The industrial loan and investment company failed Nov. 1, 1983.

"Loan demand also appears to be softening," the Fed said, especially for commercial and industrial loans.

New England has been hit hardest, with an 18 percent drop in commercial and industrial loans.

Borrowing for longer terms - to finance mortgages or industrial loans - remains problematic.

For most of 1986, large banks held about $250 billion in short-term commercial and industrial loans, a level that reflected a weak economy.

Nonetheless, demand for commercial and industrial (C&I) loans remained weak.

"The banks have more money than in quite a long time, and if you have a good industrial loan, they are anxious to lend."

The national average is for banks to issue commercial and industrial loans equal to 158 percent of their capital.

The previous recession began in July 1990 - about a month after the big banks' commercial and industrial loans started a downward slide.

The banks' outstanding commercial and industrial loans, on the other hand, have fallen gradually, to about $620 billion.