Federal Reserve Bulletin, 1991-07

VOLUME 77 • NUMBER 7 • JULY 1991 FEDERAL RESERVE BULLETIN BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn • J. Virgil Mattingly, Jr. • Michael J. Prell • Edwin M. Truman The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Graphics Center under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 505 RECENT DEVELOPMENTS AFFECTING utilization decreased 0.2 percentage point THE PROFITABILITY AND PRACTICES to 78.3 percent. OF COMMERCIAL BANKS In 1990, U.S.-chartered insured commercial 539 STATEMENTS TO THE CONGRESS banks experienced a substantial increase in Richard F. Syron, President, Federal Renonperforming loans, their loss provisions serve Bank of Boston, discusses current remained high, and their profitability edged questions about the availability of credit, down from the already depressed level of particularly how developments in the finan- 1989. Loan quality problems last year were cial and real sectors of the economy led to concentrated in the commercial real estate restricted credit availability and why the sector and, to a lesser extent, in mergersituation has been particularly acute in New related credits to highly leveraged firms. England, before the Subcommittee on Domestic Monetary Policy of the House Committee on Banking, Finance and Urban Af- 528 TREASURY AND FEDERAL RESERVE fairs, May 8, 1991. FOREIGN EXCHANGE OPERATIONS After setting new historical lows against the 543 Silas Keehn, President, Federal Reserve mark in mid-February, the dollar re- Bank of Chicago, gives his views on the bounded strongly during the February- recent trends in credit availablility and says April period to close up on balance by more that any specific legislative initiatives to than 15 percent against the mark and nearly deal with the credit restraint in an attempt 4 percent against the yen. to override the market process would seem ill-advised and would probably result in unintended distortions, before the Subcom- 534 DIFFUSION INDEXES OF INDUSTRIAL mittee on Domestic Monetary Policy of the PRODUCTION House Committee on Banking, Finance and Urban Affairs, May 8, 1991. Beginning July 1991, the Federal Reserve will resume publication of diffusion indexes 546 Robert D. McTeer, Jr., President, Federal of industrial production in its monthly sta- Reserve Bank of Dallas, discusses credit tistical release, Industrial Production and conditions in the Eleventh Federal Reserve Capacity Utilization. Output changes in the District and says that despite the contrac- 250 series that constitute the total industrial tion in credit in that District for the past production index form the basis for calcufour years, an economic recovery began in lation of the diffusion indexes. 1987 and continued modestly through last year and into this year, before the Subcommittee on Domestic Monetary Policy of the 537 INDUSTRIAL PRODUCTION AND House Committee on Banking, Finance and CAPACITY UTILIZATION Urban Affairs, May 8, 1991. Industrial production edged up 0.1 percent in April, based on preliminary estimates, 549 John P. LaWare, Member, Board of Govafter having fallen a downward revised 0.6 ernors, discusses the economic implications percent in March. Total industrial capacity of the so-called too-big-to-fail doctrine and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

proposed legislation dealing with this issue Reserve's experience with the BCCI and and says that the Board urges the Congress expresses the Federal Reserve's support for to view the too-big-to-fail doctrine as one S.1019, the Foreign Bank Supervision Enelement of a very complex set of problems that hancement Act, and says that as a result of need to be attacked on several fronts, before the BCCI matter and other recent foreign the Subcommittee on Economic Stabilization bank supervisory problems, the Board deof the House Committee on Banking, Finance termined that improvements in the existing and Urban Aflfairs, May 9, 1991. statutory framework governing foreign bank operations in this country were 555 E. Gerald Corrigan, President, Federal Re- needed and recommended the legislation serve Bank of New York, discusses certain being considered to build upon, and comaspects of the ongoing efforts to reform and plement, the existing supervisory structure modernize the banking and financial system to fill those regulatory gaps that experience of the United States and repeats his strong has demonstrated exist, before the Subcomopposition to arrangements that would per- mittee on Consumer and Regulatory Aflfairs mit commercial firms to control banking of the Senate Committee on Banking, institutions, before the Senate Committee Housing, and Urban Aflfairs, May 23, 1991. on Banking, Housing, and Urban Affairs, May 15, 1991. 582 The Board of Governors comments on H.R.6 and H.R.447 dealing with truth in savings and says that account holders should have ade- 565 Alan Greenspan, Chairman, Board of Govquate information on which to make informed ernors, discusses the low level of saving in saving decisions; however, because the implethe United States and says that inadequate mentation of the proposed legislation will redomestic saving is impairing our economic quire a set of complex rules, the law should be prospects for the longer run and that subcarefully tailored to ensure that compliance stantial reductions in the federal budget costs are minimized and that regulatory burdeficit are still the surest way to overcome dens do not lead institutions to discontinue the shortage of domestic saving and, thus, products or decide not to develop new prodto increase permanently the supply of doucts, before the Subcommittee on Consumer mestic funds available for investment, be- Aflfairs and Coinage of the House Committee fore the Senate Committee on Finance, on Banking, Finance and Urban Aflfairs, May May 16, 1991. 30, 1991. 569 William Taylor, Staff Director, Division of 585 Stephen C. Schemering, Deputy Associate Banking Supervision and Regulation, Board Director, Division of Banking Supervision of Governors, testifies about the experience and Regulation, Board of Governors, reof the Federal Reserve System with the views the Federal Reserve's administration Bank of Credit and Commerce International of its discount window activities with re- (BCCI), including some of the efforts under- spect to the Madison National Bank and taken by the Federal Reserve to investigate says that the loans to Madison National the relationship between the BCCI and First Bank were made consistent with the Fed- American Bankshares and the steps that the eral Reserve's overall policy governing dis- Federal Reserve is taking to strengthen the count window lending, before the House supervision of foreign banks in light of this Committee on Banking, Finance and Urban experience, before the Subcommittee on Aflfairs, May 31, 1991. Consumer and Regulatory Affairs of the Senate Committee on Banking, Housing, and 587 ANNOUNCEMENTS Urban Aflfairs, May 23, 1991. Statement by Chairman Greenspan on the 572 J. Virgil Mattingly, Jr., General Counsel, resignation of Karl Otto Poehl as President Board of Governors, describes the Federal of the Deutsche Bundesbank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nominations sought for members of the tively over the three-month period from Consumer Advisory Council. March through June. Meeting of the Consumer Advisory Coun- 595 LEGAL DEVELOPMENTS cil. Various bank holding company, bank ser- Modifications to the criteria for offering a vice corporation, and bank merger orders; tiered pricing structure in the check collecand pending cases. tion service. Ai FINANCIAL AND BUSINESS STATISTICS 589 RECORD OF POLICY ACTIONS OF THE These tables reflect data available as of FEDERAL OPEN MARKET COMMITTEE May 29, 1991. At its meeting on March 26, 1991, the A3 Domestic Financial Statistic^ Committee adopted a directive that called A46 Domestic Nonfinancial Statistics for maintaining the existing degree of pres- A55 International Statistics sure on reserve positions. The members A71 GUIDE TO TABULAR PRESENTATION, noted that they preferred or could accept a STATISTICAL RELEASES, AND SPECIAL directive that did not include a presumption TABLES about the likely direction of any intermeeting adjustments in policy. Accordingly, the AH BOARD OF GOVERNORS AND STAFF Committee decided that somewhat greater reserve restraint or somewhat lesser re- A74 FEDERAL OPEN MARKET COMMITTEE serve restraint might be acceptable during AND STAFF; ADVISORY COUNCILS the period ahead depending on progress toward price stability, trends in economic A76 FEDERAL RESERVE BOARD activity, the behavior of the monetary ag- PUBLICATIONS gregates, and developments in foreign exchange and domestic financial markets. The A78 INDEX TO STATISTICAL TABLES reserve conditions contemplated at this meeting were expected to be consistent A80 FEDERAL RESERVE BANKS, with some reduction in the growth of M2 BRANCHES, AND OFFICES and M3 from their recent pace to annual rates of around 5Vz and 3V2 percent respec- A81 MAP OF FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks • 1 V;7' Allan D. Brunner, John V. Duca, and Mary M. These actions, along with slackening loan de- McLaughlin, of the Board's Division of Mone- mand stemming from a weakening economy, tary Affairs, prepared this article. Thomas C. slowed the expansion of loans held on bank Allard and Charles R. Fendig provided research balance sheets last year and led to a deceleration assistance. in the overall growth of interest-earning assets at U.S. banks (table l).1 Each of the three main categories of loans—real estate, business, and Nineteen-ninety proved to be a difficult year for consumer loans—weakened; and in a developthe U.S. banking industry. U.S.-chartered in- ment reminiscent of other economic slowdowns, sured commercial banks experienced a substan- holdings of U.S. government securities picked tial increase in nonperforming loans, and as they up. attempted to keep pace through a continued high Conditions improved somewhat after the turn rate of loss provisions, their profitability edged of the year. The successful conclusion of the Gulf down from the already depressed level of 1989. war, accumulating evidence suggesting an im- In contrast to the late 1980s, when heightened proved economic outlook, and monetary policy loss provisions were made for problem loans to actions to foster a recovery all dramatically imdeveloping countries, loan quality problems last proved the financial market climate for banks in year were concentrated in the commercial real early 1991. Moreover, in recent surveys, the estate sector and, to a lesser extent, in merger- number of banks reporting tighter credit stanrelated credits to highly leveraged firms. dards has been lower than it was during 1990. Poor loan performance put strong pressure on On the liability side of their balance sheets, the banking industry to improve its capital posi- earnings pressures and difficulties in raising tion in 1990. Loan quality problems, however, funds in financial markets led commercial banks also lessened investor confidence in the banking in 1990 to increase their reliance on retail deposindustry, particularly in the second half of 1990. its for funding and to pay down managed liabili- This period was marked by sharp declines in ties. The continuing shrinkage of the thrift indusbank equity prices, large increases in the risk try, which bolstered banks' share of retail premiums demanded by investors on bank sub- deposits, aided this substitution. ordinated debt issues, and difficulties encoun- The implementation of interim risk-based captered by some large banks in obtaining funds in ital requirements at year-end 1990 heightened the interbank markets. Confronted with these funding difficulties and weak earnings, and in anticipation of new capital standards, many banks 1. Except where otherwise noted, data reported in this restricted the growth of their assets and sought to article are from the quarterly Reports of Condition and preserve their profit margins in 1990, in part by Income for all insured commercial banks. Asset values are fully consolidated averages (foreign and domestic offices) net widening margins on loans, aggressively cutting of loss reserves. Net income is net of all taxes estimated to be costs, tightening credit standards for approving due on income, extraordinary gains, and gains on securities. Size categories of hanks, based on vear-enH fnllv ronsoli- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

506 Federal Reserve Bulletin • July 1991 1. Annual growth rate of selected balance sheet items, all insured commercial banks, 1985-901 Percent, except as noted Outstanding, Item 1985 1986 1987 1988 1989 1990 Dec. 31, 1990 (billions of dollars) Assets Interest-earning assets2 9.3 8.0 3.9 4.1 6.3 2.4 2,934 Total loans 7.6 7.6 4.2 6.1 6.8 2.4 2,069 Commercial and industrial 1.8 4.0 -1.2 2.5 3.3 -.4 615 U.S. addressees 6.0 10.7 .4 6.9 4.9 .5 532 Foreign addressees -6.2 -12.1 -5.5 -14.0 -.7 -.6 83 Consumer 14.2 7.3 3.3 6.3 5.9 .4 377 Real estate 13.1 17.7 16.6 13.8 13.6 9.1 812 Foreign government -3.8 -.3 -.2 -9.7 -19.4 -10.7 25 Agricultural -10.0 -11.1 -6.2 3.2 3.4 7.5 33 Security 21.5 -22.2 -11.2 -.4 15.8 -30.0 13 Total securities 13.9 10.2 7.2 1.9 5.0 8.8 589 U.S. government 2.5 17.3 10.0 5.0 10.4 16.3 415 State and local government 32.9 -12.6 -13.7 -12.0 -10.2 -11.3 83 Liabilities Deposits 7.7 7.8 2.3 4.2 5.5 4.1 2,594 Foreign office 1.2 -2.7 8.8 -7.8 -.5 -6.0 293 Domestic office 9.0 9.7 1.4 6.3 6.4 5.6 2,301 Demand 8.9 13.6 -10.3 1.4 .7 1.0 460 Other checkable deposits 17.8 33.4 8.3 8.1 2.8 6.7 218 Savings (includes MMDAs) 16.6 17.5 -.9 1.3 .9 6.6 566 Small time 3.4 -1.1 7.6 14.6 17.7 14.1 698 Large time 2.0 -1.5 13.0 8.9 7.1 -4.7 360 1. Growth rates calculated from year-end to year-end. 2. Includes trading account assets, federal funds sold, and interestbearing balances. importance of raising capital at many large weighted capital ratios after the first quarter of banks. The new guidelines attempt to account for 1990, mainly by downsizing and restructuring differences in the riskiness of various classes of their balance sheets. Although loss provisions assets in determining the capital adequacy of a remained high last year, rising losses caused bank. Although the composition of most banks' banks to end the year with a slightly lower ratio balance sheets is such that the new capital stan- of loan loss reserves to loans (chart 2). dards generally require more capital than did the Banks' net interest margin—the spread beprevious regulations, especially for loans other tween interest income and interest expense— than qualifying residential mortgages, the major- narrowed over 1990 (table 2). Interest expense ity of banks already meet the even tougher 1992 dipped and loan rates held relatively firm, but standards. interest income fell more than interest expense The 1990 developments were manifested in several key aggregate statistics that track the 1. Net income and loan loss provisions, performance of the banking industry. Last year, as a percent of assets elevated loan loss provisions, concentrated at Percent banks with substantial exposure to commercial real estate loans, held down the industry's return on assets to 0.50 percent, the second lowest level 1 1.0 since the late 1940s (chart 1), and its return on Net income equity to 7.77 percent. Even with depressed profitability, dividends paid as a share of assets fXr .5 continued at high levels for the industry as a whole, and as a result, retained earnings re- Loss provisions mained low for the second consecutive year. iTlmri f h T f f m i ii i • 11 m i l i um III Still, banks managed to increase their risk- 1950 I960 1970 1980 1990 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 507 2. Reserves for loan losses, loss provisions, and BALANCE SHEET DEVELOPMENTS net loan losses, as a percent of loans1 Percent Changes in the balance sheet of the banking industry during 1990 largely reflected the effect of the economic slowdown on loan demand and the response of banks to new capital requirements, funding difficulties, and problems in loan quality. Assets A sharp slowing in loan growth outweighed a pickup in the net acquisitions of U.S. government securities, resulting in a deceleration in the 1. Data for loans and reserves are averages. Losses are net of expansion of bank credit from year-end to yearrecoveries. end. Much of the overall deceleration in loan expansion reflected a moderation in the growth because of increases in nonperforming loans. of real estate loans, a decline in commercial and (Appendix tables A.l and A.2 contain detailed industrial (C&I) loans, and an increased issuance information on income, expenses, and portfolio of securities backed by consumer loans (a transcomposition, by size of bank, for the years action that removes the loans from bank balance 1985-90.) sheets). In 1990, 158 federally insured commercial banks failed, down from the record of 204 set in Real Estate Loans. Real estate loans, the 1989. As in recent years, the majority of the largest category of bank loans, continued exnation's failed banks were in the Southwest. panding as a share of bank assets, albeit at a Although the number of banks classified by the reduced rate. The composition of growth shifted Federal Deposit Insurance Corporation as being last year, as in 1989, away from commercial and in danger of becoming insolvent dipped last year, toward residential mortgages. This development assets at troubled institutions rose sharply as likely resulted from the response of banks and those difficulties became more concentrated at their regulators to problems with loan quality and larger banks. overbuilding in commercial real estate markets, 2. Income and expense as a percent of average net assets, all insured commercial banks, 1985-90 Item 1985 1986 1987 1988 1989 1990 Gross interest income 9.58 8.50 8.34 8.95 9.92 9.57 Gross interest expense 6.08 5.11 4.95 5.42 6.41 6.13 Net interest margin 3.50 3.39 3.40 3.53 3.51 3.44 Noninterest income 1.20 1.28 1.41 1.47 1.55 1.63 Loss provisions .68 .78 1.27 .54 .93 .93 Other noninterest expense 3.17 3.22 3.30 3.33 3.37 3.45 Securities gains .06 .14 .05 .01 .02 .02 Income before tax .90 .80 .29 1.14 .80 .70 Taxes .21 .19 .18 .33 .31 .23 Extraordinary items .01 .01 .01 .03 .01 .02 Net income .70 .62 .11 .84 .51 .50 Cash dividends declared .33 .33 .36 .44 .44 .42 Net retained earnings .37 .29 -.24 .40 .07 .08 MEMO Net interest margin, taxable equivalent1 3.88 3.79 3.61 3.78 3.70 3.59 1. For each bank with profits before tax greater than zero, income obligations, where t is the marginal federal income-tax rate. This from tax-exempt state and local obligations was increased by [f/( 1 - /)] adjustment approximates the equivalent pretax return on tax-exempt times the lesser of profits before tax or interest earned on tax-exempt obligations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

508 Federal Reserve Bulletin • July 1991 the declining role of thrift institutions in provid- standards by banks. Large majorities of responing residential mortgages, and the relatively dents to LPSs conducted last year reported lower risk weight assigned to qualifying residen- using tougher loan approval standards, likely tial mortgages under newly imposed risk-based resulting from accumulating evidence of overcapital guidelines. building and mounting loan quality problems in The shrinkage of the thrift industry enabled real estate markets, as well as closer regulatory banks to continue expanding their role in the scrutiny. In addition, write-offs of nonperformprimary mortgage market. Nonetheless, the ing loans and foreclosures, concentrated in the growth rate of residential mortgages, excluding Northeast, reduced loans on bank balance home equity loans, slowed last year because of sheets. the recession-dampened level of housing demand, the selling of mortgages in the mortgage- Commercial and Industrial Loans. After modbacked securities market, and to a lesser extent, erate growth in 1989, C&I loans edged down at more restrictive policies toward mortgage lend- commercial banks in 1990, mainly because of a ing. A number of banks that responded to the dip in such loans made to domestic addressees August and October 1990 Lending Practices Sur- (table 1). The decline in economic activity held veys (LPSs) indicated that they had adopted down the demand for loans to finance both tougher down payment and payments-to-income working capital and business investment and requirements for approving residential mort- reduced the demand for merger-related financgages. ing. The growth of business loans has also been During the past two years, the growth of home depressed by banks' tightening of credit terms equity loans has moderated from the rapid pace and standards. Large proportions of banks rethat followed the passage of the Tax Reform Act sponding to LPSs throughout 1990 indicated of 1986, which had phased out the interest de- that they had charged somewhat higher rates ductibility of most nonmortgage household debt. for C&I loans relative to their funding costs This deceleration likely reflects the reduction and, on loans to small and medium firms, had over time in the number of eligible households tightened nonprice terms of credit such as colwithout home equity lines as well as the effect of lateral requirements and loan covenants. In the economic slowdown on the loan demand of surveys conducted in the gloomy and uncertain those with these lines. More recently, supply environment following Iraq's invasion of Kufactors also may have played a role. Responses wait, sizable proportions of reporting banks to LPSs over 1990 suggested that banks had indicated that they had tightened credit terms adopted somewhat more cautious attitudes and standards on C&I loans to larger firms as toward making home equity loans. According to well. A deterioration in the economic outlook the February 1990 LPS, banks reduced the size was the most frequently cited and highly ranked of such lines and the attractiveness of teaser reason for these loan policy changes, followed rates offered on these loans. by problems specific to the industries of the borrowers. The overbuilding in the market for nonresidential commercial structures helped further slow The continued deceleration in merger-related the expansion of longer-term bank credit in that lending and merger-related activity last year was market in 1990. A large majority of respondents in part a result of a more cautious approach to to LPSs indicated that they had tightened their providing such financing. Very large proportions credit standards for approving commercial real of respondents to an early-1990 LPS reported estate loans in each quarter of 1990, although the that they had raised their credit standards on share of respondents indicating further tightening merger-related loans. The performance of mergebbed somewhat near year-end. er-related loans also deteriorated last year: The percentage of LPS respondents indicating that Real estate loans for construction and land they had charged off merger-related loans was development fell about IVi percent last year. larger during 1990 than during 1989. In addition, This decline reflected, in part, weakening loan most of the respondents who cited charge-offs of demand and the adoption of tougher credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 509 these loans reported an increase in merger-re- yields on MBSs are higher than those on compalated charge-offs from 1989 to 1990. rable-maturity U.S. Treasury issues and because risk-based capital guidelines require less capital Consumer Loans. The growth of consumer to be maintained for government-guaranteed loans held by banks was depressed by the secu- MBSs than for most other items on a bank's ritization of $22 billion of consumer receivables balance sheet. To some extent, increased holdlast year—mostly credit card debt. The rapid ings of MBSs and of one- to four-family mortpace of securitizations, up substantially from an gages reflect the expansion of banks' role in already elevated rate in 1989, was primarily mortgage markets as the thrift industry conmotivated by banks' needs to comply with the tracts. new risk-based capital standards, which began to By contrast, bank holdings of state and local take effect at year-end 1990. By reducing loans government securities continued to decline, as held on balance sheets, securitization lowers the they have since one of the tax advantages of amount of capital that banks are required to hold holding such securities was eliminated by the while enabling them to continue earning fee passage of the Tax Reform Act of 1986. Runoffs income from originating and servicing the secu- of tax-exempt securities in 1990 were more proritized loans. Also, the uncertainty surrounding nounced at those banks that posted large losses developments in the Middle East and fears en- and were therefore not in need of sheltering gendered by the recession may have sapped income from taxation. The less-favorable treatcredit demand. Supply factors, too, may have ment of municipal securities relative to that of restrained the growth of consumer loans, as the U.S. Treasury securities under risk-based capital number of banks reporting an increased willing- guidelines may also have contributed to the reness to lend steadily declined in 1990. cent declines in holdings of these securities. In addition, the emergence last year of widespread Loans to Foreign Addressees. The sum of fiscal problems in many state and local governloans to foreign governments and C&I loans to ments likely reduced the attractiveness of purforeign addressees, which includes many loans chasing their securities. made to developing countries, contracted again last year. As part of their retrenchment in inter- Liabilities national lending, large banks, which account for almost all holdings of these loans, continued to Deposits at commercial banks grew 4 percent in restructure and reduce their exposure to heavily 1990 on a year-end basis, a pace comparable to indebted developing countries. Loans to foreign that of the past two years. However, the proporgovernments posted another large decline, and tion of bank liabilities represented by demand business loans to foreigners continued to edge deposits fell in 1990, as businesses likely contindown. ued their shift away from compensating balances and toward fees to pay for bank services. Securities. Despite the deceleration in the Retail time and savings deposits, on the other growth of assets overall, security holdings grew hand, continued to become a larger source of 83/4 percent in 1990, an acceleration reflecting the funding, partly because depositors transferred or sharp slowing in the growth of bank loans and the diverted funds from savings and loan institutions more favorable treatment of U.S. government and partly because banks acquired thrift institusecurities relative to loans under the risk-based tions. The strength in retail accounts was concapital regulations. The surge in holdings of U.S. centrated in small-denomination time deposits, a government securities more than outweighed traditional source of funding for thrift institucontinued runoffs in other securities, mainly mu- tions. These inflows helped reduce the need for nicipal government securities. As in 1989, banks banks to issue more-costly managed liabilities to acquired more government-guaranteed mort- fund their moderate growth in assets. In addition, gage-backed securities (MBSs). In general, the shift away from managed liabilities was also banks find these securities attractive because the induced by increases late last year in the interest Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

510 Federal Reserve Bulletin • July 1991 3. Profit rates, insured commercial banks, by asset size, 1985-90 Percent Type of return and size of bank 1985 > 1986 1987 1988 1989 1990 Return on assets1 AH banks .70 .62 .11 .84 .51 .50 Less than $300 million .74 .58 .63 .74 .88 .80 $300 million to $5 billion .83 .76 .58 .76 .74 .54 $5 billion or more Money center banks .45 .46 -.86 1.06 -.30 .37 Other .74 .68 -.02 .82 .58 .35 Return on equity2 All banks 11.18 9.97 1.80 13.52 7.94 7.77 Less than $300 million 9.19 7.21 7.76 8.89 10.32 9.31 $300 million to $5 billion 12.83 11.52 8.79 11.39 10.93 7.68 $5 billion or more Money center banks 9.60 9.50 -19.46 23.40 -6.17 8.37 Other 13.56 12.18 -.28 15.16 10.34 6.14 1. Net income as a percent of average fully consolidated assets net 2. Net income as a percent of average equity capital, of loss reserves. costs of large time and Eurodollar deposits rela- TRENDS IN PROFITABILITY tive to other interest and deposit rates. The higher costs reflected larger risk premiums de- While small banks continued to post healthy manded by investors in bank liabilities not fully profits in 1990, larger banks reported weak earncovered by deposit insurance. ings (table 3). Most of this difference reflects Growth in the more liquid retail bank deposits, substantial additions to loss provisions by mesuch as money market deposit accounts dium and large banks for commercial real estate (MMDAs), other checkable deposits, and sav- and domestic business loans (table 4). During the ings deposits, strengthened considerably last late 1980s, loss provisioning against loans to year. This pickup primarily reflected the fact that developing countries, which lowered income atrates on liquid retail deposits reacted more tributable to foreign operations, had accounted slowly to declines in short-term market rates for most of the variation both in industry-wide than did yields on small time deposits. profits across time and in profits across the 4. Loan losses and recoveries, insured commercial banks, by asset size, 1988-90 Millions of dollars, except as noted Net charge-offs YYeeaarr aanndd ssiizzee ooff bbaannkk LLoosssseess cchhaarrggeedd RReeccoovveerriieess LLoossss pprroovviissiioonnss Amount Percent of loans 1990 All banks 32,152 4,078 28,074 1.37 30,2% Less than $300 million 3,1% 698 2,498 .68 3,138 $300 million to $5 billion 7,346 1,046 6,299 1.12 9,485 $5 billion or more Money center banks 9,610 905 8,705 2.10 5,197 Other 12,000 1,429 10,571 1.52 12,476 1989 All banks 25,240 3,870 21,370 1.10 28,702 Less than $300 million 3,213 735 2,478 0.68 2,947 $300 million to $5 billion 5,791 959 4,831 0.88 6,153 $5 billion or more Money center banks 6,719 960 5,758 1.47 9,638 Other 9,516 1,215 8,302 1.31 9,%3 1988 All banks 21,742 4,024 17,718 .97 15,825 Less than $300 million 3,545 779 2,766 .78 3,280 $300 million to $5 billion 5,260 898 4,362 .85 4,864 $5 billion or more Money center banks 4,589 1,107 3,482 .90 2,324 Others 8,348 1,240 7,108 1.25 5,358 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 511 3. Total net income and domestic net income, 4. Domestic net income for commercial real estate as a percent of assets1 banks and others, as a percent of assets1 Percent Percent Other banks .8 .8 Total net income ,\ ^^ \ .6 X Domestic net income \ \ All banks / \ .4 """""Real estate banks .2 .2 1 1 1 1 1 1 1 1 1 i 1 1 1 1 1 1 1984 1986 1988 1990 1984 1986 1988 1990 1. Domestic income excludes income attributable to foreign opera- 1. A commercial real estate bank holds commercial mortgages and tions. loans for land development and construction that equal at least one-eighth of its total assets; about one-fourth of U.S. banks are in this category. different size categories of banks. Indeed, for several years up to 1990, the return on assets for all banks, excluding net income attributable to tic activities declined from 0.60 percent of assets foreign operations, had moved in a narrow range in 1989 to 0.28 percent in 1990. This decline was (chart 3). Last year, however, net income attrib- greater than at other banks, where domestic utable to domestic operations fell, accounting for income fell from 0.75 percent of assets in 1989 to the weakness in bank profits. 0.53 percent in 1990 (chart 4). The 47 percent increase in loss provisions for As a result of much-reduced provisioning for domestic loans in 1990 more than accounted for losses against loans to developing countries last the 5V2 percent increase in total provisions. By year, net income attributable to foreign operacontrast, loss provisions attributable to foreign tions swung from a large loss in 1989 to a operations fell 84 percent last year, following an moderate gain last year. This turnaround aided increase of 350 percent in 1989. Most of the the partial recovery in the profitability of money decline in domestic earnings was likely attribut- center banks, which hold the bulk of U.S. bank able to the deterioration in the performance of loans to developing countries. commercial real estate loans. For about one- The regional pattern of loss provisioning in 1990 fourth of all U.S. banks, commercial mortgages is reflected in the profitability of banks grouped by plus construction and land development loans at Federal Reserve District (chart 5). In general, the each of them amounted to at least one-eighth of return on assets fell in most of the eastern Distheir total assets. At these "commercial real tricts because of large provisions made against estate banks," net income attributable to domes- commercial real estate loans. The one exception 5. Net income as a percent of assets, by Federal Reserve District Percent Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

512 Federal Reserve Bulletin • July 1991 was the New York District, where the slight 6. Loan losses and delinquencies at medium recovery in profitability mainly reflected reduced and large banks, by type of loan1 provisioning against foreign loans by the money Percent Percent center banks. Profitability fell sharply in the Rich- Commercial and industrial mond District, while losses mounted in the Boston District. On the brighter side, the declining (albeit still large) backlog of troubled loans in the Dallas District allowed additions to loss provisions to diminish for the second straight year, and the return on assets of banks in the District rose markedly during 1990. For the banking system as a whole, the net rate of loss (charge-off rate) on all loans rose from 1.09 percent in 1989 to 1.37 percent last year. Detailed data on charge-oflfs net of recoveries by type of loan are available for banks with assets of more than $300 million or with foreign offices Consumer (table 5). At this large subset of the banking 2.0— industry, which accounts for nearly 80 percent of 1.5 — bank assets, the net charge-off rate on all loans rose from 1.21 percent in 1989 to 1.58 percent last 1.0 year, paced by steep increases in charge-oflfs against real estate, consumer, and domestic bus- 1. Percentages are annual rates of average amount outstanding, iness loans. On a seasonally adjusted basis, the seasonally adjusted. Losses are net of recoveries; delinquent loans are charge-oflf and delinquency rates on these loans those in nonaccrual status plus those accruing interest and at least thirty days past due. generally rose throughout last year (chart 6). employment from year-end 1989 to year-end 1990. Noninterest Income and Expense Nevertheless, salaries and employee benefits and Gains on Securities grew somewhat faster than total industry assets last year, in part because the growth of assets Noninterest income in 1990 increased about as slowed. Noninterest income was supported by much as noninterest expense (excluding loss moderate increases in fees received for deposit provisions), leaving the negative spread be- services and additional fees for servicing newly tween these two components unchanged. On issued securities backed by consumer loans. the expense side, cost-cutting efforts and bank However, to some extent, increases in nonintermergers contributed to a 1 percent decline in bank est income were restrained by the slowdown in 5. Net loan losses, by type of loan, medium and large insured commercial banks, 1985-90 Percent of average total loans Item 1985 1986 1987 1988 1989 1990 Total loans .75 .89 .91 1.03 1.21 1.58 Commercial and industrial 1.02 1.14 .96 .95 .93 1.31 U.S. addressees .94 1.10 .86 .82 .78 1.20 Foreign addressees 1.25 1.29 1.35 1.55 1.70 1.89 Consumer 1.24 1.58 1.58 1.52 1.63 1.86 Credit-card 2.57 3.28 3.26 3.08 3.05 3.29 .63 .75 .74 .73 .90 1.09 Real estate .22 .38 .47 .42 .52 .92 Foreign government .84 .47 2.58 9.35 17.01 21.05 Depository institutions .15 .36 .56 .98 1.35 2.43 u.s .12 .33 .11 .15 .19 .08 Foreign .15 .36 .96 1.83 2.52 5.41 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 513 merger-related lending, which generates fee in- in 1990. The interest costs of managed liabilities, come. such as large time deposits and foreign deposits With long-term interest rates relatively stable (for example, Eurodollar deposits), typically are in recent years, capital gains on the sale of more responsive to changes in market rates than investment-account securities continued to be are yields on retail deposits; hence, the drop in low relative to the high levels that were seen in interest expense was larger at money center the mid-1980s. banks, which rely on managed liabilities for funding more than other banks do (chart 7, middle Net Interest Margins panel). But the drop in interest income, which overall was sharper than the fall in interest expense The net interest margin of the banking industry (about lA percentage point), was also deeper at fell in 1990, with sharp drops at money center money center banks (chart 7, bottom panel) and banks and small changes at other banks (chart other large banks largely because of increases in 7, top panel). Rates on sources of funds fol- nonperforming loans (table 6). This negative effect lowed market rates downward last year and, of worsening loan quality was softened, however, somewhat more sluggishly, so did rates on by the lag in the adjustment of loan rates to the interest-earning assets, but increases in nonper- decline in short-term market rates. forming loans caused the narrowing of the interest margin. Dividends and Retained Earnings In the second half of 1990 (and into 1991), short-term interest rates declined substantially as Despite low levels of profitability, commercial the Federal Reserve took steps to cushion the banks paid dividends of 0.42 percent of assets in emerging economic slowdown. Interest expense 1990, near the record rates posted in 1988 and as a proportion of assets, moving in line with 1989. Cuts in dividends, along with reduced short-term rates, dipped about lA percentage point provisioning for loans to developing countries, enabled money center banks to bolster their 7. Interest expense and income, as a percent capital positions with retained earnings. But divof assets, and interest rates1 idends as a share of profits surged at medium and Percent large non-money-center banks, which maintained dividend payouts in the face of a substantial decline in profitability. As a result, medium banks retained virtually no earnings, and large banks other than money center banks dipped into capital to pay dividends. By contrast, small institutions continued paying out about two-thirds Interest expense and short-term interest rates of profits in dividends, and their retained earn- — Interest expense 15 ings as a share of assets stayed at levels near the (money center banks) Interest expense (all banks) average of the past five years. 10 Stock price indexes for money center and regional banks generally fell faster than the broad market through October (chart 8), likely reflecting the growing perception that the performance of merger-related and real estate loans was deterio- Primary conventional Interest income Interest income (all banks) (money center banks) rating. Such problems particularly affected stock I prices of several New England bank holding companies, while concerns over economic problems in several heavily indebted developing countries depressed the stock prices of vulnerable money center banks. In the fourth quarter, however, a 1. Net interest margin is the difference between interest income and reduction in reserve requirements and other Fedinterest expense; see text discussion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

514 Federal Reserve Bulletin • July 1991 8. Stock price indexes retained earnings remained at healthy levels. Index, January 10, 1990 =7oQ Large banks as a group raised only a bit more equity capital last year than in 1989, partly because their dividend payouts in 1990 exceeded earnings. Issuance of subordinated debt weakened last year as its cost rose sharply against a backdrop of market concerns about the health of large banks (chart 9). Nevertheless, the ratio of total capital to risk-adjusted assets actually rose for the industry as a whole between the first and fourth quarters of last year. The industry owed much of this increase to successful efforts by eral Reserve actions to foster an economic recov- some large, less-well-capitalized banks to meet ery created a market climate in which bank stock or exceed the initial phase-in of risk-based capital price indexes recovered some of these losses. standards at the end of 1990 by securitizing loans, shifting the composition of their portfolios toward assets with lower risk weights, and paring down low-earning assets. CAPITAL By year-end 1992, banks must meet three basic As a whole, the banking industry added more required capital ratios. First, tier 1 capital— equity last year than it did in 1989, despite the mainly common equity and perpetual preferred very low level of retained earnings and increased stock—must amount to at least 4 percent of costs of issuing new bank equity and subordi- risk-weighted assets. Second, tier 1 capital must nated debt (table 7). Most of the net changes in equal at least 3 percent of unweighted assets. equity capital occurred at smaller banks, where Third, total capital—tier 1 plus tier 2—must 6. Nonperforming assets, insured commercial banks, by asset size, 1988-90 Percent of total loans outstanding, except as noted Nonaccrual loans Selected components1 TTTToooottttaaaallll nnnnoooonnnnaaaaccccccccrrrruuuuaaaallll llllooooaaaannnnssss pppplllluuuussss ooootttthhhheeeerrrr YYYYeeeeaaaarrrr aaaannnndddd ssssiiiizzzzeeee ooooffff bbbbaaaannnnkkkk PPPPaaaasssstttt dddduuuueeee rrrreeeeaaaallll eeeessssttttaaaatttteeee TTToootttaaalll Commercial and industrial oooowwwwnnnneeeedddd2222 RReeaall eessttaattee Foreign Domestic 1990 All banks 2.77 3.21 3.54 6.14 3.37 4.19 Less than $300 million 2.97 1.38 0.06 .00 .16 2.48 $300 million to $5 billion 2.96 2.24 2.98 4.02 3.01 3.27 $5 billion or more Money center banks 2.12 5.93 6.54 6.94 4.79 6.85 Other 2.89 3.38 5.33 2.83 3.63 4.31 1989 All banks 2.31 2.46 2.33 n.a. n.a. 3.06 Less than $300 million 2.77 1.32 1.23 n.a. n.a. 2.39 $300 million to $5 billion 2.39 1.53 2.12 4.51 1.81 2.12 $5 billion or more Money center banks 1.61 5.29 3.08 8.12 3.30 5.71 Other 2.40 2.19 3.16 3.97 1.93 2.63 1988 All banks 2.09 2.37 1.72 n.a. n.a. 2.87 Less than $300 million 2.62 1.33 1.25 n.a. n.a. 2.39 $300 million to $5 billion 2.11 1.25 1.62 7.14 1.52 1.75 $5 billion or more Money center banks 1.59 5.56 2.25 10.06 3.34 5.90 Other 2.08 1.95 1.98 6.47 1.47 2.24 1. As a percent of total loans in that category. n.a. Not available. 2. As a percent of total loans outstanding plus other real estate owned. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 515 7. Retained income and change in total equity capital, insured commercial banks, 1985-90 Millions of dollars except as noted Item 1985 1986 1987 1988 1989 1990 Retained income1 All banks 9,348 8,069 -7,324 11,691 2,065 2,530 Large banks 4,177 4,121 -10,142 7,567 -2,565 -609 Net change in equity capital All banks 15,399 16,103 2,226 19,340 11,322 16,405 Large banks 55,,555599 77,,444466 --55,,555544 1100,,991144 22,,663388 55,,661100 Percent of change in equity capital from retained income^ All banks 61 50 60 18 15 Large banks 75 55 69 1. Net income less cash dividends declared on stock. 2. Retained income divided by the net change in equity capital. equal at least 8 percent of risk-weighted assets. Currently, the vast majority of banks meet the The corresponding interim ratios (1991-92) are interim standards, and partly in response to 3.625 percent, 3 percent, and 7.25 percent. Tier 2 market pressures, many already meet the final capital includes other types of preferred stock, 1992 capital standards. Across banks of different subordinated debt, loan loss reserves (up to 1.25 size categories, the ratio of total capital to riskpercent of risk-based capital), and mandatory weighted assets was somewhat lower for large convertible debt. In the calculation of the risk- banks. Moreover, the ratio of tier 1 capital to based capital ratio, a weight of 0 percent is risk-adjusted assets was much lower at large applied to U.S. Treasury securities, mortgages banks, mainly because of the greater reliance by backed by the Federal Housing and Veterans these banks on subordinated debt (chart 10). administrations, and MBSs guaranteed by the In general, asset growth was faster at banks Government National Mortgage Association that began 1990 with high ratios of equity cap- (GNMA). The risk weights are 20 percent for ital to assets. For example, interest-earning most other MBSs and federal agency securities, assets expanded 714 percent at large banks 50 percent for qualifying one- to four-family (those with at least $5 billion in assets) whose conventional mortgages, and 100 percent for ratios of equity capital to assets were in the most other loans, including C&I, consumer, and highest quartile, but such assets declined at a commercial real estate. To varying degrees, capital also must be maintained on most off-balancesheet exposures to risk. 10. Ratios of tier 1 and tier 2 capital to risk-adjusted assets, by size of bank, 1990:4* 9. Spread of rates for debentures of commercial banks over rates for Treasury securities1 Basis points 600 Five money center banks I 450 \ 300 ^AA^vw-^-^-Orkyv-^^ —1 50 i/^Xpsf*-^*^1^ Four regional banks 1 1 1 1 1988 1989 1990 1991 All Small Medium Large, Large, 1. Rates for the banks are the mean of the quarterly average rates for other money center the banks selected. Yields on Treasury securities and debentures are based on actively traded issues adjusted to a ten-year constant 1. See text discussion for definitions of capital tiers and risk maturity. adjustments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

516 Federal Reserve Bulletin • July 1991 similar pace at large banks in the lowest quar- First-quarter profit results were mixed. The tile. Interest-bearing assets at smaller banks profitability of several large banks was dewith capital to asset ratios in the highest quar- pressed, mainly by mounting real estate loss tile grew nearly 11 percent last year but ex- provisions and declining performance of loans to panded only 31/2 percent at smaller banks with highly leveraged firms. Weak earnings and a need ratios in the lowest quartile. to preserve capital led several large banks to cut their dividend payments late last year and in early 1991. On the brighter side, the weakness in DEVELOPMENTS IN EARLY 1991 earnings of regional and money center banks did not hamper a rally in their equity prices, which Loan quality has continued to trouble the com- rose sharply during the first quarter to outpermercial banking industry into 1991. The deteri- form broader stock price indexes. A more favororation in the performance of real estate loans, able market assessment of the banking industry mainly commercial mortgages, has spread from spurred banks to issue large volumes of subordithe Northeast down the eastern seaboard, re- nated debt and equity shortly after the Gulf war. quiring additions to loss provisions. Moreover, Indeed, banks issued more subordinated debt signs of further weakening in the performance and equity in the first quarter of 1991 than during of merger-related lending have become more all of 1990. visible. After suffering large loan losses, partic- Survey responses to the May 1991 LPS indiularly on commercial mortgages, the Bank of cated that banks continued to tighten their credit New England failed in January. In the face of standards for riskier types of loans in early 1991, mounting estimates of the costs of bank fail- but to a much lesser extent than before the conures, the Federal Deposit Insurance Corpora- clusion of the Gulf war. On the liability side of tion has raised deposit insurance premiums and their balance sheets, deposit outflows from the has asked the Congress for additional borrow- thrift industry and acquisitions of thrift instituing authority to close capital-deficient banks tions have enabled banks to continue substituting more quickly, thereby holding down the costs retail deposits for more expensive, managed liaof resolutions. bilities in an environment of slow asset expansion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 517 A.l. Report of income, all insured commercial banks, 1985-90 Millions of dollars Item 1985 1986 1987 1988 1989 1990 Operating income, total 275,741 269,152 281,218 308)580 357,033 365,702 Interest, total 245,152 233,961 240,548 264,999 308,691 312,382 Loans 181,368 172,712 177,217 196,119 231,711 232,629 Balances with banks 13,660 11,139 11,874 13,198 14,750 12,3% Gross federal funds sold and reverse repurchase agreements 9,404 8,918 8,810 10,025 12,585 12,183 Securities (excluding trading accounts) 37,387 37,860 38,698 40,738 45,219 49,809 Tax-exempt 8,752 10,594 9,085 8,014 7,186 6,253 Taxable 28,635 27,266 29,613 32,724 38,033 43,556 Trading account assets 3,333 3,332 3,948 4,918 4,427 5,364 Service charges on deposits 7,333 7,908 8,659 9,323 10,151 11,348 23,257 27,282 32,012 34,258 38,192 41,972 Other operating income 254,184 250,821 274,060 275,050 332,889 343,202 Operating expense, total 155,549 140,762 142,379 160,455 199,342 200,161 Interest, total 129,439 115,898 113,687 125,961 153,466 158,148 Deposits 22,705 19,281 18,935 21,907 28,739 26,660 Large certificates of deposit 30,117 24,440 25,946 28,248 33,436 34,031 Deposits in foreign offices 76,618 72,177 68,806 75,806 91,290 97,457 Other deposits Gross federal funds purchased and 16,432 15,745 15,472 18,146 24,007 21,953 repurchase agreements 9,677 9,119 13,220 16,347 21,869 20,060 Other borrowed money Salaries, wages, and employee benefits.. 39,467 42,262 44,463 45,595 48,129 50,827 Occupancy expense 13,137 14,291 15,041 15,4% 16,249 17,159 Loss provisions 17,504 21,538 36,534 15,990 28,806 30,2% Other operating expenses 28,527 31,968 35,643 37,515 40,363 44,760 Securities gains 1,506 3,785 1,397 285 774 513 Income before tax 23,063 22,115 8,555 33,815 24,918 23,013 Taxes 5,499 5,184 5,267 9,871 9,504 7,507 Extraordinary items 237 271 162 833 315 668 Net income 17,802 17,202 3,450 24,777 15,730 16,175 Cash dividends 8,455 9,133 10,505 13,086 13,665 13,644 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

518 Federal Reserve Bulletin • July 1991 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, by size, 1985-901 A. All banks Item 1985 1986 1987 1988 1989 1990 Balance sheet items as a percent of average consolidated assets including loss reserves Interest-earning assets 86.05 86.02 86.62 87.94 87.84 87.72 Loans 58.51 57.86 58.36 60.59 61.30 61.16 Commercial and industrial 22.26 20.% 20.04 19.55 19.20 18.59 U.S. addressees 17.50 16.93 16.60 16.55 16.60 16.07 Foreign addressees 4.76 4.03 3.44 3.00 2.60 2.53 Real estate 15.71 16.71 18.69 20.56 22.18 23.51 Construction 3.20 3.49 3.87 4.01 4.14 3.97 Farmland .41 .43 .46 .49 .51 .51 One- to four-family 7.20 7.31 8.00 9.03 9.94 10.95 Home equity .97 1.13 1.41 1.64 Other 7.74 7.90 8.53 9.30 Multifamily residential .44 .49 .56 .58 .59 .61 Nonfarm residential 4.00 4.43 5.21 5.77 6.29 6.72 Consumer 10.80 11.06 11.10 11.31 11.40 11.23 Credit card 2.48 2.75 2.97 3.13 3.26 3.31 Installment and other 8.32 8.31 8.13 8.18 8.14 7.92 Foreign government 1.56 1.43 1.34 1.23 1.03 .79 Agricultural production 1.51 1.22 1.03 .99 .96 .96 Security .83 .79 .63 .53 .54 .48 Other 7.19 7.27 6.92 6.42 5.97 5.61 Securities 17.58 18.29 18.58 16.84 16.74 17.25 U.S. government 9.50 9.26 10.03 10.35 10.78 11.85 U.S. Treasury 4.40 4.29 5.58 5.47 4.75 4.34 Government-backed mortgage pools .96 1.16 2.08 2.59 3.27 4.07 Other 4.05 3.80 2.38 2.29 2.75 2.10 State and local government 6.99 7.49 6.25 3.69 3.14 2.65 Taxable .06 .06 .08 .08 Tax-exempt 3.35 3.63 3.06 2.57 Other bonds and stocks 1.08 1.55 2.29 2.80 2.82 2.50 Trading account assets 1.24 1.55 1.32 1.26 1.25 1.44 Gross federal funds sold and reverse repurchase agreements 4.43 4.72 4.43 4.26 4.20 4.33 Interest-bearing deposits 5.53 5.15 5.26 4.99 4.36 3.54 Other assets 12.62 12.10 11.20 10.52 10.66 10.73 Deposit liabilities 77.30 76.72 76.43 76.22 76.01 76.20 In foreign offices 12.61 11.61 11.38 10.85 10.05 9.55 In domestic offices 64.69 65.11 65.06 65.37 65.96 66.65 Demand deposits 15.63 16.03 15.41 14.34 13.63 12.98 Other checkable deposits 4.57 5.21 6.01 6.27 6.16 6.22 Other core deposits MMDAs 11.72 12.64 12.32 11.44 10.55 10.81 Other savings 4.64 4.79 5.76 6.08 5.81 5.75 Small time 16.67 15.68 14.95 16.16 18.15 19.71 Large time deposits 11.46 10.76 10.60 11.08 11.66 11.18 Gross federal funds purchased and repurchase agreements 7.68 8.25 8.06 7.72 7.95 7.75 Other liabilities for borrowed money.... 3.44 4.02 4.45 4.93 4.87 4.85 Other borrowings 5.70 5.17 4.90 3.49 3.39 3.39 MEMO Money market liabilities 35.19 34.63 34.49 34.58 34.53 33.26 Loss reserves .80 .92 1.36 1.54 1.50 1.55 Total equity capital 6.17 6.21 6.06 6.10 6.27 6.26 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 519 A.2.—Continued A. All banks—Continued 11 Item 1985 1986 1987 1988 1989 1990 L- Effective interest rate (percent) Rates earned Securities 9.27 8.34 7.89 8.06 8.58 8.66 State and local government. 7.42 7.20 7.28 7.38 7.46 7.37 Loans, gross 12.07 10.84 10.44 10.80 11.97 11.41 Net of loss provisions 10.87 9.46 8.24 9.92 10.48 9.92 Taxable equivalent Securities and gross loans.. 11.93 10.77 10.12 10.31 11.48 10.46 Securities 11.45 10.52 9.11 8.06 9.32 9.28 Rates paid Interest-bearing deposits 8.20 6.98 5.82 6.81 7.84 7.54 Large certificates of deposit.. 8.72 7.31 6.86 7.39 8.63 7.98 In foreign offices 9.48 7.78 7.90 8.92 10.89 10.71 Other deposits 7.66 6.67 5.10 5.34 6.93 6.74 Other checkable deposits .. 4.81 4.77 MMDAs ::: 6.51 6.21 Other savings 5.49 5.47 Other time 8.25 7.93 All interest-bearing liabilities ... 8.29 7.01 6.11 7.26 8.52 7.87 Income and expenses as a percent of average net consolidated assets Gross interest income 9.58 8.50 8.34 8.95 9.92 9.57 Gross interest expense 6.08 5.11 4.95 5.42 6.41 6.13 Net interest margin 3.50 3.39 3.40 3.53 3.51 3.44 Taxable equivalent 3.88 3.79 3.61 3.78 3.70 3.59 Noninterest income 1.20 1.28 1.41 1.47 1.55 1.63 Loss provisions .68 .78 1.27 .54 .93 .93 Other noninterest expense 3.17 3.22 3.30 3.33 3.37 3.45 Securities gains .06 .14 .05 .01 .02 .02 Income before tax .90 .80 .29 1.14 .80 .70 Taxes .21 .19 .18 .33 .31 .23 Extraordinary items .01 .01 .01 .03 .01 .02 Net income .70 .62 .11 .84 .51 .50 Cash dividends declared .33 .33 .36 .44 .44 .42 Net retained income .37 .29 -.25 .40 .07 .08 MEMO Average assets (billions of dollars) 2,559 2,753 2,883 2,959 3,112 3,264 Number of banks 13,898 13,733 13,273 12,691 12,323 11,992 1. See text note 1 and notes to tables in the text. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

520 Federal Reserve Bulletin • July 1991 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, by size, 1985-90—Continued B. Banks with less than $300 million in assets Item 1985 1986 1987 1988 1989 1990 Balance sheet items as a percent of average consolidated assets including loss reserves Interest-earning assets 90.86 90.77 91.10 90.83 90.97 91.17 Loans 54.22 52.84 52.% 54.32 55.11 55.00 Commercial and industrial 15.00 14.01 13.23 12.74 12.45 11.78 U.S. addressees 14.% 13.99 13.21 12.72 12.24 11.75 Foreign addressees .04 .02 .02 .02 .03 .03 Real estate 20.69 21.75 23.78 25.69 27.02 28.00 Construction 2.22 2.22 2.22 2.19 2.27 2.37 Farmland 1.27 1.38 1.55 1.73 1.81 1.87 One- to four-family 11.20 11.48 12.55 13.89 14.59 15.12 Home equity .64 .72 .95 1.14 Other 12.% 13.16 13.64 13.99 Multifamily residential .49 .53 .59 .60 .61 .63 Nonfarm residential 5.70 6.14 6.87 7.29 7.74 8.00 Consumer 12.78 12.15 11.51 11.28 11.22 10.92 Credit card .48 .53 .66 .74 .82 .91 Installment and other 12.29 11.62 10.85 10.53 10.40 10.00 Foreign government .02 .02 .01 .01 .01 .01 Agricultural production 4.27 3.62 3.23 3.24 3.28 3.35 Security .08 .07 .06 .06 .05 .04 Other 1.37 1.48 1.47 1.30 1.08 .89 Securities 28.23 27.89 28.44 28.07 27.79 28.29 U.S. government 18. . 3 9 . . 17.73 18.70 19.64 20.13 21.22 U.S. Treasury 9.11 9.77 8.79 8.73 Government-backed mortgage pools.... 1.52 1.40 2.58 3.25 3.76 4.61 Other 7.01 6.61 7.59 6.92 State and local government 9.16 9.10 7.65 5.72 4.99 4.58 Taxable .17 .20 .22 .24 Tax-exempt 5.08 5.52 4.77 4.34 Other bonds and stocks .68 1.06 2.09 2.71 2.67 2.15 Trading account assets .03 .06 .07 .05 .07 .06 Gross federal funds sold and reverse repurchase agreements 5.55 7.01 6.45 5.29 5.66 66..0033 Interest-bearing deposits 2.86 3.03 3.25 3.10 2.35 1.80 Other assets 9.47 9.23 8.66 8.31 8.17 7.% Deposit liabilities 87.81 88.14 88.11 87.% 87.71 87.75 Demand deposits 15.39 15.03 14.41 13.74 13.20 12.49 Other checkable deposits 8.03 9.00 10.30 10.68 10.47 10.52 Other core deposits MMDAs 13.99 14.94 14.77 13.21 11.34 1100..6677 Other savings 7.07 7.25 8.41 8.73 8.20 7.90 Small time 31.61 30.46 29.25 30.67 33.22 34.99 Large time deposits 11.61 11.40 10.95 10.89 11.20 11.11 Gross federal funds purchased and repurchase agreements 1.59 1.36 1.34 1.32 1.32 11..3333 Other liabilities for borrowed money .49 .50 .53 .55 .57 .56 Other borrowings 1.73 1.54 1.38 1.05 1.14 1.05 MEMO Money market liabilities 13.79 13.32 12.85 12.80 13.16 13.00 .68 .77 .84 .85 .86 .87 Total equity capital 8.04 8.01 8.09 8.26 8.40 8.45 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 521 A.2.—Continued B. Banks with less than $300 million in assets—Continued Item 1985 1986 1987 1988 1989 1990 Effective interest rate (percent) Rates earned Securities 9.61 8.69 7.88 7.91 8.37 8.45 State and local government 7.65 7.55 7.53 7.58 7.59 7.48 12.50 11.52 10.84 10.% 11.70 11.52 Net of loss provisions 1111..0011 99..8855 99..6633 1100..0044 1100..8899 1100..6677 Taxable equivalent Securities and gross loans 12.11 11.13 10.27 9.98 10.91 10.07 Securities 11.36 10.40 9.24 7.91 9.19 9.17 Rates paid Interest-bearing deposits 7.92 6.91 5.47 6.34 7.07 6.94 Large certificates of deposit 8.67 7.31 6.54 7.09 8.35 7.89 Other deposits 7.79 6.84 5.31 . 5 . . 4 6 . 6.85 6.78 NOW 5.07 5.01 MMDAs . . . 6.11 5.99 Other savings ... ... 5.36 5.37 Other time . . . 8.00 7.85 All interest-bearing liabilities 7.92 6.91 5.50 6.36 7.11 6.95 Income and expenses as a percent of average net consolidated assets Gross interest income 10.17 9.18 8.63 8.91 9.60 9.51 Gross interest expense 5.98 5.20 4.67 4.89 5.48 5.44 Net interest margin 4.18 3.97 3.97 4.03 4.12 4.07 Taxable equivalent 4.68 4.45 4.35 4.07 4.39 4.31 Noninterest income .81 .82 .83 .85 .90 .90 Loss provisions .79 .87 .64 .51 .45 .48 Other noninterest expense 3.35 3.36 3.33 3.35 3.37 3.38 Securities gains .07 .15 .03 .01 .01 .00 Income before tax .92 .71 .86 1.01 1.22 1.11 Taxes .19 .15 .24 .29 .36 .33 .01 .02 .02 .02 .02 .02 Net income .74 .58 .63 .74 .88 .80 Cash dividends declared .43 .40 .41 .47 .51 .49 Net retained income .32 .19 .23 .27 .37 .30 MEMO Average assets (billions of dollars) 652 664 666 647 656 656 Number of banks 13,100 12,871 12,414 11,7% 11,393 11,024 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

522 Federal Reserve Bulletin • July 1991 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, by size, 1985-90—Continued C. Banks with $300 million to $5 billion in assets Item 1985 1986 1987 1988 1989 1990 Balance sheet items as a percent of average consolidated assets including loss reserves Interest-earning assets 87.98 88.04 88.60 88.82 88.96 88.82 Loans 57.25 57.74 59.71 63.23 64.28 63.31 Commercial and industrial 19.32 18.70 18.51 18.22 17.73 16.71 U.S. addressees 18.79 18.33 18.13 17.92 17.56 16.58 Foreign addressees .53 .37 .38 .23 .17 .14 Real estate 17.99 19.66 22.00 24.23 25.95 26.85 Construction 4.05 4.42 4.82 4.80 4.83 4.38 Farmland .20 .23 .24 .27 .27 .29 One- to four-family 7.93 8.23 9.07 10.49 11.50 12.35 Home equity 1.51 1.70 2.04 2.25 Other 8.47 8.79 9.46 10.10 Multifamily residential .55 .64 .65 .66 .68 .70 Nonfarm residential 5.25 6.13 7.21 8.01 8.65 9.13 Consumer 13.93 13.96 14.28 14.66 15.15 15.00 Credit card 3.28 3.46 4.01 4.02 4.43 4.72 Installment and other 10.65 10.50 10.28 10.64 10.72 10.28 Foreign government .43 .33 .33 .23 .15 .08 Agricultural production .69 .57 .46 .46 .43 .48 Security .65 .61 .54 .39 .36 .28 Other 6.62 6.59 5.86 5.03 4.51 3.91 Securities 21.56 21.66 20.98 18.17 18.08 18.78 U.S. government 11.09 10.43 11.01 11.18 11.77 12.98 U.S. Treasury 7.96 7.20 6.86 6.37 5.63 5.28 Government-racked mortgage pools 1.01 1.18 2.13 2.39 3.08 3.77 • Other 2.12 2.04 2.02 2.43 3.07 2.15 State and local government 9.28 9.73 7.80 6.45 3.52 3.18 Taxable .05 .05 .05 .07 Tax-exempt 3.81 4.14 3.47 3.11 Other bonds and stocks 1.19' 1.50' 2.17 2.84 2.79 2.29 Trading account assets .29 .34 .26 .32 .37 .36 Gross Federal funds sold and reverse repurchase agreements 5.14 5.26 4.71 4.16 3.91 4.35 Interest-bearing deposits 4.03 3.38 3.21 2.94 2.33 2.02 Other assets 11.80 11.48 10.71 10.16 10.01 10.01 Deposit liabilities 79.74 79.90 78.56 78.75 78.77 79.28 in foreign offices 2.69 2.42 2.50 2.31 1.96 1.78 In domestic offices 77.05 77.49 76.05 76.44 76.81 77.50 Demand deposits 18.72 18.68 17.43 16.10 15.15 14.42 Other checkable deposits 5.36 6.31 7.08 7.44 7.26 7.45 Other core deposits MMDAs 14.75 15.92 15.22 13.87 12.77 12.66 Other savings 5.98 6.12 6.90 7.37 7.09 7.08 Small time 18.68 17.91 16.88 19.13 21.87 23.97 Large time deposits 13.57 12.55 12.54 12.53 12.66 11.92 Gross federal funds purchased and repurchase agreements 8.56 8.60 9.17 8.79 8.60 7.94 Other liabilities for borrowed money.... 2.33 2.27 3.03 3.20 3.20 3.26 Other borrowings 3.13 2.82 2.70 1.65 1.66 1.50 MEMO Money market liabilities 27.14 25.84 27.24 26.83 26.43 24.83 Loss reserves .77 .85 1.02 1.02 1.03 1.17 Total equity capital 6.39 6.52 6.51 6.59 6.74 6.85 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 523 A. 2.—Continued C. Banks with $300 million to $5 billion in assets—Continued Item 1985 1986 1987 1988 1989 1990 Effective interest rate (percent) Rates earned Securities 9.01 8.14 7.66 7.86 8.36 8.50 State and local government 7.35 7.13 7.19 7.14 7.33 7.28 Loans, gross 11.94 10.89 10.37 10.59 11.55 11.13 Net of loss provisions 10.94 9.68 9.04 9.63 10.42 9.43 Taxable equivalent Securities and gross loans 11.79 10.78 10.06 10.12 11.15 10.23 Securities 11.36 10.49 9.19 7.86 9.21 9.15 Rates paid Interest-bearing deposits 7.82 6.77 5.46 6.47 7.33 7.00 Large certificates of deposit 8.55 7.23 6.79 7.39 8.72 7.98 In foreign offices 8.63 6.96 6.79 7.65 8.97 8.11 Other deposits 7.58 6.64 5..1.1. 5.37 6.93 6.75 NOW 4.85 4.75 MMDAs . . . 6.58 6.26 Other savings . . . . . . . . . 5.33 5.40 Other time 8.27 7.99 7.82 6.75 5.63 6.68 7.66 7.13 Income and expenses as a percent of average net consolidated assets Gross interest income 9.41 8.52 8.23 8.73 9.62 9.43 Gross interest expense 5.66 4.86 4.56 4.98 5.78 5.56 Net interest margin 3.75 3.66 3.67 3.75 3.84 3.87 Taxable equivalent 4.25 4.17 3.99 3.87 4.09 4.06 Noninterest income 1.34 1.29 1.33 1.33 1.35 1.46 Loss provisions .56 .69 .78 .61 .73 1.10 Other noninterest expense 3.57 3.45 3.44 3.41 3.42 3.49 Securities gains .04 .11 .04 .00 .01 .01 Income before tax 1.00 .93 .83 1.06 1.05 .75 Taxes .18 .18 .26 .31 .31 .21 Extraordinary items .01 .01 .01 .01 .01 .00 Net income .83 .76 .58 .76 .74 .54 Cash dividends declared .37 .39 .42 .46 .48 .53 Net retained income .45 .37 .16 .30 .26 .01 MEMO Average assets (billions of dollars) 685 738 808 804 842 862 Number of banks 724 779 777 800 831 864 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

524 Federal Reserve Bulletin • July 1991 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, by size, 1985-90—Continued D. Nine money center banks Item 1985 1986 1987 1988 1989 1990 Balance sheet items as a percent of average consolidated assets including loss reserves Interest-earning assets 80.56 80.09 80.65 84.84 84.64 84.13 Loans 61.91 60.07 58.41 58.53 59.31 60.46 Commercial and industrial 29.46 26.49 24.23 22.77 21.77 21.59 U.S. addressees 14.34 13.24 12.57 12.04 11.90 11.68 Foreign addressees 15.12 13.25 11.60 10.73 9.87 9.91 Real estate 10.49 11.45 12.52 13.71 16.10 18.40 Construction 2.18 2.52 2.88 2.96 3.14 3.39 Farmland .07 .06 .04 .04 .05 .05 One- to four-family 4.22 4.17 4.35 5.03 6.46 7.96 Home equity , .43 .55 .81 1.02 Other t 4.26 4.48 5.66 6.94 Multifamily residential .38 .45 .56 .60 .63 .60 Nonfarm residential 1.89 2.09 2.33 2.34 2.75 3.12 Consumer 5.78 6.13 5.99 5.82 5.84 6.36 Credit card 2.21 2.21 2.05 1.77 1.68 1.86 Installment and other 3.57 3.92 3.94 4.04 4.16 4.50 Foreign government 3.92 3.82 3.65 3.67 3.47 2.94 Agricultural production .49 .36 .28 .26 .23 .24 Security 1.21 1.16 .82 .65 .64 .53 Other 11.57 11.67 11.75 11.65 11.26 10.38 Securities 7.15 8.49 9.38 8.65 8.90 9.13 U.S. government 2.31 2.28 2.75 3.08 3.24 3.79 U.S. Treasury 1.85 1.58 1.43 1.34 1.18 .93 Government-backed mortgage pods .38 .61 1.25 1.64 1.83 2.16 Other .09 .09 .07 .10 .24 .07 State and local government 3.02 3.48 3.23 1.85 1.60 1.00 Taxable .01 .01 .02 .02 Tax-exempt 1.57 1.84 1.58 .98 Other bonds and stocks 1.82 2.73 3.40 3.72 4.07 4.10 Trading account assets 3.67 4.90 4.52 4.33 4.29 5.09 Gross federal funds sold and reverse repurchase agreements 3.54 3.62 3.95 4.64 4.10 2.88 Interest-bearing deposits 7.95 7.91 8.91 8.69 8.03 6.58 Other assets 15.31 14.38 13.13 12.47 12.55 13.19 Deposit liabilities 70.74 69.92 70.16 69.57 69.03 68.72 In foreign offices 35.86 34.64 35.03 34.02 32.62 32.49 In domestic offices 34.88 35.28 35.13 35.56 36.42 36.23 Demand deposits 11.51 12.46 12.34 11.53 11.09 10.41 Other checkable deposits 1.30 1.63 2.03 2.23 2.25 2.25 Other core deposits MMDAs 7.70 6.89 6.72 6.51 6.77 Other savings , 1.77 2.06 3.09 3.56 3.73 3.87 Small time 4.76 4.12 3.95 4.38 4.98 5.58 Large time deposits 8.18 7.30 6.83 7.14 7.87 7.36 Gross federal funds purchased and repurchase agreements 7.66 8.17 6.83 6.02 6.15 6.21 Other liabilities for borrowed money 6.51 7.95 8.69 9.52 9.80 9.44 Other borrowings 11.02 9.93 9.64 7.78 7.54 8.49 MEMO Money market liabilities 58.21 58.07 57.41 56.69 56.44 55.45 Loss reserves .83 1.02 2.11 2.69 2.81 2.68 Total equity capital 4.69 4.78 4.33 4.42 4.66 4.46 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 525 A.2.—Continued D. Nine money center banks—Continued Item 1985 1986 1987 1988 1989 1990 Effective interest rate (percent) Rates earned V: S' Securities 9.41 8.51 8.48 8.67 9.16 9.28 State and local government 7.24 7.09 7.26 7.70 7.65 7.49 12.08 10.53 10.41 11.40 13.35 12.43 Net of loss provisions 10.85 9.18 6.67 10.77 10.88 11.19 Taxable equivalent HUHFLHESFIVT'TF? ilvMMiHHPW Securities and gross loans 12.05 10.58 10.18 11.13 12.82 11.49 Securities 11.75 10.89 8.76 8.67 9.32 9.73 Rates paid Interest-bearing deposits 8.91 7.41 6.70 7.89 9.39 99..2222 Large certificates of deposit 9.07 7.45 7.33 8.04 8.68 8.15 In foreign offices 9.59 7.88 8.01 9.01 10.97 11.06 Other deposits 7.43 6.47 4.47 5.00 7.06 6.59 Other checkable deposits 4.56 4.40 MMDAs 6.66 6.21 Other savings . . . 6.23 5.98 Other time • . . 8.50 7.75 All interest-bearing liabilities 7.96 7.57 7.30 8.89 11.02 10.04 Income and expenses as a percent of average net consolidated assets Gross interest income 9.10 7.85 7.90 9.55 10.92 10.17 Gross interest expense 6.74 5.57 7.93 6.63 8.24 7.69 Net interest margin 2.36 2.28 2.06 2.91 2.68 2.48 Taxable equivalent 2.53 2.49 2.09 2.97 2.70 2.55 Noninterest income 1.75 2.02 2.50 2.11 2.22 2.23 Loss provisions .75 .79 2.16 .38 1.50 .76 Other noninterest expense 2.71 2.96 3.18 3.27 3.42 3.45 Securities gains .06 .13 .08 .03 .04 .02 Income before tax .71 .68 -.70 1.40 .02 .51 Taxes .26 .22 .15 .41 .35 .20 Extraordinary items .00 • .00 .00 .08 .03 .06 Net income .45 .46 -.86 1.06 -.30 .37 Cash dividends declared .25 .21 .28 .38 .36 .22 Net retained income .21 .25 -1.14 .69 -.66 .15 MEMO Average assets (billions of dollars) 618 645 650 641 643 668833 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

526 Federal Reserve Bulletin • July 1991 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, by size, 1985-90—Continued E. Large banks other than money center banks Item 1985 1986 1987 1988 1989 1990 Balance sheet items as a percent of average consolidated assets including loss reserves Interest-earning assets 84.28 84.88 85.78 87.30 86.92 86.% Loans 61.07 60.68 61.58 64.33 64.21 63.62 Commercial and industrial 26.02 24.79 23.98 23.42 23.29 22.39 U.S. addressees 21.96 21.60 21.36 21.42 21.74 21.02 Foreign addressees 4.06 3.19 2.62 1.99 1.55 1.37 Real estate 13.09 13.72 16.05 18.49 19.77 21.25 Construction 4.33 4.61 5.15 5.43 5.46 4.99 Farmland .08 .10 .11 .12 .14 .14 One- to four-family 5.29 5.32 6.04 7.08 7.79 9.14 Home equity 1.16 1.33 1.57 1.85 Other 5.43 5.75 6.22 7.28 Multifamily residential .33' .34' .44 .47 .48 .53 Nonfarm residential 2.91 3.18 4.11 5.15 5.66 6.22 Consumer 10.25 11.52 11.78 12.35 12.02 11.41 Credit card 4.00 4.60 4.68 5.09 4.95 4.53 Installment and other 6.26 6.91 7.10 7.26 7.07 6.88 Foreign government 2.08 1.71 1.59 1.23 .84 .50 Agricultural production .50 .42 .38 .35 .35 .33 Security 1.43 1.32 1.04 .91 .98 .86 Other 9.64 9.40 8.63 7.57 6.97 6.88 Securities 12.24 14.74 15.37 13.42 13.42 14.38 U.S. government 5.47 6.46 7.73 8.15 8.70 10.28 U.S. Treasury 4.14 4.45 4.72 4.55 3.69 3.04 Government-backed mortgage pools .88 1.41 2.29 3.00 4.08 5.19 Other .45 .60 .71 .60 .93 .39 State and local government 6.13 7.30 6.00 3.14 2.61 2.08 Taxable .02 .01 .05 .03 Tax-exempt 2.90 3.13 2.56 2.05 Other bonds and stocks .64 .97' 1.64 2.13 2.11 1.89 Trading account assets 1.12 1.14 .79 .74 .77 .86 Gross federal funds sold and reverse repurchase agreements 3.33 3.01 2.80 3.31 3.52 4.18 Interest-bearing deposits 7.64 6.46 6.03 5.50 4.99 3.92 Other assets 14.18 13.37 12.29 11.02 11.62 11.47 Deposit liabilities 69.94 68.90 69.41 70.17 70.48 71.35 In foreign offices 13.57 10.97 10.28 9.40 8.58 7.29 In domestic offices 56.37 57.93 59.13 60.77 61.90 64.06 Demand deposits 16.61 17.48 16.77 15.26 14.31 13.71 Other checkable deposits 3.26 3.77 4.59 4.96 4.96 5.08 Other core deposits MMDAs 10.29 11.56 11.79 11.40 10.80 11.91 Other savings 3.44 3.60 4.56 4.83 4.51 4.54 Small time 10.48 10.06 9.91 11.48 13.67 15.78 Large time deposits 12.28 11.45 11.50 12.84 13.64 13.02 Gross federal funds purchased and repurchase agreements 13.24 14.40 13.76 12.73 13.03 12.46 Other liabilities for borrowed money 4.75 5.55 5.73 6.34 5.90 5.88 Other borrowings 7.46 6.67 6.22 3.79 3.60 3.17 MEMO Money market liabilities. 43.84 42.37 41.27 41.31 41.15 38.56 Loss reserves .92 1.06 1.54 1.68 1.46 1.57 Total equity capital 5.42 5.50 5.29 5.29 5.53 5.58 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 527 A. 2.—Continued E. Large banks other than center banks—Continued Item 1985 1986 1987 1988 1989 1990 Effective interest rate (percent) Rates earned Securities 8.87 7.94 State and local government 7.25 6.92 Loans, gross 11.76 10.52 Net of loss provisions 10.69 9.16 Taxable equivalent Securities and gross loans 11.75 10.54 10.31 Securities 11.70 10.60 9.36 Rates paid Interest-bearing deposits 8.34 6.90 5.88 6.82 7.98 7.43 Large certificates of deposit 8.80 7.34 7.06 7.40 8.70 7.99 In foreign offices 9.37 7.67 7.83 8.93 11.07 10.21 Other deposits 7.68 6.47 6.63 5.29 6.98 6.73 NOW 4.48 4.58 MMDAs 6.67 6.29 Other savings • • • 5.43 5.38 Other time 8.55 8.03 All interest-bearing liabilities 8.09 6.87 6.18 7.27 8.58 7.66 Income and expenses as a percent of average net consolidated assets Gross interest income 9.08 7.95 8.08 8.76 9.73 9.33 Gross interest expense 5.92 4.84 4.81 5.33 6.36 6.02 Net interest margin 3.16 3.12 3.27 3.42 3.37 3.31 Taxable equivalent 3.50 3.51 3.44 3.52 3.55 3.43 Noninterest income 1.43 1.49 1.59 1.61 1.73 1.84 Loss provisions .64 .79 1.58 .62 1.03 1.17 Other noninterest expense 3.04 3.10 3.27 3.29 3.29 3.47 Securities gains .07 .16 .05 .00 .04 .03 Income before tax .96 .8it8 .06 1.13 .82 .54 Taxes .23 .08 .33 .24 .20 Extraordinary items .01 01 .00 .02 .00 Ifljjjl .01 Net income .74 68 -.02 .82 .58 .35 Cash dividends declared .26 .32 .35 .45 .41 .41 Net retained income .48 .36 -.36 .37 .17 -.06 MEMO Average assets (billions of dollars) 605 707 759 867 971 1,063 Number of banks 65 74 73 86 90 95 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

528 Treasury and Federal Reserve Foreign Exchange Operations This quarterly report, covering the period Febru- concern that war in the Persian Gulf might trigger ary through April 1991, provides information on large "safe-haven" flows into the dollar and push Treasury and System foreign exchange opera- up the exchange rate. By early February, howtions. It was presented by Sam Y. Cross, Man- ever, this possibility appeared remote. The dollar ager of Foreign Operations of the System Open had not received lasting support from the out- Market Account and Executive Vice President in break of war in mid-January. With aerial bombing charge of the Foreign Group of the Federal by the United States and its allies in Operation Reserve Bank of New York.1 Desert Storm well under way, the likelihood that conflict would widen to the point of generating After setting new historical lows against the mark new and substantial flows into dollars receded. At in mid-February, the dollar rebounded strongly the same time, concern that the war might become during the February-April period to close up on prolonged and serve as a drag on the U.S. econbalance more than 15 percent against the mark omy intensified. In that environment, the dollar and nearly 4 percent against the yen. The turn- became vulnerable to selling pressure because of around in the dollar was initially triggered by the continued movement of interest rate differenofficial intervention but then was quickly rein- tials against the dollar and the more attractive forced both by optimism engendered by the swift investment opportunities available elsewhere. conclusion of the Persian Gulf war and by the Market participants felt that there was little ofaccompanying expectations of an early recovery ficial concern about exchange rate developments of the U.S. economy from recession. The dol- and saw little reason to expect the decline to lar's rise was particularly pronounced against the end—even though the dollar appeared increasmark and certain other European currencies and ingly undervalued in terms of purchasing power. occurred mainly during late February and On the last day of January, the Bundesbank March. In April, when the initial euphoria about had increased its official discount and Lombard U.S. economic prospects began to fade, the rates in a move whose timing surprised many in dollar lost upward momentum while retaining a the market. One day later, on February 1 as the generally firm tone. period opened, the Federal Reserve discount rate was reduced 50 basis points to 6 percent, and the federal funds rate also moved down 50 basis EARLY FEBRUARY—CONTINUED DOLLAR points. The juxtaposition of the moves in the two DECLINE countries served to reinforce the prevailing market expectation that the dollar was likely to The period opened with the dollar renewing a continue to decline and encouraged those who decline that had begun in late 1989. During the had dollars to buy to postpone their purchases; months just preceding the period, this decline had and the dollar reached a low of DM1.4645 against been temporarily interrupted, with market partic- the mark. ipants wary of selling dollars aggressively out of Beginning on the next business day, February 4, the U.S. monetary authorities intervened with the aim of reintroducing a sense of two-way risk 1. The charts for the report are available on request from for the dollar. On that day, the U.S. authorities Publications Services, Board of Governors of the Federal purchased $100 million against marks and were Reserve System, mail stop 138, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

529 joined in concerted intervention by a large num- tions that the Gulf war would end quickly on ber of foreign central banks. This intervention, terms favorable to the United States and its allies coming after a considerable absence, initially buoyed the dollar. On February 15, a radio surprised the market and was taken as a show of broadcast from Baghdad suggesting conditions concern, prompting the dollar to recover some- under which Iraq might withdraw its forces from what. Over the days that followed, the U.S. Kuwait represented the first indication that the monetary authorities continued to operate in the war might have reached a decisive point. Then, market to dispel the impression that the dollar as the start of the allied ground offensive was would continue to decline. In the seven days seen as bringing the war to a quick end, the dollar between February 4 and February 12, the U.S. gained further support. Market participants, reauthorities purchased a total of $1,389 million calling Chairman Greenspan's concerns in Januagainst marks, operating generally in concert ary about the economic impact of a long war, with other monetary authorities. associated a short war with an early economic For a time, doubts lingered in the market over recovery. When the cease-fire was declared Febofficial aims and resolve. Official comments sug- ruary 27, market participants became increasgesting that U.S. economic weakness would be ingly confident that the dollar and the U.S. addressed by further interest rate reductions and economy would benefit. that other countries might be concerned about Meanwhile, the assumption that interest rate the impact of a dollar recovery on their own differentials would move inexorably against dollar economies, left many market participants believ- investments no longer appeared realistic. Several ing that the authorities were not committed to other countries were beginning to feel the effects stopping the dollar's decline. Thus, although the of slowing demand, and around mid-February, dollar showed somewhat greater stability and at official interest rates were reduced in the United times firmed in response to instances of interven- Kingdom, Spain, the Netherlands, and Belgium. tion, sentiment remained generally negative, and Rumors also circulated of a possible easing in dollar rates drifted downward on balance. On Japan. Meanwhile, German market rates had February 11, the dollar set a new historic low of moved up only modestly after the official rate DM1.4430 against the mark while declining to increase of late January. Together, these develop- ¥127.20 against the yen. At that point the dollar ments called into question the view that the was 2 percent to 3 percent below its level at the United States would remain alone in pursuing an end of January and more than 6 percent below its accommodative monetary policy. At the same level of January 15, before the commencement of time, comments by various Federal Reserve offi- Operation Desert Storm. cials, including Chairman Greenspan's congres- Thereafter, the persistence of the central sional testimony of February 20, reminded market banks and the cumulative impact of their opera- participants that there would be limits to the tions, in particular a round of concerted dollar easing of monetary policy in the United States. purchases initiated on February 12 by European Another factor contributing to the dollar's rise central banks before U.S. markets opened, fi- during this period was the possibility that large nally helped convince market participants of the market purchases of dollars to cover cash conofficial commitment to ending the dollar's de- tributions for Desert Storm expenses and postcline. Market participants paused to reassess war reconstruction costs in the Persian Gulf exchange rate levels, and a sense of two-way risk might be forthcoming. The approval on March 6 returned to the market after a prolonged, albeit by the upper house of the Japanese parliament of not continuous, decline in dollar exchange rates. a ¥1.17 trillion contribution to the Desert Storm operation along with the prospect that such a large payment might be converted from yen into MID-FEBRUARY THROUGH MARCH—THE dollars in the market was a factor affecting the DOLLAR RECOVERS dollar-yen rate during much of the rest of the As the dollar steadied, several other factors month of March. combined to engender recovery. At first, indica- At the same time, concerns began to grow Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

530 Federal Reserve Bulletin • July 1991 about the implications for the German mark of in the options markets. Writers of foreign curthe problematic economic situation in eastern rency options that had been purchased when the Germany and of the social and political strife in dollar's direction seemed uncertain hastened to the Soviet Union. Strikes and demonstrations in cover their exposure as the likelihood quickly eastern Germany idling thousands of workers increased that those options would be exercised. highlighted the difficulties of the economic re- The reversal of sentiment also triggered large structuring. The decision of the German govern- shifts into dollar investments by portfolio and ment late in February to seek a package of tax funds managers. By the end of March, the dollar increases to help finance German unification was had moved above DM1.70 and ¥140, 18 percent taken as an indication that the costs were also and 10 percent respectively above the lows for likely to be greater than previously believed. At the period reached six weeks earlier on February about the same time, strains among republics of 11. the Soviet Union and protests against the lead- As the dollar continued its upward move durership of President Gorbachev intensified, lead- ing March, exchange rates became increasingly ing to a further reassessment of the view that susceptible to sharp movements. The rapid ap- Germany was likely to reap early benefits from preciation in the dollar made market participants liberalization in the Soviet Union and elsewhere wary, uncertain whether the dollar's rise would in Eastern Europe. These and other signs of continue, and traders became more reluctant to uncertainty tended to weigh on the mark maintain positions. On March 11, in one episode, throughout the period. the dollar rose sharply against the mark in Asian For all of these reasons, sentiment toward the trading, and several European central banks redollar had turned quite positive by early March. sponded by intervening to sell dollars. U.S. As the dollar rose, it gathered momentum that monetary authorities cooperated by selling a neither disappointing economic data nor further total of $200 million against marks and $30 mileasing of U.S. monetary policy appeared to lion against yen in New York that same day and diminish. In early March, the dollar moved up later that week to support their efforts in an through its January 15 levels. In the days that environment of unsettled market conditions. followed, it was pushed up further as market March 19 and 22, in another such episode, the participants scrambled to cover short positions U.S. authorities joined other central banks and or to meet previously delayed requirements. The sold a total of $170 million against marks. Treadollar's rise was accelerated at times by actions sury Under Secretary Mulford stated that the U.S. authorities were concerned about the rapid- 1. Federal Reserve reciprocal currency arrangements ity of the dollar's rise and would continue to cooperate with other central banks. Amount of Institution facility, April 30,1991 Austrian National Bank 250 APRIL—THE DOLLAR'S RISE SUBSIDES National Bank of Belgium 1,000 Bank of Canada 2,000 National Bank of Denmark 250 By early April, the initial reaction to the end of Bank of England 3,000 the Gulf war had run its course. Market partici- Bank of France 2,000 Deutsche Bundesbank 6,000 pants then turned their attention to the near-term Bank of Italy 3,000 Bank of Japan 5,000 economic and monetary policy prospects for various countries. With clear trends in these Bank of Mexico 700 Netherlands Bank 500 areas difficult to discern, exchange rates fluctu- Bank of Norway 250 Bank of Sweden 300 ated, sometimes sharply but with less direction Swiss National Bank for the balance of the period. Bank for International Settlements The market's optimism about the near-term Dollars against Swiss Francs Dollars against other authorized European U.S. economic outlook was yet to be confirmed currencies by statistical evidence. Employment data re- 1 30,100 leased early in April pointed to a continuing drop Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 531 2. Drawings and repayments by foreign central banks under special swap arrangements with the U.S. Treasury1 Millions of dollars; drawings or repayments (-) Outstanding as Outstanding as Central bank drawing Amount of of January 31, February March April of April 30, on the U.S. Treasury facility 1991 1991 ((--SSooll 1. Data are on a value-date basis. Components may not add to totals because 2. Represents the ESF portion of a $300 million short-term credit facility of rounding. with the National Bank ofRomania that was established on March 4,1991, and expired on March 28,1991. in jobs after the end of the Gulf war. Also, month high of DM1.7690 on April 22. In the days monetary conditions in the United States contin- that followed, a number of foreign central banks ued to ease, and U.S short-term interest rates entered the market on several occasions to rewere roughly 150 and 300 basis points lower strain the dollar's rise against the mark. respectively than those in Japan and Germany. As the period drew to a close, market partici- Yet market participants held to their belief that pants began to focus on an upcoming meeting of economic recovery would soon emerge in the the Group of Seven (G-7) in Washington. Some United States, and they took note of early April sought to protect themselves against the possireports suggesting that the Federal Reserve was bility that the G-7 might undertake some action adopting a more cautious attitude toward easing to restrain the dollar's rise. In addition, there monetary policy. was speculation that the meeting might produce In addition, market participants had come to some understandings on interest rates, in which expect that with economic growth slowing or most countries, except Germany, would agree actually turning negative in most of Europe and to reduce rates in a more or less coordinated North America, world interest rates would fashion. trend downward. Canada and the United King- When markets first opened on April 29, after dom were already embarked on a path of mon- the weekend G-7 meeting, the dollar was quickly etary easing in the face of severe recessions. marked higher in the absence of any explicit With the exception of Germany, most European statement in the G-7 communique of official countries had already started to lower interest intention to limit the dollar's rise. After having rates, or appeared poised to do so, to the extent briefly reached DM1.7835, the dollar then started that the European Monetary System constraints to fall back as market participants reconsidered would permit. In Japan, Bank of Japan and the significance of the G-7 meeting and shifted government officials continued to express their their focus to the apparent absence of agreement commitment to a tight monetary policy. Market on coordinated interest rate reductions. Many participants, however, noting the sharp decline people thought that the United States might be in Japanese money supply growth and the ap- the only G-7 member to ease monetary policy in parent stabilization, after steep declines, of the near term. When, in fact, the Federal Reasset prices, increasingly came to expect an serve announced a reduction in the discount rate, ease in the weeks ahead, and the yield curve effective April 30, the dollar declined further. remained steeply inverted. Altogether, in the last two days of the period, the Only for Germany did the market expect that dollar fell nearly 8 pfennigs against the mark, or interest rates might remain high, or increase almost 5 percent, before subsequently stabilizfurther. Adding to the uncertainty about the ing. Nevertheless, the dollar closed up 15V2 per- German situation were the continuing concerns cent on balance for the three-month period as a about the Soviet Union, Eastern Europe, and the whole, at DM1.7060. The dollar's movements German government's handling of the challenges against the yen in the final days of the period of unification. In this context, the dollar rose were more moderate, with the dollar closing the further against the mark, reaching a seventeen- period at ¥ 136.10, up on balance VA percent. The » Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

532 Federal Reserve Bulletin • July 1991 3. Net profits or losses (—) payment of International Monetary Fund charges on U.S. Treasury and Federal Reserve and for repurchases. The ESF exchanged a total current foreign exchange operations1 of $87.4 million worth of SDRs during the period. Millions of dollars Since these operations began in July 1990, the U.S. Treasury Treasury has received a total of $971.1 million on Federal Exchange Period and item Reserve Stabilization sales of nearly SDR 700 million. Fund2 On March 6, the Treasury, through the ESF, Valuation profits and losses on along with the Bank for International Settlements outstanding assets and liabilities as of January 31,1991 55,,668888..00 33,,002277..22 (acting for certain participating member banks) established a $300 million near-term support fa- February 1,1991-April 30,1991 j Realized 117799..44 114466..99 cility to assist Romania in its economic adjust- Valuation profits and losses on outstanding assets ment efforts. The ESF share of the facility was and liabilities as of April 30,1991 22,,331166..33 557700..66 $40 million. Romania drew the full amount on March 7. Romania repaid $38.7 million to the 1. Data are on a value-date basis. Valuation profits (losses) represent the increase (decrease) in dollar value of outstanding currency assets valued at ESF on March 20 and, on the following day, end-of-period exchange rates, compared with rates prevailing at the time the repaid in full the remaining balance. The facility foreign currencies were acquired. expired on March 29. 2. Includes valuation of funds warehoused with the Federal Reserve System. During the period, the Federal Reserve and the ESF realized profits of $179.4 million and $146.9 million respectively from sales of foreign dollar rose 123/8 percent on a trade-weighted currencies. As of the end of April, cumulative basis as measured by the staff of the Federal bookkeeping or valuation gains on outstanding Reserve Board of Governors. foreign currency balances were $2,316.3 million During the three-month period, the U.S. mon- for the Federal Reserve and $570.6 million for etary authorities purchased a total of $1,389 the ESF. The Federal Reserve and the ESF million, all against German marks, and sold a regularly invest their foreign currency balances total of $400 million, of which $370 million was in a variety of instruments that yield marketagainst German marks and $30 million was related rates of return and that have a high against Japanese yen. Both the purchases and degree of quality and liquidity. A portion of the sales of foreign currencies were shared equally balances lis invested in securities issued by by the Federal Reserve and the Treasury's Ex- foreign governments. As of the end of April, change Stabilization Fund (ESF). holdings of such securities by the Federal Re- In other operations, the Treasury, through the serve amounted to $7,896.7 million equivalent, ESF, continued to provide special drawing rights and holdings by the Treasury amounted to the (SDRs) in exchange for dollars to certain foreign equivalent of $7,726.2 million valued at end-ofmonetary authorities that required SDRs for the period exchange rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 533 NOTE. Daily U.S. intervention figures for 1985-89 are available to interested researchers on written request from the Financial Markets Section, Division of International Finance, B-1252, Board of Governors, Washington, D.C. 20551. Earlier years' data will become available as the data are edited and verified. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

534 Diffusion Indexes of Industrial Production Beginning July 1991, the Federal Reserve will Diffusion indexes of industrial production resume publication of diffusion indexes of indus- Percent — 1 trial production (IP) in its monthly statistical One-month span release, Industrial Production and Capacity Utilization-, diffusion indexes previously were published from July 1979 to March 1990. Like all diffusion indexes, those for IP summarize the direction of change over a given time period in a i i i i i i i i i i i i i i /iv ii i wi i i i i ^i set of disaggregated data.1 Thus, their purpose is HA w Three-rr onth span to provide a measure of the breadth of change in the aggregate series.2 Output changes in the 250 series that constitute the total industrial production index form the basis for the calculation of the diffusion indexes.3 i i i i i i i 1 1 1 1 1 1 1 1 ll 1 1 1 1 1 1 1 The value of the diffusion index is equal to the nA v/VN proportion of series that increased over a given Six-month span fN time period, referred to as the "span" of the 1. Besides those for industrial production, diffusion indexes are calculated, for example, by the Bureau of Labor i i i.i i i i i i i i i i i Statistics for payroll employment and by the Bureau of 1970 1975 1980 1985 1990 Economic Analysis for the indexes of leading, coincident, The shaded areas denote periods of business recession as defined and lagging indicators. The diffusion indexes of payroll em- by the National Bureau of Economic Research. ployment are described in Patricia M. Getz and Mark G. Ulmer, "Diffusion indexes: a barometer of the economy," diffusion index, plus one-half of the proportion Monthly Labor Review (April 1990), pp. 13-21. The diffusion indexes of leading, coincident, and lagging indicators are that was unchanged. The precise computation of published in the Survey of Current Business. a diffusion index is as follows: If an individual 2. The idea of studying the breadth of movements in series increases over the span of the diffusion economic time series was central to the Work of Arthur Burns and Wesley Mitchell. See Arthur F. Burns and Wesley C. index, it receives a value of 100; if it declines, it Mitchell, Measuring Business Cycles, National Bureau of receives a value of 0; and if it is unchanged, it Economic Research (New York, 1946). The uses and interreceives a value of 50. The diffusion index is then pretation of diffusion indexes are discussed in, for example, Geoffrey H. Moore, Business Cycles, Inflation, and Fore- calculated by summing these values for each of casting, Ballinger Publishing Company for the National Bu- the components and dividing the result by the reau of Economic Research (Cambridge, Mass., 1980); H.O. number of series included in the diffusion index. Stekler, "Diffusion Index and First Difference Forecasting," Review of Economics and Statistics, vol. 43 (May 1961), pp. Diffusion indexes of IP for spans of one, three, 201-208; Geoffrey H. Moore, "Diffusion Indexes: A Com- and six months are available for the period ment," The American Statistician, vol. 9 (October 1955), pp. beginning July 1967. 13-17, 30; and Arthur L. Broida, "Diffusion Indexes," The American Statistician, vol. 9 (June 1955), pp. 7-16. The interpretation of diffusion indexes is 3. The number of series in the total IP index has changed straightforward: A value of 50 indicates that over over time, and the calculation of the diffusion indexes reflects the interval spanned by the diffusion index the these changes. Specifically, from 1968 to 1971, the index comprised 238 series; from 1972 to 1976, 256 series; and since proportion of series posting increases was equal 1977, 250 series. The industrial production index is described to the proportion that declined, whereas a readin Kenneth Armitage and Dixon A. Tranum, "Industrial ing of more than 50 means that more series rose Production: 1989 Developments and Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. than declined. As indicated in the chart, the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Diffusion Indexes of Industrial Production 535 Diffusion indexes of industrial production for spans of one, three, and six months, 1967-90 Year January February March April May June July August September October November December One-month span 1967 51.1 66.7 53.2 67.1 63.3 60.3 1968 60.3 44.3 62.9 55.3 50.6 71.7 57.8 52.3 58.6 59.1 59.5 61.2 1969 57.4 58.2 57.4 62.9 46.0 57.0 59.9 55.7 51.1 52.3 49.4 42.2 1970 34.2 51.1 46.4 43.0 43.9 45.1 60.8 43.5 46.4 38.4 44.3 54.9 1971 56.1 40.9 49.8 59.9 59.5 54.4 56.5 51.5 62.4 62.9 57.0 54.9 1972 70.9 58.4 64.7 66.7 45.5 55.7 56.1 65.9 60.4 66.7 63.9 65.9 1973 52.2 65.5 52.5 52.5 54.1 59.6 62.0 51.8 57.6 58.0 56.9 39.2 1974 41.6 45.5 52.9 45.5 63.9 53.3 48.6 49.4 42.7 37.3 31.8 22.4 1975 35.3 34.9 33.7 56.9 45.1 62.7 59.2 58.8 61.6 53.3 55.7 58.8 1976 60.4 60.4 45.5 51.8 63.1 47.8 56.1 59.6 47.1 56.9 59.6 55.3 1977 54.5 57.6 63.5 65.5 70.3 62.7 49.2 56.0 48.0 54.0 54.4 50.8 1978 53.6 54.0 59.6 76.3 51.2 63.1 51.2 58.4 53.2 56.4 53.6 59.6 1979 45.2 62.0 56.4 44.8 63.9 47.6 52.4 44.0 49.6 57.6 45.2 49.2 1980 56.4 49.2 44.4 34.1 27.3 45.2 39.2 63.9 63.5 61.2 64.7 59.2 1981 47.2 50.8 50.0 49.2 55.2 52.8 55.2 48.0 35.7 35.7 35.3 37.3 1982 40.8 68.3 35.7 39.2 48.4 50.8 39.2 48.0 43.2 40.0 48.8 39.2 1983 68.7 52.0 67.5 63.5 71.5 60.0 68.7 58.4 68.3 64.3 52.0 52.4 1984 69.1 58.8 57.6 57.2 54.8 55.6 51.2 44.4 50.0 45.6 51.2 47.2 1985 50.0 55.2 59.2 50.0 52.8 52.8 49.2 57.2 57.6 40.0 53.2 56.4 1986 60.0 43.6 40.8 61.6 46.4 50.0 50.0 60.0 50.0 54.8 56.4 60.8 1987 43.6 67.5 53.2 56.8 65.9 56.8 66.3 51.2 50.0 63.5 55.6 52.0 1988 63.1 51.6 56.0 57.2 60.4 58.0 66.7 51.6 46.8 57.2 56.8 53.6 1989 60.8 43.6 48.0 65.5 40.0 55.2 48.8 55.2 41.2 51.6 51.2 45.6 1990 56.0 52.8 47.6 49.6 58.4 56.8 57.0 49.2 45.2 37.3 34.5 36.5 Three-month span 1967 44.7 66.2 64.6 65.8 65.0 69.2 1968 69.2 61.2 62.0 51.1 58.2 63.3 67.5 65.8 57.8 60.3 62.0 67.5 1969 65.4 62.4 61.6 68.4 57.8 59.1 51.5 62.0 60.3 52.3 48.9 48.1 1970 34.2 41.4 38.0 43.5 42.2 39.2 49.8 53.2 51.9 40.1 43.0 46.0 1971 53.6 48.9 48.5 48.5 57.4 62.9 58.6 60.3 62.0 65.4 65.8 65.4 1972 71.7 74.3 75.9 69.8 71.4 65.1 55.7 69.0 68.6 73.3 72.2 75.7 1973 61.2 69.4 56.9 61.2 54.9 62.4 63.5 60.8 62.4 58.4 60.4 47.1 1974 40.4 33.7 44.7 45.9 55.3 60.0 55.7 50.2 43.1 41.6 27.5 18.0 1975 17.3 21.2 25.9 35.7 44.7 57.6 56.9 69.0 66.7 61.6 67.5 62.7 1976 68.2 71.8 68.2 57.3 62.7 60.4 62.7 57.6 59.6 59.6 60.0 63.1 1977 58.4 60.0 67.8 70.7 74.3 75.9 69.1 59.6 48.4 53.6 46.8 56.0 1978 49.6 47.6 58.4 78.3 78.3 75.9 56.0 63.9 56.4 61.2 62.0 65.9 1979 51.6 56.4 54.8 53.6 54.4 52.8 56.0 43.6 46.0 50.0 53.2 51.2 1980 52.0 52.4 51.6 35.7 27.7 28.5 28.9 48.8 60.4 71.9 74.7 69.1 1981 60.8 53.2 49.2 52.0 54.4 54.0 60.4 53.6 46.0 32.9 30.9 31.3 1982 30.9 45.6 50.4 55.2 34.5 40.0 42.0 43.6 40.0 45.6 45.6 38.8 1983 61.2 57.6 69.5 65.9 81.5 73.5 77.1 73.1 77.1 75.1 70.3 61.6 1984 65.5 71.9 75.9 63.9 64.3 57.6 51.6 48.8 46.4 41.6 46.4 44.0 1985 46.4 51.6 57.6 57.2 58.0 52.8 46.4 50.8 55.2 52.0 50.8 51.6 1986 64.3 58.4 49.2 46.8 47.2 58.0 44.0 58.0 54.0 58.4 60.4 63.5 1987 58.4 59.6 58.0 62.7 66.7 67.1 75.5 72.3 62.7 62.4 64.3 65.1 1988 65.9 58.0 64.7 56.0 63.5 63.1 68.7 63.9 67.9 56.8 58.8 62.0 1989 63.1 55.2 48.4 56.0 56.4 59.2 48.4 50.0 48.8 50.8 47.6 49.6 1990 53.6 52.8 57.6 51.2 54.8 59.8 65.5 59.6 51.4 39.6 32.1 28.1 Six-month span 1967 40.9 59.9 64.1 62.9 73.8 71.3 1968 71.3 68.8 64.6 69.2 62.9 69.2 62.4 64.6 64.6 69.6 69.2 69.2 1969 66.2 66.2 72.6 71.7 65.4 65.4 67.1 65.0 62.0 56.1 59.9 54.9 1970 38.8 38.4 39.7 36.3 37.6 35.0 46.0 43.5 46.8 43.5 48.1 48.5 1971 52.3 48.5 48.1 56.1 59.1 63.3 57.8 62.0 65.4 70.5 64.6 66.7 1972 73.0 74.7 74.7 82.7 77.6 77.6 65.5 76.1 76.1 72.5 77.3 75.3 1973 73.7 72.5 72.5 68.6 70.2 64.3 66.3 59.6 64.7 65.1 63.1 54.1 1974 44.7 46.7 40.8 38.8 42.0 47.1 53.7 56.1 51.0 51.4 29.4 15.7 1975 18.4 18.0 14.9 20.8 25.1 41.2 47.8 58.4 62.7 64.3 72.2 72.2 1976 72.2 76.9 69.4 68.6 71.8 67.8 60.4 61.6 63.1 63.9 57.3 60.8 1977 62.7 62.0 72.9 72.9 79.2 78.4 74.7 76.3 69.1 63.1 54.0 50.0 1978 52.4 48.0 56.0 71.1 70.7 73.9 78.3 77.9 71.5 57.2 67.9 66.3 1979 59.6 60.8 62.4 55.2 57.2 51.2 55.6 48.8 48.8 52.4 48.0 48.8 1980 51.2 53.2 48.8 37.3 30.5 28.5 28.1 30.5 34.9 45.2 61.2 72.7 1981 71.1 68.3 62.0 61.2 53.6 51.2 56.8 54.8 48.4 40.0 34.9 33.3 1982 27.7 34.5 31.3 30.5 37.3 46.0 47.6 36.9 40.0 40.4 43.2 36.1 1983 54.4 53.2 63.1 66.7 75.1 80.3 75.9 85.9 87.1 85.5 78.3 72.3 1984 75.9 77.5 75.1 73.1 75.1 71.1 59.2 55.2 55.6 48.0 46.0 44.0 1985 42.8 44.0 48.8 50.8 53.6 57.6 54.0 54.4 54.0 51.6 51.6 56.4 1986 64.3 60.0 49.2 60.0 52.0 52.4 47.6 57.2 57.2 56.8 60.4 64.7 1987 62.0 66.3 67.9 66.7 67.9 65.5 73.9 77.9 75.5 84.3 75.9 70.3 1988 68.7 67.1 67.9 67.9 67.9 63.5 70.7 72.3 66.3 71.9 65.1 66.7 1989 64.7 57.6 52.8 66.7 58.8 54.8 51.2 56.4 55.6 44.0 51.6 45.2 1990 51.2 52.8 54.4 52.8 58.4 59.6 61.6 60.4 56.8 54.4 44.4 37.3 Indexes are based on seasonally adjusted data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

