Federal Reserve Bulletin, 1991-11

VOLUME 77 • NUMBER 11 • NOVEMBER 1991 FEDERAL RESERVE BULLETIN BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn • J. Virgil Mattingly, Jr. • Michael J. Prell • Edwin M. Truman The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Graphics Center under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 847 A PRIMER ON THE SETTLEMENT OF 885 STATEMENTS TO THE CONGRESS PAYMENTS IN THE UNITED STATES David W. Mullins, Jr., Vice Chairman, Board This article examines the concept of settlement of Governors, testifies in connection with the as it applies to payments in the United States regulation of the government securities market, and describes the settlement process for largein particular the potential implications of the value transfer systems. The examination takes disclosures by Salomon Brothers for regulatory place in the context of increased public policy and legislative intitatives, before the Subcomattention to the importance of a sound payment mittee on Telecommunications and Finance of system, which can be measured by the certainty the House Committee on Energy and Comthat payments will settle on schedule, for merce, September 4, 1991. the efficient operation of a modern market economy. 887 E. Gerald Corrigan, President, Federal Reserve Bank of New York, provides his views concerning the disclosures by Salomon Broth- 859 HOME MORTGAGE DISCLOSURE ACT: ers and says that these disclosures must be EXPANDED DATA ON RESIDENTIAL addressed to ensure that confidence in the U.S. LENDING government securities market is maintained at This article gives an overview of the reporting the highest levels, before the Subcommittee on system required under the Home Mortgage Telecommunications and Finance of the House Disclosure Act (HMDA) in light of recent Committee on Energy and Commerce, Septemchanges in HMDA that have substantially ber 4, 1991. increased the type and amount of information available about residential lending, beginning 891 Vice Chairman Mullins discusses the regulation with data for 1990. It presents some preliminary of the government securities market in connecnumbers drawn from nationwide aggregates of tion with the Salomon Brothers episode, and the 1990 data and sounds some cautions about says that while this episode has been a troubling limitations of the data. It also discusses potential one, it is not apparent that sweeping changes in uses of the data and looks at a new area now regulation are warranted, before the Subcomcovered by HMDA—sales of home loans to the mittee on Securities of the Senate Committee secondary mortgage market. on Banking, Housing, and Urban Affairs, September 11, 1991. 882 INDUSTRIAL PRODUCTION AND CAPACITY 895 Oliver Ireland, Associate General Counsel, UTILIZATION Legal Division, Board of Governors, discusses Industrial production rose 0.3 percent in the provisions of H.R.6, the Financial Institu- August, after increases of 0.6 percent in July tions Safety and Consumer Choice Act of 1991, and 0.8 percent in June, which are now shown concerning Payment System Risk Reduction to have been larger than estimated earlier. and says that the Board strongly supports Total industrial capacity utilization increased provisions contained in H. R. 6 that are designed 0.1 percentage point in August to 80.0 percent, to confirm the validity of contractual agree- 1.6 percentage points above its trough in ments providing for the netting of payment March. obligations between and among financial insti- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

tutions, before the House Committee on Agri- between BCCI and the First American banks so culture, September 11, 1991. that the banks will be free of any tarnish that they may be suffering from their association 896 President Corrigan sheds further light on the with BCCI, before the House Committee on Salomon Brothers incident, shares his views on Banking, Finance and Urban Affairs, Septemthe workings of the government securities ber 13, 1991. market, and says that as a part of the overall review of the lessons to be learned from this 924 Robert P. Forrestal, President, Federal Reserve incident, the Federal Reserve Bank of New Bank of Atlanta, discusses the role of the York will take a fresh look at its programs for Atlanta Reserve Bank in the supervision of the monitoring primary dealers in U.S. govern- Florida offices of BCCI and in the supervision ment securities to see what changes may be of the NBG Financial Corporation, the parent needed, before the Subcommittee on Securities bank holding company of the National Bank of of the Senate Committee on Banking, Housing, Georgia, and says that the Atlanta Reserve and Urban Affairs, September 11,1991. Bank supervised the regulation of BCCI's and NBG's activities in the Atlanta District and has made criminal referrals of suspicious activity 902 J. Virgil Mattingly, Jr., General Counsel, and increased its on-site presence as warranted Board of Governors, William Taylor, Staff in full cooperation with law enforcement Director, Division of Banking Supervision and agencies, before the House Committee on Regulation, Board of Governors, and President Banking, Finance and Urban Affairs, Septem- Corrigan describe the Federal Reserve's role in ber 13, 1991. the supervision of the Bank of Credit and Commerce International (BCCI) and the Fed- 928 Thomas D. Thomson, Executive Vice Presieral Reserve's investigation of BCCI's secret dent, Federal Reserve Bank of San Francisco, acquisition of the shares of several U.S. provides information on the San Francisco banking organizations, before the House Com- Reserve Bank's supervision and regulation of mittee on Banking, Finance and Urban Affairs, BCCI and related entities in the San Francisco September 13, 1991. District and says that the San Francisco Reserve Bank's supervision was concentrated on its 918 President Corrigan reviews the role played by on-site examination program adopted in coopthe Federal Reserve Bank of New York in the eration with the California State Banking BCCI affair and says that the New York Reserve Department, its role in drafting enforcement Bank has been intimately involved in virtually actions issued against BCCI, its oversight every aspect of the Federal Reserve's investiga- efforts in light of money laundering allegations tion into BCCI, including its illegal control of in 1988, and a continuous on-site presence banking institutions in the United States, before since 1991 at a Los Angeles banking agency the House Committee on Banking, Finance and owned by BCCI, before the House Committee Urban Affairs, September 13, 1991. on Banking, Finance and Urban Affairs, September 13, 1991. 920 Robert P. Black, President, Federal Reserve Bank of Richmond, describes the role of the 932 John P. La Ware, Member, Board of Governors, Richmond Reserve Bank in the supervision and discusses issues related to mergers among U.S. regulation of Credit and Commerce American banking organizations and says that the primary Holdings (CCAH), which came under the objectives of public policy in this area should supervision of the Richmond Reserve Bank be to help manage the evolution of the banking after CCAH acquired First American Bank- industry in ways that preserve the benefits of shares, and says that the staff of the Richmond competition for the consumers of banking ser- Reserve Bank is working with the staff of the vices and to ensure a safe, sound, and profitable Board to sever any improper connections banking system, before the House Committee Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

on Banking, Finance and Urban Affairs, Sep- 951 LEGAL DEVELOPMENTS tember 24, 1991. Various bank holding company, bank service corporation, and bank merger orders; and 941 Vice Chairman Mullins testifies in connection pending cases. with the regulation of the government securities market and says that the Board considers this AL FINANCIAL AND BUSINESS STATISTICS market to be the most important securities market in the world and that he does not believe These tables reflect data available as of that this market is broken in any fundamental September 26,1991. sense, before the Subcommittee on Oversight A3 Domestic Financial Statistics of the House Committee on Ways and Means, A44 Domestic Nonfinancial Statistics September 26, 1991. A53 International Statistics 944 Peter D. Sternlight, Executive Vice President, A69 GUIDE TO TABULAR PRESENTATION, Federal Reserve Bank of New York, talks STATISTICAL RELEASES, AND SPECIAL about the market for U.S. government securi- TABLES ties and says that although he believes that improvements in market practice and official A82 BOARD OF GOVERNORS AND STAFF oversight are needed, the government securities market is not fundamentally flawed, before the A84 FEDERAL OPEN MARKET COMMITTEE AND Subcommittee on Oversight of the House STAFF; ADVISORY COUNCILS Committee on Ways and Means, September 26,1991. A86 FEDERAL RESERVE BOARD PUBUCATIONS 949 ANNOUNCEMENTS A88 INDEX TO STATISTICAL TABLES Change in the discount rate. A90 FEDERAL RESERVE BANKS, BRANCHES, Meeting of Consumer Advisory Council. AND OFFICES Meetings on application of NCNB Corporation to acquire C&S/Sovran Corporation. A91 MAP OF THE FEDERAL RESERVE SYSTEM Proposed amendments to the reporting form and instructions that accompany Regulation C. Changes in Board staff. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A Primer on the Settlement of Payments in the United States George R. Juncker, of the Federal Reserve Bank processing of payments and their underlying of New York, and Bruce J. Summers and transactions. Finally, new settlement techniques Florence M. Young, of the Board's Division of involving netting are being increasingly em- Reserve Bank Operations and Payment Systems, ployed to reduce liquidity requirements and to prepared this article. control risk. This article examines the role of banks, includ- In recent years, the soundness of the U.S. pay- ing the central bank, in the payment and settlement system, which can be measured by the ment process and explains the use of netting.1 It certainty that payments will settle on schedule, also describes large-value netting arrangements has become a key public policy issue. Payment, that settle using the Federal Reserve and identifies or the transmission of an instruction to transfer issues arising in cross-border and multicurrency value that results from a transaction in the econ- clearing arrangements. The article concludes with omy, and settlement, or the final and uncondi- a summary of domestic and international public tional transfer of the value specified in a payment policy issues related to settlement. instruction, need not, and in fact generally do not, occur simultaneously. Therefore, the recipient of a payment may face some uncertainty PAYMENT AND SETTLEMENT about receiving value even though a payment has been made to him or her. Efforts to reduce the In a modern economy, payment obligations are gap of time between payment and settlement, or discharged through the transfer of an accepted to ensure ultimate settlement of the payment, monetary asset. In earlier times, the monetary contribute to the integrity of the payment system asset could take the form of a commodity, such and the efficiency of a market economy. as gold or silver. Today, most sovereign nations Four developments have led to the increased issue fiat money denominated in a national curpublic policy attention to payment system integ- rency unit. Fiat money serves as a store of value rity and settlement in the United States. First, and a medium of exchange because it has the the daily value of payments has increased signif- public's confidence. icantly because of increased economic activity, In the United States, the deposits held with growing sophistication and turnover of financial banks by their customers, along with bank deproducts, and opportunity costs associated with posits held with the Federal Reserve, are the holding non-interest-earning demand deposits. monetary assets most frequently used to dis- Second, participants in the payment system have charge payment obligations. Accordingly, banks become increasingly aware of the credit and and the banking system are integral to the payliquidity risks associated with clearing and set- ment process. In important ways, the safety of tling payments. Third, the payment process has the banking system is itself tied to the integrity of become more complex because of technological the payment system. advances and increased emphasis on the efficient 1. The term "bank" is used throughout this article to refer to all depository institutions other than the central bank that are NOTE. The authors have received helpful comments from participants in the payment system. The Federal Reserve System several Federal Reserve colleagues, especially Jeffrey C. is the central bank of the United States and includes the Board Marquardt and Patrick M. Parkinson. of Governors and the twelve Federal Reserve Banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

848 Federal Reserve Bulletin • November 1991 A large proportion of economic obligations are ment. In this case, the bank is providing a credit discharged primarily through the transfer of de- service as well as a payment service to its mand deposit claims on banks' books. Because a customer by assuming the risk that settlement bank can fail, its depositors may bear some may not occur as scheduled. When settlement default and liquidity risk as a result of their occurs at the same time the payment is made, decision to hold bank balances. Banks face no however, settlement risk is eliminated for the risk in holding deposits directly with the Federal bank and its customer. Reserve, however, since a central bank—reflecting its governmental status—is immune from liquidity or credit problems. Thus, balances held THE WAY PAYMENTS ARE MADE with the Federal Reserve, which are referred to as "central bank money," have special signifi- Most payments in the United States are still cance when used by commercial banks to settle made with cash (currency and coin). In cash their payments. Settlement in central bank transactions, an instantaneous transfer of value money is universally acceptable because the re- occurs, and thus settlement and payment are sulting deposit claim is free of default and liquid- simultaneous. Cash is used to settle the largest ity risk. number of transactions, but it accounts for only Banks and the Federal Reserve together pro- about 1 percent of the total value of payments. vide the settlement infrastructure for the nation's Checks are the next most popular type of payment system. Commercial banks hold ac- payment, but they too still account for only a counts through which the general public's pay- small portion, about 15 percent, of the total value ments are recorded and settled. The many thou- of payments in the United States. When a check sands of payments that bank customers make is received as payment, the payee must "collect" each day result in transfers of balances between the value of the check by presenting the check to banks and therefore affect banks' positions with the bank upon which it is drawn so that settleeach other and with the central bank. Of course, ment can occur. Consequently, payment by banks also make their own payments in connec- check can precede settlement by as much as tion with carrying out the business of banking. several days. Banks, including Federal Reserve These add to, and are often major sources of, Banks, treat check deposits as deposit balances large daily payment flows among banks. Banks based on the ability to present the checks for can settle these interbank payments through ac- collection to the banks on which they are drawn. counts that they hold with each other or through Because checks can be returned, settlement does accounts that they hold with a correspondent not truly occur until statutory deadlines governbank. However, many interbank payments, es- ing the return of checks have passed.2 pecially large-value payments, are made through The automated clearinghouse (ACH) has been the transfer of balances on the books of the designed as a low-cost substitute for paper pay- Federal Reserve. ments; and, while still used primarily for con- When a bank receives a payment on behalf of sumer payments, this mechanism is increasingly its customer, the account holder obtains a de- being used for business-to-business payments. posit claim. If the bank receiving the payment is Settlement for ACH payments occurs sometime satisfied that the payment will settle, the bank after the payment is made, generally the next day may make funds available to its customer, that is, or even the second day after the transaction. ACH it will allow the customer to withdraw, or typi- payments take two forms. In ACH debit transaccally to retransfer, the funds. When a bank tions, the receiver of the payment initiates the makes funds available to its customers before payment instruction, which must be honored by settlement, it is exposed to credit risk because an the party making the payment (like a check). In account holder may withdraw funds and, if set- ACH credit transactions, the party making the tlement does not occur, the bank may not be able payment initiates the payment instruction (like a to recover the funds. Banks sometimes guarantee the unconditional use of funds to their customers 2. Checks can generally be returned unpaid until midnight based on the receipt of payments before settleof the banking day after the day of presentment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A Primer on the Settlement of Payments in the United States 849 funds transfer). It is estimated that between 0.5 receiver's funds account is debited and its securipercent and 1 percent of all payments, accounting ties account is credited. Payments to the banks for about 1 percent of the value of all payments, sending book-entry securities are settled through are made by using the ACH. the transfer of central bank balances. As with Two electronic funds transfer systems—Fed- regular Fedwire payments, the Reserve Banks wire, operated by the Federal Reserve Banks, may extend intraday credit to receivers of bookand the Clearing House Interbank Payment Sys- entry securities transfers and therefore expose tem (CHIPS), operated by the New York Clear- themselves to some credit risk.3 In the United ing House—account for less than 0.1 percent of States, some other types of securities are cleared the number of all payments in the United States; through privately operated book-entry transfer however, they account for more than 80 percent systems. These systems operate somewhat differof the value of payments. When a Fedwire pay- ently than Fedwire and settle on a net basis at the ment is processed, the Federal Reserve debits close of business in a way similar to that of the account of the sending bank and credits the CHIPS. account of the receiving bank. Payment instruc- As indicated, the Federal Reserve Banks extions are for the immediate delivery of "central tend intraday credit to banks in conjunction with bank money," and Fedwire payments are settled the payment services they provide. Similarly, when the amount of the payment is credited to banks often extend intraday credit when they the receiving bank's account with the Federal make payments on behalf of their customers. Reserve or when the receiving bank is notified of Thus, both the Federal Reserve and private the payment. The Federal Reserve "guarantees" banks are exposed to credit risk in processing the payment to the bank receiving the Fedwire payment transactions. Private banks are also and assumes any credit risk if there are insuffi- exposed to liquidity risk. cient funds in the Federal Reserve account of the Banks typically control their risk by establishbank sending the payment. ing intraday credit limits for their customers and Payments processed over CHIPS, however, are by monitoring their customers' use of such settled only when CHIPS participants fund their credit. In some cases, banks require their cusnet obligations resulting from the day's payment tomers to pledge collateral to cover daylight instructions over CHIPS at the close of the busi- credit exposures. The Federal Reserve Banks ness day. Settlement of CHIPS obligations occurs have also adopted risk control procedures: They by Fedwire transfers initiated by those in a net use "net debit caps" (or ceilings for net debits) to debit position for the day's CHIPS activity. If the limit the amount of credit extended to individual bank receiving a CHIPS payment makes funds banks that use Federal Reserve payment seravailable to its customers before settlement oc- vices. The Reserve Banks monitor the use of curs at the end of the day, it is exposed to some intraday Federal Reserve credit for healthy risk of loss if CHIPS settlement cannot occur. To banks, in most cases, by examining historical ensure that settlement occurs, the New York data through an ex post monitoring system. On- Clearing House has put in place risk control line, real-time account monitoring is used for the mechanisms (see description below). continuous control of intraday credit for certain Book-entry transactions involving U.S. govern- institutions, especially those under financial ment securities are cleared and settled over Fed- stress. Real-time monitoring enables the Federal wire, through a deli very-versus-payment mecha- Reserve to reject or hold funds transfer requests nism. With this mechanism, one form of value (in pending the availability of funds to cover them. this case, U.S. government securities) is simulta- In some cases, the Reserve Banks may also neously exchanged for another form of value (in this case, a balance with a Federal Reserve Bank). 3. Beginning January 1991, banks that incurred "frequent When book-entry transfers are processed, the and material" daylight overdrafts with the Federal Reserve sending bank's securities account at the Federal as a result of receiving book-entry securities transfers began Reserve Bank is debited and its funds account is to collateralize fully their book-entry-related overdrafts. This credited for the value of the sale. When the procedure helps protect the Federal Reserve Banks from the credit risk they face as a result of processing book-entry securities are delivered to the receiving bank, the securities transfers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

850 Federal Reserve Bulletin • November 1991 require banks to pledge collateral to secure the substitute a single, smaller, net settlement (see intraday credit they use. box 1). Two banks may also enter into an agreement to net financial contracts, such as those involving foreign exchange, and settle the net GROSS VERSUS NET SETTLEMENT amount resulting from the trading. The settlement of payments occurs on either a Multilateral Netting gross or a net basis. When payments are settled on a gross basis, each transaction is settled When three or more institutions participate in a individually. For example, Fedwire is a gross clearing and settlement arrangement with netting, settlement system. When payments are settled the arrangement is called multilateral netting. on a net basis, the parties to the payments offset Banks form multilateral netting arrangements for the amounts they are due to pay and receive with various payments and financial contracts, includeach other (or with a central party, or clearing- ing checks, ACH transactions, and large-value house) and maintain a running balance of the funds and securities transfers. Such arrangements netted amounts. The offsetting of payable and typically have the potential to reduce the number receivable amounts can occur between two par- and the overall value of settlements well beyond ties (bilateral netting) or among many parties the reductions that can be realized through bilat- (multilateral netting). eral netting (see boxes 1 and 2 for examples). In markets characterized by a high volume or Participants in multilateral netting arrangehigh value of transactions among a fixed group ments may exchange transactions either at a of participants, net settlement typically im- single designated time (which is typical for a proves the efficiency of payment processing; paper-based payment system, such as checks, or reduces liquidity needs; and, depending on the for electronic systems that process in a batch type of legal foundation and risk controls used, mode, such as ACHs) or within a specified period can help control credit exposures. Netting may of time (as with some large-value funds and be applied in many real and financial markets. securities transfer systems). An agent for the For example, petroleum companies active in netting group typically calculates each particitrading crude oil have bilaterally netted their oil pant's position based on the value of payments trades for many years and have also partici- that the participant has made and received within pated in a multilateral netting arrangement. the netting cycle, which is usually one day. Many organized exchanges for commodities Institutions that have made a greater value of and securities also employ forms of netting, payments than they have received must transfer usually through formal clearinghouses. Banks money to the clearing group, whereas particithemselves actively participate in clearing- pants that have received a greater value of payhouses through which they exchange and net ments than they have made receive money from payment transactions. the clearing group. The sum of all participants' obligations must equal zero. Bilateral Netting Box 2 shows a simple numerical example of a funds transfer netting arrangement involving four Interbank payments are often cleared and settled participants ; it illustrates settlement from the perin bilateral arrangements. For example, two spective of the clearinghouse. In this example, if banks that exchange large volumes of payments the four banks did not participate in the clearingmay agree to exchange certain types of pay- house, they would collectively need to make a ments, such as checks or ACH items, and settle total often interbank settlement payments with an the net value of the payments between them- aggregate value of $800 in connection with the selves at a specific time. This type of agreement underlying customer payments. As a result of reduces the value of settlement between the two multilateral netting, only one participant (Bank D) banks participating in the exchange because they has an obligation to transfer money to the clearcan total the net value of customer transactions inghouse, and the clearinghouse must transfer payable to and receivable from each other and money to three participants. Multilateral netting Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A Primer on the Settlement of Payments in the United States 851 1. Effects of the Netting of Payments The following example illustrates the differences between Total number of settlement payments the exchange of a series of gross payments and the bilateral made or received by Bank A 9 and multilateral netting of the series of payments from the Total value of settlement payments made standpoint of one organization. The assumptions in the or received by Bank A $450 example are that Bank A makes payments to and receives Day's settlement effect on Bank A - $50 payments from nine other banks on a given day. It makes ten $100 payments to and receives ten $95 payments from Multilateral Netting each of five banks. It also makes ten $95 payments to and Bank A nets payments with all nine counterparties as a receives ten $100 payments from each of four banks. The group throughout the day and settles at the end of the day settlement activity in each of the three cases is as follows: through a common agent for the multilateral netting arrangement. It makes a single payment of $50 for its Gross Settlement obligation to this agent. Bank A makes ninety payments worth $8,800 and receives Total number of settlement payments ninety payments worth $8,750. made by Bank A '.I; Total number of payments made or Total value of settlement payments received by Bank A 180 made by Bank A $50 Total value of payments made or Day's settlement effect on Bank A - $50 received by Bank A that must be settled $17,550 In each case, the settlement result at the end of the day Day's settlement effect on Bank A - $50 for Bank A is the same (as long as net settlement occurs normally); however, the number and the value of settlement payments drop dramatically with netting. In bilat- Bilateral Netting eral netting, the number of payments to Bank A's Bank A nets payments with each of the nine counterpar- counterparties is reduced to just 9 from 180 in gross setties throughout the day and settles at the end of the day tlement. In multilateral netting, Bank A need make only with each. Bank A pays each of five banks $50 for a total a single payment to satisfy its obligation to the group. Beof $250 and receives $50 from each of four banks for a cause a much smaller amount of money actually changes total of $200. • hands, liquidity needs are also dramatically reduced. and the use of a clearinghouse have allowed these account is opened at a designated time, and efficiencies to occur. institutions in net debit positions send Fedwire In multilateral netting arrangements that do payments to fund the account. After the account not involve banks, each participant's net money is fully funded, the agent for the clearing group position is typically settled through a "settlement originates Fedwire transfers from the account to bank." When the parties to the arrangement are participants in net credit positions. After all themselves banks, the settlement bank may be— funds transfers have been made and the account but does not have to be—the central bank. If the balance is zero, settlement of all underlying settlement bank maintains accounts for all par- payments is complete. ticipants, settlement can occur by the posting of each participant's net debit or credit position to Risks in Netting Arrangements its account. Alternatively, if participants rely on several settlement banks, institutions in net debit Two types of risk arise in bilateral and multilatpositions may be required to fund their positions eral netting arrangements: namely, credit and by transferring money to the settlement banks of liquidity risk. A third type of risk, systemic risk, participants that are in net credit positions. may also be present in multilateral netting ar- When the central bank acts as the settlement rangements. These three types of risk are debank, a special settlement account may be used scribed in box 3. to collect the settlements made by the parties In the case of bilateral netting arrangements, with net debit obligations. The special settlement banks must evaluate the credit and liquidity risk Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

852 Federal Reserve Bulletin • November 1991 2. Transactions among Four Participants in a Funds Transfer Clearinghouse Customer payments with I. Gross payments among banks before netting Customer payments customers of banks B and C with customers of W Bank Bank originating payment banks A, B, and D Sum of claims Bank C originates 100, 125 and 50 1 receives 50, 150, and 125 j I net = 50 net = -150 originates 50, 150, and Sum of 1 originates 100 and 125 obligations 75 receives 25, 125, and 100 tfttHHittiiK I II. Net claim or obligation of each bank with the receives 25 and 50 clearinghouse Bank D Customer payments A B with customers of Customer payments with bbaann ks A, C, and D Total 75 25 customers of banks B and C • assumed with the bank on the other side of the not make payments to D, nor does it receive bilateral netting arrangement—the "counter- payments from D. Nonetheless, participant D party." If there is doubt about a counterparty, a has a net obligation to the clearinghouse of bank receiving payments from the counterparty $150, and participant A's net credit of $75 on behalf of a customer may choose not to allow would be funded from participant D's settlethe customer access to the funds until settlement ment. Accordingly, participant A depends on has occurred. participant D to meet its settlement obligation, A mutualization of the credit risk occurs even though the two have exchanged no paywhen more than two banks participate in a ments. netting arrangement. In particular, the timely The risks created by privately operated netting completion of all the underlying gross transac- arrangements cannot be eliminated, but they can tions that are included in a multilateral netting be effectively controlled and limited. The risks depends on the ability of each party to meet its cannot be eliminated because extensions of single net settlement obligation arising from the credit between privately owned institutions are netting. If even one participant fails to meet its an inherent part of such arrangements, and these net settlement obligation, then settlement for all extensions of credit are subject to some degree of the underlying transactions could be delayed or default risk. Two types of risk control systems otherwise disrupted, creating credit and liquid- are used—decentralized and centralized. In netity risks for the participants. Indeed, even a ting arrangements based on a system of decenbank that has no dealings with the participant in tralized controls, the individual participants are a multilateral netting that does not settle may be responsible for controlling their risk vis-a-vis the exposed to risk. For example, in the situation other participants with whom they deal as coundescribed in box 2, participant A has no direct terparties in the individual transactions (CHIPS dealings whatsoever with participant D: A does is an example of a decentralized risk control Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A Primer on the Settlement of Payments in the United States 853 3. Risks in Netting Arrangements organizations establish membership standards, which are used to screen participants when they apply to participate in the arrangement and Liquidity risk involves the possibility that a participant which are monitored on an ongoing basis. Some in a clearing arrangement will have insufficient funds clearing organizations require each participant to at settlement to cover its obligation. If this situation oc- establish bilateral credit limits with every other curs, other participants may be negatively affected if participant whereby the volume of payments they have planned to use the proceeds from the settlereceived from each other participant can exceed ment to cover other obligations or, in anticipation of the volume sent to each other participant only by settlement, have already permitted their customers to a predetermined amount. Bilateral credit limits use such funds. Thus, other participants may have to thus provide a mechanism for controlling the risk find alternative sources of funding to cover their obligations while they wait for the "defaulting" participant's that the participants face in exchanging payments ultimate payment to meet its obligation. with each other participant in the arrangement. To the extent that participants agree to share Credit risk involves the possibility that a participant losses arising from the default of one or more in a clearing arrangement will be unable to meet its set- other participants and that these loss-sharing tlement obligation, either in whole or in part, because arrangements are tied to the bilateral credit limof its insolvency. In this case, other participants not only its, incentives are created for each participant to face a liquidity problem but also may incur actual losses. manage its bilateral credit positions prudently. Credit and liquidity risks may also be controlled Systemic risk involves the possibility that one partiby imposing limits on the net debit position of cipant's inability to settle in a clearing arrangement will each participant. Such limits reduce the risk that cause other participants in that clearing group to be any one participant may impose on the group and unable to meet their obligations either to their customers or to other banks. The value of the transactions ex- may be related in principle to each participant's changed among participants in a clearing arrangement ability to fund its daily settlement obligation. directly affects the degree of systemic risk associated Assuming that such limits, or net debit caps, are with the arrangement. When high-value payments are set realistically, their use reduces the potential exchanged and the turnover of funds within the arrange- that an individual participant will be unable to ment is also high, the degree of systemic risk is gener- settle its position at the close of business. ally high as well. Consequently, high systemic risk is To handle settlement defaults, some clearing usually associated with private large-value funds and groups rely on settlement recasts and unwinds. securities transfer systems. In a recast, all of the defaulting participant's payments are deleted from the settlement, and arrangement).4 In contrast, systems with central- the net settlement positions of the remaining ized controls typically rely on a central body that participants are recalculated. As a last resort, if a becomes the counterparty—usually a clearing- clearing group is unable to achieve settlement house—to every transaction cleared through the after more than one recast, then it may decide to system: The central counterparty becomes a unwind all transactions. This procedure essen- "buyer" to every seller and a "seller" to every tially requires all the participants to settle indebuyer (clearing bodies in the futures and options pendently with each other. markets are examples of centralized risk control For small-value arrangements, settlement rearrangements). casts may be able to address both liquidity and Clearing arrangements that use either decen- credit risk without serious systemic implications. tralized or centralized risk controls use combina- If a participant defaults, the clearing group relies tions of the following techniques. To protect on the resources of each remaining participant to participants against credit risk, many clearing fund its adjusted settlement position on the settlement day. Further, by removing all of the transactions of the defaulting participant, a set- 4. Controls, typically credit limits, are set on a decentral- tlement recast automatically allocates the losses ized basis, but they may be enforced through a central associated with the default to the participants computer facility. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

854 Federal Reserve Bulletin • November 1991 that dealt with the defaulting participant. Such an mediary. These approaches are applicable to the approach to resolving a settlement default is netting of financial contracts, such as foreign viable only when the value of payments ex- exchange deals, as well as to payments. Recent changed is relatively low and the potential work by the Group of Ten central banks has change in participants' settlement obligations is emphasized the need for significant netting arrelatively small and can be funded easily by the rangements to have sound legal foundations.5 remaining participants. In a large-value netting arrangement, the recast of the settlement could remove significant credits LARGE-VALUE NET SETTLEMENTS USING that other participants were relying on to meet CENTRAL BANK SERVICES their own obligations and thus cause them to be unable to settle. Therefore, recasts or unwinds In the United States, central bank net settlement can be a significant source of systemic risk. services support two quite different types of To avoid the undesirable effects of a recast, private sector large-value netting arrangements. large-value multilateral netting arrangements— The first type is a "pure" payment netting arsuch as CHIPS—may provide special "assur- rangement in which credit transfers are proances" of settlement akin to "guarantees." The cessed among participants, with settlement nondefaulting participants may, for example, across the Federal Reserve's books at the end of agree in advance to share the burden of meeting the day. The second type of netting involves the defaulting participant's obligation to allow payments arising from the exchange of a certain settlement to occur on schedule. Lines of credit type of asset, such as securities transactions. As or pools of collateral may be maintained, either with the first type, the net payments arising from of which can be used for overnight borrowing to the asset transfers may be settled across the provide the funds to achieve settlement on the Federal Reserve's books at the end of the day. day of the occurrence. In such arrangements, the nondefaulting participants would share losses Payment Netting Arrangements after the settlement had occurred, based on some method of loss allocation agreed upon in ad- At present, CHIPS is the only "pure" payment vance. Such arrangements would help prevent netting arrangement for large-value transfers opthe sudden market disruptions that might other- erating in the United States.6 It is the largest wise occur with recasts or unwinds. payment netting system in the world and processes nearly $1 trillion in payments daily. It has Legal Basis for Netting about 130 participants, the majority of which are branches or agencies of non-U.S. banks. Only Netting must have a sound legal basis for the twenty U.S. participants, however, are settling settlement to be certain. In particular, in the participants that actually send or receive net event that a participant in the netting becomes payments to settle on behalf of themselves and insolvent, it is important that the net obligations other, nonsettling participants. of the participants be legally recognized so that a receiver of the insolvent participant is not able to "cherry pick," that is, accept incoming payments while voiding outgoing payments. 5. Bank for International Settlements, Report on Netting Schemes, prepared by the Group of Experts on Payment A variety of legal approaches may be used to Systems chaired by Wayne D. Angell (Basle: BIS, February net obligations. For example, netting by novation 1989); and Bank for International Settlements, Report of the would substitute a new legal obligation each time Committee on Interbank Netting Schemes of the Central Banks of the Group of Ten Countries, prepared by the an additional payment instruction is sent or re- Committee on Interbank Netting Schemes chaired by M.A. ceived. Netting among several participants in an Lamfalussy (Basle: BIS, November 1990). arrangement may be accomplished by placing an 6. The Federal Reserve Banks provide settlement for more than 160 small-value payment netting arrangements involving intermediary between the counterparties so that checks, ACH transactions, automatic teller machine netall obligations are due to or from this new inter- works, and the like. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A Primer on the Settlement of Payments in the United States 855 Since its inception in 1970, CHIPS has adopted supports net settlement for two arrangements in a variety of measures to control and reduce credit which payments associated with the clearing of and liquidity risk. Currently, it employs admission financial instruments are netted and settled standards; bilateral credit limits, which are used across Fedwire. The Participants Trust Comby each participant to establish its maximum pany (PTC), a specialized clearing and settleexposure to each other participant in the event of ment arrangement for mortgage-backed securia default; net debit caps, which are based on all ties, uses a risk-control system and settlement bilateral credit limits established for each partici- process roughly similar to those of CHIPS. pant; explicit loss-sharing rules, which are based Like CHIPS, PTC monitors intraday positions on the bilateral limits; and collateral requirements in real time and allows transfers of securities to ensure timely settlement. only if the amount of the resulting settlement Since moving to same-day settlement in 1981, obligations is within specified limits. Unlike CHIPS has used a special settlement account CHIPS, which employs decentralized risk manwith the Federal Reserve Bank of New York to agement techniques, PTC employs a centralized settle each day. Immediately after the system risk management system in which PTC is the closes for the day at 4:30 p.m. eastern time, central counterparty to each transaction acparticipants are notified of their final net settle- cepted into the system and is responsible for the ment obligations. The settlement payments for settlement obligations. To ensure timely settlethe twenty U.S. banks that settle directly for ment, PTC retains collateral rights to the secuthemselves and the other participants are made rities it is transferring and stands ready to over Fedwire into the special settlement account pledge this collateral to obtain liquidity by at the Federal Reserve Bank of New York. borrowing against prearranged credit lines If any participant fails to settle, the loss-sharing should a participant fail to cover a settlement rules are invoked. In essence, an additional set- obligation at the end of the day. tlement obligation (ASO) is calculated for each PTC's settlement procedures at the end of the participant that dealt that day with the defaulting day are similar to those of CHIPS. Settlements member to make up that member's unpaid obliga- are made over Fedwire into a special PTC settletion, and the participants are given a reasonable ment account at the Federal Reserve Bank of period of time to cover this ASO. If any partici- New York. After participants in a net debit pant failed to meet its ASO, U.S. government position fully cover their obligations, PTC inisecurities held in a special CHIPS collateral ac- tiates transfers to the net creditors. In the event count at the Federal Reserve Bank of New York that a participant failed to cover its net debit would be tapped to collateralize a loan in the position, PTC would activate its secured credit market to use for ensuring timely settlement. lines to achieve settlement. Sufficient collateral is kept in the special CHIPS Depository Trust Company (DTC) operates a account to cover any one participant's largest same-day-funds settlement (SDFS) system, which is potential uncovered net debit. In certain cases, used to clear and settle new issues, redemptions, there would be sufficient collateral to cover sev- and trades for a variety of instruments, including eral simultaneous defaults by participants with commercial paper. This system uses Fedwire to smaller uncovered net debits.7 Thus, the CHIPS settle and operates much like PTC. Unlike PTC and collateral account ensures timely settlement for all CHIPS, however, DTC's SDFS system does not but cataclysmic default situations. employ a special settlement account but rather relies on DTC's regular account at the Federal Delivery-versus-Payment Arrangements Reserve Bank of New York to receive transfers from and make transfers to settlement banks acting In contrast to a payment-only netting system on behalf of system participants. DTC does, howlike CHIPS, the Federal Reserve also directly ever, provide the New York Reserve Bank with settlement data and notifies it when the settlement is complete. Like PTC, it uses securities held in the 7. The aggregate value of the collateral maintained by the system as collateral to support credit lines that CHIPS participants is currently about $3 billion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

856 Federal Reserve Bulletin • November 1991 supplement its own liquid reserves to ensure timely standing that such overdrafts will be covered in settlement. New York during the U.S. business day. U.S. dollar account balances held at Chase-Tokyo at the end of the Tokyo business day can be moved CROSS-BORDER AND MULTICURRENCY by advising Chase-Tokyo to transfer part or all of the balance in New York during the U.S. SETTLEMENT business day beginning some fourteen hours after The U.S. dollar is a key international currency. the Tokyo business day begins. These funds Many U.S. dollar payments are made "off shore" typically are transferred by Chase and its cusin connection with a variety of real and financial tomers in Tokyo through their U.S. branches or transactions. Banks around the world use a vari- through U.S. correspondent banks over CHIPS. ety of techniques to settle these payments. The Chase-Tokyo clearing arrangement for U.S. In general, the simplest form of clearing pay- dollars is based on correspondent banking relationments outside the home country of a currency is ships with customers. Nonetheless, it differs from across the books of a single correspondent bank. traditional correspondent banking in at least two That is, if X, a bank located in London, wishes to ways. First, Chase's customers contract to participay U.S. dollars to Y, a bank located in Ger- pate in a specific loss-sharing arrangement to reimmany, and both X and Y hold accounts at the burse Chase on the next business day if a participant same correspondent bank in New York, X may defaults. Second, in part because of the mutuaJizaorder (typically electronically) the New York tion of risk resulting from the loss-sharing, the correspondent bank to transfer funds from its arrangement operates as a system with some of the account to that of Y. If X and Y do not hold same kinds of interdependencies that arise in a accounts at a common correspondent bank, fur- multilateral netting arrangement. ther intermediation will be involved. The correspondent bank need not be resident in, or even Foreign Exchange Settlements chartered in, the United States to perform these account transfer functions involving the U.S. The latest international estimate (as of April dollar. Interbank settlement for off-shore U.S. 1989) of the size of the foreign exchange (FX) dollar payments may become even more elabo- market put average daily turnover conservatively rate. A concrete example may help explain how at $650 billion.8 The settlement of these transacinterbank settlement occurs for cross-border tions may represent the single largest global payments involving the U.S. dollar. demand for payment services and is believed to account for a substantial proportion of payments Chase-Tokyo Dollar Clearing made over the large-value funds transfer systems in countries with key international currencies. In Tokyo, the Chase Manhattan Bank (Chase) The traditional settlement practices for foreign operates a dollar clearing arrangement primarily exchange contracts, however, present special to serve the Japanese and Asian interbank mar- risks, since the settlement of these contracts kets. Operating during the Tokyo business day typically involves payments and counterpaybefore U.S. markets open, correspondent cus- ments that are settled at different times in differtomers of Chase move dollar payments by send- ent countries. For example, in a yen-dollar transing and receiving payment orders that result in action, the yen leg must be settled in a yen credits and debits to customer accounts at arrangement and the dollar leg in a dollar ar- Chase's Tokyo branch throughout the day. Once rangement. The party making the yen payment Chase posts a payment to an account, the pay- would be exposed to settlement risk from the ment is final, Chase stands behind it, and the time the payment was made during the Japanese customer may withdraw funds. Some customers are allowed to overdraw their dollar accounts at the Chase-Tokyo branch during the Tokyo bus- 8. Bank for International Settlements, Survey of Foreign iness day within specified limits, with the under- Exchange Market Activity (Basle: BIS, February 1990). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A Primer on the Settlement of Payments in the United States 857 business day until the dollar counterpayment ational capabilities to support multilateral netting was received during the U.S. business day. At a and cross-border, multicurrency settlement for minimum, this period represents about an eight- FX transactions. hour exposure and could reach almost twenty Major challenges appear to remain. Indeed, hours or more, depending on when individual finding a safe and efficient delivery-versus-paypayments were actually processed.9 This tem- ment mechanism that ensures the simultaneous poral risk, during which payment has been settlement of payments in two or more currenmade in one currency but not yet received in cies and virtually eliminates Herstatt risk reanother currency because of time zone differ- mains both a goal and a challenge for market ences, is often termed "Herstatt" risk, as a participants. result of the 1974 failure of a German bank, Bankhaus Herstatt. Bankhaus Herstatt failed at the end of the German business day, after mark payments had been made on the mark leg of a PUBLIC POLICY ISSUES mark-dollar transaction, but before the end of the business day in the United States and thus The United States has for decades had a payment before U.S. dollar payments in the United system that achieves timely and reliable settle- States were fully completed. Therefore, parties ment. The banking system, including commercial that had made payments and were owed dollars banks, their clearing organizations, and the Fedfor the transactions did not receive dollar pay- eral Reserve, have played an active part in ments as scheduled. supporting the payment and settlement needs of Recently, the private sector has made strides the economy. in addressing risks in the FX market by develop- As noted in the introduction, however, public ing bilateral netting arrangements that reduce policy concern about the U.S. payment system both the number and value of payments neces- has increased, especially with regard to the insary to support the settlement of the underlying tegrity of the settlement process. In large meacontracts. The central banking community has sure, this concern is related to the dramatic been monitoring existing and proposed arrange- increase in daily payment flows, which in 1980 ments out of concern that the netting arrange- represented only about twelve times average ments should in fact reduce risks and not just reserve balances held with the Federal Reserve disguise them. In fact, in November 1990 the and today represent about fifty-five times reserve Group of Ten central banks adopted minimum balances. standards for cross-border multicurrency inter- The increased demand for payment services is bank netting schemes.10 explained partly by the extensive reliance While the bilateral netting of FX transactions throughout the world on the U.S. dollar as a appears to be gaining market acceptance, such an reserve currency and as a vehicle currency in arrangement does not exhaust the operational foreign transactions. This reliance on the U.S. efficiencies or potential risk reductions that well- dollar is illustrated by the predominance of designed multilateral netting could offer. Two CHIPS payments that are related to settling the groups of banks, one in Europe and one in North U.S. dollar part of FX transactions—an esti- America have explored multilateral netting of FX mated $650 billion of the $1 trillion of daily contracts. These groups have also explored the CHIPS payment flows are related directly to FX appropriate risk management facilities and oper- settlement. However, the attractiveness of the U.S. dollar as an international currency depends partly on the efficiency and soundness of its 9. The exposure is shorter if settlement for the western- settlement arrangements. Moreover, from an inmost currency, the U.S. dollar, is made in the morning over ternational standpoint, the efficiency and sound- Fedwire. It is longer if settlement for the U.S. dollar leg is made through CHIPS, which achieves settlement at the end ness of national payment systems are becoming of the banking day in the United States. increasingly interlinked because of the need to 10. See BIS, Report of the Committee on Interbank Netmake and settle the growing number and variety ting Schemes. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

858 Federal Reserve Bulletin • November 1991 of off-shore, cross-border, and multicurrency strengthen these systems further and the benefits payments. to be gained by banks and the public? The current context of public policy therefore Second, to what extent should the interdepenis global. Participants in the payment system dencies among settlement systems with common rely on settlement banks that engage in various participants be recognized in the calculations businesses and provide services to domestic regarding risk management? For example, the and foreign customers who rely on several same institution may have settlement obligations currencies, the most important being the U.S. and settlement credits arising each day across dollar. As technology and designs for settle- netting and settlement systems associated with ment systems have evolved and have permitted different markets (say, CHIPS for FX, PTC for more efficient interbank settlement of pay- mortgage-backed securities, DTC for commerments, there has been a commensurate increase cial paper, and so forth). The sound and efficient in the sharing of risks among the participants in management of settlement risk may well be a such arrangements through their clearinghouses cross-system issue. and clearing organizations. Ensuring that these Third, to what extent can the temporal risk risks are properly managed presents an enor- related to cross-border, multicurrency settlement mous challenge. Account holders at a bank be addressed through improved international setwhose particular patterns of payment may not tlement arrangements? The formation of multidirectly require the use of a complex interbank lateral foreign exchange clearinghouses is one netting arrangement are at least indirectly de- possibility; this approach, however, itself raises pendent on the successful operation of such an fundamental questions about the payment infraarrangement through the settlement bank on structure in different countries that must be used which it relies. to effect actual settlement. The key issue here For these reasons, the Federal Reserve, as may be the desirability of extended payment well as other central banks, has become more system operations by central banks—perhaps interested in and concerned about the safe and even around-the-clock operations. reliable operation of various types of interbank Finally, in the normal course of business, U.S. netting and settlement systems. The Report of banks participate in off-shore payment and netthe Central Banks of the Group of Ten Countries ting systems and assume large settlement obligaon Interbank Netting Schemes identifies mini- tions, or receive large payments, denominated in mum standards that netting systems should meet. foreign currencies. The soundness of these banks Moreover, central banks have a great and con- may depend to some extent on the exposures and tinuing interest in the safe, efficient, and reliable risk controls in these systems. Much needs to be operation of payment systems, such as those known in the United States about the operation described in this article. of these systems to develop the same under- This review of U.S. netting and settlement standing that authorities have about U.S. syssystems suggests four public policy issues that tems. will likely occupy the attention of bankers. First, In conclusion, the integrity of the U.S. finanhow safe should netting arrangements be? At a cial system depends on the safety and soundness minimum, the risk management systems for of the settlement process for U.S. dollars. Much these arrangements should be designed to ensure progress has been made to increase confidence in settlement in the event of the default of the single the proper functioning of the arrangements that largest participant. Should the risk management together constitute the settlement process. But, systems do more? If so, what is the trade-off as the questions raised here suggest, much rebetween the costs incurred by banks to mains to be done. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Mortgage Disclosure Act: Expanded Data on Residential Lending Glenn B. Canner of the Board's Division of on loans they originated or purchased. Now, in Research and Statistics and Dolores S. Smith of disclosure statements released to the public in the Division of Consumer and Community Af- October 1991, lenders for the first time have fairs prepared this article with assistance from reported on all home loan applications they re- Nancy E. Bowen, Florence M. Benkovic, Sylvia ceived and their disposition, plus the race or A. Freeland, Cynthia H. Johnson, Thomas A. national origin, gender, and annual income of the Orndorjf, and Mark R. Schultz of the Division of applicants. In addition, more lenders are now Information Resources Management. subject to the reporting requirements. The changes in the act's requirements, as Since 1976, most banks and other depository implemented by the Federal Reserve Board's institutions that have offices in metropolitan Regulation C, will increase the usefulness of the areas have been required, under the Home Mort- HMDA data to community organizations, local gage Disclosure Act (HMDA), to disclose to the governments, financial institutions, and others. public information about the geographic distribu- The expanded data will make it possible, for tion of their loans for home purchase and home example, to review how lenders act on applicaimprovement. The data have revealed wide vari- tions and are likely to stimulate dialogue between ations in the number and dollar volume of loans institutions and members of their communities. approved across neighborhoods grouped by the Observed differences in the number of applicaincome and race of residents. These variations, tions received and loans extended to various together with data from other sources, have groups and neighborhoods are likely to lead raised questions about whether the efforts of financial institutions to reexamine their marketlenders have been adequate to help meet the ing and community outreach efforts. credit needs of the low-income and minority Differences in approval and denial rates among residents of their communities. groups and neighborhoods revealed by the new The variations in lending patterns also have data can be expected to raise questions about the generated controversy about whether lenders adequacy and fairness of the home lending protreat applicants for home loans fairly and on a cess. The data have important limitations, howracially nondiscriminatory basis. Some people ever, and care must be taken in drawing concluinterpret the variations as evidence of illegal sions from observed lending patterns. Foremost discrimination. Others suggest that the patterns among these limitations is a lack of information are attributable to differences in the demand for about factors that are important in determining housing and home loans among individuals and the creditworthiness of applicants and the adeacross neighborhoods, and that they reflect the quacy of the collateral offered as security for application of legitimate credit standards by lend- their loans. Without taking into account such ers as they review individual requests for home information, one cannot determine whether indiloans. vidual applicants or applicants grouped by a Recent changes in HMDA have substantially common characteristic (such as race or gender) increased the type and amount of information have been treated fairly. available about residential lending, beginning Major use of the expanded HMDA data will be with data for 1990. In the past, covered institu- made by the agencies charged with ensuring that tions were required to disclose information only covered institutions comply with the fair lending Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

860 Federal Reserve Bulletin • November 1991 laws (the Fair Housing and Equal Credit Oppor- Following the most recent amendments to tunity Acts) and the Community Reinvestment HMDA, contained in the Financial Institutions Act (CRA). Because bank examiners have ac- Reform, Recovery and Enforcement Act cess to loan application files, they will be able to (FIRREA) of 1989, the data may serve a fourth overcome most of the limitations of the HMDA purpose: to assist in identifying possible discrimdata. By using the HMDA data in conjunction inatory lending patterns and in enforcing antiwith loan application files, related information, discrimination laws. and other materials related to evaluating CRA performance, the agencies will be able to carry Recent Changes in Coverage out their enforcement responsibilities more effectively. For more than a decade, HMDA applied only to This article gives an overview of the HMDA depository institutions—commercial banks, reporting system and describes analytical studies savings banks, savings and loan associations, based on the geographic data available under the and credit unions—and their subsidiaries. old reporting system. It presents some prelimi- Among that group, only those with assets exnary numbers drawn from nationwide aggregates ceeding $10 million and a home or branch office of the 1990 data and sounds some cautions about in a metropolitan statistical area (MSA) have limitations of the data. The article discusses been covered.1 potential uses of the data, with a focus on the Over time, the number and type of lenders and supervisory agencies. Finally, it looks at an area the specific institutions covered by the act have newly covered by HMDA—sales of home loans changed (table 1). Even as some institutions to the secondary mortgage market. closed or merged into larger ones, many small institutions that once were exempt grew in as- HMDA's PURPOSE: IDENTIFICATION OF sets, losing their exemption as they passed the HOME LENDING PATTERNS IN $10 million mark. For example, in 1977 roughly URBAN AREAS 22 percent of commercial banks that had offices in MS As had assets of $10 million or less, com- The Congress passed the Home Mortgage Dis- pared with fewer than 3 percent in 1990. closure Act in 1975 in response to concerns that, In 1988 and again in 1989, the Congress exby failing to provide adequate home financing to panded the scope of HMDA. First, amendments qualified applicants on reasonable terms and con- passed in 1988 extended coverage to certain ditions, some depository institutions "have nondepository lenders that extend home loans, sometimes contributed to the decline of certain specifically to savings and loan service corporageographic areas." The law was intended to tions and the mortgage banking subsidiaries of provide information about residential lending ac- bank and thrift holding companies. The 1988 tivity that could be used on several fronts: amendments took effect August 19, 1988. The FIRREA amendments of August 1989 • Generally, the data could help determine brought in independent mortgage companies— whether financial institutions are serving the for the first time capturing lenders unaffiliated housing needs of the communities in which they with depository institutions. For 1990, the first are located, by identifying pockets in which they year of coverage, more than 400 independent are and are not providing credit. mortgage companies disclosed information • By providing information about the distribu- about their lending activity. Although the addition of loan originations, the data could help tion of these lenders increased the number of guide public officials in distributing public funds covered institutions in 1990 by only 5 percent, it so as to attract private investment to areas where it is needed. • After examining data about a bank's lending, 1. An MSA typically consists of a central city having a population of 50,000 or more, the county in which the city is households could better decide where to invest located, and any surrounding counties that are tied economtheir savings. ically and socially to the central city. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Mortgage Disclosure Act: Expanded Data on Residential Lending 861 1. Residential lending activity reported by financial Loans on properties outside the MSA were institutions covered by HMDA, 1981-90 grouped to show the total number and the dollar value of such loans by type of loan. Number Number of of Number of metropolitan Since 1980, the Federal Financial Institutions Year reporting loans' institutions statistical Examination Council (FFIEC) has aggregated (millions) area reports HMDA data to show the overall lending activity 1981 1.28 8,094 10,945 of covered institutions in each MSA.2 The 1982 1.13 8,258 11,357 1983 1.71 8,050 10,970 FFIEC makes these reports available at a central 1984 1.86 8,491 11,799 1985 1.98 9,072 12,567 data depository in each of the nation's 341 1986 2.83 8,898 12,329 MSAs.3 1987 3.42 9,431 13,033 1988 3.39 9,319 13,919 1989 3.13 9,203 14,154 1990 6.37 9,281 23,891 1990 Data: Disclosure Procedures and Scope of Information 1. Except for 1990, includes only loans originated by covered institutions; for 1990 (first year under revised reporting system), includes loans originated and purchased, applications approved but not accepted by the applicant, With the 1989 FIRREA amendments, institutions applications denied or withdrawn, and applications closed because informamust continue to disclose information about restion was incomplete. SOURCE. Preliminary data, Home Mortgage Disclosure Act, Board of idential loans extended and purchased and also Governors of the Federal Reserve System. must report on applications that did not result in an extension of credit. They are also making increased the lending activity reported by public for the first time information about loan roughly 15 percent. applicants—their race or national origin, gender, and annual income.4 Further, for loans originated Pre-1990 Data: Focus on or purchased during the year, institutions must Geography of Lending report the loans they sold, classified by type of secondary market purchaser. Finally, they may, Through 1989, lenders reported only their origi- if they wish, report their reasons for denying nations and purchases of home purchase and loans. home improvement loans, under conventional and government-backed lending programs (those Loan!Application Register. The Federal Reinsured or guaranteed by the Federal Housing serve Board is charged with implementing the Administration (FHA), the Veterans Administra- HMDA amendments. The Board's approach to tion (VA), or the Farmers Home Administration collecting the data (developed in consultation (FmHA)). Lenders prepared two reports for each with the other supervisory agencies5) is a rela- MSA in which they had offices—one for loans tively simple one that minimizes the burden on originated and the other for loans purchased the reporting institutions and, at the same time, during the calendar year. provides a reporting format that offers a large From 1976 through 1989, the focus was strictly base of information for use by the public and the on where a lender made or purchased loans. Of primary interest was the volume of lending 2. The FFIEC is composed of representatives of the within the MSAs in which the lender had its Federal Reserve Board, the Federal Deposit Insurance Corhome office or branch offices. In most instances, poration, the Office of the Comptroller of the Currency, the the location within an MSA of the property Office of Thrift Supervision, and the National Credit Union Administration. securing the mortgage (or of the property related 3. A directory of the central data depositories is available to the home improvement loan) was identified by from the FFIEC, 1776 G Street, NW, Suite 850B, Washingcensus tract number. For purposes of public ton, DC 20006. 4. Depository institutions with assets of $30 million or less disclosure, the number and dollar volume of may, but are not required to, report these characteristics. lending for each census tract was reported as an 5. Supervisory agencies include the member agencies of aggregate. For counties having populations of the FFIEC and the U.S. Department of Housing and Urban 30,000 or less, the data were aggregated and Development (HUD), which was assigned supervisory duties for independent mortgage bankers under the FIRREA reported by county rather than by census tract. amendments to HMDA. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

862 Federal Reserve Bulletin • November 1991 supervisory agencies. Covered institutions report for an MSA may contain as many as record data for each loan application acted on thirty-three tables. The first thirty-one are an and each loan purchased on a separate line of a aggregate version of the individual institution reporting form, the Loan/Application Register disclosure tables. The other two show the dispo- (LAR). At the end of the year, the institutions sition of loan applications by median age of submit the LARs to their respective supervisory homes in census tracts in the MSA and by the agencies, which send them to the Federal Re- central city or non-central city location of the serve Board for processing. The Board, acting on property. behalf of the FFIEC, produces disclosure state- One disadvantage of the new system is that ments and sends them to the reporting institu- processing the enormous volume of data takes a tions for release to the public. Under this system, long time. Although more information is availinstitutions collect the required information but able, the data were not available to the public this do not have to undertake the additional costly year by March 31, as in earlier years. In this first step of preparing their own disclosure state- year under the expanded coverage, the discloments, which would involve sorting and aggre- sure statements for 1990 were made public in gating their data in multiple cross-tabulations. mid-October 1991. To shorten the dataprocessing time, agencies are implementing such Disclosure Statements and Aggregate MSA measures as having lenders submit reports in Reports. The disclosure statements made avail- machine-readable form. able to the public consist of a series of tables. An individual institution's statement may con- Scope and Volume of Disclosures. However sist of as many as thirty-one tables for each measured, the 1990 effort to collect and process MSA in which it has offices. The tables show the data has been immense. The disclosure rethe following: ports contain data on nearly 6.4 million loan and application records. At the Federal Reserve, the • Disposition of loan applications, by type of volume of HMDA data processed on behalf of loan and geographic location of the property (in the FFIEC this year was greater than that for any most instances the census tract number) other single subject handled by the System. To • Loans purchased, by type of loan and geo- put the effort in context, the amount of data graphic location of the property processed was roughly eleven times the quantity • Loans sold, by type of secondary market of HMDA data handled prior to the 1989 amendpurchaser ments.6 Moreover, given the relatively weak • For each of six categories of loans, the housing market in many sections of the country disposition of applications, by applicant charac- through most of 1990, the volume of loan activity teristics (annual income, race or national origin, reported can be expected to be significantly and gender) and characteristics of the neighbor- greater in subsequent years. hood in which the property related to the loan application is located (median family income and percentage of the population that is minority). 6. The federal supervisory agencies incurred an estimated The disclosure statement is available to the pub- one-time cost of $2.8 million to develop the system for lic at the lender's home office and at one branch processing the expanded HMDA data (primarily for computer software development). The agencies have spent apoffice in each other MSA in which the lender has proximately $2.6 million to process the 1990 data. The annual a branch. Copies of the disclosure statements for processing cost is expected to decline in future years as more all lenders in an MSA also are available to the institutions submit the data in machine-readable form. Despite a comprehensive effort to identify errors in the data and public at the central data depository in that MSA. have them corrected, at the time the disclosure statements In addition, the FFIEC compiles and provides were distributed to the public the agencies were aware that to the central data depository an aggregate report about 4 percent of the LAR records contained errors. In addition, a number of institutions have contacted the FFIEC showing the overall lending activity for all covduring the thirty-day review period with questions about the ered institutions in that MSA. The aggregate completeness of their reports. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Mortgage Disclosure Act: Expanded Data on Residential Lending 863 2. Financial institutions covered by HMDA, by number increase public access to the data. These librarof metropolitan statistical area (MSA) reports, 19901 ies—of which there are some 1,400 across the Percentage distribution, except as noted nation—are repositories for a wide range of doc- Number of MSA reports Financial institutions uments and data produced by federal government agencies. 1 8888888888800000000000...........66666666666 2 88888888888...........66666666666 The standard disclosure statements and aggre- 3 33333333333...........00000000000 gate reports prepared by the FFIEC display the 4 11111111111...........88888888888 5 11111111111...........11111111111 HMDA data in the cross-tabulations thought to 6-9 22222222222...........11111111111 10-19 11111111111...........44444444444 be most generally useful. However, many other 20-49 ...........99999999999 permutations of the data are possible. The ...........66666666666 Total 111111111110000000000000000000000 FFIEC will make available to the public, in MEMO machine-readable form, an edited version of the Total number of financial institutions 99999999999,,,,,,,,,,,222222222228888888888811111111111 microdata (application by application and loan by Total number of MSA reports 2222222222233333333333,,,,,,,,,,,888888888889999999999911111111111 loan) for all the financial institutions covered by 1. Components do not sum to total because of rounding. HMDA.7 The data files, on magnetic tape, can be SOURCE. Preliminary data, Home Mortgage Disclosure Act, Board of Governors of the Federal Reserve System. purchased from the FFIEC for a nominal fee, enabling the public to analyze the data in the For lending activity in 1990, the FFIEC dis- manner that best suits their needs. Given the tributed disclosure statements to 9,281 reporting widespread use of personal computers, computinstitutions, consisting of 23,891 individual MSA erized access should enhance the ability to use reports (table 2, memo item). Disclosure state- the data. The supervisory agencies are exploring ments for the vast majority of institutions (81 with members of the private sector the formats in percent) covered a single MSA; for roughly 275 which the computerized data might be most lenders, the reports encompassed ten or more useful. MSAs. In terms of paper, the volume of output is staggering: The FFIEC distributed 1.2 million PRE-1990 STUDIES: FINDINGS AND printed pages of HMDA data to reporting insti- DATA LIMITATIONS tutions and central data depositories. The depositories in particular face a significant burden in HMDA data have long been the primary source storing and keeping track of the HMDA reports of public information about the geographic disin their current paper form. The average central tribution of home loans originated and purchased data depository received a printout of nearly by financial institutions.8 Dozens of studies have 1,700 pages showing lending activity in its area. examined the distribution of home loans across Depositories in MSAs with a large number of neighborhoods stratified by residents' income lenders are hardest hit: Los Angeles, Chicago, and race. and New York, for example, received printouts The HMDA data most often have been used to of roughly 19,200, 18,500, and 11,200 pages assess the residential lending activities of individrespectively. ual financial institutions. For the most part, one basic lending pattern has stood out: Considerable Efforts to Facilitate Public Access differences exist in the levels of home lending In paper form, the HMDA data can be awkward to use and costly to duplicate. Consequently, the 7. To help ensure the confidentiality of loan applicants, the FFIEC is exploring ways to distribute the data in edited version of the LAR excludes three reported items: the loan identification number, the date of application, and the forms that reduce the volume of paper and facildate action was taken on the application. itate public use, including microfiche, PC disk- 8. Although HMDA data have been the basis of most ette, and CD-ROM discs. The FFIEC also is analyses of the residential lending patterns of covered financial institutions, other data—such as property or lien transfer investigating the possible use of the governrecords—have also been used to obtain information about ment's Federal Depository Library System to real estate transactions in which a mortgage was recorded. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

864 Federal Reserve Bulletin • November 1991 activity across neighborhoods within local com- more home improvement loans per single family munities when the neighborhoods are grouped by housing unit in minority neighborhoods than in median family income or racial composition. similar-income predominantly white areas. Although these differences in lending activity Although the statistical disparities cited in vary greatly among different institutions, de- these studies clearly exist, opinions on the reapending on their specific circumstances, overall sons for the differences vary widely. Some peothe HMDA data show that a smaller proportion ple believe racial discrimination by commercial of home purchase loans made by reporting lend- banks and thrift institutions is a contributing, if ers are for properties in low- or moderate-income not the primary, source of these patterns. Others neighborhoods (those where median family in- suggest that the patterns reflect fundamental difcome is less than 80 percent of the median family ferences in the economic circumstances of popincome of their MSA). Although the proportion ulation groups (whether already living in or seekvaries somewhat from year to year, since 1985 it ing to reside in the different areas) and in market generally has been between 10 and 12 percent of specialization by different types of lending instiall the home purchase loans granted in MS As. In tutions. comparison, roughly one-third of the home pur- Consider, for example, the analyses that focus chase loans are for properties in upper-income on the level of home lending per housing unit in neighborhoods (those where median family in- seemingly similar minority and nonminority come exceeds 120 percent of the median family neighborhoods. An assumption underlying these income of their MSA).9 The remainder are for analyses is that by selecting neighborhoods that properties in middle-income neighborhoods. have certain similarities in aggregate characteris- The HMDA data also have been used to assess tics (such as neighborhood median family inthe home lending activities of creditors as a come), one has effectively accounted for differgroup within selected geographic markets. In ences in the economic circumstances of the 1988, newspapers in Atlanta and Detroit gained residents and that the only factor that differs— nationwide attention when they used HMDA and that consequently would influence lending data to compare lending activity in predomi- activity—is the racial makeup of the areas. nantly white middle-income neighborhoods and That assumption may not always be valid. In seemingly similar, but predominantly minority, the Atlanta study, for instance, important differmiddle-income neighborhoods in their respective ences existed between the two groups of "simicities.10 The analyses found that, as a group, the lar" neighborhoods selected for analysis. For depository institutions covered by HMDA ex- one thing, the analysis did not account in a tended roughly three to four times more home realistic manner for differences in the demand for purchase loans per single family housing unit in home purchase loans from the current and the predominantly white neighborhoods than in would-be residents of the two areas.11 It atthe predominantly minority areas. Other studies tempted to account for the differences in demand in such diverse locations as Louisville, Minneap- by controlling for differences in the number of olis, Washington, D.C., Chicago, and Denver single family units in each group of neighborfound similar patterns in home lending activity hoods. Yet the predominantly white neighboracross neighborhoods. hoods had experienced nearly twice as many For home improvement lending, HMDA data property transfers per single family unit as had have revealed an entirely different pattern in the minority areas. This finding suggests that many cities: Covered institutions have extended demand for home purchase loans may have differed significantly between the two groups of neighborhoods. 9. As of the 1980 census, low- or moderate-income neighborhoods contained about 16 percent of the owner-occupied housing units in MS As, while upper-income areas contained about 23 percent of the units. 11. Federal Reserve Board staff analysis of the Atlanta 10. See "The Color of Money," Atlanta Journal Constitu- Journal Constitution newspaper series, "The Color of Montion, May 1-16, 1988, and "The Race for Money," Detroit ey," prepared in 1988 at the request of Senator William Free Press, June 24-27, 1988. Proxmire. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Mortgage Disclosure Act: Expanded Data on Residential Lending 865 In Atlanta, another factor that appeared to The findings about FHA financing patterns are reduce demand for home purchase loans from consistent with the results of two recent studies depository institutions covered by HMDA was a that were based on nationwide consumer surmuch heavier reliance on government-backed veys. The first found that black and Hispanic forms of credit in the minority middle-income purchasers of moderately priced homes are neighborhoods than in the predominantly white roughly 70 percent more likely to use FHAareas. Mortgage bankers, most of which were not insured loans than are similarly situated white then covered by HMDA, are much more likely to home buyers.13 Although all the reasons for these be the source of such credit. Nationwide, they differing usage patterns are not clear, they may extend roughly 80 percent of FHA and VA loans. reflect differences in loan product recommenda- Thus, the use of government-backed loans by tions made by real estate agents, self steering by home buyers in the minority community in effect loan applicants, or differences in marketing efreduced demand for credit offered by lenders forts by lenders.14 covered by HMDA. The second study estimated the proportion of A review of Atlanta real estate transfer records families that could afford to buy a home using revealed that 52 percent of the home purchases in either a thirty-year, fixed-rate conventional loan the predominantly minority neighborhoods had or an FHA-insured loan of similar maturity and been insured or guaranteed by the FHA or VA, rate structure.15 It found that the availability of compared with only 13 percent in the predomi- FHA-insured credit, with its relatively low nantly white neighborhoods. Undoubtedly a va- downpayment and more liberal standards for riety of factors contributed, in turn, to this dif- qualifying, increased the proportion of black and ference in loan product utilization. The choice of Hispanic households that could afford to buy a FHA financing or conventional financing, for home more than it did for white households. instance, may have reflected differences in the With FHA financing, the proportion of white distribution of property prices in the two groups households that could afford to buy a home of neighborhoods. In Atlanta, the median value increased only slightly—from roughly 89 percent of owner-occupied units was considerably higher to 92 percent—compared with an increase from in the white areas than in the minority areas. This 60 percent to 78 percent for blacks and from 66 finding suggests that FHA loan-amount limits in percent to 79 percent for Hispanics. Thus, everysome cases may have restricted the use of FHA thing else the same, one would expect to see loans in predominantly white areas. FHA loans being used relatively more often in The relatively heavy reliance on government- neighborhoods with modestly priced homes and backed loans in Atlanta's minority neighbor- high concentrations of minority households. hoods also may have reflected differences in the A 1989 study by the Federal Reserve Bank of ability of applicants in the two groups of neigh- Boston also documented differences in lending borhoods to meet the underwriting standards for patterns across neighborhoods grouped by the conventional loans established by creditors, including downpayment amounts and debt-toincome ratios. Information about the amount of assets available for downpayment and levels of 13. Glenn B. Canner, Stuart A. Gabriel, and J. Michael debt burden of the Atlanta home buyers was not Woolley, "Default Risk and Mortgage Redlining: A Study of available. On a national level, however, black the FHA and Conventional Loan Markets," Southern Economic Journal (July 1991), pp. 249-262. households have far fewer liquid assets, on av- 14. The 1989 Housing Discrimination Study sponsored by erage, than whites, even after controlling for HUD found evidence that real estate agents are more likely to differences in income.12 recommend FHA loans to blacks than to similarly situated whites. See Margery Austin Turner, Raymond J. Struyk, and John Yinger, Housing Discrimination Study: Synthesis (The Urban Institute, August 1991). 12. See Board of Governors of the Federal Reserve Sys- 15. See Peter J. Fronczek and Howard Savage, "Who Can tem, 1983 Survey of Consumer Finances. At the time of the Afford to Buy a House?" Survey of Income and Program survey, the average white household held roughly four times Participation, Current Housing Reports, H91-1, table 7 (Dethe amount of liquid assets as the average black household. partment of Commerce, May 1991). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

866 Federal Reserve Bulletin • November 1991 3. Disposition of applications for home loans, by purpose and type of loan, 19901 Number, in thousands, and percentage distribution Loans on one- to four-family dwellings Home purchase DDDDiiiissssppppoooossssiiiittttiiiioooonnnn Federal Housing Veterans Farmers Home Administration Administration Administration Conventional Number Percent Number Percent Number Percent Number Percent Loan originated 454.2 68.6 103.6 70.3 .6 55.0 1,565.5 68.6 Application approved but not accepted by applicant... 21.3 3.2 1.3 .9 * 15.1 85.5 3.7 Application denied 111.6 16.9 22.1 15.0 * 20.0 379.9 16.6 Application withdrawn 67.7 10.2 18.4 12.5 * 9.2 233.1 10.2 File closed (information incomplete) 7.4 1.1 2.0 1.4 * ** 19.0 .8 Total 662.2 100 147.4 100 1.0 100 2,283.0 100 1. Components may not sum to totals because of rounding. SOURCE. Preliminary data, Home Mortgage Disclosure Act, Board of * Fewer than 500 Governors of the Federal Reserve System. ** Less than 0.5 percent. race of residents.16 The study used title lien keting and community outreach efforts, and in records to gather information about lenders and some cases to establish or join with others in the geographic distribution of their loans. As in offering or participating in special lending prothe other studies, the researchers did not have grams to expand affordable housing opportuniinformation about the prospective home buyers ties. and how their applications were treated by lenders. The study sought to determine whether differences in economic and other nonracial char- SOME PRELIMINARY FINDINGS acteristics (primarily neighborhood characteris- FROM THE 1990 DATA tics) as reported in census data might account for the disparities. The researchers found that, after Because the 1990 HMDA data have just been controlling for a wide variety of neighborhood released, little is yet known about what the factors, predominantly minority neighborhoods expanded data may reveal once they are thorin Boston had been granted 24 percent fewer oughly analyzed. This section takes a first look at mortgage loans per housing unit than predomisome loan and application patterns discernible nantly white areas. They concluded from this from the data. Myriad levels of analyses are evidence that race may have been a factor in the possible, particularly with respect to different lending patterns. They also indicated, however, geographic areas and different groupings of finanthat from their data it was not possible to detercial institutions. The focus here is on nationwide mine with certainty the causes of the observed totals and on some potential uses of the new and differences in lending. expanded data. In reviewing the nationwide data, Although the various studies can neither conit should be noted that the lending records of firm nor refute the presence of systematic illegal individual institutions may vary greatly, both lending practices based on race, they have raised from one another and from patterns for the questions about the effectiveness of depository nation as a whole, depending on their location, institutions' efforts to help meet the residential the types of applicants they serve, the types credit needs of all segments of their communiof loan products they offer, and their credit ties. These questions have, among other things, standards. caused many institutions to reexamine their mar- The statistics presented here are based on preliminary data and are subject to revision. It is anticipated that revised data will be available in 16. See Katharine L. Bradbury, Karl E. Case, and Con- January 1992. At that time, updated versions of stance R. Dunham, "Geographic Patterns of Mortgage Lendthe tables presented here will be made available ing in Boston, 1982-1987," New England Economic Review (September/October 1989), pp. 3-30. to the public. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Mortgage Disclosure Act: Expanded Data on Residential Lending 867 3.—Continued Loans on one- to four-family dwellings jjilll Loans on multifamily dwellings _D.i sposi.t.i on Refinancing Home (five or more improvement families) Number Percent Number Percent Number Percent Loan originated 691.1 67.5 716.1 65.1 27.2 61.5 Application approved but not accepted by applicant 36.6 3.6 50.7 4.6 1.1 2.5 Application denied 164.9 16.1 267.2 24.3 9.8 22.2 Application withdrawn 120.7 11.8 58.4 5.3 5.2 11.8 File closed (information incomplete) 11.2 1.1 8.3 .8 .9 2.0 Total 1,024.5 100 1,100.7 100 44.2 100 Volume of Applications The new data also indicate that black (and to a much lesser extent Hispanic) applicants are more In 1990, lenders covered by HMDA took action likely than either white or Asian applicants to on roughly 5.26 million home loan applications— seek government-backed home purchase loans.18 3.09 million for purchase, 1.02 million for refi- Blacks in particular are relatively more likely to nancing, and 1.10 million for improvement of seek FHA and VA loans: Blacks constituted 4.3 residences housing one to four families, and the percent of all applicants for conventional home balance for loans on multifamily dwellings for purchase loans in 1990, but they accounted for five or more families (table 3).17 Among home 10.5 percent of all applicants for FHA loans and purchase loan applications, 74 percent were for 11.7 percent of all applicants for VA credit conventional mortgage loans, and the remainder (detailed data not shown in tables). Viewed in were for government-backed forms of credit— another way, 46 percent of all black home loan FHA, VA, and FmHA loans. applicants applied for either an FHA or a VA loan, while only 28.6 of Hispanic applicants, 24.4 Use of Various percent of white applicants, and 10.2 percent of Home Purchase Loan Products Asian applicants sought such loans. These simple summary statistics, though re- Application patterns for various kinds of home vealing, do not take into account the financial purchase loans differ according to applicant in- circumstances of the applicants that make up the come. Government-backed loans are much more various racial or ethnic groups. Income is the likely to be used by households with relatively only financial characteristic of the applicant relow incomes than by households with high in- ported in the HMDA data. After controlling for comes. The 1990 HMDA data indicate that 39 applicant income, however, the 1990 HMDA percent of applicants with low incomes (less than data still indicate that blacks, and to a lesser 80 percent of the median family income for their extent Hispanics, are more likely than whites to MSA) applied for government-backed home pur- use FHA and VA loans. For instance, 60 percent chase loans, compared with only 15.6 percent of of low-income black applicants sought governapplicants with high incomes (more than 120 ment-backed home purchase loans, compared percent of the median family income for their with 37 percent of low-income white applicants. MSA). 18. Data compiled by the U.S. Census Bureau differentiate 17. Covered institutions also reported data for 1.1 million between white Hispanics and non-white Hispanics. In the loans they purchased during 1990. HMDA data, both are included in the Hispanic category. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

868 Federal Reserve Bulletin • November 1991 Overall Approval Rates whites.20 The 1990 HMDA data reveal a similar pattern for all lenders covered by HMDA. Lenders approved the majority of home purchase loan applications they received—roughly 72.3 Conventional Home Purchase Loans. Nationpercent of applications for conventional loans ally, about 14.4 percent of white applicants for and 71.7 percent of applications for government- conventional home purchase loans were denied backed loans (table 3).19 Among the applications credit in 1990. In sharp contrast, the rate for for conventional loans, 16.6 percent were denied black applicants was 33.9 and for Hispanics 21.4 by the lender and 10.2 percent were withdrawn percent (tables 4 and 5).21 At 12.9 percent, the by the consumer; in a relatively small number of denial rate for applicants of Asian extraction was cases (less than 1 percent) the application file was lower than for any other racial or ethnic group. closed after the applicant was asked for but failed Applicant income can be expected to affect the to submit information required for the credit ability to qualify for a home purchase loan, but decision. For government-backed home pur- income is just one criterion considered by lendchase loans, the denial rate was 16.5 percent and ers in evaluations of creditworthiness. A housethe withdrawal rate 10.6 percent. hold with relatively low income may qualify for a The relatively high approval rates for home loan of a given size and set of terms when a purchase loans likely reflect two characteristics high-income household cannot because of differof this market. First, prospective home buyers ences in such things as level of their nonhousing frequently work with real estate sales agents who debt, assets available for downpayment, employhelp them determine in advance of any applica- ment experience, and credit history. On average, tion the size of the loan for which they are likely however, low-income households have relatively to qualify. Second, because consumers incur fewer assets and lower net worth, experience upfront costs to file a home loan application—to more frequent employment disruptions, and are cover, at a minimum, a property appraisal and more likely than high-income households to fall credit bureau check—they have a strong incen- behind on scheduled debt repayments.22 tive to learn about the prevailing standards for The 1990 HMDA data reveal that the lower the credit used by the industry and by particular income, the lower the acceptance rate (tables 4 lenders they might approach for credit. and 5). Nationwide, 78.9 percent of the loan applicants whose income equaled or exceeded Approval Rates for Minorities the median family income for their MSA were approved for conventional home purchase loans, Although the majority of home purchase loan compared with 69.4 percent of the loan appliapplications are approved, many are not. Ap- cants with lower incomes. Differences are even proval rates vary according to the applicant's income and demographic characteristics and the characteristics of the area in which the applicant 20. Office of Thrift Supervision, Data Submission Reports, resides or seeks to purchase a home. selected years. These reports contain information on the Data previously available from sources other disposition of mortgage applications filed with savings and loan associations. The data, which have been collected for than HMDA indicate that blacks and Hispanics more than ten years, include information on the race or applying for mortgage loans at thrift institutions national origin of the applicants. are significantly more likely than white appli- 21. Totals for subgroups shown in table 4 do not sum to the totals in table 3 because information on applicant charactercants to be denied credit and that the experience istics and detailed geographic information is not available for of Asians is not greatly different from that of all applications. Various provisions of HMDA create exceptions to the rules that require such information to be collected and disclosed. 22. See Robert B. Avery, Gregory E. Elliehausen, Glenn 19. Among loans approved, in a relatively small proportion B. Canner, and Thomas A. Gustafson, "Survey of Consumer of cases the consumer did not take out the loan, perhaps Finances, 1983," Federal Reserve Bulletin, vol. 70 (Septembecause the property sale did not go through or because the ber 1984), pp. 679-692; and Glenn B. Canner and Charles A. consumer filed applications with more than one lender and Luckett, "Payment of Household Debts," Federal Reserve accepted the most attractive offer. Bulletin, vol. 77 (April 1991), pp. 218-229. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Mortgage Disclosure Act: Expanded Data on Residential Lending 869 greater when comparisons are made at the ex- categorized by race or national origin reflects, in tremes of the income distributions (as shown by part, differences in the proportion of each group table 5). that has relatively low incomes. For example, The national level of denial rates for applicants among white applicants for conventional home 4. Number of home loan applications, by purpose of loan, characteristics of applicant, and characteristics of census tract in which property is located, 1990 Home purchase AApppplliiccaanntt oorr cceennssuuss ttrraacctt cchhaarraacctteerriissttiicc RReeffiinnaanncciinngg HHoommee iimmpprroovveemmeenntt Government-backed1 Conventional Race of applicant American Indian/Alaskan native 3,281 11,320 4,960 5,727 Asian/Pacific Islander 10,721 94,284 39,897 16,968 Black 76,983 90,414 42,668 74,106 Hispanic 44,485 110,602 61,822 40,232 White 561,735 1,733,582 760,490 679,292 Other 2,201 14,290 5,888 5,563 Joint (white/minority) 19,293 40,295 18,480 14,564 Gender of applicant Male2 146,277 420,667 174,982 199,944 Female3 105,375 286,146 120,701 155,212 Joint (male/female) 478,079 1,444,093 680,605 596,803 Income of applicant (percentage of MSA median)' Less than 80 152,214 238,468 101,720 240,042 80-99 113,509 154,421 70,973 103,061 100-120 99,722 169,008 79,494 97,495 More than 120 199,755 1,083,435 533,143 358,914 Racial composition of census tract (minorities as percentage of population) Less than 10 318,464 1,010,345 421,329 484,935 10-19 106,831 293,852 162,894 120,556 20-49 87,125 222,493 131,275 100,650 50-79 25,171 77,729 53,470 43,353 80-100 21,534 52,159 41,447 57,016 Income of census tract5 Low or moderate 81,483 204,107 115,763 129,581 Middle 354,883 931,665 449,578 484,459 Upper 122,579 520,806 245,074 192,470 Income of census tract and racial composition (minorities as percentage of population)5 Low or moderate Less than 10 20,350 49,906 21,387 29,742 10-19 13,617 26,059 12,602 13,427 20-49 21,247 51,835 26,918 25,121 50-79 11,959 37,477 24,641 20,575 80-100 14,310 38,830 30,215 40,716 Middle Less than 10 213,219 585,705 246,019 316,852 10-19 68,859 169,225 90,095 72,916 20-49 53,842 131,282 79,598 60,088 50-79 12,114 34,070 24,539 19,601 80-100 6,849 11,383 9,327 15,002 Upper Less than 10 84,895 374,734 153,923 138,341 10-19 24,355 98,568 60,197 34,213 20-49 12,036 39,376 24,759 15,441 50-79 1,098 6,182 4,290 3,177 80-100 375 1,946 1,905 1,298 1. Loans backed by the Federal Housing Administration, the Veterans family income is less than 80 percent of the median family income of the Administration, and the Farmers Home Administration. MSA as a whole; in middle-income census tracts, median family income is 2. One or more males. 80 percent to 120 percent of the median MSA family income; in upper-income 3. One or more females. census tracts, median family income is more than 120 percent of the median 4. MSA median is median family income of the metropolitan statistical area MSA family income. (MSA) in which the property related to the loan is located. SOURCE. Preliminary data, Home Mortgage Disclosure Act, Board of 5. Low- or moderate-income census tracts are those in which median Governors of the Federal Reserve System. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

870 Federal Reserve Bulletin • November 1991 5. Disposition of home loan applications, by purpose of loan and characteristics of applicant, 19901 Percentage distribution Home purchase Applicant Government-backed2 Conventional characteristic Approved Denied d W ra i w th n - cl F o i s l e e d Total Approved Denied d W ra i w th n - cl F o i s l e e d Total Race American Indian/ Alaskan native 63.5 22.5 12.8 1.2 100 66.0 22.4 10.6 1.0 100 Asian/Pacific Islander .... 74.8 12.8 11.6 .9 100 72.7 12.9 13.5 .9 100 Black 60.9 26.3 11.3 1.5 100 55.7 33.9 9.4 1.1 100 Hispanic 68.7 18.4 11.6 1.3 100 65.1 21.4 12.4 1.0 100 White 77.4 12.1 9.7 .9 100 75.5 14.4 9.4 .7 100 Other 66.3 18.4 13.8 1.5 100 68.2 19.0 11.9 .8 100 Joint (white/minority) .... 75.6 14.1 9.5 .8 100 73.3 14.9 11.1 .8 100 Gender Male3 71.6 14.9 12.1 1.3 100 68.1 20.0 10.9 1.0 100 Female4 74.7 14.5 9.9 .9 100 69.8 19.9 9.5 .8 100 Joint (male/female) 75.0 14.3 9.8 .9 100 75.3 14.2 9.8 .7 100 Income (percentage of MSA median)1 Less than 80 72.0 18.1 8.9 1.0 100 65.5 26.0 7.7 .8 100 80-99 77.9 13.0 8.3 .8 100 75.5 15.7 8.2 .6 100 100-120 79.1 11.5 8.6 .8 100 78.0 12.9 8.5 .7 100 More than 120 79.7 10.4 9.2 .8 100 79.0 9.9 10.4 .7 100 1. Components may not sum to totals because of rounding. 5. MSA median is median family income of the metropolitan statistical area 2. Loans backed by the Federal Housing Administration, the Veterans in which the property related to the loan is located. Administration, and the Farmers Home Administration. SOURCE. Preliminary data, Home Mortgage Disclosure Act, Board of 3. One or more males. Governors of the Federal Reserve System. 4. One or more females. purchase loans, 14 percent had incomes below 80 higher for both Hispanic and Asian applicants, percent of their MSA's median family income. 12.4 percent and 13.5 percent respectively.23 Low-income black and Hispanic applicants, in The 1990 HMDA data also indicate some difcontrast, accounted for 25 percent and 16 percent ferences when home loan applicants are categoof all applicants in their respective groups. Low- rized by gender—male (one or more males), income Asians accounted for only 8 percent of female (one or more females), or joint (one male the conventional home purchase loan applica- and one female) (tables 4 and 5). For instance, tions filed by Asians overall. joint applicants are more likely than either male The differences in denial rates when applicants or female applicants to have a conventional home are grouped by race or national origin do not purchase loan approved. Female applicants are change notably when they also are categorized somewhat more likely than male applicants to by income (table 6). For example, among appli- have a home purchase loan approved. cants whose incomes place them in the lowest income group, the denial rates for blacks, His- Government-Backed Home Purchase Loans. panics, and Asians were 40.1 percent, 31.1 per- The pattern for denial of government-backed cent, and 17.2 percent respectively, compared with 23.1 percent for white applicants. Among applicants in the highest income group, denial 23. Home purchase loan applications are withdrawn for a rates for blacks, Hispanics, and Asians were 21.4 variety of reasons. For example, prospective home buyers percent, 15.8 percent, and 11.2 percent respec- who file a loan application may not be able to complete a purchase because of an inability to sell their own home. The tively, compared with 8.5 percent for whites. 1990 HMDA data will enable supervisory agencies, which The application withdrawal rate for conven- will have access to loan application files, to investigate differences in withdrawal rates across different gender and tional home purchase loans for both black and racial or national-origin groups for evidence of unfair treatwhite applicants was 9.4 percent. The rates were ment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Mortgage Disclosure Act: Expanded Data on Residential Lending 871 5. - Continued Refinancing Home improvement AApppplliiccaanntt cchhaarraacctteerriissttiicc Approved Denied d W ra i w th n - cl F o U se e d Total Approved Denied d W ra i w th n - cl F o U se e d Total Race American Indian/ Alaskan native 61J 17.9 13.6 .8 100 73.8 21.4 4.1 .7 100 Asian/Pacific Islander 66.0 17.8 15.2 1.1 100 65.0 24.6 9.1 1.3 100 Black 61.1 25.1 12.6 1.2 100 58.1 36.9 4.4 .6 100 Hispanic 61.9 21.6 15.4 1.1 100 60.2 32.5 6.4 .9 100 White 74.4 14.3 10.5 .9 100 78.1 17.0 4.4 .5 100 Other 60.7 23.2 15.4 .7 100 57.3 34.1 7.8 .8 100 Joint (white/minority) .... 71.1 16.4 11.8 .8 100 75.4 19.3 4.9 .4 100 Gender Male3 66.5 19.1 13.3 1.2 100 67.3 27.0 5.0 .7 100 Female4 69.4 17.7 12.0 1.0 100 66.0 28.2 5.2 .6 100 Joint (male/female) 73.6 14.7 10.9 .9 100 74.9 19.1 5.4 .7 100 Income (percentage of MSA median)' Less than 80 67.7 21.1 10.3 .9 100 62.7 32.4 4.5 .4 100 80-99 71.9 17.4 10.0 .8 100 70.0 24.8 4.8 .4 100 100-120 73.6 15.5 10.1 .8 100 73.4 21.4 4.8 .5 100 More than 120 73.0 14.4 11.7 .9 100 76.7 17.0 5.6 .8 100 home purchase loans is similar to that for con- approved. Males were somewhat more likely ventional home purchase loans. The rates of than females to have a home improvement loan denial were 26.3 percent for blacks, 18.4 percent approved. for Hispanics, and 12.8 percent for Asians, compared with 12.1 percent for whites. The rates of Relation of Approval Rates to application withdrawal were 11.3 percent for Neighborhood Income and Composition blacks, 11.6 percent for both Hispanics and Asians, and 9.7 percent for whites. The HMDA data make it possible to compare Looking at disposition of applications for gov- lending across neighborhoods grouped by racial ernment-backed loans by gender, joint applicants makeup and the income level of their residents. are somewhat more likely than either male or Considerable caution should be exercised, howfemale applicants to have a home purchase loan ever, when making such comparisons. The useapproved. Female applicants are more likely fulness of these data is currently limited by the than male applicants to have a home purchase lack of an up-to-date match with the characterisloan approved. tics of census tracts. The recently released HMDA disclosure statements are based on 1980 Home Improvement Loans. The patterns for census tract boundaries and population characdenial and withdrawal of home improvement teristics (neighborhood income level, racial comloan applications are broadly similar to those for position, and housing stock characteristics). This home purchase loan applications. Generally, for census information is now more than ten years all groups the denial rates are higher than for old, and in some cases the resulting figures may home purchase loans, and the withdrawal rates be misleading. For example, a low-income, prelower; 36.9 percent of black, 32.5 percent of dominantly minority neighborhood in 1980 may Hispanic, and 24.6 percent of Asian applicants have undergone substantial change and may now were denied loans, compared with 17 percent of have a much higher average income and a differwhite applicants. ent racial composition. The Federal Reserve Looking at disposition by gender, joint appli- Board has published proposed amendments to cants were more likely than either male or female HMDA reporting requirements, calling for a applicants to have a home improvement loan switch to the 1990 census tract definitions begin- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

872 Federal Reserve Bulletin • November 1991 6. Disposition of home loan applications, by purpose of loan and income and race of applicant, 19901 Percentage distribution Home purchase Applicant Government-backed3 Conventional income and race Approved Denied d W ra i w th n - cl F o i s l e e d Total Approved Denied d W ra i w th n - cl F o i s l e e d Total Alaskan native 63.5 26.5 9.2 .9 100 62.7 27.7 8.8 .9 100 Asian/Pacific Islander .... 75.0 13.9 10.3 .9 100 68.4 17.2 13.4 1.0 100 Black 58.5 29.4 10.7 1.4 100 51.4 40.1 7.6 .9 100 Hispanic 66.5 22.4 9.8 1.3 100 58.1 31.1 9.8 1.0 100 White 76.5 14.7 8.0 .8 100 69.0 23.1 7.2 .7 100 Other 67.7 21.3 10.2 .8 100 64.5 26.1 8.3 1.1 100 Joint (white/minority) .... 74.1 17.3 8.0 .6 100 64.8 26.3 8.0 .9 100 80-99 American Indian/ Alaskan native 70.2 17.8 11.1 .8 100 73.3 16.6 9.4 .7 100 Asian/Pacific Islander 78.4 12.7 8.4 .6 100 75.1 13.7 10.5 .7 100 Black 64.5 24.8 9.5 1.2 100 60.8 29.3 8.9 1.0 100 Hispanic 72.2 17.0 9.9 .8 100 67.7 21.5 10.1 .7 100 White 81.0 10.6 7.7 .7 100 78.1 13.7 7.6 .6 100 Other 72.0 13.5 13.0 1.6 100 70.6 21.1 7.6 .7 100 Joint (white/minority) .... 78.2 13.0 8.2 .6 100 72.2 18.0 9.1 .8 100 100-120 American Indian/ Alaskan native 68.0 17.0 13.6 1.5 100 72.6 14.0 12.7 .8 100 Asian/Pacific Islander .... 78.1 12.4 9.2 .4 100 75.0 12.6 11.5 .9 100 Black 65.7 23.1 10.1 1.1 100 63.8 26.3 9.3 .7 100 Hispanic 73.9 14.7 10.3 1.1 100 69.6 19.1 10.4 .9 100 White 81.9 9.5 8.0 .7 100 80.4 11.2 7.8 .6 100 Other 69.6 15.0 14.7 .7 100 72.1 18.0 9.2 .7 100 Joint (white/minority) .... 77.6 12.9 8.5 1.0 100 75.8 15.0 8.6 .6 100 More than 120 American Indian/ Alaskan native 71.3 15.6 12.5 .7 100 74.4 12.8 11.9 .9 100 Asian/Pacific Islander .... 76.0 11.2 12.0 .8 100 75.2 11.2 12.9 .7 100 Black 68.0 20.8 10.3 1.0 100 65.7 21.4 11.6 1.3 100 Hispanic 72.4 14.2 12.4 1.0 100 71.1 15.8 12.2 1.0 100 White 82.4 8.6 8.3 .7 100 81.2 8.5 9.7 .6 100 Other 67.3 17.1 13.7 2.0 100 71.0 15.8 12.5 .8 100 Joint (white/minority) .... 79.2 10.6 9.4 .7 100 77.6 10.5 11.3 .7 100 1. Components may not sum to totals because of rounding. 3. Loans backed by the Federal Housing Administration, the Veterans 2. Applicant income shown as percentage of the median family income of Administration, and the Farmers Home Administration. the metropolitan statistical area in which the property related to the loan is SOURCE. Preliminary data, Home Mortgage Disclosure Act, Board of located. Governors of the Federal Reserve System. ning January 1992. The FFIEC plans to reflect the income of the residents of an area increases. socioeconomic information about these areas in The rate of loan denial for conventional home the disclosure tables portraying 1992 lending loans relating to properties in low- or moderateactivity, which will be released in 1993. income neighborhoods was 20.2 percent, appreciably higher than the 13.9 percent for middle- Approval of Home Purchase Loan Applica- income and 9.7 percent for upper-income tions. Although the majority of applications for neighborhoods (table 7). For government-backed home purchase loans are approved, experience loans, the rates of loan denial were 17.8 percent differs across neighborhoods grouped by racial for low- or moderate-income, 13 percent for composition and the income levels of their resi- middle-income, and 11.2 percent for upperdents. The patterns of loan acceptance and denial income neighborhoods. do not differ greatly whether the type of home Neighborhood racial composition. The 1990 purchase loan sought is conventional or govern- HMDA data indicate that the rate of loan denial ment-backed. increases as the proportion of minority residents Neighborhood income. The 1990 HMDA data increases. For conventional home loans, the deindicate that the rate of loan denial declines as nial rate is about 12 percent for areas with less Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Mortgage Disclosure Act: Expanded Data on Residential Lending 873 6. —Continued Refinancing Home improvement AApppplliiccaanntt iinnccoommee aanndd rraaccee Approved Denied d W ra i w th n - cl F o U se e d Total Approved Denied d W ra i w th n - cl F o U se e d Total Less than 80 American Indian/ Alaskan native 64.5 22.1 13.3 .2 100 69.6 26.9 3.4 .2 100 Asian/Pacific Islander .... 56.2 22.6 20.3 1.0 100 57.0 36.1 6.3 .6 100 Black 56.3 31.5 10.9 1.3 100 52.0 43.3 4.2 .5 100 Hispanic 57.0 27.5 14.6 1.0 100 55.7 38.9 4.5 .9 100 White 72.1 18.5 8.6 .8 100 72.5 23.4 3.9 .3 100 Other 51.6 33.0 14.4 1.1 100 50.5 43.0 6.1 .3 100 Joint (white/minority) .... 65.6 22.9 10.8 .7 100 70.8 25.7 3.5 .1 100 80-99 American Indian/ Alaskan native 67.2 18.3 13.0 1.6 100 74.1 22.7 2.8 .4 100 Asian/Pacific Islander .... 66.6 18.8 13.5 1.2 100 60.5 30.5 7.9 1.2 100 Black 58.9 27.8 12.2 1.1 100 57.9 37.0 4.5 .6 100 Hispanic 62.9 22.7 13.5 .9 100 60.9 32.8 5.6 .7 100 White 75.7 15.0 8.6 .7 100 77.6 18.0 4.1 .3 100 Other 59.8 27.2 12.1 .9 100 59.6 33.0 7.0 .4 100 Joint (white/minority) .... 68.6 18.7 12.0 .6 100 74.4 21.2 4.2 .3 100 100-120 American Indian/ Alaskan native 71.3 16.1 12.3 .3 100 77.9 18.1 2.6 1.4 100 Asian/Pacific Islander .... 69.8 17.9 11.6 .8 100 65.8 25.9 7.6 .7 100 Black 62.3 24.6 11.9 1.2 100 62.3 32.6 4.6 .5 100 Hispanic 66.3 19.5 13.5 .7 100 61.7 31.0 6.5 .8 100 White 76.8 13.6 8.9 .7 100 80.1 15.6 4.0 .3 100 Other 58.6 25.4 15.3 .7 100 63.6 31.5 4.6 .4 100 Joint (white/minority) 72.3 16.9 10.0 .8 100 76.3 19.3 4.3 .2 100 More than 120 American Indian/ Alaskan native 68.2 17.3 13.7 .8 100 79.0 14.3 5.8 .9 100 Asian/Pacific Islander .... 67.3 17.3 14.4 1.1 100 68.0 21.4 9.1 1.5 100 Black 63.1 23.1 12.6 1.2 100 66.1 28.0 5.2 .7 100 Hispanic 64.8 19.7 14.5 1.1 100 65.6 26.0 7.3 1.1 100 White 75.7 12.8 10.7 .8 100 82.0 12.7 4.8 .5 100 Other 61.2 22.7 15.4 .7 100 62.9 26.3 9.6 1.2 100 Joint (white/minority) 72.8 15.0 11.4 .8 100 78.3 16.2 4.9 .6 100 than 10 percent minority residents and rises to Approval of Home Improvement Loan Appliabout 24 percent for areas with 80 percent or cations. Like home purchase loans, the majority more minority residents. The pattern of loan of home improvement loan applications are apdenial for government-backed loans is virtually proved regardless of neighborhood income or the same as that for conventional loans. racial composition (table 7). Also like home Neighborhood income and racial composition. purchase loans, the denial rate for home im- The difference in denial rates across neighbor- provement loans increases as neighborhood inhoods of different racial composition is roughly come declines and the percentage of minority the same even when differences in neighborhood residents increases. median family income levels are taken into account. For the most part, whether the neighborhood is low or moderate income, middle income, CAUTIONS IN INTERPRETING or upper income, the proportion of home pur- THE 1990 DATA chase loan applicants denied credit increases as the percentage of minority residents increases. The 1990 HMDA data offer more detailed infor- This pattern is present for applications for both mation about the home lending activities of reconventional and government-backed forms of porting institutions, bringing the prospect for a credit. better understanding of lending patterns through Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

