Federal Reserve Bulletin, 1991-09

VOLUME 77 • NUMBER 9 • SEPTEMBER 1991 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 685 MONETARY POLICY REPORT recent court interpretations that have held TO THE CONGRESS lenders liable for the cost of cleanup of hazardous substances found on a borrow- Economic activity contracted appreciably er's property and believes that the imposithis past fall and winter, and the downward tion of cleanup liability on lenders is counmomentum in activity carried into the early terproductive to long-term environmental part of 1991. However, much of the negagoals and is contributing to an unnecessary tive impetus to activity was reversed by the and unwarranted constriction of credit cumulative drop in oil prices that occurred availability to a wide range of otherwise between October and February and by the creditworthy borrowers, before the Subboost in confidence that accompanied the committee on Policy Research and Insurswift and successful conclusion of the Perance of the House Committee on Banking, sian Gulf war. These events, combined with Finance and Urban Affairs, July 10, 1991. a considerable easing of monetary policy, set the stage for a recovery, and a few 709 Alan Greenspan, Chairman, Board of Govsectors actually hit bottom quite early in the ernors, presents the midyear Monetary Polyear. Recently, further evidence has icy Report to the Congress and focuses on emerged to indicate that economic activity, current economic and financial conditions in the aggregate, stabilized or began to as well as the outlook for the economy and move up during the second quarter of the monetary policy over the coming year and a year. half; he also discusses the importance of changes in patterns of credit usage and 703 INDUSTRIAL PRODUCTION AND flows of money and credit through the fi- CAPACITY UTILIZATION nancial system in light of what could be significant departures from the trends prev- Industrial production rose 0.7 percent in alent in the 1980s, before the House Com- June, after upward revised gains of 0.7 mittee on Banking, Finance and Urban Afpercent in May and 0.5 percent in April. fairs, July 16, 1991. Total industrial capacity utilization increased 0.3 percentage point in June to 79.3 715 Wayne D. Angell and Edward W. Kelley, percent after an increase of 0.4 percentage Jr., Members, Board of Governors, discuss point in May. and review the Federal Reserve System's expenses and its budget for 1991 and the 706 STATEMENTS TO THE CONGRESS budgets of the Reserve Banks and say that Oliver Ireland, Associate General Counsel, the increase in the Federal Reserve Sys- Legal Division, Board of Governors of the tem's expenses is projected to average 5.3 Federal Reserve System, discusses the is- percent at an annual rate from 1986 through sues of lender liability under the Compre- the 1991 budget and that the Reserve hensive Environmental Response, Com- Banks' increase in expenses from 1989 to pensation, and Liability Act of 1980 1990 was only 4.2 percent because actual (CERCLA) and says that as an initial matter 1990 expenses were lower than budgeted, the Board supports the purposes of CER- before the Subcommittee on Domestic CLA but is concerned over the effect of Monetary Policy of the House Committee Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

on Banking, Finance and Urban Affairs, 732 ANNOUNCEMENTS July 18 1991. Recess appointment of Alan Greenspan as 722 Brent L. Bowen, Inspector General, Board Chairman of the Board of Governors. of Governors, provides a brief review of the Appointment of David W. Mullins, Jr., as points made in the June 7,1991, assessment Vice Chairman of the Board of Governors. of Governor Angell's report entitled "System and Procedures for Financial Supervi- Revised Lists of OTC Margin Stocks and sion and Control" to determine any partic- Foreign Margin Stocks now available. ular weaknesses or strengths in the Errata in charts for the Federal Reserve System's design for auditing and controlling Bulletin and in an entry in the 77th Annual its own financial operations and also out- Report, 1990 of the Board of Governors. lines plans for examining the Board's systems of oversight and supervision of the Proposed definition of highly leveraged Federal Reserve Banks, before the Sub- transactions. committee on Domestic Monetary Policy of Changes in Board staff. the House Committee on Banking, Finance and Urban Affairs, July 18, 1991. 735 RECORD OF POLICY ACTIONS OF THE FEDERAL OPEN MARKET COMMITTEE 724 The Board of Governors presents its views At its meeting on May 14, 1991, the Comon the proposed Fair Trade in Financial mittee indicated that it favored a directive Services Act of 1991 and says that while the that called for maintaining the existing de- Board shares the objectives of this progree of pressure on reserve positions. The posed legislation to encourage other counmembers also noted that they preferred or tries to liberalize their financial markets, the could accept a directive that did not include legislation itself is unwarranted and would a presumption about the likely direction of have unfortunate consequences in that it any intermeeting adjustments in policy. Acrejects the policy of national treatment, a cordingly, the Committee decided that policy that has been fundamental to the somewhat greater reserve restraint or U.S. approach to the international operasomewhat lesser reserve restraint might be tions of financial organizations and that acceptable during the period ahead dependshould be preserved, before the House ing on progress toward price stability, Committee on Ways and Means, July 29, trends in economic activity, the behavior of 1991. the monetary aggregates, and developments in foreign exchange and domestic financial 726 Franklin D. Dreyer, Senior Vice President, markets. The reserve conditions contem- Supervision and Regulation and Loans, plated at this meeting were expected to be Federal Reserve Bank of Chicago, disconsistent with growth of M2 and M3 at cusses asset securitization as it relates to annual rates of around 4 and 2 percent financial institutions and says that staff respectively over the three-month period members at the Federal Reserve have been from March through June. carefully reviewing securitization to ensure that this process will not pose undue risk for depository institutions and their holding 741 LEGAL DEVELOPMENTS companies, before the Subcommittee on Various bank holding company, bank ser- Policy Research and Insurance of the vice corporation, and bank merger orders; House Committee on Banking, Finance and and pending cases. Urban Affairs, July 31, 1991. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

AI FINANCIAL AND BUSINESS STATISTICS A74 FEDERAL OPEN MARKET COMMITTEE AND STAFF; ADVISORY COUNCILS These tables reflect data available as of July 26, 1991. A76 FEDERAL RESERVE BOARD A3 Domestic Financial Statistics PUBLICATIONS A46 Domestic Nonfinancial Statistics A55 International Statistics A78 INDEX TO STATISTICAL TABLES A71 GUIDE TO TABULAR PRESENTATION, STATISTICAL RELEASES, AND SPECIAL A80 FEDERAL RESERVE BANKS, TABLES BRANCHES, AND OFFICES A72 BOARD OF GOVERNORS AND STAFF A81 MAP OF THE FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress Report submitted to the Congress on July 16, 1991, came down substantially during the first half of the pursuant to the Full Employment and Balanced year, and the rise in consumer food prices moderated Growth Act of19781 after several years of relatively large increases. More generally, the softness of labor and product markets has attenuated price pressures for a range of MONETARY POUCY AND THE goods and services. This downdrift in "core" inflation ECONOMIC OUTLOOK FOR 1991 AND 1992 was difficult to discern earlier in the year because of a bunching of price increases in January and When the Federal Reserve presented its most recent February; however, most of the significant increases monetary policy report to the Congress, in February in those months either did not continue or were of this year, the economy was still in a downswing reversed. that had been precipitated by Iraq's invasion of The Federal Reserve's easing moves over the first Kuwait in August 1990 and the associated spike in part of the year not only were taken in light of the oil prices. To be sure, several developments early in contraction of economic activity and the progress in the year had created conditions that promised to help reducing inflationary pressures, but also were foster a turnaround in the economy: Not only had oil prompted by the continued slow growth of the prices reversed most of their earlier run-up, but monetary aggregates early in the year and continuing monetary policy had been eased substantially in the credit restraint by banks and other intermediaries. final months of 1990 and the early part of this year. Reserve market conditions were held steady after However, the economy continued to weaken for a April, however, as evidence began to accumulate time, and in the spring, policy was eased further, that the economy was on track toward recovery. with the objective of ensuring a satisfactory recovery. Reflecting the Federal Reserve's policy actions and Recent evidence suggests that a pickup in activity generally weak credit demands, short-term interest probably is now under way. Much of the uncertainty rates declined appreciably during the first half of the that had depressed business and consumer sentiment year. Longer-term rates, which had moved down was removed by the successful end of hostilities in markedly in the final months of 1990, were mixed the Persian Gulf. The resulting increase in confi- over the first half; with bond market participants dence, combined with the boost to real purchasing focusing on signs of an emerging recovery, Treasury power provided by the retreat in oil prices, raised bond yields rose a bit, while rates on bonds issued by consumer spending on balance over the late winter businesses fell as risk premiums narrowed sharply. and spring. These same factors, as well as lower In the stock market, share prices have registered mortgage rates, also have spurred a gradual recovery sizable increases since January, and broad indexes in the housing sector. Reflecting the stimulus from remain within a few percent of the all-time highs set housing and consumer demand, along with the in the spring. Meanwhile, the value of the dollar has continued growth in U. S. exports, industrial produc- climbed substantially on foreign exchange markets, tion turned up in April and has advanced appreciably supported by the successful conclusion of military since then; in addition, labor demand showed signs operations in the Gulf, by expectations of a recovery of stabilizing during the spring. in the U. S. economy, and by economic developments As anticipated earlier this year, inflation has in Germany and political difficulties in the Soviet slowed from its pace in 1990. Retail energy prices Union. In response to Federal Reserve easings and 1. The charts for the report are available on request from associated declines in short-term interest rates, Publication Services, Board of Governors of the Federal Reserve growth of both M2 and M3 strengthened somewhat System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

686 Federal Reserve Bulletin • September 1991 1. Ranges for growth capital as the economic outlook brightened and risk of monetary and debt aggregates1 premiums narrowed dramatically; financial interme- Percent diaries as well as nonfinancial firms issued large Provisional volumes of equity and longer-term debt, making Aggregate 1990 1991 range significant progress in strengthening their balance for 1992 sheets. M2 3-7 2V4-6% M3 1-5 1-5 1-5 Debt2 5-9 4V4-8V4 Monetary Objectives for 1991 and 1992 1. Change from average for fourth quarter of preceding year to average for fourth quarter of year indicated. Ranges for monetary aggregates are targets; At its meeting earlier this month, the FOMC range for debt is a monitoring range. 2. Domestic nonfinancial sector. reaffirmed its previously established ranges for money and credit for 1991. The target range for M2 during the first half of 1991 relative to the slow pace had been lowered in February to 2 xh to 6lA percent of the second half of 1990. M2 expanded more than from the 3 to 7 percent range that had been in place nominal GNP, and thus its velocity fell, although not for 1990. To date this year, M2 has grown at an as much as might have been expected considering annual rate of a little less than 4 percent, placing it the decline in short-term interest rates. The contin- well within the target range for 1991 as a whole. ued muted response of M2 to the easings in short- This, in effect, leaves the Committee some room to term rates probably reflected the ongoing rerouting maneuver as events unfold in the coming months, of credit outside of depositories and an effort on the while remaining within the annual range. The part of savers to maintain yields on their assets by potential need for such maneuvering room arises in turning to the stock and bond markets, sometimes part in connection with the significant uncertainties via mutual funds. Growth of M3 was boosted early attending the prospects for the velocity of M2. If, for in the year by strong issuance of large time deposits example, the public's demand for M2 balances by U.S. branches and agencies of foreign banks in should be damped by moves among depository response to a reduction in reserve requirements institutions to lower deposit rates (in response to around the end of 1990. In the second quarter, earlier declines in market yields and to higher however, the expansion of M3 slowed as issuance of insurance premiums), then velocity might tend to be time deposits at foreign banks waned, and depository stronger than otherwise would be the case and less credit and associated funding needs contracted. M2 growth would be required to support a given rate Through June, both M2 and M3 had grown at rates of GNP increase. If, on the other hand, institutions somewhat below the midpoint of their targeted were to become more aggressive in bidding for annual growth ranges. loanable funds in the retail deposit market, and thus Credit growth was slow in the first half of the year. the public began to shift its portfolio back in favor of The federal government's borrowing requirements M2 assets, then velocity could weaken and faster were held down by reduced activity by the Resolution M2 growth might be required. The Committee Trust Corporation (RTC) and by contributions from expects that the current annual growth range will foreign countries to cover the costs of Operation permit it to deal with such velocity-altering distur- Desert Storm. Growth of private-sector debt was bances in money supply and demand while it fosters restrained by slack demand associated with the financial conditions conducive to moderate ecoweakness of the economy and by a reduced appetite nomic growth and further progress toward price for leveraging. On the latter score, a lasting shift stability. toward more conservative patterns of credit use The 1 to 5 percent target range for M3 adopted in would be a fundamentally healthy development; the February took into account an expected continued excesses of the 1980s clearly left us with problems in contraction in the thrift industry and associated our financial sector that will take some time to redirection of credit flows away from depository resolve. In part reflecting earlier credit losses, banks institutions. The assets of thrift institutions are continued to be cautious lenders through the first expected to shrink further in the second half of 1991, half of 1991. However, private borrowers who in large part because of closures by the RTC. turned to securities markets found readier access to Issuance of large time deposits by branches and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 687 2. Economic projections for 1991 and 1992 1. From average for fourth quarter of preceding year to average for fourth 3. FOMC projections are for civilian labor force; Administration projection quarter of year indicated. is for total labor force, including armed forces residing in the United States. 2. FOMC projections are for all urban consumers (CPI-U); Administration projection is for urban wage earners and clerical workers (CPI-W). agencies of foreign banks has moderated, but ? The Committee will want to update its assessment of domestic banks may have a greater appetite for the underlying tendencies in the economy as well as funds during the second half as sound lending in the relations between money and debt expansion opportunities increase with the projected improve- and economic performance. Although the initial ment in the economy. indications of money and credit ranges that are given Even though growth of the aggregate debt of in July always are tentative, flexibility seems all the domestic nonfinancial sectors at midyear was at the more warranted in the current circumstances, with lower end of its current\xh to 8 xh percent monitoring the economy apparently at a cyclical turning point range, the Committee anticipates that the debt and the financial system being buffeted by fundamenmeasure will end the year well within that range. tal change. Stronger private credit demands are expected to arise as the economy grows, and federal borrowing will increase to finance stepped-up RTC activity. Economic Projections for 1991 and 1992 However, debt growth is likely to continue to be damped by the shift in attitudes about leveraging. The target ranges for the monetary aggregates and In setting provisional ranges for 1992, the Com- debt have been selected with the objective of mittee chose to carry forward the 1991 ranges for the supporting a sound economic expansion accompamonetary aggregates and for debt. Recognizing that nied by declining inflation—a pattern the Board the ranges had been reduced significantly over the members and Reserve Bank presidents generally past few years, the Committee at this time believes expect to prevail over the coming year and a half. that expansion of money and debt in 1992 within the Most forecast that real GNP will grow 34 to current ranges probably would be consistent with 1 percent over the four quarters of 1991; given the consolidating and extending the gains toward lower decline during the first quarter, this central tendency inflation that have been made to date, and at the same range for 1991 as a whole implies an appreciable time would provide sufficient liquidity to support a pickup in activity over the remainder of the year. sustainable expansion of economic activity. The The projections of growth in real GNP over the four ranges will, of course, be reevaluated next February quarters of 1992 have a central tendency of 2 XA to in light of intervening economic and financial events. 3 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

688 Federal Reserve Bulletin • September 1991 In appraising the near-term outlook, the FOMC the contribution that can be expected from the participants have placed considerable weight on the external sector. apparent absence of inventory overhangs in most By adopting policies intended to put the economy sectors. Accordingly, the recent firming of aggregate on a path of moderate, sustainable growth, the final demand is expected to bring a halt soon to the Board members and Reserve Bank presidents believe inventory drawdowns that persisted into the second that it will be possible to achieve meaningful progress quarter. The resulting swing in the pace of inventory in reducing inflation over the remainder of this year investment is expected to boost domestic production and into 1992. The central tendency of the projected considerably over the rest of 1991. As typically rise in the total consumer price index is 3% to occurs in the initial stage of a recovery, much of this 3% percent over the four quarters of 1991 and 3 to rise in output is expected to reflect gains in the 4 percent over 1992, well below the 6% percent productivity of existing workers, rather than a rise recorded over the four quarters of 1990. In each marked pickup in employment. Thus, the Board of the prior three years, 1987-89, the CPI rose about members and the Bank presidents project only 4Vi percent. modest progress in reducing unemployment over The common midpoint of the forecast ranges for the second half of the year; the projected central CPI increases in 1991 and 1992,3V2 percent, masks tendency for the civilian jobless rate in the fourth the downtrend in core inflation anticipated over the quarter is 6% to 7 percent. next year and a half. In particular, most of the The pace of expansion may moderate somewhat slowing of inflation observed thus far this year has in 1992 as the initial impetus from the inventory reflected the sharp drop in energy prices and a move swing subsides and gains in production track the toward smaller increases in food prices; excluding growth in final demand more closely. The advance food and energy, the deceleration in the CPI so far in real GNP expected for 1992, though subdued has been relatively small. However, with the relative to that during the early part of most previous tempering of labor-cost increases now under way expansions, is anticipated to reduce the margin of and the reduced pressure on plant utilization, core slack in the economy over the year. The central inflation is expected to recede significantly in coming tendency of the civilian unemployment rate projected quarters. As these declines become widely perfor the fourth quarter of 1992 is 6% to 6Vi percent, ceived, expectations of inflation should moderate, roughly Vi percentage point below the level expected reinforcing the tendencies toward deceleration. By for the fourth quarter of this year. reducing and ultimately eliminating the distortion to Several factors lie behind the expectation of a resource allocation stemming from ongoing, generrelatively mild upswing in economic activity. In real alized price increases, a monetary policy aimed at estate markets, the persistent overhang of vacant achieving price stability over time will enhance the space for many types of buildings, along with economy's potential for growth and thereby will continued caution on the part of lenders, will likely raise standards of living. limit the amount of new construction. In addition, The Administration's economic projections for fiscal policy will remain moderately restrictive 1991, presented in the budget, differ from the because of the federal budget agreement reached last projections of Federal Reserve policymakers mainly fall and efforts by state and local units to correct with respect to expectations for the consumer price serious imbalances in their budgets; although this index. The Administration forecast, at 4.3 percent, fiscal restraint ultimately will strengthen the U.S. is above the central tendency projected by the Fedeconomy by boosting domestic saving and invest- eral Reserve; however, recent statements by Adminment, its near-term effect will be to hold down istration officials suggest that this number will be aggregate demand. Further, with the personal saving lowered in the mid-session update of the budget. The rate already at a low level and some households Administration is somewhat more optimistic than saddled with heavy debt burdens, consumer spend- the FOMC participants about prospects for real ing is projected to grow at a relatively slow pace. GNP growth in 1992; in addition, the Administration Finally, the appreciation of the dollar this year has anticipates an increase in consumer prices next year offset some of the previous declines in relative prices near the upper end of the central tendency forecast of U.S. goods in international markets, thus limiting by the Federal Reserve policymakers. This combi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 689 nation of output and inflation places the Administra- accompanied the swift and successful conclusion of tion's forecast of nominal GNP growth for 1992 the Persian Gulf war. These events, combined with a somewhat above the range of projections by the considerable easing of monetary policy, set the stage FOMC participants. Given the obvious limitations for a recovery, and a few sectors of the economy on anyone's ability to forecast the economic future, actually hit bottom quite early in the year. Notably, these differences certainly cannot be said to be construction of single-family homes, which in past large—and the forecasts do have the important recessions turned up before the economy as a whole, common feature of pointing to a relatively moderate reached its low point in January, as did real consumer recovery, with inflation remaining below the average spending and real personal income. pace of the past few years. And, in light of the Recently, further evidence has emerged to indicate uncertainties attending the behavior of the velocities that economic activity, in the aggregate, stabilized of money and credit in the current period of flux in or began to move up during the second quarter of patterns of intermediation, there appears to be no 1991. Much of this evidence is to be found in necessary inconsistency between the Administra- developments in the labor market. Initial claims for tion's economic forecast and the FOMC's ranges for unemployment insurance—an indicator of the pace money and debt for 1991 and 1992. The FOMC, of of job loss—have fallen from their high level in course, will be reviewing the prospects for the March; employment on nonfarm payrolls edged up, economy, along with those for velocity, when it on balance, over May and June after ten months of reconsiders the 1992 target ranges next February. decline; and the length of the average workweek increased noticeably in May and June. In addition, industrial production advanced in April, May, and PERFORMANCE OF THE ECONOMY June, with the gains being propelled initially by DURING THE FIRST HALF OF 1991 increased output of motor vehicles and parts. Although these indicators are subject to revision and Economic activity contracted appreciably this past thus should be read with considerable caution, the fall and winter. Although the economy had been weight of the available evidence points in the sluggish during the first half of 1990, real gross direction of economic recovery. national product registered a further increase in the The magnitude and length of the recent recession third quarter, and a substantial downturn in activity still are not known with certainty, but the decline in began only after the jump in oil prices that followed real GNP appears to have been considerably smaller Iraq's invasion of Kuwait. With consumer and than the average decline during the previous postbusiness confidence badly shaken and real income World War II recessions; for the industrial sector depressed by the higher oil prices, employment and alone, production dropped 5 percent between the production declined markedly starting in October; peak in September 1990 and the low point in March real GNP fell at a 1.6 percent annual rate in the 1991, compared with an average falloff of nearly fourth quarter. The civilian unemployment rate, 10 percent during previous recessions. The recent which had held around the relatively low level of contraction also seems to have been relatively short 5 lA percent during the first half of 1990, rose by historical standards. Aggregate job losses, howsteadily over the second half, to just over 6 percent at ever, were close to the average in previous recesyear-end. sions, suggesting that firms cut payrolls vigorously The downward momentum in activity carried into in light of the fairly shallow drop in real activity. The the early part of 1991. Industrial production de- resulting rise in the unemployment rate, though, creased through the first quarter, and the shrinkage was damped relative to that during earlier contracof private-sector payrolls continued through April tions, as unusually slow growth of the labor force as firms moved aggressively to reduce inventories held down the number of job seekers; the unemployand trim labor costs in response to the weakening of ment rate in June of this year, 7 percent, was about final demand. However, much of the negative 3A percentage point below the average jobless rate at impetus to activity was reversed by the cumulative the end of previous recessions. drop in oil prices that occurred between October and Consumer price inflation, which exceeded 6 per- February and by the boost in confidence that cent last year, slowed to a 2 3A percent annual rate Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

690 Federal Reserve Bulletin • September 1991 over the first five months of 1991. Consumer energy the spending gains that began in February, the prices fell sharply early this year after soaring average level of outlays in April and May stood during the second half of 1990. In addition, the rate considerably above the first-quarter average. of increase in food prices has retreated this year Among the major components of consumer from the pace registered during the preceding three spending, outlays for motor vehicles and other years. durable goods were cut back sharply as the recession Apart from food and energy, price increases were unfolded. Indeed, between the third quarter of 1990 large early in the year but have been more moderate and the first quarter of this year, real consumer in recent months. In January and February, prices outlays for motor vehicles fell at a 23 percent annual were boosted by hikes in federal excise taxes and rate; the resulting level of such outlays in the first postal rates and by the passthrough of the energy quarter was the lowest recorded since 1984. Substanprice increases in 1990 to a wide range of goods and tial cuts also were made in purchases of nondurable services. With no further increases in these federal goods. In contrast, consumer outlays for services charges and the reversal of energy prices beginning trended up at a pace only slightly below that to show through to other items, the CPI excluding registered during the first three quarters of 1990. food and energy rose much more slowly over the Since the January trough in total consumer outlays, three months ended in May. On balance, over the purchases of both durable and nondurable goods first five months of 1991, this portion of the CPI have turned up. In particular, as of May, real increased a bit more than 5 percent at an annual rate, consumer purchases of motor vehicles had risen about xh percentage point below the trend rate of about 8 percent from the depressed January level; increase as of last summer. In part, the recent separate data on unit sales of new cars and light headway made on inflation reflects the reduction in trucks suggest that further gains were registered in labor-cost pressures that accompanied the rise in June. unemployment. As measured by the employment During late 1990 and early this year, total cost index, compensation per hour increased at an - consumer outlays fell more sharply than they had in average annual rate of 4% percent over the second most previous postwar recessions. The steepness of half of 1990 and the first quarter of this year, the drop this time mainly reflects the unusual compared with the 5lA percent (annual rate) rise weakness in several components of income out of over the first half of 1990. which the propensity to consume is high. Most important, nominal wages and salaries fell more during this recession than would have been expected The Household Sector given the magnitude of the decline in nominal GNP, as firms moved aggressively to control costs by Consumer spending was an area of notable weakness trimming payrolls. In addition, because the percentlast fall and early this year, largely in response to a age of unemployed persons receiving unemployment substantial decline in real income; purchasing power insurance benefits declined during the 1980s, total was cut initially by the jump in oil prices, but it payments to job losers were less than during earlier continued to fall even after oil prices were in retreat, downturns. The weakness in these components of reflecting the ongoing declines in employment. Real nominal income was compounded, in real terms, by consumer outlays dropped sharply between Septem- the spurt in energy prices. ber and January; the monthly pattern of spending Although consumers cut back spending, they was distorted to a degree by tax changes that caused cushioned some of the effect of weak income by some households to shift purchases from early 1991 reducing their savings. After averaging about into late 1990. All told, real consumer spending fell 5 percent over the first half of 1990, the personal at a 1 Vi percent annual rate in the first quarter, after a saving rate dropped to 4.2 percent in the third 3 Vi percent (annual rate) decline in the fourth quarter quarter and remained at that level through the first of 1990. However, in February, real income turned quarter of this year. The decline in the saving rate up and consumer confidence rebounded late in the occurred despite some deterioration, on net, in month with the end of the Gulf war; both develop- wealth positions during the second half of 1990, ments bolstered consumer spending. As a result of which reflected the softening of house prices and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 691 losses in the stock market. The average level of the number of markets, improved prospects for employsaving rate dropped another notch in the spring, to ment and income, and some reduction in mortgage about 3% percent. The bounceback in the stock rates from those prevailing in the middle of last year. market and the improvement in confidence may Recent survey results show a more favorable attitude have contributed to the decline in saving, but the toward homebuying among consumers than at any explanation also could involve the reduction in other time since 1988. Reflecting this shift in personal interest income associated with the lower- sentiment, sales of existing homes have risen ing of short-term interest rates between last fall and substantially from their low in January. Although this spring. Historically, consumer spending has sales of new homes have been less impressive, the been rather insensitive to movements in interest higher level prevailing since February has reduced income, so that a decline in such income causes the considerably the inventory of unsold new homes saving rate to fall in the short run. That said, the relative to sales; in response, home builders have saving rate is now at the lowest level since late boosted production to satisfy consumer demand. 1987, and it would not be surprising if, in the near Despite continued lender caution about granting term, gains in consumer spending lagged increases land-acquisition and construction loans, the quantity in income as households worked to rebuild net of financing available appears sufficient, on balance, worth. to support a further recovery in this sector. The recession placed some strains on household In contrast, the market for multifamily housing finances, as indicated by the increase in delinquency has continued to weaken this year. Starts in May rates for all types of consumer loans during the first were at the lowest monthly level since the 1950s. quarter. By far the sharpest rise was for credit card Moreover, even with the greatly reduced pace of debt; in fact, the first-quarter delinquency rate was new construction in recent years, the vacancy rate close to the highest on record. This jump partly for multifamily units has remained exceptionally reflects the relaxation of credit standards by major high. Given current conditions in the market, both card issuers in recent years; at the same time, lenders and potential investors recognize that the relatively low risk borrowers who have access to number of viable projects is quite limited. home equity lines of credit evidently have reduced their reliance on credit cards. Because of the resulting deterioration in the quality of the pool of The Business Sector credit card users, the rise in delinquencies for this type of debt probably overstates the degree of stress During the latter part of 1990 and the first quarter of in the household sector as a whole. For other types of this year, the business sector experienced considerconsumer loans, the first-quarter delinquency rates able stress. Demand for business output was dewere not out of line with those typically seen during pressed both by the loss of domestic purchasing recessions, despite the currendy high level of debt power and by the enormous uncertainties created by relative to disposable income. Apparently, the rise the situation in the Persian Gulf. In response to the in asset values during the 1980s left most households slump in demand, industrial production turned with sufficient wherewithal to cover the expanded downward last October; it continued to fall through level of debt. Thus, although the recession has March. In most industries, the combination of weakened the financial position of the household plummeting sales and rising energy prices caused sector, the situation does not appear worse than that profit margins, which were already slim, to shrink at the end of other downturns. further during the second half of 1990. In the first Residential construction activity, which had been quarter of 1991, before-tax profits from current trending lower since 1986, slumped further in the operations of U.S. corporations edged down from second half of 1990. However, the market for the low fourth-quarter level. single-family homes bottomed out in January of this An unusual feature of the recent recession was the year and has staged a mild recovery since then, speed with which producers cut output to avoid a spurred by a firming of demand. Several factors buildup of inventories. The promptness of this account for the pickup in demand, including the adjustment likely reflected a combination of factors. decline in home prices to more affordable levels in a The downturn in final demand was widely antici- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

692 Federal Reserve Bulletin • September 1991 pated, and some producers cut output preemptively 20 percent, after smaller declines during the prerather than risk being saddled with excessive stocks. ceding five quarters. Real business outlays for motor In addition, improved systems for monitoring and vehicles were cut at nearly a 35 percent annual controlling inventories, which have been installed in rate in the first quarter, sinking to the lowest level recent years, enabled firms to react quickly to signs since mid-1983. Purchases of computers and other of slowing demand. Further, the relatively heavy information-processing equipment also were scaled debt burdens in the corporate sector created substan- back during the first quarter, and outlays for aircraft tial financial pressures for many firms and focused edged down, after jumping 60 percent over the attention on the need to cut costs. preceding year. Accordingly, inventories were run off at a rapid The pace of nonresidential construction fell clip beginning late last summer. Automakers slashed substantially during the fourth quarter of 1990 and production and inventories particularly aggres- the first quarter of 1991. The decline was broadsively; domestic output of motor vehicles in the first based, with the steepest contraction for office and quarter of 1991 was nearly 30 percent below that in other commercial buildings. Activity in this sector the third quarter of 1990. The resulting drawdown actually peaked in 1985 and has trended lower since of inventories at auto dealers accounted for fully then in response to persistently high vacancy rates one-half of the total liquidation of nonfarm stocks and the removal of important tax benefits. In the during the fourth quarter and the first quarter. industrial sector, the rate of plant construction has Despite production cutbacks by the automakers and been damped by the emergence of substantial excess other producers, the inventory-to-sales ratio for capacity in a number of major industries. Petroleum total manufacturing and trade moved up through drilling activity, which moved up a bit late last year, January. However, by May, the ratio had retraced retreated during the first quarter with the price most of the run-up that began with the onset of the declines for crude oil and natural gas; data on recession, reflecting the continued liquidation of drilling rigs in use indicate a further weakening of stocks and an upturn in sales. activity during the second quarter. Inventories in most industries appear now to be Business spending for new equipment typically reasonably well aligned with sales, and output has does not turn up until several months after the end of begun to rise with the expansion of final demand. a recession, and the lag for construction outlays is After reaching a trough in March, industrial produc- often substantially longer. As yet, there is little sign tion expanded over the next three months at an of a rebound in spending for either equipment or annual rate of more than 7 percent; although stronger nonresidential structures. Nonetheless, shipments output of motor vehicles and parts accounted for of industrial equipment and other nondefense capital most of the increase early in the second quarter, the goods—a coincident indicator of equipment spendgains in recent months have been more widespread. ing—have stabilized in recent months. Similarly, Orders for a range of manufactured goods firmed in although vacancy rates for commercial buildings April and May, pointing to a further pickup in remain high, the steepest declines in total nonresiproduction during the summer. dential construction activity may be over; in April Business spending for fixed investment was flat in and May, the average level of activity was about real terms during the fourth quarter of last year and unchanged from the first-quarter average, and the dropped sharply during the first quarter of this year. downtrend in forward-looking indicators, such as Several factors worked to reduce outlays, including construction contracts and permits, has slowed the easing of pressures on capacity, the diminished considerably. level of cash flow, and the general atmosphere of uncertainty related to events in the Persian Gulf. Real spending for equipment plunged during the The Government Sector first quarter; measured in percentage terms, the decline was the sharpest quarterly falloff recorded in The federal budget deficit over the first eight months nearly eleven years. Reflecting the difficulties in the of fiscal year 1991 was $175 billion, compared with manufacturing sector, real spending for industrial a $151 billion deficit during the same part of fiscal equipment dropped at an annual rate of more than year 1990. The deficit during the current fiscal year Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 693 has been boosted considerably by the slowdown in nondefense purchases fell somewhat on net, pushed economic activity, and this cyclical increase has down by sales of oil from the Strategic Petroleum masked the fiscal restraint imposed by last autumn's Reserve. Over the rest of 1991, fiscal policy likely budget agreement. On the revenue side, federal tax will be a restraining influence on the economy receipts have been held down by the anemic growth because of the spending limits and tax increases of nominal income since last fall; indeed, personal mandated by last fall's budget agreement. income tax payments so far this fiscal year are little The fiscal position of state and local governments changed from the payments made during the same has remained extremely weak in recent quarters. period a year earlier. The slowdown in activity also The deficit in operating and capital accounts (that is, has raised the deficit by increasing outlays for the deficit excluding social insurance funds) stood income-support programs such as unemployment above $40 billion at an annual rate in both the fourth insurance, food stamps, and Medicaid. These effects quarter of 1990 and the first quarter of 1991, after of the contraction have been offset, to some degree, holding at a $30 billion rate for a year. The recent by the easing of short-term interest rates, which has increase in the state and local deficit reflects, for the restrained the growth of interest payments on the most part, a cyclical shortfall in tax receipts. Howfederal debt. ever, this cyclical effect overlays structural imbal- Although the deficit has increased during the ances that have been growing for some time. Since current fiscal year, the increase has been far smaller mid-1986, when the sector's accounts (excluding than that projected roughly six months ago. At that social insurance) were roughly in balance, outlays time, the Administration and the Congressional have risen from about 13 lA percent of nominal GNP Budget Office both estimated that the deficit for to 141/2 percent while revenues have held fairly fiscal year 1991 would top $300 billion. Two steady relative to GNP. The rise in the spending developments have caused the 1991 deficit to be share reflects an expansion of services largely related lower than was expected, though neither one to rapid growth in public school enrollments, prison indicates any fundamental improvement in the populations, and Medicaid expenses. budget situation. First, cash contributions from our During the past year, state and local governments allies in Operation Desert Storm have exceeded the moved to address their mounting fiscal difficulties. outlays made to date for U.S. involvement in the Many governments trimmed outlays relative to Persian Gulf. The contributions not yet spent will be earlier trends. Between the first quarter of 1990 and used to pay for the replacement of munitions into the first quarter of 1991, real purchases by state and fiscal 1992 and beyond. Second, federal outlays local governments rose only about 1 percent, well related to deposit insurance were well below below the 3V2 percent annual rate of increase expectations during the first quarter, mainly reflect- averaged over 1985-89. Moreover, last year several ing the slow pace at which insolvent thrift institu- states instituted broad-based hikes in personal tions were resolved. The activities of the RTC income and sales taxes. Looking ahead, state budgets during that period apparendy were hindered, in for fiscal year 1992—which began on July 1 for all part, by a lack of funding; legislation providing but four states—generally mandate significant furadditional funding was enacted in late March, and ther cost-cutting from earlier plans. On balance, the RTC has scheduled more rapid resolutions over these budgets point to a weak picture for real state the rest of the year. and local purchases over the current calendar Federal purchases of goods and services, the part year. Supplementing this restraint on spending, of federal spending that is included directly in GNP, many new budgets include a second wave of major rose 5 lA percent in real terms over the four quarters tax increases. of 1990. This increase reflected the fourth-quarter rise in defense purchases to support operations in the Persian Gulf, as well as increases over the year in The External Sector such nondefense programs as law enforcement, space exploration, and health research. In the first Over the first half of 1991, the foreign exchange quarter of 1991, real defense purchases moved value of the dollar appreciated about 15 percent, on above the already high fourth-quarter level, while balance, in terms of the currencies of the other Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

694 Federal Reserve Bulletin • September 1991 Group of Ten (G-10) countries. The net appreciation Real merchandise imports declined in the first over this period reversed about two-thirds of the quarter to a level about 5 percent below that in the decline in the dollar that had occurred between the third quarter of 1990, with the drop largely reflecting middle of 1989 and the end of 1990. the weakness in domestic demand. Import volumes In early January, the dollar was boosted by fell in the first quarter for a wide range of non-oil investors seeking a safe haven against the backdrop products, including consumer goods, motor vehiof growing tensions in the Persian Gulf. However, cles, and industrial supplies. Preliminary data for once the Allied bombing campaign commenced and April show some increase in non-oil imports, a was perceived as going well, part of the safe-haven pattern that is likely to continue with the apparent demand for dollars evaporated, and the currency firming of domestic activity. The quantity of oil resumed its earlier declLie. Between mid-January imports-which plunged after the spurt in oil prices and early February, the dollar fell about 4 percent last summer and remained relatively low early this against the currencies of the other G-10 countries. year—has moved back up in recent months, reflect- During this period, U.S. monetary authorities joined ing efforts to rebuild U.S. petroleum inventories. with foreign central banks to support the dollar. Merchandise exports continued to move higher Subsequently, the dollar surged through the end of through the spring, a factor that clearly tempered the March, largely reflecting the quick end of the war output loss in manufacturing after the oil shock last and the resulting expectation of an early rebound in year. In real terms, merchandise exports rose at a the U.S. economy. The sharp run-up prompted 10 percent annual rate between the third quarter of official sales of dollars during March and April, 1990 and the first quarter of this year, led by mainly by European authorities. After dropping increased sales of computers, other capital goods, back a bit, the value of the dollar rose again in June and industrial materials. Preliminary data indicate on the accumulation of evidence suggesting that the that merchandise exports rose again in April. The U.S. recession had ended. competitive position of U.S. companies has bene- On a bilateral basis, the dollar this year has fited, at least until quite recently, from the substantial appreciated about 20 percent against the German drop in the dollar over 1990 and the latter part of mark and by similar amounts against the European 1989. However, recessions in the economies of currencies associated with the mark. The weakness some of our major trading partners, especially of these currencies partly reflects economic difficul- Canada and the United Kingdom, have offset part of ties in Germany and the spillover effects of the the stimulus to U.S. exports provided by the rapid turmoil in the Soviet Union and Yugoslavia. In economic growth in such countries as Germany, contrast, the dollar has appreciated much less against Japan, and Mexico. the currencies of most of our other major trading The merchandise trade deficit narrowed to $74 bilpartners. So far this year, the dollar has risen less lion (at an annual rate) in the first quarter of 1991, than 5 percent, on balance, against the Japanese yen compared with $111 billion in the fourth quarter of and has changed even less against the currencies of 1990; the first-quarter deficit was the smallest since Canada, Korea, Singapore, and Taiwan. mid-1983. The current account actually recorded a The overall strengthening of the dollar this year $41 billion (annual rate) surplus in the first quarter, a has acted to restrain prices for non-oil imports. Over sharp improvement over the $94 billion deficit in the the first quarter of 1991, these prices rose at a fourth quarter of 1990. Most of this improvement 2Vi percent annual rate, less than half the rate of reflected unilateral transfers associated with Operaincrease between June and December of 1990; tion Desert Storm: The fourth-quarter deficit was non-oil import prices then fell during April and boosted by a grant from the U.S. government to May, more than reversing the entire first-quarter Egypt for the purpose of repaying outstanding loans, rise. The price of imported oil, which surged while cash payments to the United States from our between August and October of last year, has since coalition partners surged in the first quarter. Excludretraced most of the rise induced by the Iraqi invasion ing these cash contributions and the special grant to of Kuwait. Taken together, these two developments Egypt, the current account moved from a deficit of have contributed significandy to the restraint on $83 billion in the fourth quarter to a deficit of domestic inflation. $50 billion in the first quarter. 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Monetary Policy Report to the Congress 695 A small net capital inflow was recorded in the first average in the other recessions after World War n, quarter of 1991, as an increase in foreign official three industries had abnormally large job losses: holdings of reserve assets in the United States more construction; retail and wholesale trade; and finance, than offset a net outflow of private capital. Within insurance, and real estate. The steep decline in the private-sector accounts, there was a substantial construction employment likely reflected the unusucapital outflow in the first quarter associated with ally sharp falloff in office and other commercial U.S. direct investment abroad, the bulk of which construction, which compounded the normal cyclical was in the countries of the European Community; at contraction in residential building. In the trade the same time, capital inflows related to foreign sector, employment was depressed by the sizable direct investment in the United States fell to a low decline in consumer spending and the high degree of level. Increasingly, multinational firms have raised financial distress among retailers, some of whom funds in the United States to finance direct investment were burdened with heavy debt-servicing costs as a here and elsewhere, taking advantage of the low result of leveraged buyouts. Employment in finance, U.S. interest rates relative to those in other industrial insurance, and real estate-which continued to rise nations. With regard to other private transactions, during past recessions—edged lower this time, banks reported a small net capital inflow in the first reflecting the shakeout in the financial sector and quarter, and net purchases of U.S. securities by spillovers from the slump in real estate markets. In private foreigners about matched U. S. net purchases contrast, the decline in manufacturing payrolls was of foreign securities. somewhat smaller than in previous contractions, The net capital inflow during the first quarter, largely because the drop in industrial production when combined with the surplus on current account, was relatively shallow. Employment in the services implies a large negative statistical discrepancy in the industries continued to trend up during late 1990 international accounts. Nearly as large a discrepancy and early 1991, as it had in previous recessions, in the opposite direction was registered in the fourth supported entirely by gains in health services. quarter of last year. These wide swings in the Although the size of the drop in private nonfarm statistical discrepancy, along with the huge size of payroll employment was similar to that in previous the discrepancy for 1990 as a whole, cast doubt contractions, the decline in real GNP during the on the accuracy of both the capital account and current episode was relatively small. This contrast current account data used in the U.S. international confirms the widespread impression that firms shed accounts and highlight the need to improve these workers to an unusual degree during the recent data. downturn. At the same time, the rise in the civilian unemployment rate from 5.5 percent in July 1990 to 7 percent this June was not particularly large relative to the decline in real GNP. Apparently, an unusual Labor Markets proportion of people who lost jobs subsequently dropped out of the labor force and thus were no Labor demand appears to have stabilized after longer counted as unemployed. In addition, the contracting sharply during the latter part of 1990 and muted rise in unemployment and labor-force size the early part of this year. Employment on private during recent quarters may be part of a longer-term nonfarm payrolls peaked last June, edged lower deceleration in the rate at which women—especially through September, and then fell substantially in younger women—have entered the labor market. each month from October through April. However, For this latter group, there has been a shift toward the most recent data show that payrolls expanded additional school attendance and toward staying at slightly on balance over May and June, and survey home to care for young children. By reducing the results suggest that firms intend to increase employ- number of new job seekers at a time when jobs were ment further in the third quarter. quite hard to find, this shift held down the rate of unemployment. The cumulative decline in private nonfarm employment through April was slightly more than A variety of indicators suggest that labor demand IV2 million jobs, roughly a 1.7 percent drop. has stabilized in recent months. Perhaps the earliest Although that percentage decline is close to the signal of this improvement was provided by the data Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

696 Federal Reserve Bulletin • September 1991 on initial claims, which peaked at a weekly rate of Output per hour in the nonfarm business sector 535,000 in March and then dropped back to about was essentially flat, on balance, over the year ended 470,000 in April; the pace of weekly claims has in the first quarter of 1991, after declining during since moved considerably lower. Employment on 1989 and the early part of 1990. This pattern differed private nonfarm payrolls rose in May, the first somewhat from the usual cyclical experience. increase since the middle of 1990. Although part of Typically, productivity continues to rise until shortly this gain was reversed in June, firms continued to before the business-cycle peak, then turns down and lengthen the average workweek of their employees. falls sharply through the early part of the ensuing This pattern of cautious hiring combined with an recession. Productivity during this episode declined extension of the workweek is common in the early well before the cyclical peak last summer, as output stage of a recovery; given the expenses associated growth slowed, and firms continued to hire at a with hiring and firing, such a strategy is a natural relatively rapid pace. However, as demand softened response to uncertainty about the strength and at the peak, firms began to trim payrolls, and this duration of the pickup in demand. A separate pruning continued in an aggressive fashion through measure of employment, derived from a survey of the recession; as a result, output per hour was better households, also suggests that labor demand has maintained during the 1990-91 contraction than stabilized; the number of persons reporting them- during previous downturns. In manufacturing, selves as employed was about flat, on balance, over where competitive pressures have been particularly the second quarter, after falling sharply over the intense, the process of cutting payrolls began well three preceding quarters. Although the civilian before the onset of recession, and this early action unemployment rate did continue to inch up over the allowed productivity gains to remain robust over the second quarter, this increase is not too surprising, as year leading up to the contraction. Although producthe jobless rate often increases during the first tivity in manufacturing turned down during the several months of a recovery. With the brightening recession, the continued cutting of factory jobs kept of employment prospects, job seekers enter the the drop in output per hour relatively small by labor force at an increasing rate, raising unemploy- historical standards. ment until hiring accelerates enough to outstrip the growth in labor supply. The slack opened up in labor markets since last Price Developments summer has helped damp the rate of increase in labor costs, which had trended higher between the end of Inflation pressures have eased somewhat this year. 1987 and the middle of 1990. As indicated by the Most of last year's spike in energy prices has been employment cost index (ECI), increases in compen- retraced, and the rate of increase in food prices has sation per hour for private industry workers acceler- slowed. In addition, the margin of slack in labor and ated from 3% percent during 1987 to about a product markets that emerged during the recession 5 % percent annual rate during the first half of 1990; is placing downward pressure on price increases for this measure of labor costs covers both wages and other goods and services; this trend toward slower payments for worker benefits. The most recent ECI "core" inflation, however, was obscured early in the data show that compensation costs rose at an average year by a number of price increases that either were annual rate of 4% percent over the second half of one-time events or have since been reversed. 1990 and the first quarter of 1991, a full percentage The Iraqi invasion of Kuwait last August precipipoint below the peak rate recorded early last year. tated a sharp rise in oil prices that carried through to Although this slowing of labor-cost inflation was early October. At that point, the posted price of West apparent in both wages and benefits, the latter Texas Intermediate oil, the benchmark for U.S. component of compensation decelerated the most crude prices, reached nearly $40 per barrel, more sharply, reflecting declines in nonproduction bo- than double the $16 price prevailing just three nuses and pension contributions per hour of work. months earlier. Then, between October and Febru- However, employer costs for insurance, mainly for ary, virtually all of this price spike unwound, chiefly health insurance premiums, continued to rise at as a result of two developments. Saudi Arabia and close to double-digit rates. other oil producers boosted output to offset the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 697 embargo on Iraq and Kuwait, and the Allied forces ments that have raised prices for fresh fruits and demonstrated that they could prevent significant vegetables; given the short production cycles for disruptions to supply. In addition, prices were many of these products, the recent price increases damped by the slowdown in economic activity in the should be reversed, at least in part, in coming United States and other industrial nations. After the months. end of hostilities in February, OPEC sought to The consumer price index for items other than bolster prices by trimming production. This effort food and energy rose sharply during January and proved to be largely successful: The posted price of February, but the jumps in those months reflected a West Texas Intermediate firmed to $20 per barrel in number of one-time or transitory increases. Higher April and has changed little on balance since then. federal excise taxes on cigarettes and alcoholic Energy prices for consumers have followed the beverages went into effect, raising consumer prices movements in world oil prices since last summer. for both items; these tax hikes supplemented the The CPI for energy peaked in November 1990 at a increases in sales and excise taxes that a number of level 15 percent above that in July and then fell states have imposed over the past year. Postal rates sharply through the first quarter of this year. By also were raised 16 percent in February. Apparel April, the decline in crude oil prices had been fully prices climbed at double-digit annual rates in both passed through to energy prices at the retail level. In January and February, mainly because of the earlier- May, consumer energy prices edged back up, mainly than-usual introduction of spring clothing lines, reflecting price increases for gasoline, the largest which was not anticipated by the seasonal adjustment component of the CPI for energy. Gasoline demand factors used by the Bureau of Labor Statistics. More this spring apparently was stronger than refiners had generally, the spurt in oil prices last fall spilled over expected, and inventories fell to exceptionally low through early 1991 to prices for a wide range of levels. Along with the tight inventory situation, non-energy goods and services; this pass-through retail gasoline prices may have been boosted by the occurred via higher shipping costs and price hikes mandatory switch to cleaner—and more expensive— for petroleum-based components. However, each of gasoline before the summer driving season. How- these factors boosting inflation proved to be shortever, as of early June, gasoline inventories had lived. After the large increases in January and moved back into the normal seasonal range, and February, the CPI excluding food and energy rose at survey data suggest that pump prices softened during just a 2 lA percent annual rate between February and the second half of June and into early July. May. Apparel prices declined over this period, and airfares—which are quite sensitive to changes in oil Increases in consumer food prices this year have slowed from the 5lA to 5V2 percent range that prices—fell 10 percent (not an annual rate). prevailed over the preceding three years. During the The uneven pace of inflation this year has tended first five months of 1991, the CPI for food rose at to obscure trends in the general level of retail prices. only a 3lA percent annual rate, held down in large Nonetheless, there is little doubt that the underlying part by price declines for dairy products and by pace of inflation has moderated since last year. The roughly stable prices on balance for meat, poultry, twelve-month change in the CPI excluding food and and eggs. Following the typical pattern in agricul- energy—which held around 4Vi percent throughout tural cycles, prices for these livestock products have 1988,1989, and the early part of 1990-moved up to been damped by an expansion of supply that was about 5V2 percent in August 1990. By May of this itself spurred by the relatively high prices of recent year, the twelve-month change in this index had years. In addition, price increases have been muted fallen back to 5.1 percent. This figure slightly for many foods for which labor and other nonfarm overstates the trend rate of inflation because it inputs represent a large share of total cost. For includes the increases in federal excise taxes and example, the prices of food consumed away from postal rates earlier this year; in addition, the passhome rose at a 3 XA percent annual rate over the first through of lower energy prices to non-energy items five months of 1991, down from the 4lA percent probably was not complete as of May. Adjusting for increases over 1989 and 1990. The deceleration in both these factors would put the twelve-month food prices this year would have been somewhat change in the CPI excluding food and energy a bit greater but for a series of adverse weather develop- below 5 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

698 Federal Reserve Bulletin • September 1991 Price developments at earlier stages of processing attitude toward additional debt by both borrowers have been favorable this year, reflecting the easing and lenders. As the monetary aggregates accelerated of capacity pressures and price declines for petro- and signs accumulated that the economy was chemical products. The producer price index for bottoming out, the pace of policy easings slowed, finished goods excluding food and energy rose at a and the last such move was made at the end of April. 3% percent annual rate over the first six months of Despite the drop in short-term interest rates, 1991, a bit below the pace in 1990. Prices for long-term rates were mixed, on balance, over the intermediate materials excluding food and energy first half of the year. In the wake of the rapid fell about IV2 percent at an annual rate between conclusion of the Gulf war, expectations became December and June. Spot prices of raw industrial widespread that there would be a strengthening in commodities plunged late last year with the down- aggregate demand, and this tended to push yields on turn in economic activity, and these prices moved Treasury bonds a litde higher and contributed to an down somewhat further on balance over the first half increase in the foreign exchange value of the dollar. of 1991. With the blighter outlook for the economy, however, the risk entailed in holding private obligations was seen as considerably reduced, and yields on MONETARY AND FINANCIAL DEVELOPMENTS corporate bonds fell and stock prices rose. How- DURING THE FIRST HALF OF 1991 ever, substantial loan losses continued to afflict many financial intermediaries, and these institutions The progressive easing of money market conditions maintained cautious attitudes toward extending new initiated last fall as the economy weakened continued loans; the caution was reflected in wide spreads of through much of the first half of 1991. Since the end lending rates over borrowing rates and more of last year, open market operations, in combination stringent nonprice terms on credit. with two cuts of Vi percentage point in the discount rate, have reduced the federal funds rate from 7 percent to 5 3A percent—the lowest level in well Implementation of Monetary Policy over a decade. These moves followed a number of easings in the final months of 1990, including a The Federal Reserve adjusted policy in three Vi point reduction in the discount rate in December, separate steps during the first quarter of the year, that already had brought the federal funds rate down extending the series of moves initiated during the about 1 percentage point. As a consequence of these final months of 1990. Amid signs of continuing steep and earlier actions, the federal funds rate has declines in economic activity and abating inflation declined 4 percentage points from its most recent pressures, the Federal Reserve eased reserve provipeak in the spring of 1989. sion through open market operations in January and The policy easings this year were undertaken to again in early March, leading to a decline in the foster a turnaround in the economy and to help federal funds rate of a quarter point each time, and ensure a satisfactory expansion. They were prompted reduced the discount rate VI percentage point on February 1, resulting in a similar-sized decline in by evidence that the economy was declining further the federal funds rate.2 The monetary aggregates and that inflationary pressures were abating; early in were very weak in January, and while strengthening the year, continuing weakness in the monetary considerably in February and early March, remained aggregates and further restraint on credit availability, on a moderate growth track, especially taking into especially at banks, also were important indications consideration the lack of expansion late in 1990. of the need for additional policy easing. Policy actions led to a strengthening of money growth over the first half from the slow pace of earlier quarters, 2. The federal funds rate came under some upward pressure and both M2 and M3 in June were in the middle during much of January, as reduced levels of required reserve portions of their annual target ranges. The debt balances at Federal Reserve Banks complicated commercial aggregate, by contrast, expanded at the lower end of banks' reserve management. Required reserves were low partly because of the effects of the cut in reserve requirements on its monitoring range throughout the first half, held nonpersonal deposits in December and partly because of seasonal down by sluggish spending and also by a cautious variations. For some banks, balances held in accounts at Reserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 699 3. Growth of money and debt Percent Annually, fourth quarter to fourth quarter 1980 198 1 1982 1983 1984 1985 1986 1987 1988 1989 1990 Semiannually (annual rate) 3 1991 Quarterly (annual rate) 4 1991:1 1. From average for fourth quarter of preceding year to average for fourth 3. From average for fourth quarter of 1990 to average for second quarter of quarter of year indicated. 1991. 2. Adjusted for shift to NOW accounts in 1981. 4. From average for preceding quarter to average for quarter indicated, e Partially estimated. Other short-term rates generally fell about a In March, however, long-term market rates began percentage point over this period. TTie commercial to firm, reflecting the rebound in consumer confibank prime loan rate was reduced xh percentage dence and initial indications of a turnaround in the point in early January in lagged response to earlier housing market, which were seen as pointing to a declines in short-term rates. The drop apparently somewhat shorter and milder recession than many had been delayed as banks attempted to hold down had previously feared. Rate increases on private loan growth as 1990 drew to a close, bolstering their instruments were muted, though, as risk premiums capital positions in response to market concerns and began to shrink in response to brightening prospects the initial phase-in of risk-based capital require- for a recovery. These gains extended even to belowments. The prime rate was reduced again after the investment-grade bonds, and growing optimism was cut in the discount rate in early February. reflected as well in a strong stock market in February Longer-term rates also fell, on balance, over the and into March. The debt and equity instruments of first two months of the year, under the influence of banks generally outperformed broader indexes over monetary easings and prospects for lower inflation, this period, as the market apparently expected banks' especially when it became clear that the Gulf war earnings to be bolstered by lower short-term interest would not interrupt oil supplies. Initial success in the rates and the deterioration in the quality of their loan Persian Gulf also led briefly to weakness of the portfolios to be limited as the anticipated economic dollar in foreign exchange markets, as safe-haven recovery materialized. Better prospects for a U.S. demands that had been boosting its value since late economic recovery about coincided with a turn 1990, in the face of a substantial easing of U.S. toward more pessimism about the economic outlook monetary policy, evaporated. abroad. As a result, the exchange value of the dollar reversed, and the dollar began to appreciate sharply. Banks threatened to fall below prudent clearing levels. To avoid In the wake of the successful Gulf war and in view overnight overdrafts, banks markedly raised holdings of excess of initial signs that the System's earlier easing actions reserves and borrowed sporadically at the discount window. But with maintained balances still low relative to clearing needs, the had begun to take hold, the FOMC concluded at its volatility of the federal funds rate increased. As banks became meeting in late March that the risks to the economy more accustomed to operating with lower levels of required had become more evenly balanced. Accordingly, reserves and as these reserves subsequently rose for seasonal reasons, reserve management problems eased, and the volatility the Committee decided to end the formal tilt toward of the federal funds rate diminished. The upward pressures on ease that it had adopted in mid-1990, when slowing the funds rate in January did not show through to other shortmoney growth and tightening credit availability term rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

700 Federal Reserve Bulletin • September 1991 aroused concerns that financial conditions might be activity, expansion of the monetary aggregates in the placing greater-than-anticipated restraint on eco- first half of 1991 picked up from the lackluster pace nomic activity. Under the previous instructions, the of late 1990, and M2 and M3 grew at annual rates of FOMC's directive to the domestic trading desk at the 3% and 2 lA percent respectively, from the fourth Federal Reserve Bank of New York had stipulated quarter of last year through June. M2 growth that possible adjustments to reserve pressures increased as policy actions reduced short-term between Committee meetings would be more respon- market interest rates relative to returns that could be sive to unanticipated signs of economic weakness earned on assets in this aggregate (a decline in the and abating price pressures than to unexpected "opportunity cost" of holding M2). As a conseevidence of strength. The directive issued at the quence, expansion of M2 exceeded the growth of March meeting restored symmetry to these instruc- nominal GNR However, the growth in M2 (and tions concerning intermeeting adjustments. decline in its velocity) was smaller than would have Interest rates generally declined during April, been expected on the basis of past relationships with mainly at the short end, reflecting market partici- income, interest rates, and opportunity costs. This pants' disappointment that the response to earlier shortfall of M2 growth from historical patterns monetary easings and to the rebound in consumer followed an even greater discrepancy in 1990. confidence they had expected had yet to show The tepid response of M2 to declines in interest through in measures of economic activity. At the rates may partly reflect reduced funding needs at same time, with evidence also continuing to point to depositories associated with weak credit growth. As a further abatement of inflation, particularly as discussed below, commercial bank credit expanded reflected in wage behavior, the Federal Reserve at sluggishly over the first half of 1991, and thrift the end of April reduced the discount rate another institution balance sheets continued to contract. In xh percentage point, allowing about half that amount these circumstances, depositories may well have to show through to money market rates. As was the been less aggressive in supplying retail deposits; case in February, this action was followed by a although rates on these deposits do not appear on the xh percentage point decline in the bank prime rate. surface to have fallen unusually rapidly, institutions Despite further monetary ease, the dollar continued may have acted in other ways to reduce the cost of to rally on foreign exchange markets, in part boosted funds, including adjusting advertising and marketing by political developments abroad, particularly in the strategies. On the demand side, growth in M2 Soviet Union, and potential economic difficulties in appears to have been held down early in the year by Germany. the public's concerns about depository institutions; Market interest rates were little changed until purchases of Treasury securities through noncomearly June, when they rose in response to the release petitive tenders were especially heavy in January. of data on employment and retail sales for May that As the turnaround in the economy seemed in strongly suggested the trough of the recession had prospect, bank access to both deposit and capital been reached, or at least was close at hand. The markets improved greatly. Later, in the second ensuing rise in interest rates was particularly sharp quarter, a slowdown in M2 growth appeared to be at the long end of the Treasury market. As signs of partly related to the developing configuration of the recovery grew more distinct and interest rates returns on assets. Maturing small time deposits firmed, the dollar strengthened further, and by June could be rolled over only at much lower rates at the it had retraced all its declines of late 1990 and early same time the steep upward slope of the yield curve 1991. On balance, Treasury bond yields rose almost seemed to offer an opportunity to preserve high % percentage point over the first half of 1991, while yields by moving into capital market instruments. yields on investment-grade corporates were down For example, expansion of stock and bond mutual close to Vi percentage point. funds was quite strong over the second quarter. In addition, with returns on M2 assets falling steeply relative to rates charged on loans, households had a Monetary and Credit Flows greater incentive to finance spending by holding down the accumulation of M2 assets rather than by taking on new debt. Despite the continuing weakness in economic Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 701 The decline in market interest rates also promoted ture and must be replaced with lower-yielding a marked shift in the composition of M2 toward its instruments. liquid household deposit components—other check- M3 was about flat between March and June. Shifts able deposits, money market deposit accounts, and of foreign bank liabilities toward large time deposits savings deposits. As is typically the case, offering slowed, large time deposits at domestic depositories rates on these deposits adjusted very slowly to the ran off more rapidly with a contraction of their drop in market rates. As their opportunity costs credit, and money funds decelerated as their yields declined, these deposits accelerated, expanding at came into line with market rates. double-digit rates over the first half. Small time Bank credit expanded very slowly during the first deposits, by contrast, contracted over the period as half of 1991 and was concentrated in acquisitions of some of the proceeds of maturing instruments securities, particularly Treasury and agency securievidently were shifted into liquid components of M2 ties. As in 1990, the recent strength in acquisitions and depositors hesitated to commit currendy gener- of these securities is due in part to their favorable ated savings at available time deposit rates. The treatment under risk-based capital requirements. strength in other checkable deposits contributed to a Mainly, however, it reflects the impact on loan strong first-half advance in Ml. In the first quarter, growth of weaker spending by potential borrowers this aggregate also was boosted by a surge in cur- and continued lending restraint by banks. A substanrency stemming from rising demand abroad, partic- tial proportion of bank lending officers, citing heightularly the Middle East. Reflecting the strength in ened uncertainties about the economy and, in many currency and in other checkable deposits, the mone- cases, weak capital positions, reported implementing tary base expanded over the first half at an 8V2 per- still more restrictive lending policies in a Federal cent annual rate, more than twice the pace of M2. Reserve survey conducted early in 1991. Evidence Growth of M3 over the first half of 1991 was of tightening continued into May, although the perconcentrated in the early months of the year, when it centage of surveyed banks that reported additional received a considerable boost from heavy issuance tightening declined, perhaps in part because of the of large time deposits by U.S. branches and agencies more favorable market environment that had develof foreign banks. The issuance of these "Yankee oped from earlier in the year and that had allowed CDs" resulted from the reduction in December of banks to issue large volumes of debt and equity. the reserve requirement on nonpersonal time de- The asset-quality problems that dogged banks in posits and net Eurocurrency deposits from 3 percent 1990 continued to crop up in the first half of 1991. to zero. Previously, branches and agencies had been Available data on delinquency rates show further able to borrow a limited volume of funds from their increases in the first quarter, for both commercial head offices without becoming subject to reserve real estate and other business credits and also for requirements. With Yankee CDs apparently an consumer loans. At midyear, when a number of inherently cheaper source of funds, institutions that large banks announced surprisingly large loan losses had been able to fund additional asset expansion and depressed profits, some of the gains that banks through reserve-free borrowing from their head had made in debt and equity markets were reversed. offices began to pay down these advances with funds The contraction in depository credit was not fully raised in the CD market. Some foreign banks also reflected in the growth of total debt of nonfinancial tapped the CD market to advance funds to affiliates sectors. As occurred last year, credit advanced abroad and to pay down other nondeposit liabilities. through securities markets and by other intermedi- Domestic banks and thrift institutions, in contrast, aries met an unusually high proportion of credit ran off large time deposits in the first quarter as core needs. Banks themselves continued to sell consumer deposit inflows were more than adequate to fund loans and mortgages into securities markets to hold asset growth. The strength of M3 in the first quarter down asset growth and to bolster capital ratios; also reflected strong growth of money market mutual through these sales, the cost and availability of funds funds. The relative attractiveness of these funds to households has been largely insulated from the tends to rise when market rates are falling, as fund possible effects of bank restraint on credit. In owners receive returns based on average portfolio addition, businesses turned to long-term securities yields, which decline only as fund holdings ma- markets to meet credit needs and to restructure Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

702 Federal Reserve Bulletin • September 1991 balance sheets, reducing their reliance on banks as debt to a 2 percent annual rate in the first half. With well. some consumers also attempting to reduce high debt Overall, the debt of domestic nonfinancial sectors loads, growth of consumer credit was weak as well. increased at about a 4V6 percent annual rate over the Lower mortgage rates and stronger home sales first half of 1991. This was likely a bit above the rate helped maintain growth of residential mortgages. of expansion of nominal GNP, though by consider- States and municipalities, facing continuing downably less than on average over the previous decade, grades and the need to cut back expenditures, put as both borrowers and lenders apparently have been fairly limited net demands on the credit markets in adopting more cautious attitudes toward additional the first half of this year. Federal government debt debt. Businesses, for example, stepped up new growth in the first quarter was held down by the slow equity issuance and greatly reduced the retirement pace of RTC activity and the receipt of contributions of existing equity in corporate restructurings. These from foreign governments of payments related to the activities, together with the decline in financing Gulf war; government debt issuance picked up needs associated with falling inventories and fixed sharply in the second quarter, however. • investment, held down growth of business sector Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

703 Industrial Production and Capacity Utilization Released for publication on July 15 vehicles, goods for the home, construction supplies, and materials increased significantly. Total industrial Industrial production rose 0.7 percent in June after capacity utilization increased 0.3 percentage point upward revised gains of 0.7 percent in May and in June to 79.3 percent after an increase of 0.4 per- 0.5 percent in April. On a quarterly average basis, centage point in May. At 106.9 percent of its 1987 total output rose 1.7 percent at an annual rate in the annual average, total industrial production in June April-June period after having fallen sharply in the was 2.9 percent below its year-ago level. two preceding quarters. In June, output of motor In market groups, among consumer goods, Industrial production indexes Twelve-month percent change Twelve-month percent change Capacity and industrial production Ratio scale, 1987 production = 100 Ratio scale, 1987 production = 100 All series are seasonally adjusted. Latest series, June. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

704 Federal Reserve Bulletin • September 1991 1987 = 100 Percentage change from preceding month PPPeeerrr--ccceeennntttaaagggeee ccchhhaaannngggeee,,, IIInnnddduuussstttrrriiiaaalll ppprrroooddduuuccctttiiiooonnn 1991 1991 JJJuuunnneee 111999999000 tttooo Mar.r Apr.r MayP June? Mar.r Apr.r MayP June? JJJuuunnneee 111999999111 Total index 105.0 105.5 106.2 106.9 -.7 .5 .7 .7 -2.9 Previous estimates 105.0 105.3 105.8 -.6 .3 .5 Major market groups Products, total 106.5 106.9 107.4 108.0 -.4 .4 .5 .5 -2.6 Consumer goods 104.7 105.5 106.4 107.0 .0 .7 .9 .6 -.7 Business equipment 120.3 121.4 121.7 121.9 -.2 .9 .2 .2 -2.0 Construction supplies 94.0 94.9 95.3 97.0 -2.5 1.0 .4 1.8 -8.5 Materials 102.6 103.3 104.2 105.2 -1.2 .7 .9 .9 -3.3 Major industry groups Manufacturing 105.2 105.9 106.4 107.1 .8 .7 .5 .7 -3.3 Durable 105.0 106.0 106.6 107.4 -1.0 .9 .5 .8 -5.2 Nondurable 105.4 105.8 106.2 106.8 -.6 .4 .4 .6 -.8 Mining 101.5 100.8 100.5 102.0 -1.3 -.7 -.3 1.5 -.2 Utilities 106.4 105.7 109.8 109.2 1.7 -.6 3.9 -.5 -.5 Percent of capacity Capacity growth, Capacity utilization 1990 1991 June 1990 Average, Low, High, to 1967-90 1982 1988-89 June Mar.' Apr.1 Mayr June? June 1991 Total industry 82.2 71.8 85.0 83.8 78.4 78.6 79.0 79.3 2.6 Manufacturing 81.5 70.0 85.1 83.1 77.2 77.5 77.7 78.1 2.9 Advanced processing 81.1 71.4 83.6 82.0 76.8 77.2 77.2 77.4 3.2 Primary processing . 82.4 66.8 89.0 85.6 77.9 78.3 78.8 79.8 2.1 Mining 87.4 80.6 87.2 89.0 89.0 88.3 87.9 89.1 -.3 Utilities 86.8 76.2 92.3 86.6 83.0 82.3 85.5 84.9 1.4 r Revised, NOTE. Indexes are seasonally adjusted. p Preliminary. production of motor vehicles posted another sizable the upturn in output is evident in many other increase; output of other durables, which include industries, particularly those related to construction. appliances, furniture, and carpeting, also rose Utilization in total manufacturing, since having noticeably for the fourth successive month. By reached a low in March of 77.2 percent, has risen to contrast, output of nondurable consumer goods 78.1 percent in June. For primary processing excluding residential utilities has risen only slightly industries, the operating rate has jumped nearly in recent months. Production of business equipment 2 percentage points since the March low; among other than motor vehicles, which declined over the advanced processing industries, the utilization rate fall and winter months, rose a bit in April and was has risen 0.6 percentage point since March. Elseunchanged in both May and June. Production of where, outputatmines increased 1.5 percent, owing, construction supplies advanced substantially in June in part, to a rebound in coal. Production at utilities, after appreciable gains in April and May; even so, after a large weather-related increase in May, fell the level of output was still more than 10 percent back only slightly last month. Among producers of below its most recent peak, which occurred in early nondurables, output of textiles, apparel, chemicals, 1990. Among materials, production of parts and and rubber and plastics strengthened over the second supplies for the motor vehicle industry rose further. quarter. Although the gains in textiles last quarter In addition, output of steel, textiles, and paper were sizable, production in this industry in June was increased sharply. still more than 3 percent below its year-ago level. In industry groups, manufacturing output in- The June increase in output of durable goods was creased 0.7 percent in June after sizable increases in again led by another rise in motor vehicles. In May and April. While the turnaround in motor addition, large gains occurred in constructionvehicles has contributed noticeably to these gains, related industries, steel, and fabricated metals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization 705 Output of nonelectrical machinery, which had fallen recession of 27.7 percent in January, increased to sharply between October and March, was little 50 percent in May, which indicates that the percentchanged over the spring. age of industries posting production advances during The three-month diffusion index of industrial the three-month period ending in May was equal to production, which reached a low during the recent the percentage in which output declined. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

706 Statements to the Congress Statement by Oliver Ireland, Associate General environment. Consequently, we believe that Counsel, Legal Division, Board of Governors of the imposition of cleanup liability on lenders is the Federal Reserve System, before the Subcom- counterproductive to long-term environmental mittee on Policy Research and Insurance of the goals and is contributing to an unnecessary and Committee on Banking, Finance and Urban Af- unwarranted constriction of credit availability fairs, U.S. House of Representatives, July 10, to a wide range of otherwise creditworthy bor- 1991 rowers. Under CERCLA, the owner or operator of a I would like to thank you for the opportunity to property may be held liable for the entire cost of discuss the issues of lender liability under the cleaning up hazardous substances found on a Comprehensive Environmental Response, Com- site, regardless of whether the owner or operapensation, and Liability Act of 1980 (CERCLA). tor is responsible for the release of the hazard- The issues presented in this legislation are com- ous substance. By its terms, CERCLA generplex, and I commend the committee for under- ally excludes secured lenders from this liability; taking to explore them fully at this time. however, recent court decisions have largely As an initial matter, we strongly support the eroded the protection furnished by this exclupurposes of CERCLA. We all wish to live in a sion. Courts have imposed lender liability under clean and healthy environment; however, the CERCLA when a lender secured by property costs of achieving this goal are substantial. The forecloses on property or has "participated in Environmental Protection Agency has esti- the management" of its borrower by virtue of mated that the cleanup of the 1,200 priority sites the rights reserved by the lender under its alone may exceed $30 billion. The General lending and security agreements with the bor- Accounting Office has estimated that as many rower. With the average projected cost of remas 425,000 sites may need investigation and edying contamination at sites on the National possibly cleanup. Priority List climbing to more than $25 million, In light of these potential costs, we have liability in CERCLA cases may far exceed the become concerned over the effect of recent amount of the lender's original loan. court interpretations of CERCLA that have Because of the erosion of the secured lender held lenders liable for the cost of the cleanup of exemption, lenders to borrowers in businesses hazardous substances found on a borrower's that use or produce hazardous substances are property. Despite an exemption in CERCLA faced with a dilemma. Lenders can actively designed to shield lenders from CERCLA lia- attempt to police hazardous substance disposal bility, these decisions, in effect, place lenders in by their borrowers, risking being found to have the role of policing the hazardous substance "participated in the management" of the bordisposal activities of their borrowers. Lenders rower and therefore liable for potential cleanup are often ill equipped to perform this function, costs, or they can ignore the borrower's activand imposition of unlimited liability can be ities and risk nonpayment of the loan. Further, expected to reduce their willingness to provide these court decisions may discourage even norcredit to prospective borrowers in any business mal loan collection practices out of concern that or area in which there is a risk of CERCLA they will be found to constitute management. liability. A reduction in the availability of credit Lenders already have adequate incentives to threatens the viability of these businesses and encourage their borrowers to engage in environtheir ability to contribute to the cleanup of the mentally safe practices so that these borrowers Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

707 will avoid CERCLA liability. However, lenders property or to make loans to businesses that may do not generally have the technical expertise to use or produce hazardous substances in their police the environmental aspects of a borrower's operations. In some cases it appears that banks operations. Covenants in borrowing agreements are declining to make loans regardless of the that give lenders a voice in their borrower's safety of a borrower's handling of hazardous activities are designed to ensure that the bor- substances. rower acts prudently in financial matters and In addition, banks are examining property places a high priority on the repayment of the carefully before they foreclose on it and are debt not to permit the lender to substitute its sometimes walking away from their collateral to judgment for the borrower's in technical aspects avoid environmental liability. This problem apof the borrower's business. pears to be widespread and is not confined to Imposing affirmative liability for environmen- industrial areas of the country or to particular tal cleanup costs on lenders because of the types of businesses. Virtually every Federal Reexercise of such covenants is likely to do little to serve Bank reported instances in which lenders prevent the pollution of the environment but is had walked away from collateral, even when the likely to interfere with the availability of credit to collateral was the only source of repayment for even prudent businesses that use hazardous sub- the loan. The experience of walking away from stances, such as farmers, dry cleaners, service collateral to avoid CERCLA liability is likely to stations, and chemical and fertilizer producers. cause lenders to become increasingly cautious Credit is a necessity for the operation of com- about loans to many businesses or areas, even if mercial enterprises. Lenders, already reluctant no actual liability has been incurred under to extend credit to borrowers that are subject to CERCLA. a high risk of CERCLA liability, will only be In carrying out its examination and supervideterred further by the prospect of affirmative sory activities, the Federal Reserve expects lender liability under CERCLA. Increased lender banking organizations to have policies and proreluctance to provide funds to industries or areas cedures in place to monitor and control the that present a risk of CERCLA liability is likely risks to which they are exposed. However, to have a significant adverse effect on these banks have experienced difficulty in determinindustries or areas. ing the appropriate protective practices to min- Lack of credit in these cases may also frustrate imize the potential for CERCLA liability. Lendenvironmental interests. Companies that are un- ing institutions are at risk for hazardous waste able to continue operating because they cannot liability whether they have ignored hazardous obtain credit will not be able to make any contri- waste issues altogether or have actively atbution to the environmental cleanup costs. Con- tempted to monitor the safety of their borrowsequently, the current thrust of court decisions ers' operations. The Board currently is develimposing lender liability under CERCLA may oping guidelines for bank examiners to follow in actually frustrate the environmental goals of determining whether a lending institution has CERCLA and increase the cleanup costs that adopted appropriate procedures and safeguards must be borne by the government. to recognize potential hazardous substance While the Board does not have comprehensive problems. Unfortunately, given the current data on lender losses because of CERCLA liabil- state of the law, there is no clear guidance that ity to date, clearly significant losses have already we can provide as to how an institution can occurred. More important to the future is that extend credit and still avoid liability. data from the Federal Reserve Banks suggest Besides private-sector liability, CERCLA that CERCLA liability is, in fact, affecting the raises significant issues concerning the funding availability of credit. Commercial banks are de- of government operations. Many lending instiveloping environmental guidelines that often in- tutions that are potentially subject to CERCLA dicate that the lender should decline to make liability are federally insured through the bank loans collateralized by real property when past and thrift insurance funds. Unlimited liability uses may have resulted in contamination of the under CERCLA poses a potential threat to the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

708 Federal Reserve Bulletin • September 1991 capital and solvency of these institutions, and in lender exemption would apply to both public and some cases could result in the costs of hazard- private lenders. EPA's proposal also attempts to ous substance removal being borne by the bank address the concerns of governmental lenders by and thrift insurance funds. We understand that interpreting the provisions of the "innocent landthe Federal Deposit Insurance Corporation owner" defense to apply to government entities (FDIC) has already incurred losses as a result of that acquired property through their activities as CERCLA. lenders, conservators, or receivers. To use this Further, many agencies and instrumentalities defense, the governmental lender would also of the federal government, such as Federal have to demonstrate that the contamination was Reserve Banks, Federal Home Loan Banks, the caused by a third party with which it had no Farm Credit System, and the Small Business contractual relationship and that it had exercised Administration, are also lenders. Lender liabil- due care and taken precautions against the acts ity presents a threat to the ability of these of third parties. organizations to carry out the missions assigned We commend the Environmental Protection to them by the Congress. The Federal Reserve Agency for its efforts to provide regulations to Banks fulfill important functions in providing clarify the secured lender exemption. Its efforts, adjustment credit and acting as a lender of last however, are necessarily limited by the current resort for depository institutions. In acting as statutory provisions, which may not provide lender of last resort, a Federal Reserve Bank sufficient protection, particularly for governmenmay advance funds to a depository institution tal lenders. For example, the EPA regulations do collateralized by the institution's loans, which not expressly address the warranties that governmay, in turn, be secured by real property. mental entities are required to make under Should the institution fail, the FDIC, as re- CERCLA, and the ability of the EPA to provide ceiver, would likely acquire the loans from the a broad exclusion from the warranty provisions Reserve Bank and would be left holding the for governmental entities such as the FDIC or the loans. In these cases, the FDIC would be Resolution Trust Corporation is unclear. EPA exposed to lender liability to the same extent as regulations also cannot provide governmental the original lender. If the FDIC chose not to lenders with any protection from liability under acquire the loans, however, the Reserve Bank state environmental statutes. Additionally, there would be subject to this exposure. may be significant delays before the final rule can It is not appropriate to shift the risks and be promulgated and any judicial determinations expenses of environmental cleanup costs from as to its application made. We believe that the funds allocated by the Congress for this greater certainty and protection for both public purpose to the bank and thrift insurance funds or and private-sector lenders will be provided by to governmental instrumentalities such as the statutory amendments. Federal Reserve Banks. Federal agencies and In closing, it is in the interests of the financial instrumentalities have been charged by the Con- and environmental communities to find a balgress with particular responsibilities. Their funds anced solution to the lender liability issue. If this are intended to be used to fulfill these responsi- issue is not resolved, we risk a reduction in the bilities, not to cover the costs of hazardous availability of credit to any industry, area, or substance removal. borrower that appears to present a risk of liability The Environmental Protection Agency has for hazardous substance removal. We also risk proposed rules that are intended to clarify the imposing additional costs on the bank and thrift provisions of CERCLA relating to both private insurance funds to pay for environmental and public lenders. The proposed rules interpret cleanup costs that would otherwise be met from the secured lender exception to permit a range of the funds allocated by the Congress for that activities, including taking title to the property purpose. In light of these considerations, we following foreclosure, that a lender may under- believe that the environmental goals of CERCLA take without being considered an owner under will be furthered rather than hampered by federal CERCLA. The interpretation of the secured legislation. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 709 Statement by Alan Greenspan, Chairman, Board Today, there are compelling signs that the of Governors of the Federal Reserve System, recession is behind us. Although the turning before the Subcommittee on Domestic Monetary point has not yet been given a precise date, a Policy of the Committee on Banking, Finance variety of cyclical indicators bottomed out by and Urban Affairs, U.S. House of Representa- early spring, and some indicators have moved tives, July 16, 1991 noticeably higher in recent months. Such data strongly suggest that the economy is moving into the expansion phase of the cycle. Nevertheless, I am pleased to be here today to present the convincing evidence of a dynamic expansion is midyear Monetary Policy Report to the Congress.1 My prepared remarks this morning will still rather limited, and we must remain alert to the chance that the recovery could be muted or take their cue from that report by focusing on could even falter. current economic and financial conditions as well In recent months, there also have been promas on the outlook for the economy and monetary ising signs of a slowing in inflation. The price policy over the coming year and a half. These figures themselves have bounced around from topics merit particularly close attention at the month to month, partly in response to the gyracurrent time, when the economy appears to be tions in oil prices and the partial embedding of poised at a cyclical turning point—moving from those swings in the underlying cost structure of recession to expansion. In addition, I plan to the economy. A bunching of price increases and devote some time to discussing the importance of excise tax hikes at the beginning of the year also the changes that we have been seeing in patterns boosted "core" inflation measures for a time. of credit usage and in the flows of money and But in their wake an underlying softening trend credit through the financial system. There are has become evident, with consumer prices outsigns of what could be significant departures side the food and energy sectors rising quite from the trends prevalent in the 1980s, with modestly. In an environment of slack demand, potential implications for the interpretation of businesses have worked especially hard to confinancial data and economic developments. trol costs by keeping their operations as lean and productive as possible. With the threat of an oil-related inflation surge ECONOMIC AND FINANCIAL largely behind us and output evidently declining, DEVELOPMENTS IN THE the Federal Reserve took a series of easing steps FIRST HALF OF 1991 in quick succession over the latter part of last year and into the spring. These actions, aimed at At the time of our last report in February, the ensuring a satisfactory upturn in the economy, economy had been declining for several months. brought the federal funds rate more than 2 per- The considerable uncertainty and higher oil centage points below its prerecession level and 4 prices that followed the invasion of Kuwait had percentage points below its peak of about two depressed confidence and real incomes, discouryears ago. Other short-term interest rates aging spending by consumers and businesses and dropped more or less commensurately. Despite pulling down output and employment. However, the progressive easing of monetary policy, the even by February the first seeds of an economic foreign exchange value of the dollar is up subrecovery appeared to have been sown: The initial stantially since the beginning of the year, in part coalition successes in the Gulf War, the reversal owing to the brightening outlook in the United of much of the runup in oil prices, and the States for economic recovery without added insignificant easing of monetary policy all pointed flation. Anticipations of economic expansion also in the direction of a resumption of growth. were reflected in rising stock prices and in longterm interest rates, which have changed relatively little on balance so far this year even as short-term rates have declined. ]. See "Monetary Policy Report to the Congress," in this issue. With the cumulative drop in short-term inter- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