536 Federal Reserve Bulletin • July 1991 average level of each of the diffusion indexes was Relationships between diffusion indexes of ingreater than 50 from July 1967 to December 1990, dustrial production and percentage changes in which simply indicates that more industries re- the industrial production index are examined in corded production advances than declines during James E. Kennedy, "Empirical Relationships this period. between the Total Industrial Production Index The three- and six-month diffusion indexes and Its Diffusion Indexes," Finance and Ecoare substantially smoother from month to nomics Discussion Series 163 (Board of Govermonth than the one-month index. This pattern nors of the Federal Reserve System, Divisions of occurs because transitory shocks to production Research and Statistics and Monetary Affairs, that result from, for example, unseasonable July 1991).4 weather or strikes can buffet the one-month diffusion index. In contrast, because they are calculated over longer periods, the three- and 4. This paper may be obtained on request from The Editor, Finance and Economics Discussion Series, Division of Resix-month indexes are better insulated from search and Statistics, mail stop 89, Board of Governors of the such factors. Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

537 Industrial Production and Capacity Utilization Released for publication on May 13 Outside of motor vehicles and parts, industrial production declined 0.2 percent. Total industrial Industrial production edged up 0.1 percent in April, capacity utilization decreased 0.2 percentage point based on preliminary estimates, after having fallen a to 78.3 percent. At 105.1 percent of its 1987 annual downward revised 0.6 percent in March. Production average, total industrial production in April was of motor vehicles rose again in April, with a jump in 3.4 percent below its year-ago level. truck assemblies accounting for most of the gain. In market groups, production of consumer goods Industrial production indexes Twelve-month percent change Twelve-month percent change Products - 5 1986 1987 1988 1989 1990 1991 1986 1987 1988 1989 1990 1991 Capacity and industrial production Ratio scale, 1987 production = 100 Ratio scale, 1987 production = 100 _ — Total industry — 140 — Manufacturing 140 _ Capacity , Capacity 120 - 120 ^ 100 100 _ —Production — 80 y/ Production _ 80 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Percent of capacity Percent of capacity Total industry Manufacturing 90 90 Utilization Utilization ^ - —^ - 80 r —-wv—^^ ~ 80 70 70 1 1 1 1 1 1 1 1 1 1 I 1 1 1 1 1 1 1 1 1 1 1 1 1 1979 1981 1983 1985 1987 1989 1991 1979 1981 1983 1985 1987 1989 1991 All series are seasonally adjusted. Latest series, April. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

538 Federal Reserve Bulletin • July 1991 1987 = 100 Percentage change from preceding month PPPeeerrr--ccceeennntttaaagggeee ccchhhaaannngggeee,,, IIInnnddduuussstttrrriiiaaalll ppprrroooddduuuccctttiiiooonnn 1991 1991 AAAppprrr... 111999999000 tttooo Jan.r Feb.r Mar. P Apr. P Jan.r Feb.' Mar. P Apr. P AAAppprrr... 111999999111 Total index 106.0 105.7 105.0 105.1 -.5 -.8 -.6 .1 -3.4 Previous estimates 106.6 105.7 105.3 -.5 -.9 -.3 Major market groups Products, total 107.8 107.0 106.5 106.6 -.5 -.8 -.4 .1 -3.0 Consumer goods 105.6 105.0 105.0 105.4 -.1 -.6 .1 .4 -1.6 Business equipment 121.6 120.5 120.2 120.5 .4 -.9 -.3 .3 -.9 Construction supplies 97.7 96.3 93.9 94.3 -3.2 -1.5 -2.5 .4 -11.3 Materials 104.8 103.8 102.8 102.8 -.5 -.9 -1.0 .0 -4.1 Major industry groups Manufacturing 107.0 106.0 105.1 105.4 -.4 -.9 -.8 .2 -3.8 Durable 107.2 106.0 104.9 105.5 -.3 -1.0 -1.1 .6 -5.0 Nondurable 106.8 106.0 105.4 105.2 -.5 -.8 -.2 -2.1 Mining 101.7 102.9 102.1 101.0 -1.6 1.2 -.8 -1.1 -1.8 Utilities 107.6 105.2 106.0 106.0 -1.1 -2.3 .8 -.1 -.7 Percent of capacity CCCaaapppaaaccciiitttyyy gggrrrooowwwttthhh,,, CCCaaapppaaaccciiitttyyy uuutttiiillliiizzzaaatttiiiooonnn 1990 1991 AAAppprrr... 111999999000 AAvveerraaggee,, LLooww,, HHiigghh,, tttooo 11996677--9900 11998822 11998888--8899 Apr. Jan.r Feb.r Mar.r Apr. P AAAppprrr... 111999999111 Total industry 82.2 71.8 85.0 83.2 80.0 79.1 78.5 78.3 2.5 Manufacturing 81.5 70.0 85.1 82.5 78.9 78.0 77.2 77.1 2.9 Advanced processing 81.1 71.4 83.6 81.5 78.2 77.4 76.8 76.8 3.2 Primary processing 82.4 66.8 89.0 85.0 80.6 79.3 77.9 77.8 2.2 Mining 87.4 80.6 87.2 89.3 89.5 90.6 89.9 89.0 -1.4 Utilities 86.8 76.2 92.3 84.4 84.1 82.1 82.7 82.6 1.5 r Revised, NOTE. Indexes are seasonally adjusted. p Preliminary. other than motor vehicles was little changed in both In industry groups, manufacturing output in- March and April. This firming in production, after creased 0.2 percent in April, while production at four months of significant declines, mostly reflected mines fell sharply and output of utilities was little gains in output of durable consumer goods, such as changed. The operating rate for manufacturing furniture, carpeting, and appliances. Output of slipped to 77.1 percent, its lowest level since August nondurable consumer goods continued weak, with 1983, when it was at 76 percent. Utilization for the largest decline in April in the output of consumer advanced processing industries held steady in April, fuels. Production of business equipment other than while the rate for primary processing fell off slightly. motor vehicles fell 0.3 percent in April, as another Production picked up in April for many manufacsharp drop in industrial equipment was only partially turing industries, including motor vehicles and parts, offset by a small gain in information processing textiles, and furniture. Production of fabricated equipment. After having fallen sharply for the past metal products, particularly those related to the eight months, the output of construction supplies motor vehicle industry, also rose in April after apparently changed little in April, buoyed by having declined for the past half-year. In addition, improvements in lumber and related products. lumber output has changed little, on balance, since Output of materials was unchanged in April after February, after falling, on average, nearly 2 percent having fallen every month since last September. a month between July and February. Among the Much of the improvement resulted from increased many industries in which output continued to fall in production of parts for motor vehicles; the output of April, primary metals production dropped 0.8 perpaper and textiles also moved up. However, in cent, its fifth straight monthly decline. Likewise, April, there were further declines in the production weakness was still apparent in the chemical industry, of metals and chemicals, and a drop in energy as well as in transportation equipment other than materials. motor vehicles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

539 Statements to the Congress Statement by Richard F. Syron, President, Fed- judgmental. The natural gap between optimistic eral Reserve Bank of Boston, before the Subcom- borrowers and skeptical lenders is inherent to the mittee on Domestic Monetary Policy of the Com- credit process. Even during periods of rapid mittee on Banking, Finance and Urban Affairs, credit expansion, some borrowers will be denied U.S. House of Representatives, May 8, 1991. credit that would certainly be granted in a world with complete information and no uncertainties. I am pleased to appear before you to discuss Thus, anecdotal evidence of credit denials is current questions about the availability of credit. hardly evidence of a credit crunch. As you are all aware, this issue has been of Perhaps the best definition of a credit crunch particular concern in New England. The lessons can be reached by determining whether current learned from our experience both during the lending patterns conform to standard practices at credit laxity of the mid-1980s and the ensuing the same phase of previous business cycles. reaction should assist us in avoiding similar Clearly, lending behavior must change over the credit difficulties in the future. business cycle. Because credit evaluation is so In the hope of providing some perspective on dependent on expectations, the outlook for these problems, I will begin by attempting to projects can vary significantly depending on define what is commonly called the "credit whether lenders expect the economy to contract crunch." I will then describe how developments or expand. If credit conditions during recessions in the financial and real sectors of the economy were to be compared with conditions during led to restricted credit availability and why the expansions, all recessions would qualify as credit situation has been particularly acute in New crunches. Thus, a more useful definition of credit England. Finally, I will conclude with the out- crunch asks whether credit availability is unusulook for the future and caution that while we do ally restrictive for the current stage of the businot want to return to the credit conditions of the ness cycle. mid-1980s, which often were characterized by Historically, credit crunches have been assoexcessive credit expansion, we also must make ciated with disintermediation, the loss of bank sure that the 1990s do not become a period of deposits when higher rates of return on assets excessive credit contraction. were available from outside the banking sector. In the absence of regulation, depository institutions would normally have responded to such a CREDIT CRUNCHES loss of funds by raising the rates they paid on deposits; however, this was prevented in the past One particular difficulty with the debate over the by ceilings on interest paid on bank deposits. The credit crunch is that the term is used to describe extent of bank losses of deposits would vary a variety of credit conditions. Few borrowers across institutions, depending on their deposibelieve that they should ever be refused credit, tors' sensitivity to return differentials, but most and they interpret a denial as evidence of broader depository institutions responded to periods of credit problems, rather than a problem specific to disintermediation by tightening credit. As market the project for which they seek credit. Few loan interest rates dropped, the ceilings on bank deofficers believe that they ever refuse credit for posit rates would become nonbinding, and disinprofitable projects, but the uncertainties sur- termediation and the so-called credit crunch rounding any project and the underlying health of would end. the economy make credit assessments essentially Our current credit problems are not the result Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

540 Federal Reserve Bulletin • July 1991 of a drain of bank deposits, to be ended by lower operations. Banks have focused on this sector interest rates. In substantial measure this period because lending to small firms requires an underof tight credit is the result of a loss of bank standing of the local economy, the characteriscapital, rather than a loss of deposits. The shrink- tics of small businesses, and the business acumen ing availability of credit from banks thus may be of management. Banks' expertise in evaluating more accurately characterized as a capital and monitoring credit, particularly for these crunch rather than a credit crunch. small privately held firms, has not been seriously This capital crunch has been uneven in its invaded by competition from other financial ineffects on our depository institutions. Equity termediaries. But if this important source of capital losses have been particularly large in the financing is lost, small firms have few credit Northeast, where banks have suffered extensive alternatives. loan losses as a result of declining real estate Existing relationships between borrowers and prices and a bubble in real estate lending in the lenders are particularly important and often difmid-eighties. Similarly, not all borrowers are ficult to replicate for small businesses. Thus, equally affected by problems in the banking when a small business' current lender either goes sector, since many borrowers depend almost out of business or cuts back its lending activity, entirely on financing unassociated with banks. many companies have an extraordinarily difficult Therefore, the current capital crunch primarily time in developing new access to credit. A priaffects bank-dependent borrowers located in sec- mary reason for this is the simple economics of tors of the country that have experienced large business lending. In many ways, the costs of losses of capital. gathering and evaluating information are as great Banks are but one of many sources of financing for a loan of $100,000 as for a loan ten times that for many borrowers, particularly large ones.1 size. Depository institutions play a declining role in Small businesses in New England have been providing funds to the nonfinancial sector of the particularly hurt by the capital crunch because economy. The recent drop in the flow of depos- the loss of bank capital is greatest in this region, itory credit primarily reflects the loss of the which is also hardest hit by the recession. While intermediation services of the thrift industry. the nation as a whole has maintained a relatively However, all depository institutions have had a stable rate of growth of both bank capital and diminished role in lending, as an increasing num- assets, the New England experience has been ber of nonfinancial firms directly accessed na- quite different. Capital and assets grew rapidly tional and international financial markets, and during the mid-1980s but have declined sharply many consumer and mortgage loans were held by since then. nondepository institutions as a result of securiti- The loss of bank capital in New England is zation. In addition, other financial intermediaries particularly troubling. With little prospect of have begun to compete in markets traditionally issuing new stock in the current economic envidominated by depository institutions. This com- ronment, banks can restore their capital-to-asset petition is likely to increase, as problems in the ratio only by retaining more earnings and shrinkbanking sector limit the ability of banks to com- ing their assets. Many institutions in New Enpete effectively with other financial institutions. gland have been reducing their dividends and Thus, large firms and borrowers whose loans contracting their lending. In some areas, this can be easily securitized will not be seriously process has made loans unavailable to otherwise hurt by the erosion in some bank's capital posi- creditworthy borrowers who are dependent on tions. The sector most likely to be affected is bank financing. made up of small firms, which traditionally have It is the loss of bank capital that differentiates relied heavily on bank credit to finance their credit availability at this stage of the current business cycle from similar periods previously. Thus, the answer to whether we are experiencing 1. The attachments to this statement are available on a credit crunch is "yes," in at least that respect. request to Publications Services, Board of Governors of the Regions that have lost substantial bank capital Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 541 are experiencing tighter credit conditions than boom turned to bust, and that decline plus conthey would otherwise. The major cause of this tinuing weakness in manufacturing spilled over credit crunch is not monetary policy or changes to other sectors of the regional economy. The in bank regulation, however; it is the loss of bank result has been the worst drop in employment capital resulting from excessive credit growth experienced in New England in the past two during the mid-1980s. To understand our current decades. In the three previous recessions, emproblems with credit availability, it is essential to ployment declines subsided approximately ten understand the changes in bank lending patterns months after the peak. By contrast, New Enthat occurred in the 1980s. gland employment has been declining for the past twenty-two months, and the trough may not occur until late this year or early next year. ECONOMIC AND FINANCIAL Drops in employment of this magnitude were DEVELOPMENTS IN THE 1980S bound to have reverberations in the financial sector. Moreover, because the construction During the 1980s many regions experienced bus- boom was financed almost entirely by credit, the iness cycles that were out of sync with the banking sector had a large exposure to any country as a whole. The Southwest experienced downturn in real estate. Depository institutions an oil cycle, many midwestern states experi- had had many incentives to expand their real enced a farm cycle, and New England experi- estate portfolios. Losses from Third World enced a real estate cycle. Each of these cycles in loans, farm loans, and oil loans encouraged the the real economy has an analog in the financial large New England banks to look for lending economy. opportunities within their own region. Smaller During the 1980s, employment in New En- thrift institutions, flush with new funds from gland increased gradually but steadily despite conversion to stock ownership, were also aggresonly modest increases in the population. How- sively seeking new lending opportunities. The ever, this smooth growth in New England em- rapid expansion of real estate lending in New ployment as a whole masked large swings in England led to a relaxation of lending standards. several industry groups. Manufacturing of dura- While real estate lending roughly doubled nationble goods, a traditional strength of New England, wide between 1984 and 1988, real estate lending grew rapidly in the late 1970s and early 1980s, in New England grew nearly fourfold. This fueled by growth in computer and other high growth caused bank performance to be tied to the technology companies. However, employment in health of the real estate market. In 1990, real these industries peaked by 1984 and declined for estate loans comprised 64 percent of all loans and the rest of the decade as New England computer leases for New England banks, a dramatic inmanufacturers lost market share. crease from 48 percent in 1985. On a purely This decline in manufacturing did not cause a anecdotal basis, in my conversations with bankdrop in overall employment because of a simul- ers I have been struck by how much the very taneous increase in construction employment. vocabulary we use reflects this increase in real New England's share of construction employ- estate lending. You could close your eyes and ment started to increase in the late 1970s and think you were talking to thrift institution bankrose very sharply after 1983. The construction ers ten years earlier. Many of our institutions had boom, in turn, helped stimulate support indus- essentially become real estate lenders rather than tries such as financial services. Thus, the de- traditional commercial bankers. cline in one of our major industries, durable At first, increasing bank exposure to the real goods manufacturing, was camouflaged by the estate market was quite profitable. New England extraordinary increase in construction and re- house prices, which in 1984 were already 35 lated industries. percent higher than those in the nation as a Such explosive growth in real estate was not whole, had increased so rapidly that by 1987 they sustainable in a region with only small increases were twice the national average. These price in population. By the late 1980s the construction increases outstripped the ability of both individ- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

542 Federal Reserve Bulletin • July 1991 uals and firms to pay, resulting in excess capac- try. However, since the late 1980s the survey ity. As this excess capacity increased over time, indicates a substantial increase in New England real estate prices softened and then began to fall. respondents who believe that credit is tighter. This has been even more true of commercial real This survey, along with substantial anecdotal estate than of the residential sector. Given the evidence, suggests that small business has relarge exposure of New England depository insti- cently experienced significantly more difficulty tutions in real estate, this caused substantial in obtaining credit. problems for the banking sector. The drop in real estate prices caused a substantial increase in nonperforming assets, much THE OUTLOOK AND POLICY IMPLICATIONS of it is real estate loans. As nonperforming assets grew, banks were forced to increase their At least in New England, the 1980s was a period loan-loss reserves, resulting in lower capital. of excessive lending. In response to the large Even worse, this decline may not yet fully loan losses that occurred as a result of this reflect the extent of the problem. Nonperform- bubble, banks and bank regulators have natuing assets as a percentage of equity plus re- rally reevaluated lending practices. A return to serves have been rising through the end of 1990, more prudent lending is essential for the finanindicating that further losses of bank capital are cial health of the banking industry. However, still possible. The capital position of many we must ensure that the early 1990s do not institutions has become sufficiently impaired become a mirror image of the mid-1980s. Given that downsizing has been necessary. While that credit judgments by both bankers and most downsizing has involved selling or securi- regulators ultimately reflect human sentiments, tizing assets, banks have also tightened their it can be expected that to some extent the credit standards. overly optimistic expectations of the 1980s may During the explosive growth in lending in New be replaced by overly pessimistic expectations England during the 1980s, credit controls at some in the 1990s. However, with respect to the institutions had become lax. Most banks have regulators, and I certainly include myself in that responded to the increase in nonperforming loans group, I believe that the more valid criticism is by reevaluating loan practices established during whether we should have done more to dampen the boom, and some banks have concluded that the boom in the mid-1980s rather than how more conservative lending standards are re- much overreaction there has been now. While it quired. Correction of imprudent lending prac- is strictly my personal view, I do believe that tices was indeed a necessary condition for restor- there may have been a shift in regulatory sening some stability to the New England banking timent about some New England institutions market. Nonetheless, the shortage of capital and that, while understandable or even appropriate the need for many institutions to downsize has on a case-by-case basis, may have been permade credit availability more difficult, particu- verse for the economy as a whole. Any such larly for small firms, which are most dependent possible overreaction by regulators and banks on banks for financing. is now dissipating, however. Problems with credit availability are mea- Despite the many problems with credit availsured by a survey conducted by the National ability, we are finally beginning to see a few Federation of Independent Businessmen. In the rays of hope. As our most troubled institutions survey they ask, "Are loans easier or harder to are restructured to bring in new capital, many get than they were three months ago?" They financial institutions are in a position once again subtract responses of "easier" from responses to provide loans to creditworthy borrowers. As of "harder:" Therefore an increase reflects painful as the high unemployment rate and the tighter credit conditions. Small businessmen drop in real estate prices are, they will provide surveyed in New England during the boom the catalyst for restoring New England's comthought that credit conditions were easier than petitive position in manufacturing, which redid small businessmen in the rest of the coun- quires land and labor costs more in line with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 543 costs in the rest of the nation. Finally, any England as in the rest of the country. The restoration of the economy requires a restora- painful lesson from the New England experition of consumer confidence, which appears to ence that emerges for everyone is that avoiding be improving. As economic activity resumes, a booms that become bubbles is the only way to more sustainable rate of economic growth and a prevent busts. more viable banking sector will emerge in New I hope we have all learned that. • Statement by Silas Keehn, President, Federal levels. Many industry observers (and I strongly Reserve Bank of Chicago, before the Subcom- agree with them) feel that there is a significant mittee on Domestic Monetary Policy of the Com- overcapacity in the banking business, which, mittee on Banking, Finance and Urban Affairs, along with other market factors, accounts for U.S. House of Representatives, May 8, 1991. these highly competitive conditions. As a consequence, a commercial loan as a stand-alone I am very pleased to have this opportunity to give transaction frequently does not return an adeyou my views on the recent trends in credit quate level of profit. Indeed, some institutions availability. While perhaps I need not emphasize will decline a perfectly creditworthy loan unless the point, as the representative of a Reserve ancillary business will increase the profitability Bank located in the heart of the Midwest, it is of the overall transaction. This profitability issue entirely possible that the tenor of my comments is contributing to the current restraint. will be different from what you may hear from It is important to remember that the shift in other parts of the country. lending attitudes follows a phase of strong credit extension that took place during the 1980s. It is a logical response that was entirely reasonable to THE LENDING SLOWDOWN expect given some of the credit problems that have emerged as a consequence of this period of We have all heard a great deal about the "credit aggressive credit expansion. While the decline in crunch" during the past year. Unquestionably, economic activity with the resultant decline in there has been a tightening in the extension of the demand for credit has certainly had an imcredit, particularly commercial credit, by banks portant effect on loan volume, this tightening of during this recent period. Many banks have credit standards, reflecting a change in attitudes raised their credit standards, and to a significant by bank management, has had a major role as extent they have reduced commitments when the well. To emphasize the point, for a variety of use of unborrowed lines would result in large reasons we are going through a period of signifincreases in outstanding credit. In addition, they icant credit restraint. have raised interest rate spreads and tightened Having said that, I do not think that monetary covenants and collateral requirements. These policy has been the cause of this restraint. In a price and nonprice changes have had the effect of classic liquidity sense, it is my view that we are restraining the extension of credit. While the not experiencing a "crunch." In the most recent impact of this has been particularly significant in period, bank reserves have been adequate, and certain categories of lending, such as commercial very frequently conditions in this segment of the real estate and highly leveraged transactions, the money market have been described as "soft." effect of this restraint has extended to other parts Monetary policy has been eased rather aggresof the loan portfolio as well. sively and regularly over the past six months. Several forces have contributed to the restraint Recognizing that it is a matter of judgment, I do on the extension of bank credit. Because of not think that the recent and current credit intense competitive conditions in the banking restraint in the markets can be attributed to a markets, interest rate spreads on many commer- shortage of liquidity that has been induced by an cial transactions have been driven to very low overly restrictive monetary policy. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

544 Federal Reserve Bulletin • July 1991 CREDIT RESTRAINT Moreover, new credit-related activities like asset-backed commercial paper and prime rate What constitutes a credit "crunch," to my way funds have provided business with additional of thinking, is when creditworthy borrowers, alternatives. Ignoring these new sources of credit those that would normally find it possible to can leave the observer with an overly pessimistic obtain credit even under adverse economic cir- view of the state of the credit markets. Good data cumstances, cannot obtain financing. This is not on many of these emerging alternatives are only currently the case, at least in the Midwest. A now being assembled. However, some of the "crunch" is most likely to occur when all lenders work done at the Federal Reserve Bank of Chiserving a particular class of customers find their cago suggests that the extension of business lending capacity contracting. As a classic exam- credit on a national basis could be growing ple of this phenomenon, before Regulation Q, significantly more rapidly than was thought earwhich imposed ceilings on interest rates, was lier. The point is that focusing only on bank removed, this is precisely what happened to lending and not taking into account the broader mortgage borrowers when interest rates peaked recycling of credit within the financial markets dramatically—the good, the bad, and the indif- may obscure the overall picture. While in the ferent as a class were unable to obtain credit. past some of these alternatives may have been What currently exists is credit restraint—not a feasible only for large corporations, increasingly "crunch." But irrespective of this definitional more modest-sized companies are turning to difference, when bank borrowers experience a these sources. While smaller firms do not yet restraint on the availability of credit, this re- have access to all these alternatives, the reduced straint could have an impact on the performance reliance of large borrowers on bank credit has the of our economy. Firms may scale back on their potential benefit of freeing more bank resources plans and the projects for which the bank funds for smaller borrowers. would have been used; if enough firms are affected, economic growth in the aggregate could suffer. Large firms, however, are less likely to be THE EFFECT OF REGULATORY POLICIES affected by this sort of problem. They operate in ON CREDIT EXTENSION national or even international markets with many alternative suppliers of credit and therefore have While various regulatory policies, individually greater flexibility. Moreover, credit intermedia- and cumulatively, certainly are exercising a retion outside the banking system may indeed be straint on credit extension, in the main, I do not mitigating the impact of reduced credit extension think that the restraint has been regulatorily by commercial banks. This involvement extends driven. Rather, we are experiencing a self-corbeyond the very large borrowers. Our senior loan rective process. There has been a marketplace officer opinion survey indicates that small and reaction, and, as I noted earlier, bank managemiddle market firms are increasingly finding fi- ments have taken steps to deal with deteriorating nance companies to be an attractive alternative asset quality and the recessionary environment. to domestic banks. Though difficult to quantify, recessions do have This trend toward nonbank credit extension is an effect on lending attitudes separate and apart apparent in the data for the nation as a whole. from the credit qualifications of the borrower; the Business lending by finance companies grew at same loan applicant that might have been apan annual rate of 12 percent in 1990 while lending proved during a strong economic expansion will by domestic banks was virtually unchanged. Fi- be declined in a recessionary environment— nance companies represent only one of several lending officers will exercise a higher degree of alternative lenders that have stepped in to act as caution during adverse times. shock absorbers for the domestic banking sys- Capital requirements are certainly playing a tem. Large commercial firms are increasingly role. In the early 1980s the Congress, regulators, turning to alternatives like finance companies, and bankers began to be concerned that the foreign banks, and the commercial paper market. banking industry did not possess a capital cush- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 545 ion that was adequate for the risks being taken. region's employment declined at roughly twice Regulators began pushing banks, particularly the national rate. Even after the recession ended, large banks, to increase their capital positions. employment did not bounce back, largely because The Congress registered its concern in 1983 when the sharp run-up in the value of the dollar in the for the first time you gave regulators explicit exchange markets limited the export of the restatutory authority to set minimum capital re- gion's manufactured products into the global marquirements for banks. These efforts have had a kets. Adding to the stress experienced by the positive result, and today, capital in the largest manufacturing sector, the region's agricultural banking organizations is nearly twice the level of sector also underwent a major structural adjustthe early 1980s. As a result of this higher level of ment as the virulent inflation of the late 1970s and capital, the banking industry, which has under- early 1980s was brought down to more moderate gone, and is continuing to undergo, a period of levels. These adjustments, and it would be hard to significant adjustment has, in the main, withstood overemphasize the magnitude of the adjustments some serious shocks better than anyone could that we experienced during this period, had a have imagined only a few years ago. But in an major effect on the banks in the region. We environment in which it has been very difficult to experienced a very high level of bank failures raise capital in the markets and in which, because during this period as the undercapitalized or of intense competitive pressures and the need to weakly managed institutions were unable to adprovide reserves for loan losses, profitability has just their positions. But our banking system came been reduced, the only other way of improving out of this period stronger and better capitalized, relative capital positions is to limit asset growth. learned the risks associated with asset value lend- Clearly this drive to increase capital is having an ing and the importance of adequate cash flows for effect on the willingness of the banks to extend loan repayment, and is now able to deal with the credit. But this is a constructive reaction and one recessionary environment with less stress than that probably would have occurred without regu- was the case before. Some observers suggest that latory pressure. It is clear from the data that the banks in the District, having been conditioned by better capitalized institutions have the ability to the region's adverse experiences, are better preachieve greater asset growth and higher levels of pared to deal with the current recession. Noneprofitability. To reiterate the point, improved cap- theless, if the recession is longer and deeper than ital positions will be absolutely critical to the is generally anticipated, our banks will not escape health and well-being of the industry, and until the difficulties that have emerged in other areas. capital has been increased to a point that bank In our District, smaller banks are a primary managements and regulators alike feel is appro- source of credit for small and medium-sized buspriate, this issue will have an inhibiting effect on inesses. As a consequence, their lending experithe extension of credit. ences are most likely to reflect conditions in the District as they pertain to this segment of the market. In the Seventh Federal Reserve District, CHARACTERISTICS OF THE DISTRICT commercial and industrial lending by smaller banks grew a little less than 3 percent in 1990, I noted at the outset that coming from the Mid- down from 4.7 percent during 1989. This slowwest I might provide a different response to the down in lending appears to have been driven thrust of your hearings than is the case in other largely by the weakness in key manufacturing parts of the county. The early 1980s was a partic- sectors like the automotive industry, not by ularly difficult period for our region. Our economy tighter credit standards. To support that point, relies very heavily on manufacturing, and because commercial lending at small Michigan banks was of that we have always been highly cyclical. virtually flat during 1990 after having grown 4 Economic recessions that affected the national percent in 1989. In general, these smaller Michieconomy had a considerably greater impact on gan banks are well capitalized with a relatively our area. Our manufacturing sector bore the brunt lower level of criticized assets suggesting that, to of the 1980-82 recession; during this period the a very great extent, the reduced level of credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

546 Federal Reserve Bulletin • July 1991 extension is a reflection of reduced activity in the improving their capital positions—simply put, unit automotive industry. In states such as Wisconsin banking cuts two ways. and Indiana, where the economy has remained relatively strong, business lending continued to grow at a healthy rate in 1990. This pattern of commercial lending suggests that credit extension CONCLUSION to small business in the Midwest is being driven by a slowdown in manufacturing activity in the To conclude, it is my opinion that the credit area and not by restrictive credit terms, and we restraint that we are experiencing in the Midwest are not likely to see a significant increase in bank reflects an adjustment in the marketplace, and it is lending until the economy moves into the recov- entirely possible that we are coming to the end of ery phase. This conclusion has been reinforced by this phase. Barring a more adverse economic recent interviews with a number of small busi- experience than is generally anticipated, I would nesses. expect to see a stabilization in asset quality, and Historically, the states in our District have had that at some reasonably near-term point, and as a unit banking orientation, which is to say that the market process continues we will see an branching or at least extensive branching was not improvement in bank earnings. Capital positions, permitted. This meant that some local markets, on already significantly better than they were at the occasion, may have experienced greater credit beginning of the last decade, will continue to show restraint than others because funds did not flow improvement, and as we go through this period freely across the region from surplus to deficit the safety and soundness of the banking sector areas. This has been changing, but still it is a will be enhanced. This is absolutely fundamental feature of our market that differentiates the region to the economy of this country. A well-functionfrom others where statewide branching has been ing economy experiencing good rates of sustained permitted for quite some while. I might say, economic growth is dependent on a sound bankhowever, that there is an interesting alternative ing system. While in the short run the credit argument to this point. Some of our smaller mar- restraint that we have been experiencing has been kets are served mainly by the banks in their difficult, particularly for those who have been particular areas. Many of these banks have been a denied credit, in the long term the overall econ- "source of strength" to their markets because omy will benefit from this significant transition. In they have not been adversely affected by some of the interim, while legislation to deal with the the problems that have had an impact on the broad question of restructuring the financial syslarger institutions, and therefore they have not tem has become absolutely compelling, any spehad to restrain the extension of credit. Adding to cific legislative initiatives to deal with the credit this, the smaller banks in our area quite frequently restraint in an attempt to override the market have had better capital positions and therefore process would seem ill-advised and would probahave not had to restrain asset growth as a way of bly result in unintended distortions. • Statement by Robert D. McTeer, Jr., President, ern Louisiana, and southern New Mexico. While Federal Reserve Bank of Dallas, before the Sub- I am personally new to the area, having assumed committee on Domestic Monetary Policy of the my position on February 1, our staff has done Committee on Banking, Finance and Urban Af- considerable work on the subject, which is sumfairs, U.S. House of Representatives, May 8, marized in the annotated bibliography attached 1991. to my written remarks.1 I am pleased to appear before you to discuss 1. The attachments to this statement are available on credit conditions in the Eleventh Federal Rerequest to Publications Services, Board of Governors of the serve District, which includes all of Texas, north- Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 547 As you know, the banking industry in the 1984, the rate of nonperforming assets fell below Eleventh District experienced much turmoil in the rate at banks outside our region. The troubled the 1980s. Two oil price shocks and a related asset ratio at Eleventh District banks fell to 2.5 collapse in real estate prices triggered bank and percent of total assets by year-end 1990 from its thrift institution failures of unprecedented pro- peak of 8.3 percent in the third quarter of 1988, portions. with progress made at both large and small Banks in the Eleventh District began the dec- banks. ade of the 1980s in a very strong position in terms I wanted to avoid getting bogged down on a of profits and capital and prospects for the future. definition of "credit crunch," but with respect to Yet, during the height of the later difficulties— the Eleventh District let me just say that bank from 1987 to 1989—more than 400 banks failed, credit has contracted every year since 1985, which accounted for more than 50 percent of all including last year. The volume of outstanding the U.S. bank failures during that period, and loans at our District banks fell from a peak of these banks had 44 percent of the banking assets more than $132 billion in 1985 to just more than in our region. $83 billion at the end of 1990. The ratio of loans The number of banks located in the Eleventh to assets at Eleventh District banks declined District peaked at just more than 2,100 in 1986 from more than 59 percent to 46 percent from the and fell to about 1,300 by the end of 1990, a end of 1985 to the end of 1990. While that ratio is decline of almost 40 percent. Although this con- a sign of past credit restraint, it may also be solidation included the results of a new branching interpreted as an opportunity to expand lending law in Texas, much of it reflected failures. Eight in the future. of the nine largest banking organizations in Texas Despite the contraction in credit for the past either required Federal Deposit Insurance Cor- four years, an economic recovery, nevertheless, poration (FDIC) assistance to continue opera- began in our region in 1987 and continued modtions or were acquired by out-of-state institu- estly through last year and into this year despite tions. The thrift industry underwent an even the onset of national recession. The Eleventh larger retrenchment, with the number of thrift District economy continued to have positive eminstitutions declining more than half. A calamity ployment growth until recent weeks. If the naof this magnitude obviously disrupted normal tional economy begins to recover soon, we could lending patterns and credit arrangements. possibly escape another recession in our part of Although the difficulties that Eleventh District the country, and our banking recovery could banks experienced during the past decade con- proceed. tinue to affect their performance, we are begin- We do not fully understand the interrelationning to see signs of recovery. Last year, after ships between banking conditions and economic four consecutive years of losses, they showed an activity. Statistical research at our Federal Reaggregate profit. Year-end income statements for serve Bank of Dallas has confirmed the expected 1990 showed earnings of $780 million. The over- impact of the local economy on our banks, but it all return on assets remains low, at just less than has failed to confirm an independent impact Vi percent, but the transition to profitability is running the other way. The economic recovery in encouraging, particularly compared with the neg- the face of declining local bank and thrift lending ative returns of the preceding four years. The suggests alternative sources of funds to local charts attached to my testimony generally reflect borrowers. Since large borrowers have access to substantial improvement in the health of the commercial paper and the securities markets and banking industry in the Eleventh District in 1990. since consumers have access to nonbank The positive returns in 1990 helped our banks sources, the likely adverse impact of the cutback reduce their troubled assets. Their capital also in local bank and thrift lending is probably conimproved. Capital injections from the FDIC and centrated among small and medium-sized busifrom private sources increased the equity capital ness borrowers. Indeed, that is the source of ratios to 6.1 percent, moving them closer to the most of the anecdotal evidence of a credit national average. And for the first time since crunch. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

548 Federal Reserve Bulletin • July 1991 The reduction in bank credit no doubt resulted the conditions that led to this credit "crunch," if from the massive loss of bank capital, and new you will, have been improving and an increasing sources of capital were scarce. It is also true that number of our banks are poised to resume more the major changes in our financial structure dis- normal lending activity. Surprisingly, our local rupted traditional relationships between borrow- economy has been able to recover despite the ers and lenders and between correspondent and local credit situation, although no doubt the respondent banks—to the detriment of both bus- recovery would have been more vigorous withiness borrowers and the surviving banks. Rescu- out that constraint. If the national recovery ing banks brought needed capital to the devas- comes soon and financial conditions remain fatated industry and stabilized the situation. vorable, the climate is right for the continued Nevertheless, as the restructured banks shed healing of our banking system and the continued problem loans and changed lending focus and recovery of our local economy. strategies, even high-quality borrowers were Monetary policy has provided a positive enviforced to make new credit arrangements. Long- ronment for both. Short-term interest rates are at lasting relationships were severed and had to be very low levels. The money supply is growing in replaced, often with new bankers unfamiliar with the middle of its target range. The banking systhe borrowers' business or credit history. These tem is liquid. More money in the economy is no disruptions occurred within an environment of substitute for more capital in the banking system. closer scrutiny of new loans, rising loan stan- Fundamental banking reform is needed to predards, and declining appraisal and collateral val- vent another disaster and to foster a healthier, ues. And there seems to be a genuine perception more viable banking system for the future. Howof heightened uncertainty that has made bankers ever, care must be taken to avoid a worsening of more cautious about putting their funds at risk. the current banking situation in moving toward Surviving banks had to contend with their own long-term reforms. For example, one concern I problems while their correspondent relationships have is that deposit insurance might be cut back were being disrupted. Furthermore, they had to too severely before the "too-big-fail" problem is compete with new players that had the advantage solved. Such a development could result in unof government assistance and with existing trou- fortunate unintended consequences for the many bled players that were paying a "Texas premi- community banks and their borrowers in the um" trying to grow out of their problems. Banks Eleventh District and in the nation. that had remained relatively conservative during In the long run, the best thing the Federal the boom years found their own survival threat- Reserve can do for banking, as well as for the ened first by competition from their less conser- economy generally, is to provide a stable monevative brothers and then by the subsidized res- tary environment. cuers of those competitors. It is no wonder that Even the Texas banking crisis, though usuall involved have felt great frustration. That ally thought of as an aberration having its roots frustration was only compounded by the knowl- in an OPEC-related collapse in oil prices, can edge that these problems were considered to be be traced to the inflationary seventies. It was in merely "Texas problems" or "Southwest prob- that period that the fiction was created and lems" until they began to be experienced else- nurtured that betting on inflation generally, and where in the nation. Then they became national higher oil prices in particular, was a sure bet. problems. We have been reminded, once again, that mar- I know that you are familiar with the history kets eventually adjust and that exploding oil that I have tried to summarize here and with the prices or real estate prices will sow the seeds of frustrations felt in my part of the country. I recall their own correction. In a stable monetary and it here only because I consider it part of the price environment, extreme relative price responsibility of my new job to do so. changes will be more evident, not being masked by an inflationary price level, and lenders and In concluding, let me say that bank credit by investors will have a better basis for rational local institutions has been constrained and condecisionmaking. • tinues to be constrained in our area. However, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 549 Statement by John P. LaWare, Member, Board bility of invoking the too-big-to-fail doctrine unof Governors of the Federal Reserve System, der any circumstances. One can contemplate before the Subcommittee on Economic Stabiliza- situations in which uninsured liabilities of failing tion of the Committee on Banking, Finance and institutions should be protected, or normal regu- Urban Affairs, U.S. House of Representatives, latory actions delayed, in the interest of macro- May 9, 1991. economic stability. Such a finding typically would be appropriate only in cases of clear I am pleased to appear before this subcommittee systemic risk involving, for example, potential on behalf of the Federal Reserve Board to dis- spillover effects leading to widespread depositor cuss the economic implications of the so-called runs, impairment of public confidence in the too-big-to-fail doctrine and proposed legislation broader financial system, or serious disruptions dealing with this issue. The concerns encom- in domestic and international payments and setpassed by the term "too big to fail" are among tlement systems. the most important reasons why we need to In practice, situations representing true sysreform not only our deposit insurance system but temic risk are rare. Indeed, one can envision also the broader structure of financial institutions improved circumstances in which even a very and regulation. The Board urges the Congress to large bank could fail and not pose an inordinate view the too-big-to-fail doctrine as one element risk to the economy. Unfortunately, the specific of a very complex set of problems that need to be considerations relevant to such determinations attacked on several fronts. are not fixed but will vary over time with, for At the outset, I want to emphasize that the example, the underlying strength of the financial Board appreciates, and is sensitive to, the equity system and the economy. and efficiency arguments frequently advanced for In principle, systemic risk also could develop if eliminating too-big-to-fail policies. We are ex- several smaller or regional banks were to fail. tremely uncomfortable with any regulatory pol- Partly because such failures could potentially icy that differentiates among banks, or their have severe consequences for a community or customers, largely on the basis of that institu- region, purchase and assumption resolutions tion's size. Under the too-big-to-fail doctrine, have not only been used with large banks but uninsured deposits at large banks typically have often with small institutions as well. Neverthebeen protected in full—through purchase and less, in practice systemic risks are more likely to assumption resolution methods—while those at be associated with failures of large institutions smaller institutions generally face a greater risk that are major participants in interbank financial of some loss. markets and in clearance and settlement systems Fairness alone would seem to argue that the for securities transactions. treatment of depositors at a failed bank be inde- The Board endorses reforms that would foster pendent of its size. Indeed, on many occasions a stronger and more resilient banking system, the Board has indicated its view that the pre- one in which bank failures would be less likely, sumption should be that regulatory policy is and, should even a very large bank fail, the equally applicable to banks of all sizes. It is strength of other institutions would be sufficient desirable that no bank should assume that its to limit the potential for systemic risk. Thus, scale insulates it from market or regulatory dis- over the years we have been committed to higher cipline, nor should the depositors with uninsured capital standards, to the reduction of risk in the balances in a large bank assume that they face no payment system, to finality criteria for clearingrisk of loss should that institution fail. For these houses and payment systems, and to improved reasons, the Board supports those provisions of international cooperation in the areas of payment the Treasury proposal that would enhance the systems and banking supervision. For the same accountability of, and tighten the criteria used reason, we also support the Treasury's proposals by, regulators in resolving failed banks. calling for frequent on-site examinations, prompt However, we believe strongly that it would be corrective action policies, interstate branching, imprudent for the Congress to exclude all possi- and a broader range of permissible activities for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

550 Federal Reserve Bulletin • July 1991 financial services holding companies with well- ment for goods and services is usually taken for capitalized bank subsidiaries. With these changes, granted. But, clearly, trade and commerce would we believe that over time the financial system and be curtailed if this ability were substantially the economy could better tolerate large bank impaired for a major portion of the economy. failures, thereby minimizing the likelihood that One aspect of the potential problem is clear: regulators would need to invoke the too-big-to-fail When a bank fails, the ability of its depositors to doctrine. make payments from their accounts would be Even in such an environment, however, it severely limited were it not for government inwould be impossible to confidently assert that a tervention designed to maintain the liquidity of systemic risk situation involving one or more insured, and sometimes uninsured, balances. Retroubled banks would never occur, in large part cent examples of the potential hardship such because of varying macroeconomic and other disruptions could place on exposed depositors circumstances. In our view, therefore, it is not can be seen in the failures of the Ohio, Maryland, only prudent but essential that policymakers and Rhode Island deposit insurance systems. retain the capacity to respond quickly, flexibly, Clearly the problems could be greater in the case and forcefully in conditions involving extensive of the failure of a large bank, or a contagion of risk to the financial system and the economy. I failures at many banks. would note that while there surely are elements There is another aspect of systemic risk that is of unfairness in too-big-to-fail policies, unfair- generally not as well understood. Large banks ness also would result if regulators were required are major providers of payments and other "corto ignore systemic risks. Such a mandate could respondent" banking services for smaller banks needlessly expose banks and other financial in- as well as other financial institutions. Often these stitutions, their customers, and the broader soci- interbank relationships involve holdings of relaety to severe economic disruptions and hardships tively sizable compensating or clearing balances that were neither of their own making nor within at correspondent banks. Such interbank relationtheir control. ships are a key mechanism by which problems at The remainder of my remarks today will am- a large correspondent bank can be transmitted to plify on the reasons that have led the Board to other financial institutions. There are two ways these views. that this can occur. First, the loss of access to their balances at the correspondent could cause other financial institutions to experience liquidity SYSTEMIC RISK and solvency problems of their own. Second, the failure of a major correspondent bank could The fundamental reason why it may sometimes cause clearing and settlement problems for the be necessary to protect certain uninsured credi- customers of other banks and financial institutors or delay normal regulatory actions is sys- tions that, ultimately, depend on the correspontemic risk. Systemic risk refers to the possibility dent for payment services. Both of these possithat financial difficulties at one bank, or possibly bilities were concerns, for example, in the 1984 a small number of banks, may spill over to many failure of Continental Illinois National Bank, more banks and perhaps the entire financial which was an especially important participant in system. So long as problems can be isolated at a interbank markets. limited number of banks, but confidence main- Some of the clearest examples of payment tained in the broader banking and financial sys- system-related systemic risk are associated with tem, there is little or no systemic risk. foreign exchange markets, which involve the One of the most serious and immediate poten- largest banks from all the major industrial countial effects of the failure of a very large bank is an tries, and are closely linked to and integrated impairment of the payment system that is so with domestic money and capital markets. On widespread as to disrupt the economic activity of any given day, a major bank will have entered the nation. In modern economies, the ability of into foreign exchange contracts to be settled on a individuals and firms to make and receive pay- future day, typically two days hence in the case Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 551 of "spot market" contracts. If for any reason ing a rapid and precipitous decline in the money exchange rates were to move in the interim, a supply and in the ability of banks to maintain old bank failure during this period could subject its and make new loans. Today, while a flight to counterparties, both banks and nonbanks, to currency is not a realistic concern, in large part unexpected capital losses. because of the success of the safety net, rapid Usually of greater immediate concern is the and expanding runs from domestic bank deposits settlement risk arising from the traditional prac- to government securities, other money market tice of paying out foreign currencies in settlement instruments, and foreign bank deposits could still of foreign exchange contracts before counterpay- seriously disrupt the process of intermediation ments in U.S. dollars are fully completed. This on which many borrowers depend. practice arose because European banking mar- The process by which savings are turned into kets operate in time zones at least five or six loans and other forms of financial investment is hours earlier than U.S. markets, while Far East- crucial to the creation of real capital in our ern markets operate in time zones thirteen or economy, and therefore central to the means by fourteen hours earlier. The result is that both which increased productivity and higher living U.S. and foreign banks are typically exposed to standards are achieved. Banks are obviously the risk of losing the full amount of foreign major contributors to this process. Indeed, the currency paid out while they are awaiting dollar primary value added by banks is their ability to payments. This settlement risk, although man- attract and pool depositors' funds by issuing aged by banks through various techniques, may liquid liabilities, and then provide financing to amount to substantial temporary exposures last- individuals and firms for productive purposes by ing for a few hours during the day. Failure to creating relatively illiquid loans. complete these transactions in a timely manner A credit relationship between a borrower and a would not only subject the counterparties to risk particular bank is not necessarily easily transof loss but could undermine confidence in domes- ferred to another financial institution. The unique tic and international payment systems, whose information collected by individual banks about smooth functioning is essential to flows of goods their customers is often expensive to acquire and and financial capital around the world. may be the result of years of close interaction. To reduce systemic risks in the payment sys- True, securitization and technological change are tem, in recent years the Federal Reserve has making it increasingly possible for many bank worked with private payment and clearing sys- customers to access credit markets directly, and tems to develop policies and procedures to re- the resultant decline in the value of the bank duce payment system risk. We believe that these franchise is one of the key issues that needs to be initiatives have lowered the potential disruption addressed in banking reform. But for now—and to counterparties on large dollar networks. Still, for the foreseeable future—there will exist a core it is the case that general instability in the bank- of business and other borrowers for whom banks ing system, such as would occur in a true sys- serve as a primary source of funds. For example, temic risk situation, could lead to multiple clear- data from our 1988 National Survey of Small ing and settlement failures. The Board believes Business Finances indicate that, of those small that it is in the public interest for policymakers to businesses having a loan or lease with a financial have the tools and flexibility to prevent such an institution, more than half obtained such financevent. ing exclusively from one depository institution, Another serious aspect of systemic risk is the and more than 80 percent had a loan or lease with possibility of widespread depositor runs on both a commercial bank. Moreover, it should be rechealthy and unhealthy banks. Such runs could be ognized that many securities are backed by bank engendered by the failure of a major bank, for credit guarantees or liquidity facilities. example, if such a failure generated significant We need only look to the economic and other uncertainty regarding the health of other banks. costs imposed by the so-called credit crunch to In days past, the primary concern was that get a sense of the critical importance of credit depositors would run to currency, thereby caus- creation by banks to the stability and growth of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

552 Federal Reserve Bulletin • July 1991 our economy. In addition, research on the Great bank's participation could, for a time, signifi- Depression points to the destruction of this func- cantly impair the functioning of these markets. In tion, caused by widespread bank failures, as a short, a variety of strong arguments can be made major contributor to the severity and length of for the need to manage carefully the withdrawal the Depression. These arguments suggest that a of a major bank from financial markets. rapid shift of deposits from one major portion of The Congress and the banking regulators the banking industry to another—say from banks should take pride in the fact that systemic risk considered weak to those considered strong— seems today to be a somewhat remote problem. would seriously disrupt credit creation. Such a One of the fundamental purposes of our banking disruption could easily feed into the real econ- safety net is to prevent systemic risk from beomy. coming an observable reality. I think that there The implications of widespread difficulties in can be no doubt that over the past half century the banking sector—including perhaps major dis- we have been extremely successful in achieving ruption of the payment system and extensive this goal. Indeed, stability in the banking system depositor runs on healthy banks—are not likely has undoubtedly contributed to the much milder to be confined to banks. In large part this is due contractions in the economy that we have expeto the interconnections that I have already de- rienced since World War II relative to earlier scribed between banks, other financial and com- times. The problem is that we have also paid a mercial firms, and households. But there are price for our success. An excessive degree of other reasons why a loss of confidence at banks moral hazard has been allowed to develop within could spread. For example, all types of financial the system. This has been manifested in various institutions depend on the maintenance of public ways, including low bank capital ratios, high confidence in the broad financial system for the asset risk at many banks, reduced market discisuccessful conduct of their business. Problems in pline by depositors, and ultimately large losses banking could reduce confidence in this broader by the deposit insurance funds. But reform system. should not deny or eliminate the benefits of our In addition, other financial intermediaries, for success; rather, it should attempt to maintain the example, investment banks, depend on commer- benefits while minimizing their costs. cial banks for substantial amounts of short-term credit. A significant reduction in the supply of bank credit would reduce the ability of these FURTHER ACTIONS NEEDED TO REDUCE institutions to provide underwriting services and SYSTEMIC RISK liquidity support to a wide variety of securities markets, including those for stocks, bonds, and As I noted earlier, the Board urges the Congress commercial paper. The resultant contraction in to view the too-big-to-fail doctrine as one elethe availability and liquidity of such investment ment in a complex set of problems that should be vehicles would tend to exacerbate the effects of a attacked simultaneously. In this regard, Chairreduction of loans at banks. Indeed, the contin- man Greenspan and other Board members have ued provision of credit to other financial interme- argued repeatedly in favor of fundamental reform diaries was one of the Board's primary concerns of our system of banking and financial regulation. in our efforts to minimize the adverse effects of Most recently, Chairman Greenspan testified last the October 1987 stock market break. week before the Financial Institutions Subcom- Large commercial banks are also major and mittee of the House Banking Committee on the direct participants in a variety of key financial Board's views on these issues. I shall not repeat markets. Examples include the markets for gov- his remarks here today except to reiterate my ernment securities, mortgage-backed securities, earlier observation that a vital component of the and foreign exchange. In their role as major ultimate solution to the too-big-to-fail doctrine is participants and marketmakers, large banks are a a stronger banking system. We should promptly primary source of liquidity for these markets. adopt reforms that will achieve this goal, includ- For this reason alone, the collapse of a major ing greater emphasis on capital adequacy, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 553 prompt corrective action to deal with financially tive and the expertise that are useful for evaluatdistressed depositories, timely on-site examina- ing the systemic risk implications of a given crisis tions, full interstate branching, and a broader or imminent bank failure. Our responsibilities in range of permissible activities for financial ser- this regard are carried out in part through adminvices holding companies with well-capitalized istration of the discount window, which would banking subsidiaries. As I noted earlier, by in- likely be involved in any attempt to manage the creasing the safety and soundness of our banking demise of a major bank in an orderly way. To system, these reforms would lessen the likeli- carry out our responsibilities for assessing syshood of a major systemic threat and a need to temic risk and administering the discount wininvoke the too-big-to-fail doctrine. dow, it is particularly important that we have the A way to equalize the benefits of too-big-to-fail thorough understanding of banks and the payment policies across depository institutions is to elimi- system operations that we obtain through close nate the deposit insurance limit, implying explicit and frequent contact with large banking organiza- 100 percent insurance for all deposits, including tions. those in excess of $100,000. I would note that With the increasing globalization of banking, such a change in policy would further increase the the world's central banks will need more than degree of moral hazard in the banking system, ever to coordinate responses to developments virtually eliminate depositor discipline, and in- that may originate anywhere and may have an crease potential taxpayer liability. To offset these impact on domestic and international payment effects, much higher capital ratios and unaccept- systems and financial markets. Thus, the Board ably intrusive regulation might be required. believes that it is essential that the Federal It is important to understand that, even in a Reserve—to conduct its stabilization policies, circumstance in which the too-big-too-fail doc- including protecting against systemic risk—have trine is invoked, the stockholders, bondholders, intimate familiarity with all banking organizaand senior managers of the insolvent bank lose. tions having a substantial international presence. This occurs even when all depositors are made Inevitably, a determination of whether syswhole, and the bank continues in operation. temic risk is a substantial concern must be made Thus, from the point of view of the owners, on a case-by-case basis. Furthermore, the Board bondholders, and senior managers, the applica- understands that it may be all too tempting for tion of too-big-to-fail policies still would imply de regulators to declare that systemic risk requires facto failure of the bank, since their financial deviation from normal regulatory procedures. interest in the bank would be extinguished. In For these reasons, the Board supports the Treathis sense, the too-big-to-fail doctrine implies no sury's proposal that both the Board and the inequity of treatment across banks. Moreover, in Secretary of the Treasury, who also has major the Board's view it is these very agents—stock- responsibilities for ensuring financial stability, as holders, bondholders, and senior managers— well as protecting taxpayers' funds, should who are in the best position to exert market jointly determine when systemic risk justifies discipline on the bank so as to limit the risk that such a deviation. Such a requirement would help the bank will ever become financially impaired. ensure that a systemic risk exemption is not abused without rendering the decisionmaking excessively cumbersome and time consuming. FEDERAL RESERVE ROLE IN IDENTIFYING SYSTEMIC RISK OTHER ISSUES The Board believes that it should have a role in determining when systemic risk exists. As the In your letter of invitation you inquired as to how nation's central bank, the Federal Reserve has a too-big-to-fail policy, by which I understand responsibilities for the health of the domestic and you to mean a policy of protecting against sysinternational payment and financial systems. temic risk, should be funded. This is a difficult Thus, the Federal Reserve has both the perspec- issue. On the one hand, banks, and particularly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

554 Federal Reserve Bulletin • July 1991 the largest banks, are clear beneficiaries of a can also be regarded as part of the banking safety policy that greatly reduces the likelihood of de- net. In addition, the possibility of direct governpositor runs on healthy banks. Thus, a case can ment intervention to deal with severe problems be made for funding such a policy through de- at key financial institutions is not ruled out in posit insurance premiums. On the other hand, most countries, although such intervention has the general public surely benefits from a too-big- been highly unusual. The fact is that regardless of to-fail policy, and thus taxpayer funding may be institutional structure, observers conclude that justifiable. Moreover, the Board is concerned explicitly or implicitly the norm in other indusabout the adverse impact of continued high—let trial nations is that the largest banks will not be alone rising—deposit insurance premiums on the allowed to collapse. Thus the United States is far competitiveness, size, and viability of our bank- from being alone in having policies in place to ing system. deal with systemic risk. The Board believes that Rather than focus on the relatively narrow issue the widespread adoption of such policies abroad of funding systemic risk, the Board prefers to bears witness to the possible systemic cost of the concentrate on the more general need to recapi- uncontrolled collapse of a major bank. talize the Bank Insurance Fund (BIF). The Board believes that any plan to recapitalize the Bank Insurance Fund must provide sufficient resources CONCLUSION without imposing excessive burdens on the banking industry in the near term. The Board also In closing, I would reiterate the Board's strong believes that loans to the BIF that would be repaid support for the principle that the presumption of with future premium revenues are the best means policy should be that regulatory actions apply of striking this difficult balance. But I would stress equally to banks of all sizes. However, one of the that the BIF recapitalization should be considered primary reasons why there is a safety net for within the context of the broader set of reforms I depository institutions is that failure of these firms described earlier. If such reforms are enacted, the can produce systemic risks, and unchecked sys- Board fully expects that the probability of facing a temic risk can impose major costs on the entire failure with systemic implications will decline economy. Over the past half century a fundamenover time. Thus, in the long run, the issue may tal, and successfully achieved, goal of policy has become moot. been to avoid systemic problems in the banking The final aspect of a policy of ensuring against sector. In addition, the broad set of financial systemic risk that I would note is that it is very reforms proposed by the Treasury and supported rare to observe large bank failures in other indus- by the Board would, in the Board's view, help trialized nations. Two important reasons for this further reduce the chance that we would find experience include the operation of financial ourselves in a situation of serious systemic risk. safety nets abroad and the structure of foreign But we should not fool ourselves into believing banking and financial markets. Indeed, many that we can guarantee that an impending bank observers argue that an implicit too-big-to-fail failure will not be a threat to the stability of our policy is followed in these nations. economy. Real life is never so neat and tidy, the Virtually all of the industrial countries have structure of the economy is not so fixed, and our deposit insurance systems. Often, however, ability to understand fast-breaking developments these systems do not provide the same explicit is not so perfect that we could ever ensure that. protection for depositors as the Federal Deposit Therefore the Board strongly urges the Congress Insurance Corporation (FDIC). Support for the to continue to allow policymakers the flexibility to largest banks appears most likely to be channeled interrupt our normal regulatory and failure resothrough countries' tax systems. In a few nations, lution procedures for the purpose of protecting the direct government ownership of some banks against systemic destabilization. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 555 Statement by E. Gerald Corrigan, President, sensitive to the appearance of placing before this Federal Reserve Bank of New York, before the committee what may be viewed as a rerun, I have Committee on Banking, Housing, and Urban attached to this statement that earlier testimony.1 Affairs, U.S. Senate, May 15, 1991. Even without the benefit of that lengthy statement, it will, I am sure, come as no surprise to I am delighted to have this opportunity to appear you when I repeat my strong opposition to arbefore you to discuss again certain aspects of the rangements that would permit commercial firms ongoing efforts to reform and modernize the to control banking institutions. banking and financial system of the United While that opposition is steadfast in current States. In discussing these issues with you, I circumstances, I also have said on many occahave, in words that Yogi Berra is alleged to have sions—including before this committee—that I uttered, a sense of "deja vu all over again." am not opposed to providing a measure of greater What I mean by that, of course, is that we have flexibility in this area so long as the protections been discussing these issues for years. But now against control are not violated or threatened. In the time has come to act—a sentiment that I addition, I believe that the basic ground rules know is widely shared among the members of associated with passive investments in banking this committee. institutions are badly in need of clarification. In You have asked me to respond to several part, this need for clarification arises because the questions on the banking and commerce issue. proliferation of new capital market instruments While those questions are covered in the opening has made it very difficult to administer the existsection of this statement, I have also included ing rules in a setting in which there is a large gray several observations on other aspects of the area between investments of less than 5 percent reform process as a whole, many of which bear for which control is presumed not to exist and on issues that I have discussed with this commit- investments of 25 percent or more for which tee on earlier occasions. control is presumed to exist. Of course, if such In considering the specific question of banking clarifications are made regarding passive investand commerce as well as the larger question of ments in banking organizations, logic would sugreform of the banking system, it seems clear to gest that the same ground rules should govern me that the Congress is faced with a very difficult passive investments by bank holding companies dilemma. On the one hand, the need for progres- in firms whose scope of activities fall outside the sive reform is urgent, to put it mildly. On the "closely related" test in the Bank Holding Comother hand, the need for caution is equally pany Act. strong, since so very much is at stake not only for With that suggestion in mind, let me now turn the well-being of our financial system over time to the specific questions posed by the committee but also for the health and vitality of the econ- regarding controlling investments in banking inomy at large. Striking the proper balance be- stitutions by commercial firms. tween progressive change and caution is not easy, but that goal is within reach. I might note at 1. Would allowing commercial firms to acquire the outset that in my judgment permitting com- and control banks bolster the capital base of the mercial firms to control banks fails on both banking industry? counts. It is neither progressive nor cautious. The answer to this question is unclear. Whether or not the capital base of the banking BANKING AND COMMERCE industry would be increased depends on several factors, including the nature of the investments, As the committee knows, several weeks ago I their size, how they are financed and, very appeared before the House Subcommittee on Telecommunications and Finance to discuss the 1. The attachments to this statement are available on banking-commerce question. At that time I subrequest from Publications Services, Board of Governors of mitted a rather lengthy statement. While I am the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

556 Federal Reserve Bulletin • July 1991 importantly, whether the "added" capital results mercial firms controlled banks on a wide scale, from double-leveraging of the existing capital the resulting economic power base might underbase of the commercial firms making the invest- mine the nation's will to resist short-run temptaments. To the extent the latter is the case, the tions to live with a "little more" inflation. Since "increase" in the capital base in banking could, a central bank can only be independent within over time, prove to be illusory. the government and the society it serves, these In important respects, however, the question pressures could—in very subtle but insidious of whether the capital base in banking would be ways—undermine the capacity of the central increased is the wrong question. Capital is at- bank to perform its necessary task of promoting tracted by profits. If the returns are not there, long-term goals relating to price stability, financapital will not and should not flow to a firm or an cial stability, and overall economic stability. Secindustry. On the other hand, if the returns are ond, if commercial ownership of banks resulted there, capital will flow quite naturally. That is in a further increase in overall leverage—and why it is so important to enact legislation that especially double leverage—the fragility of both would remove the artificial barriers that are im- the financial and nonfinancial sectors could inpeding the profitability of banking. In that envi- crease further. In turn, that result could either ronment, I am quite sure that sufficient capital (1) produce a situation in which the monetary will flow to the banking industry from traditional authorities might, in the short run, feel compelled sources. to be more tolerant of financial excesses or Finally, it is by no means clear to me that the (2) produce a situation in which both the financial banking system does not have, or have access to, system and the economy at large are more prone adequate capital from traditional sources. In- to disruptions and instability. In fact, the first of deed, given the obvious "over-banking" prob- these dangers would surely give rise to the seclem in this country, a good case can be made that ond. In that eventuality, the ultimate costs of part of the problem in banking and finance may checking these excesses—costs that could not be well be that we have too much capital chasing too avoided forever—could be very great indeed. few good loans. 3. Would allowing commercial firms to control 2. What impact, if any, would allowing com- banks necessarily create new risks for the Bank mercial firms to control banks have on our na- Insurance Fund (BIF) administered by the Fedtion's monetary policy? eral Deposit Insurance Corporation (FDIC) and for taxpayers who stand behind that fund? If commercial ownership of banking organizations becomes widespread, there is a danger that There is no question that such risks would the resulting concentration of economic—and increase, just as there is no question that the perhaps even political—power could have subtle risks of the extension of the safety net more but serious implications for monetary policy. generally to the commercial owners of banks This would be true even though it is highly would increase. Reasonable men and women can unlikely that such arrangements could—by them- debate about the extent to which such risks might selves—undermine the technical linkages be- increase, but there is no doubt in my mind as to tween monetary policy and the economy. That the direction of change. One compelling reason is, as a purely technical matter, there is some set why such risks would increase is because there is of credit market conditions and interest rates that no system of fire walls that is fail-safe. Indeed, could be achieved by the monetary authorities and as outlined in my House statement in greater that would, for example, check inflationary pres- detail, the so-called contagion effects associated sures in the economy. However, in an environ- with problems in one part of a family of institument in which there is widespread control of tions simply cannot be safely isolated from the banks by commercial firms, achieving that result family as a whole. Experience has shown this to could be more costly to the society at large. That be the case time after time. When we need them possibility arises for two reasons: First, if com- the most, fire walls simply will not work. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 557 4. Do you think there is any validity to con- ing even without commercial ownership. With cerns, expressed by some, that allowing banking commercial ownership of banks, those risks and commercial firms to combine would lead to would rise appreciably. On the other hand, so an unhealthy concentration of economic power long as banking markets are truly competitive in this country? and so long as appropriate supervisory policies are in place, these risks are manageable. How- Yes, these concerns are entirely valid. In this ever, keeping them manageable in a context of connection, it is important to keep in mind that commercial ownership of banks would be anthe nature of those risks is such that there is no other story, especially given all the other probmiddle ground on the banking-commerce issue. lems that would arise in those circumstances. That is, there are some who would ask why To summarize, the risks associated with comcommercial firms shouldn't be allowed to own mercial ownership and control of banks are conselected banks. Or, why not allow commercial siderable. In my view, we as a nation should be firms to own only troubled or failing banks? prepared to run those risks only if there is some Implicit in these questions is the suggestion that compelling public policy reason that dictates that we can have it both ways. That is, we can course of action. I see nothing on the horizon satisfy the desires of a few companies or a few that would qualify as that compelling public banks, we can paper over some problems, and policy case for permitting such combinations. we can duck hard choices, while at the same Thus, unless something changes radically, I retime avoiding the concentration or other probmain steadfast in my opposition to commercial lems associated with commercial control of ownership or control of banking institutions. banks. I just do not see it that way. This is a very slippery slope and if we as a nation start down that slope we will, at that very instant, set in motion forces that will be very difficult and PROGRESSIVE BUT CAUTIOUS REFORM very costly to reverse. While combining banking and commerce does 5. Would allowing banking and commercial not meet the test of either progressive or cautious firms to combine necessarily undermine the change, there are proposals before this commitarm's length relationship that now exists betee and the Congress that, in my judgment, tween banks and their creditors and weaken the would pass both of these tests. There are also cornerstone of effective banking—that is, indepressing needs—such as the recapitalization of pendent credit decisions based on effective evalthe Bank Insurance Fund (BIF)—that must be uations of creditworthiness? attended to promptly. As I see it, however, it "Necessarily" is a very strong word, but if the would be a grave mistake were the Congress only question were restated in terms of the risks to the to enact legislation to deal with the financial impartiality of the credit decisionmaking pro- needs of the BIF, even if such legislation also cess, the answer is clear. Yes, those risks would included an appropriate title on "progressive increase. The extent of the increase would, of supervision" and "early intervention." The course, depend upon how far and how fast a Congress must recognize that the realities of the pattern of commercial ownership of banks might marketplace, including changing technology, are take hold. But even if the risks are perceived as such that the current configuration of the banking relatively small, the costs could be very high. and financial system in the United States is entirely too accident prone—a condition that 6. Would a commercial firm that owns a bank be ultimately threatens the capacity of the system to more apt to make its bank's credits available to perform its vital economic tasks. Moreover, it is its customers rather than to customers of its badly out of line with emerging trends throughout competitors? the world—to the continuing detriment of the international competitiveness of U.S. institutions Again, those risks would be present. In fact, and markets. these risks exist in virtually every facet of bank- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

558 Federal Reserve Bulletin • July 1991 Whether we like it or not, we are going to see an any legislation that would meet my personal important degree of consolidation in the U.S. standard of progressive change would also have banking and financial system. That result, as I am to get at these basic structural problems and thus prone to say, is already "baked in the cake." The include—at a minimum—the effective repeal of question, therefore, is not whether that process of the McFadden, Douglas, and Glass-Steagall consolidation will occur, but rather whether it will Acts. occur the hard way or the easy way and whether I recognize that in taking that position some it will occur in a manner that is consistent with the would suggest that, in the name of progressive public interest. Narrow legislation, in my view, change, I am throwing caution to the wind. I also virtually assures that we will be back in this room recognize that against the history of the savings two or three or five years from now pasting and loan association mess, even a hint of throwtogether another damage control package in cir- ing caution to the wind takes on special significumstances in which the task will be all the more cance to the Congress and the American taxdifficult and the public interest all the more at risk. payer. Allow me, therefore, to make several When I speak of the inevitability of an impor- points that I believe will suggest that these structant degree of consolidation in banking and fi- tural changes can be made in a manner that is nance, I do not mean to imply that we in the consistent with the need for caution. United States will end up with a highly concen- First, the risks—and there are risks—of maktrated banking and financial system such as we ing these structural changes must be weighed see in many other countries. I simply do not see against the risks of not making those changes. As that occurring here. Indeed, I would be vigor- noted earlier, the most important of the risks ously opposed to such an outcome. Even putting associated with not making those changes is that aside regulatory restraints and antitrust laws, the it would frustrate the necessary process of conrealities of banking markets and relationships in solidation, cost reduction, and diversification in this country are such that we will continue to the banking and financial system and further have thousands—but not as many thousands—of undermine the competitiveness of U.S. banking banking and financial institutions. Moreover, I institutions at home and abroad. Put differently, am absolutely certain that legions of independent absent these progressive structural changes, the community banks will survive and thrive in this risks of further stress and instability in banking otherwise changing environment. and finance will increase. Against this background, it seems clear to me Second, whatever else may be said of these that striking the right balance between the dic- changes, they will over time, work in the directates of progressive yet cautious change re- tion of permitting institutions to better diversify quires—indeed demands—more than patchwork their risks and their sources of income. This is legislation. Yes, the BIF must be recapitalized important because when we look for common and yes, there may be still unexplored ways to denominators among institutions that have produce that result in a manner that minimizes failed, one (other than poor judgment and manadverse implications for the competitiveness of agement) that stands out time and again is con- U.S. banks. Yes, a flexible system of "progres- centrations of activities and credit exposures. In sive supervision" and "early intervention," with this regard, it should be stressed that over time, the qualifications suggested by Chairman the benefits of diversification of risk and income Greenspan in his April 23 testimony, should be flows that would follow from these structural enacted. Yes, a very careful and deliberate ap- changes would not accrue solely to banking proach to deposit insurance reform can help. institutions. To the contrary, I think that impor- But these changes, as necessary and as impor- tant benefits would also arise to securities firms tant as they are, are not sufficient because they by virtue of their ability to own banks. I assume do not get to the heart of the structural, compet- that is one of the reasons why so many securities itive, and technological factors that are driving so firms own nonbank banks in the United States many of the changes and problems that we see in and own banks in foreign countries. the banking and financial system. That is why Third, under the system of progressive super- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 559 vision I have in mind, the benefits of the repeal of have maintained that practice for all major instithese outdated laws would accrue only to the tutions under our jurisdiction. At times, the strongest of institutions, taking into account not annual exam also is supplemented by limited simply capital positions but also the full range of scope or targeted examinations within a twelvesupervisory criteria. In this connection, it should month period. be noted that over the course of the recent credit There is another important consideration in crunch, call report data point to a striking differ- this regard. Namely, the examinations can only ence between the rate of commercial and indus- be as good as the examiners. I am proud of my trial (C&I) loan origination by strong banks rel- examination force, and I know that they are ative to weak banks in all parts of the country. In good—damn good—at their profession. I believe other words, while C&I lending, has, of course, that these examiners are among the best in the slowed across the board, that pattern is more business—a view that I suspect is shared by their evident at weak banks than at strong banks. This peers here and abroad. But, let's be realistic. The finding, in itself, is suggestive of why it is so Federal Reserve Bank of New York employs 206 important to promote strength and diversification bank examiners whose average tenure is eight in banking institutions. years and whose average salary is about $50,000. Fourth, as a part of the process, there are But these 200 individuals—together with their several areas in which overall supervisory stan- in-house analytical and support staff—are didards and practices must be strengthened. The rectly responsible for inspections of seven of the system of progressive supervision based on cap- fifteen largest bank holding companies in the ital zones that is part of the Treasury proposal country with aggregate assets of more than $650 and is incorporated into several other legislative billion; federal examinations of five of the ten proposals is responsive to this need for strength- largest banks in the United States; federal examening the supervisory process. However, capital inations or inspections of about 175 other banks and other prudential standards are, in my judg- or bank holding companies as well as standby or ment, only as good as the on-site examination back-up examination authority for about 250 and inspection process. That is why I believe it is foreign banking institutions operating in New so very important that major emphasis be placed York. Their work covers not only financial exon strengthening the examination process. In aminations but also a wide range of so-called saying that, I recognize that there are several compliance examinations in such areas as comproposals before the Congress calling for annual munity reinvestment activities of the banks. examinations of all banks or banking institutions. What I am suggesting, of course, is that the It is important that the Congress recognize that demands on the bank examination process, reachieving this goal, while important, is going to gionally and nationally—a process that I regard be expensive—very expensive. I say that with as the bedrock of the overall supervisory prothe knowledge that many banks are not now cess—are enormous. As an extension of that, the subject to annual examinations and with the Congress must recognize that to get it right will knowledge that even when examinations occur entail added resources of not inconsequential annually, important differences can arise as to dimensions. This will be especially true in a the scope of the examinations in such crucial setting in which interstate banking will bring with areas as the composition and size of the sample it the need to redouble our efforts in such areas as of loans reviewed by the examiners. While it will compliance examinations regarding the Commube expensive, the Congress should also recog- nity Reinvestment Act. I might also add that the nize that these costs will be very small relative to suggestion that restructuring of the bank examithe costs of not taking the necessary steps to nation agencies would produce large offsetting reinforce the examination process. savings is wrong. The amount of cooperation At the Federal Reserve Bank of New York we between the agencies at the federal level is have maintained the practice of "full scope" considerable, and the amount of duplication is annual examinations for virtually all institutions limited. under our supervisory jurisdiction and certainly Fifth, this is not the time to relax supervisory Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

560 Federal Reserve Bulletin • July 1991 standards as they apply to consolidated groups given to the temporary establishment of a body housing banking entities or to their parent hold- styled on the Depository Institutions Deregulaing companies. Not only would such a move be tion Committee of the early 1980s to coordinate wholly incompatible with practices throughout and oversee this transition, including the prepathe industrial world—practices that were re- ration of periodic reports to the Congress on the cently confirmed in an emphatic fashion by the progress and problems with the effort. Swiss courts—but such a move ignores the fact There is no course of action open to the that these holding companies are the financial Congress in the banking reform process that is and managerial nerve centers of the groups of risk free. There are risks with no legislation; entities they control. The holding company is there are risks with narrow legislation; and there also the major—and usually the sole—point of are risks with broad legislation. However, I am entry to the capital markets for the consolidated convinced that with appropriate safeguards and entity and all of its component parts. with careful implementation, the risks associated In those circumstances and in the face of the with prudent broad legislation are lower and are difficult current and prospective problems, the more manageable than the risks associated with relaxation of prudential standards at the level of the alternatives. Moreover, only broad legislathe holding company strikes me as a major tion gets to the fundamentals that are at the root mistake. Accordingly, and consistent with the of so many of the current problems in the bankposition I have taken before this committee on ing and financial system. earlier occasions, I strongly favor supervisory policies at the level of the holding company that—at the least—would include the following: DEPOSIT INSURANCE, TOO BIG TO FAIL, (1) minimal capital standards on a fully consoli- AND SYSTEMIC RISK dated basis; (2) a program of on-site inspections of such companies along the lines of current While caution is needed in all aspects of this practices; (3) consolidated reporting require- effort, nowhere is the need for caution greater ments, and (4) standby authority for inspection or than in efforts to cope with the highly sensitive examination of any unregulated affiliate of a hold- and interrelated problems of deposit insurance ing company controlling depository institutions. reform, the too-big-to-fail issue, and systemic I have carefully considered the arguments for a risk. lesser degree of ongoing supervision of holding The economic and political sensitivities surcompanies. Some of these arguments have some rounding the so-called too-big-to-fail issue are merit, even if I personally do not find them understandably great. In part, that is true bepersuasive. But, even if the arguments were fully cause of the obvious equity issues that arise in persuasive as presented, they leave one glaring this connection. But the problems go well beproblem; namely, the suggestion that supervision yond the equity issues. For example, to the can, or will be, strengthened when problems extent that practices produce a situation in which become apparent. The reality, of course, is that the financial landscape is littered with inefficient experience strongly suggests that when the prob- institutions—small or large—and to the extent lems become apparent, it is already too late. that strong institutions must pay for the mistakes Sixth and finally, it is possible to stage or phase or abuses of the weak or reckless institutions, the in certain of these structural changes in such a economic costs of such practices can be considway as to provide the Congress and the public erable. with the necessary comfort that the process is Having said that, it should also be said that the occurring in an orderly fashion and is occurring semantics of "too big to fail" are often misleadin a manner that ensures that necessary changes ing. On the one hand, shareholders, managers, in supervisory policies and practices are in place. and, increasingly, bondholders are not protected There are any number of devices that could be from "failure." On the other hand, we have seen used for this purpose. Further, and at the risk of any number of cases here and abroad in which sounding bureaucratic, consideration might be decisions by governmental authorities—includ- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 561 ing state governments—have been made to pro- confidence problem—grows out of the enortect broad classes of investors or depositors mously complex network of counterparty credit, when the banking institution that was at risk of liquidity, settlement and operational risks, and failure was not at all large and in fact was often contingent risks on a national and international quite small. What that says, of course, is that scale that characterize contemporary financial while the phrase "too big to fail" is catchy, the markets and institutions. The scale and complexreality it seeks to describe is much more complex ity of these contractual obligations and counterthan the words suggest. The reality is that there party risks are very difficult to convey. Let me are circumstances in which public authorities try by way of example. On a typical business can, and should, reach the conclusion that the day, the Federal Reserve Bank of New York threat of losses on deposits—or perhaps even processes or settles about $2 trillion in electronic other categories of loss—carries with it risks to transfers or payments. While I can only guess, it the well-being of the financial system as a whole would not surprise me if the total daily payment that can easily justify taking extraordinary mea- flows through the New York money markets sures to protect against such losses. In other were at least double that amount. To put that in words, the authorities cannot afford to ignore the perspective, a heavy day on the New York Stock systemic risk phenomenon. Exchange entails transactions with a value of Systemic risk is one of those things that is hard only $8 billion or $9 billion. At the other extreme, to define but easy to recognize. Indeed, speaking the gross national product for the United States as someone who has been at least indirectly for the year 1990 was $5.5 trillion. Virtually all involved with efforts to contain virtually every banking institutions, small and large, local, remajor financial disruption in this country for gional, and national have direct or indirect credit more than a decade, I can assure you that the or counterparty exposures that grow out of these threat of systemic risk can be very real. I can also transactions flows. say that while we have had a few close calls, we The reason why these linkages are so imporhave not had a situation in which serious prob- tant to the systemic risk issue is that in the face lems in one institution, a class of institutions, or of a problem or a perceived problem at a partica segment of the financial markets have spread to ular institution or group of institutions, other other institutions and markets in such a way as to institutions will, quite naturally, take steps to inflict serious and very costly damage on finan- protect themselves from outright loss and from cial markets generally or on the economy. Those the threat that money, securities, or other finanlatter conditions are, of course, what moves cial assets will not be delivered to them or that systemic risk from threat to reality. existing contracts will not be honored. This, in With that in mind, a natural question is the turn, gives rise to the threat of financial "gridfollowing: What is it about financial institutions lock," a threat that can easily take on the classic and financial markets that creates the systemic characteristics of a self-fulfilling prophecy. If, in risk problem in the first instance? The short those circumstances, confidence in the workings answer can be given in two words: confidence of the system begins to erode, the systemic and linkages. The confidence part of that answer problem is at hand. In this context, it is very is well understood. But it should be stressed that important to recognize that when all is said and the confidence factor relates not only to public done the payment flows that permit the system to confidence in financial institutions but also to work can be made only through transactions public confidence in the authorities' understand- accounts at banks. ing of these institutions and markets and public This, of course, is why the payment system is confidence that the authorities will act in a re- so very important to the stability and integrity of sponsible fashion when confronted with prob- the financial and economic system. It is also why lems. the Federal Reserve, like most central banks, The linkage aspect of the systemic risk prob- plays a direct role in the operation of, and the lem, unfortunately, is not always well under- oversight of, the payment system. It is also the stood. The linkage problem—while related to the reason why payment, clearance, and settlement Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

562 Federal Reserve Bulletin • July 1991 systems can so easily be the mechanism through deposit insurance reform must start with efforts which a localized problem in the financial system that will reduce the risk of failures in the system at can take on systemic elements. Finally, it is the large and efforts that will provide the authorities reason why in recent years the Federal Reserve with the tools and the ability to better contain and has placed so very much effort on improvements manage problems when they arise. This, again, is in the safety, integrity, and reliability of pay- why broad legislation is so necessary, the strucment, clearance, and settlement systems and in tural changes get at the first of these needs while the process has assumed a position of leadership the supervisory and regulatory changes—includin parallel efforts throughout the world. ing "early intervention"—get at the second. Because these issues of confidence and link- I might add, in this regard, that early intervenages are so central to the systemic risk problem tion may also help overcome one of the major and because they are so subtle, so complex, and, practical obstacles to greater reliance on "open at times, so threatening, some people may ques- bank" solutions to problem institutions. That is, tion the wisdom of specific decisions made from under current practices, it is difficult to organize time to time by the authorities in the face of competitive bidding packages for seriously weakparticular problems in the financial system. That ened but still solvent and open banks. With clear is understandable, but I am quite sure that there legislation permitting early intervention in such would be a great deal more questioning if a circumstances, the benefits of competitive bidmiscalculation resulted in a seemingly isolated ding can be realized even though the bank is open event triggering a widespread and very costly and technically solvent. systemic problem. This can be very important because experience Looked at in that light, the problem is not that clearly suggests that the losses in banks that no any institution is too big to fail. The problem is longer have "going concern" value tend to inthat there are institutions and there are circum- crease dramatically, thus raising the cost to the stances—and not just circumstances involving deposit insurance fund. More important, open banks or big banks—when the sudden and un- bank solutions clearly can help to contain and controlled demise of one or a group of institu- reduce the systemic risk problem, and anything tions, large or small, could unleash a series of that works in that direction also works in the events that take on systemic implications. In direction of reducing the inequity and other probsome cases, that reality requires that the author- lems associated with the too-big-to-fail issue. ities step in and play a major role in doing all that In all of these circumstances, there are clear can reasonably be done in ensuring that the limits as to how much can safely and construcdemise of such an institution takes place in an tively be done in the area of deposit insurance orderly fashion. This was the case with Drexel. reform at the present time. As the banking sys- In other cases, it might require, for example, that tem regains its strength, that will change. Howall depositors in a bank be kept whole even in the ever, there is one aspect of the deposit insurance face of insolvency and the $100,000 formal limit issue that warrants further comment and that on deposit insurance. relates to brokered deposits. There is no question What I am suggesting, of course, is that sys- that in looking at the savings and loan mess the temic risk—especially in its very complex con- abuse of brokered deposits was a major contribtemporary form—is a reality. It cannot be legis- utor to the overall problem. Partly for this reason lated away; it cannot be regulated away; and, as and partly because it is now so easy and so suggested from experience all over the world, inexpensive to break large chunks of money into neither it, nor the behavior of the authorities in $100,000 pieces and deploy such monies into the face of stress in the system, arises out of the fully insured deposit accounts in multiple bankmere presence of a formal system of deposit ing institutions, the brokered-deposit phenomeinsurance no matter how poorly or how well that non seems to collide head on with one of the system is designed or administered. basic purposes of deposit insurance. For that reason and because practical alternatives are To put it differently, any satisfactory solution to hard to come by, the Treasury proposal would the too-big-to-fail problem and the related issue of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 563 essentially eliminate insurance coverage on bro- heart of the structural and competitive problems kered deposits over a two-year period. in banking and finance. While that approach has some appeal, it has As this transition occurs, the Congress and the obvious disadvantage that it would elimi- others should give further consideration to what nate those aspects of the brokered deposit additional steps might be taken to strike a better market that serve a constructive purpose. I can balance between the workings of the marketplace see only one way to protect against the abuses and reliance on the safety net. In that setting, of brokered deposits while still maintaining a consideration could be given to other possible viable marketplace for brokered deposits. That reforms in deposit insurance, perhaps along the approach would center on attacking the prob- lines suggested by Senator Dixon and others. lem not at the source but at the use. It might be Who knows for sure? Maybe we will get lucky, possible, for example, to further strengthen the and the progressive legislation of 1991 might provisions of the Financial Institutions Reform, yield an outcome by 1994 or 1995 that does not Recovery, and Enforcement Act of 1989 require further major surgery. (FIRREA) as they pertain to brokered deposits by some combination of (1) adding disclosure rules; (2) providing explicit cease and desist SUPERVISORY POLICY AND THE ROLE OF authority regarding the use of brokered deposits THE FEDERAL RESERVE by any depository institution; or (3) the establishment of licensing or registration require- On several earlier occasions I have stated to this ments for all money brokers. committee my belief that the Federal Reserve, as If something along these broad lines cannot the nation's central bank, must maintain an imbe made to work, I must confess that I would portant role in the bank supervisory process. In then side with the Treasury, even though I saying that, I have acknowledged that such a recognize that this approach has the obvious statement, coming from me, cannot help but be disadvantage of throwing away the good with construed by some as a position that is motivated the bad. by institutional self-interest. I recognize that To summarize, given the current condition of danger, but because I believe that the principle is the banking system and the difficult transition so important, allow me to conclude with a further that lies ahead even under the best of circum- elaboration on this point. stances, there are no easy answers to the closely As with any chief executive officer, one of my interrelated issues of deposit insurance reform, most important duties is to try to motivate the the too-big-to-fail issue, and systemic risk. To employees who work for me and try to make sure the extent that the Congress can enact broad and that they understand why their individual jobs progressive legislation along the lines described are important and how their individual duties fit earlier, such legislation would attack these prob- into the bigger picture. In doing this, I often refer lems from two directions: First, the combination to what I like to call the "trilogy" of responsiof progressive supervision, prompt resolution, bilities of the central bank. The concept of the Federal Reserve-Treasury discretion in the face trilogy is borrowed from the literary world where of systemic problems, limited changes in deposit its definition centers on three works that are insurance, and a strengthened system of super- closely related and develop a single theme. In the vision and examination would, taken as a group, context of the Federal Reserve, the three comtend to contain and minimize these problems ponents of the trilogy are: (1) monetary policy, over the next several years of transition; second, which, of course, stands at the center of the structural changes in such areas as McFadden, trilogy; (2) the broad oversight of financial mar- Douglas, and Glass-Steagall—with the safe- kets and institutions, with special emphasis on guards suggested—would work in the direction banking institutions; and (3) the oversight of and of facilitating an orderly process of consolidation the direct participation in the workings of the while providing greater opportunities for profit- payment system. If those are the elements of the ability and diversification, thereby getting at the trilogy, the single theme that unites them is Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

564 Federal Reserve Bulletin • July 1991 stability: price stability, financial stability, and To participate as necessary in the formulation, overall economic stability. co-ordination and execution of policies relating to prudential supervision and the stability of the The components that make up that trilogy of banking system. functions are not separate and distinct; each depends on the other in precisely the same manner that the components of the literary trilogy depend In practice, monetary policy is not, nor will it on each other. If any one is left aside, the essence ever be, a simple mechanical decision to buy or and common theme of the trilogy is lost. sell. It entails judgment, and one very important While the analogy of the trilogy may be new, component of that judgment relates to conditions the recognition of the interrelationship of these in financial markets and financial institutions, inspecific functions is not. Indeed, that recognition cluding a detailed working knowledge of such was at the center of the thinking that went into markets and institutions. For example, monetary the creation of the Federal Reserve in 1913. In policy was appropriately influenced by such fact, the preamble to the Federal Reserve Act events as the recent "credit crunch" and the 1987 specifically mentions the role of the Federal stock market crash. In other cases, such as the Reserve in the supervisory process: Drexel episode or the "mini" market crash of 1989, monetary policy was not so influenced. In all such cases, however, the decision as to To provide for the establishment of Federal rewhether such events should influence monetary serve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, policy—even if only for a matter of days—must be to establish a more effective supervision of bank- faced and made one way or the other. Obviously, ing in the United States, and for other purposes. such decisions must be made in an informed manner. A very crucial ingredient in that decision- Against that background, I must confess that I making comes from the direct, hands-on knowlfind it a little difficult to comprehend the view edge of the Federal Reserve that grows out of its that essentially says: "Let the Federal Reserve supervisory responsibilities and its resulting close tend to its monetary policy knitting and leave interaction with banking institutions—institutions bank supervision to others." I find that view that remain the "cushion" or the "shock absorbespecially difficult to comprehend in the context er" of the financial system as a whole. Moreover, of supervisory responsibilities as they apply to I can assure this committee that the necessary major banking organizations for which the sys- insights to make those decisions simply cannot be temic risk problem can be so very real. gained by reading some other agency's examina- As I see it, the view that monetary policy is tion or inspection reports. separate and distinct from supervisory policy and This is not to say that there may not be, from that either or both can be separated from the time to time, conflicts between monetary policy workings of the payment system and from the and supervisory policy. To the contrary, such systemic risk problem can be based only on a conflicts do arise. The point is that in resolving dangerously narrow view of what monetary policy those conflicts the central bank must be part of is all about. Indeed, if there were nothing more to the solution and not part of the problem. monetary policy than a mechanical decision as to The direct linkages between banking superviwhether the central bank buys or sells on a given sion and the conduct of monetary policy are day, one could argue that monetary policy and important, but they do not tell the whole story as bank supervision are separate and distinct func- to why it is crucial that the Federal Reserve tions. But, in the United States and throughout continue to play a major role in the supervisory most of the industrial world, this sharp distinction process. What is even more important is that the is not accepted. Indeed, the drafters of the pro- stability of the financial system is a prerequisite posed statute for the European System of Central not only to the conduct of monetary policy but to Banks and the European Central Bank have in- the very goals of price stability and economic cluded among the five basic tasks of the European stability. They are a package deal; you cannot Central Bank the following: have one without the others. That is why every Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 565 central bank that I know of is the "lender of last very difficult transition that lies ahead. That resort;" that is why the integrity and safety of the would only elevate the risk that something of payment mechanism are so important; that is consequence will fall between the cracks. why the central bank must concern itself with the safety and soundness of those institutions that constitute the nerve center of the financial system at the local, regional, and national levels. SUMMARY In these circumstances, I would hope that any restructuring of the responsibilities of the federal My opposition to legislation that would permit bank regulatory agencies would preserve a lead commercial firms to control banking institutions role for the Federal Reserve. Having said that, is well known to this committee. I have tried in allow me to quickly add that I see no reason to this statement, and in its attachment, to spell out undertake that regulatory restructuring task now. in detail the reasons for that position. But, as For one thing, the status quo, while not perfect, strong as my opposition to banking-commerce does work reasonably well. Beyond that, logic combinations is, my support for what I have suggests the wisdom of getting the structural described as progressive, but cautious, legislareforms of the banking and financial system tion is even stronger. Few items on the national firmly in place and then forging the regulatory agenda strike me as having greater long-run apparatus to meet the needs of the changed implications for the health and competitiveness system as it takes hold in practice. Finally, and of our banking and financial system—and thereperhaps most important, it seems to me quite fore our economy—than does the enactment of risky to try to put in place massive regulatory such broad-based progressive legislation this restructuring as we work our way through the year. • Statement by Alan Greenspan, Chairman, Board would be well advised to endeavor to redress of Governors of the Federal Reserve System, such imbalances. before the Committee on Finance, U.S. Senate, Saving, of course, arises when part of the May 16, 1991. nation's current production is diverted from consumption, both private and public; it provides the funds for capital formation. Thus, by choosing to I appreciate the invitation to appear before this consume more now—and to save less—we are committee today. As you know, I have long been limiting our ability to expand and upgrade our concerned about the low level of saving in the stock of capital. It is the size of that stock and the United States and am pleased that this important new technologies embedded within it that, toproblem is drawing renewed attention. In my gether with the quality of the labor force, ultiprepared statement, I will address some of the mately determine our overall productive capacbroader issues bearing on saving and investment ity and the future standard of living of our as well as provide a review of the available population. evidence on tax incentives for personal saving. The damage from low saving does not show up Put simply, inadequate domestic saving is im- immediately. It is more insidious—it chips away pairing our economic prospects for the longer at the productivity gains we are able to achieve run. I say this with full recognition that the over time; it gradually hampers our competitiveappropriate level of saving for any economy is ness in international markets; and, after a period best left to private preferences, as reflected in the of years, it results in a lower standard of living marketplace. However, as a society, we have in than we would otherwise enjoy. recent decades clearly intervened in the market Of course, U.S. investment can be funded by process through subsidies that enhance con- foreigners as well as by domestic residents. Insumption at the expense of saving. And, we deed, since the mid-1980s, sizable inflows of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

566 Federal Reserve Bulletin • July 1991 capital from abroad have helped to sustain do- Depression, when the U.S. rate fell dramatically. mestic investment and, thus, have cushioned the In the decades after World War II, it stabilized at effect of inadequate domestic saving on worker a level slightly below its pre-Depression average. productivity. But heavy reliance on foreign sav- Notably, between 1950 and 1979, domestic saving is neither a satisfactory nor a sustainable ing averaged about 16 percent of GNP—roughly solution over the longer run. This may seem the same as total investment. Budget deficits contrary to the idea that international capital generally were small, at least by today's stanmarkets are well integrated and that competing dards, and the private saving rate showed no rates of return will draw funds to the most discernible trend. Meanwhile, the United States productive uses anywhere in the world. To be enjoyed a positive—and gradually increasing— sure, in today's world, such inflows may tend to net foreign investment position. In the 1980s, the be sustained longer than in the past. Neverthe- pattern changed markedly, as domestic saving less, the evidence for the United States and for fell well below investment, reflecting not only the most other industrial nations over the past hun- enormous federal deficits, but also a large drop in dred years indicates that large inflows have not the private saving rate. In recent years, U.S. persisted and, thus, cannot be viewed as a reli- saving (public and private) has totaled only about able substitute for domestic saving on a long- 13 percent of GNP. term basis. In other words, domestic investment, Saving rates in Japan and Germany also have for the most part, appears to follow domestic declined some over the past two decades, after saving in the long run. their surge in the post-World-War-II recovery Reflecting the large current account deficits of period, but they remain substantially above recent years, foreigners are accumulating claims those in the United States. Relative to their on a sizable portion of our future output. Fur- GNPs, the Japanese have been saving roughly thermore, we know that we will have to support twice as much in gross terms as we have, while a rapidly growing population of retirees two or Germany's saving rate has been about one and three decades in the future. In the end, our ability one-half times ours. Cross-country comparito meet those commitments, while providing sons of net saving should be viewed with some rising living standards to future workers, will caution because of differences in how deprecidepend on the investments that we make in ation is measured; nonetheless, the gap in net capital and in new technologies in the interim. saving probably is even larger than in the gross Indeed, on the basis of our recent saving measures. The high saving rates in Japan and behavior, it is difficult to see how we were able to Germany have been mirrored in rapid rates of achieve the high standard of living that we now capital formation that have helped them imenjoy. The answer is that we have not always prove their competitiveness relative to the been a low-saving society. Granted, the statistics United States and close much of the gap in are problematic, but it appears that in the period living standards. after the Civil War, when the United States The issue of why one nation saves a lot while began to emerge as an economic power, our another saves relatively little—or why saving saving and investment rates, as conventionally behavior changes over time—is complex. It unmeasured, were much higher than those in Eu- doubtedly reflects cultural influences as well as rope and Japan. For example, between 1870 and economic forces. I suspect, however, that part of 1910, domestic saving in the United States aver- the explanation relates to how well members of a aged close to 20 percent of gross national prod- society, both individually and collectively, asuct. The best available estimates for Japan and sess their future needs and take action in the Germany during that period place their saving present to meet them. Collectively, we have rates at 15 percent or less. The saving rate in recognized the need to build saving and capital Great Britain, whose preeminence was fading, and to improve our productivity performance, in was closer to 10 percent. anticipation of the significant increase in the ratio of retirees to workers in the next century. How- The shift toward both a relatively low and an ever, as last year's debate over the financing of absolutely low saving rate began during the Great Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 567 social security made clear, we have yet to take Looking at the data, one sees clearly that the sufficient actions to meet these needs. As you are surge in the stock market between 1982 and 1987 well aware, the surpluses in the social security was associated with increased consumption out trusts have been overwhelmed by enormous def- of financial capital gains and, therefore, with icits elsewhere in the federal budget. reduced saving out of current income. In addi- Just as the budget deficit accounted for a large tion, the buildup of readily accessible home part of the fall in domestic saving in the 1980s, equity enabled many individuals to spend more the surest way to raise saving in the 1990s is to out of current incomes than they would have get the deficit down. Last fall, you enacted a otherwise—especially with home equity lines of significant program of spending and tax changes credit making it much simpler to borrow against and budget process reforms. Those actions set the value of one's house. The data for Great the underlying or "structural" deficit on a down- Britain in the late 1980s support a similar linkage ward track and thus represented a strategy that is between surging real estate prices and falling geared to the longer-run needs of the economy. I rates of saving set aside out of personal income; recognize that, in the near term, those savings more recently, the British saving rate has turned are being swamped by the transitory effects of up as house sales have cooled. the weak economy. But, as the recovery takes Analyses of the relation between saving and hold, the federal sector's absorption of private demographics in the 1980s also have attracted saving should return to a downward trend. much attention; on the whole, however, the The goal of a balanced budget is a good place results of these studies—as well as the implicato start. But, as I have said frequently in the past, tions for the 1990s—are less clear cut than one it probably is not ambitious enough as a target for would have expected. Nonetheless, with older the longer run. As long as the non-social-security members of the so-called baby boom generation deficit remains sizable, we are doing little to moving into their forties, the issue of retirement ensure that adequate provisions are being made saving is coming to the forefront. for the income of future retirees. Further actions One way to engender more national saving, of must be taken to bring the rest of the budget into course, is to reduce the federal budget deficit. balance so that the trust funds will no longer be But, we can also take actions that should encourfinancing current government consumption but age individuals to save more. There is no shortwill translate dollar for dollar into national sav- age of proposals for new saving incentives. Some ing. would function in a manner similar to that of the The federal budget deficit is only part of the individual retirement accounts (IRAs) of the story of the past decade. Saving by households early and mid-1980s, which allowed workers to and businesses also has dropped sharply. The fall make deductible contributions and to defer the in personal saving, in particular, has been studied tax on both the principal and earnings until the extensively; in large part, it appears to be asso- accounts were cashed in. Other suggested incenciated with the sizable increases in household tives, such as the Family Savings Accounts fawealth through the latter part of the 1980s. To vored by the Administration, would not allow understand the relation between wealth and the deductible contributions up front but would persaving rate, it is important to note that personal mit earnings to accumulate tax free as long as the income, as defined in the national income and account balances were maintained for a specified product accounts (NIPA), measures the income amount of time. The plan offered by Senators from current production; it does not include the Bentsen and Roth (S.612) incorporates both apeffects of capital gains or losses on assets already proaches. held by households; personal saving also ignores When considering these proposals, a fundarevaluations of existing assets. Thus, an increase mental question that must be addressed is how in the value of an individual's stock portfolio or they are likely to affect total national saving. It is his house has no direct effect on his measured relatively easy to imagine an incentive that will income. But, if he raises his spending in response raise personal saving. But unless the increase is to the capital gain, NIP A saving will fall. large enough to outweigh any associated drop in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

