Full text of Federal Reserve Bulletin : September 1985
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VOLUME 71 • NUMBER 9 • SEPTEMBER 1 9 8 5 FEDERAL RESERVE BULLETIN BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • Stephen H. Axilrod • Michael Bradfield • S. David Frost • Griffith L. Garwood • James L. Kichline • Edwin M. Truman Naomi P. Salus, Coordinator The FEDERAL RESERVE BULLETIN is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Unit headed by Mendelle T. Berenson, the Graphic Communications Section under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles. Table of Contents 671 MONETARV POLICY TO THE CONGRESS REPORT In working toward the goal of sustained growth of the economy that is consistent with progress toward price stability, developments with respect to the dollar and the external position of the United States have necessarily assumed greater prominance. 685 INDUSTRIAL PRODUCTION Output rose an estimated 0.1 percent in June. 687 STATEMENTS TO CONGRESS Paul A. Volcker, Chairman, Board of Governors, presents the views of the Federal Reserve on regulation of the market for Treasury and federally sponsored agency securities, before the Subcommittee on Domestic Monetary Policy of the House Committee on Banking, Finance and Urban Affairs, July 9, 1985. 690 Chairman Volcker reviews monetary policy in the context of recent and prospective economic and financial developments and amplifies some of the decisions of the Federal Open Market Committee set out in the semiannual "Monetary Policy Report to the Congress," before the House Committee on Banking, Finance and Urban Affairs, July 17, 1985. [Chairman Volcker presented identical testimony before the Senate Committee on Banking, Housing, and Urban Affairs on July 18, 1985.] 697 Preston Martin, Vice Chairman, Board of Governors, discusses developments in the external position of the United States and related policies here and abroad, and says that one of the most significant economic developments for the United States in re cent years has been the dramatic appreciation of the dollar, before the Subcommittee on Economic Stabilization of the House Committee on Banking, Finance and Urban Affairs, July 18, 1985. 701 Chairman Volcker discusses the multilateral development institutions and their role with respect to the debt and growth problems in the developing countries and says that the International Monetary Fund and the World Bank, and to a lesser degree, the international development banks, have important roles to play in safeguarding international stability and in promoting sound growth in the world economy, before the Subcommittee on International Development Institutions and Finance of the House Committee on Banking, Finance and Urban Affairs, July 30, 1985. 706 ANNOUNCEMENTS Resignation of Lyle E. Gramley as a member of the Board of Governors. Appointment of advisory panel to assist in development of a program to reduce risk on large-dollar transfer systems. Publication of revised list of OTC stocks subject to margin regulations. Extension of comment period on proposed amendment to Regulation Z. Admission of eight state banks to membership in the Federal Reserve System. 708 RECORD OF POLICY ACTIONS OF THE FEDERAL OPEN MARKET COMMITTEE At its meeting mittee adopted background of discount rate, on May 21, 1985, the Coma directive that, against the the recent reduction in the called for maintaining the current degree of reserve restraint, abstracting from special situation borrowing by thrift institutions. The members expected such an approach to policy implementation to be consistent with growth of Ml at an annual rate of about 6 percent or a little higher for the period from March to June. Given the weakness in M2 and M3 in April, growth in these broader aggregates over the three-month period was now expected to be slower than had been anticipated at the time of the previous meeting. The members agreed that somewhat lesser restraint on reserve conditions would be acceptable in the context of substantially slower growth in the monetary aggregates, while somewhat greater restraint might be appropriate if monetary growth were substantially faster. It was understood that the need for lesser or greater restraint would be considered against the background of developments relating to the strength of the business expansion, inflationary pressures, and conditions in domestic credit and foreign exchange markets. The members agreed that the intermeeting range for the federal funds rate, which provides a mechanism for initiating consultation of the Committee when its boundaries are persistently exceeded, should be left unchanged at 6 to 10 percent. 715 LEGAL DEVELOPMENTS Various bank holding company, bank service corporation, and bank merger orders; and pending cases. Ai FINANCIAL AND BUSINESS STATISTICS A3 Domestic Financial Statistics A44 Domestic Nonfinancial Statistics A53 International Statistics A69 GUIDE TO TABULAR PRESENTATION, STATISTICAL RELEASES, AND SPECIAL TABLES A70 BOARD OF GOVERNORS AND STAFF A72 FEDERAL OPEN MARKET COMMITTEE AND STAFF; ADVISORY COUNCILS A74 FEDERAL RESERVE PUBLICATIONS BOARD A77 INDEX TO STATISTICAL TABLES A79 FEDERAL RESERVE BANKS, AND OFFICES BRANCHES, A80 MAP OF FEDERAL RESERVE SYSTEM Monetary Policy Report to the Congress Report submitted to the Congress on July 16, 1985, pursuant to the Full Employment and Balanced Growth Act of 1978.1 MONETARY POLICY AND THE ECONOMIC OUTLOOK FOR 1985 AND 1986 The fundamental objective of the Federal Reserve in charting a course for monetary and debt expansion remains unchanged—to foster a financial environment conducive to sustained growth of the economy, consistent with progress over time toward price stability. In working toward those goals, developments with respect to the dollar and our external position have necessarily assumed greater prominence. More generally, while policy initiatives are stated in terms of growth rates of certain monetary and credit aggregates, the Federal Open Market Committee has emphasized the need to interpret those aggregates in the light of other information about the economy, prices, and financial markets. Moreover, the monetary targets for 1985 needed to be evaluated, and in the case of Ml adjusted, in light of the unusual and unexpected behavior of gross national product relative to money during the first half of this year. Economic and Financial Background Economic activity continued to expand during the first half of 1985, but at a relatively slow pace. Real gross national product probably increased at an annual rate of less than 2 percent, falling short of the expectations of many forecasters and of the rate anticipated for the year by members of the Federal Open Market Committee 1. The charts to the report are available on request from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. (FOMC) when they formulated their annual monetary policy plans in February. While the economic environment was conducive to the containment of inflation within the Vh to 4 percent range of the past few years, there has been no further progress toward full employment of the nation's labor resources or industrial capacity. Indeed, the unemployment rate has remained at about 1V4 percent, well below the peak of the 1981-82 recession, but still at a historically high level. The slowing of output growth, which began in the middle of 1984, has brought into sharper focus the unevenness of this business expansion and the significance of some basic structural imbalances in the economy. The federal budget deficit has remained in the neighborhood of $200 billion, rather than moving in the direction of balance as might normally be expected in the course of an upswing in economic activity. The heavy demands placed on the credit markets by the Treasury's financing activities have, in turn, been one factor helping to hold real interest rates at historically high levels. And those high rates have contributed to the strong demand of international investors for dollar-denominated assets and thus to the strength of the dollar on foreign exchange markets. Although the dollar was little changed on balance over the first half, with a spike in its value early in the year being subsequently reversed, the adverse effects on the U.S. trade position of the appreciation of the preceding several years, together with slow economic growth abroad, were very much in evidence. U.S. firms continued to face severe competitive pressures, and our exports fell while our imports rose. The widening current account deficit was mirrored in the continuing gap between the growth of domestic spending and domestic production. Moreover, the effects of this imbalance were felt with particular severity in the manufacturing, mining, and agricultural sectors of the economy, in which 672 Federal Reserve Bulletin • September 1985 profitability was squeezed overall and employment declined. The lagging growth of production, relatively well contained inflationary pressures on resources, and the high value of the dollar on exchange markets provided the backdrop for the conduct of monetary policy in the past several months. Reserves available to the banking system expanded substantially over the first half of the year, and the discount rate was cut one-half percent in the spring. With the economic expansion slowing, interest rates—which had declined sharply from the summer of 1984 to early 1985— dropped somewhat further on balance by midyear. The declines in market interest rates in the latter part of last year and this year had substantial effects, lasting for a number of months, on the demands for assets contained in Ml. Some savings apparently were shifted into interestearning checking accounts (negotiable order of withdrawal accounts) from other instruments, and demand deposits also rose, as the cost of holding these accounts in terms of earnings forgone was reduced. As a result of the shifts of funds, Ml expanded at an annual rate of about IOV2 percent over the first half of the year (measured from the fourth quarter of 1984 to the second quarter of 1985), well above the range of 4 to 7 percent established by the FOMC in February. At the same time, however, the broader monetary aggregates remained within their designated ranges. Over the period, M2 and M3 expanded at annual rates of S3A and 8 percent respectively, as compared with their growth ranges of 6 to 9 and 6 to 9Vz percent. Growth in domestic nonfinancial sector debt over the first two quarters of the year was a little above its monitoring range of 9 to 12 percent, as debt issued to finance mergers and otherwise retire stock issues continued stronger than had been expected earlier. The rapid growth of Ml in the first half of the year was accompanied by a sharp drop in the velocity of the aggregate: Ml velocity—the ratio of nominal GNP to money—declined at an annual rate of about 5 percent. In some respects, that development is reminiscent of experience in 1982-83, when a large drop in interest rates also was accompanied by a marked decline in Ml velocity, with the attractiveness of Ml-type bal ances enhanced by the availability of explicit interest on NOW accounts. There is evidence from recent experience, as well as from research on the interest responsiveness of the demand for money, suggesting that such episodes might be expected as the economy and financial markets adjust over time to further progress toward price stability and as the inflation premium in interest rates consequently diminishes. As this occurs, probably in unpredictable spurts, the public's demand for Ml will tend to rise and the level of Ml velocity could drop more or less "permanently." However, there will be uncertainty about such a conclusion until it becomes apparent in the period ahead whether velocity is returning toward trend or whether it is tending to rise rapidly because the public is reducing its "excess" money balances by spending or investing them; in the latter case, the drop in velocity in the past two quarters could be reversed to some extent. The recent developments affecting Ml illustrate the still considerable uncertainties about the shorter-run behavior and trend of its velocity. Over the past three and a half years, the income velocity of Ml actually has declined slightly on balance. In contrast, over the preceding three decades, velocity had increased more than 3 percent per year, on average. Velocity changes are influenced by the behavior of interest rates, but the extent of interest rate impact is variable and may be changing as the public and depository institutions adjust to the new deposit instruments and deregulation of deposit ceiling rates of recent years. Moreover, the underlying trend of velocity will also be influenced by the rate of financial innovation. While that may slow down once the adjustment is made to a deregulated environment and with lower interest rates, increased computerization could also work toward a rise in velocity over time as the efficiency of the payments system increases. Ranges for Money in 1985 and 1986 and Debt Growth In reexamining its Ml range for 1985 and in setting a tentative range for 1986, the Committee expected that velocity, after its sharp decline in the first half of this year, would cease falling Monetary Policy Report to the Congress rapidly—while recognizing that much of the recent decline may not be reversed. Allowance also needed to be made for the high degree of uncertainty surrounding the behavior of Ml velocity, given the experience of the past few years. To take account of these considerations, the base for the range of Ml was shifted forward to the second quarter of 1985, and the range was set to encompass growth at an annual rate of 3 to 8 percent over the second half of this year. This range contemplates a substantial slowing in growth from the pace of the first half, and the lower part of the range implies a willingness to see relatively slow growth should the recent velocity decline be reversed and economic growth be satisfactory. The appropriateness of the new range will be under continuing review in light of evidence with respect to economic and financial developments, including conditions in foreign exchange markets. It was noted that, because of the burst of money growth in June, the current level of Ml is high relative to the new range. The Committee expected that the aggregate would move into the new range gradually over time as more usual behavior of velocity emerged. For 1986, the Ml range was tentatively set at 4 to 7 percent. The Committee recognized that uncertainties about interest rates and other factors that could affect velocity would require careful reappraisal of the range at the beginning of that year. In addition, it was noted that actual experience with institutional and depositor behavior after the completion early next year of deposit-rate deregulation would need to be taken into account in judging the appropriateness of the ranges. At the beginning of next year, regulatory minimum balance requirements on Super NOW accounts and money market deposit accounts will be removed, and at the end of March 1986, deposit ceiling rates will be lifted entirely, affecting savings deposits and regular NOW accounts. The accompanying table summarizes decisions with respect to the ranges of growth for the aggregates for 1985 and 1986. Except for Ml in 1985, the growth ranges apply to one-year periods measured on a fourth-quarter-to-fourth-quarter basis. The Ml range for 1985 applies to the second half of the year, as noted above. With respect to the broader monetary and credit aggregates, the Committee reaffirmed the 673 Ranges of growth for monetary and debt aggregates Percent changes 1985 Aggregate Ml M2 M3 Debt 3 6 6 9 to to to to 81 9 9 Vi 12 Tentative for 1986 4 6 6 8 to to to to 7 9 9 11 1. Applies to period from second quarter to fourth quarter. 1985 ranges for M2, M3, and domestic debt that had been established in February. It is recognized, as at the start of the year, that actual growth over the four quarters of 1985 might be toward the upper parts of the ranges, and it was felt that this would be acceptable, depending on developments in the velocities of the various measures, as long as inflationary pressures remained subdued. The tentative ranges for 1986 for M3 and total debt embody reductions from 1985—in the case of debt by a full percentage point and in the case of M3 by Vi percentage point on the upper limit. The range for M2 was left unchanged. In the case of the monitoring range for debt, it was assumed that, while debt might well continue its tendency of recent years to grow considerably faster than GNP, its expansion would be tempered by a drop-off in the net redemption of equity shares that has boosted corporate credit use dramatically in the past year or two. Economic Projections All the monetary ranges specified were felt to be consistent with somewhat more rapid economic growth than has characterized the first half of the year, as long as inflationary pressures remain contained. At the same time, Committee members felt that the present circumstances in the economy contain particular risks and uncertainties that can imperil progress toward either growth or price stability over the next year and a half. Clearly, the serious imbalances referred to earlier cannot be remedied through the actions of the central bank alone. Attainment of fully satisfactory economic performance and minimization of risks will require timely action in other areas of policy, here and abroad. The economic projections of the members of 674 Federal Reserve Bulletin • September 1985 the FOMC, as well as of the Reserve Bank Presidents who are not at present members of the Committee, are summarized in the accompanying table. The central tendency of the forecasts for real GNP points to some pickup in the pace of expansion in the second half of this year. The expected strengthening, given the slow growth in the first half, still would leave the GNP expansion for the year as a whole short of the range reported by the Federal Reserve in February and below the forecasts published by the administration to date. The FOMC members and the other Reserve Bank Presidents expect growth in the range of 2Vi to VA percent during 1986. Such a rise in output is seen as entailing substantial gains in employment, enough to bring about a small decrease in the civilian unemployment rate to around 7 percent by the end of next year. With pressures in labor and product markets limited, most FOMC members and other Presidents foresee only a marginal increase, if any, in the rate of inflation in 1986. It should be noted, however, that these projections are based on an assumption that the exchange value of the dollar will not deviate substantially from its recent levels. Economic projections for 1985 and 19861 FOMC members and other FRB Presidents Item Ranee Central tendency Kange 1985 Percent change, fourth quarter to fourth quarter Nominal GNP Real GNP Implicit deflator for GNP 6'/4 to VA 2 V* to 3'/4 3'/2 to 4'/4 6'/2 to 7 2VA to 3 33A to 4 Average level in the fourth quarter, percent Unemployment rate 6VA to 7'/4 7 to 7'/4 1986 Percent change, fourth quarter to fourth quarter Nominal GNP Real GNP Implicit deflator for GNP 5'/2 to 8'/2 2 to 4 3 to 5!/2 7 to IV2 2Vi to 3'/4 3 3 /4 to 43/4 Average level in the fourth quarter, percent Unemployment rate 63/4 to 7'/2 6% to IV* 1. The administration has yet to publish its mid-session budget review document, and consequently the customary comparison of FOMC forecasts and administration economic goals has not been included in this report. The projections for a pickup in GNP growth over the reduced rate of the first half of this year are based in part on the expectation that the declines in interest rates (and concomitant rise in stock prices) that have occurred over the past few quarters will be providing impetus to demand for goods and services in the months ahead. Consumer attitudes toward spending appear favorable, and housing activity already has shown improvement, although the FOMC members are somewhat concerned by the rising debt burdens of households and the increasing payment problems suggested by figures on consumer and mortgage loan delinquencies. In the business sector, inventory overhangs appear to be limited in scope and degree, and fixed investment seems to have picked up a little after exhibiting some weakness earlier this year; the lower cost of capital and desires to cut costs and maintain competitiveness are expected to keep investment on a moderate uptrend, even though pressures on capacity may not be great. Spending by the federal government and by states and localities is expected to grow rather slowly. A key ingredient in many of the projections is the expectation that there will be a tendency in the coming year for our external position to stabilize, so that domestic production will more fully reflect the expansion of domestic demand. Developments in this area will, of course, depend in part on the course of economic expansion abroad. Were the U.S. external position to continue deteriorating as it has been, the sectoral imbalances in the economy would be exacerbated, creating further difficulties for many companies, their employees, and their communities. The draining off of income would jeopardize the sustainability of economic expansion, and the risks of economic and financial dislocations would intensify. The FOMC members and other Presidents also assumed in their policy deliberations and in their projections that the Congress and the administration would achieve deficit reductions in the range of those in the recent House and Senate budget resolutions. Failure to move forward with those proposals would run a serious risk of reversing the favorable effects that congressional actions to date have had on investor expectations and would create a real impediment to the solution of Monetary Policy Report to the Congress the structural problems plaguing our economy today. THE PERFORMANCE OF THE IN THE FIRST HALF OF 1985 ECONOMY After a year and a half of extraordinarily rapid growth, economic activity decelerated abruptly in the middle of 1984 and slowed somewhat further in the first half of 1985. Growth in real gross national product is estimated to have averaged less than 2 percent at an annual rate so far this year; the unemployment rate has remained flat at about IVA percent. Inflation has held at the lower pace reached during the 1981-82 recession. To some extent, the moderation in growth during the past year has reflected the slowing in household and business spending that often occurs after the initial phase of cyclical recovery. Pent-up demand for housing and consumer durables generally fades as an expansion period lengthens, and growth in business fixed investment often exhibits some cyclical deceleration over time. However, the recent slowing in growth also reflects factors unique to this expansion. In particular, this expansion has taken place in the context of a highly stimulative federal fiscal policy. Real GNP grew more rapidly in 1983 and the first half of 1984 than in any previous recovery since the Korean War. Ultimately, some slowing in growth would have been required to avoid inflationary overheating of the economy. However, even before that point was reached, the initial effect of the fiscal stimulus began to wane, dissipated in part through its contribution to a worsening U.S. competitive position in international trade and diversion of demand away from goods produced in the United States. The pronounced increases in the merchandise trade and current account deficits have occurred as enormous federal deficits and resultant heavy borrowing by the federal government have added to other factors helping to keep U.S. interest rates at high levels, relative both to historical experience and to the rate of inflation. These credit demands have been met partly through a substantial inflow of foreign capital, which has been associated with a large appreciation in the 675 foreign exchange value of the U.S. dollar. The strong dollar has encouraged U.S. consumers and businesses to increase greatly the portion of their expenditures devoted to imports, and at the same time has inhibited U.S. exports. Exports also have been restrained by slow growth in demand abroad. As a result, gains in domestic demand have outstripped those in domestic production by a wide margin throughout the expansion period. The effects of the weakening trade balance in the past few years have been felt keenly in the manufacturing sector. Industrial production, which began to level off in the summer of 1984, remained stagnant in the first half of 1985, and employment in the manufacturing sector declined. The strong dollar also has exacerbated the economic problems of farmers, many of whom face difficult adjustments because of falling product prices and the need to service a large volume of debt accumulated during the inflationary period of the 1970s and early 1980s. Thus far, however, the weakness in the manufacturing and agricultural areas has been more than offset by strong gains in other sectors. Domestic final demand rose at an annual rate of 3V2 percent in the first quarter of 1985, about the same as in the second half of last year; secondquarter gains also appear to have been substantial. Spending in such interest-sensitive areas as autos and housing was particularly strong in the first half of 1985, reflecting in part lower credit costs that have emerged since mid-1984. The strength of the dollar also has had a restraining influence on inflation, by reducing import prices and by forcing U.S. producers to adopt more competitive pricing strategies. Inflationary pressures have been limited, too, by the lack of pressure on resources here and the slack abroad. Most measures of overall price increase remained in the 4 percent range in the first half of 1985, but prices of manufactured goods rose little and significant downward pressures on prices were evident in markets for oil and basic commodities. The Household Sector Growth in real disposable income continued to slow in the first half of 1985, reflecting smaller 676 Federal Reserve Bulletin • September 1985 increases in interest income as well as weakness in manufacturing payrolls and in farm income. Nonetheless, gains in household spending, especially in the interest-sensitive sectors, were sizable and supported by continued heavy borrowing. As a result, the personal saving rate fell appreciably below last year's level of 6 percent. Consumer spending for new cars was particularly strong in the first half. Total auto sales averaged nearly 11 million units at an annual rate, with sales of domestic models around their highest level for a six-month period since 1979. The strength in auto sales was partly attributable to the improved availability of many popular domestic models since the strike-related disruptions in production last fall. In addition, auto demand was bolstered by generally lower interest rates compared with those of last year and by some special financing programs offered by manufacturers. Sales of foreign cars were held down in the first quarter because supplies of Japanese models were limited at the end of the annual period for the voluntary export restraint program. Foreign car sales picked up in the spring and early summer, however, when Japanese cars shipped after the start of the new annual period began to arrive at U.S. dealerships. Meanwhile, activity in the housing market has rebounded since last fall. Housing starts rose to an annual rate of 1.8 million units on average in the first five months of 1985, retracing nearly all of the decline that occurred in the latter half of last year after rates on fixed-rate mortgages temporarily rose to the 14 percent range. Housing activity generally has been quite robust in this expansion period despite high real interest rates. Demand for owner-occupied units has been buoyed by the movement of the "baby boom" generation into its prime home-buying years, as well as by the beneficial effects of stable house prices and innovative financing techniques, such as adjustable-rate mortgages, on the aflfordability of homes. The strong gains in household spending over the past two and a half years have been accompanied by considerable alterations in balance sheets. The ratio of household debt to income has increased rapidly and is now well above its 1980 peak. Asset growth has been strong as well, however, and the ratio of financial assets to income has risen sharply in the past year, owing in part to the rapid rise in stock prices. The incidence of payment difficulties on consumer installment debt has risen somewhat in the past half year or so from relatively low levels. Delinquency and foreclosure rates on home mortgages have been at high levels for some time, and they rose further in early 1985. The large number of defaulted mortgage loans partly reflects rates of unemployment that are still high and the weakness of home prices in many locales, which has left some homeowners with little equity to protect when they encounter financial difficulties. However, aggressive underwriting of some mortgages, including loans carrying lower payments in the first years, appears to be a contributing factor. The Business Sector Conditions in the business sector were mixed in the first half of 1985. Many industrial firms experienced pressures on profit margins in an environment of intense price competition and declining capacity utilization, and widespread financial strains continued to be present in the agricultural and energy sectors. At the same time, however, some other sectors of the economy recorded good gains in sales and income. Economic profits for corporations in the aggregate remained at the higher level reached after the sharp runup earlier in the expansion, with after-tax profits as a percent of GNP at the highest levels seen for any sustained period since the late 1960s. Growth in business spending for fixed capital began to slow in the latter half of 1984, after a period of extraordinary expansion, and a further slowing occurred in the first part of 1985. The weakening has been most pronounced in equipment outlays, affecting both the high-technology categories and more traditional types of industrial equipment. Nevertheless, surveys of capital spending intentions taken in the first half of the year indicated that businesses still planned a healthy expansion in outlays for 1985 as a whole. A relatively large proportion of these expenditures reportedly was earmarked for replacement and modernization rather than expansion of ca- Monetary Policy Report to the Congress pacity, reflecting a desire to cut costs and improve competitiveness. Meanwhile, spending for nonresidential construction, particularly offices and stores, continued at strong rates in the first half of 1985, and construction contracts rose further despite very high vacancy rates in many parts of the country. The pace of inventory accumulation in the business sector has been moderate in recent months. In real terms, business inventories rose about $19 billion at an annual rate in the first quarter of 1985, compared with an average gain of $25 billion in 1984; inventory accumulation probably was still lower in the second quarter. Manufacturers, especially those facing intense import competition, have continued to be cautious in adding to inventories. Total stocks in this sector declined in both April and May, and inventory-sales ratios for the most part remain near historical lows. In the trade sector—with the notable exception of the car industry—inventory-sales ratios have remained a bit high, though, and selected efforts to pare stocks have continued. With slower growth in investment in the first half of 1985, the gap between capital expenditures and internal funds of firms remained moderate. Nevertheless, businesses continued to borrow heavily, reflecting a continued massive amount of equity retirements by firms engaged in mergers and other corporate restructurings. As a result, debt-equity ratios have risen for a number of firms, especially in the petroleum industry in which a major restructuring is currently taking place. However, for most other firms, equity additions through retained earnings or sales of new shares have been considerable. With rising stock prices, debt-equity ratios for these firms, when their assets and liabilities are measured at current market values, have shown some decline in recent months. Nonetheless, financial strains, in many cases related to the high foreign exchange value of the dollar, persist in some areas of the economy. In particular, low capacity utilization rates in a number of import-sensitive manufacturing industries, including machine tools, steel, some types of chemicals, and textiles, have intensified pressures on profitability. In addition, large segments of the farm sector continue to suffer greatly from 677 reduced exports, depressed land prices, and low incomes; many farmers face serious debt-servicing problems, causing problems in turn for agricultural lenders. In the energy sector, continued downward pressure on world oil prices has caused petroleum drilling to be curtailed, which has strained the earnings of many oilfield equipment and servicing firms. The Government Sector Federal tax receipts continued to rise substantially in the first half of 1985, but so too did outlays, and the deficit for fiscal year 1985 likely will be around $200 billion. This deficit represents about 5 percent of total GNP and more than half of net private domestic saving. Federal purchases of goods and services, the part of federal spending that enters directly into GNP and constitutes about a third of total outlays, rose comparatively moderately in the first half of 1985; defense procurement, an area of rapid growth in spending over the past few years, grew at a reduced pace as outlays lagged more than is typical relative to appropriations. Real nondefense purchases (excluding the Commodity Credit Corporation) continued to be relatively flat. Purchases by state and local governments were essentially unchanged in the first quarter but evidently rose in the second as construction outlays increased significantly in the spring. States and localities, many of which had serious fiscal difficulties in the last recession, generally have been cautious in raising spending throughout this expansion period, though they have been endeavoring to address the problem of an aging infrastructure. The combination of spending restraint and improved revenues, owing both to legislated tax increases and to rising incomes, has resulted in a substantial rise in the operating and capital account surpluses of state and local governments since 1982. The External Sector The external sector has come to play an increasingly important role in the U.S. economy. Mer- 678 Federal Reserve Bulletin • September 1985 chandise imports have risen rapidly in this expansion, moving above 15 percent of real domestic expenditures on goods in the first half of 1985. The increase in import penetration has been widespread, occurring in both the consumer and the capital goods sectors as well as in industrial supplies. Although U.S. exports increased in 1983 and 1984, they grew much less than imports and have not yet regained their previous peak. In the first half of 1985, exports, particularly of agricultural products, have declined somewhat. As a result of these trends, the current account deficit has widened dramatically over the past few years, reaching an annual rate of $120 billion in the first quarter of 1985. Part of this imbalance reflects the stronger growth of demand in the U.S. economy since 1982 relative both to the other industrial countries and to the debt-burdened developing countries. Although this influence has lessened with the slowing of the U.S. economic expansion since the middle of last year, there has been no acceleration in growth in the other industrial countries, and many developing countries have continued to face financial constraints. The greater share of the imbalance, however, probably is attributable to the substantial appreciation of the dollar over the past few years. On average during the first half of this year, the tradeweighted value of the dollar was roughly 70 percent above its level five years earlier. The appreciation of the dollar and the underlying demand of investors for dollar-denominated assets and other claims on the United States have been partly associated with differentials between real rates of return on U.S. and foreign assets. The enormous federal budget deficits have been an important factor contributing to these differentials. The moderation in interest rates that has accompanied the slowing of the economic expansion in the United States since mid-1984 appears to have eased some of the upward pressure on the dollar; after rising sharply through the first two months of this year, the exchange value of the dollar has trended downward and is now around the level of late last summer. Nevertheless, the high level of the dollar continues to limit the ability of U.S. producers to compete both at home and abroad. Labor Markets Growth in labor demand generally remained strong in the first half of 1985, and the number of workers on nonfarm payrolls increased 1.4 million. The bulk of the job growth was in the service and trade sectors, in which employment in the past six months has expanded at rates similar to last year's rapid pace. Increases in the restaurant and business services areas have been especially large. Construction employment also showed a sizable gain in the first half of 1985, along with significant growth in both residential and nonresidential construction. In contrast, manufacturing employment dropped about 220,000, with cutbacks in payrolls widespread among industries. Despite the substantial gains in overall payroll employment, the unemployment rate has remained at about IV4 percent, the level that has prevailed since last June. The labor force participation rate was up appreciably on average during the first half; the rise occurred primarily among adult women, who evidently were responding to the increase in job opportunities in the service and trade sectors in which 80 percent of adult women are now employed. Wage inflation has remained restrained. Yearover-year changes in the employment cost index for wages and salaries, a relatively comprehensive measure for the private nonfarm business economy, have held steady at just over 4 percent for nearly a year. This is about 1 percentage point less than in 1983 and early 1984, and substantially below the peak rate of about 9 percent reached in 1980. The slowing in union wage increases over the past several years has been especially large. Union wage gains both in and out of manufacturing have been below the increases posted in nonunionized sectors for the past year and a half, causing a partial erosion of the differential that had built up over the years before the last recession. Major collective bargaining agreements negotiated in early 1985 indicate continued moderate wage growth in the unionized sectors. Productivity in the nonfarm business sector appears to have declined in the first half of 1985, after increases amounting to 4 percent in 1983 and 2Vi percent in 1984. Both the recent slowing Monetary Policy Report to the Congress in productivity and the substantial gains earlier in the recovery largely reflect the fact that employment tends to respond more slowly than output to changes in demand. However, improvements in productivity appear to continue to be a major priority of both workers and management, as evidenced by widespread reports of modernization of facilities as well as relaxation of work rules and other steps to enhance efficiency and hold down costs. The combination of improved productivity growth and relatively restrained wage gains in this expansion has resulted in a sizable deceleration in the average rate of increase in unit labor costs relative to the previous several years. Although unit labor costs have risen this year in response to the downturn in productivity, they are still only about 3 percent above their yearago level. Price Developments After slowing sharply in the recession, the broadest measures of inflation have held fairly steady at about 4 percent during much of the expansion. While the stability of the inflation rate during this expansion partly reflects some special factors, significant progress appears to have been made in reversing the underlying momentum of the inflationary process that sustained the wageprice spiral of previous years. Inflation expectations have been more subdued, and both labor and management have exhibited a better appreciation of the fact that gains in real incomes cannot be achieved simply by marking up nominal wages or prices. The strong dollar has reinforced other factors holding down inflation in this expansion period, both directly by reducing the prices of imported goods and indirectly by forcing U.S. manufacturers to restrain price increases in order to remain competitive. Retail prices of goods excluding food and energy rose about VA percent, at an annual rate, in the first half of 1985, about the same as the average rate of change in the two preceding years. Increases in prices of nonenergy services, which have not been affected nearly so much by import competition, have continued to be substantial, averaging a 5VI per 679 cent rate in the past six months, the same as in 1984. Energy prices have been quite volatile over the past year, mainly reflecting movements in gasoline prices. From the autumn of 1984 through February of this year, gasoline prices fell about Vh percent, as refiners sought to reduce excess inventories. Production was adjusted downward as well, resulting in a spurt in prices in the spring. However, gasoline prices appear to have stabilized more recently, as inventory levels have returned to normal while crude oil supplies remain abundant. Food prices have risen only a little this year, reflecting the moderate rate of increase in processing costs as well as plentiful agricultural supplies. Prices of basic industrial commodities, which rose markedly in the initial stages of this upswing in business activity, have been trending downward for the past year and a half. The demand for materials by U.S. manufacturers has been weak, and world supplies have been ample, owing in part to the expansion of capacity in many developing countries in the past decade and their need to maintain export revenues. MONEY, CREDIT, AND FINANCIAL IN THE FIRST HALF OF 1985 MARKETS In February of this year, the FOMC established target growth ranges for the year (measured from the fourth quarter of 1984 to the fourth quarter of 1985) of 4 to 7 percent for M l , 6 to 9 percent for M2, and 6 to 9Vi percent for M3. For domestic nonfinancial sector debt, an associated monitoring range was set at 9 to 12 percent. The Ml range for 1985 represented a reduction of 1 percentage point at the upper end from the range of the preceding year, while the range for M2 was unchanged. To reflect changes in the pattern of financial flows, the 1985 range for M3 was raised Vi point at the upper end, and the whole range for the debt aggregate was raised 1 percentage point. It was expected that these ranges would be adequate to encourage further real economic growth at a sustainable pace consistent with containment of inflationary pressures and a movement over time toward reasonable price stability. 680 Federal Reserve Bulletin • September 1985 In implementing policy throughout the period, the FOMC emphasized the need to evaluate growth in the monetary aggregates in the context of information available on economic activity, prices, and financial market conditions. Among other factors, the strength of the dollar and the related sluggishness of manufacturing activity required attention. As an operational matter, the degree of pressure on reserve positions of depository institutions was relatively unchanged during the period, and the discount rate was reduced once. Money, Credit, and Monetary Policy The unusually sharp drop in velocity in 1982 and early 1983, when growth of Ml greatly exceeded that of nominal GNP, had led the FOMC to place less reliance on Ml as an operational guide to policy. During the latter part of 1983 and in 1984, however, the patterns of Ml growth relative to other economic variables proved more consistent with historical experience, and Ml was given more weight in the conduct of policy. Nonetheless, considerable uncertainty remained, in part because of limited experience with the impact of deposit deregulation and financial market innovations on the behavior of Ml under varying economic and financial circumstances. Similar concerns about possible changes in the account offerings and pricing behavior of depositories and the asset demands of households affect all the monetary aggregates to some extent. These factors accounted in part for the need to interpret movement in the aggregates in the light of other information, including evidence on shifts in velocity. In the event, monetary policy during the first half of the year had to be adapted to a further slowing in economic growth as manufacturing activity was essentially flat and the agricultural sector remained under pressure, to a continued high value of the dollar on exchange markets, and to a tendency for the velocity of money, particularly of M l , to fall. Price and wage pressures remained relatively well contained; indications of some acceleration in the early part of the year were followed by more moderate increases in subsequent months. In that context, monetary policy basically accommodated the strong demands for reserves by depository institutions that emerged during the first half of the year. The total of adjustment plus seasonal borrowing varied within a generally narrow range over the period, though increasing for a time in the spring as a result of special situations affecting nonfederally insured thrift institutions in Ohio and Maryland. Reserve positions had been eased considerably in the latter part of 1984 and the early weeks of 1985. With an easing of reserve pressures and a slowing in Growth of money and credit Percent changes Period 1984:4 to 1985:2 . . . 1984:4 to June 1985 Fourth quarter to fourth quarter 197 9 1980 198 1 1 1982 1983 1 1984 Quarterly growth rates 1984:1 2 3 Ml 10.5 11.6 7.5 7.5 5.1(2.5)' 8.8 10.4 5.2 6.2 6.5 4.5 3.2 10.6 10.1 1. Ml figure in parentheses is adjusted for shifts to NOW accounts in 1981. M2 M3 Domestic nonfinancial sector debt 8.8 7.9 12.8® 9.3 8.2 12.7® 8.1 9.0 9.2 9.1 12.2 7.7 10.3 9.6 12.4 10.0 10.0 10.4 12.1 9.6 10.0 9.1 10.8 13.6 7.2 7.1 6.8 9.1 12.0 5.3 9.2 10.5 9.5 11.0 10.7 5.0 13.0 13.0 12.6 13.4 13.4 e Estimated. 11.8 e Monetary Policy Report to the Congress economic growth, interest rates had declined sharply from their late summer peaks through the very early weeks of this year. The decline of interest rates appeared to stimulate, with usual lags of some months, a sizable increase in demands for assets contained in Ml, principally interest-bearing checking accounts (NOW accounts). Shifts of long-term savings and liquid funds out of market instruments and time deposits into these accounts in the early months of the year entailed a substantial rise in total reserves to support them. As the public's asset preferences shifted toward components of Ml, its income velocity declined sharply because holdings of these assets increased relative to the GNP. Only minimal effects on Ml growth likely resulted from shifts of funds into Super NOW accounts after the minimum-balance requirement was reduced from $2,500 to $1,000 at the beginning of the year because the bulk of the funds shifted appeared to come out of regular NOW accounts. Most market interest rates rose about a full percentage point from their January lows in the course of the winter, though the level of rates remained well below the 1984 peaks. Demands for credit remained strong. Economic growth had picked up in the fourth quarter and early data for the first quarter, though mixed, seemed generally consistent with moderate growth. While, as noted, reserve growth was sizable during the quarter to accommodate shifts in the public's asset preference, reserves were provided somewhat more cautiously through open market operations during the period of most rapid acceleration of Ml growth in the first quarter. By early spring, incoming economic data made it clear that the rate of economic expansion remained limited. Inflation rates continued generally low, prospects for further oil price declines helped damp inflation expectations, and the market responded positively to signs of possible congressional action to reduce the budget deficit. Growth of Ml moderated substantially, and the aggregate began to decelerate toward its longerrun range in late winter and early spring. Interest rates reversed their earlier rise as market expectations changed. Rate declines were also influenced by a cut in the Federal Reserve's discount rate in May of Vt percentage point to IVi percent, 681 which took place in the context of continued signs of economic weakness and against the background of restrained inflationary pressures and a strong dollar on exchange markets. By midyear, short-term rates were down to 3A to 1 lA percentage points from levels around year-end, while long-term rates had declined about 1 to 1 lA percentage points. Growth in Ml spurted once again in the late spring. To some extent, interest rate decreases contributed to a strengthening of demand for Mltype assets during the latter part of the second quarter. Growth of NOW accounts, which had moderated in late winter, picked up as offering rates on Super NOW accounts adjusted sluggishly to the renewed decline in market rates of interest. However, the strength of Ml also reflected an unusual surge in demand deposit expansion in May that extended into June at an even more rapid pace. The rise seems greater than is explainable by usual reactions to the reduced opportunity cost of holding such funds or to adjustments in compensating balances and may be partly related to sharp swings in U.S. Treasury balances. A question has been raised as to whether corporate cash management practices have become less aggressive in recent months, but there is no clear evidence on the point. With the sharp late-spring expansion of Ml, its velocity in the second quarter again declined at about the same rate as in the first. The decline in the velocity of Ml over the first half of this year—as well as the lesser declines in the velocity of M2 and M3—is reminiscent of experience in 1982-83. Indeed, both in the first half of this year and over the one-year period from mid-1982 to mid-1983 the income velocity of Ml declined at annual rates of about AVi to 5 percent. The drop in Ml velocity in both periods appears to have reflected, to a considerable degree and with usual lags, declines in market interest rates, although the magnitude of the declines was in both cases somewhat more than could be expected based on past relationships of money, income, and interest rates. Episodes of velocity decline may be inherent in the disinflationary process. As interest rates adjust downward in reflection of lowering inflation rates, households and firms become increasingly less reluctant to tie up portions of their 682 Federal Reserve Bulletin • September 1985 funds in lower-earning transaction balances. The adjustment has not been steady. Yield declines have been bunched in time, and the ensuing bunched additions to money balances have led to sudden drops in velocity. Unfortunately, the timing of such velocity changes is no easier to predict than is the timing of interest rate changes. Deposit deregulation may have contributed to the extent of velocity adjustments by making the demand for the group of assets in Ml more responsive to interest rate changes than it used to be. While growth of Ml was quite high relative to its long-run range for 1985, the broader aggregates remained generally within their ranges. Growth of M2 from the fourth quarter of 1984 to the second quarter of 1985, at an 83A percent annual rate, was a little below the upper limit of its range, expressed graphically as a cone based in the fourth quarter of 1984. However, expansion of this aggregate in June brought its monthly average a little above the upper end of the range. Given the deregulation of bank deposit rates, the growth of M2 should be less affected over periods of as long as a half year by interest rate developments because offering yields on most of its components are adjusted in line with market rates and many of the shifts of funds engendered by interest rate changes are among assets within this broader aggregate. But because the adjustments in offering yields tend to lag market changes, M2 does show considerable short-term responsiveness to interest rate changes. Deposit rates, especially on money market deposit accounts (MMDAs), fell much less than market yields last fall, so M2 rose rapidly for several months. Then rising market yields in February and March held back M2. The nontransaction portion of M2 actually declined in April for the first time in 15 years, although this may have been partly the result of difficulties in seasonal adjustment owing to the limited experience with individual retirement accounts (IRAs), which are excluded from M2, and with tax payments made out of MMDAs and money market funds. After rates fell back, M2 picked up again strongly in late spring. M3 growth, meanwhile, was comfortably within its target range during the first half of the year. Issuance of large CDs has slowed substantially from last year at both banks and thrift institu tions. Core deposit flows have accelerated while the rate of loan expansion has held about steady. Furthermore, perhaps in response to new Federal Home Loan Bank Board regulations raising net worth requirements for fast-growing institutions, thrift institutions have reduced net acquisitions of assets. In doing so, some institutions have taken advantage of declining yields by using the capital gains from asset sales to boost reported earnings. Growth in total debt remained extremely strong in the past two quarters, averaging a bit above its monitoring range, though below the record pace of 1984. Federal government borrowing continued to absorb more than a fourth of total funds made available to domestic nonfinancial sectors. An increasing proportion of the Treasury's debt carries distant maturity dates; 90 percent of net marketable borrowing this year has been in issues of notes and bonds maturing in 2 to 30 years. Issues of 20- and 30-year debt, in particular, are increasing and now dominate the new-issue market for taxable long-term bonds, accounting for more than two-thirds of new offerings in that maturity class. This large volume of new long-term debt has changed the makeup of the secondary market as well. The supply of Treasury issues outstanding with 15 or more years remaining to maturity has doubled in little more than 2 years, while the amount of private issues in that maturity range has shown little net change. Borrowing of state and local governments has been unexpectedly strong so far this year, but an unusually high proportion has been for advance refunding of existing issues, as governments have sought to take advantage of lower interest rates. Because the funds borrowed in such operations are reinvested in financial instruments, they have little net impact on credit market pressures. Indeed, most of these funds are required by law to be invested in specially issued Treasury debt, thus reducing the Treasury's need for public offerings. Single-family housing revenue bonds have slowed from the second half of last year. But last year's issues were heavily concentrated in the later part of the year because of delays in the reauthorization of such bonds; recent volume has been close to the 1984 average rate. Business credit demands have remained strong Monetary Policy Report to the Congress this year. Slowing growth of both profits and expenditures for fixed capital and inventories has, on balance, had little effect on total borrowing needs. Corporate borrowing has been heavier in the short-term paper and loan categories than in bonds, but not to the same extent as in the early part of 1984 when interest rates were rising. In addition, while new-issue bond volume has picked up in response to the lowest long-term yields in five years, maturities of new bond issues have been concentrated in the short- and intermediate-term areas, as they were last year. An unusual portion of the borrowing, also like last year, has been used to finance equity retirements of one sort or another. Mergers, buyouts, share repurchases, and swaps with shareholders of new debt for stock have continued on the same massive scale as last year. Borrowing initiated with the purpose of financing these transactions may have accounted in gross terms for more than a percentage point of the growth rate of total nonfinancial debt over the first half. But such an estimate may overstate the net effects of recent corporate recapitalizations on debt growth. A number of firms involved in mergers or restructurings this year and last have recently completed large asset sales, some for the explicit purpose of repaying debt. Furthermore, merger activity may be indirectly responsible for some of the increased new equity offerings because of its generally stimulative effect on stock prices as funds paid to shareholders are reinvested. Household borrowing also has remained strong. Demand for mortgage loans has been buoyed by declining interest costs. At the lower rates, households have found adjustable-rate loans less attractive than last year, reducing from two-thirds to about one-half the proportion of new conventional mortgages with these features. Installment debt continued to rise faster than income in the first half of the year, but the second-quarter data show some deceleration in line with signs of a slowing in the growth of consumption spending on large-ticket items. Other Developments in Financial Markets Signs of strain in financial markets have persisted this year, but without causing major disruptions in general credit market conditions. Al 683 though the government securities market as a whole has been performing well, the failures of three secondary government securities dealers caused losses, sometimes substantial, for some of their customers. A number of local governments and savings and loans were among those hurt, and losses by one large thrift institution in Ohio had further repercussions, threatening to bankrupt the statewide private insurance system and, for a time, generating some concerns here and abroad about the safety of other financial institutions. Runs on privately insured savings and loans in Maryland, some of which also lost money as a result of the failure of securities firms, followed the problems in Ohio. Privately insured savings and loans in both states were closed or limited to small withdrawals for a time, causing serious inconvenience to some depositors, and some institutions remain closed or restricted. However, these various problems have been relatively well contained, without significant effects on other institutions and markets. A number of institutions have switched to federal insurance. And the Federal Reserve, acting in its role as lender of last resort, made advances to nonfederally insured thrift institutions in Ohio and Maryland to help facilitate adjustments in the face of large deposit outflows. For a while, the borrowing affected the amount of adjustment credit at the discount window but because of the special conditions did not add to reserve market pressures as perceived by other institutions. After a time the borrowings were classified as extended credit. The thrift industry as a whole continues to suffer from low net worth and mismatched balance sheets, but the recent declines in interest rates are improving earnings. The Federal Home Loan Bank Board (FHLBB) has taken a number of steps, including increased capital requirements for rapidly growing institutions, to encourage the stabilization of the industry over time. Capital requirements also have been raised for banks, some of which have suffered from a high incidence of nonperforming loans and loan losses in recent quarters. The troubled loans are concentrated in energy, agriculture, and real estate sectors and to borrowers of some foreign countries. Bad news about the loan portfolios of individual institutions and other reported losses 684 Federal Reserve Bulletin • September 1985 have produced some ripples in market rates generally, but spreads between borrowing rates of financial institutions and the Treasury have been quite low for the most part. To some extent, loan losses reflect overly aggressive lending decisions, but the problems of borrowers in the hardest hit industries are partly a result of difficult adjustment to a higher value of the dollar and lower rates of inflation than were expected when the loans were made. In the agricultural as in other sectors, investors and borrowers have discovered that the inflation of land and commodity prices can no longer be taken for granted. In light of strains relating to agricultural credit, the Federal Reserve liberalized its regular seasonal borrowing program and initiated a temporary special seasonal program. However, there has been only relatively limited use of seasonal credit owing to the easing of money market conditions as the spring progressed. With regard to conditions among nonfinancial businesses, the prospects of some of those in the weaker industries—especially those most adversely affected by the high dollar—are subject, of course, to considerable uncertainty. But, in addition, many firms have deliberately chosen a more precarious financial structure in order to enhance current market valuations of shares or to fend off undesired takeover bids. Nevertheless, financial markets have not shown generalized concern about corporate financial structure; notably, spreads between corporate and Treasury debt are unusually narrow, having shrunk since the beginning of the year. • 685 Industrial Production materials declined. Second-quarter industrial output was 0.5 percent above the first quarter. In market groups, production of consumer goods increased 0.2 percent in June, largely reflecting a gain in nondurable consumer goods. Autos were assembled at an annual rate of 8.0 million units—off slightly from the May rate. Business equipment, one of the groups affected Released for publication July 18 Industrial production edged up 0.1 percent in June following a similar rise in May. At 124.6 percent of 1977, the new base year, output is 1.8 percent above a year earlier. In June, gains in production occurred in consumer goods, equipment, and intermediate products; but output of Seasonally adjusted, ratio scale, 1 9 7 7 = 100 140 TOTAL INDEX Products 120 100 Materials 1 1 1 1 1 1 140 MANUFACTURING _ N o n d u r a b l e ^ _ Durable MATERIALS 120 Nondurable & r ^ r ^ Durable 1 1 1 -J >*>«» Energy \ y 1 * 100 1 I 80 i i i i 1 1 160 _ CONSUMER GOODS 140 _ INTERMEDIATE PRODUCTS Nondurable r / \ s/ s 140 120 J J Business supplies 120 / 100 Durable | Construction supplies 240 MOTOR VEHICLES A N D PARTS Left scale FINAL P R O D U C T S Right scale 200 Defense and space 100 _ 160 Business equipment 140 120 100 60 Consumer g o o d s 1979 1981 1983 1985 All series are seasonally adjusted and are plotted on a ratio scale. 1979 1981 1983 1985 Auto sales and stocks include imports. Latest figures: June. 686 Federal Reserve Bulletin • September 1985 1977 = 100 Percentage change from preceding month 1985 1985 Group May June Feb. Mar. Apr. May June Percentage change, June 1984 to June 1985 Major market group Total industrial production 124.4 124.6 .1 .3 .2 .1 .1 1.8 Products, total Final products Consumer goods Durable Nondurable Business equipment.. Defense and space... Intermediate products.. Construction supplies Materials 131.6 132.1 120.6 112.3 123.6 142.1 172.6 130.0 118.3 114.5 132.1 132.6 120.8 112.4 123.9 142.6 174.3 130.6 118.8 114.2 .1 .0 .2 .1 .3 -.3 1.2 .7 -.5 .0 .4 .3 .6 .5 .6 .1 1.1 .7 1.0 .1 .5 .5 .1 -.5 .3 1.3 6 .4 .2 -.3 .5 .5 .6 -.5 .9 .0 1.5 .7 1.0 -.6 .4 .3 .2 .1 .2 .3 1.0 .5 .4 -.2 3.6 3.4 2.0 .7 2.5 5.2 10.9 4.2 4.0 -.8 .0 -.3 .5 .0 -.5 .2 .1 .3 -.2 -.2 2.2 2.7 1.7 -2.7 1.2 Major industry group Manufacturing Durable Nondurable Mining Utilities 126.7 128.0 124.9 110.6 113.0 126.9 128.1 125.3 110.4 112.8 -.1 -.5 .5 -.9 2.5 .4 .6 .1 .9 -1.7 .3 .3 .3 .2 -.2 NOTE. Indexes are seasonally adjusted. by definitional changes, increased 0.3 percent following no change in May and a large rise in April. Output of defense equipment and of construction and business supplies continued to increase in June. Materials production, however, declined 0.2 percent, mainly reflecting further reductions in basic metals and in equipment parts. Nondurable goods materials and energy materials changed little. In industry groups, manufacturing output gained 0.2 percent in June, but mining and utility output was down 0.2 percent. The Revision of the Index' The 1985 general revision of the index, the first since 1976 and the sixth since the 1920s, involves the following major modifications: 1. Historical data for the seasonally adjusted total index and for several main groups of the production index are included in the supplement to this release. A complete historical tape (order no. PB85-217602) of all published series is available from the National Technical Information Service of the U.S. Department of Commerce, 5285 Port Royal Road, Springfield, Virginia 22161; telephone (703) 487-4650. Those interested in selected industrial production series may receive copies of printouts that contain up to ten series by writing the Industrial Output Section, Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. 1. The reference year of the index was moved from 1967 to 1977 = 100, changing the level of the index. 2. The weights used to combine the production indexes were updated through 1977. 3. The number of basic index series was increased from 235 to 252. 4. The industry classification of the series now follows the 1977 Standard Industrial Classification (SIC); the old index used the 1967 SIC. Also, compositional changes have been made in the aggregates for a number of groups. 5. Indexes were revised, using various sources, including the 1972 and 1977 Census of Manufactures, the Annual Surveys of Manufactures through 1981, and others. 6. New seasonal factors were calculated from data through 1983 for the individual series and from data through 1984 for the aggregates. The July 1985 issue of the F E D E R A L R E S E R V E B U L L E T I N (pp. 487-501) contains an article providing a detailed description of the revision and its results. A technical manual, expected to be issued early in 1986, will describe the basic concepts; the estimating procedure of the monthly series; the benchmarking, aggregation, and weighting techniques; and the method of seasonal adjustment, as well as the uses, limitations, and history of the index. 687 Statements to Congress Statement by Paul A. Volcker, Chairman, Board of Governors of the Federal Reserve System, before the Subcommittee on Domestic Monetary Policy of the Committee on Banking, Finance and Urban Affairs, U.S. House of Representatives, July 9, 1985. I appreciate this opportunity to present the views of the Federal Reserve on regulation of the market for Treasury and federally sponsored agency securities. My remarks will be relatively brief, Mr. Chairman, because your subcommittee is already well informed about the developments that have prompted consideration of the need for formal regulation of these markets. Indeed, you and your colleagues have played a leading and a very valuable role through the years in exploring the difficulties that have arisen in these markets and the efforts of the Federal Reserve and others to deal with them. Recently, in testimony before another subcommittee of the House, I set forth the basic position of the Federal Reserve on the need for regulation of the market for Treasury securities. We have concluded that legislation providing for registration, inspection, and limited regulation of government security dealers would be desirable. In arriving at this conclusion, we have noted that the recent problems have not substantially affected the core of the government securities market—that is, dealers accounting for the bulk of trading activity and marketmaking and for participating regularly in the distribution of new Treasury securities. The market has continued to function with a high degree of efficiency and liquidity. We also recognize that any regulation inevitably involves additional costs for at least some of the participants in the market. However, we believe that legislation can, and should, be framed in a manner to avoid unnecessarily detailed and costly regulation and supervision— that the mandate given to the regulatory body (or bodies) should provide only limited powers di rectly related to protecting the integrity of transactions in the market. Moreover, as depositors and taxpayers in Ohio and Maryland can attest, there have been considerable costs growing out of recent market weaknesses, extending even beyond losses to the parties directly involved in government securities transactions. While regulation will not, and can not, avoid all potential losses from fraud or otherwise, we do believe that registration, inspection, and some regulation could help reduce the risks to third parties. In our view, any structure of regulation for the Treasury market should embody—and be confined to—three principal elements. First, it should provide for registration of dealers and for authority to bar or limit the participation of those who, through violations of securities laws or otherwise, have clearly demonstrated that they should not be allowed to occupy a position of trust in the government securities markets. While a registration requirement can raise difficult issues, including the necessity to define a dealer, it is important that those who have been disciplined in other markets not be allowed to find refuge in trading government securities—the very securities investors turn to for assurance of relative safety and liquidity. Second, registration implies the need for certain minimum guidelines for recordkeeping and auditing so that continued adherence to the standards established for registered dealers can be monitored. To assure the adequacy of these reports and the conformance to standards, legislation should include the authority to inspect registered dealers on a regular basis and when problems are suspected. Finally, there should be some mechanism for writing and enforcing rules to foster the financial soundness of government securities dealers and to encourage, in a limited area, market practices consistent with the safety and the efficiency of the market. Obvious cases in point are guidelines 688 Federal Reserve Bulletin • September 1985 with respect to capital and such practices as the collateralization of repurchase agreements (RPs). Legislation might permit regulation of certain other practices—such as appropriate margins or when-issued trading, if needed—but authority should be confined to areas that involve a direct threat to the integrity of the marketplace. Let me underline this last point. The potential costs of highly detailed and expansive regulations are real. Preserving the extraordinary liquidity and resiliency of this market is essential to the conduct of monetary policy and to the management of the public debt. Official intrusion into this market beyond that considered absolutely essential to promote its safety and soundness—for example, imposing on this market the degree of regulation characteristic of other securities markets—is unnecessary and could impair its basic efficiency and liquidity. Within the limited framework that we would propose, costs of regulation would be quite modest relative to the size of the market, and regulation could reinforce the performance of, and confidence in, the market. The framework that we have in mind for regulation could be implemented through a number of different administrative structures to deploy effectively the expertise of the relevant regulatory bodies in the process of registration, supervision, and regulation. One such approach is embodied in the joint proposal developed by the Treasury, the Securities and Exchange Commission, and the Federal Reserve. That proposal, as you know, provides for registration with the Treasury, or with the Securities and Exchange Commission (SEC) if the preference of that agency were to be adopted, basic rulemaking authority by the Treasury in consultation with the Federal Reserve, and enforcement by banking agencies or by existing self-regulatory organizations (SRO) under supervision by the SEC, depending on whether the dealer firm is a bank or a nonbank. That proposal encompasses all the elements that we consider necessary, including limitation on the scope of regulation. Properly implemented, with ample consultation between Federal Reserve and the Treasury, we would find this approach acceptable. The two bills under specific consideration by this subcommittee—H.R. 2521 and H.R. 1896— embody other approaches. Although there are large differences between the two bills in the scope of regulation, both bills would center the responsibility for registration and regulation in the Federal Reserve. The Federal Reserve does have a strong interest in seeing that the job of overseeing the government securities market is done well, that the integrity of the marketplace is reinforced, and that regulation not be unduly burdensome. Reflecting those interests, we expect to continue to play a key role in the surveillance of the primary dealers with whom we trade. We would also want to work closely with those responsible for registration and for rulemaking authority generally. We have not felt it necessary or sought, however, to have these latter responsibilities directly under our authority. Alternative arrangements would be consistent with the requirements as we see them. For instance, an alternative arrangement to the "joint proposal" with some appeal would fit regulation and oversight within a framework of a new SRO for dealers in Treasury and federally sponsored agency issues. The SRO approach would involve directly in the rulemaking process those with the fullest knowledge of market practices and the most intense interest in minimizing the burden of regulation. The mandate for rulewriting provided that such an SRO should be carefully prescribed and limited. The SRO would, of course, need to report to, and be subject to the jurisdiction of, a federal agency or some combination of agencies. We believe that we should participate in that oversight process. Your bill, H.R. 2521, captures some of the advantages of this approach by creating an advisory council to work with the Federal Reserve, although the council would have no legal responsibility for rulemaking. If rulemaking were in any event narrowly circumscribed by law, an advisory council might serve as an alternative to an SRO. The bill that was introduced by Congressmen Dingell and Wirth simply transformed an existing SRO, the Municipal Securities Rulemaking Board (MSRB), by providing it with authority over the entire government market. We have opposed this proposal because the two markets—for federal and municipal securities—are so different. The authority of the MSRB is con- Statements to Congress siderably broader in scope than we view as necessary, growing out of the regulatory needs of a market with a large number of small issuers, a multiplicity of issues and financing techniques, and small investors. At the same time, the MSRB has no, or little, experience with one of the principal problems in the Treasury market, collateralization of repurchase agreements, since that instrument is not so widely employed in the municipal market. In addition, we question whether the SEC, acting alone as provided for in the Dingell-Wirth bill, is the most suitable agency for exercising ultimate oversight for the Treasury and the sponsored agency market. With respect to the specific provisions of H.R. 1896 and H.R. 2521, we can see problems with each. The former is too sweeping; it simply grants the Federal Reserve Board the authority to regulate government securities dealers without specifying the nature of that regulation or its purpose. As I stated before, in our view any regulatory authority over this market given to any agency should be strictly limited to those market practices that threaten the integrity of the market. Your bill is in some respects too narrow. For one, regulation of trading practices appears to be limited to the segregation of customer securities and to the delivery of collateral. These issues may be the most obvious ones now facing the market, but I would hesitate to rule out the possibility of problems emerging in other areas. It is for this reason that I would include authority to regulate when-issued trading and to set margin requirements, with the clear understanding that such authority would not be used unless it were needed to deal with practices that posed clear threats to the integrity and efficient functioning of the market. In addition, rules promulgated by the Federal Reserve under your structure would apply only to nonbank, nonregistered, nonprimary dealers. Apparently depository institutions and dealers registered with other agencies would be subject to rules of those agencies. But we think that the basic rules governing dealer behavior should be 689 applicable, in their essentials, to all dealers. It would seem to us most practical in that context to vest the basic rulemaking authority for the dealer market in one federal authority (whether a single agency or some combination). H.R. 2521 seems to rely on the Federal Reserve to inspect the nonbank secondary dealers, rather than an existing SRO. No matter which authority registers these dealers or writes the rules for their trading practices, I believe that routine enforcement could more efficiently be conducted through existing channels. That enforcement could be accomplished by having nonbank dealers who are not otherwise registered be inspected by the National Association of Securities Dealers. In any event, as I have mentioned, we feel it necessary and appropriate to continue our surveillance of all primary dealers through the Federal Reserve Bank of New York. I do not believe that we need any new or special legislative base for that effort. We will continue to insist that primary dealers play an active role in Treasury financing operations and will continue to collect data from them that we need on a regular and a frequent basis. And we would anticipate that they will continue to meet high financial standards, even beyond those required of other dealers. In conclusion the Federal Reserve supports legislation providing for registration, inspection, and limited regulation of dealers in government and sponsored-agency securities. For the reasons indicated, I do not believe that the provisions of either H.R. 2521 or H.R. 1896, as drafted, provide a wholly appropriate framework for such regulation. We do find the joint Treasury-SEC-Federal Reserve plan acceptable for these purposes. At the same time, we do not exclude the possibility that other regulatory structures could work as well, or even better. We would, of course, be glad to work further with the subcommittee in developing these concepts into appropriate legislation. • 690 Federal Reserve Bulletin • September 1985 Statement by Paul A. Volcker, Chairman, Board of Governors of the Federal Reserve System, before the Subcommittee on Domestic Monetary Policy of the Committee on Banking, Finance and Urban Affairs, U.S. House of Representatives, July 17, 1985. I welcome the opportunity to review with you monetary policy in the context of recent and prospective economic and financial developments. The economic setting and the decisions of the Federal Open Market Committee with respect to the target ranges for the monetary and credit aggregates are set out in the semiannual Humphrey-Hawkins report, which was transmitted to you this morning. (See pages 671-84 of this B U L L E T I N . ) As usual, I would like to amplify and develop some aspects of those decisions in my testimony. THE ECONOMIC AND ENVIRONMENT FINANCIAL The pattern of slower, and more lopsided, growth in domestic output that developed during the latter part of 1984 became even more pronounced during the first half of 1985. Manufacturing activity overall has been essentially flat after exceptionally large gains earlier in the expansion period. The farming and mining sectors have remained under strong economic and financial pressure. But consumption—supported directly and indirectly by large increases in personal and federal debt—has continued to rise fairly strongly. Construction activity has also expanded, responding in part to lower interest rates. Despite recent losses of manufacturing jobs, employment growth in services and trade has been strong enough to keep the overall unemployment rate essentially unchanged at about 1V4 percent. The contrast between marked sluggishness in the goods-producing sector of the economy and rising domestic consumption and demand is reflected in continuing strong growth in merchandise imports. Those imports in real terms are up about 60 percent in three years; in manufactured goods alone the increase has been even more rapid. Overall, imports have now reached a level equivalent to 21 percent of the value of domestic production of goods. In contrast, exports have stagnated and now account for only about 14 percent of goods output. I can put the same point another way. Domestic final sales—to consumers, to businesses, and to governments—appear to have been expanding at a relatively brisk rate of more than 4 percent so far this year. Domestic output of goods and services has not nearly kept pace, rising at a rate of about IV2 percent or perhaps less. That is partly because inventory accumulation has slowed. But it is mostly because more of the domestic demand is being satisfied by growing imports. That development was true earlier in the expansion period as well. But we have felt it more as growth in demand has slowed to a more sustainable rate. Another potentially disquieting development has been the apparent failure of productivity to maintain the strong gains that were achieved earlier in the expansion period. The implication is that the underlying trend may not have increased as much as had been hoped from the poor record of the 1970s. Against those crosscurrents in the economy this year, the Federal Reserve, in conducting its open market operations, has not appreciably changed the degree of pressure on bank reserve positions, which had already been substantially eased by the end of 1984. In May, the discount rate was reduced from 8 percent to l x h percent. That action was consistent with the general tendency of market interest rates to decline further over the period, extending the rather sharp reductions during the autumn and early winter. Both the discount rate and short-term market interest rates in May and June reached the lowest levels since 1978. The relatively "accommodative" approach in the provision of reserves has been designed to provide support for the sustained growth of economic activity against a background of relatively well-contained inflationary and cost pressures. Indeed, sensitive agricultural and industrial prices—including prices of crude petroleum— have been declining appreciably, and prices at the wholesale level have been almost flat. It is somewhat reassuring that the trend in wage and salary increases has, overall, remained at the sharply reduced pace established at the start of the recovery period, although the slowdown in Statements to Congress 691 2. M2 target ranges and actual M2 1. Ml target ranges and actual Ml Billions of dollars Billions of dollars 89b 9% 1984 1985 Monthly data. Monthly data. productivity has been reflected in higher unit labor costs and some pressures on profit margins. Clearly, even if reduced, some momentum of inflation has persisted in the economy as a whole, and expectations remain sensitive. But so far this year, price increases have been concentrated largely in the service sectors. Meanwhile, the broader measures of monetary growth—M2 and M3—have remained generally within the target ranges established early in the year. However, currency and checkable deposits, measured by Ml, have increased much more rapidly than envisaged. (See charts 1-4.) Until May, growth in that aggregate remained in an area that was reasonably close to the upper band of the target range. Given that the more rapid growth during that period followed some months of subdued expansion, the outcome through April was reasonably in line with FOMC intentions and expectations. More recently, in May and June, a new surge in Ml carried that aggregate much further above the targeted range. At the same time, total nonfinancial debt has continued to expand substantially more rapidly than the gross national product, propelled particularly by the federal deficit and consumer credit. As much as 1 percent of that debt expansion can be traced to a continuing—and, from a structural point of view, disquieting—substitution of debt for equity as a result of mergers and other financial reorganization. More generally, these developments also point up the apparent dependency of economic growth, under circumstances existing this year, on a relatively high level of debt and money creation. Unduly prolonged, those developments would 3. M3 target ranges and actual M3 4. Debt monitoring ranges and actual debt Billions of dollars Billions of dollars 9'/2% t i I i I 1 1984 Monthly data. i i 1 1985 f I I I I 2,800 "I: ••'"•'I•'.