710 Federal Reserve Bulletin • September 1991 est rates making monetary assets more attractive eral Open Market Committee (FOMC) members to the public, M2 growth picked up noticeably in and other Reserve Bank presidents. On the the first half of 1991. Its growth probably was whole, their outlook is for underlying inflation to restrained to a degree, however, by the firmness continue to slacken as the economy first recovers in returns on capital market instruments. And, as and then expands at a moderate rate through the had been anticipated at the beginning of the year, end of next year. growth of M2 remained below what would have For this year, while there remain—without been predicted solely on the basis of historical question—frailties in the economy, economic relationships with interest rates and income. activity appears on balance to be picking up in a Money growth also continued to be held down by fairly broad-based manner. The expectation that the ongoing restructuring of credit flows away the turnaround in output is occurring, and that it from depository institutions. As the thrift indus- will persist, is evident in the economic projectry has contracted and banks have remained tions of the FOMC members and other Reserve quite cautious about expanding their balance Bank presidents. Their forecasts for real GNP sheets, there has been less need for depositories growth over the four quarters of 1991 center on 1 to issue liabilities—which constitute the vast percent or a shade below, implying growth over bulk of the monetary aggregates. Currently, M2 the remainder of this year that not only offsets and M3 are somewhat below the midpoints of the first-quarter decline in GNP but also lifts their respective target ranges. output above its prerecession peak by year-end. In the last several months, monetary policy Two fundamental questions may be posed has adopted a posture of watchful waiting as with regard to this outlook for the rest of the economic indicators have pointed increasingly year. The first is an inquiry into the potential toward recovery. With an eye to the usual lags in sources of strength in the recovery—those policy effects, this stance has been viewed as forces that will be at work to pull the economy prudent to guard against the risk of adding ex- out of recession in a lasting fashion. We see cessive monetary stimulus to an economy that several factors as having set the stage for the might already be solidly into recovery. Monetary recovery: in particular, the reversal of the spike policy during the first half of the year has had two in world oil prices and the favorable effects of jobs: first, to help bring the economy out of the that reversal on real incomes; the conclusion of recession; and, second, to avoid setting the stage the Gulf War and the consequent rebound in for the next recession, which would follow if we consumer and business confidence; and, finally, allowed inflationary imbalances to develop in the the decline in short-term interest rates after our economy. policy easings and the narrowing of risk premi- The progress against inflation that has been ums in financial markets. Against this backset in motion must not be lost. Moreover, by drop, growth in consumer expenditures seems consolidating and building upon the gains against to have turned positive again, along with real inflation, we come that much closer to our income; homebuilding has bottomed out and is longer-run goal of price stability. Inflation and providing some lift to overall growth; and oruncertainty about inflation keep interest rates ders for capital goods are pointing to a firming higher than they need to be, distort saving and in demand that should be reflected in producinvestment, and impede the ability of our econ- tion and shipments in coming months. omy to operate at its peak efficiency and to The strongest force behind output growth in generate higher standards of living. the near term, though, probably will be the behavior of inventories. Business inventories have been drawn down aggressively in recent THE ECONOMIC OUTLOOK quarters, and, with inventories now quite lean, sales increasingly will have to be satisfied out of It is this strategy that has been guiding monetary new production. The inherent dynamics of an policy recently, and the effects of the strategy are inventory cycle, as the drawdown ceases and reflected in the economic projections of the Fed- eventually turns to rebuilding, likely will engen- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 711 der the bulk of the initial step-up in output. But personal income, as households avoid reducing there may be additional areas of demand that will their saving rate further from its already low impel the recovery; it is quite common at this level. point in the cycle for forecasts both to underes- The expansion is seen as becoming more setimate the strength of the recovery and to miss curely established next year, with real GNP the forces that end up driving the expansion. growth strong enough to bring the unemployment In fact, recessions typically have been fol- rate down V2 percentage point or more from its lowed by periods of appreciably stronger growth current level. Should the recovery unfold about than that foreseen here. This raises the second as we expect, price pressures will remain muted question about the near-term forecasts, that is, and progress on inflation is likely. The expectawhether they are optimistic enough. Several con- tions of FOMC members and other Reserve siderations come to mind on that side of the Bank presidents for inflation this year are cenissue. First, and in some sense most appealing, is tered in the neighborhood of 3V2 percent, well the simple notion, which is lent some support by down from the 6V4 percent rate of inflation expehistory, that relatively mild recessions beget rel- rienced last year. Although the slowdown this atively mild recoveries. And this recession, as- year is exaggerated by the retreat in oil prices, a suming it came to an end in the spring, seems to clear deceleration should be evident even abhave been mild. Not only does it appear to have stracting from energy prices. That deceleration in been marked by a considerably smaller contrac- the underlying trend is expected to continue next tion in real GNP and industrial production than year as well. However, the unwinding of the oil the average postwar recession, but it also was a shock this year masks the improvement so that bit shorter. In at least one respect, however, this the projection for the increase in overall conrecession was close to average, and that was in sumer prices is about the same for 1992 as for job losses, as firms cut payrolls fairly aggres- 1991. sively. Nevertheless, the unemployment rate did not rise as much or as high as was typical in the past. RANGES FOR MONEY AND DEBT GROWTH Arguing against a rapid rebound in the econ- FOR 1991 AND 1992 omy are several other factors as well, including the lack of impetus from some sectors that con- The FOMC viewed the near-term outlook for tributed in earlier cycles. First, it has not been output and prices as generally favorable and unusual to see some fiscal stimulus in the early consistent with growth of money and debt within stages of expansion in the past; this time, how- the ranges that had been specified earlier in the ever, the Congress and the Administration have year. Consequently, at its meeting earlier this worked long and hard to make sure that genuine month, the FOMC reaffirmed the 1991 ranges for progress will be made in righting the structural money and debt growth. In addition, it was felt imbalance in the budget, putting federal spending that the money ranges retained enough scope for in real terms on a downward path. Nor is fiscal policy to be responsive, should the economy stimulus likely to emerge from the state and local stray substantially from its expected path over sector, where deepening budget problems are the remainder of the year. With M2 and M3 now constraining spending. A portion of the financial well within their ranges, there remains ample distress of localities can be traced to the softness room for money growth to change in the event in real estate markets feeding through to property policy needs either to ease in support of a faltertax receipts. The condition of the real estate ing recovery or to tighten in reaction to an market also is certain to restrain the pickup in unexpected resurgence of inflation pressures. construction that usually accompanies a recov- Unlike the monetary aggregates, our latest ery, with overbuilding in commercial real estate reading on debt of the domestic nonfinancial likely to damp activity in this area for some time sectors places it right at the bottom edge of its to come. Finally, in the consumer area, expendi- 1991 range. Its growth has been unusually low, tures are unlikely to grow more rapidly than and its position within the range is indicative Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

712 Federal Reserve Bulletin • September 1991 both of the reduced demands for credit associ- patterns of credit usage in general have been ated with the weak economy and of the restraint, changing as well. It is difficult to know which of on the part of borrowers and lenders, that has these developments will show some permanence been evident in recent quarters. In these circum- and which will prove ephemeral. But some of the stances, the FOMC felt that lowering the moni- recent changes have been striking and have aftoring range would be inappropriate and might fected a number of the financial variables that the falsely suggest a complacency on the part of Federal Reserve routinely monitors in an effort policymakers about weakness in credit growth. to glean information about the health of the Instead, maintaining the debt range unchanged economy, the soundness of the financial system, underlines the implication that a further slow- and the appropriateness of current monetary down in this aggregate would warrant close scru- policy. I would like to address several aspects of tiny. these recent developments in the remainder of On a provisional basis, the FOMC extended my remarks today. the 1991 ranges for money and debt growth to First, at the most aggregate level, the ratio of 1992, with the understanding that there will be domestic nonfinancial sector debt to nominal opportunities to reevaluate the appropriateness GNP, which soared in the 1980s, is beginning to of these ranges before they come fully into play show signs of flattening out. With the federal next year. The ranges were viewed as consistent government's borrowing lifted by the effects of with additional progress against inflation and the recession and payments related to deposit with sustained economic expansion. Moreover, insurance, these signs have been evident so far the path of no change appeared most sensible to only in the other sectors. While the changes in the Committee at the current time of some un- behavior may, in part, reflect cyclical factors at certainty about the vigor and even the durability work, a longer-term trend also may be emerging. of the economic recovery as well as about devel- And this trend, if it develops fully, would repreopments affecting the future of the thrift and sent a return to the pattern evident in earlier banking industries. postwar decades. In that case, it would be the This uncertainty about the credit intermedia- 1980s, with their burgeoning federal deficits and tion process is one of the factors that could massive corporate restructurings, that would appossibly make movements in M2 somewhat dif- pear to be the aberration. The deregulation, ficult to interpret in the short run, but I would technological advances, and financial innovaemphasize that we expect the aggregate to re- tions that came at an accelerated pace in the main a stable guide for policy over the longer 1980s lowered the cost of borrowing for many term. The relationship between M2 and nominal and probably raised the equilibrium ratio of debt income has been one of the more enduring in our to net worth for a wide range of economic financial system. Since the founding of the Fed- entities. A temporary surge in borrowing was eral Reserve, nominal GNP and M2 have grown, implied in the course of this transition from one on average, at almost precisely the same rate. equilibrium to another. Presumably, this parity reflects an underlying A tapering-oflf of that surge would then be demand for liquidity on the part of businesses expected as the new equilibrium was apand consumers that is associated with a given proached, and this may be what we currently are level of spending and wealth. This demand is witnessing. The new equilibrium debt-to-income likely to persist, though the financial structures ratio may even be below the current level, imthat supply the liquidity may change. plying the possibility of sluggish debt growth for some time. If these sorts of adjustments were in CHANGING PATTERNS train, the slow debt growth associated with them OF FINANCIAL INTERMEDIATION should not be read as implying that credit was AND DEBT ACCUMULATION insufficient to support satisfactory economic performance. Recently, patterns of financial intermediation Several considerations point in the direction of have been changing, and there are signs that restructuring of balance sheets. The forces that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 713 appear to be restraining the demand for credit up dramatically in data for the second quarter, can be generally categorized as less "grossing where equity issuance by nonfinancial corporaup" of balance sheets and less substitution of tions is estimated to have exceeded equity retiredebt for equity. During the 1980s, there was a ments for the first time in eight years, removing great deal of this "grossing up" of balance this element behind the buildup of debt. While sheets, as credit financed more purchases both of much of the weakness in credit demand at prephysical assets and of financial assets. As far as sent reflects cyclical influences, borrowers likely physical assets are concerned, the 1980s saw will continue to shy away from the heavy expansome strong spending on consumer durables and sion of debt seen in the 1980s. nonresidential structures; spending on physical On the supply side of the credit market, perassets, such as these, appears more often to be haps the major factor at work in creating a break financed with debt than is spending on most other with the behavior of the 1980s has been the types of goods and services. Now, with stocks of adverse consequences of that behavior. It is now those assets already built up and with tax law clear that a significant fraction of the credit changes that have made it less attractive in many extended during those years should not have cases to borrow to finance their purchase, credit been extended. We need merely look at the demands are likely to remain relatively damped. recent string of defaults and bankruptcies and the The high interest rates of the late 1970s and condition of many of our financial intermediaries early 1980s spurred increased financial innova- to confirm this impression. tion and extensive deregulation, helping to bring In a sense, this process may have been very businesses and consumers increasingly into more nearly inevitable. With the financial system gropcomplex financial dealings. The state and local ing toward a new equilibrium, the likelihood of sector built up a large stock of financial assets, mistakes was high. Laxity by lenders abetted the and the household sector acquired assets from spiral of debt, and we regulators were too often the wider array of instruments available. More- slow to intervene. Now, financial institutions, over, household borrowing behavior was shaped regulators, and taxpayers are facing the wrenchimportantly by the rising capital gains available ing unwinding of those lending decisions. A key on residential real estate over this period. As lesson to be learned is how important it is to house prices escalated, mortgage debt on exist- avoid these costly adjustments in the future and ing homes increased, both as capital gains were that this can only be done by avoiding a return to realized in home sales and as unrealized gains such financial laxity. were tapped through the use of second mortgages Going forward, we likely will see a continuaand, more recently, home equity lines. In this tion of the "credit correction" now under way. process, homeowners were able to redirect a One aspect of this correction is the increased portion of these capital gains toward other assets attention paid by regulators and the financial or current consumption. markets to the capital positions of financial inter- Over the decade, the financial services indus- mediaries. The more prudent approach to capitry grew at an extraordinary rate, in part by talization and lending decisions is overwhelmcreating debt instruments seemingly tailored to ingly a healthy development that ultimately will every need and financial assets for any portfolio. result in strengthened balance sheets for the While households took advantage of a number of nation's financial institutions and more assurance these new instruments, the bulk of them were of stability of the financial system. directed toward business. Mergers and acquisi- In certain areas, however, the credit retrenchtions took off, financed essentially by debt, re- ment appears to have gone beyond a point of sulting in net retirements of equity that averaged sensible balance. In some cases, lender attitudes nearly $100 billion annually between 1984 and and actions have been characterized by exces- 1989. sive caution. As a result, there doubtless are More recently, with debt levels relatively high creditworthy borrowers that are unable to access and lenders less eager to extend credit, markets credit on reasonable terms. Even in the obvihave changed. One aspect of this change shows ously troubled real estate area, new loans are Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

714 Federal Reserve Bulletin • September 1991 arguably too scarce, in some cases intensifying past. The recent decline in the importance of the illiquidity of the market for existing proper- depository institutions as intermediaries, when ties. To an extent, the scarcity of some types of measured by the credit they book, is quite strikloans may reflect the efforts of individual finan- ing. While this decline predominantly reflects the cial institutions to reduce the share of their assets contraction of the thrift industry, banks, too, in a particular category, such as commercial have contributed by growing only slowly. Over mortgages. While a single bank may be able to do time, other financial institutions have provided this without too much trouble, when the entire more close substitutes for banking services, and industry is trying to make the same balance sheet the profitability of the banking industry suffered adjustment, it simply cannot be done without over the past decade or so from a decline in loan massive untoward effects. Instead, it may be in quality. Moreover, recent emphasis on higher the banks' self-interest to make the adjustment in capital ratios and higher deposit insurance prean orderly manner over time. Regulatory efforts miums should affect this trend as well. to address concerns of credit availability con- Even as the economy has firmed, financial tinue. flows through depository institutions have re- Credit conditions remain tight in some sectors, mained weak. Some lag is typical. Indeed, in the but in others the situation appears to have im- case of business loans, there is enough of a proved considerably since our last report in regularity that they are included in the Depart- February. To chronicle briefly what we know ment of Commerce's Index of Lagging Economic about credit supply conditions at present: In Indicators. But lending to businesses has been financial markets generally, risk premiums and unusually weak for some time now, and the spreads between yields on different types of debt outlook is for a rather modest upturn when it have declined substantially this year as investor comes. At the same time that decisions to purattitudes have improved. In part reflecting this chase goods and services are made, decisions narrowing, corporate bond offerings surged over about the financing of those purchases are usuthe first half of the year. Banking firms, too, ally being made. Increasingly, it appears that gained increased access to capital markets, leav- those decisions are not being reflected in credit ing them in a better position to lend as credit on the books of depository institutions. Banks demands begin to pick up in the recovery. In- still may be involved, however. They may, for dexes of bank stock prices rose much more example, provide letters of credit or arrange rapidly than the stock market as a whole, bring- financing through a special-purpose corporation. ing the average market value of shares in the top Mortgage and consumer debt may pass through fifty bank holding companies back up to around the balance sheets of these intermediaries only their book value. Yield spreads on bank-related briefly, as it is increasingly being securitized and debt obligations narrowed sharply over the first sold into capital markets. As banks make further half of the year, prompting considerable issu- strides in bolstering their capital positions, howance. Thus far, however, lending by commercial ever, they will become better able to take advanbanks has remained quite weak. To the extent we tage of opportunities to add profitable loans to can judge, this appears primarily to reflect weak their balance sheets. While the role of the bankcredit demand, as is typical at this point in the ing industry has been changing, its importance in business cycle. Nonetheless, supply restrictions the financial system and the economy remains remain a problem. This so-called credit crunch assured. owes importantly to financial institutions' efforts In sum, the financial system in this country is to build capital to meet the demands of both the changing, and it is changing rapidly. Technology, market and the regulators. Information on lend- regulatory initiatives, and market innovations are ing terms, however, suggested little further tight- changing many dimensions of the financial sysening over the spring. tem. The relationships between borrowers and Not only the behavior of the debt aggregate lenders, between risk and balance-sheet expoitself but also the avenues through which the debt sure, and between credit and money are being flows represent something of a break with the altered in profound ways. In response, we must Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 715 understand the nature of these changes, their financial system is protected as changes occur, permanence, their limitations, and their possible for a sound financial system is an essential ingreimplications for the economy and monetary pol- dient of an effective monetary policy and a vital icy. And we must ensure that the stability of the economy. • Statement by Wayne D. Angell and Edward W. an average annual rate of 5.3 percent from 1986 Kelley, Jr., Members, Board of Governors of the through the 1991 budget. This increase includes Federal Reserve System, before the Subcommit- expenses for supervision and regulation initiatee on Domestic Monetary Policy of the Commit- tives that account for 0.4 percentage point of the tee on Banking, Finance and Urban Affairs, U.S. increase, Expedited Funds Availability legisla- House of Representatives, July 18, 1991 tion requirements (0.3 percentage point), contingency planning initiatives (0.2 percentage point), It is a pleasure for Governor Kelley and me to and several major initiatives for the U.S. Treavisit with this subcommittee today to discuss and sury (0.4 percentage point). I would add that it is review the Federal Reserve System's expenses difficult to judge the degree of discipline in an and budget. Today as we look at the Federal organization's budget solely on the growth rate Reserve System's budget for 1991, Governor of expenses. In the Federal Reserve we recog- Kelley will discuss the Board's budget and major nize the responsibilities given to us by the Coninitiatives, and my comments will focus on the gress, and we discharge them in a manner that Reserve Bank budgets as well as major System reflects a high concern for quality and effectiveinitiatives. ness as well as efficiency. The Board has recently made available to the For 1991, the Federal Reserve System has public and to this subcommittee copies of our budgeted operating expenses of $1.6 billion, an publication Annual Report: Budget Review, increase of 5.9 percent over the 1990 budget. The 1990-91, presenting detailed information about last year for comparison of actual expenses is spending plans for 1991. The attached tables 1990 over 1989. This comparison shows expenses have been updated for 1990 actual experience, up only 4.5 percent, reflecting a 0.8 percent and, therefore, some variations exist from data in underspending of the 1990 budget. Before getting that document.1 to the substance of our 1991 plans, I would While the Federal Reserve has always been remind the subcommittee of two aspects of Fedconcerned with controlling costs, the Monetary eral Reserve System operations that affect our Control Act of 1980 has provided an additional budget in unusual ways. First, 40 percent of incentive. As a matter of law, services provided System expenses arise from the services I just to depository institutions must meet a clear mar- mentioned that are provided to depository instiket test. Specifically, all expenses (including tutions at fees adequate to cover all costs, includoverhead and the imputed cost of capital and ing some imputed costs. Since additional costs of taxes) for providing "priced" services are cov- these services are more than recovered by addiered by charges to users. The markets in which tional revenues, any increases in costs result in we operate in providing these correspondent increased earnings returned to the U.S. Treabanking services are highly competitive, thereby sury. Second, many fiscal agency operations are providing a strong and direct incentive to main- provided to the Treasury Department and other tain our efficiency. Given these internal and agencies on a reimbursable basis. Altogether, 58 external restraints on costs, the Federal Reserve percent of our total expenses are either recov- System's expenses are projected to increase by ered through pricing or are reimbursable. On a net basis, the cost to the public of the Federal Reserve System's operations is $675 million of 1. The attachments to this statement are available on the total $1.6 billion budgeted for 1991. (Of request from Publications Services, Board of Governors of course, this amount does not include the earnings the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

716 Federal Reserve Bulletin • September 1991 on the System's portfolio of assets, derived di- For our nonpriced cash operations—involving rectly from monetary policy and currency issu- the distribution of currency and coin—unit costs ance activities, from which the System turned have also been declining. Since 1983 the decline over $23 billion to the Treasury in 1990.) has averaged about 2.6 percent per year, with volumes increasing 5.2 percent per year. However, in our fiscal agency operations, also non- HISTORICAL OVERVIEW priced, there has been an increase in unit costs of 2.9 percent per year since 1983, reflecting new It may be helpful to put the budget for 1991 in operations and services for the Treasury. In this perspective by sketching the most recent ten- area the Federal Reserve System has managed year history of System expenses. Between 1980 several initiatives for the Treasury to improve and 1990, Federal Reserve System expenses in- long-term efficiency in Treasury securities and creased at an average annual rate of 5.9 percent; savings bonds and improve the quality of service System employment decreased at an average to the public. Through 1990 the Federal Reserve annual rate of 0.1 percent; and volume in mea- has added 322 staff members and spent a cumusured operations increased 26 percent over the lative $65 million on these Treasury initiatives. ten-year period. Unit cost did increase in some It is difficult to measure productivity improveservices in the early eighties as Federal Reserve ments in the supervision and regulation area, but Bank volumes fell after the implementation of these activities have required significant inpricing under the Monetary Control Act. How- creases in resources over the last ten years. ever, after the transition to pricing was com- Between 1980 and 1990, the number of staff pleted in 1983, the composite unit cost for all members for supervision and regulation infunctions (unadjusted for inflation) has actually creased 629 and annual expenditures increased declined 0.3 percent on an annual basis, even $125.8 million. These resources have been emwhile improvements have been made in the qual- ployed to strengthen the ability of the Reserve ity of services. Banks to identify and address problems in the For priced services, a decline in unit cost has banking organizations under their jurisdiction. been particularly noticeable in the electronic Obviously, the Reserve Banks have had to deal payment areas. Automated clearinghouse (ACH) with greatly increasing work loads in the last unit cost has decreased 6.9 percent per year several years as reflected in the record number of (1980-90) and funds transfer unit cost has de- bank failures and problem banks as well as in the creased 1.0 percent per year during the same increasingly complex issues they have had to time period; since 1985, the decreases per year face in reviewing and processing regulatory aphave been 12.3 percent for ACH, and 2.9 percent plications and in developing supervisory policies for funds. Volume growth has averaged more to deal with new and changing banking risks. than 9 percent per year for funds transfers and In presenting our spending plans for 1991, I more than 24 percent per year for automated would like to mention that both the Reserve clearinghouse transactions (1980-90). In our Bank budgets and the Board's budget must be large check processing operation, on the other approved by the Board of Governors. Reserve hand, when there has been a significant effort to Bank budgets are first approved by the Banks' improve the quality of service through increased Boards of Directors and then reviewed by the availability and improved deposit deadlines, Committee on Federal Reserve Bank Activities there has been an average increase in unit cost of before submission to the Board of Governors. 2.0 percent per year since 1983. However, in the Governor Kelley oversees the Board's budget, most recent year-over-year comparison (1990 and I will turn to him for that discussion. over 1989) unit cost for check processing dropped 1.2 percent, chiefly because the expen- INTRODUCTION sive implementation of the Expedited Funds Availability legislation (EFA) was basically com- I appreciate this opportunity to discuss the operpleted in 1989. ating and capital budgets of the Board of Gover- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 717 nors of the Federal Reserve System. This mate- Act of 1989 (FIRREA), to help develop the Narial was included in the Annual Report: Budget tional Information Center (NIC), and to support Review 1990-91 furnished you in February, so I analysis of changes in the country's financial will not repeat the detailed data or analysis. industry. The 1991 operating budget of the Board of The growth of expenses in this budget area is Governors totals $110.8 million. The growth in constrained because earlier investments in dis- Board expenses between 1990 and 1991, at 7.6 tributed processing systems have produced repercent, is slightly higher than the 7.5 percent ductions in the cost of data previously provided increase from 1989 to 1990. The 1991 increase by the large mainframe computer and has further results from actions to further strengthen our limited cost growth by improving the productivsupervision and regulation function, to fund the ity of existing staff. higher level of salaries needed to remain competitive with changes in the marketplace, and to SUPERVISION AND REGULATION meet a higher level of expenses for health insurance, Medicare, and the Board's Thrift Plan. The 1991 budget funds considerable growth in The budget authorized 1,557 positions for the this operational area. The budget of $32.8 million Board's operations. The number of positions inis $3.7 million, or 12.7 percent, greater than creased by a net of 3 as requirements in the expenses for 1990. Eight new positions are supervision and regulation function and in the added, primarily related to policy development system policy direction and oversight function and implementation, supervision of large bank were largely met by offsetting reductions in staff holding companies, and increased emphasis upon in the support functions. From 1984 to 1986 our compliance with consumer protection statutes. position level declined by about 80, even though Most of the positions are a result of underlying we were increasing resources devoted to the suproblems and new developments in the financial pervision and regulation function. Since then the sector of the economy and ongoing work related number of positions has remained substantially to FIRREA. constant even as further increases were reallo- Besides the direct costs associated with the cated to the supervision and regulation function. new positions, the budget continues to support The foregoing figures do not include $1.8 mildevelopment of the NIC. This comprehensive lion and nineteen positions budgeted for the database will be the only source of consolidated Office of the Inspector General, which I will structure and financial data for depository insticover at the end of this statement. tutions; it will greatly enhance supervision and I will now discuss the budget as it relates to the regulation in an era of evolving structure in the Board's four major operational areas. banking and financial sector. Development of the NIC will avoid redundant costs, improve data integrity, and lead to more timely and meaningful MONETARY AND ECONOMIC POLICY analysis of applications, merger requests, and other actions in a rapidly changing environment. This function is expected to cost $54.2 million in The office automation networks supporting 1991, an increase of $3.0 million, or 5.8 percent, this functional area will be substantially upover 1990. Most of this change is caused by graded during 1991. Besides acquiring new mifactors such as the increase in pay and benefits crocomputers, more advanced networking equipand the 1991 component of the automation plan ment will be installed. supporting this function. There are no new positions in this function in spite of the continuing growth in the work load. SERVICES TO FINANCIAL INSTITUTIONS The budget provides resources to maintain the AND THE PUBLIC quality of economic analysis and continues major resource commitments to implement the Financial The budget includes $2.9 million for this opera- Institutions Reform, Recovery, and Enforcement tional area— $107,000, or 3.9 percent more than Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

718 Federal Reserve Bulletin • September 1991 in 1990. This area is composed almost entirely of outcome since 77 percent of the Board's budget oversight of the payments system function of the is made up of personnel costs. The salary Federal Reserve System. increment in this budget, $5.1 million, is signif- A major factor in the higher level of costs is the icantly less than it was in 1990, when major continued emphasis on reducing risk in the pay- actions were budgeted to fully implement the ments system and ensuring that it responds in an new compensation program. This program has efficient and timely manner to changes in the succeeded in reducing the number of vacancies financial system. The budget includes two new with the concomitant effect of increasing the positions to develop policies and procedures to salary budget. reduce risks in both national and international A change in the Board's matching contribupayment and settlement systems. tion for the Thrift Plan and a higher wage base The completion in 1990 of a large software subject to social security taxes are the principal development project to manage currency orders factors resulting in the increase for retirement and cash shipments produces significant cost sav- costs. ings and thereby limits the overall increase in the Our insurance costs rose sharply because of 1991 budgets for the Board and the Reserve two factors. The most important factor is health Banks. insurance for which costs are rising sharply for the third consecutive year. Insurance costs also increased as a result of the recent legislation SYSTEM POLICY DIRECTION AND that raised the salary base subject to the em- OVERSIGHT ployer's matching contribution to Medicare. System Policy Direction and Oversight includes resources for the supervision of System and CAPITAL OUTLAYS Board programs. This functional area has been partially redefined, and our trend data have been The capital budget of $5,131,700 is $1.0 million adjusted to reflect the new treatment of the more than 1990 expenditures. The budget funds budget for the Office of the Inspector General requirements in the areas of automation and that began in the 1990 budget. telecommunication, facilities improvements, and The $20.3 million budgeted for this function is equipment replacements. $1.0 million, or 5.4 percent more than 1990 A major element of the capital budget is outlays. $1,000,000 for the replacement of obsolescent There are no major mission increases in this analog telephone switching equipment with a functional area. Staffing increases for the Re- digital, private branch exchange. serve Bank examination function are continued Continued investment in our office automawith the addition of an electronic data processing tion systems is in line with our long-range (EDP) auditor to help ensure that internal con- automation-telecommunication plan. Productrols over major Reserve Bank automation sys- tivity gains from such investments have been tems are adequate. critical in the past in limiting requirements for The budget funds replacement of older micro- additional staff to meet the Board's increasing computer equipment in the Division of Reserve work load. Bank Operations and Payment Systems and Several facilities improvements such as major some initiatives in support of the division's local roof repairs will require a total of $1,080,000. area network. SUMMARY INCREASES BY OBJECT OF EXPENSE The 1991 operating budget contains sufficient The most significant increase in the 1991 budget funding to meet the Board's major objectives in is associated with salaries, not an unexpected each functional area, including the following: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 719 (1) expanding our oversight of the nation's finan- you may have after Governor Angell concludes cial institutions; (2) implementing risk-based cap- our joint testimony. ital standards; (3) supporting the FIRREA; (4) enhancing payments system operations while reducing payments system risk; (5) continuing in- RESERVE BANK BUDGETS vestments in productivity initiatives, including office automation and the records management The Reserve Bank 1991 expense increase—both project; (6) continuing the development of the priced and nonpriced—was budgeted at 5.8 per- National Information Center to provide relevant cent more than the 1990 budget. The actual banking structure data; and (7) maintaining a safe increase in expenses from 1989 to 1990 was only and effective working environment. Three new 4.2 percent since actual 1990 expenses were positions were added in response to continued lower than budgeted. Nine major initiatives acgrowth in the work load as a result of problems in count for almost a third of the budgeted increase the financial industry, continuing implementation in Reserve Bank expenses. of FIRREA, and changes occurring in the pay- The fiscal agency initiatives are expected to ments system mechanism. increase expenses by $4.9 million, with $4.2 million due to the nationwide implementation of the Regional Delivery System (RDS). This system, which provides for centralized issuance of BUDGET OF THE INSPECTOR GENERAL U.S. savings bonds, is one of many services that we provide the U.S. government—directly to the The Office of the Inspector General was created Treasury Department—as its fiscal agent. This by the Board in July 1987. In 1989 its reporting project will not be fully implemented until 1993 relationships, duties, and responsibilities were and will require a total staff increase of 350 by brought into conformance with the Inspector that time. A staff increase of 141 is expected in General Act Amendments of 1988. To ensure 1991. Other fiscal agency initiatives include exthe independence of the Office of the Inspector penses for processing savings bonds on high General (OIG), its budget is presented to the speed check processing equipment (EZ Clear) Board and reported on separately from the and centralized processing of payroll deductions regular operating budget. That is, its funds are for savings bonds (Masterfile). Expenses for not commingled with Board operating funds. these fiscal initiatives are fully reimbursable. The 1991 budget for the OIG is $1.8 million. The supervision and regulation initiatives re- This amount is $432,200, or 32.2 percent more sult from needs in several Reserve Districts for than 1990 expenses. The increased level of re- additional staff members to handle increases in sources is necessary to phase in broader audit work loads because of the greater complexity of and investigation coverage of the Board's mis- examinations, more holding company examinasion areas and to provide resources to review tions, increased examination of foreign banks, new and existing laws and regulations for their and more problem institutions. The expense imimpact on the economy and efficiency of Board pact is expected to be $4.0 million. programs and operations. Of the "support" initiatives, the largest—$8.2 The $432,200 increment is largely tied to the million—is for facility improvements. Approxifull-year cost of four positions added late in 1990 mately $5.5 million of this increase is for inand increases resulting from the Boardwide com- creased real estate taxes on recently completed pensation program. The travel budget projects an Federal Reserve buildings. The remaining inincrease of $55,000 associated with auditing func- crease involves efforts to provide space for effitions delegated by the Board to Reserve Banks. cient operations at Cleveland, St. Louis, Kansas The Office's 1991 budget provides for no increase City, and the New York Reserve Bank's East in positions, leaving the position count at nine- Rutherford Operations Center. teen. Reserve Bank operations in today's environ- I will be happy to address any questions that ment require more reliable and secure computer Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

720 Federal Reserve Bulletin • September 1991 systems, more office automation, more commu- anticipate some increased costs for automationnication networks, and more efficient high-speed type projects concerned with improving effisorters and counters for checks and currency. ciency and security of data. The initiatives identified as contingency and au- Expenses for Supervision and Regulation, tomation initiatives, check operational improve- budgeted at $234.2 million for 1991, are expected ments, and currency initiatives all result from to increase $22.3 million, or 10.5 percent over these requirements. 1990. This service line has been the fastest grow- The remaining initiatives include $4.5 million ing of the service lines and now constitutes 15.6 for the Reserve Banks' share of the matching percent of total System expenses, compared with contribution for the thrift plan and the two initi- 13.6 percent in 1985. The budgeted staff level is atives that have the effect of reducing costs 2,305, an increase of 88 or 4.0 percent over 1990. through improved operational efficiency. The expense increase is centered on the pro- Besides these major initiatives, it may be help- vision for the additional employees and compenful to look at 1991 budgeted expenses on the sation levels for the ongoing staff members as basis of our four service lines. well as travel, training, and automation. The Expenses for Services to Financial Institutions additional demands on the Federal Reserve's and the Public, which include all of the priced examination staff have necessitated increases in and some of the nonpriced services, are budgeted personnel. These increased demands on staff at $992.1 million and account for two-thirds of members include expanded bank examination total expenses. Expenses are increasing $53.2 programs, improved supervision of foreign bankmillion, or 5.7 percent more than 1990. Staffing is ing agencies in the United States, the broadening budgeted at 9,227, an increase of thirteen, which level of detail covered in the examination prois 0.01 percent more than the 1990 level. Ex- cess, compliance with the FIRREA and the Bank penses of priced services are budgeted at $646.6 Secrecy Act, intensified surveillance of problem million, an increase of 3.8 percent; these ser- financial institutions, and increased focus on the vices, incidentally, are expected to generate rev- requirements of the Community Reinvestment enues of about $780 million. Nonpriced services Act. are budgeted at $345.5 million, an increase of 9.3 Expenses for Services to the U.S. Treasury percent. and Other Government Agencies are budgeted at Commercial check processing is by far the $167.2 million, an increase of $10.3 million or 6.6 largest component in this service line ($492.0 percent over 1990. These expenses continue at million); it accounts for 49.6 percent of these about 11 percent of total expenses in 1991. Staffexpenses and employs 5,686 people. The antici- ing levels are budgeted to increase by 96 or 5.3 pated increase in expenses is $18.9 million or 4.0 percent. The major initiative driving the inpercent, while employment is expected to de- creases in both expenses and staff is the nationcline 35 or 0.6 percent. These levels represent wide expansion of the Regional Delivery System anticipated stable operations, with both check (RDS) discussed earlier, which consolidates the volume and unit costs expected to increase 1.3 issuance of U.S. savings bonds at one office in percent. each District. RDS volume is expected to in- Our other large operations in this service line crease by 5.4 million bonds in 1991. are currency ($166.7 million and 1,532 people), Expenses in 1991 for the conduct of Monetary automated clearinghouse ($83.4 million and 370 and Economic Policy at the Federal Reserve people), and funds transfer ($70.0 million and 155 Banks total $107.5 million and account for about people). The currency service anticipates sizable 7 percent of the total budget. An increase of $8.5 volume and staff increases in the San Francisco million and 8.6 percent is anticipated in 1991. District but with essentially stable operations Employment budgeted at 786 reflects an increase elsewhere (expenses up 6.8 percent; staff up of 14 over the actual level in 1990 but in fact nineteen). Automated clearinghouse (expenses brings the staff level only to the level approved in up 5.7 percent; staff up five) and funds transfer the 1990 budget—approved staffing for 1990 was (expenses up 9.9 percent; staff up one) both not attainable because of attrition and the lag in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 721 finding qualified replacements. Besides providing increase is primarily the result of a substantial for the staff additions, the expense increase rep- increase in postal rates in early 1991, an increase resents salary administration actions and in- for the interdistrict transportation system (ITS), creased equipment and data-processing costs as- and increases from rebidding local transportation sociated with automation initiatives. contracts. Reserve Bank expenses on an object of ex- Building expenses, which account for 9.1 perpense basis also might be useful to the subcom- cent of total expenses, are expected to increase mittee. 10.4 percent in 1991 because of higher real estate Operating expenses for Personnel comprise taxes in several Districts and the full-year effect officer and employee salaries, other compensa- of recently completed capital projects. tion to personnel, and retirement and other ben- The plans of the Reserve Banks for Capital efits. Total personnel costs account for 64.5 spending in 1991 show that outlays for buildings percent of Reserve Bank expenses and are ex- and for data processing and data communications pected to increase 8.0 percent in 1991. equipment continue to dominate Reserve Bank Salaries and other personnel expenses account capital budgets. By their nature, capital outlays for about 52 percent of 1991 budgeted expenses vary greatly from year to year. and are expected to be $49.3 million, or 6.7 percent above 1990 expenses. Salaries alone are budgeted to increase $52.6 million, or 7.3 per- SPECIAL BUDGET EMPHASIS cent, and will be partially offset by a decline in other personnel expenses of $3.2 million or 25.2 The Board of Governors has continued approval percent. The decrease in other personnel ex- in 1991 of two research and development projects penses results from a declining use of personnel intended to provide long-range benefits to the agencies. Merit pay increases of $37.1 million, or Federal Reserve and the banking industry. Be- 5.1 percent, are the primary reason for salary cause the spending on such projects is relatively expense growth. Also contributing to additional high and short term, the Federal Reserve acsalary expenses are staffing level increases, pro- counts for them separately from its operating motions, reclassifications, and structure adjust- expenses, although they are included in the total ments. These increases are partially offset by System budget. The budget for these "Special position vacancies and reduced overtime. Projects" in 1991 is $7.6 million, compared with Expenses for retirement and other benefits, $5.2 million in 1990 and $7.5 million in 1989. which account for 12.3 percent of Reserve Bank Since 1985, the Federal Reserve has been budgets, are anticipated to increase $22.1 mil- working on a project—digital imaging of lion, or 13.5 percent, in 1991. This increase is the checks—that could improve the efficiency of the result of continued escalation in hospital and check collection system through transition from medical costs, a rise in the social security tax, paper delivery to electronic delivery. The Sysand an increase in the thrift plan match in 1991. tem has been testing digital image technologies to Nonpersonnel expenses account for 35.5 per- produce high-quality images of check documents cent of Reserve Bank expenses and are projected in a sustained high-speed check processing envito increase 4.5 percent in 1991. ronment. The primary applications chosen for Equipment expenses are expected to increase the testing were truncation of government checks 7.2 percent and to account for 11.6 percent of and the processing of return items. Both of these total expenses in 1991. Most of the increase is in check processes provide rigorous tests for image depreciation expenses resulting from acquisi- technology because they require the storage of tions to expand data processing and data com- large amounts of data and require a high level of munications capabilities because of increased quality in the retrieved image. work loads. The focus of this project during 1991 will be on Shipping costs (primarily for check operations) the systems development of a high-speed governaccount for 5.8 percent of the 1991 budget and ment check archival system, of personal comare projected to increase 4.1 percent in 1991. The puter systems for potential applications such as Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

722 Federal Reserve Bulletin • September 1991 return-item processing, and of low-speed sys- of each are achieved and that they each operate tems that will be efficient in very low-volume in compliance with all prescribed rules, regulaapplications in the near term. The 1991 budget tions, and policies. The management of each is for this project is $3.7 million. responsible for maintaining adequate internal fi- The second Special Project is the development nancial, custody, and data security controls over of currency authentication systems. Our effort is all aspects of their respective operations. to improve capabilities for detection of counter- To ensure that these controls are operating in feit notes in the processing of incoming currency an effective manner at the Federal Reserve deposits, and thereby promote the integrity of Banks, we have put the following procedures in U.S. currency in circulation. The 1991 budget for place: (1) an internal audit function at each this project is $3.9 million. Reserve Bank is responsible for assessing prac- Before concluding my comments, I would like tices and procedures for soundness and conforto add that the Federal Reserve knows a rigorous mity with regulations in accordance with profesbudget process is only one part of financial sional auditing standards; (2) the Board of management. We are equally concerned about Governors examiners conduct financial, operaother areas of financial integrity. The structure of tional, and procedural reviews at each of the the Federal Reserve System provides for appro- Banks; (3) a certified public accountant firm priate segregation of responsibilities; strong ac- reviews the procedures and practices of the counting control over assets, liabilities, reve- Board's examination program; and (4) the nues, and expenses; and an organizational Board's specialists review the effectiveness of structure that establishes responsibilities for au- each Reserve Bank's internal audit function. We dit and oversight of the objectives and goals of believe that these measures offer excellent prothe Federal Reserve System. tection against financial impropriety. This was the subject of our report to the Governor Kelley and I thank you for this subcommittee earlier this year in which we de- opportunity to address the subcommittee on the scribed and documented procedures and systems Federal Reserve System budget. The existing employed in supervising and controlling the Fed- budget processes are working well in controlling eral Reserve Banks. In brief summary, it is the costs while at the same time encouraging quality policy of the Federal Reserve that the Board and improvements. We welcome your comments and each Reserve Bank maintain a system of internal would be pleased to address any questions you controls that is designed to ensure that objectives may have on our budget. • Statement by Brent L. Bowen, Inspector Gen- SUMMARY ASSESSMENT OF THE BOARD'S eral, Board of Governors of the Federal Reserve FINANCIAL CONTROL SYSTEM REPORT System, before the Subcommittee on Domestic Monetary Policy of the Committee on Banking, The subcommittee asked that the Board's Office Finance and Urban Affairs, U.S. House of Rep- of Inspector General evaluate Governor Angell's resentatives, July 18, 1991 report to the subcommittee by assessing the policies and procedures it describes and identifying any particular weaknesses or strengths in I am pleased to respond to your request to the System's design for auditing and controlling provide a brief review of the points made in our its own financial operations. Our assessment, June 7, 1991, assessment of Governor Angell's which I request be made a part of this hearing report to the subcommittee entitled "System and record, noted the extensive internal controls Procedures for Financial Supervision and Con- present in the Federal Reserve's processes but trol," and to outline our plans for examining the identified two major points of possible concern. Board's systems of oversight and supervision of First, we noted that the interactive participa- Federal Reserve Banks. tion of the Board in program management of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 723 Reserve Bank financial activities may be benefi- directly or through our nationwide hotline, from cial from a day-to-day management perspective managers and staff, and from audit findings. but may also present a potential conflict of inter- Although a risk analysis that we are developing est from an oversight perspective: That is, par- could lead us to amend our priorities, we expect ticipation by Board staff members in the manage- to devote about 25 percent of our resources to the ment of Federal Reserve Bank financial area largely defined by Governor Angell's report operations could hinder their objective oversight over the next few years, with about 40 percent of or evaluation of those operations. our audit resources to be devoted to the mission Second, we concluded that while the Board area of supervision and regulation of financial has an extensive internal control structure de- institutions and the remainder of our resources to signed to prevent and detect fraud and abuse in be about equally divided between the mission Reserve Bank valuables handling, it does not areas of monetary policy and administration. have a specific program to prevent, detect, and We began our program to evaluate the effecinvestigate specific cases of suspected or actual tiveness of the oversight of the Federal Reserve fraud or abuse in other areas. Indeed, having Banks with reviews of the operations of the such a program in the same oversight office Board's Division of Federal Reserve Bank Operwould, in our opinion, cause some of the same ations and Payment Systems and the Board's concerns about the potential conflict of interest Office of Federal Reserve Bank Activities. We expressed in our first point. submitted those reports to the subcommittee last The Inspector General Act gives my office the year. We have just begun an audit of the process authority to audit and investigate all aspects of used to examine the Federal Reserve Banks' the Board's activities, which, by definition, in- financial operations, and our 1991 audit plan clude the Board's oversight of the Federal Re- provides for an audit of the Board's oversight of serve Banks. We can, therefore, review and the Reserve Bank budget process and an audit of report on those areas of Board and Bank activity Federal Reserve Bank branch building constructhat I have characterized as interactive participa- tion costs. We expect to then address the overtion by Board and Bank personnel to determine if sight of automation planning, communication the potential conflict of interest previously cited planning, payment system risk, securities and actually exists and can investigate allegations of fiscal services, cash review, check payments, wrongdoing and the appropriateness of investi- electronic payments, financial accounting, buildgations conducted by Board and Bank personnel. ing planning, protection and contingency planning, General Auditor functions, and other areas outlined in Governor Angell's report. As for the other areas, we are currently con- PLANS FOR EXAMINING THE BOARD'S ducting a nationwide audit of the Federal Re- SYSTEMS OF OVERSIGHT serve's commercial bank examiners' adherence to conflicts of interest policies and procedures; Our assessment of Governor Angell's report to will release this week our report on the Federal the subcommittee includes an outline of the vari- Reserve's development of a national information ous mission areas of the Federal Reserve—mon- center that contains a database of financial, oretary and economic policy, supervision and regu- ganizational structure, and supervisory informalation of financial institutions, system policy tion on the nation's financial institutions; have direction and oversight (the area primarily ad- completed operations reviews of the Board's dressed by Governor Angell's report), and admin- monetary policy divisions; have completed the istration—and the resources associated with those audits of the Board's new compensation system; mission areas. In developing our five-year strate- and are proceeding with other audits identified in gic plan, we identified topics of interest within our strategic and annual plans. each of these areas for specific audit attention, This concludes my formal comments. I would leaving investigations to be more reactive to alle- be pleased to address any questions you may gations of specific wrongdoing that could come have. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

724 Federal Reserve Bulletin • September 1991 Statement submitted by the Board of Governors plication for regulatory approval is required. of the Federal Reserve System to the Committee However, under the proposed act such activities on Ways and Means, U.S. House of Represen- would be viewed as "new lines of business" tatives, July 29, 1991 requiring regulatory approval. While we share the objectives of this proposed We are pleased to present the views of the legislation, in that we too would like to encour- Federal Reserve Board on the proposed Fair age other countries to liberalize their financial Trade in Financial Services Act of 1991. Given markets, we think that the legislation itself is our direct responsibilities with respect to the unwarranted and would have unfortunate consefinancial services industry and our desire to quences. It would reject national treatment—a ensure a healthy and efficient environment for policy that has been fundamental to the U.S. the provision of financial services, the Federal approach to the international operations of finan- Reserve has a special interest in this legislation. cial organizations. This policy should be pre- The proposed act has two major elements that served. are relevant to a discussion of the policy issues The principle of national treatment was estabpresented by the proposed legislation. First, the lished as U.S. policy with respect to foreign Secretary of the Treasury would be required to banks by the International Banking Act of 1978. submit to the Congress every two years a report Despite some individual legislative initiatives in identifying those countries that do not offer na- recent years, it is acknowledged by virtually all tional treatment to U.S. banks, securities bro- major industrial countries as the principle upon kers and dealers, or investment advisers. A which regulation of the international operations country offers national treatment to foreign firms of banks ought to be based. Over many years the if it offers "the same competitive opportunities U.S. government has assumed a leadership role (including effective market access)" as are avail- in building a consensus around this concept. At able to their domestic firms. In the case of the home, our policy of national treatment seeks to country where a significant failure to accord ensure that foreign and domestic banks have fair national treatment is found, the Secretary of the and equal opportunity to participate in our mar- Treasury must, in general, enter into negotiations kets. The motivation is not merely a commitment with the country to end the discrimination. The to equity and nondiscrimination, though such a Secretary may, at his discretion, publish in the commitment in itself is worthy. More fundamen- Federal Register a determination that a country tally, the motivation also is to provide consumers does not give national treatment; if he does so, of financial services with access to a deep, varregulatory agencies would have authority to use ied, competitive, and efficient banking market in such a determination as a basis for denying which they can satisfy their financial needs on applications by financial institutions from that the best possible terms. country. Our policy of national treatment has served Second, if the Secretary of the Treasury has this country well. The U.S. banking market, and published in the Federal Register a determina- U.S. financial markets more generally, are the tion with respect to a country, institutions from most efficient, most innovative, and most sophisthat country that are already operating in the ticated in the world. It is not a coincidence that United States may not commence "any new line our markets are also among the most open to of business" or conduct business from a "new foreign competition. Foreign banks, by their location" without obtaining prior approval from presence and with the resources they bring from the appropriate regulators. This provision would their parents, make a significant contribution to apply to new U.S. activities or U.S. offices for our market and to our economic growth; they which no approval process is currently required enhance the availability and reduce the cost of for either domestic or foreign banks. For exam- financial services to U.S. firms and individuals, ple, a foreign-owned U.S. bank may decide to as well as to U.S. public sector entities. begin to offer consumer mortgage lending or The proposed act would replace the U.S. polinvestment advisory services. Currently, no apicy of national treatment with a policy of recip- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 725 rocal national treatment. The United States the committee's attention. "Grandfathering" is a would be saying that we are prepared to forgo the practice widely accepted internationally as a benefits of foreign banks' participation in our means of protecting investment in existing formarket if U.S. banks are not allowed to compete eign banking operations at a time of statutory fully and equitably abroad. change. U.S. operations of foreign banks were Based on experience to date, the Federal Re- grandfathered in the International Banking Act. serve feels strongly that there are better ways to With respect to foreign operations of U.S. banks, encourage other countries to open their markets. the Federal Reserve, along with others in the Relying on market forces to induce liberalization U.S. government and the U.S. financial industry, may actually be the most potent force. It is well objected strenuously when the European Comunderstood that any country that wants to have a munity was considering the elimination of grandfinancial market with sufficient international stat- father rights for foreign banks, including U.S. ure to compete with New York and London must banks, operating in Europe; in the end the EC liberalize and open its market. Many countries, preserved those rights. Consequently, European including notably—but not only—Japan and Ger- subsidiaries of U.S. banks may continue to conmany, are moving inexorably in that direction. duct business and expand their operations on a Nevertheless, we have not relied only on such national treatment basis. a passive strategy, however successful such a By telling existing foreign-owned banks in the strategy ultimately may be. In 1979, after the United States that the rules and procedures that International Banking Act, the Treasury Depart- have applied equally to them and to all other ment, with the help of other agencies including banks operating in the United States now apply the Federal Reserve, prepared its first National only to U.S.-owned banks, we would be denying Treatment Study, which has been updated sev- national treatment to foreign banks. We would eral times, most recently last year, and which run the risk of introducing instability and diswill be prepared regularly in the future, pursuant couraging foreign investment in our markets. to the Omnibus Trade and Competitiveness Act Moreover, we would be inviting almost certain of 1988. Based on the findings of those reports, retaliation. the Treasury Department has engaged in bilateral In conclusion, the Federal Reserve would like talks with several countries, including Japan, to emphasize that we have witnessed substantial partly as a consequence of which we have seen a liberalization and structural reform in financial substantial degree of liberalization in foreign markets abroad over the past decade. Like memfinancial markets. bers of the Congress, we too would like to see Beyond those efforts, the Federal Reserve and further progress. However, we must recognize others urged countries of the European Commu- also that U.S. markets are not as open as other nity (EC) strongly and with some success to countries would like, or for that matter as free as soften the reciprocity provisions in their pro- many in the United States, including the Federal posed Second Banking Directive. We have par- Reserve, would like. ticipated in a range of committees at the Bank of National treatment is an important concept, International Settlements in Basle and at the but in its implementation it is also an elusive one. Organisation for Economic Co-operation and De- Because it is enormously difficult to apply navelopment in Paris, where work has been aimed tional treatment in a world in which the strucin part at establishing the legal, supervisory, and tures of banking markets in various countries regulatory conditions that are a precondition for differ significantly, it is tempting to seek what ensuring a "level playing field." In addition, the may appear to be direct, clear-cut solutions. Federal Reserve has joined others in the U.S. However, lawmakers in each country, including government in working vigorously to reach a the United States, must balance considerations meaningful agreement on trade in financial ser- of competitive equity with other legitimate convices within the Uruguay round of multilateral cerns. We cannot insist that other countries trade negotiations. adopt our structures any more than we can let There is one other issue that we would bring to others dictate to us. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

726 Federal Reserve Bulletin • September 1991 It could prove to be a costly mistake if we ing access for U.S. financial firms to those jeopardize the gains we have made and are markets, for the sake of trying, probably in continuing to make in improving our own mar- vain, to force others to adhere to our own kets, in reforming markets abroad, and in gain- timetable. • Statement of Franklin D. Dreyer, Senior Vice having relatively homogeneous characteristics President, Supervision and Regulation and into pools that are transferred to a trust or Loans, Federal Reserve Bank of Chicago, before special, limited-purpose corporation. This enthe Subcommittee on Policy Research and Insur- tity then issues securities backed directly by the ance of the Committee on Banking, Finance and pooled assets, and the principal and interest Urban Affairs, U.S. House of Representatives, payments of these underlying assets flow di- July 31, 1991 rectly through to the holders of the securities. The holders of these securities are essentially in I thank you for this opportunity to discuss asset the same position as if they owned the undersecuritization as it relates to financial institu- lying assets directly. The trust or corporation tions. As you are aware, securitization of assets that issues the securities is typically established is one of several innovations changing the nature by the organization that generated and pooled and complexity of our financial system. As with the underlying assets. other innovations, an understanding of the ben- Over time, more complex securitization strucefits and risks involved in securitization is nec- tures have evolved. These structures, originally essary to evaluate properly the role that it is issued in the form of collateral mortgage obligaincreasingly playing in our financial markets. tions (CMOs) and now issued as real estate mort- Staff members at the Federal Reserve have been gage investment conduits (REMICs), aggregate carefully reviewing securitization to ensure that and then redirect the principal and interest cash this process will not pose undue risk for deposi- flows coming from the underlying assets and astory institutions and their holding companies. sign payment priorities to different classes of investors. These more complex structures have been developed to provide some classes of inves- THE NATURE OF SECURITIZATION tors with a security that has a more certain maturity or average life and thus a more predict- Securitization is a process that transforms illiq- able overall yield. However, by providing greater uid assets into marketable securities. The pro- certainty to some investors, the maturity and cess has come to be considered a normal activity overall yield to other classes of investors become for depository institutions as well as for mortgage less certain. The introduction of these features, banks—indeed, the securitization of loans into while increasing the complexity of asset-backed tradable securities and subsequent sale of these structures, has enhanced their marketability to securities now serve as an important substitute different types of investors by appealing to their for retaining loans and funding these with bank differing investment objectives and risk preferdeposits. Securitization activities started in the ences. 1970s. Fostered by certain government and gov- Regardless of the type of structure, almost all ernment-related agencies, primarily to support securitization programs involve the use of a the housing industry, mortgage-related assets servicer. The servicer is responsible for collectwere the first instruments to be securitized. Since ing interest and principal payments on the loans then, the economics of the process has sustained or other assets in the underlying pool and for its momentum as other types of assets have transmitting these funds to a trustee, who, in recently been securitized. turn, passes them on to investors. A servicer Asset securitization, in its simplest form, may be the originator of the pooled asset or consists of aggregating loans or similar assets another financial institution that has acquired the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 727 right to service the underlying assets on behalf of They have increased 290 percent since 1984 to the investor for a fee. nearly $1.1 trillion by the end of 1990. As of Another aspect of securitization is credit en- year-end 1990, approximately 40 percent of hancement. This procedure involves use of a outstanding one- to four-family residential guarantor to make sure that principal and interest mortgage debt has been securitized. Furtherpayments will be received by investors on a more, over the same period, securities backed timely basis, even if the servicer does not collect by other types of assets, such as credit card these payments from the underlying obligors. receivables, automobile loans, student loans, One form of credit enhancement is a recourse and other types of consumer loans, have also provision, or guarantee, that requires the origi- been created. The annual issuance of securities nator to cover any losses up to an amount backed by assets other than mortgages has contractually agreed upon. Some asset-backed increased from slightly more than $1 billion in securities, such as those backed by credit card 1985 to almost $43 billion by the end of 1990. As receivables, typically use a "spread account" as of year-end 1990, approximately 10 percent of a credit enhancement. A spread account is actu- consumer debt had been securitized. ally an escrow account whose funds are derived Generally, the biggest purchasers of assetfrom a portion of the spread between the interest backed securities have been banks, savings and earned on the assets in the underlying pool and loan associations, life insurance companies, the lower interest paid on securities issued by the and pension funds. Based on third-quarter 1990 trust. data, commercial banks held approximately Credit enhancement may also be provided 19.1 percent of the total mortgage-related secuthrough overcollateralization when the value of rities outstanding. Savings and loan associathe underlying assets in the pool exceeds the face tions held 14.5 percent, life insurance compavalue of the securities issued against it. Senior- nies held 14.3 percent, pension funds held 7.3 subordinated security structures also provide percent, and mutual funds held 4.5 percent, credit enhancement but generally benefit only the with the remaining amount held by other invessenior class. Other forms of credit enhancement tors. include standby letters of credit or surety bonds From the beginning, banking organizations from third parties. Asset-backed securities other have been involved in the securitization process than those securities supported by pools of mort- as originators and securitizors of residential gages generally depend on some form of credit mortgages. Over the past few years, they have enhancement provided by the originator or third ventured into securitization of other types of party to insulate the investor from some or all of assets, such as credit card receivables and other any credit losses. Issues of mortgage-backed types of consumer loans. Also, many banking securities can also be backed by the Government organizations have increased their reliance on National Mortgage Association (GNMA), a gov- securitization for funding, have acted as serernment agency backed by the full faith and vicers or trustees for securitized issues, and credit of the U.S. government, or by the Federal have increased their holdings of asset-backed National Mortgage Association (FNMA) or the securities. More recently, as noted above, Federal Home Loan Mortgage Corporation banking organizations have begun to purchase (FHLMC), which are government-sponsored asset-backed securities or derivative instruagencies. ments for investment or hedging purposes. Banking organizations have found securitization an attractive way to reduce interest rate THE SECURITIZATION MARKET risk, and securitization provides an additional source of funding, generally at a lower cost than Asset securitization has grown substantially other funding sources. Securitization helps reover the past few years. Residential mortgage- duce interest rate risk since the assets are backed, pass-through securities are the largest removed from the selling institution's books. segment of the asset-backed securities market. This risk is passed on to the investors, and, at Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

728 Federal Reserve Bulletin • September 1991 the same time, the cash received in the asset RISKS OF SECURITIZATION sale raises funds for further lending activities. Furthermore, the fees earned by banking orga- While clear benefits accrue to banking organizanizations as servicers or trustees of asset- tions that engage in securitization activities as backed securities have provided a source of well as to those that invest in asset-backed noninterest income. securities, these activities have the potential of Banking organizations may also seek to secu- increasing the overall risk profile of the banking ritize assets to accomplish several other objec- organization if they are not carried out in a tives. First, in selling, rather than holding, prudent manner. For the most part, the risks that assets they have originated, banking organiza- financial institutions encounter in the securitizations are able to lower both their reported tion process are identical to those that they face liabilities and assets, thereby reducing reserve in traditional lending transactions. These involve and capital requirements and deposit insurance credit risk, concentration risk, operational risk, premiums. This occurs because traditional liquidity risk, and interest rate risk, including lending activities are generally funded by de- prepayment risk. However, since the securitizaposits or other liabilities, and both the assets tion process separates the traditional lending and related liabilities are reflected on the bal- function into several limited roles, such as origance sheet. Deposit liabilities must generally inator, servicer, credit enhancer, trustee, and increase to fund additional loans. investor, the types of risks that a banking orga- In contrast, so long as there is no recourse nization may encounter will differ depending on back to the banking organization that originated the role it assumes. the assets, the securitization process generally As with direct investments in the underlying does not increase on-balance-sheet liabilities in assets, investors in asset-backed securities will proportion to the volume of loans or other assets be exposed to credit risk, that is, the risk that generated. When banking organizations securi- obligors will default on principal and interest tize their assets and these transactions are payments. Although investors in most assettreated as sales—that is, there is no recourse backed securities are largely shielded from credit back to the banking organization that originated risk because of government-related guarantees the loans—both the assets and the related asset- and other credit enhancements, investors are still backed securities (that is, liabilities) are not subject to the risk that the various parties, for reflected on the banking organization's balance example, the servicer or credit enhancer, in the sheet. The cash proceeds from the securitization securitization structure will be unable to fulfill transactions are generally used to originate or their contractual obligations. Moreover, invesmake additional loans for securitization, and the tors may be susceptible to concentrations of risks process is repeated. Thus, for the same volume across various asset-backed security issues of loan originations, securitization results in through overexposure to an organization perlower reported assets and liabilities when com- forming various roles in the securitization propared with traditional lending activities. cess or as a result of geographic concentrations As noted above, banking organizations can within pools of assets. earn fee income from servicing the loans that Furthermore, since the secondary markets for they originated and sold. Additional advantages certain asset-backed securities may be thin, ininclude faster recognition of fee income than vestors may encounter greater-than-anticipated normal. Previously deferred loan fees related to difficulties when seeking to sell their assetassets that are sold, and any excess servicing backed securities. Additionally, investors are fees created by the asset securitization process still subject to interest rate risk, which can vary can, under generally accepted accounting prin- greatly depending on the nature of the individual ciples (GAAP), be recognized at the time of sale security they hold. Indeed, while certain security rather than be amortized over the life of the classes of a REMIC are structured so that invesasset as would be the case if it was held on the tors are subject to substantially less interest rate bank's books. risk than that associated with the underlying Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 729 mortgages, other classes of the same REMIC are REGULA TOR Y RESPONSE necessarily structured so that these investors are exposed to considerably greater interest rate In view of the increasing involvement of bankrisk. Banking organizations that provide credit ing organizations in the asset securitization enhancements to asset-backed security issues process and the desire to foster prudent banking are, of course, subject to the credit risk inherent practice with respect to this activity, the Fedin the assets they are guaranteeing. In addition, eral Reserve and the other banking regulators as credit enhancer, a banking organization may have taken several steps over the years to be exposed to risk stemming from undue concen- address securitization activities. These steps trations of assets coming from a limited geo- include the following: (1) regulatory reporting graphical area or from an originator that may requirements that, in general, permit banks to have allowed its own credit standards to deteri- take assets they have originated and securitized orate. off their balance sheets only when they have Also, to generate the higher volume of receiv- "sold" those assets without recourse; (2) the ables necessary to maintain or expand a securi- issuance in 1988 of an interagency supervisory tization program, a banking organization that policy statement to address investments in originates the loans to be securitized may con- stripped, asset-backed securities and residual sciously or unconsciously lower its credit stan- interests and a subsequent proposed revision dards. Conversely, a banking organization that that will address "high risk" collateralized issues asset-backed securities may be subject to mortgage obligations; (3) development of exampressures to sell only their best assets, thus ination guidelines addressing various aspects of reducing the quality of their own loan portfolios. the securitization process; and (4) development Banking organizations that service the loans of the risk-based capital framework. underlying asset-backed securities must ensure In April 1988, the three federal banking agenthat their policies, operations, and systems will cies issued a joint policy statement advising not permit breakdowns that may lead to defaults. banking organizations on the selection of secu- The servicer, whether it be the originator of the rities dealers and unsuitable investment pracassets or a third-party servicer, has a responsi- tices. In addition, this policy also discussed bility to perform, which includes having to un- several types of instruments, such as stripped dertake reasonable collection efforts to collect mortgage-backed securities and residual interdelinquent payments. In this regard, the collec- ests in pools of securitized assets, with very tion costs that an anticipated volume of problem volatile prices and high-risk characteristics due assets may require could substantially raise the to extreme sensitivity to interest rate risk. The overall costs of operations for the servicer and Board policy statement indicated that these even exceed the related fee income. Further- investments may be unsuitable for most institumore, if a servicer fails to perform properly, the tions. The three banking agencies, along with trustee may take away its right to continue to the Office of Thrift Supervision (OTS), are service assets and place those servicing rights currently updating the 1988 policy statement to with another servicer, which would, of course, address other "high-risk" classes of CMOs and collect the servicing fees. REMICs. The high-risk nature of these securi- Beyond the above operational risks, certain ties stems from the manner in which the embodservicing contracts, such as those entered into ied interest rate risk affects the cash flows to with GNMA, FNMA, and FHLMC, increas- investors resulting in especially volatile price ingly contain recourse provisions that subject movements. the servicer to direct credit risk. Issuers may Examiner guidelines on asset securitization face pressures to repurchase securities backed have been established for use by the Federal by loans or leases that they have originated but Reserve's examiners. These guidelines provide that have deteriorated and become nonperform- a structured framework for assessing the risks ing, thus providing "moral recourse" for the associated with the securitization process at securities. banking organizations and for determining that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

730 Federal Reserve Bulletin • September 1991 banking organizations have implemented cer- lated to securitization. Second, bank holding tain prudential policies and procedures in this companies that transfer assets with recourse to area. In accordance with these guidelines, ex- the seller as part of the securitization process aminers are to determine the following: are required under the risk-based capital guide- • Securitization activities are integrated into lines to hold capital against their off-balancethe overall strategic objectives of the organiza- sheet credit exposures. Under GAAP, such tion. transactions may be treated as sales that re- • Sources of credit risk are understood and move the assets sold with recourse from the properly analyzed and managed, without exces- bank holding company's books. Third, banking sive reliance on credit ratings by outside agen- organizations that provide credit enhancement cies. to asset securitization issues through standby • Credit, operational, and other risks are letters of credit or by other means must hold recognized and are addressed through appropri- capital against the related off-balance-sheet ate policies, procedures, management reports, credit exposure. and other controls. The risk weights assigned to asset-backed • Possible sources of structural failure in secu- securities that banking organizations hold as ritization transactions are recognized, and the investments depend on the issuer and whether organization has adopted measures to minimize the assets that comprise the collateral pool are the impact of such failures should they occur. mortgage related assets. Asset-backed securi- • The organization is aware of the legal risks ties issued by a trust or by a single-purpose and uncertainty regarding various aspects of se- corporation and backed by nonmortgage assets curitization. are typically assigned a risk weight of 100 • Concentrations of exposure in the underlying percent. asset pools, in the asset-backed securities port- Mortgage-backed, pass-through securities folio, or in the structural elements of securitiza- guaranteed by GNMA are risk weighted at tion transactions are avoided. 0 percent because GNMA is explicitly backed • All sources of risk are evaluated at the incep- by the full faith and credit of the United States. tion of each securitization activity and are mon- Mortgage securities, such as participation itored on an ongoing basis. certificates and CMOs issued by FNMA or Special seminars on asset securitization are FHLMC, are risk weighted at 20 percent because conducted for senior Federal Reserve examiners, they are government-sponsored agencies that and securitization is a regular topic in the Sys- carry only the implied backing of the United tem's examiner schools. In-depth coverage of States. securitization issues will continue to be part of a However, several types of securities issued regular examiner training program. by FNMA and FHLMC, such as residual inter- Capital requirements play an important role in ests and CMO classes that absorb more than the supervision of banking organizations. As a their share of loss, are excluded from the lower general, long-standing rule, bank regulatory risk weight and slotted in the 100 percent riskagencies have maintained a basic tenet that when weight category because of their extreme price there is risk associated with a financial arrange- volatility. ment, capital should be held against that risk. A privately issued, mortgage-backed security The risk-based capital framework assigns assets that meets certain criteria is considered either a and off-balance-sheet items to various broad risk direct or indirect holding of the underlying mortcategories, depending on the level of credit risk gage-related assets and is assigned to the same associated with that asset. risk category as those assets (for example, the The risk-based capital framework has three assets may be U.S. government agency securimain features that will affect the asset securiti- ties, U.S. government-sponsored agency securization activities of banking organizations. First, ties, FHA- and VA-guaranteed mortgages, and the framework assigns risk weights to loans, conventional mortgages). However, under no asset-backed securities, and other assets re- circumstances will a privately issued, mortgage- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 731 backed security be assigned to the 0 percent systems. In addition, significant policies and prorisk-weight category. cedures should be approved and reviewed periodically by the organization's Board of Directors. NEW PRODUCT DEVELOPMENT In the past few years, securitization of assets has SUMMARY become an increasingly complex activity. Product development in this field is being carried out Securitization has resulted in several benefits for at a very fast pace because of (1) computer banking organizations. It improves funding and models that assist in redirecting the cash flows enhances liquidity for the banking system, parfrom the underlying assets in a number of differ- ticularly in the housing and consumer sectors. It ent directions, (2) investor demand for more has also brought new investors into the marketspecialized products to meet their individual place because of the diversity of the securities needs, (3) the marketplace growth with respect to offered. Securitization of assets has also helped the number of originators and investors, and (4) banks to fund their portfolios. the globalization of the asset-backed securities But there are also potential drawbacks and markets. risks associated with asset securitization. The The increasing complexity makes it potentially complexity of risks in this process, coupled with more difficult to determine what the risk is and the increasing pace of innovation, could make it who has it. We expect banking organizations, difficult for banking organizations to liquidate when they participate in securitization in any some types of securities. Moreover, increasingly capacity, to ensure that the activities are clearly complex recourse or guarantee arrangements can and logically integrated into the overall strategic make it more difficult to monitor the risks assoobjectives of the organization. Appropriate poli- ciated with this activity. In addition, adverse risk cies, procedures, and controls should be estab- selection can weaken the credit underpinnings of lished by a banking organization before partici- the securitization process. Bank regulators must pating in asset securitization. Controls should continue to carefully monitor the securitization include well-developed management information processes now under way. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

732 Announcements RECESS APPOINTMENT REVISED LISTS OF OTC MARGIN STOCKS OF ALAN GREENSPAN AS CHAIRMAN AND FOREIGN MARGIN STOCKS OF THE BOARD OF GOVERNORS NOW AVAILABLE President Bush on August 9, 1991, announced The Federal Reserve Board published on July 26, the recess appointment of Alan Greenspan as 1991, a revised List of Marginable OTC Stocks Chairman of the Board of Governors of the (OTC List) for over-the-counter (OTC) stocks Federal Reserve System, effective August 10, that are subject to its margin regulations. Also 1991. Following is the text of the White House published was the List of Foreign Margin Stocks statement: (Foreign List) for foreign equity securities that are subject to Regulation T (Credit by Brokers The President today announced that he will recess and Dealers). The lists are effective August 12, appoint Alan Greenspan as Chairman of the Board of 1991, and supersede the previous lists that were Governors of the Federal Reserve System, effective effective May 13, 1991. August 10, 1991. The Foreign List indicates those foreign equity securities that are eligible for margin treatment at broker-dealers. Margin treatment of foreign eq- APPOINTMENT OF DAVID W. MULLINS, JR., uity securities was made possible by a 1990 AS VICE CHAIRMAN OF THE amendment to Regulation T. Twenty companies BOARD OF GOVERNORS were added to the Foreign List, bringing the total number of foreign equity securities to 295. There President Bush, on January 14, 1991, announced were no deletions from the Foreign List. his intention to appoint Governor David W. The changes that have been made to the re- Mullins, Jr., as Vice Chairman of the Board of vised OTC List, which now contains 2,714 OTC Governors, succeeding Manuel H. Johnson, who stocks, are as follows: resigned effective August 3,1990. Governor Mullins was subsequently confirmed by the Senate • One hundred eleven stocks have been inon July 11, 1991, and took the oath of office on cluded for the first time, 106 under national July 24, 1991, for a four-year term. market system (NMS) designation. A copy of the White House announcement • Forty-seven stocks previously on the list follows: have been removed for substantially failing to meet the requirements for continued listing. The White House • Thirty-four stocks have been removed for Office of the Press Secretary reasons such as listing on a national securities exchange or involvement in an acquisition. January 14, 1991 The President today announced his intention to nom- The OTC List is published by the Board for the inate. . . David W. Mullins, Jr., of Arkansas, to be information of lenders and the general public. It Vice Chairman of the Board of Governors of the includes all OTC securities designated by the Federal Reserve System for a term of four years. He Board pursuant to its established criteria as well would succeed Manuel H. Johnson. Since May 1990, as all OTC stocks designated as NMS securities Dr. Mullins has served as a member of the Board of Governors of the Federal Reserve System in Washing- for which transaction reports are required to be ton, D.C. made pursuant to an effective transaction report- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 733 ing plan. Additional OTC securities may be des- 10. Ratios of tier 1 and tier 2 capital to risk-adjusted ignated as NMS securities in the interim between assets, by size of bank, 1990:4* the Board's quarterly publications and will be immediately marginable. The next publication of Percent the Board's list is scheduled for November 1991. In addition to NMS-designated securities, the Board will continue to monitor the market activity of other OTC stocks to determine which stocks meet the requirements for inclusion and continued inclusion on the OTC List. ERRATA Federal Reserve Bulletin In chart 6 of the July 1991 Bulletin article, "Recent Developments Affecting the Profitabil- 1. See text discussion for definitions of capital tiers and risk ity and Practices of Commercial Banks," page adjustments. 512, the plotting is incorrect; and in chart 10 of the article, page 515, the labels for tier 1 and tier 2 are reversed. The corrected charts are shown Annual Report here. On page 254 of the Board's 77th Annual Report, 1990, the entry for the merger of Texas Bank 6. Loan losses and delinquencies at medium with another institution is in error. The entry and large banks, by type of loan1 should read, Percent Percent Commercial and industrial Texas Bank, Weatherford, Texas, to merge with Citizens National Bank, Denton, Texas. PROPOSED ACTION The Federal Reserve Board, along with the Comptroller of the Currency and the Federal Deposit Insurance Corporation, issued on July 3, 1991, a request for public comment on the supervisory definition of highly leveraged transactions (HLTs). Comments were due to the Board by August 26, 1991. CHANGES IN BOARD STAFF The Federal Reserve Board announced the re- 1. Percentages are annual rates of average amount outstanding, tirement of Robert F. Gemmill, Staff Adviser in seasonally adjusted. Losses are net of recoveries; delinquent loans are the Division of International Finance, effective those in nonaccrual status plus those accruing interest and at least thirty days past due. August 2, 1991. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

734 Federal Reserve Bulletin • September 1991 The Board also announced, effective August Theodore E. Allison is appointed Assistant to 7, 1991, a revision in the functions and reporting the Board for Federal Reserve System Affairs. relationships of the Office of the Staff Director The Director of Reserve Bank Operations and for Federal Reserve Bank Activities and in the Payment Systems, Mr. Clyde H. Farnsworth, reporting relationships of the Division of Re- will report directly to the Board of Governors serve Bank Operations and Payment Systems. through the Reserve Bank Activities Commit- The Staff Director and his staff will be trans- tee. The Office of the Staff Director has been ferred to the Office of Board Members; and Mr. disestablished. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

735 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON MAY 14,1991 first quarter, with outiays for both equipment and structures decreasing substantially. The plunge in expenditures for equipment included large declines Domestic Policy Directive in spending for computers, motor vehicles, and many types of industrial equipment; in contrast, The economic information reviewed at this meeting oudays for aircraft were markedly higher. Recent was mixed, but on balance it suggested that business data on orders received by domestic manufacturers activity might be in the process of stabilizing after pointed to additional cutbacks in spending for most declining in the fourth and first quarters. Retail sales types of equipment. The sizable reduction in firstwere little changed in April, and housing markets quarter expenditures for nonresidential structures apparently strengthened in many areas; however, followed an even larger decline in the fourth quarter. business fixed investment remained weak, and some Forward-looking indicators of nonresidential conliquidation of inventories seemed to be continuing. struction suggested continuing weakness. Nonfarm Production held steady in April. Nonfarm payroll business inventories fell substantially further in the employment continued to decline but by much less first quarter, largely as a result of continuing than in previous months. Broad measures of prices liquidation of stocks of motor vehicles. In March, and wages pointed to moderating inflation pressures, housing starts lost part of their sharp February gain. although a number of special factors tended to However, more recent anecdotal reports and surveys obscure underlying inflation trends. of homebuilders suggested that reduced mortgage rates were continuing to stimulate consumer interest Total nonfarm payroll employment fell further in in purchasing homes. April, but the reduction was substantially less than the declines in the latter part of 1990 and the early Retail sales, which had risen substantially in months of 1991. The job losses included much February after sizable declines in previous months, smaller decreases in manufacturing and construc- were now indicated to have increased somewhat tion; employment in wholesale and retail trade also further in March and to have changed little in April. continued to slide, and the loss more than offset a The improvement in retail sales was led by the further gain at service establishments. The civilian durable goods category. Unit sales of motor vehicles unemployment rate declined somewhat in April to rose in March but subsequently softened again in 6.6 percent. April. After rebounding earlier, consumer sentiment After dropping sharply from October through was reported to have declined slightly in April. March, industrial production was about unchanged Producer and consumer prices changed little in in April. An upturn in the production of motor March and April, partly because of some additional vehicles provided an important boost to industrial reduction in energy prices. Excluding their food and activity, and output of other consumer durable goods energy components, both producer and consumer also edged up. These gains offset further declines in prices were up considerably less in the latest two the production of consumer nondurable goods and months than in previous months. Apparently reflectbusiness equipment. Industrial materials, while ing an increase in the minimum wage, average displaying a mixed pattern, continued to decline as a hourly earnings rose at a faster rate in April than in group. Capacity utilization rates generally fell earlier months of the year. In the first quarter, hourly further in April, and operating rates for most industry compensation as measured by the employment cost groups were at their lowest point in the current index was boosted by special factors that included an recession. increase in the wage bases for social security and medicare taxes. Real business fixed investment fell sharply in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