568 Federal Reserve Bulletin • July 1991 tax revenues—or sufficient deficit-reducing ac- ing—a perception that undoubtedly contributed to tions are taken elsewhere—the net effect on the scaling back of IRAs as part of tax reform in national saving will be negative. In other words, 1986. It is important to remember that to have the sum of private consumption plus public con- increased saving an IRA would need to have sumption as a percentage of income must fall for reduced consumption. the national saving rate to rise. Since then, many new data have become avail- I recognize that, under the current budget pro- able, and several studies of the IRA experience cedures, any anticipated loss of revenue to the have been carried out. These studies provide a Treasury from a new tax-favored saving plan will wealth of information, but, again, the results are have to be offset by increases in other taxes or by inconclusive. Some essentially confirm the "conreductions in mandatory spending. This require- ventional wisdom" that IRAs involved primarily a ment should blunt much of the concern about shifting of saving from one pile to another, withpotential drains on national saving—at least over out much effect on the total. But others suggest the next five years. But, as a matter of sensible tax that IRAs provided a substantial boost to overall policy, any new incentive must first be evaluated saving and that their effectiveness would have on its own merits and in isolation from other grown over time as people exhausted their opporconsiderations. tunities to shuffle existing assets. Essentially two types of evidence bear on that The lack of conclusive evidence on saving inassessment. The first is the broad economic evi- centives makes it difficult to take a strong position dence on the relation between saving and the rate either way on the desirability of a new IRA. In of return on saving, which has been studied inten- addition, that determination depends on how you sively over the years. In theory, the higher after- plan to meet the pay-as-you-go requirements in tax rate of return produced by an IRA or other the new budget procedures; the necessary cuts in incentive has two effects. On the one hand, it spending or increases in other taxes may, in turn, increases the amount of future consumption that have incentive effects of their own. In any event, each dollar of current saving will buy, thereby the overall desirability of the package cannot be providing an incentive to save more now to con- assessed until you specify and evaluate the offsetsume more later. On the other hand, because each ting elements. dollar of existing saving generates more after-tax In conclusion, it is important to continue to income, the individual can reduce current saving focus on the crucial need to restore saving in the and still enjoy more consumption both now and in United States to levels that are consistent with the future. In principle, either effect could domi- our longer-run economic objectives. As I noted nate, leaving the question to empirical resolution. earlier, the time is particularly opportune for Unfortunately, economists have not been able to exploring ways to facilitate retirement saving, develop unambiguous evidence on this score. given the large increase in the number of retirees The second type of evidence for evaluating a that will occur within the next few decades. new tax incentive comes from the microeconomic There may well be a role for a well-designed studies of the 1982-86 IRA experience. Clearly, private saving incentive in that process. But, the IRAs were very popular, with contributions aver- historical evidence suggests that devising such an aging nearly $35 billion per year; this amount was instrument will be a difficult task. In the end, equivalent to roughly one-quarter of personal sav- substantial reductions in the federal budget defiing as measured in the national income and prod- cit are still the surest way to overcome the uct accounts. However, at the time, many ana- shortage of domestic saving and, thus, to inlysts believed that little, if any, of the money crease permanently the supply of domestic funds flowing into the accounts represented new sav- available for investment. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 569 Statement by William Taylor, Staff Director, The BCCI is primarily owned by investors Division of Banking Supervision and Regulation, located in the Middle East, with control of most Board of Governors of the Federal Reserve Sys- of its shares now held by the ruling family and tem, before the Subcommittee on Consumer government of Abu Dhabi. The bank is presand Regulatory Affairs of the Committee on ently undertaking a restructuring that will focus Banking, Housing, and Urban Affairs, U.S. its business activity in Europe, the Middle East, Senate, May 23, 1991. and the Far East. I am pleased to appear before the subcommittee on Consumer and Regulatory Affairs of the SUPERVISION OVER THE BCCI's Senate Banking Committee to testify about the ACTIVITIES BY FOREIGN BANK experience of the Federal Reserve System with REGULA TOR Y A UTHORITIES the Bank of Credit and Commerce International (BCCI). This part of the testimony will focus At the outset, I want to make it clear that the first on the BCCI's structure, the nature of BCCI, unlike virtually any other major internasupervision over its worldwide activities, and tional bank, was not subject to a comprehensive the origin of its offices in the United States and system of supervisory oversight by authorities their supervision. Thereafter, I will describe in its home country. As I indicated, both the some of the efforts undertaken by the Federal holding company for the BCCI and one of its Reserve to investigate the relationship between major banking subsidiaries are chartered in the BCCI and First American Bankshares. Fi- Luxembourg; but neither the holding company nally, I will discuss some of the steps that we nor the subsidiary has conducted a banking are taking to strengthen the supervision of business in that country. The BCCI appears to foreign banks in light of our experience. manage most of its global business out of offices in London. The regulatory authorities in Luxembourg, therefore, did not provide consoli- BANK OF CREDIT AND COMMERCE dated supervision of the BCCI organization. Based on its experience with the BCCI, Lux- Through a network of subsidiaries, affiliates, embourg has indicated that it will no longer and branches, the Bank of Credit and Com- license a bank or a bank holding company that merce has operated in seventy-three countries, does not conduct a banking business in that with most of its banking offices located in country. Europe, Africa, the Middle East, the Carib- Given the structure of the BCCI group, peribean, and South America. The holding com- odic reporting of prudential information on a pany for these entities—BCCI (Holdings)—is consolidated basis was not produced. The fichartered in Luxembourg. Two major subsid- nancial accounts of each BCCI subsidiary had iaries of the BCCI (Holdings), Bank of Credit been audited yearly by different accounting and Commerce International S.A. (BCCI S.A.) firms. It was not until recently that a single firm in Luxembourg and Bank of Credit and Com- was responsible for auditing all of the BCCI merce International (Overseas) Limited (BCCI organization. Bank supervisors in each country Overseas) in the Cayman Islands, have oper- where BCCI maintained a banking subsidiary ated agencies in the United States that are required prudential and financial information licensed by the states of California, New York, that pertained to the BCCI entity incorporated and Florida. Agency operations are limited by locally. Given this approach, information about law, and, as such, the BCCI's offices in this other BCCI-related organizations outside the country were not allowed to accept consumer jurisdiction of the local bank supervisor had to deposits, nor were they able to offer insured be obtained through direct contact with other deposits of any kind. As I will discuss, these central banks or bank regulatory authorities. offices have either been closed or will be shut To provide some oversight of the BCCI's down before the end of the year. activities in a more structured format, several Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

570 Federal Reserve Bulletin • July 1991 bank supervisors with significant BCCI banking continuing efforts to cooperate with other interoperations in their countries decided several national, federal, and state authorities, the Fedyears ago to meet periodically to discuss the eral Reserve immediately commenced simultaactivities of the BCCI and to meet with man- neous examinations of all the U.S. offices of the agement and the external auditor. These bank BCCI to determine whether any other improper supervisors have, from time to time, required transactions were evident and to assess the reporting from the external auditor on areas of internal controls and asset quality of those particular concern. offices. Board staff members also discussed the indictment and its potential ramifications with bank regulatory authorities in the United King- ACTIVITIES OF THE BCCI IN THE dom, Cayman Islands, Luxembourg, and Hong UNITED STATES Kong. Discussions with these authorities centered on whether they were aware of any mon- As previously mentioned, the BCCI group had ey-laundering activity in their respective marstate-licensed agency offices in California, Flor- kets and whether the BCCI could meet its ida, and New York. As directed by the Inter- financial commitments in the United States. national Banking Act of 1978, the primary su- The simultaneous examinations conducted pervisory effort was carried out by the various after the indictment revealed that internal constates with the Federal Reserve providing sup- trols were deficient. Also, multiple referrals port and residual supervision. The BCCI offices were made by the Federal Reserve in the ensuwere established under state licenses from 1982 ing months to the U.S. Attorney concerning through 1984 and were examined roughly every money laundering transactions at the New York eighteen months. Agency offices exhibiting and Boca Raton, Florida, offices. As a direct problems were examined more frequently, result of the examinations, a cease and desist while those offices that received a satisfactory order was issued by the Federal Reserve on rating were examined less frequently. Before June 12, 1989, against the BCCI (Holdings) and the BCCI was indicted for money laundering in the two subsidiary banks that maintained October 1988, twenty-two examinations of its agency offices in the United States. The order U.S. offices had been conducted. required that the BCCI strengthen internal con- Offices in New York and in Tampa and Boca trols over all its U.S. operations, especially Raton, Florida, generally exhibited no signifi- those controls designed to guard against money cant problems. The examinations of the Miami laundering. Other prudential safeguards were and San Francisco offices, however, from time required, including establishing better systems to time revealed problems in asset quality and and procedures to control lending activities and internal controls. The 1984 report of the exam- to assure compliance with U.S. laws and reguination by the State of Florida and the Federal lations. Reserve Bank of Atlanta of the Miami office, for example, cited internal control deficiencies. Af- STATUS OF THE BCCFS U.S. OPERATIONS ter a 1987 examination, a criminal referral was filed by the Federal Reserve Bank of Atlanta After the BCCI pled guilty to the charges of alerting law enforcement authorities to transac- money laundering, the Florida Comptroller of tions uncovered during the examination that Banks refused to renew the BCCI's agency could be indicative of money laundering licenses. As of January 11 of this year, the through the Miami office, and staff members of Florida offices of the BCCI (Overseas) have the Board of Governors forwarded this referral been closed. The San Francisco office of the to the Internal Revenue Service for action by BCCI S.A. has been voluntarily closed. The that agency. remaining offices of the BCCI S.A. in New On October 11, 1988, the BCCI and certain of York and Los Angeles are to be terminated by its employees were indicted for laundering year-end under another Federal Reserve cease money through the Tampa, Florida, office. In and desist order. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 571 INVESTIGATION OF THE BCCVS order that was issued on January 22, 1991. Our INVOLVEMENT WITH CREDIT AND investigation continues, as does our cooperation COMMERCE AMERICAN HOLDINGS with, and reliance on, various state, federal, and international authorities. Mr. Mattingly will discuss in detail the investigation into the BCCI's connections with certain U.S. banks, including the First American orga- SUPERVISION OF FOREIGN FINANCIAL nization.1 I would like, however, to offer some INSTITUTIONS general remarks as to the actions taken by the Federal Reserve to determine the connection Based on the Federal Reserve's experience with between the BCCI and First American Bank- the BCCI and other foreign organizations and our shares. continuing concern that sound prudential policies Allegations of a linkage between the BCCI and apply to all banking institutions in this country, First American was a major concern of the we believe, that it is essential that steps be taken Federal Reserve when a group of foreign persons to strengthen the supervision of foreign banks sought control of First American in 1981. In operating in the United States. Mr. Mattingly will approving the holding company structure sought discuss a number of important legislative imby these persons, the Federal Reserve held spe- provements the Board has proposed—changes cial hearings and relied, in the absence of any that we hope the Congress will consider and evidence to the contrary, on the representations enact at the earliest possible occasion. of the new owners that the acquisition would not At the same time, we recognize that there are be financed by the BCCI and that the only role steps, other than new legislation, that can be played by the BCCI was that of investment taken to strengthen our supervisory policies and adviser to the individual shareholders. procedures. The Federal Reserve has recently As the money laundering activities of the stepped up its efforts to coordinate with the BCCI began to unfold in 1987 and 1988, there primary state and federal supervisors of foreign was a growing concern regarding the company's branches and agencies to ensure that these ofoverall management and character. Continuing fices are subject to examination on a regular reviews and examinations of First American and basis. As part of this process, we are developing its banks failed to provide evidence that would common examination procedures to be used by substantiate control by the BCCI, and access to state and federal agencies in examining branches the books and records of the BCCI held outside and agencies of foreign banks. We have also the United States was limited not only by bank instituted a program for conducting, to the extent secrecy laws in some jurisdictions but also by the possible under current law, the simultaneous disjointed structure of the BCCI. examination of the U.S. offices of selected for- As already noted, although the company oper- eign banks to obtain a comprehensive view of the ated in many countries, no one country had a foreign banks' U.S. operations. The Board and clear view of the BCCI's worldwide activities or the Reserve Banks have also taken steps to the responsibility to supervise the company on a increase and improve the sharing of information consolidated basis. During 1989 and 1990, we between the Federal Reserve and the state aucontacted various international, federal, and thorities that license foreign banks. state authorities regarding the BCCI. Finally, in In addition, the Federal Reserve is in the late 1990, a series of events, including new and process of developing proposals that would prospecific information provided by interested au- vide for the examination of foreign bank offices in thorities both here at home and abroad, led us to the United States on the same basis as is curissue an order of investigation on January 4, rently employed for state member banks. Such 1991, and to seek the consent cease and desist supervision would, at a minimum, include annual onsite examinations by Federal Reserve examiners in close cooperation with state authorities, as well as a program of formal Federal Reserve 1. The text of Mr. Mattingly's statement follows this one. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

572 Federal Reserve Bulletin • July 1991 comment to state licensing authorities when for- Let me conclude by stating that the Federal eign banks seek to open new offices. While some Reserve recognizes that the supervision and regof these steps will have significant budgetary ulation of foreign banks must be strengthened. implications, we believe that enhanced on-site We are committed to working with the primary examination coverage of foreign branches and regulators of foreign branches and agencies, as agencies is essential if we are to have a fully well as the Congress, to see that this is accomadequate supervisory framework in place. plished in an effective and timely manner. • Statement by J. Virgil Mattingly, Jr., General the supervisory and regulatory framework gov- Counsel, Board of Governors of the Federal erning foreign bank operations in this country. Reserve System, before the Subcommittee on The proposals are intended to help ensure that Consumer and Regulatory Affairs of the Com- the banking policies established by the Congress mittee on Banking, Housing, and Urban Affairs, are implemented in a fair and uniform manner U.S. Senate, May 23, 1991. with respect to all entities conducting a banking business in the United States and that the sizable I am pleased to appear today before this subcom- foreign bank community in this country adheres mittee to describe the Federal Reserve's experi- to legal requirements and operates in a safe and ence with the Bank of Credit and Commerce sound manner. International (BCCI) and to express the Federal To this end, S.1019 would establish uniform Reserve's support for S.1019, the Foreign Bank federal standards for entry and expansion of Supervision Enhancement Act. As its name im- foreign banks in the United States, including, plies, this legislation is intended to strengthen the importantly, a requirement of consolidated home supervision and regulation of foreign banks op- country supervision and the application of the erating in the United States. same financial, managerial, and operational standards that govern U.S. banks. The proposal would also grant regulators the power to termi- SUMMARY nate the activities of a foreign bank that is engaging in illegal, unsafe, or unsound practices Foreign bank operations in this country are and provide regulators with the information-gathlarge—accounting for about 21 percent of U.S. ering tools necessary to carry out their supervibanking assets—and growing. Experience with sory responsibilities. The proposal would clarify fraud and other criminal activity at a small num- the Board's examination authority over foreign ber of foreign banks over the past several years banks by providing that it may coordinate examhas convinced the Board that greater and better inations of all U.S. offices of a foreign bank. coordinated attention needs to be paid by state This legislation draws on the Board's overall and federal regulators to the U.S. offices of these experience in regulating foreign banks operating institutions. Although the problems do not at this in this country, as well as its review of the loan time appear to be widespread in relation to the practices of the Atlanta agency of Banca Naziooverall presence of foreign banks in the United nale del Lavoro and the U.S. activities of the States, recent experience in other areas of the BCCI, including its acquisition of First American financial services industry demonstrates that reg- Bankshares, a U.S. bank holding company, and ulators cannot prudently ignore any early-warn- its conviction for money laundering. ing signs of trouble. With regard to the BCCI case, the Board was For this reason, and in light of the Board's concerned about the relationship of the BCCI to continuing strong interest in ensuring that sound First American from the beginning. In the appliprudential and supervisory policies are in place cation by a group of Middle Eastern investors to for all banking institutions in the United States, acquire First American and at a hearing called by the Board has proposed legislation to fill gaps in the Board on the matter in 1981, the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 573 received numerous assurances that the BCCI Act of 1956 to retain ownership of banks in more would not fund the acquisition and would have than one state acquired before the statute was no relationship with First American other than enacted. In 1956, Financial General owned banks serving as investment adviser to the investing in Virginia, Maryland, Georgia, Tennessee, New shareholders. York, and the District of Columbia. In the years immediately after the acquisition, On April 29, 1977, an investor group led by J. the Board had no indication that the BCCI had William Middendorf II acquired control of Finanfinanced the acquisition of First American or that cial General. Within a few months, dissatisfacother assurances given to the Board had not been tion with his leadership developed among some honored. Shortly after the BCCI was indicted for of the investors, who went in search of a buyer money laundering in 1988, the Federal Reserve for their shares. They discussed a purchase of began a special inquiry into any linkage between Financial General's shares with the chief executhe BCCI and First American. During 1989 and tive officer of the BCCI, Agha Hasan Abedi. 1990, the Board also consulted with law enforce- In late 1977 and early 1978, four clients of the ment agencies and foreign and domestic bank BCCI, acting on the recommendation of Mr. supervisors regarding this issue. In late 1990, the Abedi, began to purchase shares of Financial Board learned from several sources that the General, eventually acquiring approximately 20 BCCI had outstanding loans secured by shares of percent of its voting shares. The investors, none First American's parent holding company, Credit of whom purchased more than 5 percent of the and Commerce American Holdings, N.V. shares, were two prominent citizens of Saudi (CCAH). In January 1991, the Board authorized Arabia and Kuwait and two sons of the ruler of a formal investigation with full discovery pow- Abu Dhabi. In various official filings, the BCCI ers, made criminal referrals, and issued cease stated that it acted only as an investment adviser and desist orders upon consent, requiring the to these persons in connection with their pur- BCCI to divest shares of CCAH that it controls chases of Financial General shares and did not and to terminate its activities in the United itself own, control, or vote any of the shares. States. The Board's investigation is intensive and When the purchases were made public, the ongoing and includes requests for documents, Securities and Exchange Commission filed a depositions, and witness interviews, both domes- complaint alleging that each of the four Middle tically and abroad. To avoid jeopardizing the Eastern investors, the BCCI, Mr. Abedi, and ongoing criminal and civil investigations into the certain U.S. shareholders of Financial General matter, my statement does not discuss the spe- had acquired, as a group, control of more than 5 cific findings or evidence that have been devel- percent of Financial General's shares in violation oped to date. of the Williams Act. In March 1978, the inves- I will now discuss in greater detail the BCCI tors, without admitting fault, entered into a concase and what it indicates about the need for, and sent decree with the Securities and Exchange practical limits of, improved supervision and Commission (SEC). The investors agreed either regulation of foreign banks in this country. I will to divest their shares or to proceed with a tender then describe the Board's legislative recommen- offer for all of Financial General's shares. dations. Three of the original four investors decided to proceed with the tender offer. They were joined by eleven additional individual and corporate THE BCCI CASE investors from the Middle East who were also advised by BCCI. The investors formed CCAH, Background a Netherlands Antilles corporation, to make the tender offer.1 Financial General Bankshares—the predecessor to First American Bankshares—was one of a 1. There were two other companies in the ownership chain: handful of bank holding companies that were Credit and Commerce American Investment, B.V. (CCAI), a grandfathered under the Bank Holding Company Netherlands company and a wholly owned subsidiary of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

574 Federal Reserve Bulletin • July 1991 CCAH's Application to Acquire Financial ferred the power to vote their shares to Senator General Symington for a period of five years. An experienced banker was to be selected as president CCAH could not proceed to acquire Financial and chief executive officer of Financial General, General's shares without Board approval under and this person was identified before the Board the Bank Holding Company Act. On October 19, acted on the application. 1978, CCAH filed an application seeking such In accordance with its procedures, the Board approval. The application was opposed by Finan- requested detailed information from the invescial General, including its Maryland subsidiary tors regarding their financial resources and afbank. On February 16, 1979, the Board dismissed filiations. The Board received financial statethe application, concluding that the acquisition ments, including in the case of the largest would be unlawful under a Maryland law that shareholders the source of funds to be used to forbade any hostile acquisition of a Maryland make the acquisition and letters from their bank. banks confirming their financial statements. The applicants challenged the Board's decision, The materials showed that the investors were but before the matter was adjudicated the inves- persons of considerable means and that the tors and Financial General's management negoti- purchases were to be made from their own ated an agreement for the acquisition of Financial personal resources. General by CCAH. In November 1980, CCAH The Board also conducted background checks again sought Board approval to acquire Financial on the shareholders, soliciting information from General. various federal government agencies and a for- In reviewing such an application, the Board is eign bank supervisor. The Board also obtained required to consider the competitive effects of information from the SEC regarding the original the proposal, the financial and managerial re- acquisition and two CCAH shareholders. sources and future prospects of the companies As a result of the SEC case, the Board focused concerned, and the convenience and needs of the great attention on the relationship between relevant communities. The statutory factors do CCAH and the BCCI, specifically whether the not distinguish between foreign and domestic BCCI had a stake in the planned acquisition, acquirers, and thus these factors were applied to either directly or indirectly. The Board's concern the CCAH application as they would be to a was sufficiently serious that it took the unusual domestic holding company application. Under step of convening a hearing on this question and the Bank Holding Company Act, the Board's others raised by the application, requesting that findings on these statutory factors must be sup- the principal shareholders of CCAH appear and ported by substantial evidence. testify at the hearing. The application specified that the Middle In response to the Board's questions, CCAH Eastern investors were to be passive and would and its principal shareholders stated that the take no part in the management or operation of BCCI would not be involved in the acquisition Financial General. The management of Finan- other than as an investment adviser to the CCAH cial General was to be vested in a board of investors and, in particular, would not fund the directors that would include former Senator acquisition. At the hearing and in written submis- Stuart Symington, former Secretary of Defense sions, CCAH shareholders and their counsel (Mr. Clark M. Clifford, and retired Lieutenant Gen- Clifford and his partner, Robert A. Altman, of the eral Elwood R. Quesada. Investors controlling firm of Clifford & Warnke) made the following more than 50 percent of CCAH's shares trans- statements: • The application filed by CCAH stated: BCCI owns no shares of FGB, CCAH or CCAI, either directly or CCAH; and FGB Holding Corporation, a District of Columindirectly, nor will it if the application is approved. bia corporation that was a wholly owned subsidiary of CCAI. Neither is it a lender, nor will it be, with respect to the FGB Holding was subsequently renamed First American Corporation and was the entity that acquired Financial Gen- acquisition by any of the investors of either FGB, eral Bankshares. CCAI or CCAH shares. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 575 • In a letter submitted to the Board in response to between foreign and domestic companies seeking questions about the relationship between BCCI and control of U.S. banks, and the concerns about CCAH, counsel for CCAH stated: "With regard to the possible changes in management and services stockholders of CCAH, all holdings constitute perafter the acquisition were not substantiated. The sonal investments. None are held as an unidentified agent for another individual or organization." BCCI was not mentioned in the Commissioner's • Sheikh Kamal Adham, the largest shareholder of closing statement; the concern expressed was CCAH, stated at the Board's hearing, "There is ... no that the Middle Eastern shareholders would acunderstanding or arrangement regarding any future tively represent their own business interests in relationship or proposed transactions between Finanthe management of CCAH, not that they were cial General and BCCI." He further stated, "[I]t acting as nominees or borrowing to support their appears that there is doubt that there is somebody or BCCI is behind all of this deal. I would like to assure purchases. you that each one on his own rights will not accept in On August 25, 1981, after having considered any way to be a cover for somebody else." the hearing record, reports from staff, and the • CCAH counsel, when asked at the hearing about the views of the federal and state agencies, the Board relationship among CCAH and CCAI and BCCI, approved CCAH's acquisition of Financial Genstated, "[T]here is no connection between those entities and BCCI in terms of ownership or other relation- eral. Consummation of the acquisition was deship." layed, however, pending approval of the New • Asked about the function of BCCI in the proposal, York State Banking Department of the acquisi- CCAH counsel stated, "None. There is no function of tion of Financial General's New York banks. The any kind on the part of BCCI." He added, "I know of Department initially disapproved the application, no present relationship. I know of no planned future relationship that exists . . . ." principally because of concerns about a lack of reciprocity for American banks in Arab coun- The same representations were made to the tries. On March 2, 1982, the Department granted other regulators involved in the application. The its approval after CCAH's commitment to divest Comptroller of the Currency was advised by one of the New York banks. In a subsequent counsel that "none of the investors are borrow- letter, the Department stated that "the informaing to finance their respective equity contribu- tion we received indicated that the investors tions" and that "BCCI will have no involvement were prestigious and reputable people." with the management and other affairs of Finan- The acquisition was consummated on April 19, cial General nor will the BCCI be involved in the 1982. Financial General was renamed First financing arrangements, if any are required, re- American in August 1982.2 Mr. Clifford became garding this proposal." Based on these represen- chairman of the board of First American, and tations, the Office of the Comptroller (OCC) Mr. Symington became chairman of the board of informed the Board that its concerns about the CCAH. Mr. Clifford's law partner, Mr. Altman, application had been addressed. The Bank Com- was named president of First American Corpomissioner of Maryland approved the acquisition ration and secretary and a managing director of of the Maryland bank on June 26, 1981. CCAH. In a "Closing Statement" filed with the Board, the Virginia Commissioner of Financial Institu- The 1982-90 Period tions recommended disapproval based on concerns about whether foreign ownership of U.S. In the years immediately after the acquisition, banks was in the public interest and whether the there was no evidence to suggest that CCAH and investors would make management changes and First American were functioning other than in reduce services to local communities in contra- accordance with the statements made to the vention of their commitments to the Board. His Board and the other regulators. The investors statement expressed particular concern with the acquisition by foreign organizations of U.S. banking organizations, particularly one as large as Financial General. As noted, however, the 2. During the course of the takeover, prior Financial General management had renamed most of the subsidiary Bank Holding Company Act does not distinguish banks First American Bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

576 Federal Reserve Bulletin • July 1991 adhered to their commitment to inject $12 million purchase of CCAH stock or for other business in new capital into First American, and no divi- activities of the shareholders and whether the dends were paid to the investors in keeping with loans were secured by CCAH stock. Board staff another commitment. On several occasions, the wrote to counsel for CCAH on December 13, investors made additional capital injections to 1989, asking for information on any loans by the support First American's activities. Both federal BCCI or its affiliates to the original or subsequent and state examinations of First American and its investors in CCAH, either directly or indirectly subsidiary banks and of the U.S. offices of BCCI and regardless of the purpose of the loan. detected no irregularities in their dealings with In response, the Board was advised by letter each other, which were reported as limited. from the acting chief executive of the BCCI that In early 1989, after the BCCI's indictment for the BCCI had not financed in any respect the money laundering, the Federal Reserve Bank of acquisition of Financial General; that none of the Richmond conducted a special inquiry into the CCAH shareholders had personal loans from the relationship between CCAH and the BCCI. The BCCI in 1981 or 1982; and that no CCAH stock inquiry was initiated in connection with a pend- was held as collateral against subsequent unreing application by CCAH to retain control of a lated business loans by the BCCI to some of Florida bank. Each of the First American subsid- these shareholders. Counsel for CCAH at the iary banks was asked to report on any transac- same time advised that no pledge or security tions with the BCCI, and CCAH management interest had ever been recorded on CCAH's was questioned on any relationship with the share register by any lender. Kamal Adham, the BCCI. principal shareholder of CCAH, also confirmed In its report to the Board on February 8, 1989, that his CCAH acquisition was primarily from the Reserve Bank found no evidence of irregular personal funds and was not financed by the or significant contacts between the First Ameri- BCCI. can banks and the BCCI or of failure by CCAH To verify the accuracy of the statements made to adhere to its commitments. As for ownership by the BCCI in its 1990 letter, Board staff memof CCAH, senior management of CCAH and bers requested the assistance of the foreign bank First American stated that the relationship be- supervisor that had originally provided informatween CCAH and the BCCI was no different in tion to the Board. The supervisor responded that nature than at the time of the original application, it had encountered difficulties in obtaining the and that the BCCI did not exercise a controlling necessary information but would continue its influence over CCAH. The Reserve Bank noted investigation. that the common ownership of CCAH and the In sum, during the 1989-90 period, Federal BCCI had increased, but the Bank Holding Com- Reserve staff members consulted with law enpany Act does not prohibit common ownership forcement officials, including the New York of banks or nonbanks by individuals, as it does in County District Attorney's Office, other investithe case of companies. Thus, this common own- gative federal agencies, and foreign bank superership, while significant, did not itself provide visors to obtain information about allegations grounds for Board action. that the BCCI had acquired control of CCAH. During 1989 and 1990, concerns about a possi- The Board received no substantive evidence of ble relationship between the BCCI and CCAH such a relationship until late in 1990. remained, and Federal Reserve staff continued inquiries into the matter. In this timeframe, Fed- The Present Investigation eral Reserve personnel made a number of inquiries of law enforcement authorities and foreign In November 1990, the New York County Disbank supervisors seeking information. In late trict Attorney's Office informed Federal Reserve 1989, the Board received informal advice from a staff members that a confidential source had foreign banking supervisor that the BCCI had stated that a report prepared in October 1990 by loans outstanding to certain CCAH shareholders, the BCCI's outside auditors indicated that the but it was unclear whether the loans were for the BCCI had made substantial loans to CCAH Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 577 shareholders secured by CCAH shares. Board counsel for the BCCI described certain docustaff members immediately requested access to mentary materials in the BCCI's files relevant to this report from the U.S. General Manager of the the question of nominee arrangements by the BCCI. After a delay occasioned by the initial BCCI with certain CCAH shareholders. I should refusal of the auditor to permit the report to be note that not all of the CCAH shareholders had examined by the Federal Reserve, the BCCI borrowed from the BCCI, and some that had agreed to make the report available for review by borrowed have since denied that the CCAH a senior member of the Board's examination staff shares were held for the BCCI. in the BCCI's main office in London. The review Although the investigation is not complete and was conducted on December 10, 1990. The audi- there remain many unanswered questions, the tor's report and a conversation on that date with Board determined in January 1991 that it had the new chief executive officer of the BCCI sufficient evidence to take certain action. On indicated that the BCCI had substantial loans January 22, 1991, the Board sent a proposed outstanding, secured by CCAH stock. This was cease and desist order to counsel for the BCCI the first substantive evidence received by the and made criminal referrals to the Department of Board confirming a financial relationship be- Justice. The cease and desist order, which was tween the BCCI and CCAH. consented to by the BCCI on March 4 without Shortly after Board staff members gained ac- admitting or denying any wrongdoing, requires cess to the report, attorneys from a U.S. law firm that the BCCI divest its interest in CCAH and representing the BCCI and its Abu Dhabi share- submit to the Board for its approval a plan to do holders contacted my office to request a meeting. so promptly. That order, and a similar one At a meeting on December 21, 1990, counsel against CCAH, also prohibits transactions beexplained that in the spring of 1990, the Abu tween the BCCI and CCAH and its subsidiary Dhabi government had invested a very large sum banks (other than capital injections into the in BCCI stock to correct certain capital deficien- banks) unless the transactions are in the ordinary cies. As a result, the ownership interest of the course of business; any such transactions must Abu Dhabi royal family and government in the be approved by the Federal Reserve Bank of BCCI increased from approximately 30 percent Richmond, which is monitoring compliance with to approximately 77 percent. Counsel went on to the orders. All such business transactions beconfirm that a substantial amount of the stock of tween the BCCI and CCAH are required to be CCAH had been pledged to the BCCI as collat- eliminated shortly. Finally, the order requires eral for hundreds of millions of dollars in loans to that the BCCI submit a plan to cease all banking certain shareholders of CCAH and to provide operations in the United States. other information relevant to the BCCI's control Also in January 1991, the Board briefed the over the pledged CCAH shares. Counsel stated appropriate state and federal banking supervisors that the new controlling shareholders of the concerning its preliminary findings regarding the BCCI had retained his firm to help conduct a BCCI's control of CCAH, and requested examispecial inquiry into this and other matters at nations of all First American banks, with partic- BCCI, and wished to cooperate with the Board in ular attention to detection of any relationship addressing the CCAH matter. with BCCI. Based on the information described above, on As I have indicated, the Board's investigation January 4, 1991, the Board initiated a formal into this matter is continuing, as we try to investigation, including authorization for the use determine fully the circumstances surrounding of full discovery powers, into the circumstances the BCCI's acquisition of control of CCAH, and of the BCCI's acquisition of control of CCAH to obtain the evidence necessary to document and whether false or misleading statements had what violations of law have occurred and the been made to the Board during the application persons involved. The investigative team has process in 1981 and subsequently. On January issued numerous subpoenas, interviewed and 17, 1991, in response to my request for further deposed witnesses, and reviewed thousands of information concerning the loan arrangements, pages of documents in this country and abroad. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

578 Federal Reserve Bulletin • July 1991 That process is the most extensive in my expe- I will now turn to an explanation of the Board's rience with the Federal Reserve. legislative recommendations and the reasons for In carrying out this investigation and during these recommendations. previous efforts to determine any control linkage between CCAH and the BCCI, the Board has faced serious obstacles. I would emphasize how THE FOREIGN BANK SUPERVISION complex investigations of this nature are under ENHANCEMENT ACT OF 1991 the best of circumstances, but when the evidence is located all over the world and deliberately As a result of the BCCI matter and several other concealed, the difficulties are very greatly mag- recent foreign bank supervisory problems, the nified. The shareholder register and other CCAH Board has conducted a review to determine records in the United States and the Netherlands whether the existing statutory framework gov- Antilles that were subject to Board examination erning foreign bank operations in this country is or review indicated that the individuals and com- adequate. That review, together with the Board's panies listed in CCAH's filings with the Board ongoing interest in assuring that a sound prudenwere, in fact, the owners of the shares of CCAH. tial and supervisory structure governs banking There was no record of a security or other operations in this country, convinced the Board interest by the BCCI in the CCAH shares. The that improvements in the framework, including documents that evidence the arrangements be- standards for entry and the exercise of examinatween CCAH shareholders and the BCCI were tion powers, in particular, were needed. As a maintained outside the United States. Moreover, result, the Board has recommended the legisladocuments reviewed during the investigation tion being considered here today. The legislation suggest that the BCCI deliberately structured is not intended to impose sweeping new requirevarious transactions so as to conceal from the ments or to alter radically the supervisory frame- Board the relationship between the BCCI and work governing foreign bank operations in the CCAH. Although the new owners of the BCCI United States. Rather, its purpose is to build have cooperated in the investigation, bank se- upon, and complement, the existing supervisory crecy laws and pending litigation in foreign juris- structure to fill those regulatory gaps that expedictions have made it difficult to obtain the rience has demonstrated exist. documents necessary to determine and prove the The most pressing gap was addressed last year full extent of the violations. In this connection, when the Board recommended, and the Congress the Board has requested and received assistance adopted in the Crime Control Act of 1990, in the investigation from foreign bank superviamendments to cover branches and agencies of sors and continues to coordinate actively with foreign banks under various provisions of the federal and state law enforcement authorities. criminal code governing bank fraud and other Finally, during the course of the investigation, bank-related crimes. The present proposal takes the Board also obtained information indicating the next step and seeks to strengthen the superthat the BCCI acquired control of shares of the visory structure for foreign banks in the United Independence Bank, headquartered in Encino, States. California, and the National Bank of Georgia, The International Banking Act (IBA) of 1978 which became a subsidiary of First American in for the first time subjected foreign banks with 1987 without receiving the necessary approval U.S. branches and agencies to federal regulation, under the Bank Holding Company Act. The chiefly requiring them to maintain reserves and Board has issued a cease and desist order, con- generally limiting their activities and geographic sented to by the BCCI without admitting or expansion in the United States to those available denying any wrongdoing, that requires that the to U.S. banking organizations. Because the IBA BCCI divest any shares of Independence Bank was based on a policy of national treatment, it that it controls. The BCCI was required to divest attempted also to adapt the dual banking system National Bank of Georgia as a subsidiary of First to the unique characteristics of foreign bank American in the March cease and desist order. branches and agencies. The IBA was largely Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 579 successful in this effort but left foreign banks free ees actively conspire to prevent official scrutiny of certain of the federal requirements imposed on or when all relevant information relating to the U.S. banks. For example, in the IB A the Con- fraudulent activity is maintained outside the gress did not require prior federal review of United States. The Board's proposals are deforeign bank entry as had been recommended by signed to minimize the potential for illegal activthe Board. ities by creating a bar to entry by questionable The Board's recommendations to correct these organizations and, in the event that illegal or supervisory gaps have a common purpose: to improper activities are suspected, to provide as ensure that foreign bank operations in this coun- many regulatory and supervisory tools as possitry are regulated, supervised, and examined in ble to investigate and enforce compliance. the same manner as U.S. banks. The recommended new procedures for the geographic expansion by, or examination of, foreign banks are FINANCIAL AND MANAGERIAL STRENGTH already applied to banks in the United States, whether they have state or national charters. The As a starting point in its proposals, the Board Board's proposals establish the same framework recommends that the law establish clear and for state-licensed offices of foreign banks as definite standards that would apply to any foreign applies to any state-chartered bank, whether it is institution seeking entry into the United States. a member or nonmember bank. Under the current system, a state may allow Foreign banks have an important presence in, entry by a foreign bank based on its own criteria, and hold a substantial portion of, the banking which could differ substantially from the criteria assets of this country. As of December 31, 1990, applied by another state. In the interests of the U.S. branches and agencies of foreign banks uniformity and in providing national treatment to in the United States alone had aggregate assets of all foreign banks, there should be a common set $626 billion, or 18 percent of total banking assets of standards that all applicants must meet to be in this country. When the assets of their subsid- participants in the U.S. banking market. These iary banks are included, this share rises to 21 standards must be designed to continue to permit percent. Well over 90 percent of foreign bank strong international banks to do business in the branch and agency assets are held in 489 state- United States but to weed out weakly capitallicensed offices. In light of their size and impor- ized, poorly managed, or inadequately supertance to the nation's banking system, the partic- vised institutions. ipation of foreign banks in the U.S. economy, in The proposal would not in any way replace or the Board's view, is rightly a matter of national substitute for state regulatory approval of foreign banking policy. This policy, if it is to be both fair bank branches and agencies. A state must still and effective, must be applied on an equitable license a branch or agency of a foreign bank and basis not only as between domestic banks and must apply its own standards to the establishforeign banks but also among foreign banks ment and ongoing operation of the office, includthemselves. The Board's proposal is intended to ing standards that may be more stringent or establish uniform standards for entry and partic- rigorous than those proposed here. The Board's ipation in the U.S. market by foreign banks, proposal establishes a minimum standard that all whether through state or federal license, and to foreign banks operating in the United States must provide a basis for improved coordination and meet because of the significance and impact of cooperation among state and federal supervisors these institutions on the nation's banking system. in overseeing the various offices of foreign banks These offices are now an integral part of our in this country. economy and have access to the payment sys- At this point, the Board wishes to emphasize tem. In light of their size, any problems or that its recommendations will not solve every difficulties in this sector could have significant supervisory problem relating to foreign banks. effects on the rest of the U.S. banking industry. Fraud is extremely hard for any regulatory au- For these reasons, the Board believes that forthority to detect, especially when bank employ- eign banks should meet the same standards of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

580 Federal Reserve Bulletin • July 1991 financial responsibility as are applied to U.S. The provision is not intended to grant authorbanks, including the standards that would be ity to the agencies for "fishing expeditions," to applied to a U.S. bank operating internationally. allow the exercise of extraterritorial jurisdiction over the non-U.S. operations of the foreign bank, or to provide access to the records of customers HOME COUNTRY SUPERVISION unrelated to the bank's compliance with U.S. banking law. Rather, the provision seeks to con- The Board also believes that it is critical that any firm that a foreign bank that chooses to particiforeign bank entrant be subject to comprehensive pate in the U.S. market, with all attendant privsupervision on a consolidated basis by a home ileges and responsibilities, will also make country regulator. When an institution operates available to banking regulators information that internationally in separate jurisdictions with dif- is directly relevant to determining and enforcing fering laws and regulations, consolidated review the bank's compliance with U.S. banking reand supervision are the only means of determin- quirements. ing its financial condition and the extent and lawfulness of its operations. The BCCI case provides an example of an institution that was REQUIREMENT FOR PRIOR APPROVAL not subject to consolidated review by any one regulator, which enhanced the BCCI's ability to As a means of implementing these standards, the carry out its operations without normal regula- Board recommends that there be a federal aptory scrutiny. This standard of comprehensive proval process that applies these standards to the and consolidated supervision was not a generally proposed entry by a foreign bank through any accepted principle of international bank supervi- form of banking office, whether a state or federsion at the time the IB A was adopted, as it is ally licensed office or a commercial lending comtoday, and became so only after experience pany. The IB A gave the Board certain responsidemonstrated the pitfalls of fragmented review of bilities for the supervision of foreign banks in the an international bank's operations. The Board United States, but no federal agency has a voice recommends incorporation of this standard into in deciding whether individual institutions seekthe laws governing foreign banks operating in the ing to enter U.S. markets through state branches, United States. agencies, or commercial lending companies meet the standards generally applicable to banking organizations in this country. The Board believes ACCESS TO INFORMATION that it is important that the agency charged with responsibility for the overall supervision of for- The Board also recommends that the standards eign banks in this country have a role in deciding include a requirement that the foreign bank agree whether the foreign bank may establish or mainto supply information on its activities and oper- tain a U.S. banking presence. This practice apations that a regulatory agency finds to be nec- plies in other areas of federal bank regulation, essary to determine whether the bank is in com- and, given the size and importance of foreign pliance with U.S. banking requirements. Recent bank offices in the U.S. banking market, the experience of the Board in the BCCI investiga- practice should be applied to these institutions as tion has demonstrated the critical importance of well. agency access to this type of information. Without this type of agreement, it is difficult for the agency to detect and enforce compliance with the SUPERVISION OF REPRESENTATIVE banking laws. The agency is in the position of OFFICES having to use its enforcement authority to attempt to gain access to information that the bank Foreign banks also participate in the U.S. market may be trying deliberately to shield by holding it through representative offices. These are offices offshore. at which a foreign bank may promote the ser- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 581 vices offered by the foreign bank but may not Because such coordinated examinations would engage directly in a banking business with cus- require the close cooperation of a number of tomers. Representative offices may not make different regulators, the Board believes that it is credit or other business decisions but must refer preferable that there be clear congressional authosuch decisions to the home office. Because their rization for such coordination, including authority activities are intended to be limited, there is a to call for simultaneous examinations when aplesser degree of regulation of these offices. There propriate. have, however, been instances in which foreign This last point bears emphasis. It is axiomatic banks have used representative offices to conduct that the branch offices of a bank should be regubanking activities without licenses. To prevent lated and examined as part of a single entity. such instances in the future, the Board believes Thus, for example, the branches of a U.S. bank that it would be appropriate to require federal are not examined as separate units. The Board review of the establishment by foreign banks of strongly believes that all offices of a foreign bank representative offices in the United States and to must also be treated and examined as parts of a make these offices subject to examination. single entity. The proposal is not intended to interfere with state efforts to examine and supervise state-li- TERMINATION OF FOREIGN BANK OFFICES censed branches and agencies. In implementing a coordinated examination program, the Board an- Besides the establishment of standards for entry ticipates that examinations of state branches and and federal approval authority, the Board has agencies would be conducted in a manner similar recommended that authority be provided to ter- to those of state member banks. The Federal minate the activities of a state branch, agency, Reserve has a long record in coordinating examirepresentative office, or commercial lending nations of state member banks with the states. company of a foreign bank for violations of law The Board applies a flexible approach designed to or the conduct of unsafe or unsound practices use resources efficiently while obtaining the necwhen the continuation of the activities would not essary information from the examination. Debe consistent with the public interest or the pending on the state, the Board may conduct its applicable statutory standards. own examination of the bank, participate in a joint examination with the state, or alternate examinations with the state every other year. Examination COORDINATED EXAMINATIONS of branches and agencies may require greater coordination with the states and the OCC because Our experience has demonstrated the need to of the interstate aspect of the foreign bank's strengthen and coordinate federal and state exam- operations and the number of different regulators inations of the various branches and agencies of a that are involved, but it is to be hoped that the end foreign bank. Many foreign banks operate exten- result will provide a more comprehensive picture sive interstate networks of branches and agencies of a foreign bank's U.S. operations than is curlicensed under the authority of the various states rently available. The Board hopes to enhance its or the OCC. As a result, the timing of the exam- existing communications and cooperation with inations of the various offices and the elements of federal and state bank regulators in conjunction with the program of coordinated examinations. the various examination processes may differ widely. The IB A, although it gives the Board the residual responsibility for supervising all of a foreign bank's U.S. operations, also requires that COOPERATION WITH FOREIGN the Board use the reports of examination of other SUPERVISORS regulators to the extent possible. The Board believes that the IBA should be amended to remove In terms of supervising banks that operate this requirement and to authorize the Board to call internationally, a crucial aspect is cooperation for coordinated or simultaneous examinations. and coordination with the home country regu- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

582 Federal Reserve Bulletin • July 1991 lators of such banks. Consequently, the Board I might also note that, as part of the Treasury's recommends that the IBA be amended to clarify proposed legislation on banking reform, statethat the federal banking agencies are authorized chartered banks would be limited in their activito share supervisory information with their for- ties to those of a national bank, absent agency eign counterparts, subject to adequate assur- approval. If that portion of the banking reform ances of confidentiality, when such sharing is legislation were to be enacted, consideration appropriate in carrying out the agency's super- should be given to applying a similar limitation to visory responsibilities. the activities of state branches and agencies of foreign banks. OTHER PROPOSALS CONCLUSION There are several other areas in which the Board has recommended either enhancing cur- In sum, the Board's proposals are designed to be rent requirements in the law or extending to consistent with the policy established in the IBA foreign banks in the United States the same of national treatment for foreign banks and to legal requirements that apply to U.S. banking provide the federal regulators with the same auorganizations. These areas include requiring thority over the U.S. operations of foreign banks reports by foreign banks with U.S. operations as they have with respect to domestic banks. The of loans secured by 25 percent or more of the proposals do not establish a new scheme of bank voting shares of an insured depository institu- regulation; they apply to foreign banks the same tion; requiring that a foreign bank with a structure of regulation as applies to domestic branch, agency, or commercial lending com- banks. The dual banking system is served in the pany in the United States obtain prior approval same way as with domestic banks, and the probefore acquiring more than 5 percent of the posed legislation recognizes that states have an shares of a U.S. bank or bank holding company; important role in determining whether to invite designating the banking agencies as the enforce- foreign banks into their states under a scheme of ment agencies for foreign bank branches and state regulation. The Board's proposal also recogagencies with respect to consumer lending stat- nizes, however, that the presence of an internautes; clarifying the managerial standards appli- tional bank in the U.S. market has implications cable to bank acquisitions in the Bank Holding that go beyond the boundaries of any one state Company Act; and confirming the authority to and that the national policies established by the impose civil money penalties for violation of the Congress with respect to banking must also be IBA or its implementing regulations. served. • Statement submitted by the Board of Governors advertisements for their consumer deposit acof the Federal Reserve System to the Subcom- counts, provide detailed rate and fee information mittee on Consumer Affairs and Coinage of the in account schedules, and inform account hold- Committee on Banking, Finance and Urban Af- ers when terms are changed. The Board (or the fairs, U.S. House of Representatives, May 30, Federal Depository Institutions Regulatory 1991. Agency as specified in H.R.6) would be required to write rules to implement these requirements. Thank you for the opportunity to offer the com- The Board believes that account holders ments of the Board of Governors of the Federal should have adequate information on which to Reserve System on H.R.6 and H.R.447 dealing make informed savings decisions and supports with Truth in Savings. disclosure of important account features. In fact, Both bills would require that depository insti- the Board's Regulation Q has for many years tutions disclose rate and cost information in required disclosure of account terms in adver- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 583 tisements, and institutions covered by the regu- counts) would impose significant printing and lation have been encouraged to make schedules mailing costs. of their fees available to account holders. Mailing disclosures to existing customers does While the goal of the legislation is consistent not promote the bill's purpose to provide disclowith the Board's objectives, the implementation sures when consumers are shopping for an acof this legislation will require a set of complex count. Moreover, many depository institutions rules, increasing the already heavy regulatory already provide account agreements or written burden placed on depository institutions. The disclosures to their customers when an account cumulative effect of individual rules, each well is opened. Mailing information to existing cusintentioned in its purpose to address a specific tomers would provide information to consumers concern, can be overwhelming—particularly for after they have made their choice of savings small institutions. Because of our experience with products and would frequently duplicate infornumerous consumer statutes for which we have mation that account holders are likely to have rulewriting authority (for example, the Truth in already received. Lending Act), we know firsthand that simple The bills already require that disclosures be concepts such as "truth in savings" invariably made available to any person upon request. This result in complicated regulations. To encompass requirement guarantees that existing account the diversity of industry practices and products, holders who want information will receive it, implementing rules are often intricate and volumi- without mandating that institutions distribute nous. Moreover, we have learned that rules that schedules to all account holders. In addition, are not intended to affect the variety of products both bills would require that all account holders offered nonetheless may have the practical effect be provided with a description of any adverse of standardizing products and reducing the op- changes to the terms of the account. This procetions that are available to consumers. dure ensures that existing account holders are Consequently, if the Congress decides to go alerted to any disadvantageous changes. forward with legislation, the Board believes that Thus, we believe that requiring all existing the law should be carefully tailored to ensure that account holders to be provided with account compliance costs are minimized and that regula- information, as H.R.447 does, is of questionable tory burdens do not lead institutions to discon- value. In our view, H.R.6 takes a better aptinue products or decide not to develop new proach. That bill simply requires that institutions products. In addition, the Board believes that include a notice on the periodic statement sent to there are a few disclosure requirements in the existing account holders notifying them of the bills that may confuse consumers shopping for right to receive an account schedule. deposit accounts. Thus, the Board encourages Both bills require that the disclosures (or nothe Congress to consider the following changes tice) be provided to existing account holders to the bills. within three months after the regulation is issued in final form. There is no obvious reason for requiring that disclosures be given to existing account holders within three months of enact- DISCLOSURES TO EXISTING ACCOUNT ment of the bill, rather than the six-month time HOLDERS established for new customers under H.R.6. (We would also note that, other than for existing H.R.447 requires that depository institutions customers, H.R.447 does not specify when instisend, within ninety days after the Board adopts tutions would have to comply with the law.) final regulations, a schedule of terms and condi- Three months is too short a time for institutions tions to all existing account holders. Mandating to review the new regulation, reexamine their such a mailing to holders of the approximately entire deposit product line, and prepare, print, 250 million consumer accounts (including certif- and disseminate schedules to existing customers. icates of deposit, savings, negotiable order of If the Congress believes that a notice to existing withdrawal [NOW], checking, and other ac- account holders is desirable—as provided in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

584 Federal Reserve Bulletin • July 1991 H.R.6—we believe the compliance time should "technical" violations of the act. And we know be extended from three to six months. from experience that the threat of litigation contributes greatly to the complexity of the implementing regulations. Frequently, regulatory EFFECTIVE PERCENTAGE YIELD amendments are adopted to address compliance DISCLOSURE issues that arise because of ambiguity in the statute or variations in products. A second concern of the Board deals with rate By contrast with H.R.447, H.R.6 provides that information required to be disclosed to consum- an account holder may bring an action against an ers. H.R.447 requires a disclosure of the "effec- institution for failing to comply with the act or tive percentage yield" for accounts with maturi- the implementing regulation. Permitting any perties of less than one year, besides the annual son to bring an action, including actions for percentage yield (APY) that must be disclosed violations of the advertising requirements, could for all accounts. Current credit and deposit ac- encourage litigation by nonaccount holders. We count regulations calculate rates based on an encourage the Congress to adopt the approach assumed year regardless of the maturity of the taken by H.R.6, which provides a remedy to transaction. Adding another rate like an "effec- those individuals who have an account relationtive percentage yield" would be confusing to ship with the institution and who might be customers who are accustomed to the concept of harmed by an incorrect disclosure. an annual yield and would be contrary to the purpose of the law—to provide clear disclosures to consumers. We strongly encourage the Con- REQUIRED BALANCE COMPUTATION gress to delete this requirement from H.R.447. If METHOD the Congress is concerned that consumers may be confused by use of an annual rate figure for an Finally, we question the approach taken in H.R.6 account that matures in less than a year, an to mandate the methods that institutions may use advertisement might include a statement that the to calculate the balance on which interest is annual percentage yield is based on the current figured. Mandating the balance computation rate and assumes that the rate does not change at method exceeds the scope of the stated purpose renewal and that all funds remain on deposit for of the legislation—providing uniform disclosures a full year. for comparison by consumers. The Board believes that the approach taken in H.R.447— requiring disclosure of the balance computation CIVIL LIABILITY method—is more consistent with the stated purpose of the legislation. A third concern deals with the civil liability Besides these issues, we have attached a docprovision in H.R.447. The provision is quite ument setting forth several technical concerns sweeping and provides that any person may bring about the bill that we urge the Congress to an action against an institution for failing to address.1 We appreciate the opportunity to offer comply with any requirements of the act or the our views on the proposed legislation and hope implementing regulation. The Congress has ex- that they will be helpful to you. • pressed great concerns about overly broad civil liability rules; one of the issues that prompted 1. The attachments to this statement are available on revision to the Truth in Lending Act in 1980, for request from Publications Services, Board of Governors of example, was the tremendous litigation over the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 585 Statement by Stephen C. Schemering, Deputy troubled financial institutions and consult closely Associate Director, Division of Banking Super- with that agency in making our decision whether vision and Regulation, Board of Governors of the to extend credit. Federal Reserve System, before the Committee When the Federal Reserve extends credit to on Banking, Finance and Urban Affairs, U.S. troubled institutions, we do so only when the House of Representatives, May 31, 1991. primary regulator has not determined that the institution is capital insolvent. The Federal Re- I am pleased to appear before the committee serve, in consultation with the FDIC, may lend today to review the Federal Reserve's adminis- for a short period to a failing institution for the tration of its discount window activities with purpose of facilitating an orderly resolution of respect to the Madison National Bank. I will also the situation that minimizes the potential for provide the Federal Reserve's responses to the disruption to the financial system and cost to the five questions contained in the committee chair- deposit insurance fund. man's letter of invitation dated May 21, 1991. In the context of these general policies, I will Last week the Federal Reserve provided the now respond to the questions set forth in the committee's staff with the documents and dis- committee's letter of invitation about the specifcount window data requested in that letter. ics of lending to the Madison National Bank. The loans to Madison National Bank were made consistent with the Federal Reserve's 1. Regarding Federal Reserve loans to Madioverall policy governing discount window lend- son, please provide the rationale for those loans ing. In general, Federal Reserve lending is in- in light of Madison National Bank's financial tended to be a temporary source of liquidity, and, condition at the time of the loans. under Board regulation, may not serve as a substitute for capital. Loans are extended when Madison National Bank was permitted access other reasonably available sources of funds have to the discount window for adjustment credit on already been fully utilized. Institutions using January 22, 1991, in the amount of $1 million and Federal Reserve credit are expected to take the loan was increased to $3.6 million on January actions promptly to correct the liquidity shortage 23; this loan was repaid the next day. The bank and repay the loans. borrowed for one day on January 29 in the Most discount window borrowing consists of amount of $2.5 million. On February 12, Madison short-term adjustment credit made to assist insti- National Bank again accessed the discount wintutions in meeting unforeseen, temporary re- dow for $3 million and continuously borrowed quirements for funds. Federal Reserve credit is until its failure on May 10, when the loan totaled extended for longer periods to those smaller $125 million. (On May 10 a loan was also outinstitutions that can demonstrate a recurring sea- standing to Madison National Bank of Virginia, sonal pattern in funding needs based on regular an affiliate, in the amount of $16 million.) Until intra-yearly movements in deposits or loans. May 1, the bank had not been found to be Extended credit may be advanced to troubled insolvent by the primary regulator, and efforts depository institutions that are encountering sus- were under way by new management to restructained liquidity pressures and are unable to ac- ture the bank and to attract new capital. cess alternative sources of funds on reasonable The Office of the Comptroller of the Currency terms and conditions. In such situations, the (OCC) began a full-scope examination in early Federal Reserve works in close cooperation with February, the final results of which were made the primary regulator, either federal or state. The available to the Federal Reserve on May 1. The Federal Reserve is particularly sensitive to the examination findings revealed that the bank was responsibilities of the Federal Deposit Insurance "in imminent danger of insolvency." At that Corporation (FDIC) as insurer and receiver of point, we notified the FDIC that the Federal failed depository institutions in these situations. Reserve's discount window loans would be lim- Therefore, we keep the FDIC fully informed of ited to the purpose of effecting a prompt and the status of discount window borrowings of orderly resolution of the bank. The continuation Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

586 Federal Reserve Bulletin • July 1991 of the Federal Reserve's discount window loan quality to determine the full extent of the bank's subsequent to May 1 was made in close consul- problems. Although the bank's viability was in tation with the FDIC and enabled that agency to doubt, the solvency question could not be fully arrange an assisted transaction under which the ascertained until completion of the examination, institution was closed with a minimum of disrup- which occurred on May 1. tion and inconvenience to the community and the bank's customers. 4. What factors changed between the time of the Federal Reserve loans to Madison and the 2. Did Federal Reserve loans permit Madison May 1991 takeover of Madison by federal bank to stay open beyond the point when it became regulators? insolvent? Between the initiation of Federal Reserve lend- The bank was not declared insolvent until its ing on January 22 and the May 10 closure, the closing on May 10, although we were aware on May OCC completed a full-scope examination of asset 1 of its imminent insolvency. Failure to extend quality of the institution. During this period, it credit from May 1 through May 10 before the FDIC began to appear less likely that management's was ready to effect an orderly resolution might have efforts to recapitalize the bank would be successdisrupted the local payments system, denied in- ful. As noted in the response to question 1, on sured depositors access to their funds for a period of May 1 the OCC informed the Federal Reserve time, possibly increased the FDIC's cost of resolu- that, based on the findings of the examination, the tion, and preempted the bank's attempt to respond bank was "in imminent danger of insolvency." to an OCC request for a capital plan. On May 1, the examination results were presented to the bank directorate and the OCC required the 3. What steps did the Federal Reserve take to bank to submit a capital plan by May 8 to cure its ensure that Madison was a viable institution prior deficit equity position. On the morning of May 10, to providing it with loans? the OCC notified the bank that the capital plan was not acceptable, and that afternoon the OCC Normally, in extending credit we would not declared the bank insolvent. conduct a full-scope examination to determine whether the bank is viable. Rather, we ascertain 5. Did the Federal Reserve perform its own the bank's solvency from supervisory informa- examination of Madison prior to providing it with tion provided by the primary regulator and de- loans, or did the Federal Reserve rely on the termine that adequate collateral is available to results of the OCC's examination? secure the loan. On February 5, the OCC completed a targeted review of liquidity and the Consistent with our practice, we relied on the adequacy of the loan-loss reserve and found the examination of the primary regulator for critical bank's viability to be questionable, but the insti- information about the financial condition of the tution was not considered to be capital insolvent. bank while the Federal Reserve was lending. As In response to this situation, the OCC immedi- noted above, the OCC was conducting a new ately scheduled a full-scope examination of asset examination over this period. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

587 Announcements STATEMENT BY CHAIRMAN GREENSPAN Governors of the Federal Reserve System, ON THE RESIGNATION Washington, D.C. 20551. OF KARL OTTO POEHL AS PRESIDENT OF THE DEUTSCHE BUNDESBANK MEETING OF CONSUMER ADVISORY Chairman Alan Greenspan of the Federal Re- COUNCIL serve Board issued on May 16, 1991, the following statement concerning the announced resigna- The Federal Reserve Board announced that its tion of Karl Otto Poehl as President of the Consumer Advisory Council met on June 20 in a Deutsche Bundesbank: meeting that was open to the public. The Council's function is to advise the Board President Poehl has been a dedicated professional and on the exercise of the Board's responsibilities an anchor of stability during his tenure as head of the under the Consumer Credit Protection Act and Bundesbank. His keen judgment and wise counsel will on other matters on which the Board seeks its be sorely missed by all of us. I wish my good friend advice. well in whatever new endeavors he may undertake. MODIFICATIONS TO THE CRITERIA FOR NOMINATIONS SOUGHT FOR MEMBERS OF OFFERING A TIERED PRICING STRUCTURE THE CONSUMER ADVISORY COUNCIL The Federal Reserve Board adopted on May 9, The Federal Reserve Board announced on May 1991, modifications to the criteria for offering a 31, 1991, that it is seeking nominations of quali- tiered pricing structure in the check collection fied individuals for thirteen appointments to its service. Consumer Advisory Council to replace members The revised criteria will enable Federal Rewhose terms expire on December 31,1991. Nom- serve Banks to set fees that more precisely inations should be received by August 30, 1991. reflect their costs of collecting checks drawn on The Consumer Advisory Council was estab- paying banks within a given check collection lished by the Congress in 1976, at the suggestion zone. The modifications are effective January 1, of the Board, to advise the Board on the exercise 1992. Specifically, the Board adopted the followof its duties under the Consumer Credit Protec- ing modifications: tion Act and on other consumer-related matters. The ten-member Council, with staggered three- • Tiered pricing may be applied to deposits in year terms of office, meets three times a year. all collection zones, provided clear cost differ- Nominations should include the name, ad- ences exist. dress, and telephone number of the nominee; • Reserve Banks may offer more than two past and present positions held; and special price tiers within a collection zone, provided knowledge, interests, or experience related to clear cost differences exist to justify more than consumer credit or other consumer financial ser- two tiers. vices. • The approval process for implementation of Nominations should be submitted in writing to tiered pricing in additional Federal Reserve of- Dolores S. Smith, Assistant Director, Division of fices will be the same as the approval process for Consumer and Community Affairs, Board of other routine price and service-level changes. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

588 Federal Reserve Bulletin • July 1991 The Board has not adopted an earlier proposed the need to offer a blended fee option and may modification to eliminate the current requirement determine to discontinue the blended fee alternathat a blended fee be offered as an alternative to tive at some point in the future if circumstances tiered prices within each collection zone where warrant. In addition, the Board has provided tiered pricing has been implemented. clarification on several existing tiered pricing The Board, however, will continue to evaluate criteria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

589 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON MARCH 26,1991 aircraft were down. New orders for business equipment suggested that spending on such goods would change little in coming months. Nonresiden- Domestic Policy Directive tial construction put-in-place edged up in January from a downward-revised level for December but The information reviewed at this meeting suggested remained below its weak average for the fourth that economic activity had weakened further in the quarter. Available data on contracts, permits, and opening months of the year. Production cutbacks office vacancy rates pointed to considerable softness were evident in a wide range of industries, and in nonresidential construction activity in coming private payrolls had fallen markedly, especially in months. Manufacturing and trade inventories rose the goods-producing sector. On the positive side, considerably in January after little net change in the consumer confidence had rebounded sharply since fourth quarter. With shipments and sales down the cease-fire in the Persian Gulf, retail sales and sharply around the turn of the year, the ratio of housing starts had strengthened recently, and exports inventories to sales in manufacturing and trade had continued to expand. Broad measures of prices continued to rise in January. had slowed or contracted in January and February, After declining considerably in previous months, but excluding energy and food prices, increases in retail sales turned up in February. Sales at general those measures were higher than in previous months. merchandise, apparel, and furniture outlets jumped Wage increases had moderated over the past several in February after posting sizable declines over the months. preceding few months, and purchases of automobiles Total nonfarm payroll employment fell sharply and light trucks picked up from the very low sales further in February. The decline was widespread pace in January. Consumer sentiment appeared to across industries but was particularly pronounced in have rebounded sharply in early March from the low the durable goods segment of manufacturing. levels reached after Iraq's invasion of Kuwait. In Construction employment edged up in February February, housing starts more than retraced a sharp after a steep drop in January, when the weather was January decline but were still at a low level; in unusually adverse. The only major industry to post a particular, multifamily construction activity renotable job increase was health services. The civilian mained very weak. Available data and anecdotal unemployment rate rose to 6.5 percent in February. reports indicated that lower home prices and mort- Industrial output declined markedly again in gage rates were stimulating some consumer interest February, with cutbacks evident in a wide range of in purchasing homes. industries. Production of motor vehicles and parts The nominal U.S. merchandise trade deficit slackened after being about unchanged on balance increased slightly from December to January but over the previous two months; output of other final was considerably below its average rate in the fourth products continued to fall in February, with the quarter. The value of exports picked up in January exception of computer equipment, which advanced from the strong fourth-quarter level; the value of for a second month. Capacity utilization in most imports declined considerably, mostly reflecting a major industries fell further in February; in manu- drop in the price of imported oil. Among the major facturing, operating rates were substantially below foreign industrial countries, economic activity in the their 1989 highs. fourth quarter of 1990 expanded more slowly in Shipments of nondefense capital goods increased Germany and Japan, though there had been some in February, boosted by a sizable advance in tentative indications of a pickup in growth early this shipments of aircraft and parts; categories other than year in both countries. By contrast, some weakening Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

590 Federal Reserve Bulletin • July 1991 in activity apparently had occurred in several other when conditions tightened in the federal funds major industrial countries. market. In the early part of the intermeeting period, Among major components of broad measures of federal funds averaged a bit above 6% percent, but inflation for January and February, food prices rose by the time of the March meeting the rate had more slowly or declined on balance and energy dropped to about 6 percent. The federal funds rate prices fell substantially further; however, prices of was less volatile around its average level; this items other than food and energy rose more rapidly evidently reflected not only the change in attitudes than in preceding months. At the producer level, this toward use of the window but also the greater pickup reflected in part large increases in prices of experience of banks in operating under the lower motor vehicles. At the consumer level, increases in reserve requirement ratios put in place late last year federal excise taxes on some items and an unusual and the rebound of required reserve balances from bunching of price increases at the beginning of the their seasonal low in February. year had boosted prices of nonfood, non-energy Other short-term interest rates had declined goods and services; as a result, the percent change in slightly since the Committee meeting on Febthese prices over the twelve months ended in ruary 5-6; Treasury bill rates dropped by less than February was considerably above that for the rates on private instruments. In longer-term markets, previous twelve months. Average hourly earnings rates on Treasury bonds had risen appreciably while of production or supervisory workers were little rates on high-grade bonds had changed little and changed over January and February; for the twelve those on lower-rated debt had fallen substantially. months ended in February, these earnings had The narrowing in spreads of private over Treasury increased at a slower pace than in the comparable rates appeared to stem primarily from investor year-earlier period. assessments of improved prospects for a recovery in At its meeting on February 5-6, the Committee U.S. economic activity and in business earnings and adopted a directive that called for maintaining the thus for reduced strains on borrowers. Stock prices existing degree of pressure on reserve positions but moved up considerably on balance over the interfor giving special weight to potential developments meeting period. that might require some easing during the intermeet- The trade-weighted value of the dollar in terms of ing period. To reflect the tilt toward easing, the the other G-10 currencies increased very sharply directive indicated that somewhat lesser reserve over the intermeeting period. In addition to optimism restraint would be acceptable in the intermeeting over the prospects for the U.S. economy in the period, or slightly greater reserve restraint might be aftermath of the Persian Gulf war, there was a acceptable, depending upon progress toward price growing perception by market participants that ecostability, trends in economic activity, the behavior of nomic activity in the major trade partners of the the monetary aggregates, and developments in for- United States was growing more slowly or declining eign exchange and domestic financial markets. The and that in consequence interest rate spreads were contemplated reserve conditions were expected to likely to move in favor of dollar assets. Political be consistent with growth of both M2 and M3 at difficulties in the Soviet Union also appeared to annual rates of around 3V2 to 4 percent over the affect the German mark adversely. period from December through March. At least partly in response to earlier declines in After the Committee meeting, open market interest rates, growth of M2 and M3 strengthened operations initially were directed at maintaining the substantially in February, and partial data suggested existing degree of pressure on reserve positions; appreciable further growth in March. Such growth, subsequently, in early March, in response to which was faster than the Committee had anticipated, information suggesting that economic activity had brought M2 up to the middle portion of its annual continued to decline through February, pressures on range and put M3 near the upper end of its range. reserve positions were eased slightly. Adjustment Most of the acceleration in M2 reflected rapid plus seasonal borrowing tended to run at appreciably expansion in its liquid retail deposit instruments. higher levels than expected over the intermeeting Offering rates on these accounts had responded in period; this seemed to reflect in part a greater typically sluggish fashion to declines in market willingness of banks to seek discount-window credit interest rates in recent months, and the opportunity Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 591 costs associated with holding such deposits had activity might be relatively sluggish, at least in the narrowed accordingly. The strength in M3 reflected early stages of the recovery. Consumers and businot only the faster growth of M2 but also in part the nesses probably would remain relatively cautious in efforts of some depository institutions, in the wake the context of continuing concerns about employof the elimination of the reserve requirement on ment opportunities as well as heavy debt burdens nontransaction accounts, to replace federal funds and tight constraints on credit availability; in and Eurodollar borrowings with funds raised through addition, confidence was vulnerable to further domestic issuance of large certificates of deposit. difficulties in the financial sector. Indeed, there was The staff projection prepared for this meeting some risk that the recession could deepen considerpointed to a turnaround in the economy in coming ably further, but on balance the conditions seemed to months. While further declines in activity were be in place for a turnaround in coming months. With likely in the very near term, the rebound in business regard to the outlook for inflation, members exand consumer confidence following the declaration pressed disappointment about the lack of progress in of a cease-fire in the Persian Gulf, the positive reducing its underlying rate; however, they remained effects of lower oil prices on household purchasing optimistic that reduced pressures in markets for power and of earlier declines in interest rates on output as well as for key inputs, indications of some housing demand, and the additional gains expected moderation in wage increases, a firmer dollar, and in exports were likely to foster an upturn in the weaker commodity prices all pointed to some economy before very long. Subsequently, increases subsidence in inflation over coming quarters. The in business orders and sales could lead to a further slower average rate of money growth over the pickup in production, given generally lean invento- course of recent years suggested a monetary policy ries and, with some lag, to a rise in business spending that had for some time been consistent with a gradual for investment goods. On the other hand, the reduced diminution in inflation. availability of credit and the effects of the overhang In their reports on developments around the of commercial structures on commercial construc- country, members noted that their contacts indicated tion activity, along with a moderately restrictive a sharp rebound in business sentiment since the last fiscal policy, were expected to continue to exert Committee meeting, mirroring the marked increase some restraint on domestic demand. Against the of consumer confidence as the Persian Gulf war background of lower oil prices and some added slack drew to a successful close. The effects of this change in resource utilization, the staff projected a slowing in attitudes by both producers and consumers were in the pace of increases in prices and labor costs in not yet evident in many statistical measures of coming quarters. economic activity, except perhaps in the housing In the Committee's discussion of the economic sector and retail sales. Across the nation, regional outlook, members saw improving prospects for a economic activity remained uneven; it was still recovery in business activity some time in the months declining in some areas, albeit with increasing signs ahead, especially in light of the sharp rebound in that it might be stabilizing, and appeared to have consumer and business sentiment since the cease- bottomed out or strengthened a little in other parts of fire in the Persian Gulf war. A variety of financial the country. Manufacturing activity in particular indicators, including the performance of the stock remained depressed in many areas, notably those and bond markets and the foreign exchange markets, that were dominated by the production of motor along with faster monetary growth suggested both vehicles and related parts. Members commented that an upturn in economic activity was widely that many businesses, especially in the construction expected and that liquidity had been made available industry, were continuing to report difficulties in to support it. Thus far, however, the surge in obtaining financing, but both loan demand and the consumer confidence was not accompanied by availability of financing showed signs of improveappreciable evidence of stronger economic activity, ment in some areas. though the February data in two key areas, retail In their review of developments in key sectors of sales and housing starts, were positive after a period the economy, members emphasized that the timing of substantial weakness. In the view of many and strength of the recovery would depend impormembers, the anticipated upswing in economic tantly on how quickly and to what extent the rebound Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

592 Federal Reserve Bulletin • July 1991 in consumer confidence was translated into increased contribution to the domestic expansion in coming consumer spending. The performance of the con- quarters. While continuing growth in exports was sumer durables sector, notably autos, was a key helping to offset some of the weakness in manufacelement in the outlook; while expenditures on turing, some members referred to the possibility that durable goods did not appear to have strengthened further expansion in world demand for U.S. exports thus far, developments that might help to stimulate might be curtailed by slower growth abroad related such spending included greater capital gains realized to political uncertainties and economic developments from sales of existing homes and more demand for in several nations; a partial offset was the potential household durables stemming from a possible pickup for large reconstruction expenditures by Kuwait. in the construction of new homes. Members also The recent appreciation of the dollar also would tend reported that automobile dealers had become more to inhibit net exports over time. optimistic in many areas. However, many members Turning to the outlook for inflation, a number of believed that consumer expenditures were likely to members emphasized that recent increases in probe restrained by a combination of negative factors ducer and consumer prices, excluding their food and that included concerns about job security and debt energy components, were a disturbing development burdens. Moreover, the fiscal problems of state and even though transitory factors helped to account for local governments were tending to erode consumer much of those increases. Concerns about inflation confidence in some parts of the country, and seemed to be echoed in financial markets, judging associated fiscal restraint measures would limit the from the recent rise in long-term interest rates. At growth in disposable incomes in those areas. the same time, however, increases in labor compen- With regard to the outlook for business investment sation had continued to trend down, with relatively spending, stronger consumer expenditures in com- high unemployment levels contributing to much ing months should induce more business spending reduced pressures on wages in many local areas. In for inventories and, with some lag, for new equip- circumstances characterized by strong competitive ment, especially in light of the recent improvement conditions in most industries and thus widespread in business confidence. On the negative side, if a pressures on prices and profit margins, many recovery in consumer spending failed to materialize, business firms continued to seek ways to limit their the upturn in business confidence might well reverse. labor costs. In this connection, members observed Such a development could foster a sharp drop in that efforts to hold down employment levels were business capital appropriations that in turn would likely to result in some further increases in unemdeepen and extend the recession. With regard to ployment even after a recovery got under way. The construction activity, members commented that appreciation of the dollar in recent months would problems of overcapacity were likely to limit new tend with some lag to moderate inflation pressures nonresidential construction for an extended period over coming quarters. On balance, the members in many areas. On the other hand, signs of renewed remained optimistic about the prospects for apprebuyer interest in housing were widespread, and ciable reductions in the core rate of inflation, given indeed developments in this sector of the economy their expectations of some continuing slack in were seen by some members as the most encouraging resource use and of monetary expansion at a pace indication of a prospective economic recovery. Some within the Committee's ranges for the year. concern was expressed regarding the possibility that In the Committee's discussion of policy for the persisting constraints on the availability of financing intermeeting period ahead, all of the members to homebuilders might continue to inhibit home- supported a proposal to maintain an unchanged building activity, but given the expected strengthen- degree of pressure on reserve positions. The ing in the overall economy and the already improving System's policy actions over the course of recent capital positions of many banking institutions, a months, including two reductions in the discount degree of optimism seemed warranted that such rate, represented substantial easing on a cumulative financing might become more readily obtainable in basis and most probably had positioned monetary the months ahead. policy to contribute to a satisfactory recovery in In the view of many members, the external sector business activity. Changing economic and financial of the economy was likely to make only a small conditions could, of course, lead to a reassessment, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 593 but for now a steady policy course seemed indicated toward tightening or easing. A symmetric directive as the stimulative effects of earlier policy actions, represented a change from previous directives that the drop in oil prices, and the rebound in confidence had been tilted toward easing since mid-1990, and it worked their way through the economy. Some was consistent with an assessment that the risks to members observed that the most likely direction of the economy had shifted in recent weeks and were the next policy move was not clear at this point and now more evenly balanced. Further declines in that caution was needed before any action was taken. economic activity would not be surprising—nor Prevailing uncertainties suggesting that further should they necessarily be seen as calling for easing could not be ruled out included the possibility additional ease, given the lags in policy effects. that consumer spending would not strengthen Under current circumstances, policy adjustments materially and that business capital spending would should be made only in the event of particularly continue to weaken. However, if the economy was conclusive evidence, which might include a signifiindeed near its recession trough, additional easing cant deviation in monetary growth from current would not be necessary and such a move might add expectations, that the recession might be deeper or to inflationary pressures later. On the other hand, the rebound less robust than anticipated. Other while a firming of policy clearly would be premature members expressed a preference for retaining a at this point, a number of members commented that directive that was biased toward possible easing. the Committee should be alert to the potential need Some of these members believed that, despite the to tighten reserve conditions promptly if emerging improved prospects for a recovery, there were still economic and financial conditions, including the marked risks of a prolonged recession and of a weak behavior of the monetary aggregates, threatened upturn, and in these circumstances the Committee progress toward price stability. should react relatively promptly to indications that the economy was not moving toward a turnaround. Many of the members commented that in current One member expressed a slight preference for economic and financial circumstances the strengthbiasing the directive toward restraint. In this view, ening in M2 growth in February and March was a the possibility of a continuing or even a deepening welcome development following an extended period recession could not be ruled out, but the greater risks of limited expansion. The faster growth tended to were in the direction of too much ease and of support expectations of a near-term recovery in persisting or increasing inflation; consequently, the economic activity. It also might be indicative of directive should envision any easing as a remote some rebound of public confidence in depository prospect. institutions. The growth of M2 for the year to date was near the middle of the Committee's annual At this meeting, the interaction between changes range, but if the most recent rate of M2 growth was in the discount rate, as approved by the Board of to continue for some time, this might signal the need Governors, and open market operations, as impleto tighten reserve conditions to forestall a potential mented under the current operating procedures and intensification of inflationary pressures. However, directives of the Committee, also was discussed. according to a staff analysis prepared for this The principal issue related to the extent to which meeting, monetary growth was likely to moderate changes in the discount rate should show through to somewhat over the second quarter as the effects of the federal funds rate that would be expected in the earlier declines in market interest rates on opportu- implementation of open market operations. In recent nity costs and desired money holdings tended to years, changes in the discount rate usually had been dissipate. On the assumption of an unchanged degree allowed to pass through automatically to the federal of pressure on reserve positions, the staff projected funds rate; there had been some exceptions involving the cumulative expansion of M2 to be only slightly instances where only partial pass-throughs had been above the midpoint of the Committee's range at permitted and where the change in the discount rate midyear. had been intended to conform the latter to movements Members expressed a range of views regarding that had already occurred in the federal funds rate. In possible intermeeting adjustments to the degree of general, however, both rates had tended to move reserve pressures, but a majority preferred—and all together over time, and appropriately so, as adjustcould accept-a directive that did not contain a bias ments to both policy instruments are made in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

594 Federal Reserve Bulletin • July 1991 context of the same economic and financial develop- increased somewhat in January but was considerably ments. Members agreed that in general the existing below its average rate in the fourth quarter. Energy prices practice should be continued, but that consultation fell substantially further in January and February, but prices of other consumer goods and services rose more among members of the Committee would be particrapidly than in preceding months. Wage increases have ularly appropriate in circumstances in which changes moderated in recent months. in the discount rate perhaps should not be permitted Short-term interest rates have declined slightly since to show through entirely to market rates, or in which the Committee meeting on February 5-6. In longer-term their showing through would result in quite sizable markets, rates on Treasury bonds have risen appreciably, changes in money market rates in the period between owing at least in part to heightened expectations of a recovery in U.S. economic activity. Risk premiums on meetings. corporate debt instruments have declined, and stock At the conclusion of the Committee's discussion, prices have moved up considerably on balance. The all of the members indicated that they favored a trade-weighted value of the dollar in terms of the other directive that called for maintaining the existing G-10 currencies increased very sharply over the intermeetdegree of pressure on reserve positions. The ing period. Growth of M2 and M3 strengthened substantially in members also noted that they preferred or could February, reflecting rapid expansion in liquid retail deaccept a directive that did not include a presumption posits; partial data suggest appreciable further growth in about the likely direction of any intermeeting March. adjustments in policy. Accordingly, the Committee The Federal Open Market Committee seeks monetary decided that somewhat greater reserve restraint or and financial conditions that will foster price stability, somewhat lesser reserve restraint might be accept- promote a resumption of sustainable growth in output, able during the period ahead depending on progress and contribute to an improved pattern of international transactions. In furtherance of these objectives, the toward price stability, trends in economic activity, Committee at its meeting in February established ranges the behavior of the monetary aggregates, and for growth of M2 and M3 of 2Vi to 6Vi percent and 1 to developments in foreign exchange and domestic 5 percent, respectively, measured from the fourth quarter financial markets. The reserve conditions contem- of 1990 to the fourth quarter of 1991. The monitoring plated at this meeting were expected to be consistent range for growth of total domestic nonfinancial debt was with some reduction in the growth of M2 and M3 set at 4V2 to SVz percent for the year. With regard to M3, from their recent pace to annual rates of around 5LA the Committee anticipated that the ongoing restructuring of thrift depository institutions would continue to depress and 3Vi percent respectively over the three-month its growth relative to spending and total credit. The period from March through June. behavior of the monetary aggregates will continue to be At the conclusion of the meeting, the following evaluated in the light of progress toward price level domestic policy directive was issued to the Federal stability, movements in their velocities, and developments in the economy and financial markets. Reserve Bank of New York: In the implementation of policy for the immediate future, the Committee seeks to maintain the existing The information reviewed at this meeting suggests that degree of pressure on reserve positions. Depending upon economic activity weakened further in the opening months progress toward price stability, trends in economic of 1991. In February, total nonfarm payroll employment activity, the behavior of the monetary aggregates, and fell sharply further, especially in manufacturing, and the developments in foreign exchange and domestic financial civilian unemployment rate rose to 6.5 percent. Industrial markets, somewhat greater reserve restraint or somewhat output also declined markedly again in February, with lesser reserve restraint might be acceptable in the cutbacks evident in a wide range of industries. Advance intermeeting period. The contemplated reserve conditions indicators point to further weakness in business fixed are expected to be consistent with growth of M2 and M3 investment in coming months, notably in nonresidential over the period from March through June at annual rates construction. On the other hand, after declining considerof about 5V4 and 3V2 percent, respectively. ably in previous months, retail sales turned up in February; consumer sentiment appears to have rebounded sharply in recent weeks. Housing starts jumped in February, Votes for this action: Messrs. Greenspan, Corrigan, retracing a sizable decline in January but remaining at a Angell, Black, Forrestal, Keehn, Kelley, LaWare, low level. The nominal U.S. merchandise trade deficit Mullins, and Parry. Votes against this action: None. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

595 Legal Developments FINAL RULE—AMENDMENT TO REGULATION A 3. Section 201.52 is revised to read as follows: The Board of Governors is amending 12 C.F.R. Part Section 201.52—Extended credit for depository 201, its Regulation A (Extensions of Credit by Federal institutions. Reserve Banks), to reflect its recent approval of a reduction in discount rates at each Federal Reserve (a) Seasonal credit. The rates for seasonal credit Bank. The discount rate is the interest rate that is extended to depository institutions under section charged depository institutions when they borrow 201.3(b)(1) of Regulation A are: from their district Federal Reserve Banks. The Board acted on requests submitted by the Boards of Directors of the twelve Federal Reserve Banks. Federal Reserve Bank Rate Effective The amendments to Regulation A were effective April 30, 1991. The discount rate changes were effec- Boston 5.5 Apr. 30, 1991 New York 5.5 Apr. 30, 1991 tive on the dates specified in sections 201.51 and Philadelphia 5.5 Apr. 30, 1991 201.52. The Board of Governors is amending Cleveland 5.5 May 1, 1991 Richmond 5.5 Apr. 30, 1991 12 C.F.R. Part 201 as set forth below: Atlanta 5.5 Apr. 30, 1991 Chicago 5.5 Apr. 30, 1991 St. Louis 5.5 May 2, 1991 1. The authority citation for 12 C.F.R. Part 201 Minneapolis 5.5 Apr. 30, 1991 continues to read as follows: Kansas City 5.5 Apr. 30, 1991 Dallas 5.5 Apr. 30, 1991 San Francisco 5.5 Apr. 30, 1991 Authority: Sections 10(a), 10(b), 13, 13a, 14(d) and 19 of the Federal Reserve Act (12 U.S.C. 347a, 347b, 343 (b) Other extended credit. The rates for other extended et seq., 347c, 348 et seq., 357, 374, 374a and 461); and credit provided to depository institutions under sussection 7(b) of the International Banking Act of 1978 tained liquidity pressures or where there are excep- (12 U.S.C. 347d). tional circumstances or practices involving a particular institution under section 201.3(b)(2) of Regulation A 2. Section 201.51 is revised to read as follows: are: Section 201.51—Short-term adjustment credit for depository institutions. Federal Reserve Bank Rate Effective The rates for short-term adjustment credit provided to Boston 5.5 Apr. 30, 1991 depository institutions under section 201.3(a) of Reg- New York 5.5 Apr. 30, 1991 ulation A are: Philadelphia 5.5 Apr. 30, 1991 Cleveland 5.5 May 1, 1991 Richmond 5.5 Apr. 30, 1991 Atlanta 5.5 Apr. 30, 1991 Chicago 5.5 Apr. 30, 1991 St. Louis 5.5 May 2, 1991 Federal Reserve Bank Rate Effective Minneapolis 5.5 Apr. 30, 1991 Kansas City 5.5 Apr. 30, 1991 Dallas 5.5 Apr. 30, 1991 Boston 5.5 Apr. 30, 1991 San Francisco 5.5 Apr. 30, 1991 New York 5.5 Apr. 30, 1991 Philadelphia 5.5 Apr. 30, 1991 Cleveland 5.5 May 1, 1991 Richmond 5.5 Apr. 30, 1991 These rates apply for the first 30 days of borrowing. Atlanta 5.5 Apr. 30, 1991 For credit outstanding for more than 30 days, a flexible Chicago 5.5 Apr. 30, 1991 St. Louis 5.5 May 2, 1991 rate will be charged which takes into account rates on Minneapolis 5.5 Apr. 30, 1991 Kansas City 5.5 Apr. 30, 1991 market sources of funds, but in no case will the rate Dallas 5.5 Apr. 30, 1991 charged be less than the basic discount rate plus San Francisco 5.5 Apr. 30, 1991 one-half percentage point. Where extended credit pro- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

596 Federal Reserve Bulletin • July 1991 vided to a particular depository institution is antici- members. The functions that have been delegated to pated to be outstanding for an unusually prolonged Board employees are set forth in sections 265.5, 6, 7, period and in relatively large amounts, the 30-day time 8, and 9. The functions that have been delegated to the period may be shortened. Secretary of the Federal Open Market Committee are set forth in section 265.10. The functions that have been delegated to the Reserve Banks are set forth in AMENDMENT TO RULES REGARDING section 265.11. Provisions for review of any action DELEGATIONS OF AUTHORITY taken pursuant to delegated authority are found in section 265.3. Except as otherwise indicated in these The Board of Governors is amending 12 C.F.R. Part Rules, the Board will review a delegated action only if 265, its Rules Regarding Delegations of Authority, by a Board member, at his or her own initiative, requests reorganizing the rules. The Board also is delegating to a review. its Secretary, with the concurrence of the General Counsel, the authority to make technical corrections Section 265.2—Delegation of Functions to its regulations. Generally. Effective May 17, 1991, 12 C.F.R. Part 265 is amended as follows: (a) The Board has determined to delegate authority to exercise the functions described in this Part. Part 265—Rules Regarding Delegation of (b) The Chairman of the Board shall assign responsi- Authority bility for performing such delegated functions. 1. The authority citation for Part 265 is revised to read Section 265.3—Board Review of Delegated as follows: Actions. Authority: Section ll(k) of the Federal Reserve Act (a) Request by Board member. The Board shall review (12 U.S.C. 248(k)). any action taken at a delegated level upon the vote of one member of the Board, either on the member's own 2. Part 265 is revised to read as follows: initiative or on the basis of a petition for review by any person claiming to be adversely affected by the dele- Section 265.1—Authority, Purpose, and Scope. gated action. (b) Petition for review. A petition for review of a (a) Pursuant to section ll(k) of the Federal Reserve delegated action must be received by the Secretary of Act (12 U.S.C. 248(k)), the Board of Governors of the the Board not later than the fifth day following the date Federal Reserve System (the "Board") may delegate, of the delegated action. by published order or rule, any of its functions other (c) Notice of review. The Secretary shall give notice of than those relating to rulemaking or pertaining princi- review by the Board of a delegated action to any pally to monetary and credit policies to Board mem- person with respect to whom the action was taken not bers and employees, Reserve Banks, or administrative later than the tenth day following the date of the law judges. Pursuant to section ll(i) of the Federal delegated action. Upon receiving notice, such person Reserve Act (12 U.S.C. 248(i)), the Board may make may not proceed further in reliance upon the delegated all rules and regulations necessary to enable it to action until notified of the outcome of the review by effectively perform the duties, functions, or services the Board. specified in that Act. Pursuant to section 5(b) of the (d) By action of a delegee. A delegee may submit any Bank Holding Company Act (12 U.S.C. 1844(b)), the matter to the Board for determination if the delegee Board is authorized to issue such regulations and considers it appropriate because of the importance or orders as may be necessary to enable it to administer complexity of the matter. and carry out the purposes of this Act and prevent evasions thereof. Other provisions of Federal law also Section 265.4—Functions Delegated to Board may authorize specific delegations by the Board. Members. (b) The Board's Rules Regarding Delegation of Authority (12 C.F.R. Part 265) detail the responsibilities (a) Individual members. Any Board member desigthat the Board has delegated. The table of contents, nated by the Chairman is authorized: titles, and headings that appear in these Rules are used (1) Review of denial of access to Board records; solely for their descriptive convenience. Section 265.4 FOIA. To review and determine an appeal of denial addresses the specific functions delegated to Board of access to Board records under the Freedom of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 597 Information Act (5 U.S.C. 552), the Privacy Act (1) Extension of time period for public participation (5 U.S.C. 552a), and the Board's rules regarding such in proposed regulations. To extend, when appropriaccess (12 C.F.R. Parts 261 and 261a, respectively). ate under the Board's Rules of Procedure (2) Approval of amendments to notice of charges or (12 C.F.R. 262.2(a) & (b)), the time period for cease and desist orders. To approve (after receiving public participation with respect to proposed regurecommendations of the Staff Director of the Divi- lations of the Board. sion of Banking Supervision and Regulation and the (2) Extension of time period in notices, orders, rules, General Counsel) amendments to any notice, tem- or regulations. porary order, or proposed order previously ap- (i) To grant or deny requests to extend any time proved by the Board in a specific formal enforce- period in any notice, order, rule, or regulation of ment matter (including a notice of charges or the Board relating to filing information, comremoval notice) or any proposed or temporary cease ments, opposition, briefs, exceptions, or other and desist order previously approved by the Board matters, in connection with any application, reunder 12 U.S.C. 1818(b) and (c). quest or petition for the Board's approval, author- (3) Requests for permission to appeal rulings. ity, determination, or permission, or any other (i) To act, when requested by the Secretary, upon action by the Board. any request under section 263.10(e) of the Board's (ii) Notwithstanding section 265.3 of this Part, no Rules of Practice for Hearings (12 C.F.R. Part person claiming to be adversely affected by any 263) for special permission to appeal from a ruling such extension of time by the Secretary shall have of the presiding officer on any motion made at a the right to petition the Board or any Board hearing conducted under the Rules, and if special member for review or reconsideration of the expermission is granted, the merits of the appeal tension. shall be presented to the Board for decision. (3) Conforming citations and references in Board (ii) Notwithstanding section 265.3 of this Part, the rules and regulations. denial of special permission to appeal a ruling may (i) To conform references to administrative posibe reviewed by the Board only if a Board member tions or units in Board rules and regulations with requests a review within two days of the denial. changes in the administrative structure of the No person claiming to be adversely affected by Board and in the government and agencies of the the denial shall have any right to petition the United States. Board or any Board member for review or recon- (ii) To conform citations and references in Board sideration of the denial. rules and regulations with other regulatory or (b) Three member Action Committee. Any three Board statutory changes adopted or promulgated by the members designated from time to time by the Chair- Board or by the government or agencies of the man (the "Action Committee") are authorized: United States. (1) Absence of quorum. To act, upon certification by (4) Technical corrections in Board rules and regulathe Secretary of the Board of an absence of a tions. To make technical corrections, such as spellquorum of the Board present in person, by unani- ing, grammar, construction, and organization (inmous vote on any matter that the Chairman has cluding removal of obsolete provisions and certified must be acted upon promptly in order to consolidation of related provisions), to the Board's avoid delay that would be inconsistent with the rules, regulations, and orders and other records of public interest except for matters: Board action but only with the concurrence of the (i) relating to rulemaking; Board's General Counsel. (ii) pertaining principally to monetary and credit (b) Availability of information. policies; and (1) FOIA requests. To make available, upon re- (iii) for which a statute expressly requires the quest, information in Board records and consider affirmative vote of more than three Board mem- requests for confidential treatment of information in bers. Board records under the Freedom of Information (2) [Reserved.] Act (5 U.S.C. 552) and under the Board's Rules Regarding Availability of Information (12 C.F.R. Section 265.5—Functions Delegated to Part 261). Secretary of the Board. (2) Annual reports on Privacy Act. To approve annual reports required by the Privacy Act The Secretary of the Board (or the Acting Secretary) is (5 U.S.C. 552a(p)) from the Board to the Office of authorized: Management and Budget for inclusion in the Presi- (a) Procedure. dent's annual consolidated report to Congress. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

598 Federal Reserve Bulletin • July 1991 (3) Report on prime rate of commercial banks. To acquisition that may exceed the limitations of secdetermine and report, under 26 U.S.C. (IRC) 6621, tion 25(a) of the Federal Reserve Act based on the to the Secretary of the Treasury the average pre- company's capital and surplus, if all of the following dominant prime rate quoted by commercial banks to conditions are met: large businesses. (i) the appropriate Reserve Bank and all relevant (c) Bank holding companies; Change in bank control; divisions of the Board's staff recommend ap- Mergers. proval; (1) Reports on competitive factors in bank mergers. (ii) no significant policy issue is raised on which To furnish reports on competitive factors involved the Board has not expressed its view; in a bank merger to the Comptroller of the Currency (iii) the acquisition does not result, either directly and the Federal Deposit Insurance Corporation un- or indirectly, in the bank, corporation, or bank der the provisions of the Federal Deposit Insurance holding company acquiring effective control of the Act (12 U.S.C. 1828(c)); the Bank Holding Com- company, except that this condition need not be pany Act (12 U.S.C. 1842(a), 1843(c)(14)); the Bank met if: Service Corporation Act (12 U.S.C. 1865(a), (b), (A) the company is to perform nominee, fidu- 1867(d)); the Change in Bank Control Act ciary, or other services incidental to the activ- (12 U.S.C. 1817(j)); and the Federal Reserve Act ities of a foreign branch or affiliate of the bank (12 U.S.C. 321 et seq., 601-604a, 611 et seq.). holding company, or corporation; or (2) Reserve Bank director interlocks. To take actions (B) the stock is being acquired from the parent the Reserve Bank could take except for the fact that bank or bank holding company, or subsidiary the Reserve Bank may not act because a director, Edge or Agreement corporation, as the case senior officer, or principal shareholder of any hold- may be, and the selling parent or subsidiary ing company, bank, or company involved in the holds the stock with the consent of the Board transaction is a director of a Reserve Bank or pursuant to Regulations K and Y (12 C.F.R. branch. Parts 211 and 225). (d) International banking. (e) Member banks. (1) Establishment of foreign branch or foreign (1) Waiver of penalty for early withdrawals of time agency or of Edge or Agreement corporations. To deposits. To permit depository institutions to waive approve, under sections 25 and 25(a) of the Federal the penalty for early withdrawal of time deposits Reserve Act (12 U.S.C. 601-604a & 611-631) and under section 19(j) of the Federal Reserve Act Regulation K (12 C.F.R. Part 211), the establish- (12 U.S.C. 371b) and section 204.2 of Regulation D ment, directly or indirectly, of a foreign branch or (12 C.F.R. Part 204) if the following conditions are agency by a member bank or an Edge or Agreement met: corporation if all of the following conditions are met: (i) the President declares an area a major disaster (i) the appropriate Reserve Bank and relevant or emergency area pursuant to section 301 of the divisions of the Board's staff recommend ap- Disaster Relief Act of 1974 (42 U.S.C. 5141); proval; (ii) the waiver is limited to depositors suffering (ii) no significant policy issue is raised on which disaster or emergency related losses in the offithe Board has not expressed its view, and cially designated area; and (iii) the application is not for the applicant's first (iii) the appropriate Reserve Bank and all relevant full-service branch in a foreign country. divisions of the Board's staff recommend ap- (2) Acquisition of foreign company or U.S. company proval. financing exports. To grant, under sections 25 and (2) [Reserved.] 25(a) of the Federal Reserve Act (12 U.S.C. 603 & 615(c)) and section 4(c)(13) of the Bank Holding Section 265.6—Functions Delegated to General Company Act (12 U.S.C. 1843(c)(13)) and the Counsel. Board's Regulations K and Y (12 C.F.R. Parts 211 and 225), specific consent to the acquisition, either The General Counsel of the Board (or the General directly or indirectly, by a member bank, an Edge or Counsel's delegee) is authorized: Agreement corporation, or a bank holding company (a) Procedure. of stock of a company chartered under the laws of a (1) Reconsideration of Board action. To determine foreign country or a company chartered under the whether to grant a request for reconsideration of any laws of a state of the United States that is organized Board action on an application under section and operated for the purpose of financing exports 262.3(i) of the Board's Rules of Procedure from the United States, and to approve any such (12 C.F.R. Part 262). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 599 (2) Public meetings. To order, after consulting with Act or Regulation Y (12 C.F.R. Part 225) or conthe directors of other interested divisions of the tains material information that is substantially inac- Board and the appropriate Reserve Bank, that a curate. public meeting or other proceeding be held, under (4) Tax certifications. To make prior and final certisection 262.25 of the Board's Rules of Procedure fications for federal tax purposes (26 U.S.C. (IRC) (12 C.F.R. Part 262), in connection with any appli- 1101-1103, 6158) with respect to distributions pursucation or notice filed with the Board, and to desig- ant to the Bank Holding Company Act (12 U.S.C. nate the presiding officer in the proceeding under 1841 et seq.). terms and conditions the General Counsel deems (5) Acquisition approval under § 5(d)(3) of the FDI appropriate. Act. To exercise, with the concurrence of the Staff (3) Designation of Board counsel for hearings. To Director of the Division of Banking Supervision and designate Board staff attorneys as Board counsel in Regulation, the functions described in section any proceeding ordered by the Board in accordance 265.11(c)(10) of this Part (which refers to § 5(d)(3) of with section 263.6 of the Board's Rules of Practice the FDI Act) in those cases in which the appropriate for Hearings (12 C.F.R. Part 263). Federal Reserve Bank concludes that, because of (4) Oaths, depositions, subpoenas. To take, or au- unusual considerations, or for other good cause, it thorize designated persons to take, with the concur- should not take action. rence of the Staff Director of the Division of Bank- (d) Management interlocks. ing Supervision and Regulation, actions permitted (1) General exceptions. To grant exceptions from under 12 U.S.C. 1818(n), 1820(c), and 12 U.S.C. the prohibitions of Regulation L (12 C.F.R. Part 1844(f), including administering oaths and affirma- 212) when the primary federal supervisor of the tions, taking depositions, and issuing, revoking, depository institution in need of management assistquashing, or modifying subpoenas duces tecum. ance approves. (5) Operating circulars. To approve provisions of (2) Temporary exceptions. To grant requests, after Reserve Bank operating circulars related to uniform consultation with the Staff Director of the Division services. of Banking Supervision and Regulation, for tempo- (b) Availability of Information. rary director interlocks under Regulation L (1) FOIA requests. To make available information of (12 C.F.R. Part 212) for newly chartered banks, the Board of the nature and in the circumstances banks in low-income areas, minority banks, womdescribed in the Board's Rules Regarding Availabil- en's banks, organizations experiencing conditions ity of Information (12 C.F.R. Part 261). endangering their safety or soundness, organiza- (2) [Reserved.] tions sponsoring a credit union, and organizations (c) Bank holding companies; Change in bank control; that lose thirty percent or more of their directors or Mergers. management officials due to changes in circum- (1) Control determinations under § 2(g) ofBHCAct. stances. To determine whether a company that transfers shares under section 2(g) of the Bank Holding Com- Section 265.7—Functions Delegated to Staff pany Act (12 U.S.C. 1841(g)) is incapable of con- Director of Division of Banking Supervision trolling the transferee. and Regulation. (2) Control determinations under § 4(c)(8) of BHC Act. To determine, or issue an order for a hearing to The Staff Director of the Board's Division of Banking determine, whether a company engaged in financial, Supervision and Regulation (or the Director's delegee) fiduciary, or insurance activities falls within the is authorized: exemption in section 4(c)(8) of the Bank Holding (a) Procedure. Company Act (12 U.S.C. 1843(c)(8)), permitting (1) Cease and desist orders. To refuse, with the retention or acquisition of control thereof by a bank prior concurrence of the appropriate Reserve Bank holding company. and the Board's General Counsel, an application to (3) Notices under CBC Act. To revoke acceptance the Board to stay, modify, terminate, or set aside of and return as incomplete a notice filed under the any effective cease and desist order previously Change in Bank Control Act (12 U.S.C. 18170')) or issued by the Board under section 8(b) of the Fedto extend the time during which action must be eral Deposit Insurance Act (12 U.S.C. 1818(b)), or taken on a notice where the General Counsel deter- any written agreement between the Board or the mines, with the concurrence of the Staff Director of Reserve Bank and a bank holding company or any the Division of Banking Supervision and Regulation, nonbanking subsidiary thereof or a state member that the notice is materially incomplete under that bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