874 Federal Reserve Bulletin • November 1991 7. Disposition of home loan applications, by purpose of loan and characteristics of census tract in which property is located, 19901 Percentage distribution Home purchase Census tract Government-backed2 Conventional characteristic Approved Denied d W ra i w th n - cl F o i s l e e d Total Approved Denied d W ra i w th n - cl F o i s l e e d Total (minorities as percentage of population) Less than 10 79.5 11.2 8.4 .9 100 79.1 11.5 8.7 .7 100 10-19 75.6 13.4 9.9 1.1 100 72.7 13.8 12.7 .8 100 20-49 71.7 16.1 11.1 1.2 100 70.1 16.5 12.6 .8 100 50-79 66.0 21.1 11.6 1.3 100 67.5 19.3 12.3 .9 100 80-100 63.5 23.2 11.6 1.7 100 62.1 24.0 12.5 1.4 100 Income3 Low or moderate 69.9 17.8 11.1 1.3 100 67.2 20.2 11.6 1.0 100 Middle 77.1 13.0 8.9 1.0 100 75.8 13.9 9.5 .7 100 Upper 78.2 11.2 9.5 1.1 100 78.7 9.7 10.8 .7 100 Income3 and racial composition (minorities as percentage of population) Low or moderate Less than 10 75.3 14.0 9.8 1.0 100 71.9 17.8 9.4 .9 100 10-19 72.6 14.9 11.3 1.2 100 69.3 18.9 11.0 .9 100 20-49 70.8 17.3 10.7 1.2 100 67.3 19.4 12.4 .9 100 50-79 65.8 20.6 12.2 1.4 100 65.4 21.2 12.5 1.0 100 80-100 61.8 24.2 12.3 1.7 100 61.2 24.4 12.9 1.5 100 Middle Less than 10 79.8 11.3 8.0 .9 100 78.6 12.7 8.0 .7 100 10-19 76.0 13.5 9.5 1.0 100 72.7 14.5 12.0 .8 100 20-49 71.9 15.8 11.0 1.2 100 70.4 16.3 12.5 .8 100 50-79 65.5 22.2 11.0 1.3 100 68.9 18.1 12.1 1.0 100 80-100 66.3 21.5 10.7 1.5 100 63.8 23.7 11.3 1.2 100 Upper Less than 10 79.7 10.3 8.9 1.0 100 80.9 8.8 9.6 .7 100 10-19 76.5 12.0 10.1 1.3 100 73.6 11.3 14.3 .8 100 20-49 71.9 14.9 11.9 1.4 100 72.7 13.0 13.4 .8 100 50-79 73.0 13.9 12.1 1.0 100 72.3 15.3 11.9 .5 100 80-100 74.1 17.1 4.5 4.3 100 71.0 16.8 11.0 1.2 100 1. Components may not sum to totals because of rounding. median family income is 80 percent to 120 percent of the median MSA family 2. Loans backed by the Federal Housing Administration, the Veterans income; in upper-income census tracts, median family income is more than Administration, and the Farmers Home Administration. 120 percent of the median MSA family income. 3. Low- or moderate-income census tracts are those in which median family SOURCE. Preliminary data, Home Mortgage Disclosure Act, Board of income is less than 80 percent of the median family income of the metropoli- Governors of the Federal Reserve System. tan statistical area (MSA) as a whole; in middle-income census tracts, analyses previously not possible. Knowing the nently, the data indicate that black and Hispanic personal characteristics of loan applicants and applicants are denied home loans more frethe disposition of their applications makes it quently than are white or Asian applicants who feasible, for example, to gauge more accurately have similar incomes. The data also indicate that the level of loan demand faced by an individual applicants seeking to purchase homes in low- or lender or a group of lenders seeking to serve moderate-income neighborhoods (regardless of different types of customers and various geo- the race of the residents) are denied credit more graphic areas within their communities. At the frequently than are applicants seeking to buy same time, the limitations of the data must be homes in upper-income neighborhoods. recognized. The HMDA data can and should be used to The 1990 HMDA data document differences in raise questions about lending activity and to the experiences of loan applicants grouped by develop hypotheses for further investigation. their personal characteristics or by the charac- The application-disposition patterns, however, teristics of the neighborhood in which they seek reflect a wide variety of economic factors that to purchase or improve homes. Most promi- determine the creditworthiness of individual Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Mortgage Disclosure Act: Expanded Data on Residential Lending 875 7.-Continued Refinancing Home improvement CCeennssuuss ttrraacctt cchhaarraacctteerriissttiicc Approved Denied d W ra i w th n - cl F o i s l e e d Total Approved Denied d W ra i w th n - cl F o U se e d Total Racial composition (minorities as percentage of population) Less than 10 75.2 14.0 9.9 .9 100 76.6 18.5 4.5 .4 100 10-19 68.8 16.8 13.4 1.0 100 68.9 23.9 6.2 .9 100 20-49 66.9 18.3 13.8 1.0 100 64.7 28.1 6.2 1.0 100 50-79 64.4 20.0 14.6 1.0 100 58.1 34.9 6.1 .9 100 80-100 61.5 22.0 15.3 1.2 100 50.3 43.3 5.7 .7 100 Income5 Low or moderate 64.7 20.6 13.6 1.2 100 58.3 35.6 5.4 .6 100 Middle 72.5 15.8 10.9 .9 100 72.7 21.9 4.9 .5 100 Upper 71.8 14.5 12.7 1.0 100 75.7 17.9 5.8 .7 100 Income3 and racial composition (minorities as percentage of population) Low or moderate Less than 10 71.2 17.9 9.9 .9 100 67.9 27.2 4.5 .4 100 10-19 67.5 19.1 12.3 1.1 100 64.0 30.1 5.4 .5 100 20-49 64.7 20.5 13.6 1.1 100 61.2 32.4 5.6 .7 100 50-79 62.7 21.4 14.7 1.2 100 55.9 37.5 5.8 .8 100 80-100 60.3 22.4 15.9 1.3 100 48.8 44.7 5.7 .7 100 Middle Less than 10 76.2 14.1 8.9 .8 100 76.7 18.7 4.2 .3 100 10-19 69.6 16.8 12.6 1.0 100 69.4 24.0 5.8 .9 100 20-49 67.5 18.0 13.5 1.0 100 65.4 27.4 6.2 1.0 100 50-79 65.1 19.2 14.6 1.0 100 58.9 33.7 6.4 1.0 100 80-100 63.5 21.8 13.8 .8 100 52.6 41.1 5.7 .7 100 Upper Less than 10 74.1 13.4 11.4 1.0 100 78.3 16.1 5.1 .5 100 10-19 68.0 16.3 14.7 1.0 100 69.9 21.4 7.5 1.2 100 20-49 67.3 16.9 14.8 1.0 100 67.2 23.9 7.6 1.3 100 50-79 69.5 16.1 13.6 .8 100 67.1 25.0 7.0 .9 100 80-100 70.4 15.0 14.1 .5 100 70.3 24.3 4.8 .6 100 home loan applicants and the adequacy of the across the country. That process seeks to ensure collateral provided by the properties they seek to that individuals granted credit will repay their purchase or improve. Thus, caution in interpret- debt as scheduled and that, should they fail to do ing the numbers is called for. For example, so, the collateral offered as security will pay off although the expanded HMDA data show loans the loan plus costs associated with foreclosure. denied by race or national origin, that informa- Consequently, lenders evaluate the factors that tion alone does not provide a basis for an inde- they believe allow them to predict an applicant's pendent assessment of whether an applicant who ability to repay; among these factors are several was denied credit was in fact creditworthy. Sim- consumer financial characteristics—the proporilarly, the HMDA data do not establish whether tion of the consumer's income that will need to the property involved in the proposed credit be dedicated to the repayment of the proposed extension was appropriately valued. Thus, it is loan plus other outstanding debts, the level of not possible to determine, from the HMDA data equity (through the downpayment) that the conalone, whether loan applicants are being treated sumer is able and willing to put into the property, fairly and on a racially nondiscriminatory basis. the consumer's employment experience and Fundamentally, the rates of approval and de- prospects, and the consumer's history of repaynial of loan applications reflected by the 1990 ing debts. Lenders also consider the appraised HMDA data represent the separate outcomes of value of the property serving as the collateral for a credit review process carried out by the more the loan. than 9,000 covered financial institutions located The HMDA data reveal little about the finan- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

876 Federal Reserve Bulletin • November 1991 cial characteristics of loan applicants—only their different from those of whites.26 For instance, in annual income. Even here, two applicants who 1986 the mean amount of financial assets held by have similar incomes may be strikingly different black families was $5,900, compared with in their asset levels, existing debt burdens, and $64,000 for white families. Differences in net credit histories. Applicants of different race and worth were even more pronounced, with black gender may differ systematically in their financial families having an average net worth of $29,000 characteristics. Other sources of information, and white families $165,000. such as consumer surveys conducted by the Federal Reserve, provide extensive data on the financial situations of households grouped, for USES OF NEW AND EXPANDED example, by annual income, race, or gender. HMDA DATA Here, too, caution is called for, however. Consumer surveys generally represent a wider pop- Users of the HMDA data include communityulation of respondents than do the HMDA data, based and other types of consumer-interest orgawhich represent only individuals who have ap- nizations, financial institutions, state and local plied for a home loan. To the extent that group government agencies, and federal supervisory profiles developed from these surveys reflect the agencies. Community-based organizations have characteristics of home loan applicants, such long used HMDA data in assessing the home information may prove helpful in understanding lending activities of institutions in their commuvariations in loan disposition rates among appli- nities. Financial institutions covered by HMDA cants grouped by race or gender. use the information to evaluate the success of Federal Reserve and other consumer surveys their loan marketing efforts and community outshow the financial situation of households reach programs and to compare their perforgrouped by income. These data indicate that, mance with the home lending activities of their compared with high-income households, low- competitors. State and local governments find income households tend to have relatively few the data useful in identifying areas that may need assets available for a downpayment on a home; if assistance. they have consumer debt, tend to have relatively high repayment burdens and are more likely to Supervisory Agencies have fallen behind in their scheduled debt repayments; and generally have more periods of invol- Supervisory agencies will be a major user of the untary unemployment or reduced work hours. expanded HMDA data. The new information will Generally, black and Hispanic households are help them better assess the performance of finanmuch more likely to be in a low-income grouping cial institutions in satisfying their obligations than are white households. For example, the under the Community Reinvestment Act and median income of households headed by blacks their compliance with the fair lending laws. and Hispanics is roughly 57 percent and 71 percent respectively of the median income of Community Reinvestment Act. The CRA refamilies headed by whites.24 These disparities quires federal agencies to encourage depository reflect, among other things, sharp differences in institutions to help meet the credit needs of their employment experiences. For example, in mid- communities, including low- and moderate- 1991 the national unemployment rate for blacks income neighborhoods, consistent with safe and was nearly twice that of whites.25 Also, the sound lending practices. Historically, examiners financial asset and net worth positions of non- have used the HMDA data to help them assess white and Hispanic households are substantially lenders' compliance. The regulations that implement the CRA establish twelve criteria for eval- 24. Statistical Abstract of the United States, Money Income of Households, 1990. 25. Bureau of Labor Statistics, Current Population Survey 26. Board of Governors of the Federal Reserve System, (July 1991). 1986 Survey of Consumer Finances. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Mortgage Disclosure Act: Expanded Data on Residential Lending 877 uating the record of depository institutions. The if peer lenders are receiving few applications for HMDA data help measure institution perfor- home loans, weak demand may be the explanamance against several of the criteria, including tion. Few applications might also indicate, howthe following: ever, that outreach efforts and marketing among all lenders are either ineffective or not aimed at • The geographic distribution of the institu- the community in question. tion's credit applications, extensions, and The new HMDA data also can be used in denials assessing whether a lender has established a • The institution's record of originating or reasonable CRA community delineation.27 Alpurchasing residential mortgage loans, housing though many factors affect a lender's choice of rehabilitation credit, home improvement loans, the primary service area it seeks to serve, analand loans to small businesses and small farms yses of HMDA data can help determine whether within its community the distribution of home loan applications re- • Evidence of prohibited discriminatory or ceived by a lender is consistent with this geoother illegal credit practices. graphic delineation. If most of the lender's applications for home purchases come from outside The HMDA data also help supervisory agen- its delineated community, examiners may quescies evaluate lenders' CRA records when pro- tion why it is not receiving more applications cessing applications for charters, deposit insur- from its delineated community and whether the ance, branch or other deposit facilities, office existing delineation is reasonable. The lender relocations, mergers, and acquisitions. In addi- might need to reconsider the basis for its delintion, the HMDA data are used in assessing the eation and perhaps revise the boundaries of the merits of specific protests challenging an institu- area it seeks to serve. tion's performance in the context of these applications. Fair Lending Laws. Supervisory agencies also The recent amendments to HMDA enhance will use the expanded HMDA data in evaluating the agencies' ability to conduct that portion of compliance with the fair lending laws—the Fair CRA evaluations focusing on home lending. For Housing Act and the Equal Credit Opportunity instance, in the past it was difficult to determine Act. For example, during on-site evaluations, whether the geographic distribution of a lender's Federal Reserve examiners currently review a home purchase credit extensions reflected the sample of approved and denied loan applications demand for its loan products. Although informa- to determine whether a bank is applying its stated tion about applications has been available to lending standards consistently and fairly. Examexaminers, until now it has been available only iners look for instances in which loan applicants through the original applications and loan docu- met established standards but were denied credit ments. With ready access to a listing of applica- and, conversely, for instances in which applitions from the LAR data, examiners will be able cants failed to meet the guidelines but were to identify easily the geographic distribution of a nonetheless granted credit. When they find exlender's loan applications. ceptions, examiners seek to determine whether Examiners can compare an institution's record similarly situated applicants, particularly memwith the records of other lenders serving the bers of protected groups, were accorded like same locality to see if, for example, performance treatment. reflects an absence or low level of lending activ- With the new information about applicant race ity in the locality. If some peer lenders are or national origin, gender, and annual income, receiving a significant number of applications and are extending home loans, the data likely will focus greater attention on the institution's efforts 27. The CRA requires depository institutions to identify the to determine community credit needs, on its boundaries of their primary service areas—referred to as their community delineation. The boundaries must seem marketing and outreach programs, and on the reasonable, and low- and moderate-income neighborhoods mix of loan products it offers. On the other hand, must not be excluded arbitrarily. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

878 Federal Reserve Bulletin • November 1991 examiners will be able to look for statistical by covered lenders—only for loans they themindicators of possible discrimination, such as selves originated. Although HMDA information differences in denial rates among groups. They about the census tract location of properties is will then review individual home loan application available for roughly 75 percent of the loans records for specific evidence of any disparate sold to, or securitized by, secondary market entitreatment. Although different denial rates for ties, information on borrowers' race or national majority and minority group applicants, for ex- origin, gender, and income is available for only ample, ultimately may be found to have a legiti- about two-thirds of the loans (table 8). In most mate basis, the identification of such differences instances when information is unavailable, lendis one step in the assessment process. ers had purchased the loans from other institu- To facilitate these statistical analyses, the su- tions and were not required to report applicant pervisory agencies are working to develop a characteristics. computer-based system that will help examiners identify groups of applicants whose application- General Relation between Borrowers and disposition rates are significantly different from Secondary Mortgage Purchasers those of other groups. This system can provide examiners with lists of individual application files Participants in the secondary mortgage market that can be targeted for in-depth review during buy and sell mortgage loans or securities backed on-site examinations. (The application or loan by mortgage loans. They also guarantee payments number on the institution's LAR will facilitate on pass-through securities issued against pools of retrieval of individual files.) The on-site review residential mortgage loans. In so doing, they enwill allow examiners to evaluate the specific able institutions that originate loans to raise new factors considered by a lender when it acted on funds. By selling assets that are otherwise relaan application and to assess an institution's com- tively illiquid, loan originators are able to extend pliance with the fair lending laws. additional loans or to use the funds in other ways. Three government-sponsored agencies dominate secondary market activity—the Federal HMD A DATA ON SECONDARY National Mortgage Association (FNMA, or MORTGAGE MARKET ACTIVITY Fannie Mae), the Federal Home Loan Mortgage Corporation (FHLMC, or Freddie Mac), and The 1989 amendments to HMDA require lenders the Government National Mortgage Associato report the type of secondary market purchaser tion (GNMA, or Ginnie Mae)—although banks, of home loans they sold during the year. The thrift institutions, insurance companies, and legislative history of the amendments indicates other entities are active as well. FNMA and that the Congress sought the new information to FHLMC mainly buy conventional mortgage help identify, indirectly, secondary market re- loans. Most of these loans are packaged into quirements that might have a discriminatory ef- securities and sold to investors. GNMA does fect on protected groups. The HMDA data pro- not purchase loans, but rather guarantees the vide an opportunity for the first time to profile, timely payment of principal and interest for for loans covered by HMDA, the characteristics privately issued securities backed by FHAof both the borrowers whose loans are purchased insured and VA-guaranteed loans. Secondary by secondary market entities and the neighbor- market institutions generally do not originate hoods in which they reside. loans, but they do specify the underwriting Because not all financial institutions that deal guidelines that loans must meet to be eligible for with secondary market institutions are covered purchase or securitization by the secondary market. These guidelines and related loan-size by HMDA, the patterns revealed by the HMDA purchase limitations vary among secondary data may differ from those that would be market institutions; thus, it should be expected observed in a review of all secondary market that, for the loans these institutions purchase or activity. Moreover, information on borrower securitize, the characteristics of the borrowers characteristics is not available for all loans sold Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Mortgage Disclosure Act: Expanded Data on Residential Lending 879 and neighborhoods where properties are lo- Preliminary Findings from the cated will differ as well. HMDA Data For example, in 1990 the FNMA and FHLMC limit on home purchase loans on single family Lenders covered by HMDA sold roughly 2.3 properties they purchased or securitized was million loans to secondary market institutions in $187,450. The maximum loan amounts backed by 1990 (table 8). Most of the activity (some 70 FHA insurance—between $67,500 and $124,875 percent) was with FNMA, FHLMC, and (the larger amount corresponding to localities GNMA. where housing costs were higher)—were the Not surprisingly, given GNMA's focus on limits for GNMA's FHA-related activities. The government-backed loans, the HMDA data indilimit on VA loans eligible for the loan pools that cate that GNMA is supporting home purchase GNMA would back was $144,000 at the begin- loans made to low- or moderate-income, and to a ning of 1990, and was increased to $184,000 lesser extent minority households, relatively during the year. more often than are other secondary market Other secondary market purchasers do not nec- institutions. Overall, 22 percent of the loans essarily follow these loan-size limitations. In par- backed by GNMA guarantees were made to ticular, so-called "jumbo loans" (those exceeding families whose incomes were 80 percent or less the loan limit set by FNMA and FHLMC) are of the median family income of the MSAs in purchased by depository institutions, pension which they reside. The comparable figures for funds, insurance companies, and others. both FNMA and FHLMC were roughly 10 per- Basic underwriting guidelines (such as maxi- cent. The average 1990 income of borrowers mum loan-to-value ratios and monthly debt-to- whose loans were guaranteed by GNMA was income ratios) also differ among the secondary $43,535, compared with $64,390 for FNMA and market participants, although FNMA and $63,914 for FHLMC (data not shown in tables). FHLMC follow essentially the same guidelines. Differences in borrower income are also re- In the case of GNMA, underwriting standards flected in the size of loans purchased or backed are established by HUD and the VA. Given that by secondary market institutions (table 8, memo HUD and the VA impose less-stringent loan item). In 1990, the average loan backed by standards than originators of conventional GNMA was $73,730, compared with $101,050 for loans, and that they have different rules about FNMA and $100,890 for FHLMC. the size of loans they will back, it should be Compared with other secondary market purexpected that, overall, FHA and VA borrowers chasers, relatively more GNMA-supported borwill differ markedly from conventional loan rowers purchased properties in low- and users. Consequently, borrowers whose loans moderate-income and middle-income areas. This are securitized by GNMA are also likely to pattern is similar to the lending patterns revealed differ from those whose loans are sold to or in the HMDA data for loan originations, which securitized by FNMA or FHLMC. showed that, compared with conventional loans, Borrowers using loans backed by GNMA may government-backed loans were used to finance differ from those using loans supported by home purchases relatively more often in neigh- FNMA and FHLMC for another reason. FHA borhoods whose residents had moderate inand VA loans are almost exclusively fixed-rate comes. loans, whereas adjustable-rate mortgage loans (ARMs) are widely used in the marketplace (in 1990, ARMs accounted for about 30 percent of all IN SUMMARY loan originations). Both FNMA and FHLMC buy and securitize many ARMs. Thus, it should The more complete information about home be anticipated that differences among groups of lending now being gathered under the Home borrowers who choose ARMs and those who Mortgage Disclosure Act will give many choose fixed-rate loans will be reflected in sales groups—financial institutions, community orgato secondary market institutions as well. nizations, supervisory agencies, and others—a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

880 Federal Reserve Bulletin • November 1991 8. Mortgage loans sold, by type of purchaser, characteristics of borrower, and characteristics of census tract in which property is located, 19901 Number and percentage distribution, except as noted Federal National Government National Federal Home Loan Farmers Home Borrower or census tract Mortgage Assn. Mortgage Assn. Mortgage Assn. Admin. Commercial bank characteristic Number Percent Number Percent Number Percent Number Percent Number Percent Total loans sold 584,203 656,495 349,140 3,769 61,625 Race of borrower American Indian/Alaskan native 1,935 .5 911 .4 1,284 .5 21 .8 237 .5 Asian/Pacific Islander .... 17,050 4.1 4,046 1.7 14,908 5.7 384 14.1 1,329 2.5 Black 11,995 2.9 20,968 8.6 7,993 3.0 101 3.7 3,388 6.5 Hispanic 14,803 3.6 14.245 5.8 20,906 8.0 251 9.2 1,721 3.3 White 360,756 86.5 198,132 80.8 210,077 80.1 1,902 70.0 43,964 84.1 Other 2,858 .7 768 .3 1,641 .6 17 .6 269 .5 Joint (white/minority) 7,495 1.8 6,029 2.5 5,524 2.1 43 1.6 1,376 2.6 Total 416,892 100 245,099 100 262,333 100 2,719 100 52,284 100 Gender of borrower Male2 65,664 15.5 51,300 20.5 43,672 16.4 498 17.3 10,285 19.1 Female' 52,825 12.4 33,367 13.4 35,853 13.4 427 14.9 6,734 12.5 Joint (male/female) 306,254 72.1 165,075 66.1 187,379 70.2 1,949 67.8 36,795 68.4 Total 424,743 100 249,742 100 266,904 100 2,874 100 53,814 100 Income of borrower (percentage of MSA median)' Less than 80 35,598 9.8 46,185 22.0 22,060 9.8 328 13.5 7,131 16.7 80-99 33,752 9.3 40,099 19.1 21,197 9.5 280 11.6 5,755 13.5 100-120 42,047 11.5 38,462 18.3 26,020 11.6 221 9.1 5,732 13.4 More than 120 253,412 69.5 85,200 40.6 154,710 69.1 1,592 65.8 24,055 56.4 Total 364,809 100 209,946 100 223,987 100 2,421 100 42,673 100 Racial composition of census tract (minorities as percentage of population) Less than 10 296,545 65.7 269,830 56.2 155,054 57.0 1,546 52.7 29,082 59.7 10-19 74,483 16.5 97,673 20.3 50,519 18.6 538 18.3 9,924 20.4 20-49 52,473 11.6 75,816 15.8 40,926 15.1 432 14.7 6,624 13.6 50-79 16,418 3.6 20,765 4.3 15,641 5.8 294 10.0 1,803 3.7 80-100 11,299 2.5 15,988 3.3 9.704 3.6 123 4.2 1,263 2.6 Total 451,218 100 480,072 100 271,844 100 2,933 100 48,696 100 Income of census tract' Low or moderate 40,132 8.9 62,482 13.0 32,352 11.9 424 14.5 5,343 11.0 Middle 255,961 56.7 307,361 64.0 155,408 57.2 1,756 59.9 28,136 57.8 Upper 155,125 34.4 110,229 23.0 84,084 30.9 753 25.7 15,217 31.2 Total 451,218 100 480,072 100 271,844 100 2,933 100 48,696 100 MEMO Mean size of loan (thousands of dollars). 101.05 73.73 100.89 119.7 95.24 1. Components may not sum to totals because of rounding. a whole; in middle-income census tracts, median family income is 80 percent 2. One or more males. to 120 percent of the median MSA family income; in upper-income census 3. One or more females. tracts, median family income is more than 120 percent of the median MSA 4. MSA median is the median family income of the metropolitan statisti- family income. cal area (MSA) in which the property related to the loan is located. SOURCE. Preliminary data, 1990 Home Mortgage Disclosure Act, Board 5. Low- or moderate-income census tracts are those in which median family of Governors of the Federal Reserve System. income is less than 80 percent of the median family income of the MSA as better understanding of the residential mortgage Differences in approval and denial rates remarket. Financial institutions will be able to vealed by the 1990 HMDA data—among applicompare their performance with that of their cants grouped by their personal characteristics or peers, to help them better evaluate the effective- by the characteristics of the neighborhoods in ness of their own marketing and outreach efforts. which they seek to live—and differences in the Such self-assessment may lead to more creative number of applications from these groups will approaches to meeting the housing needs of low- focus increased attention on whether lenders are and moderate-income families. treating individuals and groups of applicants Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Mortgage Disclosure Act: Expanded Data on Residential Lending 881 8.-Continued Savings bank or Life insurance Affiliate of BBoorrrroowweerr oorr cceennssuuss ttrraacctt savings and loan company institution Other purchaser cchhaarraacctteerriissttiicc Number Percent Number Percent Number Percent Number Percent Total loans sold 61,205 12,801 159,773 430,950 Race of borrower American Indian/Alaskan native 240 .5 55 .7 481 .4 1,752 .5 Asian/Pacific Islander 1,876 3.7 462 5.7 2,479 2.1 10,660 3.0 Black 2,110 4.2 320 4.0 5,251 4.4 23,234 6.5 Hispanic 2,081 4.1 285 3.5 2,698 2.3 20,335 5.7 White 42,678 85.0 6,683 83.1 105,336 88.6 291,255 81.6 Other 175 .3 52 .6 584 .5 1,495 .4 Joint (white/minority) 1,049 2.1 181 2.3 2,037 1.7 8,402 2.4 Total 50,209 100 8,038 100 118,866 100 357,133 100 Gender of borrower Male2 9,045 17.8 1,246 15.2 21,363 17.8 67,662 18.6 Female5 5,995 11.8 902 11.0 14,691 12.3 54,452 14.9 Joint (male/female) 35,889 70.5 6,056 73.8 83,826 69.9 242,479 66.5 Total 50,929 100 8,204 100 119,880 100 364,593 100 Income of borrower (percentage of MSA median)' Less than 80 5,672 13.2 870 12.0 14,210 14.6 58,704 20.4 80-99 4,591 10.7 705 9.7 11,309 11.6 46,452 16.1 100-120 4,892 11.4 793 10.9 11,474 11.8 40,797 14.2 More than 120 27,927 64.8 4,897 67.4 60,172 61.9 141,912 49.3 Total 43,082 100 7,265 100 97,165 100 287,865 100 Racial composition of census tract (minorities as percentage of population) Less than 10 28,613 58.5 6.555 60.0 81,942 70.8 180,644 56.7 10-19 9,658 19.8 2,200 20.1 17,032 14.7 63,709 20.0 20-49 6,797 13.9 1,532 14.0 11,180 9.7 48,447 15.2 50-79 2,210 4.5 334 3.1 3,288 2.8 14,029 4.4 80-100 1,614 3.3 298 2.7 2,242 1.9 11,706 3.7 Total 48,892 100 10,919 100 115,684 100 318,535 100 Income of census tract5 Low or moderate 6,043 12.4 846 7.7 10,950 9.5 38,685 12.1 Middle 28,083 57.4 5,519 50.5 65,009 56.2 185,781 58.3 Upper 14,766 30.2 4,554 41.7 39,725 34.3 94,069 29.5 Total 48,892 100 10,919 100 115,684 100 318,535 100 MEMO Mean size of loan (thousands of dollars) 123.29 123.57 115.05 101.43 within their communities in a fair and nondiscrim- oughly lenders' compliance with community inatory manner. Because of certain limitations reinvestment and fair lending obligations. With (the most important being incomplete information access to individual applications and to inforabout applicants' financial characteristics), the mation about institution lending standards, expanded data alone cannot provide the answers agency examiners are able to overcome most of to these questions. Nonetheless, the data can be the data's limitations. Computerization of the expected to prompt useful dialogue between data will increase their efficiency. Finally, a financial institutions and members of their com- switch to 1990 delineations of census tract munities. boundaries, proposed for the 1992 data, will The expanded data will make it possible for make the HMDA information more reflective of supervisory agencies to evaluate more thor- current lending practices. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

882 Industrial Production and Capacity Utilization Released for publication on September 17 in addition, production of construction supplies and nondurable materials improved further. After having Industrial production rose 0.3 percent in August increased sharply for five successive months, the after increases of 0.6 percent in July and 0.8 percent output of motor vehicles fell 9.3 percent last month; in June, which are now shown to have been larger excluding cars and trucks, total industrial production than estimated earlier. In August, the most signifi- rose 0.5 percent. Total industrial capacity utilization cant increases in output occurred in consumer goods increased 0.1 percentage point in August to 80.0 perother than motor vehicles and in durable materials; cent, 1.6 percentage points above its March trough. Industrial production indexes Twelve-month percent change Twelve-month percent change Products Total industry Materials Durable manufacturing Manufacturing Nondurable manufacturing Capacity and industrial production Ratio scale, 1987 production =100 Ratio scale, 1987 production = 100 Total industry Manufacturing Capacity Capacity Production Production Percent of capacity Percent of capacity Total industry Manufacturing Utilization Utilization 1979 1981 1983 1985 1987 1989 1991 1979 1981 1983 1985 1987 1989 1991 All series are seasonally adjusted. Latest series, August. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

883 1987 = 100 Percentage change from preceding month PPPeeerrr--ccceeennntttaaagggeee ccchhhaaannngggeee,,, IIInnnddduuussstttrrriiiaaalll ppprrroooddduuuccctttiiiooonnn 1991 1991 AAAuuuggg... 111999999000 tttooo Mayr Juner JulyP Aug.P Mayr Juner JulyP Aug. P AAAuuuggg... 111999999111 Total index 106.4 107.3 108.0 108.2 .9 .8 .6 .3 -2.0 Previous estimates 106.4 107.1 107.6 .8 .6 .5 Major market groups Products, total 107.7 108.6 108.8 108.9 .8 .9 .2 .1 -1.8 Consumer goods 106.6 107.9 107.9 108.4 1.0 1.3 .0 .5 .6 Business equipment 121.7 122.1 122.7 122.3 .4 .3 .5 -.3 -2.5 Construction supplies 95.8 97.4 97.9 98.4 .9 1.7 .4 .6 -6.6 Materials 104.5 105.4 106.7 107.2 1.1 .8 1.2 .5 -2.3 Major industry groups Manufacturing 106.6 107.4 108.2 108.5 .6 .8 .7 .3 -2.3 Durable 106.7 107.4 108.2 108.3 .7 .6 .8 .1 -4.6 Nondurable 106.5 107.5 108.2 108.9 .6 1.0 .6 .6 .8 Mining 100.2 102.1 103.1 102.0 -.7 2.0 1.0 -1.1 -.4 Utilities 111.4 111.5 110.4 111.4 5.2 .1 -.9 .8 .0 Percent of capacity Capacity growth, Capacity utilization 1990 1991 Aug. 1990 Average, Low, High, to 1967-90 1982 1988-89 Aug. Mayr June' Julyr Aug.P Aug. 1991 Total industry 82.2 71.8 85.0 83.7 79.1 79.6 79.9 80.0 2.6 Manufacturing 81.5 70.0 85.1 82.9 77.8 78.3 78.6 78.7 2.9 Advanced processing 81.1 71.4 83.6 81.6 77.3 77.6 77.7 77.6 3.2 Primary processing . 82.4 66.8 89.0 86.1 79.0 79.9 80.9 81.2 2.1 Mining 87.4 80.6 87.2 89.4 87.6 89.2 90.0 89.0 .0 Utilities 86.8 76.2 92.3 87.6 86.7 86.7 85.8 86.4 1.3 r Revised, NOTE. Indexes are seasonally adjusted. p Preliminary. At 108.2 percent of its 1987 annual average, motor vehicle industry rose again last month, and industrial production in August was 2 percent below production of basic metals increased further. Among its year-ago level. nondurables, production of textiles posted another In market groups, output of consumer goods other sizable gain in August, and output of paper, which than motor vehicles increased about 1 percent in surged in July, edged down. Production of energy August, reflecting widespread gains in nondurable materials was little changed in August; an increase goods, such as food and clothing, and further in electricity generation was about offset by a decline increases in goods for the home. Production of in coal. business equipment other than motor vehicles rose In industry groups, output in manufacturing 0.5 percent to a level about 1 percent above its low in increased 0.3 percent in August; excluding motor March. Since output in this sector reached its trough, vehicles and parts, output increased 0.6 percent, the recovery in output has been lackluster: This about the same as in recent months. Utilization for modest improvement since March has been led by manufacturing as a whole edged up 0.1 percentage gains in aircraft and in some types of equipment point in August to 78.7 percent. Within manufacturprimarily used outside the industrial sector, such as ing, the operating rate for primary processing farm and service industry equipment; the production industries continued to move upward, increasing of information processing equipment, which in- 0.3 percentage point further, while the rate for cludes computers, and industrial equipment has advanced processing was about unchanged again changed little, on balance, in recent months. last month. Among primary processing industries, Materials production expanded another 0.5 percent the utilization rates for textile mill products, in August, owing primarily to another sharp gain in petroleum products, primary metals, and fabricated durables. Despite the curtailment in output of cars metal products all increased more than 3A percentage and trucks in August, output of materials used by the point in August. Within advanced processing, the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

884 Federal Reserve Bulletin • November 1991 utilization rate for apparel also increased more than 1 percent, owing mainly to a drop in coal and to % percent in August and has risen nearly 5 percent- reduced oil and gas well drilling. Production at age points since March; however, the operating rate utilities increased about % percent, about retracing for motor vehicles dropped sharply last month. the decline in July; on balance, the output of utilities Elsewhere, the utilization rates for most other has changed little since the weather-related surge in advanced processing industries rose a bit. May. Outside manufacturing, output at mines fell about Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

885 Statements to the Congress Statement by David W. Mullins, Jr., Vice Chair- Though the U.S. government securities market man, Board of Governors of the Federal Reserve is an important market, the Board of Governors System, before the Subcommittee on Telecom- has little direct regulatory authority for this marmunications and Finance of the Committee on ket. In this market, the Reserve Banks operate as Energy and Commerce, U.S. House of Repre- fiscal agents of the U.S. Treasury, and the New sentatives, September 4, 1991 York Reserve Bank also serves as the operating arm of the Federal Open Market Committee (FOMC). The Board, however, retains general I am pleased to be here today to testify in oversight responsibility for all Federal Reserve connection with the regulation of the government District Bank activities. Moreover, the Board of securities market. President Corrigan's state- Governors bears the responsibility for determinment has detailed both the role of the Federal ing overall policy for the Federal Reserve System Reserve Bank of New York in this market, with respect to this market and all other matters. including its relationship with the primary deal- For example, the Board consults with the Treaers, and the circumstances surrounding the disclosures by Salomon Brothers.1 As he noted, the sury Department and the Securities and Exchange Commission (SEC) on issues related to Board of Governors of the Federal Reserve Sysadministration of the Government Securities tem was actively involved in the consultations Act. Because of these responsibilities and the among regulators during this episode. In my importance of this market, the Board is commitprepared remarks, I shall first delineate the role ted to participate actively in the process of of the Board of Governors in this market and ensuring and enhancing the efficiency and integthen turn to the other issues we were asked to rity of this market. address—specifically, the potential implications of this episode for regulatory and legislative The market under consideration here is at the initiatives. center of the nation's financial system. Its depth and breadth are unparalleled. And it is because of The Board of Governors considers the U.S. the importance of the market for U.S. governgovernment securities market to be the most ment securities that the events of recent months important securities market in the world. It is are of such concern. The price distortions in important for at least three reasons. First, market certain securities, the admissions of wrongdoing conditions there determine the cost to the taxby Salomon Brothers, and the allegations of payer of financing U.S. government operations. further misconduct have raised troubling ques- Second, this market serves as the foundation for tions about the government securities market. other money and capital markets here and While the government securities market has been abroad, and as a prime source of liquidity for extraordinarily resilient and has continued to financial institutions. Finally, and for us perhaps function well over this period, this episode unmost important, the U.S. government securities derscores the importance of ensuring the integmarket is the market through which the Federal rity of this market. Reserve implements monetary policy, and thus Of course, we must not overlook the fact that this market must be an efficient and reliable existing enforcement mechanisms appear to have transmitter of our monetary policy actions. been instrumental in this unfolding episode. These mechanisms included surveillance activities, inquiries, and other enforcement activities by the Federal Reserve Bank of New York, the 1. President Corrigan's statement follows this one. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

886 Federal Reserve Bulletin • November 1991 Treasury, the Securities and Exchange Commis- healthy. This episode has presented us with an sion, and the Justice Department. Although sen- opportunity to undertake a thorough analysis of ior Salomon Brothers officials were aware of rule the structure of this market and its regulations. violations months before, the firm finally admit- I also believe that the assessment of these ted wrongdoing only under the pressure of these important issues should not be done in haste. advancing enforcement processes. And, of Nor should changes be considered in a piecemeal course, these enforcement processes continue to manner. The issues are too complex and the move forward as we meet here today. It is consequences of mistakes too severe for us to already apparent to all observers that the conse- rush to judgment on fundamental issues of marquences of willful violations in this area are quite ket structure and regulation. severe indeed. What is needed is a rigorous, comprehensive, While this episode has been a troubling one, it and coordinated review of the government secuis not apparent that sweeping changes in regula- rities market—its structure, practices, and regution are warranted. It is clear that tightening up lation. The objective should be to find ways to on enforcement would be efficacious in detecting ensure and enhance the efficiency and integrity of and deterring future offenses. For example, the this market. Federal Reserve regularly receives information A key question to be addressed in the course of on dealer positions in when-issued securities. such a review is whether current laws, regula- These reports were not actively monitored. tions, procedures, and enforcement efforts foster Though these reports were not designed for the efficiency and liquidity of this market, as well enforcement purposes, closer attention to them as provide adequate protection against the potenmay be helpful in raising questions about situa- tial for manipulative practices. A wide range of tions with possible enforcement implications. issues should be on the table, pertaining to both Going forward, the Federal Reserve is commit- the primary and secondary markets for Treasury ted to ensuring active monitoring of all incoming securities. It may well be that, upon review, data and prompt referral of anomalous findings to additional rules or reporting requirements or appropriate regulatory authorities. Indeed, sur- significant changes in the auction process or in veillance and enforcement activities have already the oversight structure of the market will be been intensified. found to be in order. At this point, however, And yet this episode has raised concerns that conclusions would be premature. The issues are go beyond the straightforward process of detect- complex and interrelated, investigations are not ing and punishing wrongdoing. With the revela- yet completed, and the data needed to make tions by Salomon Brothers, the price distortions informed judgments are still being gathered. in certain recent issues, and allegations of other In thinking about such issues, the Board begins misconduct, some have felt that the fairness of from the premise that it is absolutely essential the market has been called into question. Others that the extraordinary liquidity and efficiency of have raised concerns about the efficiency of the government securities market not be immarket mechanisms. The smooth functioning of paired. This liquidity is important to the smooth this market in recent months demonstrates that functioning of the financial system; it facilitates there appears to have been no economically the implementation of monetary policy through meaningful loss of confidence in this market as open market operations; and it allows the Treayet. Nonetheless, these concerns need to be sury to issue federal debt at the lowest possible addressed. Reduced confidence in the fairness cost to the taxpayers. and efficiency of the government securities mar- With well over $2 trillion in Treasury debt held ket could potentially impair liquidity and raise by the public, the stakes are high and the consethe cost of Treasury financing. quences of mistakes are severe. Should either In response to these concerns, a wide variety concerns about market integrity or inappropriate of proposals have been advanced for changes in regulation raise the interest rate on Treasury debt regulation or market structure. I believe that this even Vioo of a percentage point, this rise would broad-based reassessment is appropriate and aggregate into more than $200 million in in- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 887 creased interest cost every year that would have Should the Congress nevertheless conclude to be borne by U.S. taxpayers. Time is needed that additional rules are desirable to help curb for a careful, analytical approach to the issues of existing or potential abuses, we would urge that, market structure and regulation. in the case of securities trading information, the The Department of the Treasury, the Federal market be given adequate opportunity to satisfy Reserve, and the SEC have agreed to undertake congressional concerns before backstop authoran intensive examination of market practices, ity mandating dissemination may be exercised. structure, and regulation, culminating in recom- And, with regard to sales practice rules, perhaps mendations for changes needed to ensure and the least costly and most responsive added meaenhance the efficiency and integrity of this mar- sure would be a simple removal of the prohibition ket. We would expect this review to take place on the National Association of Securities Dealers over the span of the next ninety days. I appreci- (NASD) applying its sales practice rules to govate that this timetable does not mesh with the ernment securities transactions. That change sunset date on the Treasury's rulemaking author- would bring NASD firms into line with what is ity under the Government Securities Act, but I already the case for New York Stock Exchange believe that the added time is necessary to bring member firms, thereby extending sales practice adequate resources to bear on this very impor- rules to all nonbank brokers and dealers. In this tant matter. In any case, our timetable need not process, which would in essence take place with serve as an impediment to action on the Govern- oversight by the SEC, we would favor substanment Securities Act. The legislative process can tive consultation and cooperation with the Deusefully go forward in extending the Treasury's partment of the Treasury as the primary regularulemaking authority and addressing other con- tor of this market. In general, we favor cerns that already had been under consideration; consultation and cooperation and oppose the if it wishes, the Congress can always take up granting of veto powers over other agencies' other related issues later, perhaps after the agen- regulations in this market. cies have completed their review. In sum, recent events have raised troubling Disclosures to date about wrongdoing in the questions about the U.S. government securities market have not fundamentally altered the market. These concerns must be addressed. A Board's views—conveyed in letters and con- thorough and thoughtful investigation is the first gressional testimony earlier this year—on the step in this process. Ultimately, a careful and amendments that had been proposed with re- wide-ranging examination of the government sespect to the Government Securities Act. Spe- curities market, with the goal of enhancing its cifically, we continue to support the recommen- efficiency and its fairness, will be an important dation that the Treasury's rulemaking authority input to our consideration of the appropriate be extended past its current sunset date. Be- changes in this market. Though I am deeply yond that, however, we do not feel that the concerned about recent revelations and await the need for the additional legislation, calling for results of ongoing investigations, I do not believe sales practice rules or mandating the dissemina- that the government securities market is broken tion of information, has been decisively demon- in any fundamental sense. I do, however, believe strated, nor has the Salomon episode produced that it can be improved, and the Board of Govevidence of such a need. ernors is committed to this end. • Statement by E. Gerald Corrigan, President, I appreciate the opportunity to provide the sub- Federal Reserve Bank of New York, before the committee with my views concerning the recent Subcommittee on Telecommunications and Fi- disclosures by Salomon Brothers Inc. and the nance of the Committee on Energy and Com- implications of those disclosures for the governmerce, U.S. House of Representatives, Septem- ment securities market. These disclosures are ber 4, 1991 clearly serious matters that must be addressed to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

888 Federal Reserve Bulletin • November 1991 ensure that confidence in the U.S. government issuance of new debt (or the rollover of existing securities market is maintained at the highest debt) by the Treasury. This function is performed levels. My statement touches on three topics: under rules established by the Treasury, includfirst, the role of the Federal Reserve Bank of ing the so-called 35 percent rule. Primary dealers New York as it relates to the government secu- (whose characteristics are described below) are rities market; second, the Bank's understanding the major takers of new debt issued by the of the circumstances surrounding Salomon Treasury either for the dealer's own account or Brothers' disclosures over the period August 9 to for the accounts of their clients or customers. August 19, including the steps the firm has taken Entities that are not primary dealers may also or is planning to take to protect against similar submit competitive bids on their own, but many problems in the future; and third, my thoughts on choose to make such bids through primary deala prudent course for the near term. ers. Finally, any entity or individual may submit noncompetitive bids in an amount up to $1 million. Such bids are accepted by the Treasury at THE STRUCTURE OF THE GOVERNMENT the average price that results from the competitive bidding process. SECURITIES MARKET AND ROLE OF THE FEDERAL RESERVE BANK OF NEW YORK The second class of activity relates to investing and trading in the vast stock of Treasury debt As the subcommittee knows, the market for U.S. that makes up the market as a whole. At this government securities is the world's largest, level, the scope of the market widens appreciably most efficient, and most important securities and ultimately encompasses the millions of indimarket. Given the sheer size of the federal gov- viduals and institutions on a global basis that are ernment debt that needs to be financed, we all active in the market for U.S. government secuhave a big stake in ensuring that the debt is rities. This vast secondary market in government financed at the lowest possible cost and that the securities functions with elements of liquidity, liquidity and efficiency of this market is pre- efficiency, and resiliency that are unique, on a served. global scale, to that market. In part, this is made The market consists of several broad catego- possible by the Treasury-Federal Reserve bookries of private and public participants. First, entry system for the electronic custody and there is the U.S. government itself as issuer of transfer of these securities. the securities. Second, there are Federal Reserve As noted above, among the private partici- Banks operating as the Treasury Department's pants in the market are the so-called primary fiscal agent. Third, there is the Federal Reserve dealers in U.S. government securities with whom Bank of New York, acting on behalf of the the Federal Reserve Bank of New York conducts Federal Open Market Committee, in entering the its open market operations. The primary dealers market for day-to-day purchases and sales of are the main market makers for government government securities as the chief instrument for debt. They maintain two-way markets for govthe implementation of monetary policy. Further, ernment securities and participate directly and the New York Bank also acts in the market as actively in the Treasury's auctions. Today, there agent for foreign central banks and other official are about forty primary dealers—about half are institutions. Fourth, there are government secu- banks or securities affiliates of banks and half are rities dealers and banks that act as intermediaries diversified or specialized securities firms. All between the Treasury and others in the distribu- Federal Reserve transactions in the market, tion and trading of government securities. Fi- whether for its own account or for the accounts nally, there is the multitude of individual and of other official institutions, are conducted with institutional holders of the Treasury's securities. the primary dealers. During 1990, the aggregate For descriptive purposes, it may be useful to volume of such transactions conducted by the think of the operation of the market in two Federal Reserve with primary dealers was close separate but closely related classes of activities. to $525 billion. First, there are those activities that center on the The mere fact that the Federal Reserve Bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 889 of New York must conduct transactions with Federal Reserve's Open Market Operations, to private-sector counterparties implies, of neces- make markets in the full range of U.S. governsity, that the Bank incurs the same elements of ment securities for customers in good times and counterparty credit, delivery, and settlement risk bad, and to be consistent and meaningful particthat any private-sector market participant also ipants in Treasury auctions of new securities. incurs. For this reason, the Bank has established Firms choose to take on these responsibilities as criteria for selecting those firms with whom the primary dealers for a variety of reasons, includ- Bank does business. (The criteria for primary ing the desire to have an active role in the largest dealers are described in Attachment A.1) It market worldwide. Firms also choose to withshould also be noted that in several other major draw for business considerations such as the industrial countries there are broadly similar belief that they may achieve better returns on arrangements between central banks and a des- their capital from other lines of business. For ignated group of firms with whom those other example, during 1990, two firms were added to central banks conduct their business. the list while five firms were deleted. It is important to note that the role of the From time to time, the Federal Reserve Bank Federal Reserve Bank of New York in its busi- of New York has carefully considered possible ness relationship with the primary dealers takes changes in its approach to the selection of those place in a framework in which the Federal Re- entities with whom it will do business. Those serve has no express statutory authority to reg- deliberations always collide head-on with two ulate or supervise the primary dealers. Indeed, realities that seem to limit practical alternatives the Government Securities Act of 1986 estab- to current arrangements. First, the fact that we lished a formal supervisory and regulatory frame- must deal with private-sector counterparties necwork for the government securities market for essarily implies that some will be chosen and the first time, with the Treasury as rulemaker and some will not. Second, the fact that some will be the Securities and Exchange Commission and chosen and others not necessarily implies that banking supervisors as responsible for enforce- whether they are called primary dealers or not, ment. While the Federal Reserve Bank of New the unique relationship between the Federal Re- York does not have statutory rulemaking or serve Bank of New York and those entities with enforcement authority in this area, we recognize whom the Bank does business will remain. Rethat our public nature carries with it certain cent events have obviously called into even implicit responsibilities to work closely with sharper focus these difficult questions. those having such authority to preserve and While the primary dealer system is, in the first enhance the health and vitality of this market. instance, based on business counterparty rela- We also recognize that the smooth functioning of tionships, our interests in the health and wellbethe market for U.S. government securities— ing of the market extend beyond that narrow given its role as the anchor for other markets— framework. The breadth, depth, and liquidity of has obvious implications for the smooth func- this market are essential characteristics that the tioning of other money and capital markets here Federal Reserve relies on for the implementation and abroad. of monetary policy, the Treasury relies on for The number of primary dealers has varied over financing the federal government, and investors the years as the U.S. Treasury market has rely on in committing their funds. grown. From eighteen in the early 1960s, the number increased to twenty-three in 1971 and to AN OVERVIEW OF THE FEDERAL RESERVE thirty-six in 1981. Today there are about forty BANK OF NEW YORK'S UNDERSTANDING primary dealers, after having peaked at forty-six OF THE EVENTS SURROUNDING THE in 1988. These firms are expected to facilitate the SALOMON BROTHERS' DISCLOSURES OF AUGUST 9 THROUGH AUGUST 19 1. The attachments to this statement are available upon On Friday, August 9, 1991, top officials at Sarequest from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. lomon Brothers telephoned the Federal Reserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

890 Federal Reserve Bulletin • November 1991 Bank of New York and almost simultaneously attention and discussions that surrounded the faxed to the Bank a copy of the firm's August 9 May auction, the disclosures made by Salomon press release. Before that phone call, the Fed- during the course of the Friday, August 9 teleeral Reserve Bank of New York had no knowl- phone call were particularly unsettling, espeedge of the wrongdoing then or subsequently cially as it pertained to top management's knowldisclosed by Salomon. However, in the normal edge since late April of the unauthorized review of the bids for the February five-year customer bid in the February auction. note auction, an employee of the Federal Re- On the basis of the disclosures made by serve Bank of New York had noted that another Salomon Brothers on Friday, August 9, the dealer firm had submitted a bid, which, if added Federal Reserve Bank of New York informed to the bid submitted by Salomon Brothers for an Salomon Brothers by letter on Tuesday, August affiliate of that same second dealer firm, would 13 that it wanted a written explanation of the have placed that entity's consolidated bid over circumstances surrounding the disclosures the Treasury's 35 percent limit for a single made on August 9 and a full report on manageentity. The Federal Reserve Bank of New York rial and other changes that would be taken to notified the Treasury of this finding, and the prevent a recurrence of these irregularities in Treasury subsequently wrote to Salomon's cus- the future. tomer—with a copy to Salomon—informing it Early in the evening of Tuesday, August 13 the that all of its affiliates would be considered a Federal Reserve Bank of New York received single entity for purposes of the administration another call from top management at Salomon. of the auction rules. At that time, further disclosures of irregularities The circumstances surrounding these events were made. These irregularities were the subject strongly suggest that it was the receipt by Sa- of the press statement issued by Salomon Brothlomon of the copy of the Treasury letter to that ers late in the day of Wednesday, August 14. second firm that prompted a senior official of On the basis of the August 14 disclosures, Salomon to disclose to his superiors the fact of the there were further discussions between top offiunauthorized bid in the February auction. Despite cials of Salomon Brothers and the Federal Rethis disclosure within the firm, the fact of the serve Bank of New York on the evening of unauthorized bid was not disclosed to the Federal Thursday, August 15 and on the morning of Reserve Bank of New York or any other official Friday, August 16. During the discussion on entity until the telephone call of August 9, 1991. Friday, August 16, it became clear that the top While not directly the subject of Salomon two officials of the firm intended to resign and Brothers' August 9 press release, there was also that Mr. Buffett would take on the position of a considerable amount of discussion between interim chairman over the weekend. In the face officials of the Federal Reserve Bank of New of these important changes in top management at York and Salomon Brothers in the period after the firm and the strong commitments made by the the Treasury's May auction of two-year notes. In incoming chairman, the Federal Reserve Bank of that timeframe, there was no evidence that Sa- New York deemed it appropriate to provide the lomon had breached the Treasury's 35 percent firm with a limited amount of additional time to rule in the May auction. There was, however, respond to the questions raised in the Bank's concern in the marketplace and in official circles letter of August 13. that the auction results may have created some- Over the entire period from the late morning thing of a "squeeze" in the market for that call of Friday, August 9 to the Federal Reserve particular issue. Those concerns prompted the Bank of New York through the conversations Securities and Exchange Commission, in consul- between the Federal Reserve Bank of New York tation with the Treasury and the Federal Re- and the firm on the morning of Friday, August 16, serve, to commence an in-depth review and the Bank kept the Federal Reserve Board, the investigation into the May two-year note auction Treasury, and the Securities and Exchange Comand its market aftermath. Given the amount of mission informed as to the nature of these conver- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 891 sations. Over this same interval, officials of the sort themselves out in a setting in which due Federal Reserve worked closely with the Securi- process must be allowed to run its course. Simties and Exchange Commission and law enforce- ilarly, some breathing room is needed for the new ment entities in the sharing of information and in management of the firm to be able to respond in the shaping of concepts and approaches to the detail as to what steps the firm, its lawyers, its investigations then under way. All such discus- accountants, and its advisers have taken, or are sion occurred in the context of full cooperation planning to take, to prevent and detect similar and strong working relationships between the activities in the future. Finally, we, along with three official entities and the Justice Department. other authorities, will rigorously evaluate these Over the course of Sunday, August 18, the changes. In the meantime, one cannot help but Federal Reserve Bank of New York was in be impressed with the sweeping management constant contact with the Treasury Department, changes that have already been made and with the Board of Governors of the Federal Reserve the strength of the new management's commit- System, and Salomon Brothers. The Bank was ment to proper behavior and strengthened manfully aware of the decisions taken by the Trea- agement and control systems. sury in regard to the extent of Salomon's ability to participate—either for its own account or for the account of customers—in Treasury auctions, STEPS FOR THE NEAR TERM and it regarded all such decisions as appropriate. Indeed, the Bank shared the view that the deci- At this point in time, while awaiting the results of sion to permit Salomon to continue to participate current investigations by several agencies, it in auctions for its own account was appropriate seems premature to come forward with any in light of the further management changes an- broad-based plans for regulatory changes or legnounced on Sunday, August 18, as well as the islative proposals with respect to the government further assurances received as to the future securities market. In coming weeks, we will be course of conduct by the firm. Throughout all of coordinating closely with officials and staff of the these discussions, however, the Federal Reserve Treasury Department, the Securities and Ex- Bank of New York was mindful that the nature change Commission, and, of course, the Board of and extent of its future business relationship with Governors of the Federal Reserve System. The the firm were under review, and the Bank made agencies together will be looking at this situation that quite clear to all, including the new manage- with an eye toward developing a coherent apment of the firm. proach that deals with the abuses that have come In looking at the acknowledgements by the to light and does so in a manner that recognizes firm since the first statement on August 9 regard- the need to proceed very carefully in respect to ing wrongdoings in the auctions of December this highly important market. We would aim to 1990 and February 1991—especially in light of have recommendations within ninety days—althe fact that the latter was known by the top though on certain more limited points it may be management of the firm in late April—one can possible to move sooner. With a carefully only be shocked and dismayed by this sequence thought-out and implemented approach, we beof events. Having said that, it will take some time lieve that it will be feasible to maintain the for the various criminal and civil proceedings to integrity and efficiency of this vital market. • Statement by David W. Mullins, Jr., Vice Chair- I am pleased to be here today to testify in man, Board of Governors of the Federal Reserve connection with the regulation of the government System, before the Subcommittee on Securities securities market. President Corrigan's stateof the Committee on Banking, Housing, and ment has detailed both the role of the Federal Urban Affairs, U.S. Senate, September 11, 1991 Reserve Bank of New York in this market, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

892 Federal Reserve Bulletin • November 1991 including its relationship with the primary deal- ensuring and enhancing the efficiency and integers, and the circumstances surrounding the dis- rity of this market. closures by Salomon Brothers.1 The Board of The market under consideration here is at the Governors of the Federal Reserve System was center of the nation's financial system. Its depth actively involved in the consultations among and breadth are unparalleled. And it is because of regulators during this episode. In my prepared the importance of the market for U.S. governremarks, I shall first delineate the role of the ment securities that the events of recent months Board of Governors in this market and then turn are of such concern. The price distortions in to the other issues we were asked to address— certain securities, the admissions of wrongdoing specifically, the potential implications of this by Salomon Brothers, and the allegations of episode for regulatory and legislative initiatives. further misconduct have raised troubling ques- The Board of Governors considers the U.S. tions about the government securities market. government securities market to be the most While it has been extraordinarily resilient and important securities market in the world. It is has continued to function well over this period, important for at least three reasons. First, market this episode underscores the importance of enconditions there determine the cost to the tax- suring the integrity of this market. payer of financing U.S. government operations. Of course, we must not overlook the fact that Second, this market serves as the foundation for existing enforcement mechanisms appear to have other money and capital markets here and abroad been instrumental in this unfolding episode. and as a prime source of liquidity for financial These mechanisms included surveillance activiinstitutions. Finally, and for us perhaps most ties, inquiries, and other enforcement activities important, the U.S. government securities mar- by the Federal Reserve Bank of New York, the ket is the market through which the Federal Treasury, the Securities and Exchange Commis- Reserve implements monetary policy, and thus sion (SEC), and the Justice Department. Althis market must be an efficient and reliable though senior Salomon Brothers officials were transmitter of our monetary policy actions. aware of rule violations months before, the firm Nonetheless, the Board of Governors has little finally admitted wrongdoing only under the presdirect regulatory authority for the U.S. govern- sure of these advancing enforcement processes. ment securities market. In this market, the Re- And of course, these enforcement processes conserve Banks operate as fiscal agents of the U.S. tinue to move forward as we meet here today. It Treasury and the Federal Reserve Bank of New is already apparent to all observers that the York also serves as the operating arm of the consequences of willful violations in this area are Federal Open Market Committee (FOMC). The quite severe indeed. Board, however, retains general oversight re- While this episode has been a troubling one, it sponsibility for all Federal Reserve District Bank is not apparent that sweeping changes in regulaactivities. Moreover, the Board of Governors tion are warranted. It is clear that tightening up bears the responsibility for determining overall on enforcement would be efficacious in detecting policy for the Federal Reserve System with re- and deterring future offenses. For example, the spect to this market and other matters. For Federal Reserve will be contacting customers example, by statute the Board consults with the bidding through dealers to confirm the accuracy Treasury Department and the Securities and Ex- of those bids. In addition, the Federal Reserve change Commission on issues related to admin- regularly receives information on dealer posiistration of the Government Securities Act. Be- tions in when-issued securities. These reports cause of these responsibilities and the were not actively monitored from an enforceimportance of this market, the Board is commit- ment perspective because they were not deted to participating actively in the process of signed for that purpose. Nonetheless, closer attention to them may be helpful in raising questions about situations with possible enforcement implications, and we will explore the redesign of this report to enhance its potential useful- 1. President Corrigan's statement follows this one. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 893 ness in the enforcement process. The Federal the primary and secondary markets for Treasury Reserve is committed to ensuring active monitor- securities. It may well be that, upon review, ing of all incoming data and prompt referral of additional rules or reporting requirements or siganomalous findings to appropriate regulatory au- nificant changes in the auction process or in the thorities. oversight structure of the market will be found to And yet this episode has raised concerns that be in order. At this point, however, conclusions go beyond the straightforward process of detect- would be premature. The issues are complex and ing and punishing wrongdoing. With the revela- interrelated, investigations are not yet completed, tions by Salomon Brothers, the price distortions and the data needed to make informed judgments in certain recent issues, and allegations of other are still being gathered. misconduct, some have felt that the fairness of However, a promising approach is to explore the market has been called into question. Others ways to make access to the primary market have raised concerns about the efficiency of easier and more efficient. Broader-based particimarket mechanisms and the efficacy of the cur- pation in auctions should reduce the vulnerability rent regulatory structure. The continued smooth to collusion and result in a deeper, more efficient functioning of this market demonstrates that market. For example, an electronic bidding prothere appears to have been no economically cess in the primary market promises to provide meaningful loss of confidence in this market as easier access, thereby broadening the market. yet. Nonetheless, these concerns need to be Moreover, a computerized auction process will addressed; reduced confidence in the fairness greatly enhance the efficiency of market surveiland efficiency of the government securities mar- lance and monitoring efforts and allow rapid and ket could potentially impair liquidity and raise easy detection of many potential abuses. The the cost of Treasury financing. Federal Reserve and the Treasury have acceler- In response to these concerns, a wide variety ated their effort to automate major aspects of the of proposals have been advanced for changes in auction process. Broader participation in aucregulation or market structure. I believe that this tions and more efficient surveillance mechanisms broad-based reassessment is appropriate and may render collusion impractical and obviate the healthy. This episode has presented us with an need for cumbersome, restrictive regulations that opportunity to undertake a thorough analysis of risk raising the cost of Treasury financing. the structure of this market and its regulations. Several commenters have questioned the pri- I also believe that the assessment of these mary dealer system. As an integral part of the important issues should not be done in haste. Nor government securities market, the primary should changes be considered in a piecemeal dealer system has served us well for thirty years. manner. The issues are too complex, highly inter- Nonetheless, the market has changed over that related, and the consequences of mistakes are too span, and it is therefore appropriate that the role severe for us to rush to judgment on fundamental of the primary dealer system in this market be issues of market structure and regulation. considered in a thorough review. What is needed is a rigorous, comprehensive, Another topic for examination in our review is and coordinated review of the government secu- the difficult issue of the appropriate amount and rities market—its structure, practices, and regu- nature of information sharing among market parlation. The objective should be to find ways to ticipants. Some sharing of information is useful, ensure and enhance the efficiency and integrity of even necessary to the smooth functioning of the this market. Treasury market. Information sharing can reduce A key question to be addressed in the course of uncertainty and facilitate lower cost Treasury such a review is whether current laws, regula- financing. Nonetheless, some kinds of informations, procedures, and enforcement mechanisms tion sharing can lead to collusive behavior and foster the efficiency and liquidity of this market, market distortion. One approach is to derive as well as provide adequate protection against the appropriate standards of conduct with respect to potential for manipulative practices. A wide range the sharing of information among market particof issues should be on the table, pertaining to both ipants. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

894 Federal Reserve Bulletin • November 1991 The issue of the Treasury's consultations with market. We would expect that this review the Public Securities Association's borrowing would take place over the span of the next committee is more appropriately addressed by ninety days. I appreciate that this timetable the Treasury. They must assess the benefits of does not mesh with the sunset date on the this arrangement, which may well be substantial, Treasury's rulemaking authority under the against the potential for abuse, which may well Government Securities Act, but I believe that be limited. the added time is necessary to bring adequate Among the suggestions from academe is that resources to bear on this very important matter. the Treasury replace the current auction tech- In any case, our timetable need not serve as an nique with a so-called Dutch auction. While not a impediment to action on the Government Secunew suggestion, it is one worthy of rigorous rities Act. The legislative process can usefully analysis. Analysis is necessary because, applied go forward on extending the Treasury's rulein this context, it is not at all clear that a Dutch making authority and addressing other conauction would reduce the cost of Treasury fi- cerns that already had been under considernancing; indeed, it might actually increase the ation; if it wishes, the Congress can always take Treasury's costs. Nevertheless, this area is a up other related issues later, perhaps after the fruitful one for examination. Redesigning the agencies have completed their review. auction process has the potential to attract Disclosures to date about wrongdoing in the broader-based interest in the auction and to market have not fundamentally altered the reduce the risk of collusive behavior. And, of Board's views—conveyed in letters and congrescourse, there are numerous other issues that sional testimony earlier this year—on the amenddeserve careful and deliberate consideration in a ments that had been proposed with respect to the thorough review of this market. Government Securities Act. Specifically, we In thinking about such issues, the Board begins continue to support the recommendation that the from the premise that it is absolutely essential Treasury's rulemaking authority be extended that the extraordinary liquidity and efficiency of past its current sunset date. Should the Congress the government securities market not be im- conclude that additional rules are desirable to paired. This liquidity is important to the smooth help curb existing or potential abuses, we would functioning of the financial system, it facilitates urge that, in the case of securities trading inforthe implementation of monetary policy through mation, the market be given adequate opportuopen market operations, and it allows the Trea- nity to satisfy congressional concerns before sury to issue federal debt at the lowest possible backstop authority mandating dissemination may cost to the taxpayers. be exercised. And, with regard to sales practice With well over $2 trillion in Treasury debt held rules, perhaps the least costly and most responby the public, the stakes are high and the conse- sive added measure would be a simple removal of quences of mistakes are severe. Should concerns the prohibition on the National Association of about either market integrity or inappropriate Securities Dealers (NASD) applying its sales regulation raise the interest rate on Treasury debt practice rules to government securities transaceven Vm of a percentage point, this rise would tions. That change would bring NASD firms into aggregate into more than $200 million in in- line with what is already the case for New York creased interest cost every year, which would Stock Exchange member firms, thereby extendhave to be borne by U.S. taxpayers. Time is ing sales practice rules to all nonbank brokers needed for a careful, analytical approach to the and dealers. In this process, which would in issues of market structure and regulation. essence take place with oversight by the SEC, we would favor substantive consultation and The Department of the Treasury, the Federal cooperation with the Department of the Treasury Reserve, and the SEC have agreed to undertake as the primary regulator of this market. In genan intensive examination of market practices, eral, we favor consultation and cooperation and structure, and regulation, culminating in recomoppose the granting of veto powers over other mendations for any changes needed to ensure agencies' regulations in this market. and enhance the efficiency and integrity of this Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 895 In sum, recent events have raised troubling input to our consideration of the appropriate questions about the U.S. government securities changes in this market. Though I am deeply market. These concerns must be addressed. A concerned about recent revelations and await the thorough and thoughtful investigation is the first results of ongoing investigations, I do not believe step in this process. Ultimately, a careful and that the government securities market is broken wide-ranging examination of the government se- in any fundamental sense. I do, however, believe curities market, with the goal of enhancing its that it can be improved, and the Board of Govefficiency and its fairness, will be an important ernors is committed to this end. • Statement by Oliver Ireland, Associate General tions. The certainty of settlement of payments Counsel, Legal Division, Board of Governors of associated with these transactions is critical to the Federal Reserve System, before the Commit- the efficiency of the U.S. economy and to the tee on Agriculture, U.S. House of Representa- role of the dollar as an international trade curtives, September 11, 1991 rency. The failure of a major financial institution could call into question the status of billions of I am pleased to be here today to discuss the dollars of these transactions and jeopardize the provisions of H.R.6, the Financial Institutions soundness of its financial institution counterpar- Safety and Consumer Choice Act of 1991, con- ties, thereby creating systemic risks for the financerning Payment System Risk Reduction. Subti- cial system. tle A of title VI of H.R.6 contains provisions To limit these risks, many financial institudesigned to confirm the validity of contractual tions enter into netting contracts under which agreements providing for the netting of payment the payment obligations between two parties, obligations between and among financial institu- or among several parties, are netted so that tions, including depository institutions, securi- each party to the netting contract is required or ties brokers or dealers, and futures commission entitled to make or to receive only a single merchants. payment that is the net of all of that party's The Board strongly supports these provisions transactions. Thus, in a bilateral netting conas an important step in reducing systemic risk in tract—that is, a netting contract involving only the U.S. financial system and maintaining the two parties—one party makes a single, net competitiveness of U.S. financial institutions and payment to the other party. In a multilateral markets. We understand, however, that the com- netting contract—that is, a netting contract mittee is concerned that these provisions may involving several parties—each party in a net conflict with provisions of the Commodity Ex- debtor position makes a single payment, and change Act and rules promulgated thereunder as each party in a net creditor position receives a well as provisions of the Bankruptcy Code. The single payment. Because individual net pay- Board believes that the purpose of these netting ments are far smaller than the gross value of the provisions is consistent with the purposes of the payment obligations to be settled between and Commodity Exchange Act and would support among the parties, the effect of the failure of amendments to H.R.6 designed to clarify the one of the parties in a net debtor position to relationship between the netting provisions, the settle its payment obligation is far smaller than provisions of the Commodity Exchange Act, and the effect of unwinding all of the underlying other federal laws. transactions. Further, the amount of any failed On every business day, financial institutions net payment can often be covered by margin or engage in transactions with one another that other collateral requirements, or by coinsurinvolve trillions of dollars. These transactions ance or other arrangements to ensure that uninvolve normal day-to-day payments between derlying transactions are settled with the minicommercial businesses as well as foreign ex- mum of systemic risk to the financial markets. change, securities, and commodities transac- The value of netting in reducing systemic risk Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

896 Federal Reserve Bulletin • November 1991 was recognized in 1990 in a Report of the to the validity of carefully drawn netting con- Committee on Interbank Netting Schemes of tracts presents unacceptable levels of systemic the Central Banks of the Group of Ten Coun- risk due to the enormous volume of dollar transtries. actions that are settled each day. The operations of the New York Clearing The provisions of subtitle A of title VI of House Interbank Payments System, also known H.R.6 are designed to remove any such doubts as CHIPS, demonstrates the ability of netting to by providing that, as a matter of federal law, reduce systemic risk. Each day CHIPS partici- netting provisions of contracts between and pants exchange payments totaling, on average, among depository institutions, securities broabout $870 billion. However, the net payments kers and dealers, futures commission mermade at the end of the day to settle these chants, and commodities and securities clearing transactions total, on average, only about $6.7 organizations are valid and binding on the parbillion, with the single largest debtor making a ties. These provisions would provide certainty payment of less than $1.9 billion. To limit sys- that the netting provisions would be enforced, temic risk further, CHIPS has instituted arrange- even in the event of the bankruptcy of one of ments under which the single largest debtor's the parties. position is covered by a collateralized coinsur- We do not believe that these provisions were ance system based on the participants' dealings intended to validate contracts that are otherwise with the failed participant. Under this arrange- invalid because they violate provisions of federal ment, CHIPS participants can be assured that the law. Nevertheless, the Board understands that system would settle in the event of the failure of the committee has expressed concern that the a large participant and that individual transac- netting provisions of H.R.6 would override protions processed through the system would not visions of the commodities, securities, or bankhave to be unwound. Other payment or clearing ing laws. For example, under federal commodisystems have similar netting and settlement ar- ties and securities laws, certain rules of clearing rangements. Critical to these systems is the abil- organizations or contract markets are not considity to net their participants' positions on either a ered to be valid unless they have received rebilateral or a multilateral basis. quired regulatory approvals. We believe that the The ability to reduce the systemic risk to netting provisions of H.R.6 were not intended to financial markets by netting is important not only validate such contracts. to the safety and soundness of U.S. financial Similar concerns were raised concerning the institutions but also to the competitiveness of Senate version of this legislation. In response to U.S. financial markets with foreign financial mar- these concerns, the Senate version was revised kets. Investors will be attracted to financial mar- to include provisions clarifying that this legislakets in which they can be certain their transac- tion does not validate netting contracts prohibtions will be subject to prompt final settlement. ited by or requiring agency approval prior to We believe that under the laws of the United becoming effective under relevant federal law. States and the various states there is a fairly high The Board supported these clarifications and degree of certainty that netting contracts would supports the addition of similar clarifying provibe enforced. Nonetheless, the slightest doubt as sions to title VI, subtitle A of H.R.6. • Statement by E. Gerald Corrigan, President, shed further light on the Salomon Brothers inci- Federal Reserve Bank of New York, before the dent and to share with you my views on the Subcommittee on Securities of the Committee on workings of the government securities market. I Banking, Housing, and Urban Affairs, U.S. Sen- also want to provide some general thoughts as to ate, September 11, 1991 how we can best ensure that this vital market remains the most efficient, liquid, and trusted I am pleased to appear before you this morning to market in the world. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 897 PRIMARY DEALERS AND THEIR the government securities market for the first ASSOCIATION WITH THE FEDERAL time, with the Treasury as rulemaker and the RESERVE BANK OF NEW YORK Securities and Exchange Commission (SEC) and banking supervisors responsible for enforce- Among the private participants in the market for ment. government securities are the so-called primary The number of primary dealers has varied over dealers in U.S. government securities with whom the years as the U.S. Treasury market has the Federal Reserve Bank of New York conducts grown. From eighteen in the early 1960s, the its open market operations. The primary dealers number increased to twenty-three in 1971 and to are the main market makers for government thirty-six in 1981. Today there are thirty-nine debt. They maintain two-way markets for gov- primary dealers, after peaking at forty-six in ernment securities and participate directly and 1988. As profitability ebbs and flows, firms come actively in the Treasury's auctions. Today, there and go as primary dealers. For example, during are thirty-nine primary dealers—about half are 1990, two firms were added while five firms banks or securities affiliates of banks, and half withdrew. Thus far in 1991, two more have left. are diversified or specialized securities firms. All These firms are expected to facilitate the Federal Federal Reserve transactions in the market, Reserve's open market operations, to make marwhether for its own account or for the accounts kets in the full range of U.S. government securiof other official institutions, are conducted with ties for customers in good times and bad, and to primary dealers. During 1990, the aggregate vol- be consistent and meaningful participants in ume of such transactions conducted by the Fed- Treasury auctions of new securities. eral Reserve with primary dealers was close to From time to time, the Federal Reserve Bank $525 billion. of New York has carefully considered possible The mere fact that the Federal Reserve Bank changes in its approach to the selection of those of New York must conduct transactions with entities with whom it will do business. Those private-sector counterparties implies, of neces- deliberations always collide head-on with two sity, that the Bank incurs the same elements of realities that seem to limit practical alternatives counterparty credit, delivery, and settlement risk to current arrangements. First, the fact that we that any private-sector participant in the market must deal with private-sector counterparties necalso incurs. For this reason, the Bank has estab- essarily implies that some will be chosen and lished criteria for selecting those firms with some will not. Second, the fact that some will be whom the Bank does business. (The criteria for chosen and others not necessarily implies that primary dealers are described in attachment A.1) whether they are called primary dealers or not, It should also be noted that in several other major the unique relationship between the Federal Reindustrial countries there are broadly similar serve Bank of New York and those entities with arrangements between central banks and a des- whom the Bank does business will remain. Reignated group of firms with whom those central cent events obviously have called into even banks conduct their business. sharper focus these difficult questions. It is important to note that the role of the While the primary dealer system is, in the first Federal Reserve Bank of New York in its busi- instance, based on business counterparty relaness relationship with the primary dealers takes tionships, our interests in the health and wellplace in a framework in which the Federal Re- being of the market extend beyond that narrow serve has limited statutory authority to regulate framework. The breadth, depth, and liquidity of or supervise primary dealers. Indeed, the Gov- this market are essential characteristics that the ernment Securities Act of 1986 established a Federal Reserve relies on for the implementation formal supervisory and regulatory framework for of monetary policy, the Treasury relies on for financing the federal government, and investors rely on in committing their funds. 1. The attachments to this statement are available on In summary, the primary dealer arrangement request from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. fundamentally grows out of the fact that the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

898 Federal Reserve Bulletin • November 1991 Federal Reserve, like other central banks, will take a fresh look at these programs to see must—as a wholly practical matter—conduct what changes may be needed and how those market operations with private-sector counter- changes can best be coordinated with the needs parties. It is therefore, in the first instance, a of the Department of the Treasury and the Secubusiness relationship. Having said that, we recog- rities and Exchange Commission (SEC). nize fully that as the central bank and fiscal agent There is one last point regarding the system of for the Treasury we have a natural interest in the primary dealers that should be discussed to fully smooth workings of the market. We also recog- grasp the dynamics of these arrangements. nize that our public nature and our participation in Namely, why do firms—domestic and foreign— the market make it impossible to fully or even want to be primary dealers in the first place? In materially ignore the reality that our relationship part, the answer to that question is straightforwith the market surely carries with it the implica- ward because some firms must judge that this tion that we are one of its "regulators." particular function is an economically effective For example, the mere presence of our limited way to deploy their capital. In point of fact, program for the periodic monitoring of primary however, returns on capital for primary dealers do dealers and the fact that we regularly collect not come easily. Indeed, it is not at all unusual for certain statistical information from the dealers individual primary dealers to lose money. In fact, create that impression. However, I should stress we have had any number of years in which a that the primary dealer monitoring program is significant fraction of individual dealers has inquite narrow in its purpose and its scope and is not curred losses in their operations in government remotely similar to the bank examination pro- securities. gram. The basic purpose of the monitoring pro- For some, however, low returns and even gram is to satisfy ourselves that the Federal periodic losses are tolerable because the firm Reserve—by virtue of its transactions with deal- may judge that having a major presence in this ers—is not incurring unacceptable risk of financial market is important because of the synergies that loss in a context in which the nature of our arise with other aspects of the firm's business transactions with dealers is relatively low in risk here and abroad. In other words, the unique to begin with. character and importance of the market for U.S. The data and information that we collect from government securities may be such that some primary dealers are aimed at providing broad firms view a major presence in that market as so insights into the workings of the market. These important to their overall business strategy that information-gathering activities have never been even subpar returns on capital deployed to this structured with a view toward enforcement or specific activity are acceptable. compliance activities, even though we fully rec- There is another factor that may also be releognize that there will always be a degree of vant in this regard—although its importance is overlap between these functions and our broad diminishing. Historically, interdealer brokers in market-monitoring activities. For example, with government securities made the wholly private the one exception of the so-called when-issued business decision to provide access to the sostatistical report, none of the data we collect from called brokers wires on a "no-name give-up" the dealers on positions and turnover are specific basis only to primary dealers. The Federal Reas to any one security. We receive weekly data, serve played no role in that decision and has grouped by broad maturity ranges. As such, these sought to distance itself from it. With changing reports have virtually no utility in detecting the technology and more widespread price dissemkind of problem that arose in the Salomon case ination, that practice is now breaking down. The because they were not designed for that purpose. Federal Reserve wholeheartedly supports initia- Even the when-issued report, which is daily, has tives that move in that direction so long, of very limited utility in this regard. course, as these initiatives are consistent with the dictates of efficiency, reliability, stability, In these circumstances, it follows quite natuand soundness of the marketplace as a whole. rally that as a part of our overall review of the lessons to be learned from the Salomon case, we There is one last factor that must be cited as Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 899 one of the key factors that attracts firms to the are established by the Treasury. Compliance and fold of primary dealers and that factor is prestige. enforcement responsibility for these rules rests Whether we like it or not, the fact remains that with the Treasury. However, as the Treasury's there is an element of prestige associated with fiscal agent, the Federal Reserve—as with most primary dealer status. It is also true that in times central banks throughout the world—is the Treaof stress that prestige factor can loom very large sury's point of contact with the marketplace. As indeed. In that regard, it is clear to me that the such, the Federal Reserve has a natural responletter the Federal Reserve Bank of New York sibility to call to the Treasury's attention events sent to Salomon Brothers on Tuesday, August or circumstances, which, in its judgment, suggest 13, which discussed our review of the firm's that the Treasury's rules or intentions may have status as a primary dealer, played a major role in been breached in the auction process. the changes in top management at the firm an- Over a very long period of time, the process by nounced on Friday, August 16. I might also add which Treasury securities are auctioned or oththat then, and now, I regarded those changes in erwise placed in the market has worked exceedtop management as an absolutely essential first ingly well. Indeed, until the Salomon event, we step in the healing process for the market. had no knowledge of any event or events that The primary dealer system has worked well would constitute a significant breakdown in the over the years. It has served the Federal Re- workings of the auction process. serve, the Treasury, the nation, and the world Although the auction process is open to all effectively. Yet, the system is not without its qualified bidders, the fact remains that over the drawbacks. However, as we consider whether long haul the primary dealers—and in recent basic changes in these arrangements are needed, years their large customers—are, by far, the it seems to me that we must keep two basic major takers of government securities in the propositions in mind. First, regardless of what auction process. This development is natural they are called and how they are selected, for at given the capital that they have devoted to this least the foreseeable future, there will be a finite business as well as their distribution network, group of private-sector counterparties with their expertise, and their role as market makers whom the Federal Reserve will have to do busi- in government securities. Having said that, it is ness. One way or another, the identity of these also true that in recent years the auction awards firms will be known in the marketplace. Second, have tended to become more concentrated, esthe sheer size of the financing and refinancing pecially if one takes account of the large institurequirements of the federal government are such tional clients of the primary dealers that choose that, one way or another, for the foreseeable to bid in the auctions through the primary dealfuture there will have to be some relatively large ers. firms that play a central role in the underwriting The mechanics of the auction process are, in and distribution of that debt and in making sec- one sense, quite simple. Those submitting comondary markets in the government's debt instru- petitive bids must present those bids on a prements. If the returns are not there to attract scribed tender form at a Federal Reserve Bank private capital to that business or if the burdens by 1:00 p.m. eastern time on the day of the of excessive regulation so stifle the efficiency and auction. As a practical matter, the overwhelming liquidity of that market, the cost to the taxpayers share of such bids (often in the range of 80 and to the prestige of the United States can be percent to 90 percent) is received by the Federal enormous. Reserve Bank of New York. To minimize market uncertainties, the results of the auction are an- THE FEDERAL RESERVE AS THE nounced about one hour later, or around 2:00 TREASURY'S FISCAL AGENT IN THE p.m. eastern time. AUCTION PROCESS Within that single hour, between 1:00 p.m. and 2:00 p.m., the initial responsibility for tabulating The basic rules governing the auctions of Trea- and checking the bids—including checking for sury securities—including the 35 percent rule— compliance with the 35 percent rule— falls to the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

900 Federal Reserve Bulletin • November 1991 staff of the Federal Reserve Bank of New York. informing the firm that in the future the entities in It was this initial check of the bids submitted for question would be considered a single entity for the February 1991 five-year note auction that we purposes of the auction rule. A copy of that letter now know began the unraveling of Salomon's was sent to Salomon. illegal activities. At the time, however, there was When Salomon finally disclosed its wrongdoabsolutely no reason to suspect any illegal activ- ings in August, and when the top management ity. Nevertheless, since the circumstances sur- acknowledged to me that they knew of the unaurounding that auction have received so much thorized customer bid in the February auction, I attention, allow me to recount what happened surmised that it was the pressure of the inquiries and how it was to shape subsequent events. about the "Mercury" bid submitted by Salomon Included in the bids received at 1:00 p.m. for in February that spooked Mr. Mozer into disclosthe February 21 auction in question was a small ing his wrongdoing to his superiors. bid, for its own account, for S.G. Warburg & It is now quite clear that my suspicion was Co., itself a primary dealer, and a bid at the 35 correct. What I did not know, however, until I percent limit submitted by Salomon for a cus- read the statement submitted to the Congress by tomer described on the tender form as Warburg Salomon last week was that in the face of those Asset Management. It should be noted that there developments Mr. Mozer apparently went to was nothing unusual about an affiliate of one rather considerable lengths in requesting an offiprimary dealer submitting a bid through another cial of Warburg not to respond to the Treasury's primary dealer. What was unusual was the fact letter. This raises another question about possithat if, under Treasury rules, the two Warburg ble wrongdoing. The SEC and the Justice Deentities were considered a single entity and if partment are aware of these developments, and both bids were awarded in full, the result would the Treasury and the Federal Reserve have arhave slightly exceeded the 35 percent limit. The ranged a meeting with Warburg for this week to Federal Reserve promptly called both Slalomon learn its side of this story. and the Treasury. Salomon indicated that the In all of these circumstances, it is only fair to client name was in error and that the bid had ask whether a more rigorous investigation into been received from their London office for Mer- the February auction might have made a differcury Asset Management—an affiliate of War- ence in terms of the course of subsequent events. burg. As this was occurring, it became evident Given (1) the history of the auction process; (2) that the actual awards in the auction would be that there was not then a shred of evidence to such that the 35 percent limit would not be suggest illegal activity; and (3) what now seems breached even if the entities in question were a to have transpired between officials at Salomon single entity for purposes of the auction rules. In and Warburg in April, it does not seem unreathose circumstances, and in a setting in which sonable to conclude that the steps followed by there was, at the time, no reason whatsoever to the Federal Reserve and the Treasury in that suspect wrongdoing, the Treasury indicated to setting were appropriate. The one thing that the Federal Reserve that it would accept both surely would have made a difference would have bids. It was understood at that time that the been the timely disclosure of these events by the Treasury would subsequently investigate the le- top management of Salomon when they learned gal relationships between the various Warburg of them in late April. entities. Having said that, three things are now clear in Over the ensuing two or three weeks the Bank retrospect. The first is that despite the fact that shared with the Treasury information it had the auction had worked so well for so long, we regarding the bids, and on March 14, the Trea- must be more rigorous in our review of the bids sury, in response to an inquiry by the Federal when received. Steps already have been taken to Reserve, indicated that it was continuing its move in that direction. Second, programs curreview of the corporate relationship between the rently under way to provide a higher degree of entities in question. That review culminated with automation in the auction process should be the Treasury's letter of April 17 to Warburg accelerated to the extent possible—keeping in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 901 mind that even a fully automated auction system that it is one of the issues we must look at over brings with it its own risks. Third, some further the period ahead. changes in the auction rules may be needed. FINANCIAL SCANDALS IN PERSPECTIVE SYMPTOMS OF OTHER POSSIBLE PROBLEMS The events surrounding the Salomon episode are Within the context of the Salomon affair the great shocking, but what makes them even more worbulk of attention has, understandably, focused risome in terms of public confidence in financial on the 35 percent rule and the firm's systematic markets and institutions is that they come on the violation of that rule. There is, however, another heels of several other cases involving highly aspect of this situation that may warrant careful questionable, if not outright illegal, activities. consideration. For example, operating wholly Moreover, while we are naturally sensitive to within the spirit and the letter of the auction these problems in this country, the phenomenon rules, it is possible for a single dealer firm and is global in nature. That, of course, raises the one or two of its clients to win a very large share very important question of whether the incidence of any auction. If, in those circumstances, there and nature of these unhappy events are worse are large short positions in the market, it is likely than they have been in the past or whether it just that one or both of the following will occur: First, seems that way. For example, there surely are the price of the securities in question will rise some economic historians who might suggest relative to close substitute securities, or, second, that these problems are not all that unusual after the financing cost of the securities in the repur- a long boom, especially in the financial sector. chase agreement (RP) market will drop, thereby However, others might suggest that the problems providing the owners of those securities with a are different in nature and frequency, even allowvery favorable cost of carry. When this latter ing for the cyclical factor and that the cause lies condition occurs, the particular security is said to with "deregulation." That, however, is a little be "on special" in the RP market. hard to accept, in part, because we have seen at Either or both of these phenomena occur with least some of these problems in segments of some regularity in the market. Moreover, these markets, or in institutions or even in countries phenomena tend to be self-correcting because where deregulation has not been a particularly the relative rise in the price of the specific important factor in influencing behavior. security in question should provide clear incen- Perhaps we will not fully understand what is tives for the holders of such securities to sell, happening, why it is happening, and whether it is reap the arbitrage profit, and in the process add truly out of line with historical experience until to the supply of the security in the market as a we are able to look back on these developments whole. with the benefit of hindsight. On the other hand, Over the past couple of years, however, the confidence in our financial markets and institufrequency with which particular issues are "on tions is simply too important to push these quesspecial" in the RP market has increased. It is tions aside and leave them to the historians. also true that the emergence in the market of a Having said that, I do not want to leave the handful of very large "hedge funds" that acquire impression that I have anything even resemlarge amounts of securities and may finance bling an answer to these questions at this time. those positions through primary dealers may be But, there are two things that keep coming back contributing to this phenomenon. This develop- to my mind as I ponder this situation. One is ment need not be a worry unless one were to that "high-tech" financial practices are a twoconclude that highly concentrated holdings and edged sword. To be sure, this technology is financings of positions in a single issue create a doing many wonderful things for us all, but it condition in which the dangers of market manip- also creates nightmares for control systems, for ulation are unacceptably large. At this point, I do top managers, and, yes, for regulators. Indeed, not have a view on this question, but I do think the combination of high technology and finan- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

902 Federal Reserve Bulletin • November 1991 cial innovation may even help to create the practices that yield millions of dollars per year, impression among some practitioners that sheer for example, for individual securities or foreign complexity makes it too easy and too inviting to exchange traders. Maybe it is asking too much, cut corners and to play close to the edge. but somewhere I would like to think that there Finally, and more important, high technology must be a chief executive officer or a board of and financial innovation are probably a major directors that will have the courage and the reason why profit margins are so thin, with the conviction to begin the process of reversing these resulting need to push that much harder to earn excesses. I cannot help but think that once that that extra dollar of profit. Even if all of that is process gets started, others would quickly folcorrect, however, the problem remains since low. In saying that, I am under no illusions that we cannot and certainly should not seek to hold more conservative compensation practices will back technology and innovation. That being the solve all or even many of these problems. On the case, the burdens on managers and regulators other hand, human nature being what it is, comloom even larger. I might add that the burdens pensation practices that hold out the potential for on legislators are also great in these circum- millions of dollars of annual income seem to me stances. For example, some might look at the to entail the clear danger that reasonable stan- Salomon episode as a reason to further delay dards of prudence and ethics can, all too easily, much needed progressive banking legislation. be cast aside for the sake of writing that next That, in my view, would be a mistake that I ticket. hope we can avoid. I thank you, for your patience in allowing me The second thing that keeps haunting me when to drift so far from the direct subject matter of I ponder these issues is bound to be highly this hearing, but I do think that as we search for controversial. It is compensation practices in the remedies to the problems immediately at hand, financial sector. Maybe I am too old-fashioned, we should also keep an eye on the larger but I cannot see the merit of compensation picture. • Statement by J. Virgil Mattingly, Jr., General eral Reserve's continuing investigation, which Counsel, and William Taylor, Staff Director, has detected and produced hard evidence of Division of Banking Supervision and Regulation, BCCI's secret acquisition of the stock of U.S. Board of Governors of the Federal Reserve Sys- banks; and finally on the very valuable lessons tem, and E. Gerald Corrigan, President, Federal learned from the Federal Reserve's experience Reserve Bank of New York, before the Commit- with BCCI. tee on Banking, Finance and Urban Affairs, U.S. In considering these matters, we believe that House of Representatives, September 13, 1991 five major points should be stressed: First, the Federal Reserve has never approved We are pleased to appear before the committee any presence by BCCI in this country, and for to describe the Federal Reserve's role in the that reason BCCI has never been authorized to supervision of the Bank of Credit and Commerce take deposits from U.S. citizens through an International (BCCI) and the Federal Reserve's insured bank. Our investigation indicates that investigation of BCCI's secret acquisition of the BCCI was aware that the Federal Reserve preshares of several U.S. banking organizations. sented a serious obstacle to acquisition of banks This testimony will focus first on the opera- in this country—a fact that may well explain tions of BCCI around the world, particularly BCCI's campaign to acquire illegally and surrep- BCCI's use of a fragmented, unsupervised struc- titiously the shares of U.S. banking organizations ture operating in foreign jurisdictions with mini- through a complex web of nominees and sham loan arrangements. mal supervision and strong bank secrecy laws; second, on the Federal Reserve's efforts to deny Second, in 1987 and 1988, the Federal Reserve BCCI entry into this country; third, on the Fed- detected money laundering and operational prob- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 903 lems at the state-licensed agencies that BCCI persons of substantial wealth who were fully able established in this country. Through the action of to make the investment by using their own funds the Federal Reserve and state regulators, BCCI's and without borrowing from BCCI or anyone U.S. agencies were eliminated or substantially else. Even today, it is undisputed that some of wound down over the next three years. By the the principal investors are persons of great time of BCCI's seizure on July 5, 1991, BCCI's wealth. Further, the Federal Reserve conducted U.S. operations had shrunk from about $1 billion background investigations of the investors: The to $250 million, and BCCI's two remaining U.S. Departments of State and Commerce stated that agencies had less than $25 million in liabilities to the investors were persons of substance and, third parties. Thus, at the time of BCCI's closing, along with the Central Intelligence Agency, rethe vast majority of funds at its two remaining ported no adverse information on the investors. U.S. agencies were its own. This situation sets Finally, the Federal Reserve took the unusual the United States apart from numerous other step of holding a hearing on the application at countries in which local depositors have lost which the largest investor, three other investors, their funds, or access to their funds, as a result of and the investors' representatives appeared and the seizure of BCCI. further denied any BCCI involvement in the Third, the Federal Reserve did act to prevent investment or its financing. an illegal BCCI presence in this country when Throughout this process, there was no evi- Middle Eastern investors applied in 1978 and dence that the shareholders and their represen- 1980 to acquire Financial General Bankshares, tatives were being untruthful in their written and now renamed First American Bankshares. In oral statements that BCCI was not involved in considering the application in 1980, the Board the financing of the acquisition. Under the Bank sought to make certain that BCCI did not have a Holding Company Act with its due process restake in the holding company formed to make the quirements, the Federal Reserve is not authoacquisition, Credit and Commerce American rized to act on suspicion or rumor but must have Holdings, N.V. (CCAH), and was not funding evidence to support its decision. The Federal the acquisition. Reserve had no grounds at the time to deny and, Although the Federal Reserve did not have at operating under this statutory standard, apthat time any evidence of fraud or illegality in proved the application. The necessary state au- BCCI's overseas banking operations, the Federal thorities approved as well. Reserve nevertheless was concerned by BCCI's Fourth, since allegations of an illegal BCCIunregulated character and rapid growth. Con- CCAH link reached the Federal Reserve in late cerned also because BCCI was acting as adviser 1988 from the Internal Revenue Service (IRS) to the investors, the Federal Reserve sought to and another source, the Federal Reserve has ensure that BCCI would not gain control of First continuously investigated the relationship be- American. The Federal Reserve received explicit tween the two, detecting and producing, in our commitments from BCCI, the investors, and view, substantial evidence of violations by BCCI their representatives that the acquisition of First and others of the Bank Holding Company Act American was being made with the investors' and other statutes. own funds and that BCCI would not acquire any In January 1989, after receipt of these allega- CCAH shares or finance the investors. The Fed- tions, the Federal Reserve conducted a special eral Reserve did not accept these representations review of CCAH and its relationship to BCCI, without question but made substantial efforts to examining the financial relationship between verify what it was being told. BCCI and the First American banks. The Federal The Federal Reserve requested and received Reserve continued to make inquiries into any from the investors financial statements and other possible link through 1989 and 1990. BCCI and documentation confirming the various represen- CCAH representatives consistently denied that tations. The numerous materials submitted by such a link existed, and the records available to the banks and accounting firms of the principal the Federal Reserve at that time provided no shareholders indicated that the investors were evidence to refute their assertions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

904 Federal Reserve Bulletin • November 1991 The Federal Reserve asked regulators in Lux- collaboration of the Federal Reserve and the embourg and the Cayman Islands, where the District Attorney's Office were to be of great principal BCCI bank subsidiaries were char- benefit to both agencies in uncovering evidence tered, to verify the reports of a BCCI-CCAH of what Mr. Morgenthau, the New York County link. The Luxembourg regulator in 1990 advised District Attorney, has characterized as the largthat it would investigate the matter but was est banking fraud in history. having difficulty obtaining the necessary informa- In fall 1990, the Federal Reserve, acting on tion. Cayman regulators stated that they had no information provided to us by the New York relevant records on the matter. County District Attorney, demanded and—after The Federal Reserve also sought information initial refusals by BCCI's auditors, Price Waterfrom law enforcement agencies conducting house—was able to review at BCCI's London probes of BCCI. In June 1989, while the U.S. offices a report confirming the existence of more Attorney's Office in Tampa was continuing its than $1 billion in nonperforming loans by BCCI investigation of BCCI, a Federal Reserve official secured by CCAH shares. Based on the evidence met with attorneys from that office, offered the gathered by Federal Reserve investigators, the assistance of examiners, and indicated that the Board, on January 4,1991, formalized and broad- Federal Reserve wished to obtain information on ened the investigation, authorizing use of discovthe investigation when completed. On February ery and subpoena powers. Later that month, the 7, 1990, two days after BCCI was sentenced for Federal Reserve initiated examinations of the money laundering, two experienced Federal Re- entire First American banking organization, serve counsel went to Tampa to determine from focused on determining whether there were any the U.S. Attorney's Office whether their investi- financial dealings with BCCI. gation had unearthed any evidence that BCCI The Federal Reserve's investigation has been owned or controlled CCAH. The U.S. Attor- intense and thorough, encompassing the seizure ney's Office referred the Federal Reserve coun- and review of tens of thousands of pages of sel to IRS investigators, who indicated that a documents both here and abroad, weeks of depreport of the findings of their investigation had ositions, interviews of more than fifty persons in been prepared. The IRS did not provide a copy of the United States and overseas, and cooperation the report, or mention any tapes made during with federal, state, and foreign law enforcement their investigation, because of considerations of agencies. The evidence unearthed by our staff grand jury secrecy and witness safety. The Fed- establishes the nature and extent of numerous eral Reserve investigators were told of the exis- violations of law, the methods by which the tence of an informant, whose credibility the IRS violations were engineered and implemented, said they seriously doubted, and of another lead. and the nature and whereabouts of the evidence In April 1990, the IRS provided the name of the establishing the violations. informant and arranged for him to call the Fed- The quality and quantity of evidence uncoveral Reserve. The Federal Reserve was unsuc- ered by the Federal Reserve's investigation are cessful in repeated attempts to contact the infor- evident from our 110-page July 29 Notice of mant until 1991. Charges and the boxes of relevant documents In further efforts to obtain information on the turned over to the committee under its subpoena. alleged control by BCCI of CCAH, the Federal In that notice and one other notice issued on July Reserve, in the spring of 1990, pursued another 12 relating to Independence Bank, the Federal avenue of the investigation. In June 1990, the Reserve has assessed a civil money penalty of Federal Reserve reached an information-sharing $200 million against BCCI and initiated actions to agreement with the New York County District bar nine individuals associated with BCCI from Attorney's Office and subsequently obtained ac- involvement with U.S. banks. At the request of cess pursuant to a New York Supreme Court the U.S. Attorney for the District of Columbia, order to certain of the materials presented to a the Board has deferred temporarily the assessstate grand jury investigating BCCI. This agree- ment of substantial civil money penalties against ment and the information sharing and ongoing the individuals involved pending completion of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 905 the U.S. Attorney's criminal inquiry. Finally, expertise regarding the BCCI case. We believe after discussions with the Federal Reserve, First that this will be vital to any prosecution of BCCI American and its parent holding companies have and others involved in BCCI's illegal acquisitions recently changed management to further distance of U.S. banks. We are greatly encouraged that the the First American banks from the taint of any New York County District Attorney's Office has association with BCCI. secured indictments against BCCI and two of its Fifth, in assessing the BCCI matter, it is im- senior officers and that the Tampa U.S. Attorportant to keep in mind that this matter is essen- ney's Office has indicted senior BCCI officers for tially a case of systematic and deliberate criminal racketeering involving money laundering. We are fraud. Although our bank examination powers continuing to work with the U.S. Department of allowed the Federal Reserve to detect poor op- Justice and the New York County District Attorerating controls as well as evidence of money ney, who are actively pursuing the BCCI fraud. laundering at BCCI's U.S. agencies, more extensive and intense efforts were required to uncover BCCI's ownership of stock in U.S. banking BANK OF CREDIT AND COMMERCE organizations. BCCI took maximum advantage INTERNA TIONAL of an unsupervised cooperate structure to conceal and warehouse in bank secrecy jurisdictions Structure of BCCI billions of dollars in fraudulent transactions. The Federal Reserve does not have the power BCCI was founded in 1972 and until recently to coerce truthful testimony from uncooperative operated principally under the leadership and criminal conspirators. Nor can the Federal Re- management of individuals from Pakistan. Initial serve offer immunity to those willing to come equity financing of BCCI was provided by Middle forward. Using the authorities available to it, the Eastern investors and Bank of America. Bank of Federal Reserve continued to investigate the America sold its ownership interest in 1980. In matter both here and abroad, and we now know April 1990, to bolster BCCI's sagging financial that BCCI's top management was seriously con- position, the ruling family and the government of cerned with the supervisory initiatives of the Abu Dhabi provided additional capital that in- Federal Reserve. Eventually our efforts paid off, creased their ownership interest in BCCI shares and we uncovered the truth. Once the Federal from about 30 percent to 77 percent. Reserve obtained credible evidence, we acted BCCI's operations eventually encompassed quickly to marshal the facts and move against subsidiaries, branches, and affiliates in sixty-nine BCCI and others involved in the alleged illegal countries, with the largest concentration of local activity. We have also taken care in accordance deposits in the United Kingdom. BCCI's total with the due process requirements under which assets of about $20 billion ranked it as about the we operate to bring actions only when we have 200th largest bank in the world, roughly the size sufficient evidence to support them, thereby of a major regional bank in this country. avoiding any misstep at this stage that might At the apex of the BCCI organization was the allow BCCI and others to escape the conse- parent holding company, BCCI Holdings (Luxemquences of their actions. bourg) S.A., which was chartered and headquar- The Federal Reserve recognizes that one of the tered in Luxembourg. Below the parent were two best ways to deter the kind of fraud that occurred principal banking subsidiaries: Bank of Credit and at BCCI is through criminal punishment that Commerce International S.A., and Bank of Credit sends a loud and clear message to would-be and Commerce International (Overseas) Limited, offenders. Throughout the Federal Reserve's in- which were chartered in Luxembourg and the vestigation of BCCI, we have made criminal re- Cayman Islands respectively. Although BCCI ferrals whenever we discovered illegal activity, was headquartered in Luxembourg, Luxembourg and have provided to criminal investigators the authorities did not supervise BCCI on a consolievidence and investigative leads that we have dated basis, thereby allowing BCCI to escape gathered, as well as our hard-won knowledge and normal banking oversight. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

906 Federal Reserve Bulletin • November 1991 Under Luxembourg law, holding companies As we will discuss later, the unrestricted abilare not subject to supervision. Thus, BCCI's ity of foreign banks to establish branches, agenholding company was able to establish an elabo- cies, and representative offices without federal rate and extensive network of subsidiaries and review has prompted legislative proposals by the affiliates to carry out its activities. Our investiga- Federal Reserve that would require federal aption indicates that when BCCI encountered a proval of, and establish prudential standards for, legal impediment, it would often create another foreign bank offices in the United States. affiliate or use one of its myriad existing or Under current law governing foreign bank opaffiliated entities to circumvent it. In one in- erations in the United States, established in the stance, BCCI apparently created an affiliate International Banking Act of 1978, the states are whose sole purpose was to serve as BCCI's alter the primary regulators of the branches and agenego in warehousing fraudulent transactions in cies they license, and the Federal Reserve is which BCCI could not safely engage directly. directed under the Bank Holding Company Act BCCI was able to do this in substantial part to rely on state reports of examination insofar as because there was no consolidated home country possible, just as the Federal Reserve is directed supervision of its banking activities. to rely on reports by the Comptroller of the In this regard, it is instructive that during the Currency for national banks and the Federal late 1960s, when U.S. banks began to form Deposit Insurance Corporation (FDIC) for nonholding companies to engage in activities that the member banks. BCCI's agencies in the United bank was not permitted to conduct directly, the States were licensed and supervised by state Congress responded with amendments to the authorities, and therefore primary supervision Bank Holding Company Act that provided for was in the respective states. As the residual increased supervision, regulation, and examina- supervisor of U.S. branches and agencies of tion of U.S. bank holding companies to ensure foreign banks, the Federal Reserve participated that the companies were financially responsible in some state examinations and conducted some and that their activities were consistent with examinations of its own. During one of these federal banking laws. No such system was in examinations of the Miami agency of BCCI, in place with respect to BCCI's holding company. April 1987, the Federal Reserve identified money laundering activities, and a criminal referral was filed with the Internal Revenue Service, the Supervision of BCCI's Operations in the Federal Bureau of Investigation, and the U.S. United States Attorney in Miami. On October 8-9, 1988, as a result of an As noted, BCCI has never been permitted to undercover operation by Customs and IRS datoperate a branch in the United States or to accept ing back to 1986 (Operation C-Chase), BCCI deposits from the general public; nor was it and several of its U.S. employees were indicted authorized to operate or control an insured bank. for money laundering through BCCI's Tampa BCCI at one time maintained state-licensed agen- office. The IRS had advised Federal Reserve cies in New York, San Francisco, Los Angeles, staff in September 1988 of the projected seizure, Miami, Tampa, and Boca Raton, and repre- and the Federal Reserve had, in coordination sentative offices in other U.S. cities, including with the IRS, scheduled an examination to Washington, D.C. and Houston, Texas. Repre- commence after the seizure so as not to comsentative offices can be established simply by promise the IRS operation. On October 11, the obtaining the consent of the state and registering Federal Reserve, with cooperation from state with the Treasury Department, but such offices banking authorities, commenced the coordiare severely limited in their activities and may nated examination of all of BCCI's U.S. agennot accept deposits. Agencies may hold credit cies through the New York, Atlanta, and San balances from customers associated with inter- Francisco Reserve Banks. The examinations of national banking transactions but may not accept the New York and Boca Raton offices revealed deposits from U.S. residents. other money laundering activities, and the Fed- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 907 eral Reserve made additional criminal referrals sufficient liquid assets to cover liabilities in its in October and November 1988. U.S. agencies. A corollary action by the Federal The examinations also revealed that internal Reserve Bank of Richmond required that First controls and lending practices of the BCCI agen- American terminate any residual business with cies were quite poor and that remedial action was BCCI.1 required. The Federal Reserve issued a cease Because of actions taken by the Federal Reand desist order against BCCI on June 12, 1989, serve and state supervisory authorities, BCCI's designed to strengthen the U.S. banking opera- U.S. operations had been substantially curtailed tions of BCCI and enforce compliance with cur- by the time of its seizure. Four of the six agencies rency reporting requirements. This order was were closed by January 1991, and the repreissued by the Federal Reserve notwithstanding sentative offices were closed by August 1990. concerns expressed by foreign and state bank Under the Federal Reserve's March 4 order, regulators over the potential effect of the action. operations at BCCI's two remaining agencies—in Moreover, the U.S. Attorney in Tampa incor- Los Angeles and New York—were scaled back, porated this cease and desist order into the plea and the company was also ordered to terminate its agreement reached with BCCI regarding its ille- activities in the United States by year-end 1991. gal money laundering activities. Thus, compliance with the Federal Reserve's order was made The Seizure of BCCI on July 5 a condition of BCCI's probation. This arrangement was a unique one, which enhanced the By early 1991, information received by the Bank Federal Reserve's ability to enforce its correc- of England about BCCI's financial condition and tive cease and desist order. integrity prompted the Bank of England to com- The indictment for money laundering in the mission Price Waterhouse to undertake a special United States further weakened BCCI's already audit under the provisions of British banking law. fragile reputation in the world financial commu- The resulting so-called section 41 report was nity. In the period after the indictment, Federal made available to the Bank of England on June Reserve staff was advised that BCCI was expe- 22, 1991. The Bank of England's filings in British riencing some outflow of deposits in London and courts indicate that the report disclosed evidence was encountering difficulty in finding counterpar- of a complex and massive fraud at BCCI, includties for its banking transactions. In these circum- ing substantial loan and treasury account losses, stances and in the face of large losses being misappropriation of funds, unrecorded deposits, discovered in the bank in early 1990, the govern- the creation and manipulation of fictitious acment and ruling family of Abu Dhabi provided counts to conceal bank losses, and concealment new capital of nearly $400 million to BCCI, from regulatory authorities of BCCI's mismanincreasing their ownership of BCCI from 30 agement and true financial position. percent to about 77 percent. Based on this report, foreign regulatory au- BCCI's problems, however, continued to thorities in England, Luxembourg, and elseworsen significantly. On October 3, 1990, Price where decided to seize BCCI. The Federal Re- Waterhouse delivered a secret report to BCCI's serve was informed of this decision and, in turn, board of directors that identified massive addi- briefed other U.S. regulatory agencies. The Fedtional problem loans. This report gave rise to an eral Reserve dispatched senior officials to Lonintensification of discussions among BCCI man- don to participate in a special unit established at agement, BCCI's principal shareholder, and Eu- the Bank of England to coordinate global regularopean banking authorities concerning possible tory actions and to provide a central point of approaches to a broad-based restructuring of the supervisory information and advice. A parallel bank. These discussions continued into 1991. unit, focusing particularly on payment and set- On March 4, 1991, the Board issued a second cease and desist order against BCCI, in part, to address concerns about the funding of its U.S. 1. The divestiture provisions and other aspects of this agencies. The order required that BCCI have cease and desist order are discussed in the next section. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

908 Federal Reserve Bulletin • November 1991 tlement issues, as well as activities in U.S. bank holding companies that were grandfathered banking markets more generally, was established under the Bank Holding Company Act to retain at the Board and at the Federal Reserve Bank ownership of banks acquired in more than one of New York. The primary concern of the Fed- state. In 1966, Financial General owned banks in eral Reserve was to take all reasonable steps to Virginia, Maryland, Georgia, Tennessee, New ensure that the seizure of the BCCI banks did not York, and the District of Columbia. precipitate serious disruptions in U.S. banking markets or in dollar-based payment and clearing systems here or abroad. Initial Stock Purchases The main seizure of BCCI occurred on July 5, in 1977-78 1991, with the Federal Reserve coordinating information necessary for the closing of BCCI's On April 29, 1977, an investor group led by remaining U.S. agencies by state regulators in J. William Middendorf II acquired control of California and New York. As of July 6, govern- Financial General. Within a few months, dissatments of eighteen countries had closed or re- isfaction with his leadership developed among stricted the activities of BCCI operations in their some of the investors, who then went in search of jurisdictions. By July 29, 1991, a total of forty- a buyer for their shares. They discussed a purfour countries had closed BCCI offices in their chase of Financial General's shares with the respective jurisdictions. chief executive officer of BCCI, Agha Hasan Because of the international cooperative su- Abedi. pervisory effort and earlier actions by the Fed- In late 1977 and early 1978, BCCI, allegedly eral Reserve and state authorities to scale back acting for four of its clients, began to purchase BCCI's limited operations in the United States, shares of Financial General. These investors the seizure of BCCI caused virtually no adverse eventually acquired approximately 20 percent of effects on U.S. markets or institutions. As a its voting shares, but none purchased more than result of earlier regulatory action, BCCI was 5 percent of the shares. The investors were two funding its business in the United States from prominent citizens of Saudi Arabia and Kuwait other non-U.S. BCCI offices and not from U.S. and two sons of the ruler of Abu Dhabi. In sources at the time BCCI's U.S. agencies were various official filings, BCCI stated that it acted closed by the states of California and New only as investment adviser to these individuals in York. As of July 30, about $17 million of the connection with their purchases of Financial $252 million in liabilities on the books of the General shares and did not itself own, control, or U.S. agencies of BCCI was owed to creditors vote any of the shares. not affiliated with BCCI. Because of the care When the purchases were made public, the and precision with which the seizure of BCCI Securities and Exchange Commission filed a and its affiliates was coordinated among U.S. complaint alleging that each of the four Middle and foreign authorities, there were, in fact, no Eastern investors, BCCI, Mr. Abedi, and certain problems of any consequence encountered in U.S. shareholders of Financial General had acthe operation of the payments system as a result quired, as a group, control of more than 5 percent of the seizure. of Financial General's shares in violation of the We will now proceed to discuss how BCCI, Williams Act. The investors denied these allegaapparently frustrated in its efforts to establish a tions. In March 1978, the investors, without substantial legal presence in this country, acquired admitting fault, entered into a consent decree illegally the stock of U.S. banking organizations. with the SEC whereby the investors agreed to proceed with a tender offer for all of Financial General's shares. THE FIRST AMERICAN BANKS AND OTHER U.S. INSTITUTIONS Three of the original four investors proceeded with the tender offer, joined by eleven additional Financial General—the predecessor to First individual and corporate investors from the Mid- American Bankshares—was one of a handful of dle East who were also advised by BCCI. The Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 909 investors formed CCAH, a Netherlands Antilles cial General. The management of Financial Gencorporation, to make the tender offer.2 eral was vested in a board of directors that would include former Senator Stuart Symington, former CCAH's Application to Acquire Financial Secretary of Defense Clark M. Clifford, and General: 1978-81 retired Lieutenant General Elwood R. Quesada. Investors controlling more than 50 percent of CCAH could not proceed to acquire Financial CCAH's shares transferred the power to vote General's shares without Board approval under their shares to Senator Symington for a period of the Bank Holding Company Act. On October 19, five years. An experienced banker was to be 1978, CCAH filed an application seeking such selected as president and chief executive officer approval. The application was opposed by Finan- of Financial General, and this person was idencial General and its Maryland subsidiary bank. tified before the Board acted on the application. On February 16, 1979, the Board dismissed the As a result of the SEC case, the Board focused application, concluding that the acquisition great attention on the relationship between would be unlawful under a Maryland law that CCAH and BCCI, specifically whether BCCI had forbade any hostile acquisition of a Maryland a stake in the planned acquisition, either directly bank. or indirectly. The Board's concern was suffi- The applicants challenged the Board's deci- ciently serious that the Board took the unusual sion, but before the matter was adjudicated, the step of convening a hearing on this question and investors and Financial General's management others raised by the application, requesting that negotiated an agreement for the acquisition of the principal shareholders of CCAH appear and Financial General by CCAH. In November 1980, testify at the hearing. CCAH again sought Board approval to acquire In response to the Board's questions, CCAH Financial General. and its principal shareholders stated that BCCI In reviewing such an application, the Board is would not be involved in the acquisition other required by statute to consider the competitive than as investment adviser to the CCAH inveseffects of the proposal, the financial and mana- tors and, in particular, would not fund the acquigerial resources and future prospects of the com- sition. At the hearing and in written submissions, panies concerned, and the convenience and CCAH shareholders and their counsel, Clark needs of the relevant communities. The statutory Clifford and his partner, Robert A. Altman, of factors do not distinguish between foreign and the law firm of Clifford & Warnke, made the domestic acquirers, and thus these factors were following statements: applied to the CCAH application as they would • The application filed by CCAH stated: be to a domestic holding company application. "BCCI owns no shares of FGB, CCAH or CCAI, Under the Bank Holding Company Act, the either directly or indirectly, nor will it if the Board does not have discretion to deny applica- application is approved. Neither is it a lender, tions as it chooses. Its decision must be made on nor will it be, with respect to the acquisition by the basis of the statutory factors and must be any of the investors of either FGB, CCAI or supported by evidence. CCAH shares." The application specified that the Middle East- • In a letter submitted to the Board in response ern investors were to be passive and would take to questions about the relationship between no part in the management or operation of Finan- BCCI and CCAH, counsel for CCAH stated: "With regard to the stockholders of CCAH, all holdings constitute personal investments. None 2. There were two other companies in the ownership chain: are held as an unidentified agent for another Credit and Commerce American Investment, B.V. (CCAI), a individual or organization." Netherlands company and a wholly owned subsidiary of CCAH; and Financial General Bankshares (FGB) Holding • Kamal Adham, the largest shareholder of Corporation, a District of Columbia corporation and wholly CCAH, stated at the Board's hearing, "There is owned subsidiary of CCAI. FGB Holding Corporation was ... no understanding or arrangement regarding subsequently renamed First American Corporation and was the entity that acquired Financial General Bankshares. any future relationship or proposed transactions Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

910 Federal Reserve Bulletin • November 1991 between Financial General and BCCI." He fur- also obtained information from the SEC regardther stated, "[I]t appears that there is doubt that ing the original acquisition and two CCAH sharethere is somebody or BCCI is behind all of this holders. deal. I would like to assure you that each one on None of the agencies performing background his own rights will not accept in any way to be a checks—the CIA and State and Commerce Decover for somebody else." partments—reported any adverse information on • CCAH counsel, when asked at the hearing the investors, and the Departments of State and about the relationship among CCAH and CCAI Commerce reported that the investors were perand BCCI, stated, "[T]here is no connection sons of substance. Neither the Board nor any between those entities and BCCI in terms of other regulator received any evidence from other ownership or other relationship." sources that the representations made to them • Asked about the function of BCCI in the were false. The Comptroller's Office wrote to the proposal, CCAH counsel stated, "None. There Board, stating that its earlier concerns about the is no function of any kind on the part of BCCI." application had been addressed by the responses He added, "I know of no present relationship. I of the investors and their representatives. The know of no planned future relationship that ex- Maryland Banking Board approved the acquisiists " tion of the Maryland bank on June 25, 1981. The same representations were made to the On August 25, 1981, after having considered other regulators involved in the application. The the hearing record, reports from staff members, Comptroller of the Currency was advised by the and the views of federal and state agencies, the investors' counsel that "none of the investors are Board approved CCAH's acquisition of Finanborrowing to finance their respective equity con- cial General. Consummation of the acquisition tributions" and that "BCCI will have no involve- was delayed, however, pending approval of the ment with the management and other affairs of New York State Banking Department of the Financial General nor will BCCI be involved in acquisition of Financial General's New York the financing arrangements, if any are required, banks. The Department initially disapproved the regarding this proposal." application, principally because of an alleged The Board did not rely solely on these repre- lack of reciprocity for American banks in the sentations that the investors were acting for investors' home countries. However, on March themselves. The Board requested detailed infor- 2, 1982, the Department granted its approval mation from the investors regarding their finan- after CCAH's commitment to divest one of the cial resources and affiliations, including financial New York banks. In a subsequent letter, the statements prepared by accounting firms, some Department stated that it had made a thorough of which were affiliated with the largest account- investigation, that "all the information we reing firms in the world. Financial statements were ceived indicated that the investors were prestisubmitted, and, in the case of the largest share- gious and reputable people," and that "the inholders, a statement about the source of funds to vestors' character and financial responsibility be used to make the acquisition was required. warranted approval of the application." The De- The Board also obtained letters from the largest partment further noted that "this application investor's banks confirming balances and con- received more scrutiny from more regulatory taining references. All these materials indicated agencies than any other application in recent that the investors were persons of considerable memory." means and that the purchases were to be made The acquisition was consummated on April 19, from their own personal resources. 1982. Financial General was renamed First To further verify that the representations being American in August 1982. 3 Mr. Clifford became made were accurate, the Board conducted back- chairman of the board of First American, and ground checks on the shareholders, soliciting information from the Central Intelligence 3. During the course of the takeover, prior Financial Agency, the Departments of State and Com- General management had renamed most of the subsidiary merce, and a foreign bank supervisor. The Board banks First American banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 911 Mr. Altman was named president of First Amer- Reserve was concerned, the first indications of ican Corporation and secretary and a managing more widespread wrongdoing in the United director of CCAH. States began to surface in the period between late December 1988 and the summer of 1989. The Period 1982-87 Federal Reserve Investigation of the In the years immediately after the acquisition, BCCI-CCAH Link: 1989-Present the Board received no indications to suggest that CCAH and First American were functioning The information described in this section is based other than in accordance with the statements on recent interviews with several persons inmade to the Board and the other regulators. The volved in this matter, and we are continuing in investors adhered to their commitment to inject our efforts to reconstruct the events of two and $12 million in new capital into First American, one-half to three years ago. Based on this inforand no dividends were paid to the investors in mation, we know that, in early September 1988, keeping with another commitment. On several an IRS special agent investigating BCCI conoccasions, the investors made very substantial tacted a supervisory official of the Board for additional capital injections, in the hundreds of technical assistance in connection with the promillions of dollars, to support First American's posed seizure of BCCI's Florida offices and activities. Both federal and state examinations of indictment for money laundering. He stated that First American and its subsidiary banks by the the IRS was investigating BCCI's money laun- Comptroller of the Currency, the FDIC, and the dering in Florida. The agent explained that this states of Maryland, Virginia, Tennessee, and was a sensitive undercover operation and that New York, and of the U.S. offices of BCCI any leaks could jeopardize lives and compromise conducted during this period detected no evi- the investigation. The agent has recently stated dence that BCCI and CCAH were improperly to us that, for these reasons, he could not provide linked. The fact that substantial fresh capital was to the Federal Reserve staff member a lot of supplied at various times and that the investors information or detail regarding the investigation. did not take dividends from the CCAH was The Board staff member had several follow-up consistent with the representations made by the conversations with the IRS agent in late 1988 and investors at the time of the acquisition that this early 1989. Probably during a telephone call in was intended to be a personal investment. December 1988, the agent mentioned an allegation that he had received during the undercover The Money Laundering Period: 1987-89 operation from a "banker" that BCCI owned First American. The Federal Reserve staff mem- As discussed previously, the Federal Reserve ber's calendar reflects a December 27, 1988, call through its examination function detected evi- from the IRS agent and that First American and dence of money laundering in 1987, and appro- the National Bank of Georgia were mentioned. priate criminal referrals were made. The coordi- The staff member recalls that, at some point nated examinations conducted after the October during their telephone conversations, the IRS 1988 indictment stemming from Operation agent mentioned the allegation. According to the C-Chase led to further criminal referrals. It is agent, the Federal Reserve staff member renow apparent that the publicity surrounding quested the evidence but was not given the name BCCI's illegal money laundering activities in the of the person or other details because the infor- United States had the understandable effect of mation was not then public. As noted above, beginning to shake loose insights into other as- during late 1988, the agent and the staff member pects of BCCI's activities and operations in the also discussed and agreed on the timing of the United States and around the world that only Federal Reserve's coordinated examinations of recently have been more fully understood by the the BCCI agencies to occur after the indictment. international community of bank supervisory and The agent states that, on December 27, 1988, law enforcement officials. Insofar as the Federal he telephoned the Federal Reserve staff member, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

912 Federal Reserve Bulletin • November 1991 and during the conversation, which was brief, source of the allegation mentioned by the IRS asked what kind of information the Federal Re- agent to the Federal Reserve staff member in serve would need to order BCCI from the coun- December 1988 and who was one of the BCCI try. The staff member had told the agent earlier employees indicted in October 1988 and conthat BCCI was an issue for the Federal Reserve victed in May 1990. The witness stated, consisand that, if the evidence were available, the tent with a transcript of his conversation with the Federal Reserve would order BCCI out of the undercover agent in September 1988, that he has country. The agent states that he asked, hypo- no direct evidence that BCCI owns First Amerthetically speaking, whether a case could be ican and that his statement was based on rumor made if he could provide the Federal Reserve within the BCCI organization. This witness prowith the names of five or six former BCCI duced no evidence to support the Federal Reofficials who would testify that at an annual serve's case. meeting of BCCI, a high level official stated that In spring 1989, the IRS talked to staff members BCCI owned and controlled First American. The of the Federal Reserve Bank of Richmond re- Federal Reserve staff member is reported to have garding information on CCAH and First Amerisaid that such statements would not be enough— can, and subsequently the Tampa U.S. Attorthat documentary evidence would be needed. ney's Office subpoenaed all relevant records, The Federal Reserve staff member recalls that including Federal Reserve examination reports the agent at some point in their discussions and internal documents. During spring and summentioned a hypothetical but does not recall that mer 1989, Federal Reserve Bank of Richmond the agent's hypothetical included mention of five personnel met with and provided information to or six witnesses. The IRS did not provide the the IRS regarding CCAH. The San Francisco and name of any witness until 1990 (as discussed Atlanta Reserve Banks provided information as later). well. The IRS agent indicates that on February 2, 1989, he had to travel to Washington for other Richmond Reserve Bank Review: purposes and decided to meet with the Federal January 1989 Reserve staff member principally for the purpose of obtaining Federal Reserve information on Because of these allegations raised by the IRS BCCI and our investigation of the original CCAH and because CCAH at that time had before the application and to secure the Federal Reserve Federal Reserve an application to acquire anstaff member's input into the agent's thinking on other subsidiary bank, the Federal Reserve Bank the investigation. According to the agent, he was of Richmond undertook in January 1989 a fresh interested in historical information on BCCI and review of any relationships between BCCI and any relationships between BCCI, the National CCAH. During the review, senior management Bank of Georgia, and First American because of of CCAH and First American stated that the earlier information he had obtained during the relationship between CCAH and BCCI was no undercover operation about such relationships. different than that represented to the Board in There were several follow-up calls by the IRS to 1981 at the time of the original application and arrange access to Federal Reserve information that BCCI did not exercise a controlling influence and subpoenas for examination material. Also, in over CCAH. The examiner at the Federal late December 1988, a staff member of the Fed- Reserve Bank of Richmond requested that eral Reserve Bank of Richmond received a press Mr. Altman write to the president of each First inquiry in which the reporter referred to an American bank subsidiary, requiring a report on affidavit for a search warrant by an undercover the relationship of the bank to BCCI and on any agent stating that, during the undercover opera- transactions conducted with BCCI by the bank. tion, a BCCI employee said that BCCI controlled This survey of presidents disclosed no unusual the National Bank of Georgia and other banks. relationships or transactions between the banks A Federal Reserve investigator has subse- and BCCI. New York State authorities had also quently interviewed this witness, who was the recently completed an examination of the New Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 913 York bank subsidiary, during which the examin- Office informed a Federal Reserve official of ers focused closely on BCCI correspondent ac- certain unsubstantiated reports that BCCI owned counts and transactions and detected no irregu- CCAH through nominees. No concrete or spelarities. Moreover, again according to the IRS cific information as to particulars or evidence agent, the Federal Reserve staff member called was provided. On February 7, 1990, two experihim sometime in early 1989 requesting any infor- enced Federal Reserve counsel followed up these mation that the IRS had on BCCI links with First contacts by meeting with the U.S. Attorney's American because of a then-pending application. Office and IRS investigators who were investi- The agent said that he told the staff member he gating BCCI and, in June 1990, by arranging an did not have anything, believing that the request information-sharing agreement with the New related only to documentary evidence. York County District Attorney, who was also In its report on February 8, 1989, the Federal investigating BCCI. We have described in the Reserve Bank of Richmond found no evidence of introduction the information on the BCCI-CCAH irregular or significant contacts between the First relationship that these agencies provided to the American banks and BCCI, or of failure by Federal Reserve during those contacts in 1990. CCAH to adhere to the commitments it made to Also in fall 1989, Federal Reserve staff inthe Board in 1981. The Reserve Bank noted that quired of, and received informal advice from, a the common ownership of CCAH and BCCI had Luxembourg banking supervisor that BCCI had increased. The Bank Holding Company Act does loans outstanding to certain CCAH shareholders. not prohibit common ownership of banks or The supervisor did not know when the loans nonbanks by individuals, as it does for compa- were booked and whether they were for the nies. purchase of CCAH stock or for other business activities of the shareholders. Federal Reserve Continuing Investigation staff wrote to Mr. Altman on December 13, 1989, asking for information on any loans by BCCI or During 1989 and continuing into 1990, Federal its affiliates to the original or subsequent inves- Reserve efforts to pursue reports of a BCCI-First tors in CCAH, either directly or indirectly and American link were often frustrated by our in- regardless of the purpose of the loan. Mr. Altman ability to obtain the documentary or corroborat- forwarded the letter to BCCI for response. ing evidence necessary to initiate actions against In February 1990, Mr. Altman responded with individuals or institutions that we now allege a letter stating that no pledge or security interest have violated laws and regulations. The Federal had ever been recorded on CCAH's share regis- Reserve's investigation persisted into 1991, and ter by any lender. Mr. Altman did not mention it was the complex chain of information devel- the security interest BCCI had held in his and oped over this period that ultimately led to the Mr. Clifford's shares from 1986 to March 1988. needed evidence and to our criminal referrals and Mr. Altman also attached the response from the civil enforcement actions. acting chief executive of BCCI, Mr. Naqvi, stat- During this period, Federal Reserve personnel ing that BCCI had not financed the acquisition of made inquiries of law enforcement authorities Financial General in any respect and that none of and foreign bank supervisors seeking informa- the CCAH shareholders had personal loans from tion. As we noted in the introduction, on June 1, BCCI during the acquisition, secured by the 1989, a Federal Reserve official met with the CCAH shares. Mr. Adham, the principal share- Tampa prosecutors and stated that the Federal holder of CCAH, also confirmed by letter in Reserve would be interested in the results of March 1990 that his CCAH acquisition was pritheir investigation and would send staff down marily from personal funds and was not financed when the investigation was completed. The offi- by BCCI. To check the statements by Mr. Naqvi, cial offered the assistance of Federal Reserve Federal Reserve staff subsequently requested the examiners. In summer 1989, during the course of assistance of the foreign bank supervisor that had a meeting on another matter, a senior official originally provided information to the Board. from the New York County District Attorney's The supervisor responded that he had encoun- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

914 Federal Reserve Bulletin • November 1991 tered difficulties in obtaining the necessary infor- ongoing investigation and authorizing the use of mation but would continue his investigation. An subpoena powers. The Federal Reserve's invesinquiry was also made of the Cayman supervisor, tigation has been wide ranging but directed who reported that he had no relevant records. chiefly into the circumstances of BCCI's acqui- During August and September 1990, Federal sition of control of CCAH and whether false or Reserve investigators continued to meet with misleading statements had been made to the investigators from the New York County District Board during the application process in 1981 and Attorney's Office and obtained access to grand subsequently. Thus far, the investigation has jury materials. In October 1990, the New York included taking weeks of depositions, interview- County District Attorney's Office informed us ing more than fifty witnesses, and seizing and that a confidential source had stated that a report reviewing a very large number of documents, prepared on October 3, 1990, by BCCI's outside including all CCAH records in the United States auditors, Price Waterhouse, indicated that BCCI and the Netherlands Antilles and BCCI loan and had made substantial loans to CCAH sharehold- other records relating to CCAH located abroad. ers secured by CCAH shares. The District Attor- The investigative team spent a week in Abu ney's Office did not have the report, and Federal Dhabi, reviewing BCCI's loan files on CCAH Reserve staff immediately requested access to it and conducting numerous interviews with BCCI from the U.S. General Manager of BCCI. After a officers. delay occasioned by the refusal of the auditor to The Federal Reserve's investigation has unpermit the report to be examined by the Federal covered evidence of extensive and secret loan Reserve, BCCI agreed that a member of the and nominee arrangements between BCCI and Federal Reserve's supervision staff could review customers of BCCI designed to allow BCCI to the report at BCCI's London office. The review acquire, in the name of these customers, the was conducted on December 10, 1990. stock of the First American banking organization The auditor's report and a conversation on that as well as other depository institutions in the date with the new chief executive officer of BCCI United States. These arrangements in many indicated that BCCI had more than $1 billion in cases involved sham loans to the BCCI customloans outstanding, secured by CCAH stock, and ers, with side agreements that the customers that these loans were nonperforming. This con- would not be required to repay or service the firmed that BCCI held CCAH shares as collateral loans and that BCCI could sell the shares and for substantial loans to CCAH shareholders. retain the profits. In return for their services, the Shortly thereafter, attorneys from a U.S. law customers received fees and indemnities. These firm representing BCCI and its Abu Dhabi share- nominee arrangements are described in detail in holders contacted the Board's General Counsel the Board's civil money penalty and prohibition to request a meeting. At a meeting on December actions of July 12 and 29, 1991. 21, 1990, BCCI's counsel confirmed that a sub- Many of these CCAH loans were never serstantial amount of the stock of CCAH had been viced or repaid except through other loans from pledged to BCCI as collateral for hundreds of BCCI. From the evidence available, it appears millions of dollars in loans to certain sharehold- that these arrangements, particularly in later ers of CCAH. BCCI's counsel identified the years, enabled BCCI to generate hundreds of borrowing shareholders and the amount of the millions of dollars in fictitious assets to conceal loans. BCCI's counsel was advised of the seri- massive losses in its trading and lending acousness of the matter under the Bank Holding counts. Company Act, and was asked to provide all Our investigation has also revealed more about information regarding the loans and BCCI's ar- how BCCI's ownership of CCAH stock was rangements with the borrowers. concealed from the Federal Reserve and other Based on this information and the other infor- investigators. The shareholder register and other mation uncovered during the Federal Reserve's CCAH records in the United States and the investigation during 1989 and 1990, the Board, on Netherlands Antilles that were subject to Federal January 4, 1991, issued an order formalizing our Reserve examination or review indicated that the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 915 individuals and companies listed in CCAH's fil- ican banks have been steadily eliminated. The ings with the Federal Reserve were, in fact, the relationship between BCCI and the First Ameriowners of the shares of CCAH. There was no can Bank of New York—with which BCCI had record of a security or other interest by BCCI in maintained a correspondent relationship—was the CCAH shares. The documents that evidence substantially wound down by July 5. the arrangements between CCAH shareholders and BCCI were all maintained outside the United Additional Acquisition of U.S. Depository States by the most senior management of BCCI Institutions in files that we understand were not available to the bank's auditors. Moreover, documents re- The Federal Reserve's investigation continued viewed during the investigation suggest that after issuance of the March 4 order and discov- BCCI deliberately structured various transac- ered evidence that BCCI acquired interests in tions so as to conceal from the Federal Reserve three additional U.S. depository institutions. Our the relationship between BCCI and CCAH. Fi- evidence indicates that BCCI in 1985 acted nally, there were the numerous denials by BCCI through a nominee, Ghaith Pharaon to acquire and CCAH representatives that any link existed. the Independence Bank, Encino, California, in violation of the Bank Holding Company Act. 1991 Cease and Desist Order Requiring Independence Bank is a state nonmember bank Divestiture of CCAH Shares supervised by the FDIC. The Federal Reserve's investigation also uncovered substantial evi- To terminate the illegal relationship between dence indicating that BCCI, acting through Mr. BCCI and CCAH, the Federal Reserve, on Jan- Pharaon, acquired during the 1980s a substantial uary 22, 1991, sent a proposed cease and desist interest in the National Bank of Georgia (NBG), order to counsel for BCCI and made criminal a bank supervised by the Comptroller of the referrals to the Department of Justice. The cease Currency. NBG was purchased by First Ameriand desist order, which was consented to by can in 1987 with funds the Board believes were BCCI on March 4, had five principal compo- provided to First American by BCCI. Finally, nents: (1) requiring BCCI to divest promptly its later in the investigation, we uncovered evidence CCAH shares; (2) significantly restricting busi- that BCCI financed and acquired control of ness transactions between BCCI and the First shares of CenTrust Savings Bank, Miami, Flor- American banks; (3) ensuring that BCCI had ida in 1988-89, again acting through or with sufficient liquid assets to cover liabilities in the Pharaon. U.S. agencies; (4) terminating BCCI's residual On May 3, the Federal Reserve issued a secbusiness presence in the United States; and ond cease and desist order requiring BCCI to (5) requiring that BCCI cooperate in the Federal submit to the Federal Reserve a plan for the Reserve's investigation. divestiture of any shares of Independence Bank The order required BCCI promptly to divest its within its control. A criminal referral relating to interest in CCAH through a plan to be submitted this violation was also filed. to the Board for its approval. The order, and a In conjunction with the investigation, the Fedsimilar one on February 1, 1991, against CCAH, eral Reserve has also taken steps to monitor also prohibited transactions between BCCI and through the examination process the operations the First American banks (other than capital of the First American banks and to determine injections into the banks and certain clearing what relationship the banks have with BCCI. transactions in the ordinary course of business). Examinations and special reviews were under- After entry of the CCAH order on February 1, taken by the Federal Reserve starting in January 1991, the Federal Reserve informed the First 1991. More than fifty senior Federal Reserve American Bank of New York that its clearing examiners have for the past nine months closely transactions for BCCI should be wound down reviewed the First American banking organizaand terminated. As a result of these actions, tion, and these efforts continue. In addition, transactions between BCCI and the First Amer- Federal Reserve investigators are working with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

916 Federal Reserve Bulletin • November 1991 other federal and state agencies to review trans- BCCI. We have been in contact with the receivactions that may involve BCCI and related per- ers, explaining to them the need to achieve total sons. divestiture as soon as possible, and requesting that they submit promptly a revised divestiture Status of Divestiture Orders plan. The receivers have indicated a willingness to achieve divestiture through the trust arrange- Recent events have made the requirement that ments, and our discussions are continuing. BCCI divest the shares of CCAH and Independence Bank under its control the most difficult part of the cease and desist order to achieve. On Federal Reserve Enforcement Actions to May 3, BCCI submitted to the Federal Reserve a Date proposed divestiture plan for the CCAH shares, and on July 3, BCCI submitted a divestiture plan As part of its investigation, the Federal Reserve for the Independence Bank shares. The CCAH is proceeding with enforcement actions as the plan called for transfer of the shares of CCAH evidence to support such actions is accumulated. held by BCCI, and possibly shares held by other On July 12, the Federal Reserve issued a notice CCAH shareholders, to a trust administered by of intent to bar from U.S. banking individuals an independent trustee acceptable to the Federal participating in the Independence Bank viola- Reserve. The trustee would vote the stock and tion. Those individuals are Agha Hasan Abedi negotiate its sale within a time frame agreed to by and Swaleh Naqvi, two former senior officers of the Federal Reserve. We found the trust arrange- BCCI; Kemal Shoaib, a former officer of BCCI ment to be acceptable but considered the pro- and the former chairman of Independence Bank; posal to be deficient because it failed to set forth and Ghaith Pharaon, the owner of record of the timing of the sale—specifically, there were no Independence Bank and a shareholder of BCCI. guarantees that the divestiture would be a More recently, on July 29, the Federal Reserve prompt one, as required in the Federal Reserve's issued a notice of assessment of a civil money order. We therefore rejected BCCI's proposal by penalty of $200 million against BCCI for its illegal letter of May 10, and required BCCI to submit acquisition of CCAH, the National Bank of within ten days a revised plan that addressed this Georgia, and CenTrust Savings Bank. The Fedconcern. eral Reserve also issued a notice of intent to bar On May 20, BCCI did submit a revised plan, permanently nine individuals associated with which also relied on a trust arrangement. Al- BCCI from any future involvement with U.S. though this new plan did not contain a timetable, banking organizations. On the same day, the it did contain details and conditions that ap- District Attorney's Office for the County of New peared to expedite the sale. A preliminary draft York secured indictments of BCCI and Messrs. of the trust agreement was submitted by BCCI on Abedi and Naqvi. As noted, the U.S. Attorney in June 20. Tampa has also recently indicted senior officials Implementation of BCCI's proposed divesti- of BCCI for racketeering involving money launture plans has been delayed by the seizure of dering. BCCI by regulatory authorities. After those au- The Federal Reserve is continuing to cooperthorities seized control of BCCI on July 5, the ate with law enforcement agencies, and will, of officers and directors of BCCI were no longer course, consult those agencies before taking enable to negotiate or effectuate a divestiture of forcement action so as to avoid prejudicing any CCAH or Independence Bank stock on behalf of criminal investigation. Thus, at the request of the BCCI. U.S. Attorney for the District of Columbia, the In our view, the July 5 seizure order does not Federal Reserve has deferred temporarily the void the Federal Reserve's divestiture orders, assessment of substantial civil money penalties however. The orders remain effective and legally against the individuals already charged, pending binding. The seizure shifts the task of implement- completion of the U.S. Attorney's criminal ining the orders from BCCI to the receivers for quiry. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 917 THE LESSONS OF THE BCCI AFFAIR tained secretly outside the United States. The Federal Reserve's proposals attempt to address Domestic Initiatives the potential for illegal activities by creating a bar to U.S. entry by weakly capitalized, poorly man- As a result of the BCCI matter and other recent aged, or inadequately supervised organizations. compliance problems with foreign banks, the As a result of recent experience, the Federal Federal Reserve reviewed the statutes, regula- Reserve is devoting more resources to examintions, and supervisory policies governing foreign ing, tracking, and monitoring foreign bank operbank operations in the United States. To help ations and will need to increase resources in this prevent a recurrence of such problems, the Fed- area if the legislation is enacted. In addition, we eral Reserve has sent to the Congress proposals believe that it would be useful to establish a small to control the entry of foreign banks into the unit of trained investigators to handle cases in United States and strengthen the supervision and which examination procedures and methods are regulation of foreign banks once they have en- not sufficient to detect or prove the wrongdoing. tered. Those proposals, collected as the Foreign Bank Supervision Enhancement Act of 1991, Improving International Cooperation have been incorporated into comprehensive banking reform bills that have been reported out The BCCI case also highlights the pressing need of this Committee and its counterpart in the for greater international cooperation among bank Senate. regulators. This legislation would establish uniform fed- The vehicle for improved international banking eral standards for entry, operation, and expan- supervision is the Basle Supervisors Committee, sion of foreign banks in the United States. The composed of the Federal Reserve and other proposed legislation includes, importantly, re- central banks and bank regulators. That commitquirements of consolidated home country super- tee's achievements so far have included the vision and supervisory access to information adoption of the Concordat, which is the stateregarding the banking organization, and the ap- ment of fundamental principles governing superplication to foreign banks of the same financial, vision of banks operating across borders, and the managerial, and operational standards that gov- establishment of international capital standards. ern U.S. banks. The proposal would also grant At its meeting in Stockholm in early Septemfederal regulators the authority to terminate the ber, the committee, under the guidance of U.S. presence of a foreign bank that is engaging President Corrigan, its newly elected chairman, in illegal, unsafe, or unsound practices. began discussions of the important lessons to As the BCCI affair amply demonstrates, con- be learned from the BCCI matter. The committinuing consolidated supervisory oversight of a tee has commissioned, and hopes to have finbank's operations is essential to maintaining the ished by its December meeting, an issues paper integrity of the bank's operations and preventing that will consider a range of subjects stemming adverse effects on the financial system. BCCI from the BCCI matter. These include the foloperated without a supervisor who could regu- lowing: (1) standardized criteria for the establate and examine the consolidated financial orga- lishment by foreign banks of branches or subsidnization, and BCCI was therefore able to manip- iaries; (2) what steps can be taken to strengthen ulate its books and conceal its actual financial procedures for the cross-border sharing of supercondition with minimal chance of detection. visory information, especially in times of stress; Of course, the Federal Reserve's legislative (3) whether contagion problems are of such a recommendations would not guarantee that crim- nature as to render distinctions between inal activity by foreign banks would not recur. branches and subsidiaries of little utility in times Fraud is extremely difficult for any regulator to of stress; (4) the relationship between home detect, especially when transactions are deliber- country and host country supervisors as it perately and illegally structured to conceal relation- tains to the supervision of branches; (5) whether ships and when the relevant information is main- consolidated supervisory responsibility should Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

918 Federal Reserve Bulletin • November 1991 rest in a single home country supervisor or be believe that the conflict between U.S. regulators' shared among several supervisors acting as a need for international cooperation, particularly college; and (6) whether and to what extent with the increasing globalization of banking and supervisors may require changes in corporate the need of the Congress to gain access to inforstructures when such structures may, by their mation for its oversight and investigatory responnature, hinder effective supervision. sibilities is a question that merits careful consid- One major practical issue confronts the Federal eration. Reserve and other U.S. regulatory agencies in efforts to cooperate with foreign regulators. CONCLUSION Whereas certain other Western nations have statutes that protect confidential bank supervisory The Federal Reserve is actively engaged in dealinformation obtained from foreign regulators from ing with the BCCI matter and has deployed its release to the public or even to the legislature, most experienced and proven staff members to information obtained by U.S. regulators from the task. The Federal Reserve will continue to foreign sources does not enjoy the same confiden- cooperate with federal, state, and foreign bank tiality. Because as U.S. regulators we may not supervisors and law enforcement agencies. Our assure our foreign counterparts that the informa- immediate goals are to conclude our investigation that we receive from them will be held tion; to make the current separation in fact confidential, those governments may be less will- between BCCI and U.S. banks a complete sepaing, or legally unable, to share information with us ration in law, so that these banks can be relieved fully or completely, or to do so on a regular or of any remaining BCCI taint and operate free and timely basis. While we are sensitive to and re- clear of this controversy; and to ensure that all spectful of the prerogatives of the legislature to wrongdoers are prosecuted civilly and criminally seek and obtain necessary information, we also to the extent permitted by law. • Statement by E. Gerald Corrigan, President, with senior regulatory officials from abroad, and, Federal Reserve Bank of New York, before the from time to time, with Robert Morgenthau, the Committee on Banking, Finance and Urban Af- New York County District Attorney. fairs, U.S. House of Representatives, September The summary report of the investigation con- 13, 1991 ducted by the Federal Reserve, which is being submitted to this committee today, together with I am pleased to have this opportunity to appear the Board of Governors' July 12 and July 29 before you this morning to review the role played Notices of Charges, speak—eloquently in my by the Federal Reserve Bank of New York in the judgment—to the scope and precision of this Bank of Credit and Commerce International investigation, but even they do not tell the whole (BCCI) affair. To put it briefly, beginning at the story. Allow me, therefore, to share with the time of the October 1988 indictment of BCCI in committee my own observations on the process, Tampa and continuing to this day, the Federal its results, and its implications for the future. Reserve Bank of New York has been intimately For starters, it should be recognized that the involved in virtually every aspect of the Federal scope and complexity of this investigation, to- Reserve's investigation into BCCI, including its gether with the almost unimaginable patterns of illegal control of banking institutions in the deceit, lies, misrepresentations, fraud, and crim- United States. Over the past twelve to fifteen inality that had to be overcome to obtain hard months, I, personally, have been significantly evidence of wrongdoing, is wholly unpreceinvolved in the investigation, often on a daily dented in my experience and probably in the basis. My involvement has entailed frequent con- seventy-seven-year history of the Federal Resultations with my own staff, with Messrs. Mat- serve. Indeed, Federal Reserve investigators tingly and Taylor, with Chairman Greenspan, were engaged—successfully I might add—in an Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 919 investigation that would be considered very for- We were also concerned about the possibility midable by even the most sophisticated law that documentary evidence so vital to the outenforcement authorities. come of our case might be destroyed. Having said that, it is only appropriate to ask Finally, the possibility exists that there may why it took so long to produce the results that are have been information available to other official now before us. In part, the answer to that ques- institutions that might have expedited the Federal tion lies in the pattern of lies and deceit that had to Reserve's investigation had such information be overcome in getting at the truth. In that regard, reached the Federal Reserve in a more timely it is important to note that there is no other fashion. governmental institution here or abroad that has Taken together, these factors—especially in a had a greater or faster measure of success in setting of widespread fraud and deceit—made the getting at the truth than has the Federal Reserve, investigation frustratingly slow at times. Also, and even though some of those institutions have con- with the benefit of hindsight, there are probably siderably more experience and discovery power some things that might have been done differently in this type of investigation than the Federal or in a different order that might have saved some Reserve. But, even allowing for these factors, time. But, even under optimal conditions, I bethere were other considerations that help account lieve that any such time saved would be measured for the duration of the investigation. Among these in months, not years. On the other hand, the other factors are the following: experience gained from this investigation surely First, we wanted to be absolutely sure that our has influenced our attitudes regarding certain asefforts were always consistent with the dictates pects of banking law and supervisory policies and of due process. This is a nation of laws. Rumors, procedures. allegations, unsupported accusations, and even To a very important extent, those lessons alclaims made by informants or "insiders" do not ready are incorporated into the Foreign Bank constitute evidence of wrongdoing. Obtaining Supervisory Enhancement Act of 1991 that is that hard evidence was an extraordinarily diffi- currently before the Congress and that I urge be cult task that was to take the Federal Reserve's enacted this year. That legislation, it should be lead investigative personnel to locations through- noted, will have important resource implications out the United States, Europe, and the Middle for the Federal Reserve, especially for the Federal East. It also entailed those investigators taking Reserve Bank of New York. Beyond that, I think thousands of pages of statements and depositions that we must carefully consider the question of from individuals here and abroad as well as whether we should be significantly augmenting reviewing tens of thousands of pages of docu- our legal staff, including developing a small ments. Getting the necessary hard documenta- "SWAT team" of investigative specialists— tion of wrongdoing was not easy, but it was done. something we have not felt was needed in the Second, from the earliest stages of the active past. We also must guard against efforts that, investigation of the money laundering problem in while well intended, may work in the direction of 1987, we had to be very careful that our own weakening existing supervisory tools and techefforts did not compromise the investigative ef- niques. forts of other supervisory and law enforcement For example, if there was ever any doubt authorities in the United States or elsewhere. about the necessity of consolidated supervision Third, as the scope of the Federal Reserve's of overall banking entities, including all of their and other investigations widened, and as allega- component parts—and there never was any such tions of serious criminal activities of BCCI began doubt in my mind—this case should settle that to emerge, we had to be concerned about pro- debate once and for all. tecting the confidentiality and well-being of wit- Another area of great importance that has been nesses, and, in the latter stages of the investiga- brought into sharper focus by the BCCI affair is tion, we were mindful of the need to be sensitive the need to strengthen still further the internato the well-being of the officials in the Federal tional coordination of bank supervision and bank Reserve who were conducting the investigation. supervisory policies. As the committee members Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

920 Federal Reserve Bulletin • November 1991 may know, in early July of this year, I was named In saying this, I want to caution about expectby the Group of Ten (G-10) Central Bank Governors ing too much too soon. Getting eleven countries to the position of Chairman of the Basle Committee to agree on these complex matters that strike so on Banking Supervision. Last week the committee close to legitimate issues of national prerogative, had its first regularly scheduled meeting since my if not national sovereignty, will not be easy, designation as its chairman. At the meeting, there especially in a setting in which majority rule is was a lengthy discussion of the BCCI affair and the not enough. That is, in this forum, everyone must lessons to be learned from it by the international agree on the chosen course of action or there is community of bank supervisors. no action. On the basis of that discussion, the committee I cannot, in good conscience, leave the subject hopes to have finished by its December meeting of international coordination of banking supervian issues paper that will consider a range of sion without saying a brief word about what I subjects stemming from the BCCI matter includ- know will be a sensitive subject. I, and all meming (1) whether and how standardized criteria for bers of the international community of banking the establishment by foreign banks of branches supervisors, deeply respect the prerogatives of or subsidiaries in the G-10 countries should be legislative bodies, including their prerogative to put in place; (2) what steps can be taken to seek and obtain information. By the same token, strengthen procedures for the cross-border shar- it is vitally important that the manner in which ing of supervisory information, especially in that prerogative is exercised in a cross-border times of stress; (3) whether the potential for setting is fully sensitive to laws and traditions in contagion problems within a single organization other countries, for if it is not, the necessary renders distinctions between branches and sub- process of sharing supervisory information across sidiaries of little utility in times of stress; (4) the national borders can be seriously impaired. relationship between home country and host In closing, let me add one further point. In a country supervisors as it pertains to the supervi- nation of law and due process, no system of law sion of branches; (5) whether the locus of con- and regulation can prevent crime or wrongdoing. solidated supervisory responsibility should rest That is one of the prices we choose to pay for the in a single home country supervisor or be shared enormous benefits of a free and open society that among several supervisors acting as a college, places such a high premium on individual rights. and (6) whether and to what extent supervisors However, preserving a free and open society should be prepared to insist upon changes in implies that when transgressions occur, those corporate structures that, by their nature, hinder responsible for administering laws and regulaeffective supervision. tions must see to it that the parties who have As noted above, my hope and expectation are violated the law or regulation are found out and that an issues paper will be finished for the are appropriately punished. I would hope that the committee's deliberation at its December meet- message growing out of the Federal Reserve's ing. That issues paper will not, however, contain persistent, vigorous, and unrelenting investigarecommendations. Rather, I have in mind that tion of the BCCI affair would be clear to all, and the discussion in December would help the com- that message is that we will not tolerate this kind mittee to shape a follow-up paper containing of behavior, no matter how formidable the obstarecommendations that would be considered over cles put in the way of our efforts to get at the the first half of 1992. truth. • Statement by Robert P. Black, President, Fed- I shall describe for you this morning the role of eral Reserve Bank of Richmond, before the the Federal Reserve Bank of Richmond in the Committee on Banking, Finance and Urban supervision and regulation of Credit and Com- Affairs, U.S. House of Representatives, Sep- merce American Holdings (CCAH) and its subtember 13, 1991 sidiaries located in the United States. Since the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 921 only authorized presence of the Bank of Credit involved in the acquisition other than as investand Commerce International (BCCI) in the Fifth ment adviser to the individual investors and, in Federal Reserve District was a representative particular, that BCCI would not fund the acquisioffice in the District of Columbia, I shall leave the tion. The senior representative of our Reserve discussion of the Systems's efforts to regulate Bank specifically asked about BCCI's current and BCCI's activities in the United States to members future role and was provided unqualified assurof the staff of the Board of Governors and to my ance by Mr. Clifford that BCCI was not involved colleagues from the Federal Reserve Banks of in the takeover other than as investment adviser Atlanta, New York, and San Francisco. Others and that no other role was contemplated for the have testified on the Federal Reserve System's future. Similar representations were made to the efforts to deny BCCI's entry into the United Comptroller of the Currency (OCC), the Federal States and the original acquisition of First Amer- Deposit Insurance Corporation (FDIC), and the ican Bankshares by a group of Middle Eastern banking commissioners of the states of Maryland, investors. I shall discuss the role of the Federal Virginia, and New York where First American's Reserve Bank of Richmond in the application pro- subsidiary banks were located. cess and describe our supervisory work since the Despite the assertions of the shareholders and purchase, including efforts to determine whether or their counsel, the Board conducted thorough not any BCCI ownership or influence existed. investigations of the investors and, in this process, solicited information from the Central Intelligence Agency, the Departments of State and BACKGROUND Commerce, and a foreign bank supervisor. None of the background checks uncovered any adverse Financial General Bankshares, as First American information regarding the investors. In addition, was originally called, was one of a very few neither the Board nor any other federal or state multistate bank holding companies that was ex- regulator received any evidence that the repreempted from the provisions of the Bank Holding sentations made to them were false. Company Act by virtue of its registration under On the basis of the record of the application, the Investment Company Act. When it became the Federal Reserve Bank of Richmond saw no subject to the Bank Holding Company Act in 1966, legal basis for recommending denial of the appliit controlled banks in Virginia, Maryland, Tennes- cation to the Board. On August 25, 1981—after see, New York, and the District of Columbia. having considered the hearing record, the recom- Other Federal Reserve officials have discussed mendations from the Board staff and the Reserve the attempts by the Middle Eastern investors to Bank, as well as the views of the federal and state obtain approval of the Board of Governors for agencies—the Board approved CCAH's acquisithe acquisition of Financial General Bankshares, tion of Financial General. The acquisition was and I shall not review this effort. I would like to consummated on April 19, 1982, and Financial point out, however, how the Federal Reserve General was renamed First American Bank- Bank of Richmond participated in the application shares in August 1982. Mr. Clifford was named process that led to the Board's approval of the chairman of the board of First American Banksecond application to acquire Financial General shares, former Senator Stuart Symington became on August 25, 1981. chairman of the board of CCAH, and Mr. Altman The Federal Reserve Bank of Richmond shared was elected president of another First American the same concerns as did many others about the holding company and secretary and managing possible involvement of BCCI in the takeover director of CCAH. attempt. We participated in the hearing the Board of Governors conducted on the application during which the testimony presented both by individual THE PERIOD 1982-OCTOBER 1988 investors and by their counsel (Clark Clifford and his partner, Robert A. Altman, of the firm of Once the acquisition was consummated, the Clifford & Warnke) stated that BCCI would not be supervision of CCAH and First American fell to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

922 Federal Reserve Bulletin • November 1991 the Federal Reserve Bank of Richmond, which OCC, or respective state bank supervisors unalso had been responsible for supervising Fi- covered any improper or illegal BCCI connection nancial General. In such supervisory work, the concerning actions taken by either the investor Reserve Banks perform their bank holding com- group or BCCI. pany inspection duties under authority dele- In the years immediately after the acquisition, gated by the Board and thus work much more there was no evidence developed through the closely with the staff of the Board on an ongoing supervisory process to suggest that CCAH and basis than is true in the case of many of our First American were functioning other than in other responsibilities. An inspection, the pri- accordance with the statements made to the mary supervision tool for bank holding compa- regulatory authorities at the time of the applicanies, is designed to ascertain whether the tion. During this period, the Reserve Bank's strength of the bank holding company is being inspections found compliance with the condimaintained and to determine the impact or tions and commitments of the original application consequences of transactions between the par- and no violations of the law. The examiners in ent holding company or its nonbanking subsid- charge of these inspections, I should emphasize, iaries and its subsidiary banks. The scope of were well aware of the Federal Reserve System's those inspections includes, among other fac- concerns about the investors and the possible tors, a review of intercompany receivables and involvement of BCCI. The examiners regularly payables, earnings, capital, asset quality, and discussed the relations between the investor dividend payments to the parent company. In group with various members of the company's measuring financial strength of a bank holding senior management team, both to determine company, the inspection process focuses on compliance with the commitments and to probe financial indexes of both the consolidated entity for involvement of the BCCI group. In addition, and its component parts. With respect to the numerous discussions were held with other bank component parts of a bank holding company, regulatory agencies responsible for supervising Reserve Banks review the reports of examina- First American's subsidiary banks, and no adtion of its subsidiary banks prepared by the verse information surfaced about the banks from banks's federal and state regulators. The ability them. of a bank holding company to maintain an The examination and inspection record beadequate level of capital, as well as to preserve tween 1982 and late 1988 is clear. Neither the its overall ability to act as a source of financial reports of our First American inspections nor strength to its bank subsidiaries, is a primary any of the reports of examination prepared by consideration and focus of the inspection. Beother federal and state regulators contained comsides the regular inspection of a parent holding ments or criticisms regarding involvement of, company, our Reserve Bank monitors the coninfluence by, or improper payments to BCCI. On dition of the entire holding company through the contrary, since the acquisition in 1982 there the review of regulatory reports filed quarterly, were no dividend payments by the First Amerisemiannually, or annually with us or other can holding companies to the investors and capregulatory authorities. ital injections into the First American organiza- Since the acquisition of the First American tion totaled more than $500 million. banks by the Middle Eastern investors, the company has been inspected by the Federal Reserve Bank of Richmond eight times. The Federal THE PERIOD OCTOBER 1988-90 Reserve Bank of Richmond does not examine any of the company's subsidiary banks since In October 1988 indictments of BCCI and its none are state member banks. These inspections officers were announced, and Federal Reserve have included the review of the reports of the Banks with supervisory responsibility over BCCI other bank supervisors to verify the condition of agencies in Florida, New York, and California the individual First American banks and, most initiated extensive examination of those agenimportant, to determine whether the FDIC, the cies. Since our Reserve Bank did not have su- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 923 pervisory responsibility for any BCCI agencies, copy of BCCI's external auditors' October 1990 we did not participate in those examinations. report, which detailed substantial loans made by In early 1989, after BCCI's indictment for BCCI to CCAH shareholders secured by CCAH money laundering and the emergence of allega- shares. The existence of these loans was later tions that BCCI and CCAH were linked, the confirmed at a meeting with representatives of Federal Reserve Bank of Richmond conducted a the investors held on December 21, 1990, at the special inquiry into the relationship between Board. As it became increasingly clear that an CCAH and BCCI. The inquiry included question- unauthorized relationship existed with BCCI, an ing First American senior management on the in-depth inspection of the First American orgarelationship to BCCI, reviewing records of the nization was initiated in early January under the organization, and requesting each First American direction of the Federal Reserve Bank of Richsubsidiary bank to report on any transactions with mond and Board staff. This inspection was coor- BCCI. The report on our findings of the inquiry, dinated with examinations of all of First Ameridated February 8, 1989, presented no evidence of can subsidiary banks to assess the general safety irregular or significant contacts between the First and soundness of the organization. At the same American banks and BCCI or any indication that time, extensive discussions were begun with CCAH had failed to adhere to its commitments. senior staff members at the Board, the Federal Our report disclosed that First American senior Reserve Banks of Atlanta, San Francisco, and management represented to us that the relation- New York, and the agencies participating in the ship between CCAH, First American, and BCCI coordinated examinations of all the banking subwas no different than at the time of the original sidiaries of First American, including the FDIC, application and that BCCI did not exercise a the OCC, and the banking departments of Marycontrolling influence over CCAH. While we found land, New York, and Virginia. that the degree of common ownership between A significant part of this examination included CCAH and BCCI had increased since the original a review of bank records for any deposits of, acquisition of Financial General, the Bank Hold- payments to, or exposures to individuals or coming Company Act does not prohibit such common panies related to BCCI or CCAH. The examinaownership of banks and nonbanks by individuals tion is seeking to determine if the resources of as it does for companies. Thus, this common First American's banks have in any way been ownership, while significant, did not provide utilized improperly, either directly or indirectly, grounds for any action on the part of the Federal for the benefit of its owners. To date, a total of Reserve Bank of Richmond or any recommenda- fifty-two examiners from all twelve Federal Retion by us for action by the Board. serve Districts with an average experience level During this period, examinations of First Amer- of approximately eight years have expended in ican's banks conducted by the states of Maryland, excess of seven man years on this examination. New York, Virginia, the OCC, and the FDIC also While this examination is ongoing, results to date found no irregularities or relationships between have not disclosed any abuse of the subsidiary First American and BCCI. Consistent with these banks or any lending practices that are widely at examinations, our two inspections of First Amer- variance with other area banks, and no additional ican in 1988 and 1989 found continued compliance evidence of BCCI ownership has been uncovered with application commitments, including finding in First American records. Simply put, no conno linkage between CCAH shareholders and nection between the banks' lending practices and BCCI other than the common shareholder inter- their unauthorized ownership by BCCI has been ests, which were not illegal. uncovered. Besides this ongoing examination process, the Federal Reserve Bank of Richmond has been SUPERVISORY ACTIVITIES SINCE 1990 monitoring compliance with CCAH's February 1, 1991, cease and desist order, which, among In December 1990, a senior member of the Board other things, prohibits transactions between of Governors's staff was permitted to review a CCAH, subsidiary banks of First American, and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

924 Federal Reserve Bulletin • November 1991 BCCI except for capital injections into the banks CONCLUSION and certain clearing transactions in the ordinary course of business. In this role, on March 1,1991, The Federal Reserve Bank of Richmond will the Federal Reserve Bank of Richmond informed continue to keep examiners on site to monitor the the First American Bank of New York that its situation and to continue to review transactions clearing transactions for BCCI should be wound of First American and its subsidiary banks for down and terminated before the end of 1991. As a any possible irregularities connected with BCCI. result of this action, the transactions between We are working with the staff of the Board to BCCI and the First American Bank of New York sever any improper connections between BCCI were liquidated in an orderly manner so that by and the First American banks so that the banks July 5, when BCCI was closed, the correspondent will be free of any tarnish that they may be relationship had been reduced substantially. suffering from their association with BCCI. • Statement by Robert P. Forrestal, President, the United States, as its first office was opened Federal Reserve Bank of Atlanta, before the on September 1, 1981, in San Francisco. Other Committee on Banking, Finance and Urban Af- offices in Los Angeles (February 7, 1983) and fairs, U.S. House of Representatives, September New York (April 16, 1984) were also opened. 13, 1991 BCCI also had an administrative office in Miami that supervised Latin American and Carib- I am pleased to appear today to discuss with you bean activities and provided back office support the role of the Federal Reserve Bank of Atlanta to the three Florida agencies. The administrative in the supervision of the Florida offices of the office was permitted under Florida law and was Bank of Credit and Commerce International supervised by the Florida Department of Bank- (BCCI), and in the supervision of the NBG ing and Finance. Financial Corporation, the parent bank holding The Miami agency managed and coordinated company of the National Bank of Georgia the activities of the Tampa and Boca Raton (NBG). offices, including regulatory reporting to the Fed- My remarks will first address BCCI. Since the eral Reserve. From the opening of the BCCIprevious witnesses have set forth the supervisory Miami office, the Federal Reserve Bank of Atand regulatory framework within which the Fed- lanta carried out its supervisory responsibilities eral Reserve System operates with respect to its pursuant to the International Banking Act of supervision of international branches and agen- 1978. As was the case with other Florida agencies, I will therefore confine my remarks regard- cies under that act, our responsibility as the ing BCCI to the Federal Reserve Bank of Atlan- residual supervisor of the state-licensed agencies ta's supervision and regulation of BCCI's offices was essentially to ensure that the BCCI Florida in Miami, Boca Raton, and Tampa, Florida. offices received timely examinations from the licensing authority, the State of Florida. During this time, our examiners participated in HISTORY OF BCCI IN THE SIXTH these examinations in a limited manner. Our FEDERAL RESERVE DISTRICT participation normally consisted of a one- or two-day visitation of the agency in which we The BCCI-Miami agency opened on March 15, conducted a review of financial reports submitted 1982; the Boca Raton agency opened on Septem- to the Federal Reserve Bank of Atlanta and a ber 12, 1983; and the Tampa agency opened on review of compliance with federal banking laws, June 29, 1984. Each of these offices was licensed including the Bank Secrecy Act. These visitaby the Comptroller's Office of the Department of tions coincided with the state's examinations, Banking and Finance of the State of Florida. and during the visitations our examiners learned These were not the initial entries by BCCI into the state's preliminary findings. After having Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 925 conducted the compliance visit, Reserve Bank peared to be structured to evade reporting examiners wrote a memorandum detailing their requirements. The transactions were detected in findings and the state's preliminary results. Cop- a review of checks and money orders sent from ies of the state's final report of examination and BCCI-Panama to BCCI-Miami for payment. BCCI's responses were forwarded to the appro- The following circumstances prompted exampriate offices within the Federal Reserve System. iners' suspicions. BCCI-Miami frequently re- Irregularities in compliance with the Bank Se- ceived such deposits from BCCI-Panama, concrecy Act were detected at various times during sisting of 300 to 500 individual money orders our visitations and resulted in two criminal refer- totaling $300,000 and more. These money orders rals, which are described below. were all purchased from institutions in the New In 1983, the Treasury Department referred York City area and were issued in bearer form, numerous institutions, including BCCI-Miami, then stamped payable to the order of one account to our attention after having found technical number. No other endorsements ever appeared. deficiencies in their reporting of transactions The purchasers of the money order wrote in their subject to the Financial Recordkeeping Act. The name and address and the date purchased. The deficiencies concerned improper completion of same handwriting appeared for different names forms designed to report individual cash transac- and different addresses. Some money orders tions of $10,000 or more. We found additional bore sequential numbers but were given different technical compliance problems at BCCI-Miami purchase dates. These transactions appeared to in a visit in 1984, in which examiners noted that be designed to facilitate a money-laundering opthe agency had failed to file currency transaction eration. A criminal referral concerning the activforms for three cash transactions of more than ities discovered at the Miami agency was filed $10,000. The agency filed the forms during the with the U.S. Attorney's office in Miami and with examination. Both cases represented isolated the Federal Bureau of Investigation in North technical problems and did not raise suspicions Miami Beach on May 18, 1987. The staff of the of money laundering. In each instance, agency Board of Governors copied the referral to the management took corrective action. In March Internal Revenue Service, Washington, D.C., on 1985, while visiting during the state's examina- June 5, 1987. tion, Reserve Bank examiners detected suspi- In October 1988, the U.S. Attorney in Tampa cious transactions carried out by a customer of issued indictments against BCCI and several BCCI-Miami. After having become aware of the employees for money laundering. In connection transactions, the agency ceased doing business with the indictments, U.S. Customs agents with the customer. To our knowledge, this cus- searched the offices of BCCI in Florida over the tomer has not been implicated in subsequent weekend of October 8. indictments of BCCI. Reserve Bank examiners entered the Miami, After the receipt in August 1985 of the state's Boca Raton, and Tampa agencies to monitor March 1985 final Report of Examination of liquidity and review operations in the week after BCCI-Miami, which noted continued asset prob- the search by law enforcement officials and relems, the Federal Reserve Bank of Atlanta con- mained on site for several weeks until the situaducted an independent examination of the Miami tion stabilized. Our efforts were part of a System office in October 1985. The examination revealed review of all of BCCI's U.S. offices. During this a significant deterioration in asset quality. How- period, activities resulting in the Atlanta Reserve ever, no further evidence of suspicious transac- Bank's second criminal referral were discovered. tions was noted at the time. As a result of the Federal Reserve examiners detected two sepadeterioration in asset quality, the Atlanta Re- rate series of suspicious transactions while on serve Bank requested that BCCI begin quarterly site at BCCI-Boca Raton. Both cases were simreporting on its classified assets. ilar to the scheme detected in Miami in 1987. Our While participating in an April 1987 examina- ability to investigate the suspected schemes was tion of BCCI-Miami, examiners discovered pos- limited because many original records had been sible money laundering transactions that ap- seized by law enforcement authorities in their Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

926 Federal Reserve Bulletin • November 1991 search. The second criminal referral was filed on December 30, 1980, he owned 98.6 percent of November 7, 1988, with the U.S. Attorneys in the total outstanding shares. Because NBG was Tampa and Miami and the FBI. The staff of the a national bank, the Office of the Comptroller of Board of Governors sent a copy of the referral to the Currency (OCC) was its primary regulator. the Internal Revenue Service, Washington, According to information supplied by the OCC, D.C., on November 14, 1988. Pharaon purchased the shares in NBG from Copies of workpapers and documents support- Bert Lance and numerous other individuals, ing the two referrals were provided in response through direct negotiations and through tender to a subpoena from the U.S. Attorney in Miami offers. A change of ownership notice was filed on February 27, 1989. Reserve Bank personnel with the OCC on August 7, 1978. The Reserve have continued to cooperate with law enforce- Bank was not a party to this notice because ment authorities, including the U.S. Attorney, NBG was not yet owned by a holding company. the Federal Bureau of Investigation, and the Pharaon incorporated GRP, Inc., in Georgia in Internal Revenue Service, on matters relating to March 1981, for the purpose of forming a bank BCCI. On June 12, 1989, the Reserve Bank holding company. The Reserve Bank learned of received a second subpoena, from the U.S. At- Pharaon's intent and requested information retorney in Tampa, Florida, requesting all records garding his financial strength and business activrelating to BCCI, the National Bank of Georgia ities. No negative information was received. (NBG), and related companies. All information Pharaon's banking interests first came under was supplied as requested. the jurisdiction of the Federal Reserve Bank of As a result of the System's review of BCCI's Atlanta in July 1981, when GRP, Inc., filed an U.S. operations in 1988, a cease and desist order application to become a bank holding company against BCCI was issued by the Board of Gov- by acquiring an existing bank holding company ernors on June 12, 1989, requiring BCCI to and its bank subsidiary—not NBG—located in strengthen U.S. operations and enforcing com- Cobb County, Georgia. The Reserve Bank appliance with the Bank Secrecy Act. The Reserve proved the application in October 1981, based on Bank conducted an independent examination of the following factors: (1) the positive impact of BCCI-Miami as of September 30, 1989, to assess Pharaon's ownership on his existing banking the condition of the agency and to determine interests, as evidenced by the OCC's recognition compliance with the Board's order. This exami- of the improved condition of NBG, and Pharanation was coordinated with other Reserve on's injection of $3 million to improve its capital; Banks' examinations of BCCI's U.S. offices. and (2) Pharaon's ability to repay debt associated Examiners noted significant asset quality prob- with the acquisition, and provide continued suplems and weakness in credit administration, in- port to the holding company. Pharaon's financial ternal controls, and the audit function. statement showed a net worth in excess of $100 The need for further examination of BCCI's million, not including the bulk of his assets, Florida offices was eliminated when the Tampa which were in Saudi Arabia. Pursuant to the and Boca Raton offices closed in September application, GRP, Inc. acquired the Cobb 1989, and the Miami agency closed in January County bank, and thus, became subject to the 1991. Reserve Bank's supervision. The Federal Reserve Bank of Atlanta's supervision and regulation responsibility for NBG's RESERVE BANKS' SUPERVISION OF NBG parent bank holding company began in November 1981, when Pharaon filed applications to Application History of NBG place his stock in NBG under his existing bank holding company, GRP, Inc., and to acquire two Ghaith Pharaon, a Saudi Arabian national, ac- more banks, in Clayton County, Georgia, and in quired a 60 percent interest in NBG in 1978 and Gwinnett County, Georgia. In evaluating the continued to acquire stock in NBG until, by applications, the Atlanta Reserve Bank again Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 927 considered Reports of Examination, issued by jected cash needs of NBG Financial Corpora- NBG's primary regulator, the OCC, which indi- tion, the "new" bank holding company, would cated that NBG had improved under Pharaon's be met through Pharaon's personal resources. ownership, and again reviewed Pharaon's abil- After considering these factors, the application ity to financially support the bank, by request- was approved. The transactions proposed in the ing a summary of the sources of the most recent applications were consummated in 1983. year's income and a list of annual obligations. In response to the committee's question, let Pharaon again provided evidence of a non- me reiterate that, during this period, there was no Saudi net worth in excess of $100 million, and information or evidence to indicate that Pharaon committed to make an additional capital injec- was not, in fact, the owner of NBG or that his tion of $10 million into NBG. He also offered source of funds for acquisitions differed from not to take dividends from the bank to allow it what he had reported. Pharaon had been the to improve its capital position. The continued owner of record of NBG for several years before improvement in NBG's condition and Phara- the formation of the holding company, and he on's ability and willingness to contribute finan- had established a satisfactory record during this cial support were positive factors leading to the control of the bank, as evidenced by the imapproval recommendation by the Federal Re- provement in the condition of the bank, his serve Bank of Atlanta. The Board of Governors ability to make capital injections, and his ability of the Federal Reserve System approved the to defer dividends. application in March 1982, and the parent hold- In January 1985, the Atlanta Reserve Bank ing company came under the Federal Reserve's recommended that the Board of Governors apsupervision. The OCC remained the primary prove an application filed by NBG to convert an regulator of NBG, while the Federal Reserve existing wholly owned service subsidiary to an Bank of Atlanta directly supervised GRP, Inc., Agreement Corporation, called NBG Interna- NBG's parent company. tional Bank. (An Agreement Corporation is per- The Federal Reserve Bank of Atlanta ap- mitted to conduct business of an international proved the reorganization of NBG's parent nature only, similar to an Edge Act corporation. holding company structure in two subsequent NBG could not own an Edge Act corporation applications, processed in 1982 and 1983. In because Pharaon was not a U.S. citizen.) The connection with the reorganization, GRP, Inc. approval recommendation was based on an evalchanged its name to NBG Financial Corpora- uation of the condition of NBG, using Reports of tion. The applications involved the creation of Examination provided by the OCC, and other two new bank holding companies, and the financial data supplied by the applicant. The merger of Pharaon's Atlanta banking interests Board of Governors approved the application on into a single bank. Pharaon remained the sole February 25, 1985. shareholder of NBG and its parent bank holding The Federal Reserve Bank of Atlanta received companies. The stated purpose of the proposed an application from NBG International Bank in reorganization was for estate and tax planning, 1987 to increase the authorized capital stock in and to take advantage of a Georgia law related the Agreement Corporation. The application was to bank mergers. submitted to correct an inadvertent violation of Before approving these applications, the Re- Regulation K. The corporation increased its capserve Bank again considered the condition of ital stock without prior approval from the Rebanks controlled by Pharaon, reviewing reports serve Bank. The Board of Governors approved of examination from the OCC and the State of the application on April 26, 1989, after NBG Georgia, and considered his ability to provide International Bank took steps to ensure that financial support for NBG. According to the further violations would not occur. On October application, the transactions would not require 23, 1987, the Atlanta Reserve Bank approved an any parties (Pharaon, the bank, or the holding application by NBG International to change its company) to incur additional debt. The pro- name to First American International Bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

928 Federal Reserve Bulletin • November 1991 Inspection-Examination Supervision of CONTACTS WITH OTHER REGULATORS NBG and NBG International Bank In keeping with the regulatory structure pre- The activities and financial condition of NBG's scribed in the Bank Holding Act of 1956 and in parent bank holding company were routinely the International Banking Act of 1978, the Remonitored by the Federal Reserve Bank of At- serve Bank has maintained regular contact with lanta, through inspections of NBG Financial Cor- the State of Florida, and with the Comptroller poration, and examinations of NBG International of the Currency in its routine supervision of Bank, according to the supervision programs BCCI and NBG's parent holding company, adopted by the Board of Governors of the Fed- relying, as directed by statute, on the reports of eral Reserve System. These supervision pro- these other supervisory agencies whenever posgrams were developed pursuant to the authority sible. When concerns regarding the condition of granted in the Bank Holding Company Act of BCCI's Florida agencies arose, the Reserve 1956, and its various amendments, and Section Bank departed from its usual residual supervi- 25(a) of the Federal Reserve Act. sion and conducted an independent examina- The bank holding company supervision pro- tion to directly assess BCCI's condition. The gram focuses on assessing the condition of the Reserve Bank continues to participate in coorbank holding company and determining its ability dinated investigations of BCCI and related parto serve as a source of strength for its subsidiaries. ties within the Federal Reserve System, and is In 1978, annual inspections were mandated for also continuing to cooperate with law enforcecompanies with assets in excess of $300 million. ment agencies in their ongoing investigations of In accordance with this program, the Federal BCCI and NBG. Reserve Bank of Atlanta inspected NBG's holding company once each year from 1983 through 1986. Each inspection considered the ability of the bank holding company to support its bank subsid- SUMMARY iaries and found the contribution of the sole indirect shareholder, Ghaith Pharaon, to be positive. In summary, the Federal Reserve Bank of At- Never in the course of our supervision of the lanta supervised BCCI's and NBG's activities in parent holding company, including reviews of the the Sixth District as directed by the International Examination Reports of the primary regulator, the Banking Act of 1978 and the Bank Holding OCC, did the Federal Reserve Bank of Atlanta Company Act of 1956. We made criminal referdiscover any information indicating BCCI's own- rals of suspicious activity and increased our ership of NBG Financial Corporation. on-site presence as warranted. With respect to NBG International Bank (now First American NBG and First American, we evaluated on sev- International Bank) has been examined annually eral occasions the owner of record, Pharaon, by the Atlanta Reserve Bank since its inception. and had every reason to believe that he was a NBG Financial Corporation was acquired by person of substance financially and that he was First American Bankshares, Inc., Washington, acting on his own behalf. Throughout this period, D.C., on August 19, 1987. The acquisition appli- we have cooperated with law enforcement agencation was processed by the Federal Reserve cies in every way possible and, even at the Bank of Richmond, the responsible Reserve present time, are contributing an examiner to the Bank for First American Bankshares, Inc. U.S. Attorney's ongoing effort in Atlanta. • Statement by Thomas D. Thomson, Executive I am pleased to appear before this committee to Vice President, Federal Reserve Bank of provide information on the Federal Reserve San Francisco, before the Committee on Bank- Bank of San Francisco's supervision and regulaing, Finance and Urban Affairs, U.S. House of tion of Bank of Credit and Commerce Interna- Representatives, September 13, 1991 tional (BCCI) and related entities. My name is Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 929 Thomas D. Thomson. I have overall executive its subsidiary, Hong Kong Metropolitan Bank responsibility for the San Francisco Reserve Limited, opened an agency in San Francisco Bank's supervision and regulation activities, licensed by the State of California. It was conamong other functions, and, therefore, the super- verted to a direct office of BCCI on June 1, 1985, vision and regulation of BCCI in the Twelfth and its name changed to reflect its ownership Federal Reserve District. President Parry is un- status. BCCI established an agency in Los able to deliver this testimony today because he is Angeles on February 7, 1983. traveling in Asia to keep a long-standing commit- The Federal Reserve Bank of San Francisco ment to meet with other Pacific Rim central has been involved directly in the examinations bankers. of both the San Francisco and Los Angeles Overall Federal Reserve supervision of BCCI agencies since their inception as a result of an has been described by other representatives of arrangement with the California State Banking the Federal Reserve System. My comments will Department. This arrangement was worked out fall into two parts: first, the Federal Reserve with the state under the provisions of the Inter- Bank of San Francisco's participation in the national Banking Act of 1978, which, at the supervision and regulation of BCCI, and second, federal level, gave the Federal Reserve System our role in the regulation of Independence Bank supervisory responsibilities for monitoring the in Encino, California. consolidated operations of foreign banks in the United States, while primary supervisory re- BANK OF CREDIT AND COMMERCE sponsibilities for each branch or agency re- INTERNATIONAL mained with its chartering authority. Under this arrangement, our Reserve Bank shared exami- Twelfth District Supervision and nation responsibilities with the California State Regulation Banking Department. The oversight efforts of this Reserve Bank The San Francisco Reserve Bank's initial super- intensified after notification of the BCCI invisory contact with BCCI was indirect, through dictments in October 1988 in Tampa, Florida. the initial acquisition by Bank of America of 2.5 Our examiners participated in special examinapercent of BCCI's outstanding shares on Decem- tions that were conducted in conjunction with ber 21, 1973. Bank of America was a founding investigations of BCCI's money-laundering shareholder and, over the next three-year period, activities. Special examinations were conincreased its equity interest in BCCI to 45.0 ducted at both the Los Angeles and San Franpercent. In 1978, Bank of America began to cisco agencies of BCCI beginning on October withdraw from its investment in BCCI and com- 11, 1988. These examinations focused on a pleted its divestment on June 30, 1980. review of the agencies' policies and procedures This Reserve Bank reviewed Bank of Ameri- to ensure compliance with the Bank Secrecy ca's investment in BCCI annually through the Act. Currency transactions that occurred examination of the Edge Act corporation that within the previous year were reviewed for held Bank of America's interest in BCCI. Be- compliance with currency reporting requirecause it was not a subsidiary, information re- ments. quired to be made available to our examiners was No evidence warranting the filing of a criminal limited to financial data such as balance sheets referral was discovered as a result of the special and income statements and other documents examinations of BCCI's Los Angeles and San such as Bank of America's internal investment Francisco agencies in 1988. However, examiners files on BCCI. Because it was not a controlled cited BCCI for asset-quality problems and lack of subsidiary, no on-site examination was con- adequate credit documentation, internal control ducted. Our examinations of Bank of America's deficiencies, errors in regulatory reporting, and investment in BCCI during this period did not inadequate record-keeping procedures. BCCI's disclose any suspicious or criminal activities. management was criticized for lax supervision. BCCI's presence in the Twelfth Federal Re- Violations of both state and federal laws and serve District began on September 1, 1981, when regulations were noted; however, they were Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

930 Federal Reserve Bulletin • November 1991 technical in nature and related principally to visory efforts, we conducted an examination of deposit-taking activities. the Los Angeles agency. Besides the standard As a result of these findings, our Reserve Bank procedures conducted in a full-scope examinaparticipated actively in drafting a Memorandum tion, particular attention was devoted to testing of Understanding, which was issued to BCCI by compliance with state and federal laws and regthe California State Banking Department on Feb- ulations, including the Bank Secrecy Act. Examruary 14, 1989. Our Reserve Bank also partici- iners also reviewed the loans transferred from pated in drafting a cease and desist order, which the Miami and San Francisco agencies in Decemaddressed these and other deficiencies in BCCI ber 1990. As with other recent examinations, the found by other Reserve Banks, which was issued results of this examination disclosed weaknesses to BCCI by the Federal Reserve Board on June in asset quality, internal controls, and manage- 12,1989. The memorandum of understanding and ment supervision. the cease and desist order required that BCCI On July 5, 1991, the State of California closed improve asset quality and credit procedures, the Los Angeles agency in conjunction with the correct internal control deficiencies, and develop coordinated closure of BCCI's offices worldprocedures to ensure compliance with all state wide. On that date, the state assumed responsiand federal laws and regulations, including the bility for the disposition of the assets of the Bank Secrecy Act. agency. At the time of its closure, all funding of Adverse publicity surrounding the filing of the the agency was from either its head office or indictments against BCCI caused a moderate BCCI affiliates. Accordingly, no U.S. depositors shrinkage in assets and liabilities at both the San or institutions are likely to suffer depository Francisco and Los Angeles agencies, as certain losses from the closure of the California office. customers elected to curtail their business rela- Our Reserve Bank has maintained a continutionship with BCCI. Also as a result of these ous presence at the Los Angeles office since the indictments, the California State Banking De- start of the February 1991 examination. Our partment required both agencies to maintain a examiners are still on site and are reviewing the more restrictive ratio of assets to liabilities and to agency's records. We are continuing to cooperrequire a higher-than-normal level of assets ate with the investigations now under way. Relpledged to the State of California for faithful evant information is being shared with appropriperformance. The result of these more restrictive ate federal and state judicial authorities, other requirements was to increase the costs of oper- regulators, and the Congress. ating these offices. In light of the above developments, BCCI management closed the San Francisco agency on December 1, 1990, and transferred the assets to INDEPENDENCE BANK the Los Angeles agency. Also in December 1990, BCCI management transferred the assets of the Independence Bank is a state-chartered non- Miami office to Los Angeles when the Miami member bank and is not owned by a bank holding agency was closed by the State of Florida. In company. Accordingly, the Federal Deposit Inboth cases, the assets that were transferred were surance Corporation (FDIC) and the California principally loans to small businesses and trade- State Banking Department are the bank's prirelated financing. mary regulators and supervisors. Our relation- In terms of asset size, the Los Angeles office ship has been limited essentially to an application reached its zenith at year-end 1990, after the that was made in 1986 to form a bank holding transfer of assets was complete. On December company. We have not examined Independence 31, 1990, the Los Angeles agency reported total Bank, nor have we participated in examinations loans of $142.9 million and total assets of $190.4 of the bank by the California State Banking million. Department or the FDIC. Because it is a non- On February 19, 1991, in conjunction with the member bank, its acquisition by Gaith Pharaon in Federal Reserve Board staff's coordinated super- November 1985 was reviewed by the FDIC and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 931 the California State Banking Department, not the San Francisco Reserve Bank staff actions, Federal Reserve. namely requests for these commitments and discussions with the applicant of the financial issues raised by its proposal, apparently discouraged Bank Holding Company Application the applicant from proceeding with its proposal to form a holding company over Independence The San Francisco Reserve Bank did, however, Bank. The applicant, after these discussions and have discussions with the management of Inde- requests for commitments, never submitted the pendence Bank about the possibility of forming a information and the commitments necessary to bank holding company because bank holding complete the application for acceptance, procompany formations require Federal Reserve cessing, and action by the Federal Reserve Sysapproval. tem. The Reserve Bank returned the application On January 8, 1986, we received a draft appli- to the applicant on December 5, 1986, as a result cation to form a multitiered holding company of its failure to provide the various required structure over Independence Bank. This applica- commitments. tion raised significant concerns related to the Because the applicant failed to proceed with proposed bank holding company's high debt the application, it never reached the stage at level and low consolidated capital ratios. which the Federal Reserve System would have The draft application reflected proposed debt- conducted background investigations of princito-equity and consolidated primary capital ratios pals of the applicant and formed conclusions that did not meet Federal Reserve System guide- concerning management of the applicant and lines. The applicant was informed that additional Independence Bank. The Reserve Bank ceased equity would be needed if the proposed holding having any direct supervisory or regulatory role company was to maintain an adequate tangible with Independence Bank following the return of primary capital ratio. the application. On August 6, 1986, the Federal Reserve Bank of San Francisco received the final application to SUMMARY AND CONCLUSION form a multitiered holding company that would own Independence Bank. In a subsequent ex- In summary, our efforts to determine the ownerchange of correspondence, we requested certain ship of Independence Bank were limited, as we commitments from the applicant. had no direct supervisory or regulatory role with The applicant was requested to commit itself the bank other than its application to form a bank to achieve and maintain minimum capital ratios holding company. The application never reached meeting Federal Reserve System guidelines at the stage at which the Federal Reserve System both the parent company and Independence would have investigated and formed conclusions Bank. It also was requested to declare that about the management and ownership structure Independence Bank, if acquired by the applicant, of Independence Bank. would not engage in nonbanking activities pro- The Federal Reserve Bank of San Francisco's hibited to bank holding companies and national supervision and regulation of BCCI was concenbanks by federal law but permitted to state- trated on our on-site examination program chartered banks by California law, such as real adopted in cooperation with the California State estate investment and development. The appli- Banking Department, our role in the drafting of cant indicated to the San Francisco Reserve enforcement actions issued against BCCI, our Bank's staff that it did not want to make this intensified oversight efforts in light of money commitment because it limited the powers and laundering allegations in 1988, and our continurights of Independence Bank as a state chartered ous on-site presence at the Los Angeles agency bank. since February 1991. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

932 Federal Reserve Bulletin • November 1991 Statement by John P. LaWare, Member, Board dropped back to an estimated 550, involving an of Governors of the Federal Reserve System, estimated $60 billion of acquired bank assets. before the Committee on Banking, Finance and The number of mergers involving large bank Urban Affairs, U.S. House of Representatives, holding companies also increased. In 1980, there September 24, 1991 were no mergers or acquisitions of commercial banking organizations in which both parties had I am pleased to appear before this committee on more than $1 billion in total deposits. The years behalf of the Federal Reserve Board to discuss 1985 through 1990 averaged 13 such transactions issues related to mergers among U.S. banking per year. organizations. The last ten years have seen con- Another perspective is provided by the fact siderable consolidation of our banking system, a that the total number of U.S. banking organizaprocess that probably will continue for some tions declined steadily throughout the 1980s. In time. And while banking consolidation is in many 1980, there were 12,679 banking organizations ways a natural response to the evolution of the (including 14,737 banks); by 1985, 11,377; and in overall banking environment, the significant 1990, about 9,688 (including 12,526 banks), a 24 changes that we have observed do raise a number percent decline in organizations and a 15 percent of public policy questions and concerns. In the decline in numbers of banks from 1980. These Board's view, the primary objectives of public trends have been accompanied by an increase in policy in this area should be to help manage the the share of total banking assets controlled by the evolution of the banking industry in ways that largest banking organizations. For example, the preserve the benefits of competition for the con- proportion of domestic banking assets accounted sumers of banking services and to ensure a safe, for by the 100 largest banking organizations went sound, and profitable banking system. My state- from 48 percent in 1980, to 55 percent in 1985, to ment today will focus on how, within the context 62 percent at year-end 1990. of existing law, the Federal Reserve is pursuing The trends that I have just described must be these goals and will review the potential eco- placed in proper perspective because, taken by nomic effects of bank mergers. themselves, they hide some of the key dynamics of the banking industry. For example, although a major reason for the decline in the MERGER TRENDS IN THE 1990S number of banking organizations over the 1980s was the fact that almost 1,100 banks failed, the It is useful to begin a discussion of the public decline in the total number of banks was offset policy and other implications of bank mergers considerably by the fact that over that decade with a brief description of recent bank consoli- about 2,700 new banks were formed. Similarly, dation trends. The statistical tables in appendix while more than 6,600 bank branches were A of my statement provide some detail that may closed during the 1980s, the same period saw be of interest to the committee. 1 the opening of well over 16,000 new branches. From a variety of perspectives the pace of Perhaps even more significant, the total number bank mergers has accelerated over the last dec- of banking offices increased sharply, from about ade. For example, excluding acquisitions of 48,500 in 1980 to almost 60,000 in 1990, a 23 failed or failing banks by healthy banks, in 1980 percent rise. there were 188 bank mergers involving about Data on the nationwide concentration of U.S. $9 billion in acquired assets; by 1987 the annual banking assets must also be viewed in perspecnumber and the dollar value of mergers peaked tive. None of the increase in such concentration for the decade at 710 mergers and $131 billion of among the 100 largest banking organizations has acquired assets. In 1989, the number of mergers occurred among the very largest—the 10 largest—banks. Rather, the large regional banks have accounted for all of the increase in the 1. The attachments to this statement are available upon concentration ratio. Of course, if the recently request from Publications Services, Board of Governors of announced mergers of some of our largest banks the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 933 are implemented, concentration among the top ber bank. The Board must evaluate the likely 10 will increase. effects of such mergers on competition, the finan- Given the Board's statutory responsibility to cial and managerial resources and future prosensure competitive banking markets, it is critical pects of the firms involved, the convenience and to understand that these nationwide concentra- needs of the communities to be served, and tion statistics are not the important concept for Community Reinvestment Act requirements. assessing competitive effects. Virtually all ob- This section of my statement briefly discusses servers agree that the relevant issue is competi- the methodology that the Board uses in assessing tion in local banking markets. And the facts are a proposed merger. In light of the committee's that, over the last decade, the average proportion specific questions, emphasis is placed on comof bank deposits accounted for by the three petitive factors. In addition, more detailed dislargest firms in urban markets has increased only cussion of the legal and economic bases for the 1 percentage point and has remained virtually Board's assessment of competition is found in unchanged in rural markets. These ratios have appendix B. actually declined in both types of markets since the mid-1970s. The apparent contradiction between increased concentration ratios nationally Competitive Criteria and virtually unchanged ratios locally can be explained by several factors. As my statement In considering the competitive effects of a prowill describe in more detail, key considerations posed bank acquisition, the Board is required to include, first, the fact that most mergers are apply the same competitive standards as those between noncompeting banks and, second, the contained in the Sherman and Clayton Antitrust fact that those mergers between entities in the acts. The Bank Holding Company (BHC) Act same market have faced new entrants and anti- and the Bank Merger Act do contain a special trust constraints and have found that smaller provision, applicable primarily in troubled bank bank competitors effectively limit their ability to cases, that permits the Board to balance public increase market share. benefits from proposed mergers against potential Overall, then, the picture that emerges is that adverse competitive effects. of a dynamic U.S. banking structure, with the The Board's analysis of competition begins number of banking offices increasing sharply and with defining the geographic areas that are with their location extremely sensitive to the likely to be affected by a merger. Under procedemands of consumers. In such an environment, dures established by the Board, these areas are it is potentially very misleading to make broad defined by staff members at the local Reserve generalizations without looking more deeply into Bank in whose District the merger would occur, what lies below the surface. In part, for the same with oversight by staff members at the Board. reasons that make generalizations difficult, the To ensure that market definition criteria remain Federal Reserve devotes considerable care and current, and in an effort to better understand substantial resources to analyzing individual the dynamics of the banking industry, the merger applications. Board has recently sponsored several surveys, including the 1988 National Survey of Small Business Finances, the national Survey of Con- FEDERAL RESERVE METHODOLOGY FOR sumer Finances, and telephone surveys in spe- ANALYZING PROPOSED BANK MERGERS cific merger cases, to assist it in defining geographic markets in banking. These surveys and The Federal Reserve Board is required by the other evidence continue to suggest that small Bank Holding Company Act (1956) and the Bank businesses and consumers tend to obtain their Merger Act (1960) to assess the effects when financial services in their local area. This local (1) a holding company acquires a bank or merges geographic market definition would, of course, with another holding company or (2) the bank be less important for the financial services resulting from a merger is a state-chartered mem- obtained by large businesses. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

934 Federal Reserve Bulletin • November 1991 With this basic local market orientation of other firms may enter the market as a result of consumers and small businesses in mind, the the merger, may be regarded as a significant staff constructs a local market Herfindahl- procompetitive factor. It is most relevant in Hirschman index (HHI), which is widely ac- markets that are attractive for entry and in which cepted as a sensitive measure of market concen- barriers to entry, legal or otherwise, are low. tration to conduct a preliminary screen of a Thus, for example, potential competition is of proposed merger. The merger would not be re- relatively little importance in markets in which garded as anticompetitive if the HHI and the entry via intra- or interstate branching is severely change in that index do not exceed the criteria in restricted, or in markets in which branching is the Justice Department's merger guidelines for restricted and it may be difficult for investors to banking. However, although the HHI is an im- raise the minimum capital needed to start a bank. portant indicator of competition, it is not a com- For potential competition to apply, it will generprehensive one. Besides statistics on bank con- ally be necessary for there to be potential acquicentration, economic theory and evidence sition targets as well as meaningful potential suggest that other factors, such as local market entrants. This factor is most likely to be relevant services available from nonbank providers of in urban markets. financial services and potential competition, may Deposits at thrift institutions are now typically have important influences on bank behavior. accorded 50 percent weight in calculating statis- These other factors have become increasingly tical measures of the impact of a merger on important as a result of many recent procompet- market structure for the Board's analysis of itive changes in the financial sector. Thus, if the competition. In some instances, however, a level and change in the HHI are within the higher percentage may be included if thrift insti- Justice Department's guidelines, there is a pre- tutions in the relevant market look very much sumption that the merger is acceptable, but if like banks, as indicated by the substantial exerthey are not, a more thorough economic analysis cise of their transactions account, commercial is required. lending, and consumer lending powers. Because the importance of the other factors Competition from other depository and nonthat may influence competition often varies from bank financial institutions may also be given case to case and market to market, an in-depth weight if such entities clearly provide substitutes economic analysis of competition is required in for the basic banking services used by most each of those merger proposals in which the consumers and small businesses. In this context, Justice Department HHI guidelines are ex- credit unions and finance companies may be ceeded. To conduct such an analysis of compe- particularly important. tition, the Board uses information from its own The competitive significance of the target firm major national surveys noted above; from tele- can be a factor in some cases. For example, if the phone surveys of consumers and small busi- bank being acquired is not a reasonably active nesses in the market being studied; from on-site competitor in a market, its market share might be investigations by staff; and from various standard given a smaller weight in the analysis of compedatabases with data on market income, popula- tition than otherwise. tion, deposits, and other variables. These data, Adverse structural effects may be offset somealong with results of general empirical research what if the firm to be acquired is located in a by Federal Reserve System staff members, aca- declining market. This factor would apply when a demics, and others, are used to assess the impor- weak or declining market is clearly a fundamentance of various factors that may affect competi- tal and long-term trend, and there are indications tion. To provide the committee with an that exit by merger would be appropriate because indication of the range of "mitigating" factors exit by closing offices is not desirable and shrinkthat the Board may consider in evaluating com- age would lead to diseconomies of scale. This petition in local markets, I shall briefly outline factor is most likely to be relevant in rural these considerations. markets. Potential competition, or the possibility that Competitive issues may be reduced in impor- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 935 tance if the bank to be acquired has failed or is rial resources from the needs of its existing about to fail. In such a case, it may be desirable subsidiary banks. to allow some adverse competitive effects if this The Board has long stressed the importance of means that banking services will continue to be capital in reviewing applications to expand. It is made available to local customers rather than the Board's policy that acquisitions or mergers be severely restricted or perhaps eliminated. should not result in a diminution of the overall A very high level of the HHI could raise capital strength of the combined organizations. questions about the competitive effects of a For this reason, the Board has generally exmerger even if the change in the HHI is permis- pected that significant acquisitions or mergers be sible within the Justice Department criteria. This funded in whole or in part by the issuance of factor would be given additional weight if there additional capital. has been a clear trend toward increasing concen- In this connection, the Board has held that tration in the market. banking organizations undertaking significant Finally, factors unique to a market or firm growth, either internally or through acquisitions would be considered if they are relevant to the or mergers, should operate with capital ratios analysis of competition. These factors might in- well in excess of the supervisory minimums, clude evidence on the nature and degree of without significant reliance on intangible assets. competition in a market, information on pricing The Board has indicated that this cushion should behavior, and the quality of services provided. be at least 100 to 200 basis points above the Some merger applications are approved only minimum ratios; still larger margins could be after the applicant proposes, or agrees to, the called for, depending on the actual financial divestiture of offices in local markets when the condition of the organization and the risks being merger would otherwise violate Justice Depart- undertaken. This emphasis on capital underlies ment guidelines and cannot be justified using any the Board's strong preference that expansionary of the criteria that I have just discussed. We applications be substantially financed from the believe that these divestiture actions have de- proceeds of equity. terred many banking organizations from applying Applications from organizations that do not for mergers that would be acceptable to the meet these capital standards would not be ap- Board only with divestitures that the applicant is proved unless the organization has under way not willing to make. a capital augmentation program and can demonstrate the ability to raise additional tier 1 Safety and Soundness Criteria (essentially equity) capital contemporaneously with the acquisition. As noted, additional In acting upon merger applications, the Board is capital may also be required to correct any required to consider financial and managerial weaknesses in the bank or company to be considerations. In doing so, the Board's goal is to acquired. This public policy serves to protect promote and protect the safety and soundness of the existing satisfactory financial strength of the the banking system and to encourage prudent organization and to prevent an undesirable deacquisition behavior by applicant banking orga- cline in capital adequacy caused by the acquinizations. sition of significant additional assets. It also can The Board expects that holding company par- serve to moderate the rate of expansion and ents will be a source of strength to their bank enable the organization to absorb the additional subsidiaries. In doing so, the Board generally risks. requires that the holding company applicant and These general principles apply regardless of its subsidiaries be in at least overall satisfactory the type of acquisition—banking or nonbanking. condition and that any weaknesses be addressed The financial and managerial analysis of the before Board action on a proposal. The holding applicant includes an evaluation of the existing company applicant must be able to demonstrate bank, nonbank subsidiaries, the parent company, the ability to make the proposed acquisition the consolidated organization, and the entity to without unduly diverting financial and manage- be acquired. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

936 Federal Reserve Bulletin • November 1991 Community Reinvestment Act Criteria helping to meet the community's credit needs through products that are consistent with the The Community Reinvestment Act (CRA) per- institution's overall business orientation. formance of banking organizations that seek the The Board generally does not accept promises Board's approval to acquire a bank or a thrift for future action in this area as a substitute for a institution is a major component of the "conve- demonstrated record of performance. Instead, nience and needs" criteria that must be consid- the Board has accepted commitments for future ered by the Board. In making its judgments, the action as a means of addressing areas of weak- Board pays particular attention to CRA exami- ness in an otherwise satisfactory record. When nation findings. In addition, any comments re- commitments have been accepted, the Board ceived from the public regarding an applicant's monitors progress in implementing the proposed CRA performance become part of the official actions, both through reports and through the record, and such comments are reviewed care- application process. fully. Indeed, the Board has just announced its intention to hold public meetings in various loca- Protection of the Deposit Insurance Fund tions on the CRA record of the banks involved in a major merger application. In recent years, many bank merger and acquisi- Banks supervised by the Federal Reserve Sys- tion cases have involved failed or failing banks. tem—regardless of the size or the geographic By far the most common resolution method used scope of a bank's operations—are examined for by the FDIC has been the so-called purchase and CRA purposes at least every eighteen to twenty- assumption procedure. Under this procedure, a four months. Banking organizations with identi- healthy banking organization assumes all or a fied weaknesses in their consumer compliance part of the assets and liabilities of a failed or are examined even more frequently. Our practice failing bank. The Federal Reserve favors conis to review the performance of banks with large tinuing to give the FDIC some flexibility in how intrastate branching systems by examining a it resolves such banks. sample of branches, which consists of all major The need for flexibility derives from our conbranches plus one-tenth of all small branches cern about the possibility of systemic risk assoselected on a rotating basis. This type of system ciated with a failing bank. Systemic risk refers to probably could be used for large, interstate the chance that financial difficulties at one bank, branch systems as well if the Congress agrees to or possibly a small number of banks, may spill permit interstate branching. Some adjustments over to many more banks and perhaps to the may be necessary, however, to ensure that the entire financial system. In principle, systemic CRA examination process continues to work risk could develop if several smaller or regional well for banking organizations that span several banks were to fail. However, in practice sysstates. temic risk is more likely to be associated with The Board expects that banking organizations failures of large institutions. In any event, in will have policies and procedures in place and some individual cases the prevention of systemic working well to address and implement their risk can be an important factor in assessing a CRA responsibilities before Board consideration proposed merger or acquisition. of bank expansion proposals. These efforts must That systemic risk is most likely in cases of include methods for ascertaining the credit needs financial distress at large institutions raises a of the entire service area, including low- and public policy concern with mergers that create moderate-income neighborhoods; credit prod- large banking organizations. Clearly, it would be ucts designed to meet those identified needs; unwise to approve mergers that significantly inoutreach and marketing efforts throughout this crease systemic risk. For this reason, in any service area; involvement by senior management merger application that comes before it, the and the institution's board of directors in estab- Board places great weight on the capital ratio and lishing and supervising the implementation of on other indicators of its financial strength that I those efforts; and a record of performance in have already discussed. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 937 However, there is an additional point that Effects of Mergers on Locally Limited should be stressed. The logical connection be- Customers tween bank merger policy and the potential for systemic risk emphasizes the interdependence The current merger wave in the banking industry between our discussion today and the need for is likely to have only modest effects on the comprehensive reform of our system of banking availability of services to consumers and small and financial regulation. If the United States is businesses that rely primarily on local providers to have a safe, sound, competitive, and profit- for their financial services. There are two reasons able banking system, then the Board strongly for this: (1) to date, most mergers have not been urges that the Congress pass a broad reform between banks operating in the same local bankpackage along the lines of that proposed by the ing markets and (2) the effects of intramarket Treasury and supported by the Board. Such mergers can be, and thus far have been, limited legislation would call for strong capital, prompt by antitrust constraints on such mergers. corrective action policies to deal with finan- Even in those places in which in-market mergcially distressed depositories, frequent on-site ers have occurred, the effect on competition has, examinations, increased opportunities for geo- on average, not been substantial. This situation, graphic diversification of risk and reduced costs of course, does not mean that no consumers have through full interstate branching, and a broader ever been harmed by mergers. No policy can range of permissible activities for financial ser- guarantee that result. But it does suggest that vices holding companies with well-capitalized increases in local market concentration have bank subsidiaries. By increasing the safety and been limited by the Board's application of antisoundness of our banking system, these reforms trust standards to within-market merger applicawould lessen the likelihood of a major systemic tions. In addition, the Board's policies have threat and would allow our banking system to almost certainly discouraged some potential adjust to evolving market and technological bank mergers before an application was ever realities. But even with these reforms, the filed. Moreover, considerable intramarket con- Board believes that it would be a mistake to solidation could occur without significant antieliminate entirely the ability of the authorities competitive effects. Many urban markets could to act to protect the economy by assisting in the see a relatively large number of in-market mergacquisition of a large failing bank in such a way ers before antitrust guidelines would be violated. as to protect all depositors. We agree that this Recent legislative changes have made thrift instiapproach has been overused in the past and tutions more important competitors for banking requires some constraints. We urge, however, services, and this competition has helped to that the authorities' hands not be tied as they reduce concerns about anticompetitive effects would be under H.R.6. from intramarket bank mergers. Although, as I shall be discussing shortly, small banks remain viable competitors in markets after larger bank mergers, some research suggests that large banks may adopt new banking POTENTIAL IMPLICATIONS OF BANK technologies—such as automated teller machines MERGERS and bank credit cards—more rapidly than small banks. Thus, bank mergers may enhance con- The increased rate of bank mergers has raised sumer convenience. On the other hand, in-marseveral concerns regarding the potential effects ket bank mergers often lead to some branch of banking consolidation on consumers whose closings, raising concerns that consumer convedemands for banking services are primarily nience may be harmed. Indeed, one of the factors local in nature, on the performance of the reviewed in a CRA examination is the bank's merged banks (including prices paid by consum- record of opening and closing offices. However, ers at those banks), and on the overall structure as I pointed out earlier, there has been a substanof the U.S. banking industry. tial increase in the number of bank offices in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

938 Federal Reserve Bulletin • November 1991 United States in recent years. More important, charge their loan and deposit customers. For the there is no reason to suspect that the market most part, such studies have found that banks factors that have led to this increase in the located in relatively concentrated markets tend number of offices have changed. Indeed, the to charge higher rates for certain types of loans, abolition of constraints on interstate branches particularly small business loans, and tend to would greatly facilitate this process. That is, if offer lower interest rates on certain types of merging banks should close branches, the open- deposits, particularly transactions accounts, than ing of branches by existing competitors or by do banks in less concentrated markets. These new entrants to the market is, based on past studies tend to be clearer in terms of their experience, likely to occur, and would become implications for merger policy because they sugeven more so with full interstate branching. If gest that mergers resulting in relatively high consumers demand locational convenience, levels of local banking market concentration can banks of all sizes will need to be responsive if adversely affect local bank customers. That is, they expect to remain viable. these studies support the need to maintain antitrust constraints if locally limited bank customers Effects of Mergers on Bank Performance are to continue to receive competitively priced banking services. Federal Reserve System staff members have Whether or not specific past mergers have conducted several studies over many years on resulted in higher loan rates, lower deposit rates, the effects of bank mergers and acquisitions. or in other ways disadvantaged banking custom- Some of these studies have focused on the effect ers is very much a different question. Studies of of mergers on bank profits and prices, while the competitive impact of individual bank mergothers have looked at the potential for cost ers, in essence, focus on the issue of whether savings and efficiencies derived from mergers. At regulatory authorities have been successful in the committee's request, a detailed review of the applying antitrust constraints. studies appears in appendix C. In general, such studies have been rare, mak- Of those studies concerned with profits and ing generalizations hazardous. Of those studies prices, some have looked at the effects of specific that have been conducted, however, no evidence mergers, but a majority have approached this of significant anticompetitive effects attributable issue more indirectly by examining how bank to past mergers has been found. One such effort profits and prices differ across banking markets. examined the impact of the merger of two large Each type of study is relevant to an assessment in-state banks on two types of deposit rates and of the impact of bank mergers on performance. found no adverse effects on bank customers. Studies of differences in bank profitability Other studies using different approaches have across markets with varying degrees of concen- also failed to find anticompetitive effects. Thus, it tration represent the oldest type of study relevant appears that while significant mergers, particuto the issue. Typically, such studies have found larly intramarket mergers that directly affect that banks operating in more concentrated mar- market concentration, can in principle adversely kets exhibit somewhat higher profits than do affect banking customers, there is no direct evibanks in less concentrated markets. These higher dence to date that those mergers passing regulaprofits may reflect the lesser degree of competi- tory scrutiny have, in fact, done so. tion in more concentrated markets. Many people A related issue relevant to the effect of mergers have argued, however, that these profits are is the prospect that, through merger, greater simply an indication of the greater efficiency and bank efficiency can be achieved, thus yielding a lower costs of the largest firms in such markets. healthier, more competitive banking firm. As in Because of this fundamental disagreement, there the case of the bank pricing studies, studies of is no consensus concerning the meaning of this the effect of mergers on bank efficiency may be type of study for merger policy. divided into those that do and those that do not Other studies have looked across banking mar- look at the effects of specific mergers. kets for differences in the prices that banks A large number of studies have sought to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 939 determine whether larger banking organizations may simply reflect differences in the level of exhibit lower average costs than do smaller or- services offered to the public, such results nevganizations. In general, these studies of "scale ertheless suggest potential gains from acquisieconomies" find that cost advantages of large tions of inefficient firms by efficient ones. Indeed, firms either do not exist or are quite small, and as banking becomes even more competitive, most do not find scale economies to exist beyond such results indicate that it may become increasthe range of a small- to medium-sized bank. ingly common for relatively efficient banks to Another strand of research has attempted to take over relatively inefficient ones and convert discover whether there are important differences them into viable, low-cost competitors. Surely in the efficiency with which banks use inputs to consumers of financial services could only be produce a given level of services. These studies, better off if such a future were to be realized and which essentially focus on management skills, competitive markets were to be maintained. suggest that some banks, both large and small, Once again, however, I would point out and are just a lot better than others at using their emphasize the connections between our discusinputs, such as labor and capital, in a productive sion here today and the need for fundamental way. Indeed, estimates of these so-called cost reform of our banking and financial regulatory inefficiencies suggest that management skills system. Achievement of the scenario that I have dominate any benefits from economies of scale. just described depends heavily upon creating an In addition, there is some evidence that these environment not only in which banks can comdifferences in management efficiencies play a role pete more effectively but also in which the likein the incidence of bank failure. More than 50 lihood that the deposit insurance funds will suffer percent of the bank failures in the 1980s are losses is greatly reduced, such as would occur estimated to have come from the highest (nonin- with higher capital, more frequent examinations, terest) cost quartile of banks, while less than 10 and prompt corrective action. Such reforms percent are estimated to have occurred in the would put even more pressure on inefficient lowest cost quartile. banks to achieve cost economies. In this regard, In the past couple of years, several researchers I would emphasize one more key point. Care have sought to determine whether individual past should be taken to ensure that the bank reform mergers have resulted in cost savings. Typically, package does not impose costly new regulations such studies examine the changes in noninterest on banks that would substantially offset the cost expenses observed before and after the merger savings that result from other reform actions. A and, in some cases, compare them to the same competitive, safe, and sound banking system changes observed concurrently in banks that did must also be one in which banks can make a not participate in mergers. With one or two profit. exceptions, these studies generally have not found evidence of substantial cost savings beyond those associated with shrinkage of the firms Effects of Mergers on Banking Structure in question after merger. However, the previously noted evidence indi- Ultimately, the effects of bank mergers on concating substantial differences in the relative effi- sumer welfare depend to a substantial extent on ciency of banks suggests that substantial cost the resulting degree of concentration in local savings are theoretically possible for many banking markets. As I have already indicated, banks. For example, a study recently completed one of the tasks of public policy is to apply the at the Board has estimated that annual cost antitrust standards in such a way as to maintain savings of about $17 billion would result if the competitive banking markets. Because it appears lowest-cost banks in the country were to acquire that anticompetitive concerns are normally most the highest-cost banks and if the costs of the serious in local banking markets, this section acquired banking organizations were subse- provides somewhat more detail on the implicaquently reduced to the level of the acquiring tions of bank mergers for local market concenbanks. Although some of these cost differences tration. In addition, because the committee's Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

940 Federal Reserve Bulletin • November 1991 letter of invitation asked for some ideas on what well as, or better than, their large counterparts, the U.S. banking industry might look like in the even in the banking markets dominated by the twenty-first century, I shall briefly address this major banks. inherently highly speculative issue. Finally, administration of the antitrust laws Metropolitan statistical areas (MSAs) and non- has almost surely played a role. At a minimum, MSA counties are often used as proxies for urban banking organizations have been deterred from and rural banking markets. The average three- proposing seriously anticompetitive mergers. firm concentration ratio for urban markets so And in some cases, to obtain merger approval, measured increased only 1 percentage point be- banks have agreed to divest banking assets and tween 1980 and 1990. Average concentration in deposits in certain local markets when the rural counties was virtually unchanged. Thus, merger otherwise would have resulted in subdespite the fact that there were more than 5,000 stantially adverse effects. bank mergers during the 1980s, concentration in local banking markets has remained about the Future Banking Structure same. Why haven't all of these mergers increased Where will all of these mergers and changes in concentration by a greater amount? There are banking lead us? What will the future structure of several reasons. First, as I have already indi- the banking industry look like? To the extent that cated, many mergers are between firms operating such forecasts can reasonably be made, it seems in different local banking markets. Although quite likely that the future will contain thousands these mergers may increase national or state of small banks, some regionals, some superreconcentration, they do not increase concentra- gionals, and a small number of large nationwide tion in any local banking market. banks. There is no reason to believe that small Second, as I have also already pointed out, banks will not continue to remain viable head-tothere is new entry into banking markets. In most head competitors in local markets with their markets new banks can be formed fairly easily, larger rivals. These rivals will be both regional and some key regulatory barriers, such as restric- banks and a few nationwide banks with offices in tions on interstate banking, are much lower than hundreds of local markets coast to coast. Some they used to be. Anecdotal evidence suggests of today's large bank mergers are probably the that new independent local banks have been early stage of the formation of nationwide banks. formed in many of the banking markets that are I hesitate to make a prediction about the dominated by the large multistate banks. number of banking organizations in the future. Third, the committee may be surprised to There is simply no way to know or forecast that discover that the evidence overwhelmingly indi- number with any high degree of certainty. Howcates that banks from outside a market usually ever, a recent study by Board staff members cannot increase their market share after entering attempted to make some ball-park projections in a new market by acquisition. An oft-mentioned this matter. Relying primarily on trends observed example here is the inability of the New York in the 1970s and 1980s and on the assumption that City banks to gain significant market share in interstate banking would be allowed through upstate New York. More general studies indicate holding companies rather than through branches, that when a local bank is acquired by a large this study projected that the total number of U.S. out-of-market bank, there is normally some loss banking organizations could be about 5,500 by of market share. The new owners are not able to the year 2010. This number of holding companies retain all of the customers of the acquired bank. probably implies the existence of 6,000 to 7,000 Fourth, it is important to emphasize that small banks. These 5,500 banking organizations inbanks have been, and continue to be, able to clude a large number of local community banks retain their market share and profitability in as well as regional banks and large, nationally competition with larger banks. Our staff has done active banking organizations. I would guess that repeated studies of small banks ; all these studies full interstate banking via branching would reindicate that small banks continue to perform as duce the number of banking organizations only Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 941 somewhat further because the staff study had some mergers. And, mergers can no doubt be already assumed interstate operations through very disruptive to bank employees as functions the more expensive option of using multibank are consolidated and reorganized. But these disholding companies. ruptions do not appear to differ substantively from similar disruptions in other industries undergoing fundamental change. CONCLUSION It is also clear that substantial harm to consumers would occur if mergers were allowed to de- The increased pace of bank mergers since the crease competitive pressures significantly. Thus, early 1980s has greatly reduced the number of it is crucial that antitrust standards be enforced by U.S. banking organizations and resulted in a sub- the bank regulatory agencies and the Department stantially higher nationwide concentration of of Justice. Given the record of success to date, the banking assets in the 100 largest banks. However, Board believes that our current statutory authorconcentration in local banking markets, which is ity in this area is sufficient to meet existing and normally considered most important for the anal- foreseeable concerns. However, if future develysis of potential competitive effects, has remained opments warrant, the Board would not be relucvirtually unchanged. In addition, there have been tant to seek additional authority in this area. a large number of new bank entrants and a sharp The evidence to date does not indicate that increase in the number of banking offices. This substantial cost savings have resulted from bank development illustrates that the U.S. banking mergers. However, our staff work does suggest structure is highly dynamic and that sweeping the potential for such savings if well-managed generalizations are extremely difficult to make. entities acquire and modify the operations of The dynamic nature of U.S. banking means that high-cost organizations. Given the continuing analysis of the potential competitive and other pressures for cost minimization in banking, it effects of individual bank mergers must be done certainly seems possible that some of the potencase by case, market by market. The Federal tial will be realized in the future. Reserve devotes considerable resources to this Last, I would emphasize once again the close end. All key factors are considered, including link between our discussion here and the need for actual competition from bank and nonbank comprehensive reform of our system of banking sources, potential competition, the general eco- and financial regulation. All of us want consumnomic health of the market, a variety of factors ers of financial services to have available comunique to a given market, and in the case of petitively priced, high-quality banking services, mergers involving failed or failing firms, systemic and we want to ensure that U.S. taxpayers are risk. In addition, safety and soundness and CRA not exposed to excessive risk of loss through the concerns are highly relevant. In the end, complex deposit insurance fund. To achieve these objecjudgments are required to ensure the appropriate tives, U.S. banks must have the ability to combalance of benefits and costs in the public interest. pete effectively and profitably both at home and To date, the available evidence suggests that abroad, and U.S. regulators must be able to act recent mergers have not resulted in adverse in timely and effective ways. The Board thereeffects on the vast majority of consumers of fore urges the Congress to pass the reform probanking services. It is certainly possible that posals that have been advanced by the Treasury some customers have been disadvantaged by and supported by the Board. • Statement by David W. Mullins, Jr., Vice Chair- I am pleased to be here today to testify in man, Board of Governors of the Federal Reserve connection with the regulation of the government System, before the Subcommittee on Oversight securities market. Mr. Sternlight's statement has of the Committee on Ways and Means, U.S. detailed both the role of the Federal Reserve House of Representatives, September 26, 1991 Bank of New York in this market, including its Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

942 Federal Reserve Bulletin • November 1991 relationship with the primary dealers, and the The market under consideration here is at the circumstances surrounding the disclosures by center of the nation's financial system. Its depth Salomon Brothers.1 The Board of Governors of and breadth are unparalleled. And it is because of the Federal Reserve System was actively in- the importance of the market for U.S. governvolved in the consultations among regulators ment securities that the events of recent months during this episode. In my prepared remarks, I are of such concern. The price distortions in shall first delineate the role of the Board of certain securities, the admissions of wrongdoing Governors in this market and then turn to the by Salomon Brothers, and the allegations of potential implications of this episode for regula- further misconduct have raised troubling questory and legislative initiatives. tions about the government securities market. The Board of Governors considers the U.S. Although the government securities market has government securities market to be the most been extraordinarily resilient and has continued important securities market in the world. It is to function well over this period, this episode important for at least three reasons. First, market underscores the importance of ensuring the inconditions there determine the cost to the tax- tegrity of this market. payer of financing U.S. government operations. Of course, we must not overlook the fact that Second, this market serves as the foundation for existing enforcement mechanisms appear to have other money and capital markets here and abroad been instrumental in this unfolding episode. and as a prime source of liquidity for financial These mechanisms included surveillance activiinstitutions. Finally, and for us perhaps most ties, inquiries, and other enforcement activities important, the U.S. government securities mar- by the Federal Reserve Bank of New York, the ket is the market through which the Federal Treasury, the SEC, and the Justice Department. Reserve implements monetary policy, and thus Although senior officials of Salomon Brothers this market must be an efficient and reliable were aware of rule violations months before, the transmitter of our monetary policy actions. firm finally admitted wrongdoing only under the Nonetheless, the Board of Governors has little pressure of these advancing enforcement prodirect regulatory authority over the U.S. govern- cesses. And of course, these enforcement proment securities market. In this market, the Re- cesses continue to move forward as we meet here serve Banks operate as fiscal agents of the U.S. today. It is already apparent to all observers that Treasury, and the Federal Reserve Bank of New the consequences of willful violations in this area York also serves as the operating arm of the are quite severe indeed. Federal Open Market Committee (FOMC). The Although this episode has been a troubling Board, however, retains general oversight re- one, it is not apparent that sweeping changes in sponsibility for all Federal Reserve Bank activi- regulation are warranted. It is clear that tightenties. Moreover, the Board of Governors bears ing up on enforcement would be efficacious in the responsibility for determining overall policy detecting and deterring future offenses. For exfor the Federal Reserve System with respect to ample, the Federal Reserve has begun contacting this market and other matters. For example, by customers bidding through dealers to confirm the statute the Board consults with the Treasury and accuracy of those bids. In addition, the Federal the Securities and Exchange Commission (SEC) Reserve regularly receives information on dealer on issues related to administration of the Gov- positions in when-issued securities. These reernment Securities Act. Because of these respon- ports were not actively monitored from an ensibilities and the importance of this market, the forcement perspective because they were not Board is committed to participating actively in designed for that purpose. Nonetheless, closer the process of ensuring and enhancing the effi- attention to them may be helpful in raising quesciency and integrity of this market. tions about situations with possible enforcement implications, and we will explore the redesign of this report to enhance its potential usefulness in the enforcement process. The Federal Reserve is committed to ensuring active monitoring of all 1. Mr. Sternlight's statement follows this one. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 943 incoming data and prompt referral of anomalous lation. The objective should be to find ways to findings to appropriate regulatory authorities. ensure and enhance the efficiency and integrity of We are working with other government agencies this market. Accordingly, the Treasury, the Fedto ensure that an effective system of surveillance eral Reserve, and the SEC have agreed to underis in place. take an intensive study, culminating in recom- And yet this episode has raised concerns that mendations for any changes needed to ensure go beyond the straightforward process of detect- and enhance the efficiency and integrity of this ing and punishing wrongdoing. With the revela- market. tions by Salomon Brothers, the price distortions A key question to be addressed in the course of in certain recent issues, and allegations of other such a review is whether current laws, regulamisconduct, some have felt that the fairness of tions, procedures, and enforcement mechanisms the market has been called into question. Others foster the efficiency and liquidity of this market have raised concerns about the efficiency of as well as provide adequate protection against market mechanisms and the efficacy of the cur- the potential for manipulative practices. Before rent regulatory structure. The continued smooth us is a wide range of issues pertaining to both the functioning of this market demonstrates that primary and secondary markets for Treasury there appears to have been no economically securities. meaningful loss of confidence in this market as A promising approach is to explore ways to yet. Nonetheless, these concerns need to be make access to the primary market easier and addressed; reduced confidence in the fairness more efficient. Broader-based participation in and efficiency of the government securities mar- auctions should reduce the vulnerability to colket could potentially impair liquidity and raise lusion and result in a deeper, more efficient the cost of Treasury financing. Of course, the market. For example, an electronic bidding pro- Treasury's costs also will rise if regulators and cess in the primary market promises to provide legislators overreact by instituting unnecessarily easier access, thereby broadening the market. burdensome and restrictive rules that discourage Moreover, a computerized auction process will bidding for Treasury securities. The integrity of greatly enhance the efficiency of market surveilthis marketplace must be ensured through means lance and monitoring and allow rapid and easy that do not unduly restrict demand or impose detection of many potential abuses. Conseunreasonable costs on bidders. quently, the Federal Reserve and the Treasury In response to these concerns, a wide variety have accelerated their effort to automate major of proposals have been advanced for changes in aspects of the auction process. We also need to regulation or market structure. I believe that this analyze alternative auction techniques. Although broad-based reassessment is appropriate and it is not clear at this stage that different ways of healthy. This episode has presented us with an conducting auctions would attract a sizable numopportunity to undertake a thorough analysis of ber of additional bidders and reduce the costs to the structure of this market and its regulations. the Treasury, this area is a potentially fruitful one I also believe that the assessment of these for examination. Broader participation in aucimportant issues should not be done in haste. tions and more efficient surveillance mechanisms Nor should changes be considered in a piecemeal may render collusion impractical and obviate the manner. The issues are too complex and highly need for cumbersome, restrictive regulations that interrelated, investigations are not yet com- risk raising the cost of Treasury financing. pleted, and the data needed to make informed In thinking about such issues, the Board begins judgments are still being gathered. The conse- from the premise that it is absolutely essential quences of mistakes are too severe for us to rush that the extraordinary liquidity and efficiency of to judgment on fundamental issues of market the government securities market not be imstructure and regulation. paired. This liquidity is important to the smooth What is needed is a rigorous, comprehensive, functioning of the financial system, it facilitates and coordinated review of the government secu- the implementation of monetary policy through rities market—its structure, practices, and regu- open market operations, and it allows the Trea- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

944 Federal Reserve Bulletin • November 1991 sury to issue federal debt at the lowest possible market. These concerns must be addressed. A cost to the taxpayers. thorough and thoughtful investigation is the first With well over $2 trillion in Treasury debt held step in this process. Ultimately, a careful and by the public, the stakes are high and the conse- wide-ranging examination of the government quences of mistakes are severe. Should either securities market, with the goal of enhancing its concerns about market integrity or inappropriate efficiency and its fairness, will be an important regulation raise the interest rate on Treasury debt input to our consideration of the appropriate even one one-hundredth of a percentage point, changes in this market. Although I am deeply this rise would aggregate into more than $200 concerned about recent revelations and await million in increased interest cost that would have the results of ongoing investigations, I do not to be borne by U.S. taxpayers every year. Time believe that the government securities market is needed for a careful, analytical approach to the is broken in any fundamental sense. I do, issues of market structure and regulation. however, believe that it can be improved, and In sum, recent events have raised troubling the Board of Governors is committed to this questions about the U.S. government securities end. • Statement by Peter D. Sternlight, Executive Vice open market operations. They are major partici- President, Federal Reserve Bank of New York, pants in the market, maintaining active markets to before the Subcommittee on Oversight of the customers across a broad spectrum of issues. Committee on Ways and Means, U.S. House of They are also active in the distribution of Trea- Representatives, September 26, 1991 sury debt, buying large portions of the Treasury auctions and placing the securities with a wide Thank you for the opportunity to be here this variety of investors here and abroad. At present morning to help shed light on the market for U.S. there are thirty-nine primary dealers, of which government securities. Recent revelations of ir- about half are banks or the securities affiliates of regularities have cast a shadow across this most banks and half are diversified—or in a few cases important financial market, and that shadow must specialized—securities firms. Last year, the total not be allowed to remain. Although I believe that volume of activity conducted by the Federal Reimprovements in market practice and official serve with primary dealers to carry out open oversight are needed, I do not believe that this market operations was about $460 billion. Our market is fundamentally flawed. Particular care trading desk also operates in this market to effect should be taken not to rush into drastic changes investment orders for foreign central banks and that could do more harm than good. My com- monetary authorities—another $65 billion of volments are from the perspective of my position at ume last year. the Federal Reserve Bank of New York, where I As a major market participant and public entity, have responsibility for the day-to-day implemen- the Federal Reserve naturally has sought privatetation of Federal Reserve monetary policy sector counterparties that can meet the standards through operations in the government securities for handling our large orders efficiently and safely market. My department also receives and reviews from the standpoint of credit, delivery, and settle- Treasury auction tenders on behalf of the Trea- ment risk. We have developed standards for sesury in the New York Reserve District. lecting those firms with which the Federal Reserve does business, described in an attachment to this statement.1 Central banks in several other ROLE OF PRIMARY DEALERS countries with well-developed financial markets have developed broadly similar arrangements to A key component of the government securities market is the group of so-called primary reporting 1. The attachments to this statement are available on dealers. These dealers are the firms with which request from Publications Services, Board of Governors of the Federal Reserve's trading desk conducts its the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 945 designate a group of firms with which to conduct deed, the Government Securities Act of 1986 money market operations. established a formal supervisory and regulatory The number of primary dealers has grown in framework for the government securities market the last few decades, although there has been for the first time, with the Treasury as rulemaker some shrinkage in the last couple of years. From and the Securities and Exchange Commission eighteen in the early 1960s, the number increased and banking supervisors responsible for enforceto thirty-six in 1981 and to a peak of forty-six in ment. 1988, growing as the market expanded, and—as Although our relationship with the primary this committee well knows—the debt expanded. dealers is rooted in a "business counterparties" Since late 1988, there has been a shrinkage in the connection, our interests in the health and wellnumber of dealers, to thirty-nine today. The being of the market extend well beyond that decline largely reflects a reaction to the exuber- framework. The breadth, depth, and liquidity of ant increase in numbers of participants in the this market are essential characteristics that the 1980s and some years of poor profitability in the Federal Reserve relies on for the implementation industry. In 1989, four firms withdrew while two of monetary policy, the Treasury relies on for were added. In 1990 five firms withdrew while financing the federal government, and investors two were added, and so far in 1991 another two rely on in committing their funds. Thus, we firms have withdrawn. recognize fully that as the central bank and fiscal Besides having strong financial credentials, the agent for the Treasury, we have a natural interest primary dealers are expected to facilitate the in the efficient working of the market and hence Federal Reserve's open market operations, to in the integrity of the market and its major make markets to a wide variety of customers in participants. At the same time, we recognize that the full range of government securities in good the extent and nature of our own participation in times and bad, and to be consistent and mean- the market, for ourselves and for the Treasury, ingful participants in the Treasury auctions for make it difficult to ignore the reality that we are new securities. regarded as one of its "regulators." From time to time the Federal Reserve Bank of For example, the presence of our limited pro- New York has carefully considered possible gram for the periodic monitoring of primary changes in its approach to the selection of firms dealers and the fact that we regularly collect with which it will transact business. We feel certain statistical information from the dealers somewhat between a rock and a hard place on help create that impression. In reality, the prithis question. We need financially sound private- mary dealer monitoring program is relatively sector counterparties, and the size and speed narrow in its purpose and scope and is not requirements for our operations mean that the comparable, say, to the bank examination pronumber must be limited in some fashion. Thus, gram. One basic aim of the monitoring program is our criteria result in some firms being chosen and to satisfy ourselves that the Federal Reserve, in some not, and the Federal Reserve will have a its transactions with dealers, is not incurring trading relationship with a selected group of firms substantial operational risk or unacceptable risk whether or not we call them primary dealers. of financial loss—in a context in which the nature Inevitably, recent events bring this matter under of our transactions with dealers is relatively low examination again, but whether another ap- in risk to begin with. proach would better serve our business needs The data and information that we collect from and public policy needs remains a difficult ques- primary dealers are aimed at providing broad tion. insights into the workings of the market. The It is worth noting that the business relationship statistical reports also help monitor whether the of the Federal Reserve Bank of New York with dealers are meeting our standards for breadth of the primary dealers exists in a framework in market-making activity. These information-gathwhich the Federal Reserve Board has only lim- ering efforts have not been structured with a view ited statutory authority to regulate or supervise toward enforcement or regulatory compliance, primary dealers or, for that matter, other partic- although we recognize that there will always be ipants in the government securities market. In- some overlap between such activities and our Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

946 Federal Reserve Bulletin • November 1991 broad market monitoring. Except for the so- they are selected, for at least the foreseeable called when-issued reports, the statistical data future, there will be a finite group of privatecollected from dealers on positions and transac- sector counterparties with whom the Federal tions are not specific as to a particular security. Reserve will do business. One way or another, Rather, we get weekly data grouped by broad the identity of these firms is likely to be known in maturity ranges. These reports have virtually no the marketplace. Further, the sheer size of the application in detecting the kind of problem that federal government's financing needs is such arose in the Salomon case. Even the when-issued that, for the foreseeable future, there will have to report, which is daily for a limited period, would be some relatively large firms that play a central have only limited value in this regard. role in the underwriting and distribution of that However, we are taking a fresh look at the debt. If the returns are not there to attract private statistics that we gather to see whether they can capital to that business—perhaps because the better serve the coordinated needs of the Trea- burdens of excessive regulation stifle the effisury, the SEC, and ourselves in either their ciency and liquidity of that market—the cost to existing or potentially revised formats. the taxpayer could be enormous. Before leaving the subject of primary dealers, it is worth asking why firms seek to be primary dealers in the first place. A starting point is that many firms evidently regard this function as an THE FEDERAL RESERVE'S ROLE economically effective way to deploy their capi- IN THE AUCTION PROCESS tal. In fact, however, positive returns do not come easily. As noted earlier, profits were par- The basic rules governing the auctions of Treaticularly spotty in the last few years, with a sury securities—including the 35 percent rule— significant fraction of individual firms incurring are set by the Treasury. Responsibility for ultilosses—a circumstance that no doubt contrib- mate compliance with, and enforcement of, these uted to attrition in the ranks since 1988. rules also rests with the Treasury. However, just For some firms, however, low returns and as most central banks throughout the world act even periodic losses apparently are tolerable as fiscal agents for their treasuries or finance because the firm may judge that having a major ministries, the Federal Reserve is the U.S. Treapresence in this market provides advantages re- sury's point of contact with the market. It is the lated to other aspects of the firm's business. Or it Federal Reserve's responsibility to call to the might be that a long-term view is taken, in which Treasury's attention events or circumstances prospects for the government securities area are that, in its judgment, suggest that the Treasury's viewed over a timeframe of more than just a few rules or intentions may have been breached. By years. Another factor that should be mentioned the same token, it is the Federal Reserve's explicitly as an attraction of the primary dealer responsibility to alert the Treasury or other regdesignation is that of prestige—although one ulatory or enforcement authorities to situations could think of it, long run, as related to profit- in which it finds evidence of improper secondary ability, too. The fact is that, whether we like it or market activity in government securities. not, there is an element of prestige associated For many years, the process by which Treawith primary dealer status—and in times of stress sury securities are auctioned or otherwise placed that factor can loom very large indeed. in the market has worked very well. Until the In sum, the primary dealer system has worked Salomon events, we had no knowledge of cirwell over the years, serving the Federal Reserve, cumstances that would constitute a significant the Treasury, and the nation effectively. It also breakdown in the workings of the auction prohas its problems, including the elevated impor- cess. Granting that the recent events do constitance that can attach, in the public view, to this tute a significant exception that must be dealt designation. As we consider possible changes in with and are being dealt with, I would still say these arrangements, we need to keep in mind that the auction process continues to work well that, regardless of what they are called and how on the whole. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 947 Although the auction process is open to all afterward we called the Treasury to alert them to qualified bidders, the fact remains that over the a possible 35 percent problem. long haul the primary dealers—and in recent As this action was occurring, it became eviyears their large customers—are by far the major dent that the bids in question would be at the buyers of government securities in the auctions. so-called stop-out rate and get only a partial This situation is natural, given the capital that award, so that the 35 percent award limit would they have devoted to this business as well as not be exceeded even if the two entities were their distribution network and role as market- combined. In those circumstances the Treasury makers. indicated that it would accept both bids. It was The mechanics of the auction process are understood that there would be a subsequent straightforward. Competitive bids must be sub- inquiry about the relationship of the Warburg mitted to a Federal Reserve Bank or to the entities with reference to future auctions, an Treasury by 1:00 p.m. eastern time on the auc- inquiry free of the extreme time pressure of the tion day. The overwhelming share of such bids immediate auction deadline. (often in the range of 80 percent to 90 percent) is In the following weeks, Treasury and Federal received by the Federal Reserve Bank of New Reserve staff members reviewed that relation- York. To minimize market uncertainties, the ship, leading finally to the Treasury's April 17 results of the auction are announced about one letter to Mercury informing it that in the future hour after the bid deadline. the affiliated Warburg entities in question would Within that single hour between 1:00 and 2:00 be considered a single entity for purposes of the p.m., the initial responsibility for tabulating and 35 percent rule. A copy of that letter was sent to checking the bulk of bids—including their com- Salomon. pliance with the 35 percent rule—falls to the staff As is well known now, of course, the so-called of the Federal Reserve Bank of New York. In "Mercury" bid was not a customer bid at all but fact, we have only about one-half hour because apparently a scheme designed by Mr. Mozer at we must get our results to the Treasury to be Salomon to obtain more than 35 percent of the combined with reports from elsewhere around issue for Salomon's own account. (Salomon was the country. also bidding for 35 percent in its own name and, It was this initial check of bids submitted for as emerged later, for yet another 35 percent the February 1991 five-year auction that we now under still another fabricated customer name.) know began the unraveling of Salomon's im- Receipt of a copy of the Treasury's letter to proper bidding activities. At the time, however, Mercury apparently prompted Mr. Mozer to go there was no reason to suspect any illegal activity to considerable lengths in requesting Mercury in the form of trumped-up customer bids. Rather, and Warburg officials not to embarrass Salomon we were simply checking for compliance with the by responding to the Treasury in a manner that Treasury's rule limiting any single entity to 35 revealed that Mercury was not in fact a Salomon percent of the issue. As it happens, the bids customer in the auction. At the same time, submitted in that auction included a small bid for receipt of the letter caused Mr. Mozer to disclose S.G. Warburg and Co., itself a primary dealer, as his wrongful "Mercury" bid to his superior at well as a bid submitted at the 35 percent limit by Salomon, who then went on to inform top man- Salomon for a customer listed as Warburg Asset agement at the firm. Management. If the two bids were awarded in Inexplicably, top Salomon management did full, and if under Treasury rules these two enti- not come forward to reveal this wrongdoing until ties were considered a single entity, the com- August. We surmise that the reason they came bined bid would have slightly exceeded the 35 forward then was that the Salomon firm had in percent limit. One of our staff members promptly the meantime become aware of official investigacalled Salomon—at around 1:20 p.m. on the tions into still another matter involving governauction day—and was told that the customer ment securities—the alleged squeeze on the supname should have read Mercury Asset Manage- ply of two-year notes auctioned on May 22. As ment, an affiliate of S.G. Warburg. Immediately that two-year note investigation became more Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

948 Federal Reserve Bulletin • November 1991 intense, Salomon engaged an outside law firm to primary dealers, verifying the authenticity of do an internal investigation at the firm, and those bids directly with the indicated customer. apparently that investigation uncovered the ear- In addition, a more formal verification process lier bidding irregularities. for the very largest bids, with written confirma- I might add that the official investigation of the tion, is being developed. We also are seeking to May two-year note situation followed a period of accelerate plans for automation of the Treasury informal inquiry into market developments by auctions—but there should be no illusion that the Federal Reserve Bank of New York and the automation can solve all problems. An auto- Treasury immediately after the May 22 auction of mated system would not, of itself, have been those notes. Just a week later, on May 29, the able to uncover fake bids. At best, it might help Treasury alerted the SEC to the situation, and speed the review process to identify situations the Justice Department also was brought into the for follow-up inquiries, and it could speed the picture shortly afterward. review process for compliance with rules such Turning back to the February auction, it is fair as the 35 percent rule. Automated bidder access to ask whether a more rigorous investigation into might also make it more feasible for some larger the authenticity of bids at that time might have investors to submit bids directly rather than made a difference in regard to subsequent events. enter the auctions as customers of dealers. It probably would have made a difference. How- Automation could also cut somewhat further ever, given the previous history of the auction the time required to process tenders before the process—which did not arouse suspicions about announcement of results. Meantime, we underthe basic authenticity of bids—it still seems rea- stand that the Treasury is reviewing its auction sonable, looking back, to say that the steps then rules. taken by the Federal Reserve and the Treasury As for the secondary market, we are moving were appropriate and responsible. With the ben- ahead with plans for closer monitoring of day-toefit of hindsight, we could have done more. day market developments and closer coordina- Looking back, another thing that surely would tion of the results of such monitoring with other have made a difference would have been the supervisory and regulatory agencies. We will timely disclosure of those earlier events by the also be reviewing, within ninety days after the top management of Salomon when they learned last round of testimony, the possible need for about at least some of them in late April. And additional legislative authority. Certainly, the in terms of internal management, for the firm to problems that have come to light need to be have allowed an individual who had acknowl- addressed systematically and forcefully. At the edged such wrongdoing to remain in charge of a same time, a high priority is to avoid a heavy key area is questionable, to say the least. panoply of regulation that could impair market At this time, as investigations of the past efficiency and liquidity. continue, our focus also has to be on the future, I think that with the cooperation of supervimaking sure that the integrity of the auction sory and regulatory agencies and with responsiprocess and of the secondary market trading ble private-sector leadership, a proper balance process are maintained at the highest levels. can be struck that permits a flourishing, liquid, For the past month we have been undertaking and efficient market free of the taints that have spot checks of customer bids submitted through been uncovered of late. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

949 Announcements CHANGE IN THE DISCOUNT RATE closures). Comments were to be submitted by October 23. The Federal Reserve Board announced on September 13, 1991, a reduction in the discount rate from 5LA percent to 5 percent, effective immediately. MEETINGS ON APPLICATION Action was taken in light of weakness in the OFNCNB CORPORATION TO ACQUIRE money and credit aggregates, the improving inflation C&S/SOVRAN CORPORATION environment, and concerns about the ongoing strength of the economic expansion. The reduction, The Federal Reserve Board announced that public in part, realigns the discount rate with market interest meetings were held in Charlotte, Richmond, Atlanta, rates. and Dallas during the week of October 7 in In taking the action, the Board voted on requests connection with the application of NCNB Corporasubmitted by the boards of directors of the Federal tion to acquire C&S/Sovran Corporation. Reserve Banks of Boston, Philadelphia, Cleveland, The purpose of these meetings was to collect Atlanta, Chicago, Minneapolis, and Dallas. The information concerning the convenience and needs Board of Governors subsequently approved similar of the communities to be served by the proposal, requests by the boards of directors of the Federal including the records of performance of the institu- Reserve Banks of New York, Richmond, Kansas tions under the Community Reinvestment Act. City, and San Francisco, also effective September Persons wishing to appear at these meetings submit- 13, and by the board of directors of the Federal ted a written request containing a brief statement of Reserve Bank of St. Louis, effective September 17. the nature of the expected testimony and the The discount rate is the interest rate that is charged estimated time required for the presentation. depository institutions when they borrow from their District Federal Reserve Banks. CHANGES IN BOARD STAFF The Board of Governors announced a realignment in MEETING OF CONSUMER ADVISORY COUNCIL the structure of the Information Resources Management (IRM) organization, effective September 30, The Federal Reserve Board announced that its 1991. Under the new structure, the Office of the Consumer Advisory Council met on October 10, Director for IRM, the Division of Hardware and 1991. The Council's function is to advise the Board Software Systems, and the Division of Applications on the exercise of its responsibilities under the Development and Statistical Services are combined Consumer Credit Protection Act and on other into a single Division of Information Resources matters on which the Board seeks its advice. Management under the direction of Stephen R. Malphrus. The realignment will streamline the management structure, reduce overhead costs, and PROPOSED ACTION improve the support levels IRM provides to the Board. The division will report to the Board through The Federal Reserve Board on September 19,1991, the Staff Director for Management. requested public comment on proposed amendments William R. Jones has been transferred to the for 1992 to the reporting form and instructions that Division of Research and Statistics as Associate accompany Regulation C (Home Mortgage Dis- Director, reporting to the Division Director, with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

950 Federal Reserve Bulletin • November 1991 responsibility for the Automation and Research bility for high-level technical projects. Marianne M. Computing function, directing all divisional comput- Emerson, Assistant Director for Planning, Support, ing activities. and Systems Integration (PS&SI), has been pro- Bruce M. Beardsley has been appointed to the moted to Assistant Director for Banking Statistics new position of Deputy Director and will oversee Systems. Edward T. Mulrenin, Assistant Director the day-to-day operations of IRM. Robert J. Zemel for Special Projects, will oversee the PS&SI Branch has been designated Senior Adviser with responsi- in addition to his current responsibilities. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

951 Legal Developments FINAL RULE — AMENDMENTS TO REGULATION Part 220—Credit by Brokers and Dealers G AND REGULATION T 1. The authority citation for Part 220 continues to read The Board of Governors is amending 12 C.F.R. Parts as follows: 207 and 220, its Regulation G and Regulation T, to exclude from the limitations of the margin rules the Authority: Sees. 3, 7, 8, 17 and 23 of the Securities deposit of margin securities with clearing agencies Exchange Act of 1934, as amended (15 U.S.C. 78c, regulated by the Commodity Futures Trading Com- 78g, 78h, 78q, and 78w). mission or the Securities and Exchange Commission, provided these deposits are made in connection with 2. In section 220.14, the section heading and paragraph the issuance of, or guarantee of, or the clearance of (b) are revised to read as follows: transactions in, any security (including options on any security, certificate of deposit, securities index or Section 220.14—Clearance of Securities, foreign currency); or the guarantee of contracts for the Options, and Futures. purchase or sale of a commodity for future delivery or options on such contracts. Effective October 11, 1991, 12 C.F.R. Parts 207 and (b) Deposit of securities with a clearing agency. The 220 are amended as follows: provisions of this part shall not apply to the deposit of Part 207—Securities Credit by Persons Other securities with an options or futures clearing agency Than Banks, Brokers, or Dealers for the purpose of meeting the deposit requirements of the agency if: (1) The clearing agency: 1. The authority citation for part 207 continues to read (i) Issues, guarantees performance on, or clears as follows: transactions in, any security (including options on any security, certificate of deposit, securities in- Authority: Sees. 3, 7, 8, 17 and 23 of the Securities dex or foreign currency); or Exchange Act of 1934, as amended (15 U.S.C. 78c, (ii) Guarantees performance of contracts for the 78g, 78h, 78q, and 78w). purchase or sale of a commodity for future delivery or options on such contracts; 2. Section 207.1 is amended by designating the text of (2) The clearing agency is registered with the Secuparagraph (b) as paragraph (b)(1) and adding a new rities and Exchange Commission or is the clearing paragraph (b)(2) as follows: agency for a contract market regulated by the Commodity Futures Trading Commission; and Section 207.1—Authority, purpose, and scope. (3) The deposit consists of any margin security and complies with the rules of the clearing agency that have been approved by the Securities and Exchange (b) Purpose and scope* * * Commission or the Commodity Futures Trading (2) This part does not apply to clearing agencies Commission. regulated by the Securities and Exchange Commission or the Commodity Futures Trading Commission that accept deposits of margin stock in connection with: (i) The issuance of, or guarantee of, or the clear- FINAL RULE — AMENDMENTS TO REGULATION ance of transactions in, any security (including G AND REGULATION U options on any security, certificate of deposit, securities index or foreign currency); or The Board of Governors is amending 12 C.F.R. Parts (ii) The guarantee of contracts for the purchase or 207 and 221, its Regulation G and Regulation U, to sale of a commodity for future delivery or options permit transfers of loans between lenders subject to on such contracts. Regulation G and lenders subject to Regulation U on Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

952 Federal Reserve Bulletin • November 1991 the same basis as transfers between two lenders sub- 2. In section 221.3, paragraphs (i)(l)(i), (ii) and (3) are ject to the same regulation. revised to read as follows: Effective October 11, 1991, 12 C.F.R. Parts 207 and 221 are amended as follows: Section 221.3—General requirements. Part 207—Securities Credit by Persons Other Than Banks, Brokers, or Dealers (i) Transfers of credit. (1) A transfer of a credit between customers or 1. The authority citation for part 207 continues to read banks or between a bank and a lender subject to part as follows: 207 of this chapter shall not be considered a new extension of credit if: Authority: Sees. 3, 7, 8, 17, and 23 of the Securities (i) The original credit was extended by a bank in Exchange Act of 1934, as amended (15 U.S.C. 78c, compliance with this part or by a lender subject to 78g, 78h, 78q, and 78w). part 207 of this chapter in a manner that would have complied with this part; 2. In section 207.3, paragraphs (l)(l)(i), (ii), and (3) are (ii) The transfer is not made to evade this part or revised to read as follows: part 207 of this chapter; * * * (3) When a transfer is made between banks or between a bank and a lender subject to part 207 of this Section 207.3—General Requirements. chapter, the transferee shall obtain a copy of the Form FR U-l or Form FR G-3 originally filed with the transferor and retain the copy with its records of (1) Transfers of credit. the transferee account. If no form was originally filed (1) A transfer of a credit between customers or with the transferor, the transferee may accept in good lenders or between a lender and a bank shall not be faith a statement from the transferor describing the considered a new extension of credit if: purpose of the loan and the collateral securing it. (i) The original credit was extended by a lender in compliance with this part or was extended by a ORDERS ISSUED UNDER BANK HOLDING bank in a manner that would have complied with COMPANY ACT this part; Orders Issued Under Section 3 of the Bank (ii) The transfer is not made to evade this part or Holding Company Act part 221 of this chapter; Summit Bancorp, Inc. Johnstown, Pennsylvania (3) When a transfer is made between lenders or between a lender and a bank, the transferee shall Order Approving the Acquisition of Shares of a obtain a copy of the Form FR G-3 or Form FR U-l Bank Holding Company originally filed with the transferor lender and retain the copy with its records of the transferee account. Summit Bancorp, Inc., Johnstown, Pennsylvania If no form was originally filed with the transferor, ("Summit"), a bank holding company within the the transferee may accept in good faith a statement meaning of the Bank Holding Company Act ("BHC from the transferor describing the purpose of the Act"), has applied under section 3 of the BHC Act loan and the collateral securing it. (12 U.S.C. § 1842) to acquire 16.6 percent of the voting shares of First National Bank of Lilly, Lilly, Pennsylvania ("Lilly Bank"). Notice of the application, affording interested per- Part 221—Credit by Banks for the Purpose of sons an opportunity to submit comments, has been Purchasing or Carrying Margin Stocks duly published (56 Federal Register 31,640 (1991)). The time for filing comments has expired, and the 1. The authority citation for part 221 continues to read Board has considered the application and all comas follows: ments received in light of the factors set forth in section 3(c) of the BHC Act. Authority: Sees. 3, 7, 8, and 23 of the Securities Summit is the 116th largest banking organization in Exchange Act of 1934, as amended (15 U.S.C. 78c, Pennsylvania, controlling deposits of $90.8 million, 78g, 78h, and 78w). representing less than 1 percent of the total deposits in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 953 commercial banking organizations in the state.1 Lilly Lilly Bank, provided that the aggregate balances of Bank is the 223rd largest commercial banking organiza- all such accounts do not exceed $500,000 and that tion in Pennsylvania, controlling deposits of $8.5 mil- the accounts are maintained on substantially the lion, representing less than 1 percent of the total depos- same terms as those prevailing for comparable acits in commercial banking organizations in the state. counts of persons unaffiliated with Lilly Bank; or Summit and Lilly Bank compete directly in the (11) seek or accept representation on the board of Johnstown MSA market.2 Summit is the eighth largest directors of Lilly Bank. banking organization in the market, controlling deposits of $90.7 million, representing 3.4 percent of the total Based on the facts of record and Summit's commitdeposits in commercial banking organizations in the ments, the Board has concluded that Summit would market. Lilly Bank is the 20th largest banking organi- not acquire control or the ability to exercise a controlzation in the market, controlling deposits of $8.0 mil- ling influence over Lilly Bank upon consummation of lion, representing less than 1 percent of the total depos- this proposal.3 its in commercial banking organizations in the market. The Board's inquiry does not end, however, with its finding that Summit will not control Lilly Bank. The Summit proposes to acquire the voting shares of Board notes that noncontrolling interests in directly Lilly Bank as a passive investment. As part of this competing banks or bank holding companies may raise proposal, Summit has made a number of commitments serious questions under the BHC Act. The Board has to address concerns that it would control Lilly Bank. previously noted that one company need not acquire In particular, Summit has committed that it will not, control of another in order to substantially lessen comwithout the Board's prior approval: petition between them, and that the specific facts of (1) exercise or attempt to exercise a controlling influeach case will determine whether the minority investence over the management or policies of Lilly Bank; ment in a company will be anticompetitive.4 In this (2) have or seek to have any employees or reprecase, it is the Board's judgment, based upon careful sentative serve as an officer, agent or employee of analysis of the record, that no significant reduction in Lilly Bank; competition is likely to result from the acquisition. The (3) take any action causing Lilly Bank to become a record shows that there will be no officer or director subsidiary of Summit; interlocks between Summit and Lilly Bank, that Sum- (4) acquire or retain shares that would cause the mit intends the acquisition to be a strictly passive combined interests of Summit and its officers, direcinvestment, and that Summit is prohibited by the BHC tors and affiliates to equal or exceed 25 percent of Act and its commitments from acting in concert with the outstanding voting shares of Lilly Bank; any other entity for control of Lilly Bank without (5) propose a director or slate of directors in oppoadditional prior Board approval. Moreover, even if the sition to a nominee or slate of nominees proposed by Board were to conclude that Summit would control the management or board of directors of Lilly Bank; Lilly Bank, the elimination of competition between the (6) attempt to influence the dividend policies or two entities is not so substantial as to warrant denial of practices of Lilly Bank; the application. The record shows that Summit and (7) solicit or participate in soliciting proxies with Lilly Bank each controls only a small percentage of the respect to any matter presented to the shareholders deposits in the Johnstown MSA market, a moderately of Lilly Bank; (8) attempt to influence the loan and credit decisions or policies of Lilly Bank, the pricing of services, any personnel decision, the location of any offices, branching, the hours of operation, or similar activi- 3. In this regard, the Board has considered comments filed by the board of directors of Lilly Bank and several individuals ("Protesties of Lilly Bank; tants") alleging that this proposal represents an initial step towards a (9) dispose or threaten to dispose of shares of Lilly big bank that will cause Lilly Bank to lose its small-town orientation and the personal nature of its current banking services. Summit states Bank in any manner as a condition of specific action that its investment in Lilly Bank will be passive and has made the or nonaction by Lilly Bank; commitments noted above in order to ensure that Summit will not (10) enter into any other banking or nonbanking exercise control over Lilly Bank. There is no evidence of record to indicate that the operations of Lilly Bank will be altered by this transactions with Lilly Bank, except that Summit proposal. In addition, prior Board approval is required if Summit may establish and maintain deposit accounts with intends to control Lilly Bank and Protestants would have an opportunity to present these concerns if any changes were proposed for the operations of Lilly Bank at that time. Under these circumstances, the Board believes that Protestants' comments do not raise issues that 1. State banking data are as of December 31, 1990. Market share would warrant a denial of this application. data are as of June 30, 1990. 4. See The Summit Bancorporation, 75 Federal Reserve Bulletin 712 2. The Johnstown MSA market includes Cambria and Somerset (1989); United Counties Bancorporation, 75 Federal Reserve Bulletin Counties in Pennsylvania. 714 (1989); Sun Banks, Inc., 71 Federal Reserve Bulletin 243 (1985). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

954 Federal Reserve Bulletin • November 1991 concentrated market with a Herfindahl-Hirschman Synovus Financial Corp. ("Synovus") and TB&C Index ("HHI") of 1166, which would not change upon Bancshares, Inc. ("TB&C"), both of Columbus, consummation of this proposal.5 Georgia ("Applicants"), bank holding companies The financial and managerial resources and future within the meaning of the Bank Holding Company Act prospects of Summit, its subsidiary bank, and Lilly ("BHC Act"), have applied under section 4(c)(8) of Bank are consistent with approval of this application. the BHC Act (12 U.S.C. § 1843(c)(8)) and section Considerations relating to the convenience and needs 225.23(a) of the Board's Regulation Y (12 C.F.R. of the communities to be served also are consistent 225.23(a)) for their subsidiary, Synovus Securities, with approval of these applications. Inc., Columbus, Georgia ("Company"):1 Based on the foregoing and other facts of record, and (1) to underwrite and deal in, to a limited extent, in reliance upon commitments made by Summit, the municipal revenue bonds, including certain indus- Board has determined that the application should be, trial revenue bonds ("ineligible securities"); and hereby is, approved. The Board's approval is (2) to act as agent in the private placement of all specifically conditioned on Summit's compliance with types of securities, including providing related adthe commitments discussed in this Order and these visory services; and commitments are considered conditions imposed in (3) to buy and sell all types of securities on the order writing in connection with the Board's findings and of investors as a "riskless principal." decision. The transaction shall not be consummated before the thirtieth calendar day following the effective Notice of the application, affording interested perdate of this Order, or later than three months after the sons an opportunity to submit comments, has been effective date of this Order, unless such period is duly published (56 Federal Register 14,527 (1991)). extended for good cause by the Board or by the Federal The time for filing comments has expired, and the Reserve Bank of Philadelphia, acting pursuant to dele- Board has considered the application and all comgated authority. ments received in light of the public interest factors set By order of the Board of Governors, effective forth in section 4(c)(8) of the BHC Act. September 9, 1991. Synovus, with approximately $3.1 billion in assets, is the sixth largest commercial banking organization in Voting for this action: Chairman Greenspan and Governors Georgia.2 Synovus operates 22 subsidiary banks in Angell, Kelley, and LaWare. Absent and not voting: Gover- Georgia and Florida. Applicants engage directly and nor Mullins. through subsidiaries in a broad range of permissible JENNIFER J. JOHNSON nonbanking activities in the United States. Associate Secretary of the Board Company is currently authorized to engage in providing investment advice, securities brokerage, underwrit- Orders Issued Under Section 4 of the Bank ing and dealing in government obligations and money Holding Company Act market instruments, consumer financial counseling and employee benefits counseling pursuant to 12 C.F.R. Synovus Financial Corp. 225.25(b)(4), (15), (16), and (20). Company is, and will Columbus, Georgia continue to be, a broker-dealer registered with the TB&C Bancshares, Inc. Securities and Exchange Commission and subject to the Columbus, Georgia record-keeping, reporting, fiduciary standards, and other requirements of the Securities Exchange Act of 1934 Order Approving Application To Underwrite and and the National Association of Securities Dealers. Deal in Certain Securities to a Limited Extent, to Act as Agent in the Private Placement of Securities, and to Act as "Riskless Principal" in Buying and Underwriting and Dealing In Municipal Revenue Bonds Selling Securities The Board has determined that, subject to the prudential framework of limitations established in previous 5. Under the revised Department of Justice Merger Guidelines, 49 decisions to address the potential for conflicts of Federal Register 26,823 (1984), a market in which the post-merger interests, unsound banking practices, or other ad- HHI is between 1000 and 1800 is considered moderately concentrated. The Department of Justice has informed the Board that, as a general verse effects, the proposed underwriting and dealing matter, a bank merger or acquisition 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 200 points. The Justice Department has stated that the higher-than- 1. Synovus owns 100 percent of Company. TB&C, which owns 8.5 normal HHI thresholds for screening bank mergers for anticompeti- percent of Synovus, also has joined in this application. tive effects implicitly recognize the competitive effect of limited- 2. Asset data are as of March 31, 1991. Ranking, based on deposits, purpose lenders and other non-depository financial entities. is as of March 31, 1991. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 955 activities are so closely related to banking as to be of section 4(c)(8) of the BHC Act.5 The Board also has proper incidents thereto within the meaning of sec- previously determined that acting as agent in the tion 4(c)(8) of the BHC Act. The Board also has private placement of securities, and purchasing and determined that the conduct of these securities un- selling securities on the order of investors as a "riskderwriting and dealing activities is consistent with less principal" do not constitute underwriting and section 20 of the Glass-Steagall Act, provided that dealing in securities for purposes of section 20 of the the underwriting and dealing subsidiary derives no Glass-Steagall Act, and that revenue derived from more than 10 percent of its total gross revenue from these activities is not subject to the 10 percent revenue underwriting and dealing in bank-ineligible securities limitation on ineligible securities underwriting and over any two year-period.3 Applicants have commit- dealing.6 Applicants have committed that Company ted that Company will conduct its underwriting and will conduct its private placement and "riskless prindealing activities with respect to bank-ineligible se- cipal" activities using the same methods and procecurities subject to the 10 percent revenue test and the dures, and subject to the same prudential limitations prudential limitations established by the Board in established by the Board in the Banker's Trust II and previous orders.4 J.P. Morgan orders. Private Placement and "Riskless Principal" Director Interlocks Activities Applicants have requested that the Board permit Applicants also propose that Company act as agent in director interlocks between Company and its affilithe private placement of debt and equity securities, ated banks. Applicants propose that two directors of including providing related advisory services, and buy its subsidiary banks be permitted to serve on Comand sell all types of securities on the order of investors pany's nine-member board of directors. These direcas a "riskless principal." The Board previously has tors are not officers of the affiliated banks, nor do determined by order that, subject to certain prudential they have authority to conduct the day-to-day busilimitations that address the potential for conflicts of ness of the banks or handle individual bank transacinterests, unsound banking practices or other adverse tions. No officers of Company would be employed by effects, the proposed private placement and "riskless the banks. Applicants maintain that these director principal" activities are so closely related to banking interlocks would permit appropriate oversight and as to be a proper incident thereto within the meaning supervision of its subsidiaries and that disallowing the requested interlocks would impose a particular hardship on Applicants in seeking replacement directors. The Board previously has permitted interlocks be- 3. Citicorp, J.P. Morgan & Company Incorporated and Bankers tween a banking organization and its affiliated section Trust New York Corporation, 73 Federal Reserve Bulletin 473 (1987) 20 company.7 In addition, the Board has requested Citicorp! Morgan!Bankers Trust"), ajf d sub. nom., Securities Industry Association v. Board of Governors of the Federal Reserve comment on modifying the section 20 prudential System, 839 F.2d 47 (2d Cir. 1988), cert, denied, 486 U.S. 1059 (1988), framework to permit interlocks with affiliated banks so as modified by Order Approving Modifications to Section 20 Orders, 75 Federal Reserve Bulletin 751 (1989) ("Modification Order"). The long as a majority of the board is not comprised of 10 percent gross revenue limit should be calculated in accordance with bank officers or directors. Applicants have agreed to the method stated in J.P. Morgan & Company, Incorporated, The abide by the results of the Board's review. Accord- Chase Manhattan Corporation, Bankers Trust New York Corporation, Citicorp, and Security Pacific Corporation, 75 Federal Reserve ingly, the Board finds that these limited interlocks Bulletin 192, 196 (1989). should be permitted, since it appears that Company 4. The industrial development bonds approved for Applicants in this would be operationally distinct from its affiliated case are only those tax-exempt bonds in which the governmental issuer, or the governmental unit on behalf of which the bonds are banks. The Board expects that Applicants will ensure issued, is the owner for federal income tax purposes of the financed that the framework established pursuant to Citicorp! facility (such as airports, mass commuting facilities, and water pollution control facilities). Without further approval from the Board, Company may underwrite and deal in only these types of industrial development bonds, except as permitted by this Order. Company may also provide services that are necessary incidents to these approved activities. Any activity conducted as a necessary 5. Bankers Trust New York Corporation, 75 Federal Reserve incident to the ineligible securities activity must be treated as part of Bulletin 829 (1989) ("Bankers Trust II). the ineligible securities activity unless Company has received specific 6. J.P. Morgan & Company, Incorporated, 76 Federal Reserve approval under section 4(c)(8) of the BHC Act to conduct the activity Bulletin 26 (1990) ("J.P. Morgan"); Bankers Trust II. independently. Until such approval is obtained, any revenues from the 1. Banc One Corporation, 76 Federal Reserve Bulletin 756, 758 incidental activity must be counted as ineligible revenue subject to the (1990); Canadian Imperial Bank of Commerce, The Royal Bank of 10 percent gross revenue limit set forth in CiticorplMorganlBankers Canada, Barclays PLC and Barclays Bank PLC, 76 Federal Reserve Trust and the Modification Order. Bulletin 158 (1990). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

956 Federal Reserve Bulletin • November 1991 Morgan!Bankers Trust will be maintained in all other Orders Issued Under Sections 3 and 4 of the respects.8 Bank Holding Company Act Under the framework established in this and prior decisions, consummation of this proposal is not likely NCNB Corporation to result in any significant adverse effects, such as Charlotte, North Carolina undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices. Consummation of the proposal would pro- Notice of Public Meeting vide added convenience to Company's customers. In Richmond, Virginia addition, the Board expects that the de novo entry of Company into the market for these services would Background and Public Meeting Notice increase the level of competition among providers of these services. Accordingly, based upon the facts of record and the commitments made by Applicants On August 21, 1991, NCNB Corporation, Charlotte, regarding the conduct of these activities, the Board North Carolina ("NCNB"), applied pursuant to has determined that the performance of the proposed sections 3 and 4 of the Bank Holding Company activities by Company can reasonably be expected to Act (12 U.S.C. §§ 1842, 1843)("BHC Act") to acproduce public benefits which would outweigh adverse quire C&S/Sovran Corporation, Atlanta, Georgia, effects under the proper incident to banking standard and Norfolk, Virginia ("C&S/Sovran"), and thereof section 4(c)(8) of the BHC Act. by to acquire the bank and nonbank subsidiaries Based on the foregoing, the Board has determined of C&S/Sovran. On September 19, 1991, the Board to, and hereby does, approve the application subject to of Governors of the Federal Reserve System the commitments made by Applicants, as well as all of ("the Board") announced that public meetings the terms and conditions set forth in this order and in would be held in Richmond, Charlotte, Atlanta, the above-noted Board orders that relate to these and Dallas during the week of October 7, 1991, to activities. The Board's determination also is subject to collect information on the convenience and needs of all of the conditions set forth in Regulation Y, includ- the communities to be served by this proposal, ing those in sections 225.4(d) and 225.23(b), and to the including the records of performance of these insti- Board's authority to require modification or termina- tutions under the Community Reinvestment Act tion of the activities of a bank holding company or any ("CRA"). of its subsidiaries as the Board finds necessary to The public meeting in Richmond will be held on assure compliance with, and to prevent evasion of, the October 7, 1991, at the Federal Reserve Bank of provisions of the BHC Act and the Board's regulations Richmond Auditorium, 701 East Byrd Street, Richand orders issued thereunder. The commitments and mond, Virginia, 23219. The meeting will begin at conditions referred to above are conditions imposed in 9:00 a.m., E.D.T. writing by the Board in connection with its findings and decision. This transaction shall not be consum- Purpose and Procedures mated later than three months after the effective date of this Order, unless such period is extended for good The purpose of the public meeting is to receive inforcause by the Board or by the Federal Reserve Bank of mation regarding the convenience and needs of the Atlanta, pursuant to delegated authority. communities to be served by this proposal, including By order of the Board of Governors, effective the records of performance of NCNB and C&S/Sovran September 23, 1991. under the CRA. The CRA requires the appropriate federal financial supervisory agency to "assess [an] Voting for this action: Chairman Greenspan and Governors institution's record of meeting the credit needs of its Angell, Kelley, and La Ware. Absent and not voting: Gover- entire community, including low- and moderatenor Mullins. income neighborhoods, consistent with the safe and JENNIFER J. JOHNSON sound operation of [the] institution." 12 U.S.C. Associate Secretary of the Board § 2903. The Board, as a federal financial supervisory agency, is required to take this record into account in its evaluation of an application under section 3 of the 8. The Board's approval of the proposed underwriting and dealing BHC Act. activities extends only to Company. The activities may not be conducted by Applicants in any other subsidiary without prior Board review. The public meeting is to be convened under the Pursuant to Regulation Y, no corporate reorganization of Company, Board's policy statement regarding informal meetings such as the establishment of subsidiaries of Company to conduct the activities, may be consummated without prior Board approval. in section 262.25(d) of the Board's Rules (12 C.F.R. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 957 225.25(d)). This policy statement provides that the NCNB Corporation purpose of a public meeting is to elicit information, to Charlotte, North Carolina clarify factual issues related to an application, and to provide testimony. In contrast to a formal administra- Notice of Public Meeting tive hearing, the rules for taking evidence in an ad- Dallas, Texas ministrative proceeding will not apply to this public meeting. In conducting the public meeting, the Presid- Background and Public Meeting Notice ing Officer will have the authority and discretion to ensure that the meeting proceeds in a fair and orderly On August 21, 1991, NCNB Corporation, Charlotte, manner. Individuals or groups may be represented by North Carolina ("NCNB"), applied pursuant to seccounsel. The public meeting will be transcribed and tions 3 and 4 of the Bank Holding Company Act information regarding procedures for obtaining a copy (12 U.S.C. §§ 1842, 1843)("BHC Act") to acquire of the transcript will be announced at the public C&S/Sovran Corporation, Atlanta, Georgia, and Normeeting. folk, Virginia ("C&S/Sovran"), and thereby to ac- The Board's announcement specified that all per- quire the bank and nonbank subsidiaries of C&S/ sons wishing to appear at the public meeting should Sovran. On September 19, 1991, the Board of submit a written request not later than September 27, Governors of the Federal Reserve System ("the 1991, containing a brief statement of the nature of the Board") announced that public meetings would be expected testimony and the estimated time required held in Richmond, Charlotte, Atlanta, and Dallas for the presentation, to William W. Wiles, Secretary during the week of October 7, 1991, to collect inforof the Board, Board of Governors of the Federal mation on the convenience and needs of the commu- Reserve System, 20th Street and Constitution Ave- nities to be served by this proposal, including the nue, N.W., Washington, D.C. (telefax: (202)728- records of performance of these institutions under the 5850). On the basis of these requests, the Presiding Community Reinvestment Act ("CRA"). Officer will prepare a schedule for persons wishing to The public meeting in Dallas will be held on Octoappear at a later date. Persons not listed on the ber 8, 1991, at the J. Erik Jonsson Central Public schedule may be permitted to speak at the public Library (Dallas Public Library) Auditorium, 1515 meeting at the discretion of the Presiding Officer if Young Street, Dallas, Texas, 75201. The meeting will time permits at the conclusion of the schedule of begin at 9:00 a.m., C.D.T. witnesses. Copies of testimony may, but need not, be filed Purpose and Procedures with the Presiding Officer before a person's presentation. To the extent available, translators will be The purpose of the public meeting is to receive inforprovided to persons wishing to present their views mation regarding the convenience and needs of the in a language other than English if they so request to communities to be served by this proposal, including the Presiding Officer not later than September 30, the records of performance of NCNB and C&S/Sovran 1991. under the CRA. The CRA requires the appropriate Testimony at the public meeting will be presented federal financial supervisory agency to "assess [an] to a panel consisting of the Presiding Officer, Glenn institution's record of meeting the credit needs of its E. Loney, Assistant Director of the Division of entire community, including low- and moderate-income Consumer and Community Affairs, Federal Reserve neighborhoods, consistent with the safe and sound Board; Irene S. McNulty, Program Manager, operation of [the] institution." 12 U.S.C. § 2903. The Compliance, Division of Consumer and Commu- Board, as a federal financial supervisory agency, is nity Affairs, Federal Reserve Board; Scott G. Alva- required to take this record into account in its evaluarez, Associate General Counsel of the Legal tion of an application under section 3 of the BHC Act. Division, Federal Reserve Board; and Fred L. Bag- The public meeting is to be convened under the well, Vice President, Federal Reserve Bank of Rich- Board's policy statement regarding informal meetmond. These panel members may question wit- ings in section 262.25(d) of the Board's Rules (12 nesses, but no cross-examination of witnesses will be C.F.R. 225.25(d)). This policy statement provides permitted. that the purpose of a public meeting is to elicit By order of the Presiding Officer, effective information, to clarify factual issues related to an September 24, 1991. application, and to provide testimony. In contrast to a formal administrative hearing, the rules for taking GLENN E. LONEY evidence in an administrative proceeding will not Presiding Officer apply to this public meeting. In conducting the public Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

958 Federal Reserve Bulletin • November 1991 meeting, the Presiding Officer will have the authority (12 U.S.C. §§ 1842, 1843) ("BHC Act") to acquire and discretion to ensure that the meeting proceeds in C&S/Sovran Corporation, Atlanta, Georgia, and Nora fair and orderly manner. Individuals or groups may folk, Virginia ("C&S/Sovran"), and thereby to acbe represented by counsel. The public meeting will quire the bank and nonbank subsidiaries of C&S/ be transcribed and information regarding procedures Sovran. On September 19, 1991, the Board of for obtaining a copy of the transcript will be an- Governors of the Federal Reserve System ("the nounced at the public meeting. Board") announced that public meetings would be The Board's announcement specified that all per- held in Richmond, Charlotte, Atlanta, and Dallas sons wishing to appear at the public meeting should during the week of October 7, 1991, to collect inforsubmit a written request not later than September 27, mation on the convenience and needs of the commu- 1991, containing a brief statement of the nature of the nities to be served by this proposal, including the expected testimony and the estimated time required records of performance of these institutions under the for the presentation, to William W. Wiles, Secretary of Community Reinvestment Act ("CRA"). the Board, Board of Governors of the Federal Reserve The public meeting in Atlanta will be held on Octo- System, 20th Street and Constitution Avenue, N.W., ber 9, 1991, at the Atlanta-Fulton Public Library Washington, D.C. (telefax: (202)728-5850). On the Auditorium, 1 Margaret Mitchell Square, N.W., basis of these requests, the Presiding Officer will Atlanta, Georgia, 30303. The meeting will begin at prepare a schedule for persons wishing to appear at a 9:00 a.m., E.D.T. later date. Persons not listed on the schedule may be permitted to speak at the public meeting at the discre- Purpose and Procedures tion of the Presiding Officer if time permits at the conclusion of the schedule of witnesses. The purpose of the public meeting is to receive infor- Copies of testimony may, but need not, be filed with mation regarding the convenience and needs of the the Presiding Officer before a person's presentation. communities to be served by this proposal, including To the extent available, translators will be provided to the records of performance of NCNB and C&S/Sovran persons wishing to present their views in a language under the CRA. The CRA requires the appropriate other than English if they so request to the Presiding federal financial supervisory agency to "assess [an] Officer not later than September 30, 1991. institution's record of meeting the credit needs of its Testimony at the public meeting will be presented to entire community, including low- and moderate-income a panel consisting of the Presiding Officer, Griffith L. neighborhoods, consistent with the safe and sound Garwood, Director of the Division of Consumer and operation of [the] institution." 12 U.S.C. § 2903. The Community Affairs, Federal Reserve Board; Diane Board, as a federal financial supervisory agency, is Jackins, Senior Review Examiner, Division of Con- required to take this record into account in its evaluasumer and Community Affairs, Federal Reserve Board; tion of an application under section 3 of the BHC Act. Robert deV. Frierson, Managing Senior Counsel, Legal The public meeting is to be convened under the Division, Federal Reserve Board; and Marion E. Board's policy statement regarding informal meetings White, Vice President, Federal Reserve Bank of Dallas. in section 262.25(d) of the Board's Rules (12 C.F.R. These panel members may question witnesses, but no 225.25(d)). This policy statement provides that the cross-examination of witnesses will be permitted. purpose of a public meeting is to elicit information, to By order of the Presiding Officer, effective Septem- clarify factual issues related to an application, and to ber 24, 1991. provide testimony. In contrast to a formal administrative hearing, the rules for taking evidence in an admin- GRIFFITH L. GARWOOD istrative proceeding will not apply to this public meet- Presiding Officer ing. In conducting the public meeting, the Presiding Officer will have the authority and discretion to ensure NCNB Corporation that the meeting proceeds in a fair and orderly manner. Charlotte, North Carolina Individuals or groups may be represented by counsel. The public meeting will be transcribed and information Notice of Public Meeting regarding procedures for obtaining a copy of the Atlanta, Georgia transcript will be announced at the public meeting. The Board's announcement specified that all per- Background and Public Meeting Notice sons wishing to appear at the public meeting should submit a written request not later than September 27, On August 21, 1991, NCNB Corporation, Charlotte, 1991, containing a brief statement of the nature of the North Carolina ("NCNB"), applied pursuant to sec- expected testimony and the estimated time required tions 3 and 4 of the Bank Holding Company Act for the presentation, to William W. Wiles, Secretary of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 959 the Board, Board of Governors of the Federal Reserve The public meeting in Charlotte will be held on System, 20th Street and Constitution Avenue, N.W., October 9, 1991, at the Federal Reserve Charlotte Washington, D.C. (telefax: (202)728-5850). On the Branch Conference Center, 530 East Trade Street, basis of these requests, the Presiding Officer will Charlotte, North Carolina, 28202. The meeting will prepare a schedule for persons wishing to appear at a begin at 9:00 a.m., E.D.T. later date. Persons not listed on the schedule may be permitted to speak at the public meeting at the discre- Purpose and Procedures tion of the Presiding Officer if time permits at the conclusion of the schedule of witnesses. The purpose of the public meeting is to receive infor- Copies of testimony may, but need not, be filed with mation regarding the convenience and needs of the the Presiding Officer before a person's presentation. communities to be served by this proposal, including To the extent available, translators will be provided to the records of performance of NCNB and C&S/Sovran persons wishing to present their views in a language under the CRA. The CRA requires the appropriate other than English if they so request to the Presiding federal financial supervisory agency to "assess [an] Officer not later than September 30, 1991. institution's record of meeting the credit needs of its Testimony at the public meeting will be presented to entire community, including low- and moderate-income a panel consisting of the Presiding Officer, Griffith L. neighborhoods, consistent with the safe and sound Garwood, Director of the Division of Consumer and operation of [the] institution." 12 U.S.C. § 2903. The Community Affairs, Federal Reserve Board; Diane Board, as a federal financial supervisory agency, is Jackins, Senior Review Examiner, Division of Con- required to take this record into account in its evaluasumer and Community Affairs, Federal Reserve Board; tion of an application under section 3 of the BHC Act. Robert deV. Frierson, Managing Senior Counsel, Legal The public meeting is to be convened under the Division, Federal Reserve Board; and Ronald N. Zim- Board's policy statement regarding informal meetings merman, Vice President, Federal Reserve Bank of At- in section 262.25(d) of the Board's Rules (12 C.F.R. lanta. These panel members may question witnesses, but 225.25(d)). This policy statement provides that the no cross-examination of witnesses will be permitted. purpose of a public meeting is to elicit information, to By order of the Presiding Officer, effective clarify factual issues related to an application, and to September 24, 1991. provide testimony. In contrast to a formal administrative hearing, the rules for taking evidence in an GRIFFITH L. GARWOOD administrative proceeding will not apply to this pub- Presiding Officer lic meeting. In conducting the public meeting, the Presiding Officer will have the authority and discre- NCNB Corporation tion to ensure that the meeting proceeds in a fair and Charlotte, North Carolina orderly manner. Individuals or groups may be represented by counsel. The public meeting will be tran- Notice of Public Meeting scribed and information regarding procedures for Charlotte, North Carolina obtaining a copy of the transcript will be announced at the public meeting. Background and Public Meeting Notice The Board's announcement specified that all persons wishing to appear at the public meeting should On August 21, 1991, NCNB Corporation, Charlotte, submit a written request not later than September 27, North Carolina ("NCNB"), applied pursuant to sec- 1991, containing a brief statement of the nature of the tions 3 and 4 of the Bank Holding Company Act expected testimony and the estimated time required (12 U.S.C. §§ 1842, 1843) ("BHC Act") to acquire for the presentation, to William W. Wiles, Secretary of C&S/Sovran Corporation, Atlanta, Georgia, and Nor- the Board, Board of Governors of the Federal Reserve folk, Virginia ("C&S/Sovran"), and thereby to ac- System, 20th Street and Constitution Avenue, N.W., quire the bank and nonbank subsidiaries of C&S/ Washington, D.C. (telefax: (202)728-5850). On the Sovran. On September 19, 1991, the Board of basis of these requests, the Presiding Officer will Governors of the Federal Reserve System ("the prepare a schedule for persons wishing to appear at a Board") announced that public meetings would be later date. Persons not listed on the schedule may be held in Richmond, Charlotte, Atlanta and Dallas dur- permitted to speak at the public meeting at the discreing the week of October 7, 1991, to collect information tion of the Presiding Officer if time permits at the on the convenience and needs of the communities to conclusion of the schedule of witnesses. be served by this proposal, including the records of Copies of testimony may, but need not, be filed with performance of these institutions under the Commu- the Presiding Officer before a person's presentation. nity Reinvestment Act ("CRA"). To the extent available, translators will be provided to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

960 Federal Reserve Bulletin • November 1991 persons wishing to present their views in a language General Counsel of the Legal Division, Federal Reother than English if they so request to the Presiding serve Board; and Fred L. Bagwell, Vice President, Officer not later than September 30, 1991. Federal Reserve Bank of Richmond. These panel Testimony at the public meeting will be presented to members may question witnesses, but no cross-exama panel consisting of the Presiding Officer, Glenn E. ination of witnesses will be permitted. Loney, Assistant Director of the Division of Con- By order of the Presiding Officer, effective sumer and Community Affairs, Federal Reserve September 24, 1991. Board; Irene S. McNulty, Program Manager, Compliance, Division of Consumer and Community Affairs, GLENN E. LONEY Federal Reserve Board; Scott G. Alvarez, Associate Presiding Officer 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 BB&T Financial Corporation, Gate City Bank, Branch Banking and August 23, 1991 Wilson, North Carolina Greensboro, North Trust Company, Carolina Wilson, North Albemarle Bank, Carolina Elizabeth City, North Carolina First Commercial Corporation, Savers Savings First Commercial September 20, 1991 Little Rock, Arkansas Association, FS&LA, Bank, N.A., Little Rock, Arkansas Little Rock, Arkansas (Geyer Springs, Park Benton State Bank, Hill, Indian Hills, Benton, Arkansas Benton and Conway First National Bank of Branches) Conway, Conway, Arkansas First of America Bank Home Federal Savings First America September 13, 1991 Corporation, Bank, F.A., Bank-Northeast Kalamazoo, Michigan Waukegan, Illinois Illinois, N.A., Libertyville, Illinois Simmons First National Savers Savings Simmons First September 20, 1991 Corporation, Association, FS&LA, National Bank, Pine Bluff, Arkansas Little Rock, Arkansas Pine Bluff, Arkansas (Pine Bluff Catalpa Branch) Southern National Corporation, Preferred Savings Bank, Southern National September 27, 1991 Lumberton, North Carolina F.S.B. Bank of North High Point, North Carolina, Carolina Lumberton, North Carolina Southern National Corporation, Southeastern Federal Southern National September 20, 1991 Lumberton, North Carolina Savings Bank, Bank of North Yadkinville, North Carolina, Carolina Lumberton, North Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 961 APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Applicant(s) Bank(s) ^Date^ Michigan National Corporation, Lockwood Banc Group, Inc., September 5, 1991 Farmington Hills, Michigan Houston, Texas Section 4 Effective Applicant(s) Bank(s) Date First Commercial Corporation, First Savers Oakar Thrift, F.A., September 20, 1991 Little Rock, Arkansas Little Rock, Arkansas First Benton Thrift, F.A., Little Rock, Arkansas First Conway Thrift, F.A., Little Rock, Arkansas First of America Bank Corporation, First of America Federal Interim September 13, 1991 Kalamazoo, Michigan Savings Bank, Waukegan, Illinois Simmons First National Corporation, Pine Bluff Federal Savings and Loan September 20, 1991 Pine Bluff, Arkansas Association, Pine Bluff, Arkansas Southern National Corporation, PSB Interim Federal Savings Bank, September 27, 1991 Lumberton, North Carolina Lumberton, North Carolina Southern National Corporation, SNC Interim Federal Savings Bank, September 20, 1991 Lumberton, North Carolina Lumberton, North Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

962 Federal Reserve Bulletin • November 1991 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 AmFirst Bancorporation, American First National San Francisco September 3, 1991 Everett, Washington Bank, Everett, Washington Big Bend Bancshares Corp., Rio Bancshares Corporation, Dallas September 9, 1991 Presidio, Texas Wilmington, Delaware First Presidio Bank, Presidio, Texas Bon, Inc., The Hesston State Bank, Kansas City September 6, 1991 Moundridge, Kansas Hesston, Kansas Central Illinois Bancorp, Inc., Arrowsmith State Bank, Chicago August 30, 1991 Sidney, Illinois Arrowsmith, Illinois Commercial BancShares, The Dime Bank, Richmond September 19, 1991 Incorporated, Marietta, Ohio Parkersburg, West Virginia Community Bancshares, Inc., Wilkes National Bank, Richmond September 9, 1991 North Wilkesboro, North North Wilkesboro, North Carolina Carolina Community First Bankshares, Community First North Minneapolis September 18, 1991 Inc., Dakota Bankshares, Inc., Fargo, North Dakota Fargo, North Dakota Exchange Bankshares First Kansas Bancorp, Kansas City September 9, 1991 Corporation of Kansas, Leavenworth, Kansas Atchison, Kansas First Bancorp, Inc., First Western Bancorp, Inc., Minneapolis August 28, 1991 Huron, South Dakota Huron, South Dakota First Bentonville Bancshares, First National Bank, St. Louis August 30, 1991 Inc., Bentonville, Arkansas Bentonville, Arkansas First Colonial Bankshares First Colonial Bank of Chicago September 11, 1991 Corporation, McHenry County, Chicago, Illinois Crystal Lake, Illinois First Michigan Bank FMB-Trust and Financial Chicago September 5, 1991 Corporation, Services, National Holland, Michigan Association, Holland, Michigan First Universal Bancorporation, Bank of the West, Kansas City September 4, 1991 Inc., Parker, Colorado Aurora, Colorado The Fischer Corporation, Ostrander Bancshares, Inc., Minneapolis September 16, 1991 Lewiston, Minnesota Ostrander, Minnesota Fulton Financial Corporation, Great Valley Savings Bank, Philadelphia September 18, 1991 Lancaster, Pennsylvania Reading, Pennsylvania Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 963 Section 3—Continued Reserve Effective AApppplliiccaanntt((ss)) BBaannkk((ss)) Bank Date Gifford Bancorp, Inc. Employee Gifford Bancorp, Inc., Chicago August 29, 1991 Stock Ownership Plan, Gifford, Illinois Gifford, Illinois Henderson Citizens Bancshares, Enterprise Bancshares, Inc., Dallas August 26, 1991 Inc., Mount Pleasant, Texas Henderson, Texas Merchants State Bank, Mount Enterprise, Texas Henderson Citizens Delaware Bancshares, Inc., Dover, Delaware Citizens National Bank of Henderson, Henderson, Texas Henderson Citizens Delaware Citizens National Bank of Dallas August 26, 1991 Bancshares, Inc., Henderson, Dover, Delaware Henderson, Texas Miners National Bancorp, Inc., East Penn Bank, Philadelphia September 10, 1991 Pottsville, Pennsylvania Emmaus, Pennsylvania National Banc of Commerce Wood County Bancorporation, Richmond September 19, 1991 Company, Inc., Charleston, West Virginia Parkersburg, West Virginia National City Corporation, Gem Bank, N.A., Cleveland August 27, 1991 Cleveland, Ohio Dayton, Ohio NBD Bancorp, Inc., FNW Bancorp, Inc., Chicago August 30, 1991 Detroit, Michigan Mount Prospect, Illinois Peoples Bancholding Company, Peoples Bank of Lawrence Atlanta August 28, 1991 Inc., County, Moulton, Alabama Moulton, Alabama Rio Bancshares Corporation, First Presidio Bank, Dallas September 9, 1991 Wilmington, Delaware Presidio, Texas River Forest Bancorp, Inc., Aetna Bancorp, Inc., Chicago August 26, 1991 Chicago, Illinois Chicago, Illinois Teutopolis Holding Co., Teutopolis State Bank, St. Louis September 5, 1991 Teutopolis, Illinois Teutopolis, Illinois Timberline Bancshares, Inc., Timberline Community Bank, San Francisco August 30, 1991 Yreka, California Yreka, California Widmer Oil Company, Inc., Widmer Bancshares, Inc., Kansas City September 6, 1991 Salisbury, Missouri Salisbury, Missouri Wiregrass Bancorporation, Inc., Barbour County Bank, Atlanta September 16, 1991 Ashford, Alabama Clayton, Alabama Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

964 Federal Reserve Bulletin • November 1991 Section 4 Nonbanking Reserve Effective AAp npnillitpaolnUt^^c^^ Activity/Company Bank Date Citizens National Bancshares of Border Federal Savings St. Louis August 30, 1991 Hope, Inc., and Loan Association, Hope, Arkansas Hope, Arkansas CNBC Bancorp, Inc., Fort Dearborn Federal Chicago August 26, 1991 Chicago, Illinois Savings and Loan Association, Chicago, Illinois Liberty National Bancorp, Inc., Liberty Investment St. Louis August 28, 1991 Louisville, Kentucky Services, Inc., Louisville, Kentucky NBD Bancorp, Inc., First Fidelity Trust, N.A., Chicago August 27, 1991 Detroit, Michigan Boca Raton, Florida NBD Bancorp, Inc., FNW Capital, Inc., Chicago August 30, 1991 Detroit, Michigan Mount Prospect, Illinois NBD Illinois, Inc., Park Ridge, Illinois Norwest Corporation, Norwest Bank Wisconsin Minneapolis August 23, 1991 Minneapolis, Minnesota East Central, Sheboygan, Wisconsin Seaway Bancshares, Inc., Seaway Investment Chicago September 9, 1991 Chicago, Illinois Management Company, Chicago, Illinois Terrapin Bancorp, Inc., general insurance Chicago August 27, 1991 Elizabeth, Illinois activities APPLICATIONS APPROVED UNDER BANK MERGER ACT Reserve Effective AApppplliiccaanntt((ss)) BBaannkk((ss)) Bank Date Aliant National Corporation, First National Bank of Atlanta August 30, 1991 Alexander City, Alabama Alexander City, Alexander City, Alabama Bank of Shawsville, Bank of Speedwell, Richmond September 6, 1991 Shawsville, Virginia Incorporated, Wytheville, Virginia Trustco Bank New York, Home & City Savings New York August 30, 1991 Schenectady, New York Bank, Albany, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 965 PENDING CASES INVOLVING THE BOARD OF Stanley v. Board of Governors, No. 90-3183 (7th GOVERNORS Circuit, filed October 3,1990). Petition for review of Board order imposing civil money penalties on five This list of pending cases does not include suits former bank holding company directors. On August against the Federal Reserve Banks in which the Board 15, 1991, the court of appeals affirmed the Board's of Governors is not named a party. order. Burke v. Board of Governors, No. 90-9509 (10th Board of Governors v. Kemal Shoaib, No. CV 91-5152 Circuit, filed February 27, 1990). Petition for review (C.D. California, filed September 24, 1991). Action of Board orders assessing civil money penalties and to freeze assets of individual pending administrative issuing orders of prohibition. On July 31, 1991, the adjudication of civil money penalty assessment by court of appeals affirmed the Board's orders. the Board. On September 25, the court issued an Kaimowitz v. Board of Governors, No. 90-3067 (11th order temporarily restraining the transfer or dispo- Circuit, filed January 23, 1990). Petition for review sition of the individual's assets. of Board order dated December 22, 1989, approving Board of Governors v. Ghaith R. Pharaon, No. 91- application by First Union Corporation to acquire CIV-6250 (S.D. New York, filed September 17, Florida National Banks. On August 27, 1991, the 1991). Action to freeze assets of individual pending court of appeals ruled that the petitioner lacked administrative adjudication of civil money penalty standing to bring the action. assessment by the Board. On September 17, the Consumers Union of U.S., Inc. v. Board of Govercourt issued an order temporarily restraining the nors, No. 90-5186 (D.C. Circuit, filed June 29, transfer or disposition of the individual's assets. 1990). Appeal of District Court decision upholding In re Smouha, No. 91-B-13569 (Bkr. S.D. New York, amendments to Regulation Z implementing the filed August 2, 1991). Ancillary proceeding under the Home Equity Loan Consumer Protection Act. On U.S. Bankruptcy Code brought by provisional liqui- July 12, 1991, the Court of Appeals affirmed the dators of BCCI Holdings (Luxembourg) S.A. and majority of district court decision upholding the affiliated companies. On August 15, 1991, the bank- Board's regulations, but remanded two issues to the ruptcy court issued a temporary restraining order Board for further action. staying certain judicial and administrative actions. Synovus Financial Corp. v. Board of Governors, No. Hanson v. Greenspan, No. 91-1599 (D.D.C., filed 89-1394 (D.C. Circuit, filed June 21, 1989). Petition June 28, 1991). Suit for return of funds and financial for review of Board order permitting relocation of a instruments allegedly owned by plaintiffs. bank holding company's national bank subsidiary Fields v. Board of Governors, No. 3:91CV069 (N.D. from Alabama to Georgia. Awaiting decision. Ohio, filed February 5, 1991). Appeal of denial of MCorp v. Board of Governors, No. 89-2816 (5th request for information under the Freedom of Infor- Circuit, filed May 2, 1989). Appeal of preliminary mation Act. injunction against the Board enjoining pending and State of Illinois v. Board of Governors, No. 90-3824 future enforcement actions against a bank holding (7th Circuit, appeal filed December 19, 1990). Ap- company now in bankruptcy. On May 15, 1990, the peal of injunction restraining the Board from provid- Fifth Circuit vacated the district court's order enjoining state examination materials in response to a ing the Board from proceeding with enforcement Congressional subpoena. On November 30, 1990, actions based on section 23A of the Federal Reserve the U.S. District Court for the Northern District of Act, but upheld the district court's order enjoining Illinois issued a preliminary injunction preventing such actions based on the Board's source-of-strength the Board and the Chicago Reserve Bank from doctrine. 900 F.2d 852 (5th Cir. 1990). On March 4, providing documents relating to the state examina- 1991, the Supreme Court granted the parties' crosstion in response to the subpoena. The House Com- petitions for certiorari, Nos. 90-913 , 90-914. Oral mittee on Banking, Finance and Urban Affairs ap- argument is scheduled for October 2, 1991. pealed the injunction. On July 25, 1991, the court of MCorp v. Board of Governors, No. CA3-88-2693 appeals dismissed the appeal as moot. (N.D. Texas, filed October 10, 1988). Application Citicorp v. Board of Governors, No. 90-4124 (2d for injunction to set aside temporary cease and Circuit, filed October 4, 1990). Petition for review of desist orders. Stayed pending outcome of MCorp v. Board order requiring Citicorp to terminate certain Board of Governors, 900 F.2d 852 (5th Cir. 1990). insurance activities conducted pursuant to Delaware White v. Board of Governors, No. CU-S-88-623-RDF law by an indirect nonbank subsidiary. On June 10, (D. Nevada, filed July 29, 1988). Age discrimination 1991, the court of appeals granted the petition and complaint. The case was dismissed on August 30, vacated the Board's order. 1991. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

966 Federal Reserve Bulletin • November 1991 FINAL ENFORCEMENT ORDERS ISSUED BY THE between the Federal Reserve Bank of Boston and BOARD OF GOVERNORS Bank of Boston Corporation, Boston, Massachusetts. First Exchange Corp. Cape Girardeau, Missouri Collinsville Bancorp, Inc. The Federal Reserve Board announced on Septem- Collinsville, Oklahoma ber 26, 1991, the issuance of Cease and Desist Orders against First Exchange Corp., Cape Girardeau, Mis- The Federal Reserve Board announced on Septemsouri, and its five subsidiary banks. The five subsidiary ber 26, 1991, the execution of a Written Agreement banks are: the Jackson Exchange Bank and Trust between the Federal Reserve Bank of Kansas City and Company, Jackson, Missouri; the First Exchange Collinsville Bancorp, Inc., Collinsville, Oklahoma, Bank of Cape Girardeau, Cape Girardeau, Missouri; and William S. Flanagan, Jr., President of Collinsville the First Exchange Bank of Madison County, Freder- Bancorp, Inc. icktown, Missouri; the First Exchange Bank of St. Louis, St. Louis, Missouri; and the First Exchange Bank of North St. Louis County, Florissant, Missouri. First American Corporation Washington, D.C. First Potomac Bancorp, Inc. Vienna, Virginia The Federal Reserve Board announced on September 13, 1991, the execution of a Written Agree- The Federal Reserve Board announced on Septem- ment by the Federal Reserve Bank of Richmond ber 6, 1991, the issuance of Cease and Desist Orders with First American Corporation, Washington, D.C., against First Potomac Bancorp, Inc., Vienna, Vir- and First American Bankshares, Inc., Washington, ginia, and Sailors and Merchants Bank and Trust, D.C. Vienna, Virginia. First Cumberland Bank WRITTEN AGREEMENTS APPROVED BY FEDERAL Madison, Tennessee RESERVE BANKS The Federal Reserve Board announced on Septem- Bank of Boston Corporation ber 17, 1991, the execution of a Written Agreement Boston, Massachusetts among the Federal Reserve Bank of Atlanta, the First Cumberland Bank, Madison, Tennessee, and the The Federal Reserve Board announced on Septem- Commissioner of Financial Institutions of the State of ber 11, 1991, the execution of a Written Agreement Tennessee, Nashville, Tennessee. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1 Financial and Business Statistics CONTENTS WEEKLY REPORTING COMMERCIAL BANKS Domestic Financial Statistics Assets and liabilities A19 All reporting banks A21 Branches and agencies of foreign banks MONEY STOCK AND BANK CREDIT FINANCIAL MARKETS A3 Reserves, money stock, liquid assets, and debt measures A22 Commercial paper and bankers dollar A4 Reserves of depository institutions, Reserve Bank acceptances outstanding credit A22 Prime rate charged by banks on short-term A5 Reserves and borrowings—Depository business loans institutions A23 Interest rates - money and capital markets A6 Selected borrowings in immediately available A24 Stock market—Selected statistics funds—Large member banks A25 Selected financial institutions—Selected assets and liabilities POLICY INSTRUMENTS FEDERAL FINANCE A7 Federal Reserve Bank interest rates A8 Reserve requirements of depository institutions A26 Federal fiscal and financing operations A9 Federal Reserve open market transactions All U.S. budget receipts and outlays A28 Federal debt subject to statutory limitation A28 Gross public debt of U.S. Treasury—Types FEDERAL RESERVE BANKS and ownership A29 U.S. government securities A10 Condition and Federal Reserve note statements dealers—Transactions All Maturity distribution of loan and security A30 U.S. government securities dealers—Positions holdings and financing A31 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 A32 New security issues—State and local A16 Loans and securities—All commercial banks governments and corporations A33 Open-end investment companies—Net sales and asset position COMMERCIAL BANKING INSTITUTIONS A33 Corporate profits and their distribution A33 Total nonfarm business expenditures on new A17 Major nondeposit funds plant and equipment A18 Assets and liabilities, last-Wednesday-of-month A34 Domestic finance companies—Assets and series liabilities and business credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A2 Federal Reserve Bulletin • November 1991 Domestic Financial Statistics—Continued A57 Selected U.S. liabilities to foreign official institutions REAL ESTATE A35 Mortgage markets REPORTED BY BANKS A36 Mortgage debt outstanding IN THE UNITED STATES A57 Liabilities to and claims on foreigners CONSUMER INSTALLMENT CREDIT A58 Liabilities to foreigners A60 Banks' own claims on foreigners A37 Total outstanding and net change A61 Banks' own and domestic customers' claims on A38 Terms foreigners A61 Banks' own claims on unaffiliated foreigners A62 Claims on foreign countries—Combined FLOW OF FUNDS domestic offices and foreign branches A39 Funds raised in U.S. credit markets A41 Direct and indirect sources of funds to credit REPORTED BYNONBANKING BUSINESS markets ENTERPRISES IN THE UNITED STATES A42 Summary of credit market debt outstanding A43 Summary of credit market claims, by holder A63 Liabilities to unaffiliated foreigners A64 Claims on unaffiliated foreigners Domestic Nonfinancial Statistics SECURITIES HOLDINGS AND TRANSACTIONS SELECTED MEASURES A65 Foreign transactions in securities A44 Nonfinancial business activity-Selected A66 Marketable U.S. Treasury bonds and measures notes—Foreign transactions A45 Labor force, employment, and unemployment A46 Output, capacity, and capacity utilization A47 Industrial production—Indexes and gross value INTEREST AND EXCHANGE RATES A49 Housing and construction A67 Discount rates of foreign central banks A50 Consumer and producer prices A67 Foreign short-term interest rates A51 Gross national product and income A68 Foreign exchange rates A52 Personal income and saving A69 Guide to Tabular Presentation, Statistical Releases, and Special International Statistics Tables SUMMARY STATISTICS SPECIAL TABLES A53 U.S. international transactions - Summary A54 U.S. foreign trade A70 Assets and liabilities of commercial banks, A54 U.S. reserve assets June 30, 1991 A54 Foreign official assets held at Federal Reserve A76 Assets and liabilities of U.S. branches and agencies Banks of foreign banks, March 31,1991 A55 Foreign branches of U. S. banks - Balance A80 Pro forma balance sheet and income statements for sheet data priced service operations, June 30,1991 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 aaggggrreeggaattee Q3 Q4 Q1 Q2 Apr. May June July Aug. Reserves of depository institutions2 1 Total -.5 3.9 9.2 3.4 -4.1 16.4 8.6 11.7 2 Required -.5 1.7 4.7 9.3 -.6 16.7 9.4r 4.5 7.5 3 Nonborrowed 3.8 7.8 9.1 3.8 -3.9 14.7 7.8 -4.4 8.0 4 Monetary base3 9.1 9.9 14.5 3.9 -1.5 3.4 3.8 5.5 9.1 Concepts of money, liquid assets, and debt* 5 Ml 3.7 3.4 55..99 7.3 -1.3 13.5 9.6 1.8 9.1 6 M2 3.0 2.0 3.4 4.8r i.ff 4.6r 1.7r .0 7 M3 1.6 .9 4.0 1.9* ,7r ,7r -2.0 -5.4r -1.4 8 L 1.9 1.8r 3.2 —2.4r -7.9r -5.r 6.01 1.0 n.a. 9 Debt 7.0r 5.7r 4.5r 3.7r 1.5r 4.9r 5.r 5.1 n.a. Nontrgnsaction components 10 In M25 22..88rr 11..66rr 22..77rr 33..99"" 44..44rr 1.6r -,8r --55..88rr --33..11 11 In M3 only6 -3.91" -3.6r 6.5r -10.5r -9.2r -15.7r -i8.r -12.4r -7.9 Time and savings deposits Commercial banks 12 Savings 5.9 5.2 10.2 16.3r 17.5r 14.9* 21.0 13.9 17.1 13 MMDAs... 8.2 3.5 6.1 16.8 15.1 18.6 13.8 10.4 6.5 14 Smalltime,. 15.5 11.5 8.8 -1.7 -7.3 -5.8 1.0 — 1.6r 7.8 15 Large time8,9 -2.2 -8.5 12.0 .3 -4.2 2.4 -3.9* -13.6r -9.1 Thrift institutions 16 Savings -3.3 -7.3 -.5 16.6 20.7 18.1 11.4 7.5r 9.6 17 MMDAs. -7.7 -7.2 -.9 21.2 23.0 30.7 12.3 14.0 -8.6 18 Smalltime7. -11.0 -8.6 -9.8 -13.7 -9.6 -14.9 -26.5 -22.1 -28.3 19 Large time8,9 -27.3 -26.3 -31.9 -35.1 -30.1 -46.3 -42.4 -38.1 -47.9 Money market mutual funds 20 General purpose and broker-dealer 10.0 99..88 1188..22 6.7 2.3 3.0 -2.6 -16.1 --2222..00 21 Institution-only 21.6 30.4 49.9 23.0 30.4 4.9 -23.8 -12.6 25.4 Debt components4 22 Federal 14.4 11.6 1122..00rr 5.7r -3.2r 10.5r 14.9 11.8 n.a. 23 Nonfederal 4.7r 3.8r 2.1r 3.<f 3^ 3.1r 2.0r 2.8 n.a. 1. Unless otherwise noted, rates of change are calculated from average offices in the United Kingdom and Canada, and (3) balances in both taxable and amounts outstanding during preceding month or quarter. tax-exempt, institution-only money market funds. Excludes amounts held by 2. Figures incorporate adjustments for discontinuities associated with regula- depository institutions, the U.S. government, money market funds, and foreign tory changes in reserve requirements. (See also table 1.20.) banks and official institutions. Also excluded is the estimated amount of overnight 3. Seasonally adjusted, break-adjusted monetary base consists of (1) season- RPs and Eurodollars held by institution-only money market funds. Seasonally ally adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted M3 is computed by adjusting its non-M2 component as a whole and then adjusted currency component of the money stock, plus (3) (for all quarterly adding this result to seasonally adjusted M2. reporters on the "Report of Transaction Accounts, Other Deposits and Vault L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Cash" and for all weekly reporters whose vault cash exceeds their required Treasury securities, commercial paper, and bankers acceptances, net of money reserves) the seasonally adjusted, break-adjusted difference between current vault market fund holdings of these assets. Seasonally adjusted L is computed by cash and the amount applied to satisfy current reserve requirements. summing U.S. savings bonds, short-term Treasury securities, commercial paper, 4. Composition of the money stock measures and debt is as follows: and bankers acceptances, each seasonally adjusted separately, and then adding Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults this result to M3. of depository institutions; (2) travelers checks of nonbank issuers; (3) demand Debt: Debt of domestic nonfinancial sectors consists of outstanding creditdeposits at ail commercial banks other than those due to depository institutions, market debt of the U.S. government, state and local governments, and private the U.S. government, and foreign banks and official institutions, less cash items in nonfinancial sectors. Private debt consists of corporate bonds, mortgages, conthe process of collection and Federal Reserve float; and (4) other checkable sumer credit (including bank loans), other bank loans, commercial paper, bankers deposits (OCDs), consisting of negotiable order of withdrawal (NOW) and acceptances, and other debt instruments. Data are derived from the Federal automatic transfer service (ATS) accounts at depository institutions, credit union Reserve Board's flow of funds accounts. Data on debt of domestic nonfinancial share draft accounts, and demand deposits at thrift institutions. Seasonally sectors are monthly averages, derived by averaging adjacent month-end levels. adjusted Ml is computed by summing currency, travelers checks, demand Growth rates for debt reflect adjustments for discontinuities over time in the levels deposits, and OCDs, each seasonally adjusted separately. of debt presented in other tables. M2: Ml plus (1) overnight (and continuing-contract) repurchase agreements 5. Sum of (1) overnight RPs and Eurodollars, (2) money market fund balances (RPs) issued by all depository institutions and overnight Eurodollars issued to (general purpose and broker-dealer), (3) MMDAs, and (4) savings and small time U.S. residents by foreign branches of U.S. banks worldwide, (2) money market deposits. deposit accounts (MMDAs), (3) savings and small time deposits (time deposits— 6. Sum of (1) large time deposits, (2) term RPs, (3) term Eurodollars of U.S. including retail repurchase agreements (RPs)—in amounts of less than $100,000), residents, and (4) money market ftind balances (institution-only), less (5) a and (4) balances in both taxable and tax-exempt general- purpose and broker- consolidation adjustment that represents the estimated amount of overnight RPs dealer money market funds. Excludes individual retirement accounts (IRAs) and and Eurodollars held by institution-only money market funds. This sum is Keogh balances at depository institutions and money market funds. Also excludes seasonally adjusted as a whole. all balances held by U.S. commercial banks, money market funds (general 7. Small time deposits—including retail RPs—are those issued in amounts of purpose and broker-dealer), foreign governments and commercial banks, and the less than $100,000. All IRA and Keogh account balances at commercial banks and U.S. government. Seasonally adjusted M2 is computed by adjusting its non-Mi thrift institutions are subtracted from small time deposits. component as a whole and then adding this result to seasonally adjusted Ml. 8. Large time deposits are those issued in amounts of $100,000 or more, M3: M2 plus (1) large time deposits and term RP liabilities (in amounts of excluding those booked at international banking facilities. $100,000 or more) issued by all depository institutions, (2) term Eurodollars held 9. Large time deposits at commercial banks less those held by money market by U.S. residents at foreign branches of U.S. banks worldwide and at all banking funds, depository institutions, and foreign banks and official institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 DomesticN onfinancial Statistics • November 1991 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT Millions of dollars Monthly averages of Weekly averages of daily figures for week ending daily figures Factor 1991 1991 June July Aug. July 17 July 24 July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 291,288 294,061 292,833 294,025 292,545 291,567 293,807 293,465 292,201 291,775 U.S. government securities2 2 Bought outright-system account 247,135 249,075 251,794 249,038 250,830 249,318 249,765 251,684 251,495 252,922 3 Held under repurchase agreements ... 527 2,766 543 2,623 0 0 1,202 0 628 577 Federal agency obligations 4 Bought outright 6,213 6,1% 6,159 6,213 6,190 6,159 6,159 6,159 6,159 6,159 5 Held under repurchase agreements ... 98 241 17 190 0 0 19 0 29 28 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 201 88 205 145 146 32 673 11 127 53 8 Seasonal credit 222 320 332 300 339 362 340 322 337 337 9 Extended credit 7 45 297 3 4 186 190 269 293 369 10 Float 402 474 335 405 349 630 220 425 579 278 11 Other Federal Reserve assets 36,481 34,856 33,151 35,109 34,686 34,880 35,240 34,595 32,555 31,051 12 Gold stock 11,060 11,062 11,062 11,062 11,062 11,062 11,062 11,062 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 20,723 20,769 20,810 20,767 20,775 20,783 20,793 20,803 20,813 20,823 ABSORBING RESERVE FUNDS 15 Currency in circulation 290,896 293,560 293,864 294,311 292,888 292,278 293,357 294,248 294,004 293,428 16 Treasury cash holdings 623 615 610 621 613 606 614 611 612 608 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 6,428 6614 5,644 6,646 6,033 6,470 5,808 6,028 5,138 5,1% 18 Foreign 228 242 233 229 221 239 198 218 265 245 19 Service-related balances and adjustments 3,194 3,239 3,307 3,144 3,316 3,260 3,314 3,301 3,278 3,294 20 Other 210 219 202 287 192 213 183 185 212 221 21 Other Federal Reserve liabilities and capital 8,288 7,812 8,282 7,912 7,909 8,006 8,498 8,230 8,100 8,154 22 Reserve balances with Federal Reserve Banks3 23,223 23,609 22,580 22,721 23,227 22,357 23,709 22,527 22,487 22,533 End-of-month figures Wednesday figures 1991 1991 June July Aug. July 17 July 24 July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 291,795 293,653 293,306 293,558 290,994 293,653 301,750 292,206 295,215 291,775 U.S. government securities Bought outright-system account ... 247,484 250,978 254,959 250,225 249,177 250,978 249,574 249,630 254,317 252,922 Held under repurchase agreements 962 0 0 682 0 0 5,205 0 0 577 Federal agency obligations Bought outright 6,213 6,159 6,159 6,213 6,159 6,159 6,159 6,159 6,159 6,159 Held under repurchase agreements 477 0 0 150 0 0 74 0 0 28 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions Adjustment credit 1,182 85 97 33 81 85 4,443 7 797 53 Seasonal credit 290 359 305 316 357 359 327 328 348 337 Extended credit 7 130 443 2 6 130 124 236 226 369 Float 433 900 48 962 420 900 381 1,230 849 278 Other Federal Reserve assets 34,747 35,043 31,296 34,975 34,793 35,043 35,462 34,617 32,520 31,051 12 Gold stock 11,062 11,062 11,062 11,062 11,062 11,062 11,062 11,062 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 20,752 20,783 20,833 20,767 20,775 20,783 20,793 20,803 20,813 20,823 ABSORBING RESERVE FUNDS 15 Currency in circulation 291,563 292,596 294,884 293,659 292,497 292,5% 293,898 294,305 293,864 293,428 16 Treasury cash holdings 613 605 605 621 606 605 610 612 608 608 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 11,822 5,831 6,745 7,111 4,644 5,831 7,435 4,964 5,164 5,1% 18 Foreign 224 314 256 219 200 314 203 282 266 245 19 Service-related balances and adjustments 3,283 3,260 3,412 3,144 3,316 3,260 3,314 3,301 3,278 3,294 20 Other 213 212 219 232 174 212 185 190 199 221 21 Other Federal Reserve liabilities and capital 7,082 8165 8,729 7,633 7,758 8,165 8,057 8,072 7,900 8,154 22 Reserve balances with Federal Reserve Banks3 18,826 24,533 20,370 22,787 23,655 24,533 29,921 22,363 25,829 22,533 1. For amounts of cash held as reserves, see table 1.12. Components may not scheduled to be bought back under matched sale-purchase transactions. sum to totals because of rounding. 3. Excludes required clearing balances and adjustments to compensate for 2. Includes securities loaned—fully guaranteed by U.S. government securities float. pledged with Federal Reserve Banks—and excludes any securities sold and 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 Prorated monthly averages of biweekly averages RReesseerrvvee ccllaassssiiffiiccaattiioonn 1988 1989 1990 1991 Dec. Dec. Dec. Feb. Mar. Apr. May June Julyr Aug. 1 Reserve balances with Reserve Banks2 37,837 35,436 30,237 19,827 21,734 23,508 22,287 23,685 23,271 22,809 2 Total vault cash3 28,204 29,822 31,777 33,477 30,895r 30,556 30,720 30,524 31,322 31,779 3 Applied vault cash4, 25,909 27,374 28,884 28,724 26,853 26,793 26,776 26,722 27,389 27,798 4 Surplus vault cash 2,295 2,448 2,893 4,753 4,043 3,764r 3,944 3,801 3,933 3,981 5 Total reserves 63,746 62,810 59,120 48,551 48,586 50,301 49,063 50,407 50,660 50,607 6 Required reserves 62,699 61,887r 57,456 46,743 47,407r 49,270r 48,033 49,399 49,754 49,522 7 Excess reserve balances at Reserve Banks ... 1,047 923r l,664r l,808r 1,179 l,031r 1,03c 1,008 906 1,085 8 Total borrowings at Reserve Banks8 1,716 265 326 252 241 231 303 340 607 764 9 Seasonal borrowings 130 84 76 37 55 79 151 222 317 331 10 Extended credit9 1,244 20 23 34 53 86 88 8 46 300 Biweekly averages of daily figures for weeks ending 1991 May 1 May 15 May 29 June 12 June 26 July 10 July 24 Aug 7r Aug. 21 Sept. 4 1 Reserve balances with Reserve Banks2 23,061 22,907 21,363 24,027 23,344 23,853 22,977 23,029 22,508 23,074 2 Total vault cash3 30,706r 30,341r 31,234r 29,787 30,926 31,327 31,351 31,257 32,499 31,137 3 Applied vault cash4 26,781 26,532 27,114 26,115 27,048 27,404 27,456 27,234 28,469 27,254 4 Surplus vault cash5 3,925r 3,809 4,120r 3,672 3,878 3,923 3,895 4,023 4,030 3,883 5 Total reserves 49,842 49,438 48,477 50,142 50,392 51,256 50,433 50,262 50,977 50,328 6 Required reserves 48,644r 48,469 47,357r 49,411 49,110 50,375r 49,492r 49,393 49,917 49,059 7 Excess reserve balances at Reserve Banks ... l,^ 970 l,121r 731 1,282 882r 941r 870 1,061 1,269 8 Total borrowings at Reserve Banks8 244 314 299 283 314 601 469 892 679 795 9 Seasonal borrowings 92 138 165 176 242 290 320 351 330 320 10 Extended credit9 103 128 59 9 8 5 4 188 281 406 1. Data in this table also appear in the Board's H.3 (502) weekly statistical institutions (that is, those whose vault cash exceeds their required reserves) to release. For ordering address, see inside front cover. Components may not sum to satisfy current reserve requirements. totals because of rounding. 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 depository institutions subject to reserve 7. Total reserves (line 5) less required reserves (line 6). requirements. Dates refer to the maintenance periods during which the vault cash 8. Also includes adjustment credit. can be used to satisfy reserve requirements. Under contemporaneous reserve 9. Extended credit consists of borrowing at the discount window under the requirements, maintenance periods end thirty days after the lagged computation terms and conditions established for the extended credit program to help periods during which the balances are held. depository institutions deal with sustained liquidity pressures. Because there is 4. All vault cash held during the lagged computation period by "bound" not the same need to repay such borrowing promptly as there is with traditional institutions (that is, those whose required reserves exceed their vault cash) plus short-term adjustment credit, the money market impact of extended credit is the amount of vault cash applied during the maintenance period by "nonbound" similar to that of nonborrowed reserves. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • November 1991 1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Banks1 Millions of dollars, averages of daily figures 1991, week ending Monday SSoouurrccee aanndd mmaattuurriittyy Mar. 4 Mar. 11 Mar. 18 Mar. 25 Apr. 1 Apr. 8 Apr. 15 Apr. 22 Apr. 29 Federal funds purchased, repurchase agreements, and other selected borrowings From commercial banks in the United States 1 For one day or under continuing contract 80,759 79,628 75,762 68,931 71,048 81,372 80,513 73,405 67,102 2 For all other maturities 15,491 16,159 1177,,995511 1177,,553300 17,436 16,378 1155,,993355 1155,,336633 1155,,009922 From other depository institutions, foreign banks and official institutions, and U.S. government agencies 3 For one day or under continuing contract 31,090 30,565 27,997 31,312 29,035 31,718 28,875 28,319 30,267 4 For all other maturities 20,826 20,988 21,676 21,386 20,783 20,730 21,869 20,716 20,308 Repurchase agreements on U.S. government and federal agency securities Brokers and nonbank dealers in securities 5 For one day or under continuing contract 10,522 10,881 10,781 11,007 8,015 12,995 10,730 10,097 9,754 6 For all other maturities 17,441 17,643 18,006 1177,,884477 18,183 18,620 1199,,332200 1188,,440000 1188,,114499 All other customers 7 For one day or under continuing contract 24,972 23,766 24,677 24,147 22,908 25,150 24,029 23,555 23,289 8 For all other maturities 11,340 11,584 11,888 11,983 12,587 10,903 11,167 10,924 11,846 MEMO: Federal funds loans and resale agreements in immediately available funds in maturities of one day or under continuing contract 9 To commercial banks in the United States 46,140 42,822 41,746 39,240 41,515 44,681 43,902 40,273 36,352 10 To all other specified customers2 21,409 17,879 20,324 17,401 15,289 17,841 20,559 17,148 15,832 1. Banks with assets of $4 billion or more as of Dec. 31, 1988. 2. Brokers and nonbank dealers in securities, other depository institutions, Data in this table also appear in the Board's H.5 (507) weekly statistical release. foreign banks and official institutions, and U.S. government agencies. For ordering address, see inside 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 Extended credit2 Adjustment credit and Federal Reserve seasonal credit1 First 30 days of borrowing After 30 days of borrowing3 Bank 9/2 O 7 n /9 1 Eff d e a c t t e i ve Pre r v at i e o us 9/2 O 7 n /9 1 Eff d e a c t t e i ve Pre r v at i e o us 9/2 O 7 n /9 1 Eff d e a c t t e i ve Pre r v at i e o us Effective date Boston 9/13/91 5.5 9/13/91 5.5 6.0 9/19/91 6.10 9/5/91 New York ... 9/13/91 9/13/91 9/19/91 9/5/91 Philadelphia.. 9/13/91 9/13/91 9/19/91 9/5/91 Cleveland 9/13/91 9/13/91 9/19/91 9/5/91 Richmond — 9/13/91 9/13/91 9/19/91 9/5/91 Atlanta 9/13/91 9/13/91 9/19/91 9/5/91 Chicago 9/13/91 9/13/91 9/19/91 9/5/91 St. Louis 9/17/91 9/17/91 9/19/91 9/5/91 Minneapolis.. 9/13/91 9/13/91 9/19/91 9/5/91 Kansas City.. 9/13/91 9/13/91 9/19/91 9/5/91 Dallas 9/13/91 9/13/91 9/19/91 9/5/91 San Francisco 9/13/91 5.5 9/13/91 5.5 6.0 9/19/91 6.10 9/5/91 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. Ba o n f k Effective A le l v l e F l) . — R. Ba o n f k Effective date A le l v l e F l) . — R. Ba o n f k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1977. 6 6 1981—May 5 .. 13-14 14 1985—May 20 7.5-8 7.5 1978--Jan. 9 6-6.5 6.5 8 .. 14 14 24 7.5 7.5 7.0 6.5 6.5 Nov. 2 .. 13-14 13 May 11 6.5-7 7 6 .. 13 13 1986—Mar. 7 7-7.5 7 1? 7 7 Dec. 4 .. 12 12 10 7 7 July 1 .. 7-7.25 7.25 Apr. 21 6.5-7 6.5 10 , 7.25 7.25 1982—July 20 .. 11.5-12 11.5 July 11 6 6 Aug. 21 7.75 7.75 23 .. 11.5 11.5 Aug. 21 5.5-6 5.5 Sept. 7? 8 8 Aug. 2 .. 11-11.5 11 22 5.5 5.5 Oct. 16 8-8.5 8.5 3 .. 11 11 20 8.5 8.5 16 .. 10.5 10.5 1987—Sept. 4 5.5-6 6 Nov. 1 8.5-9.5 9.5 27 .. 10-10.5 10 11 6 6 T 9.5 9.5 30 .. 10 10 Oct. 12 .. 9.5-10 9.5 1988—Aug. 9 6-6.5 6.5 1979--July ?0 10 10 13 .. 9.5 9.5 11 6.5 6.5 Aug. 17 10-10.5 10.5 Nov. 22 .. 9-9.5 9 70 10.5 10.5 26 .. 9 9 1989—Feb. 24 6.5-7 7 Sept. 19 , 10.5-11 11 Dec. 14 .. 8.5-9 9 27 7 7 n 11 11 15 .. 8.5-9 8.5 Oct. 8 11-12 12 17 .. 8.5 8.5 1990—Dec. 19 6.5 6.5 10 12 12 1984—Apr. 9 .. 8.5-9 9 1991—Feb. 1 6-6.5 6 1980--Feb. 15 12-13 13 13 .. 9 9 4 6 6 19 , , 13 13 Nov. 21 .. 8.5-9 8.5 Apr. 30 5.5-6 5.5 May 29 . , 12-13 13 26 .. 8.5 8.5 May 2 5.5 5.5 <0 , , 12 12 Dec. 24 .. 8 8 Sept. 13 5-5.5 5 June n . , 11-12 11 Sept. 17 5 5 16 11 11 July ?8 10-11 10 In effect Sept. 27, 1991 5 5 79 10 10 Sept. 76 11 11 Nov. 17 12 12 Dec. 5 12-13 13 1. Adjustment credit is available on a short-term basis to help depository flexible rate is reestablished on the first business day of each two-week reserve institutions meet temporary needs for funds that cannot be met through reason- maintenance period. At the discretion of the Federal Reserve Bank, the time able alternative sources. The highest rate established for loans to depository period for which the basic discount rate is applied may be shortened. institutions may be charged on adjustment-credit loans of unusual size that result 4. For earlier data, see the following publications of the Board of Governors: from a major operating problem at the borrower's facility. Banking and Monetary Statistics, 1914-1941, and 1941-1970-, and the Annual Seasonal credit is available to help smaller depository institutions meet regular, Statistical Digest, 1970-1979. seasonal needs for funds that cannot be met through special industry lenders and In 1980 and 1981, the Federal Reserve applied a surcharge to short-term that arise from a combination of expected patterns of movement in their deposits adjustment-credit borrowings by institutions with deposits of $500 million or more and loans. that had borrowed in successive weeks or in more than four weeks in a calendar 2. Extended credit is available to depository institutions when similar assist- quarter. A 3 percent surcharge was in effect from Mar. 17, 1980, through May 7, ance is not reasonably available from other sources, when exceptional circum- 1980. There was no surcharge until Nov. 17,1980, when a 2 percent surcharge was stances or practices involve only a particular institution, or when an institution is adopted; the surcharge was subsequently raised to 3 percent on Dec. 5,1980, and experiencing difficulties adjusting to changing market conditions over a longer to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective perioid of time. Sept. 22, 1981, and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981, the 3. For extended-credit loans outstanding more than thirty days, a flexible rate formula for applying the surcharge was changed from a calendar quarter to a somewhat above rates on market sources of funds ordinarily is charged, but in no moving thirteen week period. The surcharge was eliminated on Nov. 17, 1981. case is the rate charged less than the basic discount rate plus 50 basis points. The Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • November 1991 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Type of deposit2 Net transaction accounts 1 $0 million-$41.1 million... 12/18/90 2 More than $41.1 million .. 12/18/90 3 Nonpersonal time deposits' 12/27/90 4 Eurocurrency liabilities5 .. 12/27/90 1. Required reserves must be held in the form either of deposits with Federal three per month for the purpose of making payments to third persons or others. Reserve Banks or vault cash. Nonmember institutions may maintain reserve However, money market deposit accounts (MMD As) and similar accounts subject balances with a Federal Reserve Bank indirectly on a pass-through basis with to the rules that permit no more than six preauthorized, automatic, or other certain approved institutions. For previous reserve requirements, see earlier transfers per month, of which no more than three can be checks, are not editions of the Annual Report or the Federal Reserve Bulletin. Under provisions transaction accounts (such accounts are savings deposits). of the Monetary Control Act, depository institutions include commercial banks, The Monetary Control Act of 1980 requires that the amount of transaction mutual savings banks, savings and loan associations, credit unions, agencies and accounts against which the 3 percent reserve requirement applies be modified branches of 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- 4. For institutions that report weekly, the reserve requirement on nonpersonal ment each year for the succeeding calendar year by 80 percent of the percentage time deposits with an original maturity of less than 1 Vi years was reduced from 3 increase in the total reservable liabilities of all depository institutions, measured percent to 1W percent for the maintenance period that began Dec. 13, 1990, and on an annual basis as of June 30. No corresponding adjustment is to be made in to zero for the maintenance period that began Dec. 27, 1990, the reserve the event of a decrease. On Dec. 20, 1988, the exemption was raised from $3.2 requirement on nonpersonal time deposits with an original maturity of 1 Vi years million to $3.4 million. In determining the reserve requirements of depository or more has been zero since Oct. 6, 1983. institutions, the exemption applies in the following order: (1) net negotiable order For institutions that report quarterly, the reserve requirement on nonpersonal of withdrawal (NOW) accounts (NOW accounts less allowable deductions); and time deposits with an original maturity of less than 1 Vi years was reduced from 3 (2) net other transaction accounts. The exemption applies only to accounts that percent to zero on Jan. 17, 1991. would be subject to a 3 percent reserve requirement. 5. The reserve requirement on Eurocurrency liabilities was reduced from 3 3. Transaction accounts include all deposits against which the account holder is percent to zero in the same manner and on the same dates as were the reserve permitted to make withdrawals by negotiable or transferable instruments, pay- requirement on nonpersonal time deposits with an original maturity of less than ment orders of withdrawal, and telephone and preauthorized transfers in excess of I'/i years (see note 4). 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 Type of transaction 1989 1990 Feb. Mar. Apr May June U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) 2 1 Tre G 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 18 4 24 7 , , 7 2 3 9 9 1 12 0 0 1,9607 31 0 3 908 0 3,411 0 307 4 3 R Ex ed ch em an p g t e io s ns 24 2 1 , , 2 8 0 7 0 6 23 1 1 2 , , 2 7 1 3 1 0 24 4 1 , , 4 0 0 8 0 6 23 1 , , 7 0 0 0 2 0 21,3810 18,80 0 8 21,981 0 27,548 0 19,6800 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 i e n c s h o a n se e s year 2,1706 3207 4205 0 0 1000 70 0 0 70 0 0 r 20 0 0 7 Maturity shifts 23,854 28,848 25,638 989 2,292 413 4,324 5,175 8 9 R Ex ed ch em an p g t e io s ns -24,5880 -25,7 5 8 0 3 0 -27,4240 -1,3260 -3,0450 -1,87 0 7 -993 0 -4,887 0 1 1 1 0 On G G e r r t o o o s s s s f iv p sa e u l r e y c s e h a a r s s e s 5,4 8 8 0 5 0 1, 4 4 9 3 0 6 2 2 0 5 0 0 0 0 0 0 2,95 0 0 55 0 0 r 0 0 12 Maturity shifts -17,720 -25,534 -21,770 -778 -1,909 -213 -4,214 -3,410 13 Exchanges 22,515 23,250 25,410 929 2,545 1,877 777 4,287 1 1 4 5 Fiv G G e r r o o to s s s s t e p s n a u l r e y c s e h a a r s s e s 1,5 1 7 7 9 5 28 2 7 9 10 0 0 0 0 3500 5 0 0 0 0 0 0 16 Maturity shifts -5,946 -2,231 -2,186 -212 -23 -200 -110 -1,605 17 Exchanges 1,797 1,934 789 397 400 0 216 400 1 1 8 9 Mo G G r r e r o o t s s h s s a p s n a u l t r e e c s n h a y s e e a s r s 1,3908 2804 0 0 0 0 0 0 20 Maturity shifts -188 -1,086 -1,681 -361 -160 21 Exchanges 275 600 1,226 100 200 22 All G m ro a s t s u r p i u ti r e c s h ases 18,863 16,617 25,414 0 2,417 4,013 2,158r 3,611 23 Gross sales 1,562 13,337 7,591 120 0 0 0 0 24 Redemptions 2,200 13,230 4,400 1,000 0 0 0 0 Matched transactions 25 Gross sales 1,168,484 1,323,480 1,369,052 130,751 127,589 151,096 185,662 147,796 118,903 26 Gross purchases 1,168,142 1,326,542 1,363,434 131,087 127,502 151,412 187,032 147,803 118,239 Repurchase agreements2 27 Gross purchases 152,613 129,518 219,632 36,337 44,688 23,821 16,173 9,241 9,440 28 Gross sales 151,497 132,688 202,551 38,462 44,809 38,589 16,173 9,241 8,478 29 Net change in U.S. government securities 15,872 -10,055 24,886 -2,909 2,209 -10,439 3,528r 3,618 335 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 4,416 3,546 2,518 640 885 1,225 34 Gross sales 56,471 40,411 40,461 3,571 4,466 3,784 640 885 748 35 Net change in federal agency obligations . -2,018 1,192 845 -920 -1,266 -91 477 36 Total net change in System Open Market Account 16,070 -12,073 26,078 -2,064 1,290 -11,705 3,437R 3,618 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

A10 Domestic Nonfinancial Statistics • November 1991 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month Account 1991 July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 June 30 July 31 Aug. 30 Consolidated condition statement ASSETS 1 Gold certificate account 11,062 11,062 11,062 11,062 11,062 11,062 11,062 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 544 544 554 565 559 575 544 555 Loans 4 To depository institutions 574 4,894 570 1,371 727 1,479 574 844 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 6,159 6,159 6,159 6,159 6,159 6,213 6,159 6,159 8 Held under repurchase agreements 0 74 0 0 0 477 0 0 9 Total U.S. Treasury securities. 258,502 254,779 249,630 254,317 253,044 248,446 250,978 254,959 10 Bought outright2 250,978 249,574 249,630 254,317 253,044 247,484 250,978 254,959 11 Bills 122,183 120,630 120,596 125,182 123,909 119,314 122,183 125,824 12 Notes 97,332 97,482 97,572 97,522 97,522 96,707 97,332 97,522 13 Bonds 31,463 31,463 31,463 31,613 31,613 31,463 31,463 31,613 14 Held under repurchase agreements 0 5,205 0 0 0 962 0 0 15 Total loans and securities 257,710 265,906 256,359 261,846 259,930 256,615 257,710 261,962 16 Items in process of collection 5,547 5,596 4,958 5,381 4,723 4,859 5,547 4,832 17 Bank premises 940 940 941 946 950 931 940 950 Other assets 18 Denominated in foreign currencies 28,497 28,520 27,574 27,134 25,376 28,682 28,497 25,661 19 All other 5,577 6,121 6,125 4,409 4,636 5,379 5,577 4,723 20 Total assets 319,896 328,707 317,592 321,361 317,255 318,121 319,896 319,763 LIABILITIES 21 Federal Reserve notes 272,962 274,260 274,668 274,224 274,237 272,000 272,962 275,210 22 Total deposits 34,228 41,307 30,307 34,540 30,686 34,460 34,228 31,200 23 Depository institutions 27,871 33,484 24,872 28,911 25,394 22,202 27,871 23,962 24 U.S. Treasury—General account 5,831 7,435 4,964 5,164 4,758 11,822 5,831 6,745 25 Foreign—Official accounts 314 203 282 266 302 224 314 256 26 Other 212 185 190 199 233 213 212 236 27 Deferred credit items 4,541 5,083 4,545 4,698 4,325 4,579 4,541 4,624 28 Other liabilities and accrued dividends 2,370 2,583 2,553 2,406 2,468 2,392 2,370 2,977 29 Total liabilities. 314,102 323,233 312,073 315,867 311,716 313,431 314,102 314,012 CAPITAL ACCOUNTS 30 Capital paid in 2,556 2,557 2,563 2,567 2,569 2,546 2,556 2,569 31 Surplus 2,423 2,423 2,423 2,423 2,423 2,114 2,423 2,423 32 Other capital accounts. 815 494 533 504 547 31 815 759 33 Total liabilities and capital accounts 319,896 328,707 317,592 321,361 317,255 318,121 319,8% 319,763 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international accounts . 244,682 240,712 245,251 245,818 247,031 243,233 244,682 250,866 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Bank) — 342,614 345,502 347,717 349,245 351,976 325,417 342,614 353,213 36 LESS: Held by Federal Reserve Bank 69,652 71,242 73,049 75,021 77,738 53,450 69,652 78,003 37 Federal Reserve notes, net 272,962 274,260 274,668 274,224 274,237 271,967 272,962 275,210 Collateral held against notes, net: 38 Gold certificate account 11,062 11,062 11,062 11,062 11,062 11,062 11,062 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 251,882 253,180 253,588 253,143 253,157 250,887 251,882 254,130 42 Total collateral. 272,962 274,260 274,668 274,224 274,237 271,967 272,962 275,210 1. Some of the data in this table also appear in the Board's H.4.1 (503) weekly 3. Valued monthly at market exchange rates. statistical release. For ordering address, see inside front cover. Components may 4. Includes special investment account at the Federal Reserve Bank of Chicago not sum to totals because of rounding. in Treasury bills maturing within ninety 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 1 Millions of dollars Wednesday End of month Type and maturity grouping 1991 1991 July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 June 28 July 31 Aug. 30 1 Total loans 574 4,894 1,371 727 1,479 574 844 2 Within fifteen days 393 4,671 353 1,312 645 1,336 393 659 3 Sixteen days to ninety days.. 1801 2203 2107 509 802 1403 1801 1805 4 Ninety-one days to one year 5 Total acceptances 0 0 0 0 6 Within fifteen days 0 0 0 0 7 Sixteen days to ninety days . 0 0 0 0 8 Ninety-one days to one year 9 Total U.S. Treasury securities.. 250,978 254,779 254,779 254,317 253,044 247,484 250,978 254,959 10 Within fifteen days2 15,726 17,030 17,030 15,611 13,230 8,107 15,726 3,393 11 Sixteen days to ninety days. 54,238 55,183 55,183 54,934 59,121 62,898 54,238 59,957 12 Ninety-one days to one year 81,426 82,829 82,829 84,926 81,846 76,727 81,426 92,762 1 1 1 3 4 5 O M Fi n v o e e r e y y e t e h a a a r r n s t o t t e o f n i t v e y e n e y a y e r e a s a rs rs 6 2 1 2 4 2 , , , 0 7 8 4 1 3 0 6 2 6 2 1 2 4 2 , , , 1 7 8 9 1 3 0 6 2 6 2 1 2 4 2 , , , 1 7 8 9 1 3 0 6 2 6 2 1 0 4 3 , , , 8 1 8 4 7 2 8 8 0 6 2 1 0 4 3 , , , 8 1 8 4 7 2 8 8 0 6 2 1 2 4 2 , , , 4 7 5 5 1 8 3 6 4 6 2 1 2 4 2 , , , 0 7 8 4 1 3 0 6 2 6 2 1 0 4 3 , , , 8 1 8 4 7 2 8 8 0 16 Total Federal agency obligations. 6,159 6,233 6,233 6,159 6,159 6,213 6,159 6,159 17 Within fifteen days2 170 134 134 510 328 205 170 328 2 2 2 1 1 0 1 2 8 9 O F N M S i i n i v x o n e e t r e e e y t e y y e t n e - h a a o a r d r n n s a t e o y t t s o d e f n a i t t v o y e y e s n n e y t a i y o n e r e a s e o a r ty n r s s e d y a e y a s r . 2 1 , , 4 3 9 9 1 8 8 7 5 8 7 4 4 6 8 2 1 1 , , , 5 3 9 0 1 0 7 7 5 8 5 7 4 5 8 2 1 1 , , , 5 9 3 0 1 0 7 7 5 8 5 4 7 5 8 2 1 1 , , , 5 6 3 0 1 1 1 2 0 8 0 9 9 3 8 2 1 1 , , , 5 4 0 6 1 5 0 2 6 8 3 1 9 0 8 2 1 1 , , , 4 0 4 8 1 9 1 2 8 8 9 0 3 8 8 2 1 , , 4 9 3 9 1 8 7 8 5 8 7 4 4 6 8 2 1 1 , , , 5 4 6 0 1 5 0 2 6 8 3 1 9 0 8 1. Components may not sum to totals because of rounding. fifteen day sin accordance with the maximum possible maturity of the agreements. 2. Holdings under repurchase agreements are classified as maturing within Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Nonfinancial Statistics • November 1991 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1991 1987 1988 1989 1990 Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. May June July Aug. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 45.81 47.60 47.73 49.10 49.47 49.61 49.57 49.39 50.07 50.43 50.51 51.00 2 Nonborrowed reserves 45.03 45.88 47.46 48.78 48.93 49.36 49.32 49.16 49.77 50.09 49.90" 50.24 3 Nonborrowed reserves plus extended credit 45.52 47.12 47.48 48.80 48.96 49.39 49.38 49.25 49.85 50.10 49.95 50.54 4 Required reserves 44.77 46.55 46.81 47.44 47.30 47.80 48.39 48.36 49.04 49.42 49.60 49.92 5 Monetary base 246.28 263.46 274.17 299.78r 305.15 309.44 310.98 310.60 311.48 312.47 313.91 316.30 Not seasonally adjusted 47.04 49.00 49.18 50.58 50.76 48.55 48.59 50.30 49.06 50.41 50.66 50.61 46.26 47.29 48.91 50.25 50.22 48.30 48.34 50.07 48.76 50.07 50.05r 49.84 46.75 48.53 48.93 50.28 50.25 48.33 48.40 50.16 48.85 50.07 50.10 50.14 46.00 47.% 48.26 48.91 48.59 46.74 47.41 49.27 48.03 49.40 49.75 49.52 249.93 267.46 278.30 304.04 306.03 305.74 308.19 310.86 311.02 314.06 316.21 316.75 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves11 62.14 63.75 62.81 59.12 50.99 48.55 48.59 50.30 49.06 50.41 50.66 50.61 61.36 62.03 62.54 58.79 50.46 48.30 48.35 50.07 48.76 50.07 50.05r 49.84 61.85 63.27 62.56 58.82 50.48 48.33 48.40 50.16 48.85 50.08 50.10 50.14 61.09 62.70 61.89 57.46 48.82 46.74 47.41 49.27 48.03 49.40 49.75 49.52 266.06 283.00 292.55 313.70 309.30 308.53 311.04 313.95 314.25 317.25 319.46 320.06 1.05 1.05 .92 1.66 2.17 1.81 1.18 1.03 1.03 1.01 .91 1.08 .78 1.72 .27 .33 .53 .25 .24 .23 .30 .34 .61 .76 1. Latest monthly and biweekly figures are available from the Board's H.3 (502) changes in reserve requirements, a multiplicative procedure is used to estimate weekly statistical release. Historical data and estimates of the impact on required what required reserves would have been in past periods had current reserve reserves of changes in reserve requirements are available from the Monetary and requirements been in effect. Break-adjusted required reserves include required Reserves Projections Section, Division of Monetary Affairs, Board of Governors reserves against transactions deposits and nonpersonal time and savings deposits of the Federal Reserve System, Washington, D.C. 20551. (but not reservable nondeposit liabilities). 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 weekly reporters whose vault cash exceeds 4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally their required reserves) the break-adjusted difference between current vault cash adjusted, break-adjusted total reserves (line 1) less total borrowings of depository 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 crodit, 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. Since the introduction of changes in reserve requirements cash and the amount applied to satisfy current reserve requirements. (CRR), currency and vault cash figures have been measured over the computation 7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) periods ending on Mondays. plus excess reserves (line 16). 13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14). 8. To adjust required reserves for discontinuities that are due to regulatory 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 1987 1988 1989 1990 IItteemm Dec. Dec. Dec. Dec. May June Julyr Aug. Seasonally adjusted Measures2 1 Ml 749.7 786.4 793.6 825.4 851.6 858.4 859.7 866.2 2 M2 2,910.1 3,069.9 3.223.1 3,328.2r 3,397.2r 3,402.lr 3.391.1 3.391.2 3 M3 3,677.4 3,919.1 4.055.2 4,111.8r 4,173.9" 4,167.1r 4.148.2 4.143.3 4 L 4.337.0 4,676.0 4,889.9 4,965.8r 4,953.9r 4,978.5r 4,982.5 n.a. 5 Debt 8.345.1 9,107.6 9,790.4 10,434.0* 10,603.lr 10,648.6r 10,693.6 n.a. Ml components 6 Currency 196.8 212.0 222.2 246.4 256.8 257.6 258.9 260.7 7 Travelers checks4 7.0 7.5 7.4 8.4 8.0 7.8 7.7 7.7 8 Demand deposits 286.5 286.3 278.7 276.9 278.7 281.0 279.0 279.9 9 Other checkable deposits6 259.3 280.7 285.2 293.8 308.1 312.0 314.1 317.9 Nontransaction components 10 In M2 2,160.4 2,283.5 2,429.5 2,502.8r 2,545.5r 2,543.7r 2,531.5 2,524.9 11 In M3 767.3 849.3 832.1 783.5r 776.7r 765.0" 757.1 752.1 Commercial banks 12 Savings deposits 178.3 192.1 187.7 199.4 211.4 215.1 217.6 220.7 13 Money market deposit accounts ... 356.4 350.2 353.0 378.4 399.9 404.5 408.0 410.2 14 Small time deposits' 388.0 447.5 531.4 598.1 601.2 601.7 600.9 604.8 15 Large time deposits10, 11 326.6 368.0 401.9 386.1 399.3 398.0" 393.5 390.5 Thrift institutions 16 Savings deposits 233.7 232.3 216.4 211.4 221.7 223.8 225.2 227.0 17 Money market deposit accounts ... 168.5 151.2 133.1 127.6 136.2 137.6 139.2 138.2 18 Small time deposits' 529.7 584.3 614.5 566.1 539.3 527.4 517.7 505.5 19 Large time deposits10 162.6 174.3 161.6 121.0 104.6 100.9 97.7 93.8 Money market mutual funds 20 General purpose and broker-dealer. 221.7 241.1 313.6 345.4 365.1 364.3 359.4 352.8 21 Institution-only 88.9 86.9 101.9 125.7 146.2 143.3 141.8 144.8 Debt components 22 Federal debt 1,957.9 2,114.2 2,268.1 2,534.3 2,613.7r 2,646.1" 2,672.1 n.a. 23 Nonfederal debt 6,387.2 6,993.4 7,522.3 7,899,7r 7,989.4r 8,002.6' 8,021.5 n.a. Not seasonally adjusted Measures 24 Ml 766.2 804.2 811.9 844.3 841.6 857.7 861.9 864.2 25 M2 2.923.0 3,083.3 3,236.6 3,342.3r 3,376.6' 3,395. lr 3.394.4 3,392.0 26 M3 3,690.3 3,931.5 4,067.0 4,123.8 4,155.1r 4,161.7' 4,151.1 4,148.4 27 L 4,352.8 4,691.8 4,907.4 4,984.4r 4,938.8r 4,968.9' 4.975.5 n.a. 28 Debt 8.329.1 9,093.2 9,775.9 10,421.2r 10,556.9" 10,605.1' 10,652.2 n.a. Ml components 29 Currency3 199.3 214.8 225.3 249.6 257.4 259.1 260.8 261.9 30 Travelers checks4 6.5 6.9 6.9 7.8 7.8 8.1 8.5 8.6 31 Demand deposits 298.6 298.9 291.5 289.9 271.5 279.6 280.7 278.7 32 Other checkable deposits6 261.8 283.5 288.2 297.0 304.9 310.8 311.9 314.9 Nontransaction components 33 In M2l 2,156.8 2,279.1 2,424.7 2,498.0" 2,535. lr 2,537.4' 2,532.5 2,527.8 34 In M38 767.3 848.2 830.4 781.6r 778.5r 766.6* 756.7 756.4 Commercial banks 35 Savings deposits 176.8 190.6 186.4 197.7 211.9 216.5 219.7 221.3 36 Money market deposit accounts 359.0 353.2 356.5 381.6 395.8 401.9 404.8 408.8 37 Small time deposits'. 387.2 446.0 529.2 596.1 601.0 602.1 602.8 605.9 38 Large time deposits10' 11 325.8 366.8 400.4 386.1 398.9 397.5' 392.2 391.5 Thrift institutions 39 Savings deposits 231.4 229.9 214.2 209.6 222.2 225.2 227.5 227.6 40 Money market deposit accounts 168.6 151.6 133.7 128.7 134.9 136.7 138.0 137.7 41 Small time deposits' 529.5 583.8 613.8 564.1 539.1 527.7 519.3 506.5 42 Large time deposits10 163.3 175.2 162.6 121.1 104.5 100.8 97.4 94.1 Money market mutual funds 43 General purpose and broker-dealer 221.1 240.7 313.5 345.5 360.5 358.0 354.5 351.6 44 Institution-only 89.6 87.6 102.8 127.0 145.2 141.0 139.7 143.9 Repurchase agreements and eurodollars 45 Overnight 83.2 83.4 77.3 74.7r 69.7r 69.3' 65.8 68.4 46 Term 197.1 227.7 179.8 160.9* 145.2' 142.3' 143.0 141.9 Debt components 47 Federal debt 1,955.6 2,111.8 2,265.9 2,532.1 2,609.1 2,635.3 2,657.9 n.a. 48 Nonfederal debt 6,373.5 6,981.4 7,509.9 7,889. lr 7,947.9* 7,969.8* 7,994.3 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • November 1991 NOTES TO TABLE 1.21 1. Latest monthly and weekly figures are available from the Board's H.6 (508) Treasury securities, commercial paper, and bankers acceptances, net of money weekly statistical release. Historical data are available from the Money and market fund holdings of these assets. Seasonally adjusted L is computed by Reserves Projection Section, Division of Monetary Affairs, Board of Governors of summing U.S. savings bonds, short-term Treasury securities, commercial paper, the Federal Reserve System, Washington, D.C. 20551. and bankers acceptances, each seasonally adjusted separately, and then adding 2. Composition of the money stock measures and debt is as follows: this result to M3. Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults Debt: Debt of domestic nonfinancial sectors consists of outstanding credit of depository institutions; (2) travelers checks of nonbank issuers; (3) demand market debt of the U.S. government, state and local governments, and private deposits at all commercial banks other than those due to depository institutions, nonfinancial sectors. Private debt consists of corporate bonds, mortgages, conthe U.S. government, and foreign banks and official institutions, less cash items in sumer credit (including bank loans), other bank loans, commercial paper, bankers the process of collection and Federal Reserve float; and (4), other checkable acceptances, and other debt instruments. Data are derived from the Federal deposits (OCDs), consisting of negotiable order of withdrawal (NOW) and Reserve Board's flow of funds accounts. Debt data are based on monthly automatic transfer service (ATS) accounts at depository institutions, credit union averages. This sum is seasonally adjusted as a whole. share draft accounts, and demand deposits at thrift institutions. Seasonally 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of adjusted Ml is computed by summing currency, travelers checks, demand depository institutions. deposits, and OCDs, each seasonally adjusted separately. 4. Outstanding amount of U.S. dollar-denominated travelers checks of non- M2: Ml plus (1) overnight (and continuing-contract) repurchase agreements bank issuers. Travelers checks issued by depository institutions are included in (RPs) issued by all depository institutions and overnight Eurodollars issued to demand deposits. U.S. residents by foreign branches of U.S. banks worldwide, (2) money market 5. Demand deposits at commercial banks and foreign-related institutions other deposit accounts (MMDAs), (3) savings and small time deposits (time deposits— than those due to depository institutions, the U.S. government, and foreign banks including retail RPs—in amounts of less than $100,000), and (4) balances in both and official institutions, less cash items in the process of collection and Federal taxable and tax-exempt general purpose and broker-dealer money market funds. Reserve float. Excludes individual retirement accounts (IRAs) and Keogh balances at depository 6. Consists of NOW and ATS account balances at all depository institutions, institutions and money market funds. Also excludes all balances held by U.S. credit union share draft account balances, and demand deposits at thrift institucommercial banks, money market funds (general purpose and broker-dealer), tions. foreign governments and commercial banks, and the U.S. government. Season- 7. Sum of (1) overnight RPs and overnight Eurodollars, (2) money market fund ally adjusted M2 is computed by adjusting its non-Mi component as a whole and balances (general purpose and broker-dealer), (3) MMDAs, and (4) savings and then adding this result to seasonally adjusted Ml. small time deposits. M3: M2 plus (1) large time deposits and term RP liabilities (in amounts of 8. Sum of (1) large time deposits, (2) term RPs, (3) term Eurodollars of U.S. $100,000 or more) issued by all depository institutions, (2) term Eurodollars held residents, and (4) money market fund balances (institution-only), less a consoliby U.S. residents at foreign branches of U.S. banks worldwide and at all banking dation adjustment that represents the estimated amount of overnight RPs and offices in the United Kingdom and Canada, and (3) balances in both taxable and Eurodollars held by institution-only money market funds. tax-exempt, institution-only money market funds. Excludes amounts held by 9. Small time deposits—including retail RPs—are those issued in amounts of depository institutions, the U.S. government, money market funds, and foreign less than $100,000. All IRAs and Keogh accounts at commercial banks and thrift banks and official institutions. Also excluded is the estimated amount of overnight institutions are subtracted from small time deposits. RPs and Eurodollars held by institution-only money market funds. Seasonally 10. Large time deposits are those issued in amounts of $100,000 or more, adjusted M3 is computed by adjusting its non-M2 component as a whole and then excluding those booked at international banking facilities. adding this result to seasonally adjusted M2. 11. Large time deposits at commercial banks less those held by money market L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term funds, depository institutions, and foreign banks and official institutions. 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 in billions of dollars; turnover is ratio of debits to deposits; monthly data are at annual rates 1991 Bank group, or type of customer 19882 19892 19902 Feb. Apr. May DEBITS TO Seasonally adjusted Demand deposits 219,795.7 256,150.4 277,916.3 279,437.8 280,494.1 269,834.9 294,433.5 295,559.0 267,338.8 1 All insured banks 115,475.6 129,319.9 131,784.0 138,638.1 138,037.7 133,302.7 146,499.3 148,074.9 134,512.6 2 Major New York City banks.. 104,320.2 126,830.5 146,132.3 140,799.7 142,456.4 136,532.2 147,934.2 147,484.1 132,826.2 3 Other banks 2,478.1 2,910.5 3,349.6 3,559.1 3,533.7 3,240.3 3,820.3 3,620.2 3,442.4 4 ATS-NOW accounts4 537.0 547.5 558.8 572.9 551.4 523.7 577.1 548.6 522.3 5 Savings deposits DEPOSIT TURNOVER 622.9 735.1 800.6 828.3 817.8 792.0 870.3 867.0 773.3 Demand deposits3 2,897.2 3,421.5 3,804.1 4,259.7 4,125.7 4,101.4 4,533.4 4,702.8 4,166.3 6 All insured banks 333.3 408.3 467.7 461.9 460.2 443.0 483.4 476.6 423.8 7 Major New York City banks.. 8 Other banks 13.2 15.2 16.5 17.0 16.7 15.1 17.8 16.4 15.4 9 ATS-NOW accounts4 2.9 3.0 2.9 2.9 2.7 2.6 2.8 2.6 2.4 10 Savings deposits5 DEBITS TO Not seasonally adjusted Demand deposits 219,790.4 256,133.2 277,400.0 283,545.5 259,372.9 275,015.8 294,492.4 292,012.3 269,958.7 11 All insured banks 115,460.7 129,400.1 131,784.7 136,578.8 127,287.3 134,974.7 145,700.2 145,073.9 133,851.7 12 Major New York City banks.. 104,329.7 126,733.0 145,615.3 146,966.7 132,085.5 140,041.0 148,792.2 146,938.4 136,107.0 13 Other banks 2,477.3 2,910.7 3,342.2 3,923.1 3,237.8 3,317.4 3,967.1 3,549.9 3,442.1 14 ATS-NOW accounts4 2,342.7 2,677.1 2,923.8 3,106.8 2,512.7 2,767.2 2,994.5 2,978.6 2,718.8 15 MMDAs6 536.3 546.9 557.9 589.2 494.9 520.4 623.9 545.5 518.8 16 Savings deposits3 DEPOSIT TURNOVER Demand deposits3 622.8 735.4 799.6 820.3 778.7 831.9 864.8 875.5 784.0 17 All insured banks 2,896.7 3,426.2 3,810.0 3,993.4 3,899.0 4,378.4 4,565.4 4,742.5 4,154.4 18 Major New York City banks.. 333.2 408.0 466.3 471.9 439.7 467.2 482.1 485.0 436.1 19 Other banks 13.2 15.2 16.4 18.4 15.3 15.4 17.8 16.3 15.5 20 ATS-NOW accounts4 6.6 7.9 8.0 8.2 6.6 7.1 7.7 7.6 6.8 21 MMDAs6 2.9 2.9 2.9 3.0 2.5 2.5 3.0 2.6 2.4 22 Savings deposits5 1. Historical tables containing revised data for earlier periods can be obtained 3. Represents accounts of individuals, partnerships, and corporations and of from the Banking and Money Market Statistics Section, Division of Monetary states and political subdivisions. Affairs, Board of Governors of the Federal Reserve System, Washington, D.C. 4. Accounts authorized for negotiable orders of withdrawal (NOWs) and 20551. accounts authorized for automatic transfer to demand deposits (ATSs). Data in this table also appear on the Board's G.6 (406) monthly statistical 5. Excludes MMDA, ATS, and NOW accounts. release. For ordering address, see inside front cover. 6. Money market deposit accounts. 2. Annual averages of monthly figures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics • November 1991 1.23 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars, averages of Wednesday figures 1990 1991 IItteemm Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Juner Julyr Aug. Seasonally adjusted 1 Total loans and securities2 2,708.0 2,713.6 2,716.6 2,723.6 2,721.2 2,735.1 2,751.0" 2,751.8r 2,750.5r 2,763.2 2,763.3 2,761.6 2 U.S. government securities 450.1 453.1 454.0 454.2 454.1 458.0 471.4 479.2 485.lr 495.2 505.3 512.6 3 Other securities 178.8 177.8 175.9 175.6 177.7 177.6 177.6 175.7 173.9 173.1 172.0 169.9 4 Total loans and leases2 2,079.0 2,082.7 2,086.7 2,093.8 2,089.4 2,099.5 2,102.0 2,096.9" 2,091.5r 2,094.8 2,086.0 2,079.1 5 Commercial and industrial ..... 644.7 643.7 646.5 648.1 644.3 643.9 646.0 640.0 633.2 630.4 626.7 620.5 6 Bankers acceptances held ... 7.5 7.3 7.4 7.5 7.7 6.9 6.7 6.8r 6.9r 6.6 6.6 7.1 7 Other commercial and industrial 637.1 636.4 639.1 640.5 636.6 639.3r 633.2r 626.4 623.8 620.0 613.4 8 U.S. addressees4 632.6 631.7 634.0 635.3 631.1 631.5 633.6r 627.7r 620.6 617.9 614.3 607.7 9 Non-U.S. addressees 4.5 4.7 5.1 5.3 5.5 5.5 5.7 5.5 5.8 5.9 5.7 5.7 10 Real estate 822.5 827.7 832.0 836.5 837.3 842.6 846.3 850.9r 855. r 859.5 857.0 853.9 U Individual 378.6 379.7 378.7 378.9 375.9 377.7 375.5 374.1 373.5r 372.0 369.6 368.9 12 Security 41.3 40.5 39.6 40.6 43.1 43.2 38.9" 39.8 39.8 38.3 41.6 42.6 13 Nonbank financial institutions 35.2 34.8 34.6 34.8r 34.8r 35.9" 36.7r 35.91 36.91 37.1 37.0 36.2 14 Agricultural 31.8 32.2 32.5 33.0 33.5 33.5 34.0 33.9 33.6 33.0 32.5 32.3 15 State and political subdivisions 35.2 35.1 34.8 34.3 33.3r 33.2r 32.8r 32.2r 31.8r 31.1 30.6 30.1 16 Foreign banks 8.1 9.0 8.1 7.2 6.0 6.1 7.2 6.8 6.4 6.0 6.2 6.2 17 Foreign official institutions 3.3 3.2 3.2 3.2 3.0 3.1 3.2 3.0 3.0 3.0 3.1 3.1 18 Lease-financing receivables 32.8 33.3 32.9 32.7 32.4 32.8 33.0 32.7 32.7 32.8 32.0 31.4 19 All other loans 45.5 43.6 43.7 44.6r 45.8r 47.5r 48.5r 47.6r 45.6r 51.7 49.7 53.9 Not seasonally adjusted 20 Total loans and securities2 2,707.0 2,715.5 2,720.1 2,730.5 2,721.0 2,737.3 2,748.4r 2,751.5r 2,749.7r 2,763.8 2,757.2 2,756.6 21 U.S. government securities 448.2 450.8 454.1 451.5 455.8 463.9 475.8 480.5 485.2r 493.7 501.8 510.4 22 Other securities 179.0 178.0 176.6 176.3 177.9 177.3 176.9 175.1 173.8 173.2 171.3 170.1 23 Total loans and leases2 2,079.8 2,086.7 2,089.3 2,102.7 2,087.3 2,096.1 2,095.7 2,095.9" 2,090.6r 2,096.9 2,084.1 2,076.0 24 Commercial and industrial ..... 640.9 641.2 644.5 648.0 641.1 643.0 648.3 644.7 637.1 632.7 627.0 619.2 25 Bankers acceptances held ... 7.5 7.4 7.6 7.7 7.6 7.0 6.7r 6.7r 6.8r 6.7 6.4 6.9 26 Other commercial and industrial 633.4 633.8 636.9 640.3 633.4 641.6 638.1 630.3r 626.0 620.6 612.3 27 U.S. addressees4 628.8 629.1 631.9 635.1 628.2 630.5r 636. r 632.2 624.5 620.0 614.8 606.4 28 Non-U.S. addressees 4.6 4.7 5.0 5.2 5.3 5.5 5.4 5.9 5.9 6.0 5.8 5.9 29 Real estate 824.2 830.3 834.0 837.9 837.1 839.5 842.6 848.3r 854.2r 859.6 857.5 855.9 30 Individual 380.4 380.6 379.8 383.8 380.1 377.1 372.8 371.5 371.8 369.9 367.4 368.1 31 Security 40.3 39.5 38.5 40.0 41.0r 44.7 40.2r 41.3 39.0 40.5 41.3 42.0 32 Nonbank financial institutions 34.9 34.7 35.0 36.2r 35.3r 35.5r 35.? 35.5r 36.4r 37.2 36.8 36.1 33 Agricultural 32.9 33.1 32.9 32.9 32.8 32.6 32.6 32.8 33.1 33.3 33.4 33.3 34 State and political subdivisions 35.2 35.1 34.7 34.0 33.9 33.3 32.8r 32.1 31.8r 31.0 30.4 30.0 35 Foreign banks 8.2 9.3 8.3 7.4 6.0 6.0 6.8 6.7 6.3 6.1 6.2 6.2 36 Foreign official institutions 3.3 3.2 3.2 3.2 3.0 3.1 3.2 3.0 3.0 3.0 3.1 3.1 3 3 8 7 A Le ll a s o e th -f e in r a l n o c a i n n s g receivables .... 4 3 6 2 . . 8 8 4 3 6 3 . . 3 3 4 3 5 3 . . 4 1 4 3 6 2 . . 6 8 r 4 3 4 2 . . 0 8 r 4 3 8 2 . . 3 9 r 4321.9. r 4 3 7 2 . . 3 7 r 4 3 5 2 . . 3 6 r 5 3 1 2 . . 0 6 4 3 9 1 . . 2 8 5 3 1 1 . . 0 3 1. Components may not sum to totals because of rounding. 3. Includes nonfinancial commercial paper held. 2. Adjusted to exclude loans to commercial banks in the United States. 4. United States includes the fifty states and the District of Columbia. 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 Source of funds Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr." May" June" July" Aug. 1 S T e o a t s a o l n n a o l n ly d e a p d o ju si s t t e f d u nds2 — 283.6r 292.7r 293.4r 289.2r 278.7r 266.8r 266.1" 266.0 263.8 255.1 255.5 250.5 2 Net balances due to related foreign offices3 — 21.5 29.9 30.1 34.6 33.5 24.9 30.2 30.8 26.1 19.2 19.2 16.6 4 3 Bo D rr o i o n m w U e in s n t g i i c s te a f d l r l y o S m t c a h o t a e t r s h t 4 e e r r e t d h a b n a n c k o s m mercial banks 2 1 6 9 2 9 . .4 lr r 2 1 6 9 2 7 . . 8 7 r r 2 1 6 9 3 6 . . 3 ^ r 2 1 5 8 4 8 . . 6 4 r r 2 1 4 8 5 3 . . 2 7 r r 2 1 4 7 1 8 . . 9 8 r r 2 1 3 7 5 3 . . 9 4 " " 2 1 3 7 5 3 . . 2 4 2 1 3 7 7 2 . . 8 9 2 1 3 7 5 1 . . 9 8 2 1 3 7 6 1 . . 3 1 2 1 3 6 3 5 . . 8 8 5 Foreign-related banks 62.7 65.0 67.3 66.2 61.5 63.1 62.6 61.8 64.9 64.1 65.2 68.1 6 N To o t t a l s e n a o s n o d n e a p ll o y s i a t djusted ftinds2 . — 279.2r 289.5r 294.6r 283.6r 274.0" 269.8r 271.4" 266.7 271.9 258.1 252.2 248.9 7 8 9 Ne D F t o o b r m a e l i e a g s n n t c i - c r e a e s l l l a d y t u e c d e h t b a o r a t n r e e k r l e s a d te b d a f n o k r s e ign offices3 — - 2 2 4 1 5 . . . 2 6 8 - 2 3 1 9 0 . . . 0 6 6 3 3 0 0 . . . 8 6 2 - 3 4 4 7 1 . . . 1 2 3 -1 3 4 5 3 8 . . . 2 2 4 -1 2 4 5 4 0 . . . 2 8 0 - 2 3 6 9 5 . . . 0 6 6 " - 2 3 3 8 2 . . . 5 9 5 2 2 - 8 9 .7 . . 6 2 - 2 1 3 3 9 . . . 5 0 5 - 2 1 7 4 6 . . . 2 0 8 - 2 1 7 3 6 . . . 4 4 0 1 1 0 1 Bo D rr o i o n m w U e in s n t g i i c s te a f d l r l y o S m t c a h o te a t r s h t 4 e e r r e t d h a b n a n c k om s mercial banks 2 1 5 9 7 6 . . 6 2 r r 2 1 6 9 0 5 . . 0 8 r r 2 1 6 9 3 8 . . 8 6 r r 2 1 4 8 6 4. . 1 4 " r 2 1 4 7 0 9 . . 9 2 " r 2 1 4 8 5 1 . . 0 1 " " 2 1 4 7 1 7 . . 7 8 " " 2 1 3 7 7 4 . . 8 2 2 1 4 7 3 7 . . 3 7 2 1 3 7 8 2 . . 6 7 2 1 3 6 5 9 . . 4 0 2 1 3 6 2 5 . . 9 3 12 Fede b r o a r l r o fu w n i d n s g s a 5 n d security RP 192.2r 192.5r 195.7r 181.3r 175.9* 178.3" 174.5" 171.3 174.9 169.9 165.8 161.6 1 1 3 4 Fo O re t i h g e n r - 6 r elated banks6 6 4 1 . . 0 5 6 3 4 . . 2 2 6 2 5 . . 9 1 6 2 2 . . 8 3 6 3 1 . . 2 7 6 2 3 . . 8 9 6 3 4 . . 2 0 6 2 3 . . 9 6 6 2 5 . . 8 6 6 2 5 . . 8 9 6 3 6 . . 2 4 6 3 7 . . 7 6 MEMO Gross large lime 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 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 44 5 9 0 . . 2 6 4 45 5 0 1 . . 5 0 4 4 5 4 1 9 . . 3 0 4 4 5 5 3 2 . . 0 6 4 45 5 1 1 . . 4 9 4 4 4 4 7 6 . . 5 3 4 4 4 4 7 8 . . 0 0 U.S. Treasury demand balances at commercial bankss 17 Seasonally adjusted 26.0 22.3 25.2 24.4 25.7 33.4 33.8 21.7 15.1 23.2 20.5 23.8 18 Not seasonally adjusted 31.0 20.9 19.2 23.0 29.4 39.3 28.4 20.4 19.8 23.6 20.7 17.2 1. Commercial banks are nationally and state-chartered banks in the fifty states given for the purpose of borrowing money for the banking business. This includes and the District of Columbia, agencies and branches of foreign banks, New York borrowings from Federal Reserve Banks and from foreign banks, term federal investment companies majority owned by foreign banks, and Edge Act corpora- funds, loan RPs, and sales of participations in pooled loans. tions owned by domestically chartered and foreign banks. 5. Figures are based on averages of daily data reported weekly by approxi- Data in this table also appear in the Board's G.10 (411) release. For ordering mately 120 large banks and quarterly or annual data reported by other banks. address, see inside front cover. 6. Figures are partly averages of daily data and partly averages of Wednesday 2. Includes federal funds, repurchase agreements (RPs), and other borrowing 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 International Banking Facilities (IBFs). mercial banks. Averages of daily data. 4. Borrowings through any instrument, such as a promissory note or due bill, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Nonfinancial Statistics • November 1991 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKS Last-Wednesday-of-Month Series1 Billions of dollars 1990 1991 AAccccoouunntt Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. ALL COMMERCIAL BANKING INSTITUTIONS2 Assets 1 Loans and securities 2,931.3 2,925.1 2,936.9 2,908.7 2,924.9 2,910.9 2,907.1 2,921.5 2,937.9 2,937.7 2,921.0 2 Investment securities 604.9 603.3 605.6 612.8 614.0 628.3 628.5 634.1 641.1 648.7 650.9 3 U.S. government securities 438.0 437.6 439.6 447.6 449.5 463.3 465.1 471.8 480.4 489.9 492.8 4 Other 166.8 165.7 166.0 165.2 164.5 165.1 163.4 162.2 160.7 158.8 158.1 5 Trading account assets 27.4 25.0 22.0 24.1 26.9 23.5 24.9 24.3 27.5 30.2 28.5 6 Total loans 2,299.0 2,296.9 2,309.3 2,271.8 2,283.9 2,259.1 2,253.6 2,263.2 2,269.3 2,258.8 2,241.5 7 Interbank loans 207.9 207.0 204.0 193.3 185.0 171.8 160.7 172.5 166.8 175.9 167.5 8 Loans excluding interbank 2,091.2 2,089.8 2,105.3 2,078.6 2,099.0 2,087.3 2,092.9 2,090.6 2,102.5 2,082.9 2,074.1 9 Commercial and industrial 643.4 644.4 650.8 637.2 645.1 648.5 643.6 635.1 632.7 624.2 617.8 10 Real estate 831.5 833.7 838.3 836.9 840.1 842.5 849.0 855.2 859.4 856.0 854.8 11 Individual 380.8 380.5 384.7 378.6 376.4 371.5 372.0 370.7 370.5 368.3 368.2 12 All other 235.5 231.2 231.5 225.9 237.4 224.8 228.3 229.6 239.8 234.3 233.3 13 Total cash assets 220.8 216.7 217.9 199.2 204.5 206.1 201.0 224.3 212.3 214.1 200.1 14 Reserves with Federal Reserve Banks. 29.7 33.0 23.4 16.5 18.1 25.0 23.1 26.2 29.1 24.8 23.0 15 Cash in vault 29.4 32.8 32.0 30.4 29.8 28.9 29.1 31.1 29.8 29.7 31.1 16 Cash items in process of collection ... 85.4 78.4 86.0 74.7 79.9 76.9 74.3 87.2 78.3 87.8 71.7 17 Demand balances at U.S. depository institutions 28.5 28.4 29.6 28.1 27.7 27.6 26.4 30.8 28.3 26.9 27.7 18 Other cash assets 47.8 44.2 46.8 49.6 49.0 47.7 48.1 49.0 46.8 45.0 46.5 19 Other assets 230.1 226.6 245.1 249.9 259.6 263.1 260.4 264.4 259.0 286.7 276.2 20 Total assets 3,382.2 3,368.5 3,399.9 3,357.8 3,388.9 3,380.1 3,368.5 3,410.3 3,409.2 3,438.5 3,397.3 Liabilities 21 Total deposits 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 2,448.8 2,430.9 22 Transaction accounts 612.1 598.1 637.1 587.9 594.1 602.8 601.3 617.6 611.2 639.4 612.0 23 Savings deposits (excluding checkable) 570.5 573.1 573.3 573.9 583.5 594.1 595.4 606.2 610.7 619.9 624.1 24 Time deposits 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 1,189.5 1,194.7 25 Borrowings 591.0 570.6 548.7 529.8 515.4 492.3 494.6 499.8 510.4 503.5 480.9 26 Other liabilities 236.0 255.3 264.4 268.8 282.3 278.2 263.9 267.6 263.8 258.4 257.1 27 Residual (assets less liabilities)3 223.3 222.7 223.5 224.6 226.2 227.0 228.1 229.6 228.9 227.9 228.4 DOMESTICALLY CHARTERED COMMERCIAL BANKS4 Assets 28 Loans and securities 2,658.4 2,645.1 2,654.2 2,628.0 2,642.3 2,635.6 2,628.9 2,637.8 2,647.4 2,653.4 2,637.8 29 Investment securities 571.5 569.8 570.5 575.3 577.4 588.6 592.3 595.7 603.0 611.0 612.1 30 U.S. government securities 420.9 420.8 421.7 426.5 429.3 440.2 445.5 449.2 458.0 467.9 470.2 31 Other 150.6 149.1 148.8 148.7 148.2 148.5 146.8 146.5 144.9 143.0 141.9 32 Trading account assets 27.4 25.0 22.0 24.1 26.9 23.5 24.9 24.3 27.5 30.2 28.5 33 Total loans 2,059.5 2,050.3 2,061.7 2,028.6 2,038.0 2,023.5 2,011.7 2,017.8 2,016.9 2,012.3 1,997.1 34 Interbank loans 164.0 157.4 160.0 151.7 150.9 148.3 134.2 144.5 139.0 150.4 146.4 35 Loans excluding interbank 1,895.5 1,892.9 1,901.7 1,876.9 1,887.0 1,875.2 1,877.5 1,873.3 1,877.9 1,861.8 1,850.7 36 Commercial and industrial 515.4 513.4 512.7 504.2 508.4 506.3 502.4 495.0 491.6 482.6 475.3 37 Real estate 789.8 791.6 796.4 794.0 797.1 799.7 804.7 808.7 812.2 808.2 806.9 38 Revolving home equity 60.6 61.1 61.7 62.9 63.3 63.6 64.4 65.7 66.6 67.0 67.6 39 Other real estate 729.2 730.5 734.7 731.1 733.8 736.1 740.3 743.0 743.7 741.2 739.4 40 Individual 189.3 187.7 188.3 166.6 172.7 177.0 171.6 193.6 184.3 187.6 172.3 41 All other 28.5 31.5 23.0 15.3 17.0 24.0 21.9 25.8 28.3 23.9 22.1 42 Total cash assets 29.4 32.8 32.0 30.3 29.8 28.8 29.1 31.1 29.8 29.7 31.0 43 Reserves with Federal Reserve Banks. 83.6 76.4 83.9 72.9 78.2 74.9 72.6 85.5 76.2 86.1 70.1 44 Cash in vault 26.6 26.2 27.6 26.2 25.8 25.8 24.8 28.8 26.5 25.2 25.9 45 Cash items in process of collection ... 21.2 20.9 21.8 22.0 21.9 23.4 23.2 22.4 23.6 22.8 23.2 46 Demand balances at U.S. depository institutions 153.6 155.0 167.8 166.9 171.3 167.9 161.9 162.3 157.7 168.9 163.4 47 Other cash assets 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 3,009.9 2,973.4 48 Other assets 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 2,308.6 2,284.9 49 Total assets 601.5 587.7 626.1 577.4 583.8 592.2 591.4 607.5 600.9 629.3 602.1 Liabilities 50 Deposits 567.4 569.8 570.0 570.6 580.2 590.6 591.9 602.5 607.1 616.2 620.4 51 Transaction accounts 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 1,063.1 11,,006622..55 52 Savings deposits (excluding checkable) 400.4 394.1 375.6 380.1 371.8 354.9 346.5 355.1 364.4 352.2 338.8 53 Time deposits 127.5 131.5 131.4 124.2 136.8 136.0 132.6 131.9 128.4 124.9 125.0 54 Borrowings 219.6 219.0 219.8 220.9 222.6 223.4 224.5 226.0 225.3 224.2 224.8 55 Other liabilities 56 Residual (assets less liabilities)3 1. Back data are available from the Banking and Monetary Statistics Section, State foreign investment corporations. Data are estimates for the last Wednesday Board of Governors of the Federal Reserve System, Washington, D.C., 20551. of the month based on a sample of weekly-reporting foreign-related institutions Data in this table also appear in the Board's H.8 (510) weekly statistical release. and quarter-end condition reports. Data are partly estimated. They include ail bank-premises subsidiaries and 3. This balancing item is not intended as a measure of equity capital for use in other significant majority-owned domestic subsidiaries. Components may not sum capital adequacy analysis. to totals because of rounding. 4. Includes all member banks and insured nonmember banks. Loans and 2. Includes insured domestically chartered commercial banks, agencies and securities data are estimates for the last Wednesday of the month based on a branches of foreign banks, Edge act and agreement corporations, and New York sample of weekly-reporting banks and quarter-end condition reports. 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 BANKS1 Millions of dollars, Wednesday figures 1991 July 3r July 10" July 17r July 24r July 31r Aug. 7 Aug. 14 Aug. 21 Aug. 28 ASSETS 1 Cash and balances due from depository institutions 107,678 101,384 97,984 94,796 106,079 101,762 98.373 99,885 2 U.S. Treasury and government securities 196,271 195,247 197,507 196,921 202,554 201,116 202,132 204,655 3 Trading account 16,249 15,567 16,637 14,911 17,943 16,403 17,806 19,016 4 Investment account 180,022 179,679 180,871 182,010 184,611 184,713 184,325 185,639 5 Mortgage-backed securities2 78,664 78,292 77,055 77,056 77,709 77,536 77,553 76,703 All others, by maturity 6 One year or less 22,239 22,375 22,595 22,853 22,730 23.842 23,185 23,526 7 One year through five years 42,860 42,621 44,475 45,279 44,809 44,002 44,213 46,184 8 More than five years 36,259 36,391 36,745 36,823 39,364 39,333 39.374 39,225 9 Other securities 56,469 56,233 56,025 55,939 56,449 56,277 55,945 55,969 10 Trading account 1,903 1,839 1,831 1,712 1,745 1,710 1,666 1,741 11 Investment account 54,566 54,393 54,193 54,227 54,704 54,567 54,278 54,228 12 State and political subdivisions, by maturity . 25,502 25,428 25,326 25,263 25,179 25,033 25,000 24,797 13 One year or less 3,150 3,130 3,085 3,095 3,109 3,091 3,099 3,048 14 More than one year 22,352 22,298 22,241 22,168 22,070 21,942 21,901 21,749 15 Other bonds, corporate stocks, and securities 29,064 28,965 28,867 28,965 29,525 29,535 29,278 29,431 16 Other trading account assets 10,051 10,493 10,330 10,735 10,531 10,763 10,187 10,021 17 Federal funds sold3 82,427 80,318 76,237 73,930 83,262 82,073 81,525 80,673 18 To commercial banks in the United States 56,829 55,301 52,264 49,722 57,748 56,463 56,380 54,776 19 To nonbank brokers and dealers 21,256 21,1% 19,793 19,632 21,799 20.843 19,863 20,597 20 To others4 4,341 3,822 4,180 4,576 3,715 4,766 5,282 5,300 21 Other loans and leases, gross 1,031,813 1,026,504 1,020,383 1,017,269 1,020,791 1,017,077 1,015,653 1,016,181 22 Commercial and industrial 308,456 306,462 304,265 302,552 303,660 301,921 299,965 299,809 23 Bankers acceptances and commercial paper .. 1,695 1,735 1,750 1,763 1,884 2,014 1,977 1,950 24 All other 306,761 304,727 302,515 300,789 301,775 299,907 297,988 297,859 25 U.S. addressees 305,319 303,309 301,110 299,382 300,152 298,359 2%,515 2%,359 26 Non-U.S. addressees 1,442 1,418 1,405 1,407 1,623 1,548 1,474 1,501 27 Real estate loans 404,337 404,172 400,841 400,397 399,111 399,812 400,428 398,967 28 Revolving, home equity 37,917 37,965 38,062 38,111 38,233 38,279 38,366 38,487 29 All other 366,420 366,208 362,779 362,287 360,879 361,533 362,062 360,480 30 To individuals for personal expenditures 185,040 184,179 184,316 184,688 185,050 184,231 184,839 185,457 31 To financial institutions 46,123 45,070 45,542 45,199 46,061 45,155 44,988 44,596 32 Commercial banks in the United States 19,681 18,808 19,765 20,790 20,563 19,917 20,217 20,489 33 Banks in foreign countries 2,367 2,352 2,577 1,798 2,109 1,800 1,836 1,973 34 Nonbank financial institutions 24,075 23,910 23,199 22,611 23,390 23,438 22,934 22,135 35 For purchasing and carrying securities 11,734 12,008 11,466 11,344 13,701 12,931 12,763 13,948 36 To finance agricultural production 6,290 6,291 6,324 6,252 6,269 6,259 6,295 6,248 37 To states and political subdivisions 18,996 18,944 18,911 18,829 18,848 18,697 18,691 18,639 38 To foreign governments and official institutions 1,260 1,097 1,107 1,063 988 1,004 1,000 990 39 All other loans5 22,591 21,400 21,849 21,225 21,358 21,425 21,100 21,968 40 Lease-financing receivables 26,985 26,881 25,762 25,720 25,745 25,644 25,583 25,560 41 LESS: Unearned income 3,861 3,869 3,877 3,864 3,820 3,811 3,805 3,796 42 Loan and lease reserve 36,315 36,647 36,691 36,767 37,079 37,254 37,223 37,203 43 Other loans and leases, net 991,637 985,988 979,815 976,638 979,892 976,012 974,626 975,183 44 Other assets 158,895 154,999 150,005 150,866 155,309 154,557 152,327 147,489 45 Total assets 1,603,427 1,584,661 1,567,903 1,559,825 1,594,076 1,582,560 1,575,113 1,573,874 Footnotes appear on the following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Nonfinancial Statistics • November 1991 1.26 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued Millions of dollars, Wednesday figures 1991 AAccccoouunntt July 3r July 10" July 17r July 24r July 31r Aug. 7 Aug. 14 Aug. 21 Aug. 28 LIABILITIES 46 Deposits 1,125,763 1,106,821 1,103,787 1,092,295 1,113,759 1,108,583 1,110,554 1,099,508 1,097,438 47 Demand deposits 238,786 221,183 221,286 211,609 232,019 218,513 222,316 214,941 216,014 48 Individuals, partnerships, and corporations 191,009 179,576 180,199 171,703 185,966 177,627 181,620 172,953 174,740 49 Other holders 47,778 41,606 41,086 39,907 46,054 40,886 40,696 41,988 41,273 50 States and political subdivisions 6,929 6,128 7,023 6,633 7,384 6,633 6,270 6,774 6,598 51 U.S. government 2,362 1,614 1,337 1,712 3,189 1,331 1,657 1,091 1,297 52 Depository institutions in the United States 22,584 19,546 19,086 18,022 19,843 18,044 18,160 18,589 18,894 53 Banks in foreign countries 5,504 5,183 4,856 4,705 5,085 5,347 5,125 4,904 4,792 54 Foreign governments and official institutions 537 517 604 811 591 593 602 644 567 55 Certified and officers' checks 9,862 8,618 8,180 8,023 9,962 8,937 8,883 9,986 9,124 56 Transaction balances other than demand deposits5 92,746 90,635 89,776 88,420 90,489 92,740 91,048 90,661 89,992 57 Nontransaction balances 794,231 795,004 792,725 792,265 791,250 797,331 797,191 793,906 791,432 58 Individuals, partnerships, and corporations 758,954 759,761 757,471 756,854 755,825 762,401 762,477 759,101 756,826 59 Other holders 35,277 35,242 35,254 35,412 35,425 34,930 34,714 34,805 34,607 60 States and political subdivisions 28,870 28,766 28,845 29,028 29,043 28,577 28,413 28,625 28,353 61 U.S. government 1,177 1,188 1,191 1,194 1,112 1,094 1,114 1,095 1,089 62 Depository institutions in the United States 4,797 4,854 4,790 4,754 4,838 4,836 4,767 4,669 4,723 63 Foreign governments, official institutions, and banks 432 435 429 435 431 423 420 417 441 64 Liabilities for borrowed money6 265,867 265,313 255,891 257,257 269,392 265,347 255,061 265,005 258,334 65 Borrowings from Federal Reserve Banks 0 0 0 35 125 4,215 230 1,010 392 66 Treasury tax and loan notes 12,330 10,737 10,333 14,136 25,758 9,782 10,380 10,499 10,970 67 Other liabilities for borrowed money7 253,537 254,577 245,559 243,086 224433,,550088 225511,,335500 224444,,445511 225533,,44%% 224466,,997722 68 Other liabilities (including subordinated notes and debentures) 97,615 97,281 94,484 95,906 97,291 94,675 95,063 94,909 %,028 69 Total liabilities 1,489,245 1,469,415 1,454,163 1,445,458 1,480,442 1,468,605 1,460,678 1,459,422 1,451,801 70 Residual (total assets less total liabilities)8 114,182 115,246 113,741 114,367 113,634 113,955 114,435 114,453 113,980 MEMO 71 Total loans and leases, gross, adjusted, plus securities9 .. 1,300,521 1,294,686 1,288,453 1,284,283 1,295,276 1,290,926 1,288,844 1,292,234 1,286,081 72 Time deposits in amounts of $100,000 or more 189,830 189,218 189,201 188,889 187,871 188,435 187,072 186,509 185,238 73 Loans sold outright to affiliates10 1,272 1,271 1,267 1,264 1,296 1,286 1,271 1,254 1,263 74 Commercial and industrial 668 666 675 673 693 686 677 667 678 75 Other 604 604 593 591 603 600 594 587 585 76 Foreign branch credit extended to U.S. residents11 23,469 23,129 23,172 23,253 23,246 23,352 23,489 23,278 23,326 77 Net due to related institutions abroad -9,381 -5,645 -7,327 -5,139 -6,153 -7,840 -9,735 -4,952 -6,263 1. Components may not sum to totals because of rounding. the United States. 2. Includes certificates of participation, issued or guaranteed by agencies of the 10. Affiliates include a bank's own foreign branches, nonconsolidated nonbank U.S. government, in pools of residential mortgages. affiliates of the bank, the bank's holding company (if not a bank), and noncon- 3. Includes securities purchased under agreements to resell. solidated nonbank subsidiaries of the holding company. 4. Includes allocated transfer risk reserve. 11. Credit extended by foreign branches of domestically chartered weekly- 5. Includes negotiable order of withdrawal (NOW), automatic transfer service reporting banks to nonbank U.S. residents. Consists mainly of commercial and (ATS), and telephone and preauthorized transfer savings deposits. industrial loans, but includes an unknown amount of credit extended to other than 6. Includes borrowings only from other-than-directly-related institutions. nonfinancial businesses. 7. Includes federal funds purchased and securities sold under agreements to NOTE. Data that formerly appeared in table 1.28, Assets and Liabilities of Large repurchase. Weekly Reporting Commercial Banks in New York City, can be obtained from the 8. This balancing item is not intended as a measure of equity capital for use in Board's H.4.2 (504) weekly statistical release. For ordering address see inside capital-adequacy analysis. front cover. 9. 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 Liabilities1 Millions of dollars, Wednesday figures Account July 3 July 10 July 17 July 24 July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 1 Cash and balances due from depository institutions 15,743 14,800 14,429 15,134 14,878 14,859 14,987 15,547 15,659 2 U.S. Treasury and government agency securities 14,144 14,360 14,372 14,674 14,327 15,252 15,895 15,349 14,702 3 Other securities. 7,334 7,347 7,259 7,257 7,304 7,348 7,371 7,442 7,517 4 Federal funds sold 7,125 9,591" 6,714" 8,569" 9,545" 7,251 6,730 9,881 9,143 5 To commercial banks in the United States .. 3,375 4,556 2,873 3,927 4,797 3,546 1,690 5,188 3,405 6 To others2 3,750 5,035" 3,841" 4,642" 4,748" 3,705 5,040 4,693 5,737 7 Other loans and leases, gross 137,297 137,328 137,515 138,145 138,835 138,217 138,709 137,471 138,839 8 Commercial and industrial 83,157" 82,833" 83,364" 83,759" 83,641" 83,563 83,787 83,219 84,305 9 Bankers acceptances and commercial paper 2,026 1,833 1,719 1,711 1.741 2,028 2,132 1,918 1,970 10 All other 81,131r 80,999" 81,645" 82,048" 81,899" 81,535 81,655 81,301 82,336 11 U.S. addressees 78,95lr 78,889" 79,480" 79,949" 79,758" 79,365 79,503 79,165 80,151 12 Non-U.S. addressees 2,180" 2,111 2,165 2,100 2,141 2,170 2,152 2,135 2,185 1 1 1 1 1 1 3 4 5 8 6 7 T L F o o o C N B r a f n o a i o p n s n m n u a k b r s m n c s a e c h n e c i i a n r u a k c s l r i i f f e i a n o i d n n l g r s e a b b t i a n i a g y t n c u n n d i t r k a i e c s o l c a o n a i l i u n r n s e r n s y t s t t i h r t i t a n i u e e t g t e s i U o s n n e i s c t u e r d i ti S e t s a te . s .. , 3 1 2 7 7 2 6 1 , , , , , , 4 1 9 7 6 8 0 4 7 3 1 1 0 0 2 6 9 3 " " " 3 1 2 7 6 3 6 1 , , , , , , 5 9 9 3 5 3 2 0 7 6 1 % 9 1 7 0 6 " " " 3 1 7 6 2 2 6 1 , , , , , , 7 8 8 9 3 6 0 6 6 9 3 6 1 3 6 4 1 9 " " " 3 1 7 2 7 2 6 1 , , , , , , 6 2 8 6 9 8 1 4 1 4 4 3 7 1 9 4 8 0 " " " 3 1 7 2 8 3 7 1 , , , , , . 5 3 2 2 3 7 2 3 5 8 1 4 7 0 6 4 3 2 " " " 3 1 7 2 7 2 7 1 , , , , , , 6 9 6 4 2 9 1 1 1 2 5 1 2 4 3 9 3 0 3 1 7 2 7 2 7 1 , , , , , , 9 7 5 8 2 7 2 7 7 7 4 2 2 5 2 5 6 3 3 1 8 2 6 2 6 1 , , , , , , 7 0 8 7 6 7 0 2 2 4 6 5 0 0 8 1 6 1 3 1 8 2 2 6 2 7 , , , , , , 7 1 2 8 5 1 3 0 1 7 0 % 0 5 4 6 0 19 To foreign governments and official institutions 299 306 296 299 325 330 343 343 354 20 All other 1,832 1,888 1,828 1,907 1,773 1,845 1,739 1,823 1,753 21 Other assets (claims on nonrelated parties) . 27,906" 27,833" 28,187" 28,599 28,901 28,419 28,384 28,839 28,234 22 Total assets3 246,093" 248,194" 244,440" 247,766" 254,828" 252,069 251,639 250,262 252,418 23 Deposits or credit balances due to other than directly related institutions 87,001 87,315 88,746 90,834 91,904 90,573 89,818 92,497 95,382 24 Demand deposits 4,125 3,662 3,875 3,956 4,001 3,508 3,573 3,438 3,546 25 Individuals, partnerships, and corporations 2,339 2,294 2,399 2,370 2,379 2,063 2,112 1,958 2,089 26 Other 1,786 1,367 1,476 1,586 1,622 1,445 1,461 1,480 1,456 27 Nontransaction accounts 82,876 83,653 84,871 86,878 87,903 87,066 86,245 89,059 91,836 28 Individuals, partnerships, and corporations 62,308" 62,441" 63,413" 64,577" 65,247" 63,9% 63,209 65,869 66,976 29 Other 20,568" 21,212" 21,458" 22,300" 22,656" 23,070 23,036 23,190 24,860 30 Borrowings from other than directly related institutions 92,404 93,697 88,552 86,834 93,268 92,355 94,987 90,455 86,%9 31 Federal funds purchased 45,399 47,251 44,405 40,755 47,707 46,688 49,236 48,029 42,183 32 From commercial banks in the United States 21,067 20,712 19,744" 15,961 21,485 19,346 20,586 20,211 18,775 33 From others 24,332 26,539 24,661" 24,794 26,222 27,342 28,650 27,818 23,408 34 Other liabilities for borrowed money 47,005 46,446 44,147 46,078 45,561 45,668 45,751 42,426 44,785 35 To commercial banks in the United States 14,562 14,484 14,594 14,017 14,824 14,355 14,693 14,134 14,378 36 To others 32,444 31,962 29,553 32,062 30,737 31,312 31,058 28,291 30,407 37 Other liabilities to nonrelated parties 26,209 26,042 26,124 26,519 27,023 26,358 26,874 26,523 26,569 38 Total liabilities6 246,093" 248,194" 244,440" 247,766" 254,828" 252,069 251,639 250,262 252,418 39 M To E t M al O l oans (gross) and securities, adjusted7. 154,805 156,111" 155,123" 156,870" 156,931" 156,608 159,040 156,927 158,691 40 Net due to related institutions abroad 3,934" 4,206" 5,054" 8,192" 1,595" 2,060 3% 5,055 5,174 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 to related institutions abroad for U.S. branches and agencies of 3. Includes net due from related institutions abroad for U.S. branches and 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 United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • November 1991 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING1 Millions of dollars, end of period 1991 1986 1987 1988 1989 1990 IItteemm Dec. Dec. Dec. Dec. Dec. Feb. Mar. Apr. May June July Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 331,316 358,997 458,464 530,123 566,688 561,406 565,734 541,648 533,091 533,659 543,043 Financial companies2 Dealer-placed paper 2 Total 110011,,770077 102,742 115599,,777777 118866,,334433 221188,,995533 221177,,881122 222244,,886655 221122,,333377 220066,,550077 220033,,222299 220055,,003322 3 Bank-related (not seasonally adjusted)4 2,265 1,428 1,248 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Directly placed paper 4 Total 115511,,889977 174,332 119944,,993311 212,640 220011,,886622 119977,,779999 119900,,228855 118844,,770033 118833,,338833 118899,,551122 119933,,669999 5 Bank-related (not seasonally adjusted)3 40,860 43,173 43,155 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 6 Nonfinancial companies6 77,712 81,923 103,756 131,140 145,873 145,795 150,584 144,608 143,201 140,918 144,312 Bankers dollar acceptances (not seasonally adjusted)7 7 Total 64,974 70,565 66,631 62,972 54,771 52,831 48,795 47,086 46,438 45,539 44,707 Holder 8 Accepting banks 13,423 10,943 9,086 9,433 9,017 10,240 9,237 8,593 10,138 10,028 9,070 9 Own bills 11,707 9,464 8,022 8,510 7,930 8,391 7,569 7,599 8,179 8,414 7,895 10 Bills bought 1,716 1,479 1,064 924 1,087 1,849 1,668 994 1,959 1,613 1,175 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 1,066 918 892 872 934 1,053 1,203 1,274 13 Others 50,234 58,658 56,052 52,473 44,836 41,699 38,686 37,559 35,247 34,308 34,363 Basis 14 Imports into United States 14,670 16,483 14,984 15,651 13,0% 13,799 12,509 12,511 12,821 13,431 12,715 15 Exports from United States 12,960 15,227 14,410 13,683 12,703 12,082 11,500 11,219 11,511 11,416 11,433 16 All other 37,344 38,855 37,237 33,638 28,973 26,950 24,786 23,356 22,106 20,691 20,559 1. Components may not sum to totals because of rounding. 6. Includes public utilities and firms engaged primarily in such activities as 2. Institutions engaged primarily in commercial, savings, and mortgage bank- communications, construction, manufacturing, mining, wholesale and retail trade, ing; sales, personal, and mortgage financing; factoring, finance leasing, and other transportation, and services. business lending; insurance underwriting; and other investment activities. 7. Data on bankers acceptances are gathered from institutions whose accep- 3. Includes all financial-company paper sold by dealers in the open market. tances total $100 million or more annually. The reporting group is revised every 4. Bank-related series were discontinued in January 1989. January. In January 1988, the group was reduced from 155 to 111 institutions. The 5. As reported by financial companies that place their paper directly with current group, totaling approximately 100 institutions, accounts for more than 90 investors. percent of total acceptances activity. 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per year 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—Apr. .. 8.50 1989 10.87 Feb. .. 10.93 May ... 9.00 1990 10.01 Mar. .. 11.50 June .. 9.50 Apr. .. 11.50 July ... 10.00 1988— Jan. 8.75 May ... 11.50 Aug. .. 10.50 Feb. 8.51 June .. 11.07 Sept. .. Mar. 8.50 July ... 10.98 Oct. ... 11.00 Apr. 8.50 Aug. .. 10.50 Nov. .. 11.50 May 8.84 Sept. .. 10.50 Dec. .. 11.00 June 9.00 Oct. ... 10.50 10.50 July 9.29 Nov. .. 10.50 1991—Jan. ... Aug. 9.84 Dec. .. 10.50 Feb. .. 10.00 Sept. 10.00 Mar. .. Oct. 10.00 1990— Jan. ... 10.11 Apr. .. 9.50 Nov. 10.05 Feb. .. 10.00 May ... 9.00 Dec. 10.50 Mar. 10.00 June .. 8.50 July ... 8.00 Aug. .. Sept. 1. Data in this table also appear in the Board's H.15 (519) weekly and G.13 (415) monthly statistical releases. For ordering 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 IItteemm 11998888 11998899 11999900 May June July Aug. Aug. 2 Aug. 9 Aug. 16 Aug. 23 Aug. 30 MONEY MARKET INSTRUMENTS 1 Federal funds',2,3 7.57 9.21 8.10 5.78 5.90 5.82 5.66 5.79 5.83 5.62 5.68 5.58 6.20 6.93 6.98 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 Commercial paper3'5,6 7.58 9.11 8.15 5.91 6.06 5.98 5.72 5.92 5.73 5.69 5.64 5.72 7.66 8.99 8.06 5.92 6.11 6.05 5.72 5.95 5.74 5.68 5.64 5.72 7.68 8.80 7.95 5.94 6.16 6.14 5.76 6.04 5.81 5.71 5.66 5.76 Finance paper, directly placed3'5'7 7.44 8.99 8.00 5.76 5.93 5.86 5.58 5.80 5.62 5.58 5.48 5.56 7.38 8.72 7.87 5.81 5.96 5.89 5.56 5.83 5.59 5.53 5.45 5.54 7.14 8.16 7.53 5.72 5.75 5.81 5.50 5.73 5.56 5.50 5.41 5.44 Bankers acceptances3'5,8 7.56 8.87 7.93 5.75 5.94 5.89 5.54 5.80 5.56 5.50 5.49 5.54 7.60 8.67 7.80 5.77 6.00 5.97 5.55 5.88 5.58 5.51 5.47 5.54 Certificates of deposit, secondary marker• 7.59 9.11 8.15 5.86 6.00 5.92 5.64 5.84 5.66 5.62 5.57 5.63 7.73 9.09 8.15 5.91 6.07 5.98 5.65 5.90 5.69 5.62 5.58 5.63 7.91 9.08 8.17 6.03 6.26 6.25 5.79 6.14 5.87 5.78 5.68 5.72 7.85 9.16 8.16 5.94 6.08 6.01 5.65 5.94 5.78 5.61 5.59 5.63 U.S. Treasury bills Secondary market3,3 6.67 8.11 7.50 5.46 5.57 5.58 5.33 5.53 5.40 5.29 5.24 5.34 6.91 8.03 7.46 5.61 5.75 5.70 5.39 5.65 5.46 5.36 5.28 5.37 7.13 7.92 7.35 5.76 5.% 5.91 5.45 5.81 5.54 5.40 5.30 5.41 Auction average0' ' 6.68 8.12 7.51 5.51 5.60 5.58 5.39 5.58 5.51 5.30 5.17 5.40 6.92 8.04 7.47 5.65 5.76 5.71 5.47 5.69 5.59 5.39 5.23 5.47 77..1177 77..9911 7.36 5.71 5.73 6.00 5.62 5.88 n.a. n.a. n.a. 5.36 U.S. TREASURY NOTES AND BONDS Constant maturities12 7.65 8.53 7.89 6.13 6.36 6.31 5.78 6.18 5.88 5.72 5.62 5.74 8.10 8.57 8.16 6.78 6.96 6.92 6.43 6.80 6.56 6.40 6.28 6.36 8.26 8.55 8.26 7.12 7.39 7.38 6.80 7.21 6.92 6.77 6.66 6.70 8.47 8.50 8.37 7.70 7.94 7.91 7.43 7.76 7.54 7.40 7.29 7.35 8.71 8.52 8.52 7.94 8.17 8.15 7.74 8.02 7.83 7.71 7.64 7.68 8.85 8.49 8.55 8.07 8.28 8.27 7.90 8.17 7.98 7.87 7.82 7.84 8.% 8.45 8.61 8.27 8.47 8.45 8.14 8.35 8.21 8.13 8.09 8.08 Composite13 88..9988 88..5588 88..7744 88..3333 8.54 8.50 8.17 8.39 8.24 8.16 8.12 8.11 STATE AND LOCAL NOTES AND BONDS Moody's series14 7.36 7.00 6.96 6.70 6.83 6.82 6.62 6.65 6.69 6.59 6.56 6.63 30 Baa 7.83 7.40 7.29 7.10 7.21 7.18 6.% 7.01 7.02 6.91 6.90 6.97 77..6688 77..2233 7.27 6.95 7.13 7.05 6.90 6.99 6.94 6.88 6.86 6.85 CORPORATE BONDS 10.18 9.66 9.77 9.32 9.45 9.42 9.16 9.33 9.22 9.14 9.10 9.11 Rating group 3 3 3 4 A A a a a 9 9. . 9 7 4 1 9 9 . . 2 4 6 6 9 9 . . 3 5 2 6 9 8 . . 1 8 5 6 9 9. . 2 0 8 1 9 9. . 2 0 5 0 8 8 . . 7 9 5 9 8 9. . 1 9 7 3 9 8 . . 0 8 6 2 8 8 . . 7 9 3 8 8 8 . . 6 9 9 3 8 8. . 9 7 4 0 35 A 10.24 9.74 9.82 9.41 9.55 9.51 9.26 9.43 9.33 9.24 9.18 9.20 10.83 10.18 10.36 9.86 9.96 9.89 9.65 9.80 9.68 9.62 9.62 9.60 37 A-rated, recently offered utility bonds17 10.20 9.79 10.01 9.45 9.53 9.55 9.25 9.35 9.30 9.18 9.24 9.17 MEMO: Dividend-price ratio18 9.23 9.05 n.a. 8.21 8.26 8.21 8.04 8.15 8.08 8.04 7.99 8.03 33..6644 33..4455 nn..aa.. 3.23 3.23 3.20 3.10 3.13 3.12 3.12 3.10 3.05 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. Data are for transportation. Common stock ratios on the 500 stocks in the price index. indication purposes only. NOTE. These data also appear in the Board's H. 15 (519) and G. 13 (415) releases. 11. Auction date for daily data; weekly and monthly averages computed on an For address, see inside front cover. issue-date basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • November 1991 1.36 STOCK MARKET Selected Statistics 1990 1991 IInnddiiccaattoorr 11998888 11998899 11999900 Dec. Jan. Feb. Mar. Apr. May June July Aug. Prices and trading (averages of daily figures) Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 149.96 180.13 183.58 179.57 177.95 197.75 203.56 207.71 207.07 207.32 208.29 213.33 2 Industrial 180.83 228.04 225.89 221.86 220.69 246.74 255.36 260.16 260.13 261.16 262.69 268.34 3 Transportation 134.07 174.90 158.88 141.31 145.89 166.06 166.26 166.90 170.77 177.05 177.27 178.38 4 Utility 72.22 94.33 90.71 91.56 88.59 92.08 92.29 92.92 90.73 89.01 90.08 92.44 5 Finance 127.41 162.01 133.36 122.18 121.39 141.03 145.41 152.64 151.32 152.30 151.69 157.86 6 Standard & Poor's Corporation (1941-43 = 10)' 265.86 323.05 334.83 328.75 325.49 362.26 372.28 379.68 378.27 378.29 380.23 389.40 7 American Stock Exchange (Aug. 31, 1973 = 50? 295.06 356.67 338.58 305.54 304.08 338.11 353.98 365.02 362.67 366.06 364.33 367.41 Volume of trading (thousands of shares) 8 New York Stock Exchange 161,509 165,568 156,777 155,836 166,323 226,635 196,343 182,510 170,337 162,154 162,065 173,666 9 American Stock Exchange 9,955 13,124 13,155 11,620 10,870 16,649 15,326 13,140 10,995 11,477 10,883 12,667 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers3 32,740 34,320 28,210 28,210 27,390 28,860 29,660 30,020 29,980 31,280 30,600 32,260 Free credit balances at brokers* 11 Margin-account 5,660 7,040 8,050 8,050 7,435 7,190 7,320 6,975 7,200 6,690 6,545 7,060 12 Cash-account 16,595 18,505 19,285 19,285 18,825 19,435 19,555 17,830 16,650 18,110 16,945 17,060 Margin requirements (percent of market value and effective date)6 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 13 Margin stocks 70 80 65 55 65 50 14 Convertible bonds 50 60 50 50 50 50 15 Short sales 70 80 65 55 65 50 1. Effective July 1976, includes a new financial group, banks and insurance 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 A25 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1990 1991 AAccccoouunntt 1988 11998899 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June SAIF-insured institutions 1 Assets 1,350,500 1,249,055 1,156,789 1,125,653 l,116,354r 1,109,055* 1,084,821* 1,066,015* 1,054,800* 1,042,161* 1,027,608* 1,020,745 2 Mortgages 764,513 733,729 668844,,993366 666655,,665555 666622,,330099 653,508* 633,385* 624,691* 619,622* 610,644* 608,864* 605,8% 3 Mortgage-backed securities 214,587 170,532 156,398 154,197 153,469 155,616 155,228* 151,414* 149,329* 147,539* 143,976* 141,590 4 Contra-assets to mortgage assets' . 37,950 25,457 19,453 18,550 17,139 17,076* 16,897* 15,185* 14,673* 14,494* 14,312* 14,359 5 Commercial loans 33,889 32,150 27,868 26,762 26,051* 25,261* 24,125* 23,668 23,207* 22,306* 21,913* 21,736 6 Consumer loans 61,922 58,685 53,387 51,874 50,746 50,177 48,753* 48,131* 47,731* 47,634* 46,702* 45,826 7 Contra-assets to nonmortgage loans . 3,056 3,592 2,034 1,982 1,769 1,692 1,936 1,701* 1,854* 1,819* 1,739* 1,737 8 Cash and investment securities 186,986 166,053 153,061 148,058 145,286 145,998 146,644* 140,523* 138,885* 138,993* 132,876* 134,021 9 Other5 129,610 116,955 102,627 99,640 97,579* 97,262* 95,522* 94,474* 92,553* 91,358* 89,328* 87,773 10 Liabilities and net worth . 1,350,500 1,249,055 1,156,789 1,125,653 l,116,354r 1,109,055* 1,084,821* 1,066,015* 1,054,800* 1,042,161* 1,027,608* 1,020,745 11 Savings capital 971,700 945,656 878,736 857,688 851,810 846,822 835,4% 823,514* 816,493* 816,993* 806,272* 801,685 12 Borrowed money 299,400 252,230 221,872 213,563 208,105 203,855 197,353 188,914* 183,672 169,422* 164,274* 159,636 13 FHLBB 134,168 124,577 105,882 101,731 100,574 100,493 100,391 95,819* 94,658 90,555 86,779 82,312 14 Other 165,232 127,653 115,990 111,832 107,531 103,362 %,%2 93,095 89,014 78,867* 77,495* 77,324 15 Other 24,216 27,556 28,293 23,874 25,654' 26,152* 21,332* 22,167* 23,328* 20,323* 21,726* 23,640 16 Net worth n.a. 23,612 27,889 30,526 30,793* 32,225* 30,640* 31,419* 31,308* 35,423* 35,336* 35,783 SAIF-insured federal savings banks 17 Assets 425,966 498,522 584,632 591,136 588,880 585,847 576,531 567,373 556,708 552,520 549,319 552,240 18 Mortgages 230,734 283,844 328,895 333322,,992277 332,431 328,122 320,233 316,889 313,880 309,618 311,932 312,230 19 Mortgage-backed securities 64,957 70,499 80,994 82,418 82,219 84,190 81,205 79,451 78,290 77,684 75,147 75,075 20 Contra-assets to mortgage assets' . 13,140 13,548 9,339 9,964 9,578 9,305 9,591 8,222 7,777 7,975 7,638 7,932 21 Commercial loans 16,731 18,143 18,662 18,767 18,458 18,197 17,674 17,299 17,008 16,556 16,215 16,340 22 Consumer loans 24,222 28,212 31,183 30,750 30,682 30,421 29,933 31,179 29,292 30,586 30,433 30,283 23 Contra-assets to nonmortgage loans2 . 889 1,193 813 980 572 809 990 770 895 966 951 1,031 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 securities 61,029 64,538 73,756 73,602 75,117 72,454 75,940 71,066 67,721 68,157 65,786 68,847 26 Other 35,412 39,981 44,129 46,043 45,287 45,319 45,008 44,768 44,210 43,714 43,292 43,377 27 Liabilities and net worth . 425,966 498,522 584,632 591,136 588,880 585,847 576,531 567,373 556,708 552,520 549,319 552,240 28 Savings capital 298,197 360,547 424,260 434,705 436,080 436,903 434,297 428,822 422,745 425,720 422,955 424,158 29 Borrowed money 99,286 108,448 120,592 119,991 115,472 111,270 107,270 102,313 97,089 90,692 89,310 90,089 30 FHLBB 46,265 57,032 62,209 61,605 60,256 60,265 59,949 57,703 56,078 53,134 51,736 50,726 31 Other 53,021 51,416 58,383 58,386 55,216 51,005 47,321 44,610 41,011 37,558 37,574 39,363 32 Other 8,075 9,041 10,128 8,253 9,063 9,824 8,193 8,356 8,721 7,700 8,211 9,098 33 Net worth 1. Contra-assets are credit-balance accounts that must be subtracted from the NOTE. Components do not sum to totals because of rounding. Data for credit corresponding gross asset categories to yield net asset levels. Contra-assets to unions and life insurance companies have been deleted from this table. They will mortgage loans, contracts, and pass-through securities include loans in process, be shown in a separate table which will appear quarterly, starting in the December unearned discounts and deferred loan fees, valuation allowances for mortgages issue. "held for sale," and specific reserves and other valuation allowances. SOURCE. Savings Association Insurance Fund (SAIF)-insured institutions: 2. Contra-assets are credit-balance accounts that must be subtracted from the Estimates by the Office of Thrift Supervision (OTS) for all institutions insured by corresponding gross asset categories to yield net asset levels. Contra-assets to the SAIF and based on the OTS thrift institution Financial Report. nonmortgage loans include loans in process, unearned discounts and deferred loan SAIF-insured federal savings banks: Estimates by the OTS for federal savings fees, and specific reserves and valuation allowances. banks insured by the SAIF and based on the OTS thrift institution Financial 3. Includes holding of stock in Federal Home Loan Bank and finance leases Report. plus interest. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Financial Statistics • November 1991 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS1 Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll FFFiiissscccaaalll TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn yyyeeeaaarrr yyyeeeaaarrr yyyeeeaaarrr 1991 111999888888 111999888999 111999999000 Mar. Apr. May June July Aug. U.S. budget1 1 Receipts, total 908,166 990,701 1,031,308 64,805 140,380 63,560 103,389 78,593 76,426 2 On-budget 666,675 727,035 749,654 39,011 108,746 41,958 76,322 56,327 54,651 3 Off-budget 241,491 263,666 281,654 25,794 31,634 21,602 27,067 22,266 21,775 4 Outlays, total 1,063,318 1,144,020 1,251,766 105,876 110,249 116,906 105,849 119,384 119,080 5 On-budget 860,627 933,107 1,026,701 83,340 90,362 95,903 90,901 99,532 96,255 6 Off-budget 202,691 210,911 225,065 22,536 19,887 21,003 14,948 19,852 22,824 7 Surplus or deficit (-), total -155,151 -153,319 -220,458 -41,071 30,131 -53,346 -2,460 -40,791 -42,653 8 On-budget -193,952 -206,072 -277,047 -44,329 18,384 -53,945 -14,579 -43,205 -41,604 9 Off-budget 38,800 52,753 56,590 3,258 11,747 599 12,119 2,414 -1,049 Source of financing (total) 10 Borrowing from the public 166,139 141,806 264,453 -9,913 -9,399 41,742 10,715 34,434 32,574 11 Operating cash (decrease, or increase (-)) ... -7,962 3,425 818 28,473 -16,214 20,362 -15,730 6,728 18,504 12 Other7 -3,026 8,088 -44,813 22,511 -4,518 -8,758 7,475 -371 -8,425 MEMO 13 Treasury operating balance (level, end of period) 44,398 40,973 40,155 32,001 48,215 27,853 43,538 36,855 18,351 14 Federal Reserve Banks 13,023 13,452 7,638 10,922 13,682 6,619 11,822 5,831 6,745 15 Tax and loan accounts 31,375 27,521 32,517 21,078 34,533 21,234 31,761 31,024 11,606 1. Components may not sum to totals because of rounding. in the International Monetary Fund (IMF); loans to the IMF; other cash and 2. In accordance with the Balanced Budget and Emergency Deficit Control Act monetary assets; accrued interest payable to the public; allocations of SDRs; of 1985, all former off-budget entries are now presented on-budget. Federal deposit funds; miscellaneous liability (including checks outstanding) and asset Financing Bank (FFB) activities are now shown as separate accounts under the accounts; seigniorage; increment on gold; net gain or loss for U.S. currency agencies that use the FFB to finance their programs. The act also moved two valuation adjustment; net gain or loss for IMF loan-valuation adjustment; and social security trust funds (federal old-age survivors insurance and federal profit on sale of gold. disability insurance trust fund) off-budget. The Postal Service is included as an SOURCES. Monthly Treasury Statement of Receipts and Outlays of the U.S. off-budget item in the Monthly Treasury Statement beginning in 1990. Government (MTS) and the Budget of the U.S. Government. 3. Includes special drawing rights (SDRs); reserve position on the U.S. quota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance All 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Calendar year Fiscal Fiscal Source or type year year 1989 1991 1989 1990 H2 HI H2 HI June July Aug. RECEIPTS 1 All sources 990,701 1,031,308 470,276 548,861 503,123 540,504 103,389 78,593 76,426 2 Individual income taxes, net 445,690 466,884 218,706 243,087 230,745 232,389 44,517 38,403 34,560 6 3 4 5 P W R N r e o e i f t n s h u i w h n d i e e d t l n s h d t h i e al l d E lection Campaign Fund . 3 1 7 6 5 0 1 4 , , , 5 3 8 6 8 3 3 7 6 9 2 3 1 7 9 4 2 0 9 , , , 8 4 1 1 8 8 3 7 0 9 2 1 3 9 7 3 3 , , , 8 3 2 9 0 9 8 3 6 3 1 1 6 1 9 4 7 0 , , , 8 6 2 3 7 1 3 8 5 9 0 2 3 0 8 1 7 , , , 4 7 4 5 2 6 5 8 9 3 1 1 7 0 9 0 9 3 , , , 4 4 4 8 0 4 3 7 5 0 1 2 1 7 8 1 , , , 4 6 6 4 1 8 9 6 8 1 3 2 7 1 , , , 9 6 1 7 8 1 1 7 09 3 3 2 1 , , , 0 9 5 9 3 9 8 2 31 7 8 Co G R rp e r o o fu r s a s n t d i r o s e n c e i i n p c ts o me taxes 11 1 7 3 , , 0 7 1 2 5 3 11 1 0 6 , , 0 5 1 1 7 0 5 6 2 , , 8 2 4 6 2 9 5 8 8 , , 3 8 2 3 6 0 5 7 4 , , 6 0 0 4 3 4 5 7 8 , , 9 9 0 0 4 3 17,4 9 7 3 2 2 3 1 , , 0 2 3 7 9 0 2 1 , , 8 5 9 8 3 8 9 Socia n l e t i nsurance taxes and contributions, 359,416 380,047 162,574 210,476 178,468 214,303 34,758 30,360 31,504 10 Emp c lo o y n m tri e b n u t ti t o a n x s e s and 332,859 353,891 152,407 195,269 167,224 199,727 34,152 28,424 27,664 11 Se c l o f- n e t m ri p b l u o t y io m n e s nt taxes and 18,504 21,795 1,947 19,017 2,638 22,150 3,136 0 187 12 Unemployment insurance 22,011 21,635 7,909 12,929 8,996 12,296 251 1,578 3,417 13 Other net receipts4 4,546 4,522 2,260 2,278 2,249 2,279 355 358 422 14 Excise taxes 34,386 35,345 16,799 18,153 17,535 20,703 3,534 4,274 4,626 15 Customs deposits 16,334 16,707 8,667 8,096 8,568 7,488 1,215 1,464 1,484 16 Estate and gift taxes 8,745 11,500 4,451 6,442 5,333 5,631 708 1,065 853 17 Miscellaneous receipts 22,839 27,316 13,651 12,106 16,032 8,991 2,117 1,258 2,093 OUTLAYS 18 All types 1,144,020 1,251,766 587,394 640,867 647,218 631,737 105,849 119,384 119,080 19 National defense 303,559 299,335 149,613 152,733 149,497 122,089 21,934 23,910 27,968 2 2 2 2 2 0 1 4 2 3 I A G N E n n g e a te e n r tu i r r e c n g r r u a y a a l l t l t i u r o s e r c n e s i a o e l n u a c r f c e f e , a s i s r p a s a n c d e , e n a v n i d r o t n e m ch e n n o t l ogy . 1 1 1 9 3 6 6 2 , , , , , 5 7 9 8 1 7 0 4 3 8 4 2 2 8 8 1 1 1 1 2 3 1 4 7 , , , , , 4 7 9 4 0 6 7 9 2 0 0 0 8 0 9 5 7 9 4 1 , , , , , 1 1 9 0 4 3 8 7 9 4 2 3 1 1 9 6 6 7 7 1 , , , , , 7 3 9 4 2 7 4 7 5 1 0 3 4 0 6 6 8 8 9 , , , , 8 9 9 0 9 7 4 3 8 7 8 3 3 1 9 7 7 8 7 , , , , 5 3 6 4 8 9 2 8 1 % 2 4 4 6 1 1, , 7 5 5 1 1 2 9 1 9 8 5 7 8 9 0 1 1 , , 8 3 6 5 1 6 1 6 6 7 0 2 4 6 5 1 - 1 6 , , 8 4 4 1 2 3 4 7 2 4 5 0 0 9 25 Commerce and housing credit 29,091 67,495 22,295 38,672 37,491 17,992 6,424 15,199 5,805 26 Transportation 27,608 29,495 14,982 13,754 16,218 14,748 2,562 2,721 3,105 27 Community and regional development .. 5,361 8,466 4,879 3,987 3,939 3,552 503 542 614 28 Education, training, employment, and social services 36,694 37,479 18,663 19,537 18,988 21,234 3,175 2,%7 3,550 29 Health 48,390 58,101 25,339 29,488 31,424 35,608 6,917 6,220 6,401 30 Social security and medicare 317,506 346,383 162,322 175,997 176,353 190,247 33,907 32,246 32,505 31 Income security 136,031 148,299 67,950 78,475 75,948 88,778 9,827 14,803 15,367 32 Veterans benefits and services 30,066 29,112 14,864 15,217 15,479 14,326 1,168 2,654 3,666 33 Administration of justice 9,422 10,076 4,909 4,868 5,265 6,187 930 1,072 1,153 34 General government 9,124 10,822 4,760 4,916 6,976 5,212 1,592 -64 1,032 3 3 5 6 N U e n t d i i s n t t r e i r b e u s t t e 6 d offsetting receipts i ' - 1 3 6 7 9 , , 2 3 1 1 2 7 - 1 3 8 6 3 , , 6 7 1 9 5 0 -1 8 8 7 , , 9 9 3 2 5 7 -1 9 7 1 , , 6 1 8 5 8 5 -1 9 9 4 , , 8 6 2 5 9 0 -1 9 8 8 , , 7 5 0 5 2 6 - 1 3 5 ,0 ,7 5 4 1 6 - 1 3 5 ,4 ,9 5 9 4 4 - 1 2 7 , , 9 6 4 0 2 5 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

A28 Domestic Financial Statistics • November 1991 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION1 Billions of dollars, end of month 1989 1990 1991 IItteemm June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 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 3,562.9 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 3,538.0 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 2,598.4 n.a. 4 Held by agencies 657.8 676.7 707.8 722.7 775.0 795.8 828.3 866.8 n.a. 5 Agency securities 24.0 23.7 22.5 29.9 31.7 32.8 32.5 26.5 n.a. 6 Held by public 23.6 23.5 22.4 29.8 31.6 32.6 32.4 26.4 n.a. 7 Held by agencies .5 .1 .1 .2 .2 .2 .1 .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 3,450.3 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 3,449.8 10 Other debt2 .2 .3 .3 .3 .4 .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 4,145.0 1. Components may not sum to totals because of rounding. of Columbia stadium bonds. 2. Consists of guaranteed debt of Treasury 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. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership1 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 3,516.1 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 389.5 414.0 430.6 527.4 482.5 527.4 533.3 521.5 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 Nonmarketable 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 issues3 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 series4 461.3 575.6 695.6 813.8 779.4 813.8 853.1 883.2 14 Non-interest-bearing 2.8 21.3 21.2 2.8 22.4 2.8 23.8 21.9 By holder 5 15 U.S. Treasury and other federal agencies and trust funds 477.6 589.2 707.8 828.3 795.8 828.3 866.8 16 Federal Reserve Banks 222.6 238.4 228.4 259.8 232.5 259.8 247.3 17 Private investors 1,731.4 1,858.5 2,015.8 2,288.3 2,207.3 2,288.3 2,360.6 18 Commercial banks 201.5 193.8 174.8 188.2 188.0 188.2 182.0 19 Money market funds 14.6 11.8 14.9 45.4 34.0" 45.4 46.0 20 Insurance companies 104.9 107.3 130.1 149.7 142.7" 149.7 152.0 n.a. 21 Other companies 84.6 87.1 93.4 108.9 102.0 108.9 114.9 22 State and local treasuries 284.6 313.6 338.7 329.6 330.8" 329.6 329.0 Individuals 23 Savings bonds 101.1 109.6 117.7 126.2 123.9 126.2 129.7 24 Other securities 71.3 79.2 98.7r 107.6 108.6" 107.6 108.6 25 Foreign and international6 299.7 362.2 392.9 425.1 404.8" 425.1 432.2 26 Other miscellaneous investors 569.1 593.4 654.6r 807.6 772.5 807.6 866.2 1. Components may not sum to totals because of rounding. funds are actual holdings; data for other groups are Treasury estimates. 2. Includes (not shown separately) securities issued to the Rural Electrification 6. Consists of investments of foreign balances and international accounts in the Administration, depository bonds, retirement plan bonds, and individual retire- United States. ment bonds. 7. Includes savings and loan associations, nonprofit institutions, credit unions, 3. Nonmarketable series denominated in dollars, and series denominated in mutual savings banks, corporate pension trust funds, dealers and brokers, certain foreign currency held by foreigners. U.S. Treasury deposit accounts, and federally-sponsored agencies. 4. Held almost entirely by U.S. Treasury and other federal agencies and trust SOURCES. Data by type of security, U.S. Treasury Department, Monthly funds. Statement of the Public Debt of the United States; data by holder, the Treasury 5. Data for Federal Reserve Banks and U.S. government agencies and trust Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance All 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Millions of dollars, daily averages, par value 1991 1991, week ending Item May June July July 3 July 10 July 17 July 24 July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 IMMEDIATE TRANSACTIONS2 By type of security U.S. Treasury securities 1 Bills 30,745 30,281 28,081 35,068 27,527 27,252 23,224 30,130 34,608 32,317 35,343 Coupon securities, by maturity 2 Less than 3.5 years 43,429 32,941 32,862 38,197 30,539 32,948 32,346 32,414 51,083 42,382 48,175 3 3.5 to 7.5 years 24,695 23,422 23,516 23,217 20,200 26,830 24,943 22,270 32,294 32,764 36,920 4 7.5 to 15 years 14,556 10,805 8,933 10,523 7,112 8,949 7,971 10,746 23,030 19,519 17,594 5 15 years or more 13,550 11,497 10,831 9,787 9,682 10,782 9,653 13,834 21,159 21,040 17,041 Federal agency securities Debt, maturing in 6 Less than 3.5 years 4,284 4,028 4,517 5,269 4,485 3,944 4,347 4,842 4,230 3,530 4,632 7 3.5 to 7.5 years 642 554 415 639 354 362 360 448 1,006 777 506 8 7.5 years or more 712 662 621 519 693 583 844 425 1,020 768 463 Mortgage-backed securities 9 Pass-throughs 9,607 10,706 9,332 8,930 10,813 9,468 8,293 8,994 9,695 8,246 11,105 10 All others3; 1,364 1,867 1,806 2,218 1,489 1,775 1,742 1,972 2,470 1,631 2,225 By type of counterparty Primary dealers and brokers 11 U.S. Treasury and federal agency securities 76,948 67,404 63,741 71,442 57,979 65,997 61,049 65,320 100,087 92,355 94,487 Federal agency securities 12 Debt 1,621 1,365 1,461 1,576 1,416 1,324 1.516 1,517 1,678 1,515 1,223 13 Mortgage-backed 5,011 6,053 4,991 4,992 5,989 5,085 4.517 4,372 5,494 4,153 5,435 Customers 14 U.S. Treasury and federal agency securities 50,027 40,482 45,350 37,082 40,764 37,087 44,075 62,087 55,666 60,585 Federal agency securities 15 Debt 4,017 3,879 4,092 4,850 4,116 3,565 4,036 4,198 4,578 3,559 4,378 16 Mortgage-backed 5,960 6,520 6,147 6,155 6,313 6,157 5,518 6,594 6,671 5,724 7,895 FUTURE AND FORWARD TRANSACTIONS By type of deliverable security U.S. Treasury securities 17 Bills 4,201 5,531 3,490 6,286 3,306 3,187 3,072 2,721 5,647 4,403 6,868 Coupon securities, by maturity 18 Less than 3.5 years 1,292 1,285 951 1,442 967 1,015 768 760 2,186 1,459 1,229 19 3.5 to 7.5 years 569 607 493 714 224 621 580 416 577 528 468 20 7.5 to 15 years 938 1,346 720 1,172 554 721 675 658 1,052 941 1,344 21 15 years or more 8,030 9,082 7,038 6,801 6,956 7,664 6,768 6,904 10,233 9,861 10,347 Federal agency securities Debt, maturing in 22 Less than 3.5 years 57 68 83 106 7 227 4 7 6 52 23 3.5 to 7.5 years 11 47 38 91 4 5 104 12 14 189 24 7.5 years or more 26 20 20 18 22 10 30 10 14 12 Mortgage-backed 25 Pass-throughs 9,536 9,604 10,561 9,575 10,999 12,779 10,403 8,656 8,491 15,810 14,889 26 All others . 1,684 1,697 1,653 1,737 1,658 1,752 1,900 1,252 1,489 2,387 1,847 OPTION TRANSACTIONS5 By type of underlying security U.S. Treasury, coupon securities, by maturity 27 Less than 3.5 years 1,056 2,104 4,311 1,928 650 4,723 6,717 6,586 6,940 4,183 3,111 28 3.5 to 7.5 years 138 243 194 458 176 174 47 222 209 113 150 29 7.5 to 15 years 245 284 256 340 83 290 309 291 631 511 424 30 15 years or more 2,205 2,048 1,991 2,048 1,672 1,544 2,302 2,412 3,509 2,638 2,437 Federal agency, mortgagebacked securities 31 Pass-throughs 275 280 237 146 432 446 526 261 1. Transactions are market purchases and sales of securities as reported to the 4, Futures transactions are standardized agreements arranged on an exchange. Federal Reserve Bank of New York by the U.S. government securities dealers on Forward transactions are agreements made in the over-the-counter market that its published list of primary dealers. Averages for transactions are based on the specify delayed delivery. All futures transactions are included regardless of time number of trading days in the period. Immediate, forward, and future transactions to delivery. Forward contracts for U.S. Treasury securities and federal agency are reported at principal value, which does not include accrued interest; option debt securities are included when the time to delivery is more than five days. transactions are reported at the face value of the underlying securities. Forward contracts for mortgage-backed securities are included when the time to Dealers rep9rt cumulative transactions for each week ending Wednesday. delivery is more than thirty days. 2. Transactions for immediate delivery include purchases or sales of securities 5. Options transactions are purchases or sales of put-and-call options, whether (other than mortgage-backed agency securities) for which delivery is scheduled in arranged on an organized exchange or in the over-the-counter market, and include five business days or less and "when-issued" securities that settle on the issue options on futures contracts on U.S. Treasury and federal agency securities. date of offering. Transactions for immediate delivery of mortgage-backed securities NOTE. In tables 1.42 and 1.43, the term "n.a." refers to data that are not incjude purchases and sales for which delivery is scheduled in thirty days or less. published because of insufficient activity. Stripped securities are reported at market value by maturity of coupon or corpus. Data formerly shown under option transactions for U.S. Treasury securities, 3. Includes such securities as collateralized mortgage obligations (CMOs), real bills; Federal agency securities, debt; and mortgage-backed securities, other than estate mortgage investment conduits (REMICs), interest onty securities (IOs), pass-throughs are no longer available because of insufficient activity. and principal only securities (POs). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Nonfinancial Statistics • November 1991 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1991 1991, week ending IItteemm May June July June 26 July 3 July 10 July 17 July 24 July 31 Aug. 7 Aug. 14 Aug. 21 Positions NET IMMEDIATE TRANSACTIONS3 By type of security U.S. Treasury securities 1 Bills 2,907 10,964 17,206 9,231 14,569 15,197 16,019 18,545 20,191 19,627 16,312 17,804 Coupon securities, by maturity 2 Less than 3.5 years -1,704 -1,976 -3,059 -942 -2,802 -4,455 -6,513 -3,238 1,862 3,493 118 -704 3 3.5 to 7.5 years 1,808 1,677 7,128 3,083 4,083 7,356 7,192 9,515 5,755 5,016 2,691 130 4 7.5 to 15 years -4,408 -4,972 -4,725 -4,560 -5,284 -5,347 -5,591 -3,841 -3,880 -2,181 -2,402 -5,501 5 15 years or more -13,156 -15,092 -17,183 -15,128 -15,186 -15,698 -17,357 -18,307 -18,227 -16,856 -12,601 -12,518 Federal agency securities Debt, maturing in 6 Less than 3.5 years 4,960 6,230 5,673 6,835 6,077 6,274 5,863 5,286 5,095 4,615 6,132 6,663 7 3.5 to 7.5 years 2,484 2,192 1,823 2,054 2,142 2,057 1,810 1,621 1,667 1,988 1,807 1,736 8 7.5 years or more 4,836 4,636 4,707 4,723 4,862 4,717 4,618 4,734 4,693 5,057 5,117 5,040 Mortgage-backed securities 9 Pass-throughs 26,165 24,425 26,067 23,575 19,485 23,848 31,463 28,856 22,920 24,173 32,668 36,026 10 All others 10,184 10,940 12,0% 10,863 12,693 12,647 12,569 11,432 11,479 11,789 11,461 11,339 Other money market instruments 11 Certificates of deposit 2,439 3,071 3,686 3,305 3,019 3,870 3,436 3,856 3,870 4,306 3,243 2,474 12 Commercial paper 5,982 5,008 5,546 5,129 4,613 4,471 5,145 5,534 7,432 6,105 6,3% 6,717 13 Bankers acceptances 1,515 1,400 1,228 1,375 1,312 1,339 1,035 1,315 1,189 1,154 1,398 1,349 FUTURE AND FORWARD TRANSACTIONS5 By type of deliverable security U.S. Treasury securities 14 Bills -18,953 -13,075 -12,116 -12,801 -15,953 -16,984 -11,065 -8,782 -9,990 -12,061 -15,211 -15,240 Coupon securities, by maturity 15 Less than 3.5 years 520 530 1,329 466 598 1,173 1,303 2,059 1,094 1,307 995 747 16 3.5 to 7.5 years -1,254 1,000 1,511 1,827 1,107 1,028 2,010 1,833 1,347 -986 -1,666 -748 17 7.5 to 15 years -433 703 51 716 917 379 704 -341 -908 -1,661 -3,043 -2,264 18 15 years or more -4,116 -2,160 -3,222 -3,083 -3,869 -2,734 -2,198 -4,744 -2,935 -3,728 -5,944 -4,738 Federal agency securities Debt, maturing in 19 Less than 3.5 years 187 312 15 284 105 69 -97 52 -1 -84 11 -30 20 3.5 to 7.5 years 11 -138 -9 -159 -112 -104 -30 -57 201 130 74 84 21 7.5 years or more -6 -54 -15 -17 -11 -65 -13 1 16 3 51 61 Mortgage-backed securities 22 Pass-throughs -13,711 -15,368 -14,870 -15,565 -9,245 -14,066 -20,373 -17,132 -10,318 -14,492 -21,361 -24,499 23 All others 752 1,309 17 2,377 689 425 -348 -69 -227 1,392 903 2,375 24 Certificates of deposit -18,609 -46,070 -42,864 -37,646 -34,927 -28,104 -35,063 -41,109 -70,580 -90,639 -105,534 -102,471 Financing6 Reverse repurchase agreements 25 Overnight and continuing 190,522 182,725 180,538 175,447 168,763 188,649 181,852 172,000 184,697 190,895 197,455 204,559 26 Term 230,051 243,720 226,217 226,886 231,646 225,374 228,704 234,743 213,722 244,619 239,078 245,071 Repurchase agreements 27 Overnight and continuing 274,319 279,426 285,305 270,154 230,426 292,787 2%,801 287,693 287,457 299,083 302,631 323,099 28 Term 213,240 221,285 201,256 211,854 241,730 194,144 199,269 206,740 187,525 220,677 216,829 226,976 Securities borrowed 29 Overnight and continuing 60,038 64,626 64,442 64,064 63,390 64,309 64,193 63,933 65,786 60,3% 60,756 64,588 30 Term 19,025 23,069 23,187 26,064 24,564 23,917 23,078 22,534 22,627 22,256 21,732 23,999 Securities loaned 31 Overnight and continuing 7,062 7,096 7,1% 7,525 6,478 7,038 7,807 7,619 6,629 7,332 7,627 8,420 32 Term 724 1,297 937 2,926 881 828 1,464 873 608 684 586 630 Collateralized loans 33 Overnight and continuing 4,503 5,962 6,770 6,324 6,614 6,871 6,262 6,344 7,668 7,319 7,872 6,810 MEMO: Matched book7 Reverse repurchases 34 Overnight and continuing 122,990 113,023 118,316 107,558 108,214 121,684 118,766 114,146 122,998 124,388 131,618 135,490 35 Term 189,072 203,627 186,782 191,150 191,511 191,736 187,6% 190,618 175,051 200,977 192,688 195,922 Repurchases 36 Overnight and continuing 152,094 154,997 158,617 148,692 138,122 163,393 165,528 153,894 160,436 156,451 157,714 168,329 37 Term 163,869 164,351 150,534 158,046 163,427 145,982 147,563 157,906 145,160 164,021 163,4% 167,011 1. Data for positions and financing are obtained from reports submitted to the delivery. Forward contracts for U.S. Treasury securities and for federal agency Federal Reserve Bank of New York by the U.S. government securities dealers on debt securities are included when the time to delivery is more than five business its published list of primary dealers. Weekly figures are close-of-business Wednes- days. Forward contracts for mortgage-backed securities are included when the day data; monthly figures are averages of weekly data. Data for positions and time to delivery is more than thirty days. financing are averages of close-of-business Wednesday data. 6. Overnight financing refers to agreements made on one business day that 2. Securities positions are reported at market value. mature on the next business day; continuing contracts are agreements that remain 3. Net immediate positions include securities purchased or sold (other than in effect for more than one business day but have no specific maturity and can be mortgage-backed agency securities) that have been delivered or are scheduled to terminated without advance notice by either party; term agreements have a fixed be delivered in five business days or less and "when-issued" securities settle on maturity of more than one business day . the issue date of offering. Net immediate positions of mortgage-backed securities 7. Matched-book data reflect financial intermediation activity in which the include securities purchased or sold that have been delivered or are scheduled to borrowing and lending transactions are matched. Matched-book data are included be delivered in thirty days or less. in the financing breakdowns given above. The reverse repurchase and repurchase 4. Includes securities such as collateralized mortgage obligations (CMOs), real numbers are not always equal because of the "matching" of securities of different estate mortgage investment conduits (REMICs), interest only (IOs), and principal values or types of collateralization. only (POs). NOTE. Data for future and forward commercial paper and bankers' acceptances 5. Futures positions are standardized contracts arranged on an exchange. and term financing of collateralized loans are no longer available because of Forward positions reflect agreements made in the over-the-counter market that insufficient activity. Digitized for FspRecAifSy EdeRla yed delivery. Ail futures positions are included regardless of time to http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance All 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1991 Agency 1987 1988 1990 Feb. Mar. Apr. May June 1 Federal and federally sponsored agencies 341,386 381,498 411,805 434,668 441,440 437,847 432,348 432,306 429,179 2 Federal agencies 37,981 35,668 35,664 42,159 42,191 41,149 41,107 41,031 40,591 3 Defense Department1 13 8 7 7 7 7 7 7 7 4 Export-Import Etank2,3 11,978 11,033 10,985 11,376 11,376 11,186 11,186 11,186 11,244 5 Federal Housing Administration 183 150 328 393 361 370 365 407 428 6 Gove c r e n r m tif e i n ca t t N es a tional Mortgage Association participation 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 6,651 6,651 8 Tennessee Valley Authority 18,0809 18,3305 17,8909 23,4305 23,4909 22,6308 22,6001 22,7800 22,2610 9 United States Railway Association 10 Federally sponsored agencies7 303,405 345,830 375,407 392,509 399,249 396,698 391,241 391,275 388,588 11 Federal Home Loan Banks 115,727 135,836 136,108 117,895 112,874 113,311 110,691 108,981 105,775 12 Federal Home Loan Mortgage Corporation 17,645 22,797 26,148 30,941 32,640 31,425 29,768 29,016 28,836 13 Federal National Mortgage Association 97,057 105,459 116,064 123,403 125,974 124,885 124,189 126,806 126,606 14 Farm Credit Banks8 55,275 53,127 54,864 53,590 52,480 51,890 52,049 51,485 51,712 15 Student Loan Marketing Association9 16,503 22,073 28,705 34,194 35,854 35,761 35,117 35,560 36,232 1 1 1 6 7 8 R F F i a e n r s a m o n l c u C i t n i r o g e n d C it F o u F rp n in o d a r in a n t g c i i o a C n l o A rp s o s r i a st t a io n n c e Corporation11 1,200 0 0 5,8 6 5 9 0 00 4 8 , , 5 1 8 2 7 4 2 0 7 2 8 3 1 , , , 1 0 2 7 5 6 0 5 1 29 8 1 , , , 9 1 2 9 7 6 6 0 1 29 8 1 , , , 9 1 2 9 7 6 6 0 1 2 8 9 1 , , , 1 2 9 7 6 % 0 1 2 8 9 1 , , , 1 2 9 7 6 % 0 1 2 8 9 1 , , , 1 2 9 7 6 % 0 1 MEMO 19 Federal Financing Bank debt13 152,417 142,850 134,873 179,083 181,714 181,907 182,708 182,582 185,129 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 11,972 11,027 10,979 11,370 11,370 11,180 11,180 11,180 11,238 21 Postal Service6 5,853 5,892 6,195 6,698 6,698 6,698 6,698 6,401 6,401 22 Student Loan Marketing Association 4,940 4,910 4,880 4,850 4,850 4,850 4,850 4,850 4,850 2 2 3 4 T U e n n it n e e d s s S e t e a t V es a l R le a y i lw A a u y th A or s i s ty o ciation6 16,7090 16,9505 16,5109 14,0505 14,1190 13,2508 13,2210 13,4000 12,8801 Other Lending14 25 Farmers Home Administration 59,674 58,496 53,311 52,324 52,544 52,669 52,669 52,669 52,254 26 Rural Electrification Administration 21,191 19,246 19,265 18,890 18,906 18,904 18,850 18,878 18,894 27 Other 32,078 26,324 23,724 70,896 73,227 74,348 75,240 75,204 78,611 1. Consists of mortgages assumed by the Defense Department between 1957 shown on line 22. and 1%3 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 Coiporation, 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 1%9 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

A32 Domestic Nonfinancial Statistics • November 1991 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1991 TTyyppee ooff iissssuuee oorr iissssuueerr,, 11998888 11998899 11999900 oorr uussee Jan. Feb. Mar. Apr. May June July Aug. 1 All issues, new and refunding1 114,522 113,646 120,339 7,230 11,335 10,864 10,916 14,753 13,804 11,629 15,746 Type of issue 2 General obligation 30,312 35,774 39,610 2,343 4,838 4,219 3,771 4,946 4,442 3,900 5,919 3 Revenue 84,210 77,873 81,295 4,887 6,497 6,645 7,145 9,807 9,362 7,729 9,825 Type of issuer 4 State 8,830 11,819 15,149 713 2,027 1,195 1,199 1,890 1,529 690 2,328 5 Special district and statutory authority 74,409 71,022 72,661 4,563 4,903 6,599 6,604 9,549 5,057 7,320 8,890 6 Municipality, county, and township 31,193 30,805 32,510 1,954 4,405 3,070 3,113 3,314 7,218 3,659 4,526 7 Issues for new capital, total 79,665 84,062 103,235 6,977 10,403 9,675 10,156 13,924 13,347 11,414 15,177 Use of proceeds 8 Education 15,021 15,133 17,042 1,079 1,579 2,583 2,001 2,462 2,684 2,214 1,826 9 Transportation 6,825 6,870 11,650 711 146 421 1,305 1,642 1,829 621 1,498 10 Utilities and conservation 8,4% 11,427 11,739 1,1% 2,046 1,886 2,171 1,815 2,830 2,077 1,977 11 Social welfare 19,027 16,703 23,099 891 698 2,140 921 3,373 2,455 2,287 5,291 12 Industrial aid 5,624 5,036 6,117 607 768 554 319 743 1,040 425 565 13 Other purposes 24,672 28,894 34,607 2,493 4,775 2,091 3,439 3,889 2,509 3,790 4,019 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 TTyyppee ooff ii oo ss rr ss uu uu ee ss ee oo rr iissssuueerr,, 11998888 11998899 11999900 Dec. Jan. Feb. Mar. Apr. May June July 1 All issues' 410,898 379,535 339,551 21,150 17,393 30,873 36,255 33,933r 37,453r 31,370" 21,682 2 Bonds2 353,097 321,664 299,313 19,361 16,497 29,071 32,306 28,620" 30,035r 25,752r 19,000 Type of offering 3 Public, domestic 202,215 181,393 189,271 18,685 15,838 25,902 29,927 24,763r 27,205r 23,331r 17,500 4 Private placement, domestic3 127,704 117,420 86,988 15,177 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5. Sold abroad 23,178 22,851 23,054 676 659 3,169 2,379 3,857 2,830 2,421" 1,500 Industry group 6 Manufacturing 70,306 76,656 53,110 2,887 3,390 8,116 7,240 7,613 6,604 4,078r 3,180 7 Commercial and miscellaneous 62,794 49,744 40,019 1,061 1,408 1,921 1,739 2,936 1,190 1,743r 1,299 8 Transportation 10,275 10,032 12,706 351 711 563 985 502 665 567 661 9 Public utility 20,834 18,688 17,521 2,082 689 1,399 506 2,115 2,682 l,616r 1,205 10 Communication 5,593 8,461 6,664 1,380 97 669 988 845 337 1,838 616 11 Real estate and financial 183,294 158,083 169,287 11,601 10,203 16,404 20,849 14,610" 18,558r 15,910" 12,040 12 Stocks2 57,802 57,870 n.a. 1,789 896 1,802 3,949 5,313 7,418 5,618 2,682 Type of offering 13 Public preferred 6,544 6,194 3,998 175 0 150 1,233 543 1,392 203 203 14 Common 35,911 26,030 19,443 1,614 896 1,652 2,716 4,771 6,027 3,887 2,479 15 Private placement3 15,346 25,647 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Industry group 16 Manufacturing 7,608 9,308 n.a. 46 60 183 564 1,7% 2,291 1,909 685 17 Commercial and miscellaneous 8,449 7,446 5,026 110 18 546 1,0% 1,521 1,563 851 1,427 18 Transportation 1,535 1,929 126 5 242 0 249 416 277 0 18 19 Public utility 1,898 3,090 4,229 288 218 335 354 71 573 471 143 20 Communication 515 1,904 416 6 n.a. 0 0 0 0 295 46 21 Real estate and financial 37,798 34,028 11,055 1,327 359 737 1,686 1,510 2,714 2,091 350 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

Securities Market and Corporate Finance A33 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Asset Position Millions of dollars 1990 1991 IINNVVEESSTTMMEENNTT CCOOMMPPAANNIIEESS11 11998899 11999900 Dec. Jan. Feb. Mar. Apr. May Juner July 1 Sales of own shares2 306,445 345,780 34,553 38,012 30,605 31,597 40,356 36,719 33,922 39,075 272,165 289,573 29,484 27,648 23,390 25,372 32,895 26,972 27,629 28,761 3 Net sales 34,280 56,207 5,069 10,364 7,215 6,226 7,461 9,747 6,293 10,314 4 Assets4 553,871 570,744 570,744 590,296 616,472 632,052 647,053 671,852 661,643 689,604 44,780 48,638 48,638 53,549 53,899 52,895 52,982 55,450 55,057 55,376 6 Other 509,091 522,106 522,106 536,747 562,573 579,154 594,071 616,402 606,586 634,228 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 Q3 Q4 Q1 Q2 Q3 Q4 Ql Q2 1 Corporate profits with inventory valuation and capital consumption adjustment 337.6 311.6 229988..33 330066..77 229900..99 229966..88 306.6 300.7 228888..99 228866..22 228877..99 2 Profits before tax 316.7 307.7 304.7 291.4 289.8 296.9 299.3 318.5 304.1 281.5 283.6 3 Profits tax liability 136.2 135.1 132.1 127.8 123.5 129.9 133.1 139.1 126.5 115.1 119.9 180.5 172.6 172.5 163.6 166.3 167.1 166.1 179.4 177.6 166.4 163.7 110.0 123.5 133.9 125.0 127.7 130.3 133.0 135.1 137.2 137.5 136.4 6 Undistributed profits 70.5 49.1 38.7 38.6 38.6 36.8 33.2 44.3 40.4 29.0 27.3 7 Inventory valuation -27.0 -21.7 -11.4 -6.1 -14.5 -11.4 -.5 -19.8 -13.8 8.1 4.r 8 Capital consumption adjustment 47.8 25.5 4.9 21.4 15.6 11.3 7.7 2.0 -1.4 -3.5 ,3r 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. 1990 1991 19911 IInndduussttrryy 11998899 11999900 1199991111 Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 1 Total nonfarm business 507.40 532.61 535.13 532.50 534.55 534.11 530.13 535.50 524.57 539.53 540.91 Manufacturing 2 Durable goods industries 82.56 82.58 78.22 86.03 84.15 82.48 79.03 81.24 79.69 77.54 74.43 3 Nondurable goods industries 101.24 110.04 107.97 106.14 110.87 111.57 110.69 109.90 107.66 107.01 107.33 Nonmanufacturing 4 Mining 9.21 9.88 9.66 9.62 9.77 9.97 10.12 9.89 10.09 9.70 8.96 Transportation 5 Railroad 6.26 6.40 6.00 6.44 6.67 5.66 6.81 5.59 6.27 6.28 5.85 6 Air 6.73 8.87 9.90 9.27 9.37 9.55 7.54 11.18 10.10 9.53 8.78 7 Other 5.85 6.20 6.64 6.12 5.90 5.87 6.82 6.48 6.68 6.28 7.12 Public utilities 8 Electric 44.81 44.10 44.24 43.48 42.83 43.80 45.88 43.36 42.87 45.46 45.25 9 Gas and other. 21.47 23.11 22.90 21.93 21.80 23.88 24.36 23.68 21.71 23.00 23.20 10 Commercial and other2 229.28 241.43 249.60 243.46 243.18 241.32 238.87 244.19 239.50 254.73 259.98 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

A34 Domestic Nonfinancial Statistics • November 1991 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1 Billions of dollars, end of period; not seasonally adjusted 1989 1990 1991 AAccccoouunntt 11998877 11998888 11998899 Q3 Q4 Q1 Q2 Q3 Q4 Q1 ASSETS Accounts receivable, gross2 1 Consumer 141.1 146.2 140.8 146.3 140.8 137.9 138.6 140.9 136.0 131.6 2 Business 207.4 236.5 256.0 246.8 256.0 262.9 274.8 275.4 290.8 290.0 3 Real estate 39.5 43.5 48.9 48.7 48.9 52.1 55.4 57.7 59.9 57.3 4 Total 388.1 426.2 445.8 441.8 445.8 452.8 468.8 474.0 486.7 478.9 Less: 5 Reserves for unearned income 45.3 50.0 52.0 52.9 52.0 51.9 54.3 55.1 56.6 57.0 6 Reserves for losses 6.8 7.3 7.7 7.7 7.7 7.9 8.2 8.6 9.2 10.3 7 Accounts receivable, net 336.0 368.9 386.1 381.3 386.1 393.0 406.3 410.3 420.9* 411.6r 8 Mother 58.3 72.4 91.6 85.2 91.6 92.5 95.5 102.8 99.6r 103.4" 9 Total assets 394.2 441.3 477.6 466.4 477.6 485.5 501.9 513.1 520.6 515.0 LIABILITIES AND CAPITAL 10 Bank loans 16.4 15.4 14.5 12.2 14.5 13.9 15.8 15.6 19.4 22.0 11 Commercial paper 128.4 142.0 149.5 147.2 149.5 152.9 152.4 148.6 152.7 141.2 Debt 12 Other short-term 28.0 n.a. 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. n.a. 14 Due to parent n.a. 50.6 63.8 60.3 63.8 70.5 72.8 82.0 82.7 77.8 15 Not elsewhere classified n.a. 137.9 147.8 145.1 147.8 145.7 153.0 156.6 157.0 162.4 16 All other liabilities 52.8 59.8 62.6 61.8 62.6 61.7 66.1 68.7 66.0 68.0 17 Capital, surplus, and undivided profits 31.5 35.6 39.4 39.8 39.4 40.7 41.8 41.6 42.8 43.7 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 Change1 Millions of dollars, end of period, seasonally adjusted 1991 TTyyppee Feb. Mar. Apr. May June July 1 Total 234,891 258,957 292,638 294,284 294,225 294,569 297,171 298,228" 300,161 Retail financing of installment sales 2 Automotive 37,210 39,479 38,110 37,548 36,649 36,652 36,005 3355,,339900 35,491 3 Equipment 28,185 29,627 31,784 32,058 32,332 32,034 32,690 32,189 32,194 4 Pools of securitized assets2 n.a. 698 951 879 828 777 737 707 793 Wholesale 5 Automotive 32,953 33,814 32,283 31,428 30,329 30,066 30,055 29,305 29,454 6 Equipment 5,971 6,928 11,569 11,108 10,880 10,937 11,000 10,427 11,344 7 All other 9,357 9,985 9,126 9,142 8,868 8,666 8,620 8,851 8,807 8 Pools of securitized assets n.a. 0 2,950 3,353 3,354 2,905 2,855 2,805 2,843 Leasing 9 Automotive 24,693 26,804 39,129 38,922 39,279 39,707 40,738 41,603 43,024 10 Equipment 57,658 68,240 75,626 79,052 80,%9 82,750 84,126 83,961 84,311 11 Pools of securitized assets2 n.a. 1,247 1,849 1,810 1,868 1,765 1,700 1,725 1,750 12 Loans on commercial accounts receivable and factored commercial accounts receivable 17,687 18,511 22,475 22,084 21,666 21,265 21,772 24,040 23,125 13 All other business credit 21,176 23,623 26,784 26,899 27,204 27,045 26,873 27,225 27,025 Net change (during period) 14 28,900 24,065" 33,681 901 -59 345 2,601" 1,057 1,933 Retail financing of installment sales 15 Automotive 1,071" 22,,226699"" --11,,336699 --446688 -900 4 -647 -615 100 16 Equipment 3,111' 1,442 2,157 103 274 -298 656 -501 4 17 Pools of securitized assets2 n.a. -26 253 -32 -51 -51 -40 -30 86 Wholesale 18 Automotive 2,883 861" -1,532" -975 -1,100 -263 -11 -750 149 19 Equipment 393 957" 4,641 -192 -228 57 63 -573 917 20 All other 1,028" 628 -859" -224 -275 -201 -47" 231 -44 21 Pools of securitized assets2 n.a. 0 2,950 517 1 -449 -50 -50" 38 Leasing 22 Automotive 2,5% 2,111" 12,325" 1 358 428 1,031 865 1,421 23 Equipment 14,166 10,581 7,386" 2,211 1,917 1,781 1,377" -165 350 24 Pools of securitized assets2 n.a. 526 602 -44 58 -103 -65 25 25 25 Loans on commercial accounts receivable and factored commercial accounts receivable -483" 825" 3,964 194 -418 -401 506" 2,268 -914 26 All other business credit 4,135" 2,446" 3,161" -190 305 -158 -173" 352 -199 Digitized for FRASER http://fraser.stlo1.u Tishfeesed .doatrag a/ lso appear in the Board's G.20 (422) release. For address, see 2. Data on pools of securitized assets are not seasonally adjusted, inside front cover. Federal Reserve Bank of St. Louis

Real Estate A35 1.53 MORTGAGE MARKETS Conventional Mortgages on New Homes Millions of dollars; exceptions noted. 1991 IItteemm 11998888 11998899 11999900 Feb. Mar. Apr. May June July Aug. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms1 1 Purchase price (thousands of dollars) 150.0 159.6 153.2 153.2 136.7 151.4 146.8 166.7 165.1 159.0 2 Amount of loan (thousands of dollars) 110.5 117.0 112.4 113.8 100.4 114.5 109.2 121.9 121.6 115.7 3 Loan-price ratio (percent) 75.5 74.5 74.8 76.3 74.6 76.4 75.2 74.2 75.0 74.6 4 Maturity (years) 28.0 28.1 27.3 28.3 25.7 26.8 26.1 26.8 27.0 27.1 5 Fees and charges (percent of loan amount)2 2.19 2.06 1.93 1.73 1.59 2.12 1.54 1.69 1.85 1.74 6 Contract rate (percent per year) 8.81 9.76 9.68 9.28 9.16 9.24 9.26 9.18 9.12 9.19 Yield (percent per year) 7 OTS series3 9.18 10.11 10.01 9.57 9.43 9.60 9.52 99..4466 9.43 99..4488 8 HUD series4 10.30 10.21 10.08 9.49 9.49 9.51 9.46 9.60 9.46 9.22 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series)5 10.49 10.24 10.17 9.57 9.61 9.61 9.62 99..7711 9.59 99..1144 10 GNMA securities6 9.83 9.71 9.51 8.66 8.78 8.62 8.65 9.04 8.93 8.69 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 101,329 104,974 113,329 118,284 119,1% 120,074 121,798 122,806 123,770 124,230 12 FHA/VA-insured 19,762 19,640 21,028 21,947 21,976 21,972 21,609 21,474 21,511 21,529 13 Conventional 81,567 85,335 92,302 96,337 97,220 98,102 100,189 101,332 102,259 102,701 Mortgage transactions (during period) 14 Purchases 23,110 22,518 23,959 1,792 1,987 2,942 4,450 3,145 3,183 3,069 Mortgage commitments (during period)7 15 Issued8 n.a. n.a. n.a. 1,779 3,087 3,880 3,506 3,032 2,975 3,453 16 To sell9 n.a. n.a. n.a. 0 109 839 1,066 841 1,374 1,051 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)9 17 Total 15,105 20,105 20,419 22,855 23,221 23,870 24,525 23,649 24,061 n.a. 18 FHA/VA-insured 620 590 547 503 499 504 491 486 481 n.a. 19 Conventional 14,485 19,516 19,871 22,352 22,722 21,188 21,843 23,164 23,581 n.a. Mortgage transactions (during period) 20 Purchases 44,077 78,588 75,517 5,217 4,549 7,045 8,562 10,052 8,649 n.a. 21 Sales 39,780 73,446 73,817 4,549 6,183 6,226 7,692 10,694r 8,057r 8,800 Mortgage commitments10 22 Contracted (during period) 66,026 88,519 102,401 5,579 5,936 10,036 11,334 9,008 8,890 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

A36 Domestic Nonfinancial Statistics • November 1991 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1990 1991 TTyyppee ooff hhoollddeerr aanndd ooff pprrooppeerrttyy 11998877 11998888 11998899 Ql Q2 Q3 Q4 Qlp 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 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 banks 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 n 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 IS 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 9,9% 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 Multifamily 80,977 79,209 81,634 83,666 82,040 80,636 8800,,880088 80,448 62 Commercial 63,057 67,618 73,023 79,576 83,557 85,865 8877,,662244 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 Farmers 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

Consumer Installment Credit A37 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 Nov. Dec. Jan. Feb. Mar. Apr. May Juner July Seasonally adjusted 1 Total 718,863 735,102 736,411 735,102 732,962 732,762 732,442 733,621 732,289 730,591 729,753 7 Automobile 290,676 284,585 284,412 284,585 283,746 282,626 280,689 279,746 276,494 274,4% 273,616 Revolving 199,082 220,110 221,690 220,110 219,588 221,556 224,817 225,994 227,301 227,737 228,211 4 Mobile home 22,471 20,919 20,492 20,919 20,459 20,200 20,123 20,098 19,7% 19,907 19,647 5 Other 206,633 209,487 209,817 209,487 209,170 208,379 206,813 207,782 208,697 208,451 208,278 Not seasonally adjusted 6 Total 730,901 748,300 738,626 748,300 736,399 729,264 725,462 727,907 727,717 728,023 727,546 By major holder 7 Commercial banks 342,770 347,466 342,882 347,466 341,426 339,282 335,754 336,425 334,746 333,442 333,776 8 Finance companies 140,832 137,450 139,195 137,450 134,965 133,021 131,552 133,462 134,045 133,903 134,120 9 Credit unions 93,114 92,911 92,918 92,911 91,991 91,131 90,772 91,413 91,549 91,924 92,296 10 Retailers 44,154 43,552 39,095 43,552 40,945 38,864 38,497 37,817 36,782 36,702 36,392 11 Savings institutions 57,253 45,616 47,121 45,616 44,939 43,875 42,491 41,707 40,764 39,827 39,012 12 Gasoline companies 3,935 4,822 4,753 4,822 4,766 4,404 4,296 4,357 4,507 4,591 4,712 13 Pools of securitized assets 48,843 76,483 72,662 76,483 77,367 78,687 82,100 82,726 85,324 87,634 87,238 By major type of credit3 14 Automobile 290,705 284,813 285,379 284,813 282,214 279,913 277,798 277,508 227755,,558822 227755,,001188 227744,,227733 15 Commercial banks 126,288 126,259 126,544 126,259 126,235 124,745 123,411 122,710 121,631 121,605 121,221 16 Finance companies 82,721 74,396 75,224 74,396 72,015 70,287 69,233 70,500 69,689 70,304 70,444 17 Pools of securitized assets 18,235 24,537 23,475 24,537 25,123 26,872 27,755 26,875 27,085 26,039 25,609 18 Revolving 210,310 232,370 222,643 232,370 223,606 220,714 221,400 222,627 224,301 225,5% 226,157 19 Commercial banks 130,811 132,433 129,117 132,433 125,814 125,673 124,619 126,009 126,047 124,106 124,641 70 Retailers 39,583 39,029 34,657 39,029 36,510 34,509 34,179 33,513 32,458 32,381 32,076 21 Gasoline companies 3,935 4,822 4,753 4,822 4,766 4,404 4,2% 4,357 4,507 4,591 4,712 22 Pools of securitized assets2 23,477 44,335 42,297 44,335 44,773 44,451 46,722 47,116 49,667 52,897 53,094 73 Mobile home 22,240 20,666 20,472 20,666 20,614 20,362 20,030 20,052 19,721 19,875 19,671 74 Commercial banks 9,112 9,763 9,199 9,763 9,748 9,730 9,632 9,565 9,386 9,652 9,584 25 Finance companies 4,716 5,252 5,364 5,252 5,367 5,330 5,328 5,573 5,595 5,652 5,669 76 Other 207,646 210,451 210,132 210,451 209,965 208,275 206,234 207,720 208,113 207,534 207,445 77 Commercial banks 76,559 79,011 78,022 79,011 79,629 79,134 78,092 78,141 77,682 78,079 78,330 78 Finance companies 53,395 57,801 58,607 57,801 57,583 57,404 56,991 57,388 58,761 57,947 58,007 79 Retailers 4,571 4,523 4,438 4,523 4,435 4,355 4,318 4,304 4,324 4,321 4,316 30 Pools of securitized assets 7,131 7,611 6,890 7,611 7,471 7,364 7,603 8,735 8,572 8,698 8,535 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

A38 Domestic Nonfinancial Statistics • November 1991 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT1 Percent per year unless noted otherwise 1991 IItteemm 11998888 11998899 11999900 Jan. Feb. Mar. Apr. May June July INTEREST RATES Commercial banks* 1 48-month new car3 10.85 12.07 11.78 n.a. 11.60 n.a. n.a. 11.28 n.a. n.a. 2 24-month personal 14.68 15.44 15.46 n.a. 15.42 n.a. n.a. 15.16 n.a. n.a. 3 120-month mobile home3 13.54 14.11 14.02 n.a. 13.88 n.a. n.a. 13.80 n.a. n.a. 4 Credit card 17.78 18.02 18.17 n.a. 18.28 n.a. n.a. 18.22 n.a. n.a. Auto finance companies 5 New car 12.60 12.62 12.54 12.99 13.16 13.14 13.14 1122..9955 1122..7777 1122..5555 6 Used car 15.11 16.18 15.99 15.70 15.90 15.82 15.82 15.85 15.74 15.66 OTHER TERMS4 Maturity (months) 7 New car 56.2 54.2 54.6 54.9 55.2 55.2 55.4 55.5 55.5 55.5 8 Used car 46.7 46.6 46.1 47.4 47.1 47.2 47.3 47.3 47.3 47.4 Loan-to-value ratio 9 New car 94 91 87 88 88 87 87 87 88 88 10 Used car 98 97 95 96 96 97 97 % 97 % Amount financed (dollars) 11 New car 11,663 12,001 12,071 12,229 12,081 12,121 11,993 1122,,220044 1122,,334433 1122,,557722 12 Used car 7,824 7,954 8,289 8,600 8,605 8,763 8,751 8,873 8,916 8,989 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 second month of quarter only. 4. At auto finance companies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A39 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1989 1990r 1991 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998866 11998877 11998888 11998899 11999900"" Q4 Ql Q2 Q3 Q4 Ql" Q2 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors .. 836.9 687.0 760.8 678.2 639.3 620.2 803.4 596.9 657.7 499.3 411.4 462.6 By sector and instrument 7 U.S. government 215.0 144.9 157.5 151.6 272.5 185.0 247.3 222288..22 228866..11 332288..44 220044..77 224411..88 3 Treasury securities 214.7 143.4 140.0 150.0 264.4 189.6 217.8 222.9 287.5 329.4 228.7 248.0 4 Agency issues and mortgages .4 1.5 17.4 1.6 8.2 -4.6 29.6 5.4 -1.3 -1.0 -24.0 -6.2 5 Private 621.9 542.1 603.3 526.6 366.8 435.2 556.1 368.7 371.6 170.9 206.7 220.9 6 Debt capital instruments 465.8 453.2 459.2 379.8 298.2 347.0 391.0 309.3 227755..55 216.8 223300..55 229922..77 7 Tax-exempt obligations 22.7 49.3 49.8 30.4 20.1 19.1 12.4 24.5 30.0 13.5 11.3 27.5 8 Corporate bonds 126.8 79.4 102.9 73.7 49.7 87.4 30.2 68.8 32.8 67.1 80.6 95.3 9 316.3 324.5 306.5 275.7 228.3 240.5 348.4 216.0 212.7 136.3 138.6 169.9 10 Home mortgages 218.7 234.9 231.0 218.0 212.6 214.3 298.7 220.0 184.7 147.1 136.8 176.6 11 Multifamily residential 33.5 24.4 16.7 16.4 6.5 9.5 22.7 -15.5 16.2 2.7 4.6 2.9 17 Commercial 73.6 71.6 60.8 42.7 9.3 19.9 26.5 13.4 9.9 -12.8 -3.0 -8.0 13 Farm -9.5 -6.4 -2.1 -1.5 .0 -3.2 .5 -1.9 2.0 -.7 .2 -1.6 14 Other debt instruments 156.1 88.9 144.1 146.8 68.7 88.2 165.1 59.4 96.0 -45.9 -23.8 -71.9 IS Consumer credit 58.0 33.5 50.2 39.1 14.3 44.1 30.4 2.8 21.3 2.5 -23.6 -20.4 16 Bank loans n.e.c 66.9 10.0 39.8 39.9 1.3 7.7 16.3 15.4 -2.5 -24.2 14.2 -51.6 17 Open market paper -9.3 2.3 11.9 20.4 9.7 -6.9 69.6 -6.2 17.3 -41.7 5.1 -22.6 18 Other 40.5 43.2 42.2 47.4 43.4 43.3 48.8 47.4 60.0 17.5 -19.5 22.6 By borrowing sector 19 State and local government 36.2 48.8 45.6 29.6 17.2 16.5 16.0 17.2 28.1 7.6 12.2 16.8 70 293.0 302.2 314.9 285.0 254.0 291.8 377.2 257.5 227.3 154.0 162.6 199.7 71 Nonfinancial business 292.7 191.0 242.8 211.9 95.6 126.9 162.9 94.0 116.2 9.4 32.0 4.3 77 -16.3 -10.6 -7.5 1.6 2.6 8.9 6.2 -10.8 11.7 3.1 4.7 -1.6 73 Nonfarm noncorporate 99.2 77.9 65.7 50.8 13.7 35.0 45.5 3.5 19.6 -14.0 -18.7 -3.6 24 Corporate 209.7 123.7 184.6 159.5 79.4 83.1 111.2 101.3 84.8 20.2 46.0 9.5 2.5 Foreign net borrowing in United States 9.7 4.5 6.3 10.9 23.5 16.9 2.0 41.2 29.7 21.1 50.6 -53.0 76 3.1 7.4 6.9 5.3 21.6 -1.0 32.7 25.8 1.2 26.5 8.9 22.0 77 -1.0 -3.6 -1.8 -.1 -2.9 -4.3 -6.9 -1.8 1.9 -4.7 10.3 -7.1 28 Open market paper 11.5 2.1 8.7 13.3 12.3 22.2 -16.4 23.1 27.3 15.3 45.5 -52.0 29 U.S. government loans -3.9 -1.4 -7.5 -7.5 -7.5 .1 -7.3 -5.9 -.8 -16.0 -14.1 -15.8 30 Total domestic plus foreign 846.6 691.5 767.1 689.1 662.8 637.1 805.5 638.1 687.3 520.4 462.0 409.7 Financial sectors 31 Total net borrowing by financial sectors... 285.1 300.2 247.6 205.5 202.1 187.3 190.2 170.4 180.0 267.7 102.6 95.4 By instrument 32 U.S. government related 154.1 171.8 119.8 151.0 167.4 156.4 171.7 184.0 139.2 174.6 155.8 150.6 33 Sponsored credit agency securities 15.2 30.2 44.9 25.2 17.1 -4.7 9.7 17.1 22.3 19.5 14.5 -22.4 34 Mortgage pool securities 139.2 142.3 74.9 125.8 150.3 161.1 162.0 166.8 116.9 155.5 141.3 173.0 35 Loans from U.S. government -.4 -.8 .0 .0 -.1 .0 .0 .0 .0 -.5 .0 .0 36 Private 131.0 128.4 127.8 54.5 34.7 30.9 18.5 -13.5 40.8 93.1 -53.2 -55.2 37 Corporate bonds 82.9 78.9 51.7 36.8 49.8 39.6 33.5 71.2 18.0 76.7 39.5 63.2 38 Mortgages .1 .4 .3 .0 .3 -.4 .1 .2 .3 .5 .1 -.1 39 Bank loans n.e.c 4.0 -3.2 1.4 1.8 .7 4.2 -2.3 -.6 2.0 3.8 1.0 -5.8 40 Open market paper 24.2 27.9 54.8 26.9 8.6 36.3 9.2 -53.4 51.0 27.6 -65.9 -59.7 41 Loans from Federal Home Loan Banks 19.8 24.4 19.7 -11.0 -24.7 -48.8 -22.0 -30.9 -30.5 -15.5 -27.9 -52.9 By borrowing sector 42 Sponsored credit agencies 14.9 29.5 44.9 25.2 17.0 -4.7 9.7 17.1 22.3 19.0 14.5 -22.4 43 Mortgage pools 139.2 142.3 74.9 125.8 150.3 161.1 162.0 166.8 116.9 155.5 141.3 173.0 44 Private 131.0 128.4 127.8 54.5 34.7 30.9 18.5 -13.5 40.8 93.1 -53.2 -55.2 45 Commercial banks -3.6 6.2 -3.0 -1.4 -1.1 -.7 -5.7 -13.9 -5.6 20.9 -22.0 -16.6 46 Bank affiliates 15.2 14.3 5.2 6.2 -27.7 -3.9 -8.0 -32.1 -40.4 -30.2 -18.5 -7.1 47 Savings and loan associations 20.9 19.6 19.9 -14.1 -31.2 -56.2 -15.8 -53.5 -31.9 -23.4 -29.5 -55.6 48 Mutual savings banks 4.2 8.1 1.9 -1.4 -.5 .7 -8.3 6.5 -4.2 4.0 -2.2 -1.4 49 Finance companies 54.7 40.8 67.7 46.3 57.1 52.6 28.2 27.0 97.3 75.7 -9.2 -11.7 50 Real estate investment trusts (REITs).. .8 .3 3.5 -1.9 -1.9 .1 -3.8 -2.7 -1.8 .6 -.7 -.2 51 Securitized credit obligations (SCO)... 39.0 39.1 32.5 20.8 40.1 38.2 32.1 55.1 27.5 45.6 28.9 37.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • November 1991 1.57—Continued 1989 1990r 1991 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998866 11998877 11998899 11999900rr Q4 Q1 Q2 Q3 Q4 Qir Q2 All sectors 54 Total net borrowing 1,131.7 991.7 1,014.7 894.5 864.9 824.4 995.7 808.5 867.3 788.1 564.7 505.1 55 U.S. government securities 369.5 317.5 277.2 302.6 440.0 341.4 419.0 412.2 425.4 503.4 360.5 392.4 56 State and local obligations 22.7 49.3 49.8 30.4 20.1 19.1 12.4 24.5 30.0 13.5 11.3 27.5 57 Corporate and foreign bonds 212.8 165.7 161.5 115.8 121.1 125.9 96.4 165.8 52.0 170.3 129.0 180.5 58 Mortgages 316.4 324.9 306.7 275.7 228.6 240.1 348.5 216.2 213.0 136.7 138.7 169.8 59 Consumer credit 58.0 33.5 50.2 39.1 14.3 44.1 30.4 2.8 21.3 2.5 -23.6 -20.4 60 Bank loans n.e.c 69.9 3.2 39.4 41.5 -.9 7.5 7.1 13.0 1.4 -25.1 25.6 -64.5 61 Open market paper 26.4 32.3 75.4 60.6 30.7 51.6 62.3 -36.6 95.7 1.2 -15.2 -134.3 62 Other loans 56.1 65.5 54.4 28.9 11.1 -5.4 19.5 10.6 28.6 -14.5 -61.6 -46.0 63 MEMO: U.S. government, cash balance .0 -7.9 10.4 -5.9 8.3 -7.3 22.9 -38.1 21.1 27.4 51.6 -64.3 Totals net of changes in U.S. government cash balances 64 Net borrowing by domestic nonfinancial 836.9 694.9 750.4 684.1 631.0 627.6 780.5 635.0 636.6 471.9 335599..88 552266..99 65 Net borrowing by U.S. government 215.0 152.8 147.1 157.5 264.2 192.4 224.4 266.3 265.1 301.0 153.1 306.1 External corporate equity funds raised in United States 66 Total net share issues 86.8 10.9 -124.2 -63.7 9.6 14.9 -9.2 48.0 -24.1 23.6 108.0 173.9 67 Mutual funds 159.0 73.9 1.1 41.3 61.4 72.4 47.8 71.0 46.1 80.6 87.8 122.2 68 All other -72.2 -63.0 -125.3 -105.1 -51.7 -57.6 -57.0 -22.9 -70.2 -56.9 20.2 51.7 69 Nonfinancial corporations -85.0 -75.5 -129.5 -124.2 -63.0 -79.3 -69.0 -48.0 -74.0 -61.0 -12.0 11.0 70 Financial corporations 11.6 14.6 3.3 2.4 4.3 4.5 10.3 1.3 4.8 .9 3.4 4.3 71 Foreign shares purchased in United States 1.2 -2.1 .9 16.7 6.9 17.2 1.7 23.8 -1.0 3.2 28.8 36.4 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A41 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. 1990 1991 Transaction category or sector 1987 1988 1990" Q4 Qlr Q2r Q31 Q4r 1 Total funds advanced in credit markets to domestic nonfinancial sectors 836.9 687.0 678.2 639.3 620.2 803.4 596.9 499.3 2 Total net advances by federal agencies and foreign sectors 280.2 248.8 210.7 187.6 261.7 203.8 221.8 299.4 325.6 200.0 By instrument 3 U.S. government securities 69.4 70.1 85.2 30.7 74.4 27.1 4.4 111.9 139.1 42.1 4 5 R Fe e d si e d r e a n l ti H a o l m m e o r L tg o a a g n e s B ank advances to thrifts 13 1 6 9 . . 3 8 1 2 3 4 9 . . 4 1 8 1 6 9 . . 3 7 - 1 1 3 1 7 . .9 0 - 1 2 8 4 4 . . 7 1 - 1 4 7 8 8 . . 8 3 - 1 2 9 2 7 . . 0 5 - 1 3 9 0 1 . . 9 5 - 1 3 6 0 0 . . 5 8 - 1 1 8 5 6 . . 5 7 6 Other loans and securities 54.7 15.1 19.4 30.0 27.8 47.1 41.8 26.8 56.1 -13.3 By lender 7 U.S. government 9.7 -7.9 -9.4 -2.4 33.6 5.7 37.7 36.2 63.3 -2.7 8 Sponsored credit agencies and mortgage pools 153.3 169.3 112.0 125.3 166.7 158.4 187.4 163.1 165.6 150.8 9 Monetary authority 19.4 24.7 10.5 -7.3 8.1 -4.6 -6.3 40.4 24.4 -25.9 10 Foreign 97.8 62.7 97.6 72.1 53.2 44.2 3.0 59.8 72.3 77.9 Agency and foreign borrowing not in line 1 11 Sponsored credit agencies and mortgage pools 154.1 171.8 119.8 151.0 167.4 156.4 171.7 184.0 139.2 174.6 12 Foreign 9.7 4.5 6.3 10.9 23.5 16.9 2.0 41.2 29.7 21.1 13 Total private domestic funds advanced 720.5 614.5 676.2 652.5 568.5 589.7 755.3 522.7 501.0 495.0 14 U.S. government securities 300.1 247.4 192.1 271.9 365.6 314.3 414.6 300.3 286.2 461.4 15 State and local obligations 22.7 49.3 49.8 30.4 20.1 19.1 12.4 24.5 30.0 13.5 16 Corporate and foreign bonds 89.7 66.9 91.3 66.1 65.4 70.6 53.4 82.6 31.8 93.8 1 1 1 7 8 9 R O e t L h s E i e d r S e S m n : t o i F a r e l t g d m a e g r o a e r l s t g H a a n g o d e m s l e o a L n o s a n Bank advances 2 1 1 1 1 2 9 5 . . . 0 9 8 1 1 2 2 5 4 0 5 . . . 2 4 2 2 1 0 1 6 1 9 1 . . . 7 4 3 - 1 1 9 7 1 6 6 . . . 5 0 6 -2 3 5 4 5 7 . . . 7 0 7 -4 4 9 8 5 1 . . . 8 5 5 - 1 1 2 2 2 2 3 9 . . . 0 8 2 -3 7 1 0 1 3 . . . 9 4 0 -3 4 8 0 0 2 . . . 5 0 4 - - - 3 5 1 7 2 5 . . . 0 2 5 20 Total credit market funds advanced by private financial institutions 730.0 528.4 562.3 511.1 394.6 444.8 266.4 500.4 By lending institutions 21 Commercial banking 198.1 135.4 156.3 177.3 118.7 184.3 184.1 132.1 101.7 56.9 22 Savings institutions 107.6 136.8 120.4 -90.9 -153.4 -201.9 -56.6 -210.4 -168.6 -178.0 23 Insurance and pension funds 160.1 179.7 198.7 177.9 182.4 205.1 160.0 231.6 187.5 150.6 24 Other finance 264.2 76.6 86.9 246.8 246.9 374.5 157.3 113.1 246.1 470.9 By sources of funds 25 Private domestic deposits and repurchase agreements . 277.1 162.8 229.2 225.2 60.5 208.0 120.2 28.4 60.1 33.2 26 Credit market borrowing 131.0 128.4 127.8 54.5 34.7 30.9 18.5 -13.5 40.8 93.1 27 Other sources 321.8 237.1 205.3 231.4 299.4 323.1 306.1 251.6 265.9 374.1 28 Foreign funds 12.9 43.7 9.3 -9.9 24.0 -20.6 39.9 7.8 103.5 -55.1 29 Treasury balances 1.7 -5.8 7.3 -3.4 5.3 5.0 13.1 -13.4 18.2 3.4 3 3 0 1 O In t s h u e r r a , n n c e e t and pension reserves 1 18 1 7 9 . . 3 9 1 6 3 3 5 . . 9 4 1 1 77 1 . . 6 0 1 1 4 0 0 4 . . 5 2 1 1 1 5 0 9 . . 2 9 1 1 4 9 4 3 . . 7 9 1 11 3 5 7 . . 2 9 2 4 1 5 1. . 9 3 144. .0 2 2 1 8 4 0 5 . . 2 6 Private domestic nonfinancial investors 32 Direct lending in credit markets 121.5 214.6 241.7 195.9 208.6 58.7 329.0 242.8 175.0 87.7 33 U.S. government securities 27.0 86.0 129.0 134.3 148.1 65.8 198.0 154.0 165.2 75.3 34 State and local obligations -19.9 61.8 53.5 28.4 -1.0 12.8 -1.5 10.0 15.6 -27.9 35 Corporate and foreign bonds 52.9 23.3 -9.4 .7 17.5 14.6 38.9 19.7 -74.7 86.1 36 Open market paper 9.9 15.8 36.4 5.4 18.2 -64.6 60.6 33.8 16.8 -38.4 37 Other loans and mortgages 51.7 27.6 32.2 27.1 25.7 30.1 33.0 25.2 52.1 -7.4 38 Deposits and currency 297.5 179.3 232.8 241.3 90.1 230.6 137.3 64.3 95.9 62.9 39 Currency 14.4 19.0 14.7 11.7 22.6 10.1 26.1 23.0 32.2 9.1 40 Checkable deposits 96.4 -.9 12.9 1.5 .6 65.8 1.4 -18.9 13.4 6.4 41 Small time and savings accounts 120.6 76.0 122.4 100.5 59.4 109.1 107.7 21.5 59.6 48.9 42 Money market fund shares 43.2 28.9 20.2 85.2 61.8 65.6 72.2 4.7 110.9 59.3 43 Large time deposits -3.2 37.2 40.8 23.1 -46.8 -13.4 -26.4 -1.8 -97.9 -61.2 44 Security repurchase agreements 20.2 21.6 32.9 14.9 -14.5 -19.2 -34.7 22.8 -25.8 -20.1 45 Deposits in foreign countries 5.9 -2.5 -11.2 4.4 7.0 12.4 -8.9 12.8 3.6 20.6 46 Total of credit market instruments, deposits, and currency 419.0 393.9 474.5 437.2 298.7 289.3 307.0 270.9 150.6 MEMO 47 Public holdings as percent of total 33.1 36.0 27.5 27.2 39.5 32.0 27.5 46.9 47.4 38.4 48 Private financial intermediation (percent) 101.3 86.0 83.2 78.3 69.4 95.3 58.9 51.0 73.2 101.1 49 Total foreign funds 110.7 106.4 106.9 62.2 77.2 23.6 42.9 67.5 175.8 22.8 Corporate equities not included above 50 Total net issues 86.8 10.9 -124.2 -63.7 9.6 14.9 -9.2 48.0 -24.1 23.6 51 Mutual fund shares 159.0 73.9 1.1 41.3 61.4 72.4 47.8 71.0 46.1 80.6 52 Other equities -72.2 -63.0 -125.3 -105.1 -51.7 -57.6 -57.0 -22.9 -70.2 -56.9 53 Acquisitions by financial institutions 50.9 32.0 -2.9 17.2 31.9 76.9 41.1 72.8 -48.2 61.9 54 Other net purchases 35.9 -21.2 -121.4 -80.9 -22.3 -62.1 -50.3 -24.8 24.1 -38.3 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 liaoilities 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, 29. Demand deposits and note balances at commercial banks. D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • November 1991 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING Billions of dollars; period-end levels. 1989 1990" 1991 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998877 11998888 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 7,646.3 8,343.9 9,096.0 9,805.2 9,805.2 10,073.3 10,226.8 10,386.9 10,557.3 10,615.5 10,735.3 By sector and instrument 2 U.S. government 1,815.4 1,960.3 2,117.8 2,269.4 2,269.4 2,360.9 2,401.7 2,470.2 2,568.9 2,624.7 2,667.7 3 Treasury securities 1,811.7 1,955.2 2,095.2 2,245.2 2,245.2 2,329.3 2,368.8 2,437.6 2,536.5 2,598.4 2,642.9 4 Agency issues and mortgages 3.6 5.2 22.6 24.2 24.2 31.6 32.9 32.6 32.4 26.4 24.8 By instrument 5 Private 5,831.0 6,383.6 6,978.2 7,535.8 7,535.8 7,712.5 7,825.1 7,916.7 7,988.4 7,990.8 8,067.7 6 Debt capital instruments 3,962.7 4,427.9 4,886.4 5,283.3 5,283.3 5,451.9 5,533.8 5,608.8 5,669.9 5,709.8 5,787.5 7 Tax-exempt obligations 679.1 728.4 790.8 821.2 821.2 822.2 827.2 837.9 841.3 842.2 847.6 8 Corporate bonds 669.4 748.8 851.7 925.4 925.4 933.0 950.2 958.4 975.1 995.3 1,019.1 9 Mortgages 2,614,2 2,950.7 3,243.8 3,536.6 3,536.6 3,6%.7 3,756.4 3,812.6 3,853.4 3,872.3 3,920.9 10 Home mortgages 1,720.8 1,943.1 2,173.9 2,404.3 2,404.3 2,558.3 2,619.5 2,670.0 2,710.0 2,730.1 2,781.0 11 Multifamily residential 246.2 270.0 286.7 304.4 304.4 304.5 300.5 304.5 306.0 306.5 307.1 12 Commercial 551.4 648.7 6%.4 742.6 742.6 750.0 752.5 753.8 753.5 752.0 748.9 13 Farm 95.8 88.9 86.8 85.3 85.3 83.9 84.0 84.3 84.0 83.6 83.9 14 Other debt instruments 1,868.2 1,955.7 2,091.9 2,252.6 2,252.6 2,260.6 2,291.3 2,307.9 2,318.5 2,281.0 2,280.1 15 Consumer credit 659.8 693.2 743.5 790.6 790.6 782.3 789.4 798.7 808.9 782.3 784.2 16 Bank loans n.e.c 666.0 673.3 713.1 763.0 763.0 748.5 756.1 753.6 757.4 749.0 740.3 17 Open market paper 62.9 73.8 85.7 107.1 107.1 126.0 128.7 131.8 116.9 119.9 118.4 18 Other 479.6 515.3 549.6 591.9 591.9 603.7 617.1 623.8 635.4 629.9 637.3 By borrowing sector 19 State and local government 510.1 558.9 604.5 634.1 634.1 633.8 636.9 647.1 649.1 650.2 652.8 20 Household 2,5%. 1 2,879.1 3,191.5 3,501.8 3,501.8 3,654.8 3,726.5 3,790.3 3,847.2 3,853.3 3,911.3 21 Nonfinancial business 2,724.8 2,945.6 3,182.2 3,400.0 3,400.0 3,423.9 3,461.7 3,479.4 3,492.2 3,487.3 3,503.6 22 Farm 156.6 145.5 137.6 139.2 139.2 137.3 138.7 141.6 140.5 139.3 143.0 23 Nonfarm noncorporate 997.6 1,075.4 1,145.1 1,195.9 1,195.9 1,208.3 1,208.7 1,209.0 1,209.6 1,205.9 1,204.6 24 Corporate 1,570.6 1,724.6 1,899.5 2,064.8 2,064.8 2,078.3 2,114.3 2,128.7 2,142.1 2,142.1 2,155.9 25 Foreign credit market debt held in United States 238.3 244.6 253.9 261.5 261.5 261.7 273.0 279.4 284.9 297.2 285.1 26 Bonds 74.9 82.3 89.2 94.5 94.5 103.3 108.4 108.9 116.1 118.9 123.0 27 Bank loans n.e.c 26.9 23.3 21.5 21.4 21.4 18.9 19.3 19.8 18.5 20.4 19.5 28 Open market paper 37.4 41.2 49.9 63.0 63.0 59.3 65.1 71.5 75.3 87.0 74.0 29 U.S. government loans 99.1 97.7 93.2 82.6 82.6 80.2 80.2 79.3 75.0 70.9 68.6 30 Total credit market debt owed by nonfinandal sectors, domestic and foreign 7,884.7 8,588.5 9,349.9 10,066.8 10,066.8 10,335.0 10,499.8 10,666.3 10,842.2 10,912.8 11,020.5 Financial sectors 11 Total credit market debt owed by financial sectors 1,529.8 1,836.8 2,084.4 2,322.4 2,322.4 2,359.0 2,405.5 2,448.8 2,527.7 2,540.1 2,567.3 By instrument 32 U.S. government related 810.3 978.6 1,098.4 1,249.3 1,249.3 1,288.2 1,330.1 1,367.9 1,418.4 1,452.2 1,485.1 33 Sponsored credit agency securities 273.0 303.2 348.1 373.3 373.3 378.1 381.0 384.4 393.7 397.0 389.6 34 Mortgage pool securities 531.6 670.4 745.3 871.0 871.0 905.2 944.2 978.5 1,019.9 1,050.4 1,090.7 35 Loans from U.S. government 5.7 5.0 5.0 5.0 5.0 5.0 5.0 5.0 4.9 4.9 4.9 36 Private 719.5 858.2 986.1 1,073.0 1,073.0 1,070.8 1,075.4 1,080.9 1,109.3 1,087.9 1,082.2 37 Corporate bonds 287.4 366.3 418.0 482.7 482.7 491.7 510.0 514.4 533.6 543.0 559.5 38 Mortgages 2.7 3.1 3.4 3.4 3.4 4.0 4.0 4.1 4.2 4.2 4.2 39 Bank loans n.e.c 36.1 32.8 34.2 36.0 36.0 33.2 34.8 34.9 36.7 34.8 35.2 40 Open market paper 284.6 322.9 377.7 409.1 409.1 409.1 400.3 409.6 417.7 398.8 388.6 41 Loans from Federal Home Loan Banks 108.6 133.1 152.8 141.8 141.8 132.9 126.3 117.9 117.1 107.0 94.7 By borrowing sector 42 Sponsored credit agencies 278.7 308.2 353.1 378.3 378.3 383.0 385.9 389.4 398.5 401.8 394.4 43 Mortgage pools 531.6 670.4 745.3 871.0 871.0 905.2 944.2 978.5 1,019.9 1,050.4 1,090.7 44 Private financial sectors 719.5 858.2 986.1 1,073.0 1,073.0 1,070.8 1,075.4 1,080.9 1,109.3 1,087.9 1,082.2 45 Commercial banks 75.6 81.8 78.8 77.4 77.4 73.2 71.6 70.7 76.3 68.1 65.9 46 Bank affiliates 116.8 131.1 136.2 142.5 142.5 142.0 134.3 122.9 114.8 111.7 110.3 47 Savings and loan associations 119.8 139.4 159.3 145.2 145.2 137.1 125.6 116.2 114.0 102.8 90.8 48 Mutual savings banks 8.6 16.7 18.6 17.2 17.2 15.4 16.7 16.2 16.7 16.4 15.8 49 Finance companies 328.1 378.8 446.1 4%.2 4%.2 499.2 509.7 530.9 551.8 545.9 547.0 50 Real estate investment trusts (REITs) 6.5 7.3 11.4 10.1 10.1 10.9 10.4 10.2 10.6 10.6 10.8 51 Securitized credit obligations issuers (SCO).. 64.0 103.1 135.7 184.4 184.4 193.1 206.9 213.8 225.2 232.4 241.7 All sectors 52 Total credit market debt 9,414.4 10,425.3 11,434.3 12,389.1 12,389.1 12,694.0 12,905.3 13,115.1 13,369.9 13,452.9 13,587.7 53 U.S. government securities 2,620.0 2,933.9 3,211.1 3,513.7 3,513.7 3,644.1 3,726.9 3,833.1 3,982.5 4,072.1 4,147.9 54 State and local obligations 679.1 728.4 790.8 821.2 821.2 822.2 827.2 837.9 841.3 842.2 847.6 55 Corporate and foreign bonds 1,031.7 1,197.4 1,358.9 1,502.6 1,502.6 1,527.9 1,568.6 1,581.6 1,624.8 1,657.3 1,701.6 56 Mortgages 2,617.0 2,953.8 3,247.2 3,540.1 3,540.1 3,700.7 3,760.5 3,816.7 3,857.7 3,876.5 3,925.1 57 Consumer credit 659.8 693.2 743.5 790.6 790.6 782.3 789.4 798.7 808.9 782.3 784.2 58 Bank loans n.e.c 729.0 729.5 768.9 820.3 820.3 800.7 810.2 808.3 812.6 804.1 794.9 59 Open market paper 384.9 437.9 513.4 579.2 579.2 594.4 594.0 612.9 609.9 605.7 581.1 60 Other loans 693.1 751.1 800.5 821.4 821.4 821.7 828.5 826.0 832.3 812.7 805.5 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A43 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 1986 1987 1989 Q4 Q1 Q2 Q3 04 Q1 Q2 1 Total funds advanced in credit markets to domestic nonfinancial sectors 7.646.3 8,343.9 9,096.0 9.805.2 9.805.2 10,073.3 10,226.8 10,386.9 10,557.3 10,615.5 10,735i .3 2 Total held by federal agencies and foreign sector .. 1.779.4 2,006.6 2,199.7 2.379.3 2.379.3 2,423.3 2,502.6 2,584.1 2,645.8 2,698.2 2,765i .3 By instrument 4 3 R U e .S si . d g en o t v i e a r l n m m o e r n t t g a s g e e c s u rities 6 5 7 0 8 9 . . 5 8 8 5 1 7 4 0 . . 1 9 9 6 0 5 0 1 . . 4 5 1, 6 0 8 3 2 8 . .4 1 1, 6 0 8 3 2 8 . .4 1 1, 6 0 8 8 2 1 . . 7 5 1, 7 1 1 2 4 6 . . 1 5 1, 7 1 4 7 5 1 . . 6 8 1, 7 2 6 2 3 1. .0 0 1, 7 2 8 6 6 0 . . 3 3 1,310 11 ..30 5 Federal Home Loan Bank advances to thrifts 108.6 133.1 152.8 141.8 141.8 132.9 126.3 117.9 117.1 107.0 94L 7 6 Other loans and securities 482.4 488.6 495.1 517.0 517.0 526.3 535.8 548.8 544.7 544.6 5521. 2 By type of lender 7 U.S. government 1,779.4 2,006.6 2,199.7 2,379.3 2,379.3 2,423.3 2,502.6 2,584.1 2,645.8 2,698.2 2,765i .3 9 8 M Sp o o n n e s t o a r r e y d a c u r t e h d o i r t i t a y g encies and mortgage pools ... 8 2 3 5 5 5 . . 9 3 1, 2 0 4 0 0 1. . 0 0 1, 2 1 1 1 7 3. . 0 6 1, 2 23 0 8 7 . . 2 1 1,2 2 3 0 8 7 . . 2 1 1, 2 2 1 7 7 4 . . 1 8 1, 2 3 2 1 7 5 . . 4 0 1, 2 3 4 6 2 0 . . 7 5 1,4 2 0 4 3 0 . . 4 6 1,4 2 3 4 4 8 . . 8 9 1,4 2 7 5 1 81 . . 0 2 10 Foreign 205.5 230.1 240.6 233.3 233.3 224.4 237.8 240.8 241.4 247.3 2531 .7 Agency and foreign debt not in line 1 11 Sponsored credit agencies and mortgage pools 482.8 535.5 628.5 700.6 700.6 707.0 722.5 740.2 760.4 767.2 7821 .4 12 Foreign 810.3 978.6 1.098.4 1.249.3 1.249.3 1,288.2 1,330.1 1,367.9 1,418.4 1.452.2 1,485i .l 13 Total private domestic holdings 238.3 244.6 253.9 261.5 261.5 261.7 273.0 279.4 284.9 297.2 285; .i 1 1 5 4 S U t . a S te . g a o n v d e l r o n c m al e n o t b l s i e g c a u ti r o it n i s e s 6 2 , , 9 1 1 10 5 . . 1 6 7 2 , , 5 3 6 6 0 3 . . 4 0 2 8 , . 5 2 5 4 9 8 . . 7 5 8 2 , , 9 8 3 3 6 1 . . 8 6 8 2 , , 9 8 3 3 6 1 . . 8 6 9 2 , , 1 9 9 6 9 1 . . 9 4 9 3 , , 3 0 2 1 7 2 . . 3 8 9 3 , , 4 0 5 8 0 7 . . 1 5 9 3, , 2 6 1 1 9 4 . . 4 8 9 3 , , 6 2 6 8 6 5 . . 8 8 9 3 , , 7 3 4 3 0 9 1> ..36 1 1 6 7 C R o es r i p d o e r n a t t i e a l a m nd o r f t o g r a e g ig e n s bonds 6 6 7 0 9 6 . . 1 6 7 6 2 7 8 4 . . 4 3 7 7 9 6 0 5 . . 8 6 8 8 2 3 1 1 . . 2 6 8 8 2 3 1 1 . . 2 6 8 8 2 4 2 6 . . 2 7 8 86 2 5 7 . . 5 2 8 8 3 7 7 4 . . 9 0 8 8 4 9 1 7 . . 3 1 8 91 4 5 2 . . 5 2 8 9 4 3 7 6 r > .6 .8 18 Other mortgages and loans 1,288.5 1,399.0 1,560.2 1.670.4 1.670.4 1,781.4 1,793.5 1,802.8 1.795.0 1.776.3 1,778$ .0 19 LESS: Federal Home Loan Bank advances 2,339.8 2,528.7 2,724.9 2,923.8 2,923.8 2,921.0 2,954.5 2,965.9 2.979.1 2,954.0 2,9331 .0 20 Total credit market claims held by private financial institutions 108.6 133.1 152.8 141.8 141.8 132.9 126.3 117.9 117.1 107.0 941 .7 By holding institutions 21 Commercial banking 6,018.0 6,564.5 7.128.6 7,662.7 7,662.7 7,852.1 7.913.4 7,987.2 8,127.7 8.173.1 8,199» .4 2 2 2 3 S In a s v u in ra g n s c i e n s a t n it d u t p io en ns s ion funds 2 1 , , 1 2 8 9 7 7 . . 6 9 2 1 . , 3 4 2 4 3 5 . . 0 5 2 1 , . 4 5 7 6 9 7 . . 3 7 2 1 . . 6 4 5 8 6 0 . . 6 7 2 1 . . 6 4 5 8 6 0 . . 6 7 2 1 , , 6 4 7 6 9 1 . . 4 3 2 1 , . 7 4 2 0 1 9 . . 2 5 2 1 , , 7 3 5 7 0 1 . . 9 2 2 1 , , 7 3 7 3 5 0 . . 3 3 2 1 , . 7 2 8 8 5 9 . . 4 2 2 1 , , 7 2 9 5 9 3 > 1 . . 3 0 24 Other finance 1,525.4 1.705.1 1.903.8 2,081.6 2,081.6 2,150.3 2,194.4 2,227.6 2,264.1 2,308.1 2,335i .6 By sources of funds 25 Private domestic deposits and repurchase agreements 3,199.0 3,354.2 3,599.1 3,824.3 3,824.3 3,848.4 3,837.2 3,844.6 3.884.6 3.933.6 3,895i .O 26 Credit market debt 719.5 858.2 986.1 1,073.0 1,073.0 1.070.8 1,075.4 1,080.9 1.109.3 1,087.9 1,0821 .2 27 Other sources 2,099.5 2,352.1 2,543.5 2,765.5 2,765.5 2.932.9 3,000.8 3.061.8 3.133.7 3.151.7 3,2221 .2 2 2 8 9 T Fo re re a i s g u n r y f u b n a d la s n ces 2 1 7 8. .5 6 6 2 2 1 . . 3 6 7 2 1 9 . . 5 0 6 2 1 5 . . 6 6 6 2 1 5 . . 6 6 6 1 1 6 . . 7 7 6 3 3 2 . . 1 1 8 3 6 6 . . 2 6 8 3 5 0 . . 6 9 8 2 5 6 . . 2 3 5 3 4 6 L > . 4 0 30 Insurance and pension reserves 1,398.5 1,527.8 1,692.5 1,826.0 1,826.0 1,859.8 1,903.6 1,921.1 1,950.7 1,968.6 2,0031 .2 31 Other, net 655.0 740.3 750.5 852.3 852.3 994.7 1,002.1 1.017.9 1.066.4 1,071.5 1,1281 .6 Private domestic nonfinancial investors 1.0 32 Credit market claims 1.617.0 1,854.1 2,106.0 2,347.1 2,347.1 2.418.6 2,489.2 2,543.8 2.596.5 2,581.6 2,623 33 U.S. government securities 848.7 936.7 1.072.2 1,206.4 1,206.4 1,254.9 1,280.1 1,322.8 1,360.8 1,370.1 1,395i .4 34 State and local obligations 212.6 274.4 340.9 369.3 369.3 362.0 367.3 371.1 368.4 361.1 366> .5 35 Corporate and foreign bonds 90.5 114.0 100.4 130.5 130.5 153.4 169.2 166.8 180.6 180.3 195i. l 36 Open market paper 145.1 178.5 218.0 228.7 228.7 233.9 249.6 251.0 247.0 235.3 227'. 5 37 Other loans and mortgages 320.1 350.4 374.4 412.1 412.1 414.4 423.0 432.1 439.7 434.8 438! .5 38 Deposits and currency 3.410.1 3,583.9 3.832.3 4.073.6 4.073.6 4.094.7 4,097.4 4,108.5 4.163.6 4,209.8 4,184L 2 39 Currency 186.3 205.4 220.1 231.8 231.8 234.4 242.7 247.2 254.4 262.0 265i .9 40 Checkable deposits 516.6 515.4 527.2 528.7 528.7 504.3 510.1 499.7 529.2 512.2 5201 .8 41 Small time and savings accounts 1,948.3 2,017.1 2,156.2 2.256.7 2.256.7 2,285.6 2,286.6 2,295.8 2,313.2 2,343.0 2,3421 .7 42 Money market fund shares 268.9 297.8 318.0 403.3 403.3 436.7 426.3 454.5 465.0 513.3 4931' ..82 43 Large time deposits 336.7 373.9 414.7 437.8 437.8 433.4 421.6 408.1 393.8 393.2 367 44 Security repurchase agreements 128.5 150.1 182.9 197.9 197.9 188.4 192.7 186.6 183.4 171.9 1701 .4 45 Deposits in foreign countries 24.8 24.3 13.1 17.6 17.6 11.9 17.5 16.8 24.6 14.3 231 .4 46 Total of credit market instruments, deposits, and currency 5,027.2 5,438.0 5,938.2 6,420.7 6,420.7 6,513.3 6,586.6 6,652.3 6,760.1 6,791.4 6,807' .3 MEMO 47 Public holdings as percent of total 22.6 23.4 23.5 23.6 23.6 23.4 23.8 24.2 24.4 24.7 25i .l 48 Private financial intermediation (percent) 87.0 86.8 86.4 85.7 85.7 85.3 84.8 84.5 84.5 84.5 841 .2 49 Total foreign funds 501.3 597.8 700.1 762.3 762.3 768.7 785.6 826.4 846.0 852.4 836i .8 Corporate equities not included above 50 Total market value 3,360.6 3,325.0 3,619.8 4,378.9 4,378.9 4,166.6 4.333.1 3,765.3 3.982.7 4,562.4 4,596i .2 51 Mutual fund shares 413.5 460.1 478.3 555.1 555.1 550.3 587.9 547.3 579.9 643.0 681 .3 52 Other equities 2,947.1 2,864.9 3.141.6 3,823.8 3,823.8 3,616.3 3.745.2 3,218.0 3.402.8 3,919.3 3,9141U .9 53 Holdings by financial institutions 974.6 1,039.5 1,176.1 1,492.3 1,492.3 1,434.8 1,542.1 1,301.6 1,417.4 1,663.8 1,677I .l 54 Other holdings 2,385.9 2,285.5 2.443.7 2,886.6 2,886.6 2,731.8 2,791.0 2,463.6 2,565.3 2,898.6 2,919 NOTES BY 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

A44 Domestic Nonfinancial Statistics • November 1991 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly and quarterly data are seasonally adjusted. Exceptions noted. 1990 1991 MMeeaassuurree 11998888 11998899 11999900 Dec. Jan. Feb. Mar. Apr. Mayr Juner Julyr Aug. 1 Industrial production1 (1987=100) 105.4 108.1 109.2 107.2 106.6 105.7 105.0 105.5 106.4 107.3 108.0 108.2 Market groupings (1987=100) 2 Products, total 105.3 108.6 110.1 108.4 107.8 106.9 106.5 106.9 107.7 108.6 108.8 108.9 3 Final, total 105.6 109.1 110.9 109.2 109.1 108.3 108.1 108.7 109.3 110.1 110.1 110.1 4 Consumer goods 104.0 106.7 107.3 105.7 105.6 104.7 104.7 105.5 106.6 107.9 107.9 108.4 5 Equipment 107.6 112.3 115.5 113.6 113.6 112.9 112.5 112.8 112.7 112.9 112.9 112.3 6 ! Intermediate 104.4 106.8 107.7 106.0 103.8 102.6 101.3 101.2 102.7 103.9 104.6 105.1 7 Materials 105.6 107.4 107.8 105.3 104.8 103.9 102.6 103.4 104.5 105.4 106.7 107.2 Industry groupings 8 Manufacturing (1987=100) 105.8 108.9 109.9 107.5 107.0 106.1 105.2 105.9 106.6 107.4 110088..22 110088..55 Capacity utilization (percent)2 9 Manufacturing 83.9 83.9 82.3 79.4 78.9 78.0 77.2 77.5 77.8 78.3 78.6 78.7 10 Construction contracts (1982 = 100)3 166.7 172.9 154.7r 130.0 132.0 133.0 128.0 145.0 138.0 133.0 144.0 150.0 11 Nonagricultural employment, total4 128.0 131.5 133.8 132.9 132.7 132.4 132.1 131.9 132.0 132.0 131.9 132.0 12 Goods-producing, total 103.4 104.0 102.7 100.1 99.3 98.7 98.1 97.7 98.0 97.7 97.7 97.8 n Manufacturing, total 98.3 98.7 96.8 95.2 94.8 94.1 93.7 93.4 93.6 93.4 93.5 93.7 14 Manufacturing, production worker 93.5 93.8 91.5 89.6 89.1 88.3 87.9 87.7 87.9 87.8 88.0 88.3 15 Service-producing 138.3 142.9 146.8 146.7 146.6 146.4 146.3 146.1 146.3 146.4 146.3 146.3 16 Personal income, total 253.2 272.7 289.0 295.1 293.9 294.5 295.5 295.9r 297.9 299.4 299.1 n.a. 17 Wages and salary disbursements 244.6 258.9 272.2 277.1 275.8 275.9 276.2 276.7 279.0 281.6 280.9 n.a. 18 Manufacturing 196.5 203.1 205.0 205.4 202.5 200.9 200.2 201.3 202.9 204.6 205.2 n.a. 19 Disposable personal income 252.2 270.1 286.1 291.6 290.6 291.4 292.6 293.0" 295.3 296.9 296.8 n.a. 20 Retail sales6 228.2 241.7 250.9r 249.4 246.2 251.6 252.3 251.4 254.3 254.2 255.5 253.6 Prices7 21 Consumer (1982-84 = 100) 118.3 124.0 130.7 133.8 134.6 134.8 135.0 135.2 135.6 136.0 136.2 136.6 22 Producer finished goods (1982 = 100) 108.0 113.6 119.2 122.0 122.3 121.4 120.9 121.lr 121.7 121.9 121.6 121.7 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

Selected Measures A45 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data are seasonally adjusted; exceptions noted. 1991 CCaatteeggoorryy 11998888 11998899 11999900 Jan. Feb. Mar. Apr. May June Julyr Aug. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 186,837 188,601 190,216 191,116 191,248 191,384 191,525 191,664 191,805 191,955 192,095 2 Labor force (including Armed Forces)1 123,893 126,077 126,954 126,777 127,209 127,467 127,817 127,374 127,766 127,330 127,026 3 Civilian labor force 121,669 123,869 124,787 124,638 125,076 125,326 125,672 125,232 125,629 125,214 124,904 4 Nonagricultural industries 111,800 114,142 114,728 113,759 113,696 113,656 114,243 113,319 113,576 113,474 113,150 5 Agriculture 3,169 3,199 3,186 3,163 3,222 3,098 3,156 3,272 3,308 3,239 3,266 Unemployment ft Number 6,701 6,528 6,874 7,715 8,158 8,572 8,274 8,640 8,745 8,501 8,488 7 Rate (percent of civilian labor force) — 5.5 5.3 5.5 6.2 6.5 6.8 6.6 6.9 7.0 6.8 6.8 8 Not in labor force 62,944 62,524 63,262 64,339 64,039 63,917 63,708 64,290 64,039 64,625 65,069 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 105,536 108,413 110,330 109,418 109,160 108,902 108,736 108,887 108,885r 108,812 108,846 10 Manufacturing 19,350 19,426 19,064 18,671 18,532 18,443 18,396 18,426 18,378r 18,403 18,445 11 Mining 713 700 735 713 715 714 710 706 704 700 694 12 Contract construction 5,110 5,200 5,205 4,797 4,792 4,720 4,688 4,715 4,710" 4,689 4,677 13 Transportation and public utilities 5,527 5,648 5,838 5,866 5,834 5,824 5,814 5,819 5,809r 5,805 5,817 14 Trade 25,132 25,851 26,151 25,680 25,583 25,483 25,410 25,424 25,413r 25,408 25,375 15 Finance 6,649 6,724 6,833 6,736 6,732 6,735 6,718 6,712 6,703r 6,691 6,696 16 Service 25,669 27,096 28,209 28,590 28,583 28,576 28,576 28,645 28,712r 28,729 28,786 17 Government 17,386 17,769 18,295 18,365 18,389 18,407 18,424 18,440 18,456r 18,387 18,356 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

A46 Domestic Nonfinancial Statistics • November 1991 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1990 1991 1990 1991 1990 1991 Q3 Q4 Ql Q2r Q3 Q4 Ql Q2 Q3 Q4 Ql Q2r Output (1987 = 100) Capacity (percent of 1987 output) Utilization rate (percent) 1 Total industry 110.5 108.5 105.8 106.4 131.9 132.8 133.6 134.5 83.7 81.7 79.2 79.1 2 Manufacturing 111.1 109.0 106.1 106.6 134.0 135.0 136.0 136.9 82.9 80.8 78.0 77.9 3 Primary processing 107.6 104.7 100.6 100.8 125.5 126.1 126.8 127.5 85.8 83.0 79.4 79.1 4 Advanced processing 112.8 111.0 108.6 109.4 138.0 139.1 140.2 141.3 81.7 79.8 77.5 77.4 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 93.9 124.0 124.6 125.0 125.2 81.8 76.8 73.9 75.0 7 Primary metals 112.2 107.3 97.9 96.0 127.7 127.9 128.2 128.6 87.9 83.9 76.4 74.7 8 Iron and steel 114.3 110.0 96.3 92.9 132.5 132.7 133.0 133.5 86.3 82.9 72.4 69.5 9 Nonferrous 109.2 103.4 100.2 100.4 120.9 121.1 121.3 121.5 90.3 85.3 82.6 82.6 10 Nonelectrical machinery 128.5 126.4 124.4 123.5 154.7 156.3 157.9 159.5 83.1 80.8 78.8 77.4 11 Electrical machinery 112.4 109.9 108.1 110.6 140.0 141.4 142.7 144.0 80.3 77.8 75.8 76.8 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 114.5 113.3 109.9 106.4 135.2 136.1 137.0 137.9 84.7 83.3 80.2 77.2 14 Nondurable 108.1 107.8 106.1 106.6 128.9 129.9 130.9 131.9 83.8 83.0 81.0 80.8 15 Textile mill products 101.3 98.2 94.6 99.4 116.6 117.0 117.3 117.7 86.9 84.0 80.6 84.4 16 Paper and products 107.2 105.8 102.6 102.7 115.1 115.7 116.4 117.1 93.2 91.4 88.2 87.7 17 Chemicals and products 110.8 110.2 109.1 109.3 135.9 137.1 138.4 139.7 81.5 80.4 78.8 78.2 18 Plastics materials 117.2 118.1 113.2 115.6 130.6 132.9 135.7 139.2 89.7 88.9 83.4 83.0 19 Petroleum products 110.0 107.4 107.3 107.6 121.3 121.4 121.4 121.4 90.7 88.5 88.4 88.6 20 Mining 103.4 103.1 102.0 101.1 114.5 114.0 113.8 114.3 90.3 90.4 89.6 88.4 21 Utilities 110.5 108.3 106.2 109.6 127.1 127.6 128.1 128.4 86.9 84.8 82.9 85.3 22 Electric 112.9 111.2 109.3 114.6 122.6 123.2 123.8 124.3 92.1 90.2 88.3 92.2 Previous cycle Latest cycle 1990 1991 High Low High Low Aug. Feb. Apr. Mayr Juner July r Aug.p Capacity utilization rate (percent) 23 Total industry 89.2 72.6 87.3 71.8 83.7 80.0 79.1 78.4 78.6 79.1 79.6 79.9 80.0 24 Manufacturing 88.9 70.8 87.3 70.0 82.9 78.9 78.0 77.2 77.5 77.8 78.3 78.6 78.7 25 Primary processing 92.2 68.9 89.7 66.8 86.1 80.6 79.5 77.9 78.2 79.0 79.9 80.9 81.2 26 Advanced processing 87.5 72.0 86.3 71.4 81.6 78.2 77.4 76.8 77.3 77.3 77.6 77.7 77.6 77 Durable 88.8 68.5 86.9 65.0 82.3 76.8 75.8 74.9 75.4 75.7 76.0 76.4 76.3 78 Lumber and products 90.1 62.2 87.6 60.9 81.0 75.4 73.2 72.9 74.1 73.9 77.1 77.0 76.5 ?9 Primary metals 100.6 66.2 102.4 46.8 89.8 77.8 77.6 73.8 73.6 75.3 75.1 77.8 78.6 30 Iron and steel 105.8 66.6 110.4 38.3 89.3 74.5 73.7 69.1 68.7 70.4 69.5 74.4 74.8 31 Nonferrous 92.9 61.3 90.5 62.2 90.5 83.0 83.7 81.1 81.1 83.1 83.6 83.1 84.5 32 Nonelectrical machinery 96.4 74.5 92.1 64.9 83.2 79.8 78.8 77.7 77.7 77.4 77.1 77.1 77.4 33 Electrical machinery 87.8 63.8 89.4 71.1 80.4 75.7 75.8 75.9 76.4 76.8 77.2 76.8 77.0 34 Motor vehicles and parts 93.4 51.1 93.0 44.5 76.1 62.3 59.5 59.7 64.3 66.9 68.9 71.8 68.1 35 Aerospace and miscellaneous transportation equipment. 77.0 66.6 81.1 66.9 84.4 81.1 80.3 79.3 78.0 76.7 76.8 76.1 76.0 36 Nondurable 87.9 71.8 87.0 76.9 83.8 81.8 81.0 80.3 80.5 80.7 81.3 81.6 81.9 37 Textile mill products 92.0 60.4 91.7 73.8 86.1 80.2 80.4 81.3 82.7 84.3 86.3 88.3 89.1 38 Paper and products 96.9 69.0 94.2 82.0 92.5 89.8 87.9 86.8 86.7 86.5 89.7 91.7 91.7 39 Chemicals and products 87.9 69.9 85.1 70.1 81.8 79.8 78.8 77.9 78.3 78.2 78.2 78.1 78.5 40 102.0 50.6 90.9 63.4 89.7 86.2 85.0 79.0 80.5 84.5 84.1 41 Petroleum products 96.7 81.1 89.5 68.2 90.8 86.2 89.6 89.4 87.1 88.6 90.2 89.2 90.0 42 Mining 94.4 88.4 96.6 80.6 89.4 89.5 90.4 89.0 88.3 87.6 89.2 90.0 89.0 43 Utilities 95.6 82.5 88.3 76.2 87.6 84.1 81.6 83.0 82.6 86.7 86.7 85.8 86.4 44 Electric 99.0 82.7 88.3 78.7 92.7 89.3 87.0 88.6 88.5 93.7 94.5 93.3 94.1 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

Selected Measures A47 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data are seasonally adjusted 1987 1990 1991 pro- 1990 Groups por- avg. tion Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Mayr Juner Julyr Aug." Index (1987 = 100) MAJOR MARKET 1 Total index 100.0 109.2 110.5 110.6 109.9 108.3 107.2 106.6 105.7 105.0 105.5 106.4 107.3 108.0 108.2 2 Products 60.8 110.1 110.9 111.4 111.0 109.3 108.4 107.8 106.9 106.5 106.9 107.7 108.6 108.8 108.9 1 1 1 1 1 1 1 1 3 4 5 6 7 8 9 0 4 5 2 3 6 1 7 Fin C a o l D N n p s u o A F O C r u r n o o a m l u t d A A d C A M o h b o t u e u t o e l a d u u p h T r i e A r c r m r s s t t a p i p t o o r c n g u b c l s o u a e s e i g o o t l p a t n c t l e o i o n i a l n a k d v s n a d n s c c r s , e n g u t d s t o e , s e c o , m s p n a c o o b t , a t r s n o r e u o n a o n u u A d r n s t s c d d m c a s u / c g f u k h l C u m o e u a o c s o m , r l r o t e l m n s i a d e g r e i n e r s o t d d u o g r d g o e T s o o V o d d s . s . . . . . . . 4 2 2 6 9 33 2 5 0 6 2 1 1 1 . . . .. . . . . . .. . . . . . 4 0 5 11 0 1 6 6 9 88 9 6 5 4 0 1 1 1 1 1 1 1 1 1 1 1 1 9 9 9 0 1 0 0 1 0 0 0 0 0 0 0 7 2 5 7 0 9 2 6 2 7 9 6 4 6 5 . . . . . . . . . . . . . . . 4 2 3 7 9 4 3 2 4 0 6 6 1 9 9 1 1 1 1 1 1 1 1 1 1 1 1 1 9 9 0 0 1 0 0 0 0 0 0 0 0 1 0 7 4 7 7 1 8 7 1 9 4 4 1 9 6 5 . . . . . . . . . . . . . . . 2 6 8 9 9 8 4 5 6 6 9 9 3 8 7 1 1 1 1 1 1 1 1 1 1 1 1 1 1 9 1 0 1 0 0 1 0 0 1 1 1 1 1 0 5 6 8 5 8 9 1 6 1 0 3 1 2 0 5 . . . . . . . . . . . . . . . 1 2 3 4 7 3 8 0 0 0 0 5 6 4 3 1 1 1 1 1 1 1 1 1 1 1 1 1 9 9 0 1 1 0 0 0 0 0 1 0 0 0 0 4 4 9 2 2 7 8 3 6 6 5 7 4 6 6 . . . . . . . . . . . . . . . 6 2 1 2 3 1 6 8 8 4 5 5 6 9 7 1 1 1 1 1 1 1 9 9 9 9 9 8 8 9 0 0 1 1 0 0 0 3 0 9 4 0 0 9 1 8 6 0 4 4 7 7 . . . . . . . . . . . . . . . 5 2 2 2 7 8 4 7 5 5 2 1 6 3 8 1 1 1 1 1 1 1 1 7 7 7 8 8 9 9 0 0 0 0 0 1 0 0 6 4 7 0 9 6 2 9 5 8 3 4 2 0 7 . . . . . . . . . . . . . . . 7 6 2 2 9 0 2 7 1 4 4 8 5 9 5 1 1 1 1 1 1 1 1 9 9 9 8 7 7 9 0 0 0 0 0 0 1 0 0 3 2 0 3 9 7 9 7 5 3 7 0 0 6 . . . . . . . . . . . . . . . 6 2 8 6 6 6 6 1 8 2 6 1 3 8 3 1 1 1 1 1 1 1 6 9 9 9 7 7 8 9 0 0 0 0 0 0 0 8 8 4 2 4 8 5 0 4 7 8 8 5 0 9 . . . . . . . . . . . . . . . 1 1 7 0 5 6 2 8 7 3 3 3 9 7 8 1 1 1 1 1 1 1 9 9 7 7 7 8 9 9 0 0 0 0 0 0 0 7 6 8 6 6 3 0 5 4 1 7 8 7 9 5 . . . . . . . . . . . . . . . 4 2 9 7 3 9 4 9 7 4 1 1 2 4 3 1 1 1 1 1 1 1 9 9 9 9 9 8 7 9 0 0 0 0 0 1 0 7 4 7 6 8 5 0 9 7 8 3 5 5 0 8 . . . . . . . . . . . . . . . 0 2 3 3 3 0 6 2 7 3 4 5 3 8 0 1 1 1 1 1 1 1 1 1 9 9 9 9 8 8 0 0 0 0 0 1 0 0 0 2 6 6 7 9 1 8 4 9 6 9 2 1 6 1 . . . . . . . . . . . . . . . 0 9 8 4 2 9 1 1 2 5 3 8 6 6 1 1 1 1 1 1 1 1 1 1 1 1 9 9 9 8 0 0 1 1 0 0 1 0 0 0 0 3 8 2 3 9 6 2 3 7 7 0 7 4 0 4 . . . . . . . . . . . . . . . 9 8 5 8 0 8 6 1 1 1 9 6 8 5 2 1 1 1 1 1 1 1 1 1 1 1 1 9 9 9 0 0 0 0 1 0 1 0 1 0 0 0 2 8 4 8 6 2 8 1 3 6 0 0 6 7 6 . . . . . . . . . . . . . . . 8 1 9 4 9 4 4 4 4 6 6 1 2 9 2 1 1 1 1 1 1 1 1 1 1 1 9 8 9 9 0 1 0 0 1 0 0 0 0 1 0 0 3 9 5 8 0 2 9 3 4 5 6 2 7 9 . . . . . . . . . . . . . . . 2 0 7 8 4 1 2 3 1 2 9 8 0 6 6 18 Chemical products 3.5 113.3 114.3 115.1 115.9 113.5 113.5 114.7 114.8 114.2 115.0 113.9 114.5 114.3 115.6 19 Paper products 2.5 119.7 119.3 121.9 123.4 122.8 122.7 122.1 121.0 122.2 122.7 121.8 122.7 121.6 123.0 20 Energy 2.7 105.9 109.0 108.0 108.8 106.4 106.6 106.5 105.2 105.5 104.4 109.0 110.4 108.5 109.5 21 Fuels .7 102.9 106.0 105.6 104.0 101.1 98.1 99.8 103.4 104.3 101.4 103.6 104.9 103.4 104.6 22 Residential utilities 2.0 107.0 110.0 108.9 110.6 108.4 109.7 109.0 105.9 105.9 105.5 111.0 112.4 110.3 111.4 23 Equipment, total 20.0 115.5 117.2 117.8 117.0 115.1 113.6 113.6 112.9 112.5 112.8 112.7 112.9 112.9 112.3 24 Business equipment 13.9 123.1 125.4 126.4 125.4 122.9 121.2 121.6 120.6 120.3 121.3 121.7 122.1 122.7 122.3 25 Information processing and related. 5.6 127.2 128.5 129.5 130.1 128.8 127.5 130.1 131.6 131.2 131.5 131.8 130.9 131.2 131.4 26 Office and computing 1.9 149.8 152.2 153.6 155.3 149.8 148.9 155.0 157.3 155.1 155.6 155.6 154.0 156.0 155.0 27 Industrial 4.0 115.3 117.9 117.4 115.4 115.3 112.3 111.5 109.1 109.5 109.3 109.3 109.1 109.2 109.6 28 Transit 2.5 129.9 135.4 140.5 137.5 126.3 123.4 124.0 120.3 120.4 124.1 125.9 128.0 131.3 126.6 29 Autos and trucks 1.2 96.8 101.5 111.0 106.5 83.9 75.3 79.8 75.0 76.7 84.4 87.9 90.8 96.6 86.2 30 Other 1.9 118.5 119.8 118.5 117.0 117.6 118.5 115.0 112.5 110.8 112.7 113.0 115.9 115.0 117.0 31 Defense and space equipment 5.4 97.3 97.7 97.3 97.3 96.2 95.8 94.4 94.5 93.9 92.5 91.5 91.0 89.9 89.8 32 Oil and gas well drilling .6 109.0 106.9 107.4 107.1 109.7 107.3 106.4 108.2 107.7 105.1 101.3 103.0 97.8 86.7 33 Manufactured homes .2 90.8 93.4 91.8 89.0 87.3 83.4 83.1 77.3 79.3 83.1 86.6 90.8 86.5 86.0 34 Intermediate products, total 14.7 107.7 107.9 107.4 107.0 106.2 106.0 103.8 102.6 101.3 101.2 102.7 103.9 104.6 105.1 35 Construction supplies 6.0 105.2 105.3 103.8 103.1 101.8 101.0 97.7 96.4 94.0 94.9 95.8 97.4 97.9 98.4 36 Business supplies 8.7 109.4 109.7 109.9 109.7 109.2 109.4 108.1 106.8 106.4 105.6 107.5 108.3 109.3 109.7 37 Materials, total 39.2 107.8 109.7 109.4 108.3 106.8 105.3 104.8 103.9 102.6 103.4 104.5 105.4 106.7 107.2 38 Durable goods materials 19.4 111.8 114.9 114.1 112.5 110.4 107.5 106.8 105.5 103.3 104.9 106.2 106.7 108.1 109.1 39 Durable consumer parts 4.2 104.0 110.4 109.0 106.0 98.5 91.1 94.2 90.4 87.5 92.1 95.5 97.2 100.1 101.2 40 Equipment parts 7.3 118.1 119.4 119.8 118.6 117.4 116.9 115.9 116.2 114.8 114.6 114.8 113.6 113.7 114.1 41 Other 7.9 110.2 113.1 111.6 110.4 110.2 107.4 105.2 103.8 101.0 102.6 103.8 105.3 107.1 108.6 42 Basic metal materials 2.8 111.9 116.3 115.8 112.0 112.7 109.6 104.6 104.8 101.2 101.6 103.0 105.3 107.6 109.2 43 Nondurable goods materials 9.0 106.0 106.8 106.9 106.5 105.6 104.9 104.9 103.6 102.8 103.1 103.7 104.9 106.4 106.6 44 Textile materials 1.2 96.7 97.8 98.1 97.9 95.1 91.4 89.1 91.5 92.7 94.7 96.8 97.9 99.9 101.2 45 Pulp and paper materials 1.9 106.4 106.9 109.4 108.6 107.2 108.5 106.0 104.1 102.4 102.0 101.5 106.9 110.3 110.1 46 Chemical materials 3.8 106.8 108.0 106.6 105.6 105.8 105.7 106.7 104.1 102.7 102.9 103.9 103.9 104.3 104.6 47 Other 2.1 109.5 109.3 110.1 110.8 109.4 107.6 109.3 108.8 108.8 109.0 109.2 108.6 110.2 110.0 48 Eneiigy materials 10.9 102.1 103.0 103.0 102.3 101.6 102.0 101.1 101.1 101.3 101.1 102.4 103.5 104.5 104.5 49 Primary energy 7.2 101.3 102.1 101.0 100.7 101.4 101.9 101.3 102.1 101.5 100.5 101.2 104.8 106.1 105.4 50 Converted fuel materials 3.7 103.5 104.9 107.0 105.3 102.0 102.1 100.9 99.2 100.8 102.4 104.7 101.1 101.4 102.6 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.3 109.5 110.7 110.6 110.0 109.0 108.1 107.4 106.6 105.7 106.1 106.9 107.8 108.3 108.8 52 Total excluding motor vehicles and parts.. 95.3 109.8 110.9 110.7 110.2 109.4 108.6 107.8 107.0 106.2 106.5 107.3 108.1 108.5 109.0 53 Total excluding office and computing machines 97.5 108.2 109.4 109.5 108.8 107.3 106.1 105.4 104.4 103.7 104.2 105.2 106.2 106.7 107.1 54 Consumer goods excluding autos and trucks 24.5 107.9 108.2 108.4 108.7 107.9 107.6 107.2 106.5 106.4 106.7 107.6 108.9 108.5 109.5 55 Consumer goods excluding energy 23.3 107.5 107.7 108.7 108.6 106.5 105.6 105.5 104.7 104.6 105.6 106.3 107.7 107.9 108.3 56 Business equipment excluding autos and trucks 12.7 125.6 127.8 128.0 127.2 126.8 125.6 125.7 125.0 124.5 124.9 125.0 125.1 125.2 125.8 57 Business equipment excluding office and computing equipment 12.0 118.7 121.1 122.0 120.6 118.6 116.7 116.2 114.6 114.6 115.7 116.3 116.9 117.3 117.0 58 Materials excluding energy 28.4 110.0 112.3 111.8 110.6 108.9 106.6 106.2 104.9 103.1 104.3 105.4 106.1 107.5 108.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • November 1991 2.13—Continued 1987 1990 1991 Groups c S o I d C e p p r o o r - - a 1 v 99 g 0 . tion Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Mayr Juner Julyr Aug.P Index (1987 = 100) MAJOR INDUSTRY 1 Total index. 100.0 109.2 110.5 110.6 109.9 108.3 107.2 106.6 105.7 105.0 105.5 106.4 107.3 108.0 108.2 2 Manufacturing 84.4 109.9 111.1 111.2 110.7 108.9 107.5 107.0 106.1 105.2 105.9 106.6 107.4 108.2 108.5 3 Primary processing .. 26.7 106.3 108.0 106.9 106.2 104.9 102.9 102.0 100.8 99.0 99.6 100.7 102.1 103.4 104.1 4 Advanced processing 57.7 111.6 112.5 113.2 112.8 110.8 109.5 109.3 108.5 108.0 108.9 109.3 109.9 110.4 110.6 Durable 47.3 111.6 113.5 113.8 112.5 109.9 107.5 107.2 106.1 105.0 106.0 106.7 107.4 108.2 108.3 Lumber and products ... 24 2.0 101.6 100.5 100.3 98.2 95.5 93.5 94.2 91.5 91.2 92.7 92.5 96.6 96.6 95.9 Furniture and fixtures ... 25 1.4 105.9 106.7 106.9 104.4 102.3 102.0 99.0 94.9 95.4 98.3 98.5 100.2 101.0 101.5 Clay, glass, and stone products 32 2.5 105.7 106.6 104.5 104.4 103.8 100.7 97.2 98.9 94.4 94.2 95.1 95.1 96.1 96.5 Primary metals 33 3.3 108.4 114.6 111.6 108.6 109.1 104.2 99.7 99.5 94.7 94.5 96.9 96.6 100.3 101.4 Iron and steel 331,2 1.9 109.9 118.3 113.9 110.3 112.6 107.3 99.0 98.0 92.0 91.6 94.0 93.0 99.7 100.3 Raw steel .1 109.6 118.5 111.6 112.8 109.5 100.6 104.7 97.9 89.8 91.0 88.9 94.0 102.6 100.7 Nonferrous 333-6,9 1.4 106.2 109.4 108.4 106.2 104.1 99.8 100.6 101.6 98.4 98.5 101.0 101.7 101.1 102.9 Fabricated metal products 34 5.4 105.9 107.9 106.8 106.4 104.3 101.9 101.7 99.1 97.8 98.0 99.1 99.8 100.6 101.8 Nonelectrical machinery. 35 8.6 126.5 128.8 128.5 128.1 126.3 124.7 125.5 124.5 123.1 123.5 123.6 123.5 123.9 124.8 Office and computing machines 357 2.5 149.8 152.2 153.6 155.3 149.8 148.9 155.0 157.3 155.1 155.6 155.6 154.0 156.0 155.0 Electrical machinery 36 8.6 111.4 112.5 112.5 110.8 110.4 108.7 107.6 108.2 108.6 109.7 110.6 111.5 111.3 111.9 Transportation equipment 37 9.8 105.5 107.9 111.1 109.2 100.1 96.6 97.6 95.5 95.0 97.2 98.2 99.7 101.2 99.0 Motor vehicles and parts 371 4.7 96.8 101.0 107.5 103.8 85.8 78.5 83.0 79.4 79.8 86.2 89.8 92.5 96.6 91.8 Autos and light trucks 2.3 96.6 100.9 112.8 107.1 83.7 74.9 80.1 75.3 76.6 84.0 88.2 91.2 97.3 89.1 Aerospace and miscellaneous transportation equipment.. 372-6,9 5.1 113.3 114.1 114.2 114.0 113.1 112.9 110.8 110.0 108.8 107.2 105.8 106.1 105.3 105.4 Instruments 38 3.3 116.8 117.5 118.4 118.1 118.1 117.3 119.0 119.3 118.4 118.6 118.2 117.3 116.7 117.4 Miscellaneous manufacturers 39 1.2 120.0 121.8 121.3 121.5 122.5 119.1 116.1 114.6 115.3 117.5 118.7 119.4 122.9 123.5 23 Nondurable 37.2 107.8 108.1 108.0 108.4 107.7 107.4 106.8 106.0 105.4 105.9 106.5 107.5 108.2 108.9 24 Foods 20 8.8 107.6 107.7 107.6 108.8 109.6 109.1 108.3 107.6 107.4 107.6 107.8 108.5 107.8 108.3 25 Tobacco products 21 1.0 98.6 96.3 96.4 97.8 99.0 101.1 100.0 100.1 98.2 97.6 98.7 99.6 100.6 102.0 26 Textile mill products 22 1.8 100.8 100.4 100.7 101.2 97.4 96.1 94.0 94.3 95.4 97.2 99.2 101.6 104.1 105.2 27 Apparel products 23 2.4 98.8 98.8 98.4 97.2 95.5 94.9 92.9 93.1 92.5 93.2 95.2 96.2 97.9 99.0 28 Paper and products 26 3.6 105.3 106.5 107.5 106.8 105.1 105.4 104.2 102.2 101.3 101.3 101.3 105.3 107.9 108.1 29 Printing and publishing .. 27 6.4 111.9 110.9 111.6 112.9 112.4 112.8 112.1 110.9 110.4 110.7 110.6 110.7 112.0 112.1 30 Chemicals and products . 28 8.6 110.3 111.1 110.9 110.7 110.0 109.9 110.1 109.1 108.2 109.0 109.2 109.7 109.8 110.7 31 Petroleum products 29 1.3 108.2 110.2 109.3 108.6 107.8 105.6 104.7 108.8 108.5 105.7 107.5 109.6 108.3 109.2 32 Rubber and plastic products 30 3.0 110.2 112.0 110.3 110.6 109.6 106.9 108.8 106.1 104.4 106.6 109.2 110.5 112.0 113.2 33 Leather and products ... 31 .3 100.0 99.6 100.3 95.3 89.9 92.6 89.6 90.8 91.5 90.0 89.5 90.9 92.3 91.8 34 Mining 7.9 102.6 102.4 103.9 102.6 103.3 103.4 101.7 102.9 101.5 100.9 100.2 102.1 103.1 102.0 35 Metal 10 .3 153.1 155.7 163.6 146.8 153.4 162.0 143.1 148.0 147.6 145.7 148.0 154.2 149.2 155.5 36 Coal 11,12 1.2 113.2 110.2 116.8 114.7 112.9 110.6 108.4 112.8 109.9 105.9 103.4 110.2 116.0 112.7 37 Oil and gas extraction 13 5.7 95.5 95.8 95.8 95.8 97.3 96.7 96.0 97.2 96.4 96.6 96.0 96.9 97.2 96.0 38 Stone and earth minerals .. 14 .7 119.5 120.1 121.7 118.0 113.5 118.9 119.2 112.0 108.0 107.0 107.5 107.6 108.1 108.6 39 Utilities... 7.6 108.0 111.4 110.3 109.2 106.9 108.8 107.6 104.6 106.4 105.9 111.4 111.5 110.4 111.4 40 Electric. 491.3PT 6.0 110.8 113.6 112.9 112.1 109.6 111.8 110.4 107.8 109.8 109.8 116.4 117.5 116.2 117.3 41 Gas .... 492,3PT 1.6 97.3 103.3 100.9 98.1 97.0 97.6 97.5 92.8 93.6 91.6 92.8 89.2 89.1 89.3 SPECIAL AGGREGATES 42 Manufacturing excluding motor vehicles and parts 79.8 110.7 111.7 111.4 111.1 110.3 109.1 108.4 107.6 106.7 107.1 107.6 108.3 108.9 109.5 43 Manufacturing excluding office and computing machines 82.0 108.7 109.9 110.0 109.4 107.7 106.2 105.6 104.5 103.7 104.4 105.1 106.0 106.7 107.1 Gross value (billions of 1982 dollars, annual rates) MAJOR MARKET 44 Products, total 1734.8 1,911.4 1,929.5 1,941.6 1,939.6 1,882.8 1,859.4 1,860.4 1,848.4 1,845.4 1,853.3 1,875.7 1,895.6 1,899.4 1,899.7 45 Final 1350.9 1,497.7 1,516.3 1,529.1 1,523.7 1,470.8 1,450.8 1,459.6 1,452.8 1,455.6 1,464.6 1,478.1 1,492.9 1,495.8 1,493.7 46 Consumer goods . 833.4 882.9 885.9 895.2 892.7 865.2 857.6 857.9 852.7 857.4 862.9 874.4 884.5 884.7 885.5 47 Equipment 517.5 614.8 630.4 633.9 631.0 605.6 593.2 601.7 600.1 598.2 601.7 603.7 608.3 611.0 608.2 48 Intermediate 384.0 413.7 413.1 412.5 415.9 412.0 408.7 400.8 395.6 389.8 388.7 397.6 402.7 403.6 406.1 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

Selected Measures A49 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates, except as noted. 1990 1991 IItteemm 11998888 11998899 11999900 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Private residential real estate activity (thousands of units) NEW UNITS 1,456 1,339 1,111 925 916 854 802 876 892 913 966 999 1,005 994 932 794 703 668 645 611 695 689 742 760 780 794 3 Two-or-more-family 462 407 317 222 248 209 191 181 203 171 206 219 211 4 Started 1,488 1,376 1,193 1,026 1,130 971 847 992 907 977 983 1,034 1,059 1,081 1,003 895 839 769 751 648 788 742 801 831 869 887 6 Two-or-more-family 407 373 298 187 361 220 199 204 165 176 152 165 172 7 Under construction, end of period . 919 850 711 766 756 744 717 709 680 674 665 655 655 570 535 449 497 486 478 461 457 442 443 443 446 454 9 Two-or-more-family 350 315 262 269 270 266 256 252 238 231 222 209 201 10 Completed 1,530 1,423 1,308 1,275 1,246 1,155 1,125 1,096 1,190 1,089 1,070 1,098 1,049 1,085 1,026 966 930 922 878 841 838 881 821 800 880088 791 12 Two-or-more-family 445 396 342 345 324 277 284 258 309 268 270 229900 258 13 Mobile homes shipped 218 198 188 186 181 167 168 157 157 175 174 173 175 Merchant builder activity in 675 650 535 465 480 464 414 448888 449955 550066RR 449966 551166 447722 15 Number for sale, end of period1 368 363 318 334 327 318 315 313 308 303R 300 296 2% Price of units sold (thousands of dollars) 113.3 120.4 122.3 120.0 118.9 127.0 117.9 119.9 122.5 121.0R 118.0 120.1 120.2 17 Average 139.0 148.3 149.0 153.0 143.3 153.4 148.6 147.8 156.4 150.8R 147.4 147.0 151.0 EXISTING UNITS (one-family) 18 Number sold 3,594 3,439 3,316 3,070 3,150 3,130 2,900 3,160 3,220 3,310 3,540 3,590 3,320 Price of units sold (thousands of dollars)2 19 Median 89.2 92.9 95.2 92.9 92.0 91.7 95.6 94.0 98.2 100.3 101.1 102.0 103.0 20 Average 112.5 118.0 118.3 115.9 115.6 114.1 123.0 119.7 125.2 128.9 130.6 130.5 132.2 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 432,222 443,720 446,433 434,559 431,407 421,346 406,502 410,072 401,883 405,905 399,024 398,673 404,947 22 Private 337,440 345,416 337,776 324,054 317,190 311,349 303,932 300,495 293,262 298,019 291,027 290,832 295,015 2 2 3 4 R N e o s n id re e s n i t d i e a n l tial, total 198,101 1 (4 9 8 6 , , 8 5 6 5 5 1 1 1 8 5 2 4 , ,9 8 2 5 0 6 1 15 7 1 2 , , 9 1 3 2 4 0 1 1 6 4 8 9 , , 0 1 3 5 1 9 1 1 6 4 5 6 , , 0 3 1 3 4 5 1 14 6 2 1 , , 1 7 3 9 9 3 1 14 5 4 5 , , 8 6 7 2 3 2 1 1 5 4 2 0 , , 4 8 4 1 7 5 1 14 5 6 1 , , 7 2 8 3 3 6 1 1 5 3 4 6 , , 7 2 3 9 7 0 1 13 5 2 8 , , 4 3 6 6 3 9 1 13 6 3 1 , , 0 9 9 2 5 0 Buildings 25 Industrial 16,451 20,412 23,849 22,847 22,481 22,999 22,433 23,249 23,089 24,402 20,663 21,068 22,089 26 Commercial 64,025 65,496 62,866 60,208 57,764 56,913 53,848 54,023 51,766 54,707 50,402 47,507 47,365 27 Other 19,038 19,683 21,591 22,300 22,121 20,953 20,621 20,850 20,628 21,885 20,854 20,504 20,718 28 Public utilities and other 39,825 43,274 46,614 46,579 46,793 45,470 45,237 46,751 45,332 45,789 44,371 43,384 42,923 29 Public 94,783 98,303 108,655 110,505 114,218 109,997 102,570 109,577 108,621 107,886 107,997 107,841 109,931 30 Military 3,579 3,520 2,734 1,958 2,960 1,868 1,868 1,723 1,866 1,828 1,918 1,864 1,766 31 Highway 29,227 28,171 30,595 31,639 34,304 33,185 25,560 30,699 29,996 28,626 29,113 28,519 27,504 32 Conservation and development. 4,739 4,989 4,718 4,700 4,901 5,374 6,434 5,529 4,586 5,825 5,204 6,161 8,164 33 Other 57,238 61,623 70,608 72,208 72,053 69,570 68,708 71,626 72,173 71,607 71,762 71,297 72,497 1. Not at annual rates. SOURCE. Census Bureau estimates for all series except (1) mobile homes, whjch 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

A50 Domestic Nonfinancial Statistics • November 1991 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data, except as noted Change from 12 Change from 3 months earlier months earlier (at annual rate) Change from 1 month earlier Item level 1990 1991 1991 Aug. 1990 1991 1991 Aug. Aug. Sept. Dec. Mar. June Apr. May June July Aug. CONSUMER PRICES2 (1982-84=100) 5.6 3.8 8.2 4.9 2.4 3.0 .2 .3 .2 .2 .2 136.6 5.6 2.3 4.6 3.9 2.4 5.1 .7 .0 .5 -.6 -.3 136.0 2 Food 6.8 -.7 44.2 18.0 -30.7 -1.2 -.7 1.4 -1.0 -.4 -.2 102.9 5.5 4.6 6.0 3.8 6.8 3.2 .2 .2 .4 .4 .4 142.7 3.7 4.5 3.3 2.3 7.9 3.2 .2 .3 .2 .4 .5 128.7 6.4 4.7 7.2 4.8 6.4 3.0 .1 .2 .4 .3 .3 150.7 PRODUCER PRICES 5.2 2.0 11.3 5.1 -3.5 .7 .R ,4R -.3 -.2 .2 121.7 (1982=100) 1 5 6 . . 2 7 -1 6 . . 2 2 11 2 8 . . 3 7 21 1 . . 1 3 -35 1 . . 5 0 -.3 .0 -.R .3 1. . 6 2 R -1 -. . 6 4 -1 -. . 8 3 - 1 .4 .8 1 7 2 8 3 . . 8 4 3.5 3.7 3.5 3.4 5.9 .9 .2 .2 -.2 .4 .3 133.7 3.4 2.8 3.6 3.3 4.6 1.3 -.R .R .3 .1 .1 126.5 22..11 .0 13.4 44..22 --99..88 -1.0 --,,44RR ..22RR ..00 --..33 ..44 111144..44 .7 .2 4.0 2.3 -2.3 -1.0 -.2 -.1 .0 -.1 .0 121.0 2.9 -9.5 -7.8 -7.3 .0 -12.5 -.7 -3.2 .7 -1.7 -1.8 102.5 18.6 -9.2 305.8 -18.8 -54.0 -1.5 -.4R 3.7R -3.5 2.0 1.3 79.2 2.8 -10.3 5.9 -18.1 -4.7 -13.0 .R -.9 -2.6 -.7 .5 126.0 Crude materials 16 Other 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

Selected Measures A51 2.16 GROSS NATIONAL PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1990 1991 Account 11998888 11998899 11999900 Ql 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 4,016.9 4,117.7 4,157.3 4,150.6 4,155.1 4,170.0 4,153.4 4,124.1 29 Total GNP in 1982 dollars NATIONAL INCOME 3,984.9 4,223.3 4,418.4 4,350.3 4,411.3 4,452.4 4,459.7 4,456.4 30 Total 2,905.1 3,079.0 3.244.2 3.180.4 3.232.5 3,276.9 3,286.9 3,299.3 31 Compensation of employees 2,431.1 2,573.2 2.705.3 2,651.6 2,696.3 2,734.2 2,738.9 2,742.8 32 Wages and salaries 446.6 476.6 508.0 497.1 505.7 511.3 518.1 529.8 33 Government and government enterprises .. 1,984.5 2,096.6 2,197.2 2.154.5 2.190.6 2,222.9 2,220.8 2,213.0 34 Other 474.0 505.8 538.9 528.8 536.1 542.7 548.0 556.5 35 Supplement to wages and salaries 248.5 263.9 280.8 276.0 279.7 282.7 284.8 290.3 36 Employer contributions for social insurance 225.5 241.9 258.1 252.8 256.4 260.0 263.2 266.2 37 Other labor income 38 Proprietors'income1 354.2 379.3 402.5 404.0 401.7 397.9 406.2 404.4 39 Business and professional 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

A52 Domestic Nonfinancial Statistics • November 1991 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1990 1991 Account 11998888 11998899 11999900 Ql Q2 Q3 Q4 Ql 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 16,552.5 16,562.9 16,449.4 16,293.4 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 profits 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 322.1 346.4 363.0 356.7 359.7 365.5 370.3 375.6 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 -158.6 -96.8 35 Federal -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

Summary Statistics A53 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 1991 Item credits or debits 1990 Q2 Q3 Q4 Qlr Q2P -126,267 -106,305 -92,123 -22,178 -23,881 -23,402 10,501 2,965 Not seasonally adjusted -20,653 -29,112 -25,136 15,507 4,508 Merchandise trade balance2 -126,986 -115,917 -108,115 -24,090 -28,760 -27,728 -18,394 -15,624 Merchandise exports 320,337 361,451 389,550 97,088 96,638 100,580 100,900 104,108 Merchandise imports -447,323 -477,368 -497,665 -121,178 -125,398 -128,308 -119,294 -119,732 Military transactions, net -5,743 -6,203 -7,219 -1,558 -1,683 -2,243 -2,329 -1,675 Investment income, net 5,353 2,688 11,945 7 2,802 6,133 4,883 2,464 Other service transactions, net 16,082 28,618 33,595 8,156 8,086 9,716 9,402 9,640 Remittances, pensions, and other transfers ., -4,437 -4,420 -4,843 -1,123 -1,302 -1,201 -1,316 -1,300 U.S. government grants (excluding military). -10,506 -11,071 -17,486 -3,570 -3,024 -8,079 18,255 9,460 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) 2,966 1,320 2,976 -800 4,759 1,422 -560 1 1 2 3 Ch G an o g ld e in U.S. official reserve assets (increase, -). -3,912 0 -25,293 0 -2,158 0 37 0 1 1,73 0 9 -1,091 0 -353 0 1,01 0 4 14 Special drawing rights (SDRs) 127 -535 -192 -216 363 -93 31 -190 15 Reserve position in International Monetary Fund. 1,025 471 731 493 8 -4 -341 72 16 Foreign currencies -5,064 -25,229 -2,697 94 1,368 -995 -43 1,132 17 Change in U.S. private assets abroad (increase, -). -85,111 -104,637 -58,524 -33,033 -28,114 -38,370 -1,992 -27,125 18 Bank-reported claims -56,322 -51,255 5,333 -17,255 -9,984 -24,513 20,598 -11,248 19 Nonbank-reported claims -3,064 2,581 -1,944 -1,760 676 -2,509 -1,308 20 U.S. purchase of foreign securities, net -7,846 -22,575 -28,476 -11,160 -1,014 -7,546 -9,430 -i 3,235 21 U.S. direct investments abroad, net -17,880 -33,388 -33,437 -2,858 -17,792 -3,802 -11,852 -2,642 22 Change in foreign official assets in United States (increase, +) 39,657 8,624 32,425 5,805 13,341 20,301 6,631 -3,650 23 U.S. Treasury securities 41,741 149 28,643 2,461 11,849 20,119 2,381 -1,888 24 Other U.S. government obligations 1,309 1,383 667 346 134 708 -29 -219 25 Other U.S. government liabilities -568 281 1,703 1,141 -248 1,102 1,012 196 26 Other U.S. liabilities reported by U.S. banks3 -319 4,976 2,998 2,131 1,871 -707 2,501 -1,881 27 Other foreign official assets -2,506 1,835 -1,586 -274 -265 -921 766 142 28 Change in foreign private assets in United States (increase, +)... 181,877 207,925 53,879 25,452 35,754 18,732 -7,361 5,806 29 U.S. bank-reported liabilities3 70,235 63,382 9,975 8,980 26,968 17,261 -18,795 -26,687 30 U.S. nonbank-reported liabilities 5,626 5,454 3,779 699 4,260 -1,840 -1,616 31 Foreign private purchases of U.S. Treasury securities, net . 20,239 29,618 1,131 4,287 24 -2,029 3,409 " i3,905 32 Foreign purchases of other U.S. securities, net 26,353 38,920 1,781 2,140 -2,558 802 5,306 15,312 33 Foreign direct investments in United States, net 59,424 70,551 37,213 9,346 7,060 4,538 4,336 3,276 34 Allocation of SDRs 0 0 0 0 0 0 0 0 35 Discrepancy -9,240 18,366 63,526 24,383 1,475 19,072 -8,849 21,550 36 Owing to seasonal adjustments 105 -6,473 2,007 3,995 193 37 Statistical discrepancy in recorded data before seasonal adjustment -9,240 18,366 63,526 24,278 7,948 -12,844 21,357 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -3,912 -25,293 -2,158 371 1,739 -1,091 -353 1,014 39 Foreign official assets in United States excluding line 25 (increase, +) 40,225 8,343 30,722 4,664 13,589 19,199 5,619 -3,846 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) -2,996 10,738 2,163 193 -1,699 575 988 -2,680 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

A54 International Statistics • November 1991 3.11 U.S. FOREIGN TRADE1 Millions of dollars; exports, F.A.S. value; imports, Customs value; monthly data are seasonally adjusted. 1991 IItteemm 11998888 11998899 11999900 Jan. Feb. Mar. Apr. May Juner July" 1 Exports of domestic and foreign merchandise excluding grant-aid shipments, f.a.s. value 322,426 363,812 393,592 34,144 33,599 34,031 35,632 35,271 34,975 35,266 2 General imports including merchandise for immediate consumption plus entries into bonded warehouses 440,952 473,211 495,311 41,520 39,103 38,100 40,139 40,062 38,764 41,162 3 Trade balance -118,526 -109,399 -101,718 -7,376 -5,504 -4,070 -4,507 -4,790 -3,789 -5,896 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 1991 TTyyppee 11998888 11998899 11999900 Feb. Mar. Apr. May June July Aug." 1 Total 47,802 74,609 83,316 82,797 78,297 78,297 78,263 74,940 74,816 73,514 2 Gold stock, including Exchange Stabilization Fund 11,057 11,059 11,058 11,058 11,058 11,058 11,057 11,062 11,062 11,062 3 Special drawing rights2'3 9,637 9,951 10,989 10,958 10,368 10,325 10,515 10,309 10,360 10,479 4 Reserve position in International Monetary Fund 9,745 9,048 9,076 9,556 8,910 8,806 8,854 8,629 8,730 8,726 5 Foreign currencies 17,363 44,551 52,193 51,225 47,666 48,108 47,837 44,940 44,664 43,247 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 1991 AAsssseettss 11998888 11998899 11999900 Feb. Mar. Apr. May June July Aug." 1 Deposits 347 589 369 329 228 292 196 223 314 256 Assets held in custody 2 U.S. Treasury securities2 232,547 224,911 278,499 286,471 272,505 271,779 279,695 273,893 274,514 279,394 3 Earmarked gold3 13,636 13,456 13,387 13,382 13,374 13,363 13,358 13,354 13,330 13,330 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

Summary Statistics A55 3.14 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data1 Millions of dollars, end of period 1990 AAsssseett aaccccoouunntt 11998888 11998899 11999900 Jan. Feb. Mar. Apr. May June" July All foreign countries 1 Total, all currencies 505,595 545,366 556,925 563,388r 560,775" 547,031" 537,854" 529,624" 531,918 528,309 7 Claims on United States 169,111 198,835 188,496 183,305 187,874" 183,990 180,658 172,655" 180,666 174,329 3 129,856 157,092 148,837 140,812 145,667" 143,795 141,580 135,484" 141,893 136,786 4 Other banks in United States 14,918 17,042 13,296 14,541 12,887 12,268 12,085 10,412 11,871 11,000 S Nonbanks 24,337 24,701 26,363 27,952 29,320 27,927 26,993 26,759 26,902 26,543 6 Claims on foreigners 299,728 300,575 312,449 321,390 313,730" 307,305 300,646 297,903" 293,795 294,299 7 Other branches of parent bank 107,179 113,810 135,003 132,299 124,719" 129,732 122,151 118,465" 115,534 112,314 8 96,932 90,703 72,602 81,219 80,030 72,757 72,549 74,290" 74,766 77,323 9 Public borrowers 17,163 16,456 17,555 18,261 17,893 17,915 17,825 18,208 17,420 18,608 10 Nonbank foreigners 78,454 79,606 87,289 89,611 91,088 86,901 88,121 86,940" 86,075 86,054 11 Other assets 36,756 45,956 55,980 58,693r 59,171" 55,736" 56,550" 59,066" 57,457 59,681 12 Total payable in U.S. dollars 357,573 382,498 379,479 379,507" 379,987" 382,329" 371,911" 362,542" 372,613 364,219 n 163,456 191,184 180,174 175,223 180,301" 176,903 173,964 166,563" 174,306 167,880 14 Parent bank 126,929 152,294 142,962 135,107 140,489" 138,850 137,343 131,293" 137,933 132,510 15 Other banks in United States 14,167 16,386 12,513 13,739 12,266 11,757 11,624 10,020 11,362 10,505 16 22,360 22,504 24,699 26,377 27,546 26,296 24,997 25,250 25,011 24,865 17 Claims on foreigners 177,685 169,690 174,451 179,905 173,662" 180,415 173,044 171,898" 171,397 169,182 18 Other branches of parent bank 80,736 82,949 95,298 93,989 87,529" 95,106 87,895 85,365 84,231 79,001 19 54,884 48,396 36,440 41,134 40,785 40,451 40,407 42,340" 43,370 45,439 70 Public borrowers 12,131 10,961 12,298 13,137 12,944 13,206 12,996 13,137 12,485 13,569 71 Nonbank foreigners 29,934 27,384 30,415 31,645 32,404 31,652 31,746 31,056 31,311 31,173 22 Other assets 16,432 21,624 24,854 24,379" 26,024" 25,011" 24,903" 24,081" 26,910 27,157 United Kingdom 23 Total, all currencies 156,835 161,947 184,818 184,208r 180,018" 175,565" 168,880" 169,032" 165,397 161,773 74 Claims on United States 40,089 39,212 45,560 39,511 40,978" 42,529 38,136 38,338 37,574 32,475 75 34,243 35,847 42,413 35,847 37,362" 39,372 34,930 34,830 34,534 29,241 76 Other banks in United States 1,123 1,058 792 1,095 924 848 1,179 1,104 711 860 77 4,723 2,307 2,355 2,569 2,692 2,309 2,027 2,404 2,329 2,374 78 Claims on foreigners 106,388 107,657 115,536 121,220 115,496" 110,329 107,031 105,893 103,471 102,971 79 Other branches of parent bank 35,625 37,728 46,367 47,999 41,788" 44,341 40,730 39,060" 38,333 36,588 30 36,765 36,159 31,604 34,050 34,518 30,660 30,608 32,048" 31,019 31,866 31 Public borrowers 4,019 3,293 3,860 3,954 4,029 3,943 3,711 3,657 3,584 3,676 37 29,979 30,477 33,705 35,217 35,161 31,385 31,982 31,128" 30,535 30,841 33 Other assets 10,358 15,078 23,722 23,477" 23,544" 22,707" 23,713" 24,801" 24,352 26,327 34 Total payable in U.S. dollars 103,503 103,208 116,762 113,804" 113,480" 114,887" 108,563" 105,585" 106,532 101,036 35 Claims on United States 38,012 36,404 41,259 35,434 37,344" 39,052 35,058 35,274 34,726 29,352 36 33,252 34,329 39,609 33,068 35,045" 37,149 32,973 32,771 32,790 27,085 37 Other banks in United States 964 843 334 771 615 562 976 970 555 759 38 3,796 1,232 1,316 1,595 1,684 1,341 1,109 1,533 1,381 1,508 39 Claims on foreigners 60,472 59,062 63,701 68,139 64,817" 65,034 62,183 60,122" 58,561 57,857 40 Other branches of parent bank 28,474 29,872 37,142 38,262 33,271" 36,150 32,842 31,297 30,108 29,111 41 18,494 16,579 13,135 14,905 15,840 15,097 15,460 16,118" 14,983 15,723 47 2,840 2,371 3,143 3,243 3,290 3,220 3,193 3,152 3,082 3,032 43 10,664 10,240 10,281 11,729 12,416 10,567 10,688 9,555 10,388 9,991 44 Other assets 5,019 7,742 11,802 10,231" 11,319" 10,801" 11,322" 10,691" 13,245 13,827 Bahamas and Caymans 45 Total, all currencies 170,639 176,006 162,316 167,306 168,209 163,315 164,565 158,506 168,389 169,271 46 105,320 124,205 112,989 115,806 118,783 110,808 113,563 107,750 114,669 114,401 47 Parent bank 73,409 87,882 77,873 78,350 81,888 75,516 79,818 75,472 80,644 81,605 48 Other banks in United States 13,145 15,071 11,869 12,877 11,380 10,753 10,063 8,748 10,578 9,583 49 18,766 21,252 23,247 24,579 25,515 24,539 23,682 23,530 23,447 23,213 50 Claims on foreigners 58,393 44,168 41,356 42,801 40,363 43,868 42,067 42,039 45,004 46,396 51 Other branches of parent bank 17,954 11,309 13,416 12,292 11,477 13,861 12,554 12,393 12,801 10,767 57 28,268 22,611 16,310 18,343 16,863 17,571 17,458 17,284 20,707 21,688 53 Public borrowers 5,830 5,217 5,807 6,528 6,484 6,846 6,556 6,520 5,883 7,103 54 Nonbank foreigners 6,341 5,031 5,823 5,638 5,539 5,590 5,499 5,842 5,613 6,838 55 Other assets 6,926 7,633 7,971 8,699 9,063 8,639 8,935 8,717 8,716 8,474 56 Total payable in U.S. dollars 163,518 170,780 158,390 162,458 163,533 159,167 160,526 154,720 164,485 165,342 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

A56 International Statistics • November 1991 3.14—Continued 1991 LLiiaabbiilliittyy aaccccoouunntt 1988 11998899 11999900 Jan. Feb. Mar. Apr. May June" July All foreign countries 57 Total, all currencies 505,595 545,366 556,925 563,388r 560,775r 547,031" 537,854" 529,624" 531,918 528,309 58 Negotiable certificates of deposit (CDs) .. 28,511 23,500 18,060 19,107 18,595 19,920 19,484 17,753" 16,503 19,692 59 To United States 185,577 197,239 189,412 185,768 187,479" 185,999 180,279 172,246" 187,200 181,497 60 Parent bank 114,720 138,412 138,748 133,574 132,061" 128,690 123,883 117,537" 127,568 126,538 61 Other banks in United States 14,737 11,704 7,463 9,341 10,580 10,962 9,927 8,996 11,758 10,079 62 Nonbanks 56,120 47,123 43,201 42,853 44,838 46,347 46,469 45,713 47,874 44,880 63 To foreigners 270,923 296,850 311,668 319,821 316,523" 306,047 300,907 301,366" 290,155 287,762 64 Other branches of parent bank 111,267 119,591 139,113 132,214 124,437 129,201 122,789 119,765 116,226 112,506 65 Banks 72,842 76,452 58,986 70,189 73,773 63,262 63,908 66,140" 57,256 59,975 66 Official institutions 15,183 16,750 14,791 17,343 16,665 15,864 18,398 19,803 20,394 17,245 67 Nonbank foreigners 71,631 84,057 98,778 100,075 101,648" 97,720 95,812 95,658" 96,279 98,036 68 Other liabilities 20,584 27,777 37,785 38,692r 38,178" 35,065" 37,184" 38,259" 38,060 39,358 69 Total payable in U.S. dollars 367,483 396,613 383,522 383,793 380,376" 381,365 372,610 359,437 372,062 363,092 70 Negotiable CDs 24,045 19,619 14,094 15,142 14,446 15,335 14,882 13,258" 12,620 14,538 71 To United States 173,190 187,286 175,654 171,586 174,436" 173,620 168,808 159,922 175,057 169,837 72 Parent bank 107,150 132,563 130,510 125,464 124,797" 121,505 117,297 110,303 120,334 119,812 73 Other banks in United States 13,468 10,519 6,052 7,627 8,715 9,416 8,509 7,666 10,616 8,804 74 Nonbanks 52,572 44,204 39,092 38,495 40,924 42,699 43,002 41,953 44,107 41,221 75 To foreigners 160,766 176,460 179,002 182,131 175,761 177,902 173,589 171,160" 170,354 163,451 76 Other branches of parent bank 84,021 87,636 98,128 94,765 87,288 93,910 88,299 85,857 84,952 79,909 77 Banks 28,493 30,537 20,251 23,661 25,536 23,769 22,892 21,639" 21,162 21,470 78 Official institutions 8,224 9,873 7,921 10,585 10,021 9,205 11,568 12,339 13,972 11,563 79 Nonbank foreigners 40,028 48,414 52,702 53,120 52,916 51,018 50,830 51,325 50,268 50,509 80 Other liabilities 9,482 13,248 14,772 14,934 15,733 14,508 15,331 15,097 14,031 15,266 United Kingdom 81 Total, all currencies 156,835 161,947 184,818 184,208r 180,018" 175,565" 168,880" 169,032" 165,397 161,773 82 Negotiable CDs 24,528 20,056 14,256 14,873 14,363 15,820 15,162 13,486" 12,196 14,889 83 To United States 36,784 36,036 39,928 33,845 33,904" 35,066 28,450 28,618 31,084 26,599 84 Parent bank 27,849 29,726 31,806 25,004 25,504" 26,826 21,676 19,951 23,238 19,545 85 Other banks in United States 2,037 1,256 1,505 1,861 1,401 1,230 1,175 1,413 1,092 1,490 86 Nonbanks 6,898 5,054 6,617 6,980 6,999 7,010 5,599 7,254 6,754 5,564 87 To foreigners 86,026 92,307 108,531 113,754 110,455" 105,090 103,976 104,322" 99,756 97,263 88 Other branches of parent bank 26,812 27,397 36,709 34,547 30,978 33,084 31,860 30,155 29,371 28,591 89 Banks 30,609 29,780 25,126 31,765 32,784 26,609 27,001 28,459" 22,994 24,310 90 Official institutions 7,873 8,551 8,361 10,368 9,745 8,969 11,300 12,342 13,062 10,010 91 Nonbank foreigners 20,732 26,579 38,335 37,074 36,948" 36,428 33,815 33,366" 34,329 34,352 92 Other liabilities 9,497 13,548 22,103 21,736r 21,296" 19,589" 21,292" 22,606" 22,361 23,022 93 Total payable in U.S. dollars 105,907 108,178 116,094 113,765 112,118" 112,981 106,568 104,074 104,519 99,752 94 Negotiable CDs 22,063 18,143 12,710 13,388 12,790 13,816 13,291 11,610" 10,833 12,758 95 To United States 32,588 33,056 34,697 28,511 29,480" 30,779 24,690 24,245 27,106 22,355 % Parent bank 26,404 28,812 29,955 23,342 24,164" 25,450 20,391 18,457 21,848 17,924 97 Other banks in United States 1,752 1,065 1,156 1,324 926 800 848 1,002 892 1,233 98 Nonbanks 4,432 3,179 3,586 3,845 4,390 4,529 3,451 4,786 4,366 3,198 99 To foreigners 47,083 50,517 60,014 63,702 60,977 59,985 59,440 58,849" 58,068 55,433 100 Other branches of parent bank 18,561 18,384 25,957 24,954 21,339 24,049 22,452 21,671 20,452 19,509 101 Banks 13,407 12,244 9,488 11,539 12,976 10,112 9,931 9,654" 8,758 9,678 102 Official institutions 4,348 5,454 4,692 7,158 6,587 6,188 8,239 8,914 10,032 7,519 103 Nonbank foreigners 10,767 14,435 19,877 20,051 20,075 19,636 18,818 18,610 18,826 18,727 104 Other liabilities 4,173 6,462 8,673 8,164 8,871 8,401 9,147 9,370 8,512 9,206 Bahamas and Caymans 105 Total, all currencies 170,639 176,006 162,316 167,306 168,209 163,315 164,565 158,506 168,389 169,271 106 Negotiable CDs 953 678 646 654 629 729 674 694 696 904 107 To United States 122,332 124,859 114,738 120,691 122,231 118,720 120,997 114,886 125,377 126,310 108 Parent bank 62,894 75,188 74,941 80,567 78,173 72,382 73,801 71,239 76,196 80,795 109 Other banks in United States 11,494 8,883 4,526 5,655 7,618 8,210 7,543 6,408 9,438 7,473 110 Nonbanks 47,944 40,788 35,271 34,469 36,440 38,128 39,653 37,239 39,743 38,042 111 To foreigners 45,161 47,382 44,444 42,850 42,472 41,660 40,289 40,629 40,180 39,624 112 Other branches of parent bank 23,686 23,414 24,715 23,099 22,923 22,303 21,645 22,017 21,701 21,765 113 Banks 8,336 8,823 5,588 6,030 6,105 6,232 5,837 5,765 5,734 4,877 114 Official institutions 1,074 1,097 622 811 728 674 676 736 931 661 115 Nonbank foreigners 12,065 14,048 13,519 12,910 12,716 12,451 12,131 12,111 11,814 12,321 116 Other liabilities 2,193 3,087 2,488 3,111 2,877 2,206 2,605 2,297 2,136 2,433 117 Total payable in U.S. dollars 162,950 171,250 157,132 162,118 162,850 158,172 160,284 154,281 164,101 164,935 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A57 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1991 IItteemm 11998899 11999900 Jan. Feb. Mar. Apr. May June* July" 1 Total1 312,477 344,386 352,692 362,260 349,995 344,580* 350,867* 346,127 349,341 By type 2 Liabilities reported by banks in the United States 36,4% 39,765 41,464 43,309 42,266 39,061 41,769* 40,636 42,698 3 U.S. Treasury bills and certificates3 76,985 79,447 83,695 83,%3 84,013 81,110 82,444 84,549 86,071 U.S. Treasury bonds and notes 4 Marketable 179,269 202,438 205,145 212,154 200,154 220011,,003399** 203,060* 197,365 1%,664 5 Nonmarketable 568 4,491 4,521 4,550 4,580 4,610 4,642 4,672 4,704 6 U.S. securities other than U.S. Treasury securities 19,159 18,245 17,867 18,284 18,982 18,760 18,952 18,905 19,204 By area 7 Western Europe 132,849 167,141 169,141 174,119 166,466 162,%2 166,880 163,495 165,729 8 Canada 9,482 8,672 8,179 7,900 8,467 8,454 9,433 9,155 9,185 9 Latin America and Caribbean 9,313 21,115 21,957 23,716 24,649 25,378 27,757* 29,435 30,032 10 Asia 153,338 138,071 143,260 146,186 139,7% 137,662* 136,540* 133,936 134,445 11 Africa 1,030 1,433 1,659 1,439 1,802 1,171 1,184 1,254 1,178 12 Other countries 6,469 7,955 8,497 8,897 8,814 8,953 9,073 8,851 8,771 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 Sept. Dec. Mar. June 55,438 74,980 67,835 71,028 70,276 64,322 59,313 51,271 68,983 65,127 68,675 66,558 67,599 61,491 18,861 25,100 20,491 27,206 29,651 27,624 27,504 32,410 43,884 44,636 41,470 36,907 39,975 33,986 551 364 33,,550077 22,,884433 1100,,559944 77,,335577 1133,,119911 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

A58 International Statistics • November 1991 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 1991 HHoollddeerr aanndd ttyyppee ooff lliiaabbiilliittyy 11998888 11998899 11999900 Jan. Feb. Mar. Apr. May Juner Julyp 1 All foreigners 685,339 736,878 752,916 752,864 757,916 747,913 731,745 727,225R 722,682 721,242 2 Banks' own liabilities 514,532 577,498 576,195 568,974 574,913 569,037 561,102 556,538r 549,622 546,519 3 Demand deposits 21,863 22,032 21,724 19,686 20,144 20,268 19,750 18,863r 19,013 18,011 4 Time deposits2 152,164 168,780 168,245 159,248 162,354 163,971 157,171 152,277r 148,523 148,776 5 Other. 51,366 67,823 65,652 75,723 74,016 71,734 73,750 72,452r 65,484 66,713 6 Own foreign offices 289,138 318,864 320,575 314,317 318,399 313,063 310,430 312,947r 316,602 313,019 7 Banks' custody liabilities5 170,807 159,380 176,721 183,890 183,003 178,876 170,643 170,687 173,061 174,723 8 U.S. Treasury bills and certificates6 115,056 91,100 96,808 104,493 103,948 102,145 97,378 98,087 100,492 101,736 9 Other negotiable and readily transferable instruments 16,426 19,526 17,472 17,955 18,190 17,485 16,332 16,723 17,490 17,282 10 Other 39,325 48,754 62,441 61,442 60,865 59,246 56,933 55,876 55,079 55,705 11 Nonmonetary international and regional organizations 3,224 4,894 55,,991188 7,908 6,555 6,669 6,237 6,057R 55,,991177 55,,994433 12 Banks' own liabilities 2,527 3,279 4,540 6,431 4,092 4,806 5,061 4,675r 3,863 3,834 13 Demand deposits 71 % 36 67 40 73 76 24 26 44 14 Time deposits2 1,183 927 1,050 1,600 1,684 2,034 1,980 2,151r 2,010 1,732 15 Other. 1,272 2,255 3,455 4,763 2,368 2,700 3,006 2,501 1,827 2,058 16 Banks' custody liabilities5 698 1,616 1,378 1,478 2,462 1,863 1,176 1,381 2,054 2,109 17 U.S. Treasury bills and certificates6 57 197 364 423 1,620 1,103 275 662 1,287 1,404 18 Other negotiable and readily transferable instruments' 641 1,417 1,014 1,005 842 760 901 719 767 705 19 Other 0 2 0 50 0 0 0 0 0 0 20 Official institutions9 135,241 113,481 119,212 125,159 127,271 126,280 120,171 124,214R 125,185 128,769 21 Banks' own liabilities 27,109 31,108 34,792 37,345 38,878 38,592 36,096 38,420r 36,264 38,167 22 Demand deposits 1,917 2,196 1,924 1,664 1,579 1,645 1,633 l,448r 1,542 1,398 73 Time deposits2 9,767 10,495 14,265 11,659 13,426 13,946 13,546 14,433r 14,608 14,869 24 Other. 15,425 18,417 18,603 24,022 23,873 23,000 20,917 22,540r 20,114 21,900 25 Banks' custody liabilities5 108,132 82,373 84,420 87,814 88,393 87,688 84,076 85,794 88,921 90,602 26 U.S. Treasury bills and certificates 103,722 7766,,998855 79,447 83,695 83,963 84,013 81,110 82,444 84,549 86,071 27 Other negotiable and readily transferable instruments' 4,130 5,028 4,770 3,939 4,057 3,582 2,835 3,197 44,,110055 4,324 28 Other 280 361 203 180 374 92 130 152 267 207 29 Banks10 459,523 515,275 534,143 521,444 527,740 520,069 509,598 500,885R 498,698 493,269 30 Banks' own liabilities 409,501 454,273 457,535 445,772 451,031 445,588 439,018 432,36C 431,619 426,130 31 Unaffiliated foreign banks 120,362 135,409 136,960 131,455 132,633 132,525 128,587 119,413r 115,018 113,111 37 Demand deposits 9,948 10,279 10,053 9,003 9,522 10,050 9,073 8,674 8,586 8,480 33 Time deposits2 80,189 90,557 88,847 81,583 82,468 84,119 79,232 72,669r 69,906 70,071 34 Other. 30,226 34,573 38,060 40,869 40,643 38,357 40,282 38,070" 36,525 34,560 35 Own foreign offices 289,138 318,864 320,575 314,317 318,399 313,063 310,430 312,947r 316,602 313,019 36 Banks' custody liabilities5 50,022 61,002 76,608 75,672 76,709 74,481 70,581 68,525 67,078 67,139 37 U.S. Treasury bills and certificates6 7,602 9,367 10,634 10,174 11,136 10,645 10,026 8,714 8,199 8,002 38 Other negotiable and readily transferable instruments' 5,725 5,124 5,240 5,950 6,351 6,293 5,973 5,729 5,475 5,425 39 Other 36,694 46,510 60,735 59,548 59,222 57,543 54,582 54,083 53,404 53,712 40 Other foreigners 87,351 103,228 93,642 98,352 96,350 94,896 95,738 96,070R 92,882 93,261 41 Banks' own liabilities 75,396 88,839 79,328 79,427 80,911 80,051 80,927 81,082r 77,875 78,388 4? Demand deposits 9,928 9,460 9,711 8,952 9,004 8,500 8,969 8,717 8,859 8,089 43 Time deposits2 61,025 66,801 64,083 64,406 64,775 63,873 62,413 63,024r 61,999 62,104 44 Other. 4,443 12,577 5,534 6,068 7,132 7,678 9,545 9,34 lr 7,018 8,195 45 Banks' custody liabilities5 11,956 14,389 14,314 18,926 15,439 14,845 14,810 14,987 15,007 14,873 46 U.S. Treasury bills and certificates6 3,675 4,551 6,363 10,201 7,230 6,384 5,966 6,267 6,456 6,259 47 Other negotiable and readily transferable instruments 5,929 7,958 6,448 7,062 6,940 6,850 6,624 7,078 7,143 6,828 48 Other 2,351 1,880 1,503 1,664 1,269 1,611 2,221 1,642 1,408 1,786 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 6,425 7,203 7,022 6,966 6,720 7,157 7,269 7,511 7,676 6,809 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

Nonbank-Reported Data A59 3.17—Continued 1991 AArreeaa aanndd ccoouunnttrryy 11998888 11998899 11999900 Jan. Feb. Mar. Apr. May June" JulyP 1 685,339 736,878 752,916 752,864 757,916 747,913 731,745 727,225r 722,682 721,242 2 Foreign countries 682,115 731,984 746,998 744,956 751,361 741,245 725,507 721,168' 716,765 715,299 231,912 237,501 254,460 247,705 250,091 249,956 241,651 238,104r 236,607 227,926 4 Austria 1,155 1,233 1,229 1,570 1,522 1,494 1,147 1,100" 1,067 1,235 5 Belgium-Luxembourg 10,022 10,648 12,399 12,382 12,559 12,238 12,410 11,610" 11,872 12,286 6 Denmark 2,200 1,415 1,399 1,115 1,013 983 945 988 1,370 1,197 7 285 570 602 404 489 662 724 453 732 432 8 24,777 26,903 30,946 29,371 27,892 28,211 26,970 26,270 26,383 26,772 9 Germany 6,772 7,578 7,281 8,262 9,605 8,988 8,441 8,490" 7,823 7,043 10 672 1,028 934 895 797 747 809 785 791 830 11 Italy 14,599 16,169 17,736 16,157 17,506 17,367 15,045 14,725 14,347 13,905 1? Netherlands 5,316 6,613 5,375 5,680 6,397 6,204 6,773 6,686 6,100 6,069 13 Norway 1,559 2,401 2,358 2,181 2,078 2,121 1,099 1,168 1,927 1,653 14 903 2,418 2,958 2,877 2,684 2,778 2,628 2,410 2,392 2,279 15 5,494 4,364 7,544 8,813 8,073 9,784 10,006 10,095 9,392 10,4% 16 1,284 1,491 1,837 1,290 759 1,159 720 525 745 858 17 34,199 34,496 36,915 35,572 37,209 38,546 36,711 34,880 36,619 35,331 18 Turkey 1,012 1,818 1,169 1,124 1,195 1,480 1,490 1,535 1,831 1,720 19 United Kingdom 111,811 102,362 109,496 102,363 103,846 102,973 101,484 99,776r 98,298 89,964 70 Yugoslavia 529 1,474 928 1,030 959 848 1,034 953 938 1,016 21 Other Western Europe 8,598 13,563 11,689 14,352 12,806 10,545 10,340 12,812 10,876 11,884 ?? 138 350 119 1% 88 106 138 129" 178 75 23 Other Eastern Europe2 591 608 1,546 2,071 2,614 2,722 2,740 2,714" 2,926 2,881 24 Canada 21,062 18,865 20,332 19,218 23,839 23,445 23,254 22,734 23,844 22,521 75 271,146 311,028 326,351 332,135 335,679 325,786 325,349 328,802" 328,329 335,205 ?6 Argentina 7,804 7,304 7,366 7,659 7,679 7,872 7,708 7,5%" 7,523 7,123 77 86,863 99,341 107,386 105,028 102,264 96,289 96,307 97,485" %,855 97,543 ?8 2,621 2,884 2,809 3,104 3,008 2,838 2,753 3,054" 2,919 3,161 ?9 Brazil 5,314 6,351 5,853 5,975 6,310 6,489 5,821 5,773 5,765 5,800 30 113,840 138,309 140,720 148,187 154,294 150,581 150,840 151,526" 150,809 157,056 31 Chile 2,936 3,212 3,145 3,188 3,063 2,995 3,107 3,240 3,233 3,309 3? Colombia 4,374 4,653 4,492 4,466 4,308 3,786 4,348 4,409 4,448 4,423 33 Cuba 10 10 11 18 8 7 8 8" 7 2 34 1,379 1,391 1,379 1,359 1,332 1,319 1,260 1,293 1,288 1,270 35 Guatemala 1,195 1,312 1,541 1,563 1,580 1,617 1,571 1,595 1,664 1,635 36 269 209 257 224 256 268 233 237 273 225 37 15,185 15,423 16,625 16,938 17,144 17,405 17,508 18,657 19,552 20,015 38 Netherlands Antilles 6,420 6,310 7,381 7,139 6,970 6,600 6,898 5,986 5,959 6,081 39 4,353 4,362 4,575 4,345 4,351 4,454 4,293 4,552 4,676 4,699 40 Peru 1,671 1,984 1,295 1,347 1,324 1,364 1,428 1,413 1,342 1,332 41 Uruguay 1,898 2,284 2,520 2,596 2,639 2,509 2,463 2,488" 2,573 2,452 4? 9,147 9,482 12,219 11,944 12,095 12,266 11,833 12,666 12,586 12,211 43 Other 5,868 6,206 6,779 7,053 7,055 7,127 6,969 6,825 6,856 6,868 44 147,838 156,201 136,780 135,951 132,375 133,041 126,7% 122,872" 119,919 121,777 China 45 1,895 1,773 2,421 2,866 2,720 3,030 2,415 2,446 2,412 22,,440088 46 26,058 19,588 11,244 10,920 11,141 11,295 11,001 10,649 9,838 11,213 47 Hong Kong 12,248 12,416 12,700 14,872 14,794 15,748 16,109 15,010 14,575 14,529 48 699 780 1,233 1,472 1,628 1,174 986 1,968" 1,959 2,122 49 1,180 1,281 1,238 1,191 1,719 1,941 1,309 1,303 1,612 1,163 50 1,461 1,243 2,767 2,823 2,509 2,965 2,849 2,564" 2,355 2,375 51 74,015 81,184 67,075 63,452 61,093 56,820 53,172 52,031 51,482 50,012 5? 2,541 3,215 2,280 2,406 2,186 2,213 2,887 2,193 2,102 2,335 53 1,163 1,766 1,585 1,455 1,655 1,609 1,681 1,521 1,587 1,537 54 Thailand 1,236 2,093 1,443 2,228 2,148 2,403 2,571 2,502 2,386 2,367 55 Middle-East oil-exporting countries3 12,083 13,370 15,829 14,720 13,693 15,642 14,655 14,126" 13,355 15,742 56 Other 13,260 17,491 16,965 17,547 17,091 18,199 17,162 16,560 16,256 15,974 57 3,991 3,824 4,630 5,173 5,153 4,908 4,495 4,695 4,187 3,929 58 911 686 1,425 1,476 1,416 1,449 927 1,364 1,017 999 59 68 78 104 107 90 91 89 97 122 81 60 South Africa 437 206 228 212 317 312 220 202 241 221 61 85 86 53 55 50 52 50 52 45 24 6? Oil-exporting countries 1,017 1,121 1,110 1,508 1,528 1,370 1,434 1,140 1,105 960 63 Other 1,474 1,648 1,710 1,815 1,751 1,634 1,776 1,840" 1,657 1,644 64 Other countries 6,165 4,564 4,445 4,774 4,224 4,109 3,%3 3,%2 3,879 3,941 65 5,293 3,867 3,807 3,883 3,434 3,131 3,118 3,232 3,097 3,169 66 All other 872 697 637 891 790 978 845 730 782 772 67 Nonmonetary international and regional organizations 3,224 4,894 5,918 7,908 6,555 6,669 6,237 66,,005577"" 55,,991177 55,,994433 68 International5 2,503 3,947 4,390 6,428 4,880 5,108 4,895 4,641" 4,025 4,063 69 Latin American regional 589 684 1,048 975 1,235 1,170 913 802 1,410 1,273 70 Other regional6 133 263 479 506 440 391 429 614 482 607 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

A60 International Statistics • November 1991 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 1991 AArreeaa aanndd ccoouunnttrryy 11998888 11998899 11999900 Jan. Feb. Mar. Apr. May June" JulyP 1 Total 491,165 534,492 510,078 497,886 509,839 495,614 507,001 502,896r 504,792 496,635 2 Foreign countries 489,094 530,630 505,285 495,344 505,995 493,114 504,286 500,194r 500,711 494,907 3 Europe 116,928 119,025 113,043 108,184 107,614 104,180 100,318 99,243r 98,968 97,971 4 Austria 483 415 362 248 400 270 392 220 304 270 5 Belgium-Luxembourg 8,515 6,478 5,458 6,169 5,905 5,665 5,462 7,841r 6,721 6,154 6 Denmark 483 582 497 567 472 583 765 909 8% 898 7 Finland 1,065 1,027 1,047 1,083 1,364 1,157 1,173 867 673 647 8 France 13,243 16,146 14,466 15,202 14,384 14,915 13,894 13,584r 14,304 14,126 9 Germany 2,329 2,865 3,343 3,361 3,620 3,305 3,235 2,628r 2,782 2,690 10 Greece 433 788 727 651 652 667 688 762 657 625 11 Italy 7,936 6,662 6,036 6,094 5,660 6,602 5,417 5,827r 6,329 6,055 12 Netherlands 2,541 1,904 1,751 1,953 2,108 2,119 2,230 1,960" 2,122 2,427 13 Norway 455 609 782 706 670 765 679 695 701 641 14 Portugal 261 376 292 323 292 384 293 322 378 255 15 Spain 1,823 1,930 2,668 2,864 2,526 3,334 3,344 3,082 2,056 2,582 16 Sweden 1,977 1,773 2,093 2,175 2,336 2,330 1,950 1,956r 1,974 1,850 17 Switzerland 3,895 6,141 4,200 2,073 2,444 3,165 3,238 3,487r 2,%9 3,620 18 Turkey 1,233 1,071 1,405 1,377 1,509 1,537 1,440 1,445 1,593 1,419 19 United Kingdom 65,706 65,527 65,147 60,532 60,397 53,8% 52,550 50,174r 51,333 50,607 20 Yugoslavia 1,390 1,329 1,142 1,084 980 991 1,012 %5 932 877 21 Other Western Europe2 1,152 1,302 597 705 851 1,141 1,118 999 734 857 22 U.S.S.R 1,255 1,179 530 505 501 781 904 936 891 782 23 Other Eastern Europe 754 921 499 512 545 573 533 585 618 589 24 Canada 18,889 15,451 16,080 16,951 19,364 17,062 17,580 17,718r 17,434 16,686 25 Latin America and Caribbean 214,264 230,438 230,1% 231,387 237,514 233,032 239,873 244,319r 248,601 245,721 26 Argentina 11,826 9,270 6,928 6,781 6,655 6,535 6,420 6,363 6,128 5,943 27 Bahamas 66,954 77,921 76,490 79,834 81,148 73,338 76,321 79,437r 78,054 80,545 28 Bermuda 483 1,315 4,006 1,771 3,602 3,823 4,935 7,182 3,893 6,563 29 Brazil 25,735 23,749 17,994 17,956 17,935 18,319 16,523 15,594" 15,245 12,302 30 British West Indies 55,888 68,749 87,429 94,213 97,500 100,882 105,073 105,685" 114,916 110,348 31 Chile 5,217 4,353 3,271 3,225 3,237 3,170 3,050 3,023 2,917 2,823 32 Colombia 2,944 2,784 2,585 2,555 2,528 2,441 2,334 2,281 2,349 2,201 33 Cuba 1 1 0 0 0 0 0 0 0 0 34 Ecuador 2,075 1,688 1,387 1,361 1,361 1,325 1,326 1,339 1,344 1,262 35 Guatemala4 198 197 191 193 191 199 208 220" 203 190 36 Jamaica 212 297 238 243 171 224 196 181 187 144 37 Mexico 24,637 23,376 14,845 14,629 14,817 15,077 15,593 15,174" 15,411 15,453 38 Netherlands Antilles 1,306 1,921 7,998 2,194 1,599 1,298 1,4% 1,589 1,639 1,563 39 Panama 2,521 1,740 1,471 1,534 1,502 1,479 1,475 1,410 1,423 1,500 40 Peru 1,013 771 663 656 691 697 670 722 726 710 41 Uruguay 910 929 786 767 626 588 620 615 590 588 42 Venezuela 10,733 9,652 2,569 2,118 2,254 2,168 2,209 2,223" 2,260 2,386 43 Other Latin America and Caribbean 1,612 1,726 1,344 1,357 1,698 1,468 1,424 1,280" 1,315 1,200 44 130,881 157,474 138,628 131,144 134,016 131,273 139,066 131,492" 128,043 127,208 China Mainland 762 634 620 565 497 723 641 567" 992 659 46 Taiwan 4,184 2,776 1,934 1,776 1,475 1,264 1,685 1,390 2,019 1,6% 47 Hong Kong 10,143 11,128 10,644 8,250 8,792 9,729 10,891 9,870 9,217 8,871 48 India 560 621 655 624 590 539 560 455 405 362 49 Indonesia 674 651 933 926 1,081 1,136 1,029 984 896 879 50 Israel 1,136 813 774 964 842 952 871 829 852 815 51 Japan 90,149 111,300 90,679 90,266 89,896 84,614 91,287 88,822" 85,689 88,070 57 Korea 5,213 5,323 5,712 5,959 6,007 6,217 6,226 5,608 5,943 5,623 53 Philippines 1,876 1,344 1,247 1,230 1,261 1,445 1,478 1,452 1,506 1,647 54 Thailand 848 1,140 1,573 1,587 1,791 1,764 1,662 1,747 1,971 1,975 55 Middle East oil-exporting countries 6,213 10,149 10,749 8,966 12,0% 12,386 12,286 9,658 10,468 9,771 56 Other Asia 9,122 11,594 13,107 10,031 9,688 10,503 10,449 10,110 8,087 6,840 57 Africa 5,718 5,890 5,445 5,439 5,424 5,488 5,355 5,464 5,429 5,424 58 Egypt 507 502 380 384 314 304 304 305 315 324 59 Morocco 511 559 513 514 511 538 538 603 590 597 60 South Africa 1,681 1,628 1,525 1,517 1,518 1,628 1,627 1,641 1,626 1,627 61 Zaire 17 16 16 17 21 17 18 18 12 9 62 Oil-exporting countries 1,523 1,648 1,486 1,467 1,478 1,452 1,372 1,365 1,336 1,291 63 Other 1,479 1,537 1,525 1,539 1,582 1,547 1,497 1,533 1,550 1,576 64 Other countries 2,413 2,354 1,893 2,238 2,063 2,079 2,093 1,957 2,236 1,897 65 Australia 1,520 1,781 1,413 1,672 1,547 1,468 1,570 1,470 1,622 1,377 66 Mother 894 573 479 566 517 611 524 487 615 520 67 Nonmonetary international and regional organizations 2,071 3,862 4,793 2,542 33,,884444 2,501 2,715 2,701 4,081 1,728 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

Nonbank-Reported Data A61 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 1991 TTyyppee ooff ccllaaiimm 11998888 11998899 11999900 Jan. Feb. Mar. Apr. Mayr Juner July" 555555533333338888888,,,,,,,666666688888889999999 555555599999993333333,,,,,,,000000088888887777777 555555577777776666666,,,,,,,777777799999990000000 555555555555558888888,,,,,,,111111188888885555555 555555577777770000000,,,,,,,777777766666669999999 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 444444499999991111111,,,,,,,111111166666665555555 555555533333334444444,,,,,,,444444499999992222222 555555511111110000000,,,,,,,000000077777778888888 497,886 509,839 444444499999995555555,,,,,,,666666611111114444444 507,001 502,8% 555555500000004444444,,,,,,,777777799999992222222 4%,635 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 66666662222222,,,,,,,666666655555558888888 66666660000000,,,,,,,555555511111111111111 44444441111111,,,,,,,777777799999997777777 38,872 43,726 44444443333333,,,,,,,888888855555555555555 42,731 38,610 33333338888888,,,,,,,666666666666660000000 34,474 44 OOwwnn ffoorreeiiggnn ooffffiicceess 222222255555557777777,,,,,,,444444433333336666666 2222222%%%%%%%,,,,,,,000000011111111111111 333333300000003333333,,,,,,,000000055555554444444 300,514 306,122 2222222%%%%%%%,,,,,,,888888899999995555555 303,046 298,546 333333300000005555555,,,,,,,999999955555558888888 305,679 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111122222229999999,,,,,,,444444422222225555555 111111133333334444444,,,,,,,888888888888885555555 111111111111117777777,,,,,,,777777799999999999999 116,664 116,509 111111111111110000000,,,,,,,444444499999997777777 112,541 117,785 111111111111115555555,,,,,,,555555544444449999999 114,802 66 DDeeppoossiittss 66666665555555,,,,,,,888888899999998888888 77777778888888,,,,,,,111111188888885555555 66666665555555,,,,,,,222222211111111111111 68,564 69,039 66666663333333,,,,,,,000000022222221111111 64,642 68,838 66666668888888,,,,,,,444444477777770000000 68,326 77 OOtthheerr 66666663333333,,,,,,,555555522222227777777 55555556666666,,,,,,,777777700000000000000 55555552222222,,,,,,,555555588888888888888 48,100 47,470 44444447777777,,,,,,,444444477777776666666 47,899 48,947 44444447777777,,,,,,,000000077777779999999 46,476 88 AAllll ootthheerr ffoorreeiiggnneerrss 44444441111111,,,,,,,666666644444446666666 44444443333333,,,,,,,000000088888885555555 44444447777777,,,,,,,444444422222228888888 41,835 43,483 44444444444444,,,,,,,333333366666668888888 48,684 47,955 44444444444444,,,,,,,666666622222226666666 41,680 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss33...... 44444447777777,,,,,,,555555522222224444444 55555558888888,,,,,,,555555599999994444444 66666666666666,,,,,,,777777711111112222222 66666662222222,,,,,,,555555577777771111111 66666665555555,,,,,,,999999977777776666666 8888888,,,,,,,222222288888889999999 11111113333333,,,,,,,000000011111119999999 11111114444444,,,,,,,333333377777775555555 11111117777777,,,,,,,000000044444444444444 11111119999999,,,,,,,666666633333338888888 11 Negotiable and readily transferable 22222225555555,,,,,,,777777700000000000000 33333330000000,,,,,,,999999988888883333333 44444442222222,,,,,,,000000033333330000000 33333334444444,,,,,,,555555533333333333333 33333335555555,,,,,,,333333388888885555555 12 Outstanding collections and other 11111113333333,,,,,,,555555533333335555555 11111114444444,,,,,,,555555599999992222222 11111110000000,,,,,,,333333300000008888888 11111110000000,,,,,,,999999999999994444444 11111110000000,,,,,,,999999955555553333333 13 MEMO: Customer liability on 11111119999999,,,,,,,5555555%%%%%%% 11111112222222,,,,,,,888888899999999999999 11111113333333,,,,,,,666666655555559999999 11111111111111,,,,,,,777777766666666666666 11111110000000,,,,,,,444444499999999999999 DDoollllaarr ddeeppoossiittss iinn bbaannkkss aabbrrooaadd,, rreeppoorrtteedd bbyy nnoonnbbaannkkiinngg bbuussiinneessss eenntteerrpprriisseess iinn tthhee UUnniitteedd SSttaatteess 45,360 45,509 43,645 46,776 42,264 41,751 42,656r 40,057 36,051 n.a. 1. Data for banks' own claims are given on a monthly basis, but the data for parent foreign bank. claims of banks' own domestic customers are available on a quarterly basis only. 3. Assets owned by customers of the reporting bank located in the United Reporting banks include all kinds of depository institutions besides commercial States that represent claims on foreigners held by reporting banks for the account banks, as well as some brokers and dealers. of their domestic customers. 2. U.S. banks: includes amounts due from own foreign branches and foreign 4. Principally negotiable time certificates of deposit and bankers acceptances. subsidiaries consolidated in "Consolidated Report of Condition" filed with bank 5. Includes demand and time deposits and negotiable and nonnegotiable regulatory agencies. Agencies, branches, and majority-owned subsidiaries of certificates of deposit denominated in U.S. dollars issued by banks abroad. For foreign banks: principally amounts due from head office or parent foreign bank, description of changes in data reported by nonbanks, see July 1979 Bulletin, and foreign branches, agencies, or wholly owned subsidiaries of head office or p. 550. 3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1990 Maturity, by borrower and area 1988 Sept. Dec. Mar. 1 Total 233,184 238,123 213,258 206,995 198,820 By borrower 2 Maturity of one year or less2... 163,997 172,634 178,346 166,040 165,732 157,799 3 Foreign public borrowers 25,889 26,562 23,916 21,670 19,283 21,172 4 All other foreigners 138,108 146,071 154,430 144,369 146,450 136,626 5 Maturity over one year2 71,133 60,550 59,776 47,218 41,263 41,021 6 Foreign public borrowers 38,625 35,291 36,014 26,354 22,393 22,377 7 All other foreigners 32,507 25,259 23,762 20,864 18,870 18,644 By area Maturity of one year or less 8 Europe 59,027 55,909 53,913 51,125 49,169 49,521 9 Canada 5,680 6,282 5,910 5,499 5,439 5,8% 10 Latin America and Caribbean 56,535 57,991 53,003 44,010 49,674 42,597 11 Asia 35,919 46,224 57,755 56,123 53,138 53,848 12 Africa 2,833 3,337 3,225 2,954 3,040 3,016 13 All other3 4,003 2,891 4,541 6,330 5,273 2,919 Maturity of over one year 14 Europe 6,6% 4,666 4,121 4,424 3,869 4,326 15 Canada 2,661 1,922 2,353 3,033 3,291 3,387 16 Latin America and Caribbean 53,817 47,547 45,816 31,284 25,964 24,950 17 Asia 3,830 3,613 4,172 5,664 5,204 5,424 18 Africa 1,747 2,301 2,630 2,546 2,374 2,417 19 All other3 2,381 501 684 266 561 517 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

A62 International Statistics • November 1991 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks1-2 Billions of dollars, end of period 1989 1990 1991 AArreeaa oorr ccoouunnttrryy 11998877 11998888 June Sept. Dec. Mar. June Sept. Dec. Mar. Junep 1 Total 382.4 346.3 340.0 346.5 338.8 333.4 321.4 331.6 316.5 324.0" 319.7 2 G-10 countries and Switzerland 159.7 152.7 145.1 146.4 152.9 146.4 139.3 144.3 132.lr 129.6" 129.7 3 Belgium-Luxembourg 10.0 9.0 7.8 6.9 6.3 6.6 6.2 6.5 5.9 6.2" 6.1 4 France 13.7 10.5 10.8 11.1 11.7 10.4 10.2 11.1 10.4r 9.7 10.5 5 Germany 12.6 10.3 10.6 10.4 10.5 11.2 11.2 11.1 10.6 8.8" 8.1 6 Italy 7.5 6.8 6.1 6.8 7.4 5.9 5.4 4.4 5.0 4.0 3.6 7 Netherlands 4.1 2.7 2.8 2.4 3.1 3.1 2.7 3.8 3.0 3.3 3.3 8 Sweden 2.1 1.8 1.8 2.0 2.0 2.1 2.3 2.3 2.2r 2.1" 2.4 9 Switzerland 5.6 5.4 5.4 6.1 7.1 6.2 6.3 5.6 4.4 3.7" 3.3 10 United Kingdom 68.8 66.2 64.5 63.7 67.2 63.9 59.8 62.5 60.8r 62.0 59.8 11 Canada 5.5 5.0 5.1 5.9 5.4 4.7 5.1 5.1 5.9 6.7 8.2 12 Japan 29.8 34.9 30.2 31.0 32.2 32.2 30.1 32.0 24.0" 23.2" 24.6 13 Other developed countries 26.4 21.0 21.2 21.0 20.7 23.0 22.4 23.1 22.6 23.1 21.2 14 Austria 1.9 1.5 1.7 1.5 1.5 1.5 1.5 1.6 1.4 1.4 1.1 15 Denmark 1 1.7 1.1 1.4 1.1 1.1 1.2 1.1 1.1 1.1 .9 1.2 16 Finland 1.2 1.1 1.0 1.1 1.0 1.1 .9 .8 .7 1.0 .8 17 Greece 2.0 1.8 2.3 2.4 2.5 2.6 2.7 2.8 2.7 2.5 2.4 18 Norway 2.2 1.8 1.8 1.4 1.4 1.7 1.4 1.6 1.6 1.5 1.5 19 Portugal .6 .4 .6 .4 .4 .4 .8 .6 .6 .6 .6 20 Spain 8.0 6.2 6.2 6.9 7.1 8.2 7.8 8.4 8.3 9.0 7.0 21 Turkey 2.0 1.5 1.1 1.2 1.2 1.3 1.4 1.6 1.7 1.7 1.9 22 Other Western Europe 1.6 1.3 1.1 1.0 .7 1.0 1.1 .7 .9 .8 1.0 23 South Africa 2.9 2.4 2.1 2.1 2.0 2.0 1.9 1.9 1.8 1.8 1.8 24 Australia 2.4 1.8 1.9 2.1 1.6 2.1 1.8 2.0 1.8 1.9 2.0 25 OPEC countries3 17.4 16.6 16.1 16.2 17.1 15.5 15.3 14.4 12.8 17.1" 13.7 26 Ecuador 1.9 1.7 1.5 1.5 1.3 1.2 1.1 1.1 1.0 .9 .9 27 Venezuela 8.1 7.9 7.5 7.4 7.0 6.1 6.0 6.0 5.0 5.1 5.0 28 Indonesia 1.9 1.7 1.9 2.0 2.0 2.1 2.0 2.3 2.7 2.8 2.6 29 Middle East countries 3.6 3.4 3.4 3.5 5.0 4.3 4.4 3.3 2.5 6.6" 3.7 30 African countries 1.9 1.9 1.6 1.9 1.7 1.8 1.8 1.7 1.7 1.6" 1.5 31 Non-OPEC developing countries 97.8 85.3 83.4 81.2 77.5 68.8 66.7 67.1 65.3 66.3" 65.0 Latin America 32 Argentina 9.5 9.0 7.9 7.6 6.3 5.6 5.2 5.0 4.9 4.7 4.6 33 Brazil 24.7 22.4 22.1 20.9 19.0 17.5 16.7 15.4 14.4 13.9" 11.6 34 Chile 6.9 5.6 5.2 4.9 4.6 4.3 3.7 3.6 3.5 3.6 3.6 35 Colombia 2.0 2.1 1.7 1.6 1.8 1.8 1.7 1.8 1.8 1.7 1.6 36 Mexico 23.5 18.8 17.7 17.2 17.7 12.8 12.6 12.8 13.0 13.7" 14.3 37 Peru 1.1 .8 .6 .6 .6 .5 .5 .5 .5 .5 .5 38 Other Latin America 2.8 2.6 2.6 2.9 2.8 2.8 2.3 2.4 2.3 2.2" 2.1 Asia China 39 Mainland .3 .3 .3 .3 .3 .3 .2 .2 .2 .4 .6 40 Taiwan 8.2 3.7 5.2 5.0 4.5 3.8 3.6 4.0 3.5 3.6 4.1 41 India 1.9 2.1 2.4 2.7 3.1 3.5 3.6 3.6 3.3 3.5 3.0 42 Israel 1.0 1.2 .8 .7 .7 .6 .7 .6 .5 .5 .5 43 Korea (South) 5.0 6.1 6.6 6.5 5.9 5.3 5.6 6.2 6.1 6.7 6.9 44 Malaysia 1.5 1.6 1.6 1.7 1.7 1.8 1.8 1.8 1.9 2.0 2.1 45 Philippines 5.2 4.5 4.4 4.0 4.1 3.7 3.9 3.9 3.8 3.7 3.6 46 Thailand .7 1.1 1.0 1.3 1.3 1.1 1.3 1.5 1.5 1.6 1.7 47 Other Asia .7 .9 .8 1.0 1.0 1.2 1.1 1.6 1.7 2.1 2.3 Africa 48 Egypt .6 .4 .6 .5 .4 .4 .5 .4 .4 .4 .4 49 Morocco .9 .9 .9 .8 .9 .9 .9 .9 .8 .8 50 Zaire .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa4 1.3 1.1 1.1 1.0 1.0 .9 .8 .8 1.0 .8 52 Eastern Europe 3.2 3.6 3.4 3.5 3.5 3.3 2.9 2.7 2.3 2.1" 2.1 53 U.S.S.R .3 .7 .6 .8 .7 .8 .4 .4 .2 .3 54 Yugoslavia 1.8 1.8 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 1.3 1.2 1.1 1.1 .9 .8" 56 Offshore banking centers 54.5 44.2 43.2 49.2 36.6 42.9 40.0 41.8 41.2r 49.0" 48.3 57 Bahamas 17.3 11.0 11.0 11.4 5.5 9.2 8.5 8.9 2.8 8.7 58 Bermuda .6 .9 .7 1.3 1.7 .9 2.2 4.0 4.3 4.1 59 Cayman Islands and other British West Indies 13.5 12.9 10.8 15.3 9.0 10.9 8.5 9.0 10.4 13.1" 15.1 60 Netherlands Antilles 1.2 1.0 1.0 1.1 2.3 2.6 2.3 2.2 7.9 1.1 1.3 61 Panama 3.7 2.5 1.9 1.5 1.4 1.3 1.4 1.5 1.4 1.4" 1.3 62 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 63 Hong Kong 11.2 9.6 10.4 10.7 9.7 9.8 10.0 8.7 7.7r 11.5" 12.3 64 Singapore 7.0 6.1 7.3 7.8 7.0 8.0 7.0 7.5 6.6r 8.9" 65 Others6 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated7 23.2 22.6 27.4 28.7 30.3 33.3 34.5 38.1 39.8r 36.6" 39.4 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

Nonbank-Reported Data A63 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1989 1990 1991 Type and area or country 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 39,573* 2 Payable in dollars 22,785 27,335 33,211 33,211 33,705 34,595 38,744 37,406 35,561r 3 Payable in foreign currencies 5,517 5,617 4,805 4,805 4,371 4,496 5,140 4,382 4,012 4 5 B F y in P a t a y n y p c a e i b a l l e l i i a n b i d l o it l i l e a s r s 1 8 2 , , 6 4 4 2 3 4 1 14 0 , , 5 6 0 0 7 8 1 1 7 3 , , 6 8 9 3 0 0 1 1 7 3 , , 6 8 9 3 0 0 1 1 7 3 , , 1 8 3 4 4 1 1 1 8 5 , , 7 3 1 3 5 6 1 15 9 , , 7 6 6 1 6 6 1 1 7 4 , , 5 3 3 0 8 6 1 1 4 6 , , 0 7 1 0 6 3 r r 6 Payable in foreign currencies 3,781 3,900 3,860 3,860 3,292 3,380 3,850 3,232 2,687 1 7 8 9 0 Co T A P m r a d m a y v d a e a e b r n c l c p e i e a a i l y n r a e l i b d c a l o e b e i l i s p l l a i t t r s i s e a s n d other liabilities .. 1 1 7 8 5 4 , , , , 3 5 8 1 0 7 7 4 5 3 8 2 1 1 1 6 8 1 6 , , , , 5 4 9 7 0 4 2 4 5 5 7 0 2 1 1 7 0 2 9 , , , , 3 6 7 3 2 2 0 8 7 6 1 1 2 1 1 0 7 2 9 , , , , 3 6 7 3 2 2 0 8 7 6 1 1 2 1 1 7 0 9 3 , , , , 9 4 8 4 4 7 6 7 2 1 4 1 2 1 1 6 0 9 3 , , , , 3 9 2 4 7 6 6 0 6 8 0 9 2 2 1 1 4 2 0 4 , , , , 2 9 0 1 6 7 8 8 8 8 1 8 2 2 1 1 4 3 0 4 , , , , 2 1 0 2 5 0 0 4 1 0 7 3 2 2 1 8 2 1 4 , , , , 8 2 5 6 7 2 4 4 0 6 4 6 r r r r 11 Payable in foreign currencies 1,737 1,717 945 945 1,078 1,117 1,291 1,150 1,325 By area or country 12 Fin E a u n r c o i p al e liabilities 8,320 9,962 11,615 11,615 11,094 11,759 11,216 9,641 9,144r 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 866 880 944 944 900 932 945 973 948 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 5,547 19 Canada 360 388 601 601 343 297 301 215 272r 20 Latin America and Caribbean 2 2 1 2 B B a e h rm am ud a a s 1,1 3 8 1 9 8 8 1 3 8 9 4 1,2 1 6 5 8 7 1,2 1 6 5 8 7 1,8 2 1 7 5 2 2,5 2 7 4 3 9 3,3 3 9 6 4 8 3,2 3 3 4 9 4 3,5 4 0 5 9 6 * r 23 Brazil 0 0 17 17 2 0 0 0 0 24 British West Indies 25 0 0 0 0 0 0 0 0 25 Mexico 778 645 635 635 1,061 1,782 2,409 2,274 2,483r 26 Venezuela 13 1 6 6 5 4 4 5 6 0 0 0 0 0 0 0 4 4 27 Asia 28 Japan 2,451 3,312 4,104 4,104 3,775 4,027 4,223 4,032 3,774 29 Middle East oil-exporting countries . 22,,004422 2,563 3,252 3,252 2,737 2,824 3,088 2,853 2,701 88 3 2 2 3 5 4 5 1 30 Africa . 4 2 2 2 3 3 2 2 2 31 Oil-exporting countries3 1 0 0 0 0 1 0 0 0 100 4 100 100 103 55 479 409 2 32 All other4 Commercial liabilities 5,516 7,319 8,952 8,952 9,198 8,560 9,834 10,292 9,605r 33 Europe 132 158 179 179 233 297 248 285 261r 34 Belgium-Luxembourg 426 455 878 878 888 1,049 1,263 1,260 1,209 35 France 909 1,699 1,393 1,393 1,174 990 1,052 1,264 1,380* 36 Germany 423 587 699 699 688 608 701 840 715 37 Netherlands 559 417 641 641 604 628 728 759 656* 38 Switzerland 1,599 2,079 2,620 2,620 2,926 2,439 2,777 2,791 2,734r 39 United Kingdom 40 Canada 1,301 1,217 1,124 1,124 1,151 1,179 1,263 1,246 1,230* 41 Latin America and Caribbean 864 1,090 1,187 1,187 1,304 1,279 1,555 1,598 l,544r 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 95 100 100 116 106 126 137 214* 4 4 5 6 M Br e it x i i s c h o West Indies 18 1 9 9 21 3 7 4 30 2 4 7 30 2 4 7 24 1 1 8 28 2 5 9 5 4 0 2 6 42 3 1 0 30 3 4 5 r 47 Venezuela 162 114 154 154 85 119 120 121 109* 48 Asia 6,565 6,915 7,193 7,193 7,019 7,084 8,892 8,928 8,235r 49 Japan 2,578 3,094 2,917 2,917 2,748 3,189 3,283 3,606 3,467 50 Middle East oil-exporting countries ' 1,964 1,385 1,401 1,401 1,393 1,125 2,321 1,701 1,263 51 Africa . 574 576 844 844 753 885 1,315 789 650* 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

A64 International Statistics • November 1991 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1989 1990 1991 Type, and area or country 11998877 11998888 11998899 Dec. Mar. June Sept. Dec. Mar. 1 Total 30,964 34,035 31,542 31,542 29,956 31,716 31,086 33,487 34,833" 2 Payable in dollars 28,502 31,654 29,209 29,209 27,802 29,398 28,691 31,038 32,609" 3 Payable in foreign currencies 2,462 2,381 2,334 2,334 2,154 2,318 2,395 2,449 2,223r By type 4 Financial claims 20,363 21,869 17,721 17,721 16,622 18,079 16,638 18,109 18,420" 5 Deposits 14,894 15,643 10,400 10,400 10,461 9,885 10,301 11,473 ll,347r 6 Payable in dollars 13,765 14,544 9,473 9,473 9,583 8,815 9,107 10,504 10,432 7 Payable in foreign currencies 1,128 1,099 927 927 878 1,070 1,193 969 915" 8 Other financial claims 5,470 6,226 7,322 7,322 6,161 8,194 6,338 6,636 7,073r 9 Payable in dollars 4,656 5,450 6,568 6,568 5,471 7,460 5,685 5,769 6,357r 10 Payable in foreign currencies 814 777 754 754 690 733 652 866 716 11 Commercial claims 10,600 12,166 13,821 13,821 13,334 13,637 14,448 15,378 16,413r 12 Trade receivables 9,535 11,091 12,203 12,203 11,704 11,909 12,653 13,430 14,350" 13 Advance payments and other claims .. 1,065 1,075 1,618 1,618 1,630 1,728 1,795 1,948 2,063r 14 Payable in dollars 10,081 11,660 13,168 13,168 12,748 13,123 13,898 14,764 15,820" 15 Payable in foreign currencies 519 505 653 653 586 514 549 613 593" By area or country Financial claims 16 Europe 9,531 10,279 7,044 7,044 6,982 9,619 7,989 8,005 9,462 17 Belgium-Luxembourg 7 18 28 28 22 126 27 76 86 18 France 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 21 Switzerland 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 5,881" 25 Bahamas 1,994 1,846 1,516 1,516 1,662 992 977 1,261 1,640 26 Bermuda 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 3,738" 29 Mexico 172 151 94 94 152 153 158 160 179" 30 Venezuela 19 21 20 20 21 20 23 25 28 31 Asia 879 844 847 847 806 843 771 1,213 919 32 Japan 605 574 456 456 459 486 472 875 592 33 Middle East oil-exporting countries2 8 5 8 8 7 6 9 8 11 34 Africa . 65 106 140 140 67 62 49 37 62 7 10 12 12 11 8 7 0 3 35 Oil-exporting countries 36 All other4 33 155 195 195 25 41 179 215 262 Commercial claims 4,180 5,181 6,194 6,194 6,046 6,082 6,502 7,094 7,035" 37 Europe 178 189 242 242 220 209 189 211 221 38 Belgium-Luxembourg 650 672 963 963 964 924 1,206 1,302 1,267" 39 France 562 669 696 696 702 669 638 800 859" 40 Germany 133 212 479 479 453 479 492 552 609 41 Netherlands 185 344 305 305 270 235 301 299 323 42 Switzerland 1,073 1,324 1,572 1,572 1,689 1,583 1,674 1,794 1,654" 43 United Kingdom 44 Canada 936 983 1,079 1,079 1,148 1,147 1,148 1,050 1,194" 45 Latin America and Caribbean 1,930 2,241 2,178 2,178 2,063 2,207 2,399 2,320 2,304" 46 Bahamas 19 36 57 57 22 17 25 14 15 47 Bermuda 170 230 323 323 243 284 340 246 232 48 Brazil 226 299 293 293 232 235 253 323 308" 49 British West Indies 26 22 36 36 38 47 35 40 49 50 Mexico 368 461 510 510 526 582 651 646 656 51 Venezuela 283 227 147 147 189 224 225 190 190 52 Asia 2,915 2,993 3,560 3,560 3,279 3,446 3,594 4,032 5,017" 53 Japan 1,158 946 1,197 1,197 1,074 1,097 1,221 1,418 2,458 54 Middle East oil-exporting countries2 450 453 518 518 434 417 408 459 548 55 Africa . 401 435 419 419 425 390 373 488 390 56 Oil-exporting countries 144 122 108 108 89 97 72 67 68 57 All other4 238 333 392 392 372 365 432 395 473" 1. For a description of the changes in the International Statistics tables, see 3. Comprises Algeria, Gabon, Libya, and Nigeria. July 1979 Bulletin, p. 550. 4. Includes nonmonetary international and regional organizations. 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Holdings and Transactions A65 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1991 1991 Transactions, and area or country 1989 1990 Jan.- Jan. Feb. Mar. Apr. May Juner JulyP July U.S. corporate securities STOCKS 1 Foreign purchases 214,061 173,231 127,286 10,259 21,691 21,763 20,569 19,218" 17,342 16,444 204,114 188,373 115,779 11,056 20,615 19,393 17,440 15,886" 16,098 15,291 2 Foreign sales 9,946 -15,142 11,507 -797 1,076 2,370 3,129 3,332 1,244 1,153 3 Net purchases, or sales (-) 10,180 -15,213 11,250 -798 1,020 2,369 3,051 3,278" 1,200 1,130 4 Foreign countries 481 -8,498 2,580 -600 -1,245 846 1,639 1,218 719 3 5 Europe -708 -1,234 270 -24 27 100 -45 83 170 -41 6 France -830 -368 -238 -114 -204 0 13 24 49 -7 7 Germany 79 -398 40 -142 -104 119 30 25 64 49 8 Netherlands -3,277 -2,867 420 -222 -943 357 552 290 346 41 9 Switzerland 3,691 -2,992 1,056 -83 27 121 686 585" -147 -133 10 United Kingdom -881 892 2,143 25 469 284 111 712 383 159 11 Canada 3,042 -1,333 1,975 233 937 3 120 240 285 157 12 Latin America and Caribbean . 3,531 -2,435 203 -279 675 -30 -182 207 -460 272 13 Middle East' 3,577 -3,477 3,732 -1% 432 1,223 1,236 829" 99 110 14 Other Asia 3,330 -2,891 1,254 -271 -366 -2 1,163 669 76 -15 15 Japan 131 -63 115 33 31 16 0 21 9 6 16 Africa 299 -298 502 -13 -279 28 128 51 165 423 17 Other countries 18 Nonmonetary international and regional organizations -234 71 257 2 56 1 78 55 44 23 BONDS2 120,550 118,755 78,823 8,859 8,468 14,802 10,291 14,323 12,316 9,763 19 Foreign purchases 87,376 101,703 65,479 8,575 9,269 10,608 9,083" 11,645" 8,626 7,673 20 Foreign sales 33,174 17,052 13,344 284 -801 4,194 1,207" 2,678" 3,691 2,090 21 Net purchases, or sales (-) ... 32,821 17,523 13,386 103 -723 4,093 1,307" 2,736" 3,752 2,117 22 Foreign countries 19,064 10,3% 7,848 -130 -1,065 3,271 1,189" 1,667" 2,141 776 23 Europe 372 373 607 31 68 392 34 86 2 -5 24 France -238 -377 627 -54 78 238 114 400 -120 -29 25 Germany 850 172 190 47 1 20 84 21 45 -28 26 Netherlands -511 284 878 360 -217 318 -56 162 318 -7 27 Switzerland 18,123 10,703 4,692 -102 -885 1,633 789" 8%" 1,784 577 28 United Kingdom 1,116 1,906 1,342 71 106 385 247 374 127 34 29 Canada 3,686 4,289 1,653 -17 439 351 188 -142 524 309 30 Latin America and Caribbean . -182 76 638 69 -2 -13 -25 20 160 430 31 Middle East' 9,025 1,104 1,975 131 -209 81 -301 831 898 544 32 Other Asia 6,292 747 1,525 308 -214 162 -240 544 685 280 3 3 3 4 Af J r a ic p a a n 5 5 6 7 -34 % 4 -8 1 9 8 -1 -5 5 - 1 2 0 1 7 0 8 3 -2 1 3 0 -% -1 - 2 1 5 35 Other countries 36 Nonmonetary international and regional organizations 353 -471 -42 181 -78 102 -100 -58 -62 -27 Foreign securities 37 Stocks, net purchases, or sales (-)3 -13,120 -8,952 -19,384 -404 -3,177 -3,305 -2,540 -3,312 -3,595 -3,051 38 Foreign purchases 109,792 122,600 64,430 6,230 10,561 11,095 7,942 8,558 9,973 10,071 39 Foreign sales3 122,912 131,552 83,814 6,634 13,738 14,400 10,482 11,871 13,568 13,122 40 Bonds, net purchases, or sales (-) -5,943 -22,322 -7,734 -173 -1,945 -991 -254" -1,987 -1,547 -837 41 Foreign purchases 234,320 314,466 187,868 27,138 37,202 40,161 20,779" 20,642 19,916 22,030 42 Foreign sales 240,263 336,788 195,601 27,312 39,146 41,152 21,033" 22,629 21,462 22,867 43 Net purchases, or sales (-), of stocks and bonds -19,063 -31,273 -27,117 -577 -5,122 -4,296 -2,793" -5,299 -5,141 -3,888 44 Foreign countries -19,101 -28,600 -26,059 -538 -5,166 -2,845 -2,917" -4,770 -5,422 -4,402 45 Europe -17,721 -7,999 -12,687 328 -3,139 -340 348" -1,918 -3,033 -4,932 4 4 4 4 5 6 7 8 9 0 L A A C O a a s f th t r i n i a i e n a c r d a A a c o m u e n r t i r c i a e s a nd Caribbean -4 2 - , , 2 1 5 4 5 8 3 9 2 1 0 2 3 6 - - - 3 7 8 - - , , , 1 1 8 5 9 7 3 2 0 5 9 7 4 2 9 - - 7 5 - - , , 1 7 3 3 1 2 1 4 3 4 2 8 3 7 7 - - 7 5 3 1 7 7 2 5 1 8 3 2 1 3 -1 - , 7 7 2 3 9 9 1 3 1 7 3 8 0 4 -2 - , 1 4 1 3 9 1 0 4 2 3 4 -2 - , 9 2 - 8 9 4 1 7 0 8 0 " -1 - - - , 1 1 9 6 5 0 4 5 9 1 3 2 4 - - 1 1 - , , 1 1 0 -2 9 7 1 1 6 8 2 1 9 2 1 4 3 7 7 8 0 3 5 4 51 Nonmonetary international and regional organizations 38 -2,673 -1,058 -39 44 -1,451 123 -529 280 514 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

A66 International Statistics • November 1991 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1991 1991 Country or area 1989 1990 J J a u n ly .- Jan. Feb. Mar. Apr. May Juner July? Transactions, net purchases or sales (-) during period1 1 Estimated total2 54,203 19,687 14,769 3,144 12,922 -15,574 2,891r 16,415 -5,740 711 2 Foreign countries2 52,301 19,524 15,530 4,776 11,462 -14,755 2,583 16,398 -5,317 383 3 Europe2 36,286 19,065 577 3,356 2,933 -4,535 -1,358 5,513 -4,229 -1,103 4 Belgium-Luxembourg 1,048 10 441 260 149 115 37 121 -81 -159 5 Germany 7,904 5,829 -5,464 -542 -1,691 -3,340 -549 1,433 -1,458 684 6 Netherlands -1,141 1,077 -2,534 300 -85 -607 -292 -61 -794 -994 7 Sweden 693 1,152 -980 -661 43 -244 -410 560 31 -299 8 Switzerland 1,098 112 375 170 139 470 -622 230 207 -218 9 United Kingdom 20,198 -1,338 3,600 2,829 -54 513 260 1,699 -1,249 -398 10 Other Western Europe 6,508 12,202 5,131 995 4,432 -1,442 214 1,534 -886 284 11 Eastern Europe -21 13 8 6 0 0 5 -3 3 -3 12 Canada 698 -4,614 404 -795 -171 182 566 342 -114 395 13 Latin America and Caribbean 464 14,980 15,812 -4,984 2,802 121 5,561 10,481 161 1,669 14 Venezuela 311 33 -117 -153 -1 6 2 2 20 7 15 Other Latin America and Caribbean -322 4,190 10,598 -426 1,593 765 2,969 5,687 -233 242 16 Netherlands Antilles 475 10,757 5,331 -4,405 1,210 -650 2,590 4,793 374 1,420 17 13,297 -11,062 -983 7,019 5,517 -9,984 -2,179 12 -879 -489 18 Japan 1,681 -14,895 -4,058 2,244 1,915 -7,016 -3,379 711 1,422 45 19 116 313 316 78 110 0 16 1 104 7 20 All other 1,439 842 -597 102 269 -540 -22 48 -358 -96 21 Nonmonetary international and regional organizations 1,902 163 -761 -1,633 1,461 -819 308r 17 -423 328 22 International 1,473 287 -1,004 -1,571 1,104 -845 100r 42 -12 178 23 Latin America regional 231 -2 139 -202 156 5 225 -186 -9 150 Memo 24 Foreign countries 52,301 19,524 15,530 4,776 11,462 -14,755 2,583 16,398 -5,317 383 25 Official institutions 26,840 23,169 -5,774 2,707 7,009 -12,000 886r 2,020r -5,695 -701 26 Other foreign2 25,461 -3,645 21,304 2,069 4,453 -2,755 l,698r 14,377r 378 1,084 Oil-exporting countries 27 Middle East3 8,148 -387 -2,541 523 644 -1,485 -513 -562 -505 -643 28 Africa4 -1 0 20 0 21 -6 5 0 0 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

Interest and Exchange Rates A67 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per year Rate on Sept. 30, 1991 Rate on Sept. 30, 1991 Rate on Sept. 30, 1991 Country Country Country Percent Month Month Month effective effective effective Austria.. 7.5 Aug. 1991 France 9.0 Mar. 1990 Norway 10.50 July 1990 Belgium . 8.0 Aug. 1991 Germany, Fed. Rep. of 7.5 Aug. 1991 Switzerland 7.0 Aug. 1991 Canada.. 8.59 Sept. 1991 Italy 11.5 May 1991 United Kingdom2 Denmark 9.0 May 1991 Japan 5.5 July 1991 Netherlands 8.0 Aug. 1991 1. As of the end of February 1981, the rate is that at which the Bank of France or makes advances against eligible commercial paper and/or government comdiscounts Treasury bills for 7 to 10 days. mercial banks or brokers. For countries with more than one rate applicable to 2. Minimum lending rate suspended as of Aug. 20, 1981. such discounts or advances, the rate shown is the one at which it is understood the NOTE. Rates shown are mainly those at which the central bank either discounts central bank transacts the largest proportion of its credit operations. 3.27 FOREIGN SHORT-TERM INTEREST RATES Averages of daily figures, percent per year 1991 CCoouunnttrryy,, oorr ttyyppee 11998888 11998899 11999900 Mar. Apr. May June July Aug. Sept. 1 Eurodollars 7.85 9.16 8.16 6.44 6.11 5.94 6.08 6.01 5.65 5.50 2 United Kingdom 10.28 13.87 14.73 12.33 11.90 11.48 11.21 11.04 10.85 10.24 3 Canada 9.63 12.20 13.00 9.97 9.67 9.12 8.83 8.78 8.73 8.59 4 Germany 4.28 7.04 8.41 8.99 9.08 8.98 8.95 9.06 9.23 9.16 5 Switzerland 2.94 6.83 8.71 8.17 8.26 8.10 7.89 7.74 7.80 7.90 6 Netherlands 4.72 7.28 8.57 9.04 9.11 9.05 9.08 9.09 9.27 9.21 7 France 7.80 9.27 10.20 9.34 9.21 9.13 9.59 9.46 9.46 9.30 8 Italy 11.04 12.44 12.11 12.52 11.90 11.46 11.48 11.74 11.86 11.63 9 Belgium 6.69 8.65 9.70 9.28 9.20 9.00 9.08 9.12 9.25 9.02 10 Japan 4.43 5.39 7.75 8.09 7.96 7.82 7.79 7.56 7.31 6.70 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

A68 International Statistics • November 1991 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar 1991 Country/currency 11998888 11998899 11999900 Apr. May June July Aug. Sept. 1 Australia/dollar2 78.409 79.186 78.069 77.947 77.427 75.982 77.156 78.235 79.369 2 Austria/schilling 12.357 13.236 11.331 11.977 12.104 12.538 12.562 12.267 11.910 3 Belgium/franc 36.785 39.409 33.424 35.017 35.363 36.689 36.751 35.890 34.878 4 Canada/dollar 1.2306 1.1842 1.1668 1.1535 1.1499 1.1439 1.1493 1.1452 1.1370 5 China, P.R./yuan 3.7314 3.7673 4.7921 5.2767 5.3257 5.3667 5.3693 5.3725 5.3869 6 Denmark/krone 6.7412 7.3210 6.1899 6.5163 6.5793 6.8634 6.9030 6.7396 6.5367 7 Finland/markka 4.1933 4.2963 3.8300 3.9925 4.0431 4.2189 4.3295 4.2325 4.1241 8 France/franc 5.9595 6.3802 5.4467 5.7540 5.8282 6.0483 6.0596 5.9244 5.7621 9 Germany/deutsche mark 1.7570 1.8808 1.6166 1.7027 1.7199 1.7828 1.7852 1.7435 1.6933 10 Greece/drachma 142.00 162.60 158.59 184.76 188.14 195.03 195.46 192.69 188.07 11 Hong Kong/dollar 7.8072 7.8008 7.7899 7.7939 7.7798 7.7341 7.7610 7.7646 7.7524 12 India/rupee 13.900 16.213 17.492 19.906 20.519 21.062 25.613 25.846 25.834 13 Ireland/punt2 152.49 141.80 165.76 157.12 155.68 142.66 136.48 153.38 157.87 14 Italy/lira 1,302.39 1,372.28 1,198.27 1,261.57 1,275.67 1,325.09 1,329.55 1,303.31 1,266.25 15 Japan/yen 128.17 138.07 145.00 137.11 138.22 139.75 137.83 136.82 134.30 16 Malay sia/ringgit 2.6190 2.7079 2.7057 2.7498 2.7573 2.7810 2.7868 2.7806 2.7577 17 Netherlands/guilder 1.9778 2.1219 1.8215 1.9186 1.9379 2.0085 2.0114 1.9650 1.9084 18 New Zealand/dollar2 ... 65.560 59.561 59.619 58.909 58.647 57.645 56.681 57.353 57.989 19 Norway/krone 6.5243 6.9131 6.2541 6.6198 6.6953 6.9542 6.9627 6.8118 6.6266 20 Portugal/escudo 144.27 157.53 142.70 148.00 149.59 156.37 154.20 149.72 145.64 21 Singapore/dollar 2.0133 1.9511 1.8134 1.7688 1.7688 1.7782 1.7555 1.7269 1.7002 22 South Africa/rand 2.2770 2.6214 2.5885 2.7325 2.7975 2.8625 2.8819 2.8704 2.8316 23 South Korea/won 734.52 674.29 710.64 728.36 727.99 727.97 731.76 733.90 744.18 24 Spain/peseta 116.53 118.44 101.96 105.08 106.45 111.18 111.81 108.92 106.28 25 Sri Lanka/rupee 31.820 35.947 40.078 40.836 40.988 41.211 41.213 41.723 41.935 26 Sweden/krona 6.1370 6.4559 5.9231 6.1145 6.1578 6.4235 6.4609 6.3311 6.1652 27 Switzerland/franc 1.4643 1.6369 1.3901 1.4399 1.4574 1.5297 1.5481 1.5201 1.4803 28 Taiwan/dollar 28.636 26.407 26.918 27.333 27.282 27.166 26.982 26.730 26.559 29 Thailand/baht . 25.312 25.725 25.609 25.578 25.645 25.766 25.745 25.720 25.617 30 United Kingdom/pound2 178.13 163.82 178.41 174.97 172.38 164.97 165.13 168.41 172.65 MEMO 31 United States/dollar3 ... 92.72 98.60 89.09 91.41 92.29 95.18 95.19 93.47 91.18 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

A69 Guide to Tabular Presentation, Statistical Releases, and Special Tables GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations c Corrected 0 Calculated to be zero e Estimated n.a. Not available p Preliminary n.e.c. Not elsewhere classified r Revised (Notation appears on column heading when about IPCs Individuals, partnerships, and corporations half of the figures in that column are changed.) REITs Real estate investment trusts * Amounts insignificant in terms of the last decimal place RPs Repurchase agreements shown in the table (for example, less than 500,000 when SMSAs Standard metropolitan statistical areas the smallest unit given is millions) Cell not applicable General Information Minus signs are used to indicate (1) a decrease, (2) a negative tions of the Treasury. "State and local government" also infigure, or (3) an outflow. cludes municipalities, special districts, and other political "U.S. government securities" may include guaranteed issues subdivisions. of U.S. government agencies (the flow of 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 September 30, 1990 March 1991 All December 31, 1990 May 1991 A72 March 31,1991 August 1991 A72 June 30, 1991 November 1991 A70 Terms of lending at commercial banks August 1990 December 1990 A77 November 1990 April 1991 A73 February 1991 August 1991 A78 May 1991 October 1991 A72 Assets and liabilities of U.S. branches and agencies of foreign banks June 30,1990 December 1990 A82 September 30, 1990 February 1991 A78 December 31, 1990 June 1991 All March 31, 1991 November 1991 A76 Pro forma balance sheet and income statements for priced service operations March 31, 1990 September 1990 A82 June 30, 1990 October 1990 All March 31,1991 August 1991 A82 June 30, 1991 November 1991 A80 Special tables follow. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Special Tables • November 1991 4.20 DOMESTIC AND FOREIGN OFFICES, Insured Commercial Bank Assets and Liabilities1-2 Consolidated Report of Condition, June 30, 1991 Millions of dollars Banks with domestic Banks with foreign offices offices only Total Total Foreign Domestic Over 100 Under 100 1 Total assets6 3,358,235 1,882,085 416,647 1,538,538 1,108,645 367,506 2 Cash and balances due from depository institutions 281,877 194,879 89,407 105,472 63,679 23,319 3 Cash items in process of collection, unposted debits, and currency and coin n.a. 81,363 1,645 79,718 32,692 n.a. 4 Cash items in process of collection and unposted debits n.a. n.a. n.a. 65,866 23,494 n.a. 5 Currency and coin n.a. n.a. n.a. 13,852 9,198 n.a. 6 Balances due from depository institutions in the United States n.a. 31,692 20,913 10,778 18,434 n.a. 7 Balances due from banks in foreign countries and foreign central banks n.a. 70,015 66,747 3,268 2,902 n.a. 8 Balances due from Federal Reserve Banks n.a. 11,809 102 11,707 9,651 n.a. MEMO 9 Noninterest-bearing balances due from commercial banks in the United States (included in balances due from depository institutions in the United States) n.a. n.a. n.a. 6,965 13,507 8,553 10 Total securities, loans and lease financing receivables, net 2,797,249 1,480,496 n.a. n.a. 988,208 328,545 11 Total securities, book value 634,531 256,679 28,975 227,704 259,676 118,177 12 U.S. Treasury securities and U.S. government agency and corporation obligations 464,166 175,414 3,522 171,892 195,244 93,508 13 U.S. Treasury securities n.a. 52,591 1,592 50,999 79,987 n.a. 14 U.S. government agency and corporation obligations n.a. 122,823 1,930 120,893 115,257 n.a. 15 All holdings of U.S. government-issued or guaranteed certificates of participation in pools of residential mortgages 152,374 76,085 1,279 74,806 53,919 22,370 16 All other n.a. 46,738 651 46,088 61,337 n.a. 17 Securities issued by states and political subdivisions in the United States 76,276 25,509 738 24,771 35,200 15,567 18 Other domestic debt securities n.a. 27,169 1,374 25,795 24,833 n.a. 19 All holdings of private certificates of participation in pools of residential mortgages 4,914 2,423 11 2,412 2,238 252 20 All other domestic debt securities 54,907 24,745 1,362 23,383 22,595 7,567 21 Foreign debt securities n.a. 23,616 22,144 1,472 437 n.a. 22 Equity securities 10,215 4,971 1,197 3,774 3,962 1,282 23 Marketable 4,932 1,380 114 1,266 2,5% 955 24 Investments in mutual funds 2,646 484 20 464 1,287 875 25 Other 2,639 1,018 94 924 1,460 161 26 Less: Net unrealized loss 354 123 0 123 150 81 27 Other equity securities 5,284 3,591 1,083 2,508 1,365 327 28 Federal funds sold and securities purchased under agreements to resell 153,402 82,324 702 81,622 52,105 18,973 29 Federal funds sold 130,388 65,972 n.a. n.a. 45,749 18,666 30 Securities purchased under agreements to resell 23,014 16,351 n.a. n.a. 6,356 307 31 Total loans and lease financing receivables, gross 2,075,413 1,182,709 202,766 979,943 6%,272 196,432 32 LESS: Unearned income on loans 12,051 4,765 1,295 3,470 5,527 1,759 33 Total loans and leases (net of unearned income) 2,063,362 1,177,944 201,471 976,473 690,745 194,673 34 LESS: Allowance for loan and lease losses 53,598 36,002 n.a. n.a. 14,318 3,278 35 LESS: Allocated transfer risk reserves 449 449 n.a. n.a. 0 0 36 EQUALS: Total loans and leases, net 2,009,315 1,141,494 n.a. n.a. 676,427 191,395 Total loans, gross, by category 37 Loans secured by real estate 843,524 416,066 24,704 391,362 326,923 100,535 38 Construction and land development n.a. n.a. n.a. 74,851 34,999 6,431 39 Farmland n.a. n.a. n.a. 2,062 6,052 9,959 40 1-4 family residential properties n.a. n.a. n.a. 191,946 169,493 55,805 41 Revolving, open-end loans, extended under lines of credit n.a. n.a. n.a. 35,502 27,195 3,284 42 All other loans n.a. n.a. n.a. 156,445 142,299 52,520 43 Multifamily (5 or more) residential properties n.a. n.a. n.a. 11,218 9,343 1,910 44 Nonfarm nonresidential properties n.a. n.a. n.a. 111,284 107,035 26,430 45 Loans to depository institutions 44,165 35,238 16,010 19,228 8,679 248 46 To commercial banks in the United States n.a. 16,053 465 15,588 8,236 n.a. 47 To other depository institutions in the United States n.a. 1,531 180 1,351 428 n.a. 48 To banks in foreign countries n.a. 17,654 15,365 2,288 16 n.a. 49 Loans to finance agricultural production and other loans to farmers 34,776 5,696 290 5,406 9,759 19,320 50 Commercial and industrial loans 585,846 414,711 100,215 314,4% 135,206 35,929 51 To U.S. addressees (domicile) n.a. 336,715 23,949 312,766 134,829 n.a. 52 To non-U.S. addressees (domicile) n.a. 77,996 76,267 1,729 377 n.a. 53 Acceptances of other banks 2,515 831 353 477 928 756 54 U.S. banks n.a. 366 17 349 n.a. n.a. 55 Foreign banks n.a. 465 336 129 n.a. n.a. 56 Loans to individuals for household, family, and other personal expenditures (includes purchased paper) 384,192 159,470 15,944 143,526 188,583 36,138 57 Credit cards and related plans 129,546 51,041 n.a. n.a. 76,125 2,379 58 Other (includes single payment and installment) 254,646 108,430 n.a. n.a. 112,458 33,758 59 Obligations (other than securities) of states and political subdivisions in the U.S. (includes nonrated industrial development obligations) 31,412 18,160 204 17,956 11,833 1,418 60 Taxable 1,355 893 75 818 413 49 61 Tax-exempt 30,057 17,268 129 17,139 11,420 1,369 62 All other loans 112,188 102,014 41,445 60,569 8,588 1,586 63 Loans to foreign governments and official institutions n.a. 24,852 23,676 1,176 86 n.a. 64 Other loans n.a. 77,163 17,770 59,393 8,502 n.a. 65 Loans for purchasing and carrying securities n.a. n.a. n.a. 13,899 1,398 n.a. 66 All other loans n.a. n.a. n.a. 45,494 7,104 n.a. 67 Lease financing receivables 36,796 30,522 3,600 26,922 5,772 502 68 Assets held in trading accounts 57,761 56,095 29,085 26,873 1,528 138 69 Premises and fixed assets (including capitalized leases) 51,057 27,603 n.a. n.a. 17,333 6,121 70 Other real estate owned 25,974 15,660 n.a. n.a. 8,085 2,229 71 Investments in unconsolidated subsidiaries and associated companies 3,508 3,065 n.a. n.a. 394 49 72 Customers' liability on acceptances outstanding 16,778 16,460 n.a. n.a. 301 18 73 Net due from own foreign offices, Edge and agreement subsidiaries, and IBFs n.a. n.a. n.a. 45,148 n.a. n.a. 74 Intangible assets 11,499 6,671 n.a. n.a. 4,443 385 75 Other assets 112,531 81,156 n.a. n.a. 24,674 6,701 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A71 4.20—Continued Banks with foreign offices Banks with domestic offices only Item TToottaall Total Foreign Domestic Over 100 Under 100 76 Total liabilities, limited-life preferred stock, and equity capital 3,358,235 1,882,085 n.a. n.a. 1,108,645 77 Total liabilities7 3,132,912 1,773,845 416,647 1,430,298 1,024,848 78 Limited-life preferred stock 6 0 n.a. n.a. 3 79 Total deposits 2,612,799 1,373,202 301,213 1,071,989 913,908 80 Individuals, partnerships, and corporations n a. n a. 180,784 986,679 851,003 81 U.S. government n.a. n a. n.a. 4,184 1,836 82 States and political subdivisions in the United States n.a. n a. n.a. 38,147 43,875 83 Commercial banks in the United States n.a. n a. n a. 21,555 7,776 84 Other depository institutions in the United States n.a. n a. n a. 4,513 3,231 85 Banks in foreign countries n.a. n.a. n a. 5,993 135 86 Foreign governments and official institutions n.a. 25,509 24,444 1,065 48 87 Certified and official checks 19,147 11,089 1,237 9,852 6,004 88 Mother8 94,748 n.a. n.a. 89 Total transaction accounts 320,206 234,883 90 Individuals, partnerships, and corporations 270,131 206,872 91 U.S. government 2,942 1,636 92 States and political subdivisions in the United States 10,479 13.281 93 Commercial banks in the United States 17,737 5,800 94 Other depository institutions in the United States 2,916 1,170 95 Banks in foreign countries 5,395 112 96 Foreign governments and official institutions 754 8 97 Certified and official checks 9,852 6,004 98 All other n.a. n.a. 99 Demand deposits (included in total transaction accounts) 235,697 137,994 100 Individuals, partnerships, and corporations 188,920 117,829 101 U.S. government 2,895 1,582 102 States and political subdivisions in the United States 7,282 5,512 103 Commercial banks in the United States 17,737 5,796 104 Other depository institutions in the United States n.a. n.a. n.a. 2,868 1,151 105 Banks in foreign countries 5,390 112 106 Foreign governments and official institutions 752 8 107 Certified and official checks 9,852 6,004 108 All other n.a. n.a. 109 Total nontransaction accounts 751,783 679,025 110 Individuals, partnerships, and corporations 716,547 644,132 111 U.S. government 1,241 200 112 States and political subdivisions in the United States 27,669 30,594 113 Commercial banks in the United States 3,818 1,976 114 U.S. branches and agencies of foreign banks 288 296 115 Other commercial banks in the United States 3,531 1,681 116 Other depository institutions in the United States 1,597 2,061 117 Banks in foreign countries 599 23 118 Foreign branches of other U.S. banks 16 19 119 Other banks in foreign countries 583 4 120 Foreign governments and official institutions 312 39 121 All other n.a. n.a. 122 Federal funds purchased and securities sold under agreements to repurchase. 237,561 177,015 1,142 175,872 57,390 123 Federal funds purchased 148,253 118,574 n.a. n.a. 28,354 124 Securities sold under agreements to repurchase 89,308 58,441 n.a. n.a. 29,036 125 Demand notes issued to the U.S. Treasury n.a. n.a. n.a. 25,517 5,011 126 Other borrowed money 113,916 83,364 32,759 50,605 29,636 127 Banks liability on acceptances executed and outstanding 16,897 16,579 3,551 13,028 301 128 Notes and debentures subordinated to deposits 24,158 22,700 n.a. n.a. 1,320 129 Net due to own foreign offices, Edge and agreement subsidiaries, and IBFs.. n.a. n.a. n.a. 27,952 n.a. 130 All other liabilities 96,571 75,469 n.a. n.a. 17.282 131 Total equity capital9 225,318 108,240 n a. n.a. 83,794 MEMO 132 Holdings of commercial paper included in total loans, gross 751 355 3% 2,248 133 Total individual retirement accounts (IRA) and Keogh plan accounts 63,952 59,188 134 Total brokered dep<)sits 47,669 19,770 135 Total brokered retail deposits 28,435 15,806 136 Issued in denominations of $100,000 or less 2,606 4,695 137 Issued in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less 25,829 11,111 Savings deposits 138 Money market deposit accounts (MMDAs) 214,013 145,145 139 Other savings deposits (excluding MMDAs) 97,908 89,336 140 Total time deposits of less than $100,000 259,285 325 141 Time certificates of deposit of $100,000 or more n.a. n.a. n.a. 153,288 116,050 142 Open-account time deposits of $100,000 or more 27,288 3,721 143 All NOW accounts (including Super NOW) 82,888 95,185 144 Total time and savings deposits 836,291 775,914 Quarterly averages 145 Total loans 960,072 686,031 146 Obligations (other than securities) of states and political subdivisions in the United States 18,784 12,103 147 Transaction accounts in domestic offices (NOW accounts, ATS accounts, and telephone and preauthorized transfer accounts) 84,216 95,191 Nontransaction accounts in domestic offices 148 Money market deposit accounts (MMDAs) 211,345 143,518 149 Other savings deposits 95,322 87,141 150 Time certificates of deposit of $100,000 or more 159,507 119,804 151 All other time deposits 290,407 329,308 152 Number of banks 12,131 229 n. a. n.a. 2,766 Footnotes appear at the end of table 4.22 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Special Tables • November 1991 4.21 DOMESTIC OFFICES, Insured Commercial Banks with Assets of $100 Million or more or with foreign offices1-2-6 Consolidated Report of Condition, June 30, 1991 Millions of dollars Members NNoonn-- Item TToottaall mmeemmbbeerrss Total National State 1 Total assets' 2,647,183 2,055,894 1,644,870 411,024 591,289 2 Cash and balances due from depository institutions 169,151 137,682 112,652 25,030 31,470 3 Cash items in process of collection and unposted debits 89,361 79,150 64,513 14,637 10,210 4 Currency and coin 23,050 18,826 15,692 3,133 4,224 5 Balances due from depository institutions in the United States 29,212 18,519 15,259 3,259 10,693 6 Balances due from banks in foreign countries and foreign central banks 6,170 4,859 3,746 1,113 1,312 7 Balances due from Federal Reserve Banks 21,358 16,328 13,441 2,887 5,030 8 Total securities, loans and lease financingr eceivables, (net of unearned income) 2,288,324 1,757,975 1,420,605 337,371 550,348 9 Total securities, book value 487,379 359,959 277,506 82,453 127,420 10 U.S. Treasury securities 130,986 89,599 71,076 18,523 41,387 11 U.S. government agency and corporation obligations 236,150 184,255 143,182 41,073 51,8% 12 All holdings of U.S. government-issued or guaranteed certificates of participation in pools of residential mortgages 128,725 105,762 84,451 21,312 22,%3 13 Mother 107,425 78,492 58,731 19,761 28,933 14 Securities issued by states and political subdivisions in the United States 59,971 44,052 32,9% 11,056 15,919 15 Other domestic debt securities 50,628 36,240 25,685 10,555 14,388 16 All holdings of private certificates of participation in pools of residential mortgages .. 4,650 3,861 2,765 1,0% 789 17 All other 45,978 32,380 22,921 9,459 13,598 18 Foreign debt securities 1,909 1,352 923 429 557 19 Equity securities 7,736 4,461 3,644 817 3,275 20 Marketable 3,862 1,246 1,042 204 2,616 21 Investments in mutual funds 1,751 866 812 54 885 22 Other 2,384 446 272 174 1,938 23 Less: Net unrealized loss 273 66 42 24 207 24 Other equity securities 3,874 3,215 2,602 613 658 25 Federal funds sold and securities purchased under agreements to resell10 133,727 108,560 82,537 26,022 25,167 26 Federal funds sold 45,749 29,532 25,799 3,733 16,217 27 Securities purchased under agreements to resell 6,356 3,766 3,008 758 2,590 28 Total loans and lease financing receivables, gross 1,676,215 1,295,949 1,065,862 230,088 380,265 29 LESS: Unearned income on loans 8,997 6,493 5,300 1,193 2,504 30 Total loans and leases (net of unearned income) 1,667,218 1,289,456 1,060,561 228,895 377,761 Total loans, gross, by category 31 Loans secured by real estate 718,285 536,769 454,929 81,840 181,516 32 Construction and land development 109,850 85,266 70,613 14,653 24,584 33 Farmland 8,114 5,129 4,409 720 2,985 34 1-4 family residential properties 361,440 269,926 229,903 40,023 91,514 35 Revolving, open-end and extended under lines of credit 62,697 48,011 40,131 7,881 14,685 36 All other loans 298,743 221,914 189,772 32,142 76,829 37 Multifamily (5 or more) residential properties 20,562 15,097 12,751 2,347 5,465 38 Nonfarm nonresidential properties 218,320 161,351 137,253 24,098 56,968 39 Loans to commercial banks in the United States 23,824 16,741 13,327 3,414 7,083 40 Loans to other depository institutions in the United States 1,779 1,589 1,502 87 190 41 Loans to banks in foreign countries 2,304 2,237 1,217 1,021 67 42 Loans to finance agricultural production and other loans to farmers 15,165 10,911 9,887 1,024 4,254 43 Commercial and industrial loans 449,702 367,148 292,404 74,745 82,553 44 To U.S. addressees (domicile) 447,595 365,349 291,070 74,278 82,246 45 To non-U.S. addressees (domicile) 2,107 1,800 1,333 466 307 46 Acceptances of other banks11 1,406 902 721 182 503 47 Of U.S. banks 732 516 388 129 216 48 Of foreign banks 183 151 132 19 32 49 Loans to individuals for household, family, and other personal expenditures (includes purchased paper) 332,109 243,156 205,844 37,312 88,954 50 Credit cards and related plans 76,125 41,592 39,106 2,486 34,534 51 Other (includes single payment and installment) 112,458 68,614 57,970 10,644 43,844 52 Loans to foreign governments and official institutions 1,262 1,217 947 270 45 53 Obligations (other than securities) of states and political subdivisions in the United States 29,790 24,614 18,4% 6,118 5,176 54 Taxable 1,231 1,013 738 275 218 55 Tax-exempt 28,559 23,601 17,758 5,843 4,958 56 Other loans 67,895 62,847 43,459 19,388 5,047 57 Loans for purchasing and carrying securities 15,297 14,437 7,537 6,900 860 58 All other loans 52,598 48,410 35,922 12,488 4,188 59 Lease financing receivables 32,694 27,818 23,130 4,688 4,876 60 Customers' liability on acceptances outstanding 13,010 11,693 8,739 2,953 1,317 61 Net due from own foreign offices, Edge and agreement subsidiaries, and IBFs 45,148 39,406 18,338 21,068 5,742 62 Remaining assets 176,697 148,544 102,874 45,670 28,153 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A73 4.21—Continued Members Total Total National State 63 Total liabilities and equity capital 2,647,183 2,055,894 1,644,870 411,024 64 Total liabilities4 2,455,146 1,911,008 1,530,806 380,202 65 Total deposits 1,985,897 1,520,797 1,243,954 276,843 66 Individuals, partnerships, and corporations 1,837,682 1,403,947 1,150,603 253,344 67 U.S. government 6,020 5,268 4,472 796 68 States and political subdivisions in the United States 82,023 60,769 49,847 10,922 69 Commercial banks in the United States 29,331 26,087 20,537 5,550 70 Other depository institutions in the United States 7,744 5,658 4,718 940 71 Banks in foreign countries 6,128 5,519 3,549 1,970 72 Foreign governments and official institutions 1,113 987 632 355 73 Certified and official checks 15,856 12,563 9,596 2,966 74 Total transaction accounts 555,089 441,311 356,347 84,964 75 Individuals, partnerships, and corporations 477,003 375,207 304,853 70,353 76 U.S. government 4,579 3,875 3,249 627 77 States and political subdivisions in the United States 23,760 18,733 15,203 3,530 78 Commercial banks in the United States 23,537 21,639 17,032 4,606 79 Other depository institutions in the United States 4,086 3,346 2,650 6% 80 Banks in foreign countries 5,507 5,224 3,367 1,857 81 Foreign governments and official institutions 762 725 397 328 82 Certified and official checks 15,856 12,563 9,5% 2,966 83 Demand deposits (included in total transaction accounts) 373,691 304,213 241,651 62,562 84 Individuals, partnerships, and corporations 306,748 246,399 196,828 49,571 85 U.S. government 4,478 3,813 3,194 619 86 States and political subdivisions in the United States 12,794 10,567 8,645 1,922 87 Commercial banks in the United States 23,533 21,638 17,032 4,606 88 Other depository institutions in the United States 4,019 3,287 2,592 695 89 Banks in foreign countries 5,502 5,222 3,367 1,855 90 Foreign governments and official institutions 761 724 396 328 91 Certified and official checks 15,856 12,563 9,5% 2,966 92 Total nontransaction accounts 1,430,808 1,079,487 887,607 191,880 93 Individuals, partnerships, and corporations 1,360,679 1,028,740 845,749 182,990 94 U.S. government 1,441 1,393 1,223 170 95 States and political subdivisions in the United States 58,263 42,037 34,645 7,392 96 Commercial banks in the United States 5,795 4,448 3,504 944 97 U.S. branches and agencies of foreign banks 584 261 97 165 98 Other commercial banks in the United States 5,211 4,187 3,408 779 99 Other depository institutions in the United States 3,658 2,312 2,068 244 100 Banks in foreign countries 621 295 182 113 101 Foreign branches of other U.S. banks 34 28 15 13 102 Other banks in foreign countries 587 267 167 100 103 Foreign governments and official institutions 351 262 235 27 104 Federal funds purchased and securities sold under agreements to repurchase12 233,262 198,681 140,995 57,686 105 Federal funds purchased 28,354 20,161 17,290 2,871 106 Securities sold under agreements to repurchase 29,036 14,493 11,961 2,532 107 Demand notes issued to the U.S. Treasury 30,528 28,009 20,214 7,794 108 Other borrowed money 80,241 57,456 45,051 12,405 109 Banks liability on acceptances executed and outstanding 13,329 12,011 8,993 3,019 110 Notes and debentures subordinated to deposits 1,320 840 784 56 111 Net due to own foreign offices, Edge and agreement subsidiaries, and IBFs 27,952 20,861 19,251 1,610 112 Remaining liabilities 110,568 93,214 70,815 22,399 113 Total equity capital9 192,037 144,885 114,064 30,822 MEMO 114 Holdings of commercial paper included in total loans, gross 2,644 1,267 1,234 33 115 Total individual retirement accounts (IRA) and Keogh plan accounts 123,140 95,074 78,299 16,775 116 Total brokered deposits 67,439 50,878 43,731 7,147 117 Total brokered retail deposits 44,241 31,889 27,179 4,710 118 Issued in denominations of $100,000 or less 7,301 2,949 2,506 443 119 Issued in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less 36,940 28,940 24,673 4,267 Savings deposits 120 Money market deposit accounts (MMDAs) 359,158 283,705 233,223 50,482 121 Other savings accounts 187,245 144,815 107,625 37,191 122 Total time deposits of less than $100,000 584,058 429,731 362,301 67,430 123 Time certificates of deposit of $100,000 or more 269,338 195,968 168,665 27,303 124 Open-account time deposits of $100,000 or more 31,009 25,267 15,793 9,475 125 All NOW accounts (including Super NOW accounts) 178,073 134,713 113,279 21,433 126 Total time and savings deposits 1,612,205 1,216,584 1,002,303 214,281 Quarterly averages 127 Total loans 1,646,102 1,273,007 1,048,921 224,085 128 Obligations (other than securities) of states and political subdivisions in the United States ... 30,887 25,683 19,021 6,662 129 Transaction accounts (NOW accounts, ATS accounts, and telephone preauthorized transfer accounts) 179,407 135,864 113,848 22,015 Nontransaction accounts 130 Money market deposit accounts (MMDAs) 354,863 280,541 229,791 50,750 131 Other savings deposits 182,463 141,177 104,990 36,187 132 Time certificates of deposits of $100,000 or more 279,311 203,144 173,465 29,679 133 All other time deposits 619,715 458,826 382,473 76,353 134 Number of banks 2,995 1,626 1,366 260 Footnotes appear at the end of table 4.22 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • November 1991 4.22 DOMESTIC OFFICES, Insured Commercial Bank Assets and Liabilities12-6 Consolidated Report of Condition, June 30, 1991 Millions of dollars Members NNoonn-- Item TToottaall mmeemmbbeerrss Total National State 1 Total assets6 3,014,688 2,200,322 1,758,907 441,416 814,366 2 Cash and balances due from depository institutions 192,470 147,162 120,297 26,865 45,309 3 Currency and coin 26,186 20,076 16,694 3,382 6,110 4 Noninterest-bearing balances due from commercial banks 29,025 16,223 13,004 3,219 12,802 5 Other 137,260 110,863 90,599 20,264 26,397 6 Total securities, loans, and lease financing receivables (net of unearned income) 2,620,147 1,888,063 1,523,119 364,944 732,084 7 Total securities, book value 605,556 406,264 315,217 91,047 199,292 8 U.S. Treasury securities and U.S. government agency and corporation obligations 460,644 310,900 244,543 66,357 149,744 9 Securities issued by states and political subdivisions in the United States 75,538 49,697 37,475 12,222 25,841 10 Other debt securities 60,356 40,622 29,081 11,540 19,734 11 All holdings of private certificates of participation in pools of residential mortgages .. 4,902 3,963 2,837 1,126 939 12 All other 55,453 36,658 26,244 10,414 18,795 13 Equity securities 9,018 5,045 4,118 927 3,973 14 Marketable 4,818 1,595 1,340 255 3,223 15 Investments in mutual funds 2,627 1,210 1,107 103 1,417 16 Other 2,545 479 299 180 2,066 17 Less: Net unrealized loss 354 94 66 28 260 18 Other equity securities 4,200 3,451 2,778 672 750 19 Federal funds sold and securities purchased under agreements to resell1" 152,700 117,145 89,385 27,760 35,555 20 Federal funds sold 64,415 37,934 32,482 5,452 26,481 21 Securities purchased under agreements to resell 6,663 3,950 3,172 777 2,713 22 Total loans and lease financing receivables, gross 1,872,647 1,371,864 1,124,372 247,492 500,783 23 LESS: Unearned income on loans 10,756 7,210 5,855 1,356 3,546 24 Total loans and leases (net of unearned income) 1,861,891 1,364,654 1,118,517 246,137 497,237 Total loans, gross, by category 25 Loans secured by real estate 818,819 575,250 484,532 90,718 243,569 26 Construction and land development 116,281 87,981 72,591 15,390 28,300 27 Farmland 18,073 8,295 6,959 1,336 9,778 28 1-4 family residential properties 417,245 291,413 246,295 45,118 125,832 29 Revolving, open-end loans, and extended under lines of credit 65,981 49,449 41,167 8,282 16,532 30 All other loans 351,264 241,964 205,128 36,836 109,300 31 Multifamily (5 or more) residential properties 22,472 15,807 13,303 2,504 6,665 32 Nonfarm nonresidential properties 244,750 171,754 145,385 26,370 72,995 33 Loans to depository institutions 28,155 20,704 16,135 4,569 7,452 34 Loans to finance agricultural production and other loans to farmers 34,485 17,449 15,110 2,340 17,036 35 Commercial and industrial loans 485,631 381,877 303,396 78,482 103,753 36 Acceptances of other banks 2,162 1,182 968 214 980 37 Loans to individuals for household, family, and other personal expenditures (includes purchased paper) 368,247 257,631 217,226 40,406 110,616 38 Credit cards and related plans 78,505 42,755 40,159 2,597 35,749 39 Other (includes single payment installment) 146,216 81,926 68,300 13,626 64,290 40 Obligations (other than securities) of states and political subdivisions in the United States 31,208 25,121 18,915 6,205 6,087 41 Taxable 1,280 1,031 753 278 249 42 Tax-exempt 29,928 24,090 18,163 5,927 5,839 43 All other loans 70,743 64,668 44,823 19,845 6,075 44 Lease financing receivables 33,196 27,982 23,267 4,715 5,214 45 Customers' liability on acceptances outstanding 13,028 11,708 8,754 2,954 1,320 46 Net due from own foreign offices, Edge and agreement subsidiaries, and IBFs 45,148 39,406 18,338 21,068 5,742 47 Remaining assets 189,043 153,390 106,737 46,653 35,653 48 Total liabilities and equity capital 3,014,688 2,200,322 1,758,907 441,416 814,366 49 Total liabilities4 2,789,365 2,042,676 1,634,902 407,774 746,688 50 Total deposits 2,311,586 1,648,633 1,345,062 303,570 662,953 51 Individuals, partnerships, and corporations 2,137,533 1,521,879 1,243,909 277,970 615,654 52 U.S. government 6,571 5,479 4,642 837 1,092 53 States and political subdivisions in the United States 103,012 68,408 56,038 12,370 34,604 54 Commercial banks in the United States 30,522 26,865 20,989 5,876 3,657 55 Other depository institutions in the United States 8,738 6,006 4,981 1,025 2,732 56 Certified and official checks 17,910 13,452 10,290 3,161 4,458 57 All other 7,299 6,543 4,213 2,330 756 58 Total transaction accounts 638,562 475,503 383,807 91,697 163,058 59 Individuals, partnerships, and corporations 550,780 405,411 329,219 76,192 145,369 60 U.S. government 5,030 4,056 3,400 656 974 61 States and political subdivisions in the United States 30,139 21,005 17,080 3,925 9,134 62 Commercial banks in the United States 24,142 22,190 17,327 4,862 1,952 63 Other depository institutions in the United States 4,271 3,429 2,718 710 842 64 Certified and official checks 17,910 13,452 10,290 3,161 4,458 65 All other 6,290 5,961 3,771 2,190 329 66 Demand deposits (included in total transaction accounts) 415,408 321,928 255,675 66,253 93,480 67 Individuals, partnerships, and corporations 343,381 261,771 209,113 52,658 81,611 68 U.S. government 4,914 3,991 3,343 648 924 69 States and political subdivisions in the United States 14,588 11,199 9,173 2,026 3,389 70 Commercial) banks in the United States 24,138 22,189 17,327 4,862 1,949 71 Other depository institutions in the United States 4,198 3,368 2,659 709 830 72 Certified and official checks 17,910 13,452 10,290 3,161 4,458 73 All other 6,278 5,959 3,771 2,188 319 74 Total nontransaction accounts 1,673,024 1,173,129 % 1,256 211,874 499,895 75 Individuals, partnerships, and corporations 1,586,753 1,116,468 914,690 201,778 470,285 76 U.S. government 1,541 1,423 1,242 181 118 77 States and political subdivisions in the United States 72,873 47,403 38,957 8,446 25,470 78 CommerciaJ banks in the United States 6,380 4,675 3,662 1,014 1,704 79 Other depository institutions in the United States 4,467 2,577 2,263 315 1,890 80 All other 1,009 582 441 140 427 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A75 4.22—Continued Members NNoonn-- Item TToottaall mmeemmbbeerrss Total National State 81 Federal funds purchased and securities sold under agreements to repurchase 236,418 200,198 142,063 58,135 36,220 82 Federal funds purchased 29,679 20,865 17,709 3,156 8,814 83 Securities sold under agreements to repurchase 30,867 15,305 12,611 2,695 15,562 84 Demand notes issued to the U.S. Treasury 31,009 28,197 20,368 7,829 2,813 85 Other borrowed money 81,157 57,949 45,472 12,477 23,208 86 Banks liability on acceptances executed and outstanding 13,347 12,026 9,007 3,019 1,320 87 Notes and debentures subordinated to deposits 1,459 902 838 63 557 88 Net due to own foreign offices, Edge and agreement subsidiaries, and IBFs 27,952 20,861 19,251 1,610 7,091 89 Remaining liabilities 114,389 94,772 72,091 22,681 19,617 90 Total equity capital9 225,324 157,646 124,004 33,642 67,678 MEMO 91 Assets held in trading accounts 28,539 27,032 16,317 10,715 1,507 92 U.S. Treasury securities 10,710 10,212 4,760 5,452 498 93 U.S. government agency corporation obligations 4,688 4,592 3,878 714 96 94 Securities issued by states and political subdivisions in the United States 1,327 1,292 846 446 36 95 Other bonds, notes, and debentures 609 520 71 448 90 96 Certificates of deposit 1,178 1,148 615 533 30 97 Commercial paper 90 90 90 0 0 98 Bankers acceptances 3,379 3,292 2,093 1,199 86 99 Other 5,844 5,598 3,732 1,866 246 100 Total individual retirement accounts (IRA) and Keogh plan accounts 142,210 102,323 84,066 18,257 39,886 101 Total brokered deposits 68,242 51,058 43,848 7,210 17,184 102 Total brokered retail deposits 44,980 32,061 27,292 4,768 12,920 103 Issued in denominations of $100,000 or less 7,871 3,097 2,603 494 4,773 104 Issued in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less 37,110 28,963 24,689 4,274 8,146 Savings deposits 105 Money market deposit accounts (MMDAs) 396,079 299,388 245,623 53,765 96,691 106 Other savings deposits 216,700 156,374 116,745 39,629 60,326 107 Total time deposits of less than $100,000 723,837 481,638 403,091 78,547 242,199 108 Time certificates of deposit of $100,000 or more 304,199 210,041 179,668 30,373 94,159 109 Open-account time deposits of $100,000 or more 32,208 25,688 16,129 9,559 6,520 110 All NOW accounts (including Super NOW) 218,653 150,805 126,444 24,361 67,848 111 Total time and savings deposits 1,896,178 1,326,705 1,089,387 237,318 569,473 Quarterly averages 112 Total loans 1,837,694 1,347,302 1,106,283 241,019 490,392 113 Transaction accounts (NOW accounts, ATS accounts, and telephone and preauthorized transfer accounts) 220,807 152,241 127,201 25,040 68,566 Nontransaction accounts 114 Money market deposit accounts (MMDAs) 391,270 296,080 242,082 53,998 95,190 115 Other savings deposits 211,092 152,438 113,878 38,560 58,654 116 Time certificates of deposit of $100,000 or more 314,548 217,308 184,556 32,752 97,241 117 All other time deposits 760,633 511,146 423,593 87,553 249,487 118 Number of banks 12,131 4,903 3,917 986 7,228 1. Effective Mar. 31, 1984, the report of condition was substantially revised for refers to those respondents whose assets, as of June 30 of the previous calendar commercial banks. Some of the changes are as follows: (1) Previously, banks with year, were less than $100 million. (These respondents filed the FFIEC 034 call international banking facilities (IBFs) that had no other foreign offices were report.) considered domestic reporters. Beginning with the Mar. 31,1984 call report these 6. Since the domestic portion of allowances for loan and lease losses and banks are considered foreign and domestic reporters and must file the foreign and allocated transfer risk reserve are not reported for banks with foreign offices, the domestic report of condition; (2) banks with assets greater than $1 billion have components of total assets (domestic) will not add to the actual total (domestic). additional items reported; (3) the domestic office detail for banks with foreign 7. Since the foreign portion of demand notes issued to the U.S. Treasury is not offices has been reduced considerably; and (4) banks with assets under $25 million reported for banks with foreign offices, the components of total liabilities (foreign) have been excused from reporting certain detail items. will not add to the actual total (foreign). 2. The "n.a." for some of the items is used to indicate the lesser detail available 8. The definition of 'all other' varies by report form and therefore by column in from banks without foreign offices, the inapplicability of certain items to banks this table. See the instructions for more detail. that have only domestic offices and/or the absence of detail on a fully consolidated 9. Equity capital is not allocated between the domestic and foreign offices of basis for banks with foreign offices. banks with foreign offices. 3. All transactions between domestic and foreign offices of a bank are reported 10. Only the domestic portion of federal funds sold and securities purchased in "net due from" and "net due to." All other lines represent transactions with under agreements to resell are reported here, therefore, the components will not parties other than the domestic and foreign offices of each bank. Since these add to totals for this item. intraoffice transactions are nullified by consolidation, total assets and total 11. "Acceptances of other banks" is not reported by domestic respondents less liabilities for the entire bank may not equal the sum of assets and liabilities than $300 million in total assets, therefore the components will not add to totals for respectively, of the domestic and foreign offices. this item. 4. Foreign offices include branches in foreign countries, Puerto Rico, and in 12. Only the domestic portion of federal funds purchased and securities sold U.S. territories and possessions; subsidiaries in foreign countries; all offices of are reported here, therefore the components will not add to totals for this item. Edge act and agreement corporations wherever located and IBFs. 13. Components of assets held in trading accounts are only reported for banks 5. The 'over 100' column refers to those respondents whose assets, as of June with total assets of $1 billion or more; therefore the components will not add to the 30 of the previous calendar year, were equal to or exceeded $100 million. (These totals for this item. respondents file the FFIEC 032 or FFIEC 033 call report.) The 'under 100' column Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Special Tables • November 1991 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 19911 Millions of dollars All states2 New York California Illinois IItteemm inc T l o u t d a i l n g IBF's inc T l o u t d a i l n g IBF's inc T l o u t d a i l n g IBF's inc T l o u t d a i l n g IBF's IBF's only IBF's only IBF's only IBF's only 1 Total assets4 631,166 285,276 465,699 221,706 84,747 34,819 48,052 17,949 ? Claims on nonrelated parties 546,952 207,282 396,849 168,830 77,634 17,296 47,680 15,428 3 Cash and balances due from depository institutions 148,192 123,793 123,209 101,010 9,512 8,606 13,070 12,568 4 Cash items in process of collection and unposted debits 1,914 3 1,883 2 19 1 3 0 5 Currency and coin (U.S. and foreign) 22 n.a. 15 n.a. 2 n.a. 1 n.a. 6 Balances with depository institutions in United States .. 79,911 58,491 67,426 47,838 5,2% 4,442 6,231 5,745 7 U.S. branches and agencies of other foreign banks (including their IBFs) 70,999 55,012 59,795 44,710 4,751 4,338 5,6% 5,538 8 Other depository institutions in United States (including their IBFs) 8,912 3,478 7,630 3,128 544 104 535 208 9 Balances with banks in foreign countries and with foreign central banks 65,980 65,299 53,654 53,171 4,167 4,164 6,823 6,822 10 Foreign branches of U.S. banks 1,733 1,676 1,577 1,530 46 46 95 95 11 Other banks in foreign countries and foreign central banks 64,247 63,624 52,077 51,641 4,121 4,118 6,728 6,727 12 Balances with Federal Reserve Banks 365 n.a. 231 n.a. 29 n.a. 12 n.a. 13 Total securities and loans 332,635 73,272 221,822 59,541 60,458 7,749 29,198 1,953 14 Total securities, book value 54,720 15,605 49,063 14,111 3,626 947 1,467 497 15 U.S. Treasury 14,291 n.a. 14,056 n.a. 51 n.a. 120 n.a. 16 Obligations of U.S. government agencies and corporations 77,,773333 n.a. 77,,442277 n.a. 220000 n.a. 2222 n.a. 17 Other bonds, notes, debentures and corporate stock (including state and local securities) 32,696 15,605 27,579 14,111 3,375 947 1,326 497 18 Federal funds sold and securities purchased under agreements to resell 14,924 2,072 13,335 1,603 521 63 657 395 19 U.S. branches and agencies of other foreign banks 7,485 1,158 6,566 1,045 365 3 304 100 70 Commercial banks in United States 2,463 362 1,946 67 58 0 301 295 21 Other 4,975 552 4,824 491 98 60 52 0 7? Total loans, gross 278,102 57,703 172,895 45,463 56,863 6,804 27,739 1,455 73 Less: Unearned income on loans 188 35 135 33 31 2 9 0 24 Equals: Loans, net 277,914 57,667 172,759 45,430 56,832 6,802 27,731 1,455 Total loans, gross, by category 75 Real estate loans 49,120 547 2255,,442211 344 15,074 142 5,154 61 26 Loans to depository institutions 49,677 29,959 38,472 22,907 6,546 4,552 2,645 884 77 Commercial banks in United States (including IBFs) 29,060 11,943 21,811 8,423 4,936 2,969 2,089 481 28 U.S. branches and agencies of other foreign banks ... 25,395 11,378 18,682 7,952 4,750 2,915 1,777 461 29 Other commercial banks in United States 3,665 565 3,129 471 186 54 312 20 30 Other depository institutions in United States (including IBFs) 4488 0 4400 0 7 0 0 00 31 Banks in foreign countries 20,569 18,016 16,621 14,485 1,602 1,583 556 403 3? Foreign branches of U.S. banks 431 246 368 183 42 42 21 21 33 Other banks in foreign countries 20,138 17,770 16,253 14,301 1,560 1,541 535 383 34 Other financial institutions 9,595 1,051 7,455 867 955 133 751 46 35 Commercial and industrial loans 150,375 15,025 85,950 12,698 33,427 1,582 18,583 323 36 U.S. addressees (domicile) 128,993 287 69,205 189 30,773 92 18,027 6 37 Non-U.S. addressees (domicile) 21,382 14,738 16,745 12,510 2,653 1,490 556 317 38 Acceptances of other banks 1,098 18 727 14 210 5 118 0 39 U.S. banks 357 1 207 1 113 0 6 0 40 Foreign banks 741 17 520 12 97 5 112 0 41 Loans to foreign governments and official institutions (including foreign central banks) 1111,,881199 10,863 99,,115533 8,423 471 389 146 113377 42 Loans for purchasing or carrying securities (secured and unsecured) 33,,006611 1133 22,,887799 8 110000 00 8811 5 43 All other loans 3,357 227 2,838 202 81 0 262 0 44 All other assets 51,201 8,145 38,483 6,676 7,142 878 4,755 513 45 Customers' liability on acceptances outstanding 22,269 n.a. 16,436 n.a. 4,543 n.a. 937 n.a. 46 U.S. addressees (domicile) 14,522 n.a. 9,962 n.a. 3,589 n.a. 936 n.a. 47 Non-U.S. addressees (domicile) 7,747 n.a. 6,474 n.a. 954 n.a. 1 n.a. 48 Other assets including other claims on nonrelated parties 28,932 8,145 22,047 6,676 2,599 878 3,818 513 49 Net due from related depository institutions5 84,214 77,994 68,850 52,876 7,113 17,523 373 2,521 50 Net due from head office and other related depository institutions 84,214 n.a. 68,850 n.a. 7,113 n.a. 373 n.a. 51 Net due from establishing entity, head offices, and other related depository institutions n.a. 7777,,999944 n.a. 5522,,887766 n.a. 1177,,552233 n.a. 22,,552211 52 Total liabilities4 631,166 285,276 465,699 221,706 84,747 34,819 48,052 17,949 53 Liabilities to nonrelated parties 548,677 249,400 424,631 195,387 73,976 33,592 32,098 12,151 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies All 4.30—Continued Millions of dollars All states2 New York California Illinois Item ex I T c B l o u F t d a ' i s l n g I o B n F ly 's 3 ex I T c B l o u F t d a ' i s l n g I o B n F ly 's 3 ex I T c B l o u F t d a ' i s l n g I o B n F ly 's 3 ex I T c B l o u F t d a ' i s l n g I o B n F ly 's 3 54 Total deposits and credit balances 111,516 185,479 96,145 163,528 4,244 10,965 4,017 3,446 55 Individuals, partnerships, and corporations 80,171 17,197 67,092 10,163 3,323 920 3,662 108 56 U.S. addressees (domicile) 65,595 448 58,722 448 1,342 0 2,612 0 57 Non-U.S. addressees (domicile) 14,576 16,748 8,371 9,715 1,981 920 1,051 108 58 Commercial banks in United States (including IBFs). 22,084 56,877 20,266 51,417 653 3,337 330 1,305 59 U.S. branches and agencies of other foreign banks 8,680 51,167 8, 580 46,484 26 2,958 8 1,111 60 Other commercial banks in United States 13,404 5,710 11,686 4,933 628 379 323 194 61 Banks in foreign countries 3,768 96,606 3,673 87,910 12 6,221 2 1,916 62 Foreign branches of U.S. banks 1,132 7,154 1,132 6,246 0 638 0 237 63 Other banks in foreign countries 2,636 89,452 2,541 81,664 12 5,582 2 1,679 64 Foreign governments and official institutions (including foreign central banks) 1,453 14,315 1,160 13,554 223 488 3 117 65 All other deposits and credit balances 3,732 483 3,715 483 6 0 2 0 66 Certified and official checks 309 n.a. 238 n.a. 26 n.a. 18 n. a. 67 Transaction accounts and credit balances (excluding IBFs) 7,768 6,562 344 237 68 Individuals, partnerships, and corporations 4,985 3,961 297 215 69 U.S. addressees (domicile) 3,631 3,037 262 210 70 Non-U.S. addressees (domicile) 1,354 923 35 4 71 Commercial banks in United States (including IBFs). 357 351 1 0 72 U.S. branches and agencies of other foreign banks 68 67 0 0 73 Other commercial banks in United States 290 n. a. 285 n.a. 1 n.a. 0 n. a. 74 Banks in foreign countries 1,039 973 12 2 75 Foreign branches of U.S. banks 4 4 0 0 76 Other banks in foreign countries 1,035 969 12 2 77 Foreign governments and official institutions (including foreign central banks) 451 424 3 1 78 All other deposits and credit balances 626 614 6 1 79 Certified and official checks 309 238 26 18 80 Demand deposits (included in transaction accounts and credit balances) 7,040 6,092 281 220 81 Individuals, partnerships, and corporations 4,598 3,823 237 198 82 U.S. addressees (domicile) 3,469 2,978 215 194 83 Non-U.S. addressees (domicile) 1,129 845 22 4 84 Commercial banks in United States (including IBF)s. 255 249 1 0 85 U.S. branches and agencies of other foreign banks 61 60 0 0 86 Other commercial banks in United States 194 n.a. 189 n.a. 1 n.a. 0 n.a. 87 Banks in foreign countries 937 874 12 2 88 Foreign branches of U.S. banks 4 4 0 0 89 Other banks in foreign countries 932 870 12 2 90 Foreign governments and official institutions (including foreign central banks) 395 368 3 1 91 All other deposits and credit balances 547 539 3 1 92 Certified and official checks 309 238 26 18 93 Non-transaction accounts (including MMDAs, excluding IBFs) 103,748 89,583 3,899 3,781 94 Individuals, partnerships, and corporations 75,186 63,132 3,026 3,448 95 U.S. addressees (domicile) 61,964 55,685 80 2,401 96 Non-U.S. addressees (domicile) 13,222 7,447 1,946 1,047 97 Commercial banks in United States (including IBFs). 21,726 19,915 652 330 98 U.S. branches and agencies of other foreign banks 8,612 8,514 26 8 99 Other commercial banks in United States 13,114 n a. 11,401 n a. 627 n.a. 323 n.a. 100 Banks in foreign countries 2,728 2,700 0 0 101 Foreign branches of U.S. banks 1,128 1,128 0 0 102 Other banks in foreign countries 1,601 1,572 0 0 103 Foreign governments and official institutions (including foreign central banks) 1,002 735 220 2 104 All other deposits and credit balances 3,106 3,101 0 1 105 IBF deposit liabilities 185,479 163,528 10,965 3,446 106 Individuals, partnerships, and corporations 17,197 10,163 920 108 107 U.S. addressees (domicile) 448 448 0 0 108 Non-U.S. addressees (domicile) 16,748 9,715 920 108 109 Commercial banks in United States (including IBFs). 56,877 51,417 3,337 1,305 110 U.S. branches and agencies of other foreign banks 51,167 46,484 2,958 1,111 111 Other commercial banks in United States n a. 5,710 n.a. 4,933 n a. 379 n.a. 194 112 Banks in foreign countries 96,606 87,910 6,221 1,916 113 Foreign branches of U.S. banks 7,154 6,246 638 237 114 Other banks in foreign countries •••••; 89,452 81,664 5,582 1,679 1 i5 Foreign governments and official institutions (including foreign central banks) 14,315 13,554 488 117 116 All other deposits and credit balances 483 483 0 0 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 Special Tables • November 1991 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 1991'—Continued Millions of dollars All states2 New York California Illinois IItteemm in I c T B l o u F t d a ' i s l n g I o B n F ly 's in I T c B l o u F t d a ' i s l n g I o B n F ly 's 3 in I c T B l o u F t d a ' i s l n g I o B n F ly 's 3 in I c T B l o u F t d a ' i s l n g I o B n F ly 's 3 117 Federal funds purchased and securities sold under agreements to repurchase 68,203 5,046 51,107 2, <88 10,810 1,588 5,632 556 UK U.S. branches and agencies of other foreign banks 10,693 1,884 6,844 903 2,300 638 1,521 330 119 Other commercial banks in United States 28,439 363 19,056 75 5,511 120 3,386 168 170 Other 29,072 2,799 25,207 1,910 2,998 830 725 58 121 Other borrowed money 129,759 51,494 72,385 22,902 40,743 20,127 14,840 7,827 17,7 Owed to nonrelated commercial banks in United States (including IBFs) 60,870 20,687 28,017 5,389 23,997 11,732 7,545 3,152 m Owed to U.S. offices of nonrelated U.S. banks 22,020 3,062 11,419 1,159 6,458 1,334 3,637 444 124 Owed to U.S. branches and agencies of nonrelated foreign banks 38,850 17,626 16,597 4,230 17,539 10,398 3,908 2,708 125 Owed to nonrelated banks in foreign countries 29,006 28,008 15,709 14,838 8,379 8,276 4,678 4,670 126 Owed to foreign branches of nonrelated U.S. banks ... 2,769 2,730 699 688 1,501 1,474 566 566 12.7 Owed to foreign offices of nonrelated foreign banks 26,238 25,278 15,010 14,150 6,877 6,802 4,112 4,104 128 Owed to others 39,883 2,798 28,659 2,675 8,367 118 2,617 5 129 All other liabilities 53,720 7,382 41,467 6,069 7,215 913 4,163 321 130 Branch or agency liability on acceptances executed and outstanding 27,370 n.a. 2200,,993388 n. a. 44,,992233 n. a. 889944 n.a. 131 Other liabilities to nonrelated parties 26,350 7,382 20,529 6,069 2,293 913 3,269 321 132 Net due to related depository institutions5 82,489 35,875 41,068 26,319 10,770 1,226 15,954 5,799 133 Net due to head office and other related depository institutions 82,489 n.a. 41,068 n.a. 10,770 n.a. 15,954 n.a. 134 Net due to establishing entity, head office, and other related depository institutions n.a. 35,875 n.a. 26,319 n.a. 1,226 n.a. 5,799 MEMO 135 Non-interest bearing balances with commercial banks in United States 2,263 0 1,992 0 118 0 91 0 136 Holding of commercial paper included in total loans 2,208 2,045 115 40 137 Holding of own acceptances included in commercial and industrial loans 2,360 1,674 458 115 138 Commercial and industrial loans with remaining maturity of one year or less 81,228 44,137 19,052 10,815 139 Predetermined interest rates 52,170 n.a. 27,996 n. a. 12,128 n. a. 6,673 n. a. 140 Floating interest rates 29,058 16,140 6,924 4,142 141 Commercial and industrial loans with remaining maturity of more than one year 69,147 41,813 14,375 7,768 142 Predetermined interest rates 21,184 12,656 3,659 3,486 143 Floating interest rates 47,963 29,157 10,716 4,282 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A79 4.30—Continued Millions of dollars All states2 New York California Illinois IItteemm ex T c IB l o u F t d a s i l n g o IB nl F y s ex T c IB l o u F t d a s i l n g o IB nl F y s 3 ex T c IB l o u F t d a s i l n g o IB nl F y s ex T c IB l o u F t d a s i l n g o IB nl F y s 3 111144444444 CCCCoooommmmppppoooonnnneeeennnnttttssss ooooffff ttttoooottttaaaallll nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, i n i n i n i n nnnn oooo cccc nnnn lllluuuu ttttrrrr dddd aaaa eeee nnnn dddd ssss aaaa iiii cccc nnnn tttt iiii tttt oooo oooo nnnn ttttaaaa aaaa llll llll dddd aaaa eeee cccc pppp ccccoooo oooo uuuu ssssiiii nnnn ttttssss ttttssss ,,,, aaaa nnnn iiiinnnn dddd cccc cccc lllluuuu rrrr dddd eeeedddd iiiinnnn iiiitttt gggg bbbb IIII aaaa BBBB llllaaaa FFFF nnnn ssss cccc eeeessss ooooffff 110,267 t 97,310 I 4,117 1 3,692 1 111144445555 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 75,253 66,221 2,289 2,035 111144446666 OOOOtttthhhheeeerrrr ttttiiiimmmmeeee ddddeeeeppppoooossssiiiittttssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 20,823 n.\a . 17,998 n.a. 1,232 n1.a. 1,460 nt.a. 111144447777 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee * wwwwiiiitttthhhh rrrreeeemmmmaaaaiiiinnnniiiinnnngggg mmmmaaaattttuuuurrrriiiittttyyyy ooooffff mmmmoooorrrreeee tttthhhhaaaannnn 11112222 mmmmoooonnnntttthhhhssss ........ 14,191 13,092 5% 196 All states2 New York California Illinois in T c IB l o u F t d a s i l n g o IB nl F y s 3 in T c I l B o u t F d a i s l n g o IB nl F y s inc T I l B o u F t d a i s l n g o IB nl F y s 3 inc T I l B o u F t d a i s l n g o IB nl F y s 3 111144448888 MMMMaaaarrrrkkkkeeeetttt vvvvaaaalllluuuueeee ooooffff sssseeeeccccuuuurrrriiiittttiiiieeeessss hhhheeeelllldddd 49,169 13,732 43,843 12,301 3,419 887 1,455 495 111144449999 IIIImmmmmmmmeeeeddddiiiiaaaatttteeeellllyyyy aaaavvvvaaaaiiiillllaaaabbbblllleeee ffffuuuunnnnddddssss wwwwiiiitttthhhh aaaa mmmmaaaattttuuuurrrriiiittttyyyy ggggrrrreeeeaaaatttteeeerrrr tttthhhhaaaannnn oooonnnneeee ddddaaaayyyy iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ooootttthhhheeeerrrr bbbboooorrrrrrrroooowwwweeeedddd mmmmoooonnnneeeeyyyy 75,571 n.a. 39,836 n.a. 25,337 n.a. 9,081 n.a. 111155550000 NNNNuuuummmmbbbbeeeerrrr ooooffff rrrreeeeppppoooorrrrttttssss ffffiiiilllleeeedddd6666 571 0 266 0 131 0 56 0 1. Data are aggregates of categories reported on the quarterly form FFIEC 002, that no IBF data re reported for that item, either because the item is not an eligible "Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign IBF asset or liability or because that level of detail is not reported for IBFs. From Banks." Details may not add to totals because of rounding. This form was first December 1981 through September 1985, IBF data were included in all applicable used for reporting data as of June 30, 1980, and was revised as of December 31, items reported. 1985. From November 1972 through May 1980, U.S. branches and agencies of 4. Total assets and total liabilities include net balances, if any, due from or due foreign banks had filed a monthly FR 886a report. Aggregate data from that report to related banking institutions in the United States and in foreign countries (see were available through the Federal Reserve statistical release G.ll, last issued on footnote 5). On the former monthly branch and agencyu report, available through July 10, 1980. Data in this table and in the G.ll tables are not strictly comparable the G.ll statistical release, gross balances were included in total assets and total because of differences in reporting panels and in definitions of balance sheet liabilities. Therefore, total asset and total liability figures in this table are not items. comparable to those in the G.ll tables. 2. Includes the District of Columbia. 5. "Related banking institutions" includes the foreign head office and other 3. Effective December 1981, the Federal Reserve Board amended Regulations U.S. and foreign branches and agencies of the bank, the bank's parent holding D and Q to permit banking offices located in the United States to operate company, and majority-owned banking subsidiaries of the bank and of its parent International Banking Facilities (IBFs). As of December 31, 1985 data for IBFs holding company (including subsidiaries owned both directly and indirectly). are reported in a separate column. These data are either included in or excluded 6. In some cases two or more offices of a foreign bank within the same from the total columns as indicated in the headings. The notation "n.a." indicates metropolitan area file a consolidated report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A80 Special Tables • November 1991 4.31 Pro forma balance sheet for priced services of the Federal Reserve System1 Millions of dollars Item June 30, 1991 June 30, 1990 Short-term assets2 Imputed reserve requirement on clearing balances 370.9 222.6 Investment in marketable securities 2,720.1 1,632.4 Receivables 56.8 59.1 Materials and supplies 6.2 6.5 Prepaid expenses 16.3 15.4 Items in process of collection 2,864.4 3,098.1 Total short-term assets 6,034.6 5,034.2 Long-term assets3 Premises 340.5 304.8 Furniture and equipment 163.4 130.3 Leases and leasehold improvements 17.8 7.0 Prepaid pension costs 80.7 57.8 Total long-term assets 602.3 499.9 Total assets 6,636.9 5,534.1 Short-term liabilities Clearing balances and balances arising from early credit of uncollected items 3.505.6 2,318.4 Deferred availability items 2.449.7 2,634.8 Short-term debt 79.3 81.0 Total short-term liabilities 6,034.6 5,034.2 Long-term liabilities Obligations under capital leases 1.2 1.2 Long-term debt 165.5 140.2 Total long-term liabilities 166.7 141.4 Total liabilities 6,201.3 5,175.6 Equity 435.6 358.5 Total liabilities and equity4 6,636.9 5,534.1 1. Details may not sum to totals because of rounding. collected for government agencies; and items associated with providing fixed 2. The imputed reserve requirement on clearing balances and investment in availability or credit prior to receipt and processing of items. The cost base for marketable securities reflect the Federal Reserve's treatment of clearing balances providing services that must be recovered under the Monetary Control Act maintained on deposit with Reserve Banks by depository institutions. For includes the cost of float (the difference between the value of gross CIPC and the presentation of the balance sheet and the income statement, clearing balances are value of deferred availability items) incurred by the Federal Reserve during the reported in a manner comparable to the way correspondent banks report period, valued at the federal funds rate. The amount of float, or net CIPC, compensating balances held with them by respondent institutions. That is, represents the portion of gross CIPC that involves a financing cost. respondent balances held with a correspondent are subject to a reserve require- 3. Long-term assets on the balance sheet have been allocated to priced services ment established by the Federal Reserve. This reserve requirement must be with the direct determination method, which uses the Federal Reserve's Planning satisfied with either vault cash or with nonearning balances maintained at a and Control System (PACS) to ascertain directly the value of assets used solely in Reserve Bank. Following this model, clearing balances maintained with Reserve priced services operations and to apportion the value of jointly used assets Banks for priced service purposes are subjected to imputed reserve requirements. between priced services and nonpriced services. Also, long-term assets include an Therefore, a portion of the clearing balances held with the Federal Reserve is estimate of the assets of the Board of Governors directly involved in the classified on the asset side of the balance sheet as required reserves and is development of priced services. reflected in a manner similar to vault cash and due from bank balances normally Long-term assets include amounts for capital leases and leasehold improveshown on a correspondent bank's balance sheet. The remainder of clearing ments and for prepaid pension costs associated with priced services. Effective balances is assumed to be available for investment. For these purposes, the January 1, 1987, the Federal Reserve Banks implemented Financial Accounting Federal Reserve assumes that all such balances are invested in three-month Standards Board Statement No. 87, Employer's Accounting for Pensions. Treasury bills. 4. A matched-book capital structure has been used for those assets that are not The account "items in the process of collection" (CIPC) represents the gross "self-financing" in determining liability and equity amounts. Short-term assets amount of Federal Reserve CIPC as of the balance sheet date, stated on a basis are financed with short-term debt. Long-term assets are financed with long-term comparable with a commercial bank. Adjustments have been made for intra- debt and equity in a proportion equal to the ratio of long-term debt to equity for System items that would otherwise be double-counted on a consolidated Federal the bank holding companies used in the model for the private sector adjustment Reserve balance sheet; items associated with nonpriced items, such as items factor (PSAF). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank Reported Data A81 4.32 Pro forma income statement for priced services of the Federal Reserve System1 Millions of dollars Quarters ending June 30 IItteemm 1991 1990 Income services provided to depository institutions2 184.1 182.7 Production expenses3 152.5 146.3 Income from operations 31.6 36.4 Imputed costs4 Interest on float 3.1 6.6 Interest on debt 4.8 4.2 Sales taxes 2.6 2.2 FDIC insurance 2.3 12.8 1.2 14.3 Income from operations after imputed costs 18.8 22.1 Other income and expenses5 Investment income 43.9 40.6 Earnings credits 39.8 4.2 35.9 4.6 Income before income taxes 22.9 26.7 Imputed income taxes6 7.0 7.4 Net income 15.9 19.3 MEMO Targeted return on equity6 8.1 8.4 Six months ending June 30 1991 1990 Income services provided to depository institutions2 365.5 364.5 Production expenses3 302.2 292.1 Income from operations 63.3 72.4 Imputed costs4 Interest on float 9.2 15.0 Interest on debt 9.6 8.4 Sales taxes 5.0 4.0 FDIC insurance 4.3 28.1 2.6 29.9 Income from operations after imputed costs 35.1 42.5 Other income and expenses5 Investment income 85.4 78.2 Earnings credits 74.9 10.5 68.8 9.4 Income before income taxes 45.6 51.9 Imputed income taxes6 13.9 14.4 Net income 31.7 37.5 MEMO Targeted return on equity6 16.2 16.8 1. The income statement reflects income and expenses for priced services. Float recovered through per-item fees is valued at the federal funds rate and has Included in these amounts are the imputed costs of float, imputed financing costs, been added to the cost base subject to recovery in the second quarter of 1991. and the income related to clearing balances. Total float 369.9 Details may not add to totals because of rounding. Unrecovered float -21.8 2. Income represents charges to depository institutions for priced services. Float subject to recovery 391.7 This income is realized through one of two methods: direct charges to an Sources of float recovery institution's account or charges against accumulated earnings credits. Income Income on clearing balances 52.6 includes charges for per-item fees, fixed fees, package fees, explicitly priced float, As of adjustments 195.6 account maintenance fees, shipping and insurance fees, and surcharges. Direct charges 71.8 3. Production expenses include direct, indirect, and other general administra- Per-item fees 71.7 tive expenses of the Federal Reserve Banks for providing priced services. Also Also included in imputed costs is the interest on debt assumed necessary to included are the expenses of staff members of the Board of Governors working finance priced-service assets and the sales taxes and FDIC insurance assessment directly on the development of priced services, which amounted to $1.0 million that the Federal Reserve would have paid had it been a private-sector firm. and $0.9 million in the second quarter for 1991 and 1990, respectively. Because of a change in the methodology for imputing PSAF costs approved in 4. Imputed float costs represent the value of float to be recovered, either 1989, FDIC insurance is now calculated on the basis of actual clearing balances explicitly or through per-item fees, during the period. Float costs include those for and credits that are deferred to depository institutions. Previously, the assessment checks, book-entry securities, noncash collection, ACH, and wire transfers. was calculated on the basis of available funds. The following table depicts the daily average recovery of float by the Federal 5. Other income and expenses consist of income on clearing balances and the Reserve Banks for the second quarter of 1991. In the table, unrecovered float cost of earnings credits granted to depository institutions on their clearing includes that generated by services to government agencies or by other central balances. Income on clearing balances represents the average coupon-equivalent bank services. yield on three-month Treasury bills applied to the total clearing balance main- Float recovered through income on clearing balances represents increased tained, adjusted for the effect of reserve requirements on clearing balances. investable clearing balances as a result of reducing imputed reserve requirements Expenses for earnings credits are derived by applying the average federal funds through the use of a deduction for float for cash items in process of collection rate to the required portion of the clearing balances, adjusted for the net effect of when calculating the reserve requirement. This income then reduces the float reserve requirements on clearing balances. required to be recovered through other means. 6. Imputed income taxes are calculated at the effective tax rate derived from a As-of adjustments and direct charges refer to midweek closing float and model consisting of the 50 largest bank holding companies. The targeted return on Digitized for iFntRertAerSriEtoRry check float, which may be recovered from depositing institutions equity represents the after-tax rate of return on equity that the Federal Reserve http://fraser. t ts h ht e rlo o f u l ug o ih a s t af a ed t jd t u h .s e otm r f g e e d n/ e ts r a t l o f t u h n e d i s n r s a ti t t e u a ti n o d n 's b il r l e in se g r v th e e o i r n c st l i e t a u r t i i n o g n b d a i l r a e n c c tl e y . o r by valuing c w o o m ul p d a n h y a v m e o e d a e rn l. e d had it been a private business firm, based on the bank holding Federal Reserve Bank of St. Louis

A82 Federal Reserve Board of Governors and Official Staff ALAN GREENSPAN, Chairman WAYNE D. ANGELL DAVID W. MULLINS, JR., Vice Chairman 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. SIEGMAN, 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 DLANE 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 WILLIAM R. JONES, Associate Director MARYELLEN A. BROWN, Assistant to the General Counsel THOMAS D. SIMPSON, Associate Director LAWRENCE SLIFMAN, Associate Director OFFICE OF THE SECRETARY DAVID J. STOCKTON, Associate Director WILLIAM W. WILES, Secretary MARTHA BETHEA, Deputy Associate Director JENNIFER J. JOHNSON, Associate Secretary PETER A. TINSLEY, Deputy Associate Director BARBARA R. LOWREY, Associate Secretary MYRON L. KWAST, Assistant Director RICHARD C. STEVENS, Assistant Secretary1 PATRICK M. PARKINSON, Assistant Director MARTHA S. SCANLON, Assistant Director DIVISION OF CONSUMER JOYCE K. ZICKLER, Assistant Director LEVON H. GARABEDIAN, 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 SUPERVISION AND REGULATION RICHARD D. PORTER, Assistant Director 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 WILLIAM A. RYBACK, Deputy Associate Director BRENT L. BO WEN, Inspector General STEPHEN C. SCHEMERING, Deputy Associate Director 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 1. On loan from the Division of Applications Development and Statistical Services. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A83 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 DIVISION OF INFORMATION RESOURCES MANAGEMENT STEPHEN R. MALPHRUS, Director BRUCE M. BEARDSLEY, Deputy Director ROBERT J. ZEMEL, Senior Adviser MARIANNE M. EMERSON, Assistant Director Po KYUNG KIM, Assistant Director RAYMOND H. MASSEY, Assistant Director EDWARD T. MULRENIN, Assistant Director DAYW. RADEBAUGH, JR. , Assistant Director ELIZABETH B. RIGGS, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A84 Federal Reserve Bulletin • November 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 THOMAS M. HOENIG JAMES H. OLTMAN RICHARD F. SYRON THOMAS C. MELZER STAFF DONALD L. KOHN, Secretary and Economist J. ALFRED BROADDUS, JR., Associate Economist NORMAND R.V. BERNARD, Deputy Secretary RICHARD G. DAVIS, Associate Economist JOSEPH R. COYNE, Assistant Secretary DAVID E. LINDSEY, Associate Economist GARY P. GILLUM, Assistant Secretary LARRY J. PROMISEL, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel KARL A. SCHELD, Associate Economist ERNEST T. PATRIKIS, Deputy General Counsel CHARLES J. SIEGMAN, Associate Economist MICHAEL J. PRELL, Economist THOMAS D. SIMPSON, Associate Economist EDWIN M. TRUMAN, Economist LAWRENCE SLIFMAN, Associate Economist JACK H. BEEBE, Associate Economist SHEILA T. TSCHINKEL, Associate Economist PETER D. STERNLIGHT, Manager for Domestic Operations, System Open Market Account SAM Y. CROSS, Manager for Foreign Operations, System Open Market Account FEDERAL ADVISORY COUNCIL PAUL HAZEN, President LLOYD P. JOHNSON, Vice President IRA STEPANIAN, First District B. KENNETH WEST, Seventh District CHARLES S. SANFORD, JR., Second District DAN W. MITCHELL, Eighth District TERRENCE A. LARSEN, Third District LLOYD P. JOHNSON, Ninth District JOHN B. MCCOY, Fourth District JORDAN L. HAINES, Tenth District EDWARD E. CRUTCHFIELD, Fifth District RONALD G. STEINHART, Eleventh District E.B. ROBINSON, JR., Sixth District PAUL HAZEN, Twelfth District HERBERT V. PROCHNOW, Secretary WILLIAM J. KORSVIK, Associate Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A85 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. SILBERSTEIN, New York, New York DEBORAH B. GOLDBERG, Washington, D.C. NANCY HARVEY STEORTS, Dallas, Texas MICHAEL M. GREENFIELD, St. Louis, Missouri DAVID P. WARD, Chester, New Jersey JOYCE HARRIS, Madison, Wisconsin SANDRA L. WILLETT, Boston, Massachusetts THRIFT INSTITUTIONS ADVISORY COUNCIL MARION O. SANDLER, Oakland, California, President LYNN W. HODGE, Greenwood, South Carolina, Vice President DANIEL C. ARNOLD, Houston, Texas RICHARD A. LARSON, West Bend, Wisconsin JAMES L. BRYAN, Richardson, Texas PRESTON MARTIN, San Francisco, California DAVID L. HATFIELD, Kalamazoo, Michigan RICHARD D. PARSONS, New York, New York ELLIOT K. KNUTSON, Seattle, Washington EDMOND M. SHANAHAN, Chicago, Illinois JOHN WM. LAISLE, Oklahoma City, Oklahoma WOODBURY C. TITCOMB, Worcester, Massachusetts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A86 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. 231 pp. $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 to Fair Lending August 1990. 646 pp. $10.00. 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. / (Regular Transactions). 1969. 100pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each volume $2.25; 10 or more of same volume to one address, $2.00 each. PAMPHLETS FOR FINANCIAL INSTITUTIONS Introduction to Flow of Funds. 1980. 68 pp. $1.50 each; 10 or Short pamphlets on regulatory compliance, primarily suitable more to one address, $1.25 each. for banks, bank holding companies, and creditors. Federal Reserve Regulatory Service. Looseleaf; updated at least monthly. (Requests must be prepaid.) Limit of fifty copies Consumer and Community Affairs Handbook. $75.00 per year. The Board of Directors' Opportunities in Community Monetary Policy and Reserve Requirements Handbook. Reinvestment $75.00 per year. The Board of Directors' Role in Consumer Law Compliance Securities Credit Transactions Handbook. $75.00 per year. Combined Construction/Permanent Loan Disclosure and The Payment System Handbook. $75.00 per year. Regulation Z Federal Reserve Regulatory Service. 3 vols. (Contains all four Community Development Corporations and the Federal Reserve Handbooks plus substantial additional material.) $200.00 Construction Loan Disclosures and Regulation Z per year. Finance Charges Under Regulation Z Rates for subscribers outside the United States are as follows How to Determine the Credit Needs of Your Community and include additional air mail costs: Regulation Z: The Right of Rescission Federal Reserve Regulatory Service, $250.00 per year. The Right to Financial Privacy Act Each Handbook, $90.00 per year. Signature Rules in Community Property States: Regulation B Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A87 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 and financial subjects that are of VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by Gregory E. Elliehausen and John D. Wolken. September general interest. Requests to obtain single copies of the full text 1990. 35 pp. or to be added to the mailing list for the series may be sent to Publications Services. 161. A REVIEW OF CORPORATE RESTRUCTURING ACTIVITY, 1980-90, by Margaret Hastings Pickering. May 1991. 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

A88 Index to Statistical Tables References are to pages A3-A81 although the prefix "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, 70-75 Depository institutions Domestic finance companies, 34 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, 76-79 Banks, by classes, 3,18-20, 21, 71, 73, 75 Automobiles Federal Reserve Banks, 4, 10 Consumer installment credit, 37, 38 Turnover, 15 Production, 47, 48 Discount rates at Reserve Banks and at foreign central banks and foreign countries (See Interest rates) BANKERS acceptances, 9, 22, 23 Discounts and advances by Reserve Banks (See Loans) Bankers balances, 18-20, 70, 72, 74. (See also Foreigners) Dividends, corporate, 33 Bonds (See also U.S. government securities) New issues, 33 EMPLOYMENT, 45 Rates, 23 Branch banks, 21, 55, 76-79 Eurodollars, 23 Business activity, nonfinancial, 44 Business expenditures on new plant and equipment, 33 FARM mortgage loans, 36 Business loans (See Commercial and industrial loans) Federal agency obligations, 4, 9, 10, 11, 29, 30 Federal credit agencies, 31 CAPACITY utilization, 46 Federal finance Capital accounts Debt subject to statutory limitation, and types and ownership Banks, by classes, 18, 71, 73,75 of gross debt, 28 Federal Reserve Banks, 10 Receipts and outlays, 26, 27 Central banks, discount rates, 67 Treasury financing of surplus, or deficit, 26 Certificates of deposit, 23 Treasury operating balance, 26 Commercial and industrial loans Federal Financing Bank, 26, 31 Commercial banks, 16,19,70,72,74 Federal funds, 6,17,19,20,21,23,26 Weekly reporting banks, 19—21 Federal Home Loan Banks, 31 Commercial banks Federal Home Loan Mortgage Corporation, 31, 35, 36 Assets and liabilities, 18-20, 76-79 Federal Housing Administration, 31, 35, 36 Commercial and industrial loans, 16, 18, 19, 20, 21, 70, 72, Federal Land Banks, 36 74,76-79 Federal National Mortgage Association, 31, 35, 36 Consumer loans held, by type and terms, 37, 38 Federal Reserve Banks Loans sold outright, 19 Condition statement, 10 Nondeposit funds, 17 Discount rates (See Interest rates) Number by classes, 71, 73, 75 U.S. government securities held, 4, 10, 11, 28 Real estate mortgages held, by holder and property, 36 Federal Reserve credit, 4, 5, 10, 11 Time and savings deposits, 3 Federal Reserve notes, 10 Commercial paper, 22, 23, 34 Federal Reserve System Condition statements (See Assets and liabilities) Balance sheet for priced services, 80 Construction, 44, 49 Condition statement for priced services, 81 Consumer installment credit, 37, 38 Federally sponsored credit agencies, 31 Consumer prices, 44,46 Finance companies Consumption expenditures, 52, 53 Assets and liabilities, 34 Corporations Business credit, 34 Nonfinancial, assets and liabilities, 33 Loans, 37, 38 Profits and their distribution, 33 Paper, 22, 23 Security issues, 32, 65 Financial institutions Cost of living (See Consumer prices) Loans to, 19,20,21 Credit unions, 37 Selected assets and liabilities, 25 Currency and coin, 18, 70, 72, 74 Float, 4, 81 Currency in circulation, 4,13 Flow of funds, 39,41,42,43 Customer credit, stock market, 24 Foreign banks, assets and liabilities of U.S. branches and agencies, 21,76-79 DEBITS to deposit accounts, 14 Foreign currency operations, 10 Debt (See specific types of debt or securities) Foreign deposits in U.S. banks, 4, 10, 19, 20 Demand deposits Foreign exchange rates, 68 Banks, by classes, 18-21, 71, 73, 75 Foreign trade, 54 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A89 Foreigners Profits, corporate, 33 Claims on, 55, 57, 60, 61, 62, 64 Liabilities to, 20, 54, 55, 57, 58, 63, 65, 66 REAL estate loans Banks, by classes, 16, 19, 20, 36, 72 GOLD Financial institutions, 25 Certificate account, 10 Terms, yields, and activity, 35 Stock, 4,54 Type of holder and property mortgaged, 36 Government National Mortgage Association, 31, 35, 36 Repurchase agreements, 6,17,19, 20,21 Gross national product, 51 Reserve requirements, 8 Reserves Commercial banks, 18 HOUSING, new and existing units, 49 Depository institutions, 3, 4, 5, 12 Federal Reserve Banks, 10 INCOME and expenses, Federal Reserve System, 80-81 U.S. reserve assets, 54 Income, personal and national, 44, 51, 52 Residential mortgage loans, 35 Industrial production, 44, 47 Retail credit and retail sales, 37, 38, 44 Installment loans, 37, 38 Insurance companies, 25, 28, 36 SAVING Interest rates Flow of funds, 39,41,42,43 Bonds, 23 National income accounts, 51 Consumer installment credit, 38 Savings and loan associations, 36, 37, 39. (See also SAIF-insured Federal Reserve Banks, 7 institutions) Foreign central banks and foreign countries, 67 Savings Association Insurance Funds (SAIF) insured institutions, 25 Money and capital markets, 23 Savings banks, 25, 36, 37 Mortgages, 35 Savings deposits (See Time and savings deposits) Prime rate, 22 Securities (See also specific types) International capital transactions of United States, 53-67 Federal and federally sponsored credit agencies, 31 International organizations, 57, 58, 60, 63, 64 Foreign transactions, 65 Inventories, 51 New issues, 32 Investment companies, issues and assets, 33 Prices, 24 Investments (See also specific types) Special drawing rights, 4, 10, 53, 54 Banks, by classes, 18, 19, 20,21, 25 State and local governments Commercial banks, 3, 16, 18-20, 36, 70 Deposits, 19, 20 Federal Reserve Banks, 10, 11 Holdings of U.S. government securities, 28 Financial institutions, 25, 36 New security issues, 32 Ownership of securities issued by, 19, 20, 25 LABOR force, 45 Rates on securities, 23 Life insurance companies (See Insurance companies) Stock market, selected statistics, 24 Loans (See also specific types) Stocks (See also Securities) Banks, by classes, 18-20 New issues, 32 Commercial banks, 3, 16,18-20, 70, 72, 74 Prices, 24 Federal Reserve Banks, 4, 5, 7, 10, 11 Federal Reserve System, 80-81 Student Loan Marketing Association, 31 Financial institutions, 25, 36 Insured or guaranteed by United States, 35, 36 TAX receipts, federal, 27 Thrift institutions, 3. (See also Credit unions and Savings and MANUFACTURING loan associations) Capacity utilization, 46 Time and savings deposits, 3, 13, 17, 18, 19, 20, 21, 71, 73, 75 Production, 46, 48 Trade, foreign, 54 Margin requirements, 24 Treasury cash, Treasury currency, 4 Member banks (See also Depository institutions) Treasury deposits, 4, 10, 26 Federal funds and repurchase agreements, 6 Treasury operating balance, 26 Reserve requirements, 8 UNEMPLOYMENT, 45 Mining production, 48 U.S. government balances Mobile homes shipped, 49 Commercial bank holdings, 18, 19, 20 Monetary and credit aggregates, 3,12 Treasury deposits at Reserve Banks, 4, 10, 26 Money and capital market rates, 23 U.S. government securities Money stock measures and components, 3,13 Bank holdings, 18-20, 21, 28 Mortgages (See Real estate loans) Dealer transactions, positions, and financing, 30 Mutual funds, 33 Federal Reserve Bank holdings, 4,10,11, 28 Mutual savings banks (See Thrift institutions) Foreign and international holdings and transactions, 10, 28, 66 NATIONAL defense outlays, 27 Open market transactions, 9 National income, 51 Outstanding, by type and holder, 25, 28 Rates, 23 OPEN market transactions, 9 U.S. international transactions, 53-67 Utilities, production, 48 PERSONAL income, 52 Prices VETERANS Administration, 35, 36 Consumer and producer, 44, 50 Stock market, 24 WEEKLY reporting banks, 19-21 Prime rate, 22 Wholesale (producer) prices, 44, 50 Producer prices, 44, 50 Production, 44, 47 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A90 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.LeeHoskins A. William Reynolds William H. Hendricks Cincinnati 45201 Kate Ireland Charles A. Cerino1 Pittsburgh 15230 Robert P. Bozzone Harold J. Swart1 RICHMOND* 23219 Anne Marie Whittemore Robert P. Black Henry J. Faison Jimmie R. Monhollon Baltimore 21203 John R. Hardesty, Jr. Ronald B. Duncan1 Charlotte 28230 Anne M. Allen Albert D. Tinkelenberg1 Culpeper Communications John G. Stoides1 and Records Center 22701 ATLANTA 30303 Larry L. Prince Robert P. Forrestal Edwin A. Huston Jack Guynn Donald E. Nelson1 Birmingham 35283 Roy D.Terry FredR. Herr1 Jacksonville 32231 Hugh M. Brown James D. Hawkins1 Miami 33152 Dorothy C. Weaver James T. Curry III 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. Melzer 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. Thomas M. Hoenig Burton A. Dole, Jr. Henry R. Czerwinski Denver 80217 Barbara B. Grogan KentM. Scott Oklahoma City 73125 Ernest L. Hollo way 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 Patrick K. Barron Los Angeles 90051 Yvonne B. Burke John F.Moore1 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A91 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories e*rYor* Mi**1 April 1984 i i ALASKA i i i \ i i © i •Xs 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