736 Federal Reserve Bulletin • September 1991 The nominal U.S. merchandise trade deficit ing period, apparently reflecting reactions to indicanarrowed in February, and for January-February tions of continued weakness in the economy as well combined the deficit was considerably below its as the easing in reserve conditions. Banks reduced average rate in the fourth quarter. The improvement their prime rate from 9 to 8V2 percent in early May reflected a significant decline in the average price of after the easing of monetary policy. In long-term oil imports, a lower volume of non-oil imports, and debt markets, yields on Treasury bonds were little further expansion in the quantity of exports. In the changed on balance over the period as market first quarter, economic activity appeared to have participants appeared to focus increasingly on the continued to grow at a sluggish pace in the major prospects for very large Treasury financing needs. foreign industrial nations as a group. In private-sector bond markets, rates edged lower At its meeting on March 26,1991, the Committee and risk premia fell further after declining sharply in adopted a directive that called for maintaining the February and March. Major stock price indexes existing degree of pressure on reserve positions and retreated from record levels reached during April that contained no presumption regarding the likely but still rose on balance over the period. Prices of direction of possible intermeeting adjustments. bank debt and equities outpaced the broader indexes, Accordingly, the directive indicated that somewhat in part because bank earnings for the first quarter more or somewhat less pressure on reserve positions were not as poor as many investors had feared. might be appropriate during the intermeeting period In foreign exchange markets, the dollar tended to depending on progress toward price stability, trends weaken in reaction to the easing of U.S. monetary in economic activity, the behavior of the monetary policy in late April and the release of data that failed aggregates, and developments in foreign exchange to confirm market expectations of a quick recovery and domestic financial markets. The contemplated in U. S. economic activity after the end of the Persian reserve conditions were expected to be consistent Gulf war. However, some decline in short-term with some reduction in the growth of M2 and M3 interest rates abroad and reactions to political from accelerated rates in previous months to annual developments in Germany and the Soviet Union rates of about 5V2 and 3 ¥2 percent respectively over limited the downward pressure on the dollar. On the three-month period from March through June. balance, the dollar was little changed over the period For much of the period after the Committee in terms of the other G-10 currencies, and at the time meeting, open market operations were directed of this meeting it was at a level well above its lows of toward maintaining the existing degree of pressure mid-February. on reserve positions. On April 30, in response to After accelerating to a relatively rapid pace in indications of continuing weakness in the economy February and March, growth of M2 slowed appreand in the context of abating inflation pressures, the ciably in April. The slowing was somewhat greater discount rate was reduced from 6 to 516 percent and than had been anticipated and appeared to be related part of this decline was allowed to show through to in part to a relatively small buildup in household the federal funds rate. Adjustment plus seasonal deposit balances associated with a falloff in income borrowing averaged a bit above $150 million over tax payments. The expansion of M3, which already the intermeeting period, close to expected levels. had moderated in March, stalled in April. Apart During this period, two technical increases were from the effect of reduced M2 growth, M3 was made to assumed levels of borrowing to reflect a influenced by a runoff of large time deposits normal upswing in seasonal credit. Federal funds associated with contracting credit at depository traded at an average rate just below 6 percent until institutions. For the year through April, M2 exlate April; the rate was under downward pressure at panded at a rate close to the midpoint of the times from market expectations of some further Committee's annual range; M3 grew at a pace in the easing in monetary policy and from unanticipated upper half of the Committee's range, as the eliminareserve surpluses. After the announcement of the tion of reserve requirements on nontransaction reduction in the discount rate on April 30, federal accounts induced some foreign banks to shift funding funds traded in a range around 5% percent. into the U.S. CD market. Most short-term interest rates declined somewhat The staff projection prepared for this meeting more than the federal funds rate over the intermeet- suggested that a recovery in economic activity was Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 737 imminent and would be fully under way by the expenditures could develop, possibly induced by summer months; the expansion was projected to further disappointment over the level of consumer continue through 1992. In the context of moderate spending, that would deepen and prolong the growth in consumer spending, the recovery would recession. Consumer confidence had receded after be stimulated by an upturn in homebuilding and a its surge at the end of the Persian Gulf war. swing in coming months from decumulation to Consumer and business attitudes were seen as a accumulation of inventories. Capital expenditures critical factor bearing on the prospective perforwere expected to strengthen over time as sales trends mance of the economy. improved. On balance, however, the projection Despite the uncertainties, the members generally pointed to a recovery that was less robust than most viewed a business recovery in the months ahead as a of those experienced in previous postwar cycles. reasonable expectation. At the same time, while Among the factors that would tend to inhibit the acknowledging the unpredictability of the economy's recovery were the effect of unoccupied nonresiden- momentum once the recovery got under way, many tial structures on construction activity, the absence questioned the potential strength of the anticipated of further significant impetus from net exports, and expansion. Their assessment of current conditions the prospect of some continued constraint on the did not point to major sources of stimulus to the availability of credit. Federal fiscal policy was economy, aside perhaps from residential housing. expected to remain moderately restrictive, and Some members also observed that the rebuilding of efforts by states and localities to cope with budgetary balance sheets, to the extent that it continued, might imbalances also promised to exert some restraint on temper the initial strength of the recovery though it domestic demand. Against the background of some would have obviously favorable implications for the persisting slack in labor and product markets, the sustainability of the recovery over time. With regard staff anticipated that the underlying rate of inflation to inflation trends, members commented that on the would trend down in coming quarters. whole recent price and wage developments were In the Committee's discussion of the economic encouraging and provided a firmer basis than earlier situation and outlook, members commented that for projections of appreciable progress in reducing current business indicators continued to provide the core rate of inflation over the next several mixed signals of the prospects for the economy but quarters. that a variety of developments appeared to have laid Reports from around the country indicated that the groundwork for a recovery. Indeed, in the view business conditions were still uneven. Economic of a number of members, the economy might well be activity appeared to have weakened somewhat close to its recession trough. Consumer spending, further in some regions over the course of recent while disappointing to many business firms, ap- months but had changed little or shown modest gains peared to have been better maintained in recent in other parts of the nation. Relatively weak ecomonths than earlier reports had suggested, and nomic conditions had limited the tax revenues of demand for housing clearly had picked up across the numerous state and local governments, including nation. Overall spending had exceeded production many major cities, and the imposition or the prospect by a considerable margin since the fall of 1990, and of higher taxes along with efforts to cut services at some point the liquidation of inventories would were having an unsettling influence on business and end and a pickup in production would be needed to consumer confidence in many areas. More generally, satisfy ongoing demand. On the financial side, the fiscal developments, including trends in federal stock market remained strong; households and spending, were expected to have a retarding effect business firms were making progress in rebuilding on the nation's economy over the balance of the year their balance sheets; and the overall condition of the and in 1992. banking system appeared to be improving despite Many of the members observed that the consumer the continuing difficulties of a number of individual sector might well remain relatively sluggish in the institutions. Negative factors included indications of months ahead as consumer expenditures continued relatively depressed business sentiment; business to be restrained by lagging growth in disposable capital spending remained weak and members were incomes and by concerns about employment prosconcerned that additional retrenchment in business pects, debt burdens, and the health of a number of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

738 Federal Reserve Bulletin • September 1991 financial institutions. With regard to the prospects suggested a relatively limited role for inventories for business capital spending, members continued to in buttressing an expansion in light of the now anticipate that significant strengthening would lag widespread business practice of tighter inventory an improvement in consumer spending. In this management. connection, some commented that unless tangible Housing construction also was cited as a sector of evidence of stronger consumer spending began to the economy that might make a significant contribuemerge fairly soon, already gloomy business atti- tion to a rebound in economic activity. Reports from tudes would be shaken further and could lead to an around the country already indicated a marked additional cutback in business capital expenditures. revival in buyer interest, abetted by reduced mort- For now, the weakness in investment spending gage rates and lower home prices in many areas. appeared to reflect in large measure a stretching out Those developments had greatly enhanced the of major capital projects rather than widespread affordability of houses. The availability of financing cancellations. The large issuance of new equity and to many home builders remained subject to some long-term debt by business firms was being used at uncertainty, but while lending institutions would this point mainly to shore up balance sheets rather probably apply stricter credit standards than in than to finance capital expenditures, but these earlier years, the improving financial condition of activities implied that business firms would be in an these lenders should induce them in the context of improved position to finance more investment strengthening housing markets generally to provide spending later in response to a pickup in the demand the financing that would be needed to translate for their products and an ongoing need to modernize increased home sales into more home construction. production facilities for competitive reasons. In any With regard to the outlook for inflation, members event, commercial construction activity was likely indicated that they were encouraged by recent price to remain depressed for an extended period until and wage developments. Some observed that greater a severe overcapacity in office space and other progress had been made in recent months than they facilities in many parts of the country could be had anticipated earlier, and many commented that worked down. more progress in reducing the core rate of inflation Several members commented that a turnaround in was a likely prospect over the next several quarters. inventory investment could play a significant role, In this connection, members reported that competias it had historically, in helping to generate a business tive pressures remained strong and that many recovery. The members recognized that a good deal business firms found it difficult to sustain price of uncertainty typically surrounded the outiook for increases. Moreover, the prices paid by business inventories, and it seemed especially difficult to firms for raw materials had tended to hold in a anticipate inventory behavior in the context of still narrow range, and many business contacts indicated evolving business policies aimed at much tighter that they did not anticipate much change in such inventory controls. Nonetheless, the general liqui- prices during the months ahead. More generally, the dation of inventories was not likely to persist, and its members continued to express confidence that the termination would at the minimum remove a major ongoing effects of earlier monetary policy actions retarding influence on economic activity, should and reduced monetary growth over an extended appreciable rebuilding of inventories fail to materi- period, together with the slack that had emerged in alize in the near term. Indeed, the reduction in auto labor and product markets, would result over time in dealer inventories since late 1990 already had caused a lasting downward adjustment in the core rate of production schedules in the motor vehicles industry inflation. In addition, the appreciation of the dollar to be raised substantially for the second quarter in foreign exchange markets would tend with some despite still lagging sales. A question obviously lag to exert a favorable restraining effect on prices. remained regarding the prospective strength of the A number of members cautioned, however, that a buildup in business inventories once there were significant reduction in the core rate of inflation was relatively firm indications of a recovery in final not yet assured, and some observed that the failure demand from recession levels. In one view, a pickup of long-term bond yields to adjust more fully to in inventory investment was likely to be a key source recessionary economic conditions and to the substanof expansion in the economy. A differing view tial cumulative decline in short-term interest rates Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 739 over the course of recent quarters might well be likely to strengthen over the balance of the current indicative of continued and still considerable infla- quarter after showing little or no growth in April. tionary expectations on the part of the public. For the quarter as a whole, expansion of both In the Committee's discussion of a desirable policy monetary aggregates was expected to be below the for the intermeeting period ahead, all of the members rates projected at the time of the March meeting, but indicated their support of a proposal to maintain an their cumulative growth through midyear would still unchanged degree of pressure on reserve positions. be in the middle portions of their respective annual Most also preferred to retain the current instruction ranges. The members recognized that the economy in the directive that did not bias possible intermeeting was subject to events beyond the Committee's adjustments toward ease or toward restraint. Mone- control, but an appropriate rate of monetary expantary policy appeared to be properly positioned at this sion at this stage would support the view that policy point to help implement the Committee's objectives was positioned to help prevent substantial further in that it reflected an appropriate balancing of the weakening in business activity on the one hand while risks of an overly stimulative policy that would guarding against disappointing inflation results later threaten progress against inflation versus the risks of on the other. Subnormal monetary growth might be a deepening recession or an overly delayed recovery. an indication that monetary policy was still too tight, A number of members commented that some further perhaps because of the reluctance of depository deterioration in economic activity could not be ruled institutions and other lenders to extend credit. In that out, and some emphasized that the costs of a regard, it might be especially useful in this period to substantial shortfall in economic activity from scrutinize the asset side of bank balance sheets, current projections would be much greater than notably the behavior of various categories of loans, those of a markedly faster expansion than the and other data on debt trends in relation to typical members currently expected, since present levels of cyclical behavior for possible clues regarding both slack in labor and other resource use would tend to the strength of credit demands and business activity limit the price consequences of a period of robust and changes in lending practices and conditions. economic growth. However, the System's earlier Turning to possible adjustments to the degree of easing actions, including the most recent reduction reserve pressure during the intermeeting period, all in the discount rate in late April and some associated of the members supported or could accept a symmeteasing in reserve conditions, had provided a good rical directive in light of their current assessments of deal of insurance against cumulative further weak- the prospects for the economy and the behavior of ening in business activity. Moreover, the System's the monetary aggregates. Some members emphacommitment to the goal of reducing inflation argued sized that the marked uncertainties in the current for a cautious approach to any further easing at a economic situation underscored the need for a great time when the economy might be close to its deal of vigilance in appraising ongoing economic recession trough. Steady progress against inflation developments. Some indicated a slight preference would foster lower interest rates in long-term debt for a directive that was tilted toward possible easing. markets and would thus provide an added degree of These members believed that the risks in the econstimulus to the economy; conversely, a resurgence omy remained at least marginally tilted toward a in inflation would probably induce a backup in weaker than projected economic performance and long-term interest rates, including mortgage rates, that any policy adjustments in the intermeeting with adverse implications for housing markets and period were likely to be in the direction of some the economy. Against this background, the members easing. Should the incoming data suggest a substanconcluded that a desirable policy was to take no tial shortfall from expectations, monetary policy in action at this time but to monitor carefully the this view should be adjusted promptly toward ease. ongoing effects of the System's earlier easing moves. In the view of a majority of the members, however, a symmetrical directive was warranted because the In the course of the Committee's discussion, a risks to the economy were reasonably well balanced number of members underscored the desirability of at this point. While incoming data on business achieving monetary growth within the Committee's activity might remain relatively weak over the near ranges for the year. According to a staff analysis term, a change in policy probably would not be prepared for this meeting, both M2 and M3 were Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

740 Federal Reserve Bulletin • September 1991 called for so long as such data did not suggest a average rate in the fourth quarter. Producer and consumer further cumulative decline in economic activity but prices were little changed over March and April, partly reflecting further reductions in energy prices. tended to confirm already available anecdotal Short-term interest rates have declined since the information and current Committee expectations. Committee meeting on March 26, while bond yields have At the conclusion of the Committee's discussion, changed little. The Board of Governors approved a all of the members indicated that they favored a reduction in the discount rate from 6 to percent on directive that called for maintaining the existing April 30. The trade-weighted value of the dollar in terms of the other G-10 currencies showed little change on degree of pressure on reserve positions. The balance over the intermeeting period. members also noted that they preferred or could Growth of M2 and M3 weakened in April; for the year accept a directive that did not include a presumption thus far, expansion of M2 has been at the midpoint of the about the likely direction of any intermeeting Committee's range, while growth of M3 has been in the adjustments in policy. Accordingly, the Committee upper half of its range. decided that somewhat greater reserve restraint or The Federal Open Market Committee seeks monetary somewhat lesser reserve restraint might be accept- and financial conditions that will foster price stability, promote a resumption of sustainable growth in output, able during the period ahead depending on progress and contribute to an improved pattern of international toward price stability, trends in economic activity, transactions. In furtherance of these objectives, the the behavior of the monetary aggregates, and Committee at its meeting in February established ranges developments in foreign exchange and domestic for growth of M2 and M3 of 2xh to 6'/2 percent and 1 to financial markets. The reserve conditions contem- 5 percent, respectively, measured from the fourth quarter plated at this meeting were expected to be consistent of 1990 to the fourth quarter of 1991. The monitoring range for growth of total domestic nonfinancial debt was with growth of M2 and M3 at annual rates of around set at 4V2 to Wi percent for the year. With regard to M3, 4 and 2 percent respectively over the three-month the Committee anticipated that the ongoing restructuring period from March through June. of thrift depository institutions would continue to depress At the conclusion of the meeting, the following its growth relative to spending and total credit. The behavior of the monetary aggregates will continue to be domestic policy directive was issued to the Federal evaluated in the light of progress toward price level Reserve Bank of New York: stability, movements in their velocities, and developments in the economy and financial markets. The information reviewed at this meeting provides In the implementation of policy for the immediate mixed signals regarding the course of economic activity, future, the Committee seeks to maintain the existing which had weakened appreciably further earlier in the degree of pressure on reserve positions. Depending upon year. Following sharp decreases in previous months, total progress toward price stability, trends in economic nonfarm payroll employment fell somewhat further in activity, the behavior of the monetary aggregates, and April; the civilian unemployment rate edged down to developments in foreign exchange and domestic financial 6.6 percent. Industrial output changed little in April after markets, somewhat greater reserve restraint or somewhat declining markedly in earlier months. Retail sales were lesser reserve restraint might be acceptable in the about unchanged in April and are now indicated to have intermeeting period. The contemplated reserve conditions risen somewhat in March. Advance indicators continue to are expected to be consistent with growth of M2 and M3 point to weakness in business fixed investment in coming over the period from March through June at annual rates months. Housing starts were down in March, partly of about 4 and 2 percent, respectively. offsetting a sizable advance in February, but sales of new and existing homes continued to rise. The nominal U.S. Votes for this action: Messrs. Greenspan, Corrigan, merchandise trade deficit declined in February and its Angell, Black, Forrestal, Keehn, Kelley, LaWare, January-February rate was considerably below the Mullins, and Parry. Votes against this action: None. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

741 Legal Developments FINAL RULE—AMENDMENT TO RULES cap. It also sets forth the Board's policy, program, and REGARDING EQUAL OPPORTUNITY procedures for prohibiting discrimination on the basis of physical or mental handicap in programs and activ- The Board of Governors is amending 12 C.F.R. Part ities conducted by the Board, and in addition specifies 268, its Rules Regarding Equal Opportunity, by adding the circumstances under which the Board will hire or a new Subpart J—Employment of Noncitizens, and decline to hire persons who are not citizens of the making a conforming change to section 268.101(b) United States, consistent with the Board's operational ("Purpose and scope"), in order to define the Board's needs, the requirements and prohibitions of the Immipractices regarding the employment of persons who gration Reform and Control Act of 1986 (8 U.S.C. are not citizens of the United States. The amendment 1101 et seq.), and other applicable law. will govern employment of such persons consistent with the Board's security requirements. 3. Subpart J, consisting of sections 268.1001 through The amendment replaces the Board's Management 268.1004, is added immediately following Subpart I to Policy Statement regarding Employment of Nonciti- read as follows: zens, which prohibited employment of noncitizens subject to limited exceptions. The amendment permits Subpart J—Employment of Noncitizens the employment of persons who are not United States citizens in all positions which do not require access to Section 268.1001 Definitions. sensitive information of the Board. The amendment Section 268.1002 Prohibitions. permits the employment of only United States citizens Section 268.1003 Exception. and persons intending to become United States citi- Section 268.1004 Applicability. zens in positions which require access to sensitive information of the Board. Subpart J—Employment of Noncitizens Effective July 11, 1991, the Board amends 12 C.F.R. Part 268 as follows: Section 268.1001—Definitions. Part 268—Rules Regarding Equal Opportunity (a) Noncitizen means any person who is not a citizen of the United States. 1. The authority citation for Part 268 continues to read (b) Sensitive information means: as follows: (1) Information that is classified for national security purposes under Executive Order No. 10,450, includ- Authority: Sees. 10(4) and 11(7) of the Federal ing any amendments or superseding orders that the Reserve Act (partially codified in 12 U.S.C. 244 and President of the United States may issue from time 248(7)). to time; (2) Information that consists of confidential supervi- 2. Section 268.101(b) is revised to read as follows: sory information of the Board, as defined in 12 C.F.R. 261.2(b), or of similar confidential busi- Section 268.101—Authority, purpose, and ness information regarding the affairs of institutions, scope. or their subsidiaries, which are supervised or regulated by the Board; or (3) Information the disclosure or premature disclo- (b) Purpose and scope. This regulation sets forth the sure of which to unauthorized persons may be Board's policy, program, and procedures for providing reasonably likely to impair the formulation or impleequal opportunity to Board employees and applicants mentation of monetary policy, or cause unnecessary for employment without regard to race, color, religion, or unwarranted disturbances in securities or other sex, national origin, age, or physical or mental handi- financial markets, such that access to such informa- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

742 Federal Reserve Bulletin • September 1991 tion must be limited to persons who are loyal to the Section 268.1004—Applicability. United States. This Subpart J applies to employment in all positions For purposes of paragraph (b)(3) of this section on the staff of the Board of Governors of the Federal 268.1001(b), information may not be deemed sensitive Reserve System and to employment by Federal Reinformation merely because it would be exempt from serve Banks of examiners who must be appointed, or disclosure under the Freedom of Information Act, selected and approved by the Board of Governors of 5 U.S.C. 552, but sensitive information must be infor- the Federal Reserve System pursuant to 12 U.S.C. mation the unauthorized disclosure or premature dis- 325, 326, 338, or 625. This Subpart J shall be effective closure of which may be reasonably likely to impair as of July 11, 1991. important functions or operations of the Board, (c) Sensitive position means: (1) Any position of employment with the Board of Governors of the Federal Reserve System in which ORDERS ISSUED UNDER BANK HOLDING the employee will be required to have access to COMPANY ACT sensitive information; or (2) Any examiner position with any Federal Reserve Orders Issued Under Section 3 of the Bank Bank for which the appointment or selection must Holding Company Act be made or approved by the Board of Governors of the Federal Reserve System pursuant to 12 U.S.C. Banc One Corporation 325, 326, 338, or 625. Columbus, Ohio Banc One Ohio Corporation Section 268.1002—Prohibitions. Columbus, Ohio (a) Unauthorized aliens. The Board will not hire any Order Approving Acquisition of Banks person unless that person is able to satisfy the requirements of section 101 of the Immigration Reform and Banc One Corporation and Banc One Ohio Corpora- Control Act of 1986 (8 U.S.C. 1324a(a)). tion, both of Columbus, Ohio (together, "Banc (b) Employment in sensitive positions. The Board will One"), bank holding companies within the meaning not hire any person to a sensitive position unless such of the Bank Holding Company Act ("BHC Act"), person is a citizen of the United States or, if a have applied under section 3 of the BHC Act noncitizen, is an intending citizen as defined in (12 U.S.C. § 1842) to acquire all of the voting shares 8 U.S.C. 1324b(a)(3). of the following indirect subsidiaries of PNC Finan- (c) Preference. Consistent with the Immigration Re- cial Corp, Pittsburgh, Pennsylvania ("PNC"): The form and Control Act of 1986 and other applicable law, Central Trust Company, Newark, Ohio; The Central applicants for employment who are citizens of the Trust Company of Northern Ohio, N.A., Lorain, United States or intending citizens as defined in Ohio; The Central Trust Company of Northeastern 8 U.S.C. 1324b(a)(3) shall be preferred over equally Ohio, N.A., Canton, Ohio; and The Central Trust qualified applicants who are neither United States Company of Southeastern Ohio, N.A., Marietta, citizens nor intending citizens. Ohio (collectively, "Banks").1 Notice of the applications, affording interested persons an opportunity to submit comments, has Section 268.1003—Exception. been published (56 Federal Register 22,871 (1991)). The time for filing comments has expired, and the The prohibition of section 268.1002(b) does not apply Board has considered the applications and all comto hiring for positions for which a security clearance is required under Executive Order No. 10,450, including any subsequent amendments or superseding orders that the President of the United States may issue from time to time, where the noncitizen either has or can 1. Banc One will not acquire the branch of The Central Trust Company of Southeastern Ohio, N.A., ("Central Trust-Marietta") obtain the necessary security clearance. Any offer of located in Meigs County, Ohio. A subsidiary of PNC, The Central employment authorized by this section 268.1003 shall Trust Company, N.A., Cincinnati, Ohio, will purchase the assets and be contingent upon receipt of the required security assume the liabilities of the branch, and Banc One has committed not to consummate its acquisition of Central Trust-Marietta until the clearance in the manner prescribed by law. branch is transferred. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 743 ments received in light of the factors set forth in In order to mitigate the anticompetitive effects that section 3(c) of the BHC Act.2 would result from consummation of this proposal in the Banc One, with total consolidated assets of $44.0 Dover-New Philadelphia banking market, Banc One billion, controls 53 banking subsidiaries in Ohio, Ken- has committed to divest, on or before consummation of tucky, Indiana, Michigan, Wisconsin, and Texas. its acquisition of Banks, one banking office in the Banc One is the second largest commercial banking Dover-New Philadelphia market that controls deposits organization in Ohio, controlling approximately $12.3 of $13.6 million. This divestiture represents approxibillion in deposits, representing approximately 13.8 mately 1.9 percent of the deposits held by commercial percent of the total deposits in commercial banks in banks in the market. The Board believes that this the state.3 PNC is the seventh largest commercial divestiture, together with the other facts of record, banking organization in Ohio, controlling approxi- substantially mitigates the effects on competition of this mately $4.5 billion in deposits, representing approxi- proposal in the Dover-New Philadelphia banking market. mately 5.1 percent of the total deposits in commercial In particular, eight commercial banking organizabanks in the state. Banks control approximately $1.8 tions, including some of the largest commercial banking billion in deposits, representing approximately 2 per- organizations in Ohio, would remain as competitors cent of the total deposits in commercial banks in the after consummation of the proposal. In addition, six state. Upon consummation of the proposal, including thrift institutions that control approximately 21.2 perthe planned divestiture, Banc One would become the cent of the combined deposits of banks and thrift largest commercial banking organization in Ohio, con- institutions in the market actively compete in the martrolling deposits of approximately $14.1 billion, repre- ket. Based upon the size, number, and market share of senting approximately 15.9 percent of deposits in thrift institutions in the Dover-New Philadelphia bankcommercial banks in Ohio. Consummation of this ing market, the Board has concluded that thrift instituproposal would not have a significantly adverse effect tions exert a competitive influence that mitigates in part upon the concentration of commercial banking re- the anticompetitive effects of this proposal.6 sources in Ohio. Moreover, several characteristics of the Dover-New Banc One and Banks compete directly in seven Philadelphia market indicate that it is attractive for banking markets in Ohio. These markets are Dover- entry. The Dover-New Philadelphia market's level of New Philadelphia, Akron, Cleveland, Columbus, per capita income and deposits per bank office and the Marietta-Parkersburg, Wooster, and Canton. growth rates in bank deposits, employment, and retail In the Dover-New Philadelphia market,4 Banc One sales exceed those of similar Ohio markets. Of these is the second largest of nine commercial banking markets, Dover-New Philadelphia ranks first in the organizations, controlling $213.7 million in deposits, state in terms of total deposits. Since 1985, three representing approximately 29.9 percent of the depos- commercial banks have entered the market by acquisiits in commercial banks in the market. The Central tion and one commercial bank has entered de novo. Trust Company of Northeastern Ohio, N.A., is the Finally, because Ohio banking law permits statewide fourth largest commercial banking organization in the branching and nationwide de novo entry on a reciprocal market, controlling $59.5 million in deposits, repre- basis, there are many potential entrants into the Doversenting approximately 8.3 percent of the commercial New Philadelphia banking market. bank deposits in the market. The Dover-New Phila- Based upon all of these and other facts of record, the delphia market is considered highly concentrated. The Board has concluded that consummation of this pro- HHI for the market is 2257 and would increase by 496 points to 2753 upon consummation of the proposal.5 trated. In such markets, the Justice Department is likely to challenge a merger that increases the HHI by more than 50 points. The Justice 2. The Board received comments from the National Association of Department has informed the Board that a bank merger or acquisition Life Underwriters, Inc.; the Ohio Association of Life Underwriters; generally will not be challenged (in the absence of other factors the Professional Insurance Agents of America; the Professional Insur- indicating anticompetitive effects) unless the post-merger HHI is at ance Agents of Ohio; the Independent Insurance Agents of America; least 1800 and the merger increases the HHI by more than 200 points. and the National Association of Casualty & Surety Agents regarding The Justice Department has stated that the higher than normal HHI the sale of insurance on the premises of Central Trust-Marietta. Banc thresholds for screening bank mergers for anticompetitive effects One has committed that Central Trust-Marietta will cease this activity implicitly recognize the competitive effect of limited-purpose lenders upon consummation of this transaction. and other non-depository financial entities. 3. State deposit data are as of December 30, 1990. Market deposit 6. If 50 percent of the deposits held by thrift institutions were data are as of June 30, 1990. included in the calculation of market concentration, Banc One's 4. The Dover-New Philadelphia market is approximated by Tuscar- pro forma market share, after taking account of the planned divestiawas County, except for Lawrence and Sandy Townships. ture, would be 32.0 percent and the HHI would increase by 302 to 5. Under the revised Department of Justice Merger Guidelines, 49 2324. See Midwest Financial Group, 75 Federal Reserve Bulletin 386 Federal Register 26,823 (June 29, 1984), a market in which the (1989); National City Corporation, 70 Federal Reserve Bulletin 743 post-merger HHI is above 1800 is considered to be highly concen- (1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

744 Federal Reserve Bulletin • September 1991 posal is not likely to result in a significantly adverse Fifth Third Bancorp, Cincinnati, Ohio ("Bancorp"), a effect on competition in the Dover-New Philadelphia bank holding company within the meaning of the Bank banking market. Holding Company Act ("BHC Act"), has applied The Board also has examined the effects of this under section 3 of the BHC Act (12 U.S.C. § 1842) to proposal in the other six banking markets in which acquire all of the voting shares of Farmers Exchange Banc One and Banks operate. After taking account of Bank, Millersburg, Kentucky ("Farmers").1 Fifth competition by thrifts in these markets, the increase in Third Bank, Cincinnati, Ohio ("Fifth Third Cincinthe HHI upon consummation would not exceed the nati"), and Fifth Third Bank, Columbus, Ohio ("Fifth revised Department of Justice Guidelines in any of Third Columbus") (collectively "Banks") have also these banking markets. Based on this and all the other applied to purchase certain assets and assume certain facts of record, the Board believes that consummation liabilities from several branches of Chase Bank of of this proposal would not have a significantly adverse Ohio, Columbus, Ohio, under section 18(c) of the effect on competition in any relevant banking market. Federal Deposit Insurance Act (12 U.S.C. § 1828(c)) The financial and managerial resources of Banc One ("Bank Merger Act"). In addition, Banks have apand Banks and their future prospects are consistent plied to establish certain branches pursuant to section with approval. Considerations relating to the conve- 9 of the Federal Reserve Act (12 U.S.C. § 321). Lonience and needs of the communities to be served are cations of all branches are set forth in the Appendix. also consistent with approval of this application. Notice of the applications, affording interested per- Based on the foregoing and other facts of record, sons an opportunity to submit comments, has been including the proposal as finally structured, and com- published (56 Federal Register 21,493 (1991)). As mitments by Banc One, the Board has determined that required by the Bank Merger Act, reports on the the applications should be, and hereby are, approved. competitive effects of the mergers were requested The Board's approval is specifically conditioned on from the United States Attorney General, the Office of Banc One's compliance with the commitments dis- the Comptroller of the Currency, and the Federal cussed in this order and in the application and other Deposit Insurance Corporation. The time for filing submissions by Banc One, and these commitments are comments has expired, and the Board has considered considered conditions imposed in writing in connection the applications and all comments received in light of with the Board's findings and decision. This transaction the factors set forth in section 3(c) of the BHC Act, the shall not be consummated before the thirtieth calendar Bank Merger Act and the Federal Reserve Act. day following the effective date of this order, or later Section 3(d) of the BHC Act, the Douglas Amendthan three months after the effective date of this order, ment, prohibits the Board from approving an applicaunless such period is extended for good cause by the tion by a bank holding company to acquire control of Board or by the Federal Reserve Bank of Cleveland, any bank located outside of the holding company's acting pursuant to delegated authority. home state,2 unless such acquisition is "specifically By order of the Board of Governors, effective authorized by the statute laws of the State in which July 22, 1991. [the] bank is located, by language to that effect and not merely by implication." 12 U.S.C. § 1842(d). Ban- Voting for this action: Chairman Greenspan and Governors corp's home state is Ohio, while Farmers is located in Angell, Kelley, La Ware, and Mullins. Kentucky. The Board has determined that the laws of Ken- JENNIFER J. JOHNSON tucky expressly authorize the acquisition of Kentucky Associate Secretary of the Board banks by Ohio bank holding companies.3 Accordingly, the Board's approval of these applications is not Fifth Third Bancorp precluded by the Douglas Amendment. Cincinnati, Ohio Fifth Third Bank Cincinnati, Ohio 1. Bancorp proposes to merge Farmers into its subsidiary, Fifth Third Bank of Central Kentucky, N.A., Paris, Kentucky. Fifth Third Bank 2. A bank holding company's home state is that state in which the Columbus, Ohio operations of the bank holding company's banking subsidiaries were principally conducted on July 1, 1966, or the date on which the company became a bank holding company, whichever is later. Order Approving the Acquisition of a Bank, the 3. National City Corporation, 74 Federal Reserve Bulletin 581 Acquisition of Certain Assets and Assumption of (1988). See also Ky. Rev. Stat. Ann. § 287.900 (Michie/Bobbs-Merrill 1986) and Cooperative Agreement and Determination of Reciprocity Certain Liabilities of a Bank, and the Establishment between the Commonwealth of Kentucky and the State of Ohio, of Branches October 16, 1985. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 745 Bancorp, with total deposits of $6.3 billion, operates cial banking organization in the market, controlling subsidiary banks in Ohio, Indiana, and Kentucky.4 deposits of $2.8 billion, representing 19.4 percent of Bancorp is the sixth largest banking organization in the total deposits in commercial banking organizations Ohio, controlling approximately $5.4 billion in depos- in the market. The deposits in the branches to be its in Ohio, representing 6.4 percent of the total acquired from Chase Bank of Ohio total $96.0 million deposits in commercial banking organizations in the and represent less than 1 percent of the total deposits state. Bancorp is also the 11th largest banking organi- in commercial banking organizations in the market. zation in Kentucky, controlling approximately $401.1 Upon consummation of the proposal, the HHI would million in deposits in Kentucky, representing 1.3 per- increase by 25 points, to a level of 1448.'° cent of the total deposits in commercial banking orga- Fifth Third Columbus and Chase Bank of Ohio nizations in the state. Upon consummation of the compete directly in the Columbus banking market.11 proposals, Bancorp would remain the sixth largest Fifth Third Columbus is the ninth largest commercial banking organization in Ohio and would become the banking organization in the market, controlling depostenth largest banking organization in Kentucky.5 Con- its of $355.6 million, representing 2.1 percent of the summation of the proposal would not result in signif- total deposits in commercial banking organizations in icantly adverse effects on the concentration of banking the market. The deposits in the branches to be acresources in Ohio or Kentucky. quired from Chase Bank of Ohio total $95.0 million Bancorp and Farmers compete directly in the Lex- and represent less than 1 percent of the total deposits ington, Kentucky, banking market.6 Both Bancorp in commercial banking organizations in the market. and Farmers control less than 1 percent of the deposits Upon consummation of the proposal, the HHI would in commercial banking organizations in this market.7 increase by 3 points, to a level of 1810.12 Upon consummation of the proposed transaction, Based on all the facts of record, the Board has Bancorp would become the 13th largest commercial determined that consummation of this proposal would banking organization in the market, controlling depos- not have a significantly adverse effect on competition its of $51.5 million, representing 1.5 percent of the in any relevant banking market. The Board also detertotal deposits in commercial banking organizations in mines that the financial and managerial resources and the market. The Herfindahl-Hirschman Index future prospects of Bancorp, Farmers and Banks are ("HHI") would increase by 1 point, to a level of 1518.8 consistent with approval of these applications. Fifth Third Cincinnati and Chase Bank of Ohio In considering the convenience and needs of the compete directly in the Cincinnati banking market.9 communities to be served under the BHC Act and the Fifth Third Cincinnati is the second largest commer- Bank Merger Act, and the applications to establish branches under the Federal Reserve Act, the Board has taken into account the record of Bancorp and 4. Total deposits are as of March 31,1991. State banking data are as Banks under the Community Reinvestment Act of June 30, 1990. Market share data are as of June 30, 1989. (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA re- 5. Bancorp would control approximately $5.6 billion in deposits in quires the federal financial supervisory agencies to Ohio, representing 6.6 percent of the total deposits in Ohio commercial banking organizations, and approximately $419.4 million in de- encourage financial institutions to help meet the credit posits in Kentucky, representing 1.4 percent of the total deposits in needs of the local communities in which they operate Kentucky commercial banking organizations. 6. The Lexington banking market is approximated by Bourbon consistent with the safe and sound operation of such County, Clark County, Fayette County, Jessamine County, Powell institutions. To accomplish this end, the CRA requires County, Scott County and Woodford County, all in Kentucky. the appropriate federal supervisory authority to "as- 7. Bancorp is the 14th largest commercial banking organization in the market, controlling deposits of $33.2 million, and Farmers is the sess an institution's record of meeting the credit needs 18th largest commercial banking organization in the market, control- of its entire community, including low- and moderateling deposits of $18.3 million. 8. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (1984), a market in which the post-merger HHI is between 1000 and 1800 is considered moderately concentrated. The Department of Justice has informed the Board that, as a general matter, a bank merger or acquisition will not be challenged, in the 10. Fifth Third Cincinnati would remain the second largest commerabsence of other factors indicating anticompetitive effects, unless the cial banking organization in the market, controlling deposits of $2.9 post-merger HHI is at least 1800 and the merger increases the HHI by billion, representing 20.3 percent of the total deposits in commercial 200 points. The Justice Department has stated that the higher-than- banking organizations in the market. normal HHI thresholds for screening bank mergers for anticompeti- 11. The Columbus banking market is approximated by Franklin tive effects implicitly recognize the competitive effect of limited- County, Delaware County, Fairfield County, Licking County, Madipurpose lenders and other non-depository financial entities. son County, Pickaway County, Union County, Perry Township in 9. The Cincinnati banking market is approximated by Hamilton Hocking County and Thorn Township in Perry County, all in Ohio. County, Brown County, Clermont County, and portions of Butler 12. Fifth Third Columbus would become the eighth largest commer- County and Warren County in Ohio; Dearborn County, Indiana; and cial banking organization in the market, controlling deposits of $450.6 Boone County, Kenton County, Campbell County, Grant County and million, representing 2.8 percent of the total deposits in commercial Pendleton County, in Kentucky. banking organizations in the market. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

746 Federal Reserve Bulletin • September 1991 income neighborhoods, consistent with the safe and In this regard, the March Order noted certain defisound operation of the institution." 12 U.S.C. § 2901. ciencies in Banks' CRA performance and Banks' In this regard, the Board has considered comments representations that these deficiencies would be corfiled by the Ohio Community Reinvestment Alliance rected. As discussed below, Banks have taken some and the Coalition of Neighborhoods, both in Cincin- steps to correct these deficiencies. Banks are required nati, Ohio (collectively, "Protestants"). Protestants to report quarterly to the Federal Reserve Bank of allege that the performance of Banks under the CRA: Cleveland ("Reserve Bank") on their progress in (i) does not demonstrate sufficient components of correcting these deficiencies and Banks' first quarterly effective CRA programs, including board of direc- reports are due on July 30, 1991. Banks' progress in tor involvement, employee training, community correcting these deficiencies will be carefully considoutreach and marketing efforts; ered in reviewing future applications by Banks. (ii) reflects inadequate participation in CRA-related programs; and Components of CRA Programs (iii) indicates discriminatory lending practices. Protestants allege that components of Banks' CRA The Board has carefully reviewed the CRA perfor- programs are deficient in board-of-director involvemance record of Bancorp and Banks, as well as ment, employee training, community outreach, and Protestants' comments and Fifth Third Cincinnati's marketing efforts.16 For the reasons fully set forth in responses to those comments, in light of the CRA, the the March Order, the Board believes that Banks have Board's regulations, and the Statement of the Federal adopted many elements of an effective CRA program Financial Supervisory Agencies Regarding the Com- as outlined in the Agency Policy Statement, including munity Reinvestment Act ("Agency CRA State- procedures for coordinating ascertainment efforts and ment").13 Banks have received a satisfactory rating CRA activities with board-of-director involvement. from their primary regulator in the most recent exam- Banks have a CRA officer who is responsible for ination of their CRA performance.14 The Agency CRA coordinating the Banks' CRA program, keeping the Statement provides that a CRA examination is an board of directors current on CRA developments, and important and often controlling factor particularly acting as the liaison between the bank and the comwhere, as in this case, many of the specific issues munity. Banks also have CRA committees that include raised by the protests were incorporated in the reviews representatives from senior management, all lending of Banks. In addition, the Board extensively reviewed areas, the legal department, marketing, community the CRA performance of Banks in light of comments affairs, and the banking centers. These committees raising very similar issues received from Protestants in meet twice a month to review ascertainment efforts, recent applications by Banks to establish branches and discuss CRA concerns, and on occasions to meet with Customer Bank Communication Terminals in Ohio.15 community groups. CRA policies for each bank are set Accordingly, the Board has considered Protestants' by its board of directors and their CRA statements are comments in light of these satisfactory ratings and the reviewed annually.17 Board's findings in the March Order. Employee training is also part of Banks' CRA program.18 For example, Fifth Third Cincinnati states that new customer service representatives are required to attend mandatory training sessions which include ed- 13. 54 Federal Register 13,742 (1989). The Agency CRA Statement provides guidance regarding the types of policies and procedures that the supervisory agencies believe financial institutions should have in place in order to fulfill their responsibilities under the CRA on an ongoing basis and the procedures that the supervisory agencies will 16. Protestants also charge that Fifth Third Cincinnati does not have use during the application process to review an institution's CRA adequate minority representation on its board of directors and in compliance and performance. The Agency CRA Statement also sug- senior management. While the Board fully supports affirmative progests that decisions by agencies to allow financial institutions to grams designed to promote equal opportunity in every aspect of a expand will be made pursuant to an analysis of the institution's overall bank's personnel policies and practices in the employment, develop- CRA performance and will be based on the actual record of perfor- ment, advancement, and treatment of employees and applicants for mance of the institution. employment, the Board believes that the alleged deficiencies in the 14. Protestants generally allege that these ratings are erroneous and banks' general personnel practices are beyond the scope of factors criticize the examination process. Protestants do not, however, fac- assessed under the CRA. tually rebut the examination findings but rather rely on comparisons of 17. Protestants have questioned certain deficiencies noted in the certain factors chosen by Protestants with two other Cincinnati banks March Order regarding community delineations and listings of the that received satisfactory ratings by other federal regulators to sup- types of credit products available. These deficiencies raised technical port their allegations. The Board notes that the CRA performance compliance issues and have been corrected by the bank. ratings of Banks are based on a review of the relevant CRA assess- 18. The Ohio Community Reinvestment Alliance alleges that its ment factors as applied to the individual banks. "checkers/testers" have found that no CRA training has been imple- 15. Fifth Third Bank, 77 Federal Reserve Bulletin 347 (1991) mented. There have been no facts presented to support these allega- ("March Order"). tions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 67 ucation on CRA obligations within the first month of tutions and the Chamber of Commerce to explore the their employment. In addition, its legal department marketing of various technical assistance programs to conducts lender compliance training sessions quar- small and minority-owned businesses. The Committee terly which include CRA compliance for commercial has also identified the need for certain alternative loan and consumer lending officers. Fifth Third Cincinnati's programs for small and minority-owned businesses, CRA officer also regularly makes CRA presentations which Fifth Third Cincinnati is adding to its list of to banking center managers and annually presents a existing loan programs. In addition, the Committee summary of CRA program components to consumer has updated Fifth Third Cincinnati's brochure on loan and commercial lending officers which emphasizes applications procedures and published this informacommunity needs assessment, documentation, com- tion in minority and small business magazines. munity outreach and overall calling efforts in all com- The Board noted in its March Order that there were munities.19 some weaknesses in the effectiveness of Banks' adver- Community outreach efforts have been criticized by tising efforts in low- and moderate-income communi- Protestants as omitting contact with certain civil rights ties.23 Banks have committed to review and strengthen groups.20 Banks have undertaken programs to insure their efforts in reaching these markets and Banks' contact with their entire community. For example, this improvement in this regard will be reviewed as part of year Fifth Third Cincinnati sponsored minority arts Banks' quarterly reporting to the Reserve Bank as and cultural programs that included the Black Music required by the March Order. Repertory Ensemble; Dr. Martin Luther King, Jr. Fifth Third Cincinnati has begun to strengthen its Tribute at the School for Creative and Performing marketing efforts by introducing two major loan cam- Arts; and the American Negro Spiritual Festival. In paigns that use billboards and transit advertising to addition, the Fifth Third Foundation has met with 53 target low- and moderate-income communities.24 Fifth community groups this year and made grants in Third Cincinnati has also initiated a radio campaign to amounts of approximately $1.3 million.?1 Groups that inform customers of its Good Neighbor Mortgage have received grants include the Urban League, the Loan program that targets low- and moderate-income Cincinnati Human Relations Commission and the individuals with income below $35,000.25 YMCA Black Achievers. Banks' CRA officers, banking center managers, and lending officers also maintain Participation in CRA-Related Programs contacts with the business community, including minority businesses, through specific call programs as Protestants generally allege that Banks' participation discussed in the March Order.22 in CRA-related programs is insufficient. Specifically, Fifth Third Cincinnati has formed a Minority Busi- Protestants criticize Banks for lack of participation in ness Development Committee ("Committee") within local development and redevelopment projects and the last year and this committee has called on 300 programs. In addition, Protestants allege that Banks minority-owned businesses to ascertain their banking have insufficient involvement with minority small busneeds. On the basis of these calls, the Committee has iness development and that small business lending has identified a need for technical assistance and Fifth been inadequate. In its March Order, the Board spe- Third Cincinnati's CRA Officer is participating on a cifically reviewed Banks' participation in CRA-related committee with representatives of local financial insti- programs, including community development projects and Small Business Administration ("SBA") lending, 19. This year Fifth Third Cincinnati has held six new training sessions for new customer representatives, five sessions for commercial lenders, two sessions for consumer lenders and forty-one presen- 23. In response to Protestants' criticism of insufficient advertising in tations to the banking centers. black media publications, Fifth Third Cincinnati notes that it hired a 20. Fifth Third Cincinnati states that it welcomes meetings with minority-owned public relations firm and placed advertisements in representative community groups, and in June 1991 senior manage- several papers including the Call and Post, East Side Daily News, and ment officials met with representatives of the Ohio Community The Report to promote the opening of its Glenville branch, an office Reinvestment Alliance, the Cincinnati Chapter of the NAACP, and located in a low- and moderate-income neighborhood and under the Coalition of Neighborhoods. minority management. 21. Protestants have suggested that a percentage of Banks' charita- 24. The "Right Loan, Right Here, Right Now" campaign includes ble gifts be directed to established black service organizations. The the use of 20 outdoor billboards, 16 external boards on local Metro Board concluded in the March Order that Banks' charitable activities buses, advertisements placed in the Cincinnati Herald and Blackbook, were consistent with meeting the convenience and needs of commu- brochures and posters, and television advertisement. In addition, nities served by Banks. Fifth Third Cincinnati has initiated a mortgage loan campaign that 22. Approximately 1,000 CRA-related calls have been made by bank uses outdoor advertising in selected low- and moderate-income neighofficers this year. Fifth Third Cincinnati denies Protestants' allegation borhoods. that calls on black realtors have been discontinued. During the first 25. As part of this campaign, Fifth Third Cincinnati has pledged to quarter of 1991, Fifth Third Cincinnati made approximately 90 calls on donate $100 to two local housing organizations for every home run hit minority realtors or realtors located in targeted neighborhoods. by the Cincinnati Reds baseball team. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

748 Federal Reserve Bulletin • September 1991 and found that participation to be consistent with The Board's March Order concluded that data under approval. Since January 1991, Fifth Third Cincinnati the Home Mortgage Disclosure Act ("HMDA") has also committed to lend more than $2.4 million to showed some weaknesses in Fifth Third Cincinnati's local community development and redevelopment pattern of lending in Dayton and in Hamilton and projects in Cincinnati, including several new projects Middletown Counties and in Fifth Third Columbus's to provide housing to low- and moderate-income fam- pattern of lending in Columbus.29 The Board noted, ilies.26 however, that Banks have committed to take steps to Protestants criticize Banks for their lack of partici- target additional marketing toward minority and lowpation in various CRA-related programs, including the and moderate-income communities and to improve Ohio Equity Fund for Housing ("OEFH"), the Cin- their lending performance to these areas. These steps cinnati Minority Enterprise Small Business Invest- include increasing the amount of funds available for ment Company ("MESBIC"), and the Cincinnati Mi- marketing Banks' products in low- and moderatenority and Female Small Business Incubator income neighborhoods and progress on achieving ("Incubator"). Fifth Third Cincinnati states that it these goals must be reported quarterly to the Reserve intends to carefully consider participating in the Bank. OEFH this year and notes that it has recently commit- Protestants also believe that portions of the black ted $85,000 to the Dayton and Cincinnati MESBICs. community have only limited access to Banks' offices. Fifth Third Cincinnati is also involved in discussions In the March Order the Board concluded that Banks' with the Executive Director of the Incubator. banking center locations appear to be accessible to all segments of the community.30 In addition, Fifth Third Discriminatory Lending Practices Cincinnati received approval in the Board's March Order to open an additional full-service branch in a Protestants allege without providing any factual basis low- and moderate-income and predominately minorthat Banks engage in discriminatory lending practices, ity area. In this proposal, two of the branches that including substantial noncompliance with anti-discrim- Fifth Third Columbus is applying to open will be ination laws and regulations.27 The Board's March located in low- and moderate-income areas. Order stated that recent examinations of Banks found For the reasons discussed above and in the March no evidence of loan discrimination against individuals Order, the Board believes that, on balance, and subin low- and moderate-income neighborhoods. In addi- ject to the commitments to address the deficiencies tion, these examinations also found no evidence of noted in Banks' performance under the CRA, convesubstantial noncompliance with anti-discrimination nience and needs considerations, including the record laws and regulations. of performance under the CRA of Bancorp and Banks, Protestants criticize Banks' lending patterns in low- are consistent with approval of these applications. The and moderate-income neighborhoods and allege that Board continues to expect Banks to further improve Banks have no review or reporting mechanism to their record of performance under the CRA and to monitor lending patterns for discriminatory effects.28 equity loans by low-, moderate-, and high-income area zip codes. The results of the analysis for 1990 are being compiled and this information 26. These projects include the Lewiston Project in the East End will be presented to its CRA committee for future planning. ($790,000), Avondale Redevelopment Project (commitment to partic- 29. Protestants also allege that Banks' CRA public comment files do ipate), and Enterprise Social Investment Corporation ($500,000). not contain Banks' HMDA data in the form of a Loan Application 27. Protestants cite a survey by the Deputy Superintendent/Trea- Register and that individuals seeking to view the public comment files surer of the Cincinnati Board of Education of vendors doing business were subject to harassment. Although financial institutions are rewith the Board of Education to support their allegations that Fifth quired to make their HMDA Disclosure Statements available upon Third Cincinnati does not lend to black male and female vendors. request, they are not required to place this information in the public Although the number of loans made by Fifth Third Cincinnati to black comment files. Moreover, they are not required to release the HMDA vendors who answered the survey is small, Fifth Third Cincinnati Loan Application Registers (from which the Disclosure Statements argues that the response rate of 40 percent of the vendors surveyed are derived), only the statements. In addition, the HMDA Disclosure impairs the usefulness of the survey. The survey also does not Statements for 1990, the first reports compiled under the revised distinguish loans made to white females and black females. In addi- HMDA requirements referred to by Protestants, are not yet available; tion, the Cincinnati Minority Supplier Development Council has their release to the public is expected to take place by November 1, expressed appreciation for Fifth TTiird Cincinnati's support of its 1991. Finally, Protestants have not alleged any specific instances of efforts and the bank's role in building a positive partnership in harassment. minority business development. Under these circumstances, the 30. Fifth Third Cincinnati has 64 full-service offices located through- Board does not believe that this survey sustains Protestants' allega- out its community, four limited-service offices at retirement centers, tions of racial discrimination in Fifth Third Cincinnati's lending. two limited-service branches at a large manufacturing plant and 12 28. Fifth Third Cincinnati states that, as part of enhancing its CRA automatic teller machines at a chain of grocery stores. Fifth Third performance in response to its last CRA performance examination, Columbus has 18 branches located in the Columbus Primary Metrotwo loan officers must review any commercial loan before the appli- politan Statistical Area. Four are in low- and moderate-income areas cation is denied. In addition, Fifth Third Cincinnati now tracks and six are in middle-income areas. Fifth Third Columbus also has annually its credit cards, small business loans, auto loans, and home automatic teller machines at a chain of grocery stores. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 749 report on their progress in addressing the areas of (3) 7747 Old Troy Pike, Dayton, Ohio; weakness in their performance as previously dis- (4) 2917 West Alex Bell Road, Dayton, Ohio; cussed. The Reserve Bank will closely monitor this (5) 8588 Princeton-Glendale Road, Union Townperformance. ship, Ohio; Fifth Third Cincinnati and Fifth Third Columbus (6) 4530 Eastgate Blvd., Union Township, Ohio; have also applied under section 9 of the Federal (7) 1783 Ohio Pike, Amelia, Ohio; Reserve Act (12 U.S.C. § 321 et seq.) to establish (8) 2250 Shiloh Springs Road, Trotwood, Ohio; branches at various locations in Cincinnati and Colum- (9) 9689 Montgomery Road, Cincinnati, Ohio; bus. The Board has considered the factors it is re- (10) 3427 Edwards Road, Cincinnati, Ohio; quired to consider when reviewing applications for (11) 6218 Glen way and Parkcrest, Cincinnati, Ohio; establishing branches pursuant to section 9 of the and Federal Reserve Act (12 U.S.C. § 322) and finds those (12) 200 West Benson Street, Reading, Ohio. factors to be consistent with approval. Based on all the foregoing and other facts of record, First Lindsay Corporation the Board has determined that the applications should Lindsay, Oklahoma be, and hereby are, approved. The Board's approval, however, is conditioned upon applicants' complying Order Approving Formation of a Bank Holding with all commitments and obtaining all required ap- Company provals under applicable state laws. The acquisition of Farmers shall not be consummated before the thirtieth First Lindsay Corporation, Lindsay, Oklahoma calendar day following the effective date of this Order, ("First Lindsay"), has applied under section 3(a)(1) of or later than three months after the effective date of the Bank Holding Company Act ("BHC Act") this Order, unless such period is extended for good (12 U.S.C. § 1842(a)(1)) to become a bank holding cause by the Board or by the Federal Reserve Bank of company by acquiring up to 100 percent of the voting Cleveland, acting pursuant to delegated authority. shares of First National Bank of Lindsay, Lindsay, By order of the Board of Governors, effective Oklahoma ("Bank"). July 12, 1991. Notice of the application, affording interested persons an opportunity to submit comments, has been Voting for this action: Chairman Greenspan and Governors published (56 Federal Register 21,493 (1991)). The Angell, Kelley, and Mullins. Absent and not voting: Gover- time for filing comments has expired, and the Board nor La Ware. has considered the application and all comments received in light of the factors set forth in section 3(c) of JENNIFER J. JOHNSON the BHC Act. Associate Secretary of the Board First Lindsay is a nonoperating corporation formed for the purpose of acquiring Bank. Bank, controlling Appendix deposits of approximately $17.6 million, is the 269th largest commercial banking organization in Oklahoma, Fifth Third Columbus will establish the following representing less than 1 percent of the total deposits in branches: commercial banking organizations in the state.1 Based (1) 2161 Eakin Road, Columbus, Ohio; on all the facts of record, the Board believes that (2) 7970 Worthington-Galena Road, Columbus, consummation of the proposal would have no adverse Ohio; effect on the concentration of banking resources in (3) 1630 Morse Road, Columbus, Ohio; Oklahoma. (4) 1955 West Henderson Road, Columbus, Ohio; Bank operates in the Garvin County, Oklahoma, (5) 21 East State Street, Columbus, Ohio; banking market,2 where it controls 8.3 percent of the (6) 155 East Main Street, New Albany, Ohio; total deposits in commercial banks. First Lindsay and (7) 170 South Hamilton Road, Columbus, Ohio; its principals are not affiliated with any other deposi- (8) 118 B Worthington Square, Worthington, Ohio; tory institution. Based on all the facts of record, (9) 420 Metro Place South, Dublin, Ohio; and consummation of the proposed transaction would not (10) 1440 Bethel Road, Columbus, Ohio. result in any adverse effects on existing or potential competition, nor would it increase the concentration Fifth Third Cincinnati will establish the following branches: 1. Data are as of March 31, 1991. (1) 6677 Pearl Road, Cleveland, Ohio; 2. The Garvin County banking market is approximated by all of (2) 34700 Vine Street, Cleveland, Ohio; Garvin County except for the town of Stratford. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

750 Federal Reserve Bulletin • September 1991 of banking resources in any relevant banking market. holding company, Fleet/Norstar Holdings, Inc. Accordingly, the Board concludes that competitive ("Holdings"), to acquire New BNE and New Conconsiderations under the BHC Act are consistent with necticut.1 approval. Fleet Bank of Maine, Portland, Maine, also seeks The financial and managerial resources and future approval under section 18(c) of the Federal Deposit prospects of First Lindsay and Bank appear to be Insurance Act (12 U.S.C. § 1828(c)) (the "Bank consistent with approval of this application.3 Consid- Merger Act") to merge with New Maine National erations relating to the convenience and needs of the Bank, Portland, Maine ("New Maine"), and to estabcommunity to be served also are consistent with lish the branches of New Maine set forth in the approval. Appendix as branches of Fleet Bank of Maine pursu- Based on the foregoing and other facts of record, the ant to section 9 of the Federal Reserve Act Board has determined that the application should be, (12 U.S.C. § 321). New BNE, New Maine, and New and hereby is, approved. The Board's approval is Connecticut (together "bridge banks") are bridge specifically conditioned upon the commitments made banks created by the Federal Deposit Insurance Corby First Lindsay in this application. The transaction poration ("FDIC") to acquire the assets and assume shall not be consummated before the thirtieth calendar the deposits and other liabilities of the three subsidiary day following the effective date of this order, or later banks of Bank of New England Corporation, Boston, than three months after the effective date of this order, Massachusetts.2 unless such period is extended for good cause by the Notice of these applications, affording interested Board or the Federal Reserve Bank of Kansas City, persons an opportunity to submit comments, has been acting pursuant to delegated authority. given in accordance with the BHC Act, the Bank By order of the Board of Governors, effective Merger Act and the Board's Rules of Procedure July 22, 1991. (12 C.F.R. 262.3(b)). As required by the Bank Merger Act, reports on the competitive effects of the merger Voting for this action: Chairman Greenspan and Governors were requested from the United States Attorney Gen- Angell, Kelley, La Ware, and Mullins. eral, the Comptroller of the Currency, and the FDIC. The time for filing comments has expired, and the JENNIFER J. JOHNSON Board has considered the applications and all com- Associate Secretary of the Board ments received in light of the factors set forth in the BHC Act and the Bank Merger Act. Fleet/Norstar Financial Group, Inc. Providence, Rhode Island Douglas Amendment Order Approving the Acquisitions of a Bank Holding Under the Douglas Amendment (section 3(d) of the Company and Banks BHC Act), the Board may not approve an application by a bank holding company to acquire control of any Fleet/Norstar Financial Group, Inc., Providence, bank located outside of the holding company's home Rhode Island ("Fleet"), a bank holding company state unless authorized by the statute laws of the state within the meaning of the Bank Holding Company Act in which the bank to be acquired is located.3 The (the "BHC Act"), has applied under section 3 of the Garn-St Germain Act, however, authorizes the Board BHC Act (12 U.S.C. § 1842) to acquire the New Bank to approve the interstate acquisition of a bridge bank of New England, N.A., Boston, Massachusetts with assets of $500 million.4 Accordingly, the provi- ("New BNE"), and New Connecticut Bank & Trust Company, N.A., Hartford, Connecticut ("New Connecticut"). Fleet will establish a new second-tier bank 1. The acquisitions of New BNE and New Connecticut are subject to review by the Office of the Comptroller of the Currency ("OCC") and applications under the Bank Merger Act are pending. 2. On April 22, 1991, the FDIC approved in principle Fleet's bid to 3. The Board has received comments from six minority sharehold- acquire certain assets and assume the deposits and the liabilities of the ers of Bank expressing their concern that the cash amount that First bridge banks. In order to stabilize the bridge banks during the final Lindsay offered for their shares did not equal the full book value of negotiation process, the FDIC entered into interim contracts with their shares. First Lindsay contends that its offer was reasonable Fleet for the management of the bridge banks. On April 23, the Board because the shareholders could exchange their bank shares for shares approved Fleet's application to exercise control over the bridge banks of First Lindsay having an equivalent value to the book value of the through the interim management contracts. See Fleet/Norstar Finanbank shares exchanged. In addition, the minority shareholders are not cial Group, 77 Federal Reserve Bulletin 483 (1991). required to sell or exchange their bank shares. In Western Banc- 3. Fleet's home state is Rhode Island. 12 U.S.C. § 1842(d). The shares, Inc. v. Board of Governors, 480 F.2d 749 (10th Cir. 1973), the bridge banks are located in Massachusetts, Connecticut, and Maine. court concluded that a stock acquisition price offer was not a relevant 4. 12 U.S.C. §§ 1821(n)(8)(b) and 1823(f). Each of the bridge banks factor for consideration by the Board under the BHC Act. was established by the FDIC pursuant to section ll(n) of the Federal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 751 sions of the Douglas Amendment do not bar approval $8.7 billion, representing approximately 13.3 percent of the proposed acquisitions. of state deposits. Fleet controls one depository organization in Mas- Financial and Managerial Considerations sachusetts that currently has no deposits. New BNE is the third largest depository organization in Massachu- In evaluating an application under the Bank Merger setts, controlling deposits of $9.1 billion, representing Act and section 3 of the BHC Act, the Board is approximately 8.1 percent of state deposits. Upon required to consider the financial and managerial re- consummation, Fleet would become the third largest sources and future prospects of the companies in- depository organization in Massachusetts, controlling volved, the effect of the proposal on competition, and deposits of $9.1 billion, representing approximately the convenience and needs of the communities to be 8.1 percent of state deposits. served. Under the proposal, Fleet will recapitalize The Board believes that consummation of this proeach of the bridge banks and will provide the bridge posal would not have a significantly adverse effect banks with new management officials with demon- upon the concentration of commercial banking restrated management capability. As a result of these sources in Maine, Connecticut or Massachusetts.6 actions by Fleet, the bridge banks will be able to Fleet and the bridge banks compete directly in 17 continue to provide a full range of services to their banking markets in New England. Consummation of customers and the communities they serve. The Board the proposal would result in the elimination of a notes that Fleet will have raised approximately $600 competitor and in an increase in the concentration in million in new capital prior to consummating the each market as measured by the Herfindahlacquisition. Based on these and all other facts of Hirschman Index ("HHI").7 After considering the record, the Board concludes that the financial and competition offered by thrift institutions,8 the number managerial resources and future prospects of Fleet, its subsidiaries, and the bridge banks are consistent with approval of these applications. 6. The Board received comments maintaining that the proposal would result in substantially anticompetitive effects in the state of Competitive Considerations Maine. The commenter's analysis, however, is based on product and geographic market concepts that differ substantially from those employed in the Board's analysis, which is based on the product and Fleet is the largest depository organization in Maine, geographic market concepts recently affirmed by the Board in First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991). Based on the controlling deposits of $2.9 billion, representing apfacts of record, and for the reasons discussed in this order, the Board proximately 21.8 percent of deposits in depository does not believe that the proposal would substantially lessen compeinstitutions in the state ("state deposits").5 New tition for banking services in the state of Maine as a whole or result in an undue concentration of banking resources in the State. Maine is the sixth largest depository organization in This commenter also requested that the Board hold a public hearing Maine, controlling deposits of $1.0 billion, represent- on the competitive issues in this proposal. Under the Board's rules, ing approximately 7.2 percent of state deposits. Upon the Board may, in its discretion, hold a public hearing or meeting on an application to clarify factual issues related to the application and to consummation of the proposal, Fleet would remain the provide an opportunity for testimony, if appropriate. 12 C.F.R. largest depository institution in Maine, controlling 262.3(e) and 262.25(d). The Board has carefully reviewed this request. deposits of $3.8 billion, representing approximately In the Board's view, the commenter has had ample opportunity to present submissions, and has submitted written comments that have 28.6 percent of state deposits. been considered by the Board. The record indicates that the com- Fleet is the eighth largest depository organization in menter disputes the manner of analyzing the competitive effects of the proposal rather than material facts. In light of these circumstances, the Connecticut, controlling deposits of $1.8 billion, rep- Board has determined that a public hearing or meeting is not necessary resenting approximately 2.8 percent of state deposits. to clarify the factual record on the issues raised in this comment, or New Connecticut is the second largest depository otherwise warranted in this case. Accordingly, this request for a public hearing or meeting is denied. organization in Connecticut, controlling deposits of 7. Under the revised Department of Justice Merger Guidelines, 49 $6.9 billion, representing approximately 10.5 percent Federal Register 26,823 (1984), a market in which the post-merger HHI is above 1800 is considered to be highly concentrated. In such of state deposits. Upon consummation of the proposal, markets, the Department is likely to challenge a merger that increases Fleet would become the second largest depository the HHI by more than 50 points. The Department has informed the organization in Connecticut, controlling deposits of Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Justice Department has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the Deposit Insurance Act, has total assets in excess of $500,000,000, and competitive effect of limited-purpose lenders and other non-deposiwill be acquired by Fleet in an assisted transaction in conformance tory financial entities. with section 13(f) of the FDI Act. Id. 8. The Board previously has indicated that thrift institutions have 5. State data are as of June 30,1990. Market data are as of March 31, become, or have the potential to become, significant competitors of 1991, unless otherwise noted. commercial banks. WM Bancorp, 76 Federal Reserve Bulletin 788 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

752 Federal Reserve Bulletin • September 1991 of competitors remaining in the markets, the increase differs from the cluster of bank products and services in concentration, and the other facts of record, the approach used by the Board. For the reasons ex- Board has concluded that consummation of the pro- plained in previous decisions, the Board continues to posal would not result in a significantly adverse effect believe that competitive analysis of bank expansion in competition in the following 12 banking markets: the proposals should be based on the availability of the Danielson, Hartford, New London, and Old Say brook cluster of banking services to a range of customers in banking markets in Connecticut; the Augusta,9 Brun- the local banking market.11 The Department's analysis swick, Farmington, and Lewiston-Auburn banking also does not account for substantial deposit runoff markets in Maine; the Boston and Fall River banking that has occurred in this market since June 1990. markets in Massachusetts; the Portsmouth banking Finally, the Department does not include thrifts as market in New Hampshire; and the Providence bank- full competitors in this market. The record indicates ing market in Rhode Island. that Maine thrift institutions in general compete ac- The remaining banking markets in which Fleet and tively in the full range of banking products and ser- New Maine compete include the Presque Isle-Caribou, vices, providing transaction accounts as well as tradi- Portland, Bangor, and Pittsfield, Maine banking mar- tional savings accounts and engaging actively in kets, and the Willimantic, Connecticut banking mar- commercial and consumer lending. Thrifts in Maine in ket. The Superintendent of the Maine Bureau of Bank- fact offer all or virtually all of the cluster of banking ing has commented that the proposal would have a products and services.12 significantly adverse competitive effect in the Bangor Thrift institutions in the Presque Isle-Caribou marand Pittsfield, Maine banking markets. The Depart- ket maintain on average a significantly higher percentment of Justice ("Department") has commented that age of their assets in commercial loans and consumer the proposal would have an anticompetitive effect in loans than thrift institutions generally. The Board these two markets, as well as in the Presque Isle- believes that the actual provision of most of these Caribou, Maine banking market. The Maine Attorney products and services by thrifts in Maine as well as the General has raised objections to the proposal in these potential that these institutions will exercise their markets as well as in the Portland, Maine banking existing authority to expand these activities justify market. including thrift institutions as full competitors of banks in the calculation of market share in this market.13 Presque Isle-Caribou and Portland Banking Markets With thrift deposits weighted at 100 percent, Fleet would control 19.5 percent of market deposits and the The Department and the Maine Attorney General have HHI would increase by 186 points to 1981 in the commented that a substantial increase in concentra- Presque Isle-Caribou market upon consummation of tion would occur in the Maine banking market of the proposal.14 Four commercial banks and three Presque Isle-Caribou.10 The Department's analysis thrifts would remain as competitors in the market after consummation of the proposal. The Maine Attorney General has also commented (1990); First Union Corporation, 76 Federal Reserve Bulletin 83 that anticompetitive effects would result from the (1990); Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989). During the evolutionary period of the past several years in which thrifts have begun to act in the marketplace increasingly like banks, the Board's practice has been to shade down the market share of banks to account for the growing competition from thrifts. Thus, the proposal with respect to these markets. The Maine Attorney General Board has regularly included thrift deposits in the calculation of recognizes, however, that thrifts are significant competitors of banks market share on a 50 percent weighted basis. See, e.g., First Hawai- in Maine, and argues that credit unions in Maine are also significant ian, Inc., supra. competitors of banks. The Board believes that sufficient alternative 9. For the reasons discussed in this order, the Board has considered providers of banking services operate in Maine to justify use of the thrift institutions in Maine as full competitors with commercial banks. higher HHI threshold recommended by the Department for review of On this basis, consummation of the proposal in the Augusta, Maine bank expansion proposals. banking market would increase the HHI by 143 points to 1867. If 11. See First Hawaiian, Inc., supra; United States v. Philadelphia thrifts were weighted at only 75 percent in this market, the HHI would National Bank, 374 U.S. 321 (1963). increase by 177 points to 2120. In the remaining 11 markets, the 12. These banking products and services include FDIC-insured increases in the HHIs would not exceed the threshold standards set transaction accounts, consumer loans, commercial real estate loans forth in the Department's revised merger guidelines even if thrift and other commercial loans, as well as mortgage and home improvedeposits were weighted at 50 percent. ment loans. 10. The Maine Attorney General has commented on the basis of 13. The Board has recognized in other decisions that thrifts in anecdotal evidence that non-depository financial institutions, such as certain markets compete fully with banks and should be fully weighted brokerage and mortgage finance companies, compete less effectively in analyzing the competitive effect of bank expansion proposals. See, with banks in the Presque Isle-Caribou market, as well as in the e.g., BanPonce Corporation, 77 Federal Reserve Bulletin 43 (1991); Bangor and Pittsfield markets, than is the case nationally. In his view, Fleet Financial Group, Inc., 74 Federal Reserve Bulletin 62 (1988). the general standards of the Department's merger guidelines, rather 14. The Board has also considered the recent de novo entry in 1990 than the modified standard that the Department applies routinely to of First Citizens Bank, an institution with $21 million in deposits, bank acquisitions, should apply to the competitive analysis of the representing 5.7 percent of the market. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 753 proposal in the Portland, Maine banking market.15 For would control approximately 49.6 percent of the total the reasons discussed above, the Board believes that deposits in depository institutions in the market thrifts in the Portland market are full competitors with ("market deposits") and the HHI would increase by commercial banks. With thrifts weighted at 100 per- 510 points to 3271. cent, Fleet would control 28.5 percent of market In the Pittsfield, Maine banking market,18 Fleet is deposits and the HHI would increase by 295 points to the smallest of three commercial banking organiza- 1605.16 The Board has also considered that seven tions, controlling deposits of $25.1 million, representcommercial banks and eight thrifts would remain as ing approximately 28.1 percent of the total deposits in competitors in the market after consummation of the commercial banks in the market. New Maine is the proposal. second largest commercial bank in the market, con- On the basis of these and all of the other facts of trolling deposits of $29.0 million, representing approxrecord, the Board believes that consummation of the imately 32.4 percent of the total deposits in commerproposal would not result in substantially adverse cial banks in the market. The Pittsfield banking market effects on competition in the Presque Isle-Caribou and is considered to be highly concentrated and, upon Portland banking markets. consummation of the acquisition, Fleet would control approximately 60.5 percent of the total deposits in Bangor, Pittsfield and Willimantic Banking Markets commercial banks in the market. The HHI would increase by 1818 points to 5218. Two commercial In the Bangor banking market,17 Fleet is the largest of banks and two thrift institutions would remain in the five commercial banking organizations, controlling de- Pittsfield market following consummation of the proposits of $536.7 million, representing approximately posal. 66.7 percent of the total deposits in commercial banks The Board believes that, for the same reasons in the market. New Maine is the third largest commer- discussed above, thrift deposits in this market should cial banking organization in the market, controlling be weighted at 100 percent. After including 100 perdeposits of $71.5 million, representing approximately cent of thrift deposits in the calculation of market 8.9 percent of the total deposits in commercial banks share, upon consummation Fleet would control apin the market. The Bangor banking market is consid- proximately 33.4 percent of market deposits and the ered to be highly concentrated and, upon consumma- HHI would increase by 556 points to 2605. tion of the proposal, Fleet would control approxi- In the Willimantic, Connecticut banking market,19 mately 75.6 percent of the total deposits in commercial Fleet is the largest of three commercial banking orgabanks in the market. The HHI would increase by 1186 nizations, controlling deposits of $131.3 million, reppoints to 5964. Four commercial banks and two thrift resenting approximately 57.6 percent of the total deinstitutions would remain in the Bangor market as posits in commercial banks in the market. New competitors following consummation of the proposal. Connecticut is the second largest commercial bank in For the reasons previously discussed, the Board the market, controlling deposits of $93.2 million, repbelieves that these statistics do not reflect the true resenting approximately 40.9 percent of the total destate of competition in this market because they fail to posits in commercial banks in the market. Upon conaccount for the competition afforded by thrifts. After summation of the proposal, Fleet would control including 100 percent of market thrift deposits in the approximately 98.5 percent of the total deposits in calculation of market share, upon consummation Fleet commercial banks in the market and the HHI would increase by 4713 points to 9707. Two commercial banks and seven thrift institutions would remain in the Willimantic banking market after consummation of the 15. The Maine Attorney General has also recommended divestitures proposal. in the towns of York and Wells. These towns are located in the Portsmouth, New Hampshire banking market. The effects of this The Board has considered the types of commercial proposal in this market do not appear to justify divestitures in this loans and banking products offered by thrifts in this market. Upon consummation, over 25 banks and thrift competitors would remain in the market and the HHI would increase by 129 points to 819 with thrifts weighted at 50 percent. 16. With thrifts weighted at 75 percent, the HHI would increase by 356 points to 1718. 18. The Pittsfield banking market is approximated by the township 17. The Bangor banking market is approximated by the Bangor of Burnham in Waldo County; Cambridge, Detroit, Harmony, Hart- MSA; the townships of Alton, Amherst, Argyle, Bradford, Bradley, land, Palmyra, Pittsfield, Ripley, and St. Albans in Somerset County; Carmel, Charlestown, Clifton, Corinth/East Corinth, Dixmont, Etna, Corinna, Dexter, Exeter, Garland, Newport, and Plymouth in Penob- Greenbush, Greenfield, Hudson, LaGrange, Levant, Milford, New- scot County; and Wellington in Piscataquis County. burgh, and Stetson in Penobscot County; Bucksport, Castine, Ded- 19. The Willimantic banking market is approximated by the City of ham, Orland, Otis, and Verona in Hancock County; Frankfort, Willimantic, with the addition of Mansfield township in Tolland Prospect, and Stockton Springs in Waldo County; and the unorga- County and the townships of Chaplin, Hampton, Scotland, and nized townships T1N.D and T3M.D. Windham in Windham County, all in Connecticut. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

754 Federal Reserve Bulletin • September 1991 market, and for the same reasons discussed for the Insurance Fund. On this basis, the Fleet proposal is Maine banking markets, the Board believes that thrift the only means before the Board of achieving the deposits should be weighted in this market at 100 public benefits discussed above. In this regard, the percent. Upon consummation of the proposal, and FDIC has advised the Board that, as required by with thrift deposits weighted at 100 percent, Fleet statute, it has reviewed the competitive effects of the would control deposits representing 38.4 percent of Fleet proposal and does not find those effects to be market deposits and the HHI would increase by 716 unacceptable in light of the relevant circumstances. points to 2219.20 Under these circumstances, we believe that any The increase in concentration in these three markets anticompetitive effects of this proposal in the relevant resulting from the proposal is in excess of the levels markets, including any substantial lessening of comspecified in the Department's revised merger guide- petition in the Bangor, Pittsfield, and Willimantic lines as indicating that the proposal could have sub- markets, are clearly outweighed in the public interest stantial anticompetitive effects. The BHC Act and the by the probable effect of the Fleet proposal in meeting Bank Merger Act provide that the Board may not the convenience and needs of the communities to be approve an acquisition if the effect of the acquisition in served. any section of the country "may be substantially to lessen competition . . . unless [the Board] finds that Convenience and Needs Considerations the anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the In considering the convenience and needs of the probable effect of the transaction in meeting the con- communities to be served by these institutions, the venience and needs of the community to be served."21 Board has carefully reviewed the performance of Under applicable law, the Board may approve a pro- Fleet's subsidiary banks in light of the Community posal that substantially lessens competition in a bank- Reinvestment Act (12 U.S.C. § 2901) (the "CRA"), ing market only if the Board finds that demonstrable the Board's regulations, and the Statement of the public benefits are likely to result from the proposal Federal Financial Supervisory Agencies Regarding the and could not reasonably be expected to result through Community Reinvestment Act (the "Agency CRA other means less injurious to competition.22 Statement"). The Board notes that each of Fleet's Although the effect of Fleet's proposal would be to bank subsidiaries received CRA ratings of satisfactory increase market concentrations to levels above the or outstanding from their primary supervisors in their Department's revised merger guidelines in these three most recent examinations. Fleet's lead bank, Fleet markets, we believe that any lessening of competition National Bank, Providence, Rhode Island received a is outweighed by the important and substantial public rating of "outstanding." The Agency CRA Statement benefits resulting from this proposal. Fleet is acquiring provides that the CRA record of an institution, as the failed subsidiary banks of the Bank of New En- reflected in its examination reports, will be accorded gland and thereby will insure that these banks will great weight in the applications process. continue as viable competitors in these markets. In As discussed above, the Board believes that the addition, Fleet's recapitalization of the bridge banks proposal will result in substantial benefits to the conwill enhance their ability to provide credit opportuni- venience and needs of the communities to be served ties and banking services in the communities formerly by maintaining and enhancing the bridge banks' serserved by Bank of New England.23 Fleet's proposal vice to those communities. The Board also notes that was selected by the FDIC under the procedures spec- Fleet has announced a $100 million Community Reinified by Congress for resolving failed banks. The FDIC vestment Plan for low- and moderate-income neighconsidered this proposal in light of competing proposborhoods and communities in Massachusetts that will als submitted by other bidders and determined that become effective upon Fleet's acquisition of the bridge Fleet's bid represented the lowest cost to the Bank banks. According to Fleet, this plan will create over 1,750 affordable homes and help minority-owned and other small businesses in Boston and other Massachu- 20. The Board notes that the Department has concluded that setts communities.24 anticompetitive effects are unlikely to occur in Willimantic as a result of Fleet's proposal because of recent substantial new entry and expansion in Connecticut. The OCC, the primary federal regulator for Fleet's acquisition of New Connecticut, has also reviewed the pro- 24. Fleet will make $91 million available to increase production of posal and does not object on competitive grounds. new affordable housing, help rehabilitate properties for use as 21. 12 U.S.C. §§ 1842(c)(2) and 1828(c)(5)(B). affordable housing, and provide low-interest mortgages to first-time 22. United States v. Third National Bank in Nashville, 390 U.S. 171 homebuyers or homeowners who were injured by high-cost mort- (1967). gage lending practices in Boston. Fleet will also provide over $7 23. Fleet will provide $233 million in new capital for New Connect- million in lines of credit, equity investments, and grants to agencies icut; $229 million for New BNE; and $40 million for New Maine. helping small businesses in minority and low- and moderate-income Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 755 The Board received comments relating to conve- ments alleging that Fleet's subsidiary banks and its nience and needs considerations from a community nonbank mortgage subsidiary, Fleet Finance, Inc. group. The community group has requested that Fleet ("Fleet Finance"), financially support mortgage ficomply with the community reinvestment provisions nance companies that engage in abusive lending pracof the Massachusetts interstate banking law and as- tices. According to UNAC, these mortgage companies sume BNE's participation in a community investment lend to borrowers, particularly low-income individuplan announced by the Massachusetts Banker's Asso- als, at inflated interest rates and with substantial loan ciation in January 1990. Fleet has agreed to continue charges, even though the borrowers do not have implementation of a CRA plan begun by the Bank of sufficient income to repay the loans. UNAC alleges New England in Massachusetts and to comply with the that a disproportionately high number of borrowers community reinvestment provisions of the Massachu- from these finance companies eventually lose their setts interstate banking statute as part of Fleet's CRA homes through foreclosure as a result of these prac- Plan.25 tices.26 UNAC asserts that a public hearing is neces- The Board also received comments regarding sary to develop an adequate factual record to consider Fleet's proposal in Maine from several individuals its allegations.27 expressing: While Fleet acknowledges that certain of its bank (1) dissatisfaction with the bidding process and subsidiaries extended credit to several Massachusetts Fleet's services and foreclosure policies; mortgage finance companies identified by UNAC, (2) general concerns over the loss of a Maine-based Fleet maintains that these loans were small and all bank; and lending relationships with these companies were (3) concerns over potential unemployment. ended as of March 1990.28 In addition, Fleet has announced an $11 million Homeowner's Assistance As discussed above, Fleet was selected as the winning Plan to aid low-income and minority homeowners who bidder by the FDIC in a process that is within the received burdensome mortgage loans from mortgage exclusive jurisdiction of the FDIC and not subject to companies that obtained financing from Fleet and review by the Board. Also as noted above, Fleet's Bank of New England. Fleet plans to: Maine subsidiary bank has a satisfactory record in (1) create a $10 million mortgage refinancing promeeting the convenience and needs of its entire com- gram featuring below-market pricing and custommunity, including low- and moderate-income neigh- ized underwriting criteria; borhoods. These comments do not specify why out- (2) grant up to $1 million for assistance to homeownof-state ownership of New Maine would prevent it ers who suffered losses through the actions of the from serving the credit needs of the community. mortgage finance companies; Finally, the potential for unemployment at New Maine (3) contribute $100,000 to a legal defense fund for is offset by the substantial public benefit to the entire homeowners unable to afford legal representation; community of preserving New Maine as a competitor, and employer, and provider of credit opportunities. Accordingly, the Board does not believe that the matters raised by these comments warrant denial of these applications under the convenience and needs factor. 26. UNAC specifically alleges that Fleet: On the basis of these and all the facts of record, the (1) lends directly to mortgage finance companies engaged in abusive practices in Massachusetts; and Board believes that considerations relating to the (2) purchases loans through Fleet Finance that were made without convenience and needs of the communities to be proper underwriting standards. UNAC also generally alleges served favor approval of these applications. that Fleet purchases loans in violation of the Truth in Lending Act and questions Fleet Finance's relationship with certain "master brokers" based in Georgia. In addition, UNAC gener- Other Comments and Request for Public Hearing ally questions Fleet's lending relationship with all mortgage companies but has not provided specific facts regarding these relationships. The Union Neighborhood Assistance Corporation, 27. UNAC also alleges that Fleet controls two insurance subsidiar- Boston, Massachusetts ("UNAC") has filed com- ies that provide credit life insurance and that credit life insurance is often a requirement for loan applicants. Fleet denies that loan applicants are required to purchase insurance from the Fleet companies as a condition of any loan. In this regard, the Board notes that the Bank areas. Finally, Fleet will provide over $1 million to improve access Holding Company Act and the Board's regulations prohibit tying an to banking products and services to Boston's minority, low- and extension of credit to the condition that the borrower purchase credit moderate-income areas. insurance from an affiliate. 12 U.S.C. § 1972. 25. Another individual commented that a branch of Fleet Bank of 28. UNAC also alleges that Fleet purchases loans from a lender Maine failed to make available the bank's public CRA file. Fleet alleged to have engaged in fraudulent home improvement lending maintains that this error was the result of a misunderstanding and has activities. Fleet states that it has terminated its activities with this undertaken to ensure that the bank does not repeat such an error. company. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