600 Federal Reserve Bulletin • July 1991 (2) Modification of commitments or conditions. To (1) Bank holding company registration forms and grant or deny requests for modifying, including annual reports. To promulgate registration forms extending the time for, performing a commitment or and annual reports and other forms for use in condition relied on by the Board or its delegee in connection with the Bank Holding Company Act, taking any action under the Bank Holding Company after receiving clearance from the Office of Manage- Act, the Bank Merger Act, the Change in Bank ment and Budget (where necessary), under section 5 Control Act of 1978, the Federal Reserve Act, or the of the Bank Holding Company Act (12 U.S.C. 1844) International Banking Act. In acting on such re- and in accordance with 5 U.S.C. 553. quests, the Staff Director may take into account (2) Emergency action. To take actions the Reserve changed circumstances and good faith efforts to Bank could take under this Part at § 265.11(d)(5) and fulfill the commitments or conditions, and shall (f) if immediate or expeditious action is required to consult with the directors of other interested divi- avert failure of a bank or savings association or sions where appropriate. The Staff Director may not because of an emergency pursuant to sections 3(a) take any action that would be inconsistent with or and 4(c)(8) of the Bank Holding Company Act result in an evasion of the provisions of the Board's (12 U.S.C. 1842(a), 1843(c)(8)) or the Change in original action. Bank Control Act (12 U.S.C. 1817(j)). (3) Notice of insufficient capital. To issue, with the (3) Waiver of notice. To waive, dispense with, concurrence of the Board's General Counsel, a modify or excuse the failure to comply with the notice that a state member bank or bank holding requirement for publication and solicitation of pubcompany has insufficient capital and which directs lic comment regarding a notice filed under the the bank or company to file with its Reserve Bank a Change in Bank Control Act (12 U.S.C. 1817(j)), capital improvement plan under Subpart D of the with the concurrence of the Board's General Coun- Board's Rules of Practice for Hearings (12 C.F.R. sel, provided a written finding is made that such Part 263). disclosure would seriously threaten the safety or (4) Obtaining possession or control of securities; soundness of a bank holding company or a bank. extending time period. To approve, under section (4) Notices for addition or change of directors or 403.5(g) of the Treasury Department regulations officers. Under section 914(a) of the Financial Insti- (17 C.F.R. Part 403) implementing the Government tutions Reform, Recovery and Enforcement Act Securities Act of 1986, as amended (Pub. L. 99- (12 U.S.C. 183li) and Subpart H of Regulation Y 571), the application of a member bank, a state (12 C.F.R. Part 225), provided that no senior officer branch or agency of a foreign bank, a foreign bank, or director or proposed senior officer or director of or a commercial lending company owned or con- the notificant is also a director of the Reserve Bank trolled by a foreign bank, to extend for one or more or a branch of the Reserve Bank: limited periods commensurate with the circum- (i) To determine the informational sufficiency of stances the 30-day time period specified in section notices filed pursuant to section 225.71 of Regu- 403.5(c)(l)(iii) of these regulations, provided the lation Y (12 C.F.R. Part 225); and Staff Director is satisfied that the applicant is acting (ii) To waive the prior notice requirements of that in good faith and that exceptional circumstances section. warrant such action. (5) Acquisition approval under § 5(d)(3) of FDI Act. (b) Availability of Information. To exercise, with the concurrence of the General (1) FOIA requests. To make available information of Counsel, the functions described in section the Board of the nature and in the circumstances 265.1 l(c)(10) of this Part (which refers to § 5(d)(3) of described in section 261.11 of the Board's Rules the FDI Act) in those cases in which the appropriate Regarding Availability of Information (12 C.F.R. Federal Reserve Bank concludes that, because of Part 261). unusual considerations, or for other good cause, it (2) FOIA; Availability of information. To make should not take action. available, under the Board's Rules Regarding Avail- (d) International banking. ability of Information (12 C.F.R. Part 261), reports (1) Foreign bank reports. To require submission of a and other information of the Board acquired pursu- report of condition respecting any foreign bank in ant to the Board's Regulations G, T, U, and X which a member bank holds stock acquired under (12 C.F.R. Parts 207, 220, 221, 224) of the nature section 211.5(b) of Regulation K (12 C.F.R. Part and in circumstances described in sections 211) and section 25, paragraph 4, of the Federal 261.8(a)(2) and (3) of these Rules. Reserve Act (12 U.S.C. 602). (c) Bank holding companies; Change in bank control; (2) Edge corporation reports. To require submission Mergers. and publication of reports by an Edge corporation Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 601 under section 25(a), paragraph 19, of the Federal 211.5(d)(14)(iii)(A) of Regulation K (12 C.F.R. Reserve Act (12 U.S.C. 625). Part 211). (3) Capital stock of Edge corporation; articles of (e) Member banks. association; additional investments in Agreement (1) Membership certification to FDIC. To certify, corporation. To approve under sections 25 and 25(a) under section 4(b) of the Federal Deposit Insurance as of the Federal Reserve Act (12 U.S.C. 601, H 3, Act (12 U.S.C. 1814(b)), to the Federal Deposit & 618) and sections 211.4(a)(1) and (a)(7) of Regu- Insurance Corporation that the factors specified in lation K (12 C.F.R. Part 211), increases and de- section 6 of the Act (12 U.S.C. 1816) were considcreases in the capital stock of and amendments to ered with respect to the admission of a state-charthe articles of association of an Edge corporation tered bank to Federal Reserve membership. and additional investments by a member bank in the (2) Dollar exchange. To permit any member bank to stock of an Agreement corporation. accept drafts or bill of exchange drawn upon it for (4) Waiver or suspension of prior notice; specific the purpose of furnishing dollar exchange under consent. section 13(12) of the Federal Reserve Act (i) To waive the 45 days' prior notice period for (12 U.S.C. 373). establishing a branch in an additional foreign (3) ERISA violations. To provide to the Department country under section 211.3(a)(3) of Regulation K of Labor written notification of possible significant (12 C.F.R. Part 211). violations of the Employee Retirement Income Se- (ii) To waive or suspend the 45 days' notice period curity Act (ERISA) by state member banks, in for an investment that qualifies for the prior notice accordance with section 3004(b) of ERISA and the procedures in section 211.5(c)(2) of Regulation K Interagency Agreement adopted to implement its (12 C.F.R. Part 211) or require that an investor provisions. file an application for the Board's specific con- (4) Examiners. To select or approve the appointsent. ment of Federal Reserve examiners, assistant exam- (5) Investment by foreign subsidiaries in U.S. affil- iners, and special examiners for the purpose of iates. To permit, after consultation with the Board's making examinations for or by the direction of the General Counsel, a foreign subsidiary of a bank Board under (12 U.S.C. 325, 338, 625, 1844(c), and holding company to invest in shares of a U.S. 3105(b)(1)). affiliate of the bank holding company where the (5) Capital stock reduction; branch applications; investment is made as part of an internal corporate declaration of dividends; investment in bank premreorganization or an internal transfer of funds, sub- ises. To exercise the functions described in sections ject to any conditions and terms the Staff Director 265.11(e)(5), (11), and (12) of this Part (reductions in and General Counsel deem appropriate and consis- capital, issuance of subordinated debt, and early tent with the purposes of Regulation K (12 C.F.R. retirement of subordinated debt) when the condi- Part 211). tions specified in those sections preclude a Reserve (6) Allocated transfer risk reserves. To determine Bank's acting on a member bank request for action the need for establishing and the amount of any or the Reserve Bank considers that it should not allocated transfer risk reserve against specified in- take action, and to exercise the functions in sections ternational assets, and notify the banking institu- 265.11(e)(2), (3), and (4) of this Part (approving tions of the determination and the amount of the branch applications, declaration of dividends, and reserve and whether the reserve may be reduced investment in bank premises) in cases in which the under Subpart D of Regulation K (12 C.F.R. Part appropriate Reserve Bank considers that it should 211). not take action. (7) Underwriting and dealing authority outside the (6) Security devices; Regulation P. To exercise the United States; hedging techniques. To approve, functions described in section 265.11(a)(8) of this under section 211.5(d)(14) of Regulation K Part in those cases in which the appropriate Reserve (12 C.F.R. Part 211): Bank concludes that it should not take action for (i) Requests for authority to engage in the activi- good cause. ties of underwriting, distributing, and dealing in (f) Securities. shares outside the United States, provided that (1) Registration statements by member banks. Unthe Staff Director has determined that the internal der section 12(g) of the Securities Exchange Act procedures and operations of the organization and (15 U.S.C. 781(g)): the effect of the proposed activities on capital (i) to accelerate the effective date of a registration adequacy are consistent with approval. statement filed by a member bank with respect to (ii) Hedging methods authorized under section its securities; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

602 Federal Reserve Bulletin • July 1991 (ii) to accelerate termination of the registration of therein under section 208.16 of Regulation H a security that is no longer held of record by 300 (12 C.F.R. Part 208). persons; and (7) Municipal securities dealers. Under section 23 of (iii) to extend the time for filing a registration the Securities Exchange Act of 1934 (15 U.S.C. statement by a member bank. 78 w): (2) Exemption from registration. To issue notices with (i) To grant or deny requests for waiver of examrespect to an application by a state member bank for ination and waiting period requirements for muexemption from registration under section 12(h) of the nicipal securities principals and representatives Securities Exchange Act (15 U.S.C. 78(h)). under Municipal Securities Rulemaking Board (3) Accelerating registration of security on national Rule G-3; securities exchange. To accelerate the effective date (ii) To grant or deny requests for a determination of an application by a state member bank for regis- that a natural person or municipal securities tration of a security on a national securities ex- dealer subject to a statutory disqualification is change under section 12(d) of the Securities Ex- qualified to act as a municipal securities reprechange Act (15 U.S.C. 781(d)). sentative or dealer under Municipal Securities (4) Unlisted trading in security of state member Rulemaking Board Rule G-4; bank. To issue notices with respect to an application (iii) To approve or disapprove clearing arrangeby a national securities exchange for unlisted trading ments under Municipal Securities Rulemaking privileges in a security of a state member bank under Board Rule G-8, in connection with the adminissection 12(f) of the Securities Exchange Act tration of these rules for municipal securities deal- (15 U.S.C. 781(f)). ers for which the Board is the appropriate regula- (5) Transfer agent registration; acceleration; with- tory agency under section 3(a)(34) of the Securities drawal or cancellation. Exchange Act of 1934 (15 U.S.C. 78c(a)(34)). (i) To accelerate, under section 17A(c)(2) of the (8) Making reports available to SEC. To make Securities Exchange Act of 1934, as amended available, upon request, to the Securities and Ex- (15 U.S.C. 78q-l), the effective date of a regis- change Commission reports of examination of transtration statement for transfer agent activities filed fer agents, clearing agencies, and municipal securiby a member bank or a subsidiary thereof, a bank ties dealers for which the Board is the appropriate holding company or a subsidiary thereof that is a regulatory agency for use by the Commission in bank as defined in section 3(a)(6) of the Act other exercising its supervisory responsibilities under the than a bank specified in clause (i) or (iii) of section Act under section 17(c)(3) of the Securities Ex- 3(a)(34)(B) of the Act (15 U.S.C. 78c). change Act of 1934 (15 U.S.C. 78q(c)(3). (ii) To withdraw or cancel, under section (9) Issuing examination manuals, forms, and other 17A(c)(3)(C) of the Securities Exchange Act of materials. To issue examination or inspection man- 1934, as amended (15 U.S.C. 78q-1(c)(3)(C)), the uals, registration, report, agreement, and examinatransfer agent registration of a member bank or a tion forms, guidelines, instructions, and other simisubsidiary thereof, a bank holding company, or a lar materials for use in administering sections 7, 8, subsidiary thereof that is a bank as defined in 15B, and 17A(c) of the Securities Exchange Act of section 3(a)(6) of that Act other than a bank 1934 (15 U.S.C. 78g, 78h, 78o-4, and 78q-l). specified in clause (i) or (iii) of section 3(a)(34)(B) (10) List of OTC margin stocks. To approve issuof the Act (15 U.S.C. 78c), that has filed a written ance of the list of OTC margin stocks and foreign notice of withdrawal with the Board or upon a margin stocks and add, omit, or remove any stock in finding that such transfer agent is no longer in circumstances indicating that such change is necesexistence or has ceased to do business as a sary or appropriate in the public interest under transfer agent. section 207.6 of Regulation G (12 C.F.R. Part 207), (6) Proxy solicitation; financial statements. section 220.17(d) of Regulation T (12 C.F.R. Part (i) To permit the mailing of proxy and other 220), or section 221.7(d) of Regulation U (12 C.F.R. soliciting materials by a state member bank before Part 221). the expiration of the time prescribed therein under section 208.16 of Regulation H (12 C.F.R. Part Section 265.8—Functions Delegated to the Staff 208). Director of the Division of International Finance. (ii) To permit the omission of financial statements from reports by a state member bank, or to The Staff Director of the Board's Division of Internarequire other financial statements in addition to, tional Finance (or the Director's delegee) is authoor in substitution for, the statements required rized: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 603 (a) Establishment of foreign accounts. To approve the inconsistent with the following federal acts and reguestablishment of foreign accounts and the terms of any lations: account-related agreements with the Federal Reserve (1) §§ 111, 171(a), and 186(a) of the Truth in Lending Bank of New York under section 14(e) of the Federal Act (15 U.S.C. 1610(a), 1666j(a), 1667e(a)); section Reserve Act (12 U.S.C. 358). 226.28 of Regulation Z (12 C.F.R. Part 226); (b) [Reserved.] (2) § 919 of the Electronic Fund Transfer Act (15 U.S.C. 1693q), section 205.12 of Regulation E (12 C.F.R. Part 205); Section 265.9—Functions Delegated to the (3) § 705(f) of the Equal Credit Opportunity Act Director of the Division of Consumer and (15 U.S.C. 1691d(f)) and section 202.11 of Regula- Community Affairs. tion B (12 C.F.R. Part 202); (4) § 306(a) of the Home Mortgage Disclosure Act The Director of the Board's Division of Consumer and (12 U.S.C. 2805(a)) and Regulation C (12 C.F.R. Community Affairs (or the Director's delegee) is au- Part 203). thorized: (a) Issuing examination manuals, forms, and other Section 265.10—Functions Delegated to the materials. To issue, pursuant to § 11(a) of the Federal Secretary of Federal Open Market Committee. Reserve Act (12 U.S.C. 248(a)); §§ 108(b), 621(c), 704(b), 814(c), and 917(b) of the Consumer Credit The Secretary of the Federal Open Market Committee Protection Act (15 U.S.C. 1607(b), 1681s(c), 1691c(b), (or the Deputy Secretary in the Secretary's absence) is and 1693o(b)); § 305(c) of the Home Mortgage Disclo- authorized: sure Act (12 U.S.C. 2804(c)); § 18(f)(3) of the Federal (a) Records of policy actions. To approve for inclusion Trade Commission Act (15 U.S.C. 57a(f)(3)); § 808(c) in the Board's Annual Report to Congress, records of of the Civil Rights Act of 1968 (42 U.S.C. 3608(c)); policy actions of the Federal Open Market Committee. and § 5 of the Bank Holding Company Act of 1956 (b) [Reserved.] (12 U.S.C. 1844(c)), examination or inspection manuals; report, agreement, and examination forms; Section 265.11—Functions Delegated to guidelines, instructions, and other similar materials, in Federal Reserve Banks. consultation with the Legal Division where appropri- i ate, for use in connection with: Each Federal Reserve Bank is authorized as to a (1) §§ 1-921 of the Consumer Credit Protection Act, member bank or other indicated organization for excluding §§ 201-500 (15 U.S.C. 1601-1693r); which the Reserve Bank is responsible for receiving (2) §§ 301-312 of the Home Mortgage Disclosure Act applications or registration statements or to take other (12 U.S.C. 2801-2811); actions as indicated: (3) §§ 18(f)(l)-(3) of the Federal Trade Commission (a) Procedure. Act (15 U.S.C. 57a(f)(l)-(3)); (1) Member bank affiliate's reports. To extend the (4) § 805 of the Civil Rights Act of 1968 (42 U.S.C. time for good cause shown, within which an affiliate 3605) and rules and regulations issued thereunder; of a state member bank must file reports under (5) § 1364 of the National Flood Insurance Act of section 9(17) of the Federal Reserve Act (12 U.S.C. 1968 (42 U.S.C. 4101(a)), and §§ 105(b) and 202(b) 334). of the Flood Disaster Protection Act of 1973 (42 (2) Edge corporation's divestiture of stock acquired U.S.C. 4012a(b), 4106(b)); dpc. To extend the time in which an Edge corpora- (6) § 190) of the Federal Reserve Act (12 U.S.C. tion must divest itself of stock acquired to prevent a 371b); and loss upon a debt previously contracted under sec- (7) §§ 801-806 of the Community Reinvestment Act tion 25(a), paragraph 9, of the Federal Reserve Act (12 U.S.C. 2901-2905). (12 U.S.C. 615). (b) Consumer Advisory Council. Pursuant to § 703(b) (3) Edge corporation's corporate existence. To exof the Consumer Credit Protection Act (15 U.S.C. tend the period of corporate existence of an Edge 1691(b)), to call meetings of and consult with the corporation under section 25(a), paragraph 22, of the Consumer Advisory Council established under that Federal Reserve Act (12 U.S.C. 628). section, approve the agenda for such meetings, and (4) Bank holding company registration statement. accept any resignations from Consumer Advisory To extend the time within which a bank holding Council Members. company must file a registration statement under (c) Determining inconsistencies between state and section 5(a) of the Bank Holding Company Act federal laws. To determine whether a state law is (12 U.S.C. 1844(a)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

604 Federal Reserve Bulletin • July 1991 (5) Bank holding company divestiture of nonbanking (ii) a member bank may establish a foreign interests. To extend the time within which a bank branch; or holding company must divest itself of interests in (iii) an Edge or Agreement corporation may esnonbanking organizations under section 4(a) of the tablish a branch or agency. Bank Holding Company Act (12 U.S.C. 1843(a)). (13) Purchase of stock by Edge or Agreement Cor- (6) Bank holding company divestiture of dpc inter- poration, member bank, or bank holding company. ests. To extend the time within which a bank holding To extend the time within which an Edge or Agreecompany or any of its subsidiaries must divest itself ment corporation, member bank, or a bank holding of interests acquired in satisfaction of a debt previ- company may accomplish a purchase of stock if no ously contracted: material change has occurred in the general condi- (i) under section 4(c)(2) of the Bank Holding tion of the corporation, member bank, or bank Company Act (12 U.S.C. 1843(c)(2)) or section holding company since such authorization under 225.22(c)(1) of Regulation Y (12 C.F.R. Part 225); sections 25 or 25(a) of the Federal Reserve Act or or section 4(c)(13) of the Bank Holding Company Act (ii) under sections 2(a)(5)(D) and 3(a) of the Bank (12 U.S.C. 615(c), 628, 1843(c)(13)) was given. Holding Company Act (12 U.S.C. 1841(a)(5)(D) (14) Federal Reserve Membership. To extend the and 1842(a)). time within which Federal Reserve membership (7) Member bank's surrender of Reserve Bank stock must be accomplished, if no material change has upon withdrawal from membership. To extend the occurred in the bank's general condition since the time within which a member bank that has given application was approved. notice of intention to withdraw from membership (15) Enforcement actions; written agreements; must surrender its Federal Reserve Bank stock and cease and desist orders. With the prior approval of its certificate of membership under Regulation H both the Staff Director of the Board's Division of (12 C.F.R. 208.11(c)). Banking Supervision and Regulation and the (8) Member bank's reports of condition. To extend Board's General Counsel; the time for publication of reports of condition under (i) To enter into a written agreement with a bank Regulation H (12 C.F.R. Part 208) for good cause holding company or any nonbanking subsidiary shown. thereof, with a state member bank, or with any (9) Bank holding company's annual reports. To other person or entity subject to the Board's grant to a bank holding company a 90-day extension supervisory jurisdiction under 12 U.S.C. 1818(b) of time in which to file an annual report, and for concerning the prevention or correction of an good cause shown grant an additional extension of unsafe or unsound practice in conducting the time not to exceed 90 days under section 5(c) of the business of the bank holding company, nonbank- Bank Holding Company Act (12 U.S.C. 1844(c)). ing subsidiary, or state member bank or other (10) Regulation K—Divestiture of interest acquired entity, or concerning the correction or prevention dpc. To extend the time within which an investor, of any violation of law, rule, or regulation, or any under Regulation K (12 C.F.R. 211.5(e)) must di- condition imposed in writing by the Board in vest itself of interests acquired to prevent a loss connection with the granting of any application or upon a debt previously contracted. other request by the bank or company or any (11) Bank holding company's acquisition of shares, other appropriate matter; opening new bank, consummating merger. To ex- (ii) To stay, modify, terminate, or suspend an tend the time within which a bank holding company agreement entered into pursuant to this paramay acquire shares, open a new bank to be ac- graph; quired, or consummate a merger in connection with (iii) To stay, modify, terminate, or suspend an an application approved by the Board, if no material outstanding cease and desist order that has bechange relevant to the proposal has occurred since come final pursuant to 12 U.S.C. 1818(b) and (k). its approval. Any agreement authorized under this paragraph (12) Member bank's establishing domestic or for- may, by its terms, be enforceable to the same eign branch; Edge or Agreement corporation's es- extent and in the same manner as an effective and tablishing branch or agency. To extend the time, if outstanding cease and desist order that has beno material change has occurred in the bank's or come final pursuant to 12 U.S.C. 1818(b) and (k). corporation's general condition since the application (16) Appointment of assistant Federal Reserve was approved, within which: agents. To approve the appointment of assistant (i) a member bank may establish a domestic Federal Reserve agents (including representatives branch; or alternate representatives of such agents) under Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 605 section 4, paragraph 21 of the Federal Reserve Act (iii) To permit a bank holding company to con- (12 U.S.C. 306). summate the proposal before the expiration of the (b) Availability of Information. 45-day period referred to in section 225.23(a)(1) of (1) Availability of Information; Board records. To Regulation Y because exigent circumstances jusmake available information of the Board of the tify consummation at an earlier time under section nature and in the circumstances described in the 225.4(b)(1) of Regulation Y (12 C.F.R. Part 225). Board's Rules Regarding Availability of Information (4) Permit or stay of modification or location of activ- (12 C.F.R. 261.11) ities. To permit or stay a proposed de novo modification (2) [Reserved.] or relocation of activities engaged in by a bank holding (c) Bank holding companies; Change in bank control; company on the same basis as de novo proposals under Mergers. section 265.11(d)(3) of this Part. (1) Require reports under oath. To require reports (5) Notices under Change in Bank Control Act. With under oath to determine whether a company is respect to a bank holding company or a state memcomplying with section 5(c) of the Bank Holding ber bank: Company Act (12 U.S.C. 1844(c)). (i) To determine the informational sufficiency of (2) Acquisition of going concern—authorization of notices and reports filed under the Change in consummation; early consummation. Bank Control Act (12 U.S.C. 1817(j); (i) To notify a bank holding company that, because (ii) To extend periods for consideration of notices; the circumstances surrounding the application to (iii) To determine whether a person who is or will acquire a going concern indicate that additional be subject to a presumption described in information is required or that the acquisition § 225.41(b) of Regulation Y (12 C.F.R. Part 225) should be considered by the Board, the acquisition should file a notice regarding a proposed transacshould not be consummated until specifically au- tion; and thorized by the Reserve Bank or by the Board. (iv) To issue a notice of intention not to disap- (ii) To permit a bank holding company to make a prove a proposed change in control if all the proposed acquisition of a going concern before following conditions are met: the expiration of the 30-day period referred to in (A) no member of the Board has indicated an Regulation Y (12 C.F.R. 225.23(a)(2)) because objection prior to the Reserve Bank's action; exigent circumstances justify consummation of (B) no senior officer or director of an involved the acquisition at an earlier time. party is also a director of the Federal Reserve (3) Petition for review of decision that adverse Bank or a branch of the Reserve Bank; comments are not substantive; permit proposed (C) all relevant departments of the Reserve de novo activities; authorization of consummation; Bank concur; early consummation. Under section 225.4(b)(1) of (D) if the proposal involves shares of a state Regulation Y (12 C.F.R. Part 225) and subject to member bank or a bank holding company consection 265.3 of this Part, if a person submitting trolling a state member bank, the appropriate adverse comments that the Reserve Bank had de- bank supervisory authorities have indicated cided are not substantive files a petition for review that they have no objection to the proposal, or by the Board of that decision: no objection has been received from them (i) To permit a bank holding company to engage within the time allowed by the act; and de novo in activities specified in section 225.25 of (E) no significant policy issue under the Change Regulation Y (12 C.F.R. Part 225), or retain in Bank Control Act (12 U.S.C. 1817(j)) or shares in a company established de novo and section 225.41 of Regulation Y (12 C.F.R. Part engaging in such activities, if the Reserve Bank's 225) is raised by the proposal as to which the evaluation of the considerations specified in sec- Board has not expressed its view. tion 4(c)(8) of the Bank Holding Company Act (6) Failure to comply with publication requirement (12 U.S.C. 1843(c)(8)) leads it to conclude that under Change in Bank Control Act. To waive, the proposal can reasonably be expected to pro- dispense with, modify, or excuse the failure to duce benefits to the public. comply with the requirement for publication and (ii) To notify a bank holding company that the solicitation of public comment regarding a notice proposal should not be consummated until specif- filed under the Change in Bank Control Act, with the ically authorized by the Reserve Bank or by the concurrence of the Board's Staff Director of the Board or that the proposal should be processed in Division of Banking Supervision and Regulation and accordance with the procedures in section the Board's General Counsel, provided that a writ- 225.23(a)(2) of Regulation Y (12 C.F.R. Part 225). ten finding is made that such disclosure or solicita- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

606 Federal Reserve Bulletin • July 1991 tion would seriously threaten the safety or sound- bank merger required to be approved by one of ness of a bank holding company or bank under the those agencies, unless one or more of the following Change in Bank Control Act (12 U.S.C. 1817(j)(2)). conditions is present: (7) Grandfathered nonbanking activities. To deter- (i) a member of the Board has indicated an objecmine under section 4(a)(2) of the Bank Holding tion prior to the Reserve Bank's action; or Company Act (12 U.S.C. 1843(a)(2)) that termina- (ii) the Board has indicated that such delegated tion of grandfathered nonbanking activities of a authority shall not be exercised by the Reserve particular bank holding company is not warranted, Bank in whole or in part; or provided the Reserve Bank is satisfied all of the (iii) a written substantive objection to the applicafollowing conditions are met: tion has been properly made; or (i) the company or its successor is "a company (iv) the application raises a significant policy issue covered in 1970"; or legal question on which the Board has not (ii) the nonbanking activities for which indefinite established its position; or grandfather privileges are being sought do not (v) with respect to bank holding company formapresent any significant unsettled policy issues; tions, bank acquisitions or mergers, the proposed and transaction involves two or more banking organi- (iii) the bank holding company was lawfully en- zations: gaged in such activities as of June 30, 1968 and has (A) that rank among a state's five largest bankbeen engaged in such activities continuously ing organizations, or among the 50 largest bankthereafter. ing organizations in the United States (as mea- (8) Opening of additional nonbanking offices. To sured by total domestic deposits within the approve applications by a bank holding company relevant area); or under sections 4(c)(8) and 5(b) of the Bank Holding (B) that, upon consummation of the proposal, Company Act (12 U.S.C. 1843(c)(8), 1844(b)) and would control over 30 percent of total deposits section 225.23(b) of Regulation Y (12 C.F.R. Part in banking offices in the relevant geographic 225) to open additional offices to engage in nonbank- market, or would result in an increase of at least ing activities for which the bank holding company 200 points in the Herfindahl-Hirschman Index previously received approval pursuant to Board (HHI) in a highly concentrated market (a marorder, unless one of the conditions specified in ket with a post-merger HHI of at least 1800); or § 265.11(f)(1), (2), (3), or (4), of this Part is present. (C) where divestitures designed to address any (9) Notices for addition or change of directors or substantial anticompetitive effects are not efofficers. Under section 914(a) of the Financial Insti- fected on or before consummation of the protutions Reform, Recovery and Enforcement Act posed transaction; or (12 U.S.C. 1831 i) and Subpart H of Regulation Y (vi) with respect to nonbank acquisitions: (12 C.F.R. Part 225), provided that no senior officer (A) the nonbanking activities involved do not or director or proposed senior officer or director of clearly fall within activities that the Board has the notificant is also a director of the Reserve Bank designated as permissible for bank holding comor a branch of the Reserve Bank: panies under section 225.25(b) of Regulation Y; (i) to determine the informational sufficiency of or notices filed pursuant to section 225.71 of Regu- (B) the proposal would involve the acquisition, lation Y; and by a banking organization that has total domes- (ii) to waive the prior notice requirements of that tic banking assets of $1 billion or more, of a section. nonbanking organization that appears to have a (10) Acquisition approvals under § 5(d)(3) of the significant presence in a permissible nonbank- FDI Act. To approve, under section 5(d)(3)(E) of ing activity. FDI Act, § 18(c) (12 U.S.C. the Federal Deposit Insurance Act (12 U.S.C. 1828(c); BHC Act, § 3(a), 4(c)(8) (12 U.S.C. 1815(d)(3)(E)), requests by a bank holding company 1842(a), 1843(c)(8)); Bank Service Corporation to engage in any transaction described in section Act, §§ 5(a), 5(b), 7(d) (12 U.S.C. 1865(a),(b), 5(d)(3)(A) of that Act. 1867(d)); Regulation Y, § 225.14, 225.23 (11) Applications requiring Board approval; com- (12 C.F.R. Part 225). petitive factors reports for bank mergers. To ap- (d) International banking. prove applications requiring prior approval of the (1) Application to establish Edge Corporation. To Board and furnish to the Comptroller of the Cur- approve the application by a U.S. banking organirency and the Federal Deposit Insurance Corpora- zation to establish an Edge corporation under tion reports on competitive factors involved in a section 25(a) of the Federal Reserve Act (12 U.S.C. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 607 611) and section 211.4(a) of Regulation K shall receive only such deposits at its out-of-home- (12 C.F.R. Part 211) if all of the following criteria state branch as would be permissible for an Edge are met: corporation under section 5 of the International (i) The U.S. banking organization meets the cap- Banking Act (12 U.S.C. 3103). ital adequacy guidelines and is otherwise in satis- (6) Waiver of 30-day prior notification period. To factory condition; waive the 30-day prior notification period with re- (ii) The proposed Edge corporation will be a spect to a foreign bank's change of home state under wholly owned subsidiary of a single banking or- section 211.22(c)(1) of Regulation K (12 C.F.R. Part ganization; and 211). (iii) No other significant policy issue is raised on (7) Granting specific consent. To grant prior specific which the Board has not previously expressed its consent to an investor for an investment in its first view. subsidiary or its first joint venture, where such (2) Issuance of permit to Edge corporation to investment does not exceed the general consent commence business. To issue to an Edge corpora- limitations under section 211.5(c) of Regulation K tion under section 25(a), paragraph 4, of the Fed- (12 C.F.R. Part 211). eral Reserve Act (12 U.S.C. 614) and section (8) Requiring application for specific consent. To 211.4(a)(2) and (a)(7) of Regulation K, (12 C.F.R. suspend the notification period or require that an Part 211) a final permit to commence business and investor file an application for the Board's specific to approve amendments to the articles of associa- consent under section 211.5(c)(2) of Regulation K tion of any Edge corporation to reflect the follow- (12 C.F.R. Part 211). ing: (9) Investment in export trading company. To issue (i) any increase in capital stock where all addi- a notice of intention not to disapprove a proposed tional shares are to be acquired by existing share- investment in an export trading company if all the holders; following criteria are met: (ii) any change in the location of the home office in (i) the proposed export trading company will be a the city where the Edge corporation is presently wholly owned subsidiary of a single investor, or located; ownership will be shared with an individual or (iii) any change in the number of members of the individuals involved in the operation of the export board of directors; trading company; (iv) any change in the name; and (ii) a bank holding company investor and its lead (v) deletion of the requirements that all directors bank meet the minimum capital adequacy guideand shareholders must be U.S. citizens. lines of the Board, the Comptroller of the Cur- (3) Edge corporation establishing branch abroad. rency, or the Federal Deposit Insurance Corpora- To approve, under section 211.3(a) of Regulation K tion or have enacted capital enhancement plans (12 C.F.R. Part 211), an Edge corporation's appli- that have been determined by the appropriate cation to establish a branch abroad, provided that no supervisory authority to be acceptable; senior officer or director of the involved parties is (iii) the proposed activities of the export trading also a director of a Reserve Bank or a branch of a company do not include product research or de- Reserve Bank and that no significant policy issue is sign, product modification, or activities not speraised by the proposal as to which the Board has not cifically covered by the list of services contained expressed its view. in section 4(c)(14)(F)(ii) of the Bank Holding (4) Member bank establishing foreign branch. To Company Act (12 U.S.C. 1843(c)(14)(F)(ii»; approve under section 211.3(a) of Regulation K (iv) no other significant policy issue is raised on (12 C.F.R. Part 211) a member bank's establishing, which the Board has not previously expressed its directly or indirectly, a foreign branch where the view under section 4(c)(14) of the Bank Holding application is not one for a full-service branch in a Company Act (12 U.S.C. 1843(c)(14)) and Reguforeign country, provided that no senior officer or lation K (12 C.F.R. Part 211). director of the involved parties is also a director of a (10) Futures commission merchant activities. To Reserve Bank or a branch of a Reserve Bank and approve, under section 211.5(d)(17) of Regulation K that no significant policy issue is raised by the (12 C.F.R. Part 211), applications to engage in proposal as to which the Board has not expressed its futures commission merchant activities on an exview. change that requires members to guarantee or oth- (5) Agreement with foreign bank concerning depos- erwise contract to cover losses suffered by the other its of out-of-home-state branch. To enter into an members, provided that the Board has previously agreement or undertaking with a foreign bank that it approved the exchange and the application is ap- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

608 Federal Reserve Bulletin • July 1991 proved on the same terms and conditions on which in bank premises after the expenditure for the the Board based its prior approval of the exchange, proposed branch. (e) Member banks. (4) Declaration of dividends in excess of net profits. (1) Approval of membership applications. To ap- To permit a state member bank, under section 9(6) prove applications for membership in the Federal of the Federal Reserve Act (12 U.S.C. 324) and Reserve System under section 9 of the Federal (12 U.S.C. 60) to declare dividends in excess of net Reserve Act (12 U.S.C. 321 et seq.) and Regula- profits for the calendar year combined with the tion H (12 C.F.R. Part 208) if the Reserve Bank is retained net profits of the preceding two years, less satisfied with respect to each of the following any required transfers to surplus or a fund for the criteria: retirement of any preferred stock, if the Reserve (i) the financial history and condition of the apply- Bank is satisfied that approval is warranted after ing bank and the general character of its manage- giving consideration to: ment; (i) the bank's capitalization in relation to the (ii) the adequacy of its capital structure in relation character and condition of its assets and to its to the character and condition of its assets and to deposit liabilities and other corporate responsibilits existing and prospective deposit liabilities and ities, including the volume of its risk assets and of other corporate responsibilities and its future its marginal and inferior quality assets, all considearnings prospects; ered in relation to the strength of its management; (iii) the convenience and needs of the community and to be served by the bank; and (ii) the bank's capitalization after payment of the (iv) whether its corporate powers are consistent proposed dividends. with the purposes of the Federal Reserve Act and (5) Reduction of capital stock. To permit a state the Federal Deposit Insurance Act. member bank under section 9(11) of the Federal (2) Waiver of notice of intention to withdraw from Reserve Act (12 U.S.C. 329) to reduce its capital membership. To approve or deny applications by stock if its capitalization thereafter will be: state banks for waiver of the required six months' (i) in conformity with the requirements of federal notice of intention to withdraw from Federal Re- law; and serve membership under section 9(10) of the Federal (ii) adequate in relation to the character and Reserve Act (12 U.S.C. 328). condition of its assets and to its deposit liabilities (3) Approval of branch applications. To approve a and other corporate responsibilities, including the state member bank's establishment of a domestic volume of its risk assets and of its marginal and branch under section 9(3) of the Federal Reserve inferior quality assets, all considered in relation to Act (12 U.S.C. 321) and Regulation H (12 C.F.R. the strength of its management. Part 208) if the Reserve Bank is satisfied that ap- (6) Acceptance of drafts and bills of exchange. To proval is warranted after considering: permit a member bank or a federal or state branch or (i) the bank's capitalization in relation to the agency of a foreign bank that is subject to reserve character and condition of its assets and to its requirements under section 7(a) of the International deposit liabilities and other corporate responsibil- Banking Act of 1978 (12 U.S.C. 3105a) to accept ities, including the volume of its risk assets and of drafts or bills of exchange under section 13(7) of the its marginal and inferior quality assets, all consid- Federal Reserve Act (12 U.S.C. 372) in an aggreered in relation to the strength of its management ; gate amount at any one time up to 200 percent of its (ii) the ability of the bank's management to cope paid-up and unimpaired capital stock and surplus, if successfully with existing or foreseeable prob- the Reserve Bank is satisfied that such permission is lems, and to staff the proposed branch without warranted after giving consideration to the instituany significant deterioration in the overall man- tion's capitalization in relation to the character and agement situation; condition of its assets and to its deposit liabilities (iii) the convenience and needs of the community ; and other corporate responsibilities, including the (iv) the competitive situation (either actual or volume of its risk assets and of its marginal and potential); inferior-quality assets, all considered in relation to (v) the prospects for profitable operations of the the strength of its management. proposed branch within a reasonable time, and (7) Investment in bank premises in excess of capital the ability of the bank to sustain the operational stock. To permit a state member bank to invest in losses of the proposed branch until it becomes bank premises under section 24A of the Federal profitable; and Reserve Act (12 U.S.C. 371a) in an amount in (vi) the reasonableness of the bank's investment excess of its capital stock, if the Reserve Bank is Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 609 satisfied that approval is warranted after giving (f) Securities. consideration to the bank's capitalization in relation (1) Application for termination of registration. To to the character and condition of its assets and to its approve applications for termination of registration deposit liabilities and other corporate responsibili- by persons who are registered pursuant to sections ties, including the volume of its risk assets and of its 207.3(a)(1) and (2) of Regulation G (12 C.F.R. Part marginal and inferior-quality assets, all considered 207). in relation to the strength of its management. (2) Agreements from nonmember banks; extensions (8) Security devices. To determine whether security of credit. To accept agreements concerning extendevices and procedures of state member banks are sions of credit to finance securities transactions on deficient in meeting the requirements of Regula- behalf of the Board from nonmember banks in the tion P (12 C.F.R. Part 216) and whether such form prescribed by the Board under section 8(a) of requirements should be varied in the circumstances the Securities Exchange Act of 1934 (15 U.S.C. of a particular banking office, and whether to require 78(a)). corrective action. (g) Management interlocks. (9) Classifying member banks for election of direc- (1) Change in circumstances requiring termination tors. To classify member banks for the purposes of of management interlocks; Regulation L. To grant electing Federal Reserve Bank class A and class B time for compliance with section 121.6 of Reguladirectors under section 4(16) of the Federal Reserve tion L (12 C.F.R. Part 212) of up to an aggregate Act (12 U.S.C. 304), giving consideration to: of 15 months from the date on which the change in (i) the statutory requirement that each of the three circumstances as specified in that section occurs groups shall consist as nearly as may be of banks when the additional time appears to be appropriate of similar capitalization; and to avoid undue disruption to the depository orga- (ii) the desirability that every member bank have nizations involved in the management interlocks. the opportunity to vote for a class A or a class B (2) Depository Institutions Management Interlocks director at least once every three years. Act. After consultation with the Board's General (10) Waiver of penalty for deficient reserves. To Counsel, to decide not to disapprove notices made waive the penalty for deficient reserves by a mem- under 12 U.S.C. 3204(8) to establish director interber bank if, after a review of all the circumstances locks with diversified savings and loan holding comrelating to the deficiency, the Reserve Bank con- panies. cludes that waiver is warranted, except that in no case may a penalty be waived if the deficiency in reserves arises out of the bank's gross negligence or conduct inconsistent with the principles and pur- AMENDMENT TO RULES REGARDING poses of reserve requirements. AVAILABILITY OF INFORMATION (11) Approval of subordinated debt. To approve a state member bank's proposed subordinated debt The Federal Open Market Committee is amending issue as an addition to the bank's capital structure if 12 C.F.R. Part 271, its Rules Regarding Availability of all of the following conditions are met: Information, to conform its provisions regarding fees (i) the terms of the proposed debt issue satisfy the to the requirements of the Freedom of Information requirements of section 204.2(a)(l)(vii)(C) of Reg- Reform Act. The new fee schedule is set out in ulation D (12 C.F.R. Part 204) and the Board's "Appendix A" and reflects the direct costs to the guideline criteria for approval of subordinated Committee to conduct searches, review documents, debt as an addition to capital; and copy documents in response to requests made (ii) the appropriate Reserve Bank recommends under the Freedom of Information Act. In addition, approval; and these amendments update other portions of the Rules. (iii) no significant policy issue is raised by the Effective July 1, 1991, the Committee amends proposed issue as to which the Board has not 12 C.F.R. Part 271 as follows: expressed its view. (12) Retirement of subordinated debt. To approve Part 271—Rules Regarding Availability of the retirement prior to maturity of capital notes Information described in section 204.2(a)(l)(vii)(c) of Regulation D (12 C.F.R. Part 204) and issued by a state 1. The authority citation for Part 271 is revised to read member bank, provided the Reserve Bank is sat- as follows: isfied that the capital position of the bank will be adequate after the proposed redemption. Authority: 12 U.S.C. 263; 5 U.S.C. 552. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

610 Federal Reserve Bulletin • July 1991 2. Section 271.1 is revised to read as follows: "review" of material to determine whether the material is exempt from disclosure. Section 271.1—Authority. 4. Section 271.4 is amended by revising paragraph (c) This part is issued by the Federal Open Market Com- to read as follows, and by removing paragraph (f): mittee (the "Committee") pursuant to the requirement of section 552 of Title 5 of the United States Code that Section 271.4—Records available to the public every agency shall publish in the Federal Register for on request. the guidance of the public descriptions of the established places at which, the officers from whom, and the methods whereby, the public may obtain information, (c) Obtaining access to records. Any person requestmake submittals or requests, or obtain decisions, and ing access to records of the Committee shall submit the requirement that agencies promulgate, pursuant to such request in writing to the Secretary of the notice and receipt of public comment, the fees applica- Committee. In any case in which the records reble to those requests for information, and also pursuant quested, or copies thereof, are available at a Federal to the Committee's authority under section 12A of the Reserve Bank, the Secretary of the Committee or his Federal Reserve Act, 12 U.S.C. 263, to issue regulaor her designee may so advise the person requesting tions governing the conduct of its business. access to the records. Every request for access to records of the Committee shall state the full name 3. In § 271.2, paragraph (b) is revised and paragraphs and shall describe such records in a manner reason- (c) and (d) are added to read as follows: ably sufficient to permit their identification without undue difficulty. The Secretary of the Committee or Section 271.2—Definitions. his or her designee shall determine within ten working days after receipt of a request for access to records of the Committee whether to comply with (b) Records of the Committee. (1) For purposes of such request; and he shall immediately notify the requests submitted pursuant to the Freedom of requesting party of his decision, of the reasons Information Act (5 U.S.C. 552), the term "rec- therefor, and of the right of the requesting party to ords of the Committee" includes rules, state- appeal to the Committee any refusal to make availments, opinions, orders, memoranda, letters, re- able the requested records of the Committee. ports, accounts, and other written material, as well as magnetic tapes, computer printouts of information obtained through use of existing com- 5. Section 271.5 is amended by revising paragraph puter programs, charts, and other materials in (b)(3) to read as follows: machine readable form that constitute a part of the Committee's official files. Section 271.5—Deferment of availability of (c) Board and Federal Reserve bank. For the purposes certain information. of this part, "Board" means the Board of Governors of the Federal Reserve System established by the Federal Reserve Act of 1913 (38 Stat. 251). "Federal (b) * * * Reserve bank" means one of the district banks authorized by that same Act, 12 U.S.C. 222, including any (3) Result in unnecessary or unwarranted disturbranch of any such bank. bances in foreign exchange or domestic securities (d) Search. (1) For the purposes of this part, "search" markets; means a reasonable search of the Committee's files and any other files containing records of the Committee as seems reasonably likely in the particular 6. Section 271.6 is amended by revising paragraphs (b) circumstances to contain documents of the kind and (d), by removing the word "or" at the end of requested. Searches may be done manually or by paragraph (e) and adding a semicolon in place of the computer using existing programming. For pur- period at the end of paragraph (f), and adding paraposes of computing fees under § 271.8 of this graphs (g) and (h) to read as follows: regulation, search time includes all time spent looking for material that is responsive to a request, Section 271.6—Information not disclosed. including line-by-line identification of material within documents. Such activity is distinct from Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 611 (b) Relates solely to internal personnel rules or prac- of original records that contain exempt material or tices or other internal practices of the Committee that otherwise cannot be inspected directly. Such within the meaning of 5 U.S.C. 552(b)(2); copies may take the form of paper copy, microform, audio-visual materials, or machine readable documentation (e.g., magnetic tape or disk), (d) Is contained in inter- or intra-agency memoran- among others. dums, reports, or letters that would not be routinely (3) Review refers to the process of examining docuavailable by law to a party (other than an agency) in ments located in response to a request that is for a litigation with the Committee, including but not commercial use to determine whether any portion of limited to: any document located is permitted to be withheld. It (i) Memorandums; also includes processing any documents for disclosure, (ii) Reports; e.g., doing all that is necessary to excise them and (iii) Other documents prepared by the staff or otherwise prepare them for release. Review does not agents of the Committee; include time spent resolving general legal or policy (iv) Records of deliberations of the Committee issues regarding the application of exemptions. and of discussions at meetings of the Committee, (c) Commercial use. (1) The fees in the Schedule of Fees or staff or agents of the Committee. for document search, duplication, and review apply when records are requested for commercial use. (2) Commercial use request refers to a request from (g) Constitutes records or information compiled for or on behalf of one who seeks information for a use law enforcement purposes, to the extent permitted or purpose that furthers the commercial, trade, or under 5 U.S.C. 552(b)(7). profit interests of the requester or the person on (h) Constitutes a document or information that is whose behalf the request is made. covered by an order of a court of competent jurisdic- (d) Educational, research, or media use. (1) Only the tion that prohibits its disclosure; fees in the Schedule of Fees for document duplication apply when records are not sought for commer- 7. Section 271.8 is added to read as follows: cial use and the requester is a representative of the news media, or of an educational or noncommercial Section 271.8—Fee schedule; waiver of fees. scientific institution, whose purpose is scholarly or scientific research. However, there is no charge for (a) Fee schedule. Records of the Committee available the first one hundred pages of duplication. for public inspection and copying are subject to a (2) Educational institution refers to a preschool, a written Schedule of Fees for search, review, and public or private elementary or secondary school, or duplication. (See Appendix A for Schedule of Fees.) an institution of undergraduate higher education, The fees set forth in the Schedule of Fees reflect the graduate higher education, professional education, full allowable direct costs of search, duplication, and or an institution of vocational education which opreview, and may be adjusted from time to time by the erates a program of scholarly research. Secretary to reflect changes in direct costs. (3) Noncommercial scientific institution refers to (b) Fees charged. The fees charged only cover the full an institution that is not operated on a "commerallowable direct costs of search, duplication, or review. cial" basis (as that term is used in paragraph (c) of (1) Direct costs mean those expenditures which the this section) and which is operated solely for the Committee actually incurs in searching for and purpose of conducting scientific research the reduplicating (and in the case of commercial request- sults of which are not intended to promote any ers, reviewing) documents to respond to a request particular product or industry. made under § 271.4 of this regulation. Direct costs (4) Representative of the news media refers to include, for example, the salary of the employee any person who is actively gathering news for an performing work (the basic rate of pay for the entity that is organized and operated to publish or employee plus a factor to cover benefits) and the broadcast news to the public. The term "news" cost of operating duplicating machinery. Not in- means information that is about current events or cluded in direct costs are overhead expenses such as that would be of current interest to the public. costs of space, and heating or lighting the facility in "Free lance" journalists may be regarded as workwhich the records are stored. ing for a news organization if they can demonstrate (2) Duplication refers to the process of making a a solid basis for expecting publication through that copy of a document necessary to respond to a organization, even though not actually employed request for disclosure of records, or for inspection by it. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

612 Federal Reserve Bulletin • July 1991 (e) Other uses. For all other requests, the fees in the denied. The Secretary shall apply the standards set Schedule of Fees for document search and duplication out in paragraph (h) of this section in determining apply. However, there is no charge for the first one whether to waive or reduce fees, hundred pages of duplication or the first two hours of (h) Waiver or reduction of fees. (1) Standards for search time. determining waiver or reduction. The Secretary (f) Aggregated requests. If the Secretary reasonably or his or her designee shall grant a waiver or believes that a requester or group of requesters is reduction of fees chargeable under paragraph (b) attempting to break down a request into a series of of this section where it is determined both that requests, each seeking portions of a document or disclosure of the information is in the public documents solely for the purpose of avoiding the interest because it is likely to contribute signifiassessment of fees, the Secretary may aggregate such cantly to public understanding of the operations requests and charge accordingly. It is considered or activities of the government, and that the reasonable for the Secretary to presume that multiple disclosure of information is not primarily in the requests of this type made within a 30-day period have commercial interest of the requester. The Secrebeen made to avoid fees. tary or his or her designee shall also waive fees (g) Payment procedures. (1) Fee payment. The Sec- that are less than the average cost of collecting retary may assume that a person requesting rec- fees. ords pursuant to § 271.4 of this regulation will pay (2) Contents of request for waiver. The Secretary the applicable fees, unless a request includes a shall normally deny a request for a waiver of fees limitation on fees to be paid or seeks a waiver or that does not include: reduction of fees pursuant to paragraph (h) of this (i) A clear statement of the requester's interest in section. the requested documents; (2) Advance notification. If the Secretary estimates (ii) The use proposed for the documents and that charges are likely to exceed $25, the requester whether the requester will derive income or other shall be notified of the estimated amount of fees, benefit from such use; unless the requester has indicated in advance willing- (iii) A statement of how the public will benefit ness to pay fees as high as those anticipated. Upon from such use and from the Board's release of the receipt of such notice the requester may confer with requested documents; and the Secretary as to the possibility of reformulating (iv) If specialized use of the documents or inforthe request in order to lower the costs. mation is contemplated, a statement of the re- (3) Advance payment. quester's qualifications that are relevant to the (i) The Secretary may require advance payment of specialized use. any fee estimated to exceed $250. The Secretary (3) Burden of proof. In all cases the burden shall be may also require full payment in advance where a on the requester to present evidence or information requester has previously failed to pay a fee in a in support of a request for a waiver or reduction of timely fashion. fees. (ii) For purposes of computing the time period for (4) Employee requests. In connection with any responding to requests under § 271.4(c) of this regu- request by an employee, former employee, or lation, the running of the time period will begin only applicant for employment, for records for use in after the Secretary receives the required payment. prosecuting a grievance or complaint of discrimi- (4) Late charges. The Secretary may assess interest nation against the Committee, fees shall be waived charges when a fee is not paid within 30 days of the where the total charges (including charges for date on which the billing was sent. Interest will be at information provided under the Privacy Act of the rate prescribed in section 3717 of Title 31 U.S.C. 1974 (5 U.S.C. 552a) are $50 or less; but the and will accrue from the date of the billing. This rate of Secretary may waive fees in excess of that amount. interest is published by the Secretary of the Treasury before November 1 each year and is equal to the 10. "Appendix A" is added to the end of Part 271 to average investment rate for Treasury tax and loan read as follows: accounts for the 12-month period ending on September 30 of each year. The rate is effective on the first day of Part 271—Rules Regarding Availability of the next calendar quarter after publication. Information (5) Fees for nonproductive search. Fees for record searches and review may be charged even if no responsive documents are located or if the request is Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 613 APPENDIX A TO PART 271—FREEDOM OF Fee Waivers: INFORMATION FEE SCHEDULE For qualifying educational and noncommercial scientific institution requesters and representatives of the news media, the Committee will not assess fees for Duplication: review time, for the first 100 pages of reproduction, or, when the records sought are reasonably described, for Photocopy, per standard page $. 10 search time. For other noncommercial use requests, no Paper copies of microfiche, per frame $.10 fees will be assessed for review time, for the first 100 Duplicate microfiche, per microfiche $.30 pages of reproduction, or the first two hours of search time. For requesters qualifying for 100 free pages of reproduction, the fees for duplicate microfiche will be Search and Review: prorated to eliminate the charge for 100 frames. The Committee will waive in full fees that total less Clerical/Technical, hourly rate $17.00 than $5. Professional/Supervisory, hourly rate $32.00 The Secretary of the Committee or his or her desig- Manager/Senior Professional, hourly nee will also waive or reduce fees, upon proper rerate $53.00 quest, if disclosure of the information is in the public interest because it is likely to contribute significantly to Computer search and production: public understanding of the operations or activities of the government and is not primarily in the commercial Operator search time, hourly rate $25.00 interest of the requester. A fee reduction is available to Cassette tapes $5.00 employees, and applicants for employment who re- PC computer output, per minute $.10 quest records for use in prosecuting a grievance or Mainframe computer output Actual cost complaint against the Committee Special Services: By order of the Federal Open Market Committee, The Secretary of the Committee may agree to provide, and set fees to recover the costs of, special services not covered May 16, 1991. by the Freedom of Information Act, such as certifying records or information and sending records by special methods such as express mail. The Secretary may provide DONALD L. KOHN self-service photocopy machines and microfiche printers as a convenience to requesters. Secretary of the Committee ORDERS ISSUED UNDER BANK HOLDING effects of the proposed transaction and the financial COMPANY ACT and managerial resources and future prospects of the banks concerned, and the convenience and needs Orders Approved Under Section 3 of the Bank before the communities to be served. On the basis of Holding Company Act the information before the Board, the Secretary of the Board finds that an emergency situation exists so as to require that the Secretary of the Board act immedi- BankAmerica Corporation ately pursuant to the provisions of section 3(b) of the San Francisco, California Act (12 U.S.C. § 1842(b)) in order to safeguard depositors of Bank. Having considered the record of Order Approving Acquisition of a Bank this application in light of the factors contained in the BankAmerica Corporation, San Francisco, California, Act, the Secretary of the Board has determined that a bank holding company within the meaning of the consummation of the transaction would be in the Bank Holding Company Act, has applied for approval public interest and that the application should be under section 3(a)(3) of the Act (12 U.S.C. approved on a basis that would not preclude immedi- § 1842(a)(3)) to acquire Bank of America, Texas, ate consummation of the proposal. On the basis of N.A., Houston, Texas, which will acquire the deposits these considerations, the application is approved. and certain liabilities of Village Green National Bank, The transaction may be consummated immediately, Jersey Village, Texas ("Bank"). but in no event later than three months after the Public notice of the application before the Board is effective date of this Order, unless such period is not required by the Act, and in view of the emergency extended for good cause by the Board or by the situation the Board has not followed its normal practice Federal Reserve Bank of San Francisco acting pursuof affording interested parties the opportunity to submit ant to delegated authority. comments and views. In view of the emergency situa- By order of the Secretary of the Board, acting tion involving Bank, the Comptroller of the Currency pursuant to delegated authority for the Board of Govhas recommended immediate action by the Board to ernors, effective May 9, 1991. prevent the probable failure of Bank. In connection with the application, the Secretary of WILLIAM W. WILES the Board has taken into consideration the competitive Secretary of the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

614 Federal Reserve Bulletin • July 1991 BOK Financial Corporation proposal would strengthen the Bank financially and Tulsa, Oklahoma that Applicant has indicated its intent to continue the improvement of Bank's financial condition. In addi- Order Approving Formation of a Bank Holding tion, the proposal would transfer the Federal Deposit Company Insurance Corporation's equity interest in Bank to private ownership. The Board believes that this trans- BOK Financial Corporation, Tulsa, Oklahoma ("Ap- action would permit Bank to better serve the commuplicant"), has applied for the Board's approval, pur- nity and would result in substantial public benefits. suant to section 3(a)(1) of the Bank Holding Company Accordingly, in light of all the facts of record, includ- Act ("BHC Act") (12 U.S.C. § 1842(a)(1)), to become ing new ownership and management of Applicant and a bank holding company by acquiring 99.99 percent of Bank, the Board concludes that considerations relatthe voting shares of Bank of Oklahoma, N.A., Tulsa, ing to the convenience and needs of the communities Oklahoma ("Bank"). to be served are also consistent with approval. Notice of the application, affording interested per- Based on the foregoing and other facts of record, the sons an opportunity to submit comments, has been Board has determined that the application should be, published (56 Federal Register 10,903 (1991)). The and hereby is, approved. This approval is conditioned time for filing comments has expired, and the Board upon Applicant fulfilling its commitments, including has considered the application and all comments re- commitments regarding the financial condition of ceived in light of the factors set forth in section 3(c) of Bank. The proposal shall not be consummated before the BHC Act. the thirtieth calendar day following the effective date Applicant is a nonoperating company formed for the of this Order, or later than three months after the purpose of acquiring Bank. Bank is the largest com- effective date of this Order, unless such period is mercial banking organization in Oklahoma, controlling extended for good cause by the Board or by the deposits of approximately $1.8 billion, representing Federal Reserve Bank of Kansas City, acting pursuant 7.4 percent of the total deposits in commercial banking to delegated authority. organizations in the state.1 Bank ranks as the largest By order of the Board of Governors, effective commercial banking organization in the Tulsa RMA May 1, 1991. banking market with approximately 28.8 percent of the total deposits in commercial banking organizations in Voting for this action: Chairman Greenspan and Governors the market.2 Principals of Applicant are not affiliated Angell, Kelley, La Ware, and Mullins. with any other depository institutions in the market. Based on the facts of record, the Board believes that WILLIAM W. WILES consummation of this proposal would not result in any Secretary of the Board adverse effects upon competition or increase the concentration of commercial banking resources in any EuroHoldings, Inc. relevant banking market. Accordingly, the Board con- Coral Gables, Florida cludes that competitive considerations under the BHC Act are consistent with approval. Order Approving Formation of a Bank Holding Applicant will acquire Bank with existing funds, and Company Applicant will have no debt outstanding upon consummation of the proposal. Upon consummation, Appli- EuroHoldings, Inc., Coral Gables, Florida ("Eurocant and Bank will meet all applicable interim regula- Holdings"), has applied under section 3(a)(1) of the tory capital requirements. Based on the facts of Bank Holding Company Act ("BHC Act") record, including certain commitments and represen- (12 U.S.C. § 1842(a)(1)) to become a bank holding tations made by Applicant's principal, the Board concompany by acquiring 99 percent of the voting shares cludes that financial and managerial resources and of Transflorida Bank of Palm Beach, Boca Raton, future prospects of Applicant and Bank are consistent Florida ("Bank").1 with approval. Notice of the application, affording interested per- In considering the convenience and needs of the sons an opportunity to submit comments, has been communities to be served, the Board notes that the 1. Currently, Bank's head office is in Boynton Beach, Florida, with 1. All state and market banking data are as of December 31, 1989. branches in Boca Raton and Wellington, Florida. As part of the 2. The Tulsa, Oklahoma RMA includes all of Tulsa County and proposal, Bank will transfer its charter to Boca Raton, and the portions of Wagoner, Rogers, Osage, and Creek counties, all in Boynton Beach and Wellington offices will be sold to a third party. Oklahoma. EuroHoldings intends to change the name of Bank to "EuroBank." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 615 published (56 Federal Register 7386 (1991)). The time The transaction shall not be consummated before the for filing comments has expired, and the Board has thirtieth calendar day following the effective date of this considered the application and all comments received order, or later than three months after the effective date in light of the factors set forth in section 3(c) of the of this order, unless such period is extended for good BHC Act. cause by the Board or the Federal Reserve Bank of EuroHoldings is a non-operating corporation formed Atlanta, acting pursuant to delegated authority. for the purpose of acquiring Bank. Upon consummation By order of the Board of Governors, effective of the transaction, Bank will control deposits of approx- May 31, 1991. imately $8 million and will be the 315th largest commercial banking organization in Florida, representing less Voting for this action: Chairman Greenspan and Governors than 1 percent of the total deposits in commercial Angell, Kelley, LaWare, and Mullins. banking organizations in the state.2 Based on all the facts of record, the Board believes that consummation of the proposal would have no adverse effect on the JENNIFER J. JOHNSON Associate Secretary of the Board concentration of banking resources in Florida. Bank operates in the East Palm Beach County, North Fork Bancorporation Florida banking market.3 The office of Bank that Euro- Mattituck, New York Holdings proposes to acquire controls less than one percent of the total deposits in commercial banks in the Order Approving Acquisition of a Bank Holding market. EuroHoldings and its principals are not affili- Company and Savings Bank Subsidiary ated with any other depository institution. Based on all the facts of record, consummation of the proposed North Fork Bancorporation, Mattituck, New York transaction would not result in any adverse effects on ("North Fork"), a bank holding company within the existing or potential competition, nor would it increase meaning of the Bank Holding Company Act (the the concentration of banking resources in any relevant "BHC Act"), has applied pursuant to section 3(a)(3) banking market. Accordingly, the Board concludes that of the BHC Act (12 U.S.C. § 1842(a)(3)) to acquire competitive considerations under the BHC Act are Eastchester Financial Corporation, White Plains, New consistent with approval of the application. York ("EFC"), and thereby to acquire indirectly The financial and managerial resources and future EFC's sole subsidiary bank, Eastchester Savings prospects of EuroHoldings and Bank are consistent Bank, Mount Vernon, New York.1 with approval. In making this determination, the Board Notice of the application, affording interested parties has relied upon the commitments and representations an opportunity to comment, has been published (56 made by Applicant and its principals in this application, Federal Register 1642 (1991)). The time for filing comincluding the commitments that have been accepted by ments has expired, and the Board has considered the Applicant and its principals as conditions. Considerapplication and all comments received in light of the ations relating to the convenience and needs of the factors set forth in section 3(c) of the BHC Act. community to be served also are consistent with ap- North Fork is the 32nd largest depository organizaproval. The State of Florida has approved this proposal tion in New York, controlling $1.4 billion in deposits, after a public hearing. representing less than one percent of the total deposits Based on the foregoing and other facts of record, the in depository organizations in the state.2 EFC is the Board has determined that the application should be, 57th largest depository organization in the state, conand hereby is, approved. The Board's approval is trolling deposits of $416.4 million, representing less specifically conditioned upon compliance with all comthan one percent of the total deposits in depository mitments and representations made by Applicant and organizations in the state. Consummation of this proits principals in this application, including the commitposal would not result in a significantly adverse effect ments that have been accepted by Applicant and its principals as conditions. These commitments and representations, including the commitments that have been 1. Eastchester Savings Bank is a state-chartered, FDIC insured accepted by Applicant and its principals as conditions, savings bank. North Fork proposes to cause its existing bank subsidare incorporated by reference and made a part hereof. iary, Southold Savings Bank, to form a subsidiary solely for the purpose of facilitating the acquisition. This subsidiary will merge with EFC, with EFC as the surviving company. Immediately following this merger, EFC will dissolve and Eastchester Savings Bank will merge 2. Data are as of June 30, 1990. with and into Southold. In connection with this application, North 3. The East Palm Beach County banking market is approximated by Fork has committed to cause Southold to divest the savings bank life the portion of East Palm Beach County, Florida, that is east of insurance activities of both Southold and Eastchester Savings Bank. Loxahatchee. 2. State and market deposit data are as of June 30, 1989. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

616 Federal Reserve Bulletin • July 1991 on the concentration of banking resources in New Orders Issued Under Bank Merger Act York. North Fork and EFC compete directly in the metro- Manufacturers and Traders Trust Company politan New York-New Jersey banking market,3 which Buffalo, New York is considered to be unconcentrated. Upon consummation of this proposal, the Herfindahl-Hirschman Index ("HHI") would remain unchanged at 638.4 Based on Order Approving the Acquisition these and other facts of record, the Board concludes of Assets and Assumption that consummation of this proposal would not result in of Liabilities a significantly adverse effect on competition in any relevant banking market. Manufacturers and Traders Trust Company, Buffalo, Under section 3 of the BHC Act, the Board is New York ("M&T Bank"), has applied for the required to consider the financial and managerial re- Board's approval under the Bank Merger Act sources and future prospects of North Fork, EFC and (12 U.S.C. § 1828) to acquire certain assets and their bank subsidiaries. North Fork has committed to assume certain liabilities from Goldome, New York, raise additional capital and to contribute these funds to New York, and thereby to establish branches pursu- North Fork Bank and Trust Company, an existing ant to section 9 of the Federal Reserve Act bank subsidiary, before consummation of this pro- (12 U.S.C. § 321). posal. Based on the facts of record, including this Public notice of the application before the Board is commitment, the Board finds that financial factors are not required by the Act, and in view of the emerconsistent with approval. The Board also finds that gency situation the Board has not followed its normal managerial factors and considerations relating to conpractice of affording interested parties the opportuvenience and needs of the communities to be served nity to submit comments and views. In view of the are consistent with approval. emergency situation involving Goldome, the New Based on all of the facts of record, including com- York Deputy Superintendent of Banks has recommitments made by North Fork in connection with this mended immediate action by the Board to prevent application, the Board has determined that the applithe probable failure of Goldome. cation should be, and hereby is, approved. The trans- In connection with the application, the Secretary action shall not be consummated before the thirtieth of the Board has taken into consideration the comcalendar day following the effective date of this order, petitive effects of the proposed transaction and the or later than three months after the effective date of financial and managerial resources and future prosthis order, unless such period is extended for good pects of the institutions concerned, and the convecause by the Board or by the Federal Reserve Bank of nience and needs of the communities to be served. New York, acting pursuant to delegated authority. On the basis of the information before the Board, the By order of the Board of Governors, effective Secretary of the Board finds that an emergency May 17, 1991. situation exists so as to require that the Secretary of the Board act immediately pursuant to the provisions Voting for this action: Chairman Greenspan and Governors Kelley, LaWare, and Mullins. Absent and not voting: Gov- of section 18(c)(3) of the Federal Deposit Insurance ernor Angell. Act (12 U.S.C. § 1828(c)(3)) in order to safeguard depositors of Goldome. Having considered the JENNIFER J. JOHNSON record of this application in light of the factors Associate Secretary of the Board contained in the Bank Merger Act and the Federal Reserve Act, the Secretary of the Board has determined that consummation of the transaction would be in the public interest and that the application should be approved on a basis that would not pre- 3. The metropolitan New York-New Jersey banking market is approximated by New York City; Nassau, Orange, Putnam, Rock- clude immediate consummation of the proposal. On land, Suffolk, Sullivan, and Westchester Counties in New York; the basis of these considerations, the application is Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, approved.1 Ocean, Passaic, Somerset, Sussex, Union, and Warren Counties in New Jersey; and part of Fairfield County in Connecticut. 4. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (1984), a market in which the post-merger HHI is less than 1000 is considered unconcentrated. Generally, the 1. In connection with these applications, the Secretary has ap- Department of Justice will not challenge a bank merger (in the absence proved the request by M&T Bank to increase its investment in bank of other factors indicating anticompetitive effects) if the post-merger premises pursuant to section 24A of the Federal Reserve Act, HHI is less than 1000. 12 U.S.C. § 371d. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 617 The transaction may be consummated immedi- By order of the Secretary of the Board, acting ately, but in no event later than three months after pursuant to delegated authority for the Board of Govthe effective date of this Order unless such period is ernors, effective May 31, 1991. extended for good cause by the Board or by the Federal Reserve Bank of New York acting pursuant WILLIAM W. WILES to delegated authority. Secretary of the Board ORDERS ISSUED UNDER THE FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT ACT C'FIRREA ORDERS") Recent orders have been issued by the Staff Director of the Division of Banking Supervision and Regulation and the General Counsel of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Acquired Surviving Approval Bank Holding Company Thrift Bank(s) Date Centura Banks, Inc., Watauga Savings and Centura Bank, May 17, 1991 Rocky Mount, North Carolina Loan Association, Inc., Rocky Mount, Boone, North Carolina North Carolina Vista Bancorp, Inc., First Atlantic Federal The Phillipsburg May 3, 1991 Phillipsburg, New Jersey Savings Association, National Bank and South Plainfield, New Trust Company, Jersey (2 Branches) Phillipsburg, New Jersey APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 4 Effective Applicant(s) Bank(s) Date Vista Bancorp, Inc., VAC, Inc., May 3, 1991 Phillipsburg, New Jersey Phillipsburg, New Jersey Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

618 Federal Reserve Bulletin • July 1991 Sections 3 and 4 Effective Applicant(s) Bank(s) Date Northern Trust Corporation, Northern Trust of California National May 20, 1991 Chicago, Illinois Association, Northern Trust of California Santa Barbara, California Corporation, Tri-Valley National Bank, Chicago, Illinois Dublin, California Northern Trust of California Northern Trust of California National May 20, 1991 Corporation, Association, Chicago, Illinois Santa Barbara, California Tri-Valley National Bank, Dublin, California Northern Trust of California Berry, Hartell, Evers & Osbourne, May 20, 1991 Corporation, Inc., Chicago, Illinois San Francisco, California APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant(s) Bank(s) Bank Date American Community Bank Pierce County Bank and Minneapolis May 17, 1991 Group, Inc., Trust Company, Minneapolis, Minnesota Ellsworth, Wisconsin Arvest Bank Group, Inc., Village South National St. Louis May 15, 1991 Bentonville, Arkansas Bank, Tulsa, Oklahoma Bourbon Bancshares, Inc., Peoples Security Bank, St. Louis May 1, 1991 Bourbon, Missouri Licking, Missouri CB&T Financial Corp., Bank of Hundred, Richmond May 20, 1991 Fairmont, West Virginia Hundred, West Virginia CB&T Financial Corp., The Tygarts Valley Richmond May 8, 1991 Fairmont, West Virginia National Bank, Elkins, West Virginia Central BancShares, Inc., The First Central National Cleveland May 10, 1991 St. Paris, Ohio Bank of St. Paris, St. Paris, Ohio Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 619 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date Central Banking Group, Inc., Central Bank of Kansas City May 1, 1991 Oklahoma City, Oklahoma Oklahoma City, Oklahoma City, Oklahoma Friendly Bank of Oklahoma City, Oklahoma City, Oklahoma FEO Investments, Inc., Commercial State Bank, Kansas City May 22, 1991 Hoskins, Nebraska Hoskins, Nebraska First Decatur Bancshares, Inc. First National Bank of Mt. Chicago May 23, 1991 Decatur, Illinois Zion, Mt. Zion, Illinois First Heartland Bancorp, First Sioux Bancshares, Chicago April 30, 1991 Sioux Center, Iowa Sioux Center, Iowa Pender State Corporation, Pender, Nebraska First National Bancorp, Inc., Citizens State Bank, Chicago April 26, 1991 Madison, Wisconsin Belleville, Wisconsin First National Insurance Agency, First National Bank in Kansas City April 29, 1991 Inc., Exeter, Exeter, Nebraska Exeter, Nebraska HP Holding Company, Bank of Commerce and Chicago April 29, 1991 Oak Park, Illinois Industry, Chicago, Illinois Johnson International, Inc., Biltmore Investors Bank, Chicago May 8, 1991 Racine, Wisconsin Lake Forest, Illinois Liberty National Bancorp, Inc., Bank of Lexington & St. Louis May 7, 1991 Louisville, Kentucky Trust Company, Inc., Lexington, Kentucky Locust Grove Banshares, Inc., Lakeside Bank of Salina, Kansas City May 2, 1991 Locust Grove, Oklahoma Salina, Oklahoma Minnesota-Wisconsin The Battle Creek Bank, Minneapolis May 17, 1991 Bancshares, Inc., St. Paul, Minnesota Newport, Minnesota Mid America Banshares Inc., Newport, Minnesota Mid America Bank Maplewood, Maplewood, Minnesota Orchard Bancorp, Bank of Orchard, Kansas City May 21, 1991 Orchard, Nebraska Orchard, Nebraska Prairie Bancorp, Inc., Bank of Ladd, Chicago May 15, 1991 Manlius, Illinois Ladd, Illinois Royal Bancshares, Inc., BGM Bancorporation, Chicago May 1, 1991 Elroy, Wisconsin Inc., Gays Mills, Wisconsin Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

620 Federal Reserve Bulletin • July 1991 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date Sandwich Banco, Inc., Colonial Bank of Granite Chicago May 17, 1991 Sandwich, Illinois City, Sycamore, Illinois San Juan Bancshares, Inc., San Juan Delaware Dallas April 29, 1991 San Juan, Texas Financial Corporation, Dover, Delaware San Juan State Bank, San Juan, Texas San Juan Delaware Financial San Juan State Bank, Dallas April 29, 1991 Corporation, San Juan, Texas Dover, Delaware Sunrise Bancorp, Inc., The Sunshine Bank of Cleveland April 29, 1991 Wheeling, West Virginia Wheeling, Wheeling, West Virginia Univest Corporation of Pennview Savings Bank, Philadelphia May 6, 1991 Pennsylvania, Souderton, Pennsylvania Lancaster, Pennsylvania Valley Banc Services Mattoon Bank, Chicago April 19, 1991 Corporation, Mattoon, Illinois St. Charles, Illinois Valley Bancshares, Inc., Nisswa State Bank, Chicago May 16, 1991 Mapleton, Iowa Nisswa, Minnesota Section 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date Ashby Bancshares, Inc., Rylander Insurance Minneapolis April 29, 1991 Ashby, Minnesota Agency, Ashby, Minnesota BB&T Financial Corporation, Albemarle Savings and Richmond May 17, 1991 Wilson, North Carolina Loan Association, Elizabeth City, North Carolina BB&T Financial Corporation, Gate City Federal Savings Richmond April 29, 1991 Wilson, North Carolina and Loan Association, Greensboro, North Carolina Brooke Holdings, Inc., Brooke Corporation, Kansas City May 3, 1991 Jewell, Kansas Concordia, Kansas Crawford Bancorp, Inc., Peoples Federal Building St. Louis April 25, 1991 Robinson, Illinois and Loan Association, Oblong, Illinois First Citizens BancShares, Inc., First Federal Savings Richmond May 2, 1991 Raleigh, North Carolina Bank, Hendersonville, North Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 621 Section 4—Continued Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date First National Corporation of First National Finance St. Louis May 21, 1991 West Point, Company, West Point, Mississippi West Point, Mississippi First of America Bank First of America Chicago May 23, 1991 Corporation, Community Kalamazoo, Michigan Development Corporation, Kalamazoo, Michigan First Virginia Banks, Inc., Harwood-Andrews, Inc., Richmond May 23, 1991 Falls Church, Virginia Farmville, Virginia Pikeville National Corporation, First Federal Savings Cleveland April 29, 1991 Pikeville, Kentucky Bank, Campbellsville, Kentucky Stichting Prioriteit ABN AMRO DBI Holdings, Inc., Chicago May 8, 1991 Holding, New York, New York Amsterdam, The Netherlands Stichting Administratiekantoor ABN AMRO Holding, Amsterdam, The Netherlands ABN AMRO Holding N.V., Amsterdam, The Netherlands Amsterdam-Rotterdam Bank N.V., Amsterdam, The Netherlands Sections 3 and 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date Heron Lake Bancshares, Inc., Heron Lake Minneapolis May 8, 1991 Heron Lake, Minnesota Bancorporation, Inc., Heron Lake, Minnesota Heron Lake Agency, Heron Lake, Minnesota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