•. 1- ^ i I 1984 Monthly data. I I I I ! I I I 1985 692 Federal Reserve Bulletin • September 1985 not provide a satisfactory financial underpinning for sustaining growth in a context of greater price and financial stability. For the time being, however, taking account of current and likely economic developments, the downward pressures on commodity prices, and the high level of the dollar that has prevailed in the foreign exchange markets, the growth in M l and debt has not, in itself, justified a more restrictive approach toward the provision of reserves to the banking system. After increasing sharply from already high levels in the early weeks of the year, the dollar more recently has fallen back against the currencies of other leading industrial countries, dropping abruptly over the past week or so to about the average levels of last summer. At these exchange rates—still about 60 percent above the relatively depressed levels of 1979 and 1980— prospects for stemming the deterioration in our trade accounts, much less achieving a turnabout, remain uncertain. Much depends upon the rate of growth in other countries that provide the principal markets for our exports and are the source of our imports. In any event, the potential effects of interest rates and decisions with respect to monetary policy on exchange rates and the external sector of the economy have necessarily been a significant ingredient in FOMC deliberations. THE OUTLOOK FOR THE ECONOMY Members of the FOMC generally have projected a pickup in economic activity over the second half of 1985 and sustained growth through 1986. In those circumstances, while employment gains should remain substantial, unemployment would be expected to drop only a little if at all. The overall rate of price increase would be expected to remain close to the recent pattern, assuming dollar exchange rates do not vary widely from recent levels. (See attached table for the numerical projections. 1 ) Obviously, neither the anticipated "sticki- 1. The attachments to this statement are available on request from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. ness" of the unemployment rate nor the projected inflation rate is entirely satisfactory, and a substantial range of uncertainty must be associated with any economic projections at this time. As I emphasized earlier, there are sharp differences in the performance of different sectors of the economy. Demand for and employment in services, the sector in which most upward price pressures have been concentrated, continue to expand rather strongly. Most sectors more immediately sensitive to interest rates and monetary conditions—including construction and automobile sales—have also been performing relatively well. Other sectors exposed to strong international competition are sluggish, and agriculture remains under strong financial pressure. THE BROAD POLICY CHALLENGE The crosscurrents, dislocations, and uncertainties in the present situation point up one uncomfortable but inescapable fact. We are dealing with a situation marked by gross imbalances that can neither be sustained indefinitely nor dealt with successfully by monetary policy alone, however conducted. • We are borrowing, as a nation, far more than we are willing to save internally. • We are buying abroad much more than we are able to sell. • We reconcile borrowing more than we save and buying more than we sell by piling up debts abroad in amounts unparalleled in our history. • Our key trading partners, directly or indirectly, have been relying on our markets to support their growth, and even so most of them remain mired in historically high levels of unemployment. • Meanwhile, our high levels of consumption and employment are not being matched by the expansion in the industrial base that we will need as we restore external balance and service our growing external debt. • And, after two and one-half years of economic expansion, too many borrowers at home and abroad remain under strain or are overextended. At their core, these major imbalances and disequilibria may lie outside the reach of mone- Statements tary policy—or in some instances, U.S. policy generally. But they necessarily condition the environment in which the Federal Reserve acts, along with all the current evidence about monetary growth, economic conditions, and prices. In all our decisions, whether with respect to monetary or regulatory policies, we would like to work in a direction that is consistent with reducing the imbalances, or at the least to avoid aggravating them. That sounds obvious and straightforward. The difficulty is that, as things now stand, some policy actions that might seem, on their face, to contribute toward easing one problem could aggravate others. Nor can we afford to apply a mere "poultice" at one point of strain in the hope of temporary relief at the expense of undermining basic objectives. Our monetary policy actions need to be conducted with a clear vision of the continuing longer-term goals—a financial environment in which we as a nation can enhance prospects for sustained growth in a framework of greater stability. To succeed fully in that effort, monetary policy will need to be complemented by action elsewhere. THE 1985 AND 1986 TARGET RANGES As I indicated earlier, the recent surge in Ml in May and June has carried that monetary aggregate well above the target range set in February. M2 and M3, while also rising rather sharply in June, have remained generally within, or close to, their targeted ranges. Against the background of a high dollar, the sluggishness of manufacturing output, and relatively well-contained price pressures, quick and strong action to curtail the recent burst in Ml growth has not been appropriate. The potential implications of the relatively strong growth in Ml since last year nonetheless had to be considered carefully in developing our target ranges and policy approach. You may recall that somewhat similar high growth rates in Ml developed during the second half of 1982 and during the first half of 1983. At that time, important regulatory changes involving new accounts and affecting the payment of interest on checking accounts had taken place. to Congress 693 Pervasive uncertainty during the latter stages of the recession appeared to affect desires to hold cash. Both circumstances made interpretation of the monetary data particularly difficult, and Ml was de-emphasized. Those circumstances are not present today, at least not in the same degree. However, one common factor, and an important factor, was at work during both periods. The rapid growth in Ml in 1982 and 1983 and this year followed sizable interest rate declines, with a lagged response evident for some months. Analysis strongly suggests that, as market interest rates decline, individuals and businesses are inclined to build up cash balances because they sacrifice less interest income in doing so. The possibility today of earning interest on checking accounts—and the fact that these interest rates change more sluggishly than market or marketoriented rates—probably increases that tendency. Moreover, as I have suggested in earlier testimony, the payment of interest on checking accounts may, over time, encourage more holdings of Ml relative to other assets, or relative to economic activity, than was the case earlier. Partly for that reason, the upward trend in Ml "velocity"—the ratio of GNP to Ml—characteristic of the earlier postwar period may be changing. That trend was, of course, established during a period when inflation and interest rates were trending upward. In contrast, over the past three and one-half years, velocity has moved irregularly lower, with the declines concentrated in periods of declining interest rates. The earlier 1982-83 period of rapid growth in Ml was correctly judged not to presage a resurgence of inflationary pressures, contrary to some expectations. I would emphasize in that connection, however, that M l growth was moderated substantially after mid-1983 and that velocity rose during the period of strong economic expansion as anticipated. We simply do not have enough experience with the new institutional framework surrounding M l , which will be further changed next year under existing law, to specify with any precision what new trend in velocity may be emerging or the precise nature of the relationship between 694 Federal Reserve Bulletin • September 1985 fluctuations in interest rates and the money supply. Moreover, while the surge in M l , and the related drop in velocity, can be traced, at least in substantial part, to the interest rate declines of the past year, the permanence of the change in velocity will be dependent on inflationary expectations and interest rates remaining subdued. For those reasons, the committee has continued to take the view that, in the implementation of policy, developments with respect to Ml be judged against the background of the other aggregates and evidence about the behavior of the economy, prices, and financial markets, domestic and international. None of that analysis contradicts the basic thrust of a proposition that we have emphasized many times—that excessive growth of money, sustained over time, will foster inflation. Certainly the burst in May and June cannot be explained by trend or interest rate factors. But, it is also true that monthly data are notoriously volatile, and sharp increases unrelated to more fundamental factors are typically moderated or partly reversed in following months. In all these circumstances, the FOMC, in its meeting last week, decided to " r e b a s e " the Ml target at the second-quarter average and to widen the range for the rest of the year to 3 percent to 8 percent at an annual rate. That decision implies that some adjustment in the base of the Ml target range is appropriate to take account both of some change in trend velocity and a return of interest rates closer to levels that are historically normal. We are, of course, conscious that, because of strong growth in June, Ml currently is high relative to the rebased range, and the committee contemplates that M l will return within its range only gradually as the year progresses. Consistent with the conviction that a marked slowing in the rate of Ml growth is appropriate over time, the committee tentatively set the target range at 4 to 7 percent for next year—a decision that will be reassessed on the basis of the further evidence available at that time. Meanwhile, the lower part of the range set for the remainder of this year reflects the willingness of the FOMC, in appropriate surrounding circumstances, to tolerate substantially slower Ml growth for a time should the recent bulge in effect "wash o u t . " No changes were made in the target ranges for M2 and M3 and the associated monitoring range for debt this year. As was the case at the beginning of 1985, the committee would find growth in the upper part of these ranges acceptable. The changes tentatively agreed for 1986 are small, limited to a Vi percent reduction in the upper limit for M3 and a 1 percent reduction in the monitoring range for debt. These target ranges are felt to be fully consistent with sustained growth in the economy so long as inflationary pressures are contained. I should note again, however, that members of the FOMC are concerned about the persistent debt creation well in excess of the growth of the economy and historical experience, and therefore look toward some moderation in that growth next year, as reflected in the monitoring range set out. The uncertainties surrounding M l , and to a lesser extent the other aggregates, in themselves imply the need for a considerable degree of judgment rather than precise rules in the current conduct of monetary policy—a need that, in my thinking, is reinforced by the strong crosscurrents and imbalances in the economy and in the financial markets. That may not be an ideal situation for either the central bank or for those exercising oversight—certainly the forces that give rise to it are not happy. But it is the world in which, for the time being, we find ourselves. COMPLEMENTARY POLICIES The massive trade deficit that has rapidly developed over the period of economic expansion is the most obvious and concrete reflection of underlying economic imbalances. The trade deficit, in an immediate sense, has been primarily related both to the strength of the dollar in the exchange markets and to relatively slow growth elsewhere in the world. In effect, much of the world has been dependent, directly or indirectly, on expanding demand in the United States to support its own growth. Put another way, growth in domestic demand in Japan, Canada, and Europe has been less than the growth in their GNP, the converse of our situation. And, even with surging exports to this market, output has been Statements to Congress increasing too slowly to cut into high rates of unemployment in Europe and elsewhere. As a consequence, the demand of others for our products has been relatively weak. The strong competition from abroad has, in an immediate sense, had benefits as well as costs for this country. It has been a powerful force restraining prices in the industrial sector and in encouraging productivity improvement. The related net capital inflow has eased pressures on our interest rates and capital markets. We have been able to readily satisfy the higher levels of consumption driven in part by the budget deficit. But those benefits cannot last. Sooner or later our external accounts will have to come much closer toward balance. Indeed, as our debts increase, we will have to earn even more in our trade to help pay the interest. In the meantime, the flood of imports and the perceptions of unfairness that accompany it foster destructive protectionist forces. The domestic investment that we will ultimately need is discouraged while our companies shift more of their planned expansion overseas. And the larger the external deficits and the longer they are prolonged, the more severe the subsequent adjustments in the exchange rate and in our economy are apt to be. We will have paid dearly indeed for any short-term benefits. These considerations have tempered the conduct of monetary policy for some time. Specifically, our decisions with respect to providing reserves and to reducing the discount rate have been influenced to some extent by a desire to curb excessive and ultimately unsustainable strength in the foreign exchange value of the dollar. But we have also had to recognize the clear limitations and the risks in such an approach. The possibility at some point that sentiment toward the dollar could change adversely, with sharp repercussions in the exchange rate in a downward direction, poses the greatest potential threat to the progress that we have made against inflation. Those risks would be compounded by excessive monetary and liquidity creation. As I have said to this committee before, there is little doubt that the dollar could be driven lower by " b a d " monetary policy—a policy that poses a clear inflationary threat of its own and 695 undermines confidence. But such a policy could hardly be in our overall interest—it would in fact be destructive of all that has been achieved. The hard fact remains that so long as we run massive budgetary deficits, we will remain dependent on unprecedented capital inflows to help finance, directly or indirectly, that deficit. The net capital inflows will be mirrored in a trade deficit—they are Siamese twins. As things now stand, if our trade deficit narrowed sharply, both the budget deficit and investment needs would have to be financed internally, with new pressures on interest rates and a squeeze on other sectors of the economy—some of which are now doing relatively well, such as housing, and some, such as farmers and thrift institutions, already under strong financial pressure. The implications for our trading partners and for the heavily indebted developing countries would be severe as well. There has to be a way out of the impasse—a way that would maintain, and even enhance, confidence in our own economy and prospects for stability, a way that would not simply shift the pressures from one sector of the economy to another, and a way consistent with the economic growth of other countries. But that way cannot be found by U.S. monetary policy alone. What we can do is reduce our dependence on foreign capital and on the rising imports to meet our domestic demands by curtailing the budget deficits that importantly drive the process. In that sense, the choice is before you—in the decisions you will make in the budgetary deliberations that have been so prolonged. The needed adjustments would be eased as well if other industrialized countries became less dependent on stimulus from the United States for growth in their own economies. I am a central banker. I can well appreciate and sympathize with the priority that those countries have attached to budgetary restraint and particularly to the need to restore a sense of price stability in their own economies. They have had a large measure of success in those efforts in the face of depreciation of their currencies vis-a-vis the dollar, which has made the process more difficult. The pull of capital into the United States, and the reduced outflow from the United States, has also had effects on their own financial 696 Federal Reserve Bulletin • September 1985 markets and interest rates, and thus on the possibilities for "home grown" expansion. But as those adverse factors diminish in force or even begin to be reversed, opportunities surely exist for fostering more expansion at home, in their own interest as well as that of a better balanced world economy. All of the industrialized countries, working with the International Monetary Fund, the World Bank, and by other means, need to continue to support the efforts of much of the developing world to restore the financial and economic foundations for growth in their countries. That process, under the pressure of the "debt crisis," has been under way for some years. By its nature, the fundamental adjustments required pose challenging questions of economic and political management. There is a certain irony in observing the enormous difficulties in our own political process in achieving—so far without success—deficit reductions equivalent to 1 to 2 percent of our GNP while much poorer countries with much greater demands upon them are cutting their deficits by much larger relative amounts. That effort—along with others—is justified only by its necessity to their own economic health. It is hardly surprising that progress has been uneven, that from time to time setbacks are encountered, and that impatience and frustration surface politically. But I know of no realistic shortcuts or substitutes for the effort to place their own economies on a sounder footing, any more than we can ultimately escape our own responsibilities to put our budget in order. What is so encouraging is that the strong effort that has been made in most of the indebted countries is yielding some tangible results. A measure of growth has been restored in Latin America as a whole. With interest rates lower and many debts restructured, debt burdens are gradually but measurably being reduced. For the most part, the heavily indebted countries are still a long way from regaining easy access to commercial credit markets. Extraordinary cooperative efforts by the International Monetary Fund (IMF), the World Bank, and commercial banks will continue to be required for a time to make sure that external financing obligations are structured in a way that matches ability to pay. As always, the ultimate success of all those efforts—most of all those by the borrowers themselves—will depend upon orderly growth, reasonable interest rates, and access to markets in the rest of the world, which will be determined by our actions and those of our trading partners. CONCLUSION We have had a relatively strong economic expansion in the United States over the past two and one-half years as a whole. At the same time, the rate of inflation has remained at the lowest level in more than fifteen years. That combination should be a source of great satisfaction. But two and one-half years is not, in itself, terribly significant in the economic life of the nation. What will count is whether we can build on that progress, and extend it over a long time ahead. The inherent strength of our economy and the momentum of our expansion have carried us a long way. We have done a lot to lead the world to recovery. The longer-term opportunities are still there for the taking. But we also do not need to look far to see signs of strain, imbalance, and danger. In these circumstances, monetary policy has accommodated a sizable increase in monetary and credit growth, and interest rates have dropped appreciably even though they are still relatively high in real terms. In that way, economic growth has been supported at a time when the dollar has been particularly strong and inflationary pressures, at least in contrast to the 1970s and the early 1980s, quiescent. But there are obvious limitations to the process of monetary expansion without threatening the necessary progress toward stability upon which so much rests. Plainly, there are implications for other policies as well. The widely shared sense that other nations should do more to open markets, to deal with the structural rigidities in their economic systems, to encourage growth—to get their own houses in order—is certainly right. We can legitimately cajole, and urge, and bargain to those ends. But there can also be no doubt that it all will come much easier as the United States does its Statements to Congress part. Monetary policy must be part of that effort. But we also do need to come to grips with the budget deficit. We do need to avoid a witch's brew of protectionism. The success of the world economy—and of our fortunes within it—is in large measure dependent on us. That is the inescapable consequence of size and leadership. • Chairman Volcker presented identical testimony Housing, and Urban Affairs, July 18, 1985. Statement by Preston Martin, Vice Chairman, Board of Governors of the Federal Reserve System, before the Subcommittee on Economic Stabilization of the Committee on Banking, Finance and Urban Affairs, U.S. House of Representatives, July 18, 1985. I appreciate the opportunity to discuss with you this morning, on behalf of the Federal Reserve Board, developments in the external position of the United States and related policies here and abroad. The openness of the U.S. economy is continuously being brought home to all sectors of our economy. The value of the dollar, other developments affecting our exports and imports, and the inflow of capital from abroad play a crucial role in determining the growth and the composition of U.S. output and income. Thus our policies must be deliberate, constructive, and farsighted; the costs over the long run of acting incautiously now are too great. One of the most significant external economic developments for the United States in recent years has been the dramatic appreciation of the dollar. Since the end of 1980, the international value of the dollar against a weighted average of the other G-10 currencies has appreciated on balance about 60 percent, despite backing off significantly from its peak earlier this year. The appreciation has been great even after allowing for the somewhat faster rate of increase of prices abroad than in the United States. The increase in the dollar's value has been greater against European currencies than against the Japanese yen or the Canadian dollar. In a sense, those latter two currencies have been strong, just not as strong as the U.S. dollar. The factors underlying the dollar's rise are complex. A great deal of the explanation centers on a combination of a highly expansionary fiscal policy and a decline in the rate of inflation in the 697 before the Senate Committee on Banking, United States. Reductions in taxes in recent years and increases in government spending have enhanced the attractiveness of investment in this country and have raised overall demands for goods and services. The federal government has increased substantially its demands for credit to finance its huge deficits. With Federal Reserve policy designed to avoid monetizing the deficit, real interest rates have been higher in the past five years than they were earlier in the postwar period. These interest rates, relatively robust rates of economic growth in this country, both actual and projected, as well as confidence and more general "safe-haven" factors, have produced a record volume of capital inflow from abroad, a moderation in U.S. capital outflow, and a rise in the foreign exchange value of the dollar. The extreme volatility in exchange markets earlier this year and especially the dollar's substantial spurt in February provide convincing evidence that expectational and other factors have been at work, as well. However, the decline in the dollar since the end of February probably was related again mainly to more fundamental perceptions—for example, prospects for lower real interest rates on dollar assets in response to weaker U.S. economic growth and the market's views of improved chances for reducing our budget deficit. Another factor may have been the situation of thrift institutions in Ohio and elsewhere, which received widespread and, perhaps, exaggerated attention abroad. The rise in the international value of the dollar since 1980 has been a significant proximate factor contributing to our unprecedented deficits on trade and current accounts. From a balance near zero in 1980, the current account has moved to a deficit at an annual rate of about $125 billion so far this year and is likely to widen further. Our current account deficit has reflected pri- 698 Federal Reserve Bulletin • September 1985 marily the unparalleled increase in our trade deficit, which occurred despite the significant decline in the value of oil imports from $80 billion in 1980 to less than $50 billion at an annual rate in the first half of 1985. The rise in the international value of the dollar has reduced the competitiveness of U.S. goods, both in foreign markets and here at home. Thus, the growth of our exports has been held down. At the same time, imports into the United States have grown phenomenally—about 65 percent in volume since 1980. The rise in the dollar has not been the only factor underlying the deterioration in our trade position. Another factor has been that economic growth in our trading partners generally has lagged significantly behind growth in the United States, and their demands for imports have for this reason grown more slowly. Among the industrial countries, this has been especially true in Europe, where growth of real GNP has averaged only about IV2 percent over the past three years. Many developing countries, notably in Latin America, the Far East, and Eastern Europe, have adopted adjustment programs to service their external debts, which temporarily have had an adverse effect on their imports. Weak global demand and high real interest rates made the servicing of their external debts increasingly difficult. Given the importance of these relative demand factors in the evolution of the U.S. trade position, it is oversimplified but nevertheless instructive, I believe, to characterize external developments over the past few years in the following way. There has been a shift in the demand for claims on the U.S. economy by foreign, as well as by U.S., investors that has bid up the value of the dollar sufficiently to generate a current account deficit that corresponds to the desired increase in net claims on the United States. This shift contrasts with earlier periods in which it was typically believed that the exchange value of the dollar moved to equilibrate trade or current account positions; when those positions became too large or too small, a change in exchange rates was expected to correct the situation. The more recent evolution of our external situation has both positive and negative implications for the U.S. and world economies. On the positive side, our government budget deficit has been financed at lower interest rates than would otherwise have been the case. As a consequence, there has been less crowding out in the interestsensitive sectors of the U.S. economy, and, in particular, there has been more private investment and housing activity. At the same time, the sharp increase in our imports has provided needed stimulus to the world economy and has helped improve the balance of payments of some heavily indebted developing countries. We also have experienced lower inflation rates than we would have otherwise, given the vigor of the 1983-85 U.S. recovery and the robust increase in U.S. employment. The cost of the goods that we purchase has been lowered— directly, because of the lower price and the ready availability of imported goods and materials, and indirectly, because U.S. producers have been forced to adopt more efficient techniques to modernize and to cut costs, to innovate, and to invest in productivity enhancements to compete with foreign producers. The rate of increase in U.S. labor productivity has improved on balance, although it remains less than that in some of our major trading partners. On the negative side, of course, have been severely adverse effects on some sectors of the U.S. economy. These are the sectors that are most vulnerable to foreign competition—both those whose sales abroad have been eroded and those who have lost shares of domestic markets to less expensive foreign products. Agriculture, manufacturing, and even "high technology" goods producers have lost world and domestic market shares. Whereas more than seven million jobs have been created since the end of 1980 in the private service sectors—which, by their nature, are less open to foreign competition—the number of jobs in our manufacturing industries has actually declined. Indeed, there is some evidence of U.S. firms beginning to shift some of their investment and production abroad. Without in any sense denying the social and the economic costs that these adjustments entail, I should reiterate, however, that the high value of the dollar and the external developments that I have cited basically have shifted some of the burden of accommodating to the government deficit away from traditional interest-sensitive sectors and toward sectors relatively sensitive to movements in exchange rates. The specific sec- Statements to Congress toral impacts have been mitigated, but not avoided, by the strong overall recovery. The severe strains that were imposed on certain sectors of our economy have contributed to serious pressures for more restrictive trade policies. I will come back to this issue in a few minutes when I discuss alternative policy responses. But it should be clear that such protectionist pressures must be resisted. This practice follows from our general policy of seeking to enhance the benefits of international trade for our citizens. Moreover, so long as we continue to run a huge federal budget deficit, the inflow of capital from abroad and our access to foreign goods provide welcome relief to our credit markets. Let me turn now to one other implication of our large and growing current account deficit, namely, the continuing erosion of the net external financial position of the United States. Data recently released by the Department of Commerce suggest that the United States became a net debtor to the rest of the world sometime in spring 1985, falling from a peak position in which the United States had net claims on the rest of the world of about $150 billion at the end of 1982. These statistics are subject to a variety of defects. For example, our stock of gold— amounting to more than 260 million ounces—is valued in these statistics at about $42 per ounce, compared with a market price now of more than $300 per ounce. Similarly, the stock of U.S. direct investments overseas, as well as foreigners' direct investments here, are expressed only at book value. At the same time, none of the statistical discrepancy in our balance of payments accounts has been counted as net capital inflows, contrary to the conventional wisdom that much of the discrepancy takes that form; to that extent, net foreign claims on the United States are understated. Notwithstanding these statistical issues, it remains clear that if the United States is not now a net debtor country, we probably soon will be as we continue to run current account deficits of well over $100 billion a year. One might ask, "How serious is this development?" One answer is that an increasing burden will be placed on current and future generations to service that debt. This burden will be especially onerous to the extent that foreign funds end up 699 financing current consumption—for example, by the federal government—since in that case our ability to consume in the future will be adversely affected. However, I have argued already that we have had more investment in this country than we would have had without the inflow of capital. While it is impossible to know precisely how much more investment we have had, to some extent at least the inflow of capital has had as its direct or indirect counterpart some increase in the productive capacity of this country that will facilitate the servicing of our debt. Also worrisome is the inference, based on the experience of several developing countries in recent years, that the vulnerability of an economy to shocks can be very sensitive to the level of its net external debt. But there are two major differences between our situation and that of many of the financially troubled developing countries. First, we are not building up large debts denominated in foreign currencies. Second, creditor confidence in the ability of the United States to service its debts is supported by a healthy, flexible economy with a large and diversified tradable goods sector and a broad and dynamic capital market. Nevertheless, we must recognize that foreigners will not forever invest an increasing share of their wealth in this country, and we might wonder whether it is appropriate for one of the richest countries in the world to be a net absorber of capital from the rest of the world. I want to emphasize that we must protect against the risk that the factors inducing investors to bid up the price of dollar assets could reverse abruptly. If that were to happen at a time when credit demands in this country were still strong, especially those from the federal government, the resulting pressures on our financial markets could have seriously harmful consequences. Interest rates would be driven up, private investment would be curtailed, and the housing sector would be hard hit. It will come as no surprise to you, therefore, that I believe prompt action to reduce the federal budget deficit is an essential aspect of the appropriate policy response to the problem of our twin deficits. Indeed, action in this area is long overdue. In particular, I believe that progress in controlling the growth of the spending side of the budget is vital. Reductions in the government's 700 Federal Reserve Bulletin • September 1985 demand on savings and on resources tend to reduce pressures on interest rates and to provide scope for strong private investment and for employment growth. Such a process would also tend to reduce upward pressures on the dollar and relieve some of the excessive burden on many of our manufacturing firms and on our farmers. In contrast to the need to tighten the budget position in the United States, I am inclined to believe that there is scope for more vigorous economic expansion abroad. Authorities in other industrial countries have been reluctant to alter existing policies, which have been aimed at disinflation and moderate economic growth over the medium term. They apparently are concerned about the financing of government deficits, about the excessive role of the public sector in economic decisionmaking, and about the potential that a lowering of interest rates could weaken the value of their currencies and apply upward pressure on domestic prices. These are legitimate concerns, but they should be balanced by an awareness of the costs and the dangers of continued high unemployment and continued international imbalances. Moreover, more rapid expansion in several countries together would be mutually supportive. Tax revenues would be enhanced, and the value of their currencies would tend to move together against the dollar. Indeed, the prospects of stronger economic growth actually could tend to raise the demand for investments denominated in those currencies. A more vigorous expansion abroad—together with an improvement in the U.S. fiscal position—would over time help to redress some of the major distortions in the global economy today. These distortions have adversely affected not just the U.S. economy but the economies of other industrial countries, as well, and have exacerbated the difficult adjustment process now under way in many of the developing economies, especially in Latin America. In the face of the basic imbalances in the U.S. and world economy, resort to increased trade protection would be pointless and, in the long run, counterproductive. The list of reasons for opposing the imposition of additional import barriers is well known. Import barriers raise prices facing U.S. consumers and U.S. producers who use imported goods and materials as inputs in production processes. By raising prices, these barriers threaten to reignite the inflation psychology we have struggled so painfully to subdue. Import barriers distort the allocation of domestic resources and enable producers to postpone the investment and the rationalization of production that ultimately is necessary. Barriers can involve significant economic setbacks from some of our friends and trading partners—again, including those in Latin America—for whom access to markets in industrial countries is vital in economic, social, and political terms. Trade barriers often violate or undermine international agreements. Especially in such cases, but surely not only then, they are likely to provoke retaliation and so threaten the global trading order on which U.S. exporters and therefore the U.S. economy in general importantly depend. I have not so far explicity addressed the role of monetary policy in dealing with our external situation. An aggressive policy by the Federal Reserve of massive money growth to bring down short-term interest rates to reduce the value of the dollar would set the stage for higher inflation in the future. Excessively expansionary monetary policies obviously would not be a solution to the yawning trade deficit. The experience in the late 1970s taught us harsh lessons about the disruptive influence of high and variable inflation in the United States on the domestic and world economies. This experience also has demonstrated the high costs for the economy of substantially reducing inflation once it gains momentum. This is not to say that the Federal Reserve is indifferent or insensitive to the problems that we have discussed this morning. The Board and the Federal Open Market Committee take into account the foreign exchange value of the dollar and the international economic situation explicitly in their policy deliberations. Moreover, to the extent that the dollar and the current account deficit affect U.S. prices, growth, and employment they are taken account of implicitly, as well. But the overriding task of monetary policy is to ensure long-run price stability, and thereby sustainable long-run economic growth. We cannot afford to jeopardize the successful accomplishment of that task. We cannot deny that we have economic prob- Statements to Congress 701 lems. What I have argued this morning is that those problems derive from fundamental imbalances that must be corrected. The search for easy, short-term palliatives such as trade barriers or overly expansionary monetary policy cannot ultimately be successful, and will only distract us from the tough decisions that must be made. There are, of course, a number of developments that would help in a real way. I am optimistic that the rapid growth in the U.S. capital stock so far in this recovery and other productivity-enhancing developments will improve the competitiveness of U.S. products in world markets. Moderately faster growth in industrial countries abroad also would help to correct international imbal- ances. But the most fundamental force behind the problems that I have discussed is the huge federal budget deficit, and thus substantial reductions in this deficit offer the best long-run solution to trade imbalances. Although the Federal Reserve will continue to consider exchange rates and trade imbalances in its deliberations, we should not be looked to as a main source of a solution. As I mentioned earlier, any attempt by the Federal Reserve to bring exchange rates down through highly expansionary policies would inevitably lead to more inflation. Thus our best hope for correcting international imbalances lies with efforts by the Congress and the administration to cut federal deficits. • Statement by Paul A. Volcker, Chairman, Board of Governors of the Federal Reserve System, before the Subcommittee on International Development Institutions and Finance of the Committee on Banking, Finance and Urban Affairs, U.S. House of Representatives, July 30, 1985. that seem to me very much in accord with the larger interests of the United States. I believe that the constructive response of these institutions to the severe debt and adjustment problems that emerged in the early 1980s illustrates these points. In the initial stages of the international debt crisis, the Fund played an essential and, in key respects, an innovative role. It worked with borrowing countries to develop strong adjustment programs that could command international support. Concurrently, it helped coordinate an unprecedented international cooperative effort to provide sufficient external funds to meet immediate needs and to support the adjustment efforts of the countries. The World Bank and the regional lending institutions, geared toward a longer-range perspective and project lending, could not, in the circumstances, at first respond so forcibly. Indeed, borrowing countries cut back on some investment projects that could have received support by the World Bank. Now, many of the borrowing countries are, or should be, moving into a second stage, looking beyond the immediate need for budgetary and monetary adjustments to the essential need to sustain growth within the constraints of servicing existing debt and the less ready availability of private credit. In that context, the role of the World Bank and of the regional development lending institutions is likely to become much more critical. The need for innovative approach- I appreciate your invitation to appear before this subcommittee to discuss the multilateral development institutions and their role with respect to the debt and growth problems in the developing countries. Over the years I have had some opportunity to observe the Bretton Woods institutions—the International Monetary Fund (IMF) and the World Bank—and, to a much lesser degree, the regional development banks. All these institutions, in my judgment, have important ongoing roles to play in safeguarding international stability and in promoting sound growth in the world economy. In the process, these institutions necessarily have to adapt their programs and approaches to new circumstances as they emerge. That task is not an easy one for large institutions, and particularly for those institutions that must operate within the framework of a wide international consensus. At the same time, it is the fact that these institutions are international, with memberships drawn from all nations other than the USSR and most of its satellites, that provides a sense of cohesion and of political legitimacy that is essential to the success of their efforts—efforts 702 Federal Reserve Bulletin • September 1985 es and for even closer cooperation with the Fund seems to me evident. There is a natural division of labor between the two Bretton Woods institutions that must be respected. The Fund is concerned with monetary stability, with balance of payments equilibrium, and with the broad economic policies necessary to support that equilibrium. The Bank is concerned with longer-term development and with projects and policies that are designed to support that development in particular sectors of the economy. These are valid distinctions. Essentially the roles are complementary, not competitive. But in practice, both institutions serve as sources of finance, as purveyors of policy analysis and advice to their members, and as forums for economic consultations among governments. In specific areas, those functions can overlap and should be coordinated. Management of the "debt problem" provides apt illustrations. FIRST RESPONSES TO THE INTERNATIONAL DEBT PROBLEM Beginning in 1982, many foreign borrowers, principally in Latin America but also in other areas of the world, experienced an abrupt curtailment of their access to new loans from the private market. The Fund responded by assisting in the design of stabilization programs to help restore confidence and external balance. It also provided temporary financial assistance to many of the most troubled borrowers. In one perspective, that kind of work is a normal part of the Fund's business. But it has been without precedent in scope and challenge. More or less simultaneous negotiations have been required with a large number of member countries in a highly charged atmosphere. Not only were the fortunes of particular countries at stake, but also the performance of the world economy and of the financial system as a whole. In that situation, the Fund became involved to an unusual degree in consultations with the borrowing countries' commercial bank and official creditors. Those lenders clearly recognized that individual, uncoordinated responses to the crisis could not serve their mutual interest in the orderly adjustment and the servicing of loans. Restructuring of old debt and of some new private credit would typically be necessary to provide enough time for the adjustment process to be effective. By working with the Fund, lenders could both be better assured that appropriate adjustment programs were undertaken and that financial needs were appropriately assessed. From the viewpoint of the Fund, orderly refinancing of outstanding debt and the provision of new private credit, substantially supplementing its own resources, provided essential financial support during the period of economic adjustment. With its traditional emphasis on investment planning and on project lending, the World Bank was not in a position to react as quickly as the IMF to the immediate adjustment needs of the major borrowing countries. Nor were borrowing countries—faced with overwhelming short-term needs to cut back on budget deficits, to bring monetary expansion under control, and to adjust exchange rates—able to give priority attention to long-term development and investment programs. Instead, cutbacks in overall investment and consumption expenditures by governments became unavoidable. In these circumstances, both existing and new investment projects assisted by the World Bank and other donors tended to slow down rather than increase. Even in the "crisis" stage, however, there have been clear opportunities for mutually supportive approaches by the Fund and by the Bank. In advising countries about "adjustment" programs, the Fund is always concerned with measures that should help promote economic efficiency and long-term development. Flexible pricing policies, more open and less discriminatory trade practices, and appropriate exchange rates are normal parts of Fund-sponsored programs. Such approaches are consistent with, and typically crucial to, long-term growth. At the same time, the Bank was, in fact, able to increase or to speed up its disbursements of funds to several of the countries that were affected by the debt crisis. That response was assisted by the capability that the World Bank has developed in 1979 for nonproject lending through so-called structural adjustment loans (SALs). The Bank's new commitments for SALs and for broadly similar sec- Statements toral adjustment loans expanded from less than $Vi billion in fiscal year 1980 to more than %2lh billion in fiscal year 1984, before declining somewhat in the fiscal year just ended. The SALs and the sectoral adjustment loans have the advantage of being fast disbursing so that they can have an immediate effect on the short-term balance of payments financing requirements. At the same time, they are strongly linked to policy actions that are designed to promote economic efficiency in particular sectors and to support growth. The recipient government, in effect, commits itself to the changes in specific policies that will be sustained over time and that are expected to have a material positive impact on the effectiveness of its investment expenditures and on the growth of the economy. There is, by now, a record of accomplishment by these kinds of programs in some countries. For example, Turkey has undertaken a series of major reforms, including major steps toward import liberalization, decontrol of interest rates, and reform of state economic enterprises with the support of the World Bank. These efforts of the Bank overlap those of the Fund in two respects. The quick-disbursing Bank loans help provide the necessary external financing for the borrowing countries. And, at a sectoral or " m i c r o " level, the policies supported by the Bank should reinforce and undergird the efforts of the Fund to promote economic efficiency and competitiveness. The recent efforts by the Fund and by the Bank in Colombia exemplify these relationships, and could have implications for future cooperation. While that country has not requested or received IMF financial assistance, it has kept the Fund fully informed in developing its economic program. Just last Friday, the Fund, in turn, agreed to monitor progress in implementing the economic adjustment program, that, in the judgment of the Fund, is broadly appropriate to the needs of Colombia. Meanwhile, the World Bank is a major lender to the country, both for specific projects and for sectoral adjustment. The size of that lending program has been facilitated by the efforts of Colombia to implement suitable adjustment measures. The staffs of both institutions will work together in assessing Colombia's progress. LOOKING to Congress 703 AHEAD The particular circumstances in Colombia are unique, and the arrangements in that country do not necessarily provide a precise prototype for others. However, all the heavily indebted countries in Latin America and elsewhere need to move from a situation of endemic financial crisis to another stage in development, looking toward what is necessary to sustain growth. As they do so, the particular skills and the resources of the World Bank become increasingly relevant. Heavy reliance on the shorter-term tools of the IMF should then be phased down and out. Clearly, either or both of these institutions can only play a supporting role in the economic development of a country. The borrowing countries themselves must maintain a disciplined budgetary and financial environment, enabling them to consolidate the essential gains that they have made in achieving better balance in their external accounts and to respect the tight constraints that still prevail with respect to their access to external finance. I believe that these countries will also have to encourage more open and competitive economies that are able to sell into world markets as well as to increase their productivity. They will need well-conceived investment programs. More generally, they will need to encourage economic efficiency and well-functioning markets in agriculture, industry, and finance. These are the kinds of things that the World Bank and its affiliate, the International Finance Corporation (IFC), working especially with the private sector, can support, but not impose. Internal reform is critical in circumstances in which access to new foreign bank and trade credits seems bound to remain limited for the time being. The hope that was occasionally expressed for really major increases in long-term official lending on concessional terms to the middle-income developing countries does not appear to be politically realistic. Moreover, I doubt that industrial countries are prepared to ease debt burdens substantially by taking over and by writing off existing debt to private lenders. Nor do such approaches seem to me essential if well-conceived adjustment efforts are maintained. In time, renewed confidence could end capital flight and induce repatriation of capital by the 704 Federal Reserve Bulletin • September 1985 citizens of the borrowing countries themselves as well as fresh flows from abroad. That process would be immensely helpful and the best possible evidence of success. But it is, of course, dependent upon a sense of sustained economic performance. The implication of these conditions is that it is too early for the major borrowers to plan on significant net private inflows of capital. Imports will not be able to grow over time at a rate substantially exceeding the growth in exports. But that is not a recipe for stagnation, so long as exports, in fact, grow. One of the lessons of experience is that rapid growth in developing countries, without excessive dependence on new debt, must go hand in hand with participation in international trade. That is why a competitive and a relatively open economy is so important. This theme is one that the World Bank has stressed in its structural and sectoral adjustment lending. Without doubt, there will be more opportunities for working with borrowing countries to help encourage the process. In some countries, for instance, there are urgent needs to improve the efficiency and the effectiveness of agriculture, of transport, and of domestic financial markets and institutions. Review of the structure, operation, and performance of state enterprises is sorely needed, including the possibility of greater private participation and of incentives in some cases. Structural distortions that hamper or discourage sectors of the economy that potentially could become the most dynamic and efficient need to be eliminated. That in turn may require import liberalization so that companies that have high export potential can in fact make use of the most rational and efficient production techniques. Much of this seems to be recognized, for instance, in the latest steps announced by Mexico only last week, in conjunction with actions to reinforce budgetary discipline and to adjust exchange rates. In all these areas, there should be potential opportunities for constructive collaboration by the World Bank, both in consultation as to the design of programs and in financing, dependent on effective implementation. That official financing not only will help the borrowing countries to cover external needs during a period when private financing is so slack but also will encourage some resumption of private lending, through socalled cofinancing or otherwise. You are aware that the World Bank now has under development a proposed Multilateral Investment Guarantee Agency (or MIGA). MIGA would be designed to enhance prospects for foreign direct investment by providing guarantees against noncommercial (that is, currency transfer and expropriation) risks. Here in the United States the Overseas Private Investment Corporation has offered such guarantees to U.S. investors in many countries for more than 20 years, with a considerable measure of success. Some other countries have comparable programs. But, properly structured, I believe that the wider availability of such guarantees on a multilateral basis could help improve the climate for direct investment in the developing countries. None of this suggests to me that the major focus of the World Bank on project lending will not, or should not, continue. The inherent discipline in project lending—the need to relate a loan to tangible projected returns—is important. But it also is quite possible that, as a matter of relative priority, heavily capital-intensive, longlead-time projects, with returns deferred far into the future, could give way to areas in which more effective use of the existing capital stock is emphasized, with quicker and more evident returns. I will not pretend to an expertise in these areas that I do not possess. But certain broad conclusions do seem valid to me. • In the World Bank Group and the regional lending institutions the world has an enormously valuable resource. That resource lies not just in their technical skills and financial resources. As international institutions, they are in a uniquely advantageous position for working constructively with developing countries in the common interest. • The role of those institutions will be more important—indeed potentially crucial—in Latin America and elsewhere if those countries are to be able to restore strong and sustained growth in the wake of the debt crisis. • The development institutions can only be effective as they build on the stabilization efforts of the countries themselves—the effort that has been so strongly supported by the IMF. • As that implies, the efforts of the IMF and the Statements to Congress World Bank in heavily indebted countries have become increasingly intertwined, and the need for close cooperation and operating relationships between the institutions has greatly increased. • The entire effort deserves the continued strong support of the United States, including, as and when the need is demonstrated, financial backing in the form of capital increases. Perhaps I need not emphasize at length that the success of all these efforts is also fundamentally dependent on prosperous, growing econo- 705 mies in the industrialized world. Here and elsewhere, we must maintain reasonably open markets for what others can produce more efficiently and economically. The developing countries, in turn, can again become the most promising and the most rapidly expanding markets for our products, as they were during much of the 1960s and 1970s. Flourishing two-way trade will be both the means for recovery and growth and a measure of our success. • 706 Announcements LYLEE. GRAMLEY: RESIGNATION AS A MEMBER OF THE BOARD OF GOVERNORS Lyle E. Gramley resigned as a member of the Board of Governors, effective September 1, 1985. Following is the text of Governor Gramley's letter of resignation to President Reagan: June 26, 1985 Dear Mr. President: It has been a great privilege to serve as a Member of the Board of Governors of the Federal Reserve System during the past five years. For personal reasons, however, I must submit my resignation eflFective September 1, 1985. Sincerely yours, Lyle E. Gramley APPOINTMENT OF LARGE DOLLAR PAYMENT SYSTEMS ADVISORY GROUP The Federal Reserve Board has announced the appointment of a 14-member panel to assist in the development of its program to reduce risk on large dollar transfer systems. Roland K. Bullard III, Executive Vice President of The Philadelphia National Bank, has agreed to serve as chairman of the panel, called the Large Dollar Payment Systems Advisory Group. On May 17, 1985, the Board announced a statement of policy to control and reduce risks to depository institutions that participate in large dollar wire transfer networks. Large dollar networks are an integral part of the payment and clearing mechanism and daylight overdrafts on these systems now total about $110 billion to $120 billion per day. Daylight overdrafts occur when an institution has sent funds over the Federal Reserve wire transfer system in excess of the balance in its reserve or clearing account, or it has sent more funds over a private wire than it has received. In adopting its policy statement to reduce daylight overdrafts, the Board agreed to set up an Advisory Group to study any and all matters that could reduce risk on large dollar transfers. In addition to Bullard, the Advisory Group includes the following members: William P. Ballard, Executive Vice President and Cashier, Citizens and Southern Georgia Corporation, Atlanta, Georgia. Nathan C. Collins, Executive Vice President, Valley National Bank of Arizona, Phoenix, Arizona. Thomas A. Cooper, Executive Vice President, Bank of America NT & SA, San Francisco, California. David L. Eyles, Executive Vice President and Chief Credit Officer, Chemical Bank, New York, New York. Donald R. Hollis, Senior Vice President, First Chicago Corporation, Chicago, Illinois. Roger K. Lindland, Senior Executive Vice President, Great American First Savings Bank, San Diego, California. David O. Nordby, Executive Vice President, Mellon Bank, N.A., Pittsburgh, Pennsylvania. Peter C. Palmieri, Vice Chairman, Irving Trust Company, New York, New York. Seymour R. Rosen, Vice President, Citibank, N.A., New York, New York. John W. Sapanski, President and Chief Operating Officer, Dime Savings Bank, New York, New York. O.J. Tomson, Chairman of the Board and CEO, Citizens National Bank, Charles City, Iowa. Flavian E. Zeugin, First Vice President, Swiss Bank Corporation, New York, New York. William C. Dudley, Vice President, Economic Analysis Department, Morgan Guaranty Trust Company, New York, New York. 707 REVISED LIST OF OTC SUBJECT TO MARGIN STOCKS REGULATIONS The Federal Reserve Board has published a revised list of over-the-counter (OTC) stocks that are subject to its margin regulations, effective August 13, 1985. The list includes all OTC securities designated by the Board pursuant to its established criteria as well as all securities qualified for trading in the national market system (NMS). This list includes all securities qualified for trading in tier 1 of the NMS through August 13 and those in tier 2 through July 16, 1985. Additional OTC securities may be designated as NMS securities in the interim between the quarterly publications of the Board's list and will be immediately marginable. The next publication of the Board's list is scheduled for November 1985. This List of Marginable OTC Stocks supersedes the revised list that was effective on May 14, 1985. Changes that have been made in the list, which now includes 2,476 OTC stocks, are as follows: 157 stocks have been included for the first time, 122 under NMS designation; 43 stocks previously on the list have been removed for substantially failing to meet the requirements for continued listing; 44 stocks have been removed for reasons such as listing on a national securities exchange or involvement in an acquisition. In addition to NMS-designated securities, the Board will continue to monitor the market activity of other OTC stocks to determine which stocks meet the requirements for inclusion and continued inclusion on the list. EXTENSION OF COMMENT PERIOD ON PROPOSED AMENDMENT TO REGULATION Z The Federal Reserve Board extended the comment period from July 12, 1985, to August 30, 1985, on a proposed amendment to Regulation Z (Truth in Lending) to require lenders to provide more information to consumers about adjustable rate mortgages. The proposal was originally published May 10, 1985. SYSTEM MEMBERSHIP ADMISSION OF STATE BANKS The following banks were admitted to membership in the Federal Reserve System during the period July 1 through July 31, 1985: Colorado Thornton Florida Miami St. Petersburg Georgia Martinez Pennsylvania Ebensburg Texas San Antonio City wide Bank of Thornton Grovegate Bank Bank of St. Petersburg First Columbia Bank Laurel Bank Mercantile Bank and Trust Company Virginia Fairfax . . . Fairfax Bank and Trust Company Virginia Beach Bank of Tidewater 708 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON MAY Domestic Policy 21,1985 Directive The information reviewed at this meeting suggested only a modest pickup in real GNP in the current quarter from the 0.7 percent annual rate of growth reported for the first quarter. Spending by domestic sectors has been relatively well maintained, but a large share of the demand for goods apparently has been met by imports rather than through an expansion of domestic production. Broad measures of prices and wages generally were continuing to rise at rates close to those recorded in 1984. After declining in March, total retail sales rebounded in April to a level nearly 3A percent above the average for the first quarter. Gains were particularly strong at automotive outlets and at food and general merchandise stores. Sales of new domestic automobiles have been running at an annual rate of about 8V2 million units since the beginning of April, in line with the strong pace posted in the first quarter and considerably above last year's average. Part of the recent strength in car sales was attributable to below-market financing incentives offered by major manufacturers. Total private housing starts increased about 14V2 percent in March to an annual rate of 1.9 million units and continued at that advanced level in April. Newly issued permits for residential building fell somewhat in April but, at an annual rate of nearly 1.7 million units, remained in the improved range recorded in the first quarter. Sales of new and existing homes improved in March, the latest month for which data were available, as the general decline in mortgage credit costs continued to bolster demand. The index of industrial production declined 0.2 percent in April, after rising little in the first quarter. Production of defense and space equipment continued to advance, but output in most other major market sectors fell. Reflecting these widespread declines in output, the capacity utilization rate for total industry dropped Vi percentage point to 80.6 percent in April, its lowest level since January 1984. The decline in industrial production in April was associated with further reductions in manufacturing employment. The loss of 45,000 manufacturing jobs in April brought the cumulative loss in that sector to 130,000 thus far in 1985. Outside of manufacturing, sizable job gains were reported for April in the services industry and in construction. On balance, total nonfarm payroll employment rose 215,000 in April compared with average monthly gains of 285,000 since last fall. The civilian unemployment rate remained at 7.3 percent in April, little changed from the rates recorded over the previous three quarters. Information on business capital spending suggested that expansion was continuing at a much less rapid rate than earlier in the economic expansion, though trends in business equipment orders placed with domestic producers have been obscured lately by extreme volatility in monthly data for orders of office and computing equipment. Imports apparently have continued to account for a sizable share of outlays for equipment, but shipments of capital goods by domestic producers picked up in February and March. Spending on nonresidential construction has continued at a relatively brisk pace in recent months. Moreover, according to recent surveys of business spending plans, firms still expect to increase nominal outlays for plant and equipment by 8V2 to 11 percent in 1985. The producer price index for finished goods rose 0.3 percent in April, somewhat more than in other recent months. The rise was attributable to a surge in energy prices that apparently reflected 709 a temporary reduction in petroleum inventories; prices of other finished goods changed little or declined. A sharp increase in prices of petroleum products was also the major factor in the 0.4 percent increase in the consumer price index in April. Thus far in 1985 consumer prices had risen at an annual rate of about 4lA percent, close to the 4 percent rate in 1984. On balance, recent wage developments indicated little if any acceleration