756 Federal Reserve Bulletin • September 1991 (4) support proposed Massachusetts legislation de- public benefits of this proposal, including the imporsigned to regulate mortgage finance companies and tant benefits to the convenience and needs of the New home improvement contractors that lend to custom- England communities served by the bridge banks, the ers. Board believes that it must act promptly on these applications and will not defer action in order to hold Fleet also states that it reviews all mortgages that it a public hearing or until the review is completed.31 purchases from mortgage finance companies for com- As previously noted, Fleet's proposal will recapitalpliance with Fleet's own underwriting standards. Ac- ize each of the bridge banks, preserving and revitalizcording to Fleet, the effectiveness of its underwriting ing a provider of banking services in numerous comstandards has been verified by a recent securitization munities in New England. By restoring the bridge of mortgage loans originated and purchased by Fleet banks as effective competitors, Fleet will create the Finance.29 Fleet denies that Fleet Finance has know- bases for new credit opportunities in these communiingly purchased loans that violate Truth in Lending ties. The Board believes that consummation of the Act and usury laws and states that Fleet Finance proposal will be beneficial to the New England bankreviews such loans according to established proce- ing system and economy. dures in order to minimize the possibility that Fleet After carefully considering the facts of record, inwould acquire mortgage loans from lenders engaged in cluding UNAC's comments and Fleet's responses, as illegal or improper activities.30 well as the significant public benefits that are expected In this regard, the Board notes that the Federal to result from this proposal, the Board concludes that Reserve Bank of Boston ("Reserve Bank") has com- UNAC's comments do not warrant denial of these menced an examination and review of Fleet Finance's applications under applicable statutory criteria. mortgage practices in consultation with the Federal Trade Commission ("FTC"). The FTC has jurisdic- Other Considerations tion over any violations of the Truth in Lending Act and any unfair and deceptive practices by Fleet Fi- Fleet Bank of Maine has applied under section 9 of the nance or the mortgage companies identified by UNAC Federal Reserve Act (12 U.S.C. § 321 et seq.) to esas originating the loans. In conjunction with its review, tablish branches at the existing sites of the branches of the Reserve Bank will provide an opportunity to New Maine. Fleet Bank of Maine meets all the criteria members of the public to provide information on in the Federal Reserve Act to establish branches. matters relating to Fleet's mortgage lending practices. Accordingly, the application of Fleet Bank of Maine to The Reserve Bank also has offered to hold a meeting establish branches at the existing sites of New Maine with banks, public officials, and community leaders to branches is approved. discuss issues relating to mortgage lending practices in Based on the foregoing and other considerations Massachusetts generally. The Board will evaluate the reflected in the record, and subject to the commitresults of the Reserve Bank's examination and review ments made by Applicants in this case and to Fleet's to determine whether any supervisory action is appro- obtaining all necessary state approvals, the Board has priate. determined that the applications should be, and hereby The Board expects that this review will take several are, approved. The FDIC has indicated that an emerweeks to conclude. The FDIC has written the Board, gency exists and has requested that the Board act urging that it act upon these applications as quickly as expeditiously. Based on these requests and all the possible in light of substantial continuing losses at the facts of record, the Board finds that an emergency bridge banks and the substantial costs to the FDIC that exists requiring expeditious action. Accordingly, as will continue until the proposal is consummated. In view of the FDIC's request and the very substantial 31. The Board is not required to hold a public hearing on these applications under the Bank Merger Act or section 3 of the BHC Act because the state banking commissioners of Maine, Connecticut and 29. Independent sampling of these loans indicates that borrowers Massachusetts have not objected to the proposal within the comment had sufficient current verifiable income to meet debt with an average periods specified in those Acts. The Board has provided UNAC and installment debt to gross income ratio of approximately 35 percent. other interested commenters an opportunity to present information, 30. Fleet generally requires that: and UNAC has submitted two sets of written comments. As noted (1) purchased loans conform with Fleet's own underwriting stan- above, the Reserve Bank has also commenced an examination of Fleet dards; Finance and will make its staff available to receive information on this (2) selling lenders warrant that each loan complies with all legal matter from the public. In light of these efforts, and the statement by requirements; and the FDIC that an emergency exists in this case that requires expedi- (3) selling lenders agree to repurchase loans that do not comply with tious action on this proposal as well as the substantial public benefits applicable laws. Fleet also reviews the licenses and reputations that would result from consummation of this proposal, the Board has of selling lenders and appropriate loan documents to ensure that determined not to exercise its discretion to grant the request by the seller complies with relevant laws. UNAC for a public hearing, and denies the request. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 757 provided in section 18(c)(6) of the FDI Act and section 218 York Street 11 of the BHC Act, the transaction may be consum- York, Maine 03909 mated on or after the fifth calendar day following the effective date of this order. 38 Bangor Street By order of the Board of Governors, effective Augusta, Maine 04330 July 1, 1991. 110 Maine Street Voting for this action: Chairman Greenspan and Governor Brunswick, Maine 04011 La Ware. Concurring in this action: Governor Mullins. Voting against this action: Governors Angell and Kelley. One Merchants Plaza Bangor, Maine 04401 JENNIFER J. JOHNSON Associate Secretary of the Board Caribou Mall, Sweden Street Caribou, Maine 04736 Appendix 77 West Maine Street Ft. Kent, Maine 04743 181 Center Street Auburn, Maine 04210 69 Main Street Orono, Maine 04473 206 Main Street Biddeford, Maine 04006 Union and Limerick Rockland, Maine 04841 21 Armory Street Agusta, Maine 04330 Route 1 Wells, Maine 04090 77 North Main Street Brewer, Maine 04005 106 U.S. Route 1 Falmouth, Maine 04105 124 State Road 13 Main Street, Elliot, Maine 03903 U.S. Route 1 Ogunqui, Maine 03907 19 North Street Windham Shopping Center 351 Main Street North Windham, Maine 04062 Presque Isle, Maine 04798 1356 Washington Street Main Street Portland, Maine 04104 Thomaston, Maine 04561 15 Hinckley Drive 559 Union Street South Portland, Maine 04101 Bangor, Maine 04401 415 Gorham Road Access Highway Branch Mall Plaza Route 89 South Portland, Maine 04106 Caribou, Maine 04736 Wallingford Square 83 Front Street Kittery, Maine 03904 Bath, Maine 04530 Forest Avenue Main Street Portland, Maine 04104 Dixifield, Maine 04224 215 Maine Street Federal Road South Berwick, Maine 03906 Kazar Falls, Maine 04047 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

758 Federal Reserve Bulletin • September 1991 400 Congress Street limited divestitures to avoid what we believe are Portland, Maine 04104 serious anticompetitive effects in three markets. We wish to emphasize that our point of disagreement 430 U.S. Route 1 with the majority is on the narrow issue of whether Scarborough, Maine 04074 divestitures, representing less than 1 percent of the deposits to be acquired in this case, are necessary in 63 Main Street three markets. We are in agreement with the findings Yarmouth, Maine 04096 made in the majority opinion on all other aspects of this case. Commercial Street In our view, the proposal would have a signifi- Hartland, Maine 04943 cantly adverse effect on competition in the Bangor and Pittsfield, Maine banking markets, and in the Willimantic, Connecticut banking market. The pro- 27 Main Street posal would result in significant increases in concen- Pittsfield, Maine 04967 tration in these already highly concentrated markets. Upon consummation, Applicant would control at 108 Congress Street least 60 percent of deposits in commercial banks and Rumford, Maine 04276 33 percent of deposits in all banks and thrifts in each of these markets. These increases, and the corre- Plaza Shopping Center sponding increases in the levels of the Herfindahl- Westbrook, Maine 04092 Hirschman Index in these markets of over 500 points, exceed the levels in the Department of Justice Merger Guidelines and previously approved by the Concurring Statement of Governor Mullins Board in other cases. The anticompetitive effects of the proposal could, in our judgment, be addressed I concur in the decision to approve these applications. through divestitures representing a total for all three In the context of this transaction, I do not believe that markets of approximately $90 million, out of a total the anticompetitive effects are so serious in any releacquisition of approximately $15 billion. vant banking market as to warrant either denial or We recognize that the FDIC has chosen the Applidivestitures. There is no persuasive evidence of anticant as the single winning bidder in this case. Howcompetitive pricing or profits in any of the relevant ever, given the facts of this case and the limited banking markets that would indicate that the markets nature of divestitures necessary, we do not believe are overly concentrated or would become so upon that the Board should approve this proposal without consummation of the proposal. In addition, there requiring divestitures that would eliminate the subwould remain an adequate number of bank and thrift stantial anticompetitive effects of the proposal in the competitors in each of the relevant banking markets, three markets. and there do not appear to be significant barriers to Applicant has given no indication that the limited entry into these markets by other potential competiamount of divestitures cannot be completed or that tors. In light of these and the other facts of record and the contemplated divestitures would in any signifiin the context of this transaction, I believe that the cant respect have affected the bidding process competitive factors in this case are consistent with for the bridge banks. In fact, Applicant has agreed to approval. make whatever divestitures would be required by I concur with the other findings made in the opinion the Board to address anticompetitive effects. Given of Chairman Greenspan and Governor La Ware. these circumstances, we do not believe that the small amount of divestitures that would be required July 1, 1991 to address anticompetitive effects in the three markets would interfere with achievement of the public benefits of the proposal, which we recognize Dissenting Statement of Governor Angell and are substantial. Accordingly, we must dissent Governor Kelley from the decision of the majority to approve these applications without divestitures in the three mar- We must reluctantly disagree with the decision of the kets. majority in this case. We cannot vote to approve without requiring that the Applicant make certain July 1, 1991 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 759 Orders Issued Under Section 4 of the Bank incident to banking, the Board must find that the Holding Company Act proposed acquisition "can reasonably be expected to produce benefits to the public . . . that outweigh the Swiss Bank Corporation possible adverse effects, such as undue concentration Basel, Switzerland of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices." Order Approving an Application to Engage in 12 U.S.C. § 1843(c)(8). Trading in Futures, Options, and Options on Futures Based on U.S. Government Securities and Certain A. Closely Related to Banking Analysis Money Market Instruments Under the established test for determining when an Swiss Bank Corporation, Basel, Switzerland ("Appli- activity is closely related to banking, the Board may cant"), a foreign bank subject to the provisions of find that an activity is closely related to banking for the Bank Holding Company Act (the "BHC Act"), purposes of section 4(c)(8) of the BHC Act if: has applied under section 4(c)(8) of the BHC Act (1) banks generally do in fact conduct the proposed (12 U.S.C. § 1843(c)(8)) and section 225.23 of the activity; Board's Regulation Y (12 C.F.R. 225.23), for the (2) banks generally provide services that are opera- Board's approval to engage through its wholly owned tionally or functionally so similar to the proposed subsidiary, SBC Government Securities, Inc., New activity as to equip them particularly well to provide York, New York ("Company"), in trading, for its own the proposed services; or account, in futures, options, and options on futures (3) banks generally provide services that are so based on U.S. government securities that are permis- integrally related to the proposed service as to sible investments for national banks ("bank-eligible require their provision in a specialized form.3 securities") and certain money market instruments.1 Notice of the application, affording interested per- In this case, the record shows that banks do conduct sons an opportunity to submit comments on the pro- the proposed trading activity. The Office of the Compposal, has been published (55 Federal Register 29,896 troller of the Currency ("OCC") has permitted na- (1990)). The time for filing comments has expired, and tional banks to purchase and sell instruments based on the Board has considered the application and all bank-eligible securities.4 The OCC has approved tradcomments received in light of the public interest ing in derivative instruments for the company's own factors set forth in section 4(c)(8) of the BHC Act. account through an operations subsidiary of a national Applicant is the 27th largest banking organization in bank, finding the activity incidental to the purchase the world, controlling total consolidated assets of and sale of bank-eligible securities, including governapproximately U.S. $152.2 billion.2 Applicant has ment securities.5 The OCC required that the bank limit branches in New York, New York; Chicago, Illinois; the use of these instruments to those contracts which and San Francisco, California; and agencies in At- represented securities that a bank may purchase or sell lanta, Georgia; Miami, Florida; and Houston, Texas. for its own account. Company is a primary dealer in government securities. The Board has approved applications to trade in In order to approve an application submitted pursu- derivative instruments based on foreign exchange for ant to section 4(c)(8) of the BHC Act, the Board is the company's own account for other than hedging required to determine that the proposed activity is "so closely related to banking as to be a proper incident thereto." 12 U.S.C. § 1843(c)(8). In considering 3. See National Courier Association v. Board of Governors, 516 whether a proposed new activity would be a proper F.2d 1229, 1237 (D.C. Cir. 1975). The Board may also consider any other factor that an applicant may advance to demonstrate a reasonable or close connection or relationship to banking. 49 Federal Register 794, 806 (1984); Securities Industry Ass'n v. Board of 1. In particular, Applicant has proposed to trade the derivative Governors, 468 U.S. 207, 210-11 n.5 (1984). instruments listed in Appendix A. Company would hedge its positions 4. See OCC Interpretive Letter No. 260 (June 27,1983), reprinted in in these instruments with the instruments listed in Appendix B. [1983-1984 Transfer Binder] Fed. Banking L. Rep. (CCH) H 85,424. The Board has previously determined that bank holding companies 5. OCC Interpretive Letter No. 422 (April 11, 1988), reprinted in may purchase derivative instruments based on government securities [1988-89] Transfer Binder Fed. Banking L. Rep. 1 85,645. The OCC for the purpose of reducing the holding company's interest rate noted that derivative instruments "bear an intrinsic relationship to exposure. Statement of policy concerning bank holding companies their underlying financial instruments inasmuch as a futures contract engaging in futures, forward and options contracts on U.S. Govern- represents a commitment to buy or sell the underlying financial ment and agency securities and money market instruments, 12 C.F.R. instruments." OCC Interpretive Letter No. 86-13 (August 8, 1986), 225.142 ("Policy Statement"). reprinted in [1988-89 Transfer Binder] Fed. Banking L. Rep. 2. Banking data are as of December 31, 1990. (CCH) H 84,019. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

760 Federal Reserve Bulletin • September 1991 purposes.6 The Board determined that a bank holding 1. Public Benefits. Applicant maintains that its activicompany may purchase and sell derivative instru- ties relating to derivative instruments would enhance ments based on foreign exchange under section 4(c)(8) its ability to operate efficiently in the government of the BHC Act because banks may trade in foreign securities business because of the close correlation exchange and the applicant instituted controls to mon- between the markets. Competition in the market itor the risks of the trading operations. The Board has would be increased, because Company would be a also authorized bank holding companies to act as de novo competitor. Using the technology and comfutures commission merchants and to offer advice with puter models that Applicant has obtained by entering regard to futures and options on futures on bank- into a joint venture with a commodities trading firm,8 eligible securities, pursuant to sections 225.25(b)(18) Applicant maintains that it may profitably trade in and (b)(19) of the Board's Regulation Y (12 C.F.R. derivative instruments in a manner that is consistent 225.25(b)( 18),(19)). with safe and sound banking practices.9 The Board believes that purchasing and selling derivative instruments which represent the right to 2. Adverse Effects. The Board has previously noted purchase or sell bank-eligible securities is closely that trading in derivative instruments for other than related to banking.7 The experience gained by banks in hedging purposes could pose significant financial risks dealing in the securities that underlie these instru- to the parent bank holding company, raising safety and ments would likewise equip the banks to trade in soundness concerns. Other adverse effects could ininstruments based on these securities. In addition, the volve conflicts of interests between Company's tradderivative instruments based on money market instru- ing activities and any advisory services concerning ments that Applicant proposes that Company trade in these instruments. require a market judgment on interest rates. Banks, The Board notes that, as a primary dealer, Company through lending and funding activities, have developed has broad experience in trading and monitoring bankexpertise in judging interest rates and predicting future eligible securities positions.10 In addition, Applicant price movements. In sum, the Board believes that the has developed expertise in dealing in derivative instruproposed activity of trading for Company's own ac- ments from its trading activities outside the United count in derivative instruments based on bank-eligible States. The resulting familiarity with the operations securities and certain money market instruments is and controls associated with these products should closely related to banking for purposes of section help to ensure prudent operations, since Company 4(c)(8) of the BHC Act pursuant to the standards set already has the operational, accounting and control forth in the National Courier case, because banks systems in place to properly monitor positions resultconduct the proposed activity, and generally provide ing from trading these contracts. Applicant maintains services that are operationally or functionally so simthat these sophisticated risk management controls ilar to the proposed activity as to equip them particuwould tend to minimize the likelihood of potentially larly well to provide the proposed services. significant losses resulting from the proposed activities. Applicant would use the instruments listed in Appendix B to ensure that compliance with the risk B. Proper Incident to Banking Analysis limits established by management would be maintained by Company. In determining whether an activity is a proper incident Applicant has also established counterparty credit to banking the Board must consider whether the risk guidelines, which would limit its exposure to third activity "can reasonably be expected to produce ben- parties. As a registered broker-dealer Company would efits to the public, such as greater convenience, in- be required to comply with the Securities and Excreased competition, or gains in efficiency, that out- change Commission's net capital rule.11 Applicant and weigh possible adverse effects, such as undue Company will have comprehensive review procedures concentration of resources, decreased or unfair com- in place to insure that Applicant and Company adhere petition, conflicts of interest, or unsound banking to the risk limits established for the trading operation. practices." 8. Swiss Bank Corporation, 11 Federal Reserve Bulletin 126 (1991) ("Swiss Bank"). 6. The Hongkong and Shanghai Banking Corporation, Kellett, 9. Company would not become a specialist or market-maker with N.V., HSBC Holdings, B.V., and Marine Midland Banks, Inc., 75 respect to these instruments. Federal Reserve Bulletin 217 (1989). 10. As a primary dealer, Company is subject to regular review and 7. Applicant would not be authorized to purchase derivative instru- reporting requirements to allow the Federal Reserve Bank of New ments based on securities or instruments that a state member bank York to monitor Company's performance. may not purchase for its own account. 11. 15 C.F.R. 240.15c3-l. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 761 Company's exposure to risk related to the proposed Board or by the Federal Reserve Bank of New York, activities in respect of options on government obliga- pursuant to delegated authority. tions will be monitored in connection with hedging and By order of the Board of Governors, effective risk control mechanisms, including risk limits estab- July 12, 1991. lished for the trading operation. The proposed activities would be monitored separately from Company's Voting for this action: Chairman Greenspan and Governors activities as a primary dealer. Applicant anticipates Angell, Kelley, and Mullins. Absent and not voting: Governor La Ware. that Company's position in derivative instruments would be small in comparison with its primary dealer JENNIFER J. JOHNSON operations. Associate Secretary of the Board Both business management and internal auditing personnel will monitor Company's compliance with Appendix A risk limits. Senior management will be periodically informed of the potential risk to which Company is Applicant has proposed to trade for its own account in exposed. Auditing personnel will report directly to the following instruments: senior management to ensure that any violations of (i) Options on U.S. Treasury Bond Futures, which risk limitations are corrected. In addition, in addressare traded on the Chicago Board of Trade ing any potential conflicts of interests issues raised ("CBOT"); by Applicant's investment advisory activities, the (ii) Options on Ten Year U.S. Note Futures, which Board notes that Applicant provides through its joint are traded on the CBOT; venture subsidiary, investment advice on derivative (iii) Options on Eurodollar Futures, which are instruments based on bank-eligible and non-financial traded on the Chicago Mercantile Exchange instruments only to Applicant, its affiliates and a ("CME"); co-venturer commodity trading organization through the joint venture arrangement.12 In sum, the record (iv) Options on U.S. Treasury Bill Futures, which are traded on CME; shows that consummation of this proposal is not (v) Options on 30-day LIBOR Futures, which are likely to result in any significantly adverse effects, traded on the CME; such as undue concentration of resources, decreased (vi) Options on 30-Year U.S. Treasury Bonds Speor unfair competition, conflicts of interests, unsound cific Issues, which are traded on the Chicago Board banking practices. Options Exchange ("CBOE"); The financial and managerial resources of Applicant (vii) Options on 5-Year U.S. Treasury Notes Speare considered consistent with approval. Based on cific Issues, which are traded on the CBOE; consideration of all the relevant facts, the Board (viii) Options on Short Term Treasury Index, which concludes that the balance of the public interest facare traded on the CBOE; tors that it is required to consider under section 4(c)(8) (ix) Options on Long Term Treasury Index, which is favorable. Accordingly, based on all the facts of are traded on the CBOE; record, and subject to the conditions of this Order, the (x) Options on U.S. Treasury Bills, Notes and Board has determined that the proposed application Bonds, which would be traded on the over-theshould be, and hereby is, approved. counter market ("OTC"); The Board's determination is subject to all the (xi) Options on Five Year Treasury Note Futures, conditions set forth in the Board's Regulation Y, which are traded on the New York Commodities including those in sections 225.4(d) and 225.23(b), and Exchange ("NYCE"); to the Board's authority to require modification or (xii) Options on Eurodollar Futures, which are termination of the activities of a bank holding comtraded on the London International Financial Fupany or any of its subsidiaries as the Board finds tures Exchange ("LIFFE"); and necessary to assure compliance with, and to prevent (xiii) Options on U.S. Treasury Bond Futures, evasion of, the provisions of the BHC Act and the which are traded on the LIFFE.1 Board's regulations and orders issued thereunder. This transaction shall not be consummated later than three months after the effective date of this Order, unless such period is extended for good cause by the 1. Applicant has indicated that SBCGSI would also trade in: (i) futures contracts on two-year U.S. Treasury notes, which would be traded on the CBOT; (ii) options on futures on two-year and five-year U.S. Treasury 12. Swiss Bank, supra. This joint venture subsidiary would not notes, which would be traded on the CBOT. These contracts provide advice to third parties without prior Board approval. Id. have not commenced trading on the CBOT. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

762 Federal Reserve Bulletin • September 1991 Appendix B (viii) Five Year Treasury Note Futures, which are traded on the NYCE; Applicant would hedge its positions in the contracts (ix) U.S. Two Year Treasury Note Futures, which listed in Appendix A through the purchase of the are traded on the NYCE; following exchange-traded contracts:1 (x) Eurodollar Futures, which are traded on the (i) U.S. Treasury Bond Futures, which are traded on LIFFE; the CBOT; (xi) U.S. Treasury Bond Futures, which are traded (ii) U.S. Treasury Ten Year Note Futures, which on the LIFFE; and are traded on the CBOT; (xii) Futures and options on futures on The Bond (iii) U.S. Treasury Five Year Note Futures, which Buyer Municipal Bond Index, which are traded on are traded on the CBOT; the CBOT. (iv) 30-Day Interest Rate Futures, which are traded on the CBOT;2 Applicant would also purchase and sell the following (v) Eurodollar Futures, which are traded on the OTC contracts for hedging purposes: CME; (i) U.S. Treasury Bills, Notes and Bonds; (vi) U.S. Treasury Bill Futures, which are traded on (ii) Warrants and Forward Rate Agreements on the CME; Interest Rates of Major Currencies;3 (vii) 30-day LIBOR Futures, which are traded on the (iii) Options on Forward Rate Agreements on Inter- CME; est Rates of Major Currencies; (iv) Interest Rate or Currency Swaps; (v) Options on Interest Rate or Currency Swaps; (vi) Caps, Floors, or Collars on Interest Rates of 1. Applicant has indicated that Company would use these instru- Major Currencies; and ments in accordance with detailed hedging strategies that are designed (vii) Options on Interest Rate or Currency Caps, to measure and control various price, market and portfolio risks. SBCGSI would examine the instruments available and make a deci- Floors, or Collars. sion based on quantity, maturity, and its risk analysis. Applicant has represented that movements in these instruments have a statistically significant correlation to movements in options on government securities, and thus appear at the present time to be appropriate hedging devices. 2. The 30-day interest rate futures contract is cash-settled against 3. Applicant describes these contracts as interest rate contracts the average daily Federal funds rate for the delivery month period. denominated in a foreign country's currency. ORDERS ISSUED UNDER THE FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT ACT ("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 BankAmerica Corporation, Commerce Federal Bank of America July 12, 1991 San Francisco, California Savings Association, Texas, N.A., San Antonio, Texas Houston, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 763 FIRREA Orders—Continued Acquired Surviving Approval Bank Holding Company Thrift Bank(s) Date First Commercial Corporation, First Savings of First Commercial July 26, 1991 Little Rock, Arkansas Arkansas, F.A., Bank of Lonoke Little Rock, Arkansas County, (Van Buren, Helena, England, Arkansas Asher, Rodney Parham, McCain, Home Office and Cabot Branches) First Commercial Bank, N.A., Little Rock, Arkansas Rebank Netherlands Antilles Ensign Federal Savings Republic National July 19, 1991 Miami, Florida Bank, Bank of Florida, Republic Banking Corporation of New York, New York Miami, Florida Florida (Kendale Lake, Florida Miami, Florida Branch) Simmons First National First Savings of Simmons First July 26, 1991 Corporation, Arkansas, F.A., National Bank, Pine Bluff, Arkansas Little Rock, Arkansas Pine Bluff, (Fort Smith and Pine Arkansas Bluff Branches) 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 BankAmerica Corporation, BAC Coyote Interim Federal July 12, 1991 San Francisco, California Savings Bank, Houston, Texas First Commercial Corporation, Pinnacle Federal Savings and Loan, July 26, 1991 Little Rock, Arkansas Little Rock, Arkansas Cypress Bayou Federal Savings and Loan, England, Arkansas Rebank Netherlands Antilles, Republic Federal Interim Bank II, July 19, 1991 Miami, Florida F.S.B., Republic Banking Corporation Miami, Florida of Florida, Miami, Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

764 Federal Reserve Bulletin • September 1991 Section 4—Continued Effective Applicant(s) Bank(s) ^ Simmons First National Corporation, Simmons Federal Savings and July 26, 1991 Pine Bluff, Arkansas Loan Association, Pine Bluff, Arkansas 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 A.N.B. Holding Company, Ltd., The American National Dallas July 16, 1991 Terrell, Texas Bank of Terrell, Terrell, Texas Columbia Bancorp-Delaware, The First State Bank, Dallas July 19, 1991 Inc., Columbus, Texas Wilmington, Delaware Columbus Bancorp, Inc., Columbia Bancorp- Dallas July 19, 1991 Columbus, Texas Delaware, Inc., Wilmington, Delaware The First State Bank, Columbus, Texas First National Security Bank of Waldron, St. Louis July 17, 1991 Company, Waldron, Arkansas DeQueen, Arkansas Lisco State Company, First National Financial Kansas City July 5, 1991 Lisco, Nebraska Corporation, First Nebraska Bancs, Inc., Estes Park, Colorado Sidney, Nebraska LS Bancorp, Inc., La Salle State Bank, Chicago June 28, 1991 La Salle, Illinois La Salle, Illinois Overton Financial Corporation, Lindale Bancshares, Inc., Dallas July 22, 1991 Overton, Texas Lindale, Texas Lindale State Bank, Lindale, Texas Rawlins National The Rawlins National Kansas City July 19, 1991 Bancorporation, Inc., Bank, Denver, Colorado Rawlins, Wyoming RCN Holding Company, The Roberts County Minneapolis July 18, 1991 Sisseton, South Dakota National Bank of Sisseton, Sisseton, South Dakota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 765 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date Swatara Bancorp, Inc., Jonestown Bank and Philadelphia July 23, 1991 Jonestown, Pennsylvania Trust Company, Jonestown, Pennsylvania Synovus Financial Corp., Athens Federal Savings Atlanta July 12, 1991 Columbus, Georgia Bank, TB&C Bancshares, Inc., Athens, Georgia Columbus, Georgia Synovus Financial Corp., CB Bancshares, Inc., Atlanta July 12, 1991 Columbus, Georgia Fort Valley, Georgia TB&C Bancshares, Inc., Columbus, Georgia Section 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date Bankers Trust New York BT Asset Management, New York July 16, 1991 Corporation, Inc., New York, New York New York, New York BanPonce Corporation, Spring Financial Services, New York July 25, 1991 Hato Rey, Puerto Rico Inc., Mt. Laurel, New Jersey Brooke Holdings, Inc., Mid America Real Estate Kansas City July 10, 1991 Jewell, Kansas and Insurance, Phillipsburg, Kansas Caisse Nationale de Credit Credit Agricole Futures, Chicago July 18, 1991 Agricole, Inc., Paris, France Chicago, Illinois Commercial Banshares, Inc., Spectrum Life Insurance Minneapolis July 1, 1991 Mitchell, South Dakota Company, Omaha, Nebraska Norwest Corporation, Norwest Financial Minneapolis July 24, 1991 Minneapolis, Minnesota Services, Inc., Des Moines, Iowa Norwest Financial, Inc., Des Moines, Iowa Prime Rate Premium Finance Corporation, Inc., Florence, South Carolina Agency Technologies, Inc., Florence, South Carolina IFCO, Inc., Fayetteville, North Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

766 Federal Reserve Bulletin • September 1991 APPLICATIONS APPROVED UNDER BANK MERGER ACT Reserve Effective Applicant(s) Bank(s) Bank Date Commercial State Bank Interim Commercial State Bank of Atlanta July 12, 1991 of Orlando, Orlando, Orlando, Florida Orlando, Florida First Exchange Bank of Madison Jackson Exchange Bank St. Louis June 27, 1991 County, and Trust Company, Fredericktown, Missouri Jackson, Missouri PENDING CASES INVOLVING THE BOARD OF Sibille v. Federal Reserve Bank of New York and GOVERNORS Board of Governors, No. 90-CIV-5898 (S.D. New York, filed September 12, 1990). Appeal of denial of Freedom of Information Act request. On May 13, This list of pending cases does not include suits 1991, the court heard argument on the plaintiff's against the Federal Reserve Banks in which the Board motion for a Vaugn index and the Board's motion to of Governors is not named a party. dismiss. On July 9, the court denied the plaintiff's motion and granted the Board's motion to dismiss. Hanson v. Greenspan, No. 91-1599 (D.D.C., filed Burke v. Board of Governors, No. 90-9509 (10th June 28, 1991). Suit for return of funds and financial Circuit, filed February 27, 1990). Petition for review instruments allegedly owned by plaintiffs. of Board orders assessing civil money penalties and Fields v. Board of Governors, No. 3:91CV069 (N.D. issuing orders of prohibition. Oral argument took Ohio, filed February 5, 1991). Appeal of denial of place May 7, 1991. request for information under the Freedom of Infor- Kaimowitz v. Board of Governors, No. 90-3067 (11th mation Act. Cir., filed January 23, 1990). Petition for review of State of Illinois v. Board of Governors, No. 90-3824 Board order dated December 22, 1989, approving (7th Circuit, appeal filed December 19, 1990). Ap- application by First Union Corporation to acquire peal of injunction restraining the Board from provid- Florida National Banks. Petitioner objects to aping state examination materials in response to a proval on Community Reinvestment Act grounds. Congressional subpoena. On November 30, 1990, Consumers Union of U.S., Inc. v. Board of Goverthe U.S. District Court for the Northern District of nors, No. 90-5186 (D.C. Cir., filed June 29, 1990). Illinois issued a preliminary injunction preventing Appeal of District Court decision upholding amendthe Board and the Chicago Reserve Bank from ments to Regulation Z implementing the Home providing documents relating to the state examina- Equity Loan Consumer Protection Act. On July 12, tion in response to the subpoena. The House Com- 1991, the Court of Appeals affirmed the majority of mittee on Banking, Finance and Urban Affairs ap- district court decision upholding the Board's regupealed the injunction. On July 25, 1991, the court of lations, but remanded two issues to the Board for further action. appeals dismissed the appeal as moot. Citicorp v. Board of Governors, No. 90-4124 (2d Synovus Financial Corp. v. Board of Governors, No. Circuit, filed October 4, 1990). Petition for review of 89-1394 (D.C. Cir., filed June 21, 1989). Petition for Board order requiring Citicorp to terminate certain review of Board order permitting relocation of a insurance activities conducted pursuant to Delaware bank holding company's national bank subsidiary law by an indirect nonbank subsidiary. On June 10, from Alabama to Georgia. Awaiting decision. 1991, the Court of Appeals granted the petition and MCorp v. Board of Governors, No. 89-2816 (5th Cir., vacated the Board's order. filed May 2, 1989). Appeal of preliminary injunction Stanley v. Board of Governors, No. 90-3183 (7th against the Board enjoining pending and future Circuit, filed October 3, 1990). Petition for review of enforcement actions against a bank holding com- Board order imposing civil money penalties on five pany now in bankruptcy. On May 15,1990, the Fifth former bank holding company directors. Oral argu- Circuit vacated the district court's order enjoining ment was held May 16, 1991. the Board from proceeding with enforcement ac- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 767 tions based on section 23A of the Federal Reserve Jose M. Valle Act, but upheld the district court's order enjoining Miami, Florida such actions based on the Board's source-ofstrength doctrine. 900 F.2d 852 (5th Cir. 1990). On The Federal Reserve Board announced on July 24, March 4, 1991, the Supreme Court granted the 1991, the issuance of an Order of Prohibition against parties' cross-petitions for certiorari, Nos. 90-913, Jose M. Valle, a former employee of the Banco del 90-914. The Board's brief was filed on April 18, and Pinchincha, Miami, Florida. MCorp's brief was filed on June 10, 1991. MCorp v. Board of Governors, No. CA3-88-2693 (N.D. Tex., filed October 10, 1988). Application for injunction to set aside temporary cease and desist WRITTEN AGREEMENTS APPROVED BY FEDERAL orders. Stayed pending outcome of MCorp v. Board RESERVE BANKS of Governors, 900 F.2d 852 (5th Cir. 1990). White v. Board of Governors, No. CU-S-88-623-RDF Boca Bank (D. Nev., filed July 29, 1988). Age discrimination Boca Raton, Florida complaint. Board's motion to dismiss or for summary judgment was denied on January 3, 1991. The Federal Reserve Board announced on July 30, Awaiting trial date. 1991, the execution of a Written Agreement among the Federal Reserve Bank of Atlanta, the State Comptroller and Banking Commissioner of the State of Florida, FINAL ENFORCEMENT ORDERS ISSUED BY THE and the Boca Bank, Boca Raton, Florida. BOARD OF GOVERNORS Community National Bancorp, Inc. Southeast Banking Corporation Staten Island, New York Miami, Florida The Federal Reserve Board announced on July 24, 1991, the issuance of a Cease and Desist Order and an The Federal Reserve Board announced on July 8, Order of Assessment of a civil money penalty against 1991, the execution of a Written Agreement between Community National Bancorp, Inc., Staten Island, the Federal Reserve Bank of Atlanta and Southeast New York. Banking Corporation, Miami, Florida. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A1 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 POUCY INSTRUMENTS FEDERAL FINANCE A7 Federal Reserve Bank interest rates A8 Reserve requirements of depository institutions All 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

2 Federal Reserve Bulletin • September 1991 Domestic Financial Statistics — Continued A55 Foreign official assets held at Federal Reserve Banks A56 Foreign branches of U.S. banks—Balance REAL ESTATE 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 A38 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 BYNONBANKING BUSINESS Domestic Nonfinancial Statistics ENTERPRISES IN THE UNITED STATES 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 A55 U.S. foreign trade Statistical Releases, and Special 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 Percent annual rate of change, seasonally adjusted1 1990 1991 1991 MMoonneettaarryy aanndd ccrreeddiitt aaggggrreeggaatteess Q3 Q4 Q1 Q2 Feb. Mar. Apr. May' June Reserves of depository institutions2 1 Total -.5 3.9 9.2 3.4 3.5 -1.1 -4.1 16.4 8.7 2 Required -.5 1.7 4.7 9.3 12.8 14.7 -.6 16.7 9.4 3 Nonborrowed 3.8 7.8 9.1 3.8 10.5 -.8 -3.9 14.7 7.8 4 Monetary base3 9.1 9.9 14.5 3.9 16.9 6.0 -1.5 3.4 3.8 Concepts of money, liquid assets, and debt4 5 Ml 3.7 3.4 5.9 7.4 14.1 9.5 -1.1 13.5 9.6 6 M2 3.0 2.0 3.4 4.6 8.4 7.4 2.8 4.3 1.3 7 M3 1.6 .9 4.0 1.7 10.4 2.5' .4 .4 -2.1 8 L 1.9^ 1.7' 3.3' n.a. 6.7r -.5' -9.5' -6.2 n.a. 9 Debt 7.1 5.5 4.8 4.2 6.7 4.3 1.6' 5.6 n.a. Nontransaction components 10 In M25 2.7 1.5 2.6 3.7 6.5 6.7 4.1' 1.2 -1.5 11 In M3 only6 -3.8 -3.5 6.7r -10.7 18.8 -17.9' -9.8' -16.5 -17.1 Time and savings deposits Commercial banks 12 Savings 5.9 5.2 10.2 16.4 10.7 15.4 18.1 14.9 20.4 13 MMDAs 8.2 3.5 6.1 16.7 17.5 17.8 14.8 18.6 13.8 14 Small-denomination time 15.5 11.5 8.8' -1.7 7.8' 4.6' -7.3 -5.8 1.0 15 Large-denomination time8' -2.2 -8.5 12.0 -.6 21.6 -3.6 -5.7 .9 -4.2 Thrift institutions 16 Savings -3.3 -7.3 -,5r 16.7 8.5r 14.7' 20.7 18.1 11.9 17 MMDAs -7.7 -7.2 -.9 21.5 7.5 18.7 23.9 30.7 12.3 18 Small-denomination time -11.0 -8.6 -9.8r -13.6 -li.r -14.2' -9.6' -14.7 -26.3 19 Large-denomination time -27.3 -26.3 -31.9 -35.3 -31.5 -34.5 -30.1' -47.4 -42.5 Money market mutual funds 20 General purpose and broker-dealer 10.0 9.8 1188..22 6.7 14.6 17.8 2.3 33..00 --22..66 21 Institution-only 21.6 30.4 49.9 23.0 84.9 23.3 30.4 4.9 -23.8 Debt components4 22 Federal 14.4 1111..66 1122..22 5.4 15.2 5.1 -4.1 1100..33 n.a. 23 Nonfederal 4.8 3.7 2.4 3.8 3.9 4.1 3.5' 4.1 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 (OCDs), consisting of negotiable order of withdrawal (NOW) and of debt presented in other tables. automatic 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 repurchase agreements (RPs)—in amounts of by institution-only money market mutual funds. less than $100,000), and balances in both taxable and tax-exempt general 7. Small-denomination time deposits—including retail RPs—are those issued purpose and broker-dealer money market mutual funds. Excludes individual in amounts of less than $100,000. All IRA and Keogh accounts at commercial retirement accounts (IRA) and Keogh balances at depository institutions and banks and thrifts are subtracted from small time deposits. money market funds. Also excludes all balances held by U.S. commercial 8. Large-denomination time deposits are those issued in amounts of $100,000 banks, money market funds (general purpose and broker-dealer), foreign or more, excluding those booked at international banking facilities. governments and commercial 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

A48 Domestic Nonfinancial Statistics • September 1991 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT Millions of dollars Monthly averages of daily figures Weekly averages of daily figures for week ending Factor 1991 1991 Apr. May June May 15 May 22 May 29 June 5 June 12 June 19 June 26 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 285,272 286,418 291,288 287,157 285,118 286,542 291,731 291,168 290,052 291,196 U.S. government securities1' 2 2 Bought outright-system account 240,832 243,104 247,135 242,872 243,428 243,829 248,558 247,738 246,321 246,157 3 Held under repurchase agreements ... 608 298 527 663 0 477 0 0 0 1,195 Federal agency obligations7 4 Bought outright 6,314 6,246 6,213 6,250 6,250 6,240 6,213 6,213 6,213 6,213 5 Held under repurchase agreements . •. 21 29 98 28 0 76 0 0 0 149 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 69 60 201 52 44 107 31 167 44 84 8 Seasonal credit 79 151 222 137 156 174 173 179 214 270 9 Extended credit 85 89 7 132 95 22 14 3 6 9 10 Float 541 492 402 278 177 326 600 286 465 99 11 Other Federal Reserve assets 36,722 35,949 36,481 36,746 34,967 35,290 36,141 36,583 36,789 37,019 12 Gold stock 11,058 11,058 11,060 11,058 11,058 11,057 11,057 11,058 11,062 11,062 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 20,599 20,670 20,723 20,664 20,674 20,684 20,697 20,710 20,724 20,738 ABSORBING RESERVE FUNDS 15 Currency in circulation 287,527 288,789 290,896 288,692 288,623 289,767 290,670 290,994 290,921 290,567 16 Treasury cash holdings 640 641 623 653 626 628 628 627 623 620 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 4,931 5,275 6,428 4,931 5,583 4,644 5,942 5,158 5,977 5,745 18 Foreign 246 227 228 206 218 244 227 242 226 216 19 Service-related balances and adjustments 3,089 3,504 3,194 3,231 3,397 3,160 3,181 3,124 3,253 3,178 20 Other 239 222 210 216 223 223 218 192 204 224 21 Other Federal Reserve liabilities and capita] 6,556 7,415 8,288 7,462 7,463 7,640 8,460 8,734 8,241 8,190 22 Reserve balances with Federal Reserve Banks3 23,720 22,091 23,223 23,506 20,734 21,997 24,176 23,883 22,412 24,275 End-of-month figures Wednesday figures 1991 1991 Apr. May June May 15 May 22 May 29 June 5 June 12 June 19 June 26 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 288,432 291,168 291,795 288,690 285,005 290,722 292,398 293,500 291,139 294,980 U.S. government securities1, 2 2 Bought outright-system account 244,493 248,111 247,484 241,778 243,581 244,293 248,876 248,624 248,626 246,578 3 Held under repurchase agreements ... 0 0 962 4,638 0 3,342 0 0 0 4,611 Federal agency obligations7 4 Bought outright 6,250 6,213 6,213 6,250 6,250 6,213 6,213 6,213 6,213 6,213 5 Held under repurchase agreements ... 0 0 477 196 0 534 0 0 0 748 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions2 7 Adjustment credit 55 20 1,182 228 141 58 22 307 61 68 8 Seasonal credit 105 163 290 140 158 174 179 191 241 275 9 Extended credit 131 23 7 58 101 24 2 6 8 8 10 Float 913 457 433 369 -334 618 780 1,472 -711 -792 11 Other Federal Reserve assets 36,484 36,181 34,747 35,032 35,108 35,466 36,326 36,687 36,700 37,271 12 Gold stock 11,058 11,057 11,062 11,058 11,057 11,057 11,057 11,061 11,062 11,062 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 20,617 20,694 20,752 20,664 20,674 20,684 20,697 20,710 20,724 20,738 ABSORBING RESERVE FUNDS 15 Currency in circulation 286,766 290,507 291,563 288,859 288,995 290,666 290,841 291,142 290,907 290,941 16 Treasury cash holdings 652 629 613 626 628 629 628 623 622 613 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 13,682 6,619 11,822 3,835 5,319 3,945 4,915 4,519 7,483 5,419 18 Foreign 292 196 224 222 241 266 206 226 244 233 19 Service-related balances and adjustments 3,174 3,185 3,283 3,231 3,397 3,160 3,181 3,125 3,253 3,178 20 Other 276 225 213 240 205 242 190 191 210 262 21 Other Federal Reserve liabilities and capital 6,826 8,570 7,082 7,302 7,425 7,575 8,419 8,133 7,878 8,107 22 Reserve balances with Federal Reserve Banks3 18,457 23,008 18,826 26,115 20,545 25,998 25,790 27,331 22,346 28,046 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 sum 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 RReesseerrvvee ccllaassssiiffiiccaattiioonn 1988 1989 1990 1990 1991 Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. May' June 1 Reserve balances with Reserve Banks2 37,837 35,436 30,237 30,237 22,023 19,827 21,734 23,508 22,287 23,686 2 Total vault cash3 28,204 29,822 31,777 31,777 33,220 33,477 30,896 30,556' 30,720 30,524 3 Applied vault cash 25,909 27,374 28,884 28,884 28,969 28,724 26,853 26,793 26,776 26,722 4 Surplus vault cash5 2,295 2,448 2,893 2,893 4,250 4,753 4,043 3,763' 3,944 3,801 5 Total reserves6 63,746 62,810 59,120 59,120 50,992 48,551 48,586 50,301 49,063 50,409 6 Required reserves 62,699 61,888 57,456 57,456 48,824 46,743 47,408 49,271 48,033 49,399 7 Excess reserve balances at Reserve Banks' 1,047 922 1,665 1,665 2,168 1,809 1,179 1,030 1,029 1,009 8 Total borrowings at Reserve Banks 1,716 265 326 326 534 252 241 231 303 340 9 Seasonal borrowings at Reserve Banks 130 84 76 76 33 37 55 79 151 222 10 Extended credit at Reserve Banks 1,244 20 23 23 27 34 53 86 88 8 Biweekly averages of daily figures for weeks ending 1991 Mar. 6 Mar. 20 Apr. 3 Apr. 17 May 1 May 15 May 29 June 12' June 26 July 10 1 Reserve balances with Reserve Banks2 20,228 22,209 21,949 24,257 23,061 22,907 21,363 24,027 23,344 23,860 2 Total vault cash3 32,005 30,286 31,067 30,309 30,705' 30,340r 31,235' 29,787 30,926 31,327 3 Applied vault cash4 27,629 26,413 26,989 26,762 26,781 26,532 27,114' 26,115 27,048 27,405 4 Surplus vault cash 4,376 3,873 4,078 3,547 3,924' 3,809' 4,121' 3,672 3,878 3,922 5 Total reserves 47,857 48,622 48,938 51,019 49,842 49,438 48,477 50,142 50,392 51,265 6 Required reserves 46,637 47,616 47,564 50,218 48,645 48,469 47,358 49,411 49,110 50,376 7 Excess reserve balances at Reserve Banks 1,221 1,007 1,374 801 1,198 970 1,12c 731 1,282 889 8 Total borrowings at Reserve Banks 426 185 212 224 244 314 299 283 314 601 9 Seasonal borrowings at Reserve Banks 41 51 68 70 92 138 165 176 242 290 10 Extended credit at Reserve Banks 50 47 62 76 103 128 59 9 5 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 (line 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

A48 DomesticN onfinancial Statistics • September 1991 1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Banks1 Millions of dollars, averages of daily figures 1991, week ending Monday Maturity and source Jan. 21 Jan. 28 Feb. 4 Feb. 11 Feb. 18 Feb. 25 Mar. 4 Mar. 11 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 74,840 74,301 81,956 77,369 77,708 74,061 80,759 79,628 2 For all other maturities 17,810 16,906 16,423 16,373 16,890 15,830 15,491 16,159 From other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies 3 For one day or under continuing contract 28,746 32,895 33,366 31,641 32,389 30,568 31,090 30,565 4 For all other maturities 21,015 21,157 20,974 20,923 20,465 20,124 20,826 20,988 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 9,343 9,645 10,466 8,867 9,251 10,175 10,522 10,881 6 For all other maturities 21,917 20,821 21,622 21,241 18,651 17,298 17,441 17,643 All other customers 7 For one day or under continuing contract 24,749 24,779 25,808 25,119 26,218 25,408 24,972 23,766 8 For all other maturities 11,350 12,119 12,145 11,855 11,635 11,292 11,340 11,584 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 40,215 44,641 48,386 42,209 42,099 40,092 46,140 42,822 10 To all other specified customers2 20,612 18,073 21,528 19,334 19,820 18,528 21,409 17,879 1. Banks with assets of $1 billion or more as of Dec. 31, 1977. 2. Brokers and nonbank dealers in securities; other depository institutions; These data also appear in the Board's H.5 (507) release. For address, see inside foreign banks and official institutions; and United States government agencies, front cover. 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 AAddjjuussttmmeenntt ccrreeddiitt Extended credit2 aanndd FFFeeedddeeerrraaalll RRReeessseeerrrvvveee sseeaassoonnaall ccrreeddiitt11 First 30 days of borrowing After 30 days of borrowing3 BBBaaannnkkk 7/2 O 6 n /9 1 Ef d fe a c te ti ve Pre ra v t i e o us 7/2 O 6 n /9 1 Ef d fe a c te ti ve Pre ra v t i e o us 7/2 O 6 n /9 1 Ef d fe a c te ti ve Pre ra v t i e o us Effective date Boston 5 Vl 4/30/91 6 5Vi 4/30/91 6.40 7/25/91 6.55 7/11/91 New York 4/30/91 4/30/91 7/25/91 7/11/91 Philadelphia 4/30/91 4/30/91 - 7/25/91 7/11/91 Cleveland 5/1/91 5/1/91 7/25/91 7/11/91 Richmond 4/30/91 4/30/91 7/25/91 7/11/91 Atlanta 4/30/91 4/30/91 7/25/91 7/11/91 Chicago 4/30/91 4/30/91 7/25/91 7/11/91 St. Louis 5/2/91 5/2/91 7/25/91 7/11/91 Minneapolis 4/30/91 4/30/91 7/25/91 7/11/91 Kansas City 4/30/91 4/30/91 7/25/91 7/11/91 Dallas 4/30/91 4/30/91 7/25/91 7/11/91 San Francisco ... 5 Vl 4/30/91 6 SVi 4/30/91 6 6.40 7/25/91 6.55 7/11/91 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 an f k Effective date 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 1985—May 20 lVi-% IVi 1978--Jan. 9 6-6 Vi 6 Vi 8 14 14 24 IVi 7 Vl 20 6 Vl 6 Vi Nov. ? 13-14 13 May 11 bVi-1 1 6 . 13 13 1986—Mar. 7 i-m 1 12 7 7 Dec. 4 12 12 10 i 1 July 3 7-71^4 7W Apr. 21 6Vz-7 6 Vl 10 IV• 7V4 1982---JJuullyy 70 11W-12 llVi July 11 6 6 Aug. 21 7V4 73/4 73 1 \Vl im Aug. 21 5Vi-6 5W Sept. 22 8 8 AAuugg.. ? 11-11 Vl 11 22 5Vi 5Vi Oct. 16 8-8^ 8Vi 3 11 11 20 814 8 Vi 16 lOVi 10V5 1987—Sept. 4 5Vi-6 6 Nov. 1 SVi-9Vi 9 Vi 77 lO-lOVi 10 11 6 6 3 9 Vl 9 Vi 30 10 10 Oct. 1? 9Vi-\0 9Vi 1988—Aug. 9 6-6Vl 6Vi 1979--July 20 10 10 13 9 V5 9Vi 11 6 Vi 6V2 Aug. 17 10-10W 10 Vi Nov. ?? 9-9 Vl 9 20 10^ 10 Vi 76 9 9 1989—Feb. 24 6'A-7 1 Sept. 19 10Vi-ll 11 Dec. 14 8W-9 9 7 1 21 11 11 15 SVi-9 m 27 Oct. 8 11-12 12 17 8 Vl 8 Vl 6Vi 6 Vi 10 12 12 1990—Dec. 19 1984-—Apr. 9 SVi-9 9 6-61/2 6 1980--Feb. 15 12-13 13 M 9 9 1991—Feb. 1 6 6 19 13 13 Nov. ?1 81/2-9 m 4 5Yi— 6 5Vl May 29 12-13 13 76 8 Vi Apr. 30 5Vi 5Vi 30 12 12 Dec. 74 8 8 May 2 June 13 11-12 11 In effect July 26, 1991 5 Vi 5 Vi 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 that 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 Vi 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 thirty 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

A48 Domestic Nonfinancial Statistics • September 1991 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Depository institution requirements after implementation of the Monetary Control Act TTyyppee ooff ddeeppoossiitt,, aanndd ddeeppoossiitt iinntteerrvvaall22 P d e e rc p e o n s t i ts o f 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 Eurocurrency 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 1991 Type of transaction 1989 1990 Nov. Dec. Feb. Apr. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) 2 1 Tr G e G a r r s o o u s s r s s y s p b a u i l l r e l c s s h ases 8,2 5 2 8 3 7 1 1 4 2 , , 2 8 8 1 4 8 24 7 , , 7 29 3 1 9 6,658 0 2,35 0 0 12 0 0 1,96 0 7 31 0 3 90 0 8 4 3 R Ex ed ch em an p g t e io s ns 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 25,981 0 1 3 6 , , 0 9 0 3 0 9 19 1 , , 7 0 4 00 7 21,381 0 18,80 0 8 21,981 0 6 5 Ot G G he r r r o o s s s s s w p s it a u h l r e i c n s h a 1 s y e e s ar 2,17 0 6 32 0 7 42 0 5 32 0 5 0 0 0 0 10 0 0 70 0 0 70 0 0 7 9 8 M R E e x a d c tu e h m r a i n t p y g t e i s o s h n i s f ts -2 2 4 3 , , 5 85 8 4 8 0 -2 2 5 8 , ,8 7 5 4 8 0 8 3 0 -2 2 7 5 , , 4 63 2 8 4 0 -4 3 , , 3 5 1 3 5 1 0 1,99 0 1 0 -1,3 9 2 8 6 9 0 -3 2 , , 0 2 4 9 5 2 0 -1,8 4 7 1 7 3 0 4 - , 9 3 9 2 3 4 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 rs l r e c s h ases 5,4 8 8 0 5 0 1,4 4 3 9 6 0 2 2 5 0 0 0 0 0 20 0 0 0 0 0 0 2,950 0 55 0 0 12 Maturity shifts -17,720 -25,534 -21,770 -3,258 -1,991 -778 -1,909 -213 -4,214 13 Exchanges 22,515 23,250 25,410 3,915 0 929 2,545 1,877 777 1 1 4 5 5 t G G o r r 1 o o 0 s s s s y p s e a u a l r r e s c s h ases 1,5 1 7 7 9 5 28 2 7 9 10 0 0 0 0 10 0 0 0 0 35 0 0 5 0 0 0 0 1 1 6 7 M Ex a c tu h r a i n ty g e s s h ifts -5 1 , , 9 7 4 9 6 7 -2 1 , , 2 9 3 3 1 4 -2,1 7 8 8 6 9 12 0 7 0 0 -2 3 1 9 2 7 - 4 2 0 3 0 -200 0 -1 2 1 1 0 6 1 1 8 9 Mo G G re r r o o t s s h s s a p s n a u l 1 r e c 0 s h y a e s a es rs 1,39 0 8 28 0 4 0 0 0 0 0 0 20 Maturity shifts -188 -1, -1,681 -400 -361 21 Exchanges 275 1,226 400 100 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 4 7 5 , , , 4 5 4 9 0 1 1 0 4 6,983 0 0 2 3, , 0 6 0 5 0 0 0 1,0 1 0 2 0 0 0 2,417 0 0 4,013 0 0 7,39 0 0 7' Matched transactions 25 Gross sales 1,168,484 1,323,480 1,369,052 116,601 125,844 130,751 127,589 151,0% 185,662 26 Gross purchases 1,168,142 1,326,542 1,363,434 114,488 123,442 131,087' 127,502 151,412 187,032 Repurchase agreements2 27 Gross purchases 152,613 129,518 219,632 36,457 45,684 36,337 44,688 23,821 16,173 28 Gross sales 151,497 132,688 202,551 34,105 31,022 38,462 44,809 38,589 16,173 29 Net change in U.S. government securities 15,872 -10,055 24,886 7,222 6,608 -2,909' 2,209 -10,439 8,768' 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 2,774 2,091 4,416 3,546 2,518 640 34 Gross sales 56,471 40,411 40,461 2,504 1,021 3,571 4,466 3,784 640 35 Net change in federal agency obligations . 198 -2,018 1,192 270 1,070 845 -920 -1,266 36 Total net change in System Open Market Account 16,070 -12,073 26,078 7,492 7,678 -2,064' 1,290 -11,705 8,676' 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 sum to acceptances in repurchase agreements. totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • September 1991 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month Account 1991 1991 May 29 June 5 June 12 June 19 June 26 Apr. 30 May 31 June 30 Consolidated condition statement ASSETS 1 Gold certificate account 11,058 11,057 11,061 11,062 11,062 11,058 11,057 11,062 2 Special drawing rights certificate account 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 3 Coin 577 575 582 590 580 643 577 575 Loans 4 To depository institutions 255 203 504 310 351 291 206 1,479 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 7 Bought outright 6,213 6,213 6,213 6,213 6,213 6,250 6,213 6,213 8 Held under repurchase agreements 534 0 0 0 748 0 0 477 U.S. Treasury securities 9 Bought outright2 244,293 248,876 248,624 248,626 246,578 244,493 248,111 247,484 10 Bills 116,323 120,706 120,454 120,457 118,409 116,523 119,942 119,314 11 Notes 96,507 96,707 96,707 96,707 96,707 96,707 96,707 96,707 12 Bonds 31,463 31,463 31,463 31,463 31,463 31,263 31,463 31,463 13 Held under repurchase agreements 3,342 0 0 0 4,611 0 0 962 14 Total U.S. Treasury securities 247,635 248,876 248,624 248,626 251,189 244,493 248,111 248,446 15 Total loans and securities 254,638 255,292 255,341 255,150 258,502 251,035 254,530 256,615 16 Items in process of collection 7,625 6,387 5,547 5,542 4,871 9,640 5,531 4,859 17 Bank premises 915 915 927 928 931 906 915 931 Other assets 18 Denominated in foreign currencies3 30,002 30,835 30,871 30,945 31,058 29,816 30,835 28,682 19 All other4 4,606 4,604 4,930 5,027 5,346 5,862 4,416 5,379 20 Total assets 319,439 319,684 319,277 319,262 322,369 318,978 317,879 318,121 Liabilities 21 Federal Reserve notes 271,188 271,347 271,637 271,395 271,397 267,445 271,019 272,000 Deposits 22 Depository institutions 29,704 29,106 29,766 25,750 32,414 22,081 26,223 22,202 23 U.S. Treasury—General account 3,945 4,915 4,519 7,483 5,419 13,682 6,619 11,822 24 Foreign—Official accounts 266 206 226 244 233 292 196 224 25 Other 242 190 191 210 262 276 225 213 26 Total deposits 34,156 34,417 34,702 33,686 38,328 36,330 33,263 34,460 27 Deferred credit items ^ 6,519 5,501 4,805 6,302 4,537 8,377 5,028 4,579 28 Other liabilities and accrued dividends5 2,373 2,521 2,680 2,416 2,634 2,277 2,614 2,392 29 Total liabilities 314,236 313,786 313,823 313,800 316,895 314,429 311,923 313,431 Capital Accounts 30 Capital paid in 2,548 2,545 2,547 2,549 2,546 2,513 2,545 2,546 31 Surplus 2,198 2,377 2,393 2,410 2,423 1,808 2,216 2,114 32 Other capital accounts 457 976 514 503 504 228 1,195 31 33 Total liabilities and capital accounts 319,439 319,684 319,277 319,262 322,369 318,978 317,879 318,121 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international accounts 243,789 244,525 245,223 245,333 242,774 241,334 249,523 243,233 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Bank) 315,767 316,818 318,508 320,160 323,981 312,160 315,843 325,417 36 LESS: Held by bank 44,579 45,471 46,871 48,765 52,584 44,716 44,824 53,450 37 Federal Reserve notes, net 271,188 271,347 271,637 271,395 271,397 267,445 271,019 271,967 Collateral held against notes net: 38 Gold certificate account 11,057 11,057 11,061 11,062 11,062 11,058 11,057 11,062 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 0 0 0 0 0 0 41 U.S. Treasury and agency securities 250,113 250,271 250,558 250,315 250,316 246,369 249,944 250,887 42 Total collateral 271,188 271,347 271,637 271,395 271,397 267,445 271,018 271,967 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 gggrrrooouuupppiiinnnggg 1991 1991 May 29 June 5 June 12 June 19 June 26 Apr. 30 May 31 June 28 2 3 1 Lo W 1 a 6 n i t s d h — a in y T s 1 o t 5 t o a l d 9 a 0 y s d ays 2 2 2 2 5 0 7 9 5 2 1 0 8 2 0 2 0 3 5 3 1 7 0 2 0 7 3 7 2 3 2 8 8 1 0 7 7 0 3 1 4 5 2 0 2 1 3 2 2 3 9 5 0 8 1 4 2 1 1 0 0 0 0 6 0 6 3 1 4 5 2 0 2 1 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 8 7 9 1 1 6 d d a a y y s s t t o o 9 1 0 y e d a a r y s 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 9 0 1 2 3 4 5 U. W M M 9 M S 1 1 6 . o o o i t T d d r r r h e e e a a r i e n y y t t t a s s h h h s 1 a a a u t t 5 n n n o o r y d 9 5 1 1 1 a 0 0 s y y y y e d e e e s y c ' a a a a e u r r y r a r s s i r t t s o i t e o 5 s — 1 y 0 e T a y o r e t s a a r l s 2 6 4 2 5 7 1 1 1 7 4 7 6 2 5 , , , , , , , 6 9 7 2 1 5 0 3 8 1 2 8 1 0 5 9 6 8 4 0 9 2 6 6 4 2 7 1 1 2 2 8 4 5 1 2 , , , , , , , 1 4 8 7 4 5 5 5 7 1 5 6 8 0 5 6 6 3 7 4 1 2 6 6 4 7 2 1 7 2 2 8 4 8 2 , , , , , , , 5 6 4 9 7 4 5 2 0 5 1 1 5 8 4 7 3 4 5 1 4 2 6 6 2 4 7 1 9 2 4 0 8 8 2 , , , , , , , 4 7 7 5 6 6 5 5 0 1 2 7 0 8 3 0 6 6 3 1 4 2 6 2 5 5 7 1 1 2 4 3 7 8 2 5 , , , , , , , 4 1 1 0 8 5 4 5 8 8 8 7 8 7 2 9 9 6 6 3 6 2 6 2 5 7 4 1 1 1 4 9 4 4 0 3 , , , , , , , 3 6 4 4 5 6 7 7 7 0 9 9 4 8 6 6 5 3 9 8 9 2 6 6 2 4 7 1 6 5 2 8 4 6 2 , , , , , , , 5 5 4 1 7 2 5 6 0 1 5 1 8 9 2 4 1 3 6 4 3 2 6 6 2 7 4 1 2 8 2 4 6 7 2 , , , , , , , 8 4 1 7 7 4 5 9 5 1 0 2 8 8 7 4 5 6 7 3 3 2 2 1 1 1 1 0 1 7 8 6 9 Fe M M 9 W 1 d 1 6 e o o i r t d r r d a h e e a l a i y n y t t a h h s s g 1 a a e t t 5 n n o n o c d 5 1 9 1 y a 0 y y y y o e s e d e b 1 a a a a l r r i y r s g s t a t o o ti o 5 1 n 0 y s— e y a e r T a s o r s ta l 6 2 1 1 , , , , 7 4 7 5 0 8 1 4 5 4 0 1 3 8 7 8 8 7 0 6 8 6 2 1 1 1 , , , , , 2 4 0 4 0 1 1 5 2 4 8 1 8 3 9 8 6 3 0 8 6 2 1 1 1 , , , , , 4 2 0 4 0 1 6 1 3 7 4 1 8 4 3 2 5 4 0 7 6 2 1 1 , , , , 2 4 8 0 4 2 1 6 1 4 1 7 3 8 4 3 2 0 5 4 8 6 2 1 1 , , , , 9 4 8 4 9 0 1 6 9 2 8 5 1 8 2 8 7 4 3 0 7 6 2 1 1 , , , , 2 4 7 0 7 1 5 4 3 9 2 6 8 0 2 2 9 6 3 8 6 2 1 1 , , , , 2 4 7 5 0 3 1 1 5 4 0 0 1 8 3 8 8 7 2 0 8 6 2 1 1 , , , , 2 4 8 0 4 2 1 1 9 8 1 0 2 8 3 8 8 0 5 3 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 with maximum maturity of the agreements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • September 1991 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1990 1991 1987 1988 1989 1990 Dec. Dec. Dec. Dec. Nov. Dec. Jan. Feb. Mar. Apr. May June Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 45.81 47.60 47.73 49.10 48.24 49.10 49.47 49.61 49.57 49.39 50.07 50.43 2 Nonborrowed reserves4 . 45.03 45.88 47.46 48.78 48.01 48.78 48.93 49.36 49.32 49.16 49.IT 50.09 3 Nonborrowed reserves plus extended credit5 45.52 47.12 47.48 48.80 48.04 48.80 48.96 49.39 49.38 49.25 49.85 50.10 4 Required reserves 44.77 46.55 46.81 47.44 47.30 47.44 47.30 47.80 48.39 48.36 49.04 49.42 5 Monetary base6 246.28 263.46 274.17 299.79 297.55 299.79 305.15 309.44 310.98 310.60 311.48 312.47 ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 Not seasonally adjusted 6 Total reserves7 47.04 49.00 49.18 50.58 48.42 50.58 50.76 48.55 48.59 50.30 49.06 50.41 7 Nonborrowed reserves 46.26 47.29 48.91 50.25 48.19 50.25 50.22 48.30 48.34 50.07 48.76 50.07 8 Nonborrowed reserves plus extended credit 46.75 48.53 48.93 50.28 48.21 50.28 50.25 48.33 48.40 50.16 48.85 50.08 9 Required reserves 46.00 47.96 48.26 48.91 47.47 48.91 48.59 46.74 47.41 49.27 48.03 49.40 10 Monetary base9 249.93 267.46 278.30 304.04 298.44 304.04 306.03 305.74 308.19 310.86 311.02 314.06 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves11 62.14 63.75 62.81 59.12 62.05 59.12 50.99 48.55 48.59 50.30 49.06 50.41 12 Nonborrowed reserves ^ 61.36 62.03 62.54 58.79 61.82 58.79 50.46 48.30 48.35 50.07 48.76 50.07 13 Nonborrowed reserves plus extended credit 61.85 63.27 62.56 58.82 61.84 58.82 50.48 48.33 48.40 50.16 48.85 50.08 14 Required reserves 61.09 62.70 61.89 57.46 61.10 57.46 48.82 46.74 47.41 49.27 48.03 49.40 15 Monetary base12 266.06 283.00 292.55 313.70 312.69 313.70 309.30 308.53 311.04 313.95 314.25 317.26 16 Excess reserves13 1.05 1.05 .92 1.66 .95 1.66 2.17 1.81 1.18 1.03 1.03 1.01 17 Borrowings from the Federal Reserve .78 1.72 .27 .33 .23 .33 .53 .25 .24 .23 .30 .34 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 (for all quarterly reporters on the "Report of Transaction Accounts, Other adjusted, 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 . Mar. Apr. May June Seasonally adjusted 1 Ml 749.7 786.4 793.6 825.4 843.0 842.2 851.7' 858.5 2 M2 2,910.1 3,069.9 3.223.1 3.327.6 3,374.9' 3,382.8' 3,394.9' 3,398.6 3 M3 3,677.4 3,919.1 4.055.2 4.111.7 4,168.8'' 4,170.3' 4,171.6' 4,164.3 4 L 4.337.0 4,676.0 4,889.9 4,965.5' 5,008.4r 4,968.6' 4,943.1 n.a. 5 Debt 8.345.1 9,107.6 9,790.4 10,436.1 10,563.9 10,578.0' 10,627.3 n.a. Ml components 6 Currency5 196.8 212.0 222.2 246.4 256.7 256.6 256.8 257.6 7 Travelers checks* 7.0 7.5 7.4 8.4 8.1 7.9 8.0 7.8 8 Demand deposits5 286.5 286.3 278.7 276.9 277.1 275.7' 278.6' 280.9 9 Other checkable deposits6 259.3 280.7 285.2 293.8 301.0 302.0 308.3 312.2 Nontrqnsaction components 10 In M2 . 2,160.4 2,283.5 2,429.5 2,502.2 2,531.9 2,540.6' 2,543.2' 2,540.1 11 In M3 only8 767.3 849.3 832.1 784.1 794.0 787.5' 776.7' 765.6 Time and savings accounts Commercial banks 12 Savings deposits 178.3 192.1 187.7 199.4 205.8 208.9 211.5 215.1 13 Money market deposit accounts . 356.4 350.2 353.0 378.4 388.9 393.7 399.8 404.4 14 Small time deposits' 388.0 447.5 531.4 598.1 607.8 604.1 601.2' 601.7 15 Large time deposits10, 326.6 368.0 401.9 386.1 399.9 398.0 398.3' 396.9 Thrift institutions 16 Savings deposits 233.7 232.3 216.4 211.4 214.7 218.4 221.7' 223.9 17 Money market deposit accounts . 168.5 151.2 133.1 127.6 130.3 132.9 136.3 137.7 18 Small time deposits9 . 529.7 584.3 614.5 566.1 550.5 546.1' 539.4 527.6 19 Large time deposits10 162.6 174.3 161.6 121.0 111.6 108.8' 104.5 100.8 Money market mutual funds 20 General purpose and broker-dealer. 221.7 241.1 313.6 345.4 363.5 364.2 365.1 364.3 21 Institution-only 88.9 86.9 101.9 125.7 142.0 145.6 146.2 143.3 Debt components 22 Federal debt 1,957.9 2,114.2 2,268.1 2,534.3 2,599.7 2,590.8 2,613.1 n.a. 23 Nonfederal debt 6,387.2 6,993.4 7,522.3 7,901.8 7,964.2 7,987.1' 8,014.1 n.a. Not seasonally adjusted 24 Ml 766.2 804.2 811.9 844.3 835.0 852.9 841.6' 857.8 25 M2 2.923.0 3,083.3 3,236.6 3,341.6 3,374. T 3,396.3' 3,374.3' 3,391.6 26 M3 3,690.3 3,931.5 4,067.0 4,123.8 4,168.1' 4,179.5' 4,152.8' 4,158.8 27 L 4,352.8 4,691.8 4,907.4 4,984.0' 5,006.6' 4,980.C 4,928.1 n.a. 28 Debt 8.329.1 9,093.2 9,775.9 10,423.3 10,518.6 10,533.4' 10,582.4 n.a. Ml components 29 Currency3 199.3 214.8 225.3 249.6 255.6 256.0 257.4 259.1 30 Travelers checks4 6.5 6.9 6.9 7.8 7.8 7.5 7.8 8.1 31 Demand deposits5 298.6 298.9 291.5 289.9 270.1 277.6 271.5 279.5 32 Other checkable deposits6 261.8 283.5 288.2 297.0 301.6 311.8 305.0 311.0 Nontrqnsaction components 33 In M2 ... .„ 2,156.8 2,279.1 2,424.7 2,497.3 2,539.1 2,543.5' 2,532.7' 2,533.9 34 In M3 only8 767.3 848.2 830.4 782.2 794.1 783.1' 778.5' 767.2 Time and savings accounts Commercial banks 35 Savings deposits 176.8 190.6 186.4 197.7 205.8 209.5 212.0 216.5 36 Money market deposit accounts 359.0 353.2 356.5 381.6 391.1 394.0 395.8 401.8 37 Small time deposits'.... 387.2 446.0 529.2 596.1 607.4 604.2 600.9' 602.1 38 Large time deposits10, 11 325.8 366.8 400.4 386.1 399.4 395.8' 397.8 396.4 Thrift institutions 39 Savings deposits 231.4 229.9 214.2 209.6 214.7 219.0 222.3 225.3 40 Money market deposit accounts 168.6 151.6 133.7 128.7 131.0 133.0 134.9 136.8 41 Small time deposits'. 529.5 583.8 613.8 564.1 550.1 546.2 539.1' 527.9 42 Large time deposits10 163.3 175.2 162.6 121.1 111.5 108.1 104.4 100.7 Money market mutual funds 43 General purpose and broker-dealer 221.1 240.7 313.5 345.5 370.0 368.5 360.5 358.0 44 Institution-only 89.6 87.6 102.8 127.0 143.9 144.1 145.2 141.0 Repurchase agreements and eurodollars 45 Overnight 83.2 83.4 77.3 74.0 69.1 69.1 67.2' 65.5 46 Term 197.1 227.7 179.8 161.5 154.3 150.3' 146.5' 143.9 Debt components 47 Federal debt 1,955.6 2,111.8 2,265.9 2.532.1 2,602.8 2,593.0 2,609.2 n.a. 48 Nonfederal debt 6,373.5 6,981.4 7,509.9 7.891.2 7,915.8 7,940.4' 7,973.2 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • September 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 (OCDs) 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 11999900 Nov. Dec. Jan. Feb. Mar. Apr. Seasonally adjusted Demand deposits3 1 All insured banks 219,795.7 256.150.4 277,916.3 294,468.6 267,479.9 279,437.8 280,494.1 271,546.1 295,451.1 2 Major New York City banks 115,475.6 129,319.9 131,784.0 140,531.5 130,154.6 138,638.1 138,037.7 132.697.5 146,929.3 3 Other banks , 104,320.2 126.830.5 146,132.3 153,937.1 137,325.3 140,799.7 142,456.4 138.848.6 148,521.8 4 ATS-NOW accounts4 2,478.1 2,910.5 3,349.6 3,479.2 3,368.4 3,559.1 3,533.7 3,245.9 3,806.6 5 Savings deposits 537.0 547.5 558.8 565.8 527.2 572.9 551.4 525.5 581.6 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 622.9 735.1 800.6 857.1 779.5 828.3 817.8 792.4 868.8 7 Major New York City banks 2,897.2 3,421.5 3,804.1 4,320.4 3,949.1 4,259.7 4,125.7 4,095.8 4,523.3 8 Other banks 333.3 408.3 467.7 494.9 442.7 461.9 460.2 447.5 482.8 9 ATS-NOW accounts4 13.2 15.2 16.5 16.8 16.2 17.0 16.7 15.1 17.7 10 Savings deposits 2.9 3.0 2.9 2.9 2.7 2.9 2.7 2.6 2.8 Not seasonally adjusted Demand deposits3 11 All insured banks 219,790.4 256,133.2 277,400.0 277,536.6 .275,664.8 283,545.5 259,372.9 278,280.4 294,771.5 12 Major New York City banks 115,460.7 129,400.1 131,784.7 133,220.6 133,491.9 136,578.8 127,287.3 134,974.7 145,700.2 13 Other banks 104,329.7 126,733.0 145,615.3 144,316.0 142,172.9 146,966.7 132,085.5 143,305.7 149,071.4 14 ATS-NOW accounts4 2,477.3 2,910.7 3,342.2 3,259.5 3,430.2 3,923.1 3,237.8 3,310.7 3.972.1 15 MMDA 2,342.7 2,677.1 2,923.8 2,805.0 2,938.6 3,106.8 2,512.7 2,771.6 2.984.2 16 Savings deposits 536.3 546.9 557.9 505.1 530.1 589.2 494.9 524.5 627.9 DEPOSIT TURNOVER Demand deposits3 17 All insured banks 622.8 735.4 799.6 800.0 765.8 820.3 778.7 835.8 860.7 18 Major New York City banks 2,896.7 3,426.2 3,810.0 4,067.4 3,760.0 3,993.4 3,899.0 4,378.5 4,565.4 19 Other banks 333.2 408.0 466.3 459.3 438.2 471.9 439.7 474.3 480.0 20 ATS-NOW accounts4 13.2 15.2 16.4 15.8 16.2 18.4 15.3 15.3 17.8 21 MMDAs6 6.6 7.9 8.0 7.4 7.8 8.2 6.6 7.1 7.6 22 Savings deposits 2.9 2.9 2.9 2.6 2.7 3.0 2.5 2.6 3.0 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 Financial Statistics • September 1991 1.23 LOANS AND SECURITIES All Commercial Banks Billions of dollars; averages of Wednesday figures 1990 1991 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Seasonally adjusted 1 Total loans and securities1 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 2,750.0 2,758.1 2 U.S. government securities 442.8 445.7 450.1 453.1 454.0 454.2 454.1 458.0 471.4 479.2 484.9 492.9 i Other securities 177.3 178.8 178.8 177.8 175.9 175.6 177.7 177.6 177.6 175.7 173.9' 173.1 4 Total loans and leases' 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 2,091.1 2,092.1 3 Commercial and industrial ..... 644.4 645.1 644.7 643.7 646.5 648.1 644.3 643.9 646.0 640.0 633.2 629.7 6 Bankers acceptances held ... 7.6 7.4 7.5 7.3 7.4 7.5 7.7 6.9 6.7 6.7' 6.8' 6.5 / Other commercial and industrial 636.7 637.7 637.1 636.4 639.1 640.5 636.6 637.1 639.4 633.3' 626.4' 623.2 8 U.S. addressees3 632.5 633.4 632.6 631.7 634.0 635.3 631.1 631.5 633.7 627.8' 620.6' 617.3 9 Non-U.S. addressees3 4.3 4.3 4.5 4.7 5.1 5.3 5.5 5.5 5.7 5.5 5.8 5.9 10 Real estate 814.5 818.0 822.5 827.7 832.0 836.5 837.3 842.6 846.3 850.7 854.7 857.7 11 Individual 376.4 378.2 378.6 379.7 378.7 378.9 375.9 377.7 375.5 374.1 373.4' 371.7 12 Security 38.7 44.6 41.3 40.5 39.6 40.6 43.1 43.2 38.8 39.8 39.8 38.3 13 Nonbank financial institutions 34.7 35.0 35.2 34.8 34.6 34.7 34.2 35.3 36.1 35.2 36.1 36.2 14 Agricultural 31.3 31.5 31.8 32.2 32.5 33.0 33.5 33.5 34.0 33.9 33.6 33.0 13 State and political subdivisions 36.4 35.8 35.2 35.1 34.8 34.3 33.2 33.1 32.8' 32.2 31.8 31.0 16 Foreign banks 7.0 7.9 8.1 9.0 8.1r 7.2' 6.0' 6.1' 7.2' 6.9 6.4 6.0 17 Foreign official institutions 3.2 3.2 3.3 3.2 3.2 3.2 3.0 3.1 3.2 3.0 3.0 3.0 18 Lease financing receivables 32.6 32.7 32.8 33.3 32.9 32.7 32.4 32.8 33.0 32.7 32.7 32.8 19 All other loans 43.6 48.2 45.5 43.6 43. r 44.7' 46.4' 48.2' 49.1' 48.2 46.4 52.7 Not seasonally adjusted 20 Total loans and securities1 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 2,749.2 2,758.8 21 U.S. government securities 439.9 444.0 448.2 450.8 454.1 451.5 455.8 463.9 475.8 480.5 485.1 491.5 22 Other securities 176.4 179.1 179.0 178.0 176.6 176.3 177.9 177.3 176.9 175.1 173.8 173.2 23 Total loans and leases' 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 2,090.3' 2,094.1 24 Commercial and industrial ..... 644.6 643.5 640.9 641.2 644.5 648.0 641.1 643.0 648.3 644.7 637.1 632.0 23 Bankers acceptances held ... 7.3 7.2 7.5 7.4 7.6 7.7 7.6 7.0 6.6 6.6' 6.7' 6.6 26 Other commercial and industrial 637.3 636.3 633.4 633.8 636.9 640.3 633.4 636.1 641.6 638.1' 630.4' 625.4 27 U.S. addressees3 632.9 631.8 628.8 629.1 631.9 635.1 628.2 630.6 636.2 632.2' 624.5' 619.4 28 Non-U.S. addressees3 4.4 4.5 4.6 4.7 5.0 5.2 5.3 5.5 5.4 5.9 5.9 6.0 29 Real estate 814.9 819.9 824.2 830.3 834.0 837.9 837.1 839.5 842.6 848.1 853.8 857.7 30 Individual 374.1 377.4 380.4 380.6 379.8 383.8 380.1 377.1 372.8 371.5 371.8 369.7 31 Security 38.6 43.9 40.3 39.5 38.5 40.0 40.9 44.7 40.1 41.3 39.0 40.5 32 Nonbank financial institutions 34.6 35.0 34.9 34.7 35.0 36.1 34.7 34.9 35.4 34.8r 35.7 36.2 33 Agricultural 32.1 32.5 32.9 33.1 32.9 32.9 32.8 32.6' 32.6 32.8 33.1 33.3 34 State and political subdivisions 36.2 35.7 35.2 35.1 34.7 34.0 33.9' 33.3' 32.8' 32.1 31.7' 31.0 33 Foreign banks 7.1 8.0 8.2 9.3 8.3' 7.4' 6.0' 6.V 6.8' 6.7 6.3' 6.1 36 Foreign official institutions 3.2 3.2 3.3 3.2 3.2 3.2 3.0 3.1 3.2 3.0 3.0 3.0 37 Lease financing receivables 32.4 32.6 32.8 33.3 33.1 32.8 32.8 32.9 32.9 32.7 32.6 32.6 38 All other loans 43.3 45.4 46.8 46.3 45.4' 46.7' 44.7' 48^ 48.2' 47.9 46.1 52.0 1. Adjusted to exclude loans to commercial banks in the United States. 3. United States includes the fifty 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 Billions of dollars, monthly averages 1990 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Seasonally adjusted 2 1 N To et t a b l a n la o n n c d e e s p o d s u it e f t u o n r d e s la 2 ted foreign offices3 — 28 1 1 9 . . 1 1 28 1 3 9 . . 8 0 2 2 8 1 3 . . 5 0 2 2 9 9 1 . . 9 8 2 3 9 0 2. . 4 1 2 3 8 4 7 . . 6 9 27 3 7 3 . . 1 5 26 2 5 4 . .9 r r 2 3 64 0 . . 0 2 ' 2 3 6 0 2 . . 7 6 2 2 5 6 8 . . 0 1 ' 24 1 8 9 . . 0 2 3 4 5 Bo D F rr o o i o r n m w e i U e i g n s n n t g i - i c s t r e a e f d l l r l a o y t S e m t c d a h o t b a e t r a s h t 4 n e e k r r e s t d h a b n a n c k o s m mercial banks 2 2 6 6 0 0 2 1 . . . 4 0 6 2 2 6 6 0 4 2 2 . . . 8 2 6 2 1 6 6 9 2 1 8 . . . 5 7 8 2 1 6 6 9 1 5 6 . . . 9 0 9 2 1 6 6 9 2 7 5 . . . 2 3 0 2 1 6 5 8 3 6 7 . . . 2 2 1 2 1 4 6 8 3 1 2 . . . 6 5 2 2 1 6 4 7 0 3 7 . . . 2 1 1 2 1 6 3 7 3 2 1 . . . 8 3 5 2 1 6 3 7 1 1 0 . . . 2 8 6 ' ' 2 1 6 3 6 3 2 8 . . . 2 0 8 2 1 6 2 6 8 2 6 . . . 9 6 3 Not seasonally adjusted 6 7 8 9 N To e F D t t a o o b l r m e a n i l e o g a s n n n t d c i - c r e e e a s p l l a o l d y t s u e i d t c e h f t b a u o a r n t n r e d e k r s l e s 2 a d te b d a f n o k r s e ign offices' 2 - 2 7 1 5 2 7 6 . . . 8 . 4 2 6 2 - 2 8 1 3 1 2 8 . . . . 4 9 5 5 2 - 2 2 7 4 5 1 8 . . . . 2 8 5 6 2 - 2 3 8 1 0 9 8 . . . . 0 6 6 7 2 3 3 9 0 0 3 . . . . 2 6 8 5 2 - 4 3 8 4 1 7 2 . . . . 1 3 2 3 - 2 1 4 3 7 5 8 3 2 . . . . 2 4 1 5 - 2 1 4 2 6 5 0 4 8 . . . . 2 0 1 8 2 - 2 3 6 6 5 9 9 . . . . 0 6 2 7 ' 2 - 2 3 6 3 2 3 8 . . . 5 ^ 4 3 2 2 2 6 - 9 8 6 . . 7 . . 2 6 C ' 2 - 2 5 1 3 3 1 9 . . . . 5 0 0 5 10 Borrowings from other than commercial banks in United States4 260.6 264.0 257.0 259.2 262.7 245.1 239.4 243.3 239.5' 234.4' 237.4 231.5 11 Domestically chartered banks 199.1 201.7 195.6 195.0 197.6 182.8 177.7 179.4 175.8' 171.4 173.5 167.2 1 1 1 3 4 2 Fo O F re e t i d h g e e n b r r - o a 6 r r l e r l o f a u w t n e i d d n s g b s a a n n d k s s 6 e curity RP 1 6 9 1 2 6 . . . 5 9 2 1 6 9 2 3 8 . . . 3 6 1 1 6 9 4 1 1 . . . 0 5 6 1 6 9 4 3 1 . . . 2 2 7 1 6 9 2 5 4 . . . 1 9 7 1 6 8 2 2 0 . . . 8 3 0 1 6 7 1 3 4 . . . 7 2 4 1 6 7 3 2 6 . . . 9 8 6 1 6 7 3 3 2 . . . 7 2 6 1 6 6 2 3 8 . . . 9 0 5 ' 1 6 7 2 3 0 . . . 8 9 7 1 6 6 2 4 4 . . . 8 3 3 MEMO Gross large time deposits 1 1 5 6 S N e o a t s o se n a a s ll o y n a a l d ly ju a st d e j d u sted 4 45 5 0 1 . . 5 9 4 4 4 5 9 0 . . 2 1 4 44 4 5 3 . . 4 6 4 44 3 0 8 . . 4 0 4 4 3 3 5 7 . . 2 8 4 4 3 3 1 1 . . 8 8 4 43 4 9 1 . . 3 0 4 4 5 4 0 9 . .2 6 r 4 45 5 0 0 . . 5 9 4 44 5 8 0 . . 6 9 4 4 5 5 2 1 . . 1 7 4 45 5 0 0 . . 0 5 U.S. Treasury demand balances at commercial 1 1 7 8 N Se o a t s b o s a e n a n a s k ll o s y n a a l d ly ju a st d e j d u sted 1 1 5 5 . . 2 0 2 32 3 . . 7 5 3 2 1 6 . . 0 0 2 2 0 2 . . 9 3 2 1 5 9 . . 2 2 2 24 3 . . 4 0 2 2 5 9 . . 7 4 3 3 9 3 . . 3 4 2 3 8 3 . . 4 8 2 21 0 . . 7 4 1 1 9 5 . . 8 1 2 23 3 . . 2 6 1. Commercial banks are those in the fifty states and the District of Columbia promissory note or due bill, given for the purpose 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, repurchase agreements (RPs), and other borrowing 6. Figures are partly daily averages and partly averages of Wednesday data. from nonbanks and net 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