622 Federal Reserve Bulletin • July 1991 APPLICATIONS APPROVED UNDER BANK MERGER ACT Reserve Effective Applicant(s) Bank(s) Bank Date Centura Bank, Pioneer Savings Bank, Richmond May 17, 1991 Rocky Mount, North Carolina Inc., Rocky Mount, North Carolina United New Mexico Bank at United New Mexico Bank Kansas City April 26, 1991 Albuquerque, at Rio Rancho, Albuquerque, New Mexico Rio Rancho, New Mexico PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits order denying request for attorney's fees pursuant against the Federal Reserve Banks in which the Board to Equal Access to Justice Act. The petition for of Governors is not named a party. review was denied on April 12, 1991. May v. Board of Governors, No. 90-1316 (D.C. Cir., Fields v. Board of Governors, No. 3:91CV069 (N.D. filed July 27, 1990). Appeal of District Court order Ohio, filed February 5, 1991). Appeal of denial of dismissing plaintiff's action under Freedom of Inrequest for information under the Freedom of Infor- formation and Privacy Acts. The Board's motion mation Act. for summary affirmance was granted on May 16, State of Illinois v. Board of Governors, No. 90-3824 1991. (7th Circuit, appeal filed December 19,1990). Appeal Burke v. Board of Governors, No. 90-9509 (10th of injunction restraining the Board from providing Circuit, filed February 27, 1990). Petition for review state examination materials in response to a Congres- of Board orders assessing civil money penalties and sional subpoena. On November 30, 1990, the U.S. issuing orders of prohibition. Oral argument took District Court for the Northern District of Illinois place May 7, 1991. issued a preliminary injunction preventing the Board Kaimowitz v. Board of Governors, No. 90-3067 (11th and the Chicago Reserve Bank from providing doc- Cir., filed January 23, 1990). Petition for review of uments relating to the state examination in response Board order dated December 22, 1989, approving to the subpoena. The House Committee on Banking, application by First Union Corporation to acquire Finance and Urban Affairs has appealed the injunc- Florida National Banks. Petitioner objects to tion. Argument in the case took place May 10, 1991. approval on Community Reinvestment Act Citicorp v. Board of Governors, No. 90-4124 (2d Circuit, grounds. filed October 4, 1990). Petition for review of Board Babcock and Brown Holdings, Inc. v. Board of Govorder requiring Citicorp to terminate certain insurance ernors, No. 89-70518 (9th Cir., filed November 22, activities conducted pursuant to Delaware law by an 1989). Petition for review of Board determination indirect nonbank subsidiary. Awaiting decision. that a company would control a proposed insured Stanley v. Board of Governors, No. 90-3183 (7th bank for purposes of the Bank Holding Company Circuit, filed October 3, 1990). Petition for review of Act. Oral argument was held on April 9, and on Board order imposing civil money penalties on five April 17 the Court of Appeals dismissed the case as former bank holding company directors. Oral argu- moot. ment was held May 16, 1991. Consumers Union of U.S., Inc. v. Board of Governors, Sibille v. Federal Reserve Bank of New York and No. 90-5186 (D.C. Cir., filed June 29,1990). Appeal of Board of Governors, No. 90-CIV-5898 (S.D. New District Court decision upholding amendments to Reg- York, filed September 12, 1990). Appeal of denial of ulation Z implementing the Home Equity Loan Con- Freedom of Information Act request. sumer Protection Act. Awaiting decision. Kuhns v. Board of Governors, No. 90-1398 (D.C. Cir., Synovus Financial Corp. v. Board of Governors, No. filed July 30, 1990). Petition for review of Board 89-1394 (D.C. Cir., filed June 21, 1989). Petition Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 623 for review of Board order permitting relocation of The Federal Reserve Board announced on May 3, a bank holding company's national bank subsidiary 1991, the issuance of a Cease and Desist Order against from Alabama to Georgia. Awaiting decision. Independent Bankgroup, Inc., Springfield, Vermont. MCorp v. Board of Governors, No. 89-2816 (5th Cir., filed May 2, 1989). Appeal of preliminary injunction against the Board enjoining pending and BCCI Holdings (Luxembourg) S.A. future enforcement actions against a bank holding Luxembourg, Luxembourg company now in bankruptcy. On May 15, 1990, the Fifth Circuit vacated the district court's order The Federal Reserve Board announced on May 7, enjoining the Board from proceeding with enforce- 1991, the joint issuance, with the Superintendent of ment actions based on section 23A of the Federal Banks of the State of California, of an Order against Reserve Act, but upheld the district court's order BCCI Holdings (Luxembourg) S.A., Luxembourg, enjoining such actions based on the Board's source- and Bank of Credit and Commerce International S.A., of-strength doctrine. 900 F.2d 852 (5th Cir. 1990). On Luxembourg. Written Agreements Approved by Fed- March 4, 1991, the Supreme Court granted the eral Reserve Banks parties' cross-petitions for certiorari, Nos. 90-913, 90-914. The Board's brief was filed on April 18,1991. MCorp v. Board of Governors, No. CA3-88-2693 James Madison Limited (N.D. Tex., filed October 10, 1988). Application for Washington, D.C. injunction to set aside temporary cease and desist orders. Stayed pending outcome of MCorp v. Board The Federal Reserve Board announced on May 6, of Governors, 900 F.2d 852 (5th Cir. 1990). 1991, the execution of a Written Agreement between White v. Board of Governors, No. CU-S-88-623-RDF the Federal Reserve Bank of Richmond and James (D. Nev., filed July 29, 1988). Age discrimination Madison Limited, Washington, D.C. complaint. Board's motion to dismiss or for summary judgment was denied on January 3, 1991. Awaiting trial date. Midlantic Corporation Edison, New Jersey FINAL ENFORCEMENT ORDERS ISSUED BY THE BOARD OF GOVERNORS The Federal Reserve Board announced on May 20, 1991, the execution of a Written Agreement between Independent Bankgroup, Inc., the Federal Reserve Bank of New York and Midlantic Springfield, Vermont Corporation, Edison, New Jersey. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1 Financial and Business Statistics CONTENTS WEEKLY REPORTING COMMERCIAL BANKS Domestic Financial Statistics Assets and liabilities A19 All reporting banks A21 Branches and agencies of foreign banks MONEY STOCK AND BANK CREDIT FINANCIAL MARKETS A3 Reserves, money stock, liquid assets, and debt measures A22 Commercial paper and bankers dollar A4 Reserves of depository institutions, Reserve Bank acceptances outstanding credit A22 Prime rate charged by banks on short-term A5 Reserves and borrowings—Depository business loans institutions A23 Interest rates—money and capital markets A6 Selected borrowings in immediately available A24 Stock market—Selected statistics funds—Large member banks A25 Selected financial institutions—Selected assets and liabilities POLICY INSTRUMENTS FEDERAL FINANCE A7 Federal Reserve Bank interest rates A8 Reserve requirements of depository institutions A27 Federal fiscal and financing operations A9 Federal Reserve open market transactions A28 U.S. budget receipts and outlays A29 Federal debt subject to statutory limitation A29 Gross public debt of U.S. Treasury—Types FEDERAL RESERVE BANKS and ownership A30 U.S. government securities A10 Condition and Federal Reserve note statements dealers — Transactions All Maturity distribution of loan and security A31 U.S. government securities dealers—Positions holdings and financing A32 Federal and federally sponsored credit agencies—Debt outstanding MONETARY AND CREDIT AGGREGATES A12 Aggregate reserves of depository institutions SECURITIES MARKETS AND and monetary base CORPORATE FINANCE A13 Money stock, liquid assets, and debt measures A15 Bank debits and deposit turnover A33 New security issues—State and local A16 Loans and securities-All commercial banks governments and corporations A34 Open-end investment companies—Net sales and asset position COMMERCIAL BANKING INSTITUTIONS A34 Corporate profits and their distribution A34 Total nonfarm business expenditures on new A17 Major nondeposit funds plant and equipment A18 Assets and liabilities, last-Wednesday-of-month A35 Domestic finance companies—Assets and series liabilities and business credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A2 Federal Reserve Bulletin • July 1991 Domestic Financial Statistics — Continued A55 Foreign official assets held at Federal Reserve Banks REAL ESTATE A56 Foreign branches of U.S. banks—Balance sheet data A36 Mortgage markets A58 Selected U.S. liabilities to foreign official A37 Mortgage debt outstanding institutions REPORTED BY BANKS CONSUMER INSTALLMENT CREDIT IN THE UNITED STATES A3 8 Total outstanding and net change A39 Terms A58 Liabilities to and claims on foreigners A59 Liabilities to foreigners A61 Banks' own claims on foreigners A62 Banks' own and domestic customers' claims on FLOW OF FUNDS foreigners A62 Banks' own claims on unaffiliated foreigners A40 Funds raised in U.S. credit markets A63 Claims on foreign countries—Combined A42 Direct and indirect sources of funds to credit domestic offices and foreign branches markets A43 Summary of credit market debt outstanding A44 Summary of credit market claims, by holder REPORTED BY NONBANKING BUSINESS ENTERPRISES IN THE UNITED STATES Domestic Nonfinancial Statistics A64 Liabilities to unaffiliated foreigners SELECTED MEASURES A65 Claims on unaffiliated foreigners A45 Nonfinancial business activity - Selected measures SECURITIES HOLDINGS AND TRANSACTIONS A46 Labor force, employment, and unemployment A47 Output, capacity, and capacity utilization A66 Foreign transactions in securities A48 Industrial production—Indexes and gross value A67 Marketable U.S. Treasury bonds and A50 Housing and construction notes—Foreign transactions A51 Consumer and producer prices A52 Gross national product and income A53 Personal income and saving INTEREST AND EXCHANGE RATES International Statistics A68 Discount rates of foreign central banks A68 Foreign short-term interest rates SUMMARY STATISTICS A69 Foreign exchange rates A71 Guide to Tabular Presentation, A54 U.S. international transactions - Summary Statistical Releases, and Special A55 U.S. foreign trade A55 U.S. reserve assets Tables Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A3 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Annual rates of change, seasonally adjusted in percent1 1990 1991 1990 1991 MMoonneettaarryy aanndd ccrreeddiitt aaggggrreeggaatteess Q2 Q3 Q4 Qr Dec. Jan. Feb/ Mar/ Apr. Reserves of depository institutions2 1 Total .2 -.5 3.9 9.2 21.4 8.8 3.5 -1.1 -4.1 2 Required .9 -.5 1.7 4.7 3.6 -3.6 12.8 14.7 -.6 3 Nonborrowed .7 3.8 7.8 9.1 19.1 3.8 10.5 -.8 -3.9 4 Monetary base3 7.9 9.1 9.9 14.5 9.0 21.5 16.9 6.0 -1.4 Concepts of money, liquid assets, and debt4 i Ml 4.2 3.7 3.4 5.9 3.1 1.9 14.1 9.5 -1.3 6 M2 3.9 3.0 2.1 3.6 i.y 1.1 8.6 7.5 2.5 7 M3 1.3 1.6 1.0 4.3 1.2r 3.7 10.8 2.9 .2 8 L .9 2.0 1.5 3.7 .8' 4.4r 8.3 1.2 n.a. 9 Debt 7.0 7.1 5.9^ 5.0 4.9^ 4.2r 5.9 4.2 n.a. Nontrgnsaction components 10 In M2 ... j 3.8 2.7 1.7 2.8 1.5 .8r 6.8 6.9 3.8 11 In M3 only6 -9.1 -3.8 -3.5 7.3 -1.8f lS.P 20.1 -16.7 -9.6 Time and savings deposits Commercial banks 12 Savings 4.1 5.9 5.2 10.2 7.3 12.0 10.7 15.4 17.5 13 MMDAs 9.6 8.2 3.5 6.1 3.2 -2.2 17.5 17.8 14.8 14 Small-denomination time 12.7 15.5 11.5 8.9 17.5 7.C 8.0 4.4 -6.7 15 Large-denomination time8,9 -2.9 -2.2 -8.5 11.9 -4.0 24.2r 21.9 -3.6 -6.9 Thrift institutions 16 Savings 2.2 -3.3 -7.3 -.4 -8.5 -4.5 9.1 14.1 20.7 17 MMDAs .4 -7.7 -7.2 -.9 -16.7 7.5 18.7 23.9 18 Small-denomination time -7.4 -11.0 -8.6 -10.3 -13.0 -10.(K -10.5 -14.7 -11.4 19 Large-denomination time -28.7 -27.3 -26.3 -31.9 -39.3 -29.8r -31.5 -34.5 -30.1 Money market mutual funds 20 General purpose and broker-dealer 4.7 10.0 11.2 19.4 16.4 29.7 14.1 18.0 3.0 21 Institution-only 14.8 21.6 30.4 49.9 51.8 42.0 84.9 23.3 30.4 Debt components* 22 Federal 9.7 14.4 11.4 12.2 13.1 10.9 14.4 5.6 n.a. 23 Nonfederal 6.2 4.9 4.2' 2.7 2.3' 2.C 3.2 3.8 n.a. 1. Unless otherwise noted, rates of change are calculated from average banking offices in the United Kingdom and Canada, and balances in both taxable amounts outstanding in preceding month or quarter. and tax-exempt, institution-only money market mutual funds. Excludes amounts 2. Figures incorporate adjustments for discontinuities associated with regula- held by depository institutions, the U.S. government, money market funds, and tory changes in reserve requirements. (See also table 1.20.) foreign banks and official institutions. Also subtracted is the estimated amount of 3. Seasonally adjusted, break-adjusted monetary base consists of (1) season- overnight RPs and Eurodollars held by institution-only money market mutual ally adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally funds. adjusted currency component of the money stock, plus (3) (for all quarterly L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term reporters on the "Report of Transaction Accounts, Other Deposits and Vault Treasury securities, commercial paper and bankers acceptances, net of money Cash" and for all those weekly reporters whose vault cash exceeds their required market mutual fund holdings of these assets. reserves) the seasonally adjusted, break adjusted difference between current vault Debt: Debt of domestic nonfinancial sectors consists of outstanding credit cash and the amount applied to satisfy current reserve requirements. market debt of the U.S. government, state and local governments, and private 4. Composition of the money stock measures and debt is as follows: nonfinancial sectors. Private debt consists of corporate bonds, mortgages, con- Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults sumer credit (including bank loans), other bank loans, commercial paper, bankers of depository institutions; (2) travelers checks of nonbank issuers; (3) demand acceptances, and other debt instruments. Data are derived from the Federal deposits at all commercial banks other than those due to depository institutions, Reserve Board's flow of funds accounts. Data on debt of domestic nonfinancial the U.S. government, and foreign banks and official institutions, less cash items in sectors are monthly averages, derived by averaging adjacent month-end levels. the process of collection and Federal Reserve float; and (4) other checkable Growth rates for debt reflect adjustments for discontinuities over time in the levels deposits (OCD), consisting of negotiable order of withdrawal (NOW) and auto- of debt presented in other tables. matic transfer service (ATS) accounts at depository institutions, credit union 5. Sum of overnight RPs and Eurodollars, money market fund balances share draft accounts, and demand deposits at thrift institutions. (general purpose and broker-dealer), MMDAs, and savings and small time M2: Ml plus overnight (and continuing contract) repurchase agreements deposits. (RPs) issued by all depository institutions and overnight Eurodollars issued to 6. Sum of large time deposits, term RPs, term Eurodollars of U.S. residents, U.S. residents by foreign branches of U.S. banks worldwide, money market and money market fund balances (institution-only), less a consolidation adjustdeposit accounts (MMDAs), savings and small-denomination time deposits ment that represents the estimated amount of overnight RPs and Eurodollars held (time deposits—including retail RPs—in amounts of less than $100,000), and by institution-only money market mutual funds. balances in both taxable and tax-exempt general purpose and broker-dealer 7. Small-denomination time deposits—including retail RPs—are those issued money market mutual funds. Excludes individual retirement accounts (IRA) in amounts of less than $100,000. All IRA and Keogh accounts at commercial and Keogh balances at depository institutions and money market funds. Also banks and thrifts are subtracted from small time deposits. excludes all balances held by U.S. commercial banks, money market funds 8. Large-denomination time deposits are those issued in amounts of $100,000 (general puroose and broker-dealer), foreign governments and commercial or more, excluding those booked at international banking facilities. banks, and the U.S. government. 9. Large-denomination time deposits at commercial banks less those held by M3: M2 plus large-denomination time deposits and term RP liabilities (in money market mutual funds, depository institutions, and foreign banks and amounts of $100,000 or more) issued by all depository institutions, term Eurodol- official institutions. lars held by U.S. residents at foreign branches of U.S. banks worldwide and at all Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 DomesticN onfinancial Statistics • July 1991 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT Millions of dollars Monthly averages of Weekly averages of daily figures for week ending daily figures Factors 1991 1991 Feb. Mar. Apr. Mar. 13 Mar. 20 Mar. 27 Apr. 3 Apr. 10 Apr. 17 Apr. 24 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit 286,467 285,011 285,272 285,061 285,153 283,699 286,888 286,427 284,787 284,199 U.S. government securities1, 2 2 Bought outright-system account 235,257 238,299 240,832 238,476 237,476 237,285 240,866 241,929 240,092 240,451 3 Held under repurchase agreements 3,542 1,019 608 1,319 2,039 380 1,421 568 617 0 Federal agency obligations 4 Bought outright 6,342 6,342 6,314 6,342 6,342 6,342 6,342 6,342 6,342 6,302 5 Held under repurchase agreements 331 87 21 36 109 77 58 33 0 0 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions2 7 Adjustment credit 145 143 69 65 109 34 131 31 124 41 8 Seasonal credit 36 53 79 45 56 68 67 71 69 83 9 Extended credit 34 51 85 38 56 72 52 72 79 90 10 Float 874 557 541 322 286 242 1,062 809 760 464 11 Other Federal Reserve assets 39,907 38,459 36,722 38,418 38,680 39,200 36,888 36,572 36,704 36,767 12 Gold stock 11,058 11,058 11,058 11,058 11,058 11,058 11,058 11,058 11,058 11,058 13 Special drawing rights certificate account .. 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 14 Treasury currency outstanding 20,471 20,546 20,599 20,533 20,548 20,562 20,577 20,587 20,597 20,607 ABSORBING RESERVE FUNDS 15 Currency in circulation 284,133 286,408 287,527 286,944 286,745 286,047 286,994 288,199 288,303 287,196 16 Treasury cash holdings 576 616 640 609 619 622 624 628 640 646 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 11,221 6,406 4,931 5,869 4,801 6,131 8,352 4,7% 3,780 5,509 18 Foreign 223 247 246 247 250 266 226 229 247 251 19 Service-related balances and adjustments 2,777 2,849 3,089 2,890 2,859 2,812 2,827 2,844 3,292 3,168 20 Other 195 220 239 212 256 206 208 220 242 232 21 Other Federal Reserve liabilities and capital 9,246 8,087 6,556 8,242 8,501 8,549 6,127 6,071 6,543 6,780 22 Reserve balances with Federal Reserve Banks3 19,643 21,800 23,720 21,657 22,746 20,705 23,182 25,102 23,413 22,100 End-of-month figures Wednesday figures 1991 1991 Feb. Mar. Apr. Mar. 13 Mar. 20 Mar. 27 Apr. 3 Apr. 10 Apr. 17 Apr. 24 SUPPLYING RESERVE FUNDS 23 Reserve Bank credit 298,834 286,706 288,432 283,623 294,060 287,378 287,810 284,765 288,492 282,652 U.S. government securities1, 2 24 Bought outright-system account 236,636 240,965 244,493 237,572 237,816 241,238 240,296 239,428 242,925 239,000 25 Held under repurchase agreements 14,768 0 0 0 9,857 0 4,371 0 2,072 0 Federal agency obligations 26 Bought outright 6,342 6,342 6,250 6,342 6,342 6,342 6,342 6,342 6,342 6,250 27 Held under repurchase agreements — 1,266 0 0 0 592 0 266 0 0 0 28 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions2 29 Adjustment credit 402 135 55 22 183 44 124 93 55 32 30 Seasonal credit 47 62 105 53 66 66 73 70 72 93 31 Extended credit 57 48 131 46 65 63 58 82 75 92 32 Float 1,073 2,582 913 977 -181 299 -223 2,070 377 170 33 Other Federal Reserve assets 38,245 36,573 36,484 38,611 39,321 39,327 36,502 36,680 36,574 37,015 34 Gold stock 11,058 11,058 11,058 11,058 11,058 11,058 11,058 11,058 11,058 11,058 35 Special drawing rights certificate account . 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 36 Treasury currency outstanding 20,494 20,577 20,617 20,533 20,548 20,562 20,577 20,587 20,597 20,607 ABSORBING RESERVE FUNDS 37 Currency in circulation 285,151 286,685 286,766 287,254 286,514 286,286 287,750 288,724 288,087 286,823 38 Treasury cash holdings 605 623 652 618 621 623 627 639 645 652 Deposits, other than reserve balances, with Federal Reserve Banks 39 Treasury 23,898 10,922 13,682 4,827 5,243 6,156 4,401 4,318 3,384 4,411 40 Foreign 329 228 292 228 197 299 214 214 196 186 41 Service-related balances and adjustments 2,854 2,827 3,174 2,890 2,859 2,812 2,827 2,844 3,292 3,168 42 Other 171 188 276 197 195 207 222 210 225 208 43 Other Federal Reserve liabilities and capital 8,216 5,670 6,826 8,331 8,506 8,392 5,815 6,177 6,512 6,939 44 Reserve balances with Federal Reserve Banks3 19,181 21,214 18,457 20,888 31,548 24,240 27,607 23,302 27,823 21,948 1. Includes securities loaned—fully guaranteed by U.S. government securities 3. Excludes required clearing balances and adjustments to compensate for pledged with Federal Reserve Banks—and excludes any securities sold and float. scheduled to be bought back under matched sale-purchase transactions. NOTE. For amounts of currency and coin held as reserves, see table 1.12. 2. Beginning with the May 1990 Bulletin, this table has been revised to Components may not add to totals because of rounding. correspond with the H.4.1 statistical release. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A5 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Monthly averages9 RRReeessseeerrrvvveee ccclllaaassssssiiifffiiicccaaatttiiiooonnn 1988 1989 1990 1990 1991 Dec. Dec. Dec. Oct. Nov. Dec. Jan. Feb. Mar/ Apr. 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss22222 37,837 35,436 30,237 32,127 33,382 30,237 22,023 19,827 21,734 23,508 22222 TTTTToooootttttaaaaalllll vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh33333 28,204 29,822 31,777 31,515 31,086 31,777 33,220 33,477 30,896 30,558 33333 AAAAAppppppppppllllliiiiieeeeeddddd vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh44444,,,,, 25,909 27,374 28,884 28,925 28,663 28,884 28,969 28,724 26,853 26,793 44444 SSSSSuuuuurrrrrpppppllllluuuuusssss vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh 2,295 2,448 2,893 2,590 2,423 2,893 4,250 4,753 4,043 3,766 55555 TTTTToooootttttaaaaalllll rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss66666 63,746 62,810 59,120 61,052 62,045 59,120 50,992 48,551 48,586 50,301 66666 RRRRReeeeeqqqqquuuuuiiiiirrrrreeeeeddddd rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss 62,699 61,888 57,456 60,206 61,099 57,456 48,824 46,743 47,408 49,270 77777 EEEEExxxxxccccceeeeessssssssss rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss77777 1,047 922 1,665 847 947 1,665 2,168 1,809 1,179 1,032 88888 TTTTToooootttttaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 1,716 265 326 410 230 326 534 252 241 231 99999 SSSSSeeeeeaaaaasssssooooonnnnnaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 130 84 76 335 162 76 33 37 55 79 1111100000 EEEEExxxxxttttteeeeennnnndddddeeeeeddddd cccccrrrrreeeeedddddiiiiittttt aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss88888 1,244 20 23 18 24 23 27 34 53 86 Biweekly averages of daily figures for weeks ending 1990 1991 Dec. 26 Jan. 9 Ian. 23 Feb. 6 Feb. 20 Mar. 6 Mar. 20 Apr. 3r Apr. 17 May 1 1111111111 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss22222 28,413 26,198 21,193 18,776 20,049 20,228 22,209 21,949 24,257 23,061 1111122222 TTTTToooootttttaaaaalllll vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh*****............... 32,690 32,783 32,050 35,759 33,341 32,005 30,286 31,067 30,309 30,710 1111133333 AAAAAppppppppppllllliiiiieeeeeddddd vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh44444,,,,, 29,621 28,876 28,222 30,384 28,638 27,629 26,413 26,989 26,762 26,781 1111144444 SSSSSuuuuurrrrrpppppllllluuuuusssss vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh55555 3,069 3,908 3,828 5,375 4,703 4,376 3,873 4,078 3,547 3,929 1111155555 TTTTToooootttttaaaaalllll rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss66666 58,034 55,074 49,415 49,160 48,687 47,857 48,622 48,938 51,019 49,843 1 1 1 1 1 1 1 1 1 1 6 7 6 7 6 7 6 7 6 7 RRRRR EEEEE eeeee xxxxx qqqqq ccccc uuuuu eeeee iiiii sssss rrrrr sssss eeeee ddddd rrrrreeeee sssss rrrrreeeee eeeee sssss rrrrrvvvvv eeeee eeeee rrrrrvvvvv bbbbb eeeeesssss aaaaa lllllaaaaannnnnccccceeeeesssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss''''' iiiii 56 1 , , 1 9 1 2 3 2 51 3 , ,5 4 9 8 2 1 48,4 9 7 3 8 7 46 2, , 7 4 2 3 1 9 46 1 , , 9 7 3 5 4 3 46 1 , , 6 2 3 2 7 1 47 1 , , 6 0 1 0 6 7 47 1 , , 5 3 6 7 4 4 50,2 8 1 0 8 1 48 1 , , 6 2 4 0 2 1 1111188888 TTTTToooootttttaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 504 295 884 191 179 426 185 212 224 244 1111199999 SSSSSeeeeeaaaaasssssooooonnnnnaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 79 41 28 35 37 41 51 68 70 92 2222200000 EEEEExxxxxttttteeeeennnnndddddeeeeeddddd cccccrrrrreeeeedddddiiiiittttt aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss88888 22 22 28 30 27 50 47 62 76 103 1. These data also appear in the Board's H.3 (502) release. For address, see in- satisfy current reserve requirements. side front cover. 5. Total vault cash (line 2) less applied vault cash (line 3). 2. Excludes required clearing balances and adjustments to compensate for float 6. Reserve balances with Federal Reserve Banks (line 1) plus applied vault cash and includes other off-balance sheet "as-of" adjustments. (line 3). 3. Total "lagged" vault cash held by those depository institutions currently 7. Total reserves Oine 5) less required reserves (line 6). subject to reserve requirements. Dates refer to the maintenance periods in which 8. Extended credit consists of borrowing at the discount window under the the vault cash can be used to satisfy reserve requirements. Under contempora- terms and conditions established for the extended credit program to help neous reserve requirements, maintenance periods end 30 days after the lagged depository institutions deal with sustained liquidity pressures. Because there is computation periods in which the balances are held. not the same need to repay such borrowing promptly as there is with traditional 4. All vault cash held during the lagged computation period by "bound" short-term adjustment credit, the money market impact of extended credit is institutions (i.e., those whose required reserves exceed their vault cash) plus the similar to that of nonborrowed reserves. amount of vault cash applied during the maintenance period by "nonbound" 9. Data are prorated monthly averages of biweekly averages. institutions (i.e., those whose vault cash exceeds their required reserves) to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • July 1991 1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Banks1 Averages of daily figures, in millions of dollars 1990, week ending Monday2 1991, week ending Monday2 Maturity and source Dec. 10 Dec. 17 Dec. 24 Dec. 31 Jan. 7 Jan. 14 Jan. 21 Jan. 28 Feb. 4 Federal funds purchased, repurchase agreements, and other selected borrowing in immediately available funds From commercial banks in the United States 1 For one day or under continuing contract 88,675 83,932 80,069 74,416 82,002 78,600 74,840 74,301 2 For all other maturities 20,403 19,750 19,919 19,020 16,548 16,797 17,810 16,906 From other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies 3 For one day or under continuing contract 35,472 34,350 29,847 28,065 29,672 30,986 28,746 32,895 4 For all other maturities 21,495 20,976 20,512 21,031 20,037 20,563 21,015 2:1,157 Repurchase agreements on U.S. government and federal agency securities in immediately available funds Brokers and nonbank dealers in securities 5 For one day or under continuing contract 9,971 9,542 8,891 8,718 9,219 9,343 9,645 6 For all other maturities 20,222 18,797 16,567 17,577 18,874 19,605 21,917 20,821 All other customers 7 For one day or under continuing contract 29,936 29,794 26,219 27,064 27,549 26,103 24,749 24,779 8 For all other maturities 12,912 12,064 13,609 13,624 11,629 11,636 11,350 12,119 MEMO: Federal funds loans and resale agreements in immediately available funds in maturities of one day or under continuing contract 9 To commercial banks in the United States 46,871 44,446 43,353 43,753 49,537 41,777 40,215 44,641 10 To all other specified customers3 17,362 20,409 18,312 15,935 17,786 18,798 20,612 18,073 1. Banks with assets of $1 billion or more as of Dec. 31, 1977. Division of Applications Development and Statistical Services, Financial State- These data also appear in the Board's H.5 (507) release. For address, see inside ment Reports Section, (202) 452-3349. front cover. 3. Brokers and nonbank dealers in securities; other depository institutions; 2. Beginning with the August Bulletin data appearing are the most current foreign banks and official institutions; and United States government agencies. available. To obtain data from May 1, 1989, through April 16, 1990, contact the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Extended credit2 Adjustment credit and Federal Reserve Seasonal credit1 First 30 days of borrowing After 30 days of borrowing3 Bank 5/3 O 1 n /9 1 Eff d e a c te ti ve Pre r v at i e o us 5/3 O 1 n /9 1 Eff d e a c te ti ve Pre r v at i e o us 5/3 O 1 n /9 1 Ef d fe a c te ti ve Pre r v at i e o us Effective date Boston 5 Vl 4/30/91 5 Vl 4/30/91 6.35 5/30/91 6.35 5/16/91 New York ... 4/30/91 4/30/91 5/30/91 5/16/91 Philadelphia.. 4/30/91 4/30/91 5/30/91 5/16/91 Cleveland 5/1/91 5/1/91 5/30/91 5/16/91 Richmond 4/30/91 4/30/91 5/30/91 5/16/91 Atlanta 4/30/91 4/30/91 5/30/91 5/16/91 Chicago 4/30/91 4/30/91 5/30/91 5/16/91 St. Louis 5/2/91 5/2/91 5/30/91 5/16/91 Minneapolis.. 4/30/91 4/30/91 5/30/91 5/16/91 Kansas City.. 4/30/91 4/30/91 5/30/91 5/16/91 Dallas 4/30/91 4/30/91 5/30/91 5/16/91 San Francisco 51* 4/30/91 5Vl 4/30/91 6.35 5/30/91 6.35 5/16/91 Range of rates for adjustment credit in recent years4 Range (or F.R. Range (or F.R. Range (or F.R. Effective date A le l v l e F l) . — R. B o a f n k Effective A le l v l e F l) . — R. B o an f k Effective date A le l v l e F l) . — R. B o an f k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1977. 6 6 1981---MMaayy 5 13-14 14 11998855——MMaayy 20 7V*-8 7V* 1978—Jan. 9 6-6VS 6V* 8 14 14 24 7V* 71* 20 61* 6 Vi Nov. 7 13-14 13 May 11 61*-7 7 6 13 13 1986—Mar. 7 7-7 V* 7 12 7 7 Dec. 4 12 12 10 7 7 July 3 1-1V* 7V4 Apr. 21 6V*-7 61* 10 iv* 7V4 1982---JJuullyy ?n 11V*-12 1IV* July 11 6 6 Aug. 21 7% 73/4 ?3 11 Vi 11V* AAuugg.. 21 5V*-6 SVi Sept. 22 8 8 Aug. ? 11-1IV* 11 22 5V* 5 Vl Oct. 16 8-8V* m 3 11 11 20 8 V* m 16 101* 10V* 11998877——SSeepptt.. 4 51*-6 6 Nov. 1 8V*-91* 9 Vi 77 lO-lOVi 10 11 6 6 3 91h 9 Vi 30 10 10 Oct. 1? 91*-10 91* 11998888——AAuugg.. 9 6-6V* 6V* 1979—July 20 10 10 13 9 Vi 91* 11 61* 6V* Aug. 17 10-10V* 101* Nov. 77 9-9 Vi 9 20 10V* 10V* 76 9 9 1989—Feb. 24 6V1-I 7 Sept. 19 10V*-11 11 Dec. 14 8V*-9 9 27 1 7 21 11 11 15 81*-9 81* Oct. 8 11-12 12 17 8 Vi 81* 1990—Dec. 19 6V* 6V* 10 12 12 1984--Apr. 9 8V*-9 9 1991—Feb. 1 6-6 V* 6 1980—Feb. 15 12-13 13 n 9 9 4 6 6 19 13 13 Nov. 71 8V*-9 81* Apr. 30 5V*—6 51* May 29 12-13 13 76 m 81* May 2 51* 51* 30 12 12 Dec. 74 8 8 In effect May 31, 1991 51* 5V* June 13 11-12 11 16 11 11 July 28 10-11 10 29 10 10 Sept. 26 11 11 Nov. 17 12 12 Dec. 5 12-13 13 1. Adjustment credit is available on a short-term basis to help depository in no case will the rate charged be less than the basic discount rate plus 50 basis institutions meet temporary needs for funds that cannot be met through reason- points. The flexible rate is reestablished on the first business day of each able alternative sources. After May 19,1986, the highest rate established for loans two-week reserve maintenance period. At the discretion of the Federal Reserve to depository institutions may be charged on adjustment credit loans of unusual Bank, the time period for which the basic discount rate is applied may be size mat result from a major operating problem at the borrower's facility. shortened. Seasonal credit is available to help smaller depository institutions meet regular, 4. For earlier data, see the following publications of the Board of Governors: seasonal needs for funds that cannot be met through special industry lenders and Banking and Monetary Statistics, 1914-1941, and 1941-1970; Annual Statistical that arise from a combination of expected patterns of movement in their deposits Digest, 1970-1979. and loans. A temporary simplified seasonal program was established on Mar. 8, In 1980 and 1981, the Federal Reserve applied a surcharge to short-term 1985, and the interest rate was a fixed rate V* percent above the rate on adjustment adjustment credit borrowings by institutions with deposits of $500 million or more credit. The program was reestablished for 1986 and 1987 but was not renewed for that had borrowed in successive weeks or in more than four weeks in a calendar 1988. quarter. A 3 percent surcharge was in effect from Mar. 17, 1980 through May 7, 2. Extended credit is available to depository institutions, when similar assist- 1980. There was no surcharge until Nov. 17,1980, when a 2 percent surcharge was ance is not reasonably available from other sources, when exceptional circum- adopted; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and stances or practices involve only a particular institution or when an institution is to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective experiencing difficulties adjusting to changing market conditions over a longer Sept. 22, 1981, and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981 the period of time. formula for applying the surcharge was changed from a calendar quarter to a 3. For extended-credit loans outstanding more than 30 days, a flexible rate moving 13-week period. The surcharge was eliminated on Nov. 17, 1981. somewhat above rates on market sources of funds ordinarily will be charged, but Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • July 1991 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Percent of deposits Depository institution requirements after implementation of the Monetary Control Act TTyyppee ooff ddeeppoossiitt,, aanndd ddeeppoossiitt iinntteerrvvaall Percent of deposits Effective date Net transaction accounts3' 4 33333 1111122222/////1111188888/////9999900000 1111122222 1111122222/////1111188888/////9999900000 00000 1111122222/////2222277777/////9999900000 00000 1111122222/////2222277777/////9999900000 1. Required reserves must be held in the form of deposits with Federal Reserve three per month for the purpose of making payments to third persons or others. Banks or vault cash. Nonmember institutions may maintain reserve balances with However, MMDAs and similar accounts subject to the rules that permit no more a Federal Reserve Bank indirectly on a pass-through basis with certain approved than six preauthorized, automatic, or other transfers per month, of which no more institutions. For previous reserve requirements, see earlier editions of the Annual than three can be checks, are not transaction accounts (such accounts are savings Report or the Federal Reserve Bulletin. Under provisions of the Monetary deposits). Control Act, depository institutions include commercial banks, mutual savings 4. The Monetary Control Act of 1980 requires that the amount of transaction banks, savings and loan associations, credit unions, agencies and branches of accounts against which the 3 percent reserve requirement applies be modified foreign banks, and Edge corporations. annually by 80 percent of the percentage change in transaction accounts held by 2. The Garn-St Germain Depository Institutions Act of 1982 (Public Law all depository institutions, determined as of June 30 each year. Effective Dec. 18, 97-320) requires that $2 million of reservable liabilities of each depository 1990 for institutions reporting quarterly and Dec. 25, 1990 for institutions institution be subject to a zero percent reserve requirement. The Board is to adjust reporting weekly, the amount was increased from $40.4 million to $41.1 million. the amount of reservable liabilities subject to this zero percent reserve require- 5. The reserve requirements on nonpersonal time deposits with an original ment each year for the succeeding calendar year by 80 percent of the percentage maturity of less than 1-1/2 years were reduced from 3 percent to 1-1/2 percent on increase in the total reservable liabilities of all depository institutions, measured the maintenance period that began December 13, 1990, and to zero for the on an annual basis as of June 30. No corresponding adjustment is to be made in maintenance period that began December 27, 1990, for institutions that report the event of a decrease. On Dec. 20, 1988, the exemption was raised from $3.2 weekly. The reserve requirement on nonpersonal time deposits with an original million to $3.4 million. In determining the reserve requirements of depository maturity of 1-1/2 years or more has been zero since October 6, 1983. institutions, the exemption shall apply in the following order: (1) net NOW 6. For institutions that report quarterly, the reserves on nonpersonal time accounts (NOW accounts less allowable deductions); and (2) net other transaction deposits with an original maturity of less than 1-1/2 years were reduced from 3 accounts. The exemption applies only to accounts that would be subject to a 3 percent to zero on January 17, 1991. percent reserve requirement. 7. The reserve requirements on Euroccurrency liabilities were reduced from 3 3. Transaction accounts include all deposits on which the account holder is percent to zero in the same manner and on the same dates as were the reserves on permitted to make withdrawals by negotiable or transferable instruments, pay- nonpersonal time deposits with an original maturity of less than 1-1/2 years (see ment orders of withdrawal, and telephone and preauthorized transfers in excess of notes 5 and 6). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A9 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 1990 1991 Type of transaction 1988 1990 Sept. Oct. Nov. Dec Jan. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 2 1 G G r r o o s s s s s p a u l r e c s hases 8,2 5 2 8 3 7 1 1 4 2 , , 2 8 8 1 4 8 2 7 4 , , 2 7 9 3 1 9 631 0 93 0 3 6,658 0 2,350 0 12 0 0 1,96 0 7 4 3 R Ex ed ch em an p g t e i ons 241 2 , , 8 2 7 0 6 0 23 1 1 2 , , 2 7 1 3 1 0 24 4 1 , , 4 0 0 8 0 6 19,041 0 19,271 0 25,981 0 1 3 6 , , 0 9 0 3 0 9 1 1 9, , 7 0 4 0 7 0 21,381 0 5 6 Ot G G he r r r o o s s s s s w p s it a u h l r i e c n s h a 1 s y e e s ar 2,176 0 327 0 425 0 0 0 0 0 325 0 0 0 0 0 10 0 0 7 8 9 M R Ex e a d c t h u em r a i n t p y g t e i s o h n i s f t -2 2 4 3 , , 5 8 8 5 8 4 0 -2 2 5 8 , , 7 8 5 8 4 0 3 8 0 -2 2 7 5 , , 4 6 2 3 4 8 0 1,010 0 0 1,934 0 0 -4 3 , , 3 5 1 3 5 1 0 1,991 0 0 -1,3 9 2 8 6 9 0 ' -3 2 , , 0 2 4 9 5 2 0 '' 1 1 0 1 1 t G G o r r 5 o o s s y s s e p s a a u r l s r e c s h ases 5,4 8 8 0 5 0 1, 4 4 9 3 0 6 2 20 5 0 0 0 0 0 0 0 0 20 0 0 0 0 0 0 1 1 2 3 E M x a c t h u a ri n ty g e shift -1 2 7 2 , , 7 5 2 1 0 5 -2 2 5 3 , , 5 2 3 5 4 0 -2 2 1 5 , , 7 4 7 1 0 0 -1,010 0 -1,677 0 -3 3 , , 2 9 5 1 8 5 -1,991 0 -7 9 7 2 8 y -1 2 , , 9 5 0 4 9 5 ' 1 1 1 1 4 5 6 7 5 t G G M E o x r r a 1 o o c t 0 s s u h s s r a y i n p s t e y a g u a l e r r e s s c s h h i a ft s es -5 1 1 , , , 9 7 5 1 4 9 7 7 6 7 9 5 -2 1 , , 2 2 9 3 8 3 2 1 7 4 9 -2,1 7 1 8 8 0 6 0 9 0 -256 0 0 0 12 0 0 0 7 10 0 0 0 0 -2 3 1 9 2 0 0 7 r - 3 4 2 5 0 3 0 0 0 r r 2 2 1 1 0 1 9 8 Ov M G E G e x r r r a o o c t 1 u s h s s 0 s r a i n s p t y y g a u e e l a r e s c r s h s h i f a t s es - 1 1 , 2 3 8 7 9 8 0 5 8 -1,0 2 6 8 8 0 0 4 6 0 -1 1 , , 6 2 8 2 1 0 0 6 -4 4 0 0 0 0 0 0 -3 1 6 0 1 0 0 0 r All maturities 2 2 2 2 3 4 G G Re r r o o d s s e s s m p s p a u t l i r e o c s n h s a ses 1 2 1 8 , , , 2 5 8 0 6 6 0 2 3 1 1 1 6 3 3 , , , 6 3 2 1 3 3 7 7 0 2 7 4 5 , , , 5 4 4 9 1 0 1 4 0 631 0 0 93 0 0 3 6,983 0 0 2 3 , , 6 0 5 0 0 0 0 1,0 1 0 2 0 0 0 2,417 0 0 Matched transactions 25 Gross sales 1,168,484 1,323,480 1,369,052 120,036 127,265 116,601 125,844 130,751 127,589 26 Gross purchases 1,168,142 1,326,542 1,363,434 120,280 129,722 114,488 123,442 126,141 127,502 Repurchase agreements2 27 Gross purchases 152,613 129,518 219,632 31,996 19,844 36,457 45,684 36,337 44,688 28 Gross sales 151,497 132,688 202,551 34,932 19,844 34,105 31,022 38,462 44,809 29 Net change in U.S. government securities 15,872 -10,055 24,886 -2,060 3,390 7,222 6,608 -7,855 FEDERAL AGENCY OBLIGATIONS Outright transactions 0 0 0 30 Gross purchases 0 0 0 31 Gross sales 32 Redemptions 587 442 183 Repurchase agreements2 33 Gross purchases 57,259 38,835 41,836 7,394 5,913 2,774 2,091 4,416 3,546 34 Gross sales 56,471 40,411 40,461 8,580 5,913 2,504 1,021 3,571 4,466 35 Net change in federal agency obligations . -2,018 1,192 -1,186 -34 1,070 845 -920 36 Total net change in System Open Market Account 16,070 -12,073 26,078 -3,247 3,356 7,492 7,678 1,290 1. Sales, redemptions, and negative figures reduce holdings of the System Open 2. In July 1984 the Open Market Trading Desk discontinued accepting bankers Market Account; all other figures increase such holdings. Details may not add to acceptances in repurchase agreements. totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Nonfinancial Statistics • July 1991 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1991 1991 Mar. 27 Apr. 3 Apr. 10 Apr. 17 Apr. 24 Feb. 28 Mar. 29 Apr. 30 Consolidated condition statement ASSETS 1 Gold certificate account 11,058 11,058 11,058 11,058 11,058 11,058 11,058 11,058 2 Special drawing rights certificate account . 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 3 Coin 658 651 642 630 622 611 659 643 Loans 4 To depository institutions 172 256 246 203 217 180 244 291 5 Other 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Federal agency obligations 0 0 0 0 0 0 0 0 7 Bought outright 6,342 6,342 6,342 6,342 6,250 6,342 6,342 6,250 8 Held under repurchase agreements 0 266 0 0 0 2,186 0 0 U.S. Treasury securities Bought outright 9 Bills 114,668 113,127 111,458 114,955 111,030 111,736 114,245 116,523 10 Notes 95,307 95,907 %,707 %,707 %,707 91,407 95,457 %,707 11 Bonds 31,263 31,263 31,263 31,263 31,263 31,163 31,163 31,263 12 Total bought outright2 241,238 240,2% 239,428 242,925 239,000 234,306 240,%5 244,493 13 Held under repurchase agreements 0 4,371 0 2,072 0 14,888 0 0 14 Total U.S. Treasury securities 241,238 244,667 239,428 244,997 239,000 249,194 240,%5 244,493 15 Total loans and securities 247,752 251,531 246,015 251,541 245,467 257,901 247,551 251,035 16 Items in process of collection 4,719 5,505 6,810 6,638 5,226 5,160 9,381 9,640 17 Bank premises 896 899 899 906 906 875 8% 906 Other assets 18 Denominated in foreign currencies2 33,006 30,101 30,136 30,170 30,246 33,879 30,0% 29,816 19 All other 5,674 5,579 5,672 5,516 5,751 6,704 5,647 5,862 20 Total assets 313,781 315,341 311,250 316,478 309,293 326,206 315,305 318,978 LIABILITIES 21 Federal Reserve notes 226677,,000055 268,451 226699,,441188 226688,,776666 226677,,449900 226633,,775511 226677,,339911 226677,,444455 Deposits 22 To depository institutions 27,205 31,014 25,898 31,463 25,234 19,902 24,067 22,081 23 U.S. Treasury—General account 6,156 4,401 4,318 3,384 4,411 27,810 10,922 13,682 24 Foreign—Official accounts 299 214 214 1% 186 271 228 292 25 Other 207 222 210 225 208 183 188 276 26 Total deposits 33,867 35,850 30,640 35,267 30,038 48,165 35,405 36,330 27 Deferred credit items 4,516 5,225 5,015 5,932 4,826 4,470 6,839 8,377 28 Other liabilities and accrued dividends4 3,000 2,484 2,426 2,333 2,355 3,588 2,552 2,277 29 Total liabilities 308,388 312,010 •307,498 312,298 304,709 319,974 312,187 314,429 CAPITAL ACCOUNTS 30 Capital paid in 2,501 2,501 2,506 2,511 2,511 2,450 2,501 2,513 31 Surplus 2,423 760 1,245 1,661 1,884 2,423 751 1,808 32 Other capital accounts 468 70 0 7 189 1,359 -133 228 33 Total liabilities and capital accounts 313,781 315,341 311,250 316,478 309,293 326,206 315,305 318,978 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international accounts 241,444 240,818 235,835 239,813 237,406 255,092 245,789 241,334 Federal Reserve note statement 35 Federal Reserve notes outstanding issued to bank 311,119 311,266 311,808 312,090 312,068 306,681 311,042 312,160 36 LESS: Held by bank 44,114 42,814 42,390 43,324 44,578 42,930 43,651 44,716 37 Federal Reserve notes, net 267,605 268,451 269,418 268,766 267,490 263,751 226677,,339911 226677,,444455 Collateral held against notes net: 38 Gold certificate account 11,058 11,058 11,058 11,058 11,058 11,058 11,058 11,058 39 Special drawing rights certificate account 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 40 Other eligible assets 0 0 2,572 0 1,164 0 CI 0 41 U.S. Treasury and agency securities 245,928 247,375 245,770 247,690 245,250 242,675 246,315 246,369 42 Total collateral 267,005 268,451 269,418 268,766 267,490 263,751 267,391 267,445 1. Some of these data also appear in the Board's H.4.1 (503) release. For 3. Valued monthly at market exchange rates. address, see inside front cover. Components may not add to totals because of 4. Includes special investment account at the Federal Reserve Bank of Chicago rounding. in Treasury bills maturing within 90 days. 2. Includes securities loaned—fully guaranteed by U.S. Treasury securities 5. Includes exchange-translation account reflecting the monthly revaluation at pledged with Federal Reserve Banks—and excludes securities sold and scheduled market exchange rates of foreign-exchange commitments. to be bought back under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Banks All 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding Millions of dollars Wednesday End of month TTTyyypppeee aaannnddd mmmaaatttuuurrriiitttyyy gggrrrooouuupppiiinnngggsss 1991 1991 Mar. 13 Mar. 20 Mar. 27 Apr. 3 Apr. 10 Feb. 27 Mar. 29 Apr. 30 1 Loans—Total 122 314 173 256 246 125 173 291 2 Within 15 days 87 308 166 201 192 125 166 254 4 3 9 1 1 6 d d a a y y s s t t o o 9 1 0 y d ea a r y s 3 0 5 6 0 6 0 5 0 5 5 0 3 4 0 6 0 3 0 8 5 Acceptances—Total 0 0 0 0 0 0 0 0 6 Within 15 days 0 0 0 0 0 0 0 0 7 16 days to 90 days 0 0 0 0 0 0 0 0 8 91 days to 1 year 0 0 0 0 0 0 0 0 9 U.S. Treasury securities—Total 237,572 247,673 241,238 240,301 239,428 236,238 240,965 244,493 10 Within 15 days1 10,298 20,562 10,710 8,397 14,544 9,319 6,881 10,648 11 16 days to 90 days 60,270 56,699 58,794 59,510 53,903 57,895 62,204 59,405 12 91 days to 1 year 67,607 70,516 71,138 72,234 70,321 71,166 71,133 74,599 13 Over 1 year to 5 years 61,037 61,537 62,237 61,801 62,301 59,549 62,387 61,376 14 Over 5 years to 10 years 13,684 13,684 13,684 13,684 13,684 13,634 13,684 13,789 15 Over 10 years 24,675 24,676 24,676 24,676 24,676 24,676 24,676 24,676 16 Federal agency obligations—Total 6,342 6,934 6,342 6,342 6,342 6,342 6,342 6,250 17 Within 15 days1 75 862 275 80 126 304 275 99 18 16 days to 90 days 884 689 652 843 716 657 653 732 2 2 2 1 0 1 2 9 O 9 O O 1 v v v e e e d r r r a y 5 1 1 s 0 y y t e e y o a a e r r a 1 s r t y s o t e o a 5 r 1 y 0 e y ar e s a rs 2 1 1 , , , 4 7 0 1 2 2 3 8 8 9 7 8 2 1 1 , , , 4 7 0 1 2 2 2 8 8 9 4 8 2 1 1 , , , 3 8 0 1 9 0 2 8 3 8 4 7 2 1 1 , , , 3 8 0 1 9 1 2 8 3 3 4 8 2 1 1 , , , 4 8 0 1 1 3 5 8 8 3 9 8 2 1 1 , , , 5 6 0 1 4 0 2 8 8 8 4 7 2 1 1 , , , 3 8 0 1 9 0 2 8 3 8 6 8 2 1 1 , , , 4 7 0 1 4 6 2 8 2 3 6 8 1. Holdings under repurchase agreements are classified as maturing within 15 NOTE: Components may not sum to totals because of rounding, days in accordance witn maximum maturity of the agreements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Nonfinancial Statistics • July 1991 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1990 1991 IItteemm D 19 e 8 c 7 . D 19 e 8 c 8 . D 19 e 8 c 9 . D 19 e 9 c 0 . Sept. Oct. Nov. Dec. Jan. Feb. Mar/ Apr. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 45.81 47.60 47.73 49.10 48.26 47.94 48.24 49.10 49.47 49.61 49.57 49.40 2 Nonborrowed reserves4 ^ 45.03 45.88 47.46 48.78 47.64 47.53 48.01 48.78 48.93 49.36 49.32 49.16 3 Nonborrowed reserves plus extended credit5 45.52 47.12 47.48 48.80 47.64 47.55 48.04 48.80 48.96 49.39 49.38 49.25 4 Required reserves 44.77 46.55 46.81 47.44 47.35 47.10 47.30 47.44 47.30 47.80 48.39 48.36 5 Monetary base6 246.28 263.46 274.17 299.79 293.80 295.94 297.55 299.79 305.15 309.44 310.98 310.61 ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 Not seasonally adjusted 6 Total reserves7 47.04 49.00 49.18 50.58 48.11 47.55 48.42 50.58 50.76 48.55 48.59 50.30 7 Nonborrowed reserves ^ 46.26 47.29 48.91 50.25 47.48 47.14 48.19 50.25 50.22 48.30 48.34 50.07 8 Nonborrowed reserves plus extended credit5 46.75 48.53 48.93 50.28 47.49 47.16 48.21 50.28 50.25 48.33 48.40 50.16 9 Required reserves8 46.00 47.% 48.26 48.91 47.20 46.71 47.47 48.91 48.59 46.74 47.41 49.27 10 Monetary base9 249.93 267.46 278.30 304.04 293.07 294.43 298.44 304.04 306.03 305.74 308.19 310.86 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves11 62.14 63.75 62.81 59.12 61.45 61.05 62.05 59.12 50.99 48.55 48.59 50.30 12 Nonborrowed reserves 61.36 62.03 62.54 58.79 60.83 60.64 61.82 58.79 50.46 48.30 48.35 50.07 13 Nonborrowed reserves plus extended credit 61.85 63.27 62.56 58.82 60.83 60.66 61.84 58.82 50.48 48.33 48.40 50.16 14 Required reserves 61.09 62.70 61.89 57.46 60.54 60.21 61.10 57.46 48.82 46.74 47.41 49.27 15 Monetary base12 266.06 283.00 292.55 313.70 307.21 308.85 312.69 313.70 309.30 308.53 311.04 313.95 16 Excess reserves13 1.05 1.05 .92 1.66 .91 .85 .95 1.66 2.17 1.81 1.18 1.03 17 Borrowings from the Federal Reserve .78 1.72 .27 .33 .62 .41 .23 .33 .53 .25 .24 .23 1. Latest monthly and biweekly figures are available from the Board's H.3(502) 8. To adjust required reserves for discontinuities because of regulatory changes statistical release. Historical data and estimates of the impact on required reserves in reserve requirements, a multiplicative procedure is used to estimate what of changes in reserve requirements are available from the Monetary and Reserves required reserves would have been in past periods had current reserve require- Projections Section. Division of Monetary Affairs. Board of Governors of the ments been in effect. Break-adjusted required reserves are equal to break-adjusted Federal Reserve System, Washington, D.C. 20551. required reserves held against transactions deposits. 2. Figures reflect adjustments for discontinuities or "breaks" associated with 9. The break-adjusted monetary base equals (1) break-adjusted total reserves regulatory changes in reserve requirements. (line 6), plus (2) the (unadjusted) currency component of the money stock, plus (3) 3. Seasonally adjusted, break adjusted total reserves equal seasonally adjusted, (for all quarterly reporters on the "Report of Transaction Accounts, Other break-adjusted required reserves (line 4) plus excess reserves (line 16). Deposits and Vault Cash" and for all those weekly reporters whose vault cash 4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally exceeds their required reserves) the break-adjusted difference between current adjusted, break-adjusted total reserves (line 1) less total borrowings of depository vault cash and the amount applied to satisfy current reserve requirements. institutions from the Federal Reserve (line 17). 10. Reflects actual reserve requirements, including those on nondeposit liabil- 5. Extended credit consists of borrowing at the discount window under ities, with no adjustments to eliminate the effects of discontinuities associated the terms and conditions established for the extended credit program to help with changes in reserve requirements. depository institutions deal with sustained liquidity pressures. Because there is 11. Reserve balances with Federal Reserve Banks plus vault cash used to not the same need to repay such borrowing promptly as there is with traditional satisfy reserve requirements. short-term adjustment credit, the money market impact of extended credit is 12. The monetary base, not break-adjusted and not seasonally adjusted, similar to that of nonborrowed reserves. consists of (1) total reserves (line 11), plus (2) required clearing balances and 6. The seasonally adjusted, break-adjusted monetary base consists of (1) adjustments to compensate for float at Federal Reserve Banks, plus (3) the seasonally adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally currency component of the money stock, plus (4) (for all quarterly reporters on adjusted currency component of the money stock, plus (3) (for all quarterly the "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all reporters on the "Report of Transaction Accounts, Other Deposits and Vault those weekly reporters whose vault cash exceeds their required reserves) the Cash" and for all those weekly reporters whose vault cash exceeds their required difference between current vault cash and the amount applied to satisfy current reserves, the seasonally adjusted, break-adjusted difference between current vault reserve requirements. After the introduction of CRR, currency and vault cash cash and the amount applied to satisfy current reserve requirements. figures are measured over the computation periods ending on Mondays. 7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) 13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14). plus excess reserves (line 16). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A13 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1991" Item2 D 19 e 8 c 7 . D 19 e 8 c 8 . D 19 e 8 c 9 . D 19 e 9 c 0 . Jan. Feb. Mar. Apr. Seasonally adjusted 1 Ml 749.7 786.4 793.6 825.4 826.7 836.4 843.0 842.1 2 M2 2,910.1 3,069.9 3,223.1 3,330.0" 3,333.0 3,357.0 3,378.1 3,385.2 3 M3 3,677.4 3,919.1 4,055.2 4,114.1r 4,126.9 4,164.2 4,174.1 4,174.8 4 L 4,337.0 4,676.0 4,889.9 4,961.3" 4,979.4 5,013.8 5,019.0 n.a. 5 Debt 8,345.1 9,107.6 9,790.4 10,448.5r 10,485.1 10,537.0 10,574.2 n.a. Ml components 6 Currency 196.8 212.0 222.2 246.4 251.6 255.1 256.7 256.6 7 Travelers checks 7.0 7.5 7.4 8.4 8.4 8.2 8.1 7.9 8 Demand deposits3 286.5 286.3 278.7 276.9 272.9 276.2 277.1 275.7 9 Other checkable deposits6 259.3 280.7 285.2 293.8r 293.9 296.9 301.0 301.9 Nontransactions components 10 In M2 ... 2,160.4 2,283.5 2,429.5 2,504.6r 2,506.3 2,520.6 2,535.1 2,543.1 11 In M3 only 767.3 849.3 832.1 784. lr 793.9 807.2 796.0 789.6 Time and Savings accounts Commercial banks 12 Savings deposits 178.3 192.1 187.7 199.4 201.4 220033..22 220055..88 220088..88 13 Money market deposit accounts 356.4 350.2 353.0 378.4 377.7 383.2 388.9 393.7 14 Small time deposits 388.0 447.5 531.4 598.1 601.6 605.6 607.8 604.4 15 Large time deposits10' 1 326.6 368.0 401.9 386.1 393.9 401.1 399.9 397.6 Thrift institutions 16 Savings deposits 233.7 232.3 216.4 211.4 210.6 212.2 214.7 218.4 17 Money market deposit accounts 168.5 151.2 133.1 127.6 127.5 128.3 130.3 132.9 1 1 8 9 L Sm ar a g l e l t t i i m m e e d d e e p p o o s s i i t t s s 9 1 0h 5 1 2 6 9 2 . . 7 6 5 1 8 7 4 4 . . 3 3 6 1 1 6 4 1 . . 5 6 5 1 6 2 6 1 . . 1 0 5 1 6 1 1 8 . . 4 0 5 1 5 1 6 4 . . 5 9 5 1 4 1 9 1 . . 7 6 5 1 4 0 4 8 . . 5 8 Money market mutual funds 20 General purpose and broker-dealer 221.7 241.1 313.6 347.7 335566..33 336600..55 336655..99 336666..88 21 Institution-only 88.9 86.9 101.9 125.7 130.1 139.3 142.0 145.6 Debt components 22 Federal debt 1,957.9 2,114.2 2,268.1 2,532.8 22,,555555..99 22,,558866..66 22,,559988..66 n.a. 23 Nonfederal debt 6,387.2 6,993.4 7,522.3 7,915.7r 7,929.2 7,950.4 7,975.7 n.a. Not seasonally adjusted 24 Ml 766.2 804.2 811.9 844.3 833.2 823.4 835.0 852.8 25 M2 2,923.0 3,083.3 3,236.6 3,344.0r 3,343.3 3,347.8 3,377.3 3,398.8 26 M3 3,690.3 3,931.5 4,067.0 4,126.2r 4,133.0 4,152.3 4,173.4 4,183.9 4,352.8 4,691.8 4,907.4 4,979.6'' 4,995.3 5,004.3 5,017.2 n.a. 28 Debt 8,329.1 9,093.2 9,775.9 10,435.9" 10,474.8 10,505.7 10,530.8 n.a. Ml components 29 Currency3 199.3 214.8 225.3 249.6 249.8 252.7 255.6 256.0 30 Travelers checks 6.5 6.9 6.9 7.8 7.8 7.8 7.8 7.5 31 Demand deposits 298.6 298.9 291.5 289.9 277.7 268.1 270.1 277.6 32 Other checkable deposits6 261.8 283.5 288.2 297.0 297.9 294.9 301.6 311.8 Nontransactions components 33 In M2 2,156.8 2,279.1 2,424.7 2,499.8' 2,510.0 22,,552244..33 22,,554422..33 22,,554466..00 34 In M3 only8 767.3 848.2 830.4 782.2" 789.7 804.5 796.1 785.2 Time and Savings accounts Commercial banks 35 Savings deposits 176.8 190.6 186.4 197.7 199.9 201.5 205.8 209.5 36 Money market deposit accounts 359.0 353.2 356.5 381.6 380.6 384.7 391.1 393.9 37 Small time deposits . 387.2 446.0 529.2 596.1 602.1 606.1 607.4 604.4 38 Large time deposits 1 325.8 366.8 400.4 386.1 392.3 399.6 399.4 395.4 Thrift institutions 39 Savings deposits 231.4 229.9 214.2 209.6 209.0 210.4 214.7 219.0 40 Money market deposit accounts 168.6 151.6 133.7 128.7 128.4 128.8 131.0 133.0 41 Small time deposits9. 529.5 583.8 613.8 564.1 561.8 557.1 549.4 544.5 42 Large time deposits 163.3 175.2 162.6 121. r 117.5 114.5 111.5 108.1 Money market mutual funds 43 General purpose and broker-dealer 221.1 240.7 313.5 347.8 356.6 364.7 372.5 371.2 44 Institution-only 89.6 87.6 102.8 127.0 134.8 144.0 143.9 144.1 Repurchase agreements and Eurodollars 45 Overnight 83.2 83.4 77.3 74. r 71.7 71.1 70.5 70.5 46 Term 197.1 227.7 179.8 161.5" 160.5 160.6 156.3 152.3 Debt components 47 Federal debt 1,955.6 2,111.8 2,265.9 2,532.1 2,557.8 2,591.0 2,603.3 n.a. 48 Nonfederal debt 6,373.5 6,981.4 7,509.9 7,903.8" 7,917.1 7,914.7 7,927.5 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • July 1991 NOTES TO TABLE 1.21 1. Latest monthly and weekly figures are available from the Board's H.6 (508) Debt: Debt of domestic nonfinancial sectors consists of outstanding credit release. Historical data are available from the Money and Reserves Projection market debt of the U.S. government, state and local governments, and private Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve nonfinancial sectors. Private debt consists of corporate bonds, mortgages, con- System, Washington, D.C. 20551. sumer credit (including bank loans), other bank loans, commercial paper, bankers 2. Composition of the money stock measures and debt is as follows: acceptances, and other debt instruments. Data are derived from the Federal Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults Reserve Board's flow of funds accounts. Debt data are based on monthly of depository institutions; (2) travelers checks of nonbank issuers; (3) demand averages. deposits at all commercial banks other than those due to depository institutions, 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of the U.S. government, and foreign banks and official institutions less cash items in depository institutions. the process of collection and Federal Reserve float; and (4), other checkable 4. Outstanding amount of U.S. dollar-denominated travelers checks of nondeposits (OCD) consisting of negotiable order of withdrawal (NOW) and auto- bank issuers. Travelers checks issued by depository institutions are included in matic transfer service (ATS) accounts at depository institutions, credit union demand deposits. share draft accounts, and demand deposits at thrift institutions. 5. Demand deposits at commercial banks and foreign-related institutions other M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs) than those due to depository institutions, the U.S. government, and foreign banks issued by all depository institutions and overnight Eurodollars issued to U.S. and official institutions, less cash items in the process of collection and Federal residents by foreign branches of U.S. banks worldwide, money market deposit Reserve float. accounts (MMDAs), savings and small-denomination time deposits (time depos- 6. Consists of NOW and ATS balances at all depository institutions, credit its—including retail RPs—in amounts of less than $100,000), and balances in both union share draft balances, and demand deposits at thrift institutions. taxable and tax-exempt general purpose and broker-dealer money market mutual 7. Sum of overnight RPs and overnight Eurodollars, money market fund funds. Excludes individual retirement accounts (IRA) and Keogh balances at balances (general purpose and broker-dealer), MMDAs, and savings and small depository institutions and money market funds. Also excludes all balances held time deposits. by U.S. commercial banks, money market funds (general purpose and broker- 8. Sum of large time deposits, term RPs, term Eurodollars of U.S. residents, dealer), foreign governments and commercial banks, and the U.S. government. and money market fund balances (institution-only), less a consolidation adjust- M3: M2 plus large-denomination time deposits and term RP liabilities (in ment that represents the estimated amount of overnight RPs and Eurodollars held amounts of $100,000 or more) issued by all depository institutions, term Eurodol- by institution-only money market funds. lars held by U.S. residents at foreign branches of U.S. banks worldwide and at all 9. Small-denomination time deposits—including retail RPs—are those issued banking offices in the United Kingdom and Canada, and balances in both taxable in amounts of less than $100,000. All individual retirement accounts (IRA) and and tax-exempt, institution-only money market mutual funds. Excludes amounts Keogh accounts at commercial banks and thrifts are subtracted from small time held by depository institutions, the U.S. government, money market funds, and deposits. foreign banks and official institutions. Also subtracted is the estimated amount of 10. Large-denomination time deposits are those issued in amounts of $100,000 overnight RPs and Eurodollars held by institution-only money market mutual or more, excluding those booked at international banking facilities. funds. 11. Large-denomination time deposits at commercial banks less those held by L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term money market mutual funds, depository institutions, and foreign banks and Treasury securities, commercial paper and bankers acceptances, net of money official institutions. market mutual fund holdings of these assets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A15 1.22 BANK DEBITS AND DEPOSIT TURNOVER1 Debits are shown in billions of dollars, turnover as ratio of debits to deposits. Monthly data are at annual rates. 1990 1991 BBaannkk ggrroouupp,, oorr ttyyppee ooff ccuussttoommeerr 11998888 11998899 11999900rr Sept. Oct. Nov. Dec/ Jan/ Feb. Seasonally adjusted Demand deposits 1 All insured banks 219,795.7 256.150.4 277,916.3 267,680.2 295,490.0 294,468.6 267,479.9 279,437.8 253,096.1 2 Major New York City banks 115,475.6 129,319.9 131,784.0 126,088.7 136,082.4 140,531.5 130,154.6 138,638.1 125,118.6 3 Other banks 104,320.2 126.830.5 146,132.3 141,591.5 159,407.6 153,937.1 137,325.3 140,799.7 127,977.5 4 ATS-NOW accounts" 2,478.1 2,910.5 3,349.6 3,110.7 3,449.3 3,479.2 3,368.4 3,559.1 3,174.4 5 Savings deposits5 537.0 547.5 558.8 523.6 573.7 565.8 527.2 572.9 495.8 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 622.9 735.1 800.6 764.8 865.9 857.1 779.5 828.3 738.3 7 Major New York City banks 2,897.2 3,421.5 3,804.1 3,717.9 4,280.5 4,320.4 3,949.1 4,259.7 3,651.3 8 Other banks 333.3 408.3 467.7 447.9 515.1 494.9 442.7 461.9 414.8 9 ATS-NOW accounts* 13.2 15.2 16.5 15.1 16.8 16.8 16.2 17.0 15.1 10 Savings deposits5 2.9 3.0 2.9 2.7 2.9 2.9 2.7 2.9 2.5 DEBITS TO Not seasonally adjusted Demand deposits3 11 All insured banks 219,790.4 256,133.2 277,400.0 257,936.7 298,947.2 277,536.6 275.664.8 283,545.5 259,372.9 12 Major New York City banks 115,460.7 129,400.1 131,784.7 121,343.4 142,664.0 133,220.6 133.491.9 136,578.8 127,287.3 13 Other banks 104,329.7 126,733.0 145,615.3 136,593.3 156,283.2 144,316.0 142,172.9 146,966.7 132,085.5 14 ATS-NOW accounts4 2,477.3 2,910.7 3,342.2 3,131.6 3,462.0 3,259.5 3,430.2 3,923.1 3,237.8 15 MMDA? 2,342.7 2,677.1 2,923.8 2,775.9 3,095.5 2,805.0 2,938.6 3,106.8 2,512.7 16 Savings deposits5 536.3 546.9 557.9 513.6 616.3 505.1 530.1 589.2 494.9 DEPOSIT TURNOVER Demand deposits3 17 All insured banks 622.8 735.4 799.6 744.4 870.9 800.0 765.8 820.3 778.7 18 Major New York City banks 2,896.7 3,426.2 3,810.0 3,607.3 4,376.5 4,067.4 3,760.0 3,993.4 3,899.0 19 Other banks 333.2 408.0 466.3 436.6 503.1 459.3 438.2 471.9 439.7 20 ATS-NOW accounts4 13.2 15.2 16.4 15.4 17.1 15.8 16.2 18.4 15.3 21 MMDA® 6.6 7.9 8.0 7.5 8.3 7.4 7.8 8.2 6.6 22 Savings deposits5 2.9 2.9 2.9 2.6 3.1 2.6 2.7 3.0 2.5 1. Historical tables containing revised data for earlier periods may be obtained states and political subdivisions. from the Banking and Money Market Statistics Section, Division of Monetary 4. Accounts authorized for negotiable orders of withdrawal (NOW) and ac- Affairs, Board of Governors of the Federal Reserve System, Washington, D.C. counts authorized for automatic transfer to demand deposits (ATS). ATS data are 20551. available beginning December 1978. These data also appear on the Board's G.6 (406) release. For address, see inside 5. Excludes MMDA, ATS and NOW accounts. front cover. 6. Money market deposit accounts. 2. Annual averages of monthly figures. 3. Represents accounts of individuals, partnerships, and corporations and of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Nonfinancial Statistics • July 1991 1.23 LOANS AND SECURITIES All Commercial Banks Billions of dollars; averages of Wednesday figures 1990 1991 CCaatteeggoorryy May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Seasonally adjusted 1 Total loans and securities1 2,655.4 2,670.1 2,683.0 2,704.9 2,708.0 2,713.6 2,716.6 2,723.6 2,721.2 2,735.1 2,750.9 2,751.6 2 U.S. government securities 430.3 438.4 442.8 445.7 450.1 453.1 454.0 454.2 454.1 458.0 471.4 479.2 3 Other securities 178.2 177.5 177.3 178.8 178.8 177.8 175.9 175.6 177.7 177.6 177.6 175.7 4 Total loans and leases1 2,046.9 2,054.2 2,062.9 2,080.4 2,079.0 2,082.7 2,086.7 2,093.8 2,089.4 2,099.5 2,102.0 2,096.7 5 Commercial and industrial ..... 644.3 645.3 644.4 645.1 644.7 643.7 646.5 648.1 644.3 643.9 646.0 640.0 6 Bankers acceptances held2... 7.6 7.8 7.6 7.4 7.5 7.3 7.4 7.5 7.7 6^ 6.7 6.6 7 Other commercial and industrial 636.7 637.4 636.7 637.7 637.1 636.4 639.1 640.5 636.6 637.1 639.4 633.4 8 U.S. addressees 632.2 633.2 632.5 633.4 632.6 631.7 634.0 635.3 631.1 631.5 633.7 627.9 9 Non-U.S. addressees3 4.4 4.3 4.3 4.3 4.5 4.7 5.1 5.3 5.5 5.5 5.7' 5.5 10 Real estate 798.9 805.9 814.5 818.0 822.5 827.7 832.0 836.5 837.3 842.6 846.3 850.7 11 Individual 378.4 377.6 376.4 378.2 378.6 379.7 378.7 378.9 375.9 377.7 375.5 374.1 12 Security 35.5 35.0 38.7 44.6 41.3 40.5 39.6 40.6 43. r 43.2 38.8' 39.7 13 Nonbank financial institutions 34.1 34.4 34.7 35.0 35.2 34.8 34.6 34.7 34.2 35.3 36.1 35.3 14 Agricultural 31.0 31.1 31.3 31.5 31.8 32.2 32.5 33.0 33.5r 33.5' 34.C 33.9 15 State and political subdivisions 37.9 37.3 36.4 35.8 35.2 35.1 34.8 34.3' 32.9' 32.8' 32.5' 32.1 16 Foreign banks 8.7 7.4 7.0 7.9 8.1 9.0 8.2 7.4 6.5' 6.8r 7.5' 7.0 17 Foreign official institutions 3.3 3.2 3.2 3.2 3.3 3.2 3.2 3.2 3.0 3.1 3.2 3.0 18 Lease financing receivables 32.6 32.4 32.6 32.7 32.8 33.3 32.9 32.7 32.4 32.8 33.0 32.7 19 All other loans 42.3 44.5 43.6 48.2 45.5 43.6 43.6 44.6 46.3' 47.8' 49.1' 48.2 Not seasonally adjusted 20 Total loans and securities' 2,654.5 2,670.8 2,677.5 2,700.1 2,707.0 2,715.5 2,720.1 2,730.5 2,721.0 2,737.3 2,748.3 2,751.3 21 U.S. government securities 430.3 437.1 439.9 444.0 448.2 450.8 454.1 451.5 455.8 463.9 475.8 480.5 22 Other securities 178.0 177.5 176.4 179.1 179.0 178.0 176.6 176.3 177.9 177.3 176.9 175.1 23 Total loans and leases 2,046.2 2,056.3 2,061.1 2,077.1 2,079.8 2,086.7 2,089.3 2,102.7 2,087.3 2,096.1 2,095.7 2,095.7 24 Commercial and industrial ..... 648.3 647.7 644.6 643.5 640.9 641.2 644.5 648.0 641.1 643.0 648.3 644.7 25 Bankers acceptances held ... 7.6 8.0 7.3 7.2 7.5 7.4 7.6 7.7 7.6 7.0 6.6 6.5 26 Other commercial and industrial 640.8 639.7 637.3 636.3 633.4 633.8 636.9 640.3 633.4 636.1 641.6' 638.2 27 U.S. addressees3 ^ 636.3 635.5 632.9 631.8 628.8 629.1 631.9 635.1 628.2 630.6 636.2 632.3 28 Non-U.S. addressees 4.5 4.3 4.4 4.5 4.6 4.7 5.0 5.2 5.3 5.5 5.4 5.9 29 Real estate 798.0 806.0 814.9 819.9 824.2 830.3 834.0 837.9 837.1 839.5 842.6 848.1 30 Individual 376.6 375.6 374.1 377.4 380.4 380.6 379.8 383.8 380.1 377.1 372.8 371.5 31 Security 34.9 37.1 38.6 43.9 40.3 39.5 38.5 40.0 40.9r 44.7' 40.1' 41.2 32 Nonbank financial institutions 33.8 34.5 34.6 35.0 34.9 34.7 35.0 36.1 34.7 34.9 35.4 34.9 33 Agricultural 30.6 31.4 32.1 32.5 32.9 33.1 32.9 32.9 32.8' 32.5' 32.6' 32.8 34 State and political subdivisions 37.8 37.2 36.2 35.7 35.2 35.1 34.7 34.0 33.6' 33.0' 32.5' 32.0 35 Foreign banks 8.6 7.5 7.1 8.0 8.2 9.3 8.4 7.6 6.5r 6.7' 7.1' 6.8 36 Foreign official institutions 3.3 3.2 3.2 3.2 3.3 3.2 3.2 3.2 3.0 3.1 3.2 3.0 37 Lease financing receivables 32.5 32.2 32.4 32.6 32.8 33.3 33.1 32.8 32.8 32.9 32.9 32.7 38 All other loans 41.6 43.9 43.3 45.4 46.8 46.3 45.3 46.5 44.5' 48.6r 48.3' 48.0 1. Excludes loans to commercial banks in the United States. 3. United States includes the 50 states and the District of Columbia. 2. Includes nonfinancial commercial paper held. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions A17 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Monthly averages, billions of dollars 1990 1991 May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar/ Apr. Seasonally adjusted 1 Total nondeposit funds2 ^ — 269.0 272.3 281.1 283.8 283.0 291.8 292.4 287.7 277.2' 265.5r 264.6 263.3 2 Net balances due to related foreign offices3 — 25.8 17.2 19.1 19.0 21.5 29.9 30.1 34.6r 33.4 24.8r 30.1 30.6 3 Borrowings from other than commercial banks in United States4 243.2 255.1 262.0 264.8 261.5 262.0 262.3 253.2r 243.7 240.7 234.5 232.7 4 Domestically chartered banks 186.6 196.8 201.6 202.2 198.8 196.9 195.1 187.2 182.5 177.6 172.2 171.4 5 Foreign-related banks 56.5 58.3 60.4 62.6 62.7 65.0 67.3r 66.0 61.3 63.1 62.3 61.2 Not seasonally adjusted 6 Total nondeposit funds2 — 277.3 275.1 277.2 282.5 278.6 288.7 293.6r 282.2r 272.5 268.5r 269.8 264.0 7 Net balances due to related foreign offices3 — 28.5 17.4 16.6 18.5 21.5 29.6 30.8 37.1 33.1 24.7 29.5 28.7 8 Domestically chartered banks -1.3 -6.1 -5.8 -3.4 -4.2 -1.0 .6 -4.2 -15.3 -15.2 -6.1 -3.6 9 Foreign-related banks 29.8 23.5 22.4 21.9 25.8 30.6 30.2 41.3 48.4 40.C 35.6 32.4 10 Borrowings from other than commercial banks in United States4 248.8 257.7 260.6 264.0 257.0 259.2 262.8 245. r 239.4 243.8'' 240.3 235.3 11 Domestically chartered banks 191.6 197.7 199.1 201.7 195.6 195.0 197.6 182.9 177.9 179.8 176.6 172.2 12 Federal funds and security RP borrowings 188.3 194.6 196.2 198.1 191.6 191.7 194.8 180.1 174.7 177.1 173.4 169.4 13 Other6 3.4 3.2 2.9 3.6 4.0 3.2 2.9 2.8 3.2 2.8 3.2 2.9 14 Foreign-related banks 57.2 60.0 61.5 62.3 61.5 64.2 65.1 62.1 61.5 63.9 63.7 63.0 MEMO Gross large time deposits' 15 Seasonally adjusted 454.4 451.5 451.9 449.2 443.6 438.0 435.2 431.8 441.(y 450.6' 450.9 451.0 16 Not seasonally adjusted 454.0 451.0 450.5 450.1 445.4 440.4 437.8 431.8 439.3 449. r 450.5 448.7 U.S. Treasury demand balances at commercial banks" 17 Seasonally adjusted 19.2 20.6 15.0 32.7 26.0 22.3 25.2 24.4 25.7 33.4 33.8 21.6 18 Not seasonally adjusted 25.2 20.9 15.2 23.5 31.0 20.9 19.2 23.0 29.4 39.3 28.4 20.3 1. Commercial banks are those in the 50 states and the District of Columbia promissory note or due bill, given for the puroose of borrowing money for the with national or state charters plus agencies and branches of foreign banks, New banking business. This includes borrowings from Federal Reserve Banks and York investment companies majority owned by foreign banks, and Edge Act from foreign banks, term federal funds, loan RPs, and sales of participations in corporations owned by domestically chartered and foreign banks. pooled loans. These data also appear in the Board's G.10 (411) release. For address, see 5. Based on daily average data reported weekly by approximately 120 large inside front cover. banks and quarterly or annual data reported by other banks. 2. Includes federal funds, RPs, and other borrowing from nonbanks and net 6. Figures are partly daily averages and partly averages of Wednesday data. balances due to related foreign offices. 7. Time deposits in denominations of $100,000 or more. Estimated averages of 3. Reflects net positions of U.S. chartered banks, Edge Act corporations, and daily data. U.S. branches and agencies of foreign banks with related foreign offices plus net 8. U.S. Treasury demand deposits and Treasury tax-and-loan notes at compositions with own IBFs. mercial banks. Averages of daily data. 4. Other borrowings are borrowings through any instrument, such as a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Nonfinancial Statistics • July 1991 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series1 Billions of dollars 1990 1991 AAccccoouunntt June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. ALL COMMERCIAL BANKING INSTITUTIONS2 1 Loans and securities 2,871.6 2,878.8 2,896.8 2,887.1 2,931.3 2,925.1 2,936.9 2,908.7 2,924.9 2,910.9 2,907.1 2 Investment securities 589.8 588.3 597.2 601.7 604.9 603.3 605.6 612.8 614.0 628.3 628.5 3 U.S. government securities 422.2 421.7 429.1 434.5 438.0 437.6 439.6 447.6 449.5 463.3 465.1 4 Other 167.6 166.6 168.0 167.2 166.8 165.7 166.0 165.2 164.5 165.1 163.4 5 Trading account assets 23.7 27.7 29.3 21.4 27.4 25.0 22.0 24.1 26.9 23.5 24.9 6 Total loans 2,258.1 2,262.8 2,270.4 2,264.0 2,299.0 2,296.9 2,309.3 2,271.8 2,283.9 2,259.1 2,253.6 7 Interbank loans 202.2 204.8 200.1 191.0 207.9 207.0 204.0 193.3 185.0 171.8 160.7 8 Loans excluding interbank 2,055.9 2,057.9 2,070.3 2,073.0 2,091.2 2,089.8 2,105.3 2,078.6 2,099.0 2,087.3 2,092.9 9 Commercial and industrial 646.9 641.5 639.7 639.7 643.4 644.4 650.8 637.2 645.1 648.5 643.6 10 Real estate 807.9 816.0 820.1 825.0 831.5 833.7 838.3 836.9 840.1 842.5 849.0 11 Individual 376.8 374.8 379.4 381.2 380.8 380.5 384.7 378.6 376.4 371.5 372.0 12 All other 224.3 225.6 231.1 227.1 235.5 231.2 231.5 225.9 237.4 224.8 228.3 13 Total cash assets 219.6 210.7 207.7 213.7 220.8 216.7 217.9 199.2 204.5 206.1 201.0 14 Reserves with Federal Reserve Banks. 31.8 29.8 30.0 33.6 29.7 33.0 23.4 16.5 18.1 25.0 23.1 15 Cash in vault 28.9 28.8 30.3 29.3 29.4 32.8 32.0 30.4 29.8 28.9 29.1 16 Cash items in process of collection ... 86.2 79.6 77.5 81.1 85.4 78.4 86.0 74.7 79.9 76.9 74.3 17 Demand balances at U.S. depository institutions 27.7 27.3 27.3 27.0 28.5 28.4 29.6 28.1 27.7 27.6 26.4 18 Other cash assets 45.0 45.2 42.5 42.8 47.8 44.2 46.8 49.6 49.0 47.7 48.1 19 Other assets 207.5 205.3 220.8 226.6 230.1 226.6 245.1 249.9 259.6 263.1 260-4 20 Total assets/total liabilities and capital 3,298.6 3,294.8 3,325.3 3,327.4 3,382.2 3,368.5 3,399.9 3,357.8 3,388.9 3,380.1 3,368.5 21 Deposits 2,282.4 2,290.9 2,296.5 2,300.1 2,332.0 2,319.9 2,363.4 2,334.6 2,365.0 2,382.5 2,381.9 22 Transaction deposits 598.6 590.1 589.1 595.3 612.1 598.1 637.1 587.9 594.1 602.8 601.3 23 Savings deposits 556.4 561.3 565.6 563.5 570.5 573.1 573.3 573.9 583.5 594.1 595.4 24 Time deposits 1,127.5 1,139.5 1,141.8 1,141.3 1,149.4 1,148.8 1,152.9 1,172.8 1,187.3 1,185.6 1,185.3 25 Borrowings 572.6 562.1 579.9 570.9 591.0 570.6 548.7 529.8 515.4 492.3 494.6 26 Other liabilities 223.9 220.5 226.2 233.1 236.0 255.3 264.4 268.8 282.3 278.2 263.9 27 Residual (assets less liabilities) 219.7 221.2 222.8 223.4 223.3 222.7 223.5 224.6 226.2 227.0 228.1 MEMO 28 U.S. government securities (including trading account) 436.1 440.4 446.3 445.1 454.2 451.9 451.1 459.4 463.7 475.9 479.0 29 Other securities (including trading account) 177.4 175.6 180.2 178.0 178.1 176.4 176.5 177.5 177.2 176.0 174.5 DOMESTICALLY CHARTERED COMMERCIAL BANKS3 30 Loans and securities 2,608.3 2,614.4 2,631.8 2,620.5 2,658.4 2,645.1 2,654.2 2,628.0 2,642.3 2,635.6 2,628.9 31 Investment securities 559.2 557.3 566.1 569.0 571.5 569.8 570.5 575.3 577.4 588.6 592.3 32 U.S. government securities 407.7 406.5 414.1 417.9 420.9 420.8 421.7 426.5 429.3 440.2 445.5 33 Other 151.5 150.8 152.0 151.2 150.6 149.1 148.8 148.7 148.2 148.5 146.8 34 Trading account assets 23.7 27.7 29.3 21.4 27.4 25.0 22.0 24.1 26.9 23.5 24.9 35 Total loans 2,025.5 2,029.4 2,036.4 2,030.0 2,059.5 2,050.3 2,061.7 2,028.6 2,038.0 2,023.5 2,011.7 36 Interbank loans 153.3 153.7 153.7 146.0 164.0 157.4 160.0 151.7 150.9 148.3 134.2 37 Loans excluding interbank 1,872.2 1,875.7 1,882.6 1,884.0 1,895.5 1,892.9 1,901.7 1,876.9 1,887.0 1,875.2 1,877.5 38 Commercial and industrial 520.1 517.3 514.0 513.2 515.4 513.4 512.7 504.2 508.4 506.3 502.4 39 Real estate 769.7 776.7 779.5 784.0 789.8 791.6 796.4 794.0 797.1 799.7 804.7 40 Individual 376.8 374.8 379.4 381.2 380.8 380.5 384.7 378.6 376.4 371.5 372.0 41 All other 205.5 206.9 209.8 205.7 209.5 207.4 207.9 200.2 205.1 197.7 198.4 42 Total cash assets 193.3 184.7 181.7 187.0 189.3 187.7 188.3 166.6 172.7 177.0 171.6 43 Reserves with Federal Reserve Banks. 30.9 28.9 28.0 32.1 28.5 31.5 23.0 15.3 17.0 24.0 21.9 44 Cash in vault 28.9 28.8 30.3 29.2 29.4 32.8 32.0 30.3 29.8 28.8 29.1 45 Cash items in process of collection ... 84.2 78.1 75.9 79.0 83.6 76.4 83.9 72.9 78.2 74.9 72.6 46 Demand balances at U.S. depository institutions 25.9 25.6 25.0 25.1 26.6 26.2 27.6 26.2 25.8 25.8 24.8 47 Other cash assets 23.4 23.4 22.5 21.5 21.2 20.9 21.8 22.0 21.9 23.4 23.2 48 Other assets 141.2 139.1 145.6 152.3 153.6 155.0 167.8 166.9 171.3 167.9 161.9 49 Total assets/liabilities and capital 2,942.9 2,938.2 2,959.1 2,959.7 3,001.3 2,987.8 3,010.3 2,961.4 2,986.3 2,980.4 2,962.4 50 Deposits 2,200.0 2,209.2 2,214.9 2,220.1 2,253.8 2,243.3 2,283.5 2,236.2 2,255.2 2,266.2 2,258.8 51 Transaction deposits 588.5 580.2 578.8 584.4 601.5 587.7 626.1 577.4 583.8 592.2 591.4 52 Savings deposits 553.4 558.3 562.6 560.4 567.4 569.8 570.0 570.6 580.2 590.6 591.9 53 Time deposits 1,058.1 1,070.7 1,073.5 1,075.3 1,085.0 1,085.8 1,087.4 1,088.1 1,091.2 1,083.4 1,075.6 54 Borrowings 410.3 396.0 404.3 395.8 400.4 394.1 375.6 380.1 371.8 354.9 346.5 55 Other liabilities 116.5 115.3 120.7 124.1 127.5 131.5 131.4 124.2 136.8 136.0 132.6 56 Residual (assets less liabilities) 216.2 217.7 219.2 219.7 219.6 219.0 219.8 220.9 222.6 223.4 224.5 MEMO 57 Real estate loans, revolving 55.0 56.3 57.7 58.6 60.6 61.1 61.7 62.9 63.3 63.6 64.4 58 Real estate loans, other 714.7 720.4 721.7 725.4 729.2 730.5 734.7 731.1 733.8 736.1 740.3 1. Back data are available from the Banking and Monetary Statistics section, the last Wednesday of the month based on a weekly reporting sample of Board of Governors of the Federal Reserve System, Washington, D.C., 20551. foreign-related institutions and quarter-end condition reports. These data also appear in the Board's weekly H.8 (510) release. 2. Commercial banking institutions include insured domestically chartered Figures are partly estimated. They include all bank-premises subsidiaries and commercial banks, branches and agencies of foreign banks, Edge Act and other significant majority-owned domestic subsidiaries. Loan and securities data Agreement corporations, and New York State foreign investment corporations. for domestically chartered commercial banks are estimates for the last Wednes- 3. Insured domestically chartered commercial banks include all member banks day of the month based on a sample of weekly reporting banks and quarter-end and insured nonmember banks. condition report data. Data for other banking institutions are estimates made for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A19 1.26 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS Millions of dollars, Wednesday figures 1991 Account Feb. IT Mar. 6r Mar. 13r Mar. 2<K Mar. IT Apr. 3 Apr. 10 Apr. 17 ASSETS 1 Cash and balances due from depository institutions . 98,934 104,435 101,539 107,649 103,457 106,830 99,594 108,426 2 U.S. Treasury and government securities 187,553 192,349 190,753 191,799 189,565 195,895 194,450 195,595 3 Trading account 14,707 18,541 16,139 16,121 12,605 17,101 15,974 16,062 4 Investment account 172,846 173,807 174,614 175,678 176,959 178,793 178,476 179,532 5 Mortgage-backed securities1 82,015 82,370 82,488 83,607 83,986 84,398 84,343 85,155 6 All other maturing in 7 One year or less 18,358 18,178 18,255 17,981 18,941 19,546 19,359 19,240 8 Over one through five years 39,725 39,966 41,016 41,079 41,007 41,151 41,001 41,401 9 Over five years 32,749 33,294 32,855 33,011 33,026 33,698 33,774 33,736 10 Other securities 60,187 60,305 60,049 59,687 59,962 59,217 58,896 58,548 11 Trading account 1,348 1,412 1,267 1,267 1,553 1,353 1,221 1,163 12 Investment account 58,839 58,893 58,781 58,419 58,409 57,864 57,674 57,385 13 State and political subdivisions, by maturity ... 29,057 28,957 28,719 28,414 28,131 27,998 27,858 27,585 14 One year or less 3,707 3,711 3,699 3,659 3,606 3,781 3,738 3,685 15 Over one year 25,350 25,246 25,019 24,754 24,525 24,217 24,119 23,900 16 Other bonds, corporate stocks, and securities .. 29,782 29,936 30,063 30,006 30,278 29,867 29,817 29,800 17 Other trading account assets 10,826 11,254 10,708 9,997 9,184 10,997 9,631 9,717 18 Federal funds sold2 73,536 80,289 74,904 69,027 69,931 79,788 79,521 85,577 19 To commercial banks in the U.S 47,717 54,636 47,085 45,249 48,485 59,095 53,921 60,026 20 To nonbank brokers and dealers 21,688 22,043 24,146 20,626 17,656 17,250 21,772 21,541 21 To others3 4,132 3,610 3,673 3,153 3,791 3,443 3,828 4,010 22 Other loans and leases, gross 1,057,387 1,056,599 1,054,052 1,054,141 1,050,697 1,049,626 1,044,698 1,048,930 23 Commercial and industrial 320,569 321,049 318,755 319,910 319,493 320,471 317,550 318,819 24 Bankers' acceptances and commercial paper— 1,540 1,569 1,540 1,588 1,679 1,697 1,671 1,736 25 All other 319,029 319,480 317,216 318,322 317,814 318,774 315,879 317,083 26 U.S. addressees 317,631 318,129 315,845 317,030 316,492 317,386 314,530 315,767 27 Non-U.S. addressees 1,398 1,351 1,371 1,291 1,322 1,388 1,349 1,316 28 Real estate loans 401,594 401,952 403,005 403,146 402,611 402,667 403,349 403,757 29 Revolving, home equity 35,589 35,582 35,645 35,718 36,411 36,445 36,516 36,738 30 All other 366,006 366,370 367,360 367,428 366,201 366,222 366,833 367,019 31 To individuals for personal expenditures 194,751 193,924 193,416 192,155 191,378 190,191 190,216 190,612 32 To depository and financial institutions 48,368 48,906 50,269 49,856 48,533 49,363 47,811 46,459 33 Commercial banks in the United States 23,037 22,529 23,886 24,378 23,172 22,211 21,826 21,347 34 Banks in foreign countries 2,866 3,239 3,235 2,716 2,730 3,855 2,922 2,520 35 Nonbank depository and other financial institutions 22,465 23,137 23,148 22,762 22,632 23,297 23,063 22,592 36 For purchasing and carrying securities 15,142 13,702 12,163 13,010 12,844 11,834 11,401 12,988 37 To finance agricultural production 5,732 5,786 5,810 5,707 5,770 5,753 5,824 5,915 4 4 4 4 3 3 4 4 4 5 2 3 8 9 0 1 O O LE t t T T A L h h S o o e e S e ll r r a : f s o s a l o L U t e o t a s r o h n a s t e a e e f n e e i i n r s g s t a n s n a r l a a a n n o n g n n c e a d d d o i d n n v s p g l l e i 4 e e o n r a a l r n c i s s e t o m e e c i m c s e e r , a i e e n l v n s t a s s e e b u t r a l v b e n d e s d 3 i v o i f s f i i o c n i s a l institutions .. 1,0 1 2 2 2 3 1 6 0 4 8 7 2 5 1 3 , , , , , , , , 4 2 0 3 1 1 3 8 4 1 0 5 1 6 1 2 7 2 9 8 0 6 6 5 1,0 1 3 2 2 2 1 6 8 4 7 0 2 4 1 2 , , , , , , , , 1 3 4 2 0 3 2 1 5 7 3 7 8 0 4 0 1 6 5 2 9 9 8 0 1,0 1 2 2 3 2 1 6 4 8 0 7 1 1 1 2 , , , , , , , , 1 3 1 3 5 3 7 9 3 2 7 7 9 0 8 0 3 6 4 4 3 5 1 3 1,0 1 2 2 2 3 1 6 4 0 8 7 1 1 1 1 , , , , , , , , 1 2 2 1 7 7 2 9 4 3 9 2 0 6 3 4 1 1 4 9 5 9 0 9 1,0 1 3 2 2 2 0 6 4 8 1 7 0 8 1 0 , , , , , , , , 1 0 2 2 5 3 2 4 1 2 3 4 6 9 9 0 7 0 1 4 0 1 6 1 1,0 1 2 2 3 0 1 6 4 7 7 1 7 1 9 1 , , , , , , , , 0 6 2 0 9 9 1 8 3 7 3 0 0 2 8 1 8 9 4 9 3 7 3 2 1,0 1 2 2 3 0 1 5 4 0 7 7 2 1 9 9 , , , , , , , , 0 3 8 1 7 1 8 1 8 8 5 5 4 3 8 0 6 4 6 6 9 2 2 1 1,0 1 3 2 2 0 1 5 7 4 2 7 6 9 7 1 , , , , , , , , 9 1 1 1 8 9 0 1 2 0 9 9 2 1 7 5 4 8 8 1 4 3 1 2 46 Total assets 1,610,027 1,624,803 1,612,448 1,611,876 1,601,156 1,622,451 1,603,948 1,621,832 Footnotes appear on the following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Nonfinancial Statistics • July 1991 1.26 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued Millions of dollars, Wednesday figures 1991 Account Feb. 27r Mar. 6' Mar. 13r Mar. 2C Mar. 27r Apr. 3 Apr. 10 Apr. 17 Apr. 24 LIABILITIES 47 Deposits 1,098,876 1,107,116 1,108,887 1,100,393 1,102,446 1,120,385 1,116,138 1,122,723 1,094,449 48 Demand deposits 216,397 217,712 219,746 212,990 218,178 228,608 223,484 231,802 214,376 49 Individuals, partnerships, and corporations 173,451 176,383 176,476 171,433 173,621 183,825 181,150 184,693 170,130 50 Other holders 42,947 41,329 43,270 41,557 44,557 44,783 42,334 47,109 44,246 51 States and political subdivisions 6,808 6,081 5,826 6,721 6,943 6,620 6,652 6,926 7,121 52 U.S. government 1,628 1,513 1,310 1,513 1,662 1,795 1,975 4,106 3,387 53 Depository institutions in the United States 17,984 19,611 17,893 19,450 18,984 20,396 18,243 19,907 18,299 54 Banks in foreign countries 4,922 4,872 5,187 4,582 5,415 6,346 4,854 5,445 5,118 55 Foreign governments and official institutions 676 489 669 818 569 582 612 612 686 56 Certified and officers' checks — 10,929 8,763 12,385 8,473 10,984 9,045 9,998 10,112 9,635 57 Transaction balances other than demand deposits4 84,412 88,984 86,838 86,817 86,607 91,982 91,697 94,692 88,294 58 Nontransaction balances 798,067 800,421 802,304 800,586 797,661 799,795 800,958 7%,229 791,779 59 Individuals, partnerships, and corporations 759,990 762,602 764,439 762,717 760,034 763,102 764,171 759,419 754,989 60 Other holders 38,077 37,818 37,864 37,869 37,628 36,693 36,786 36,810 36,790 61 States and political subdivisions 31,212 30,937 31,031 31,215 31,195 30,432 30,818 30,826 30,730 62 U.S. government 879 891 892 877 870 874 871 899 900 63 Depository institutions in the United States 5,559 5,556 5,471 5,300 5,084 4,911 4,630 4,614 4,669 64 Foreign governments, official institutions, and banks 427 435 471 477 479 476 467 471 491 65 Liabilities for borrowed money5 287,568 295,984 277,883 289,061 274,978 282,743 266,222 279,977 267,922 66 Borrowings from Federal Reserve Banks 0 2,313 0 62 11 80 0 0 0 67 Treasury tax and loan notes 29,205 19,412 14,761 22,127 21,556 13,997 3,780 22,701 27,029 68 Other liabilities for borrowed money6 258,363 274,259 263,122 266,872 253,411 268,666 262,442 257,277 240,893 69 Other liabilities (including subordinated notes and debentures) 111,891 110,007 113,142 110,403 110,856 106,948 108,773 106,462 107,231 70 Total liabilities 1,498,335 1,513,107 1,499,912 1,499,858 1,488,279 1,510,075 1,491,133 1,509,162 1,469,602 71 Residual (Total assets minus total liabilities)7 111,692 111,696 112,535 112,018 112,877 112,375 112,815 112,671 113,127 MEMO 72 Total loans and leases, gross, adjusted, plus securities8 .. 