in wage costs from the pace in 1984. While the index of average hourly earnings increased at an annual rate of IVi percent in the first four months of this year compared with a rise of about 3 percent in 1984, the increase in hourly compensation in the nonfarm business sector thus far this year was running above its year-earlier pace. The rise in compensation reflected in part legislated changes in social security taxes and higher employers' contributions for unemployment insurance. Since the Committee's meeting in late March, the trade-weighted value of the dollar against major foreign currencies had continued to fluctuate widely in volatile market conditions and had declined a little more than 4 percent on balance. The U.S. merchandise trade deficit and the current account deficit widened in the first quarter as a rebound in non-oil imports from the low fourth-quarter level extended the pattern of sharp quarter-to-quarter swings experienced since the beginning of 1984. At its meeting on March 26, 1985, the Committee had adopted a directive that called for maintaining the existing degree of pressure on reserve positions. That action was expected to be consistent with growth in M l , M2, and M3 at annual rates of around 6, 7, and 8 percent respectively during the period from March to June. The members agreed that somewhat lesser restraint might be acceptable in the event of substantially slower growth in the monetary aggregates while somewhat greater restraint might be acceptable in the event of substantially higher growth. In either case, adjustments in the degree of reserve pressures would be considered in the context of appraisals of the strength of the business expansion, progress against inflation, and conditions in domestic credit and foreign exchange markets. The intermeeting range for the federal funds rate was retained at 6 to 10 percent. Growth in M l , which had slowed markedly in March from the rapid pace of earlier months, remained moderate in April at an annual rate of about 6 percent. M2 and M3, after slowing appreciably in March to annual rates of growth of about 33A and 5'/2 percent respectively, were little changed in April. Thus, while expansion in Ml was about in line with the Committee's expectations for the March-to-June period, growth in the broader aggregates was running well below the rates anticipated. Weakness in these aggregates stemmed in large part from a substantial reversal of earlier increases in banks' managed liabilities, as banks obtained funds from a sharp rise in U.S. government deposits after mid-April. Expansion in total domestic nonfinancial debt continued relatively rapid at an annual rate of about 113A percent in April, the same as in March. For the period from the fourth quarter of 1984 through April, growth in Ml was running above the Committee's range for the year 1985 while M2 and M3 were growing at rates within their long-term ranges; expansion in domestic nonfinancial debt was somewhat above the upper limit of its monitoring range for the year. The level of adjustment plus seasonal borrowing averaged about $475 million over the three complete reserve maintenance periods between meetings, enlarged by borrowing by some nonfederally insured thrift institutions to meet deposit withdrawals. Over the last week or so, total adjustment plus seasonal borrowing was running over $800 million, boosted in part by a further increase in borrowing by thrifts and overnight borrowing by a few large banks faced with unexpected needs for funds. The federal funds rate had declined from the 8V2 percent rate prevailing at the time of the March meeting and had averaged just over 8Vs percent in recent weeks. Other market rates had fallen by about 3A to 1 lA percentage points over the period since the previous Committee meeting until the announcement by the Federal Reserve on May 17 of a reduction in the discount rate from 8 to 7V2 percent. On the day before this meeting, when the new discount rate went into effect, the federal funds rate moved lower, with trading averaging around 13A percent, and most other interest rates fell about 15 to 35 basis points further. The average rate on new commitments 710 Federal Reserve Bulletin • September 1985 for fixed-rate conventional home mortgage loans declined about 30 basis points over the intermeeting period. The staff projections presented at this meeting suggested that growth in real GNP, after a modest pickup in the current quarter from the reduced pace in the first quarter, would be slightly faster in the second half of the year. The unemployment rate was projected to edge down, and the rate of increase in prices was expected to remain close to that experienced in 1984 and early 1985. During their review of the economic situation and outlook, Committee members focused with concern on evidence that the economy, despite elements of strength, was expanding at a relatively sluggish pace; and they also stressed the uncertainties that surrounded the prospects for some pickup in the rate of economic growth. The currently mixed pattern of developments greatly complicated the forecasting process, especially against the background of the distortions and pressures associated with massive deficits in the federal budget and the balance of trade, together with persisting strains in financial markets. While acknowledging the considerable risks of unexpected developments in these circumstances, several members commented that improvement in the rate of economic growth remained the most reasonable expectation for the second half of the year. Others gave more weight to the downside risks in the economy and were concerned that the expansion might well remain relatively weak and considerably below the economy's potential. A number of members expressed particular concern about the depressing impact that the competition of foreign goods was having on domestic production, and some commented that the outlook for the dollar in the exchange markets constituted the major uncertainty in assessing economic prospects. While domestic final demands were being reasonably well maintained, a strong dollar was diverting these demands toward imports, which were growing rapidly, and holding back domestic output. The strength of the dollar was also tending to curb the expansion of exports. Members cited examples of a wide range of manufacturing firms, including small firms, that along with some agricultural and extractive businesses were being severely affected by foreign competition. The exchange value of the dollar also appeared to be curbing expansion in domestic plant and equipment spending and fostering decisions to establish or expand productive facilities abroad rather than in the United States. Members who were relatively optimistic about the economic outlook stressed the favorable impact that recent declines in interest rates were likely to have on interest-sensitive sectors of the economy. Housing had already responded to earlier reductions in interest rates. Consumer spending was holding up well, with automobile sales continuing to display notable strength, and consumer sentiment remained favorable. Some members commented that the negative impact of growing imports might diminish over the quarters ahead, especially if the dollar fell further from its recent highs. Reference was also made to continuing indications that businesses were planning further, if more moderate, increases in their investment spending. One member expressed the view that rapid growth in Ml during late 1984 and early 1985 would exert an expansive influence on the economy over the months ahead. Members who felt less comfortable with economic developments referred to the vulnerability of the manufacturing sector and also agriculture to the high value of the dollar on exchange markets. Moreover, business and consumer confidence could be adversely affected by ongoing problems in financial sectors of the economy. Other potential areas of vulnerability in the economy included nonresidential construction and multifamily housing; as they had at previous meetings, members cited instances of apparent overbuilding of office structures and of multifamily dwellings in various parts of the country. In addition, problems in agriculture and related industries might worsen, with retarding consequences for overall economic activity. With regard to the outlook for inflation, members commented on the highly competitive pricing situation in many industries, and reference was also made to favorable developments in recent labor negotiations. In general, price pressures appeared to be relatively well contained in goods-producing sectors of the economy. Most Record of Policy Actions of the FOMC commodity prices had fallen further to their lowest levels in about 2 years. At the same time, significant increases in prices and costs were continuing to occur in the service industries. Given the relatively low rates of capacity utilization and the outlook for only limited growth in economic activity, members indicated that the risks of an acceleration in the rate of inflation appeared to be low. Some members noted their concern, however, that current inflation rates were too high—with recent tendencies in consumer prices worrisome—especially in light of the inflationary implications of a possible decline over time in the foreign exchange value of the dollar. At its meeting in February the Committee had agreed on policy objectives that called for monetary growth ranges for the period from the fourth quarter of 1984 to the fourth quarter of 1985 of 4 to 7 percent for M l , 6 to 9 percent for M2, and 6 to 9V2 percent for M3. The associated range for total domestic nonfinancial debt was set at 9 to 12 percent for 1985. In keeping with the usual procedures under the Humphrey-Hawkins Act, these ranges would be reviewed at the July meeting and provisional ranges would be established for 1986. In discussing policy implementation for the weeks ahead, Committee members, taking account of the recent reduction in the discount rate, generally favored maintaining about the same degree of pressure on bank reserve positions as in recent weeks, abstracting from special situation borrowing by thrift institutions. It was recognized that the recent decline in market rates and the lower discount rate would tend to increase the demands for money and credit under those circumstances as compared with what they otherwise would be. Most members found this acceptable particularly in view of the recent weakness in the broader monetary aggregates and sluggishness in the overall economy. In the course of discussion it was noted that Ml had been growing about as expected at the previous meeting, but that some pickup in growth could develop in the period ahead. A number of members indicated that they were prepared to accept a little more rapid expansion against the background of relatively weak economic performance, strains in financial markets, 711 and the recent behavior of the broader aggregates. It was also pointed out that much of the increase in Ml thus far this year reflected expansion in interest-bearing checking accounts. Banks and thrifts had reduced interest rates on these accounts only slowly in response to declines in market yields that had begun in the latter part of last year, thereby making it relatively more attractive for the public to hold savings in such instruments. Nonetheless, Ml was running above the path associated with its long-run target and some members stressed the desirability of holding down near-term Ml growth, partly because a rate of growth that appeared unduly high could risk having an adverse impact on inflationary sentiment. However, one member also questioned whether the behavior of Ml should be interpreted as in the past given the present institutional environment and taking account of such other factors as the very high level of the dollar in foreign exchange markets. Given the strength of Ml relative to its longrun target for the year, members indicated that they were prepared to accept slower growth in M2 and M3 for the quarter than they had expected earlier. One member observed, however, that continued weakness in the broader aggregates would be a matter of some concern and that somewhat faster growth than was now expected for the quarter should not be resisted. A differing view emphasized that the broader aggregates had less information content than Ml and that some aberration in their behavior should be tolerated. Another member highlighted the desirability of a decline in long-term interest rates over time, but felt that further monetary ease at this point might work against that objective by fostering inflationary expectations. In keeping with the Committee's usual practice, the members contemplated that operations might be adjusted during the intermeeting period toward implementing somewhat lesser or somewhat greater restraint on reserve positions if monetary growth should appear to be substantially slower or faster than was currently expected for the quarter. While no member wanted to rule out possible adjustments in either direction, a majority believed that policy implementation should be alert to the potential need for some easing of reserve conditions. Other members, 712 Federal Reserve Bulletin • September 1985 however, put more stress on the desirability of moving promptly, if necessary, to curb unduly rapid monetary expansion. It was understood that any adjustment should not be made automatically in response to the behavior of the monetary aggregates, but should be undertaken only after an appraisal of the strength of economic activity and inflationary pressures and evaluations of conditions in domestic and international financial markets. In light of recent declines in market interest rates and the reduction in the discount rate, it appeared likely that the degree of reserve restraint contemplated by most of the Committee members would be associated with a lower federal funds rate, on average, than had prevailed until just before today's meeting. Nonetheless, the members anticipated that the rate would remain well within the 6 to 10 percent federal funds range established earlier by the Committee, and no sentiment in favor of changing that range was expressed. At the conclusion of the Committee's discussion, a majority of the members indicated their acceptance of a directive that, against the background of the recent reduction in the discount rate, called for maintaining the current degree of reserve restraint, abstracting from special situation borrowing by thrift institutions. The members expected such an approach to policy implementation to be consistent with growth of Ml at an annual rate of about 6 percent or a little higher for the period from March to June. Given the weakness in M2 and M3 in April, growth in these broader aggregates over the three-month period was now expected to be slower than had been anticipated at the time of the previous meeting. The members agreed that somewhat lesser restraint on reserve conditions would be acceptable in the context of substantially slower growth in the monetary aggregates, while somewhat greater restraint might be appropriate if monetary growth were substantially faster. It was understood that the need for lesser or greater restraint would be considered against the background of developments relating to the strength of the business expansion, inflationary pressures, and conditions in domestic credit and foreign exchange markets. The members agreed that the intermeeting range for the federal funds rate, which provides a mechanism for initiating consultation of the Committee when its boundaries are persistently exceeded, should be left unchanged at 6 to 10 percent. At the conclusion of the meeting, the following domestic policy directive was issued to the Federal Reserve Bank of New York: The information reviewed at this meeting suggests only a modest pickup in real GNP in the current quarter from the reduced rate of growth in the first quarter. Total retail sales rose in April to a level somewhat above the average for the first quarter, and housing starts increased further after rising substantially in the first quarter. Information on business capital spending suggests further growth, though at a much less rapid pace than earlier in the economic expansion. Industrial production declined slightly in April after rising little over the first quarter. Total nonfarm payroll employment increased at a somewhat reduced pace in April with employment in manufacturing registering another decline. The civilian unemployment rate remained at 7.3 percent in April. Broad measures of prices and wages appear to be rising at rates close to those recorded in 1984. Since the Committee's meeting in late March, the trade-weighted value of the dollar against major foreign currencies has continued to fluctuate widely in often volatile market conditions and has declined moderately on balance. The trade and current account deficits widened in the first quarter as a rebound in non-oil imports from their low fourth-quarter level extended the pattern of sharp quarter-to-quarter swings experienced since the beginning of 1984. Growth in Ml slowed markedly in March from the rapid pace of earlier months and remained moderate in April. The broader aggregates showed little change in April after their growth had slowed appreciably in March. Expansion in total domestic nonfinancial debt has remained relatively rapid. Interest rates have declined considerably since the March meeting of the Committee. On May 17, the Federal Reserve Board approved a reduction in the discount rate from 8 to LLA percent. The Federal Open Market Committee seeks to foster monetary and financial conditions that will help to reduce inflation further, promote growth in output on a sustainable basis, and contribute to an improved pattern of international transactions. In furtherance of these objectives the Committee agreed at its meeting in February to establish ranges for monetary growth of 4 to 7 percent for Ml, 6 to 9 percent for M2, and 6 to 9Vi percent for M3 for the period from the fourth quarter of 1984 to the fourth quarter of 1985. The associated range for total domestic nonfinancial debt was set at 9 to 12 percent for the year 1985. The Committee agreed that growth in the monetary aggregates in the upper part of their ranges for 1985 may be Record appropriate, depending on developments with respect to velocity and provided that inflationary pressures remain subdued. The Committee understood that policy implementation would require continuing appraisal of the relationships not only among the various measures of money and credit but also between those aggregates and nominal GNP, including evaluation of conditions in domestic credit and foreign exchange markets. In the implementation of policy for the immediate future, and against the background of the recent reduction in the discount rate, the Committee seeks to maintain about the same degree of pressure on bank reserve positions. This action is expected to be consistent with growth in Ml at an annual rate of around 6 percent or a little higher during the period from March to June, while M2 and M3, in the light of their weakness in April, are expected to grow more slowly over the quarter than the 7 and 8 percent annual rates, respectively, anticipated earlier. Somewhat lesser reserve restraint would be acceptable in the event of substantially slower growth of the monetary aggregates while somewhat greater restraint might be acceptable in the event of substantially higher growth. In either case such a change would be considered in the context of appraisals of the strength of the business of Policy Actions of the FOMC 713 expansion, progress against inflation, and conditions in domestic credit and foreign exchange markets. The Chairman may call for Committee consultation if it appears to the Manager for Domestic Operations that pursuit of the monetary objectives and related reserve paths during the period before the next meeting is likely to be associated with a federal funds rate persistently outside a range of 6 to 10 percent. Votes for this action: Messrs. Volcker, Corrigan, Balles, Forrestal, Gramley, Keehn, Martin, Partee, Rice, Ms. Seger, and Mr. Wallich. Vote against this action: Mr. Black. Mr. Black dissented b e c a u s e h e preferred to direct policy implementation in the w e e k s immediately ahead t o w a r d achieving s o m e w h a t slower expansion in M l . In his view, bringing M l growth m o r e promptly within the C o m m i t t e e ' s range for the year would help guard against a possible worsening of inflationary expectations and would limit the risk of a potentially unsettling m o v e m e n t in interest rates later in the year. 715 Legal Developments ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT, BANK MERGER ACT, BANK SERVICE CORPORATION ACT, AND FEDERAL RESERVE ACT Orders Issued Under Section 3 of Bank Holding Company Act Commerce Union Corporation Nashville, Tennessee Order Approving Merger of Bank Holding Companies Commerce Union Corporation, Nashville, Tennessee, a bank holding company within the meaning of the Bank Holding Company Act of 1956, as amended (12 U.S.C. § 1841, et seq.) ("Act"), has applied for the Board's approval under section 3(a)(5) of the Act (12 U.S.C. § 1842(a)(5)) to merge with Tennessee Eastern Bancshares, Inc., Oak Ridge, Tennessee ("Company"), and thereby indirectly to acquire Energy Bank, Oak Ridge, Tennessee. Notice of this application, affording an opportunity for interested persons to submit comments, has been given in accordance with section 3 of the Act. The time for filing comments has expired, and the Board has considered the application and all comments received, in light of the factors set forth in section 3(c) of the Act (12 U.S.C. § 1842 (c)). Applicant, the third largest commercial banking organization in Tennessee, holds deposits of $2.0 billion, representing 7.6 percent of the total deposits in commercial banks in the state.1 Company, the tenth largest commercial banking organization in Tennessee, controls $180.9 million in deposits, representing 0.7 percent of the total deposits in commercial banks in the state. Upon consummation of the transaction Applicant would remain the third largest commercial banking organization in Tennessee. Thus, the proposed transaction would have no significant effect on the concentration of banking resources in Tennessee. 1. Banking data are as of June 30, 1984 and market data are as of June 30, 1983. Company and Applicant do not operate subsidiary banks in the same markets. Therefore, consummation of the proposal would not eliminate existing competition in any relevant geographic market. The Board has considered the effects of this proposal on probable future competition and has examined the proposal in light of its proposed guidelines for assessing the competitive effects of market extension mergers and acquisitions 2 in the six markets in which Company competes. 3 In view of the fact that none of these markets is highly concentrated under the Board's guidelines, the Board has concluded that consummation of this proposal would not have any significant adverse effects on probable future competition in any relevant market. The financial and managerial resources of Applicant and Company are consistent with approval of the proposal. Considerations relating to the convenience and needs of the community to be served are also consistent with approval of the proposal. Based on the foregoing and other facts of record, the Board has determined that the application under section 3(a)(5) should be, and hereby is, approved for the reasons set forth above. The transaction shall not be consummated before the thirtieth calendar day following the effective date of this Order, or later than three months after the effective date of this Order, unless such period is extended for good cause by the Board or the Federal Reserve Bank of Atlanta, acting pursuant to delegated authority. By order of the Board of Governors, effective July 30, 1985. Voting for this action: Chairman Volcker and Governors Martin, Wallich, Partee, Rice, and Seger. Absent and not voting: Governor Gramley. JAMES M C A F E E [SEAL] Associate Secretary of the Board 2. "Policy Statement of the Board of Governors of the Federal Reserve System for Assessing Competitive Factors Under the Bank Merger Act and the Bank Holding Company Act," 47 Federal Register 9017 (1982). While the proposed policy statement has not been approved by the Board, the Board is using the policy guidelines as part of its analysis of the effect of a proposal on probable future competition. 3. These banking markets are the Athens, Kingsport/Bristol, Knoxville, Roane, Scott, and Monroe markets. 716 Federal Reserve Bulletin • September 1985 First Central Bancorp, Inc. Phoenix, Arizona Order Approving Formation of a Bank Holding Company First Central Bancorp, Inc., Phoenix, Arizona, has applied for the Board's approval under section 3(a)(1) of the Bank Holding Company Act ("Act") (12 U.S.C. § 1842(a)(1)) to become a bank holding company by acquiring 100 percent of the voting shares of First Central Bank, Phoenix, Arizona ("Bank"). Notice of the application, affording opportunity for interested persons to submit comments, has been given in accordance with section 3(b) of the Act. The time for filing comments has expired, and the Board has considered the application and all comments received in light of the factors set forth in section 3(c) of the Act (12 U.S.C. § 1842(c)). Applicant is a nonoperating corporation organized for the purpose of becoming a bank holding company by acquiring Bank, which holds deposits of $22.5 million.1 Upon acquisition of Bank, Applicant would be the 19th largest of 43 commercial banking organizations in Arizona and would control approximately 0.1 percent of the total deposits in commercial banks in the state. The proposed acquisition would not have a significant effect on the concentration of banking resources in Arizona. Bank, which operates in the Phoenix market,2 was formed de novo by principals of Applicant in 1983, and this application represents a reorganization into a holding company structure. Applicant's principals are not affiliated with any other banking organizations in the relevant market, and consummation of the proposed transaction would not result in any adverse effects on competition or increase the concentration of banking resources in any relevant area. In evaluating the financial factors in this case, the Board notes that Bank has placed significant reliance on large, high-cost certificates of deposit which have had a somewhat adverse effect on Bank's earnings and liquidity. Based on Bank's efforts and plans to reduce reliance on such certificates of deposit and based on evaluation of other financial factors, the Board concludes that the financial and managerial resources and future prospects of Applicant are consistent with approval. Considerations relating to convenience and needs of the community to be served also are consistent with approval. Accordingly, it is the Board's 1. Statewide banking data are as of September 30, 1984. 2. The Phoenix market is approximated by the Phoenix Metropolitan Area. judgment that the proposed acquisition is in the public interest and that the application should be approved. On the basis of the record, the application is approved for the reasons summarized above. The transaction shall not be consummated before the thirtieth calendar day following the effective date of this Order or later than three months after the effective date of this Order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of San Francisco, acting pursuant to delegated authority. By order of the Board of Governors, effective July 8, 1985. Voting for this action: Vice Chairman Martin and Governors Partee, Rice, Gramley, and Seger. Absent and not voting: Chairman Volcker and Governor Wallich. JAMES M C A F E E [SEAL] Associate Secretary of the Board First City Bancorporation of Texas, Inc. Houston, Texas Order Approving Acquisition of a Bank First City Bancorporation of Texas, Inc., Houston, Texas, a bank holding company within the meaning of the Bank Holding Company Act ("Act"), has applied for the Board's approval under section 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to acquire all of the voting shares of First City Bank-Sioux Falls, N.A., Sioux Falls, South Dakota ("Bank"), a proposed new bank. Notice of the application, affording interested persons an opportunity to submit comments, has been given in accordance with section 3(b) of the Act. The time for filing comments has expired, and the Board has considered the application and all comments received, including the comments of the Independent Community Bankers Association of South Dakota, Inc., in light of the factors set forth in section 3(c) of the Act (12 U.S.C. § 1842(c)). Applicant, with consolidated assets of $17.3 billion,1 is the 24th largest commercial banking organization in the nation. It operates 63 banking subsidiaries in Texas and is the fourth largest commercial banking organization in the state, with total domestic deposits of approximately $12 billion. Applicant also engages through subsidiaries in a variety of nonbanking activities. Bank is a newly established national bank formed to engage primarily in offering bank credit card services 1. Banking data are as of December 31, 1984. Legal Developments to customers in Texas, Louisiana, Arkansas, Oklahoma, Colorado, and New Mexico. Upon consummation of the proposed transaction, Applicant would transfer its existing credit card operations, now conducted through First City National Bank of Houston ("FCNB"), to Bank.2 Section 3(d) of the Bank Holding Company Act (12 U.S.C. § 1842(d)) (the Douglas Amendment) prohibits the Board from approving any application by a bank holding company to acquire any bank located outside the state in which the operations of the bank holding company's banking subsidiaries are principally conducted unless the acquisition is "specifically authorized by the statute laws of the State in which such bank is located, by language to that effect and not merely by implication." South Dakota law permits an out-of-state bank holding company to acquire a single de novo national bank and a single de novo state bank subject to the conditions that each such bank have only a single office and that it be operated in a manner and at a location that is "not likely to attract customers from the general public in the state to the substantial detriment of existing banks in the state." 3 In addition, interstate acquisitions under the South Dakota statute are subject to approval by the South Dakota Banking Commission.4 In acting on an application under the statute, the Banking Commission may consider the economic advantages to the state of the proposed acquisition, whether the acquisition may result in undue concentration of resources or substantial lessening of competition in South Dakota, whether the convenience and benefits to the public outweigh any adverse competitive effects, and whether the proposed de novo bank is likely by its location to attract business from the general public to the substantial detriment of existing banks. On July 25, 1984, the South Dakota Banking Commission approved Applicant's formation and acquisition of Bank, concluding that Applicant's proposal met the requirements for approval under the South Dakota statute. Based on the foregoing, the Board has determined, as required by section 3(d) of the Act, that the proposed acquisition conforms to South Dakota law and is specifically authorized by the statute laws of South Dakota. Bank will engage primarily in offering consumer credit card services in the regional market of Texas, Louisiana, Arkansas, Oklahoma, Colorado, and New Mexico. Since the establishment of Bank represents an internal reorganization of Applicant's credit card operations, the proposal will not alter the structure of the market for bank credit card services. 2. Applicant has stated that it would transfer approximately $500 million of credit card receivables from FCNB to Bank. 3. S.D. Codified Laws Ann. § 51-16-40, 51-16-41 (Supp. 1984). 4. S.D. Codified Laws § 51-16-42. 717 Bank will also compete in the Sioux Falls, South Dakota, banking market,5 where it will provide retail and commercial deposit-taking, lending, and checking services to the local community to the extent allowed by South Dakota law. Because of the limitations imposed on Bank's operations by South Dakota law, Bank will not generally compete directly with commercial banks in South Dakota; however, Bank will engage de novo in offering certain banking services, including the provision of overline banking services to other banks in South Dakota. To the extent that Bank will offer banking services de novo, the effect of this proposal will be procompetitive. Accordingly, the Board concludes that the competitive effects of this proposal are consistent with approval. In evaluating this application, the Board has considered the financial and managerial resources of Applicant and the proposal's effect on these resources. The proposed acquisition represents a relocation of existing activities that would provide Applicant with increased income opportunities and have minimal effect on Applicant's primary and total capital ratios, which would remain above the minimum levels specified for bank holding companies under the Board's guidelines. In this context, the Board concludes that approval of the application is consistent with financial and managerial considerations. Factors relating to the convenience and needs of the community to be served also are consistent with approval. The Board has received comments in opposition to this proposal, as well as a request for a hearing, from the Independent Community Bankers Association of South Dakota, Inc. ("Protestant"). The Protestant first argues that the Douglas Amendment to the Bank Holding Company Act does not authorize the states to permit out-of-state bank holding companies to acquire national banks. The Protestant bases this argument on the state authorization clause of the Douglas Amendment, which reads: "unless the acquisition of . . . a State bank by an out-of-State bank holding company is specifically authorized by the statute laws of the State in which such bank is located . . . ." 12 U.S.C. § 1842(d). On the basis of this clause and the absence of any express mention of national banks in the Douglas Amendment, the Protestant asserts that Senator Douglas "deliberately chose" to limit section 3(d) to acquisition of state banks. Contrary to the Protestant's assertions, however, the Douglas Amendment applies to the interstate acquisition of any bank, national or state-chartered: its 5. The Sioux Falls market includes Moody, McCook, Minnehaha, Turner, and Lincoln Counties and parts of Clay and Union Counties in South Dakota, as well as Clay County in Minnesota. 718 Federal Reserve Bulletin • September 1985 initial clause prohibits Federal Reserve Board approval of a bank holding company's acquisition of "voting shares of . . . any additional bank" (emphasis added) in another state, while the following clause permits that state to authorize such an acquisition.6 In a conscious attempt to parallel the McFadden Act (12 U.S.C. § 36(c)), on which it was based,7 the Douglas Amendment permits the states to lift the Amendment's flat prohibition on the acquisition of state banks by out-of-state bank holding companies and ties the degree to which bank holding companies can make interstate acquisitions of national banks to state authorizations for interstate acquisitions of state banks. Clearly the intent of the Douglas Amendment, consistent with the policy of the McFadden Act, was to maintain competitive equality by allowing the acquisition of any similarly situated bank—whether national or state-chartered—on an equal basis. Thus, it appears to have been Senator Douglas' intent that, when the flat prohibition on interstate bank acquisitions is lifted by a state with respect to state banks, the Douglas Amendment itself lifts the prohibition, to the same degree, with respect to national banks. The Board concludes that the Douglas Amendment was not intended to allow only state-chartered banks to be acquired by out-of-state bank holding companies. The Protestant also argues that the Board should deny this application in light of the "unauthorized restriction" placed by the South Dakota statute on the operations of national banks acquired under the statute. Specifically, the Protestant alleges that the statutory restrictions, such as those which limit Bank to a single office and require operation of that office in a manner and at a location so as to avoid attracting local customers, impose burdens on national banks that conflict with national banking laws. The Protestant argues, therefore, that the Board should not approve an application under such a restrictive state statute. 6. Senator Douglas' statements on the Senate floor indicate that he did not intend the Amendment's authorization to the states to be limited to state banks. For example, in describing the effect of his Amendment, Senator Douglas stated that it: "would prohibit bank holding companies from purchasing banks in other States unless such purchases by out-of-State bank holding companies were specifically permitted by law in such States." 102 Cong. Rec. 6860 (1956). 7. See Northeast Bancorp, Inc. v. Board of Governors of the Federal Reserve System, 53 U.S.L.W. 4699, 4702 (1985). In debate on his amendment, Senator Douglas stated: [W]hat our amendment aims to do is to carry over into the field of holding companies the same provisions which already apply for branch banking under the McFadden Act—namely, our amendment will permit out-of-State holding companies to acquire banks in other States only to the degree that State laws expressly permit them. 102 Cong. Rec. 6858 (1956). The Board finds no merit in the Protestant's position because, as stated above, it is Congress through the Douglas Amendment that imposes the conditions or restrictions on the operation of a national bank by an out-of-state bank holding company, or, at a minimum, it is Congress that authorizes the states to impose such restrictions. Where, as here, such restrictions are within the scope of those authorized by Congress,8 they cannot be said to impose unauthorized burdens that conflict with the national banking laws. Moreover, the restrictions are not so burdensome as to conflict with federal banking laws. The Comptroller of the Currency, the primary supervisor of national banks and the agency charged with interpretation and enforcement of the National Bank Act, reviewed the restrictions imposed by South Dakota in the course of issuing a preliminary national bank charter for a bank in South Dakota to Citicorp, New York, New York. In an opinion issued November 11, 1980, the Comptroller held that the South Dakota statute did not "so restrict the operations of the proposed bank as to be incompatible with the framework of federal law." Based upon the facts in the record and for the reasons stated, the Board finds the Protestant does not present adequate reasons to deny this application. In addition, the Protestant has requested a hearing with respect to the legal and public policy issues raised by this proposal. The Board, however, has determined that there are no material factual issues in dispute that would warrant a hearing on this application. Accordingly, the Protestant's hearing request is denied. While it has decided to approve this application, the Board wishes to reiterate the concerns it has expressed in previous orders9 about the proliferation of statutes that, like South Dakota's, permit the entry of out-of-state bank holding companies in order to shift jobs and revenue from other states, while limiting the in-state activities of banks owned by out-of-state holding companies so as to avoid competition with in-state banking organizations. These statutes do not appear to be based on appropriate public policy considerations for assuring a stable and sound banking system locally and nationwide, and the end result of their adoption by other states can only be a serious impairment of banking standards and no net gains in jobs or revenues because of the proliferation. Based on the foregoing and other facts of record, the application is approved for the reasons summarized above. The transaction shall not be consummated before the thirtieth calendar day following the effective date of this Order, or later than three months after the 8. See Northeast Bancorp, 53 U . S . L . W . at 4 7 0 2 - 4 7 0 3 (1985). 9. See Citicorp, 71 FEDERAL RESERVE BULLETIN 101 ( 1 9 8 5 ) ; MCorp, 71 FEDERAL RESERVE BULLETIN 6 4 2 . Legal Developments effective date of this Order, and Bank shall be opened for business not later than six months after the effective date of this Order. The latter two periods may be extended for good cause by the Board or by the Federal Reserve Bank of Dallas, acting pursuant to delegated authority. By order of the Board of Governors, effective July 12, 1985. Voting for this action: Chairman Volcker and Governors Martin, Wallich, Partee, Rice, Gramley, and Seger. JAMES M C A F E E [SEAL] Associate Secretary of the Board Haltom City Bancshares, Inc. Dallas, Texas Order Approving Acquisition of Bank Haltom City Bancshares, Inc., Dallas, Texas, a bank holding company within the meaning of the Bank Holding Company Act (the "Act") (12 U.S.C. § 1841 et seq.), has applied for the Board's approval under section 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to acquire all of the voting shares of American Bank of Commerce, Grapevine, Texas. Notice of the application, affording interested persons an opportunity to submit comments, has been given in accordance with section 3(b) of the Act. The time for filing comments has expired, and the Board has considered the application and all comments received in light of the factors set forth in section 3(c) of the Act. Applicant, a Texas corporation, owns one commercial banking subsidiary, Haltom City State Bank, Fort Worth, Texas, controlling deposits of $117.7 million.1 Applicant is the 82nd largest commercial banking organization in the state, controlling 0.09 percent of the total deposits in commercial banking organizations in the state. Applicant seeks to acquire Bank, which holds deposits of $27.8 million and is the 591st largest commercial banking organization in the state, controlling 0.2 percent of total deposits in commercial banking organizations in the state. Upon consummation of this proposal, Applicant would become the 61st largest commercial banking organization in the state, controlling deposits of $145.5 million, representing 0.1 percent of total deposits in commercial banking organizations in the state. Consummation of this transaction 719 would not have any significant adverse effects upon the concentration of banking resources in the state. Bank operates in the Dallas banking market,2 where it is the 79th largest of 122 banking organizations, controlling 0.1 percent of the total deposits in commercial banks in the market. Neither Applicant nor any of its principals is associated with any other banking organization in the relevant market. Accordingly, the Board concludes that consummation of this proposal would have no significant adverse effect upon existing competition in any relevant market. In evaluating this application, the Board has considered the financial and managerial resources of Applicant and the effect on these resources of this proposal. The Board has stated and continues to believe that capital adequacy is an especially important factor in the analysis of bank holding company proposals, and that it will consider the implications of a significant level of intangible assets in evaluating an application. Under the Board's Capital Adequacy Guidelines,3 the Board has stated that, in reviewing acquisition proposals, the Board will take into consideration both the stated primary capital ratio and the primary capital ratio after deducting intangibles. In acting on applications under the revised guidelines, the Board also will take into account the nature and amount of intangible assets and will, as appropriate, adjust capital ratios to include intangible assets on a case-by-case basis. In its assessment of Applicant's capital adequacy, the Board has considered the fact that at the time of consummation of this proposal, Applicant would meet the minimum capital required under the Board's guidelines without undue reliance on goodwill. Applicant has recently improved its tangible capital ratio. In addition, Applicant has submitted a capital plan which would cause its tangible capital ratio to reach 5.5 percent within twelve months following consummation of the proposal. Based upon these facts, the Board concludes that the financial and managerial resources and future prospects of Applicant, its subsidiary bank, and Bank are consistent with approval, particularly in light of commitments made by Applicant in connection with this application. Considerations relating to the convenience and needs of the communities to be served also are consistent with approval. 2. The Dallas banking market consists of Dallas County, the southeast quadrant of Denton County, including Denton and Lewisville, the southwest quadrant of Collin County, including McKinney and Piano, the northern half of Rockwell County, the communities of Forrey and Terrell in Kaufman County, the communities of Midlothian, Waxahachie and Ferris in Ellis County, and Grapevine and Arlington in Tarrant County, Texas. 3. Capital Adequacy Guidelines, 71 FEDERAL RESERVE BULLETIN 1. All banking data are as of June 30, 1984. 445 (1985). 720 Federal Reserve Bulletin • September 1985 Based on the foregoing and other facts of record, the Board has determined that the application should be and hereby is approved. The transaction shall not be consummated before the thirtieth calendar day following the effective date of this Order, or later than three months after the effective date of this Order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of Dallas pursuant to delegated authority. By order of the Board of Governors, effective July 31, 1985. Voting for this action: Chairman Volcker and Governors Martin, Wallich, Partee, and Rice. Absent and not voting: Governors Gramley and Seger. JAMES M C A F E E [SEAL] Associate Secretary of the Board Malta Banquo, Inc. Malta, Montana Order Denying Formation of a Bank Holding Company Malta Banquo, Inc., Malta, Montana, has applied for the Board's approval pursuant to section 3(a)(1) of the Bank Holding Company Act (12 U.S.C. § 1842(a)(1)) ("Act") to become a bank holding company by acquiring at least 60 percent of the voting shares of First Security Bank of Malta, Malta, Montana ("Bank"). Notice of the application, affording interested persons an opportunity to submit comments, has been given in accordance with section 3(b) of the Act. The time for filing comments has expired, and the Board has considered the application and all comments received in light of the factors set forth in section 3(c) of the Act. Applicant, a nonoperating corporation with no subsidiaries, was organized under the laws of Montana for the purpose of becoming a bank holding company by acquiring Bank, which holds deposits of $13.9 million.1 Upon acquisition of Bank, Applicant would control the 76th largest of 106 banking organizations in Montana, representing approximately 0.2 percent of the total deposits in commercial banks in the state. Bank operates in the Phillips County banking market 2 and is the smaller of two commercial banking organizations, controlling approximately 25.6 percent of the total deposits in commercial banks in the market. Neither Applicant nor any of its principals is associated with any other banking organization in the relevant market, and consummation of the proposal would not result in any adverse effects upon competition or increase the concentration of banking resources in any relevant area. Accordingly, the Board concludes that competitive considerations under the Act are consistent with approval. The Board has indicated on previous occasions that a holding company should serve as a source of financial and managerial strength to its subsidiary bank and that the Board would closely examine the condition of an applicant in each case with this consideration in mind.3 In connection with this proposal, Applicant would incur a sizeable amount of debt. Using projections based upon Bank's performance in recent years and other facts of record, the Board concludes that Applicant may not have sufficient financial flexibility to be able to reduce its indebtedness in a satisfactory manner while maintaining adequate capital levels at Bank.4 Accordingly, based on these and other facts of record, including Bank's level of loan classifications, the Board concludes that considerations relating to Applicant's financial and managerial resources and future prospects are adverse and weigh against approval of this application. Applicant has proposed no new services for Bank upon consummation of this proposal. Considerations relating to the convenience and needs of the community to be served are consistent with, but lend no weight toward, approval of this application. On the basis of all of the facts of record, the Board concludes that the banking considerations involved in this proposal are adverse and are not outweighed by any relevant competitive or convenience and needs considerations. Accordingly, it is the Board's judgment that approval of the application would not be in the public interest and that the application should be, and hereby is, denied for the reasons summarized above. 3. See Northwest Wisconsin Banco, Inc., 71 FEDERAL RESERVE BULLETIN 105 (1985); Singer & Associates, Inc., 70 FEDERAL RESERVE BULLETIN 883 (1984); Central Minnesota Bancshares, Inc., 70 F E D E R A L RESERVE B U L L E T I N 8 7 7 ( 1 9 8 4 ) . 1. All banking data are as of September 30, 1984. 2. The Phillips County banking market consists of Phillips County, Montana. 4. The Board has previously stated that in small one-bank holding company formations, it expects, among other things, that the bank holding co-npany's debt-to-equity ratio will be reduced to no more than 30 percent within 12 years. Policy Statement for Formation of Small One-Bank Holding Companies, 12 C.F.R. Part 225, Appendix B. Legal Developments By order of the Board of Governors, effective July 17, 1985. Voting for this action: Vice Chairman Martin and Governors Wallich, Partee, Rice, Gramley, and Seger. Absent and not voting: Chairman Volcker. JAMES M C A F E E [SEAL] Associate Secretary of the Board Manufacturers National Corporation Detroit, Michigan Order Approving Acquisition of a Consumer Credit Bank Manufacturers National Corporation, Detroit, Michigan, a bank holding company within the meaning of the Bank Holding Company Act ("Act"), has applied for the Board's approval under section 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to acquire all of the voting shares of Manufacturers Bank-Delaware, Wilmington, Delaware ("Bank"), a proposed consumer credit bank chartered under Delaware law that will engage in credit card operations and accept time deposits.1 Notice of the application, affording an opportunity for interested persons to submit comments, has been duly published. (50 Federal Register 13,286 (1985)). The time for filing comments has expired, and the Board has considered the application and all comments received in light of the factors set forth in section 3(c) of the Act (12 U.S.C. § 1842(c)). Applicant, the fourth largest commercial banking organization in Michigan, operating nine subsidiary banks with total deposits of $4.4 billion, has applied to acquire Bank, which will be located in Delaware.2 This application involves the transfer of the credit card operations of Applicant's lead bank, Manufacturers National Bank of Detroit, Detroit, Michigan, to Bank in order to take advantage of Delaware's less restrictive policy regarding interest rates. Because Bank's activities are limited by state law, the proposed transaction would have no significant effect on concentration in Delaware. 1. Although Bank's deposit-taking and commercial lending authority is circumscribed under the Delaware statute (Del. Code Ann. tit. 5 §1051 (Supp. 1984)), the Board has accepted this application under section 3 of the Act and has considered the proposal under the standards of section 3 of the Act applicable to bank acquisitions. See, Florida Dep't of Banking and Finance v. Board of Governors of the Federal Reserve System, 760 F.2d 1135 (11th Cir. 1985). 2. Banking data are as of June 30, 1984. 721 Under the Douglas Amendment to the Act, the Board is prohibited from approving any application by a bank holding company to acquire a bank located in another state unless that state specifically authorizes the acquisition. In this case, Delaware has expressly authorized by statute the acquisition of consumer credit banks, such as Bank, by any bank holding company, including out-of-state bank holding companies. In this regard, the Board notes that on February 28, 1985, the State Banking Commissioner of Delaware approved the formation of Bank by Applicant. Based on the foregoing, the Board has determined that its approval of the proposed acquisition is not prohibited by the terms or policies of the Douglas Amendment. Although Bank is located in the Wilmington banking market,3 under the limitations imposed by Delaware law on Bank's operations, Bank is not likely to become a significant competitor in the Wilmington banking market.4 The financial and managerial resources of Applicant and Bank are regarded as satisfactory and consistent with approval. There is no evidence in the record indicating that the banking needs of the communities to be served are not being met. Considerations relating to the convenience and needs of the community to be served also are consistent with approval. Although approving this application, the Board has previously expressed its concern about the proliferation of statutes of this type, which permit the entry of out-of-state bank holding companies in order to shift jobs and revenues from other states, while limiting the in-state activities of out-of-state owned banks to avoid competition with in-state banking organizations.5 These statutes do not appear to be based on appropriate public policy considerations for assuring a stable and sound banking system locally and nationwide, and the end result of their adoption by other states can only be a serious impairment of banking standards and no net gains in jobs or revenues because of the proliferation. Based on the foregoing and other facts of record, the Board has determined that approval of the application would be consistent with the public interest and that the application should be and hereby is approved. The 3. The Wilmington banking market is approximated by Cecil County in Maryland, Salem County in New Jersey, Chester County in Pennsylvania, and New Castle County in Delaware. 4. Del. Code Ann. tit. 5 § 1051 (Supp. 1984). In addition, Bank must be "operated in a manner and at a location that is not likely to attract customers from the general public in [Delaware] to the material detriment of existing banking institutions . . . located in this state." Del. Code Ann. tit. 5 § 1053 (Supp. 1984). 5 . See, Citicorp, 7 1 F E D E R A L RESERVE B U L L E T I N 101 ( 1 9 8 5 ) . 722 Federal Reserve Bulletin • September 1985 transaction shall not be consummated before the thirtieth calendar day following the effective date of this Order, or later than three months after the effective date of this Order, and Bank shall be opened for business not later than six months after the effective date of this Order. The latter two periods may be extended for good cause by the Board or by the Federal Reserve Bank of Chicago, acting pursuant to delegated authority. By order of the Board of Governors, effective July 1, 1985. Voting for this action: Chairman Volcker and Governors Martin, Partee, Rice, Gramley, and Seger. Absent and not voting: Governor Wallich. JAMES M C A F E E [SEAL] Associate Secretary of the Board Montgomery Financial Corporation Darlington, Indiana Order Approving Formation of a Bank Holding Company Montgomery Financial Corporation, Darlington, Indiana, has applied for the Board's approval pursuant to section 3(a)(1) of the Bank Holding Company Act (12 U.S.C. § 1842(a)(1)) ("Act") to become a bank holding company by acquiring 80.8 percent of the voting shares of Farmers & Merchants State Bank, Darlington, Indiana ("Bank"). Notice of the application, affording interested persons an opportunity to submit comments, has been given in accordance with section 3(b) of the Act. The time for filing comments has expired, and the Board has considered the application and all comments received in light of the factors set forth in section 3(c) of the Act. Applicant, a nonoperating corporation with no subsidiaries, was organized under the laws of Indiana for the purpose of becoming a bank holding company by acquiring Bank, which holds deposits of $4.6 million.1 Upon acquisition of Bank, Applicant would control one of the smaller banking organizations in Indiana, representing less than 0.1 percent of the total deposits in commercial banks in the state. Bank operates in the Crawfordsville banking market2 and is the smallest of five commercial banking 1. All banking data are as of June 30, 1984. 2. The Crawfordsville banking market consists of Montgomery County, Indiana. organizations in the market, controlling approximately 1.8 percent of the total deposits in commercial banks in the market. Neither Applicant nor any of its principals is associated with any other banking organization in the relevant market, and consummation of the proposal would not result in any adverse effects upon competition or increase the concentration of banking resources in any relevant area. Accordingly, the Board concludes that competitive considerations under the Act are consistent with approval. The financial and managerial resources and future prospects of Applicant and Bank are regarded as consistent with approval, especially in light of a commitment made by Applicant's principal in connection with this application. Considerations relating to the convenience and needs of the community to be served are consistent with approval. Based on the foregoing and other facts of record, the Board has determined that the proposed acquisition is in the public interest and that the application should be approved. Accordingly, the application is approved for the reasons summarized above. The transaction shall not be consummated before the thirtieth calendar day following the effective date of this Order, or later than three months after the effective date of this Order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of Chicago, pursuant to delegated authority. By order of the Board of Governors, effective July 29, 1985. Voting for this action: Chairman Volcker and Governors Martin, Wallich, Partee, Rice, and Seger. Absent and not voting: Governor Gramley. [SEAL] JAMES M C A F E E Associate Secretary of the Board State Bond and Mortgage Company New Ulm, Minnesota Order Denying Acquisition of Bank State Bond and Mortgage Company, New Ulm, Minnesota, a bank holding company within the meaning of the Bank Holding Company Act ("Act") (12 U.S.C. § 1841 et seq.), has applied for the Board's approval under section 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to acquire all of the voting shares of National Bank of Commerce, Mankato, Minnesota ("Bank"). Notice of the application, affording opportunity for interested persons to submit comments and views, has been given in accordance with section 3(b) of the Act. Legal Developments The time for filing comments and views has expired, and the Board has considered the application and all comments received in light of the factors set forth in section 3(c) of the Act (12 U.S.C. § 1842(c)). Applicant is a one bank holding company by virtue of its control of State Bank and Trust Company of New Ulm, New Ulm, Minnesota ("New Ulm Bank"). Applicant, the 34th largest banking organization in the state, with aggregate deposits of $61.2 million, and Bank, the 73rd largest banking organization in the state, with aggregate deposits of $41.4 million, are among the smaller commercial banking organizations in Minnesota.1 Upon consummation of the proposed transaction, Applicant would become the 17th largest commercial banking organization in Minnesota, with total deposits representing less than one percent of total deposits in commercial banks in the state. Consummation of the proposal would not result in a significant increase in the concentration of banking resources in Minnesota. Applicant and Bank compete in separate but adjacent banking markets in Minnesota.2 Neither New Ulm Bank nor Bank are market leaders. In the Board's judgment, consummation of the transaction would not have a significant adverse effect upon existing or potential competition in any relevant market. The Board has indicated on previous occasions that a bank holding company should be a source of financial and managerial strength to its subsidiaries, and that the Board will closely examine the condition of an applicant in each case with these considerations in mind. The Board has stated in several orders that it views with concern proposals that would result in a significant decline in capital ratios.3 The Board has also indicated that, as a matter of safety and soundness and competitive equity, the Board should, in analyzing a bank holding company's consolidated capital position, consider the capital levels represented by nonbanking activities in light of industry norms and standards and the risk factors of a particular industry.4 1. Banking data are as of March 30, 1984. 2. New Ulm Bank operates in the New Ulm banking market, which is defined as the southern one-fourth of McLeod County, the western half of Nicollet County, all of Brown County, and the western twothirds of Sibley County. Bank operates in the Mankato banking market, which is defined as Blue Earth and Watonwan Counties, the eastern one-half of Nicollet County, the eastern one-third of Sibley County, the western one-third of Waseca County, and Le Sueur County less Lanesburgh Township. 3. See Security Banks of Montana, 71 FEDERAL RESERVE BULLE- TIN 246 (1985); National City CorpJBancOhio Corp., 70 FEDERAL RESERVE BULLETIN 743 (1984); Manufacturers Hanover/CIT Financial Corp., 70 FEDERAL RESERVE BULLETIN 452 (1984). 4. Capital Adequacy Guidelines, 50 Federal Register 16,057, 16,066 (1985), 71 FEDERAL RESERVE BULLETIN 445, 446 (1985); Manufacturers Hanover/CIT Financial Corp., 70 FEDERAL RESERVE BULLETIN at 453 (1984). 723 Applicant, its subsidiary bank and the bank to be acquired are in satisfactory condition. The proposed acquisition, however, involves a purchase premium and would be funded almost entirely through debt, resulting in a substantial decline in Applicant's tangible primary capital ratio. While Applicant's overall capital ratios would be slightly above the minimum levels required under the Board's Capital Adequacy Guidelines, the Board is concerned with the effect of the proposal on the capital adequacy of certain of Applicant's component activities. A substantial majority of Applicant's assets are devoted to insurance underwriting and to the issuance and underwriting of securities, including face amount certificates issued by Applicant and mutual fund shares, and to securities brokerage. The Board notes that, if the capital devoted to support Applicant's banking activities at an acceptable level is excluded, Applicant would not have adequate capital support for its nonbanking activities consistent with the risk factors involved in Applicant's nonbanking activities or generally accepted norms for companies engaged in similar activities.5 Conversely, if the capital devoted to support Applicant's nonbanking activities at such acceptable levels is excluded, the capital available to support Applicant's banking activities would be below the levels specified in the Board's Capital Adequacy Guidelines. Consequently, in the Board's view, Applicant's overall capital position is not sufficient to allow for the proposed debt-financed expansion of its banking activities, while maintaining an adequate capitalization for both its banking and nonbanking activities. Based on these and other facts of record, the Board concludes that banking considerations involved in this proposal present adverse factors bearing upon financial resources and future prospects of Applicant and Bank. Applicant has proposed no new services for Bank upon consummation of this proposal. Considerations relating to the convenience and needs of the community to be served are consistent with but lend no weight toward approval of this application. 5. Applicant argues that, in analyzing its proposal, the Board should reallocate part of the capital from an insurance subsidiary to other parts of the holding company. However, such a reallocation has not been made, and the record does not establish that such a reallocation would clearly be permitted by the relevant State Authority or would be consistent with the maintenance of adequate capital in the insurance subsidiary. The Board has also considered Applicant's contention that certain face amount certificates should not be considered debt. The Board, however, believes that in evaluating capital adequacy, these certificates are appropriately considered liabilities and that the performance of this activity by Applicant must be supported by an adequate provision for capital, as in other business activities, in order to provide appropriate protection for the risks of doing business. 724 Federal Reserve Bulletin • September 1985 On the basis of the facts of record of this application, the Board concludes that the banking considerations involved in this proposal are adverse and are not outweighed by any relevant competitive or convenience and needs considerations. Accordingly, it is the Board's judgment that approval of the application would not be in the public interest and the application should be and hereby is denied for the reasons summarized above. By order of the Board of Governors, effective July 5, 1985. Voting for this action: Chairman Volcker and Governors Martin, Partee, Rice, Gramley, and Seger. Absent and not voting: Governor Wallich. [SEAL] James McAfee Associate Secretary of the Board Orders Issued Under Section 4 of Bank Holding Company Act RepublicBank Corporation Dallas, Texas Order Approving the Issuance of and Sale of Payment Instruments RepublicBank Corporation, Dallas, Texas, a bank holding company within the meaning of the Bank Holding Company Act ("Act"), has applied for the Board's approval under section 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of the Board's Regulation Y (12 C.F.R. § 225.23) to engage de novo through its subsidiary, Republic Money Orders, Inc., Dallas, Texas ("RMO"), in the issuance and sale of variably denominated payment instruments with a maximum face value of $10,000. These instruments will be sold primarily by RepublicBank's subsidiaries and unaffiliated financial institutions throughout the United States. Notice of the application, affording interested persons an opportunity to submit comments on whether the proposed activity is closely related to banking and on the balance of public interest factors regarding the application, has been published (50 Federal Register 21,353 (1985)). The time for filing comments has expired, and the Board has considered the application and all comments received in light of the public interest factors set forth in section 4(c)(8) of the Act. RepublicBank, the third largest bank holding company in Texas, operates 38 commercial banks and controls total deposits of $12.4 billion, representing 9.2 percent of the total deposits in commercial banks in the state. Applicant also engages in a variety of nonbanking activities, including mortgage banking and insurance activities. RepublicBank proposes to expand its current payment instrument activities by engaging de novo in the issuance and sale of variably denominated payment instruments with a face value of up to $10,000. These instruments will include money orders and will be issued on a nationwide basis. These instruments will be sold primarily by RepublicBank's subsidiaries, unaffiliated banks, savings and loan associations, and other financial institutions. Regulation Y includes on the list of permissible nonbanking activities1 the issuance or sale of money orders and other similar consumer-type payment instruments with a face value not exceeding $1,000. The Board has previously approved applications to engage in the issuance of payment instruments with a maximum face value of $10,000. In its Orders, the Board found that an increase in the denomination of such instruments would not affect the fundamental nature of the payment instruments, and the Board concluded that the issuance and sale of the proposed instruments is closely related to banking.2 In order to approve this application, the Board must also find that the performance of the proposed activity by a nonbank affiliate of RepublicBank "can reasonably be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices." Consumer-type payment instruments, such as traditional money orders, are marketed nationally on the wholesale level by a few large organizations and locally on the retail level by a wide variety of financial and nonfinancial institutions. On the national scale, the market is concentrated, being dominated by only a few large organizations.3 Entry into this business on a national scale involves overcoming significant barriers because a potential entrant must possess the capability for managing the extensive sales and servicing operation necessary for handling a low unit-price, highvolume product. Such capabilities frequently are associated with banking organizations of significant size, such as RepublicBank. RepublicBank's entry into this 1. 12 C.F.R. § 225.25(b)(12). 2. BankAmerica ( 1 9 8 4 ) ; Citicorp, Corporation, 70 FEDERAL RESERVE BULLETIN 364 7 1 F E D E R A L RESERVE B U L L E T I N 5 8 ( 1 9 8 5 ) . 3. Money orders are primarily used to transmit money by members of the consumer public who do not or cannot maintain checking accounts. Traditionally, money orders have a maximum face value printed on the instrument, which is generally at or lower than the limit set by Regulation Y. Legal Developments market would result in increased competition in this industry and may be expected ultimately to result in increased prospects for some deconcentration of the industry in the future. Accordingly, the Board views RepublicBank's proposal as procompetitive and in the public interest insofar as it relates to the issuance of instruments that are intended primarily for use by consumers. In its past consideration of the issuance of variably denominated payment instruments, the Board has been concerned that the issuance of such instruments with a face value of over $1,000 would result in an adverse effect on the reserve base. Because reserve requirements serve as an essential tool of monetary policy, the Board is concerned that this proposal may result in adverse effects due to the erosion of the reservable deposits of the banking system. In its BankAmerica Order, the Board decided that BankAmerica and any other bank holding company that receives approval to engage in this activity would be required to file with the Board weekly reports of daily data on this activity for use in conjunction with measuring and interpreting the money stock and for assessing the effects of the proposal on the reserve base. The Board also determined to monitor closely the effects of such proposals by bank holding companies on the Board's conduct of monetary policy. If it later appears that the result of such proposals is a significant reduction in the reserve base or other adverse effect on the conduct of monetary policy, the Board may impose reserve requirements on such transactions, pursuant to section 19 of the Federal Reserve Act (12 U.S.C. § 461(a)) and the Board's Regulation D (12 C.F.R. Part 204). The record shows that the sale of these largerdenominated money orders by RepublicBank would increase competition in this field and enhance the convenience of the purchaser. The Board finds that these instruments, which will be issued by a large financial organization and will enjoy ready acceptability, will provide benefits to the public. Based upon the foregoing and other considerations reflected in the record, the Board has determined that the balance of the public interest factors it is required to consider under section 4(c)(8) is favorable with respect to the activity of issuing consumer-oriented payment instruments. This determination is subject to all of the conditions set forth in Regulation Y, including section 225.4(d) and 225.23(b), and to the Board's authority to require such modification or termination of the activities of a holding company or any of its subsidiaries as the Board finds necessary to assure compliance with the provisions and purposes of the Act and the Board's regulations and orders issued thereunder, or to prevent evasion thereof. 725 The activity approved hereby shall be commenced not later than three months after the effective date of this Order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of Dallas, acting pursuant to delegated authority. By order of the Board of Governors, effective July 2, 1985. Voting for this action: Chairman Volcker and Governors Martin, Partee, Rice, Gramley, and Seger. Absent and not voting: Governor Wallich. JAMES M C A F E E [SEAL] Associate Secretary of the Board The Wachovia Corporation Winston-Salem, North Carolina Order Approving Expansion of Student Loan Servicing Activities The Wachovia Corporation, Winston-Salem, North Carolina, a bank holding company within the meaning of the Bank Holding Company Act ("Act"), 12 U.S.C. § 1841 et seq., has applied for the Board's approval, pursuant to section 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of the Board's Regulation Y (12 C.F.R. § 225.23), to expand the student loan servicing activities previously approved for its existing nonbank subsidiary, Wachovia Services, Inc. ("WSI"), Winston-Salem, North Carolina.1 The prior approval included provision of such servicing activities to a state student loan authority. Applicant's current proposal would encompass the following expanded activities: (1) WSI will provide state student loan authorities (the "Authority") with regular reports that include information in the aggregate and by individual lend- 1. WSI was organized de novo as a subsidiary of Wachovia Bank & Trust Company, N.A., Winston-Salem, North Carolina, in 1964 and became a wholly owned subsidiary of Applicant on January 1, 1969. On October 27, 1977, the Federal Reserve Bank of Richmond approved, under delegated authority, Applicant's notice to retain WSI, pursuant to section 4(c)(8) of the Act, and to continue to engage, inter alia, "in rendering data processing services related to banking, financial, or related economic data, and specifically in the following product areas: c) data processing services to financial institutions, colleges, and universities in the accounting and servicing of student loans." On November 30, 1984, the Richmond Reserve Bank approved Applicant's notice to engage in certain additional student loan servicing activities on a nationwide basis, including provision of such activities to a state student loan authority, and to establish an office of WSI in Baton Rouge, Louisiana, from which the proposed expanded activities initially would be conducted. 726 Federal Reserve Bulletin • September 1985 ers concerning the volume of loans being serviced by WSI for the Authority, and the volume of loan commitments outstanding; (2) Based on the volume of loans being serviced and commitments outstanding (and in consultation with a bank trustee and the Authority), WSI will prepare projections for approval by the Authority of student loans to be purchased and commitments to be issued in the future, consistent with the amount of funds available to the Authority as a result of its sale of bonds; (3) WSI will advise eligible lenders, borrowers and other interested parties of the Authority's student loan purchase program, including the criteria used by the Authority in purchasing student loans, and the extent to which the Authority will be purchasing loans in the future based on the funds available; and (4) WSI will meet with the Authority on a regular basis to keep the Authority apprised of WSI's efforts in connection with the above proposed (and those previously approved) student loan servicing activities. Under no circumstances would WSI be authorized to bind the Authority or its bank trustee to commit to purchase or actually to purchase student loans from eligible lenders. These activities have not been specified by the Board in section 225.25 of Regulation Y as permissible for bank holding companies. Notice of the application, affording interested persons an opportunity to submit comments, has been duly published. 50 Federal Register 23,360 (1985). The time for filing comments has expired, and the Board has considered the application and all comments received in light of the public interest factors set forth in section 4(c)(8) of the Act. Applicant is the largest banking organization in North Carolina, with total consolidated assets of $8.5 billion,2 and engages in numerous nonbanking activities. In order to approve an application under section 4(c)(8) of the Act, the Board must determine that the proposed activity is "so closely related to banking or managing or controlling banks as to a proper incident thereto. . . ." 12 U.S.C. § 1843(c)(8). In determining whether an activity is closely related to banking under section 4(c)(8), the Board has relied on guidelines established by the federal courts to determine whether a particular activity meets the "closely related to banking" test. 3 Under these guidelines, an activity 2. Asset data are as of March 31, 1985. 3. See National Courier Association v. Board of Governors, 516 F.2d 1229 (D.C. Cir. 1975). Accord, Securities Industry Ass'n v. Board of Governors, _ U.S. _ , 104 S. Ct. 3003, 3008 (1984). may be found to be closely related to banking if it is demonstrated: (1) that banks generally have, in fact, provided the proposed service; (2) that banks generally provide services that are operationally or functionally so similar to the proposed services as to equip them particularly well to provide the proposed service; or (3) that banks generally provide services that are so integrally related to the proposed services as to require their provision in a specialized form. The Board also may consider other factors in determining what is closely related to banking and has stated that it will consider evidence of any reasonable connection to banking in making its analysis.4 Applicant believes that these activities are so closely related to banking or managing or controlling banks as to be a proper incident thereto, because the activities are, in Applicant's opinion, either provided by banks or functionally similar to services provided by banks. Specifically, Applicant believes that these expanded activities, in addition to the previously approved student loan servicing activities, are permissible under section 225.25(b) of Regulation Y because they are an integral part of: (1) making, acquiring and servicing loans for the account of others, as permitted by section 225.25(b)(1) of Regulation Y; (2) rendering investment and financial advice, as permitted by section 225.25(b)(4); and (3) data processing, as permitted by section 225.25(b)(7). Utilizing the National Courier criteria, the Board believes that banks generally have, in fact, provided services operationally and functionally similar to the services proposed by Applicant and that Applicant, in light of its considerable experience in student loan servicing, is particularly well suited to provide these expanded loan servicing activities. On this basis, the Board concludes that the proposed services are closely related to banking. The proposed activities appear to be substantially equivalent to the activities of a mortgage banking subsidiary of a bank holding company under section 225.25(b)(1) of Regulation Y, with respect to acquiring and servicing mortgage loans for institutional investors or in connection with the secondary mortgage market. The facts of record indicate that the activities conducted and proposed by Applicant, to the extent they are 4. See 49 Federal Register 9215 (1984). Legal Developments different from the services performed by any institution that services loans for others, appear to be different only in that they relate to servicing student loans for a governmental authority. Banks and their nonbank subsidiaries have generally provided comprehensive loan acquisition and servicing "packages" for investors in mortgage and other loans. In this regard, in 1974 the Board approved the acquisition by a bank holding company of a company engaged in the activity of arranging, negotiating and acquiring, for the account of institutional investors, loans and other financial transactions secured by income-producing property.5 Moreover, as the nation's largest servicer of student loans, WSI provides similar services to more than 250 banks and other investors. Thus, WSI appears to be particularly well equipped to perform the proposed services. Before approving a bank holding company's application to engage in an activity that the Board determines is closely related to banking, the Board must also find that consummation of the proposal can reasonably be expected to produce benefits to the public that outweigh possible adverse effects. Under this proposal, WSI would assist state authorities participating in the Guaranteed Student Loan Program ("GSLP") created by the Congress in the Higher Education Act of 1965, 20 U.S.C. § 1001 et seq. The GSLP provides insured loans to post-secondary school students through a complex delivery system that includes banks and other institutions that originate the loans, state agencies and authorities that purchase the loans, state guaranty agencies that insure the loans, and the federal government, which guarantees or reinsures the loans. Many financial institutions find it difficult to hold student loans from the point of origination to maturity because of the ten-year repayment provisions and the necessity for compliance with a myriad of federal, state and guaranty agency regulations. These regulations require the assumption of detailed servicing responsibilities by the lending institution and the corresponding expense that those servicing responsibilities entail. By using the proceeds of a tax-exempt bond issue to create a secondary market for the loans and assuming the servicing responsibilities, a state hopes to increase the number of bank and nonbank lenders who would make funds available for student loans: Lenders would be assured that any student loans generated in reliance on an authority's loan 727 purchase program can be sold to the Authority any time after origination, and that administration of the program would not be overly burdensome on the participating lenders because the loan servicing responsibilities would be performed by Applicant. By providing state authorities with expertise in servicing such student loan programs and assisting state authorities in establishing a secondary market in such loans, WSI can ease the administration and enhance the liquidity of such programs. The record reflects there may be as much as $148 million of unmet need for student loans in Applicant's proposed initial service area (Louisiana). That amount could be reduced if the state authority, with Applicant's assistance, were to increase the number of lenders providing student loans by ensuring a liquid secondary market for such assets and relieving lenders of servicing responsibilities for such loans. Accordingly, consummation of the proposal would provide substantial public benefits outweighing any possible adverse effects. Financial and managerial considerations are consistent with approval of this proposal. Moreover, there is no evidence in the record that consummation of this proposal would result in adverse effects, such as unsound banking practices, unfair competition, conflicts of interests, or undue concentration of resources. Based upon the foregoing and all the facts of record, the Board has determined that the balance of public interest factors it is required to consider under section 4(c)(8) is favorable. Accordingly, the application is hereby approved. This determination is subject to all of the conditions set forth in the Board's Regulation Y, including those in sections 225.4(d) and 225.23(b). The approval also is subject to the Board's authority to require modification or termination of the activities of a holding company or any of its subsidiaries as the Board finds necessary to assure compliance with the provisions and purposes of the Act and the Board's regulations and orders issued thereunder, or to prevent evasion thereof. 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 July 1, 1985. Voting for this action: Chairman Volcker and Governors Martin, Partee, Rice, Gramley, and Seger. Absent and not voting: Governor Wallich. 5. Fidelity Corporation of Pennsylvania, 39 Federal Register 16,929 (1974). JAMES M C A F E E [SEAL] Associate Secretary of the Board 728 Federal Reserve Bulletin • September 1985 Citizens and Southern Georgia Corporation Atlanta, Georgia Order Approving Acquisition of Banks and Nonbanking Companies Citizens and Southern Georgia Corporation, Atlanta, Georgia, a bank holding company within the meaning of the Bank Holding Company Act ("Act"), has applied for the Board's approval under section 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to acquire the successor by merger to Landmark Banking Corporation of Florida, Fort Lauderdale, Florida ("Landmark").1 As a result of the acquisition, Applicant would acquire indirectly 22 of Landmark's 23 subsidiary banks.2 Applicant has also applied for the Board's approval under section 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of the Board's Regulation Y (12 C.F.R. § 225.23) to acquire Landmark's nonbanking subsidiaries, all in Florida: Capital Group, Inc., Fort Lauderdale, and its subsidiaries, Capital America, Inc., Fort Lauderdale, and Capital Associates, Inc., Pompano Beach, companies that engage in equipment leasing; Landmark Financial Services, Inc., Fort Lauderdale ("LFS"), a company that engages in real estate appraisal activities and acts as an agent with respect to the sale of credit life insurance directly related to extensions of credit by Landmark's subsidiary banks; Landmark Mortgage Corporation, Tampa ("Landmark Mortgage"), a company that engages in making and servicing residential real estate mortgage loans; The National Trust Company, Fort Myers, a company that engages in trust activities; and Florida Interchange Group, Inc., Orlando, a company 1. Applicant has also applied under section 3(a)(1) of the Act (12 U.S.C. § 1842(a)(1)) for approval for its wholly owned inactive subsidiary, Citizens and Southern Acquisition Corporation, Atlanta, Georgia ("Acquisition Corporation"), to become a bank holding company through merger with Landmark. Acquisition Corporation would be the surviving corporation in the merger and would change its name to Landmark Banking Corporation of Florida. 2. Landmark controls the following banks, all in Florida: Landmark Bank of Brevard, Melbourne; Landmark First National Bank, Fort Lauderdale; Charlotte County National Bank, Port Charlotte; First Bank of Marco Island, N.A., Marco Island; First National Bank and Trust Company of Naples, Naples; First County Bank, Riverview; Landmark Bank of Tampa, Tampa; Peoples Bank of Hillsborough County, Tampa; East First National Bank, East Fort Myers; First Commercial Bank of Fort Myers, Fort Myers; The First Bank of Fort Myers, Fort Myers; Gulf Coast First National Bank, Fort Myers; North First Bank, North Fort Myers; The Palmetto Bank and Trust Company, Palmetto; Landmark Bank of Orlando, Orlando; Landmark Bank of Palm Beach County, Boca Raton; Peoples Bank of Pasco County, Elfers; Gulf Coast Bank of Pinellas, Madeira Beach; Landmark Union Trust Bank of St. Petersburg, N.A., St. Petersburg; Palm State Bank, Palm Harbor; Gulf Coast National Bank, Sarasota; National Bank of Sarasota, Sarasota; and South County Bank, Venice. that engages in data processing and related activities for an electronic funds transfer interchange system. These activities have been determined by the Board to be closely related to banking and permissible for bank holding companies, 12 C.F.R. §§ 225.25(b)(1), (3), (5), (7), (8), and (13). The determination related to the authority of bank holding companies to act as agent with respect to credit life insurance in connection with extensions of credit has not been affected by amendments to section 4(c)(8) of the Act limiting the permissible insurance investments of bank holding companies.3 Notice of the applications, affording opportunity for interested persons to submit comments and views, has been given in accordance with sections 3 and 4 of the Act (50 Federal Register 18,314 (1985)). The time for filing comments and views has expired, and the Board has considered the applications and all comments received in light of the factors set forth in section 3(c) of the Act (12 U.S.C. § 1842(c)) and the considerations specified in section 4(c)(8) of the Act. 4 Applicant is the largest commercial banking organization in Georgia, with six subsidiary banks that control aggregate deposits of approximately $4.7 billion, representing 17.1 percent of the total deposits in commercial banks in Georgia.5 Landmark is the sixth largest commercial banking organization in Florida. Its 23 subsidiary banks control aggregate deposits of approximately $3 billion, representing 5.1 percent of the total deposits in commercial banks in Florida. Section 3(d) of the Act (12 U.S.C. § 1842(d)), the Douglas Amendment, prohibits the Board from approving any application by a bank holding company to acquire control of any bank located outside of the 3. See Garn-St Germain Depository Institutions Act of 1982, Pub. L. No. 97-320, §601, 96 Stat. 1469, 1536-38 (1982) ("Garn-St Germain"). The Board received a comment on behalf of the National Association of Life Underwriters and the National Association of Professional Insurance Agents in connection with Applicant's proposed acquisition of LFS. This comment urges the Board to ensure that LFS's insurance agency activities are conducted in accordance with the standards established by section 4(c)(8) and, in particular, by Garn-St Germain. In this regard, the Board notes that LFS's insurance activities consist of acting as agent with respect to credit life insurance directly related to extensions of credit by Landmark's subsidiary banks. Such activities are explicitly permitted by the terms of section 4(c)(8)(A) of the Act. 4. The Board received a protest from Legal Services of Greater Miami, Inc., Gulf Coast Legal Services, Inc., Greater Orlando Legal Services, Inc., and Central Florida Legal Services, Inc., alleging that certain of Landmark's subsidiary banks are not fulfilling their responsibility under the Community Reinvestment Act to help meet the credit needs of their communities. The protestants withdrew their protest following several meetings with Applicant and Applicant's adoption of a Statement of Policy setting forth its corporate commitment to help meet community credit needs and its program for implementing this commitment in the markets served by Landmark. 5. Banking data are as of June 30, 1984. Legal Developments holding company's home state,6 unless such acquisition is "specifically authorized by the statute laws of the State in which [the] bank is located, by language to that effect and not merely by implication." The statute laws of Florida authorize the acquisition of a bank in Florida by a bank holding company that controls a bank located in other states in a defined southeastern region, including Georgia, if such other state authorizes on a reciprocal basis the acquisition of a bank in the state by a Florida bank holding company.7 Georgia has enacted such a reciprocal statute.8 Based on its review of the relevant Florida and Georgia statutes, the Board has determined that Florida has by statute expressly authorized a Georgia bank holding company, such as Applicant, to acquire a Florida bank or bank holding company, such as Landmark.9 Furthermore, the United States Supreme Court has recently held, in Northeast Bancorp, Inc. v. Board of Governors of the Federal Reserve System, 105 S. Ct. 2545 (1985), that regional reciprocal banking statutes, such as those involved in this case, are authorized by the Douglas Amendment to the Bank Holding Company Act and consistent with the United States Constitution. Accordingly, the Board concludes that Board approval of Applicant's proposal to acquire banks in Florida is not barred by the Douglas Amendment. Landmark's banking subsidiaries operate in 14 markets in Florida. None of Applicant's subsidiary banks operates in Florida and, accordingly, consummation of the proposal would have no effect on existing competition in any relevant market. The Board has also examined the effect of Applicant's acquisition of Landmark on probable future competition in the relevant geographic markets in light of the Board's proposed guidelines for assessing the competitive effects of market-extension mergers or acquisitions.10 In view 6. 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. 7. Fla. Stat. Ann. § 658.295 (1984). The Florida statute also requires that all of the bank subsidiaries of a Florida bank holding company sought to be acquired by a regional bank holding company under the statute must have been in existence and in continuous operation for more than two years. Fla. Stat. Ann. § 658.295(3)(a)(3). Applicant has one bank subsidiary, Landmark Bank of Palm Beach County, that has been in existence for less than two years. Applicant has committed that this bank will be divested before or contemporaneously with Applicant's consummation of the proposed acquisition. 8. Ga. Code Ann. §§ 7-1-620 to 7-1-625 (Supp. 1985). 9. See SunTrust Banks, Inc., 71 FEDERAL RESERVE BULLETIN 176, 177 ( 1 9 8 5 ) . 10. "Proposed Policy Statement of the Board of Governors of the Federal Reserve System for Assessing Competitive Factors Under the Bank Merger Act and the Bank Holding Company Act," 47 Federal Register 9017 (1982). While the proposed policy statement has not been adopted by the Board, the Board has applied the criteria set forth in the proposed policy statement in its analysis of the effects of proposals on probable future competition. 729 of the existence of numerous other potential entrants from within the three-state interstate banking region of Georgia, Florida, and North Carolina into each of the markets served by Landmark or Applicant,11 the Board has concluded that the consummation of this proposal would not have any significant adverse effects on probable future competition in any relevant market. The financial and managerial resources of Applicant, Landmark, and their respective subsidiaries are considered satisfactory and their prospects appear favorable. Upon consummation of the proposed transaction, Applicant's primary and total capital ratios would exceed the minimum levels specified in the Board's Capital Adequacy Guidelines.12 The Board concludes that banking factors are consistent with approval of this application. Considerations relating to the convenience and needs of the communities to be served also are consistent with approval of the application, particularly in light of Applicant's adoption of a Statement of Policy regarding the Community Reinvestment Act obligations of its proposed subsidiary banks. Applicant has also applied, pursuant to section 4(c)(8) of the Act, to acquire five nonbanking subsidiaries of Landmark that engage in equipment leasing, credit insurance, real estate appraisal, residential real estate mortgage lending and servicing, trust, and data processing activities. This proposal would eliminate a small amount of existing competition in Florida between Landmark's and Applicant's subsidiaries that engage in mortgage banking activities. Both Landmark Mortgage and Landmark's bank subsidiaries offer residential mortgage lending and servicing through numerous offices in Florida, while Applicant's subsidiary, Citizens and Southern Mortgage Company ("C&S Mortgage") operates offices in Tampa, Tallahassee, and Maitland, Florida. C&S Mortgage's share of the mortgage banking market in Florida is not significant, and the product market in Florida is unconcentrated, with numerous competitors and low barriers to entry. Accordingly, the proposed acquisition would not have a significant effect on competition for mortgage banking services in any relevant market. In addition, Appli- 11. North Carolina has in effect regional reciprocal interstate banking legislation that is similar to the Georgia and Florida laws in permitting interstate acquisitions of North Carolina banks by banking organizations located in certain Southern states, including Georgia and Florida. N.C. Gen. Stat. § 53-229 (1984). North Carolina is a state within the interstate banking regions defined by the Georgia and Florida statutes. 12. Capital Adequacy Guidelines, 50 Federal Register 16,057 (1985). 730 Federal Reserve Bulletin • September 1985 cant's discount brokerage subsidiary, First Southeastern Company, competes with Landmark's subsidiary banks in the market for discount brokerage services through its office in Tampa, Florida. However, in view of First Southeastern's de minimis market share in Florida and the unconcentrated nature of the product market, the Board concludes that the proposed acquisition would not eliminate any significant competition in the market for discount brokerage services. After consideration of the above facts and other facts of record, the Board concludes that Applicant's acquisition of Landmark's nonbanking subsidiaries would not significantly affect competition 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, 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 the public interest factors it must consider under section 4(c)(8) of the Act is favorable and consistent with approval of the applications to acquire Landmark's nonbanking subsidiaries. Based on the foregoing and other facts of record, the Board has determined that the applications under sections 3 and 4 of the Act should be and hereby are approved. The acquisition of Landmark's subsidiary banks shall not be consummated before the thirtieth calendar day following the effective date of this Order, and neither the banking acquisition nor the nonbanking acquisition shall occur later than three months after the effective date of this Order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of Atlanta, acting pursuant to delegated authority. The determination with respect to Applicant's acquisition of Landmark's nonbanking subsidiaries is subject to all of the conditions set forth in Regulation Y, including sections 225.4(d) and 225.23(b) (12 C.F.R. §§ 225.4(d) and 225.23(b)), and to the Board's authority to require such modifications or termination of activities of a holding company or any of its subsidiaries as the Board finds necessary to assure compliance with the provisions and purposes of the Act and the Board's regulations and orders issued thereunder, or to prevent evasion thereof. By order of the Board of Governors, effective July 29, 1985. Voting for this action: Chairman Volcker and Governors Martin, Wallich, Partee, Rice, and Seger. Absent and not voting: Governor Gramley. JAMES M C A F E E [SEAL] Associate Secretary of the Board Society Corporation Cleveland, Ohio Order Approving the Merger of Bank Holding Companies and the Acquisition of Nonbank Subsidiaries Society Corporation, Cleveland, Ohio, a bank holding company within the meaning of the Bank Holding Company Act ("Act"), has applied for the Board's approval under section 3(a)(5) of the Act (12 U.S.C. § 1842(a)(5)) to acquire Centran Corporation, Cleveland, Ohio ("Centran"). As a result of the acquisition, Applicant would acquire indirectly Centran's six subsidiary banks. Applicant has also applied for the Board's approval under section 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) and section 225.23(a)(2) of the Board's Regulation Y (12 C.F.R. § 225.23(a)(2)), to acquire Security Capital Leasing, Inc., Berea, Ohio, a company that engages in the leasing of personal property ; CFS One, Inc. of Mississippi, Berea, Ohio, a company that engages in the activity of making consumer loans; Protective Loan Corporation, Berea, Ohio, a company that has authority to engage in making and acquiring consumer loans and to act as an agent with respect to the sale of credit life and credit health and accident insurance in connection with its extensions of credit; and Centran Life Insurance Company, Berea, Ohio, and Dallas, Texas, a company that engages in the activity of acting as a reinsurer with respect to credit life insurance written in connection with extensions of credit by Centran's affiliate banks. These activities have been determined by the Board to be closely related to banking and permissible for bank holding companies, 12 C.F.R. §§ 225.25(b)(1),(5),(8) and (9), and those determinations related to the authority of bank holding companies to act as agent or reinsurer with respect to credit life and credit health and accident insurance in connection with extensions of credit, have not been affected by amendments to section 4(c)(8) of the Act limiting the permissible insurance activities of bank holding companies.1 Applicant has also applied to acquire CFS One, Inc., Berea, Ohio, another subsidiary of Centran, that engages in the activity of making consumer and commercial loans, and has the authority to act as an agent with respect to the sale of credit life and credit health and accident insurance in connection with its extensions of credit, and with respect to the sale of fire insurance and extended coverage insurance on real property, furniture and household goods taken as 1. See Garn-St Germain Depository Institutions Act of 1982, Pub. L. No. 97-320, § 601, 96 Stat. 1469, 1536-38 (1982). Legal Developments 731 collateral on loans made or purchased by CFS One, Inc., pursuant to section 4(c)(8)(D) of the Act. The scope of permissible activities under section 4(c)(8)(D) is currently the subject of a rulemaking proceeding.2 Applicant has committed that it will not exercise the authority of CFS One, Inc., to act as agent with respect to the sale of property and casualty insurance directly related to extensions of credit prior to the conclusion of the Board's adoption of final provisions of Regulation Y, 12 C.F.R. § 225 et seq., implementing section 4(c)(8)(D) of the Act, and that it will do so only in compliance with such final provisions, and only after consultation with the Federal Reserve Bank of Cleveland. Notice of the applications, affording an opportunity for interested persons to submit comments and views, has been given in accordance with sections 3 and 4 of the Act (50 Federal Register 19,808 (1985)). The time for filing comments and views has expired, and the Board has considered the applications and all comments received in light of the factors set forth in section 3(c) of the Act (12 U.S.C. § 1842(c)) and the considerations specified in section 4(c)(8) of the Act. 3 Applicant is the fourth largest banking organization in Ohio, with ten subsidiary banks that control aggregate deposits of approximately $4.7 billion, representing 8.4 percent of the total deposits in commercial banks in the state.4 Centran is the seventh largest banking organization in Ohio, with six subsidiary banks that control aggregate deposits of $2.2 billion, representing 4.0 percent of the total deposits in commercial banks in the state. Upon consummation of the proposed merger, including divestitures proposed by Applicant, Applicant's share of the total deposits in commercial banks in Ohio would increase to 11.9 percent, and Applicant would become the third largest commercial banking organization in the state. The Board has carefully considered the effects of the proposal on statewide banking structure. This proposal involves the combination of sizeable commercial banking organizations that are among the leading To minimize the competitive effects of the proposal in the Cleveland banking market, Applicant has committed to divest 18 of Centran's Cleveland market offices and the deposit accounts associated with those facilities, to a financial institution not presently represented in the market.8 Upon consummation of the transaction, including the proposed divestiture, Applicant would control 22.1 percent of the total deposits in commercial banks in the Cleveland banking market, and the HHI would increase by 215 points to 1895. The effect of this transaction is further mitigated by the extent of competition offered by thrift institutions 2. 49 Federal Register 9215 (1984). 3. The Board received a comment on behalf of the Independent Insurance Agents of America, Inc., the National Association of Casualty and Surety Agents, Inc., and the National Association of Surety Bond Producers ("Protestants"), in connection with Applicant's acquisition under section 4(c)(8) of the Act of CFS One, Inc. Protestants stated that the Board should limit its approval of the acquisition of a subsidiary engaged in insurance-related activities to those activities permissible under sections 4(c)(8)(A) and (B) of the Act, 12 U.S.C. § 1843(c)(8)(A),(B). In view of Applicant's commitment, discussed above, the Board does not believe that the limitations suggested by Protestants are necessary. 4. Unless otherwise indicated, banking data are as of December 31, 1984. 5. The Cleveland market is approximated by Cuyahoga, Lake, Lorain, and Geauga Counties and parts of Summit, Medina, Portage, and Erie Counties. 6. Market data are as of June 30, 1983. 7. Under the revised Department of Justice Merger Guidelines (49 Federal Register 26,823 (1984), any market in which the post-merger HHI is above 1800 is considered highly concentrated. In such markets, the Department is likely to challenge any merger that produces an increase in the HHI of more than 50 points unless other factors indicate that the merger will not substantially lessen competition. 8. The divestiture would be completed before or contemporaneously with Applicant's consummation of the proposed merger with Centran. banking organizations in the state. However, Ohio's banking structure is relatively unconcentrated, with the state's four largest banking organizations holding approximately 46 percent of the total deposits in commercial banks in the state. Upon consummation of the proposed merger, including the divestitures, the four-firm concentration ratio would increase to 49.9 percent, and the state would not become highly concentrated. Accordingly, the Board concludes that consummation of this transaction would not have a significant adverse effect on the concentration of banking resources in the state. Applicant's subsidiary banks compete directly with Centran's subsidiary banks in the Cleveland, Akron, Columbus, and Seneca County banking markets. Applicant is the fourth largest of 20 commercial banking organizations in the Cleveland banking market,5 with $1.5 billion in deposits, representing 12.0 percent of the total deposits in commercial banks therein.6 Centran is the third largest banking organization in the Cleveland banking market, with deposits of $1.5 billion, representing 12.4 percent of the total deposits in commercial banks therein. Upon consummation of this proposal, absent any divestiture, Applicant would become the second largest commercial banking organization in the market, controlling 24.4 percent of the market's commercial banking deposits. The HHI in the market would increase by 298 points to 1978, and the market would be considered highly concentrated.7 732 Federal Reserve Bulletin • September 1985 in the market.9 Thirty-three thrift institutions operate in the Cleveland banking market and control $11.0 billion in deposits representing 47 percent of total deposits in the market. The thrift institutions in the market currently offer a full range of consumer services and transaction accounts. Twenty-three of the 33 thrift institutions offer commercial loans (other than commercial real estate loans) and 21 offer commercial checking accounts. 10 In view of the extent of competition offered by thrift institutions and the proposed divestiture the Board has determined that consummation of this proposal would not have a significantly adverse effect on existing competition in the Cleveland banking market. Applicant is the fifth largest of nine commercial banking organizations in the Akron banking market,11 with $209.2 million in deposits, representing approximately 7.5 percent of the total deposits in commercial banks in the market. Centran is the fourth largest banking organization in the Akron banking market, with $257.0 million in deposits, representing approximately 9.2 percent of the total deposits in commercial banks in the market. After consummation of this proposal, Applicant would become the fourth largest commercial banking organization in the market, controlling 16.6 percent of total deposits in commercial banks in the market. The HHI in the market would increase by 137 points to 2294, and the market would be considered highly concentrated. While consummation of the proposal would eliminate some existing competition in the Akron banking market, the Board believes that the anticompetitive effects of this proposal are mitigated by the presence of 20 thrift institutions in the market, controlling $2.1 billion in deposits, which represents approximately 42.3 percent of the total deposits in the market. The thrift institutions in the market currently offer a full range of consumer services and transaction accounts. Seventeen of the 20 thrift institutions offer commercial loans (other than commercial real estate loans) and 14 offer commercial checking accounts. Accordingly, in view of the facts cited above and other facts of record, the Board concludes that consummation of this proposal would not have a significantly adverse effect on existing competition in the Akron banking market.12 Applicant is the fifth largest of nineteen commercial banking organizations in the Columbus banking market,13 with $250.7 million in deposits, representing approximately 4.2 percent of the total deposits in commercial banks in the market. Centran is the ninth largest banking organization in the Columbus banking market, with $73.1 million in deposits, representing approximately 1.2 percent of the total deposits in commercial banks in the market. After consummation of this proposal, Applicant would remain the fifth largest commercial banking organization in the market, controlling approximately 5.4 percent of total deposits in commercial banks in the market. The HHI in the market would increase by 10 points to 2182. Consummation of the proposal would eliminate existing competition in this market. However, in view of the small resulting market share and the fact that 17 commercial banking organizations would remain in the market following consummation of the proposal, the Board concludes that the acquisition would not have any significant effect on competition in the Columbus banking market. Applicant is the second largest of eight banking organizations in the Seneca County banking market,14 with $71.0 million in deposits, representing approximately 21.7 percent of the total deposits in commercial banks in the market. Centran is the fourth largest banking organization in the Seneca County market, with $21.9 million in deposits, representing approximately 6.7 percent of the total deposits in commercial banks in the market. The market is highly concentrated, with a four-firm concentration ratio of 85 percent and an HHI of 2576. The combination of Applicant and Centran would increase Applicant's share of commercial bank deposits in the market to 28.3 percent. The HHI in the market would increase by 289 points to 2865. 9. The Board has previously determined that thrift institutions have become, or at least have the potential to become, major competitors of banks. NCNB Corporation, 70 FEDERAL RESERVE BULLETIN 225 (1984); Sun Banks, Inc., 69 FEDERAL RESERVE BULLETIN 934 (1983); Merchants Bancorp, Inc., 69 FEDERAL RESERVE BULLETIN 865 (1983); First Tennessee National Corporation, 69 FEDERAL RESERVE BULLETIN 298 (1983). 10. Following Applicant's divestiture of 18 Cleveland offices, if 50 percent of the deposits held by thrift institutions were included in the calculation of market concentration, Applicant would control 8.3 percent of the total deposits in the market and Bank would control 8.6 percent. Consummation of the proposal would increase the HHI by 108 points, from 878 to 986, and the four-firm concentration ratio would be 56.1 percent. 11. The Akron market is approximated by portions of Summit, Portage, Medina, Stark, and Wayne Counties. 12. If 50 percent of the deposits held by thrift institutions were included in the calculation of market concentration, Applicant would control 5.5 percent of deposits and Centran would control 6.7 percent. Consummation of the proposal would increase the HHI by 73 points, from 1321 to 1394, and the four-firm concentration ratio would be 66.7 percent. 13. The Columbus market is approximated by Franklin, Fairfield, Licking, Delaware, and Pickaway Counties and parts of Madison, Perry, and Hocking Counties. 14. The Seneca County banking market is defined as Seneca County and those portions of the City of Fostoria that lie in adjacent counties. Legal Developments To minimize the competitive effects of the proposal in the Seneca County market, Applicant proposes to divest Centran's sole banking office in the market to a recently formed bank holding company that currently does not operate there. The divestiture would be completed before or contemporaneously with Applicant's consummation of the proposed merger with Centran.15 Thus, upon consummation of the transaction, including the proposed divestiture, Applicant's share of commercial bank deposits and the number of competitors in the market would remain unchanged. Accordingly, consummation of the proposal would not have any significant adverse effect on competition in the Seneca County market. There are 21 markets in Ohio in which either Applicant or Centran, but not both, operates.16 The Board has considered the effect of this proposal on probable future competition in these markets and has evaluated the proposal in light of its guidelines for assessing the competitive effects of market extension mergers and acquisitions.17 There are two markets in which Centran, but not Applicant, competes. Each market has numerous potential entrants. Accordingly, the Board finds that consummation of the proposal would not have a substantially adverse effect on probable future competition in these markets. As noted above, Centran has a banking office in the Seneca County banking market that will be divested upon consummation of this proposal. While the divestiture would eliminate any adverse effect the proposal may have upon existing competition, the Board has also examined the proposal for any adverse effect upon probable future competition in this market. Because of its size and financial resources and the fact that it had already entered the Seneca County market, Centran is viewed as a likely probable future entrant into this market. However, there are numerous probable future entrants into the market. Therefore, the 15. In this respect, Applicant's proposed divestiture conforms to the requirement announced in Barnett Banks of Florida, Inc., 68 FEDERAL RESERVE BULLETIN 190 (1982); see alsoInterFirst tion, 68 FEDERAL RESERVE BULLETIN 243, 244 (1982). Corpora- 16. The 19 markets in which only Applicant operates are: Ashtabula, Canton, Carrollton, Cincinnati, Crawford, Dayton, Findlay, Fremont, Huron, Mercer, Mt. Gilead, Oxford, Port Clinton, Salem, Sandusky, Springfield, Toledo, Wapakoneta, and Youngstown-Warren. The two markets in which only Centran operates are Ashland and Mansfield. 17. "Proposed Policy Statement of the Board of Governors of the Federal Reserve System for Assessing Competitive Factors Under the Bank Merger Act and the Bank Holding Company Act", 47 Federal Register 9017 (1982). Although the proposed policy statement has not been approved by the Board, the Board is using the policy guidelines as part of its analysis of the effect of proposals on probable future competition. 733 Board does not view the elimination of Centran as a probable future entrant into this market as substantially anticompetitive. Of the remaining 19 markets in which only Applicant now competes, 16 have numerous probable future entrants, and the remaining three markets are not highly concentrated. Based on the foregoing and other facts of record, the Board concludes that consummation of the proposal would not have any significant adverse effect on probable future competition in any relevant market. Thus, competitive considerations are consistent with approval of the application. The financial and managerial resources of Applicant and its subsidiaries are regarded as generally satisfactory, and their future prospects appear favorable. Banking factors are consistent with approval of the application. Considerations relating to the convenience and needs of the communities to be served are also consistent with approval of the application. Applicant has also applied, pursuant to section 4(c)(8) of the Act, to acquire Centran Life Insurance Company, Security Capital Leasing, Inc., CFS One, Inc., CFS One, Inc. of Mississippi, and Protective Loan Corporation. It does not appear that Applicant's acquisition of these subsidiaries would have any significant adverse effect upon existing or potential competition. Furthermore, there is no evidence in the record to indicate that approval of this proposal would result in undue concentration of resources, decreased or unfair competition, conflicts of interests, unsound banking practices or other adverse effects on the public interest. Accordingly, the Board has determined that the balance of the public interest factors it must consider under section 4(c)(8) of the Act is favorable and consistent with approval of the applications to acquire Centran Life Insurance Company, Security Capital Leasing, Inc., CFS One, Inc., CFS One, Inc., of Mississippi, and Protective Loan Corporation. Based on the foregoing and other facts of record, the Board has determined that the applications under sections 3(a)(5) and 4(c)(8) of the Act should be, and hereby are, approved.18 The merger shall not be consummated before the thirtieth calendar day following the effective date of this Order, and neither the merger nor the acquisition of the nonbanking subsidiaries shall occur later than three months after the 18. As part of this proposal, Marine Midland Banks, Inc., New York, New York ("Marine"), will receive nonvoting shares of Applicant in exchange for its existing nonvoting equity investment in Centran, together with cash and a warrant for the purchase of certain voting shares of Applicant. Applicant has committed that it will not consummate this proposal until the Board has reviewed and approved the terms of Marine's proposed investment in Applicant. 734 Federal Reserve Bulletin • September 1985 effective date of this Order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of Cleveland pursuant to delegated authority. The determinations as to Applicant's nonbanking activities are subject to the conditions set forth in Regulation Y, including those in sections 225.4(d) and 225.23(b), and to the Board's authority to require such modification or termination of the activities of a holding company or any of its subsidiaries as the Board finds necessary to assure compliance with the provisions and purposes of the Act and the Board's regulations and orders issued thereunder, or to prevent evasion thereof. By order of the Board of Governors, effective July 15, 1985. Voting for this action: Chairman Volcker and Governors Martin, Wallich, Partee, Rice, Gramley, and Seger. Governor Wallich abstained from the insurance portion of these applications. JAMES M C A F E E [SEAL] Associate Secretary of the Board Valley Bancorporation Appleton, Wisconsin Order Approving Acquisition of Banks and a Mortgage Finance Company Valley Bancorporation, Appleton, Wisconsin, has applied for the Board's approval under section 3 of the Bank Holding Company Act ("Act") (12 U.S.C. § 1842), to acquire United Banks of Wisconsin, Inc., Madison, Wisconsin ("United Banks"), a bank holding company within the meaning of the Act, and thereby to acquire indirectly its four subsidiary banks: United Bank, Madison, Wisconsin ("United Madison"); Farmers & Citizens United Bank, Sauk City, Wisconsin ("United Sauk"); United Bank in Menomonie, Menomonie, Wisconsin ("United Menomonie"); and United Bank in Sun Prairie, Sun Prairie, Wisconsin ("United Sun Prairie"). Applicant proposes to merge United Banks into Valley-Capital Corporation, Appleton, Wisconsin, a recently organized wholly owned subsidiary of Applicant that would be the surviving institution. The banks to be acquired will continue to operate under their existing names and charters. Applicant has also applied under section 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) and section 225.23(a)(2) of the Board's Regulation Y (12 C.F.R. § 225.23(a)(2)), to acquire United Mortgage of Wisconsin, Inc., Madison, Wisconsin ("United Mortgage"), a subsidiary of United Banks. United Mortgage is en gaged in mortgage financing, an activity that the Board has determined to be closely related to banking and permissible for bank holding companies. 12 C.F.R. § 225.25(b)(1). Notice of the applications, affording an opportunity for interested persons to submit comments, has been given in accordance with sections 3 and 4 of the Act, 50 Federal Register 15,683 (1985). The time for filing comments has expired, and the Board has considered the applications and all comments received in light of the factors set forth in section 3(c) of the Act, 12 U.S.C § 1842(c), and the considerations specified in section 4(c)(8) of the Act. Applicant is a multibank holding company that currently controls 24 subsidiary banks.1 It is the fourth largest banking organization in Wisconsin and controls total domestic deposits of $1.1 billion, representing approximately 4.0 percent of the total deposits in commercial banks in the state.2 United Banks, the 13th largest banking organization in the state, controls total domestic deposits of $258.0 million, representing approximately 0.9 percent of the total deposits in commercial banks in the state. Upon consummation of the proposed transaction, Applicant would remain the fourth largest banking organization in Wisconsin, controlling 28 commercial banks with total deposits of $1.3 billion, representing 4.9 percent of the total deposits in commercial banks in the state. The proposed transaction would have no significant effect on the concentration of banking resources in Wisconsin. Applicant and United Banks compete directly in one market, the Madison banking market.3 Applicant's banking subsidiary in the Madison market, Bank of Oregon, Oregon, Wisconsin, controls deposits of $30.5 million, representing approximately 1.8 percent of the total deposits in commercial banks in the market.4 United Banks is the third largest commercial banking organization in the market, operating two banking subsidiaries that together control deposits of approximately $167.3 million, representing approximately 9.6 percent of the total deposits in commercial banks in the market.5 Upon consummation of the proposed transaction, Applicant would control approximately 1. This figure includes Applicant's recent acquisition of Banc Wis Corporation, Janesville, Wisconsin, and Bank of Oregon, Oregon, Wisconsin, which were consummated, respectively, on March 31 and May 7, 1985. 2. Banking data are as of June 30, 1984. 3. The Madison banking market is defined as all of Dane County except for the eastern tier, which includes the townships of York, Medina, Dearfield, Christiana and Albion, all in Wisconsin. 4. Deposit data are as of September 30, 1984. 5. United Madison and United Sun Prairie control, respectively, deposits of $138.0 million and $29.3 million, representing 7.9 percent and 1.7 percent of total deposits in commercial banks in the Madison banking market. Legal Developments 11.4 percent of the total deposits in commercial banks in the market. The share of deposits held by the four largest banking organizations in the Madison banking market is 57 percent and would increase to 58.8 percent upon consummation of this proposal. The market's Herfindahl-Hirschman Index is 1103 and would increase by 35 points to 1138 upon consummation of the proposal.6 Although the proposed acquisition would eliminate some existing competition between Applicant and United Banks in the Madison banking market, the market would not become highly concentrated as a result of this transaction and 25 competitors would remain in the market upon consummation. On the basis of these and other facts of record, the Board concludes that the effects of consummation of the proposal on existing competition in the Madison banking market would not be significantly adverse. United Banks operates in two other banking markets, the Sauk County and Dunn County banking markets,7 in which Applicant does not compete. Thus, consummation of this proposal would not have any effect on existing competition in these markets. The Board has also examined the effect of the proposed acquisition upon probable future competition in the three geographic markets in which United Banks operates and has evaluated the proposal in light of the Board's proposed guidelines for assessing the competitive effects of market extension mergers and acquisitions.8 None of these markets is highly concentrated under the Board's Guidelines. Accordingly, the Board has concluded that consummation of this proposal would not have any significant adverse effects on probable future competition in any relevant market. Accordingly, competitive considerations are consistent with approval of this application. In evaluating this application, the Board has considered the financial and managerial resources of Applicant and the effect on these resources of the proposed acquisition of United Banks. The Board has stated that 6. Under the revised Department of Justice Merger Guidelines (49 Federal Register 26,823 (1984)), a market in which the post-merger HHI is between 1000 and 1800 is considered only moderately concentrated. In such a market, the Department is unlikely to challenge a merger producing an increase in the HHI of less than 100 points. 7. The Sauk County banking market is approximated by Sauk County, Wisconsin, excluding Spring Green township, and includes the Westford and Wellon townships in Richland County, Wisconsin. The Dunn County banking market is defined as Dunn County, Wisconsin. 8. "Policy Statement of the Board of Governors of the Federal Reserve System for Assessing Competitive Factors Under the Bank Merger Act and the Bank Holding Company Act," 47 Federal Register 9017 (1982). While the proposed policy statement has not been adopted by the Board, the Board is using the policy Guidelines as part of its analysis of the effect of a proposal on probable future competition. 735 a bank holding company should serve as a source of strength to its banking subsidiaries. In addition, the Board has stated that capital adequacy is an especially important factor in the analysis of bank holding company proposals.9 While Applicant's existing primary and total capital ratios are above the minimum levels specified for bank holding companies in the Board's Capital Adequacy Guidelines,10 consummation of the proposed transaction would result in a slight decline in Applicant's tangible primary capital ratio to the minimum acceptable primary capital ratio under the Board's Guidelines. Furthermore, Applicant will incur additional debt in connection with this proposal. It appears from the facts of record, however, that Applicant is capable of improving its tangible capital ratio, servicing its debt, and serving as a source of strength to its subsidiaries. Therefore, based on these and other facts of record, the Board concludes that the financial and managerial resources and future prospects of Applicant and United Banks are generally satisfactory, and that banking factors are consistent with approval of this application. Considerations relating to the convenience and needs of the community to be served are also consistent with approval. Consummation of this proposal would result in the expansion of banking services offered by United Banks' subsidiaries, to include the provision of trust and discount brokerage services. Applicant has also applied under section 4(c)(8) of the Act to acquire United Mortgage, a mortgage financing company that makes, acquires and services mortgage loans for itself and for others. This activity has been determined by the Board to be closely related to banking under section 225.25(b)(1) of the Board's Regulation Y. 12 C.F.R. § 225.25(b)(1)). Consummation of this proposal would have no effect on competition or the concentration of resources in any relevant market. The record does not contain any evidence that consummation of the proposal would result in any other adverse factors, such as undue concentration of resources, decreased or unfair competition, conflicts of interest or unsound banking practices. Accordingly, the Board has determined that the balance of public interest factors it must consider under section 4(c)(8) of the Act is favorable and consistent with approval of the application. Based on the foregoing and other facts of record, the Board has determined that the applications under sections 3 and 4 of the Act should be and hereby are 9. See, e.g., National City Corporation, 70 FEDERAL RESERVE BULLETIN 743 (1984). 10. Capital Adequacy Guidelines, 50 Federal Register (1985). 16,057 736 Federal Reserve Bulletin • September 1985 approved. The acquisition of banks shall not be consummated before the thirtieth calendar day following the effective date of this Order, and neither the banking acquisition nor the nonbanking acquisition shall occur later than three months after the effective date of this Order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of Chicago acting pursuant to delegated authority. The determination with respect to Applicant's acquisition of United Mortgage is subject to all of the conditions set forth in Regulation Y, including sections 225.4(d) and 225.23(b) (12 C.F.R. §§ 225.4(d) and 225.23(b)), and to the Board's authority to require such modifica- tion or termination of activities of a holding company or any of its subsidiaries as the Board finds necessary to assure compliance with the provisions and purposes of the Act and the Board's regulations and orders issued thereunder, or to prevent evasion thereof. By order of the Board of Governors, effective July 15, 1985. Voting for this action: Chairman Volcker and Governors Martin, Wallich, Partee, Rice, Gramley, and Seger. JAMES M C A F E E [SEAL] Associate Secretary of the Board ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT By the Board of Governors During June and July 1985 the Board of Governors approved the applications listed below. Copies are available upon request to Publications Services, Division of Support Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Applicant Bankers Trust New York Corporation, New York, New York Barnett Banks of Florida, Inc., Jacksonville, Florida Fifth Third Bancorp, Cincinnati, Ohio RepublicBank Corporation, Dallas, Texas By Federal Reserve Board action (effective date) Bank(s) Bankers Trust Delaware, Wilmington, Delaware Niceville Bankshares Corporation, Niceville, Florida The Fifth Third Bank of Columbus, Columbus, Ohio RepublicBank Countryside, N.A., San Antonio, Texas July 19, 1985 June 26, 1985 June 27, 1985 July 1, 1985 Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies of the orders are available upon request to the Reserve Banks. Section 3 Applicant American National Bancshares, Inc., Noblesville, Indiana Bank(s)/Nonbanking Company The American National Bank of Noblesville, Noblesville, Indiana Reserve Bank Chicago Effective date July 16, 1985 Legal Developments Section 3—Continued a i- t pp Amcorp Financial, Inc., Ardmore, Oklahoma BancTenn Corp., Kingsport, Tennessee Barclays PLC, London, England BFW Financial Corporation, Burleson, Texas BoRC Financial Corporation, Harriman, Tennessee Carroll Financial Corporation, Burlington, Indiana Cascade Bancorporation, Inc., Cascade, Wisconsin Citicorp, New York, New York Citizens Bancorporation of New Ulm, New Ulm, Minnesota Commerce Bancshares of Roswell, Inc., Roswell, New Mexico Community Financial Corporation, Littlestown, Pennsylvania Commonwealth Bancshares Corp., Williamsport, Pennsylvania Cosmos Bancorporation, Inc., Cosmos, Minnesota Darmen Financial of Wisconsin, Inc., Fennimore, Wisconsin Edna Bancshares, Inc., Edna, Kansas Elston Corporation, Crawfordsville, Indiana Evergreen Bancshares, Inc., Crossett, Arkansas Farmers & Merchants Bancorp, Inc., Archbold, Ohio Bank(s)/Nonbanking Company American National Bank, Ardmore, Oklahoma Bank of Tennessee, Kingsport, Tennessee Barclays Bank PLC, London, England Barclays USA, Inc., Wilmington, Delaware Barclays Bank of Delaware, N.A., Wilmington, Delaware Shady Oaks National Bank, Lake Worth, Texas Bank of Roane County, Harriman, Tennessee First Bank of Carroll County, Burlington, Indiana State Bank of Cascade, Cascade, Wisconsin Quadstar Corporation, Wilmington, Delaware Citizens Bank of New Ulm, New Ulm, Minnesota Reserve Bank Effective date Kansas City July 9, 1985 Atlanta July 19, 1985 New York June 20, 1985 Dallas June 21, 1985 Atlanta July 15, 1985 Chicago July 18, 1985 Chicago July 2, 1985 New York July 15, 1985 Minneapolis July 10, 1985 Valley Bank of Commerce, Roswell, New Mexico Dallas June 27, 1985 Community National Bank of Southern Pennsylvania, Littlestown, Pennsylvania Commonwealth National Financial Corporation, Harrisburg, Pennsylvania Heritage Financial Services Corporation, Lewistown, Pennsylvania First State Bank of Cosmos, Cosmos, Minnesota The First State Bank, Fennimore, Wisconsin Philadelphia July 11, 1985 Philadelphia July 19, 1985 Minneapolis July 10, 1985 Chicago July 12, 1985 First State Bank of Edna, Edna, Kansas Lizton Financial Corporation, Lizton, Indiana First State Bank, Crossett, Arkansas The Farmers & Merchants State Bank, Archbold, Ohio Kansas City June 21, 1985 Chicago June 27, 1985 St. Louis July 3, 1985 Cleveland June 21, 1985 737 738 Federal Reserve Bulletin • September 1985 Section 3—Continued Applicant Farmers & Merchants Bancshares, Inc., Mart, Texas Financial Dominion of Kentucky, Inc., Radcliff, Kentucky Financial Holdings, Inc., Louisville, Colorado Financial Management Services of Jefferson, Inc., Jefferson, Wisconsin F M Fincorp, Laotto, Indiana First Commonwealth Financial Corporation, Indiana, Pennsylvania First Corinth Corp., Corinth, Mississippi First Crockett Bancshares, Inc., Crockett, Texas First Fidelity Bancorporation, Newark, New Jersey First National Shares of Louisiana, Baton Rouge, Louisiana First National Bancorp, Gainesville, Georgia First National Talladega Corporation, Talladega, Alabama First Railroad & Banking Company of Georgia, Augusta, Georgia First Railroad & Banking Company of Georgia, Augusta, Georgia First Wyoming Bancorporation, Cheyenne, Wyoming Bank (s)/Nonbanking Company Reserve Bank Effective date The Farmers and Merchants Bank of Mart, Mart, Texas Farmers Deposit Bank, Brandenburg, Kentucky Dallas July 18, 1985 St. Louis July 12, 1985 Boulder Valley National Bank, Boulder, Colorado The Farmers & Merchants Bank of Jefferson, Jefferson, Wisconsin Farmers & Merchants Bank, Laotto, Indiana The Dale National Bank, Dale, Pennsylvania Kansas City July 5, 1985 Chicago July 3, 1985 Chicago July 10, 1985 Cleveland July 16, 1985 St. Louis July 3, 1985 Dallas June 28, 1985 New York July 1, 1985 Atlanta July 10, 1985 Atlanta July 3, 1985 Atlanta July 19, 1985 Atlanta July 1, 1985 Atlanta July 11, 1985 Kansas City June 18, 1985 National Bank of Commerce of Corinth, Corinth, Mississippi Allied First National Bank of Crockett, Crockett, Texas First Fidelity Bank, Princeton, West Windsor, New Jersey First National Bank of East Baton Rouge, Baton Rouge, Louisiana Peoples Bancorp, Cleveland, Georgia The First National Bank of Talladega, Talladega, Alabama Washington Loan & Banking Company, Washington, Georgia Decimus Data Services Corporation, Chicago, Illinois First Wyoming Bank, N.A.-Riverton, Riverton, Wyoming Legal Developments Section 3—Continued .. p FirstPlace Financial Corp., Lincoln, Illinois Forsyth Bancshares, Inc., Cumming, Georgia Ft. Elliott Bancshares, Inc., Mobeetie, Texas Harris Bankcorp, Inc., Chicago, Illinois Headland Capital Corporation, Headland, Alabama In wood Holding Corporation, Irving, Texas KGG Ban Corp., Hampton, Iowa Kingfisher Bancorp, Inc., Kingfisher, Oklahoma Kootenai Bancorp, Libby, Montana Madison Bank Corp., Madison, Georgia Marshall & Ilsley Corporation, Milwaukee, Wisconsin NEB Corporation, Fond du Lac, Wisconsin Old-First National Corporation, Bluffton, Indiana Ontario Bancorporation, Inc., Ontario, Wisconsin PSB Bancshares, Ltd, Postville, Iowa Bank(s)/Nonbanking Company First National Bank in Lincoln, Lincoln, Illinois Forsyth County Bank, Cumming, Georgia The First State Bank of Mobeetie, Mobeetie, Texas Bankmont Financial Corp., New York, New York First Canadian Financial U.S. Holdings, Inc., Montreal, Quebec, Canada First National Bank and Trust Company of Barrington, Barrington, Illinois Bank of Montreal, Montreal, Quebec, Canada Wiregrass Bank & Trust, Headland, Alabama Inwood Bancshares, Inc., Dallas, Texas Inwood National Bank of Dallas, Dallas, Texas Community State Bank, Rockwell, Iowa Kingfisher Bank and Trust Company, Kingfisher, Oklahoma First National Bank in Libby, Libby, Montana Bank of Madison, Madison, Georgia M&I Bank of Dodgeville, Dodgeville, Wisconsin American Bank of Fond du Lac, Fond du Lac, Wisconsin Old-First National Bank in Bluffton, Bluffton, Indiana Genoa State Bank, Genoa, Wisconsin Postville State Bank, Postville, Iowa Reserve Bank Effective date Chicago July 3, 1985 Atlanta June 21, 1985 Dallas July 12, 1985 Chicago June 28, 1985 Atlanta June 28, 1985 Dallas July 17, 1985 Chicago July 11, 1985 Kansas City June 28, 1985 Minneapolis June 20, 1985 Atlanta July 10, 1985 Chicago June 18, 1985 Chicago June 27, 1985 Chicago July 16, 1985 Chicago July 11, 1985 Chicago July 3, 1985 739 740 Federal Reserve Bulletin • September 1985 Section 3—Continued A PPhcant River Bend Bancshares, Inc., Wood River, Illinois Rock Springs American Bancorporation, Inc., Rock Springs, Wyoming Rockford Bancorporation, Inc., Rockford, Minnesota Ruston Bancshares, Inc., Ruston, Louisiana Sand Ridge Financial Corp., South Bend, Indiana Security Pacific Corporation, Los Angeles, California Sequatchie County Bancorp, Inc., Dunlap, Tennessee SouthTrust Corporation, Birmington, Alabama Southwest Banc Shares, Inc., Chatom, Alabama State Financial Services Corporation, Hales Corners, Wisconsin Tolna Bancorp, Inc., Tolna, North Dakota United Banks of Colorado, Inc., Denver, Colorado Wanamingo Bancshares, Inc., Wanamingo, Minnesota Warrick Financial Corporation, Boonville, Indiana WGNB Corporation, Carrollton, Georgia Bank(s)/Nonbanking Company Illinois State Bank of East Alton, East Alton, Illinois The American National Bank of Rock Springs, Rock Springs, Wyoming State Bank, Rockford, Minnesota Security Bancshares, Inc., Monroe, Louisiana Security Bank, Monroe, Louisiana Bank of Highland, Highland, Indiana Vierling, Devaney & Maguire, Inc., New York, New York Sequatchie County Bank, Dunlap, Tennessee Reserve Bank Effective date St. Louis July 12, 1985 Kansas City July 12, 1985 Minneapolis July 19, 1985 Dallas July 12, 1985 Chicago July 15, 1985 San Francisco June 24, 1985 Atlanta July 3, 1985 Elba Exchange Bank, Elba, Alabama Chatom State Bank, Chatom, Alabama University National Bank, Milwaukee, Wisconsin Atlanta June 27, 1985 Atlanta June 27, 1985 Chicago July 10, 1985 The Farmers & Merchants State Bank, Tolna, North Dakota United Banks of Westminster, Westminster, Colorado Security State Bank of Wanamingo, Inc., Wanamingo, Minnesota Warrick National Bank of Boonville, Boonville, Indiana West Georgia National Bank of Carrollton, Carrollton, Georgia Minneapolis July 9, 1985 Kansas City July 12, 1985 Minneapolis July 16, 1985 St. Louis July 12, 1985 Atlanta June 21, 1985 Legal Developments Section 4 Applicant First Bank System, Inc., Minneapolis, Minnesota First Eastern Corp., Wilkes-Barre, Pennsylvania Marion National Corporation, Marion, South Carolina Bank(s)/Nonbanking Company The John Fawcett Company, Duluth, Minnesota The Byers Company, Duluth, Minnesota Robert H. Heimbach Agency, Inc., Duluth, Minnesota Montana International Insurance, Inc., Helena, Montana Ideal Consumer Discount Company, Nanticoke, Pennsylvania Gasque-Clemmons Agency, Inc., Marion, South Carolina Marion Investment Corporation, Inc., Marion, South Carolina Reserve Bank Effective date Minneapolis July 16, 1985 Philadelphia June 28, 1985 Richmond July 19, 1985 Sections 3 and 4 Applicant Barclays U.S. Holdings, Inc., New York, New York Key Bancshares of New York Inc., Albany, New York National Commerce Corporation, Birmingham, Alabama Bank(s)/Nonbanking Company BarclaysAmericanCorporation, Charlotte, North Carolina Barclays Bank of Delaware, N.A., Wilmington, Delaware consumer finance, credit-related insurance, sale of money orders and travelers checks, data processing activities Several New York-domiciled subsidiary banks of Key Banks Inc., Albany, New York lending, leasing, data processing, investment advisory services, underwriting of credit-related insurance MetroBank, Birmingham, Alabama extension of credit Legal Developments Reserve Bank Effective date New York June 20, 1985 New York July 17, 1985 Atlanta July 17, 1985 continued on next page 741 742 Federal Reserve Bulletin • September 1985 PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the Federal Reserve Banks in which the Board of Governors is not named a party. Florida Bankers Association v. Board of Governors, No. 84-3883 and No. 84-3884 (11th Cir., filed Feb. 15, 1985). Florida Department of Banking v. Board of Governors, No. 84-3831 and No. 84-3832 (11th Cir., filed Feb. 15, 1985). Dimension Financial Corporation v. Board of Governors, No. 84-1274 (U.S., filed Feb. 6, 1985). Lewis v. Paul A. Volcker and Arthur D. Merman, Bank of Ohio, No. C-1-85-0099 (S.D. Ohio, filed Jan. 14, 1985). Brown v. United States Congress, et al., No. 84-28876(IG) (filed Dec. 7, 1985). Seattle Bancorporation, et al. v. Board of Governors, No. 84-7535 (9th Cir., filed Aug. 15, 1984). Citicorp v. Board of Governors, No. 84-4081 (2d Cir., filed May 22, 1984). Melcher v. Federal Open Market Committee, No. 841335 (D.D.C., filed, Apr. 30, 1984). Florida Bankers Association, et al. v. Board of Governors, No. 84-3269 and No. 84-3270 (11th Cir., filed Apr. 20, 1984). State of Ohio, v. Board of Governors, No. 84-1270 (10th Cir., filed Jan. 30, 1984). Colorado Industrial Bankers Association v. Board of Governors, No. 84-1122 (10th Cir., filed Jan. 27, 1984). First Bancorporation v. Board of Governors, No. 841011 (10th Cir., filed Jan. 5, 1984). Oklahoma Bankers Association v. Federal Reserve Board, No. 83-2591 (10th Cir., filed Dec. 13, 1983). Securities Industry Association v. Board of Governors, No. 80-2730 (D.C. Cir., filed Oct. 24, 1980). A1 Financial and Business Statistics CONTENTS Domestic WEEKLY REPORTING COMMERCIAL BANKS Financial Statistics MONEY STOCK AND BANK CREDIT A3 Reserves, money stock, liquid assets, and debt measures A4 Reserves of depository institutions, Reserve Bank credit A5 Reserves and borrowings—Depository institutions A5 Federal funds and repurchase agreements— Large member banks POLICY INSTRUMENTS A6 Federal Reserve Bank interest rates A7 Reserve requirements of depository institutions A8 Maximum interest rates payable on time and savings deposits at federally insured institutions A9 Federal Reserve open market transactions FEDERAL RESERVE BANKS A10 Condition and Federal Reserve note statements A l l Maturity distribution of loan and security holdings MONETARY AND CREDIT AGGREGATES A12 Aggregate reserves of depository institutions and monetary base A13 Money stock, liquid assets, and debt measures A15 Bank debits and deposit turnover A16 Loans and securities—All commercial banks COMMERCIAL BANKING INSTITUTIONS A17 Major nondeposit funds A18 Assets and liabilities, last-Wednesday-of-month series A19 A20 A21 A22 Assets and liabilities All reporting banks Banks in New York City Branches and agencies of foreign banks Gross demand deposits—individuals, partnerships, and corporations FINANCIAL MARKETS A23 Commercial paper and bankers dollar acceptances outstanding A23 Prime rate charged by banks on short-term business loans A24 Interest rates—money and capital markets A25 Stock market—Selected statistics A26 Selected financial institutions—Selected assets and liabilities FEDERAL FINANCE A28 A29 A30 A30 Federal fiscal and financing operations U.S. budget receipts and outlays Federal debt subject to statutory limitation Gross public debt of U.S. Treasury—Types and ownership A31 U.S. government securities dealers— Transactions A32 U.S. government securities dealers—Positions and financing A3 3 Federal and federally sponsored credit agencies—Debt outstanding 76 Federal Reserve Bulletin • September 1985 International SECURITIES MARKETS AND CORPORATE FINANCE SUMMARY A34 New security issues—State and local governments and corporations A35 Open-end investment companies—Net sales and asset position A35 Corporate profits and their distribution A36 Nonfinancial corporations—Assets and liabilities A36 Total nonfarm business expenditures on new plant and equipment A37 Domestic finance companies—Assets and liabilities and business credit Statistics STATISTICS A53 A54 A54 A54 U.S. international transactions—Summary U.S. foreign trade U.S. reserve assets Foreign official assets held at Federal Reserve Banks A55 Foreign branches of U.S. banks—Balance sheet data A57 Selected U.S. liabilities to foreign official institutions REPORTED BY BANKS IN THE UNITED STATES REAL ESTATE A38 Mortgage markets A39 Mortgage debt outstanding CONSUMER INSTALLMENT CREDIT A40 Total outstanding and net change A41 Terms A57 A58 A60 A61 Liabilities to and claims on foreigners Liabilities to foreigners Banks' own claims on foreigners Banks' own and domestic customers' claims on foreigners A61 Banks' own claims on unaffiliated foreigners A62 Claims on foreign countries—Combined domestic offices and foreign branches REPORTED BY NONBANKING BUSINESS ENTERPRISES IN THE UNITED STATES FLOW OF FUNDS A42 Funds raised in U.S. credit markets A43 Direct and indirect sources of funds to credit markets A63 Liabilities to unaffiliated foreigners A64 Claims on unaffiliated foreigners SECURITIES HOLDINGS AND Domestic Nonfinancial SELECTED MEASURES A44 Nonfinancial business activity—Selected measures A45 Labor force, employment, and unemployment A46 Output, capacity, and capacity utilization A47 Industrial production—Indexes and gross value A49 Housing and construction A50 Consumer and producer prices A51 Gross national product and income A52 Personal income and saving TRANSACTIONS Statistics A65 Foreign transactions in securities A66 Marketable U.S. Treasury bonds and notes— Foreign transactions INTEREST AND EXCHANGE RATES A67 Discount rates of foreign central banks A67 Foreign short-term interest rates A68 Foreign exchange rates A69 Guide to Tabular Statistical Releases, Tables Presentation, and Special Money Stock and Bank Credit 1.10 A3 RESERVES, M O N E Y STOCK, LIQUID ASSETS, A N D DEBT M E A S U R E S Monetary and credit aggregates (annual rates of change, seasonally adjusted in percent)' Item 1984 Q3 Q4 Q1 1985 Q2 Feb. Mar. Apr.' May' June institutions2 1 2 3 4 Reserves of depository Total Required Nonborrowed Monetary base 3 5 6 7 8 9 Concepts of money, liquid assets, and debt4 Ml M2 M3 L Debt Nontransaction 10 InM2 5 11 In M3 only 6 1985 6.9' 6.7' -44.7' 7.1' 3.8' 3.C 36.3' 4.7' 17.4' 16.9"57.3' 8.2' 12.2 12.3 14.1 7.5 24.1' 19.7' 28.3' 11.(K 1.1' 5.4' -8.1' 5.3' 7.1 8.1 15.7 3.6 18.1 16.4 18.3 10.6 24.9 22.3 29.6 13.5 4.5 6.8 9.5 12.1' 12.6 3.2 9.1 11.0 9.5' 13.4 10.6 12.0 10.7 9.8 13.4 10.2 5.3 5.2 n.a. 11.7 14.3 11.1 8.1 10.1 11.1' 5.7 4.1 5.6' 8.7' 10.9<- 5.9 -.9 .2 .7 12.1 14.0 8.6 7.8 n.a. 11.7 19.8 14.0 10.9 n.a. n.a. 7.6 20.5 10.9 18.7 12.5 5.4' 3.8 4.8 10.1 -3.3 3.5 11.8' -3.0 5.0 6.9 4.6 12.2 -1.0 -5.6 13.4 19.3 -10.4 6.9 12.2 -8.7 -1.8 2.6 -1.7 6.5 8.3 -2.0 -8.4 9.6 -10.9 2.5 23.1 -7.0 15.0 15.1 8.0 7.1 -4.0 14.9 2.5 -19.0 -6.5 17.1 37.8 -6.6 15.2 29.8 2.2 1.7 21.0 3.3 4.2 2.3 7.9 -3.9 2.3 2.9 .5 -5.4 -.7 4.8 .8 5.0 10.6 13.2 9.2 4.8 2.3 14.7 12.0 9.1 15.6 12.7 9.2 15.9 12.6 9.9 13.1 11.2 n.a. 13.7 10.3' 12.7 10.6 10^ 11.4 13.2 11.8 n.a. 14.8 10.8 9.3 n.a. n.a. 9.6 components Time and savings deposits Commercial banks Savings 7 Small-denomination time 8 Large-denomination time 9,10 Thrift institutions 15 Savings 7 16 Small-denomination time 17 Large-denomination time 9 12 13 14 Debt components4 18 Federal 19 Nonfederal 20 Total loans and securities at commercial banks" 1. Unless otherwise noted, rates of change are calculated from average amounts outstanding in preceding month or quarter. 2. Figures incorporate adjustments for discontinuities associated with the implementation of the Monetary Control Act and other regulatory changes to reserve requirements. To adjust for discontinuities due to changes in reserve requirements on reservable nondeposit liabilities, the sum of such required reserves is subtracted from the actual series. Similarly, in adjusting for discontinuities in the monetary base, required clearing balances and adjustments to compensate for float also are subtracted from the actual series. 3. The monetary base not adjusted for discontinuities consists of total reserves plus required clearing balances and adjustments to compensate for float at Federal Reserve Banks plus the currency component of the money stock less the amount of vault cash holdings of thrift institutions that is included in the currency component of the money stock plus, for institutions not having required reserve balances, the excess of current vault cash over the amount applied to satisfy current reserve requirements. After the introduction of contemporaneous reserve requirements (CRR), currency and vault cash figures are measured over the weekly computation period ending Monday. Before CRR, all components of the monetary base other than excess reserves are seasonally adjusted as a whole, rather than by component, and excess reserves are added on a not seasonally adjusted basis. After CRR, the seasonally adjusted series consists of seasonally adjusted total reserves, which include excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted currency component of the money stock plus the remaining items seasonally adjusted as a whole. 4. Composition of the money stock measures and debt is as follows: Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults of commercial banks; (2) travelers checks of nonbank issuers; (3) demand deposits at all commercial banks other than those due to domestic banks, the U.S. government, and foreign banks and official institutions less cash items in the process of collection and Federal Reserve float; and (4) other checkable deposits (OCD) consisting of negotiable order of withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, credit union share draft accounts, and demand deposits at thrift institutions. The currency and demand deposit components exclude the estimated amount of vault cash and demand deposits respectively held by thrift institutions to service their OCD liabilities. M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs) issued by all commercial banks and overnight Eurodollars issued to U.S. residents by foreign branches of U.S. banks worldwide, MMDAs, savings and smalldenomination time deposits (time deposits—including retail RPs—in amounts of less than $100,000), and balances in both taxable and tax-exempt general purpose and broker/dealer money market mutual funds. Excludes individual retirement accounts (IRA) and Keogh balances at depository institutions and money market funds. Also excludes all balances held by U.S. commercial banks, money market funds (general purpose and broker/dealer), foreign governments and commercial banks, and the U.S. government. Also subtracted is a consolidation adjustment that represents the estimated amount of demand deposits and vault cash held by thrift institutions to service their time and savings deposits. M3: M2 plus large-denomination time deposits and term RP liabilities (in amounts of $100,000 or more) issued by commercial banks and thrift institutions, term Eurodollars held by U.S. residents at foreign branches of U.S. banks worldwide and at all banking offices in the United Kingdom and Canada, and balances in both taxable and tax-exempt, institution-only money market mutual funds. Excludes amounts held by depository institutions, the U.S. government, money market funds, and foreign banks and official institutions. Also subtracted is a consolidation adjustment that represents the estimated amount of overnight RPs and Eurodollars held by institution-only money market mutual funds. L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury securities, commercial paper and bankers acceptances, net of money market mutual fund holdings of these assets. Debt: Debt of domestic nonfinancial sectors consists of outstanding credit market debt of the U.S. government, state and local governments, and private nonfinancial sectors. Private debt consists of corporate bonds, mortgages, consumer credit (including bank loans), other bank loans, commercial paper, bankers acceptances, and other debt instruments. The source of data on domestic nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt data are on an end-of-month basis. Growth rates for debt reflect adjustments for discontinuities over time in the levels of debt presented in other tables. 5. Sum of overnight RPs and Eurodollars, money market fund balances (general purpose and broker/dealer), MMDAs, and savings and small time deposits less the estimated amount of demand deposits and vault cash held by thrift institutions to service their time and savings deposit liabilities. 6. Sum of large time deposits, term RPs, and Eurodollars of U.S. residents, money market fund balances (institution-only), less a consolidation adjustment that represents the estimated amount of overnight RPs and Eurodollars held by institution-only money market mutual funds. 7. Excludes MMDAs. 8. Small-denomination time deposits—including retail RPs—are those issued in amounts of less than $100,000. All IRA and Keogh accounts at commercial banks and thrifts are subtracted from small time deposits. 9. Large-denomination time deposits are those issued in amounts of $100,000 or more, excluding those booked at international banking facilities. 10. Large-denomination time deposits at commercial banks less those held by money market mutual funds, depository institutions, and foreign banks and official institutions. 11. Changes calculated from figures shown in table 1.23. A4 1.11 DomesticNonfinancialStatistics • September 1985 RESERVES OF DEPOSITORY INSTITUTIONS A N D RESERVE B A N K CREDIT Millions of dollars Monthly averages of daily figures Weekly averages of daily figures for week ending 1985 1985 May 15 Apr. May June May 22 May 29 187,124 189,001 188,651 188,009 186,050 185,768 187,266 188,845 188,490 188,052 164,467 163,690 777 8,454 8,372 82 0 1,316 503 12,384 11,093 4,618 16,634 166,708 165,365 1,343 8,461 8,365 96 0 1,178 587 12,067 11,091 4,618 16,696 166,584 166,451 133 8,325 8,321 4 0 1,227 600 11,915 11,090 4,618 16,749 164,869 164,869 0 8,364 8,364 0 0 1,393 589 12,793 11,091 4,618 16,687 164,355 164,355 0 8,363 8,363 0 0 1,474 591 11,267 11,091 4,618 16,701 164,223 164,223 0 8.363 8,363 0 0 1,174 496 11,512 11,091 4,618 16,715 165,262 164,694 568 8,382 8,363 19 0 1,861 144 11,617 11,091 4,618 16,728 166,676 166,676 0 8,337 8,337 0 0 819 1,055 11,958 11,091 4,618 16,739 166,052 166,052 0 8,303 8,303 0 0 1,427 798 11,910 11,090 4,618 16,750 166,709 166,709 0 8,303 8,303 0 0 735 314 11,991 11,090 4,618 16,761 180,973 575 183,019 600 185,414 596 182,900 600 183,037 602 183,966 601 184,906 602 185,548 597 185,640 597 185,139 594 6,711 218 1,556 6,591 227 1,549 2,874 229 1,657 6,883 241 1,516 3,138 233 1,618 3,245 226 1,507 2,400 217 1,494 2,077 211 1,669 2,514 240 1,768 3,754 210 1,608 June 5 June 12 June 19 June 26 SUPPLYING RESERVE F U N D S 1 Reserve Bank credit U.S. government securities 1 2 3 Bought outright Held under repurchase agreements 4 Federal agency obligations 5 6 Bought outright Held under repurchase agreements 7 8 Acceptances 9 Loans 10 Float 11 Other Federal Reserve assets 12 Gold stock 13 Special drawing rights certificate account 14 Treasury currency outstanding ABSORBING RESERVE F U N D S 15 Currency in circulation 16 Treasury cash holdings Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 18 Foreign 19 Service-related balances and adjustments 20 Other 21 Other Federal Reserve liabilities and capital 22 Reserve balances with Federal Reserve Banks 2 427 603 470 647 784 487 541 426 622 400 6,424 6,310 6,301 6,290 6,328 6,258 6,254 6,275 6,357 6,307 22,587 22,508 23,568 21,328 22,722 21,902 23,290 24,490 23,211 22,508 End-of-month figures Wednesday figures 1985 1985 Apr. May June May 15 May 22 May 29 197,652 185,262 191,442 186,438 190,176 186,578 189,908 188,647 190,224 188,027 173,913 166,460 7,453 8,903 8,372 531 0 1,525 254 13,057 164,245 164,245 0 8,363 8,363 0 0 1,765 -816 11,705 169,110 169,110 0 8,303 8,303 0 0 1,338 262 12,429 164,212 164,212 0 8,363 8,363 0 0 1,484 743 11,636 164,262 164,262 0 8,363 8,363 0 0 4,769 1,336 11,446 164,714 164,714 0 8,363 8,363 0 0 1,419 162 11,920 165,240 164,066 1,174 8,373 8,363 10 0 3,549 774 11,972 166,816 166,816 0 8,303 8,303 0 0 688 961 11,879 165,431 165,431 0 8,303 8,303 0 0 3,806 517 12,167 166,282 166,282 0 8,303 8,303 0 0 776 391 12,275 11,091 4,618 16,673 11,091 4,618 16,726 11,090 4,618 16,770 11,091 4,618 16,699 11,091 4,618 16,713 11,091 4,618 16,726 11,091 4,618 16,737 11,090 4,618 16,748 11,090 4,618 16,759 11,090 4,618 16,770 180,858 586 184,691 602 185,886 588 183,114 602 183,325 601 184,853 602 185,233 598 185,818 597 185,478 594 185,414 588 19,305 348 1,302 1,933 205 1,337 3,288 310 1,348 3,414 319 1,326 3,110 213 1,327 3,853 223 1,336 1,975 211 1,337 1,778 207 1,422 3,541 168 1,423 3,892 243 1,348 324 557 321 1,469 472 530 444 432 567 349 6,652 6,242 6,291 6,123 6,119 6,086 6,091 6,067 6,186 6,144 20,660 22,131 25,888 22,480 27,431 21,531 26,466 24,783 24,734 22,527 June 5 June 12 June 19 June 26 SUPPLYING RESERVE FUNDS 23 Reserve Bank credit 24 25 26 27 28 29 30 31 32 33 U.S. government securities 1 Bought outright Held under repurchase agreements... Federal agency obligations Bought outright Held under repurchase agreements... Acceptances Loans Float Other Federal Reserve assets 34 Gold stock 35 Special drawing rights certificate account 36 Treasury currency outstanding .. ABSORBING RESERVE F U N D S 37 Currency in circulation 38 Treasury cash holdings Deposits, other than reserve balances with Federal Reserve Banks 39 Treasury 40 Foreign 41 Service-related balances and adjustments . . . 42 Other 43 Other Federal Reserve liabilities and capital 44 Reserve balances with Federal Reserve Banks 2 1. Includes securities loaned—fully guaranteed by U.S government securities pledged with Federal Reserve Banks—and excludes (if any) securities sold and scheduled to be bought back under matched sale-purchase transactions. 2. Excludes required clearing balances and adjustments to compensate for float. NOTE. For amounts of currency and coin held as reserves, see table 1.12. Money Stock and Bank Credit 1.12 RESERVES A N D BORROWINGS A5 Depository Institutions Millions of dollars Monthly averages 8 Reserve classification 1 2 3 4 5 6 7 8 9 10 Reserve balances with Reserve Banks' Total vault cash 2 Vault cash used to satisfy reserve requirements 3 . Surplus vault cash 4 Total reserves 5 Required reserves Excess reserve balances at Reserve Banks 6 Total borrowings at Reserve Banks Seasonal borrowings at Reserve Banks Extended credit at Reserve Banks 7 1982 1983 1984 1984 Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. May' June 24,939 20,392 17,049 3,343 41,853 41,353 500 697 33 187 21,138 20,755 17,908 2,847 38,894 38,333 561 774 96 2 21,738 22,316 18,958 3,358 40,696 39,843 853 3,186 113 2,604 21,738 22,316 18,958 3,358 40,696 39,843 853 3,186 113 2,604 21,577 23,044 19,547 3,497 41,125 40,380 745 1,395 62 1,050 20,416 23,927 19,857 4,070 40,273 39,370 903 1,289 71 803 22,065 21,863 18,429 3,434 40,494 39,728 766 1,593 88 1,059 23,217 21,567 18,435 3,132 41,652 40,914 738 1,323 135 868 22,385 21,898 18,666 3,231 41,051 40,247 804 1,334 165 534 23,369 22,180 18,984 3,196 42,354 41,446 907 1,205 151 665 1985 Biweekly averages of daily figures for weeks ending 1985 11 12 13 14 15 16 17 18 19 20 Reserve balances with Reserve Banks' Total vault cash 2 Vault cash used to satisfy reserve requirements 3 . Surplus vault cash 4 Total reserves 5 Required reserves Excess reserve balances at Reserve Banks 6 Total borrowings at Reserve Banks Seasonal borrowings at Reserve Banks Extended credit at Reserve Banks 7 Feb. 27 Mar. 13 Mar. 27 Apr. 10 Apr. 24 May 8 May 22 June 5 June 19 July 3 20,731 23,203 19,272 3,931 40,002 39,191 812 1,174 81 603 22,407 21,518 18,093 3,425 40,500 39,719 782 1,865 69' 1,224 21,458 22,353 18,828 3,148 40,286 39,477 810 1,289 98 839 23,073 21,274 18,126 3,148 41,199 40,642 557 1,775 121 1,295 23,520 21,880 18,764 3,116 42,284 41,400 884 1,158 131 766 22,751 21,327 18,182 3,145 40,933 40,234 699 953 169 396 22,032 22,357 19,068 3,289 41,100 40,248 852 1,434 160 369 22,610 21,692 18,473 3,220 41,082 40,260 823 1,518 171 914 23,861 21,688 18,724 2,964 42,585 41,861 724 1,123 171 914 23,087 23,029 19,549 3,481 42,637 41,458 1,179 1,167 142 612 1. Excludes required clearing balances and adjustments to compensate for float. 2. Dates refer to the maintenance periods in which the vault cash can be used to satisfy reserve requirements. Under contemporaneous reserve requirements, maintenance periods end 30 days after the lagged computation periods in which the balances are held. 3. Equal to all vault cash held during the lagged computation period by institutions having required reserve balances at Federal Reserve Banks plus the amount of vault cash equal to required reserves during the maintenance period at institutions having no required reserve balances. 4. Total vault cash at institutions having no required reserve balances less the amount of vault cash equal to their required reserves during the maintenance period. 5. Total reserves not adjusted for discontinuities consist of reserve balances with Federal Reserve Banks, which exclude required clearing balances and adjustments to compensate for float, plus vault cash used to satisfy reserve requirements. Such vault cash consists of all vault cash held during the lagged 1.13 computation period by institutions having required reserve balances at Federal Reserve Banks plus the amount of vault cash equal to required reserves during the maintenance period at institutions having no required reserve balances. 6. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy reserve requirements less required reserves. 7. Extended credit consists of borrowing at the discount window under the terms and conditions established for the extended credit program to help depository institutions deal with sustained liquidity pressures. Because there is not the same need to repay such borrowing promptly as there is with traditional short-term adjustment credit, the money market impact of extended credit is similar to that of nonborrowed reserves. 8. Before February 1984, data are prorated monthly averages of weekly averages; beginning February 1984, data are prorated monthly averages of biweekly averages. NOTE. These data also appear in the Board's H.3 (502) release. For address, see inside front cover. FEDERAL FUNDS A N D REPURCHASE AGREEMENTS Large Member Banks 1 Averages of daily figures, in millions of dollars 1985 week ending Monday By maturity and source May 20 One day and continuing contract 1 Commercial banks in United States 2 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 3 Nonbank securities dealers 4 All other All other maturities 5 Commercial banks in United States 6 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 7 Nonbank securities dealers 8 All other MEMO: Federal funds and resale agreement loans in maturities of one day or continuing contract 9 Commercial banks in United States 10 Nonbank securities dealers 1. Banks with assets of $1 billion or more as of Dec. 31, 1977. May 27 June 3 June 10 June 17 June 24 July 1 July 8 July 15 60,948 57,948 60,878 71,025' 67,155 60,567 58,209 68,283 64,586 28,373 8,583 27,378 29,995 9,936 26,803 28,822 12,702 26,897 32,686 8,428 25,487 33,019 8,134 26,465 32,298 9,063 25,282 31,173 8,244 24,718 33,003 8,408 22,106 32,320 9,459 25,570 9,626 9,547r 9,180' 8,870' 8,883 9,278 9,728 9,732 9,326 8,163 9,499 8,719 7,646' 10,135 8,758 7,572' 8,9% 8,701 7,696' 9,214 8,724 7,517 8,870 8,488 7,671 9,238 8,545 7,890 9,517 7,943 7,861 9,139 9,061 8,397 9,004 7,528 29,212 7,492 27,759 6,982 33,482' 7,92C 31,755 7,505 30,618 7,671 31,795 7,108 34,998 6,456 30,423 7,335 30,412 7,379 A6 DomesticNonfinancialStatistics • September 1985 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per annum Current and previous levels Extended credit 2 Short-term adjustment credit and seasonal credit 1 Federal Reserve Bank Rate on 7/29/85 Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco... m 1 Vi Effective date Previous rate First 60 days of borrowing Rate on 7/29/85 Next 90 days of borrowing Previous rate Rate on 7/29/85 IVl 5/20/85 5/20/85 5/24/85 5/21/85 5/20/85 5/20/85 5/20/85 5/21/85 5/20/85 5/20/85 5/20/85 5/21/85 Range (or level)— All F.R. Banks F.R. Bank of N.Y. 7Vi 7Vi-8 IVl 8 73/»-8 7V4 73/4 73/4 6 10 24 Feb. 5 7 Mar. 10 14 May 16 23 7V4-7V4 73/4 7V4 m 63/4 1976— Jan. 19 23 Nov. 22 26 5Vi-6 5 Vi 51/4-5'/! 5V4 5 Vi 5Vi 5V4 5'/4 1977— Aug. 30 31 Sept. 2 Oct. 26 5W53/4 5^4-53/4 53/4 6 5>/4 53/4 53/4 6 6-6 Vi 6Vi 6Vi-7 7 6Vi 6Vz 7 7 Effective date In effect Dec. 31, 1973 1974— Apr. 25 30 Dec. 9 16 1975— Jan. 1978— Jan. 9 20 May 11 12 7V4 63/4-7!/4 63/4 6'/4-63/4 61/4 6-61/4 6 63/4 61/4 6V4 6 6 Effective date July 3 10 Aug. 21 Sept. 22 Oct. 16 20 Nov. 1 3 July 20 Aug. 17 20 Sept. 19 21 Oct. 8 10 Feb. 15 19 May 29 30 June 13 16 Julv 28 29 Sept. 26 Nov. 17 Dec. 5 5 1. A temporary simplified seasonal program was established on Mar. 8, 1985, and the interest rate was set at 8Vi percent at that time. On May 20 this rate was lowered to 8 percent. 2. Applicable to advances when exceptional circumstances or practices involve only a particular depository institution and to advances when an institution is under sustained liquidity pressures. As an alternative, for loans outstanding for more than 150 days, a Federal Reserve Bank may charge a flexible rate that takes into account rates on market sources of funds, but in no case will the rate charged be less than the basic rate plus one percentage point. Where credit provided to a particular depository institution is anticipated to be outstanding for an unusually prolonged period and in relatively large amounts, the time period in which each rate under this structure is applied may be shortened. See section 201.3(b)(2) of Regulation A. 3. Rates for short-term adjustment credit. For description and earlier data see the following publications of the Board of Governors: Banking and Monetary Rate on 7/29/85 Previous rate 9 9 Vi 10 SV2 Range of rates in recent years 9 7-7'/4 7V« 73/4 8 8-8Vi m 8 V2-9V1 9Vi F.R. Bank of N.Y. 71/4 m 73/4 8 ZVi m 9 Vi 9 Vi 10 10 IOV2 10>/2 10VV-11 11 11-12 12 10^ 11 11 12 12 12-13 13 12-13 13 13 13 12 12 11-12 11 11 11 10-11 10 10 10 11 12 13 13 14 11 12 12-13 13 13-14 9Vi 5/20/85 5/20/85 5/24/85 5/21/85 5/20/85 5/20/85 5/20/85 5/21/85 5/20/85 5/20/85 5/20/85 5/21/85 10 3 Range (or level)— All F.R. Banks IO-IOV2 Effective date for current rates Previous rate m m After 150 days Effective date Range (or level)— All F.R. Banks F.R. Bank of N.Y. 1981— May 8 Nov. 2 6 Dec. 4 14 13-14 13 12 1982— July 20 23 Aug. 2 3 16 27 30 Oct. 12 13 Nov. 22 26 Dec. 14 15 17 llVi-12 11 Vi 11-tlVi 11 lOVi 10-10^ 10 9Vi-10 9Vi 9-9 Vi 9 8Vi-9 8V4-9 SVi llVi im u 11 10 Vi 1984— Apr. 9 13 Nov. 21 26 Dec. 24 m-9 9 8Vi-9 8Vi 8 9 9 m m 8 1985— May 20 28 7W-8 IVl 7Vi IVI IVl IVl In effect July 29, 1985 14 13 13 12 10 10 9Vi 9 Vi 9 9 9 8V5 8 >A Statistics, 1914-1941, and 1941-1970; Annual Statistical Digest, 1970-1979, 1980, 1981, and 1982. In 1980 and 1981, the Federal Reserve applied a surcharge to short-term adjustment credit borrowings by institutions with deposits of $500 million or more that had borrowed in successive weeks or in more than 4 weeks in a calendar quarter. A 3 percent surcharge was in effect from Mar. 17, 1980, through May 7, 1980. There was no surcharge until Nov. 17,1980, when a 2 percent surcharge was adopted; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, and to 2 percent effective Oct. 12. As of Oct. 1, the formula for applying the surcharge was changed from a calendar quarter to a moving 13-week period. The surcharge was eliminated on Nov. 17, 1981. Policy Instruments 1.15 Al RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS' Percent of deposits Type of deposit, and deposit interval Member bank requirements before implementation of the Monetary Control Act Percent Net Effective date demand2 $10 million-$100 million $100 million-$400 million Over $400 million Time and savings2 Savings 7 9l/2 113/4 123/4 16'/4 12/30/76 12/30/76 12/30/76 12/30/76 12/30/76 3 3/16/67 3 Time 4 $0 million-$5 million, by maturity 30-179 days 180 days to 4 years 4 years or more Over $5 million, by maturity 30-179 days 180 days to 4 years 4 years or more 3 m 1 3/16/67 1/8/76 10/30/75 6 2Vi 1 12/12/74 1/8/76 10/30/75 1. For changes in reserve requirements beginning 1963, see Board's Annual Statistical Digest, 1971-1975, and for prior changes, see Board's Annual Report for 1976, table 13. Under provisions of the Monetary Control Act, depository institutions include commercial banks, mutual savings banks, savings and loan associations, credit unions, agencies and branches offoreign banks, and Edge Act corporations. 2. Requirement schedules are graduated, and each deposit interval applies to that part of the deposits of each bank. Demand deposits subject to reserve requirements were gross demand deposits minus cash items in process of collection and demand balances due from domestic banks. The Federal Reserve Act as amended through 1978 specified different ranges of requirements for reserve city banks and for other banks. Reserve cities were designated under a criterion adopted effective Nov. 9, 1972, by which a bank having net demand deposits of more than $400 million was considered to have the character of business of a reserve city bank. The presence of the head office of such a bank constituted designation of that place as a reserve city. Cities in which there were Federal Reserve Banks or branches were also reserve cities. Any banks having net demand deposits of $400 million or less were considered to have the character of business of banks outside of reserve cities and were permitted to maintain reserves at ratios set for banks not in reserve cities. Effective Aug. 24, 1978, the Regulation M reserve requirements on net balances due from domestic banks to their foreign branches and on deposits that foreign branches lend to U.S. residents were reduced to zero from 4 percent and 1 percent respectively. The Regulation D reserve requirement of borrowings from unrelated banks abroad was also reduced to zero from 4 percent. Effective with the reserve computation period beginning Nov. 16, 1978, domestic deposits of Edge corporations were subject to the same reserve requirements as deposits of member banks. 3. Negotiable order of withdrawal (NOW) accounts and time deposits such as Christmas and vacation club accounts were subject to the same requirements as savings deposits. The average reserve requirement on savings and other time deposits before implementation of the Monetary Control Act had to be at least 3 percent, the minimum specified by law. 4. Effective Nov. 2, 1978, a supplementary reserve requirement of 2 percent was imposed on large time deposits of $100,000 or more, obligations of affiliates, and ineligible acceptances. This supplementary requirement was eliminated with the maintenance period beginning July 24, 1980. Effective with the reserve maintenance period beginning Oct. 25, 1979, a marginal reserve requirement of 8 percent was added to managed liabilities in excess of a base amount. This marginal requirement was increased to 10 percent beginning Apr. 3, 1980, was decreased to 5 percent beginning June 12, 1980, and was eliminated beginning July 24, 1980. Managed liabilities are defined as large time deposits, Eurodollar borrowings, repurchase agreements against U.S. government and federal agency securities, federal funds borrowings from nonmember institutions, and certain other obligations. In general, the base for the marginal reserve requirement was originally the greater of (a) $100 million or (b) the average amount of the managed liabilities held by a member bank, Edge corporation, or family of U.S. branches and agencies of a foreign bank for the two reserve computation periods ending Sept. 26, 1979. For the computation period beginning Mar. 20, 1980, the base was lowered by (a) 7 percent or (b) the decrease in an institution's U.S. office gross loans to foreigners and gross balances due from foreign offices of other institutions between the base period (Sept. 13-26, 1979) and the week ending Mar. 12, 1980, whichever was greater. For the computation period beginning May 29, 1980, the base was increased by iVi percent above the base used to calculate the marginal reserve in the statement Type of deposit, and deposit interval 5 Depository institution requirements after implementation of the Monetary Control Act 6 Percent Effective date Net transaction accounts7,8 $0-$29.8 million Over $29.8 million 3 12 1/1/85 1/1/85 Nonpersonal time deposits9 By original maturity Less than l'/2 years l'/2 years or more 3 0 10/6/83 10/6/83 Eurocurrency All types 3 11/13/80 liabilities week of May 14-21, 1980. In addition, beginning Mar. 19, 1980, the base was reduced to the extent that foreign loans and balances declined. 5. The Garn-St Germain Depository Institutions Act of 1982 (Public Law 97320) provides that $2 million of reservable liabilities (transaction accounts, nonpersonal time deposits, and Eurocurrency liabilities) of each depository institution be subject to a zero percent reserve requirement. The Board is to adjust the amount of reservable liabilities subject to this zero percent reserve requirement each year for the next succeeding calendar year by 80 percent of the percentage increase in the total reservable liabilities of ail depository institutions, measured on an annual basis as of June 30. No corresponding adjustment is to be made in the event of a decrease. Effective Dec. 9, 1982, the amount of the exemption was established at $2.1 million. Effective with the reserve maintenance period beginning Jan. 1, 1985, the amount of the exemption is $2.4 million. In determining the reserve requirements of a depository institution, the exemption shall apply in the following order: (1) nonpersonal money market deposit accounts (MMDAs) authorized under 12 CFR section 1204.122; (2) net NOW accounts (NOW accounts less allowable deductions); (3) net other transaction accounts; and (4) nonpersonal time deposits or Eurocurrency liabilities starting with those with the highest reserve ratio. With respect to NOW accounts and other transaction accounts, the exemption applies only to such accounts that would be subject to a 3 percent reserve requirement. 6. For nonmember banks and thrift institutions that were not members of the Federal Reserve System on or after July 1, 1979, a phase-in period ends Sept. 3, 1987. For banks that were members on or after July 1, 1979, but withdrew on or before Mar. 31, 1980, the phase-in period established by Public Law 97-320 ends on Oct. 24, 1985. For existing member banks the phase-in period of about three years was completed on Feb. 2, 1984. All new institutions will have a two-year phase-in beginning with the date that they open for business, except for those institutions that have total reservable liabilities of $50 million or more. 7. Transaction accounts include all deposits on which the account holder is permitted to make withdrawals by negotiable or transferable instruments, payment orders of withdrawal, and telephone and preauthorized transfers (in excess of three per month) for the purpose of making payments to third persons or others. However, MMDAs and similar accounts offered by institutions not subject to the rules of the Depository Institutions Deregulation Committee (DIDC) that permit no more than six preauthorized, automatic, or other transfers per month of which no more than three can be checks—are not transaction accounts (such accounts are savings deposits subject to time deposit reserve requirements.) 8. The Monetary Control Act of 1980 requires that the amount of transaction accounts against which the 3 percent reserve requirement applies be modified annually by 80 percent of the percentage increase in transaction accounts held by all depository institutions determined as of June 30 each year. Effective Dec. 31, 1981, the amount was increased accordingly from $25 million to $26 million; effective Dec. 30, 1982, to $26.3 million; effective Dec. 29, 1983, to $28.9 million; and effective Jan. 1, 1985, to $29.8 million. 9. In general, nonpersonal time deposits are time deposits, including savings deposits, that are not transaction accounts and in which a beneficial interest is held by a depositor that is not a natural person. Also included are certain transferable time deposits held by natural persons, and certain obligations issued to depository institution offices located outside the United States. For details, see section 204.2 of Regulation D. NOTE. Required reserves must be held in the form of deposits with Federal Reserve Banks or vault cash. Nonmembers may maintain reserve balances with a Federal Reserve Bank indirectly on a pass-through basis with certain approved institutions. A8 DomesticNonfinancialStatistics • September 1985 1.16 MAXIMUM INTEREST RATES PAYABLE on Time and Savings Deposits at Federally Insured Institutions1 Percent per annum Type of deposit Commercial banks Savings and loan associations and mutual savings banks (thrift institutions) 1 In effect July 31, 1985 In effect July 31, 1985 Percent 1 2 3 4 Savings Negotiable order of withdrawal accounts Negotiable order of withdrawal accounts of $1,000 or more 2 Money market deposit account 2 Time accounts 5 7-31 days of less than $1,0004 6 7-31 days of $1,000 or more 2 7 More than 31 days 1. Effective Oct. 1, 1983, restrictions on the maximum rates of interest payable by commercial banks and thrift institutions on various categories of deposits were removed. For information regarding previous interest rate ceilings on all categories of accounts see earlier issues of the FEDERAL RESERVE BULLETIN, the Federal Home Loan Bank Board Journal, and the Annual Report of the Federal Deposit Insurance Corporation. 2. Effective Dec. 1, 1983, IRA/Keogh (HR10) Plan accounts are not subject to minimum deposit requirements. Effective Jan. 1, 1985, the minimum denomination requirement was lowered from $2,500 to $1,000. 3. Effective Dec. 14, 1982, depository institutions are authorized to offer a new account with a required initial balance of $2,500 and an average maintenance balance of $2,500 not subject to interest rate restrictions. Effective Jan. 1, 1985, 5 Vi 5V4 (3) 5Vi Effective date 1/1/84 12/31/80 1/5/83 12/14/82 1/1/84 1/5/83 10/1/83 Percent 5Vi 5!/4 3 ( ) 5Vi Effective date 7/1/79 12/31/80 1/5/83 12/14/82 9/1/82 1/5/83 10/1/83 the minimum denomination and average maintenance balance requirements was lowered to $1,000. No minimum maturity period is required for this account, but depository institutions must reserve the right to require seven days, notice before withdrawals. When the average balance is less than $1,000, the account is subject to the maximum ceiling rate of interest for NOW accounts; compliance with the average balance requirement may be determined over a period of one month. Depository institutions may not guarantee a rate of interest for this account for a period longer than one month or condition the payment of a rate on a requirement that the funds remain on deposit for longer than one month. 4. Effective Jan. 1, 1985, the minimum denomination requirement was lowered from $2,500 to $1,000. Deposits of less than $1,000 issued to governmental units continue to be subject to an interest rate ceiling of 8 percent. Policy Instruments 1.17 A9 FEDERAL RESERVE OPEN MARKET TRANSACTIONS Millions of dollars 1985 1984 Type of transaction 1982 1983 1984 Nov. Jan. Dec. Apr. Mar. Feb. May U . S . GOVERNMENT SECURITIES Outright transactions (excluding matched transactions) 1 2 3 4 Treasury bills Gross purchases Gross sales Exchange Redemptions 5 6 7 8 9 17,067 8,369 0 3,000 18,888 3,420 0 2,400 20,036 8,557 0 7,700 4,463 0 0 0 3,410 0 0 0 0 2,668 0 1,600 2,976 214 0 400 916 554 0 500 6,026 0 0 0 274 417 0 800 Others within 1 year Gross purchases Gross sales Maturity shift Exchange Redemptions 312 0 17,295 -14,164 0 484 0 18,887 -16,553 87 1,126 0 16,354 -20,840 0 146 0 1,348 -3,363 0 182 0 771 -966 0 0 0 596 -625 0 0 0 1,987 -2,739 0 961 0 1,299 0 0 245 0 1,129 -1,463 0 0 0 2,443 -2,945 0 10 11 12 13 1 to 5 years Gross purchases Gross sales Maturity shift Exchange 1,797 0 -14,524 11,804 1,896 0 -15,533 11,641 1,638 0 -13,709 16,039 830 0 594 1,763 0 0 -771 966 0 0 -5% 625 0 0 -1,902 1,645 465 0 -1,299 0 846 0 -1,114 1,463 0 0 -2,101 1,940 14 15 16 17 5 to 10 years Gross purchases Gross sales Maturity shift Exchange 388 0 -2,172 2,128 890 0 -2,450 2,950 536 300 -2,371 2,750 335 0 -1,893 850 0 0 0 0 0 100 0 0 0 0 -54 600 0 0 0 0 108 0 -16 0 0 0 42 600 18 19 20 21 Over 10 years Gross purchases Gross sales Maturity shift Exchange 307 0 -601 234 383 0 -904 1,962 441 0 -275 2,052 164 0 -49 750 0 0 0 0 0 0 0 0 0 0 -30 493 0 0 0 0 0 0 0 0 0 0 -384 405 22 23 24 All maturities Gross purchases Gross sales Redemptions 19,870 8,369 3,000 22,540 3,420 2,487 23,476 7,553 7,700 5,938 0 0 3,591 0 0 0 2,768 1,600 2,976 214 400 2,343 554 500 7,321 0 0 274 417 800 25 26 Matched transactions Gross sales Gross purchases 543,804 543,173 578,591 576,908 808,986 810,432 51,904 55,516 63,674 61,537 66,668 66,367 57,076 57,283 54,718 57,288 65,845 64,001 78,870 77,597 27 28 Repurchase agreements Gross purchases Gross sales 130,774 130,286 105,971 108,291 139,441 139,019 12,063 12,063 3,888 2,261 20,225 21,852 19,584 17,077 4,922 7,429 11,540 4,088 21,716 29,168 8,358 12,631 8,908 9,549 3,080 -6,295 5,077 1,351 12,931 -9,668 0 0 189 0 0 292 0 0 256 0 0 90 0 0 0 0 0 0 0 0 17 0 0 0 0 0 0 8 18,957 18,638 8,833 9,213 1,205 817 698 698 506 119 1,463 1,851 2,428 2,048 445 825 983 452 1,336 1,867 130 -672 132 -90 388 388 363 -380 531 -540 36 Repurchase agreements, net 1,285 -1,062 -418 0 0 0 0 0 0 0 37 Total net change in System Open Market Account 9,773 10,897 6,116 9,459 3,468 -6,683 5,440 971 13,462 -10,208 29 Net change in U.S. government securities FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 31 Gross sales 32 Redemptions Repurchase agreements 34 Gross sales 35 Net change in federal agency obligations * BANKERS ACCEPTANCES NOTE: Sales, redemptions, and negative figures reduce holdings of the System Open Market Account; all other figures increase such holdings. Details may not add to totals because of rounding. A10 1.18 DomesticNonfinancialStatistics • September 1985 FEDERAL RESERVE BANKS Condition and Federal Reserve N o t e Statements Millions of dollars Account May 29 Wednesday End of month 1985 1985 June 12 June 5 June 19 June 26 May Apr. June Consolidated condition statement ASSETS 11,091 4,618 491 11,091 4,618 481 11,090 4,618 489 11,090 4,618 482 11,090 4,618 481 11,091 4,618 561' 11,091 4,618 490 11,090 4,618 474 1,419 0 3,549 0 688 0 3,806 0 776 0 1,525 0 1,765 0 1,338 0 1 Gold certificate account 2 Special drawing rights certificate account 3 Coin Loans 4 To depository institutions 5 Other Acceptances—Bought outright 6 Held under repurchase agreements Federal agency obligations 7 Bought outright 8 Held under repurchase agreements U.S. government securities Bought outright 9 Bills 10 Notes 11 Bonds 12 Total bought outright 1 13 Held under repurchase agreements 14 Total U.S. government securities 0 0 0 0 0 0 0 0 8,363 0 8,363 10 8,303 0 8,303 0 8,303 0 8,372 531 8,363 0 8,303 0 73,905 67,066 23,743 164,714 0 164,714 73,257 67,066 23,743 164,066 1,174 165,240 76,007 67,066 23,743 166,816 0 166,816 74,622 67,066 23,743 165,431 0 165,431 75,473 67,066 23,743 166,282 0 166,282 75,651 67,269 23,540 166,460 7,453 173,913 73,436 67,066 23,743 164,245 0 164,245 78,301 67,066 23,743 169,110 0 169,110 15 Total loans and securities 174,496 177,162 175,807 177,540 175,361 184,341 174,373 178,751 8,278 581 7,557 581 7,304 582 7,782 584 6,316 583 9,730 577 6,865 581 6,277 585 4,026 7,313 4,058 7,333 4,069 7,228 4,072 7,511 4,075 7,617 4,007 8,473 4,058 7,066 4,149 7,695 210,894 212,881 211,187 213,679 210,141 223,398' 209,142 213,639 16 Cash items in process of collection 17 Bank premises Other assets 18 Denominated in foreign currencies 2 19 All other 3 20 Total assets LIABILITIES 169,219 169,574 170,155 169,795 169,713 165,331' 169,056 170,178 22 23 24 25 22,867 3,853 223 530 27,803 1,975 211 444 26,205 1,778 207 432 26,157 3,541 168 567 23,875 3,892 243 349 21,962 19,305 348 324 23,468 1,933 205 557 27,236 3,288 310 321 26 Total deposits 27,473 30,433 28,622 30,433 28,359 41,939 26,163 31,155 8,116 2,335 6,783 2,320 6,343 2,305 7,265 2,423 5,925 2,381 9,476 2,614 7,681 2,359 6,015 2,315 207,143 209,110 207,425 209,916 206,378 219,360r 205,259 209,663 1,714 1,626 411 1,713 1,626 432 1,717 1,626 419 1,716 1,626 421 1,721 1,626 416 1,702 1,626 710 1,713 1,626 544 1,721 1,626 629 33 Total liabilities and capital accounts 210,894 212,881 211,187 213,679 210,141 223,398' 209,142 213,639 34 MEMO: Marketable U.S. government securities held in custody for foreign and international account 120,328 122,203 120,826 122,401 121,759 116,712 119,753 121,276 21 Federal Reserve notes Deposits To depository institutions U.S. Treasury—General account Foreign—Official accounts Other 27 Deferred availability cash items 28 Other liabilities and accrued dividends 4 29 Total liabilities CAPITAL ACCOUNTS 30 Capital paid in 31 Surplus 32 Other capital accounts Federal Reserve note statement 35 Federal Reserve notes outstanding 36 LESS: Held by bank Federal Reserve notes, net 37 Collateral held against notes net: 38 Gold certificate account 39 Special drawing rights certificate account 40 Other eligible assets 41 U.S. government and agency securities 198,229 29,010 169,219 198,487 28,913 169,574 198,882 28,727 170,155 199,819 30,024 169,795 200,227 30,514 169,713 196,490 31,159' 165,331' 198,021 28,965 169,056 200,234 30,056 170,178 11,091 4,618 0 153,510 11,091 4,618 0 153,865 11,090 4,618 0 154,447 11,090 4,618 0 154,087 11,090 4,618 0 154,005 11,091 4,618 0 149,622' 11,091 4,618 0 153,347 11,090 4,618 0 154,470 42 Total collateral 169,219 169,574 170,155 169,795 169,713 165,331' 169,056 170,178 1. Includes securities loaned—fully guaranteed by U.S. government securities pledged with Federal Reserve Banks—and excludes (if any) securities sold and scheduled to be bought back under matched sale-purchase transactions. 2. Assets shown in this line are revalued monthly at market exchange rates. 3. Includes special investment account at Chicago of Treasury bills maturing within 90 days. 4. Includes exchange-translation account reflecting the monthly revaluation at market exchange rates of foreign-exchange commitments. NOTE: Some of these data also appear in the Board's H.4.1 (503) release. For address, see inside front cover. Federal Reserve Banks 1.19 FEDERAL RESERVE BANKS All Maturity Distribution of Loan and Security Holdings Millions of dollars Type and maturity groupings Wednesday End of month 1985 1985 May 29 June 5 June 12 June 19 June 26 Apr. 30 May 31 June 28 1 Loans—Total 2 Within 15 days 3 16 days to 90 days 4 91 days to 1 year 1,419 1,363 56 0 3,549 3,465 84 0 688 620 68 0 3,806 3,792 14 0 776 759 17 0 1,525 1,438 87 0 1,765 1,700 65 0 1,338 937 401 0 5 Acceptances—Total 6 Within 15 days 7 16 days to 90 days 8 91 days to 1 year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 164,714 7,975 35,578 47,935 37,132 15,281 20,813 165,240 8,784 35,562 47,758 37,042 15,281 20,813 166,816 7,585 39,303 46,792 37,042 15,281 20,813 165,431 5,042 38,375 48,878 37,042 15,281 20,813 166,282 7,230 37,122 48,794 37,042 15,281 20,813 173,913 12,305 38,406 50,568 37,204 14,638 20,792 164,245 4,256 38,379 48,474 37,042 15,281 20,813 169,110 7,604 39,719 48,651 37,042 15,281 20,813 8,363 162 566 1,918 4,089 1,229 399 8,373 89 678 1,931 4,053 1,223 399 8,303 0 778 1,871 4,023 1,232 399 8,303 120 658 1,871 4,023 1,232 399 8,303 159 619 1,871 4,023 1,232 399 8,903 613 533 1,991 4,083 1,284 399 8,363 162 566 1,918 4,089 1,229 399 8,303 159 677 1,813 4,023 1,232 399 9 U.S. government securities—Total 10 Within 15 days 1 11 16 days to 90 days 1? 91 days to 1 year n Over 1 year to 5 years 14 Over 5 years to 10 years 15 Over 10 years 16 Federal agency obligations—Total 17 Within 15 days 1 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 1. Holdings under repurchase agreements are classified as maturing within 15 days in accordance with maximum maturity of the agreements. A12 1.20 DomesticNonfinancialStatistics • September 1985 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS A N D MONETARY BASE Billions of dollars, averages of daily figures Item 1981 Dec. 1982 Dec. 1983 Dec. 1984 1984 Dec. Nov. 2 3 4 5 Nonborrowed reserves Nonborrowed reserves plus extended credit 3 Required reserves Monetary base 4 Dec. Jan. May' June Feb. Mar. Apr. 40.43' 40.47' 40.71' 41.32 42.18 33.85' 35.9<y 38.24' 39.14' 38.88' 37.69' 38.5(y 39.29' 39.95' 39.94' 37.77' 38.23' 38.89' 39.53' 39.71' 197.67' 199.03' 200.21' 202.05' 202.95' 39.39' 40.26' 39.97' 203.56' 39.99 40.52 40.52 205.35 40.97 41.64 41.27 207.66 Seasonally adjustec ADJUSTED FOR 1 Total reserves2 1985 32.10 34.28 31.46 31.61 31.78 158.10 33.65 33.83 33.78 170.14 36.14 39.08r 35.36 35.90' 35.37 38.5C 35.58 38.23' 185.49 199.03' 38.47' 39.08' 39.64' Not seasonally adjusted 6 Total reserves2 7 8 9 10 Nonborrowed reserves Nonborrowed reserves plus extended credit 3 Required reserves Monetary base 4 32.82 35.01 32.18 32.33 32.50 160.94 34.37 34.56 34.51 173.17 40.13 38.69 40.13 40.70 39.88 40.07 41.25 40.64 41.96 36.09 36.94 36.09 39.55 36.30 39.28 188.76 202.02 34.07 37.91 37.99 198.22 36.94 39.55 39.28 202.02 39.31 40.36 39.% 200.93 38.59 39.39 38.97 199.54 38.47 39.53 39.30 200.86 39.93 40.80 40.52 203.42 39.31 39.84 39.84 204.54 40.76 41.42 41.05 207.99 36.86 N O T ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS 5 11 Total reserves2 12 13 14 15 Nonborrowed reserves Nonborrowed reserves plus extended credit 3 Required reserves Monetary base 4 41.92 41.85 41.29 41.44 41.61 170.47 41.22 41.41 41.35 180.52 1. Figures incorporate adjustments for discontinuities associated with the implementation of the Monetary Control Act and other regulatory changes to reserve requirements. To adjust for discontinuities due to changes in reserve requirements on reservable nondeposit liabilities, the sum of such required reserves is subtracted from the actual series. Similarly, in adjusting for discontinuities in the monetary base, required clearing balances and adjustments to compensate for float also are subtracted from the actual series. 2. Total reserves not adjusted for discontinuities consist of reserve balances with Federal Reserve Banks, which exclude required clearing balances and adjustments to compensate for float, plus vault cash used to satisfy reserve requirements. Such vault cash consists of all vault cash held during the lagged computation period by institutions having required reserve balances at Federal Reserve Banks plus the amount of vault cash equal to required reserves during the maintenance period at institutions having no required reserve balances. 3. Extended credit consists of borrowing at the discount window under the terms and conditions established for the extended credit program to help depository institutions deal with sustained liquidity pressures. Because there is not the same need to repay such borrowing promptly as there is with traditional short-term adjustment credit, the money market impact of extended credit is similar to that of nonborrowed reserves. 4. The monetary base not adjusted for discontinuities consists of total reserves plus required clearing balances and adjustments to compensate for float at Federal Reserve Banks and the currency component of the money stock less the amount 38.89 40.70 39.23 40.70 41.12 40.27 40.49 41.65 41.05 42.35 38.12 37.51 38.12 40.09 38.33 39.84 192.36 202.59 34.62 38.54 38.54 198.77 37.51 40.09 39.84 202.59 39.73 40.88 40.38 201.35 38.98 39.83 39.37 199.94 38.90 40.03 39.73 201.29 40.33 40.77 40.91 203.81 39.72 40.45 40.25 204.94 41.15 41.88 41.45 208.39 of vault cash holdings of thrift institutions that is included in the currency component of the money stock plus, for institutions not having required reserve balances, the excess of current vault cash over the amount applied to satisfy current reserve requirements. After the introduction of contemporaneous reserve requirements (CRR), currency and vault cash figures are measured over the weekly computation period ending Monday. Before CRR, all components of the monetary base other than excess reserves are seasonally adjusted as a whole, rather than by component, and excess reserves are added on a not seasonally adjusted basis. After CRR, the seasonally adjusted series consists of seasonally adjusted total reserves, which include excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted currency component of the money stock and the remaining items seasonally adjusted as a whole. 5. Reflects actual reserve requirements, including those on nondeposit liabilities, with no adjustments to eliminate the effects of discontinuities associated with implementation of the Monetary Control Act or other regulatory changes to reserve requirements. NOTE. Latest monthly and biweekly figures are available from the Board's H.3(502) statistical release. Historical data and estimates of the impact on required reserves of changes in reserve requirements are available from the Banking Section, Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Monetary and Credit Aggregates 1.21 A13 M O N E Y STOCK, LIQUID ASSETS, A N D D E B T M E A S U R E S Billions of dollars, averages of daily figures 1985 item 1981 Dec. 1982 Dec. 1983 Dec. 1984 Dec. Mar. Apr. May June Seasonally adjusted 1 2 3 4 5 Ml M2 M3 L Debt 441.8 1,794.4 2,235.8 2,596.5 4,309.5 480.8 1,954.9 2,446.8 2,857.4 4,709.7 528.0 2,188.8 2,701.8 3,176.4 5,224.6 558.5 2,371.7 2,995.0 3,543.8 5,953.2 572.1 2,429.2 3,055.3r 3,624.1' 6,129.6' 574.9' 2,427.3' 3,055.9' 3,626.3' 6,191.4' 581.6 2,444.6' 3,075.7' n.a. 6,251.9 591.2 2,473.1 3,103.7 n.a. n.a. 6 7 8 9 Ml components Currency 2 Travelers checks 3 Demand deposits 4 Other checkable deposits 5 124.0 4.4 235.2 78.2 134.3 4.3 238.6 103.5 148.4 4.9 243.5 131.3 158.7 5.2 248.6 146.0 161.3 5.4 251.9 153.6 161.7 5.5 252.5 155.3 163.1' 5.5 255.7 157.3 164.5 5.7 260.7 160.3 10 11 Nontransactions components In M26 In M3 only 7 1,352.6 441.4 1,474.0 492.0 1,660.8 512.9 1,813.2 623.3 1,857.0 626.1' 1,852.3' 628.7' 1,863.(K 631.1' 1,882.0 630.6 12 13 Savings deposits 9 Commercial Banks Thrift institutions 158.6 185.8 163.5 194.4 133.4 173.6 122.6 166.0 120.3 168.4 119.6 168.3 120.4 169.0 121.9 170.3 14 15 Small denomination time deposits 9 Commerical Banks Thrift institutions 347.8 475.8 379.8 471.7 350.7 433.8 387.0 498.6 382.8 495.8 387.6 497.8 389.9 502.2' 390.7 504.2 16 17 Money market mutual funds General purpose and broker/dealer Institution-only 150.6 38.0 185.2 51.1 138.2 43.2 167.5 62.7 177.6 59.5 176.2' 59.5 172.2 63.5 175.4 67.1 18 19 Large denomination time deposits 10 Commercial Banks" Thrift institutions 247.5 54.6 262.0 66.2 228.9 101.9 264.4 151.8 269.5 154.2 272.9' 154.3 272.0' 156.0 267.7 156.3 20 21 Debt components Federal debt Non-federal debt 825.9 3,483.6 979.3 3,730.4 1,172.8 4,051.8 1,367.0 4,586.2' 1,413.5 4,716.2' 1,429.0 4,762.4' 1,446.6 4,805.3 n.a. n.a. 576.2 2,440.7' 3,073.6' n.a. 6,223.1 592.2 2,476.8 3,106.4 n.a. n.a. Not seasonally adjusted 22 23 24 25 26 Ml M2 M3 L Debt 452.2 1,798.7 2,243.4 2,604.7 4,304.7 491.8 1,959.6 2,454.4 2,862.1 4,703.8 539.7 2,194.0 2,709.2 3,180.1 5,218.8 570.4 2,376.7 3,002.2 3,545.1 5,947.3' 564.9 2,429.4' 3,057.0' 3,631.5' 6,100.8' 581.6 2,439.2' 3,067.8' 3,639.5' 6,160.9' 27 28 29 30 Ml components Currency 2 Travelers checks 3 Demand deposits 4 Other checkable deposits 5 126.2 4.1 243.4 78.5 136.5 4.0 247.2 104.1 150.5 4.6 252.2 132.4 160.9 4.9 257.4 147.2 159.8 5.1 246.3 153.6 161.2 5.2 255.1 160.1 163.2' 5.4 251.4 156.2 165.2 6.0 259.7 161.3 31 32 Nontransactions components M26 M3 only7 1,346.5 444.7 1,467.8 494.8 1,654.2 515.2 1,806.2 625.5 1,864.6 627.6' 1,857.6' 628.7' 1,864.5' 632.9' 1,884.6 629.6 33 34 Money market deposit accounts Commercial banks Thrift institutions n.a. .0 26.3 16.9 230.5 148.7 267.1 147.9 294.0 163.9 295.9 164.4 298.2' 165.4' 307.3 167.6 35 36 Savings deposits 8 Commercial Banks Thrift institutions 157.5 184.7 162.1 193.2 132.2 172.5 121.4 164.9 120.6 168.2 120.9 169.3 121.7 170.2 123.2 172.7 37 38 Small denomination time deposits 9 Commercial Banks Thrift institutions 347.7 475.5 380.1 471.7 351.1 434.2 387.6 499.4 383.7 496.2 383.9 495.6 385.2 495.7' 386.3 497.5 39 40 Money market mutual funds General purpose and broker/dealer Institution-only 150.6 38.0 185.2 51.1 138.2 43.2 167.5 62.7 177.6 59.5 176.2' 59.5 172.2 63.5 175.4 67.1 41 42 Large denomination time deposits 10 Commercial Banks 11 Thrift institutions 251.7 54.4 265.2 65.9 230.8 101.4 265.9 151.1 269.8 153.3 270.4' 153.4 269.9' 156.0' 267.2 155.8 43 44 Debt components Federal debt Non-federal debt 823.0 3,481.7 976.4 3,727.4 1,170.2 4,048.6 1,364.7 4,582.5 1,412.0 4,688.8' 1,427.1 4,733.8' For notes see following page. 1,443.8 4,779.4 n.a. n.a. A14 DomesticNonfinancialStatistics • September 1985 NOTES TO TABLE 1.21 1. Composition of the money stock measures and debt is as follows: Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults of commercial banks; (2) travelers checks of nonbank issuers; (3) demand deposits at all commercial banks other than those due to domestic banks, the U.S. government, and foreign banks and official institutions less cash items in the process of collection and Federal Reserve float; and (4) other checkable deposits (OCD) consisting of negotiable order of withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, credit union share draft accounts, and demand deposits at thrift institutions. The currency and demand deposit components exclude the estimated amount of vault cash and demand deposits respectively held by thrift institutions to service their OCD liabilities. M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs) issued by all commercial banks and overnight Eurodollars issued to U.S. residents by foreign branches of U.S. banks worldwide, MMDAs, savings and smalldenomination time deposits (time deposits—including retail RPs—in amounts of less than $100,000), and balances in both taxable and tax-exempt general purpose and broker/dealer money market mutual funds. Excludes individual retirement accounts (IRA) and Keogh balances at depository institutions and money market funds. Also excludes all balances held by U.S. commercial banks, money market funds (general purpose and broker/dealer), foreign governments and commercial banks, and the U.S. government. Also subtracted is a consolidation adjustment that represents the estimated amount of demand deposits and vault cash held by thrift institutions to service their time and savings deposits. M3: M2 plus large-denomination time deposits and term RP liabilities (in amounts of $100,000 or more) issued by commercial banks and thrift institutions, term Eurodollars held by U.S. residents at foreign branches of U.S. banks worldwide and at all banking offices in the United Kingdom and Canada, and balances in both taxable and tax-exempt, institution-only money market mutual funds. Excludes amounts held by depository institutions, the U.S. government, money market funds, and foreign banks and official institutions. Also subtracted is a consolidation adjustment that represents the estimated amount of overnight RPs and Eurodollars held by institution-only money market mutual funds. L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury securities, commercial paper and bankers acceptances, net of money market mutual fund holdings of these assets. Debt: Debt of domestic nonfinancial sectors consists of outstanding credit market debt of the U.S. government, state and local governments, and private nonfinancial sectors. Private debt consists of corporate bonds, mortgages, consumer credit (including bank loans), other bank loans, commercial paper, bankers acceptances, and other debt instruments. The source of data on domestic nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt data are on an end-of-month basis. 2. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of commercial banks. Excludes the estimated amount of vault cash held by thrift institutions to service their OCD liabilities. 3. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. Travelers checks issued by depository institutions are included in demand deposits. 4. Demand deposits at commercial banks and foreign-related institutions other than those due to domestic banks, the U.S. government, and foreign banks and official institutions less cash items in the process of collection and Federal Reserve float. Excludes the estimated amount of demand deposits held at commercial banks by thrift institutions to service their OCD liabilities. 5. Consists of NOW and ATS balances at all depository institutions, credit union share draft balances, and demand deposits at thrift institutions. Other checkable deposits seasonally adjusted equals the difference between the seasonally adjusted sum of demand deposits plus OCD and seasonally adjusted demand deposits. Included are all ceiling free "Super NOWs," authorized by the Depository Institutions Deregulation committee to be offered beginning Jan. 5, 1983. 6. Sum of overnight RPs and overnight Eurodollars, money market fund balances (general purpose and broker/dealer), MMDAs, and savings and small time deposits, less the consolidation adjustment that represents the estimated amount of demand deposits and vault cash held by thrift institutions to service their time and savings deposits liabilities. 7. Sum of large time deposits, term RPs and term Eurodollars of U.S. residents, money market fund balances (institution-only), less a consolidation adjustment that represents the estimated amount of overnight RPs and Eurodollars held by institution-only money market funds. 8. Savings deposits exclude MMDAs. 9. Small-denomination time deposits—including retail RPs— are those issued in amounts of less than $100,000. All individual retirement accounts (IRA) and Keogh accounts at commercial banks and thrifts are subtracted from small time deposits. 10. Large-denomination time deposits are those issued in amounts of $100,000 or more, excluding those booked at international banking facilities. 11. Large-denomination time deposits at commercial banks less those held by money market mutual funds, depository institutions, and foreign banks and official institutions. NOTE: Latest monthly and weekly figures are available from the Board's H.6 (508) release. Historical data are available from the Banking Section, Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Monetary and Credit Aggregates 1.22 A15 B A N K DEBITS A N D DEPOSIT TURNOVER Debits are shown in billions of dollars, turnover as ratio of debits to deposits. Monthly data are at annual rates. 1984 1985 Dec. Jan. Feb. Mar. Apr/ May Seasonally adjusted DEBITS TO 2 Demand deposits 1 All insured banks 2 Major New York City banks 3 Other banks 4 ATS-NOW accounts 3 5 Savings deposits 4 80,858.7 34,108.1 46,966.5 761.0 679.6 90,914.4 37,932.9 52,981.5 1,036.2 720.3 109,642.3 47,769.4 61,873.1 1,405.5 741.4 137,512.0 62,341.0 75,171.0 1,677.5 486.0 140,678.6 64,474.7 76,203.9 1,552.0 501.3 143,281.5 63,157.0 80,124.5 1,618.6 499.8 139,608.3 62,523.7 77,084.6 1,567.0 539.2 156,513.2 70,621.4 85,891.8 1,689.3 589.0 149,252.8 66,394.3 82,858.4 1,771.1 636.4 285.8 1,116.7 185.9 14.4 4.1 324.2 1,287.6 211.1 14.5 4.5 379.7 1,528.0 240.9 15.6 5.4 453.4 1,903.0 277.8 16.3 4.0 468.6 2,008.6 284.2 14.6 4.2 471.4 1,902.2 295.9 15.0 4.2 456.3 1,967.0 281.1 14.4 4.6 515.4 2,183.9 316.5 15.4 5.0 484.6 2,079.6 300.2 16.1 5.4 DEPOSIT TURNOVER 6 7 8 9 10 Demand deposits 2 All insured banks Major New York City banks Other banks ATS-NOW accounts 3 Savings deposits 4 11 12 13 14 15 16 Demand deposits 2 All insured banks Major New York City banks Other banks ATS-NOW accounts 3 MMDA 5 Savings deposits 4 Not seasonally adjusted DEBITS TO 81,197.9 34,032.0 47,165.9 737.6 91,031.8 38,001.0 53,030.9 1,027.1 672.9 720.0 286.4 1,114.2 186.2 14.0 325.0 1,295.7 211.5 14.4 4.1 4.5 109,517.6 47,707.4 64,310.2 1,397.0 567.4 742.0 140,166.0 64,498.9 75,667.1 1,625.4 899.7 470.6 148,880.1 68,203.1 80,677.0 1,838.9 1,103.9 544.7 129,297.2 57,337.4 71,959.8 1,524.4 980.9 455.5 143,154.3 64,188.9 78,965.4 1,624.7 1,032.5 552.9 151,536.1 67,422.3 84,113.8 1,946.1 1,221.4 644.4 151,342.3 67,249.3 84,093.0 1,775.5 1,146.7 621.1 379.9 1,510.0 240.5 15.5 2.8 5.4 447.1 1,910.8 270.5 15.4 3.4 3.9 486.0 2,025.9 295.9 17.1 4.0 4.6 437.2 1,780.6 273.0 14.3 3.4 3.9 480.9 1,990.7 297.5 14.9 3.5 4.7 498.1 2,138.6 308.4 17.2 4.2 5.4 505.5 2,205.8 312.7 16.2 3.9 5.2 DEPOSIT TURNOVER Demand deposits 2 17 All insured banks 18 Major New York City banks 19 Other banks 20 ATS-NOW accounts 3 71 MMDA 5 22 Savings deposits 4 1. Annual averages of monthly figures. 2. Represents accounts of individuals, partnerships, and corporations and of states and political subdivisions. 3. Accounts authorized for negotiable orders of withdrawal (NOW) and accounts authorized for automatic transfer to demand deposits (ATS). ATS data availability starts with December 1978. 4. Excludes ATS and NOW accounts, MMDA and special club accounts, such as Christmas and vacation clubs. 5. Money market deposit accounts. NOTE. Historical data for demand deposits are available back to 1970 estimated in part from the debits series for 233 SMSAs that were available through June 1977. Historical data for ATS-NOW and savings deposits are available back to July 1977. Back data are available on request from the Banking Section, Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. These data also appear on the Board's G.6 (406) release. For address, see inside front cover. A16 1.23 Domestic Financial Statistics • September 1985 LOANS A N D SECURITIES All Commercial Banks 1 Billions of dollars; averages of Wednesday figures 1984 July Aug. Sept. 1985 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Seasonally adjusted 1 Total loans and securities2 2 U.S. government securities 3 Other securities 4 Total loans and leases 2 5 Commercial and industrial Bankers acceptances held 3 .. 6 Other commercial and 7 industrial 8 U.S. addressees 4 9 Non-U.S. addressees 4 .... 10 Real estate 11 Individual 12 Security 13 Nonbank financial institutions 14 Agricultural 15 State and political subdivisions 16 Foreign banks 17 Foreign official institutions . . . 18 Lease financing receivables... 19 All other loans 1,652.6 1,662.1 1,674.8 1,682.8 1,701.0 1,714.8 1,724.0 1,742.3 1,758.9 1,765.8 1,785.3 1,799.1 256.4 139.5 1,256.7 455.0 6.2 257.1 140.8 1,264.2 458.1 5.8 258.0 141.9 1,274.9 460.0 5.4 257.0 141.5 1,284.3 463.0 5.6 259.4 141.1 1,300.6 467.1 6.0 260.2 139.9 1,314.7 468.1 5.2 260.1 142.4 1,321.5 468.4 5.0 265.8 140.8 1,335.6 473.4 6.1 266.9 138.7 1,353.3 480.4 6.4 261.1 140.1 1,364.6 480.9 5.4 265.9 142.1 1,377.3 483.3 4.9 266.6 144.5 1,388.0 483.6 4.7 448.8 437.2 11.7 358.3 236.3 28.0 452.3 440.6 11.6 361.2 238.5 26.1 454.6 443.5 11.1 364.7 241.3 28.8 457.3 446.7 10.6 367.7 243.5 30.3 461.1 450.7 10.3 371.8 246.7 30.2 462.9 453.3 9.6 375.6 251.0 31.5 463.4 453.8 9.7 377.9 254.6 31.9 467.2 457.1 10.2 382.1 257.7 31.6 474.1 463.8 10.3 385.8 261.9 32.8 475.5 465.3 10.3 389.9 265.5 35.1 478.4 468.7 9.6 393.8 268.7 37.5 478.9 469.8 9.1 397.4 271.4 40.0 31.4 40.6 30.8 40.6 31.2 40.7 31.1 40.6 31.2 40.5 31.4 40.3 31.2 40.2 30.9 40.2 30.6^ 40.3 31.2 40.1 31.5 39.8 31.2 39.3 40.4 12.5 9.3 14.5 30.6 41.2 12.2 9.4 14.8 31.4 41.7 11.7 8.9 15.0 30.9 41.2 11.7 8.5 15.1 31.6 42.1 11.9 8.4 15.3 35.5 44.0 11.5 8.3 15.5 37.4 46.9 11.4 7.9 15.6 35.4 46.6 11.5 7.9 15.8 38.0 46.8 11.2 7.7 16.1 39.5 47.1 10.8 7.8 16.4 39.8 47.4 10.6 7.8 16.7 40.1 47.4 10.3 7.6 16.9 42.7 Not seasonally adjusted 20 Total loans and securities2 1,646.7 1,656.1 1,673.2 1,684.0 1,701.9 1,725.8 1,732.0 1,740.4 1,755.0 1,766.0 1,781.4 1,800.0 21 U.S. government securities 22 Other securities 23 Total loans and leases 2 24 Commercial and industrial.... 25 Bankers acceptances held 3 .. 26 Other commercial and industrial 27 U.S. addressees 4 Non-U.S. addressees 4 .... 28 29 Real estate Individual 30 Security 31 Nonbank financial 32 institutions 33 Agricultural 34 State and political subdivisions 35 Foreign banks Foreign official institutions . . . 36 i/ Lease financing receivables... 38 All other loans 256.2 138.2 1,252.4 454.3 6.0 255.5 140.4 1,260.2 456.1 5.6 255.7 141.3 1,276.2 459.9 5.3 254.1 140.9 1,289.0 463.8 5.5 255.2 141.2 1,305.5 467.3 5.9 256.9 141.5 1,327.4 471.2 5.7 260.1 143.3 1,328.7 470.3 5.1 266.8 141.0 1,332.6 472.9 6.0 269.0 138.9 1,347.1 480.0 6.3 266.6 139.8 1,359.7 481.2 5.5 268.0 142.7 1,370.7 481.9 4.9 270.3 144.2 1,385.5 482.1 4.8 448.2 436.5 11.7 357.7 234.7 26.6 450.4 438.8 11.6 361.4 238.3 25.4 454.6 443.3 11.3 365.8 242.3 27.7 458.3 447.2 11.1 368.9 245.3 30.2 461.4 450.5 372.8 248.4 31.7 465.5 455.0 10.5 376.2 254.0 35.2 465.2 455.4 9.8 378.6 257.0 33.0 466.9 457.2 9.7 381.7 257.4 30.8 473.7 463.9 9.8 384.7 259.7 32.2 475.7 466.2 9.5 388.6 263.2 35.0 477.0 467.8 9.2 392.8 266.5 36.0 477.2 468.3 8.9 396.9 269.5 39.9 31.4 41.4 40.4 30.9 41.4 41.2 31.3 41.5 41.7 31.0 41.2 41.2 31.1 40.6 42.1 31.5 40.0 44.0 31.3 39.6 46.9 30.7 39.4 46.6 30.6 39.3 46.8 31.3 39.4 47.1 31.3 39.7 47.4 31.2 39.8 47.4 12.3 9.3 14.4 30.0 11.9 9.4 14.7 29.5 11.9 8.9 14.9 30.3 12.0 8.5 15.0 31.8 12.2 8.4 15.1 35.6 12.2 8.3 15.5 39.3 11.7 7.9 15.8 36.6 11.4 7.9 16.0 37.8' 11.0 7.7 16.3 38.7 10.5 7.8 16.4 39.2 10.3 7.8 16.7 40.3 10.0 7.6 16.9 44.3 1. Data are prorated averages of Wednesday estimates for domestically chartered insured banks, based on weekly sample reports and quarterly universe reports. For foreign-related institutions, data are averages of month-end estimates based on weekly reports from large U.S. agencies and branches and quarterly reports from all U.S. agencies and branches, New York investment companies majority owned by foreign banks, and Edge Act corporations owned by domestically chartered and foreign banks. 11.0 2. Excludes loans to commercial banks in the United States. 3. Includes nonfinancial commercial paper held. 4. United States includes the 50 states and the District of Columbia. NOTE. These data also appear in the Board's G.7 (407) release. For address, see inside front cover. Commercial 1.24 Banking Institutions A17 MAJOR N O N D E P O S I T F U N D S O F C O M M E R C I A L B A N K S 1 Monthly averages, billions of dollars 1984 1985 Source July Total nondeposit funds Seasonally adjusted 2 Not seasonally adjusted Federal funds, RPs, and other borrowings from nonbanks 3 Seasonally adjusted 3 4 Not seasonally adjusted 5 Net balances due to foreign-related institutions, not seasonally adjusted 1 2 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June 100.3 99.9 103.5 105.7 106.5 107.0 107.9 109.6 112.0 117.5 108.5 111.1 102.2' 104.6 113.8 117.2 116.8 119.2 105.0 108.2 111.7' 116.9' 112.4 114.7 134.5 134.0 139.3 141.5 141.6 142.1 141.4 143.1 145.0 150.5 140.5 143.1 138.8' 141.1 146.8' 150.2 147.2 149.7' 138.8' 141.9 142.0 147.2 146.9 149.2 -34.2 -35.8 -35.1 -33.5 -33.1 -32.0 -36.5 -33.0 -30.4 -33.7 -30.3' -34.4 -33.1 71.2 38.1 -35.0 72.8 37.7 -35.2 71.5 36.3 -34.2 69.8 35.6 -32.7 68.3 35.6 -31.4 69.0 37.6 -35.0 71.4 36.5 -31.7 70.5 38.8 -29.7 71.4 41.7 -32.6 75.0 42.4 -29.7' 44.9' -32.6 76.6 43.9 -1.1 51.9 50.8 -.8 51.6 50.8 .1 51.7 51.8 .7 50.8 51.5 -.4 50.7 50.4 -.6 52.0 51.4 -1.6' 53.C 51.4 -1.2' 54^ 52.7 -.8' 53.4' 52^ -1.2' 51.8' 50.7' -.6' 52.4 51.8 -1.8 53.7 51.9 77.5 74.6 79.9 79.6 81.4 79.4 82.0 81.2 84.0 87.0 81.1 81.1 82.3 82.2 90.1 91.1 92.0 92.0 85.4 86.0 85.5 88.3 86.5 86.3 12.8 11.9 13.1 10.3 16.0 17.5 8.0 11.0 17.3 10.4 16.1 12.5 14.7 18.5 13.0 15.8 11.8 12.8 14.6 15.4 22.6 20.9 17.4 14.9 314.8 313.7 314.2 315.6 315.4 316.8 321.4 322.2 323.0 322.9 325.8 327.3 324.8 325.6 325.4 324.9 329.9 330.3 332.6' 330.0 331.0 328.9 326.6 326.1 MEMO 6 Domestically chartered banks' net positions with own foreign branches, not seasonally adjusted 4 Gross due from balances 7 8 Gross due to balances 9 Foreign-related institutions' net positions with directly related institutions, not seasonally adjusted 3 10 Gross due from balances 11 Gross due to balances Security RP borrowings 12 Seasonally adjusted® 13 Not seasonally adjusted U.S. Treasury demand balances 7 14 Seasonally adjusted 15 Not seasonally adjusted Time deposits, $100,000 or more 8 16 Seasonally adjusted 17 Not seasonally adjusted 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. 2. Includes seasonally adjusted federal funds, RPs, and other borrowings from nonbanks and not seasonally adjusted net Eurodollars. Includes averages of Wednesday data for domestically chartered banks and averages of current and previous month-end data for foreign-related institutions. 3. Other borrowings are borrowings on any instrument, such as a promissory note or due bill, given for the purpose of borrowing money for the banking business. This includes borrowings from Federal Reserve Banks and from foreign 7A.& banks, term federal funds, overdrawn due from bank balances, loan RPs, and participations in pooled loans. 4. Averages of daily figures for member and nonmember banks. 5. Averages of daily data. 6. Based on daily average data reported by 122 large banks. 7. Includes U.S. Treasury demand deposits and Treasury tax-and-loan notes at commercial banks. Averages of daily data. 8. Averages of Wednesday figures. NOTE. These data also appear in the Board's G. 10 (411) release. For address see inside front cover. A18 1.25 DomesticNonfinancialStatistics • September 1985 A S S E T S A N D L I A B I L I T I E S OF C O M M E R C I A L B A N K I N G I N S T I T U T I O N S Last-Wednesday-of-Month Series Billions of dollars 1984 1985 Account Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June 1,784.5 376.2 243.5 132.7 20.0 1,388.4 127.1 1,261.2 455.2 361.8 240.0 204.2 1,798.3 377.2 243.4 133.8 20.9 1,400.2 123.3 1,276.9 459.8 366.6 243.3 207.3 1,822.7 375.2 241.2 134.0 22.5 1,424.9 126.1 1,298.8 467.7 369.8 247.1 214.2 1,822.7 374.4 240.4 133.9 21.9 1,426.4 122.6 1,303.8 468.7 374.4 249.6 211.1 1,864.0 377.5 242.5 134.9 22.9 1,463.7 126.9 1,336.8 476.8 377.7 255.5 226.8 1,853.8 381.0 244.9 136.1 24.2 1,448.7 125.2 1,323.4 469.8 380.2 257.4 216.1 1,873.4 382.0 248.0 134.1 27.6 1,463.7 128.6 1,335.1 476.5 382.5 258.1 218.0 1,880.5 383.3 250.9 132.5 23.7 1,473.5 125.9 1,347.6 482.7 386.0 260.4 218.4 1,895.9 383.4 250.0 133.4 23.5 1,489.0 130.7 1,358.3 481.5 389.8 264.2 222.8 1,905.1' 389.8' 254.0 135.8' 23.5 1,491.8 123.8 1,368.0 482.8 394.9' 267.3' 223.0 1,921.2 391.1 254.6 136.5 23.1 1,507.0 123.7 1,383.2 482.2 398.7 270.9 231.4 177.3 17.4 22.2 60.7 181.0 18.0 21.6 63.2 188.0 18.1 21.4 70.2 188.4 20.4 23.9 66.5 201.9 20.5 23.3 75.9 187.8 20.9 21.9 66.9 189.2 19.6 21.8 68.8 183.4 19.8 21.3 63.9 187.3 22.9 21.3 64.1 202.(K 20.7 23.3 76.5 190.0 22.0 22.2 68.5 29.5 47.5 30.8 47.4 32.0 46.3 30.9 46.7 34.5 47.7 30.9 47.3 32.2 46.7 31.6 46.8 30.1 48.9 35.1' 46.5' 31.2 46.2 ALL COMMERCIAL BANKING INSTITUTIONS 1 1 Loans and securities 2 Investment securities U.S. government securities 3 4 Other Trading account assets 5 6 Total loans 7 Interbank loans Loans excluding interbank 8 Commercial and industrial 9 Real estate 10 11 Individual All other 12 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 20 Total assets/total liabilities and capital . . . 21 22 23 24 25 26 27 Deposits Transaction deposits Savings deposits Time deposits Borrowings Other liabilities Residual (assets less liabilities) 190.6 196.8 201.6 190.1 196.8 191.7 195.4 188.5 188.7 183.4' 189.7 2,152.4 2,176.1 2,212.2 2,201.2 2,262.6 2,233.3 2,257.9 2,252.4 2,272.0 2,290.5' 2,300.9 1,539.0 440.0 365.1 734.0 301.5 169.7 142.1 1,549.9 442.3 364.9 742.7 307.1 172.9 146.2 1,578.9 462.7 371.1 745.0 314.3 175.1 144.0 1,578.2 453.1 378.1 747.0 298.8 179.4 144.8 1,631.2 491.1 386.3 753.8 304.1 181.1 146.2 1,604.3 456.8 400.0 747.5 306.5 173.7 148.8 1,617.8 459.2 406.8 751.8 308.8 182.2 149.2 1,625.6 457.6 409.8 758.2 300.6 176.9 149.2 1,636.4 465.3 409.4 761.7 309.8 175.3 150.5 1,659.2 479.9 418.0 761.3' 304.9 175.6' 150.8' 1,657.7 473.8 424.7 759.2 312.6 179.3 151.3 255.1 255.4 256.3 255.2 256.9 261.9 269.5 268.4 266.4 268.9 270.3 141.0 142.7 141.5 141.1 143.4 143.2 140.2 138.7 140.6 144.3' 143.9 1,688.4 369.1 238.5 130.7 20.0 1,299.4 97.6 1,201.8 414.5 358.0 239.8 189.6 1,707.4 369.8 238.4 131.5 20.9 1,316.6 99.9 1,216.7 418.7 362.3 243.1 192.5 1,728.5 367.9 236.1 131.8 22.5 1,338.0 103.3 1,234.7 423.0 365.5 246.9 199.3 1,726.7 367.5 235.8 131.6 21.9 1,337.3 96.1 1,241.2 424.7 369.1 249.4 198.0 1,765.4 370.5 237.9 132.6 22.9 1,372.1 102.8 1,269.3 430.2 372.1 255.3 211.7 1,759.6 373.7 240.2 133.5 24.2 1,361.7 100.6 1,261.2 425.7 375.1 257.2 203.1 1,774.6 374.7 243.2 131.5 27.6 1,372.3 100.9 1,271.4 431.5 377.3 257.9 204.8 1,781.9 376.6 246.6 130.0 23.7 1,381.6 99.9 1,281.6 435.5 380.9 260.2 205.0 1,796.4 376.7 246.0 130.6 23.5 1,396.2 103.1 1,293.1 436.0 384.5 263.9 208.7 1,809.2' 383.3 250.3 133.0' 23.5 1,402.5 100.4 1,302.1 435.9 389.4 267.1 209.6 1,825.3 384.6 250.9 133.7 23.1 1,417.6 100.3 1,317.3 435.3 393.3 270.6 218.1 165.9 16.7 22.2 60.5 169.0 17.4 21.6 63.0 176.6 17.1 21.4 69.9 176.8 19.7 23.9 66.3 190.3 19.2 23.3 75.6 175.7 20.2 21.9 66.7 177.8 18.7 21.8 68.5 172.5 19.2 21.3 63.7 175.7 22.3 21.3 63.9 191.C 19.6 23.2 76.2 179.0 20.9 22.2 68.1 28.2 38.3 29.4 37.7 30.7 37.5 29.4 37.5 32.9 39.3 29.5 37.5 30.9 37.9 30.3 38.0 28.7 39.5 33.7' 38.2 29.7 38.0 MEMO 28 U.S. government securities (including trading account) 29 Other securities (including trading account) DOMESTICALLY CHARTERED COMMERCIAL BANKS 3 30 Loans and securities Investment securities 31 32 U.S. government securities Other 33 34 Trading account assets 35 Total loans 36 Interbank loans 37 Loans excluding interbank 38 Commercial and industrial 39 Real estate 40 Individual All other 41 42 Total cash assets Reserves with Federal Reserve Banks 43 44 Cash in vault 45 Cash items in process of collection . . . Demand balances at U.S. depository 46 institutions 47 Other cash assets 48 Other assets 49 Total assets/total liabilities and capital... 50 51 52 53 54 55 56 Deposits Transaction deposits Savings deposits Time deposits Borrowings Other liabilities Residual (assets less liabilities) 140.6 141.2 147.9 139.7 142.1 137.6 139.0 137.2 137.6 131.6' 137.8 1,995.0 2,017.6 2,053.1 2,043.2 2,097.8 2,072.9 2,091.4 2,091.7 2,109.7 2,131.8' 2,142.1 1,500.3 433.7 364.2 702.4 236.0 119.3 139.3 1,510.9 435.9 363.9 711.1 243.5 119.7 143.4 1,539.1 456.2 370.1 712.8 251.3 120.5 142.1 1,538.0 446.8 377.1 714.1 240.9 122.3 142.0 1,587.8 484.5 385.2 718.1 243.1 123.5 143.4 1,561.8 450.6 398.9 712.3 246.5 118.4 146.1 1,573.7 452.9 405.6 715.2 247.0 124.2 146.5 1,580.5 451.4 408.6 720.5 239.9 124.7 146.6 1,591.7 458.9 408.3 724.5 247.9 122.3 147.8 1,616.0 473.5 416.8' 725.8 245.6 122.(K 148.1' 1,614.5 467.3 423.5 723.7 253.3 125.7 148.6 1. Commercial banking institutions include insured domestically chartered commercial banks, branches and agencies of foreign banks. Edge Act and Agreement corporations, and New York State foreign investment corporations. 2. Data are not comparable with those of later dates. See the Announcements section of the March 1985 BULLETIN for a description of the differences. 3. Insured domestically chartered commercial banks include all member banks and insured nonmember banks. NOTE. Figures are partly estimated. They include all bank-premises subsidiaries and other significant majority-owned domestic subsidiaries. Loan and securities data for domestically chartered commercial banks are estimates for the last Wednesday of the month based on a sample of weekly reporting banks and quarter-end condition report data. Data for other banking institutions are estimates made for the last Wednesday of the month based on a weekly reporting sample of foreign-related institutions and quarter-end condition reports. Weekly Reporting Commercial Banks A19 1.26 ALL LARGE WEEKLY REPORTING COMMERCIAL BANKS with Domestic Assets of $1.4 Billion or More on December 31, 1982, Assets and Liabilities Millions of dollars, Wednesday figures 1985 Account May 8 Cash and balances due from depository institutions 2 Total loans, leases and securities, net 3 U.S. Treasury and government agency 4 Trading account 5 Investment account, by maturity 6 One year or less 7 Over one through five years 8 Over five years 9 10 Trading account 11 Investment account 12 States and political subdivisions, by maturity 13 One year or less 14 Over one year IS Other bonds, corporate stocks, and securities 16 Other trading account assets . 17 Federal funds sold 1 18 To commercial banks 19 To nonbank brokers and dealers in securities 70 To others 21 Other loans and leases, gross 2 V Other loans, gross 2 ?3 Commercial and industrial 2 24 Bankers acceptances and commercial paper 25 All other 76 U.S. addressees Non-U.S. addressees 27 28 Real estate loans 2 29 To individuals for personal expenditures 30 To depository and financial institutions 31 Commercial banks in the United States 32 Banks in foreign countries 33 Nonbank depository and other financial institutions 34 For purchasing and carrying securities 35 To finance agricultural production 36 To states and political subdivisions 37 To foreign governments and official institutions 38 All other 39 Lease financing receivables 40 LESS: Unearned income 41 Loan and lease reserve 2 4? Other loans and leases, net 2 43 All other assets 44 Total assets 45 Demand deposits 46 Individuals, partnerships, and corporations 47 States and political subdivisions 48 U.S. government 49 Depository institutions in United States 50 Banks in foreign countries 51 Foreign governments and official institutions 52 Certified and officers' checks 53 Transaction balances other than demand deposits 54 Nontransaction balances 55 Individuals, partnerships and corporations 56 States and political subdivisions 57 U.S. government 58 Depository institutions in the United States 59 Foreign governments, official institutions and banks 60 Liabilities for borrowed money 61 Borrowings from Federal Reserve Banks 6? Treasury tax-and-loan notes 63 All other liabilities for borrowed money 3 64 Other liabilities and subordinated note and debentures 65 Total liabilities 66 Residual (total assets minus total liabilities)4 Total loans and leases (gross) and investments adjusted 5 Total loans and leases (gross) adjusted 2 ' 5 Time deposits in amounts of $100,000 or more Loans sold outright to affiliates—total 6 Commercial and industrial Other Nontransaction savings deposits (including MMDAs) May 29 June 5 June 12 June 19 June 26 July 3 92,218 848,227 863,734 90,371 98,309 94,106' 98,124' 97,189' 95,014 92,874 853,778 844,944' 838,7%' 857,652' 848,180 85,607 15,533 70,073 20,937' 35,211' 13,925 48,533 4,263 44,270 39,213 4,998 34,214 5,057 3,061 51,786' 35,045' 10,904 5,837 666,795' 653,248' 255,635' 2,234 253,401' 248,000' 5,400 166,277' 119,000' 40,845' 11,513' 5,575' 23,756' 17,502 7,099' 30,002' 3,706' 13,182' 13,546 5,165 87,905 15,999 71,906 20,898 37,083 13,925 48,492 4,393 44,099 39,323 5,000 34,323 4,776 3,371 59,522 40,568 12,887 6,067 671,444 657,886 254,718 2,256 252,461 246,972 5,490 167,149 119,248 40,917 11,342 5,530 24,044 20,504 7,164 30,070 4,143 13,974 13,557 5,179 11,777 654,488 128,7% 88,037 15,854 72,183 20,434' 37,015' 14,734 48,891' 4,475 44,416 39,398 4,946 34,451' 5,018 2,866 87,417 14,918 72,499 20,689' 37,097' 14,713 49,552 4,984 44,568 39,566 5,220 34,346 5,002 3,55C 50,918 34,128 11,298 5,491 664,311' 650,709' 253.45C 2,287 251,162' 246,149' 5,014 88,146 16,327 71,819 20,718' 35,606' 15,494 49,094 4,304 44,790 39,822 5,255 34,567 4,968 4,205 86,043 16,075 69,%8 20,868 34,189 14,911 49,179 4,084 45,095 40,048 5,422 34,626 5,046 4,078 860,666 87,992 18,343 69,650 21,172 34,084 14,393 49,337 4,266 45,071 39,957 5,287 34,670 5,114 2,986 60,729 43,143 11,656 5,929 676,828 663,103 253,436 2,025 251,411 246,441 4,970 168,295 120,964 40,537 10,975 5,229 24,333 24,736 7,234 29,970 3,598 14,333 13,725 5,178 12,028 659,622 131,818 11,76c 649,870' 127,871' 54,476 37,052 11,605 5,818 667,65C 653,988' 254,202' 2,200 252,002' 246,556' 5,446 167,164' 119,536' 40,569 11,232' 5,489 23,848' 17,871 7,185' 30,064' 3,819' 13,577 13,662 5,190 11,786 650,674' 127,532' 1,057,099 1,080,883 1,066,583' 182,513' 200,380 184,706' 140,673' 138,662' 150,563 5,735 4,809 4,718 3,388 2,271 2,595 24,253 22,336' 21,731' 5,712 5,813 5,449 1,089 918 789 9,539 8,379 8,179 36,905 37,129 36,408 467,152 465,111' 466,160 429,835' 428,595' 429,373 24,678 25,051 24,478 345 357 338 9,334 9,243' 9,523' 2,430 2,386 2,458 208,024' 203,636' 206,946 830 70 3,831 12,104 15,946 11,126 187.62C 194,012 193,068' %,204 94,391' 95,993' 992,284' 982,781 1,006,596 74,287 74,299 74,318 809,224' 672,023' 155,906 2,768 1,875 894 177,377 1. Includes securities purchased under agreements to resell. 2. Levels of major loan items were affected by the Sept. 26, 1984 transaction between Continental Illinois National Bank and the Federal Deposit Insurance Corporation. For details see the H.4.2 statistical release dated Oct. 5, 1984. 3. Includes federal funds purchased and securities sold under agreements to repurchase; for information on these liabilities at banks with assets of $1 billion or more on Dec. 31, 1977, see table 1.13. 4. This is not a measure of equity capital for use in capital adequacy analysis or for other analytic uses. May 22 838,857' MEMO 67 68 69 70 71 72 73 May 15' 818,824 679,056 155,579 2,605 1,786 820 178,723 813,636' 673,842' 155,972' 2,586 1,758 827 179,052 167,272' 119,983' 39,974' 10,783' 5,157' 24,035' 14,924 7,188' 30.03C 3,745' 14,142 13,601 5,194 11,759 647,358' 124,347' 1,061,267 192,625' 146,211' 5,169 1,047 25,257' 5,347 813 8,780 36,401' 467,566' 430,697' 24,813 376 9,373' 2,307 194,905' 730 7,575 186,600' 95,416' 986,913 74,354 810,838' 670,318' 155,572' 2,601 1,721 880 179,792 63,878 56,653 44,665 37,933 12,347 11,303 7,417 6,866 669,451' 669,422 655,767' 655,708 253,938' 253,173 2,277 2,448 251,489' 250,8% 246,391' 245,885 5,098 5,010 167,236' 167,880 120,231' 120,444 39,576 40,146 10,416 10,45C 5,113 5,369' 24,326' 24,048 19,741 19,466 7,238 7,238 29,933' 30,156 3,613 3,602 13,978' 13,887 13,714 13,683 5,147 5,165 11,975' 12,030 652,329' 652,226 131,828' 130,237 1,086,669' 1,073,432 1,085,358 196,171 197,483' 194,403 148,239' 148,839 146,598 4,814 5,378 5,705 4,133 2,560 4,422 21,948 23.56C 24,102 5,202 6,008' 5,448 787 1,057 842 9,378 9,983 9,054 38,887 38,400 37,943 470,367 469,398 471,175 433,045' 434,061 434,986 24,219 24,161 23,939 376 340 366 9,395' 9,415 9,541 2,354 2,398 2,342 210,271' 199,467 210,439 2,919 123 3,212 2,130 2,563' 12,659 204,788' 197,215 194,568 95,645' 95,521 94,478 1,011,684' 998,158 1,010,205 74,985 75,274 75,152 819,659' 678,214' 155,276' 2,448 1,591 857 181,912' 817,027 677,726 155,405 2,413 1,593 819 182,728 823,754 683,439 155,595 2,300 1,492 808 183,050 100,547 86,212 87,993 15,657 16,339 70,555 71,654 21,812 21,930 34,765 35,590 13,978 14,134 49,387 48,902 4,455 4,388 44,998 44,446 39,949 39,360 5,192 4,824 34,757 34,536 5,049 5,086 3,095 4,362 55,004 62,530 36,350 43,720 12,521 12,583 6,071 6,290 671,742 677,209 657,984 663,256 252,237 253,957 2,335 2,656 249,902 251,302 244,900 246,234 5,002 5,068 168,713 168,811 121,669 122,282 39,879 40,403 11,018 10,534 5,110 5,409 23,750 24,460 19,618 21,977 7,351 7,282 30,008 30,015 3,609 3,473 14,969 14,986 13,758 13,953 5,219 5,193 11,993 12,070 654,530 659,946 129,772 138,158 1,070,218 1,102,439 190,798 206,263 143,760 153,774 5,268 5,550 2,350 4,456 22,159 25,513 5,701 5,114 772 898 10,788 10,956 36,671 39,412 469,761 471,662 433,818 436,616 23,781 23,017 397 402 9,466 9,392 2,299 2,235 201,470 216,998 118 3,472 14,467 15,230 186,885 198,2% 96,613 92,800 995,314 1,027,135 74,904 75,304 818,071 679,377 154,441 2,221 1,402 819 182,876 826,742 685,485 154,085 2,200 1,412 788 184,832 5. Exclusive of loans and federal funds transactions with domestic commercial banks. 6. Loans sold are those sold outright to a bank's own foreign branches, nonconsolidated nonbank affiliates of the bank, the bank's holding company (if not a bank), and nonconsolidated nonbank subsidiaries of the holding company. NOTE. These data also appear in the Board's H.4.2 (504) release. For address, see inside front cover. A20 1.28 DomesticNonfinancialStatistics • September 1985 L A R G E W E E K L Y R E P O R T I N G C O M M E R C I A L B A N K S I N N E W Y O R K CITY A s s e t s and Liabilities Millions of dollars, Wednesday figures 1985 Account May 8 1 Cash and balances due from depository institutions 2 Total loans, leases and securities, net1 Securities 3 4 5 Investment account, by maturity 6 One year or less 7 Over one through five years 8 Over five years 9 10 11 Investment account 12 States and political subdivisions, by maturity 13 One year or less 14 Over one year 15 Other bonds, corporate stocks and securities 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 Loans and leases Federal funds sold3 To commercial banks To nonbank brokers and dealers in securities To others Other loans and leases, gross Other loans, gross Commercial and industrial Bankers acceptances and commercial paper All other U.S. addressees Non-U.S. addressees Real estate loans To individuals for personal expenditures To depository and financial institutions Commercial banks in the United States Banks in foreign countries Nonbank depository and other financial institutions For purchasing and carrying securities To finance agricultural production To states and political subdivisions To foreign governments and official institutions All other Lease financing receivables LESS: Unearned income Loan and lease reserve Other loans and leases, net All other assets 4 Total assets Deposits Demand deposits Individuals, partnerships, and corporations States and political subdivisions U.S. government Depository institutions in the United States Banks in foreign countries Foreign governments and official institutions Certified and officers' checks Transaction balances other than demand deposits ATS, NOW, Super NOW, telephone transfers) Nontransaction balances Individuals, partnerships and corporations States and political subdivisions U.S. government Depository institutions in the United States Foreign governments, official institutions and banks Liabilities for borrowed money 54 55 56 57 58 59 60 61 62 Treasury tax-and-loan notes 63 All other liabilities for borrowed money 5 64 Other liabilities and subordinated note and debentures 65 Total liabilities 66 Residual (total assets minus total liabilities)6 May 15 May 22 May 29 June 5 June 12 June 19 June 26 July 3 23,542 178,735 25,981 184,914 24,995 24,824 179,165 176,578 24,404 183,282 23,722 179,667 21,524 185,111 24,448 182,871 23,061 185,193 12,295 1,664 8,840 1,791 12,639 1,681 9,217 1,741 12,383 1,428 9,218 1,737 12,352 1,416 9,222 1,713 10,657 1,304 7,450 1,903 9,925 1,301 6,915 1,708 10,167 1,758 6,702 1,707 10,660 2,021 6,933 1,707 10,614 2,005 6,868 1,741 9,674 8,643 1,227 7,416 1,031 9,739 8,689 1,243 7,446 1,050 9,764 8,670 1,119 7,550 1,094 9,769 8,671 1,248 7,423 1,098 9,934 8,805 1,236 7,570 1,129 9,921 8,820 1,222 7,598 1,101 9,914 8,825 1,213 7,611 1,090 9,989 8,891 1,160 7,731 1,098 9,933 8,827 1,203 7,624 1,106 21,200 11,461 5,744 3,9% 140,473 138,007 62,552 656 61,897 61,227 670 25,800 16,789 11,938 2,493 2,169 7,276 8,680 435 7,944 816 3,051 2,466 1,446 3,462 135,566 64,733 267,010 24,037 12,137 7,818 4,082 143,419 140,950 62,048 712 61,336 60,611 725 25,986 16,770 11,607 2,188 2,013 7,406 11,397 426 7,973 1,191 3,552 2,468 1,450 3,469 138,499 66,882 277,777 21,578 11,736 5,694 4,147 140,365 137,781 61,765 720 61,045 60,350 695 26,043 16,795 11,704 2,150 2,025 7,528 8,704' 439 8,009 891 3,431 2,583 1,455 3,470 135,440 66,732 270,892 21,590 11,282 6,289 4,019 137,789 135,275 61,419 755 60,664 59,956 708 26,030 16,870 11,506 2,297 1,743 7,466 6,551 434 7,911 848 3,704 2,514 1,453 3,469 132,866 64,185 265,587 25,905 13,890 7,081 4,934 141,727 139,209 61,794 813 60,981 60,273 708 26,012 16,853 11,502 2,346 1,892 7,264 10,446 421 7,869 769 3,543 2,518 1,419 3,521 136,787 69,640 277,326 23,527 11,588 6,315 5,625 141,301 138,782 61,277 646 60,630 59,932 699 26,202 16,861 10,974 2,123 1,638 7,213 10,593 394 7,890 822 3,769 2,519 1,424 3,584 136,294 68,200 271,590 23,583 12,466 6,785 4,332 146,464 143,934 61,245 543 60,702 60,036 666 26,296 16,976 11,797 2,503 1,898 7,3% 14,895 396 7,855 851 3,622 2,530 1,426 3,591 141,447 70,480 277,116 25,256 13,910 6,872 4,474 141,997 139,460 60,662 721 59,941 59,277 664 26,261 17,052 11,354 2,515 1,749 7,090 10,642 405 7,897 888 4,299 2,537 1,460 3,571 136,966 65,644 272,963 26,126 14,326 7,500 4,300 143,565 140,906 60,907 948 59,959 59,281 678 26,351 17,143 11,1% 2,110 1,924 7,162 12,189 388 7,828 789 4,116 2,659 1,450 3,595 138,520 73,245 281,499 44,634 29,691 780 537 4,624 4,425 746 3,832 52,418 34,536 1,431 646 5,701 4,577 933 4,594 47,262 31,708 835 513 5,176 4,268 612 4,149 48,147 32,921 771 120 5,303 4,110 640 4,283 48,651 32,183 1,037 825 4,938 4,674 582 4,413 48,319 32,066 930 455 4,703 3,956 890 5,319 49,956 32,957 990 870 6,073 4,269 675 4,121 49,793 32,459 933 442 5,029 4,510 575 5,844 49,806 32,944 1,014 931 5,400 3,820 693 5,001 3,919 85,688 77,508 4,440 66 2,454 1,220 68,889 3,933 86,125 77,997 4,457 76 2,404 1,191 70,348 3,864 85,700 77,711 4,459 78 2,380 1,071 62,852 242,048 23,538 253,570 23,757 247,739 23,851 3,669 64,608 42,510 249,287 4,172 86,207 78,817 4,178 52 2,225 935 76,096 1 465 3,582 71,049 41,366 257,647 23,647 4,108 85,676 77,912 4,334 54 2,406 %9 72,281 2,615 3,425 66,241 41,201 253,221 23,894 3,931 84,775 77,224 4,266 58 2,273 953 68,277 2,895 67,454 41,390 4,044 86,158 78,378 4,373 50 2,336 1,020 73,830 1,980 645 71,205 40,887 4,076 85,925 78,246 4,373 56 2,263 988 68,686 4,144 64,744 40,341 243,470 3,850 85,950 77,717 4,553 80 2,436 1,163 69,653 2,615 2,486 64,552 40,529 247,244 23,676 23,852 170,204 148,056 33,829 167,922 145,800 33,267 171,986 151,395 33,500 170,964 151,118 33,010 175,159 155,077 32,694 171,477 150,828 32,010 173,803 153,256 32,815 23,539 254,216 23,562 169,689 147,720 33,842 175,509 153,131 34,001 1,746 61,107 41,485 477 68,209 40,732 MEMO 67 Total loans and leases (gross) and investments adjusted1-7 68 Total loans and leases (gross) adjusted 7 69 Time deposits in amounts of $100,000 or more 1. Excludes trading account securities. 2. Not available due to confidentiality. 3. Includes securities purchased under agreements to resell. 4. Includes trading account securities. 5. Includes federal funds purchased and securities sold under agreements to repurchase. 6. Not a measure of equity capital for use in capital adequacy analysis or for other analytic uses. 7. Exclusive of loans and federal funds transactions with domestic commercial banks. NOTE. These data also appear in the Board's H.4.2 (504) release. For address, see inside front cover. Weekly Reporting Commercial Banks 1.30 A21 L A R G E W E E K L Y R E P O R T I N G U . S . B R A N C H E S A N D A G E N C I E S O F F O R E I G N B A N K S WITH A S S E T S O F $750 M I L L I O N OR M O R E O N J U N E 30, 1980 A s s e t s and Liabilities • Millions of dollars, Wednesday figures 1985 Account May 8 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 38 39 40 41 Cash and due from depository institutions. Total loans and securities U.S. Treasury and govt, agency securities Other securities Federal funds sold1 To commercial banks in the United States To others Other loans, gross Commercial and industrial Bankers acceptances and commercial paper All other U.S. addressees Non-U.S. addressees To financial institutions Commercial banks in the United States . Banks in foreign countries Nonbank financial institutions To foreign govts, and official institutions.. For purchasing and carrying securities .. All other Other assets (claims on nonrelated parties).. Net due from related institutions Total assets Deposits or credit balances due to other than directly related institutions.... Credit balances Demand deposits Individuals, partnerships, and corporations Other Time and savings deposits Individuals, partnerships, and corporations Other Borrowings from other than directly related institutions Federal funds purchased 2 From commercial banks in the United States From others Other liabilities for borrowed m o n e y . . . . To commercial banks in the United States To others Other liabilities to nonrelated parties Net due to related institutions Total liabilities May 15 May 22 May 29 June 5 June 12 June 19 June 26 July 3 6,950 44,862 3,439 1,642 4,246 3,837 409 35,535 20,639 6,606 44,426 3,375 1,629 3,302 3,066 236 36,120 20,670 6,436 45,989 3,324 1,630 4,389 4,075 314 36,645 21,351 6,302 44,614 3,143 1,632 3,925 3,553 372 35,914 21,261 6,969 45,283 3,269 1,687 3,772 3,385 388 36,554 21,697 6,521 44,856 3,386 1,723 3,037 2,653 383 36,710 21,954 6,808 46,093 3,238 1,751 4,231 3,769 461 36,874 21,513 6,347 46,111 3,413 1,779 3,419 3,001 418 37,500 21,959 6,638 47,538 3,413 1,764 4,276 4,061 215 38,085 22,320 1,776 18,863 17,743 1,119 10,832 8,552 1,024 1,255 680 1,275 2,108 18,734 10,368 80,914 1,663 19,006 17,885 1,122 11,175 8,853 1,070 1,252 667 1,264 2,345 18,774 11,106 80,913 1,628 19,723 18,429 1,294 11,209 9,062 1,023 1,124 670 1,089 2,326 18,723 9,998 81,146 1,819 19,442 18,389 1,053 10,714 8,444 1,112 1,158 667 938 2,334 18,911 9,290' 79,11V 2,029 19,669 18,569 1,099 10,604 8,251 1,137 1,216 707 1,195 2,350 18,408 10,503 81,162 2,020 19,934 18,873 1,061 10,441 8,196 1,164 1,081 700 1,275 2,340 18,478 9,720 79,575 1,902 19,611 18,473 1,138 10,618 8,287 1,096 1,235 703 1,687 2,352 18,455 10,184 81,541 1,813 20,146 18,962 1,184 10,713 8,639 1,079 995 690 1,791 2,348 18,261 9,668 80,387 1,994 20,326 19,096 1,230 10,794 8,429 1,080 1,285 703 1,856 2,412 18,174 9,788 82,138 24,127 135 1,581 23,715 158 1,789 23,606 172 1,556 23,645' 193 1,627' 23,525 157 1,670 23,357 168 1,713 23,354 223 1,777 23,438 166 1,716 23,350 187 1,815 829 752 22,410 877 912 21,768 843 714 21,878 866 76C 21,825 854 816 21,699 883 830 21,477 910 866 21,354 906 810 21,556 998 817 21,348 17,774 4,636 17,274 4,493 17,458 4,420 17,390 4,435 16,969 4,730' 16,888 4,588 16,745 4,609 16,928 4,628 16,749 4,599 29,874 12,484 30,695 13,093 30,230 12,384 27,894 10,645 30,664 13,598 29,762 12,284 30,839 13,216 29,344 11,611 31,566 13,231 10,166 2,318 17,390 11,103 1,990 17,603 10,313 2,071 17,846 8,425 2,220 17,249 11,340 2,258 17,066 9,987 2,298 17,478 10,642 2,574 17,623 9,022 2,590 17,733 10,634 2,597 18,335 16,080 1,309 20,749 6,164 80,914 16,288 1,315 20,777 5,726 80,913 16,412 1,434 20,659 6,651 81,146 16,044 1,205 20,866 6,712 79,117' 15,850 1,215 20,317 6,657 81,162 16,127 1,350 20,376 6,080 79,575 16,254 1,368 20,374 6,974 81,541 16,333 1,401 20,129 7,476 80,387 16,982 1,352 20,224 6,998 82,138 32,472 27,391 32,506 27,502 32,851 27,897 32,617 27,842 33,646 28,690 34,007 28,898 34,037 29,048 34,470 29,279 35,049 29,872 MEMO 42 Total loans (gross) and securities adjusted 3 43 Total loans (gross) adjusted 3 • Levels of many asset and liability items were revised beginning Oct. 31, 1984. For details, see the H.4.2 (504) statistical release dated Nov. 23, 1984. 1. Includes securities purchased under agreements to resell. 2. Includes securities sold under agreements to repurchase. 3. Exclusive of loans to and federal funds sold to commercial banks in the United States. NOTE. These data also appear in the Board's H.4.2 (504) release. For address, see inside front cover. A22 1.31 DomesticNonfinancialStatistics • September 1985 G R O S S D E M A N D D E P O S I T S Individuals, Partnerships, and Corporations' Billions of dollars, estimated daily-average balances Commercial banks Type of holder 1983 1979 2 1980 1981 1982 Dec. Dec. Dec. Dec. Dec. 1984 Mar. June' 1985 Sept. Dec. Mar. 5 ' p 1 All holders—Individuals, partnerships, and corporations 302.3 315.5 288.9 291.8 293.5 279.3 286.3 288.8' 302.7' 288.3 2 3 4 5 6 27.1 157.7 99.2 3.1 15.1 29.8 162.8 102.4 3.3 17.2 28.0 154.8 86.6 2.9 16.7 35.4 150.5 85.9 3.0 17.0 32.8 161.1 78.5 3.3 17.8 31.7 150.3 78.1 3.3 15.9 30.8 156.7 78.7 3.5 16.7 30.4' 158.9^ 31.7' 166.3 81.5' 3.6 19.7' 28.3 159.7 77.3 3.5 19.6 Financial business Nonfinancial business Consumer Foreign Other 19.9* 3.3 16.3' Weekly reporting banks 1983 1979 3 1980 1981 1982 Dec. Dec. Dec. Dec. Dec. 4 7 All holders—Individuals, partnerships, and corporations 8 9 10 11 12 Financial business Nonfinancial business Consumer Foreign Other Mar. June 1985 Sept. Dec. Mar. 5 - P 139.3 147.4 137.5 144.2 146.2 139.2 145.3 145.3 157.1 147.9 20.1 74.1 34.3 3.0 7.8 21.8 78.3 35.6 3.1 8.6 21.0 75.2 30.4 2.8 8.0 26.7 74.3 31.9 2.9 8.4 24.2 79.8 29.7 3.1 9.3 23.5 76.4 28.4 3.2 7.7 23.6 79.7 29.9 3.2 8.9 23.7 79.2 29.8 3.2 9.3 25.3 87.1 30.5 3.4 10.9 22.6 82.8 29.3 3.3 9.9 1. Figures include cash items in process of collection. Estimates of gross deposits are based on reports supplied by a sample of commercial banks. Types of depositors in each category are described in the June 1971 BULLETIN, p. 466. 2. Beginning with the March 1979 survey, the demand deposit ownership survey sample was reduced to 232 banks from 349 banks, and the estimation procedure was modified slightly. To aid in comparing estimates based on the old and new reporting sample, the following estimates in billions of dollars for December 1978 have been constructed using the new smaller sample; financial business, 27.0; nonfinancial business, 146.9; consumer, 98.3; foreign, 2.8; and other, 15.1. 3. After the end of 1978 the large weekly reporting bank panel was changed to 170 large commercial banks, each of which had total assets in domestic offices exceeding $750 million as of Dec. 31, 1977. Beginning in March 1979, demand deposit ownership estimates for these large banks are constructed quarterly on the basis of 97 sample banks and are not comparable with earlier data. The following 1984 estimates in billions of dollars for December 1978 have been constructed for the new large-bank panel; financial business, 18.2; nonfinancial business, 67.2; consumer, 32.8; foreign, 2.5; other, 6.8. 4. In January 1984 the weekly reporting panel was revised; it now includes 168 banks. Beginning with March 1984, estimates are constructed on the basis of 92 sample banks and are not comparable with earlier data. Estimates in billions of dollars for December 1983 based on the newly weekly reporting panel are: financial business, 24.4; nonfinancial business, 80.9; consumer, 30.1; foreign, 3.1; other, 9.5. 5. 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. Financial Markets 1.32 A23 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period 19843 1979' Dec. Instrument 1980 Dec. 1982 Dec. 2 1981 Dec. 1983 Dec. Dec. 1985 Jan. Feb. Mar. Apr. May Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 2 3 4 5 6 Financial companies 4 Dealer-placed paper5 Total Bank-related (not seasonally adjusted) Directly placed paper6 Total Bank-related (not seasonally adjusted) Nonfinancial companies 7 112,803 124,374 165,829 166,436 188,312 239,117 245,322 247,095 250,575 255,236 258,943 17,359 19,599 30,333 34,605 44,622 56,917 59,713 60,186 60,895 63,405 61,282 2,784 3,561 6,045 2,516 2,441 2,035 2,137 2,265 2,304 2,180 2,295 64,757 67,854 81,660 84,393 96,918 110,474 113,101 114,824 118,029 117,841 119,975 17,598 30,687 22,382 36,921 26,914 53,836 32,034 47,437 35,566 46,772 42,105 71,726 43,046 72,508 42,759 72,085 43,334 71,651 42,405 73,990 43,126 77,686 Bankers dollar acceptances (not seasonally adjusted) 8 7 Total Holder Accepting banks Own bills Bills bought Federal Reserve Banks Own account Foreign correspondents Others Basis 14 Imports into United States 15 Exports from United States 16 All other 8 9 10 11 12 13 45,321 54,744 69,226 79,543 78,309 75,470 72,273 76,109 73,726 72,825 69,689 9,865 8,327 1,538 10,564 8,963 1,601 10,857 9,743 1,115 10,910 9,471 1,439 9,355 8,125 1,230 10,255 9,065 1,191 10,060 8,839 1,220 10,623 9,726 897 10,473 9,166 1,340 9,666 8,263 1,403 9,265 7,578 1,687 704 1,382 33,370 776 1,791 41,614 195 1,442 56,731 1,480 • 949 66,204 418 729 68,225 0 671 64,543 0 679 61,603 0 761 64,779 0 737 65,865 0 728 65,965 0 575 58,739 10,270 9,640 25,411 11,776 12,712 30,257 14,765 15,400 39,060 17,683 16,328 45,531 15,649 16,880 45,781 16,975 15,859 42,635 16,733 15,445 40,095 17,115 15,881 43,113 16,124 15,179 42,423 16,417 14,875 41,533 16,670 14,214 38,805 1. A change in reporting instructions results in offsetting shifts in the dealerplaced and directly placed financial company paper in October 1979. 2. Effective Dec. 1, 1982, there was a break in the commercial paper series. The key changes in the content of the data involved additions to the reporting panel, the exclusion of broker or dealer placed borrowings under any master note agreements from the reported data, and the reclassification of a large portion of bank-related paper from dealer-placed to directly placed. 3. Correction of a previous misclassification of paper by a reporter has created a break in the series beginning December 1983. The correction adds some paper to nonfinancial and to dealer-placed financial paper. 4. Institutions engaged primarily in activities such as, but not limited to, commercial, savings, and mortgage banking; sales, personal, and mortgage 1.33 financing; factoring, finance leasing, and other business lending; insurance underwriting; and other investment activities. 5. Includes all financial company paper sold by dealers in the open market. 6. As reported by financial companies that place their paper directly with investors. 7. Includes public utilities and firms engaged primarily in such activities as communications, construction, manufacturing, mining, wholesale and retail trade, transportation, and services. 8. Beginning October 1984, the number of respondents in the bankers acceptance survey will be reduced from 340 to 160 institutions—those with $50 million or more in total acceptances. The new reporting group accounts for over 95 percent of total acceptances activity. PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per annum Effective Date 11.00 10.50 11.00 11.50 12.00 12.50 13.00 12.75 Average rate 1984—Oct. 17 29 Nov. 9 28 Dec. 20 12.50 12.00 11.75 11.25 10.75 1985—Jan. 15 May 20 June 18 10.50 10.00 9.50 NOTE. These data also appear in the Board's H.15 (519) release. For address, see inside front cover. 1983—Jan. Feb. Mar. Apr. May June July Aug. Sept Oct. Nov. Dec. 11.16 1984—Jan.. Feb. Mar. 11.00 11.00 10.98 10.50 10.50 10.50 10.50 10.50 10.89 11.00 11.00 11.00 11.00 11.21 Month 1984—Apr. May June July Aug. Sept Oct. Nov. Dec. 1985—Jan. Feb. Mar. Apr. May June A24 1.35 DomesticNonfinancialStatistics • September 1985 I N T E R E S T R A T E S M o n e y and Capital Markets Averages, percent per annum; weekly and monthly figures are averages of business day data unless otherwise noted. 1985 Instrument 1982 1983 1985, week ending 1984 Mar. Apr. May June May 31 June 7 June 14 June 21 June 28 MONEY MARKET RATES 1 Federal funds 1 ' 2 2 Discount window borrowing 1 ' 2 - 3 Commercial paper 4 - 5 3 1-month 4 3-month 5 6-month Finance paper, directly placed 4 ' 5 6 1-month 7 3-month 8 6-month Bankers acceptances 5 ' 6 9 3-month 10 6-month Certificates of deposit, secondary market 7 11 1-month 12 3-month 13 6-month 14 Eurodollar deposits, 3-month 8 U.S. Treasury bills5 Secondary market 9 15 3-month 16 6-month 17 1-year Auction average 10 18 3-month 19 6-month 20 1-year 12.26 11.02 9.09 8.50 10.22 8.80 8.58 8.00 8.27 8.00 7.97 7.81 7.53 7.50 7.60 7.50 7.75 7.50 7.62 7.50 7.13 7.50 7.46 7.50 11.83 11.89 11.89 8.87 8.88 8.89 10.05 10.10 10.16 8.74 8.90 9.23 8.31 8.37 8.47 7.80 7.83 7.88 7.34 7.35 7.38 7.46 7.48 7.54 7.37 7.33 7.31 7.41 7.40 7.40 7.13 7.16 7.21 7.45 7.49 7.60 11.64 11.23 11.20 8.80 8.70 8.69 9.97 9.73 9.65 8.70 8.67 8.65 8.29 8.26 8.27 7.74 7.71 7.69 7.31 7.19 7.16 7.44 7.42 7.39 7.34 7.19 7.17 7.38 7.22 7.21 7.07 7.00 6.99 7.47 7.36 7.26 11.89 11.83 8.90 8.91 10.14 10.19 8.88 9.20 8.33 8.42 7.77 7.81 7.32 7.34 7.43 7.47 7.30 7.25 7.36 7.38 7.19 7.23 7.42 7.52 12.04 12.27 12.57 13.12 8.96 9.07 9.27 9.56 10.17 10.37 10.68 10.73 8.73 9.02 9.60 9.32 8.35 8.49 8.75 8.74 7.83 7.91 8.08 8.13 7.38 7.44 7.58 7.60 7.49 1.5V 7.74 7.86 7.38 7.39 7.46 7.63 7.45 7.49 7.59 7.58 7.22 7.29 7.44 7.50 7.47 7.60 7.83 7.70 10.61 11.07 11.07 8.61 8.73 8.80 9.52 9.76 9.92 8.52 8.90 9.06 7.95 8.23 8.44 7.48 7.65 7.85 6.95 7.09 7.27 7.19 7.32 7.53 7.01 7.10 7.25 7.03 7.15 7.31 6.81 6.97 7.14 6.97 7.16 7.37 10.66 10.80 11.10 8.64 8.76 8.85 9.56 9.79 9.91 8.56 8.92 9.24 7.99 8.31 8.44 7.56 7.75 7.94 7.01 7.16 7.18 7.22 7.39 n.a. 7.03 7.16 n.a. 7.21 7.35 7.18 6.73 6.90 n.a. 7.06 7.24 n.a. 12.27 12.80 9.57 10.21 10.89 11.65 9.86 10.71 9.14 10.09 8.46 9.39 7.80 8.69 8.09 9.01 12.92 13.01 13.06 13.00 12.92 12.76 10.45 10.80 11.02 11.10 11.34 11.18 11.89 12.24 12.40 12.44 12.48 12.39 11.05 11.52 11.82 11.86 12.06 11.81 10.49 11.01 11.34 11.43 11.69 11.47 9.75 10.34 10.72 10.85 11.19 11.05 9.05 9.60 10.08 10.16 10.57 10.45 9.36 9.84 10.25 10.39 10.79' 10.68' 7.80 8.63 9 15 8.97 9.45 9.93 10.00 10.46 10.37 7.85 8.72 n SL 9.06 9.60 10.06 10.12 10.53 10.43 7.66 8.55 8 80 8.90 9.50 10.01 10.08 10.50 10.38 7.91 8.85 n a 9.27 9.85 10.32 10.43 10.77 10.60 12.23 10.84 11.99 11.78 11.42 10.96 10.36 10.58 10.27 10.33 10.29 10.56 10.86 12.46 11.66 8.80 10.17 9.51 9.61 10.38 10.10 9.18 10.18 9.77 8.95 9.95 9.42 8.52 9.54 9.01 8.24 9.03 8.69 8.30 9.30 8.81 8.15 8.90 8.60 8.25 9.05 8.66 8.25 9.05 8.69 8.30 9.10 8.80 14.94 13.79 14.41 15.43 16.11 12.78 12.04 12.42 13.10 13.55 13.49 12.71 13.31 13.74 14.19 13.13 12.56 12.91 13.36 13.69 12.89 12.23 12.69 13.14 13.51 12.47 11.72 12.30 12.70 13.15 11.70 10.94 11.46 11.98 12.40 12.01 11.27 11.82 12.24 12.69 11.71 10.93 11.50 12.04 12.36 11.66 10.88 11.48 11.97 12.32 11.63 10.86 11.36 11.91 12.37 11.80 11.09 11.52 12.02 12.56 15.49 12.73 13.81 13.17 12.75 12.25 11.62 11.78 11.57 11.50 11.71 11.62 12.53 5.81 11.02 4.40 11.59 4.64 10.97 4.37 10.75 4.37 10.60 4.31 10.05 4.21 10.25 4.23 10.07 4.17 10.10 4.23 9.95 4.26 10.07 4.19 CAPITAL MARKET RATES 21 22 23 24 2b 26 21 28 29 30 31 32 33 34 35 36 37 38 39 U.S. Treasury notes and bonds 11 Constant maturities 12 1-year 2-vear 2-Vi-year13 3-year 5-year 7-year 10-year 20-year 30-year Composite 14 Over 10 years (long-term) State and local notes and bonds Moody's series 15 Aaa Baa Bond Buyer series 16 Corporate bonds Seasoned issues 17 All industries Aaa Aa A Baa A-rated, recently-offered utility bonds 18 MEMO: Dividend/price ratio 19 40 Preferred stocks 41 Common stocks 1. Weekly and monthly figures are averages of all calendar days, where the rate for a weekend or holiday is taken to be the rate prevailing on the preceding business day. The daily rate is the average of the rates on a given day weighted by the volume of transactions at these rates. 2. Weekly figures are averages for statement week ending Wednesday. 3. Rate for the Federal Reserve Bank of New York. 4. Unweighted average of offering rates quoted by at least five dealers (in the case of commercial paper), or finance companies (in the case of finance paper). Before November 1979, maturities for data shown are 30-59 days, 90-119 days, and 120-179 days for commercial paper; and 30-59 days, 90—119 days, and 150179 days for finance paper. 5. Yields are quoted on a bank-discount basis, rather than an investment yield basis (which would give a higher figure). 6. Dealer closing offered rates for top-rated banks. Most representative rate (which may be, but need not be, the average of the rates quoted by the dealers). 7. Unweighted average of offered rates quoted by at least five dealers early in the day. 8. Calendar week average. For indication purposes only. 9. Unweighted average of closing bid rates quoted by at least five dealers. 10. Rates are recorded in the week in which bills are issued. Beginning with the Treasury bill auction held on Apr. 18, 1983, bidders were required to state the percentage yield (on a bank discount basis) that they would accept to two decimal places. Thus, average issuing rates in bill auctions will be reported using two rather than three decimal places. 11. Yields are based on closing bid prices quoted by at least five dealers. 12. Yields adjusted to constant maturities by the U.S. Treasury. That is, yields are read from a yield curve at fixed maturities. Based on only recently issued, actively traded securities. 13. Each biweekly figure is the average of five business days ending on the Monday following the date indicated. Until Mar. 31, 1983, the biweekly rate determined the maximum interest rate payable in the following two-week period on 2-'/2-year small saver certificates. (See table 1.16.) 14. Averages (to maturity or call) for all outstanding bonds neither due nor callable in less than 10 years, including several very low yielding "flower" bonds. 15. General obligations based on Thursday figures; Moody's Investors Service. 16. General obligations only, with 20 years to maturity, issued by 20 state and local governmental units of mixed quality. Based on figures for Thursday. 17. Daily figures from Moody's Investors Service. Based on yields to maturity on selected long-term bonds. 18. 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. 19. Standard and Poor's corporate series. Preferred stock ratio based on a sample of ten 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 1984 Indicator 1982 1983 1985 1984 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June 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 Finance 5 6 Standard & Poor's Corporation (1941-43 = 10)1 . . . 7 American Stock Exchange 2 (Aug. 31, 1973 = 100) 68.93 78.18 60.41 39.75 71.99 119.71 92.63 107.45 89.36 47.00 95.34 160.41 92.46 95.09 108.01 110.44 85.63 86.82 46.44 49.02 89.28 92.94 160.50 164.82 95.85 110.91 87.37 49.93 95.28 166.27 94.85 99.11 109.05 113.99 88.00 94.88 50.58 51.95 95.29 101.34 164.48 171.61 104.73 120.71 101.76 53.44 109.58 180.88 103.92 119.64 98.30 53.91 107.59 179.42 104.66 119.93 96.47 55.51 109.39 180.62 107.00 121.88 99.66 57.32 115.31 180.94 109.52 124.11 105.79 59.61 118.44 188.89 282.62' 216.48 207.96 210.39 209.47 202.28 211.82 228.40 225.62 229.46 228.75 227.48 Volume of trading (thousands of shares) 8 New York Stock Exchange 9 American Stock Exchange 64,617 5,283 85,418 8,215 91,084 91,676 6,107 5,587 83,692 6,008 89,032 121,545 7,254 9,130 115,489 102,591 10,010 8,677 94,387 7,801 106,827 7,171 105,849 7,128 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers 3 11 Margin stock 12 Convertible bonds 13 Subscription issues Free credit balances at brokers4 14 Margin-account 15 Cash-account 13,325 23,000 12,980 344 22,720 279 1 1 5,735 8,390 6,620 8,430 22,470 22,330 t 7,015 10,215 22,350 t 22,470 22,090 t t 6,770 9,725 n.a. n.a. n.a. 6,580 8,650 6,7(XK 8,420 7,015 10,215 22,970 23,230 23,900 t I I 6,680 9,840 6,780 10,155r 6,910 9,230 24,300 • 6,865' 9,230 Margin-account debt at brokers (percentage distribution, end of period) 16 Total 17 18 19 20 21 22 By equity class (in percentJs Under 40 40-49 50-59 60-69 70-79 80 or more 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 21.0 24.0 24.0 14.0 9.0 8.0 41.0 22.0 16.0 9.0 6.0 6.0 46.0 18.0 16.0 9.0 5.0 6.0 44.0 21.0 14.0 9.0 6.0 6.0 47.0 19.0 13.0 9.0 6.0 6.0 46.0 18.0 16.0 9.0 5.0 6.0 35.0 19.0 20.0 36.0 20.0 18.0 38.0 20.0 18.0 10.0 7.0 7.0 39.0 19.0 18.0 10.0 7.0 7.0 36.0 19.0 19.0 7.0 8.0 37.0 19.0 19.0 10.0 7.0 8.0 82,990 87,120 86,910 11.0 7.0 8.0 11.0 8.0 8.0 11.0 Special miscellaneous-account balances at brokers (end of period) 6 23 Total balances (millions of dollars) Distribution by equity status (percent) 24 Net credit status Debt status, equity of 25 60 percent or more 26 Less than 60 percent 35,598 58,329 62.0 63.0 29.0 9.0 28.0 9.0 75,840 73,500r 73,904 75,840 79,600 81,830 81,930^ 59.0 59.0 59.0 59.0 59.0 59.0 60.0 60.0 60.0 59.0 29.0 30.0 29.0 12.0 29.0 30.0 10.0 31.0 10.0 30.0 10.0 30.0 10.0 30.0 10.0 31.0 10.0 11.0 11.0 11.0 Margin requirements (percent of market value and effective date) 7 27 Margin stocks 28 Convertible bonds 29 Short sales Mar. 11, 1968 June 8, 1968 70 50 70 80 60 80 1. Effective July 1976, includes a new financial group, banks and insurance companies. With this change the index includes 400 industrial stocks (formerly 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 financial. 2. Beginning July 5, 1983, the American Stock Exchange rebased its index effectively cutting previous readings in half. 3. Beginning July 1983, under the revised Regulation T, margin credit at broker-dealers includes credit extended against stocks, convertible bonds, stocks acquired through exercise of subscription rights, corporate bonds, and government securities. Separate reporting of data for margin stocks, convertible bonds, and subscription issues was discontinued in April 1984, and margin credit at broker-dealers became the total that is distributed by equity class and shown on lines 17-22. 4. Free credit balances are in accounts with no unfulfilled commitments to the brokers and are subject to withdrawal by customers on demand. May 6, 1970 65 50 65 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 55 50 55 65 50 65 50 50 50 5. Each customer's equity in his collateral (market value of collateral less net debit balance) is expressed as a percentage of current collateral values. 6. Balances that may be used by customers as the margin deposit required for additional purchases. Balances may arise as transfers based on loan values of other collateral in the customer's margin account or deposits of cash (usually sales proceeds) occur. 7. Regulations G, T, and U of the Federal Reserve Board of Governors, prescribed in accordance with the Securities Exchange Act of 1934, limit the amount of credit to purchase and carry margin stocks that may be extended on securities as collateral by prescribing a maximum loan value, which is a specified percentage of the market value of the collateral at the time the credit is extended. Margin requirements are the difference between the market value (100 percent) and the maximum loan value. The term "margin stocks" is defined in the corresponding regulation. A26 1.37 DomesticNonfinancialStatistics • September 1985 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1984 Account 1985 1982 July Aug. Nov. Oct. Sept. Dec. Jan. Feb. Mar. Apr. May Savings and loan associations 1 2 3 4 Assets Mortgages Cash and investment securities 1 . . . . Other 5 Liabilities and net worth 6 7 8 9 10 11 Savings capital Borrowed money FHLBB Other Loans in process 2 Other 707,646 773,417 850,780 860,088 877,642 881,627 887,696 902,449 898,537 483,614 494,789 535,814 540,644 550,129 552,516 556,229 555,277 558,276 85,438 104,274 108,456 108,820 112,350 112,023 114,879 125,358 119,673 138,594 174,354 206,510 210,624 215,163 217,088 216,588 221,814 220,588 904,827 906,995' 559,263 563,376' 119,713 114,641' 225,851 228,978' 911,696 566,396 116,432 228, S68 898,537 898,086 904,827 906,995' 911,696 567,961 634,455 687,817 691,704 704,558 708,846 714,780 724,301 730,709 97,850 92,127 110,238 114,747 121,329 119,305 117,775 126,169 114,806 57,115 60,178 63,627 63,412 63,383 64,207 63,152 63,861 52,626 54,392 61,962 51,654 54,569 57,702 55,893 33,989 39,501 53,123 26,683 26,546 27,141 26,754 26,959 26,122 26,773 9,934 21,117 21,302 17,215 18,358 18,050 19,894 15,602 19,970 20,599 15,968 726,308 732,406 116,879 119,461 63,452 63,187 53,427 56,274 26,636 27,004 19,857 17,471 731,914' 118,655' 63,941' 54,714' 27,406' 20,539' 737,704 115,391 65,239 50,152 27,404 21,671 707,646 773,417 850,780 860,088 877,642 881,627 887,696 898,086 556,184 119,724 222,178 902,449 12 Net worth 3 26,233 30,867 32,755 33,038 33,705 33,582 33,839 34,764 34,664 35,042 35,489 35,887' 36,930 13 MEMO: Mortgage loan commitments outstanding 4 18,054 32,996 43,878 41,182 40,089 38,530 37,856 34,841 33,305 34,217 35,889 36,269' 36,953 203,898 204,859 206,175 210,568' 210,469 212,509 103,654 104,340' 105,102 26,456 27,798' 28,000 105,869 28,530 15,098r 2,092' 43,888' 4,864' 12,488' 14,504 2,097 43,889 4,679 12,288 14,895 2,094 43,871 5,004 12,246 Mutual savings banks 5 174,197 193,535 199,128 200,722 201,445 203,274 204,499 94,091 16,957 97,356 19,129 100,091 23,213 101,211 24,068 101,621 24,535 102,704 24,486 102,953 24,884 102,895 24,954 103,393 25,747 9,743 2,470 36,161 6,919 7,855 15,360 2,177 43,580 6,263 9,670 15,457 2,037 42,682 4,8% 10,752 15,019 2,055 42,632 4,981 10,756 14,965 2,052 42,605 4,795 10,872 15,295 2,080 43,003 4,605 11,101 15,034 2,077 43,361 4,795 11,395 14,643 2,077 42,962 4,954 11,413 14,628 2,067 43,351 4,140 11,533 22 Liabilities 174,197 193,535 199,128 200,722 201,445 203,274 204,499 203,898 204,859 206,175 210,568' 210,469 212,509 23 Deposits 24 Regular 8 25 Ordinary savings 155,196 152,777 46,862 96,369 2,419 8,336 9,235 172,665 170,135 38,554 95,129 2,530 10,154 10,368 174,823 171,740 35,511 98,410 3,083 13,269 10,495 176,085 172,990 34,787 101,270 3,095 13,604 10,498 177,345 174,296 34,564 102,934 3,049 12,979 10,488 178,624 175,727 34,221 104,151 2,897 13,853 10,459 180,073 177,130 34,009 104,849 2,943 13,453 10,535 180,616 177,418 33,739 104,732 3,198 12,504 10,510 181,062 177,954 33,413 104,098 3,108 12,931 10,619 181,849 185,197' 184,478 178,791 181,742' 180,804 33,413 33,715' 33,211 103,536 105,204' 104,527 3,058 3,455' 3,689 13,387 14,393' 14,959 10,670 10,72C 10,803 185,802 182,113 33,457 104,843 3,674 15,546 10,913 1,285 2,387 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 14 Assets 15 16 17 18 19 20 21 Loans Mortgage Other Securities U.S. government 6 State and local government Corporate and other 7 Cash Other assets 27 Other 28 Other liabilities 29 General reserve accounts 30 MEMO: Mortgage loan commitments outstanding 9 14,917 2,069 43,063 4,423 11,593 n.a. n.a. n.a. n.a. Life insurance companies 31 Assets Securities 33 34 35 37 38 39 40 41 42 United States 10 State and local Foreign 11 Bonds Stocks Mortgages Real estate Policy loans Other assets 588,163 654,948 684,573 694,082 699,996 56,263 57,552 54,688 36,499 50,752 33,886 35,586 16,529 28,636 32,654 9,221 9,357 8,664 9,236 9,986 12,745 13,020 12,798 11,306 12,130 287,126 322,854 341,802 348,614 350,512 231,406 257,986 281,113 283,673 285,543 64,941 64,969 60,689 55,720 64,868 141,989 150,999 154,299 155,438 155,802 24,117 24,685 24,019 20,264 22,234 54,517 54,551 54,441 52,961 54,063 56,894 55,324 55,133 48,571 54,046 705,827 712,271 720,807 730,120 65,367 59,825 62,678 64,683 40,288 41,970 42,183 37,594 9,385 9,895 9,344 9,757 13,005 12,887 13,289 12,956 352,059 354,815 354,902 364,617 287,607 291,021 290,731 297,666 66,951 63,794 64,171 64,452 156,064 156,691 157,283 157,583 25,467 24,947 25,985 26,343 54,571 54,442 54,574 54,610 58,049 63,344 61,768 58,358 734,920 741,442 747,683 67,111 66,641 67,265 43,929 43,317 43,840 9,772 9,956 9,770 13,653 13,226 13,554 367,411 370,582 374,904 298,381 302,072 305,945 69,030 68,510 68,959 158,052 158,956 160,250 26,567 26,911 27,202 54,472 54,523 54,466 61,256 63,886 63,590 n.a. Credit unions 12 43 Total assets/liabilities and capital . . . . 45 State 48 State 50 51 Federal (shares) State (shares and deposits) 69,585 45,493 24,092 81,961 54,482 27,479 90,145 61,163 28,982 90,503 61,500 29,003 91,651 62,107 29,544 91,619 61,935 29,684 92,521 62,690 29,831 93,036 63,205 29,831 94,646 64,505 30,141 96,183 65,989 30,194 98,646 67,799 30,847 101,268 68,903 32,365 104,992 71,342 33,650 43,232 27,948 15,284 62,990 41,352 21,638 50,083 32,930 17,153 74,739 49,889 24,850 57,286 38,490 18,796 82,402 56,278 26,124 58,802 39,578 19,224 82,135 56,205 25,930 59,874 40,310 19,564 83,172 56,734 26,438 60,483 40,727 19,756 83,129 56,655 26,474 62,170 41,762 20,408 84,000 57,302 26,698 62,561 42,337 20,224 84,348 57,539 26,809 62,662 42,220 20,442 86,047 58,820 27,227 62,393 42,283 20,110 86,048 59,914 26,134 62,936 42,804 20,132 88,560 61,758 26,802 64,341 43,414 20,927 91,275 62,867 28,408 65,298 44,042 21,256 95,278 66,680 28,598 Financial Markets 1.37 A27 Continued 1985 1984 Account 1982 1983 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May FSLIC-insured federal savings banks 6,859 3,353 64,969 38,698 10,436 15,835 83,989 49,996 13,184 20,809 87,209 52,039 13,331 21,839 82,174 48,841 12,867 20,466 87,743 51,554 13,615 22,574 94,536 55,861 14,826 23,849 98,559 57,429 16,001 25,129 98,747 57,667 15,378 25,702 106,657 109,720 60,938 62,608 17,511 18,237 28,208 28,875 110,511' 63,519' 17,923' 29,069' 113,739 64,822 18,886 30,031 56 Liabilities and net worth 6,859 64,969 83,989 87,209 82,174 87,743 94,536 98,559 98,747 106,657 109,720 57 58 59 60 61 62 5,877 53,227 7,477 4,640 2,837 1,157 3,108 66,227 12,060 6,897 5,163 1,807 3,895 68,443 12,863 7,654 5,209 1,912 3,991 65,079 11,828 6,600 5,228 1,610 3,657 70,080 11,935 6,867 5,068 1,896 3,832 76,167 11,937 7,041 4,896 2,259 4,173 79,572 12,798 7,515 5,283 1,903 4,286 80,091 12,372 7,361 5,011 1,982 4,302 52 53 54 55 Assets Mortgages Cash and investment securities' Other Savings and capital Borrowed money FHLBB Other Other Net worth 3 85,632 14,079 8,023 6,056 2,356 4,590 110,511' 113,739 88,001 14,860 8,491 6,369 2,174 4,685 88,205' 15,187' 8,849' 6,338' 2,400' 4,719' 90,414 15,220 8,925 6,295 3,032 5,073 MEMO 63 Loans in process 2 64 Mortgage loan commitments outstanding 4 1,264 1,901 1,895 1,505 1,457 1,689 1,738 1,685 1,747 1,919 2,010' 2,068 2,151 3,988 3,860 2,970 2,925 3,298 3,234 3,510 3,646 3,752 3,937' 4,229 1. Holdings of stock of the Federal Home Loan Banks are in "other assets." 2. Beginning in 1982, loans in process are classified as contra-assets and are not included in total liabilities and net worth. Total assets are net of loans in process. 3. Includes net undistributed income accrued by most associations. 4. Excludes figures for loans in process. 5. The National Council reports data on member mutual savings banks and on savings banks that have converted to stock institutions, and to federal savings banks. 6. Beginning April 1979, includes obligations of U.S. government agencies. Before that date, this item was included in "Corporate and other." 7. Includes securities of foreign governments and international organizations and, before April 1979, nonguaranteed issues of U.S. government agencies. 8. Excludes checking, club, and school accounts. 9. Commitments outstanding (including loans in process) of banks in New York State as reported to the Savings Banks Association of the State of New York. 10. Direct and guaranteed obligations. Excludes federal agency issues not guaranteed, which are shown in the table under "Business" securities. 11. Issues of foreign governments and their subdivisions and bonds of the International Bank for Reconstruction and Development. 12. As of June 1982, data include only federal or federally insured state credit unions serving natural perons. NOTE. Savings and loan associations: Estimates by the FHLBB for all associations in the United States. Data are based on monthly reports of federally insured associations and annual reports of other associations. Even when revised, data for current and preceding year are subject to further revision. Mutual savings banks: Estimates of National Council of Savings Institutions for all savings banks in the United States. 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." Credit unions: Estimates by the National Credit Union Administration for a group of federal and federally insured state credit unions serving natural persons. Figures are preliminary and revised annually to incorporate recent data. A28 1.38 DomesticNonfinancialStatistics • September 1985 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year Fiscal year 1982 Type of account or operation Fiscal year 1983 Fiscal year 1984 1983 HI U.S. budget 1 Receipts 1 2 Outlays 1 3 Surplus, or deficit ( - ) Trust funds 4 5 Federal funds 2 3 Off-budget entities (surplus, or deficit 6 Federal Financing Bank outlays 7 Other 3 4 1984 H2 HI 1985 Apr. May June 617,766 728,375 -110,609 5,456 -116,065 600,562 795,917 -195,355 23,056 -218,410 666,457 841,800 -175,343 30,565 -205,908 306,331 396,477 -90,146 22,680 -112,822 306,584 406,849 -100,265 7,745 -108,005 341,808 420,700 -78,892 18,080 -96,971 94,593 82,228 12,365 5.182 7.183 39,794 80,245 -40,451 6,699 -47,149 72,151 71,506 645 10,268 -9,623 -14,142 -3,190 -10,404 -1,953 -7,277 -2,719 -5,418 -528 -3,199 -1,206 -2,813 -838 -1,108 128 -1,192 -354 -1,573 -441 -127,940 -207,711 -185,339 -96,094 -104,670 -84,884 11,386 -41,997 -1,369 134,993 212,425 170,817 102,538 84,020 80,592 17,036 16,333 11,857 -11,911 4,858 -9,889 5,176 5,636 8,885 -9,664 3,222 -16,294 4,358 -3,127 7,418 -27,927 -495 -29,808 -4,143 -12,697 2,209 29,164 10,975 18,189 37,057 16,557 20,500 22,345 3,791 18,553 27,997 19,442 8,764 11,817 3,661 8,157 13,567 4,397 9,170 40,022 19,305 20,717 11,138 1,933 9,204 24,013 3,288 20,725 (-)) U.S. budget plus off-budget, including Federal Financing Bank 8 Surplus, or deficit ( - ) Source of financing 9 Borrowing from the public 10 Cash and monetary assets (decrease, or increase ( - ) ) 4 11 Other 5 MEMO 12 Treasury operating balance (level, end of period) 13 Federal Reserve Banks 14 Tax and loan accounts 1. Effective Feb. 8, 1982, supplemental medical insurance premiums and voluntary hospital insurance premiums, previously included in other insurance receipts, have been reclassified as offsetting receipts in the health function. 2. Half-year figures are calculated as a residual (total surplus/deficit less trust fund surplus/deficit). 3. Other off-budget includes Postal Service Fund; Rural Electrification and Telephone Revolving Fund; Rural Telephone Bank; and petroleum acquisition and transportation and strategic petroleum reserve effective November 1981. 4. Includes U.S. Treasury operating cash accounts; SDRs; gold tranche drawing rights; loans to International Monetary Fund; and other cash and monetary assets. 5. Includes accrued interest payable to the public; allocations of special drawing rights; deposit funds; miscellaneous liability (including checks outstanding) and asset accounts; seigniorage; increment on gold; net gain/loss for U.S. currency valuation adjustment; net gain/loss for IMF valuation adjustment; and profit on the sale of gold. SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. Government" Treasury Bulletin, and the Budget of the U.S. Government, Fiscal Year 1985. Federal Finance A3 3 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS Millions of dollars Calendar year Source or type Fiscal year 1983 Fiscal year 1984 1985 1984 1983 HI H2 HI H2 Apr. May June RECEIPTS 1 All sources 2 Individual income taxes, net 3 Withheld 4 Presidential Election Campaign Fund . . . 5 Nonwithheld Refunds 6 Corporation income taxes 7 Gross receipts 8 Refunds 9 Social insurance taxes and contributions, net 10 Payroll employment taxes and contributions 1 11 Self-employment taxes and contributions 2 12 Unemployment insurance 13 Other net receipts 3 14 15 16 17 Excise taxes Customs deposits Estate and gift taxes Miscellaneous receipts 4 600,563 666,457 306,331 305,122 341,808 341,392 94,593 39,794 72,151 288,938 266,010 36 83,586 60,692 295,955 279,345 35 81,346 64,771 144,551 135,531 30 63,014 54,024 147,663 133,768 6 20,703 6,815 144,691 140,657 29 61,463 57,458 157,229 145,210 5 19,403 7,387 51,602 26,343 9 43,235 17,986 3,611 27,640 8 1,945 25,982 34,764 23,448 3 13,579 2,226 61,780 24,758 74,179 17,286 33,522 13,809 31,064 8,921 40,328 10,045 35,190 6,847 11,265 2,409 2,205 975 11,373 585 209,001 241,902 110,520 100,832 131,372 118,690 28,032 28,423 21,049 179,010 203,476 90,912 88,388 106,436 104,540 18,822 19,204 18,924 6,756 18,799 4,436 8,709 25,138 4,580 6,427 10,984 2,197 398 8,714 2,290 7,667 14,942 2,329 1,086 10,706 2,360 5,757 3,062 391 590 8,192 437 1,298 501 367 35,300 8,655 6,053 15,594 37,361 11,370 6,010 16,965 16,904 4,010 2,883 7,751 19,586 5,079 3,050 7,811 18,304 5,576 3,102 8,481 18,961 6,329 3,029 8,812 2,700 939 671 1,793 3,235 946 566 1,783 2,733 997 428 1,391 OUTLAYS 18 All types 795,917 841,800 396,477 406,849 420,700 446,943 82,228 80,245 71,506 19 20 21 22 23 24 National defense International affairs General science, space, and technology . . . Energy Natural resources and environment Agriculture 210,461 8,927 7,777 4,035 12,676 22,173 227,405 13,313 8,271 2,464 12,677 12,215 105,072 4,705 3,486 2,073 5,892 10,154 108,967 6,117 4,216 1,533 6,933 5,278 114,639 5,426 3,981 1,080 5,463 7,129 118,286 8,550 4,473 1,423 7,370 8,524 20,239 946 743 355 1,006 2,822 22,198 1,201 722 408 1,016 903 20,815 974 656 -874 1,073 822 25 26 27 28 Commerce and housing credit Transportation Community and regional development . . . . Education, training, employment, social services 4,721 21,231 7,302 5,198 24,705 7,803 2,164 9,918 3,124 2,648 13,323 4,327 2,572 10,616 3,154 2,663 13,673 4,836 1,128 2,045 683 -187 2,124 508 266 2,130 652 25,726 26,616 12,801 13,246 13,445 13,737 2,344 2,448 1,949 28,655] 223,311f 106,21 l j 30,435 235,764 96,714 41,206 143,001 42,150 15,748 135,579 65,212 15,692 119,613 57,411 2,909 21,355 13,347 3,016 21,378 10,740 2,735 23,074 7,809 25,640 5,616 4,836 6,577 111,007 -15,454 11,334 2,522 2,434 3,124 42,358 -8,887 13,621 2,628 2,479 3,290 47,674 -7,262 12,849 2,807 2,462 2,943 53,729 -7,333 13,317 2,992 2,552 3,458 61,293 -12,914 2,293 572 80 1,258 10,858 -2,754 3,207 492 848 91 11,536 -2,403 907 443 643 -131 9,972 -2,410 29 Health 30 Social security and medicare 31 Income security 32 33 34 35 36 37 Veterans benefits and services Administration of justice General government General-purpose fiscal assistance Net interest" Undistributed offsetting receipts 7 24,845 5,014 4,991 6,287 89,774 -21,424 1. Old-age, disability, and hospital insurance, and railroad retirement accounts. 2. Old-age, disability, and hospital insurance. 3. Federal employee retirement contributions and civil service retirement and disability fund. 4. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts. 5. In accordance with the Social Security Amendments Act of 1983, the Treasury now provides social security and medicare outlays as a separate function. Before February 1984, these outlays were included in the income security and health functions. 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. SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. Government" and the Budget of the U.S. Government, Fiscal Year 1985. A30 1.40 D o m e s t i c Financial Statistics • S e p t e m b e r 1985 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1984 1983 1985 Item Mar. 31 1 Federal debt outstanding 2 Public debt securities 3 Held by public Held by agencies 4 5 Agency securities 6 Held by public Held by agencies 7 8 Debt subject to statutory limit Sept. 30 June 30 Dec. 31 Mar. 31 Mar. 31 Dec. 31 1,324.3 1,381.9 1,415.3 1,468.3 1,517.2 1,576.7 1,667.4 1,715.1 1,244.5 1,043.3 201.2 1,319.6 1,090.3 229.3 1,377.2 1,138.2 239.0 1,410.7 1,174.4 236.3 1,463.7 1,223.9 239.8 1,512.7 1,255.1 257.6 1,572.3 1,309.2 263.1 1,663.0 1,373.4 289.6 1,710.7 1,415.2 295.5 4.8 3.7 1.1 4.7 3.6 1.1 4.7 3.6 1.1 4.6 3.5 1.1 4.6 3.5 1.1 4.5 3.4 1.1 4.5 3.4 1.1 4.5 3.4 1.1 4.4 3.3 1.1 1,245.3 1,320.4 1,378.0 1,411.4 1,464.5 1,513.4 1,573.0 1,663.7 1,711.4 1,512.1 1.3 1,571.7 1.3 1,662.4 1.3 1,710.1 1.3 1,520.0 1,573.0 1,823.8 1,823.8 1,249.3 9 Public debt securities 10 Other debt 1 1,243.9 1.4 1,319.0 1.4 1,376.6 1.3 1,410.1 1.3 1,463.1 1.3 11 MEMO: Statutory debt limit 1,290.2 1,389.0 1,389.0 1,490.0 1,490.0 1. Includes guaranteed debt of government agencies, specified participation certificates, notes to international lending organizations, and District of Columbia stadium bonds. 1.41 Sept. 30 June 30 GROSS PUBLIC DEBT OF U.S. TREASURY NOTE. Data from Treasury Bulletin (U.S. Treasury Department), Types and Ownership Billions of dollars, end of period 1984 Type and holder 1 Total gross public debt By type 2 Interest-bearing debt 3 Marketable 4 Bills 5 Notes 6 Bonds 7 Nonmarketable 1 8 State and local2 government series 9 Foreign issues 10 11 Public 12 Savings bonds and notes 13 Government account series 3 14 Non-interest-bearing debt By holder4 15 U.S. government agencies and trust funds 16 Federal Reserve Banks 17 18 Commercial banks 19 Money market funds 20 Insurance companies 21 Other companies 22 State and local governments 23 74 25 26 Individuals Savings bonds Other securities Foreign and international 5 Other miscellaneous investors 6 1981 1980 Q3 Q4 Q1 Q2 930.2 1,028.7 1,197.1 1,410.7 1,572.3 1,663.0 1,710.7 1,774.6 928.9 623.2 216.1 321.6 85.4 305.7 23.8 24.0 17.6 6.4 72.5 185.1 1,027.3 720.3 245.0 375.3 99.9 307.0 23.0 19.0 14.9 4.1 68.1 196.7 1,195.5 881.5 311.8 465.0 104.6 314.0 25.7 14.7 13.0 1.7 68.0 205.4 1,400.9 1,050.9 343.8 573.4 133.7 350.0 36.7 10.4 10.4 .0 70.7 231.9 1,559.6 1,176.6 356.8 661.7 158.1 383.0 41.4 8.8 8.8 .0 73.1 259.5 1,660.6 1,247.4 374.4 705.1 167.9 413.2 44.4 9.1 9.1 .0 73.3 286.2 1,695.2 1,271.7 379.5 713.8 178.4 423.6 47.7 9.1 9.1 .0 74.4 292.2 1,759.8 1,310.7 381.9 740.9 187.9 449.1 53.9 8.3 8.3 .0 75.7 311.0 1.3 1.4 1.6 9.8 12.7 2.3 15.5 14.8 192.5 121.3 616.4 112.1 3.5 24.0 19.3 87.9 203.3 131.0 694.5 111.4 21.5 29.0 17.9 104.3 209.4 139.3 848.4 131.4 42.6 39.1 24.5 127.8 236.3 151.9 1,022.6 188.8 22.8 56.7 39.7 155.1 263.1 155.0 1,154.1 183.0 13.6 73.2 47.7 n.a. 289.6 160.9 1,212.5 183.4 25.9 82.3 51.1 n.a. 295.5 161.0 1,254.1 195.0 26.6 84.0 51.9 n.a. 72.5 44.6 129.7 122.8 68.1 42.7 136.6 163.0 68.3 48.2 149.5 217.0 71.5 61.9 166.3 259.8 73.7 68.7 175.5 n.a. 74.5 69.3 192.8 n.a. 75.4 69.9 186.3 n.a. 1. Includes (not shown separately): Securities issued to the Rural Electrification Administration; depository bonds, retirement plan bonds, and individual retirement bonds. 2. Nonmarketable dollar-denominated and foreign currency-denominated series held by foreigners. 3. Held almost entirely by U.S. government agencies and trust funds. 4. Data for Federal Reserve Banks and U.S. government agencies and trust funds are actual holdings; data for other groups are Treasury estimates. 1985 1983 1982 n.a. 5. Consists of investments of foreign and international accounts. Excludes noninterest-bearing notes issued to the International Monetary Fund. 6. Includes savings and loan associations, nonprofit institutions, credit unions, mutual savings banks, corporate pension trust funds, dealers and brokers, certain U.S. government deposit accounts, and U.S. government-sponsored agencies. SOURCES. Data by type of security, U.S. Treasury Department, Monthly Statement of the Public Debt of the United States; data by holder. Treasury Bulletin. Federal Finance 1.42 U.S. GOVERNMENT SECURITIES DEALERS A3 3 Transactions Par value; averages of daily figures, in millions of dollars 1985 week ending Wednesday 1982 1983 Apr.' May' May 22 May 29 June 5 June 12 June 19 June 26 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Immediate delivery U.S. government securities.. By maturity Bills Other within 1 year 1-5 years 5-10 years Over 10 years By type of customer U.S. government securities dealers U.S. government securities brokers All others 2 Federal agency s e c u r i t i e s . . . . Certificates of deposit Bankers acceptances Commercial paper Futures transactions 3 Treasury bills Treasury coupons Federal agency s e c u r i t i e s . . . . Forward transactions 4 U.S. government securities.. Federal agency s e c u r i t i e s . . . . 18,392 810 6,271 3,555 3,232 42,135 52,786 72,507 83,324 86,999 0,340' 71,499' 97,539 80,176 88,813 80,373 22,393 708 8,758 5,279 4,997 26,040 1,305 11,734 7,607 6,100 35,900 1,971 17,007 10,899 6,729 34,179 1,933 23,116 13,088 11,008 34,591 1,664 23,482 15,600 11,662 30,498 2,172 25,202' 10,814' 11,655' 27,109' 1,296 23,146' 11,434' 8,515' 39,748 2,031 22,718 19,685 13,356 35,662 1,515 17,941 14,719 10,340 36,591 1,531 24,554 15,065 11,072 28,575 1,582 27,761 13,051 9,405 1,770 2,257 2,920 3,895 3,050 2,947 2,595 2,357 3,751 2,904 2,371 2,062 15,794 14,697 4,140 5,000 2,502 7,595 21,045 18,832 5,576 4,333 2,642 8,036 25,584 24,282 7,846 4,947 3,244 40,053 40,222 10,954 4,693 3,923 11,378 42,822 41,230 12,876 4,661 4,001 12,714 38,351 39,395' 11,127 4,69C 3,998' 10,832 34,870' 34,273' 7,619' 4,130 4,231 10,018 34,705 33,907 10,176 4,355 3,499 12,019 45,452 48,336 13,513 5,418 4,490 13,062 40,373 36,899 11,349 3,937 3,659 11,606 44,469 41,973 16,177 5,236 4,550 13,541 40,340 37,971 10,165 4,099 3,648 12,222 5,055 1,487 261 6,655 2,501 265 6,947 4,503 262 6,662 5,517 120 4,572 5,730 148 6,416 7,627 222 3,770 5,906 311 4,050 4,627 121 7,332 7,506 202 6,163 7,870 300 7,539 8,536 99 5,223 6,388 347 835 978 1,493 1,646 1,364 2,843 1,017 2,632 1,719 3,268 1,319 3,747 1,735' 3,820 1,399 2,032 1,387 3,394 666 3,912 1,922 4,809 1,317 2,974 1. Data for immediate transactions does not include forward transactions. 2. Includes, among others, all other dealers and brokers in commodities and securities, nondealer departments of commercial banks, foreign banking agencies, and the Federal Reserve System. 3. 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. 4. Forward transactions are agreements arranged in the over-the-counter market in which securities are purchased (sold) for delivery after 5 business days 11,020 from the date of the transaction for government securities (Treasury bills, notes, and bonds) or after 30 days for mortgage-backed agency issues. NOTE. Averages for transactions are based on number of trading days in the period. Transactions are market purchases and sales of U.S. government securities dealers reporting to the Federal Reserve Bank of New York. The figures exclude allotments of, and exchanges for, new U.S. government securities, redemptions of called or matured securities, purchases or sales of securities under repurchase agreement, reverse repurchase (resale), or similar contracts. A32 1.43 DomesticNonfinancialStatistics • September 1985 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing Averages of daily figures, in millions of dollars 1985 Item 1982 1983 1985 week ending Wednesday 1984 May Apr. June May 29 June 5 June 12 June 19 June 26 Positions 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Net immediate 1 U.S. government securities Bills Other within 1 year 1-5 years 5-10 years Over 10 years Federal agency securities Certificates of deposit Bankers acceptances Commercial paper Futures positions Treasury bills Treasury coupons Federal agency securities Forward positions U.S. government securities Federal agency securities 13,663 7,297 972 3,256 -318 2,026 4,145 5,532 2,832 3,317 10,701 8,020 394 1,778 -78 528 7,232 5,839 3,332 3,159 5,538 5,500 63 2,159 -1,119 -1,174 15,294 7,369 3,874 3,788 8,531 11,538 1,203 2,235 -4,464' -2,307 r 18,049 8,652 3,949 4,959 5,481' 8,004' 1,083' 3,797 -5,687 -2,075 19,815' 9,368' 4,476' 5,469 1,886 4,588 845 5,698 -7,179 -2,394 22,746 9,492 4,544 5,232 -125' 3,832' 913 3,802 -7,165 -1,858 20,721' 9,226' 4,949' 5,204 5,810 7,193 1,014 5,783 -7,218 -1,302 22,165 9,821 5,218 6,512 4,643 7,132 1,083 5,744 -7,088 -2,563 23,420 10,241 5,267 5,989 2,564 5,379 745 5,681 -7,065 -2,515 22,541 9,491 4,204 4,425 -3,462 1,155 585 5,125 -7,928 -2,731 22,628 8,908 3,875 4,616 -2,507 -2,303 -224 -4,125 -1,032 171 -4,525 1,794 233 -2,885' 6,316' 38 -5,927' 6,589 -99 -4,925 4,239' -469 -7,887 5,284 -421 -7,451 4,842 -175 -6,009 4,617 -252 -5,672 4,736 -330 -3,411 3,664 -776 -788 -1,432 -1,936 -3,561 -1,643 -9,205 -818' -7,881 -344' -7,803' 225 -9,144 813 -7,634' -123 -8,683 -998 -9,830 -76 -9,342 1,318 -8,908 Financing 2 Reverse repurchase agreements 3 Overnight and continuing Term agreements Repurchase agreements 4 18 Overnight and continuing 19 Term agreements 16 17 26,754 48,247 29,099 52,493 44,078 68,357 62,325 77,440 64,824 74,562 66,347 75,308 66,126 72,491 67,633 73,949 68,551 71,940 67,572 75,144 65,057 78,893 49,695 43,410 57,946 44,410 75,717 57,047 94,055 65,621 97,989 67,542 146,450 66,486 97,482 65,%2 97,714 66,185 99,708 63,166 98,638 64,648 298,069 65,772 1. 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. Before 1984, securities owned, and hence dealer positions, do not include all securities acquired under reverse RPs. After January 1984, 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 does not include forward positions. 2. Figures cover financing involving U.S. government and federal agency securities, negotiable CDs, bankers acceptances, and commercial paper. 3. 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. 4. Includes both repurchase agreements undertaken to finance positions and "matched book" repurchase agreements. NOTE. 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 shown net and are on a commitment basis. Data for financing are based on Wednesday figures, in terms of actual money borrowed or lent. Federal Finance 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES A3 3 Debt Outstanding Millions of dollars, end of period 1985 1984 Agency 1 1981 Federal and federally sponsored agencies r Federal agencies 3 Defense Department' 4 Export-Import Bank 2 ' 3 5 Federal Housing Administration 4 6 Government National Mortgage Association participation certificates 5 7 Postal Service 6 8 Tennessee Valley Authority 9 United States Railway Association 6 12 13 14 15 Federally sponsored agencies 7 Federal Home Loan Banks Federal Home Loan Mortgage Corporation Federal National Mortgage Association 8 Farm Credit Banks Student Loan Marketing Association 16 Federal Financing Bank debt 10 11 17 18 19 20 21 22 23 24 Dec. Jan. Feb. Mar. Apr. May 237,085 239,716 271,564 270,965 271,479 275,093 275,209 31,806 484 13,339 413 33,055 354 14,218 288 33,940 243 14,853 194 35,145 142 15,882 133 35,235 133 15,882 132 35,360 122 15,881 129 35,140 116 15,709 127 35,182 107 15,707 123 278,901P 35,282 102 15,706 122 2,715 1,538 13,115 202 2,165 1,471 14,365 194 2,165 1,404 14,970 111 2,165 1,337 15,435 51 2,165 1,337 15,535 51 2,165 1,337 15,675 51 2,165 1,337 15,635 51 2,165 1,337 15,776 74 2,165 1,337 15,776 74 190,140 54,131 5,480 58,749 71,359 421 204,030 55,967 4,524 70,052 71,896 1,591 205,776 48,930 6,793 74,594 72,409 3,050 236,419 65,085 10,270 83,720 71,255 5,369 235,730 64,705 10,195 84,612 70,642 5,576 236,120 64,706 11,237 84,701 70,012 5,464 239,953 65,700 11,882 86,297 70,161 5,913 240,027 65,257 12,004 86,913 69,882 5,971 243,619'' 67,765 110,698 126,424 135,791 145,217 146,034 146,611 147,507 148,718' 149,597 12,741 1,288 5,400 11,390 202 14,177 1,221 5,000 12,640 194 14,789 1,154 5,000 13,245 111 15,852 1,087 5,000 13,710 51 15,852 1,087 5,000 13,810 51 15,852 1,087 5,000 13,950 51 15,690 1,087 5,000 13,910 51 15,690 1,087 5,000 14,051 74 15,690 720 5,000 14,154 74 48,821 13,516 12,740 53,261 17,157 22,774 55,266 19,766 26,460 58,971 20,693 29,853 59,066 20,653 30,515 59,041 20,804 30,826 59,756 20,730 31,283 60,641 20,894 31,281' 61,461 21,003 31,495 n.a. 88,170 69,321 6,359 sponsored Export-Import Bank 3 Postal Service 6 Student Loan Marketing Association Tennessee Valley Authority United States Railway Association 6 Other Lending10 Farmers Home Administration Rural Electrification Administration 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. 1983 221,946 MEMO Lending to federal and federally 1982 7. Includes outstanding noncontingent liabilities: Notes, bonds, and debentures. 8. Before late 1981, the Association obtained financing through the Federal Financing Bank. 9. The FFB, which began operations in 1974, is authorized to purchase or sell obligations issued, sold, or guaranteed by other federal agencies. Since FFB incurs debt solely for the purpose of lending to other agencies, its debt is not included in the main portion of the table in order to avoid double counting. 10. Includes FFB purchases of agency assets and guaranteed loans; the latter contain loans guaranteed by numerous agencies with the guarantees of any particular agency being generally small. The Farmers Home Administration item consists exclusively of agency assets, while the Rural Electrification Administration entry contains both agency assets and guaranteed loans. A34 1.45 DomesticNonfinancialStatistics • September 1985 NEW SECURITY ISSUES State and Local Governments Millions of dollars 1984 Type of issue or issuer, or use 1982 1983 Sept. 1 All issues, new and refunding1 1985 1984 Oct. Nov. Dec. Jan. Feb. Mar/ Apr. 79,138 86,421 106,641 7,967 12,558 13,548 17,713 6,275 8,109 9,647 10,962 21,094 225 58,044 461 21,566 96 64,855 253 26,485 16 80,156 17 1,433 4 6,534 1 3,770 1 8,788 3 2,611 3 10,937 1 2,185 2 15,528 0 1,804 7 4,471 3 3,463 0 4,646 0 2,875 5 6,772 0 3,187 0 7,775 2 Type of issuer 6 State 7 Special district and statutory authority 8 Municipalities, counties, townships, school districts 8,438 45,060 25,640 7,140 51,297 27,984 9,129 63,550 33,962 596 5,202 2,169 1,110 7,087 4,361 405 7,265 5,878 725 11,894 5,094 367 3,847 2,061 1,542 4,282 2,285 252 5,644 3,751 958 6,540 3,464 9 Issues for new capital, total 74,804 72,441 94,050 7,454 11,105 12,352 16,354 4,904 5,580 8,042 8,096 Use of proceeds Education Transportation Utilities and conservation Social welfare Industrial aid Other purposes 6,482 6,256 14,259 26,635 8,349 12,822 8,099 4,387 13,588 26,910 7,821 11,637 7,553 7,552 17,844 29,928 15,415 15,758 333 590 2,013 3,018 679 821 755 1,018 2,784 3,500 1,522 1,526 999 2,151 534 3,701 3,866 1,101 671 1,339 4,133 3,598 5,572 1,041 661 341 1,315 1,567 376 644 930 472 912 1,847 185 1,234 1,045 153 1,483 3,017 565 1,779 863 92 2,286 2,738 293 1,824 2 3 4 5 10 11 12 13 14 15 Type of issue General obligation U.S. government loans 2 Revenue U.S. government loans 2 1. Par amounts of long-term issues based on date of sale. 2. Consists of tax-exempt issues guaranteed by the Farmers Home Administration. 1.46 SOURCE. Public Securities Association. NEW SECURITY ISSUES Corporations Millions of dollars Type of issue or issuer, or use 1984 1982 1983 1985 1984 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May 1 AU issues1 84,638 120,074 132,311 12,350 11,931 6,940 7,294 6,743 14,005 11,462' 13,285 2 Bonds2 54,076 68,495 109,683 10,403 9,524 5,918 5,739 4,027 11,641 8,850' 9,738 Type of offering 3 Public 4 Private placement 44,278 9,798 47,369 21,126 73,357 36,326 10,403 n.a. 9,524 n.a. 5,918 n.a. 5,739 n.a. 4,027 n.a. 11,641 n.a. 8,850' n.a. 9,738 n.a. 12,822 5,442 1,491 12,327 2,390 19,604 16,851 7,540 3,833 9,125 3,642 27,502 24,607 13,726 4,694 10,679 2,997 52,980 2,989 988 161 1,150 240 4,875 1,447 1,198 19 555 1,557 4,749 1,741 555 110 575 169 2,768 1,326 144 297 309 375 3,288 1,476 469 30 80 353 1,619 5,660 974 130 500 300 4,077 922 1,317 334 860 0 5,418' 1,500 899 357 1,136 150 5,696 11 Stocks3 30,562 51,579 22,628 1,947 2,407 1,022 1,555 2,716 2,364 2,612 3,547 Type 12 Preferred 13 Common 5,113 25,449 7,213 44,366 4,118 18,510 555 1,392 655 1,752 91 931 170 1,385 218 2,498 311 2,053 208 2,404 634 2,913 5,649 7,770 709 7,517 2,227 6,690 14,135 13,112 2,729 5,001 1,822 14,780 4,054 6,277 589 1,624 419 9,665 712 489 16 146 69 515 227 1,025 66 150 3 936 137 112 71 66 26 610 172 234 0 225 271 653 229 760 153 283 101 1,190 224 472 32 197 15 1,424 283 978 419 157 5 770 504 616 30 185 119 2,093 5 6 7 8 9 10 14 15 16 17 18 19 Industry group Manufacturing Commercial and miscellaneous Transportation Public utility Communication Real estate and financial Industry group Manufacturing Commercial and miscellaneous Transportation Public utility Communication Real estate and financial 1. Figures, which represent gross proceeds of issues maturing in more than one year, sold for cash in the United States, are principal amount or number of units multiplied by offering price. Excludes offerings of less than $100,000, secondary offerings, undefined or exempted issues as defined in the Securities Act of 1933, employee stock plans, investment companies other than closed-end, intracorporate transactions, and sales to foreigners. 2. Monthly data include only public offerings. 3. Beginning in August 1981, gross stock offerings include new equity volume from swaps of debt for equity. SOURCE. Securities and Exchange Commission and the Board of Governors of the Federal Reserve System. Securities Market and Corporate Finance 1.47 O P E N - E N D INVESTMENT COMPANIES A35 Net Sales and Asset Position Millions of dollars 1984 Item 1983 1985 1984 Nov. Oct. Dec. Jan. Feb. Mar. Apr/ May INVESTMENT COMPANIES 1 1 Sales of own shares 2 2 Redemptions of own shares 3 3 Net sales 4 Assets 4 5 Cash position 5 Other 6 84,345 57,100 27,245 107,485 77,033 30,452 9,517 6,766 2,751 9,458 6,343 3,115 10,006 8,948 1,058 19,152 9,183 9,969 14,786 8,005 6,781 14,582 9,412 5,170 18,049 13,500 4,549 16,394 10,070 6,324 113,599 8,343 105,256 137,126 11,978 125,148 131,539 11,417 120,122 132,709 11,518 121,191 137,126 11,978 125,148 151,534 13,114 138,420 154,707 14,567 140,140 157,065 13,082 143,983 164,087 15,444 148,643 178,265 14,326 163,939 5. Also includes all U.S. government securities and other short-term debt securities. 1. Excluding money market funds. 2. Includes reinvestment of investment income dividends. Excludes reinvestment of capital gains distributions and share issue of conversions from one fund to another in the same group. 3. Excludes share redemption resulting from conversions from one fund to another in the same group. 4. Market value at end of period, less current liabilities. 1.48 NOTE. Investment Company Institute data based on reports of members, which comprise substantially all o p e n - e n d investment companies registered with the Securities and Exchange Commission. Data reflect newly formed companies after their initial offering of securities. CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1983 Account 1982 1983 1984 1985 1984 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2 3 4 5 6 1 Corporate profits with inventory valuation and capital consumption adjustment Profits before tax Profits tax liability Profits after tax Dividends Undistributed profits 159.1 165.5 60.7 104.8 69.2 35.6 225.2 203.2 75.8 127.4 72.9 54.5 285.7 235.7 89.8 145.9 80.5 65.3 216.7 198.2 74.8 123.4 71.7 51.7 245.0 227.4 84.7 142.6 73.3 69.3 260.0 225.5 84.5 141.1 75.4 65.6 277.4 243.3 92.7 150.6 77.7 72.9 291.1 246.0 95.8 150.2 79.9 70.2 282.8 224.8 83.1 141.7 81.3 60.3 291.6 228.7 87.7 141.0 83.1 58.0 292.3 222.3 85.3 137.0 84.5 52.5 7 Inventory valuation 8 Capital consumption adjustment -9.5 3.1 -11.2 33.2 -5.6 55.7 -12.1 30.6 -19.3 36.9 -9.2 43.6 -13.5 47.6 -7.3 52.3 -.2 58.3 -1.6 64.5 .9 69.1 SOURCE. Survey of Current Business (Department of Commerce). A36 1.49 DomesticNonfinancialStatistics • September 1985 NONFINANCIAL CORPORATIONS Assets and Liabilities Billions of dollars, except for ratio 1984 1979 Account 1980 1981 1982 1985 1983 Q1 Q2 Q3 Q4 Ql 1,214.8 1,327.0 1,418.4 1,432.7 1,557.3 1,599.6 1,630.1 1,666.1 1,682.0 1,694.2 118.0 16.7 459.0 505.1 116.0 126.9 18.7 506.8 542.8 131.8 135.5 17.6 532.0 583.7 149.5 147.0 22.8 519.2 578.6 165.2 165.8 30.6 577.8 599.3 183.7 159.0 35.0 599.7 619.6 186.3 154.7 36.9 615.4 629.8 193.4 150.0 33.2 630.6 656.9 195.4 160.9 36.6 622.3 655.6 206.6 153.8 35.3 634.8 664.6 205.7 7 Current liabilities 807.3 889.3 970.0 976.8 1,043.0 1,077.0 1,111.9 1,142.2 1,150.7 1,159.1 8 Notes and accounts payable 9 Other 460.8 346.5 513.6 375.7 546.3 423.7 543.0 433.8 577.8 465.3 584.0 493.0 605.1 506.9 623.9 518.2 627.4 523.3 614.7 544.4 10 Net working capital 407.5 437.8 448.4 455.9 514.3 522.6 518.1 523.9 531.3 535.1 11 MEMO: Current ratio1 1.505 1.492 1.462 1.467 1.493 1.485 1.466 1.459 1.462 1.462 1 Current assets 2 3 4 5 6 Cash U.S. government securities Notes and accounts receivable Inventories Other Statistics, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. SOURCE. Federal Trade Commission and Bureau of the Census. 1. Ratio of total current assets to total current liabilities. NOTE. For a description of this series, see "Working Capital of Nonfinancial C o r p o r a t i o n s " in t h e J u l y 1978 BULLETIN, p p . 5 3 3 - 3 7 . All data in this table reflect the most current benchmarks. Complete data are available upon request from the Flow of Funds Section, Division of Research and 1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment • Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1983 Industry 1 Total nonfarm business Manufacturing 2 Durable goods industries 3 Nondurable goods industries Nonmanufacturing 4 Mining Transportation 5 Railroad 6 Air 7 Other Public utilities 8 Electric 9 Gas and other 10 Commercial and other 2 1983 1984 1985 Q4 Ql Q2 Q3 Q4 Ql Q21 Q3' 304.78 353.74 386.10 325.45 337.48 348.34 361.12 367.21 371.16 385.31 392.61 53.08 63.12 65.95 72.43 75.24 80.74 57.56 66.19 61.26 68.71 63.12 72.21 68.31 73.72 71.13 75.07 69.87 75.78 75.72 79.83 77.83 82.96 15.19 16.88 16.06 16.27 17.61 16.01 16.96 16.93 15.66 16.47 16.19 4.88 4.36 4.72 6.77 3.55 6.17 7.35 4.09 6.21 6.04 3.75 5.48 5.76 3.23 5.96 7.46 3.52 6.06 7.47 3.73 6.50 6.40 3.73 6.16 6.02 4.20 6.01 7.44 3.60 6.12 8.30 4.54 6.47 37.27 7.70 114.45 37.09 10.30 134.39 35.23 12.51 148.68 37.79 8.07 124.30 38.36 8.77 127.83 37.82 10.07 132.07 36.82 11.07 136.55 35.37 11.31 141.10 36.65 11.81 145.17 35.35 12.36 148.42 33.93 12.83 149.56 • T r a d e and services are no longer being reported separately. They are included in Commercial and other, line 10. 1. Anticipated by business. 1984 1985' 2. "Other" consists of construction; wholesale and retail trade; finance and insurance; personal and business services; and communication. SOURCE. Survey of Current Business (Department of Commerce). Securities Markets and Corporate Finance 1.51 DOMESTIC FINANCE COMPANIES A37 Assets and Liabilities A Billions of dollars, end of period 1984 1983 Account 1980 1981 1985 1982 Q3 Q4 Q2 Ql Q4 Q3 QL ASSETS Accounts receivable, gross 1 Consumer 2 Business Real estate 4 Total 63.2 90.3 13.8 167.3 72.4 100.3 17.9 190.5 78.1 101.4 20.2 199.7 85.4 106.3 21.8 213.5 87.4 113.4 22.5 223.4 87.4 120.5 22.2 230.1 90.5 124.4 23.0 238.0 95.6 124.5 25.2 245.3 96.7 135.2 26.3 258.3 99.1 141.4 27.2 267.8 23.6 2.8 30.0 3.2 31.9 3.5 32.7 3.8 33.0 4.0 32.8 4.1 33.9 4.4 36.0 4.3 36.5 4.4 36.5 4.8 7 Accounts receivable, net 8 All other 140.9 23.1 157.3 27.1 164.3 30.7 177.0 33.7 186.4 34.0 193.2 35.7 199.6 35.8 205.0 36.4 217.3 35.4 226.5 36.2 9 Total assets 164.0 184.4 195.0 210.7 220.4 228.9 235.4 241.3 252.7 262.6 14.3 47.7 16.1 57.2 18.3 51.1 17.5 56.5 18.7 59.7 16.2 64.8 18.3 68.5 19.7 66.8 21.3 72.5 19.8 79.1 10.4 52.4 15.9 23.3 11.3 56.0 18.5 25.3 12.7 64.4 21.2 27.4 12.7 66.9 26.8 30.3 13.9 68.1 30.1 29.8 14.1 70.3 32.4 31.1 15.5 69.7 32.1 31.4 16.1 73.8 32.6 32.3 16.2 77.2 33.1 32.3 16.8 78.4 35.2 33.3 164.0 184.4 195.0 210.7 220.4 228.9 235.4 241.3 252.7 262.6 Less: 5 Reserves for unearned income 6 Reserves for losses LIABILITIES 10 Bank loans 11 Commercial paper Debt 12 Other short-term N Long-term 14 All other liabilities 15 Capital, surplus, and undivided profits 16 Total liabilities and capital A Finance company asset and liability data have been revised from June 1980 forward. Revised quarterly data will appear in the Board's forthcoming Annual Statistical Digest. 1.52 DOMESTIC FINANCE COMPANIES NOTE. Components may not add to totals due to rounding, These data also appear in the Board's G.20 (422) release. For address, see inside front cover. Business Credit Millions of dollars, seasonally adjusted except as noted Type Changes in accounts receivable Extensions Repayments 1985 1985 1985 Accounts receivable outstanding May 31, 1985' Mar. 1 Total 2 3 4 5 6 7 8 9 10 Retail financing of installment sales Automotive (commercial vehicles) Business, industrial, and farm equipment Wholesale financing Automotive Equipment All other Leasing Automotive Equipment Loans on commercial accounts receivable and factored commercial accounts receivable All other business credit 1. Not seasonally adjusted. Apr. Mar. Apr. May Mar. Apr. May 692 27,588' 26,098' 26,710 26,089' 24,932' 26,018 May 143,269 l,499 r 12,214 20,251 298 84 119 -102 354 4 1,060 1,427 889 1,063 1,135 1,238 762 1,343 770 1,165 781 1,234 20,846 4,887 6,705 476 105 86 417 -213 -59 -462 34 -249 10,201 540 1,652 9,090 479 1,627 9,493 588 1,569 9,725 435 1,566 8,673 692 1,686 9,955 554 1,818 14,592 36,877 271 -252 538 628 363 141 872 1,222 1,093 1,313 1,034 992 601 1,474 555 685 671 851 15,719 11,178 207r 224 -44' -118 243 264 9,567' 1,047 9,448' 1,096 9,396 1,265 9,36C 823 9,492' 1,214 9,153 1,001 NOTE. These data also appear in the Board's G.20 (422) release. For address, see inside front cover. A38 1.53 Domestic Financial Statistics • September 1985 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1984 Dec. 1985 Jan. Feb. Mar. Apr. May June Terms and yields in primary and secondary markets PRIMARY MARKETS 1 2 3 4 5 6 Conventional mortgages on new homes Terms1 Purchase price (thousands of dollars) Amount of loan (thousands of dollars) Loan/price ratio (percent) Maturity (years) Fees and charges (percent of loan amount) 2 Contract rate (percent per annum) Yield (percent per annum) 7 FHLBB series 5 8 HUD series 4 94.6 69.8 76.6 27.6 2.95 14.47 92.8 69.5 77.1 26.7 2.40 12.20 96.8 73.7 78.7 27.8 2.64 11.87 102.6 76.9 77.9 28.0 2.65 12.05 94.8 71.4 77.9 27.7 2.65 11.77 101.8 76.5 77.6 28.1 2.58 11.74 91.3 69.9 79.8 27.2 2.65 11.42 101.4 76.9 78.9 27.4 2.65 11.55 106.4' 78.4' 76.1' 26.8' 2.49' 11.55' 102.4 79.7 79.9 27.7 2.40 11.31 15.12 15.79 12.66 13.43 12.37 13.80 12.55 13.05 12.27 12.88 12.21 13.06 11.92 13.26 12.05 13.01 12.01' 12.49 11.75 12.06 15.30 14.68 13.11 12.25 13.81 13.13 12.99 12.54 13.01 12.26 13.27 12.23 13.43 12.68 12.97 12.31 12.28 11.93 1.89 11.54 SECONDARY MARKETS Yield (percent per annum) 9 FHA mortgages (HUD series) 5 10 GNMA securities 6 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 12 FHA/VA-insured 13 Conventional 66,031 39.718 26,312 74,847 37,393 37,454 83,339 35,148 48,191 87,940 34,711 53,229 89,353 34,602 54,751 90,369 34,553 55,816 91,975 34,585 57,391 92,765 34,516 58,250 93,610 34,428 59,182 94,777 34,307 60,470 Mortgage transactions (during period) 14 Purchases 15 Sales 15,116 2 17,554 3,528 16,721 978 1,962 0 1,943 0 1,559 0 2,256 100 1,515 0 1,703 0 1,904 0 Mortgage commitments1 16 Contracted (during period) 17 Outstanding (end of period) 22,105 7,606 18,607 5,461 21,007 6,384 2,758 6,384 1,230 5,678 1,895 5,665 1,636 5,019 1,921 5,361 2,074 5,589 1,593 5,062 5,131 1,027 4,102 5,996 974 5,022 9,283 910 8,373 10,399 881 9,518 10,362 876 9,485 11,118 859 10,259 11,549 854 10,694 11,615 850 10,765 23,673 24,170 23,089 19,686 21,886 18,506 4,137 3,635 2,197 2,162 3,247 2,428 3,232 2,751 2,201 1,973 28,179 7,549 32,852 16,964 32,603 13,318' 4,174 13,318' 4,264 29,654 3,622 30,135 3,453 30,436 4,141 n.a. FEDERAL H O M E LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)8 18 Total 19 FHA/VA 20 Conventional Mortgage transactions (during period) 21 Purchases 22 Sales 9 Mortgage commitments 23 Contracted (during period) 24 Outstanding (end of period) 1. Weighted averages based on sample surveys of mortgages originated by major institutional lender groups; compiled by the Federal Home Loan Bank Board in cooperation with the Federal Deposit Insurance Corporation. 2. Includes all fees, commissions, discounts, and "points" paid (by the borrower or the seller) to obtain a loan. 3. Average effective interest rates on loans closed, assuming prepayment at the end of 10 years. 4. Average contract rates on new commitments for conventional first mortgages; from Department of Housing and Urban Development. 5. Average gross yields on 30-year, minimum-downpayment, Federal Housing Administration-insured first mortgages for immediate delivery in the private secondary market. Any gaps in data are due to periods of adjustment to changes in maximum permissible contract rates. 6. Average net yields to investors on Government National Mortgage Association guaranteed, mortgage-backed, fully modified pass-through securities, assuming prepayment in 12 years on pools of 30-year FHA/VA mortgages carrying the prevailing ceiling rate. Monthly figures are averages of Friday figures from the Wall Street Journal. 7. Includes some multifamily and nonprofit hospital loan commitments in addition to 1- to 4-family loan commitments accepted in FNMA's free market auction system, and through the FNMA-GNMA tandem plans. 8. Includes participation as well as whole loans. 9. Includes conventional and government-underwritten loans. FHLMC's mortgage commitments and mortgage transactions include activity under mortgage/ securities swap programs, while the corresponding data for FNMA exclude swap activity. Real Estate 1.54 A39 MORTGAGE DEBT OUTSTANDING Millions of dollars, end of period 1984 Type of holder, and type of property 1982 1983 Q1 1 ? 3 4 5 All holders 1- to 4-family Multifamily Commercial 6 Major financial institutions 7 Commercial banks' 1- to 4-family 8 9 Multifamily 10 Commercial Farm 11 1985 1984 Q2 Q4 Q3 Q1 1,658,450 1,110,315 140,063 301,362 106,710 1,825,647' 1,217,439' 149,733' 349,102' 109,373' 2,027,818' 1,346,017' 163,701' 407,236' 110,864' 1,869,278' 1,247,468' 152,962' 359,231' 109,617' 1,928,619' 1,284,075' 157,655' 376,397' 110,492' 1,980,361' 1,315,544' 159,965' 393,784' 111,068' 2,027,818' 1,346,017' 163,701' 407,236' 110,864' 2,070,982' 1,376,918' 167,394' 415,408' 111,262' 1,024,680 301,272 173,804 16,480 102,553 8,435 1,108,249' 330,521 182,514 18,410 120,210 9,387 1,241,690' 374,689 196,112 21,395 146,653 10,529 1,133,720' 339,653 185,213 19,836 124,890 9,714 1,177,662' 352,258 190,185 20,501 131,533 10,039 1,215,047' 363,043 193,138 20,040 139,663 10,202 1,241.69C 374,689 196,112 21,395 146,653 10,529 1,261,329' 383,187 200,024 22,033 150,401 10,729 97,805 66,777 15,305 15,694 29 131,940' 93,649' 17,247' 21,016' 28' 154,441' 109,890' 19,385' 25,136' 3C 139,113' 98,975' 17,917' 22,192' 29' 143,387' 102,122' 18,227' 23,009' 29r 146,073' 103,824' 18,58c 23,639' 3C 154,441' 109,89C 19,385' 25,136' 3C 160,696' 114,507' 20,03C 26,129' 3C 1? 13 14 15 16 Mutual savings banks 1- to 4-family Multifamily Commercial Farm 17 18 19 20 Savings and loan associations 1- to 4-family Multifamily Commercial 483,614 393,323 38,979 51,312 494,789 390,883 42,552 61,354 555,277 431,450 48,309 75,518 503,509 397,017 43,553 62,939 528,172 414,087 45,951 68,134 550,129 429,101 47,861 73,167 555,277 431,450 48,309 75,518 559,263 433,429 48,936 76,898 ?1 ?? 23 74 25 Life insurance companies 1- to 4-family Multifamily Commercial Farm 141,989 16,751 18,856 93,547 12,835 150,999 15,319 19,107 103,831 12,742 157,283 14,180 19,017 111,642 12,444 151,445 14,917 19,083 104,890 12,555 153,845 14,437 19,028 107,796 12,584 155,802 14,204 18,828 110,149 12,621 157,283 14,180 19,017 111,642 12,444 158,183 14,153 19,114 112,641 12,275 138,138 4,227 676 3,551 147,370 3,395 630 2,765 157,377 2,301 585 1,716 150,784 2,900 618 2,282 152,669 2,715 605 2,110 153,355 2,389 594 1,795 157,377 2,301 585 1,716 162,416 1,964 576 1,388 26 Federal and related agencies 27 Government National Mortgage Association 1- to 4-family 78 Multifamily 29 30 31 3? 33 34 Farmers Home Administration 1- to 4-family Multifamily Commercial Farm 1,786 783 218 377 408 2,141 1,159 173 409 400 1,276 213 119 497 447 2,094 1,005 303 319 467 1,344 281 463 81 519 738 206 126 113 293 1,276 213 119 497 447 1,062 156 82 421 403 35 36 37 Federal Housing and Veterans Administration 1- to 4-family Multifamily 5,228 1,980 3,248 4,894 1,893 3,001 4,782 2,007 2,775 4,832 1,956 2,876 4,753 1,894 2,859 4,749 1,982 2,767 4,782 2,007 2,775 4,938 2,113 2,825 38 39 40 Federal National Mortgage Association 1- to 4-family Multifamily 71,814 66,500 5,314 78,256 73,045 5,211 87,940 82,175 5,765 80,975 75,770 5,205 83,243 77,633 5,610 84,850 79,175 5,675 87,940 82,175 5,765 91,975 86,129 5,846 41 4? 43 Federal Land Banks 1- to 4-family Farm 50,350 3,068 47,282 51,052 3,000 48,052 50,679 2,948 47,731 51,004 2,982 48,022 51,136 2,958 48,178 51,182 2,954 48,228 50,679 2,948 47,731 50,929 2,998 47,931 44 45 46 Federal Home Loan Mortgage Corporation 1- to 4-family Multifamily 4,733 4,686 47 7,632 7,559 73 10,399 9,654 745 8,979 8,847 132 9,478 8,931 547 9,447 8,841 606 10,399 9,654 745 11,548 10,642 906 216,654 118,940 115,831 3,109 285,073 159,850 155,801 4,049 332,057 179,981 175,084 4,897 2%,481 166,261 161,943 4,318 305,051 170,893 166,415 4,478 317,548 175,770 171,095 4,675 332,057 179,981 175,084 4,897 347,793 185,954 180,878 5,076 42,964 42,560 404 57,895 57,273 622 70,822 70,253 569 59,376 58,776 600 61,267 60,636 631 63,964 63,352 612 70,822 70,253 569 76,759 75,781 978 47 Mortgage pools or trusts 2 48 Government National Mortgage Association 49 1- to 4-family 50 Multifamily 51 5? 53 Federal Home Loan Mortgage Corporation 54 55 56 Federal National Mortgage Association 3 1- to 4-family Multifamily 14,450 14,450 n.a. 25,121 25,121 n.a. 36,215 35,965 250 28,354 28,354 n.a. 29,256 29,256 n.a. 32,888 32,730 158 36,215 35,965 250 39,370 38,772 598 57 58 59 60 61 Farmers Home Administration 1- to 4-family Multifamily 40,300 20,005 4,344 7,011 8,940 42,207 20,404 5,090 7,351 9,362 45,039 21,813 5,841 7,559 9,826 42,490 20,573 5,081 7,456 9,380 43,635 21,331 5,081 7,764 9,459 44,926 21,595 5,618 7,844 9,869 45,039 21,813 5,841 7,559 9,826 45,710 21,928 6,041 7,681 10,060 278,978 189,121 30,208 30,868 28,781 284,955 189,189 31,433 34,931 29,402 296,694 193,688 32,918 40,231 29,857 288,293 190,522 31,776 36,545 29,450 293,237 193,304 32,169 38,080 29,684 294,411 192,753 32,624 39,209 29,825 296,694 193,688 32,918 40,231 29,857 299,444 194,832 33,541 41,237 29,834 Multifamily 6? Individual and others 4 63 64 Multifamily 65 66 Farm 1. Includes loans held by nondeposit trust companies but not bank trust departments. 2. Outstanding principal balances of mortgages backing securities insured or guaranteed by the agency indicated. 3. Outstanding balances on FNMA's issues of securities backed by pools of conventional mortgages held in trust. Implemented by FNMA in October 1981. 4. Other holders include mortgage companies, real estate investment trusts, state and local credit agencies, state and local retirement funds, noninsured pension funds, credit unions, and U.S. agencies for which amounts are small or for which separate data are not readily available. 5. Includes estimate of residential mortgage credit provided by individuals. NOTE. Based on data from various institutional and governmental sources, with some quarters estimated in part by the Federal Reserve in conjunction with the Federal Home Loan Bank Board and the Department of Commerce. Separation of nonfarm mortgage debt by type of property, if not reported directly, and interpolations and extrapolations when required, are estimated mainly by the Federal Reserve. Multifamily debt refers to loans on structures of five or more units. A40 1.55 DomesticNonfinancialStatistics • September 1985 C O N S U M E R I N S T A L L M E N T CREDIT' Total Outstanding, and N e t Change Millions of dollars 1984 Holder, and type of credit 1983 1985 1984 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Amounts outstanding (end of period) 1 Total 383,701 460,500 437,469 441,358 447,783 460,500 461,530 463,628 471,567 479,935 488,666 By major holder Commercial banks Finance companies . . . . Credit unions Retailers 2 Savings and loans Gasoline companies . . . Mutual savings b a n k s . . 171,978 87,429 53,471 37,470 23,108 4,131 6,114 212,391 96,747 67,858 40,913 29,945 4,315 8,331 202,452 95.594 63,808 35.595 27,880 4,328 7,812 204,582 95,113 64,716 35,908 28,781 4,290 7,968 206,635 95,753 66,528 37,124 29,358 4,217 8,168 212,391 96,747 67,858 40,913 29,945 4,315 8,331 213,951 96,732 68,538 38,978 30,520 4,329 8,482 215,778 97,360 68,939 37,483 31,405 4,012 8,651 219,970 99,133 70,432 37,082 32,349 3,820 8,781 223,850 101,324 71,418 37,091 33,514 3,834 8,904 226,973 104,130 72,381 37,472 34,754 3,918 9,038 By major type of credit 9 Automobile 10 Commercial b a n k s . . . 11 Credit unions 12 Finance companies .. 143,114 67,557 25,574 49,983 172,589 85,501 32,456 54,632 167,231 82,706 30,519 54,006 168,923 83,620 30,953 54,350 170,731 84,326 31,820 54,585 172,589 85,501 32,456 54,632 173,769 86,223 32,781 54,765 175,491 87,333 32,973 55,185 179,661 89,257 33,687 56,717 183,558 90,915 34,159 58,484 187,795 92,403 34,620 60,772 13 Revolving 14 Commercial b a n k s . . . 15 Retailers 16 Gasoline companies . 81,977 44,184 33,662 4,131 101,555 60,549 36,691 4,315 90,231 54,258 31,645 4,328 91,505 55,276 31,939 4,290 93,944 56,641 33,086 4,217 101,555 60,549 36,691 4,315 100,565 61,445 34,791 4,329 99,316 61,978 33,326 4,012 100,434 63,684 32,930 3,820 101,887 65,127 32,926 3,834 103,492 66,311 33,263 3,918 17 Mobile home 18 Commercial b a n k s . . . 19 Finance companies .. 20 Savings and loans . . . 21 Credit unions 23,862 9,842 9,547 3,906 567 24,556 9,610 9,243 4,985 718 25,198 9,761 10,065 4,697 675 24,573 9,627 9,470 4,791 685 24,439 9,613 9,235 4,887 704 24,556 9,610 9,243 4,985 718 24,281 9,498 9,053 5,005 725 24,379 9,456 9,044 5,150 729 24,456 9,425 8,981 5,305 745 24,675 9,432 8,992 5,496 755 24,925 9,445 9,016 5,699 765 22 Other 23 Commercial b a n k s . . . 24 Finance companies . . 25 Credit unions 26 Retailers 27 Savings and loans . . . 28 Mutual savings banks 134,748 50,395 27,899 27,330 3,808 19,202 6,114 161,800 56,731 32,872 34,684 4,222 24,960 8,331 154,809 55,727 31,523 32,614 3,950 23,183 7,812 156,357 56,059 31,293 33,078 3,969 23,990 7,968 158,669 56,055 31,933 34,004 4,038 24,471 8,168 161,800 56,731 32,872 34,684 4,222 24,960 8,331 162,915 56,785 32,914 35,032 4,187 25,515 8,482 164,442 57,011 33,131 35,237 4,157 26,255 8,651 167,016 57,604 33,435 36,000 4,152 27,044 8,781 169,815 58,376 33,848 36,504 4,165 28,018 8,904 172,454 58,814 34,342 36,996 4,209 29,055 9,038 2 3 4 5 6 7 8 Net change (during period) 29 Total 48,742 76,799 4,982 5,631 6,080 6,819 7,223 9,041 8,342 8,270 9,042 By major holder Commercial banks Finance companies . . . . Credit unions Retailers 2 Savings and loans Gasoline companies . . . Mutual savings banks .. 19,488 18,572 6,218 5,075 7,285 68 1,322 40,413 18,636 14,387 3,443 6,837 184 2,217 1,384 1,571 871 225 770 -38 199 2,756 398 1,224 128 864 98 163 2,483 778 1,731 278 546 86 178 3,028 1,196 1,336 389 576 117 177 3,799 901 1,290 251 922 -91 151 5,071 1,203 1,423 269 997 -102 180 4,847 2,048 797 91 715 -142 -14 3,853 1,885 1,215 168 1,063 -45 131 4,108 2,373 673 341 1,327 59 161 By major type of credit 37 Automobile 38 Commercial b a n k s . . . 39 Credit unions 40 Finance companies .. 16,856 8,002 2,978 11,752 29,475 17,944 6,882 9,298 1,513 434 416 663 2,504 1,057 587 860 2,549 1,019 828 702 2,687 1,275 640 772 2,887 1,616 598 673 3,198 1,790 696 712 3,391 1,767 381 1,243 3,488 1,546 580 1,362 3,792 1,589 325 1,878 41 Revolving 42 Commercial banks 43 Retailers 44 Gasoline companies . 12,353 7,518 4,767 68 19,578 16,365 3,029 184 1,484 1,323 199 -38 1,488 1,279 111 98 1,614 1,289 239 86 1,445 1,001 327 117 1,957 1,809 239 -91 2,527 2,429 200 -102 2,631 2,698 75 -142 2,126 2,003 168 -45 2,429 2,095 275 59 45 Mobile home 46 Commercial banks 47 Finance companies .. 48 Savings and loans 49 Credit unions 1,452 237 776 763 64 694 -232 -608 1,079 151 127 4 19 95 9 -392 -91 -381 67 13 -91 -1 -192 84 18 117 29 -13 88 13 -159 -89 -144 60 14 282 41 33 192 16 -11 -50 -63 92 10 218 19 13 175 11 186 -21 -19 219 7 18,081 3,731 6,044 3,176 308 6,522 1,322 27,052 6,336 9,946 7,354 414 5,758 2,217 1,858 -377 889 446 26 675 199 2,031 511 -81 624 17 797 163 2,008 176 268 885 39 462 178 2,570 723 437 683 62 488 177 2,538 463 372 678 12 862 151 3,034 811 458 711 69 805 180 2,331 432 868 406 16 623 -14 2,438 285 510 624 0 888 131 2,635 445 514 341 66 1,108 161 30 31 32 33 34 35 36 50 Other 51 Commercial b a n k s . . . . 52 Finance companies . . 53 Credit unions 54 Retailers 55 Savings and loans 56 Mutual savings banks 1. The Board's series cover most short- and intermediate-term credit extended to individuals through regular business channels, usually to finance the purchase of consumer goods and services or to refinance debts incurred for such purposes, and scheduled to be repaid (or with the option of repayment) in two or more installments. 2. Includes auto dealers and excludes 30-day charge credit held by travel and entertainment companies. NOTE. Total consumer noninstallment credit outstanding—credit scheduled to be repaid in a lump sum, including single-payment loans, charge accounts, and service credit—amounted to, not seasonally adjusted, $85.9 billion at the end of 1982, $96.9 billion at the end of 1983, and $116.6 billion at the end of 1984. These data also appear in the Board's G.19 (421) release. For address, see inside front cover. Consumer Installment Credit 1.56 A41 TERMS OF CONSUMER INSTALLMENT CREDIT Percent unless noted otherwise 1984 Item 1982 1985 1984 1983 Nov. Jan. Dec. Feb. Apr. Mar. May INTEREST RATES 1 2 3 4 5 6 Commercial banks 1 48-month new car 2 24-month personal 120-month mobile home 2 Credit card Auto finance companies New car Used car 16.82 18.64 18.05 18.51 13.92 16.50 16.08 18.78 13.71 16.47 15.58 18.77 13.91 16.63 15.60 18.82 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 13.37 16.21 15.42 18.85 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 13.16 16.09 15.03 18.64 16.15 20.75 12.58 18.74 14.62 17.85 15.24 18.30 15.24 18.34 15.11 17.88 13.78 17.91 12.65 17.78 11.92 17.78 11.87 17.84 45.9 37.0 45.9 37.9 48.3 39.7 50.0 39.9 50.2 39.8 50.7 41.3 51.4 41.1 52.2 41.3 51.5 41.3 50.9 41.4 85 90 86 92 88 92 89 93 89 93 90 93 90 93 91 93 91 93 91 94 8,178 4,746 8,787 5,033 9,333 5,691 9,577 5,900 9,707 5,975 9,654 5,951 9,196 5,968 9,232 5,976 9,305 6,043 9,775 6,117 OTHER TERMS 3 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. Data for midmonth of quarter only. 2. Before 1983 the maturity for new car loans was 36 months, and for mobile home loans was 84 months. 3. At auto finance companies. NOTE. These data also appear in the Board's G.19 (421) release. For address, see inside front cover. A42 1.57 DomesticNonfinancialStatistics • September 1985 F U N D S RAISED IN U.S. CREDIT MARKETS Billions of dollars; half-yearly data are at seasonally adjusted annual rates. 1982 1979 1980 1983 1984 1982 HI H2 HI H2 HI H2 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors . . . . By sector and instrument 2 U.S. government i Treasury securities 4 Agency issues and mortgages 386.0 344.6 380.4 404.1 526.4 734.2 358.1 450.1 448.9 563.8 688.9 779.4 37.4 38.8 -1.4 79.2 79.8 -.6 87.4 87.8 -.5 161.3 162.1 -.9 186.6 186.7 -.1 198.8 199.0 -.2 104.1 105.5 -1.4 218.4 218.8 -.4 222.0 222.1 -.1 151.1 151.2 -.1 177.4 177.6 -.2 220.2 220.3 -.1 5 Private domestic nonfinancial sectors 6 Debt capital instruments V Tax-exempt obligations 8 Corporate bonds 9 Mortgages 10 Home mortgages 11 Multifamily residential 12 Commercial 13 Farm 348.6 211.2 30.3 17.3 163.6 120.0 7.8 23.9 11.8 265.4 192.0 30.3 26.7 135.1 96.7 8.8 20.2 9.3 293.1 159.1 22.7 21.8 114.6 76.0 4.3 24.6 9.7 242.8 158.9 53.8 18.7 86.5 52.5 5.5 23.6 5.0 339.8 239.3 56.3 15.7 167.3 108.7 8.4 47.3 2.9 535.4 300.7 58.9 37.0 204.7 129.9 14.3 59.0 1.5 254.0 140.7 43.9 12.0 84.8 53.6 5.1 19.7 6.5 231.7 177.2 63.7 25.3 88.2 51.3 5.8 27.5 3.5 266.9 214.4 62.8 23.0 128.6 83.8 2.8 40.3 1.6 412.7 264.2 49.7 8.4 206.0 133.6 13.9 54.3 4.1 511.5 262.4 21.7 28.9 211.8 137.5 16.7 56.0 1.6 559.2 338.9 96.1 45.1 197.7 122.2 12.0 62.0 1.4 14 15 16 17 18 Other debt instruments Consumer credit Bank loans n.e.c Open market paper Other 137.5 45.4 51.2 11.1 29.7 73.4 6.3 36.7 5.7 24.8 134.0 26.7 54.7 19.2 33.4 83.9 21.0 55.5 -4.1 11.5 100.5 51.3 27.3 -1.2 23.1 234.7 96.5 77.4 23.8 37.1 113.2 20.6 69.0 10.0 13.6 54.6 21.4 42.0 -18.2 9.4 52.5 35.9 13.3 -10.6 13.9 148.5 66.6 41.2 8.3 32.3 249.1 102.1 91.2 31.5 24.3 220.3 90.9 63.6 16.0 49.8 19 20 21 22 23 24 By borrowing sector State and local governments Households Farm Nonfarm noncorporate Corporate 348.6 17.6 179.3 21.4 34.4 96.0 265.4 17.2 122.1 14.4 33.7 78.1 293.1 6.2 127.5 16.3 40.2 102.9 242.8 31.3 94.5 7.6 39.5 70.0 339.8 36.7 175.4 4.3 63.9 59.5 535.4 36.8 241.7 2.3 78.8 175.8 254.0 24.1 94.7 9.6 36.6 89.0 231.7 38.5 94.3 5.6 42.3 51.0 266.9 41.9 134.8 .8 50.1 39.3 412.7 31.6 216.0 7.9 77.6 79.6 511.5 3.0 240.8 .9 83.1 183.7 559.2 70.5 242.5 3.8 74.4 167.9 25 Foreign net borrowing in United States 26 Bonds 21 Bank loans n.e.c 28 Open market paper 29 U.S. government loans 20.2 3.9 2.3 11.2 2.9 27.2 .8 11.5 10.1 4.7 27.2 5.4 3.7 13.9 4.2 15.7 6.7 -6.2 10.7 4.5 18.9 3.8 4.9 6.0 4.3 .6 4.1 -7.8 .4 4.0 10.2 2.4 -7.6 12.5 3.0 21.2 11.0 -4.7 9.0 6.0 15.3 4.6 11.3 -4.6 3.9 22.5 2.9 -1.5 16.5 4.6 19.2 1.1 -6.0 18.9 5.2 -18.0 7.0 -9.6 -18.1 2.7 406.2 371.8 407.6 419.8 545.3 734.8 368.3 471.4 504.2 586.3 708.1 761.4 30 Total domestic plus foreign Financial sectors 31 Total net borrowing by financial sectors By instrument 32 U.S. government related 33 Sponsored credit agency securities 34 Mortgage pool securities <5 36 Private financial sectors 37 Corporate bonds 38 Mortgages 39 Bank loans n.e.c 40 Open market paper 41 Loans from Federal Home Loan Banks By sector 42 Sponsored credit agencies 43 Mortgage pools 44 Private financial sectors 45 Commercial banks 46 Bank affiliates 47 Savings and loan associations 48 Finance companies 49 REITs 82.4 62.9 84.1 69.0 90.7 131.1 84.2 53.8 74.0 107.3 123.4 138.8 47.9 24.3 23.1 .6 34.5 7.8 47.4 30.5 15.0 1.9 36.7 -.8 -.5 .9 20.9 16.2 64.9 14.9 49.5 .4 4.1 2.5 .1 1.9 -1.2 .8 67.8 1.4 66.4 74.4 30.4 43.9 66.2 -4.1 70.3 69.4 6.9 62.5 69.1 30.8 38.3 79.6 30.1 49.5 22.9 17.1 56.8 18.8 38.0 18.9 54.3 17.0 59.2 20.6 1.0 21.3 15.7 -16.0 7.6 .1 .6 -14.7 -9.5 7.8 15.2 -.2 13.0 -7.0 60.0 22.4 36.8 .8 24.2 -2.5 .1 3.2 12.3 11.1 69.7 7.5 62.2 -.5 18.0 9.2 44.8 24.4 19.2 1.2 18.1 7.1 -.1 -.9 4.8 7.1 -2.5 7.2 -12.1 2.2 18.8 -2.0 .1 21.5 15.7 1.8 21.1 15.7 24.8 23.1 34.5 1.6 6.5 12.6 16.5 -1.3 25.6 19.2 18.1 .5 6.9 7.4 5.8 -2.2 32.4 15.0 36.7 .4 8.3 15.5 12.8 .2 15.3 49.5 4.1 1.2 1.9 2.5 -.9 .1 1.4 66.4 22.9 .5 8.6 -2.7 17.0 .2 30.4 43.9 56.8 4.4 10.9 22.7 19.5 .1 .1 7.5 62.2 -16.0 1.7 -5.8 -9.3 -1.9 .1 -4.1 70.3 7.8 .8 6.1 -10.0 11.4 .2 6.9 62.5 38.0 .2 11.1 4.5 22.7 .2 30.8 38.3 54.3 4.8 20.0 19.1 10.9 .1 30.1 49.5 59.2 3.9 1.8 26.2 28.1 .1 452.5 163.5 43.9 11.8 84.8 20.6 64.6 34.8 28.5 525.1 288.3 63.7 43.8 88.2 21.4 37.9 -23.9 5.9 578.2 288.4 62.8 42.8 128.5 35.9 22.1 -8.0 5.7 693.6 220.5 49.7 30.3 206.0 66.6 41.9 43.6 35.0 831.5 246.7 21.7 46.9 211.7 102.1 85.3 71.8 45.2 900.2 299.8 96.1 72.8 197.6 90.9 55.8 19.0 68.2 52.0 28.9 23.1 18.4 2.5 2.2 -43.3 39.0 -82.3 -84.5 2.9 -.1 -27.5 35.9 -63.4 -69.4 3.2 2.9 * * * 23.2 36.8 24.2 .7 9.7 14.3 * * * * All sectors 50 Total net borrowing 51 U.S. government securities 52 State and local obligations 33 Corporate and foreign bonds 54 Mortgages 53 Consumer credit 56 Bank loans n.e.c 57 Open market paper 58 Other loans 488.7 84.8 30.3 29.0 163.5 45.4 52.9 40.3 42.4 434.7 122.9 30.3 34.6 134.9 6.3 47.3 20.6 37.8 491.8 133.0 22.7 26.4 113.9 26.7 59.3 54.0 55.8 488.8 225.9 53.8 27.8 86.5 21.0 51.2 5.4 17.2 635.9 254.4 56.3 36.5 167.2 51.3 32.0 17.8 20.3 865.9 273.3 58.9 59.9 204.6 96.5 70.6 45.4 56.7 External corporate equity funds raised in United States 59 Total new share issues 60 Mutual funds 61 All other 62 Nonfinancial corporations 63 Financial corporations 64 Foreign shares purchased in United States -3.8 .1 -3.9 -7.8 3.2 .8 22.2 5.2 17.1 12.9 2.1 2.1 -4.1 6.3 -10.4 -11.5 .8 .3 35.3 18.4 16.9 11.4 4.0 1.5 67.8 32.8 34.9 28.3 2.7 4.0 -35.4 37.5 -72.9 -77.0 3.0 1.1 23.3 12.5 10.9 7.0 3.9 -.1 47.2 24.3 22.9 15.8 4.1 3.0 83.5 36.8 46.8 38.2 2.8 5.7 Flow of Funds 1.58 A43 D I R E C T A N D I N D I R E C T S O U R C E S O F F U N D S TO CREDIT M A R K E T S Billions of dollars, except as noted; half-yearly data are at seasonally adjusted annual rates. 1982 Transaction category, or sector 1980 1979 1981 1982 1983 1984r 1983 1984r HI H2 HI H2 HI H2 1 Total funds advanced in credit markets to domestic nonfinancial sectors 386.0 344.6 380.4 404.1 526.4 734.2 358.1 450.1 488.9 563.8 688.9 779.4 By public agencies and foreign ? Total net advances 3 U.S. government securities Residential mortgages 4 5 FHLB advances to savings and loans 6 Other loans and securities 75.2 -6.3 35.8 9.2 36.5 97.0 15.7 31.7 7.1 42.4 97.7 17.2 23.5 16.2 40.9 109.1 18.0 61.0 .8 29.3 117.1 27.6 76.1 -7.0 20.5 142.3 36.0 56.0 15.7 34.6 100.8 9.7 47.6 11.1 32.4 117.3 26.2 74.4 -9.5 26.2 119.7 40.5 80.1 -12.1 11.1 114.6 14.6 72.0 -2.0 29.9 125.0 33.4 52.0 15.7 23.9 159.5 38.5 60.0 15.7 45.3 7 8 9 10 Total advanced, by sector U.S. government Sponsored credit agencies Monetary authorities Foreign 19.0 53.0 7.7 -4.6 23.7 45.6 4.5 23.2 24.1 48.2 9.2 16.3 16.0 65.3 9.8 18.1 9.7 69.5 10.9 27.1 18.8 72.1 8.4 42.9 14.8 61.8 3.8 20.4 17.1 68.7 15.7 15.8 9.1 68.2 15.6 26.8 10.3 70.7 6.2 27.4 7.4 73.0 17.1 27.5 30.2 71.2 -.3 58.4 11 12 Agency and foreign borrowing not in line 1 Sponsored credit agencies and mortgage pools Foreign 47.9 20.2 44.8 27.2 47.4 27.2 64.9 15.7 67.8 18.9 74.4 .6 60.0 10.2 69.7 21.2 66.2 15.3 69.4 22.5 69.1 19.2 79.6 -18.0 Private domestic funds advanced n 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 379.0 91.1 30.3 18.5 91.9 156.3 9.2 319.6 107.2 30.3 19.3 73.7 96.2 7.1 357.3 115.8 22.7 18.8 56.7 159.5 16.2 375.6 207.9 53.8 14.8 -3.2 103.2 .8 495.9 226.9 56.3 14.6 40.9 150.2 -7.0 666.9 237.3 58.9 25.1 88.1 273.1 15.7 327.5 153.7 43.9 -.1 11.0 130.2 11.1 423.8 262.0 63.7 29.6 -17.4 76.3 -9.5 450.8 247.8 62.8 22.9 6.4 98.7 -12.1 541.1 205.9 49.7 6.3 75.5 201.7 -2.0 652.2 213.2 21.7 22.8 102.2 308.0 15.7 681.5 261.3 96.1 27.5 74.1 238.1 15.7 Private financial intermediation 20 Credit market funds advanced by private financial institutions 71 Commercial banking 2? Savings institutions 23 Insurance and pension funds 24 Other finance 313.9 123.1 56.5 85.9 48.5 281.5 100.6 54.5 94.3 32.1 323.4 102.3 27.8 97.4 96.0 285.6 107.2 31.3 108.8 38.3 376.7 136.1 136.8 98.8 5.0 544.8 179.9 145.1 113.0 106.8 274.4 99.9 25.2 111.4 37.9 296.7 114.5 37.4 106.3 38.6 323.2 121.6 128.9 89.5 -16.8 430.1 150.6 144.6 108.1 26.8 535.1 193.0 163.9 96.8 81.2 554.6 166.8 126.3 129.1 132.3 25 Sources of funds 26 Private domestic deposits and RPs 27 Credit market borrowing 313.9 137.4 34.5 281.5 169.6 18.1 323.4 211.9 36.7 285.6 174.7 4.1 376.7 203.5 22.9 544.8 288.6 56.8 274.4 147.6 24.2 296.7 201.9 -16.0 323.2 192.7 7.8 430.1 214.2 38.0 535.1 283.5 54.3 554.6 293.6 59.2 78 29 30 31 32 142.0 27.6 72.8 41.2 93.9 -21.7 -2.6 83.9 34.2 74.8 -8.7 -1.1 90.4 -5.9 106.7 -26.7 6.1 104.6 22.8 150.4 22.1 -5.3 99.2 34.4 199.5 16.6 4.0 106.2 72.7 102.6 -28.3 -2.0 111.4 21.5 110.8 -25.1 14.1 97.8 24.1 122.8 -14.2 10.1 90.0 36.8 177.9 58.5 -20.8 108.4 31.9 197.3 15.7 .9 107.6 73.1 201.7 17.5 7.1 104.8 72.3 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 99.6 52.5 9.9 -1.4 8.6 30.0 56.1 24.6 7.0 -5.7 -3.1 33.3 70.6 29.3 10.5 -8.1 2.7 36.3 94.2 37.4 34.4 -5.2 -.1 27.8 142.1 88.7 42.5 2.0 3.9 5.0 178.8 121.7 33.3 3.6 -.8 21.0 77.3 35.3 30.1 -17.7 3.5 26.2 111.0 39.5 38.7 7.3 -3.7 29.3 135.3 95.9 52.7 -1.7 -8.1 -3.4 148.9 81.4 32.3 5.7 15.9 13.5 171.5 131.3 5.6 15.3 -.3 19.6 186.1 112.2 61.0 -8.2 -1.3 22.4 39 Deposits and currency 40 Currency 41 Checkable deposits Small time and savings accounts 42 43 Money market fund shares 44 Large time deposits 45 Security RPs Deposits in foreign countries 46 146.8 8.0 18.3 59.3 34.4 18.8 6.6 1.5 181.1 10.3 5.2 82.9 29.2 45.8 6.5 1.1 221.9 9.5 18.0 47.0 107.5 36.9 2.5 .5 181.9 9.7 15.7 138.2 24.7 -7.7 3.8 -2.5 222.6 14.3 21.7 219.1 -44.1 -7.5 14.3 4.8 290.3 8.6 22.8 149.2 47.2 76.2 -6.8 -6.9 152.1 6.7 1.9 83.2 39.4 21.9 1.1 -2.2 211.7 12.7 29.5 193.1 10.0 -37.3 6.6 -2.9 214.5 14.8 48.0 278.6 -84.0 -61.0 11.0 7.0 230.7 13.8 -4.7 159.7 -4.2 45.9 17.5 2.7 294.9 17.7 36.6 123.0 30.2 92.4 1.3 -6.3 285.7 -.5 8.9 175.5 64.2 59.9 -15.0 -7.5 47 Total of credit market instruments, deposits and currency 246.5 237.2 292.5 276.1 364.7 469.1 229.4 322.7 349.8 379.6 466.4 471.8 18.5 82.8 23.0 26.1 88.1 1.5 24.0 90.5 7.6 26.0 76.0 -8.6 21.5 76.0 49.2 19.4 81.7 59.5 27.4 83.8 -7.9 24.9 70.0 -9.3 23.7 71.7 12.6 19.5 79.5 85.9 17.6 82.0 43.1 21.0 81.4 75.9 -3.8 .1 -3.9 12.9 -16.7 22.2 5.2 17.1 24.9 -2.7 -4.1 6.3 -10.4 20.1 -24.2 35.3 18.4 16.9 39.2 -3.9 67.8 32.8 34.9 57.5 10.2 -35.4 37.5 -72.9 21.9 -57.2 23.3 12.5 10.9 11.0 12.3 47.2 24.3 22.9 67.3 -20.1 83.5 36.8 46.8 75.9 7.6 52.0 28.9 23.1 39.2 12.8 -43.3 39.0 -82.3 7.6 -50.8 -27.5 35.9 -63.4 36.2 -63.6 Other sources Foreign funds Treasury balances Insurance and pension reserves Other, net 48 49 50 Public holdings as percent of total Private financial intermediation (in percent) Total foreign funds MEMO: Corporate equities not included above 51 Total net issues 52 Mutual fund shares 53 Other equities 54 Acquisitions by financial institutions 55 Other net purchases .4 NOTES BY LINE NUMBER. 1. 2. 6. 11. 13. 18. 26. 27. 29. 30. 31. Line 1 of table 1.58. Sum of lines 3-6 or 7-10. Includes farm and commercial mortgages. Credit market funds raised by federally sponsored credit agencies, and net issues of federally related mortgage pool securities. Line 1 less line 2 plus line 11 and 12. Also line 20 less line 27 plus line 33. Also sum of lines 28 and 47 less lines 40 and 46. Includes farm and commercial mortgages. Line 39 less lines 40 and 46. Excludes equity issues and investment company shares. Includes line 19. Foreign deposits at commercial banks, bank borrowings from foreign branches, and liabilities of foreign banking agencies to foreign affiliates. Demand deposits at commercial banks. Excludes net investment of these reserves in corporate equities. 32. Mainly retained earnings and net miscellaneous liabilities. 33. Line 12 less line 20 plus line 27. 34-38. Lines 14-18 less amounts acquired by private finance. Line 38 includes mortgages. 40. Mainly an offset to line 9. 47. Lines 33 plus 39, or line 13 less line 28 plus 40 and 46. 48. Line 2/line 1. 49. Line 20/line 13. 50. Sum of lines 10 and 29. 51. 53. Includes issues by financial institutions. NOTE. Full statements for sectors and transaction types in flows and in amounts outstanding may be obtained from Flow of Funds Section, Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. A44 2.10 DomesticNonfinancialStatistics • September 1985 N O N F I N A N C I A L B U S I N E S S ACTIVITY Selected Measures' 1977 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1984 Measure 1982 1983 1985 1984 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May' June 1 Industrial production 103.1 109.2 121.8 122.7 123.4 123.3 123.6 123.7 124.0 124.3 124.4 124.6 2 3 4 5 6 7 Market groupings Products, total Final, total Consumer goods Equipment Intermediate Materials 107.8 109.5 101.4 120.2 101.7 96.7 113.9 114.7 109.3 121.7 111.2 102.8 127.1 127.8 118.2 140.5 124.9 114.6 129.0 129.9 118.5 145.0 126.2 114.2 129.9 130.7 119.6 145.5 127.2 114.6 129.8 130.6 119.7 144.9 127.3 114.6 129.6 130.4 118.8 145.7 126.8 115.4 129.8 130.4 119.1 145.3 127.7 115.4 130.3 130.8 119.8 145.4 128.6 115.5 130.9 131.5 119.9 146.9 129.1 115.1 131.6 132.1 120.6 147.5 130.0 114.5 132.1 132.6 120.8 148.2 130.6 114.2 8 Industry groupings Manufacturing 102.2 110.2 123.9 125.5 126.0 125.8 125.9 125.8 126.3 126.7 126.7 126.9 80.7 81.7 80.4 81.5 80.5 81.4 80.5 81.0 80.3 80.3 80.3 80.0 Capacity utilization (percent) 2 Manufacturing 9 Industrial materials industries 10 70.3' 71.7' 74.<Y 15 y 80.8' 82.3' 81.1' 81.3' 81.2' 81.5' 80.9' 81.3' 11 Construction contracts (1977 = 100)3 111.0 137.0 149.0 145.0 151.0 150.0 150.0 145.0 162.0 161.0 162.0 142.0 12 13 14 15 16 17 18 19 20 21 Nonagricultural employment, total 4 Goods-producing, total Manufacturing, total Manufacturing, production-worker . . . Service-producing Personal income, total Wages and salary disbursements Manufacturing Disposable personal income 5 Retail sales (1977 = 100)6 136.1 102.2 96.6 89.1 154.7 410.3 367.4 285.5 398.0 148. 1 ' 137.1' 100.1' 94.8' 87.9 157.3' 435.6 388.6 294.7 427.1 162.0" 143.6' 106.1' 99.8' 94.0 164.1' 478.1 422.5 323.6 470.3 179.0' 145.2 106.9 100.5 93.5 166.3 488.8 428.8 326.7 480.6 180.9' 145.7 107.1 100.5 93.5 166.9 491.7 432.6 330.0 482.9 183.0' 146.0 107.5 100.8 93.7 167.2 493.9 436.7 333.2 484.5 183.4' 146.5 107.7 100.8 93.6 167.8 496.7 438.5 334.4 487.6 184.2' 146.8 107.5 100.6 93.3 168.3 499.4 440.5 332.9 484.7 186.1' 147.3 107.5 100.4 93.0 169.1 501.0 443.7 334.8 481.3 185.7' 147.6 107.6' 100.1 92.6 169.5 506.C 445.7' 333.5' 496.8' 191.5' 148.0 107.5 99.9 92.3 170.2 503.2 447.1 333.9 505.7 190.6 148.1 107.3 99.7 92.2 170.5 505.9 450.0 334.2 494.8 189.1 22 23 Prices 7 Consumer Producer finished goods 289.1 280.7 298.4 285.2 311.1 291.2 315.3 291.5 315.3 292.3 315.5 292.0 316.1 292.1' 317.4 292.6' 318.8 292.4 320.1 293.1 321.3 294.2 322.3 294.0 1. A major revision of the industrial production index and the capacity utilization rates was released in July 1985. See "A Revision of the Index of Industrial Production" and accompanying tables that contain revised indexes ( 1 9 7 7 = 1 0 0 ) t h r o u g h D e c e m b e r 1984 in t h e FEDERAL RESERVE BULLETIN, v o l . 71 (July 1985), pp. 487-501. The revised indexes for January through June 1985 will be shown in the September BULLETIN. 2. Ratios of indexes of production to indexes of capacity. Based on data from Federal Reserve, McGraw-Hill Economics Department, Department of Commerce, and other sources. 3. Index of dollar value of total construction contracts, including residential, nonresidential and heavy engineering, from McGraw-Hill Information Systems Company, F. W. Dodge Division. 4. Based on data in Employment and Earnings (U.S. Department of Labor). Series covers employees only, excluding personnel in the Armed Forces. 5. Based on data in Survey of Current Business (U.S. Department of Commerce). 6. Based on Bureau of Census data published in Survey of Current Business. 7. Data without seasonal adjustment, as published in Monthly Labor Review. Seasonally adjusted data for changes in the price indexes may be obtained from the Bureau of Labor Statistics, U.S. Department of Labor. NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5, and 6, and indexes for series mentioned in notes 3 and 7 may also be found in the Survey of Current Business. Figures for industrial production for the last two months are preliminary and estimated, respectively. Selected Measures 2.11 A45 L A B O R FORCE, E M P L O Y M E N T , A N D U N E M P L O Y M E N T Thousands of persons; monthly data are seasonally adjusted. Exceptions noted. 1985 1984 Category 1982 1983' 1984' Nov. Dec. Jan. Feb. Mar. Apr. May' June HOUSEHOLD SURVEY DATA 1 Noninstitutional population' 174,450 176,414 178,602 179,353 179,524 179,600 179,742 179,891 180,024 180,171 180,322 2 Labor force (including Armed Forces) 1 3 Civilian labor force Employment 4 Nonagricultural industries 2 Agriculture 5 Unemployment 6 Number 7 Rate (percent of civilian labor force) . . . 8 Not in labor force 112,383 110,204 113,749 111,550 115,763 113,544 116,292 114,074 116,682 114,464 117,091 114,875 117,310 115,084 117,738 115,514 117,596 115,371 117,600 115,373 117,009 114,783 96,125 3,401 97,450 3,383 101,685 3,321 102,598 3,334 102,888 3,385 103,071 3,320 103,345 3,340 103,757 3,362 103,517 3,428 103,648 3,312 103,232 3,138 10,678 9.7 62,067 10,717 9.6 62,665 8,539 7.5 62,839 8,142 7.1 63,061 8,191 7.2 62,842 8,484 7.4 62,509 8,399 7.3 62,432 8,3% 7.3 62,153 8,426 7.3 62,428 8,413 7.3 62,571 8,413 7.3 63,313 89,566 90,196 94,461 95,882 96,092 96,419 96,591 96,910 97,120' 97,386 97,466 18,781 1,128 3,905 5,082 20,457 5,341 19,036 15,837 18,434 952 3,948 4,954 20,881 5,468 19,694 15,870 19,412 974 4,345 5,171 22,134 5,682 20,761 15,987 19,553 978 4,424 5,229 22,641 5,755 21,184 16,118 19,603 973 4,469 5,246 22,691 5,776 21,252 16,082 19,604 974 4,534 5,259 22,776 5,790 21,382 16,100 19,561 976 4,525 5,272 22,857 5,809 21,480 16,111 19,526 977 4,553 5,269 22,963 5,835 21,644 16,143 19,467' 982' 4,641' 5,278' 23,013 5,858 21,723 16,158' 19,427 981 4,655 5,305 23,137 5,890 21,808 16,183 19,382 976 4,649 5,318 23,201 5,909 21,891 16,140 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 10 11 12 13 14 IS 16 17 Manufacturing Mining Contract construction Transportation and public utilities Trade Finance Service Government 1. Persons 16 years of age and over. Monthly figures, which are based on sample data, relate to the calendar week that contains the 12th day; annual data are averages of monthly figures. By definition, seasonality does not exist in population figures. Based on data from Employment and Earnings (U.S. Department of Labor). 2. Includes self-employed, unpaid family, and domestic service workers. 3. Data include all full- and part-time employees who worked during, or received pay for, the pay period that includes the 12th day of the month, and exclude proprietors, self-employed persons, domestic servants, unpaid family workers, and members of the Armed Forces. Data are adjusted to the March 1984 benchmark and only seasonally adjusted data are available at this time. Based on data from Employment and Earnings (U.S. Department of Labor). A46 2.12 Domestic Nonfinancial Statistics • September 1985 O U T P U T , C A P A C I T Y , A N D CAPACITY U T I L I Z A T I O N Seasonally adjusted 1985' 1984' 1984' 1985' 1984' 1985' Series Q4 Q3 Q1 Q2 Output (1977 = 100) Q3 Q4 Q1 Q2 Capacity (percent of 1977 output) Q4 Q3 Q1 Q2 Utilization rate (percent) 1 Total industry 123.4 123.1 123.8 124.4 150.6 151.7 152.8 154.0 81.9 81.2 81.0 80.8 2 Mining 3 Utilities 113.8 109.8 108.3 111.1 110.1 114.2 110.6 113.1 132.9 132.6 133.1 133.0 133.4 133.7 133.6 134.5 85.6 82.8 81.3 83.5 82.6 85.5 82.8 84.1 4 Manufacturing 125.6 125.8 126.0 126.8 153.9 155.2 156.5 157.7 81.6 81.0 80.5 80.4 5 Primary processing . . . 6 Advanced processing , 107.6 136.3 107.0 137.0 107.5 137.1 107.7 138.3 131.2 167.6 131.4 169.6 131.6 171.4 132.0 173.2 82.0 81.3 81.5 80.8 81.6 80.0 81.6 79.8 7 Materials 116.0 114.5 115.4 114.6 139.8 140.7 141.6 142.5 83.0 81.4 81.5 80.4 8 Durable goods 9 Metal materials . . . . 10 Nondurable g o o d s . . . . 11 Textile, paper, and chemical.. Paper 12 13 Chemical 124.0 82.0 111.6 112.2 127.7 110.2 123.7 80.4 110.9 110.7 126.2 110.9 123.6 80.6 110.9 111.6 126.3 113.2 121.6 79.2 110.3 110.9 154.4 117.8 136.8 136.2 135.3 141.1 155.9 117.3 137.3 136.7 136.1 141.5 157.4 117.3 137.8 137.0 n.a. n.a. 153.1 118.8 136.3 135.7 133.7 140.8 80.1 68.2 81.0 81.3 93.3 78.6 79.3 68.7 80.7 81.7 92.8 80.0 77.2 67.5 80.1 80.9 n.a. n.a. 81.0 69.0 81.9 82.7 95.5 78.3 14 Energy materials 105.7 101.3 105.0 106.1 119.3 119.7 120.0 120.3 88.6 84.6 87.5 Previous cycle 1 ' High Low Latest cycle 2 ' 1984' High June Low 1984' Oct. Nov. n.a. n.a. 88.2 1985' Dec. Jan. Feb. Mar. Apr. May June Capacity utilization rate (percent) 15 Total industry 88.6 72.1 86.9 69.5 81.6 81.1 81.3 81.1 81.1 80.9 81.0 80.9 80.8 80.7 16 Mining 17 Utilities 92.8 95.6 87.8 82.9 95.2 88.5 76.9 78.0 85.5 84.2 80.6 82.4 81.7 84.3 81.7 83.8 82.9 84.7 82.1 86.7 82.8 85.0 82.9 84.6 82.8 84.0 82.6 83.6 18 Manufacturing 87.7 69.9 86.5 68.0 81.1 81.1 81.2 80.9 80.7 80.4 80.5 80.5 80.3 80.3 19 Primary processing . . . 20 Advanced processing . 91.9 86.0 68.3 71.1 89.1 85.1 65.1 69.5 81.8 80.7 81.8 80.7 81.7 80.9 80.9 80.8 81.6 80.2 81.5 79.8 81.8 79.8 82.1 79.8 81.4 79.9 81.3 79.8 21 Materials 92.0 70.5 89.1 68.4 82.8 81.3 81.5 81.3 81.7 81.5 81.4 81.0 80.3 80.0 22 Durable goods 23 Metal materials 91.8 99.2 64.4 67.1 89.8 93.6 60.9 45.7 80.4 70.0 80.3 68.1 80.2 68.6 79.7 68.0 79.9 68.1 79.1 68.2 78.9 69.8 78.1 68.8 77.1 67.3 76.5 66.4 24 Nondurable goods . . . . 25 Textile, paper, and 26 27 chemical Paper Chemical 28 Energy materials 91.1 66.7 88.1 70.6 81.8 81.4 80.9 80.8 80.9 81.1 80.2 80.1 80.1 80.0 92.8 98.4 92.5 64.8 70.6 64.4 89.4 97.3 87.9 68.6 79.9 63.3 82.8 96.2 78.2 82.0 93.7 78.6 81.1 92.5 78.8 80.7 93.7 78.3 81.7 93.7 80.1 82.0 92.6 80.2 81.4 92.1 79.5 80.9 89.9 79.2 80.8 90.2 79.1 81.1 94.6 86.9 94.0 82.2 89.0 83.5 84.8 85.5 86.6 87.4 88.4 88.4 88.1 88.0 1. Monthly high 1973; monthly low 1975. 2. Monthly highs 1978 through 1980; monthly lows 1982. n.a. n.a. NOTE. These data also appear in the Board's G.3 (402) release. For address, see inside front cover. Selected Measures 2.13 INDUSTRIAL PRODUCTION A47 Indexes and Gross Value A Monthly data are seasonally adjusted Grouping 1977 proportion 1985 1984 1984 avg. June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Index (1977 = 100) MAJOR MARKET 1 Total index 100.00 121.8 122.3 123.2 123.5 123.3 122.7 123.4 123.3 123.6 123.7 124.0 124.3 124.4 124.6 2 Products 3 Final products 4 Consumer goods Equipment 5 57.72 44.77 25.52 19.25 127.1 127.8 118.2 140.5 127.5 128.2 118.5 141.0 128.6 129.2 119.1 142.5 129.0 129.7 118.4 144.5 128.8 129.8 118.3 145.0 129.0 129.9 118.5 145.0 129.9 130.7 119.6 145.5 129.8 130.6 119.7 144.9 129.6 130.4 118.8 145.7 129.8 130.4 119.1 145.3 130.3 130.8 119.8 145.4 130.9 131.5 119.9 146.9 131.6 132.1 120.6 147.5 132.1 132.6 120.8 148.2 6 Intermediate products 7 Materials 12.94 42.28 124.9 114.6 125.4 115.2 127.0 115.8 126.9 116.1 125.6 115.9 126.2 114.2 127.2 114.6 127.3 114.6 126.8 115.4 127.7 115.4 128.6 115.5 129.1 115.1 130.0 114.5 130.6 114.2 6.89 2.98 1.79 1.16 .63 1.19 3.91 1.24 1.19 .96 1.71 112.6 109.8 103.0 93.2 121.2 120.1 114.8 136.2 137.5 117.6 97.8 111.7 110.4 102.7 93.7 119.3 122.1 112.7 131.0 131.8 118.0 96.6 113.8 110.4 102.8 92.8 121.5 121.9 116.4 140.9 143.0 119.3 97.2 113.3 111.6 106.0 92.7 130.8 120.0 114.6 138.7 140.6 117.5 95.7 111.5 107.4 98.7 85.1 124.1 120.6 114.7 138.0 140.1 118.8 95.6 111.4 104.2 95.0 84.0 115.4 118.1 116.9 140.5 142.2 118.1 99.3 113.3 110.2 103.1 89.7 127.8 121.1 115.8 137.4 138.4 118.1 99.0 113.1 111.6 104.7 95.6 121.5 122.1 114.3 137.2 138.2 114.1 97.9 112.8 114.2 112.5 102.5 131.1 116.8 111.6 126.1 126.6 112.7 100.6 112.8 115.4 111.7 100.7 132.0 121.1 110.9 127.1 127.2 117.9 95.1 113.5 115.1 110.5 101.3 127.5 122.0 112.2 131.8 131.8 117.7 95.0 112.9 116.4 114.4 100.5 140.2 119.4 110.2 126.9 127.1 118.1 93.7 112.3 114.4 109.6 98.1 130.9 121.5 110.7 129.9 129.3 117.1 93.2 112.4 114.9 109.7 97.0 19 Nondurable consumer goods 20 Consumer staples 21 Consumer foods and tobacco 22 Nonfood staples 23 Consumer chemical products . 24 Consumer paper products 25 Consumer energy 26 Consumer fuel 27 Residential utilities 18.63 15.29 7.80 7.49 2.75 1.88 2.86 1.44 1.42 120.2 125.0 126.2 123.9 137.4 138.4 101.4 89.3 113.7 120.9 125.7 126.8 124.8 138.1 140.5 101.6 89.5 113.9 120.9 125.9 126.9 125.0 139.0 143.0 99.7 87.4 112.2 120.2 125.4 126.6 124.3 138.3 141.2 99.8 88.5 111.2 120.7 126.3 127.7 125.0 140.4 140.7 100.0 88.1 112.1 121.0 126.7 128.2 125.4 141.3 140.0 100.5 88.8 112.4 121.8 127.4 127.6 127.5 143.3 141.5 103.0 89.9 116.3 122.1 127.7 129.1 126.5 142.7 141.8 100.7 87.7 113.9 121.1 126.6 127.1 126.0 142.9 141.2 99.9 85.1 115.0 121.4 126.9 127.8 126.0 143.2 138.1 101.5 84.9 118.4 122.1 127.9 128.0 127.7 145.1 141.7 101.9 87.0 117.1 122.5 128.5 129.3 127.7 145.1 142.2 101.5 90.0 113.7 123.6 129.8 129.8 129.7 147.8 146.0 101.7 89.2 123.9 130.3 Equipment 28 Business and defense equipment 29 Business equipment 30 Construction, mining, and farm ., 31 Manufacturing 32 Power 33 Commercial 34 Transit 35 Defense and space equipment 18.01 14.34 2.08 3.27 1.27 5.22 2.49 3.67 139.6 134.9 66.6 109.4 79.2 209.2 98.6 157.9 139.9 135.5 66.6 109.7 79.8 212.1 95.3 157.2 141.4 137.0 68.9 110.6 80.3 213.5 97.6 158.5 143.5 139.1 68.1 113.4 80.3 216.5 100.6 160.7 144.1 139.2 67.9 113.3 82.4 216.9 99.3 163.4 144.1 139.1 69.5 112.7 83.7 216.4 98.5 163.5 144.6 139.8 68.2 112.4 83.8 217.1 102.9 163.3 143.9 138.4 68.5 111.5 84.5 214.5 100.9 165.3 145.5 140.4 68.8 111.6 82.5 217.4 106.7 165.3 145.6 140.0 68.3 112.3 81.8 217.0 104.9 167.3 146.1 140.2 67.1 112.0 79.6 218.9 104.5 169.0 147.7 142.0 68.4 112.4 81.8 221.7 106.4 170.1 148.3 142.1 67.5 113.9 82.0 222.8 103.1 172.6 149.0 142.6 5.95 6.99 5.67 1.31 114.0 134.2 137.9 118.0 114.3 134.9 138.4 119.5 114.3 137.8 142.0 119.5 115.3 136.9 141.3 117.4 114.7 134.9 138.7 118.2 114.6 136.1 140.1 118.8 115.7 137.1 140.9 120.4 114.7 138.0 141.4 122.9 116.2 135.9 140.2 117.1 115.7 137.9 141.1 124.1 116.9 138.6 141.9 124.5 117.1 139.3 143.2 122.4 118.3 139.9 144.5 118.8 20.50 4.92 5.94 9.64 4.64 122.3 98.0 164.5 108.6 86.4 122.4 97.2 164.8 109.1 87.2 123.5 97.5 168.6 108.8 86.5 124.4 99.0 170.1 109.2 85.6 124.0 98.8 169.9 108.5 85.0 123.7 98.9 168.6 108.7 84.8 123.9 99.1 169.1 108.7 85.2 123.4 99.8 168.8 107.4 84.0 124.2 102.6 166.7 109.1 83.5 123.3 102.2 164.2 109.0 84.1 123.3 102.1 163.3 109.6 85.1 122.5 101.8 161.4 109.2 85.0 121.3 101.1 158.0 109.1 88.5 120.8 101.1 157.2 108.5 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 10.09 111.2 111.2 111.6 111.6 111.4 111.2 110.7 110.7 110.9 111.4 110.3 110.3 110.4 110.4 7.53 1.52 1.55 4.46 2.57 111.6 101.5 126.5 109.9 109.8 112.0 102.1 127.6 110.0 108.7 111.8 103.2 128.5 109.1 110.8 112.5 104.5 127.0 110.1 109.0 112.3 99.2 127.7 111.5 108.4 111.5 98.5 126.2 110.8 109.9 110.5 93.7 125.1 111.5 90.3 127.5 113.3 109.2 112.1 93.5 126.0 113.5 109.4 111.3 93.0 125.4 112.7 107.2 110.7 94.1 122.4 112.3 109.0 110.8 93.8 122.9 112.4 109.2 111.2 111.1 111.1 110.1 91.2 127.2 110.6 112.1 51 Energy materials 52 Primary energy 53 Converted fuel materials 11.69 7.57 4.12 104.0 107.5 97.6 106.0 110.1 98.5 106.0 110.7 97.3 105.5 109.3 98.5 105.5 110.0 97.2 99.9 101.4 97.1 101.5 104.1 96.8 102.4 106.0 96.0 103.9 107.0 98.2 104.9 107.6 100.0 106.2 110.2 99.0 106.4 109.5 100.6 106.0 108.3 99.9 106.0 Consumer goods 8 Durable consumer goods 9 Automotive products 10 Autos and trucks 11 Autos, consumer 12 Trucks, consumer 13 Auto parts and allied goods 14 Home goods 15 Appliances, A/C and TV 16 Appliances and TV 17 Carpeting and furniture 18 Miscellaneous home goods Intermediate products 36 Construction supplies 37 Business supplies 38 General business supplies 39 Commercial energy products Materials 40 Durable goods materials 41 Durable consumer parts 42 Equipment parts 43 Durable materials n.e.c 44 Basic metal materials 122.6 110.5 129.0 130.1 113.5 82.1 223.8 103.2 174.3 A48 2.13 Domestic Nonfinancial Statistics • September 1985 INDUSTRIAL PRODUCTION Indexes and Gross Value—Continued Grouping SIC code 1977 proportion 1985 1984 1984 avg. June Aug. July Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Index (1977 = 100) MAJOR INDUSTRY 15.79 9.83 5.96 84.21 35.11 49.10 110.9 110.9 110.9 123.9 122.5 124.8 112.7 113.5 111.4 124.1 123.2 124.7 112.9 114.8 109.8 125.4 123.9 126.4 111.9 113.0 110.0 125.9 123.2 127.7 112.1 113.6 109.7 125.6 123.1 127.2 108.0 107.2 109.4 125.5 123.3 127.0 110.1 108.8 112.1 126.0 123.8 127.5 109.9 108.9 111.6 125.8 123.4 127.4 111.4 110.5 113.0 125.9 123.2 127.8 111.9 109.5 115.8 125.8 123.8 127.2 111.8 110.5 113.9 126.3 123.9 128.0 111.8 110.7 113.6 126.7 124.3 128.4 111.5 110.6 113.0 126.7 124.9 128.0 111.3 110.4 112.8 126.9 125.3 128.1 10 11.12 13 14 .50 1.60 7.07 .66 77.0 127.6 109.1 116.1 79.0 137.9 110.2 117.0 79.6 141.7 110.9 118.3 72.2 136.4 110.2 118.4 73.6 144.2 109.2 117.6 75.3 102.0 110.1 114.2 75.5 113.1 109.8 115.3 69.3 116.2 109.8 113.2 70.5 118.5 110.7 118.5 74.5 121.5 108.2 119.8 83.6 131.9 106.8 118.7 81.5 128.5 108.0 118.5 75.9 128.7 108.3 117.9 129.0 108.1 131.2 7 8 9 10 Mining Metal Coal Oil and gas extraction Stone and earth minerals 12 13 14 15 Tobacco products Textile mill products Apparel products Paper and products 20 21 22 23 26 7.96 .62 2.29 2.79 3.15 127.1 100.7 103.7 102.8 127.3 127.4 102.0 105.0 102.9 127.2 127.8 100.9 105.7 102.3 128.2 127.7 97.3 103.5 101.3 128.2 128.2 99.6 100.9 100.1 128.9 129.1 103.1 100.3 100.5 127.6 128.7 102.7 97.1 101.1 127.7 129.0 107.4 94.7 102.5 128.8 128.2 97.2 93.6 102.6 128.3 129.4 103.8 98.5 103.1 126.4 128.5 103.4 99.4 101.3 126.9 130.8 98.4 99.7 100.2 125.3 98.5 100.0 125.1 16 17 18 19 20 Printing and publishing Chemicals and products Petroleum products Rubber and plastic products Leather and products 27 28 29 30 31 4.54 8.05 2.40 2.80 .53 147.9 121.7 87.4 143.2 76.7 149.4 122.1 88.4 144.9 77.3 152.3 122.9 87.0 146.0 77.0 151.5 122.0 87.5 144.5 74.2 148.8 124.2 85.7 144.1 73.4 149.5 123.5 85.4 146.0 70.9 153.5 124.3 86.2 146.6 71.5 151.2 123.4 84.7 146.6 71.4 150.4 125.7 84.1 145.9 69.1 150.3 125.8 84.0 145.7 69.2 152.6 126.5 84.7 144.1 69.4 153.9 125.6 87.3 144.9 69.1 156.8 126.3 85.5 145.4 70.2 24 25 32 2.30 1.27 2.72 109.1 136.7 112.3 109.8 138.6 112.5 107.9 139.4 113.8 109.4 140.0 113.7 110.4 140.9 112.6 110.2 139.9 113.3 109.5 139.8 113.6 109.4 138.0 111.8 109.2 136.5 112.7 109.1 139.0 110.5 109.5 139.2 111.4 110.9 141.0 113.3 142.4 114.9 33 331.2 34 35 36 5.33 3.49 6.46 9.54 7.15 82.4 73.5 102.8 142.0 172.4 80.4 71.0 103.3 143.7 171.4 80.6 69.0 103.7 146.1 175.3 84.0 74.6 104.1 147.8 176.2 82.9 73.6 104.8 146.5 176.8 81.3 71.0 104.8 146.6 178.4 80.9 71.1 105.4 145.8 178.9 78.4 68.9 105.9 144.6 180.2 81.7 71.0 106.4 145.0 176.0 80.2 68.5 107.6 144.9 173.2 81.8 73.2 108.6 146.5 173.1 81.5 71.9 109.1 148.9 168.9 77.1 67.3 108.5 149.2 168.9 108.6 150.4 168.0 37 371 9.13 5.25 113.6 105.6 112.4 104.3 114.2 105.4 116.2 108.3 114.3 104.6 113.4 103.1 116.0 107.5 117.8 109.5 120.4 113.0 120.5 112.5 120.8 111.3 121.9 112.9 121.2 110.6 121.5 110.3 372-6.9 38 39 3.87 2.66 1.46 124.4 136.9 98.0 123.4 138.0 96.4 126.0 139.4 99.7 126.9 139.8 97.8 127.5 140.2 95.9 127.3 138.6 98.6 127.5 138.6 98.6 129.0 138.9 97.2 130.5 138.7 99.0 131.4 138.7 96.4 133.7 139.0 96.0 134.1 138.5 98.3 135.6 139.6 98.9 136.8 138.8 4.17 116.8 118.0 116.1 116.8 116.2 116.8 118.7 117.5 118.9 121.9 119.5 119.1 118.1 118.1 Nondurable manufactures Durable manufactures 21 Lumber and products 22 Furniture and fixtures 23 Clay, glass, stone products 24 25 26 27 28 Primary metals Iron and steel Fabricated metal products Nonelectrical machinery Electrical machinery 29 Transportation equipment 30 Motor vehicles and parts 31 Aerospace and miscellaneous transportation equipment 32 Instruments Utilities 157.7 84.9 76.7 Gross value (billions of 1972 dollars, annual rates) MAJOR MARKET 35 Products, total 596.0 745.6 749.5 748.1 752.4 749.2 753.7 759.2 756.5 761.3 764.2 769.5 774.3 776.3 36 Final 37 Consumer goods. 38 Equipment 39 Intermediate 472.7 309.2 163.5 123.3 593.7 356.5 237.6 151.8 596.7 357.7 239.4 152.7 593.7 355.0 239.1 154.3 598.0 354.1 244.3 154.3 596.8 352.5 244.8 152.3 600.4 355.5 245.4 153.2 605.2 359.0 246.7 154.0 601.8 606.5 358.8 608.7 360.9 613.3 364.6 617.4 366.1 618.1 366.6 620.1 367.3 154.9 155.5 156.3 156.9 158.1 158.9 • A major revision of the industrial production index and the capacity utilization rates was released in July 1985. See "A Revision of the Index of Industrial Production" and accompanying tables that contain revised indexes ( 1 9 7 7 = 1 0 0 ) t h r o u g h D e c e m b e r 1984 in t h e FEDERAL RESERVE BULLETIN, v o l . 71 360.0 242.3 154.6 (July 1985), pp. 487-501. The revised indexes for January through June 1985 will be shown in the September BULLETIN. NOTE. These data also appear in the Board's G. 12.3 (414) release. For address, see inside front cover. Selected Measures 2.14 A49 HOUSING A N D CONSTRUCTION Monthly figures are at seasonally adjusted annual rates except as noted. 1985 1984 1982 Item 1983 1984 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr/ May Private residential real estate activity (thousands of units) N E W UNITS 1 Permits authorized 1-family 2 3 2-or-more-family 1,000 546 454 1,605 902 703 1,682 922 759 1,542 853 689 1,517 866 651 1,477 827 650 1,616 846 770 1,599 843 756 1,635 903 732 1,624 927 697 1,741 993 748 1,704 948 756 1,778 933 845 4 Started 1-family 5 6 2-or-more-family 1,062 663 400 1,703 1,067 635 1,749 1,084 665 1,590 962 628 1,669 1,009 660 1,564 979 585 1,600 1,043 557 1,630 1,112 518 1,849 1,060 789 1,647 1,135 512 1,889 1,168 721 1,933 1,155 778 1,673 1,041 632 720 400 320 1,003 524 479 1,051 556 494 1,091 574 517 1,088 568 520 1,081 571 510 1,077 574 503 1,073 579 495 1,071 572 499 1,066 580 485 1,063 578 485 1,093 586 507 1,095 589 506 1,005 631 374 1,390 924 466 1,652 1,025 627 1,681 1,035 646 1,657 1,040 617 1,614 972 642 1,587 1,001 586 1,635 985 650 1,719 1,107 612 1,794 1,082 712 1,685 1,043 642 1,630 1,073 557 1,627 1,007 620 240 296 295 302 282 302 291 282 273 276 283 287 287 413 255 622 304 639 358 557 343 670 343 652 346 596 349 604 356 634 356 676' 360 696 359 616 363 676 362 7 Under construction, end of period 1 8 1-family 9 2-or-more-family 10 Completed 11 1-family 12 2-or-more-family 13 Mobile homes shipped Merchant builder activity in I-family 14 Number sold 15 Number for sale, end of period 1 Price (thousands Median 16 Units sold Average 17 Units sold units of dollars)2 69.3 75.5 80.0 82.0 81.3 80.1 82.5 78.3 82.5 82.<Y 84.5 85.8 81.0 83.8 89.9 97.5 96.9 101.3 95.7 101.4 96.3 98.3 96.2' 100.9 105.4 99.4 1,991 2,719 2,868 2,770 2,730 2,740 2,830 2,870 3,000 2,880 3,030 3,040 3,040 67.7 80.4 69.8 82.5 72.3 85.9 73.5 87.6 71.9 85.4 71.9 86.2 71.9 85.1 72.1 85.9 73.8 87.7 73.5 87.2 74.2 88.6 74.5 89.7 75.0 90.1 21 Total put in place 236,935' 268,730' 312,989' 321,248' 320,957' 318,179' 313,076' 310,062' 341,038' 334,254' 333,723 338,281 343,525 77 Private 73 Residential 24 Nonresidential, total Buildings ?5 Industrial ?6 Commercial ?7 Other 28 Public utilities and other 186,091' 218,016' 257,802' 265,384' 264,348' 261,963' 257,469' 254,547' 283,688' 276,452' 274,575 279,013 80,609' 121,309' 145,058' 149,834' 149,366' 144,043' 137,880' 134,296' 155,260' 146,042' 146,195 144,467 105,482' 96,707' 112,744' 115,550' 114,982' 117,920' 119,589' 120,251' 128,428' 130,410' 128,380 134,546 282,563 146,827 135,736 EXISTING UNITS (1-family) 18 Number sold Price of units sold (thousands 19 Median 20 Average of dollars)2 Value of new construction 3 (millions of dollars) CONSTRUCTION ?9 Public 30 Military 31 Highway V Conservation and development 33 Other 17,346 37,281 10,507 40,348' 12,863 35,787 11,660 36,397' 13,746' 48,102' 12,298' 38,598' 13,962' 49,084' 11,852' 40,652' 14,663' 50,778' 12,052' 37,489' 14,333' 52,092' 11,916' 39,579' 14,645' 52,541' 11,771' 40,632' 14,440' 54,528' 12,15c 39,133' 15,195' 58,524' 11,889' 42,820' 15,815' 58,922' 12,054' 43,619' 14,585 59,382 11,245 43,168 17,155 61,292 12,745 43,354 17,463 61,554 13,297 43,422 50,843' 2,205 13,293' 5,029 30,316' 50,715' 2,544 14,143' 4,822 29,206' 55,186' 2,839' 16,295' 4,656' 31,396' 55,863' 2,864' 16,608' 4,590' 31,801' 56,609' 3,569' 16,475' 4,851' 31,714' 56,215' 2,902' 16,210' 4,748' 32,355' 55,608' 3,107' 16,939' 5,127' 30,435' 55,514' 2,952' 16,888' 4,654' 31,020' 57,350' 2,969' 17,759' 4,645' 31,977' 57,802' 3,036' 18,416' 4,674' 31,676' 59,148 3,078 19,176 4,727 32,167 59,268 3,038 19,674 4,377 32,179 60,962 3,083 20,239 5,091 32,549 1. Not at annual rates. 2. Not seasonally adjusted. 3. Value of new construction data in recent periods may not be strictly comparable with data in prior periods because of changes by the Bureau of the Census in its estimating techniques. For a description of these changes see Construction Reports (C-30-76-5), issued by the Bureau in July 1976. NOTE. Census Bureau estimates for all series except (a) mobile homes, which are private, domestic shipments as reported by the Manufactured Housing Institute and seasonally adjusted by the Census Bureau, and (b) sales and prices of existing units, which are published by the National Association of Realtors. All back and current figures are available from originating agency. Permit authorizations are those reported to the Census Bureau from 16,000 jurisdictions beginning with 1978. A50 2.15 Domestic Nonfinancial Statistics • September 1985 C O N S U M E R A N D P R O D U C E R PRICES Percentage changes based on seasonally adjusted data, except as noted Change from 12 months earlier Change from 3 months earlier (at annual rate) Change from 1 month earlier Index level June Item 1984 1984 1985 June June Sept. 1985 Dec. Mar. 1985 (1967 = 100)' 1985 June Feb. Mar. Apr. May June CONSUMER PRICES 2 1 All items 4.2 3.7 4.5 3.0 4.1 3.3 .3 .5 .4 .2 .2 322.3 2 3 4 5 6 Food Energy items All items less food and energy Commodities Services 3.4 .3 5.1 4.7 5.4 2.4 1.9 4.4 2.5 5.6 3.9 .1 5.3 3.8 6.2 3.7 -.7 3.5 .9 5.0 2.6 -.8 5.5 6.6 5.0 -.9 9.6 3.4 -1.4 6.4 .5 -1.4 .6 .8 .4 .0 1.9 .4 .3 .4 -.2 1.8 .3 .0 .4 -.1 .3 .3 -.2 .7 .1 .2 .3 -.2 .5 309.3 436.8 313.4 259.0 374.6 2.1 3.7 -3.3 2.5 2.5 1.1 -.8 -3.0 2.6 2.3 .0 4.5 -19.7 2.5 2.3 1.1 3.3 5.6 -.2 -1.1 1.0 -2.4 -21.0 6.6 6.5 1.9 -8.8 32.1 1.8 1.6 .1' .1' -2.5' .4 .8' .2 -.3' -.8' .6 .4 .3 -1.0 5.8 -.2 .0 .2 -1.1 3.4 .2 .0 .0 -.1 -2.0 .4 .4 294.0 268.5 741.9 251.9 300.7 -.5 -.2 -.1 -.1 .3 .0 .3 .2 .0 .2 326.6 306.0 - 2 .(X -.4' -2.5' -.9' 1.4' -3.0 .1 2.1 -2.4 2.0 -1.5 -.3 -1.5 .2 234.0 751.7 247.6 PRODUCER PRICES 7 8 9 10 11 Finished goods Consumer foods Consumer energy Other consumer goods Capital equipment 12 13 Intermediate materials 3 Excluding energy 3.2 3.4 .1 .6 -1.1 .9 1.2 1.5 -2.5 -1.0 2.7 1.2 14 15 16 Crude materials Foods Energy Other 3.3 -.4 9.3 -10.1 -4.6 -9.2 -1.7 .4 -15.3 10.6 -7.6 -10.7 -24.1 -12.7 -13.4 -20.7 2.4 3.6 1. Not seasonally adjusted. 2. Figures for consumer prices are those for all urban consumers and reflect a rental equivalence measure of homeownership after 1982. -3.V 3. Excludes intermediate materials for food manufacturing and manufactured animal feeds. SOURCE. Bureau of Labor Statistics. Selected Measures 2.16 A51 GROSS NATIONAL PRODUCT A N D INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1985 1984 Account 1982 1983 1984 Q2 Q3 Q4 Q1 Q2 GROSS NATIONAL PRODUCT 1 By source 2 Personal consumption expenditures 3 4 5 6 7 8 9 10 11 12 Nondurable goods Services Gross private domestic investment Fixed investment Nonresidential Structures Producers' durable equipment Residential structures Nonfarm 3,069.3 3,304.8 3,662.8 3,644.7 3,694.6 3,758.7 3,810.6 3,853.5 1,984.9 245.1 757.5 982.2 2,155.9 279.8 801.7 1,074.4 2,341.8 318.8 856.9 1,166.1 2,332.7 320.7 858.3 1,153.7 2,361.4 317.2 861.4 1,182.8 2,396.5 326.3 866.5 1,203.8 2,446.5 334.8 877.3 1,234.4 2,496.1 340.7 894.7 1,260.7 414.9 441.0 349.6 142.1 207.5 91.4 86.6 471.6 485.1 352.9 129.7 223.2 132.2 127.6 637.8 579.6 425.7 150.4 275.3 153.9 148.8 627.0 576.4 420.8 150.0 270.7 155.6 150.5 662.8 591.0 435.7 151.4 284.2 155.3 150.1 637.8 601.1 447.7 157.9 289.7 153.5 148.3 646.8 606.1 450.9 162.9 288.0 155.2 150.0 638.7 626.1 466.5 171.5 295.0 159.6 153.8 13 14 Change in business inventories Nonfarm -26.1 -24.0 -13.5 -3.1 58.2 49.6 50.6 47.0 71.8 63.7 36.6 27.2 40.7 34.1 12.6 8.8 IS 16 17 Net exports of goods and services Exports Imports 19.0 348.4 329.4 -8.3 336.2 344.4 -64.2 364.3 428.5 -58.7 362.4 421.1 -90.6 368.6 459.3 -56.0 367.2 423.2 -74.5 360.7 435.2 -91.1 349.5 440.7 18 19 20 Government purchases of goods and services 650.5 258.9 391.5 685.5 269.7 415.8 747.4 295.4 452.0 743.7 296.4 447.4 761.0 302.0 458.9 780.5 315.7 464.8 791.9 319.9 472.0 809.8 325.2 484.6 3,095.4 1,276.7 499.9 776.9 1,510.8 281.7 3,318.3 1,355.7 555.3 800.4 1,639.3 309.8 3,604.6 1,542.9 655.6 887.3 1,763.3 356.5 3,594.1 1,544.8 647.9 896.9 1,742.6 357.2 3,622.8 1,549.1 654.7 894.4 1,783.3 362.1 3,722.1 1,579.8 687.7 892.1 1,813.7 365.2 3,770.0 1,583.8 677.1 906.7 1,857.2 369.6 3,840.9 1,574.6 658.3 916.3 1,891.7 387.3 -26.1 -18.0 -8.1 -13.5 -2.1 -11.3 58.2 30.4 27.8 50.6 18.2 32.4 71.8 41.7 30.1 36.6 26.7 9.9 40.7 29.0 11.7 12.6 -3.8 16.4 1,480.0 1,534.7 1,639.3 1,638.8 1,645.2 1,662.4 1,663.5 1,670.7 2,446.8 2,646.7 2,959.9 2,944.8 2,984.9 3,036.3 3,076.5 n.a. 1,864.2 1,568.7 306.6 1,262.2 295.5 140.0 155.5 1,984.9 1,658.8 328.2 1,331.1 326.2 153.1 173.1 2,173.2 1,804.1 349.8 1,454.2 369.0 173.5 195.5 2,159.2 1,793.3 347.5 1,445.8 365.9 172.4 193.5 2,191.9 1,819.1 352.0 1,467.1 372.8 174.7 198.1 2,228.1 1,848.2 357.2 1,490.9 380.0 177.5 202.5 2,272.7 1,882.8 365.5 1,517.3 389.8 183.6 206.3 2,306.5 1,910.2 370.7 1,539.5 396.3 186.1 210.2 111.1 121.7 107.9 13.8 154.4 126.2 28.2 149.8 126.3 23.4 153.7 126.4 27.3 159.1 129.7 29.4 159.8 134.0 25.7 161.7 138.5 23.2 State and local By major type of product 71 7? 73 74 ?5 26 Goods Durable Nondurable 71 Change in business inventories 78 29 Nondurable goods 30 MEMO: Total G N P in 1972 dollars NATIONAL INCOME 31 32 33 34 35 36 37 38 Compensation of employees 39 40 41 Proprietors' income 1 Business and professional 1 42 Rental income of persons 2 51.5 58.3 62.5 62.0 63.0 64.1 64.8 67.1 43 44 45 46 Corporate profits' Profits before tax 3 Inventory valuation adjustment Capital consumption adjustment 159.1 165.5 -9.5 3.1 225.2 203.2 -11.2 33.2 285.7 235.7 -5.7 55.7 291.1 246.0 -7.3 52.3 282.8 224.8 -.2 58.3 291.6 228.7 -1.6 64.5 292.3 222.3 .9 69.1 n.a. n.a. .1 76.4 47 Net interest 260.9 256.6 284.1 282.8 293.5 293.4 287.0 280.0 Government and government enterprises Other Supplement to wages and salaries Employer contributions for social insurance Other labor income 1. With inventory valuation and capital consumption adjustments. 2. With capital consumption adjustment. 89.2 21.8 3. For after-tax profits, dividends, and the like, see table 1.48. SOURCE. Survey of Current Business (Department of Commerce). A52 2.17 Domestic Nonfinancial Statistics • September 1985 PERSONAL INCOME A N D SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1985 1984 Account 1982 Q2 Q3 Q4 Q1 PERSONAL INCOME AND SAVING 1 Total personal income 2.584.6 2,744.2 3,012.1 2,984.6 3,047.3 3,096.2 3,143.8 2 Wage and salary disbursements 3 Commodity-producing industries 4 Manufacturing 5 Distributive industries 6 Service industries 7 Government and government enterprises 1.568.7 509.3 382.9 378.6 374.3 306.6 1,659.2 519.3 395.2 398.6 413.1 328.2 1.804.0 569.3 433.9 432.0 452.9 349.8 1,793.1 567.0 432.2 429.5 449.3 347.3 1,819.5 573.3 436.4 436.4 457.3 352.4 1,847.6 580.9 442.4 443.1 466.9 356.7 1.882.7 590.9 447.9 449.0 477.4 365.4 155.5 173.1 121.7 107.9 13.8 58.3 70.3 376.3 405.0 193.5 149.8 126.3 23.4 221.6 195.5 154.4 126.2 28.2 62.5 77.7 433.7 416.7 237.3 198.1 153.7 126.4 27.3 63.0 78.5 449.3 418.6 238.2 202.5 159.1 129.7 29.4 64.1 80.2 456.1 421.8 243.5 206.3 159.8 134.0 25.7 64.8 81.4 456.0 439.2 249.6 111.4 119.6 132.5 131.8 133.4 135.2 146.4 2,584.6 2,744.2 3.012.1 2,984.6 3.047.3 3,0%.2 3.143.8 8 9 10 11 12 13 14 15 16 17 Other labor income Proprietors' income 1 Business and professional 1 Farm 1 Rental income of persons 2 Dividends Personal interest income Transfer payments O l d - a g e survivors, disability, and health insurance benefits. LESS: Personal contributions for social insurance 18 EQUALS: Personal income 111.1 89.2 21.8 51.5 66.5 366.6 376.1 204.5 62.0 77.2 425.6 415.2 235.2 404.1 404.2 435.3 430.3 440.9 451.7 489.0 20 EQUALS: Disposable personal income 2,180.5 2,340.1 2,576.8 2,554.3 2.606.4 2,644.5 2,654.8 21 LESS: Personal outlays 2,044.5 2,222.0 2,420.7 2,409.5 2,442.3 2,481.5 2,536.2 22 EQUALS: Personal saving 136.0 118.1 156.1 144.8 164.1 163.0 118.6 6,369.7 4,145.9 4,555.0 6,926.1 4,488.7 4,939.0 6.1 6.933.2 4.502.3 4,930.0 5.7 6,943.2 4,498.4 4,965.0 6.3 6,998.3 4,527.1 4,996.0 6.2 6,543.4 4,302.8 4,670.0 5.0 6.2 6,989.0 4,575.7 4,965.0 4.5 27 Gross saving. 408.8 437.2 551.8 551.0 556.4 556.0 550.7 28 29 30 31 524.0 136.0 29.2 -9.5 571.7 118.1 76.5 674.8 156. 115.4 -5.7 660.2 689.4 164.1 118.4 -.2 698.2 163.0 662.1 118.6 120.8 122.5 -1.6 .9 244.1 156.0 19 LESS: Personal tax and nontax payments MEMO Per capita (1972 dollars) 23 Gross national product 24 Personal consumption expenditures 25 Disposable personal income 26 Saving rate (percent) GROSS SAVING Gross private saving Personal saving Undistributed corporate profits 1 Corporate inventory valuation adjustment Capital consumption allowances 32 Corporate 33 Noncorporate 34 Wage accruals less disbursements 35 Government surplus, or deficit ( - ) , national income and product accounts 36 Federal 37 State and local 137.1 .0 231.2 145.9 .0 246.2 157.0 .0 248.1 158.8 .0 252.8 161.5 .0 .0 257.4 163.7 .0 -115.3 -148.2 32.9 -134.5 -178.6 44.1 -122.9 -175.8 52.9 -109.2 -163.7 54.5 -133.0 -180.6 47.6 -142.2 -197.8 55.6 -111.4 -165.1 53.7 221.8 38 Capital grants received by the United States, net 39 Gross investment 40 Gross private domestic 41 Net foreign 42 Statistical discrepancy. 1. With inventory valuation and capital consumption adjustments. 2. With capital consumption adjustment. -11.2 144.8 115.3 -7.3 414.9 -6.6 .0 .0 .0 .0 .0 .0 437.7 544.4 542.0 543.4 546.1 542.6 471.6 -33.9 637.8 -93.4 627.0 -85.0 662.8 -119.4 637.8 -91.6 646.8 -104.2 -7.4 -9.0 -13.0 -9.9 -8.1 SOURCE. Survey of Current Business (Department of Commerce). Summary Statistics 3.10 U.S. INTERNATIONAL TRANSACTIONS A53 Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 1984 1984 1982 Item credits or debits Ql Q2 Q3 Q1P Q4 -8,051 -40,790 -101,532 -19,064 -18,395 -24,493 -24,654 -32,500 -35,724 -25,477 -22,759 -29,997 -29,079 -36,444 211,198 -247,642 -318 29,493 7,353 -62,012 200,745 -262,757 -163 25,401 4,837 -108,281 220,316 -328,597 -1,765 19,109 819 -25,569 53,753 -79,322 -346 8,234 829 -25,649 54,677 -80,326 -593 3,618 363 -32,507 55,530 -88,037 -250 3,256 -123 -24,557 56,355 -80,912 -575 4,003 -253 -29,437 55,811 -85,248 -89 2,626 78 -2,633 -5,501 -2,566 -6,287 -2,891 -8,522 -732 -1,480 -710 -1,522 -669 -2,207 -782 -3,313 -857 -2,318 -6,131 -5,006 -5,516 -2,059 -1,353 -1,369 -734 -795 -4,965 -1,196 -3,130 -657 -565 -799 -1,109 0 -233 0 -1,371 -2,552 -1,041 -66 -226 -288 -4,434 3,304 -979 -995 -1,156 -200 -321 44 -271 -331 -197 -194 -143 -772 -264 281 -250 -11,800 -8,504 6,266 -5,059 -4,503 -2,260 -111,070 6,626 -8,102 4,425 -48,842 -29,928 -6,513 -7,007 -5,394 -17,070 -20,186 1,908 -756 1,964 20,532 17,725 2,099 -1,313 2,021 -13,003 -4,933 970 -3,663 -5,377 -2,165 -285 n.a. -2,461 581 22 Change in foreign official assets in the United States (increase, + ) 23 U.S. Treasury securities 24 Other U.S. government obligations 25 Other U.S. government liabilities 4 26 Other U.S. liabilities reported by U.S. banks 27 Other foreign official assets 5 3,672 5,779 -694 684 -1,747 -350 5,795 6,972 -476 552 545 -1,798 3,424 4,690 167 453 663 -2,549 -2,786 -275 3 233 -2,147 -686 -600 -224 -274 146 555 328 -979 -575 85 -139 430 -487 7,119 5,814 -67 -197 2,052 -483 -11,402 -7,227 -307 -532 -3,219 -117 28 Change in foreign private assets in the United States (increase, +) 3 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 the United States, net 3 90,775 65,922 -2,383 7,052 6,392 13,792 78,527 49,341 -118 8,721 8,636 11,947 93,895 31,674 4,284 22,440 12,983 22,514 22,063 11,348 4,520 1,396 1,494 3,305 41,816 20,970 4,566 6,485 506 9,289 3,825 -5,125 -2,939 5,058 1,603 5,228 26,191 4,481 -1,863 9,501 9,380 4,692 27,923 13.011 n.a. 2,677 9,522 2,713 1 Balance on current account 2 Not seasonally adjusted.. 3 4 5 6 7 8 9 10 Merchandise trade balance 2 . . . Merchandise exports Merchandise imports Military transactions, net Investment income, net 3 Other service transactions, net. Remittances, pensions, and other transfers U.S. government grants (excluding military) 11 Change in U.S. government assets, other than official reserve assets, net (increase, - ) 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 17 Change in U.S. private assets abroad (increase, - ) 3 . 18 Bank-reported claims 19 Nonbank-reported claims 20 U.S. purchase of foreign securities, net 21 U.S. direct investments abroad, net 3 34 Allocation of SDRs 35 Discrepancy 36 Owing to seasonal adjustments 37 Statistical discrepancy in recorded data before seasonal adjustment 0 -108,121 0 0 0 -231 -1,110 1,289 673 -3,112 0 0 0 0 0 0 0 0 0 0 32,821 11,513 24,660 4,763 -422 1,889 10,997 -3,170 7,013 -4,200 16,669 -343 -606 17.012 32,821 11,513 24,660 -4,965 -1,196 -3,131 -657 -566 -799 -1,110 -233 2,988 5,243 2,971 -3,019 -779 -547 7,316 -10,870 7,291 -8,283 -4,143 -2,405 -2,097 -453 812 -2,013 585 194 190 41 44 45 61 15 5,185 MEMO Changes in official assets U.S. official reserve assets (increase, - ) Foreign official assets in the United States (increase, + ) 40 Change in Organization of Petroleum Exporting Countries official assets in the United States (part of line 22 above) 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 38 39 1. Seasonal factors are not calculated for lines 38-41. 2. Data are on an international accounts (IA) basis data, shown in table 3.11, for reasons of exports are excluded from merchandise data and 3. Includes reinvested earnings. 6, 10, 12-16, 18-20, 22-34, and basis. Differs from the Census coverage and timing; military are included in line 6. 4. Primarily associated with military sales contracts and other transactions arranged with or through foreign official agencies. 5. Consists of investments in U.S. corporate stocks and in debt securities of private corporations and state and local governments. NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business (Department of Commerce). A54 3.11 International Statistics • September 1985 U.S. FOREIGN TRADE Millions of dollars; monthly data are seasonally adjusted. 1984 Item 1982 1981 Nov. 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments 233,677 1985 1983 212,193 200,486 Dec. 18,395 Jan. 19,142 Feb. 19,401 Mar. 17,853 Apr. 18,446 May 17,779 17,414 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 261,305 243,952 258,048 27,331 25,933 28,297 27,985 28,129 28,295 28,685 3 Trade balance -27,628 -31,759 -57,562 -8,936 -6,791 -8,896 -10,131 -9,683 -10,516 -11,271 NOTE. The data through 1981 in this table are reported by the Bureau of Census data of a free-alongside-ship (f.a.s.) value basis—that is, value at the port of export. Beginning in 1981, foreign trade of the U.S. Virgin Islands is included in the Census basis trade data; this adjustment has been made for all data shown in the table. Beginning with 1982 data, the value of imports are on a customs valuation basis. The Census basis data differ from merchandise trade data shown in table 3.10, U.S. International Transactions Summary, for reasons of coverage and timing. On the export side, the largest adjustments are: (1) the addition of exports to Canada 3.12 not covered in Census statistics, and (2) the exclusion of military sales (which are combined with other military transactions and reported separately in the "service account" in table 3.10, line 6). On the import side, additions are made for gold, ship purchases, imports of electricity from Canada, and other transactions; military payments are excluded and shown separately as indicated above. SOURCE. FT900 "Summary of U.S. Export and Import Merchandise Trade" (Department of Commerce, Bureau of the Census). U.S. RESERVE ASSETS Millions of dollars, end of period 1984 Type 1981 1982 1985 1983 Dec. Jan. Feb. Mar. Apr. May June 1 Total 30,075 33,958 33,747 34,934 34,380 34,272 35,493 35,493 35,782 36,088 2 Gold stock, including Exchange Stabilization Fund 1 11,151 11,148 11,121 11,0% 11,095 11,093 11,093 11,091 11,091 11,091 3 Special drawing rights2-3 4,095 5,250 5,025 5,641 5,693 5,781 5,973 5,971 6,163 6,1% 4 Reserve position in International Monetary Fund 2 5,055 7,348 11,312 11,541 11,322 11,097 11,386 11,382 11,370 11,394 5 Foreign currencies 4 9,774 10,212 6,289 6,656 6,270 6,301 7,041 7,049 7,158 7,408 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 B A N K S Millions of dollars, end of period 1984 Assets 1982 1981 1985 1983 Jan. Dec. 1 Deposits Assets held in custody 2 U.S. Treasury securities 1 3 Earmarked gold2 Mar. Apr. May June 505 328 190 253 244 331 253 348 204 310 104,680 14,804 112,544 14,716 117,670 14,414 118,267 14,265 117,330 14,261 115,179 14,260 113,532 14,264 115,184 14,264 116,989 14,265 121,755 14,262 1. Marketable U.S. Treasury bills, notes, and bonds; and nonmarketable U.S. Treasury securities payable in dollars and in foreign currencies. 2. Earmarked gold is valued at $42.22 per fine troy ounce. Feb. NOTE. Excludes deposits and U.S. Treasury securities held for international and regional organizations. Earmarked gold is gold held for foreign and international accounts and is not included in the gold stock of the United States. Summary Statistics 3.14 FOREIGN BRANCHES OF U.S. BANKS A55 Balance Sheet Data1 Millions of dollars, end of period 1985 1984 1983 1981 Asset account Nov. Dec. Jan. Feb. Mar. Apr. May P All foreign countries 462,847 1 Total, all currencies ? Claims on United States Parent bank 4 Other banks in United States 2 5 Nonbanks 2 6 Claims on foreigners 7 Other branches of parent bank 8 Banks 9 Public borrowers 10 Nonbank foreigners 11 Other assets 12 Total payable in U.S. dollars n Claims on United States 14 Parent bank 15 Other banks in United States 2 16 Nonbanks 2 17 Claims on foreigners 18 Other branches of parent bank 19 Banks 20 Public borrowers 21 Nonbank foreigners 22 Other assets 469,712 477,090 63,743 43,267 91,805 61,666 115,542 82,026 378,954 87,821 150,763 28,197 112,173 358,493 91,168 133,752 24,131 109,442 342,689 96,004 117,668 24,517 107,785 452,914 112,815 77,958 13,313 21,544 319,431 91,313 103,050 22,907 102,161 452,205 445,041 452,883 462,098 460,428 458,198 113,435 78,151 13,664 21,620 318,710 94,717' 100,328r 22,872 100,793 115,501 79,318 13,686 22,497 309,193 87,351' 99,871' 22,441 99,530 119,034' 84,084' 13,737 21,213 314,247' 89,184' 104,373' 22,219 98,471 119,927' 86,809' 13,092 20,026 321,759' 92,990' 105,258' 22,492 101,019 121,376 86,472 14,199 20,705 318,991 91,329 104,303 22,844 100,515 120,234 84,702 14,101 21,431 317,283 91,341 102,249 22,783 100,910 20,150 19,414 18,859 20,668 20,060 20,347 20,412 20,061 20,681 350,735 361,982 371,508 345,511 349,342 343,461 351,7% 354,570' 351,280 349,433 62,142 42,721 90,085 61,010 113,436 80,909 276,937 69,398 122,110 22,877 62,552 259,871 73,537 106,447 18,413 61,474 247,406 78,431 93,332 17,890 60,977 110,442 76,763 13,121 20,558 224,251 74,600 77,096 17,374 55,181 111,468 77,271 13,500 20,697 227,303 78,279' 76,872' 17,160 54,992 113,250 78,392 13,493 21,365 219,768 72,326' 75,756' 16,994 54,692 116,730' 83,074' 13,464 20,192 224,714' 74,248' 79,217' 16,754 54,495 117,562' 85,727' 12,790 19,045 226,966' 77,229' 78,755' 17,001' 53,981 118,786 85,339 13,844 19,603 222,693 75,085 76,874 16,976 53,758 117,786 85,733 13,708 20,345 221,738 75,582 75,642 16,999 53,515 11,656 12,026 10,666 10,818 10,571 10,443 10,352' 10,042 9,801 9,909 _ 19,602' United Kingdom 23 Total, all currencies 24 Claims on United States 75 Parent bank 76 Other banks in United States 2 77 Nonbanks 2 28 Claims on foreigners 29 Other branches of parent bank 30 Banks 31 Public borrowers 32 Nonbank foreigners 161,067 158,732 149,377 144,385 146,130 149,534 150,705 148,711 148,285 11,823 7,885 27,354 23,017 34,433 29,111 138,888 41,367 56,315 7,490 33,716 127,734 37,000 50,767 6,240 33,727 119,280 36,565 43,352 5,898 33,465 29,502 23,773 1,484 4,245 114,264 37,395 39,262 5,424 32,183 27,731 21,918 1,429 4,384 111,772 37,897 37,443 5,334 31,098 28,783 22,296 1,540 4,947 112,284 36,367 39,063 5,345 31,509 31,910 25,313 1,561 5,036 112,937 35,381 40,961 5,306 31,289 29,675 23,250 1,511 4,914 115,889 35,857 40,812 5,186 34,034 29,497 22,803 1,649 5,045 114,122 34,469 41,253 4,959 33,441 29,424 22,647 1,613 5,164 113,720 34,868 39,910 4,921 34,021 -» 33 Other assets 34 Total payable in U.S. dollars 35 Claims on United States 36 Parent bank 37 Other banks in United States 2 38 Nonbanks 2 39 Claims on foreigners 40 Other branches of parent bank 41 Banks 47 Public borrowers 43 Nonbank foreigners 157,229 6,518 5,979 5,019 5,611 4,882 5,063 4,687 5,141 5,092 5,141 115,188 123,740 126,012 114,895 112,809 112,953 116,232 114,122 111,497 111,303 11,246 7,721 26,761 22,756 33,756 28,756 5,UUU 99,850 35,439 40,703 5,595 18,113 92,228 31,648 36,717 4,329 19,534 88,917 31,838 32,188 4,194 20,697 28,610 23,378 1,437 3,795 82,971 32,669 27,290 4,094 18,918 26,924 21,551 1,363 4,010 82,889 33,551 26,805 4,030 18,503 27,807 21,960 1,4% 4,351 82,161 31,899 27,465 4,021 18,776 30,945 24,911 1,498 4,536 82,268 31,099 28,523 3,964 18,682 28,839 22,910 1,466 4,463 82,437 31,331 27,982 3,804 19,320 28,570 22,472 1,576 4,522 79,938 29,489 27,808 3,533 19,108 28,504 22,354 1,491 4,659 79,917 30,148 27,188 3,527 19,054 4,092 4,751 3,339 3,314 2,996 2,985 3,019 2,846 2,989 2,882 144,665 147,041 145,0% 144,033 79,150 53,008 11,647 14,495 62,164 14,716 29,887 6,683 10,878 78,849 51,902 11,723 15,224 61,604 15,271 28,942 6,604 10,787 1 44 Other assets Bahamas and Caymans 149,108 45 Total, all currencies 46 Claims on United States 47 Parent bank 48 Other banks in United States 2 49 Nonbanks 2 50 Claims on foreigners 51 Other branches of parent bank 5? Banks 53 Public borrowers 54 Nonbank foreigners 55 Other assets 56 Total payable in U.S. dollars 1 145,156 152,083 46,546 31,643 59,403 34,653 75,309 48,720 98,057 12,951 55,151 10,010 19,945 81,450 18,720 42,699 6,413 13,618 72,868 20,626 36,842 6,093 12,592 75,655 48,202 11,043 16,410 62,024 13,837 30,529 6,075 11,583 146,811 77,296 49,449 11,544 16,303 65,598 17,661' 30,246' 6,089 11,602 141,834 76,856 48,892 11,326 16,638 61,204 14,382' 29,230' 6,162 11,430 76,446 50,043 11,305 15,098 64,408 16,235' 30,927' 6,081 11,165 78,886 53,937 10,761 14,188 64,339 15,685' 31,481' 6,349 10,824 4,505 4,303 3,906 3,931 3,917 3,774 3,811 3,816 3,782 3,580 143,743 139,605 145,641 136,211 141,562 137,090 139,543 141,543 139,926 138,724 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. 141,610 2. Data for assets vis-a-vis other banks in the United States and vis-a-vis nonbanks are combined for dates before June 1984. A56 3.14 International Statistics • September 1985 Continued 1984 Nov. 1985 Dec. Jan. Feb. Mar. Apr. MayP All foreign countries 57 Total, all currencies 462,847 469,712 477,090 452,914 452,205 445,041 452,883 462,098 460,428 458,198 58 Negotiable CDs 3 59 To United States Parent bank 60 61 Other banks in United States 62 Nonbanks n.a. 137,767 56,344 19,197 62,226 n.a. 179,015 75,621 33,405 69,989 n.a. 188,070 81,261 29,453 77,356 37,915 138,498 70,284 18,679 49,535 37,725 146,955 78,111 18,409 50,435 38,804 143,680 75,230 18,125 50,325 41,798 140,914 72,338 17,831 50,745 40,889 145,%9' 76,038' 18,021' 51,910 38,940 144,%5 75,844 18,841 50,280 37,188 145,278 77,869 18,782 48,627 63 To foreigners Other branches of parent bank 64 65 Banks 66 Official institutions Nonbank foreigners 67 68 Other liabilities 305,630 86,396 124,906 25,997 68,331 19,450 270,853 90,191 96,860 19,614 64,188 19,844 269,685 90,615 92,889 18,896 68,845 19,335 254,099' 90,681 86,822 20,883 55,713' 22,402' 247,122' 93,206 78,203 20,281 55,432' 20,403' 241,595' 87,722 79,291 19,484 55,098' 20, %2' 249,675' 89,872 84,013 19,356 56,434' 20,496' 253,635' 93,978' 82,611 20,831 56,215' 21,605' 254,953 91,856 83,607 21,854 57,636 21,570 253,653 91,332 81,557 21,657 59,107 22,079 69 Total payable in U.S. dollars 364,447 379,270 388,291 361,875 365,859 357,853 366,054 369,049 365,257 363,416 70 Negotiable CDs 3 71 To United States 72 Parent bank 73 Other banks in United States 74 Nonbanks n.a. 134,700 54,492 18,883 61,325 n.a. 175,528 73,295 33,040 69,193 n.a. 184,305 79,035 28,936 76,334 35,608 134,303 67,761 18,128 48,414 35,227 142,943 75,626 17,935 49,382 36,295 139,811 72,892 17,587 49,332 39,544 137,154 70,084 17,302 49,768 38,197 141,614' 73,597' 17,472' 50,545 35,958 140,288 73,229 18,270 48,789 34,216 140,549 75,233 18,209 47,107 75 To foreigners Other branches of parent bank 76 77 Banks Official institutions 78 Nonbank foreigners 79 80 Other liabilities 217,602 69,299 79,594 20,288 48,421 12,145 192,510 72,921 57,463 15,055 47,071 11,232 194,139 73,522 57,022 13,855 51,260 9,847 180,841 74,552 50,509 16,068 39,712 11,123 177,638 77,222 45,131 15,773 39,512 10,051 171,479 72,648 44,948 14,861 39,022 10,268 178,745 74,926 48,734 14,653 40,432 10,611 179,007' 78,441' 44,812 16,049 39,705 10,231 178,787 76,024 45,167 17,178 40,418 10,224 178,815 75,595 44,433 17,237 41,550 9,836 United Kingdom 81 Total, all currencies 157,229 161,067 158,732 149,377 144,385 146,130 149,534 150,705 148,711 148,285 82 Negotiable CDs 3 83 To United States 84 Parent bank Other banks in United States 85 Nonbanks 86 n.a. 38,022 5,444 7,502 25,076 n.a. 53,954 13,091 12,205 28,658 n.a. 55,799 14,021 11,328 30,450 34,269 25,338 15,060 3,074 7,204 34,413 25,250 14,651 3,125 7,474 35,455 27,757 16,714 3,569 7,474 38,281 23,439 13,763 2,948 6,728 37,350 23,982 14,509 2,918 6,555 35,326 23,920 13,%9 2,665 7,286 33,661 24,909 14,159 2,735 8,015 87 To foreigners 88 Other branches of parent bank 89 Banks 90 Official institutions 91 Nonbank foreigners 92 Other liabilities 112,255 16,545 51,336 16,517 27,857 6,952 99,567 18,361 44,020 11,504 25,682 7,546 95,847 19,038 41,624 10,151 25,034 7,086 81,217 20,846 34,739 10,505 15,127 8,553 77,424 21,631 30,436 10,154 15,203 7,298 75,039 20,199 31,216 9,084 14,540 7,879 80,418 22,146 33,789 9,374 15,141' 7,364 80,722 23,699 32,003 10,305 14,715 8,651 80,977 21,951 32,259 11,590 15,177 8,488 80,940 21,908 31,593 11,090 16,349 8,775 93 Total payable in U.S. dollars 120,277 130,261 131,167 119,287 117,497 117,198 120,623 117,984 116,128 115,740 94 Negotiable CDs 3 95 To United States Parent bank % Other banks in United States 97 98 Nonbanks n.a. 37,332 5,350 7,249 24,733 n.a. 53,029 12,814 12,026 28,189 n.a. 54,691 13,839 11,044 29,808 33,168 24,024 14,688 2,862 6,474 33,070 24,105 14,339 2,980 6,786 34,084 26,587 16,349 3,420 6,818 37,033 22,386 13,506 2,804 6,076 35,719 22,481 14,129 2,748 5,604 33,763 22,219 13,507 2,500 6,212 32,140 23,244 13,755 2,550 6,939 99 To foreigners 100 Other branches of parent bank 101 Banks 102 Official institutions 103 Nonbank foreigners 104 Other liabilities 79,034 12,048 32,298 13,612 21,076 3,911 73,477 14,300 28,810 9,668 20,699 3,755 73,279 15,403 29,320 8,279 20,277 3,197 58,163 17,562 20,262 9,072 11,267 3,932 56,923 18,294 18,356 8,871 11,402 3,399 52,954 16,940 17,889 7,748 10,377 3,573 57,654 18,772 20,022 7,854 11,006 3,550 56,327 20,127 17,191 8,734 10,275 3,457 56,535 18,513 17,497 9,989 10,536 3,611 56,849 18,494 17,437 9,517 11,401 3,507 Bahamas and Caymans 149,108 145,156 152,083 141,610 146,811 141,834 144,665 147,041 145,0% 144,033 106 Negotiable CDs 3 107 To United States 108 Parent bank 109 Other banks in United States 110 Nonbanks n.a. 85,759 39,451 10,474 35,834 n.a. 104,425 47,081 18,466 38,878 n.a. 111,299 50,980 16,057 44,262 898 95,975 40,517 14,187 41,271 615 102,955 47,162 13,938 41,855 734 98,466 43,783 13,320 41,363 953 99,200 43,358 13,590 42,252 779 103,0% 45,441 13,959 43,696 634 100,480 43,750 15,112 41,618 436 99,370 45,557 14,545 39,268 111 To foreigners 112 Other branches of parent bank 113 Banks 114 Official institutions 115 Nonbank foreigners 116 Other liabilities 60,012 20,641 23,202 3,498 12,671 3,337 38,274 15,7% 10,166 1,967 10,345 2,457 38,445 14,936 11,876 1,919 11,274 2,339 41,764 16,455 13,993 2,376 8,940 2,973 40,320 16,782 12,405 2,054 9,079 2,921 39,785 16,014 12,274 2,020 9,477 2,849 41,529 17,111 12,976 1,992 9,450 2,983 40,308 16,744 12,503 1,884 9,177 2,858 41,102 17,179 13,469 1,598 8,856 2,880 41,437 17,759 12,879 2,194 8,605 2,790 145,284 141,908 148,278 137,874 143,590 138,200 140,973 143,223 140,945 139,909 105 Total, all currencies 117 Total payable in U.S. dollars 3. Before June 1984, liabilities on negotiable CDs were included in liabilities to the United States or liabilities to foreigners, according to the address of the initial purchaser. Summary Statistics 3.15 A57 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1984 Item 1 Total 1 2 3 4 5 6 7 8 9 10 11 12 By type Liabilities reported by banks in the United States 2 U.S. Treasury bills and certificates 3 U.S. Treasury bonds and notes Marketable Nonmarketable 4 U.S. securities other than U.S. Treasury securities 5 By area Western Europe 1 Canada Latin America and Caribbean Asia Africa Other countries 6 1982 Nov. Dec. Jan. Feb. Mar/ Apr. May'' 172,718 177,950 178,468 180,640 176,828 173,334 169,816 170,555 173,314 24,989 46,658 25,534 54,341 25,986 59,570 26,197 59,976 23,310 56,662 23,420 52,474 22,991 54,685 22,711 57,226 22,940 56,691 67,733 8,750 24,588 68,514 7,250 22,311 67,076 5,800 20,036 68,995 5,800 19,672 71,522 5,800 19,534 72,846 5,300 19,294 67,601 5,300 19,239 67,003 4,900 18,715 70,310 4,500 18,873 61,298 2,070 6,057 96,034 1,350 5,909 67,645 2,438 6,248 92,572 958 8,089 70,510 1,466 8,904 90,115 1,423 6,050 69,756 1,528 8,645 93,951 1,290 5,470 68,260 1,491 7,450 93,044 1,120 5,463 67,354 1,136 7,278 91,030 1,397 5,139 63,746 1,715 7,518 90,721 1,200 4,916 65,650 1,403 7,528 89,968 1,403 4,603 67,799 1,558 7,897 90,142 1,262 4,656 1. Includes the Bank for International Settlements. 2. Principally demand deposits, time deposits, bankers acceptances, commercial paper, negotiable time certificates of deposit, and borrowings under repurchase agreements. 3. Includes nonmarketable certificates of indebtedness (including those payable in foreign currencies through 1974) and Treasury bills issued to official institutions of foreign countries. 4. Excludes notes issued to foreign official nonreserve agencies. Includes bonds and notes payable in foreign currencies. 3.16 1985 1983 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 AND CLAIMS ON FOREIGNERS Reported by Banks in the United States Payable in Foreign Currencies Millions of dollars, end of period 1984 Item 1981 1982 June 1 Banks'own liabilities 2 Banks' own claims 3 Deposits Other claims 4 5 Claims of banks' domestic customers 1 1. Assets owned by customers of the reporting bank located in the United States that represent claims on foreigners held by reporting banks for the accounts of their domestic customers. 3,523 4,980 3,398 1,582 971 4,844 7,707 4,251 3,456 676 1985 1983 5,219 7,231 2,731 4,501 1,059 6,459 9,687 4,284 5,404 227 Sept. 6,227 9,334 3,685 5,649 281 Dec. Mar. 7,501 10,956 4,119 6,837 569 8,012 12,639 6,148 6,491 440 NOTE. Data on claims exclude foreign currencies held by U.S. monetary authorities, A58 3.17 International Statistics • September 1985 L I A B I L I T I E S TO F O R E I G N E R S Payable in U . S . dollars Reported by Banks in the United States Millions of dollars, end of period 1984 Holder and type of liability 1981A 1982 1985 1983 Nov. Dec. Jan. Feb. Mar. Apr. Mayf 1 All foreigners 243,889 307,056 369,607 399,681 406,381 398,987 405,198 413,225' 410,701 410,940 2 Banks' own liabilities 3 Demand deposits 4 Time deposits 1 Other 2 6 Own foreign offices 3 163,817 19,631 29,039 17,647 97,500 227,089 15,889 68,797 23,184 119,219 279,087 17,470 90,632 25,874 145,111 297,857 18,351 112,218 23,684 143,604 306,758 19,542 110,235 26,332 150,650 301,398 17,975 114,145 23,542 145,736 311,627 19,369 117,065 24,991 150,202 317,097' 18,131' 119,228' 25,127' 154,611' 312,743 18,294 117,761 24,228 152,460 315,250 17,680 120,666 25,597 151,307 80,072 55,315 79,967 55,628 90,520 68,669 101,824 76,531 100,074 75,838 97,588 73,635 93,572 69,189 96,128 71,552 97,958 73,077 95,690 71,597 18,788 5,970 20,636 3,702 17,467 4,385 19,703 5,590 18,775 5,460 18,141 5,812 18,068 6,315 18,099 6,477 18,338 6,543 17,530 6,563 2,721 4,922 5,957 5,852 4,083 6,929 5,812 5,905 6,112 6,694 638 262 58 318 1,909 106 1,664 139 4,632 297 3,584 750 2,779 354 2,114 311 1,644 263 1,093 288 3,571 417 2,682 472 2,092 341 936 815 2,333 191 1,488 654 3,083 167 2,276 640 4,389 264 3,747 377 2,083 541 3,013 1,621 1,325 463 3,073 1,448 2,440 916 3,358 1,921 3,719 2,258 3,572 2,082 3,029 1,434 2,305 775 1,542 0 1,392 0 862 0 1,604 21 1,524 0 1,429 8 1,461 1 1,490 0 1,593 2 1,531 0 20 Official institutions8 79,126 71,647 79,876 85,556 86,173 79,972 75,894 77,675' 79,937 79,631 21 Banks' own liabilities Demand deposits 22 23 Time deposits 1 24 Other 2 17,109 2,564 4,230 10,315 16,640 1,899 5,528 9,212 19,427 1,837 7,318 10,272 18,790 2,133 9,457 7,201 19,065 1,823 9,391 7,852 16,970 1,780 8,371 6,818 17,249 1,881 8,673 6,694 16,777' 1,923 8,469' 6,385' 16,571 1,975 9,126 5,471 17,439 1,596 8,564 7,279 25 Banks' custody liabilities4 26 U.S. Treasury bills and certificates 5 27 Other negotiable and readily transferable instruments 6 Other 28 62,018 52,389 55,008 46,658 60,448 54,341 66,766 59,570 67,108 59,976 63,002 56,662 58,645 52,474 60,898 54,685 63,366 57,226 62,192 56,691 9,581 47 8,321 28 6,082 25 7,010 186 7,038 94 6,277 63 6,086 85 6,109 105 6,007 133 5,291 210 29 Banks9 136,008 185,881 226,887 239,806 248,360 241,515 250,039 257,565' 252,944 251,723 30 Banks' own liabilities 31 Unaffiliated foreign banks Demand deposits 32 33 Time deposits 1 34 Other 2 35 Own foreign offices 3 124,312 26,812 11,614 8,720 6,477 97,500 169,449 50,230 8,675 28,386 13,169 119,219 205,347 60,236 8,759 37,439 14,038 145,111 214,240 72,635 9,430 47,717 15,488 143,604 225,512 74,862 10,526 47,059 17,278 150,650 218,980 73,244 9,030 48,612 15,602 145,736 227,703 77,501 9,656 50,982 16,862 150,202 235,132' 80,521' 9,154' 54,222' 17,144' 154,611' 230,511 78,052 9,266 51,613 17,173 152,460 229,806 78,499 8,722 52,770 17,007 151,307 36 Banks' custody liabilities4 37 U.S. Treasury bills and certificates 38 Other negotiable and readily transferable instruments 6 Other 39 11,696 1,685 16,432 5,809 21,540 10,178 23,566 11,409 22,848 10,927 22,535 10,933 22,336 10,493 22,433 10,602 22,432 10,446 21,917 10,216 4,400 5,611 7,857 2,766 7,485 3,877 7,360 4,797 7,156 4,766 6,487 5,114 6,254 5,589 6,206 5,625 6,235 5,751 6,095 5,606 40 Other foreigners 26,035 44,606 56,887 68,467 68,215 70,571 73,454 72,079' 71,708 72,891 41 Banks' own liabilities 42 Demand deposits 43 Time deposits Other 2 44 21,759 5,191 16,030 537 39,092 5,209 33,219 664 49,680 6,577 42,290 813 60,048 6,433 52,930 685 60,537 6,930 52,693 914 61,877 6,747 54,481 650 7,491 56,473 619 62,855' 6,863' 55,049' 943' 62,577 6,887 54,746 945 63,616 7,098 55,585 934 4,276 699 5,514 1,540 7,207 3,686 8,419 4,103 7,678 4,020 8,693 4,118 8,871 3,964 9,224 4,182 9,131 3,971 9,275 3,915 3,265 312 3,065 908 3,038 483 3,730 586 3,058 601 3,948 628 4,267 640 4,294 748 4,503 657 4,613 746 10,747 14,307 10,346 10,437 10,476 9,287 9,169 9,412 9,145 9,081 7 Banks' custody liabilities4 8 U.S. Treasury bills and certificates 5 9 Other negotiable and readily transferable instruments 6 10 Other 11 Nonmonetary international and regional organizations7 12 Banks' own liabilities 13 Demand deposits 14 Time deposits 1 15 Other 2 16 Banks' custody liabilities4 17 U.S. Treasury bills and certificates 18 Other negotiable and readily transferable instruments 6 19 Other 45 Banks' custody liabilities4 46 U.S. Treasury bills and certificates 47 Other negotiable and readily transferable instruments 6 48 Other 49 MEMO: Negotiable time certificates of deposit in custody for foreigners A Liabilities and claims of banks in the United States were increased, beginning in December 1981, by the shift from foreign branches to international banking facilities in the United States of liabilities to, and claims on, foreign residents. 1. Excludes negotiable time certificates of deposit, which are included in "Other negotiable and readily transferable instruments." 2. Includes borrowing under repurchase agreements. 3. U.S. banks: includes amounts due to own foreign branches and foreign subsidiaries consolidated in "Consolidated Report of Condition" filed with bank regulatory agencies. Agencies, branches, and majority-owned subsidiaries of foreign banks: principally amounts due to head oflice or parent foreign bank, and foreign branches, agencies or wholly owned subsidiaries of head office or parent foreign bank. 4. Financial claims on residents of the United States, other than long-term securities, held by or through reporting banks. 5. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official institutions of foreign countries. 6. Principally bankers acceptances, commercial paper, and negotiable time certificates of deposit. 7. Principally the International Bank for Reconstruction and Development, and the Inter-American and Asian Development Banks. 8. Foreign central banks and foreign central governments, and the Bank for International Settlements. 9. Excludes central banks, which are included in "Official institutions." Nonbank-Reported 3.17 Data Continued 1985 1984 Area and country 1981A 1982 1983 Nov. Dec. Jan. Feb. Mar. Apr. r MayP 1 Total 243,889 307,056 369,607 399,681 406,831 398,987 405,198 413,225 410,701 410,940 2 Foreign countries 241,168 302,134 363,649 393,829 402,748 392,057 399,387 407,320' 404,589 404,246 91,275 596 4,117 333 296 8,486 7,645 463 7,267 2,823 1,457 354 916 1,545 18,716 518 28,286 375 6,541 49 493 117,756 519 2,517 509 748 8,171 5,351 537 5,626 3,362 1,567 388 1,405 1,390 29,066 296 48,172 499 7,006 50 576 138,072 585 2,709 466 531 9,441 3,599 520 8,462 4,290 1,673 373 1,603 1,799 32,246 467 60,683 562 7,403 65 596 150,659 627 3,613 434 487 11,935 3,425 602 11,056 5,077 1,693 552 1,873 1,839 31,494 457 67,964 565 6,429 54 481 152,395 615 4,114 438 418 12,701 3,353 699 10,757 4,799 1,548 597 2,082 1,676 31,054 584 68,553 602 7,184 79 542 149,264 734 4,000 452 425 11,908 3,586 615 9,477 4,663 1,712 570 2,016 2,133 31,397 495 68,039 545 5,855 66 575 152,221 625 4,638 530 735 12,430 3,258 583 9,108 4,622 1,635 614 1,887 1,486 31,580 501 70,269 602 6,628 60 431 151,660' 670 4,797 452 804 12,782' 2,923' 730 8,412 4,934 1,889 715 2,079' 1,667 30,421' 527 70,289' 671 6,286' 94 517 149,218 537 4,795 557 476 13,627 3,539 649 7,895 4,448 2,138 698 2,000 1,901 30,059 506 68,350 648 5,790 125 480 151,001 627 4,619 494 604 14,179 3,727 586 8,464 4,550 1,995 665 2,030 1,689 29,742 384 69,708 585 5,828 67 461 3 Europe 4 Austria 5 Belgium-Luxembourg 6 Denmark 7 Finland 8 France 9 Germany 10 Greece 11 Italy 12 Netherlands 13 Norway 14 Portugal 15 Spain 16 Sweden 17 Switzerland 18 Turkey 19 United Kingdom 20 Yugoslavia 21 Other Western Europe 1 22 U.S.S.R 23 Other Eastern Europe 2 24 Canada 10,250 12,232 16,026 16,549 16,048 16,233 18,263 17,228' 17,006 16,214 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 Latin America and Caribbean 85,223 2,445 34,856 765 1,568 17,794 664 2,993 9 434 479 87 7,235 3,182 4,857 694 367 4,245 2,548 114,163 3,578 44,744 1,572 2,014 26,381 1,626 2,594 9 455 670 126 8,377 3,597 4,805 1,147 759 8,417 3,291 140,088 4,038 55,818 2,266 3,168 34,545 1,842 1,689 8 1,047 788 109 10,392 3,879 5,924 1,166 1,244 8,632 3,535 149,794 4,558 55,470 3,222 4,997 34,385 2,063 2,057 8 1,029 884 110 13,422 4,180 6,847 1,209 1,309 10,013 4,030 153,985 4,424 56,955 2,370 5,332 36,949 2,001 2,514 10 1,092 896 183 12,695 4,153 6,928 1,247 1,394 10,545 4,297 151,229 4,523 55,398 2,706 4,920 35,269 1,948 2,356 26 912 920 157 13,298 4,346 6,873 1,151 1,485 10,667 4,275 154,787 4,354 56,928 3,410 6,143 35,157 1,916 2,453 8 981 915 182 13,000 4,662 7,149 1,064 1,413 10,740 4,311 157,708' 4,551' 59,60c 2,799' 4,656' 36,593' 1,897' 2,540' 6' 1,024' 950 163 13,240' 4,576 7,488 1,132 1,443 10,649' 4,401 156,766 4,664 59,069 3,159 4,743 35,765 1,909 2,401 6 1,022 955 154 13,165 4,383 7,584 1,077 1,461 10,791 4,458 157,050 4,912 58,195 3,192 5,376 35,483 1,922 2,452 7 987 979 146 13,658 4,439 7,554 1,162 1,492 10,696 4,3% 44 Asia China Mainland Taiwan Hong Kong India Indonesia Israel Japan Korea Philippines Thailand Middle-East oil-exporting countries 3 Other Asia 49,822 48,716 58,570 66,952 71,139 66,536 64,981 72,095' 73,205 71,543 158 2,082 3,950 385 640 592 20,750 2,013 874 534 12,992 4,853 203 2,761 4,465 433 857 606 16,078 1,692 770 629 13,433 6,789 249 4,051 6,657 464 997 1,722 18,079 1,648 1,234 747 12,976 9,748 844 5,142 6,535 606 893 1,023 20,750 1,609 1,252 1,458 13,399 13,442 1,153 4,975 7,240 507 1,033 1,268 20,929 1,691 1,396 1,257 16,804 12,886 1,075 5,098 6,558 554 1,136 1,003 21,662 1,560 1,327 1,161 15,965 9,437 1,068 5,187 6,648 725 914 994 22,551 1,584 1,113 1,050 15,202 7,945 980 5,306 6,937 738 1,052 941 24,540' 1,526 1,102 1,384' 16,391 11,200' 912 5,242 7,091 554 1,104 873 22,755 1,595 1,223 1,141 16,273 14,441 698 5,381 7,360 546 1,031 990 22,754 1,598 1,305 1,167 16,316 12,396 57 Africa 58 Egypt 59 Morocco 60 South Africa 61 Zaire 62 Oil-exporting countries 4 63 Other Africa 3,180 360 32 420 26 1,395 946 3,124 432 81 292 23 1,280 1,016 2,827 671 84 449 87 620 917 3,599 739 117 460 163 1,141 978 3,506 757 118 328 153 1,189 961 3,170 541 115 376 76 1,186 876 3,561 637 116 371 79 1,450 910 3,476 715 167 244 100 1,346 903 3,517 747 155 339 128 1,177 969 3,429 618 189 273 124 1,114 1,112 64 Other countries 65 Australia 66 All other 1,419 1,223 196 6,143 5,904 239 8,067 7,857 210 6,277 5,598 679 5,674 5,290 384 5,624 5,248 377 5,574 5,017 557 5,152 4,743' 409 4,877 4,456 422 5,009 4,608 401 67 Nonmonetary international and regional organizations International Latin American regional Other regional5 2,721 1,661 710 350 4,922 4,049 517 357 5,957 5,273 419 265 5,852 5,055 593 204 4,083 3,376 587 120 6,929 6,165 600 165 5,812 4,935 580 296 5,905 5,132 632 141 6,112 5,247 706 159 6,694 5,636 834 224 45 46 47 48 49 50 51 57, 53 54 55 56 68 69 70 • Liabilities and claims of banks in the United States were increased, beginning in December 1981, by the shift from foreign branches to international banking facilities in the United States of liabilities to, and claims on, foreign residents. 1. Includes the Bank for International Settlements. Beginning April 1978, also includes Eastern European countries not listed in line 23. 2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German Democratic Republic, Hungary, Poland, and Romania. 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). 4. Comprises Algeria, Gabon, Libya, and Nigeria. 5. Asian, African, Middle Eastern, and European regional organizations, except the Bank for International Settlements, which is included in "Other Western Europe." A59 A60 3.18 International Statistics • September 1985 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States Payable in U.S. Dollars Millions of dollars, end of period 1984 Area and country 1981A 1982 1985 1983 Nov. Dec. Jan. Feb. Mar. Apr. May 1 Total 251,589 355,705 391,312 384,634 398,722 386,911 393,182 3%,898' 389,647 390,440 2 Foreign countries 251,533 355,636 391,148 384,072 398,048 385,986 392,882 3%,658' 389,567 390,342 49,262 121 2,849 187 546 4,127 940 333 5,240 682 384 529 2,095 1,205 2,213 424 23,849 1,225 211 377 1,725 85,584 229 5,138 554 990 7,251 1,876 452 7,560 1,425 572 950 3,744 3,038 1,639 560 45,781 1,430 368 263 1,762 91,927 401 5,639 1,275 1,044 8,766 1,284 476 9,018 1,267 690 1,114 3,573 3,358 1,863 812 47,364 1,718 477 192 1,598 97,930 532 4,988 520 1,098 9,299 1,261 819 8,854 1,229 602 1,262 3,017 2,313 2,275 1,097 54,637 1,866 625 169 1,467 97,%2 433 4,794 648 898 9,085 1,305 817 9,079 1,351 675 1,243 2,884 2,220 2,201 1,130 55,184 1,886 5% 142 1,391 %,044 339 4,683 589 817 8,617 1,001 896 8,040 1,480 651 1,212 2,858 2,497 2,308 1,232 54,843 1,862 671 118 1,329 97,995 367 5,097 589 907 9,602 945 840 8,481 1,490 808 1,286 3,135 2,586 2,110 1,155 54,648 1,783 679 178 1,308 101,759' 484 5,233 638 826 10,042' 1,072 848' 8,711' 1,348' 621' 1,186' 2,978' 2,342 1,921' 1,172 58,381' 1,793 642 203' 1,317 99,500 519 5,161 601 804 10,273 1,008 907 8,256 1,401 748 1,151 2,890 2,338 1,853 1,147 56,264 1,892 640 245 1,402 100,004 552 5,264 560 700 10,462 1,018 921 7,798 1,040 753 1,158 2,587 2,177 1,631 1,162 57,820 1,940 760 312 1,390 3 Europe 4 Austria 5 Belgium-Luxembourg b Denmark 7 Finland 8 France 9 Germany 10 Greece 11 Italy 12 Netherlands 13 Norway 14 Portugal 15 Spain 16 Sweden 17 Switzerland 18 Turkey 19 United Kingdom 20 Yugoslavia 21 Other Western Europe 1 22 U.S.S.R 23 Other Eastern Europe 2 24 Canada 9,193 13,678 16,341 15,778 16,057 16,343 19,082 18,766' 18,155 17,883 138,347 7,527 43,542 346 16,926 21,981 3,690 2,018 3 1,531 124 62 22,439 1,076 6,794 1,218 157 7,069 1,844 187,969 10,974 56,649 603 23,271 29,101 5,513 3,211 3 2,062 124 181 29,552 839 10,210 2,357 686 10,643 1,991 205,491 11,749 59,633 566 24,667 35,527 6,072 3,745 0 2,307 129 215 34,802 1,154 7,848 2,536 977 11,287 2,277 199,058 10,983 54,084 635 26,275 33,727 6,703 3,406 0 2,431 148 222 35,288 1,337 7,360 2,358 990 10,994 2,118 207,577 11,043 58,027 592 26,307 38,105 6,839 3,499 0 2,420 158 252 34,697 1,350 7,707 2,384 1,088 11,017 2,091 199,378 11,453 54,369 5% 25,886 35,358 6,746 3,369 0 2,477 154 242 34,021 1,273 6,864 2,414 1,053 10,968 2,135 200,730 11,280 54,548 448 26,146 36,806 6,713 3,406 1 2,489 157 253 33,655 1,393 7,071 2,337 1,021 10,929 2,077 202,808' 11,162' 57,608' 464' 26,124' 36,299' 6,775 3,313' 0 2,470 154 233 33,410 1,254 7,083 2,345 1,019 10,956' 2,139' 198,827 11,163 55,526 633 26,207 35,377 6,676 3,246 0 2,467 154 223 32,473 1,319 7,039 2,353 1,014 10,804 2,154 201,320 11,346 56,843 776 26,477 35,873 6,634 3,270 0 2,487 149 237 32,747 1,386 6,751 2,310 1,013 10,947 2,072 49,851 60,952 67,837 61,398 66,380 64,387 65,351 63,595' 63,383 61,739 107 2,461 4,132 123 352 1,567 26,797 7,340 1,819 565 1,581 3,009 214 2,288 6,787 222 348 2,029 28,379 9,387 2,625 643 3,087 4,943 292 1,908 8,489 330 805 1,832 30,354 9,943 2,107 1,219 4,954 5,603 543 1,679 6,945 381 797 1,938 26,421 8,8% 2,487 1,112 4,687 5,512 710 1,849 7,368 425 734 2,088 29,059 9,285 2,550 1,125 5,054 6,133 507 1,745 6,801 299 710 1,993 28,495 8,799 2,499 1,123 5,004 6,411 741 1,827 7,351 354 780 2,041 29,092 8,813 2,560 1,076 4,856 5,860 65C 1,954' 6,639 284 780 1,941 28,008' 9,298' 2,435 1,005 4,708 5,895 572 1,976 6,844 307 704 2,004 26,591 9,406 2,360 939 5,509 6,171 545 1,639 7,290 270 701 2,038 25,477 9,120 2,384 852 5,546 5,878 57 Africa 58 Egypt 59 Morocco 60 South Africa 61 Zaire 62 Oil-exporting countries 5 63 Other 3,503 238 284 1,011 112 657 1,201 5,346 322 353 2,012 57 801 1,802 6,654 747 440 2,634 33 1,073 1,727 6,719 693 536 2,960 19 911 1,600 6,615 728 583 2,795 18 842 1,649 6,536 668 552 2,791 41 812 1,672 6,376 584 582 2,666 29 791 1,724 6,221 674 584 2,420 24 8^ 1,700' 6,299 629 595 2,508 24 893 1,651 6,203 612 577 2,497 24 871 1,621 64 Other countries 65 Australia All other 66 1,376 1,203 172 2,107 1,713 394 2,898 2,256 642 3,189 2,487 702 3,456 2,778 678 3,297 2,593 704 3,348 2,635 713 3.51C 2,824 686' 3,403 2,755 648 3,192 2,533 658 56 68 164 562 674 925 300 240 80 98 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 3 36 Jamaica 3 37 Mexico 38 Netherlands Antilles 39 Panama 40 Peru 41 Uruguay 42 Venezuela 43 Other Latin America and Caribbean 44 45 46 47 48 49 50 51 52 53 54 55 56 China Mainland Taiwan Hong Kong India Indonesia Israel Japan Korea Philippines Thailand Middle East oil-exporting countries 4 Other Asia 67 Nonmonetary international and regional organizations 6 • Liabilities and claims of banks in the United States were increased, beginning in December 1981, by the shift from foreign branches to international banking facilities in the United States of liabilities to, and claims on, foreign residents. 1. Includes the Bank for International Settlements. Beginning April 1978, also includes Eastern European countries not listed in line 23. 2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German Democratic Republic, Hungary, Poland, and Romania. 3. Included in "Other Latin America and Caribbean" through March 1978. 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). 5. Comprises Algeria, Gabon, Libya, and Nigeria. 6. Excludes the Bank for International Settlements, which is included in "Other Western Europe." NOTE. Data for period before April 1978 include claims of banks' domestic customers on foreigners. Nonbank-Reported 3.19 Data BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the United States Payable in U.S. Dollars Millions of dollars, end of period 1984 Type of claim 1981A 1982 1985 1983 Nov. Dec. Jan. Feb. 386,911 61,364 153,586 116,903 45,070 71,832 55,058 393,182 61,860 154,500 121,340 47,685 73,655 55,481 Mar/ 1 Total 287,557 396,015 426,215 2 3 4 5 6 7 8 251,589 31,260 96,653 74,704 23,381 51,322 48,972 355,705 45,422 127,293 121,377 44,223 77,153 61,614 391,312 57,569 146,393 123,837 47,126 76,711 63,514 35,968 1,378 40,310 2,491 34,903 2,969 32,916 3,380 33,646 3,871 26,352 30,763 26,064 23,805 24,576 8,238 7,056 5,870 5,732 5,198 29,952 38,153 37,715 36,575 35,204 40,369 42,499 46,217 R Banks' own claims on foreigners Foreign public borrowers Own foreign offices 1 Unaffiliated foreign banks Deposits Other All other foreigners 9 Claims of banks' domestic customers2 . . 431,639 384,634 61,443 144,809 120,890 45,788 75,102 57,492 398,722 61,371 156,497 123,775 48,112 75,663 57,080 Apr. MayP 389,647 60,910 154,905 119,255 47,636 71,619 54,577 390,440 60,974 156,768 119,171 48,096 71,074 53,526 39,079 n.a. 430,544 3%,898 61,676 157,933 122,145 49,672 72,473 55,143 11 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 4 44,322 1. U.S. banks: includes amounts due from own foreign branches and foreign subsidiaries consolidated in "Consolidated Report of Condition" filed with bank regulatory agencies. Agencies, branches, and majority-owned subsidiaries of foreign banks: principally amounts due from head office or parent foreign bank, and foreign branches, agencies, or wholly owned subsidiaries of head office or parent foreign bank. 2. Assets owned by customers of the reporting bank located in the United States that represent claims on foreigners held by reporting banks for the account of their domestic customers. 3. Principally negotiable time certificates of deposit and bankers acceptances. 3.20 40,096 41,8% 39,916 39,593 4. Includes demand and time deposits and negotiable and nonnegotiable certificates of deposit denominated in U.S. dollars issued by banks abroad. For description of changes in data reported by nonbanks, see July 1979 BULLETIN, p. 550. • Liabilities and claims of banks in the United States were increased, beginning in December 1981, by the shift from foreign branches to international banking facilities in the United States of liabilities to, and claims on, foreign residents. NOTE. Beginning April 1978, data for banks' own claims are given on a monthly basis, but the data for claims of banks' own domestic customers are available on a quarterly basis only. BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States Payable in U.S. Dollars Millions of dollars, end of period 1984 Maturity; by borrower and area 1 Total 2 3 4 5 6 7 By borrower Maturity of 1 year or less 1 Foreign public borrowers All other foreigners Maturity of over 1 year 1 Foreign public borrowers All other foreigners By area Maturity of 1 year or less 1 Europe Canada Latin America and Caribbean Asia Africa All other 2 Maturity of over 1 year 1 14 Europe 15 Canada 16 Latin America and Caribbean 17 18 Africa 19 All other 2 8 9 10 11 12 13 198! A 1985 1983 June Sept. Dec. Mar. 154,590 228,150 243,715 249,904 240,595 243,049 239,222 116,394 15,142 101,252 38,197 15,589 22,608 173,917 21,256 152,661 54,233 23,137 31,095 176,158 24,039 152,120 67,557 32,521 35,036 172,474 21,066 151,407 77,430 37,747 39,683 162,863 21,059 141,804 77,731 38,410 39,321 165,200 22,076 143,124 77,849 39,620 38,229 164,883 23,4% 141,387 74,339 38,088 36,251 28,130 4,662 48,717 31,485 2,457 943 50,500 7,642 73,291 37,578 3,680 1,226 56,117 6,211 73,660 34,403 4,199 1,569 59,924 6,959 65,136 34,012 4,790 1,652 56,773 5,841 61,479 32,252 4,798 1,720 58,170 5,978 60,692 33,450 4,442 2,468 60,269 7,481 60,071 30,651 4,109 2,301 8,100 1,808 25,209 1,907 900 272 11,636 1,931 35,247 3,185 1,494 740 13,576 1,857 43,888 4,850 2,286 1,101 12,778 2,203 54,249 5,098 1,865 1,237 11,249 1,801 56,568 5,106 1,857 1,150 9,590 1,890 57,834 5,386 2,033 1,116 8,545 2,181 55,372 5,235 1,963 1,043 • Liabilities and claims of banks in the United States were increased, beginning in December 1981, by the shift from foreign branches to international banking facilities in the United States of liabilities to, and claims on, foreign residents. 1982 1. Remaining time to maturity, 2. Includes nonmonetary international and regional organizations, A61 A62 International Statistics • September 1985 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks1 Billions of dollars, end of period 3.21 1982 Area or country 1 Total 1980 1983 1984 1985 1981 Dec. June Sept. Dec. Mar. June 7 Sept. Dec. Mar.P 352.0 415.2 438.7 439.9 431.0 437.3 435.1 430.6 410.1 407.7 409.2 162.1 13.0 14.1 12.1 8.2 4.4 2.9 5.0 67.4 8.4 26.5 175.5 13.3 15.3 12.9 9.6 4.0 3.7 5.5 70.1 10.9 30.2 179.7 13.1 17.1 12.7 10.3 3.6 5.0 5.0 72.1 10.4 30.2 177.1 13.3 17.1 12.6 10.5 4.0 4.7 4.8 70.8 10.8 28.5 168.8 12.6 16.2 11.6 9.9 3.6 4.9 4.2 67.8 8.9 29.0 168.0 12.4 16.3 11.3 11.4 3.5 5.1 4.3 65.4 8.3 29.9 166.0 11.0 15.9 11.7 11.2 3.4 5.2 4.3 65.1 8.6 29.7 157.7 10.9 14.2 10.9 11.5 3.0 4.3 4.2 60.5 8.9 29.3 148.0 9.8 14.3 10.0 9.7 3.4 3.5 3.9 57.4 8.1 27.9 147.6 8.8 14.1 9.0 10.1 3.9 3.2 3.9 59.8 7.8 27.2 152.0 9.4 14.5 8.9 10.0 3.7 3.1 4.2 64.4 9.0 24.8 13 Other developed countries 14 Austria 15 Denmark 16 Finland 17 Greece 18 Norway 19 Portugal 20 Spain 21 Turkey 22 Other Western Europe South Africa 23 24 Australia 21.6 1.9 2.3 1.4 2.8 2.6 .6 4.4 1.5 1.7 1.1 1.3 28.4 1.9 2.3 1.7 2.8 3.1 1.1 6.6 1.4 2.1 2.8 2.5 33.7 1.9 2.4 2.2 3.0 3.3 1.5 7.5 1.4 2.3 3.7 4.4 34.5 2.1 3.4 2.1 2.9 3.4 1.4 7.2 1.4 2.0 3.9 4.5 34.3 1.9 3.3 1.8 2.9 3.2 1.4 7.1 1.5 2.1 4.7 4.4 36.1 1.9 3.4 2.4 2.8 3.3 1.5 7.1 1.7 1.8 4.7 5.5 35.7 2.0 3.4 2.1 3.0 3.2 1.4 7.1 1.9 1.8 4.8 5.2 37.1 1.9 3.1 2.3 3.3 3.2 1.7 7.3 2.0 1.9 4.7 5.7 36.3 1.8 2.9 1.9 3.2 3.2 1.6 6.9 2.0 1.7 5.0 6.2 33.8 1.6 2.2 1.9 2.9 3.0 1.4 6.5 1.9 1.7 4.5 6.1 33.0 1.6 2.1 1.8 2.9 2.9 1.4 6.4 1.9 1.7 4.2 6.2 25 OPEC countries 2 26 Ecuador 27 Venezuela 28 Indonesia 29 Middle East countries 30 African countries 22.7 2.1 9.1 1.8 6.9 2.8 24.8 2.2 9.9 2.6 7.5 2.5 27.4 2.2 10.5 3.2 8.7 2.8 28.3 2.2 10.4 3.2 9.5 3.0 27.2 2.1 9.8 3.4 9.1 2.8 28.9 2.2 9.9 3.8 10.0 3.0 28.6 2.1 9.7 4.0 9.8 3.0 26.7 2.1 9.5 4.0 8.4 2.7 25.0 2.1 9.2 3.8 7.4 2.5 25.6 2.2 9.3 3.7 8.2 2.3 25.3 2.2 9.2 3.6 7.8 2.4 31 Non-OPEC developing countries 77.4 96.3 107.1 108.8 109.8 111.6 112.2 112.8 111.9 112.2 111.3 7.9 16.2 3.7 2.6 15.9 1.8 3.9 9.4 19.1 5.8 2.6 21.6 2.0 4.1 8.9 22.9 6.3 3.1 24.5 2.6 4.0 9.4 22.7 5.8 3.2 25.3 2.6 4.3 9.5 23.1 6.3 3.2 25.9 2.4 4.2 9.5 23.1 6.4 3.2 26.1 2.4 4.2 9.5 25.1 6.5 3.1 25.6 2.3 4.4 9.2 25.4 6.7 3.0 26.0 2.3 4.1 9.1 26.3 7.1 2.9 26.1 2.2 3.9 8.7 26.3 7.0 2.9 25.8 2.2 3.9 8.6 26.4 7.0 2.8 25.7 2.2 3.8 2 G-10 countries and Switzerland 3 Belgium-Luxembourg 4 France 5 Germany 6 Italy 7 Netherlands 8 Sweden 9 Switzerland 10 United Kingdom 11 Canada 12 Japan 32 33 34 35 36 37 38 Latin America Argentina Brazil Chile Colombia Mexico Peru Other Latin America 39 40 41 42 43 44 45 46 47 Asia China Mainland Taiwan India Israel Korea (South) Malaysia Philippines Thailand Other Asia .2 4.2 .3 1.5 7.1 1.1 5.1 1.6 .6 .2 5.1 .3 2.1 9.4 1.7 6.0 1.5 1.0 .2 5.3 .6 2.3 10.9 2.1 6.3 1.6 1.1 .2 5.1 .7 2.3 10.9 2.6 6.4 1.8 1.2 .2 5.2 .8 1.7 10.9 2.8 6.2 1.8 1.0 .3 5.3 1.0 1.9 11.3 2.9 6.2 2.2 1.0 .3 4.9 1.0 1.6 11.1 2.8 6.7 2.1 .9 .6 5.3 1.0 1.9 11.2 2.7 6.3 1.9 1.1 .5 5.2 1.1 1.7 10.3 3.0 5.9 1.8 1.0 .7 5.1 1.0 1.8 10.7 2.8 6.0 1.8 1.1 .7 5.3 1.0 1.7 10.5 2.8 6.1 1.7 1.1 48 49 50 51 Africa Egypt Morocco Zaire Other Africa 3 .8 .7 .2 2.1 1.1 .7 .2 2.3 1.2 .7 .1 2.4 1.3 .8 .1 2.2 1.4 .8 .1 2.4 1.5 .8 .1 2.3 1.4 .8 .1 2.2 1.4 .8 .1 1.9 1.2 .8 .1 1.9 1.2 .8 .1 2.1 1.1 .8 .1 2.1 52 Eastern Europe U.S.S.R 53 54 Yugoslavia 55 Other 7.4 .4 2.3 4.6 7.8 .6 2.5 4.7 6.2 .3 2.2 3.7 5.8 .4 2.3 3.0 5.3 .2 2.3 2.8 5.3 .2 2.4 2.8 4.9 .2 2.3 2.5 4.9 .2 2.3 2.4 4.5 .2 2.3 2.1 4.4 .1 2.3 2.0 4.5 .4 2.2 1.9 56 Offshore banking centers 57 Bahamas 58 Bermuda 59 Cayman Islands and other British West Indies 60 Netherlands Antilles 61 Panama 4 62 Lebanon Hong Kong 63 64 Singapore 65 Others 5 47.0 13.7 .6 10.6 2.1 5.4 .2 8.1 5.9 .3 63.7 19.0 .7 12.4 3.2 7.7 .2 11.8 8.7 .1 66.8 19.0 .9 12.9 3.3 7.6 .1 13.9 9.2 .0 69.3 20.7 .8 12.7 2.6 6.6 .1 14.5 11.2 .0 68.7 21.6 .8 10.5 4.1 5.7 .1 15.2 10.5 .1 70.5 21.8 .9 12.2 4.2 6.0 .1 15.0 10.3 .0 71.4 24.6 .7 12.0 3.3 6.3 .1 14.4 10.0 .0 74.1 27.5 .7 12.2 3.3 6.6 .1 13.5 10.2 .0 66.9 23.7 1.0 11.1 3.1 5.7 .1 12.7 9.5 .0 66.8 21.5 .9 11.7 3.4 6.8 .1 12.5 9.8 .0 66.3 21.5 .7 12.6 3.3 5.7 .1 12.4 10.0 .0 66 Miscellaneous and unallocated 6 14.0 18.8 17.9 16.2 16.9 17.0 16.3 17.3 17.3 17.3 16.9 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. Besides the Organization of Petroleum Exporting Countries shown individually, this group includes other members of OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates) as well as Bahrain and Oman (not formally members of OPEC). 3. Excludes Liberia. 4. Includes Canal Zone beginning December 1979. 5. Foreign branch claims only. 6. Includes New Zealand, Liberia, and international and regional organizations. 7. 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. Nonbank-Reported 3.22 Data A63 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1984 1983 Type, and area or country 1981 1980 1982 Mar. Dec. Sept. June Dec. 1 Total 29,434 28,618 27,512 25,215' 29,551' 34,248' 30,738 28,808 2 3 Payable in dollars Payable in foreign currencies 25,689 3,745 24,909 3,709 24,280 3,232 22,195' 3,020 26,314' 3,237 31,050' 3,198 27,934 2,804 25,935 2,873 4 5 6 By type Financial liabilities Payable in dollars Payable in foreign currencies 11,330 8,528 2,802 12,157 9,499 2,658 11,066 8,858 2,208 10,441' 8,662' 1,779 14,247' 12,229' 2,018 18,574' 16,532' 2,043 15,879 14,082 1,797 13,951 12,084 1,868 7 8 9 Commercial liabilities Trade payables Advance receipts and other liabilities 18,104 12,201 5,903 16,461 10,818 5,643 16,446 9,438 7,008 14,774 7,765 7,009 15,304 7,893 7,411 15,674 7,897 7,776 14,859 6,900 7,959 14,857 6,990 7,867 17,161 943 15,409 1,052 15,423 1,023 13,533 1,241 14,085 1,219 14,518 1,155 13,852 1,007 13,851 1,006 6,481 479 327 582 681 354 3,923 6,825 471 709 491 748 715 3,565 6,501 505 783 467 711 792 3,102 6,679 428 910 521 595 514 3,463 6,798 471 995 489 578 569 3,389 10 11 12 13 14 15 16 17 18 Payable in dollars Payable in foreign currencies By area or country Financial liabilities Europe Belgium-Luxembourg France Germany Netherlands Switzerland United Kingdom 7,335' 359 900 571' 595 563 4,097' 964 963 746 764 795 825 863 3,356 1,279 7 22 1,241 102 98 2,751 904 14 28 1,027 121 114 2,607 751 13 32 1,018 213 124 4,912 1,419 51 37 2,635 243 121 9,017' 3,642' 13 25 4,546' 237 124 6,780 2,606 11 33 3,250 260 130 4,576 1,423 13 35 2,103 367 137 723 644 38 976 792 75 1,039 715 169 1,332 898 170 1,355 947 170 1,462 1,013 180 1,566 1,085 144 1,682 1,121 147 Africa Oil-exporting countries 3 11 1 14 0 17 0 19 0 19 0 16 0 16 1 14 0 All other 4 15 24 12 10 9 9 14 19 4,402 90 582 679 219 499 1,209 3,770 71 573 545 220 424 880 3,831 52 598 468 346 367 1,027 3,245 62 437 427 268 241 732 3,567 40 488 417 259 477 847 3,409 45 525 501 265 246 794 3,961 34 430 558 239 405 1,133 3,987 48 438 619 245 257 1,082 Canada 70 21 2? 73 24 ?5 26 Latin America and Caribbean Bahamas Bermuda Brazil British West Indies Mexico Venezuela 77 78 29 Asia Japan Middle East oil-exporting countries 2 30 31 32 Commercial liabilities Europe Belgium-Luxembourg France Germany Netherlands Switzerland United Kingdom 40 Canada 41 42 43 44 45 46 47 Latin America and Caribbean Bahamas Bermuda Brazil British West Indies Mexico Venezuela 48 49 50 7,158' 428 956 524' 537' 641 3,841' 3,136 964 1 23 1,452 99 81 19 33 34 35 36 37 38 39 5,71C 302 843 502' 589' 486 2,839 Japan Middle East oil-exporting countries 2 - 5 735 888 897 1,495 1,841 1,776 1,840 1,906 1,975 1,300 8 75 111 35 367 319 1,044 2 67 67 2 340 276 1,570 16 117 60 32 436 642 1,473 1 67 44 6 585 432 1,807 14 158 68 33 682 560 1,705 17 124 31 5 568 630 1,758 1 110 68 8 641 628 1,871 7 114 124 32 586 636 10,242 802 8,098 9,384 1,094 7,008 8,144 1,226 5,503 6,741 1,247 4,178 6,620 1,291 3,735 6,989 1,235 4,190 5,569 1,429 2,364 5,307 1,256 2,372 51 52 Africa Oil-exporting countries 3 817 517 703 344 753 277 553 167 539 243 684 217 597 251 588 233 53 All other 4 456 664 651 921 995 1,046 1,068 1,128 1. For a description of the changes in the International Statistics tables, see July 1979 BULLETIN, p. 550. 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). 3. Comprises Algeria, Gabon, Libya, and Nigeria. 4. Includes nonmonetary international and regional organizations. 5. Revisions include a reclassification of transactions, which also affects the totals for Asia and the grand totals. A64 3.23 International Statistics • September 1985 CLAIMS ON UNAFFILIATED FOREIGNERS United States1 Reported by Nonbanking Business Enterprises in the Millions of dollars, end of period 1983 Type, and area or country 1980 1981 1984 1982 Dec. Mar. June Sept. Dec. 1 Total 34,482 36,185 28,725 34,951' 33,767' 31,977' 30,545' 29,505 2 Payable in dollars 3 Payable in foreign currencies 31,528 2,955 32,582 3,603 26,085 2,640 31,856' 3,0%' 30,919' 2,848' 28,996' 2,982' 27,754' 2,792 26,908 2,597 By type 4 Financial claims 5 Deposits Payable in dollars 6 7 Payable in foreign currencies 8 Other financial claims Payable in dollars 9 10 Payable in foreign currencies 19,763 14,166 13,381 785 5,597 3,914 1,683 21,142 15,081 14,456 625 6,061 3,599 2,462 17,684 13,058 12,628 430 4,626 2,979 1,647 23,821' 18,375' 17,872' 503' 5,445 3,489 1,956 22,904' 17,657' 17,225' 432' 5,247' 3,502' 1,745' 21,529' 16.41C 15,888' 522' 5,12C 3,359' 1,761 20,157' 15,376' 14,936' 439 4,781 3,088 1,693 18,940 14,307 13,887 420 4,633 3,190 1,442 11 Commercial claims 12 Trade receivables 13 Advance payments and other claims 14,720 13,960 759 15,043 14,007 1,036 11,041 9,994 1,047 11,131 9,721 1,410 10,864 9,540 1,323 10,448 9,105 1,343 10,389 8,885 1,503 10,565 9,084 1,481 14 15 14,233 487 14,527 516 10,478 563 10,494 637 10,193 671 9,749 699 9,729 659 9,830 735 6,069 145 298 230 51 54 4,987 4,596 43 285 224 50 117 3,546 4,873 15 134 178 97 107 4,064 6,448' 37 150 159 71 38 5,781' 6,351' 30 171 144' 32' 115' 5,651' 6,434' 37 151 161 158 61 5,613' 5,679' 15 146 187 62 64 4,973' 5,604 15 114 224 66 66 4,721 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 5,036 6,755 4,377 6,166 5,684' 5,29C 4,48C 4,006 24 25 26 27 28 29 30 Latin America and Caribbean Bahamas Bermuda Brazil British West Indies Mexico Venezuela 7,811 3,477 135 96 2,755 208 137 8,812 3,650 18 30 3,971 313 148 7,546 3,279 32 62 3,255 274 139 10,15c 4,745 102' 53 4,163 291 134 9,871' 3,953' 3 87 4,925' 279 130 8,562' 3,255' 11' 83 4,394' 230 124 8,825' 3,382' 5 84 4,488' 232 128 8,045 3,270 6 100 3,905 215 125 31 32 33 Asia Japan Middle East oil-exporting countries 2 607 189 20 758 366 37 698 153 15 764 297 4 757' 313' 7 977' 321' 8 900 371 7 %1 353 13 34 35 Africa Oil-exporting countries 3 208 26 173 46 158 48 147 55 144 42 158 35 160 37 210 85 32 48 31 145 %' ltW 113 114 5,544 233 1,129 599 318 354 929 5,405 234 776 561 299 431 985 3,826 151 474 357 350 360 811 3,670 135 459 349' 334 317 809 3,610 173 413 365' 310 336 787 3,555 142 408 447' 306 250 812 3,570 128 411 370 303 289 891 3,805 138 439 374 340 271 1,061 36 37 38 39 40 41 42 43 44 All other 4 Commercial claims Europe Belgium-Luxembourg France Germany Netherlands Switzerland United Kingdom Canada 914 967 633 829 1,061 933 1,026 1,020 3,479 12 223 668 12 1,022 424 2,526 21 261 258 12 775 351 2,695 8 190 493 7 884 272 2,419 8 216 357 7 745 268 2,042 4 89 310 8 577 241 1,976 14 88 219 10 595 245 1,972 8 115 214 7 583 206 45 46 47 48 49 50 51 Latin America and Caribbean Bahamas Bermuda Brazil British West Indies Mexico Venezuela 3,766 21 108 861 34 1,102 410 52 53 54 Asia Japan Middle East oil-exporting countries 2 3,522 1,052 825 3,959 1,245 905 3,050 1,047 751 3,063 1,114 737 2,997 1,186 701 3,085 1,178 710 2,884 1,080 703 3,070 1,180 687 55 56 Africa Oil-exporting countries 3 653 153 772 152 588 140 588 139 497 132 536 128 595 135 470 134 57 All other 4 321 461 417 286 280 297 338 228 1. For a description of the changes in the International Statistics tables, see July 1979 BULLETIN, p. 550. 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). 3. Comprises Algeria, Gabon, Libya, and Nigeria. 4. Includes nonmonetary international and regional organizations. Securities Holdings and Transactions 3.24 A65 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1985 Transactions, and area or country 1983 1985 1984 1984 Jan.May Nov. Dec. Jan. Mar. Feb. Apr. May U.S. corporate securities STOCKS 69,770 64,360 60,462 63,388 30,016 31,071 4,838 4,746 4,487 5,049 5,005 5,701 7,125 7,180 6,303 6,748 5,106 5,071 6,476 6,371 3 Net purchases, or sales ( - ) 5,410 -2,926 -1,055 92 -562 -696 -56 -445 36 106 4 Foreign countries 5,312 -3,041 -989 81 -461 -713 -51 -402 28 149 3,979 -97 1,045 -109 1,325 1,799 1,151 529 -808 395 42 24 -2,986 -405 -50 -315 -1,490 -658 1,673 493 -1,998 -372 -23 171 -1,786 -33 -296 -314 -543 -650 255 757 -89 -212 -31 117 -90 -46 11 -15 -34 17 47 30 -12 74 -8 39 -359 -54 -105 -29 -249 91 134 67 -196 -91 -6 -11 -558 -19 -134 -44 -159 -178 46 103 -52 -264 -7 19 -215 -41 -109 -108 -133 129 168 158 -101 -99 -2 40 -582 -13 -113 -129 -122 -195 -2 80 116 -41 -13 39 -161 24 23 16 -48 -191 33 169 -96 91 -1 -6 -269 17 38 -48 -81 -216 9 247 44 101 -8 25 98 115 -66 11 -101 17 -5 -43 8 -44 24,000 23,097 39,341 26,071 30,869 16,089 4,902 2,556 6,403 2,900 5,937 3,106 8,219 3,649 5,484 2,598 4,501 3,068 6,729 3,667 20 Net purchases, or sales ( - ) 903 13,269 14,781 2,346 3,503 2,831 4,570 2,886 1,432 3,062 21 Foreign countries 888 12,972 14,918 2,133 3,527 2,835 4,489 2,936 1,408 3,250 909 -89 344 51 583 434 123 100 -1,161 865 0 52 11,792 207 1,731 93 644 8,520 -71 390 -1,011 1,862 1 10 14,140 47 2 41 946 12,681 86 305 -954 1,319 1 21 1,954 -11 139 -1 159 1,603 13 44 -45 169 -2 2 3,338 24 184 15 276 2,776 14 78 -179 276 1 0 2,635 55 67 9 12 2,441 59 90 -123 140 0 35 4,143 -17 -153 44 315 4,018 -11 50 -84 337 0 54 2,952 -10 -112 8 483 2,550 -5 69 -127 89 0 -41 1,634 18 174 -9 65 1,294 0 -82 -507 381 0 -19 2,776 0 26 -11 72 2,378 43 178 -112 372 1 -8 15 297 -137 213 -24 -4 81 -50 25 -188 1 Foreign purchases 2 Foreign sales 5 6 7 8 9 10 11 12 13 14 15 16 Europe France Germany Netherlands Switzerland United Kingdom Canada Latin America and Caribbean Middle East 1 Other Asia Africa Other countries 17 Nonmonetary international and regional organizations BONDS 2 18 Foreign purchases 19 Foreign sales 22 23 24 25 26 27 28 29 30 31 32 33 Europe France Germany Netherlands Switzerland United Kingdom Canada Latin America and Caribbean Middle East 1 Other Asia Africa Other countries 34 Nonmonetary international and regional organizations Foreign securities 35 Stocks, net purchases, or sales ( - ) 36 Foreign purchases 37 Foreign sales -3,765 13,281 17,046 -1,077 14,591 15,668 -1,851 7,271 9,122 -177 1,147 1,324 -221 1,169 1,390 -781 1,149 1,930 -652 1,562 2,215 -457' 1,379' 1,836' -101 1,437 1,538 140 1,744 1,604 38 Bonds, net purchases, or sales ( - ) 39 Foreign purchases 40 Foreign sales -3,239 36,333 39,572 -3,931 57,338 61,270 -1,977 29,506 31,483 -578 6,601 7,179 -1,159 5,134 6,293 168 5,396 5,228 198 5,294 5,096 -95C 5,673' 6,623' -670 5,674 6,345 -723 7,469 8,191 41 Net purchases, or sales (—), of stocks and bonds . . . . -7,004 -5,008 -3,829 -755 -1,379 -613 -454 -1,407' -772 -583 42 Foreign countries -6,559 -4,619 -4,140 -908 -671 -742 -754 -1,217' -680 -747 43 44 45 46 47 48 -5,492 -1,328 1,120 -855 141 -144 -8,532 413 2,472 1,345 -107 -210 -4,663 -320 1,111 -362 -37 130 -707 -23 207 88 -16 -457 -1,086 254 104 -115 3 169 -732 75 194 -394 -4 120 -91 -422 -47 -255 -3 64 -1,208' -68 7 99 -26 -21 -798 23 136 -13 -5 -23 -1,833 71 822 201 2 -9 -445 -389 312 153 -709 129 300 -190 -91 164 Europe Canada Latin America and Caribbean Asia Africa Other countries 49 Nonmonetary international and regional organizations 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). 2. Includes state and local government securities, and securities of U.S. government agencies and corporations. Also includes issues of new debt securi- ties sold abroad by U.S. corporations organized to finance direct investments abroad. A66 3.25 International Statistics • September 1985 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1984 1985 Country or area 1985 1984 1983 Jan.May Nov. Dec. Jan. Feb. Mar. Apr. May Transactions, net purchases or sales ( - ) during period 1 1 Estimated total2 3,693 21,412 7,365 2,197 7,508 2,312 2,319 -4,401 -4,324 2,812 2 Foreign countries 2 3,162 16,432 7,482 2,293 5,066 3,797 2,163 -4,756 2,249 4,029 6,226 -431 2,450 375 170 -421 1,966 2,118 0 699 11,070 289 2,958 454 46 635 5,223 1,465 0 1,526 1,304 303 -711 -330 328 686 -464 1,492 0 163 776 41 36 -7 1 -288 244 748 0 193 1,300 46 336 16 -88 26 716 248 0 249 532 104 -120 -71 150 -35 419 86 0 -92 -81 18 -129 11 -10 358 -342 12 0 -231 -1,435 0 -1,538 -201 1 313 293 -303 0 38 1,818 80 299 -7 30 183 188 1,045 0 334 470 101 777 -62 157 -133 -1021 652 0 115 -212 -124 60 -149 -3,535 2,315 3 -17 1,413 14 528 871 2,377 6,062 -67 114 1,838 -2 763 1,077 4,140 4,086 74 -38 965 7 57 902 369 1,287 -5 -5 380 -10 213 177 3,218 1,585 2 -83 149 5 -2 146 3,093 578 2 113 735 -11 71 674 1,726 559 1 14 -82 2 65 -149 -3,289 177 1 11 465 10 177 278 -331 1,717 13 -50 570 -9 452 127 2,941 1,054 57 -125 535 218 0 4,982 4,612 0 -118 -98 3 -96 -188 0 2,442 2,361 0 -1,485 -1,675 0 154 504 1 355 338 0 2,075 1,792 -3 -1,217 -1,057 5 3,162 779 2,382 16,432 481 15,951 7,482 1,282 6,201 2,293 -602 2,895 5,066 1,919 3,147 3,797 2,527 1,270 2,163 1,324 840 -4,756 -5,278 521 2,249 -598 2,847 4,029 3,307 723 -5,419 -1 -6,277 -101 -515 0 -1,284 0 -200 0 27 0 -372 0 554 0 -827 0 102 0 3 Europe 2 4 Belgium-Luxembourg 5 Germany 2 6 Netherlands 7 Sweden 8 Switzerland 2 9 United Kingdom 10 Other Western Europe 11 Eastern Europe 12 Canada 13 Latin America and Caribbean 14 Venezuela 15 Other Latin America and Caribbean 16 Netherlands Antilles 17 18 Japan 19 Africa 20 All other 21 Nonmonetary international and regional organizations 22 International Latin American regional 23 MEMO 24 Foreign countries 2 25 Official institutions 26 Other foreign 2 27 28 Oil-exporting countries Middle East 3 Africa 4 1. Estimated official and private transactions in marketable U.S. Treasury securities with an original maturity of more than 1 year. Data are based on monthly transactions reports. Excludes nonmarketable U.S. Treasury bonds and notes held by official institutions of foreign countries. 2. Includes U.S. Treasury notes publicly issued to private foreign residents denominated in foreign currencies. 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 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per annum Country Country Percent Austria.. Belgium. Brazil... Canada.. Denmark Rate on June 30, 1985 Rate on June 30, 1985 Rate on June 30, 1985 Country 4.5 11.0 49.0 9.58 7.0 Percent Month effective June Feb. Mar. June Oct. 1984 1984 1981 1985 1983 France 1 Germany, Fed. Rep. of Italy Japan Netherlands 1. As of the end of February 1981, the rate is that at which the Bank of France discounts Treasury bills for 7 to 10 days. 2. Minimum lending rate suspended as of Aug. 20, 1981. NOTE. Rates shown are mainly those at which the central bank either discounts 3.27 10.13 4.5 15.5 5.0 5.5 Month effective May June Jan. Oct. Feb. 1985 1984 1985 1983 1985 Norway Switzerland United Kingdom 2 . Venezuela Month effective 8.0 4.0 June 1983 Mar. 1983 11.0 May 1983 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. 1985 1984 6 7 8 9 10 Percent FOREIGN SHORT-TERM INTEREST RATES Percent per annum, averages of daily figures Country, or type 1 2 3 4 5 A67 1982 1983 1984 Dec. Jan. Feb. Mar. Apr. May June Eurodollars United Kingdom Canada Germany Switzerland 12.24 12.21 14.38 8.81 5.04 9.57 10.06 9.48 5.73 4.11 10.75 9.91 11.29 5.96 4.35 8.90 9.74 10.41 5.81 4.% 8.37 11.63 9.70 5.84 5.13 9.05 13.69 10.63 6.13 5.66 9.32 13.52 11.42 6.36 5.77 8.74 12.70 10.15 5.99 5.35 8.13 12.61 9.77 5.87 5.15 7.60 12.38 9.58 5.66 5.14 Netherlands France 8.26 14.61 19.99 14.10 6.84 5.58 12.44 18.95 10.51 6.49 6.08 11.66 17.08 11.41 6.32 5.77 10.66 16.86 10.75 6.33 5.87 10.43 15.82 10.75 6.27 6.90 10.60 15.79 10.75 6.29 7.14 10.71 15.82 10.75 6.30 6.82 10.49 15.15 10.09 6.26 6.90 10.15 14.91 9.35 6.26 6.58 10.18 15.00 8.96 6.30 Belgium Japan NOTE. Rates are for 3-month interbank loans except for Canada, finance company paper; Belgium, 3-month Treasury bills; and Japan, Gensaki rate. A68 3.28 International Statistics • September 1985 FOREIGN E X C H A N G E RATES Currency units per dollar 1985 Country/currency 1982 1983 1984 Jan. 1 2 3 4 5 6 7 1 Feb. Mar. Apr. May June Australia/dollar Austria/schilling Belgium/franc Brazil/cruzeiro Canada/dollar China, P.R./yuan Denmark/krone 101.65 17.060 45.780 179.22 1.2344 1.8978 8.3443 90.14 17.968 51.121 573.27 1.2325 1.9809 9.1483 87.937 20.005 57.749 1841.50 1.2953 2.3308 10.354 81.51 22.267 63.455 3346.67 1.3240 2.8160 11.330 73.74 23.190 66.310 3768.17 1.3547 2.8347 11.807 69.70 23.247 66.308 4158.19 1.3840 2.8533 11.797 65.84 21.717 62.283 4511.58 1.3658 2.8480 11.114 67.68 21.868 62.572 5239.00 1.3756 2.8556 11.2244 66.51 21.532 61.719 5786.00 1.3676 2.8693 10.9962 8 9 10 11 12 13 14 15 Finland/markka France/franc Germany/deutsche mark Greece/drachma Hong Kong/dollar India/rupee Ireland/pound 1 Israel/shekel 4.8086 6.5793 2.428 66.872 6.0697 9.4846 142.05 24.407 5.5636 7.6203 2.5539 87.895 7.2569 10.1040 124.81 55.865 6.0007 8.7355 2.8454 112.73 7.8188 11.348 108.64 n.a. 6.6368 9.7036 3.1706 129.38 7.8110 12.612 98.23 n.a. 6.8616 10.093 3.3025 134.73 7.8017 12.922 94.23 n.a. 6.8464 10.078 3.2982 140.62 7.8009 12.861 94.58 n.a. 6.4652 9.4427 3.0946 134.86 7.7902 12.400 101.17 n.a. 6.4641 9.4829 3.1093 137.239 7.7766 12.5004 100.71 n.a. 6.3660 9.3414 3.0636 136.00 7.7698 12.441 102.19 n.a. 16 17 18 19 20 21 22 23 24 Italy/lira Japan/yen Malaysia/ringgit Mexico/peso Netherlands/guilder New Zealand/dollar 1 Norway/krone Philippines/peso Portugal/escudo 1354.00 249.06 2.3395 72.990 2.6719 75.101 6.4567 8.5324 80.101 1519.30 237.55 2.3204 155.01 2.8543 66.790 7.3012 11.0940 111.610 1756.10 237.45 2.3448 192.31 3.2083 57.837 8.1596 n.a. 147.70 1948.76 254.18 2.4804 227.56 3.5819 47.040 9.1765 n.a. 172.56 2042.00 260.48 2.5513 236.06 3.7387 45.223 9.4695 n.a. 183.24 2078.50 257.92 2.5734 246.15 3.7290 45.276 9.4608 n.a. 183.98 1975.89 251.84 2.4922 246.57 3.4981 45.520 8.9314 n.a. 174.56 1984.45 251.73 2.4759 254.8182 3.5097 45.197 8.9442 n.a. 177.545 1953.92 248.84 2.4685 294.22 3.4535 45.949 8.8255 n.a. 176.15 25 26 27 28 29 30 31 32 33 34 35 Singapore/dollar South Africa/rand 1 South Korea/won Spain/peseta Sri Lanka/rupee Sweden/krona Switzerland/franc Taiwan/dollar Thailand/baht United Kingdom/pound 1 Venezuela/bolivar 2.1406 92.297 731.93 110.09 20.756 6.2838 2.0327 n.a. 23.014 174.80 4.2981 2.1136 89.85 776.04 143.500 23.510 7.6717 2.1006 n.a. 22.991 151.59 10.6840 2.1325 69.534 807.91 160.78 25.428 8.2706 2.3500 39.633 23.582 133.66 n.a. 2.2011 46.34 832.16 175.13 26.392 9.0716 2.6590 39.209 27.330 112.71 n.a. 2.2557 50.57 839.16 182.35 26.605 9.3364 2.8045 39.228 27.961 109.31 n.a. 2.2582 50.33 850.71 183.13 26.836 9.4135 2.8033 39.542 28.097 112.53 n.a. 2.2199 51.50 861.21 172.85 27.113 8.9946 2.5948 39.728 27.466 123.77 n.a. 2.2228 50.18 792.56 175.397 27.404 8.9895 2.6150 39.906 27.554 124.83 n.a. 2.2291 50.54 875.00 173.42 27.433 8.8565 2.5721 39.857 27.433 128.08 n.a. 116.57 125.34 138.19 152.83 158.43 158.14 149.56 149.92 147.71 MEMO 36 United States/dollar 2 1. Value in U.S. cents. 2. Index of weighted-average exchange value of U.S. dollar against currencies of other G-10 countries plus Switzerland. March 1973 = 100. Weights are 1972-76 global trade of each of the 10 countries. Series revised as of August 1978. For description and back data, see "Index of the Weighted-Average Exchange Value of the U.S. Dollar: Revision" on p. 700 of the August 1978 BULLETIN. NOTE. Averages of certified noon buying rates in New York for cable transfers. Data in this table also appear in the Board's G.5 (405) release. For address, see inside front cover. A69 Guide to Tabular Presentation, Statistical Releases, and Special Tables GUIDE TO TABULAR Symbols and c e p r * PRESENTATION Abbreviations Corrected Estimated Preliminary Revised (Notation appears on column heading when about half of the figures in that column are changed.) Amounts insignificant in terms of the last decimal place shown in the table (for example, less than 500,000 when the smallest unit given is millions) General 0 n.a. n.e.c. IPCs REITs RPs SMSAs Calculated to be zero Not available Not elsewhere classified Individuals, partnerships, and corporations Real estate investment trusts Repurchase agreements Standard metropolitan statistical areas Cell not applicable Information Minus signs are used to indicate (1) a decrease, (2) a negative figure, or (3) an outflow. "U.S. government securities" may include guaranteed issues of U.S. government agencies (the flow of funds figures also include not fully guaranteed issues) as well as direct STATISTICAL obligations of the Treasury. "State and local government" also includes municipalities, special districts, and other political subdivisions. In some of the tables details do not add to totals because of rounding. RELEASES List Published Semiannually, with Latest Bulletin Reference Issue Anticipated schedule of release dates for periodic releases SPECIAL Page June 1985 A83 TABLES Published Irregularly, with Latest Bulletin Reference Assets and liabilities of commercial banks, March 31, 1983 Assets and liabilities of commercial banks, June 30, 1983 Assets and liabilities of commercial banks, September 30, 1983 Assets and liabilities of commercial banks, December 31, 1983 Assets and liabilities of U.S. branches and agencies of foreign banks, Assets and liabilities of U.S. branches and agencies of foreign banks, Assets and liabilities of U.S. branches and agencies of foreign banks, Assets and liabilities of U.S. branches and agencies of foreign banks, Terms of lending at commercial banks, February 1985 Terms of lending at commercial banks, May 1985 March 31, 1984 June 30, 1984 September 30, 1984 December 31, 1984. August December March June November April April August June August 1983 1983 1984 1984 1984 1985 1985 1985 1985 1985 A70 A68 A68 A66 A4 A70 A74 A76 A70 A70 A70 Federal Reserve Board of Governors PAUL A . VOLCKER, PRESTON M A R T I N , Chairman Vice Chairman OFFICE OF BOARD MEMBERS JOSEPH R. COYNE, Assistant DONALD J. WINN, Assistant STEVEN M . ROBERTS, to the to the HENRY C. WALLICH J . CHARLES PARTEE OFFICE OF STAFF DIRECTOR MONETARY AND FINANCIAL Board Board FOR POLICY STEPHEN H . A X I L R O D , Staff Director D O N A L D L . K O H N , Deputy Staff Director Assistant to the Chairman ANTHONY F. COLE, Special Assistant to the Board NAOMI P. SALUS, Special Assistant to the Board STANLEY J. SIGEL, Assistant to the Board NORMAND R.V. BERNARD, Special Assistant LEGAL DIVISION DIVISION MICHAEL BRADFIELD, General J. VIRGIL M A T T I N G L Y , J R . , Counsel Deputy General Counsel RICHARD M. ASHTON, Associate General Counsel OLIVER IRELAND, Associate General Counsel RICKI TIGERT, Assistant General Counsel MARYELLEN A. BROWN, Assistant to the General OFFICE OF THE SECRETARY WILLIAM W. WILES, Secretary BARBARA R. LOWREY, Associate Secretary JAMES MCAFEE, Associate Secretary DIVISION OF CONSUMER AND COMMUNITY AFFAIRS GRIFFITH L . GARWOOD, Counsel OF RESEARCH STATISTICS JAMES L . K I C H L I N E , Director E D W A R D C . E T T I N , Deputy Director MICHAEL J. PRELL, Deputy Director JOSEPH S . ZEISEL, Deputy Director JARED J. E N Z L E R , Associate Director D A V I D E . L I N D S E Y , Associate Director ELEANOR J. STOCKWELL, Associate Director THOMAS D . SIMPSON, Deputy Associate Director LAWRENCE SLIFMAN, Deputy Associate Director H E L M U T F . W E N D E L , Deputy Associate Director MARTHA B E T H E A , Assistant Director ROBERT M . FISHER, Assistant Director D A V I D B . H U M P H R E Y , Assistant Director S U S A N J. LEPPER, Assistant Director RICHARD D . PORTER, Assistant Director PETER A . TINSLEY, Assistant Director L E V O N H . G A R A B E D I A N , Assistant Director (Administra tion) Director JERAULD C . K L U C K M A N , Associate Director G L E N N E . L O N E Y , Assistant Director DOLORES S . S M I T H , Assistant Director DIVISION OF BANKING SUPERVISION AND REGULATION DIVISION OF INTERNATIONAL 1. On loan from the Federal Reserve Bank of Boston. FINANCE E D W I N M . T R U M A N , Director LARRY J. PROMISEL, Senior Associate Director CHARLES J. SIEGMAN, Senior Associate Director D A L E W . H E N D E R S O N , Associate Director ROBERT F. GEMMILL, Staff WILLIAM TAYLOR, Director THOMAS E . C I M E N O , J R . , Deputy Director' FREDERICK R . D A H L , Associate Director D O N E . K L I N E , Associate Director FREDERICK M . STRUBLE, Associate Director HERBERT A . B I E R N , Assistant Director A N T H O N Y C O R N Y N , Assistant Director ROBERT S . PLOTKIN, Assistant Director STEPHEN C . SCHEMERING, Assistant Director RICHARD SPILLENKOTHEN, Assistant Director S I D N E Y M . S U S S A N , Assistant Director L A U R A M . H O M E R , Securities Credit Officer AND to the Adviser PETER HOOPER I I I , Assistant Director D A V I D H . H O W A R D , Assistant Director RALPH W . SMITH, J R . , Assistant Director Board A71 and Official Staff EMMETT J. LYLE E. RICE MARTHA R . SEGER GRAMLEY OFFICE OF STAFF DIRECTOR FOR MANAGEMENT S . D A V I D FROST, Staff Director E D W A R D T . M U L R E N I N , Assistant Staff Director CHARLES L . H A M P T O N , Senior Technical Adviser PORTIA W . THOMPSON, Equal Employment Opportunity OFFICE OF STAFF DIRECTOR FOR FEDERAL RESERVE BANK ACTIVITIES THEODORE E. ALLISON, Staff Director Adviser, Equal Employment Opportunity Programs, Federal Reserve System JOSEPH W . D A N I E L S , S R . , Programs Officer DIVISION OF COMPUTING SERVICES BRUCE M . BEARDSLEY, Director THOMAS C . J U D D , Assistant Director ELIZABETH B . RIGGS, Assistant Director ROBERT J. Z E M E L , DIVISION WILLIAM STEPHEN RICHARD WILLIAM DIVISION Assistant Director OF INFORMATION SERVICES R . JONES, Director R . M A L P H R U S , Assistant Director J. MANASSERI, Assistant Director C . SCHNEIDER, JR., Assistant Director OF PERSONNEL D A V I D L . S H A N N O N , Director JOHN R . W E I S , Assistant Director CHARLES W . W O O D , Assistant Director OFFICE OF THE CONTROLLER GEORGE E . LIVINGSTON, Controller BRENT L . B O W E N , Assistant Controller DIVISION OF SUPPORT SERVICES Director Associate Director Assistant Director ROBERT E . FRAZIER, WALTER W . K R E I M A N N , GEORGE M . L O P E Z , 2. On loan from the Federal Reserve Bank of Richmond (Baltimore Branch). DIVISION OF FEDERAL BANK OPERATIONS RESERVE C L Y D E H . FARNSWORTH, J R . , Director ELLIOTT C . M C E N T E E , Associate Director D A V I D L . ROBINSON, Associate Director C . WILLIAM SCHLEICHER, J R . , Associate Director WALTER A L T H A U S E N , Assistant Director CHARLES W . B E N N E T T , Assistant Director A N N E M . D E B E E R , Assistant Director JACK D E N N I S , JR., Assistant Director EARL G . H A M I L T O N , Assistant Director WILLIAM E. PASCOE III, Assistant FLORENCE M . Y O U N G , Adviser Director2 146 Federal Reserve Bulletin • September 1985 Federal Open Market Committee FEDERAL OPEN MARKET PAUL A . VOLCKER, COMMITTEE Chairman JOHN J. BALLES ROBERT P . BLACK ROBERT P . FORRESTAL STEPHEN H . AXILROD, SILAS KEEHN PRESTON MARTIN J. CHARLES PARTEE Staff Director and Secretary NORMAND R . V . BERNARD, Assistant NANCY M . STEELE, Secretary Deputy Assistant Secretary MICHAEL BRADFIELD, General JAMES H . OLTMAN, E . GERALD CORRIGAN, Counsel Deputy General Counsel JAMES L . KICHLINE, E D W I N M . TRUMAN, Economist Economist (International) JOSEPH R. BISIGNANO, Associate Economist PETER D . STERNLIGHT, Manager SAM Y . CROSS, Manager for FEDERAL ADVISORY EMMETT J. RICE MARTHA R . SEGER HENRY C . WALLICH J. ALFRED BROADDUS, Associate Economist RICHARD G. DAVIS, Associate Economist DONALD L. KOHN, Associate Economist DAVID E. LINDSEY, Associate Economist MICHAEL J. PRELL, Associate Economist KARL A. SCHELD, Associate Economist CHARLES J. SIEGMAN, Associate Economist SHEILA L. TSCHINKEL, Associate Economist for Domestic Operations, System Open Market Account Foreign Operations, System Open Market Account COUNCIL LEWIS T. PRESTON, President PHILIP F . SEARLE, Vice President WILLIAM H . BOWEN, E . PETER GILLETTE, AND N . BERNE HART, ROBERT L . N E W E L L , First District LEWIS T. PRESTON, Second District GEORGE A . BUTLER, Third District JULIEN L . M C C A L L , Fourth District JOHN G . M E D L I N , JR., Fifth District PHILIP F. SEARLE, Sixth District Directors HAL C. KUEHL, Seventh District WILLIAM H . BOWEN, Eighth District E. PETER GILLETTE, JR., Ninth District N. BERNE HART, Tenth District NAT S. ROGERS, Eleventh District G . ROBERT TRUEX, JR., Twelfth District HERBERT V . PROCHNOW, Secretary WILLIAM J. KORSVIK, Associate Secretary Vice Chairman and Advisory Councils CONSUMER ADVISORY COUNCIL TIMOTHY D. MARRINAN, Minneapolis, Minnesota, Chairman THOMAS L . CLARK, JR., New York, New York, Vice Chairman RACHEL G. BRATT, Medford, Massachusetts JONATHAN BROWN, W a s h i n g t o n , D . C . JEAN A. CROCKETT, Philadelphia, Pennsylvania THERESA FAITH CUMMINGS, Springfield, Illinois STEVEN M. GEARY, Jefferson City, Missouri RICHARD M. HALLIBURTON, Kansas City, Missouri CHARLES C . HOLT, Austin, Texas EDWARD N. LANGE, Seattle, Washington KENNETH V. LARKIN, Berkeley, California FRED S. MCCHESNEY, Atlanta, Georgia FREDERICK H . MILLER, Norman, Oklahoma MARGARET M . MURPHY, Columbia, Maryland ROBERT F . MURPHY, Detroit, Michigan HELEN NELSON, Mill Valley, California THRIFT INSTITUTIONS ADVISORY LAWRENCE S. OKINAGA, Honolulu, Hawaii JOSEPH L. PERKOWSKI, Centerville, Minnesota ELVA QUIJANO, San Antonio, Texas BRENDA L. SCHNEIDER, Detroit, Michigan PAULA A. SLIMAK, Cleveland, Ohio GLENDA G . SLOANE, W a s h i n g t o n , D . C . HENRY J. SOMMER, Philadelphia, Pennsylvania TED L. SPURLOCK, New York, New York MEL STILLER, Boston, Massachusetts CHRISTOPHER J. SUMNER, Salt Lake City, Utah WINNIE F. TAYLOR, Gainesville, Florida MICHAEL M. V A N BUSKIRK, Columbus, Ohio MERVIN WINSTON, Minneapolis, Minnesota MICHAEL ZOROYA, St. Louis, Missouri COUNCIL THOMAS R . BOMAR, Miami, Florida, President RICHARD H. DEIHL, LOS Angeles, California, Vice President ELLIOTT G . CARR, Harwich Port, Massachusetts T O D D COOKE, Philadelphia, Pennsylvania J. MICHAEL CORNWALL, Dallas, Texas HAROLD W . GREENWOOD, JR., Minneapolis, Minnesota MICHAEL R. WISE, M. JOHN A. HARDIN, Rock Hill, South Carolina FRANCES LESNIESKI, East Lansing, Michigan JOHN T. MORGAN, New York, New York SARAH R. 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Women Fair Credit Billing Federal Reserve Glossary Guide to Federal Reserve Regulations How to File A Consumer Credit Complaint If You Borrow To Buy Stock If You Use A Credit Card Instructional Materials of the Federal Reserve System Series on the Structure of the Federal Reserve System The Board of Governors of the Federal Reserve System The Federal Open Market Committee Federal Reserve Bank Board of Directors Federal Reserve Banks Monetary Control Act of 1980 Organization and Advisory Committees Truth in Leasing U.S. Currency What Truth in Lending Means to You 131. CALCULATIONS OF PROFITABILITY FOR U . S . D O L L A R DEUTSCHE MARK INTERVENTION, by Laurence R. Jacobson. October 1983. 8 pp. 132. TIME-SERIES STUDIES OF THE RELATIONSHIP BETWEEN EXCHANGE RATES AND INTERVENTION: A REVIEW OF THE TECHNIQUES AND LITERATURE, b y Kenneth Rogoff. October 1983. 15 pp. 133. RELATIONSHIPS AMONG EXCHANGE RATES, INTERVENTION, A N D INTEREST RATES: A N EMPIRICAL IN- VESTIGATION, by Bonnie E. Loopesko. November 1983. 20 pp. 134. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET INTERVENTION: A REVIEW OF THE LITERATURE, b y Ralph W. Tryon. October 1983. 14 pp. 135. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET INTERVENTION: APPLICATIONS TO C A N A D A , GERMA- NY, AND JAPAN, by Deborah J. Danker, Richard A. Haas, Dale W. Henderson, Steven A. Symansky, and Ralph W. Tryon. April 1985. 27 pp. 136. THE EFFECTS OF FISCAL POLICY ON THE U . S . ECONO- MY, by Darrell Cohen and Peter B. Clark. January 1984. 16 pp. 137. THE IMPLICATIONS FOR BANK MERGER POLICY OF FINANCIAL DEREGULATION, INTERSTATE BANKING, AND FINANCIAL SUPERMARKETS, by Stephen A. Rhoades. February 1984. 8 pp. 138. ANTITRUST L A W S , JUSTICE DEPARTMENT G U I D E LINES, AND THE LIMITS OF CONCENTRATION IN LOCAL BANKING MARKETS, by James Burke. June 1984. 14 pp. STAFF STUDIES.- Summaries Only Printed in the Bulletin Studies and papers on economic and financial subjects that are of general interest. Requests to obtain single copies of the full text or to be added to the mailing list for the series may be sent to Publications Services. 139. SOME IMPLICATIONS OF FINANCIAL INNOVATIONS IN THE UNITED STATES, by Thomas D. Simpson and Patrick M. Parkinson. August 1984. 20 pp. 140. GEOGRAPHIC MARKET DELINEATION: A REVIEW OF THE LITERATURE, by John D. Wolken. November 1984. 38 pp. 141. A COMPARISON OF DIRECT DEPOSIT A N D CHECK PAYMENT COSTS, by William Dudley. November 1984. 15 Staff Studies 115-125 are out of print. pp. 142. MERGERS AND BANKS, 1 9 6 0 - 8 3 , 114. MULTIBANK HOLDING COMPANIES: RECENT EVIDENCE ON COMPETITION AND PERFORMANCE IN BANKING MARKETS, by Timothy J. Curry and John T. Rose. Jan. 1982. 9 pp. 126. DEFINITION A N D MEASUREMENT OF EXCHANGE MAR- KET INTERVENTION, by Donald B. Adams and Dale W. Henderson. August 1983. 5 pp. 127. U . S . EXPERIENCE WITH EXCHANGE MARKET INTERVENTION: JANUARY-MARCH 1 9 7 5 , by Margaret L . Greene. August 1984. 16 pp. 128. U . S . EXPERIENCE WITH EXCHANGE MARKET INTERVENTION: SEPTEMBER 1977-DECEMBER 1 9 7 9 , b y M a r - garet L. Greene. October 1984. 40 pp. 129. U . S . EXPERIENCE WITH EXCHANGE MARKET INTERVENTION: OCTOBER I98O-OCTOBER 1 9 8 1 , by Margaret L. Greene. August 1984. 36 pp. ACQUISITIONS A. by Stephen BY COMMERCIAL Rhoades. December 1984. 30 pp. 143. COMPLIANCE COSTS A N D CONSUMER BENEFITS OF THE ELECTRONIC F U N D TRANSFER ACT: RECENT SURVEY EVIDENCE, by Frederick J. Schroeder. April 1985. 23 pp. 144. SCALE ECONOMIES IN COMPLIANCE COSTS FOR CONSUMER CREDIT REGULATIONS: THE TRUTH IN L E N D ING A N D EQUAL CREDIT OPPORTUNITY L A W S , b y Gregory E. Elliehausen and Robert D. Kurtz. May 1985. 10 pp. 145. SERVICE CHARGES AS A SOURCE OF B A N K INCOME AND THEIR IMPACT ON CONSUMERS, by Glenn B . Canner and Robert D. Kurtz. August 1985. 31 pp. A76 REPRINTS OF BULLETIN ARTICLES Most of the articles reprinted do not exceed 12 pages. The Commercial Paper Market since the Mid-Seventies. 6/82. Applying the Theory of Probable Future Competition. 9/82. International Banking Facilities. 10/82. Foreign Experience with Targets for Money Growth. 10/83. Intervention in Foreign Exchange Markets: A Summary of Ten Staff Studies. 11/83. A Financial Perspective on Agriculture. 1/84. 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. U.S. International Transactions in 1984. 5/85. A Revision of the Index of Industrial Production. 7/85. A77 Index to Statistical Tables References are to pages A3-A68 although the prefix 'A" ACCEPTANCES, bankers (See Bankers acceptances) Agricultural loans, commercial banks, 19, 20 Assets and liabilities (See also Foreigners) Banks, by classes, 18-20 Domestic finance companies, 37 Federal Reserve Banks, 10 Financial institutions, 26 Foreign banks, U.S. branches and agencies, 21 Nonfinancial corporations, 36 Automobiles Consumer installment credit, 40, 41 Production, 47, 48 BANKERS acceptances, 9, 23, 24 Bankers balances, 18-20 (See also Foreigners) Bonds (See also U.S. government securities) New issues, 34 Rates, 24 Branch banks, 21, 55 Business activity, nonfinancial, 44 Business expenditures on new plant and equipment, 36 Business loans (See Commercial and industrial loans) CAPACITY utilization, 46 Capital accounts Banks, by classes, 18 Federal Reserve Banks, 10 Central banks, discount rates, 67 Certificates of deposit, 24 Commercial and industrial loans Commercial banks, 16, 19 Weekly reporting banks, 19-21 Commercial banks Assets and liabilities, 18-20 Commercial and industrial loans, 16, 18, 19, 20, 21 Consumer loans held, by type, and terms, 40, 41 Loans sold outright, 19 Nondeposit funds, 17 Real estate mortgages held, by holder and property, 39 Time and savings deposits, 3 Commercial paper, 23, 24, 37 Condition statements (See Assets and liabilities) Construction, 44, 49 Consumer installment credit, 40, 41 Consumer prices, 44, 50 Consumption expenditures, 51, 52 Corporations Nonfinancial, assets and liabilities, 36 Profits and their distribution, 35 Security issues, 34, 65 Cost of living (See Consumer prices) Credit unions, 26, 40 (See also Thrift institutions) Currency and coin, 18 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 is omitted in this index Demand deposits—Continued Ownership by individuals, partnerships, and corporations, 22 Turnover, 15 Depository institutions Reserve requirements, 7 Reserves and related items, 3, 4, 5, 12 Deposits (See also specific types) Banks, by classes, 3, 18-20, 21 Federal Reserve Banks, 4, 10 Turnover, 15 Discount rates at Reserve Banks and at foreign central banks and foreign countries (See Interest rates) Discounts and advances by Reserve Banks (See Loans) Dividends, corporate, 35 EMPLOYMENT, 45 Eurodollars, 24 FARM mortgage loans, 39 Federal agency obligations, 4, 9, 10, 11, 31, 32 Federal credit agencies, 33 Federal finance Debt subject to statutory limitation, and types and ownership of gross debt, 30 Receipts and outlays, 28, 29 Treasury financing of surplus, or deficit, 28 Treasury operating balance, 28 Federal Financing Bank, 28, 33 Federal funds, 5, 17, 19, 20, 21, 24, 28 Federal Home Loan Banks, 33 Federal Home Loan Mortgage Corporation, 33, 38, 39 Federal Housing Administration, 33, 38, 39 Federal Land Banks, 39 Federal National Mortgage Association, 33, 38, 39 Federal Reserve Banks Condition statement, 10 Discount rates (See Interest rates) U.S. government securities held, 4, 10, 11, 30 Federal Reserve credit, 4, 5, 10, 11 Federal Reserve notes, 10 Federally sponsored credit agencies, 33 Finance companies Assets and liabilities, 37 Business credit, 37 Loans, 19, 40, 41 Paper, 23, 24 Financial institutions Loans to, 19, 20, 21 Selected assets and liabilities, 26 Float, 4 Flow of funds, 42, 43 Foreign banks, assets and liabilities of U.S. branches and agencies, 21 Foreign currency operations, 10 Foreign deposits in U.S. banks, 4, 10, 19, 20 Foreign exchange rates, 68 Foreign trade, 54 Foreigners Claims on, 55, 57, 60, 61, 62, 64 Liabilities to, 20, 54, 55, 57, 58, 63, 65, 66 A78 GOLD Certificate account, 10 Stock, 4, 54 Government National Mortgage Association, 33, 38, 39 Gross national product, 51 HOUSING, new and existing units, 49 INCOME, personal and national, 44, 51, 52 Industrial production, 44, 47 Installment loans, 40, 41 Insurance companies, 26, 30, 39 Interest rates Bonds, 24 Consumer installment credit, 41 Federal Reserve Banks, 6 Foreign central banks and foreign countries, 67 Money and capital markets, 24 Mortgages, 38 Prime rate, 23 Time and savings deposits, 8 International capital transactions of United States, 53-67 International organizations, 57, 58, 60, 63, 64 Inventories, 51 Investment companies, issues and assets, 35 Investments (See also specific types) Banks, by classes, 18, 19, 20, 21, 26 Commercial banks, 3, 16, 18-20, 39 Federal Reserve Banks, 10, 11 Financial institutions, 26, 39 LABOR force, 45 Life insurance companies (See Insurance companies) Loans (See also specific types) Banks, by classes, 18-20 Commercial banks, 3, 16, 18-20 Federal Reserve Banks, 4, 5, 6, 10, 11 Financial institutions, 26, 39 Insured or guaranteed by United States, 38, 39 MANUFACTURING Capacity utilization, 46 Production, 46, 48 Margin requirements, 25 Member banks (See also Depository institutions) Federal funds and repurchase agreements, 5 Reserve requirements, 7 Mining production, 48 Mobile homes shipped, 49 Monetary and credit aggregates, 3, 12 Money and capital market rates, 24 Money stock measures and components, 3, 13 Mortgages (See Real estate loans) Mutual funds, 35 Mutual savings banks, 8, 26, 39, 40 (See also Thrift institutions) NATIONAL defense outlays, 29 National income, 51 OPEN market transactions, 9 PERSONAL income, 52 Prices Consumer and producer, 44, 50 Stock market, 25 Prime rate, 23 Producer prices, 44, 50 Production, 44, 47 Profits, corporate, 35 REAL estate loans Banks, by classes, 16, 19, 20, 39 Financial institutions, 26 Terms, yields, and activity, 38 Type of holder and property mortgaged, 39 Repurchase agreements, 5, 17, 19, 20, 21 Reserve requirements, 7 Reserves Commercial banks, 18 Depository institutions, 3, 4, 5, 12 Federal Reserve Banks, 10 U.S. reserve assets, 54 Residential mortgage loans, 38 Retail credit and retail sales, 40, 41, 44 SAVING Flow of funds, 42, 43 National income accounts, 51 Savings and loan associations, 8, 26, 39, 40, 42 (See also Thrift institutions) Savings deposits (See Time and savings deposits) Securities (See specific types) Federal and federally sponsored credit agencies, 33 Foreign transactions, 65 New issues, 34 Prices, 25 Special drawing rights, 4, 10, 53, 54 State and local governments Deposits, 19, 20 Holdings of U.S. government securities, 30 New security issues, 34 Ownership of securities issued by, 19, 20, 26 Rates on securities, 24 Stock market, 25 Stocks (See also Securities) New issues, 34 Prices, 25 Student Loan Marketing Association, 33 TAX receipts, federal, 29 Thrift institutions, 3 (See also Credit unions, Mutual savings banks, and Savings and loan associations) Time and savings deposits, 3, 8, 13, 17, 18, 19, 20, 21 Trade, foreign, 54 Treasury cash, Treasury currency, 4 Treasury deposits, 4, 10, 28 Treasury operating balance, 28 UNEMPLOYMENT, 45 U.S. government balances Commercial bank holdings, 18, 19, 20 Treasury deposits at Reserve Banks, 4, 10, 28 U.S. government securities Bank holdings, 18-20, 21, 30 Dealer transactions, positions, and financing, 32 Federal Reserve Bank holdings, 4, 10, 11, 30 Foreign and international holdings and transactions, 10, 30, 66 Open market transactions, 9 Outstanding, by type and holder, 26, 30 Rates, 24 U.S. international transactions, 53-67 Utilities, production, 48 VETERANS Administration, 38, 39 WEEKLY reporting banks, 19-21 Wholesale (producer) prices, 44, 50 YIELDS (See Interest rates) A79 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK, Chairman branch, or facility Zip Deputy Chairman President First Vice President BOSTON* 02106 Joseph A. Baute Thomas I. Atkins Frank E. Morris Robert W. Eisenmenger NEW YORK* 10045 John Brademas Clifton R. Wharton, Jr. M. Jane Dickman E. Gerald Corrigan Thomas M. Timlen Buffalo 14240 John T. Keane PHILADELPHIA 19105 Robert M. Landis Nevius M. Curtis Edward G. Boehne Richard L. Smoot CLEVELAND* 44101 William H. Knoell E. Mandell de Windt Robert E. Boni Milton G. Hulme, Jr. Karen N. Horn William H. Hendricks Leroy T. Canoles, Jr. Robert A. Georgine Robert L. Tate Wallace J. Jorgenson Robert P. Black Jimmie R. Monhollon John H. Weitnauer, Jr. Bradley Currey, Jr. Martha Mclnnis E. William Nash, Jr. Eugene E. Cohen Condon S. Bush Leslie B. Lampton Robert P. Forrestal Jack Guynn Stanton R. Cook Robert J. Day Russell G. Mawby Silas Keehn Daniel M. Doyle W.L. Hadley Griffin Mary P. Holt Sheffield Nelson Henry F. Frigon Donald B. Weis Thomas C. Melzer Joseph P. Garbarini John B. Davis, Jr. Michael W. Wright Gene J. Etchart Gary H. Stern Thomas E. Gainor Irvine O. Hockaday, Jr. Robert G. Lueder James E. Nielson Patience Latting Kenneth L. Morrison Roger Guffey Henry R. Czerwinski Robert D. Rogers Bobby R. Inman John R. Sibley Robert T. Sakowitz Robert F. McDermott Robert H. Boykin William H. Wallace Alan C. Furth Fred W. Andrew Richard C. Seaver Paul E. Bragdon Don M. Wheeler John W. Ellis John J. Balles Richard T. Griffith Cincinnati Pittsburgh 45201 15230 RICHMOND* 23219 Baltimore 21203 Charlotte 28230 Culpeper Communications and Records Center 22701 ATLANTA Birmingham Jacksonville Miami Nashville New Orleans 30301 35283 32231 33152 37203 70161 CHICAGO* 60690 Detroit 48231 ST. LOUIS 63166 Little Rock Louisville Memphis 72203 40232 38101 MINNEAPOLIS 55480 Helena KANSAS CITY Denver Oklahoma City Omaha DALLAS El Paso Houston San Antonio 59601 64198 80217 73125 68102 75222 79999 77252 78295 SAN FRANCISCO 94120 Los Angeles Portland Salt Lake City Seattle 90051 97208 84125 98124 Vice President in charge of branch Charles A. Cerino Harold J. Swart Robert D. McTeer, Jr. Albert D. Tinkelenberg John G. Stoides Fred R. Herr James D. Hawkins Patrick K. Barron Jeffrey J. Wells Henry H. Bourgaux Roby L. Sloan John F. Breen James E. Conrad Paul I. Black, Jr. Robert F. McNellis Wayne W. Martin William G. Evans Robert D. Hamilton Joel L. Koonce, Jr. J.Z. Rowe Thomas H. Robertson Robert M. McGill Angelo S. Carella E. Ronald Liggett Gerald R. Kelly * Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; Cranford, New Jersey 07016; Jericho, New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; and Milwaukee, Wisconsin 53202. A80 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories HAWAII •HHQ LEGEND — ~ Boundaries of Federal Reserve Districts Boundaries of Federal Reserve Branch Territories ® Federal Reserve Bank Cities • Federal Reserve Branch Cities Federal Reserve Bank Facility Q Board of Governors of the Federal Reserve System Publications of Interest FEDERAL RESERVE CONSUMER CREDIT PUBLICATIONS The Federal Reserve Board publishes a series of pamphlets covering individual credit laws and topics, as pictured below. The series includes such subjects as how the Equal Credit Opportunity Act protects women against discrimination in their credit dealings, how to use a credit card, and how to use Truth in Lending information to compare credit costs. The Board also publishes the Consumer Handbook to Credit Protection Laws, a complete guide to con- sumer credit protections. This 44-page booklet explains how to use the credit laws to shop for credit, apply for it, keep up credit ratings, and complain about an unfair deal. Protections offered by the Electronic Fund Transfer Act are explained in Alice in Debitland. This booklet offers tips for those using the new "paperless" systems for transferring money. Copies of consumer publications are available free of charge from Publications Services, Mail Stop 138, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Multiple copies for classroom use are also available free of charge. IMSS LE4SINO LE4SMG LE4SMG TRUTH IN LE45IN6 What Thith In Lending Means To You \The ll Equal Credit I Opportunity Act and Credit Rights In Housing The Equal Credit Opportunity Act and . . . Publications of Interest FEDERAL RESERVE REGULATORY SERVICE To promote public understanding of its regulatory functions, the Board publishes the Federal Reserve Regulatory Service, a three-volume looseleaf service containing all Board regulations and related statutes, interpretations, policy statements, rulings, and staff opinions. For those with a more specialized interest in the Board's regulations, parts of this service are published separately as handbooks pertaining to monetary policy, securities credit, and consumer affairs. These publications are designed to help those who must frequently refer to the Board's regulatory materials. They are updated at least monthly, and each contains conversion tables, citation indexes, and a subject index. The Monetary Policy and Reserve Requirements Handbook contains Regulations A, D, and Q plus related materials. For convenient reference, it also contains the rules of the Depository Institutions Deregulation Committee. The Securities Credit Transactions Handbook contains Regulations G, T, U, and X, dealing with extensions of credit for the purchase of securities, together with all related statutes, Board interpretations, rulings, and staff opinions. Also included is the Board's list of OTC margin stocks. The Consumer and Community Affairs Handbook contains Regulations B, C, E, M, Z, AA, and BB and associated materials. For domestic subscribers, the annual rate is $175 for the Federal Reserve Regulatory Service and $60 for each handbook. For subscribers outside the United States, the price including additional air mail costs is $225 for the Service and $75 for each Handbook. All subscription requests must be accompanied by a check or money order payable to Board of Governors of the Federal Reserve System. Orders should be addressed to Publications Services, Mail Stop 138, Federal Reserve Board, 20th Street and Constitution Avenue, N.W., Washington, D.C. 20551.