A48 Domestic Nonfinancial Statistics • September 1991 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series1 Billions of dollars 1990 1991 AAccccoouunntt Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June ALL COMMERCIAL BANKING INSTITUTIONS2 1 Loans and securities 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 2,921.5 2,931.1 2 Investment securities 597.2 601.7 604.9 603.3 605.6 612.8 614.0 628.3 628.5 634.1 638.5 3 U.S. government securities 429.1 434.5 438.0 437.6 439.6 447.6 449.5 463.3 465.1 471.8 477.8 4 Other 168.0 167.2 166.8 165.7 166.0 165.2 164.5 165.1 163.4 162.2 160.7 5 Trading account assets 29.3 21.4 27.4 25.0 22.0 24.1 26.9 23.5 24.9 24.3 27.5 6 Total loans 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 2,263.2 2,265.2 7 Interbank loans 200.1 191.0 207.9 207.0 204.0 193.3 185.0 171.8 160.7 172.5 166.8 8 Loans excluding interbank 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 2,090.6 2,098.5 9 Commercial and industrial 639.7 639.7 643.4 644.4 650.8 637.2 645.1 648.5 643.6 635.1 631.7 10 Real estate 820.1 825.0 831.5 833.7 838.3 836.9 840.1 842.5 849.0 855.2 857.5 11 Individual 379.4 381.2 380.8 380.5 384.7 378.6 376.4 371.5 372.0 370.7 369.5 12 All other 231.1 227.1 235.5 231.2 231.5 225.9 237.4 224.8 228.3 229.6 239.7 13 Total cash assets 207.7 213.7 220.8 216.7 217.9 199.2 204.5 206.1 201.0 224.3 212.3 14 Reserves with Federal Reserve Banks. 30.0 33.6 29.7 33.0 23.4 16.5 18.1 25.0 23.1 26.2 29.1 15 Cash in vault 30.3 29.3 29.4 32.8 32.0 30.4 29.8 28.9 29.1 31.1 29.8 16 Cash items in process of collection ... 77.5 81.1 85.4 78.4 86.0 74.7 79.9 76.9 74.3 87.2 78.2 17 Demand balances at U.S. depository institutions 27.3 27.0 28.5 28.4 29.6 28.1 27.7 27.6 26.4 30.8 28.3 18 Other cash assets 42.5 42.8 47.8 44.2 46.8 49.6 49.0 47.7 48.1 49.0 46.8 19 Other assets 220.8 226.6 230.1 226.6 245.1 249.9 259.6 263.1 260.4 264.4 265.6 20 Total assets/total liabilities and capital.... 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 3,410.3 3,409.0 21 Deposits 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 2,413.3 2,406.1 22 Transaction deposits 589.1 595.3 612.1 598.1 637.1 587.9 594.1 602.8 601.3 617.6 611.2 23 Savings deposits 565.6 563.5 570.5 573.1 573.3 573.9 583.5 594.1 595.4 606.2 610.6 24 Time deposits 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 1,189.5 1,184.2 25 Borrowings 579.9 570.9 591.0 570.6 548.7 529.8 515.4 492.3 494.6 499.8 509.9 26 Other liabilities 226.2 233.1 236.0 255.3 264.4 268.8 282.3 278.2 263.9 267.6 264.1 27 Residual (assets less liabilities) 222.8 223.4 223.3 222.7 223.5 224.6 226.2 227.0 228.1 229.6 228.9 MEMO 28 U.S. government securities (including trading account) 446.3 445.1 454.2 451.9 451.1 459.4 463.7 475.9 479.0 485.0 492.9 29 Other securities (including trading account) 180.2 178.0 178.1 176.4 176.5 177.5 177.2 176.0 174.5 173.4 173.1 DOMESTICALLY CHARTERED COMMERCIAL BANKS3 30 Loans and securities 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 2,637.8 2,640.8 31 Investment securities 566.1 569.0 571.5 569.8 570.5 575.3 577.4 588.6 592.3 595.7 600.5 32 U.S. government securities 414.1 417.9 420.9 420.8 421.7 426.5 429.3 440.2 445.5 449.2 455.5 33 Other 152.0 151.2 150.6 149.1 148.8 148.7 148.2 148.5 146.8 146.5 144.9 34 Trading account assets 29.3 21.4 27.4 25.0 22.0 24.1 26.9 23.5 24.9 24.3 27.5 35 Total loans 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 2,017.8 2,012.8 36 Interbank loans 153.7 146.0 164.0 157.4 160.0 151.7 150.9 148.3 134.2 144.5 139.0 37 Loans excluding interbank 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 1,873.3 1,873.9 38 Commercial and industrial 514.0 513.2 515.4 513.4 512.7 504.2 508.4 506.3 502.4 495.0 490.5 39 Real estate 779.5 784.0 789.8 791.6 796.4 794.0 797.1 799.7 804.7 808.7 810.3 40 Individual 379.4 381.2 380.8 380.5 384.7 378.6 376.4 371.5 372.0 370.7 369.5 41 All other 209.8 205.7 209.5 207.4 207.9 200.2 205.1 197.7 198.4 198.8 203.6 4? Total cash assets 181.7 187.0 189.3 187.7 188.3 166.6 172.7 177.0 171.6 193.6 184.3 43 Reserves with Federal Reserve Banks. 28.0 32.1 28.5 31.5 23.0 15.3 17.0 24.0 21.9 25.8 28.3 44 Cash in vault 30.3 29.2 29.4 32.8 32.0 30.3 29.8 28.8 29.1 31.1 29.8 45 Cash items in process of collection ... 75.9 79.0 83.6 76.4 83.9 72.9 78.2 74.9 72.6 85.5 76.2 46 Demand balances at U.S. depository institutions 25.0 25.1 26.6 26.2 27.6 26.2 25.8 25.8 24.8 28.8 26.5 47 Other cash assets 22.5 21.5 21.2 20.9 21.8 22.0 21.9 23.4 23.2 22.4 23.6 48 Other assets 145.6 152.3 153.6 155.0 167.8 166.9 171.3 167.9 161.9 162.3 164.3 49 Total assets/liabilities and capital 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 2,993.7 2,989.4 50 Deposits 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 2,280.8 2,271.3 51 Transaction deposits 578.8 584.4 601.5 587.7 626.1 577.4 583.8 592.2 591.4 607.5 600.9 52 Savings deposits 562.6 560.4 567.4 569.8 570.0 570.6 580.2 590.6 591.9 602.5 607.1 53 Time deposits 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 1,070.8 1,063.4 54 Borrowings 404.3 395.8 400.4 394.1 375.6 380.1 371.8 354.9 346.5 355.1 364.4 55 Other liabilities 120.7 124.1 127.5 131.5 131.4 124.2 136.8 136.0 132.6 131.9 128.4 56 Residual (assets less liabilities) 219.2 219.7 219.6 219.0 219.8 220.9 222.6 223.4 224.5 226.0 225.3 MEMO 57 Real estate loans, revolving 57.7 58.6 60.6 61.1 61.7 62.9 63.3 63.6 64.4 65.7 66.6 58 Real estate loans, other 721.7 725.4 729.2 730.5 734.7 731.1 733.8 736.1 740.3 743.0 743.7 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 May 1 May 8 May 15 May 22 May 29' June 5 June 12 June 19 ASSETS 2 1 U Ca .S sh . T a r n e d a s b u a r l y a n a c n e d s g d o u v e e f r r n o m m e n d t e p se o c s u it r o i r ti y e s i nstitutions .. 1 19 2 4 5 , , 6 7 9 6 1 3 ' 1 9 9 7 3 , , 6 91 7 5 6 ' 1 19 1 6 3 , , 2 5 0 5 1 1 ' 1 9 9 4 3 , , 7 6 4 6 2 6 ' ' 1 19 1 2 2 , , 9 5 0 6 5 6 1 1 9 0 7 3 , , 5 1 5 2 9 6 1 1% 00, , 9 6 1 1 3 0 1 19 0 5 1 , , 6 0 9 3 5 1 3 Trading account 15,432 14,577 16,810 14,692 13,183 16,006 15,967 16,225 4 Investment account 179,259 179,338 179,391 178,974' 179,722 181,553 180,643 179,470 5 Mortgage-backed securities' 83,105' 83,095' 82,302' 81,544' 81,514 81,358 79,290 78,402 All other maturing in 6 One year or less 18,929 19,027 18,649 19,464 19,658 20,4% 20,820 20,548 7 Over one through five years 42.517 43,706 45,139 44,426 44,416 45,385 44,974 45,457 8 Over five years 34,709' 33,51c 33,301' 33,540' 34,135 34,315 35,558 35,063 9 Other securities 58,580 58,547 57,844 57,594' 57,615 57,984 57,946 58,098 10 Trading account 1,365 1,241 1,346 1,360 1,372 1,825 1,939 2,065 11 Investment account 57,215 57,306 56,498 56,234' 56,243 56,159 56,008 56,033 1 1 1 1 1 2 3 4 5 6 Othe O S r t t t a O O h r t a e e n v d r e e i a r b n n y o g o d e n n a a d p e r c o s c o y , l o i r e c t u i a o l c n e r r a t s p l s a o s s r u s a b e te t d s i s v t i o s c io k n s s , , a b n y d m se a c t u u r r i i t t i y e s ... 2 2 2 9 3 9 7 3 , , , . , 9 7 2 5 4 8 2 1 1 3 6 9 1 8 5 ' 3 2 2 0 9 7 3 3 , , , , , 0 2 5 7 5 6 4 3 0 0 4 2 9 3 3 ' 2 2 2 1 9 3 3 7 0 , , , , , 3 5 6 1 2 1 0 8 8 1 0 8 7 0 6 ' 2 2 2 9 3 9 3 7 , , , , , 4 6 0 1 5 3 9 5 4 3 5 1 6 3 4 ' ' 2 2 2 9 9 3 7 3 , , , , , 7 1 6 0 4 6 5 6 9 3 4 0 2 3 1 2 2 2 9 9 3 3 6 , , , , , 2 9 2 6 9 3 8 6 5 2 8 8 3 8 1 2 2 2 1 9 3 3 6 0 , , , , , 1 6 2 8 0 2 5 2 8 2 5 4 9 3 0 2 2 2 1 9 3 3 6 0 , , , , , 1 2 6 8 1 5 0 7 8 4 2 4 7 0 5 17 Federal funds sold2 86,089 68,178 78,327 63,099 73,512 76,258 75,106 77,433 18 To commercial banks in the U.S 57,489 47,446 55,417 43,621 53,098 54,193 52,232 53,995 19 To nonbank brokers and dealers 25,298 17,906 19,689 17,329 17,608 19,212 20,063 20,043 20 To others3 3,303 2,826 3,221 2,149 2,805 2,853 2,811 3,395 2 2 2 2 2 2 1 2 3 6 4 5 Ot C he o B A r m a l l N U l m o n o a o k . e S n t n e r h s . c r - e s i U a a a r ' d n l . a S d d a c . r n c e l a d e e s d p a s i d e s t n a e e r d n e s s u s , c s s e g e t s r r e i o s a a s n l s d commercial paper 1, 3 0 3 3 1 1 1 5 6 4 7 1 1 1 , , , , , , 2 8 3 8 7 6 0 2 7 4 8 4 1 8 3 3 9 8 ' ' ' 1, 3 3 0 3 1 1 1 4 4 2 5 5 1 1 , , , , , , 1 7 3 8 7 7 7 9 8 8 2 1 2 1 1 7 7 5 ' ' ' 1, 3 3 0 3 1 1 1 4 2 1 4 5 1 1 , , , , , , 8 3 4 4 7 6 0 8 2 7 7 6 4 4 0 6 0 5 ' ' ' 1, 3 3 0 3 1 1 1 4 1 3 0 1 1 1 , , , , , , 7 3 4 3 5 1 3 2 1 2 4 9 3 3 0 8 2 5 ' ' ' 1,0 3 3 3 4 1 1 0 2 2 0 9 1 1 , , , , , , 7 3 6 2 4 6 2 5 8 3 5 6 2 7 9 5 8 3 1, 3 0 3 3 1 3 1 0 1 8 0 8 1 1 , , , , , , 9 8 2 7 7 4 5 7 2 2 6 5 2 8 9 3 9 9 1,0 3 3 3 3 0 0 0 4 9 7 6 1 1 , , , , , , 4 3 7 4 6 3 5 3 1 9 6 5 9 3 2 1 8 6 1,0 3 3 3 3 1 0 0 5 0 8 6 1 1 , , , , , , 7 0 2 7 7 5 6 4 9 7 4 1 0 3 4 5 9 9 27 Real estate loans 404,577' 404,836' 404,519' 404,134' 404,734 404,731 405,367 405,490 28 Revolving, home equity 37,366' 37,434' 37,543' 37,538' 37,625 37,710 37,766 38,188 29 All other 367,210' 367,403' 366,976' 366,5%' 367,109 367,021 367,601 367,302 30 To individuals for personal expenditures 190,806' 190,383' 190,426' 189,959' 188,758 188,921 187,863 188,266 4 4 4 4 4 3 3 3 3 3 3 3 3 3 3 4 0 1 2 1 2 3 4 5 6 7 8 9 O O LE t t T A T L T T F h h S e e o o o e o o l S C N B l r r a r : f d f s s o o a o l L a i o p U t e e o n t n m n a s r u o h p a a n s k e f t b r a e o m e n i n e i e s a c n n g r s s s t c a n h e s a i n i e r l k t a a n r a a n o n o c n s n n g a c a e d r i f i d g d d o a i n y o n d e n r l v g r s p p i g l l e a e 4 i b c e e o o n i n r a u a a r a s g l n c n d e s i l n i s n o t m t t c d e e o k u i f m e c s c i r s e r r c i n a , y a o n e e v a l i a l n u s t a n r a n s s e e n r b p n c u y r t t t l r a d h v i r b e i o a n n i e e s d d e o l d g 3 i s u t U i v h n c o s i n e s t s e f i r t i f i c o i t f o i t u e c i n n u n d i r a s t i a i t l o S i n e i n t n c s a s s i t a t e i l t s i u n t s i t o it n u s t ion . s .. ... 1,0 1 4 2 2 2 2 3 0 1 5 1 7 1 7 2 5 4 2 2 8 4 9 1 7 9 , , , , , , , , , , , , , , 0 9 9 8 0 2 0 4 8 1 2 9 4 7 7 6 8 9 3 9 6 4 0 9 6 5 5 7 5 7 3 8 9 4 2 1 6 5 8 4 9 0 ' ' ' ' ' 1,0 1 4 2 2 2 2 3 0 5 1 1 1 1 7 7 2 5 4 3 8 3 1 9 2 5 , , , , , , , , , , , , , , 0 9 0 0 1 6 0 0 1 2 7 6 5 3 1 8 2 7 3 8 9 1 7 1 1 7 4 6 7 1 5 4 3 8 2 3 1 8 3 3 5 5 ' ' ' ' ' 1,0 1 4 2 2 2 2 3 0 1 1 5 7 2 4 2 6 6 3 1 7 4 2 1 9 5 , , , , , , , , , , , , , , 7 2 4 0 0 9 0 9 5 7 1 7 2 3 3 7 5 5 7 8 7 3 2 6 0 1 2 0 5 6 4 5 8 8 0 3 0 6 3 3 3 2 ' ' 9 1 4 2 2 2 2 3 9 1 1 5 6 1 2 6 4 6 2 1 7 9 1 9 2 2 , , , , , , , , , , , , , , 2 7 9 1 3 0 0 0 3 6 7 1 7 0 1 2 5 6 1 2 7 4 3 3 0 2 5 7 1 7 3 2 9 2 9 9 8 0 1 8 5 9 ' ' 1,0 1 4 2 2 2 2 3 0 5 1 1 6 4 6 6 1 1 2 2 7 1 4 3 9 1 , , , , , , , , , , , , , , 1 9 9 9 0 5 5 3 8 3 2 2 7 9 8 6 2 0 0 5 6 4 3 2 4 2 6 1 4 6 1 1 4 5 8 7 1 0 8 4 8 0 9 1 4 2 2 2 9 2 3 5 1 1 6 6 1 6 1 7 2 3 3 7 5 1 9 1 , , , , , , , , , , , , , , 3 3 4 9 0 1 2 0 5 9 1 1 8 3 5 4 8 4 8 3 9 4 9 1 7 5 1 4 2 5 2 0 2 0 5 6 8 5 9 2 1 6 9 1 4 2 2 9 2 3 5 1 1 1 4 6 1 6 2 2 3 7 2 5 1 9 9 1 , , , , , , , , , , , , , , 8 6 7 2 9 9 6 0 9 5 5 3 7 1 2 8 0 1 5 6 7 2 9 7 2 3 7 3 8 3 0 6 3 5 6 9 7 7 7 2 9 4 9 1 4 2 2 2 2 9 3 5 1 1 5 2 6 3 6 2 1 0 4 7 3 1 1 9 , , , , , , , , , , , , , , 4 2 8 0 7 2 6 9 2 5 5 1 7 2 0 7 5 0 1 5 5 4 7 3 4 3 9 7 8 6 9 1 8 7 8 0 6 0 4 4 5 3 45 Total assets 1,641,788' 1,586,729' 1,615,663' 1,570,469' 1,601,939 1,597,451 1,588,889 1,590,173 Footnotes appear on the following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • September 1991 1.26 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued Millions of dollars, Wednesday figures 1991 AAccccoouunntt May 1 May 8 May 15 May 22 May 29' June 5 June 12 June 19 June 26 LIABILITIES 46 Deposits 1,129,398'' 1,098,050' 1,121,960' 1,089,445' 1,104,345 1,115,569 1,111,297 1,100,798 1,095,041 47 Demand deposits 248,899' 215,647' 238,422' 211,264' 224,817 225,309 223,169 220,574 219,506 48 Individuals, partnerships, and corporations 193,803' 174,855' 190,625' 170,366' 178,361 183,741 181,489 176,974 175,597 49 Other holders 55,095' 40,792' 47,798 40,898 46,456 41,568 41,680 43,600 43,910 50 States and political subdivisions 7,996 6,033 7,114 6,864 6,398 6,372 6,284 7,378 7,132 51 U.S. government 3,660 1,323 3,060 1,249 1,425 1,795 1,975 3,514 1,655 52 Depository institutions in the United States 25,738' 17,891' 23,712 18,528 22,894 19,826 19,408 19,215 19,573 53 Banks in foreign countries 5,689 4,987 5,086 5,186 5,374 4,498 4,535 4,472 4,673 54 Foreign governments and official institutions 690 694 621 658 564 582 661 509 672 55 Certified and officers' checks 11,323 9,864 8,205 8,414 9,802 8,495 8,816 8,512 10,204 56 Transaction balances other than demand deposits 88,717 88,366 88,108 86,695 86,705 91,894 90,102 88,695 87,272 57 Nontransaction balances 791,782' 794,037' 795,429' 791,486' 792,823 798,366 798,027 791,530 788,263 58 Individuals, partnerships, and corporations 755,316' 756,302' 757,594' 753,582' 754,807 760,745 760,786 755,019 751,859 59 Other holders 36,467' 37,735' 37,835' 37,903' 38,016 37,621 37,240 36,511 36,404 60 States and political subdivisions 30,376 31,527 31,588 31,738 31,822 31,534 31,255 30,625 30,626 61 U.S. government 1,037 1,030 1,051 1,065 1,059 1,138 1,153 1,167 1,160 62 Depository institutions in the United States 4,559' 4,687' 4,690' 4,582' 4,604 4,402 4,290 4,207 4,101 63 Foreign governments, official institutions, and banks 494 490 507 518 532 546 542 511 518 64 Liabilities for borrowed money5 293,933' 268,331' 273,489' 261,413' 277,610 265,338 262,430 275,170 283,737 65 Borrowings from Federal Reserve Banks 0 0 200 0 0 0 286 0 0 66 Treasury tax and loan notes , 29,176' 16,165 4,431' 2,868 16,654 3,709 5,007 27,315 27,654 67 Other liabilities for borrowed money 264,756' 252,166' 268,857' 258,545' 260,956 261,629 257,137 247,855 256,083 68 Other liabilities (including subordinated notes and debentures) 106,347' 107,081' 106,78C 105,701' 105,603 101,877 100,021 99,861 110022,,880044 69 Total liabilities 1,529,678' 1,473,462' 1,502,228' 1,456,559' 1,487,558 1,482,783 1,473,749 1,475,830 1,481,582 70 Residual (Total assets minus total liabilities)7 112,110 113,267 113,435 113,910 114,381 114,667 115,140 114,343 114,150 MEMO 71 Total loans and leases, gross, adjusted, plus securities8 .. 1,321,829' 1,306,752' 1,310,712' 1,299,688' 1,301,851 1,305,444 1,302,005 1,302,478 1,302,696 72 Time deposits in amounts of $100,000 or more 198,074' 198,312' 197,71c 197,033' 196,789 196,196 195,519 192,818 190,811 73 Loans sold outright to affiliates, total9 1,164 1,152 1,149 1,123 1,032 1,021 1,032 1,042 1,284 74 Commercial and industrial 657 639 590 554 536 540 538 546 644 75 Other 507 513 559 568 495 482 494 496 641 76 Foreign branch credit extended to U.S. residents1" 24,650 24,324 24,397 24,406 24,115 24,049 23,867 23,471 23,527 77 Net due to related institutions abroad -1,867 -253 -586 2,925 1,570 -2,682 -3,697 -2,803 -2,551 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 chartered 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 funds 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 May 1 May 8 May 15 May 22 May 29' Jun. 5 Jun. 12 Jun. 19 Jun. 26 1 Cash and balances due from depository institutions 15,328' 14,524' 14,777' 14,837' 14,957 14,497 15,074 14,974 15,039 2 4 8 3 6 5 7 O F U O e t t . T C T h d S h e e o e o . o s r r r m o T e c a c s l o t l r m o h e u e m f a c e r a e u n i m u r s r t n c s s u i r e e d 2 i i r a r t a s s y i c l n e i s d a s a a o l . n n l l b d d d e a 1 a g i n s n o k e d v s s u , e i s r n g t n r r t m i o h a s e l e s n U t n a i g te e d n c S y ta tes .. 1 8 1 1 3 1 7 5 6 3 5 1 , , , , , , , 6 2 6 1 7 4 8 8 7 5 6 4 0 4 < 9 6 4 9 2 5 r ' ' ' 1 8 1 3 7 8 1 3 5 3 4 , , , , , , , 2 3 7 3 2 1 4 1 6 6 9 4 0 2 6 0 6 2 3 4 7 ' ' ' 1 8 1 3 7 9 3 6 1 4 5 , , , , , , , 2 8 2 8 7 0 3 1 8 6 3 0 2 3 3 9 1 7 5 6 2 ' ' ' ' 1 8 1 3 7 8 2 6 1 5 4 , , , , , , , 1 7 9 8 1 3 3 8 3 7 6 3 3 6 5 8 5 5 0 5 2 ' ' ' ' ' 1 8 1 1 3 2 7 5 6 4 1 5 , , , , , , , 1 2 2 7 6 9 9 3 2 2 6 7 8 0 2 7 3 5 1 7 5 1 8 1 3 1 7 8 2 6 4 6 , , , , , , , 8 9 2 3 5 2 4 4 0 1 4 2 1 2 5 7 7 5 8 1 2 1 8 1 1 3 2 7 4 6 0 4 6 , , , , , , , 1 1 0 8 8 5 6 7 9 3 5 8 7 2 2 5 2 1 3 0 5 1 8 1 3 7 9 2 2 7 4 5 , , , , , , , 2 2 5 1 0 3 4 6 3 6 3 9 1 9 2 3 7 9 5 0 8 1 8 1 1 3 3 4 7 8 2 4 7 , , , , , , , 1 7 2 0 8 1 4 5 9 5 6 6 6 7 5 8 9 4 6 1 7 1 1 1 1 1 1 1 1 1 9 0 1 3 4 2 6 5 7 8 T L F o o o B A C B N a r f a n l o i a o p U N l n n s n m n u o a k o k . p b r s S n m t e s n a c a e h c r . p h - n c e s e i i U a a e n r u a k r c a d s r l r . i f i c f e S d i a n o i n c d r . n l g r e e s e a a b t b p s i n a i d s a g y t t n c a e u d n n d i n e t r r k a i e e s c c o s l c a s o e n i a s l i s u n n s r e e n s r e a y s t t t s n i h r t i t a i d n u e e t g t e s c U i o o s n n e m i s c t m u ed r e i t r i S c e i t s a a l t e . s .. . 7 7 3 1 1 9 7 1 2 5 2 8 0 1 1 , , , , , , , , , , 8 2 9 7 7 5 0 5 2 2 1 4 1 7 9 6 5 9 0 7 2 7 9 1 4 1 3 0 8 5 ' ' ' ' ' 7 7 3 1 1 2 1 9 6 2 5 2 7 0 1 , , , , , , , , , , 0 2 7 0 3 6 2 1 9 6 3 0 2 5 2 2 1 4 7 7 1 4 9 7 6 9 2 8 3 0 r ' ' 7 7 3 1 1 2 2 6 2 9 7 1 8 0 1 , , , , , , , , , , 1 1 1 2 0 2 5 3 3 6 6 7 8 5 9 1 3 6 8 6 5 8 0 0 4 2 1 1 1 3 ' ' ' 7 7 3 1 2 9 2 9 1 7 5 2 7 1 , , , , , , , , , , 0 5 1 9 2 0 7 2 5 6 4 1 9 1 9 0 6 2 5 3 9 9 4 2 3 8 2 7 9 3 ' ' ' 7 3 8 1 2 9 6 2 1 7 0 2 7 1 , , , , , , , , , , 0 5 4 3 2 8 1 6 5 6 2 8 5 3 0 0 9 8 5 3 5 8 7 8 7 9 9 4 6 0 7 7 3 1 2 8 7 2 7 1 9 2 7 1 , , , , , , , , , , 0 6 5 5 5 2 9 3 5 5 3 9 7 9 6 6 1 2 1 5 2 2 8 1 9 3 3 1 3 8 3 8 7 1 8 7 1 0 7 2 2 7 1 1 , , , , , , , , , , 1 4 6 1 8 3 4 5 9 8 7 9 9 9 7 0 6 1 7 9 2 8 7 7 9 0 6 2 6 7 8 7 3 1 2 8 6 2 1 8 0 6 1 1 , , , , , , , , , , 8 5 2 3 2 6 5 5 9 5 4 0 6 4 3 9 8 0 8 4 3 4 2 8 8 0 6 1 1 9 8 7 3 1 2 8 1 7 2 2 1 8 7 1 , , , , , , , , , , 4 0 9 1 2 0 9 8 1 6 1 2 3 3 1 1 0 3 1 9 5 1 1 4 5 9 2 0 0 2 2 2 1 0 1 9 Ot A T he o ll r f o a o in t s r h s s e e t e i i g r t t s u n t ( i g c o o l n a v s i e m rn s m o e n n n ts o n a r n e d l a o te ff d ic p ia a l r ties) . 29 1 , , 2 0 9 2 3 8 2 5 9 ' ' 28 1 , , 2 9 7 2 8 5 8 6 8 ' 28 1 , , 2 7 8 3 6 9 5 7 8 ' 28 1 , , 2 8 4 0 2 2 6 0 4 ' 28 1 , , 0 2 8 1 5 2 5 0 6 2 2 8 , , 5 9 2 6 0 5 5 9 3 2 2 9 , , 5 0 2 7 3 6 5 3 3 29 1 , , 0 2 8 1 6 2 9 1 1 28 1 , , 3 2 8 2 7 5 0 8 7 22 Total assets3 245,033' 244,295' 250,963' 244,711' 247,413 249,805 250,498 248,326 249,110 2 2 3 4 D D e em po t a h s n a it d n s d d o e i r r p e c o c r s e tl i d y t i s t 4 r e b l a a l t a e n d c e in s s d ti u tu e t i t o o n o s ther 8 4 2 , , 2 7 1 0 4 1 83 3 , , 0 9 4 4 2 7 84 3 , , 6 8 2 4 1 9 8 4 6 ,1 ,8 0 ^ 8 ' 88 3 , , 3 7 2 6 8 0 88 3 , , 3 7 7 5 1 7 8 3 8 , , 6 56 1 9 1 8 3 8 , , 8 1 7 5 2 4 8 4 9 , , 3 1 4 2 0 8 2 2 2 5 6 7 No O I n n t d t h r i a e v c n r i o d s r a u p c a o t l i r s o a , n t p i o a a n r c t s c n o e u rs n h ts ip s, and 7 2 8 1 , , , 7 4 4 8 8 2 7 9 6 7 2 9 1 , , , 3 0 6 9 2 2 5 5 2 8 2 0 1 , , , 5 7 3 4 7 0 0 1 9 82 2 1 , , , 7 4 6 0 5 5 1 4 4 ' ' 8 2 4 1 , , , 4 5 3 3 6 3 0 8 0 8 2 4 1 , , , 4 6 3 1 0 5 5 0 6 8 2 4 1 , , , 9 2 3 5 4 6 8 8 2 8 2 4 1 , , , 2 4 4 8 4 3 2 0 2 84 2 1 , , , 7 4 8 8 8 6 8 0 0 28 Indiv c i o d r u p a o l r s a , t p io a n rt s n erships, and 58,983 59,377 60,666 61,805 63,005 63,424 64,444 64,282 64,426 29 Other 19,504 19,718 20,105 20,896 21,563 21,191 20,514 19,999 20,363 30 Borr r o e w la i t n e g d s i f n r s o t m itu o ti t o h n e s r than directly 91,350 91,916 94,896 89,514 88,404 92,400 87,990 92,899 89,060 31 Federal funds purchased3 44,880 44,109 47,925 42,552 44,305 49,419 41,893 49,595 44,331 3 3 3 2 3 4 Ot F F h r r e o o r m m l U i a n o c b o i t i t h m l e i e d t m i r e s S s e t r f a c o t i e a r s l b b o a rr n o k w s e i d n t m he o ney 2 2 4 1 3 6 , , , 5 3 4 3 4 7 7 3 0 2 4 1 6 7 7 , , , 1 8 9 2 0 8 1 7 8 2 2 4 5 2 6 , , , 2 6 9 6 6 7 5 0 1 2 4 1 7 6 5 , , , 1 9 3 6 6 9 1 2 1 2 2 4 2 1 4 , , , 7 5 0 9 0 9 7 8 9 2 2 4 2 7 2 , , , 2 1 9 4 7 8 1 7 1 2 4 1 3 6 8 , , , 6 0 2 2 9 7 3 8 0 2 2 43 0 8 , , , 3 6 9 0 1 8 4 0 6 2 2 4 0 4 4 , , , 3 0 7 2 1 2 0 1 9 3 3 3 6 7 5 Ot T T he o o r o c l U o t i h a m n b e i m r i t l s e i e t d i r e c S s i a t t a l o t b e n s a o n n k r s e l i a n t e t d h e p arties 2 2 1 8 8 8 , , , 1 2 0 9 7 4 3 8 5 ' 2 2 1 9 8 8 , , , 6 1 2 5 5 7 6 1 8 ' 2 2 1 9 8 7 , , , 0 9 2 7 0 1 0 2 7 ' 3 2 1 0 7 6 , , , 3 6 7 1 5 9 2 0 1 ' 2 2 1 8 8 5 , , , 2 1 8 8 4 1 4 8 5 2 2 1 6 8 6 , , , 9 5 0 1 2 6 9 9 2 3 2 1 0 8 6 , , , 0 1 0 1 0 8 1 5 7 2 2 1 8 7 5 , , , 2 9 0 6 2 4 3 8 1 2 2 1 7 9 4 , , , 8 7 9 7 7 5 4 4 5 38 Total liabilities6 245,033' 244,295' 250,963' 244,711' 247,413 249,805 250,498 248,326 249,110 3 4 9 0 T N M o e E t t M a l d O u l o e a t n o s r ( e g l r a o t s e s d ) i a n n s d ti t s u e t c io u n ri s t i a e b s r a o d ad ju sted7' . 1 1 5 0 2 , , 5 3 1 3 6 5 ' ' 15 3 0 , , 8 0 0 2 8 4 ' ' 15 2 2 . , 6 6 4 8 C 3' 15 4 3 , , 9 5 9 0 6 1 ' ' 15 7 4 , , 8 9 8 8 3 0 155,6 7 7 9 6 2 15 8 6 , , 7 7 5 4 7 3 155 1 , , 9 3 0 1 3 4 15 9 8 , , 0 5 5 4 8 7 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

A48 Domestic Nonfinancial Statistics • September 1991 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period 1990 1991 IInnssttrruummeenntt D 19 e 8 c 6 . D 19 e 8 c 7 . D 19 e 8 c 8 . D 19 e 8 c 9 . D 19 e 9 c 0 . Dec. Jan. Feb. Mar. Apr. May Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 331,316 358,997 458,464 530,123 566,688 566,688 569,165r 561,406r 565,734' 541,648 533,091 Financial companies' Dealer-placed paper2 2 Total 110011,,770077 102,742 159,777 118866,,334433 221188,,995533 221188,,995533 216,148 221177,,881122 222244,,886655 221122,,333377 220066,,550077 3 Bank-related (not seasonally adjusted) 22,,226655 1,428 1,248 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Directly placed paper4 4 Total 115511,,889977 174,332 194,931 212,640 220011,,886622 220011,,886622 202,784' 197,799' 190,285' 118844,,770033 118833,,338833 5 Bank-related (not seasonally adjusted) 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 81,923 103,756 131,140 145,873 145,873 150,233 145,795 150,584 144,608 143,201 Bankers dollar acceptances (not seasonally adjusted)6 7 Total 64,974 70,565 66,631 62,972 54,771 54,771 56,498 52,831 48,795 47,086 46,438 Holder 8 Accepting banks 13,423 10,943 9,086 9,433 9,017 9,017 10,029 10,240 9,237 8,593 10,138 9 Own bills 11,707 9,464 8,022 8,510 7,930 7,930 8,539 8,391 7,569 7,599 8,179 10 Bills bought 11,,771166 1,479 1,064 924 1,087 1,087 1,490 1,849 1,668 994 11,,995599 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 1,066 918 918 927 892 872 934 1,053 13 Others 50,234 58,658 56,052 52,473 44,836 44,836 45,542 41,699 38,686 37,559 35,247 Basis 14 Imports into United States 14,670 16,483 14,984 15,651 13,096 13,096 14,284 13,799 12,509 12,511 12,821 15 Exports from United States 12,960 15,227 14,410 13,683 12,703 12,703 12,870 12,082 11,500 11,219 11,511 16 All other 37,344 38,855 37,237 33,638 28,973 28,973 29,344 26,950 24,786 23,356 22,106 1. Institutions engaged primarily in activities such as, but not limited to, 5. Includes public utilities and firms engaged primarily in such activities sis 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 Rate Period Av r e a r t a e g e Period Av r e a r t a e g e Period 8.75 1988 9.32 1989—Jan. ... 10.50 1990—Jan. ... 8.50 1989 10.87 Feb. .. 10.93 Feb. .. 9.00 1990 10.01 Mar. .. 11.50 Mar. .. 9.50 Apr. .. 11.50 Apr. .. 10.00 1988— Jan. 8.75 May ... 11.50 10.50 Feb. 8.51 June .. 11.07 June .. Mar. 8.50 July ... 10.98 July ... 11.00 Apr. 8.50 Aug. .. 10.50 Aug. .. 11.50 May 8.84 Sept. .. 10.50 Sept. .. 11.00 June 9.00 Oct. ... 10.50 Oct. ... 10.50 July 9.29 Nov. .. 10.50 Nov. .. Aug. 9.84 Dec. .. 10.50 Dec. .. 10.00 Sept. 10.00 Oct. 10.00 1991—Jan. ... 9.50 Nov. 10.05 Feb. .. 9.00 Dec. 10.50 Mar. .. 8.50 Apr. .. May ... June .. July 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 Item 11998888 11998899 11999900 Mar. Apr. May June May 31 June 7 June 14 June 21 MONEY MARKET INSTRUMENTS 1 Federal funds1,2,3 7.57 9.21 8.10 6.12 5.91 5.78 5.90 5.72 5.91 5.75 5.78 2 Discount window borrowing2,4 6.20 6.93 6.98 6.00 5.98 5.50 5.50 5.50 5.50 5.50 5.50 Commercial paper3,5,6 3 1-month 7.58 9.11 8.15 6.48 6.08 5.91 6.06 5.91 6.02 6.10 6.05 4 3-month 7.66 8.99 8.06 6.41 6.07 5.92 6.11 5.94 6.07 6.16 6.09 5 6-month 7.68 8.80 7.95 6.36 6.07 5.94 6.16 5.95 6.09 6.20 6.15 Finance paper, directly placed3,5,7 6 1-month 7.44 8.99 8.00 6.31 5.95 5.76 5.93 5.69 5.89 5.98 5.92 7 3-month 7.38 8.72 7.87 6.28 5.94 5.81 5.96 5.80 5.94 6.01 5.95 8 6-month 7.14 8.16 7.53 6.20 5.91 5.72 5.75 5.72 5.72 5.73 5.72 Bankers acceptances3,5,8 9 3-month 7.56 8.87 7.93 6.24 5.92 5.75 5.94 5.76 5.91 5.98 5.93 10 6-month 7.60 8.67 7.80 6.21 5.92 5.77 6.00 5.80 5.94 6.04 6.01 Certificates <rf deposit, secondary market9 11 1-month 7.59 9.11 8.15 6.47 6.03 5.86 6.00 5.85 6.01 6.05 5.98 12 3-month 7.73 9.09 8.15 6.45 6.06 5.91 6.07 5.90 6.07 6.12 6.03 13 6-month 7.91 9.08 8.17 6.50 6.16 6.03 6.26 6.04 6.18 6.31 6.25 14 Eurodollar deposits, 3-month3,10 7.85 9.16 8.16 6.44 6.11 5.94 6.08 5.94 6.01 6.10 6.09 U.S. Treasury bills Secondary market3,5 15 3-month 6.67 8.11 7.50 5.91 5.65 5.46 5.57 5.46 5.58 5.58 5.58 16 6-month 6.91 8.03 7.46 5.92 5.71 5.61 5.75 5.63 5.72 5.78 5.76 17 1-year 7.13 7.92 7.35 6.00 5.85 5.76 5.96 5.76 5.92 6.00 5.97 Auction average3'^ 18 3-month 6.68 8.12 7.51 5.91 5.67 5.51 5.60 5.46 5.59 5.60 5.61 19 6-month 6.92 8.04 7.47 5.91 5.73 5.65 5.76 5.65 5.71 5.78 5.79 20 1-year 7.17 7.91 7.36 6.06 5.88 5.71 5.73 n.a. 5.73 n.a. n.a. U.S. TREASURY NOTES AND BONDS Constant maturities12 21 1-year 7.65 8.53 7.89 6.40 6.24 6.13 6.36 6.13 6.30 6.40 6.37 22 2-year 8.10 8.57 8.16 7.10 6.95 6.78 6.% 6.64 6.85 7.04 6.96 23 3-year 8.26 8.55 8.26 7.35 7.23 7.12 7.39 7.07 7.29 7.44 7.41 24 5-year 8.47 8.50 8.37 7.77 7.70 7.70 7.94 7.66 7.86 7.97 7.95 25 7-year 8.71 8.52 8.52 8.00 7.92 7.94 8.17 7.92 8.08 8.21 8.19 26 10-year 8.85 8.49 8.55 8.11 8.04 8.07 8.28 8.06 8.20 8.31 8.31 27 30-year 8.% 8.45 8.61 8.29 8.21 8.27 8.47 8.26 8.39 8.50 8.50 Composite13 8.98 8.58 8.74 8.38 8.29 8.33 8.54 8.33 8.46 8.57 8.57 28 Over 10 years (long-term) STATE AND LOCAL NOTES AND BONDS Moody's series1* 7.36 7.00 6.% 6.76 6.70 6.70 n.a. 6.77 6.74 6.85 6.87 29 Aaa 7.83 7.40 7.29 7.29 7.18 7.10 n.a. 7.14 7.11 7.23 7.27 30 Baa 7.68 7.23 7.27 7.10 7.02 6.95 7.13 6.97 7.06 7.19 7.15 31 Bond Buyer series15 CORPORATE BONDS 10.18 9.66 9.77 9.43 9.33 9.32 9.45 9.33 9.40 9.48 9.48 32 Seasoned issues, all industries16 Rating group 9.71 9.26 9.32 8.93 8.86 8.86 9.01 8.87 8.93 9.01 9.05 33 Aaa 9.94 9.46 9.56 9.21 9.12 9.15 9.28 9.17 9.23 9.31 9.30 34 Aa 10.24 9.74 9.82 9.50 9.39 9.41 9.55 9.42 9.51 9.59 9.57 35 A 10.83 10.18 10.36 10.09 9.94 9.86 9.% 9.85 9.92 10.00 9.98 36 Baa 37 A-rated, recently offered utility bonds17 . 10.20 9.79 10.01 9.58 9.46 9.45 9.53 9.39 9.55 9.52 9.57 MEMO: Dividends-price ratio1* 38 Preferred stocks 9.23 9.05 n.a. 8.56 8.43 8.21 8.26 8.12 8.27 8.28 8.25 39 Common stocks 3.64 3.45 n.a. 3.26 3.19 3.23 3.23 3.19 3.17 3.23 3.25 1. The daily effective federal funds rate is a weighted average of rates on 12. 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 13. 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. 14. General obligation based on Thursday figures; Moody's Investors Service. 4. Rate for the Federal Reserve Bank of New York. 15. General obligations only, with 20 years to maturity, issued by 20 state and 5. Quoted on a discount basis. local governmental units of mixed quality. Based on figures for Thursday. 6. An average of offering rates on commercial paper placed by several leading 16. Daily figures from Moody's Investors Service. Based on yields to maturity dealers for firms whose bond rating is AA or the equivalent. on selected long-term bonds. 7. An average of offering rates on paper directly placed by finance companies. 17. Compilation of the Federal Reserve. This series is an estimate of the yield 8. Representative closing yields for acceptances of the highest rated money on recently-offered, A-rated utility bonds with a 30-year maturity and 5 years of center banks. call protection. Weekly data are based on Friday quotations. 9. An average of dealer offering rates on nationally traded certificates of 18. Standard and Poor's corporate series. Preferred stock ratio based on a deposit. sample of ten issues: four public utilities, four industrials, one financial, and one 10. Bid rates for Eurodollar deposits at 11 a.m. London time. transportation. Common stock ratios on the 500 stocks in the price index. 11. Auction date for daily data; weekly and monthly averages computed on an NOTE. These data also appear in the Board's H. 15 (519) and G.13 (415) releases. issue-date basis. For address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • September 1991 1.36 STOCK MARKET Selected Statistics 1990 1991 IInnddiiccaattoorr 11998888 11998899 11999900rr Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Prices and trading (averages of daily figures) CCCCCCCooooooommmmmmmmmmmmmmooooooonnnnnnn ssssssstttttttoooooooccccccckkkkkkk ppppppprrrrrrriiiiiiiccccccceeeeeeesssssss (((((((iiiiiiinnnnnnndddddddeeeeeeexxxxxxxeeeeeeesssssss))))))) 1111111 NNNNNNNeeeeeeewwwwwww YYYYYYYooooooorrrrrrrkkkkkkk SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee (((((((DDDDDDDeeeeeeeccccccc....... 33333331111111,,,,,,, 1111111999999966666665555555 ======= 55555550000000))))))) 149.96 180.13 183.58 168.05 172.21 179.57 177.95 197.75 203.56 207.71 206.93 207.32 2222222 IIIIIIInnnnnnnddddddduuuuuuussssssstttttttrrrrrrriiiiiiiaaaaaaalllllll 180.83 228.04 225.89 208.58 212.81 221.86 220.69 246.74 255.36 260.16 260.13 261.16 3333333 TTTTTTTrrrrrrraaaaaaannnnnnnssssssspppppppooooooorrrrrrrtttttttaaaaaaatttttttiiiiiiiooooooonnnnnnn 134.07 174.90 158.88 131.99 132.96 141.31 145.89 166.06 166.26 166.90 170.77 177.05 4444444 UUUUUUUtttttttiiiiiiillllllliiiiiiitttttttyyyyyyy 72.22 94.33 90.71 87.27 89.69 91.56 88.59 92.08 92.29 92.92 90.73 89.01 5555555 FFFFFFFiiiiiiinnnnnnnaaaaaaannnnnnnccccccceeeeeee 127.41 162.01 133.36 108.01 113.76 122.18 121.39 141.03 145.41 152.64 151.32 152.30 6666666 SSSSSSStttttttaaaaaaannnnnnndddddddaaaaaaarrrrrrrddddddd &&&&&&& PPPPPPPoooooooooooooorrrrrrr'''''''sssssss CCCCCCCooooooorrrrrrrpppppppooooooorrrrrrraaaaaaatttttttiiiiiiiooooooonnnnnnn (((((((1111111999999944444441111111-------44444443333333 ======= 11111110000000)))))))1111111 265.86 323.05 334.83 307.12 315.29 328.75 325.49 362.26 372.28 379.68 377.99 378.29 7777777 AAAAAAAmmmmmmmeeeeeeerrrrrrriiiiiiicccccccaaaaaaannnnnnn SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee (((((((AAAAAAAuuuuuuuggggggg....... 33333331111111,,,,,,, 1111111999999977777773333333 ======= 55555550000000??????? 295.06 356.67 338.58 296.67 294.88 305.54 304.08 338.11 353.98 365.02 362.67 366.06 VVVVVVVooooooollllllluuuuuuummmmmmmeeeeeee ooooooofffffff tttttttrrrrrrraaaaaaadddddddiiiiiiinnnnnnnggggggg (((((((ttttttthhhhhhhooooooouuuuuuusssssssaaaaaaannnnnnndddddddsssssss ooooooofffffff ssssssshhhhhhhaaaaaaarrrrrrreeeeeeesssssss))))))) 8888888 NNNNNNNeeeeeeewwwwwww YYYYYYYooooooorrrrrrrkkkkkkk SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee 161,509 165,568 156,777 159,590 149,916 155,836 166,323 226,635 196,343 182,510 170,337 162,154 9999999 AAAAAAAmmmmmmmeeeeeeerrrrrrriiiiiiicccccccaaaaaaannnnnnn SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee 9,955 13,124 13,155 11,294 10,368 11,620 10,870 16,649 15,326 13,140 10,995 11,477 Customer financing (millions of dollars, end-of-period balances) 11111110000000 MMMMMMMaaaaaaarrrrrrrgggggggiiiiiiinnnnnnn cccccccrrrrrrreeeeeeedddddddiiiiiiittttttt aaaaaaattttttt bbbbbbbrrrrrrroooooookkkkkkkeeeeeeerrrrrrr-------dddddddeeeeeeeaaaaaaallllllleeeeeeerrrrrrrsssssss3333333 32,740 34,320 28,210 28,650 27,820 28,210 27,390 28,860 29,660 30,020 29,980 31,280 FFFFFFFrrrrrrreeeeeeeeeeeeee cccccccrrrrrrreeeeeeedddddddiiiiiiittttttt bbbbbbbaaaaaaalllllllaaaaaaannnnnnnccccccceeeeeeesssssss aaaaaaattttttt bbbbbbbrrrrrrroooooookkkkkkkeeeeeeerrrrrrrsssssss4444444 11111111111111 MMMMMMMaaaaaaarrrrrrrgggggggiiiiiiinnnnnnn-------aaaaaaaccccccccccccccooooooouuuuuuunnnnnnnttttttt''''''' 5,660 7,040 8,050 7,245 7,300 8,050 7,435 7,190 7,320 6,975 7,200 6,690 11111112222222 CCCCCCCaaaaaaassssssshhhhhhh-------aaaaaaaccccccccccccccooooooouuuuuuunnnnnnnttttttt 16,595 18,505 19,285 15,820 17,025 19,285 18,825 19,435 19,555 17,830 16,650 18,110 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 11111113333333 MMMMMMMaaaaaaarrrrrrrgggggggiiiiiiinnnnnnn ssssssstttttttoooooooccccccckkkkkkksssssss 70 80 65 55 65 50 11111114444444 CCCCCCCooooooonnnnnnnvvvvvvveeeeeeerrrrrrrtttttttiiiiiiibbbbbbbllllllleeeeeee bbbbbbbooooooonnnnnnndddddddsssssss 50 60 50 50 50 50 11111115555555 SSSSSSShhhhhhhooooooorrrrrrrttttttt sssssssaaaaaaallllllleeeeeeesssssss 70 80 65 55 65 50 1. Effective July 1976, includes a new financial group, banks and insurance alized by securities. Margin requirements on securities other than options are the companies. With this change the index includes 400 industrial stocks (formerly difference between the market value (100 percent) and the maximum loan value of 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 collateral as prescribed by the Board. Regulation T was adopted effective Oct. 15, financial. 1934; Regulation U, effective May 1, 1936; Regulation G, effective Mar. 11, 1968; 2. Beginning July 5, 1983, the American Stock Exchange rebased its index and Regulation X, effective Nov. 1, 1971. effectively cutting previous readings in half. On Jan. 1, 1977, the Board of Governors for the first time established in 3. Beginning July 1983, under the revised Regulation T, margin credit at Regulation T the initial margin required for writing options on securities, setting broker-dealers includes credit extended against stocks, convertible bonds, stocks it at 30 percent of the current market-value of the stock underlying the option. On acquired through exercise of subscription rights, corporate bonds, and govern- Sept. 30, 1985, the Board changed the required initial margin, allowing it to be the ment securities. Separate reporting of data for margin stocks, convertible bonds, same as the option maintenance margin required by the appropriate exchange or and subscription issues was discontinued in April 1984. self-regulatory organization; such maintenance margin rules must be approved by 4. Free credit balances are in accounts with no unfulfilled commitments to the the Securities and Exchange Commission. Effective Jan. 31, 1986, the SEC brokers and are subject to withdrawal by customers on demand. approved new maintenance margin rules, permitting margins to be the price of the 5. New series beginning June 1984. option plus 15 percent of the market value of the stock underlying the option. 6. These regulations, adopted by the Board of Governors pursuant to the Effective June 8, 1988, margins were set to be the price option plus 20 percent Securities Exchange Act of 1934, limit the amount of credit to purchase and carry of the market value of the stock underlying the option (or 15 percent in the case "margin securities" (as defined in the regulations) when such credit is collater- of stock-index options). 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 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. SAIF-insured institutions 1 Assets 1,350,500 1,249,055 1,162,297 1,156,789 1,125,653 1,116,641 1,109,032 1,084,900 1,066,116 1,054,897 1,042,169 1,027,590 2 Mortgages 764,513 733,729 689,079 684,936 665,655 662,309 653,472 633,567 624,783 619,725 610,674 608,685 3 Mortgage-backed securities 214,587 170,532 158,146 156,398 154,197 153,469 155,616 155,320 151,522 149,433 147,479 143,935 5 4 6 C C o o C m n o s m u n m t m e r r a e c o - r i r a a t l s g l o s a l a e g o n t e s a s n t a s o s sets' 3 3 61 3 7 , , , 9 8 9 2 8 5 2 9 0 2 3 58 5 2 , , , 6 4 1 8 5 5 5 7 0 2 5 1 8 4 9 , , , 4 6 5 8 6 5 3 6 2 2 5 1 3 7 9 , , , 3 8 4 8 6 5 7 8 3 2 5 1 6 1 8 , , , 7 8 5 6 7 5 2 4 0 2 5 1 6 0 7 , , , 0 7 1 5 4 3 2 6 9 2 5 1 5 0 7 , , , 2 1 0 6 7 3 2 7 8 2 4 1 4 8 6 , , , 1 7 9 3 5 1 9 6 8 2 4 1 8 3 5 , , , 1 6 1 3 6 6 7 8 9 2 4 1 3 7 4 , , , 1 7 6 9 0 3 4 7 6 2 4 1 2 7 4 , , , 3 6 4 0 3 9 5 6 5 4 2 1 6 1 4 , , , 7 9 0 1 1 8 7 4 2 7 Con m tra o - r a tg ss a e g t e s l t o o a n no s n 3,056 3,592 1,989 2,034 1,982 1,769 1,692 1,936 1,699 1,846 1,797 1,747 8 Cash and investment securities 186,986 166,053 150,399 153,061 148,058 145,286 145,998 146,534 140,451 138,819 139,059 132,856 9 Other3 129,610 116,955 103,226 102,627 99,640 97,686 97,237 95,439 94,417 92,501 91,309 89,311 10 Liabilities and net worth 1,350,500 1,249,055 1,162,297 1,156,789 1,125,653 1,116,641 1,109,032 1,084,900 1,066,116 1,054,897 1,042,169 1,027,590 11 Savings capital 971,700 945,656 885,286 878,736 857,688 851,810 846,822 835,4% 823,499 816,500 817,010 806,249 12 Borrowed money 299,400 252,230 222,439 221,872 213,563 208,105 203,855 197,353 188,937 183,672 169,428 164,273 13 FHLBB 134,168 124,577 106,127 105,882 101,731 100,574 100,493 100,391 95,842 94,658 90,555 86,779 14 Other 165,232 127,653 116,312 115,990 111,832 107,531 103,362 %,%2 93,095 89,014 78,873 77,494 15 Other 24,216 27,556 26,798 28,293 23,874 25,559 26,127 21,305 22,154 23,319 20,286 21,711 16 Net worth n.a. 23,612 27,775 27,889 30,526 31,188 32,228 30,747 31,526 31,407 35,446 35,358 SAIF-insured federal savings banks 17 Assets 425,966 498,522 580,847 584,632 591,136 588,880 585,847 576,531 567,373 556,708 552,520 549,319 18 Mortgages 230,734 283,844 328,236 328,895 332,927 332,431 328,122 320,233 316,889 313,880 309,618 311,932 19 Mortgage-backed securities 64,957 70,499 80,474 80,994 82,418 82,219 84,190 81,205 79,451 78,290 77,684 75,147 20 Contra-assets to mortgage assets' 13,140 13,548 9,227 9,339 9,964 9,578 9,305 9,591 8,222 7,777 7,975 7,638 21 Commercial loans 16,731 18,143 18,810 18,662 18,767 18,458 18,197 17,674 17,299 17,008 16,556 16,215 22 Consumer loans 24,222 28,212 31,003 31,183 30,750 30,682 30,421 29,933 31,179 29,292 30,586 30,433 23 Contra-assets to nonmortgage loans 889 1,193 870 813 980 572 809 990 770 895 966 951 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 71,354 73,756 73,602 75,117 72,454 75,940 71,066 67,721 68,157 65,786 26 Other 35,412 39,981 44,150 44,129 46,043 45,287 45,319 45,008 44,768 44,210 43,714 43,292 27 Liabilities and net worth 425,966 498,522 580,847 584,632 591,136 588,880 585,847 576,531 567,373 556,708 552,520 549,319 28 Savings capital 298,197 360,547 423,472 424,260 434,705 436,080 436,903 434,297 428,822 422,745 425,720 422,955 29 Borrowed money 99,286 108,448 118,393 120,592 119,991 115,472 111,270 107,270 102,313 97,089 90,692 89,310 30 FHLBB 46,265 57,032 61,287 62,209 61,605 60,256 60,265 59,949 57,703 56,078 53,134 51,736 31 Other 53,021 51,416 57,106 58,383 58,386 55,216 51,005 47,321 44,610 41,011 37,558 37,574 32 Other 8,075 9,041 9,245 10,128 8,253 9,063 9,824 8,193 8,356 8,721 7,700 8,211 33 Net worth 20,218 22,716 26,424 26,420 24,859 24,837 24,931 24,172 25,285 25,432 25,494 25,542 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Financial Statistics • September 1991 1.37—Continued 1990 1991 AAccccoouunntt 11998888 11998899 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Credit unions4 34 Total assets/liabilities and capital 174,593 183,688 194,523 196,625 197,272 198,206 f f f f f f 35 Federal 114,566 120,666 127,564 128,715 129,086 130,073 36 State 60,027 63,022 66,959 67,910 68,186 1 1 68,133 1 1 1 1 37 Loans outstanding 113,191 122,608 124,343 126,156 127,341 n.a. n a. 127,132 n.a. n.a. n.a. n.a. 38 Federal 73,766 80,272 81,063 82,040 82,823 83,029 39 State 39,425 42,336 43,280 44,116 44,518 44,102 40 Savings 159,010 167,371 176,360 178,081 177,532 179,974 41 Federal (shares) 104,431 109,653 115,305 116,411 115,469 117,892 42 State (shares and deposits) 54,579 57,718 61,056 61,670 62,063 62,082 Life insurance companies5 43 Assets 1,299,756 1,387,463 1,411,881 Securities 44 Government.... 178,141 202,962 208,782 45 United States6 153,361 175,156 180,200 46 State ami local 9,028 11,818 12,038 47 Foreign" 15,752 15,988 16,544 48 Business 663,677 709,470 724,603 49 Bonds 538,063 588,251 5%,053 50 Stocks 125,614 121,219 128,550 254,215 266,063 267,922 51 Mortgages 52 Real estate 39,908 44,544 44,718 53 Policy loans 57,439 60,641 61,562 54 Other assets 106,376 103,783 104,294 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. Savings Association Insurance Fund (SAIF)-insured institutions: Estiunearned discounts and deferred loan fees, valuation allowances for mortgages mates by the Office of Thrift Supervision (OTS) for all institutions insured by the "held for sale," and specific reserves and other valuation allowances. SAIF and based on the OTS thrift Financial Report. 2. Contra-assets are credit-balance accounts that must be subtracted from the SAIF-insured federal savings banks: Estimates by the OTS for federal savings corresponding gross asset categories to yield net asset levels. Contra-assets to banks insured by the SAIF and based on the OTS thrift Financial Report. nonmortgage loans include loans in process, unearned discounts and deferred loan Credit unions: Estimates by the National Credit Union Administration for fees, and specific reserves and valuation allowances. federally chartered and federally insured state-chartered credit unions serving 3. Includes holding of stock in Federal Home Loan Bank and Finance leases natural persons. plus interest. Life insurance companies: Estimates of the American Council of Life Insurance 4. Data include all federally insured credit unions, both federal and state for all life insurance companies in the United States. Annual figures are annualchartered, serving natural persons. statement asset values, with bonds carried on an amortized basis and stocks at 5. Data are no longer available on a monthly basis for life insurance companies. year-end market value. Adjustments for interest due and accrued and for 6. Direct and guaranteed obligations. Excludes federal agency issues not differences between market and book values are not made on each item separately guaranteed, which are shown in the table under "Business" securities. but are included, in total, in "Other assets." 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 1991 111999888888 111999888999 111999999000 Jan. Feb. Mar. Apr. May June U.S. budget1 1 Receipts, total 908,166 990,701 1,031,308 100,713 67,657 64,805 140,380 63,560 103,389 2 On-budget 666,675 727,035 749,654 70,023 45,594 39,011 108,746 41,958 76,322 3 Off-budget 241,491 263,666 281,654 30,690 22,063 25,794 31,634 21,602 27,067 4 Outlays, total 1,063,318 1,144,020 1,251,766 99,023 93,834 105,876 110,249 116,906 105,849 5 On-budget 860,627 933,107 1,026,701 79,105 72,667 83,340 90,362 95,903 90,901 6 Off-budget 202,691 210,911 225,065 19,918 21,167 22,536 19,887 21,003 14,948 7 Surplus or deficit (-), total -155,151 -153,319 -220,458 1,690 -26,177 -41,071 30,131 -53,346 -2,460 8 On-budget -193,952 -206,072 -277,047 -9,082 -27,073 -44,329 18,384 -53,945 -14,579 9 Off-budget 38,800 52,753 56,590 10,772 896 3,258 11,747 599 12,119 Source of financing (total) 10 Borrowing from the public 166,139 141,806 264,453 31,764 34,611 -9,913 -9,399 41,742 10,715 11 Operating cash (decrease, or increase (-)) ... -7,962 3,425 818 -30,627 2,341 28,473 -16,214 20,362 -15,730 12 Other -3,026 8,088 -44,813 -2,827 -10,775 22,511 -4,518 -8,758 7,475 MEMO 13 Treasury operating balance (level, end of period) 44,398 40,973 40,155 62,815 60,474 32,001 48,215 27,853 43,538 14 Federal Reserve Banks 13,023 13,452 7,638 27,810 23,898 10,922 13,682 6,619 11,822 15 Tax and loan accounts 31,375 27,521 32,517 35,006 36,577 21,078 34,533 21,234 31,761 1. In accordance with the Balanced Budget and Emergency Deficit Control Act in the International Monetary Fund (IMF); loans to the IMF; other cash and of 1985, all former off-budget entries are now presented on-budget. The Federal monetary assets; accrued interest payable to the public; allocations of special Financing Bank (FFB) activities are now shown as separate accounts under the drawing rights; deposit funds; miscellaneous liability (including checks outstandagencies that use the FFB to finance their programs. The act has also moved two ing) and asset accounts; seigniorage; increment on gold; net gain or loss for U.S. social security trust funds (Federal old-age survivors insurance and Federal currency valuation adjustment; net gain or loss for IMF loan-valuation adjustdisability insurance trust funds) off-budget. The Postal Service B included as an ment; and profit on sale of gold. off-budget item in the Monthly Treasury Statement beginning in 1990. SOURCES. Monthly Treasury Statement of Receipts and Outlays of the U.S. 2. Includes special drawing rights (SDRs); reserve position on the U.S. quota Government and the Budget of the U.S. Government. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 A48 Domestic Nonfinancial Statistics • September 1991 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Calendar year Fiscal Fiscal SSoouurrccee oorr ttyyppee year year 1989 1990 1991 1989 1990 H2 HI H2 HI Apr. May June RECEIPTS 1 All sources 990,701 1,031,308 470,276 548,861 503,123 540,504 140,380 63,560 103,389 2 Individual income taxes, net 445,690 466,884 218,706 243,087 230,745 232,389 77,768 20,005 44,517 3 Withheld 361,386 390,480 193,296 190,219 207,469 193,440 36,428 36,958 27,449 4 Presidential Election Campaign Fund 32 32 3 30 3 31 6 6 6 5 Nonwithheld 154,839 149,189 33,303 117,675 31,728 109,405 60,246 3,067 18,681 6 Refunds 70,567 72,817 7,898 64,838 88,,445555 70,487 18,912 20,026 1,618 Corporation income taxes 7 Gross receipts 117,015 110,017 52,269 58,830 54,044 58,903 15,526 2,931 17,472 8 Refunds 13,723 16,510 6,842 8,326 77,,660033 77,,990044 2,229 899 932 9 Social insurance taxes and contributions, net 359,416 380,047 162,574 210,476 117788,,446688 214,303 42,478 34,546 34,758 10 Employment taxes and contributions 332,859 353,891 152,407 195,269 116677,,222244 199,727 39,671 27,192 34,152 11 Self-employment taxes and contributions3 18,504 21,795 1,947 19,017 2,638 22,150 12,707 1,604 3,136 12 Unemployment insurance 22,011 21,635 7,909 12,929 8,996 12,2% 2,435 6,928 251 13 Other net receipts 4,546 4,522 2,260 2,278 2,249 2,279 372 426 355 14 Excise taxes 34,386 35,345 16,799 18,153 17,535 20,703 3,842 3,653 3,534 15 Customs deposits 16,334 16,707 8,667 8,096 8,568 7,488 1,219 1,244 1,215 16 Estate and gift taxes 8,745 11,500 4,451 6,442 5,333 5,631 1,546 835 708 17 Miscellaneous receipts5 22,839 27,316 13,651 12,106 16,032 8,991 231 1,245 2,117 OUTLAYS 18 All types 1,144,020 1,251,766 587,394 640,867 647,218 631,737 110,249 116,906 105,849 19 National defense 303,559 299,335 149,613 152,733 149,497 122,089 21,651 25,069 21,934 20 International affairs 9,574 13,760 5,971 6,770 8,943 7,592 1,513 1,862 496 21 General science, space, and technology .... 12,838 14,420 7,091 6,974 8,081 7,4% 1,369 1,410 1,199 22 Energy 3,702 2,470 1,449 1,216 979 816 -40 513 180 23 Natural resources and environment 16,182 17,009 9,183 7,343 9,933 8,324 1,385 1,557 1,518 24 Agriculture 16,948 11,998 4,132 7,450 6,878 7,684 2,115 1,638 597 25 Commerce and housing credit 29,091 67,495 22,295 38,672 37,491 18,492 4,700 3,115 6,924 26 Transportation 27,608 29,495 14,982 13,754 16,218 14,748 2,624 2,631 2,562 27 Community and regional development 5,361 8,466 4,879 3,987 3,939 3,552 697 698 503 28 Education, training, employment, and social services 36,694 37,479 18,663 19,537 18,988 21,234 3,319 3,404 3,175 29 Health 48,390 58,101 25,339 29,488 31,424 35,608 5,882 6,059 6,917 30 Social security and medicare 317,506 346,383 162,322 175,997 176,353 190,248 31,975 32,621 33,908 31 Income secunty 136,031 148,299 67,950 78,475 75,948 88,778 16,034 16,307 9,827 32 Veterans benefits and services 30,066 29,112 14,864 15,217 15,479 14,326 3,200 3,674 1,168 33 Administration of justice 9,422 10,076 4,909 4,868 5,265 6,187 1,136 1,219 930 34 General government 9,124 10,822 4,760 4,916 6,976 5,212 419 1,266 1,592 35 Net interest6 169,317 183,790 87,927 91,155 94,650 98,556 15,802 17,042 15,746 36 Undistributed offsetting receipts7 -37,212 -36,615 -18,935 -17,688 -19,829 -18,702 -3,531 -3,180 -3,051 1. Functional details do not sum 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, end of period 1989 1990 Item June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Mar. 31 1 Federal debt outstanding . 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. 2,799.9 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 2.142.1 2.180.7 2,245.2 2,329.3 2,368.8 2,437.6 2.536.6 n.a. 4 Held by agencies .. 657.8 676.7 707.8 722.7 775.0 795.8 828.3 n.a. 5 Agency securities .. 24.0 23.7 22.5 29.9 31.7 32.8 32.5 n.a. 6 Held by public... 23.6 23.5 22.4 29.8 31.6 32.6 32.4 n.a. 7 Held by agencies .5 .1 .1 .2 .2 .2 .1 n.a. 8 Debt subject to statutory limit. 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. 2,784.3 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 .3 .3 .3 .4 .4 .4 .4 11 MEMO: Statutory debt limit, 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. Consists of guaranteed debt ofTreasury 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 11998877 11998888 11998899 11999900 Q3 Q4 Ql Q2 1 Total gross public debt 2,431.7 2,684.4 2,953.0 3,364.8 3,233.3 3,364.8 3,465.2 3,538.0 By type 2 Interest-bearing 2,428.9 2,663.1 2,931.8 3,362.0 3,210.9 3,362.0 3,441.4 2,516.1 3 Marketable 1,724.7 1,821.3 1,945.4 2,195.8 2,092.8 2,195.8 2,227.9 2,268.1 4 Bills 389.5 414.0 430.6 527.4 482.5 527.4 533.3 512.5 5 Notes 1,037.9 1,083.6 1,151.5 1,265.2 1,218.1 1,265.2 1,280.4 1,320.3 6 Bonds 282.5 308.9 348.2 388.2 377.2 388.2 399.3 411.2 7 Nonmarketable1 704.2 841.8 986.4 1,166.2 1,118.2 1,166.2 1,213.5 1,248.0 8 State and local government series 139.3 151.5 163.3 160.8 161.3 160.8 159.4 161.0 9 Foreign issues2 4.0 6.6 6.8 43.5 36.0 43.5 42.8 42.1 10 Government 4.0 6.6 6.8 43.5 36.0 43.5 42.8 42.1 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes... 99.2 107.6 115.7 124.1 122.2 124.1 127.7 131.3 13 Government account series 461.3 575.6 695.6 813.8 779.4 813.8 853.1 883.2 14 Non-interest-bearing debt 2.8 21.3 21.2 2.8 22.4 2.8 23.8 21.9 By holder4 15 U.S. Treasury and other federal agencies and trust funds. 477.6 589.2 707.8 828.3 795.8 828.3 16 Federal Reserve Banks 222.6 238.4 228.4 259.8 232.5 259.8 17 Private investors 1,731.4 1,858.5 2,015.8 2,288.3 2,207.3 2,288.3 18 Commercial banks 201.5 193.8 174.8 n.a. 188.0 n.a. 19 Money market funds 14.6 11.8 14.9 n.a. 33.6 n.a. 20 Insurance companies 104.9 107.3 130.1 n.a. 138.9 n.a. n.a. n.a. 21 Other companies 84.6 87.1 98.8 n.a. 114.6 n.a. 22 State and local treasuries 284.6 313.6 338.7 n.a. 344.0 n.a. Individuals 23 Savings bonds 101.1 109.6 117.7 126.2 123.9 126.2 24 Other securities 71.3 79.2 98.8 n.a. 114.6 n.a. 25 Foreign and international5 299.7 362.2 392.9 n.a. 404.9 n.a. 26 Other miscellaneous investors6 569.1 593.4 672.5 n.a. n.a. n.a. 1. Includes (not shown separately): Securities issued to the Rural Electrifica- estimates. tion Administration; depository bonds, retirement plan bonds, and individual 5. Consists of investments of foreign and international accounts. Excludes retirement bonds. non-interest-bearing notes issued to the International Monetary Fund. 2. Nonmarketable series denominated in dollar and series denominated in 6. Includes savings and loan associations, nonprofit institutions, credit unions, foreign currency held by foreigners. mutual savings banks, corporate pension trust funds, dealers and brokers, certain 3. Held almost entirely by U.S. Treasury and other federal agencies and trust U.S. Treasury deposit accounts, and federally-sponsored agencies. funds. SOURCES. Data by type of security, U.S. Treasury Department, Monthly 4. Data for Federal Reserve Banks and U.S. Treasury and other Federal Statement of the Public Debt of the United States; data by holder, the Treasury agencies and trust funds are actual holdings; data for other groups are Treasury Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • September 1991 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Millions of dollars, daily averages, par value 1991 1991, week ending Mar. Apr. May May 1 May 8 May 15 May 22 May 29 June 5 June 12 June 19 June 26 IMMEDIATE TRANSACTIONS2 By type of security U.S. Treasury securities Bills 32,648 30,498 30,745 29,628 33,033 27,085 30,818 30,112 36,132 28,990 2266,,220000 30,228 Coupon securities 2 Maturing in less than 3.5 years .. 35,168 37,426 43,429 44,061 47,402 41,385 43,357 43,520 38,248 32,478 28,826 32,234 3 Maturing in 3.5 to 7.5 years 26,889 30,113 24,695 31,206 22,015 25,722 24,757 24,873 24,969 22,212 23,873 23,335 4 Maturing in 7.5 to 15 years 12,169 11,243 14,556 12,868 19,081 19,923 10,290 9,789 13,252 11,636 10,114 9,310 5 Maturing in 15 years or more ... 14,127 12,905 13,550 12,617 12,324 22,559 11,621 8,161 12,858 12,736 12,074 99,,554466 Federal agency securities Debt 6 Maturing in less than 3.5 years .. 4,375 4,171 4,198 4,865 3,609 3,661 4,444 4,834 44,,447722 3,591 3,668 3,878 7 Maturing in 3.5 to 7.5 years 601 566 616 357 698 668 409 664 880088 567 476 408 8 Maturing in 7.5 years or more .. 644 654 695 594 570 1,084 483 509 1,082 623 509 616 Mortgage-backed securities 9 Pass-throughs 9,712 10,588 9,607 9,137 11,514 10,716 7,655 8,620 9,653 11,318 12,075 10,067 10 All others . 1,303 1,469 1,499 1,578 1,481 1,611 1,355 1,436 1,736 1,926 2,013 1,854 By type of counterparty Primary dealers and brokers 11 U.S. Treasury and Federal agency securities 76,452 74,699 76,948 77,699 80,762 83,693 73,008 7700,,008855 7777,,118844 6666,,445566 6622,,776600 6655,,551144 Federal agency 12 Debt securities 1,559 1,601 1,589 1,807 1,434 1,553 1,450 1,825 1,712 1,174 1,282 1,268 13 Mortgage-backed securities.. 5,650 5,762 5,044 4,915 6,216 5,690 33,,993322 44,,222200 55,,440000 55,,887711 77,,449911 55,,669900 Customers 14 U.S. Treasury and Federal agency securities 44,549 47,486 50,027 52,681 53,092 52,981 4477,,883344 4466,,336699 4488,,227755 4411,,559966 3388,,332277 3399,,113399 Federal agency 15 Debt securities 4,062 3,790 3,921 4,010 3,444 3,860 3,886 4,182 4,650 3,607 3,370 3,634 16 Mortgage-backed securities.. 5,365 6,295 6,062 5,799 6,779 6,637 5,078 5,837 5,989 7,373 6,597 6,231 FUTURE AND FORWARD TRANSACTIONS4 By type of deliverable security U.S. Treasury securities 17 Bills 4,607 3,782' 4,201 5,734' 3,713' 4,390 4,971 3,136 44,,992277 44,,000055 55,,880077 66,,884411 Coupon securities 18 Maturing in less than 3.5 years . 1,351 1,065 1,292 1,152 1,644 1,557 1,066 910 1,340 1,218 1,323 1,218 19 Maturing in 3.5 to 7.5 years 847 740 569 1,047 495 504 696 475 593 704 628 456 20 Maturing in 7.5 to 15 years 1,059 810 938 1,002 851 1,079 895 619 1,680 1,497 1,582 828 21 Maturing in 15 years or more ... 9,023 7,735 8,030 8,434 6,845 11,873 6,943 5,449 10,348 10,059 9,237 8,107 Federal agency securities Debt 22 Maturing in less than 3.5 years .. 100 56' 57 12 37 15 69 101 96 116 24 31 23 Maturing in 3.5 to 7.5 years 34 25' 11 4 6 2 21 16 10 141 4 2 24 Maturing in 7.5 years or more .. 36 41 26 120 70 7 11 5 11 22 18 28 Mortgage-backed securities 25 Pass-throughs 8,313 9,316 9,536 8,799 8,798 11,677 11,096 6,754 9,456 11,342 8,628 8,942 26 All others 1,285 1,472 1,684 1,532 1,597 1,680 1,336 2,119 1,768 2,143 1,051 1,839 OPTION TRANSACTIONS5 By type of underlying securities U.S. Treasury securities 27 Bills 2 8 76 5 158 33 151 0 20 45 0 0 Coupon securities 28 Maturing in less than 3.5 years . 1,014 874 1,056 1,010 1,276 598 956 921 2,264 2,189 1,356 2,740 29 Maturing in 3.5 to 7.5 years 288' 196 138 165 117 125 95 200 157 293 254 146 30 Maturing in 7.5 to 15 years 307' 226 245 127 165 277 289 226 362 296 349 140 31 Maturing in 15 years or more ... 1,786 2,249 2,205 2,563 1,854 3,130 2,903 1,116 1,569 2,615 1,936 1,879 Federal agency securities Debt 32 Maturing in less than 3.5 years .. 1 3 1 8 0 4 0 0 2 0 0 0 33 Maturing in 3.5 to 7.5 years 0 0 0 0 0 0 0 0 0 0 0 0 34 Maturing in 7.5 years or more .. 0 0 1 0 0 2 0 1 0 0 1 0 Mortgage-backed securities 35 Pass-throughs 297 333 202 195 240 224 212 113 249 443 310 158 36 All others 0 9 0 0 0 0 0 0 1 0 0 0 1. Transactions are market purchases and sales of securities as reported to the 3. Includes securities such as collateralized mortgage obligations (CMOs), real Federal Reserve Bank of New York by the U.S. government securities dealers on estate mortgage investment conduits (REMICs); interest only (IOs), and principal its published list of primary dealers. Averages for transactions are based on the only (POs). number of trading days in the period. Immediate, forward, and future transactions 4. Futures transactions are standardized agreements arranged on an exchange. are reported at principal value, which does not include accrued interest; option Forward transactions are agreements made in the over-the-counter market that transactions are reported at the face value of the underlying securities. specify delayed delivery. All futures transactions are included regardless of time Dealers report cumulative transactions for each week ending Wednesday. to delivery. Forward contracts for U.S. Treasury securities and federal agency 2. Transactions for immediate delivery include purchases or sales of securities debt securities are included when the time to delivery is more than five days. (other than mortgage-backed agency securities) for which delivery is scheduled in Forward contracts for mortgage-backed securities are included when the time to five business days or less and "when-issued" securities that settle on the issue delivery is more than thirty days. date of offering. Transactions for immediate delivery of mortgage-backed securities 5. Options transactions are purchases or sales of put and call options, whether include purchases and sales for which delivery is scheduled in thirty days or less. arranged on an organized exchange or in the over-the-counter market and include Stripped securities are reported at market value by maturity of coupon or corpus. options on futures contracts on U.S. Treasury 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 it Mar. Apr. May Apr. 24 May 1 May 8 May 15 May 22 May 29 June 5 June 12 June 19 Positions2 NET IMMEDIATE3 By type of security U.S. Treasury securities 1 Bills 12,824 8,014 2,907 3,347 188 2,692 -2,075 3,381 6,153 9,438 10,685 12,008 Coupon securities 2 Maturing in less than 3.5 years 1,564 3,892 -1,704 3,770 3,859 559 -5,655 -2,858 -94 -166 -2,150 -3,657 3 Maturing in 3.5 to 7.5 years 882 3,735 1,808 2,574 2,835 2,606 811 681 3,465 136 2,151 -477 4 Maturing in 7.5 to 15 years -4,928 -6,301 -4,408 -5,925 -7,303 -4,544 -4,085 -4,438 -4,006 -4,915 -4,941 -5,278 5 Maturing in 15 years or more -16,065 -12,982 -13,156 -11,700 -12,892 -13,745 -12,787 -12,801 -13,102 -13,947 -14,841 -16,073 Federal agency securities Debt 6 Maturing in less than 3.5 years 4,743 3,547 4,960 4,048 2,995 5,146 4,377 5,562 4,597 6,490 5,598 6,158 7 Maturing in 3.5 to 7.5 years 2,620 2,466 2,484 2,354 2,543 2,916 2,441 2,293 2,340 2,263 2,196 2,304 8 Maturing in 7.5 years or more 6,267 5,324 4,836 4,908 5,047 5,193 4,699 4,748 4,777 4,481 4,486 4,682 Mortgage-backed securities 9 Pass-throughs 23,988 24,655 26,165 26,922 22,831 28,555 28,850 29,391 19,464 22,231 26,345 27,745 10 All others 9,000 9,373 10,184 8,465 10,876 10,545 10,304 9,759 9,939 10,492 10,439 10,835 Other money market instruments 11 Certificates of deposit 2,404 2,336 2,439 2,390 2,813 2,240 2,820 2,188 2,438 2,497 3,290 3,058 12 Commercial paper 5,769 6,315 5,982 4,397 8,711 5,630 6,507 4,907 6,529 5,856 5,042 3,803 13 Bankers' acceptances 908 1,509 1,515 1,844 2,302 1,424 1,928 1,104 1,570 1,245 1,477 1,510 FUTURE AND FORWARD5 By type of deliverable security U.S. Treasury securities 14 Bills -9,921 -12,209 -18,953 -11,441 -15,348 -16,786 -19,543 -19,811 -21,409 -14,675 -11,880 -11,758 Coupon securities 15 Maturing in less than 3.5 years -1,137 -1,044 520 -898 -515 743 1,076 607 -144 326 686 544 16 Maturing in 3.5 to 7.5 years -1,194 -1,688 -1,254 -1,384 -759 -835 -1,053 -1,557 -1,767 -815 842 1,566 17 Maturing in 7.5 to 15 years -181 -200 -433 -398 39 -241 -304 -538 -850 29 1,038 714 18 Maturing in 15 years or more -3,726 -6,577 -4,116 -7,020 -5,967 -6,926 -3,483 -3,224 -3,039 -2,470 -730 -1,468 Federal agency securities Debt 19 Maturing in less than 3.5 years 80 42 187 191 292 344 281 7 160 -26 535 475 20 Maturing in 3.5 to 7.5 years 123 158 11 97 104 19 0 8 10 -11 -172 -181 21 Maturing in 7.5 years or more -29 -20 -6 -86 95 -128 14 62 5 22 -90 -133 Mortgage-backed securities 22 Pass-throughs -9,464 -11,134 -13,711 -14,180 -8,853 -13,080 -18,049 -16,435 -8,907 -10,441 -18,140 -19,419 23 All others^ 502 1,588 752 2,323 939 781 1,092 857 175 1,014 589 1,524 Other money market instruments 24 Certificates of deposit 5,024' 3,085r -18,609 16,444r -2,014 2,741 -11,121 -23,530 -35,842 -50,301 -53,650 -50,260 25 Commercial paper -19 64 157 121 166 100 215 149 174 121 122 1% 26 Bankers' acceptances 0 0 0 0 0 0 0 0 0 0 0 0 Financing6 Reverse repurchase agreements 27 Overnight and continuing 179,145 184,273 190,522 175,030 199,952 186,945 213,524 183,406 178,150 186,023 189,701 188,649 28 Term 224,668 230,965 230,051 236,166 226,216 238,628 218,712 232,609 227,947 240,046 256,504 257,295 Repurchase agreements 29 Overnight and continuing 280,236 280,196 274,319 277,160 280,539 257,643 285,047 272,492 276,970 289,136 293,647 295,542 30 Term 195,158 201,866 213,240 205,428 201,243 219,019 205,488 220,630 210,103 211,261 223,345 224,131 Securities borrowed 31 Overnight and continuing 52,701 51,440 60,038 49,416 53,447 53,893 53,279 66,698 66,058 64,116 64,762 66,124 32 Term 23,796 20,621 19,025 21,075 19,848 19,441 18,777 18,817 18,743 19,738 22,126 22,543 Securities loaned 33 Overnight and continuing 6,833 6,538 7,062 6,504 6,851 7,038 6,979 7,516 6,723 7,133 6,889 7,202 34 Term 982 874 724 1,477 499 699 815 736 652 821 592 949 Collateralized loans 35 Overnight and continuing 4,198 4,122 4,503 3,974 4,386 3,903 4,515 4,227 5,005 5,825 5,740 5,546 36 Term 1,605 1,967 2,023 2,014 2,036 2,080 1,781 2,160 2,008 2,237 2,100 2,146 MEMO: Matched book7 Reverse repurchases 37 Overnight and continuing 116,036 116,928 122,990 109,659 129,509 119,133 134,482 122,271 116,666 117,661 114,743 116,202 38 Term 180,364 192,791 189,072 198,773 188,946 198,005 177,319 186,329 190,907 202,181 214,468 213,218 Repurchases 39 Overnight and continuing 148,269 154,692 152,094 149,403 166,706 145,283 155,959 148,311 154,322 160,535 161,221 160,764 40 Term 144,928 153,202 163,869 157,590 155,498 170,691 158,560 167,094 161,785 158,762 169,004 170,524 1. Data for positions and financing are obtained from reports submitted to the Forward positions reflect agreements made in the over-the-counter market that Federal Reserve Bank of New York by the U.S. government securities dealers on specify delayed delivery. All futures positions are included regardless of time to its published list of primary dealers. Weekly figures are close-of-business Wednes- delivery. Forward contracts for U.S. Treasury securities and for federal agency day data; monthly figures are averages of weekly data. Data for positions and debt securities are included when the time to delivery is more than five business financing are averages of close-of-business Wednesday data. days. Forward contracts for mortgage-backed securities are included when the 2. Securities positions are reported at market value. time to delivery is more than thirty days. 3. Net immediate positions include securities purchased or sold (other than 6. Overnight financing refers to agreements made on one business day that mortgage-backed agency securities) that have been delivered or are scheduled to mature on the next business day; continuing contracts are agreements that remain be delivered in five business days or less and "when-issued" securities settle on in effect for more than one business day but have no specific maturity and can be the issue date of offering. Net immediate positions of mortgage-backed securities terminated without a requirement for advance notice by either party; term include securities purchased or sold that have been delivered or are scheduled to agreements have a fixed maturity of more than one business day. be delivered in thirty days or less. 7. Matched-book data reflect financial intermediation activity in which the 4. Includes securities such as collateralized mortgage obligations (CMOs), real borrowing and lending transactions are matched. Matched-book data are included estate mortgage investment conduits (REMICs), interest only (IOs), and principal in the financing breakdowns listed above. The reverse repurchase and repurchase only (POs). numbers are not always equal because of the "matching of securities of different 5. Futures positions are standardized contracts arranged on an exchange. values or types of collateralization. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • September 1991 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1990 Agency 1987 1988 1989 1990 Dec. Jan. Feb. Mar. Apr. 1 Federal and federally sponsored agencies 341,386 381,498 411,805 434,668 434,668 445,430 441,440 437,847 432,348 2 Federal agencies 37,981 35,668 35,664 42,159 42,159 42,141 42,191 41,149 41,107 3 Defense Department' 13 8 7 7 7 7 7 7 7 4 Export-Import Bank2-3 11,978 11,033 10,985 11,376 11,376 11,376 11,376 11,186 11,186 5 Federal Housing Administration4 183 150 328 393 393 329 361 370 365 6 Government National Mortgage Association participation certificates5 1,615 0 0 0 0 0 0 0 0 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 23,435 23,481 23,499 22,638 22,601 9 United States Railway Association6 0 0 0 0 0 0 0 0 0 10 Federally sponsored agencies7 303,405 345,830 375,407 392,509 392,509 403,289 399,249 396,698 391,241 11 Federal Home Loan Banks 115,727 135,836 136,108 117,895 117,895 115,402 112,874 113,311 110,691 12 Federal Home Loan Mortgage Corporation 17,645 22,797 26,148 30,941 30,941 33,157 32,640 31,425 29,768 13 Federal National Mortgage Association 97,057 105,459 116,064 123,403 123,403 125,849 125,974 124,885 124,189 14 Farm Credit Banks8 55,275 53,127 54,864 53,590 53,590 53,717 52,480 51,890 52,049 15 Student Loan Marketing Association9 16,503 22,073 28,705 34,194 34,194 35,736 35,854 35,761 35,117 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 Corporation12 0 0 4,522 23,055 23,055 29,996 29,996 29,996 29,996 MEMO 19 Federal Financing Bank debt13 152,417 142,850 134,873 179,083 179,083 181,062 181,714 181,907 182,708 Lending to federal and federally sponsored agencies 20 Export-Import Bank 11,972 11,027 10,979 11,370 11,370 11,370 11,370 11,180 11,180 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 14,055 14,101 14,119 13,258 13,221 24 United States Railway Association6 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 52,169 52,544 52,669 52,669 26 Rural Electrification Administration 21,191 19,246 19,265 18,890 18,890 18,906 18,906 18,904 18,850 27 Other 32,078 26,324 23,724 70,896 70,896 72,968 73,227 74,348 75,240 1. Consists of mortgages assumed by the Defense Department between 1957 shown on line 22. and 1963 under family housing and homeowners assistance programs. 10. The Financing Corporation, established in August 1987 to recapitalize the 2. Includes participation certificates reclassified as debt beginning Oct. 1,1976. Federal Savings and Loan Insurance Corporation, undertook its first borrowing in 3. On-budget after Sept. 30, 1976. October 1987. 4. Consists of debentures issued in payment of Federal Housing Administration 11. The Farm Credit Financial Assistance Corporation, established in January insurance claims. Once issued, these securities may be sold privately on the 1988 to provide assistance to the Farm Credit System, undertook its first securities market. borrowing in July 1988. 5. Certificates of participation issued before fiscal 1969 by the Government 12. The Resolution Funding Corporation, established by the Financial Institu- National Mortgage Association acting as trustee for the Farmers Home Admin- tions Reform, Recovery, and Enforcement Act of 1989, undertook its first istration; Department of Health, Education, and Welfare; Department of Housing borrowing in October 1989. and Urban Development; Small Business Administration; and the Veterans 13. The FFB, which began operations in 1974, is authorized to purchase or sell Administration. obligations issued, sold, or guaranteed by other federal agencies. Since FFB 6. Off-budget. incurs debt solely for the purpose of lending to other agencies, its debt is not 7. Includes outstanding noncontingent liabilities: notes, bonds, and deben- included in the main portion of the table in order to avoid double counting. tures. Some data are estimated. 14. Includes FFB purchases of agency assets and guaranteed loans; the latter 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, contain loans guaranteed by numerous agencies with the guarantees of any shown in line 17. particular agency being generally small. The Farmers Home Administration item 9. Before late 1982, the Association obtained financing through the Federal consists exclusively of agency assets, while the Rural Electrification Administra- Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is tion entry contains both agency assets and guaranteed loans. 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 Type of issue or issuer, 1989 1990 or use Feb. Apr. May' June 1 All issues, new and refunding1 114,522 113,646 120,339 9,961 12,250 7,230 11,335 10,864 10,916 14,753 13,804 Type of issue 2 General obligation 30,312 35,774 39,610 3,024 3,536 2,343 4,838 4,219 3,771 4,946 4,442 3 Revenue 84,210 77,873 81,295 6,937 8,714 4,887 6,497 6,645 7,145 9,807 9,362 Type of issuer 4 5 S S t p a e t c e i al district and statutory authority i1 7 8 4 , , 8 4 3 0 0 9 7 1 1 1 , , 0 8 2 1 2 9 7 1 2 5 , , 6 1 6 4 1 9 5 1 , , 8 3 7 3 9 7 7 1 , , 0 3 3 9 2 6 4,5 7 6 1 3 3 2 4 , , 0 9 2 0 7 3 6 1 , , 5 1 9 9 9 5 6 1 , , 6 1 0 9 4 9 9 1 , , 5 8 4 9 9 0 5 1 , , 0 5 5 2 7 9 6 Municipality, county, and township ... 31,193 30,805 32,510 2,745 3,822 1,954 4,405 3,070 3,113 3,314 7,218 7 Issues for new capital, total 79,665 84,062 103,235 9,058 10,707 6,977 10,403 9,675 10,156 13,924 13,347 Use of proceeds 8 Education 15,021 15,133 17,042 1,009 1,418 1,079 1,579 2,583 2,001 2,462 2,684 9 Transportation 6,825 6,870 11,650 727 2,008 711 146 421 1,305 1,642 1.829 10 Utilities and conservation 8,496 11,427 11,739 1,301 776 1,1% 2,046 1,886 2,171 1,815 2.830 11 Social welfare 19,027 16,703 23,099 1,992 2,001 891 698 2,140 921 3,373 2,455 1 1 2 3 O In t d h u e s r t r p ia u l r p a o id se s 24 5 , , 6 6 7 2 2 4 2 5 8, , 8 0 9 3 4 6 34 6 , , 6 1 0 1 7 7 4,3 5 9 4 2 0 3,5 9 7 3 1 3 2,4 6 9 0 3 7 4,7 7 7 6 5 8 2,0 5 9 5 1 4 3,4 3 3 1 9 9 3,8 7 8 4 9 3 2 1 , , 5 0 0 4 9 0 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 1991 Type of issue or issuer, 1988 1990 or use Oct. Dec. Feb. Mar. Apr. May 1 All issues1 410,894 376,744 235,461 20,535 25,058 21,044 17,378' 30,708' 35,830' 33,770' 35,118 2 Bonds2 353,093 318,873 235,461 19,573 23,823 19,255 16,482r 28,906' 31,881' 28,457' 27,700 Type of offering 3 Public, domestic 202,215 181,393 188,969 17,708 22,117 18,621' 15,823' 25,737' 29,502' 24,60c 25,200 4 5 . P S r o iv ld at e a b p r l o a a c d e ment, domestic . 1 2 2 3 7 , , 1 6 7 9 8 9 ' 1 2 1 2 4 , , 8 6 5 2 1 9 2 n 3 . , a 0 . 5 4 n 1, . 8 a 6 . 5 n 1, . 7 a 0 . 6 n. 6 a 7 . 6 n. 6 a 5 . 9' 3 n , . 1 a 6 . 9' 2 n , . 3 a 7 . 9' 3 n , . 8 a 5 . 7' 2 n , . 5 a 0 . 0 Industry group 6 Manufacturing 70,306 76,345 38,248 3,531 6,593 2,831 3,375 8,051' 6,969' 7,435' 6,300 1 1 9 7 8 0 1 P C T C R u r o o e a b a m m n l l i m s m c e p s e u o u t r n a t r c i t i t l i a c e i a t t a l y i t a o i a n o n n d n d f i m na is n c c e ia ll l a neous 1 6 2 1 8 5 2 0 0 3 , , , , , 5 7 2 8 2 9 9 7 3 9 3 0 5 4 4 ' ' 1 4 5 1 1 8 9 7 7 0 , , , , , 4 7 1 1 1 6 0 2 3 0 1 7 6 0 5 13 1 1 4 4 8 1 3 , , , , , 8 9 9 0 8 7 2 8 9 9 6 6 7 8 3 14, 3 0 5 2 7 7 9 4 3 9 8 0 8 0 6 1 2 3 , , 2 6 4 0 8 0 9 5 5 2 9 3 7 0 1 1 2 1 1 1 , , , , 0 3 0 3 6 3 8 6 0 5 2 0 1 1 1 10 1, , 6 4 7 2 9 8 0 1 0 7 9 8 1 3 ' 1 1 1 6 , , , 6 3 5 4 8 6 9 6 0 2 9 9 3 4 1 ' ' 20 1 , , 9 8 9 5 6 8 8 0 1 1 8 5 6 9 4 ' ' 1 2 2 4 , , , 8 8 0 5 6 8 4 0 9 9 6 5 2 5 4 ' ' ' ' ' 1 2 6 1 , , , 7 4 2 6 3 0 9 3 0 6 0 8 7 0 5 12 Stocks2 57,802 57,870 962 1,235 1,789 896 1,802 3,949 5,313 7,418 Type of offering 1 1 1 3 4 5 P P C r u o i b m v l a i m c te o p n p r e la f c e e rr m ed en t3 3 1 6 5 5 , , , 5 9 3 4 1 4 4 1 6 2 2 6 5 6 , , , 1 6 0 9 4 3 4 7 0 1 n 3 9 . , , a 9 4 . 9 4 8 3 n. 5 4 a 1 5 . 2 0 n. 2 9 a 6 7 . 5 0 1 n , . 6 1 a 1 7 . 4 5 n. 8 a 9 . 0 6 1 n , . 6 1 a 5 5 . 2 0 2 1 n , , 7 . 2 a 1 3 . 6 3 4 n ,7 . 5 a 7 4 . 1 3 6 n 1 , , . 0 3 a 2 9 . 7 2 Industry group 2 2 1 1 1 1 0 1 9 8 6 7 C R T P C M u o r e o a a b a m m n n l li m u s m c e p f s u a e o u t n c r a r t c i t i t t l u c i a e i a a t r t l i y i t a o n i n a o n g n d n d f i m na i n sc c e ia ll l a neous 3 7 8 7 1 1 , , , , , 6 4 7 8 5 5 0 4 9 9 3 1 8 9 8 8 5 5 3 3 9 7 4 1 1 , , , , , , 0 0 3 4 9 9 9 0 2 0 4 2 0 4 8 8 6 9 1 n 4 5 1 . , , , a 2 0 4 0 1 . 2 2 1 5 2 9 6 6 5 6 2 4 1 9 0 6 9 0 7 7 0 0 4 4 5 1 6 7 4 5 0 0 2 4 2 4 1, 2 3 1 8 4 2 1 6 5 8 6 7 0 n. 2 2 3 a 4 1 6 5 1 . 8 0 2 9 8 3 5 7 1 3 3 4 8 0 0 5 7 6 3 1 1, , 2 3 5 6 0 5 4 6 8 % 0 4 9 4 6 1 1 1 , , , 4 5 5 7 7 1 2 1 % 0 1 6 1 0 2 2 1 , , , 7 2 2 5 5 1 9 7 7 6 0 4 1 3 7 3 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 the 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