1,318,736 1,323,630 1,319,494 1,315,024 1,307,683 1,314,217 1,311,448 1,316,994 1,307,454 73 Time deposits in amounts of $100,000 or more 208,756 207,268 206,634 205,140 202,474 201,740 201,890 200,745 199,099 74 Loans sold outright to affiliates, total9 1,293 1,271 1,302 1,233 1,241 1,180 1,184 1,197 1,1% 75 Commercial and industrial 753 731 760 695 692 678 682 694 664 76 Other 539 540 542 538 550 502 502 503 532 77 Foreign branch credit extended to U.S. residents10 26,036 25,939 26,055 26,241 25,981 25,195 25,311 25,242 24,745 78 Net due to related institutions abroad -7,036 -6,038 -2,985 -5,194 -4,161 -8,749 -4,273 -4,509 1,707 1. Includes certificates of participation, issued or guaranteed by agencies of the the United States. U.S. government, in pools of residential mortgages. 9. Affiliates include a bank's own foreign branches, nonconsolidated nonbank 2. Includes securities purchased under agreements to resell. affiliates of the bank, the bank's holding company (if not a bank), and noncon- 3. Includes allocated transfer risk reserve. solidated nonbank subsidiaries of the holding company. 4. Includes NOW, ATS, and telephone and pre-authorized transfer savings 10. Credit extended by foreign branches of domestically chattered weekly deposits. reporting banks to nonbank U.S. residents. Consists mainly of commercial and 5. Includes borrowings only from other than directly related institutions. industrial loans, but includes an unknown amount of credit extended to other than 6. Includes federal hinds purchased and securities sold under agreements to nonfinancial businesses. repurchase. NOTE. Data that formerly appeared on table 1.28 Asset and Liabilities of Large 7. This balancing item is not intended as a measure of equity capital for use in Weekly Reporting Commercial Banks in New York City may be obtained from the capital adequacy analysis. Board's H.4.2 (504) statistical release. For address see inside front cover. 8. Excludes loans to and federal funds transactions with commercial banks in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A21 1.30 LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS Assets and Liabilities Millions of dollars, Wednesday figures 1991 Account Feb. 27 Mar. 6 Mar. 13 Mar. 20 Mar. 27' Apr. 3 Apr. 10 Apr. 17 Apr. 24 1 Cash i n a s n t d it u b t a io la n n s ces due from depository 17,845r 17,588' 17,092' 16,021' 15,505 15,516 15,741 16,708 15,605 2 U.S. Treasury and government agency securities 13,082 14,426 14,600 16,126 14,940 14,295 13,457 12,504 12,750 3 Other securities. 7,732' 7,723' 7,788' 7,770' 7,819 7,823 7,791 7,585 7,617 4 Federal funds sold1 9,696 8,841 8,686 10,589 5,153 9,449 8,320 9,844 8,484 5 7 8 6 Ot T T C h o o e o r m c o l o t m o h m a e e n m r r s c s e 2 i r a a c n l i d a a l n l b d e a a n i s n e k d s s , u i s g n t r r t o i h a s e l s United States .. 1 8 3 3 0 5 6 , , , , 9 7 0 6 5 4 9 8 3 3 9 8 ' ' 1 8 3 3 4 1 7 , , , , 8 9 5 0 8 5 2 5 8 3 3 3 ' ' 1 8 3 2 6 1 8 , , , , 6 0 9 2 8 0 6 4 2 4 4 9 ' ' 1 8 3 4 2 5 8 , , , , 6 9 3 5 3 5 5 1 0 9 1 5 ' ' 1 8 3 3 3 6 1 , , , , 2 4 8 6 4 5 9 9 9 4 8 9 1 8 3 2 5 4 6 , , , , 8 2 1 1 8 9 5 5 1 0 9 4 1 8 3 2 3 4 5 , , , , 0 3 9 0 6 4 7 5 7 5 6 7 1 8 3 4 2 4 5 , , , , 9 4 9 6 0 6 4 2 3 1 1 2 1 8 3 2 3 5 5 , , , , 3 4 1 6 0 3 7 7 7 0 7 1 9 Bankers acceptances and commercial paper 2,111 2,168 2,143 1,981 2,019 2,266 2,085 1,871 1,763 1 1 1 1 1 1 1 1 1 4 0 1 2 3 5 6 7 8 T L F o o o A B N C r a f l a o n o p i l N U n n s m n u o a k o . b r s m n S t s c n a e h c . h - e n c i e i U a n a a r k u r c l s d r . f i i e S d f i a o n i n d . r l n g r e s e a a b b t s i n a i d a s y g t n c d e n u n i d e r r a k t e e i s c l s o c a s o a n l i s i u n n r s e e n r s e y s t t t s h i r t i t a i n e u e t g e s t U i o s n e n i c s t u ed ri ti S e t s a te . s .. . 7 7 2 2 1 7 2 6 5 9 1 4 1 1 , , , , , , , , , 9 1 5 4 7 7 0 5 6 7 8 3 1 4 5 1 5 6 7 9 4 5 5 4 6 3 2 r ' ' ' ' ' 7 7 3 2 1 2 9 6 6 0 0 3 1 1 , , , , , , , , , 3 8 4 0 1 0 7 6 2 6 5 9 5 5 6 4 6 8 8 8 3 5 8 2 7 ( 6 r ' ' ' ' ' 7 7 2 3 1 2 6 9 7 1 0 3 1 1 , , , , , , , , , 4 8 3 1 1 0 3 7 6 9 4 0 2 7 1 9 6 9 8 4 5 2 1 9 7 2 5 ' ' ' ' ' ' 8 7 3 2 1 2 0 7 5 0 0 2 1 1 , , , , , , , , , 3 9 3 9 3 7 7 7 % 9 8 9 7 7 0 1 4 5 1 5 0 2 1 8 7 1 ' ' ' ' ' ' 8 7 2 1 1 8 2 1 9 5 1 8 1 1 , , , , , , , , , 7 4 9 2 5 7 9 7 4 3 9 3 2 5 1 0 7 2 1 9 4 9 3 5 2 0 5 8 7 3 1 1 0 8 2 5 0 1 8 1 1 , , , , , , , , , 6 1 4 0 8 3 9 7 0 1 8 3 1 0 5 8 4 3 5 0 5 4 6 0 4 0 8 7 7 3 1 1 7 5 9 0 2 1 1 8 1 , , , , , , , , , 6 9 9 3 3 0 0 4 4 1 1 3 6 8 4 2 1 9 5 2 9 7 2 1 1 3 6 7 8 3 1 1 8 2 0 0 5 0 8 1 1 , , , , , , , , , 2 3 2 5 6 7 3 1 8 0 8 9 9 8 8 6 8 9 4 6 9 0 9 9 8 3 0 8 7 3 1 1 8 0 2 0 5 8 1 1 1 , , , , , , , , , 4 6 2 0 5 6 2 2 8 3 6 4 3 8 8 1 1 8 5 7 7 1 1 3 3 4 9 19 To foreign governments and official institutions 290 212 211 192 259 188 214 220 225 2 2 0 1 Ot A he ll r o a t s h s e e r t s (claims on nonrelated parties) . 31 3 , , 2 1 9 8 1 4 ' 30 3 , , 5 1 7 2 7 6 ' 3 2 0, , 6 9 2 9 6 7 ' 3 3 0, , 0 2 9 1 0 4 ' 29 3 , , 5 0 5 6 1 2 29 3 , ,0 3 9 3 4 3 29 2 , , 4 9 7 7 4 5 29 3 , , 0 0 9 9 3 0 29 3 , , 3 0 2 7 1 1 22 Total assets3 240,767 241,846 243,417 242,544 238,439 246,216 240,704 244,478 240,669 23 Depo th si a t n s o d r i r c e r c e tl d y i t r b el a a l t a e n d c e i s n s d ti u t e u t t i o o n o s t her 73,281 72,822 75,688 76,238 77,874 77,392 78,356 80,698 82,268 24 Demand deposits4 4,012' 3,997 4,466 4,517 4,051 4,173 4,166 4,137 25 Individuals, partnerships, and corporations 2,455' 2,519' 2,5%' 2,7% 2,752 2,590 2,495 2,647 2,649 2 2 7 6 No O n t t h ra e n r saction accounts 69 1 , , 2 55 6 8 9 ' 68 1 , , 9 32 8 0 3 ' 71 1 , , 6 4 9 0 1 0 ' 71 1 , , 7 6 7 7 2 0 73 1 , , 3 7 5 6 7 5 73 1 , , 3 4 4 6 1 0 74 1 , , 1 6 8 7 3 8 76 1 , , 5 5 3 1 2 9 78 1 , , 1 4 3 8 1 8 28 Individuals, partnerships, and corporations 52,494' 51,862' 53,804 54,050 54,312 54,394 54,804 55,684 56,812 29 Other 16,774 17,121 17,887 17,722 19,046 18,947 19,380 20,848 21,319 30 Borrowings from other than directly related institutions 90,136 94,049 94,790 90,377 85,213 97,663 95,427 93,253 90,610 31 Federal funds purchased3 36,641 40,023 40,208 36,746 34,470 48,371 44,888 46,813 41,999 3 3 3 2 3 4 Ot F F h r r e o o r m m l U i a o c n b o t i i h t m l e i e t d m i r e s S e s r t f c a o i t a r e l s b b o a rr n o k w s e i d n t m he o ney 2 5 1 3 1 4 , , , 4 6 9 9 6 7 5 7 4 2 5 1 4 3 6 , , , 0 3 6 2 7 4 6 7 5 2 5 1 4 2 7 , , , 5 2 9 8 3 7 2 7 1 2 5 1 3 3 3 , , , 6 0 7 3 2 2 1 6 0 5 1 1 0 5 9 , , , 7 2 1 4 7 9 3 2 8 2 4 2 9 4 3 , , , 2 5 8 9 1 5 2 6 5 2 2 5 0 0 4 , , , 0 5 8 1 3 7 8 9 0 2 4 2 6 5 1 , , , 4 5 3 3 0 0 9 7 6 4 2 1 8 7 4 , , , 6 7 2 1 7 2 1 8 1 3 3 3 6 7 5 Ot T T h o o er o c l o U t i h a m n e b i m r i t s l e i e t d i r e c s S i a t t l a o t b e n a s o n n k r s e l i a n t e t d h e p arties 3 2 3 1 0 1 , , , 0 6 8 8 9 0 4 1 5 ' ' 2 3 29 1 2 , , , 4 0 9 3 8 3 2 7 9 ' ' 2 2 3 9 1 2 , , , 7 8 6% 7 0 4 8 ' ' 2 2 3 9 1 2 , , , 4 6 0 0 1 1 7 5 6 ' ' 2 3 1 8 1 9 , , , 7 0 6 9 5 9 0 0 3 2 2 2 8 0 9 , , , 3 0 2 7 5 3 4 8 4 2 3 1 8 1 9 , , , 1 1 3 3 6 7 3 6 2 2 2 1 8 7 8 , , , 1 8 5 3 6 7 4 9 0 2 2 1 8 9 9 , , , 4 5 0 5 2 9 2 0 1 38 Total liabilities6 240,767 241,846 243,417 242,544 238,439 246,216 240,704 244,478 240,669 4 3 0 9 T N M o e E t t M a d l O u l o e a t n o s r ( e g l r a o te s d s) i a n n s d ti t s u e t c io u n r s it i a e b s ro ad ad ju sted7 . 1 2 4 2 9 , , 8 0 3 6 2 8 ' 15 19 1 , , 9 0 0 8 6 8 ' 15 16 3 , , 8 4 6 4 7 3 ' 1 2 5 3 5 , , 0 3 9 7 1 6 ' 15 1 1 7 , , 4 9 4 8 1 8 15 9 1 , , 1 0 4 8 1 2 14 7 9 , , 9 6 2 3 5 6 14 9 9 , , 2 8 7 6 0 3 15 8 0 , , 1 0 1 0 9 2 1. Includes securities purchased under agreements to resell. 5. Includes securities sold under agreements to repurchase. 2. Includes transactions with nonbank brokers and dealers in securities. 6. Includes net due to related institutions abroad for U.S. branches and 3. Includes net due from related institutions abroad for U.S. branches and agencies of foreign banks having a net due to position. agencies of foreign banks having a net due from position. 7. Excludes loans to and federal funds transactions with commercial banks in 4. Includes other transaction deposits. the U.S. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • July 1991 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period 1990 1991 T 1986 1987 1988 1989 1990 Dec. Dec. Dec. Dec. Dec. Oct. Nov. Dec. Jan. Feb. Mar. Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 331,316r 358,997r 458,464r 530,123' 566,688r 561,148r 564,482r 566,688' 569,378' 561,597' 566,069 Financial companies1 Dealer-placed paper* 2 Total 101,707 102,742 159,777 186,343 218,953 205,673 221111,,998866 221188,,995533 221166,,114488 221177,,881122 222244,,886655 3 Bank-related (not seasonally adjusted)3 2,265 1,428 1,248 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Directly placed paper* 4 Total 151,897 174,332 194,931 212,640 201,862 205,420 220044,,119911 220011,,886622 220022,,999977 119977,,999900 119900,,662200 5 Bank-related (not seasonally adjusted)3 40,860 43,173 43,155 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 6 Nonfinancial companies5 77,712 81,923 103,756 131,140 145,873 150,055 148,305 145,873 150,233 145,795 150,584 Bankers dollar acceptances (not seasonally adjusted)6 V 7 Total 64,974 70,565 66,631 62,972 54,771 52,093 53,968 54,771 56,498 52,831 48,795 Holder 8 Accepting banks 13,423 10,943 9,086 9,433 9,017 9,189 8,751 9,017 10,029 10,240 9,237 9 Own bills 11,707 9,464 8,022 8,510 7,930 7,868 7,535 7,930 8,539 8,391 7,569 10 Bills bought 1,716 1,479 1,064 924 1,087 1,321 1,217 11,,008877 11,,449900 11,,884499 11,,666688 Federal Reserve Banks 11 Own account 0 0 0 0 0 0 0 0 0 0 0 12 Foreign correspondents 1,317 965 1,493 1,066 918 1,145 880 918 927 892 872 13 Others 50,234 58,658 56,052 52,473 44,836 41,760 44,337 44,836 45,542 41,699 38,686 Basis 14 Imports into United States 14,670 16,483 14,984 15,651 13,096 12,408 12,758 13,096 14,284 13,799 12,509 15 Exports from United States 12,960 15,227 14,410 13,683 12,703 13,238 13,865 12,703 12,870 12,082 11,500 16 All other 37,344 38,855 37,237 33,638 28,973' 26,447 27,345 28,973' 29,344 26,950 24,786 1. Institutions engaged primarily in activities such as, but not limited to, 5. Includes public utilities and firms engaged primarily in such activities as commercial savings, and mortgage banking; sales, personal, and mortgage financ- communications, construction, manufacturing, mining, wholesale and retail trade, ing; factoring, finance leasing, and other business lending; insurance underwrit- transportation, and services. ing; and other investment activities. 6. Beginning January 1988, the number of respondents in the bankers accep- 2. Includes all financial company paper sold by dealers in the open market. tance survey were reduced from 155 to 111 institutions—those with $100 million 3. Beginning January 1989, bank-related series have been discontinued. or more in total acceptances. The panel is revised every January and currently has 4. As reported by financial companies that place their paper directly with about 100 respondents. The current reporting group accounts for over 90 percent investors. of total acceptances activity. 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per year Date of change Rate Period Av r e a r t a e ge Period Av r e a r t a e ge Period 1988— Jan. 4 8.75 9.32 1989—Jan. ... 10.50 1990—Jan. ... Feb. 2 8.50 1989 10.87 Feb. .. 10.93 Feb. .. May 11 9.00 1990 10.01 Mar. .. 11.50 Mar. .. July 14 9.50 Apr. .. 11.50 Apr. .. Aug. 11 10.00 1988— Jan. 8.75 May ... 11.50 May ... Nov. 28 10.50 Feb. 8.51 June .. 11.07 June .. Mar. 8.50 July ... 10.98 July ... 1989—Feb. 10 11.00 Apr. 8.50 Aug. .. 10.50 Aug. .. 24 11.50 May 8.84 Sept. .. 10.50 Sept. .. June 5 11.00 June 9.00 Oct. ... 10.50 Oct. ... July 31 10.50 July 9.29 Nov. .. 10.50 Nov. .. Aug. 9.84 Dec. .. 10.50 Dec. 1990— Jan. 8 10.00 Sept. 10.00 Oct. 10.00 1991—Jan. . 1991— Jan. 2 9.50 Nov. 10.05 Feb. Feb. 4 9.00 Dec. 10.50 Mar. May 1 8.50 Apr. May . NOTE. These data also appear in the Board's H. 15 (519) and G. 13 (415) releases. For address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.35 INTEREST RATES Money and Capital Markets Averages, percent per year; weekly, monthly and annual figures are averages of business day data unless otherwise noted. 1991 1991, week ending IInnssttrruummeenntt 11998888 11998899 11999900 Jan. Feb. Mar. Apr. Mar. 29 Apr. 5 Apr. 12 Apr. 19 Apr. 26 MONEY MARKET RATES 1 Federal funds1,2,3 7.57 9.21 8.10 6.91 6.25 6.12 5.91 6.10 6.00 5.90 5.69 5.92 2 Discount window borrowing ' 6.20 6.93 6.98 6.50 6.00 6.00 5.98 6.00 6.00 6.00 6.00 6.00 Commercial paper3' 3 7.58 9.11 8.15 7.12 6.53 6.48 6.08 6.36 66..2255 55..9999 66..0033 66..0077 4 3-month 7.66 8.99 8.06 7.10 6.49 6.41 6.07 6.29 6.20 5.99 6.02 6.10 5 6-month 7.68 8.80 7.95 7.02 6.41 6.36 6.07 6.27 6.17 5.99 6.04 6.12 Finance paper, directly placed ' • 6 7.44 8.99 8.00 6.95 6.31 6.31 55..9955 66..1177 66..1111 55..8866 55..9900 55..9966 7 7.38 8.72 7.87 6.92 6.38 6.28 5.94 6.16 6.08 5.86 5.88 5.97 8 6-month 7.14 8.16 7.53 6.59 6.14 6.20 5.91 6.14 6.05 5.84 5.86 5.91 Bankers acceptances3'4'7 9 7.56 8.87 7.93 6.96 6.36 6.24 5.92 6.14 66..0022 55..8888 55..8899 55..9922 10 6-month 7.60 8.67 7.80 6.84 6.22 6.21 5.92 6.13 6.01 5.89 5.90 5.94 Certificates of deposit, secondary market3,8 11 7.59 9.11 8.15 7.10 6.45 6.47 6.03 6.30 6.18 5.98 55..9977 66..0044 17 7.73 9.09 8.15 7.17 6.52 6.45 6.06 6.31 6.18 6.00 6.00 6.08 N 7.91 9.08 8.17 7.17 6.51 6.50 6.16 6.39 6.26 6.09 6.13 6.21 14 Eurodollar deposits, 3-month3' 7.85 9.16 8.16 7.23 6.60 6.44 6.11 6.35 6.25 6.13 6.01 6.13 U.S. Treasury bills Secondary market3,4 15 6.67 8.11 7.50 6.22 5.94 5.91 5.65 5.82 55..7755 55..5599 55..6633 55..6666 16 6.91 8.03 7.46 6.28 5.93 5.92 5.71 5.83 5.77 5.67 5.70 5.73 17 1-year 7.13 7.92 7.35 6.25 5.91 6.00 5.85 5.94 5.87 5.84 5.87 5.86 Auction average3'412 18 6.68 8.12 7.51 6.30 5.95 5.91 5.67 5.86 55..8800 55..6600 55..5577 55..6699 19 6-month 6.92 8.04 7.47 6.34 5.93 5.91 5.73 5.84 5.79 5.68 5.67 5.79 20 1-year 7.17 7.91 7.36 6.22 5.85 6.06 5.88 n.a. n.a. 5.88 n.a. n.a. CAPITAL MARKET RATES U.S. Treasury notes and bonds Constant maturities13 21 1-year 7.65 8.53 7.89 6.64 6.27 6.40 6.24 6.34 6.26 6.22 6.26 6.25 22 2-year 8.10 8.57 8.16 7.13 6.87 7.10 6.95 7.10 6.97 6.94 6.95 6.98 23 3-year 8.26 8.55 8.26 7.38 7.08 7.35 7.23 7.36 7.25 7.24 7.21 7.25 24 5-year 8.47 8.50 8.37 7.70 7.47 7.77 7.70 7.79 7.69 7.69 7.70 7.74 25 7-year 8.71 8.52 8.52 7.97 7.73 8.00 7.92 8.01 7.92 7.92 7.89 7.96 26 10-year 8.85 8.49 8.55 8.09 7.85 8.11 8.04 8.10 8.03 8.04 8.00 8.09 27 30-year 88..9966 88..4455 88..6611 8.27 8.03 8.29 8.21 8.28 8.22 8.21 8.16 8.25 Composite' 28 Over 10 years (long-term) 88..9988 88..5588 88..7744 8.33 8.12 8.38 8.29 8.37 8.30 8.29 8.23 8.32 State and local notes and bonds Moody's series15 29 Aaa 7.36 7.00 6.96 6.57 6.41 6.76 n.a. 6.97 6.89 6.73 6.61 6.57 30 Baa 7.83 7.40 7.29 7.17 7.03 7.29 n.a. 7.40 7.30 7.21 7.13 7.09 31 Bond Buyer series10 77..6688 77..2233 77..2277 7.08 6.91 7.10 7.02 7.14 7.06 7.02 6.98 7.01 Corporate bonds Seasoned issues1 32 All industries 10.18 9.66 9.77 9.62 9.36 9.43 9.33 9.43 9.36 9.33 9.29 9.34 33 Aaa 9.71 9.26 9.32 9.04 8.83 8.93 8.86 8.92 8.86 8.87 8.81 8.89 34 Aa 9.94 9.46 9.56 9.37 9.16 9.21 9.12 9.23 9.16 9.11 9.09 9.11 35 A 10.24 9.74 9.82 9.61 9.38 9.50 9.39 9.49 9.43 9.39 9.33 9.41 36 Baa •. 10.83 10.18 10.36 10.45 10.07 10.09 9.94 10.06 9.98 9.96 9.93 9.93 37 A-rated, recently offered utility bonds10 .. 1100..2200 9.79 10.01 9.83 9.54 9.58 9.46 9.49 9.41 9.41 9.49 9.50 MEMO: Dividend/price ratio 38 Preferred stocks 9.23 9.05 n.a. 8.71 8.46 8.56 8.43 8.58 8.41 8.45 8.47 8.38 39 Common stocks 3.64 3.45 n.a. 3.82 3.35 3.26 3.19 3.25 3.22 3.27 3.11 3.17 1. The daily effective federal funds rate is a weighted average of rates on 13. Yields on actively traded issues adjusted to constant maturities. Source: trades through N.Y. brokers. U.S. Treasury. 2. Weekly figures are averages of 7 calendar days ending on Wednesday of the 14. Unweighted average of rates on all outstanding bonds neither due nor current week; monthly figures include each calendar day in the month. callable in less than 10 years, including one very low yielding "flower"bond. 3. Annualized using a 360-day year or bank interest. 15. General obligation based on Thursday figures; Moody's Investors Service. 4. Quoted on a discount basis. 16. General obligations only, with 20 years to maturity, issued by 20 state and 5. An average of offering rates on commercial paper placed by several leading local governmental units of mixed quality. Based on figures for Thursday. dealers for firms whose bond rating is AA or the equivalent. 17. Daily figures from Moody's Investors Service. Based on yields to maturity 6. An average of offering rates on paper directly placed by finance companies. on selected long-term bonds. 7. Representative closing yields for acceptances of the highest rated money 18. Compilation of the Federal Reserve. This series is an estimate of the yield center banks. on recently-offered, A-rated utility bonds with a 30-year maturity and 5 years of 8. An average of dealer offering rates on nationally traded certificates of call protection. Weekly data are based on Friday quotations. deposit. 19. Standard and Poor's corporate series. Preferred stock ratio based on a 9. Bid rates for Eurodollar deposits at 11 a.m. London time. sample often issues: four public utilities, four industrials, one financial, and one 10. One of several base rates used by banks to price short-term business loans. transportation. Common stock ratios on the 500 stocks in the price index. 11. Rate for the Federal Reserve Bank of New York. NOTE. These data also appear in the Board's H.15 (519) and G.13 (415) releases. 12. Auction date for daily data; weekly and monthly averages computed on an For address, see inside front cover. issue-date basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • July 1991 1.36 STOCK MARKET Selected Statistics 1990 1991 IInnddiiccaattoorr 11998888 11998899 11999900 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 149.96" 180.13 183.48 181.45 173.22 168.05 172.21 179.57 177.95 197.75 203.56 207.71 2 Industrial 180.83 228.04 225.81 226.73 216.81 208.58 212.81 221.86 220.69 246.74 255.36 260.16 3 Transportation 134.07" 174.90 158.64 147.41 136.95 131.99 132.% 141.31 145.89 166.06 166.26 166.90 4 Utility 72.22 94.33 90.61 85.81 83.30 87.27 89.69 91.56 88.59 92.08 92.29 92.92 5 Finance 127.41 162.01 133.23 128.14 118.59 108.01 113.76 122.18 121.39 141.03 145.41 152.64 6 Standard & Poor's Corporation (1941-43 = 10)1 265.86" 323.05 334.63 330.75 315.41 307.12 315.29 328.75 325.49 362.26 372.28 379.68 7 American Stock Exchange (Aug. 31, 1973 = 50? 295.06" 356.67 338.36 333.49 318.53 296.67 294.88 305.54 304.08 338.11 353.98 365.02 Volume of trading (thousands of shares) 8 New York Stock Exchange 161,509" 165,568 156,842 174,446 142,054 159,590 149,916 155,836 166,323 226,635 196,343 182,510 9 American Stock Exchange 9,955 13,124 13,155 15,881 11,668 11,294 10,368 11,620 10,870 16,649 15,326 13,140 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers3 32,740 34,320 28,210 30,350 29,640 28,650 27,820 28,210 27,390 28,860 29,660" 30,020 Free credit balances at brokers4 11 Margin-account5 5,660 7,040 8,050 7,140 7,285 7,245 7,300 8,050 7,435 7,190 7,320 6,975 12 Cash-account 16,595 18,505 19,285 16,745 16,185 15,820 17,025 19,285 18,825 19,435 19,555 17,830 Margin requirements (percent of market value and effective date)6 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 13 Margin stocks 70 80 65 55 65 50 14 Convertible bonds 50 60 50 50 50 50 15 Short sales 70 80 65 55 65 50 1. Effective July 1976, includes a new financial group, banks and insurance "margin securities" (as defined in the regulations) when such credit is collatercompanies. With this change the index includes 400 industrial stocks (formerly alized by securities. Margin requirements on securities other than options are the 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 difference between the market value (100 percent) and the maximum loan value of financial. collateral as prescribed by the Board. Regulation T was adopted effective Oct. 15, 2. Beginning July 5, 1983, the American Stock Exchange rebased its index 1934; Regulation U, effective May 1, 1936; Regulation G, effective Mar. 11, 1968; effectively cutting previous readings in half. and Regulation X, effective Nov. 1, 1971. 3. Beginning July 1983, under the revised Regulation T, margin credit at On Jan. 1, 1977, the Board of Governors for the first time established in broker-dealers includes credit extended against stocks, convertible bonds, stocks Regulation T the initial margin required for writing options on securities, setting acquired through exercise of subscription rights, corporate bonds, and govern- it at 30 percent of the current market-value of the stock underlying the option. On ment securities. Separate reporting of data for margin stocks, convertible bonds, Sept. 30,1985, the Board changed the required initial margin, allowing it to be the and subscription issues was discontinued in April 1984. same as the option maintenance margin required by the appropriate exchange or 4. Free credit balances are in accounts with no unfulfilled commitments to the self-regulatory organization; such maintenance margin rules must be approved by brokers and are subject to withdrawal by customers on demand. the Securities and Exchange Commission. Effective Jan. 31, 1986, the SEC 5. New series beginning June 1984. approved new maintenance margin rules, permitting margins to be the price of the 6. These regulations, adopted by the Board of Governors pursuant to the option plus 15 percent of the market value of the stock underlying the option. Securities Exchange Act of 1934, limit the amount of credit to purchase and carry Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1990 1991 AAccccoouunntt 11998888 11998899 May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. SAIF-insured institutions 1 Assets 1,350,500 1,249,055 1,197,787 1,174,615 1,162,559 1,157,160 1,125,652 1,115,311 1,107,499 1,083,673 1,064,986 1,053,675 2 Mortgages 764,513 733,729 708,550 691,239 689,079 684,967 665,891 662,304 653,471 633,634 624,852 619,799 3 Mortgage-backed securities 214,587 170,532 165,741 159,173 158,146 156,398 154,197 153,469 155,616 115555,,330088 115511,,551155 114499,,443333 4 Contra-assets to mortgage assets . 37,950 25,457 22,044 20,337 19,552 19,323 18,788 17,131 17,038 16,910 1155,,115511 1144,,664400 5 Commercial loans 33,889 32,150 30,351 28,753 28,483 27,868 26,761 26,052 25,262 24,129 23,670 23,198 6 Consumer loans 61,922 58,685 55,659 55,171 54,667 53,387 51,874 49,370 48,595 47,224 46,701 46,172 7 Contra-assets to nonmortgage loans2 . 3,056 3,592 1,771 1,980 1,978 2,022 1,981 1,753 1,675 11,,889966 11,,556666 11,,880033 8 Cash and investment securities 186,986 166,053 152,391 155,674 150,399 153,061 147,959 145,286 146,004 114466,,554433 114400,,446655 113388,,881177 9 Other3 129,610 116,955 108,910 106,922 103,314 102,825 99,739 97,713 97,263 95,641 94,600 92,699 10 Liabilities and net worth . 1,350,500 1,249,055 1,197,787 1,174,615 1,162,559 1,157,160 1,125,652 1,115,311 1,107,499 1,083,673 1,064,986 1,053,675 11 Savings capital 971,700 945,656 902,653 890,497 885,286 878,736 857,688 851,802 846,816 835,494 823,532 816,525 299,400 252,230 241,943 230,169 222,442 221,872 213,562 206,769 202,316 195,818 187,509 182,166 13 FHLBB 134,168 124,577 114,047 109,733 106,127 105,882 101,731 100,574 100,493 100,391 95,838 94,658 14 Other 165,232 127,653 127,896 120,436 116,315 115,990 111,831 106,195 101,823 95,427 91,671 87,508 15 Other 24,216 27,556 28,807 25,151 26,732 28,236 23,923 25,569 26,132 21,300 22,061 23,227 16 Net worth n.a. 23,612 24,384 28,797 28,099 28,317 30,480 31,170 32,235 31,061 31,883 31,756 SAIF-insured federal savings banks 17 Assets 425,966 498,522 570,795 583,392 580,847 584,632 591,136 588,880 585,847 576,531 567,373 556,708 18 Mortgages 230,734 283,844 317,985 323,516 328,236 328,895 332,927 332,431 328,122 320,233 316,889 313,880 19 Mortgage-backed securities 64,957 70,499 77,781 78,001 80,474 80,994 82,418 82,219 84,190 8811,,220055 7799,,445511 7788,,229900 20 Contra-assets to mortgage assets' . 13,140 13,548 10,798 10,200 9,227 9,339 9,964 9,578 9,305 99,,559911 88,,222222 77,,777777 21 Commercial loans 16,731 18,143 19,713 19,683 18,810 18,662 18,767 18,458 18,197 17,674 17,299 17,008 22 Consumer loans 24,222 28,212 32,407 32,745 31,003 31,183 30,750 30,682 30,421 29,933 31,179 29,292 23 Contra-assets to nonmortgage loans2 . 889 1,193 707 970 870 813 980 572 809 999900 777700 889955 24 Finance leases plus interest 880 1,101 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 25 Cash and investment ... 61,029 64,538 70,999 75,081 71,354 73,756 73,602 75,117 72,454 75,940 71,066 67,721 26 Other 35,412 39,981 44,840 47,723 44,150 44,129 46,043 45,287 45,319 45,008 44,768 44,210 27 Liabilities and net worth . 425,966 498,522 570,795 583,392 580,847 584,632 591,136 588,880 585,847 576,531 567,373 556,708 28 Savings capital 298,197 360,547 413,009 427,379 423,472 424,260 434,705 436,080 436,903 434,297 428,822 422,745 29 Borrowed money 99,286 108,448 123,415 121,721 118,393 120,592 119,991 115,472 111,270 107,270 102,313 97,089 30 FHLBB 46,265 57,032 61,057 60,666 61,287 62,209 61,605 60,256 60,265 59,949 57,703 56,078 31 Other 53,021 51,416 62,358 61,055 57,106 58,383 58,386 55,216 51,005 47,321 44,610 41,011 32 Other 8,075 9,041 10,307 8,889 9,245 10,128 8,253 9,063 9,824 8,193 8,356 8,721 33 Net worth 20,218 22,716 21,138 21,944 26,424 26,420 24,859 24,837 24,931 24,172 25,285 25,432 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Nonfinancial Statistics • July 1991 1.37—Continued 1990 1991 AAccccoouunntt 11998888 11998899 May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Credit unions4 34 Total assets/liabilities and capital 174,593 183,688 195,020 195,302 194,523 196,625 197,272 35 Federal 114,566 120,666 128,648 128,142 127,564 128,715 129,086 36 State 60,027 63,022 66,372 67,160 66,959 67,910 68,186 37 Loans outstanding.. 113,191 122,608 123,205 123,968 124,343 126,156 127,341 38 Federal 73,766 80,272 80,550 81,063 81,063 82,040 82,823 39 State 39,425 42,336 42,655 42,905 43,280 44,116 44,518 40 Savings 159,010 167,371 176,701 178,127 176,360 178,081 177,532 41 Federal 104,431 109,653 116,402 116,717 115,305 116,411 115,469 42 State 54,579 57,718 60,299 61,408 61,056 61,670 62,063 Life insurance companies5 43 Assets 1,299,756 1,376,660 1,387,463 1,411,881 Securities 44 Government.... 178,141 195,287 202,962 220088,,778822 45 United States6 153,361 175,156 180,200 46 State and local 9,028 10,963 11,818 12,038 47 Foreign 15,752 16,589 15,988 16,544 48 Business 663,677 n.a. 705,070 n.a. n.a. 709,470 n.a. n.a. 724,603 n.a. 49 Bonds 538,063 570,245 588,251 596,053 50 Stocks 125,614 134,825 121,219 128,550 51 Mortgages 254,215 264,865 266,063 267,922 52 Real estate 39,908 44,188 44,544 44,718 53 Policy loans 57,439 63,144 60,641 61,562 54 Other assets .... 106,376 104,106 103,783 104,294 1. Contra-assets are credit-balance accounts that must be subtracted from the 7. Issues of foreign governments and their subdivisions and bonds of the corresponding gross asset categories to yield net asset levels. Contra-assets to International Bank for Reconstruction and Development. mortgage loans, contracts, and pass-through securities include loans in process, NOTE. SAIF-insured institutions: Estimates by the OTS for all institutions unearned discounts and deferred loan fees, valuation allowances for mortgages insured by the SAIF and based on the OTS thrift Financial Report. "held for sale," and specific reserves and other valuation allowances. SAIF-insured federal savings banks: Estimates by the OTS for federal savings 2. Contra-assets are credit-balance accounts that must be subtracted from the banks insured by the SAIF and based on the OTS thrift Financial Report. corresponding gross asset categories to yield net asset levels. Contra-assets to Credit unions: Estimates by the National Credit Union Administration for nonmortgage loans include loans in process, unearned discounts and deferred loan federally chartered and federally insured state-chartered credit unions serving fees, and specific reserves and valuation allowances. natural persons. 3. Holding of stock in Federal Home Loan Bank and Finance leases plus Life insurance companies: Estimates of the American Council of Life Insurance interest are included in "Other" (line 9). for all life insurance companies in the United States. Annual figures are annual- 4. Data include all federally insured credit unions, both federal and state statement asset values, with bonds carried on an amortized basis and stocks at chartered, serving natural persons. year-end market value. Adjustments for interest due and accrued and for 5. Data are no longer available on a monthly basis for life insurance companies. differences between market and book values are not made on each item separately 6. Direct and guaranteed obligations. Excludes federal agency issues not but are included, in total, in "other assets." guaranteed, which are shown in the table under "Business" securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll FFFiiissscccaaalll TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn yyyeeeaaarrr yyyeeeaaarrr yyyeeeaaarrr 1990 1991 111999888888 111999888999 111999999CCC Nov. Dec. Jan. Feb. Mar. Apr. U.S. budget1 1 Receipts, total 908,166 990,701 1,031,308 70,507 101,900 100,713 67,657 64,805 140,380 2 On-budget 666,675 727,035 749,654 24,976' 82,059 70,023 45,594' 39,011 108,746 3 Off-budget 241,491 263,666 281,654 24,976 19,841 30,690 22,063 25,794 31,634 4 Outlays, total 1,063,318 1,144,020 1,251,766 118,142' 109,212 99,023' 93,834' 105,876' 110,249 5 On-budget 860,627 933,107 1,026,701 96,694' 94,679 79,105 72,667 83,34c 90,362 6 Off-budget 202,691 210,911 225,065 21,448 14,532 19,918 21,167 22,536 19,887 7 Surplus, or deficit (-), total -155,151 -153,319^ -220,458 -47,635' -7,311 1,690 -26,177 -41,071' 30,131 8 On-budget -193,952 -206,072 -277,047 -51,163' -12,620 -9,082 -27,073 -44,329' 18,384 9 Off-budget 38,800 52,753 56,590 3,528 5,309 10,772 8% 3,258 11,747 Source of financing (total) 10 Borrowing from the public 166,139 141,806 264,453 46,776 19,700 31,764 34,611 -9,913 -9,399 11 Operating cash (decrease, or increase (-)) . -7,962 3,425 818 12,533 -9,286 -30,627 2,341 28,473 -16,214 12 Other -3,026 8,088' -44,813 -11,674' -3,103 -2,827 -10,775 22,511' -4,518 MEMO 13 Treasury operating balance (level, end of period) 44,398 40,973 40,155 22,902 32,188 62,815 60,474 32,001 48,215 14 Federal Reserve Banks 13,023 13,452 7,638 5,495 8,960 27,810 23,898 10,922 13,682 15 Tax and loan accounts 31,375 27,521 32,517 17,406 23,228 35,006 36,577 21,078 34,533 1. In accordance with the Balanced Budget and Emergency Deficit Control Act international monetary fund; other cash and monetary assets; accrued interest of 1985, all former off-budget entries are now presented on-budget. The Federal payable to the public; allocations of special drawing rights; deposit funds; Financing Bank (FFB) activities are now shown as separate accounts under the miscellaneous liability (including checks outstanding) and asset accounts; agencies that use the FFB to finance their programs. The act has also moved two seigniorage; increment on gold; net gain/loss for U.S. currency valuation adjustsocial security trust funds (Federal old-age survivors insurance and Federal ment; net gain/loss for IMF valuation adjustment; and profit on the sale of gold. disability insurance trust funds) off-budget. SOURCE. Monthly Treasury Statement of Receipts and Outlays of the U.S. 2. Includes SDRs; reserve position on the U.S. quota in the IMF; loans to Government and the Budget of the U.S. Government. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Financial Statistics • July 1991 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll SSSooouuurrrccceee ooorrr tttyyypppeee yyyeeeaaarrr yyyeeeaaarrr 1989 1990 1991 111999888999 111999999000 HI H2 HI H2 Feb. Mar. Apr. RECEIPTS 1 All sources 990,701 1,031,308 527,574 470,276 548,861 503,123 67,657 64,805 140,380 2 Individual income taxes, net 445,690 466,884 233,572 218,706 243,087 230,745 27,929 11,288 77,768 3 Withheld 361,386 390,480 174,230 193,296 190,219 207,469 32,737 30,478 36,428 4 Presidential Election Campaign Fund 32 32 28 3 30 3 4 9 6 5 Nonwithheld 154,839 149,189 121,563 33,303 117,675 31,728 1,186 4,426 60,246 6 Refunds 70,567 72,817 62,251 7,898 64,838 88,,445555 5,998 2233,,662255 1188,,991122 Corporation income taxes 7 Gross receipts 117,015 110,017 61,585 52,269 58,830 54,044 3,611 14,338 15,526 8 Refunds 13,723 16,510 7,259 6,842 8,326 77,,660033 1,116 11,,553311 22,,222299 9 Social insurance taxes and contributions, net 359,416 380,047 200,127 162,574 210,476 178,468 29,872 33,045 4422,,447788 10 Employment taxes and contributions 332,859 353,891 184,569 152,407 195,269 116677,,222244 2277,,882244 3322,,441166 3399,,667711 11 Self-employment taxes and contributions3 18,504 21,795 16,371 1,947 19,017 2,638 1,445 1,463 12,707 12 Unemployment insurance 22,011 21,635 13,279 7,909 12,929 8,9% 1,678 226 2,435 13 Other net receipts 4,546 4,522 2,277 2,260 2,278 2,249 370 402 372 14 Excise taxes 34,386 35,345 16,814 16,799 18,153 17,535 2,594 4,149 3,842 15 Customs deposits 16,334 16,707 7,918 8,667 8,096 8,568 1,215 1,271 1,219 16 Estate and gift taxes 8,745 11,500 4,583 4,451 6,442 5,333 772 864 1,546 17 Miscellaneous receipts5 22,839 27,316 10,235 13,651 12,106 16,032 2,780 1,381 231 OUTLAYS 18 All types 1,144,020 1,251,766 565,425 587,394 640,867 647,218 93,834 105,876 110,249 19 National defense 303,559 299,335 148,098 149,613 152,733 149,497 16,881 15,743 21,651 20 International affairs 9,574 13,760 6,567 5,971 6,770 8,943 1,026 2,001 1,513 21 General science, space, and technology 12,838 14,420 6,238 7,091 6,974 8,081 1,188 1,317 1,369 22 Energy 3,702 2,470 2,221 1,449 1,216 979 31 61 -40 23 Natural resources and environment 16,182 17,009 7,022 9,183 7,343 9,933 1,183 1,283 1,385 24 Agriculture 16,948 11,998 9,619 4,132 7,450 6,878 578 1,240 2,115 25 Commerce and housing credit 29,091 67,495 4,129 22,295 38,672 37,491 -2,257 6,154 4,700 26 Transportation 27,608 29,495 12,953 14,982 13,754 16,218 2,134 2,139 2,624 27 Community and regional development 5,361 8,466 1,833 4,879 3,987 3,939 494 497 697 28 Education, training, employment, and social services 36,694 37,479 18,083 18,663 19,537 18,988 3,509 3,782 3,319 29 Health 48,390 58,101 24,078 25,339 29,488 31,424 5,464 5,623 5,882 30 Social security and medicare 317,506 346,383 162,195 162,322 175,997 176,353 30,476 30,643 31,975 31 Income security 136,031 148,299 70,937 67,950 78,475 75,948 15,475 16,836 16,034 32 Veterans benefits and services 30,066 29,112 14,891 14,864 15,217 15,479 2,591 2,731 3,200 33 Administration of justice 9,422 10,076 4,801 4,909 4,868 5,265 1,010 941 1,136 34 General government 9,124 10,822 3,858 4,760 4,916 6,976 147 717 419 35 Net interest6 169,317 183,790 86,009 87,927 91,155 94,650 16,782 17,120 15,802 36 Undistributed offsetting receipts -37,212 -36,615 -18,131 -18,935 -17,688 -19,829 -2,879 -2,952 -3,531 1. Functional details do not add to total outlays for calendar year data because 5. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts. revisions to monthly totals have not been distributed among functions. Fiscal year 6. Net interest function includes interest received by trust funds. total for outlays does not correspond to calendar year data because revisions from 7. Consists of rents and royalties on the outer continental shelf, U.S. governthe Budget have not been fully distributed across months. ment contributions for employee retirement. 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. SOURCES. U.S. Department of the Treasury, Monthly Treasury Statement of 3. Old-age, disability, and hospital insurance. Receipts and Outlays of the U.S. Government, and the U.S. Office of Manage- 4. Federal employee retirement contributions and civil service retirement and ment and Budget, Budget of the U.S. Government, Fiscal Year 1990. disability fund. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A29 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1989 1990 1991 IItteemm Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 1 Federal debt outstanding 2,763.6 2,824.0 2,881.1 2,975.5 3,081.9 3,175.5 3,266.1 3,397.3 3,491.7 2 Public debt securities 2,740.9 2,799.9 2,857.4 2,953.0 3,052.0 3,143.8 3,233.3 3,364.8 3,465.2 3 Held by public 2,133.4 2,142.1 2,180.7 2,245.2 2,329.3 2,368.8 2,437.6 2,536.6 n.a. 4 Held by agencies 607.5 657.8 676.7 707.8 722.7 775.0 795.8 828.3 n.a. 5 Agency securities 22.7 24.0 23.7 22.5 29.9 31.7 32.8 32.5 n.a. 6 Held by public 22.3 23.6 23.5 22.4 29.8 31.6 32.6 32.4 n.a. 7 Held by agencies .4 .5 .1 .1 .2 .2 .2 .1 n.a. 8 Debt subject to statutory limit 2,725.6 2,784.6 2,829.8 2,921.7 2,988.9 3,077.0 3,161.2 3,281.7 3,377.1 9 Public debt securities 2,725.5 2,784.3 2,829.5 2,921.4 2,988.6 3,076.6 3,160.9 3,281.3 3,376.7 10 Other debt1 .2 .2 .3 .3 .3 .4 .4 .4 .4 11 MEMO: Statutory debt limit 2,800.0 2,800.0 2,870.0 3,122.7 3,122.7 3,122.7 3,195.0 4,145.0 4,145.0 1. Includes guaranteed debt of Treasuiy and other federal agencies, specified SOURCES. Treasury Bulletin and Monthly Statement of the Public Debt of the participation certificates, notes to international lending organizations, and District United States. of Columbia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 1990 1991 Type and holder 1987 1988 1989 1990 Q2 Q3 Q4 Q1 1 Total gross public debt 2,431.7 2,684.4 2,953.0 3,364.8 3,143.8 3,233.3 3,364.8 3,465.2 By type 2 Interest-bearing debt 2,428.9 2,663.1 2,931.8 3,362.0 3,121.5 3,210.9 3,362.0 3,441.4 3 Marketable 1,724.7 1,821.3 1.945.4 2,195.8 2,028.0 2,092.8 2,195.8 2,227.9 4 Bills 389.5 414.0 430.6 527.4 453.5 482.5 527.4 533.3 5 Notes 1,037.9 1,083.6 1.151.5 1,265.2 1,192.7 1,218.1 1,265.2 1.280.4 6 Bonds 282.5 308.9 348.2 388.2 366.8 377.2 388.2 399.3 7 Nonmarketable 704.2 841.8 986.4 1,166.2 1,093.5 1,118.2 1,166.2 1.213.5 8 State and local government series 139.3 151.5 163.3 160.8 164.3 161.3 160.8 159.4 9 Foreign issues2 4.0 6.6 6.8 43.5 36.4 36.0 43.5 42.8 10 Government 4.0 6.6 6.8 43.5 36.4 36.0 43.5 42.8 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes 99.2 107.6 115.7 124.1 120.1 122.2 124.1 127.7 13 Government account series3 461.3 575.6 695.6 813.8 758.7 779.4 813.8 853.1 14 Non-interest-bearing debt 2.8 21.3 21.2 2.8 22.3 22.4 2.8 23.8 By holder4 15 U.S. government agencies and trust funds 477.6 589.2 707.8 828.3 775.0 795.8 828.3 16 Federal Reserve Banks 222.6 238.4 228.4 259.8 231.4 232.5 259.8 17 Private investors 1,731.4 1,858.5 2,015.8 2,288.3 2,141.8 2,207.3 2,288.3 18 Commercial banks 201.5 193.8 174.8 n.a. 189.2 188.0 n.a. 19 Money market funds 14.6 11.8 14.9 n.a. 28.1 33.6 n.a. 20 Insurance companies 104.9 107.3 130.1 n.a. 137.0 138.9 n.a. 21 Other companies 84.6 87.1 98.8 n.a. 112.1 114.6 n.a. 22 State and local Treasurys 284.6 313.6 338.7 n.a. 345.7 344.0 n.a. Individuals 23 Savings bonds 101.1 109.6 117.7 126.2 121.9 123.9 126.2 24 Other securities 71.3 79.2 98.8 n.a. 112.1 114.6 n.a. 25 Foreign and international 299.7 362.2 392.9 n.a. 392.3 404.9 n.a. 26 Other miscellaneous investors 569.1 593.4 672.5 n.a. n.a. n.a. n.a. 1. Includes (not shown separately): Securities issued to the Rural Electrifica- 5. Consists of investments of foreign and international accounts. Excludes tion Administration; depository bonds, retirement plan bonds, and individual non-interest-bearing notes issued to the International Monetary Fund. retirement bonds. 6. Includes savings and loan associations, nonprofit institutions, credit unions, 2. Nonmarketable dollar-denominated and foreign currency-denominated se- mutual savings banks, corporate pension trust funds, dealers and brokers, certain ries held by foreigners. U.S. Treasury deposit accounts, and federally-sponsored agencies. 3. Held almost entirely by U.S. Treasury agencies and trust funds. SOURCES. Data by type of security, U.S. Treasury Department, Monthly 4. Data for Federal Reserve Banks and U.S. Treasury agencies and trust funds Statement of the Public Debt of the United States; data by holder and the are actual holdings; data for other groups are Treasury estimates. Treasury Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Nonfinancial Statistics • July 1991 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Millions of dollars, daily averages 1991 1991, week ending Jan. Feb. Mar. Feb. 27 Mar. 6 Mar. 13 Mar. 20 Mar. 27 Apr. 3 Apr. 10 Apr. 17 Apr. 24 IMMEDIATE TRANSACTIONS2 By type of security U.S. government securities 1 Bills 35,403 32,223' 32,648 29,526' 30,844' 40,782 32,542 27,073 30,129 32,920 31,788 Coupon securities 2 Maturing in less than 3.5 years 38,084 42,249" 35.168 36,650' 31,602' 38,501 36,362 35,569 29,982 29,643 39,424 3 Maturing in 3.5 to 7.5 years... 28,006r 30,587r 26,889 29,980' 26,538' 28,473 29,859 23,184 25,469 28,912 33,169 4 Maturing in 7.5 to 15 years 10,874' 16,109" 12.169 12,744' 11,231' 13,956 13,786 10,467 9,784 10,712 11,890 5 Maturing in 15 years or more.. 14,905 17,860" 14,127 14,398' 15,053' 17,059 15,433 11,078 9,297 12,696 14,435 Federal agency securities Debt 6 Maturing in less than 3.5 years 4,715r 3,946 4,375 3,875' 3,960" 4,091 4,440 4,912 4,412 3,854 4,074 7 Maturing in 3.5 to 7.5 years... 453 607 601 457 576 487 686 618 683 580 567 8 Maturing in 7.5 years or more 1,079 677 644 465 435' 846 692 505 790 504 737 Mortgage-backed 9 Pass-throughs 10,991 10,070 9,712 10,060 8,380 11,358 10,884 8,557 8,218 10,189 13,197 10 All others 1,066 1,416 1,303 1,715 1,335 1,205 1,233 1,261 1,763 1,269 1,601 By type of counterparty Primary dealers and brokers 11 U.S. government securities 78,827'' 85,703' 76,452 77,454' 73,171 89,342 81,204 66,674 63,350 70,667 79,505 Federal agency 12 Debt securities 1,985 1,439 1,559 1,148 1,173' 1,463 1,766 1,676 1,758 1,412 1,777 13 Mortgage backed securities . 6,048 5,627 5,650 5,957 5,079 6,626 5,874 5,317 4,623 5,091 7,497 Customers 14 U.S. government securities 48,445 53,326' 44,549 45,843' 42,097' 49,428 46,777 40,696 41,311 44,217 51,201 Federal agency 15 Debt securities 4,262r 3,792 4,062 3,649' 3,798' 3,%1 4,051 4,359 4,128 3,526 3,601 16 Mortgage-backed securities . 6,008 5,858 5,365 5,817 4,637 5,937 6,243 4,501 5,358 6,368 7,301 FUTURE AND FORWARD TRANSACTIONS4 By type of deliverable security U.S. government securities 17 Bills 6,339 4,669 4,607 3,662 5,115 6,268 3,795 3,591 4,010 3,159 2,805 Coupon securities 18 Maturing in less than 3.5 years 1,470 2,258 1,351 2,012 1,557 1,445 1,370 1,212 999 874 1,140 19 Maturing in 3.5 to 7.5 years... 804 867 847 782 615' 922 1,227 479 1,092 395 691 20 Maturing in 7.5 to 15 years ... 861 1,419 1,059 1,199 1,239 867 1,392 930 674 792 683 21 Maturing in 15 years or more.. 9,362 9,507 9,023 8,269 9,921 10,488 10,497 6,974 5,006 7,164 8,040 Federal agency securities Debt 22 Maturing in less than 3.5 years 121 137 100 126 10 39 167 191 41 4 167 23 Maturing in 3.5 to 7.5 years... 40 23 34 19 12 45 50 31 15 72 27 24 Maturing in 7.5 years or more 62 52 36 80 29 46 9 51 58 6 14 Mortgage-backed 2 2 5 6 A Pa ll s s o - t th h r e o r u s g " hs 9 1 , , 2 1 0 0 3 8 ' 9 1 , , 6 0 6 59 2 " 8 1 , , 3 2 1 8 3 5 6,9 9 9 3 5 0 7 1 , , 1 1 8 7 9 0 9 1 , , 5 4 9 3 7 6 8 1 , , 5 2 4 7 5 3 8 1 , , 0 1 2 0 1 4 7 1 , , 5 6 0 1 2 7 10 1 , ,3 2 5 1 3 8 8,6 9 0 9 8 5 OPTION TRANSACTIONS5 By type of underlying securities U.S. government securities 27 Bills 64 102 0 0 0 10 0 0 0 30 Coupon securities 28 Maturing in less than 3.5 years 1,136 1,5%' 1,014 1,651 1,144' 1,118 980 636 1,528 713 614 29 Maturing in 3.5 to 7.5 years ... 245 300" 287 253 278 370 381 188 116 112 363 30 Maturing in 7.5 to 15 years 187 226' 308 177 369" 320 363 198 288 261 290 31 Maturing in 15 years or more.. 2,691 2,659 1,786 2,268 1,706 2,075 1,840 1,489 1,829 1,737 2,520 Federal agency securities Debt 32 Maturing in less than 3.5 years 0 2 1 0 0 1 0 0 1 0 4 33 Maturing in 3.5 to 7.5 years... 0 0 0 0 0 0 0 0 0 0 0 34 Maturing in 7.5 years or more 0 1 0 4 0 0 0 0 1 0 0 Mortgage-backed 35 Pass-throughs 356 365 297 285 189 430 383 175 274 588 359 36 All others^ 2 1 0 2 0 0 0 1 0 0 29 1. Transactions are market purchases and sales of securities as reported to the Stripped securities are reported at market value by maturity of coupon or corpus. Federal Reserve Bank of New York by the U.S. government securities dealers on 3. Includes securities such as CMOs, REMICs; IOs, and POs. its published list of primary dealers. Averages for transactions are based on the 4. Futures transactions are standardized agreements arranged on an exchange. number of trading days in the period. Immediate, forward, and future transactions Forward transactions are agreements made m the over-the-counter market that are reported at principal value, which does not include accrued interest; option specify delayed delivery. All futures transactions are included regardless of time transactions are reported at the face value of the underlying securities. to delivery. Forward contracts for U.S. government securities and federal agency Dealers report cumulative transactions for each week ending Wednesday. debt securities are included when the time to delivery is more than five days. 2. Transactions for immediate delivery include purchases or sales of securities Forward contracts for mortgage-backed securities are included when the time to (other than mortgage-backed agency securities) for which delivery is scheduled in delivery is more than thirty days. five business days or less and "when-issued" securities that settle on the issue 5. Options transactions are purchases or sales of put and call options, whether date of offering. Transactions for immediate delivery of mortgage-backed securities arranged on an organized exchange or in the over-the-counter market and include include purchases and sales for which delivery is scheduled in thirty days or less. options on futures contracts on U.S. government and federal agency securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A31 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1991 1991, week ending item Jan. Feb. Mar. Feb. 20 Feb. 27 Mar. 6 Mar. 13 Mar. 20 Mar. 27 Apr. 3 Apr. 10 Apr. 17 Positions2 NET IMMEDIATE3 By type of security U.S. government securities 1 Bills 11,468 12,61c 12,824 12,083' 11,290 10,778 17,496 14,112 6,796 16,015 14,827 9,146 Coupon securities 2 Maturing in less than 3.5 years 4,300' 7,542' 1,564 12,202' 2,662 1,717 250 206 3,231 3,090 4,031 4,246 3 Maturing in 3.5 to 7.5 years -1,31(K -3,914' 882 -6,059' -632 -878 -210 103 2,940 3,191 5,765 3,869 4 Maturing in 7.5 to 15 years -7,514' -5,149' -4,928 -4,484' -4,593 -4,344 -3,967 -5,385 -5,640 -5,437 -6,691 -5,799 5 Maturing in 15 years or more -13,768' -16,065 -12,697' -13,895 -16,350 -16,661 -15,707 -16,007 -15,326 -13,437 -12,880 Federal agency securities Debt 6 Maturing in less than 3.5 years 4,006 5,128 4,743 5,291 6,389 6,783 3,810 5,352 4,022 3,512 3,035 4,044 7 Maturing in 3.5 to 7.5 years 1,930 2,212 2,620 2,162 2,222 2,514 2,792 2,569 2,509 2,763 2,584 2,267 8 Maturing in 7.5 years or more 7,392 7,153' 6,267 7,063' 7,054 6,926 6,421 6,064 5,936 5,946 5,593 5,441 Mortgage-backed 9 Pass-throuehs 23,290 24,668 23,988 25,590 22,040 23,320 25,797 24,893 23,211 21,600 24,628 25,288 10 All others 10,665 10,599 9,000 10,473 10,783 9,805 9,178 8,929 8,281 8,865 9,150 9,433 Other money market instruments 11 Certificates of deposit 2,934' 2,821' 2,404 2,786' 2,022 2,400 2,451 2,531 2,256 2,364 2,170 2,027 12 Commercial paper 6,243 6,020 5,769 5,708 5,482 6,144 5,821 5,764 5,174 6,166 5,811 6,746 13 Bankers' acceptances 1,041 1,020 908 1,039 1,043 762 1,022 945 739 1,155 744 1,412 FUTURE AND FORWARD5 By type of deliverable security U.S. government securities 14 Bills -21,345 -15,684' -9,921 -14,759' -11,165 -6,679 -11,199 -11,531 -9,479 -10,507 -11,485 -11,739 Coupon securities 15 Maturing in less than 3.5 years -1,258' -1,684' -1,137 -1,284' -1,446 -1,318 -1,388 -801 -1,261 -799 -1,315 -1,476 16 Maturing in 3.5 to 7.5 years -3,147 -2,095' -1,194 -2,134' -1,608 -1,056 -1,561 -235 -1,590 -1,746 -2,467 -1,986 17 Maturing in 7.5 to 15 years -918' -495' -181 -611' -289 -166 -813 672 -199 -559 227 -479 18 Maturing in 15 years or more -5,487 -4,531' -3,726 -3,906 -2,792 -2,342 -3,700 -2,964 -5,126 -4,731 -5,631 -8,393 Federal agency securities Debt 19 Maturing in less than 3.5 years 236 218 80 234 171 90 108 -52 214 15 -31 -235 20 Maturing in 3.5 to 7.5 years 15 120 123 75 142 194 1 317 54 11 189 297 21 Maturing in 7.5 years or more -84 -38 -29 -47 -7 -22 -10 -23 -62 -26 -48 -22 Mortgage-backed 22 Pass-throughs -11,001 -14,009 -9,464 -14,658 -10,075 -11,203 -11,354 -8,987 -7,738 -7,401 -11,506 -11,270 23 All others4^ -547 -674 502 -674 -710 -291 -430 853 1,080 1,696 1,833 1,120 Other money market instruments 24 Certificates of deposit 53,424' 17,877' 5,000 4,917' 2,498 -6,326 5,036 14,922 6,653 1,673 -3,127 1,315 25 Commercial paper 0 0 -19 0 0 0 0 -50 -50 29 0 0 26 Bankers' acceptances 0 0 0 0 0 0 0 0 0 0 0 0 Financing6 Reverse repurchase agreements 27 Overnight and continuing 161,799 166,419 179,145 169,523 170,914 182,558 183,511 178,461 176,475 172,254 181,215 188,286 28 Term 222,596 238,768 224,668 233,033 231,059 221,502 233,812 238,384 206,381 221,417 232,991 231,902 Repurchase agreements 29 Overnight and continuing 261,845 273,462 280,236 284,136 277,814 290,048 280,431 282,021 272,972 274,768 279,230 286,232 30 Term 189,444 206,983 195,158 201,160 201,593 187,622 204,997 211,004 183,270 182,319 199,820 209,260 Securities borrowed 31 Overnight and continuing 53,229 50,385 52,701 49,962 50,199 50,041 49,339 52,353 57,827 54,215 52,139 49,855 32 Term 24,357 23,369 23,796 22,978 24,532 25,416 25,013 23,022 23,426 21,236 20,588 20,600 Securities lent 33 Overnight and continuing 5,906' 6,497' 6,833 6,773' 6,900 6,904 6,203 6,602 7,734 6,660 6,348 6,442 34 Term 716' 931 982 871 1,328 826 831 1,029 1,335 780 645 860 Collateralized loans 35 Overnight and continuing 5,950 5,109 4,198 4,639 3,772 3,851 4,841 4,264 3,919 3,965 3,939 4,293 36 Term 1,066 1,599 1,605 1,648 1,740 1,740 1,567 1,525 1,600 1,619 1,976 2,002 MEMO: Matched book7 Reverse repurchases 37 Overnight and continuing 106,486 109,746 116,036 112,897 110,232 117,176 112,749 118,468 119,242 110,214 115,048 118,321 38 Term 181,794 195,243 180,364 190,709 189,774 178,956 188,760 188,987 168,109 174,141 194,190 196,699 Repurchases 39 Overnight and continuing 141,455 144,722 148,269 147,567 148,540 159,509 148,983 146,205 140,818 146,813 152,413 155,490 40 Term 140,092 158,034 144,928 153,053 151,409 139,251 152,061 157,669 136,535 133,349 147,247 161,308 1. Data for positions and financing are obtained from reports submitted to the specify delayed delivery. All futures positions are included regardless of time to Federal Reserve Bank of New York by the U.S. government securities dealers on delivery. Forward contracts for U.S. government securities and for federal its published list of primary dealers. Weekly figures are close-of-business Wednes- agency debt securities are included when the time to delivery is more than five day data; monthly figures are averages of weekly data. Data for positions and business days. Forward contracts for mortgage-backed securities are included financing are averages of close-of-business Wednesday data. when the time to delivery is more than thirty days. 2. Securities positions are reported at market value. 6. Overnight financing refers to agreements made on one business day that 3. Net immediate positions include securities purchased or sold (other than mature on the next business day; continuing contracts are agreements that remain mortgage-backed agency securities) that have been delivered or are scheduled to in effect for more than one business day but have no specific maturity and can be be delivered in five business days or less and "when-issued" securities settle on terminated without a requirement for advance notice by either party; term the issue date of offering. Net immediate positions of mortgage-backed securities agreements have a fixed maturity of more than one business day. include securities purchased or sold that have been delivered or are scheduled to 7. Matched-book data reflect financial intermediation activity in which the be delivered in thirty days or less. borrowing and lending transactions are matched. Matched-book data are included 4. Includes securities such as CMOs, REMICs, IOs, and POs. in the financing breakdowns listed above. The reverse repurchase and repurchase 5. Futures positions are standardized contracts arranged on an exchange. numbers are not always equal due to the "matching" of securities of different Forward positions reflect agreements made in the over-the-counter market that values or types of collateralization. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • July 1991 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1990 1991 AAggeennccyy 11998877 11998888 11998899 11999900 Nov. Dec. Jan. Feb. Mar. 1 Federal and federally sponsored agencies 341,386 381,498 411,805 434,668 430,842 434,668 445,430 441,440 437,847 2 Federal agencies 37,981 35,668 35,664 42,159 42,191 42,159 42,141 42,191 41,149 3 Defense Department1 13 8 7 7 7 7 7 7 7 4 Export-Import Bank2, 11,978 11,033 10,985 11,376 11,346 11,376 11,376 11,376 11,186 5 Federal Housing Administration4 183 150 328 393 387 393 329 361 370 6 Government National Mortgage Association participation certificates 1,615 0 0 0 0 00 00 0 00 7 Postal Service6 6,103 6,142 6,445 6,948 6,948 6,948 6,948 6,948 6,948 8 Tennessee Valley Authority 18,089 18,335 17,899 23,435 23,510 23,435 23,481 23,499 22,638 9 United States Railway Association 0 0 0 0 0 0 0 0 0 10 Federally sponsored agencies7 303,405 345,830 375,407 392,509 388,651 392,509 403,289 399,249 3%,698 11 Federal Home Loan Banks 115,727 135,836 136,108 117,895 116,627 117,895 115,402 112,874 113,311 12 Federal Home Loan Mortgage Corporation 17,645 22,797 26,148 30,941 30,035 30,941 33,157 32,640 31,425 N Federal National Mortgage Association 97,057 105,459 116,064 123,403 122,257 123,403 125,849 125,974 124,885 14 Farm Credit Banks8 55,275 53,127 54,864 53,590 53,469 53,590 53,717 52,480 51,890 15 Student Loan Marketing Association 16,503 22,073 28,705 34,194 33,777 34,194 35,736 35,854 35,761 16 Financing Corporation 1,200 5,850 8,170 8,170 8,170 8,170 8,170 8,170 8,170 17 Farm Credit Financial Assistance Corporation" 0 690 847 1,261 1,261 1,261 1,261 1,261 1,261 18 Resolution Funding Corporation 0 0 4,522 23,055 23,055 23,055 29,996 29,9% 29,996 MEMO 19 Federal Financing Bank debt13 152,417 142,850 134,873 179,083 177,620 179,083 181,062 181,714 181,907 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 11,972 11,027 1100,,997799 11,370 11,340 1111,,337700 1111,,337700 1111,,337700 1111,,118800 21 Postal Service6 5,853 5,892 6,195 6,698 6,698 6,698 6,698 6,698 6,698 22 Student Loan Marketing Association 4,940 4,910 4,880 4,850 4,850 4,850 4,850 4,850 4,850 23 Tennessee Valley Authority 16,709 16,955 16,519 14,055 14,130 14,055 14,101 14,119 13,258 24 United States Railway Association 0 0 0 0 0 0 0 0 0 Other Lending14 25 Farmers Home Administration 59,674 58,496 53,311 52,324 52,324 52,324 52,169 52,544 52,669 26 Rural Electrification Administration 21,191 19,246 19,265 18,890 18,968 18,890 18,906 18,906 18,904 27 32,078 26,324 23,724 70,896 69,310 70,8% 72,%8 73,227 74,348 1. Consists of mortgages assumed by the Defense Department between 1957 10. The Financing Corporation, established in August 1987 to recapitalize the and 1963 under family housing and homeowners assistance programs. Federal Savings and Loan Insurance Corporation, undertook its first borrowing in 2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976. October 1987. 3. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget thereafter. 11. The Farm Credit Financial Assistance Corooration (established in January 4. Consists of debentures issued in payment of Federal Housing Administration 1988 to provide assistance to the Farm Credit System) undertook its first insurance claims. Once issued, these securities may be sold privately on the borrowing in July 1988. securities market. 12. The Resolution Funding Corporation, established by the Financial Institu- 5. Certificates of participation issued before fiscal 1969 by the Government tions Reform, Recovery, and Eniforcement Act of 1989, undertook its first National Mortgage Association acting as trustee for the Farmers Home Admin- borrowing in October 1989. istration; Department of Health, Education, and Welfare; Department of Housing 13. The FFB, which began operations in 1974, is authorized to purchase or sell and Urban Development; Small Business Administration; and the Veterans obligations issued, sold, or guaranteed by other federal agencies. Since FFB Administration. incurs debt solely for the purpose of lending to other agencies, its debt is not 6. Off-budget. included in the main portion of the table in order to avoid double counting. 7. Includes outstanding noncontingent liabilities: notes, bonds, and deben- 14. Includes FFB purchases of agency assets and guaranteed loans; the latter tures. Some data are estimated. contain loans guaranteed by numerous agencies with the guarantees of any 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, particular agency being generally small. The Farmers Home Administration item shown in line 17. consists exclusively of agency assets, while the Rural Electrification Administra- 9. Before late 1981, the Association obtained financing through the Federal tion entry contains both agency assets and guaranteed loans. Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is shown on line 22. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Market and Corporate Finance A33 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1990 1991 TTyyppee ooff iissssuuee oorr iissssuueerr,, 11998888 11998899 11999900 oorr uussee Sept. Oct. Nov. Dec. Jan. Feb.' Mar. Apr. 1 AU issues, new and refunding1 114,522 113,646 120,339 13,930 8,512 9,961 12,250 7,230 11,335 10,864 10,916 Type of issue 2 General obligation 30,312 35,774 39,610 3,763 3,530 3,024 3,536 2,343 44,,883388 4,219 33,,777711 3 Revenue 84,210 77,873 81,295 10,167 4,982 6,937 8,714 4,887 6,497 6,645' 7,145 Type of issuer 4 State 8,830 11,819 15,149 2,317 1,470 1,337 1,3% 713 22,,002277 11,,119955 11,,119999 5 Special district and statutory authority2 74,409 71,022 72,661 8,188 4,512 5,879 7,032 4,563 4,903 6,599 6,604 6 Municipalities, counties, and townships 31,193 30,805 32,510 3,425 2,530 2,745 3,822 1,954 4,405 3,070 3,113 7 Issues for new capital, total 79,665 84,062 103,235 12,713 7,936 9,058 10,707 6,977 10,403 9,675 10,156 Use of proceeds 8 Education 15,021 15,133 17,042 1,472 1,743 1,009 1,418 1,079 11,,557799 22,,558833 22,,000011 9 Transportation 6,825 6,870 11,650 920 1,069 727 2,008 711 146 421 1,305 10 Utilities and conservation 8,496 11,427 11,739 687 806 1,301 776 1,1% 2,046 1,886 2,171 11 Social welfare 19,027 16,703 23,099 3,995 1,153 1,992 2,001 891 898 2,140 921 12 Industrial aid 5,624 5,036 6,117 674 497 540 933 607 803 554 319 13 Other purposes 24,672 28,894 34,607 4,965 2,668 4,392 3,571 2,493r 5,166 2,091 3,439 1. Par amounts of long-term issues based on date of sale. SOURCES. Investment Dealer's Digest beginning April 1990. Securities Data/ 2. Includes school districts beginning 1986. Bond Buyer Municipal Data Base beginning 1986. Public Securities Association for earlier data. 1.46 NEW SECURITY ISSUES U.S. Corporations Millions of dollars 1990 Type of issue or issuer, 1988 1989 1990 or use Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. 1 All issues 410,849 376,627 235,306R 13,773 14,987 20,534R 25,058' 20,969' 17,212' 29,86Y 33,849 2 Bonds2 353,048 318,756 235,306R 12,965 14,561 19,572R 23,823R 19,180' 16,316' 28,061' 29,900 Type of offering 3 Public, domestic 202,170 181,276 188,814r 11,769 12,652 17,707' 22,117' 18,504' 15,662' 25,00C 27,700 4 Private placement, domestic3 . 127,700 114,629 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5. Sold abroad 23,178 22,851 23,054 1,196 1,909 1,865 1,706 676 654' 3,061' 2,200 Industry group 6 Manufacturing 70,306 76,345 38,233' 854 2,598 3,531 6,593' 2,816' 3,316' 7,700' 6,500 7 Commercial and miscellaneous 62,790 49,726 11,098 304 138 548 821 1,061 1,408 1,762' 1,206 8 Transportation 10,275 10,105 4,926 489 533 230 457 351 711 563 985 9 Public utility 19,579 17,130 13,893 818 928 796 2,209 2,032 682' 1,375' 500 10 Communication 5,593 8,461 4,816r 48 250 378' 693' 1,32c 97 557' 1,000 11 Real estate and financial 184,503 156,991 138,907 10,453 10,113 14,089 13,050 11,601 10,103' 16,104' 19,709 12 Stocks2 57,802 57,870 808 426 962 1,235 1,789 1,802 3,949 896 13 P T r y e p f e e rred 6,544 6,194 3,998 145 100 550 265 175 0 150 1,233 14 Common 35,911 26,030 19,443 663 327 412 970 1,614 896 1,652 2,716 15 Private placement3 15,346 25,647 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Industry group 16 Manufacturing 7,608 9,308 n.a. 125 0 60 154 46 60 183 564 1 1 7 8 T C r o a m n m sp e o r r c t i a a t l i o a n n d miscellaneous 8 1 , , 4 5 4 3 9 5 7 1 , , 4 9 4 2 6 9 5,0 1 2 2 6 6 25 7 1 1 17 0 2 19 7 4 4 0 2 11 5 0 24 1 2 8 54 0 6 1, 2 09 4 6 9 2 1 0 9 C Pu o b m li m c u u n t i i c li a ty ti on 1, 5 8 1 9 5 8 3 1 , , 0 90 9 4 0 4,2 4 2 1 9 6 13 0 9 3 0 9 297 0 462 0 28 6 8 218 0 33 0 5 35 0 4 21 Real estate and financial 37,798 34,028 11,055 218 215 400 574 1,327 359 737 1,686 1. Figures which represent gross proceeds of issues maturing in more than one 3. Data are not available on a monthly basis. Before 1987, annual totals include year, are principal amount or number of units multiplied by offering price. underwritten issues only. Excludes secondary offerings, employee stock plans, investment companies other SOURCES. IDD Information Services, Inc., the Board of Governors of the than closed-end, intracorporate transactions, equities sold abroad, and Yankee Federal Reserve System, and before 1989, the U.S. Securities and Exchange bonds. Stock data include ownership securities issued by limited partnerships. Commission. 2. Monthly data include only public offerings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 DomesticN onfinancial Statistics • July 1991 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Asset Position Millions of dollars 1990 1991 IItteemm 11998899 11999900 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. INVESTMENT COMPANIES1 1 Sales of own shares2 306,445 345,780 29,227 23,387 27,511 25,583 34,553 38,012 30,605 31,600 2 Redemptions of own shares3 272,165 289,573 24,837 21,053 23,112 22,085 29,484 27,648 23,390 25,384 3 Net sales 34,280 56,207 4,390 2,334 4,399 3,498 5,069 10,364 7,215 6,216 4 Assets4 553,871 570,744 554,722 535,787 538,306 557,676 570,744 590,296 616,472 629,543 44,780 48,638 51,103 51,128 51,847 52,829 48,638 53,549 53,899 52,948 6 Other 509,091 522,106 503,619 484,659 486,459 504,847 522,106 536,747 562,573 576,595 1. Data on sales and redemptions exclude money market mutual funds but 4. Market value at end of period, less current liabilities. include limited maturity municipal bond funds. Data on asset positions exclude 5. Also includes all U.S. government securities and other short-term debt both money market mutual funds and limited maturity municipal bond funds. securities. 2. Includes reinvestment of investment income dividends. Excludes reinvest- NOTE. Investment Company Institute data based on reports of members, which ment of capital gains distributions and share issue of conversions from one fund comprise substantially all open-end investment companies registered with the to another in the same group. Securities and Exchange Commission. Data reflect newly formed companies after 3. Excludes share redemption resulting from conversions from one fund to their initial offering of securities. another in the same group. 1.48 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1989 1990 1991 AAccccoouunntt 11998888 11998899 11999900"" Q2 Q3 Q4 Ql Q2 Q3 Q4' Ql 1 Corporate profits with inventory valuation and capital consumption adjustment 337.6 311.6 298.3 321.4 306.7 290.9 296.8 306.6 300.7 288.9 288.0 2 Profits before tax 316.7 307.7 304.7 314.6 291.4 289.8 296.9 299.3 318.5 304.1 282.7 3 Profits tax liability 136.2 135.1 132.1 140.8 127.8 123.5 129.9 133.1 139.1 126.5 115.1 4 Profits after tax 180.5 172.6 172.5 173.8 163.6 166.3 167.1 166.1 179.4 177.6 167.6 5 Dividends 110.0 123.5 133.9 122.1 125.0 127.7 130.3 133.0 135.1 137.2 137.5 6 Undistributed profits 70.5 49.1 38.7 51.7 38.6 38.6 36.8 33.2 44.3 40.4 30.2 7 Inventory valuation -27.0 -21.7 -11.4 -23.1 -6.1 -14.5 -11.4 -.5 -19.8 -13.8 8.3 8 Capital consumption adjustment 47.8 25.5 4.9 29.9 21.4 15.6 11.3 7.7 2.0 -1.4 -3.0 SOURCE. Survey of Current Business (Department of Commerce). 1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment A Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1989 1990 1991 IInndduussttrryy 11998899 11999900 11999911 Q3 Q4 Ql Q2 Q3 Q4 Ql Q2 1 Total nonfarm business 507.40 532.96 546.41 514.95 519.58 532.45 535.49 534.86 529.02 540.82 547.91 Manufacturing 2 Durable goods industries 82.56 82.99 80.88 83.60 83.41 86.35 84.34 82.67 78.62 81.36 80.86 3 Nondurable goods industries 101.24 109.79 112.51 102.40 108.47 105.02 110.82 111.81 111.52 107.37 113.28 Nonmanufacturing 4 Mining 9.21 9.87 9.85 9.24 9.38 9.58 9.84 9.98 10.09 10.02 10.12 Transportation 5 Railroad 6.26 6.41 6.18 6.36 6.80 6.45 6.66 5.60 6.90 5.80 6.07 6 Air 6.73 8.98 10.06 8.89 5.75 9.35 9.36 10.05 7.17 9.61 8.86 7 Other 5.85 6.20 6.82 5.78 5.69 6.33 5.84 5.76 6.88 6.83 6.67 Public utilities 8 Electric 44.81 43.98 46.66 44.44 44.66 43.37 42.62 43.63 46.31 45.87 46.61 9 Gas and other 21.47 23.02 22.41 20.75 21.15 22.34 21.65 23.85 24.22 22.85 21.97 10 Commercial and other2 229.28 241.72 251.04 233.50 234.25 243.66 244.37 241.51 237.32 251.11 253.48 •Trade and services are no longer being reported separately. They are included 2. "Other" consists of construction; wholesale and retail trade; finance and in Commercial and other, line 10. insurance; personal and business services; and communication. 1. Anticipated by business. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Finance Companies A35 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1 Billions of dollars, end of period 1989 1990 AAccccoouunntt 11998877 11998888 11998899 Q2 Q3 Q4 QL Q2 Q3 Q4 ASSETS Accounts receivable, gross2 141.1 146.2 140.8 143.9 146.3 140.8 137.9 138.6 140.9 136.0 207.4 236.5 256.0 250.9 246.8 256.0 262.9 274.8 275.4 290.8 39.5 43.5 48.9 47.1 48.7 48.9 52.1 55.4 57.7 59.9 4 Total 388.1 426.2 445.8 441.9 441.8 445.8 452.8 468.8 474.0 486.7 Less: 45.3 50.0 52.0 52.2 52.9 52.0 51.9 54.3 55.1 56.6 6.8 7.3 7.7 7.5 7.7 7.7 7.9 8.2 8.6 8.9 336.0 368.9 386.1 382.2 381.3 386.1 393.0 406.3 410.3 421.2 8 All other 58.3 72.4 91.6 81.4 85.2 91.6 92.5 95.5 102.8 103.6 394.2 441.3 477.6 463.6 466.4 477.6 485.5 501.9 513.1 524.8 LIABILITIES 16.4 15.4 14.5 12.1 12.2 14.5 13.9 15.8 15.6 18.6 128.4 142.0 149.5 149.0 147.2 149.5 152.9 152.4 148.6 152.7 Debt 28.0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 137.1 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 50.6 63.8 59.8 60.3 63.8 70.5 72.8 82.0 77.3 n.a. 137.9 147.8 140.5 145.1 147.8 145.7 153.0 156.6 157.4 52.8 59.8 62.6 63.5 61.8 62.6 61.7 66.1 68.7 78.7 31.5 35.6 39.4 38.8 39.8 39.4 40.7 41.8 41.6 40.2 18 Total liabilities and capital 394.2 441.3 477.6 463.6 466.4 477.6 485.5 501.9 513.1 524.8 1. Components may not sum to totals because of rounding. 2. Excludes pools of securitized assets. 1.52 DOMESTIC FINANCE COMPANIES Business Credit Outstanding and Net Change1 Millions of dollars, seasonally adjusted 1990' 1991' TTyyppee 11998888'' 11998899'' 11999900'' Oct. Nov. Dec. Jan. Feb. Mar. 1 234,891 258,957 292,638 287,623 289,335 292,638 293,383 294,284 294,225 Retail financing of installment sales 7 Automotive 37,210 39,479 38,110 39,165 38,475 38,110 38,016 3377,,554488 3366,,664499 3 Equipment 28,185 29,627 31,784 30,667 30,908 31,784 31,956 32,058 32,332 4 Pools of securitized assets2 n.a. 698 951 902 927 951 911 879 828 Wholesale 5 Automotive 32,953 33,814 32,283 34,143 32,905 32,283 32,404 31,428 30,329 6 Equipment 5,971 6,928 11,569 10,752 10,874 11,569 11,299 11,108 10,880 7 All other 9,357 9,985 9,126 9,495 9,451 9,126 9,366 9,142 8,868 8 Pools of securitized assets2 n.a. 0 2,950 2,192 2,841 2,950 2,836 3,353 3,354 Leasing 9 24,693 26,804 39,129 31,535 31,833 39,129 38,921 3388,,992222 3399,,227799 10 Equipment 57,658 68,240 75,626 79,713 80,818 75,626 76,841 79,052 80,969 11 Pools of securitized assets2 n.a. 1,247 1,849 1,724 1,884 1,849 1,854 1,810 1,868 17 Loans on commercial accounts receivable and factored commercial accounts receivable 17,687 18,511 22,475 20,761 21,553 22,475 21,891 2222,,008844 21,666 13 All other business credit 21,176 23,623 26,784 26,574 26,866 26,784 27,089 26,899 27,204 Net change (during period) 14 28,900 24,067 33,681 3,881 1,712 3,303 745 901 -59 Retail financing of installment sales 15 Automotive 1,070 2,267 -1,369 537 -690 --336655 -94 --446688 --990000 16 Equipment 3,108 1,442 2,157 -8 241 877 171 103 274 17 Pools of securitized assets n.a. -26 253 -44 25 24 -40 -32 -51 Wholesale 18 Automotive 2,883 862 -1,531 244 -1,238 -622 121 -975 -1,100 19 393 958 4,641 850 122 695 -270 -192 -228 70 All other 1,029 628 -860 -129 -44 -325 240 -224 -275 21 Pools of securitized assets2 n.a. 0 2,300 679 649 109 -114 517 1 Leasing 77 2,596 2,110 12,326 463 298 7,296 -209 1 358 73 Equipment 14,166 10,581 7,385 971 1,105 -5,192 1,215 2,211 1,917 24 Pools of securitized assets2 n.a. 526 602 69 160 -35 5 -44 58 ?5 Loans on commercial accounts receivable and factored commercial accounts receivable -484 826 3,964 135 793 922 -585 194 -418 26 All other business credit 4,134 3,163 3,163 114 291 -82 305 -190 305 1. These data also appear in the Board's G.20 (422) release. For address, see 2. Data on pools of securitized assets are not seasonally adjusted, inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Nonfinancial Statistics • July 1991 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1990 1991 IItteemm 11998888 11998899 11999900 Oct. Nov. Dec. Jan. Feb. Mar. Apr. Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms 1 Purchase price (thousands of dollars) 150.0 159.6 153.2 146.1 151.5 156.3 148.3 153.2 136.7 151.4 2 Amount of loan (thousands of dollars) 110.5 117.0 112.4 105.1 111.2 115.4 112.3 113.8 100.4 114.5 3 Loan/price ratio (percent) 75.5 74.5 74.8 73.5 75.0 74.9 77.2 76.3 74.6 76.4 4 Maturity (years) 28.0 28.1 27.3 26.9 27.1 28.6 28.1 28.3 25.7 26.8 5 Fees and charges (percent of loan amount)2 2.19 2.06 1.93 1.80 1.68 1.85 1.75 1.73 1.59 2.12 6 Contract rate (percent per year) 8.81 9.76 9.68 9.68 9.61 9.45 9.36 9.28 9.16 9.24 Yield (percent per year) / OTS series3 9.18 10.11 10.01 9.98 9.90 9.76 9.65 9.57 9.43 9.60 8 HUD series4 10.30 10.21 10.08 10.11 9.86 9.66 9.53 9.49 9.49 9.51 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series) 10.49 10.24 10.17 10.23 9.81 9.66 9.58 9.57 9.61 9.61 10 GNMA securities6 9.83 9.71 9.51 9.66 9.46 9.08 8.87 8.66 8.75 8.62 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 101,329 104,974 113,329 114,216 115,085 116,628 117,445 118,284 119,196 120,074 12 FHA/VA-insured 19,762 19,640 21,028 21,495 21,530 21,751 21,854 21,947 21,976 21,972 13 Conventional 81,567 85,335 92,302 92,721 93,555 94,877 95,591 96,337 97,220 98,102 Mortgage transactions (during period) 14 Purchases 23,110 22,518 23,959 2,077 2,078 2,410 1,781 1,792 1,987 2,942 Mortgage commitments1 15 Issued (during period) n.a. n.a. n.a. 1,849 2,426 2,104 1,889 1,779 3,087 3,880 16 To sell (during period)9 n.a. n.a. n.a. 92 0 0 2 0 109 839 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of periodf 17 Total 15,105 20,105 20,419 20,790 21,301 21,857 22,300 22,855 23,221 n.a. 18 FHA/VA 620 590 547 530 524 518 511 503 499 n.a. 19 Conventional 14,485 19,516 19,871 20,260 20,777 21,339 21,789 22,352 22,722 n.a. Mortgage transactions (during period) 20 Purchases 44,077 78,588 75,517 6,118 6,981 10,637 5,018 5,217 4,549 n.a. 21 39,780 73,446 73,817 5,734 6,314 9,918 4,438' 4,549' 6,183' 6,226 Mortgage commitments10 22 Contracted (during period) 66,026 88,519 102,401 10,972 10,164 12,938 8,437 5,579 5,936 n.a. 1. Weighted averages based on sample surveys of mortgages originated by ciation guaranteed, mortgage-backed, fully modified pass-through securities, major institutional lender groups; compiled by the Federal Home Loan Bank assuming prepayment in 12 years on pools of 30-year FHA/VA mortgages Board in cooperation with the Federal Deposit Insurance Corporation. carrying the prevailing ceiling rate. Monthly figures are averages of Friday figures 2. Includes all fees, commissions, discounts, and "points" paid (by the from the Wall Street Journal. borrower or the seller) to obtain a loan. 7. Includes some multifamily and nonprofit hospital loan commitments in 3. Average effective interest rates on loans closed, assuming prepayment at addition to 1- to 4-family loan commitments accepted in FNMA's free market the end of 10 years. auction system, and through the FNMA-GNMA tandem plans. 4. Average contract rates on new commitments for conventional first mort- 8. Does not include standby commitments issued, but includes standby gages; from Department of Housing and Urban Development. commitments converted. 5. Average gross yields on 30-year, minimum-downpayment, Federal Housing 9. Includes participation as well as whole loans. Administration-insured first mortgages for immediate delivery in the private 10. Includes conventional and government-underwritten loans. FHLMC's secondary market. Based on transactions on first day of subsequent month. Large mortgage commitments and mortgage transactions include activity under mortgage/ monthly movements in average yields may reflect market adjustments to changes securities swap programs, while the corresponding data for FNMA exclude swap in maximum permissable contract rates. activity. 6. Average net yields to investors on Government National Mortgage Asso- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate A37 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1989 1990 TTyyppee ooff hhoollddeerr,, aanndd ttyyppee ooff pprrooppeerrttyy 11998888 11998899 11999900 Q4 Ql Q2 Q3 Q4P 1 All holders 3,265,352 3,552,716 3,858,580 3,552,716 3,693,622 3,757,289 3,813,083 3,858,580 ? 1- to 4-family 2,184,449 2,408,575 2,690,678 2,408,575 2,530,708 2,593,951 2,643,112 2,690,678 3 Multifamily 290,651 302,537 300,173 302,537 304,758 300,644 301,756 300,173 4 Commercial 704,970 757,538 783,498 757,538 774,253 778,694 783,916 783,498 5 85,282 84,066 84,231 84,066 83,903 84,000 84,299 84,231 6 Selected financial institutions 1,826,706 1,927,883 1,918,662 1,927,883 1,935,745 1,937,175 1,930,841 1,918,662 7 Commercial banks 669,237 763,415 841,814 763,415 783,542 811,407 828,178 841,814 8 1- to 4-family 317,585 368,518 427,740 368,518 381,221 405,545 418,225 427,740 9 Multifamily 33,158 37,996 36,180 37,996 36,833 37,274 36,737 36,180 10 Commercial 302,989 340,204 360,243 340,204 348,676 351,412 355,843 360,243 11 Farm 15,505 16,697 17,651 16,697 16,812 17,176 17,373 17,651 1? Savings institutions3 924,606 910,254 809,829 910,254 891,921 860,903 836,600 809,829 n 671,722 669,220 610,809 669,220 658,405 642,110 626,789 610,809 14 Multifamily 110,775 106,014 91,789 106,014 103,841 97,359 94,714 91,789 IS Commercial 141,433 134,370 106,708 134,370 129,056 120,866 114,567 106,708 16 676 650 524 650 619 568 530 524 17 Life insurance companies 232,863 254,214 267,018 254,214 260,282 264,865 266,063 267,018 18 1- to 4-family 11,164 12,231 12,837 12,231 12,525 12,740 12,773 12,837 19 Multifamily 24,560 26,907 28,171 26,907 27,555 28,027 28,100 28,171 70 Commercial 187,549 205,472 215,121 205,472 210,422 214,024 214,585 215,121 21 Farm 9,590 9,604 10,890 9,604 9,780 10,075 10,605 10,890 22 Finance companies 37,846 45,476 48,777 45,476 45,808 47,104 49,784 48,777 23 Federal and related agencies 200,570 209,498 247,693 209,498 216,146 227,818 242,695 247,693 24 Government National Mortgage Association 26 23 21 23 22 21 21 21 25 1- to 4-family 26 23 21 23 22 21 21 21 26 Multifamily 0 0 0 0 0 0 0 0 77 Farmers Home Administration5 42,018 41,176 41,324 41,176 41,125 41,175 41,269 41,324 78 1- to 4-family 18,347 18,422 18,494 18,422 18,419 18,434 18,476 18,494 79 Multifamily 8,513 9,054 9,623 9,054 9,199 9,361 9,477 9,623 30 5,343 4,443 4,671 4,443 4,510 4,545 4,608 4,671 31 Farm 9,815 9,257 8,536 9,257 8,997 8,835 8,708 8,536 V Federal Housing and Veterans Administration 5,973 6,087 8,570 6,087 6,355 6,792 7,938 8,570 33 1- to 4-family 2,672 2,875 3,362 2,875 3,027 3,054 3,248 3,362 34 Multifamily 3,301 3,212 5,208 3,212 3,328 3,738 4,690 5,208 35 Federal National Mortgage Association 103,013 110,721 115,508 110,721 112,353 112,855 113,718 115,508 36 1- to 4-family 95,833 102,295 104,900 102,295 103,300 103,431 103,722 104,900 37 Multifamily 7,180 8,426 10,608 8,426 9,053 9,424 9,996 10,608 38 Federal Land Banks 32,115 29,640 29,145 29,640 29,325 29,595 29,441 29,145 39 1- to 4-family 1,890 1,210 1,820 1,210 1,197 1,741 1,766 1,820 40 Farm 30,225 28,430 27,325 28,430 28,128 27,854 27,675 27,325 41 Federal Home Loan Mortgage Corporation 17,425 21,851 20,525 21,851 19,823 19,979 20,508 20,525 4? 1- to 4-family 15,077 18,248 17,870 18,248 16,772 17,316 17,810 17,870 43 Multifamily 2,348 3,603 2,655 3,603 3,051 2,663 2,697 2,655 44 Mortgage pools or trusts6 811,847 946,766 1,101,589 946,766 984,811 1,024,893 1,060,640 1,101,589 45 Government National Mortgage Association 340,527 368,367 404,076 368,367 376,962 385,456 394,859 404,076 46 1- to 4-family 331,257 358,142 393,656 358,142 366,300 374,960 384,474 393,656 47 Multifamily 9,270 10,225 10,419 10,225 10,662 10,496 10,385 10,419 48 Federal Home Loan Mortgage Corporation 226,406 272,870 309,486 272,870 281,736 295,340 301,797 309,486 49 1- to 4-family 219,988 266,060 301,450 266,060 274,084 287,232 293,721 301,450 50 Multifamily 6,418 6,810 8,036 6,810 7,652 8,108 8,077 8,036 St Federal National Mortgage Association 178,250 228,232 303,880 228,232 246,391 263,330 281,806 303,880 5? 172,331 219,577 295,438 219,577 237,916 254,811 273,335 295,438 53 Multifamily 5,919 8,655 8,442 8,655 8,475 8,519 8,471 8,442 54 Farmers Home Administration 104 80 68 80 76 72 70 68 55 1- to 4-family 26 21 17 21 20 19 18 17 56 Multifamily 0 0 0 0 0 0 0 0 57 Commercial 38 26 24 26 25 24 24 24 58 Farm 40 33 27 33 31 30 29 27 59 Individuals and others7 426,229 468,569 590,637 468,569 556,920 567,403 578,908 590,637 60 1- to 4-family 259,971 294,517 402,385 294,517 374,143 382,343 393,027 402,385 61 Multifamily 79,209 81,634 80,978 81,634 83,666 82,040 80,636 80,978 6? Commercial 67,618 73,023 87,995 73,023 79,576 83,557 85,865 87,995 63 Farm 19,431 19,395 19,278 19,395 19,536 19,463 19,379 19,278 1. Based on data from various institutional and governmental sources, with 5. Farmers Home Administration-guaranteed securities sold to the Federal some quarters estimated in part by the Federal Reserve. Multifamily debt refers Financing Bank were reallocated from FmHA mortgage pools to FmHA mortgage to loans on structures of five or more units. holdings in 1986:4, because of accounting changes by the Farmers Home 2. Includes loans held by nondeposit trust companies but not bank trust Administration. departments. 6. Outstanding principal balances of mortgage pools backing securities insured 3. Includes savings banks and savings and loan associations. Beginning 1987:1, or guaranteed by the agency indicated. Includes private pools which are not data reported by FSLIC-insured institutions include loans in process and other shown as a separate line item. contra assets (credit balance accounts that must be subtracted from the corre- 7. Other holders include mortgage companies, real estate investment trusts, sponding gross asset categories to yield net asset levels). state and local credit agencies, state and local retirement funds, noninsured 4. Assumed to be entirely 1- to 4-family loans. pension funds, credit unions, and other U.S. agencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 DomesticN onfinancial Statistics • July 1991 1.55 CONSUMER INSTALLMENT CREDIT1 Total Outstanding, and Net Change, seasonally adjusted Millions of dollars, amounts outstanding, end of period 1990' 1991' HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt 11998899'' 11999900'' July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Seasonally adjusted 11 TToottaall 718,863 735,102 732,750 733,844 735,547 735,433 736.411 735,102 732,962 732,762 731,830 22 AAuuttoommoobbiillee 290,676 284,585 288,136 286,818 285,627 285,024 284.412 284,585 283,746 282,626 280,332 33 RReevvoollvviinngg 199,082 220,110 215,119 217,024 219,090 220,031 221,690 220,110 219,588 221,556 224,804 44 MMoobbiillee hhoommee 22,471 20,919 21,211 21,191 21,073 20,680 20,492 20,919 20,459 20,200 20,105 55 OOtthheerr 206,633 209,487 208,284 208,811 209,758 209,698 209,817 209,487 209,170 208,379 206,588 Not seasonally adjusted 6 Total 730,901 748,300 730,660 736,480 738,946 736,091 738,626 748,300 736,399 729,264 724,855 By major holder 7 Commercial banks 342,770 347,466 336,658 340,525 342,698 341,755 342,882 347,466 341,426 339,282 335,803 8 Finance companies 140,832 137,450 138,796 139,496 140,890 141,329 139,195 137,450 134,965 133,021 131,552 9 Credit unions 93,114 92,911 92,260 93,071 92,996 93,190 92,918 92,911 91,991 91,131 90,263 10 Retailers 44,154 43,552 39,165 39,557 38,963 38,282 39,095 43,552 40,945 38,864 38,497 11 Savings institutions 57,253 45,616 53,541 51,822 50,683 48,055 47,121 45,616 44,939 43,875 42,491 12 Gasoline companies 3,935 4,822 4,396 4,722 4,723 4,749 4,753 4,822 4,766 4,404 4,2% 13 Pools of securitized assets2 .. 48,843 76,483 65,844 67,287 67,993 68,731 72,662 76,483 77,367 78,687 81,953 By mqjor type of credit3 14 Automobile 290,705 284,813 288,741 289,371 289,169 287,304 285,379 284,813 282,214 279,913 277,445 15 Commercial banks 126,288 126,259 126,475 127,647 128,268 127,667 126,544 126,259 126,235 124,745 123,344 16 Finance companies 82,721 74,397 77,716 77,205 78,116 78,033 75,224 74,397 72,015 70,287 69,233 17 Pools of securitized assets 18,235 24,537 22,099 21,988 21,390 20,944 23,475 24,537 25,123 26,872 27,757 18 Revolving 210,310 232,370 213,140 216,633 218,279 218,337 222,643 232,370 223,606 220,714 221,387 19 Commercial banks 130,811 132,433 125,248 126,683 127,415 127,108 129,117 132,433 125,814 125,673 124,635 20 Retailers 39,583 39,029 34,731 35,101 34,528 33,867 34,657 39,029 36,510 34,509 34,179 21 Gasoline companies 3,935 4,822 4,396 4,722 4,723 4,749 4,753 4,822 4,766 4,404 4,2% 22 Pools of securitized assets2 23,477 44,335 36,785 38,194 39,606 40,798 42,297 44,335 44,773 44,451 46,722 23 Mobile home 22,240 20,666 21,245 21,185 21,195 20,773 20,472 20,666 20,614 20,362 20,013 24 Commercial banks 9,112 9,763 9,005 9,338 9,263 9,274 9,199 9,763 9,748 9,730 9,615 25 Finance companies 4,716 5,252 5,328 5,358 5,423 5,400 5,364 5,252 5,367 5,330 5,328 26 Other 207,646 210,451 207,534 209,291 210,303 209,677 210,132 210,451 209,965 208,275 206,010 27 Commercial banks 76,559 79,011 75,930 76,857 77,752 77,706 78,022 79,011 79,629 79,134 78,209 28 Finance companies 53,395 57,801 55,752 56,933 57,351 57,896 58,607 57,801 57,583 57,404 56,991 29 Retailers 4,571 4,523 4,434 4,456 4,435 4,415 4,438 4,523 4,435 4,355 4,318 30 Pools of securitized assets2 7,131 7,611 6,960 7,105 6,997 6,989 6,890 7,611 7,471 7,364 7,474 1. The Board's series cover most short- and intermediate-term credit extended 2. Outstanding balances of pools upon which securities have been issued; these to individuals that is scheduled to be repaid (or has the option of repayment) in balances are no longer carried on the balance sheets of the loan originator. two or more installments. 3. Totals include estimates for certain holders for which only consumer credit These data also appear in the Board's G.19 (421) release. For address, see totals are available. inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumer Installment Credit A39 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT1 Percent unless noted otherwise 1990 1991 IItteemm 11998888 11998899 11999900 Sept. Oct. Nov. Dec. Jan. Feb. Mar. INTEREST RATES Commercial banks2 1 48-month new car 10.85 12.07 11.78 n.a. n.a. 11.62 n.a. n.a. 11.60 n.a. 2 24-month personal 14.68 15.44 15.46 n.a. n.a. 15.69 n.a. n.a. 15.42 n.a. 3 120-month mobile home3 13.54 14.11 14.02 n.a. n.a. 13.99 n.a. n.a. 13.88 n.a. 4 Credit card 17.78 18.02 18.17 n.a. n.a. 18.23 n.a. n.a. 18.28 n.a. Auto finance companies New car 12.60 12.62 12.54 12.34 12.57 12.74 12.86 12.99 13.16 13.14 6 Used car 15.11 16.18 15.99 16.03 16.12 16.07 16.04 15.70 15.90 15.82 OTHER TERMS4 Maturity (months) 7 New car 56.2 54.2 54.6 54.3 54.6 54.6 54.7 54.9 55.2 55.2 8 Used car 46.7 46.6 46.1 46.1 46.1 46.0 45.8 47.4 47.1 47.2 Loan-to-value ratio 9 New car 94 91 87 85 85 85 85 88 88 87 10 Used car 98 97 95 95 95 95 94 % % 97 Amount financed (dollars) 11 New car 11,663 12,001 12,071 11,837 11,917 11,986 12,140 12,229 12,081 12,121 12 Used car 7,824 7,954 8,289 8,403 8,423 8,494 8,530 8,600 8,605 8,763 1. These data also appear in the Board's G.19 (421) release. For address, see 3. Before 1983 the maturity for new car loans was 36 months, and for mobile inside front cover. home loans was 84 months. 2. Data for midmonth of quarter only. 4. At auto finance companies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • July 1991 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1989 1990 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998866 11998877 11998888 11998899 11999900 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors.. 836.9 687.0 760.8 678.2 662.1 666.8 678.8 620.2 788.6 611.8 687.2 561.0 By sector and instrument 2 U.S. government 215.0 144.9 157.5 151.6 272.5 100.1 173.9 185.0 247.3 228.2 286.1 328.4 3 Treasury securities 214.7 143.4 140.0 150.0 264.4 95.0 166.8 189.6 217.8 222.9 287.5 329.4 4 Agency issues and mortgages .4 1.5 17.4 1.6 8.2 5.1 7.1 -4.6 29.6 5.4 -1.3 -1.0 5 Private domestic nonfinancial sectors 621.9 542.1 603.3 526.6 389.6 566.7 504.9 435.2 541.3 383.6 401.0 232.6 6 Debt capital instruments 465.8 453.2 459.2 379.8 309.6 390.1 369.2 347.0 393.7 318.9 282.8 243.0 7 Tax-exempt obligations 22.7 49.3 49.8 30.4 19.4 28.7 34.1 19.1 13.0 24.7 29.8 10.1 8 Corporate bonds 126.8 79.4 102.9 73.7 61.5 86.5 62.7 87.4 45.2 75.2 46.0 79.6 9 Mortgages 316.3 324.5 306.5 275.7 228.7 275.0 272.4 240.5 335.6 218.9 207.0 153.3 10 Home mortgages 218.7 234.9 231.0 218.0 214.4 211.3 221.0 214.3 272.8 228.2 179.3 177.4 11 Multifamily residential 33.5 24.4 16.7 16.4 -.7 21.4 11.8 9.5 22.1 -18.2 3.1 -9.7 12 Commercial 73.6 71.6 60.8 42.7 14.8 41.5 40.9 19.9 40.1 10.9 22.7 -14.6 13 Farm -9.5 -6.4 -2.1 -1.5 .2 .9 -1.3 -3.2 .5 -1.9 1.9 .2 14 Other debt instruments 156.1 88.9 144.1 146.8 80.0 176.5 135.6 88.2 147.6 64.7 118.2 -10.4 15 Consumer credit 58.0 33.5 50.2 39.1 18.4 36.9 37.1 44.1 14.9 10.5 26.6 21.6 16 Bank loans n.e.c 66.9 10.0 39.8 39.9 -3.0 45.1 50.8 7.7 18.7 6.5 5.6 -43.0 17 Open market paper -9.3 2.3 11.9 20.4 9.7 39.5 16.9 -6.9 69.6 -6.2 17.3 -41.7 18 Other 40.5 43.2 42.2 47.4 54.9 55.0 30.9 43.3 44.3 53.9 68.7 52.6 19 By borrowing sector 621.9 542.1 603.3 526.6 389.6 566.7 504.9 435.2 541.3 383.6 401.0 232.6 20 State and local governments 36.2 48.8 45.6 29.6 14.6 33.3 28.6 16.5 8.9 17.7 28.7 3.1 21 Households 293.0 302.2 314.9 285.0 260.1 264.0 290.8 291.8 335.0 269.7 246.8 189.0 22 Nonfinancial business 292.7 191.0 242.8 211.9 114.9 269.4 185.4 126.9 197.4 96.2 125.6 40.4 23 Farm -16.3 -10.6 -7.5 1.6 3.0 -5.0 -2.1 8.9 6.3 -4.8 5.2 5.1 24 Nonfarm noncorporate 99.2 77.9 65.7 50.8 14.3 56.9 40.2 35.0 44.4 5.2 22.3 -14.5 25 Corporate 209.7 123.7 184.6 159.5 97.6 217.4 147.3 83.1 146.8 95.8 98.1 49.8 26 Foreign net borrowing in United States 9.7 4.5 6.3 10.9 23.3 -6.9 30.4 16.9 -3.5 42.5 32.9 21.2 27 Bonds 3.1 7.4 6.9 5.3 21.1 11.5 8.1 -1.0 28.1 27.4 3.2 25.7 28 Bank loans n.e.c -1.0 -3.6 -1.8 -.1 -2.8 -3.2 3.7 -4.3 -6.7 -2.0 1.9 -4.3 29 Open market paper 11.5 2.1 8.7 13.3 12.3 -6.6 20.7 22.2 -16.4 23.1 27.3 15.3 30 U.S. government loans -3.9 -1.4 -7.5 -7.5 -7.4 -8.7 -2.1 .1 -8.5 -6.1 .5 -15.5 31 Total domestic plus foreign 846.6 691.5 767.1 689.1 685.4 659.9 709.2 637.1 785.1 654.3 720.1 582.2 Financial sectors 32 Total net borrowing by financial sectors 285.1 300.2 247.6 205.5 199.4 154.1 123.9 187.3 198.6 172.6 170.9 255.4 By instrument 33 U.S. government related 154.1 171.8 119.8 151.0 170.6 128.8 124.8 156.4 176.2 183.8 137.5 184.8 34 Sponsored credit agency securities 15.2 30.2 44.9 25.2 22.6 22.5 13.2 -4.7 14.3 17.0 20.6 38.8 35 Mortgage pool securities 139.2 142.3 74.9 125.8 148.0 106.3 111.6 161.1 162.0 166.8 116.9 146.1 36 Loans from U.S. government -.4 -.8 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 37 Private financial sectors 131.0 128.4 127.8 54.5 28.8 25.3 -.9 30.9 22.3 -11.3 33.5 70.5 38 Corporate bonds 82.9 78.9 51.7 36.8 44.1 28.5 26.7 39.6 37.7 64.0 22.3 52.4 39 Mortgages .1 .4 .3 .0 .7 .0 .3 -.4 -.7 .8 2.6 .0 40 Bank loans n.e.c 4.0 -3.2 1.4 1.8 .7 -.1 2.0 4.2 -2.2 -.6 1.9 3.8 41 Open market paper 24.2 27.9 54.8 26.9 8.0 10.1 11.0 36.3 9.5 -44.6 37.2 29.8 42 Loans from Federal Home Loan Banks 19.8 24.4 19.7 -11.0 -24.7 -13.1 -41.0 -48.8 -22.0 -30.9 -30.5 -15.5 By sector 43 285.1 300.2 247.6 205.5 199.4 154.1 123.9 187.3 198.6 172.6 170.9 255.4 44 Sponsored credit agencies 14.9 29.5 44.9 25.2 22.6 22.5 13.2 -4.7 14.3 17.0 20.6 38.8 45 Mortgage pools 139.2 142.3 74.9 125.8 148.0 106.3 111.6 161.1 162.0 166.8 116.9 146.1 46 Private financial sectors 131.0 128.4 127.8 54.5 28.8 25.3 -.9 30.9 22.3 -11.3 33.5 70.5 47 Commercial banks -3.6 6.2 -3.0 -1.4 -1.1 2.5 3.5 -.7 -4.9 -7.9 -12.5 21.0 48 Bank affiliates 15.2 14.3 5.2 6.2 -27.7 2.9 16.5 -3.9 -10.0 -32.2 -40.2 -28.5 49 Savings and loan associations 20.9 19.6 19.9 -14.1 -32.4 -16.3 -44.7 -56.2 -15.8 -53.5 -36.5 -24.0 50 Mutual savings banks 4.2 8.1 1.9 -1.4 -.1 .0 -2.3 .7 -8.3 6.5 .3 1.1 51 Finance companies 54.7 40.8 67.7 46.3 50.9 40.4 23.5 52.6 27.1 27.5 91.3 57.8 52 REITs .8 .3 3.5 -1.9 -.3 -2.8 -3.1 .1 -.5 -2.0 1.3 -.1 53 SCO Issuers 39.0 39.1 32.5 20.8 39.5 -1.4 5.7 38.2 34.7 50.3 29.7 43.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A41 1.57—Continued 1989 1990 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998866 11998877 11998888 11998899 11999900 Q2 Q3 Q4 Q1 Q2 Q3 Q4 All sectors 54 Total net borrowing 1,131.7 991.7 1,014.7 894.5 884.8 814.0 833.0 824.4 983.7 826.8 891.0 837.5 55 U.S. government securities 369.5 317.5 277.2 302.6 443.1 228.9 298.7 341.4 423.6 412.1 423.6 513.3 56 State and local obligations 22.7 49.3 49.8 30.4 19.4 28.7 34.1 19.1 13.0 24.7 29.8 10.1 57 Corporate and foreign bonds 212.8 165.7 161.5 115.8 126.7 126.5 97.6 125.9 111.0 166.6 71.4 157.7 58 Mortgages 316.4 324.9 306.7 275.7 229.4 275.0 272.7 240.1 334.9 219.7 209.5 153.4 59 Consumer credit 58.0 33.5 50.2 39.1 18.4 36.9 37.1 44.1 14.9 10.5 26.6 21.6 60 Bank loans n.e.c 69.9 3.2 39.4 41.5 -5.1 41.9 56.5 7.5 9.8 4.0 9.4 -43.5 61 Open market paper 26.4 32.3 75.4 60.6 30.0 42.9 48.5 51.6 62.6 -27.7 81.9 3.3 62 Other loans 56.1 65.5 54.4 28.9 22.8 33.2 -12.2 -5.4 13.9 17.0 38.8 21.6 63 MEMO: U.S. government, cash balance .0 -7.9 10.4 -5.9 8.6 20.7 -22.7 -7.3 22.9 -38.1 21.1 28.3 Totals net of changes in U.S. government cash balances 64 Net borrowing by domestic nonfinancial 836.9 694.9 750.4 684.1 653.6 646.1 701.6 627.6 765.7 649.9 666.1 532.6 65 Net borrowing by U.S. government 215.0 152.8 147.1 157.5 264.0 79.4 196.7 192.4 224.4 266.3 265.1 300.1 External corporate equity funds raised in United States 66 Total net share issues 86.8 10.9 -124.2 -63.7 17.2 -43.0 -61.0 14.9 -4.7 51.3 -9.6 31.7 67 Mutual funds 159.0 73.9 1.1 41.3 66.9 34.0 57.9 72.4 53.1 76.5 51.7 86.2 68 All other -72.2 -63.0 -125.3 -105.1 -49.7 -77.0 -118.9 -57.6 -57.8 -25.2 -61.3 -54.4 69 Nonfinancial corporations -85.0 -75.5 -129.5 -124.2 -63.0 -98.7 -146.3 -79.3 -69.0 -48.0 -74.0 -61.0 70 Financial corporations 11.6 14.6 3.3 2.4 6.1 4.3 -.1 4.5 10.0 .3 12.6 1.5 71 Foreign shares purchased in United States 1.2 -2.1 .9 16.7 7.2 17.4 27.5 17.2 1.3 22.5 .1 5.1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • July 1991 1.58 DIRECT AND INDIRECT SOURCES OF FUNDS TO CREDIT MARKETS Billions of dollars, except as noted; quarterly data are at seasonally adjusted annual rates. 1989 1990 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11998866 11998877 11998888 11998899 11999900 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 Total funds advanced in credit markets to domestic nonfinancial sectors 836.9 687.0 760.8 678.2 662.1 666.8 678.8 620.2 788.6 611.8 687.2 561.0 By public agencies and foreign 2 Total net advances 280.2 248.8 210.7 187.6 278.7 15.5 218.3 203.8 234.4 314.3 316.1 249.9 3 U.S. government securities 69.4 70.1 85.2 30.7 79.9 -103.3 115.7 27.1 17.3 97.1 134.9 70.2 4 Residential mortgages 136.3 139.1 86.3 137.9 179.0 119.7 127.7 178.3 182.2 206.7 160.8 166.3 5 FHLB advances to thrifts 19.8 24.4 19.7 -11.0 -24.7 -13.1 -41.0 -48.8 -22.0 -30.9 -30.5 -15.5 6 Other loans and securities 54.7 15.1 19.4 30.0 44.5 12.1 15.8 47.1 56.8 41.3 50.9 28.9 Total advanced, by sector 7 U.S. government 9.7 -7.9 -9.4 -2.4 34.0 -6.0 -9.3 5.7 33.5 41.3 59.1 2.0 8 Sponsored credit agencies 153.3 169.3 112.0 125.3 170.1 28.0 126.4 158.4 184.2 166.3 155.6 174.4 9 Monetary authorities 19.4 24.7 10.5 -7.3 8.1 -1.6 -31.2 -4.6 -6.3 40.4 24.4 -25.9 10 Foreign 97.8 62.7 97.6 72.1 66.4 -4.9 132.4 44.2 22.9 66.4 77.0 99.4 Agency and foreign borrowing not in line 1 11 Sponsored credit agencies and mortgage pools 154.1 171.8 119.8 151.0 170.6 128.8 124.8 156.4 176.2 183.8 137.5 184.8 12 Foreign 9.7 4.5 6.3 10.9 23.3 -6.9 30.4 16.9 -3.5 42.5 32.9 21.2 Private domestic funds advanced 13 Total net advances 720.5 614.5 676.2 652.5 577.3 773.3 615.7 589.7 727.0 523.8 541.5 517.1 14 U.S. government securities 300.1 247.4 192.1 271.9 363.2 332.2 183.0 314.3 406.2 314.9 288.8 443.0 15 State and local obligations 22.7 49.3 49.8 30.4 19.4 28.7 34.1 19.1 13.0 24.7 29.8 10.1 16 Corporate and foreign bonds 89.7 66.9 91.3 66.1 67.7 91.1 65.6 70.6 57.0 81.7 47.2 84.8 17 Residential mortgages 115.9 120.2 161.3 96.5 34.8 113.0 105.1 45.5 112.7 3.3 21.6 1.5 18 Other mortgages and loans 212.0 155.2 201.4 176.6 67.6 195.2 186.9 91.5 116.1 68.3 123.6 -37.7 19 LESS: Federal Home Loan Bank advances 19.8 24.4 19.7 -11.0 -24.7 -13.1 -41.0 -48.8 -22.0 -30.9 -30.5 -15.5 Private financial intermediation 20 Credit market funds advanced by private financial institutions 730.0 528.4 562.3 511.1 394.1 600.9 345.9 623.4 379.9 275.8 404.8 515.8 21 Commercial banking 198.1 135.4 156.3 177.3 119.9 160.9 183.7 184.3 188.1 126.1 104.6 60.7 22 Savings institutions 107.6 136.8 120.4 -90.9 -141.0 -42.3 -135.8 -201.9 -56.6 -210.3 -167.4 -129.6 23 Insurance and pension funds 160.1 179.7 198.7 177.9 226.1 188.1 136.1 205.1 168.8 238.9 231.0 265.5 24 Other finance 264.2 76.6 86.9 246.8 189.1 294.2 161.9 436.0 79.5 121.1 236.6 319.2 25 Sources of funds 730.0 528.4 562.3 511.1 394.1 600.9 345.9 623.4 379.9 275.8 404.8 515.8 26 Private domestic deposits and RPs 277.1 162.8 229.2 225.2 72.8 267.4 284.4 208.0 113.0 36.7 91.8 49.6 27 Credit market borrowing 131.0 128.4 127.8 54.5 28.8 25.3 -.9 30.9 22.3 -11.3 33.5 70.5 28 Other sources 321.8 237.1 205.3 231.4 292.5 308.2 62.3 384.6 244.6 250.3 279.6 395.6 29 Foreign funds 12.9 43.7 9.3 -9.9 46.5 -35.4 30.4 -20.6 46.4 13.4 122.2 4.2 30 Treasury balances 1.7 -5.8 7.3 -3.4 5.3 13.9 -19.9 5.0 13.1 -13.4 18.2 3.4 31 Insurance and pension reserves 119.9 135.4 177.6 140.5 209.2 123.2 82.6 193.9 144.8 219.2 219.8 252.8 32 Other, net 187.3 63.9 11.0 104.2 31.5 206.4 -30.8 206.3 40.3 31.1 -80.7 135.2 Private domestic nonfinancial investors 33 Direct lending in credit markets 121.5 214.6 241.7 195.9 212.0 197.7 268.9 -2.8 369.3 236.8 170.1 71.9 34 U.S. government securities 27.0 86.0 129.0 134.3 198.4 136.2 196.8 4.3 250.7 186.2 178.1 178.5 35 State and local obligations -19.9 61.8 53.5 28.4 -1.3 5.1 39.0 12.8 .4 13.0 16.0 -34.3 36 Corporate and foreign bonds 52.9 23.3 -9.4 .7 -26.6 9.4 -4.7 14.6 38.0 -27.2 -82.4 -34.8 37 Open market paper 9.9 15.8 36.4 5.4 15.9 17.8 21.4 -64.6 45.3 39.8 13.7 -35.3 38 Other 51.7 27.6 32.2 27.1 25.6 29.2 16.4 30.1 34.9 24.9 44.8 -2.1 39 Deposits and currency 297.5 179.3 232.8 241.3 100.1 290.6 261.8 230.6 138.0 60.3 137.8 64.3 40 Currency 14.4 19.0 14.7 11.7 22.6 12.8 6.0 10.1 26.1 23.1 32.2 9.1 41 Checkable deposits 96.4 -.9 12.9 1.5 -1.0 -41.7 14.7 65.8 -11.0 -4.2 16.9 -5.6 42 Small time and savings accounts 120.6 76.0 122.4 100.5 67.5 99.0 163.1 109.1 111.3 29.3 63.0 66.6 43 Money market fund shares 43.2 28.9 20.2 85.2 62.4 119.2 116.7 65.6 72.2 4.7 110.9 62.0 44 Large time deposits -3.2 37.2 40.8 23.1 -45.8 61.1 -23.8 -13.4 -24.6 -15.4 -78.8 -64.2 45 Security RPs 20.2 21.6 32.9 14.9 -10.5 29.8 13.7 -19.2 -34.9 22.3 -20.2 -9.1 46 Deposits in foreign countries 5.9 -2.5 -11.2 4.4 4.7 10.4 -28.6 12.4 -1.1 .6 13.9 5.6 47 Total of credit market instruments, deposits, and currency 419.0 393.9 474.5 437.2 312.1 488.3 530.7 227.7 507.3 297.1 307.9 136.2 48 Public holdings as percent of total 33.1 36.0 27.5 27.2 40.7 2.3 30.8 32.0 29.9 48.0 43.9 42.9 49 Private financial intermediation (in percent) 101.3 86.0 83.2 78.3 68.3 77.7 56.2 105.7 52.3 52.7 74.8 99.7 50 Total foreign funds 110.7 106.4 106.9 62.2 113.0 -40.3 162.8 23.6 69.3 79.8 199.2 103.6 MEMO: Corporate equities not included above 51 Total net issues 86.8 10.9 -124.2 -63.7 17.2 -43.0 -61.0 14.9 -4.7 51.3 -9.6 31.7 52 Mutual fund shares 159.0 73.9 1.1 41.3 66.9 34.0 57.9 72.4 53.1 76.5 51.7 86.2 53 Other equities -72.2 -63.0 -125.3 -105.1 -49.7 -77.0 -118.9 -57.6 -57.8 -25.2 -61.3 -54.4 54 Acquisitions by financial institutions 50.9 32.0 -2.9 17.2 30.1 -14.1 6.1 76.9 42.1 72.1 -36.5 42.8 55 Other net purchases 35.9 -21.2 -121.4 -80.9 -12.9 -28.9 -67.1 -62.1 -46.8 -20.8 26.9 -11.0 NOTES BY LINE NUMBER. 31. Excludes net investment of these reserves in corporate equities. 1. Line 1 of table 1.57. 32. Mainly retained earnings and net miscellaneous liabilities. 2. Sum of lines 3-6 or 7-10. 33. Line 13 less line 20 plus line 27. 6. Includes farm and commercial mortgages. 34-38. Lines 14-18 less amounts acquired by private finance plus amounts 11. Credit market funds raised by federally sponsored credit agencies, and net borrowed by private finance. Line 38 includes mortgages. issues of federally related mortgage pool securities. 40. Mainly an offset to line 9. 13. Line 1 less line 2 plus line 11 and 12. Also line 20 less line 27 plus line 33. 47. Lines 33 plus 39, or line 13 less line 28 plus 40 and 46. Also sum of lines 28 and 47 less lines 40 and 46. 48. Line 2/line 1. 18. Includes farm and commercial mortgages. 49. Line 20/line 13. 26. Line 39 less lines 40 and 46. 50. Sum of lines 10 and 29. 27. Excludes equity issues and investment company shares. Includes line 19. 51. 53. Includes issues by financial institutions. 29. Foreign deposits at commercial banks, bank borrowings from foreign NOTE. Full statements for sectors and transaction types in flows and in amounts branches, and liabilities of foreign banking agencies to foreign affiliates, less outstanding may be obtained from Flow of Funds Section, Division of Research claims on foreign affiliates and deposits by banking in foreign banks. and Statistics, Board of Governors of the Federal Reserve System, Washington, 30. Demand deposits and note balances at commercial banks. D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A43 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING Billions of dollars; period-end levels. 1989 1990 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998866 11998877 11998888 11998899 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 7,646.3 8,343.9 9,096.0 9,805.2 9,438.7 9,605.1 9,805.2 10,069.4 10,226.6 10,394.1 10,579.9 By sector and instrument 2 U.S. government 1,815.4 1,960.3 2,117.8 2,269.4 2,165.7 2,206.1 2,269.4 2,360.9 2,401.7 2,470.2 2,568.9 3 Treasury securities 1,811.7 1,955.2 2,095.2 2,245.2 2,142.1 2,180.7 2,245.2 2,329.3 2,368.8 2,437.6 2,536.5 4 Agency issues and mortgages 3.6 5.2 22.6 24.2 23.6 25.4 24.2 31.6 32.9 32.6 32.4 5 Private domestic nonfinancial sectors 5,831.0 6,383.6 6,978.2 7,535.8 7,273.0 7,399.0 7,535.8 7,708.6 7,824.9 7,923.9 8,011.0 6 Debt capital instruments 3,962.7 4,427.9 4,886.4 5,283.3 5,091.4 5,189.9 5,283.3 5,449.4 5,533.8 5,610.6 5,678.2 7 Tax-exempt obligations 679.1 728.4 790.8 821.2 804.9 816.4 821.2 822.4 827.4 838.0 840.6 8 Corporate bonds 669.4 748.8 851.7 925.4 887.9 903.5 925.4 936.7 955.5 967.0 986.9 9 Mortgages 2,614.2 2,950.7 3,243.8 3,536.6 3,398.6 3,470.0 3,536.6 3,690.4 3,750.9 3,805.6 3,850.7 10 Home mortgages 1,720.8 1,943.1 2,173.9 2,404.3 2,287.6 2,347.6 2,404.3 2,530.7 2,594.0 2,643.1 2,690.7 11 Multifamily residential 246.2 270.0 286.7 304.4 298.3 301.2 304.4 303.7 298.9 299.8 298.1 12 Commercial 551.4 648.7 696.4 742.6 725.9 734.9 742.6 772.1 773.9 778.4 777.7 13 Farm 95.8 88.9 86.8 85.3 86.8 86.3 85.3 83.9 84.0 84.3 84.2 14 Other debt instruments 1,868.2 1,955.7 2,091.9 2,252.6 2,181.6 2,209.1 2,252.6 2,259.1 2,291.2 2,313.3 2,332.8 15 Consumer credit 659.8 693.2 743.5 790.6 756.7 771.0 790.6 774.3 783.3 793.9 809.0 16 Bank loans n.e.c 666.0 673.3 713.1 763.0 740.3 750.7 763.0 756.2 761.6 761.1 760.2 17 Open market paper 62.9 73.8 85.7 107.1 110.1 113.3 107.1 126.0 128.7 131.8 116.9 18 Other 479.6 515.3 549.6 591.9 574.5 574.1 591.9 602.6 617.6 626.5 646.8 19 By borrowing sector 5,831.0 6,383.6 6,978.2 7,535.8 7,273.0 7,399.0 7,535.8 7,708.6 7,824.9 7,923.9 8,011.0 20 State and local governments 510.1 558.9 604.5 634.1 619.9 629.9 634.1 634.3 637.6 647.9 648.8 21 Households 2,596.1 2,879.1 3,191.5 3,501.8 3,330.7 3,411.4 3,501.8 3,625.0 3,699.7 3,768.4 3,834.1 22 Nonfinancial business 2,724.8 2,945.6 3,182.2 3,400.0 3,322.5 3,357.6 3,400.0 3,449.3 3,487.6 3,507.6 3,528.2 23 Farm 156.6 145.5 137.6 139.2 139.5 139.2 139.2 137.4 140.2 141.5 140.9 24 Nonfarm noncorporate 997.6 1,075.4 1,145.1 1,195.9 1,177.6 1,183.0 1,195.9 1,208.0 1,208.9 1,209.8 1,210.2 25 Corporate 1,570.6 1,724.6 1,899.5 2,064.8 2,005.3 2,035.5 2,064.8 2,103.9 2,138.6 2,156.3 2,177.1 26 Foreign credit market debt held in United States 238.3 244.6 253.9 261.5 252.2 257.7 261.5 260.4 272.0 279.3 284.8 27 Bonds 74.9 82.3 89.2 94.5 92.1 94.2 94.5 102.1 107.7 108.6 115.6 28 Bank loans n.e.c 26.9 23.3 21.5 21.4 21.5 22.6 21.4 19.0 19.3 19.8 18.6 29 Open market paper 37.4 41.2 49.9 63.0 52.7 57.5 63.0 59.3 65.1 71.5 75.3 30 U.S. government loans 99.1 97.7 93.2 82.6 85.8 83.4 82.6 80.0 80.0 79.4 75.3 31 Total domestic plus foreign 7,884.7 8,588.5 9,349.9 10,066.8 9,690.8 9,862.8 10,066.8 10,329.8 10,498.7 10,673.3 10,864.7 Financial sectors 32 Total credit market debt owed by financial sectors 1,529.8 1,836.8 2,084.4 2,322.4 2,234.1 2,263.8 2,322.4 2,356.3 2,403.3 2,444.4 2,520.2 By instrument 33 U.S. government related 810.3 978.6 1,098.4 1,249.3 1,169.5 1,203.6 1,249.3 1,286.1 1,328.0 1,365.4 1,418.5 34 Sponsored credit agency securities 273.0 303.2 348.1 373.3 369.0 370.4 373.3 376.0 378.9 381.9 396.0 35 Mortgage pool securities 531.6 670.4 745.3 871.0 795.6 828.2 871.0 905.2 944.2 978.5 1,017.5 36 Loans from U.S. government 5.7 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 37 Private financial sectors 719.5 858.2 986.1 1,073.0 1,064.6 1,060.2 1,073.0 1,070.2 1,075.3 1,079.0 1,101.8 38 Corporate bonds 287.4 366.3 418.0 482.7 466.1 472.7 482.7 491.7 508.2 513.6 526.8 39 Mortgages 2.7 3.1 3.4 3.4 3.5 3.5 3.4 3.2 3.5 4.1 4.1 40 Bank loans n.e.c 36.1 32.8 34.2 36.0 33.8 34.1 36.0 33.2 34.8 34.9 36.7 41 Open market paper 284.6 322.9 377.7 409.1 399.4 398.8 409.1 409.1 402.5 408.4 417.1 42 Loans from Federal Home Loan Banks... 108.6 133.1 152.8 141.8 161.9 151.1 141.8 132.9 126.3 117.9 117.1 43 Total, by sector 1,529.8 1,836.8 2,084.4 2,322.4 2,234.1 2,263.8 2,322.4 2,356.3 2,403.3 2,444.4 2,520.2 44 Sponsored credit agencies 278.7 308.2 353.1 378.3 374.0 375.4 378.3 381.0 383.8 386.8 400.9 45 Mortgage pools 531.6 670.4 745.3 871.0 795.6 828.2 871.0 905.2 944.2 978.5 1,017.5 46 Private financial sectors 719.5 858.2 986.1 1,073.0 1,064.6 1,060.2 1,073.0 1,070.2 1,075.3 1,079.0 1,101.8 47 Commercial banks 75.6 81.8 78.8 77.4 75.7 77.0 77.4 73.4 73.3 70.7 76.3 48 Bank affiliates 116.8 131.1 136.2 142.5 141.2 144.0 142.5 141.5 133.8 122.5 114.7 49 Savings and loan associations 119.8 139.4 159.3 145.2 167.9 155.7 145.2 137.1 125.6 115.1 112.7 50 Mutual savings banks 8.6 16.7 18.6 17.2 17.7 17.5 17.2 15.4 16.7 17.3 17.1 51 Finance companies 328.1 378.8 446.1 496.2 478.0 481.2 496.2 499.6 510.3 530.1 546.6 57. REITs 6.5 7.3 11.4 10.1 10.6 10.0 10.1 10.1 9.8 10.2 10.3 53 SCO issuers 64.0 103.1 135.7 184.4 173.5 174.9 184.4 193.1 205.7 213.1 224.0 All sectors 54 Total credit market debt 9,414.4 10,425.3 11,434.3 12,389.1 11,925.0 12,126.6 12,389.1 12,686.1 12,902.0 13,117.7 13,384.9 55 U.S. government securities 2,620.0 2,933.9 3,211.1 3,513.7 3,330.3 3,404.7 3,513.7 3,642.0 3,724.8 3,830.6 3,982.4 56 State and local obligations 679.1 728.4 790.8 821.2 804.9 816.4 821.2 822.4 827.4 838.0 840.6 57 Corporate and foreign bonds 1,031.7 1,197.4 1,358.9 1,502.6 1,446.1 1,470.5 1,502.6 1,530.5 1,571.4 1,589.3 1,629.3 58 Mortgages 2,617.0 2,953.8 3,247.2 3,540.1 3,402.1 3,473.6 3,540.1 3,693.6 3,754.3 3,809.7 3,854.8 59 Consumer credit 659.8 693.2 743.5 790.6 756.7 771.0 790.6 774.3 783.3 793.9 809.0 60 Bank loans n.e.c 729.0 729.5 768.9 820.3 795.6 807.4 820.3 808.4 815.7 815.8 815.5 61 Open market paper 384.9 437.9 513.4 579.2 562.2 569.6 579.2 594.5 596.3 611.7 609.2 62 Other loans 693.1 751.1 800.5 821.4 827.1 813.5 821.4 820.5 828.9 828.8 844.2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • July 1991 1.60 SUMMARY OF CREDIT MARKET CLAIMS, BY HOLDER Billions of dollars, except as noted; period-end levels. 1989 1990 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11998866 11998877 11998888 11998899 Q2 Q3 Q4 Ql Q2 Q3 Q4 1 Total funds advanced in credit markets to domestic nonfinancial sectors 7,646.3 8,343.9 9,096.0 9,805.2 9,438.7 9,605.1 9,805.2 10,069.4 10,226.6 10,394.1 10,579.9 By public agencies and foreign 2 Total held 1,779.4 2,006.6 2,199.7 2,379.3 2,263.5 2,317.4 2,379.3 2,419.9 2,503.0 2,582.0 2,656.5 3 U.S. government securities 509.8 570.9 651.5 682.1 642.7 668.6 682.1 679.2 706.9 737.4 762.0 4 Residential mortgages 678.5 814.1 900.4 1,038.4 954.4 991.1 1,038.4 1,077.7 1,126.5 1,171.8 1,215.9 5 FHLB advances to thrifts 108.6 133.1 152.8 141.8 161.9 151.1 141.8 132.9 126.3 117.9 117.1 6 Other loans and securities 482.4 488.6 495.1 517.0 504.5 506.6 517.0 530.2 543.3 555.0 561.4 7 Total held, by type of lender 1,779.4 2,006.6 2,199.7 2,379.3 2,263.5 2,317.4 2,379.3 2,419.9 2,503.0 2,582.0 2,656.5 8 U.S. government 255.3 240.0 217.6 207.1 211.5 207.8 207.1 216.2 227.8 242.0 241.2 9 Sponsored credit agencies and mortgage pools ... 835.9 1,001.0 1,113.0 1,238.2 1,157.8 1,193.5 1,238.2 1,274.0 1,315.0 1,358.0 1,406.8 10 Monetary authority 205.5 230.1 240.6 233.3 238.4 227.6 233.3 224.4 237.8 240.8 241.4 11 Foreign 482.8 535.5 628.5 700.6 655.7 688.5 700.6 705.2 722.4 741.3 767.1 Agency and foreign debt not in line 1 12 Sponsored credit agencies and mortgage pools ... 810.3 978.6 1,098.4 1,249.3 1,169.5 1,203.6 1,249.3 1,286.1 1,328.0 1,365.4 1,418.5 13 Foreign 238.3 244.6 253.9 261.5 252.2 257.7 261.5 260.4 272.0 279.3 284.8 Private domestic holdings 14 Total private holdings 6,915.6 7,560.4 8,248.5 8,936.8 8,596.9 8,749.0 8,936.8 9,196.0 9,323.7 9,456.7 9,626.7 15 U.S. government securities 2,110.1 2,363.0 2,559.7 2,831.6 2,687.6 2,736.1 2,831.6 2,962.8 3,017.9 3,093.2 3,220.3 16 State and local obligations 679.1 728.4 790.8 821.2 804.9 816.4 821.2 822.4 827.4 838.0 840.6 17 Corporate and foreign bonds 606.6 674.3 765.6 831.6 797.7 814.5 831.6 847.6 866.2 878.5 899.3 18 Residential mortgages 1,288.5 1,399.0 1,560.2 1,670.4 1,631.5 1,657.7 1,670.4 1,756.7 1,766.4 1,771.1 1,772.9 19 Other mortgages and loans 2,339.8 2,528.7 2,724.9 2,923.8 2,837.0 2,875.3 2,923.8 2,939.4 2,972.1 2,993.8 3,010.6 20 LESS: Federal Home Loan Bank advances 108.6 133.1 152.8 141.8 161.9 151.1 141.8 132.9 126.3 117.9 117.1 Private financial intermediation 21 Credit market claims held by private financial institutions 6,018.0 6,564.5 7,128.6 7,662.7 7,424.6 7,507.8 7,662.7 7,850.5 7,915.0 8,000.6 8,123.5 22 Commercial banking 2,187.6 2,323.0 2,479.3 2,656.6 2,549.0 2,599.6 2,656.6 2,680.4 2,720.7 2,751.1 2,776.5 23 Savings institutions 1,297.9 1,445.5 1,567.7 1,480.7 1,561.0 1,530.3 1,480.7 1,461.3 1,409.5 1,371.5 1,339.7 24 Insurance and pension funds 1,525.4 1,705.1 1,903.8 2,081.6 1,999.0 2,031.6 2,081.6 2,152.5 2,198.4 2,242.5 2,307.6 25 Other finance 1,007.1 1,091.0 1,177.9 1,443.8 1,315.6 1,346.2 1,443.8 1,556.4 1,586.4 1,635.5 1,699.6 26 Sources of funds 6,018.0 6,564.5 7,128.6 7,662.7 7,424.6 7,507.8 7,662.7 7,850.5 7,915.0 8,000.6 8,123.5 27 Private domestic deposits and RPs 3,199.0 3,354.2 3,599.1 3,824.3 3,679.1 3,742.5 3,824.3 3,846.6 3,837.6 3,852.9 3,897.0 28 Credit market debt 719.5 858.2 986.1 1,073.0 1,064.6 1,060.2 1,073.0 1,070.2 1,075.3 1,079.0 1,101.8 29 Other sources 2,099.5 2,352.1 2,543.5 2,765.5 2,680.9 2,705.1 2,765.5 2,933.7 3,002.1 3,068.8 3,124.7 30 Foreign funds 18.6 62.3 71.5 61.6 49.4 55.0 61.6 63.4 66.3 94.1 108.2 31 Treasury balances 27.5 21.6 29.0 25.6 34.4 30.3 25.6 16.7 32.1 36.6 30.9 32 Insurance and pension reserves 1,398.5 1,527.8 1,692.5 1,826.0 1,770.0 1,785.7 1,826.0 1,861.5 1,907.7 1,940.6 1,996.7 33 Other, net 655.0 740.3 750.5 852.3 827.2 834.0 852.3 992.1 996.0 997.5 988.8 Private domestic nonfinancial investors 34 Credit market claims 1,617.0 1,854.1 2,106.0 2,347.1 2,236.9 2,301.5 2,347.1 2,415.6 2,484.1 2,535.0 2,605.0 35 U.S. government securities 848.7 936.7 1,072.2 1,206.4 1,122.9 1,171.3 1,206.4 1,256.2 1,288.7 1,332.3 1,414.4 36 Tax-exempt obligations 212.6 274.4 340.9 369.3 353.8 363.1 369.3 362.5 368.5 372.4 368.1 37 Corporate and foreign bonds 90.5 114.0 100.4 130.5 128.2 131.1 130.5 152.1 156.2 151.8 138.4 38 Open market paper 145.1 178.5 218.0 228.7 236.7 239.3 228.7 230.1 247.2 247.9 244.6 39 Other 320.1 350.4 374.4 412.1 395.3 396.8 412.1 414.8 423.3 430.6 439.5 40 Deposits and currency 3,410.1 3,583.9 3,832.3 4,073.6 3,926.2 3,979.0 4,073.6 4,094.9 4,096.7 4,118.3 4,173.7 41 Currency 186.3 205.4 220.1 231.8 226.4 224.4 231.8 234.4 242.7 247.2 254.4 4? Checkable deposits 516.6 515.4 527.2 528.7 495.0 486.1 528.7 501.2 510.7 501.2 527.7 43 Small time and savings accounts 1,948.3 2,017.1 2,156.2 2,256.7 2,189.3 2,224.4 2,256.7 2,289.4 2,292.3 2,302.4 2,324.2 44 Money market fund shares 268.9 297.8 318.0 403.3 362.1 391.0 403.3 436.7 426.3 454.5 465.7 45 Large time deposits 336.7 373.9 414.7 437.8 435.7 440.0 437.8 431.1 415.8 407.1 392.0 46 Security RPs 128.5 150.1 182.9 197.9 196.9 200.9 197.9 188.3 192.5 187.9 187.4 47 Deposits in foreign countries 24.8 24.3 13.1 17.6 20.7 12.1 17.6 13.9 16.4 18.3 22.3 48 Total of credit market instruments, deposits, and currency 5,027.2 5,438.0 5,938.2 6,420.7 6,163.0 6,280.5 6,420.7 6,510.6 6,580.7 6,653.3 6,778.7 49 Public holdings as percent of total 22.6 23.4 23.5 23.6 23.4 23.5 23.6 23.4 23.8 24.2 24.5 50 Private financial intermediation (in percent) 87.0 86.8 86.4 85.7 86.4 85.8 85.7 85.4 84.9 84.6 84.4 51 Total foreign funds 501.3 597.8 700.1 762.3 705.1 743.5 762.3 768.6 788.7 835.4 875.2 MEMO: Corporate equities not included above 52 Total market value 3,360.6 3,325.0 3,619.8 4,378.9 4,069.7 4,395.4 4,378.9 4,170.3 4,336.4 3,846.4 3,995.8 53 Mutual fund shares 413.5 460.1 478.3 555.1 514.8 543.9 555.1 550.3 587.9 547.3 579.9 54 Other equities 2,947.1 2,864.9 3,141.6 3,823.8 3,555.0 3,851.5 3,823.8 3,620.0 3,748.5 3,299.1 3,415.9 55 Holdings by financial institutions 974.6 1,039.5 1,176.1 1,492.3 1,343.0 1,478.5 1,492.3 1,435.6 1,543.0 1,312.1 1,408.3 56 Other holdings 2,385.9 2,285.5 2,443.7 2,886.6 2,726.8 2,917.0 2,886.6 2,734.6 2,793.4 2,534.3 2,587.4 NOTES BY LINE NUMBER. 32. Excludes net investment of these reserves in corporate equities. 1. Line 1 of table 1.59. 33. Mainly retained earnings and net miscellaneous liabilities. 2. Sum of lines 3-6 or 8-11. 34. Line 14 less line 21 plus line 28. 6. Includes farm and commercial mortgages. 35-39. Lines 15-19 less amounts acquired by private finance plus amounts 12. Credit market debt of federally sponsored agencies, and net issues of borrowed by private finance. Line 39 includes mortgages. federally related mortgage pool securities. 41. Mainly an offset to line 10. 14. Line 1 less line 2 plus line 12 and 13. Also line 21 less line 28 plus line 34. 48. Lines 34 plus 40, or line 14 less line 29 plus 41 and 47. Also sum of lines 29 and 48 less lines 41 and 47. 49. Line 2/line 1 and 13. 19. Includes farm and commercial mortgages. 50. Line 21/line 14. 27. Line 40 less lines 41 and 47. 51. Sum of lines 11 and 30. 28. Excludes equity issues and investment company shares. Includes line 20. 52-54. Includes issues by financial institutions. 30. Foreign deposits at commercial banks plus bank borrowings from foreign NOTE. Full statements for sectors and transaction types in flows and in amounts affiliates, less claims on foreign affiliates and deposits by banking in foreign banks. outstanding may be obtained from Flow of Funds Section, Stop 95, Division of 31. Demand deposits and note balances at commercial banks. Research and Statistics, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A45 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures 1977 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1990 Measure 1988 1989 Aug. Sept. Oct. Nov. Dec. Jan. Feb.' Apr. 1 Industrial production (1987 = 100)1 .... 105.4 108.1 110.5 110.6 109.9 108.3 107.2 105.7 105.0 105.1 2 M Pr a o r d ke u t c ts, g t r o o t u a p l i n ( g 1 s 9 87 = 100) 105.3 108.6 110.1 110.9 111.4 111.0 109.3 108.4 107.8 107.0 106.5 106.6 3 Final, total (1987 = 100) 105.6 109.1 110.9 111.9 112.6 112.3 110.2 109.2 109.1 108.4 108.2 108.4 4 Consumer goods (1987 = 100) 104.0 106.7 107.3 107.8 108.7 108.6 106.5 105.7 105.6'' 105.0 105.0 105.4 5 Equipment (1987 = 100) 107.6 112.3 115.5 117.2 117.8 117.0 115.1 113.6 113.6' 112.8 112.4 112.3 6 Intermediate (1987 = 100) 104.4 106.8 107.7 107.9 107.4 107.0 106.2 106.0 103.8' 102.5 101.0 100.7 7 Materials (1987 = 100) 105.6 107.4 107.8 109.7 109.4 108.3 106.8 105.3 104.8'" 103.8 102.8 102.8 8 I M nd a u n s u tr f y a ctu g r r i o n u g p ( in 1 g 9 s 8 7 = 100) 105.8 108.9 109.9 111.1 111.2 110.7 108.9 107.5 107.0 106.0 105.1 105.4 Capacity utilization (percent)2 83.9 83.9 82.3 82.9 82.8 82.2 79.4 78.0 77.2 77.1 9 Manufacturing 166.7 172.9 153.6 149.0 146.0 147.0 146.0 130.0 132.0 133.0 128.0 n.a. 10 Construction contracts (1982 = 100)3... 11 Nonagricultural employment, total4 128.0 131.5 133.8 134.1 134.1 133.9 133.6 133.4 133.2 132.8 132.5 132.4 2 1 1 1 1 1 1 1 1 0 2 3 4 5 6 7 8 9 R P D e e i G S W r s ta s p e o o i a M M M o r l o n v g s d s a a a a i e a a c s l n n s n b l - e e u u u l i p a - e s n f f f p ® r n a a a c o p d r c c c o o d e t t t m d r s u u u u s a u c r r r e o l i i i c i , a n n n n n i r t g g n g g a y o , g , l , t d a t p i t o l n o i r s t o c t a b a d o l l u u m r c s e t e 5 i m on e - n t w s orker 2 2 2 2 1 1 1 9 9 5 5 2 4 0 3 9 8 3 3 2 8 4 3 8 6 . . . . . . . . . 3 5 2 2 4 2 6 3 5 2 2 2 2 2 1 1 9 9 4 0 7 5 7 0 4 8 3 1 3 0 8 2 4 2 . . . . . . . . . 7 8 7 1 1 9 7 0 9 2 2 2 2 2 1 1 9 9 8 7 8 0 5 0 4 1 6 6 2 9 5 0 2 6 . . . . . . . . . 5 8 2 0 0 9 7 8 1 2 2 2 2 2 1 1 9 9 8 0 5 7 9 0 4 6 1 7 6 1 4 0 2 7 . . . . . . . . . 9 7 6 7 7 5 8 3 8 2 2 2 2 2 1 1 9 9 7 9 8 0 5 0 4 1 6 6 2 8 7 4 2 7 . . . . . . . . . 2 6 4 2 7 4 0 0 4 2 2 2 2 2 1 1 9 9 5 8 7 9 0 0 4 0 6 3 8 4 2 6 1 7 . . . . . . . . . 9 3 5 7 8 1 0 8 4 2 2 2 2 2 1 1 9 8 9 9 5 7 0 0 4 5 9 0 3 4 4 2 0 7 . . . . . . . . . 2 6 1 4 3 7 8 9 4 2 2 2 2 2 1 1 9 8 9 7 0 4 9 4 0 5 9 5 7 5 9 1 7 0 . . . . . . . . . 0 3 1 1 4 4 6 3 2 2 2 2 2 2 1 9 9 8 4 0 9 9 7 4 4 9 8 6 2 7 0 4 5 . . . . . . . . . 6 4 9 2 3 6 5 0 7 ' ' ' ' 2 2 2 2 2 1 9 9 8 9 7 9 5 0 4 8 7 3 1 5 4 1 0 7 . . . . . . . . . 9 9 8 2 7 5 6 9 0 2 2 2 2 2 1 9 9 8 9 7 0 5 9 4 8 3 7 5 6 0 2 1 6 . . . . . . . . . 2 3 4 2 1 4 6 9 9 2 1 n n n n 9 9 8 5 4 . . . . 7 7 3 2 6 a a a a . . . . . . . . . 9 2 1 4 8 Prices7 21 Consumer (1982-84 = 100) 118.3 124.0 130.7 131.6 132.7 133.5 133.8 133.8 134.6 134.8 135.0 135.2 22 Producer finished goods (1982 = 100) 108.0 113.6 119.2 119.3 120.4 122.3 122.9 122.C 121.9 121.2 120.6 120.9 1. A major revision of the industrial production index and the capacity 6. Based on Bureau of Census data published in Survey of Current Business. utilization rates was released in April 1990. See "Industrial Production: 1989 7. Data without seasonal adjustment, as published in Monthly Labor Review. Developments and Historical Revision" in the Federal Reserve Bulletin, vol. 76 Seasonally adjusted data for changes in the price indexes may be obtained from (April 1990), pp. 187-204. the Bureau of Labor Statistics, U.S. Department of Labor. 2. Ratios of indexes of production to indexes of capacity. Based on data from Federal Reserve, McGraw-Hill Economics Department, Department of Com- NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5,and 6, merce, and other sources. and indexes for series mentioned in notes 3 and 7 may also be found in the Survey 3. Index of dollar value of total construction contracts, including residential, of Current Business. nonresidential and heavy engineering, from McGraw-Hill Information Systems Figures for industrial production for the latest month are preliminary and the Company, F. W. Dodge Division. prior three months have been revised. See "Recent Developments in Industrial 4. Based on data in Employment and Earnings (U.S. Department of Labor). Capacity and Utilization," Federal Reserve Bulletin, vol. 76 (June 1990), pp. Series covers employees only, excluding personnel in the Armed Forces. 411-35. 5. Based on data in Survey of Current Business (U.S. Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • July 1991 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data are seasonally adjusted. Exceptions noted. 1990 1991 CCaatteeggoorryy 11998888 11998899 11999900 Sept. Oct. Nov. Dec. Jan. Feb/ Mar. Apr. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 186,837 188,601 190,216 190,568 190,717 190,854 190,999 191,116 191,248 191,384 191,525 2 Labor force (including Armed Forces)1 123,893 126,077 126,954 127,137 127,067 126,880 127,307 126,777 127,209 127,467 127,817 3 Civilian labor force 121,669 123,869 124,787 124,970 112244,,887755 112244,,772233 112255,,117744 112244,,663388 112255,,007766 112255,,332266 112255,,667722 Employment 4 Nonagricultural industries2 111,800 114,142 114,728 114,689 114,558 114,201 114,321 113,759 113,6% 113,656 114,243 5 Agriculture 3,169 3,199 3,186 3,194 3,175 33,,118855 33,,225533 33,,116633 33,,222222 33,,009988 33,,115566 Unemployment 6 Number 6,701 6,528 6,874 7,087 7,142 7,337 7,600 7,715 8,158 8,572 8,274 7 Rate (percent of civilian labor force) 5.5 5.3 5.5 5.7 5.7 5.9 6.1 6.2 6.5 6.8 6.6 8 Not in labor force 62,944 62,524 63,262 63,431 63,650 63,974 63,692 64,339 64,039 63,917 63,708 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 105,536 108,413 110,330 110,612 110,432 110,165 110,004 109,813 109,527 109,286r 109,162 10 Manufacturing 19,350 19,426 19,064 19,019 18,951 18,744 18,693 18,615 18,462 18,369' 18,327 11 Mining 713 700 735 736 733 738 740 737 740 738' 735 12 Contract construction 5,110 5,200 5,205 5,176 5,093 5,029 4,983 4,841 4,866 4,792' 4,771 13 Transportation and public utilities 5,527 5,648 5,838 5,870 5,870 5,866 5,882 5,883 5,843 5,831' 5,828 14 Trade 25,132 25,851 26,151 26,214 26,147 26,082 26,001 25,974 25,835 25,757' 25,703 15 Finance 6,649 6,724 6,833 6,851 6,843 6,833 6,829 6,829 6,824 6,825' 6,828 16 Service 25,669 27,0% 28,209 28,440 28,475 28,548 28,573 28,622 28,613 28,618' 28,639 17 Government 17,386 17,769 18,295 18,306 18,320 18,325 18,303 18,312 18,344 18,356 18,331 1. Persons 16 years of age and over. Monthly figures, which are based on 3. Data include all full- and part-time employees who worked during, or sample data, relate to the calendar week that contains the 12th day; annual data received pay for, the pay period that includes the 12th day of the month, and are averages of monthly figures. By definition, seasonality does not exist in exclude proprietors, self-employed persons, domestic servants, unpaid family population figures. Based on data from Employment and Earnings (U.S. Depart- workers, and members of the Armed Forces. Data are adjusted to the March 1984 ment of Labor). benchmark and only seasonally adjusted data are available at this time. Based on 2. Includes self-employed, unpaid family, and domestic service workers. data from Employment and Earnings (U.S. Department of Labor). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A47 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1990 1991 1990 1991 1990 1991 SSeerriieess Q2 Q3 Q4 Ql' Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql' Output (1987 = 100) Capacity (percent of 1987 output) Utilization rate (percent) 1 Total industry 109.4 110.5 108.5 105.8 131.1 131.9 132.8 133.6 83.5 83.7 81.7 79.2 2 Manufacturing 110.2 111.1 109.0 106.1 133.0 134.0 135.0 136.0 82.8 82.9 80.8 78.0 3 Primary processing 106.3 107.6 104.7 100.5 124.8 125.5 126.1 126.8 85.2 85.8 83.0 79.3 4 Advanced processing 112.1 112.8 111.0 108.6 136.9 138.0 139.1 140.2 81.9 81.7 79.8 77.5 5 Durable 112.4 113.6 110.0 106.0 137.1 138.0 139.0 139.9 82.0 82.3 79.1 75.8 6 Lumber and products 102.3 101.5 95.7 92.1 123.5 124.0 124.6 125.0 82.8 81.8 76.8 73.7 7 Primary metals 107.4 112.2 107.3 97.9 127.4 127.7 127.9 128.2 84.2 87.9 83.9 76.4 8 Iron and steel 107.5 114.3 110.0 96.5 132.2 132.5 132.7 133.0 81.3 86.3 82.9 72.5 9 Nonferrous 107.1 109.2 103.4 99.9 120.6 120.9 121.1 121.3 88.8 90.3 85.3 82.4 10 Nonelectrical machinery 126.7 128.5 126.4 124.4 153.1 154.7 156.3 157.9 82.8 83.1 8800..88 78.8 11 Electrical machinery 112.2 112.4 109.9 108.1 138.7 140.0 141.4 142.7 80.9 80.3 7777..88 75.7 17. Motor vehicles and parts 102.6 103.7 89.4 80.9 132.4 132.7 132.9 133.4 77.5 78.2 67.2 60.7 13 Aerospace and miscellaneous transportation equipment ... 113.6 114.5 113.3 109.8 134.3 135.2 136.1 137.0 84.6 8844..77 8833..33 8800..22 14 107.5 108.1 107.8 106.1 127.9 128.9 129.9 130.9 84.0 83.8 83.0 81.0 15 Textile mill products 102.4 101.3 98.2 94.3 116.3 116.6 117.0 117.3 88.1 86.9 84.0 80.4 16 Paper and products 104.5 107.2 105.8 102.4 114.5 115.1 115.7 116.4 91.3 93.2 91.4 88.0 17 Chemicals and products 109.9 110.8 110.2 109.3 134.6 135.9 137.1 138.4 81.6 81.5 80.4 79.0 18 Plastics materials 116.3 117.2 118.1 115.3 128.4 130.6 132.9 129.5 90.6 89.7 88.9 85.0 19 Petroleum products 106.0 110.0 107.4 107.5 121.2 121.3 121.4 121.4 87.4 90.7 88.5 88.6 70 102.5 103.4 103.1 102.3 115.0 114.5 114.0 113.6 89.1 90.3 90.4 90.0 71 Utilities 107.8 110.5 108.3 106.3 126.6 127.1 127.6 128.1 85.2 86.9 84.8 83.0 22 Electric 111.0 112.9 111.2 109.1 121.9 122.6 123.2 123.8 91.1 92.1 90.2 88.1 Previous cycle Latest cycle 1990 1991 High Low High Low Apr. Sept. Oct. Nov. Dec. Jan.r Feb/ Mar/ Aprp Capacity utilization rate (percent) 23 Total industry 89.2 72.6 87.3 71.8 83.2 83.6 83.0 81.6 80.6 80.0 79.1 78.5 78.3 24 Manufacturing 88.9 70.8 87.3 70.0 82.5 82.8 82.2 80.7 79.4 78.9 78.0 77.2 77.1 75 Primary processing 92.2 68.9 89.7 66.8 85.0 85.1 84.3 83.2 81.5 80.6 79.3 77.9 77.8 26 Advanced processing 87.5 72.0 86.3 71.4 81.5 81.8 81.3 79.6 78.5 78.2 77.4 76.8 76.8 77 88.8 68.5 86.9 65.0 81.2 82.2 81.2 79.1 77.2 76.8 75.8 74.8 75.1 78 Lumber and products 90.1 62.2 87.6 60.9 83.7 80.7 78.9 76.6 74.9 75.4 73.0 72.6 72.9 79 Primary metals 100.6 66.2 102.4 46.8 83.5 87.4 85.0 85.3 81.4 77.8 77.5 73.8 73.1 30 Iron and steel 105.8 66.6 110.4 38.3 80.7 86.0 83.2 84.8 80.8 74.5 73.6 69.4 67.8 31 Nonferrous 92.9 61.3 90.5 62.2 87.9 89.6 87.7 85.9 82.3 83.0 83.6 80.5 81.4 3? Nonelectrical machinery 96.4 74.5 92.1 64.9 82.4 82.8 82.2 80.8 79.5 79.8 78.8 77.7 77.1 33 Electrical machinery 87.8 63.8 89.4 71.1 80.5 80.1 78.6 78.1 76.6 75.7 75.8 75.7 75.4 34 Motor vehicles and parts 93.4 51.1 93.0 44.5 72.4 81.0 78.1 64.5 59.0 62.3 59.8 59.8 64.4 35 Aerospace and miscellaneous transportation equipment.. 77.0 66.6 81.1 66.9 84.6 84.3 84.0 8833..11 82.8 8811..11 8800..33 7799..11 7788..66 36 Nondurable 87.9 71.8 87.0 76.9 84.3 83.6 83.6 82.9 82.4 81.8 81.0 80.3 80.0 37 Textile mill products 92.0 60.4 91.7 73.8 86.9 86.3 86.6 83.3 82.1 80.2 80.4 80.6 81.7 38 Paper and products 96.9 69.0 94.2 82.0 92.2 93.3 92.5 90.9 91.0 89.8 87.9 86.4 86.8 39 Chemicals and products 87.9 69.9 85.1 70.1 82.2 81.4 81.0 80.2 79.9 79.8 79.0 78.2 77.8 40 Plastics materials 102.0 50.6 90.9 63.4 90.8 88.9 90.0 90.2 86.5 86.2 85.0 83.8 84.2 41 Petroleum products 96.7 81.1 89.5 68.2 88.1 90.1 89.5 88.9 87.0 86.2 89.3 90.1 87.9 4? 94.4 88.4 96.6 80.6 89.3 90.9 89.9 90.6 90.8 89.5 90.6 89.9 89.0 43 Utilities 95.6 82.5 88.3 76.2 84.4 86.7 85.6 83.8 85.1 84.1 82.1 82.7 82.6 44 Electric 99.0 82.7 88.3 78.7 90.2 91.9 91.2 88.9 90.6 89.3 87.3 87.8 87.7 1. These data also appear in the Board's G.17 (419) release. For address, see 2. Monthly high 1973; monthly low 1975. inside front cover. For a detailed description of the series, see "Recent Devel- 3. Monthly highs 1978 through 1980; monthly lows 1982. opments in Industrial Capacity and Utilization," Federal Reserve Bulletin, vol. 76 (June 1990), pages 411-35. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • July 1991 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data are seasonally adjusted 1987 1990 1991 pro- 1990 GGrroouuppss por- aavvgg.. tion Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan/ Feb.' Mar.' Apr/ Index (1987 = 100) MAJOR MARKET 1 Total index 100.0 109.2 108.8 109.4 110.1 110.4 110.5 110.6 109.9 108.3 107.2 106.6 105.7 105.0 105.1 2 Products 60.8 110.1 109.8 110.5 110.9 110.9 110.9 111.4 111.0 109.3 108.4 107.8 107.0 106.5 106.6 3 Final products 46.0 110.9 110.4 111.2 111.7 111.7 111.9 112.6 112.3 110.2 109.2 109.1 108.4 108.2 108.4 4 Consumer goods 26.0 107.3 107.2 107.4 107.8 107.5 107.8 108.7 108.6 106.5 105.7 105.6 105.0 105.0 105.4 5 Durable consumer goods 5.6 106.2 107.3 109.3 112.1 108.3 107.4 110.4 106.9 99.4 96.0 97.6 95.6 96.2 99.1 6 Automotive products 2.5 102.3 102.4 107.0 112.2 106.7 104.6 111.8 107.1 93.5 86.7 90.6 88.4 89.6 94.8 7 Autos and trucks 1.5 97.4 95.8 105.6 112.9 104.8 101.5 113.0 107.5 84.2 74.6 79.6 75.2 77.3 85.6 8 Autos, consumer .9 92.2 87.7 96.8 103.8 98.0 97.2 111.5 104.6 80.7 77.2 83.2 79.2 76.8 78.9 9 Trucks, consumer .6 106.1 109.3 120.4 128.3 116.1 108.8 115.4 112.2 90.2 70.2 73.6 68.6 78.0 97.0 10 Auto parts and allied goods... 1.0 109.6 112.2 108.9 111.2 109.5 109.3 110.0 106.4 107.3 104.8 107.1 108.3 108.0 108.6 11 Other 3.1 109.4 111.2 111.1 112.0 109.5 109.6 109.3 106.8 104.1 103.4 103.2 101.2 101.5 102.5 12 Appliances, A/C, and TV .8 102.0 104.4 103.6 107.5 100.2 101.9 101.0 94.6 90.8 89.9 92.8 94.5 96.3 96.6 13 Carpeting and furniture .9 104.9 107.5 107.6 107.8 106.0 104.9 106.0 103.8 99.2 100.9 100.3 93.9 94.2 97.5 14 Miscellaneous home goods ... 1.4 116.4 117.3 117.5 117.2 116.9 116.8 116.1 115.5 114.6 112.5 110.8 109.7 109.0 109.0 15 Nondurable consumer goods 20.4 107.6 107.1 106.9 106.6 107.3 107.9 108.2 109.1 108.5 108.4 107.8 107.5 107.4 107.2 16 Foods and tobacco 9.1 105.9 105.6 105.2 104.4 105.1 105.7 105.3 106.7 107.8 107.5 106.3 106.1 105.8 105.6 17 Clothing 2.6 95.7 96.0 96.4 95.7 95.6 94.6 95.3 94.2 91.7 92.1 90.6 90.7 90.1 89.8 18 Chemical products 3.5 113.3 113.5 113.0 112.8 112.4 114.3 115.1 115.9 113.5 113.5 114.7 115.2 115.0 115.6 19 Paper products 2.5 119.7 118.1 118.6 118.3 120.3 119.3 121.9 123.4 122.8 122.7 122.1 120.8 120.8 120.0 20 Energy 2.7 105.9 104.1 104.1 105.3 106.7 109.0 108.0 108.8 106.4 106.6 106.5 105.8 107.0 105.9 71 Fuels .7 102.9 101.6 98.2 102.6 104.6 106.0 105.6 104.0 101.1 98.1 99.8 103.4 105.0 100.8 22 Residential utilities 2.0 107.0 105.0 106.3 106.3 107.5 110.0 108.9 110.6 108.4 109.7 109.0 106.6 107.8 107.8 23 Equipment, total 20.0 115.5 114.7 116.2 116.8 117.2 117.2 117.8 117.0 115.1 113.6 113.6 112.8 112.4 112.3 24 Business equipment 13.9 123.1 121.6 123.5 124.4 125.0 125.4 126.4 125.4 122.9 121.2 121.6 120.5 120.2 120.5 25 Information processing and related .. 5.6 127.2 126.4 126.6 126.3 128.0 128.5 129.5 130.1 128.8 127.5 130.1 131.4 131.5 131.8 26 Office and computing 1.9 149.8 149.3 148.9 150.6 152.7 152.2 153.6 155.3 149.8 148.9 155.0 157.1 156.1 157.5 27 Industrial 4.0 115.3 114.2 115.8 116.0 117.2 117.9 117.4 115.4 115.3 112.3 111.5 109.1 108.6 107.6 28 Transit 2.5 129.9 126.2 132.5 137.4 135.5 135.4 140.5 137.5 126.3 123.4 124.0 121.1 120.6 124.2 29 Autos and trucks 1.2 96.8 95.2 105.7 112.2 103.1 101.5 111.0 106.5 83.9 75.3 79.8 75.6 77.3 85.0 30 Other 1.9 118.5 117.6 119.4 119.9 119.2 119.8 118.5 117.0 117.6 118.5 115.0 112.0 110.8 109.8 31 Defense and space equipment 5.4 97.3 97.3 97.6 97.6 97.8 97.7 97.3 97.3 96.2 95.8 94.4 94.5 93.8 92.7 32 Oil and gas well drilling .6 109.0 114.3 118.6 119.5 116.2 106.9 107.4 107.1 109.7 107.3 106.4 108.2 107.7 105.1 33 Manufactured homes .2 90.8 89.7 91.3 92.8 90.0 93.4 91.8 89.0 87.3 83.4 83.1 77.3 79.3 81.5 34 Intermediate products, total 14.7 107.7 108.0 108.3 108.3 108.4 107.9 107.4 107.0 106.2 106.0 103.8 102.5 101.0 100.7 35 Construction supplies 6.0 105.2 106.4 105.5 106.0 106.7 105.3 103.8 103.1 101.8 101.0 97.7 96.3 93.9 94.3 36 Business supplies 8.7 109.4 109.1 110.2 109.8 109.5 109.7 109.9 109.7 109.2 109.4 108.1 106.8 105.9 105.2 37 Materials, total 39.2 107.8 107.3 107.7 108.8 109.6 109.7 109.4 108.3 106.8 105.3 104.8 103.8 102.8 102.8 38 Durable goods materials 19.4 111.8 110.9 112.5 113.8 114.0 114.9 114.1 112.5 110.4 107.5 106.8 105.4 103.7 104.1 39 Durable consumer parts 4.2 104.0 103.2 108.5 108.5 108.1 110.4 109.0 106.0 98.5 91.1 94.2 90.3 88.1 91.5 40 Equipment parts 7.3 118.1 117.4 118.1 119.1 119.2 119.4 119.8 118.6 117.4 116.9 115.9 116.1 115.1 114.4 41 Other 7.9 110.2 108.9 109.6 111.8 112.4 113.1 111.6 110.4 110.2 107.4 105.2 103.4 101.4 101.3 42 Basic metal materials 2.8 111.9 110.2 109.2 113.6 115.5 116.3 115.8 112.0 112.7 109.6 104.6 104.8 102.0 100.9 43 Nondurable goods materials 9.0 106.0 106.1 105.2 106.1 107.8 106.8 106.9 106.5 105.6 104.9 104.9 103.6 102.9 102.7 44 Textile materials 1.2 96.7 95.6 97.4 99.4 100.2 97.8 98.1 97.9 95.1 91.4 89.1 91.4 91.8 93.0 45 Pulp and paper materials 1.9 106.4 106.0 104.5 104.8 109.0 106.9 109.4 108.6 107.2 108.5 106.0 104.1 102.2 103.5 46 Chemical materials 3.8 106.8 107.4 105.4 107.3 108.5 108.0 106.6 105.6 105.8 105.7 106.7 104.4 103.7 102.8 47 Other 2.1 109.5 109.8 109.8 108.8 109.9 109.3 110.1 110.8 109.4 107.6 109.3 108.6 108.0 107.3 48 Energy materials 10.9 102.1 101.8 101.1 102.1 103.3 103.0 103.0 102.3 101.6 102.0 101.1 101.2 101.2 100.7 49 Primary energy 7.2 101.3 100.3 100.1 101.2 103.3 102.1 101.0 100.7 101.4 101.9 101.3 102.5 102.3 101.8 50 Converted fuel materials 3.7 103.5 104.6 102.9 103.9 103.4 104.9 107.0 105.3 102.0 102.1 100.9 98.7 99.0 98.5 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.3 109.5 109.2 109.5 110.0 110.6 110.7 110.6 110.0 109.0 108.1 107.4 106.6 105.8 105.6 52 Total excluding motor vehicles and parts ... 95.3 109.8 109.5 109.7 110.2 110.8 110.9 110.7 110.2 109.4 108.6 107.8 107.0 106.3 106.0 53 Total excluding office and computing machines 97.5 108.2 107.8 108.4 109.1 109.3 109.4 109.5 108.8 107.3 106.1 105.4 104.4 103.8 103.8 54 Consumer goods excluding autos and trucks 24.5 107.9 107.9 107.6 107.5 107.6 108.2 108.4 108.7 107.9 107.6 107.2 106.8 106.7 106.6 55 Consumer goods excluding energy 23.3 107.5 107.5 107.8 108.1 107.6 107.7 108.7 108.6 106.5 105.6 105.5 104.9 104.8 105.4 56 Business equipment excluding autos and trucks 12.7 125.6 124.2 125.3 125.6 127.2 127.8 128.0 127.2 126.8 125.6 125.7 124.9 124.4 124.0 57 Business equipment excluding office and computing equipment 12.0 118.7 117.2 119.4 120.2 120.5 121.1 122.0 120.6 118.6 116.7 116.2 114.6 114.4 114.5 58 Materials excluding energy 28.4 110.0 109.4 110.2 111.4 112.1 112.3 111.8 110.6 108.9 106.6 106.2 104.8 103.4 103.7 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A49 2.13—Continued 1987 1990 1991 SIC pro- 1990 GGrroouuppss code por- aavvgg.. tion Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan/ Feb/ Mar/ AApprr.."" Index (1987 = 100) MAJOR INDUSTRY 1 Total index 100.0 109.2 108.8 109.4 110.1 110.4 110.5 110.6 109.9 108.3 107.2 106.6 105.7 105.0 105.1 2 Manufacturing 84.4 109.9 109.5 110.3 110.8 111.1 111.1 111.2 110.7 108.9 107.5 107.0 106.0 105.1 105.4 3 Primary processing 26.7 106.3 105.9 106.1 107.0 107.9 108.0 106.9 106.2 104.9 102.9 102.0 100.6 99.0 99.0 4 Advanced processing 57.7 111.6 111.3 112.4 112.6 112.5 112.5 113.2 112.8 110.8 109.5 109.3 108.5 108.0 108.2 5 Durable 47.3 111.6 111.1 112.6 113.4 113.4 113.5 113.8 112.5 109.9 107.5 107.2 106.0 104.9 105.5 6 Lumber and products ... 24 2.0 101.6 103.3 101.7 102.0 103.6 100.5 100.3 98.2 95.5 93.5 94.2 91.2 90.8 91.2 7 Furniture and fixtures ... 25 1.4 105.9 107.6 108.0 108.7 108.0 106.7 106.9 104.4 102.3 102.0 99.0 96.0 95.7 96.9 8 Clay, glass, and stone products 32 2.5 105.7 105.1 106.4 106.1 106.0 106.6 104.5 104.4 103.8 100.7 9977..22 9988..55 9955..22 9955..00 9 Primary metals 33 3.3 108.4 106.4 106.2 109.5 110.3 114.6 111.6 108.6 109.1 104.2 99.7 99.4 94.7 93.9 10 Iron and steel 333311,,22 1.9 109.9 106.7 105.5 110.3 110.6 118.3 113.9 110.3 112.6 107.3 99.0 97.9 92.5 90.5 11 Raw steel .1 109.6 104.9 107.6 111.8 113.9 118.5 111.6 112.8 109.5 100.6 104.7 97.9 89.8 88.0 12 Nonferrous 333-6,9 1.4 106.2 105.9 107.1 108.3 109.8 109.4 108.4 106.2 104.1 99.8 100.6 101.5 97.7 98.8 13 Fabricated metal products 34 5.4 105.9 105.0 107.1 106.7 107.7 107.9 106.8 106.4 104.3 101.9 101.7 98.6 9977..00 98.1 14 Nonelectrical machinery. 35 8.6 126.5 125.7 126.9 127.5 128.3 128.8 128.5 128.1 126.3 124.7 125.5 124.5 123.2 122.6 15 Office and computing machines 357 2.5 149.8 149.3 149.0 150.6 152.7 152.2 153.6 155.3 149.8 148.9 155.0 115577..11 115566..11 115577..55 16 Electrical machinery 36 8.6 111.4 111.3 112.4 112.8 112.2 112.5 112.5 110.8 110.4 108.7 107.6 108.2 108.4 108.3 17 Transportation equipment 37 9.8 105.5 105.1 109.0 111.0 109.3 107.9 111.1 109.2 110000..11 96.6 9977..66 9955..66 9955..00 9977..77 18 Motor vehicles and parts 371 4.7 96.8 95.8 104.0 108.0 102.7 101.0 107.5 103.8 85.8 78.5 83.0 79.8 8800..00 8866..22 19 Autos and light trucks 22..33 9966..66 9944..66 110044..33 111.6 103.8 100.9 112.8 107.1 8833..77 74.9 8800..11 7755..88 7777..22 8844..77 20 Aerospace and miscellaneous transportation equipment.. 372 -6,9 5.1 113.3 113.4 113.5 113.8 115.2 114.1 114.2 114.0 113.1 112.9 110.8 111100..00 110088..66 110088..11 21 Instruments 38 3.3 116.8 115.8 116.5 115.0 116.9 117.5 118.4 118.1 118.1 117.3 119.0 119.1 118.1 111188..88 22 Miscellaneous manufacturers 39 1.2 120.0 118.6 119.1 119.6 120.4 121.8 121.3 121.5 122.5 119.1 116.1 111144..00 111133..66 111133..11 23 Nondurable 3377..22 107.8 107.5 107.4 107.6 108.1 108.1 108.0 108.4 107.7 107.4 106.8 106.0 105.4 105.2 24 Foods 20 88..88 107.6 107.0 106.8 106.1 107.1 107.7 107.6 108.8 109.6 109.1 108.3 108.0 107.9 107.6 25 Tobacco products 21 1.0 98.6 98.8 97.2 95.6 98.5 96.3 96.4 97.8 99.0 101.1 100.0 99.4 98.7 97.3 26 Textile mill products 22 1.8 100.8 100.9 102.7 103.6 102.9 100.4 100.7 101.2 97.4 96.1 94.0 94.3 94.7 96.0 27 Apparel products 23 2.4 98.8 98.7 99.2 99.3 99.2 98.8 98.4 97.2 95.5 94.9 92.9 93.1 92.5 92.6 28 Paper and products 26 3.6 105.3 105.3 104.0 104.2 107.8 106.5 107.5 106.8 105.1 105.4 104.2 102.2 100.7 101.4 29 Printing and publishing .. 27 6.4 111.9 112.0 112.8 112.0 111.4 110.9 111.6 112.9 112.4 112.8 112.1 110.7 109.7 109.3 30 Chemicals and products . 28 8.6 110.3 110.3 109.2 110.3 110.4 111.1 110.9 110.7 110.0 109.9 110.1 109.3 108.6 108.3 31 Petroleum products 29 1.3 108.2 106.8 104.6 106.5 110.5 110.2 109.3 108.6 107.8 105.6 104.7 108.5 109.3 106.7 32 Rubber and plastic products 30 3.0 110.2 109.0 110.9 112.8 110.9 112.0 110.3 110.6 109.6 106.9 110088..88 110055..55 110044..99 110044..88 33 Leather and products ... 31 .3 100.0 102.6 103.5 102.0 102.5 99.6 100.3 95.3 89.9 92.6 89.6 88.6 87.8 86.3 34 Mining 7.9 102.6 102.9 102.2 102.2 104.0 102.4 103.9 102.6 103.3 103.4 101.7 102.9 102.1 101.0 35 Metal 10 .3 153.1 152.7 148.7 156.7 164.8 155.7 163.6 146.8 153.4 162.0 143.1 148.0 147.0 146.6 36 Coal 11,12 1.2 113.2 114.2 110.0 113.5 118.5 110.2 116.8 114.7 112.9 110.6 108.4 112.8 109.9 106.7 37 Oil and gas extraction 13 5.7 95.5 95.7 96.0 94.6 95.5 95.8 95.8 95.8 97.3 96.7 96.0 97.2 97.3 96.6 38 Stone and earth minerals .. 14 .7 119.5 120.2 119.9 121.1 121.8 120.1 121.7 118.0 113.5 118.9 119.2 112.6 108.2 107.2 39 Utilities 7.6 108.0 106.7 107.1 109.7 109.7 111.4 110.3 109.2 106.9 108.8 107.6 105.2 106.0 106.0 40 Electric 491,3PT 6.0 110.8 109.7 110.3 113.1 112.1 113.6 112.9 112.1 109.6 111.8 110.4 108.0 108.9 108.8 41 Gas 492,3PT 1.6 97.3 95.5 95.2 97.4 100.7 103.3 100.9 98.1 97.0 97.6 97.5 94.7 95.5 95.4 SPECIAL AGGREGATES 42 Manufacturing excluding motor vehicles and parts 7799..88 111100..77 111100..33 110.7 111.0 111.6 111.7 111.4 111.1 110.3 109.1 108.4 107.6 106.6 110066..55 43 Manufacturing excluding office and computing machines 8822..00 110088..77 110088..33 109.2 109.6 109.8 109.9 110.0 109.4 107.7 106.2 105.6 104.5 103.6 103.8 Gross value (billions of 1982 dollars, annual rates) MAJOR MARKET 44 Products, total 1734.8 1,911.4 1,906.2 1,922.2 1,937.0 1,923.5 1,929.5 1,941.6 1,939.6 1,882.8 1,859.4 1,860.4 1,850.7 1,850.6 1,855.2 45 Final 1350.9 1,497.7 1,493.9 1,506.0 1,523.4 1,508.7 1,516.3 1,529.1 1,523.7 1,470.8 1,450.8 1,459.6 1,455.1 1,459.3 1,465.3 46 Consumer goods 833.4 882.9 883.9 885.9 893.8 886.0 885.9 895.2 892.7 865.2 857.6 857.9 855.0 860.8 864.4 47 Equipment 517.5 614.8 610.0 620.1 629.6 622.7 630.4 633.9 631.0 605.6 593.2 601.7 600.0 598.5 600.9 4488 Intermediate 338844..00 441133..77 441122..33 416.2 413.6 414.9 413.1 412.5 415.9 412.0 408.7 400.8 395.6 391.3 389.9 1. These data also appear in the Board's G.17 (419) release. For requests see utilization rates was released in April 1990. See "Industrial Production: 1989 address inside front cover. Developments and Historical Revision," Federal Reserve Bulletin, vol. 76 (April A major revision of the industrial production index and the capacity 1990), pp. 187-204. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • July 1991 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates except as noted. 1990 1991 IItteemm 11998888 11998899 11999900 June July Aug. Sept. Oct. Nov. Dec. Jan.' Feb.' Mar. Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,456 1,339 1,111' 1,123' 1,086' 1,055' 989' 925' 916' 854' 802 876 892 2 1-family 994 932 794' 801' 781' 756' 73C 703' 668' 645 611 695 689 3 2-or-more-family 462 407 317' 322' 305' 299' 259' 222' 248' 209' 191 181 203 4 Started 1,488 1,376 1,193 1,187 1,155 1,131 1,106 1,026 1,130 971 847 992 901 5 1-family 1,081 1,003 895 890 876 835 858 839 769 751 648 788 736 6 2-or-more-family 407 373 298 297 279 296 248 187 361 220 199 204 165 7 Under construction, end of period1 . 919 850 711 847 831 815 790 766 756 744 717 713 685 8 1-family 570 535 449 538 528 517 503 497 486 478 461 458 445 9 2-or-more-family 350 315 262 309 303 298 287 269 270 266 256 255 240 10 Completed 1,530 1,423 1,308 1,294 1,312 1,307 1,314 1,275 1,246 1,155 1,125 1,095 1,178 11 1-family 1,085 1,026 966 950 988 950 963 930 922 878 841 837 864 12 2-or-more-family 445 396 342 344 324 357 351 345 324 277 284 258 314 13 Mobile homes shipped 218 198 188 190 187 193 184 186 181 167 168 157 157 Merchant builder activity in 1-family units 14 Number sold 675 650 535 549 541 525 504 465 480 464' 409 485 490 15 Number for sale, end of period1 368 363 318' 354 350 345 338 334 327 318' 316 313 308 Price (thousands of dollars)2 Median 16 Units sold 113.3 120.4 122.3 125.0 118.7 118.4 113.0 120.0 118.9 127.0 120.0 120.0 125.0 Average 17 Units sold 139.0 148.3 149.0 150.4 149.8 144.7 142.1 153.0 143.3 153.4' 150.7 150.5 163.4 EXISTING UNITS (1-family) 18 Number sold 3,594 3,439 3,316 3,370 3,320 3,410 3,160 3,070 3,150 3,130 2,900 3,160 3,220 Price of units sold (thousands of dollars)2 19 Median 89.2 92.9 95.2 98.9 98.1 97.2 94.4 92.9 92.0 91.7 95.6 94.0 98.2 20 Average 112.5 118.0 118.3 122.5 121.1 120.7 116.8 115.9 115.6 114.1 123.0 119.7 125.2 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 422,076 432,068 433,999 441,088 437,010 436,338 423,941 420,186 415,737 406,639 396,007 397,377 391,421 22 Private 327,102 333,514 324,435 329,556 331,269 323,518 317,516 309,354 301,861 295,482 292,403 287,601 283,216 23 Residential 198,101 196,551 186,852 189,462 187,083 184,409 179,713 174,573 169,292 164,751 161,730 155,155 155,113 24 Nonresidential, total 129,001 136,963 137,583 140,094 144,186 139,109 113377,,880033 113344,,778811 113322,,556699 113300,,773311 113300,,667733 113322,,444466 112288,,110033 Buildings 25 Industrial 14,931 18,506 20,563 20,405 23,609 20,239 19,862 19,598 19,530 20,748 20,854 21,150 20,716 26 Commercial 58,104 59,389 54,630 56,581 56,951 55,347 53,648 51,880 49,806 49,534 48,623 48,316 45,519 27 Other 17,278 17,848 18,824 19,272 19,792 19,801 20,267 19,606 19,377 18,428 18,503 18,560 18,398 28 Public utilities and other 38,688 41,220 43,566 43,836 43,834 43,722 44,026 43,697 43,856 42,021 42,693 44,420 43,470 29 Public 94,971 98,551 109,564 111,532 105,741 112,820 106,425 110,833 113,877 111,157 103,604 109,776 108,205 30 Military 3,579 3,520 3,735 5,868 3,308 2,888 2,543 1,981 2,982 1,890 2,164 1,960 2,033 31 Highway 30,140 29,502 31,987 30,311 28,775 31,865 31,322 33,231 35,289 34,562 27,310 33,021 32,078 32 Conservation and development... 4,726 4,969 4,735 3,958 4,460 4,776 3,482 4,939 5,068 5,486 5,608 4,681 4,306 33 Other 56,526 60,560 69,107 71,395 69,198 73,291 69,078 70,682 70,538 69,219 68,522 70,114 69,788 1. Not at annual rates. NOTE. Census Bureau estimates for all series except (1) mobile homes, which 2. Not seasonally adjusted. are private, domestic shipments as reported by the Manufactured Housing 3. Value of new construction data in recent periods may not be strictly Institute and seasonally adjusted by the Census Bureau, and (2) sales and prices comparable with data in previous periods because of changes by the Bureau of the of existing units, which are published by the National Association of Realtors. All Census in its estimating techniques. For a description of these changes see back and current figures are available from the originating agency. Permit Construction Reports (C-30-76-5), issued by the Bureau in July 1976. authorizations are those reported to the Census Bureau from 16,000 jurisdictions beginning with 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A51 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data, except as noted Change from 12 Change from 3 months earlier Change from 1 month earlier months earlier (at annual rate) IIInnndddeeexxx llleeevvveeelll IIIttteeemmm 1990 1991 1990 1991 AAAppprrr... 11999900 11999911 111999999111 AApprr.. AApprr.. June Sept. Dec/ Mar/ Dec/ Jan/ Feb. Mar. Apr. CONSUMER PRICES2 (1982-84=100) 1 All items 4.7 4.9 4.1 8.2 4.9 2.4 .3 > .4 .2 -.1 .2 135.2 ? Food 5.7 4.1 2.5 4.6 3.9 2.4 .1 .6 -.2 .2 .7 136.7 3 Energy items .8 4.0 1.2 44.2 18.0 -30.7 -.4 -2.4 -4.0 -2.6 -.7 99.5 4 All items less food and energy 4.8 5.1 4.6 6.0 3.8 6.8 .4 ..88 .7 ..11 .2 141.1 5 Commodities 3.4 4.0 2.0 3.3 2.3 7.9 .2 11..00 1.0 --..11 .2 128.6 6 Services 5.6 5.8 5.5 7.2 4.8 6.4 .4 .7 .6 .3 .1 148.4 PRODUCER PRICES (1982=100) 7 Finished goods 3.7 3.2 1.0 11.3 5.1 -4.5 -.4 -.2 -.6 -.3 .2 120.9 8 Consumer foods 4.7 1.8 -1.6 2.3 1.3 .6 -.3 -.3 .2 .2 .4 125.4 9 Consumer energy -.6 10.4 -4.6 118.7 21.1 -37.2 -4.0 -3.2 -5.1 -3.2 -.3 75.1 10 Other consumer goods 4.1 4.2 3.8 3.5 3.4 5.3 .0 .7 .5 .2 .4 133.1 11 Capital equipment 3.9 2.9 2.7 3.6 3.3 3.2 .3 .3 .2 .2 -.2 125.7 12 Intermediate materials3 .4 1.2 .4 13.4 4.2 -9.5 -.8 -.5 -.9 -1.1 -.4 114.1 13 Excluding energy -.1 .9 .7 4.0 2.3 -1.9 -.1 .0 -.1 -.4 -.2 121.7 Crude materials 14 Foods 3.1 -5.3 -3.8 -7.8 -7.3 1.1 -1.2 -.9 .0 1.2 -1.0 109.0 N Energy -5.4 5.6 -39.2 305.8 -18.8 -53.5 -10.2 5.9 -15.9 -7.3 .0 77.2 16 Other -2.4 -3.8 13.5 5.9 -18.1 -3.0 -1.3 .2 .2 -1.1 -.5 132.5 1. Not seasonally adjusted. 3. Excludes intermediate materials for food manufacturing and manufactured 2. Figures for consumer prices are those for all urban consumers and reflect a animal feeds. rental equivalence measure of homeownership after 1982. SOURCE. Bureau of Labor Statistics. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics • July 1991 2.16 GROSS NATIONAL PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1989 1990 AAccccoouunntt 11998888 11998899 11999900 Q4 Q1 Q2 Q3 Q4 GROSS NATIONAL PRODUCT 1 Total 4,873.7 5,200.8 5,465.1 5,289.3 5,375.4 5,443.3 5,514.6 5,527.3 By source 2 Personal consumption expenditures 3,238.2 3,450.1 3,657.3 3,518.5 3,588.1 3,622.7 3,693.4 3,724.9 3 Durable goods 457.5 474.6 480.3 471.2 492.1 478.4 482.3 468.5 4 Nondurable goods 1,060.0 1,130.0 1,193.7 1,148.8 1,174.7 1,179.0 1,205.0 1,216.0 5 Services 1,720.7 1,845.5 1,983.3 1,898.5 1,921.3 1,965.3 2,006.2 2,040.4 6 Gross private domestic investment 747.1 771.2 741.0 762.7 747.2 759.0 759.7 698.3 7 Fixed investment 720.8 742.9 746.1 737.7 758.9 745.6 750.7 729.2 8 Nonresidential 488.4 511.9 524.1 511.8 523.1 516.5 532.8 524.0 9 Structures 139.9 146.2 147.0 147.1 148.8 147.2 149.8 142.1 10 Producers' durable equipment 348.4 365.7 377.1 364.7 374.3" 369.3 383.0 381.9 11 Residential structures 232.5 231.0 222.0 225.9 235.9 229.1 217.9 205.2 12 Change in business inventories 26.2 28.3 -5.0 25.0 -11.8 13.4 9.0 -30.8 13 Nonfarm 29.8 23.3 -7.4 24.1 -17.0 13.0 6.8 -32.4 14 Net exports of goods and services -74.1 -46.1 -31.2 -35.3 -30.0 -24.9 -41.3 -28.8 15 Exports 552.0 626.2 672.8 642.8 661.3 659.7 672.7 697.4 16 Imports 626.1 672.3 704.0 678.1 691.3 684.6 714.1 726.2 17 Government purchases of goods and services 962.5 1,025.6 1,098.1 1,043.3 1,070.1 1,086.4 1,102.8 1,132.9 18 Federal 380.3 400.0 424.0 399.9 410.6 421.9 425.8 437.6 19 State and local 582.3 625.6 674.1 643.4 659.6 664.6 677.0 695.3 By major type of product 20 Final sales, total 4,847.5 5,172.5 5,470.2 5,264.3 5,387.2 5,429.9 5,505.6 5,558.2 21 Goods 1,908.9 2,044.4 2,148.3 2,060.9 2,122.8 2,133.1 2,161.4 2,175.9 22 Durable 840.3 894.7 939.0 894.2 941.4 930.1 943.4 941.2 23 Nondurable 1,068.6 1,149.7 1,209.3 1,166.7 1,181.4 1,203.0 1,218.0 1,234.7 24 Services 2,488.6 2,671.2 2,864.5 2,747.5 2,791.3 2,834.2 2,889.6 2,943.0 25 Structures 450.0 456.9 457.4 455.9 473.0 462.5 454.6 439.3 26 Change in business inventories 26.2 28.3 -5.0 25.0 -11.8 13.4 9.0 -30.8 27 Durable goods 19.9 11.9 -11.1 13.2 -21.6 .0 9.8 -32.5 28 Nondurable goods 6.4 16.4 6.0 11.9 9.8 13.4 -.8 1.7 MEMO 29 Total GNP in 1982 dollars 4,016.9 4,117.7 4,157.3 4,133.2 4,150.6 4,155.1 4,170.0 4,153.4 NATIONAL INCOME 30 Total 3,984.9 4,223.3 4,418.4r 4,267.1 4,350.3 4,411.3 4,452.4 4,459.7r 31 Compensation of employees 2,905.1 3,079.0 3,244.2 3,128.6 3,180.4 3,232.5 3,276.9 3,286.9 32 Wages and salaries 2,431.1 2,573.2 2,705.3 2,612.7 2,651.6 2,696.3 2,734.2 2,738.9 33 Government and government enterprises 446.6 476.6 508.0 486.7 497.1 505.7 511.3 518.1 34 Other 1,984.5 2,096.6 2,197.2 2,126.0 2,154.5 2,190.6 2,222.9 2,220.8 35 Supplement to wages and salaries 474.0 505.8 538.9 515.9 528.8 536.1 542.7 548.0 36 Employer contributions for social insurance 248.5 263.9 280.8 268.4 276.0 279.7 282.7 284.8 37 Other labor income 225.5 241.9 258.1 247.5 252.8 256.4 260.0 263.2 38 Proprietors' income1 354.2 379.3 402.5 381.7 404.0 401.7 397.9 406.2 39 Business and professional 310.5 330.7 352.6 336.0 346.6 350.8 355.6 357.4 40 Farm1 43.7 48.6 49.9 45.7 57.4 51.0 42.4 48.8 41 Rental income of persons2 16.3 8.2 6.9 4.1 5.5 4.3 8.4 9.3 42 Corporate profits' 337.6 311.6 298.3R 290.9 296.8 306.6 300.7 288.9R 43 Profits before tax3 316.7 307.7 304.7R 289.8 296.9 299.3 318.5 304.1' 44 Inventory valuation adjustment -27.0 -21.7 -11.4 -14.5 -11.4 -.5 -19.8 -13.8 45 Capital consumption adjustment 47.8 25.5 4.9 15.6 11.3 7.7 2.0 -1.4 46 Net interest 371.8 445.1 466.7 461.7 463.6 466.2 468.3 468.4 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A53 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1989 1990 AAccccoouunntt 11998888 11998899 11999900 Q4 Ql Q2 Q3 Q4' PERSONAL INCOME AND SAVING 1 Total personal income 4,070.8 4,384.3 4,645.5 4,469.2 4,562.8 4,622.2 4,678.5 4,718.5 2 Wage and salary disbursements 2,431.1 2,573.2 2,705.3 2,612.7 2,651.6 2,696.3 2,734.2 2,738.9 3 Commodity-producing industries 696.4 720.6 729.3 721.4 724.6 731.1 735.3 726.0 4 Manufacturing 524.0 541.8 546.8 540.9 541.2 548.1 551.8 546.1 5 Distributive industries 572.0 604.7 637.2 614.6 627.0 637.3 642.7 641.9 6 Service industries 716.2 771.4 830.8 790.0 802.9 822.2 844.9 853.0 7 Government and government enterprises 446.6 476.6 508.0 486.7 497.1 505.7 511.3 518.1 8 Other labor income 225.5 241.9 258.1 247.5 252.8 256.4 260.0 263.2 9 Proprietors' income1 354.2 379.3 402.5 381.7 404.0 401.7 397.9 406.2 10 Business and professional1 310.5 330.7 352.6 336.0 346.6 350.8 355.6 357.4 11 Farm1 43.7 48.6 49.9 45.7 57.4 51.0 42.4 48.8 12 Rental income of persons2 16.3 8.2 6.9 4.1 5.5 4.3 8.4 9.3 13 Dividends 102.2 114.4 123.8 118.2 120.5 122.9 124.9 126.7 14 Personal interest income 547.9 643.2 680.4 664.9 670.5 678.0 685.3 687.9 15 Transfer payments 587.7 636.9 694.8 655.9 680.9 686.7 696.4 715.1 16 Old-age survivors, disability, and health insurance benefits ... 300.5 325.3 350.7 334.1 347.2 347.6 351.1 356.8 17 LESS: Personal contributions for social insurance 194.1 212.8 226.2 215.8 222.9 224.1 228.6 228.9 18 EQUALS: Personal income 4,070.8 4,384.3 4,645.5 4,469.2 4,562.8 4,622.2 4,678.5 4,718.5 19 LESS: Personal tax and nontax payments 591.6 658.8 699.4 669.6 675.1 696.5 709.5 716.6 20 EQUALS: Disposable personal income 3,479.2 3,725.5 3,946.1 3,799.6 3,887.7 3,925.7 3,969.1 4,001.9 21 LESS: Personal outlays 3,333.6 3,553.7 3,766.0 3,625.5 3,696.4 3,730.6 3,802.6 3,834.4 22 EQUALS: Personal saving 145.6 171.8 180.1 174.1 191.3 195.1 166.5 167.5 MEMO Per capita (1982 dollars) 23 Gross national product 16,302.4 165.5' 165.4'" 16,546.0 16,575.9 16,554.2 16,562.9 16,449.4 24 Personal consumption expenditures 10,578.3 106.8r 106.7' 10,688.2 10,692.1 10,672.5 10,711.5 10,588.7 25 Disposable personal income 11,368.0 11,531.0 11,509.0 11,541.0 11,586.0 11,564.0 11,511.0 11,376.0 26 Saving rate (percent) 4.2 4.6 4.6 4.6 4.9 5.0 4.2 4.2 GROSS SAVING 27 Gross saving 656.1 691.5 657.3r 674.8 664.8 679.3 665.9 619.2' 28 Gross private saving 751.3 779.3 787.9' 786.4 795.0 806.7 772.2 777.8' 29 Personal saving 145.6 171.8 180.1 174.1 191.3 195.1 166.5 167.5 30 Undistributed corporate profits1 91.4 53.0 32.2r 39.8 36.7 40.5 26.5 25.2' 31 Corporate inventory valuation adjustment -27.0 -21.7 -11.4 -14.5 -11.4 -.5 -19.8 -13.8 Capital consumption allowances 32 Corporate 322.1 346.4 363.0 356.5 356.7 359.7 365.5 370.3 33 Noncorporate 192.2 208.0 212.6 216.0 210.3 211.4 213.8 214.8 34 Government surplus, or deficit (-), national income and product accounts -95.3 -87.8 -130.6' -111.6 -130.2 -127.3 -106.4 -158.6' 35 Federal -141.7 -134.3 -166.0' -150.1 -168.3 -166.0 -145.7 -184.3' 36 State and local 46.5 46.4 35.4' 38.5 38.1 38.6 39.3 25.7' 37 Gross investment 627.8 674.4 655.6 671.8 665.6 676.1 661.0 619.6 38 Gross private domestic 747.1 771.2 741.0 762.7 747.2 759.0 759.7 698.3 39 Net foreign -119.2 -96.8 -85.5 -90.9 -81.6 -82.9 -98.7 -78.7 40 Statistical discrepancy -28.2 -17.0 -I.R -3.0 .7 -3.2 -4.9 .4' 1. With inventory valuation and capital consumption adjustments. SOURCE. Survey of Current Business (Department of Commerce). 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 Domestic Nonfinancial Statistics • July 1991 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 1989 1990 Item credits or debits 1988 1990 Q4 Q1 Q2 Q3 Q4P 1 Balance on current account. -128,862 -110,035 -99,297 -26,692 -22,320 -22,733 -26,481 -27,762 2 Not seasonally adjusted .... -27,926 -18,327 -20,987 -30,672 -29,311 3 Merchandise trade balance . -126,986 -114,864 -108,680 -28,746 -26,809 -23,225 -29,785 -28,861 Merchandise exports . 320,337 360,465 389,286 91,738 96,093 96,585 96,152 100,456 Merchandise imports -447,323 -475,329 -497,966 -120,484 -122,902 -119,810 -125,937 -129,317 Military transactions, net -5,452 -6,319 -6,414 -1,776 -1,287 -1,382 -1,705 -2,042 Investment income, net 1,610 -913 7,534 561 2,004 -990 2,256 4,265 Other service transactions, net 16,971 26,783 29,337 7,900 7,212 7,286 6,852 7,988 Remittances, pensions, and other transfers -4,261 -3,758 -4,101 -889 -1,038 -921 -1,106 -1,037 U.S. government grants -10,744 -10,963 -16,972 -3,742 -2,402 -3,501 -2,993 -8,075 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) 2,969 1,185 2,971 -47 -659 -360 4,797 12 Change in U.S. official reserve assets (increase, -). -3,912 -25,293 -2,158 -3,202 -3,177 371 1,739 -1,092 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) 127 -535 -192 -204 -247 -216 363 -93 15 Reserve position in International Monetary Fund. 1,025 471 731 -23 234 493 8 -4 16 Foreign currencies -5,064 -25,229 -2,697 -2,975 -3,164 94 1,368 -995 17 Change in U.S. private assets abroad (increase, -). -83,232 -102,953 -62,062 -45,496 36,741 -31,257 -33,273 -34,273 18 Bank-reported claims3 -56,322 -50,684 816 -32,658 52,353 -13,639 -13,489 -24,409 19 Nonbank-reported claims -2,847 1,391 47 1,202 -1,550 625 20 U.S. purchase of foreign securities, net -7,846 -21,938 -26,785 -4,109 -7,496 -11,247 -1,223 -6,819 21 U.S. direct investments abroad, net -16,217 -31,722 -36,370 -8,776 -9,318 -4,821 -19,186 -3,045 22 Change in foreign official assets in United States (increase, +) .. 39,515 8,823 30,778 -7,016 -8,203 5,541 13,588 19,851 23 U.S. Treasury securities. 41,741 333 28,704 -7,342 -5,897 2,442 12,058 20,101 24 O~ th' er U.S. government obligations 1,309 1,383 667 569 -521 346 134 708 25 Other U.S. government liabilities4 -710 332 1,486 412 -381 1,089 -202 979 26 Other U.S. liabilities reported by U.S. banks3 -319 4,940 1,495 -820 -1,278 1,918 1,871 -1,016 27 Other foreign official assets -2,506 1,835 -1,574 165 -126 -254 -273 -921 28 Change in foreign private assets in United States (increase, +). 181,926 205,829 56,766 76,336 -24,786 19,954 42,543 19,055 29 U.S. bank-reported liabilities3 70,235 61,199 19,786 36,674 -32,264 4,897 27,591 19,562 30 U.S. nonbank-reported liabilities 6,664 2,867 1,732 290 1,317 4,425 31 Foreign private purchases of U.S. Treasury securities, net 20,239 29,951 1,144 5,671 -835 3,614 312 — i ,947 32 Foreign purchases of other U.S. securities, net 26,353 39,568 4,096 10,793 2,486 2,890 -1,670 390 33 Foreign direct investments in United States, net 58,435 72,244 25,708 21,466 5,537 7,236 11,885 1,050 34 Allocation of SDRs 0 0 0 0 0 0 0 0 35 Discrepancy -8,404 22,443 73,002 6,117 22,404 28,932 2,244 19,424 36 Owing to seasonal adjustments 3,560 3,023 -767 -4,980 2,726 37 Statistical discrepancy in recorded data before seasonal adjustment -8,404 22,443 73,002 2,558 19,381 29,699 7,224 16,698 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -3,912 -25,293 -2,158 -3,202 -3,177 371 1,739 -1,092 39 Foreign official assets in United States (increase, +) excluding line 25 40,225 8,491 29,292 -7,428 -7,822 4,452 13,790 18,872 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22 above) -2,996 10,713 1,902 -1,379 2,953 208 341 1. Seasonal factors are not calculated for lines 6,10, 12-16, 18-20, 22-34, and 4. Primarily associated with military sales contracts and other transactions 38-40. arranged with or through foreign official agencies. 2. Data are on an international accounts (IA) basis. Differs from the Census 5. Consists of investments in U.S. corporate stocks and in debt securities of basis data, shown in table 3.11, for reasons of coverage and timing. Military private corporations and state and local governments. exports are excluded from merchandise data and are included in line 6. NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business 3. Reporting banks include all kinds of depository institutions besides commer- (Department of Commerce). cial banks, as well as some brokers and dealers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A55 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data are seasonally adjusted. 1990 1991' IItteemm 11998888 11998899 11999900 Sept. Oct. Nov. Dec. Jan. Feb. Mar." 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments, f.a.s. value 322,426 363,812 393,592 32,231 34,631 33,586 33,570 34,144 33,599 33,991 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 2 Customs value 440,952 473,211 495,311 41,315 44,527 43,123 39,895 41,520 39,103 38,037 Trade balance 3 Customs value -118,526 -109,399 -101,718 -9,084 -9,897 -9,536 -6,325 -7,376 -5,504 -4,047 1. The Census basis data differ from merchandise trade data shown in table tions; military payments are excluded and shown separately as indicated above. 3.10, U.S. International Transactions Summary, for reasons of coverage and As of Jan. 1,1987 census data are released 45 days after the end of the month; the timing. On the export side, the largest adjustment is the exclusion of military sales previous month is revised to reflect late documents. Total exports and the trade (which are combined with other military transactions and reported separately in balance reflect adjustments for undocumented exports to Canada. the "service account" in table 3.10, line 6). On the import side, additions are made SOURCE. FT900 "Summary of U.S. Export and Import Merchandise Trade" for gold, ship purchases, imports of electricity from Canada, and other transac- (Department of Commerce, Bureau of the Census). 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1990 1991 Type 1987 1988 1989 Oct. Dec. Feb. Apr." 1 Total 45,798 47,802 74,609 82,822 83,041 83,316 85,006 82,797 78,002 78,927 2 Gold stock, including Exchange 11,078 11,057 11,059 11,060 11,059 11,058 11,058 11,058 11,058 11,058 Stabilization Fund' 10,283 9,637 9,951 10,876 11,059 10,989 10,922 10,958 10,368 10,325 3 Special drawing rights2,3 4 ReseMrvoen peotasriyti oFnu nind International 11,349 9,745 9,048 9,066 8,871 9,076 9,468 9,556 8,910 8,806 5 Foreign currencies4 13,088 17,363 44,551 51,820 52,052 52,193 53,558 51,225 47,666 48,108 1. Gold held under earmark at Federal Reserve Banks for foreign and interna- in the IMF also are valued on this basis beginning July 1974. tional accounts is not included in the gold stock of the United States; see table 3. Includes allocations by the International Monetary Fund of SDRs as follows: 3.13. Gold stock is valued at $42.22 per fine troy ounce. $867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 1, 2. Beginning July 1974, the IMF adopted a technique for valuing the SDR based 1972; $1,139 million on Jan. 1, 1979; $1,152 million on Jan. 1, 1980; and $1,093 on a weighted average of exchange rates for the currencies of member countries. million on Jan. 1, 1981; plus transactions in SDRs. From July 1974 through December 1980, 16 currencies were used; from January 4. Valued at current market exchange rates. 1981, 5 currencies have been used. The U.S. SDR holdings and reserve position 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1 Millions of dollars, end of period 1990 1991 AAsssseettss 11998877 11998888 11998899 p Oct. Nov. Dec. Jan. Feb. Mar. Apr. 1 Deposits 244 347 589 297 264 369 271 329 228 292 Assets held in custody 2 U.S. Treasury securities2 195,126 232,547 224,911 266,749 272,399 278,499 286,722 286,471 272,505 271,779 3 Earmarked gold3 13,919 13,636 13,456 13,415 13,389 13,387 13,377 13,382 13,374 13,363 1. Excludes deposits and U.S. Treasury securities held for international and 3. Earmarked gold and the gold stock are valued at $42.22 per fine troy ounce, regional organizations. Earmarked gold is gold held for foreign and international accounts and is not 2. Marketable U.S. Treasury bills, notes, and bonds; and nonmarketable U.S. included in the gold stock of the United States. Treasury securities payable in dollars and in foreign currencies at face value. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • July 1991 3.14 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data1 Millions of dollars, end of period 1990 1991 AAsssseett aaccccoouunntt 11998877 11998888 11998899 Sept. Oct. Nov. Dec. Jan. Feb. Mar. All foreign countries 1 Total, all currencies 518,618 505,595 545,366 546,172 552,542 558,626 556,925 563,997' 560,968' 546,491 2 Claims on United States 138,034 169,111 198,835 182,593 177,571 180,938 188,496 183,991' 188,174' 183,296 3 Parent bank 105,845 129,856 157,092 140,897 135,568 140,302 148,837 141,498' 145,967' 143,151 4 Other banks in United States 16,416 14,918 17,042 14,272 13,261 12,937 13,296 14,541 12,887 12,268 5 Nonbanks 15,773 24,337 24,701 27,424 28,742 27,699 26,363 27,952 29,320 27,877 6 Claims on foreigners 342,520 299,728 300,575 311,248 319,318 323,020 312,449' 321,247' 313,595' 307,102 7 Other branches of parent bank 122,155 107,179 113,810 123,359 128,747 135,177 135,003r 132,157' 124,584' 129,529 8 Banks 108,859 96,932 90,703 83,305 82,706 81,440 72,602' 81,2W 80,030 72,757 9 Public borrowers 21,832 17,163 16,456 16,379 16,335 16,591 17,555' 18,26C 17,893' 17,915 10 Nonbank foreigners 89,674 78,454 79,606 88,205 91,530 89,812 87,289' 89,611 91,088 86,901 11 Other assets 38,064 36,756 45,956 52,331 55,653 54,668 55,98c 58,759' 59,199' 56,093 12 Total payable in U.S. dollars 350,107 357,573 382,498 360,210 362,537 371,753 379,479' 380,116' 380,18C 381,848 13 Claims on United States 132,023 163,456 191,184 174,016 168,988 172,336 180,174 175,909' 180,601' 176,209 14 Parent bank 103,251 126,929 152,294 135,100 129,882 134,436 142,962 135,793' 140,789' 138,206 15 Other banks in United States 14,657 14,167 16,386 13,422 12,441 12,088 12,513 13,739 12,266 11,757 16 Nonbanks 14,115 22,360 22,504 25,494 26,665 25,812 24,699 26,377 27,546 26,246 17 Claims on foreigners 202,428 177,685 169,690 163,994 168,722 174,832 174,451' 179,762' 173,527' 180,415 18 Other branches of parent bank 88,284 80,736 82,949 84,378 90,198 95,599 95,298' 93,847' 87,394' 95,106 19 Banks 63,707 54,884 48,396 39,413 37,531 37,795 36,440 41,134 40,785 40,451 20 Public borrowers 14,730 12,131 10,961 11,166 11,201 11,202 12,298 13,136 12,944 13,206 21 Nonbank foreigners 35,707 29,934 27,384 29,037 29,792 30,236 30,415 31,645 32,404 31,652 22 Other assets 15,656 16,432 21,624 22,200 24,827 24,585 24,854' 24,445' 26,052' 25,224 United Kingdom 23 Total, all currencies 158,695 156,835 161,947 178,484 184,660 188,182 184,818 184,817 180,211 175,025 24 Claims on United States 32,518 40,089 39,212 42,574 39,862 42,301 45,560 40,197 41,278 41,916 25 Parent bank 27,350 34,243 35,847 39,042 35,904 38,453 42,413 36,533 37,662 38,759 26 Other banks in United States . 1,259 1,123 1,058 723 694 1,088 792 1,095 924 848 27 Nonbanks 3,909 4,723 2,307 2,809 3,264 2,760 2,355 2,569 2,692 2,309 28 Claims on foreigners 115,700 106,388 107,657 114,863 122,203 124,077 115,536 121,077 115,361 110,329 29 Other branches of parent bank 39,903 35,625 37,728 44,408 47,390 49,499 46,367 47,857 41,653 44,341 30 Banks 36,735 36,765 36,159 34,088 35,480 36,135 31,604 34,050 34,518 30,660 31 Public borrowers 4,752 4,019 3,293 3,639 3,521 3,675 3,860 3,953 4,029 3,943 32 Nonbank foreigners 34,310 29,979 30,477 32,728 35,812 34,768 33,705 35,217 35,161 31,385 33 Other assets 10,477 10,358 15,078 21,047 22,595 21,804 23,722 23,543 23,572 22,780 34 Total payable in U.S. dollars 100,574 103,503 103,208 106,899 109,950 115,182 116,762 114,413 113,673 114,347 35 Claims on United States 30,439 38,012 36,404 37,997 35,429 37,668 41,259 36,120 37,644 38,439 36 Parent bank 26,304 33,252 34,329 36,024 33,145 35,614 39,609 33,754 35,345 36,536 37 Other banks in United States . 1,044 964 843 466 419 611 334 771 615 562 38 Nonbanks 3,091 3,796 1,232 1,507 1,865 1,443 1,316 1,595 1,684 1,341 39 Claims on foreigners 64,560 60,472 59,062 59,811 63,720 66,876 63,701 67,996 64,682 65,034 40 Other branches of parent bank 28,635 28,474 29,872 33,990 37,069 39,630 37,142 38,120 33,136 36,150 41 Banks 19,188 18,494 16,579 13,206 13,571 13,915 13,135 14,905 15,840 15,097 42 Public borrowers 3,313 2,840 2,371 2,866 2,790 2,862 3,143 3,242 3,290 3,220 43 Nonbank foreigners 13,424 10,664 10,240 9,749 10,290 10,469 10,281 11,729 12,416 10,567 44 Other assets 5,575 5,019 7,742 9,091 10,801 10,638 11,802 10,297 11,347 10,874 Bahamas and Caymans 45 Total, all currencies 160,321 170,639 176,006 153,266 153,529 153,850 162,316 167,306' 168,209' 163,315 46 Claims on United States 85,318 105,320 124,205 106,606 107,009 106,694 112,989 115,806' 118,783' 110,727 47 Parent bank 60,048 73,409 87,882 70,177 70,877 71,416 77,873 78,35C 81,888' 75,485 48 Other banks in United States 14,277 13,145 15,071 12,539 11,605 11,017 11,869 12,877 11,380 10,753 49 Nonbanks 10,993 18,766 21,252 23,890 24,527 24,261 23,247 24,579 25,515 24,489 50 Claims on foreigners 70,162 58,393 44,168 39,573 38,062 38,669 41,356 42,801 40,363 43,665 51 Other branches of parent bank 21,277 17,954 11,309 11,638 12,152 12,697 13,416 12,292 11,477 13,658 52 Banks 33,751 28,268 22,611 18,076 15,994 16,299 16,310 18,343 16,863 17,571 53 Public borrowers 7,428 5,830 5,217 4,818 4,876 4,775 5,807 6,528 6,484 6,846 54 Nonbank foreigners 7,706 6,341 5,031 5,041 5,040 4,898 5,823 5,638 5,539 5,590 55 Other assets 4,841 6,926 7,633 7,087 8,458 8,487 7,971 8,699' 9,063' 8,923 56 Total payable in U.S. dollars 151,434 163,518 170,780 149,615 149,271 149,754 158,390 162,458' 163,533' 159,226 1. Beginning with June 1984 data, reported claims held by foreign branches from $50 million to $150 million equivalent in total assets, the threshold now have been reduced by an increase in the reporting threshold for "shell" branches applicable to all reporting branches. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A57 3.14—Continued 1990 1991 LLiiaabbiilliittyy aaccccoouunntt 11998877 11998888 11998899 Sept. Oct. Nov. Dec. Jan. Feb. Mar. All foreign countries 57 Total, all currencies 518,618 505,595 545,366 546,172 552,542 558,626 556,925 563,997' 560,968' 546,491 58 Negotiable CDs 30,929 28,511 23,500 21,977 22,089 21,521 18,060 19,106 18,595 19,920 59 To United States 161,390 185,577 197,239 172,916 167,575 171,592 189,412 186,279' 187,562' 185,178 60 Parent bank 87,606 114,720 138,412 117,384 113,098 115,519 138,748 134,118' 132,227' 128,009 61 Other banks in United States 20,355 14,737 11,704 8,976 7,984 9,140 7,463 9,341 10,580 10,961 62 Nonbanks 53,429 56,120 47,123 46,556 46,493 46,933 43,201 42,820 44,755 46,208 61 304,803 270,923 296,850 317,202 327,139 328,534 311,668r 319,854' 316,605' 305,804 64 Other branches of parent bank 124,601 111,267 119,591 125,382 131,045 137,849 139,113' 132,214' 124,437' 128,916 65 87,274 72,842 76,452 75,351 75,815 72,352 58,986' 70,222' 73,873' 63,338 66 Official institutions 19,564 15,183 16,750 17,475 18,436 17,996 14,791 17,343 16,648 15,830 67 Nonbank foreigners 73,364 71,631 84,057 98,994 101,843 100,337 98,778' 100,075' 101,647' 97,720 68 Other liabilities 21,496 20,584 27,777 34,077 35,739 36,979 37,785' 38,758' 38,206' 35,589 69 Total payable in U.S. dollars 361,438 367,483 396,613 364,972 363,963 372,359 383,581' 384,395' 380,601' 380,871 70 Negotiable CDs 26,768 24,045 19,619 17,219 17,022 16,845 14,094 15,141 14,446 15,335 71 To United States 148,442 173,190 187,286 159,059 153,350 157,013 175,713 172,189' 174,661' 172,900 7? Parent bank 81,783 107,150 132,563 109,490 104,651 106,951 130,569 126,067' 125,022' 120,883 73 Other banks in United States 18,951 13,468 10,519 7,501 6,486 7,686 6,052 7,627 8,715 9,415 74 Nonbanks 47,708 52,572 44,204 42,068 42,213 42,376 39,092 38,495 40,924 42,602 75 To foreigners 177,711 160,766 176,460 175,725 178,969 183,461 179,002' 182,131' 175,761' 177,902 76 Other branches of parent bank 90,469 84,021 87,636 85,303 89,658 95,556 98,128' 94,765' 87,288' 93,910 77 35,065 28,493 30,537 26,576 23,669 25,022 20,251 23,661 25,553 23,803 78 Official institutions 12,409 8,224 9,873 9,346 9,689 9,091 7,921 10,585 10,004 9,171 7799 Nonbank foreigners 39,768 40,028 48,414 54,500 55,953 53,792 52,702 53,12^ 52,916 51,018 8800 Other liabilities 8,517 9,482 13,248 12,969 14,622 15,040 14,772' 14,934' 15,733' 14,734 United Kingdom 81 Total, all currencies 158,695 156,835 161,947 178,484 184,660 188,182 184,818 184,817 180,211 175,025 87 Negotiable CDs 26,988 24,528 20,056 17,542 17,557 17,144 14,256 14,872 14,363 15,820 83 To United States 23,470 36,784 36,036 35,485 32,143 36,500 39,928 34,389 34,070 34,453 84 Parent bank 13,223 27,849 29,726 25,461 22,013 26,165 31,806 25,548 25,670 26,213 85 Other banks in United States 1,536 2,037 1,256 1,765 1,430 1,671 1,505 1,861 1,401 1,230 86 Nonbanks 8,711 6,898 5,054 8,259 8,700 8,664 6,617 6,980 6,999 7,010 8877 To foreigners 98,689 86,026 92,307 106,494 114,959 113,958 108,531 113,754 110,454 105,090 8888 Other branches of parent bank 33,078 26,812 27,397 30,487 32,357 34,406 36,709 34,547 30,978 33,084 89 34,290 30,609 29,780 30,111 33,870 32,844 25,126 31,765 32,801 26,643 90 Official institutions 11,015 7,873 8,551 9,578 10,788 9,534 8,361 10,368 9,728 8,935 91 Nonbank foreigners 20,306 20,732 26,579 36,318 37,944 37,174 38,335 37,074 36,947 36,428 92 Other liabilities 9,548 9,497 13,548 18,963 20,001 20,580 22,103 21,802 21,324 19,662 93 Total payable in U.S. dollars 102,550 105,907 108,178 107,216 108,064 114,090 116,153 114,367 112,343 112,427 94 Negotiable CDs 24,926 22,063 18,143 15,502 15,237 15,100 12,710 13,387 12,790 13,816 95 To United States 17,752 32,588 33,056 30,368 26,867 31,117 34,756 29,114 29,705 30,225 % Parent bank 12,026 26,404 28,812 23,963 20,334 24,381 30,014 23,945 24,389 24,896 97 Other banks in United States 1,308 1,752 1,065 1,471 1,035 1,318 1,156 1,324 926 800 98 Nonbanks 4,418 4,432 3,179 4,934 5,498 5,418 3,586 3,845 4,390 4,529 99 55,919 47,083 50,517 54,679 57,639 59,787 60,014 63,702 60,977 59,985 100 Other branches of parent bank 22,334 18,561 18,384 18,560 20,797 23,288 25,957 24,954 21,339 24,049 101 15,580 13,407 12,244 11,116 10,465 11,911 9,488 11,539 12,993 10,146 107 7,530 4,348 5,454 5,324 5,751 5,000 4,692 7,158 6,570 6,154 103 Nonbank foreigners 10,475 10,767 14,435 19,679 20,626 19,588 19,877 20,051 20,075 19,636 104 Other liabilities 3,953 4,173 6,462 6,667 8,321 8,086 8,673 8,164 8,871 8,401 Bahamas and Caymans 105 Total, all currencies 160,321 170,639 176,006 153,266 153,529 153,850 162,316 167,306' 168,209' 163,315 106 Negotiable CDs 885 953 678 553 560 561 646 654 629 729 107 To United States 113,950 122,332 124,859 104,243 103,577 104,086 114,738 120,658' 122,148' 118,512 108 53,239 62,894 75,188 62,308 62,506 61,350 74,941 80,567' 78,173' 72,314 109 Other banks in United States 17,224 11,494 8,883 5,398 4,959 5,798 4,526 5,655 7,618 8,209 110 Nonbanks 43,487 47,944 40,788 36,537 36,112 36,938 35,271 34,436 36,357 37,989 111 43,815 45,161 47,382 46,237 46,867 46,299 44,444 42,883 42,555 41,417 117 Other branches of parent bank 19,185 23,686 23,414 24,781 25,864 25,579 24,715 23,099 22,923 22,018 in 10,769 8,336 8,823 7,519 6,794 6,569 5,588 6,063 6,188 6,274 114 Official institutions 1,504 1,074 1,097 731 703 763 622 811 728 674 115 Nonbank foreigners 12,357 12,065 14,048 13,206 13,506 13,388 13,519 12,910 12,716 12,451 116 Other liabilities 1,671 2,193 3,087 2,233 2,525 2,904 2,488 3,111 2,877 2,657 117 Total payable in U.S. dollars 152,927 162,950 171,250 148,621 147,781 148,197 157,132 162,118' 162,850' 158,232 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • July 1991 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1990 1991' IItteemm 11998888 11998899 Sept. Oct. Nov. Dec. Jan. Feb. Mar." 1 Total1 304,132 312,477 324,007 329,964 340,542 343,908 352,084 361,552 349,445 By type 2 Liabilities reported by batiks in the United States 31,519 36,4% 40,202 44,681 43,170 39,494 41,450 43,064 42,084 3 U.S. Treasury bills and certificates3 110033,,772222 76,985 72,472 72,457 8800,,222200 7788,,449933 8822,,552200 8822,,661111 8822,,448844 U.S. Treasury bonds and notes 4 Marketable 152,429 179,269 189,159 190,534 195,305 203,185 205,726 213,043 201,315 5 Nonmarketable 523 568 3,717 3,741 3,765 4,491 4,521 4,550 4,580 6 U.S. securities other than U.S. Treasury securities5 15,939 19,159 18,457 18,551 18,082 18,245 17,867 18,284 18,982 By area 7 Western Europe1 123,752 133,417 156,275 163,363 169,277 171,170 173,005 178,009 170,348 8 9,513 9,482 10,171 8,903 8,639 8,598 8,106 7,777 8,494 9 Latin America and Caribbean 10,030 8,745 11,776 11,615 14,298 15,777 16,379 18,307 19,329 10 Asia 151,887 153,338 136,333 137,032 139,235 138,159 143,617 146,2% 139,827 11 1,403 1,030 1,383 1,305 1,404 1,433 1,659 1,439 1,802 12 Other countries6 7,548 6,469 8,068 7,748 7,692 8,071 8,612 9,013 8,930 1. Includes the Bank for International Settlements. bonds and notes payable in foreign currencies; zero coupon bonds are included at 2. Principally demand deposits, time deposits, bankers acceptances, commer- current value. cial paper, negotiable time certificates of deposit, and borrowings under repur- 5. Debt securities of U.S. government coiporations and federally sponsored chase agreements. agencies, and U.S. corporate stocks and bonds. 