A48 Domestic Nonfinancial Statistics • September 1991 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Asset Position Millions of dollars 1990 1991 INVESTMENT COMPANIES1 1989 1990 Oct. Nov. Dec Jan. Feb. Mar. Apr, May 1 Sales of own shares2 306,445 345,780 27,511 25,583 34,553 38,012 30,605 31,597 40,356 36,719 2 Redemptions of own shares3 272,165 289,573 23,112 22,085 29,484 27,648 23,390 25,372 32,895 26,970 34,280 56,207 4,399 3,498 5,069 10,364 7,215 6,226 7,461 9,749 3 Net sales 553,871 570,744 538,306 557,676 570,744 590,296 616,472 632,052 647,053 671,763 4 Assets4 44,780 48,638 51,847 52,829 48,638 53,549 53,899 52,895 52,982 55,424 65 OCathsher position5 509,091 522,106 486,459 504,847 522,106 536,747 562,573 579,154 594,071 616,342 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. Treasury 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- SOURCE. Investment Company Institute. Data based on reports of members, ment of capital gains distributions and share issue of conversions from one fund which comprise substantially all open-end investment companies registered with to another in the same group. the Securities and Exchange Commission. Data reflect newly formed companies 3. Excludes share redemptions resulting from conversions from one fund to after 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 Q1 Q2 Q3 Q4 Ql' 1 Corporate profits with inventory valuation and 337.6 311.6 298.3 321.4 306.7 290.9 296.8 306.6 300.7 288.9 286.2 316.7 307.7 304.7 314.6 291.4 289.8 296.9 299.3 318.5 304.1 281.5 136.2 135.1 132.1 140.8 127.8 123.5 129.9 133.1 139.1 126.5 115.1 180.5 172.6 172.5 173.8 163.6 166.3 167.1 166.1 179.4 177.6 166.4 110.0 123.5 133.9 122.1 125.0 127.7 130.3 133.0 135.1 137.2 137.5 70.5 49.1 38.7 51.7 38.6 38.6 36.8 33.2 44.3 40.4 29.0 -27.0 -21.7 -11.4 -23.1 -6.1 -14.5 -11.4 -.5 -19.8 -13.8 8.1 47.8 25.5 4.9 29.9 21.4 15.6 11.3 7.7 2.0 -1.4 -3.5 SOURCE. Survey of Current Business (Department of Commerce). 1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1989 1990 1991 IInndduussttrryy 11998899 11999900 1199991111 Q4 Ql Q2 Q3 Q4 Ql Q21 Q31 1 Total nonfarm business 507.40 532.96 547.23 519.58 532.45 535.49 534.86 529.02 535.32 544.16 553.52 Manufacturing 2 Durable goods industries 82.56 82.99 80.06 83.41 86.35 84.34 82.67 78.62 81.53 81.53 79.71 3 Nondurable goods industries 101.24 109.79 110.11 108.47 105.02 110.82 111.81 111.52 108.58 109.58 111.74 Nonmanufacturing 4 Mining 9.21 9.87 9.88 9.38 9.58 9.84 9.98 10.09 9.85 10.05 9.% Transportation 5 Railroad 6.26 6.41 5.44 6.80 6.45 6.66 5.60 6.90 5.60 5.15 5.81 6 Air 6.73 8.98 11.43 5.75 9.35 9.36 10.05 7.17 11.27 12.60 12.14 7 Other 5.85 6.20 7.47 5.69 6.33 5.84 5.76 6.88 6.71 7.50 7.45 Public utilities 8 Electric 44.81 43.98 45.92 44.66 43.37 42.62 43.63 46.31 43.21 47.10 46.16 9 Gas and other 21.47 23.02 23.45 21.15 22.34 21.65 23.85 24.22 24.18 22.65 23.34 10 Commercial and other2 229.28 241.72 253.48 234.25 243.66 244.37 241.51 237.32 244.39 248.00 257.22 1. Anticipated by business. insurance; personal and business services; and communication. 2. "Other" consists of construction; wholesale and retail trade; finance and 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; not seasonally adjusted 1989 1991 Account 1988 1989 Q3 Q4 Q1 Q2 Q3 Q4' ASSETS Accounts receivable, gross2 1 Consumer 141.1 146.2 140.8 146.3 140.8 137.9 138.6 140.9 136.0 2 Business 207.4 236.5 256.0' 246.8 256.0' 262.9 274.8' 275.4 290.8 3 Real estate 39.5 43.5 48.9 48.7 48.9 52.1 55.4 57.7 59.9 4 Total 388.1 426.2 445.8r 441.8 445.8' 452.8' 468.8' 474.0 486.7 Less: 5 Reserves for unearned income 45.3 50.0 52.0 52.9 52.0 51.9 54.3 55.1 56.6 6 Reserves for losses 6.8 7.3 7.7 7.7 7.7 7.9 8.2 8.6 9.2 7 Accounts receivable, net 336.0 368.9 386.1 381.3 386.1 393.0 406.3 410.3 420.9 58.3 72.4 91.6 85.2 91.6 92.5 95.5 102.8 99.6 8 All other 394.2 441.3 477.6 466.4 477.6 501.9 513.1 520.6 9 Total assets LIABILITIES AND CAPITAL 16.4 15.4 14.5 12.2 14.5 13.9 15.8 15.6 19.4 1101 BCaonmkm leoracnias l paper 128.4 142.0 149.5 147.2 149.5 152.9 152.4 148.6 152.7 Debt 12 Other short-term 28.0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 13 Long-term 137.1 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 14 Due to parent n.a. 50.6 63.8 60.3 63.8 70.5 72.8 82.0 82.7 15 Not elsewhere classified n.a. 137.9 147.8 145.1 147.8 145.7 153.0 156.6 157.0 16 All other liabilities 52.8 59.8 62.6 61.8 62.6 61.7 66.1 68.7 66.0 17 Capital, surplus, and undivided profits 31.5 35.6 39.4 39.8 39.4 40.7 41.8 41.6 42.8 18 Total liabilities and capital 394.2 441.3 477.6 466.4 477.6 485.5 501.9 513.1 520.6 515.0 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 Chang.1 Millions of dollars, end of period, seasonally adjusted 1990 1991 TTyyppee Dec. Jan. Feb. Mar. Apr. May 1 Total 234,891 258,957 292,638 292,638 293,383 294,284 294,225 294,569 297,171 Retail financing of installment sales 2 Automotive 37,210 39,479 38,110 38,110 38,016 37,548 36,649 36,652 3366,,000055 3 Equipment 28,185 29,627 31,784 31,784 31,956 32,058 32,332 32,034 32,690 4 Pools of securitized assets n.a. 698 951 951 911 879 828 777 737 Wholesale 5 Automotive 32,953 33,814 32,283 32,283 32,404 31,428 30,329 30,066 30,055 6 Equipment 5,971 6,928 11,569 11,569 11,299 11,108 10,880 10,937 11,000 7 All other 9,357 9,985 9,126 9,126 9,366 9,142 88,,886688 8,666 8,620 8 Pools of securitized assets2 n.a. 0 2,950 2,950 2,836 3,353 33,,335544 2,905 2,855 Leasing 9 Automotive 24,693 26,804 39,129 39,129 38,921 38,922 39,279 39,707 4400,,773388 10 Equipment 57,658 68,240 75,626 75,626 76,841 79,052 80,969 82,750 84,126 11 Pools of securitized assets2 n.a. 1,247 1,849 1,849 1,854 1,810 1,868 1,765 1,700 12 Loans on commercial accounts receivable and factored commercial accounts receivable 17,687 18,511 22,475 22,475 21,891 22,084 21,666 21,265 21,772 13 AH other business credit 21,176 23,623 26,784 26,784 27,089 26,899 27,204 27,045 26,873 Net change (during period) 14 Total 28,900 24,067 33,681 3,303 745 901 -59 345 2,601 Retail financing of installment sales 15 Automotive 1,070 2,267 -1,369 -365 --9944 --446688 --990000 4 --664477 16 Equipment 3,108 1,442 2,157 877 171 103 274 -298 656 17 Pools of securitized assets n.a. -26 253 24 -40 -32 -51 -51 -40 Wholesale 18 Automotive 2,883 862 -1,531 -622 121 -975 -1,100 -263 -11 19 Equipment 393 958 4,641 695 -270 -192 -228 57 63 20 All other 1,029 628 -860 -325 240 -224 -275 -201 -47 21 Pools of securitized assets n.a. 0 2,950 109 -114 517 1 -449 -50 Leasing 22 Automotive 2,596 2,110 12,326 7,296 -209 1 358 428 1,031 23 Equipment 14,166 10,581 7,385 -5,192 1,215 2,211 1,917 1,781 1,377 24 Pools of securitized assets n.a. 526 602 -35 5 -44 58 -103 -65 25 Loans on commercial accounts receivable and factored commercial accounts receivable -484 826 3,964 922 -585 194 -418 -401 506 26 All other business credit 4,134 3,163 3,163 -82 305 -190 305 -158 -173 Digitized for FRASER 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, http://fraser.sintsliodue ifsrofentd c.oovregr/. Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • September 1991 1.53 MORTGAGE MARKETS Conventional Mortgages on New Homes Millions of dollars; exceptions noted. 1990 1991 IItteemm 11998888 11998899 11999900 Dec. Jan. Feb. Mar. Apr. May June Terms and yields in primary and secondary markets PRIMARY MARKETS Terms1 1 Purchase price (thousands of dollars) 150.0 159.6 153.2 156.3 148.3 153.2 136.7 151.4 146.8 166.7 2 Amount of loan (thousands of dollars) 110.5 117.0 112.4 115.4 112.3 113.8 100.4 114.5 109.2 121.9 3 Loan-price ratio (percent) 75.5 74.5 74.8 74.9 77.2 76.3 74.6 76.4 75.2 74.2 4 Maturity (years) 28.0 28.1 27.3 28.6 28.1 28.3 25.7 26.8 26.1 26.8 5 Fees and charges (percent of loan amount)2 2.19 2.06 1.93 1.85 1.75 1.73 1.59 2.12 1.54 1.69 6 Contract rate (percent per year) 8.81 9.76 9.68 9.45 9.36 9.28 9.16 9.24 9.26 9.18 Yield (percent per year) 7 OTS series3 9.18 10.11 10.01 9.76 9.65 9.57 9.43 9.60 9.52 9.46 8 HUD series4 10.30 10.21 10.08 9.66 9.53 9.49 9.49 9.51 9.46 9.60 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series)5 10.49 10.24 10.17 9.66 9.58 9.57 9.61 9.61 9.62 9.71 10 GNMA securities6 9.83 9.71 9.51 9.08 8.87 8.66 8.75 8.62 8.65 9.04 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 101,329 104,974 113,329 116,628 117,445 118,284 119,196 120,074 121,798 122,806 12 FHA/V A-insured 19,762 19,640 21,028 21,751 21,854 21,947 21,976 21,972 21,609 21,474 13 Conventional 81,567 85,335 92,302 94,877 95,591 96,337 97,220 98,102 100,189 101,332 Mortgage transactions (during period) 14 Purchases 23,110 22,518 23,959 2,410 1,781 1,792 1,987 2,942 4,450 3,145 Mortgage commitments1 15 Issued (during period)8 n.a. n.a. n.a. 2,104 1,889 1,779 3,087 3,880 3,506 3,032 16 To sell (during period)9 n.a. n.a. n.a. 0 2 0 109 839 1,066 841 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)9 17 Total 15,105 20,105 20,419 21,857 22,300 22,855 23,221 23,870 24,525 n.a. 18 FHA/VA-insured 620 590 547 518 511 503 499 504 491 n.a. 19 Conventional 14,485 19,516 19,871 21,339 21,789 22,352 22,722 21,188 21,843 n.a. Mortgage transactions (during period) 20 Purchases 44,077 78,588 75,517 10,637 5,018 5,217 4,549 7,045 8,562 n.a. 21 Sales 39,780 73,446 73,817 9,918 4,438 4,549 6,183 6,226 7,692' 10,789 Mortgage commitments10 22 Contracted (during period) 66,026 88,519 102,401 12,938 8,437 5,579 5,936 10,036 11,334 n.a. 1. Weighted averages based on sample surveys of mortgages originated by backed by mortgages and guaranteed by the Government National Mortgage major institutional lender groups; compiled by the Federal Housing Finance Association, assuming prepayment in twelve years on pools of thirty-year Board in cooperation with the Federal Deposit Insurance Corporation. mortgages insured by the Federal Housing Administration or guaranteed by the 2. Includes all fees, commissions, discounts, and "points" paid (by the Department of Veterans Affairs carrying the prevailing ceiling rate. Monthly borrower or the seller) to obtain a loan. figures are averages of Friday figures from the Wall Street Journal. 3. Average effective interest rates on loans closed, assuming prepayment at 7. Includes some multifamily and nonprofit hospital loan commitments in the end of 10 years. addition to one- to four-family loan commitments accepted in FNMA's free 4. Average contract rates on new commitments for conventional first mort- market auction system, and through the FNMA-GNMA tandem plans. gages; from U.S. Department of Housing and Urban Development. 8. Does not include standby commitments issued, but includes standby 5. Average gross yields on thirty-year, minimum-downpayment, first mort- commitments converted. gages, insured by the Federal Housing Administration for immediate delivery in 9. Includes participation as well as whole loans. the private secondary market. Based on transactions on first day of subsequent 10. Includes conventional and government-underwritten loans. Federal Home month. Large monthly movements in average yields may reflect market adjust- Loan Mortgage Corporation (FHLMC's) mortgage commitments and mortgage ments to changes in maximum permissable contract rates. transactions include activity under mortgage securities swap programs, while the 6. Average net yields to investors on fully modified pass-through securities corresponding data for FNMA exclude swap activity. 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 1990 1991 Type of holder and of property 11998877 11998888 11998899 Ql Q2 Q3 Q4 Ql" 1 All holders 2,986,425 3,270,118 3,556,370 3,696,882 3,760,480 3,815,220 3,856,205 3,883,700 2 One- to four-family 1,962,958 2,201,231 2,429,689 2,554,496 2,619,522 2,669,613 2,708,951 2,740,122 3 Multifamily 278,899 291,405 303,416 305,838 301,789 302,993 304,004 303,543 4 Commercial 657,036 692,236 739,240 752,688 755,212 758,362 759,306 756,349 5 Farm 87,532 85,247 84,025 83,861 83,957 84,252 83,943 83,686 6 Major financial institutions 1,665,291 1,831,472 1,931,537 1,939,005 1,940,366 1,932,978 1,912,099 1,890,344 7 Commercial banks2 592,449 674,003 767,069 786,802 814,598 830,868 843,136 855,256 8 One- to four-family 275,613 334,367 389,632 405,009 431,115 445,218 454,851 462,975 9 Multifamily 32,756 33,912 38,876 37,913 38,420 37,898 37,116 38,021 10 Commercial 269,648 290,254 321,906 327,110 327,930 330,426 333,943 336,803 11 Farm 14,432 15,470 16,656 16,771 17,133 17,326 17,225 17,457 12 Savings institutions3 860,467 924,606 910,254 891,921 860,903 836,047 801,628 771,948 13 One- to four-family 602,408 671,722 669,220 658,405 642,110 626,297 600,154 584,639 14 Multifamily 106,359 110,775 106,014 103,841 97,359 94,790 91,806 85,654 15 Commercial 150,943 141,433 134,370 129,056 120,866 114,430 109,168 101,187 16 Farm 757 676 650 619 568 530 500 468 17 Life insurance companies 212,375 232,863 254,214 260,282 264,865 266,063 267,335 263,139 18 One- to four-family 13,226 11,164 12,231 12,525 12,740 12,773 12,052 11,514 19 Multifamily 22,524 24,560 26,907 27,555 28,027 28,100 29,406 28,847 20 Commercial 166,722 187,549 205,472 210,422 214,024 214,585 215,121 212,018 21 Farm 9,903 9,590 9,604 9,780 10,075 10,605 10,756 10,760 22 Finance companies4 29,716 37,846 45,476 45,808 47,104 49,784 48,777 49,658 23 Federal and related agencies 192,721 200,570 209,498 216,146 227,818 242,695 250,762 262,167 24 Government National Mortgage Association.. 444 26 23 22 21 21 21 20 25 One- to four-family 25 26 23 22 21 21 21 20 26 Multifamily 419 0 0 0 0 0 0 0 27 Farmers Home Administration5 43,051 42,018 41,176 41,125 41,175 41,269 41,439 41,545 28 One- to four-family 18,169 18,347 18,422 18,419 18,434 18,476 18,527 18,578 29 Multifamily 8,044 8,513 9,054 9,199 9,361 9,477 9,640 9,792 30 Commercial 6,603 5,343 4,443 4,510 4,545 4,608 4,690 4,754 31 Farm 10,235 9,815 9,257 8,997 8,835 8,708 8,582 8,421 32 Federal Housing and Veterans Administration 5,574 5,973 6,087 6,355 6,792 7,938 8,801 9,492 33 One- to four-family 2,557 2,672 2,875 3,027 3,054 3,248 3,593 3,600 34 Multifamily 3,017 3,301 3,212 3,328 3,738 4,690 5,208 5,891 35 Federal National Mortgage Association 96,649 103,013 110,721 112,353 112,855 113,718 116,628 118,210 36 One- to four-family 89,666 95,833 102,295 103,300 103,431 103,722 106,081 107,053 37 Multifamily 6,983 7,180 8,426 9,053 9,424 9,996 10,547 11,157 38 Federal Land Banks 34,131 32,115 29,640 29,325 29,595 29,441 29,416 29,253 39 One- to four-family 2,008 1,890 1,210 1,197 1,741 1,766 1,838 1,884 40 Farm 32,123 30,225 28,430 28,128 27,854 27,675 27,577 27,368 41 Federal Home Loan Mortgage Corporation .. 12,872 17,425 21,851 19,823 19,979 20,508 21,857 21,947 42 One- to four-family 11,430 15,077 18,248 16,772 17,316 17,810 19,185 19,460 43 Multifamily 1,442 2,348 3,603 3,051 2,663 2,697 2,672 2,487 44 Mortgage pools or trusts6 718,297 811,847 946,766 984,811 1,024,893 1,060,640 1,103,950 1,138,889 45 Government National Mortgage Association.. 317,555 340,527 368,367 376,962 385,456 394,859 403,613 412,982 46 One- to four-family 309,806 331,257 358,142 366,300 374,960 384,474 391,505 400,322 47 Multifamily 7,749 9,270 10,225 10,662 10,496 10,385 12,108 12,660 48 Federal Home Loan Mortgage Corporation .. 212,634 226,406 272,870 281,736 295,340 301,797 316,359 328,305 49 One- to four-family 205,977 219,988 266,060 274,084 287,232 293,721 308,369 319,978 50 Multifamily 6,657 6,418 6,810 7,652 8,108 8,077 7,990 8,327 51 Federal National Mortgage Association 139,960 178,250 228,232 246,391 263,330 281,806 299,833 312,101 52 One- to four-family 137,988 172,331 219,577 237,916 254,811 273,335 291,194 303,554 53 Multifamily 1,972 5,919 8,655 8,475 8,519 8,471 8,639 8,547 54 Farmers Home Administration 245 104 80 76 72 70 66 63 55 One- to four-family 121 26 21 20 19 18 17 16 56 Multifamily 0 0 0 0 0 0 0 0 57 Commercial 63 38 26 25 24 24 24 23 58 Farm 61 40 33 31 30 29 26 24 59 Individuals and others7 410,116 426,229 468,569 556,920 567,403 578,908 589,395 592,301 60 One- to four-family 246,061 259,971 294,517 374,143 382,343 393,027 401,685 403,791 61 Multifami|y 80,977 79,209 81,634 83,666 82,040 80,636 80,808 80,448 62 Commercial 63,057 67,618 73,023 79,576 83,557 85,865 87,624 88,875 63 Farm 20,021 19,431 19,395 19,536 19,463 19,379 19,278 19,187 1. Based on data from various institutional and governmental sources, with 5. Securities guaranteed by the Fanners Home Administration sold to the figures for some quarters estimated in part by the Federal Reserve. Multifamily Federal Financing Bank were reallocated from FmHA mortgage pools to FmHA debt refers to loans on structures of five or more units. mortgage holdings in 1986:4, because of accounting changes by the Farmers 2. Includes loans held by nondeposit trust companies but not bank trust Home Administration. departments. 6. Outstanding principal balances of mortgage-backed securities insured or 3. Includes savings banks and savings and loan associations. Beginning 1987:1, guaranteed by the agency indicated. Includes private pools which are not shown data reported by FSLIC-insured institutions include loans in process and other 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 one- to four-family loans. pension funds, credit unions, and other U.S. agencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • September 1991 1.55 CONSUMER INSTALLMENT CREDIT1 Total Outstanding and Net Change Millions of dollars, amounts outstanding, end of period 1990 1991 HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt 11998899 11999900 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr/ May Seasonally adjusted 1 Total 718,863 735,102 735,547 735,433 736,411 735,102 732,962 732,762 732,442 733,621 732,995 2 Automobile 290,676 284,585 285,627 285,024 284,412 284,585 283,746 282,626 280,689 279,746 276,449 3 Revolving 199,082 220,110 219,090 220,031 221,690 220,110 219,588 221,556 224,817 225,994 227,440 4 Mobile home 22,471 20,919 21,073 20,680 20,492 20,919 20,459 20,200 20,123 20,098 19,842 5 Other 206,633 209,487 209,758 209,698 209,817 209,487 209,170 208,379 206,813 207,782 209,263 Not seasonally adjusted 6 Total 730,901 748,300 738,946 736,091 738,626 748,300 736,399 729,264 725,462 727,907 728,419 By major holder 7 Commercial banks 342,770 347,466 342,698 341,755 342,882 347,466 341,426 339,282 335,754 336,425 334,801 8 Finance companies 140,832 137,450 140,890 141,329 139,195 137,450 134,965 133,021 131,552 133,462 134,045 9 Credit unions 93,114 92,911 92,996 93,190 92,918 92,911 91,991 91,131 90,772 91,413 92,054 10 Retailers 44,154 43,552 38,963 38,282 39,095 43,552 40,945 38,864 38,497 37,817 36,782 11 Savings institutions 57,253 45,616 50,683 48,055 47,121 45,616 44,939 43,875 42,491 41,707 41,214 12 Gasoline companies 3,935 4,822 4,723 4,749 4,753 4,822 4,766 4,404 4,296 4,357 4,507 13 Pools of securitized assets 48,843 76,483 67,993 68,731 72,662 76,483 77,367 78,687 82,100 82,726 85,016 By major type of credit3 14 Automobile 290,705 284,813 289,169 287,304 285,379 284,813 282,214 279,913 277,798 277,508 275,537 15 Commercial banks 126,288 126,259 128,268 127,667 126,544 126,259 126,235 124,745 123,411 122,710 121,530 16 Finance companies 82,721 74,396r 78,116 78,033 75,224 74,396' 72,015 70,287 69,233 70,500 69,689 17 Pools of securitized assets2 18,235 24,537 21,390 20,944 23,475 24,537 25,123 26,872 27,755 26,875 26,777 18 Revolving 210,310 232,370 218,279 218,337 222,643 232,370 223,606 220,714 221,400 222,627 224,438 19 Commercial banks 130,811 132,433 127,415 127,108 129,117 132,433 125,814 125,673 124,619 126,009 126,085 20 Retailers 39,583 39,029 34,528 33,867 34,657 39,029 36,510 34,509 34,179 33,513 32,458 21 Gasoline companies 3,935 4,822 4,723 4,749 4,753 4,822 4,766 4,404 4,296 4,357 4,507 22 Pools of securitized assets 23,477 44,335 39,606 40,798 42,297 44,335 44,773 44,451 46,722 47,116 49,667 23 Mobile home 22,240 20,666 21,195 20,773 20,472 20,666 20,614 20,362 20,030 20,052 19,767 24 Commercial banks 9,112 9,763 9,263 9,274 9,199 9,763 9,748 9,730 9,632 9,565 9,379 25 Finance companies 4,716 5,252 5,423 5,400 5,364 5,252 5,367 5,330 5,328 5,573 5,595 26 Other 207,646 210,451 210,303 209,677 210,132 210,451 209,965 208,275 206,234 207,720 208,677 27 Commercial banks 76,559 79,011 77,752 77,706 78,022 79,011 79,629 79,134 78,092 78,141 77,807 28 Finance companies 53,395 57,801 57,351 57,896 58,607 57,801 57,583 57,404 56,991 57,388 58,761 29 Retailers 4,571 4,523 4,435 4,415 4,438 4,523 4,435 4,355 4,318 4,304 4,324 30 Pools of securitized assets2 7,131 7,611 6,997 6,989 6,890 7,611 7,471 7,364 7,603 8,735 8,572 1. The Board's series on amounts of credit covers most short- and intermedi- 2. Outstanding balances of pools upon which securities have been issued; these ate-term credit extended to individuals that is scheduled to be repaid (or has the balances are no longer carried on the balance sheets of the loan originator. option of repayment) in 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 per year unless noted otherwise 1990 1991 IItteemm 11998888 11998899 11999900 Nov. Dec. Jan. Feb. Mar. Apr. May INTEREST RATES Commercial banks? 1 48-month new car 10.85 12.07 11.78 11.62 n.a. n.a. 11.60 n.a. n.a. 11.28 2 24-month personal 14.68 15.44 15.46 15.69 n.a. n.a. 15.42 n.a. n.a. 15.16 3 120-month mobile home3 13.54 14.11 14.02 13.99 n.a. n.a. 13.88 n.a. n.a. 13.80 4 Credit card 17.78 18.02 18.17 18.23 n.a. n.a. 18.28 n.a. n.a. 18.22 Auto finance companies 5 New car 12.60 12.62 12.54 12.74 12.86 12.99 13.16 13.14 13.14 1122..9955 6 Used car 15.11 16.18 15.99 16.07 16.04 15.70 15.90 15.82 15.82 15.85 OTHER TERMS4 Maturity (months) 7 New car 56.2 54.2 54.6 54.6 54.7 54.9 55.2 55.2 55.4 55.5 8 Used car 46.7 46.6 46.1 46.0 45.8 47.4 47.1 47.2 47.3 47.3 Loan-to-value ratio 9 New car 94 91 87 85 85 88 88 87 87 87 10 Used car 98 97 95 95 94 96 % 97 97 % Amount financed (dollars) 11 New car 11,663 12,001 12,071 11,986 12,140 12,229 12,081 12,121 11,993 12,204 12 Used car 7,824 7,954 8,289 8,494 8,530 8,600 8,605 8,763 8,751 8,873 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

A48 Domestic Nonfinancial Statistics • September 1991 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1989 1990 1991 Q3 Q4 Qi Q2 Q3 Q4 Ql Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors .. 836.9 687.0 760.8 678.2 641.2 678.8 620.2 808.9 617.6 655.7 482.6 474.7 By sector and instrument 2 U.S. government 215.0 144.9 157.5 151.6 272.5 173.9 185.0 247.3 228.2 286.1 328.4 204.7 3 Treasury securities 214.7 143.4 140.0 150.0 264.4 166.8 189.6 217.8 222.9 287.5 329.4 228.7 4 Agency issues and mortgages .4 1.5 17.4 1.6 8.2 7.1 -4.6 29.6 5.4 -1.3 -1.0 -24.0 5 Private 621.9 542.1 603.3 526.6 368.7 504.9 435.2 561.6 389.4 369.6 154.2 270.0 By instrument 6 Debt capital instruments 465.8 453.2 459.2 379.8 309.3 369.2 347.0 391.6 338.7 280.2 226.9 264.6 7 Tax-exempt obligations 22.7 49.3 49.8 30.4 18.5 34.1 19.1 12.4 24.5 28.0 9.0 7.1 X Corporate bonds 126.8 79.4 102.9 73.7 64.5 62.7 87.4 45.2 83.7 47.7 81.6 85.2 9 Mortgages 316.3 324.5 306.5 275.7 226.4 272.4 240.5 334.0 230.5 204.5 136.3 172.4 10 Home mortgages 218.7 234.9 231.0 218.0 211.6 221.0 214.3 283.5 235.2 183.1 144.4 181.0 11 Multifamily residential 33.5 24.4 16.7 16.4 3.0 11.8 9.5 22.9 -15.7 3.8 .8 .2 12 Commercial 73.6 71.6 60.8 42.7 11.9 40.9 19.9 27.1 13.0 15.8 -8.2 -9.4 13 Farm -9.5 -6.4 -2.1 -1.5 -.1 -1.3 -3.2 .5 -1.9 1.8 -.8 .5 14 Other debt instruments 156.1 88.9 144.1 146.8 59.3 135.6 88.2 170.0 50.7 89.3 -72.7 5.4 15 Consumer credit 58.0 33.5 50.2 39.1 14.3 37.1 44.1 30.4 2.8 21.3 2.5 -23.6 16 Bank loans n.e.c 66.9 10.0 39.8 39.9 -5.0 50.8 7.7 21.1 8.8 -15.8 -34.0 38.7 17 Open market paper -9.3 2.3 11.9 20.4 9.7 16.9 -6.9 69.6 -6.2 17.3 -41.7 5.1 18 Other 40.5 43.2 42.2 47.4 40.3 30.9 43.3 48.9 45.3 66.6 .5 -14.9 By borrowing sector 19 State and local government 36.2 48.8 45.6 29.6 14.6 28.6 16.5 8.9 17.7 28.5 3.1 7.1 20 Household 293.0 302.2 314.9 285.0 254.3 290.8 291.8 364.7 271.5 221.7 159.4 192.6 21 Nonfinancial business 292.7 191.0 242.8 211.9 99.8 185.4 126.9 188.0 100.2 119.4 -8.3 70.3 22 Farm -16.3 -10.6 -7.5 1.6 2.5 -2.1 8.9 6.3 -10.8 11.6 3.1 5.0 23 Nonfarm noncorporate 99.2 77.9 65.7 50.8 11.1 40.2 35.0 45.5 3.5 18.3 -23.0 -17.0 24 Corporate 209.7 123.7 184.6 159.5 86.2 147.3 83.1 136.2 107.5 89.4 11.6 82.2 25 Foreign net borrowing in United States 9.7 4.5 6.3 10.9 32.1 30.4 16.9 2.3 41.0 45.1 40.2 11.7 26 Bonds 3.1 7.4 6.9 5.3 21.6 8.1 -1.0 32.7 25.8 1.2 26.5 8.9 27 Bank loans n.e.c -1.0 -3.6 -1.8 -.1 5.9 3.7 -4.3 -6.7 -2.0 17.4 14.9 -27.7 28 Open market paper 11.5 2.1 8.7 13.3 12.3 20.7 22.2 -16.4 23.1 27.3 15.3 45.5 29 U.S. government loans -3.9 -1.4 -7.5 -7.5 -7.6 -2.1 .1 -7.3 -5.9 -.8 -16.5 -15.0 30 Total domestic plus foreign 846.6 691.5 767.1 689.1 673.3 709.2 637.1 811.2 658.6 700.8 522.8 486.4 Financial sectors 31 Total net borrowing by financials ectors 285.1 300.2 247.6 205.5 203.0 123.9 187.3 191.4 177.5 175.4 267.5 115.1 By instrument 32 U.S. government related 154.1 171.8 119.8 151.0 167.4 124.8 156.4 171.7 184.0 139.2 174.6 168.0 33 Sponsored credit agency securities 15.2 30.2 44.9 25.2 17.0 13.2 -4.7 9.7 17.1 22.3 19.0 14.5 34 Mortgage pool securities 139.2 142.3 74.9 125.8 150.3 111.6 161.1 162.0 166.8 116.9 155.5 153.5 35 Loans from U.S. government -.4 -.8 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 36 Private 131.0 128.4 127.8 54.5 35.6 -.9 30.9 19.7 -6.5 36.2 93.0 -52.9 37 Corporate bonds 82.9 78.9 51.7 36.8 50.2 26.7 39.6 35.1 68.8 20.3 76.7 37.5 38 Mortgages .1 .4 .3 .0 .8 .3 -.4 -.7 .8 2.6 .5 1.0 39 Bank loans n.e.c 4.0 -3.2 1.4 1.8 .7 2.0 4.2 -2.2 -.6 1.9 3.6 1.0 40 Open market paper 24.2 27.9 54.8 26.9 8.6 11.0 36.3 9.5 -44.6 41.9 27.7 -64.5 41 Loans from Federal Home Loan Banks 19.8 24.4 19.7 -11.0 -24.7 -41.0 -48.8 -22.0 -30.9 -30.5 -15.5 -27.9 By borrowing sector 42 Sponsored credit agencies 14.9 29.5 44.9 25.2 17.0 13.2 -4.7 9.7 17.1 22.3 19.0 14.5 43 Mortgage pools 139.2 142.3 74.9 125.8 150.3 111.6 161.1 162.0 166.8 116.9 155.5 153.5 44 Private 131.0 128.4 127.8 54.5 35.6 -.9 30.9 19.7 -6.5 36.2 93.0 -52.9 45 Commercial banks -3.6 6.2 -3.0 -1.4 -1.1 3.5 -.7 -4.9 -7.9 -12.5 21.0 -22.0 46 Bank affiliates 15.2 14.3 5.2 6.2 -28.0 16.5 -3.9 -8.0 -32.1 -40.4 -31.6 -27.4 47 Savings and loan associations 20.9 19.6 19.9 -14.1 -31.2 -44.7 -56.2 -15.8 -53.5 -31.9 -23.4 -29.1 48 Mutual savings banks 4.2 8.1 1.9 -1.4 -.5 -2.3 .7 -8.3 6.5 -4.2 4.0 -2.2 49 Finance companies 54.7 40.8 67.7 46.3 56.7 23.5 52.6 25.3 27.7 96.9 76.9 -5.0 50 Real estate investment trusts (REITs) .8 .3 3.5 -1.9 -.4 -3.1 .1 -.6 -2.3 .9 .6 .4 51 Securitized credit obligations (SCO) 39.0 39.1 32.5 20.8 40.1 5.7 38.2 32.1 55.1 27.5 45.6 32.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A41 1.57—Continued 1989 1990 1991 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998866 11998877 11998888 11998899 11999900 Q3 Q4 Q1 Q2 Q3 Q4 Q1 All sectors 54 Total net borrowing 1,131.7 991.7 1,014.7 894.5 876.3 833.0 824.4 1,002.5 836.1 876.2 790.3 601.5 55 U.S. government securities 369.5 317.5 277.2 302.6 439.9 298.7 341.4 419.0 412.2 425.4 503.0 372.7 56 State and local obligations 22.7 49.3 49.8 30.4 18.5 34.1 19.1 12.4 24.5 28.0 9.0 7.1 57 Corporate and foreign bonds 212.8 165.7 161.5 115.8 136.3 97.6 125.9 112.9 178.3 69.3 184.8 131.6 58 Mortgages 316.4 324.9 306.7 275.7 227.1 272.7 240.1 333.3 231.3 207.1 136.8 173.3 59 Consumer credit 58.0 33.5 50.2 39.1 14.3 37.1 44.1 30.4 2.8 21.3 2.5 -23.6 60 Bank loans n.e.c 69.9 3.2 39.4 41.5 1.6 56.5 7.5 12.2 6.2 3.5 -15.6 12.1 61 Open market paper 26.4 32.3 75.4 60.6 30.7 48.5 51.6 62.6 -27.7 86.5 1.2 -13.8 62 Other loans 56.1 65.5 54.4 28.9 8.0 -12.2 -5.4 19.6 8.5 35.2 -31.4 -57.9 63 MEMO: U.S. government, cash balance .0 -7.9 10.4 -5.9 8.3 -22.7 -7.3 22.9 -38.1 21.1 27.4 51.8 Totals net of changes in U.S. government cash balances 64 Net borrowing by domestic nonfinancial 836.9 694.9 750.4 684.1 632.9 701.6 627.6 786.0 655.7 634.7 455.2 422.9 65 Net borrowing by U.S. government 215.0 152.8 147.1 157.5 264.2 196.7 192.4 224.4 266.3 265.1 301.0 152.9 External corporate equity funds raised in United States 66 Total net share issues 86.8 10.9 -124.2 -63.7 11.4 -61.0 14.9 -9.4 47.3 -15.9 23.6 101.3 67 Mutual funds 159.0 73.9 1.1 41.3 61.4 57.9 72.4 47.8 71.0 46.1 80.6 87.6 68 All other -72.2 -63.0 -125.3 -105.1 -49.9 -118.9 -57.6 -57.2 -23.6 -62.0 -56.9 13.7 69 Nonfinancial corporations -85.0 -75.5 -129.5 -124.2 -63.0 -146.3 -79.3 -69.0 -48.0 -74.0 -61.0 -17.0 70 Financial corporations 11.6 14.6 3.3 2.4 6.1 -.1 4.5 10.1 .6 13.0 .9 1.9 71 Foreign shares purchased in United States 1.2 -2.1 .9 16.7 6.9 27.5 17.2 1.7 23.8 -1.0 3.2 28.8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • September 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 1991 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998866 11998877 11998888 11998899 11999900 Q3 Q4 Ql Q2 Q3 Q4 Ql 1 Total funds advanced in credit markets to domestic nonfinancial sectors 836.9 687.0 760.8 678.2 641.2 678.8 620.2 808.9 617.6 655.7 482.6 474.7 2 Total net advances by federal agencies and foreign sectors 280.2 248.8 210.7 187.6 261.0 218.3 203.8 218.6 300.6 324.8 200.0 304.5 By instrument 3 U.S. government securities 69.4 70.1 85.2 30.7 74.4 115.7 27.1 16.4 99.9 139.1 42.1 127.6 4 Residential mortgages 136.3 139.1 86.3 137.9 184.1 127.7 178.3 182.3 206.7 160.8 186.7 184.1 5 Federal Home Loan Bank advances to thrifts 19.8 24.4 19.7 -11.0 -24.7 -41.0 -48.8 -22.0 -30.9 -30.5 -15.5 -27.9 6 Other loans and securities 54.7 15.1 19.4 30.0 27.1 15.8 47.1 41.8 24.8 55.3 -13.4 20.7 By lender 7 U.S. government 9.7 -7.9 -9.4 -2.4 32.9 -9.3 5.7 37.7 34.2 62.5 -2.8 31.6 8 Sponsored credit agencies and mortgage pools 153.3 169.3 112.0 125.3 166.7 126.4 158.4 184.2 166.3 165.6 150.8 172.3 9 Monetary authority 19.4 24.7 10.5 -7.3 8.1 -31.2 -4.6 -6.3 40.4 24.4 -25.9 53.3 10 Foreign 97.8 62.7 97.6 72.1 53.2 132.4 44.2 3.0 59.8 72.3 77.9 47.3 Agency and foreign borrowing not in line 1 11 Sponsored credit agencies and mortgage pools 154.1 171.8 119.8 151.0 167.4 124.8 156.4 171.7 184.0 139.2 174.6 168.0 12 Foreign 9.7 4.5 6.3 10.9 32.1 30.4 16.9 2.3 41.0 45.1 40.2 11.7 13 Total private domestic funds advanced 720.5 614.5 676.2 652.5 579.7 615.7 589.7 764.2 542.0 515.2 497.4 350.0 14 U.S. government securities 300.1 247.4 192.1 271.9 365.5 183.0 314.3 402.6 312.3 286.2 460.9 245.0 15 State and local obligations 22.7 49.3 49.8 30.4 18.5 34.1 19.1 12.4 24.5 28.0 9.0 7.1 16 Corporate and foreign bonds 89.7 66.9 91.3 66.1 80.2 65.6 70.6 68.4 97.5 46.7 108.3 69.8 17 Residential mortgages 115.9 120.2 161.3 96.5 30.4 105.1 45.5 124.1 12.8 26.1 -41.5 -2.9 18 Other mortgages and loans 212.0 155.2 201.4 176.6 60.5 186.9 91.5 134.9 64.1 97.7 -54.8 3.0 19 LESS: Federal Home Loan Bank advances 19.8 24.4 19.7 -11.0 -24.7 -41.0 -48.8 -22.0 -30.9 -30.5 -15.5 -27.9 20 Total credit market funds advanced by private financial institutions 730.0 528.4 562.3 511.1 421.6 353.9 561.9 449.2 257.8 419.4 560.2 149.4 By lending institutions 21 Commercial banking 198.1 135.4 156.3 177.3 120.1 183.7 184.3 188.1 126.1 102.7 63.2 119.3 22 Savings institutions 107.6 136.8 120.4 -90.9 -145.8 -135.8 -201.9 -56.6 -210.4 -168.6 -147.4 -154.2 23 Insurance and pension funds 160.1 179.7 198.7 177.9 201.0 136.1 205.1 160.8 226.8 228.3 188.2 112.6 24 Other finance 264.2 76.6 86.9 246.8 246.3 170.0 374.5 156.8 115.3 257.0 456.1 71.7 By sources of funds 25 Private domestic deposits and repurchase agreements ... 277.1 162.8 229.2 225.2 58.3 284.4 208.0 125.0 20.4 77.8 10.1 231.4 26 Credit market borrowing 131.0 128.4 127.8 54.5 35.6 -.9 30.9 19.7 -6.5 36.2 93.0 -52.9 27 Other sources 321.8 237.1 205.3 231.4 327.7 70.4 323.1 304.5 243.8 305.4 457.0 -29.1 28 Foreign funds 12.9 43.7 9.3 -9.9 35.7 30.4 -20.6 46.4 14.1 121.2 -38.9 38.6 29 Treasury balances 1.7 -5.8 7.3 -3.4 5.3 -19.9 5.0 13.1 -13.4 18.2 3.4 30.1 30 Insurance and pension reserves 119.9 135.4 177.6 140.5 170.6 82.6 193.9 137.9 211.9 162.2 170.4 33.9 31 Other, net 187.3 63.9 11.0 104.2 116.1 -22.7 144.7 107.1 31.2 3.8 322.1 -131.6 Private domestic nonfinancial investors 32 Direct lending in credit markets 121.5 214.6 241.7 195.9 193.7 260.8 58.7 334.7 277.8 132.0 30.2 147.7 33 U.S. government securities 27.0 86.0 129.0 134.3 144.0 188.7 65.8 185.6 170.4 159.9 59.8 121.1 34 State and local obligations -19.9 61.8 53.5 28.4 -.5 39.0 12.8 -.2 12.8 15.6 -30.0 -2.2 35 Corporate and foreign bonds 52.9 23.3 -9.4 .7 9.9 -4.7 14.6 54.8 29.0 -92.1 48.0 -24.6 36 Open market paper 9.9 15.8 36.4 5.4 18.4 21.4 -64.6 61.0 42.5 7.7 -37.7 16.6 37 Other loans and mortgages 51.7 27.6 32.2 27.1 21.9 16.4 30.1 33.5 23.0 40.9 -9.8 36.7 38 Deposits and currency 297.5 179.3 232.8 241.3 88.0 261.8 230.6 142.1 56.3 113.6 39.8 243.0 39 Currency 14.4 19.0 14.7 11.7 22.6 6.0 10.1 26.1 23.1 32.2 9.1 46.0 40 Checkable deposits 96.4 -.9 12.9 1.5 1.2 14.7 65.8 2.2 -19.4 15.1 7.0 27.9 41 Small time and savings accounts 120.6 76.0 122.4 100.5 52.5 163.1 109.1 110.7 18.2 59.7 21.4 103.2 42 Money market fund shares 43.2 28.9 20.2 85.2 61.8 116.7 65.6 72.2 4.7 110.9 59.3 128.5 43 Large time deposits -3.2 37.2 40.8 23.1 -42.7 -23.8 -13.4 -25.2 -5.5 -82.6 -57.5 13.9 44 Security repurchase agreements 20.2 21.6 32.9 14.9 -14.5 13.7 -19.2 -34.9 22.3 -25.2 -20.1 -42.2 45 Deposits in foreign countries 5.9 -2.5 -11.2 4.4 7.0 -28.6 12.4 -8.9 12.8 3.6 20.6 -34.4 46 Total of credit market instruments, deposits, and currency 419.0 393.9 474.5 437.2 281.7 522.7 289.3 476.8 334.1 245.6 70.0 390.7 MEMO 47 Public holdings as percent of total 33.1 36.0 27.5 27.2 38.8 30.8 32.0 27.0 45.6 46.3 38.2 62.6 48 Private financial intermediation (percent) 101.3 86.0 83.2 78.3 72.7 57.5 95.3 58.8 47.6 81.4 112.6 42.7 49 Total foreign funds 110.7 106.4 106.9 62.2 88.9 162.8 23.6 49.4 73.8 193.5 39.0 85.9 Corporate equities not included above 50 Total net issues 86.8 10.9 -124.2 -63.7 11.4 -61.0 14.9 -9.4 47.3 -15.9 23.6 101.3 51 Mutual fund shares 159.0 73.9 1.1 41.3 61.4 57.9 72.4 47.8 71.0 46.1 80.6 87.6 52 Other equities -72.2 -63.0 -125.3 -105.1 -49.9 -118.9 -57.6 -57.2 -23.6 -62.0 -56.9 13.7 53 Acquisitions by financial institutions 50.9 32.0 -2.9 17.2 21.4 6.1 76.9 41.1 72.8 -66.2 37.9 43.1 54 Other net purchases 35.9 -21.2 -121.4 -80.9 -10.0 -67.1 -62.1 -50.5 -25.5 50.3 -14.2 58.2 NOTES BY LINE NUMBER. 30. Excludes net investment of these reserves in corporate equities. 1. Line 1 of table 1.57. 31. Mainly retained earnings and net miscellaneous liabilities. 2. Sum of lines 3-6 or 7-10. 32. Line 13 less line 20 plus line 26. 6. Includes farm and commercial mortgages. 33-37. 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 37 includes mortgages. issues of federally related mortgage pool securities. 39. Mainly an offset to line 9. 13. Line 1 less line 2 plus line 11 and 12. Also line 20 less line 26 plus line 32. 46. Sum of lines 32 plus 38, or line 13 less line 27 plus lines 39 and 45. Also sum of lines 28 and 47 less lines 40 and 46. 47. Line 2 divided by line 1. 18. Includes farm and commercial mortgages. 48. Line 20 divided by line 13. 25. Line 38 less lines 39 and 45. 49. Sum of lines 10 and 28. 26. Excludes equity issues and investment company shares. Includes line 19. 50. 52. Includes issues by financial institutions. 28. 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 institutions in foreign banks. and Statistics, Board of Governors of the Federal Reserve System, Washington, Digitized for FRA29S. EDRem and deposits and note balances at commercial banks. D.C. 20551. 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 1991 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998866 11998877 1988 11998899 Q3 Q4 Qi Q2 Q3 Q4 Ql Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 7,646.3 8,343.9 9,096.0 9,805.2 9,605.1 9,805.2 10,075.7 10,234.4 10,393.9 10,560.2 10,634.2 By sector and instrument 2 U.S. government 1,815.4 1,960.3 2,117.8 2,269.4 2,206.1 2,269.4 2,360.9 2.401.7 2,470.2 2,568.9 2,624.7 3 Treasury securities 1,811.7 1,955.2 2,095.2 2,245.2 2,180.7 2,245.2 2,329.3 2.368.8 2,437.6 2,536.5 2,598.4 4 Agency issues and mortgages 3.6 5.2 22.6 24.2 25.4 24.2 31.6 32.9 32.6 32.4 26.4 By instrument 5 Private 5,831.0 6.383.6 6,978.2 7,535.8 7,399.0 7,535.8 7,714.8 7,832.6 7,923.7 7,991.3 8,009.5 6 Debt capital instruments 3.962.7 4,427.9 4,886.4 5,283.3 5,189.9 5,283.3 5,453.0 5,542.3 5.618.5 5,682.1 5,730.5 7 Tax-exempt obligations 679.1 728.4 790.8 821.2 816.4 821.2 822.2 827.2 837.4 839.7 839.6 8 Corporate bonds 669.4 748.8 851.7 925.4 903.5 925.4 937.1 958.1 970.0 990.4 1,011.7 9 Mortgages 2,614.2 2.950.7 3.243.8 3,536.6 3,470.0 3,536.6 3,693.6 3,757.0 3,811.1 3,852.0 3,879.2 10 Home mortgages 1.720.8 1,943.1 2.173.9 2,404.3 2,347.6 2,404.3 2,554.5 2,619.5 2.669.6 2,709.0 2,740.1 11 Multifamily residential 246.2 270.0 286.7 304.4 301.2 304.4 304.8 300.6 301.6 302.6 302.1 12 Commercial 551.4 648.7 696.4 742.6 734.9 742.6 750.5 752.9 755.6 756.5 753.4 13 Farm 95.8 88.9 86.8 85.3 86.3 85.3 83.9 84.0 84.3 83.9 83.7 14 Other debt instruments 1,868.2 1,955.7 2,091.9 2,252.6 2,209.1 2,252.6 2,261.8 2,290.3 2,305.3 2,309.2 2,279.0 15 Consumer credit 659.8 693.2 743.5 790.6 771.0 790.6 782.3 789.4 798.7 808.9 782.3 16 Bank loans n.e.c 666.0 673.3 713.1 763.0 750.7 763.0 749.7 755.7 749.8 751.2 748.9 17 Open market paper 62.9 73.8 85.7 107.1 113.3 107.1 126.0 128.7 131.8 116.9 119.9 18 Other 479.6 515.3 549.6 591.9 574.1 591.9 603.8 616.6 625.0 632.3 628.0 By borrowing sector 19 State and local government 510.1 558.9 604.5 634.1 629.9 634.1 634.3 637.6 647.8 648.7 648.6 20 Household 2,596.1 2,879.1 3,191.5 3.501.8 3.411.4 3.501.8 3,650.7 3.725.8 3,788.2 3,846.4 3,860.0 21 Nonfinancial business 2,724.8 2,945.6 3,182.2 3,400.0 3,357.6 3,400.0 3,429.9 3,469.3 3,487.7 3,496.1 3,500.8 22 Farm 156.6 145.5 137.6 139.2 139.2 139.2 137.3 138.7 141.6 140.5 139.4 23 Nonfarm noncorporate 997.6 1,075.4 1,145.1 1.195.9 1,183.0 1.195.9 1,208.3 1,208.7 1,208.7 1,207.0 1.203.7 24 Corporate 1,570.6 1,724.6 1,899.5 2,064.8 2.035.5 2,064.8 2,084.3 2.121.9 2,137.4 2,148.7 2.157.8 25 Foreign credit market debt held in United States 238.3 244.6 253.9 261.5 257.7 261.5 261.8 273.1 283.4 293.7 296.3 26 Bonds 74.9 82.3 89.2 94.5 94.2 94.5 103.3 108.4 108.9 116.1 118.9 27 Bank loans n.e.c 26.9 23.3 21.5 21.4 22.6 21.4 19.0 19.3 23.7 27.3 19.6 28 Open market paper 37.4 41.2 49.9 63.0 57.5 63.0 59.3 65.1 71.5 75.3 87.0 29 U.S. government loans 99.1 97.7 93.2 82.6 83.4 82.6 80.3 80.3 79.4 75.0 70.7 30 Total credit market debt owed by nonfinancial sectors, domestic and foreign 7,884.7 8,588.5 9,349.9 10,066.8 9,862.8 10,066.8 10,337.5 10,507.5 10,677.3 10,853.8 10,930.5 Financial sectors 31 Total credit market debt owed by financial sectors 1,529.8 1,836.8 2,084.4 2,322.4 2,263.8 2,322.4 2,358.4 2,406.7 2,448.8 2,527.7 2,543.2 By instrument 32 U.S. government related 810.3 978.6 1,098.4 1,249.3 1,203.6 1,249.3 1,288.2 1,330.1 1,367.9 1,418.4 1,455.3 33 Sponsored credit agency securities 273.0 303.2 348.1 373.3 370.4 373.3 378.1 381.0 384.4 393.6 396.9 34 Mortgage pool securities 531.6 670.4 745.3 871.0 828.2 871.0 905.2 944.2 978.5 1,019.9 1,053.5 35 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 36 Private 719.5 858.2 986.1 1,073.0 1,060.2 1,073.0 1,070.2 1,076.5 1,080.9 1,109.3 1,087.9 37 Corporate bonds 287.4 366.3 418.0 482.7 472.7 482.7 491.7 509.4 514.4 533.6 542.5 38 Mortgages 2.7 3.1 3.4 3.4 3.5 3.4 3.2 3.5 4.1 4.2 4.5 39 Bank loans n.e.c 36.1 32.8 34.2 36.0 34.1 36.0 33.2 34.8 34.9 36.7 34.8 40 Open market paper 284.6 322.9 377.7 409.1 398.8 409.1 409.1 402.5 409.6 417.7 399.2 41 Loans from Federal Home Loan Banks 108.6 133.1 152.8 141.8 151.1 141.8 132.9 126.3 117.9 117.1 107.0 By borrowing sector 42 Sponsored credit agencies 278.7 308.2 353.1 378.3 375.4 378.3 383.0 385.9 389.4 398.5 401.8 43 Mortgage pools 531.6 670.4 745.3 871.0 828.2 871.0 905.2 944.2 978.5 1,019.9 1,053.5 44 Private financial sectors 719.5 858.2 986.1 1,073.0 1,060.2 1,073.0 1,070.2 1,076.5 1,080.9 1,109.3 1,087.9 45 Commercial banks 75.6 81.8 78.8 77.4 77.0 77.4 73.4 73.3 70.7 76.3 68.1 46 Bank affiliates 116.8 131.1 136.2 142.5 144.0 142.5 142.0 134.3 122.9 114.4 109.2 47 Savings and loan associations 119.8 139.4 159.3 145.2 155.7 145.2 137.1 125.6 116.2 114.0 102.9 48 Mutual savings banks 8.6 16.7 18.6 17.2 17.5 17.2 15.4 16.7 16.2 16.7 16.4 49 Finance companies 328.1 378.8 446.1 496.2 481.2 496.2 499.1 509.8 530.9 552.1 547.2 50 Real estate investment trusts (REITs) 6.5 7.3 11.4 10.1 10.0 10.1 10.1 9.8 10.2 10.6 10.9 51 Securitized credit obligations issuers (SCO) 64.0 103.1 135.7 184.4 174.9 184.4 193.1 206.9 213.8 225.2 233.2 All sectors 52 Total credit market debt 9,414.4 10,425.3 11,434.3 12,389.1 12,126.6 12,389.1 12,695.9 12,914.1 13,126.1 13,381.5 13,473.7 53 U.S. government securities . 2,620.0 2,933.9 3.211.1 3,513.7 3,404.7 3,513.7 3,644.1 3,726.9 3.833.1 3,982.3 4.075.0 54 State and local obligations .. 679.1 728.4 790.8 821.2 816.4 821.2 822.2 827.2 837.4 839.7 839.6 55 Corporate and foreign bonds 1,031.7 1,197.4 1,358.9 1,502.6 1.470.5 1,502.6 1,532.1 1,575.9 1.593.2 1,640.0 1.673.1 56 Mortgages 2,617.0 2,953.8 3.247.2 3,540.1 3.473.6 3,540.1 3,696.9 3,760.5 3,815.2 3,856.2 3,883.7 57 Consumer credit 659.8 693.2 743.5 790.6 771.0 790.6 782.3 789.4 798.7 808.9 782.3 58 Bank loans n.e.c 729.0 729.5 768.9 820.3 807.4 820.3 802.0 809.8 808.4 815.1 803.3 59 Open market paper 384.9 437.9 513.4 579.2 569.6 579.2 594.5 596.3 612.9 609.9 606.1 60 Other loans 693.1 751.1 800.5 821.4 813.5 821.4 821.9 828.2 827.2 829.3 810.6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • September 1991 1.60 SUMMARY OF CREDIT MARKET CLAIMS, BY HOLDER Billions of dollars, except as noted; period-end levels. 1989 1990 1991 Transaction category, or sector 11998866 11998877 1*88 11998899 Q3 Q4 Q1 Q2 Q3 Q4 Q1 1 Total funds advanced in credit markets to domestic nonfinancial sectors 7,646.3 8,343.9 9,096.0 9,805.2 9,605.1 9,805.2 10,075.7 10,234.4 10,393.9 10,560.2 10,634.2 2 Total held by federal agencies and foreign sector .. 1,779.4 2,006.6 2,199.7 2,379.3 2,317.4 2,379.3 2,416.0 2,495.6 2,576.8 2,638.8 2,698.6 By instrument 3 U.S. government securities 509.8 570.9 651.5 682.1 668.6 682.1 679.0 707.3 738.9 756.5 781.1 4 Residential mortgages 678.5 814.1 900.4 1,038.4 991.1 1,038.4 1,077.7 1,126.5 1,171.8 1,221.0 1,262.4 5 Federal Home Loan Bank advances to thrifts 108.6 133.1 152.8 141.8 151.1 141.8 132.9 126.3 117.9 117.1 107.0 6 Other loans and securities 482.4 488.6 495.1 517.0 506.6 517.0 526.5 535.4 548.2 544.1 548.1 By type of lender 7 U.S. government 255.3 240.0 217.6 207.1 207.8 207.1 217.3 227.0 242.1 240.0 248.6 8 Sponsored credit agencies and mortgage pools ... 835.9 1,001.0 1,113.0 1,238.2 1,193.5 1,238.2 1,274.0 1,315.0 1,360.5 1,403.4 1,438.2 9 Monetary authority 205.5 230.1 240.6 233.3 227.6 233.3 224.4 237.8 240.8 241.4 247.3 10 Foreign 482.8 535.5 628.5 700.6 688.5 700.6 700.2 715.8 733.5 753.9 764.4 Agency and foreign debt not in line 1 11 Sponsored credit agencies and mortgage pools ... 810.3 978.6 1,098.4 1,249.3 1,203.6 1,249.3 1,288.2 1,330.1 1,367.9 1,418.4 1,455.3 12 Foreign 238.3 244.6 253.9 261.5 257.7 261.5 261.8 273.1 283.4 293.7 2%. 3 13 Total private domestic holdings 6,915.6 7,560.4 8,248.5 8,936.8 8,749.0 8,936.8 9,209.8 9,342.0 9,468.5 9,633.5 9,687.2 14 U.S. government securities 2,110.1 2,363.0 2,559.7 2,831.6 2,736.1 2,831.6 2,965.1 3,019.5 3,094.2 3,225.8 3,293.9 15 State and local obligations 679.1 728.4 790.8 821.2 816.4 821.2 822.2 827.2 837.4 839.7 839.6 16 Corporate and foreign bonds 606.6 674.3 765.6 831.6 814.5 831.6 850.9 873.4 885.6 912.3 931.7 17 Residential mortgages 1,288.5 1,399.0 1,560.2 1,670.4 1,657.7 1,670.4 1,781.6 1,793.7 1,799.5 1,790.5 1,779.8 18 Other mortgages and loans 2,339.8 2,528.7 2,724.9 2,923.8 2,875.3 2,923.8 2,922.8 2,954.5 2,969.7 2,982.3 2,949.2 19 LESS: Federal Home Loan Bank advances 108.6 133.1 152.8 141.8 151.1 141.8 132.9 126.3 117.9 117.1 107.0 20 Total credit market claims held by private financial institutions 6,018.0 6,564.5 7,128.6 7,662.7 7,507.8 7,662.7 7,853.1 7,912.3 7,999.3 8,151.7 8,178.6 By holding institutions 21 Commercial banking 2,187.6 2.323.0 2,479.3 2.656.6 2,599.6 2.656.6 2.680.4 2.720.7 2.750.6 2,776.6 2,783.0 22 Savings institutions 1,297.9 1,445.5 1.567.7 1.480.7 1,530.3 1.480.7 1,461.3 1,409.5 1,371.2 1,335.0 1,291.0 23 Insurance and pension funds 1,525.4 1.705.1 1.903.8 2,081.6 2,031.6 2,081.6 2.150.5 2,193.4 2,236.8 2,282.6 2,317.0 24 Other finance 1,007.1 1,091.0 1.177.9 1.443.8 1,346.2 1.443.8 1,561.0 1.588.8 1.640.7 1,757.5 1,787.6 By sources of funds 25 Private domestic deposits and repurchase agreements 3,199.0 3,354.2 3,599.1 3,824.3 3,742.5 3,824.3 3,849.6 3.836.4 3,848.2 3,882.5 3,935.0 26 Credit market debt 719.5 858.2 986.1 1,073.0 1,060.2 1,073.0 1,070.2 1.076.5 1,080.9 1.109.3 1,087.9 27 Other sources 2,099.5 2,352.1 2,543.5 2,765.5 2,705.1 2,765.5 2,933.4 2,999.4 3,070.2 3,159.9 3,155.6 28 Foreign funds 18.6 62.3 71.5 61.6 55.0 61.6 63.4 66.4 94.0 97.3 95.6 29 Treasury balances 27.5 21.6 29.0 25.6 30.3 25.6 16.7 32.1 36.6 30.9 26.3 30 Insurance and pension reserves 1,398.5 1,527.8 1,692.5 1,826.0 1,785.7 1,826.0 1,859.8 1,904.2 1,920.5 1.960.4 1,997.5 31 Other, net 655.0 740.3 750.5 852.3 834.0 852.3 993.5 996.8 1,019.1 1,071.2 1,036.2 Private domestic nonfinancial investors 32 Credit market claims 1,617.0 1,854.1 2,106.0 2,347.1 2,301.5 2,347.1 2,426.8 2,506.2 2,550.1 2.591.1 2.596.5 33 U.S. government securities 848.7 936.7 1,072.2 1,206.4 1,171.3 1,206.4 1,258.5 1,287.8 1,329.3 1.363.2 1.388.6 34 State and local obligations 212.6 274.4 340.9 369.3 363.1 369.3 362.3 368.3 372.1 368.8 360.6 35 Corporate and foreign bonds 90.5 114.0 100.4 130.5 131.1 130.5 157.4 175.6 168.8 176.1 170.3 36 Open market paper 145.1 178.5 218.0 228.7 239.3 228.7 234.0 251.9 251.0 247.1 240.7 37 Other loans and mortgages 320.1 350.4 374.4 412.1 396.8 412.1 414.5 422.6 428.9 435.9 436.2 38 Deposits and currency 3,410.1 3,583.9 3,832.3 4.073.6 3,979.0 4.073.6 4,095.9 4,096.6 4,112.2 4,161.5 4,209.3 39 Currency 186.3 205.4 220.1 231.8 224.4 231.8 234.4 242.7 247.2 254.4 261.9 40 Checkable deposits 516.6 515.4 527.2 528.7 486.1 528.7 504.5 510.1 500.2 529.9 511.8 41 Small time and savings accounts 1,948.3 2,017.1 2,156.2 2.256.7 2,224.4 2.256.7 2,286.3 2,286.5 2,295.7 2,306.3 2,336.6 42 Money market fund shares 268.9 297.8 318.0 403.3 391.0 403.3 436.7 426.3 454.5 465.0 513.3 43 Large time deposits 336.7 373.9 414.7 437.8 440.0 437.8 433.7 421.0 411.3 398.0 401.4 44 Security repurchase agreements 128.5 150.1 182.9 197.9 200.9 197.9 188.3 192.5 186.6 183.4 172.0 45 Deposits in foreign countries 24.8 24.3 13.1 17.6 12.1 17.6 11.9 17.5 16.8 24.6 12.3 46 Total of credit market instruments, deposits, and currency 5,027.2 5,438.0 5,938.2 6,420.7 6,280.5 6,420.7 6,522.7 6,602.8 6,662.2 6,752.6 6,805.8 MEMO 47 Public holdings as percent of total 22.6 23.4 23.5 23.6 23.5 23.6 23.4 23.8 24.1 24.3 24.7 48 Private financial intermediation (percent) 87.0 86.8 86.4 85.7 85.8 85.7 85.3 84.7 84.5 84.6 84.4 49 Total foreign funds 501.3 597.8 700.1 762.3 743.5 762.3 763.6 782.2 827.5 851.2 860.0 Corporate equities not included above 50 Total market value 3,360.6 3,325.0 3,619.8 4,378.9 4.395.4 4,378.9 4,170.4 4,336.9 3,770.7 3,987.7 4,550.2 51 Mutual fund shares 413.5 460.1 478.3 555.1 543.9 555.1 550.3 587.9 547.3 579.9 643.0 52 Other equities 2,947.1 2,864.9 3.141.6 3,823.8 3.851.5 3,823.8 3,620.1 3.749.0 3.223.4 3,407.9 3,907.2 53 Holdings by financial institutions 974.6 1,039.5 1,176.1 1,492.3 1,478.5 1,492.3 1,434.8 1.542.1 1,297.2 1,406.6 1,636.9 54 Other holdings 2,385.9 2,285.5 2.443.7 2,886.6 2,917.0 2,886.6 2,735.6 2,794.8 2.473.5 2,581.1 2,913.4 NOTES BV LINE NUMBER. 30. Excludes net investment of these reserves in corporate equities. 1. Line 1 of table 1.59. 31. Mainly retained earnings and net miscellaneous liabilities. 2. Sum of lines 3-6 or 8-11. 32. Line 13 less line 20 plus line 26. 6. Includes farm and commercial mortgages. 33-37. Lines 14-18 less amounts acquired by private finance plus amounts 11. Credit market debt of federally sponsored agencies, and net issues of borrowed by private finance. Line 37 includes mortgages. federally related mortgage pool securities. 39. Mainly an offset to line 9. 13. Line 1 less line 2 plus line 11 and 12. Also line 20 less line 26 plus line 32. 46. Sum of lines 32 plus 38, or line 13 less line 27 plus 39 and 45. Also sum of lines 27 and 46 less lines 39 and 45. 47. Line 2 divided by line 1. 18. Includes farm and commercial mortgages. 48. Line 20 divided by line 13. 25. Line 38 less lines 39 and 45. 49. Sum of lines 10 and 28. 26. Excludes equity issues and investment company shares. Includes line 19. 50-52. Includes issues by financial institutions. 28. 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 29. 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 Monthly and quarterly data are seasonally adjusted. Exceptions noted. 1991 Measure 1989 1990 Oct. Nov. Jan. Feb. Mar. Apr/ May' 1 Industrial production1 (1987=100) 105.4 108.1 109.2 109.9 107.2 105.7 105.5 106.2 106.9 Market groupings (1987=100) 4 2 3 5 6 7 P M ro a F In t d i e n t C E u r e a i c q o r a l m t u , n l s s i s , t e p o u d t m t m o i a a t e l e a t n e r l t goods 1 1 1 1 1 1 0 0 0 0 0 0 4 5 4 5 7 5 . . . . . . 4 3 0 6 6 6 1 1 1 1 1 1 0 0 0 0 0 1 6 8 6 7 9 2 . . . . . . 6 7 4 1 8 3 1 1 1 1 1 1 1 1 0 0 0 1 0 0 7 7 7 5 . . . . . . 1 9 7 3 8 5 1 1 1 1 1 1 0 1 1 0 1 0 8 1 2 8 7 7 . . . . . . 6 0 3 3 0 0 1 1 1 1 1 1 0 0 0 0 1 1 6 6 9 6 0 5 . . . . . . 2 8 3 5 2 1 1 1 1 1 1 1 0 0 0 0 0 1 8 9 5 5 6 3 . . . . . . 4 2 7 3 0 6 1 1 1 1 1 1 0 0 0 0 0 1 9 7 4 5 3 3 . . . . . . 1 8 8 6 8 6 1 1 1 1 1 1 0 0 0 0 0 1 2 4 6 3 8 2 . . . . . . 6 7 9 9 3 9 1 1 1 1 1 1 0 0 1 0 0 0 8 2 2 6 4 1 . . . . . . 1 6 5 5 7 3 ' ' ' ' 1 1 1 1 1 1 0 0 0 0 0 1 5 6 8 1 3 2 . . . . . . 5 9 7 3 3 9 1 1 1 1 1 1 0 0 0 0 0 1 2 7 6 9 4 2 . . . . . . 0 4 4 2 2 7 1 1 1 1 1 1 0 0 0 0 0 1 8 7 9 3 5 2 . . . . . . 0 0 6 1 2 9 8 I M nd a u n s u t f r a y c t g u r r o in u g p i ( n 1 g 9 s 8 7=100) 105.8 108.9 109.9 110.7 108.9 107.5 107.0 106.1 105.2 105.9 106.4 107.1 Capacity utilization (percent)2 83.9 83.9 82.3 82.2 80.7 79.4 78.9 78.0 77.2 77.5 77.7 78.1 9 Manufacturing 166.7 172.9 154. r 147.0 146.0 130.0 132.0 133.0 128.0 145.0 138.0 133.0 10 Construction contracts (1982 = 100)3 11 Nonagricultural employment, total4 1 1 2 0 8 3 . . 0 4 1 1 3 0 1 4 . . 5 0 1 1 3 0 3 2 . . 8 7 1 1 3 0 3 1 . . 4 5 1 1 3 0 3 0 . . 1 6 1 1 3 0 2 0 . . 9 1 1 9 3 9 2 . . 3 7 1 9 3 8 2 . . 7 4 1 9 3 8 2 . . 1 1 1 9 3 7 1 . . 7 9 1 9 3 7 2 . . 9 0 1 9 3 7 1 . . 6 9 1 1 1 1 1 1 1 1 2 3 4 5 7 6 8 9 Pe G W D S rs e o i o M M a M s r o n v g p d a a a i a e o c s n n l n s s e - a u u u i p - a n b f f f p n r a a a c l o r d e c c c o o d t t t m d p u u u u s u a e r c r r e i i c i l r i , n n n a n s i n r g g g o t g y o g , , n , t a t p a d t o l o l r i t o s t i a a b n d l l u c u o r c s m t e io m e n 3 e n w ts o rker — 2 2 2 2 1 1 9 9 4 5 2 5 3 9 8 3 4 2 8 3 8 6 . . . . . . . . 3 5 6 2 2 2 3 5 2 2 2 2 2 1 9 9 0 7 5 4 7 4 8 3 3 0 8 1 2 2 . . . . . . . . 7 8 1 1 9 7 7 9 2 2 2 2 2 1 9 9 8 5 7 0 8 4 6 1 6 2 1 5 9 6 . . . . . . . . 8 5 1 2 0 0 0 8 2 2 2 2 2 1 9 9 0 5 8 7 9 4 6 1 6 3 8 4 2 6 . . . . . . . . 4 0 5 7 0 7 8 1 2 2 2 2 2 1 9 8 9 0 5 7 9 4 5 9 0 2 4 4 3 6 . . . . . . . . 5 9 1 9 7 8 4 3 2 2 2 2 2 1 9 8 0 9 7 4 9 4 5 9 5 1 7 9 5 6 . . . . . . . . 2 6 4 6 1 4 7 1 2 2 2 2 2 1 9 8 4 9 0 9 7 4 4 9 6 3 6 2 0 5 . . . . . . . . 8 1 2 9 6 5 6 8 ' ' ' 2 2 2 2 2 1 9 8 5 9 0 9 4 1 4 8 1 4 0 6 1 5 . . . . . . . 1 3 5 9 4 6 4 . ' 9 T 2 2 2 2 2 1 9 8 0 5 9 9 7 4 3 7 0 2 2 5 6 6 . . . . . . . . 7 2 9 3 3 6 5 2 ' ' ' ' 2 2 2 2 2 1 0 5 9 8 9 7 9 4 1 1 2 7 6 3 5 6 . . . . . . . . 2 4 8 7 7 8 4 1 2 2 2 2 2 1 0 9 5 9 8 9 7 4 2 4 3 3 7 7 8 6 . . . . . . . . 6 4 4 3 3 6 9 3 2 1 n n n n 5 9 8 4 . . . . 3 7 3 6 a a a a . . . . . . . . 0 7 3 3 20 Retail sales6 2 2 1 2 P P C r r o o i n c d s e u u s c 7 m er e r f i ( n 1 i 9 sh 82 ed -8 g 4 o = od s 1 0 ( 0 19 ) 82 = 100) 1 10 1 8 8 . . 0 3 1 1 1 2 3 4 . . 6 0 1 11 3 9 0 . . 2 7 1 1 3 2 3 2 . . 5 3 1 12 3 2 3 . . 9 8 1 12 3 2 3 . . 0 8 1 12 3 2 4 . . 3 6 1 1 3 2 4 1 . . 8 4 ' 1 1 2 3 0 5 . . 6 0 1 1 3 2 5 0 . . 2 9 1 12 3 1 5 . . 7 6 1 1 3 2 6 1 . . 0 9 1. A major revision of the industrial production index and the capacity 6. Based on U.S. Bureau of Census data published in Survey of Current utilization rates was released in April 1990. See "Industrial Production: 1989 Business. Developments and Historical Revision" in the Federal Reserve Bulletin, vol. 76 7. Data without seasonal adjustment, as published in Monthly Labor Review. (April 1990), pp. 187-204. Seasonally adjusted data for changes in the price indexes may be obtained from 2. Ratios of indexes of production to indexes of capacity. Based on data from the Bureau of Labor Statistics, U.S. Department of Labor. the Federal Reserve, DRI McGraw-Hill Economics Department, U.S. Department of Commerce, and other sources. NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5,and 6, 3. Index of dollar value of total construction contracts, including residential, and indexes for series mentioned in notes 3 and 7 may also be found in the Survey nonresidential and heavy engineering, from McGraw-Hill Information Systems of Current Business. Company, F.W. Dodge Division. Figures for industrial production for the latest month are preliminary and the 4. Based on data in Employment and Earnings (U.S. Department of Labor). earlier three months have been revised. See "Recent Developments in Industrial Series covers employees only, excluding personnel in the Armed Forces. Capacity and Utilization," Federal Reserve Bulletin, vol. 76 (June 1990), pp. 5. Based on data in Survey of Current Business (U.S. Department of Com- 411-35. merce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • September 1991 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data are seasonally adjusted; exceptions noted. 1990 1991 CCaatteeggoorryy 11998888 11998899 11999900 Nov. Dec. Jan. Feb. Mar. Apr. May June HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 186,837 188,601 190,216 190,854 190,999 191,116 191,248 191,384 191,525 191,664 191,805 2 Labor force (including Armed Forces)1 123,893 126,077 126,954 126,880 127,307 126,777 127,209 127,467 127,817 127,374 127,766 3 Civilian labor force 121,669 123,869 124,787 124,723 125,174 124,638 125,076 125,326 125,672 125,232 125,629 4 Nonagricultural industries 111,800 114,142 114,728 114,201 114,321 113,759 113,6% 113,656 114,243 113,319 113,576 5 Agriculture 3,169 3,199 3,186 3,185 3,253 3,163 3,222 3,098 3,156 3,272 3,308 Unemployment 6 Number 6,701 6,528 6,874 7,337 7,600 7,715 8,158 8,572 8,274 8,640 8,745 7 Rate (percent of civilian labor force) 5.5 5.3 5.5 5.9 6.1 6.2 6.5 6.8 6.6 6.9 7.0 8 Not in labor force 62,944 62,524 63,262 63,974 63,692 64,339 64,039 63,917 63,708 64,290 64,039 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 105,536 108,413 110,330 109,761 109,621 109,418 109,160 108,902 108,736r 108,855' 108,805 10 Manufacturing 19,350 19,426 19,064 18,807 18,749 18,671 18,532 18,443 18,396' 18,418' 18,359 It Mining 713 700 735 712 715 713 715 714 710' 705 702 12 Contract construction 5,110 5,200 5,205 4,962 4,911 4,797 4,792 4,720 4,688' 4,710' 4,701 13 Transportation and public utilities 5,527 5,648 5,838 5,852 5,867 5,866 5,834 5,824 5,814' 5,814' 5,814 14 Trade 25,132 25,851 26,151 25,808 25,745 25,680 25,583 25,483 25,410' 25,42c 25,391 15 Finance 6,649 6,724 6,833 6,740 6,733 6,736 6,732 6,735 6,718 6,709' 6,701 16 Service 25,669 27,096 28,209 28,525 28,548 28,590 28,583 28,576 28,576' 28,637' 28,706 17 Government 17,386 17,769 18,295 18,355 18,353 18,365 18,389 18,407 18,424' 18,442' 18,431 1. Persons sixteen 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 twelfth day; annual data received pay for, the pay period that includes the twelfth 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 Q3 Q4 Qlr Q2 Q3 Q4 Ql Q2 Q3 Q4 Qlr Q2 Output (1987 = 100) Capacity (percent of 1987 output) Utilization rate (percent) 1 Total industry 110.5 108.5 105.8 106.2 131.9 132.8 133.6 134.5 83.7 81.7 79.2 79.0 2 Manufacturing 111.1 109.0 106.1 106.5 134.0 135.0 136.0 136.9 82.9 80.8 78.0 77.8 3 Primary processing 107.6 104.7 100.6 100.7 125.5 126.1 126.8 127.5 85.8 83.0 79.4 79.0 4 Advanced processing 112.8 111.0 108.6 109.2 138.0 139.1 140.2 141.3 81.7 79.8 77.5 77.3 5 Durable 113.6 110.0 106.1 106.7 138.0 139.0 139.9 140.9 82.3 79.1 75.8 75.7 6 Lumber and products 101.5 95.7 92.3 93.6 124.0 124.6 125.0 125.2 81.8 76.8 73.9 74.7 7 Primary metals 112.2 107.3 97.9 96.4 127.7 127.9 128.2 128.6 87.9 83.9 76.4 75.0 8 Iron and steel 114.3 110.0 96.3 93.9 132.5 132.7 133.0 133.5 86.3 82.9 72.4 70.3 9 Nonferrous 109.2 103.4 100.2 100.0 120.9 121.1 121.3 121.5 90.3 85.3 82.6 82.3 10 Nonelectrical machinery 128.5 126.4 124.4 123.4 154.7 156.3 157.9 159.5 83.1 80.8 78.8 77.4 11 Electrical machinery 112.4 109.9 108.1 110.2 140.0 141.4 142.7 144.0 80.3 77.8 75.8 76.6 12 Motor vehicles and parts 103.7 89.4 80.8 89.5 132.7 132.9 133.4 134.2 78.2 67.2 60.5 66.7 13 Aerospace and miscellaneous transportation equipment . 114.5 113.3 109.9 106.6 135.2 136.1 137.0 137.9 84.7 8833..33 80.2 7777..33 14 Nondurable 108.1 107.8 106.1 106.2 128.9 129.9 130.9 131.9 83.8 83.0 81.0 80.5 15 Textile mill products 101.3 98.2 94.6 99.0 116.6 117.0 117.3 117.7 86.9 84.0 80.6 84.1 16 Paper and products 107.2 105.8 102.6 101.7 115.1 115.7 116.4 117.1 93.2 91.4 88.2 86.8 17 Chemicals and products 110.8 110.2 109.1 109.1 135.9 137.1 138.4 139.7 81.5 80.4 78.8 78.1 18 Plastics materials 117.2 118.1 113.2 111.7 130.6 132.9 135.7 139.2 89.7 88.9 83.4 80.3 19 Petroleum products 110.0 107.4 107.3 107.3 121.3 121.4 121.4 121.4 90.7 88.5 88.4 88.4 70 103.4 103.1 102.0 101.1 114.5 114.0 113.8 114.3 90.3 90.4 89.6 88.4 ?1 Utilities 110.5 108.3 106.2 108.2 127.1 127.6 128.1 128.4 86.9 84.8 82.9 84.3 22 Electric 112.9 111.2 109.3 113.1 122.6 123.2 123.8 124.3 92.1 90.2 88.3 91.0 Previou s cycle Latest cycle 1990 1991 High Low High Low June Nov. Dec. Jan. Feb. Mar/ ApK Mayr Junep Capacity utilization rate (percent) 23 Total industry 89.2 72.6 87.3 71.8 83.8 81.6 80.6 80.0 79.1 78.4 78.6 79.0 79.3 24 Manufacturing 88.9 70.8 87.3 70.0 83.1 80.7 79.4 78.9 78.0 77.2 77.5 77.7 78.1 25 Primary processing 92.2 68.9 89.7 66.8 85.6 83.2 81.5 80.6 79.5 77.9 78.3 78.8 79.8 26 Advanced processing 87.5 72.0 86.3 71.4 82.0 79.6 78.5 78.2 77.4 76.8 77.2 77.2 77.4 77 Durable 88.8 68.5 86.9 65.0 82.5 79.1 77.2 76.8 75.8 74.9 75.4 75.6 76.1 78 Lumber and products 90.1 62.2 87.6 60.9 82.5 76.6 74.9 75.4 73.2 72.9 74.0 74.3 75.9 79 Primary metals 100.6 66.2 102.4 46.8 85.9 85.3 81.4 77.8 77.6 73.8 73.6 75.1 76.3 30 Iron and steel 105.8 66.6 110.4 38.3 83.4 84.8 80.8 74.5 73.7 69.1 68.7 70.4 71.7 31 Nonferrous 92.9 61.3 90.5 62.2 89.7 85.9 82.3 83.0 83.7 81.1 81.2 82.3 83.5 32 Nonelectrical machinery 96.4 74.5 92.1 64.9 83.0 80.8 79.5 79.8 78.8 77.7 77.7 77.3 77.1 33 Electrical machinery 87.8 63.8 89.4 71.1 81.1 78.1 76.6 75.7 75.8 75.9 76.4 76.6 76.7 34 Motor vehicles and parts 93.4 51.1 93.0 44.5 81.5 64.5 59.0 62.3 59.5 59.7 64.3 66.9 68.9 35 Aerospace and miscellaneous transportation equipment. 77.0 66.6 81.1 66.9 84.5 83.1 82.8 81.1 80.3 7799..33 7788..11 7777..00 7766..99 36 Nondurable 87.9 71.8 87.0 76.9 83.9 82.9 82.4 81.8 81.0 80.3 80.4 80.5 80.7 37 Textile mill products 92.0 60.4 91.7 73.8 89.0 83.3 82.1 80.2 80.4 81.3 82.7 84.4 85.2 38 Paper and products 96.9 69.0 94.2 82.0 90.9 90.9 91.0 89.8 87.9 86.8 86.7 86.3 87.5 39 Chemicals and products 87.9 69.9 85.1 70.1 81.7 80.2 79.9 79.8 78.8 77.9 78.0 77.9 78.3 40 Plastics materials 102.0 50.6 90.9 63.4 90.0 90.2 86.5 86.2 85.0 79.0 80.5 80.6 79.7 41 Petroleum products 96.7 81.1 89.5 68.2 87.8 88.9 87.0 86.2 89.6 89.4 87.1 88.2 89.8 47 94.4 88.4 96.6 80.6 89.0 90.6 90.8 89.5 90.4 89.0 88.3 87.9 89.1 43 Utilities 95.6 82.5 88.3 76.2 86.6 83.8 85.1 84.1 81.6 83.0 82.3 85.5 84.9 44 Electric 99.0 82.7 88.3 78.7 92.6 88.9 90.6 89.3 87.0 88.6 88.5 92.6 91.9 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 • September 1991 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data are seasonally adjusted 1987 1990 1991 pro- 1990 por- avg. tion June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar/ Apr/ May' Junep Index (1987 = 100) MAJOR MARKET 1 Total index 100.0 109.2 110.1 110.4 110.5 110.6 109.9 108.3 107.2 106.6 105.7 105.0 105.5 106.2 106.9 7 Products 60.8 110.1 110.9 110.9 110.9 111.4 111.0 109.3 108.4 107.8 106.9 106.5 106.9 107.4 108.0 Final products 46.0 110.9 111.7 111.7 111.9 112.6 112.3 110.2 109.2 109.1 108.3 108.1 108.7 109.2 109.6 4 Consumer goods, total 26.0 107.3 107.8 107.5 107.8 108.7 108.6 106.5 105.7 105.6 104.7 104.7 105.5 106.4 107.0 5 Durable consumer goods 5.6 106.2 112.1 108.3 107.4 110.4 106.9 99.4 96.0 97.6 95.2 95.9 99.2 100.8 102.9 6 Automotive products 2.5 102.3 112.2 106.7 104.6 111.8 107.1 93.5 86.7 90.6 88.1 88.9 94.2 96.9 98.9 7 Autos and trucks 1.5 97.4 112.9 104.8 101.5 113.0 107.5 84.2 74.6 79.6 74.7 76.7 85.0 89.2 92.5 8 Autos, consumer .9 92.2 103.8 98.0 97.2 111.5 104.6 80.7 77.2 83.2 78.6 76.3 78.3 81.9 83.8 9 Trucks, consumer .6 106.1 128.3 116.1 108.8 115.4 112.2 90.2 70.2 73.6 68.1 77.4 96.3 101.6 107.1 10 Auto parts and allied goods... 1.0 109.6 111.2 109.5 109.3 110.0 106.4 107.3 104.8 107.1 108.3 107.3 108.0 108.5 108.6 11 Other 3.1 109.4 112.0 109.5 109.6 109.3 106.8 104.1 103.4 103.2 100.7 101.4 103.1 103.8 106.0 12 Appliances, A/C, and TV .8 102.0 107.5 100.2 101.9 101.0 94.6 90.8 89.9 92.8 94.5 96.2 97.3 96.7 102.7 N Carpeting and furniture .9 104.9 107.8 106.0 104.9 106.0 103.8 99.2 100.9 100.3 92.0 93.9 97.0 97.1 98.4 14 Miscellaneous home goods ... 1.4 116.4 117.2 116.9 116.8 116.1 115.5 114.6 112.5 110.8 109.8 109.2 110.3 112.0 112.7 15 Nondurable consumer goods 20.4 107.6 106.6 107.3 107.9 108.2 109.1 108.5 108.4 107.8 107.3 107.1 107.2 108.0 108.2 16 Foods and tobacco 9.1 105.9 104.4 105.1 105.7 105.3 106.7 107.8 107.5 106.3 105.9 105.4 105.5 106.0 105.9 17 Clothing 2.6 95.7 95.7 95.6 94.6 95.3 94.2 91.7 92.1 90.6 90.8 90.4 90.6 92.2 93.0 18 Chemical products 3.5 113.3 112.8 112.4 114.3 115.1 115.9 113.5 113.5 114.7 114.8 114.2 114.7 114.6 115.4 19 Paper products 2.5 119.7 118.3 120.3 119.3 121.9 123.4 122.8 122.7 122.1 121.0 122.2 122.8 121.4 121.9 20 Energy 2.7 105.9 105.3 106.7 109.0 108.0 108.8 106.4 106.6 106.5 105.2 105.5 104.4 108.5 108.0 71 Fuels .7 102.9 102.6 104.6 106.0 105.6 104.0 101.1 98.1 99.8 103.4 104.3 101.4 103.3 104.1 22 Residential utilities 2.0 107.0 106.3 107.5 110.0 108.9 110.6 108.4 109.7 109.0 105.9 105.9 105.5 110.4 109.4 23 Equipment, total 20.0 115.5 116.8 117.2 117.2 117.8 117.0 115.1 113.6 113.6 112.9 112.5 112.9 112.7 112.9 24 Business equipment 13.9 123.1 124.4 125.0 125.4 126.4 125.4 122.9 121.2 121.6 120.6 120.3 121.4 121.7 121.9 25 Information processing and related .. 5.6 127.2 126.3 128.0 128.5 129.5 130.1 128.8 127.5 130.1 131.6 131.2 131.5 131.9 131.3 26 Office and computing 1.9 149.8 150.6 152.7 152.2 153.6 155.3 149.8 148.9 155.0 157.3 155.1 155.6 156.0 155.9 27 Industrial 4.0 115.3 116.0 117.2 117.9 117.4 115.4 115.3 112.3 111.5 109.1 109.5 109.6 108.8 108.9 28 Transit 2.5 129.9 137.4 135.5 135.4 140.5 137.5 126.3 123.4 124.0 120.3 120.4 124.4 126.2 128.3 29 Autos and trucks 1.2 96.8 112.2 103.1 101.5 111.0 106.5 83.9 75.3 79.8 75.0 76.7 84.4 87.9 90.8 30 Other 1.9 118.5 119.9 119.2 119.8 118.5 117.0 117.6 118.5 115.0 112.5 110.8 112.7 112.9 113.6 31 Defense and space equipment 5.4 97.3 97.6 97.8 97.7 97.3 97.3 96.2 95.8 94.4 94.5 93.9 92.5 91.6 91.3 32 Oil and gas well drilling .6 109.0 119.5 116.2 106.9 107.4 107.1 109.7 107.3 106.4 108.2 107.7 105.1 101.3 103.0 33 Manufactured homes .2 90.8 92.8 90.0 93.4 91.8 89.0 87.3 83.4 83.1 77.3 79.3 83.1 86.6 83.4 34 Intermediate products, total 14.7 107.7 108.3 108.4 107.9 107.4 107.0 106.2 106.0 103.8 102.6 101.3 101.3 102.0 103.1 35 Construction supplies 6.0 105.2 106.0 106.7 105.3 103.8 103.1 101.8 101.0 97.7 96.4 94.0 94.9 95.3 97.0 36 Business supplies 8.7 109.4 109.8 109.5 109.7 109.9 109.7 109.2 109.4 108.1 106.8 106.4 105.7 106.7 107.3 37 Materials, total 39.2 107.8 108.8 109.6 109.7 109.4 108.3 106.8 105.3 104.8 103.9 102.6 103.3 104.2 105.2 38 Durable goods materials 19.4 111.8 113.8 114.0 114.9 114.1 112.5 110.4 107.5 106.8 105.5 103.3 104.7 105.7 106.7 39 Durable consumer parts 4.2 104.0 108.5 108.1 110.4 109.0 106.0 98.5 91.1 94.2 90.4 87.5 91.9 95.1 97.6 40 Equipment parts 7.3 118.1 119.1 119.2 119.4 119.8 118.6 117.4 116.9 115.9 116.2 114.8 114.5 114.7 114.6 41 Other 7.9 110.2 111.8 112.4 113.1 111.6 110.4 110.2 107.4 105.2 103.8 101.0 102.5 103.1 104.3 47 Basic metal materials 2.8 111.9 113.6 115.5 116.3 115.8 112.0 112.7 109.6 104.6 104.8 101.2 101.3 102.4 104.5 43 Nondurable goods materials 9.0 106.0 106.1 107.8 106.8 106.9 106.5 105.6 104.9 104.9 103.6 102.8 103.1 103.5 104.5 44 Textile materials 1.2 96.7 99.4 100.2 97.8 98.1 97.9 95.1 91.4 89.1 91.5 92.7 94.6 96.4 97.2 45 Pulp and paper materials 1.9 106.4 104.8 109.0 106.9 109.4 108.6 107.2 108.5 106.0 104.1 102.4 102.0 101.1 103.8 46 Chemical materials .. •. 3.8 106.8 107.3 108.5 108.0 106.6 105.6 105.8 105.7 106.7 104.1 102.7 102.9 103.1 104.2 47 Other 2.1 109.5 108.8 109.9 109.3 110.1 110.8 109.4 107.6 109.3 108.8 108.8 109.2 110.1 109.8 48 Energy materials 10.9 102.1 102.1 103.3 103.0 103.0 102.3 101.6 102.0 101.1 101.1 101.3 101.0 102.2 103.1 49 Primary energy 7.2 101.3 101.2 103.3 102.1 101.0 100.7 101.4 101.9 101.3 102.1 101.5 100.5 101.4 102.9 50 Converted fuel materials 3.7 103.5 103.9 103.4 104.9 107.0 105.3 102.0 102.1 100.9 99.2 100.8 101.9 103.9 103.5 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.3 109.5 110.0 110.6 110.7 110.6 110.0 109.0 108.1 107.4 106.6 105.7 106.1 106.7 107.3 52 Total excluding motor vehicles and parts ... 95.3 109.8 110.2 110.8 110.9 110.7 110.2 109.4 108.6 107.8 107.0 106.2 106.4 107.0 107.6 53 Total excluding office and computing machines 97.5 108.2 109.1 109.3 109.4 109.5 108.8 107.3 106.1 105.4 104.4 103.7 104.2 104.9 105.7 54 Consumer goods excluding autos and trucks 24.5 107.9 107.5 107.6 108.2 108.4 108.7 107.9 107.6 107.2 106.5 106.4 106.7 107.5 107.9 55 Consumer goods excluding energy 23.3 107.5 108.1 107.6 107.7 108.7 108.6 106.5 105.6 105.5 104.7 104.6 105.6 106.2 106.9 56 Business equipment excluding autos and trucks 12.7 125.6 125.6 127.2 127.8 128.0 127.2 126.8 125.6 125.7 125.0 124.5 125.0 125.0 125.0 57 Business equipment excluding office and computing equipment 12.0 118.7 120.2 120.5 121.1 122.0 120.6 118.6 116.7 116.2 114.6 114.6 115.9 116.1 116.4 58 Materials excluding energy 28.4 110.0 111.4 112.1 112.3 111.8 110.6 108.9 106.6 106.2 104.9 103.1 104.2 105.0 106.0 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 Groups code por- avg. tion June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar/ Apr/ May' June" Index (1987 = 100) MAJOR INDUSTRY 1 Total index. 100.0 109.2 110.1 110.4 110.5 110.6 109.9 108.3 107.2 106.6 105.7 105.0 105.5 106.2 106.9 2 Manufacturing 84.4 109.9 110.8 111.1 111.1 111.2 110.7 108.9 107.5 107.0 106.1 105.2 105.9 106.4 107.1 3 Primary processing .. 26.7 106.3 107.0 107.9 108.0 106.9 106.2 104.9 102.9 102.0 100.8 99.0 99.6 100.5 101.9 4 Advanced processing 57.7 111.6 112.6 112.5 112.5 113.2 112.8 110.8 109.5 109.3 108.5 108.0 108.8 109.1 109.6 Durable 47.3 111.6 113.4 113.4 113.5 113.8 112.5 109.9 107.5 107.2 106.1 105.0 106.0 106.6 107.4 Lumber and products ... 24 2.0 101.6 102.0 103.6 100.5 100.3 98.2 95.5 93.5 94.2 91.5 91.2 92.5 93.0 95.1 Furniture and fixtures ... 25 1.4 105.9 108.7 108.0 106.7 106.9 104.4 102.3 102.0 99.0 94.9 95.4 98.3 98.6 99.8 Clay, glass, and stone products 32 2.5 105.7 106.1 106.0 106.6 104.5 104.4 103.8 100.7 97.2 98.9 94.4 94.8 94.5 96.1 Primary metals 33 3.3 108.4 109.5 110.3 114.6 111.6 108.6 109.1 104.2 99.7 99.5 94.7 94.5 96.5 98.2 Iron and steel 333311,,22 1.9 109.9 110.3 110.6 118.3 113.9 110.3 112.6 107.3 99.0 98.0 92.0 91.6 94.0 95.9 Raw steel .1 109.6 111.8 113.9 118.5 111.6 112.8 109.5 100.6 104.7 97.9 89.8 91.0 88.9 95.0 Nonferrous 333-6,9 1.4 106.2 108.3 109.8 109.4 108.4 106.2 104.1 99.8 100.6 101.6 98.4 98.6 100.0 101.5 Fabricated metal products 34 5.4 105.9 106.7 107.7 107.9 106.8 106.4 104.3 101.9 101.7 99.1 97.8 98.1 99.3 100.7 Nonelectrical machinery. 35 8.6 126.5 127.5 128.3 128.8 128.5 128.1 126.3 124.7 125.5 124.5 123.1 123.5 123.3 123.4 Office and computing machines 357 2.5 149.8 150.6 152.7 152.2 153.6 155.3 149.8 148.9 155.0 157.3 155.1 155.6 156.0 155.9 Electrical machinery 36 8.6 111.4 112.8 112.2 112.5 112.5 110.8 110.4 108.7 107.6 108.2 108.6 109.6 110.3 110.8 Transportation equipment 37 9.8 105.5 111.0 109.3 107.9 111.1 109.2 100.1 96.6 97.6 95.5 95.0 97.3 98.3 99.7 Motor vehicles and parts 371 4.7 96.8 108.0 102.7 101.0 107.5 103.8 85.8 78.5 83.0 79.4 79.8 86.2 89.7 92.5 Autos and light trucks 2.3 96.6 111.6 103.8 100.9 112.8 107.1 83.7 74.9 80.1 75.3 76.6 84.0 88.2 91.2 20 Aerospace and miscellaneous transportation equipment.. 372- 6,9 5.1 113.3 113.8 115.2 114.1 114.2 114.0 113.1 112.9 110.8 110.0 108.8 107.4 106.1 106.2 Instruments 38 3.3 116.8 115.0 116.9 117.5 118.4 118.1 118.1 117.3 119.0 119.3 118.4 118.6 118.1 117.8 Miscellaneous manufacturers 39 1.2 120.0 119.6 120.4 121.8 121.3 121.5 122.5 119.1 116.1 114.6 115.3 117.4 118.2 118.8 23 Nondurable 3377..22 107.8 107.6 108.1 108.1 108.0 108.4 107.7 107.4 106.8 106.0 105.4 105.8 106.2 106.8 24 Foods 20 88..88 107.6 106.1 107.1 107.7 107.6 108.8 109.6 109.1 108.3 107.6 107.4 107.5 107.8 107.7 25 Tobacco products 21 1.0 98.6 95.6 98.5 96.3 96.4 97.8 99.0 101.1 100.0 100.1 98.2 98.2 98.0 98.0 26 Textile mill products 22 1.8 110000..88 103.6 102.9 100.4 100.7 101.2 97.4 96.1 94.0 94.3 95.4 97.2 99.4 100.4 27 Apparel products 23 2.4 9988..88 99.3 99.2 98.8 98.4 97.2 95.5 94.9 92.9 93.1 92.5 93.2 95.2 95.6 28 Paper and products 26 3.6 105.3 104.2 107.8 106.5 107.5 106.8 105.1 105.4 104.2 102.2 101.3 101.3 101.1 102.7 29 Printing and publishing .. 27 6.4 111.9 112.0 111.4 110.9 111.6 112.9 112.4 112.8 112.1 110.9 110.4 110.7 110.1 110.3 30 Chemicals and products . 28 8.6 110.3 110.3 110.4 111.1 110.9 110.7 110.0 109.9 110.1 109.1 108.2 108.7 108.9 109.8 31 Petroleum products 29 1.3 108.2 106.5 110.5 110.2 109.3 108.6 107.8 105.6 104.7 108.8 108.5 105.7 107.1 109.0 32 Rubber and plastic products 30 3.0 110.2 112.8 110.9 112.0 110.3 110.6 109.6 106.9 108.8 106.1 104.4 106.6 107.9 108.9 33 Leather and products ... 31 .3 100.0 102.0 102.5 99.6 100.3 95.3 89.9 92.6 89.6 90.8 91.5 90.0 89.3 90.2 34 Mining 7.9 102.6 102.2 104.0 102.4 103.9 102.6 103.3 103.4 101.7 102.9 101.5 100.8 100.5 102.0 35 Metal 10 .3 153.1 156.7 164.8 155.7 163.6 146.8 153.4 162.0 143.1 148.0 147.6 143.5 144.1 144.7 36 Coal 11,12 1.2 113.2 113.5 118.5 110.2 116.8 114.7 112.9 110.6 108.4 112.8 109.9 105.9 103.4 109.6 37 Oil and gas extraction 13 5.7 95.5 94.6 95.5 95.8 95.8 95.8 97.3 96.7 96.0 97.2 96.4 96.6 96.4 97.0 38 Stone and earth minerals . 14 .7 119.5 121.1 121.8 120.1 121.7 118.0 113.5 118.9 119.2 112.0 108.0 107.0 109.6 110.9 39 Utilities... 7.6 108.0 109.7 109.7 111.4 110.3 109.2 106.9 108.8 107.6 104.6 106.4 105.7 109.8 109.2 40 Electric. 491,3PT 6.0 110.8 113.1 112.1 113.6 112.9 112.1 109.6 111.8 110.4 107.8 109.8 109.8 115.1 114.4 41 Gas .... 492,3PT 1.6 97.3 97.4 100.7 103.3 100.9 98.1 97.0 97.6 97.5 92.8 93.6 90.4 90.1 90.1 SPECIAL AGGREGATES 42 Manufacturing excluding motor vehicles and parts 79.8 110.7 111.0 111.6 111.7 111.4 111.1 110.3 109.1 108.4 107.6 106.7 107.1 107.4 108.0 43 Manufacturing excluding office and computing machines 8822..00 110088..77 109.6 109.8 109.9 110.0 109.4 107.7 106.2 105.6 104.5 103.7 104.4 104.9 105.7 Gross va lue (billi ons of li> 82 dollars, annual rates) MAJOR MARKET 44 Products, total 1734.8 1,911.4 1,937.0 1,923.5 1,929.5 1,941.6 1,939.6 1,882.8 1,859.4 1,860.4 1,848.4 1,845.4 1,855.7 1,868.0 1,884.2 45 Final 1350.9 1,497.7 1,523.4 1,508.7 1,516.3 1,529.1 1,523.7 1,470.8 1,450.8 1,459.6 1,452.8 1,455.6 1,466.9 1,476.5 1,485.1 46 Consumer goods 833.4 882.9 893.8 886.0 885.9 895.2 892.7 865.2 857.6 857.9 852.7 857.4 864.8 872.6 879.1 47 Equipment 517.5 614.8 629.6 622.7 630.4 633.9 631.0 605.6 593.2 601.7 600.1 598.2 602.0 603.9 606.0 48 Intermediate 338844..00 413.7 413.6 414.9 413.1 412.5 415.9 412.0 408.7 400.8 395.6 389.8 388.8 391.4 399.0 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 • September 1991 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates, except as noted. 1990 1991 IItteemm 11998888 11998899 11999900 Aug. Sept. Oct. Nov. Dec. Jan. Feb/ Mar/ Apr/ May Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,456 1,339 1,111 1,055 989 925 916 854 802 876 892 913 966 2 One-family 994 932 794 756 730 703 668 645 611 695 689 742 760 3 Two-or-more-family 462 407 317 299 259 222 248 209 191 181 203 171 206 4 Started 1,488 1,376 1,193 1,131 1,106 1,026 1,130 971 847 992 907 977 989 5 One-family 1,081 1,003 895 835 858 839 769 751 648 788 742 801 836 6 Two-or-more-family 407 373 298 296 248 187 361 220 199 204 165 176 153 7 Under construction, end of period1 . 919 850 711 815 790 766 756 744 717 709 680 673 665 8 One-family 570 535 449 517 503 497 486 478 461 457 442 443 446 9 Two-or-more-family 350 315 262 298 287 269 270 266 256 252 238 230 219 10 Completed 1,530 1,423 1,308 1,307 1,314 1,275 1,246 1,155 1,125 1,096 1,190 1,082 1,055 11 One-family 1,085 1,026 966 950 963 930 922 878 841 838 881 815 780 12 Two-or-more-family 445 396 342 357 351 345 324 277 284 258 309 267 275 13 Mobile homes shipped 218 198 188 193 184 186 181 167 168 157 157 175 174 Merchant builder activity in one-family units 14 Number sold 675 650 535 525 504 465 480 464 414 488 491 490 474 15 Number for sale, end of period1 .... 368 363 318 345 338 334 327 318 315 313 308 304 301 Price of units sold (thousands of dollars) 16 Median 113.3 120.4 122.3 118.4 113.0 120.0 118.9 127.0 117.9 119.9 122.9 120.0 121.9 17 Average 139.0 148.3 149.0 144.7 142.1 153.0 143.3 153.4 148.6 147.8 157.4 149.4 154.4 EXISTING UNITS (one-family) 18 Number sold 3,594 3,439 3,316 3,410 3,160 3,070 3,150 3,130 2,900 3,160 3,220 3,310 3,540 Price of units sold (thousands of dollars)2 19 Median 89.2 92.9 95.2 97.2 94.4 92.9 92.0 91.7 95.6 94.0 98.2 100.3 101.1 20 Average 112.5 118.0 118.3 120.7 116.8 115.9 115.6 114.1 123.0 119.7 125.2 128.9 130.6 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 432,222' 443,720' 446,433' 449,744' 437,161' 434,559' 431,407' 421,346' 406,502' 410,072 401,883 406,594 403,095 ?? 337,440' 345,416' 337,776' 336,936' 330,323' 324,054' 317,190' 311,349' 303,932' 300,495 293,262 298,370 293,825 ?3 198,101 196,551 182,856' 180,631' 175,415' 172,12<r 168,031' 165,014' 161,793' 155,622 152,447 151,495 154,9% 24 Nonresidential, total 139,339' 148,865' 154,920' 156,305' 154,908' 151,934' 149,159' 146,335' 142,139' 144,873 140,815 146,875 138,829 75 16,451' 20,412' 23,849' 22,915' 22,544' 22,847' 22,481' 2222,,999999'' 22,433' 23,249 23,089 24,351 21,212 76 64,025' 65,4%' 62,866' 63,768' 62,660' 60,208' 57,764' 56,913' 53,848' 54,023 51,766 54,761 51,078 77 Other 19,038' 19,683' 21,591' 22,636' 22,705' 22,300' 22,121' 20,953' 20,621' 20,850 20,628 21,845 20,895 28 Public utilities and other 39,825' 43,274' 46,614' 46,986' 46,999' 46,579' 46,793' 45,470' 45,237' 46,751 45,332 45,918 45,644 ?9 Public 94,783' 98,303' 108,655' 112,808' 106,838' 110,505' 114,218' 109,997' 102,570' 109,577 108,621 108,224 109,271 30 3,579 3,520 2,734' 2,867' 2,520' 1,958' 2,960' 1,868' 1,868' 1,723 1,866 1,828 1,939 31 29,227' 28,171' 30,595' 30,295' 29,781' 31,639' 34,304' 33,185' 25,560' 30,699 29,9% 28,626 28,778 3? Conservation and development... 4,739' 4,989' 4,718' 4,795' 3,439' 4,700' 4,901' 5,374' 6,434' 5,529 4,586 5,838 5,572 33 Other 57,238' 61,623' 70,608' 74,851' 71,098' 72,208' 72,053' 69,570' 68,708' 71,626 72,173 71,932 72,982 1. Not at annual rates. SOURCE. 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 from 1978 to 1983, and 17,000 jurisdictions beginning in 1984. 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) Index level Item 1990 June 1990 1991 1991 June June Sept. Dec Mar. June Feb. Mar. Apr. May June CONSUMER PRICES2 (1982-84=100) 1 All items 4.7 8.2 4.9 2.4 .2 2 Food 5.6 3.9 4.6 3.9 2.4 5.1 -.2 .2 .0 3 Energy items .5 4.0 44.2 18.0 -30.7 -1.2 -4.0 -2.6 1.4 4 All items less food and energy. 4.9 5.0 6.0 3.8 6.8 3.2 .7 .1 .2 5 Commodities 3.3 4.1 3.3 2.3 7.9 3.2 1.0 -.1 .3 6 Services 5.8 5.3 7.2 4.8 6.4 3.0 .6 .3 .2 PRODUCER PRICES (1982=100) 7 Finished goods 3.1 3.5 11.3 5.1 -4.5 1.7 -,7r -.5' .2 .6 8 9 C C o o n n s s u u m m e e r r e fo n o er d g s y -3 4 . . 7 7 16 1. .0 0 11 2 8 . . 3 7 21 1 . . 1 3 -37. . 2 6 2. .0 7 -5. . 3 2 ' ' -i.r . V -.3 .4 2. .2 4 10 Other consumer goods 3.8 3.5 3.5 3.4 5.3 1.5 .4 .2 .4 .2 11 Capital equipment 3.1 3.2 3.6 3.3 3.2 2.6 .2' -.1' -.2 .6 12 Intermediate materials3 1.3 13.4 4.2 -9.5 -1.4 -.9 -1.1 -.4 13 Excluding energy .7 4.0 2.3 -1.9 -1.3 -.1 -.4 -.2 Crude materials 14 Foods 3.5 -7.1 -7.8 -7.3 1.1 -13.5 .r 1.3' -1.0 -3.2 15 Energy -10.5 10.5 305.8 -18.8 -53.5 -2.6 -14.9' -7.1' .0 3.0 16 Other -.1 -8.0 5.9 -18.1 -3.0 -14.6 -.r -.9' -.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

A48 Domestic Nonfinancial Statistics • September 1991 2.16 GROSS NATIONAL PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1990 1991 AAccccoouunntt 11998888 11998899 11999900 Q1 Q2 Q3 Q4 Ql GROSS NATIONAL PRODUCT 1 Total 4,873.7 5,200.8 5,465.1 5,375.4 5,443.3 5,514.6 5,527.3 5,557.7 By source 2 Personal consumption expenditures 3,238.2 3,450.1 3,657.3 3,588.1 3,622.7 3,693.4 3,724.9 3,742.8 3 Durable goods 457.5 474.6 480.3 492.1 478.4 482.3 468.5 455.3 4 Nondurable goods 1,060.0 1,130.0 1,193.7 1,174.7 1,179.0 1,205.0 1,216.0 1,212.7 5 Services 1,720.7 1,845.5 1,983.3 1,921.3 1,965.3 2,006.2 2,040.4 2,074.8 6 Gross private domestic investment 747.1 771.2 741.0 747.2 759.0 759.7 698.3 660.0 7 Fixed investment 720.8 742.9 746.1 758.9 745.6 750.7 729.2 694.1 8 Nonresidential 488.4 511.9 524.1 523.1 516.5 532.8 524.0 503.6 9 Structures 139.9 146.2 147.0 148.8 147.2 149.8 142.1 139.5 10 Producers' durable equipment 348.4 365.7 377.1 374.3 369.3 383.0 381.9 364.1 11 Residential structures 232.5 231.0 222.0 235.9 229.1 217.9 205.2 190.5 12 Change in business inventories 26.2 28.3 -5.0 -11.8 13.4 9.0 -30.8 -34.2 13 Nonfarm 29.8 23.3 -7.4 -17.0 13.0 6.8 -32.4 -37.1 14 Net exports of goods and services -74.1 -46.1 -31.2 -30.0 -24.9 -41.3 -28.8 13.5 15 Exports 552.0 626.2 672.8 661.3 659.7 672.7 697.4 694.5 16 Imports 626.1 672.3 704.0 691.3 684.6 714.1 726.2 681.0 17 Government purchases of goods and services 962.5 1,025.6 1,098.1 1,070.1 1,086.4 1,102.8 1,132.9 1,141.5 18 Federal 380.3 400.0 424.0 410.6 421.9 425.8 437.6 443.8 19 State and local 582.3 625.6 674.1 659.6 664.6 677.0 695.3 697.7 By major type of product 20 Final sales, total 4,847.5 5,172.5 5,470.2 5,387.2 5,429.9 5,505.6 5,558.2 5,591.9 21 Goods 1,908.9 2,044.4 2,148.3 2,122.8 2,133.1 2,161.4 2,175.9 2,170.2 22 Durable 840.3 894.7 939.0 941.4 930.1 943.4 941.2 918.5 23 Nondurable 1,068.6 1,149.7 1,209.3 1,181.4 1,203.0 1,218.0 1,234.7 1,251.7 24 Services 2,488.6 2,671.2 2,864.5 2,791.3 2,834.2 2,889.6 2,943.0 3,004.0 25 Structures 450.0 456.9 457.4 473.0 462.5 454.6 439.3 417.7 26 Change in business inventories 26.2 28.3 -5.0 -11.8 13.4 9.0 -30.8 -34.2 27 Durable goods 19.9 11.9 -11.1 -21.6 .0 9.8 -32.5 -42.2 28 Nondurable goods 6.4 16.4 6.0 9.8 13.4 -.8 1.7 8.0 MEMO 29 Total GNP in 1982 dollars 4,016.9 4,117.7 4,157.3 4,150.6 4,155.1 4,170.0 4,153.4 4,124.1 NATIONAL INCOME 30 Total 3,984.9 4,223.3 4,418.4 4,350.3 4,411.3 4,452.4 4,459.7 4,456.4 31 Compensation of employees 2,905.1 3,079.0 3,244.2 3,180.4 3,232.5 3,276.9 3,286.9 3,299.3 32 Wages and salaries 2,431.1 2,573.2 2,705.3 2,651.6 2,696.3 2,734.2 2,738.9 2,742.8 33 Government and government enterprises 446.6 476.6 508.0 497.1 505.7 511.3 518.1 529.8 34 Other 1,984.5 2,096.6 2,197.2 2,154.5 2,190.6 2,222.9 2,220.8 2,213.0 35 Supplement to wages and salaries 474.0 505.8 538.9 528.8 536.1 542.7 548.0 556.5 36 Employer contributions for social insurance 248.5 263.9 280.8 276.0 279.7 282.7 284.8 290.3 37 Other labor income 225.5 241.9 258.1 252.8 256.4 260.0 263.2 266.2 38 Proprietors' income1 354.2 379.3 402.5 404.0 401.7 397.9 406.2 404.4 39 Business and professional1 310.5 330.7 352.6 346.6 350.8 355.6 357.4 355.8 40 Farm1 43.7 48.6 49.9 57.4 51.0 42.4 48.8 48.5 41 Rental income of persons2 16.3 8.2 6.9 5.5 4.3 8.4 9.3 5.6 42 Corporate profits1 337.6 311.6 298.3 296.8 306.6 300.7 288.9 286.2 43 Profits before tax3 316.7 307.7 304.7 296.9 299.3 318.5 304.1 281.5 44 Inventory valuation adjustment -27.0 -21.7 -11.4 -11.4 -.5 -19.8 -13.8 8.1 45 Capital consumption adjustment 47.8 25.5 4.9 11.3 7.7 2.0 -1.4 -3.5 46 Net interest 371.8 445.1 466.7 463.6 466.2 468.3 468.4 460.9 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. 1990 1991 AAccccoouunntt 11998888 11998899 11999900 Q1 Q2 Q3 Q4 Q1 PERSONAL INCOME AND SAVING 1 Total personal income 4,070.8 4,384.3 4,645.5 4,562.8 4,622.2 4,678.5 4,718.5 4,735.8 2 Wage and salary disbursements 2,431.1 2,573.2 2,705.3 2,651.6 2,696.3 2,734.2 2,738.9 2,742.8 3 Commodity-producing industries 696.4 720.6 729.3 724.6 731.1 735.3 726.0 713.0 4 Manufacturing 524.0 541.8 546.8 541.2 548.1 551.8 546.1 536.7 5 Distributive industries 572.0 604.7 637.2 627.0 637.3 642.7 641.9 639.7 6 Service industries 716.2 771.4 830.8 802.9 822.2 844.9 853.0 860.3 7 Government and government enterprises 446.6 476.6 508.0 497.1 505.7 511.3 518.1 529.8 8 Other labor income 225.5 241.9 258.1 252.8 256.4 260.0 263.2 266.2 9 Proprietors' income1 354.2 379.3 402.5 404.0 401.7 397.9 406.2 404.4 10 Business and professional 310.5 330.7 352.6 346.6 350.8 355.6 357.4 355.8 11 Farm1 43.7 48.6 49.9 57.4 51.0 42.4 48.8 48.5 12 Rental income of persons 16.3 8.2 6.9 5.5 4.3 8.4 9.3 5.6 13 Dividends 102.2 114.4 123.8 120.5 122.9 124.9 126.7 126.7 14 Personal interest income 547.9 643.2 680.4 670.5 678.0 685.3 687.9 682.0 15 Transfer payments 587.7 636.9 694.8 680.9 686.7 696.4 715.1 745.4 16 Old-age survivors, disability, and health insurance benefits ... 300.5 325.3 350.7 347.2 347.6 351.1 356.8 372.1 17 LESS: Personal contributions for social insurance 194.1 212.8 226.2 222.9 224.1 228.6 228.9 237.3 18 EQUALS: Personal income 4,070.8 4,384.3 4,645.5 4,562.8 4,622.2 4,678.5 4,718.5 4,735.8 19 LESS: Personal tax and nontax payments 591.6 658.8 699.4 675.1 696.5 709.5 716.6 714.6 20 EQUALS: Disposable personal income 3,479.2 3,725.5 3,946.1 3,887.7 3,925.7 3,969.1 4,001.9 4,021.3 21 LESS: Personal outlays 3,333.6 3,553.7 3,766.0 3,696.4 3,730.6 3,802.6 3,834.4 3,852.5 22 EQUALS: Personal saving 145.6 171.8 180.1 191.3 195.1 166.5 167.5 168.7 MEMO Per capita (1982 dollars) 23 Gross national product 16,302.4 16,549.6 16,535.3 16,576.4 1166,,555522..55 1166,,556622..99 1166,,444499..44 1166,,229933..44 24 Personal consumption expenditures 10,578.3 10,678.0 10,665.8 10,692.4 10,671.4 10,711.5 10,588.7 10,523.7 25 Disposable personal income 11,368.0 11,531.0 11,509.0 11,586.0 11,564.0 11,511.0 11,376.0 11,307.0 26 Saving rate (percent) 4.2 4.6 4.6 4.9 5.0 4.2 4.2 4.2 GROSS SAVING 27 Gross saving 656.1 691.5 657.3 664.8 679.3 665.9 619.2 697.1 28 Gross private saving 751.3 779.3 787.9 795.0 806.7 772.2 777.8 793.9 29 Personal saving 145.6 171.8 180.1 191.3 195.1 166.5 167.5 168.7 30 Undistributed corporate profits1 91.4 53.0 32.2 36.7 40.5 26.5 25.2 33.6 31 Corporate inventory valuation adjustment -27.0 -21.7 -11.4 -11.4 • -.5 -19.8 -13.8 8.1 Capital consumption allowances 32 Corporate 322.1 346.4 363.0 335566..77 335599..77 336655..55 337700..33 337755..66 33 Noncorporate 192.2 208.0 212.6 210.3 211.4 213.8 214.8 216.0 34 Government surplus, or deficit (-), national income and product accounts -95.3 -87.8 -130.6 -130.2 -127.3 -106.4 --115588..66 --9966..88 -141.7 -134.3 -166.0 -168.3 -166.0 -145.7 -184.3 -126.9 36 State and local 46.5 46.4 35.4 38.1 38.6 39.3 25.7 30.0 37 Gross investment 627.8 674.4 655.6 665.6 676.1 661.0 619.6 705.3 38 Gross private domestic 747.1 771.2 741.0 747.2 759.0 759.7 698.3 660.0 39 Net foreign -119.2 -96.8 -85.5 -81.6 -82.9 -98.7 -78.7 45.3 40 Statistical discrepancy -28.2 -17.0 -1.7 .7 -3.2 -4.9 .4 8.2 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

A48 Domestic Nonfinancial Statistics • September 1991 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 1990 1991 Item credits or debits Q1 Q2 Q3 Q4 Q1P -126,237 -106,304 -92,123 -22,667 -22,178 -23,881 -23,402 10,215 Not seasonally adjusted . -17,223 -20,653 -29,112 -25,136 15,395 Merchandise trade balance -126,986 -115,917 -108,115 -27,537 -24,090 -28,760 -27,728 -18,367 Merchandise exports 320,337 361,451 389,550 95,244 97,088 96,638 100,580 100,861 Merchandise imports -447,323 -477,368 -497,665 -122,781 -121,178 -125,398 -128,308 -119,228 Military transactions, net -5,743 -6,203 -7,219 -1,736 -1,558 -1,683 -2,243 -2,182 Investment income, net 5,353 2,689 11,945 3,002 7 2,802 6,133 4,652 Other service transactions, net 16,082 28,618 33,595 7,636 8,156 8,086 9,716 9,173 Remittances, pensions, and other transfers . -4,437 -4,420 -4,843 -1,218 -1,123 -1,302 -1,201 -1,295 U.S. government grants (excluding military) -10,506 -11,071 -17,486 -2,814 -3,570 -3,024 -8,079 18,234 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) 2,966 1,320 2,976 -669 -800 -314 4,759 1,581 12 Change in U.S. official reserve assets (increase, -). -3,912 -25,293 -2,158 -3,177 371 1,739 -1,092 -353 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) 127 -535 -192 -247 -216 363 -93 31 15 Reserve position in International Monetary Fund. 1,025 471 731 234 493 8 -4 -341 16 Foreign currencies -5,064 -25,229 -2,697 -3,164 94 1,368 -995 -43 17 Change in U.S. private assets abroad (increase, -). -85,112 -104,637 -58,524 40,993 -33,033 -28,114 -38,370 5,953 18 Bank-reported claims3 -56,322 -51,255 5,333 57,085 -17,255 -9,984 -24,513 23,900 19 Nonbank-reported claims -3,064 2,581 -1,944 1,649 -1,760 676 -2,509 20 U.S. purchase of foreign securities, net -7,846 -22,575 -28,476 -8,756 -11,160 -1,014 -7,546 -9,426 21 U.S. direct investments abroad, net -17,880 -33,388 -33,437 -8,985 -2,858 -17,792 -3,802 -8,521 22 Change in foreign official assets in United States (increase, +) .. 39,657 8,624 32,425 -7,022 5,805 13,341 20,301 6,534 23 U.S. Treasury securities 41,741 149 28,643 -5,786 2,461 11,849 20,119 2,220 24 Other U.S. government obligations 1,309 1,383 667 -521 346 134 708 -29 25 Other U.S. government liabilities -568 281 1,703 -292 1,141 -248 1,102 987 26 Other U.S. liabilities reported by U.S. banks3. -319 4,976 2,998 -297 2,131 1,871 -707 2,590 2T77 OnttUhaerr ffnotr-eaiignnn noffffiinciinall IaCsCsfelttps^' -2,506 1,835 -1,586 -126 -274 -265 -921 766 28 Change in foreign private assets in United States (increase, +).. 181,877 207,925 53,879 -26,059 25,452 35,754 18,732 -8,458 29 U.S. bank-reported liabilities3 70,235 63,382 9,975 -43,234 8,980 26,968 17,261 -19,419 30 U.S. nonbank-reported liabilities 5,626 5,454 3,779 660 699 4,260 -1,840 31 Foreign private purchases of U.S. Treasury securities, net 20,239 29,618 1,131 -1,151 4,287 24 -2,029 ''3,910 32 Foreign purchases of other U.S. securities, net 26,353 38,920 1,781 1,397 2,140 -2,558 802 5,026 33 Foreign direct investments in United States, net 59,424 70,551 37,213 16,269 9,346 7,060 4,538 2,025 34 Allocation of SDRs 0 0 0 0 0 0 0 0 35 Discrepancy -9,240 18,366 63,526 18,601 24,383 1,475 19,072 -15,472 36 Owing to seasonal adjustments 4,367 105 -6,473 2,007 4,135 37 Statistical discrepancy in recorded data before seasonal adjustment 18,366 63,526 14,235 7,948 17,066 -19,607 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -3,912 -25,293 -2,158 -3,177 371 1,739 -1,092 -353 39 Foreign official assets in United States excluding line 25 (increase, +) 40,225 8,343 30,722 -6,730 4,664 13,589 19,199 5,547 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) -2,996 10,738 2,163 3,094 193 -1,699 575 1,109 1. Seasonal factors are not calculated for lines 6, 10, 12-16, 18-20, 22-34, and 4. Associated primarily 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. The data differ from the 5. Consists of investments in U.S. corporate stocks and in debt securities of Census basis data, shown in table 3.11, for reasons of coverage and timing. private corporations and state and local governments. Military exports are excluded from merchandise data and are included in line 6. SOURCE. Data are from Bureau of Economic Analysis, Survey of Current 3. Reporting banks include all kinds of depository institutions besides commer- Business (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; exports, F.A.S. value; imports, Customs value; monthly data are seasonally adjusted. 1990 1991 IItteemm 11998888 11998899 11999900 Nov. Dec. Jan. Feb. Mar. Apr/ Mayp 1 Exports of domestic and foreign merchandise excluding grant-aid shipments, f.a.s. value 322,426 363,812 393,592 33,586 33,570 34,144 33,599 34,031 35,632 35,304 2 General imports including merchandise for immediate consumption plus entries into bonded warehouses 440,952 473,211 495,311 43,123 39,895 41,520 39,103 38,100 40,139 39,878 3 Trade balance -118,526 -109,399 -101,718 -9,536 -6,325 -7,376 -5,504 -4,070 -4,507 -4,574 1. The Census basis data differ from merchandise trade data shown in table military payments are excluded and shown separately as indicated above. As of 3.10, U.S. International Transactions Summary, because of coverage and timing. Jan. 1,1987 census data are released forty-five days after the end of the month; the On the export side, the largest adjustment is the exclusion of military sales (which previous month is revised to reflect late documents. Total exports and the trade are combined with other military transactions and reported separately in the balance reflect adjustments for undocumented exports to Canada. "service account" in table 3.10, line 6). On the import side, additions are made for SOURCE. FT900, Summary of U.S. Export and Import Merchandise Trade gold, ship purchases, imports of electricity from Canada, and other transactions; (Department of Commerce, Bureau of the Census). 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1990 1991 TTyyppee 11998877 11998888 11998899 Dec. Jan. Feb. Mar. Apr. May June" 1 Total 45,798 47,802 74,609 83,316 85,006 82,797 78,297 78,297 78,263 74,940 2 Gold stock, including Exchange Stabilization Fund1 11,078 11,057 11,059 11,058 11,058 11,058 11,058 11,058 11,057 11,062 3 Special drawing rights2'3 10,283 9,637 9,951 10,989 10,922 10,958 10,368 10,325 10,515 10,309 4 Reserve position in International Monetary Fund2 11,349 9,745 9,048 9,076 9,468 9,556 8,910 8,806 8,854 8,629 5 Foreign currencies4 13,088 17,363 44,551 52,193 53,558 51,225 47,666 48,108 47,837 44,940 1. Gold held under earmark at Federal Reserve Banks for foreign and interna- been used. The U.S. SDR holdings and reserve positions in the IMF also are tional accounts is not included in the gold stock of the United States; see table valued on this basis beginning July 1974. 3.13. Gold stock is valued at $42.22 per fine troy ounce. 3. Includes allocations by the International Monetary Fund of SDRs as follows: 2. Beginning July 1974, the International Monetary Fund (IMF) adopted a $867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 1, technique for valuing the special drawing right (SDR) based on a weighted average 1972; $1,139 million on Jan. 1, 1979; $1,152 million on Jan. 1, 1980; and $1,093 of exchange rates for the currencies of member countries. From July 1974 through million on Jan. 1, 1981; plus transactions in SDRs. December 1980, 16 currencies were used; from January 1981, 5 currencies have 4. Valued at current market exchange rates. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1 Millions of dollars, end of period 1990 1991 AAsssseettss 11998877 11998888 11998899 Dec. Jan. Feb. Mar. Apr. May Junep 1 Deposits 244 347 589 369 271 329 228 292 196 223 Assets held in custody 2 U.S. Treasury securities2 195,126 232,547 224,911 278,499 286,722 286,471 272,505 271,779 279,695 273,893 3 Earmarked gold3 13,919 13,636 13,456 13,387 13,377 13,382 13,374 13,363 13,358 13,354 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 • September 1991 3.14 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data1 Millions of dollars, end of period 1990 1991 AAsssseett aaccccoouunntt 11998877 11998899 Nov. Dec. Jan. Feb. Mar. Apr. May All foreign countries 1 Total, all currencies 518,618 505,595 545,366 558,626 556,925 563,997 560,968 546,491 537,891 529,044 2 Claims on United States 138,034 169,111 198,835 180,938 188,496 183,991 188,174 182,828 180,627 173,051 3 Parent bank 105,845 129,856 157,092 140,302 148,837 141,498 145,967 142,683 141,580 135,377 4 Other banks in United States 16,416 14,918 17,042 12,937 13,296 14,541 12,887 12,268 12,085 10,412 5 Nonbanks 15,773 24,337 24,701 27,699 26,363 27,952 29,320 27,877 26,962 27,262 6 Claims on foreigners 342,520 299,728 300,575 323,020 312,449 321,247 313,595 307,102 300,456 297,225 7 Other branches of parent bank 122,155 107,179 113,810 135,177 135,003 132,157 124,584 129,529 121,961 118,332 8 Banks 108,859 96,932 90,703 81,440 72,602 81,219 80,030 72,757 72,549 74,190 9 Public borrowers 21,832 17,163 16,456 16,591 17,555 18,260 17,893 17,915 17,825 17,%7 10 Nonbank foreigners 89,674 78,454 79,606 89,812 87,289 89,611 91,088 86,901 88,121 86,736 11 Other assets 38,064 36,756 45,956 54,668 55,980 58,759 59,199 56,561 56,808 58,768 12 Total payable in U.S. dollars 350,107 357,573 382,498 371,753 379,479 380,116 380,180 381,848 371,999 362,737 13 Claims on United States 132,023 163,456 191,184 172,336 180,174 175,909 180,601 175,741 173,933 166,959 14 Parent bank 103,251 126,929 152,294 134,436 142,962 135,793 140,789 137,738 137,343 131,186 15 Other banks in United States 14,657 14,167 16,386 12,088 12,513 13,739 12,266 11,757 11,624 10,020 16 Nonbanks 14,115 22,360 22,504 25,812 24,699 26,377 27,546 26,246 24,966 25,753 17 Claims on foreigners 202,428 177,685 169,690 174,832 174,451 179,762 173,527 180,415 173,044 171,355 18 Other branches of parent bank 88,284 80,736 82,949 95,599 95,298 93,847 87,394 95,106 87,895 85,359 19 Banks 63,707 54,884 48,396 37,795 36,440 41,134 40,785 40,451 40,407 42,246 20 Public borrowers 14,730 12,131 10,961 11,202 12,298 13,136 12,944 13,206 12,9% 12,8% 21 Nonbank foreigners 35,707 29,934 27,384 30,236 30,415 31,645 32,404 31,652 31,746 30,854 22 Other assets 15,656 16,432 21,624 24,585 24,854 24,445 26,052 25,692 25,022 24,423 United Kingdom 23 Total, all currencies 158,695 156,835 161,947 188,182 184,818 184,817 180,211 175,025 168,917 168,646 24 Claims on United States 32,518 40,089 39,212 42,301 45,560 40,197 41,278 41,448 38,136 38,338 25 Parent bank 27,350 34,243 35,847 38,453 42,413 36,533 37,662 38,291 34,930 34,830 26 Other banks in United States 1,259 1,123 1,058 1,088 792 1,095 924 848 1,179 1,104 27 Nonbanks 3,909 4,723 2,307 2,760 2,355 2,569 2,692 2,309 2,027 2,404 28 Claims on foreigners 115,700 106,388 107,657 124,077 115,536 121,077 115,361 110,329 107,031 105,893 29 Other branches of parent bank 39,903 35,625 37,728 49,499 46,367 47,857 41,653 44,341 40,730 39,077 30 Banks 36,735 36,765 36,159 36,135 31,604 34,050 34,518 30,660 30,608 32,027 31 Public borrowers 4,752 4,019 3,293 3,675 3,860 3,953 4,029 3,943 3,711 3,657 32 Nonbank foreigners 34,310 29,979 30,477 34,768 33,705 35,217 35,161 31,385 31,982 31,132 33 Other assets 10,477 10,358 15,078 21,804 23,722 23,543 23,572 23,248 23,750 24,415 34 Total payable in U.S. dollars 100,574 103,503 103,208 115,182 116,762 114,413 113,673 114,347 108,600 105,676 35 Claims on United States 30,439 38,012 36,404 37,668 41,259 36,120 37,644 37,971 35,058 35,274 36 Parent bank 26,304 33,252 34,329 35,614 39,609 33,754 35,345 36,068 32,973 32,771 37 Other banks in United States 1,044 964 843 611 334 771 615 562 976 970 38 Nonbanks 3,091 3,796 1,232 1,443 1,316 1,595 1,684 1,341 1,109 1,533 39 Claims on foreigners 64,560 60,472 59,062 66,876 63,701 67,996 64,682 65,034 62,183 60,106 40 Other branches of parent bank 28,635 28,474 29,872 39,630 37,142 38,120 33,136 36,150 32,842 31,297 41 Banks 19,188 18,494 16,579 13,915 13,135 14,905 15,840 15,097 15,460 16,102 42 Public borrowers 3,313 2,840 2,371 2,862 3,143 3,242 3,290 3,220 3,193 3,152 43 Nonbank foreigners 13,424 10,664 10,240 10,469 10,281 11,729 12,416 10,567 10,688 9,555 44 Other assets 5,575 5,019 7,742 10,638 11,802 10,297 11,347 11,342 11,359 10,798 Bahamas and Caymans 45 Total, all currencies 160,321 170,639 176,006 153,850 162,316 167,306 168,209 163,315 164,565 158,506 46 Claims on United States 85,318 105,320 124,205 106,694 112,989 115,806 118,783 110,727 113,532 108,148 47 Parent bank 60,048 73,409 87,882 71,416 77,873 78,350 81,888 75,485 79,818 75,367 48 Other banks in United States 14,277 13,145 15,071 11,017 11,869 12,877 11,380 10,753 10,063 8,748 49 Nonbanks 10,993 18,766 21,252 24,261 23,247 24,579 25,515 24,489 23,651 24,033 50 Claims on foreigners 70,162 58,393 44,168 38,669 41,356 42,801 40,363 43,665 41,877 41,368 51 Other branches of parent bank 21,277 17,954 11,309 12,697 13,416 12,292 11,477 13,658 12,364 12,243 52 Banks 33,751 28,268 22,611 16,299 16,310 18,343 16,863 17,571 17,458 17,206 53 Public borrowers 7,428 5,830 5,217 4,775 5,807 6,528 6,484 6,846 6,556 6,279 54 Nonbank foreigners 7,706 6,341 5,031 4,898 5,823 5,638 5,539 5,590 5,499 5,640 55 Other assets 4,841 6,926 7,633 8,487 7,971 8,699 9,063 8,923 9,156 8,990 56 Total payable in U.S. dollars 151,434 163,518 170,780 149,754 158,390 162,458 163,533 159,226 160,577 154,826 1. Beginning in June 1984 reported claims held by foreign branches have been million to $150 million equivalent in total assets, the threshold now applicable to reduced by an increase in the reporting threshold for "shell" branches from $50 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 Nov. Dec. Jan. Feb. Mar. Apr. May All foreign countries 57 Total, all currencies 518,618 505,595 545,366 558,626 556,925 563,997 560,968 546,491 537,891 529,044 58 Negotiable certificates of deposit (CDs) 30,929 28,511 23,500 21,521 18,060 19,106 18,595 19,920 19,484 17,703 59 To United States 161,390 185,577 197,239 171,592 189,412 186,312' 187,645' 185,220' 180,243' 172,147 60 Parent bank 87,606 114,720 138,412 115,519 138,748 134,118 132,227 128,009 123,883' 117,455 61 Other banks in United States 20,355 14,737 11,704 9,140 7,463 9,341 10,580 10,961 9,927' 8,9% 62 Nonbanks 53,429 56,120 47,123 46,933 43,201 42,853' 44,838' 46,250' 46,433' 45,696 63 To foreigners 304,803 270,923 296,850 328,534 311,668 319,821' 316,522' 305,762' 300,660' 301,099 64 Other branches of parent bank ... 124,601 111,267 119,591 137,849 139,113 132,214 124,437 128,916 122,542 119,613 65 Banks 87,274 72,842 76,452 72,352 58,986 70,189' 73,773' 63,262' 63,908' 66,005 66 Official institutions 19,564 15,183 16,750 17,9% 14,791 17,343 16,665 15,864 18,398 19,803 67 Nonbank foreigners 73,364 71,631 84,057 100,337 98,778 100,075 101,647 97,720 95,812' 95,678 68 Other liabilities 21,496 20,584 27,777 36,979 37,785 38,758 38,206 35,589 37,504 38,095 69 Total payable in U.S. dollars 361,438 367,483 396,613 372,300' 383,522' 384,336' 380,542' 380,812' 372,669' 359,437 70 Negotiable CDs 26,768 24,045 19,619 16,845 14,094 15,141 14,446 15,335 14,882 13,208 71 To United States 148,442 173,190 187,286 156,954' 175,654' 172,130' 174,602' 172,841' 168,772' 159,845 72 Parent bank 81,783 107,150 132,563 106,892' 130,51c 126,008' 124,963' 120,824' 117,297' 110,244 73 Other banks in United States 18,951 13,468 10,519 7,686 6,052 7,627 8,715 9,415 8,509 7,666 74 Nonbanks 47,708 52,572 44,204 42,376 39,092 38,495 40,924 42,602 42,966 41,935 75 To foreigners 177,711 160,766 176,460 183,461 179,002 182,131 175,761 177,902 173,589 171,204 76 Other branches of parent bank ... 90,469 84,021 87,636 95,556 98,128 94,765 87,288 93,910 88,299 85,847 7 7 7 8 9 7 8 0 Ot N O B he a f o r f n n i c k l b i i s a a a b n l i k i l n it f s i o t e i r s t e u i t g io n n e s r s 3 3 1 8 5 9 2 , , , , 5 0 7 4 1 6 6 0 7 5 8 9 4 2 9 0 8 8 , , , , 4 0 2 4 8 2 2 9 2 4 8 3 4 3 1 9 8 0 3 , , , , 4 8 5 2 1 7 3 4 4 3 7 8 5 2 1 9 3 5 5 , , , , 0 7 0 0 9 9 2 4 1 2 2 0 2 5 1 7 0 2 4 , , , , 9 2 7 7 2 5 0 7 1 1 2 2 5 2 1 1 3 3 4 0 , , , , 1 6 9 5 6 2 3 8 1 0 4 5 2 5 1 1 5 2 0 5 , , , , 5 9 0 7 3 1 2 3 6 6 1 3 5 2 1 9 1 3 4 , , , , 2 0 7 7 0 3 1 6 5 4 8 9 5 2 1 1 0 2 5 1 , , , , 8 8 4 5 9 3 2 6 2 0 6 8 5 2 1 1 1 1 5 2 , , , , 3 6 1 3 2 8 8 3 9 9 0 9 United Kingdom 81 Total, all currencies 158,695 156,835 161,947 188,182 184,818 184,817 180,211 175,025 168,917 168,646 82 Negotiable CDs 26,988 24,528 20,056 17,144 14,256 14,872 14,363 15,820 15,162 13,436 83 To United States 23,470 36,784 36,036 36,500 39,928 34,389 34,070 34,453 28,450 28,618 84 Parent bank 13,223 27,849 29,726 26,165 31,806 25,548 25,670 26,213 21,676 19,951 85 Other banks in United States 1,536 2,037 1,256 1,671 1,505 1,861 1,401 1,230 1,175 1,413 86 Nonbanks 8,711 6,898 5,054 8,664 6,617 6,980 6,999 7,010 5,599 7,254 87 To foreigners 98,689 86,026 92,307 113,958 108,531 113,754 110,454 105,090 103,976 104,372 88 Other branches of parent bank 33,078 26,812 27,397 34,406 36,709 34,547 30,978 33,084 31,860 30,155 89 Banks 34,290 30,609 29,780 32,844 25,126 31,765 32,784 26,609 27,001 28,492 90 Official institutions 11,015 7,873 8,551 9,534 8,361 10,368 9,745 8,969 11,300 12,342 91 Nonbank foreigners 20,306 20,732 26,579 37,174 38,335 37,074 36,947 36,428 33,815 33,383 92 Other liabilities 9,548 9,497 13,548 20,580 22,103 21,802 21,324 19,662 21,329 22,220 93 Total payable in U.S. dollars 102,550 105,907 108,178 114,031' 116,094' 114,308' 112,284' 112,368' 106,568' 104,074 94 Negotiable CDs 24,926 22,063 18,143 15,100 12,710 13,387 12,790 13,816 13,291 11,560 95 To United States 17,752 32,588 33,056 31,058' 34,697' 29,055' 29,646' 30,166' 24,690' 24,245 % 9 9 7 8 N O Pa t o h r n e e b n r a t b n b a k a n s n k k s in United States 1 4 2 1 , , , 4 3 0 1 0 2 8 8 6 2 4 6 1 , , , 4 4 7 0 3 5 4 2 2 28 3 1 , , , 8 1 0 1 7 6 2 9 5 2 5 4 1 , , , 4 3 3 1 1 2 8 8 2 ' 2 3 9 1 , , , 5 1 9 8 5 5 6 6 5 ' 2 3 3 1 , , , 8 3 8 4 2 8 5 4 6 ' 24 4 , , 3 3 9 3 9 2 < 0 6 K 2 4 4 , , 5 8 8 2 0 3 9 0 7 ' 2 3 0 , , 4 8 3 5 4 9 1 8 1 ' 1 4 8 1 , , , 7 0 4 8 0 5 2 6 7 99 To foreigners 55,919 47,083 50,517 59,787 60,014 63,702 60,977 59,985 59,440 58,899 100 Other branches of parent bank 22,334 18,561 18,384 23,288 25,957 24,954 21,339 24,049 22,452 21,671 101 Banks 15,580 13,407 12,244 11,911 9,488 11,539 12,976 10,112 9,931 9,704 102 Official institutions 7,530 4,348 5,454 5,000 4,692 7,158 6,587 6,188 8,239 8,914 103 Nonbank foreigners 10,475 10,767 14,435 19,588 19,877 20,051 20,075 19,636 18,818 18,610 104 Other liabilities 3,953 4,173 6,462 8,086 8,673 8,164 8,871 8,401 9,147 9,370 Bahamas and Caymans 105 Total, all currencies 160,321 170,639 176,006 153,850 162,316 167,306 168,209 163,315 164,565 158,506 106 Negotiable CDs 885 953 678 561 646 654 629 729 674 694 1 1 1 1 0 0 1 0 7 8 0 9 To P O N U a t o r h n n e e i b n r te a t b d n b a k a S n s n k t k a s t e in s United States 1 5 4 1 1 3 3 7 3 , , , , 4 2 9 2 8 3 5 2 7 9 0 4 1 6 4 2 1 2 7 2 1 , , , , 8 9 3 4 9 4 3 9 4 4 2 4 1 7 4 2 8 0 5 4 , , , , 7 8 1 8 8 8 8 5 8 3 8 9 1 6 3 0 5 1 6 4 , , , , 7 9 3 0 9 3 5 8 8 8 0 6 1 7 3 1 4 4 5 4 , , , , 5 9 2 7 4 7 2 3 1 1 6 8 1 8 3 2 5 0 4 0 , , , , 6 5 4 6 5 6 6 9 5 7 9 1 ' ' 1 7 3 2 7 8 6 2 , , , , 6 1 4 2 1 7 4 3 8 3 0 1 ' ' 1 7 3 1 8 2 8 8 , , , , 3 2 0 5 1 0 3 5 4 9 1 4 ' ' 1 7 3 2 7 3 9 0 , , , , 5 8 6 9 4 0 1 6 3 1 7 1 ' ' 1 7 3 1 6 7 1 4 , , , , 2 4 1 8 2 0 8 1 2 8 0 0 111 To foreigners 43,815 45,161 47,382 46,299 44,444 42,850' 42,472' 41,375' 40,042' 40,481 112 Other branches of parent bank 19,185 23,686 23,414 25,579 24,715 23,099 22,923 22,018 21,398 21,865 113 Banks 10,769 8,336 8,823 6,569 5,588 6,030' 6,105' 6,232' 5,837 5,765 114 Official institutions 1,504 1,074 1,097 763 622 811 728 674 676 736 115 Nonbank foreigners 12,357 12,065 14,048 13,388 13,519 12,910 12,716 12,451 12,131' 12,115 116 Other liabilities 1,671 2,193 3,087 2,904 2,488 3,111 2,877 2,657 2,888 2,521 117 Total payable in U.S. dollars ... 152,927 162,950 171,250 148,197 157,132 162,118 162,850 158,232 160,343 154,281 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • September 1991 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1990 1991 IItteemm 11998888 11998899 Nov/ Dec/ Jan/ Feb/ Mar/ Apr/ Mayp 1 Total1 304,132 312,477 341,594 344,386 352,692 362,260 349,995 344,385 349,206 By type 2 Liabilities reported by banks in the United States'1 31,519 36,4% 43,444 39,765 41,464 43,309 42,266 38,868 40,105 3 U.S. Treasury bills and certificates3 103,722 76,985 80,971 79,447 83,695 83,%3 84,013 81,110 82,444 U.S. Treasury bonds and notes 4 Marketable 152,429 179,269 195,332 202,438 205,145 212,154 200,154 201,037 203,064 5 Nonmarketable4 523 568 3,765 4,491 4,521 4,550 4,580 4,610 4,642 6 U.S. securities other than U.S. Treasury securities5 15,939 19,159 18,082 18,245 17,867 18,284 18,982 18,760 18,951 By area 7 Western Europe1 123,229r 132,849' 165,452 167,141 169,141 174,119 166,466 162,764 165,249 9,513 9,482 88,,668888 8,672 8,179 7,900 8,467 8,454 9,433 9 Latin America and Caribbean 10,553r 9,313r 1199,,331188 21,115 21,957 23,716 24,649 25,378 27,701 10 Asia 151,887 153,338 139,158 138,071 143,260 146,186 139,7% 137,664 136,567 11 Africa 1,403 1,030 1,404 1,433 1,659 1,439 1,802 1,171 1,184 12 Other countries6 7,548 6,469 7,576 7,955 8,497 8,897 8,814 8,953 9,074 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 corporations 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 Treasury Department data and on data reported to the of foreign countries. Treasury Department by banks (including Federal Reserve Banks) and securities 4. Excludes notes issued to foreign official nonreserve agencies. Includes dealers in the United 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 1991 IItteemm 11998877 11998888 11998899 June' Sept/ Dec/ Mar/ 55,438 74,980 67,835 68,650 71,028 70,276 64,042 51,271 68,983 65,127 66,780 68,675 66,558 67,428 18,861 25,100 20,491 22,210 27,206 29,651 27,619 32,410 43,884 44,636 44,569 41,470 36,907 39,809 551 364 33,,550077 22,,661122 22,,884433 1100,,559944 77,,335577 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 1991' HHoollddeerr aanndd ttyyppee ooff lliiaabbiilliittyy 11998888 11998899 11999900'' Nov/ Dec/ Jan. Feb. Mar. Apr. Mayp 1 All foreigners 685,339 736,878 752,916 742,916 752,916 752,864 757,916 747,913 731,060 722,738 2 Banks' own liabilities 514,532 577,498 576,195 561,237 576,195 568,974 574,913 569,037 560,417 552,052 3 Demand deposits 21,863 22,032 21,724 19,683 21,724 19,686 20,144 20,268 19,740 18,872 4 Time deposits2 152,164 168,780 168,245 162,317 168,245 159,248 162,354 163,971 157,171 152,134 5 Other. 51,366 67,823 65,652 72,269 65,652 75,723 74,016 71,734 73,542 70,358 6 Own foreign offices 289,138 318,864 320,575 306,968 320,575 314,317 318,399 313,063 309,964 310,687 7 Banks' custody liabilities5 170,807 159,380 176,721 181,679 176,721 183,890 183,003 178,876 170,643 170,687 8 U.S. Treasury bills and certificates6 115,056 91,100 %,808 99,862 %,808 104,493 103,948 102,145 97,378 98,087 9 Other negotiable and readily transferable instruments7 16,426 19,526 17,472 18,357 17,472 17,955 18,190 17,485 16,394 16,723 10 Other 39,325 48,754 62,441 63,460 62,441 61,442 60,865 59,246 56,871 55,876 11 Nonmonetary inteniational and regional organizations 3,224 4,894 5,918 5,324 5,918 7,908 6,555 6,669 6,237 5,548 12 Banks' own liabilities 2,527 3,279 4,540 3,179 4,540 6,431 4,092 4,806 5,061 4,167 13 Demand deposits 71 96 36 33 36 67 40 73 76 24 14 Time deposits 1,183 927 1,050 783 1,050 1,600 1,684 2,034 1,980 2,142 15 Other. 1,272 2,255 3,455 2,363 3,455 4,763 2,368 2,700 3,006 2,001 16 Banks' custody liabilities5 698 1,616 1,378 2,145 1,378 1,478 2,462 1,863 1,176 1,381 17 U.S. Treasury bills and certificates6 57 197 364 1,077 364 423 1,620 1,103 275 662 18 Other negotiable and readily transferable instruments7 641 1,417 1,014 1,022 1,014 1,005 842 760 901 719 19 Other 0 2 0 46 0 50 0 0 0 0 20 Official institutions9 135,241 113,481 119,212 124,415 119,212 125,159 127,271 126,280 119,978 122,550 21 Banks' own liabilities 27,109 31,108 34,792 38,167 34,792 37,345 38,878 38,592 35,903 36,756 22 Demand deposits 1,917 2,1% 1,924 1,781 1,924 1,664 1,579 1,645 1,633 1,444 23 Time deposits 9,767 10,495 14,265 12,929 14,265 11,659 13,426 13,946 13,551 14,318 24 Other. 15,425 18,417 18,603 23,457 18,603 24,022 23,873 23,000 20,719 20,994 25 Banks' custody liabilities5 108,132 82,373 84,420 86,248 84,420 87,814 88,393 87,688 84,076 85,794 26 U.S. Treasury bills and certificates 103,722 76,985 79,447 80,971 79,447 83,695 83,%3 84,013 81,110 82,444 27 Other negotiable and readily transferable instruments7 4,130 5,028 4,770 4,897 4,770 3,939 4,057 3,582 2,835 3,197 28 Other 280 361 203 380 203 180 374 92 130 152 29 Banks10 459,523 515,275 534,143 516,724 534,143 521,444 527,740 520,069 509,108 498,748 30 Banks' own liabilities 409,501 454,273 457,535 437,890 457,535 445,772 451,031 445,588 438,527 430,223 31 Unaffiliated foreign banks 120,362 135,409 136,960 130,921 136,960 131,455 132,633 132,525 128,563 119,536 32 Demand deposits 9,948 10,279 10,053 8,999 10,053 9,003 9,522 10,050 9,067 8,688 33 Time deposits 80,189 90,557 88,847 83,573 88,847 81,583 82,468 84,119 79,227 72,675 34 Other. 30,226 34,573 38,060 38,349 38,060 40,869 40,643 38,357 40,269 38,174 35 Own foreign offices4 289,138 318,864 320,575 306,968 320,575 314,317 318,399 313,063 309,964 310,687 36 Banks' custody liabilities5 50,022 61,002 76,608 78,834 76,608 75,672 76,709 74,481 70,581 68,525 37 U.S. Treasury bills and certificates 7,602 9,367 10,634 11,378 10,634 10,174 11,136 10,645 10,026 8,714 38 Other negotiable and readily transferable instruments7 5,725 5,124 5,240 5,730 5,240 5,950 6,351 6,293 6,034 5,729 39 Other 36,694 46,510 60,735 61,726 60,735 59,548 59,222 57,543 54,520 54,083 40 Other foreigners 87,351 103,228 93,642 96,453 93,642 98,352 %,350 94,8% 95,737 95,892 41 Banks' own liabilities 75,396 88,839 79,328 82,001 79,328 79,427 80,911 80,051 80,926 80,905 42 Demand deposits 9,928 9,460 9,711 8,869 9,711 8,952 9,004 8,500 8,%5 8,717 43 Time deposits2 61,025 66,801 64,083 65,032 64,083 64,406 64,775 63,873 62,413 62,999 44 Other. 4,443 12,577 5,534 8,100 5,534 6,068 7,132 7,678 9,548 9,189 45 Banks' custody liabilities5 11,956 14,389 14,314 14,452 14,314 18,926 15,439 14,845 14,810 14,987 46 U.S. Treasury bills and certificates6 3,675 4,551 6,363 6,436 6,363 10,201 7,230 6,384 5,966 6,267 47 Other negotiable and readily transferable instruments7 5,929 7,958 6,448 6,708 6,448 7,062 6,940 6,850 - 6,624 7,078 48 Other 2,351 1,880 1,503 1,308 1,503 1,664 1,269 1,611 2,221 1,642 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 6,425 7,203 7,022 6,466 7,022 6,966 6,720 7,157 7,269 7,511 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 • September 1991 3.17—Continued 1990 1991 AArreeaa aanndd ccoouunnttrryy 11998888 11998899 11999900 Nov. Dec. Jan.' Feb.' Mar. Apr.' MMaayypp 1 Total 685,339 736,878 752,916' 742,916' 752,916' 752,864 757,916 747,913' 731,060 722,738 2 Foreign countries 682,115 731,984 746,998' 737,592' 746,998' 744,956 751,361 741,245' 724,822 717,190 3 Europe 231,912 237,501 254,460' 247,059' 254,460' 247,705 250,091 249,956' 241,312 236,281 4 Austria 1,155 1,233 1,229 1,385 1,229 1,570 1,522 1,494 1,147 1,008 5 Belgium-Luxembourg 10,022 10,648 12,399' 11,510 12,399' 12,382 12,559 12,238 12,410 11,720 6 Denmark 2,200 1,415 1,399' 1,773' 1,399' 1,115 1,013 983' 945 988 7 Finland 285 570 602 422 602 404 489 662 724 453 8 France 24,777 26,903 30,946 29,1% 30,946 29,371 27,892 2288,,221111 26,822 26,314 9 Germany 6,772 7,578 7,281' 8,1% 7,281' 8,262 9,605 88,,998888 88,,444466 8,366 10 Greece 672 1,028 934 949 934 895 797 747 880088 785 11 Italy 14,599 16,169 17,736 16,051 17,736 16,157 17,506 17,367 15,045 14,675 12 Netherlands 5,316 6,613 5,375 6,056 5,375 5,680 6,397 6,204 6,773 6,721 13 Norway 1,559 2,401 2,358 2,330 2,358 2,181 2,078 2,121 1,099 1,168 14 Portugal 903 2,418 2,958 2,959 2,958 2,877 2,684 2,778 2,628 2,414 15 Spain 5,494 4,364 7,544' 7,197' 7,544' 8,813 8,073 9,784' 10,006 10,050 16 Sweden 1,284 1,491 1,837 2,304 1,837 1,290 759 1,159 720 525 17 Switzerland 34,199 34,4% 36,915 34,031 36,915 35,572 37,209 38,546 36,711 35,068 18 Turkey 1,012 1,818 1,169 1,358 1,169 1,124 1,195 1,480 1,490 1,633 19 United Kingdom 111,811 102,362 109,4%' 103,034 109,496' 102,363 103,846 102,973 101,490 99,404 20 Yugoslavia 529 1,474 928 1,571 928 1,030 959 848 1,034 953 21 Other Western Europe1 8,598 13,563 11,689' 15,131' l l^ 14,352 12,806 10,545 10,138 11,067 22 U.S.S.R 138 350 119 220 119 1% 88 106 138 250 23 Other Eastern Europe 591 608 1,546 1,388 1,546 2,071 2,614 2,722 2,740 2,721 24 Canada 21,062 18,865 20,332 20,679 20,332 19,218 23,839 23,445 23,254 22,734 25 Latin America and Caribbean 271,146 311,028 326,351' 317,414' 326,351' 332,135 335,679 325,786' 325,015 327,853 26 Argentina 7,804 7,304 7,366 7,664 7,366 7,659 7,679 7,872 7,708 7,595 27 Bahamas 86,863 99,341 107,386' 97,689 107,386' 105,028 102,264 %,289' %,307 97,276 28 Bermuda 2,621 2,884 2,809 2,518 2,809 3,104 3,008 2,838 2,743 3,104 29 Brazil 5,314 6,351 5,853 6,470 5,853 5,975 6,310 6,489' 5,821 5,773 30 British West Indies 113,840 138,309 140,720' 141,395' 140,720' 148,187 154,294 150,581' 150,522 150,746 31 Chile 2,936 3,212 3,145 3,422 3,145 3,188 3,063 2,995 3,107 3,240 32 Colombia 4,374 4,653 4,492 4,251 4,492 4,466 4,308 3,786 44,,334488 4,409 33 Cuba 10 10 11 9 11 18 8 7 88 10 34 Ecuador 1,379 1,391 1,379 1,310 1,379 1,359 1,332 1,319 1,260 1,293 35 Guatemala 1,195 1,312 1,541 1,478 1,541 1,563 1,580 1,617 1,571 1,595 36 Jamaica 269 209 257 228 257 224 256 268 233 237 37 Mexico 15,185 15,423 16,625' 16,420' 16,625' 16,938 17,144 17,405' 17,501 18,657 38 Netherlands Antilles 6,420 6,310 7,381 7,350 7,381 7,139 6,970 6,600 6,898 5,986 39 Panama 4,353 4,362 4,575 4,644 4,575 4,345 4,351 4,454' 4,293 4,552 40 Peru 1,671 1,984 1,295 1,327 1,295 1,347 1,324 1,364 1,428 1,413 41 Uruguay 1,898 2,284 2,520 2,446 2,520 2,5% 2,639 2,509 2,463 2,475 42 Venezuela 9,147 9,482 12,2W 12,099' 12, IV? 11,944 12,095 12,266' 11,833 12,666 43 Other 5,868 6,206 6,779 6,693 6,779 7,053 7,055 7,127 6,969 6,825 44 147,838 156,201 136,780' 143,555' 113366,,778800'' 135,951 132,375 113333,,004411'' 112266,,778844 112211,,666655 China 45 Mainland 1,895 1,773 2,421 2,493 2,421 2,866 2,720 3,030 2,415 2,498 46 Taiwan 26,058 19,588 11,244' 11,397' 11,244' 10,920 11,141 11,295' 11,001 10,597 47 Hong Kong 12,248 12,416 12,700' 13,849' 12,70C 14,872 14,794 15,748' 16,104 15,006 48 India 699 780 1,233' 1,124' 1,233' 1,472 1,628 1,174 986 766 49 Indonesia 1,180 1,281 1,238 1,261 1,238 1,191 1,719 1,941 1,309 1,303 50 Israel 1,461 1,243 2,767 3,075 2,767 2,823 2,509 2,965 2,849 2,609 51 Japan 74,015 81,184 67,075' 69,046' 67,075' 63,452 61,093 56,820 53,170 52,030 52 Korea 2,541 3,215 2,280 2,732 2,280 2,406 2,186 2,213 2,887 2,189 53 Philippines 1,163 1,766 1,585 1,549 1,585 1,455 1,655 1,609 1,681 1,521 54 Thailand 1,236 2,093 1,443 1,681 1,443 2,228 2,148 2,403 2,571 2,502 55 Middle-East oil-exporting countries 12,083 13,370 15,829' 17,437' 15,829' 14,720 13,693 15,642 14,655 14,070 56 Other 13,260 17,491 16,%5' 17,912' 16,%5' 17,547 17,091 18,199 17,157 16,575 57 3,991 3,824 4,630 4,390 4,630 5,173 5,153 4,908 4,495 4,695 58 Egypt 911 686 1,425 996 1,425 1,476 1,416 1,449 927 1,364 59 Morocco 68 78 104 90 104 107 90 91 89 97 60 South Africa 437 206 228 283 228 212 317 312 220 202 61 Zaire 85 86 53 55 53 55 50 52 50 52 62 Oil-exporting countries4 1,017 1,121 1,110 1,288 1,110 1,508 1,528 1,370' 1,434 1,140 63 Other 1,474 1,648 1,710 1,678 1,710 1,815 1,751 1,634' 1,776 1,839 64 Other countries 6,165 4,564 4,445' 4,495' 4,445' 4,774 4,224 4,109' 3,963 3,%2 65 Australia 5,293 3,867 3,807 3,804 3,807 3,883 3,434 3,131 3,118 3,232 66 All other 872 697 637' 691' 637' 891 790 978' 845 730 67 Nonmonetary international and regional organizations 3,224 4,894 5,918 5,324 5,918 7,908 6,555 6,669' 6,237 5,548 68 International 2,503 3,947 4,390 4,203 4,390 6,428 4,880 5,108' 4,895 4,133 69 Latin American regional 589 684 1,048 809 1,048 975 1,235 1,170 913 802 70 Other regional6 133 263 479 312 479 506 440 391 429 614 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 1991' Area and country 11998888 11998899 11999900 Nov. Dec.' Jan. Feb. Mar. Apr. May" 1 Total 491,165 534,492 510,078' 504,283' 510,078 497,886 509,839 495,614 504,663 498,490 2 Foreign countries 489,094 530,630 505,285' 499,132' 505,285 495,344 505,995 493,114 502,357 4%,556 3 Europe 116,928 119,025 113,043' 106,782' 113,043 108,184 107,614 104,180 100,260 99,139 1 1 4 5 6 7 8 9 0 1 A F G D B F G It i r a e u e e r n a e l l r n s l y n g m e a t m r c i c n u i a e e a a d n m r y k - Luxembourg 1 7 8 2 1 3 , , , , , 5 9 4 3 4 4 0 2 1 2 3 8 6 3 8 4 5 9 6 3 5 3 3 3 1 6 2 6 6 1 , , , , , 6 4 8 4 5 1 0 7 6 7 6 1 8 2 4 8 2 8 5 5 2 7 6 8 1 6 5 3 1 4 , , , , , 4 7 4 0 0 3 3 4 5 9 4 6 2 3 4 6 8 7 7 2 7 6 3 6 ' ' ' ' 1 6 5 3 3 , , , . 4 7 8 2 0 5 8 3 4 4 6 1 9 6 4 2 1 2 8 8 8 4 6 C ' ' ' ' 1 6 3 5 4 1 , , , , , 0 4 3 4 4 0 7 3 3 5 9 4 4 6 2 6 6 8 7 3 7 2 7 6 1 6 6 3 1 5 , , , , , 0 1 3 2 6 2 0 5 9 6 6 0 4 5 6 8 4 9 1 2 8 1 7 3 1 5 5 3 4 1 , , , , , 9 6 6 3 4 4 3 6 0 6 8 2 6 7 0 5 5 0 4 0 4 2 0 2 1 6 3 5 4 1 , , , , , 6 6 3 6 5 1 9 2 6 0 0 6 8 5 1 7 5 2 5 7 3 7 5 0 1 5 5 3 3 1 , , , , , 4 4 2 8 6 7 3 1 6 1 3 9 9 7 8 5 2 7 5 4 2 3 8 0 1 7 2 5 3 , , , , 8 6 8 5 7 9 2 8 3 4 3 5 2 6 0 6 9 0 6 2 0 2 9 7 12 Netherlands 2,541 1,904 1,751' 1,864' 1,751 1,953 2,108 2,119 2,230 1,940 13 Norway 455 609 782' 666' 782 706 670 765 679 695 14 Portugal 261 376 292' 368 292 323 292 384 293 322 15 Spain 1,823 1,930 2,668' 2,494' 2,668 2,864 2,526 3,334 3,180 3,120 16 Sweden 1,977 1,773 2,093' 2,281' 2,093 2,175 2,336 2,330 2,115 1,923 17 Switzerland 3,895 6,141 4,200' 3,855' 4,200 2,073 2,444 3,165 3,238 3,486 18 Turkey 1,233 1,071 1,405 1,346 1,405 1,377 1,509 1,537 1,440 1,445 19 United Kingdom 65,706 65,527 65,147' 59,908' 65,147 60,532 60,397 53,8% 52,492 50,109 20 Yugoslavia 1,390 1,329 1,142 1,160 1,142 1,084 980 991 1,012 %5 21 Other Western Europe2 1,152 1,302 597' 629' 597 705 851 1,141 1,118 989 22 U.S.S.R 1,255 1,179 530 653 530 505 501 781 904 936 23 Other Eastern Europe3 754 921 499 459 499 512 545 573 548 585 24 Canada 18,889 15,451 16,080' 14,284' 16,080 16,951 19,364 17,062 17,581 17,703 25 Latin America and Caribbean 214,264 230,438 230,1%' 228,445' 230,1% 231,387 237,514 233,032 238,128 241,161 26 Argentina 11,826 9,270 6,928' 7,077' 6,928 6,781 6,655 6,535 6,420 6,365 27 Bahamas 66,954 77,921 76,49c 71,048' 76,490 79,834 81,148 73,338 76,321 78,236 28 Bermuda 483 1,315 4,006 4,291 4,006 1,771 3,602 3,823 4,646 6,897 29 Brazil 25,735 23,749 17,994 18,393 17,994 17,956 17,935 18,319 16,525 15,590 30 British West Indies 55,888 68,749 87,429' 86,354' 87,429 94,213 97,500 100,882 103,606 104,041 31 Chile 5,217 4,353 3,271 3,373 3,271 3,225 3,237 3,170 3,050 3,037 32 Colombia 22,,994444 22,,778844 2,585 22,,553311 2,585 2,555 2,528 2,441 2,334 2,284 33 Cuba 11 11 0 11 0 0 0 0 0 0 34 Ecuador 2,075 1,688 1,387 1,499 1,387 1,361 1,361 1,325 1,326 1,339 35 Guatemala4 198 197 191 152 191 193 191 199 208 200 36 Jamaica4 212 297 238 265 238 243 171 224 1% 181 37 Mexico 24,637 23,376 14,845' 15,144' 14,845 14,629 14,817 15,077 15,601 15,166 38 Netherlands Antilles 1,306 1,921 7,998 7,386 7,998 2,194 1,599 1,298 1,4% 1,589 39 Panama 2,521 1,740 1,471 1,449 1,471 1,534 1,502 1,479 1,475 1,414 40 Peru 1,013 771 663 730 663 656 691 697 670 722 41 Uruguay 910 929 786 787 786 767 626 588 620 615 42 Venezuela 10,733 9,652 2,569' 6,565' 2,569 2,118 2,254 2,168 2,209 2,223 43 Other Latin America and Caribbean 1,612 1,726 1,344' 1,40C 1,344 1,357 1,698 1,468 1,424 1,261 44 Asia 130,881 157,474 138,628' 142,191' 138,628 131,144 134,016 131,273 138,940 131,132 China Mainland 762 634 620 689 620 565 497 723 641 566 46 Taiwan 4,184 2,776 1,934 1,586 1,934 1,776 1,475 1,264 1,612 1,282 47 Hong Kong 10,143 11,128 10,644 8,506 10,644 8,250 8,792 9,729 10,886 9,865 48 India 560 621 655 540 655 624 590 539 560 435 49 Indonesia 674 651 933 923 933 926 1,081 1,136 1,029 984 50 Israel 1,136 813 774 758 774 964 842 952 871 829 51 Japan 90,149 111,300 90,679' 99,693' 90,679 90,266 89,8% 84,614 91,291 88,618 52 Korea 5,213 5,323 5,712' 5,511' 5,712 5,959 6,007 6,217 6,171 5,582 53 Philippines 11,,887766 1,344 1,247 1,175 1,247 1,230 1,261 1,445 1,478 1,457 54 Thailand , • 884488 1,140 1,573 1,523 1,573 1,587 1,791 1,764 1,662 1,747 55 Middle East oil-exporting countries^ 6,213 10,149 10,749' 10,947 10,749 8,966 12,0% 12,386 12,286 9,658 56 Other Asia 9,122 11,594 13,107' 10,339' 13,107 10,031 9,688 10,503 10,452 10,109 57 Africa 5,718 5,890 5,445 5,705 5,445 5,439 5,424 5,488 5,355 5,464 58 Egypt 507 502 380 383 380 384 314 304 304 305 59 Morocco 511 559 513 519 513 514 511 538 538 603 60 South Africa 1,681 1,628 1,525 1,726 1,525 1,517 1,518 1,628 1,627 1,641 61 Zaire 17 16 16 19 16 17 21 17 18 18 62 Oil-exporting countries6 1,523 1,648 1,486 1,492 1,486 1,467 1,478 1,452 1,372 1,365 63 Other 1,479 1,537 1,525 1,566 1,525 1,539 1,582 1,547 1,497 1,533 64 Other countries 2,413 2,354 1,893' 1,726' 1,893 2,238 2,063 2,079 2,093 1,957 65 Australia 1,520 1,781 1,413' 1,366' 1,413 1,672 1,547 1,468 1,570 1,470 66 Mother 894 573 479 360 479 566 517 611 524 487 67 Nonmonetary international and regional organizations 2,071 3,862 4,793 5,151 4,793 2,542 3,844 2,501 2,306 1,934 1. Reporting banks include all kinds of depository institutions besides commer- 5. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and cial banks, as well as some brokers and dealers. United Arab Emirates (Trucial States). 2. Includes the Bank for International Settlements and Eastern European 6. Comprises Algeria, Gabon, Libya, and Nigeria. countries not listed in line 23. 7. Excludes the Bank for International Settlements, which is included in 3. Comprises Bulgaria, Czechoslovakia, Hungary, Poland, and Romania. "Other Western Europe." 4. Included in "Other Latin America and Caribbean" through March 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • September 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 1991r TTyyppee ooff ccllaaiimm 11998888 11998899 119999CC Nov/ Dec/ Jan. Feb. Mar. Apr. May" 1 Total 555555533333338888888,,,,,,,666666688888889999999 555555599999993333333,,,,,,,000000088888887777777 555555577777776666666,,,,,,,777777799999990000000 555555577777776666666,,,,,,,777777799999990000000 555555555555558888888,,,,,,,111111188888886666666 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 444444499999991111111,,,,,,,111111166666665555555 555555533333334444444,,,,,,,444444499999992222222 555555511111110000000,,,,,,,000000077777778888888 504,283 555555511111110000000,,,,,,,000000077777778888888 497,886 509,839 444444499999995555555,,,,,,,666666611111114444444 504,663 498,490 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 66666662222222,,,,,,,666666655555558888888 66666660000000,,,,,,,555555511111111111111 44444441111111,,,,,,,777777799999997777777 46,695 44444441111111,,,,,,,777777799999997777777 38,872 43,726 44444443333333,,,,,,,888888855555555555555 42,234 37,807 44 OOwwnn ffoorreeiiggnn ooffffiicceess22 222222255555557777777,,,,,,,444444433333336666666 222222299999996666666,,,,,,,000000011111111111111 333333300000003333333,,,,,,,000000055555554444444 291,048 333333300000003333333,,,,,,,000000055555554444444 300,514 306,122 222222299999996666666,,,,,,,888888899999995555555 301,406 295,561 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111122222229999999,,,,,,,444444422222225555555 111111133333334444444,,,,,,,888888888888885555555 111111111111117777777,,,,,,,777777799999999999999 120,851 111111111111117777777,,,,,,,777777799999999999999 116,664 116,509 111111111111110000000,,,,,,,444444499999997777777 112,173 117,593 66 DDeeppoossiittss 66666665555555,,,,,,,888888899999998888888 77777778888888,,,,,,,111111188888885555555 66666665555555,,,,,,,222222211111111111111 67,265 66666665555555,,,,,,,222222211111111111111 68,564 69,039 66666663333333,,,,,,,000000022222221111111 64,963 68,863 77 OOtthheerr 66666663333333,,,,,,,555555522222227777777 55555556666666,,,,,,,777777700000000000000 55555552222222,,,,,,,555555588888888888888 53,585 55555552222222,,,,,,,555555588888888888888 48,100 47,470 44444447777777,,,,,,,444444477777776666666 47,211 48,731 88 AAllll ootthheerr ffoorreeiiggnneerrss 44444441111111,,,,,,,666666644444446666666 44444443333333,,,,,,,000000088888885555555 44444447777777,,,,,,,444444422222228888888 45,689 44444447777777,,,,,,,444444422222228888888 41,835 43,483 44444444444444,,,,,,,333333366666668888888 48,850 47,529 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss33...... 44444447777777,,,,,,,555555522222224444444 55555558888888,,,,,,,555555599999994444444 66666666666666,,,,,,,777777711111112222222 66666666666666,,,,,,,777777711111112222222 66666662222222,,,,,,,555555577777772222222 8888888,,,,,,,222222288888889999999 11111113333333,,,,,,,000000011111119999999 11111114444444,,,,,,,333333377777775555555 11111114444444,,,,,,,333333377777775555555 11111117777777,,,,,,,000000044444444444444 11 Negotiable and readily transferable 22222225555555,,,,,,,777777700000000000000 33333330000000,,,,,,,999999988888883333333 44444442222222,,,,,,,000000033333330000000 44444442222222,,,,,,,000000033333330000000 33333334444444,,,,,,,555555533333333333333 12 Outstanding collections and other 11111113333333,,,,,,,555555533333335555555 11111114444444,,,,,,,555555599999992222222 11111110000000,,,,,,,333333300000008888888 11111110000000,,,,,,,333333300000008888888 11111110000000,,,,,,,999999999999995555555 13 MEMO: Customer liability on 11111119999999,,,,,,,555555599999996666666 11111112222222,,,,,,,888888899999999999999 11111113333333,,,,,,,666666655555559999999 11111113333333,,,,,,,666666655555559999999 11111111111111,,,,,,,777777766666666666666 DDoollllaarr ddeeppoossiittss iinn bbaannkkss aabbrrooaadd,, rreeppoorrtteedd bbyy nnoonnbbaannkkiinngg bbuussiinneessss eenntteerrpprriisseess iinn tthhee UUnniitteedd SSttaatteess55 ........ 45,360 45,509 43,645 49,026 43,645 46,776 42,264 41,657 40,788 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 1991 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa 11998877 11998888 11998899 June' Sept/ Dec/ Mar. 1 Total 235,130 233,184 238,123 207,906 213,258 206,995 198,492 By borrower 2 Maturity of one year or less2 163,997 172,634 178,346 158,603 166,040 165,732 157,468 3 Foreign public borrowers 25,889 26,562 23,916 20,877 21,670 19,283 21,170 4 All other foreigners 138,108 146,071 154,430 137,726 144,369 146,450 136,298 5 Maturity over one year2 71,133 60,550 59,776 49,303 47,218 41,263 41,024 6 Foreign public borrowers 38,625 35,291 36,014 28,132 26,354 22,393 22,380 7 All other foreigners 32,507 25,259 23,762 21,171 20,864 18,870 18,644 By area Maturity of one year or less 8 Europe 59,027 55,909 53,913 48,997 51,125 49,169 49,506 9 Canada 5,680 6,282 5,910 5,624 5,499 5,439 5,896 10 Latin America and Caribbean 56,535 57,991 53,003 44,312 44,010 49,674 42,282 11 35,919 46,224 57,755 51,043 56,123 53,138 53,848 12 Africa 2,833 3,337 3,225 2,994 2,954 3,040 3,016 n All other3 4,003 2,891 4,541 5,633 66,,333300 55,,227733 22,,991199 Maturity of over one year2 14 Europe 6,696 4,666 4,121 4,201 4,424 3,869 4,326 15 Canada 2,661 1,922 2,353 2,819 3,033 3,291 3,387 16 Latin America and Caribbean 53,817 47,547 45,816 33,209 31,284 25,964 24,953 17 3,830 3,613 4,172 5,864 5,664 5,204 5,424 18 Africa 1,747 2,301 2,630 2,744 2,546 2,374 2,417 19 All other3 2,381 501 684 465 266 561 517 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 Banks12 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 382.4 346.3 346.3 340.0 346.5 338.8 333.4' 321.4' 331.6' 316.5' 325.5' 159.7 152.7 145.5 145.1 146.4 152.9 146.4' 139.3' 144.3' 131.8' 129.7 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 10.4' 10.2' 11.1 10.3' 9.7 12.6 10.3 10.2 10.6 10.4 10.5 11.2 11.2 11.1' 10.6' 8.7 7.5 6.8 5.2 6.1 6.8 7.4 5.? 5.4 4.4' 5.0 4.0 4.1 2.7 2.8 2.8 2.4 3.1 3.1 2.7 3.8 3.C 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 6.2r 6.3' 5.6' 4.4' 3.6 68.8 66.2 65.6 64.5 63.7 67.2 63.9" 59.8' 62.5' 60.7' 62.6 5.5 5.0 4.0 5.1 5.9 5.4 4.7' 5.1' 5.1 5.9 6.7 29.8 34.9 30.5 30.2 31.0 32.2 32.2' 30.1' 32.0' 23.8' 22.9 26.4 21.0 21.1 21.2 21.0 20.7 23.(y 22.4' 23.1' 22.6' 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 1.2' 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 1.6' 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 8.2r 7.8' 8.4' 8.3' 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 1.8' 2.0 1.8' 1.9 25 OPEC countries3 17.4 16.6 16.2 16.1 16.2 17.1 15.5 15.3 14.4 12.8' 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 2.5' 6.7 1.9 1.9 1.7 1.6 1.9 1.7 1.8 1.8 1.7 1.7 1.7 9977..88 8855..33 85.9 83.4 81.2 77.5 68.8 66.7' 67.1' 65.3' 66.<r Latin America 9.5 9.0 8.5 7.9 7.6 6.3 5.6r 5.2' 5.<T 4.9 4.7 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 12.8' 12.6 12.8' 13.0' 13.1 37 Peru 1.1 .8 .7 .6 .6 .6 .5 .5 .5 .5 .5 2.8 2.6 2.7 2.6 2.9 2.8 2.8' 2.3 2.4 2.3 2.3 Asia China .3 .3 .5 .3 .3 .3 .3 .2 .2 .2 .4 8.2 3.7 4.9 5.2 5.0 4.5 3.8 3.6 4.0 3.5 3.6 41 India 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 6.1' 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 .7 1.1 1.0 1.0 1.3 1.3 1.1 1.3 1.5 1.5 1.6 .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 3.3' 2.9 2.7 2.3 2.0 .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 40.0' 41.8 40^ 49.1' 17.3 11.0 15.8 11.0 11.4 5.5 9.2 8.5 8.9 2.8 9.1 .6 .9 1.1 .7 1.3 1.7 .9 2.2 4.0 4.3 4.1 13.5 12.9 12.2 10.8 15.3 9.0 10.9 8.5 9.0 10.4' 13.C 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 6.5' 8.7 65 Others® .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 2233..22 2222..66 25.0 27.4 28.7 30.3 33.3 34.5 38.1 40.6 38.1' 1. The banking offices covered by these data are the U.S. offices and foreign million to $150 million equivalent in total assets, the threshold now applicable to branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks. 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 in June 1984 reported claims held by foreign branches have been 7. Includes New Zealand, Liberia, and international and regional organizareduced by an increase in the reporting threshold for "shell" branches from $50 tions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics • September 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'' Dec. Mar.' June' Sept.' Dec. Mar" 1 Total 28,302 32,952 38,017 38,017' 38,076 39,092 43,885 41,788' 39,478 2 Payable in dollars 22,785 27,335 33,211 33,211' 33,705 34,595 38,744 37,406' 35,445 3 Payable in foreign currencies 5,517 5,617 4,805 4,805' 4,371 4,496 5,140 4,382' 4,033 By type 4 Financial liabilities 12,424 14,507 17,690 n,69C 17,134 18,715 19,616 17,538' 16,485 5 Payable in dollars 8,643 10,608 13,830 13,830' 13,841 15,336 15,766 14,306' 13,630 6 Payable in foreign currencies 3,781 3,900 3,860 3,860' 3,292 3,380 3,850 3,232' 2,856 7 Commercial liabilities 15,878 18,445 20,327 20,327' 20,942 20,376 24,268 24,251' 22,992 8 Trade payables 7,305 6,505 7,626 7,626' 7,471 6,968 10,081 10,007' 8,372 9 Advance receipts and other liabilities 8,573 11,940 12,701 12,701' 13,471 13,409 14,188 14,243 14,620 10 Payable in dollars 14,142 16,727 19,381 19,381' 19,864 19,260 22,978 23,10C 21,815 11 Payable in foreign currencies 1,737 1,717 945 945' 1,078 1,117 1,291 1,150' 1,177 By area or country Financial liabilities 12 Europe 8,320 9,962 11,615 11,615' 11,094 11,759 11,216 9,641' 9,002 13 Belgium-Luxembourg 213 289 340 340 318 332 350 344 285 14 France 382 359 258 258 271 171 470 638 578 15 Germany 551 699 475 475' 442 557 615 630 570 16 Netherlands 866 880 944 944' 900 932 945 973 928 17 Switzerland 558 1,033 541 541 528 552 632 576 577 18 United Kingdom 5,557 6,533 8,846 8,846' 8,388 8,851 7,651 5,944' 5,497 19 Canada 360 388 601 601' 343 297 301 215 264 20 Latin America and Caribbean 1,189 839 1,268 1,268 1,815 2,573 3,394 3,239 3,337 21 Bahamas 318 184 157 157 272 249 368 344 342 22 Bermuda 0 0 17 17 2 0 0 0 0 23 Brazil 25 0 0 0 0 0 0 0 0 24 British West Indies 778 645 635 635 1,061 1,782 2,409 2,274 2,426 25 Mexico 13 1 6 6 5 4 4 5 6 26 Venezuela 0 0 0 0 0 0 0 4 4 27 Asia 2,451 3,312 4,104 4,104' 3,775 4,027 4,223 4,032' 3,878 28 Japan 2,042 2,563 3,252 3,252' 2,737 2,824 3,088 2,853' 22,,880055 29 Middle East oil-exporting countries2 8 3 2 2 3 5 4 5 11 30 Africa 4 2 2 2 3 3 2 2 2 31 Oil-exporting countries3 1 0 0 0 0 1 0 0 0 32 All other4 100 4 100 100 103 55 479 409 2 Commercial liabilities 33 Europe 5,516 7,319 8,952 8,952' 9,198 8,560 9,834 10,292' 9,782 34 Belgium-Luxembourg 132 158 179 179 233 297 248 285 248 35 France 426 455 878 878' 888 1,049 1,263 1,26C 1,209 36 Germany 909 1,699 1,393 1,393' 1,174 990 1,052 1,264' 1,375 37 Netherlands 423 587 699 699 688 608 701 84C 715 38 Switzerland 559 417 641 641' 604 628 728 759' 668 39 United Kingdom 1,599 2,079 2,620 2,620' 2,926 2,439 2,777 2,791' 2,713 40 Canada 1,301 1,217 1,124 1,124 1,151 1,179 1,263 1,246' 1,226 41 Latin America and Caribbean 864 1,090 1,187 1,187 1,304 1,279 1,555 1,598' 1,703 42 Bahamas 18 49 41 41 37 22 18 12 21 43 Bermuda 168 286 308 308 516 412 371 538 494 44 Brazil 46 95 100 100 116 106 126 137 208 45 British West Indies 19 34 27 27 18 29 42 30 35 46 Mexico 189 217 304 304 241 285 506 421' 296 47 Venezuela 162 114 154 154 85 119 120 121 283 48 Asia 6,565 6,915 7,193 7,193' 7,019 7,084 8,892 8,928' 8,027 49 Japan 2,578 3,094 2,917 2,917' 2,748 3,189 3,283 3,606 3,284 50 Middle East oil-exporting countries • 1,964 1,385 1,401 1,401 1,393 1,125 2,321 1,701 1,236 51 Africa 574 576 844 844 753 885 1,315 789 648 52 Oil-exporting countries3 135 202 307 307 263 277 593 422 225 53 All other4 1,057 1,328 1,027 1,027 1,517 1,390 1,408 1,397 1,606 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 1991 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998877 11998888 11998899'' Dec/ Mar/ June' Sept/ Dec. Mar.p 1 Total 30,964 34,035 31,542 31,542 29,956 31,716 31,086 33,487' 34,903 2 Payable in dollars 28,502 31,654 29,209 29,209 27,802 29,398 28,691 31,038' 32,708 3 Payable in foreign currencies 2,462 2,381 2,334 2,334 2,154 2,318 2,395 2,449' 2,195 By type 20,363 21,869 17,721 17,721 16,622 18,079 16,638 18,109 18,540 14,894 15,643 10,400 10,400 10,461 9,885 10,301 11,473 11,444 6 Payable in dollars 13,765 14,544 9,473 9,473 9,583 8,815 9,107 10,504 10,552 7 Payable in foreign currencies 1,128 1,099 927 927 878 1,070 1,193 969 891 8 Other financial claims 5,470 6,226 7,322 7,322 6,161 8,194 6,338 6,636 7,096 9 Payable in dollars 4,656 5,450 6,568 6,568 5,471 7,460 5,685 5,769 6,380 10 Payable in foreign currencies 814 777 754 754 690 733 652 866 716 10,600 12,166 13,821 13,821 13,334 13,637 14,448 15,378r 16,364 9,535 11,091 12,203 12,203 11,704 11,909 12,653 13,43c 14,312 13 Advance payments and other claims 1,065 1,075 1,618 1,618 1,630 1,728 1,795 l,948r 2,052 14 Payable in dollars 10,081 11,660 13,168 13,168 12,748 13,123 13,898 14,764' 15,776 15 Payable in foreign currencies 519 505 653 653 586 514 549 613' 587 By area or country 9,531 10,279 7,044 7,044 6,982 9,619 77,,998899 88,,000055 99,,446622 17 Belgium-Luxembourg 7 18 28 28 22 126 27 76 86 332 203 153 153 203 141 153 366 240 19 Germany 102 120 192 192 508 93 102 371 481 20 Netherlands 350 348 303 303 316 340 329 333 448 65 218 95 95 122 137 176 325 405 22 United Kingdom 8,467 9,039 6,035 6,035 5,589 8,556 6,976 6,276 7,555 23 Canada 2,844 2,325 1,904 1,904 1,758 2,036 1,989 2,887 1,833 24 Latin America and Caribbean 7,012 8,160 7,590 7,590 6,984 5,479 5,661 5,751 5,893 1,994 1,846 1,516 1,516 1,662 992 977 1,261 1,640 7 19 7 7 4 3 4 3 6 27 Brazil 63 47 224 224 79 84 70 68 68 28 British West Indies 4,433 5,763 5,431 5,431 4,824 4,003 4,210 4,031 3,773 172 151 94 94 152 153 158 160 155 30 Venezuela 19 21 20 20 21 20 23 25 28 879 844 847 847 806 843 771 1,213 1,027 605 574 456 456 459 486 472 875 692 33 Middle East oil-exporting countries2 8 5 8 8 7 6 9 8 11 65 106 140 140 67 62 49 37 62 35 Oil-exporting countries3 7 10 12 12 11 8 7 0 3 36 All other4 33 155 195 195 25 41 179 215 262 37 Europe 4,180 5,181 6,194 6,194 6,046 6,082 66,,550022 77,,009944'' 77,,001155 38 Belgium-Luxembourg 178 189 242 242 220 209 189 211 221 650 672 963 963 964 924 1,206 1,302' 1,265 562 669 696 696 702 669 638 80C 855 1 1 8 3 5 3 2 3 1 4 2 4 4 3 7 0 9 5 4 3 7 0 9 5 2 45 7 3 0 4 2 7 3 9 5 4 3 9 0 2 1 5 29 5 9 2 1 ' - 6 3 0 3 9 1 43 United Kingdom 1,073 1,324 1,572 1,572 1,689 1,583 1,674 1,794' 1,645 44 Canada 936 983 1,079 1,079 1,148 1,147 1,148 1,05C 1,179 45 Latin America and Caribbean 1,930 2,241 2,178 2,178 2,063 2,207 2,399 2,32C 2,299 19 36 57 57 22 17 25 14 15 170 230 323 323 243 284 340 246' 232 48 Brazil 226 299 293 293 232 235 253 323' 307 49 British West Indies 26 22 36 36 38 47 35 4C 49 368 461 510 510 526 582 651 646' 656 283 227 147 147 189 224 225 19C 190 2,915 2,993 3,560 3,560 3,279 3,446 3,594 4,032' 5,009 1,158 946 1,197 1,197 1,074 1,097 1,221 1,418' 2,456 54 Middle East oil-exporting countries2 450 453 518 518 434 417 408 459 548 401 435 419 419 425 390 373 488 390 56 Oil-exporting countries3 144 122 108 108 89 97 72 67 68 57 All other4 238 333 392 392 372 365 432 395' 472 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. 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 • September 1991 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1991 1990 1991r Transactions, and area or country 1989 1990r Jan.- May Nov. Dec/ Jan. Feb. Mar. Apr. May" U.S. corporate securities STOCKS 1 Foreign purchases 214,061 173,231 93,501 12,555'" 13,316 10,259 21,691 21,763 20,573 19,214 2 Foreign sales 204,114 188,373 84,384 13,368 14,573 11,056 20,615 19,393 17,437 15,884 3 Net purchases, or sales (-) 9,946 -15,142 9,117 -812' -1,257 -797 1,076 2,370 3,137 3,331 4 Foreign countries 10,180 -15,213 8,926 -808' -1,267 -798 1,020 2,369 3,059 3,276 5 Europe 481 -8,498 1,952 -582 -487 -600 -1,245 846 1,734 1,217 6 France -708 -1,234 141 -80 -49 -24 27 100 -45 83 7 Germany -830 -368 -281 -14 -144 -114 -204 0 13 24 8 Netherlands 79 -398 -73 21 -46 -142 -104 119 30 25 9 Switzerland -3,277 -2,867 34 -169 -263 -222 -943 357 552 290 10 United Kingdom 3,691 -2,992 1,431 -282 149 -83 27 121 781 586 11 Canada -881 892 1,600 216 279 25 469 284 110 712 12 Latin America and Caribbean 3,042 -1,333 1,533 2%r -280 233 937 3 120 240 13 Middle East' 3,531 -2,435 391 -430 -251 -279 675 -30 -182 207 14 Other Asia 3,577 -3,477 3,436 -420 -406 -1% 432 1,223 1,149 828 15 Japan 3,330 -2,891 1,106 -194 -382 -271 -366 -2 1,076 669 16 Africa 131 -63 100 -5 -14 33 31 16 0 21 17 Other countries 299 -298 -86 117 -108 -13 -279 28 128 51 18 Nonmonetary international and regional organizations -234 71 191 -5 9 2 56 1 78 55 BONDS2 19 Foreign purchases 120,550 118,755 56,743 11,205 10,216 8,859 8,468 14,802 10,291 14,323 20 Foreign sales 87,376 101,703 48,976 1,111' 7,890 8,575 9,269 10,608 8,945 11,580 21 Net purchases, or sales (-) 33,174 17,052 7,768 3,429R 2,326 284 -801 4,194 1,346 2,744 22 Foreign countries 32,821 17,523 7,751 3,456 2,329 103 -723 4,093 1,453 2,825 23 Europe 19,064 10,3% 5,165 2,046 1,361 -130 -1,065 3,271 1,334 1,755 24 France 372 373 611 24 39 31 68 392 34 86 25 Germany -238 -377 776 -59 -41 -54 78 238 114 400 26 Netherlands 850 172 173 52 110 47 1 20 84 21 27 Switzerland -511 284 602 148 45 360 -217 318 -21 162 28 United Kingdom 18,123 10,703 2,493 1,727 1,680 -102 -885 1,633 900 948 29 Canada 1,116 1,906 1,182 93 -85 71 106 385 247 374 30 Latin America and Caribbean 3,686 4,289 821 343 495 -17 439 351 188 -142 31 Middle East' -182 76 48 -35 74 69 -2 -13 -25 20 32 Other Asia 9,025 1,104 533 1,033 486 131 -209 81 -301 831 33 Japan 6,292 747 560 812 399 308 -214 162 -240 544 34 Africa 56 % 20 6 -9 -15 10 7 8 10 35 Other countries 57 -344 -18 -30 7 -5 -2 10 3 -23 36 Nonmonetary international and regional organizations 353 -471 16 -If -2 181 -78 102 -107 -81 Foreign securities 37 Stocks, net purchases, or sales (-)3 -13,120 -8,952 -12,718 -1,831 -404 -3,177 -3,305 -2,520 -3,313 38 Foreign purchases 109,792 122,600 44,381 10,060 7,263 6,230 10,561 11,095 7,937 8,558 39 Foreign sales3 122,912 131,552 57,100 8,991' 9,094 6,634 13,738 14,400 10,457 11,871 40 Bonds, net purchases, or sales (-) -5,943 -22,322 -5,687 176' -4,745 -173 -1,945 -991 -589 -1,989 41 Foreign purchases 234,320 314,466 145,957 32,8%' 33,391 27,138 37,202 40,161 20,785 20,671 42 Foreign sales 240,263 336,788 151,644 32,721' 38,136 27,312 39,146 41,152 21,374 22,660 43 Net purchases, or sales (-), of stocks and bonds — -19,063 -31,273 -18,405 1,244' -6,576 -577 -5,122 -4,296 -3,109 -5,302 44 Foreign countries -19,101 -28,600 -16,553 UW -5,834 -538 -5,166 -2,845 -3,232 -4,773 45 Europe -17,721 -7,999 -4,714 2,017 -898 328 -3,139 -340 351 -1,913 46 Canada -4,180 -7,502 -4,601 -1,740 -655 -573 -797 3 -2,290 -943 47 Latin America and Caribbean 426 -8,959 -1,184 283 -2,810 351 314 114 -311 -1,652 48 2,532 -3,824 -6,211 712' -1,572 -778 -1,793 -2,494 -987 -159 49 Africa 93 -137 68 -69 28 22 30 2 10 4 50 Other countries -251 -179 88 16' 74 113 218 -130 -4 -109 51 Nonmonetary international and regional organizations 38 -2,673 -1,852 25 -742 -39 44 -1,451 123 -529 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' J M an a . y - Nov. Dec. Jan. Feb. Mar. Apr. Mayp Transactions, net purchases or sales (-) during period1 1 Estimated total2 54,203 19,687 19,867 6,410 5,554 3,144 12,922 -15,574 2,954 16,421 2 Foreign countries2 52,301 19,524 20,462 5,999 5,557 4,776 11,462 -14,755 2,575 16,404 3 Europe2 36,286 19,065 5,921 2,344 4,258 3,356 2,933 -4,535 -1,353 5,520 4 Belgium-Luxembourg 1,048 10 681 -64 -105 260 149 115 37 121 Germany2 7,904 5,829 -4,689 1,849 571 -542 -1,691 -3,340 -549 1,433 6 Netherlands -1,141 1,077 -745 -249 625 300 -85 -607 -292 -61 7 Sweden 693 1,152 -712 276 721 -661 43 -244 -410 560 8 Switzerland 1,098 112 386 -6 200 170 139 470 -622 230 9 United Kingdom 20,198 -1,338 5,259 -1,527 240 2,829 -54 513 265 1,706 10 Other Western Europe 6,508 12,202 5,733 2,069 2,006 995 4,432 -1,442 214 1,534 11 Eastern Europe -21 13 8 -5 0 6 0 0 5 -3 12 Canada 698 -4,614 124 -468 155 -795 -171 182 566 342 13 Latin America and Caribbean 464 14,980 13,968 4,502 830 -4,984 2,802 121 5,547 10,481 14 Venezuela 311 33 -144 132 1 -153 -1 6 2 2 IS Other Latin America and Caribbean -322 4,190 10,575 1,080 428 -426 1,593 765 2,955 5,687 16 Netherlands Antilles 475 10,757 3,537 3,290 401 -4,405 1,210 -650 2,590 4,793 17 13,297 -11,062 386 -930 -72 7,019 5,517 -9,984 -2,179 12 18 Japan 1,681 -14,895 -5,524 -1,153 -2,407 2,244 1,915 -7,016 -3,379 711 19 116 313 205 8 -3 78 110 0 16 1 20 Mother 1,439 842 -142 543 389 102 269 -540 -22 48 21 Nonmonetary international and regional organizations 1,902 163 -594 411 -4 -1,633 1,461 -819 379 17 22 International 1,473 287 -1,099 260 -119 -1,571 1,104 -845 171 42 23 Latin America regional 231 -2 -2 0 92 -202 156 5 225 -186 Memo 24 Foreign countries2 52,301 19,524 20,462 5,999 5,557 4,776 11,462 -14,755 2,575 16,404 25 Official institutions 26,840 23,169 626 5,046 7,106 2,707 7,009 -12,000 883 2,027 26 Other foreign2 25,461 -3,645 19,835 953 -1,549 2,069 4,453 -2,755 1,692 14,377 Oil-exporting countries 27 Middle East3 8,148 -387 -1,392 -878 1,014 523 644 -1,485 -513 -562 28 Africa4 -1 0 20 0 0 0 21 -6 5 0 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, denominated in foreign currencies, publicly issued to private foreign residents. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 International Statistics • September 1991 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per year Rate on July 31, 1991 Rate on July 31, 1991 Rate on July 31, 1991 CCoouunnttrryy CCoouunnttrryy CCoouunnttrryy 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 Percent e M ffe o c n t t i h v e 66666.....55555 OOOOOcccccttttt..... 11111999998888899999 99999.....00000 MMMMMaaaaarrrrr..... 11111999999999900000 111000...555000 JJJuuulllyyy 111999999000 77777.....55555 JJJJJuuuuunnnnneeeee 11111999999999911111 GGeerrmmaannyy,, FFeedd.. RReepp.. ooff...... 66666.....5555500000 FFFFFeeeeebbbbb..... 11111999999999911111 666...000 OOOcccttt... 111999888999 88888.....9999944444 JJJJJuuuuulllllyyyyy 11111999999999911111 IIttaallyy 1111111111.....55555 MMMMMaaaaayyyyy 11111999999999911111 99999.....5555500000 JJJJJaaaaannnnn..... 11111999999999911111 55555.....55555 JJJJJuuuuulllllyyyyy 11111999999999911111 Netherlands 77777.....7777755555 FFFFFeeeeebbbbb..... 11111999999999911111 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 Averages of daily figures, percent per year 1991 CCoouunnttrryy,, oorr ttyyppee 11998888 11998899 11999900 Jan. Feb. Mar. Apr. May June July 1 7.85 9.16 8.16 7.23 6.60 6.44 6.11 5.94 6.08 6.01 i 10.28 13.87 14.73 13.91 13.20 12.33 11.90 11.48 11.21 11.04 } 9.63 12.20 13.00 11.13 10.37 9.97 9.67 9.12 8.83 8.78 4 4.28 7.04 8.41 9.25 8.% 8.99 9.08 8.98 8.95 9.06 S 2.94 6.83 8.71 8.44 7.81 8.17 8.26 8.10 7.89 7.74 6 4.72 7.28 8.57 9.31 9.01 9.04 9.11 9.05 9.08 9.09 7 7.80 9.27 10.20 10.14 9.64 9.34 9.21 9.13 9.59 9.46 8 Italy 11.04 12.44 12.11 13.13 13.31 12.52 11.90 11.46 11.48 11.74 9 6.69 8.65 9.70 9.91 9.51 9.28 9.20 9.00 9.08 9.12 1100 4.43 5.39 7.75 8.18 8.01 8.09 7.% 7.82 7.79 7.56 NOTE. Rates are for three-month interbank loans except for Canada, finance company paper; Belgium, three-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 Country/currency 1988 1989 Feb. Apr. May 1 Australia/dollar^ 78.409 79.186 78.069 78.351 77.107 77.947 77.427 75.982 2 Austria/schilling 12.357 13.236 11.331 10.416 11.341 11.977 12.104 12.538 3 Belgium/franc 36.785 39.409 33.424 30.475 33.206 35.017 35.363 36.689 4 Canada/dollar 1.2306 1.1842 1.1668 1.1549 1.1572 1.1535 1.1499 1.1439 5 China, P.R./yuan 3.7314 3.7673 4.7921 5.2352 5.2352 5.2767 5.3257 5.3667 6 Denmark/krone 6.7412 7.3210 6.1899 5.6953 6.1886 6.5163 6.5793 6.8634 7 Finland/markka 4.1933 4.2963 3.8300 3.5941 3.8512 3.9925 4.0431 4.2189 8 France/franc 5.9595 6.3802 5.4467 5.0398 5.4862 5.7540 5.8282 6.0483 9 Germany/deutsche mark 1.7570 1.8808 1.6166 1.4805 1.6122 1.7027 1.7199 1.7828 10 Greece/drachma 142.00 162.60 158.59 158.82 174.16 184.76 188.14 195.03 11 Hong Kong/dollar 7.8072 7.8008 7.7899 7.7943 7.7911 7.7939 7.7798 7.7341 12 India/rupee 13.900 16.213 17.492 18.860 19.243 19.906 20.519 21.062 13 Ireland/punt2 152.49 141.80 165.76 179.81 157.43 157.12 155.68 142.66 14 Italy/lira 1,302.39 1,372.28 1,198.27 1,111.19 1,201.96 1,261.57 1,275.67 1,325.09 15 Japan/yen 128.17 138.07 145.00 130.54 137.39 137.11 138.22 139.75 16 Malaysia/ringgit 2.6190 2.7079 2.7057 2.6969 2.7418 2.7498 2.7573 2.7810 17 Netherlands/guilder 1.9778 2.1219 1.8215 1.6689 1.8174 1.9186 1.9379 2.0085 18 New Zealand/dollar2 65.560 59.561 59.619 60.120 59.389 58.909 58.647 57.645 19 Norway /krone 6.5243 6.9131 6.2541 5.7919 6.2899 6.6198 6.6953 6.9542 20 Portugal/escudo 144.27 157.53 142.70 130.45 140.97 148.00 149.59 156.37 21 Singapore/dollar 2.0133 1.9511 1.8134 1.7180 1.7589 1.7688 1.7688 1.7782 22 South Africa/rand 2.2770 2.6214 2.5885 2.5412 2.6636 2.7325 2.7975 2.8625 23 South Korea/won 734.52 674.29 710.64 723.97 727.73 728.36 727.99 727.97 24 Spain/peseta 116.53 118.44 101.96 92.61 100.21 105.08 106.45 111.18 25 Sri Lanka/rupee 31.820 35.947 40.078 40.598 40.750 40.836 40.988 41.211 26 Sweden/krona 6.1370 6.4559 5.9231 5.5516 5.9081 6.1145 6.1578 6.4235 27 Switzerland/franc 1.4643 1.6369 1.3901 1.2685 1.3918 1.4399 1.4574 1.5297 2 2 3 8 9 0 T T U a h n i a i w t i e l a a d n n / d d K / o b i l n a l g a h r d t om/pound2 1 2 2 7 8 5 8 . . . 6 3 1 3 1 3 6 2 1 2 2 6 6 5 3 . . . 4 7 8 0 2 2 7 5 1 2 2 7 6 5 8 . . . 9 6 4 1 0 1 8 9 1 2 2 9 7 5 6 . . . 1 1 4 0 4 1 9 1 1 2 2 8 7 5 2 . . . 3 4 1 1 4 4 1 7 1 2 2 7 7 5 4 . . . 3 5 9 3 7 7 3 8 1 2 2 7 7 5 2 . . . 2 6 3 8 4 8 2 5 1 2 2 6 7 5 4 . . . 1 7 9 6 6 7 6 6 31 M Un E i M te O d States/dollar3... 92.72 98.60 89.09 82.12 8.12 91.41 92.29 95.18 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 figuresi n 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 funds 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 June 1991 A82 SPECIAL TABLES-Published Irregularly, with Latest BULLETIN Reference Title and Date Issue Page Assets and liabilities of commercial banks June 30,1990 February 1991 A72 September 30, 1990 March 1991 A72 December 31,1990 May 1991 A72 March 31,1991 August 1991 A72 Terms of lending at commercial banks May 1990 December 1990 A72 August 1990 December 1990 All November 1990 April 1991 A73 February 1991 August 1991 A78 Assets and liabilities of U.S. branches and agencies of foreign banks March 31,1990 September 1990 A78 June 30,1990 December 1990 A 82 September 30,1990 February 1991 A78 December 31,1990 June 1991 A72 Pro forma balance sheet and income statements for priced service operations September 30,1989 March 1990 A88 March 31,1990 September 1990 A82 June 30,1990 October 1990 A72 September 30,1990 August 1991 A82 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Federal Reserve Board of Governors and Official Staff Chairman ALAN GREENSPAN, WAYNE D. ANGELL Vice Chairman DAVID W. MULLINS, JR., 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 THEODORE E. ALLISON, Assistant to the Board for Federal CHARLES J. SDEGMAN, Senior Associate Director Reserve System Affairs DAVID H. HOWARD, Deputy Associate Director BOB STAHLY MOORE, Special Assistant to the Board DONALD B. ADAMS, Assistant Director DIANE E. WERNEKE, Special Assistant to the Board DALE W. HENDERSON, Assistant Director PETER HOOPER III, Assistant Director LEGAL DIVISION KAREN H. JOHNSON, Assistant Director J. VIRGIL MATTINGLY, JR., General Counsel RALPH W. SMITH, JR. , Assistant Director SCOTT G. ALVAREZ, Associate General Counsel RICHARD M. ASHTON, Associate General Counsel DIVISION OF RESEARCH AND STATISTICS OLIVER IRELAND, Associate General Counsel MICHAEL J. PRELL, Director RICKI R. TIGERT, Associate General Counsel EDWARD C. ETTIN, Deputy Director KATHLEEN M. O'DAY, Assistant General Counsel THOMAS D. SIMPSON, Associate Director MARYELLEN A. BROWN, Assistant to the General Counsel LAWRENCE SLIFMAN, Associate Director DAVID J. STOCKTON, Associate Director OFFICE OF THE SECRETARY MARTHA BETHEA, Deputy Associate Director WILLIAM W. WILES, Secretary PETER A. TINSLEY, Deputy Associate Director JENNIFER J. JOHNSON, Associate Secretary MYRON L. KWAST, Assistant Director BARBARA R. LOWREY, Associate Secretary PATRICK M. PARKINSON, Assistant Director MARTHA S. SCANLON, Assistant Director JOYCE K. ZICKLER, Assistant Director DIVISION OF CONSUMER LEVON H. GARABEDLAN, Assistant Director AND COMMUNITY AFFAIRS (Administration) GRIFFITH L. GARWOOD, Director GLENN E. LONEY, Assistant Director DIVISION OF MONETARY AFFAIRS ELLEN MALAND, Assistant Director DOLORES S. SMITH, Assistant Director DONALD L. KOHN, Director DAVID E. LINDSEY, Deputy Director DIVISION OF BANKING BRIAN F. MADIGAN, Assistant Director RICHARD D. PORTER, Assistant Director SUPERVISION AND REGULATION NORMAND R. V. BERNARD, Special Assistant to the Board WILLIAM TAYLOR, Staff Director DON E. KLINE, Associate Director OFFICE OF THE INSPECTOR GENERAL FREDERICK M. STRUBLE, Associate Director BRENT L. BOWEN, Inspector General W ST I E L P L H IA E M N A C . . R SC Y H BA EM CK E , R D IN e G p , u D ty e p A u s t s y o A ci s a s t o e c D ia ir te e c D to ir r e ctor BARRY R. SNYDER, Assistant Inspector General RICHARD SPILLENKOTHEN, Deputy Associate Director HERBERT A. BIERN, Assistant Director JOE M. CLEAVER, Assistant Director ROGER T. COLE, Assistant Director JAMES I. GARNER, Assistant Director JAMES D. GOETZINGER, Assistant Director MICHAEL G. MARTINSON, Assistant Director ROBERT S. PLOTKIN, Assistant Director SIDNEY M. SUSSAN, Assistant Director LAURA M. HOMER, Securities Credit Officer Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A73 JOHN P. LAWARE OFFICE OF DIVISION OF RESERVE BANK OPERATIONS STAFF DIRECTOR FOR MANAGEMENT AND PAYMENT SYSTEMS S. DAVID FROST, Staff Director CLYDE H. FARNSWORTH, JR., Director WILLIAM SCHNEIDER, Special Assignment: DAVID L. ROBINSON, Deputy Director (Finance and Project Director, National Information Center Control) PORTIA W. THOMPSON, Equal Employment Opportunity BRUCE J. SUMMERS, Deputy Director (Payments and Programs Officer Automation) CHARLES W. BENNETT, Assistant Director DIVISION OF HUMAN RESOURCES JACK DENNIS, JR., Assistant Director MANAGEMENT EARL G. HAMILTON, Assistant Director DAVID L. SHANNON, Director JEFFREY C. MARQUARDT, Assistant Director JOHN R. WEIS, Associate Director JOHN H. PARRISH, Assistant Director ANTHONY V, DIGIOIA, Assistant Director LOUISE L. ROSEMAN, Assistant Director JOSEPH H. HAYES, JR. , Assistant Director FLORENCE M. YOUNG, Assistant Director FRED HOROWITZ, Assistant Director OFFICE OF THE CONTROLLER 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

74 Federal Reserve Bulletin • September 1991 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman E. GERALD CORRIGAN, Vice Chairman WAYNE D. ANGELL SILAS 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. KORSVDC, 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. HERNANDEZ, 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. SELBERSTEIN, 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 The Federal Open Market Committee 1988. 1989. 256 pp. $25.00 per copy. Federal Reserve Bank Board of Directors 1980-89. 1991. 712 pp. $25.00 per copy. Federal Reserve Banks SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES Organization and Advisory Committees OF CHARTS. Weekly. $30.00 per year or $.70 each in the A Consumer's Guide to Mortgage Lock-Ins United States, its possessions, Canada, and Mexico. A Consumer's Guide to Mortgage Settlement Costs Elsewhere, $35.00 per year or $.80 each. A Consumer's Guide to Mortgage Refinancing THE FEDERAL RESERVE ACT and other statutory provisions Home Mortgages: Understanding the Process and Your Right affecting the Federal Reserve System, as amended through 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. Home Equity Lines of Credit ANNUAL PERCENTAGE RATE TABLES (Truth in Lending-Regulation 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 fiftyc opies 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 ofthejull 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. 21pp. Staff Studies 1-145 are out of print. 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 "A"is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Demand deposits—Continued Agricultural loans, commercial banks, 19, 20 Ownership by individuals, partnerships, and corporations, 21 Assets and liabilities (See also Foreigners) Turnover, 15 Banks, by classes, 18-20 Depository institutions Domestic finance companies, 35 Reserve requirements, 8 Federal Reserve Banks, 10 Reserves and related items, 3, 4, 5, 12 Financial institutions, 25 Deposits (See also specific types) Foreign banks, U.S. branches and agencies, 21 Banks, by classes, 3,18-20,21 Automobiles Federal Reserve Banks, 4, 10 Consumer installment credit, 38, 39 Turnover, 15 Production, 48, 49 Discount rates at Reserve Banks and at foreign central banks and foreign countries (See Interest rates) Discounts and advances by Reserve Banks (See Loans) BANKERS acceptances, 9,22,23 Dividends, corporate, 34 Bankers balances, 18-20 (See also Foreigners) Bonds (See also U.S. government securities) New issues, 33 EMPLOYMENT, 46 Rates, 23 Eurodollars, 23 Branch banks, 21, 56 Business activity, nonfinancial, 45 Business expenditures on new plant and equipment, 34 FARM mortgage loans, 37 Business loans (See Commercial and industrial loans) Federal agency obligations, 4,9, 10,11, 30, 31 Federal credit agencies, 32 Federal finance CAPACITY utilization, 47 Debt subject to statutory limitation, and types and ownership Capital accounts of gross debt, 29 Banks, by classes, 18 Receipts and outlays, 27, 28 Federal Reserve Banks, 10 Treasury financing of surplus, or deficit, 27 Central banks, discount rates, 68 Treasury operating balance, 27 Certificates of deposit, 23 Federal Financing Bank, 27, 32 Commercial and industrial loans Federal funds, 6, 17, 19, 20, 21,23, 27 Commercial banks, 16, 19 Weekly reporting banks, 19-21 Federal Home Loan Banks, 32 Commercial banks Federal Home Loan Mortgage Corporation, 32, 36, 37 Assets and liabilities, 18-20 Federal Housing Administration, 32, 36, 37 Commercial and industrial loans, 16, 18, 19, 20, 21 Federal Land Banks, 37 Consumer loans held, by type and terms, 38, 39 Federal National Mortgage Association, 32, 36, 37 Loans sold outright, 19 Federal Reserve Banks Nondeposit funds, 17 Condition statement, 10 Discount rates (See Interest rates) Real estate mortgages held, by holder and property, 37 U.S. government securities held, 4, 10, 11,29 Time and savings deposits, 3 Federal Reserve credit, 4,5,10, 11 Commercial paper, 22, 23, 35 Federal Reserve notes, 10 Condition statements (See Assets and liabilities) Federal Reserve System Construction, 45, 50 Balance sheet for priced services, 82 Consumer installment credit, 38, 39 Condition statement for priced services, 83 Consumer prices, 45,47 Federally sponsored credit agencies, 32 Consumption expenditures, 52, 53 Finance companies Corporations Assets and liabilities, 35 Nonfinancial, assets and liabilities, 34 Business credit, 35 Profits and their distribution, 34 Loans, 38, 39 Security issues, 33, 66 Paper, 22, 23 Cost of living (See Consumer prices) Financial institutions Credit unions, 26,38. (See also SAIF-insured institutions) Loans to, 19,20,21 Currency and coin, 18 Selected assets and liabilities, 25 Currency in circulation, 4,13 Float, 4, 83 Customer credit, stock market, 24 Flow of funds, 40,42,43,44 Foreign banks, assets and liabilities of U.S. branches and DEBITS to deposit accounts, 14 agencies, 21 Debt (See specific types of debt or securities) Foreign currency operations, 10 Demand deposits Foreign deposits in U.S. banks, 4,10, 19, 20 Banks, by classes, 18-21 Foreign exchange rates, 69 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A79 Foreign trade, 55 REAL estate loans Foreigners Banks, by classes, 16,19,20, 37 Claims on, 56, 58, 61,62, 63, 65 Financial institutions, 25 Liabilities to, 20, 55, 56, 58, 59, 64,66,67 Terms, yields, and activity, 36 Type of holder and property mortgaged, 37 Repurchase agreements, 6, 17, 19,20, 21 GOLD Reserve requirements, 8 Certificate account, 10 Reserves Stock, 4, 55 Commercial banks, 18 Government National Mortgage Association, 32, 36, 37 Depository institutions, 3, 4, 5,12 Gross national product, 52 Federal Reserve Banks, 10 U.S. reserve assets, 55 HOUSING, new and existing units, 50 Residential mortgage loans, 36 Retail credit and retail sales, 38, 39,45 INCOME, personal and national, 45, 52, 53 Industrial production, 45,48 Installment loans, 38, 39 SAVING Insurance companies, 25, 29, 37 Flow of funds, 40, 42, 43, 44 Interest rates National income accounts, 52 Bonds, 23 Savings and loan associations, 37, 38, 40. (See also SAIF-insured Consumer installment credit, 39 institutions) Federal Reserve Banks, 7 Savings Association Insurance Funds (SAIF) insured institutions, 25 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, 26 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 Credit unions, 26 Student Loan Marketing Association, 32 Federal Reserve Banks, 4, 5, 7,10, 11 Financial institutions, 25, 37 TAX receipts, federal, 28 Insured or guaranteed by United States, 36, 37 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) Dealer transactions, positions, and financing, 31 Mutual funds, 34 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, 25,26, 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 WEEKLY reporting banks, 19-21 Prime rate, 22 Wholesale (producer) prices, 45, 51 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, or 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 John R. Miller W. Lee Hoskins 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 m Nashville 37203 Shirley A. Zeitlin Melvyn K. Purcell New Orleans 70161 JoAnnSlaydon 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 M. elzer Robert H. Quenon James R. Bowen Little Rock 72203 L. Dickson Flake 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 KentM. 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, III Sammie C. Clay Houston 77252 Gilbert D. Gaedcke, Jr. Robert Smith, III1 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 Judith Runstad 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 Helen, j Minneapolis^ i © jS'l'Like City ® X T r s_ I lx!^"''^.' .y^Jsa I I Denver Kansas City one* fichm?! Mahoma CitT \fAemphis ^ashvilj^ X r r T . "ge/es little Rock BirmiHghai^® ^ lgn Dallas® r ~ " ~ )| ) © Jacks' , HoustonI Stii Antonio I/WFMM"* April 1984 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