3. Includes nonmarketable certificates of indebtedness (including those payable 6. Includes countries in Oceania and Eastern Europe. in foreign currencies through 1974) and Treasury bills issued to official institutions NOTE. Based on data and on data reported to the Treasury Department by of foreign countries. banks (including Federal Reserve Banks) and securities dealers in the United 4. Excludes notes issued to foreign official nonreserve agencies. Includes States and on the 1984 benchmark survey of foreign portfolio investment in the United States. 3.16 LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Banks in the United States Payable in Foreign Currencies1 Millions of dollars, end of period 1990 IItteemm 11998877 11998888 11998899 Mar. June Sept. Dec. 1 Banks' own liabilities 55,438 74,980 67,835 63,273 68,650 69,827 69,275r 2 Banks' own claims 51,271 68,983 65,127 61,082 66,680 68,064 66,108 3 Deposits 18,861 25,100 20,491 21,585 20,281 23,718 25,526 4 Other claims 32,410 43,884 44,636 39,497 46,399 44,346 40,582 5 Claims of banks' domestic customers2 551 364 3,507 1,649 2,612 2,843 6,563 1. Data on claims exclude foreign currencies held by U.S. monetary author- 2. Assets owned by customers of the reporting bank located in the United ities. States that represent claims on foreigners held by reporting banks for the accounts of the domestic customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A59 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 1990 1991r Holder and type of liability 11998888 11998899 11999900 Sept. Oct. Nov. Dec. Jan. Feb. Mar/ 1 All foreigners 685,339 736,878 755,455 731,516 737,343 744,298 755,455 754,968 760,464 749,179 2 Banks' own liabilities 514,532 577,498 577,424 561,795 564,094 561,298 577,424 569,835 576,112 568,854 3 Demand deposits 21,863 22,032 21,734 22,085 20,212 19,680 21,734 19,6% 20,130 20,218 4 Time deposits2 152,164 168,780 168,0% 159,040 158,674 162,289 168,0% 159,427 162,287 164,029 5 Other. 51,366 67,823 67,560 67,406 75,398 72,280 67,560 76,804 75,704 72,222 6 Own foreign offices 289,138 318,864 320,034 313,264 309,810 307,049 320,034 313,908 317,992 312,385 7 Banks' custody liabilities5 170,807 159,380 178,031 169,721 173,250 183,000 178,031 185,132 184,352 180,324 8 U.S. Treasury bills and certificates6 115,056 91,100 98,179 91,361 94,821 101,243 98,179 105,801 105,301 103,477 9 Other negotiable and readily transferable instruments' 16,426 19,526 17,408 17,198 17,680 18,294 17,408 17,886 18,182 17,396 10 Other 39,325 48,754 62,444 61,162 60,748 63,464 62,444 61,445 60,869 59,451 11 Nonmonetary international and regional organizations* 3,224 4,894 5,918 6,422 5,404 5,324 5,918 7,908 6,555 6,270 1 1 3 2 Ba D n e k m s' a o n w d n d e li p a o b s il i i t t s i es 2,52 7 7 1 3,27 % 9 4,54 3 0 6 5,1 1 1 0 1 1 4,36 5 9 7 3,17 3 9 3 4,54 3 0 6 6,43 6 1 7 4,09 4 2 0 4,40 2 7 2 14 Time deposits2 1,183 927 1,038 1,245 885 773 1,038 1,587 1,672 1,914 15 Other. 1,272 2,255 3,467 3,765 3,427 2,373 3,467 4,776 2,381 2,471 16 Banks' custody liabilities5 698 1,616 1,378 1,311 1,034 2,145 1,378 1,478 2,462 1,863 17 U.S. Treasury bills and certificates6 57 197 364 479 248 1,077 364 423 1,620 1,103 18 Other negotiable and readily transferable instruments7 641 1,417 1,014 817 782 1,022 1,014 1,005 842 760 19 Other 0 2 0 15 5 46 0 50 0 0 20 Official institutions' 135,241 113,481 117,988 112,673 117,137 123,390 117,988 123,970 125,675 124,568 21 Banks' own liabilities 27,109 31,108 34,698 36,237 39,893 38,065 34,698 37,558 38,768 38,520 22 Demand deposits 1,917 2,1% 1,940 2,498 2,121 1,784 1,940 1,686 1,577 1,645 23 Time deposits2 9,767 10,495 13,%5 11,547 11,535 12,824 13,965 11,850 13,317 13,878 24 Other 15,425 18,417 18,793 22,192 26,237 23,457 18,793 24,022 23,873 22,998 25 Banks' custody liabilities5 108,132 82,373 83,290 76,436 77,244 85,325 83,290 86,413 86,908 86,048 26 U.S. Treasury bills and certificates6 103,722 76,985 78,493 72,472 72,457 80,220 78,493 82,520 82,611 82,484 27 Other negotiable and readily transferable instruments 4,130 5,028 4,594 3,676 4,361 4,725 4,594 3,712 3,923 3,472 28 Other 280 361 203 289 427 380 203 180 374 92 29 Banks10 459,523 515,275 537,076 517,854 514,636 519,067 537,076 524,635 531,810 523,458 30 Banks' own liabilities 409,501 454,273 458,053 439,390 436,852 438,014 458,053 446,155 452,152 445,866 31 Unaffiliated foreign banks 120,362 135,409 138,018 126,127 127,041 130,965 138,018 132,247 134,160 133,481 32 Demand deposits 9,948 10,279 10,048 10,405 8,989 8,9% 10,048 8,992 9,508 10,040 33 Time deposits2 80,189 90,557 89,040 80,273 80,187 83,620 89,040 81,613 82,523 84,411 34 Other. 30,226 34,573 38,930 35,449 37,866 38,349 38,930 41,641 42,129 39,031 35 Own foreign offices 289,138 318,864 320,034 313,264 309,810 307,049 320,034 313,908 317,992 312,385 36 Banks' custody liabilities5 50,022 61,002 79,024 78,464 77,785 81,053 79,024 78,480 79,658 77,592 37 U.S. Treasury bills and certificates6 7,602 9,367 12,958 13,002 13,642 13,510 12,958 12,803 13,937 13,506 38 Other negotiable and readily transferable instruments7 5,725 5,124 5,356 6,184 5,840 5,841 5,356 6,129 6,498 6,398 39 Other 36,694 46,510 60,710 59,278 58,303 61,701 60,710 59,548 59,222 57,688 40 Other foreigners 87,351 103,228 94,473 94,566 100,166 96,518 94,473 98,454 96,424 94,882 41 Banks' own liabilities 75,396 88,839 80,134 81,056 82,980 82,040 80,134 79,692 81,100 80,061 42 Demand deposits 9,928 9,460 9,710 9,081 9,045 8,868 9,710 8,951 9,005 8,511 43 Time deposits2 61,025 66,801 64,054 65,975 66,067 65,072 64,054 64,377 64,775 63,826 44 Other. 4,443 12,577 6,370 6,000 7,868 8,100 6,370 6,365 7,321 7,723 45 Banks' custody liabilities5 11,956 14,389 14,339 13,509 17,186 14,477 14,339 18,762 15,324 14,821 46 U.S. Treasury bills and certificates6 3,675 4,551 6,363 5,408 8,476 6,436 6,363 10,055 7,133 6,384 47 Other negotiable and readily transferable instruments7 5,929 7,958 6,445 6,521 6,697 6,705 6,445 7,040 6,919 6,766 48 Other 2,351 1,880 1,531 1,580 2,013 1,336 1,531 1,667 1,272 1,671 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 6,425 7,203 7,022 6,346 6,199 6,466 7,022 6,963 6,718 7,157 1. Reporting banks include all kinds of depository institutions besides commer- 5. Financial claims on residents of the United States, other than long-term cial banks, as well as some brokers and dealers. securities, held by or through reporting banks. 2. Excludes negotiable time certificates of deposit, which are included in 6. Includes nonmarketable certificates of indebtedness and Treasury bills "Other negotiable and readily transferable instruments." issued to official institutions of foreign countries. 3. Includes borrowing under repurchase agreements. 7. Principally bankers acceptances, commercial paper, and negotiable time 4. U.S. banks: includes amounts due to own foreign branches and foreign certificates of deposit. subsidiaries consolidated in "Consolidated Report of Condition" filed with bank 8. Principally the International Bank for Reconstruction and Development, and regulatory agencies. Agencies, branches, and majority-owned subsidiaries of the Inter-American and Asian Development Banks. Data exclude "holdings of foreign banks: principally amounts due to head office or parent foreign bank, and dollars" of the International Monetary Fund. foreign branches, agencies, or wholly owned subsidiaries of head office or parent 9. Foreign central banks, foreign central governments, and the Bank for foreign bank. International Settlements. 10. Excludes central banks, which are included in "Official institutions." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • July 1991 3.17—Continued 1990 199r AArreeaa aanndd ccoouunnttrryy 11998888 11998899 11999900 Sept. Oct. Nov. Dec. Jan. Feb. Mar." 1 Total 685,339 736,878 755,455 731,516 737,343 744,298 755,455 754,968' 760,464" 749,179 2 Foreign countries 682,115 731,984 749,537 725,094 731,940 738,974 749,537 747,059" 753,909" 742,909 3 Europe 231,912 237,501 254,960 244,063 245,718 247,225 254,960 247,883' 250,618' 250,316 4 Austria 1,155 1,233 1,229 • 1,433 1,401 1,385 1,229 1,615 1,567' 1,632 5 Belgium-Luxembourg 10,022 10,648 12,407 12,130 12,207 11,510 12,407 12,382 12,559 1122,,114455 6 Denmark 2,200 1,415 1,405 2,055 1,985 1,779 1,405 1,121 1,019 998899 7 Finland 285 570 602 392 660 422 602 404' 489 662 8 France 24,777 26,903 30,946 29,111 29,131 29,196 30,946 29,371' 28,081 28,211 9 Germany 6,772 7,578 7,386 7,815 8,438 8,1% 7,386 8,262 9,604 9,076 10 Greece 672 1,028 934 1,435 993 949 934 895 797 746 11 Italy 14,599 16,169 17,736 16,259 16,732 16,051 17,736 16,167' 17,353 17,368 12 ' Netherlands 5,316 6,613 5,375 5,385 6,082 6,056 5,375 5,680" 6,562 6,204 13 Norway 1,559 2,401 2,358 1,951 1,875 2,330 2,358 2,181 2,078 2,121 14 Portugal 903 2,418 2,958 2,992 2,985 2,959 2,958 2,877 2,684 2,778 lb Spain 5,494 4,364 7,694 4,335 5,312 7,347 7,694 8,964 8,224 9,934 16 Sweden 1,284 1,491 1,837 833 1,706 2,304 1,837 1,256 71C 1,159 17 Switzerland 34,199 34,496 36,915 34,537 34,239 34,031 36,915 35,570 37,391' 38,613 18 Turkey 1,012 1,818 1,169 1,634 1,451 1,358 1,169 1,124' 1,195 1,480 19 United Kingdom 111,811 102,362 109,527 104,728 100,983 103,034 109,527 102,371' 103,842' 102,938 20 Yugoslavia 529 1,474 928 2,043 1,753 1,571 928 1,030 959' 848 21 Other Western Europe1 8,598 13,563 11,889 13,240 16,258 15,141 11,889 14,348' 1122,,8800cc 10,545 22 U.S.S.R 138 350 119 240 234 220 119 1% 8888 142 23 Other Eastern Europe2 591 608 1,546 1,515 1,294 1,388 1,546 2,071 2,614' 2,722 24 Canada 21,062 18,865 20,332 20,796 19,654 20,679 20,332 19,215' 23,836' 23,446 25 Latin America and Caribbean 271,146 311,028 326,995 314,347 319,932 318,387 326,995 332,977' 336,390' 326,415 26 Argentina 7,804 7,304 7,366 7,981 7,722 7,664 7,366 7,659 7,678' 7,870 27 Bahamas 86,863 99,341 107,311 97,998 98,330 97,689 107,311 105,055' 102,377' %,373 28 Bermuda 2,621 2,884 2,809 2,641 2,482 2,518 2,809 3,101 3,037' 2,871 29 Brazil 5,314 6,351 5,853 6,150 5,915 6,470 5,853 5,945' 6,268' 6,507 30 British West Indies 113,840 138,309 140,569 139,440 144,374 141,385 140,569 148,066' 153,930" 149,960 31 Chile 2,936 3,212 3,145 3,134 3,170 3,422 3,145 3,188' 3,064 2,995 32 Colombia 4,374 4,653 4,492 3,926 4,285 4,251 4,492 4,467 44,,330088 3,786 33 Cuba 10 10 11 10 49 9 11 18 88 7 34 Ecuador 1,379 1,391 1,379 1,348 1,314 1,310 1,379 1,359 1,332 1,319 35 Guatemala 1,195 1,312 1,541 1,517 1,485 1,478 1,541 1,564 1,580 1,617 36 Jamaica 269 209 257 217 219 228 257 224 256' 268 37 Mexico 15,185 15,423 16,769 16,701 16,680 16,501 16,769 17,053' 17,300" 17,557 38 Netherlands Antilles 6,420 6,310 7,381 6,554 7,101 7,350 7,381 7,100 6,942 6,600 39 Panama 4,353 4,362 4,575 4,636 4,617 4,644 4,575 4,336 4,340 4,506 40 Peru 1,671 1,984 1,295 1,362 1,360 1,327 1,295 1,347 1,323 1,364 41 Uruguay 1,898 2,284 2,520 2,512 2,512 2,446 2,520 2,595 2,640 2,512 42 Venezuela 9,147 9,482 12,945 11,107 11,365 13,001 12,945 12,846' 12,951' 13,174 43 Other 5,868 6,206 6,779 7,113 6,951 6,693 6,779 7,053 7,055' 7,127 44 114477,,883388 156,201 113388,,006600 113366,,887788 113377,,224411 114433,,668844 113388,,006600 113366,,992200'' 113333,,556699'' 113333,,559988 China 45 Mainland 1,895 1,773 2,421 2,115 2,173 2,493 2,421 2,866 2,724' 3,031 46 Taiwan 26,058 19,588 11,277 12,468 12,237 11,418 11,277 11,11^ 11,154' 11,178 47 Hong Kong 12,248 12,416 12,689 13,836 13,767 13,843 12,689 14,868' 14,744 15,724 48 India 699 780 1,225 1,005 953 1,116 1,225 1,464' 1,628 1,175 49 Indonesia 1,180 1,281 1,238 1,397 1,261 1,261 1,238 1,191' 1,719 1,941 50 Israel 1,461 1,243 2,767 942 921 3,075 2,767 2,823 2,509' 2,966 51 Japan 74,015 81,184 68,290 68,934 67,925 69,137 68,290 64,182' 62,257' 57,361 52 Korea 2,541 3,215 2,280 2,560 2,442 2,732 2,280 2,406' 2,180 2,214 53 Philippines 1,163 1,766 1,585 1,340 1,274 1,549 1,585 1,455 1,655 1,609 54 Thailand 1,236 2,093 1,443 1,626 1,448 1,681 1,443 2,228 2,148' 2,403 55 Middle-East oil-exporting countries3 12,083 13,370 15,844 14,044 16,412 17,431 15,844 14,734 13,721' 15,809 56 Other 13,260 17,491 17,002 16,611 16,428 17,949 17,002 17,584' 17,131 18,189 57 3,991 3,824 4,630 4,152 4,225 4,390 4,630 5,177 5,157 4,910 58 Egypt 911 686 1,425 970 1,099 9% 1,425 1,476 1.416 1,449 59 Morocco 68 78 104 93 87 90 104 107 90 91 60 South Africa 437 206 228 393 235 283 228 212 317 312 61 Zaire 85 86 53 44 45 55 53 55' 5C 52 62 Oil-exporting countries 1,017 1,121 1,110 966 1,050 1,288 1,110 1,508 1.528 1,369 63 Other 1,474 1,648 1,710 1,687 1,708 1,678 1,710 1,819" 1,755 1,636 64 Other countries 6,165 4,564 4,560 4,858 5,169 4,610 4,560 4,888 4,339 4,225 65 Australia 5,293 3,867 3,807 4,127 4,371 3,804 3,807 3,882 3,433 3,131 66 All other 872 697 753 732 797 807 753 1,007 906 1,094 67 Nonmonetary international and regional organizations 3,224 4,894 5,918 6,422 5,404 5,324 5,918 7,908' 6,555 6,270 68 International5 2,503 3,947 4,390 5,198 4,289 4,203 4,390 6,428' 4,880 4,709 69 Latin American regional 589 684 1,048 668 627 809 1,048 975 1,235 1,170 70 Other regional6 133 263 479 556 487 312 479 506 440 391 1. Includes the Bank for International Settlements and Eastern European 4. Comprises Algeria, Gabon, Libya, and Nigeria. countries that are not listed in line 23. 5. Excludes "holdings of dollars" of the International Monetary Fund. 2. Comprises Bulgaria, Czechoslovakia, Hungary, Poland, and Romania. 6. Asian, African, Middle Eastern, and European regional organizations, 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and except the Bank for International Settlements, which is included in "Other United Arab Emirates (Trucial States). Western Europe." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A61 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1990 Area and country 11998888 11998899 11999900 Sept. Oct. Nov. Dec. Jan. Feb.' Mar.- 1 Total 491,165 534,492 512,323 493,463 495,593 505,352 512,323 497,293' 508,329 2 Foreign countries 489,094 530,630 507,529 488,115 491,309 500,202 507,529 494,672' 504,579 3 Europe 116,928 119,025 113,737 105,406 103,631 107,189 113,737 108,431' 107,841 4 Austria 483 415 362 369 247 268 362 248' 400 5 Belgium-Luxembourg 8,515 6,478 5,458 5,629 5,147 6,441 5,458 6,169 5,905 6 Denmark 483 582 497 659 489 842 497 567' 472 7 Finland 1,065 1,027 1,047 972 814 861 1,047 1,083' 1,381 8 France 13,243 16,146 14,531 14,403 13,750 13,386 14,531 15,202' 14,357 9 Germany 2,329 2,865 3,449 3,403 3,242 3,634 3,449 3,562 3,620 10 Greece 433 788 729 686 729 720 729 653 654 11 Italy 7,936 6,662 6,066 4,629 5,070 5,171 6,066 6,141' 5,846 12 Netherlands 2,541 1,904 1,736 2,219 1,711 1,849 1,736 1,938 2,093 13 Norway 455 609 777 744 732 661 777 701 670 14 Portugal 261 376 304 407 444 368 304 345 314 15 Spain 1,823 1,930 2,758 2,312 2,373 2,584 2,758 2,864' 2,526 16 Sweden 1,977 1,773 2,073 2,332 2,577 2,251 2,073 2,145' 2,306 17 Switzerland 3,895 6,141 4,473 4,043 3,475 3,995 4,473 2,082' 2,548 2 1 1 0 8 9 Y T U u u n r g i k t o e e s d y l a K vi i a n gdom 65 1 1 , , , 7 2 3 0 3 9 6 3 0 65 1 1 , , , 5 0 3 2 7 2 7 1 9 65 1 1 , , , 3 4 1 1 0 4 2 5 2 57 1 1 , , , 8 3 1 3 7 2 3 7 0 58 1 1 , , , 2 3 2 6 7 2 7 1 6 59 1 1 , , , 9 3 1 1 4 6 9 6 0 65 1 1 , , , 3 4 1 1 0 4 2 5 2 60 1 1 , , , 5 0 3 8 4 7 4 8 7 ' ' 60 1 , , 3 9 5 7 8 0 5 0 9 21 Other Western Europe2 1,152 1,302 587 690 667 619 587 705 841 22 U.S.S.R 1,255 1,179 530 940 825 653 530 505 501 23 Other Eastern Europe3 754 921 499 640 474 459 499 512 545 24 Canada 18,889 15,451 16,091 15,445 16,185 14,295 16,091 16,952' 19,364 25 Latin America and Caribbean 214,264 230,438 230,043 211,853 217,247 228,593 230,043 229,577' 234,808 26 Argentina 11,826 9,270 6,874 7,549 7,028 7,024 6,874 6,727 6,601 27 Bahamas 66,954 77,921 76,504 71,534 71,934 71,026 76,504 78,334 79,648 28 Bermuda 483 1,315 4,006 3,736 3,662 4,291 4,006 1,771 2,699 29 Brazil 25,735 23,749 17,994 18,651 18,626 18,393 17,994 17,953 17,943 30 British West Indies 55,888 68,749 87,061 73,601 78,046 86,333 87,061 93,924 97,217 31 Chile 5,217 4,353 3,271 3,264 3,372 3,373 3,271 3,227 3,239 3 3 3 2 C C u o b lo a m bia 22,,994444 11 22,,778844 11 2,585 0 2,563 0 2,544 0 2,531 1 2,585 0 2,555 0 2,528 0 34 Ecuador 2,075 1,688 1,387 1,498 1,487 1,499 1,387 1,361 1,361 35 Guatemala4 198 197 191 215 211 152 191 193 191 36 Jamaica4 212 297 238 254 262 265 238 243 171 37 Mexico 24,637 23,376 15,068 15,366 15,359 15,380 15,068 14,661' 14,848 38 Netherlands Antilles 1,306 1,921 7,998 1,818 3,310 7,386 7,998 2,199 1,604 39 Panama 2,521 1,740 1,471 1,556 1,463 1,449 1,471 1,534 1,502 40 Peru 1,013 771 663 649 667 730 663 659 694 41 Uruguay 910 929 786 804 794 787 786 767 626 42 Venezuela 10,733 9,652 2,611 7,274 7,102 6,585 2,611 2,118' 2,254 43 Other Latin America and Caribbean . 1,612 1,726 1,334 1,521 1,382 1,390 1,334 1,351 1,683 44 Asia 130,881 157,474 140,216 147,580 146,800 142,577 140,216 132,033' 135,078 China Mainland 762 634 620 542 639 689 620 565 497 46 Taiwan 4,184 2,776 1,934 1,681 1,061 1,586 1,934 1,776 1,475 47 Hong Kong 10,143 11,128 10,644 9,026 8,478 8,506 10,644 8,250 8,792 48 India 560 621 655 864 524 540 655 624 590 49 Indonesia 674 651 933 826 896 923 933 926 1,081 50 Israel 1,136 813 774 698 688 758 774 934 842 51 Japan 90,149 111,300 92,023 106,549 106,369 100,083 92,023 91,035' 90,814 52 Korea 5,213 5,323 5,737 5,688 5,533 5,533 5,737 5,98C 6,007 53 Philippines 1,876 1,344 1,247 1,333 1,206 1,175 1,247 1,230 1,261 54 Thailand ... 848 1,140 1,573 1,279 1,444 1,523 1,573 1,587 1,791 55 Middle East oil-exporting countries3 . 6,213 10,149 10,984 10,430 11,098 10,947 10,984 9,109' 12,255 56 Other Asia 9,122 11,594 13,092 8,663 8,865 10,314 13,092 10,016 9,673 57 Africa 5,718 5,890 5,445 5,544 5,601 5,705 5,445 5,439' 5,424 58 Egypt 507 502 380 430 411 383 380 384 314 59 Morocco 511 559 513 542 534 519 513 514 511 60 South Africa 1,681 1,628 1,525 1,594 1,576 1,726 1,525 1,517' 1,518 61 Zaire 17 16 16 20 19 19 16 17 21 62 Oil-exporting countries6 1,523 1,648 1,486 1,534 1,510 1,492 1,486 1,467' 1,478 63 Other 1,479 1,537 1,525 1,424 1,551 1,566 1,525 1,539" 1,582 64 Other countries 2,413 2,354 1,998 2,287 1,845 1,843 1,998 2,240 2,063 65 Australia 1,520 1,781 1,518 1,863 1,416 1,483 1,518 1,674 1,547 66 All other 894 573 479 424 429 360 479 566 517 67 Nonmonetary international and regional organizations 2,071 3,862 4,793 5,347 4,284 5,151 4,793 2,621 3,751 1. Reporting banks include all kinds of depository institutions besides commer- 4. Included in "Other Latin America and Caribbean" through March 1978. cial banks, as well as some brokers and dealers. 5. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and 2. Includes the Bank for International Settlements. Beginning April 1978, also United Arab Emirates (Trucial States). includes Eastern European countries not listed in line 23. 6. Comprises Algeria, Gabon, Libya, and Nigeria. 3. Beginning April 1978 comprises Bulgaria, Czechoslovakia, Hungary, Po- 7. Excludes the Bank for International Settlements, which is included in land, and Romania. "Other Western Europe." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • July 1991 3.19 BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1990 1991' TTyyppee ooff ccllaaiimm 11998888 11998899 11999900 Sept. Oct. Nov. Dec. Jan. Feb. Mar." 1 Total 555555533333338888888,,,,,,,666666688888889999999 555555599999993333333,,,,,,,000000088888887777777 555555588888881111111,,,,,,,666666611111114444444 555555555555559999999,,,,,,,222222266666663333333 555555588888881111111,,,,,,,666666611111114444444 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 444444499999991111111,,,,,,,111111166666665555555 555555533333334444444,,,,,,,444444499999992222222 555555511111112222222,,,,,,,333333322222223333333 444444499999993333333,,,,,,,444444466666663333333 495,593 505,352 555555511111112222222,,,,,,,333333322222223333333 497,293 508,329 492,849 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 66666662222222,,,,,,,666666655555558888888 66666660000000,,,,,,,555555511111111111111 44444441111111,,,,,,,999999922222227777777 44444448888888,,,,,,,444444422222223333333 46,714 46,903 44444441111111,,,,,,,999999922222227777777 38,870 43,692 43,907 44 OOwwnn ffoorreeiiggnn ooffffiicceess22 222222255555557777777,,,,,,,444444433333336666666 222222299999996666666,,,,,,,000000011111111111111 333333300000003333333,,,,,,,111111122222227777777 222222277777778888888,,,,,,,999999944444448888888 281,529 291,011 333333300000003333333,,,,,,,111111122222227777777 298,964 304,485 294,045 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111122222229999999,,,,,,,444444422222225555555 111111133333334444444,,,,,,,888888888888885555555 111111111111119999999,,,,,,,666666699999990000000 111111122222225555555,,,,,,,000000044444445555555 124,833 121,447 111111111111119999999,,,,,,,666666699999990000000 117,647 117,624 111,289 66 DDeeppoossiittss 66666665555555,,,,,,,888888899999998888888 77777778888888,,,,,,,111111188888885555555 66666667777777,,,,,,,666666677777773333333 77777772222222,,,,,,,333333399999993333333 72,132 68,441 66666667777777,,,,,,,666666677777773333333 69,200 69,116 63,211 77 OOtthheerr 66666663333333,,,,,,,555555522222227777777 55555556666666,,,,,,,777777700000000000000 55555552222222,,,,,,,000000011111117777777 55555552222222,,,,,,,666666655555552222222 52,701 53,006 55555552222222,,,,,,,000000011111117777777 48,446 48,508 48,078 88 AAllll ootthheerr ffoorreeiiggnneerrss 44444441111111,,,,,,,666666644444446666666 44444443333333,,,,,,,000000088888885555555 44444447777777,,,,,,,555555577777779999999 44444441111111,,,,,,,000000044444446666666 42,517 45,992 44444447777777,,,,,,,555555577777779999999 41,812 42,528 43,608 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss33...... 44444447777777,,,,,,,555555522222224444444 55555558888888,,,,,,,555555599999994444444 66666669999999,,,,,,,222222299999991111111 66666665555555,,,,,,,888888800000001111111 66666669999999,,,,,,,222222299999991111111 1100 DDeeppoossiittss 8888888,,,,,,,222222288888889999999 11111113333333,,,,,,,000000011111119999999 11111117777777,,,,,,,222222277777772222222 11111114444444,,,,,,,777777700000007777777 11111117777777,,,,,,,222222277777772222222 11 Negotiable and readily transferable instruments4 22222225555555,,,,,,,777777700000000000000 33333330000000,,,,,,,999999988888883333333 33333333333333,,,,,,,444444433333330000000 33333334444444,,,,,,,000000099999994444444 33333333333333,,,,,,,444444433333330000000 12 Outstanding collections and other 11111113333333,,,,,,,555555533333335555555 11111114444444,,,,,,,555555599999992222222 11111118888888,,,,,,,555555588888888888888 11111116666666,,,,,,,999999999999999999999 11111118888888,,,,,,,555555588888888888888 13 MEMO: Customer liability on 11111119999999,,,,,,,555555599999996666666 11111112222222,,,,,,,888888899999999999999 11111113333333,,,,,,,555555588888883333333rrrrrrr 11111112222222,,,,,,,888888866666660000000 11111113333333,,,,,,,555555588888883333333''''''' Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 45,360 45,509 43,395' 43,016 42,827 48,405 43,395' 45,259 41,491 n.a. 1. Data for banks' own claims are given on a monthly basis, but the data for parent foreign bank. claims of banks' own domestic customers are available on a quarterly basis only. 3. Assets owned by customers of the reporting bank located in the United Reporting banks include all kinds of depository institutions besides commercial States that represent claims on foreigners held by reporting banks for the account banks, as well as some brokers and dealers. of their domestic customers. 2. U.S. banks: includes amounts due from own foreign branches and foreign 4. Principally negotiable time certificates of deposit and bankers acceptances. subsidiaries consolidated in "Consolidated Report of Condition" filed with bank 5. Includes demand and time deposits and negotiable and nonnegotiable regulatory agencies. Agencies, branches, and majority-owned subsidiaries of certificates of deposit denominated in U.S. dollars issued by banks abroad. For foreign banks: principally amounts due from head office or parent foreign bank, description of changes in data reported by nonbanks, see July 1979 Bulletin, and foreign branches, agencies, or wholly owned subsidiaries of head office or p. 550. 3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1990 Maturity; by borrower and area 1987 1989 Mar. June Sept. 1 Total 235,130 233,184 238,123 211,640 208,443 213,898 By borrower 2 Maturity of 1 year or less2 163,997 172,634 178,346 160,129 159,164 166,687 3 Foreign public borrowers 25,889 26,562 23,916 23,345 20,778 21,770 4 All other foreigners 138,108 146,071 154,430 136,784 138,387 144,917 5 Maturity over 1 year2 71,133 60,550 59,776 51,510 49,279 47,211 6 Foreign public borrowers 38,625 35,291 36,014 27,894 27,961 26,213 7 All other foreigners 32,507 25,259 23,762 23,616 21,318 20,998 By area Maturity of 1 year or less2 8 Europe 59,027 55,909 53,913 48,484 49,312 51,579 9 Canada 5,680 6,282 5,910 5,680 5,720 5,520 10 Latin America and Caribbean 56,535 57,991 53,003 46,415 44,332 43,941 11 Asia 35,919 46,224 57,755 51,768 51,126 56,366 12 Africa 2,833 3,337 3,225 3,166 2,991 2,951 13 All other3 4,003 2,891 4,541 4,616 5,683 6,330 Maturity of over 1 year2 14 Europe 6,696 4,666 4,121 4,389 4,201 4,426 15 Canada 2,661 1,922 2,353 2,712 2,819 3,033 16 Latin America and Caribbean 53,817 47,547 45,816 35,529 33,189 31,295 17 Asia 3,830 3,613 4,172 5,552 5,866 5,646 18 Africa 1,747 2,301 2,630 2,764 2,739 2,544 19 All other3 2,381 501 684 565 465 266 1. Reporting banks include all kinds of depository institutions besides commer- 2. Remaining time to maturity. cial banks, as well as some brokers and dealers. 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A63 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks1 2 Billions of dollars, end of period 1989 1990 1991 AArreeaa oorr ccoouunnttrryy 11998877 11998888 Mar. June Sept. Dec. Mar. June Sept. Dec. Mar." 1 Total 382.4 346.3 346.3 340.0 346.5 338.8 334.1 322.2 332.8 318.6' 324.2 159.7 152.7 145.5 145.1 146.4 152.9 146.9 140.0 145.2 133.7' 130.6 10.0 9.0 8.6 7.8 6.9 6.3 6.6 6.2 6.5 5.9 6.1 13.7 10.5 11.2 10.8 11.1 11.7 10.5 10.3 11.1 10.4 9.7 12.6 10.3 10.2 10.6 10.4 10.5 11.2 11.2 11.2 10.7 8.7 7.5 6.8 5.2 6.1 6.8 7.4 6.0 5.4 4.5 5.0 4.1 4.1 2.7 2.8 2.8 2.4 3.1 3.1 2.7 3.8 2.9 3.3 2.1 1.8 2.3 1.8 2.0 2.0 2.1 2.3 2.3 2.1 2.0 5.6 5.4 5.1 5.4 6.1 7.1 6.3 6.4 5.7 4.7 3.8 68.8 66.2 65.6 64.5 63.7 67.2 64.0 59.9 62.7' 60.9' 62.5 5.5 5.0 4.0 5.1 5.9 5.4 4.8 5.2 5.1 5.9' 6.7 29.8 34.9 30.5 30.2 31.0 32.2 32.4 30.4 32.4r 25.1 23.7 26.4 21.0 21.1 21.2 21.0 20.7 23.1 22.6 23.2 22.8 23.1 1.9 1.5 1.4 1.7 1.5 1.5 1.5 1.5 1.6 1.4 1.4 1.7 1.1 1.1 1.4 1.1 1.1 1.1 1.1 1.1 1.1 .9 1.2 1.1 1.0 1.0 1.1 1.0 1.1 .9 .8 .7 1.0 2.0 1.8 2.1 2.3 2.4 2.5 2.6 2.7 2.8 2.7 2.5 2.2 1.8 1.6 1.8 1.4 1.4 1.7 1.4 1.5 1.6 1.5 .6 .4 .4 .6 .4 .4 .4 .8 .6 .6 .6 8.0 6.2 6.6 6.2 6.9 7.1 8.3 7.9 8.5 8.4 9.0 2.0 1.5 1.3 1.1 1.2 1.2 1.3 1.4 1.6 1.7 1.7 1.6 1.3 1.1 1.1 1.0 .7 1.0 1.1 .7 .9 .8 2.9 2.4 2.2 2.1 2.1 2.0 2.0 1.9 1.9 1.8 1.8 2.4 1.8 2.4 1.9 2.1 1.6 2.1 1.9 2.0 1.9 1.9 17.4 16.6 16.2 16.1 16.2 17.1 15.5 15.3 14.4 13.1 17.2 1.9 1.7 1.6 1.5 1.5 1.3 1.2 1.1 1.1 1.0 .9 8.1 7.9 7.9 7.5 7.4 7.0 6.1 6.0 6.0 5.0 5.1 1.9 1.7 1.7 1.9 2.0 2.0 2.1 2.0 2.3 2.7 2.8 3.6 3.4 3.3 3.4 3.5 5.0 4.3 4.4 3.3 2.8 6.7 1.9 1.9 1.7 1.6 1.9 1.7 1.8 1.8 1.7 1.7 1.7 97.8 85.3 85.9 83.4 81.2 77.5 68.8 66.6 67.2' 65.5 66.0 Latin America 9.5 9.0 8.5 7.9 7.6 6.3 5.5 5.1 4.9 4.9 4.6 33 Brazil 24.7 22.4 22.8 22.1 20.9 19.0 17.5 16.7 15.4 14.4 14.0 34 Chile 6.9 5.6 5.7 5.2 4.9 4.6 4.3 3.7 3.6 3.5 3.6 2.0 2.1 1.9 1.7 1.6 1.8 1.8 1.7 1.8 1.8 1.7 23.5 18.8 18.3 17.7 17.2 17.7 12.7 12.6 13.1 13.2 13.1 1.1 .8 .7 .6 .6 .6 .5 .5 .5 .5 .5 2.8 2.6 2.7 2.6 2.9 2.8 2.7 2.3 2.4 2.3 2.3 Asia China .3 .3 .5 .3 .3 .3 .3 .2 .2 .2 .3 8.2 3.7 4.9 5.2 5.0 4.5 3.8 3.6 4.0' 3.5 3.5 1.9 2.1 2.6 2.4 2.7 3.1 3.5 3.6 3.6 3.3 3.5 1.0 1.2 .9 .8 .7 .7 .6 .7 .6 .5 .5 43 Korea (South) 5.0 6.1 6.1 6.6 6.5 5.9 5.3 5.6 6.2 6.2 6.7 1.5 1.6 1.7 1.6 1.7 1.7 1.8 1.8 1.8 1.9 2.0 5.2 4.5 4.4 4.4 4.0 4.1 3.7 3.9 3.9 3.8 3.7 46 Thailand .7 1.1 1.0 1.0 1.3 1.3 1.1 1.3 1.5 1.5 1.9 .7 .9 .8 .8 1.0 1.0 1.2 1.1 1.6 1.7 2.1 Africa .6 .4 .5 .6 .5 .4 .4 .5 .4 .4 .4 .9 .9 .9 .9 .8 .9 .9 .9 .9 .8 .8 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa4 1.3 1.1 1.1 1.1 1.0 1.0 .9 .8 .8 1.0 .8 3.2 3.6 3.5 3.4 3.5 3.5 3.4 2.9 2.7 2.3 2.0 53 U.S.S.R .3 .7 .7 .6 .8 .7 .8 .4 .4 .2 .3 1.8 1.8 1.7 1.7 1.7 1.6 1.4 1.4 1.3 1.2 1.0 55 Other 1.1 1.1 1.1 1.1 1.1 1.3 1.2 1.1 1.1 .9 .7 54.5 44.2 48.7 43.2 49.2 36.6 42.9 40.1 41.8' 40.5' 46.5 17.3 11.0 15.8 11.0 11.4 5.5 9.2 8.5 8.9 2.8 7.8 .6 .9 1.1 .7 1.3 1.7 .9 2.2 4.0 4.3 3.3 13.5 12.9 12.2 10.8 15.3 9.0 10.9 8.5 9.0 10.0 12.6 1.2 1.0 .9 1.0 1.1 2.3 2.6 2.3 2.2 7.9 1.1 3.7 2.5 2.2 1.9 1.5 1.4 1.3 1.4 1.5 1.4 1.6 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 11.2 9.6 9.6 10.4 10.7 9.7 9.8 10.0 8.7' 7.4' 11.3 7.0 6.1 6.8 7.3 7.8 7.0 8.0 7.0 7.5' 6.4' 8.7 65 Others® .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 2233..22 22.6 25.0 27.4 28.7 30.3 33.3 34.5 38.1' 40.6' 38.5 1. The banking offices covered by these data are the U.S. offices and foreign from $50 million to $150 million equivalent in total assets, the threshold now branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks. applicable to all reporting branches. Offices not covered include (1) U.S. agencies and branches of foreign banks, and 3. This group comprises the Organization of Petroleum Exporting Countries (2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are shown individually, other members of OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, adjusted to exclude the claims on foreign branches held by a U.S. office or another Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates), and Bahrain and foreign branch of the same banking institution. The data in this table combine Oman (not formally members of OPEC). foreign branch claims in table 3.14 (the sum of lines 7 through 10) with the claims 4. Excludes Liberia. of U.S. offices in table 3.18 (excluding those held by agencies and branches of 5. Includes Canal Zone beginning December 1979. foreign banks and those constituting claims on own foreign branches). 6. Foreign branch claims only. 2. Beginning with June 1984 data, reported claims held by foreign branches 7. Includes New Zealand, Liberia, and international and regional organizahave been reduced by an increase in the reporting threshold for "shell" branches tions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics • July 1991 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1989 1990 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998877 11998888 11998899 Sept. Dec. Mar. June Sept. Dec. 1 Total 28,302 32,952 38,653 36,544 38,653 38,832 39,642 44,557 42,180 2 Payable in dollars 22,785 27,335 33,808 31,683 33,808 34,463 35,090 39,431 37,812 3 Payable in foreign currencies 5,517 5,617 4,846 4,861 4,846 4,369 4,552 5,126 4,368 By type 4 Financial liabilities 12,424 14,507 18,365 17,141 18,365 17,928 19,495 20,484 17,935 5 Payable in dollars 8,643 10,608 14,462 13,289 14,462 14,635 16,055 16,644 14,712 6 Payable in foreign currencies 3,781 3,900 3,903 3,852 3,903 3,293 3,441 3,840 3,223 7 Commercial liabilities 15,878 18,445 20,288 19,403 20,288 20,904 20,147 24,073 24,245 8 Trade payables 7,305 6,505 7,588 6,906 7,588 7,434 6,881 9,956 10,002 9 Advance receipts and other liabilities 8,573 11,940 12,700 12,497 12,700 13,470 13,266 14,118 14,243 10 Payable in dollars 14,142 16,727 19,345 18,394 19,345 19,828 19,036 22,787 23,100 11 Payable in foreign currencies 1,737 1,717 943 1,009 943 1,076 1,111 1,286 1,145 By area or country Financial liabilities 12 Europe 8,320 9,962 11,609 11,213 11,609 11,050 11,883 11,345 9,590 13 Belgium-Luxembourg 213 289 340 308 340 318 332 350 344 14 France 382 359 258 242 258 277 196 503 670 15 Germany 551 699 521 592 521 482 601 660 676 16 Netherlands 866 880 947 855 947 901 934 948 975 17 Switzerland 558 1,033 541 799 541 529 552 633 576 18 United Kingdom 5,557 6,533 8,741 8,207 8,741 8,256 8,741 7,539 5,796 19 Canada 360 388 573 575 573 476 345 357 261 20 Latin America and Caribbean 1,189 839 1,268 1,367 1,268 1,814 2,573 3,394 3,239 21 Bahamas 318 184 157 186 157 272 249 368 344 22 Bermuda 0 0 17 7 17 0 0 0 0 23 Brazil 25 0 0 0 0 0 0 0 0 24 British West Indies 778 645 635 743 635 1,061 1,782 2,409 2,274 25 Mexico 13 1 6 4 6 5 4 4 5 26 Venezuela 0 0 0 0 0 0 0 0 4 27 Asia 2,451 3,312 4,814 3,886 4,814 4,483 4,636 4,906 4,434 28 Japan 2,042 2,563 3,963 3,130 3,963 3,445 3,434 3,771 3,256 29 Middle East oil-exporting countries 8 3 2 2 2 3 5 4 5 30 Africa 4 2 2 4 2 3 3 2 2 31 Oil-exporting countries3 1 0 0 2 0 0 1 0 0 32 Mother4 100 4 100 97 100 102 55 479 409 Commercial liabilities 33 Europe 5,516 7,319 8,918 8,335 8,918 9,165 8,343 9,733 10,251 34 Belgium-Luxembourg 132 158 179 137 179 233 297 248 285 35 France 426 455 871 806 871 882 929 1,191 1,251 36 Germany 909 1,699 1,365 1,185 1,365 1,145 962 1,023 1,235 37 Netherlands 423 587 699 548 699 688 607 701 838 38 Switzerland 559 417 621 531 621 583 607 708 735 39 United Kingdom 1,599 2,079 2,648 2,717 2,648 2,954 2,466 2,804 2,819 40 Canada 1,301 1,217 1,124 1,189 1,124 1,150 1,179 1,266 1,290 41 Latin America and Caribbean 864 1,090 1,187 1,086 1,187 1,304 1,278 1,554 1,594 42 Bahamas 18 49 41 27 41 37 22 18 12 43 Bermuda 168 286 308 305 308 516 412 371 538 44 Brazil 46 95 100 113 100 116 106 126 137 45 British West Indies 19 34 27 30 27 18 29 42 30 46 Mexico 189 217 304 220 304 241 285 506 420 47 Venezuela 162 114 154 107 154 85 119 120 121 48 Asia 6,565 6,915 7,188 7,088 7,188 7,015 7,073 8,797 8,924 49 Japan 2,578 3,094 2,915 2,676 2,915 2,745 3,182 3,189 3,606 50 Middle East oil-exporting countries ' 1,964 1,385 1,401 1,442 1,401 1,393 1,125 2,321 1,701 51 Africa 574 576 844 648 844 753 885 1,315 789 52 Oil-exporting countries3 135 202 307 255 307 263 277 593 422 53 All other4 1,057 1,328 1,027 1,057 1,027 1,517 1,390 1,408 1,397 1. For a description of the changes in the International Statistics tables, see 3. Comprises Algeria, Gabon, Libya, and Nigeria. July 1979 Bulletin, p. 550. 4. Includes nonmonetary international and regional organizations. 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and 5. Revisions include a reclassification of transactions, which also affects the United Arab Emirates (Trucial States). totals for Asia and the grand totals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A65 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1989 1990 Type, and area or country 11998877 11998888 11998899 Sept. Dec. Mar. June Sept. Dec. 1 Total 30,964 34,035 31,437 32,088 31,437 29,815 31,577 30,903 33,413r 2 Payable in dollars 28,502 31,654 29,106 29,806 29,106 27,687 29,265 28,504 30,968' 3 Payable in foreign currencies 2,462 2,381 2,330 2,282 2,330 2,128 2,312 2,399 2,445' By type 4 Financial claims 20,363 21,869 17,689 19,135 17,689 16,558 18,035 16,572 18,033' 5 Deposits 14,894 15,643 10,400 12,154 10,400 10,451 9,869 10,303 11,458' 6 Payable in dollars 13,765 14,544 9,473 11,278 9,473 9,583 8,799 9,110 10,489' 7 Payable in foreign currencies 1,128 1,099 927 877 927 868 1,070 1,193 969' 8 Other financial claims 5,470 6,226 7,289 6,981 7,289 6,108 8,166 6,269 6,575' 9 Payable in dollars 4,656 5,450 6,535 6,073 6,535 5,420 7,433 5,616 5,709' 10 Payable in foreign currencies 814 777 754 908 754 688 733 652 866' 11 Commercial claims 10,600 12,166 13,748 12,953 13,748 13,257 13,542 14,331 15,380' 12 Trade receivables 9,535 11,091 12,140 11,472 12,140 11,635 11,821 12,518 13,439' 13 Advance payments and other claims . 1,065 1,075 1,608 1,481 1,608 1,622 1,721 1,813 1,940' 14 Payable in dollars 10,081 11,660 13,099 12,455 13,099 12,684 13,034 13,778 14,770' 15 Payable in foreign currencies 519 505 650 498 650 573 508 554 610 By area or country Financial claims 16 Europe 9,531 10,279 7,040 7,528 7,040 6,964 9,604 7,950 7,970' 17 Belgium-Luxembourg 7 18 28 166 28 22 126 27 76 18 France 332 203 153 173 153 198 141 143 366 19 Germany 102 120 192 120 192 505 93 97 371 20 Netherlands 350 348 303 292 303 315 332 315 333' 21 Switzerland 65 218 95 111 95 122 137 176 320 22 United Kingdom 8,467 9,039 6,035 6,419 6,035 5,587 8,556 6,971 6,246' 23 Canada 2,844 2,325 1,892 2,359 1,892 1,758 2,035 1,994 2,887' 24 Latin America and Caribbean 7,012 8,160 7,590 8,315 7,590 6,984 5,479 5,666 5,751' 25 Bahamas 1,994 1,846 1,516 1,699 1,516 1,662 992 977 1,261 26 Bermuda 7 19 7 33 7 4 3 4 3' 27 Brazil 63 47 224 70 224 79 84 70 68' 28 British West Indies 4,433 5,763 5,431 6,125 5,431 4,824 4,003 4,215 4,031 29 Mexico 172 151 94 105 94 152 153 158 160 30 Venezuela 19 21 20 36 20 21 20 23 25 31 Asia 879 844 831 826 831 763 815 733 1,173 32 Japan 605 574 439 460 439 416 473 450 850 33 Middle East oil-exporting countries' 8 5 8 7 8 7 6 9 8 34 Africa 65 106 140 75 140 67 62 49 37 35 Oil-exporting countries3 7 10 12 8 12 11 8 7 0 36 All other4 33 155 195 31 195 23 41 179 215 Commercial claims 4,180 5,181 6,168 5,429 6,168 6,026 6,042 6,428 7,103' 37 Europe 178 189 241 220 241 219 208 189 210 38 Belgium-Luxembourg 650 672 956 829 956 958 908 1,140 1,297' 39 France 562 669 687 686 687 699 662 638 804' 40 Germany 133 212 478 396 478 450 475 491 549' 41 Netherlands 185 344 305 222 305 270 235 300 302 42 Switzerland 1,073 1,324 1,572 1,398 1,572 1,690 1,586 1,679 1,799' 43 United Kingdom 44 Canada 936 983 1,058 1,278 1,058 1,121 1,125 1,135 1,043' 45 Latin America and Caribbean 1,930 2,241 2,177 2,147 2,177 2,061 2,204 2,392 2,316' 46 Bahamas 19 36 57 10 57 22 17 25 14 47 Bermuda 170 230 323 271 323 243 284 340 249' 48 Brazil 226 299 292 239 292 231 234 252 320' 49 British West Indies 26 22 36 33 36 38 46 35 39' 50 Mexico 368 461 509 509 509 525 581 649 644 51 Venezuela 283 227 147 189 147 188 223 223 191 52 Asia 2,915 2,993 3,538 3,316 3,538 3,257 3,419 3,575 4,037' 53 Japan 1,158 946 1,184 1,176 1,184 1,061 1,080 1,211 1,429' 54 Middle East oil-exporting countries2 450 453 515 410 515 432 414 403 459' 55 Africa 401 435 418 399 418 425 390 372 488' 56 Oil-exporting countries3 144 122 107 87 107 89 98 71 67 57 All other4 238 333 389 383 389 367 361 429 394' 1. For a description of the changes in the International Statistics tables, see 3. Comprises Algeria, Gabon, Libya, and Nigeria. July 1979 Bulletin, p. 550. 4. Includes nonmonetary international and regional organizations. 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 International Statistics • July 1991 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1991 1990 1991 Transactions, and area or country 1989 1990 Jan.- Mar. Sept. Oct. Nov. Dec. Jan. Feb/ Mar." U.S. corporate securities STOCKS 1 Foreign purchases 214,061 173,227 53,541 8,804 11,633 12,551 13,316 10,241 21,683 21,617 2 Foreign sales 204,114 188,373 51,045 11,318 15,434 13,368 14,573 11,048 20,604 19,393 3 Net purchases, or sales (-) 9,946 -15,146 2,496 -2,515 -3,801 -817 -1,257 -807 1,079 2,224 4 Foreign countries 10,180 -15,218 2,438 -2,460 -3,759 -812 -1,267 -808 1,023 2,223 5 Europe 481 -8,498 -1,154 -1,166 -1,415 -582 -487 -610 -1,243 699 6 France -708 -1,234 102 -151 -159 -80 -49 -24 27 100 7 Germany -830 -368 -318 2 -87 -14 -144 -114 -204 0 8 Netherlands 79 -398 -127 -47 -61 21 -46 -142 -104 119 9 Switzerland -3,277 -2,867 -808 -124 -213 -169 -263 -222 -943 357 10 United Kingdom 3,691 -2,992 -90 -721 -687 -282 149 -93 29 -26 11 Canada -881 892 778 197 155 216 279 24 470 284 12 Latin America and Caribbean 3,042 -1,337 1,174 -216 -357 292 -280 233 937 3 13 Middle East1 3,531 -2,435 366 -437 -558 -430 -251 -279 675 -30 14 Other Asia 3,577 -3,477 1,458 -711 -1,517 -420 -406 -1% 432 1,223 15 Japan 3,330 -2,891 -639 -737 -1,135 -194 -382 -271 -366 -2 16 Africa 131 -63 79 -1 -31 -5 -14 33 31 16 17 Other countries 299 -298 -265 -125 -35 117 -108 -13 -279 28 18 Nonmonetary international and regional organizations -234 71 59 -55 -42 -5 9 2 56 1 BONDS2 19 Foreign purchases 120,550 118,464 32,043 7,398 8,842 11,205 9,943 8,859" 8,468 14,716 20 Foreign sales 87,376 101,571 28,492 9,388 7,673 7,754 7,890 8,575' 9,269 10,649 21 Net purchases, or sales (—) 33,174 16,892 3,551 -1,990 1,169 3,452 2,052 284r -801 4,068 22 Foreign countries 32,821 17,348 3,347 -2,020 1,405 3,456 2,055 103" -723 3,966 23 Europe 19,064 10,231 1,837 -925 428 2,046 1,088 -130" -1,065 3,032 24 France 372 373 405 -103 -74 24 39 31 68 305 25 Germany -238 -377 213 4 -29 -59 -41 -54 78 189 26 Netherlands 850 172 68 -72 35 52 110 47 1 20 27 Switzerland -511 392 293 0 -193 148 45 360 -217 150 28 United Kingdom 18,123 10,429 792 -382 371 1,727 1,406 -102" -885 1,779 29 Canada 1,116 1,906 561 -89 127 93 -85 71 106 385 30 Latin America and Caribbean 3,686 4,279 774 -223 282 343 495 -17 439 351 31 Middle East1 -182 76 54 -46 -10 -35 74 69 -2 -13 32 Other Asia 9,025 1,104 116 -711 628 1,033 486 131 -209 194 33 Japan 6,292 747 368 -871 386 812 399 308 -214 274 34 Africa 56 96 2 8 2 6 -9 -15 10 7 35 Other countries 57 -344 2 -34 -53 -30 7 -5 -2 10 36 Nonmonetary international and regional organizations 353 -455 204 30 -237 -4 -2 181" -78 102 Foreign securities 37 Stocks, net purchases, or sales (-)3 -13,120 -8,729 -6,886 452 -319 1,068 -1,831 —404" -3,177 -3,305 38 Foreign purchases 109,792 122,532 27,886 7,521 9,282 10,060 7,244 6,230" 10,561 11,095 39 Foreign sales3 122,912 131,261 34,772 7,069 9,601 8,993 9,075 6,634" 13,738 14,400 40 Bonds, net purchases, or sales (-) -5,943 -22,294 -3,109 -573 -2,791 165 -4,771 -173' -1,945 -991 41 Foreign purchases 234,320 314,228 104,501 25,719 35,235 32,837 33,372 27,138' 37,202 40,161 42 Foreign sales 240,263 336,522 107,610 26,292 38,026 32,671 38,143 27,312' 39,146 41,152 43 Net purchases, or sales (—), of stocks and bonds -19,063 -31,023 -9,995 -122 -3,110 1,233 -6,602 -577' -5,122 -4,296 44 Foreign countries -19,101 -28,349 -8,548 -397 -2,312 1,207 -5,860 -538" -5,166 -2,845 45 Europe -17,721 -7,752 -3,045 -71 -911 2,017 -919 342' -3,118 -269 46 Canada -4,180 -7,374 -1,368 6 -893 -1,740 -659 -573' -797 3 47 Latin America and Caribbean 426 -8,960 780 -402 262 283 -2,811 351' 314 114 48 Asia 2,532 -3,885 -5,105 -305 -687 706 -1,571 -792 -1,811 -2,502 49 Africa 93 -137 54 12 4 -69 28 22 30 2 50 Other countries -251 -240 136 363 -87 11 73 112 216 -193 51 Nonmonetary international and regional organizations 38 -2,673 -1,446 275 -798 25 -742 -39 44 -1,451 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, ties sold abroad by U.S. corporations organized to finance direct investments Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). abroad. 2. Includes state and local government securities, and securities of U.S. 3. As a result of the merger of a U.S. and U.K. company in July 1989, the government agencies and corporations. Also includes issues of new debt securi- former stockholders of the U.S. company received $5,453 million in shares of the new combined U.K. company. This transaction is not reflected in the data above. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interest and Exchange Rates A67 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1991 1990 1991 Country or area 1989 1990 Jan.— Sept. Oct. Nov. Dec. Jan. Feb.' Mar/ Mar. Transactions, net purchases or sales (-) during period1 1 Estimated total 54,203 19,930 870 1,014 -1,066 5,848 6,531 2,978' 13,250 -15,358 2 Foreign countries2 52,301 20,245 1,952 1,346 -1,051 5,538 6,541 4,61c 11,790 -14,448 3 Europe2 36,286 19,096 1,721 5,065 245 2,070 4,461 3,356'' 2,933 -4,568 4 Belgium-Luxembourg 1,048 -2 524 -99 72 -68 -105 260 149 115 5 Germany2 7,904 5,732 -5,606 633 580 1,677 571 -542 -1,691 -3,373 6 Netherlands -1,141 1,012 -392 956 -454 -249 625 300 -85 -607 7 Sweden ... 693 1,142 -862 -33 163 276 721 -661 43 -244 8 Switzerland2 1,098 112 778 548 619 -6 200 170 139 470 9 United Kingdom 20,198 -1,309 3,289 1,611 -1,740 -1,625 244 2,829' -54 513 1 1 1 0 E O a th st e e r r n W E es u t r e o r p n e Europe 6, - 5 2 0 1 8 12,38 1 8 3 3,98 6 5 1,44 0 4 1,00 0 4 2,0 - 6 5 9 2,20 0 4 99 6 5 4,43 0 2 -1,442 0 12 Canada 698 -4,558 -1,074 -866 -637 -468 155 -795 -171 -108 13 Latin America and Caribbean 464 15,587 -1,324 -1,946 4,731 4,316 1,610 -5,150 3,110 715 14 Venezuela 311 -50 -147 -50 -2 49 1 -153 -1 6 15 Other Latin America and Caribbean -322 4,880 2,669 -1,150 646 978 1,208 -592 1,901 1,360 16 Netherlands Antilles 475 10,757 -3,846 -747 4,086 3,290 401 -4,405 1,210 -650 17 Asia 13,297 -11,047 2,608 -1,751 -5,192 -930 -72 7,019 5,537 -9,948 18 Japan 1,681 -14,880 -2,821 -2,092 -4,059 -1,153 -2,407 2,244 1,915 -6,980 19 Africa 116 313 188 151 83 8 -3 78 110 0 20 All other 1,439 855 -168 692 -281 543 389 102 269 -540 21 Nonmonetary international and regional organizations 1,902 -316 -1,082 -332 -15 310 -10 -1,633' 1,461 -910 22 International 1,473 -191 -1,368 -154 -100 159 -125 -1,571' 1,104 -901 23 Latin America regional 231 -2 -41 -75 -59 0 92 -202 156 5 Memo 24 Foreign countries2 52,301 20,245 1,952 1,346 -1,051 5,538 6,541 4,610' 11,790 -14,448 25 Official institutions 26,840 23,916 -1,870 3,807 1,375 4,771 7,880 2,541' 7,317 -11,728 26 Other foreign2 25,461 -3,671 3,822 -2,462 -2,426 767 -1,339 2,069' 4,473 -2,719 Oil-exporting countries 27 Middle East3 8,148 -387 -318 241 -1,247 -878 1,014 523 644 -1,485 28 Africa4 -1 0 15 0 0 0 0 0 21 -6 1. Estimated official and private transactions in marketable U.S. Treasury 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and securities with an original maturity of more than 1 year. Data are based on United Arab Emirates (Trucial States). monthly transactions reports. Excludes nonmarketable U.S. Treasury bonds and 4. Comprises Algeria, Gabon, Libya, and Nigeria. notes held by official institutions of foreign countries. 2. Includes U.S. Treasury notes publicly issued to private foreign residents denominated in foreign currencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 International Statistics • July 1991 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per year Rate on May 31, 1991 Rate on May 31, 1991 Rate on May 31, 1991 Country Country Country e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e Austria.. 6.5 Oct. 1989 France1 9.0 Mar. 1990 Norway 10.50 July 1990 Belgium . 10.5 Nov. 1989 Germany, Fed. Rep. of. 6.50 Feb. 1991 Switzerland . 6.0 Oct. 1989 Canada.. 9.06 May 1991 Italy 11.5 May 1991 United Kingdom' Denmark 9.50 Jan. 1991 Japan 6.0 Aug. 1990 Netherlands 7.75 Feb. 1991 1. As of the end of February 1981, the rate is that at which the Bank of France or makes advances against eligible commercial paper and/or government comdiscounts Treasury bills for 7 to 10 days. mercial banks or brokers. For countries with more than one rate applicable to 2. Minimum lending rate suspended as of Aug. 20, 1981. such discounts or advances, the rate shown is the one at which it is understood the NOTE. Rates shown are mainly those at which the central bank either discounts central bank transacts the largest proportion of its credit operations. 3.27 FOREIGN SHORT-TERM INTEREST RATES Percent per year, averages of daily figures 1990 1991 CCoouunnttrryy,, oorr ttyyppee 11998888 11998899 11999900 Nov. Dec. Jan. Feb. Mar. Apr. May 1 Eurodollars 7.85 9.16 8.16 8.04 7.87 7.23 6.60 6.44 6.11 5.94 2 United Kingdom 10.28 13.87 14.73 13.57 13.75 13.91 13.20 12.33 11.90 11.48 3 Canada 9.63 12.20 13.00 12.36 11.95 11.13 10.37 9.97 9.67 9.12 4 Germany 4.28 7.04 8.41 8.79 9.17 9.25 8.% 8.99 9.08 8.98 5 Switzerland 2.94 6.83 8.71 8.39 8.65 8.44 7.81 8.17 8.26 8.10 6 Netherlands 4.72 7.28 8.57 8.73 9.27 9.31 9.01 9.04 9.11 9.05 7 France 7.80 9.27 10.20 9.88 10.14 10.14 9.64 9.34 9.21 9.13 8 Italy 11.04 12.44 12.11 12.42 13.45 13.13 13.31 12.52 11.90 11.46 9 Belgium 6.69 8.65 9.70 9.03 9.81 9.91 9.51 9.28 9.20 9.00 10 Japan 4.43 5.39 7.75 8.35 8.27 8.18 8.01 8.09 7.96 7.82 NOTE. Rates are for 3-month interbank loans except for Canada, finance company paper; Belgium, 3-month Treasury bills; and Japan, CD rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interest and Exchange Rates A69 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar 1990 1991 Country/currency 1988 1989 1990 Dec. Feb. Mar. Apr. 1 Australia/dollar2 78.409 79.186 78.069 77.019 77.930 78.351 77.107 77.947 2 Austria/schilling 12.357 13.236 11.331 10.539 10.616 10.416 11.341 11.977 3 Belgium/franc 36.785 39.409 33.424 31.014 31.088 30.475 33.206 35.017 4 Canada/dollar 1.2306 1.1842 1.1668 1.1603 1.1560 1.1549 1.1572 1.1535 5 China, P.R./yuan 3.7314 3.7673 4.7921 5.2352 5.2352 5.2352 5.2352 5.2767 6 Denmark/krone 6.7412 7.3210 6.1899 5.7735 5.8115 5.6953 6.1886 6.5163 7 Finland/markka 4.1933 4.2963 3.8300 3.6341 3.6431 3.5941 3.8512 3.9925 8 France/franc 5.9595 6.3802 5.4467 5.0895 5.1253 5.0398 5.4862 5.7540 9 Germany/deutsche mark. 1.7570 1.8808 1.6166 1.4982 1.5091 1.4805 1.6122 1.7027 10 Greece/drachma 142.00 162.60 158.59 156.08 159.70 158.82 174.16 184.76 11 Hong Kong/dollar 7.8072 7.8008 7.7899 7.8034 7.7950 7.7943 7.7911 7.7939 12 India/rupee 13.900 16.213 17.492 18.127 18.339 18.860 19.243 19.906 13 Ireland/punt2 152.49 141.80 165.76 177.77 168.68 179.81 157.43 157.12 14 Italy/lira 1,302.39 1,372.28 1,198.27 1,129.26 1,134.38 1,111.19 1,201.96 1,261.57 15 Japan/yen 128.17 138.07 145.00 133.89 133.70 130.54 137.39 137.11 16 Malaysia/ringgit 2.6190 2.7079 2.7057 2.7030 2.7140 2.6969 2.7418 2.7498 17 Netherlandsfeuilder. 1.9778 2.1219 1.8215 1.6904 1.7015 1.6689 1.8174 1.9186 18 New Zealand/dollar — 65.560 59.354 59.619 59.574 59.476 60.120 59.389 58.909 19 Norway/krone 6.5243 6.9131 6.2541 5.8717 5.8993 5.7919 6.2899 6.6198 20 Portugal/escudo 144.27 157.53 142.70 132.82 134.43 130.45 140.97 148.00 21 Singapore/dollar 2.0133 1.9511 1.8134 1.7275 1.7455 1.7180 1.7589 1.7688 22 South Africa/rand 2.2770 2.6214 2.5885 2.5395 2.5643 2.5412 2.6636 2.7325 23 South Korea/won 734.52 674.29 710.64 718.58 720.83 723.97 727.73 728.36 24 Spain/peseta 116.53 118.44 101.96 95.75 95.08 92.61 100.21 105.08 25 Sri Lanka/rupee 31.820 35.947 40.078 40.244 40.300 40.598 40.750 40.836 26 Sweden/krona 6.1370 6.4559 5.9231 5.6338 5.6345 5.5516 5.9081 6.1145 27 Switzerland/franc 1.4643 1.6369 1.3901 1.2814 1.2714 1.2685 1.3918 1.4399 2 3 2 8 0 9 U T T a h n i a i w t i e l a a d n n / d K d / o b in l a l g a h d r t om/pound2 1 2 2 7 8 5 8 . . . 6 3 1 1 3 3 2 6 1 2 2 6 6 5 3 . . . 4 7 8 0 2 2 7 5 1 2 2 7 5 6 8 . . . 6 9 4 0 1 1 9 8 1 2 2 9 7 5 2 . . . 1 2 1 6 0 9 2 8 1 2 2 9 7 5 3 . . . 1 2 4 9 4 6 7 4 1 2 2 9 5 7 6 . . . 1 1 4 4 0 1 1 9 1 2 2 8 5 7 2 . . . 4 3 1 4 1 4 7 1 1 2 2 7 7 5 4 . . . 3 5 9 3 7 7 3 8 MEMO 31 United States/dollar3 92.72 98.60 89.09 83.35 83.51 82.12 8.12 91.41 1. Averages of certified noon buying rates in New York for cable transfers. currencies of 10 industrial countries. The weight for each of the 10 countries is the Data in this table also appear in the Board's G.5 (405) release. For address, see 1972-76 average world trade of that country divided by the average world trade of inside front cover. all 10 countries combined. Series revised as of August 1978 (see Federal Reserve 2. Value in U.S. cents. Bulletin, vol. 64, August 1978, p. 700). 3. Index of weighted-average exchange value of U.S. dollar against the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 Guide to Tabular Presentation, Statistical Releases, and Special Tables GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations c Corrected 0 Calculated to be zero e Estimated n.a. Not available p Preliminary n.e.c. Not elsewhere classified r Revised (Notation appears on column heading when about IPCs Individuals, partnerships, and corporations half of the figures in that column are changed.) REITs Real estate investment trusts * Amounts insignificant in terms of the last decimal place RPs Repurchase agreements shown in the table (for example, less than 500,000 when SMSAs Standard metropolitan statistical areas the smallest unit given is millions) Cell not applicable General Information Minus signs are used to indicate (1) a decrease, (2) a negative tions of the Treasury. "State and local government" also infigure, or (3) an outflow. cludes municipalities, special districts, and other political "U.S. government securities" may include guaranteed issues subdivisions. of U.S. government agencies (the flow of ftinds figures also In some of the tables, details do not add to totals because of include not fully guaranteed issues) as well as direct obliga- rounding. STATISTICAL RELEASES-List Published Semiannually, with Latest BULLETIN Reference Issue Page Anticipated schedule of release dates for periodic releases lune 1991 A82 SPECIAL TABLES—Published Irregularly, with Latest BULLETIN Reference Title and Date Issue Page Assets and liabilities of commercial banks March 31,1990 January 1991 A72 June 30,1990 February 1991 A72 September 30,1990 March 1991 A72 December 31,1990 May 1991 A72 Terms of lending at commercial banks February 1990 September 1990 A73 May 1990 December 1990 A72 August 1990 December 1990 All November 1990 April 1991 A73 Assets and liabilities of U.S. branches and agencies of foreign banks March 31, 1990 September 1990 A78 June 30,1990 December 1990 A82 September 30,1990 February 1991 A78 December 31,1990 June 1991 A72 Pro forma balance sheet and income statements for priced service operations June 30,1989 Februaty 1990 A78 September 30,1989 March 1990 A88 March 31,1990 September 1990 A82 June 30,1990 October 1990 A72 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Federal Reserve Board of Governors and Official Staff ALAN GREENSPAN, Chairman WAYNE D. ANGELL EDWARD W. KELLEY, JR. OFFICE OF BOARD MEMBERS DIVISION OF INTERNATIONAL FINANCE JOSEPH R. COYNE, Assistant to the Board EDWIN M. TRUMAN, Staff Director DONALD J. WINN, Assistant to the Board LARRY J. PROMISEL, Senior Associate Director BOB STAHLY MOORE, Special Assistant to the Board CHARLES J. SIEGMAN, Senior Associate Director DIANE E. WERNEKE, Special Assistant to the Board DAVID H. HOWARD, Deputy Associate Director ROBERT F. GEMMILL, Staff Adviser LEGAL DIVISION DONALD B. ADAMS, Assistant Director J. VIRGIL MATTINGLY, JR., General Counsel DALE W. HENDERSON, Assistant Director SCOTT G. ALVAREZ, Associate General Counsel PETER HOOPER III, Assistant Director RICHARD M. ASHTON, Associate General Counsel KAREN H. JOHNSON, Assistant Director OLIVER IRELAND, Associate General Counsel RALPH W. SMITH, JR. , Assistant Director RICKI R. TIGERT, Associate General Counsel KATHLEEN M. O'DAY, Assistant General Counsel DIVISION OF RESEARCH AND STATISTICS MARYELLEN A. BROWN, Assistant to the General Counsel MICHAEL J. PRELL, Director EDWARD C. ETTIN, Deputy Director OFFICE OF THE SECRETARY THOMAS D. SIMPSON, Associate Director WILLIAM W. WILES, Secretary LAWRENCE SLEFMAN, Associate Director JENNIFER J. JOHNSON, Associate Secretary DAVID J. STOCKTON, Associate Director BARBARA R. LOWREY, Associate Secretary M PE A T R E T R H A A . B T E IN T S H L E E A Y , , D D e e p p u u t t y y A A s s s s o o c c i i a a t t e e D D i i r r e e c c t t o o r r DIVISION OF CONSUMER MYRON L. KWAST, Assistant Director AND COMMUNITY AFFAIRS PATRICK M. PARKINSON, Assistant Director MARTHA S. SCANLON, Assistant Director GRIFFITH L. GARWOOD, Director JOYCE K. ZICKLER, Assistant Director GLENN E. LONEY, Assistant Director LEVON H. GARABEDIAN, Assistant Director ELLEN MALAND, Assistant Director (Administration) DOLORES S. SMITH, Assistant Director DIVISION OF MONETARY AFFAIRS DIVISION OF BANKING SUPERVISION AND REGULATION DONALD L. KOHN, Director DAVID E. LINDSEY, Deputy Director WILLIAM TAYLOR, Staff Director BRIAN F. MADIGAN, Assistant Director DON E. KLINE, Associate Director RICHARD D. PORTER, Assistant Director FREDERICK M. STRUBLE, Associate Director NORMAND R.V. BERNARD, Special Assistant to the Board WILLIAM A. RYBACK, Deputy Associate Director STEPHEN C. SCHEMERING, Deputy Associate Director OFFICE OF THE INSPECTOR GENERAL R H JO I E C E R H B M A . E R R C D T L E S A P A . I V B L E I L E R E R , N N A K , s O A s T i s s H s ta i E s n N ta t , n D D t i e r D p e i u c r t t e o y c r A t o s r s ociate Director B B R AR EN R T Y L R . . B S O NY W D E E N R , , I A ns s p si e s c ta to n r t G In e s n p e e r c a t l o r General ROGER T. COLE, Assistant Director JAMES I. GARNER, Assistant Director JAMES D. GOETZINGER, Assistant Director MICHAEL G. MARTINSON, Assistant Director ROBERT S. PLOTKIN, Assistant Director SIDNEY M. SUSSAN, Assistant Director LAURA M. HOMER, Securities Credit Officer Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A73 JOHN P. LAWARE DAVID W. MULLINS, JR. OFFICE OF OFFICE OF STAFF DIRECTOR FOR STAFF DIRECTOR FOR MANAGEMENT FEDERAL RESERVE BANK ACTIVITIES S. DAVID FROST, Staff Director THEODORE E. ALLISON, Staff Director WILLIAM SCHNEIDER, Special Assignment: Project Director, National Information Center DIVISION OF RESERVE BANK OPERATIONS PORTIA W. THOMPSON, Equal Employment Opportunity AND PAYMENT SYSTEMS Programs Officer CLYDE H. FARNSWORTH, JR., Director DAVID L. ROBINSON, Deputy Director (Finance and DIVISION OF HUMAN RESOURCES Control) MANAGEMENT BRUCE J. SUMMERS, Deputy Director (Payments and DAVID L. SHANNON, Director Automation) JOHN R. WEIS, Associate Director CHARLES W. BENNETT, Assistant Director ANTHONY V. DIGIOIA, Assistant Director JACK DENNIS, JR., Assistant Director JOSEPH H. HAYES, JR. , Assistant Director EARL G. HAMILTON, Assistant Director FRED HOROWITZ, Assistant Director JOHN H. PARRISH, Assistant Director LOUISE L. ROSEMAN, Assistant Director OFFICE OF THE CONTROLLER FLORENCE M. YOUNG, Assistant Director GEORGE E. LIVINGSTON, Controller STEPHEN J. CLARK, Assistant Controller (Programs and Budgets) DARRELL R. PAULEY, Assistant Controller (Finance) DIVISION OF SUPPORT SERVICES ROBERT E. FRAZIER, Director GEORGE M. LOPEZ, Assistant Director DAVID L. WILLIAMS, Assistant Director OFFICE OF THE DIRECTOR FOR INFORMATION RESOURCES MANAGEMENT STEPHEN R. MALPHRUS, Director MARIANNE M. EMERSON, Assistant Director EDWARD T. MULRENIN, Assistant Director DIVISION OF HARDWARE AND SOFTWARE SYSTEMS BRUCE M. BEARDSLEY, Director DAY W. RADEBAUGH, JR., Assistant Director ELIZABETH B. RIGGS, Assistant Director DIVISION OF APPLICATIONS DEVELOPMENT AND STATISTICAL SERVICES WILLIAM R. JONES, Director ROBERT J. ZEMEL, Associate Director Po KYUNG KIM, Assistant Director RAYMOND H. MASSEY, Assistant Director RICHARD C. STEVENS, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Federal Reserve Bulletin • July 1991 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman E. GERALD CORRIGAN, Vice Chairman WAYNE D. ANGELL SBLAS KEEHN JOHN P. LAWARE ROBERT P. BLACK EDWARD W. KELLEY, JR. DAVID W. MULLINS, JR. ROBERT P. FORRESTAL ROBERT T. PARRY ALTERNATE MEMBERS ROGER GUFFEY THOMAS C. MELZER JAMES H. OLTMAN W. LEE HOSKINS RICHARD F. SYRON STAFF DONALD L. KOHN, Secretary and Economist J. ALFRED BROADDUS, JR., Associate Economist NORMAND R.V. BERNARD, Deputy Secretary RICHARD G. DAVIS, Associate Economist JOSEPH R. COYNE, Assistant Secretary DAVID E. LINDSEY, Associate Economist GARY P. GILLUM, Assistant Secretary LARRY J. PROMISEL, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel KARL A. SCHELD, Associate Economist ERNEST T. PATRIKIS, Deputy General Counsel CHARLES J. SIEGMAN, Associate Economist MICHAEL J. PRELL, Economist THOMAS D. SIMPSON, Associate Economist EDWIN M. TRUMAN, Economist LAWRENCE SLIFMAN, Associate Economist JACK H. BEEBE, Associate Economist SHEILA T. TSCHINKEL, Associate Economist PETER D. STERNLIGHT, Manager for Domestic Operations, System Open Market Account SAM Y. CROSS, Manager for Foreign Operations, System Open Market Account FEDERAL ADVISORY COUNCIL PAUL HAZEN, President LLOYD P. JOHNSON, Vice President IRA STEPANIAN, First District B. KENNETH WEST, Seventh District CHARLES S. SANFORD, JR., Second District DAN W. MITCHELL, Eighth District TERRENCE A. LARSEN, Third District LLOYD P. JOHNSON, Ninth District JOHN B. MCCOY, Fourth District JORDAN L. HAINES, Tenth District EDWARD E. CRUTCHFIELD, Fifth District RONALD G. STEINHART, Eleventh District E.B. Robinson, Jr., Sixth District PAUL HAZEN, Twelfth District HERBERT V. PROCHNOW, Secretary WILLIAM J. KORSVIK, Associate Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A75 CONSUMER ADVISORY COUNCIL JAMES W. HEAD, Berkeley, California, Chairman LINDA K. PAGE, Columbus, Ohio, Vice Chairman VERONICA E. BARELA, Denver, Colorado JULIA E. HILER, Marietta, Georgia GEORGE H. BRAASCH, Oakbrook, Illinois HENRY JARAMILLO, Belen, New Mexico TOYE L. BROWN, Boston, Massachusetts BARBARA KAUFMAN, San Francisco, California CLIFF E. COOK, Tacoma, Washington KATHLEEN E. KEEST, Boston, Massachusetts R.B. (JOE) DEAN, JR., Columbia, South Carolina COLLEEN D. MCCARTHY, Kansas City, Missouri DENNY D. DUMLER, Denver, Colorado MICHELLE S. MEIER, Washington, D.C. WILLIAM C. DUNKELBERG, Philadelphia, Pennsylvania BERNARD F. PARKER, JR., Detroit, Michigan JAMES FLETCHER, Chicago, Illinois OTIS PITTS, JR., Miami, Florida GEORGE C. GALSTER, Wooster, Ohio VINCENT P. QUAYLE, Baltimore, Maryland E. THOMAS GARMAN, Blacksburg, Virginia CLIFFORD N. ROSENTHAL, New York, New York DONALD A. GLAS, Hutchinson, Minnesota ALAN M. SILBERSTEIN, New York, New York DEBORAH B. GOLDBERG, Washington, D.C. NANCY HARVEY STEORTS, Dallas, Texas MICHAEL M. GREENFIELD, ST. Louis, Missouri DAVID P. WARD, Chester, New Jersey JOYCE HARRIS, Madison, Wisconsin SANDRA L. WILLETT, Boston, Massachusetts THRIFT INSTITUTIONS ADVISORY COUNCIL MARION O. SANDLER, Oakland, California, President LYNN W. HODGE, Greenwood, South Carolina, Vice President DANIEL C. ARNOLD, Houston, Texas RICHARD A. LARSON, West Bend, Wisconsin JAMES L. BRYAN, Richardson, Texas PRESTON MARTIN, San Francisco, California DAVID L. HATFIELD, Kalamazoo, Michigan RICHARD D. PARSONS, New York, New York ELLIOT K. KNUTSON, Seattle, Washington EDMOND M. SHANAHAN, Chicago, Illinois JOHN WM. LAISLE, Oklahoma City, Oklahoma WOODBURY C. TITCOMB, Worcester, Massachusetts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MS-138, Board of Governors of the Federal Reserve System, MULTICOUNTRY MODEL, May 1984. 590 pp. $14.50 each. Washington, D.C. 20551 or telephone (202) 452-3244 or FAX WELCOME TO THE FEDERAL RESERVE. March 1989. 14 pp. (202) 728-5886. When a charge is indicated, payment should INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. accompany request and be made payable to the Board of 440 pp. $9.00 each. Governors of the Federal Reserve System. Payment from foreign FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. residents should be drawn on a U. S. bank. December 1986. 264 pp. $10.00 each. FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY- SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS. 1984. 120 pp. ANNUAL REPORT. ANNUAL REPORT: BUDGET REVIEW, 1990-91. CONSUMER EDUCATION PAMPHLETS FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or $2.50 each in the United States, its possessions, Canada, Short pamphlets suitable for classroom use. Multiple copies are and Mexico. Elsewhere, $35.00 per year or $3.00 each. available without charge. ANNUAL STATISTICAL DIGEST 1974-78. 1980. 305 pp. $10.00 per copy. Consumer Handbook on Adjustable Rate Mortgages 1981. 1982.239 pp. $ 6.50 per copy. Consumer Handbook to Credit Protection Laws 1982. 1983. 266 pp. $ 7.50 per copy. A Guide to Federal Reserve Regulations 1983. 1984. 264 pp. $11.50 per copy. A Guide to Business Credit for Women, Minorities, and Small 1984. 1985. 254 pp. $12.50 per copy. Businesses 1985. 1986. 231pp. $15.00 per copy. How to File A Consumer Credit Complaint 1986. 1987. 288 pp. $15.00 per copy. Series on the Structure of the Federal Reserve System 1987. 1988. 272 pp. $15.00 per copy. The Board of Governors of the Federal Reserve System 1988. 1989. 256 pp. $25.00 per copy. The Federal Open Market Committee 1980-89. 1991. 712 pp. $25.00 per copy. Federal Reserve Bank Board of Directors Federal Reserve Banks SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF CHARTS. Weekly. $30.00 per year or $.70 each in the Organization and Advisory Committees United States, its possessions, Canada, and Mexico. A Consumer's Guide to Mortgage Lock-Ins Elsewhere, $35.00 per year or $.80 each. A Consumer's Guide to Mortgage Settlement Costs THE FEDERAL RESERVE ACT and other statutory provisions A Consumer's Guide to Mortgage Refinancing affecting the Federal Reserve System, as amended through Home Mortgages: Understanding the Process and Your Right August 1990. 646 pp. $10.00. to Fair Lending Making Deposits: When Will Your Money Be Available? REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL When Your Home is on the Line: What You Should Know About RESERVE SYSTEM. ANNUAL PERCENTAGE RATE TABLES (Truth in Lending-Reg- Home Equity Lines of Credit ulation Z) Vol. I (Regular Transactions). 1969.100pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each volume $2.25; 10 or more of same volume to one address, $2.00 each. PAMPHLETS FOR FINANCIAL INSTITUTIONS Introduction to Flow of Funds. 1980. 68 pp. $1.50 each; 10 or Short pamphlets on regulatory compliance, primarily suitable more to one address, $1.25 each. for banks, bank holding companies, and creditors. Federal Reserve Regulatory Service. Looseleaf; updated at least monthly. (Requests must be prepaid.) Limit of fifty copies Consumer and Community Affairs Handbook. $75.00 per year. The Board of Directors' Opportunities in Community Monetary Policy and Reserve Requirements Handbook. Reinvestment $75.00 per year. The Board of Directors' Role in Consumer Law Compliance Securities Credit Transactions Handbook. $75.00 per year. Combined Construction/Permanent Loan Disclosure and The Payment System Handbook. $75.00 per year. Regulation Z Federal Reserve Regulatory Service. 3 vols. (Contains all four Community Development Corporations and the Federal Reserve Handbooks plus substantial additional material.) $200.00 Construction Loan Disclosures and Regulation Z per year. Finance Charges Under Regulation Z Rates for subscribers outside the United States are as follows How to Determine the Credit Needs of Your Community and include additional air mail costs: Regulation Z: The Right of Rescission Federal Reserve Regulatory Service, $250.00 per year. The Right to Financial Privacy Act Each Handbook, $90.00 per year. Signature Rules in Community Property States: Regulation B Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A77 Signature Rules: Regulation B 158. THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIRE- Timing Requirements for Adverse Action Notices: Regulation B MENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE What An Adverse Action Notice Must Contain: Regulation B PRODUCTS, by Mark J. Warshawsky with the assistance of Understanding Prepaid Finance Charges: Regulation Z Dietrich Earnhart. September 1989. 23 pp. 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUB- SIDIARIES OF BANK HOLDING COMPANIES, by Nellie Liang STAFF STUDIES: Summaries Only Printed in the and Donald Savage. February 1990. 12 pp. Bulletin 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- Studies and papers on economic andfinancial subjects that are of VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by Gregory E. Elliehausen and John D. Wolken. September general interest. Requests to obtain single copies of the full text 1990. 35 pp. or to be added to the mailing list for the series may be sent to Publications Services. 161. A REVIEW OF CORPORATE RESTRUCTURING ACTIVITY, 1980-90, by Margaret Hastings Pickering. May 1991. Staff Studies 1-145 are out of print. 21pp. 146. THE ROLE OF THE PRIME RATE IN THE PRICING OF BUSINESS LOANS BY COMMERCIAL BANKS, 1977-84, by REPRINTS OF SELECTED Bulletin ARTICLES Thomas F. Brady. November 1985. 25 pp. Some Bulletin articles are reprinted. The articles listed below 147. REVISIONS IN THE MONETARY SERVICES (DIVISIA) IN- are those for which reprints are available. Most of the articles DEXES OF THE MONETARY AGGREGATES, by Helen T. Farr reprinted do not exceed twelve pages. and Deborah Johnson. December 1985. 42 pp. 148. THE MACROECONOMIC AND SECTORAL EFFECTS OF THE Limit of ten copies ECONOMIC RECOVERY TAX ACT: SOME SIMULATION RESULTS, by Flint Brayton and Peter B. Clark. December Recent Developments in the Bankers Acceptance Market. 1/86. 1985. 17 pp. The Use of Cash and Transaction Accounts by American 149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS IN Families. 2/86. BANKING BEFORE AND AFTER ACQUISITION, by Stephen Financial Characteristics of High-Income Families. 3/86. A. Rhoades. April 1986. 32 pp. Prices, Profit Margins, and Exchange Rates. 6/86. 150. STATISTICAL COST ACCOUNTING MODELS IN BANKING: Agricultural Banks under Stress. 7/86. A REEXAMINATION AND AN APPLICATION, by John T. Foreign Lending by Banks: A Guide to International and U.S. Rose and John D. Wolken. May 1986. 13 pp. Statistics. 10/86. 151. RESPONSES TO DEREGULATION : RETAIL DEPOSIT PRICING Recent Developments in Corporate Finance. 11/86. FROM 1983 THROUGH 1985, by Patrick I. Mahoney, Alice Measuring the Foreign-Exchange Value of the Dollar. 6/87. P. White, Paul F. O'Brien, and Mary M. McLaughlin. Changes in Consumer Installment Debt: Evidence from the 1983 January 1987. 30 pp. and 1986 Surveys of Consumer Finances. 10/87. 152. DETERMINANTS OF CORPORATE MERGER ACTIVITY: A Home Equity Lines of Credit. 6/88. REVIEW OF THE LITERATURE, by Mark J. Warshawsky. Mutual Recognition: Integration of the Financial Sector in the April 1987. 18 pp. European Community. 9/89. 153. STOCK MARKET VOLATILITY, by Carolyn D. Davis and The Activities of Japanese Banks in the United Kingdom and in Alice P. White. September 1987. 14 pp. the United States, 1980-88. 2/90. 154. THE EFFECTS ON CONSUMERS AND CREDITORS OF Industrial Production: 1989 Developments and Historical PROPOSED CEILINGS ON CREDIT CARD INTEREST RATES, Revision. 4/90. by Glenn B. Canner and James T. Fergus. October 1987. Recent Developments in Industrial Capacity and Utilization. 26 pp. 6/90. 155. THE FUNDING OF PRIVATE PENSION PLANS, by Mark J. Developments Affecting the Profitability of Commercial Banks. Warshawsky. November 1987. 25 pp. 7/90. 156. INTERNATIONAL TRENDS FOR U. S. BANKS AND BANKING Recent Developments in Corporate Finance. 8/90. MARKETS, by James V. Houpt. May 1988. 47 pp. U.S. Exchange Rate Policy: Bretton Woods to Present. 11/90. 157. M2 PER UNIT OF POTENTIAL GNP AS AN ANCHOR FOR The Transmission Channels of Monetary Policy: How Have THE PRICE LEVEL, by Jeffrey J. Hallman, Richard D. They Changed? 12/90. Porter, and David H. Small. April 1989. 28 pp. U.S. International Transactions in 1990. 5/91. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 Index to Statistical Tables References are to pages A3-A69 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Demand deposits Agricultural loans, commercial banks, 19, 20 Banks, by classes, 18-21 Assets and liabilities (See also Foreigners) Ownership by individuals, partnerships, and corporations, 21 Banks, by classes, 18-20 Turnover, 15 Domestic finance companies, 35 Depository institutions Federal Reserve Banks, 10 Reserve requirements, 8 Financial institutions, 25 Reserves and related items, 3,4, 5, 12 Foreign banks, U.S. branches and agencies, 21 Deposits (See also specific types) Automobiles Banks, by classes, 3,18-20,21 Consumer installment credit, 38, 39 Federal Reserve Banks, 4, 10 Production, 48, 49 Turnover, 15 Discount rates at Reserve Banks and at foreign central banks and foreign countries (See Interest rates) BANKERS acceptances, 9, 22, 23 Discounts and advances by Reserve Banks (See Loans) Bankers balances, 18-20. (See also Foreigners) Dividends, corporate, 34 Bonds (See also U.S. government securities) New issues, 33 EMPLOYMENT, 46 Rates, 23 Eurodollars, 23 Branch banks, 21, 56 Business activity, nonfinancial, 45 FARM mortgage loans, 37 Business expenditures on new plant and equipment, 34 Federal agency obligations, 4,9, 10, 11, 30, 31 Business loans (See Commercial and industrial loans) Federal credit agencies, 32 Federal finance Debt subject to statutory limitation, and types and ownership CAPACITY utilization, 47 of gross debt, 29 Capital accounts Receipts and outlays, 27,28 Banks, by classes, 18 Treasury financing of surplus, or deficit, 27 Federal Reserve Banks, 10 Treasury operating balance, 27 Central banks, discount rates, 68 Federal Financing Bank, 27, 32 Certificates of deposit, 23 Federal funds, 6, 17, 19, 20, 21, 23, 27 Commercial and industrial loans Federal Home Loan Banks, 32 Commercial banks, 16, 19 Federal Home Loan Mortgage Corporation, 32, 36, 37 Weekly reporting banks, 19-21 Federal Housing Administration, 32, 36, 37 Commercial banks Federal Land Banks, 37 Assets and liabilities, 18-20 Federal National Mortgage Association, 32, 36, 37 Commercial and industrial loans, 16, 18, 19, 20, 21 Federal Reserve Banks Consumer loans held, by type and terms, 38, 39 Condition statement, 10 Loans sold outright, 19 Discount rates (See Interest rates) Nondeposit funds, 17 U.S. government securities held, 4, 10, 11, 29 Real estate mortgages held, by holder and property, 37 Federal Reserve credit, 4, 5, 10, 11 Time and savings deposits, 3 Federal Reserve notes, 10 Commercial paper, 22, 23, 35 Federal Savings and Loan Insurance Corporation insured Condition statements (See Assets and liabilities) institutions, 25 Construction, 45, 50 Federally sponsored credit agencies, 32 Consumer installment credit, 38, 39 Finance companies Consumer prices, 45,47 Assets and liabilities, 35 Consumption expenditures, 52, 53 Business credit, 35 Corporations Loans, 38, 39 Nonfinancial, assets and liabilities, 34 Paper, 22, 23 Profits and their distribution, 34 Financial institutions Security issues, 33, 66 Loans to, 19,20,21 Cost of living (See Consumer prices) Selected assets and liabilities, 25 Credit unions, 28, 38. (See also Thrift institutions) Float, 4 Currency and coin, 18 Flow of funds, 40, 42,43, 44 Currency in circulation, 4, 13 Foreign banks, assets and liabilities of U.S. branches and Customer credit, stock market, 24 agencies, 21 Foreign currency operations, 10 Foreign deposits in U.S. banks, 4,10,19,20 DEBITS to deposit accounts, 14 Foreign exchange rates, 69 Debt (See specific types of debt or securities) Foreign trade, 55 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A79 Foreigners REAL estate loans Claims on, 56, 58, 61, 62, 63, 65 Banks, by classes, 16, 19, 20, 37 Liabilities to, 20, 55, 56, 58, 59, 64, 66, 67 Financial institutions, 25 Terms, yields, and activity, 36 GOLD Type of holder and property mortgaged, 37 Certificate account, 10 Repurchase agreements, 6,17, 19,20, 21 Stock, 4, 55 Reserve requirements, 8 Government National Mortgage Association, 32, 36, 37 Reserves Gross national product, 52 Commercial banks, 18 Depository institutions, 3,4, 5, 12 HOUSING, new and existing units, 50 Federal Reserve Banks, 10 U.S. reserve assets, 55 Residential mortgage loans, 36 INCOME, personal and national, 45, 52, 53 Retail credit and retail sales, 38, 39,45 Industrial production, 45, 48 Installment loans, 38, 39 Insurance companies, 25, 29, 37 SAVING Interest rates Flow of funds, 40, 42, 43, 44 Bonds, 23 National income accounts, 52 Consumer installment credit, 39 Savings and loan associations, 25, 37, 38, 40. (See also Thrift Federal Reserve Banks, 7 institutions) Foreign central banks and foreign countries, 68 Savings banks, 25, 37, 38 Money and capital markets, 23 Savings deposits (See Time and savings deposits) Mortgages, 36 Securities (See also specific types) Prime rate, 22 Federal and federally sponsored credit agencies, 32 International capital transactions of United States, 54-68 Foreign transactions, 66 International organizations, 58, 59, 61, 64, 65 New issues, 33 Inventories, 52 Prices, 24 Investment companies, issues and assets, 34 Special drawing rights, 4, 10, 54, 55 Investments (See also specific types) State and local governments Banks, by classes, 18,19,20,21,25 Deposits, 19,20 Commercial banks, 3,16,18-20, 37 Holdings of U.S. government securities, 29 Federal Reserve Banks, 10,11 New security issues, 33 Financial institutions, 25, 37 Ownership of securities issued by, 19,20, 25 Rates on securities, 23 LABOR force, 46 Stock market, selected statistics, 24 Life insurance companies (See Insurance companies) Stocks (See also Securities) Loans (See also specific types) New issues, 33 Banks, by classes, 18-20 Prices, 24 Commercial banks, 3, 16,18-20 Federal Reserve Banks, 4, 5, 7,10, 11 Student Loan Marketing Association, 32 Financial institutions, 25, 37 Insured or guaranteed by United States, 36, 37 TAX receipts, federal, 28 Thrift institutions, 3. (See also Credit unions and Savings and MANUFACTURING loan associations) Capacity utilization, 47 Time and savings deposits, 3,13, 17,18, 19, 20, 21 Production, 47, 49 Trade, foreign, 55 Margin requirements, 24 Treasury cash, Treasury currency, 4 Member banks (See also Depository institutions) Treasury deposits, 4, 10, 27 Federal funds and repurchase agreements, 6 Treasury operating balance, 27 Reserve requirements, 8 UNEMPLOYMENT, 46 Mining production, 49 U.S. government balances Mobile homes shipped, 50 Commercial bank holdings, 18, 19, 20 Monetary and credit aggregates, 3, 12 Treasury deposits at Reserve Banks, 4, 10,27 Money and capital market rates, 23 U.S. government securities Money stock measures and components, 3,13 Bank holdings, 18-20,21, 29 Mortgages (See Real estate loans) Mutual funds, 34 Dealer transactions, positions, and financing, 31 Federal Reserve Bank holdings, 4, 10, 11, 29 Mutual savings banks (See Thrift institutions) Foreign and international holdings and transactions, 10, 29, 67 NATIONAL defense outlays, 28 Open market transactions, 9 National income, 52 Outstanding, by type and holder, 25, 29 Rates, 23 OPEN market transactions, 9 U.S. international transactions, 54-68 Utilities, production, 49 PERSONAL income, 53 Prices VETERANS Administration, 36, 37 Consumer and producer, 45, 51 Stock market, 24 Prime rate, 22 WEEKLY reporting banks, 19-21 Producer prices, 45, 51 Wholesale (producer) prices, 45, 51 Production, 45,48 Profits, corporate, 34 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A80 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK Chairman President Vice President branch, ox facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* 02106 Richard N. Cooper Richard F. Syron Jerome H. Grossman Cathy E. Minehan NEW YORK* 10045 Cyrus R. Vance E. Gerald Corrigan Ellen V. Futter James H. Oltman Buffalo 14240 Mary Ann Lambertsen James O. Aston PHILADELPHIA 19105 Peter A. Benoliel Edward G. Boehne Jane G. Pepper William H. Stone, Jr. CLEVELAND* 44101 JohnR. Miller W. LeeHoskins A. William Reynolds William H. Hendricks Cincinnati 45201 Kate Ireland Charles A. Cerino1 Pittsburgh 15230 Robert P. Bozzone Harold J. Swart1 RICHMOND* 23219 Anne Marie Whittemore Robert P. Black Henry J. Faison Jimmie R. Monhollon Baltimore 21203 John R. Hardesty, Jr. Ronald B. Duncan1 Charlotte 28230 Anne M. Allen Albert D. Tinkelenberg1 Culpeper Communications John G. Stoides1 and Records Center 22701 ATLANTA 30303 Larry L. Prince Robert P. Forrestal Edwin A. Huston Jack Guynn Donald E. Nelson1 Birmingham 35283 Roy D.Terry FredR. Herr1 Jacksonville 32231 Hugh M.Brown James D. Hawkins1 Miami 33152 Dorothy C. Weaver James T. Curry EI Nashville 37203 Shirley A. Zeitlin Melvyn K. Purcell New Orleans 70161 Vacancy Robert J. Musso CHICAGO* 60690 Charles S. McNeer Silas Keehn Richard G. Cline Daniel M. Doyle Detroit 48231 Phyllis E. Peters Roby L. Sloan1 ST. LOUIS 63166 H. Edwin Trusheim Thomas C. Melzer Robert H. Quenon James R. Bowen Little Rock 72203 Wm. Earle Love Karl W. Ashman Louisville 40232 Lois H. Gray Howard Wells Memphis 38101 Katherine H. Smythe Ray Laurence MINNEAPOLIS 55480 Delbert W. Johnson Gary H. Stern Gerald A. Rauenhorst Thomas E. Gainor Helena 59601 James E.Jenks John D. Johnson KANSAS CITY 64198 Fred W. Lyons, Jr. Roger Guffey Burton A. Dole, Jr. Henry R. Czerwinski Denver 80217 Barbara B. Grogan Kent M.Scott Oklahoma City 73125 Ernest L. Holloway David J. France Omaha 68102 Herman Cain Harold L. Shewmaker DALLAS 75222 Hugh G. Robinson Robert D. McTeer, Jr. Leo E. Linbeck, Jr. Tony J. Salvaggio El Paso 79999 W. Thomas Beard, m Sammie C. Clay Houston 77252 Gilbert D. Gaedcke, Jr. Robert Smith, m1 San Antonio 78295 Roger R. Hemminghaus Thomas H. Robertson SAN FRANCISCO 94120 Robert F. Erburu Robert T. Parry Carolyn S. Chambers Carl E. Powell Los Angeles 90051 Yvonne B. Burke Thomas C. Warren2 Portland 97208 William A. Hilliard Leslie R. Watters Salt Lake City 84125 D.N. Rose Andrea P. Wolcott Seattle 98124 Bruce R. Kennedy Gerald R. Kelly1 •Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; Cranford, New Jersey 07016; Jericho, New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; and Milwaukee, Wisconsin 53202. 1. Senior Vice President. 2. Executive Vice President. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A81 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories • • • B B I Im April 1984 -; w Us — i i l l l lB WW ALASKA WWwiiM IIIIIIBM •••HWBWBWI — I 1 1 1 MM llllllBIsM H HH 7 YP wl llIlllBlSSi • • *• • LEGEND Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities Boundaries of Federal Reserve Branch * Federal Reserve Branch Cities Territories Federal Reserve Bank Facility Q Board of Governors of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Publications of Interest FEDERAL RESERVE REGULATORY SERVICE To promote public understanding of its regulatory ings, and staff opinions. Also included is the Board's functions, the Board publishes the Federal Reserve list of OTC margin stocks. Regulatory Service, a three-volume looseleaf service The Consumer and Community Affairs Handbook containing all Board regulations and related statutes, contains Regulations B, C, E, M, Z, AA, and BB, and interpretations, policy statements, rulings, and staff associated materials. opinions. For those with a more specialized interest in The Payment System Handbook deals with expethe Board's regulations, parts of this service are pub- dited funds availability, check collection, wire translished separately as handbooks pertaining to monetary fers, and risk-reduction policy. It includes Regulation policy, securities credit, consumer affairs, and the CC, Regulation J, the Expedited Funds Availability payment system. Act and related statutes, official Board commentary on These publications are designed to help those who Regulation CC, and policy statements on risk reducmust frequently refer to the Board's regulatory mate- tion in the payment system. rials. They are updated at least monthly, and each For domestic subscribers, the annual rate is $200 for contains citation indexes and a subject index. the Federal Reserve Regulatory Service and $75 for The Monetary Policy and Reserve Requirements each Handbook. For subscribers outside the United Handbook contains Regulations A, D, and Q, plus States, the price including additional air mail costs is related materials. For convenient reference, it also $250 for the Service and $90 for each Handbook. All contains the rules of the Depository Institutions De- subscription requests must be accompanied by a check regulation Committee. or money order payable to the Board of Governors of The Securities Credit Transactions Handbook con- the Federal Reserve System. Orders should be adtains Regulations G, T, U, and X, dealing with exten- dressed to Publications Services, mail stop 138, Board sions of credit for the purchase of securities, together of Governors of the Federal Reserve System, Washwith all related statutes, Board interpretations, rul- ington, D.C. 20551. U.S. MONETARY POLICY AND FINANCIAL MARKETS U.S. Monetary Policy and Financial Markets by Ann- context, examining first the evolution of Federal Re- Marie Meulendyke offers an in-depth description of serve monetary policy procedures from their beginthe way monetary policy is developed by the Federal nings in 1914 to the end of the 1980s. It indicates how Open Market Committee and the techniques employed policy operates most directly through the banking to implement policy at the Open Market Trading Desk. system and the financial markets and describes key Written from her perspective as a senior economist in features of both. Finally, the book turns its attention to the Open Market Function at the Federal Reserve the transmittal of monetary policy actions to the U.S. Bank of New York, Ann-Marie Meulendyke describes economy and throughout the world. the tools and the setting of policy, including many of The book is $5.00 a copy for U.S. purchasers and the complexities that differentiate the process from $10.00 for purchasers outside the United States. Copsimpler textbook models. Included is an account of a ies are available from the Public Information Departday at the Trading Desk, from morning information- ment, Federal Reserve Bank of New York, 33 Liberty gathering through daily decisionmaking and the exe- Street, New York, N.Y. 10045. Checks must accomcution of an open market operation. pany orders and should be payable to the Federal The book also places monetary policy in a broader Reserve Bank of New York in U.S. dollars. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Statistical Releases Available on the Commerce Department's Electronic Bulletin Board The Board of Governors of the Federal Reserve scription. For further information regarding a System makes some of its statistical releases avail- subscription to the electronic bulletin board, able to the public through the U.S. Department of please call (703) 487-4630. The releases transmit- Commerce's electronic bulletin board. Computer ted to the electronic bulletin board, on a regular access to the releases can be obtained by sub- basis, are the following: Reference Number Statistical release Frequency of release H.3 Aggregate Reserves Weekly/Thursday H. 4.1 Factors Affecting Reserve Balances Weekly/Thursday H.6 Money Stock Weekly/Thursday H. 8 Assets and Liabilities of Insured Domestically Chartered Weekly/Monday and Foreign Related Banking Institutions H. 10 Foreign Exchange Rates Weekly/Monday H. 15 Selected Interest Rates Weekly/Monday G.5 Foreign Exchange Rates Monthly/end of month G.17 Industrial Production and Capacity Utilization Monthly/midmonth G.19 Consumer Installment Credit Monthly/fifth business day Z.7 Flow of Funds Quarterly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis