Federal Reserve Bulletin, 1992-04

VOLUME 78 • NUMBER 4 • APRIL 1992 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 223 MONETARY POLICY REPORT Securities and Exchange Commission, along TO THE CONGRESS with other reforms announced earlier, constitute a careful, comprehensive modernization The monetary stimulus already in train, couof the mechanisms and practices in the govpled with lessening drags from credit supply ernment securities market, before the Subcomdisruptions and from the restructuring of mittee on Oversight of the House Committee household and business balance sheets, is exon Ways and Means, February 3, 1992. pected to provide effective support for economic growth this year. Nonetheless, the pace 253 Alan Greenspan, Chairman, Board of Goverof expansion this year is expected to remain nors, focuses on some of the broad considerweaker than in previous business-cycle recov- ations bearing on our economic prospects and eries. "Core" inflation, however, is expected says that the attainment of rising living stanto move down appreciably in 1992, and this dards in the future will hinge crucially on our trend should carry into 1993—a pattern that ability to elevate productivity growth and that bodes well for the achievement of a balanced, bolstering the supply of saving available to sustained economic expansion. support productive private investment must be a priority for fiscal policy, before the House 242 TREASURY AND FEDERAL RESERVE Committee on the Budget, February 4, 1992. FOREIGN EXCHANGE OPERATIONS 256 Vice Chairman Mullins discusses reforms to The dollar declined during the period from the regulation of the government securities November 1991 through January 1992 a net market and says that over the longer term, the 3lA percent against the mark and 4 percent most effective force in enhancing market effiagainst the yen. On a trade-weighted basis, ciency and reducing the potential for manipuas measured by the Federal Reserve Board's lative abuses is the force of competition and index, the dollar declined 22A percent, on balthat proposed reforms to the market will open ance, over the period. it up to broad-based participation, before the Subcommittee on Domestic Monetary Policy 248 INDUSTRIAL PRODUCTION AND of the House Committee on Banking, Finance CAPACITY UTILIZATION and Urban Affairs, February 6, 1992. The index of industrial production dropped 258 E. Gerald Corrigan, President, Federal Re- 0.9 percent in January, after having fallen serve Bank of New York, shares his views on 0.4 percent in December. Total industrial the Joint Report on the Government Securities capacity utilization dropped 0.8 percentage Market and says that he strongly supports the point in January, to 78.0 percent. overall thrust of the joint report and believes that the changes and legislative recommenda- 251 STATEMENTS TO THE CONGRESS tions outlined in it represent a comprehensive David W. Mullins, Jr., Vice Chairman, Board yet well-balanced approach to the problems of Governors, presents the Board's views on that surfaced in the government securities reforms to the regulation of the government market last year, before the Subcommittee securities market and says that the proposals on Domestic Monetary Policy of the House contained in a joint report by the Federal Committee on Banking, Finance and Urban Reserve, the Treasury Department, and the Affairs, February 6, 1992. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

262 Edward C. Ettin, Deputy Director, Division of Errata in Federal Reserve Bulletin. Research and Statistics, Board of Governors, Revisions to money stock data. discusses issues related to bank mergers in the United States and says that a substantial volume of bank mergers has been a natural 280 RECORD OF POLICY ACTIONS OF THE response to a changing banking environment FEDERAL OPEN MARKET COMMITTEE and that the Board is continuing to analyze the At its meeting on December 17, 1991, the competitive effects of all proposed mergers Committee adopted a directive that called for and acquisitions, before the Subcommittee on initially maintaining the existing degree of Treasury, Postal Service, and General Govern- pressure on reserve positions but that inment of the Senate Committee on Appropria- cluded a marked bias toward easing during tions, February 24, 1992. the intermeeting period. Accordingly, the directive indicated that in the context of 264 Chairman Greenspan presents the Federal Re- the Committee's long-run objectives for price serve's Monetary Policy Report to the Con- stability and sustainable economic growth, gress (pages 223^1 of this issue) and says and giving careful consideration to economic, that even though the recovery that seemed to financial, and monetary developments, be in train at the time of the last report to the slightly greater reserve restraint might be ac- Congress has stalled, there are reasons to be- ceptable or somewhat lesser reserve restraint lieve that business activity will pick up, before would be acceptable during the intermeeting the Senate Committee on Banking, Housing, period. The reserve conditions contemplated and Urban Affairs, February 25, 1992. (Chair- at this meeting were expected to be consistent man Greenspan presented similar testimony with growth of M2 and M3 at annual rates of before the Subcommittee on Domestic Mone- around 3 percent and 1 xh percent respectively tary Policy of the House Committee on Bank- over the four-month period from November ing, Finance and Urban Affairs, February 19, through March. 1992.) 287 LEGAL DEVELOPMENTS Various bank holding company, bank service 272 ANNOUNCEMENTS corporation, and bank merger orders; and Reappointment of Alan Greenspan as Chair- pending cases. man of the Board of Governors and as a member of the Board. A1 FINANCIAL AND BUSINESS STATISTICS Reduction in reserve requirements on transac- These tables reflect data available as of tion accounts of depository institutions. February 26, 1992. Discontinuance of use of the supervisory definition of highly leveraged transactions. A3 GUIDE TO TABULAR PRESENTATION Availability of Consumer Affairs brochures on A4 Domestic Financial Statistics mortgage financing. A44 Domestic Nonfinancial Statistics A53 International Statistics Proposal to revise the Board's Regulations O and Y; proposal to revise the Board's capital adequacy guidelines for bank holding compa- A69 GUIDE TO STATISTICAL RELEASES AND nies and state member banks to provide ex- SPECIAL TABLES plicit guidance on the types of intangible assets that may be included in the tier 1 capital calculation for risk-based and leverage capital A70 INDEX TO STATISTICAL TABLES purposes. A72 BOARD OF GOVERNORS AND STAFF Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 FEDERAL OPEN MARKET COMMITTEE A78 FEDERAL RESERVE BANKS, BRANCHES, AND STAFF; ADVISORY COUNCILS AND OFFICES A76 FEDERAL RESERVE BOARD A79 MAP OF THE FEDERAL RESERVE PUBLICATIONS SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress Report submitted to the Congress on February 19, The faltering of the recovery process apparently 1992, pursuant to the Full Employment and Bal- owed to a variety of forces, some of which were anced Growth Act of 19781 operating well before the oil price shock of 1990 tipped the economy into recession. In a sluggish economy and amid unexpectedly weak asset values—particularly in real estate—deteriorating MONETARY POLICY AND THE ECONOMIC OUTLOOK FOR 1992 financial positions of debt-laden households and corporations further damped credit demands and When the Federal Reserve presented its midyear aggregate spending. Financial intermediaries, chasmonetary policy report to Congress last July, a tened by their negative experience with earlier moderate economic upturn was under way. Con- loans, became more hesitant about extending new sumer spending and housing activity had risen con- credit; the resultant tighter lending standards deepsiderably since the winter, bolstered by the decline ened the slowdown in economic activity and inhibin oil prices, by a rebound in consumer confidence ited the subsequent recovery. In the government in the wake of the allied victory in the Persian Gulf sector, where deficits remained large, not only at conflict, and by lower interest rates. Inventories the federal level but also in many state and local had been trimmed appreciably, orders were rising, jurisdictions, efforts to curb spending and increase and businesses, while still cautious, had begun to revenues constituted a further drag on aggregate increase employment and production. The key demand in the short run. monetary aggregates had accelerated and were Inflation, meanwhile, moved down over the secaround the middle of their 1991 target ranges. With ond half of 1991. Weak demand reduced pressures the stance of monetary policy seemingly conducive in both labor and product markets, and, after some to an upturn in economic activity, the Federal Re- acceleration of wages and prices in 1989 and 1990, serve, after having progressively reduced pressures an underlying disinflationary trend has now been on reserve positions earlier in the year, maintained established. Important in this process has been a a more neutral money market posture in the spring reduction in inflation expectations, visible not only and early summer. in a variety of survey data but also in the behavior As the year wore on, however, the incipient of securities markets. recovery lost its momentum. Consumer spending With actual and prospective inflationary presturned down, and business and consumer sentiment sures easing, economic activity flagging, and the began to erode. Inventories at wholesale and retail broader monetary aggregates weakening and growtrade establishments began to increase relative to ing near the bottom of their target ranges, the sales, inducing a new outbreak of production ad- Federal Reserve resumed easing money market justments and layoffs that continued through year- conditions in the second half of the year. As a end. Although the economy—as measured by its result, the federal funds rate fell from 53A percent real gross domestic product—continued to grow in in July to 4 percent by year-end, and most other the second half of the year, the pace of expansion short-term rates followed suit; the discount rate was only marginally positive. was also reduced over this period, from 5Vi percent to 3V2 percent, the lowest rate in nearly thirty years. Long-term interest rates, which had failed to respond to declines in money market rates in the 1. The charts for the report are available on request from Publi- early months of the year, came down significantly cations Services, Board of Governors of the Federal Reserve Sysin the latter part of 1991, partly in response to the tem, Washington, DC 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

224 Federal Reserve Bulletin • April 1992 easing in inflationary expectations. Although long- 1. Ranges for growth of monetary and debt aggregates1 term rates have backed up some in recent weeks, Percent they remain appreciably below the levels of last Aggregate 1990 1991 1992 summer. The decline in rates has helped reduce the financial burdens of highly leveraged households M2 3-7 2VS-6l /t 2V2-6V2 M3 1-5 1-5 1-5 and corporations, which have taken this opportu- Debt2 5-9 4>/2-8'/2 4V4-8V4 nity to refinance mortgages and to replace existing 1. Change from average for fourth quarter of preceding year to average debt with new lower-cost bonds. Lower interest for fourth quarter of year indicated. Ranges for monetary aggregates are rates also have contributed to an increase in stock targets; range for debt is a monitoring range. 2. Domestic nonfinancial sector. prices, inducing firms to boost equity issuance and to pay down debt, further strengthening their balance sheets. With the decline in U.S. interest rates, led investors to switch into other financial assets, the foreign exchange value of the dollar has largely such as bond and stock mutual funds. Flows into reversed the upward movement that had occurred these funds helped finance credit that had formerly earlier in the year. been intermediated by depositories, facilitating The unusually slow growth of the key monetary shifts to longer-term borrowing and reducing the and credit aggregates last year was, to a degree, adverse effects of any retrenchment by banks and indicative of the continuing restraint on private thrifts on the cost and availability of credit to many credit usage and spending. The aggregate debt of borrowers. However, some types of lending that domestic nonfinancial sectors—abstracting from are not so easily rechanneled—such as construcfederal government debt, which continued to grow tion loans and credits to small and lower-rated briskly—expanded only 23A percent in 1991, the businesses—have been curtailed, and a number of slowest advance in decades, and below the pace of borrowers now face more stringent credit terms. nominal GDP; households, nonfinancial businesses, and state and local governments all retrenched, curbing spending and borrowing in order to but- Monetary Objectives for 1992 tress deteriorating financial positions. The weakness in the monetary aggregates M2 In formulating its objectives for monetary policy and M3 reflected not only subdued overall credit for 1992, the Federal Open Market Committee has usage but also a continued decline in the share of sought to promote a sustainable upturn in economic credit intermediated by depositories. With the thrift activity while continuing to build upon the hardindustry contracting further, commercial banks ex- won gains against inflation that have already been ercising caution in their credit extensions, and bor- made. The task of translating these objectives into rowing demand concentrated in longer-term instru- specific ranges for money and debt continues to be ments, depository credit continued to shrink as a complicated by the ongoing restructurings of deshare of overall credit extensions. As a result, the positories and by the evolving attitudes toward velocity of M3—a monetary aggregate that com- credit on the part of borrowers and lenders. The prises most of the liabilities used by depositories to Committee believes that the rechanneling of credit fund credit growth—increased again in 1991, as flows away from depository institutions could well M3 grew only 1 lA percent, near the bottom of its continue to produce slower growth in the broad target range. Depository restructuring also re- monetary aggregates than normally would be assostrained M2, which grew in line with nominal GDP ciated with a given path for nominal GDP. despite a steep drop in short-term market interest Taking account of these effects, the Committee rates; ordinarily such a drop would have been ex- has deemed the ranges for 1992 tentatively adopted pected to depress the velocity of this aggregate. last July as appropriate for achieving its objectives. Banks, eager to improve capital positions, reduced The target range for M2 growth in 1992 is 2Vi perdeposit rates more than loan rates, increasing the cent to 6V2 percent, unchanged from 1991. Deincentive for households to pay down debt rather mands for M2 relative to income would be damped than to accumulate monetary assets. Less aggresif, as seems likely, banks and thrifts continue to sive pursuit of retail accounts by depositories also reduce deposit rates in lagged response to the de- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 225 2. Economic projections for 1992 FOMC members and MMeemmoo:: other FRB presidents IItteemm AAddmmiinniissttrraattiioonn 11999911 aaccttuuaall Range Central tendency Percent change, fourth quarter to fourth quarter1 Nominal GDP 3.2 4-6 4>/S-53/4 5.4 Real GDP .2 l'A-23/* PA-2V2 2.2 Consumer price index 2 2.9 2'/2-3'A 3-31/2 3.1 Average level, fourth quarter (percent) Unemployment rate3 6.9 6¥*-7>/* 6V*-7 6.8 1. From average for fourth quarter of 1990 to average for fourth quarter 2. All urban consumers. of 1991. 3. Percentage of civilian labor force. cline that has occurred in market rates. These are likely to refinance adjustable-rate mortgages deposit-rate reductions could be especially large if with fixed-rate obligations that can easily be securicredit continues to be channeled outside deposi- tized, and corporations will probably continue to tories; in this case, relatively modest growth in M2 turn to equity markets and long-term bonds rather would be adequate to support a satisfactory out- than bank loans. As a result, depository funding come for the economy. On the other hand, as the needs are likely to remain damped relative to the balance sheets and capital positions of depositories pace of economic activity, and the velocity of M3 continue to improve, banks and thrifts may adopt a should consequently rise further. generally more accommodative posture with re- The monitoring range for the aggregate debt of spect to credit extensions and would therefore have domestic nonfinancial sectors for 1992 is 41/2 pergreater need for retail deposits. In that event, some- cent to 8»/ percent, also unchanged from 1991. 2 what faster growth of M2 would be appropriate. Federal government borrowing is expected to re- On balance, the Committee's M2 range for 1992 main heavy in 1992, given the large budget deficit. allows room for a variety of developments in the Debt growth in nonfederal sectors, however, should intermediation process and thus in the behavior of remain fairly subdued relative to economic activity monetary velocity. Flexibility in interpreting M2 as borrowers and lenders alike maintain a cautious within its range is particularly important at this approach to leverage, in part because of a desire to time, in light of the ongoing and unpredictable make further repairs to damaged balance sheets. shifts in the patterns of credit usage and financial intermediation that likely will continue to buffet our financial system. Looking ahead to future years, the Committee also recognizes that the range Economic Projections for 1992 for M2 growth may eventually have to be lowered in order to put in place the monetary and credit Although the long-standing structural problems that conditions consistent with price level stability. aborted the fledgling recovery last summer clearly The target range for M3 growth in 1992 remains are being addressed, the speed of their resolution— at 1 percent to 5 percent. Although credit growth is and the associated restraint on economic growth— expected to pick up somewhat in 1992, in line with is quite difficult to gauge, augmenting the usual a firming of economic activity, much of this credit uncertainties in assessing the economic outlook. likely will be financed outside the depository On the whole, however, the members of the Board system. The thrift industry is expected to contract of Governors and the Reserve Bank presidents further as activity by the Resolution Trust Corpo- believe that, with the easing of monetary condiration continues apace, and banks, faced with tions to date providing considerable impetus to the continued—though moderating—pressures on cap- economy, the most likely outcome is for a moderital positions, will still be somewhat hesitant to ate reacceleration of activity over 1992. At the expand. At the same time, additional households same time, they anticipate that the trend toward Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

226 Federal Reserve Bulletin • April 1992 price stability, which now appears to be rooted problems of credit availability that have plagued more securely, will be sustained through this the economy over the past couple of years should year. begin to ease in 1992 as the economic recovery The forecasts of most of the governors and pres- takes hold and lenders become more confident idents for growth of real gross domestic product about extending credit. are in a range of 13A percent to 2Vi percent mea- Nonetheless, the pace of expansion this year is sured from the fourth quarter of 1991 to the fourth expected to remain weaker than in previous busiquarter of 1992. With employers likely to be cau- ness cycle recoveries. In large part, this expectation tious about hiring until they are fully persuaded of reflects some still-unresolved economic and finanthe sustained vitality of the upturn, gains in em- cial imbalances in particular segments of the econployment are expected to come slowly. Thus, only omy. The persistent overhang of space in office and a small improvement in the unemployment other commercial buildings undoubtedly will inrate is anticipated this year, with the central ten- hibit new construction in that sector for some time. dency of projections being a range of 63A percent In addition, the budgetary constraints that have to 7 percent for the fourth quarter of 1992. With capped government spending are likely to linger; a regard to inflation, the central tendency range for good many states and localities are finding that the CPI increase this year is 3 percent to 3V2 per- budget gaps are reopening despite the spending cent. These forecasts are, in general, very similar to cuts and tax increases they instituted last year. the projections presented by the Administration in Meanwhile, the external sector is expected to have the fiscal year 1993 budget. Indeed, the Adminis- a relatively neutral net influence on domestic protration's forecast for nominal GDP is well within duction this year; foreign demand—particularly the Committee's central tendency range and thus from Mexico and developing countries in Asia— appears to be quite consistent with the FOMC's should continue to boost export growth, but the monetary ranges. anticipated pickup in domestic purchases is likely In their early February discussion of the eco- to draw in additional imports as well, limiting the nomic outlook, the Board members and Reserve potential for further substantial improvement in the Bank presidents observed that the effects of recent trade balance. job losses and weak consumer confidence are likely Only a minority of Board members and Reserve to restrain activity in the near term. Under the Bank presidents foresee a smaller increase this year circumstances, the Board members and Bank presi- in the overall CPI than the 3 percent rise experidents stressed that economic developments need to enced in 1991. But the pickup in inflation sugbe monitored closely to guard against the possibil- gested by the 3 percent to 3V2 percent central ity that the economy might falter. Nonetheless, the tendency range is deceptive: the underlying trends monetary stimulus already in train is expected to in price movement are more favorable. The CPI provide effective support for economic growth this was held down to a substantial degree last year by year, and in this regard the early indications of a the unwinding of the energy price shock that folmarked pickup in residential real estate activity and lowed Iraq's invasion of Kuwait in August 1990, a rise in retail sales are a particularly favorable and further sharp declines in energy prices do not sign. appear likely in the current environment. However, It is also expected that the drags on growth from an ongoing deceleration in prices is evident for a disruptions in credit supply and from the restructur- wide range of other goods and services, and with ing of household and business balance sheets will inflationary tendencies under considerable restraint begin to lessen over the year. As noted above, this from several factors—including further moderation is obviously an area of substantial uncertainty. in labor cost growth, continued slack in industrial However, as household and corporate debt loads product markets, and small increases in import diminish in an environment of stronger economic prices—"core" inflation is expected to move down activity, and as lower interest rates continue to ease appreciably in 1992. Indeed, this trend should carry financing burdens of borrowers, consumers and into 1993—a pattern that bodes well for the businesses should be poised to participate more achievement of a balanced, sustained economic fully in the economic expansion. Moreover, the expansion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 227 THE PERFORMANCE OF THE ECONOMY adjustments. In part, the impact of these adjust- IN 1991 ments was felt abroad as businesses cut back their imports of foreign goods. However, domestic ad- The year 1991 began with the U.S. economy in the justments were evident as well, and, apart from midst of recession. Activity had contracted sharply atypical weather patterns that temporarily increased after the jump in oil prices that followed Iraq's the demand for electricity, industrial production invasion of Kuwait in August 1990, and this weak- was flat over the second half of the year. The ness spilled into the first quarter with further reduc- sluggish pace of activity in the industrial sector tions in production and employment. By the spring, was joined by weakness in other parts of the econhowever, economic data indicated that the decline omy, and overall, the nation's real gross domestic in economic activity had bottomed out. The rapid product is estimated to have risen a scant V* percent conclusion of the Persian Gulf war boosted con- at an annual rate in the fourth quarter of last year. sumer confidence, and the reversal of the earlier In the labor market, layoffs proliferated once again, runup in oil prices and the cumulative effects of and the civilian unemployment rate rose to 7.1 perdeclining interest rates were providing support for cent at the end of 1991. an increase in household spending. Indeed, con- The deterioration in both industrial activity and struction of single-family homes had already turned nonfarm employment extended into this year, with up noticeably by April, and consumer spending factory production down sharply in January and posted a moderate rise in the second quarter. Al- private payrolls edging beneath the low of last though businesses continued to liquidate invento- April. On the other hand, housing market activity ries at a fairly rapid pace, industrial production appears to have picked up somewhat since the grew steadily from April through July, and hiring beginning of the year, and nominal retail sales rose activity increased. about V2 percent in January. However, the pickup in the economy evident Inflation slowed in 1991, with consumer prices from April to July failed to develop any momen- up 3 percent over the year, much less than the tum, as the thrust to domestic demand initiated by 6 percent rise posted during 1990. In part, the the end of the Gulf war dissipated during the sum- slowing in inflation reflected the sharp drop in oil mer. The absence of a more robust recovery likely prices early in the year; consumer energy prices in reflected the drag on aggregate demand from some December were IV2 percent below their level at the longer-term economic and financial adjustments. end of 1990, with the decline concentrated in the For example, imbalances long evident in the com- first quarter of the year. Food price inflation also mercial and multifamily construction sectors moderated considerably, amounting to only 2 perdamped enthusiasm for new projects, and ongoing cent last year after three years of increases in difficulties in the financial sector continued to re- excess of 5 percent. strain credit availability; these influences undoubt- Even apart from food and energy, inflation now edly muted the stimulus that normally would have appears to be on a downward trend. To be sure, been forthcoming from the decline in interest rates. there were sizable increases in the CPI excluding Fiscal restraint evident at all levels of government food and energy early in the year, as higher federal weighed on aggregate demand in a way not typi- excise taxes and a pass-through of the sharp rise in cally observed in previous economic cycles. Signif- energy prices boosted prices for a variety of goods icant restructurings of operations in a number of and services. With the subsequent reversal in oil sectors had the effect of retarding employment and prices and no further major tax hikes, however, income growth, at least in the short run. And con- price pressures eased visibly beginning in the cerns about debt-servicing burdens as well as about spring. On balance, the CPI excluding food and economic prospects sustained a reluctance on the energy rose less than 4 percent at an annual rate in part of businesses and consumers to borrow and the second half of 1991, well below the 5 percent increase spending. pace of 1990. Labor cost pressures also diminished Despite their cautious planning, some businesses last year, although substantial increases in health experienced inventory backups in the late summer care expenses remained a problem for employers. and fall, necessitating another round of production As measured by the employment cost index, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

228 Federal Reserve Bulletin • April 1992 nominal compensation per hour rose about AVz per- parts of the nation, this spending boom spread to cent over 1991, somewhat less than the increases residential real estate as well, with the associated recorded in each of the three previous years. borrowing, which was often predicated on expectations of rapidly rising family incomes, adding further to the financing burdens of households. As Household Spending—Consumption and income growth weakened over the past year and a Residential Construction half, consumers struggled to meet the monthly With household finances adversely affected by job obligations on their accumulated debt and apparlosses and declining real incomes, real consumer ently deferred some discretionary spending in the spending rose just lA percent over the year, the process. This financial stress also was evidenced by same as in 1990. At the beginning of the year, an increase in delinquency rates for consumer and consumer purchasing power already had been mortgage loans last year to levels comparable to sapped by the rise in energy prices and by declines those experienced in the previous two recessions. in employment. And although the retreat in oil A renewed pessimism on the part of households prices then in progress and an improvement in may also have contributed to the reluctance of consumer confidence following the end of the Gulf consumers to step up spending over the latter part war provided a boost to spending in the spring, the of 1991. As noted previously, consumer confifailure of the recovery to take hold and concerns dence, which was quite low at the beginning of the about financial prospects and debt burdens re- year, rose markedly upon the conclusion of the strained spending in the second half of the year. On Gulf war. However, as it became apparent that the balance, real consumer outlays edged down be- anticipated recovery in the economy was not matetween July and December, retracing part of the rializing and announcements of layoffs resumed, rise that had occurred during the spring and early confidence turned down, dropping especially summer. sharply toward the end of the year. In January The weakness in consumer spending over the 1992, the Survey Research Center's index of conpast year was particularly evident for durable sumer sentiment stood at the levels of last winter, goods. A sharp drop in motor vehicle purchases while the Conference Board's confidence index accounted for much of the overall decline in spend- was below that seen in the 1981-82 recession. ing on durables; indeed, the level of motor vehicle Many analysts observed that consumers appeared sales in 1991, at 12V4 million units, was the lowest to be more apprehensive than normally might since 1983. Outlays for other durable goods were be expected, given the broad macroeconomic down slightly over the year, after a IV2 percent circumstances—for example, the unemployment decline in 1990. As with total spending, purchases rate has remained well below that reached in the of other durables picked up somewhat in the spring early 1980s—suggesting that concerns about and early summer, but then fell in the fourth quarter longer-run economic prospects may have contribas consumers retrenched. Spending on nondurable uted to the heightened anxiety among households goods also declined last year, with expenditures, last fall. especially for apparel, down sharply in the fourth After dropping sharply in January, housing starts quarter. In contrast, outlays for services continued posted a moderate recovery over the remainder of to trend up at a pace similar to that registered in the the year, fueled by a reduction in mortgage rates to two previous years. their lowest levels since the 1970s. Sales of new The patterns of change among the components and existing single-family homes rose over the of consumer spending—particularly the steep de- year, with the pickup in demand reportedly especline in outlays for "big ticket" durable goods— cially pronounced from first-time buyers. Reflectunderscore the role of household balance sheet ing the strengthening in demand, the excess supply concerns in restraining economic growth last year. of unsold new homes diminished, and the pace of Household debt burdens rose substantially during single-family housing starts moved above 900,000 the 1980s, when consumers stepped up spending units at an annual rate by the fourth quarter, an on motor vehicles and other consumer durables, increase of more than 16 percent from a year often financing their purchases with credit. In some earlier. Nevertheless, production was well below Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 229 that of earlier years, and, despite the upturn in industrial production rose an average 0.7 percent activity, the single-family housing market remains per month from April to July. Despite the firming softer than would be expected given recent mort- in sales, businesses remained cautious, and invengage rates and the rising number of households of tory levels continued to decline through midyear. prime homebuying age. Continued lender caution In late summer, however, final demand slackabout granting land-acquisition and construction ened, and after seven months of decline, business loans reportedly has damped production in some inventories accumulated at a substantial rate from locales. However, given the absence of significant September through December. The rise in inventoprice pressures in the housing market, restraint on ries was centered in wholesale and retail trade, and the demand for single-family homes, stemming inventory-sales ratios there moved into ranges that from weak income growth, concerns about employ- appeared undesirably high in light of carrying costs ment prospects, and poor conditions for home sell- and expected sales. A portion of the accumulation ing, likely has been a more prominent influence on appeared to consist of goods ordered from abroad; homebuilding than have supply constraints. indeed, a partial reaction to the overhang may have In the multifamily housing market, an excess been visible in the sharp drop in nonoil imports in supply of vacant units and restraints on credit avail- November. Nonetheless, retailers evidently also reability continued to depress construction last year. duced orders from domestic suppliers, contributing Starts of multifamily units fell about 30 percent to the sluggish pattern of manufacturing output in over the twelve months of 1991, and the number of the fourth quarter. By January of this year, factory starts during the year was the lowest since the production had dropped back to its level of a year 1950s. There have been numerous reports of re- earlier, and the operating rate in industry was back strictive lending practices damping activity in this down to levels that, prior to last winter, had not sector. However, vacancy rates for rental units been seen since the brief industrial slump of 1986. remain exceptionally high—and rents soft— Business investment in fixed capital fell 7 persuggesting that in many areas new projects might cent in real terms over the four quarters of 1991. As well be of questionable economic viability. Until is typical during recessions, spending was inhibited market supplies begin to tighten discernibly, activ- by weak profits, a rise in excess capacity, and ity in this segment of the market is unlikely to uncertainty regarding the outlook for sales. Howshow appreciable improvement. ever, investment outlays last year also were depressed by a desire on the part of many businesses to reduce debt burdens and by a continued oversup- Business Spending—Investment in Inventories ply of office and other commercial space. Even and Fixed Capital adjusting for cyclical considerations, last year's weak pace of investment appeared to extend the In early 1991, the investment climate was domi- relatively slow rate of capital formation evident for nated by the effects of the decline in the demand some time. The capital stock in the nonresidential for business output and the jump in energy prices business sector, net of depreciation, has risen about during the second half of 1990. With profit margins 23A percent at an annual rate over the past decade— down sharply and inventory imbalances emerging down from 33A percent annually during the previin a number of sectors, businesses reduced produc- ous decade. In part, this pattern has owed to a shift tion and employment substantially between Octo- toward shorter-lived assets—such as computers— ber 1990 and March 1991. Cutbacks in the motor that depreciate more quickly. However, such outvehicle sector were especially sharp over that lays, by generating a relatively high flow of capital period, although output of most other types of services per dollar of investment, have cushioned goods and materials turned down as well. the impact on productivity of the slowing pace of By the spring, inventories generally were better capital formation. Even so, the quantity of investment, which has also been depressed by large fedaligned with sales, and operating profits, while still eral budget deficits and the resulting low level of low, had turned up. As a result, the improvement in national saving, has been inimical to productivity aggregate demand in the second quarter was acgrowth and thus to the advance of living standards. companied by an increase in business output, and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

230 Federal Reserve Bulletin • April 1992 Real spending for equipment fell 3lA percent structures also generally declined over the year, as over 1991, as outlays plunged in the first quarter low rates of capacity utilization curtailed plans for and showed only limited improvement on net over new factory construction. Petroleum drilling activthe remainder of the year. The strongest area in ity, meanwhile, dropped sharply in response to the investment spending was computers, for which real decline in oil prices. outlays increased more than 40 percent at an an- Federal banking regulators have taken a number nual rate over the second half of the year; these of steps to ensure that supervisory pressures do not gains were driven by new product introductions unduly restrict real estate lending. The agencies and by the substantial price cuts offered by com- have, for example, addressed issues relating to puter manufacturers. In contrast, business invest- accounting and appraisal, to make sure that illiquid ment in other types of equipment generally de- real estate exposures are evaluated sensibly and clined, on balance, over the year. Outlays for consistently. And, they have issued guidance to industrial equipment continued to deteriorate as examiners—and simultaneously to bankers— excess capacity limited expansion in the manufac- emphasizing that banks should not be criticized for turing sector, and business purchases of motor vehi- renewing loans to creditworthy borrowers whose cles dropped off sharply. In addition, domestic or- real estate collateral has fallen in value—even ders for commercial aircraft plunged after midyear when the banks need to build up capital or reduce as a number of domestic airlines trimmed invest- loan concentrations over time. However, with so ment plans. Although the large backlog of unfilled adverse a supply-demand imbalance in the proporders that still remains should sustain production erty market, lenders understandably have remained and shipments for some time, the slackening in reluctant to bear the risks of real estate exposures. demand indicated by the sharp downturn in aircraft orders suggests that the growth surge in this sector The Government Sector may have run its course. Nonresidential construction plummeted 15 per- Budgetary pressures were widespread in the govcent in real terms over the four quarters of 1991. ernment sector in 1991. At the federal level, the The contraction was broadly based, but especially unified budget deficit increased to $269 billion in large declines in outlays were evident for office fiscal year 1991, up $48 billion from the 1990 buildings and other commercial structures. Despite deficit. In large part, the rise in the deficit was the sharp cutbacks in construction in recent years, attributable to the slowdown in economic activity, prices of existing commercial properties have con- which reduced tax receipts and increased outlays tinued to fall, contributing to the substantial stress for income-support programs such as unemployevident in the financial sector. Of course, the funda- ment insurance and food stamps. However, as in mental problem is the space overhang from the 1990, the fiscal 1991 deficit also was affected by earlier overbuilding; the vacancy rate for office special factors: A pickup in net outlays for deposit buildings nationwide was still close to 20 percent insurance added to the deficit, while one-time conat the end of the year. However, a lack of liquidity tributions from our allies to defray the costs of in this market—in particular, the reluctance of Operations Desert Shield and Desert Storm relenders to finance acquisitions of commercial duced it. Excluding deposit insurance and these properties—has made the adjustment still more foreign contributions, the 1991 deficit totaled difficult. Such problems are especially acute in the $246 billion. market for office buildings, where appraised values On the revenue side, federal tax receipts rose just have declined nearly 30 percent since 1985 and 2 percent in fiscal 1991, the smallest increase in where lenders and developers generally have many years. The slowing in receipts largely shown little interest in new projects. For other stemmed from weak nominal income growth; incommercial structures—primarily shopping centers deed, personal income tax payments in 1991, which and warehouses—the outlook is slightly less downaccounted for nearly half of total receipts, were beat, with the data on new contracts and building about the same as in 1990 despite changes in tax permits suggesting that the steepest declines may provisions that were projected to raise $16 billion have already occurred. Spending for industrial in new revenues. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 231 Meanwhile, spending rose nearly 6 percent in third quarter of 1991 from a high of nearly $47 bilfiscal 1991. Part of the $71 billion increase in lion in the fourth quarter of 1990; the shrinkage of nominal federal outlays reflected the slightly more this deficit represents the first major improvement rapid pace at which the Resolution Trust Corpora- since 1984, when the state and local budget surplus tion resolved insolvent thrift institutions last year. peaked. Even so, relative to GDP, the deficit still is In contrast, outlays were reduced by allied contri- quite high on a historical basis. The credit quality butions to the Defense Cooperation Account. These of state and local government debt also continued contributions, which are scored as negative outlays to deteriorate last year, as illustrated by the downin the budget accounts, exceeded the outlays made grading of the general obligation debt of eight in 1991 for U.S. involvement in the conflict; the states by one rating agency; most of the rating excess will be put toward the replacement of muni- changes were the direct result of budgetary tions in 1992 and beyond. Excluding deposit insur- imbalances. ance and contributions of allies, outlays rose about The poor fiscal position of state and local bud- 9 percent in fiscal 1991. Spending for health pro- gets led to both severe restraints on spending and grams continued to rise rapidly, elevated by large sizable tax hikes. Overall, real purchases of goods increases in health care costs and in outlays for the and services edged down over the four quarters of medicaid program. Among other entitlement pro- 1991. In nominal terms, total expenditures by grams, outlays for social security and other income- these governments were up 4 percent last year, less support programs, which together account for one- than one-half the average pace in recent years. third of total federal spending, rose more than Receipts rose an estimated 7 percent over 1991, as 11 percent in fiscal 1991, reflecting substantial numerous jurisdictions imposed a variety of new increases in the number of beneficiaries. In con- tax measures and federal aid to state and local trast, declining interest rates reduced the growth governments—especially for medicaid—increased of interest payments on the federal debt. Defense substantially. Nonetheless, many state and local outlays—excluding foreign contributions—were governments continue to report revenue shortfalls up 5Vi percent from fiscal year 1990 to fiscal and spending overruns for the current fiscal year, year 1991, as the additional U.S. outlays for the setting the stage for another round of budget- Persian Gulf conflict were only partially offset by balancing measures ahead. the spending cuts enacted in the 1990 budget agreement and in previous years. Federal purchases of goods and services, the The External Sector portion of federal spending that is included directly in GDP, fell 3 lA percent in real terms over the four Measured in terms of the other Group of Ten quarters of 1991. Defense purchases jumped (G-10) currencies, the trade-weighted foreign exsharply early in the year to support operations in change value of the U.S. dollar appreciated 14 perthe Persian Gulf, but declined substantially over cent, on balance, from December 1990 to July the remainder of the year as the effects of sched- 1991, reversing more than one-half of the decline uled cuts in defense outlays were augmented by a that had occurred from the middle of 1989 to the dropoff in purchases for Desert Storm; on net, end of 1990. In large part, the rise in the dollar over defense purchases were down about 41/2 percent this period reflected the quick end to the Gulf war last year. In contrast, nondefense purchases were and expectations of a recovery in the U.S. econup slightly in 1991; increases for law enforcement, omy, as well as developments in Eastern Europe space exploration, and health research offset a that initially weighed on the German mark. Howdrawdown in inventories held by the Commodity ever, as the U.S. economic recovery faltered in late Credit Corporation. summer and market participants viewed further The fiscal position of state and local govern- easing actions by the Federal Reserve as more ments, which had deteriorated sharply in 1990, likely, the dollar again turned down, averaging in remained poor in 1991. The deficit in the combined December 1991 only about 3 percent above its operating and capital accounts (excluding social level in December 1990. The dollar rebounded insurance funds) narrowed to $34 billion in the somewhat in January on market perceptions of a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

232 Federal Reserve Bulletin • April 1992 diminished likelihood of an additional easing in weakness in domestic demand. Exports rose fairly U.S. interest rates and expectations that German strongly in the second quarter, as high levels of authorities would not push their interest rates up investment in such countries as Germany and Japan further. boosted exports of computers and other capital On a bilateral basis, the dollar rose 19 percent equipment. Economic activity in the major foreign against the mark between December 1990 and July industrial countries weakened as the year wore on, 1991, amid disappointment about the effect of Ger- however, and with a deterioration in the competiman unification on German inflation and trade. tive position of U.S. companies following the ap- During the second half of last year, German mone- preciation of the dollar over the first half of the tary policy tightened, and the dollar gave up much year, export growth slowed markedly in the third of its previous gains, finishing the year just 4 per- quarter. Exports surged again in the fourth quarter, cent above its December 1990 level. Other curren- led by sales of computers, aircraft, and other capicies in the European Monetary System generally tal goods. However, some of the recent increase moved with the mark during 1991, although ster- appears to represent a bunching of sales rather than ling slipped somewhat near year-end. The dollar an increase in economic activity abroad. declined about 4 percent on net against the yen in Merchandise imports excluding oil grew about 1991, as increasing Japanese trade surpluses led to 4 percent in real terms during 1991. Imports dethe view that an appreciation of the yen would be clined early in the year as weak domestic spending welcomed by the authorities. reduced the demand for foreign goods. As domes- The merchandise trade deficit narrowed to less tic demand in the United States turned up in the than $75 billion in 1991, compared with $108 bil- spring, imports—especially of automotive prodlion in 1990; the trade deficit last year was the ucts, computers, and consumer goods—rose and smallest since 1983. An especially large decline in remained strong through the summer. With the the deficit was registered early in the year, as the subsequent weakening in demand, however, some drop in oil prices sharply reduced the value of of the additional import volume apparently ended imports. In addition, trade flows during the first up on retailers' shelves. In response, U.S. busihalf of 1991 were influenced by the weakening of nesses reduced orders from abroad, and import U.S. activity (which reduced demand for imports), growth slowed sharply over the fourth quarter. The by continued growth abroad (which boosted ex- quantity of oil imports, which had plunged after the ports), and by the lagged effects of the decline in sharp rise in oil prices in the fall of 1990, generally dollar exchange rates that had taken place in 1990. moved up through the third quarter as refiners However, imports rose sharply in the third quarter, moved to rebuild inventories. However, oil import and the trade deficit widened somewhat in the volumes turned down again in the fourth quarter, second half of the year. The current account bal- reflecting sluggish U.S. activity and unseasonably ance recorded a small surplus, on average, during warm weather. the first three quarters of 1991, a sharp improve- The sharp reduction in the recorded U.S. current ment from the $92 billion deficit in 1990. However, account deficit in the first three quarters of 1991 about half of that improvement resulted from cash was mirrored by changes in recorded capital ingrants from foreign governments to support opera- flows and the statistical discrepancy. The statistical tions in the Persian Gulf; excluding these transfers, discrepancy in the international accounts, which the current account showed an average deficit of had jumped to $64 billion in 1990, declined to $48 billion at an annual rate over the first three virtually zero in the first three quarters of 1991. quarters of 1991. The improvement in the current Inflows of official capital were about matched by account (excluding transfers) was somewhat outflows of private capital in the first three quarters greater than that in the trade balance owing to a of 1991. Net official inflows amounted to $16 bilstrengthening of net service receipts in such areas lion despite net intervention sales of dollars in as travel, education, and professional services. foreign exchange markets by the G-10 countries U.S. merchandise exports grew about 10 percent and a drawdown of reserves held in the United in real terms over the four quarters of 1991, temper- States by countries helping to cover the costs of ing the production declines associated with the Desert Storm; some countries also financed their Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 233 contributions by borrowing and liquidating invest- The net job losses last year were widespread by ments in the Euromarkets. Net private capital out- industry and reflected both the cyclical weakness in flows were $18 billion in the first three quarters, labor demand associated with the recession and largely accounted for by banks. In part, these out- more fundamental efforts by many businesses to flows reflected the increased net demand for funds restructure operations and permanently reduce the in the Euromarkets associated with Desert Storm size of their workforces. Employment in manufactransfers. In addition, the elimination by the Fed- turing, which began its decline in 1989, fell more eral Reserve of certain reserve requirements in than 400,000 over 1991' with most of the losses in December 1990 led some U.S. agencies and the durable goods sector. The continued contracbranches of foreign banks to increase their issuance tion in commercial building depressed construction of large time deposits in the United States and to employment despite the moderate recovery in resireduce their reliance on borrowing from abroad. dential housing demand. Efforts to restructure ex- Securities transactions in the first three quarters isting operations and to downsize workforce levels of 1991 reflected the continued internationalization were evident in the finance, insurance, and real of financial markets. Although the net inflow was estate sector as well, where job losses last year modest, private foreigners added substantially to stood in contrast to the past pattern of continued their holdings of U.S. stocks and bonds, while U.S. hiring during recessions. Employment in trade esresidents bought a large volume of foreign stocks tablishments also fell substantially over the year, and bonds. Reflecting interest rate developments pushed down by the decline in consumer spending that encouraged shifting from short- to long-term and the high degree of financial distress among financing, both issues of foreign bonds in the retailers. In contrast, employment in services con- United States and issues of Eurobonds by U.S. tinued to trend up over the latter part of the year, as corporations were strong. Capital outflows associ- steady gains in health services more than offset ated with U.S. direct investment abroad also were sluggish hiring in the more cyclically sensitive sizable, as U.S. investors positioned themselves to business and personal service industries. take advantage of EC 1992 and participated in the Reflecting the substantial declines in output and privatization of previously state-owned enterprises employment over the past year and a half, the in such countries as Mexico. In contrast, foreign unemployment rate rose more than IV2 percentage direct investment in the United States was far points between July 1990 and December 1991. below recent peaks; foreign takeovers of U.S. busi- Moreover, the distribution of job losses was espenesses declined, and reinvested earnings were de- cially wide compared with previous episodes of pressed by the recession. rising unemployment. Increases in unemployment were broadly based across regions, industries, and occupations, and an unusually large proportion ap- Labor Markets peared to constitute permanent layoffs. Nonetheless, the rise in the jobless rate has been Labor market conditions generally deteriorated in less than in prior episodes of increasing unemploy- 1991, and the unemployment rate rose above 7 per- ment. In part, the rise has been smaller because cent by the end of the year, the highest level since labor force growth has been unusually slow over 1986. Employers had moved quickly to shed work- the past two years. In particular, the labor force ers when the recession took hold during the second participation rate, which stood at about 66 percent half of 1990, and this pattern continued into 1991, at the beginning of this year, is Vi percentage point with nonfarm payroll employment down sharply below its average during the first half of 1990. This over the first four months of the year. Economic decline in participation appears to contain some conditions improved in the spring, and labor de- elements of a cyclical pattern: The number of dismand turned up for a time. However, the subse- couraged workers rose over the year, and sizable quent weakening in activity in the late summer led increases in the number of retirees were reported, to a renewed bout of layoffs that has continued into perhaps reflecting to some extent a spate of early early 1992, retracing the job gains recorded during retirement programs. However, the weak labor the spring and summer. force growth of recent years may also represent a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

234 Federal Reserve Bulletin • April 1992 downshift in the trend rate of increase in labor peak, increases in benefit costs—at 6V\ percent in supply that—if not offset by productivity gains— 1991—remained well above those for wages alone. could translate into a reduction in the rate of trend Expenses for health insurance have continued to potential output growth. In this regard, the compo- spiral upward despite considerable efforts on the sition of the corresponding increase in nonpartici- part of employers to control costs by negotiating pants is, in part, a favorable long-term develop- directly with providers and by increasing workers' ment. There has been a sharp rise in recent years in share of health expenditures. Employer premiums the number of individuals who have left the labor for workers compensation insurance also rose force in order to attend school. Although that in- sharply last year, reflecting both a swelling in the crease may, to some degree, reflect declining op- number of claims and the rapid pace of inflation of portunity costs associated with the poor job pros- medical care costs. pects of last year, recognition of the longer-term decline in relative wages among lower-skilled workers may also have played a role. As these Price Developments individuals reenter the labor force upon completion of their schooling, their increased skills should Evidence that a significant slowing of inflation is boost labor productivity and potential output in under way mounted over 1991. The consumer price future years. index rose 3 percent during the year, about half the Efforts to increase labor productivity have also rate of increase in 1990. A sharp swing in energy intensified in the business community. If the afore- prices accounted for a major part of this deceleramentioned plans to reorganize corporate structures tion. However, the elements of a more fundamental and to downsize the labor force requirements of diminution of inflation moved into place: Labor existing operations are successful, the possible out- cost increases moderated; expectations of inflation come is a significant improvement in the productiv- eased; and upward pressures from import prices ity trend, much as occurred in the manufacturing and industrial raw material prices were virtually sector after the considerable compression of manu- absent during the year. facturing organizations in the early 1980s. The Energy prices dropped sharply in 1991, mirrorperformance of productivity, which rose about ing the changes in oil prices over the year. The CPI 1 percent for the nonfarm business sector in 1991, for energy fell 30 percent at an annual rate in the has been somewhat better than is typical in a weak first quarter of last year, as the sequence of events economy. However, last year's advance came after in the Middle East reduced the posted price of West a decline in 1989 and no change in 1990, and it is Texas Intermediate crude oil from a peak of about difficult at this stage to distinguish more fundamen- $39 per barrel in October of 1990 to less than $20 tal changes in productivity trends from the apparent by February of last year. Oil prices subsequently cyclical tendency last year for employers to reduce held near that level, but gasoline prices firmed labor inputs aggressively in response to deteriorat- somewhat during the summer as reduced imports ing sales. and domestic refinery problems led to some tight- With widespread layoffs and the unemployment ness in inventories. However, these forces were rate rising throughout the year, the upward pres- offset by declines in natural gas and electricity sures on wages that had intensified between 1987 rates, and energy prices changed little, on balance, and mid-1990 diminished somewhat over 1991. As in the second and third quarters. Price pressures measured by the employment cost index, increases again emerged in the fall as crude oil prices trended in hourly compensation for private nonfarm work- up in September and October on concerns about ers rose 4Vi percent over the four quarters of 1991, supplies from the Soviet Union. Since October, down from more than 5 percent in the first half of however, oil prices have retreated again, with the 1990. The wage and salary component of hourly most recent quotes at about $18 per barrel. These compensation, which rose 3 percent at an annual latest reductions probably will show up at the retail rate over the second half of last year, exhibited the level in the first quarter of 1992; indeed, the energy most deceleration. Although employer costs for component of the producer price index fell nearly benefits have also decelerated from their mid-1990 3 percent in January, and other preliminary infor- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 235 mation points to sizable declines in both retail on low-end "super-saver" fares. In contrast, prices gasoline and heating oil prices. for medical care services rose 8 percent over the The CPI for food rose just 2 percent over 1991, year, while tuition costs and other school fees were well below the increases of 5 percent to 5V2 percent up nearly 10 percent. in the three previous years. In part, the subdued The CPI for commodities excluding food and pace of food price inflation reflects an increased energy rose 4 percent in 1991, about Vi percentage supply of livestock products. Beef production point faster than in 1990. In large part, the more turned up last year in response to the strong prices rapid rate of inflation in goods prices reflected the that prevailed in the preceding few years, and sup- aforementioned hike in excise taxes and, despite plies of pork and poultry rose sharply; in response, weak sales, larger increases in prices for both new meat and poultry prices fell about 2 percent over and used cars. However, a slowing in price inthe year. The deceleration in food prices also ex- creases was evident for a number of other goods, tended to food groups whose prices are influenced notably apparel, household paper products, and more by the cost of nonfarm inputs than by supply personal care items. conditions in agriculture; for example, the increase The easing of inflationary pressures has been in the price of food away from home last year was even more evident at earlier stages of processing. the smallest since 1964. Elsewhere, there were The producer price index for finished goods edged large monthly variations in prices for fruits and down over 1991 after an average 5 percent annual vegetables, as adverse weather conditions tempo- rate of increase over the three preceding years; this rarily boosted prices in the first half of the year and index posted another small decline in January of prices for some fresh vegetables jumped toward the this year. Falling prices for energy and consumer end of the year because of the whitefly infestation foods accounted for much of the overall decelerain California. tion last year. Even apart from food and energy, The consumer price index for items other than however, producer prices slowed to a 3 percent food and energy rose 4V2 percent in 1991, about pace. Prices for intermediate materials excluding 3A percentage point less than in 1990. The index food and energy declined 3A percent over the year, was boosted early in the year by increases in fed- reflecting declining fuel and petroleum feedstock eral excise taxes on cigarettes and alcoholic bever- costs, an easing of wage pressures, and weak deages and by an increase in postal rates. Price in- mand. The downturn in economic activity also creases last winter also were enlarged by the pass- depressed industrial commodity markets last year. through of the rise in energy prices to a wide range After dropping sharply in the fourth quarter of of nonenergy goods and services. However, the 1990, spot prices for these commodities continued subsequent decline in energy prices soon spread to to decline gradually over most of 1991. the nonenergy sector, and except for an uptick during the summer associated with some bunching MONETARY AND FINANCIAL DEVELOPMENTS of price increases, this measure of core inflation IN 1991 moderated significantly over the remainder of the year. The principal objective of monetary policy this past Prices for nonenergy services decelerated consid- year has been to help lay the groundwork for erably last year, rising 4J/2 percent after an increase a sustainable expansion without sacrificing the of 6 percent in 1990. Reflecting weak real estate progress against inflation that had already been set markets, rent increases slowed sharply, with both in motion. The Federal Reserve progressively eased tenants' rent and owners' equivalent rent up less money market conditions in 1991 amid signs of than 4 percent last year. The drop in interest rates continued sluggish economic activity, weak growth pushed down auto financing costs more than 7 per- in the broader monetary and credit aggregates, and cent. And, after a brief spurt early in the year, diminishing inflationary pressures. A more generairfares receded as energy costs fell and the weak ous provision of reserves through open market economy cut into demand; more recently, however, operations, coupled with five separate reductions in airfares have turned up again as carriers have re- the discount rate—which now stands at its lowest duced the availability of and increased restrictions level in nearly 30 years—brought the federal funds Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

236 Federal Reserve Bulletin • April 1992 rate and most other short-term interest rates down leverage that had severely stretched corporate balabout 3 percentage points over the course of the ance sheets. year. These actions, building on earlier easing ef- On the whole, the nation made considerable forts, pushed the federal funds rate down to 4 per- progress in strengthening its balance sheet in 1991. cent, its lowest sustained level since the 1960s and Less reliance on debt, greater use of equity, and nearly 6 percentage points below its most recent lower financing costs have helped ease debtpeak in the spring of 1989. servicing burdens for many financially troubled The faltering of the economic recovery in the households and corporations. Although to date the second half of 1991 owed in part to an unusually trend toward deleveraging has exerted a restraining cautious approach to credit on the part of both effect on aggregate spending, over time this trend borrowers and lenders. Efforts by debt-burdened should help put consumers, firms, and financial households and businesses to pare debt in order to intermediaries on a sounder financial footing, pavstrengthen balance sheets that had been strained by ing the way for healthy, sustainable economic the general slowdown in income and by declines in growth. property values exerted further damping effects on credit demands and on aggregate spending. Faced The Implementation of Monetary Policy with deteriorating asset values and pressures on capital positions, depositories and other lenders The Federal Reserve eased money market condimaintained tighter lending standards and were tions several times in the first few months of 1991, somewhat hesitant to extend credit. The more cir- extending the series of easing moves initiated in cumspect attitude toward credit and spending on the latter stages of 1990. Against a backdrop of the part of borrowers and financial intermediaries further declines in economic activity, abating price was manifest in the behavior of the aggregate debt pressures, weakness in the monetary aggregates of domestic nonfinancial sectors, which grew near early in the year, and continuing credit restraint by the bottom of the Federal Open Market Commit- banks and other financial intermediaries, a more tee's monitoring range despite burgeoning U.S. expansive open market posture was adopted, in Treasury borrowing. Not only was overall credit conjunction with two xh percentage point reducgrowth subdued, but credit flows continued to be tions in the discount rate, to engender a 125 basis rechanneled away from depositories, reflecting the point decline in the federal funds rate over the first more restrictive lending standards at banks and four months of the year. Short-term Treasury rates thrifts as well as efforts by borrowers to make generally followed suit, and banks reduced the greater use of longer-term debt and equity in order prime rate in three 50 basis point increments to to strengthen their balance sheets. Partly as a result, 8V2 percent. the monetary aggregates M2 and M3 also finished Long-term interest rates, by contrast, were the year near the bottoms of their target ranges. roughly unchanged on balance over the first few To prevent these forces from stifling the recov- months of the year. At first, these rates fell someery, the Federal Reserve eased money market con- what in response to the continued downturn in ditions aggressively in the latter part of the year. In economic activity and declining energy prices, eslight of weak aggregate demand and reduced infla- pecially in light of initial successes in the Gulf war tionary potential, long-term interest rates—which that ensured an unimpeded flow of oil. Success in had largely failed to respond to monetary easings the initial phases of the war also prompted a brief earlier in the year—came down substantially to- dip in the exchange value of the dollar, as safeward the end of 1991. This decline prompted a haven demands that had been propping up the flood of mortgage refinancings and additional cor- dollar's value in the face of falling interest rates in porate and municipal bond offerings, which helped the United States dissipated. reduce the financing burdens of nonfederal sectors. In March, bond yields drifted up on the post-war Lower interest rates also contributed to a major rebound in consumer confidence and other evistock market rally, which induced firms to boost dence, particularly from the housing industry, that equity issuance and pay down debt, partially re- an economic upturn was at hand. The improving versing the trend of the 1980s toward increased outlook for recovery also contributed to narrowing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 237 risk premiums on private securities, especially on were reduced slightly in August and again in Sepbelow-investment-grade issues, which had reached tember, with the latter move accompanied by a 50 very high levels in January. The debt and equity basis point reduction in the discount rate. With the instruments of banks performed especially well economic climate remaining stagnant, price presover this period, responding to lower short-term sures subdued, and the broader monetary aggreinterest rates and the likelihood that an economic gates still mired near the bottoms of their target rebound would help limit the deterioration in their ranges, the System's easing moves became more loan portfolios. Moderate official support for the aggressive in the fourth quarter, culminating in a dollar, better prospects for a U.S. economic recov- full 1 percentage point reduction in the discount ery, and a rise in U.S. long-term interest rates rate on December 20. All told, these moves comrelative to those abroad, together with an uncertain bined to drive the federal funds rate down from economic and political situation overseas, espe- 5% percent in July to 4 percent by year-end. Most cially in the Soviet Union, helped to reverse the other short-term interest rates declined by similar dollar's slide on foreign exchange markets. magnitudes, and the prime rate was reduced by As evidence of a nascent economic recovery 2 percentage points, to 6V2 percent. cumulated through the remainder of the spring and The decline in short-term interest rates, in combiinto early summer, interest rates and die dollar nation with flagging economic activity, depressed continued to firm, and quality spreads narrowed credit demands, and prospects for lower inflation, further. Although the increases in rates during this contributed to bringing long-term interest rates period were most pronounced at the long end of the down significantly in the latter part of 1991. The maturity spectrum, short-term rates backed up a bit thirty-year Treasury bond rate dropped about a as well as prospects for additional monetary eas- percentage point over the second half of the year, ings faded. Indeed, with the pace of economic and mortgage interest rates tumbled to their lowest activity apparently quickening, and with the levels in many years. Declining interest rates broader monetary aggregates near the middles of prompted a spate of mortgage refinancings, corpotheir target ranges, the Federal Reserve held money rate and municipal bond offerings, and a major market conditions steady, as the stimulus already in stock market rally, which propelled most indexes to train seemed sufficient to support an upturn in record highs. Although monetary growth bounced aggregate spending. back a bit in the fourth quarter, both M2 and As the summer passed, however, the strength M3 remained near the lower ends of their and durability of the recovery appeared less as- respective growth cones. The dollar, which had sured. Aggregate spending, production, and em- begun to lose ground in foreign exchange markets ployment began to falter, easing wage and price in the summer—when the weakness in money and pressures. In addition, the broader monetary aggre- credit raised the specter of additional easings of gates suddenly weakened dramatically, with M2 U.S. monetary policy—depreciated further in the coming to a virtual standstill and M3 actually de- fourth quarter as the economic situation deterioclining in the third quarter. The softness in the rated and the pace of policy easings quickened. aggregates was symptomatic of a warier approach Rising interest rates in Germany also put downto spending and borrowing on the part of house- ward pressure on the foreign exchange value of the holds and corporations, whose balance sheet prob- dollar. In January 1992, the dollar rebounded lems were exacerbated by the stagnant economy. In somewhat, reflecting an emerging view that interaddition, credit standards at financial intermediar- est rate declines in the United States and interest ies remained restrictive, and spreads between loan rate increases in Germany might have come to and deposit rates remained high by historical stan- an end. The former view was also reflected in dards, reinforcing households' inclinations to pay the U.S. bond market, where rates retraced a down debt rather than to accumulate assets. portion of their earlier declines, partly on brightening prospects for the U.S. economy but also To help ensure that these forces did not imperil on concerns that impending fiscal stimulus may the recovery, the Federal Reserve moved to ease increase federal government demands on credit money market conditions further during the latter markets. part of the year. Pressures on reserve positions Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

238 Federal Reserve Bulletin • April 1992 Monetary and Credit Flows nal income growth would be sustained at the elevated pace of the mid-1980s and that the prices of Patterns of credit usage and financial intermedia- assets purchased with credit would continue to tion, which began to shift even before the onset of climb. the economic downturn, continued to evolve in In recent years, however, asset values and in- 1991, distorting traditional relationships between come growth have fallen short of these expectaoverall economic activity and the monetary and tions. In particular, depressed commercial and resicredit aggregates. dential real estate values, coupled with slower These changes were evident in the behavior of income growth, have eroded the net worth of some the aggregate debt of nonfinancial sectors, which borrowers and severely strained the ability of expanded 43A percent in 1991, leaving this aggre- highly leveraged households and corporations to gate near the bottom of its monitoring range. Ro- service debt. These difficulties, in turn, have fed bust growth in federal government debt, owing to back on to the strength of the financial intermediarthe economic downturn and to additional outlays ies that extended the credit. In an effort to bolster for federal deposit insurance, masked an even depleted capital positions, reduce financing burweaker picture for nonfederal debt. Households, dens, and shore up weakened balance sheets, both nonfinancial corporations, and state and local gov- borrowers and lenders have adopted a more chary ernments accumulated debt at an anemic 23/4 per- attitude toward additional credit. cent rate in 1991, the slowest advance in decades This more cautious approach to leverage has and below even the sluggish growth rate of nomi- interacted with the sluggish pace of economic acnal GDP. tivity to restrain borrowing across nearly all sectors The small rise in nonfederal debt velocity last of the economy. Nonfinancial business sector debt, year runs counter to the pattern seen in the 1980s, held in check by the decline in financing needs when the accumulation of debt vastly outstripped associated with weak aggregate demand and by growth in nominal GDP. The rapid buildup of debt efforts of debt-laden firms to restructure their balin the 1980s was likely a result of the deregulation ance sheets, grew only Vi percent in 1991. Taking of interest rates and financial innovations, which advantage of a buoyant stock market, particularly combined to lower the cost of borrowing to house- in the latter part of the year, corporations turned to holds and businesses, spawning a surge in leverag- equity financing; net equity issuance for the year ing activity. Greater debt burdens may also have was positive for the first time since 1983, and the been accumulated under the assumption that nomi- ratio of the book value of nonfinancial corporate 3. Growth of money and debt Percent Debt of domestic Period Ml M2 M3 nonfinancial sectors Annually, fourth quarter to fourth quarter1 1980 7.5 8.9 9.5 9.2 1981 5.4 (2.5J) 9.3 12.3 9.9 1982 8.8 9.1 9.9 9.2 1983 10.4 12.2 9.9 11.3 1984 5.4 8.0 10.8 14.1 1985 12.0 8.7 7.6 13.8 1986 15.5 9.2 9.0 13.8 1987 6.3 4.3 5.9 10.4 1988 4.3 5.2 6.4 9.4 1989 0.6 4.8 3.6 8.2 1990 4.2 3.8 1.7 6.9 1991 8.0 3.1 1.3 4.7 Quarterly (annual rate)3 1991: 1 5.2 3.5 3.3 4.5 2 7.4 4.3 1.8 4.0 3 7.5 1.1 -1.1 4.9 4 11.1 3.3 1.2 5.2 1. From average for fourth quarter of preceding year to average for fourth 2. Adjusted for shift to NOW accounts in 1981. quarter of year indicated. 3. From average for preceding quarter to average for quarter indicated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 239 debt to equity, which had soared in the 1980s and localities moved to refinance debt at lower amid a flurry of corporate restructurings, actually rates. turned down in 1991. Firms also took advantage Efforts by borrowers to restructure balance of lower interest rates to refinance higher-rate sheets by substituting long-term debt and equity for long-term bonds and to reduce uncertainty about short-term borrowing, along with more restrictive their future financing burdens by substituting long- credit standards by some lenders and the closing term debt for short-term borrowing. Overall, the and shrinkage of troubled thrifts, have affected the mixture of less debt, more equity, and lower inter- channels through which debt flows. In particular, in est rates had a salubrious effect on the financial recent years there has been a major rerouting of positions of many firms. Indeed, the ratio of interest credit flows away from depository institutions. The payments to cash flow for all nonfinancial firms decline in the importance of depositories, when declined in 1991, reversing some of the runup measured by the credit they book relative to the seen in the late 1980s. Consistent with an im- total debt of nonfinancial sectors, has been striking, proving financial picture and prospects of an and this trend was extended in 1991. Not only did economic rebound, quality spreads on corporate the thrift industry continue to contract, as the direct issues narrowed considerably from their peaks in result of RTC resolutions as well as the retrenchearly 1991, especially on below-investment-grade ment of marginally capitalized institutions, but securities. In addition, downgradings of corporate commercial banks cut back on their net credit exbonds dropped sharply in the third and fourth tensions. Indeed, bank credit increased only 4 perquarters, although they still ran higher than the cent, not even enough to offset the continued runoff pace of upgrades. at thrifts. Weakness was particularly evident in Deleveraging was also evident in the household bank lending, which shrank VA percent last year; sector in 1991. Consumer credit declined as house- banks' holdings of government securities, by conholds reined in expenditures, curbed their accumu- trast, expanded at a rapid clip. lation of financial assets, and pared existing debt Although the shifting composition of bank asset burdens. Households took advantage of declining flows in 1991 was reminiscent of patterns seen in interest rates, particularly in the fourth quarter, by previous periods of languid economic activity, the refinancing outstanding mortgages; they also sub- magnitude of the downturn in loan growth last year stituted home equity loans for installment debt and was more pronounced than the usual experience. other consumer credit, which carry higher financ- Apparently, loan growth was depressed not only by ing costs and are no longer tax deductible. By reduced credit demands, but also by a more rereducing their net accumulation of debt and refi- strained bank lending posture. Faced with deterionancing a substantial volume of their remaining ration in the quality of their assets, higher deposit borrowings at lower rates, households were able to insurance premiums, and more stringent requireease their financing burdens, reducing the ratio of ments for capital, banks retrenched, adopting a scheduled debt payments to disposable personal more cautious attitude regarding credit extensions. income, which had risen sharply in the 1980s. Even Concerns about capital, especially in light of rising so, loan delinquency rates rose through much of loan delinquency rates and mounting loan loss pro- 1991, albeit to levels not out of line with what was visions, induced many banks to continue tightening seen in previous cyclical downturns. On the other lending standards through the early part of 1991 side of the ledger, many households that had net and to maintain fairly restrictive standards over the creditor positions saw their interest incomes de- balance of the year. cline last year. A more prudent approach to capitalization and Faced with intensifying budgetary pressures and lending decisions is, in the main, a positive develnumerous downgradings, state and local govern- opment that ultimately will result in strengthened ments also put only limited net demands on credit balance sheets for the nation's depositories. Remarkets in 1991. The outstanding debt of this sec- flecting this improved outlook, prices of outstandtor grew but 3 percent last year, the smallest in- ing bank debt and equity increased markedly from crease in more than a decade. Gross issuance of their lows in late 1990 and early 1991, outperformmunicipal bonds was substantial, however, as states ing broader market indexes. Bank profits, benefit- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

240 Federal Reserve Bulletin • April 1992 ting from wide spreads between loan rates and of 1991, however, was the rebirth of the market for deposit rates, also showed improvement relative to "Yankee CDs"—large time deposits issued by forthe depressed levels of recent years, although they eign banks in the United States. After the 3 percent remained low by broader historical standards. reserve requirement against nonpersonal time de- To date, depository retrenchment appears to have posits and net Euroborrowings was lifted at the end had some restraining effects on aggregate borrow- of 1990, foreign banks showed a distinct prefering. Of course, in some areas, much of the credit ence for funding with such instruments, rather than formerly extended by banks and thrifts has been borrowing from their overseas affiliates or in the supplanted by other intermediaries and by credit federal funds or repurchase agreement markets. advanced directly through securities markets, at Domestic depositories, by contrast, faced with high little if any additional cost to borrowers. For exam- and rising U.S. deposit insurance premiums, exhibple, growing markets for securitized loans largely ited no inclination to alter their funding strategies have filled the vacuum created by depository re- in favor of large time deposits. straint in the areas of residential mortgage and The surge in Yankee CD issuance, which toconsumer lending. Similarly, many large businesses taled nearly $40 billion over the first quarter, have turned to stock and bond markets to meet began to taper off a bit as the year progressed, credit needs and to restructure balance sheets, re- revealing the underlying weakness in M3. After ducing their reliance on banks as well. Both banks slowing somewhat in the second quarter, this aggreand thrifts have cut back on other types of lending gate contracted at a VA percent annual rate in the that can less easily be rechanneled, however, in- third quarter, reflecting feeble loan demand in a cluding construction and nonresidential real estate tepid economy as well as the restructuring of deloans, loans to highly leveraged and lower-rated positories. The Resolution Trust Corporation borrowers, and loans to small and medium-sized played a direct role in damping M3 growth by businesses. Other financial intermediaries, includ- taking assets formerly held by thrifts and funded ing life insurance companies, have been afflicted with M3 deposits onto its own books and financing by some of the same balance sheet problems plagu- them with Treasury securities. Although M3 reing depositories and have also curbed their lending bounded a bit in the fourth quarter, in line with to these sectors. As a result of the pullback in credit some firming of bank credit, its growth remained supplies, these borrowers now face somewhat more subdued. stringent borrowing terms. The effects of depository restructuring on M2 As in 1990, the retrenchment of banks and thrifts remain imperfectly understood. In the past, the and the associated redirection of credit flows away velocity of M2 has tended to move in tandem with from depositories continued in 1991 to have pro- changes in a simple measure of the opportunity found effects on the broad monetary aggregates cost of holding this aggregate—that is, with and their traditional relationships with aggregate changes in the returns on alternative short-term economic activity. M3, which comprises most of investments relative to those available on assets the liabilities used by banks and thrifts to fund included in M2. Typically, when the opportunity credit expansion, has been most affected by the cost of holding M2 declines as decreases in money reduced importance of depository credit in funding market interest rates outpace drops in yields on spending. The velocity of this aggregate, which deposits, holdings of M2 strengthen relative to declined through much of the 1980s, has trended expenditures—and velocity drops. In recent years, up in recent years; this trend continued in 1991, as however, this relationship appears to have broken M3 rose only VA percent, well below the pace of down, with the velocity of M2 holding up despite a nominal GDP, leaving this aggregate near the bot- steep, persistent drop in this measure of opportutom of its target range. nity cost. This was particularly evident in 1991, when M2 expanded at about the same pace as In the first few months of the year, M3 showed nominal GDP despite a significant decline in such surprising strength, boosted in part by a firming of opportunity costs. M2 finished the year near the its M2 component, which benefited from declining bottom of its target range and much weaker than interest rates. The most important single factor would be expected on the basis of historical relacontributing to strong M3 growth in the early part Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 241 tionships among income, interest rates, and the the configuration of returns on financial assets. public's appetite for monetary assets. Yields on small time deposits and money market In the early months of the year, M2 growth mutual funds largely tracked the downward path of accelerated somewhat from its lackluster pace of market interest rates, falling to their lowest levels late 1990. Narrowing opportunity costs generated since the deregulation of deposit rates and promptsubstantial inflows to liquid deposits, particularly ing significant outflows from these components of those in Ml, which more than offset continued M2. Although some of these funds shifted into the runoffs in small CDs. Money growth also was liquid deposit components of M2—whose offering temporarily boosted by strong foreign demands for rates responded slowly, as they normally do, to the U.S. currency as a safe haven during the crisis in declines in market interest rates—a portion of these the Persian Gulf. Through May, M2 growth re- funds appear to have left the aggregate. The primained broadly consistent with the general config- mary lure seems to have been the stock and bond uration of opportunity costs and income, and near markets, which offered higher returns, in part bethe middle of its target range. cause of the steep upward slope of the yield curve. M2 began to slow in June, however, and stalled Indeed, inflows to stock and bond mutual funds in the third quarter, despite expansion in nominal were robust throughout 1991, and especially since income and further declines in opportunity costs. midyear, when investors seemed particularly intent Growth in this aggregate resumed in the following on reaching for higher yields by lengthening the quarter, fueled by a surge in transactions deposits maturity of their portfolios. Depositories, faced owing to additional declines in opportunity costs, with weak loan demand and pressures on capital but inflows to M2 remained fairly weak, and this positions, seemed disinclined to compete aggresaggregate ended the year only a little above the sively for these funds by offering competitive rates bottom of its target range. on longer-term CDs. Although the unusual behavior of M2 relative to The rapid pace of activity by the Resolution income and opportunity costs has not been fully Trust Corporation also likely depressed M2 growth explained, it surely is related to the restructuring of in the third quarter, as it did throughout the year. financial flows and to the downsizing of the bank- The abrogation of existing retail CD contracts and ing system. With inflows of M2 deposits appar- the disruption of long-standing depositor relationently tending to be more than sufficient to fund ships often attending resolutions of failed thrift weak depository credit growth, banks and thrifts institutions may have encouraged investors to reseem to have pursued additional retail deposits less shape their portfolios, substituting nonmonetary fiaggressively than in the past. Although rates of- nancial assets for M2 deposits. fered on these deposits did not, until very recently, Despite sluggish income growth, Ml expanded fall unusually rapidly in response to declining mar- 8 percent in 1991, the swiftest advance since 1986. ket interest rates, depositories seem to have acted Unlike M2, this aggregate has responded to declinin other ways to reduce the cost of funds, including ing market interest rates about as would be exadjustments in advertising and marketing strategies pected given historical relationships. Ml was that would not show up in traditional measures of boosted by large inflows to NOW accounts, whose opportunity costs. In addition, by keeping deposit offering rates responded very slowly, until the end rates very low relative to loan rates, partly in an of the year, to declining market interest rates. Fallattempt to bolster profit margins while shrinking ing rates also brought new life to demand deposits, their balance sheets, depositories provided house- as compensating balances to pay for bank services holds with a greater incentive to finance spending surged. Demand deposits likely benefited as well by holding down the accumulation of M2 assets from the pickup in mortgage refinancings, because rather than by taking on new debt. This incentive the proceeds from mortgage prepayments are somelikely reinforced the impetus to borrowing restraint times housed temporarily in demand accounts. stemming from household concerns about their Rapid growth in currency, owing in part to continown balance sheets. ued strong foreign demands, also contributed to the The slowdown in M2 growth, particularly in the strength in Ml, as well as in the monetary base, third quarter, also appears to have been related to which increased 8 LA percent last year. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

242 Treasury and Federal Reserve Foreign Exchange Operations This quarterly report, covering the period Novem- work off inventories and would not lead to a susber 1991 through January 1992, provides informa- tained pattern of growth. Then, just before the tion on Treasury and System foreign exchange period, any remaining hopes of recovery suffered a operations. It was presented by William J. McDon- severe blow when the Conference Board's index of ough, Executive Vice President in charge of the consumer confidence took an unexpected plunge. Foreign Group at the Federal Reserve Bank of Thus, by early November, market participants were New York and Manager of Foreign Operations for beginning to question what mechanism might still the System Open Market Account. Robert Ennis be able to spark recovery, noting that up to that was primarily responsible for preparation of the point monetary policy had been about the only report.1 instrument available to support the economy. Under these circumstances, the November 6 an- The dollar declined through the end of the calendar nouncement that the Federal Reserve had cut its year, approaching historical lows against both the discount rate Vi percentage point to AVi percent German mark and the Japanese yen as sentiment was widely anticipated. But market observers noted toward the prospects for U.S. economic recovery that the Federal Reserve had now cut the discount turned increasingly negative and large short-dollar rate five times in eleven months, producing a cumupositions were built up. Early in the new year, lative drop of 2Vi percentage points, and they were however, the dollar recovered somewhat as expec- beginning to doubt whether monetary policy could tations about the economy tended to stabilize and do much more to facilitate recovery. At the same short positions were significantly reduced. The dol- time, they were sensitive to the political pressures lar' s decline was consequently pared back at the generated by disappointment about the economy end of the period to a net V/i percent against the and concerned about what alternative measures mark and 4 percent against the yen. On a trade- might be proposed. Operators in the exchange marweighted basis, the dollar declined 23/4 percent, on kets, who were mindful that interest rate differenbalance, over the period.2 On January 17, the U.S. tials were already widely unfavorable to the dollar, authorities sold $50 million against yen in then- especially in relation to the German mark, felt a only intervention operation of the period. strong incentive to sell the dollar short. The dollar declined as events in November and early December tended to confirm pessimism about NOVEMBER AND DECEMBER U.S. economic prospects. In mid-November, when financial markets grew nervous about a congres- As the period opened, skepticism was deepening sional proposal to spur consumer spending by capabout the prospects for a U.S. economic recovery. ping credit card interest rates, a sharp drop in U.S. During the fall, it had become increasingly appar- equity prices dragged the dollar down for a few ent that the tentative pickup in consumer spending days. In late November and early December, release of data showing a further drop in consumer after the Persian Gulf war had served merely to confidence and a much sharper-than-expected drop in payroll employment prompted another sell-off. 1. The charts for the report are available on request from Publi- Meanwhile, statistics for consumer price inflation cations Services, Board of Governors of the Federal Reserve System, mail stop 138, Washington, DC 20551. suggested to financial markets that the Federal Re- 2. The trade-weighted basis is as measured by the Federal serve had further leeway to ease monetary policy. Reserve Board index. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

243 In addition, speculation mounted that an ex- example, came under significant pressure, forcing cessively expansionist fiscal package might be the Riksbank to raise its marginal lending rate a forthcoming. total of 7 percentage points by early December. The dollar declined more against the German As market participants sought to shift funds mark during this period than against other curren- from higher-yielding currencies into the mark, cies. This occurred, in part, because interest rates in the exchange rate mechanism (ERM) of the EMS Germany were at, and were expected to stay near, became strained. Market participants questioned historically high levels. The German economy was whether an ERM realignment at the upcoming still going through the transition associated with Maastricht summit could be avoided, raising furunification. Although the full force of the unity- ther uncertainty about the effects such developrelated boom had dissipated earlier in the year, ments might have on the dollar. Support for the credit demands were still significant enough to mark was partly offset, from time to time, by keep monetary aggregate growth stronger than de- concerns about the rapidly moving political situasired, and inflationary pressures were being kept tion in the Soviet Union and its possible negative alive by high wage demands. Accordingly, market effects on European countries, including Germany. participants believed that the Bundesbank would In the event, the Maastricht summit proceeded seek to maintain a tight monetary policy stance. without incident, and tensions among European They interpreted the Bundesbank's money market currencies abated somewhat by mid-December. But operations as clear evidence of its intention to the growing disparity in economic conditions beresist domestic and international pressures to ease. tween the United States and Germany persisted. As They saw this policy stance as implying that the wage negotiations in Germany became more tense, large interest rate differentials against the dollar the Bundesbank moved to increase interest rates would be maintained for the foreseeable future. both sooner and by a larger amount than the market Market participants also suspected that there had expected, announcing VI percentage point rises might be tension between the monetary policy ob- for both its discount and Lombard rates on Decemjectives of Germany and those of other European ber 19. To avoid renewed exchange rate pressures, countries where economic activity was generally all other EMS central banks except the Bank of decelerating more rapidly. And they were wary of England followed this interest rate move, at least in the possibility that these tensions might be reflected part, over the next several days. By contrast, on sooner or later in pressures within the exchange December 20, the Federal Reserve reduced its disrate relationships of the European Monetary Sys- count rate more than had been expected. The cut of tem (EMS), pressures that might spill over into 1 percentage point brought the discount rate to the exchange markets more broadly—especially 3V percent, its lowest level since 1964. The Fed- 2 because final negotiations over eventual monetary eral Reserve also appeared to signal that it had union in Europe were scheduled for early Decem- relaxed reserve pressures to an extent consistent ber in Maastricht, the Netherlands. with a decline of about VI percentage point in the In this environment, two announcements by the federal funds rate. Finnish authorities in mid-November, first, that the As the foreign exchange market responded to Finnish markka would float and, later, that it would these divergent moves in interest rates, the dollar be effectively devalued about 12 percent, height- continued its decline against the German mark. ened the sense of exchange rate risk and boosted After having moved irregularly lower in November the German mark. This episode served as a re- and early December, the dollar moved down a minder that market pressures could at times force further 3Vi percent after December 19, hitting its unwanted changes in exchange rate policy. In re- low of the period of DM1.5025 on December 27. sponse, market participants rushed to reduce then- At this level, the dollar had depreciated 10 percent holdings of assets denominated in those European from DM1.6713 at the period's start and I8V2 percurrencies that had previously appeared attractive cent from its 1991 high. because of their high yields but that no longer The dollar's decline against the yen during Nocarried a yield sufficient to compensate for their vember and December was more tempered than its perceived exchange risk. The Swedish krona, for decline against the mark. Evidence was accumulat- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

244 Federal Reserve Bulletin • April 1992 ing that the pace of expansion in Japan was clearly that this evidence would lead to any near-term decelerating. Japan's monetary growth was slow- moderation of the Bundesbank's tight monetary ing, business confidence and investment intentions policies; indeed, the Bundesbank appeared still to were weakening, and flagging domestic demand be concerned about wage inflation and credit dewas being reflected in a widening of Japan's trade mands. But the evidence did suggest that the scope surplus. Market participants had therefore come to for further policy tightening was more limited and expect that the Japanese monetary authorities, who the prospects for growth in the coming year more had eased official interest rates the previous July, clouded than previously perceived. Under these would continue moving to a somewhat more ac- circumstances, market participants began to quescommodative monetary policy stance so that U.S.- tion whether interest differentials so unfavorable to Japanese interest differentials would remain rela- the dollar would continue to widen. tively stable. Indeed, official Japanese interest rates Moreover, the financial markets appeared to react declined during these two months. The Bank of positively to the Federal Reserve's policy move of Japan trimmed its official discount rate once in mid-December. The capital markets in the United mid-November and again at the end of December. States had responded favorably, with long-term At the same time, persistent weakness in Japan's interest rates easing and the stock market showing equity market and political uncertainty caused by sustained strength. Also, the move appeared to recent scandals also weighed on the yen at a time have broken the pattern of market expectations when the dollar was declining generally. concerning U.S. interest rates. Market participants As a result, the dollar eased only moderately were less certain that a weaker-than-expected U.S. against the yen during November. Although the economic statistic would immediately trigger anpace of decline quickened during December, the other monetary policy action, and they were more dollar rebounded at the end of the year to close likely than before to attribute weakness in the data December at ¥124.80, down on balance 43A percent to temporary factors. Moreover, they became mindfrom ¥130.75 at the beginning of the period. ful once again of the possibility that some statistics might show greater-than-expected strength. The dollar's decline against the European curren- JANUARY cies therefore lost momentum early in January. Market participants were aware that the dollar had By early January, the dissolution of the Soviet been under virtually continuous selling pressure for Union was introducing a new level of uncertainty, almost six months. Many investors as well as forespecially regarding the outlook for Europe. Al- eign exchange market operators had portfolios that though recurring rumors about the Soviet Union's were heavily weighted in assets denominated in financial condition had been a concern during the European currencies. The developments of Novemearlier months, market participants were now faced ber and December had led to an even greater conwith the prospects of greater disarray stemming centration in these portfolios of assets denominated from changing political structures and moves to in German marks. Under the circumstances, there liberalize prices in January. Accordingly, the Ger- was a perception of a large risk of loss if market man mark was increasingly susceptible to selling sentiment should switch in favor of the dollar and a pressures whenever new financial or political diffi- perception of a diminishing chance for gain if culties in the former Soviet Union became evident. sentiment should remain negative to the dollar. Meanwhile, market participants' assessment of For a short while, however, the focus of market the German mark and the German economy weak- attention was the Japanese yen, a currency against ened considerably after the new year. Press com- which the dollar continued to decline in early Janumentary at that time increasingly focused on the ary. Talk had already begun to circulate before the sustained slowdown in Germany's expansion. Not turn of the year that the United States and Japan only was the pace of domestic demand moderating would agree on some official action to support yen but export orders were also sagging under the appreciation. Commentary about President Bush's weight of slowing economies in other industrial- trip to Japan to meet with Prime Minister ized countries. Market participants did not believe Miyazawa suggested that the deteriorating condi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 245 tion of the U.S. economy would prompt the Presi- sidered at an upcoming G-7 meeting on January 25. dent to seek ways to reduce the U.S. trade deficit. This possibility seemed credible to market partici- There was also speculation the Japanese govern- pants because the yen had lagged behind rising ment was looking for ways to counter weakness in European currencies during previous months and Japan's stock market. In this context an upward because this gap appeared to be generating ecomove in the yen's exchange rate was thought to be nomic and political concerns in several countries acceptable to both governments. other than the United States. But in time, even this In response to these expectations, the dollar re- proposition lost standing in the marketplace. ceived only a temporary boost from the year-end When the G-7 meeting occurred in New York, cut in the Bank of Japan's discount rate. During the the finance ministers and central bank governors first five business days of January, the dollar re- issued a communique in which they agreed to sumed its downward trend against the yen, declin- intensify their cooperative efforts to strengthen ing IV2 percent to a low of ¥122.80 on January 7, world economic growth. With reference to exthe day that President Bush arrived in Tokyo. At change markets, the G-7 "agreed to continue to this level, the dollar was down 6 percent from the monitor market developments and reaffirmed their start of the period and 13 V2 percent from its 1991 commitment to cooperate closely in exchange marhigh. kets, thus contributing to favorable conditions for Thereafter, expectations of official action to sup- stable exchange markets and economic recovery." port the Japanese yen gradually faded. Market par- Market participants, however, were somewhat disticipants became less convinced during President appointed by the absence of any specific mention Bush's stay in Japan that the two countries would of the yen exchange rate. take immediate steps to strengthen the yen against As expectations of a yen appreciation subsided, the dollar. In keeping with these diminished expec- market participants began to worry that there was tations, the President and the Prime Minister agreed an overhang of short-dollar positions against the "that recent exchange rate movements were con- yen as well as against the European currencies. sistent with current economic developments." Concerns about the technical position of the market Nontheless, market participants continued to focus came to the surface when the dollar did not fall off on the possibility that a more generalized Group of sharply on news that President Bush had become ill Seven (G-7) policy toward the yen might be con- and had had to leave a state dinner during his Tokyo trip. The dollar's unusual lack of sensitivity to potentially disturbing news about an American president's health was interpreted as indicating how 1. Federal Reserve reciprocal currency arrangements unwilling market professionals were to extend their Millions of dollars short-dollar positions further and how great the Amount of risks were that the dollar might rise abruptly if a Institution facility, January 31, 1992 general effort to cover some of these short-dollar positions were to develop. Austrian National Bank 250 National Bank of Belgium.. 1,000 Under these circumstances, the dollar drifted Bank of Canada 2,000 National Bank of Denmark 250 higher and staged an uneven recovery during most Bank of England 3,000 of January. In some instances, particular events Bank of France 2,000 Deutsche Bundesbank 6,000 triggered dollar buying: the announcement in Janu- Bank of Italy 3,000 Bank of Japan 5,000 ary of a stronger-than-expected report for U.S. employment, testimony by Chairman Greenspan that Bank of Mexico 700 Netherlands Bank ... 500 further dampened expectations of an early easing Bank of Norway 250 Bank of Sweden 300 of Federal Reserve monetary policy, and rumors Swiss National Bank 4,000 out of the former Soviet Union of violence and Bank for International Settlements political upheaval. In other instances, however, the Dollars against Swiss Francs 600 Dollars against other authorized European dollar's rise was precipitated by the bidding of currencies — 1,250 market professionals and their customers that re- Total 30,100 flected pent-up demand from previous months. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

246 Federal Reserve Bulletin • April 1992 2. Drawings and repayments by foreign central banks under special swap arrangements with the U.S. Treasury1 Millions of dollars; drawings or repayments (-) Outstanding as Outstanding as Central bank drawing Amount of of October 31, November December January of January 31, on the U.S. Treasury facility 1991 1992 114433..0022 114433..00 114433..00 1. Data are on a value-date basis. Components may not add to totals 2. Represents a bilateral credit facility with the National Bank of Panama because of rounding. that was established on January 28. These pressures were particularly intense around The ESF continued to purchase special drawing midmonth. The dollar rose sharply to trade at levels rights (SDRs) against marks in transactions by that had not been expected just weeks before and agreement with the International Monetary Fund that therefore threatened to unleash yet further (IMF). During the period, a total of $341.7 million rounds of bidding as market participants continued equivalent of such SDR purchases settled, of which to cover their short positions. Under these circum- $41 million equivalent was transacted in the previstances, the U.S. monetary authorities entered the ous report period. The ESF also purchased a total market on January 17, in an operation coordinated of $443.4 million against sales of SDRs in transacwith the Japanese monetary authorities, selling tions by agreement with foreign monetary authori- $50 million against yen. The intervention sale was ties needing SDRs to pay IMF charges or for shared equally by the Federal Reserve and the repurchases. An additional $50.6 million, which Treasury's Exchange Stabilization Fund (ESF). was transacted in October, settled in the period. After this operation, the dollar declined sharply. The Treasury agreed to participate in a special Although subsequently finding support, it remained financial facility for the first time since March below the highs of DM1.6355 and ¥129.37 reached 1991. On January 28, the Treasury, through the on January 15. The dollar closed the period at ESF, established a $143 million bilateral credit DM1.6125 and ¥125.75, down on balance over facility to assist Panama in repaying its arrears to the three months nearly 4 percent against the two international creditors. Panama drew the full currencies. At these levels, the dollar was about amount on January 31. The facility is scheduled to 12 percent below its 1991 highs against both the expire on March 20,1992. mark and the yen. During the November-January period, the Fed- In other operations, a total of $1,301 million in eral Reserve and the ESF realized profits of off-market spot and forward foreign currency sales, $75 million and $3.9 million respectively from the executed by the U.S. monetary authorities with sales of foreign currencies. As of the end of Januforeign monetary authorities, settled during the ary, cumulative bookkeeping or valuation gains period. • The two remaining forward purchases of 3. Net profits or losses (-) $551.1 million and $549.9 million against marks on U.S. Treasury and Federal Reserve foreign exchange operations1 settled on November 27 and December 27 respec- Millions of dollars tively completing the $5,548.5 million of spot and forward dollar purchases from the Bundesbank. As U.S. Treasury Federal Exchange previously reported, the operation was initiated in Period and item Reserve Stabilization Fund June 1991 to adjust the foreign currency reserves of the Federal Reserve and the ESF. For each Valuation profits and losses on outstanding assets and liabilities transaction, 60 percent was executed for the ac- as of October 31, 1991 22,,776644..88 11,,113322..66 count of the Federal Reserve and 40 percent for the November 1,1991-January 31,1992 ESF account. Realized 7755..00 33..99 Valuation profits and losses • On November 22, the Federal Reserve agreed on outstanding assets and liabilities as of to purchase $200 million against German marks January 31, 1992 33,,661155..22 11,,994411..66 from a foreign monetary authority. 1. Data are on a value-date basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 247 on outstanding foreign currency balances were balances is invested in securities issued by foreign $3,615.2 million for the Federal Reserve and governments. As of the end of January, Federal $1,941.6 million for the ESF. The Federal Reserve Reserve holdings in these securities amounted to and the ESF regularly invest their foreign currency $8,938.8 million equivalent, and the Treasury holdbalances in a variety of instruments that yield ings amount to $9,203.5 million equivalent, valued market-related rates of return and that have a high at end-of-period exchange rates. • degree of quality and liquidity. A portion of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

248 Industrial Production and Capacity Utilization Released for publication February 14 of its 1987 annual average, total industrial production in January was about even with its year-ago The index of industrial production dropped 0.9 per- level. Total industrial capacity utilization dropped cent in January, after having fallen 0.4 percent in 0.8 percentage point in January, to 78.0 percent. December. The decline in January was broadly When analyzed by market group, the data show based, although the most significant loss occurred that the production of consumer goods fell 0.7 perin the motor vehicles and parts industry, where cent in January, mainly because of the drop in output declined about 8 percent. At 106.7 percent motor vehicle production. The output of consumer Industrial production indexes Twelve-month percent change Twelve-month percent change 1987 1988 1989 1990 1991 1992 1987 1988 1989 1990 1991 1992 Capacity and industrial production Ratio scale, 1987 production = 100 Ratio scale, 1987 production = 100 — Total industry — 140 — Manufacturing - — 140 Capacity -——— Capacity . * 120 120 ^ ^ " 100 ^ " 100 -V Production - 80 • v / — P r o d u c t i on — 80 1 1 1 1 1 Percent of capacity Percent of capacity Total industry Manufacturing 90 90 Utilization _ . Utilization —^ - 80 80 70 70 1 1 1 1 1 1 1 1 1 1 1 1 1980 1982 1984 1986 1988 1990 1992 1980 1982 1984 1986 1988 1990 1992 All series are seasonally adjusted. Latest series, January. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

249 Industrial production and capacity utilization Industrial production, index, 1987 = 100' Percentage change Category 11999911 11999922 19912 19922 JJaann.. 11999911 ttoo Oct.' Nov.' Dec.P Jan.P Oct.' Nov.' Dec.f Jan.p JJaann.. 11999922 Total 108.4 108.1 107.6 106.7 .0 -J -.4 -.9 .0 Previous estimate 108.2 108.0 107.8 -.1 -.2 -.2 Major market groups Products, total 109.0 109.0 108.8 107.8 .1 .0 -.2 -.9 -.0 Consumer goods ... 109.7 110.0 109.7 108.9 .3 .3 -.2 -.7 3.1 Business equipment 122.3 121.7 121.7 120.3 .1 -.5 -.1 -1.1 -1.0 Construction supplies 95.4 95.8 95.6 95.3 -1.2 .5 -.2 -.3 -2.5 Materials 107.4 106.6 105.8 104.9 -.1 -.8 -.7 -.9 -.1 Major industry groups Manufacturing 109.0 108.6 108.5 107.5 .1 -.4 .1 -1.0 .4 Durable 108.2 107.7 107.2 105.8 -.2 -.4 -.5 -1.3 -1.3 Nondurable 110.1 109.7 110.1 109.6 .4 .4 .4 -.5 2.5 Mining 100.7 99.3 97.8 97.6 -.7 -1.4 -1.6 -.2 -4.1 Utilities 109.4 111.0 108.1 107.7 -.3 1.5 -2.6 -.4 .0 Capacity utilization, percent MMMEEEMMMOOO CCCaaapppaaaccciiitttyyy,,, pppeeerrr--ccceeennntttaaagggeee 1991 1992 ccchhhaaannngggeee,,, AAvveerraaggee,, LLooww,, HHiigghh,, JJJaaannn... 111999999111 11996677--9900 11998822 11998888--8899 tttooo Jan. Oct.' Nov.' Dec.' Jan.p JJJaaannn... 111999999222 Total 82.1 71.8 85.0 80.0 79.8 793 78.8 78.0 2.6 Manufacturing 81.4 70.0 85.1 78.9 78.7 78.2 78.0 77.0 2.8 Advanced processing 81.0 71.4 83.6 78.2 77.6 77.2 76.9 75.9 3.2 Primary processing . 82.3 66.8 89.0 80.6 81.4 80.8 80.5 79.7 2.1 Mining 87.4 80.6 87.2 89.5 87.9 86.6 85.2 85.0 .9 Utilities 86.7 76.2 92.3 84.1 84.8 85.9 83.6 83.2 1.1 1. Seasonally adjusted. r Revised, 2. Change from preceding month to month indicated. p Preliminary. goods other than automotive products also edged When analyzed by industry group, the data show down in January. The production of business equip- that manufacturing production fell 1.0 percent in ment other than motor vehicles again drifted down January, after having declined V2 percent over the in January because of further weakness in indus- last two months of 1991. The factory operating rate trial equipment. Continued retrenchments by manu- dropped to 77.0 percent in January, its lowest level facturers of defense and space equipment and by since August 1983. The slack in utilization is espeoil and gas well drillers also contributed to the cially evident in advanced-processing industries, overall decrease in equipment production. The pro- where the operating rate in January fell to 75.9 perduction of construction supplies declined a bit in cent, 5 percentage points below its 1967-91 avereach of the past two months; materials output age and about 1 percentage point below its low in dropped sharply in January for the third consecu- March 1991. In recent months, the decline in adtive month. Although the production of energy vanced processing has mainly resulted from cutmaterials flattened out in January after having backs in motor vehicle production, where the operfallen rapidly in November and December, the ating rate in January was still 4 percentage points output of both durable and nondurable materials above its level in March 1991. Unlike motor vehifell more than 1 percent last month. Although the cle production, the output of instruments, electrical declines were widespread, the reductions in output and nonelectrical machinery, and aerospace and of parts and supplies for the motor vehicle industry miscellaneous transportation equipment never reand in paper were the most noticeable. covered significantly last spring and summer, and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

250 Federal Reserve Bulletin • April 1992 their operating rates in January were below their ing, the rate for primary-processing industries in levels of last March. The utilization rate for pri- January was only 2VI percentage points below its mary processing declined for a third consecutive long-run average and was still above its level of month in January; paper, industrial chemicals, and last March. stone, clay and glass products have been the largest Mining output decreased 0.2 percent in January, contributors to this recent decline. Nonetheless, in despite a 2VI percent increase in coal mining. Utilicontrast to the utilization rate for advanced process- ties output fell 0.4 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

251 Statements to the Congress Statement by David W. Mullins, Jr., Vice Chair- market participants, in the aggregate, willingly man, Board of Governors of the Federal Reserve commit substantial amounts of risk capital and System, before the Subcommittee on Oversight exchange a large volume of securities each day. of the Committee on Ways and Means, U.S. Positions are large, yet trading skills are so House of Representatives, February 3, 1992 sharply refined that bid-ask spreads are razor thin, a small fraction of the size of spreads in Thank you for this opportunity to present the major equity markets. Federal Reserve Board's views on reforms to the The government securities market generates regulation of the government securities market. widespread macroeconomic benefits. It effi- Since September, when I last testified before this ciently absorbs the large quantity of new issues Committee, staff of the Federal Reserve, the required to finance the deficit. With real-time Treasury Department, and the Securities and quotes on a range of instruments, this market Exchange Commission (SEC) have conducted an serves as the foundation for private market rates exhaustive examination of this market, the re- and a haven for ready liquidity. Further, this sults of which were released two weeks ago. My deep and liquid market gives the Federal Reserve prepared remarks will touch upon some of the a powerful, reliable mechanism for implementing main conclusions of this report from the partic- monetary policy. ular perspective of the Board of Governors of the Nonetheless, the admission of wrongdoing by Federal Reserve System. Our perspective differs Salomon Brothers, episodes of price distortions, somewhat from the perspectives of the other and other evidence uncovered in our joint study agencies contributing to the report because of all suggest that this market has faults. It can be differences in legislative mandates. The Board of improved. The proposals contained in the joint Governors has little direct regulatory authority report, along with other reforms announced earfor the U.S. government securities market. lier, constitute a careful, comprehensive modern- Although the Board has general oversight re- ization of the mechanisms and practices in the sponsibility for all Federal Reserve District government securities market. In our view, im- Banks, it is the District Banks that act as fiscal plementing these proposals represents a formidaagents of the Treasury, thus sharing operating ble, though feasible, task. responsibility for the market with the Treasury. Over the longer term, the most effective force The SEC's charge is to enforce the securities laws in enhancing market efficiency and reducing the that seek to foster a high degree of fairness in the potential for manipulative abuses is the force of marketplace. With neither the direct responsibili- competition. And the effect of these proposals is ties of funding the government nor substantial to open up the government securities market to regulatory oversight, the Board of Governors can broad-based participation. Automating Treasury view this market from a somewhat different van- auctions; facilitating direct bidding by customtage point—a policy perspective that allows it to ers, including nonprimary dealers; implementing examine these issues in an economywide context. a single-price open-auction technique; and reduc- When we look to the government securities ing the barriers to primary dealer membership— market, we see a market that works as well as all will serve, in time, to broaden participation in any on earth. U.S. government debt is an ideal the primary market and in the secondary market trading vehicle because it is all closely substitut- for newly issued securities. More depth and able and has none of the default risk or idiosyn- breadth in this end of the market should increase cratic problems of private issues. As a result, efficiency, reduce Treasury financing costs, and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

252 Federal Reserve Bulletin • April 1992 lessen the potential for manipulative trading additional change—the imposition of broadabuses. In addition, the competitive force of based reporting requirements for this market. broader participation will be reinforced by pro- The agencies agree that large position reporting posals targeted at manipulative abuse: tighter en- requirements should not be implemented at this forcement of auction rules and enhanced market time. Rather than risk slipping into this fundasurveillance by the Federal Reserve Bank of New mental change through backup authority, the York to identify potential manipulative episodes Board of Governors feels it would be a wiser that could trigger SEC investigation and Treasury course of action to return to the Congress in the supply management to reopen offerings. future should such authority appear necessary. Taken together, these actions should serve to The interagency report provides an alternative deter manipulative practices and allow quick to burdensome regulation—a low-cost, marketdetection of abuses should they occur. More- based solution to the problem that targets manipover, they are relatively low-cost, market-based ulative behavior without impairing the liquidity responses that should achieve these benefits of this important market. This overall strategy without impairing the efficiency and liquidity of has three basic elements: improved auction this vital market. mechanisms, enhanced market surveillance, and Of course, many other alternatives could be con- active supply management. sidered to combat the potential for abuses in this Although many aspects of the Salomon Brothmarket. However, the government securities mar- ers admission of wrongdoing and the results of ket is too important a national resource and works the subsequent investigation cause concern, one too well to be put at risk by regulatory change for is particularly unsettling: Because of the falsifithe sake of change. From the Board of Governors' cation of bids at auctions, the Treasury was the perspective, a compelling case must be established direct counterparty in attempts to manipulate the that the benefits outweigh the costs. market. Immediate steps were taken to reduce In our view, such a compelling cost-benefit anal- the risk of a reoccurrence, including tightening ysis has not been made with respect to proposals to the enforcement of auction rules and implementestablish a broad-based apparatus of reporting re- ing measures to encourage more direct bidding. quirements or audit trails in this market. Although Looking forward, automation of the auction proincreased reporting would deter manipulation and cess, already under way and expected to be facilitate the investigation of abuses, such systems completed by year-end, should efficiently snare would impose substantial potential costs on this any infraction of the rules. market. The reporting burden would fall on all More important still, automation will facilitate traders—the good and the bad—boosting the cost of consideration of alternative auction techniques. every trade. While the direct costs of additional At a minimum, switching to single-price awards recordkeeping might be kept manageable, an indi- from the current multiple-price format should rect cost looms larger. Rather than risk divulging foster greater participation and likely reduce their finances and trading strategies, participants gaming behavior at the auction. But more can be might withdraw from this market, thereby raising done. Linking bidders directly by a computer the cost of Treasury finance. And, of course, the network and conducting the auction in real time stakes are high: A tiny increase in Treasury rates will expose any would-be manipulator to public aggregates into a very substantial increase in cost to scrutiny in time for the competition to react. U.S. taxpayers. With the element of surprise gone, the potential Because it might be difficult to resist imple- return to manipulation should disappear. Thus, menting, even backup authority risks sending a the auction of the near future may well be played chilling message about the U.S. market to all in the open, on a level field, with sharply defined participants choosing a trading arena in the and easily policed foul lines. global marketplace. Moreover, in view of the The report also finds that the benefits of enextensive nature of the other changes proposed hanced monitoring extend to when-issued and in this report, one might question the capacity of secondary market trading. Manipulative behavthis market to absorb, at an acceptable cost, this ior leaves its footprints in market quotes because Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 253 a shortage of an issue will be evidenced by a yield sury will act in the market to narrow those price below that of similar securities and by depressed anomalies, thereby limiting the extent of the marfinancing rates. The agencies agreed that the ket disruption in general and reducing the poten- Federal Reserve Bank of New York, with its tial gain if manipulative behavior was the root substantial experience as the operating arm of cause. The Treasury's actions will be effected by the Federal Open Market Committee and (along eitiier holding a new auction of the sought-after with the other Reserve Banks) as one of the fiscal security—a reopening—or through the sale of agents of the Treasury, should have primary those securities into the market by the Trading responsibility for market surveillance; the Bank, Desk of the Federal Reserve Bank of New York in turn, will provide information to the Treasury, on behalf of the Treasury—a tap issuance. The the SEC, and the Board of Governors. The view resulting expansion of supply should slash the of the Board of Governors is that rigorous mon- manipulator's potential gain, making it unlikely itoring of the behavior of market rates will ex- that any one would even try to manipulate the pose manipulative behavior without the need to market. Circumstance and experience over time gather the positions of large traders routinely. will dictate when an increase in supply will be Indeed, automation and enhanced market mon- required and which means of augmenting the issue itoring also present the opportunity to correct a will be taken. longstanding market misimpression. Although the It is the judgment of the Board of Governors Federal Reserve Bank of New York has no stat- that the reforms that I have outlined—changes in utory authority to regulate the primary dealers, auction mechanisms, active and rigorous monimany people view the primary dealer system as toring of market rates, and the clear willingness evidence of some measure of oversight of those to use relative supplies to punish manipulative firms by the Federal Reserve Bank of New York. behavior—will work to prevent a replay of last Ongoing automation and enhanced monitoring year's events. These reforms are fundamental capabilities will let the Bank move to a more open changes in market mechanisms that promise to set of trading relationships, thus disabusing mar- open this market to broad-based participation ket participants of the notion that the primary while, at the same time, enhancing regulatory dealers have a special status. To further that end, surveillance and remedial capabilities. These rethe Bank will eliminate its dealer surveillance sponses are measured, targeted, and commensuunit, showing unambiguously that responsibility rate to the problem at hand and in our view rests with the primary regulator. The Bank will obviate the need to punish many with reporting also lower the impediments to primary-dealer burdens because of the actions of a few. This membership, thereby encouraging a broadening of strategy also offers flexibility to deal with future membership in the primary-dealer system. problems as they arise. It is perhaps ironic that The careful monitoring of the market will be the most serious abuses in the history of this made more credible by action: Persistent and market—the Salomon Brothers episode—have large-scale price anomalies consistent with a ma- served as the catalyst for changes that promise nipulative squeeze will call forth two sets of policy substantial long-term benefits. Taken together, responses. First, if other evidence (including dis- these proposals and those already implemented cussions with market participants) suggests ma- constitute a thorough, thoughtful, and feasible nipulation, then the SEC will begin an investiga- renovation of the government securities market tion to determine if any security laws have been and will result in a healthier, more efficient broken. Second, and more immediately, the Trea- market for U.S. government securities. • Statement by Alan Greenspan, Chairman, Board I am pleased to appear here today. As you know, of Governors of the Federal Reserve System, the Federal Reserve will submit its semiannual before the Committee on the Budget, U.S. report on monetary policy to the Congress later House of Representatives, February 4, 1992 this month. That report will cover in detail the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

254 Federal Reserve Bulletin • April 1992 System's policy targets for 1992, as well as our In some parts of the United States, the household expectations for growth and inflation. Today, I spending boom reached to the purchase of would like to focus on some of the broad consid- homes, not simply for essential shelter, but as erations bearing on our economic prospects. speculative investments—and often involving The recent performance of the economy borrowing that constituted a heavy call on curclearly has been disappointing, and it is apparent rent and expected family incomes. that some strong forces have been working Most analysts, of course, were aware of the against a typical cyclical revival in economic increasingly disturbing trends of rising household activity. Indeed, in many respects, these under- debt and elevated corporate leverage. However, lying forces, which were obscured for a time by they did not think that these burdens had reached the gyrations associated with the crisis in the a magnitude that would restrain the U.S. econ- Persian Gulf, have been impeding growth since omy from a moderate cyclical recovery in 1991. well before the economy tilted into recession in Indeed, output began to move up last spring and, the fall of 1990. as inventory liquidation abated at midyear, During the 1980s, large stocks of physical closed the gap with the consumption of goods assets were amassed in several sectors, largely and services in much the same manner evident in financed by huge increases in indebtedness. The the early stages of recoveries in other recent buildup of debt was originally largely collateral- business cycles. ized or matched by rising asset values, but be- By late summer, however, with half the decause of the weakening of property values, the cline in output during the recession recovered, it debts have become more troubling. The en- became clear that the cumulative upward modeavor to redress these debt imbalances has led mentum that had characterized previous recovmany businesses and households to divert cash eries was spent. The continued strong propensity flows to debt repayment rather than investment of households to pare debt and businesses to and consumption, thereby depressing aggregate reduce leverage was a signal that the balance economic demand. sheet restraints, a concern of many for a long In the business sector, the most obvious ex- time, had indeed taken hold. ample is that of commercial real estate, with the Consumer spending on motor vehicles and accumulation of vast amounts of office and other other items softened, while household and busicommercial space—space beyond the plausible ness sentiment, which had rebounded in a normal needs in most locales well into the future. Our fashion as the cyclical recovery began last financial intermediaries, not just depository insti- spring, fell back in the autumn as the recovery tutions but other lenders as well, lavished credit stalled. Inventories backed up in the wholesale upon developers, and they are paying the price and retail trade sectors, particularly of goods today in the form of loan losses and impaired ordered earlier from abroad in anticipation of capital positions, with adverse effects on their climbing sales. The inventory bulge, in turn, willingness to extend credit. This process has contributed to the drop in imports of late and to also damaged the asset positions, creditworthi- the persistent slackness in industrial production ness, and possibly the willingness to borrow of in the United States. Moreover, although export many developers, entrepreneurs, and other bus- activity has remained a bright spot for us, recesinesses. Another characteristic of the 1980s was sions and slower-than-expected economic the wave of mergers and buyouts—purchases of growth in several major industrial countries over corporate assets, often involving the substitution the second half of 1991 limited the growth of of debt for equity and anticipating the sale of demand from abroad for our goods. All told, assets at higher prices. U.S. industrial output changed little between In the household sector, purchases of motor July and December. vehicles and other consumer durables ran for Against a backdrop of sluggish activity, recedseveral years at remarkably high levels and were ing inflationary pressures, and weakness in the often paid for with installment or other debt that monetary aggregates, the Federal Reserve eased carried longer maturities than had been normal. monetary policy over the last several months of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 255 1991—at times aggressively. As we indicated in developments in financial markets, some individour press release accompanying the cut in the uals—many of them retirees—are suffering bediscount rate to 3l/i percent in December, we cause their interest income has shrunk. And on expect that the amount of monetary ease in the the employment front, the unexpectedly sharp pipeline is adequate to turn the economy onto the slowing in labor force growth over the past few path of sustained recovery.1 But, assessing the years suggests that individuals' assessments of economic outlook at the present time is extraor- job availability may be much more negative than dinarily difficult. We are, of course, continuing to is implied by many of the traditional labor market evaluate whether some additional insurance in indicators. In addition, the string of job cuts the way of further monetary ease would be announced by many large corporations undoubtappropriate. edly has heightened concern about job security— Not unexpectedly, lower interest rates are both now and in the future. reducing debt service burdens and are encourag- More fundamentally, I suspect that what trouing companies and households to hasten the bles consumers, and indeed everyone, is that the repair of stretched balance sheets. Offerings of current pause in activity may be underscoring a new corporate equity shares in our capital mar- sense of retardation in the growth of living stankets have risen to record levels, and large bond dards over the long run. So long as the recovery issues are funding short-term liabilities and higher- remained convincingly on track, these latent cost long-term debt. Households are not only concerns did not surface. But as the recovery repaying debt but are initiating heavy mortgage failed to meet expectations, earlier worries about refinancings that are reducing their debt service our long-run economic prospects and whether burdens as well. the current generation will live as well as previ- We thus have already made considerable prog- ous ones reemerged. ress in the balance sheet adjustment process, and The record of the past decade provides ample this unusual restraint on economic activity reason for concern. Although we saw some imshould begin to dissipate, it is hoped, in the provement in productivity trends—at least relareasonably near future. But resumption of a tive to the experience of the late 1970s—our sustainable, healthy recovery also depends, performance left much to be desired, a fact among other things, on a restoration of consumer reflected in our loss of international competitiveand business confidence. ness in several industries and in the disappointing On the surface, the extraordinary apprehen- real incomes of too many American families. sion on the part of consumers and businesses Especially disturbing was the failure of many does not seem to square with the broad macro- young persons to acquire the education and skills economic circumstances. To be sure, our recent needed to keep pace with the demands of our economic performance is disappointing when rapidly changing economy—and the prospect measured against the norms of previous recover- that they will fall even further behind in the ies—or even against the forecasts made last 1990s. summer. And such gains as have occurred since The attainment of rising living standards in the last spring have not reached all sectors of the future will hinge crucially on our ability to eleeconomy or all regions of the nation. But, it does vate productivity growth. To be sure, economists not appear that we are tumbling into another have not had great success in forecasting, or significant contraction in overall activity. even explaining after the fact, the shifts in pro- This situation suggests that the highly aggre- ductivity in years past. It is thus conceivable that gated macroeconomic data may not be capturing the payoff from the restructuring efforts of Amerthe full story. For example, although consumers ican business will turn out to be considerably as a group are clearly benefiting from the recent larger than we now expect. But we cannot count on such an outcome. The surest way to ensure a better productivity trend is to take actions that will increase domestic investment; it is here that 1. See Federal Reserve Bulletin, vol. 78 (February 1992), our major policy focus must rest. p. 125. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

256 Federal Reserve Bulletin • April 1992 I, and others, have long argued before this strategy for fiscal year 1993 and beyond that is committee that bolstering the supply of saving geared to the longer-run needs of the U.S. econavailable to support productive private invest- omy. At a minimum, maintaining a commitment ment must be a priority for fiscal policy. In that to the elimination of the structural budget deficit regard, reducing the call of the federal govern- over the coming years will help enormously to ment on the nation's pool of saving is essential. alleviate the concerns of the American people Above all, I urge you to adhere to a budgetary about our economic future. • Statement by David W. Mullins, Jr., Vice Chair- tive that allows it to examine these issues in an man, Board of Governors of the Federal Reserve economy wide context. System, before the Subcommittee on Domestic When we look to the government securities Monetary Policy of the Committee on Banking market, we see a market that works as well as Finance and Urban Affairs, U.S. House of Rep- any on earth. U.S. government debt is an ideal resentatives, February 6, 1992 trading vehicle because it is all closely substitutable and has none of the default risk or idiosyn- Thank you for this opportunity to present the cratic problems of private issues. As a result, Federal Reserve Board's views on reforms to the market participants, in the aggregate, willingly regulation of the government securities market. commit substantial amounts of risk capital and Just two weeks ago, staff of the Federal Reserve, exchange a large volume of securities each day. the Treasury Department, and the Securities and Positions are large, yet trading skills are so Exchange Commission (SEC) released results of sharply refined that bid-ask spreads are razor their exhaustive examination of this market. My thin, a small fraction of the size of spreads in prepared remarks will touch upon some of the major equity markets. main conclusions of this report from the partic- The government securities market generates ular perspective of the Board of Governors of the widespread macroeconomic benefits. It effi- Federal Reserve System. Our perspective differs ciently absorbs the large quantity of new issues somewhat from the perspectives of the other required to finance the deficit. With real-time agencies contributing to the report because of quotes on a range of instruments, this market differences in legislative mandates. The Board of serves as the foundation for private market rates Governors has little direct regulatory authority and a haven for ready liquidity. Further, this for the U.S. government securities market. deep and liquid market gives the Federal Reserve Although the Board has general oversight re- a powerful, reliable mechanism for implementing sponsibility for all Federal Reserve District monetary policy. Banks, it is the District Banks that act as fiscal Nonetheless, the admission of wrongdoing by agents of the Treasury, thus sharing operating Salomon Brothers, episodes of price distortions, responsibility for the market with the Treasury. and other evidence uncovered in our joint study In addition, it is the District Banks that routinely all suggest that this market has faults. It can be examine the financial institutions for which the improved. The proposals contained in the joint Federal Reserve System has primary oversight report, along with other reforms announced earresponsibility, virtually all of which hold, and lier, constitute a careful, comprehensive modernsome of which actively trade, government secu- ization of the mechanisms and practices in the rities. The SEC's charge is to enforce the secu- government securities market. In our view, imrities laws that seek to foster a high degree of plementing these proposals represents a formidafairness in the marketplace. With neither the ble, though feasible, task. direct responsibilities of funding the government Over the longer term, the most effective force nor substantial regulatory oversight, the Board of in enhancing market efficiency and reducing the Governors can view this market from a somepotential for manipulative abuses is the force of what different vantage point—a policy perspeccompetition. And the effect of these proposals is Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 257 to open up the government securities market to vulging their finances and trading strategies, parbroad-based participation. Automating Treasury ticipants might withdraw from this market, auctions; facilitating direct bidding by custom- thereby raising the cost of Treasury finance. ers, including nonprimary dealers; implementing And, of course, the stakes are high. A tiny a single-price, open auction technique; and re- increase in Treasury rates aggregates into a very ducing the barriers to primary dealer member- substantial increase in cost to U.S. taxpayers. ship—all will serve, in time, to broaden partici- Because it might be difficult to resist implepation in the primary market and in the menting, even backup authority risks sending a secondary market for newly issued securities. chilling message about the U.S. market to all More depth and breadth in this end of the market participants choosing a trading arena in the should increase efficiency, reduce Treasury fi- global marketplace. Moreover, in view of the nancing costs, and lessen the potential for ma- extensive nature of the other changes proposed nipulative trading abuses. In addition, the com- in this report, one might question the capacity of petitive force of broader participation will be this market to absorb, at an acceptable cost, this reinforced by proposals targeted at manipulative additional change—the imposition of broadabuse: tighter enforcement of auction rules and based reporting requirements for this market. enhanced market surveillance by the Federal The agencies agree that large position reporting Reserve Bank of New York to identify potential requirements should not be implemented at this manipulative episodes that could trigger SEC time. Rather than risk slipping into this fundainvestigation and Treasury supply management mental change through backup authority, the to reopen offerings. Board of Governors feels it would be a wiser Taken together, these actions should serve to course of action to return to the Congress for deter manipulative practices and quickly detect enabling legislation in the future should such abuses should they occur. Moreover, they are authority appear necessary. relatively low-cost, market-based responses that This committee's important mandate is to enshould achieve these benefits without impairing sure that a legislative framework that provides the efficiency and liquidity of this vital market. for the adequate supervision of the government Of course, many other alternatives could be securities activities of banks is in place. In the considered to combat the potential for abuses in Board's opinion, the current supervisory structhis market. However, the government securities ture secures a full measure of prudential overmarket is too important a national resource and sight of the activities of commercial banks and works too well to be put at risk by regulatory bank-related dealers in government securities. change for the sake of change. From the Board of The Federal Reserve System's share of respon- Governors' perspective, a compelling case must sibility for that supervision and oversight has be established that the benefits outweigh the three components. costs. First, under the Government Securities Act of In our view, such a compelling cost-benefit 1986 (GSA), government securities brokers and analysis has not been made with respect to dealers that are financial institutions are subject proposals to establish a broad-based apparatus of to oversight by their primary federal supervisory reporting requirements in this market, either agency. In this capacity, the Federal Reserve's directly or through audit trails or transparency watch extends to state member banks of the requirements. Although increased reporting Federal Reserve System, foreign banks, state would deter manipulation and facilitate the inves- branches and agencies of foreign banks, and tigation of abuses, such systems would impose commercial lending companies owned or consubstantial potential costs on this market. The trolled by foreign banks. As a part of their annual reporting burden would fall on all traders—the examinations, Federal Reserve examiners regood and the bad—boosting the cost of every view dealer compliance with all aspects of GSAtrade. Although the direct costs of additional mandated rules adopted by the Treasury Departrecordkeeping might be kept manageable, an ment. Specifically included are rules designed for indirect cost looms larger. Rather than risk di- protection of investor securities and funds, re- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

258 Federal Reserve Bulletin • April 1992 cordkeeping, registration of associated persons, still must scrutinize those holdings. For examand rules governing custodial holdings of govern- ple, a portfolio's liquidity and interest rate risk ment securities—the latter of which are applica- must be evaluated to determine whether the ble to all depository institutions. investments are consistent with the institution's Second, the Federal Reserve examines the financial position and management's expertise. trading and investment practices of nonbank Indeed, only last month the Federal Reserve subsidiaries of bank holding companies that deal and other depository institution regulatory in or underwrite securities—including govern- agencies issued a revised supervisory policy ment securities—to ensure that they are being statement that describes securities trading pracprudently managed and do not pose an undue tices that are inappropriate to be conducted in risk to bank affiliates. These subsidiaries are an investment portfolio. registered with the SEC and are examined by a Returning to the broader issue of the health of self-regulatory organization (SRO), such as the the government securities market, it is the Board National Association of Securities Dealers, for of Governors'judgment that the reforms outlined compliance with all rules applicable to broker- in the interagency report—changes in auction dealers. Federal Reserve inspection procedures mechanisms, active and rigorous monitoring of are designed to prevent, to the extent possible, market rates, and the clear willingness to use duplication of the procedures of the various relative supplies to punish manipulative behav- SROs. For the so-called "section 20 subsidiar- ior—will work to prevent .a replay of last year's ies," which have been authorized to underwrite events. These reforms are fundamental changes and deal in bank-ineligible securities, the Federal in market mechanisms that promise to open up Reserve also examines for compliance with its this market to broad-based participation while, at "firewall" provisions, which importantly insu- the same time, enhancing regulatory surveillance late affiliated depositories and the federal safety and remedial capabilities. These responses are net from the risks inherent in the securities busi- measured, targeted, and commensurate to the ness. Moreover, section 20 inspections check problem at hand and, in our view, obviate the compliance with the Board's revenue test, verify- need to punish many with reporting burdens ing that section 20 subsidiaries do not become because of the actions of a few. This strategy also principally engaged in the distribution of securi- offers flexibility to deal with future problems as ties in violation of the Glass-Steagall Act. More- they arise. It is perhaps ironic that the most over, all inspections of nonbank subsidiaries in- serious abuses in the history of this market—the clude an evaluation of their financial impact, if Salomon Brothers episode—have served as the any, on the parent bank holding company. catalyst for changes that promise substantial Third, the Federal Reserve supervises state long-term benefits. Taken together, these promember banks' investment activities, which in posals and those already implemented constitute virtually all instances include investments in a thorough, thoughtful, and feasible renovation government securities. Despite the diminished of the government securities market and will concerns about credit quality afforded by a result in a healthier, more efficient market for portfolio of government securities, examiners U.S. government securities. • Statement by E. Gerald Corrigan, President, before you this morning to share with you my Federal Reserve Bank of New York, before the observations on the Joint Report on the Govern- Subcommittee on Domestic Monetary Policy of ment Securities Market, with particular emphasis the Committee on Banking, Finance and Urban on those aspects of the report that relate directly Affairs, U.S. House of Representatives, Febru- to the activities or responsibilities of the Federal ary 6, 1992 Reserve Bank of New York. Let me say at the outset that I strongly support I am pleased to have this opportunity to appear the overall thrust of the joint report. Taken as a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 259 whole, the changes and legislative recommenda- sury auctions—would not have been a prudent tions outlined in the report represent a compre- step. hensive yet well-balanced approach to the prob- Second, it was important to provide for a more lems that surfaced in the government securities "open" system of primary dealers, in part bemarket last year. Let me quickly add that the cause the existing approach has been viewed as changes are at or near the outer threshold of what conferring on dealer firms special status that I believe the market can reasonably absorb in the carries with it elements of "franchise" value, near term without running undue risks to market and in part because of fairness and equity conefficiency, Treasury debt management practices, siderations. This provision has been accomor the flexibility of Federal Reserve open market plished by the elimination of the so-called 1 peroperations. cent market share requirement and the use of With those general observations in mind, let straightforward and objective capital standards me turn to the specific aspects of the report that for eligibility as a primary dealer. Taken torelate directly to the responsibilities of the Fed- gether, these changes will substantially increase eral Reserve Bank of New York. There are three the potential number of firms that can become such major areas: first, the changes in the Bank's primary dealers. administration of relationships with primary Third, it was important that the Federal Redealers; second, the Bank's role in the develop- serve Bank of New York make absolutely clear ment, testing, and implementation of new auto- to the marketplace that the Bank does not regumated systems for Treasury auctions and Federal late the primary-dealer firms, in part because of Reserve open market operations; and third, the "moral hazard" considerations and in part be- Bank's expanded role with regard to day-to-day cause of legal and regulatory realities. For this surveillance of the government securities mar- reason we are disbanding the Bank's dealer ket. The statement concludes with a brief status surveillance unit. report from the Federal Reserve's standpoint on Fourth, for obvious reasons, it was necessary the Salomon Brothers situation, as requested by to clarify the reasons and the conditions under the committee. which the Federal Reserve Bank of New York would alter its relationship with a primary-dealer firm. Under the new administrative procedures, ADMINISTRATION OF RELATIONSHIPS WITH the three independent sets of circumstances un- PRIMARY DEALERS der which that might occur, are the following: • A dealer firm's status will be altered if the Attached to this statement is a paper issued late firm fails to meet its responsibilities to make last month by the Federal Reserve Bank of New reasonable markets for Federal Reserve open York outlining revised procedures for the admin- market operations or if it fails to participate istration of the Bank's relationships with primary meaningfully in Treasury auctions or if it fails to dealers.1 Although that document itself repre- meet its responsibilities to provide the Federal sents a careful balancing of many considerations Reserve with meaningful market intelligence and viewpoints, it is based on the following key over time. To the extent that a firm's dealer and interrelated considerations: status is altered for any or all of the above First, although change was needed, the com- reasons, that action by the Federal Reserve will plete dismantling of the primary-dealer system— reflect considerations relating to the business including the responsibility of dealers to make relationship alone and will carry no implication markets for Federal Reserve open market oper- about the creditworthiness, financial strength, or ations and to participate meaningfully in Trea- managerial competence of the firm. • A dealer firm's status will be altered if its capital falls below the relevant capital standards and it does not, in the eyes of its primary federal 1. The attachment to this statement is available on request regulator, have a credible plan to restore such from Publications Services, Board of Governors of the Fedcapital in a reasonable period of time. eral Reserve System, Washington, DC 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

260 Federal Reserve Bulletin • April 1992 • A dealer firm's status will be altered if the requirements have been defined. This enhancefirm is convicted of a felony under U.S. law or ment will not, however, delay the planned implepleads guilty or nolo contendere to a felony mentation of automated procedures for the curunder U.S. law for activities directly or indirectly rent auction by the end of this year. related to its business relationship with the Fed- The committee might gain a more useful ineral Reserve. This provision should create pow- sight into exactly how the automated Treasury erful incentives for a firm—when faced with auction system will work in practice if the major wrongdoing by individual employees—to take characteristics of the system are thought of, at immediate and strong actions to root out the the risk of a great oversimplification, in the source of the problem to minimize the risk to that following terms: firm. First, each institution that is "eligible" to Although major elements of the changes in the submit competitive bids in Treasury auctions administration of the relationships with primary would have a terminal-based telecommunicadealers will begin to take place immediately, the tions link to the Federal Reserve Bank of New full benefits of these changes will occur only as York, either directly or through another Federal the automation of Treasury auctions and Federal Reserve Bank. The basic "hardware" used for Reserve open market operations take place and this purpose will be the FedLine terminal that is as the other changes contemplated by the Joint currently used in more than 9,000 depository Report take hold. Over time, however, the auto- institutions nationwide. The communications mation efforts may prove particularly important. network will be the proven and highly reliable These initiatives are described below. Fedwire telecommunications system. Finally, the new auction system will utilize the same security and encryption devices that are cur- AUTOMATION EFFORTS OF THE FEDERAL rently used for Fedwire operations. RESERVE BANK OF NEW YORK Second, for each such "eligible" bidder, certain data—including any affiliations with other The design work for the automation of the com- "eligible" bidders—would have to be housed in petitive bidding portion of Treasury auctions our database, as would acceptable methods for based on existing auction techniques has been making payment for securities and for receiving under way for some time and should be com- delivery of securities awarded in the auctions. pleted late this year. The software for the auto- Because payment and delivery must be made in mation of the auctions is not particularly difficult electronic form, nonbanks would have to have to develop. The difficult aspects of this task suitable "auto-charge" agreements in place with relate more to its communications system—par- banks for this purpose. ticularly as the number and nature of prospective Third, after electronic announcements of nodirect participants in the auctions change. But tices of auctions, bidders would be able to submit what makes this automation effort especially bids electronically until the auction cutoff time, difficult is the need to build into the computer which currently is 1:00 p.m. Eastern time. To systems and the communications systems a very provide adequate backup for contingencies, howhigh level of operation integrity as well as multi- ever, the system must be designed so that all bids ple levels of backup for various contingencies. can be routed to both the Federal Reserve Bank If the Treasury were to decide to move to a of New York's main data processing center in different auction technique, the strategy would lower Manhattan and its remote backup probe to enhance the system now being developed to cessing center. accommodate both types of auctions. Although Fourth, the computers would then sort through important elements of the work being done for the bids on the basis of the highest prices (lowest the current auction procedures can be used with yields) received, in much the same fashion as in a new auction technique, the enhancement of the today's manual procedures. As a part of this system being developed to accommodate the process, several internal audit and control pronew procedures will take some time after the cedures are planned to ensure compliance with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 261 Treasury auction rules and to "flag" outlier bids, securities market except to emphasize that (1) including those resulting from clerical errors in market surveillance is quite distinct from dealer message preparation. surveillance, which we are discontinuing and (2) Fifth, once the proper audits have been per- it will take some time to put in place the new or formed, the information has been sent to the altered statistical reporting arrangements that Treasury, and the "awards" have been made, might be agreed upon by the interagency surveilthe payment for and delivery of the securities lance working group over the period immediately must be initiated and completed. This process ahead. will be carried out through the Federal Reserve's As a first step, the Federal Reserve Bank of money and securities transfer systems (Fedwire). New York expects to have the initial redeploy- Finally, and in the normal course, after the ment of key personnel necessary for this effort in initial delivery and payment for the securities in place later this month. Final decisions about the question is completed, end-of-day verifications number and mix of personnel needed for this and reconcilements must be made as a part of the effort will have to await agreement among the overall controls on operating systems that often agencies about the precise scope and nature of handle more than $1 trillion of transaction per the statistical reporting and other aspects of the day. market surveillance effort, which should be es- The full automation of Federal Reserve open sentially completed in a month or two. market operations is even a more complex and time-consuming task, especially because it is impossible to prejudge with any precision the THE SALOMON BROTHERS SITUATION number, location, and other characteristics of potential counterparties for such operations. Because the official investigation into the Sa- Moreover, the operating systems and communi- lomon Brothers wrongdoings is still under way, cations systems associated with this effort must very little can be said at this time regarding the be integrated with several other highly complex particulars of that situation. The firm, in reautomated systems, including the Federal Re- sponse to inquiries by the Federal Reserve Bank serve's existing money and securities transfer of New York, has provided the Bank with sevsystems. Because of this complexity, an extraor- eral reports over the period of September dinarily high level of reliability and integrity will through December 1991. In general, these rebe needed. To illustrate the concerns I have in ports cover (1) the sweeping changes in managemind, just imagine for a moment what might have ment and management structure that were put in occurred on the morning of October 20, 1987, if place after the disclosures made by the firm last the Federal Reserve had been unable—because August, (2) the major changes in internal control of technical problems with such a system—to procedures and compliance systems that have furnish substantial liquidity through open market been put in place over the period in question, (3) operations as a part of the effort to stabilize various estimates of the profits associated with financial markets in the wake of the stock market the auctions in which irregularities have been crash. acknowledged by the firm, and (4) further details regarding the firm's financing activities in certain of the Treasury issues. All relevant materials THE ROLE OF THE FEDERAL RESERVE have been made available to the Securities and Exchange Commission (SEC) and the U.S. At- BANK OF NEW YORK IN THE MARKET torney. SURVEILLANCE PROCESS It is contemplated that any decision by the Little needs to be added to what is contained in Federal Reserve Bank of New York regarding the joint report as it pertains to the expanded role the status of Salomon Brothers as a primary of the Federal Reserve Bank of New York—in dealer will be made in the context of the findings cooperation with the other agencies—with regard reached by the SEC as a result of its ongoing to day-to-day surveillance of the government investigation of the matter. This approach, which Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

262 Federal Reserve Bulletin • April 1992 has the support of the other agencies, is being Salomon Brothers episode is such that certain followed in deference to fairness and due process sanctions by the Federal Reserve Bank of New considerations and to minimize uncertainties that York might apply even if the firm is not convicted might follow from multiple and uncoordinated of, or if it pleads guilty or nolo contendere to, a announcements of this nature. The timing of the felony under U.S. law. • Statement by Edward C. Ettin, Deputy Director, Ware's testimony of last fall, which I understand Division of Research and Statistics, Board of you already have. Governors of the Federal Reserve System, before the Subcommittee on Treasury, Postal Service, and General Government of the Committee RECENT STRUCTURAL CHANGES on Appropriations, U.S. Senate, February 24, IN BANKING 1992 The restructuring of the banking industry accel- I am pleased to have this opportunity to appear erated in the past decade. There were 188 mergbefore this subcommittee on behalf of the Fed- ers of healthy banks involving about $9 billion in eral Reserve Board and to discuss issues related acquired assets in 1980,710 such mergers involvto bank mergers in the United States. However, ing $131 billion in acquired assets in 1987, and an I am not in a position to discuss issues or to estimated 550 mergers of healthy banks with $60 answer questions directly related to the proposed billion in acquired assets in 1989. BankAmerica-Security Pacific merger—which I Such an increase in merger activity did not understand is the subject of these hearings— come about spontaneously. It was instead a because that merger is under "consideration by natural response to the removal of many longthe staff, preparatory to presentation to the standing legal restrictions on entry that had, until Board of Governors. recently, balkanized the banking industry, not As you know, the U.S. banking system is in only between states but within states as well. As the midst of a major restructuring in response to recently as 1985, only eighteen states allowed a variety of forces in the marketplace and the statewide branching, but by early 1992 only four continuing removal of legal barriers to entry by states prohibited statewide banking. In 1985, the individual states. A substantial volume of only nine states permitted interstate banking, but bank mergers has been a natural response to the by early 1992, only two states prohibited banking changing banking environment. The Board is operations by out-of-state banks. very aware of this evolution but is equally aware As the banking industry has responded to the of its statutory responsibility to manage events changing environment, mergers have not been the so as to preserve competition and ensure a safe only source of structural change. Indeed, the bankand sound banking system for the benefit of ing industry has been characterized by a great deal consumers, businesses, and taxpayers. of entry and exit that is indicative of a very healthy, My testimony will discuss recent structural active competitive environment. For example, changes in the banking system, the Federal Re- while there were approximately 5,000 acquisitions serve's continuing efforts to ensure that compe- of healthy banks during the 1980s, about 2,700 new tition is maintained, and some of the potential banks were formed, 16,000 new bank branches were benefits that may be expected from the restruc- opened, 6,600 branches were closed, and about turing of the banking industry that is currently 1,100 banks failed. under way. In my brief remarks today, I will not After a decade of remarkable changes in the address specifically two other areas of Board banking industry, and with a major restructuring concern—bank safety and soundness and Com- of the industry under way, almost no change has munity Reinvestment Act issues. Both of these occurred in the concentration in local banking areas were covered, however, in Governor La- markets, the battlefield on which competition is Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 263 measured and analyzed. The fact that concentra- goes no further. However, structural measures tion in both urban and rural banking markets has that exceed the merger guidelines are taken as an remained largely unchanged during the past dec- indication that the merger may have anticompetade is an indication of the continuing intensely itive effects, and Board review is required. The competitive structure of the banking industry. reason I say that a merger that exceeds the This structure reflects, in part, the efforts of the merger guidelines may have anticompetitive efregulators to ensure a competitive banking envi- fects is that, although market structure is imporronment. That concentration has not increased, tant, it is only one factor that may influence especially in urban markets, is even more notable competition in banking. because in many of these markets banking con- For cases submitted to Board review, other centration could increase considerably without factors are analyzed that would not need to be raising any questions about competition under examined if the basic commercial bank concentrathe antitrust laws or the merger guidelines of the tion ratios imply competitive structures. These Justice Department. factors include the following: (1) the importance of nonbank thrift institutions as commercial bank rivals, especially with respect to their newer lend- THE FEDERAL RESERVE'S EFFORTS TO ing and checking powers; (2) the importance of ENSURE COMPETITION potential competition, both in terms of the likelihood of new entry into the market and the current In view of the apparent success of the regulators competitive effect from the threat of entry; (3) the in ensuring a competitive banking environment, I importance of other depository and nonbank fiwould like to discuss briefly what the Federal nancial institutions, such as credit unions and Reserve does to carry out its responsibilities for finance companies, in the market; (4) the financial evaluating the competitive effects of mergers. health of the target firm; (5) the economic health Each and every bank merger or acquisition of the market (to determine whether exit from a subject to the Board's jurisdiction—that is, those declining market is necessary marketplace adjustmergers involving member banks and all acqui- ment); and (6) the competitive importance of the sitions by, and mergers of, bank holding compa- target bank if the target has proved to be an nies—are reviewed for the possibility of anticom- unusually weak competitor. petitive effects. The review process begins at one This brief overview of procedures for the comof the twelve Federal Reserve Banks. At this petitive analysis of merger proposals at the Fedstage, the appropriate geographic market for eral Reserve suggests the seriousness with which analyzing the merger is determined. This deter- the Federal Reserve takes its responsibility for mination may involve the collection of data on ensuring competition in banking. commuting, shopping patterns, banking relation- The Federal Reserve's bank merger policy and ships, and so forth. If such data prove to be past actions discourage the filing of merger apinsufficient, telephone surveys may be conducted plications that would clearly be anticompetitive. and, if necessary, on-site visits made by Federal The self-screening of such cases means that the Reserve staff to conduct interviews. vast majority of merger proposals submitted to Once the appropriate geographic area that en- the Board do not raise any competitive issues. compasses the local banking market is deter- Furthermore, in some of the relatively few cases mined, an initial screening analysis is conducted. in which a merger application does raise compet- This analysis essentially involves calculating ba- itive problems, the Federal Reserve will accept a sic pre-merger and post-merger measures of mar- divestiture of the merged bank's offices in local ket structure (market shares and the Herfindahl markets when competition may otherwise be index) to determine whether the proposed harmed. Such divestitures eliminate the anticommerger would be acceptable under the merger petitive aspects of the merger while allowing the guidelines of the Justice Department. If these basic merger to proceed. Thus, the Board acguidelines are not breached, the application is cepted divestiture proposals in thirty-five merger approved at the Reserve Bank and the process cases from 1982 to 1991. The rationale for such a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

264 Federal Reserve Bulletin • April 1992 policy is to ensure that competition is maintained important vehicle for achieving significant effiin local markets while government interference ciency gains, particularly from merging large, with the marketplace in our private-property- sophisticated back-office and computer operabased system is minimized. That is, if there are tions and from closing redundant offices. Or no competitive or other public policy problems mergers may provide the environment necesarising from a merger, no reason exists to impede sary to justify the tough cost-cutting measures decisions in the marketplace, whether or not that are required. clear public benefits are evident. This issue of The historical evidence indicates that there public benefits brings me to the last point I would have been few efficiency gains from past merglike to discuss—the potential for public benefits ers, but these studies have been based on mergfrom bank mergers. ers from an era in which banks were almost surely less cost conscious. Today, bankers, like other business managers, know that if they are to POTENTIAL PUBLIC BENEFITS remain competitive they must carefully manage their costs. Thus, the future may hold a potential Possible public benefits from a merger are con- for more cost savings than research has demonsidered under the "convenience and needs" test strated to date. Moreover, the possibility of and may be used to override some of the anti- efficiency gains may be greater in some cases competitive elements that may exist in a given than in others. Thus, the Board carefully considmerger application. If, for example, a target bank ers the potential for these gains on a case-by-case is expected to fail, the benefit to the community basis. In the last analysis, however, regardless of of uninterrupted banking servicesvices, the con- any anticipated efficiency gains, the Board is tinued operation of convenient offices, and pos- sensitive to its statutory responsibility to mainsibly the maintenance of some employment may tain competitive banking markets. provide the basis for approving the merger in Let me conclude by emphasizing that the spite of some anticompetitive effects. Board is aware of, and is monitoring, the During the past few years, poor operating changes that are taking place in the financial performance and the increasingly competitive system. It continues to devote substantial efenvironment have caused many banks, as well as forts to the analysis of the competitive effects of other firms, to focus a great deal of attention on all proposed mergers and acquisitions. Alincreasing their efficiency. Banks, like other though we at the Board have not yet seen firms, must be efficient to be profitable; equally systematic evidence of efficiency gains from important, they must be profitable to be healthy. mergers, the potential for substantial cost sav- Researchers, bankers, and bank consultants ings clearly exists. Thus, we continue to reall agree that some banks are much more effi- search this topic because of the possibility of cient than others and that opportunities exist to important public benefits in this area, not the increase the overall efficiency of the industry. least of which is that a safe and sound banking Many bankers believe that mergers provide an system is also a profitable one. • Statement by Alan Greenspan, Chairman, policy decisions discussed in the report were Board of Governors of the Federal Reserve made against the backdrop of a troubled econ- System, before the Committee on Banking, omy. The recovery that seemed to be in train at Housing, and Urban Affairs, U.S. Senate, Feb- the time of our last report to the Congress ruary 25, 1992 I am pleased to present the Federal Reserve's 1. See "Monetary Policy Report to the Congress," Federal Monetary Policy Report to the Congress.1 The Reserve Bulletin, vol. 78 (April 1992), pp. 223-41. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 265 stalled, job losses have mounted, and confi- the Federal Reserve eased policy substantially dence remains low. over late 1990 and into early 1991. Looking forward, however, there are reasons By the spring, many signs pointed to economic to believe that business activity will pick up. recovery. The quick and successful conclusion of Indeed, anecdotal reports and early data seem to the Gulf war bolstered consumer confidence. be indicating that spending is starting to firm in Growth of the money stock was strengthening. some sectors. These signs should not be exagger- Homebuilding had begun to stir, consumer ated; the prospective incipient recovery could spending had turned up, and industrial producpeter out, as indeed the much more vigorous tion was advancing. The lower interest rates and recovery of last spring petered out. Nonetheless the retracing of the earlier jump in oil prices distinct financial indications of improvement are appeared to be providing support for an expanapparent at this time. Several measures suggest sion of aggregate demand. In these circumthat the balance sheets of many households and stances, the odds appeared to favor a continued businesses have been strengthened, a develop- moderate recovery in jobs and employment durment that should facilitate spending in the recov- ing 1991. ery. Similarly, banks and other lenders have Over the third quarter, however, evidence taken steps to bolster their capital positions so began to surface that the recovery had not taken that they will be able to supply the credit to hold. The impetus to consumer sentiment and support additional spending. And, most recently, spending that was provided by the completion of broad measures of money have strengthened. the Gulf war seemed to ebb, and consumer Moreover, there are clear signals that core infla- outlays turned down again. Businesses, appartion rates are falling, implying the prospect that ently caught by surprise by this development, within the foreseeable future we will have at- saw their inventories back up in the late summer tained the lowest rates of inflation in a genera- and fall. With demand slackening, businesses tion, an encouraging indicator of future gains in engaged in another round of layoffs, and private standards of living for the American people. Still, nonfarm payrolls declined over the second half of the outlook remains particularly uncertain. This 1991 while the civilian unemployment rate rose means that we at the Federal Reserve have to be to 7.1 percent. particularly sensitive to signs that the anticipated In addition, growth of the monetary aggregates strengthening in business activity is not emerging slowed unexpectedly during the third quarter. and be prepared to act should the need arise. Expansion of M2 virtually ceased, while M3 As background, I would like to discuss our actually contracted—a nearly unprecedented ocrecent economic performance, reviewing in some currence. Judging from our surveys of banks, detail the causes of the disappointments we have other contacts in the financial industry, and anexperienced and the important balance sheet ecdotal information from borrowers, the supply adjustments in process that promise eventually of credit for many borrowers remained quite to support a resumption of sustainable economic tight, particularly for those firms without access growth. to open market sources of funds. Moreover, private credit demands weakened further. Against this background, and with signs that inflationary pressures were diminishing, the Fed- MACROECONOMIC PERFORMANCE AND eral Reserve took several steps to ease policy MONETARY POLICY IN 1991 further in the second half of 1991. Through both open market operations and reductions in the After the contraction of economic activity in the discount rate, money market interest rates were autumn of 1990 that resulted from the invasion of lowered nearly 2 percentage points between Au- Kuwait and the subsequent sharp rise in oil gust and December. prices, economic activity continued to decline in These monetary policy actions, building on the first quarter of 1991. In response to the those actions over the previous two and one-half weakening of activity and anemic money growth, years, have resulted in a large cumulative reduc- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

266 Federal Reserve Bulletin • April 1992 tion of interest rates. The federal funds rate has ity, remained relatively high. As a result, many declined nearly 6 percentage points from its households apparently used deposit balances to cyclical peak and the discount rate 3V2 percent- pay off or to avoid taking on consumer credit. age points. Other short-term interest rates have Also, the steep yield curve and the attractive fallen substantially as well. The prime rate also returns recorded by bond mutual funds, as well has been reduced appreciably but by somewhat as impressive gains in the stock market, apparless than market rates as commercial banks have ently led many households to shift funds out of sought to bolster lending margins. In longer-term deposits and into capital market instruments, markets, bond and mortgage yields have dropped which are not included in the monetary aggre- 1 to 2 percentage points on balance from their gates. cyclical highs, with much of the decline coming Finally, £ brisk pace of activity by the Resoluin the latter half of 1991. The decreases in tion Trust Corporation (RTC) appears to have interest rates appear to have given stock prices a depressed the monetary aggregates, especially boost as well, with most major indexes rising to M3. When the RTC takes savings and loan assets record levels early this year. onto its own balance sheet, they are financed Despite substantial decreases in interest rates with Treasury securities rather than depository in late 1990 and throughout 1991, however, M2 liabilities. In effect, the RTC has taken on some growth was only about 3 percent in 1991, the of the role of thrift institutions, but its liabilities same as the sluggish pace of expansion of are not included in the monetary aggregates. In nominal gross domestic product (GDP). M3 addition, the disruption of banking relationships rose only VA percent. Both aggregates ended as institutions are resolved, including the abrothe year only modestly above the lower bounds gation of some time deposit contracts, seems to of their respective annual ranges. Growth of lead investors to reassess their portfolio allocadomestic nonfinancial sector debt, at 43A per- tion and, in some cases, to shift funds out of cent, also was near the lower bound of its deposits. monitoring range. Outside the federal sector, Thus, several factors reduced the public's dedebt increased less than 3 percent for the year mands for monetary balances in 1991. Some of in reflection not only of depressed spending but these factors tended to raise the velocity of also of a deleveraging in the household and money so that to an extent slow growth of M2 business sectors and financial difficulties of was not reflected in income flows. But the patmany state and local governments. tern of money and credit growth over the past The behavior of the monetary aggregates in half of the year appeared also to stem impor- 1991 relative to other economic variables was tantly from forces depressing spending and ecosomewhat puzzling. Doubtless, part of the slow nomic activity, which the Federal Reserve atmoney growth was related to the weakness in tempted to counter through easing money market borrowing and spending. But even after taking conditions. account of weak spending, growth of money was unusually slow. The velocity of M2 was about unchanged over the year rather than falling as BALANCE SHEET ADJUSTMENTS would ordinarily be expected in circumstances of sharp declines in short-term market interest Understanding these forces and the appropriate rates. It appears that certain interest rate rela- role for monetary policy under the circumstances tionships gave households incentives to limit requires stepping back several years. As I have their money holdings. Commercial banks, re- discussed with you previously, the 1980s saw straining their own balance sheets in response to outsized accumulation of certain kinds of real weak loan demand and in an attempt to conserve assets and even more rapid growth of debt and capital, lowered deposit interest rates apprecia- leverage. To a degree, this buildup of balance bly, especially late in the year. On the other sheets was a natural and economically efficient hand, interest rates on consumer debt, particu- outcome of deregulation and financial innovalarly when adjusted for the lack of tax deductibil- tion. It also may have reflected a lingering infla- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 267 tion psychology from the 1970s—that is, people optimistic assumptions about what the econmay have expected a rapid increase in the gen- omy could deliver—that rapid economic growth eral price level and especially in the prices of could continue without setback and that asset specific real assets such as real estate properties prices would always rise. that would make debt-financed purchases profit- A primary example of the accumulation of debt able. But in retrospect, the growth of debt and and real assets occurred in commercial real esleverage was out of line with subsequent eco- tate markets. In the early 1980s, when space was nomic expansion and asset price appreciation. in unusually short supply, commercial real estate Indeed, the burden of debt relative to income received an additional push from the Economic mounted as asset values, especially for real prop- Recovery Tax Act, which provided an acceleraerty, declined or stagnated. In part, our current tion of depreciation allowances for capital goods. economic adjustments can be seen as arising out Although an adjustment was appropriate and of a process in which debt is being realigned with overdue, that for commercial structures was exa more realistic outlook for incomes and asset cessive, resulting in tax lives that were far values. shorter than economic fundamentals would dic- Rapid rates of debt-financed asset accumula- tate. This shift in incentives led to a surge in tion were broad-based during the 1980s. For debt-financed commercial construction during example, households purchased cars and other the 1980s. consumer goods at a brisk pace. Although house- Financial institutions, of course, participated hold income was increasing swiftly in this period, in this process by lending heavily; indeed, their the growth of expenditures was faster. House- aggressive lending behavior probably contribhold saving rates dropped from about 8 percent uted to the speed of debt accumulation. During at the beginning of the decade to a 4 to 5 percent the economic expansion, bank credit expanded range by its end. This drop was reflected in part at an average annual rate of nearly 9 percent, in burgeoning consumer installment credit, well in excess of the growth of nominal income. which expanded at an average annual rate of 15 Banks lent heavily against real estate collateral, percent between 1983 and 1986. In addition, for corporate restructurings, and for consumer mortgage debt expanded at an 11 percent pace credit, and, in addition, for more traditional between 1983 and 1989. Most of this increase was business purposes. Life insurance companies against existing homes, representing borrowing also expanded their portfolios rapidly, with against rising values either in the process of growth in real estate loans especially prominent. home turnover or as owners borrowed against By the end of the 1980s, the inevitable correchigher equity. Mortgage borrowing also financed tion was upon us. The economy was operating a substantial amount of buying of new homes, close to capacity, so that growth had to slow to a which in some parts of the country at times pace more in line with its long-run potential. seemed to be motivated more by speculative Inflation did not pick up much, contrary to what considerations than by fundamental needs. some might have expected as capacity was ap- The 1980s also witnessed a dramatic increase proached. In the commercial real estate sector, in desired leverage of the business sector, soaring vacancy rates and a change in tax law in which fostered a wave of mergers and buyouts. 1986 brought the boom to an end, producing These transactions typically involved substan- sharp decreases in prices of office buildings in tial retirements of equity financed through issu- particular. ance of debt; equity retirements in the nonfi- Together, these developments resulted in denancial corporate sector exceeded new equity clines in the value of assets and growing probissuance by a staggering $640 billion in the lems in servicing the associated debt out of 1984-90 period. Such restructurings often were current income. Because of the runup in leverage based, at least in part, on a well-founded quest over previous years, these problems have been for increased efficiency, and gains were more severe than might be expected just from the achieved by several firms. However, many of slowing in income and spending. And the diffithese deals also were predicated on overly culties of both borrowers and lenders have fed Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

268 Federal Reserve Bulletin • April 1992 back on spending, exacerbating the economic The Federal Reserve has taken several meadownturn during the Gulf crisis and inhibiting the sures to facilitate balance sheet restructuring and recovery. adequate flows of credit. Together with other Faced with mounting financial problems and supervisors, we have directed examiners to conuncertainty about the future, people's natural sider not only the current market value of collatreaction is to withdraw from commitments when eral against performing loans but the overall possible and to conserve and even build savings quality of the credits. We also have met on and capital. Both households and businesses, con- numerous occasions with bankers as well as bank cerned about their economic prospects, over the examiners to clarify bank supervisory policies past two years or so have taken several measures and to emphasize the importance of banks conto reduce drains on their cash flow and to lower tinuing to lend and take reasonable risks. their exposure to further surprises. Part of this Monetary policy also has, in part, been diprocess has involved unusually conservative rected in recent quarters to supporting balance spending patterns, and part has involved the early sheet restructuring that is laying the groundwork stages of a restructuring of financial positions. for renewed, sustained, economic expansion. We Businesses, for example, have strived to re- recently reduced reserve requirements on transduce fixed costs. To do this, they have cut back actions deposits. This reduction will free up staffing levels and closed plants. They have tried some funds for lending or investment and should to decrease production promptly to keep inven- over time enhance the ability of banks and their tories in line. Firms also have taken steps to customers to build capital. lower their risk exposures by restructuring their In addition, lower short-term interest rates sources of funds to reduce leverage, enhance clearly have been helpful to debtors, but their liquidity, and cut down on interest obligations. contribution to the restructuring process would The response of households has been analo- be relatively muted if long-term rates had not gous. To increase their net worth, households also declined at the same time and stock prices have taken steps to increase their savings by were not buoyant. Reductions in short-term rates restraining expenditures. To reduce interest ex- that were expected very soon to be reversed or penses, they have paid down consumer debt, and that were not seen as consistent with containing as long-term interest rates have declined, they inflation would contribute little to the strengthhave refinanced mortgages and other debt at ening of balance sheets fundamental to enhanclower interest rates. ing our long-term economic prospects. Lenders too have drawn back. With capital In part, because we have seen declines in longimpaired by actual and prospective losses on as well as short-term rates and increases in loans, especially on commercial real estate, equity prices, progress has been made in balance banks and other intermediaries have not only sheet restructuring, and it is hoped that more is in adopted much more cautious lending standards train. As a result of lower interest rates, housebut also have attempted to hold down asset hold debt service as a percentage of disposable growth and bolster capital. They have done so, in personal income has fallen in the past year from part, by aggressively reducing what they pay for about 19V2 to about 18V2 percent. Moreover, funds by more than they have reduced what they further declines are in prospect as more refinanccharge for credit. Like other businesses, they ing occurs and as interest costs on floating-rate have taken steps to pare expenses generally, debt, such as adjustable-rate mortgages, graduincluding reducing work forces and looking for ally reflect current interest rates. cost-saving consolidations with other institu- In the business sector, similar patterns can be tions. To a considerable extent, this response has observed. With corporate bond rates close to been rational and positive for the long-term their lowest levels in more than a decade, a large health of our financial intermediaries. But in number of firms in recent months have called, many cases it seems to have gone too far, im- retired, and replaced a considerable volume of pelled to an extent by the reaction of supervisors high-cost debt. A flood of issuance of longer-term to the deteriorating situation. debt and equity shares has reduced dependence Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 269 of firms on short-term obligations. Several of the important elements that we will need to continue equity deals constituted so-called reverse to monitor on a day-by-day basis in assessing LBOs—the deleveraging of highly leveraged and whether further adjustments to the stance of therefore rather risky firms. The ratio of corpo- monetary policy are appropriate. rate debt to equity in book value terms has only begun to edge down, but the increase in equity, together with the lower level of interest rates, has ECONOMIC EXPANSION AND enabled many corporations to make significant MONEY AND CREDIT GROWTH IN 1992 headway in lowering interest expenses over the past two years, and further decreases in corpo- Against this background of significant progress in rate debt burdens are presumably in prospect. balance sheet strengthening as well as lower real Restraint on inventories and other spending has interest rates, the Board members and Reserve contributed to this result by keeping outlays in Bank Presidents expect a moderate upturn in close alignment with internally generated funds. economic activity during 1992, although in the And the strengthening of balance sheets is paying current context the outlook remains particularly off in terms of credit evaluations. Downgrades of uncertain. According to the central tendency of nonfinancial firms, though still greater than up- these views, real output should grow between PA grades, are well below the levels of last winter and 2Vi percent this year. The unemployment and spring, and upgrades have risen slightly. rate is projected to begin declining, finishing the The condition of our financial institutions also year in the vicinity of 63/t to 7 percent. is improving. In the banking sector, wider inter- An especially favorable aspect of the outlook est margins seemed to be boosting profits by the is that for inflation. The central tendency of the end of last year. In addition, many institutions Board members' and Reserve Bank Presidents' have taken difficult but necessary measures to forecast is that inflation, as measured by the control noninterest expenses. Reflecting an im- consumer price index (CPI), will be in the neighproved earnings outlook and a generally favor- borhood of 3 to 3Vi percent over the four quarters able equity market, the stock prices of large of 1992, compared with a 3 percent rise in 1991. banks have doubled on average from their 1990 However, the CPI was held down last year by a lows, and the premium paid by many money- retracing of the sharp runup in oil prices that had center banks on uninsured debentures has resulted from the Gulf crisis. Consequently, our dropped several percentage points. Increased outlook anticipates a significant improvement in share prices have spurred several holding com- the so-called core rate of inflation. With appropanies to sell substantial volumes of new equity priate economic policies, the prospects are good shares in the market, contributing to a significant for further declines in 1993 and beyond even as rise of capital ratios in the banking system, the economy expands. despite still-large provisions for loan losses. To support these favorable outcomes for eco- Measures of bank liquidity, such as the ratio of nomic activity and inflation, the committee reafsecurities to loans in bank portfolios, have risen firmed the ranges for M2, M3, and debt that it appreciably, signalling an improved ability of had selected on a tentative basis last July—that banks to lend. is, 21/2 to 6V2 percent for M2, 1 to 5 percent for The balance sheet adjustments that are in M3, and 4Vi to 8V2 percent for debt, measured on progress in the financial and nonfinancial sectors a fourth-quarter-to-fourth-quarter basis. These alike are without parallel in the postwar period. ranges are the same as those used for 1991. The Partly for that reason, assessing how far the 1992 ranges were chosen against the backdrop of process has come and how far it has to go is anomalous monetary behavior during the past extraordinarily difficult. As increasingly comfort- two years. Since 1989, M2 has posted widening able financial structures are built, however, the shortfalls from the levels that historical experirestraint arising from this source eventually ence indicates would have been compatible with should begin to diminish. In any case, the nature actual nominal GDP and short-term market interand speed of balance sheet restructuring are est rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

270 Federal Reserve Bulletin • April 1992 The appropriate pace of M2 growth within its will have to continue to be sensitive to evolving range during 1992 thus will depend on the inten- velocity patterns. sity with which forces other than nominal GDP turn out to affect money demand. Depository institutions are likely to continue reducing their CONCLUDING COMMENTS rates on retail deposits in lagged response to the steep declines in money market yields before Our focus, quite naturally and appropriately, has year-end. Those deposit-rate reductions could be been on our immediate situation—the causes of significant, especially if banks are not seeking the recent slowdown and the prospects for reretail deposits, given their continued caution in turning to solid growth this year. However, as we extending credit and borrowers' continued pref- move forward, we cannot lose sight of the crucial erence for longer-term sources of credit to importance of the longer-run performance of the strengthen balance sheets. With the effects of economy. As I have noted before, much of the lower deposit rates contributing to further shifts difficulty and dissatisfaction with our economy of funds into longer-term mutual funds and into comes from a sense that it is not delivering the debt repayment, and with the RTC remaining kind of long-term improvement in living stanactive in resolving troubled thrift institutions, the dards we have come to expect. The contribution velocity of M2 could increase this year, indepen- monetary policy can make to addressing this dently of changes in market interest rates. deficiency is to provide a financial background The ongoing restructuring of depository insti- that fosters saving and investment and sound tutions, as in the past two years, is likely to balance sheet structures. Removing over time continue to have an even larger influence on M3 the costs and uncertainties associated with ongothan on M2 growth. Assets previously on the ing inflation encourages productivity-enhancing books of thrift institutions that are acquired by investment. Moreover, inflation tends to prothe RTC will be financed by Treasury debt mote leverage and overaccumulation of real asrather than by the liabilities of thrift institu- sets as a hedge against increases in price levels; tions. Managed liabilities in M3 should continue progress toward price stability provides a backto be more depressed by resolution activity drop for borrowing and lending decisions that than retail certificates of deposit. The reaf- lead to strong balance sheets, far less apt to firmed range for M3 growth thus remains lower magnify economic disturbances. than that for M2. A crucial aspect of our recent economic per- Nonfinancial debt growth is likely to be a little formance is the difficult situation of our financial faster than last year's 43A percent increase. The sector. Clearly, some of the weakness of the wider federal deficit in prospect for 1992 will economy over the past two years arose from the increase Treasury borrowing. Assuming that out- restraint on the supply of credit—the so-called put and incomes are again expanding, balance credit crunch. Both depository institutions and sheets are in somewhat better condition, and other financial intermediaries made some of the credit conditions are no longer tightening, the same mistakes of judgment about the likely apborrowing of households and businesses may preciation of asset prices as did borrowers. In pick up a little, although their overall posture addition, however, the balance sheets of many probably will remain cautious. financial intermediaries themselves were not ro- Will these ranges for money and credit growth bust; many lacked adequate capital to continue prove to be appropriate? Obviously, we believe to lend to good credit risks in the face of losses that the answer is yes. But I should reemphasize from their previous lending mistakes. Our emthe sizable uncertainties that prevail. The ongo- phasis on improving the capitalization of deposing process of balance sheet restructuring may itory institutions over time, where we have alaffect spending, as well as the relationship of ready made substantial progress, should help various measures of money and credit to spend- bolster their ability to lend both in good times and ing, in ways we are not anticipating. In assessing bad. We could make further strides in strengthenmonetary growth in 1992, the Federal Reserve ing our depository institutions through removal of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 271 outmoded constraints on their behavior. By loos- federal debt that have been built up, too, likely ening strictures on the ability of these firms to have adversely affected our economic prospects compete across arbitrary boundaries of product line by putting upward pressure on real interest rates and geography, we would improve their profitability and thus stunting the growth of the capital stock, and capital. Their strengthened position should aug- on which our future incomes depend. In considment their ability to lend and potentially could ering the various fiscal options that are before reduce demands on the federal safety net. you as members of the Congress, I urge you to Finally, we should consider carefully the ef- keep in mind their long-term implications for fects of the extremely low rates of national national saving. Through a combination of fiscal saving that we have experienced for a decade. policies directed at reducing budget deficits and Certainly, low personal and corporate saving boosting private saving and monetary policies rates have contributed to the deterioration in aimed at noninflationary growth, we can achieve balance sheets that has impaired our economic the strong economic performance that our fellow performance in recent years. The large stocks of citizens rightly expect. • Chairman Greenspan presented similar testimony before the Subcommittee on Domestic Monetary Policy of the House Committee on Banking, Finance and Urban Affairs, February 19, 1992. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

272 Announcements REAPPOINTMENT OF ALAN GREENSPAN AS Chairman Greenspan made the following com- CHAIRMAN OF THE BOARD OF GOVERNORS ment at that time: AND AS A MEMBER OF THE BOARD I thank you very much, Mr. President. It's certainly President Bush on July 10, 1991, announced his been an honor to serve as Chairman of the Federal Reserve under your presidency. And, hopefully, if the intention to reappoint Alan Greenspan as Chair- Senate sees fit to find my credentials appropriate, I look man of the Board of Governors and as a member forward to another four years of what is really, for an of the Board for a full fourteen-year term. Dr. economist, the most interesting job that there is in Greenspan's appointments were subsequently con- government. firmed by the Senate on February 27, 1992, and he Needless to say, the last four years have been rather extraordinary, and I suspect that the next four years will took the oath of office on March 3, 1992. His full have as many surprises as the last four. term as a member of the Board began February 1, Again, let me thank you very much, Mr. President. It 1992, while his four-year term as Chairman began has certainly been an honor to work with you. March 2. In making the announcement at a White House (On August 9, 1991, President Bush announced press conference on July 10, 1991, President Bush the recess appointment of Dr. Greenspan as Chairstated: man, effective August 10. Dr. Greenspan's first four-year appointment as Chairman expired on August 10, 1991.) Just to top the day with a very important announcement, I want to say that it is my intention to send as soon as possible to the Senate my intention to reappoint Chairman Greenspan as Chairman of the Federal Reserve, and also nominating him to another term as a REDUCTION IN RESERVE REQUIREMENTS Governor of the Federal Reserve. I, of course, would encourage the Senate to move as ON TRANSACTION ACCOUNTS quickly as possible on this important nomination. The OF DEPOSITORY INSTITUTIONS respect that Alan Greenspan has around the world and in this country, particularly in the financial marketplaces, is The Federal Reserve Board announced on Febunparalleled. And it gives me great pleasure to move ruary 18, 1992, that it will reduce reserve requireforward at this time, quite a bit in advance of the expiration of the term, but nevertheless, I think, most ments on transaction accounts of depository instituappropriately, to ask him to serve. tions effective in April. And, you know, it's not a one-way street. This is a The reduction from 12 percent to 10 percent very complicated job. It is a time-consuming job. It's a in the reserve ratio on net transaction accounts job of great pressure. And I'm extraordinarily grateful to Chairman Greenspan for being willing to undertake an- will reduce funding costs for depositories and other term as Chairman of the Fed. He has done an strengthen their balance sheets. Over time, it is outstanding job. Everyplace I go abroad, I get the same expected that most of these cost savings will be reports and the same vote of confidence that I get here passed on to depositors and borrowers. from the central bankers abroad, from the finance ministers abroad, as well as from the heads of state and The Board noted that the reduction should government. strengthen the financial condition of banks and So this country is very fortunate to have the important thereby improve their access to capital markets, affairs of the Federal Reserve Bank in Alan Greenspan's thus putting them in a better position to extend hands, and I am very grateful that he is willing to credit. continue in this most important job. The effective date in April is designed to provide And so, Alan, my thanks to you, sir, for your service to your country, and the mike is all yours. depository institutions time to adjust their reserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

273 management strategies by increasing use of their DISCONTINUANCE OF THE USE OF THE required clearing balances, economizing on vault SUPERVISORY DEFINITION cash, and generally providing more efficient man- OF HIGHLY LEVERAGED TRANSACTIONS agement of their accounts. This change is the first major one in the reserve The Federal Reserve Board has voted to disconratio on net transaction accounts since the Mone- tinue use of the supervisory definition of highly tary Control Act was adopted by the Congress in leveraged transactions (HLTs) after June 30, 1992. 1980. That law made all depositories—not just The Board will also discontinue the reporting of member commercial banks—subject to reserve HLT exposure by banking organizations it regurequirements. In an action announced in December lates after the June 30, 1992, reporting date. 1990, the Board reduced from 3 percent to 0 the In the interim, the Board has approved revisions reserve requirement on nonpersonal time deposits to the supervisory definition of HLTs to be used by and Eurocurrency liabilities. banks and bank holding companies for reporting Reserve requirements are held by depositories in their HLT exposure as of March 31, 1992, and the form of deposits at Federal Reserve Banks and June 30, 1992. vault cash. Had the lower reserve ratio been in Although the Board will phase out the use of the place in 1991, required reserves would have been formal supervisory definition of HLTs, guidance about $8 billion below the nearly $50 billion level previously issued by the Board for assessing indithat prevailed last year. About %1Va billion of the vidual credits that finance corporate restructurings decline would have been in required reserve bal- and for evaluating internal processes for initiating ances and less than $1 billion in applied vault cash. and reviewing these credits will continue to be In light of the increase in required reserves over used by examiners for this purpose. last year, the drop in required reserves and required Because of the complex nature and level of risk reserve balances will be somewhat larger when associated with such HLT financings, boards of today's action is implemented. directors and management at banking organizations Today's action will be effective with the two- will be expected to continue to monitor carefully week reserve maintenance period beginning on their banking organization's risk exposure to these April 2, 1992. credits. At the same time, on February 18, 1992, the Similar action to discontinue use of the HLT Board said that it will request public comment on definition and reporting has also been approved by the following proposed changes in reserve require- the Comptroller of the Currency and the Federal ment regulations: Deposit Insurance Corporation. 1. A proposal to double the carryover allowance for reserve balances to the larger of $50,000 or 4 percent of required reserves plus required clear- CONSUMER AFFAIRS BROCHURES ing balances. This change will provide institutions ON MORTGAGE FINANCING AVAILABLE with more flexibility in managing reserves from one maintenance period to another. Buying a new house? Refinancing your existing 2. A proposal to shorten by two weeks the lag in home? One of the following pamphlets published counting vault cash toward required reserves to by the Federal Reserve may be of help to you: reduce the decline in required reserve balances early in the year. • A Consumer's Guide to Mortgage The Board also said that previous proposals to Refinancings prevent erosion of the reserve base for transaction • A Consumer's Guide to Mortgage Settlement accounts remain under consideration. The propos- Costs als, issued for comment last April 12, would • A Consumer's Guide to Mortgage Lock-Ins classify certain sweep arrangements including cer- • Consumer Handbook on Adjustable Rate tain commingled time deposits as transaction ac- Mortgages counts and make other changes designed to prevent • Home Mortgages: Understanding the Process avoidance of reserve requirements. and Your Right to Fair Lending Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

274 Federal Reserve Bulletin • April 1992 Copies of any or all of these pamphlets may be the article indicates, the SCF definition of "famobtained by writing or telephoning Publications ily" differs from that used by the CPS. In particu- Services, Federal Reserve Board, mail stop 138, lar, the SCF excludes household members who are Washington, DC 20551 (telephone 202-452-3245). outside the main economic unit and who have There is no charge for single copies of these independent finances. As a result, differences bebrochures. tween the SCF income figures and those of the CPS could occur. In addition, the SCF and the CPS have very different sample designs. Estimates based on PROPOSED ACTIONS these surveys may also differ because of sampling error, which is present in all sample surveys. The Federal Reserve Board issued for public com- Second, on page 2 the figures in table 1 on ment on February 13,1992, a proposal to revise the income for families with heads having at least Board's Regulations O (Loans to Executive Offi- some college education are correct. However, the cers of Member Banks) and Y (Bank Holding words "at least" should have been deleted from the Companies) to conform the regulations to the sentence on page 4, "The median income for famiamendments of section 22(h) of the Federal Re- lies headed by persons with at least some college serve Act (12 U.S.C. §375b) made by section 306 experience rose, but this increase was offset by of the Federal Reserve Deposit Insurance Corpora- declines in all other education categories." Family tion Improvement Act of 1991. Comment was re- income rose only for those with some college and quested by March 20, 1992. fell for all other education groups except the lowest The Federal Reserve Board requested public (those with eight or fewer years of education) for comment on February 19, 1992, on a proposal to whom income did not change significantly. revise its capital adequacy guidelines for bank holding companies and state member banks to provide explicit guidance on the types of intangible REVISIONS TO MONEY STOCK DATA assets that may be included in the tier 1 capital calculation for risk-based and leverage capital pur- Measures of the money stock were revised in Febposes. Comments were due by March 27, 1992. ruary of this year as a result of the annual benchmark and seasonal factor review. Data in tables 1.10 and 1.21 in the statistical appendix to the ERRATA Bulletin reflect these changes beginning with this issue. Federal Reserve Bulletin Data for the monetary aggregates were benchmarked using call reports through September 1991 Two textual errors have been identified in the Jan- and other sources. Seasonal factors for the moneuary 1992 Bulletin article "Changes in Family tary aggregates have been revised using the X-ll- Finances from 1983 to 1989: Evidence from the ARIMA procedure that has been employed for this Survey of Consumer Finances." First, on page 4 purpose since 1982. Following the method introthe article states that real median family income duced last year, seasonal factors for deposit series, was virtually unchanged between 1983 and 1989 beginning with January 1990, have been conand that this fact was supported by data from the structed with data aggregated across banks and Current Population Survey (CPS). The reference to thrift institutions. Owing to changes in the deposit the CPS is in error. The CPS estimate of household reports (FR 2900) effective September 17, 1991, income increased about $2,900 over this period. the series for savings deposits and MMDAs have Nevertheless, the amount of increase in family been combined. Beginning with January 1990, seaincome estimated from the Survey of Consumer sonal factors have been constructed from this com- Finances (SCF)—an increase of about $100—was bined series. Up to December 1989, each of the calculated correctly. The difference probably re- four series—savings deposits at banks, savings deflects a combination of sampling and definitional posits at thrift institutions, money market deposit variations in the two surveys. As the appendix to accounts (MMDAs) at banks, and MMDAs at Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 275 thrift institutions—continues to be seasonally ad- from the Money and Reserves Projections Section, justed individually. Through that date, the four Division of Monetary Affairs, mail stop 72, Board adjusted bank and thrift series are then summed to of Governors of the Federal Reserve System, yield the seasonally adjusted total savings deposits Washington, DC 20551. Revised monthly historiand MMDAs. cal data for Ml, M2, M3, and total nonfinancial More detail on the revisions is available in the debt also are available from the economic bulletin Board's H.6 statistical release, "Money Stock, board of the U.S. Department of Commerce. Call Liquid Assets, and Debt Measures," dated Febru- 202-377-1986 for information on subscriptions to ary 13, 1992. Complete historical data are available the Commerce bulletin board. 1. Monthly seasonal factors used to construct Ml, M2, and M3, January 1991-March 1993 NNoonnbbaannkk Other checkable deposits1 Nontransaction components DDeemmaanndd YYeeaarr aanndd mmoonntthh CCuurrrreennccyy ttrraavveelleerrss'' ddeeppoossiittss cchheecckkss Total Held at banks In M2 In M3 only 1991—January .9931 .9493 1.0205 1.0105 1.0197 1.0003 .9957 February .9921 .9608 .9714 1 . .0 9 0 91 1 3 1 .9994 1.0007 1.0021 March .9983 .9625 .9753 1.0053 1.0034 1.0055 April .9989 .9545 1.0057 1.0309 1.0334 1.0023 .9977 May 1.0029 .9699 .9757 .9906 .9866 .9970 1.0043 June 1.0058 1.0280 .9991 .9980 .9933 .9982 1.0017 July 1.0060 1.0943 1.0056 .9950 .9877 1.0003 .9975 August 1.0026 1.1067 .9952 .9930 .9884 1.0006 1 1. .0 0 0 05 0 2 1 September .9956 1.0616 .9928 .9942 .9920 .9987 October .9939 1.0076 .9999 .9881 .9855 1.0003 .9939 November 1.0011 .9607 1.0121 .9972 .9954 1.0003 .9986 December 1.0101 .9419 1.0469 1.0100 1.0132 .9979 .9957 1.0001 1992—January .9943 .9519 1.0209 1.0103 1.0197 .9961 February .9924 .9621 .9714 .9911 .9993 1.0006 1.0031 March .9970 .9630 .9755 1.0013 1.0054 1.0035 1.0063 April .9993 .9545 1.0053 1.0309 1.0335 1.0024 .9982 May 1.0036 .9689 .9757 .9906 .9865 .9970 1.0048 June 1.0040 1.0275 .9988 .9984 .9935 .9982 1.0018 July 1.0067 1.0927 1.0053 .9949 .9875 1.0003 .9971 August 1.0022 1.1057 .9954 .9932 .9884 1.0006 1.0052 September .9940 1.0614 .9928 .9944 .9922 .9988 .9995 October .9951 1.0081 .9994 .9879 .9854 1.0005 .9931 November 1.0004 .9616 1.0124 .9972 .9954 1.0002 .9982 December 1.0089 .9428 1.0471 1.0099 1.0131 .9978 .9956 1.0000 1993—January .9949 .9530 1.0213 1.0101 1.0197 .9963 February .9923 .9625 .9712 .9909 .9992 1.0005 1.0039 March .9967 .9632 .9754 1.0014 1.0054 1.0035 1.0068 1. Seasonally adjusted other checkable deposits at thrift institutions are adjusted, and seasonally adjusted other checkable deposits at commercial derived as the difference between total other checkable deposits, seasonally banks. Additional tables on seasonal factors follow. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

276 Federal Reserve Bulletin • April 1992 2. Monthly seasonal factors for selected components of the monetary aggregates, January 1991-March 1993 Deposits1 Money market mutual funds Year and month Savings Small Large and denomination denomination In M2 IInn MM33 oonnllyy MMDAs time time 1991—January .9952 1.0028 .9934 .9989 1.0303 February .9947 1.0026 .9969 1.0136 1.0453 March 1.0021 1.0006 1.0014 1.0242 1.0310 April 1.0035 .9992 .9967 1.0175 1.0066 May .9996 .9972 1.0031 .9925 1.0027 June 1.0044 .9966 1.0034 .9874 .9805 July 1.0048 .9998 .9991 .9876 .9749 August 1.0024 .9993 1.0048 .9954 .9848 September .9985 .9993 1.0042 .9965 .9679 October .9983 1.0018 1.0005 .9947 .9719 November .9998 1.0008 .9993 .9976 .9946 December .9962 1.0003 .9965 .9933 1.0064 1992—January .9946 1.0031 .9930 .9988 1.0308 February .9946 1.0025 .9968 1.0139 1.0461 March 1.0023 1.0004 1.0014 1.0249 1.0327 April 1 1.0 .0 04 0 0 00 .9990 .9968 1.0178 1.0087 May .9969 1.0038 .9923 1.0037 June 1.0047 .9963 1.0042 .9877 .9800 July 1.0050 .9996 .9994 .9874 .9735 August 1.0026 .9993 1.0051 .9952 .9846 September .9986 .9994 1 1 .0 .0 03 0 8 01 .9967 .9668 October .9983 1.0019 .9952 .9716 November .9995 1.0010 .9987 .9969 .9935 December .9958 1.0006 .9964 .9927 1.0064 1993—January .9942 1.0031 .9929 .9989 1.0306 February .9946 1.0025 .9970 1.0141 1.0473 March 1.0024 1.0005 1.0016 1.0251 1.0341 1. These seasonal factors are applied to deposits data at both commercial banks and thrift institutions. 3. Weekly seasonal factors used to construct Ml, M2, and M3, December 1991-April 5, 1993 NNoonnbbaannkk Other checkable deposits1 Nontransaction components DDeemmaanndd WWeeeekk eennddiinngg CCuurrrreennccyy ttrraavveelleerrss'' ddeeppoossiittss cchheecckkss Total Held at banks In M2 In M3 only 1991—December 2 1.0037 .9402 1.0316 .9990 .9925 .9972 1.0025 9 1.0095 .9399 1.0331 1.0218 1.0165 1.0008 .9970 16 1.0080 .9412 1.0445 1.0084 1.0070 .9999 .9952 23 1.0165 .9425 1.0420 1.0063 1.0137 .9955 .9944 30 1.0092 .9438 1.0633 1.0022 1.0161 .9948 .9952 1992—January 6 1.0048 .9460 1.0863 1.0432 1.0487 .9974 .9824 13 .9986 .9492 1.0410 1 1. .0 0 1 2 1 92 1 1.0349 1.0014 .9988 20 .9951 .9524 1.0089 1.0192 1.0012 .9986 27 .9871 .9555 .9807 .9804 .9946 1.0001 .9984 February 3 .9877 .9587 .9877 .9849 .9958 1.0000 1.0035 10 .9962 .9603 .9829 1.0015 1.0075 1.0006 1.0065 17 .9945 .9619 .9760 .9891 .9979 1.0004 1.0008 24 .9897 .9635 .9542 .9826 .9912 1.0005 1.0002 March 2 .9898 .9651 .9623 .9911 .9945 1.0012 1.0055 9 1.0010 .9644 .9795 1.0123 1.0119 1.0023 1.0052 16 .9982 .9634 .9773 1.0006 1.0051 1.0038 1.0058 23 .9968 .9624 .9627 .9942 .9997 1.0034 1.0067 30 .9949 .9614 .9753 .9954 1.0032 1.0045 1.0083 April 6 1.0031 .9596 1.0171 1.0336 1.0319 1.0074 1.0008 13 1.0035 .9567 1.0211 1.0446 1.0471 1.0076 .9975 20 1.0006 .9537 1.0169 1.0498 1.0560 1.0010 .9971 27 .9950 .9508 .9797 1.0105 1.0098 .9973 .9959 1.0001 May 4 .9496 .9849 1.0019 1.0038 .9959 1.0023 11 1.0057 .9587 .9757 1.0023 .9936 .9960 1.0047 18 1.0026 .9678 .9854 .9884 .9809 .9976 1.0011 25 1.0024 .9768 .9550 .9818 .9763 .9975 1.0060 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 277 3. Weekly seasonal factors used to construct Ml, M2, and M3—continued NNoonnbbaannkk Other checkable deposits1 Nontransaction components DDeemmaanndd Week ending CCuurrrreennccyy ttrraavveelleerrss'' ddeeppoossiittss cchheecckkss Total Held at banks In M2 In M3 only June 1 .9983 .9858 .9843 .9798 .9836 .9978 1.0094 8 1.0077 1.0011 1.0043 1.0127 1.0052 .9993 1.0037 15 1.0053 1.0187 1.0134 1.0074 .9995 .9991 1.0067 22 1.0038 1.0361 .9873 .9932 .9854 .9971 .9998 29 1.0020 1.0534 .9824 .9807 .9869 .9974 .9966 July 6 1.0148 1.0687 1.0350 1.0099 1.0040 .9980 .9963 13 1.0113 1.0815 1.0205 1.0061 .9978 1.0019 .9914 20 1.0059 1.0944 1.0024 .9933 .9850 1.0007 .9946 27 1.0004 1.1072 .9770 .9765 .9710 .9997 .9999 August 3 1.0011 1.1201 .9995 .9953 .9879 1.0010 1.0073 10 1.0083 1.1137 1.0068 1.0078 .9965 1.0015 1.0059 17 1.0022 1.1074 1.0033 .9945 .9912 1.0010 1.0067 1.0001 24 .9982 1.1010 .9813 .9824 .9823 1.0052 31 .9934 1.0947 .9819 .9815 .9808 .9996 1.0022 September 7 1.0017 1.0842 1.0086 1.0118 1.0087 1 . .0 9 0 9 0 97 0 1.0005 14 .9976 1.0705 1.0143 1.0090 1.0059 1.0007 21 .9932 1.0567 .9802 .9916 .9881 .9979 .9991 28 .9886 1.0430 .9679 .9718 .9739 .9974 .9991 October 5 .9953 1.0301 1.0160 .9952 .9948 .9997 .9952 12 .9982 1.0191 .9948 .9967 .9938 1.0014 .9960 1.0011 19 .9943 1.0081 1.0083 .9899 .9867 .9909 26 .9910 .9972 .9810 .9736 .9724 .9998 .9909 1.0001 November 2 .9919 .9862 1.0012 .9821 .9799 .9934 9 1.0028 .9756 1.0118 1.0055 1.0017 1.0006 .9999 16 1.0000 .9651 1.0183 .9983 .9964 1.0014 .9963 23 .9989 .9546 .9985 .9930 .9905 1.0010 .9946 30 1.0007 .9441 1.0188 .9921 .9934 .9978 1.0033 1.0000 December 7 1.0072 .9404 1.0352 1.0179 1.0157 .9949 1.0001 14 1.0069 .9418 1.0452 1.0107 1.0135 .9960 21 1.0120 .9432 1.0480 1.0104 1.0125 .9969 .9911 28 1.0142 .9445 1.0460 1.0012 1.0116 .9941 1.0002 1993—January 4 1.0047 .9462 1.1008 1.0225 1.0245 .9982 .9963 11 1.0007 .9494 1.0510 1.0290 1.0320 1.0017 .9904 18 .9945 .9525 1.0218 1.0151 1.0251 1.0007 .9957 25 .9889 .9557 .9810 .9965 1.0097 .9995 .9977 1.0000 February 1 .9864 .9589 .9767 .9866 .9990 1.0024 8 .9941 .9607 .9816 1.0005 1.0051 .9997 1.0016 15 .9939 .9620 .9762 .9905 .9971 1.0003 1.0099 22 .9913 .9633 .9628 .9856 .9956 1.0010 .9971 March 1 .9909 .9646 .9634 .9884 .9960 1.0013 1.0077 1.0000 8 .9644 .9806 1.0138 1.0097 1.0022 1.0039 15 .9991 .9635 .9811 1.0042 1.0063 1.0039 1.0069 22 .9980 .9627 .9685 1.0004 1.0054 1.0035 1.0045 29 .9954 .9619 .9635 .9911 1.0032 1.0040 1.0114 April 5 1.0006 .9596 1.0044 1.0157 1.0185 1.0059 1.0077 1. Seasonally adjusted other checkable deposits at thrift institutions are adjusted, and seasonally adjusted other checkable deposits at commercial derived as the difference between total other checkable deposits, seasonally banks Additional table on seasonal factors follows. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

278 Federal Reserve Bulletin • April 1992 4. Weekly seasonal factors for selected components of the monetary aggregates, December 1991-April 5, 1993 Deposits1 Money market mutual funds Week ending Savings Small Large and denomination denomination In M2 IInn MM33 oonnllyy MMDAs time time 1991—December 2 .9980 1.0009 .9963 .9975 1.0017 9 1.0017 1.0003 .9970 .9970 1.0012 16 1.0001 .9995 .9966 .9968 1.0116 23 .9926 .9993 .9949 .9940 1.0091 30 .9892 1.0007 .9961 .9869 1.0085 1992—January 6 .9968 1.0030 .9942 .9736 .9811 13 .9988 1.0035 .9945 .9972 1.0368 20 .9950 1.0032 .9926 1.0068 1.0454 27 .9902 1.0026 .9918 1.0098 1.0473 February 3 .9908 1.0029 .9917 1.0060 1.0389 10 .9950 1.0034 .9965 1.0112 1.0490 17 .9951 1.0029 .9975 1.0121 1.0459 24 .9941 1.0018 .9978 1.0180 1.0439 March 2 .9965 1.0014 .9980 1.0190 1.0498 9 1.0015 1.0009 1.0011 1.0225 1.0354 16 1.0034 1.0003 1.0029 1.0250 1.0360 23 1.0018 .9996 1.0019 1.0268 1.0364 30 1.0028 1.0006 1.0005 1.0271 1.0219 April 6 1.0099 1.0004 1.0017 1.0235 1.0080 13 1.0116 .9993 .9986 1.0292 1.0219 20 1.0020 .9987 .9945 1.0198 1.0062 27 .9963 .9984 .9938 1.0095 1.0043 May 4 .9976 .9980 .9952 .9953 .9960 11 1.0002 .9975 1.0001 .9893 1.0113 18 1.0007 .9970 1.0039 .9880 .9947 25 .9992 .9964 1.0085 .9966 1.0156 June 1 1.0015 .9961 1.0082 .9938 .9969 8 1.0084 .9957 1.0087 .9918 .9889 15 1.0082 .9958 1.0091 .9906 .9806 22 1.0021 .9957 1.0044 .9859 .9768 29 1.0002 .9976 .9951 .9830 .9737 July 6 1.0066 1.0001 .9951 .9785 .9640 13 1.0085 .9998 .9978 .9884 .9684 20 1.0049 .9995 1.0003 .9903 .9810 27 1.0014 .9994 1.0022 .9903 .9802 August 3 1.0027 .9995 1.0026 .9885 .9719 10 1.0057 1.0000 1.0036 .9937 .9855 17 1.0045 .9995 1.0041 .9924 .9873 24 1.0009 .9990 1.0061 .9993 .9919 31 .9992 .9987 1.0077 .9981 .9794 September 7 1.0031 .9992 1.0050 .9923 .9745 14 1.0027 .9987 1.0053 1.0002 .9722 21 .9960 .9987 1.0028 1.0016 .9688 28 .9926 1.0000 1.0025 .9946 .9566 October 5 .9991 1.0028 1.0033 .9906 .9504 12 1.0013 1.0030 1.0017 .9956 .9724 19 .9990 1.0017 .9990 .9937 .9631 26 .9953 1.0011 .9988 1.0013 .9838 November 2 .9964 1.0010 .9981 .9928 .9864 9 1.0019 1.0011 .9993 .9950 .9874 16 1.0018 1.0010 .9991 .9954 .9883 23 .9984 1.0009 .9990 1.0011 1.0026 30 .9968 1.0010 .9976 .9972 .9978 December 7 1.0000 1.0010 .9968 .9954 .9998 14 .9992 1.0005 .9974 .9980 1.0129 21 .9927 .9999 .9964 .9956 1.0173 28 .9904 1.0002 .9958 .9875 1.0054 1993—January 4 .9976 1.0026 .9947 .9789 .9838 11 1.0000 1.0037 .9939 .9887 1.0229 18 .9946 1.0035 .9930 1.0044 1.0374 25 .9891 1.0029 .9923 1.0079 1.0435 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 279 4. Weekly seasonal factors for selected components of the monetary aggregates—continued Deposits1 Money market mutual funds Week ending Savings Small Large and denomination denomination In M2 In M3 only MMDAs time time FFeebbrruuaarryy 11 .9908 1.0028 .9909 1.0070 1.0478 88 .9947 1.0034 .9947 1.0102 1.0462 15 .9952 1.0030 .9980 1.0148 1.0479 22 .9942 1.0021 .9978 1.0155 1.0416 March 1 .9950 1.0013 .9985 1.0174 1.0542 8 1.0012 1.0012 1.0000 1.0210 1.0386 15 1.0038 1.0006 1.0022 1.0251 1.0413 22 1.0026 .9995 1.0025 1.0274 1.0378 29 1.0013 1.0003 1.0027 1.0276 1.0226 April 5 1.0081 1.0007 .9998 1.0260 1.0105 1. These seasonal factors are applied to deposits data at both commercial banks and thrift institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

280 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON DECEMBER 17, 1991 clines in operating rates were widespread across industries. Domestic Policy Directive Real consumer spending had been soft on balance in recent months, reflecting sluggish growth The information reviewed at this meeting indicated in disposable incomes, weak labor-market condithat the economy was sluggish and that business tions, and depressed consumer confidence. Nomiand consumer confidence remained depressed. nal retail sales expanded somewhat in November Spending for housing and business equipment had from a downward revised level for October. The been rising, but consumption expenditures had soft- November increase reflected a rebound in sales of ened, commercial construction activity was still nondurable goods other than food and a rise in declining, and government spending at all levels sales at automotive dealers; sales of durable goods was being restrained by budgetary imbalances. Re- other than autos were about unchanged. Housing cently, industrial production had fallen, and payroll starts fell in November, retracing part of a substanemployment had dropped sharply. Wage and price tial advance in October; on average, starts were increases had continued to trend downward. appreciably higher in October and November than Total nonfarm payroll employment fell sharply in the third quarter. Despite low mortgage interest in November after rising somewhat in the third rates and steady house prices, sales of singlequarter and changing little in October. Declines in family homes in October remained well below their employment were widespread: The number of man- spring levels. ufacturing jobs decreased in November for a third After changing little over the third quarter, shipstraight month, and further job losses were reported ments of nondefense capital goods registered a in construction and in wholesale and retail trade. sharp rise in October, reflecting a bulge in outlays However, the average weekly hours worked by for computing equipment; shipments of most other production or nonsupervisory workers in the pri- types of business equipment remained sluggish. vate nonfarm sector edged up in November, and Recent data on orders suggested little growth in the civilian unemployment rate remained at aggregate outlays for business equipment over the 6.8 percent. near term. Nonresidential construction, notably of Industrial production fell appreciably in Novem- office and other commercial structures, continued ber after changing little in the previous three to shrink in October. The vacancy rate for office months. A portion of the November decline re- buildings was still very high, and this along with flected a sizable drop in the output of motor vehi- available information on contracts and commitcles and parts. In addition, however, the production ments suggested that nonresidential construction of non-auto consumer goods slackened, and the activity would remain weak for an extended period. output of business equipment other than motor Business inventories turned up sharply in Sepvehicles remained near its low of last March; the tember after many months of liquidation. At the latter reflected in part the persisting effects of a retail level, inventories rose further in October, strike at a major producer of industrial equip- with nearly half of the buildup occurring at auto ment. As in most earlier months of the year, the dealers. The additional rise in stocks coupled with production of defense and space products declined. declines in sales led to higher inventory-to-sales With industrial output down in November, total ratios at many types of retail establishments. Agindustrial capacity utilization decreased, and de- gregated over all retail establishments other than Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

281 auto dealers, the ratio of inventories to sales in cated that slightly greater reserve restraint might be October was close to the peak posted in early 1991. acceptable during the intermeeting period or By contrast, in manufacturing, stocks changed little slightly lesser reserve restraint would be acceptable in October, and the ratio of stocks to sales de- depending on progress toward price stability, trends creased and nearly reached its low of August 1990. in economic activity, the behavior of the monetary Wholesale inventories were up slightly in October aggregates, and developments in foreign exchange after a sizable decline in the previous month; the and domestic financial markets. The reserve condiinventory-to-sales ratio remained in the narrow tions contemplated under this directive were exrange that had prevailed in recent months. pected to be consistent with growth of M2 and M3 The nominal U.S. merchandise trade deficit wid- at annual rates of around 3 percent and 1 percent ened slightly further in September. For the third respectively over the three-month period from quarter, the deficit was somewhat above its average September through December. rate over the first half of 1991 but well below its Immediately following the November meeting, rate in 1990. The value of exports in the third open market operations were directed toward a quarter remained close to the record high reached slight easing of conditions in reserve markets; this in the second quarter while the value of imports step was taken in conjunction with the reduction in increased appreciably, with most of the rise re- the discount rate from 5 to 4V2 percent approved by flecting larger imports of automotive products and the Board of Governors on November 6. In early consumer goods. The increase in imports of con- December, as economic indicators continued to sumer goods appeared to have contributed to the point to a faltering recovery and growth of the substantial buildup in retail inventories in the broad monetary aggregates remained sluggish, an United States, particularly in the month of Septem- additional slight easing of reserve conditions was ber. The available data on economic activity in the carried out. Several technical reductions were made major foreign industrial countries provided further during the intermeeting period to expected levels of evidence of relatively weak growth on balance in adjustment plus seasonal borrowing to reflect the these countries in the third quarter and gave few declining usage of seasonal credit during the auindications of a revival in the fourth quarter. The tumn. For most of the intermeeting interval, adjusttrend toward reduced inflation had continued in ment plus seasonal borrowing tended to run a little most of the industrial countries. below expected levels, averaging slightly more Producer prices of finished goods advanced in than $100 million over the three complete reserve November at about the slow pace recorded since maintenance periods. The federal funds rate avermidyear; over this period, declines in food prices aged around 43A percent over most of the period roughly offset increases in energy prices. At the but softened to around 4l/z percent after the second consumer level, food and energy prices jumped in easing action. November, but the increase in the prices of non- Other short-term interest rates declined more food, non-energy items was about the same as that than the federal funds rate as market participants registered since midyear and considerably below reacted to actual and anticipated further easing the 1990 pace. Average hourly earnings of produc- steps amid growing evidence that the economic tion or nonsupervisory workers in the October- recovery had stalled. Expectations of more sub- November period increased at about the reduced dued economic activity contributed to declines in third-quarter rate; over the past twelve months, yields on longer-term instruments as well. Yields average hourly earnings had risen more slowly than on intermediate maturity securities dropped almost in the previous twelve-month period. as much as short-term rates while rates on mort- At its meeting on November 5, 1991, the Com- gages, corporate bonds, and long-term Treasuries mittee adopted a directive that called for an imme- fell by less. The prime rate was reduced by Vi perdiate slight easing in the degree of pressure on centage point to IVi percent early in the intermeetreserve positions and that provided for giving spe- ing period. Broad stock price indexes were down cial weight to potential developments that might slightly. require some additional easing during the inter- The trade-weighted value of the dollar in terms meeting period. Accordingly, the directive indi- of the other G-10 currencies declined further on Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

282 Federal Reserve Bulletin • April 1992 balance over the intermeeting period. During most absence of new fiscal initiatives. The substantial of the period, signs of weakness in the U.S. econ- though diminishing slack expected in labor and omy and the easings of U.S. monetary policy had a product markets in coming quarters was projected depressing effect on the value of the dollar. The to induce further declines in the underlying rate of dollar's depreciation was primarily against the inflation. mark and other European currencies; the mark was In the Committee's discussion of current and supported by reports of further increases in wage prospective economic developments, the members and price inflation in Germany and associated ex- focused on an evident pause in the business recovpectations that German monetary policy would be ery and its interaction with very gloomy business tightened. The dollar declined less against the Japa- and consumer sentiment. A number of factors that nese yen as evidence accumulated that the Japanese had been expected to damp the expansion— economy was slowing further and some easing was including the retrenchment associated with the reimplemented in Japanese monetary policy. building of balance sheets by heavily indebted Expansion in M2 picked up in November from a businesses and consumers and the efforts of many slow pace in October. At least in part this reflected firms to improve efficiency by streamlining operathe cumulative effect of earlier declines in short- tions and reducing employment—had in fact term market interest rates in lowering the opportu- proved to be stronger and more persistent than nity costs of holding liquid deposits. The somewhat anticipated. The timing of a renewed expansion in faster expansion of M2 was consistent with the business activity was uncertain, and a number of Committee's expectations for M2 growth in the members commented that the economy might well fourth quarter. The more rapid growth of M2 remain quite sluggish over the months immediately showed through to a limited extent to M3. For the ahead. Nonetheless, considerable progress in busiyear through November, expansion of both M2 and ness and financial restructuring activities was in M3 was estimated to have been at the lower ends of train, and the latter, together with the stimulus that the Committee's annual ranges. could be expected from the lagged effects of earlier The staff projection prepared for this meeting monetary policy easing actions, was likely to lead pointed to a recovery in economic activity. How- to a moderate pickup in the economy later in 1992. ever, a variety of incoming information, notably With regard to the outlook for inflation, many indications of a depressed state of confidence, members observed that the statistical and anecdotal weaker than expected consumer spending, and evidence pointed to faster progress toward price sluggish industrial production suggested a pause in stability than they had anticipated earlier. the recovery that might extend into early 1992. By As they had at earlier meetings, the members the spring, the cumulative effects of declines in gave considerable emphasis to current business and interest rates in recent months would contribute to consumer sentiment, which they judged to be much a resumption of economic growth at a moderate more negative than under similar business and emrate, with the risks of a stronger or weaker trajec- ployment conditions in the past. The underlying tory for the economy being viewed as about in reasons were difficult to ascertain but probably balance. Increases in residential construction, reflected a variety of developments, including somewhat larger consumption expenditures, and widespread disappointment over the pace of the some pickup in business equipment spending were economic recovery, related consumer concerns projected to provide the underpinnings for the re- about employment opportunities, and fears associsumption of growth. As in earlier forecasts, the ated with heavy debt burdens and the weakened continuing downtrend in commercial construction financial condition of many business and financial and ongoing adjustments in state and local govern- institutions. The size of the federal budget deficit ment spending in response to budget imbalances was adding to those concerns, and the budgetary were expected to have a retarding effect on aggre- problems of many state and local governments gate demand. At the federal level, projected de- were seen as likely to result in higher taxes and clines in defense outlays, which would be only spending cutbacks. On the positive side, while the partially offset by higher nondefense spending, also efforts to rebuild balance sheets and to restructure would be a source of restraint, at least in the business activities were likely to continue to exert Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 283 restraining effects on the economy, such develop- nationwide basis. The declines that had occurred in ments had favorable implications for the financial interest rates would tend over time to stimulate health and the competitive strength of the economy housing and other interest-sensitive sectors of the over the longer run. Members noted in this connec- economy. The outlook for U.S. exports was temtion that a record volume of equity issues was pered by more sluggish business conditions in sevhelping to reduce balance sheet leverage and that eral key countries than had been expected earlier, proceeds from large offerings of debt securities but exports would be supported by the depreciation were being used to a considerable extent to pay in the foreign exchange value of the dollar since down short-term liabilities. The sizable decline in mid-1991. interest rates over the course of recent months was Businesses continued to pursue cautious inveneasing the debt service burdens of many borrowers, tory investment policies. Contacts in most parts of and in a few geographic areas banking institutions the country described current inventories as lean, were reported to be making funds more readily and many retailers were prepared to accept reduced available. The stock market continued to display sales rather than to add to their inventories under appreciable strength, reflecting the drop in interest prevailing conditions, although some buildup had rates and suggesting investor confidence in the occurred in recent months in association with weak longer-run outlook for the economy. Some mem- demands. While rising inventories were not likely bers also cited the indications of reviving growth in to make a major contribution to the anticipated the broader monetary aggregates as an encouraging recovery, any significant firming in final demands if still tentative development. probably would be reflected fairly promptly in in- Turning to developments in key sectors of the creased production. economy, the members commented that it was still With regard to the outlook for the government too early to get a firm indication regarding holiday sectors, members commented that the massive size spending by consumers, though retailers in some of current federal budget deficits greatly limited parts of the country reported that sales were some- any flexibility in providing some stimulus through what better than they had projected. Nonetheless, fiscal policy actions. It was noted in this connection consumers remained quite cautious nationwide, and that any legislation that was seen as significantly some members commented that consumer spend- increasing the size of the federal deficits over the ing for durable goods might well continue sluggish longer run could have adverse repercussions on over the months ahead, especially in a context of long-term interest rates and business and consumer widespread consumer concerns about employment confidence. Some members also referred to the prospects, debt burdens, and softness in real estate negative effects on confidence and spending stemprices. Some members also observed that the sav- ming from the budgetary difficulties of numerous ing rate was already on the low side and that the state and local governments; at least in some areas, risks of a rise in that rate could not be ruled out in however, capital expenditures by such government the environment that was likely to prevail during entities were being accelerated by lower interest the months ahead. and other costs. The members did not discern signs of significant The members were encouraged by evidence that strengthening in business expenditures for equip- inflationary pressures appeared to be subsiding at a ment over the nearer term, though the output of faster pace than they had anticipated earlier. Aneccapital goods appeared to be on a slowly rising dotal reports suggested very competitive conditions trend in at least one major capital-producing re- in producer and retail markets and favorable wage gion. Nonresidential construction activity remained patterns. Employee benefit costs were still rising very weak in most parts of the country, and high rapidly, notably medical costs, but members cited vacancy rates suggested little prospect for improve- some examples of promising efforts on the part of ment in the commercial building sector for an medical providers to curb the escalation in their extended period. On the other hand, significant costs. It was suggested that the behavior of comimprovement in housing construction was reported modity prices over the past year was consistent in some parts of the country, and housing activity with an outlook for stable producer prices. The appeared to be holding up reasonably well on a members saw little risk of worsening inflationary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

284 Federal Reserve Bulletin • April 1992 pressures over the forecast horizon even if the pace ally was not anticipated in financial markets, would of the recovery proved to be somewhat more vigor- have greater effectiveness in part because it would ous than they currently expected; however, some be more likely to bolster confidence. The level of stressed that it was important for monetary policy interest rates and money growth that would be to sustain the downtrend in inflation over an even expected to ensue from such an action, against the longer horizon. background of the substantial easing that had al- In the Committee's discussion of policy for the ready been implemented, should be sufficient to period ahead, most of the members indicated that foster expansion and promote the view that further they favored or could accept a directive that called easing would not be needed. for no immediate change in the degree of pressure Other members, while not disagreeing that furon reserve positions but that carried an especially ther easing might be desirable, nonetheless exstrong presumption that some easing in reserve pressed reservations about the urgency to ease in conditions would be implemented unless improve- the near term and especially the need for a sizable ment in the economy became evident fairly move. These members emphasized that a substanpromptly or there was significant evidence of a tial amount of easing had been implemented over pickup in M2 growth in the period immediately the past several months and that to a considerable ahead. Separately, the Board of Governors would extent the effects of such easing had not yet shown need to decide how the discount rate should be through in the economy. A number of these memstructured in order to get the maximum benefits bers also expressed the view that monetary policy from any easing, given the current state of business could do little to offset the restraining effects of the and consumer confidence. balance sheet adjustments and business restructur- The policy discussion focused on the need to ing activities that were currently under way. Morefoster a sustained, noninflationary recovery. Such over, a resurgence of inflation pressures as the an environment would promote continuing balance recovery gathered strength could not be ruled out, sheet adjustments and business restructurings that and too much easing in the period immediately would over time enhance the financial soundness ahead might have to be reversed later with unsetand competitive strength of the economy. For now, tling consequences. however, these activities were having restraining According to a staff analysis prepared for this effects on the economy, and there were as yet no meeting, M2 and M3 were likely to continue to clear indications that the recovery was resuming. grow at a restrained pace over the months ahead in While the risks of a substantial weakening in the light of sluggish expansion in nominal income and economy were perhaps small, such a development very limited loan growth. A decision to implement would have severe consequences for the economy somewhat easier reserve conditions would stimuand financial institutions. In these circumstances, late slightly faster monetary expansion in the early many of the members believed that some further months of next year, though the broader aggregates easing of reserve conditions likely would be called would probably remain appreciably below the midfor, especially if indications of some strengthening points of the tentative ranges that the Committee in the economy or in the growth of the monetary had established for 1992. The members observed aggregates should fail to materialize in the near that to an important extent the weakness of the future. A number of members also commented that monetary aggregates appeared to be related to deagainst the background of better-than-expected velopments that involved some reduction in the progress toward price stability, a stalled recovery, intermediary role of depository institutions and and slow monetary growth, the inflation risks of might not have adverse implications for the overall further easing were minimal. availability of financing in the economy. Some Some members indicated that they saw an advan- members suggested that a number of indicators, tage in making a more substantial policy move at including the behavior of commodity prices, the some point in the period ahead rather than addi- slope of the yield curve, and trends in the growth of tional limited easing actions of the sort that had reserves and narrow measures of money, pointed to been implemented in recent years. In this view, a an adequate availability of liquidity in the econlarger and more visible policy action, which gener- omy. Nonetheless, several members expressed con- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 285 cern about the continuing lagging growth in the tively over the four-month period from November broad measures of money, and they felt that consid- through March. eration should be given to an easing of reserve At the conclusion of the meeting the following conditions if incoming data were to suggest that the domestic policy directive was issued to the Federal recent pickup was not being sustained. Reserve Bank of New York: In the course of the Committee's discussion, the members reviewed a proposal to amend the word- The information reviewed at this meeting continues to ing of the statement in the operational paragraph of portray a sluggish economy and a depressed state of the directive that related to possible intermeeting business and consumer confidence. Total nonfarm payadjustments to the degree of reserve pressures. roll employment fell sharply in November; however, the average workweek in the private nonfarm sector edged While several members expressed a slight preferup and the civilian unemployment rate remained at ence for retaining the current statement, which 6.8 percent. Industrial production fell in November, contained an ordering of the factors considered by partly reflecting a sizable drop in motor vehicle assemthe Committee in guiding intermeeting policy ad- blies. Consumer spending has been soft on balance in justments, and a few preferred to delete the listing recent months. Real outlays for business equipment appear to be rising slowly, and nonresidential construction of factors altogether from the sentence, all of the has continued to decline. Housing starts were appreciamembers indicated that they could support a probly higher on average in October and November than in posed alternative. That alternative would make the third quarter. The nominal U.S. merchandise trade clearer the Committee's focus on its long-term deficit widened slightly further in September; the deficit goals by inserting a reference to those goals at the in the third quarter was substantially larger than in the beginning of the sentence and would refer in a second quarter. Wage and price increases have continued to trend downward. more general way to the immediate economic, Interest rates have declined appreciably since the financial, and monetary developments that might Committee meeting on November 5. The Board of Govprompt an intermeeting adjustment. This new ernors approved a reduction in the discount rate from 5 wording implied less focus in the directive itself on to 4V2 percent on November 6. In foreign exchange the ranking of the factors, but the understandings markets, the trade-weighted value of the dollar in terms reached at meetings regarding their relative impor- of the other G-10 currencies declined further over the intermeeting period; the dollar depreciated primarily tance would continue to be explained fully in the against the mark and other European currencies. policy record. The members agreed that the revised Expansion in M2 and M3 edged up in November from statement should be reviewed every year or more a slow pace in October; the slightly faster growth reoften if warranted by changing economic or finan- flected a strengthening in the most liquid components of cial conditions. the aggregates. For the year through November, expansion of both M2 and M3 is estimated to have been at the At the conclusion of the Committee's discussion, lower ends of the Committee's ranges. all but one of the members indicated that they The Federal Open Market Committee seeks monetary favored or could accept a directive that would call and financial conditions that will foster price stability initially for maintaining the existing degree of pres- and promote sustainable growth in output. In furtherance of these objectives, the Committee at its meeting in July sure on reserve positions. The members also noted reaffirmed the ranges it had established in February for their preference or acceptance of a directive that growth of M2 and M3 of 2Vi to 6V2 percent and 1 to included a marked bias toward easing during the 5 percent, respectively, measured from the fourth quarter intermeeting period. Accordingly, in the context of of 1990 to the fourth quarter of 1991. The monitoring the Committee's long-run objectives for price sta- range for growth of total domestic nonfinancial debt also bility and sustainable economic growth, and giving was maintained at AV2 to 8V2 percent for the year. For 1992, on a tentative basis, the Committee agreed in July careful consideration to economic, financial, and to use the same ranges as in 1991 for growth in each of monetary developments, slightly greater reserve the monetary aggregates and debt, measured from the restraint might be acceptable or somewhat lesser fourth quarter of 1991 to the fourth quarter of 1992. reserve restraint would be acceptable during the With regard to M3, the Committee anticipated that the intermeeting period. The reserve conditions con- ongoing restructuring of thrift depository institutions would continue to depress the growth of this aggregate templated at this meeting were expected to be relative to spending and total credit. The behavior of the consistent with growth of M2 and M3 at annual monetary aggregates will continue to be evaluated in the rates of around 3 percent and IV2 percent respeclight of progress toward price level stability, movements Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

286 Federal Reserve Bulletin • April 1992 in their velocities, and developments in the economy and sions to spend no longer were postponed in anticifinancial markets. pation of still lower interest rates. He recognized In the implementation of policy for the immediate that lower interest rates could alleviate heavy debt future, the Committee seeks to maintain the existing service burdens, but he was concerned about the degree of pressure on reserve positions. In the context of effects of a further decline in interest rates on the the Committee's long-run objectives for price stability and sustainable economic growth, and giving careful value of the dollar in foreign exchange markets. consideration to economic, financial, and monetary de- At a telephone conference on December 20, velopments, slightly greater reserve restraint might or 1991, the Committee discussed the approval by the somewhat lesser reserve restraint would be acceptable in Board of Governors of a 1 percentage point reducthe intermeeting period. The contemplated reserve contion in the discount rate, effective that day, and the ditions are expected to be consistent with growth of M2 implications of that action for the implementation and M3 over the period from November through March at annual rates of about 3 and 1 Vi percent, respectively. of the Committee's policy with regard to the degree of pressure to be sought in reserve markets. It Votes for this action: Messrs. Greenspan, Corrigan, was noted during this discussion that the limited Angell, Black, Forrestal, Keehn, Kelley, Lindsey, data received since the Committee's meeting on Mullins, Parry, and Ms. Phillips. Vote against this December 17 continued to point to a very sluggish action: Mr. LaWare. economy. In keeping with the Committee's deci- Mr. LaWare dissented because he did not favor sion at its recent meeting, it was deemed approprithe inclusion in the directive of a strong presump- ate to direct open market operations toward allowtion that monetary policy would be eased further ing part of the reduction in the discount rate to be during the intermeeting period. While future devel- reflected in the federal funds rate. Members comopments might call for further easing, he preferred mented that the substantial cut in the discount rate not to prejudge that need but to wait and assess the and the accompanying adjustment in open market effects of the considerable easing actions under- operations were likely to have a favorable effect on taken earlier. In his view, the main barrier to a financial markets and the behavior of the monetary satisfactory economic performance was a crisis in aggregates and in conjunction with the ongoing confidence that was not likely to be alleviated by effects of earlier easing actions would provide the further incremental easing. In present circum- financial basis for a resumption of sustainable ecostances, a steady policy could provide a firm signal nomic growth. In light of the substantial size of that the downward drift in interest rates associated these actions, it would be appropriate to view the with a long series of small easing actions had come directive as symmetrical with regard to any further to an end. This signal might well prove to be changes in policy over the remainder of the interbeneficial to the economy as interest-sensitive deci- meeting period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

287 Legal Developments FINAL RULE—AMENDMENT TO RULES the Board's jurisdiction, when the order has been REGARDING DELEGATION OF AUTHORITY consented to by the institution or individual subject to the order ; The Board of Governors is amending 12 C.F.R. Part (2) To stay, modify, terminate, or suspend an order 265, its Rules Regarding Delegation of Authority. The issued pursuant to paragraph (1). amendment expands the duties Delegated to the General Counsel and the Director of the Board's Division Orders Issued Under Section 3 of the Bank of Banking Supervision and Regulation to include the Holding Company Act Authority to enter into, stay, modify, terminate or suspend a cease-and-desist order, removal and prohi- Norwest Corporation bition order, or civil money penalty assessment order, Minneapolis, Minnesota when the order has been consented to by the institution or individual subject to the order. The Board Order Approving Acquisition of a De Novo Bank believes that the Federal Reserve's enforcement functions can be made more efficient and responsive by Norwest Corporation, Minneapolis, Minnesota ("Nordelegating this authority. west"), a bank holding company within the meaning of Effective February 28, 1992, 12 C.F.R. Part 265 is the Bank Holding Company Act ("BHC Act"), has amended as follows: applied under section 3 of the BHC Act (12 U.S.C. § 1842) to acquire Norwest Bank, Waseca, N.A., 1. The authority citation for 12 C.F.R. Part 265 con- Waseca, Minnesota ("Waseca Bank"), a de novo tinues to read as follows: bank. Notice of the application, affording interested per- Authority: Section 11 (i) and (k) of the Federal Reserve sons an opportunity to submit comments, has been Act, (12 U.S.C. 248(i) and (k)). duly published (56 Federal Register 58,383 (1991)). The time for filing comments has expired, and the 2. Section 265.6 is amended by republishing the intro- Board has considered the application and all comductory text and adding paragraph (e) to read as ments received in light of the factors set forth in follows: section 3(c) of the BHC Act. Norwest is the largest commercial banking organi- Part 265—Rules Regarding Delegation of zation in Minnesota, controlling $10.0 billion in depos- Authority its in the state, representing 23.5 percent of total deposits in commercial banking organizations in Min- Section 265.6—Functions delegated to General nesota.1 Waseca Bank a de novo institution will pro- Counsel. vide a full range of commercial banking services in the Owatonna banking market.2 In view of the de novo The Board's general counsel (or the general counsel's status of Waseca Bank and based upon the facts in the delegee) is authorized: record, the Board concludes that the proposed transaction would have no adverse effect on existing com- (e) Consent enforcement orders. With the concurrence of the director of the Board's Division of Banking Supervision and Regulation (or the director's delegee): 1. Data are as of June 30, 1991. (1) To enter into a cease-and-desist order, removal 2. The Owatonna, Minnesota banking market consists of Steele County, Minnesota; Waseca County, Minnesota, less Jamesville, and prohibition order, or civil money penalty assess- Alton, Freedom and Vivian townships; and Ellington, Claremont, ment order with a bank holding company or any Ripley, and Westfield townships in Dodge County, Minnesota. Norwest will transfer certain assets and liabilities from the Owatonna nonbanking subsidiary thereof, with a state member branch of Norwest Bank Minnesota South, N.A., Faribault, Minnebank, or with any other person or entity subject to sota to Waseca Bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

288 Federal Reserve Bulletin • April 1992 petition, nor would it increase the concentration of The record does not indicate that Norwest will resources in any relevant market. operate the Waseca Bank as a branch of another bank. Several local Waseca banks and the Independent For example, Waseca Bank will be separately char- Bankers of Minnesota (collectively "Protestants") tered, separately incorporated, and separately capitalhave filed comments objecting to Norwest's proposal. ized; loans made by the Waseca Bank will be ac- Under Minnesota law, Norwest is prohibited by the counted for as assets of that bank; and the Waseca so-called "home office protection rule" from estab- Bank will have lending officers on site who will have lishing a branch of an existing subsidiary bank in a independent lending authority subject to the same community like Waseca with a population of 10,000 or policies that apply throughout the Norwest system.8 less unless the local banks consent to the addition of Protestants have not provided facts to indicate that the the branch.3 Waseca Bank will operate as a branch of another bank. Protestants maintain that Norwest's proposal is In the Board's view, issues regarding Norwest's future prohibited by Minnesota's home office protection rule plans for Waseca Bank are more appropriately raised because the proposal would be an illegal circumven- if and when Norwest seeks the required regulatory tion of this provision.4 Protestants note that Norwest approvals. has announced plans to merge Waseca Bank with In approving Norwest's acquisition of First Min- Norwest Bank, Minnesota South, N.A., Faribault, nesota Savings Bank, F.S.B., Minneapolis, Minne- Minnesota ("NBMS"), and to operate it as a branch of sota ("First Minnesota") in 1990, the Board relied on NBMS within two years. Protestants also allege that a commitment by Norwest not to maintain First by this acquisition, Norwest would violate a commit- Minnesota's branch in Waseca if this branch were ment to the Board not to operate a branch in Waseca impermissible under Minnesota law.9 This commitif to do so would be inconsistent with Minnesota law.5 ment was given to assure that the acquisition of First At this time, Norwest has not proposed to establish Minnesota would not violate the home office proteca branch of a subsidiary bank in a small community, tion rule. and approval of Norwest's application before the After consummation of the proposal, Norwest con- Board only authorizes the acquisition of a de novo verted First Minnesota's Waseca branch into a service bank in the Waseca community. Minnesota law does center. In July 1991 the OCC conducted an unannot require the consent of local banks for the acquisi- nounced visitation to the Waseca service center and tion of a new bank in a small community. Minnesota's confirmed that it was not being operated as a branch. branching restrictions do not prohibit entry into a The acquisition of a new bank in Waseca would not small community if such entry can be accomplished violate the commitment to the Board. In light of these without establishing a branch, and the Minnesota facts, the Board believes that Norwest has complied Commerce Commission previously has approved al- with the commitment it made to the Board in connecternative means of entry into a small community when tion with its acquisition of First Minnesota.10 the applicant was unable to obtain the required con- The financial and managerial resources and future sent of local banks.6 Moreover, additional regulatory prospects of Norwest, its subsidiary banks and approvals would be required before NBMS could Waseca Bank are consistent with approval. The establish a branch in Waseca by merging with a Board also finds that considerations relating to the Norwest subsidiary bank.7 convenience and needs of the communities to be 3. Minn. Stat. § 47.52 (1991). 4. Protestants raised similar objections in Norwest's application to charter Waseca Bank, as a national bank. The Office of the Comptrol- subject to the same restrictions as those imposed on similarly situated ler of the Currency ("OCC") has approved Norwest's charter appli- state-chartered banks. 12 U.S.C. § 36(c). cation and the Minnesota Commerce Commission, the state's bank 8. See Grandview Bank and Trust Co. v. Board of Governors of the regulator, has not objected to Norwest's application to acquire Federal Reserve System, 550 F.2d 415 (8th Cir. 1977), cert, denied 434 Waseca Bank. U.S. 821 (1977); North Hills Bank v. Board of Governors of the 5. See Norwest Corporation, 76 Federal Reserve Bulletin 873 Federal System, 506 F.2d 623 (8th Cir. 1974). See also Commerce (1990). Bancshares, Inc., 64 Federal Reserve Bulletin 803 (1978); United 6. The Commission's approval was upheld by the Supreme Court of Banks of Colorado, Inc., 64 Federal Reserve Bulletin 37 (1978); First Minnesota in First National Bank of Long Prairie v. Department of International Bancshares, Inc., 63 Federal Reserve Bulletin 744 Commerce, 350 N.W. 2d 363 (1984). (1977). 7. The OCC's approval of the Waseca Bank charter specifically 9. Norwest Corporation, 76 Federal Reserve Bulletin 873 (1990). noted that the OCC expressed no opinion on the permissibility of 10. Protestants maintain that Norwest's unsuccessful legislative merging Waseca Bank into NBMS. The merger of Waseca Bank into attempts to change Minnesota branching restrictions and the estaba Norwest subsidiary bank and its operation as a branch would require lishment of a branch in a neighboring community evidences Norwest's the approval of the appropriate federal or state regulator. In the event bad faith in complying with its commitment. In the Board's opinion, that OCC approval were required, the McFadden Act would permit neither allegation is inconsistent with Norwest's commitment not to Norwest to operate Waseca Bank as a branch only if a similarly establish a branch in Waseca if to do so would be inconsistent with situated state-chartered bank could operate a branch in Waseca, and Minnesota law. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 289 served, and supervisory factors are consistent with the meaning of the Bank Holding Company Act approval.11 ("BHC Act"), has applied under section 3(a)(3) of the Based on the foregoing and other facts of record, the BHC Act (12 U.S.C. § 1842(a)(3)) to acquire Mid Board has determined that the application should be, Valley Bank, Weslaco, Texas.1 Texas State Bank, and hereby is, approved. Approval of this proposal is McAllen, Texas, the lead subsidiary bank of Texas specifically conditioned on compliance by Norwest Regional, has applied under section 18(c) of the Fedand all of its subsidiaries with the conditions refer- eral Deposit Insurance Act (12 U.S.C. § 1828(c)) enced in this order. The conditions relied on in reach- ("Bank Merger Act") to merge with Texas Regional's ing this decision are conditions imposed in writing by other subsidiary bank, Harlingen State Bank, Harlinthe Board in connection with its findings and decision gen, Texas, and TSB-Weslaco, the successor by and may be enforced in proceedings under applicable merger to Mid Valley Bank. Texas State Bank will be law. The acquisition shall not be consummated before the surviving entity. In addition, Texas State Bank has the thirtieth calendar day following the effective date applied to establish branches at the locations of Harof this Order, or later than three months after the lingen State Bank and Mid Valley Bank, and an effective date of this Order, and Waseca Bank shall be automated teller machine ("ATM") in Harlingen, opened for business not later than six months after the Texas, pursuant to section 9 of the Federal Reserve effective date of this Order. The latter two periods may Act (12 U.S.C. § 321). be extended for good cause by the Board or by the Notice of the applications, affording interested per- Federal Reserve Bank of Minneapolis, acting pursuant sons an opportunity to submit comments, has been to delegated authority. given in accordance with the BHC Act, the Bank By order of the Board of Governors, effective Merger Act, and the Board's Rules of Procedure February 12, 1992. (12 C.F.R. 262.3(b)). As required by the Bank Merger Act, reports on the competitive effects of the merger Voting for this action: Chairman Greenspan and Governors were requested from the United States Attorney Gen- Mullins, Angell, Kelley, LaWare, Lindsey, and Phillips. eral, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation JENNIFER J. JOHNSON ("FDIC"). The time for filing comments has expired, Associate Secretary of the Board and the Board has considered the applications and all comments received in light of the factors set forth in Texas Regional Bancshares, Inc. the BHC Act, the Bank Merger Act, and the Federal McAllen, Texas Reserve Act. Texas Regional is the 50th largest commercial bank- Texas State Bank ing organization in Texas, controlling two subsidiary Mc Allen, Texas banks with total deposits of $229.8 million, representing less than 1 percent of total deposits in commercial Order Approving Acquisition of a Bank Merger of banking organizations in the state.2 Mid Valley Bank is Banks, and Establishment of Branches the 254th largest commercial banking organization in Texas, controlling deposits of $72.3 million, represent- Texas Regional Bancshares, Inc., Mc Allen, Texas ing less than 1 percent of total deposits in commercial ("Texas Regional"), a bank holding company within banking organizations in the state. Upon consummation of this proposal, Texas Regional would become 11. The Board has carefully considered comments filed by a Waseca the 32nd largest banking organization in Texas, conresident who maintains along with Protestants that his community is trolling deposits of $302.1 million, representing less adequately served by the four financial institutions currently operating than 1 percent of total deposits in commercial banking in Waseca. This commenter also asserts without further explanation that Norwest drains local deposits from communities like Waseca for organizations in the state. Consummation of this prouse in other service areas and has generally abandoned serving the posal would not result in any significantly adverse credit needs of rural agricultural communities. effect on the concentration of commercial banking As discussed above, the addition of Waseca Bank as a provider of a full range of commercial banking services should serve to increase resources in Texas. the level of competition among providers of these services. In addition, the Board has recently reviewed Norwest's record of performance under the Community Reinvestment Act ("CRA"), including relevant examination reports, and concluded that Norwest's assistance in meeting the credit needs of its entire communities, is 1. Mid Valley Bank is an affiliate of Texas Regional through consistent with approval of applications under the BHC Act. Norwest common shareholders and directors. Texas Regional has formed Corporation, 77 Federal Reserve Bulletin 110,112 (1991) and Norwest Texas State Bank, Weslaco, Texas ("TSB-Weslaco"), a de novo Corporation, 77 Federal Reserve Bulletin 343 (1991). On the basis of bank, for the purpose of effecting this proposal. TSB-Weslaco will be these and other facts of record, the Board concludes that these merged with Mid Valley Bank with TSB-Weslaco as the survivor. comments do not warrant denial of the application. 2. State data and market data are as of June 30, 1990. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

290 Federal Reserve Bulletin • April 1992 Texas State Bank and Mid Valley Bank compete income neighborhoods, consistent with the safe and directly in the McAllen-Edinburg-Mission MSA bank- sound operation of the institution."5 ing market.3 Texas State Bank is the sixth largest The Board has received comments from the commercial banking organization in the market, con- McAllen Minority Business Development Center and trolling deposits of $145 million, representing 5.3 per- an individual (collectively "Protestants") alleging gencent of total deposits in commercial banking organiza- erally that Mid Valley Bank's efforts in meeting the tions in the market. Mid Valley Bank is the 11th largest credit needs of the Hispanic community are inadecommercial banking organization in the market, con- quate. Protestants also allege that credit decisions are trolling deposits of $72.3 million, representing 2.6 delayed for Hispanic applicants at Mid Valley Bank. percent of total deposits in commercial banking orga- The Board has carefully reviewed the CRA perfornizations in the market. Upon consummation, Texas mance record of Texas Regional's subsidiary banks Regional would become the fifth largest commercial and Mid Valley Bank, as well as Protestants' combanking organization in the market, controlling total ments and Texas Regional's responses to those comdeposits of $217.3 million, representing 7.9 percent of ments, in light of the CRA, the Board's regulations, total deposits in commercial banking organizations in and the Statement of the Federal Financial Supervithe market. The Herfindahl-Hirschman Index sory Agencies Regarding the Community Reinvest- ("HHI") would increase 28 points to a level of 1176.4 ment Act ("Agency CRA Statement").6 The Agency In light of the small increase in concentration, the CRA Statement provides guidance regarding the types number of competitors remaining in the market, and of policies and procedures that supervisory agencies other facts of record, the Board concludes that conbelieve financial institutions should have in place in summation of the proposal is not likely to result in any order to fulfill their responsibilities under the CRA on significantly adverse effect on competition in any an ongoing basis, and the procedures that the superrelevant banking market. The Board also concludes visory agencies will use during the application process that the financial and managerial resources, supervito review an institution's CRA compliance and perforsory factors, and future prospects of Texas Regional mance. The Agency CRA Statement also suggests that and Mid Valley Bank are consistent with approval of decisions by agencies to allow financial institutions to these applications. expand will be made pursuant to an analysis of the In considering the convenience and needs of the institution's overall CRA performance and will be communities to be served by these institutions, the based on the actual record of performance of the Board has taken into account the record of the subsid- institution.7 iary banks of Texas Regional and Mid Valley Bank Texas State Bank's most recent examination rating under the Community Reinvestment Act (12 U.S.C. for CRA performance as of July 22, 1991, by its § 2901 et je«?.)("CRA"). The CRA requires the federal primary regulator, the Federal Reserve Bank of Dallas financial supervisory agencies to encourage financial ("Reserve Bank"), was satisfactory.8 Mid Valley institutions to help meet the credit needs of the local Bank has also received a satisfactory rating in the most communities in which they operate consistent with recent examination of its CRA performance by its the safe and sound operation of such institutions. To primary regulator, the FDIC, as of August 13, 1990. accomplish this end, the CRA requires the appropri- The Agency CRA Statement provides that although ate federal supervisory authority to "assess an insti- CRA examination reports do not provide conclusive tution's record of meeting the credit needs of its evidence of an institution's CRA record, these reports entire community, including low- and moderate- will be given great weight in the application process. Texas State Bank has a program in place designed to assist the bank in meeting the credit needs of its entire community, including low- and moderate-income neighborhoods. The Board notes that Texas Regional 3. The McAllen-Edinburg-Mission MSA banking market is approxintends to merge Mid Valley Bank and Harlingen State imated by Hidalgo County, Texas. 4. Under the revised Department of Justice Merger Guidelines, 49 Bank into Texas State Bank and to continue the CRA Federal Register 26,823 (1984), a market in which the post-merger program of Texas State Bank. The CRA program in HHI is between 1000 and 1800 is considered to be moderately place at Texas State Bank includes a compliance concentrated. The Justice Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger or acquisition increases the HHI by at least 200 points. The Justice Department has 5. 12 U.S.C. § 2901. stated that the higher than normal HHI thresholds for screening bank 6. 54 Federal Register 13,742 (1989). mergers for anticompetitive effects implicitly recognize the competi- l.ld. tive effect of limited-purpose lenders and other non-depository finan- 8. Harlingen State Bank was also rated satisfactory for CRA cial entities. performance by its primary regulatory, the FDIC, as of April 22,1991. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 291 committee which meets every two months and moni- review were provided to the Protestants and one tors consumer compliance and the bank's CRA pro- Protestant submitted comments regarding the findings gram. Texas State Bank's efforts to ascertain the of this review. The Board has carefully reviewed the credit needs of its communities rely primarily on results of this review and comments relating to its personal contact by its board members, officers, and conclusions. employees with members of the community. The bank Mid Valley Bank has taken several steps to ensure has supplemented these efforts by mailing community that its CRA performance includes meeting the credit contact letters and questionnaires to various persons needs of the Hispanic community. For example, a and organizations within its community in order to substantial portion of Mid Valley Bank's staff, includobtain information regarding whether the credit needs ing loan officers, speak Spanish, and Mid Valley Bank of the community were being met and what other is in the process of translating all of its credit applicaservices Texas State Bank could provide to meet tions into Spanish.10 Moreover, Mid Valley Bank's needs that were not being addressed. Although Texas ATM machine has been programmed to permit cus- State Bank's marketing program is not extensive, tomers to conduct transactions in either Spanish or given its size and resources, the program appears English. The bank's CRA notices and Statement are sufficient. Texas State Bank makes use of radio, also available in Spanish. television, and billboards, and its loan-to-deposit ratio Mid Valley Bank's business development and officer reflects a demand for its products. call programs include Hispanic businesses, and His- Texas State Bank also actively participates in panic borrowers constitute approximately 53 percent projects that support community development activi- of Mid Valley Bank's total commercial loans, repreties. The chairman of the bank's board of directors senting approximately 37 percent of the total dollar serves as the president of McAllen Affordable Homes, amount of the bank's commercial loan portfolio.11 a corporation which provides funds for development Moreover, approximately 80 percent of Mid Valley of subdivisions for first time home buyers with low- to Bank's total installment loans, representing approximoderate-incomes. In February 1991, Texas State mately 65 percent of the dollar amount of the bank's Bank provided $500,000 in funding to McAllen Afford- total installment loans, were made to Hispanic individable Homes for the development of a subdivision. uals or Hispanic-owned businesses. Mid Valley Bank Moreover, the bank's executive vice president in also participates in organizations supporting commucharge of lending serves as president of Ronco Enter- nity development activities, including the Weslaco prises, Inc., a corporation that engages in real estate Development Committee, Leadership Mid Valley, development of low-income single family housing. Better Business Bureau, and Weslaco Tomorrow Ronco Enterprises also provides counseling to individ- Commission, and has invested in 22 separate issues of revenue and general obligation bonds from municipaluals on how to qualify for a mortgage loan and ities located in the bank's community. provides assistance in avoiding default. Texas State Bank participates in governmentally Protestants have generally alleged that loan applicaguaranteed lending programs, such as those of the tions from Hispanics are subjected to delays in pro- Small Business Administration ("SBA"), and has cessing at Mid Valley Bank. Illegal credit practices, taken steps to become a certified SBA lender. The such as unequal treatment of loan applicants solely on bank has made seven SBA guaranteed loans totalling the basis of ethnic background, are prohibited under $783,000 from November 1990 through July 1991, and the Equal Credit Opportunity Act (15 U.S.C. § 1601 is active in providing funds for minority businesses. et seq.). Mid Valley Bank's most recent CRA perfor- According to the Protestant McAllen Minority Busi- mance examination found no evidence of illegal disness Development Center, Texas State Bank has been crimination or other illegal credit practices. In addiinvolved with this organization during the past year tion, the Reserve Bank's review found no evidence of and a half in providing funding for minority business Mid Valley Bank's failure to comply with the Equal enterprises. In light of Protestants' allegations regarding Mid Valley Bank's inadequate efforts to assist in meeting 10. Protestants state that more Hispanics should be employed or the credit needs of the Hispanic community, the serve in decision-making positions. While the Board fully supports Reserve Bank conducted an on-site review over a affirmative programs designed to promote equal opportunity in every ten-day period in November 1991.9 The results of this aspect of a bank's personnel policies and practices in the employment, development, advancement, and treatment of employees and applicants for employment, the Board believes that the bank's general personnel practices are beyond the scope of factors that may be assessed under the CRA. 9. This review was conducted in connection with the proposed 11. These percentages exclude loans purchased from other banks merger of Mid Valley Bank into Texas State Bank. and loans extended to municipalities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

292 Federal Reserve Bulletin • April 1992 Credit Opportunity Act or the Board's implementing Orders Issued Under Section 4 of the Bank regulation, Regulation B. Holding Company Act The Board notes that, although Mid Valley Bank's CRA performance is satisfactory, the Reserve Bank's Australia and New Zealand Banking Group review indicated that the bank could improve the Limited documentation of its ascertainment and marketing Melbourne, Australia efforts, to include how these efforts identify specific credit needs in the communities served by Mid Valley Order Approving Application to Provide Investment Bank. Texas State Bank has proposed a program to Advisory and Securities Brokerage Services on a address these areas of weakness, and the Board ex- Combined Basis, to Provide Certain Financial pects Texas State Bank to put this program in place as Advisory Services, and to Arrange as Agent the soon as possible. The Board will review Texas Region- Purchase and Sale of Loans and Other Extensions al's progress in improving ascertainment and market- of Credit ing efforts in future applications. On the basis of these and other facts of record, Australia and New Zealand Banking Group Limited, including the satisfactory CRA performance records of Melbourne, Australia, ("Applicant"), a foreign bank Texas State Bank and Mid Valley Bank, the Board subject to the provisions of the Bank Holding Comconcludes that considerations relating to the conve- pany Act (the "BHC Act"), has applied, pursuant to nience and needs of the communities to be served are section 4(c)(8) of the BHC Act (12 U.S.C. consistent with approval of these applications. § 1843(c)(8)), to engage, through its indirect wholly Texas State Bank has also applied under section 9 of owned subsidiary, ANZ McCaughan Securities (USA) the Federal Reserve Act (12 U.S.C. § 322) to establish Inc., New York, New York ("Company"), in the a branch at the location of Mid Valley Bank in following activities: Weslaco, Texas; a branch at the location of Harlingen (1) providing investment advisory services and se- State Bank in Harlingen, Texas; and an ATM at an curities brokerage services on a combined basis additional location in Harlingen, Texas. The Board has ("full-service brokerage") to institutional customconsidered the factors it is required to consider when ers;1 reviewing applications for establishing branches and (2) providing corporate finance advisory services to finds those factors to be consistent with approval. institutional customers by: Based on the foregoing and other facts of record, the (a) acting as a financial advisor either on a retainer Board has determined that the applications under the or success fee basis, including advice with respect BHC Act, the Bank Merger Act, and the Federal to structuring, financing, and negotiating domestic Reserve Act should be, and hereby are, approved. The and international mergers and acquisitions, joint Board's approval is expressly conditioned upon com- ventures, divestitures, capital-raising vehicles, inpliance with all of the commitments made by Texas terest rate swaps, interest rate caps, interest rate Regional in connection with these applications. Fur- collars, currency swaps, similar hedging devices, ther, these commitments and conditions referred to in and other corporate transactions, and providing this Order are conditions imposed in writing by the Board in connection with its findings and decision and may be enforced in proceedings under applicable law. The proposed acquisitions shall not be consummated 1. Australia and New Zealand defines an institutional customer as: before the thirtieth calendar day following the effective (1) banks (acting in an individual or fiduciary capacity); savings banks or savings and loan associations; insurance companies; date of this Order, or later than three months following investment companies registered under the Investment Company the effective date of this Order, unless such period is Act of 1940; or corporations, partnerships, proprietorships, organiextended for good cause by the Board or by the zations or institutional entities that regularly invest in the types of securities as to which investment advice is provided or that regu- Federal Reserve Bank of Dallas, acting pursuant to larly engage in transactions in securities; delegated authority. (2) employee benefit plans with assets exceeding $1,000,000 or By order of the Board of Governors, effective whose investment decisions are made by a bank, insurance company or investment advisor registered under the Investment Advi- February 24, 1992. sors Act of 1940; (3) natural persons whose individual net worth (or joint net worth Voting for this action: Chairman Greenspan and Governors with his or her spouse) at the time of receipt of the investment Mullins, Angell, La Ware, Lindsey, and Phillips. Absent and advice or brokerage services exceeds $1,000,000; not voting: Governor Kelley. (4) broker-dealers or options traders registered under the Securities Exchange Act of 1934, or other securities, investment, or banking professionals; or JENNIFER J. JOHNSON (5) an entity all of the equity owners of which are institutional Associate Secretary of the Board customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 293 ancillary services or functions incidental to the The Board has also determined by order that the foregoing activities; proposed financial advisory services are closely related (b) performing feasibility studies, principally in to banking and permissible for bank holding companies the context of determining the financial attractive- under section 4(c)(8) of the BHC Act.5 Applicant proness and feasibility of particular corporate trans- poses that Company will engage in financial advisory actions; activities in accordance with all of the conditions set (c) providing valuation services; and forth in the Board's orders concerning these activities.6 (d) rendering fairness opinions in connection with In addition, the Board has previously determined corporate transactions; and that arranging for the purchase and sale of loans or (3) arranging as agent the purchase and sale of loans other extensions of credit originated by affiliated and or other extensions of credit originated by affiliated unaffiliated lenders as agent is encompassed within the and unaffiliated lenders. authorization of section 225.25(b)(1) of the Board's Regulation Y, 12 C.F.R. 225.25(b)(1).7 Notice of the application, affording interested per- In order to approve this proposal, the Board is sons an opportunity to submit comments, has been required to determine that the performance of the duly published (56 Federal Register 67,621 (1991)). proposed activities "can reasonably be expected to The time for filing comments has expired, and the produce benefits to the public . . . that outweigh the Board has considered the application and all com- possible adverse effects, such as undue concentration ments received in light of the factors set forth in of resources, decreased or unfair competition, conflicts section 4(c)(8) of the BHC Act. of interests, or unsound banking practices." 12 U.S.C. Applicant is the 89th largest banking organization § 1843(c)(8). worldwide and the second largest banking organiza- Consummation of the proposal would provide added tion in Australia, controlling consolidated assets convenience to Applicant's customers. In addition, the equivalent to approximately $78.4 billion.2 Applicant Board expects that the de novo entry of Applicant into operates branches in New York and Chicago, and the market for the proposed services in which it does agencies in Los Angeles and Houston. not currently engage in the United States would in- Applicant currently provides, through Company's crease the level of competition among providers of offices in New York, certain brokerage, advisory, and these services. Under the framework established in this loan marketing services as incidental to Applicant's and prior decisions, consummation of this proposal is activities outside the United States pursuant to the not likely to result in any significant adverse effects, Board's Regulation K. Company is registered as a such as undue concentration of resources, decreased or broker-dealer with the Securities Exchange Commis- unfair competition, conflicts of interests, or unsound sion under the Securities Exchange Act of 1934 ("Ex- banking practices. The financial and managerial rechange Act") and is registered as a broker-dealer in sources of Applicant are consistent with approval. various states. Company is subject to the record- Accordingly, based upon the facts of record and the keeping, reporting, fiduciary standards, and other requirements of the Exchange Act and the National Association of Securities Dealers. 5. See, e.g., The Dai-Ichi Kangyo Bank Limited, 11 Federal The Board has previously determined by order that Reserve Bulletin 184 (1991); First Regional Bancorp, Inc., 76 Federal the proposed full-service brokerage activities are Reserve Bulletin 859 (1990),Creditanstalt-Bankverein, 76 Federal Reserve Bulletin 761 (1990);77ie Fuji Bank, Limited, 75 Federal Reserve closely related to banking and permissible for bank Bulletin 577 (1989). holding companies under section 4(c)(8) of the BHC 6. Id. For example, Applicant has committed that: Act.3 Applicant proposes that Company will conduct (1) Company's financial advisory activities will not encompass the performance of routine tasks or operations for a client on a daily or full-service brokerage in accordance with all of the continuous basis; requirements established by the Board in its orders (2) Disclosure will be made to each potential client of Company that concerning these activities.4 Company is an affiliate of Applicant; (3) Advice rendered by Company on an explicit fee basis will be without regard to correspondent balances maintained by a client of Company at Applicant or any of Applicant's depository subsidiaries or U.S. branches or agencies; and 2. Asset data are as of September 30, 1991. Ranking data are as of (4) Company will not make available to Applicant or any of December 31, 1990. Applicant's subsidiaries confidential information received from 3. See Banc One Corporation, 76 Federal Reserve Bulletin 756 Company's clients, except with the client's consent. (1990); The Bank of Tokyo, Ltd., 76 Federal Reserve Bulletin 654 7. See The Toronto-Dominion Bank, 76 Federal Reserve Bulletin (1990); Norwest Corporation, 76 Federal Reserve Bulletin 79 (1990); 573 (1990); Bryn Mawr Bank Corporation, 74 Federal Reserve Bulletin Bank of New England Corporation, 74 Federal Reserve Bulletin 700 329 (1988). See also Sovran Financial Corporation, 73 Federal Re- (1988); Bankers Trust New York Company, 74 Federal Reserve serve Bulletin 939 (1987); Post-och Kreditbanken, PKbanken, 68 Bulletin 695 (1988). Federal Reserve Bulletin 787 (1982); Societe Generate, 67 Federal 4. Id. Reserve Bulletin 453 (1981). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

294 Federal Reserve Bulletin • April 1992 commitments made by Applicant regarding the conduct applied under section 4(c)(8) of the BHC Act of the proposed activities, the Board has determined (12 U.S.C. § 1843(c)(8)) and section 225.23(a) of the that performance of these activities by Company can Board's Regulation Y (12 C.F.R. 225.23(a)) for its reasonably be expected to produce benefits to the wholly owned subsidiary, PNC Securities Corp, Pittspublic that would outweigh adverse effects under the burgh, Pennsylvania ("Company"), to act as agent in proper incident to banking standard of section 4(c)(8) of the private placement of all types of securities, includthe BHC Act. ing providing related advisory services, and to buy and Based on the foregoing and other facts of record, as sell all types of securities on the order of investors as well as the commitments made by Applicant, the Board a "riskless principal." has determined to, and hereby does, approve this Notice of the application, affording interested perapplication, subject to all of the terms and conditions sons an opportunity to submit comments, has been set forth above and in the above-noted Board orders. duly published (56 Federal Register 26,820 (1991)). The Board's determination is also subject to all of The time for filing comments has expired, and the the conditions set forth in Regulation Y, including Board has considered the application and all comthose in sections 225.4(d) and 225.23(b), and to the ments received in light of the public interest factors set Board's authority to require modification or termina- forth in section 4(c)(8) of the BHC Act. tion of the activities of a bank holding company or any PNC, with approximately $44.3 billion in total conof its subsidiaries as the Board finds necessary to solidated assets, is the second largest commercial assure compliance with, and to prevent evasion of, the banking organization in Pennsylvania.1 PNC operates provisions of the BHC Act and the Board's regulations 26 subsidiary banks and engages directly and through and orders issued thereunder. The Board's decision is its subsidiaries in a broad range of permissible nonspecifically conditioned on continued compliance with banking activities in the United States. all of the commitments made in this application, in- Company is currently authorized to engage in uncluding the commitments discussed in this Order and derwriting and dealing in commercial paper, municipal the conditions set forth in the above-noted Board revenue bonds, certain mortgage-related securities, orders. These commitments are conditions imposed in and consumer-receivable-related securities. Company writing by the Board in connection with its findings also is authorized to engage in underwriting and dealand decisions, and may be enforced in proceedings ing in government obligations and money market inunder applicable law. struments, pursuant to 12 C.F.R. 225.25(b)(16), and in This transaction shall not be consummated later providing investment advisory and brokerage services than three months after the effective date of this order, on a combined basis to retail and institutional customunless such period is extended for good cause by the ers. Company is, and will continue to be, a broker- Board or by the Federal Reserve Bank, of San Fran- dealer registered with the Securities and Exchange cisco, acting pursuant to delegated authority. Commission and subject to the record-keeping, report- By order of the Board of Governors, effective ing, fiduciary standards, and other requirements of the February 11, 1992. Securities Exchange Act of 1934 and the National Association of Securities Dealers. Voting for this action: Chairman Greenspan and Governors Private placement involves the placement of new Angell, Kelley, LaWare, Lindsey, and Phillips. Absent and issues of securities with a limited number of sophistinot voting: Governor Mullins. cated purchasers in a nonpublic offering. A financial intermediary in a private placement transaction acts JENNIFER J. JOHNSON solely as an agent of the issuer in soliciting purchasers, Associate Secretary of the Board and does not purchase the securities and attempt to resell them. Securities that are privately placed are not PNC Financial Corp subject to the registration requirements of the Securi- Pittsburgh, Pennsylvania ties Act of 1933, and are offered only to financially sophisticated institutions and individuals and not the Order Approving Application to Act as Agent in the public. PNC will not privately place registered securi- Private Placement of Securities, and to Act as ties and will only place securities with customers who "Riskless Principal" in Buying and Selling qualify as accredited investors. Securities PNC Financial Corp, Pittsburgh, Pennsylvania ("PNC"), a bank holding company within the meaning 1. Asset data are as of March 31, 1991. Ranking, based on deposits, of the Bank Holding Company Act ("BHC Act"), has is as of December 31, 1990. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 295 "Riskless principal" is the term used in the securi- work of restrictions designed to avoid potential conties business to refer to a transaction in which a flicts of interest, unsound banking practices and other broker-dealer, after receiving an order to buy (or sell) adverse effects imposed by the Board in connection a security from a customer, purchases (or sells) the with underwriting and dealing in securities.6 security for its own account to offset a contemporane- In every case involving a nonbanking acquisition by ous sale to (or purchase from) the customer.2 "Risk- a bank holding company under section 4 of the BHC less principal" transactions are understood in the Act, the Board considers the financial condition and industry to include only transactions in the secondary resources of the applicant and its subsidiaries and the market. Thus, PNC proposes that Company would not effect of the transaction on these resources.7 Based on act as a "riskless principal" in selling securities at the the facts of this case, the Board concludes that finanorder of a customer that is the issuer of the securities cial considerations are consistent with approval of this to be sold or in any transaction where Company has a application. The managerial resources of PNC also are contractual agreement to place the securities as agent consistent with approval. of the issuer. Company also would not act as a In order to approve this application, the Board is "riskless principal" in any transaction involving a required to determine that the performance of the security for which it makes a market. proposed activities by PNC can reasonably be expected The Board has previously determined by order that, to produce public benefits which would outweigh adsubject to certain prudential limitations that address the verse effects under the proper incident to banking potential for conflicts of interests, unsound banking standard of section 4(c)(8) of the BHC Act. Under the practices or other adverse effects, the proposed private framework established in this and prior decisions, conplacement and "riskless principal" activities are so summation of this proposal is not likely to result in any closely related to banking as to be a proper incident significantly adverse effects, such as undue concentrathereto within the meaning of section 4(c)(8) of the tion of resources, decreased or unfair competition, BHC Act.3 The Board also has previously determined conflicts of interests, or unsound banking practices. that acting as agent in the private placement of securi- Consummation of the proposal would provide added ties, and purchasing and selling securities on the order convenience to Company's customers. In addition, the of investors as a "riskless principal" do not constitute Board expects that the de novo entry of Company into underwriting and dealing in securities for purposes of the market for these services would increase the level section 20 of the Glass-Steagall Act, and that revenue of competition among providers of these services. Acderived from these activities is not subject to the 10 cordingly, the Board has determined that the perforpercent revenue limitation on ineligible securities un- mance of the proposed activities by Company can derwriting and dealing.4 PNC has committed that Com- reasonably be expected to produce public benefits pany will conduct its private placement and "riskless which would outweigh adverse effects under the proper principal" activities using the same methods and pro- incident to banking standard of section 4(c)(8) of the cedures, and subject to the same prudential limitations BHC Act. established by the Board in the Bankers Trust and J.P. Morgan orders,5 including the comprehensive framenot act as a "riskless principal" with respect to any securities of investment companies that are advised by PNC or any of its affiliates. 2. See Securities and Exchange Commission Rule 10b-10. With regard to private placement activities, PNC has committed that 17 C. F. R.240.1Ob-10(a)(8)(i). Company will not privately place registered investment company 3. Bankers Trust New York Corporation, 75 Federal Reserve securities. Further, Company will not privately place any securities of Bulletin 829 (1989) ("Bankers Trust"). investment companies that are advised by PNC or any of its affiliates. 4. J.P. Morgan and Company, Inc., 76 Federal Reserve Bulletin 26 6. See First Union Corporation, 75 Federal Reserve Bulletin 645 (1990) C'J.P. Morgan"); Bankers Trust. (1989). The Board modified this framework of restrictions for "risk- 5. As detailed more fully in those orders, in addition to the less principal" and private placement activities in Bankers Trust and commitments imposed by the Board in connection with underwriting J.P. Morgan, and PNC has committed to conduct its private placeand dealing in securities, PNC has committed that Company will ment activities and likewise has agreed to conduct its "riskless maintain specific records that will clearly identify all "riskless princi- principal" activities subject to this modified framework of restricpal" transactions, and Company will not engage in any "riskless tions. See First Union Corporation, 76 Federal Reserve Bulletin 174 principal" transactions for any securities carried in its inventory. (1990). These modifications relate to extensions of credit to an issuer When acting as a "riskless principal", Company will only engage in of securities for which Company would act as "riskless principal," transactions in the secondary market, and not at the order of a purchases by affiliates of securities for which Company would act as customer that is the issuer of the securities to be sold, will not act as "riskless principal," acting as a "riskless principal" for sophisticated "riskless principal" in any transaction involving a security for which institutions purchasing or selling unrated securities of Company's it makes a market, nor hold itself out as making a market in the affiliates, and including "riskless principal" transactions in Comsecurities that it buys and sells as a "riskless principal." Moreover, pany's policies limiting overall exposure to a single customer whose Company will not engage in "riskless principal" transactions on securities are underwritten by Company. behalf of its foreign affiliates that engage in securities dealing activities 7. 12 C.F.R. 225.24; The Fuji Bank, Limited, 75 Federal Reserve outside the United States and will not act as "riskless principal" for Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve registered investment company securities. In addition, Company will Bulletin 155, 156 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

296 Federal Reserve Bulletin • April 1992 Based on all the facts of record, and subject to the AMRO Holding N.V., all of Amsterdam, The Nethercommitments made by PNC, as well as all of the terms lands, foreign banking organizations subject to the and conditions set forth in this order and in the Bank Holding Company Act ("BHC Act"); and ABN above-noted Board orders, the Board has determined AMRO Bank, N.V., Amsterdam, The Netherlands, that the application should be, and hereby is, ap- and ABN AMRO North America, Inc., Chicago, Illiproved. Approval of this proposal is specifically con- nois, bank holding companies within the meaning of ditioned on compliance by PNC and Company with the BHC Act (collectively, "Applicant"), have apthe commitments made in connection with its applica- plied under section 4(c)(8) of the BHC Act (12 U.S.C. tion, as supplemented, and with the conditions refer- § 1843(c)(8)) and section 225.23 of the Board's Reguenced in this order. The Board's determination also is lation Y (12 C.F.R. 225.23), to acquire The Talman subject to all of the conditions set forth in Regulation Home Federal Savings and Loan Association of Illi- Y, including those in section 225.4(d) and 225.23(b), nois, Chicago, Illinois ("Talman"). Talman will be and to the Board's authority to require modification or acquired through a purchase of assets and assumption termination of the activities of a bank holding com- of liabilities transaction with LaSalle Talman Bank, pany or any of its subsidiaries as the Board finds F.S.B., Chicago, Illinois ("LaSalle Talman"), a newly necessary to assure compliance with, and to prevent chartered federal stock savings bank to be owned by evasion of, the provisions of the BHC Act and the Applicant's United States subsidiary, ABN AMRO Board's regulations and orders issued thereunder. The North America. Talman and LaSalle Talman will be commitments and conditions relied on in reaching this owned by Applicants in accordance with section decision are conditions imposed in writing by the 225.25(b)(9) of the Board's Regulation Y (12 C.F.R. Board in connection with its findings and decision and 225.25(b)(9)).1 may be enforced in proceedings under applicable law. Notice of the application, affording interested per- This transaction shall not be consummated later sons an opportunity to submit comments, has been than three months after the effective date of this published (56 Federal Register 51 Ml (1991)). The Order, unless such period is extended for good cause time for filing comments has expired, and the Board by the Board or by the Federal Reserve Bank of has considered the application and all comments re- Cleveland, pursuant to delegated authority. ceived in light of the public interest factors set forth in By order of the Board of Governors, effective section 4(c)(8) of the BHC Act.2 February 18, 1992. The Board has determined that the operation of a savings association is closely related to banking and Voting for this action: Chairman Greenspan and Governors permissible for bank holding companies. 12 C.F.R. Mullins, Angell, Kelley, Lindsey, and Phillips. Absent and 225.25(b)(9). In making this determination, the Board not voting: Governor La Ware. JENNIFER J. JOHNSON 1. Applicant also has applied to acquire the following nonbanking Associate Secretary of the Board subsidiaries of Talman: Talman Home Mortgage Corporation, Norridge, Illinois, and thereby engage in the origination and servicing of residential mortgage loans pursuant to 12 C.F.R. 225.25(b)(1); and Stichting Prioriteit ABN AMRO Holding Talman Insurance Services, Inc., Chicago, Illinois ("TISI"), and thereby engage in credit-related insurance agency activities pursuant to 12 C.F.R. 225.25(b)(8)(i). Applicant also has applied to engage in Stichting Administratiekantoor ABN AMRO securities brokerage activities pursuant to 12 C.F.R. 225.25(b)(15), Holding through a lease agreement with GNA Securities; and to retain Talman's investment in the Savings and Loan Network, Inc., Chicago, Illinois, and thereby engage in community development activities ABN AMRO Holding N.V. pursuant to 12 C.F.R. 225.25(b)(6). 2. The Board has received comments from the National Training Institute and Information Center ("NTIIC") and the Woodstock ABN AMRO Bank, N.V. Institute, both of Chicago, Illinois, stating that the public benefits of all of Amsterdam, The Netherlands permitting Applicant to acquire Talman weigh for approval of this case and outweigh potential adverse effects from the proposal. NTIIC has endorsed the lending record of Talman, as well as its participation in ABN AMRO North America, Inc. special loan programs, and the Woodstock Institute has endorsed Talman's home mortgage lending record in the community. The Board Chicago, Illinois also has received comments from several members of Congress in favor of the proposal. In addition, another member of Congress requests that the Board thoroughly review the CRA aspects of the Order Approving Application to Acquire a Savings proposal and not diminish the weight given to the CRA in reviewing Association this case. The Board also has received comments filed by a customer of LaSalle Bank, alleging that interest on his home equity line of credit was incorrectly calculated. These allegations are under review by the Stichting Prioriteit ABN AMRO Holding, Stichting Office of the Comptroller of the Currency ("OCC"), LaSalle Bank's Administratiekantoor ABN AMRO Holding, and ABN primary regulator. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 297 required that savings associations acquired by bank Applicant is the largest banking institution in The holding companies conform their direct and indirect Netherlands, and is the sixth largest banking instituactivities to those activities permissible for bank hold- tion in Europe. ABN AMRO North America, a wholly ing companies under section 4 of the BHC Act.3 In this owned subsidiary of ABN AMRO Bank, N.V., has regard, the Board has previously determined that the consolidated assets of $8.6 billion. Applicant also mortgage lending, credit-related insurance agency, operates European American Bank, Uniondale, New discount brokerage and community development ac- York, and numerous agencies, branches, and repretivities of Talman's nonbanking subsidiaries are per- sentative offices in Atlanta, Boston, Chicago, Housmissible activities for bank holding companies. In ton, Los Angeles, San Francisco, Miami, New York, addition, Applicant has committed to conform all Pittsburgh, and Seattle. activities of LaSalle Talman to the requirements of ABN AMRO North America operates seven bank section 4 of the BHC Act and Regulation Y.4 subsidiaries in Illinois through LaSalle National Cor- In reviewing proposals under section 4(c)(8) of the poration ("LNC"). LNC is the fourth largest banking BHC Act, the Board is required to determine that the organization in Illinois, controlling approximately $5.3 ownership and operation of the acquired company by billion in commercial bank deposits in Illinois, reprethe applicant "can reasonably be expected to produce senting 4 percent of the total deposits in commercial benefits to the public, such as greater convenience, banking organizations in the state.5 Talman is the increased competition, or gains in efficiency, that largest savings association in Illinois, controlling apoutweigh possible adverse effects, such as undue proximately $4.1 billion in deposits. Upon consummaconcentration of resources, decreased or unfair com- tion of the proposed acquisition, LNC would become petition, conflicts of interests, or unsound banking the third largest commercial banking organization in practices." 12 U.S.C. § 1843(c)(8). Illinois, controlling approximately $9.4 billion in deposits in Illinois. LNC and Talman compete directly in the Chicago, Illinois banking market.6 LNC is the fourth largest 3. Applicant commits that should Talman engage in any activities depository organization in this market, controlling that are impermissible for bank holding companies under section $5.3 billion in deposits, representing approximately 4.9 4(c)(8) of the BHC Act, these activities will be divested as follows: (1) any impermissible securities activities conducted by Talman percent of the deposits held by banks and savings or its subsidiaries will cease on or before consummation; and associations operating in the market ("market depos- (2) any impermissible real estate investments will be divested its").7 Talman is the seventh largest depository instiwithin two years of consummation of the proposal, no new impermissible projects or investments will be undertaken during tution in the Chicago banking market, controlling $3.9 this period, and capital adequacy guidelines will be met excluding billion in deposits, representing approximately 1.8 specified real estate investments. percent of market deposits. Upon consummation of Talman, through a joint venture, owns 10 percent of the stock of the Bank for Financial Institutions, Chicago, Illinois ("BFI"), a bank this proposal, Applicant would become the third largchartered under Illinois law to provide banking services to financial est depository organization in the market, controlling institutions. Applicant has committed to divest its interest in BFI as $9.2 billion in deposits, representing approximately 6.7 soon as possible following consummation of this transaction and, in any event, within one year from the date of consummation of this percent of market deposits. The Herfindahltransaction. Hirschman Index ("HHI") would increase by 23 4. TISI also engages in the sale as agent of insurance products in points to 609, and the banking market would remain Illinois under the Home Owners' Loan Act. These activities are not permissible for bank holding companies under section 4(c)(8) of the unconcentrated.8 BHC Act. These insurance agency activities include the sale of credit-related insurance on extensions of credit made by non-affiliated lenders, and the sale of homeowners, life, health, automobile, accident, property and casualty, surety coverage and professional liability coverage. Section 461 of the Federal Deposit Insurance Corporation Improvement Act of 1991, Pub. L. No. 102-242, § 461; 105 Stat. 2236 5. State deposit data are as of June 30, 1990. (1991), permits a Qualified Savings Association chartered in Decem- 6. The Chicago, Illinois banking market is approximated by Cook, ber 1986 and acquired without federal financial assistance by a bank DuPage, and Lake Counties, all in Illinois. holding company before March 1, 1992, to continue to engage in 7. Market share data are as of June 30,1990. The pre-merger market insurance agency activities in its home state if the savings association deposit data are based on calculations in which the deposits of Talman was continuously engaged in such activity from June 1, 1991, to the and all other thrifts are included at 50 percent. Upon consummation of date of acquisition. On the basis of the record on this application, the the proposal, LaSalle Talman would be affiliated with a commercial Board concludes that this provision would permit LaSalle Talman to banking organization. Therefore, on a pro forma basis, the deposits of continue TISI's insurance agency activities in Illinois following its LaSalle Talman are included at 100 percent, while the deposits of acquisition by LaSalle National Corporation ("LNC") for so long as other savings associations continue to be included at 50 percent. LaSalle Talman is operated as a Qualified Savings Association. 8. Under the revised Department of Justice Merger Guidelines, 49 Applicant has committed that in the event Talman ceases to be a Federal Register 26,823 (1984), a market in which the post-merger Qualified Savings Association, Applicant will cease or divest immedi- HHI is less than 1000 is considered unconcentrated. Generally, the ately all impermissible insurance activities, and will conduct its Department of Justice will not challenge a bank merger (in the absence insurance activities in accordance with the BHC Act and the Board's of other factors indicating anticompetitive effects) if the post-merger Regulation Y. HHI is less than 1800. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

298 Federal Reserve Bulletin • April 1992 On the basis of all the facts of record, the Board isfactory CRA performance ratings from their priconcludes that consummation of the proposed acqui- mary regulators in their two preceding examinations. sition would not have a significantly adverse effect on Applicant has committed to take a number of steps competition in any banking market. The Board also at LaSalle Bank to address the concerns raised in the notes that the markets for the nonbanking activities December 1991 examination.10 The OCC has informed in which both LNC and Talman compete are served the Board that these steps, when fully implemented, by numerous competitors, and the share of the will satisfactorily address the CRA weaknesses at market controlled by LNC and Talman is small in LaSalle, and that LaSalle Bank has been responsive in each case. Accordingly, the Board concludes that correcting weaknesses identified in previous examinaconsummation of this proposal would not have a tions. In the case of Matteson Bank, substantial steps significantly adverse effect on competition in the have already been taken to address the criticisms provision of these services in any relevant market. noted in the FDIC's examination.11 The record does not indicate that this proposal is The Board has also taken into account as a signiflikely to result in any other significantly adverse icant mitigating factor the fact that this proposal effects, such as undue concentration of resources, would serve the convenience and needs of the comdecreased or unfair competition, conflicts of inter- munity by maintaining Talman and its successors as ests, or unsound banking practices. an active lender in its market. The financial support The Board also has taken into account the financial provided to Talman under this proposal will enable condition of Talman, and Applicant's proposal to LaSalle Talman, without federal assistance, to conprovide substantial new capital to Talman. Talman tinue to provide credit opportunities and banking has recently experienced significant financial difficul- services to its local communities, including low- and ties, and has reported negative net worth. The Office moderate-income neighborhoods. of Thrift Supervision ("OTS") has informed the On the basis of these and all of the other facts of Board that Talman has incurred losses that have record, including a review of the CRA performance depleted substantially all of its capital and that record of Applicant, the Board finds that the public Talman is an institution "in danger of default." As benefits that would result from this transaction are part of this transaction, Applicant has committed to substantial and outweigh the possible adverse efprovide substantial capital resources to Talman suf- fects. Accordingly, based upon consideration of all ficient to restore Talman's capital levels above the the facts in this case, the Board has determined that regulatory minimum levels. the balance of the public interest factors it is required The Board previously has determined that the to consider under section 4(c)(8) of the BHC Act is performance record under the Community Reinvest- favorable and consistent with approval of the appliment Act (12 U.S.C. § 2901 et seq.) ("CRA") of cation to acquire Talman. Although the Board does banks owned by an applicant must be considered in not generally consider commitments made in the the analysis of the public benefits of any proposal to applications process as adequate to overcome a deficient CRA performance record, the Board and acquire a savings association. In this regard, the the other federal banking agencies have indicated in Board has considered that two of LNC's subsidiary the Statement of the Federal Financial Supervisory banks, LaSalle National Bank, Chicago, Illinois ("LaSalle Bank"), and the LaSalle Bank, Matteson, Matteson, Illinois ("Matteson Bank"), have not re- 10. LaSalle Bank received its most recent CRA rating during the ceived satisfactory ratings in the most recent exam- pendency of this application and immediately developed proposals to ination of their performance under the CRA.9 The address deficiencies identified by the OCC. LaSalle Bank has not had sufficient time before this application was considered by the Board to CRA performance records of all the remaining LNC implement all of the steps. LaSalle Bank's proposed corrective subsidiary banks are currently rated satisfactory by measures include a review of all denials of credit applications received the banks' primary regulators, and have been rated from low- and moderate-income residents; expansion of the scope of the bank's audits for compliance with fair lending laws to include an satisfactory for at least two preceding examinations. analysis of the reasons for loan denials as well as monitoring of the LaSalle Bank and Matteson Bank also received sat- location of the applicants; establishment of a small business lending unit; and expansion of LaSalle Bank's outreach and marketing efforts. 11. For example, Matteson Bank has significantly improved its efforts to ascertain the credit needs of its communities through increased contacts with community groups, public officials, and consumers in general through mail surveys. Matteson Bank's market- 9. LaSalle Bank, LNC's lead bank, received a "needs to improve" ing efforts now include the use of local newspapers and statement CRA performance rating from the OCC in a CRA performance inserts that advertise specific services and products. The geographic examination in December 1991 (the "December 1991 examination"). distribution of Matteson Bank's loans are reviewed quarterly by its Matteson Bank, which comprises approximately 2.6 percent of LNC CRA committee and data from these reports have served as a basis for total consolidated assets, received a less than satisfactory rating from redefining the bank's service area. Matteson Bank has also signifithe Federal Deposit Insurance Corporation ("FDIC") in April 1990. cantly increased its community development activities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 299 Agencies Regarding the Community Reinvestment Orders Issued Under Sections 3 and 4 of the Act that commitments may be appropriate in ad- Bank Holding Company Act dressing CRA performance in certain circumstances, BankAmerica Corporation including in the context of an acquisition of a trou- San Francisco, California bled financial institution. In this regard, the Board has directed the Federal Reserve Bank of Chicago ("Reserve Bank") to monitor Applicant's progress Nevada First Development Corporation in implementing the CRA programs and policies Las Vegas, Nevada described in the application as supplemented, and to report to the Board on Applicant's progress. As a Order Approving Acquisition of a Bank Holding condition of the Board's action in this case, Appli- Company and Banks cant must submit quarterly reports to the Reserve Bank that include a description of the steps it has BankAmerica Corporation, San Francisco, California taken to comply with its representations and commit- ("BankAmerica"), and its wholly owned subsidiary, ments to the Board, as well as the steps it has Nevada First Development Corporation, Las Vegas, implemented to improve the CRA performance of the Nevada ("NFDC"), both bank holding companies two subsidiary banks. within the meaning of the Bank Holding Company Act Based on all the facts of record, the Board has ("BHC Act"), have applied under section 3 of the determined that the application should be, and BHC Act (12 U.S.C. § 1842) to acquire Valley Capital hereby is, approved. The Board's approval is specif- Corporation, Las Vegas, Nevada ("Valley Capital"), ically conditioned upon compliance with all the com- and thereby acquire Valley Bank of Nevada, Las mitments made by Applicant in connection with this Vegas, Nevada, and Caliber Bank, Phoenix, Arizona.1 application, including implementation of the planned BankAmerica and NFDC have also applied for the corrective actions at LaSalle Bank, and the condi- Board's approval under section 4(c)(8) of the BHC Act tions imposed in this Order. This determination is to acquire the shares of certain nonbanking companies also subject to all of the conditions set forth in the owned by Valley Capital that are listed in the Appen- Board's Regulation Y, including sections 225.4(d) dix to this order. Each of the nonbanking companies and 225.23, and to the Board's authority to require conducts nonbanking activities that have been authosuch modifications or termination of the activities of rized by the Board by order or by regulation. a bank holding company or any of its subsidiaries as Notice of the applications, affording an opportunity the Board finds necessary to assure compliance with, for interested persons to comment, has been duly or to prevent evasion of, the provisions and purposes published (56 Federal Register 51,898 (1991)). The of the BHC Act and the Board's regulations and time for filing comments has expired, and the Board Orders issued thereunder. All of the commitments has considered the application and all comments reand conditions relied on by the Board in reaching its ceived in light of the factors set forth in sections 3 and decision in this case are conditions imposed in writ- 4 of the BHC Act.2 ing by the Board in connection with its findings and decision and may be enforced in proceedings under Interstate Banking Provisions applicable laws. The transaction approved in this Order shall not be Section 3(d) of the BHC Act, the Douglas Amendconsummated later than three months after the effec- ment, prohibits the Board from approving an applicative date of this Order, unless such period is ex- tion by a bank holding company to acquire control of tended for good cause by the Board or by the Federal any bank located outside of the bank holding com- Reserve Bank of Chicago, pursuant to delegated pany's home state, unless such acquisition is "specifauthority. ically authorized by the statute laws of the State in By order of the Board of Governors, effective which [the] bank is located, by language to that effect February 27, 1992. Voting for this action: Chairman Greenspan and Governors 1. The proposed transaction would be effected through the merger Mullins, LaWare, and Phillips. Abstaining from this action: of Valley Capital with and into NFDC. BankAmerica has also applied to acquire an option that gives BankAmerica the right to acquire up to Governors Angell and Lindsey. Absent and not voting: 14.9 percent of Valley Capital's common stock upon the occurrence of Governor Kelley. certain triggering events defined in the Plan and Agreement of Merger between BankAmerica and Valley Capital. The option will expire upon consummation of the proposed acquisition. JENNIFER J. JOHNSON 2. With the exception of a report from the U.S. Department of Associate Secretary of the Board Justice, the Board received no comments on this application. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

300 Federal Reserve Bulletin • April 1992 and not merely by implication." For purposes of the gate the potential anticompetitive effects of the pro- Douglas Amendment, California is the home state of posed acquisition in these markets, BankAmerica has BankAmerica.3 BankAmerica proposes to acquire committed to divest of all of the operations of Bank- Valley Capital's Nevada and Arizona bank subsidiar- America Nevada, its Nevada bank subsidiary, to a ies. The laws of both Arizona and Nevada permit substantial bank holding company that does not have out-of-state bank holding companies, including bank significant operations in Nevada.7 After giving effect holding companies located in California, to acquire to the divestitures proposed in these Nevada markets, established banks located in those states, subject to the Herfindahl-Hirschman Index ("HHI") and other the prior approval of the respective state banking measures of concentration would not increase signifisupervisors.4 Accordingly, Board approval of this pro- cantly and the number of competitors remaining in any posal is not barred by the Douglas Amendment. relevant market would not change.8 The Bullhead City banking market includes portions Competitive Considerations of Arizona, California, and Nevada. BankAmerica competes with Valley Capital in this market through Nevada BankAmerica Arizona, a bank subsidiary located in Arizona. In order to mitigate the potentially anticom- BankAmerica is the third largest commercial banking petitive effect of the proposed transaction in the Bullorganization in the United States and operates banking head City banking market, BankAmerica has commitsubsidiaries in California, Arizona, Idaho, Nevada, ted to divest a branch in this market.9 After giving New Mexico, Oregon, Texas and Washington.5 effect to the proposed divestiture, the HHI and other BankAmerica is the fifth largest commercial banking measures of concentration would not increase signifiorganization in Nevada, where it controls deposits of cantly and the number of competitors remaining in this approximately $436.0 million, representing approxi- market would not change. Accordingly, the Board mately 4.9 percent of the total deposits in commercial believes that consummation of the proposal would not banks in Nevada. Valley Capital is the second largest result in a significantly adverse effect on competition commercial banking organization in Nevada, where it in any banking market in Nevada. controls deposits of approximately $2.7 billion, representing approximately 29.9 percent of the total depos- Arizona its in commercial banks in Nevada. Upon consummation, BankAmerica would become the largest BankAmerica is the third largest commercial banking commercial banking organization in Nevada, account- organization in Arizona, where it controls deposits of ing for approximately 34.8 percent of the total deposits in commercial banks in the state. BankAmerica competes directly with Valley Capital more than 50 points. The Justice Department has informed the Board in seven Nevada banking markets.6 In order to miti- that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Justice Department has stated that the 3. 12 U.S.C. § 1842(d). A bank holding company's home state for higher than normal HHI thresholds for screening bank mergers for purposes of the Douglas Amendment is that state in which the total anticompetitive effects implicitly recognize the competitive effect of deposits of its banking subsidiaries were largest on July 1, 1966, or on limited-purpose lenders and other non-depository financial entities. the date it became a bank holding company, whichever date is later. 7. BankAmerica has committed to execute an agreement for the sale Id. of BankAmerica Nevada prior to consummation of this proposal. 4. Ariz. Rev. Stat. § 6-321 to -323 (1991); Nev. Rev. Stat. Ann. BankAmerica has committed that, if it is unsuccessful in consummat- § 666.225-305, -315 (Michie 1991). The Board has determined previ- ing the divestiture of BankAmerica Nevada within 180 days of ously that the Douglas Amendment does not bar a California bank consummation of the proposal to acquire Valley Capital, BankAmerholding company's acquisition of a bank holding company and bank ica will transfer all of the shares of BankAmerica Nevada to an located in Nevada. BankAmerica Corporation, 75 Federal Reserve independent trustee with instructions that the trustee sell the bank Bulletin 825 (1989). BankAmerica's application to acquire Valley promptly. See, e.g., First Hawaiian, Inc., 11 Federal Reserve Bulletin Capital's Nevada subsidiary bank is pending before the Nevada 52, (1991); First Union Corporation, 76 Federal Reserve Bulletin 83 Commissioner of Financial Institutions. The Board's action in this (1990). case is specifically conditioned on BankAmerica's obtaining any 8. The Board previously has indicated that thrift institutions have approvals required under Nevada law. By order dated December 4, become, or have the potential to become, significant competitors of 1991, the Arizona Superintendent of Banks approved BankAmerica's commercial banks. See, e.g., First Union Corporation, 76 Federal application to acquire Valley Capital's Arizona subsidiary bank. Reserve Bulletin 83 (1990). In considering the competition offered by 5. State deposit data are as of June 30,1991. Market deposit data are thrifts in all banking markets in this case, thrift deposits are weighted as of June 30, 1990. at 50 percent, unless otherwise noted. See, e.g.,Fleet/Norstar Finan- 6. These banking markets are: Bullhead City; Carson City; Church- cial Group, Inc., 11 Federal Reserve Bulletin 751 (1991). ill County; Elko; Humboldt County; Las Vegas; and Reno. Under the 9. The Board will consider BankAmerica's request to defer the revised Department of Justice Merger Guidelines, 49 Federal Register proposed divestiture in the Bullhead City banking market when the 26,823 (1984), a market in which the post-merger HHI is above 1800 is Board reviews the other divestitures proposed by BankAmerica in considered to be highly concentrated. In such markets, the Justice Arizona in connection with BankAmerica's application to acquire Department is likely to challenge a merger that increases the HHI by Security Pacific Corporation, Los Angeles, California. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 301 approximately $5.3 billion, representing approxi- nience and needs considerations related to this promately 17.9 percent of the total deposits in commercial posal are consistent with approval of this transaction. banks in Arizona. Valley Capital is the 11th largest The Board notes that BankAmerica has applied for commercial banking organization in Arizona, where it Board approval to acquire Security Pacific Corporacontrols deposits of approximately $164.9 million, tion. In acting upon the proposal to acquire Valley representing approximately 0.6 percent of the total Capital, the Board considered the statutory factors deposits in commercial banks in Arizona. Upon con- only as they relate to the Valley Capital proposal and summation of the proposal, BankAmerica would re- did not consider the statutory factors as they may main the third largest commercial banking organiza- relate to the Security Pacific proposal or to any other tion in Arizona, accounting for approximately 18.5 proposal pending before the Board. percent of the total deposits in commercial banks in BankAmerica has also applied under section 4(c)(8) the state. of the BHC Act to acquire the shares of the nonbank- BankAmerica competes directly with Valley Cap- ing subsidiaries of Valley Capital listed in the Appenital in one banking market in Arizona through dix. The Board has determined by order or by regula- BankAmerica Arizona. Based on post-consumma- tion that each of the activities conducted by these tion concentration levels, market share, and the companies is closely related to banking and generally number of competitors remaining in the market, the permissible for bank holding companies under section Board believes that the proposal would not result in 4(c)(8) of the BHC Act. a significantly adverse effect on competition in any BankAmerica nonbank subsidiaries compete with banking market in Arizona.10 five of Valley Capital's six nonbank subsidiaries. In Accordingly, based on all the facts of record in this each instance, the markets for these nonbanking sercase, and subject to the divestiture commitments made vices are not highly concentrated and numerous proby BankAmerica in this case, the Board concludes that viders of the services would remain after consummaconsummation of this proposal would not have a tion of the proposal. As a result, consummation of the significantly adverse effect on competition or the con- this proposal would have a minimal effect on compecentration of banking resources in any relevant bank- tition for these services, and the Board concludes that ing market. The Board has sought comments from the the proposal would not result in a significantly adverse United States Attorney General, the Office of the effect on competition in any relevant market. For the Comptroller of the Currency ("OCC"), and the Fed- reasons discussed above, the Board has determined eral Deposit Insurance Corporation ("FDIC") on the that the proposal is not likely to result in any significompetitive effects of this proposal. The Attorney cant adverse effects, such as undue concentration or General has indicated that, subject to consummation resources, decreased or unfair competition, conflicts by BankAmerica of the proposed divestitures in the of interests, unsound banking practices, concentration Churchill County, Elko, Humboldt County, Las of resources or other adverse effects, and that the Vegas, and Reno, Nevada banking markets, the pro- balance of public interest factors that the Board is posal would not have significantly adverse effects on required to consider under section 4(c)(8) of the BHC competition in any relevant banking market. Neither Act is favorable. the OCC nor the FDIC has provided any objection to Based on the foregoing and other facts of record, consummation of this proposal nor indicated that the and subject to the commitments made by BankAmerproposal would have any significantly adverse compet- ica and the conditions in this order, the Board has itive effects. determined that the applications should be, and hereby are, approved. Approval of these proposals is specif- Other Considerations ically conditioned on compliance by BankAmerica with the commitments made in connection with its Based on the facts of record, the Board also concludes applications in this case and with the conditions referthat financial considerations, managerial resources, enced in this order. The determinations as to the future prospects, supervisory factors, and conve- nonbanking activities are also subject to all the conditions set forth in the Board's Regulation Y, including those in sections 225.4(d) and 225.23(b), and to the 10. BankAmerica competes directly with Valley Capital in the Board's authority to require such modification or Phoenix, Arizona banking market. The Phoenix banking market is termination of the activities of a bank holding comapproximated by the Phoenix Ranally Metropolitan Area with the addition of the towns of Carefree, Cave Creek, and Buckeye, Arizona. pany or any of its subsidiaries as the Board finds Upon consummation, BankAmerica would remain the largest depos- necessary to assure compliance with, or to prevent itory institution in the market, holding deposits of approximately $5.6 evasion of, the provisions and purposes of the BHC billion, representing 24.2 percent of the market deposits. The HHI would increase by 37 points to 1788. Act and the Board's regulations and orders issued Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

302 Federal Reserve Bulletin • April 1992 thereunder. Further, the commitments and conditions Finance Company), and thereby engage in the financreferenced in this order are conditions imposed in ing of non-recourse automobile dealer installment writing by the Board in connection with its findings sales contracts, pursuant to section 225.25(b)(1) of and decision and may be enforced under applicable Regulation Y. provisions of law. (f) Caliber Premium Company, and thereby engage in The acquisition of Valley Capital Corporation's sub- insurance premium financing pursuant to section sidiary banks shall not be consummated before the 225.25(b)(1) of Regulation Y. thirtieth calendar day following the effective date of this Order, and no acquisition may be consummated Society Corporation later than three months after the effective date of the Cleveland, Ohio order. This period may be extended for good cause by the Board or the Federal Reserve Bank of San Fran- Order Approving the Acquisition of a Bank Holding cisco, acting pursuant to delegated authority. Company By order of the Board of Governors, effective February 12, 1992. Society Corporation, Cleveland, Ohio ("Society"), a bank holding company within the meaning of the Bank Voting for this action: Chairman Greenspan and Governors Holding Company Act (the "BHC Act"), has applied Mullins, Angell, Kelley, LaWare, Lindsey, and Phillips. under section 3 of the BHC Act (12 U.S.C. § 1842) to merge with Ameritrust Corporation, Cleveland, Ohio JENNIFER J. JOHNSON ("Ameritrust"), and thereby indirectly acquire Amer- Associate Secretary of the Board itrust Company, N.A., and Ameritrust Development Bank, both of Cleveland, Ohio; Ameritrust Indiana Appendix Corporation, Elkhart, Indiana, and its subsidiary banks, Ameritrust National Bank Central Indiana, BankAmerica will acquire the following nonbank sub- Indianapolis, Indiana; Ameritrust National Bank, Misidiaries of Valley Capital: chiana (Elkhart), Elkhart, Indiana; Ameritrust National Bank, Michiana (Sturgis), Sturgis, Michigan; (a) Valley Capital Life Insurance Co., Inc., and and Ameritrust Bank, Howard County, Kokomo, Inthereby engage in underwriting and reinsurance of diana.1 credit life insurance and credit accident, health and Society also has applied under section 4(c)(8) of the unemployment insurance which is directly related to BHC Act to acquire the nonbanking subsidiaries of extensions of credit by Valley Bank pursuant to sec- Ameritrust listed in the Appendix to this Order. Each of tion 225.25(b)(8)(i) of the Board's Regulation Y. these activities has been previously approved by the (b) Valley Electronic Services, Inc., and thereby en- Board. Society also has applied to acquire Ameritrust gage in providing electronic banking services by oper- International Corporation, Cleveland, Ohio, an inactive ating and servicing the automatic teller machines at corporation that is chartered pursuant to section 25(a) affiliate bank branch locations; owning, operating and of the Federal Reserve Act (12 U.S.C. § 611 et seq.) servicing terminals at off-site locations such as grocery ("Edge Act").2 stores, hotels and casinos throughout Nevada; pro- Notice of the applications, affording interested percessing credit and debit card transactions; providing sons an opportunity to submit comments, has been connections to national and regional ATM networks, published (56 Federal Register 61,251 (1991)). The pursuant to section 225.25(b)(7) of Regulation Y. time for filing comments has expired, and the Board (c) Valley Leasing Company, Inc., and thereby engage has considered the applications and all comments in leveraged and non-leveraged leasing of personal received in light of the factors set forth in sections 3(c) property, including gaming equipment, furniture and and 4 of the BHC Act. fixtures, and industrial, high-tech and medical equipment, pursuant to section 225.25(b)(5) of Regulation Y. (d) Valley Mortgage Company, Inc., and thereby 1. In connection with this transaction, Ameritrust has granted engage in originating residential mortgage loans for Society an option to purchase up to 19.9 percent of the outstanding common stock of Ameritrust, and Society has applied to exercise the resale in the secondary market, servicing such loans, option if any of several preconditions occur. This option will become making residential real estate construction loans, and moot upon consummation of the Society application to acquire servicing such loans for third parties, pursuant to Ameritrust. 2. Ameritrust International has been inactive since 1986. Society section 225.25(b)(1) of Regulation Y. has committed not to engage in any activities through it without (e) Pacific Century Finance Company (dba Caliber obtaining prior Board approval. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 303 Douglas Amendment the total deposits in commercial banking organizations in Michigan.7 Section 3(d) of the BHC Act, the Douglas Amend- Society and Ameritrust compete directly in ten ment, prohibits the Board from approving an appli- banking markets in Ohio and Indiana.8 After considcation by a bank holding company to acquire any ering the competition offered by thrift institutions,9 the bank located outside of the bank holding company's number of competitors remaining in the market, the home state, unless such acquisition is "specifically increase in concentration, and the other facts of authorized by the statute laws of the State in which record, the Board has concluded that consummation [the] bank is located, by language to that effect and of the proposal would not result in a significantly not merely by implication."3 Society seeks to ac- adverse effect on competition in the following banking quire bank subsidiaries of Ameritrust located in markets: Akron, Canton, Cincinnati, Cleveland, Co- Indiana and Michigan. For purposes of the Douglas lumbus and Youngstown-Warren in Ohio; and Amendment, the home state of Society is Ohio.4 The Elkhart-Niles-South Bend and Warsaw County in In- Board previously has determined that the interstate diana. Society has proposed divestitures to mitigate banking statutes of Indiana permit the acquisition of the anticompetitive effects of the proposed merger in Indiana banking organizations by Ohio banking orga- the remaining banking markets of Ashtabula, Ohio, nizations.5 The Board also has determined that the and Starke County, Indiana.10 Michigan interstate banking statute expressly autho- In the Ashtabula banking market,11 Society is the rizes the acquisition of a Michigan bank by an Ohio largest of ten depository institutions, with $186.8 milbank holding company.6 Accordingly, Board ap- lion in deposits, which represents approximately 25.1 proval of this proposal is not prohibited by the percent of the total deposits in depository institutions Douglas Amendment. However, approval of this in the market ("market deposits"). Ameritrust is the proposal is conditioned upon Society receiving all third largest depository institution in the market, with required state regulatory approvals. $132.8 million in deposits, which represents approxi- Competitive, Financial, Managerial and Supervisory 7. State deposit data are as of September 30, 1991, and reflect all Considerations proposed divestitures. Market data are as of June 30, 1990. 8. Under the revised Department of Justice Merger Guidelines, 49 Upon consummation of the transaction, Society would Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI is above 1800 is considered highly concentrated. In become the largest banking organization in Ohio, such markets, the Department is likely to challenge a merger that controlling deposits of $16.5 billion, representing 18.3 increases the HHI by more than 50 points. The Department has percent of the deposits in commercial banking organi- informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticomzations in the state; the fourth largest banking organi- petitive effects) unless the post-merger HHI is at least 1800 and the zation in Indiana, controlling deposits of $2.8 billion, merger increases the HHI by 200 points. The Justice Department has representing 6.0 percent of the deposits in commercial stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competibanking organizations in the state; and would remain tive effect of limited-purpose lenders and other non-depository finanthe twelfth largest commercial banking organization in cial entities. 9. The Board previously has indicated that thrift institutions have Michigan, controlling approximately $748.0 million in become, or have the potential to become, significant competitors of total deposits, representing approximately 1 percent of commercial banks. WM Bancorp, 76 Federal Reserve Bulletin 788 (1990); First Union Corporation, 76 Federal Reserve Bulletin 83 (1990); Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989). Thus, the Board has regularly included thrift deposits in the calculation of market share on a 50 percent weighted basis. See e.g., 3. 12 U.S.C. § 1842(d). First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991). In 4. A bank holding company's home state is that state in which the considering the competition offered by thrifts in all banking markets in operations of the bank holding company's banking subsidiaries were this case, thrift deposits are weighted at 50 percent, unless otherwise principally conducted on July 1, 1966, or the date on which the noted. See e.g., Ames National Corporation, 78 Federal Reserve company became a bank holding company, whichever is later. Bulletin 59 (1992); Fleet/Norstar Financial Group Inc., 77 Federal 5. Ind. Code § 28-2-15-18 (Supp. 1991). See Banc One Corpora- Reserve Bulletin 750 (1990). tion,72 Federal Reserve Bulletin 422 (1986). 10. In each market in which Society has committed to divest branch 6. Michigan law authorizes acquisitions of Michigan banking orga- offices to mitigate possible anticompetitive effects of this acquisition, nizations by out-of-state banking organizations on a national recipro- Society has executed agreements that require consummation of these cal basis, provided that the acquisition meets state safety and sound- divestitures within 180 days of consummation of the proposal. If ness considerations, and that it does not a£fect adversely the activities Society is unsuccessful in divesting these branches within 180 days of of any Michigan banking institution. Mich. Stat. Ann. § 23.710(130b) consummation, Society has committed to transfer these branches to (1991). The Acting Commissioner of the State of Michigan Depart- an independent trustee with instructions to sell these branches ment of Commerce, Financial Institutions Bureau, has determined promptly. See e.g., United New Mexico Financial Corporation, 77 that Society's acquisition of Ameritrust's Michigan subsidiaries meets Federal Reserve Bulletin 484, 485 (1991); First Union Corporation, 76 the requirements of section 130b of the Michigan Banking Code of Federal Reserve Bulletin 83 (1990). 1969, as amended, Mich. Stat. Ann. § 23.710(130b) (1991), and that 11. The Ashtabula banking market is approximated by Ashtabula the acquisition is permissible, subject to approval by the Board. County, Ohio. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

304 Federal Reserve Bulletin • April 1992 mately 17.9 percent of market deposits. Society has banking services to a range of customers in the local committed to divest four of the five Ameritrust banking market.15 A recent study conducted by Board branches in this market, representing approximately staff supports the conclusion that customers still seek $105.0 million in market deposits, to a banking orga- to obtain this cluster of services.16 Based on this nization not currently operating in this market. With product market definition, the Board believes that the this divestiture, the number of competitors in the relevant geographic market is the Cleveland banking Ashtabula banking market will not change following market.17 consummation of this proposal, and the HHI in this The Cleveland banking market is moderately conmarket would increase by 81 points to 1850.12 centrated, with 48 banking and thrift competitors in In the Starke County banking market,13 Society is the market. Following consummation, the market the second largest of five depository institutions, hold- would remain moderately concentrated with numerous ing $43.5 million in deposits, which represents approx- competitors providing or poised to provide the cluster imately 28.6 percent of the total market deposits. of banking products and services.18 Furthermore, sta- Ameritrust is the fifth largest depository institution in tistics relating to population per banking office, deposthe market, with $6.9 million in deposits, which rep- its per banking office, total banking assets and houseresents approximately 4.5 percent of market deposits. hold income in the market, all indicate that Cleveland Society has committed to divest Ameritrust's single is an attractive market for entry. It is a major urban branch in this market to a banking organization not area, and includes the second largest city in Ohio. currently operating in this market. As a result of this Seven banking organizations have entered the Clevedivestiture, the number of depository institutions in land banking market de novo since 1983, three of them the Starke County banking market will not change in the last two years. following the consummation of the proposal, and the In considering the views of the Department, the HHI in this market would remain unchanged. Board notes that the Department has not provided the The Department of Justice ("Department") has Board with evidence to support the Department's conindicated to the Board the Department's opinion that clusions regarding the definition of the product market the proposal would have a significantly adverse com- in this case. The Board also notes that, assuming the petitive effect in Cuyahoga County and Lake County, product market is defined by non-real estate commer- Ohio.14 The Department bases this conclusion on an cial lending to small businesses, the Department does analysis of the supply of and demand for credit to not indicate that it has taken into account competition commercial customers, in particular small and medi- in these products from nonbanking institutions, includum-sized businesses, in these areas. The Department ing finance companies, or the degree to which a variety believes that the relevant product market for analyzing of banking and nonbanking competitors supply other the competitive effects of this transaction is commer- products, such as home equity loans and credit card cial loans other than commercial mortgage loans, and, loans, that may be effective substitutes for the products that the relevant geographic markets consist of four identified by the Department. In light of the record counties, including Cuyahoga County and Lake before the Board, the Board believes that the appropri- County. The Department has stated its belief that the ate product market is the cluster of banking products divestitures currently proposed by Applicant in Cuya- and services and the relevant geographic market is the hoga County do not appear to be sufficient to address Cleveland banking market as defined above. the Department's concern regarding competition in Based on all of the facts of record in this case, and that area. The Department has also indicated that it is subject to the divestiture proposals made by Society, continuing to discuss this matter with Applicant. the Board concludes that consummation of this pro- For the reasons explained in previous decisions and based on the record in this case, the Board believes that competitive analysis of this acquisition proposal 15. See First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991); Fleet/Norstar Financial Group, Inc., 77 Federal Reserve Bulletin 750 should be based on the availability of the cluster of (1991); and U.S. v. Philadelphia National Bank, 374 U.S. 321 (1963). 16. Elliehausen and Wolken, Banking Markets and the Use of Financial Services by Small- and Medium-Sized Businesses, 76 Federal Reserve Bulletin 726 (1990). 12. Following this proposed divestiture in the Ashtabula banking 17. The Cleveland banking market is approximated by Cuyahoga, market, Society would remain the largest depository institution in the Geauga, Lake, and Lorain Counties, the northern third of Summit market, controlling approximately $214.6 million in deposits, repre- County, the northern two-thirds of Medina County, Aurora and senting approximately 28.9 percent of deposits in the market. Streetsboro townships in Portage County, and the City of Vermilion in 13. The Starke County banking market is approximated by Starke Erie County, all in Ohio. County, Indiana. 18. With thrift deposits weighted at 50 percent, Society would 14. The Department has indicated that, after taking into account the control 34.4 percent of the market deposits, and the HHI would divestitures proposed in other markets, the transaction would not increase by 568 points to 1699 in the Cleveland market upon consumraise competitive concerns in other relevant banking markets. mation of the proposal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 305 posal would not have a significantly adverse effect on Protestants expressed concerns regarding the effect of competition or the concentration of banking resources the merger on local commercial lending and home in any relevant banking market. The Board has also mortgage availability, and alleged that the 1990 data sought comments from the Office of the Comptroller of available under the Home Mortgage Disclosure Act the Currency ("OCC"), and the Federal Deposit In- indicate that Society and Ameritrust have insufficient surance Corporation ("FDIC") on the competitive shares of the first mortgage home financing market. effects of this proposal. Neither the OCC nor the FDIC Protestants have also raised issues regarding possible has provided any objection to consummation of this branch closings that may result from the proposal.22 proposal or indicated that the proposal would have any The Board has carefully reviewed the CRA perforsignificantly adverse competitive effects. mance records of Society, Ameritrust, and their sub- Based on the entire record, the Board also con- sidiary banks, the comments and evidence presented in cludes that the financial and managerial resources, written submissions, and Society's responses to those future prospects of Society, its subsidiary banks, and comments, in light of the CRA, the Board's regulations, Ameritrust, and the supervisory factors in this case, and the Statement of the Federal Financial Supervisory are consistent with approval of this proposal.19 Agencies Regarding the Community Reinvestment Act ("Agency CRA Statement").23 The Agency CRA Convenience and Needs Considerations Statement provides guidance regarding the types of policies and procedures that the supervisory agencies In analyzing the effect of this merger on the conve- believe financial institutions should have in place in nience and needs of the communities served by Soci- order to fulfill their responsibilities under the CRA on ety and Ameritrust, the Board has taken into account an ongoing basis, and the procedures that the supervithe record of the subsidiary banks of Society and sory agencies will use during the application process to Ameritrust under the Community Reinvestment Act review an institution's CRA compliance and perfor- (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA re- mance. The Agency CRA Statement explains that dequires the federal financial supervisory agencies to cisions to allow financial institutions to expand will be encourage financial institutions to help meet the credit made pursuant to an analysis of the institution's overall needs of the local communities in which they operate CRA performance and will be based on the actual consistent with the safe and sound operation of such record of performance of the institution.24 institutions. To accomplish this end, the CRA requires Initially, the Board notes that all of Society's five the appropriate federal supervisory authority to "as- subsidiary banks have received an "outstanding" or sess the institution's record of meeting the credit "satisfactory" rating from their primary supervisors needs of its entire community, including low- and during the most recent examination of each bank's moderate-income neighborhoods, consistent with the CRA performance, and all of Ameritrust's subsidiary safe and sound operation of such institution", and to banks received "satisfactory" ratings.25 The Agency take that record into account in its evaluation of bank CRA Statement provides that a CRA examination is an holding company applications.20 important and often controlling factor in the consider- In this regard, the Board has considered comments filed by several protestants ("Protestants") expressing concerns regarding the efforts by Society and Ameri- South Bend, Indiana, submitted comments which were withdrawn trust to meet the credit needs of their entire commu- after discussions with Society. 22. Two Protestants that have received financing from Ameritrust nities, including low- and moderate-income neighbor- Development Bank have questioned the future of this subsidiary hoods primarily in Cleveland.21 Some of the under the proposal. Society has committed to retain a specialized financing affiliate dedicated to neighborhood development projects that will be capitalized at the same level as Society's current development affiliate and the Ameritrust Development Bank, and that will 19. The Board has considered comments filed after the close of the offer the same lending services and expertise that is currently availpublic comment period by two individuals involved in litigation able from these operations. alleging mismanagement of trust funds by a Society subsidiary bank. 23. 54 Federal Register 13,742 (1989). Under the Board's rules, the Board may in its discretion take into 24. Id. consideration the substance of such comments. 12 C.F.R. 262.3(e). 25. Society's banking subsidiaries have received the following CRA The Board has reviewed these comments in light of all of the facts of ratings: Society Bank, N.A., Dayton, Ohio, and Society National record in this case, including recent examination reports of this bank's Bank, Cleveland, Ohio, each received an "outstanding" rating in trust operations by this bank's primary regulator, and concludes that examinations conducted by the OCC, in September 1991 and October these comments do not reflect so adversely upon the managerial 1990 respectively; Society Bank and Trust, Toledo, Ohio, received an resources of Society as to warrant denial of these applications. "outstanding" rating in September 1991, in an examination conducted 20. 12 U.S.C. § 2903. by the Federal Reserve Bank of Cleveland; Society Bank, Indiana, 21. These comments were submitted by the St. Clair-Superior South Bend, Indiana, and Society Bank of Michigan, Ann Arbor, Coalition ("SCSC"), Stockyard Area Development Association Michigan, each received a "satisfactory" rating in examinations ("SADA"), Cleveland Coalition Against Plant Closings, all of Cleve- conducted by the FDIC, in May 1991 and September 1989, respecland, Ohio, as well as two Cleveland City Councilmen. CA$H PLU$, tively. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

306 Federal Reserve Bulletin • April 1992 ation of an institution's CRA record and that, although In addition, Bank recently entered into a Neighbor- CRA examination reports do not provide conclusive hood Reinvestment Agreement ("Agreement") with evidence of an institution's CRA record, these reports the City of Cleveland to enhance further Bank's CRA will be given great weight in the applications process.26 program.27 Under the Agreement, Bank has commit- Society and its subsidiary banks have in place the ted to a four-year, $260 million goal to increase home type of policies outlined in the Agency CRA Statement mortgage and home improvement lending in minority that contribute to an effective CRA program. Society's and low- and moderate-income neighborhoods in corporate CRA policy sets out CRA-related goals for Cleveland. Bank also has made commitments to proall its banks, and includes comprehensive community vide $20 million to fund the construction of new development programs in each of the states in which housing and $12 million for the purchase and rehabilthese banks currently operate. A review of the CRA itation of existing distressed housing in Cleveland, and records of Society's subsidiary banks indicates that to provide at least $100 million in new loans to small these banks maintain regular contacts in the commu- businesses over the next four years. Bank intends to nities they serve in order to ascertain credit needs. work with the City of Cleveland to develop initiatives They meet with members of minority groups and for large scale housing and community development community organizations on a regular basis, and have programs.28 corporate programs in place to evaluate the informa- The Agreement also provides for the maintenance of tion received from those contacts. Society has adver- full-service branches in 23 Cleveland neighborhoods tising programs targeted at low-income and minority for five years, to give written notification to the mayor residents, including the use of news media that are of any branch closings, and to follow its existing targeted at minority communities, and marketing cam- branch closing policy. The branch closing policy inpaigns that are specifically aimed at low- to moderate- volves an evaluation of whether there are solutions income borrowers. As a result of these ascertainment which do not involve closing the branch; meetings efforts, Society has established special credit products with the affected community groups; attempts to have for low- to moderate-income customers, such as its the branch remain open if the neighborhood will be left low- to moderate-income installment loan product. without banking services; and review by both an Society's subsidiary banks participate actively in gov- internal community committee and the full board of ernmentally-insured, guaranteed, and subsidized loan directors prior to closing any branch. programs for housing and small business lending. On the basis of all the facts of record, including the Society participates in HomeAssist, which provides comments received and relevant examination reports, financing and grants to mortgage customers seeking the Board concludes that the convenience and needs downpayments for homes. The program includes coun- considerations, including the CRA performance recseling services to provide information and assistance to ords of Society and Ameritrust, are consistent with home buyers with a variety of credit and financial approval of these applications.29 needs, budgeting, and reconciliation of budget issues. Society's HomeAssist program has more flexible credit underwriting requirements that permit more low- and 27. In light of this Agreement, the mayor of Cleveland has endorsed moderate-income residents to obtain mortgages. the proposal. Society National Bank, Cleveland, Ohio ("Bank"), 28. Society also has made certain commitments to the City of Cleveland regarding job retention in the downtown area and job has been actively engaged in mortgage lending in lowtraining and outplacement services for displaced employees; the and moderate-income areas in Cleveland. The 1990 maintenance of a leadership role for civic contributions and partici- HMDA data for Bank indicates that Bank makes ap- pation; the provision of checking accounts for a nominal fee and consulting services for certain marketing and research projects involvproximately two loans per thousand owner-occupied ing housing and lending patterns in Cleveland. units in low- and moderate-income areas, compared to 29. SCSC has requested that the Board hold a public hearing or 1.3 in middle-income areas and 2.3 in high-income meeting on these applications. Generally, under the Board's rules, the Board may, in its discretion, hold a public hearing or meeting on an areas. Overall, 18.8 percent of the mortgage loans application to clarify factual issues related to the application and to originated in Cleveland by Bank and 20.1 percent of its provide an opportunity for testimony, if appropriate. home improvement loans were originated in low-in- 12 U.S.C. § 262.3(e) and 262.25(d). The Board has carefully considered this request. In the Board's come owner-occupied neighborhoods. Owner-occupied view, the parties have had ample opportunity to present written housing in low- and moderate-income housing com- submissions, and the commenter requesting the public hearing or prises only 14.9 percent of Cleveland's housing stock. meeting has submitted written comments that have been considered by the Board. Further, SCSC has not identified facts that are material to the Board's decision and that are in dispute. In light of this, the Board has determined that a public meeting or hearing is not necessary to clarify the factual record in these applications, or otherwise warranted in this case. Accordingly, the request for a public meeting 26. 54 Federal Register at 13,745. or hearing on these applications is denied. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 307 Acquisition of Nonbanking Companies and conditions relied on in reaching this decision in this case are conditions imposed in writing by the Society also has applied, pursuant to section 4(c)(8) of Board in connection with its findings and decision the BHC Act, to acquire certain nonbanking subsid- and may be enforced in proceedings under applicable iaries of Ameritrust. The Board has determined by law. regulation or order that each of the activities of these The acquisition of Ameritrust's banking subsidiaries companies is closely related to banking under section shall not be consummated before the thirtieth calendar 4(c)(8) of the BHC Act, and generally permissible for day following the effective date of this Order, and no bank holding companies under section 4(c)(8) of the acquisitions may be consummated later than three BHC Act, and has approved applications by Ameri- months following the effective date of this Order, trust to own shares in each of these companies. unless such period is extended for good cause by the Society operates subsidiaries engaged in nonbank- Board or by the Federal Reserve Bank of Cleveland, ing activities that compete with many of Ameritrust's acting pursuant to delegated authority. subsidiaries. In each case, the markets for these ser- By order of the Board of Governors, effective vices are unconcentrated and there are numerous February 13, 1992. providers of these services. In light of these factors and the shares of each of the markets controlled by Voting for this action: Chairman Greenspan and Governors Society and Ameritrust, the Board concludes that Mullins, Kelley, LaWare, Lindsey, and Phillips. Voting against this action: Governor Angell. consummation of this proposal would not have any significantly adverse effect on competition in the pro- JENNIFER J. JOHNSON vision of these services in any relevant market. Fur- Associate Secretary of the Board thermore, the record does not indicate that consummation of this proposal is likely to result in any significantly adverse effects such as undue concentra- Appendix tion of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices. Accordingly, the Board has determined that the bal- Nonbanking Subsidiaries ance of public interest factors it must consider under section 4(c)(8) of the BHC Act is favorable and consistent with approval of Society's application to ac- Ameritrust Company of New York, New York, New quire the nonbanking subsidiaries of Ameritrust. In York, and thereby engage in providing corporate trust addition, after consideration of all the factors specified services to the public pursuant to § 225.25(b)(3) of the in the Board's Regulation K and based upon all the Board's Regulation Y; facts of record, the Board has determined that disap- Ameritrust Southeast, National Association, Tampa, proval of Society's investment in Ameritrust Interna- Florida, and thereby engage in providing corporate tional Corporation is not warranted. and personal trust services to the public pursuant to Based on the foregoing and other facts of record, § 225.25(b)(3) of the Board's Regulation Y; including the commitments made by Society, the Ameritrust Texas, National Association, Dallas, Board has determined that the applications should be, Texas, and thereby engage in providing corporate and and hereby are, approved. The Board's approval of personal trust services to the public pursuant to this proposal is specifically conditioned on compliance § 225.25(b)(3) of the Board's Regulation Y; by Society with the commitments made in connection Ameritrust Petroleum Corp., Dallas, Texas, and with its application, including the commitments to thereby engage in: divest certain bank offices and conditions discussed in (1) investment advisory services in an agency capacthis Order. The determination as to the nonbanking ity to the public pursuant to § 225.25(b)(4) of the activities approved in this case is also subject to all of Board's Regulation Y; and the conditions contained in Regulation Y, including (2) real estate appraisal services to the public purthose in sections 225.4(d) and 225.23(b)(3) (12 C.F.R. suant to § 225.25(b)(13) of the Board's Regulation 225.4(d) and 225.23(b)(3)), and to the Board's author- Y; ity to require such notification or termination of the Ameritrust Realty Corp., Dallas, Texas, and thereby activities of a holding company or any of its subsidiar- engage in: ies as the Board finds necessary to assure compliance (1) providing investment advisory services to the with, or to prevent evasion of, the provisions and public with respect to investments in real estate purposes of the BHC Act and the Board's regulations pursuant to § 225.25(b)(4) of the Board's Regulation and orders issued thereunder. All of the commitments Y; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

308 Federal Reserve Bulletin • April 1992 (2) providing real estate appraisal services to the § 1843(c)(8)) to acquire the following companies that public pursuant to § 225.25(b)(13) of the Board's are inactive: Regulation Y; and (3) acting as an intermediary in arranging equity AT Acceptance Corp., Cleveland, Ohio — purchasing financing for commercial and industrial income- and selling installment loan contracts from automobile producing real estate pursuant to § 225.25(b)(14) of dealers and making other extensions of credit to fithe Board's Regulation Y; nance consumer purchases; and Ameritrust Securities Corp., Dallas, Texas, and AT Financial Corp., Cleveland, Ohio—making, acthereby engage in providing investment advisory ser- quiring and servicing loans; and vices to the public, including the provision of portfolio ATEK Check Printing Company, Cleveland, Ohio — investment advice both to unaffiliated corporate enti- providing checks and related documents to financial ties, endowment funds and foundations, and to indi- institutions; and viduals, pursuant to § 225.25(b)(4) of the Board's Franklin Financial Corporation, Indianapolis, Indiana Regulation Y ; — mortgage loan servicing activities for its Ameritrust AT Investment Services Corporation, Cleveland, National Bank, Central Indiana, and in servicing com- Ohio, and thereby engage in: mercial lines of credit for unaffiliated financial institu- (1) offering securities brokerage services to the tions. public pursuant to § 225.25(b)(15) of the Board's Regulation Y, and Dissenting Statement of Governor Angell (2) the purchase and sale of gold and silver bullion and gold coins for the accounts of its customers I dissent from the Board's action in this case. As I pursuant to Ameritrust Corp., 14 Federal Reserve have indicated in previous cases, I believe that the Bulletin 341 (1988); structural measures used by the Board in analyzing bank acquisition proposals do not accurately reflect First Indiana Life Insurance, Elkhart, Indiana, and the competitive effects of these proposals. In particuthereby engage, as a reinsurer, in underwriting life lar, I believe that these measures do not adequately insurance and accident and health insurance written in account for the effect of these acquisitions on the connection with extensions of credit by affiliate banks availability and pricing of credit to small businesses. pursuant to § 225.25(b)(8)(i) of the Board's Regula- I believe that the Board should focus particular tion Y; and attention on this aspect of the cluster of banking Lake Life Insurance Company, Cleveland, Ohio, and services in conducting its analysis of the competitive thereby engage, as a reinsurer, in underwriting life insur- effects of bank acquisitions. In this case, I agree with ance and accident and health insurance written in connec- the conclusion expressed by the Department of Justice tion with extensions of credit by affiliate banks pursuant that this acquisition would have a significantly adverse to § 225.25(b)(8)(i) of the Board's Regulation Y. effect on competition in the market for small business lending in these areas. Society has also applied pursuant to section 4(c)(8) of the Bank Holding Company Act (12 U.S.C. February 13, 1992 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 309 APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 4 Effective Applicant(s) Bank(s) Date Southern National Corporation, Workmen's Bancorp, Inc., February 19, 1992 Lumberton, North Carolina Mount Airy, North Carolina Trans Financial Bancorp, Inc. First Federal Savings Bank of February 21, 1992 Bowling Green, Kentucky Tennessee, Tullahoma, Tennessee Maury Federal Savings Bank, Columbia, Tennessee APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant(s) Bank(s) Bank Date American Interstate American Interstate Chicago February 7, 1992 Bancorporation, Inc., Bancorporation, Inc., Omaha, Nebraska Omaha, Nebraska CBS Bancshares, Inc., First State Bank, Atlanta February 11, 1992 Spencer, Tennessee Maynardville, Tennessee Community First Bankshares, First Interstate of North Minneapolis February 20, 1992 Inc., Dakota, Inc., Fargo, North Dakota Fargo, North Dakota First Autauga Bancshares, Inc., Cee Bee Corporation, Atlanta February 12, 1992 Montgomery, Alabama Prattville, Alabama Galatia Bancorp, Inc., The First National Bank St. Louis February 7, 1992 Galatia, Illinois of Metropolis, Metropolis, Illinois Investors Banking Corporation, Colonial Banking San Francisco February 13, 1992 Portland, Oregon Company, Grants Pass, Oregon KLT Bancshares, Inc., Farley Bancshares, Inc., Kansas City February 12, 1992 Farley, Missouri Farley, Missouri Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

310 Federal Reserve Bulletin • April 1992 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date Mahoning National Bancorp, The Mahoning National Cleveland February 6, 1992 Inc., Bank of Youngstown, Youngstown, Ohio Youngstown, Ohio Mason-Dixon Bancshares, Inc., Carroll County Bank and Richmond February 6, 1992 Westminster, Maryland Trust Company, Westminster, Maryland Ohio County Community The Hartford Bank and St. Louis February 18, 1992 Bancshares, Inc., Trust Company, Hartford, Kentucky Hartford, Kentucky United Nebraska Financial Citizens Bank & Trust Kansas City February 7, 1992 Company, Company, Grand Island, Nebraska Columbus, Nebraska Wilton Holding Company, First State Bank of Minneapolis February 5, 1992 Wilton, North Dakota Wilton, Wilton, North Dakota Section 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date Banc One Corporation, Diamond Mortgage Cleveland February 7, 1992 Columbus, Ohio Corporation, Banc One Mortgage Corporation, Findlay, Ohio Indianapolis, Indiana First Community Bancshares, Bancshares of Knob Kansas City February 20, 1992 Inc., Noster, Inc., Knob Noster, Missouri Knob Noster, Missouri Ionia Bancshares, Inc., Windsor, Missouri Sweet Springs Bancshares, Inc., Sweet Springs, Missouri First Union Corporation, M&M Financial, Inc., Richmond February 7, 1992 Charlotte, North Carolina Austell, Georgia National City Corporation, B & L Consultants, Inc., Cleveland February 14, 1992 Cleveland, Ohio Norwood, Massachusetts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 311 Sections 3 and 4 Reserve Effective Applicant(s) Bank(s) Bank Date Johnson Holdings, Inc., First State Bank of Isanti, Minneapolis February 14, 1992 Isanti, Minnesota Isanti, Minnesota Isanti Agency, Inc., Isanti, Minnesota Mahaska Investment Company Mahaska Investment Chicago February 5, 1992 ESOP, Company, Oskaloosa, Iowa Oskaloosa, Iowa APPLICATIONS APPROVED UNDER BANK MERGER 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. .. r» w x Reserve Effective A Apphcant(s) Bank(s) ank Date B Chemical Bank, Anchor Savings Bank, New York February 5, 1992 New York, New York F.S.B., Hewlett, New York PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits Greenberg v. Board of Governors, No. 91-4200 (2d against the Federal Reserve Banks in which the Board Cir., filed December 4, 1991). Petition for review of of Governors is not named a party. orders of prohibition issued by the Board on October 28, 1991. Oral argument is scheduled for the week of April 13, 1992. Davis v. Board of Governors, No. 91-6972 (Supreme Court, filed December 4, 1991). Petition for certio- First Interstate BancSystem of Montana, Inc. v. Board of rari seeking review of Burke v. Board of Governors, Governors, No. 91-1525 (D.C. Cir., filed November 1, 940 F.2d 1360 (10th Cir. 1991), in which the court of 1991). Petition for review of Board's order denying on appeals upheld Board orders assessing civil money Community Reinvestment Act grounds the petitioner's penalties and issuing orders of prohibition. application under section 3 of the Bank Holding Com- In re Subpoena Served on the Board of Governors, pany Act to merge with Commerce BancShares of Nos. 91-5427, 91-5428 (D.C. Cir., filed December Wyoming, Inc. The case is pending. 27, 1991). Appeal of order of district court, dated Board of Governors v. Kemal Shoaib, No. CV 91-5152 December 3, 1991, requiring the Board and the (C.D. California, filed September 24, 1991). Action Office of the Comptroller of the Currency to produce to freeze assets of individual pending administrative confidential examination material to a private liti- adjudication of civil money penalty assessment by gant. The court of appeals stayed the district court the Board. On October 15, the court issued a preorder on January 7, 1992, and will hear oral argu- liminary injunction restraining the transfer or dispoment on the case on March 17, 1992. sition of the individual's assets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

312 Federal Reserve Bulletin • April 1992 Board of Governors v. Ghaith R. Pharaon, No. 91- Citicorp v. Board of Governors, No. 90-4124 (2d CIV-6250 (S.D. New York, filed September 17, Circuit, filed October 4, 1990). Petition for review of 1991). Action to freeze assets of individual pending Board order requiring Citicorp to terminate certain administrative adjudication of civil money penalty insurance activities conducted pursuant to Delaware assessment by the Board. On September 17, the law by an indirect nonbank subsidiary. On June 10, court issued an order temporarily restraining the 1991, the court of appeals granted the petition and transfer or disposition of the individual's assets. vacated the Board's order. On January 13, 1992, the In re Smouha, No. 91-B-13569 (Bkr. S.D. New York, Supreme Court denied the petition for certiorari filed August 2, 1991). Ancillary proceeding under filed by the Independent Insurance Agents of Amerthe U.S. Bankruptcy Code brought by provisional ica and others. liquidators of BCCI Holdings (Luxembourg) S.A. Synovus Financial Corp. v. Board of Governors, No. and affiliated companies. On August 15, 1991, the 89-1394 (D.C.Circuit, filed June 21, 1989). Petition bankruptcy court issued a temporary restraining for review of Board order permitting relocation of a order staying certain judicial and administrative bank holding company's national bank subsidiary actions, which has been continued by consent. from Alabama to Georgia. On December 20, 1991, Hanson v. Greenspan, No. 91-1599 (D.D.C., filed the Court of Appeals vacated the Board's order, June 28, 1991). Suit for return of funds and financial ruling that the Board has no authority over interstate instruments allegedly owned by plaintiffs. The relocations of national banks. Synovus's petition for Board's motion to dismiss was granted on Decemrehearing is pending. ber 6, 1991. Fields v. Board of Governors, No. 3:91CV069 (N.D. MCorp v. Board of Governors, No. CA3-88-2693 Ohio, filed February 5, 1991). Appeal of denial of (N.D. Texas, filed October 10, 1988). Application request for information under the Freedom of Infor- for injunction to set aside temporary cease and mation Act. desist orders. The case is pending. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1 Financial and Business Statistics CONTENTS WEEKLY REPORTING COMMERCIAL BANKS A3 Guide to Tabular Presentation Assets and liabilities A20 All reporting banks A22 Branches and agencies of foreign banks Domestic Financial Statistics MONEY STOCK AND BANK CREDIT FINANCIAL MARKETS A4 Reserves, money stock, liquid assets, and debt A23 Commercial paper and bankers dollar measures acceptances outstanding A5 Reserves of depository institutions, Reserve Bank A23 Prime rate charged by banks on short-term credit business loans A6 Reserves and borrowings—Depository A24 Interest rates—money and capital markets institutions A25 Stock market—Selected statistics A7 Selected borrowings in immediately available A26 Selected financial institutions—Selected assets funds—Large member banks and liabilities POLICY INSTRUMENTS FEDERAL FINANCE A8 Federal Reserve Bank interest rates A26 Federal fiscal and financing operations A9 Reserve requirements of depository institutions A27 U.S. budget receipts and outlays A10 Federal Reserve open market transactions A28 Federal debt subject to statutory limitation A28 Gross public debt of U.S. Treasury—Types and ownership FEDERAL RESERVE BANKS A29 U.S. government securities dealers—Transactions All Condition and Federal Reserve note statements A30 U.S. government securities dealers—Positions A12 Maturity distribution of loan and security and financing holdings A31 Federal and federally sponsored credit agencies—Debt outstanding MONETARY AND CREDIT AGGREGATES A13 Aggregate reserves of depository institutions SECURITIES MARKETS AND and monetary base CORPORATE FINANCE A14 Money stock, liquid assets, and debt measures A16 Bank debits and deposit turnover A32 New security issues—State and local A17 Loans and securities—All commercial banks governments and corporations A3 3 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 A18 Major nondeposit funds plant and equipment A19 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 • April 1992 Domestic Financial Statistics—Continued A54 U.S. reserve assets A54 Foreign official assets held at Federal Reserve Banks REAL ESTATE A55 Foreign branches of U.S. banks—Balance A35 Mortgage markets sheet data A36 Mortgage debt outstanding A57 Selected U.S. liabilities to foreign official institutions CONSUMER INSTALLMENT CREDIT REPORTED BY BANKS A37 Total outstanding and net change IN THE UNITED STATES A3 8 Terms A57 Liabilities to and claims on foreigners A58 Liabilities to foreigners FLOW OF FUNDS A60 Banks' own claims on foreigners A61 Banks' own and domestic customers' claims on A39 Funds raised in U.S. credit markets foreigners A41 Direct and indirect sources of funds to credit A61 Banks' own claims on unaffiliated foreigners markets A62 Claims on foreign countries—Combined A42 Summary of credit market debt outstanding domestic offices and foreign branches A43 Summary of credit market claims, by holder REPORTED BY NONBANKING BUSINESS Domestic Nonfinancial Statistics ENTERPRISES IN THE UNITED STATES SELECTED MEASURES A63 Liabilities to unaffiliated foreigners A64 Claims on unaffiliated foreigners A44 Nonfinancial business activity—Selected measures A45 Labor force, employment, and unemployment SECURITIES HOLDINGS AND TRANSACTIONS A46 Output, capacity, and capacity utilization A47 Industrial production—Indexes and gross value A65 Foreign transactions in securities A49 Housing and construction A66 Marketable U.S. Treasury bonds and A50 Consumer and producer prices notes—Foreign transactions A51 Gross domestic product and income A52 Personal income and saving INTEREST AND EXCHANGE RATES International Statistics A67 Discount rates of foreign central banks A67 Foreign short-term interest rates SUMMARY STATISTICS A68 Foreign exchange rates A69 Guide to Statistical Releases and A53 U.S. international transactions—Summary Special Tables A54 U.S. foreign trade Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

3 Guide to Tabular Presentation SYMBOLS AND ABBREVIATIONS c Corrected GNP Gross national product e Estimated HUD Department of Housing and Urban P Preliminary Development r Revised (Notation appears on column heading IMF International Monetary Fund when about half of the figures in that column IO Interest only are changed.) IPCs Individuals, partnerships, and corporations * Amounts insignificant in terms of the last decimal IRA Individual retirement account place shown in the table (for example, less than MMDA Money market deposit account 500,000 when the smallest unit given is millions) n.a. Not available 0 Calculated to be zero n.e.c. Not elsewhere classified Cell not applicable NOW Negotiable order of withdrawal ATS Automatic transfer service OCD Other checkable deposit CD Certificate of deposit OPEC Organization of Petroleum Exporting Countries CMO Collateralized mortgage obligation OTS Office of Thrift Supervision FFB Federal Financing Bank PO Principal only FHA Federal Housing Administration REIT Real estate investment trust FHLBB Federal Home Loan Bank Board REMIC Real estate mortgage investment conduit FHLMC Federal Home Loan Mortgage Corporation RP Repurchase agreement FmHA Farmers Home Administration RTC Resolution Trust Corporation FNMA Federal National Mortgage Association SAIF Savings Association Insurance Fund FSLIC Federal Savings and Loan Insurance Corporation SCO Securitized credit obligation G-7 Group of Seven SDR Special drawing right G-10 Group of Ten SMSA Standard metropolitan statistical area GNMA Government National Mortgage Association VA Veterans Administration GENERAL INFORMATION In some of the tables, details do not add to totals because of include not fully guaranteed issues) as well as direct obligarounding. tions of the Treasury. "State and local government" also in- Minus signs are used to indicate (1) a decrease, (2) a negative cludes municipalities, special districts, and other political figure, or (3) an outflow. subdivisions. "U.S. government securities" may include guaranteed issues of U.S. government agencies (the flow of funds figures also Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Nonfinancial Statistics • April 1992 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 1991r 1991r 1992 MMoonneettaarryy aanndd ccrreeddiitt aaggggrreeggaattee Q1 Q2 Q3 Q4 Sept. Oct. Nov. Dec. Jan. Reserves of depository institutions2 1 Total 9.1 3.0 7.4 15.3 6.2 15.7 20.3 24.1 13.7 2 Required 4.5 8.9 7.9 15.5 10.1 12.3 25.3 22.5 13.4 3 Nonborrowed 8.9 3.4 4.3 19.3 9.1 25.0 24.0 22.2 12.9 4 Monetary base3 13.3 4.2 6.6 8.4 6.9 9.2 8.2 7.8 9.1 Concepts of money, liquid assets, and debt4 5 Ml 5.2 7.4 7.5 11.1 7.6 12.2 14.3 9.0 16.7 6 M2 3.5 4.3 1.1 3.3 1.6 4.3 4.9 2.7 3.5 7 M3 3.3 1.8 -1.2 1.2 -.8 2.1 2.6 1.2 1.6 8 L 2.8 -1.8 1.1 .5 -1.8 2.0 2.5 -2.2 n.a. 9 Debt 4.5 4.0 4.9 5.2 5.2 5.6 5.5 3.7 n.a. Nontransaction components 10 In M2 2.9 3.3 -1.0 .7 -.4 1.5 1.7 .5 -1.2 11 In M3 only6 2.8 -8.9 -11.0 -8.2 -11.9 -7.7 -8.3 -5.9 -7.4 Time and savings deposits Commercial banks 12 Savings, including MMDAs 8.1 13.1 13.3 16.2 12.4 17.2 18.0 17.4 20.0 13 Small time 9.4 .4 3.3 -4.8 -.6 -1.2 -15.0 -15.6 -21.9 14 Large time • 6.5 -1.9 -10.4 -20.5 -17.1 -33.5 -18.2 -10.4 -27.1 Thrift institutions 15 Savings, including MMDAs -.4 16.7 9.8 10.3 6.3 12.1 13.0 14.1 24.5 16 Small time -10.8 -14.1 -24.2 -21.3 -19.2 -23.7 -18.7 -19.0 -23.9 17 Large time8, -32.4 -34.9 -40.4 -37.4 -40.9 -42.4 -31.6 -28.2 -24.5 Money market mutual funds 18 General purpose and broker-dealer 16.9 7.6 -3.6 -3.2 -5.3 -.7 -1.0 .3 -2.7 19 Institution-only 43.0 28.8 11.4 37.2 30.3 41.3 38.5 38.0 22.1 Debt components4 20 10.4 6.8 13.8 12.4 12.4 13.6 11.2 7.6 n.a. 21 Nonfederal 2.7 3.1 2.1 3.0 2.8 3.1 3.6 2.5 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 all 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) savings and small deposits. time deposits (time deposits—including retail repurchase agreements (RPs)—in 6. Sum of (1) large time deposits, (2) term RPs, (3) term Eurodollars of U.S. amounts of less than $100,000), and (3) balances in both taxable and tax-exempt residents, and (4) money market fund balances (institution-only), less (5) a general-purpose and broker-dealer money market funds. Excludes individual consolidation adjustment that represents the estimated amount of overnight RPs retirement accounts (IRAs) and Keogh balances at depository institutions and and Eurodollars held by institution-only money market funds. This sum is money market funds. Also excludes all balances held by U.S. commercial banks, seasonally adjusted as a whole. money market funds (general purpose and broker-dealer), foreign governments 7. Small time deposits—including retail RPs—are those issued in amounts of and commercial banks, and the U.S. government. Seasonally adjusted M2 is less than $100,000. All IRA and Keogh account balances at commercial banks and computed by adjusting its non-Mi component as a whole and then adding this thrift institutions are subtracted from small time deposits. 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

Money Stock and Bank Credit A5 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT 1 Millions of dollars Monthly averages of Weekly averages of daily figures for week ending daily figures 1992 1991 Nov. Dec. Jan. Dec. 18 Dec. 25 Jan. 1 Jan. 8 Jan. 15 Jan. 22 Jan. 29 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 300,929 312,013 307,590 306,457 314,947 320,626 312,035 307,108 306,410 U.S. government securities 2 Bought outright-system account 261,764 266,743 264,753 266,780 266,439 265,519 266,736 265,888 264,615 3 Held under repurchase agreements ... 1,004 4,993 1,489 0 7,754 13,842 3,335 0 562 Federal agency obligations 4 Bought outright 6,130 6,081 6,005 6,090 6,090 6,045 6,045 6,015 6,001 5 Held under repurchase agreements ... 15 144 32 0 273 419 33 0 12 6 Acceptances 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 18 84 279 12 137 141 857 47 199 8 Seasonal credit 86 39 16 42 39 27 16 10 15 9 Extended credit 1 1 1 1 1 1 0 0 0 10 Float 635 845 797 765 730 666 935 971 808 11 Other Federal Reserve assets 31,276 33,084 34,219 32,767 33,483 33,965 34,078 34,176 34,199 12 Gold stock 11,059 11,058 11,058 11,058 11,058 11,058 11,058 11,058 11.058 13 Special drawing rights certificate account . 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 14 Treasury currency outstanding 20,965 21,001 21,039 21,000 21,008 21,017 21,031 21,045 21.059 ABSORBING RESERVE FUNDS 15 Currency in circulation 299,098 304,649 303,218 303,668 305,668 307,623 306,786 303,847 301,959 16 Treasury cash holdings 633 632 666 630 632 633 637 674 677 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5,731 7,816 7,180 5,838 9,723 13,005 6,147 5,455 6,072 18 Foreign 209 284 369 217 295 520 453 389 291 19 Service-related balances and adjustments 3,456 4,140 4,332 4,372 4,249 4,109 4,124 4,204 4,321 20 Other 220 268 262 223 214 654 183 238 216 21 Other Federal Reserve liabilities and capital 8,580 9,204 8,440 8,709 8,849 8,593 8,277 8,592 8,538 22 Reserve balances with Federal Reserve Banks 24,785 27,098 25,238 24,875 27,403 27,582 27,535 25,831 26,471 End-of-month figures Wednesday figures 1991 1992 1991 1992 Nov. Dec. Jan. Dec. 18 Dec. 25 Jan. Jan. 8 Jan. 22 Jan. 29 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 304,408 323,906 306,533 308,118 317,319 324,100 313,432 306,589 312,057 U.S. government securities2 2 Bought outright-system account 265,212 266,486 262,619 268,084 265,932 266,486 266,189 264,909 265,146 3 Held under repurchase agreements ... 0 15,345 3,529 0 10,002 15,345 0 0 3,932 Federal agency obligations 4 Bought outright 6,090 6,045 5,960 6,090 6,090 6,045 6,045 6,011 5,976 5 Held under repurchase agreements ... 0 553 135 0 400 553 0 0 83 6 Acceptances 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 59 194 14 153 194 5,459 174 1,142 8 Seasonal credit 45 23 21 45 28 23 14 10 17 9 Extended credit 1 1 3 2 1 1 0 0 0 10 Float 660 731 198 1,144 975 997 1,071 1,508 1,140 11 Other Federal Reserve assets 32,341 34,529 33,980 32,740 33,738 34,456 34,655 33,977 34,622 12 Gold stock 11,058 11,059 11,058 11,058 11,058 11,059 11,058 11,058 11.058 13 Special drawing rights certificate account . 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 14 Treasury currency outstanding 20,996 21,017 21,060 21,000 21,008 21,017 21,031 21,045 21.059 ABSORBING RESERVE FUNDS 15 Currency in circulation 301,830 307,759 299,879 304,446 306,619 307,759 305,587 302,964 301,709 16 Treasury cash holdings 636 636 684 631 634 636 673 677 677 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 6,317 17,697 10,828 7,494 9,834 17,697 6,262 5,002 9,163 18 Foreign 346 968 321 235 268 968 224 406 307 19 Service-related balances and adjustments 4,033 4,118 4,560 4,372 4,249 4,109 ,124 4,204 4,321 20 Other 221 1,706 251 219 200 1,706 144 207 201 21 Other Federal Reserve liabilities and capital 10,156 8,113 7,629 8,391 8,961 8,113 8,427 8,248 8,383 22 Reserve balances with Federal Reserve Banks 22,942 25,004 24,516 24,405 28,639 25,207 30,097 27,002 29,432 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

A6 Domestic Nonfinancial Statistics • April 1992 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages RReesseerrvvee ccllaassssiiffiiccaattiioonn 1989 1990 1991 1991 1992 Dec. Dec. Dec. July Aug. Sept. Oct. Nov. Dec. Jan. 1 Reserve balances with Reserve Banks 35,436 30,237 26,659r 23,271 22,810 23,447 23,197 25,004 26,659" 25,416 2 Total vault cash' 29,828r 31,786r 32,513 31,317r 31,779 31,536r 32,299* 31,714r 32,513 34,136 3 Applied vault cash 27,374 28,884 28,872 27,389 27,798 27,680 28,386 28,053 28,872 30,397 4 Surplus vault cash 2,454r 2,903r 3,641 3,928r 3,981 3,856r 3,913r 3,661r 3,641 3,739 5 Total reserves6 62,810 59,120 55,532 50,660 50,607 51,127 51,584 53,057 55,532 55,813 6 Required reserves 61,887 57,456 54,553r 49,754 49,521 50,198 50,501 52,165 54,553r 54,809 7 Excess reserve balances at Reserve Banks7 ... 923 1,664 979r 906 1,086 929 1,083 892 9791 1,004 8 Total borrowings at Reserve Banks8 265 326 192 607 764 645 261 108 192 233 9 Seasonal borrowings 84 76 38 317 331 287 211 86 38 17 10 Extended credit 20 23 1 46 300 302 12 1 1 1 Biweekly averages of daily figures for weeks ending 1992 Oct. 16 Oct. 30 Nov. 13 Dec. 25 Jan. 8r Jan. 22 Feb. 5 1 Reserve balances with Reserve Banks 23,418 22,980 25,494 24,155 26,839 26,133 27,557 26,147 22,375 2 Total vault cash3 32,330r 32,376r 30,844r 32,656r 31,093 33,284 33,318 33,157 36,386 3 Applied vault cash 28,506 28,377 27,326 28,825 27,607 29,554 29,601 29,732 32,139 4 Surplus vault cash5 3,824r 3,999r 3,518r 3,832r 3,486 3,730 3,717 3,425 4,248 5 Total reserves6 51,924 51,357 52,820 52,979 54,446 55,687 57,158 55,879 54,514 6 Required reserves 50,908 50,191 51,907 52,045 53,842 54,484 56,020 54,966 53,487 7 Excess reserve balances at Reserve Banks ... 1,016 1,167 913 934 605 1,203 1,138 913 1,027 8 Total borrowings at Reserve Banks8 290 225 114 103 110 116 521 136 130 9 Seasonal borrowings 228 191 98 84 45 41 22 13 20 10 Extended credit 7 14 2 2 1 1 1 0 2 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

Money Stock and Bank Credit A7 1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Banks1 Millions of dollars, averages of daily figures 1991, week ending Monday SSoouurrccee aanndd mmaattuurriittyy Sept. 30 Oct. 7 Oct. 14 Oct. 21 Oct. 28 Nov. 4 Nov. 11 Nov. 18 Nov. 25 Federal funds purchased, repurchase agreements, and other selected borrowings From commercial banks in the United States 1 For one day or under continuing contract 77,654 83,101 80,744 81,028 75,541 83,958 81,717 84,312 75,936 2 For all other maturities 15,270 14,569 15,267 14,915 15,471 15,872 17,536 17,012 16,947 From other depository institutions, foreign banks and official institutions, and U.S. government agencies 3 For one day or under continuing contract 22,030 22,966 23,064 23,249 20,383 23,901 20,765 22,199 22,555 4 For all other maturities 20,396 20,656 21,336 20,191 19,280 19,582 20,136 21,513 21,466 Repurchase agreements on U.S. government and federal agency securities Brokers and nonbank dealers in securities 5 For one day or under continuing contract 9,336 10,461 11,663 12,207 11,351 12,629 11,676 13,553 12,668 6 For all other maturities 16,165 15,961 16,349 16,663 17,566 17,475 16,688 15,085 15,264 All other customers 7 For one day or under continuing contract 25,459 25,618 25,484 24,372 24,265 25,174 23,862 24,154 24,608 8 For all other maturities 11,520 11,028 11,554 11,231 11,824 11,634 11,329 10,991 11,232 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 47,539 47,607 42,467 46,359 40,334 49,190 46,558 49,708 40,723 10 To all other specified customers 18,343 19,356 17,774 16,985 16,747 21,939 19,883 20,659 19,686 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

A8 Domestic Nonfinancial Statistics • April 1992 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit2 Extended credit3 FFeeddeerraall RReesseerrvvee BBaannkk 2/2 O 8 n /9 2 Effective date Previous rate 2/2 O 8 n /9 2 Effective date Previous rate 2/2 O 8 n /9 2 Effective date Previous rate Boston 3.5 12/20/91 4.5 4.05 2/20/92 4.10 4.55 2/20/92 4.60 New York 12/20/91 2/20/92 2/20/92 Philadelphia 12/20/91 2/20/92 2/20/92 Cleveland 12/20/91 2/20/92 2/20/92 Richmond 12/20/91 2/20/92 2/20/92 Atlanta 12/20/91 2/20/92 2/20/92 Chicago 12/20/91 2/20/92 2/20/92 St. Louis 12/24/91 2/20/92 2/20/92 Minneapolis 12/23/91 2/20/92 2/20/92 Kansas City, 12/20/91 2/20/92 2/20/92 Dallas 12/20/91 2/20/92 2/20/92 San Francisco ... 3.5 12/20/91 4.5 4.05 2/20/92 4.10 4.55 2/20/92 4.60 Range of rates for adjustment credit in recent years4 Range (or F.R. Range(or F.R. Range (or F.R. Effective date A le l v l e F l) . — R. B o an f k Effective A le l v l e F l) . — R. B o an f k Effective date A le l v l e F l) . — R. B o an f k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1977. 6 6 1981-—May 5 13-14 14 1986—Mar. 7 7-7.5 7 14 14 10 7 7 1978—Jan. 9 6-6.5 6.5 Nov. 7 13-14 13 Apr. 21 6.5-7 6.5 20 6.5 6.5 6 13 13 July 11 6 6 May 11 6.5-7 7 Dec. 4 12 12 Aug. 21 5.5-6 5.5 12 7 7 22 5.5 5.5 July 3 7-7.25 7.25 1982---JJuullyy 70 11.5-12 11.5 10 7.25 7.25 73 11.5 11.5 1987—Sept. 4 5.5-6 6 Aug. 21 7.75 7.75 Aug. 7 11-11.5 11 11 6 6 Sept. 22 8 8 3 11 11 Oct. 16 8-8.5 8.5 16 10.5 10.5 1988—Aug. 9 6-6.5 6.5 20 8.5 8.5 77 10-10.5 10 11 6.5 6.5 Nov. 1 8.5-9.5 9.5 30 10 10 3 9.5 9.5 Oct. 17 9.5-10 9.5 1989—Feb. 24 6.5-7 7 13 9.5 9.5 27 7 7 1979—July 20 10 10 Nov. 77 9-9.5 9 Aug. 17 10-10.5 10.5 76 9 9 1990—Dec. 19 6.5 6.5 20 10.5 10.5 Dec. 14 8.5-9 9 Sept. 19 10.5-11 11 15 8.5-9 8.5 1991—Feb. 1 6-6.5 6 21 11 11 17 8.5 8.5 4 6 6 Oct. 8 11-12 12 Apr. 30 5.5-6 5.5 10 12 12 1984-——AApprr.. 9 8.5-9 9 May 2 5.5 5.5 n 9 9 Sept. 13 5-5.5 5 1980—Feb. 15 12-13 13 Nov. 71 8.5-9 8.5 Sept. 17 5 5 19 13 13 76 8.5 8.5 Nov. 6 4.5-5 4.5 May 29 12-13 13 Dec. 74 8 8 7 4.5 4.5 30 12 12 Dec. 20 3.5-4.5 3.5 June 13 11-12 11 1985-——MMaayy 70 7.5-8 7.5 24 3.5 3.5 16 11 11 74 7.5 7.5 29 10 10 In effect Feb. 28, 1992 3.5 3.5 July 28 10-11 10 Sept. 26 11 11 Nov. 17 12 12 Dec. 5 12-13 13 1. Adjustment credit is available on a short-term basis to help depository ordinarily is charged on extended-credit loans outstanding less than thirty days; institutions meet temporary needs for funds that cannot be met through reason- however, at the discretion of the Federal Reserve Bank, this time period may be able alternative sources. The highest rate established for loans to depository shortened. Beyond this initial period, a flexible rate somewhat above rates on institutions may be charged on adjustment-credit loans of unusual size that result market sources of funds is charged. The rate ordinarily is reestablished on the first from a major operating problem at the borrower's facility. business day of each two-week reserve maintenance period, but it is never less 2. Seasonal credit is available to help relatively small depository institutions than the discount rate applicable to adjustment credit plus 50 basis points. meet regular seasonal needs for funds that arise from a clear pattern of intra- 4. For earlier data, see the following publications of the Board of Governors: yearly movements in their deposits and loans and that cannot be met through Banking and Monetary Statistics, 1914-1941, and 1941-1970; and the Annual special industry lenders. The discount rate on seasonal credit takes into account Statistical Digest, 1970-1979. rates on market sources of funds and ordinarily is reestablished on the first In 1980 and 1981, the Federal Reserve applied a surcharge to short-term business day of each two-week reserve maintenance period; however, it is never adjustment-credit borrowings by institutions with deposits of $500 million or more less than the discount rate applicable to adjustment credit. that had borrowed in successive weeks or in more than four weeks in a calendar 3. Extended credit may be made available to depository institutions when quarter. A 3 percent surcharge was in effect from Mar. 17, 1980, through May 7, similar assistance is not reasonably available from other sources, including special 1980. A surcharge of 2 percent was reimposed on Nov. 17, 1980; the surcharge industry lenders. Such credit may be provided when exceptional circumstances was subsequently raised to 3 percent on Dec. 5, 1980, and to 4 percent on May 5, (including sustained deposit drains, impaired access to money market funds, or 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, and to 2 sudden deterioration in loan repayment performance) or practices involve only a percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the particular institution, or to meet the needs of institutions experiencing difficulties surcharge was changed from a calendar quarter to a moving thirteen week period. adjusting to changing market conditions over a longer period (particularly at times The surcharge was eliminated on Nov. 17, 1981. of deposit disintermediation). The discount rate applicable to adjustment credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A9 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Requirements TTyyppee ooff ddeeppoossiitt22 Percent of Effective date deposits Net transaction accounts3 1 $0 million-$42.2 million 33333 1111122222/////1111177777/////9999911111 2 More than $42.2 million 1111122222 1111122222/////1111177777/////9999911111 00000 1111122222/////2222277777/////9999900000 00000 1111122222/////2222277777/////9999900000 1. Required reserves must be held in the form of deposits with Federal Reserve However, money market deposit accounts (MMDAs) and similar accounts subject Banks or vault cash. Nonmember institutions may maintain reserve balances with to the rules that permit no more than six preauthorized, automatic, or other a Federal Reserve Bank indirectly on a pass-through basis with certain approved transfers per month, of which no more than three may be checks, are not institutions. For previous reserve requirements, see earlier editions of the Annual transaction accounts (such accounts are savings deposits). Report or the Federal Reserve Bulletin. Under provisions of the Monetary The Monetary Control Act of 1980 requires that the amount of transaction Control Act, depository institutions include commercial banks, mutual savings accounts against which the 3 percent reserve requirement applies be modified banks, savings and loan associations, credit unions, agencies and branches of annually by 80 percent of the percentage change in transaction accounts held by foreign banks, and Edge corporations. all depository institutions, determined as of June 30 each year. Effective Dec. 17, 2. The Garn-St Germain Depository Institutions Act of 1982 (Public Law 1991, for institutions reporting quarterly, and Dec. 24, 1991, for institutions 97-320) requires that $2 million of reservable liabilities of each depository reporting weekly, the amount was increased from $41.1 million to $42.2 million. institution be subject to a zero percent reserve requirement. The Board is to adjust 4. For institutions that report weekly, the reserve requirement on nonpersonal the amount of reservable liabilities subject to this zero percent reserve require- time deposits with an original maturity of less than 1 Vi years was reduced from 3 ment each year for the succeeding calendar year by 80 percent of the percentage percent to IV2 percent for the maintenance period that began Dec. 13, 1990, and increase in the total reservable liabilities of all depository institutions, measured to zero for the maintenance period that began Dec. 27, 1990. The reserve on an annual basis as of June 30. No corresponding adjustment is to be made in requirement on nonpersonal time deposits with an original maturity of IVi years the event of a decrease. On Dec. 17, 1991, the exemption was raised from $3.4 or more has been zero since Oct. 6, 1983. million to $3.6 million. The exemption applies in the following order: (1) net For institutions that report quarterly, the reserve requirement on nonpersonal negotiable order of withdrawal (NOW) accounts (NOW accounts less allowable time deposits with an original maturity of less than 1 Vi years was reduced from 3 deductions); and (2) net other transaction accounts. The exemption applies only to percent to zero on Jan. 17, 1991. accounts that 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 W2 years (see note 4). three per month for the purpose of making payments to third persons or others. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Nonfinancial Statistics • April 1992 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 1991 TTyyppee ooff ttrraannssaaccttiioonn 11998899 11999900 11999911 June July Aug. Sept. Oct. Nov. Dec. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 14,284 24,739 20,158 37 1,359 5,776 529 2,198 2,823r 837 2 Gross sales 12,818 7,291 120 0 0 0 0 0 0 0 3 Exchanges 231,211 241,086 277,314 19,680 25,ISO1 28,009 19,508 25,409 24,141 21,967 4 Redemptions 12,730 4,400 1,000 0 0 0 0 0 0 0 Others within one year 5 Gross purchases 327 425 3,043 0 625 340 200 0 178 0 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shifts 28,848 25,638 24,454 0 1,478 3,425 1,131 2,002 1,655 1,570 8 Exchanges -25,783 -27,424 -28,090 0 -3,136 -2,443 -2,202 -2,034 -2,585 -3,562 9 Redemptions 500 0 1,000 0 0 0 0 0 0 0 One to five years 10 Gross purchases 1,436 250 6,583 0 0 0 650 0 2,133 300 11 Gross sales 490 200 0 0 0 0 0 0 0 0 12 Maturity shifts -25,534 -21,770 -21,211 0 -1,192 -3,425 -1,131 -1,877 -1,492 -1,570 13 Exchanges 23,250 25,410 24,594 0 2,601 1,993 2,202 1,686 2,135 3,562 Five to ten years 14 Gross purchases 287 0 1,280 0 0 0 0 0 880 0 13 Gross sales 29 100 0 0 0 0 0 0 0 0 16 Maturity shifts -2,231 -2,186 -2,037 0 -286 688 0 -126 -163 0 17 Exchanges 1,934 789 2,894 0 534 300 0 347 300 0 More than ten years 18 Gross purchases 284 0 375 0 0 0 0 0 375 0 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shifts -1,086 -1,681 -1,209 0 0 -688 0 0 0 0 21 Exchanges 600 1,226 600 0 0 150 0 0 150 0 All maturities 22 Gross purchases 16,617 25,414 31,439 37 1,984 6,116 1,379 2,198 6,390* 1,137 23 Gross sales 13,337 7,591 120 0 0 0 0 0 0 0 24 Redemptions 13,230 4,400 1,000 0 0 0 0 0 0 0 Matched transactions 25 Gross sales 1,323,480 1,369,052 1,570,456 118,903 120,292 112,414 116,266 137,073 98,063 118,127 26 Gross purchases 1,326,542 1,363,434 1,571,534 118,239 121,803 110,280 118,481 135,281 97,925 118,263 Repurchase agreements2 27 Gross purchases 129,518 219,632 310,084 9,440 35,149 16,847 40,447 12,432 14,165 51,345 28 Gross sales 132,688 202,551 311,752 8,478 36,111 16,847 40,447 3,718 22,879 36,000 29 Net change in U.S. government securities -10,055 24,886 29,729 335 2,532 3,981 3,595 9,121 —2,462r 16,619 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 0 0 0 0 0 0 0 0 0 31 Gross sales 0 0 5 0 0 0 5 0 0 0 32 Redemptions 442 183 292 0 55 0 0 14 51r 45 Repurchase agreements2 33 Gross purchases 38,835 41,836 22,807 1,225 3,245 537 3,061 714 275 1,744 34 Gross sales 40,411 40,461 23,595 748 3,722 537 3,061 695 294 1,191 35 Net change in federal agency obligations -2,018 1,192 -1,085 477 -532 0 -5 5 -70* 508 36 Total net change in System Open Market Account -12,073 26,078 28,644 812 2,000 3,981 3,590 9,126 —2,532r 17,127 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

Federal Reserve Banks All 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1992 1991 1992 Jan. 1 Jan. 8 Jan. 15 Jan. 22 Jan. 29 Nov. 29 Dec. 31 Jan. 31 Consolidated condition statement ASSETS 1 Gold certificate account 11,059 11,058 11,058 11,058 11,058 11,058 11,059 11,058 2 Special drawing rights certificate account 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 3 Coin 528 522 548 574 600 557 528 614 Loans 4 To depository institutions 218 5,473 184 1,159 119 106 218 112 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 6,045 6,045 6,011 55,,997766 55,,996600 66,,009900 66,,004455 55,,996600 8 Held under repurchase agreements 553 0 0 83 0 0 553 135 9 Total U.S. Treasury securities 281,831 266,189 264,909 269,078 261,957 265,213 281,831 266,148 10 Bought outright2 266,486 266,189 264,909 265,146 261,957 265,213 266,486 262,619 11 Bills 132,635 132,338 131,058 131,295 128,106 131,661 132,635 128,767 12 Notes 101,520 101,520 101,520 101,520 101,520 101,220 101,520 101,520 13 Bonds 32,331 32,331 32,331 32,331 32,331 32,332 32,332 32,332 14 Held under repurchase agreements 15,345 0 0 3,932 0 0 15,345 3,529 15 Total loans and securities 288,647 277,706 271,104 276,295 268,036 271,407 288,647 272,354 16 Items in process of collection 7,678 6,897 6,479 10,055 5,190 4,059 8,286 5,034 17 Bank premises 987 989 989 992 991 976 987 994 Other assets 18 Denominated in foreign currencies 27,626 27,646 27,683 27,747 27,771 26,739 27,626 26,928 19 All other4 5,911 5,237 5,349 6,031 5,906 4,705 5,911 6,130 20 Total assets 352,453 340,073 333,227 342,771 329,571 329,519 353,061 333,129 LIABILITIES 21 Federal Reserve notes 287,906 285,811 283,144 281,902 280,422 282,027 287,906 280,117 22 Total deposits 49,784 40,271 36,735 44,139 36,254 34,129 49,783 40,595 23 Depository institutions 29,413 33,640 31,120 34,468 26,432 27,246 29,413 29,195 24 U.S. Treasury—General account 17,697 6,262 5,002 9,163 9,048 6,317 17,697 10,828 25 Foreign—Official accounts 968 224 406 307 554 346 968 321 26 Other 1,706 144 207 201 219 221 1,706 252 27 Deferred credit items 6,651 5,574 5,101 8,348 4,575 3,207 7,259 4,788 28 Other liabilities and accrued dividends 2,810 2,645 2,556 2,724 2,594 2,947 2,810 2,558 29 Total liabilities 347,150 334,300 327,535 337,113 323,845 322,310 347,758 328,058 CAPITAL ACCOUNTS 30 Capital paid in 2,652 2,652 2,661 2,671 2,678 2,642 2,652 2,683 31 Surplus 2,652 2,652 2,652 2,652 2,652 2,423 2,652 2,383 32 Other capital accounts 0 470 380 336 396 2,144 0 6 33 Total liabilities and capital accounts 352,453 340,073 333,227 342,771 329,571 329,519 353,061 333,129 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international accounts 251,209 252,853 251,021 257,523 258,793 254,484 251,209 266,801 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Bank) 366,468 365,559 364,580 364,205 364,259 371,067 366,468 364,621 36 LESS: Held by Federal Reserve Bank 78,562 79,749 81,437 82,303 83,837 89,040 78,562 84,504 37 Federal Reserve notes, net 287,906 285,811 283,144 281,902 280,422 282,027 287,906 280,117 Collateral held against notes, net: 38 Gold certificate account 11,059 11,058 11,058 11,058 11,058 11,058 11,059 11,058 39 Special drawing rights certificate account 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. Treasury and agency securities 266,829 264,735 262,067 260,826 259,346 260,951 266,829 259,041 42 Total collateral 287,906 285,811 283,144 281,902 280,422 282,027 287,906 280,117 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

A12 Domestic Nonfinancial Statistics • April 1992 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding 1 Millions of dollars Wednesday End of month TTTyyypppeee aaannnddd mmmaaatttuuurrriiitttyyy gggrrrooouuupppiiinnnggg 1992 1991 1992 Jan. 1 Jan. 8 Jan. 15 Jan. 22 Jan. 29 Nov. 29 Dec. 31 Jan. 31 1 Total loans 218 5,473 184 1,159 119 106 218 112 2 Within fifteen days 217 5,470 181 1,159 119 84 217 112 3 Sixteen days to ninety days 2 3 3 0 0 22 2 0 4 Ninety-one days to one year 0 0 0 0 0 0 0 0 5 Total acceptances 0 0 0 0 0 0 0 0 6 Within fifteen days 0 0 0 0 0 0 0 0 7 Sixteen days to ninety days 0 0 0 0 0 0 0 0 8 Ninety-one days to one year 0 0 0 0 0 0 0 0 9 Total U.S. Treasury securities 281,831 266,189 264,909 269,078 261,957 265,212 281,831 262,619 10 Within fifteen days2 21,109 12,037 10,551 13,708 11,678 5,174 21,109 8,864 11 Sixteen days to ninety days 66,759 62,763 65,149 64,206 60,009 69,572 66,759 64,603 12 Ninety-one days to one year 90,655 88,080 85,769 87,724 86,831 88,931 90,655 86,028 13 One year to five years 64,299 64,299 64,103 64,104 64,104 62,527 64,299 63,788 14 Five years to ten years 14,469 14,469 14,796 14,796 14,7% 14,469 14,469 14,7% 15 More than ten years 24,540 24,540 24,540 24,540 24,540 24,540 24,540 24,540 16 Total Federal agency obligations 6,597 6,045 6,011 6,059 5,960 6,090 6,597 5,960 17 Within fifteen days2 753 60 101 257 108 308 753 108 18 Sixteen days to ninety days 811 976 931 823 867 565 811 867 19 Ninety-one days to one year 1,329 1,304 1,284 1,349 1,343 1,430 1,329 1,343 20 One year to five years 2,508 2,508 2,683 2,635 2,647 2,608 2,508 2,647 21 Five years to ten years 1,007 1,008 858 841 841 990 1,008 841 22 More than ten years 188 188 154 154 154 188 188 154 1. Components may not sum to totals because of rounding. fifteen days in 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

Monetary and Credit Aggregates A13 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1991 1992 IItteemm DD 1199 ee 88 cc 88 .. DD 1199 ee 88 cc 99 .. DD 1199 ee 99 cc 00 .. DD 1199 ee 99 cc 11 .. June July Aug. Sept. Oct. Nov. Dec. Jan. Seasonally adjusted AADDJJUUSSTTEEDD FFOORR CCHHAANNGGEESS IINN RREESSEERRVVEE RREEQQUUIIRREEMMEENNTTSS22 11 TToottaall rreesseerrvveess33 47.60 47.73 49.10 53.75 50.35 50.41 50.89 51.15 51.82 52.69 53.75 54.37 22 NNoonnbboorrrroowweedd rreesseerrvveess44 ^^ 45.88 47.46 48.78 53.56 50.01 49.80 50.12 50.50 51.56 52.59 53.56 54.13 33 NNoonnbboorrrroowweedd rreesseerrvveess pplluuss eexxtteennddeedd ccrreeddiitt 47.12 47.48 48.80 53.56 50.01 49.85 50.42 50.80 51.57 52.59 53.56 54.13 44 RReeqquuiirreedd rreesseerrvveess 46.55 46.81 47.44 52.77 49.34 49.50 49.80 50.22 50.73 51.80 52.77 53.36 55 MMoonneettaarryy bbaassee66 263.77r 274.57r 300.35r 325.22r 312.47r 314.22r 316.68r 318.50r 320.93r 323.13r 325.22r 327.70 Not seasonally adjusted 6 Total reserves 49.00 49.18 50.58 55.38 50.32 50.56 50.49 50.99 51.43 52.89 55.38 55.79 7 Nonborrowed reserves 47.29 48.91 50.25 55.18 49.98 49.95 49.73 50.35 51.17 52.78 55.18 55.56 8 Nonborrowed reserves plus extended credit 48.53 48.93 50.28 55.19 49.99 50.00 50.03 50.65 51.18 52.78 55.19 55.56 9 Required reserves 47.96 48.26 48.91 54.40 49.31 49.65 49.41 50.07 50.35 51.99 54.40 54.79 10 Monetary base9 267.46 278.30 304.04 329.35r 314.00 316.14 316.68 317.28 319.14 323.06 329.35r 328.77 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS 11 Total reserves11 63.75 62.81 59.12 55.53 50.41 50.66 50.61 51.13 51.58 53.06 55.53 55.81 12 Nonborrowed reserves 62.03 62.54 58.79 55.34 50.07 50.05 49.84 50.48 51.32 52.95 55.34 55.58 13 Nonborrowed reserves plus extended credit 63.27 62.56 58.82 55.34 50.08 50.10 50.14 50.78 51.33 52.95 55.34 55.58 14 Required reserves 62.70 61.89 57.46 54.55 49.40 49.75 49.52 50.20 50.50 52.16 54.55 54.81 15 Monetary base12 283.00 292.55 313.70 333.61r 317.25 319.46 320.07 320.70 322.71 326.88 333.61r 333.11 16 Excess reserves 1.05 .92 1.66 .98 1.01 .91 1.09 .93 1.08 .89 .98 1.00 17 Borrowings from the Federal Reserve 1.72 .27 .33 .19 .34 .61 .76 .65 .26 .11 .19 .23 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 credit, the money market impact of extended credit is 12. The monetary base, not break-adjusted and not seasonally adjusted, similar to that of nonborrowed reserves. consists of (1) total reserves (line 11), plus (2) required clearing balances and 6. The seasonally adjusted, break-adjusted monetary base consists of (1) adjustments to compensate for float at Federal Reserve Banks, plus (3) the seasonally adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally currency component of the money stock, plus (4) (for all quarterly reporters on adjusted currency component of the money stock, plus (3) (for all quarterly the "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all reporters on the "Report of Transaction Accounts, Other Deposits and Vault those weekly reporters whose vault cash exceeds their required reserves) the Cash" and for all those weekly reporters whose vault cash exceeds their required difference between current vault cash and the amount applied to satisfy current reserves) the seasonally adjusted, break-adjusted difference between current vault reserve requirements. 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

A14 Domestic Nonfinancial Statistics • April 1992 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1991r 1992 1988 1989 1990 1991 IItteemm Dec.r Dec.r Dec.r Dec/ Oct. Nov. Dec. Jan Seasonally adjusted Measures1 1 Ml 786.9 794.1 826.1 898.1 880.9 891.4 898.1 910.6 2 M2 3,071.1 3,227.3 3,332.4 3,442.2 3,420.3 3,434.4 3,442.2 3,452.1 3 M3 3,923.1 4,059.8 4,114.4 4,175.1 4,161.8 4,170.8 4,175.1 44,,118800..55 4 L 4,677.9 4,891.5 4,966.7 4,991.9 4,990.7 5,001.0 4,991.9 nn..aa.. 5 Debt 9,362.5 10,113.3 10,791.0 11,292.4 11,206.5 11,257.5 11,292.4 n.a. Ml components 6 Currency 212.3 222.6 246.8 267.3 264.8 266.0 267.3 269.4 7 Travelers checks 7.5 7.4 8.3 8.2 7.9 8.0 8.2 8.3 8 Demand deposits5 286.5 279.0 277.1 289.5 283.8 287.6 289.5 293.9 9 Other checkable deposits6 280.6 285.1 293.9 333.2 324.5 329.7 333.2 339.0 Nontransaction components 10 In M2 2,284.2 2,433.2 2,506.3 2,544.1 2,539.4 2,543.0 2,544.1 2,541.6 11 In M38 852.0 832.5 782.1 732.8 741.5 736.4 732.8 728.3 Commercial banks 12 Savings deposits, including MMDAs 542.7 541.4 581.9 664.9 645.7 655.4 664.9 676.0 13 Small time deposits 447.0 531.0 599.8 598.5 614.1 606.4 598.5 587.6 14 Large time deposits10' 11 366.9 398.2 380.4 354.0 362.6 357.1 354.0 346.0 Thrift institutions 15 Savings deposits, including MMDAs 383.5 349.7 338.8 377.7 369.3 373.3 377.7 385.4 16 Small time deposits9 585.9 617.5 562.3 466.6 481.6 474.1 466.6 457.3 17 Large time deposits10 174.3 161.1 120.9 83.1 87.4 85.1 83.1 81.4 Money market mutual funds 18 General purpose and broker-dealer 241.9 316.3 348.9 361.5 361.7 361.4 361.5 360.7 19 Institution-only 91.0 107.2 133.7 179.1 168.2 173.6 179.1 182.4 Debt components 20 Federal debt 2,101.5 2,249.9 2,493.6 2,766.9 2,724.0 2,749.5 2,766.9 n.a. 21 Nonfederal debt 7,261.0 7,863.4 8,297.3 8,525.5 8,482.5 8,508.0 8,525.5 n.a. Not seasonally adjusted Measures 22 Ml 804.1 811.9 844.1 917.3 875.4 893.9 917.3 918.3 23 M2 3.083.8 3,240.0 3,345.2 3,456.1 3,415.7 3,437.6 3,456.1 3,460.1 24 M3 3,934.7 4,070.3 4,124.5 4,185.8 4,152.7 4,173.0 4,185.8 4,185.6 25 L 4,695.0 4,910.7 4,986.5 5,013.1 4,980.7 5,008.9 5,013.1 n.a. 26 Debt 9.347.9 10,098.9 10,778.2 11,280.8 11,172.7 11,232.6 11,280.8 n.a. Ml components 27 Currency 214.8 225.3 249.5 270.0 263.1 266.3 270.0 267.9 28 Travelers checks4 6.9 6.9 7.8 7.7 8.0 7.7 7.7 7.9 29 Demand deposits5 298.9 291.5 289.9 303.1 283.7 291.1 303.1 300.0 30 Other checkable deposits6 283.5 288.1 296.9 336.5 320.6 328.8 336.5 342.5 Nontransaction components 31 In M2 2,279.7 2,428.1 2,501.1 2,538.8 2,540.3 2,543.7 2,538.8 2,541.8 32 In M38 850.8 830.3 779.3 729.7 737.0 735.3 729.7 725.5 Commercial banks 33 Savings deposits, including MMDAs 543.8 543.0 580.0 662.3 644.6 655.3 662.3 672.4 34 Small time deposits 446.0 529.5 599.7 598.7 615.2 606.9 598.7 589.4 35 Large time deposits10' 11 365.9 397.1 379.4 352.8 362.8 356.9 352.8 343.6 Thrift institutions 36 Savings deposits, including MMDAs 381.1 347.6 337.7 376.3 368.7 373.2 376.3 383.3 37 Small time deposits 584.9 616.0 562.2 466.7 482.5 474.5 466.7 458.7 38 Large time deposits10 175.2 162.0 120.6 82.8 87.4 85.1 82.8 80.8 Money market mutual funds 39 General purpose and broker-dealer 240.8 314.6 346.8 359.1 359.8 360.6 359.1 360.2 40 Institution-only 91.4 107.8 134.4 180.3 163.4 172.7 180.3 188.1 Repurchase agreements and eurodollars 41 Overnight 83.2 77.5 74.7 75.6 69.5 73.3 75.6 77.8 42 Term 227.4 178.5 158.3 129.4 138.5 136.0 129.4 128.1 Debt components 43 Federal debt 2,099.0 2,247.5 2,491.3 2,765.0 2,707.6 2,740.7 2,765.0 n.a. 44 Nonfederal debt 7,249.0 7,851.4 8,286.9 8,515.9 8,465.1 8,491.9 8,515.9 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A15 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

A16 Domestic Nonfinancial Statistics • April 1992 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 BBaannkk ggrroouupp,, oorr ttyyppee ooff ccuussttoommeerr June July Aug. Sept. Oct. Nov. DEBITS TO Seasonally adjusted Demand deposits3 1 All insured banks 219,795.7 256,150.4 277,916.3 266,704.2 284,872.2 275,915.9 283,521.6 290,074.6 280,263.3 2 Major New York City banks 115,475.6 129,319.9 131,784.0 133,761.4 139,089.0 136,906.9 142,138.4 144,208.2 140,754.1 3 Other banks 104,320.2 126,830.5 146,132.3 132,942.8 145,783.2 139,009.0 141,383.2 145,866.4 139,509.2 4 ATS-NOW accounts4 2,478.1 2,910.5 3,349.6 3,460.1 3,822.8 3,659.4 3,679.1 3,759.9 3,553.7 5 Savings deposits 537.0 547.5 558.8 519.9 552.6 516.7 2,904.0 2,733.0 3,233.1 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 622.9 735.1 800.6 768.4 833.4 798.0 823.9 843.2 793.0 7 Major New York City banks 2,897.2 3,421.5 3,804.1 4,141.9 4,413.3 4,448.0 4,490.7 4,606.2 4,211.8 8 Other banks 333.3 408.3 467.7 422.3 469.8 441.4 452.5 466.4 435.9 9 ATS-NOW accounts4 13.2 15.2 16.5 15.5 16.9 15.9 15.7 15.9 14.8 10 Savings deposits 2.9 3.0 2.9 2.4 2.5 2.3 4.7 4.4 5.0 DEBITS TO Not seasonally adjusted Demand deposits3 11 All insured banks 219,790.4 256,133.2 277,400.0 270,144.7 286,068.7 289,049.5 273,967.0 298,196.7 269,949.6 12 Major New York City banks 115,460.7 129,400.1 131,784.7 133,851.7 139,527.4 146,342.8 137,659.5 149,704.6 136,592.8 13 Other banks 104,329.7 126,733.0 145,615.3 136,293.0 146,541.3 142,706.6 136,307.5 148,492.0 133,356.8 14 ATS-NOW accounts4 2,477.3 2,910.7 3,342.2 3,446.1 3,729.0 3,693.2 3,679.4 3,770.6 3,314.0 15 MMDAs6 2,342.7 2,677.1 2,923.8 2,714.5 2,868.0 2,751.7 n.a n.a n.a 16 Savings deposits 536.3 546.9 557.9 516.4 558.2 537.0 3,110.7 3,132.6 2,939.5 DEPOSIT TURNOVER Demand deposits3 17 All insured banks 622.8 735.4 799.6 781.7 831.4 849.5 796.0 864.8 757.1 18 Major New York City banks 2,896.7 3,426.2 3,810.0 4,154.4 4,334.6 4,771.4 4,305.8 4,775.5 4,059.4 19 Other banks 333.2 408.0 466.3 434.9 469.8 460.9 436.6 473.7 413.0 20 ATS-NOW accounts4 13.2 15.2 16.4 15.5 16.7 16.3 15.9 16.2 13.9 21 MMDAs6 6.6 7.9 8.0 6.8 7.2 6.8 n.a n.a n.a 22 Savings deposits 2.9 2.9 2.9 2.4 2.5 2.4 4.9 4.9 4.5 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 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

Commercial Banking Institutions A17 1.23 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars, averages of Wednesday figures 1991r 1992 IItteemm Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. Seasonally adjusted 1 Total loans and securities2 2,747.3 2,759.9 2,763.9 2,765.7 2,774.6 2,776.4 2,778.3 2,789.4 2,805.1 2,821.6 2,836.0 2,843.5 2 U.S. government securities 460.7 470.8 478.2 484.1 493.9 503.7 513.2 523.4 538.4 550.5 562.5 564.2 3 Other securities 178.3 178.5 177.5 176.9 176.2 175.3 174.0 175.8 177.1 177.6 178.5 179.0 4 Total loans and leases2 2,108.3 2,110.6 2,108.3 2,104.8 2,104.6 2,097.4 2,091.1 2,090.2 2,089.6 2,093.4 2,095.0 2,100.2 5 Commercial and industrial ..... 638.2 638.7 635.1 630.6 626.0 623.6 619.4 622.0 622.6 621.0 617.6 614.5 6 Bankers acceptances held ... 9.0 8.7 8.7 8.2 7.7 7.5 7.8 7.4 7.0 7.6 7.9 7.3 7 Other commercial and industrial 629.2 630.0 626.5 622.4 618.3 616.1 611.6 614.6 615.6 613.4 609.7 607.2 8 U.S. addressees4 623.3 623.9 620.6 616.6 612.6 610.3 605.7 608.5 608.9 606.8 602.9 601.1 9 Non-U.S. addressees4 5.9 6.1 5.8 5.9 5.7 5.7 5.9 6.1 6.7 6.6 6.8 6.1 10 Real estate 852.8 857.7 861.5 863.8 868.6 867.7 866.9 867.9 869.0 870.6 871.1 870.7 11 Individual 376.3 375.2 374.3 373.6 372.9 371.0 370.3 367.2 364.4 363.2 363.9 363.9 12 Security 51.8 48.2 48.5 49.1 49.0 47.4 48.4 50.0 51.1 53.6 54.6 59.1 13 Nonbank financial institutions 36.1 36.9 36.0 36.5 39.3 38.8 37.7 37.6 38.1 39.2 40.6 40.3 14 Agricultural 31.9 33.0 33.6 33.7 33.9 34.0 34.2 34.3 34.1 33.9 34.1 33.7 15 State and political subdivisions 32.9 32.8 32.3 31.7 31.3 30.9 30.5 30.1 29.7 29.4 29.2 28.3 16 Foreign banks 6.6 7.5 7.1 6.6 6.5 6.6 6.6 6.9 6.6 6.8 7.2 7.1 17 Foreign official institutions 2.7 2.8 2.5 2.4 2.5 2.4 2.3 2.3 2.4 2.6 2.5 2.4 18 Lease-financing receivables .... 33.0 33.1 33.1 33.0 33.2 32.4 31.7 31.7 31.5 31.3 31.4 31.3 19 All other loans 45.9 44.7 44.2 43.6 41.5 42.8 43.1 40.2 40.1 41.8 42.9 49.0 Not seasonally adjusted 20 Total loans and securities2 2,748.6 2,759.0 2,762.7 2,761.6 2,775.7 2,769.6 2,775.4 2,789.5 2,807.8 2,826.9 2,842.4 2,840.3 21 U.S. government securities 463.8 474.9 479.9 484.0 493.1 501.5 511.7 521.9 537.3 551.5 558.5 563.8 22 Other securities 178.3 178.5 177.0 176.5 176.2 174.3 174.2 175.8 177.4 177.9 178.7 179.5 23 Total loans and leases2 2,106.5 2,105.5 2,105.7 2,101.0 2,106.5 2,093.8 2,089.5 2,091.8 2,093.1 2,097.6 2,105.2 2,096.9 24 Commercial and industrial ..... 637.5 641.3 638.3 633.4 628.0 623.5 617.6 619.1 621.1 619.7 618.9 611.4 25 Bankers acceptances held3... 9.1 8.7 8.4 8.2 7.7 7.2 7.6 7.4 7.0 7.9 8.2 7.4 26 Other commercial and industrial 628.3 632.6 629.9 625.2 620.3 616.3 609.9 611.8 614.1 611.9 610.7 604.0 71 U.S. addressees4. 622.1 626.4 623.8 619.3 614.3 610.5 604.1 605.8 607.9 605.7 604.3 597.5 28 Non-U.S. addressees 6.3 6.2 6.0 5.9 6.0 5.7 5.8 6.0 6.2 6.1 6.4 6.5 ?9 Real estate 849.9 854.3 860.2 864.4 868.9 868.8 868.8 868.8 870.3 872.0 871.3 870.1 30 Individual 376.2 372.5 371.6 371.9 370.7 368.3 369.3 368.7 365.3 364.7 368.6 368.1 31 Security 55.7 49.5 49.8 46.7 49.1 46.3 47.3 48.7 50.8 53.6 55.2 58.6 32 Nonbank financial institutions 35.7 36.3 35.5 36.1 39.6 39.0 37.8 37.2 37.8 39.5 41.9 40.8 33 Agricultural 31.0 31.7 32.7 33.3 34.2 34.7 35.1 35.3 35.0 34.2 34.1 33.3 34 State and political subdivisions 33.0 32.8 32.2 31.7 31.3 30.7 30.4 30.1 29.7 29.4 29.1 28.6 35 Foreign banks 6.5 7.3 6.9 6.4 6.3 6.5 6.5 6.9 6.8 7.1 7.7 6.9 36 Foreign official institutions 2.7 2.8 2.5 2.4 2.5 2.4 2.3 2.3 2.4 2.6 2.5 2.4 37 Lease-financing receivables 33.2 33.3 33.1 33.0 32.9 32.1 31.6 31.6 31.6 31.4 31.4 31.6 38 All other loans 45.0 43.6 42.8 41.6 43.0 41.6 42.9 43.2 42.3 43.3 44.6 45.2 1. Data have been revised to reflect new seasonal adjustment factors and Components may not sum to totals because of rounding, benchmarking to Call reports. Historical data may be obtained from the Banking 2. Adjusted to exclude loans to commercial banks in the United States, and Money Market Statistics Section, Division of Monetary Affairs, Board of 3. Includes nonfinancial commercial paper held. Governors of the Federal Reserve System, Washington, DC 20551. 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

A18 Domestic Nonfinancial Statistics • April 1992 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Billions of dollars, monthly averages 1991r 1992 Source of funds Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. Seasonally adjusted 1 Total nondeposit funds2 266.7 264.8 265.7 260.8 250.2 247.9 245.4 248.7 262.8 264.0 274.5 277.3 2 Net balances due to related foreign offices3 23.8 28.5 28.7 24.6 17.8 18.4 17.8 20.8 31.7 33.9 39.8 44.1 3 Borrowings from other than commercial banks in United States4 242.9 236.4 237.1 236.2 232.4 229.5 227.6 227.9 231.0 230.0 234.7 233.2 4 Domestically chartered banks 176.2 169.6 170.4 167.2 163.9 160.2 156.0 154.7 153.2 149.2 150.9 153.0 5 Foreign-related banks 66.7 66.8 66.7 69.0 68.6 69.3 71.6 73.2 77.8 80.9 83.8 80.2 Not seasonally adjusted 6 Total nondeposit funds 267.7 268.8 263.1 266.9 251.3 244.1 242.2 246.0 264.0 268.2 273.0 273.3 7 Net balances due to related foreign offices3 24.0 28.6 27.4 27.1 17.3 15.2 15.9 19.9 31.3 34.8 43.4 44.8 8 Domestically chartered banks -15.1 -5.7 -3.3 -.3 -3.7 -7.3 -7.2 -8.8 -7.2 -4.4 -3.8 -4.8 9 Foreign-related banks 39.1 34.2 30.7 27.4 20.9 22.5 23.2 28.8 38.5 39.3 47.2 49.6 10 Borrowings from other than commercial banks in United States4 243.7 240.2 235.8 239.9 234.0 228.9 226.2 226.1 232.7 233.4 229.6 228.5 11 Domestically chartered banks 176.9 173.0 168.5 170.3 164.1 158.4 154.3 153.6 154.0 153.4 149.6 148.7 12 Federal funds and security RP borrowings5 174.1 169.7 165.7 167.6 161.2 155.2 150.6 150.2 150.9 150.2 146.5 145.3 13 Other6 2.8 3.2 2.9 2.8 2.8 3.2 3.7 3.5 3.2 3.2 3.1 3.4 14 Foreign-related banks6 66.8 67.2 67.2 69.5 69.9 70.4 71.9 72.5 78.6 80.0 80.0 79.8 MEMO Gross large time deposits1 15 Seasonally adjusted 449.3 448.8 449.5 451.0 450.0 443.8 444.6 440.9 429.5 426.1 423.9 416.0 16 Not seasonally adjusted 448.0 449.4 448.2 452.3 451.3 443.5 446.4 442.5 429.7 425.8 422.6 413.6 U.S. Treasury demand balances at commercial banks8 17 Seasonally adjusted 30.9 31.1 22.8 15.8 24.1 22.8 25.3 23.8 29.2 34.2 26.5 27.8 18 Not seasonally adjusted 39.3 28.4 20.4 19.9 23.6 20.7 17.2 26.9 28.7 28.5 25.4 33.1 1. Commercial banks are nationally and state-chartered banks in the fifty states positions with own International Banking Facilities (IBFs). and the District of Columbia, agencies and branches of foreign banks, New York 4. Borrowings through any instrument, such as a promissory note or due bill, investment companies majority owned by foreign banks, and Edge Act corpora- given for the purpose of borrowing money for the banking business. This includes tions owned by domestically chartered and foreign banks. borrowings from Federal Reserve Banks and from foreign banks, term federal Data in this table also appear in the Board's G.10 (411) release. For ordering funds, loan RPs, and sales of participations in pooled loans. address, see inside front cover. 5. Figures are based on averages of daily data reported weekly by approxi- Data have been revised to reflect new seasonal adjustment factors and bench- mately 120 large banks and quarterly or annual data reported by other banks. marking to Call reports. Historical data may be obtained from the Banking and 6. Figures are partly averages of daily data and partly averages of Wednesday Money Market Statistics Section, Division of Monetary Affairs, Board of Gover- data. nors of the Federal Reserve System, Washington, DC 20551. 7. Time deposits in denominations of $100,000 or more. Estimated averages of 2. Includes federal funds, repurchase agreements (RPs), and other borrowing daily data. from nonbanks and net balances due to related foreign offices. 8. U.S. Treasury demand deposits and Treasury tax-and-loan notes at com- 3. Reflects net positions of U.S. chartered banks, Edge act corporations, and mercial banks. Averages of daily data. U.S. branches and agencies of foreign banks with related foreign offices plus net Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions A19 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKS Last-Wednesday-of-Month Series' Billions of dollars 1991 1992 AAccccoouunntt Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. ALL COMMERCIAL BANKING INSTITUTIONS2 1 Total assets 3,385.3 3,370.8 3,413.3 3,416.8 3,443.6 3,403.4 3,433.3 3,470.1 3,508.4 3,536.0 3,496.1 ? Loans and securities 2,917.7 2,913.6 2,929.7 2,941.0 2,947.9 2,933.7 2,953.1 2,980.6 3,001.8 3,022.0 3,011.3 3 Investment securities 627.2 627.7 633.2 640.6 650.5 654.0 663.5 686.3 695.9 704.9 704.8 4 U.S. government securities 460.4 462.5 468.4 477.5 488.2 492.1 500.6 522.3 530.6 538.5 539.6 5 Other 166.8 165.1 164.8 163.1 162.3 161.9 162.9 164.0 165.2 166.4 165.2 6 Trading account assets 25.9 27.3 26.9 30.1 33.4 31.3 32.4 34.9 36.0 33.2 38.1 7 Total loans 2,264.6 2,258.6 2,269.6 2,270.3 2,264.0 2,248.4 2,257.3 2,259.4 2,270.0 2,283.9 2,268.4 8 Interbank loans 167.6 156.3 167.9 161.4 169.2 161.3 163.8 168.4 171.4 172.4 176.0 9 Loans excluding interbank 2,097.0 2,102.4 2,101.7 2,108.8 2,094.8 2,087.1 2,093.5 2,091.0 2,098.6 2,111.5 2,092.4 10 Commercial and industrial 641.3 637.3 632.0 627.6 622.2 616.5 619.0 618.5 620.3 620.4 608.7 11 Real estate 855.3 861.0 865.7 868.8 867.8 868.2 867.9 871.5 871.4 871.3 870.7 1? Individual 371.5 372.4 370.9 370.7 369.5 369.3 368.7 365.5 363.8 370.2 367.5 13 All other 229.0 231.6 233.2 241.8 235.4 233.1 237.8 235.5 243.1 249.7 245.5 14 Total cash assets 203.6 196.2 219.8 210.8 212.9 197.5 204.0 206.8 225.3 230.6 203.2 15 Reserves with Federal Reserve Banks .. 24.5 22.4 26.7 29.3 24.3 22.6 26.1 25.9 24.7 29.2 23.7 16 Cash in vault 28.8 29.1 31.1 29.8 29.7 31.0 30.2 30.7 29.6 30.7 31.1 17 Cash items in process of collection ... 76.8 74.3 87.2 78.2 88.0 71.9 75.5 75.3 90.5 87.5 72.8 18 Demand balances at U.S. depository institutions 28.0 26.2 31.0 29.1 27.3 27.6 27.2 29.3 32.8 33.3 2288..22 19 Other cash assets 45.6 44.1 43.8 44.3 43.6 44.4 44.9 45.5 47.7 49.9 47.4 20 Other assets 263.9 261.0 263.8 265.0 282.8 272.2 276.2 282.8 281.3 283.4 281.7 21 Total liabilities 3,156.7 3,142.8 3,181.9 3,185.4 3,210.3 3,167.3 3,195.6 3,235.0 3,272.9 3,299.4 3,255.8 V Total deposits 2,387.8 2,387.3 2,418.1 2,410.5 2,453.5 2,435.2 2,435.2 2,448.5 2,489.9 2,495.6 2,449.2 23 Transaction accounts 602.6 601.4 617.7 611.4 639.8 612.4 614.3 628.7 670.4 682.9 643.9 24 Savings deposits (excluding checkable) 596.2 597.6 608.7 613.4 623.1 627.4 631.3 643.0 665500..77 665566..11 666677..77 25 Time deposits 1,189.0 1,188.4 1,191.7 1,185.8 1,190.6 1,195.4 1,189.6 1,176.8 1,168.8 1,156.7 1,137.7 76 Borrowings 486.3 486.7 489.8 500.4 489.0 466.7 483.8 501.3 487.3 499.5 507.2 ?7 Other liabilities 282.5 268.8 274.0 274.5 267.7 265.4 276.6 285.1 295.6 304.3 299.3 28 Residual (assets less liabilities) 228.6 228.0 231.4 231.4 233.3 236.1 237.7 235.1 235.5 236.6 240.3 DOMESTICALLY CHARTERED COMMERCIAL BANKS4 29 Total assets 2,988.1 2,970.6 3,002.4 3,003.5 3,021.4 2,985.4 3,000.9 3,025.1 3,052.3 3,068.7 3,032.2 30 Loans and securities 2,645.3 2,639.1 2,647.8 2,655.3 2,665.1 2,650.3 2,659.4 2,673.8 2,687.9 2,694.7 2,688.2 31 Investment securities 587.7 591.6 594.7 602.1 611.3 613.0 621.1 638.2 644.9 651.0 652.3 32 U.S. government securities 439.0 444.0 447.7 456.9 467.2 470.0 477.2 493.4 499.4 505.6 508.5 33 Other 148.8 147.5 147.0 145.1 144.1 143.0 143.8 144.8 145.4 145.4 143.8 34 Trading account assets 25.9 27.3 26.9 30.1 33.4 31.3 32.4 34.9 36.0 33.2 38.1 35 Total loans 2,031.6 2,020.2 2,026.2 2,023.1 2,020.5 2,005.9 2,006.0 2,000.6 2,007.1 2,010.5 1,997.8 36 Interbank loans 144.9 130.7 141.0 136.8 146.5 141.5 142.8 144.5 150.7 150.5 156.3 37 Loans excluding interbank 1,886.7 1,889.5 1,885.2 1,886.3 1,874.1 1,864.4 1,863.2 1,856.2 1,856.4 1,860.1 1,841.5 38 Commercial and industrial 504.3 501.3 494.4 490.0 482.5 475.6 472.9 471.0 468.3 463.4 454.9 39 Real estate 805.2 810.6 814.3 816.8 815.1 814.9 814.3 817.1 816.8 816.3 815.7 40 Revolving home equity 63.4 64.5 65.3 66.0 66.6 67.3 68.1 68.9 69.2 69.9 71.0 41 Other real estate 741.8 746.1 749.0 750.8 748.4 747.6 746.2 748.2 747.6 746.4 744.8 4? Individual 371.5 372.4 370.9 370.7 369.5 369.3 368.7 365.5 363.8 370.2 367.5 43 All other 205.8 205.2 205.7 208.9 207.0 204.6 207.4 202.6 207.5 210.2 203.4 44 Total cash assets 177.3 171.8 194.2 185.2 187.7 171.5 176.5 179.1 197.6 201.7 176.3 45 Reserves with Federal Reserve Banks. 24.1 22.0 25.8 28.2 23.9 22.1 24.9 25.1 24.0 28.5 23.3 46 Cash in vault 28.8 29.1 31.1 29.8 29.7 31.0 30.1 30.7 29.6 30.7 31.1 47 Cash items in process of collection ... 74.9 72.7 85.6 76.2 86.3 70.3 74.0 73.6 88.3 85.4 71.0 48 Demand balances at U.S. depository institutions 26.1 24.6 29.1 27.3 25.6 25.7 25.2 27.4 30.7 31.1 26.2 49 Other cash assets 23.4 23.4 22.7 23.6 22.3 22.3 22.3 22.4 25.0 25.9 24.7 50 Other assets 165.5 159.7 160.4 163.0 168.5 163.6 165.0 172.2 166.8 172.3 167.7 51 Total liabilities 2,763.5 2,746.8 2,775.1 2,776.2 2,792.2 2,753.4 2,767.4 2,794.2 2,821.0 2,836.2 2,796.1 5? Deposits 2,270.7 2,263.7 2,285.6 2,275.7 2,313.5 2,289.3 2,286.9 2,301.2 2,340.9 2,342.5 2,292.0 53 Transaction accounts 592.6 592.1 608.3 601.7 630.4 603.1 605.3 619.4 660.4 672.6 634.1 54 Savings deposits (excluding checkable) 592.7 594.0 605.1 609.7 619.3 623.7 627.5 639.2 646.8 652.1 666633..66 55 Time deposits 1,085.3 1,077.5 1,072.2 1,064.3 1,063.8 1,062.6 1,054.1 1,042.6 1,033.7 1,017.8 994.3 56 Borrowings 356.1 349.9 357.6 369.8 352.7 339.1 354.6 362.1 346.8 356.8 367.9 57 Other liabilities 136.8 133.1 131.9 130.7 126.0 125.0 125.9 130.8 133.3 136.9 136.2 58 Residual (assets less liabilities)3 224.6 223.9 227.3 227.2 229.2 232.0 233.5 230.9 231.3 232.4 236.1 1. Data have been revised to reflect benchmarking to quarterly Call reports. State foreign investment corporations. Data are estimates for the last Wednesday Back data are available from the Banking and Monetary Statistics Section, Board of the month based on a sample of weekly-reporting foreign-related institutions of Governors of the Federal Reserve System, Washington, D.C., 20551. Data in and quarter-end condition reports. this table also appear in the Board's H.8 (510) weekly statistical release. 3. This balancing item is not intended as a measure of equity capital for use in Data are partly estimated. They include all bank-premises subsidiaries and capital adequacy analysis. other significant majority-owned domestic subsidiaries. Components may not sum 4. Includes all member banks and insured nonmember banks. Loans and to totals because of rounding. securities data are estimates for the last Wednesday of the month based on a 2. Includes insured domestically chartered commercial banks, agencies and sample of weekly-reporting banks and quarter-end condition reports. branches of foreign banks, Edge act and agreement corporations, and New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Nonfinancial Statistics • April 1992 1.26 ASSETS AND LIABILITIES OF LARGE WEEKLY-REPORTING COMMERCIAL BANKS1 Millions of dollars, Wednesday figures 1991 1992 AAccccoouunntt Dec. 4 Dec. 11 Dec. 18 Dec. 25 Jan. 1 Jan. 8 Jan. 15 Jan. 22 Jan. 29 ASSETS 1 Cash and balances due from depository institutions 115,247r 112,422 110,424* 120,462 125,862 106,684 123,478 123,366 104,397 2 U.S. Treasury and government securities 226,906 225,142 224,460 221,687 227,934 227,696 229,257 230,739 228,760 3 Trading account 21,945 21,041 19,867 18,486 17,962 18,659 19,590 20,598 20,659 4 Investment account 204,961r 204,101 204,593 203,201 209,972 209,036 209,667 210,141 208,102 5 Mortgage-backed securities 77,542r 77,352* 78,029* 78,121* 79,183 78,827 78,562 7788,,994499 7788,,558833 All others, by maturity 6 One year or less 25,534 2255,,445522** 25,671 25,284 25,494 26,034 26,889 26,526 24,731 7 One year through five years 55,213 54,655* 54,144* 53,113* 54,525 55,980 57,013 57,688 57,960 8 More than five years 46,672r 46,642* 46,748* 46,684* 50,770 48,195 47,202 46,978 46,827 9 Other securities 55,710* 55,455 55,646 56,221 56,766 55,624 55,479 55,440 55,455 10 Trading account 1,330 1,326 1,872 1,836 2,019 1,269 1,225 1,212 1,614 11 Investment account 54,380* 54,130 53,774 54,384 54,747 54,355 54,254 54,228 53,841 12 State and political subdivisions, by maturity 22,724 22,637 22,517 22,667 22,984 22,673 22,641 22,689 22,580 13 One year or less 3,043r 3,011 2,980 3,112 3,275 3,161 3,171 3,241 3,231 14 More than one year 19,681* 19,626 19,536 19,555 19,709 19,512 19,470 19,448 19,349 15 Other bonds, corporate stocks, and securities 31,656* 31,493* 31,257 31,717 31,763 31,682 31,613 31,539 31,261 16 Other trading account assets 12,151* 11,998* 11,672* 11,336* 11,447 12,596 11,842 12,371 13,178 17 Federal funds sold3 82,829 84,023 86,075 86,112 77,213 95,687 107,976 100,767 95,321 18 To commercial banks in the United States 56,286 56,608 57,749 57,9% 53,021 64,397 73,712 70,880 66,540 19 To nonbank brokers and dealers 21,819 22,636 23,161 23,641 20,056 24,463 28,690 24,247 22,943 20 To others4 4,724 4,778 5,166 4,475 4,137 6,828 5,574 5,640 5,837 21 Other loans and leases, gross 998,028 996,116 1,000,859 1,001,038 1,017,136 1,013,033 1,012,652 1,009,936 1,008,215 22 Commercial and industrial 292,878* 290,937* 292,147* 290,125* 293,378 290,189 290,143 289,363 288,643 23 Bankers acceptances and commercial paper 2,218 2,056 2,043 2,038 1,946 1,633 1,608 1,597 1,584 24 All other 290,660* 288,881* 290,104* 288,088* 291,432 288,557 288,535 287,766 287,059 25 U.S. addressees 289,340* 287,622* 288,746* 286,599* 289,884 287,033 286,999 286,221 285,551 26 Non-U.S. addressees 1,320 1,259 1,357 1,488 1,548 1,523 1,536 1,545 1,508 27 Real estate loans 395,313* 395,624* 394,631* 393,905* 403,044 403,135 402,634 401,846 402,392 28 Revolving, home equity 39,539 39,621 39,717 39,916 41,494 41,472 41,594 41,665 41,685 29 All other 355,774* 356,003* 354,914* 353,988* 361,550 361,662 361,041 360,181 360,706 30 To individuals for personal expenditures 180,400* 181,352* 182,749* 183,732* 188,466 187,964 187,150 186,972 186,788 31 To financial institutions 44,679 44,411 44,403 45,719 46,473 45,717 45,768 44,872 45,521 32 Commercial banks in the United States 18,980* 18,960* 19,213* 20,147* 20,872 20,772 21,514 20,831 21,565 33 Banks in foreign countries 1,964 2,150 1,934 2,484 2,080 1,858 2,091 2,065 1,934 34 Nonbank financial institutions 23,735* 23,302* 23,255* 23,088* 23,521 23,086 22,163 21,976 22,022 35 For purchasing and carrying securities 13,304 12,813 15,017 14,805 12,495 13,791 14,374 14,784 14,107 36 To finance agricultural production 5,906 5,850 5,872 5,842 6,190 6,039 6,022 5,948 5,850 37 To states and political subdivisions 17,654 17,586 17,543 17,581 17,683 17,534 17,443 17,432 1177,,334444 38 To foreign governments and official institutions 1,032 941 931 947 918 1,001 928 939 889988 39 All other loans 21,547* 21,248* 22,243* 23,024* 22,733 21,845 22,383 21,982 20,909 40 Lease-financing receivables 25,315 25,355 25,323 25,358 25,755 25,819 25,808 25,798 25,764 41 LESS: Unearned income 3,279 3,270 3,254 3,256 3,306 3,255 3,244 3,233 3,275 42 Loan and lease reserve6 37,265 37,481 37,227 36,709 37,215 37,127 37,257 37,206 37,056 43 Other loans and leases, net 957,483 955,365 960,378 961,073 976,614 972,651 972,151 969,498 967,884 44 Other assets 155,776* 154,727* 151,476* 157,141* 170,439 159,466 162,351 157,556 154,723 45 Total assets 1,606,102* 1,599,131* 1,600,132* 1,614,031* 1,646,276 1,630,405 1,662,534 1,649,737 1,619,719 Footnotes appear on the following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A21 1.26 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued Millions of dollars, Wednesday figures 1991 1992 AAccccoouunntt Dec. 4 Dec. 11 Dec. 18 Dec. 25 Jan. 1 Jan. 8 Jan. 15 Jan. 22 Jan. 29 LIABILITIES 46 Deposits 1,120,281 1,112,598 1,110,123" 1,119,817 1,158,676 1,135,387 1,158,334 1,129,716 1,110,245 47 Demand deposits 239,253 234,198 238,536" 251,299 267,363 237,786 262,416 245,168 230,396 48 Individuals, partnerships, and corporations 192,900 188,307 190,421 200,832 214,354 193,174 207,201 193,318 182,853 49 Other holders 46,353 45,891 48,115" 50,467 53,008 44,613 55,214 51,850 47,543 50 States and political subdivisions 7,658 8,020 8,047 8,671 9,242 7,896 8,001 8,389 7,753 51 U.S. government 1,664 1,799 1,848 2,129 3,050 1,754 4,975 2,439 1,7% 52 Depository institutions in the United States 20,816 20,271 20,949" 23,470 23,997 19,772 25,408 23,401 20,094 53 Banks in foreign countries 4,998 5,649 5,275 5,545 5,788 5,294 5,538 5,813 5,194 54 Foreign governments and official institutions 768 870 604 880 1,000 532 604 694 668 55 Certified and officers' checks 10,449 9,281 11,394 9,772 9,932 9,365 10,689 11,115 12,037 56 Transaction balances other than demand deposits .... 99,801 97,628 98,320 98,859 105,006 106,020 104,795 101,460 99,458 57 Nontransaction balances 781,227 780,773 773,267 769,659 786,308 791,581 791,124 783,087 780,391 58 Individuals, partnerships, and corporations 750,441 749,780 743,178 740,164 757,385 761,643 761,308 753,033 749,290 59 Other holders 30,787 30,993 30,089 29,495 28,923 29,938 29,816 30,054 31,101 60 States and political subdivisions 25,513 25,823 25,024 24,405 23,989 24,687 24,598 24,427 25,049 61 U.S. government 1,170 1,116 1,110 1,094 1,105 1,494 1,484 1,484 1,517 62 Depository institutions in the United States 3,690 3,653 3,584 3,613 3,452 3,383 3,363 3,782 4,176 63 Foreign governments, official institutions, and banks .... 414 401 372 384 377 374 370 361 360 64 Liabilities for borrowed money6 263,726 262,038 270,337 271,114 262,650 273,104 280,785 294,938 282,183 65 Borrowings from Federal Reserve Banks 0 600 0 31 0 4,583 0 965 0 66 Treasury tax and loan notes 11,010" 7,290 26,117 27,780 25,798 16,173 16,865 29,461 29,817 67 Other liabilities for borrowed money 252,716r 254,148 244,220 243,303 236,852 252,348 263,919 264,512 252,366 68 Other liabilities (including subordinated notes and debentures) 106,195r 108,306r 103,763" 108,121" 107,029 103,802 105,286 105,899 107,223 69 Total liabilities L,490,203R L,482,943R 1,484,223" 1,499,051" 1,528,355 1,512,293 1,544,406 1,530,553 1,499,652 70 Residual (total assets less total liabilities)8 115,899" 116,189" 115,909" 114,980" 117,921 118,111 118,128 119,183 120,067 MEMO 71 Total loans and leases, gross, adjusted, plus securities .. l,300,358r 1,297,165" 1,301,751" 1,298,250" 1,316,603 1,319,467 1,321,980 1,317,542 1,312,825 72 Time deposits in amounts of $100,000 or more 170,555 169,399 166,249 163,958" 162,887 164,539 162,927 161,499 160,639 73 Loans sold outright to affiliates10 1,299 1,258 1,242 1,221 1,232 1,247 1,233 1,230 1,224 74 Commercial and industrial 681 675 654 654 680 701 695 697 685 75 Other 618 583 588 566 553 546 538 534 538 76 Foreign branch credit extended to U.S. residents 24,452 24,179 24,217 24,141 23,603 23,822 23,829 23,685 23,409 77 Net due to related institutions abroad -5,760" -2,855" -4,771 -4,229 -11,695 -5,753 -7,972 -3,792 453 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

A22 Domestic Nonfinancial Statistics • April 1992 1.30 LARGE WEEKLY-REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS Assets and Liabilities1 Millions of dollars, Wednesday figures 1991 1992 AAccccoouunntt Dec. 4r Dec. 11 Dec. 18 Dec. 25 Jan. 1 Jan. 8 Jan. 15 Jan. 22 Jan. 29 1 Cash and balances due from depository institutions 16,576 16,307 17,291 17,711 17,349 16,733 17,412 17,074 16,543 2 U.S. Treasury and government agency securities 19,572 20,631 20,590 21,600 21,792 22,167 21,947 20,836 20,459 3 Other securities 7,876 7,911 8,153 8,366 8,890 8,927 8,826 8,949 8,913 4 Federal funds sold1 8,846 11,115 10,186 9,516 13,061 9,531 10,533 13,692 11,276 5 To commercial banks in the United States ... 3,963 4,512 4,115 5,233 6,472 3,774 3,812 7,519 3,905 6 To others 4,883 6,602 6,071 4,284 6,590 5,756 6,721 6,173 7,371 7 Other loans and leases, gross 151,110 151,121r 152,797r 157,256r 168,317 162,735 163,266 163,363 164,761 8 Commercial and industrial 88,285 88,145r 89,412r 91,161r 98,150 97,116 97,669 97,263 97,690 9 Bankers acceptances and commercial paper 2,174 l,994r 2,236r 2,199r 2,573 2,322 2,288 2,373 2,314 10 All other 86,111 86,^O1 87,176r 88,962r 95,577 94,794 95,381 94,890 95,376 11 U.S. addressees 83,345 83,331r 84,23lr 86,047r 92,589 91,930 92,525 92,021 92,495 17 Non-U.S. addressees 2,766 2,819r 2,945r 2,915r 2,988 2,864 2,856 2,869 2,881 13 Loans secured by real estate 33,588 33,462 33,392 33,604 36,660 36,581 36,652 36,638 36,564 14 To financial institutions 21,319 21,219r 21,443r 22,47lr 22,230 21,396 20,314 20,369 20,851 15 Commercial banks in the United States.. 7,754 7,778r 7,458r 7,688r 8,292 7,889 7,566 7,704 7,824 16 Banks in foreign countries 2,247 1,965 2,220 2,776 1,919 1,941 1,816 1,807 1,866 17 Nonbank financial institutions 11,318 11,476r 11,765r 12,006r 12,020 11,567 10,932 10,858 11,161 18 For purchasing and carrying securities .... 5,412 5,834 6,024 7,469r 8,310 5,173 6,113 6,591 7,225 19 To foreign governments and official institutions 408 410 410 384 405 393 394 407 420 20 All other 2,098 2,052 2,116 2,166r 2,563 2,075 2,124 2,094 2,011 21 Other assets (claims on nonrelated parties) .. 31,685 33,342r 30,544r 31,206r 32,232 30,963 30,229 29,811 30,142 22 Total assets3 275,720 278,963 280,485 283,060 297,449 288,063 292,890 293,020 291,881 23 Deposits or credit balances due to other than directly related institutions 93,069 95,855 98,778r 97,847 96,363 95,232 95,339 97,834 101,546 24 Demand deposits4 3,565 3,453 4,980" 4,260 4,200 3,792 3,755 3,824 3,669 25 Individuals, partnerships, and corporations 2,707 2,667r 3,976r 3,141r 3,381 2,970 2,928 3,000 2,801 76 Other 859 787r l,003r 1,119" 819 823 827 825 867 27 Nontransaction accounts 89,503 92,402 93,799 93,586 92,163 91,439 91,584 94,009 97,877 28 Individuals, partnerships, and corporations 64,195 66,296 67,343 67,502 65,058 64,477 64,529 66,736 69,212 29 Other 25,308 26,106 26,455 26,085 27,104 26,963 27,054 27,273 28,665 30 Borrowings from other than directly related institutions 99,472 95,274r 97,137r 97,144r 107,426 104,537 105,354 102,142 99,849 31 Federal funds purchased5 54,634 47,127 50,158 46,879 52,742 53,691 58,103 53,445 51,208 32 From commercial banks in the United States 21,059 20,183 20,707 20,123 22,490 24,043 26,338 20,803 22,282 33 From others 33,576 26,943 29,451 26,756 30,252 29,648 31,766 32,642 28,926 34 Other liabilities for borrowed money 44,838 48,148r 46,978r 50,266r 54,684 50,846 47,251 48,698 48,641 35 To commercial banks in the United States 13,197 13,999 13,761 14,779 16,605 15,241 15,050 14,778 16,097 36 To others 31,641 34,148r 33,218r 35,487r 38,079 35,606 32,201 33,920 32,544 37 Other liabilities to nonrelated parties 29,918 30,730" 28,796R 29,382R 29,456 28,584 28,079 27,704 27,317 38 Total liabilities6 275,720 278,963 280,485 283,060 297,449 288,063 292,890 293,020 291,881 39 T M o E t M al O l oans (gross) and securities, adjusted .. 175,687 178,488r 180,153r 183,816r 197,297 191,697 193,194 191,618 193,680 40 Net due to related institutions abroad 13,204 18,568 14,850 21,282 28,397 22,704 23,442 26,046 23,382 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

Financial Markets A23 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING1 Millions of dollars, end of period 1991 1987 1988 1989 1990 1991 IItteemm Dec. Dec. Dec. Dec. Dec. July Aug. Sept. Oct. Nov. Dec. Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 358,997 458,464 530,123 566,688 535,998 545,493r 538,179" 532,931" 529,981" 538,567" 535,998 Financial companies2 Dealer-placed paper 2 Total 102,742 159,777 186,343 218,953 218,687 205,099 208,159 211,821 219,028 220,402 218,687 3 Bank-related (not seasonally adjusted) 1,428 1,248 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Directly placed paper5 4 Total 174,332 194,931 212,640 201,862 185,074 195,144r 191,902" 189,427" 180,540" 118822,,110099"" 118855,,007744 5 Bank-related (not seasonally adjusted) 43,173 43,155 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 6 Nonfinancial companies6 81,923 103,756 131,140 145,873 132,237 145,250 138,118 131,683 130,413 136,056 132,237 Bankers dollar acceptances (not seasonally adjusted)7 7 Total 70,565 66,631 62,972 54,771 43,770 44,756 44,228 43,462 44,910 43,947 43,770 Holder 8 Accepting banks 10,943 9,086 9,433 9,017 11,027 9,081 9,622 10,174 9,876 10,750 11,027 9 Own bills 9,464 8,022 8,510 7,930 9,356 7,906 7,826 8,237 8,306 8,754 9,356 10 Bills bought 1,479 1,064 924 1,087 1,670 1,175 1,795 1,937 1,570 1,996 1,670 Federal Reserve Banks 11 Own account 0 0 0 0 0 0 0 0 0 0 0 12 Foreign correspondents 965 1,493 1,066 918 1,739 1,274 1,665 1,678 1,862 1,705 1,739 13 Others 58,658 56,052 52,473 44,836 31,004 34,401 32,941 31,610 33,172 31,491 31,004 Basis 14 Imports into United States 16,483 14,984 15,651 13,096 12,843 12,728 12,968 12,876 13,265 13,472 12,843 15 Exports from United States 15,227 14,410 13,683 12,703 10,351 11,468 11,044 10,966 11,105 10,486 10,351 16 All other 38,855 37,237 33,638 28,973 20,577 20,561 20,215 19,620 20,541 19,989 20,577 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 Loans1 Percent per year Date of change Rate Period Av r e a r te a ge Period Av r e a r te a ge Period 1989— Jan. 1 10.50 1989 10.87 1990—Jan. ... 10.11 1991— Jan. .. Feb. 10 11.00 1990 10.01 Feb. .. 10.00 Feb. . 24 11.50 1991 8.46 Mar. .. 10.00 Mar. . June 5 11.00 Apr. .. 10.00 Apr. . July 31 10.50 1989— Jan. 10.50 May ... 10.00 May .. Feb. 10.93 June .. 10.00 June . 1990— Jan. 8 10.00 Mar. 11.50 July ... 10.00 July ... Apr. 11.50 Aug. .. 10.00 Aug. .. 1991— Jan. 2 9.50 May 11.50 Sept. .. 10.00 Sept. .. Feb. 4 9.00 June 11.07 Oct. ... 10.00 Oct. ... May 1 8.50 July 10.98 Nov. .. 10.00 Nov. .. Sept. 13 . 8.00 Aug. 10.50 Dec. .. 10.00 Dec. .. Nov. 6 7.50 Sept. 10.50 Dec. 23 6.50 Oct. 10.50 1992— Jan. ... Nov. 10.50 Feb. Dec. 10.50 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

A24 DomesticN onfinancial Statistics • April 1992 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 1992 1992, week ending IItteemm 11998899 11999900 11999911 Oct. Nov. Dec. Jan. Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 MONEY MARKET INSTRUMENTS 1 Federal funds1,2,3 9.21 8.10 5.69 5.21 4.81 4.43 4.03 4.19 4.19 4.01 3.87 4.01 2 Discount window borrowing2,4 6.93 6.98 5.45 5.00 4.58 4.11 3.50 3.50 3.50 3.50 3.50 3.50 Commercial paper3,5,6 3 1-month 9.11 8.15 5.89 5.29 4.95 4.98 4.11 4.57 4.09 4.10 4.08 4.08 4 3-month 8.99 8.06 5.87 5.35 4.98 4.61 4.07 4.27 4.02 4.08 4.07 4.09 5 6-month 8.80 7.95 5.85 5.33 4.93 4.49 4.06 4.17 3.99 4.08 4.08 4.09 Finance paper, directly placed3,5,7 6 1-month 8.99 8.00 5.73 5.18 4.80 4.69 3.99 4.16 3.95 3.99 3.97 4.00 7 3-month 8.72 7.87 5.71 5.19 4.87 4.39 3.99 4.07 3.94 4.00 3.99 4.01 8 6-month 8.16 7.53 5.60 5.12 4.76 4.31 3.95 4.00 3.92 3.95 3.97 3.98 Bankers acceptances3'5'8 9 3-month 8.87 7.93 5.70 5.21 4.85 4.42 3.97 4.05 3.92 3.99 3.96 4.00 10 6-month 8.67 7.80 5.67 5.15 4.76 4.28 3.96 3.97 3.87 3.99 3.95 4.02 Certificates of deposit, secondary marker9 11 1-month 9.11 8.15 5.82 5.23 4.86 4.84 4.07 4.35 4.04 4.08 4.06 4.06 12 3-month 9.09 8.15 5.83 5.33 4.94 4.47 4.05 4.15 3.98 4.09 4.06 4.08 13 6-month 9.08 8.17 5.91 5.32 4.92 4.41 4.07 4.11 3.97 4.12 4.08 4.11 14 Eurodollar deposits, 3-month3,10 9.16 8.16 5.86 5.34 4.96 4.48 4.06 4.16 3.96 4.10 4.08 4.08 U.S. Treasury bills Secondary market • 15 3-month 8.11 7.50 5.38 4.99 4.56 4.07 3.80 3.87 3.77 3.81 3.77 3.84 16 6-month 8.03 7.46 5.44 5.04 4.61 4.10 3.87 3.87 3.81 3.88 3.86 3.92 17 1-year 7.92 7.35 5.52 5.04 4.64 4.17 3.95 3.93 3.87 3.98 3.95 4.02 Auction average ' • 18 3-month 8.12 7.51 5.42 5.03 4.60 4.12 3.84 3.91 3.85 3.83 3.78 3.84 19 6-month 8.04 7.47 5.49 5.08 4.66 4.16 3.88 3.91 3.86 3.87 3.84 3.93 20 1-year 7.91 7.36 5.54 5.12 4.72 4.20 3.84 n.a. n.a. 3.84 n.a. n.a. U.S. TREASURY NOTES AND BONDS Constant maturities12 21 1-year 8.53 7.89 5.86 5.33 4.89 4.38 4.15 4.14 4.06 4.17 4.14 4.23 22 2-year 8.57 8.16 6.49 5.91 5.56 5.03 4.96 4.79 4.74 5.02 5.02 5.14 23 3-year 8.55 8.26 6.82 6.23 5.90 5.39 5.40 5.14 5.12 5.45 5.47 5.65 24 5-year 8.50 8.37 7.37 6.87 6.62 6.19 6.24 5.98 6.01 6.34 6.32 6.41 25 7-year 8.52 8.52 7.68 7.25 7.06 6.69 6.70 6.46 6.48 6.76 6.80 6.88 26 10-year 8.49 8.55 7.86 7.53 7.42 7.09 7.03 6.78 6.80 7.04 7.14 7.25 27 30-year 8.45 8.61 8.14 7.93 7.92 7.70 7.58 7.45 7.43 7.57 7.65 7.74 Composite13 28 Over 10 years (long-term) 8.58 8.74 8.16 7.88 7.83 7.58 7.48 7.32 7.29 7.49 7.57 7.66 STATE AND LOCAL NOTES AND BONDS Moody's series14 29 Aaa 7.00 6.96 6.56 6.28 6.24 6.32 6.13 6.22 6.22 6.02 6.08 6.20 30 Baa 7.40 7.29 6.99 6.70 6.58 6.65 6.47 6.54 6.54 6.37 6.42 6.54 31 Bond Buyer series15 7.23 7.27 6.92 6.68 6.73 6.69 6.54 6.52 6.40 6.56 6.59 6.65 CORPORATE BONDS 32 Seasoned issues, all industries16 9.66 9.77 9.23 8.99 8.93 8.75 8.64 8.60 8.57 8.64 8.67 8.70 Rating group 33 Aaa 9.26 9.32 8.77 8.55 8.48 8.31 8.20 8.17 8.14 8.20 8.22 8.25 34 Aa 9.46 9.56 9.05 8.83 8.78 8.61 8.51 8.45 8.43 8.52 8.56 8.58 35 A 9.74 9.82 9.30 9.08 9.01 8.82 8.72 8.65 8.64 8.72 8.76 8.76 36 Baa 10.18 10.36 9.80 9.49 9.45 9.26 9.13 9.11 9.05 9.11 9.16 9.20 37 A-rated, recently offered utility bonds17 .... 9.79 10.01 9.32 9.02 8.95 8.68 8.57 8.46 8.49 8.58 8.67 8.72 MEMO: Dividend-price ratio18 38 Preferred stocks 9.05 8.96 8.17 7.84 7.81 7.62 7.54 7.57 7.52 7.51 7.50 7.61 39 Common stocks 3.45 3.61 3.25 3.14 3.15 3.11 2.90 2.91 2.89 2.87 2.89 2.96 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 seven calendar days ending on Wednesday 13. Unweighted average of rates on all outstanding bonds neither due nor of the 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 obligations based on Thursday figures; Moody's Investors Service. 4. Rate for the Federal Reserve Bank of New York. 15. General obligations only, with twenty years to maturity, issued by twenty 5. Quoted on a discount basis. state and local government^ units of mixed quality. Based on figures for 6. An average of offering rates on commercial paper placed by several leading Thursday. dealers for firms whose bond rating is AA or the equivalent. 16. Daily figures from Moody's Investors Service. Based on yields to maturity 7. An average of offering rates on paper directly placed by finance companies. on selected long-term bonds. 8. Representative closing yields for acceptances of the highest rated money 17. Compilation of the Federal Reserve. This series is an estimate of the yield center banks. on recently-offered, A-rated utility bonds with a thirty-year maturity and five 9. An average of dealer offering rates on nationally traded certificates of years of call protection. Weekly data are based on Friday quotations. deposit. 18. Standard and Poor's corporate series. Preferred stock ratio based on a 10. Bid rates for Eurodollar deposits at 11 a.m. London time. Data are for sample of ten issues: four public utilities, four industrials, one financial, and one indication purposes only. transportation. Common stock ratios on the 500 stocks in the price index. 11. Auction date for daily data; weekly and monthly averages computed on an NOTE. These data also appear in the Board's H. 15 (519) and G. 13 (415) releases. issue-date basis. For address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A25 1.36 STOCK MARKET Selected Statistics 1991 1992 IInnddiiccaattoorr 11998899 11999900rr 11999911 May June July Aug. Sept. Oct. Nov. Dec. Jan. Prices and trading volume (averages of daily figures) Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 180.13 183.66 206.35 207.07 207.32 208.29 213.33 212.55 213.10 213.25 214.26 229.34 2 Industrial 228.04 226.06 258.16 260.13 261.16 262.48 268.22 266.21 265.68 264.89 266.01 286.62 3 Transportation 174.90 158.80 173.97 170.77 177.05 177.15 178.42 177.99 187.45 188.52 185.47 201.55 4 Utility 94.33 90.72 92.64 90.73 89.01 90.05 92.38 93.72 95.25 96.78 98.08 99.31 5 Finance 162.01 133.21 150.84 151.32 152.30 151.69 157.70 157.69 158.94 159.78 159.96 174.50 6 Standard & Poor's Corporation (1941-43 = 10)1 323.05 335.01 376.20 378.27 378.29 380.23 389.40 387.20 386.88 385.87 388.51 416.08 7 American Stock Exchange (Aug. 31, 1973 = 50? 356.67 338.32 360.32 362.67 366.06 364.33 367.38 369.55 376.82 382.38 373.08 409.08 Volume of trading (thousands of shares) 8 New York Stock Exchange 165,568 156,359 179,411 170,337 162,154 157,871 171,490 163,242 177,502 187,191 197,914 239,903 9 American Stock Exchange 13,124 13,155 12,486 10,995 11,477 10,883 12,514 13,378 13,764 14,487 17,475 20,444 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers3 34,320 28,210 36,660 29,980 31,280 30,600 32,240 33,170 33,360 34,840 36,660 36,350 Free credit balances at brokers4 11 Margin accounts 7,040 8,050 8,290 7,200 6,690 6,545 7,040 6,950 6,965 7,040 8,290 7,865 12 Cash accounts 18,505 19,285 19,255 16,650 18,110 16,945 17,040 17,595 17,100 17,780 19,255 19,990 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 on securities other than options are the difference between the market value (100 companies. With this change the index includes 400 industrial stocks (formerly percent) and the maximum loan value of collateral as prescribed by the Board. 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 Regulation T was adopted effective Oct. 15, 1934; Regulation U, effective May 1, financial. 1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective Nov. 1, 2. On July 5, 1983, the American Stock Exchange rebased its index, effectively 1971. cutting previous readings in half. On Jan. 1, 1977, the Board of Governors for the first time established in 3. Since July 1983, under the revised Regulation T, margin credit at broker- Regulation T the initial margin required for writing options on securities, setting dealers has included 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 amounts in accounts with no unfulfilled commit- the Securities and Exchange Commission. Effective Jan. 31, 1986, the SEC ments to 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 since June 1984. option plus 15 percent of the market value of the stock underlying the option. 6. These requirements, stated in regulations adopted by the Board of Gover- Effective June 8, 1988, margins were set to be the price option plus 20 percent nors pursuant to the Securities Exchange Act of 1934, limit the amount of credit of the market value of the stock underlying the option (or 15 percent in the case that can be used to purchase and carry "margin securities" (as defined in the of stock-index options). regulations) when such credit is collateralized by securities. Margin requirements Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Nonfinancial Statistics • April 1992 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1991 AAccccoouunntt 11998899 11999900 Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. SAIF-insured institutions 1 Assets 1,249,055 1,084,821 1,054,654 1,041,977 1,027,464 1,020,677 1,001,582 984,971 972,529 949,047 937,776 934,295 2 Mortgages 733,729 633,385 619,720 610,618 608,857 605,947 596,022 586,280 557788,,226699 566,107 556600,,883300 555566,,999977 3 Mortgage-backed securities 170,532 155,228 149,318 147,431 143,968 141,582 139,536 137,098 135,751 135,377 135,084 133,341 4 Contra-assets to mortgage assets1 . 25,457 16,897 14,872 14,592 14,413 14,438 14,625 14,242 14,031 13,115 12,471 12,261 5 Commercial loans 32,150 24,125 23,205 22,294 21,903 21,724 20,645 20,301 20,390 18,507 18,159 17,525 6 Consumer loans 58,685 48,753 47,729 47,653 46,702 45,827 45,174 44,352 4433,,225599 4422,,444411 4433,,006622 4422,,773322 7 Contra-assets to nonmortgage loans . 3,592 1,939 1,876 1,827 1,742 1,739 1,745 1,676 1,546 1,399 1,372 1,146 8 Cash and investment securities 166,053 146,644 138,884 138,976 132,878 134,012 130,443 130,264 132,011 125,774 120,675 123,370 9 Other 116,955 95,522 92,546 91,424 89,301 87,757 86,133 82,594 78,425 75,354 73,809 73,738 10 Liabilities and net worth . 1,249,055 1,084,821 1,054,654 1,041,977 1,027,464 1,020,677 1,001,582 984,971 972,529 949,047 937,776 934,295 11 Savings capital 945,656 835,4% 816,477 816,991 806,266 801,678 792,923 775,445 763,763 749,372 741,371 737,379 12 Borrowed money 252,230 197,353 183,660 169,412 164,268 159,625 151,474 146,901 142,908 132,726 127,356 125,146 13 FHLBB 124,577 100,391 94,658 90,555 86,779 82,312 78,966 76,104 74,424 68,792 66,578 65,976 14 Other 127,653 96,962 89,002 78,857 77,489 77,313 72,508 70,797 68,484 63,934 60,778 59,170 15 Other 27,556 21,332 23,355 20,350 21,752 23,647 20,480 21,647 22,642 19,070 20,368 21,677 16 Net worth 23,612 30,640 31,162 35,223 35,178 35,720 36,705 40,977 43,216 47,878 48,681 50,093 1. Contra-assets are credit-balance accounts that must be subtracted from the 3. Includes holding of stock in Federal Home Loan Bank and finance leases corresponding gross asset categories to yield net asset levels. Contra-assets to plus interest. mortgage loans, contracts, and pass-through securities include loans in process, NOTE. Components do not sum to totals because of rounding. Data for credit unearned discounts and deferred loan fees, valuation allowances for mortgages unions and life insurance companies have been deleted from this table. They will "held for sale," and specific reserves and other valuation allowances. be shown in a separate table which will appear quarterly, starting in the December 2. Contra-assets are credit-balance accounts that must be subtracted from the issue. corresponding gross asset categories to yield net asset levels. Contra-assets to SOURCE. Savings Association Insurance Fund (SAIF)-insured institutions: nonmortgage loans include loans in process, unearned discounts and deferred loan Estimates by the Office of Thrift Supervision (OTS) for all institutions insured by fees, and specific reserves and valuation allowances. the SAIF and based on the OTS thrift institution Financial Report. 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS1 Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll FFFiiissscccaaalll TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn yyyeeeaaarrr yyyeeeaaarrr yyyeeeaaarrr 1991 1992 111999888999 111999999000 111999999111 Aug. Sept. Oct. Nov. Dec. Jan. U.S. budget2 1 Receipts, total 990,701 1,031,308 1,054,260 76,426 109,345 78,068 73,194 103,662 104,040 2 On-budget 727,035 749,652 760,377r 54,651 83,130" 57,216 50,898 80,172 79,886 3 Off-budget 263,666 281,656 293,883r 21,775 26,215r 20,852 22,296 23,490 24,154 4 Outlays, total 1,144,020 1,251,766 1,322,989 120,071 116,174 114,045 117,731r 106,094r 119,742 5 On-budget 933,107 1,026,711 l,081,303r 97,247 91,516r 94,062 95,438r 95,396r 97,189 6 Off-budget 210,911 225,065 241,685r 22,824 24,658r 19,983 22,293 10,698 22,553 7 Surplus or deficit (-), total -153,319 -220,469 -268,729 -43,645 -6,829 -35,976 -44,537r -2,432r -15,702 8 On-budget -206,072 -277,059 -320,926 -42,596 -8,386 -36,846 -44,540" -15,224r -17,303 9 Off-budget 52,753 56,590 52,198 -1,049 1,557 869 3 12,792 1,601 Source of financing (total) 10 Borrowing from the public 141,806 220,101 276,802 32,574 27,970 40,657 25,641 22,825 11,449 11 Operating cash (decrease, or increase (-)) ... 3,425 818 -1,329 18,504 -23,133 -11,235 28,195 -24,258 925 12 Other 8,088 -451 -6,744 -7,433 1,992 6,554 -9,299" 3,865r 3,328 MEMO 13 Treasury operating balance (level, end of period) 40,973 40,155 41,484 18,351 41,484 52,719 24,524 48,782 47,857 14 Federal Reserve Banks 13,452 7,638 7,928 6,745 7,928 18,111 6,317 17,697 10,828 15 Tax and loan accounts 27,521 32,517 33,556 11,606 33,556 34,608 18,207 31,085 37,028 1. Components may not sum to totals because of rounding. in the International Monetary Fund (IMF); loans to the IMF; otheT 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 FFiissccaall FFiissccaall Source or type yyeeaarr yyeeaarr 1990 1991 1991 1992 11999900 11999911 HI H2 HI H2 Nov. Dec. Jan. RECEIPTS 1 All sources 1,031,308 1,054,260 548,861 503,123 540,504 519,288 73,194 103,662 104,040 2 Individual income taxes, net 466,884 467,827 243,087 230,745 232,389 233,983 31,987 41,722 60,451 4 3 P W re it s h i h d e e l n d t ial Election Campaign Fund . 388,38 3 4 2 404,15 3 2 2 190,21 3 9 0 207,469 3 193,44 3 0 1 210,552 1 32,44 0 8 39,94 0 3 36,047 0 5 Nonwithheld 151,285 142,693 117,675 31,728 109,405 33,2% 1,743 2,614 25,601 6 Refunds 72,817 79,050 64,838 8,455 70,487 9,867 2,205 835 1,197 Corporation income taxes 7 Gross receipts 110,017 113,599 58,830 54,044 58,903 54,016 2,411 22,546 3,856 8 Refunds 16,510 15,513 8,326 7,603 7,904 7,956 895 827 864 9 Social insurance taxes and contributions, net 380,047 396,011 210,476 178,468 214,303 186,839 31,502 30,9% 31,832 10 Employment taxes and contributions 353,891 370,526 195,269 167,224 199,727 175,802 28,835 30,418 30,797 11 Self-employment taxes and contributions 21,795 25,457 19,017 2,638 22,150 3,306 0 0 -1,361 12 Unemployment insurance 21,635 20,922 12,929 8,996 12,2% 8,721 2,293 228 619 13 Other net receipts 4,522 4,563 2,278 2,249 2,279 2,317 374 350 415 14 Excise taxes 35,345 42,430 18,153 17,535 20,703 24,690 4,200 3,912 3,349 15 Customs deposits 16,707 15,921 8,096 8,568 7,488 8,694 1,412 1,405 1,367 16 Estate and gift taxes 11,500 11,138 6,442 5,333 5,631 5,521 984 757 930 17 Miscellaneous receipts 27,316 22,847 12,106 16,032 8,991 13,503 1,593 3,151 3,119 OUTLAYS 18 All types 1,251,776 1,322,989 640,867 647,218 631,737 693,499' 117,731r 106,094r 119,742 19 National defense 299,331 272,514 152,733 149,497 122,089 147,531 25,794 24,138 25,675 20 International affairs 13,762 16,167 6,770 8,943 7,592 7,651 1,836 1,252 1,678 21 General science, space, and technology . 14,444 15,946 6,974 8,081 7,4% 8,473 1,293 1,501 1,308 22 Energy 2,372 1,750 1,216 979 816 1,436 667 160 -23 23 Natural resources and environment 17,067 18,708 7,343 9,933 8,324 11,221 1,829 1,580 1,232 24 Agriculture 11,958 14,864 7,450 6,878 7,684 7,335 2,291 2,409 878 25 Commerce and housing credit 67,160 75,639 38,672 37,491 17,992 36,579 2,099 -6,650 4,736 26 Transportation 29,485 31,531 13,754 16,218 14,748 17,094 2,882 2,731 2,546 27 Community and regional development .. 8,498 7,432 3,987 3,939 3,552 3,784 664 546 599 28 Education, training, employment, and social services 38,497 41,479 19,537 18,988 21,234 21,104 3,581 3,937 4,375 29 Health 57,716 71,183 29,488 31,424 35,608 41,458 7,283 7,329 6,688 30 Social security and medicare 346,383 373,495 175,997 176,353 190,247 193,156 32,186 32,676 33,497 31 Income security 147,314 171,618 78,475 75,948 88,778 87,215 14,970 16,191 17,663 32 Veterans benefits and services 29,112 31,344 15,217 15,479 14,326 17,425 4,060 2,637 2,465 33 Administration of justice 10,004 12,295 4,868 5,265 6,187 6,586 1,124 1,142 1,058 34 General government 10,724 11,358 4,916 6,976 5,212 6,821 1,303 1,313 937 35 Net interest6 184,221 195,012 91,155 94,650 98,556 99,405 16,557 16,564 17,577 36 Undistributed offsetting receipts -36,615 -39,356 -17,688 -19,829 -18,702 -20,435 -2,566 -3,148 -3,147 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. Fjscal 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 Nonfinancial Statistics • April 1992 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION1 Billions of dollars, end of month 1989 1990 1991 IItteemm Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec 31 1 Federal debt outstanding 2,975.50 3,081.90 3,175.50 3,266.10 3,397.30 3,491.70 3,562.90 3,683.10 3,736.30r 2 Public debt securities 2,953.00 3,052.00 3,143.80 3,233.30 3,364.80 3,465.20 3,538.00 3,665.30 3,801.70 3 Held by public 2,245.20 2,329.30 2,368.80 2,437.60 2,536.60 2,598.40 2,642.90 2,745.70 n.a. 4 Held by agencies 707.80 722.70 775.00 795.80 828.30 866.80 895.10 919.60 n.a. 5 Agency securities 22.50 29.90 31.70 32.80 32.50 26.50 25.00 17.80 n.a. 6 Held by public 22.40 29.80 31.60 32.60 32.40 26.40 24.80 17.60 n.a. 7 Held by agencies .10 .20 .20 .20 .10 .10 .10 .10 n.a. 8 Debt subject to statutory limit 2,921.70 2,988.90 3,077.00 3,161.20 3,281.70 3,377.10 3,450.30 3,569.30 9 Public debt securities 2,921.40 2,988.60 3,076.60 3,160.90 3,281.30 3,376.70 3,449.80 3,569.00 3,706.40 10 Other debt2 .30 .30 .40 .40 .40 .40 .40 .30 .40 11 MEMO: Statutory debt limit 3,122.70 3,122.70 3,122.70 3,195.00 4,145.00 4,145.00 4,145.00 4,145.00 4,145.00 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 1991 Type and holder 11998888 11998899 11999900 11999911 Q1 Q2 Q3 Q4 1 Total gross public debt 2,684.4 2,953.0 3,364.8' 3,801.7 3,465.2 3,538.0 3,665.3 3,801.7 By type 2 Interest-bearing 2,663.1 2,931.8 3,362.0 3,798.9 3,441.4 3,516.1 3,662.8 3,798.9 3 Marketable 1,821.3 1,945.4 2,195.8 2,471.6 2,227.9 2,268.1 2,390.7 2,471.6 4 Bills 414.0 430.6 527.4 590.4 533.3 521.5 564.6 590.4 5 Notes 1,083.6 1,151.5 1,265.2 1,430.8 1,280.4 1,320.3 1,387.7 1,430.8 6 Bonds 308.9 348.2 388.2 435.5 399.3 411.2 423.4 435.5 7 Nonmarketable2 841.8 986.4 1,166.2 1,327.2 1,213.5 1,248.0 1,272.1 1,327.2 8 State and local government series 151.5 163.3 160.8 159.7 159.4 161.0 158.1 159.7 9 Foreign issues3 6.6 6.8 43.5 41.9 42.8 42.1 41.6 41.9 10 Government 6.6 6.8 43.5 41.9 42.8 42.1 41.6 41.9 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes 107.6 115.7 124.1 135.9 127.7 131.3 133.5 135.9 13 Government account series4 575.6 695.6 813.8 959.2 853.1 883.2 908.4 959.2 14 Non-interest-bearing 21.3 21.2 2.8 2.8 23.8 21.9 2.5 2.8 By holder 5 15 U.S. Treasury and other federal agencies and trust funds 589.2 707.8 828.3 866.8 895.1 919.6 16 Federal Reserve Banks 238.4 228.4 259.8 247.3 255.1 264.7 17 Private investors 1,858.5 2,015.8 2,288.3 2,360.6 2,397.9 2,489.4 18 Commercial banks 193.8 174.8 188.2 194.8 204.2 214.0 19 Money market funds 11.8 14.9 45.4 65.7 55.2 64.5 20 Insurance companies 107.3 130.1 149.7 n.a. 149.3 155.1 157.0 n.a. 21 Other companies 87.1 93.4 108.9 114.9 130.8 142.0 22 State and local treasuries 313.6 338.7 329.6 329.5 327.0 326.0 Individuals 23 Savings bonds 109.6 117.7 126.2 129.7 133.2 135.4 24 Other securities 79.2 98.7 107.6 108.6 110.3 122.1 25 Foreign and international 362.2 392.9 423.2 430.7 441.2 444.8 26 Other miscellaneous investors 593.4 654.6 822.4 837.4 840.9 883.6 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 1992, week ending IItteemm Oct. Nov. Dec. Dec. 4 Dec. 11 Dec. 18 Dec. 25 Jan. 1 Jan. 8 Jan. 15 Jan. 22 Jan. 29 IMMEDIATE TRANSACTIONS2 By type of security U.S. Treasury securities 1 Bills 35,273 36,252r 30,957r 28,497 34,549" 32,804 30,880 26,080 37,021 47,436 33,151 32,335 Coupon securities, by maturity 2 Less than 3.5 years 38,280 42,034 32,848r 33,775 37,494 37,513 34,762 18,599 3355,,886633 59,975 4499,,449911 5511,,113388 3 3.5 to 7.5 years 35,454 33,385 29,975r 31,799 36,389 32,629 32,028 15,218 41,188 53,921 44,476 40,483 4 7.5 to 15 years 16,202 18,691 14,018r 13,578 19,959 13,752 13,611 7,663 16,713 24,708 18,752 18,515 5 15 years or more 15,710 18,559 14,508r 11,601 21,265 13,150 15,500 8,949 16,784 21,137 18,481 14,787 Federal agency securities Debt, maturing in 6 Less than 3.5 years 4,428 4,089 4,636 4,205 4,998 4,983 4,352 4,359 66,,000099 33,,556622 55,,006600 66,,227766 7 3.5 to 7.5 years 571 700 610 933 843 680 375 226 704 678 663 620 8 7.5 years or more 736 904 739 1,167 999 707 597 275 611 885 597 622 Mortgage-backed securities 9 Pass-throughs 11,954 14,169 11,900 10,193 15,685 14,184 11,919 5,576 16,940 14,124 14,354 10,624 10 All others 2,638 2,934 2,662 2,440 3,019 3,161 2,388 2,035 2,507 3,242 3,200 2,978 By type of counterparty Primary dealers and brokers 11 U.S. Treasury securities 88,007 93,690" 73,458r 72,738 93,103r 78,975 72,225 43,776 90,502 131,312 110022,,995533 103,810 Federal agency securities 12 Debt 1,585 1,387 1,383 1,790 1,693 1,495 1,026 907 1,779 1,216 11,,334444 1,534 13 Mortgage-backed 6,803 8,245 6,227 5,317 8,323 7,672 5,996 2,714 8,691 7,142 8,303 5,818 Customers 14 U.S. Treasury securities 52,913 55,231 48,848r 46,511 56,553 50,873 54,554 32,733 57,067 75,866 61,399 53,448 Federal agency securities 15 Debt 4,150 4,305 4,604 4,516 5,148 4,876 4,299 3,953 5,546 3,909 4,976 55,,998844 16 Mortgage-backed 7,788 8,858 8,336 7,315 10,381 9,673 8,312 4,897 10,756 10,224 9,251 7,784 FUTURE AND FORWARD TRANSACTIONS4 By type of deliverable security U.S. Treasury securities 17 Bills 3,073 3,740 3,295 4,102 6,001 2,170 2,431 1,576 55,,880011 3,125 33,,115577 44,,223344 Coupon securities, by maturity 18 Less than 3.5 years 1,312 1,673 l,801r 1,195 1,381 11,,228899 4,093 1,130 11,,661199 22,,660000 22,,113311 22,,555522 19 3.5 to 7.5 years 812 864 1,096 872 1,305 867 1,888 495 1,220 1,851 1,390 1,477 20 7.5 to 15 years 941 1,224 1,052 776 1,498 1,218 703 844 1,372 2,078 1,859 1,680 21 15 years or more 9,273 10,328 7,264 5,937 10,178 6,612 8,496 4,200 10,160 14,160 11,839 10,259 Federal agency securities Debt, maturing in 22 Less than 3.5 years 92 94 119 22 22 220044 315 12 4 28 228855 17 23 3.5 to 7.5 years 38 73 39 134 47 17 16 6 10 160 71 55 24 7.5 years or more 25 63 30 49 13 54 24 14 7 51 38 8 Mortgage-backed 25 Pass-throughs 12,076 12,374 9,lllr 7,270 13,528 9,813 9,683 3,521 16,120 22,000 14,748 15,722 26 Others 2,339 1,745 1,308 927 2,024 1,169 1,456 725 1,225 2,094 2,288 2,657 OPTION TRANSACTIONS5 By type of underlying security U.S. Treasury, coupon securities, by maturity 27 Less than 3.5 years 1,025 975 1,074 807 1,200 425 2,273 728 1,332 1,973 1,560 1,390 28 3.5 to 7.5 years 420 640 526 631 1,058 234 517 156 507 492 210 211 29 7.5 to 15 years 381 523 386 631 381 252 413 350 575 490 696 1,323 30 15 years or more 22,,220055 33,,448822 2,019 1,877 2,420 1,739 2,528 1,467 2,304 2,350 3,057 2,877 Federal agency, mortgagebacked securities 31 Pass-throughs 532 334 480 339 875 176 713 237 1,758 601 402 438 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 report 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 include 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 only 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 • April 1992 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1991 1991, week ending 1992, week ending item Oct. Nov. Dec. Nov. 27 Dec. 4 Dec. 11 Dec. 18 Dec. 25 Jan. 1 Jan. 8 Jan. 15 Jan. 22 Positions2 NET IMMEDIATE TRANSACTIONS3 By type of security U.S. Treasury securities 1 Bills 15,720 15,482 17,034 10,990 14,921 17,261 18,469 17,134 16,202 11,629 10,224 13,120 Coupon securities, by maturity 2 Less than 3.5 years 6,362 7,368 5,510 5,197 5,771 3,636 7,501 6,137 4,788 4,524 840 6,508 3 3.5 to 7.5 years -2,993 -8,509 -6,729 -8,204 -10,663 -8,291 -8,598 -2,872 -4,176 -2,328 -5,312 -11,486 4 7.5 to 15 years -3,733 -3,844 -5,926 -4,885 -6,332 -6,640 -5,232 -5,484 -6,080 -7,638 -4,873 -6,086 5 15 years or more -8,144 -7,296 -1,437 -5,493 -3,816 -2,050 -1,450 -293 -632 -455 -2,292 -2,049 Federal agency securities Debt, maturing in 6 Less than 3.5 years 4,104 4,099 4,469 3,298 6,035 3,841 4,121 5,398 3,508 2,951 4,005 4,130 7 3.5 to 7.5 years 1,940 2,314 2,723 2,462 2,698 2,796 2,678 2,719 2,696 2,856 3,527 3,795 8 7.5 years or more 5,108 4,231 3,695 3,685 4,046 3,720 3,580 3,830 3,492 3,656 3,572 3,648 Mortgage-backed securities 9 Pass-throughs 25,712 27,555 22,350 21,506 18,525 27,315 26,517 24,685 13,550 23,937 29,624 29,668 10 All others' . 14,414 15,780 17,575 17,795 17,868 16,620 16,373 17,397 20,119 20,670 18,725 18,717 Other money market instruments 11 Certificates of deposit 3,355 3,147 2,928 2,644 3,435 2,610 2,562 3,168 3,110 3,709 3,593 3,445 12 Commercial paper 6,481 6,194 5,420 5,847 5,296 5,889 6,148 5,200 4,361 4,253 5,653 5,833 13 Bankers acceptances 1,495 1,574 1,413 1,630 1,840 1,564 1,257 1,301 1,264 1,330 1,000 1,392 FUTURE AND FORWARD TRANSACTIONS5 By type of deliverable security U.S. Treasury securities 14 Bills -8,523 -10,708 -9,316 -10,350 -13,238 -11,880 -8,267 -6,389 -8,082 -12,918 -11,273 -11,078 Coupon securities, by maturity 15 Less than 3.5 years 1,195 394 2,144 111 209 441 2,984 3,645 2,650 2,142 1,987 243 16 3.5 to 7.5 years -1,553 -1,565 -516 -1,566 -1,077 -945 -235 -719 -16 1,870 3,040 3,263 17 7.5 to 15 years -1,061 -500 -542 -575 -337 449 -730 -1,042 -1,617 -34 224 1,740 18 15 years or more -3,551 -2,016 -5,074 -2,594 -4,149 -5,747 -5,356 -5,217 -4,746 -5,532 -4,306 -5,009 Federal agency securities Debt, maturing in 19 Less than 3.5 years 35 54 112 180 -45 -14 -97 428 231 -14 300 1,061 20 3.5 to 7.5 years -60 16 123 75 -65 109 145 187 135 187 39 317 21 7.5 years or more -18 94 18 287 180 56 -83 -1 58 -24 0 100 Mortgage-backed securities 22 Pass-throughs -15,336 -14,580 -6,874 -9,585 -2,912 -12,654 -12,046 -8,898 4,041 -7,472 -13,065 -11,497 23 All others 1,363 1,883 1,460 1,081 1,779 2,223 1,506 1,417 338 1,365 1,867 3,429 24 Certificates of deposit -153,734 -175,570 -190,580 -179,251 -179,492 -190,448 -190,469 -198,974 -196,901 -193,222 -135,563 -133,527 Financing6 Reverse repurchase agreements 25 Overnight and continuing 182,835 179,781 167,562 162,257 183,095 180,718 172,652 149,592 156,887 203,686 210,043 208,845 26 251,079 254,361 233,972 252,491 234,131 245,766 236,075 243,182 206,910 263,130 278,315 281,433 Repurchase agreements 27 Overnight and continuing 287,307 270,661 263,365 221,264 282,007 285,609 286,300 242,050 223,096 314,115 332,437 332,730 28 Term 234,937 255,652 231,374 292,960 219,421 232,870 225,806 258,941 211,932 233,496 258,725 263,295 Securities borrowed 29 Overnight and continuing 59,052 62,159 62,441 64,400 64,191 62,784 62,399 60,518 63,168 65,749 68,424 69,153 30 23,690 28,080 29,811 32,989 29,679 30,823 29,610 31,048 27,509 32,103 32,833 30,336 Securities loaned 31 Overnight and continuing 9,304 9,271 8,302 9,330 7,434 7,352 8,763 8,621 9,080 8,702 10,566 10,295 32 Term 742 1,363 897 4,057 387 410 396 1,775 1,364 834 1,249 833 Collateralized loans 33 Overnight and continuing 8,547 10,097 10,755 10,204 9,567 9,692 10,719 10,881 12,684 19,105 17,833 17,984 MEMO: Matched book7 Reverse repurchases 34 Overnight and continuing 124,310 123,670 116,612 114,179 124,129 119,955 123,691 109,340 107,925 142,013 150,223 146,554 35 Term 205,104 205,613 197,052 205,149 193,840 203,366 200,344 209,184 173,832 226,219 239,862 241,594 Repurchases 36 Overnight and continuing 143,450 135,345 137,254 112,602 143,575 148,199 140,897 125,160 130,128 176,104 179,318 179,831 37 Term 181,206 192,103 170,102 208,512 163,073 178,622 175,124 185,520 141,000 177,584 193,902 197,339 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 FRAsSpeEciRfy delayed delivery. All 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 AAggeennccyy 11998877 11998888 11998899 11999900 July Aug. Sept. Oct. Nov. 1 Federal and federally sponsored agencies 341,386 381,498 411,805 434,668 432,637 437,942 436,189 438,032 439,670 2 Federal agencies 37,981 35,668 35,664 42,159 40,380 40,923 42,409 42,638 42,951 3 Defense Department1 13 8 7 7 7 7 7 7 7 4 Export-Import Bank2,3 11,978 11,033 10,985 11,376 11,244 11,244 11,267 11,267 11,267 5 Federal Housing Administration4 183 150 328 393 300 315 336 337 365 6 Government National Mortgage Association participation certificates 1,615 0 0 0 0 0 0 0 00 7 Postal Service6 6,103 6,142 6,445 6,948 6,621 6,621 8,421 8,421 8,421 8 Tennessee Valley Authority 18,089 18,335 17,899 23,435 22,208 22,745 22,378 22,606 22,891 9 United States Railway Association6 0 0 0 0 0 0 0 0 0 10 Federally sponsored agencies7 303,405 345,830 375,407 392,509 392,257 397,019 393,780 395,394 3%,719 11 Federal Home Loan Banks 115,727 135,836 136,108 117,895 106,397 107,469 106,510 105,945 107,344 12 Federal Home Loan Mortgage Corporation 17,645 22,797 26,148 30,941 29,559 31,650 31,502 31,818 31,099 13 Federal National Mortgage Association 97,057 105,459 116,064 123,403 128,764 128,589 127,460 128,594 130,197 14 Farm Credit Banks8 55,275 53,127 54,864 53,590 51,318 52,056 52,010 52,488 52,105 15 Student Loan Marketing Association 16,503 22,073 28,705 34,194 36,742 37,778 36,821 37,072 36,497 16 Financing Corporation 1,200 5,850 8,170 8,170 8,170 8,170 8,170 8,170r 8,170 17 Farm Credit Financial Assistance Corporation11 0 690 847 1,261 1,261 1,261 1,261 1,261 1,261 18 Resolution Funding Corporation12 0 0 4,522 23,055 29,9% 29,996 29,9% 29,9% 29,9% MEMO 19 Federal Financing Bank debt13 152,417 142,850 134,873 179,083 186,752 188,920 194,234 192,747 194,837 Lending to federal and federally sponsored agencies 20 Export-Import Bank 11,972 1111,,002277 1100,,997799 1111,,337700 1111,,223388 1111,,223388 1111,,226611 1111,,226611 1111,,226611 21 Postal Service6 5,853 5,892 6,195 6,698 6,401 6,401 8,201 8,201 8,201 22 Student Loan Marketing Association 4,940 4,910 4,880 4,850 4,850 4,850 4,850 4,820 4,820 23 Tennessee Valley Authority 16,709 16,955 16,519 14,055 12,828 12,373 11,875 11,375 11,375 24 United States Railway Association6 0 0 0 0 0 0 0 0 0 Other Lending14 25 Farmers Home Administration 59,674 58,496 53,311 52,324 51,334 51,334 5500,,669944 48,534 48,534 26 Rural Electrification Administration 21,191 19,246 19,265 18,890 18,832 18,846 18,597 18,599 18,628 27 Other 32,078 26,324 23,724 70,8% 81,269 83,878 88,756 89,957 92,018 1. Consists of mortgages assumed by the Defense Department between 1957 shown on line 22. and 1963 under family housing and homeowners assistance programs. 10. The Financing Corporation, established in August 1987 to recapitalize the 2. Includes participation certificates reclassified as debt beginning Oct. 1,1976. Federal Savings and Loan Insurance Corporation, undertook its first borrowing in 3. On-budget after Sept. 30, 1976. October 1987. 4. Consists of debentures issued in payment of Federal Housing Administration 11. The Farm Credit Financial Assistance Corporation, established in January insurance claims. Once issued, these securities may be sold privately on the 1988 to provide assistance to the Farm Credit System, undertook its first securities market. borrowing in July 1988. 5. Certificates of participation issued before fiscal 1969 by the Government 12. The Resolution Funding Corporation, established by the Financial Institu- National Mortgage Association acting as trustee for the Farmers Home Admin- tions Reform, Recovery, and Enforcement Act of 1989, undertook its first istration; Department of Health, Education, and Welfare; Department of Housing borrowing in October 1989. and Urban Development; Small Business Administration; and the Veterans 13. The FFB, which began operations in 1974, is authorized to purchase or sell Administration. obligations issued, sold, or guaranteed by other federal agencies. Since FFB 6. Off-budget. incurs debt solely for the purpose of lending to other agencies, its debt is not 7. Includes outstanding noncontingent liabilities: notes, bonds, and deben- included in the main portion of the table in order to avoid double counting. tures. Some data are estimated. 14. Includes FFB purchases of agency assets and guaranteed loans; the latter 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, contain loans guaranteed by numerous agencies with the guarantees of any shown in line 17. particular agency being generally small. The Farmers Home Administration item 9. Before late 1982, the Association obtained financing through the Federal consists exclusively of agency assets, while the Rural Electrification Administra- Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is tion entry contains both agency assets and guaranteed loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • April 1992 t.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1991 1992 TTyyppee ooff iissssuuee oorr iissssuueerr,, 11998899 11999900 11999911rr oorr uussee June July Aug. Sept. Oct. Nov. Dec.* Jan. 1 All issues, new and refunding1 113,646 120,339 154,402r 13,804 11,629 15,744 13,240 11,357 17,734 15,796 12,612 By type of issue 2 General obligation 35,774 39,610 55,100* 4,442 3,900 5,919 5,253 3,088 6,510 5,871 3,954 3 Revenue 77,873 81,295 99,302* 9,362 7,729 9,825 7,987 8,269 11,224 9,925 8,658 By Type of issuer 4 State 11,819 15,149 n.a. 1,529 650 2,328 3,371 7,195 1,171 1,671 1,036 5 Special district or statutory authority2 71,022 72,661 n.a. 5,057 7,320 8,890 6,272 605 10,817 9,435 8,243 6 Municipality, county, or township 30,805 32,510 n.a. 7,218 3,659 4,526 3,597 3,557 5,746 4,690 3,333 7 Issues for new capital, total 84,062 103,235 116,953r 10,008 9,513 12,164 9,586 8,967 13,495 12,020 7,127 By use of proceeds 8 Education 15,133 17,042 21,664* 1,568 2,033 1,585 1,507 1,511 1,297 1,924 2,385 9 Transportation 6,870 11,650 13,395* 1,570 629 720 1,248 1,744 2,682 488 1,194 10 Utilities and conservation 11,427 11,739 21,447 1,884 1,763 1,673 1,573 1,825 1,915 1,931 11,,995533 11 Social welfare 16,703 23,099 26,121 2,220 1,986 4,119 2,793 1,276 2,621 3,070 886688 12 Industrial aid 5,036 6,117 8,542 895 511 676 916 973 349 1,083 218 13 Other purposes 28,894 n.a. n.a. 1,871 2,591 3,391 1,549 1,638 4,631 3,524 n.a. 1. Par amounts of long-term issues based on date of sale. SOURCES. Investment Dealer's Digest beginning April 1990. Securities Data/ 2. Since 1986, has included school districts. Bond Buyer Municipal Data Base beginning 1986. Public Securities Association for earlier data. 1.46 NEW SECURITY ISSUES U.S. Corporations Millions of dollars 1991 TTyyppee ooff iissssuuee,, ooffffeerriinngg,, 11998899 11999900 11999911 oorr iissssuueerr May June July Aug. Sept. Oct. Nov. Dec. 1 All issues1 378,760* 340,197* 379,560 37,908* 31,837* 23,176* 35,450* 32,180* 34,893* 34,276* 31,586 2 Bonds2 320,889* 299,959* 314,201 30,490* 26,219* 20,494* 28,720* 26,759* 26,029* 25,223* 24,066 By type of offering 3 Public, domestic 180,618* 189,917* 287,010 27,660* 23,797* 18,920* 26,845* 23,856* 23,469* 23,200* 23,300 4 Private placement, domestic3 117,420 86,988 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Sold abroad 22,851 23,054 27,192 2,830 2,422* 1,574* 1,875* 2,902* 2,560* 2,070* 1,000 By industry group 6 Manufacturing 76,456* 53,110 69,710 7,080* 4,260* 3,600* 7,643* 6,949* 4,732* 4,536* 4,956 7 Commercial and miscellaneous 49,615* 40,019 20,694 1,213* 1,773 1,500 1,388 1,012 1,209 2,044 1,977 8 Transportation 10,032 12,818* 6,998 665 567 697 809 231 744* 180* 150 9 Public utility 18,696* 17,621* 20,454 2,722 1,644 1,457 1,897 1,315* 1,430* 3,063* 2,238 10 Communication 8,461 6,597* 8,541 337 1,838 749* 668 408 958 226* 1,085 11 Real estate and financial 157,629* 169,789* 187,806 18,474 16,138* 12,492* 16,315* 16,844* 16,957* 15,175* 13,660 12 Stocks2 57,870 40,165 n.a. 7,418 5,618 2,682 6,730 5,421 8,864 9,053 7,520 By type of offering 13 Public preferred 6,194 3,998 17,408 1,392 1,731 203 1,952 666 3,527 3,240 2,771 14 Common 26,030 19,443 47,860 6,027 3,887 2,479 4,778 4,755 5,337 5,813 4,749 15 Private placement3 25,647 16,736 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. By industry group 16 Manufacturing 9,308 5,649 n.a. 2,291 1,909 685 3,167 1,842 3,623 4,054 2,684 17 Commercial and miscellaneous 7,446 10,171 n.a. 1,563 851 1,427 2,050 858 2,095 2,158 2,535 18 Transportation 1,929 369 n.a. 277 0 18 56 0 16 0 0 19 Public utility 3,090 416 n.a. 573 471 143 150 55 320 174 233 20 Communication 1,904 3,822 n.a. 0 295 46 8 0 25 84 17 21 Real estate and financial 34,028 19,738 n.a. 2,714 2,091 350 1,298 2,666 2,622 2,583 2,014 1. Figures represent gross proceeds of issues maturing in more than one year; 2. Monthly data cover only public offerings. they are the principal amount or number of units calculated by multiplying by the 3. Monthly data are not available. offering price. Figures exclude secondary offerings, employee stock plans, SOURCES. IDD Information Services, Inc., the Board of Governors of the investment companies other than closed-end, intracorporate transactions, equi- Federal Reserve System, and, before 1989, the U.S. Securities and Exchange ties sold abroad, and Yankee bonds. Stock data include ownership securities Commission. issued by limited partnerships. 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 Assets Millions of dollars 1991 IItteemm11 11999900"" 11999911 May June July Aug. Sept. Oct. Nov.r Dec. 1 Sales of own shares2 344,420 464,488 36,719 33,922 39,329 38,014 37,316 45,218 41,365 52,035 288,441 342,088 26,972 27,629 28,767 28,128 26,319 27,957 28,454 38,557 3 Net sales3 55,979 122,400 9,747 6,293 10,562 9,886 10,997 17,261 12,911 13,478 4 Assets4 568,517 807,001 671,852 661,643 (90,486 712,782 730,426 753,344 752,798 807,001 5 Cash5 48,638 60,937 55,450 55,057 55,293 52,791 53,884 59,902 59,689 60,937 6 Other 519,875 746,064 616,402 606,586 635,193 659,992 676,543 695,492 693,109 746,064 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. Includes all U.S. Treasury securities and other short-term debt securities. both money market mutual funds and limited-maturity municipal bond funds. SOURCE. Investment Company Institute. Data based on reports of membership, 2. Includes reinvestment of dividends. Excludes reinvestment of capital gains which comprises substantially all open-end investment companies registered with distributions. the Securities and Exchange Commission. Data reflect underwritings of new 3. Does not includes sales or redemptions resulting from transfers of shares companies. into or out of money market mutual funds within the same fund family. 1.48 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data at seasonally adjusted annual rates 1989 1990 1991 AAccccoouunntt 11998888 11998899 11999900 Q4 Ql Q2 Q3 Q4 Ql Q2 Q3 1 Profits with inventory valuation and capital consumption adjustment 365.0 351.7 319.0 334.7 340.2 339.8 299.8 296.1 302.1 303.5 306.1 2 Profits before taxes 347.5 344.5 332.3 332.8 336.6 331.6 335.1 326.1 309.1 306.2 318.2 3 Profits tax liability 137.0 138.0 135.3 129.8 137.6 137.9 138.8 127.1 119.4 123.5 128.6 4 Profits after taxes 210.5 206.6 197.0 203.0 199.1 193.7 196.3 199.0 189.7 182.7 189.6 5 Dividends 115.3 127.9 133.7 130.7 132.3 132.5 133.8 136.2 137.8 136.7 138.1 6 Undistributed profits 95.2 78.7 63.3 72.3 66.7 61.2 62.5 62.8 51.9 46.1 51.5 7 Inventory valuation -27.3 -17.5 -14.2 -13.5 -6.6 3.8 -32.6 -21.2 6.7 9.9 -4.8 8 Capital consumption adjustment 44.7 24.7 .8 15.4 10.2 4.4 -2.7 -8.8 -13.6 -12.6 -7.3 SOURCE. Survey of Current Business (U.S. Department of Commerce). 1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment Billions of dollars; quarterly data at seasonally adjusted annual rates 1990 19911 19921 IInndduussttrryy 11999900 11999911 1199992211 Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql 1 Total nonfarm business 532.61 529.97 558.60 534.55 534.11 530.13 535.50 524.57 527.86 531.96 563.31 Manufacturing 2 Durable goods industries 82.58 77.04 79.38 84.15 82.48 79.03 81.24 79.69 74.51 72.74 80.58 3 Nondurable goods industries 110.04 107.27 104.68 110.87 111.57 110.69 109.90 107.66 102.54 108.98 107.52 Nonmanufacturing 4 Mining 9.88 10.06 9.50 9.77 9.97 10.12 9.89 10.09 10.09 10.15 10.58 Transportation 5 Railroad 6.40 5.84 6.78 6.67 5.66 6.81 5.59 6.27 6.50 5.02 5.52 6 Air 8.87 9.84 12.34 9.37 9.55 7.54 11.18 10.10 9.81 8.27 12.88 7 Other 6.20 6.50 7.12 5.90 5.87 6.82 6.48 6.68 6.52 6.32 6.41 Public utilities 8 Electric 44.10 43.56 47.34 42.83 43.80 45.88 43.36 42.87 43.09 44.90 48.54 9 Gas and other 23.11 22.42 24.10 21.80 23.88 24.36 23.68 21.71 23.38 20.92 22.98 10 Commercial and other 241.43 247.44 267.35 243.18 241.32 238.87 244.19 239.50 251.42 254.66 268.28 1. Figures are amounts 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 (U.S. Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Nonfinancial Statistics • April 1992 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities Billions of dollars, end of period; not seasonally adjusted 1990 1991 AAccccoouunntt 11998877 11998888 11998899 Q1 Q2 Q3 Q4 Ql Q2 Q3 ASSETS 1 Accounts receivable, gross1 388.1 426.2 445.7 452.8 468.8 474.0 486.7 478.9 487.9 487.8 2 Consumer 141.1 146.2 140.8 137.9 138.6 140.9 136.0 131.6 133.9 132.5 3 Business 207.4 236.5 256.0 262.9 274.8 275.4 290.8 290.0 295.5 296.6 4 Real estate 39.5 43.5 48.9 52.1 55.4 57.7 59.9 57.3 58.5 58.7 5 LESS: Reserves for unearned income 45.3 50.0 52.0 51.9 54.3 55.1 56.6 57.0 58.7 59.6 6 Reserves for losses 6.8 7.3 7.7 7.9 8.2 8.6 9.2 10.3 10.8 12.9 7 Accounts receivable, net 336.0 368.9 386.1 393.0 406.3 410.3 420.9 411.6 418.4 415.2 8 All other 58.3 72.4 91.6 92.5 95.5 102.8 99.6 103.4 106.1 111.9 9 Total assets 394.2 441.3 477.6 485.5 501.9 513.1 520.6 515.0 524.5 527.1 LIABILITIES AND CAPITAL 10 Bank loans 16.4 15.4 14.5 13.9 15.8 15.6 19.4 22.0 22.7 24.0 11 Commercial paper 128.4 142.0 149.5 152.9 152.4 148.6 152.7 141.2 140.6 138.1 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 70.5 72.8 82.0 82.7 77.8 81.7 87.4 15 Not elsewhere classified n.a. 137.9 147.8 145.7 153.0 156.6 157.0 162.4 164.2 163.4 16 All other liabilities 52.8 59.8 62.6 61.7 66.1 68.7 66.0 68.0 72.2 72.1 17 Capital, surplus, and undivided profits 31.5 35.6 39.4 40.7 41.8 41.6 42.8 43.7 43.0 42.1 18 Total liabilities and capital 394.2 441.3 477.6 485.5 501.9 513.1 520.6 515.0 524.5 527.1 1. Excludes pools of securitized assets. 1.52 DOMESTIC FINANCE COMPANIES Business Credit Outstanding and Net Change1 Millions of dollars, end of period; seasonally adjusted, except as noted 1991 TTyyppee ooff ccrreeddiitt July Aug. Sept. Oct. Nov. Dec. 1 Total 258,957 292,638 309,709 300,161 305,024 307,599 310,876 311,632 309,709 Retail financing of installment sales 2 Automotive 39,479 38,110 33,204 35,491 34,665 34,119 34,167 33,664 33,204 3 Equipment 29,627 31,784 35,404 32,194 33,146 34,822 33,989 33,375 35,404 4 Pools of securitized assets2 698 951 819 793 833 797 769 746 819 Wholesale 5 Automotive 33,814 32,283 32,487 29,454 30,637 30,072 31,831 32,292 32,487 6 Equipment 6,928 11,569 9,790 11,344 10,631 10,594 11,075 10,414 9,790 7 All other 9,985 9,126 8,459 8,807 8,712 8,695 8,407 8,418 8,459 8 Pools of securitized assets2 0 2,950 4,905 2,843 3,508 4,053 4,458 4,639 4,905 Leasing 9 Automotive 26,804 39,129 44,445 43,024 44,628 45,387 45,837 45,299 44,445 10 Equipment 68,240 75,626 87,821 84,311 86,145 86,732 87,701 90,079 87,821 11 Pools of securitized assets2 1,247 1,849 1,820 1,750 1,679 1,844 1,803 1,885 1,820 12 Loans on commercial accounts receivable and factored commercial accounts receivable 18,511 22,475 23,859 23,125 23,366 23,204 23,295 23,338 23,859 13 All other business credit 23,623 26,784 26,697 27,025 27,073 27,279 27,544 27,483 26,697 Net change (during period) 1 Total 24,066 33,681 17,071 1,933 4,862 2,576 3,277 756 -1,923 Retail financing of installment sales 2 Automotive 2,269 -1,369 -4,906 100 -825 -547 48 -503 -460 3 Equipment 1,442 2,157 3,619 4 952 1,676 -833 -614 2,029 4 Pools of securitized assets -26 253 -132 86 40 -36 -28 -23 73 Wholesale 5 Automotive 861 -1,532 204 149 1,183 -564 1,759 461 195 6 Equipment 957 4,641 -1,779 917 -713 -37 481 -662 -624 7 All other 628 -859 -668 -44 -95 -17 -289 11 41 8 Pools of securitized assets2 0 2,950 1,955 38 665 545 405 181 266 Leasing 9 Automotive 2,111 12,325 5,316 1,421 1,604 759 450 -538 -854 10 Equipment 10,581 7,386 12,195 350 1,834 587 969 2,378 -2,258 11 Pools of securitized assets2 526 602 -29 25 -71 165 -41 82 -65 12 Loans on commercial accounts receivable and factored commercial accounts receivable 825 3,964 1,383 -914 240 -162 91 43 520 13 All other business credit 2,446 3,161 -87 -199 47 207 264 -60 -786 Digitized for FRASER http://fraser.stlou1i.s Dfeadta. oinr gth/i s table also appear in the Board's G.20 (422) monthly statistical 2. Data on pools of securitized assets are not seasonally adjusted, release. For ordering address, see inside front cover. Federal Reserve Bank of St. Louis

Real Estate A35 1.53 MORTGAGE MARKETS Conventional Mortgages on New Homes Millions of dollars, except as noted 1991 1992 IItteemm 11998899 11999900 11999911 July Aug. Sept. Oct. Nov. Dec. Jan. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms1 1 Purchase price (thousands of dollars) 159.6 153.2 155.0 165.1 159.0 157.8 153.4 162.6 159.1 153.9 2 Amount of loan (thousands of dollars) 117.0 112.4 114.0 121.6 115.7 114.3 115.0 116.0 113.8 114.9 3 Loan-price ratio (percent) 74.5 74.8 75.0 75.0 74.6 73.3 76.5 73.5 73.1 75.2 4 Maturity (years) 28.1 27.3 26.8 27.0 27.1 25.9 27.5 26.4 26.4 26.2 5 Fees and charges (percent of loan amount) 2.06 1.93 1.71 1.85 1.74 1.86 1.61 1.53 1.50 1.85 6 Contract rate (percent per year) 9.76 9.68 9.02 9.12 9.19 9.00 8.78 8.38 8.28 8.17 Yield (percent per year) 7 OTS series3 10.11 10.01 9.30 9.43 9.48 9.30 9.04 8.64 8.53 8.49 8 HUD series4 10.21 10.08 9.20 9.46 9.22 8.88 8.76 8.67 8.30 8.69 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series)5 10.24 10.17 9.25 9.59 9.14 9.06 8.71 8.69 8.10 8.72 10 GNMA securities6 9.71 9.51 8.59 8.93 8.69 8.60 8.34 8.09 7.81 7.81 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 104,974 113,329 122,837 123,770 124,230 124,954 125,884 126,624 128,983 131,058 12 FHA/VA-insured 19,640 21,028 21,702 21,511 21,529 21,636 21,576 21,547 21,796 21,981 13 Conventional 85,335 92,302 101,135 102,259 102,701 103,318 104,308 105,077 107,187 109,077 Mortgage transactions (during period) 14 Purchases 22,518 23,959 37,202 3,183 3,069 3,032 3,408 3,299 5,114 4,809 Mortgage commitments (during period)1 15 Issued8 n.a. 23,689 40,010 2,975 3,453 3,1% 4,122 3,806 5,285 7,202 16 To sell9 n.a. 5,270 7,608 1,374 1,051 762 917 569 78 249 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)9 17 Total 20,105 20,419 n.a. 24,061 24,217 23,906 24,922 25,239 n.a. n.a. 18 FHA/VA-insured 590 547 n.a. 481 475 471 462 468 n.a. n.a. 19 Conventional 19,516 19,871 n.a. 23,581 23,742 23,435 24,460 24,772 n.a. n.a. Mortgage transactions (during period) 20 Purchases 78,588 75,517 n.a. 8,649 9,191 9,155 8,644 10,170 n.a. n.a. 21 Sales 73,446 73,817 92,870 8,057 8,803 9,305 7,449 9,545 9,929 10,597 Mortgage commitments (during period)10 22 Contracted 88,519 102,401 n.a. 8,890 12,430 7,468 6,358 11,594 n.a. n.a. 1. Weighted averages based on sample surveys of mortgages originated by Association (GNMA), assuming prepayment in twelve years on pools of thirtymajor institutional lender groups; compiled by the Federal Housing Finance year mortgages insured by the Federal Housing Administration or guaranteed by Board in cooperation with the Federal Deposit Insurance Corporation. the Department of Veterans Affairs carrying the prevailing ceiling rate. Monthly 2. Includes all fees, commissions, discounts, and "points" paid (by the figures are averages of Friday figures from the Wall Street Journal. borrower or the seller) to obtain a loan. 7. Includes some multifamily and nonprofit hospital loan commitments in 3. Average effective interest rates on loans closed, assuming prepayment at addition to one- to four-family loan commitments accepted in the Federal National the end of ten years; from Office of Thrift Supervision (OTS). Mortgage Association's (FNMA's) free market auction system, and through the 4. Average contract rates on new commitments for conventional first mort- FNMA-GNMA tandem plans. gages; from U.S. Department of Housing and Urban Development (HUD). 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 (FHA) for immediate 9. Includes participation as well as whole loans. delivery in the private secondary market. Based on transactions on first day of 10. Includes conventional and government-underwritten loans. The Federal subsequent month. Large monthly movements in average yields may reflect Home Loan Mortgage Corporation's mortgage commitments and mortgage transmarket adjustments to changes in maximum permissible contract rates. actions 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. backed by mortgages and guaranteed by the Government National Mortgage Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Nonfinancial Statistics • April 1992 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1990 1991 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11998877 11998888 11998899 Q3 Q4 Ql Q2 Q3P 1 All holders 2,986,425 3,270,118 3,556,370 3,870,156r 3,912,197r 3,943,103r 3,995,164 4,026,139 By type of property 2 One- to four-family residences 1,962,958 2,201,231 2,429,689 2,724,873r 2,765,11 lr 2,789,693r 2,837,098 2,876,979 3 Multifamily residences 278,899 291,405 303,416 306,073r 307,049r 309,633r 311,769 309,368 4 Commercial 657,036 692,236 739,240 754,926r 756,075r 759,852r 762,546 756,018 5 Farm 87,532 85,247 84,025 84,284 83,%2r 83,925r 83,752 83,775 By type of holder 6 Major financial institutions 1,665,291 1,831,472 1,931,537 1,933,303 l,913,945r 1,902,050"^ 1,898,114 1,868,554 7 Commercial banks 592,449 674,003 767,069 831,193 844,456r 856,499r 871,222 870,684 8 One- to four-family 275,613 334,367 389,632 445,882 455,698r 463,547r 476,133 478,628 9 Multifamily 32,756 33,912 38,876 37,900 37,008r 37,927r 37,864 36,669 10 Commercial 269,648 290,254 321,906 330,086 334,520r 337,518r 339,186 337,063 11 Farm 14,432 15,470 16,656 17,326 17,231 17,507r 18,039 18,323 12 Savings institutions3 860,467 924,606 910,254 836,047 801,628 776,551 755,219 722,754 13 One- to four-family 602,408 671,722 669,220 626,297 600,154 583,694 570,044 549,406 14 Multifamily 106,359 110,775 106,014 94,790 91,806 88,743 86,448 82,361 15 Commercial 150,943 141,433 134,370 114,430 109,168 103,647 98,280 90,583 16 Farm 757 676 650 530 500 468 447 404 17 Life insurance companies 212,375 232,863 254,214 266,063 267,861r 269, OOC 271,674 275,117 18 One- to four-family 13,226 11,164 12,231 12,773 13,005r 11,737r 11,743 11,947 19 Multifamily 22,524 24,560 26,907 28,100 28,979" 29,493r 30,006 30,527 20 Commercial 166,722 187,549 205,472 214,585 215,121 216,768r 219,204 221,750 21 Farm 9,903 9,590 9,604 10,605 10,756 ll,001r 10,721 10,893 22 Finance companies4 29,716 37,846 45,476 49,784 48,777 48,187 48,972 50,800 23 Federal and related agencies 192,721 200,570 209,498 242,695 250,761 264,189r 276,798 283,395 24 Government National Mortgage Association 444 26 23 21 20 22r 22 22 25 One- to four-family 25 26 23 21 20 22r 22 22 26 Multifamily , 419 0 0 0 0 0 0 0 27 Farmers Home Administration 43,051 42,018 41,176 41,269 41,439 41,307 41,430 41,506 28 One- to four-family 18,169 18,347 18,422 18,476 18,527 18,522 18,521 18,542 29 Multifamily 8,044 8,513 9,054 9,477 9,640 9,720 9,898 10,037 30 Commercial 6,603 5,343 4,443 4,608 4,690 4,715 4,750 4,803 31 Farm 10,235 9,815 9,257 8,708 8,582 8,350 8,261 8,124 32 Federal Housing and Veterans Administration 5,574 5,973 6,087 7,938 8,801 9,492 10,210 11,395 33 One- to four-family 2,557 2,672 2,875 3,248 3,593 3,600 3,729 3,948 34 Multifamily 3,017 3,301 3,212 4,690 5,208 5,891 6,480 7,446 35 Federal National Mortgage Association 96,649 103,013 110,721 113,718 116,628 119,1% 122,806 125,451 36 One- to four-family 89,666 95,833 102,295 103,722 106,081 108,348 111,560 113,6% 37 Multifamily 6,983 7,180 8,426 9,9% 10,547 10,848 11,246 11,755 38 Federal Land Banks 34,131 32,115 29,640 29,441 29,416 29,253 29,152 29,053 39 One- to four-family 2,008 1,890 1,210 1,766 1,838 1,884 2,041 2,124 40 Farm 32,123 30,225 28,430 27,675 27,577 27,368 27,111 26,929 41 Federal Home Loan Mortgage Corporation 12,872 17,425 21,851 20,508 21,857 23,221r 23,649 23,906 42 One- to four-family 11,430 15,077 18,248 17,810 19,185 20,570r 21,120 21,489 43 Multifamily 1,442 2,348 3,603 2,697 2,672 2,651 2,529 2,417 44 Mortgage pools or trusts6 718,297 811,847 946,766 1,062,729 l,110,555r l,144,733r 1,184,4% 1,232,394 45 Government National Mortgage Association 317,555 340,527 368,367 394,859 403,613 409,929 413,707 422,501 46 One- to four-family 309,806 331,257 358,142 384,474 391,505 397,631 401,304 409,826 47 Multifamily 7,749 9,270 10,225 10,385 12,108 12,298 12,403 12,675 48 Federal Home Loan Mortgage Corporation 212,634 226,406 272,870 301,797 316,359 318,215' 341,132 348,843 49 One- to four-family 205,977 219,988 266,060 293,721 308,369 319,978 332,624 341,183 50 Multifamily 6,657 6,418 6,810 8,077 7,990 8,237r 8,509 7,660 51 Federal National Mortgage Association 139,960 178,250 228,232 281,806 299,833 312,101 331,089 351,917 52 One- to four-family 137,988 172,331 219,577 273,335 291,194 303,554 322,444 343,430 53 Multifamily 1,972 5,919 8,655 8,471 8,639 8,547 8,645 8,487 54 Farmers Home Administration 245 104 80 70 66 62 13 12 55 One- to four-family 121 26 21 18 17 14 13 12 56 Multifamily 0 0 0 0 0 0 0 0 57 Commercial 63 38 26 24 24 23 0 0 58 Farm 61 40 33 29 26 24 0 0 59 Individuals and others7 410,116 426,229 468,569 636,935r 632,131r 635,756 641,7% 60 One- to four-family 246,061 259,971 294,517 445,534r 449,440" 444,865r 448,215 453,147 61 Multifamily 80,977 79,209 81,634 83,714r 84,388r 83,567r 83,101 83,382 62 Commercial 63,057 67,618 73,023 82,769" 83,816r 84,493r 85,267 86,164 63 Farm 20,021 19,431 19,395 19,412 19,291r 19,207r 19,173 19,102 1. Based on data from various institutional and governmental sources, with 4. Assumed to be entirely loans on one- to four-family residences. figures for some quarters estimated in part by the Federal Reserve. Multifamily 5. Securities guaranteed by the Farmers Home Administration (FmHA) sold to debt refers to loans on structures of five or more units. the Federal Financing Bank were reallocated from FmHA mortgage pools to 2. Includes loans held by nondeposit trust companies but not loans held by FmHA mortgage holdings in 1986:4 because of accounting changes by the FmHA. bank trust 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 institutions insured by the Federal Savings and Loan Insurance as a separate line item. Corporation include loans in process and other contra-assets (credit balance 7. Other holders include mortgage companies, real estate investment trusts, accounts that must be subtracted from the corresponding gross asset categories to state and local credit agencies, state and local retirement funds, noninsured yield net asset levels). 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 CREDIT Total Outstanding and Net Change1 Millions of dollars, amounts outstanding, end of period 1991 HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt 1988 11998899 11999900 July Aug. Sept. Oct. Nov. Dec. Seasonally adjusted 1 Total 664,049 718,863 735,102 729,962 729,108 729,152 730,317 730,147 728,425 2 Automobile 284,214 290,676 284,585 273,565 271,906 270,219 270,013 268,123 267,434 3 Revolving 174,104 199,082 220,110 228,199 229,453 232,070 233,661 234,666 234,459 4 Mobile home 25,348 22,471 20,919 19,615 19,495 18,892 18,943 19,059 19,109 5 Other 180,383 206,633 209,487 208,582 208,253 207,971 207,700 208,300 207,424 Not seasonally adjusted 6 Total 674,855 730,901 748,300 727,754 731,531 732,183 730,722r 732,256 742,548 By major holder 7 Commercial banks 324,792 342,770 347,466 334,273 335,662 335,509 335,258 334,904 340,594 8 Finance companies 146,212 140,832 137,450 134,120 135,509 132,471 131,778 130,679 129,566 9 Credit unions 88,340 93,114 92,911 92,017 92,843 93,305 92,746 92,373 92,188 10 Retailers 48,438 44,154 43,552 36,392 37,296 37,281 37,359 38,651 43,130 11 Savings institutions 63,399 57,253 45,616 39,012 37,893 37,036 37,424 36,987 35,941 12 Gasoline companies 3,674 •3,935 4,822 4,712 4,857 4,753 4,529 4,388 4,362 13 Pools of securitized assets n.a. 48,843 76,483 87,228 87,471 91,829 91,628 94,274 96,767 By major type of credit3 14 Automobile 284,328 290,705 284,813 274,222 274,190 273,354 272,092 268,297 267,808 15 Commercial banks 123,392 126,288 126,259 121,319 120,577 119,730 119,276 118,502 117,349 16 Finance companies 97,245 82,721 74,396 70,444 71,571 69,853 69,364 67,907 66,549 17 Pools of securitized assets 0 18,235 24,537 25,609 25,071 26,808 26,803 26,237 27,997 18 Revolving 184,045 210,310 232,370 226,145 229,224 231,281 231,862 235,674 247,471 19 Commercial banks 123,020 130,811 132,433 124,645 125,787 125,524 126,234 125,734 132,624 20 Retailers 43,833 39,583 39,029 32,076 32,962 32,964 33,055 34,319 38,652 21 Gasoline companies 3,674 3,935 4,822 4,712 4,857 4,753 4,529 4,388 4,362 22 Pools of securitized assets n.a. 23,477 44,335 53,094 54,017 56,438 56,290 59,459 60,139 23 Mobile home 25,143 22,240 20,666 19,639 19,468 18,996 19,026 19,021 18,870 24 Commercial banks 9,025 9,112 9,763 9,552 9,534 9,614 9,600 9,656 9,552 25 Finance companies 7,191 4,716 5,252 5,669 5,700 5,300 5,358 5,401 5,520 26 Other 181,339 207,646 210,451 207,748 208,649 208,553 207,742 208,633 208,399 27 Commercial banks 69,355 76,559 79,011 78,757 79,764 80,641 80,148 81,012 81,069 28 Finance companies 41,776 53,395 57,801 58,007 58,238 57,318 57,056 57,371 57,497 29 Retailers 4,605 4,571 4,523 4,316 4,334 4,317 4,304 4,332 4,478 30 Pools of securitized assets2 n.a. 7,131 7,611 8,525 8,383 8,583 8,535 8,578 8,631 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 Data in this table also appear in the Board's G.19 (421) monthly statistical totals are available. release. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Nonfinancial Statistics • April 1992 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT1 Percent per year, except as noted 1991 IItteemm 11998899 11999900 11999911 June July Aug. Sept. Oct. Nov. Dec. INTEREST RATES Commercial banks2 1 48-month new car3 12.07 11.78 11.14 n.a. n.a. 11.06 n.a. n.a. 10.61 n.a. 2 24-month personal 15.44 15.46 15.18 n.a. n.a. 15.24 n.a. n.a. 14.88 n.a. 3 120-month mobile home3 14.11 14.02 13.70 n.a. n.a. 13.73 n.a. n.a. 13.37 n.a. 4 Credit card 18.02 18.17 18.23 n.a. n.a. 18.24 n.a. n.a. 18.19 n.a. Auto finance companies 5 New car 12.62 12.54 12.41 12.77 12.55 12.40 12.38 12.23 10.79 10.41 6 Used car 16.18 15.99 15.60 15.74 15.66 15.63 15.60 15.46 15.06 14.90 OTHER TERMS4 Maturity (months) 7 New car 54.2 54.6 55.1 55.5 55.5 55.4 55.4 55.4 54.1 53.7 8 Used car 46.6 46.1 47.2 47.3 47.4 47.2 47.2 47.0 47.0 46.9 Loan-to-value ratio 9 New car 91 87 88 88 88 88 87 88 88 88 10 Used car 97 95 96 97 % 97 96 97 % 93 Amount financed (dollars) 11 New car 12,001 12,071 12,494 12,343 12,572 12,518 12,460 12,684 13,245 13,476 12 Used car 7,954 8,289 8,884 8,916 8,989 8,902 8,996 9,077 9,029 9,105 1. Data in this table also appear in the Board's G.19 (421) monthly statistical 3. Before 1983 the maturity for new car loans was 36 months, and for mobile release. For ordering address, see inside front cover. home loans was 84 months. 2. Data are available only for the second month of each quarter. 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 at seasonally adjusted annual rates 1989 1990 1991 IInnssttrruummeenntt oorr sseeccttoorr Q4 Qi 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 lending sector and instrument ? U.S. government 215.0 144.9 157.5 151.6 272.5 185.0 247.3 228.2 286.1 328.4 220044..77 224411..88 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 By instrument Debt capital instruments 465.8 453.2 459.2 379.8 298.2 347.0 391.0 309.3 275.5 216.8 230.5 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 Mortgages 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 1? 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 n 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 n 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 2288..11 7.6 1122..22 1166..88 70 Household 293.0 302.2 314.9 285.0 254.0 291.8 377.2 257.5 227.3 154.0 162.6 199.7 7.1 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 23 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 25 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 Bank loans n.e.c -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 3? U.S. government-related 154.1 171.8 119.8 151.0 167.4 156.4 171.7 184.0 139.2 174.6 115555..88 115500..66 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 ..11 .2 .3 .5 ..11 -.1 39 Bank loans n.e.c 4.0 -3.2 1.4 1.8 .7 4.2 --22..33 -.6 2.0 3.8 11..00 -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 4? Sponsored credit agencies 14.9 29.5 44.9 25.2 17.0 -4.7 9.7 17.1 2222..33 19.0 1144..55 --2222..44 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 obligation (SCO) issuers 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 • April 1992 1.57—Continued 1989 1990 1991 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998866 11998877 11998888 11998899 11999900 Q4 Ql Q2 Q3 Q4 Ql Q2 All sectors 52 Total net borrowing, all sectors 1,131.7 991.7 1014.7 894.5 864.9 824.4 995.7 808.5 867.3 788.1 564.7 505.1 53 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 54 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 55 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 56 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 57 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 58 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 59 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 60 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 61 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 62 Net borrowing by domestic nonfinancial sectors 836.9 694.9 750.4 684.1 631.0 627.6 780.5 635.0 636.6 471.9 359.8 526.9 63 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 64 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 65 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 66 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 67 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 68 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 69 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 at seasonally adjusted annual rates 1989r 1990" 1991r TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998866rr 11998877rr 11998888rr 11998899rr 11999900"" Q4 Ql Q2 Q3 Q4 Ql Q2 1 Total hinds advanced in credit markets to domestic nonfinancial sectors 861.6 722.8 767.2 714.7 630.0 696.4 780.6 669.3 588.3 482.0 442277..11 551155..77 2 Total net advances by federal agencies and foreign sectors 280.6 248.0 208.1 188.1 261.7 188.5 218.5 290.1 334477..44 119900..88 330022..99 221111..33 By instrument 3 U.S. government securities 69.4 70.1 85.2 30.2 74.4 25.5 9.2 100.9 142.0 45.6 140.1 5500..99 4 Residential mortgages 136.3 139.1 86.3 137.9 184.1 173.2 194.5 185.2 176.3 180.5 176.0 186.7 5 Federal Home Loan Bank advances to thrifts 19.8 24.4 19.7 -11.0 -24.7 -50.3 -28.9 -26.9 -27.3 -15.7 -35.7 -48.5 6 Other loans and securities 55.1 14.3 16.8 31.0 27.8 40.2 43.6 31.0 56.4 -19.6 22.5 22.3 By lender 7 U.S. government 9.7 -7.9 -9.4 -2.6 33.6 3.9 38.3 36.1 63.6 -3.7 4488..11 2266..55 8 Sponsored credit agencies and mortgage pools 153.3 169.3 112.0 125.3 166.7 149.3 179.1 163.6 182.4 141.9 164.0 123.9 9 Monetary authority 19.4 24.7 10.5 -7.3 8.1 -4.5 -.3 30.8 26.2 -24.2 60.2 11..88 10 Foreign 98.2 61.8 95.0 72.7 53.2 39.9 1.4 59.6 75.1 76.8 30.6 5599..11 Agency and foreign borrowing not included in line I 11 Sponsored credit agencies and mortgage pools 154.1 171.8 119.8 151.0 167.4 167.0 164.8 172.8 114466..22 185.6 114499..66 111188..00 12 Foreign 9.7 6.2 6.4 10.6 23.5 15.6 12.5 36.3 26.2 19.0 62.0 -59.2 13 Total private domestic funds advanced 744.8 652.8 685.3 688.2 559.2 690.4 739.4 588.2 413.4 495.8 335.8 363.1 14 U.S. government securities 301.0 246.3 189.7 267.2 340.0 305.5 389.9 311.5 246.6 411.9 208.7 336.2 15 State and local obligations 45.7 83.5 53.7 65.0 45.5 78.3 70.7 56.2 36.5 18.3 25.3 38.4 16 Corporate and foreign bonds 89.8 67.5 94.4 65.5 63.2 74.5 55.0 75.7 27.2 94.8 63.5 82.5 17 Residential mortgages 115.9 120.2 161.3 96.5 26.3 67.2 72.3 25.7 23.4 -16.1 -27.1 -16.3 18 Other mortgages and loans 212.3 159.8 205.9 183.1 59.5 114.7 122.6 92.1 52.3 -28.9 29.7 -126.2 19 LESS: Federal Home Loan Bank advances 19.8 24.4 19.7 -11.0 -24.7 -50.3 -28.9 -26.9 -27.3 -15.7 -35.7 -48.5 20 Total credit market funds advanced by private financial institutions 743.5 497.3 538.5 534.0 380.0 574.6 422.8 282.4 294.9 520.1 228844..99 221133..77 By lending institution 21 Commercial banks 194.8 135.3 157.0 177.0 121.2 181.7 174.3 114400..99 110077..66 61.8 111111..44 1199..88 22 Savings institutions 107.6 136.8 118.0 -90.9 -153.4 -194.0 -70.0 -211.9 -160.8 -171.0 -173.8 -150.0 23 Insurance and pension funds 174.0 149.1 176.4 197.9 183.2 218.1 169.2 241.6 135.6 186.2 208.0 210.3 24 Other financial institutions 267.1 76.2 87.1 249.9 229.1 368.8 149.2 111.7 212.4 443.1 139.4 133.6 By source of funds 25 Private domestic deposits and repurchase agreements ... 262.4 173.8 229.6 209.5 53.3 178.6 196.3 --55..77 4455..55 -22.8 221144..66 --111166..33 26 Credit market borrowing 124.0 92.4 93.7 40.0 -6.8 10.0 -27.4 19.5 -59.4 40.2 -70.1 -23.2 27 Other sources 357.1 231.1 215.3 284.5 333.5 386.1 253.9 268.6 308.8 502.6 140.4 353.1 28 Foreign funds 12.9 43.7 9.3 -9.9 24.0 -.8 13.5 23.5 87.5 -28.5 9.2 -99.3 29 Treasury balances 1.7 -5.8 7.3 -3.4 5.3 6.4 5.2 -1.0 13.7 3.4 20.6 -22.3 30 Insurance and pension reserves 171.3 94.9 174.1 192.0 164.1 159.9 96.8 209.1 128.3 222.1 267.0 191.8 31 Other, net 171.1 98.4 24.5 105.8 140.0 220.5 138.3 36.9 79.4 305.6 -156.5 282.8 Private domestic nonfinancial investors 32 Direct lending in credit markets 125.3 247.8 240.5 194.2 172.4 112255..88 228899..22 332255..44 5599..00 16.0 --1199..22 112266..22 33 U.S. government securities 20.3 100.5 134.5 125.5 123.4 47.6 189.0 175.4 134.6 -5.5 17.7 157.1 34 State and local obligations 1.6 96.1 57.3 62.7 24.9 76.9 65.3 40.0 7.6 -13.5 15.2 22.7 35 Corporate and foreign bonds 44.8 6.4 -32.2 -26.5 -31.2 -29.6 -22.5 21.3 -125.5 1.7 -9.2 18.8 36 Open market paper 9.5 13.3 41.9 2.9 18.8 -35.5 19.0 53.0 12.8 -9.5 -55.2 -83.7 37 Other loans and mortgages 49.1 31.5 39.0 29.6 36.6 66.3 38.5 35.7 29.4 42.8 12.2 11.3 38 Deposits and currency 282.8 190.3 233.1 225.7 83.0 211.2 212.7 24.7 74.2 20.3 231.2 -92.8 39 Currency 14.4 19.0 14.7 11.7 22.6 16.1 20.0 22.6 30.9 16.9 38.7 6.0 40 Checkable deposits 98.2 -.3 12.5 .6 .4 34.1 31.1 -4.6 -1.8 -23.0 63.2 4.2 41 Small time and savings accounts 120.6 76.0 122.4 98.2 59.4 117.0 109.3 28.9 38.5 61.0 98.0 14.7 42 Money market fund shares 43.2 28.9 21.2 86.7 56.0 52.8 108.6 -32.7 106.0 42.1 171.0 -63.5 43 Large time deposits -19.7 47.6 40.6 9.1 -42.1 -13.9 -15.7 -15.5 -70.7 -66.4 -61.2 -74.3 44 Security repurchase agreements 20.2 21.6 32.9 14.9 -20.5 -11.4 -37.1 18.2 -26.5 -36.6 -56.4 2.7 45 Deposits in foreign countries 5.9 -2.5 -11.2 4.4 7.0 16.5 -3.6 7.8 -2.2 26.2 -22.1 17.5 46 Total of credit market instruments, deposits, and currency 408.1 438.2 473.6 419.9 255.4 336.9 501.9 350.1 133.2 36.3 212.0 3333..44 MEMO 47 Public holdings as percent of total 32.2 34.0 26.9 25.9 40.0 26.5 27.5 41.1 56.5 38.1 61.9 46.3 48 Private financial intermediation (percent) 99.8 76.2 78.6 77.6 68.0 83.2 57.2 48.0 71.3 104.9 84.9 58.9 49 Total foreign funds 111.1 105.5 104.3 62.8 77.2 39.1 14.9 83.1 162.6 48.3 39.8 -40.1 Corporate equities not included above 50 Total net issues 88.5 7.1 -119.3 -65.4 15.8 16.7 -.8 56.4 --1199..11 26.6 111166..55 117799..55 51 Mutual fund shares 160.9 70.2 6.1 38.5 65.7 73.4 56.3 77.1 45.9 83.7 97.6 125.2 52 Other equities -72.4 -63.1 -125.4 -103.9 -50.0 -56.7 -57.1 -20.7 -65.0 -57.0 18.9 54.3 53 Acquisitions by financial institutions 61.1 22.2 4.1 18.9 32.0 63.7 37.7 62.9 -27.9 55.4 61.0 56.3 54 Other net purchases 27.4 -15.1 -123.3 -84.3 -16.2 -47.0 -38.5 -6.6 8.8 -28.8 55.6 123.2 NOTES BY LINE NUMBER. 30. Excludes 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 lines 11 and 12. Also line 20 less line 26 plus line 32. 46. Sum of lines 32 and 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, plus bank borrowings from foreign NOTE. Full statements for sectors and transaction types in flows and in amounts branches, plus liabilities of foreign banking agencies to foreign affiliates, less outstanding may be obtained from Flow of Funds Section, Division of Research claims on foreign affiliates and deposits by banking institutions in foreign banks. and Statistics, Board of Governors of the Federal Reserve System, Washington, Digitized for FR2A9.S DEeRma nd deposits and note balances at commercial banks. D.C. 20551. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • April 1992 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING Billions of dollars, end of period 1989 1990 1991 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998877 11998888 11998899 Q4 Ql Q2 Q3 Q4 Ql 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 lending 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 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 By instrument 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 3,696.7 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 551.4 648.7 696.4 742.6 742.6 750.0 752.5 753.8 753.5 752.0 748.9 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 2,596.1 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 nonfinancial 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 31 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 328.1 378.8 446.1 496.2 496.2 499.2 509.7 530.9 551.8 545.9 547.0 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 obligation (SCO) issuers... 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, domestic and foreign.. 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, end of period 1989r 1990r 1991r TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998866rr 11998877rr 11998888rr 11998899rr Q4 Ql Q2 Q3 Q4 Ql Q2 1 Total funds advanced in credit markets to domestic nonfinancial sectors 7,749.8 8,483.8 9,242.3 10,029.0 10,029.0 10,327.3 10,486.8 10,638.4 10,801.7 10,870.0 1100,,998899..11 2 Total held by federal agencies and foreign sector 1,810.5 2,037.7 2,223.2 2,413.1 2,413.1 2,450.6 2,529.9 2,611.3 2,673.1 2,733.8 2,793.8 By instrument 3 U.S. government securities 509.8 570.9 651.5 688.9 688.9 682.7 714.1 745.6 763.0 789.3 808.5 4 Residential mortgages 678.5 814.1 900.4 1,038.4 1,038.4 1,081.5 1,126.5 1,171.8 1,221.0 1,261.4 1,306.8 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 94.7 6 Other loans and securities 513.5 519.7 518.5 544.1 544.1 553.6 563.1 576.0 572.0 576.1 583.9 By type of lender 7 U.S. government 255.2 239.9 214.6 207.0 207.0 217.1 227.4 242.7 240.6 253.2 226611..11 8 Sponsored credit agencies and mortgage pools 835.9 1,001.0 1,113.0 1,238.2 1,238.2 1,274.8 1,315.0 1,360.5 1,403.4 1,438.8 1,468.7 9 Monetary authority 205.5 230.1 240.6 233.3 233.3 224.4 237.8 240.8 241.4 247.3 253.7 10 Foreign 513.9 566.7 655.0 734.6 734.6 734.2 749.8 767.5 787.7 794.5 810.4 Agency and foreign debt not in line I 11 Sponsored credit agencies and mortgage pools 810.3 978.6 1,098.4 1,249.3 1,249.3 11,,228888..22 11,,333300..11 11,,336677..99 11,,441188..44 11,,445522..11 11,,448800..33 12 Foreign 245.1 254.3 255.7 265.4 265.4 265.7 277.0 283.4 297.9 310.2 297.7 13 Total private domestic holdings 6,994.8 7,678.9 8,373.2 9,130.6 9,130.6 9,430.6 9,564.0 9,678.4 9,844.8 9,898.6 9,973.3 14 U.S. government securities 2,100.6 2,352.5 2,546.8 2,806.8 2,806.8 2,910.5 2,958.5 3,027.7 3,148.6 3,206.8 3,259.0 15 State and local obligations 789.6 873.1 939.4 1,046.2 1,046.2 1,060.6 1,073.2 1,084.8 1,091.7 1,094.6 1,102.7 16 Corporate and foreign bonds 583.0 653.4 744.8 809.8 809.8 824.3 842.7 850.5 882.0 898.7 918.2 17 Residential mortgages 1,288.5 1,399.0 1,560.2 1,670.4 1,670.4 1,834.9 1,849.7 1,857.8 1,849.2 1,836.6 1,840.7 18 Other mortgages and loans 2,341.6 2,534.0 2,734.7 2,939.2 2,939.2 2,933.0 2,966.2 2,975.3 2,990.4 2,968.9 2,947.4 19 LESS: Federal Home Loan Bank advances 108.6 133.1 152.8 141.8 141.8 132.9 126.3 117.9 117.1 107.0 94.7 20 Total credit market claims held by private financial institutions 5,995.9 6,515.1 7,055.3 7,602.9 7,602.9 7,862.0 7,931.6 7,988.8 8,131.4 8,191.0 8,252.4 By holding institution 71 Commercial banks 2,183.9 2,319.2 2,476.2 2,643.9 2,643.9 2,667.2 2,709.5 2,739.0 2,765.1 2,772.9 22,,778844..99 77 Savings institutions 1,297.9 1,445.5 1,565.2 1,478.2 1,478.2 1,476.1 1,424.2 1,385.9 1,345.0 1,302.7 1,264.3 73 Insurance and pension funds 1,506.7 1,659.6 1,836.1 2,034.0 2,034.0 2,103.7 2,153.3 2,173.8 2,217.5 2,274.0 2,326.7 24 Other finance 1,007.4 1,090.8 1,177.9 1,446.7 1,446.7 1,615.0 1,644.5 1,690.2 1,803.7 1,841.4 1,876.5 By source of funds 25 Private domestic deposits and repurchase agreements 3,166.2 3,336.2 3,581.3 3,790.4 3,790.4 3,816.0 33,,880066..55 3,812.1 3,843.8 33,,887733..33 33,,883366..55 76 Credit market debt 703.1 807.3 901.4 970.0 970.0 1,089.3 1,095.1 1,078.5 1,093.5 1,072.9 1,067.7 77 Other sources 2,126.6 2,371.7 2,572.6 2,842.5 2,842.5 2,956.7 3,030.0 3,098.2 3,194.2 3,244.8 3,348.2 28 Foreign funds 18.6 62.3 71.6 62.1 62.1 62.1 63.5 86.6 86.1 84.7 55.3 29 U.S. Treasury balances 27.5 21.6 29.0 25.6 25.6 16.7 32.1 36.6 30.9 26.3 36.0 30 Insurance and pension reserves 1,462.2 1,568.0 1,723.2 1,908.2 1,908.2 1,951.4 1,983.0 2,018.6 2,067.7 2,120.7 2,171.8 31 Other, net 618.4 719.8 748.9 846.6 846.6 926.4 951.3 956.3 1,009.4 1,013.0 1,085.1 Private domestic nonfinancial investors 37 Credit market claims 1,702.0 1,971.1 2,219.3 2,497.8 2,497.8 2,657.9 2,727.5 22,,776688..11 22,,880066..99 22,,778800..55 22,,778888..77 33 U.S. government securities 807.4 909.7 1,050.7 1,169.0 1,169.0 1,196.8 1,214.5 1,256.8 1,278.3 1,278.2 1,289.7 34 State and local obligations 320.3 416.4 486.7 591.2 591.2 597.8 610.8 615.7 616.1 610.1 618.8 35 Corporate and foreign bonds 69.3 91.2 52.4 64.7 64.7 204.6 217.8 200.1 203.7 203.5 206.6 36 Open market paper 183.5 198.0 243.0 245.9 245.9 247.6 264.5 266.4 264.7 248.0 230.4 37 Other loans and mortgages 321.6 355.8 386.5 427.0 427.0 411.2 420.0 429.1 444.2 440.7 443.1 38 Deposits and currency 3,377.3 3,565.9 3,814.5 4,039.7 4,039.7 4,062.4 4,066.6 4,076.1 4,122.7 4,149.5 4,124.8 39 Currency 186.3 205.4 220.1 231.8 231.8 234.4 242.7 247.2 254.4 262.0 265.9 40 Checkable deposits 522.2 521.5 532.9 532.9 532.9 508.1 514.2 503.5 533.3 515.6 524.2 41 Small time and savings accounts 1,948.3 2,017.1 2,156.2 2,254.7 2,254.7 2,286.6 2,287.6 2,296.8 2,314.2 2,343.4 2,340.8 47 Money market fund shares 268.9 297.8 318.9 405.6 405.6 438.1 425.9 452.1 461.6 509.6 489.6 43 Large time deposits 298.2 349.7 390.3 399.3 399.3 394.9 386.1 373.1 357.3 341.8 318.2 44 Security repurchase agreements 128.5 150.1 182.9 197.9 197.9 188.4 192.7 186.6 177.4 162.9 163.6 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 22.5 46 Total of credit market instruments, deposits, and currency 5,079.3 5,537.0 6,033.8 6,537.5 6,537.5 6,720.3 6,794.2 6,844.2 6,929.6 6,930.0 6,913.5 MEMO 47 Public holdings as percent of total 22.6 23.3 23.4 23.4 23.4 23.1 23.5 23.9 24.1 24.5 24.8 48 Private financial intermediation (percent) 104.0 98.6 97.2 94.2 94.2 91.6 91.6 90.5 87.8 86.5 85.5 49 Total foreign funds 532.4 628.9 726.6 796.7 796.7 796.4 813.3 854.1 873.7 879.3 865.7 Corporate equities not included above 50 Total market value 3,360.6 3,325.0 3,619.8 4,374.8 4,374.8 4,171.1 4,334.4 3,779.7 3,986.5 4,552.8 4,587.5 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 57 Other equities 2,947.1 2,864.9 3,141.6 3,819.7 3,819.7 3,620.8 3,746.5 3,232.4 3,406.6 3,909.7 3,906.2 53 Holdings by financial institutions 942.0 979.4 1,113.6 1,416.9 1,416.9 1,359.2 1,455.8 1,231.4 1,338.4 1,568.6 1,574.9 54 Other holdings 2,418.6 2,345.7 2,506.2 2,958.0 2,958.0 2,811.9 2,878.6 2,548.3 2,648.1 2,984.2 3,012.6 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 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 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 lines 11 and 12. Also line 20 less line 26 plus line 32. 46. Sum of lines 32 and 38, or line 13 less line 27 plus lines 39 and 45. Also sum of lines 27 and 46 less lines 39 and 45. 47. Line 2 divided by lines 1 plus 12. 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 can 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, Digitized for FRASER Washington, D.C. 20551. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • April 1992 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, except as noted 1991 1992 MMeeaassuurree 11998899 11999900 11999911 May June July Aug. Sept. Oct.r Nov. Dec.r Jan. 1 Industrial production1 (1987=100) 108.1 109.2 107.1 106.4 107.3 108.1 108.0 108.4 108.4 IO8.r 107.6 106.7 Market groupings (1987=100) 2 Products, total 108.6 110.1 108. r 107.7 108.6 108.7 108.5 108.9 109.0 KW.O1 108.8 107.8 3 Final, total 109.1 110.9 109.6r 109.3 110.1 110.2 109.8 110.4 110.6 110.6r 110.2 109.2 4 Consumer goods 106.7 107.3 107.6r 106.6 108.0 108.3 108.4 109.4 109.7 llO.O1 109.7 108.9 5 Equipment 112.3 115.5 112.2 112.7 112.8 112.8 111.6 111.8 111.9 111.4r 110.9 109.5 6 Intermediate 106.8 107.7 103.4R 102.7 104.0 104.0 104.4 104.3 104.1 104.1r 104.2 103.5 7 Materials 107.4 107.8 105.5r 104.5 105.4 107.0 107.2 107.5 107.4 106.6 105.8 104.9 Industry groupings (1987=100) 8 Manufacturing 108.9 109.9 107.5 106.6 107.5 108.3 108.4 108.9 109.0 108.6 108.5 107.5 9 Capacity utilization, manufacturing (percent)2 83.9 82.3 78.2 77.8 78.3 78.7 78.6 78.8 78.7 78.2 78.0 77.0 10 Construction contracts (1982=100)3 172.9 156.2 140.8 138.0 133.0 144.0 150.0 143.0 157.0 134.0 152.0 n.a. 11 Nonagricultural employment, total4 106.0 107.6 106.6 106.5 106.5 106.5 106.6 106.7 106.7 106.5 106.5 106.4 12 Goods-producing, total 102.5 101.0 96.4 96.5 96.3 96.3 96.4 96.3 96.0 95.5 95.3 95.1 13 Manufacturing, total 102.2 100.5 96.9 96.9 96.6 96.7 96.9 96.8 96.6 96.4 96.1 95.9 14 Manufacturing, production worker 102.3 100.0 96.0 95.8 95.7 96.0 96.3 96.0 95.9 95.6 95.5 95.1 15 Service-producing 107.1 109.7 109.9 109.7 109.8 109.8 109.9 110.0 110.1 110.0 110.1 110.0 16 Personal income, total 115.2 123.1 127.1 126.9 127.5 127.1 127.7 128.2 128.4 128.2r 129.5 n.a. 17 Wages and salary disbursements 114.4 121.1 124.2 123.8 124.8 124.2 124.9 125.4 125.1 125.2 126.0 n.a. 18 Manufacturing 110.6 113.4 113.5 112.7 113.4 113.8 114.4 114.6 115.6 114.4r 115.5 n.a. 19 Disposable personal income 115.2 123.4 128.2 128.1 128.6 128.3 128.9 129.3 129.6 129.4r 130.8 n.a. 20 Retail sales 113.2 117.4 118.4r 119.0 119.0 119.4 118.6 119.0 118.9 118.9* 119.0 119.7 Prices7 21 Consumer (1982-84=100) 124.0 130.7 136.2 135.6 136.0 136.2 136.6 137.2 137.4 137.8 137.9 138.1 22 Producer finished goods (1982=100) 113.6 119.2 121.7 121.8 121.9 121.6 121.7 121.4r 122.3 122.3 121.9 121.7 1. A major revision of the industrial production index and the capacity 6. Based on U.S. Bureau of the Census data published in Survey of Current utilization rates was released in April 1990. See "Industrial Production: 1989 Business. Developments and Historical Revision," Federal Reserve Bulletin, vol. 76 (April 7. Based on data not seasonally adjusted, as published in Monthly Labor 1990), pp. 187-204. Review. Seasonally adjusted data for changes in the price indexes can be obtained 2. Ratio of index of production to index of capacity. Based on data from the from the Bureau of Labor Statistics, U.S. Department of Labor. Federal Reserve, DRI McGraw-Hill, U.S. Department of Commerce, and other sources. NOTE. Basic data (not indexes) for series mentioned in notes 4, 5,and 6, and 3. Index of dollar value of total construction contracts, including residential, indexes for series mentioned in notes 3 and 7 can also be found in the Survey of nonresidential, and heavy engineering, from McGraw-Hill Information Systems Current Business. Co., F.W. Dodge Division. Figures for industrial production for the latest month are preliminary, and many 4. Based on data in Employment and Earnings (U.S. Department of Labor). figures for the three months preceding the latest month have been revised. See Series covers employees only, excluding personnel in the armed forces. "Recent Developments in Industrial Capacity and Utilization," Federal Reserve 5. Based on data in Survey of Current Business (U.S. Department of Com- Bulletin, vol. 76 (June 1990), pp. 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 seasonally adjusted; exceptions noted 1991 1992 CCaatteeggoorryy 11998899 11999900 11999911 June July Aug. Sept. Oct. Nov. Dec. Jan. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 188,601 190,216 191,883 191,805 191,955 192,095 192,240 192,386 192,522 192,661 192,796 2 Labor force (including Armed Forces)1 126,077 126,954 127,421 127,661 127,320 127,126 127,708 127,605 127,444 127,675 128,083 3 Civilian labor force 123,869 112244,,778877 125,303 125,524 125,204 112255,,000044 125,590 112255,,550088 125,374 112255,,661199 112266,,004466 Employment 4 Nonagricultural industries 114,142 114,728 114,644 113,623 113,485 113,230 113,806 113,663 113,500 113,545 113,951 5 Agriculture 3,199 3,186 3,233 3,286 3,244 3,254 3,283 3,204 3,272 3,183 33,,116666 Unemployment 6 Number 6,528 6,874 8,426 8,615 8,475 8,520 8,501 8,641 8,602 8,891 8,929 7 Rate (percent of civilian labor force) 5.3 5.5 6.7 6.9 6.8 6.8 6.8 6.9 6.9 7.1 7.1 8 Not in labor force 62,524 63,262 64,462 64,144 64,635 64,969 64,532 64,781 65,078 64,986 64,713 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 108,329 109,971 108,975 108,885 108,859 108,971 109,066 109,073 108,843 108,846 108,755 10 Manufacturing 19,442 19,111 18,427 18,378 18,402 18,442 18,414 18,377 18,337 18,290 18,238 11 Mining 693 711 697 704 701 693 684 679 674 671 667 12 Contract construction 5,187 5,136 4,696 4,710 4,695 4,691 4,699 4,671 4,584 4,593 4,587 13 Transportation and public utilities 5,644 5,826 5,823 5,809 5,809 5,820 5,829 5,828 5,816 5,798 5,814 14 Trade 25,770 25,843 25,412 25,413 25,411 25,393 25,387 25,335 25,261 25,238 25,173 15 Finance 6,695 6,739 6,707 6,703 6,688 6,687 6,692 6,697 6,694 6,693 6,695 16 Service 27,120 28,240 28,778 28,712 28,733 28,831 28,937 29,019 29,008 29,043 29,050 17 Government 17,779 18,322 18,434 18,456 18,420 18,414 18,424 18,467 18,469 18,520 18,531 1. Persons sixteen years of age and older. Monthly figures are based on sample pay for, the pay period that includes the twelfth day of the month, and exclude data collected during the calendar week that contains the twelfth day; annual data proprietors, self-employed persons, household and unpaid family workers, and are averages of monthly figures. By definition, seasonality does not exist in members of the armed forces. Data are adjusted to the March 1984 benchmark, population figures. and only seasonally adjusted data are available at this time. 2. Includes self-employed, unpaid family, and domestic service workers. SOURCE. Based on data from Employment and Earnings (U.S. Department of 3. Includes all full- and part-time employees who worked during, or received Labor). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • April 1992 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1991 1991 1991 SSeerriieess Ql Q2 Q3 Q4r Ql Q2 Q3 Q4 Ql Q2 Q3 Q4r Output (1987=100) Capacity (percent of 1987 output) Capacity utilization rate (percent) 1 Total industry 105.8 106.4 108.1 108.0 133.6 134.5 135.3 136.2 79.2 79.1 79.9 79.3 2 Manufacturing 106.1 106.7 108.5 108.7 136.0 136.9 137.9 138.9 78.0 77.9 78.7 78.3 3 Primary processing 100.6 100.8 104.1 104.2 126.8 127.5 128.1 128.8 79.4 79.1 81.2 80.9 4 Advanced processing 108.6 109.4 110.6 110.8 140.2 141.3 142.4 143.5 77.5 77.4 77.7 77.2 5 Durable goods 106.1 106.7 108.1 107.7 139.9 140.9 141.8 142.8 75.8 75.7 76.2 75.4 6 Lumber and products 92.3 94.0 95.1 95.4 125.0 125.2 125.4 125.7 73.9 75.1 75.8 75.9 7 Primary metals 97.9 95.9 102.0 103.1 128.2 128.6 129.0 129.3 76.4 74.6 79.1 79.7 8 Iron and steel 96.3 92.8 100.3 104.3 133.0 133.5 134.0 134.5 72.4 69.5 74.8 77.5 9 Nonferrous 100.2 100.3 104.5 101.4 121.3 121.5 121.7 121.9 82.6 82.6 85.8 83.2 10 Nonelectrical machinery 124.4 123.5 123.5 122.8 157.9 159.5 161.2 162.8 78.8 77.4 76.6 75.5 11 Electrical machinery 108.1 110.6 111.2 110.3 142.7 144.0 145.3 146.6 75.8 76.8 76.5 75.3 12 Motor vehicles and parts 80.8 89.5 95.9 97.0 133.4 134.2 134.9 135.6 60.5 66.7 71.1 71.5 13 Aerospace and miscellaneous transportation equipment 109.9 106.4 105.2 102.8 137.0 137.9 138.7 139.6 80.2 77.2 75.9 73.6 14 Nondurable goods 106.1 106.7 109.1 110.0 130.9 131.9 132.9 133.8 81.0 80.9 82.1 82.2 15 Textile mill products 94.6 99.4 104.1 104.9 117.3 117.7 118.0 118.3 80.6 84.5 88.2 88.6 16 Paper and products 102.6 102.7 107.6 107.4 116.4 117.1 117.9 118.7 88.2 87.7 91.2 90.5 17 Chemicals and products 109.1 109.3 112.1 113.4 138.4 139.7 141.0 142.3 78.8 78.2 79.5 79.7 18 Plastics materials 113.2 115.6 125.4 127.7 135.7 139.2 142.6 146.1 83.4 83.0 87.9 87.4 19 Petroleum products 107.3 107.6 108.1 106.6 121.4 121.4 121.4 121.4 88.4 88.6 89.0 87.8 20 Mining 102.0 101.1 101.8 99.3 113.8 114.3 114.6 114.7 89.6 88.4 88.9 86.6 21 Utilities 106.2 109.6 110.4 109.5 128.1 128.4 128.8 129.2 82.9 85.3 85.7 84.8 22 Electric 109.3 114.4 115.2 111.6 123.8 124.3 124.7 125.2 88.3 92.1 92.4 89.2 Previous cycle Latest cycle 1991 1992 High Low High Low June July Aug. Sept Oct.r Nov.r Dec.r Jan." Capacity utilization rate (percent) 1 Total industry 89.2 72.6 87.3 71.8 80.0 79.6 80.0 79.8 79.9 79.8 79.3 78.8 78.0 2 Manufacturing 88.9 70.8 87.3 70.0 78.9 78.3 78.7 78.6 78.8 78.7 78.2 78.0 77.0 3 Primary processing 92.2 68.9 89.7 66.8 80.6 79.9 81.1 81.2 81.3 81.4 80.8 80.5 79.7 4 Advanced processing 87.5 72.0 86.3 71.4 78.2 77.6 77.8 77.5 77.7 77.6 77.2 76.9 75.9 5 Durable goods 88.8 68.5 86.9 65.0 76.8 76.0 76.4 76.0 76.2 75.9 75.5 74.9 73.8 6 Lumber and products 90.1 62.2 87.6 60.9 75.4 77.2 75.6 76.0 75.8 74.6 76.5 76.6 76.6 7 Primary metals 100.6 66.2 102.4 46.8 77.8 74.9 78.5 79.6 79.3 79.4 80.0 79.7 79.6 8 Iron and steel 105.8 66.6 110.4 38.3 74.5 69.5 74.3 75.0 75.1 76.2 78.5 77.8 78.7 9 Nonferrous 92.9 61.3 90.5 62.2 83.0 83.5 85.1 86.7 85.7 84.5 82.5 82.6 81.0 10 Nonelectrical machinery 96.4 74.5 92.1 64.9 79.8 77.1 77.2 76.5 76.1 76.1 75.5 74.8 74.3 11 Electrical machinery 87.8 63.8 89.4 71.1 75.7 77.2 76.6 76.8 76.2 75.1 75.5 75.2 74.8 12 Motor vehicles and parts 93.4 51.1 93.0 44.5 62.3 68.9 71.8 67.9 73.6 74.2 70.7 69.7 63.9 13 Aerospace and miscellaneous transportation equipment. 77.0 66.6 81.1 66.9 81.1 76.8 76.1 76.1 75.3 74.8 73.9 72.1 70.3 14 Nondurable goods 87.9 71.8 87.0 76.9 81.8 81.4 82.0 82.1 82.3 82.4 82.0 82.1 81.5 15 Textile mill products 92.0 60.4 91.7 73.8 80.2 86.4 88.4 88.8 87.4 89.2 88.2 88.4 87.4 16 Paper and products 96.9 69.0 94.2 82.0 89.8 89.7 91.9 90.4 91.4 92.1 89.4 90.1 87.7 17 Chemicals and products 87.9 69.9 85.1 70.1 79.8 78.2 79.3 79.7 79.6 80.0 79.4 79.6 79.0 18 Plastics materials 102.0 50.6 90.9 63.4 86.2 84.1 89.6 87.1 87.0 89.5 87.2 85.5 84.4 19 Petroleum products 96.7 81.1 89.5 68.2 86.2 90.2 89.2 88.4 89.4 87.3 87.9 88.3 87.8 20 Mining 94.4 88.4 96.6 80.6 89.5 89.2 89.6 88.5 88.5 87.9 86.6 85.2 85.0 21 Utilities 95.6 82.5 88.3 76.2 84.1 86.7 86.2 85.9 85.1 84.8 85.9 83.6 83.2 22 Electric 99.0 82.7 88.3 78.7 89.3 94.1 93.6 92.7 90.8 89.7 90.0 87.7 87.3 1. Data in this table also appear in the Board's G.17 (419) monthly statistical 2. Monthly high, 1973; monthly low, 1975. release. For ordering address, see inside front cover. For a detailed description of 3. Monthly highs, 1978 through 1980; monthly lows, 1982. the series, see "Recent Developments in Industrial Capacity and Utilization," Federal Reserve Bulletin, vol. 76 (June 1990), pp. 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 seasonally adjusted 1987 1991 1992 1991 GGrroouupp por- aavvgg.. tion Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct.r Nov/ Dec.r Jan." Index (1987 = 100) MAJOR MARKETS 1 Total index 100.0 107.1 106.6 105.7 105.0 105.5 106.4 107.3 108.1 108.0 108.4 108.4 108.1 107.6 106.7 7 60.8 108.1 107.8 106.9 106.5 106.9 107.7 108.6 108.7 108.5 108.9 109.0 109.0 108.8 107.8 3 Final products 46.0 109.6 109.1 108.3 108.1 108.7 109.3 110.1 110.2 109.8 110.4 110.6 110.6 110.2 109.2 4 Consumer goods, total 26.0 107.6 105.6 104.7 104.7 105.5 106.6 108.0 108.3 108.4 109.4 109.7 110.0 109.7 108.9 Durable consumer goods 5.6 102.3 97.6 95.2 95.9 99.3 101.1 104.2 105.5 104.0 107.7 107.5 106.0 105.2 101.8 6 Automotive products 2.5 97.8 90.6 88.1 88.9 94.2 97.4 100.4 102.3 98.6 106.5 106.7 103.6 101.5 94.2 7 Autos and trucks 1.5 90.2 79.6 74.7 76.7 85.0 89.2 92.5 98.1 90.2 103.0 105.1 99.0 96.7 84.3 8 Autos, consumer .9 84.6 83.2 78.6 76.3 78.3 81.9 83.8 92.8 83.0 94.6 92.6 89.8 88.2 79.1 9 Trucks, consumer .6 99.6 73.6 68.1 77.4 96.3 101.6 107.1 106.9 102.2 117.1 126.1 114.5 111.0 93.0 10 Auto parts and allied goods... 1.0 109.3 107.1 108.3 107.3 108.0 109.5 112.2 108.6 111.3 111.8 109.1 110.4 108.8 109.2 11 Other 3.1 105.8 103.2 100.7 101.4 103.4 104.1 107.3 108.1 108.3 108.7 108.1 108.0 108.0 107.8 1? Appliances, A/C, and TV .8 99.6 92.8 94.5 96.2 97.3 96.8 104.8 100.6 99.6 104.1 102.1 102.3 100.3 101.4 N Carpeting and furniture .9 99.4 100.3 92.0 93.9 97.0 96.9 99.2 103.1 103.9 101.8 101.8 101.6 102.6 102.0 14 Miscellaneous home goods ... 1.4 113.4 110.8 109.8 109.2 110.8 112.8 113.8 115.5 115.9 115.6 115.6 115.2 115.8 115.1 IS Nondurable consumer goods 20.4 109.0 107.8 107.3 107.1 107.2 108.1 109.0 109.0 109.6 109.8 110.3 111.0 111.0 110.9 16 9.1 106.8 106.3 105.9 105.4 105.3 106.2 106.9 106.9 107.1 107.8 107.8 108.1 108.2 108.4 17 Clothing 2.6 93.5 90.6 90.8 90.4 90.6 92.0 93.9 94.3 94.8 95.2 96.3 96.5 96.8 96.5 18 Chemical products 3.5 115.9 114.7 114.8 114.2 115.0 113.9 114.3 115.4 117.4 117.3 117.0 117.7 118.7 118.0 19 2.5 123.6 122.1 121.0 122.2 122.7 121.8 123.3 122.1 122.6 124.8 125.6 126.0 126.1 126.3 ?0 2.7 108.5 106.5 105.2 105.5 104.4 109.0 110.0 109.4 109.5 106.7 108.5 112.0 109.2 108.8 71 .7 103.5 99.8 103.4 104.3 101.4 103.6 104.9 105.2 104.0 104.4 103.5 103.6 103.7 104.0 22 Residential utilities 2.0 110.4 109.0 105.9 105.9 105.5 111.0 111.9 110.9 111.5 107.6 110.3 115.1 111.3 110.6 ?3 20.0 112.2 113.6 112.9 112.5 112.8 112.7 112.8 112.8 111.6 111.8 111.9 111.4 110.9 109.5 74 13.9 121.5 121.6 120.6 120.3 121.3 121.7 121.9 122.5 121.3 122.2 122.3 121.7 121.7 120.3 75 5.6 131.5 130.1 131.6 131.2 131.5 131.8 130.9 131.1 130.3 130.3 131.7 133.5 133.9 133.9 76 1.9 155.6 155.0 157.3 155.1 155.6 155.6 154.0 156.0 153.1 152.2 156.0 158.5 159.3 160.4 ?7 4.0 108.1 111.5 109.1 109.5 109.3 109.3 109.1 109.0 108.6 108.2 106.8 104.1 103.1 102.2 78 Transit 2.5 126.9 124.0 120.3 120.4 124.1 125.9 128.0 131.2 126.7 132.7 133.1 130.5 129.9 124.1 79 1.2 88.6 79.8 75.0 76.7 84.4 87.9 90.8 96.6 86.2 99.3 101.1 96.5 96.1 84.9 30 Other 1.9 113.6 115.0 112.5 110.8 112.7 113.0 114.8 114.0 114.8 114.2 113.6 113.4 114.2 114.2 31 Defense and space equipment 5.4 91.0 94.4 94.5 93.9 92.5 91.5 91.0 90.0 89.8 89.1 89.1 8888..88 87.4 85.9 37 Oil and gas well drilling .6 93.3 106.4 108.2 107.7 105.1 101.3 103.0 97.8 86.7 80.1 79.0 7788..11 75.8 71.8 33 Manufactured homes .2 85.5 83.1 77.3 79.3 83.1 86.6 90.8 86.5 90.3 86.2 86.3 87.0 87.9 89.5 34 Intermediate products, total 14.7 103.4 103.8 102.6 101.3 101.2 102.7 104.0 104.0 104.4 104.3 104.1 104.1 104.2 103.5 35 Construction supplies 6.0 96.1 97.7 96.4 94.0 94.9 95.8 97.4 96.9 96.7 96.5 95.4 95.8 95.6 95.3 36 Business supplies 8.7 108.4 108.1 106.8 106.4 105.6 107.5 108.5 109.0 109.7 109.7 110.1 109.9 110.1 109.2 37 39.2 105.5 104.8 103.9 102.6 103.4 104.5 105.4 107.0 107.2 107.5 107.4 106.6 105.8 104.9 38 19.4 107.1 106.8 105.5 103.3 104.9 106.2 106.7 108.2 109.1 109.3 108.8 108.6 108.2 107.0 39 Durable consumer parts 4.2 96.5 94.2 90.4 87.5 92.1 95.5 97.3 100.2 100.1 101.3 101.6 100.5 97.6 95.3 40 7.3 114.4 115.9 116.2 114.8 114.6 114.8 113.6 113.5 114.3 113.9 113.6 113.7 114.1 113.5 41 Other 7.9 106.0 105.2 103.8 101.0 102.6 103.8 105.3 107.5 109.0 109.3 108.2 108.2 108.3 107.1 4? Basic metal materials 2.8 106.0 104.6 104.8 101.2 101.6 103.0 105.9 108.8 110.2 109.5 107.7 107.7 108.5 107.8 43 Nondurable goods materials 9.0 106.0 104.9 103.6 102.8 103.1 103.7 104.9 108.1 107.8 108.3 109.6 107.6 107.6 106.3 44 1.2 97.2 89.1 91.5 92.7 94.7 96.8 98.1 101.4 101.5 99.5 101.8 99.9 99.6 98.7 45 Pulp and paper materials 1.9 106.9 106.0 104.1 102.4 102.0 101.5 106.9 110.3 108.2 110.4 112.0 108.4 110.0 105.5 46 Chemical materials 3.8 106.2 106.7 104.1 102.7 102.9 103.9 103.9 107.7 107.9 108.2 109.9 108.3 107.6 107.5 47 Other 2.1 109.8 109.3 108.8 108.8 109.0 109.2 108.6 110.5 110.9 111.3 111.2 110.1 109.9 109.1 48 10.9 102.3 101.1 101.1 101.3 101.1 102.4 103.4 104.1 103.3 103.6 103.1 102.1 100.2 100.0 49 Primary energy 7.2 102.3 101.3 102.1 101.5 100.5 101.2 104.7 106.2 104.5 103.8 102.8 100.8 99.1 99.5 50 Converted fuel materials 3.7 102.2 100.9 99.2 100.8 102.4 104.7 101.0 100.1 101.0 103.4 103.8 104.6 102.4 101.0 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.3 107.6 107.4 106.6 105.7 106.1 106.9 107.8 108.4 108.5 108.6 108.5 108.3 107.9 107.3 52 Total excluding motor vehicles and parts... 95.3 107.9 107.8 107.0 106.2 106.5 107.3 108.1 108.6 108.8 108.8 108.8 108.7 108.2 107.6 53 Total excluding office and computing machines 97.5 105.9 105.4 104.4 103.7 104.2 105.2 106.2 106.9 106.8 110077..33 110077..22 110066..88 110066..33 110055..33 54 Consumer goods excluding autos and 24.5 108.6 107.2 106.5 106.4 106.7 110077..66 108.9 110088..99 110099..55 110099..88 110099..99 111100..66 111100..55 111100..44 55 Consumer goods excluding energy 23.3 107.5 105.5 104.7 104.6 105.6 106.3 107.7 108.1 108.3 109.7 109.8 109.7 109.8 108.9 56 Business equipment excluding autos and trucks 12.7 124.7 125.7 125.0 124.5 124.9 112255..00 125.0 112255..00 112244..77 112244..44 112244..44 112244..22 112244..11 112233..88 57 Business equipment excluding office and computing equipment 12.0 116.0 116.2 114.6 114.6 115.7 111166..33 116.7 111177..00 111166..22 111177..33 111166..99 111155..88 111155..66 111133..99 58 Materials excluding energy 28.4 106.8 106.2 104.9 103.1 104.3 105.4 106.1 108.2 108.7 109.0 109.1 108.3 108.0 106.8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • April 1992 2.13 —Continued 1987 1991 1992 Group c S o IC de 2 p p r o o r - - a 1 v 99 g 1 . tion Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct/ Nov/ Dec/ Jan." Index (1987 = 100) MAJOR INDUSTRIES 1 Total index . 100.0 107.1 106.6 105.7 105.0 105.5 106.4 107.3 108.1 108.0 108.4 108.4 108.1 107.6 106.7 2 Manufacturing 84.4 107.5 107.0 106.1 105.2 105.9 106.6 107.5 108.3 108.4 108.9 109.0 108.6 108.5 107.5 3 Primary processing .. 26.7 102.4 102.0 100.8 99.0 99.6 100.7 102.1 103.7 104.1 104.4 104.7 104.1 103.9 102.9 4 Advanced processing 57.7 109.8 109.3 108.5 108.0 108.9 109.3 109.9 110.5 110.3 111.0 111.0 110.7 110.6 109.5 Durable goods 47.3 107.1 107.2 106.1 105.0 106.0 106.7 107.3 108.1 107.8 108.4 108.2 107.7 107.2 105.8 Lumber and products ... 24 2.0 94.3 94.2 91.5 91.2 92.7 92.5 96.7 94.8 95.3 95.2 93.8 96.2 96.4 96.4 Furniture and fixtures ... 25 1.4 99.2 99.0 94.9 95.4 98.3 98.5 99.4 100.5 101.3 101.2 100.5 99.9 101.2 101.4 Clay, glass, and stone products 32 2.5 94.9 97.2 98.9 94.4 94.2 95.1 95.0 95.8 95.5 94.4 94.4 92.8 91.9 91.1 Primary metals 33 3.3 99.6 99.7 99.5 94.7 94.5 96.9 96.4 101.2 102.6 102.3 102.6 103.5 103.1 102.9 Iron and steel 331,2 1.9 98.3 99.0 98.0 92.0 91.6 94.0 92.9 99.5 100.6 100.8 102.4 105.6 104.8 105.8 Raw steel .1 97.3 104.7 97.9 89.8 91.0 88.9 94.0 102.6 102.4 100.9 101.3 99.1 97.6 100.1 Nonferrous 333-6,9 1.4 101.6 100.6 101.6 98.4 98.5 101.0 101.5 103.5 105.5 104.4 102.9 100.5 100.7 98.8 Fabricated metal products 34 5.4 100.4 101.7 99.1 97.8 98.0 99.1 99.8 100.9 101.4 101.9 101.9 101.8 101.3 99.5 Nonelectrical machinery. 35 8.6 123.6 125.5 124.5 123.1 123.5 123.6 123.4 123.9 123.3 123.1 123.5 122.9 122.1 121.8 Office and computing machines 357 2.5 155.6 155.0 157.3 155.1 155.6 155.6 154.0 156.0 153.0 152.2 155.9 158.5 159.3 160.4 Electrical machinery .... 36 8.6 110.1 107.6 108.2 108.6 109.7 110.6 111.5 111.0 111.5 111.0 109.8 110.7 110.5 110.2 Transportation equipment 37 9.8 98.6 97.6 95.5 95.0 97.2 98.2 99.7 101.3 99.0 102.2 102.4 99.7 97.9 93.1 Motor vehicles and parts 371 4.7 90.4 83.0 79.4 79.8 86.2 89.8 92.5 96.7 91.6 99.5 100.4 95.9 94.7 86.9 Autos and light trucks 2.3 89.4 80.1 75.3 76.6 84.0 88.2 91.2 97.3 89.1 101.8 103.2 97.6 95.5 83.5 Aerospace and miscellaneous transportation equipment.. 372-6,9 5.1 106.0 110.8 110.0 108.8 107.2 105.8 106.1 105.4 105.6 104.6 104.3 103.1 100.9 98.6 Instruments 38 3.3 118.2 119.0 119.3 118.4 118.6 118.2 117.3 116.5 116.9 118.1 118.2 118.5 118.9 118.5 Miscellaneous 39 1.2 119.4 116.1 114.6 115.3 117.5 118.7 119.8 121.6 123.2 121.5 120.6 120.7 121.6 122.2 23 Nondurable goods 37.2 108.0 106.8 106.0 105.4 105.9 106.5 107.6 108.6 109.0 109.6 110.1 109.7 110.1 109.6 24 Foods 20 8.8 108.6 108.3 107.6 107.4 107.6 107.8 108.6 108.3 108.7 109.5 109.4 110.0 110.0 110.0 25 Tobacco products 21 1.0 100.5 100.0 100.1 98.2 97.6 98.7 99.4 102.6 103.1 102.7 102.2 100.5 100.9 104.0 26 Textile mill products 22 1.8 100.7 94.0 94.3 95.4 97.2 99.2 101.7 104.2 104.7 103.2 105.5 104.4 104.7 103.7 27 Apparel products 23 2.4 96.2 92.9 93.1 92.5 93.2 95.2 96.2 97.8 98.3 98.1 98.7 98.8 98.9 98.4 28 Paper and products 26 3.6 105.1 104.2 102.2 101.3 101.3 101.3 105.3 108.1 106.5 108.0 109.0 106.1 107.2 104.5 29 Printing and publishing .. 27 6.4 112.4 112.1 110.9 110.4 110.7 110.6 111.2 111.9 112.3 113.3 114.4 114.3 115.0 114.3 30 Chemicals and products . 28 8.6 111.0 110.1 109.1 108.2 109.0 109.2 109.6 111.5 112.3 112.6 113.5 113.0 113.7 113.1 31 Petroleum products 29 1.3 107.4 104.7 108.8 108.5 105.7 107.5 109.6 108.3 107.3 108.6 106.0 106.7 107.2 106.6 32 Rubber and plastic products 30 3.0 110.0 108.8 106.1 104.4 106.6 109.2 110.5 110.1 112.6 113.8 113.2 112.6 112.7 112.2 33 Leather and products ... 31 .3 88.2 89.6 90.8 91.5 90.0 89.5 90.9 91.0 87.1 85.8 83.9 84.3 83.7 83.3 34 Mining 7.9 101.0 101.7 102.9 101.5 100.9 100.2 102.1 102.7 101.3 101.4 100.7 99.3 97.8 97.6 35 Metal 10 .3 149.4 143.1 148.0 147.6 145.7 148.0 157.0 153.0 155.5 153.1 146.5 148.4 147.2 145.1 36 Coal 11,12 1.2 109.2 108.4 112.8 109.9 105.9 103.4 110.2 116.0 110.8 110.1 107.9 108.4 107.6 110.4 37 Oil and gas extraction... 13 5.7 95.7 96.0 97.2 96.4 96.6 96.0 96.9 96.4 95.7 96.0 96.0 93.9 91.7 91.1 38 Stone and earth minerals 14 .7 108.3 119.2 112.0 108.0 107.0 107.5 106.4 107.8 107.0 107.3 105.9 105.9 108.4 106.9 39 Utilities... 7.6 109.2 107.6 104.6 106.4 105.9 111.4 111.5 110.9 110.7 109.7 109.4 111.0 108.1 107.7 40 Electric. 491,3PT 6.0 112.6 110.4 107.8 109.8 109.8 116.4 117.1 116.6 115.6 113.4 112.2 112.7 109.9 109.6 41 Gas .... 492,3PT 1.6 96.3 97.5 92.8 93.6 91.6 92.8 90.7 89.7 92.4 95.8 98.9 104.8 101.7 100.7 SPECIAL AGGREGATES 42 Manufacturing excluding motor vehicles and parts 79.8 108.5 108.4 107.6 106.7 107.1 107.6 108.3 109.0 109.3 109.5 109.5 109.3 109.3 108.7 43 Manufacturing excluding office and computing machines 82.0 106.0 105.6 104.5 103.7 104.4 105.1 106.1 106.9 107.0 107.6 107.6 107.1 107.0 105.9 Gross value (billions of 1982 dollars, annual rates) MAJOR MARKETS 44 Products, total 1734.8 1,880.3 1,860.4 1,848.4 1,845.4 1,853.3 1,875.7 1,890.5 1,895.3 1,885.5 1,901.8 1,911.4 1,906.5 1,894.4 1,878.0 45 Final 1350.9 1,482.2 1,459.6 1,452.8 1,455.6 1,464.6 1,478.1 1,490.5 1,496.1 1,484.5 1,501.5 1,510.0 1,504.0 1,492.5 1,476.0 46 Consumer goods 833.4 880.1 857.9 852.7 857.4 862.9 874.4 884.2 888.3 882.7 898.3 902.4 901.8 898.5 885.5 47 Equipment 517.5 602.1 601.7 600.1 598.2 601.7 603.7 606.2 607.8 601.8 603.3 607.6 602.2 594.0 590.5 48 Intermediate 384.0 398.1 400.8 395.6 389.8 388.7 397.6 400.1 399.2 401.0 400.3 401.4 402.6 401.9 402.0 1. Data in this table also appear in the Board's G.17 (419) weekly statistical Developments and Historical Revision," Federal Reserve Bulletin, vol. 76 (April release. For ordering address see inside front cover. 1990), pp. 187-204. A major revision of the industrial production index and the capacity 2. Standard industrial classification. utilization rates was released in April 1990. See "Industrial Production: 1989 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A49 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates, except as noted 1991 IItteemm 11998899 11999900 11999911 Mar. Apr. May June July Aug. Sept. Oct.r Nov.r Dec. Private residential real estate activity (thousands of units, except as noted) NEW UNITS 1 Permits authorized 1,339 1,111 %1 892 913 966 999 1,005 953 982 1,028 993 1,055 ? One-family 932 794 759 689 742 760 780 794 769 782 796 787 851 3 Two-or-more-family 407 317 202 203 171 206 219 211 184 200 232 206 204 4 Started 1,376 1,193 1,015 918R 978R 983 L,036R L,053R L,053R 1,020R 1,085 1,085 1,106 5 One-family 1,003 895 841 75 R 802R 830" 870R 881R 881R 864R 887 907 %5 6 Two-or-more-family 373 298 173 167R 176 153R 166R 172R 172R 156 198 178 141 7 Under construction at end of period .. 850 711 617 680 674 665 655 652 649 632 629 635 644 8 One-family 535 449 443 442 443 443 446 451 455 453 449 457 467 9 Two-or-more-family 315 262 174 238 231 222 209 201 194 179 180 178 177 10 Completed 1,423 1,308 1,088 1,190 1,089 1,070 1,105 1,069 1,054 1,194 1,069 1,023 991 11 One-family 1,026 966 835 881 821 800 815 806 821 869 876 826 820 1? Two-or-more-family 396 342 253 309 268 270 290 263 233 325 193 197 171 13 Mobile homes shipped 198 188 171 159*^ 177R 173R 172R 175 175R 172 171 171 176 Merchant builder activity in one-family units 14 Number sold 650 535 503 495 506 507 518 507 522 498R 551188 559 552222 15 Number for sale at end of period ... 363 318 283 308 303 299 295 2% 291 291 287 284 283 Price of units sold (thousands of dollars)2 16 Median 120.4 122.3 120.1 122.5 121.0 116.0 119.0 120.0 112200..88 112200..00"" 112233..55 111177..33 112233..88 17 Average 148.3 149.0 147.4 156.4 150.8 145.4 145.9 148.2 141.8 147.3R 147.8 140.5 148.2 EXISTING UNITS (one-family) 18 Number sold 3,439 3,316 3,283 3,220 3,310 3,540 3,590 3,320 3,250 3,120 3,160 3,310 3,340 Price of units sold (thousands of dollars)2 19 92.9 95.2 99.5 98.2 100.3 101.1 102.0 103.6 102.2 99.7 9999..22 97.9 100.0 20 Average 118.0 118.3 127.3 125.2 128.9 130.6 130.5 132.2 131.0 127.7 126.4 124.9 127.1 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 443,720 446,433 404,891 401,883 407,050 399,030 398,189 398,409 403,151 406,983 410,342 408,410 407,403 22 Private 345,416 337,776 295,737 293,262 299,044 291,048 290,871 290,299 293,402 2%,621 297,537 295,714 294,956 23 Residential 196,551 182,856 160,962 152,447 151,836 154,567 158,282 158,039 162,800 166,578 168,251 168,212 167,259 24 Nonresidential, total 148,865 154,920 134,775 140,815 147,208 136,481 132,589 132,260 130,602 130,043 129,286 127,502 127,697 25 Industrial buildings 20,412 23,849 21,710 23,089 24,301 20,683 20,868 20,885 20,418 20,321 21,494 21,643 22,371 26 Commercial buildings 65,496 62,866 48,036 51,766 54,824 50,220 47,5% 47,144 46,341 45,589 44,479 42,316 41,237 27 Other buildings 19,683 21,591 20,743 20,628 21,928 20,858 20,429 20,674 19,973 20,615 20,708 20,443 21,242 28 Public utilities and other 43,274 46,614 44,286 45,332 46,155 44,720 43,696 43,557 43,870 43,518 42,605 43,100 42,847 29 Public 98,303 108,655 109,156 108,621 108,007 107,982 107,318 108,110 109,749 110,361 112,805 112,697 112,447 30 Military 3,520 2,734 1,849 1,866 1,828 1,918 1,864 1,759 1,783 2,261 1,205 1,912 2,200 31 Highway 28,171 30,595 29,041 29,9% 28,591 29,246 28,776 28,854 30,047 28,610 29,079 28,680 28,805 32 Conservation and development 4,989 4,718 5,347 4,586 5,833 5,123 5,807 4,688 4,901 4,226 6,109 6,814 5,613 33 Other 61,623 70,608 72,919 72,173 71,755 71,695 70,871 72,809 73,018 75,264 76,412 75,291 75,829 1. Not at annual rates. SOURCE. Bureau of the Census estimates for all series except (1) mobile homes, 2. Not seasonally adjusted. which are private, domestic shipments as reported by the Manufactured Housing 3. Recent data on value of new construction may not be strictly comparable Institute and seasonally adjusted by the Census Bureau, and (2) sales and prices with data for previous periods because of changes by the Bureau of the Census in of existing units, which are published by the National Association of Realtors. All its estimating techniques. For a description of these changes, see Construction back and current figures are available from the originating agency. Permit Reports (C-30-76-5), issued by the Bureau in July 1976. authorizations are those reported to the Census Bureau from 17,000 jurisdictions beginning in 1984. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • April 1992 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data, except as noted C m h o an n g th e s f e ro a m rli e 1 r 2 Change f ( r a o n m n u 3 a l m r o a n te th ) s earlier Change from 1 month earlier IIInnndddeeexxx llleeevvveeelll,,, IIIttteeemmm 1991r 1991r 1992 JJJaaannn... 11999911 11999922 111999999222 JJaann.. JJaann.. Mar. June Sept. Dec. Sept. Oct. Nov. Dec. Jan. CONSUMER PRICES2 (1982-84=100) 1 All items 5.7 2.6 2.7 3.0 3.0 3.2 .4 .2 .4 .2 .1 138.1 2 4.1 1.0 2.4 4.8 -2.3 2.7 .1 -.1 .4 .3 -.4 137.2 3 Energy items 4 All items less food and energy 9.7 -6.5 -29.4 -.8 1.2 3.6 .2 .0 .8 .1 -1.5 100.1 5 Commodities 5.6 3.9 6.8 3.2 4.6 3.1 .4 .2 .3 .2 .3 144.9 6 Services 4.0 3.3 8.2 2.2 4.4 .6 .4 .1 .3 -.2 .2 130.1 6.3 4.3 6.2 3.3 4.6 4.3 .4 .3 .3 .4 .4 153.4 PRODUCER PRICES (1982=100) 7 Finished goods 4.0 -.5 -2.9 .7 1.3 1.0 .2 .3 .0 -.1 -.3 121.7 8 Consumer foods .7 -1.8 .0 -.6 -4.4 -1.3 -.1 .0 -.2 -.2 -.3 122.5 9 Consumer energy 13.6 -10.0 -32.6 -1.5 3.7 -.5 .4 1.2 .1 -1.4 -2.8 74.3 10 Other consumer goods 4.2 2.9 5.6 1.8 3.6 2.4 .3 .3 .1 .2 .4 136.2 11 Capital equipment 3.9 1.9 5.2 1.6 1.3 1.9 .2 .2 .2 .2 .2 128.3 Intermediate materials 12 Excluding foods and feeds 3.0 -2.9 -7.6 -1.0 .4 -1.7 .2 -.3 .1 -.2 -.5 113.4 13 Excluding energy 2.0 -1.1 -1.0 -.7 -1.3 .0 -.1 -.1 .0 .1 -.2 121.0 Crude materials 14 Foods -5.6 -3.0 -3.6 -8.6 -6.6 -3.8 1.6 -.2 -.4 -.4 1.7 104.0 15 Energy 18.6 -23.0 -54.0 .5 -.5 4.8 -2.5 4.0 1.2 -3.9 -3.5 75.2 16 Other 1.1 -8.2 -5.3 -14.1 -4.9 -7.4 -.8 -.5 -1.3 -.2 .0 122.6 1. Not seasonally adjusted. rental-equivalence measure of homeownership. 2. Figures for consumer prices are for all urban consumers and reflect a SOURCE. Bureau of Labor Statistics. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A51 2.16 GROSS DOMESTIC PRODUCT AND INCOME Billions of current dollars, except as noted; quarterly data at seasonally adjusted annual rates 1991 1990 1991 Q4 Ql Q2 Q3 GROSS DOMESTIC PRODUCT 1 Total 5,244.0 5,513.8 5,671.8 5,557.5 5,589.0 5,652.6 5,709.2 By source 2 Personal consumption expenditures 3,517.9 3.742.6 3.886.8 3,812.0 3,827.7 3.868.5 3,916.4 3 Durable goods 459.8 465.9 445.2 451.9 440.7 440.0 452.9 4 Nondurable goods 1,146.9 1.217.7 1,251.0 1,246.4 1,246.3 1,252.9 1,257.4 5 Services 1,911.2 2,059.0 2,190.5 2,113.6 2.140.7 2.175.6 2,206.1 6 Gross private domestic investment 837.6 802.6 725.3 750.9 709.3 708.8 740.9 7 Fixed investment 801.6 802.7 745.6 787.4 748.4 745.8 744.5 8 Nonresidential 570.7 587.0 550.4 585.2 560.0 554.6 546.8 9 Structures 193.1 198.7 174.5 191.2 184.0 180.0 169.0 10 Producers' durable equipment 377.6 388.3 376.0 394.0 375.9 374.7 377.8 11 Residential structures 230.9 215.7 195.1 202.2 188.4 191.2 197.7 12 Change in business inventories 36.0 .0 -20.2 -36.5 -39.2 -37.1 -3.6 13 Nonfarm 35.5 -2.0 -17.0 -28.9 -35.0 -34.0 -3.2 14 Net exports of goods and services -82.9 -74.4 -27.1 -76.6 -36.8 -17.2 -37.3 15 Exports 504.9 550.4 593.3 572.6 565.9 589.8 597.0 16 Imports 587.8 624.8 620.4 649.2 602.7 607.0 634.3 17 Government purchases of goods and services .. 971.4 1,042.9 1.086.9 1,071.2 1.088.8 1,092.5 1,089.1 18 Federal 401.4 424.9 445.1 434.5 451.5 452.1 444.9 19 State and local 570.0 618.0 641.8 636.7 637.3 640.4 644.2 By major type of product 20 Final sales, total 5.208.1 5,513.8 5,692.0 5,594.0 5,628.2 5.689.6 5,712.8 21 Goods 2,062.1 2,167.6 2,213.0 2,194.5 2,208.6 2,223.2 2,214.1 22 Durable 892.9 934.7 929.0 927.2 916.4 939.5 929.4 23 Nondurable 1.169.2 1,233.0 1,284.0 1,267.3 1,292.1 1.283.7 1,284.7 24 Services 2,634.7 2,834.0 3,012.7 2,905.5 2,951.7 2,999.0 3,035.1 25 Structures 511.3 512.2 466.4 494.0 467.9 467.4 463.5 26 Change in business inventories 36.0 .0 -20.2 -36.5 -39.2 -37.1 -3.6 27 Durable goods 26.9 -7.0 -24.6 -29.4 -43.5 -33.5 -9.2 28 Nondurable goods 9.1 7.0 4.3 -7.1 4.3 -3.6 5.6 MEMO 4,836.9 4,884.9 4,848.4 4,855.1 4,824.0 4,840.7 4,862.7 29 Total GDP in 1987 dollars NATIONAL INCOME 4.244.7 4,459.6 4,506.8 4.489.8 4,530.8 4,559.8 30 Total 3,101.3 3,290.3 3,387.7 3,340.0 3.342.9 3,377.4 3.405.3 31 Compensation of employees 2.585.8 2,738.9 2,807.7 2,778.3 2,771.1 2,800.2 2.822.4 32 Wages and salaries 478.6 514.0 540.2 525.4 536.0 540.1 541.8 33 Government and government enterprises .. 2,107.2 2,224.9 2,267.6 2,253.0 2,235.1 2,260.1 2,280.6 34 Other 515.5 551.4 580.0 561.6 571.8 577.2 582.9 35 Supplement to wages and salaries 261.7 277.3 289.3 281.7 287.5 288.7 290.2 36 Employer contributions for social insurance 253.7 274.0 290.6 279.9 284.2 288.5 292.8 37 Other labor income 38 Proprietors'income1 347.0 373.2 379.6 373.9 364.2 380.0 382.5 39 Business and professional 305.5 330.7 344.5 332.7 331.4 340.4 350.5 40 Farm1 41.4 42.5 35.2 41.2 32.8 39.6 32.0 41 Rental income of persons2 -7.9 -12.9 -13.2 -9.5 -11.9 -11.7 -14.2 42 Corporate profits' 351.7 319.0 n.a. 296.1 302.1 303.5 306.1 43 Profits before tax 344.5 332.3 n.a. 326.1 309.1 306.2 318.2 44 Inventory valuation adjustment -17.5 -14.2 3.8 -21.2 6.7 9.9 -4.8 45 Capital consumption adjustment 24.7 -9.1 -13.6 -12.6 -7.3 46 Net interest 452.6 481.3 492.6 481.6 480.1 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 (U.S. Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics • April 1992 2.17 PERSONAL INCOME AND SAVING Billions of current dollars, except as noted; quarterly data at seasonally adjusted annual rates 1991 Account 1989 1990 Q4 Q1 Q2 Q3 PERSONAL INCOME AND SAVING 1 Total personal income 4,380.2 4.679.8 4,833.9 4,764.7 4,768.0 4,821.1 4.853.3 2 Wage and salary disbursements 2,585.8 2.738.9 2.807.8 2,778.2 2,770.9 2,800.6 2.822.4 3 Commodity-producing industries 723.8 745.4 738.7 745.2 733.4 735.2 742.3 4 Manufacturing 542.1 555.8 556.5 557.3 549.3 552.3 559.9 5 Distributive industries 607.5 634.6 641.2 639.0 635.1 642.0 644.0 6 Service industries 775.9 845.0 887.6 868.8 866.5 883.0 894.4 7 Government and government enterprises 478.6 514.0 540.2 525.2 535.8 540.5 541.8 8 Other labor income 253.7 274.0 290.6 279.9 284.2 288.5 292.8 9 Proprietors' income1 347.0 373.2 379.6 373.9 364.2 380.0 382.5 10 Business and professional1 305.5 330.7 344.5 332.7 331.4 340.4 350.5 11 Farm1 41.4 42.5 35.2 41.2 32.8 39.6 32.0 12 Rental income of persons -7.9 -12.9 -13.2 -9.5 -11.9 -11.7 -14.2 13 Dividends 119.8 124.8 128.5 127.0 128.7 127.4 128.7 14 Personal interest income 669.0 721.3 719.4 736.9 730.1 721.8 716.7 15 Transfer payments 624.4 684.9 759.1 705.8 737.2 751.5 763.7 16 Old-age survivors, disability, and health insurance benefits ... 352.0 379.7 358.4 373.1 377.2 381.7 325.1 17 LESS: Personal contributions for social insurance 224.3 238.0 227.5 235.4 237.0 239.3 211.7 18 EQUALS: Personal income 4,679.8 4.833.9 4,764.7 4,768.0 4,821.1 4,853.3 4,380.2 19 LESS: Personal tax and nontax payments 621.0 616.0 627.2 617.1 613.6 615.1 591.7 20 EQUALS: Disposable personal income 4,058.8 4,217.8 4,137.5 4,151.0 4,207.5 4,238.2 3,788.6 21 LESS: Personal outlays 3,852.2 3,995.8 3,921.7 3,937.5 3,977.9 4,024.9 3,621.6 22 EQUALS: Personal saving 206.6 222.1 215.8 213.4 229.6 213.3 166.9 MEMO Per capita (1987 dollars) 23 Gross domestic product 19.550.5 19,539.6 19,186.4 19,337.3 19,166.5 19,187.7 19,220.2 24 Personal consumption expenditures 13.027.6 13,050.4 12,887.6 12,951.6 12,877.4 12,892.0 12,929.6 25 Disposable personal income 14,030.0 14,154.0 13,987.0 14,058.0 13,965.0 14,022.0 13,992.0 26 Saving rate (percent) 5.3 5.1 5.5 5.0 GROSS SAVING 744.2 711.8 n.a. 678.3 713.9 698.0 27 Gross saving 827.3 851.3 n.a. 853.9 893.0 876.4 28 Gross private saving 166.9 206.6 222.1 215.8 213.4 229.6 213.3 2390 PUenrdsoisntarilb suatvedin gc orporate profits1 85.8 49.9 n.a. 32.8 45.0 43.4 39.4 31 Corporate inventory valuation adjustment -17.5 -14.2 3.8 -21.2 6.7 9.9 -4.8 Capital consumption allowances 32 Corporate 350.5 365.5 384.0 372.7 380.1 383.2 384.6 33 Noncorporate 224.0 229.3 239.5 232.7 235.3 236.8 239.1 34 Government surplus, or deficit (-), national income and product accounts -83.0 -139.5 -171.2 -175.6 -126.1 -179.1 -178.4 35 Federal -124.2 -165.3 -200.7 -193.6 -146.4 -206.7 -210.2 36 State and local 41.1 25.7 29.6 18.0 20.4 27.6 31.8 37 Gross investment 765.8 730.4 720.0 38 Gross private domestic 837.6 802.6 725.3 750.9 709.3 708.8 740.9 39 Net foreign -96.0 -82.8 11.5 -70.4 56.5 21.7 -20.9 40 Statistical discrepancy 8.1 16.5 1. With inventory valuation and capital consumption adjustments SOURCE. Survey of Current Business (U.S. 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 seasonally adjusted, except as noted1 Item credits or debits 1990 Q3 Q4 Ql Q2 Q3P -126,236 -106,305 -92,123 -23,881 -23,402 10,501 3,028 -10,459 Not seasonally adjusted -29,112 -25,136 15,507 4,593 -15,593 Merchandise trade balance2 -126,986 -115,917 -108,115 -28,760 -27,728 -18,394 -15,391 -20,486 Merchandise exports 320,337 361,451 389,550 %,638 100,580 100,900 104,245 104,532 Merchandise imports -447,323 -477,368 -497,665 -125,398 -128,308 -119,294 -119,636 -125,018 Military transactions, net -5,743 -6,203 -7,219 -1,683 -2,243 -2,329 -1,484 -1,168 Investment income, net 5,353 2,689 11,945 2,802 6,133 4,883 2,345 2,502 Other service transactions, net 16,082 28,618 33,595 8,086 9,716 9,402 10,429 10,630 Remittances, pensions, and other transfers . -4,437 -4,420 -4,843 -1,302 -1,201 -1,316 -1,315 -1,267 U.S. government grants (excluding military) -10,506 -11,071 -17,486 -3,024 -8,079 18,255 8,444 -670 11 Change in U.S. government assets other than official reserve assets, net (increase, -) 2,966 1,320 2,976 4,759 1,422 -493 2,715 12 Change in U.S. official reserve assets (increase, -). -3,912 -25,293 -2,158 1,739 -1,092 -353 1,014 3,878 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) 127 -535 -192 363 -93 31 -190 6 15 Reserve position in International Monetary Fund. 1,025 471 731 8 -4 -341 72 -114 16 Foreign currencies -5,064 -25,229 -2,697 1,368 -995 -43 1,132 3,986 17 Change in U.S. private assets abroad (increase, -). -85,112 -104,637 -58,524 -28,114 -38,370 -1,992 -15,503 -18,564 18 Bank-reported claims -56,322 -51,255 5,333 -9,984 -24,513 20,598 1,215 -178 19 Nonbank-reported claims -3,064 2,581 -1,944 676 -2,509 -1,308 -2,076 20 U.S. purchases of foreign securities, net -7,846 -22,575 -28,476 -1,014 -7,546 -9,430 -12,833 -i2,5n 21 U.S. direct investments abroad, net -17,880 -33,388 -33,437 -17,792 -3,802 -11,852 -1,809 -5,875 22 Change in foreign official assets in United States (increase, +) .. 39,657 8,624 32,425 13,341 20,301 6,631 -3,105 4,309 23 U.S. Treasury securities 41,741 149 28,643 11,849 20,119 2,381 -2,287 5,717 24 Other U.S. government obligations 1,309 1,383 667 134 708 -29 -219 407 25 Other U.S. government liabilities4 -568 281 1,703 -248 1,102 1,012 370 1,302 26 Other U.S. liabilities reported by U.S. banks3 -319 4,976 2,998 1,871 -707 2,501 -1,084 -3,144 27 Other foreign official assets -2,506 1,835 -1,586 -265 -921 766 115 27 28 Change in foreign private assets in United States (increase, +).. 181,877 207,925 53,879 35,754 18,732 -7,360 6,608 18,507 29 U.S. bank-reported liabilities3 70,235 63,382 9,975 26,%8 17,261 -18,795 -28,687 8,840 30 U.S. nonbank-reported liabilities 5,626 5,454 3,779 4,260 -1,840 -1,616 -760 31 Foreign private purchases of U.S. Treasury securities, net 20,239 29,618 1,131 24 -2,029 3,409 13,434 -1,389 32 Foreign purchases of other U.S. securities, net 26,353 38,920 1,781 -2,558 802 5,306 15,073 9,653 33 Foreign direct investments in United States, net 59,424 70,551 37,213 7,060 4,538 4,336 7,548 1,403 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 35 Discrepancy -9,240 18,366 63,526 1,475 19,072 -8,849 8,451 -386 36 Due to seasonal adjustments -6,473 2,007 3,995 166 -6,059 37 Statistical discrepancy in recorded data before seasonal adjustment 63,526 7,948 17,066 -12,844 8,285 MEMO Changes in official assets 38 U.S. officii reserve assets (increase, -) -3,912 -25,293 -2,158 1,739 -1,092 -353 1,014 3,878 39 Foreign official assets in United States excluding line 25 (increase, +) 40,225 8,343 30,722 13,589 19,199 5,619 -3,475 3,007 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) -2,9% 10,738 2,163 -1,699 575 -3,162 -4,298 1. Seasonal factors not calculated for lines 6, 10, 12-16, 18-20, 22-34, and cial banks, as well as some brokers and dealers. 38-40. 4. Associated primarily with military sales contracts and other transactions 2. Data are on an international accounts (IA) basis. The data differ from the arranged with or through foreign official agencies. Census basis data, shown in table 3.11, for reasons of coverage and timing. 5. Consists of investments in U.S. corporate stocks and in debt securities of Military exports are excluded from merchandise trade data and are included in private corporations and state and local governments. line 6. SOURCE. Survey of Current Business (U.S. Department of Commerce). 3. Reporting banks include all kinds of depository institutions besides commer- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • April 1992 3.11 U.S. FOREIGN TRADE1 Millions of dollars; exports, F.A.S. value; imports, Customs value; monthly data seasonally adjusted 1991 IItteemm 11998899 11999900 11999911 June July Aug. Sept. Oct. Nov/ Dec.p 1 Exports of domestic and foreign merchandise, excluding grant-aid shipments 363,812 393,592 421,851 34,975 35,227 34,380 35,348 37,114 36,939 36,129 2 General imports, including merchandise for immediate consumption plus entries into bonded warehouses 473,211 495,311 488,055 38,764 41,176 40,910 42,282 43,434 41,109 42,065 3 Trade balance -109,399 -101,718 -66,205 -3,789 -5,949 -6,530 -6,934 -6,320 -4,171 -5,936 1. The Census basis data differ from merchandise trade data shown in table as indicated above. Since Jan. 1, 1987 census data have been released forty-five 3.10, U.S. International Transactions Summary, because of coverage and timing. days after the end of the month; the previous month is revised to reflect late On the export side, the largest difference is the exclusion of military sales (which documents. Total exports and the trade balance reflect adjustments for undocuare combined with other military transactions and reported separately in the mented exports to Canada. Components may not sum to totals because of "service account" in table 3.10, line 6). On the import side, this table includes rounding. imports of gold, ship purchases, imports of electricity from Canada, and other SOURCE. FT900, Summary of U.S. Export and Import Merchandise Trade transactions; military payments are excluded and shown separately in table 3.10, (U.S. Department of Commerce, Bureau of the Census). 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1991 1992 TTyyppee 11998888 11998899 11999900 July Aug. Sept. Oct. Nov. Dec. Jan." 1 Total 47,802 74,609 83,316 74,816 73,514 74,731 74,508 74,651 77,719 75,868 2 Gold stock, including Exchange Stabilization Fund1 11,057 11,059 11,058 11,062 11,062 11,062 11,059 11,058 11,057 11,058 3 Special drawing rights 9,637 9,951 10,989 10,360 10,479 10,722 10,710 10,942 11,240 10,980 4 Reserve position in International Monetary Fund2 9,745 9,048 9,076 8,730 8,726 9,094 9,065 8,943 9,488 9,113 5 Foreign currencies4 17,363 44,551 52,193 44,664 43,247 43,853 43,674 43,708 45,934 44,717 1. Gold held "under earmark" at Federal Reserve Banks for foreign and cies have been used. U.S. SDR holdings and reserve positions in the IMF also international accounts is not included in the gold stock of the United States; see have been valued on this basis since July 1974. table 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. Special drawing rights are valued according to a techique adopted by the $867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 1, International Monetary Fund (IMF) in July 1974. Values are based on a weighted 1972; $1,139 million on Jan. 1, 1979; $1,152 million on Jan. 1, 1980; and $1,093 average of exchange rates for the currencies of member countries. From July 1974 million on Jan. 1, 1981; plus net transactions in SDRs. through December 1980, 16 currencies were used; since January 1981, 5 curren- 4. Valued at current market exchange rates. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1 Millions of dollars, end of period 1991 1992 AAsssseettss 11998888 11998899 11999900 July Aug. Sept. Oct. Nov. Dec. Jan." 1 Deposits 347 589 369 314 256 384 223 346 968 321 Assets held in custody 2 U.S. Treasury securities2 232,547 224,911 278,499 274,514 279,394 279,013 280,249 285,905 281,107 293,958 3 Earmarked gold3 13,636 13,456 13,387 13,330 13,330 13,330 13,326 13,307 13,303 13,303 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; it 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 1991 AAsssseettss 11998888 11998899 11999900 June July Aug. Sept. Oct. Nov. Dec. All foreign countries 1 Total, all currencies 505,595 545,366 556,925 533,017 529,313 528,077 547,359 546,570 550,777 549,177 2 Claims on United States 169,111 198,835 188,496 181,135 174,802 169,061 177,572 176,959 177,828 176,270 3 Parent bank 129,856 157,092 148,837 142,222 137,159 130,169 137,036 136,570 137,165 137,478 4 Other banks in United States 14,918 17,042 13,296 12,011 11,100 12,447 13,692 13,432 13,543 12,884 5 Nonbanks 24,337 24,701 26,363 26,902 26,543 26,445 26,844 26,957 27,120 25,908 6 Claims on foreigners 299,728 300,575 312,449 294,421 294,826 2%,855 300,229 299,915 304,049 303,934 7 Other branches of parent bank 107,179 113,810 135,003 115,420 112,205 112,916 114,845 108,269 107,180 111,729 8 Banks 96,932 90,703 72,602 75,1% 77,711 76,393 77,293 80,060 84,980 81,970 9 Public borrowers 17,163 16,456 17,555 17,223 18,416 19,110 18,930 18,685 18,940 18,652 10 Nonbank foreigners 78,454 79,606 87,289 86,582 86,494 88,436 89,161 92,901 92,949 91,583 11 Other assets 36,756 45,956 55,980 57,461 59,685 62,161 69,558 69,6% 68,900 68,973 12 Total payable in U.S. dollars 357,573 382,498 379,479 373,441 365,008 359,316 368,149 365,223 365,143 363,910 n Claims on United States 163,456 191,184 180,174 174,775 168,353 163,593 171,393 170,615 171,701 169,631 14 Parent bank 126,929 152,294 142,962 138,262 132,883 126,746 133,450 132,929 133,984 133,445 15 Other banks in United States 14,167 16,386 12,513 11,502 10,605 11,973 13,109 12,904 12,668 12,025 16 Nonbanks 22,360 22,504 24,699 25,011 24,865 24,874 24,834 24,782 25,049 24,161 17 Claims on foreigners 177,685 169,690 174,451 171,752 169,494 167,039 166,9% 164,543 165,490 167,010 18 Other branches of parent bank 80,736 82,949 95,298 84,318 79,112 79,317 80,179 75,649 75,823 78,114 19 Banks 54,884 48,396 36,440 43,578 45,589 41,761 40,656 41,132 42,808 41,635 20 Public borrowers 12,131 10,961 12,298 12,479 13,565 14,160 13,609 13,889 13,671 13,685 21 Nonbank foreigners 29,934 27,384 30,415 31,377 31,228 31,801 32,552 33,873 33,188 33,576 22 Other assets 16,432 21,624 24,854 26,914 27,161 28,684 29,760 30,065 27,952 27,269 United Kingdom 23 Total, all currencies 156,835 161,947 184,818 165,534 161,869 162,879 172,113 172,795 174,648 175,599 24 Claims on United States 40,089 39,212 45,560 37,574 32,475 31,315 34,409 32,615 32,531 35,257 25 Parent bank 34,243 35,847 42,413 34,534 29,241 28,189 31,205 29,021 28,901 31,931 26 Other banks in United States 1,123 1,058 792 711 860 816 997 1,502 1,259 1,267 27 Nonbanks 4,723 2,307 2,355 2,329 2,374 2,310 2,207 2,092 2,371 2,059 28 Claims on foreigners 106,388 107,657 115,536 103,608 103,067 103,935 105,699 108,397 111,160 109,692 29 Other branches of parent bank 35,625 37,728 46,367 38,333 36,588 38,382 39,077 36,757 36,474 35,735 30 Banks 36,765 36,159 31,604 31,019 31,866 30,168 31,658 33,375 36,709 36,394 31 Public borrowers 4,019 3,293 3,860 3,584 3,676 3,717 3,502 3,492 3,512 3,306 32 Nonbank foreigners 29,979 30,477 33,705 30,672 30,937 31,668 31,462 34,773 34,465 34,257 33 Other assets 10,358 15,078 23,722 24,352 26,327 27,629 32,005 31,783 30,957 30,650 34 Total payable in U.S. dollars 103,503 103,208 116,762 106,536 101,040 100,966 105,243 103,439 103,591 105,974 35 Claims on United States 38,012 36,404 41,259 34,726 29,352 28,870 31,772 29,995 30,054 32,418 36 Parent bank 33,252 34,329 39,609 32,790 27,085 26,608 29,673 27,404 27,689 30,370 37 Other banks in United States 964 843 334 555 759 680 727 1,378 894 822 38 Nonbanks 3,796 1,232 1,316 1,381 1,508 1,582 1,372 1,213 1,471 1,226 39 Claims on foreigners 60,472 59,062 63,701 58,565 57,861 56,127 56,354 57,155 59,037 58,791 40 Other branches of parent bank 28,474 29,872 37,142 30,108 29,111 30,279 30,840 28,655 29,047 28,667 41 Banks 18,494 16,579 13,135 14,983 15,723 12,534 12,485 13,269 15,480 15,219 42 Public borrowers 2,840 2,371 3,143 3,082 3,032 3,083 2,899 2,%9 2,848 2,853 43 Nonbank foreigners 10,664 10,240 10,281 10,392 9,995 10,231 10,130 12,262 11,662 12,052 44 Other assets 5,019 7,742 11,802 13,245 13,827 15,%9 17,117 16,289 14,500 14,765 Bahamas and Caymans 45 Total, all currencies 170,639 176,006 162,316 169,194 170,044 166,333 170,219 170,529 170,846 168,295 46 Claims on United States 105,320 124,205 112,989 115,128 114,870 111,787 116,263 117,782 118,164 115,213 47 Parent bank 73,409 87,882 77,873 80,%3 81,974 77,566 80,890 83,286 83,348 81,489 48 Other banks in United States 13,145 15,071 11,869 10,718 9,683 11,119 12,063 11,028 11,457 10,907 49 Nonbanks 18,766 21,252 23,247 23,447 23,213 23,102 23,310 23,468 23,359 22,817 50 Claims on foreigners 58,393 44,168 41,356 45,346 46,6% 46,318 45,640 43,662 44,177 45,229 51 Other branches of parent bank 17,954 11,309 13,416 12,886 10,880 10,774 10,645 9,086 10,268 11,098 52 Banks 28,268 22,611 16,310 20,917 21,836 21,113 20,535 20,300 19,865 20,174 53 Public borrowers 5,830 5,217 5,807 5,916 7,136 7,394 7,149 7,435 7,363 7,161 54 Nonbank foreigners 6,341 5,031 5,823 5,627 6,844 7,037 7,311 6,841 6,681 6,7% 55 Other assets 6,926 7,633 7,971 8,720 8,478 8,228 8,316 9,085 8,505 7,853 56 Total payable in U.S. dollars 163,518 170,780 158,390 165,290 166,115 162,260 166,287 166,598 166,582 163,740 1. Since 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 • April 1992 3.14—Continued 1991 11998888 11998899 11999900 June July Aug. Sept. Oct. Nov. Dec. All foreign countries 57 Total, all currencies 505,595 545,366 556,925 533,017 529,313 528,077 547,359 546,570 550,777 549,177 58 Negotiable certificates of deposit (CDs) .. 28,511 23,500 18,060 16,503 19,692 18,796 17,579 18,928 18,334 16,284 59 To United States 185,577 197,239 189,412 188,025 182,270 178,249 188,448 186,246 188,686 198,163 60 Parent bank 114,720 138,412 138,748 128,352 127,284 122,179 131,998 130,092 131,383* 136,473 61 Other banks in United States 14,737 11,704 7,463 11,789 10,090 10,085 11,843 10,356 12,892* 13,040 62 Nonbanks 56,120 47,123 43,201 47,884 44,896 45,985 44,607 45,798 44,411 48,650 63 To foreigners 270,923 296,850 311,668 290,277 287,887 290,257 295,645 295,282 298,152 288,488 64 Other branches of parent bank 111,267 119,591 139,113 116,253 112,521 112,845 114,101 108,534 109,085 111,960 65 Banks 72,842 76,452 58,986 57,236 59,975 62,329 62,665r 68,286* 67,945* 63,097 66 Official institutions 15,183 16,750 14,791 20,394 17,245 18,030 19,420 17,247 19,394 15,596 67 Nonbank foreigners 71,631 84,057 98,778 96,394 98,146 97,053 99,459* 101,215* 101,728* 97,835 68 Other liabilities 20,584 27,777 37,785 38,212 39,464 40,775 45,687 46,114 45,605 46,242 69 Total payable in U.S. dollars 367,483 396,613 383,522 372,871 363,869 360,397 367,771 366,449 369,515* 370,530 70 Negotiable CDs 24,045 19,619 14,094 12,620 14,538 14,183 13,180 14,157 13,813 11,909 71 To United States 173,190 187,286 175,654 175,882 170,610 167,207 176,709 174,274 176,254 185,328 72 Parent bank 107,150 132,563 130,510 121,118 120,558 115,999 125,496 123,399 124,625* 129,711 73 Other banks in United States 13,468 10,519 6,052 10,647 8,815 8,449 10,368 9,011 11,436* 11,487 74 Nonbanks 52,572 44,204 39,092 44,117 41,237 42,759 40,845 41,864 40,193 44,130 75 To foreigners 160,766 176,460 179,002 170,334 163,451 164,188 163,551 161,850 164,275 158,920 76 Other branches of parent bank 84,021 87,636 98,128 84,952 79,909 79,277 79,679 75,243 76,224 76,528 77 Banks 28,493 30,537 20,251 21,142 21,470 23,330 21,239* 25,653* 24,501* 24,156 78 Official institutions 8,224 9,873 7,921 13,972 11,563 11,496 12,591 10,565 13,375 10,304 79 Nonbank foreigners 40,028 48,414 52,702 50,268 50,509 50,085 50,042r 50,389* 50,175* 47,932 80 Other liabilities 9,482 13,248 14,772 14,035 15,270 14,819 14,331 16,168 15,173* 14,373 United Kingdom 81 Total, all currencies 156,835 161,947 184,818 165,534 161,869 162,879 172,113 172,795 174,648 175,599 82 Negotiable CDs 24,528 20,056 14,256 12,196 14,889 14,148 12,941 14,145 13,506 11,333 83 To United States 36,784 36,036 39,928 31,084 26,599 27,915 31,534 29,137 30,560 37,720 84 Parent bank 27,849 29,726 31,806 23,238 19,545 20,367 23,707 21,080 22,629 29,834 85 Other banks in United States 2,037 1,256 1,505 1,092 1,490 1,662 1,724 2,053 1,934 1,438 86 Nonbanks 6,898 5,054 6,617 6,754 5,564 5,886 6,103 6,004 5,997 6,448 87 To foreigners 86,026 92,307 108,531 99,756 97,263 96,773 98,572 100,267 102,299 98,167 88 Other branches of parent bank 26,812 27,397 36,709 29,371 28,591 27,457 29,898 26,879 26,977 30,054 89 Banks 30,609 29,780 25,126 22,994 24,310 25,131 23,525r 28,254* 27,959* 25,541 90 Official institutions 7,873 8,551 8,361 13,062 10,010 10,722 12,071 10,045 12,628 9,670 91 Nonbank foreigners 20,732 26,579 38,335 34,329 34,352 33,463 33,078r 35,089* 34,735* 32,902 92 Other liabilities 9,497 13,548 22,103 22,498 23,118 24,043 29,066 29,246 28,283 28,379 93 Total payable in U.S. dollars 105,907 108,178 116,094 104,523 99,756 100,131 104,303 103,238 104,433 108,755 94 Negotiable CDs 22,063 18,143 12,710 10,833 12,758 12,337 11,249 12,397 12,042 10,076 95 To United States 32,588 33,056 34,697 27,106 22,355 23,788 27,272 24,394 25,517 33,003 96 Parent bank 26,404 28,812 29,955 21,848 17,924 18,949 22,228 19,391 20,923 28,260 97 Other banks in United States 1,752 1,065 1,156 892 1,233 1,216 1,259 1,704 1,481 1,177 98 Nonbanks 4,432 3,179 3,586 4,366 3,198 3,623 3,785 3,299 3,113 3,566 99 To foreigners 47,083 50,517 60,014 58,068 55,433 54,848 56,829 56,639 57,527 56,626 100 Other branches of parent bank 18,561 18,384 25,957 20,452 19,509 18,480 20,878 18,319 18,678 20,800 101 Banks 13,407 12,244 9,488 8,758 9,678 9,731 8,401r 12,040* 10,542* 11,069 102 Official institutions 4,348 5,454 4,692 10,032 7,519 7,929 9,149 7,050 9,995 7,156 103 Nonbank foreigners 10,767 14,435 19,877 18,826 18,727 18,708 18,401r 19,230* 18,312* 17,601 104 Other liabilities 4,173 6,462 8,673 8,516 9,210 9,158 8,953 9,808 9,347 9,050 Bahamas and Caymans 105 Total, all currencies 170,639 176,006 162,316 169,194 170,044 166,333 170,219 170,529 170,846 168,295 106 Negotiable CDs 953 678 646 696 904 963 1,055 981 1,034 1,173 107 To United States 122,332 124,859 114,738 126,182 127,083 123,117 128,217 130,223 129,781 129,914 108 Parent bank 62,894 75,188 74,941 76,980 81,541 77,159 82,142 84,853 83,057* 79,436 109 Other banks in United States 11,494 8,883 4,526 9,449 7,484 7,036 8,841 7,070 9,728* 10,011 110 Nonbanks 47,944 40,788 35,271 39,753 38,058 38,922 37,234 38,300 36,9% 40,467 111 To foreigners 45,161 47,382 44,444 40,180 39,624 39,994 38,868 36,861 37,857 35,127 112 Other branches of parent bank 23,686 23,414 24,715 21,701 21,765 21,846 20,767 19,675 19,555 17,315 113 Banks 8,336 8,823 5,588 5,734 4,877 5,558 5,431 5,218 5,984 5,662 114 Official institutions 1,074 1,097 622 931 661 655 647 666 646 572 115 Nonbank foreigners 12,065 14,048 13,519 11,814 12,321 11,935 12,023 11,302 11,672 11,578 116 Other liabilities 2,193 3,087 2,488 2,136 2,433 2,259 2,079 2,464 2,174 2,081 117 Total payable in U.S. dollars 162,950 171,250 157,132 164,906 165,708 162,040 165,556 166,226 166,157 163,572 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 June July Aug. Sept. Oct. Nov/ Dec." 1 Total1 312,477 344,529 347,118 350,476 356,885 350,518 358,025r 366,009 363,954 By type 2 Liabilities reported by banks in the United States 36,496 39,880 41,232 43,417 47,374 38,402 41,526r 42,701 37,959 3 U.S. Treasury bills and certificates3 76,985 79,424 84,526 86,071 88,5% 90,394 94,428 92,855 92,692 U.S. Treasury bonds and notes 4 Marketable 179,269 202,487 197,808 197,104 196,815 197,645 198,157 205,354 207,983 5 Nonmarketable4 568 4,491 4,672 4,704 4,734 4,765 4,7% 4,827 4,858 6 U.S. securities other than U.S. Treasury securities 19,159 18,247 18,880 19,180 19,366 19,312 19,118 20,272 20,462 By area 7 Western Europe1 132,849 167,191 164,009 166,349 170,467 165,061 170,423r 173,708 169,287 8 Canada 9,482 8,671 9,229 9,260 10,001 9,608 9,121 9,428 7,310 9 Latin America and Caribbean 9,313 21,184 29,415 30,064 31,377 31,911 32,604r 33,993 36,057 10 Asia 153,338 138,0% 134,310 134,806 134,826 133,082 134,667r 137,513 139,610 11 Africa 1,030 1,434 1,259 1,183 1,202 1,558 1,519 1,383 2,091 12 Other countries 6,469 7,955 8,892 8,812 9,010 9,2% 9,689 9,982 9,597 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 SOURCE. 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 Dec. Mar. June Sept/ 1 Banks' own liabilities 555555,,,444333888 777444,,,999888000 666777,,,888333555 777000,,,444777777 666444,,,999222999 555999,,,444888777 666333,,,111888999 2 Banks' own claims 555111,,,222777111 666888,,,999888333 666555,,,111222777 666666,,,777%%% 666666,,,999111999 666111,,,666111999 666444,,,999888888 111888,,,888666111 222555,,,111000000 222000,,,444999111 222999,,,666777222 222777,,,555888666 222777,,,777999222 333000,,,222333000 333222,,,444111000 444333,,,888888444 444444,,,666333666 333777,,,111222444 333999,,,333333333 333333,,,888222777 333444,,,777555888 5 Claims of banks' domestic customers2 555555111 333666444 333,,,555000777 666,,,333000999 555,,,555666999 111,,,666444666 222,,,333444888 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 • April 1992 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 11998899 11999900 11999911 June July Aug. Sept. Oct/ Nov/ Dec.p 1 All foreigners 736,878 759,634 753,451 729,866 726,807 733,321 735,950 750,205 758,065 753,451 2 Banks' own liabilities 577,498 577,229 572,848 550,103 548,063 552,670 554,557 565,347 575,503 572,848 3 Demand deposits 22,032 21,723 20,518 18,797 17,929 18,423 19,841 17,637 21,630 20,518 4 Time deposits 168,780 168,017 158,736 148,572 148,667 146,395 149,708 154,552 154,302 158,736 5 Other. 67,823 65,822 66,179 65,3% 66,823 72,595 67,646 73,223 75,763 66,179 6 Own foreign offices4 318,864 321,667 327,415 317,338 314,644 315,257 317,362 319,935 323,808 327,415 7 Banks' custody liabilities5 159,380 182,405 180,603 179,763 178,744 180,651 181,393 184,858 182,562 180,603 8 U.S. Treasury bills and certificates6 91,100 96,7% 110,731 100,876 101,809 105,325 110077,,001199 111122,,228800 111100,,993388 111100,,773311 9 Other negotiable and readily transferable instruments 19,526 17,578 18,656 18,040 17,351 16,508 16,820 17,076 17,225 18,656 10 Other 48,754 68,031 51,216 60,848 59,584 58,818 57,554 55,502 54,399 51,216 11 Nonmonetary inteniational and regional organizations 4,894 5,918 8,150 5,932 6,236 6,945 6,915 7,689 8,719 8,150 12 Banks' own liabilities 3,279 4,540 5,9% 3,878 4,127 4,971 5,410 5,988 6,826 5,9% 13 Demand deposits 96 36 43 26 44 28 36 28 24 43 14 Time deposits 927 1,050 2,214 2,025 1,742 1,550 2,307 2,490 2,392 2,214 15 Other. 2,255 3,455 3,739 1,827 2,341 3,393 3,067 3,470 4,410 3,739 16 Banks' custody liabilities5 1,616 1,378 2,154 2,054 2,109 1,974 1,505 1,701 1,893 2,154 17 U.S. Treasury bills and certificates6 197 364 1,730 1,287 1,404 1,269 11,,003322 11,,224466 11,,553300 11,,773300 18 Other negotiable and readily transferable instruments 1,417 1,014 424 767 705 705 473 455 363 424 19 Other 2 0 0 0 0 0 0 0 0 0 20 Official institutions9 113,481 119,303 130,651 125,758 129,488 135,970 128,796 135,954 135,556 130,651 21 Banks' own liabilities 31,108 34,910 33,974 36,864 38,886 43,156 33,854 37,559 38,860 33,974 22 Demand deposits 2,196 1,924 2,840 1,542 1,396 1,683 1,645 1,307 1,621 2,840 23 Time deposits 10,495 14,359 16,024 14,671 14,970 14,747 13,237 14,544 13,145 16,024 24 Other. 18,417 18,628 15,110 20,651 22,520 26,726 18,972 21,708 24,094 15,110 25 Banks' custody liabilities5 82,373 84,393 %,677 88,894 90,602 92,814 94,942 98,395 %,6% %,677 26 U.S. Treasury bills and certificates6 76,985 79,424 92,692 84,526 86,071 88,5% 9900,,339944 9944,,442288 9922,,885555 9922,,669922 27 Other negotiable and readily transferable instruments 5,028 4,766 3,879 4,101 4,324 4,047 4,128 3,832 3,627 3,879 28 Other 361 203 106 267 207 171 420 135 214 106 29 Banks10 515,275 540,805 520,022 506,023 498,681 500,544 509,557 515,933 521,576 520,022 30 Banks' own liabilities 454,273 458,470 457,337 432,258 427,648 429,732 439,924 447,667 455,844 457,337 31 Unaffiliated foreign banks 135,409 136,802 129,922 114,920 113,004 114,475 122,562 127,732 132,036 129,922 32 Demand deposits 10,279 10,053 8,618 8,584 8,423 8,252 8,959 8,164 11,396 8,618 33 Time deposits 90,557 88,541 82,901 69,941 70,185 70,608 74,861 78,038 80,170 82,901 34 Other. 34,573 38,208 38,403 36,395 34,3% 35,615 38,742 41,530 40,470 38,403 35 Own foreign offices4 318,864 321,667 327,415 317,338 314,644 315,257 317,362 319,935 323,808 327,415 36 Banks' custody liabilities5 61,002 82,335 62,685 73,765 71,033 70,812 69,633 68,266 65,732 62,685 37 U.S. Treasury bills and certificates6 9,367 10,669 7,471 8,664 7,970 8,242 88,,116611 88,,336633 77,,885555 77,,447711 38 Other negotiable and readily transferable instruments7 5,124 5,341 5,808 5,928 5,472 5,316 5,819 6,083 5,948 5,808 39 Other 46,510 66,325 49,406 59,173 57,591 57,254 55,653 53,820 51,929 49,406 40 Other foreigners 103,228 93,608 94,628 92,153 92,402 89,862 90,682 90,629 92,214 94,628 41 Banks' own liabilities 88,839 79,309 75,541 77,103 77,402 74,811 75,369 74,133 73,973 75,541 42 Demand deposits 9,460 9,711 9,017 8,645 8,066 8,460 9,201 8,138 8,589 9,017 43 Time deposits 66,801 64,067 57,597 61,935 61,770 59,490 59,303 59,480 58,595 57,597 44 Other. 12,577 5,530 8,927 6,523 7,566 6,861 6,865 6,515 6,789 8,927 45 Banks' custody liabilities5 14,389 14,299 19,087 15,050 15,000 15,051 15,313 16,4% 18,241 19,087 46 U.S. Treasury bills and certificates6 4,551 6,339 8,838 6,399 6,364 7,218 77,,443322 88,,224433 88,,669988 88,,883388 47 Other negotiable and readily transferable instruments7 7,958 6,457 8,545 7,244 6,850 6,440 6,400 6,706 7,287 8,545 48 Other 1,880 1,503 1,704 1,408 1,786 1,393 1,481 1,547 2,256 1,704 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 7,203 7,073 7,456 8,186 7,073 7,062 7,542 7,5% 7,137 7,456 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. For 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. For agencies, branches, and majority-owned subsidiaries of the Inter-American and Asian Development Banks. Data exclude "holdings of foreign banks, consists principally of amounts due to head office or parent foreign dollars" of the International Monetary Fund. bank, and foreign branches, agencies, or wholly owned subsidiaries of head office 9. Foreign central banks, foreign central governments, and the Bank for or parent 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 11998899 11999900 11999911 June July Aug. Sept. Oct. Nov." Dec.p 1 736,878 759,634 753,451 729,866 726,807 733,321 735,950 750,205" 758,065 753,451 2 Foreign countries 731,984 753,716 745,301 723,934 720,571 726,376 729,035 742,516r 749,346 745,301 3 Europe 237,501 254,452 249,112 236,543 228,782 235,018 237,000 246,806r 251,266 249,112 4 1,233 1,229 1,205 1,067 1,234 %1 1,109 1,232 1,313 1,205 5 Belgium-Luxembourg 10,648 12,382 13,241 11,849 12,292 11,168 13,912 13,495 14,471 13,241 6 Denmark 1,415 1,399 937 1,370 1,197 1,065 1,038 912 1,143 937 7 570 602 1,341 732 1,222 1,170 618 938 1,080 1,341 8 France 26,903 30,946 31,817 26,382 26,747 26,580 27,476 30,500" 31,104 31,817 9 Germany 7,578 7,485 8,638 7,822 7,056 7,037 7,500 7,891r 8,032 8,638 10 1,028 934 763 791 817 851 944 840 890 763 11 Italy 16,169 17,735 13,543 14,347 13,883 12,507 12,507 12,274 13,288 13,543 1? Netherlands 6,613 5,350 7,132 6,100 6,069 5,651 6,310 6,546 6,124 7,132 13 Norway 2,401 2,357 1,888 1,926 1,653 1,279 1,444 1,192 1,489 1,888 14 2,418 2,958 2,183 2,392 2,279 2,313 2,391 2,431 2,223 2,183 15 4,364 7,544 11,390 9,392 10,4% 10,3% 10,834 12,280" 11,148 11,390 16 Sweden 1,491 1,837 2,222 745 858 1,424 1,435 l,217r 1,105 2,222 17 Switzerland 34,4% 36,690 37,286 36,089 34,808 35,%7 38,341 36,733 36,711 37,286 18 Turkey 1,818 1,169 1,598 1,806 1,720 1,780 1,538 1,493 1,845 1,598 19 United Kingdom 102,362 109,555 100,622 98,311 90,059 95,359 95,628 99,472r 99,841 100,622 70 Yugoslavia 1,474 928 622 925 1,016 955 854 807 544 622 71 Other Western Europe" 13,563 11,689 8,974 11,393 12,423 15,176 9,640 12,964" 15,257 8,974 77 U.S.S.R 350 119 241 178 75 136 117 178 236 241 23 Other Eastern Europe12 608 1,545 3,469 2,925 2,878 3,243 3,364 3,411 3,422 3,469 24 Canada 18,865 20,349 21,696 23,900 22,519 23,919 24,038 24,685 23,131 21,6% 75 Latin America and Caribbean 311,028 332,997 343,653 334,668 339,202 337,729 340,519 340,561" 345,163 343,653 76 Argentina 7,304 7,365 7,758 7,504 7,097 6,978 6,858 7,190 7,452 7,758 77 99,341 107,386 99,713 %,900 98,011 93,977 %,577 99,858" 100,339 99,713 78 Bermuda 2,884 2,822 3,178 2,919 3,087 3,520 3,120 3,191 3,295 3,178 79 Brazil 6,351 5,834 5,924 5,747 5,837 6,074 6,068 5,998" 5,811 5,924 30 British West Indies 138,309 147,321 162,428 157,229 161,253 162,590 163,040 160,555" 163,459 162,428 31 Chile 3,212 3,145 3,284 3,229 3,305 3,162 3,092 3,348 3,388 3,284 3? Colombia 4,653 4,492 4,662 4,446 4,419 4,735 4,641 4,823 4,797 4,662 33 Cuba 10 11 2 7 2 9 8 4 12 2 34 1,391 1,379 1,232 1,286 1,267 1,236 1,226 1,237 1,236 1,232 35 Guatemala 1,312 1,541 1,593 1,663 1,641 1,613 1,585 1,541 1,589 1,593 36 209 257 231 273 219 235 213 202 201 231 37 15,423 16,650 19,927 19,552 20,008 20,357 20,937 19,979 20,515 19,927 38 Netherlands Antilles 6,310 7,357 5,593 5,934 5,828 5,732 5,565 5,499" 5,924 5,593 39 Panama 4,362 4,574 4,694 4,670 4,435 4,748 4,374 4,450 4,563 4,694 40 Peru 1,984 1,294 1,249 1,340 1,333 1,287 1,305 1,234" 1,240 1,249 41 2,284 2,520 2,111 2,571 2,450 2,439 2,507 2,442" 2,373 2,111 4? Venezuela 9,482 12,271 13,151 12,581 12,170 12,249 12,348 12,237 12,171 13,151 43 Other 6,206 6,779 6,923 6,816 6,840 6,788 7,055 6,773" 6,798 6,923 44 156,201 136,844 120,471 120,750 122,194 121,689 118,830 120,443" 120,039 120,471 China 45 Mainland 1,773 2,421 2,599 2,412 2,408 2,247 2,198 2,494 2,783 2,599 46 Taiwan 19,588 11,246 11,514 9,878 11,220 11,579 9,425 12,443" 11,675 11,514 47 Hong Kong 12,416 12,754 14,373 14,581 14,719 14,206 14,468 13,943" 13,812 14,373 48 India 780 1,233 2,418 1,959 2,122 2,373 2,474 2,504" 2,613 2,418 49 1,281 1,238 1,464 1,612 1,191 1,232 1,065 1,230 1,414 1,464 50 1,243 2,767 2,014 2,355 2,376 2,697 2,848 2,115 2,108 2,014 51 81,184 67,076 47,112 51,449 50,144 48,875 48,089 47,068" 46,004 47,112 57 3,215 2,287 2,538 2,211 2,444 2,272 2,107 2,169" 2,555 2,538 53 1,766 1,585 2,449 1,587 1,537 1,465 1,647 1,926 2,139 2,449 54 Thailand 2,093 1,443 2,252 2,386 2,368 2,650 3,348 3,113" 3,581 2,252 55 Middle-East oil-exporting countries 3 13,370 15,829 15,731 13,371 15,750 14,835 15,310 15,534" 16,302 15,731 56 Other 17,491 16,%5 16,007 16,949 15,915 17,258 15,851 15,904 15,053 16,007 57 3,824 4,630 5,141 4,188 3,929 4,017 4,483 4,558 4,465 5,141 58 686 1,425 1,619 1,017 999 957 1,125 1,241 1,060 1,619 59 78 104 79 122 81 91 82 78 93 79 60 South Africa 206 228 228 241 221 137 242 207 173 228 61 86 53 31 45 24 58 37 42 32 31 62 Oil-exporting countries14 1,121 1,110 1,082 1,105 960 992 1,145 1,182 1,280 1,082 63 Other 1,648 1,710 2,102 1,6^8 1,644 1,782 1,852 1,808 1,827 2,102 64 Other countries 4,564 4,444 5,228 3,885 3,945 4,004 4,165 5,463 5,282 5,228 65 3,867 3,807 4,464 3,103 3,173 3,149 3,231 4,445 4,116 4,464 66 All other 697 637 764 781 772 855 934 1,018 1,166 764 67 Nonmonetary international and regional 4,894 5,918 8,150 5,932 6,236 66,,994455 66,,991155 77,,668899"" 88,,771199 88,,115500 68 International 3,947 4,390 5,658 4,040 4,356 4,371 4,877 5,435" 6,178 5,658 69 Latin American regional 684 1,048 1,177 1,410 1,273 1,531 1,094 1,242" 1,366 1,177 70 Other regional16 263 479 1,315 482 607 1,043 944 1,012 1,175 1,315 11. Includes the Bank for International Settlements and Eastern European 14. Comprises Algeria, Gabon, Libya, and Nigeria. countries not listed in line 23. 15. Excludes "holdings of dollars" of the International Monetary Fund. 12. Comprises Bulgaria, Czechoslovakia, Hungary, Poland, and Romania. 16. Asian, African, Middle Eastern, and European regional organizations, 13. 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 • April 1992 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 11998899 11999900 11999911 June July Aug. Sept. Oct. Nov.* Dec.p 1 Total 534,492 511,543 511,917 505,424 497,814 502,559 498,985 511,091r 513,540 511,917 2 Foreign countries 530,630 506,750 506,153 501,195 495,415 500,079 496,416 509,310* 510,250 506,153 3 Europe 119,025 113,093 114,225 99,037 97,767 98,575 103,395 103,756* 107,780 114,225 4 Austria 415 362 327 303 269 185 297 374 325 327 5 Belgium-Luxembourg 6,478 5,473 6,157 6,736 5,924 6,534 7,175 7,677* 6,962 6,157 6 Denmark 582 497 686 896 898 945 670 609* 656 686 7 Finland 1,027 1,047 1,912 668 642 771 908 1,195* 1,378 1,912 8 France 16,146 14,468 15,091 14,302 14,300 13,827 14,504 13,080 14,813 15,091 9 Germany 2,865 3,343 3,369 2,751 2,682 3,106 2,672 2,107* 2,869 3,369 10 Greece 788 727 553 654 619 495 473 487 555 553 11 Italy 6,662 6,052 8,242 6,339 5,911 5,931 6,541 6,370 6,362 8,242 12 Netherlands 1,904 1,761 2,508 2,132 2,234 2,101 1,955 2,139* 2,190 2,508 13 Norway 609 782 669 701 661 599 679 682 776 669 14 Portugal 376 292 344 378 260 308 266 301 358 344 15 Spain 1,930 2,668 1,844 2,056 2,582 1,995 2,333 2,410* 2,480 1,844 16 Sweden 1,773 2,094 2,315 1,993 1,858 1,633 1,896 1,842 2,347 2,315 17 Switzerland 6,141 4,202 4,495 2,969 3,627 3,609 4,048 4,195* 4,469 4,495 18 Turkey 1,071 1,405 1,053 1,593 1,458 1,407 1,382 1,192 1,147 1,053 19 United Kingdom 65,527 65,151 60,522 51,369 50,775 51,625 54,305 55,490* 55,967 60,522 20 Yugoslavia 1,329 1,142 824 932 877 820 802 803 848 824 21 Other Western Europe 1,302 597 787 734 832 1,024 773 714 1,001 787 22 U.S.S.R 1,179 530 1,930 911 772 1,015 1,157 1,358 1,669 1,930 23 Other Eastern Europe3 921 499 597 617 586 645 559 731 608 597 24 Canada 15,451 16,091 15,207 17,446 16,719 14,495 14,734 16,076* 15,796 15,207 25 Latin America and Caribbean 230,438 231,506 244,280 248,841 246,051 249,305 250,313 255,080* 251,745 244,280 26 Argentina 9,270 6,967 5,877 6,127 5,944 5,749 5,749 5,735* 5,778 5,877 27 Bahamas 77,921 76,525 87,094 78,023 81,294 78,414 80,217 85,940* 87,145 87,094 28 Bermuda 1,315 4,056 2,188 3,893 5,804 11,773 6,847 4,298* 4,095 2,188 29 Brazil 23,749 17,995 11,845 15,248 12,350 12,332 11,880 11,499* 11,897 11,845 30 British West Indies 68,749 88,565 106,016 115,284 110,628 111,119 112,589 116,401* 110,735 106,016 31 Chile 4,353 3,271 2,802 2,917 2,832 2,779 2,732 2,721 2,831 2,802 32 Colombia 2,784 2,587 2,424 2,349 2,202 2,368 2,431 2,541 2,571 2,424 33 Cuba 1 0 0 0 0 0 0 0 0 0 34 Ecuador 1,688 1,387 1,053 1,344 1,263 1,238 1,115 1,095 1,090 1,053 35 Guatemala 197 191 222 203 190 182 185 191 191 222 36 Jamaica 297 238 158 187 144 150 150 162 161 158 37 Mexico 23,376 14,851 16,662 15,408 15,447 15,279 16,427 16,871* 17,400 16,662 38 Netherlands Antilles 1,921 7,998 1,286 1,639 1,563 1,540 3,606 1,247* 1,122 1,286 39 Panama 1,740 1,471 1,554 1,429 1,501 1,490 1,489 1,558 1,652 1,554 40 Peru 771 663 739 726 712 728 712 722 724 739 41 Uruguay 929 786 599 590 577 571 577 555 550 599 42 Venezuela 9,652 2,571 2,514 2,222 2,405 2,394 2,443 2,406* 2,634 2,514 43 Other 1,726 1,384 1,247 1,252 1,195 1,199 1,164 1,138* 1,169 1,247 44 157,474 138,722 125,220 128,210 112277,,556600 113300,,222200 112200,,335533 112277,,001199** 112277,,221144 112255,,222200 China 45 Mainland 634 620 747 992 659 575 621 597 698 747 46 Taiwan 2,776 1,952 2,088 2,019 1,696 1,522 1,460 1,577 1,583 2,088 47 Hong Kong 11,128 10,648 9,698 9,312 9,051 9,154 9,467 10,203 10,171 9,698 48 India 621 655 440 432 409 425 449 481 449 440 49 Indonesia 651 933 952 891 874 858 852 841* 872 952 50 Israel 813 774 853 851 818 919 945 994* 907 853 51 Japan 111,300 90,699 84,782 85,708 88,183 90,604 80,498 84,839* 85,559 84,782 52 Korea 5,323 5,766 6,025 5,924 5,597 5,383 5,140 5,340* 5,773 6,025 53 Philippines 1,344 1,247 1,910 1,506 1,647 1,682 1,633 1,916 1,971 1,910 54 Thailand 1,140 1,573 1,625 1,977 1,975 1,870 1,934 1,826 1,798 1,625 55 Middle East oil-exporting countries 10,149 10,749 8,284 10,468 9,771 9,741 10,439 9,973 9,957 8,284 56 Other 11,594 13,106 7,816 8,131 6,880 7,487 6,915 8,432 7,476 7,816 57 Africa 5,890 5,445 4,919 5,429 5,417 5,344 5,272 5,264 5,234 4,919 58 Egypt 502 380 286 315 324 315 312 294 343 286 59 Morocco 559 513 575 590 597 576 579 589 583 575 60 South Africa 1,628 1,525 1,231 1,626 1,627 1,610 1,498 1,494 1,493 1,231 61 Zaire 16 16 4 12 9 9 8 9 7 4 62 Oil-exporting countries5 1,648 1,486 1,298 1,336 1,285 1,273 1,270 1,260 1,320 1,298 63 Other 1,537 1,525 1,525 1,550 1,575 1,561 1,605 1,618 1,488 1,525 64 Other countries 2,354 1,892 2,302 2,233 1,901 2,140 2,349 2,115* 2,481 2,302 65 Australia 1,781 1,413 1,665 1,621 1,384 1,464 1,526 1,503 1,718 1,665 66 All other 573 479 637 611 517 676 823 612* 763 637 67 Nonmonetary international and regional organizations6 3,862 4,793 5,764 4,229 2,399 2,480 2,569 1,781 3,290 5,764 1. Reporting banks include all kinds of depository institutions besides commer- 4. 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 5. Comprises Algeria, Gabon, Libya, and Nigeria. countries not listed in line 23. 6. Excludes the Bank for International Settlements, which is included in 3. Comprises Bulgaria, Czechoslovakia, Hungary, Poland, and Romania. "Other Western Europe." 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 11998899 11999900 11999911 June July Aug. Sept. Oct.r Nov.r Dec." 1 Total 555555599999993333333,,,,,,,000000088888887777777 555555577777779999999,,,,,,,000000044444444444444rrrrrrr 555555577777772222222,,,,,,,777777722222220000000 555555566666666666666,,,,,,,333333322222224444444 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 555555533333334444444,,,,,,,444444499999992222222 555555511111111111111,,,,,,,555555544444443333333 511,917 555555500000005555555,,,,,,,444444422222224444444 497,814 502,559 444444499999998888888,,,,,,,999999988888885555555 511,091 513,540 511,917 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 66666660000000,,,,,,,555555511111111111111 44444441111111,,,,,,,999999900000000000000 35,988 33333339999999,,,,,,,444444466666660000000 35,174 35,423 33333335555555,,,,,,,000000077777776666666 34,878 35,908 35,988 44 OOwwnn ffoorreeiiggnn ooffffiicceess 222222299999996666666,,,,,,,000000011111111111111 333333300000004444444,,,,,,,333333311111115555555 316,917 333333300000006666666,,,,,,,000000088888889999999 305,470 301,649 333333300000003333333,,,,,,,999999944444448888888 313,052 312,764 316,917 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111133333334444444,,,,,,,888888888888885555555 111111111111117777777,,,,,,,222222277777772222222 116,529 111111111111115555555,,,,,,,000000011111118888888 115,041 116,553 111111111111113333333,,,,,,,888888855555553333333 119,847 120,234 116,529 66 DDeeppoossiittss 77777778888888,,,,,,,111111188888885555555 66666665555555,,,,,,,222222255555553333333 69,227 66666669999999,,,,,,,111111133333330000000 69,302 70,730 66666668888888,,,,,,,333333366666669999999 72,493 71,578 69,227 77 OOtthheerr 55555556666666,,,,,,,777777700000000000000 55555552222222,,,,,,,000000011111119999999 47,302 44444445555555,,,,,,,888888888888889999999 45,739 45,823 44444445555555,,,,,,,444444488888884444444 47,354 48,656 47,302 88 AAllll ootthheerr ffoorreeiiggnneerrss 44444443333333,,,,,,,000000088888885555555 44444448888888,,,,,,,000000055555556666666 42,483 44444444444444,,,,,,,888888855555557777777 42,129 48,934 44444446666666,,,,,,,111111100000008888888 43,314 44,634 42,483 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss33...... 55555558888888,,,,,,,555555599999994444444 66666667777777,,,,,,,555555500000001111111rrrrrrr 66666667777777,,,,,,,222222299999996666666 66666667777777,,,,,,,333333333333339999999 11111113333333,,,,,,,000000011111119999999 11111114444444,,,,,,,333333377777775555555 11111119999999,,,,,,,333333399999990000000 11111119999999,,,,,,,555555511111112222222 11 Negotiable and readily transferable 33333330000000,,,,,,,999999988888883333333 44444441111111,,,,,,,333333333333333333333 33333335555555,,,,,,,111111144444447777777 33333335555555,,,,,,,000000055555554444444 12 Outstanding collections and other 11111114444444,,,,,,,555555599999992222222 11111111111111,,,,,,,777777799999992222222rrrrrrr 11111112222222,,,,,,,777777755555558888888 11111112222222,,,,,,,777777777777773333333 13 MEMO: Customer liability on 11111112222222,,,,,,,888888899999999999999 11111113333333,,,,,,,666666622222228888888 11111110000000,,,,,,,444444422222220000000 8888888,,,,,,,666666666666665555555 1144 DDoollllaarr ddeeppoossiittss iinn bbaannkkss aabbrrooaadd,, rreeppoorrtteedd bbyy nnoonnbbaannkkiinngg bbuussiinneessss eenntteerrpprriisseess iinn tthhee UUnniitteedd SSttaatteess ........ 45,744 44,554 n.a. 36,026 40,425 41,717 37,856 39,761 40,509 n.a. 1. Data for banks' own claims are given on a monthly basis, but the data for subsidiaries of head office or 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. For U.S. banks, includes amounts due from own foreign branches and 4. Principally negotiable time certificates of deposit and bankers acceptances. foreign subsidiaries consolidated in "Consolidated Report of Condition" filed 5. Includes demand and time deposits and negotiable and nonnegotiable with bank regulatory agencies. For agencies, branches, and majority-owned certificates of deposit denominated in U.S. dollars issued by banks abroad. For subsidiaries of foreign banks, consists principally of amounts due from head office description of changes in data reported by nonbanks, see July 1979 Bulletin, or parent foreign bank, and foreign branches, agencies, or wholly owned p. 550. 3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1990 1991 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa 11998877 11998888 11998899 Dec. Mar. June Sept.r 1 235,130 233,184 238,123 206,903 199,254 199,085 194,820 By borrower ?. Maturity of one year or less2 163,997 172,634 178,346 165,985 158,220 159,465 159,385 3 Foreign public borrowers 25,889 26,562 23,916 19,305 21,216 18,596 17,088 4 All other foreigners 138,108 146,071 154,430 146,680 137,004 140,869 142,297 5 Maturity of more than one year2 71,133 60,550 59,776 40,918 41,034 39,620 35,435 6 Foreign public borrowers 38,625 35,291 36,014 22,269 22,498 20,624 17,791 7 All other foreigners 32,507 25,259 23,762 18,649 18,536 18,996 17,644 By area Maturity of one year or less 8 Europe 59,027 55,909 53,913 49,184 4499,,664411 49,917 51,104 9 Canada 5,680 6,282 5,910 5,450 5,938 7,290 5,671 10 Latin America and Caribbean 56,535 57,991 53,003 49,782 42,660 41,121 47,260 11 Asia 35,919 46,224 57,755 53,258 54,042 53,177 49,291 1? Africa 2,833 3,337 3,225 3,040 3,008 2,945 2,815 13 All other3 4,003 2,891 4,541 5,272 2,931 5,016 3,244 Maturity of more than one yean 14 Europe 6,696 4,666 4,121 3,859 4,329 4,285 3,819 15 Canada 2,661 1,922 2,353 3,290 3,387 3,820 3,673 16 Latin America and Caribbean 53,817 47,547 45,816 25,774 24,961 23,219 19,241 17 Asia 3,830 3,613 4,172 5,165 5,414 5,645 6,095 18 Africa 1,747 2,301 2,630 2,374 2,426 2,456 2,385 19 All other3 2,381 501 684 456 517 195 222 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 • April 1992 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks1 Billions of dollars, end of period 1989 1990 1991 AArreeaa oorr ccoouunnttrryy 11998877 11998888 Sept. Dec. Mar. June Sept. Dec. Mar. June Sept. 1 Total 382.4 346.3 346.5 338.8 333.9 321.7 331.5 317.8 325.3" 320.2 335.8' 2 G-10 countries and Switzerland 159.7 152.7 146.4 152.9 146.6 139.3 143.6 132.1 129.9" 130.1 134.7 3 Belgium-Luxembourg 10.0 9.0 6.9 6.3 6.7 6.2 6.5 5.9 6.2 6.1 5.8 4 France 13.7 10.5 11.1 11.7 10.4 10.2 11.1 10.4 9.7 10.5 11.1 3 Germany 12.6 10.3 10.4 10.5 11.2 11.2 11.1 10.6 8.8 8.3 9.7 6 Italy 7.5 6.8 6.8 7.4 5.9 5.4 4.4 5.0 4.0 3.6 4.5 7 Netherlands 4.1 2.7 2.4 3.1 3.1 2.7 3.8 3.0 3.3 3.3 3.0 8 Sweden 2.1 1.8 2.0 2.0 2.1 2.3 2.3 2.2 2.0 2.5 2.1 9 Switzerland 5.6 5.4 6.1 7.1 6.2 6.3 5.6 4.4 3.7 3.3 3.9 10 United Kingdom 68.8 66.2 63.7 67.2 64.0 59.9 62.6 60.8 62.3" 59.8 65.6 11 Canada 5.5 5.0 5.9 5.4 4.8 5.1 5.0 5.9 6.8 8.2 5.8 12 29.8 34.9 31.0 32.2 32.2 30.1 31.3 23.9 23.2 24.6 23.2 13 Other developed countries 26.4 21.0 21.0 20.7 23.0 22.4 23.0 22.6 23.1 21.1 21.7 14 Austria 1.9 1.5 1.5 1.5 1.5 1.5 1.6 1.4 1.4 1.1 1.0 13 Denmark 1.7 1.1 1.1 1.1 1.2 1.1 1.1 1.1 .9 1.2 .9 16 Finland 1.2 1.1 1.1 1.0 1.1 .9 .8 .7 1.0 .8 .7 17 Greece 2.0 1.8 2.4 2.5 2.6 2.7 2.8 2.7 2.5 2.4 2.3 18 Norway 2.2 1.8 1.4 1.4 1.7 1.4 1.6 1.6 1.5 1.5 1.4 19 Portugal .6 .4 .4 .4 .4 .8 .6 .6 .6 .6 .5 20 Spain 8.0 6.2 6.9 7.1 8.2 7.8 8.4 8.3 9.0 7.0 8.3 21 Turkey 2.0 1.5 1.2 1.2 1.3 1.4 1.6 1.7 1.7 1.9 1.6 22 Other Western Europe 1.6 1.3 1.0 .7 1.0 1.1 .7 .9 .8 .9 1.0 23 South Africa 2.9 2.4 2.1 2.0 2.0 1.9 1.9 1.8 1.8 1.8 1.6 24 Australia 2.4 1.8 2.1 1.6 2.1 1.8 2.0 1.8 1.9 2.0 2.4 25 OPEC countries2 17.4 16.6 16.2 17.1 15.5 15.3 14.2 12.8 17.1 14.0 15.6 26 Ecuador 1.9 1.7 1.5 1.3 1.2 1.1 1.1 1.0 .9 .9 .8 27 Venezuela 8.1 7.9 7.4 7.0 6.1 6.0 6.0 5.0 5.1 5.3 5.6 28 Indonesia 1.9 1.7 2.0 2.0 2.1 2.0 2.3 2.7 2.8 2.6 2.8 29 Middle East countries 3.6 3.4 3.5 5.0 4.3 4.4 3.1 2.5 6.6 3.7 5.0 30 African countries 1.9 1.9 1.9 1.7 1.8 1.8 1.7 1.7 1.6 1.5 1.5 31 Non-OPEC developing countries 97.8 85.3 81.2 77.5 68.8 66.7 67.1 65.4 66.3 64.9" 65.2 Latin America 32 Argentina 9.5 9.0 7.6 6.3 5.6 5.2 5.0 5.0 4.7 4.6 4.7 33 Brazil 24.7 22.4 20.9 19.0 17.5 16.7 15.4 14.4 13.9 11.6 10.5 34 Chile 6.9 5.6 4.9 4.6 4.3 3.7 3.6 3.5 3.6 3.6 3.7 35 Colombia 2.0 2.1 1.6 1.8 1.8 1.7 1.8 1.8 1.7 1.6 1.6 36 Mexico 23.5 18.8 17.2 17.7 12.8 12.6 12.8 13.0 13.7 14.3 16.1 37 Peru 1.1 .8 .6 .6 .5 .5 .5 .5 .5 .5 .4 38 Other Latin America 2.8 2.6 2.9 2.8 2.8 2.3 2.4 2.3 2.2 2.0 1.9 Asia China 39 Mainland .3 .3 .3 .3 .3 .2 .2 .2 .4 .6 .4 40 Taiwan 8.2 3.7 5.0 4.5 3.8 3.6 4.0 3.5 3.6 4.1 4.1 41 India 1.9 2.1 2.7 3.1 3.5 3.6 3.6 3.3 3.5 3.0 2.8 42 Israel -. 1.0 1.2 .7 .7 .6 .7 .6 .5 .5 .5 .5 43 Korea (South) 5.0 6.1 6.5 5.9 5.3 5.6 6.2 6.2 6.8 6.9 6.5" 44 Malaysia 1.5 1.6 1.7 1.7 1.8 1.8 1.8 1.9 2.0 2.1 2.3 43 Philippines 5.2 4.5 4.0 4.1 3.7 3.9 3.9 3.8 3.7 3.7 3.6 46 Thailand .7 1.1 1.3 1.3 1.1 1.3 1.5 1.5 1.6 1.7 1.9 47 Other Asia3 .7 .9 1.0 1.0 1.2 1.1 1.6 1.7 2.1 2.3 2.3" Africa 48 Egypt .6 .4 .5 .4 .4 .5 .4 .4 .4 .4 .4 49 Morocco .9 .9 .8 .9 .9 .9 .9 .8 .8 .7 .7 50 Zaire .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 1.3 1.1 1.0 1.0 .9 .8 .8 1.0 .8 .8 .8 52 Eastern Europe 3.2 3.6 3.5 3.5 3.3 2.9 2.7 2.3 2.1 2.1 1.8 53 U.S.S.R .3 .7 .8 .7 .8 .4 .4 .2 .3 .4 .4 54 Yugoslavia 1.8 1.8 1.7 1.6 1.4 1.4 1.3 1.2 1.0 1.0 .8 33 Other 1.1 1.1 1.1 1.3 1.2 1.1 1.1 .9 .8 .7 .7 56 OflFshore banking centers 54.5 44.2 49.2 36.6 43.1 40.3 42.6 42.5 49.9" 48.2 51.9 57 Bahamas 17.3 11.0 11.4 5.5 9.2 8.5 8.9 2.8 8.1 6.5 6.1 58 Bermuda .6 .9 1.3 1.7 1.2 2.5 4.5 4.4 4.4 4.2 7.1 59 Cayman Islands and other British West Indies 13.5 12.9 15.3 9.0 10.9 8.5 9.3 11.5 14.2" 15.1 14.0 60 Netherlands Antilles 1.2 1.0 1.1 2.3 2.6 2.3 2.2 7.9 1.1 1.4 3.5 61 Panama4 3.7 2.5 1.5 1.4 1.3 1.4 1.5 1.4 1.4 1.3 1.3 62 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 63 Hong Kong 11.2 9.6 10.7 9.7 9.8 10.0 8.7 7.7 11.6" 12.4 12.1" 64 Singapore 7.0 6.1 7.8 7.0 8.0 7.0 7.5 6.6 8.9 7.2 7.7 65 Others5 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated6 23.2 22.6 28.7 30.3 33.3 34.5 38.1 39.8 36.5" 39.6 44.6 1. The banking offices covered by these data are the U.S. offices and foreign $150 million equivalent in total assets, the threshold now applicable to all branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks. reporting branches. Offices not covered include (1) U.S. agencies and branches of foreign banks, and 2. 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 3. Excludes Liberia. of U.S. offices in table 3.18 (excluding those held by agencies and branches of 4. Includes Canal Zone beginning December 1979. foreign banks and those constituting claims on own foreign branches). 5. Foreign branch claims only. Since June 1984, reported claims held by foreign branches have been reduced 6. Includes New Zealand, Liberia, and international and regional organizaby an increase in the reporting threshold for "shell" branches from $50 million to 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 1990 1991 TTyyppee aanndd aarreeaa oorr ccoouunnttrryy 11998877 11998888 11998899 June Sept. Dec. Mar. June Sept.p 1 28,302 32,952 38,776 39,831 45,165 42,928 40,753 39,311 40,459 ?.P ayable in dollars 22,785 27,335 33,985 35,351 40,034 38,529 36,635 35,291 36,057 3 Payable in foreign currencies 5,517 5,617 4,791 4,480 5,131 4,399 4,119 4,019 4,402 By type 4 Financial liabilities 12,424 14,507 17,891 19,025 19,898 17,979 17,104 16,767 17,603 5 Payable in dollars 8,643 10,608 14,047 15,663 16,059 14,731 14,182 13,872 14,673 6 Payable in foreign currencies 3,781 3,900 3,844 3,363 3,839 3,247 2,922 2,895 2,930 7 Commercial liabilities 15,878 18,445 20,885 20,806 25,267 24,949 23,650 22,544 22,856 8 Trade payables 7,305 6,505 8,070 7,256 10,960 10,494 8,865 8,697 9,067 9 Advance receipts and other liabilities 8,573 11,940 12,815 13,550 14,306 14,456 14,784 13,846 13,789 10 Payable in dollars 14,142 16,727 19,938 19,688 23,974 23,798 22,453 21,420 21,384 11 Payable in foreign currencies 1,737 1,717 947 1,117 1,292 1,152 1,197 1,124 1,472 By area or country Financial liabilities 12 Europe 8,320 9,962 11,672 11,802 11,251 9,813 9,187 9,244 9,739 13 Belgium-Luxembourg 213 289 340 332 350 344 285 297 347 14 France 382 359 258 165 463 695 627 535 3S4 15 Germany 551 699 464 547 606 622 561 664 654 16 Netherlands 866 880 941 928 942 990 945 917 943 17 Switzerland 558 1,033 541 552 628 576 577 535 510 18 United Kingdom 5,557 6,533 8,830 8,832 7,632 5,976 5,551 5,706 6,370 19 Canada 360 388 610 306 309 223 272 287 305 70 Latin America and Caribbean 1,189 839 1,357 2,774 3,560 3,400 3,636 3,308 3,518 71 Bahamas 318 184 157 312 395 371 392 375 337 2.2 Bermuda 0 0 17 0 0 0 0 12 0 73 Brazil 25 0 0 0 0 0 0 0 1 24 British West Indies 778 645 724 1,920 2,548 2,407 2,674 2,319 2,578 75 Mexico 13 1 6 4 4 5 6 6 6 26 Venezuela 0 0 0 0 0 4 4 4 4 77 Asia 2,451 3,312 4,151 4,085 4,296 4,132 4,005 3,918 4,037 28 Japan 2,042 2,563 3,299 2,883 3,161 2,930 2,932 2,865 2,802 29 Middle East oil-exporting countries 8 3 2 5 4 5 1 4 226 30 Africa 4 2 2 3 2 2 2 9 3 31 Oil-exporting countries 1 0 0 1 0 0 0 7 2 32 All other4 100 4 100 55 479 409 2 2 1 Commercial liabilities 33 Europe 5,516 7,319 9,071 8,652 10,039 10,310 9,877 8,848 9,280 34 Belgium-Luxembourg 132 158 175 291 245 275 263 254 1% 35 France 426 455 877 1,049 1,270 1,218 1,216 1,246 999 36 Germany 909 1,699 1,392 990 1,051 1,270 1,389 1,044 913 37 Netherlands 423 587 710 606 699 844 731 750 792 38 Switzerland 559 417 693 665 746 775 661 586 560 39 United Kingdom 1,599 2,079 2,620 2,450 2,839 2,792 2,852 2,336 3,2% 40 Canada 1,301 1,217 1,124 1,179 1,263 1,251 1,231 1,186 1,018 41 Latin America and Caribbean 864 1,090 1,224 1,321 1,690 1,671 1,621 1,631 1,512 42 Bahamas 18 49 41 22 18 12 14 6 14 43 Bermuda 168 286 308 412 371 538 495 505 450 44 Brazil 46 95 100 109 129 145 218 180 209 45 British West Indies 19 34 27 29 42 30 36 50 46 46 Mexico 189 217 323 315 592 475 346 364 290 47 Venezuela 162 114 164 129 165 130 126 121 101 48 Asia 6,565 6,915 7,550 7,365 9,533 9,471 8,669 8,847 8,943 49 Japan 2,578 3,094 2,914 3,197 3,356 3,639 3,413 3,383 3,359 50 Middle East oil-exporting countries2'5 1,964 1,385 1,632 1,285 2,728 2,016 1,569 1,699 1,812 51 Africa 574 576 886 900 1,334 841 655 594 835 52 Oil-exporting countries 135 202 339 287 610 422 225 224 356 53 All other4 1,057 1,328 1,030 1,390 1,408 1,406 1,5% 1,436 1,268 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 • April 1992 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1990 1991 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998877 11998888 11998899 June Sept. Dec. Mar. June Sept.p 1 Total 30,964 33,805 33,080 33,098 32,239 34,780 35,272 36,946 38,361 2 Payable in dollars 28,502 31,425 30,742 30,765 29,836 32,354 33,068 34,948 36,154 3 Payable in foreign currencies 2,462 2,381 2,338 2,333 2,402 2,426 2,204 1,997 2,207 V By type 4 Financial claims 20,363 21,640 19,235 19,438 17,758 19,444 19,392 20,687 22,392 5 Deposits 14,894 15,643 12,336 11,615 11,810 13,331 12,835 12,300 15,522 6 Payable in dollars 13,765 14,544 11,409 10,533 10,616 12,318 11,893 11,595 14,712 7 Payable in foreign currencies 1,128 1,099 927 1,082 1,193 1,012 942 705 810 8 Other financial claims 5,470 5,997 6,899 7,823 5,949 6,114 6,557 8,387 6,870 9 Payable in dollars 4,656 5,220 6,145 7,090 5,296 5,247 5,861 77,,669999 6,260 10 Payable in foreign currencies 814 777 754 733 652 866 696 668888 610 11 Commercial claims 10,600 12,166 13,845 13,660 14,480 15,336 15,879 16,259 15,969 12 Trade receivables 9,535 11,091 12,221 11,951 12,702 13,458 13,691 13,963 13,345 13 Advance payments and other claims 1,065 1,075 1,624 1,708 1,778 1,878 2,189 2,296 2,624 14 Payable in dollars 10,081 11,660 13,188 13,142 13,924 14,788 15,314 15,654 15,182 15 Payable in foreign currencies 519 505 657 518 556 548 565 605 787 By area or country Financial claims 16 Europe 9,531 10,278 8,401 10,780 8,924 9,363 10,524 11,756 12,928 17 Belgium-Luxembourg 7 18 28 126 27 76 85 74 75 18 France 332 203 153 126 145 358 193 255 257 19 Germany 102 120 87 76 79 302 249 233 438 20 Netherlands 350 348 303 339 327 330 443 494 492 21 Switzerland 65 217 91 131 163 293 358 367 527 22 United Kingdom 8,467 9,039 7,496 9,757 7,956 7,760 8,981 10,184 10,886 23 Canada 2,844 2,325 1,904 2,036 1,989 2,887 1,850 1,986 2,066 24 Latin America and Caribbean 7,012 8,160 8,020 5,998 6,107 6,091 6,119 5,849 5,969 25 Bahamas 1,994 1,846 1,890 1,499 1,443 1,594 1,847 1,031 1,356 26 Bermuda 7 19 7 3 4 3 6 4 19 27 Brazil 63 47 224 84 70 68 68 127 124 28 British West Indies 4,433 5,763 5,486 4,003 4,191 4,021 3,769 4,307 4,100 29 Mexico 172 151 94 164 158 177 179 161 173 30 Venezuela 19 21 20 20 23 25 28 29 32 31 Asia 879 623 590 534 531 860 568 757 1,069 32 Japan 605 354 213 185 207 523 246 409 721 33 Middle East oil-exporting countries 8 5 8 6 9 8 11 4 3 34 Africa 65 106 140 62 49 37 62 64 61 35 Oil-exporting countries 7 10 12 8 7 0 3 1 1 36 All other4 33 148 180 28 158 206 268 275 299 Commercial claims 37 Europe 4,180 5,181 6,207 6,076 6,495 7,032 7,181 7,545 6,973 38 Belgium-Luxembourg 178 189 242 209 188 212 226 220 186 39 France 650 672 963 924 1,206 1,240 1,292 1,408 1,328 40 Germany 562 669 696 670 641 805 873 957 855 41 Netherlands 133 212 479 480 491 552 604 756 651 42 Switzerland 185 344 313 234 300 301 392 2% 259 43 United Kingdom 1,073 1,324 1,575 1,582 1,673 1,774 1,669 1,822 1,867 44 Canada 936 983 1,087 1,150 1,148 1,070 1,212 1,240 1,232 45 Latin America and Caribbean 1,930 2,241 2,176 2,207 2,402 2,333 2,314 2,433 2,575 46 Bahamas 19 36 58 17 25 14 15 16 8 47 Bermuda 170 230 323 284 340 246 231 245 338 48 Brazil 226 299 293 233 251 320 309 297 391 49 British West Indies 26 22 36 47 35 40 49 43 37 50 Mexico 368 461 507 576 650 656 653 711 739 51 Venezuela 283 227 147 223 224 189 181 195 196 52 Asia 2,915 2,993 3,561 3,473 3,631 4,049 4,306 4,159 4,216 53 Japan 1,158 946 1,197 1,097 1,221 1,396 1,778 1,604 1,752 54 Middle East oil-exporting countries 450 453 518 418 407 459 507 510 497 55 Africa 401 435 422 387 371 488 394 428 518 56 Oil-exporting countries 144 122 108 97 72 67 68 59 79 57 All other4 238 333 392 366 433 364 471 453 455 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 Transaction and area or country 1990 1991 Jan.- June July Aug. Sept. Oct. Nov.1 Dec.p Dec. U.S. corporate securities STOCKS 1 Foreign purchases 173,293 210,694 210,694 17,356 16,462 17,934 12,919 17,201 20,515 14,713 2 Foreign sales 188,419 199,598 199,598 16,122 15,304 16,192 13,659 16,791 19,594 17,446 3 Net purchases, or sales (—) -15,126 11,095 11,095 1,234 1,158 1,742 -740 410 921 -2,733 4 Foreign countries -15,197 10,527 10,527 1,190 1,135 1,606 -850 365 884 -2,716 5 Europe -8,479 94 94 710 5 753 -567 -452 -310 -1,899 6 France -1,234 18 18 170 -41 39 -95 -21 -50 -125 7 Germany -367 -63 -63 45 -8 21 62 12 22 44 8 Netherlands -397 -228 -228 60 47 -209 38 6 -42 -52 9 Switzerland -2,866 -139 -139 346 42 % -48 -93 -508 -7 10 United Kingdom -2,980 -310 -310 -148 -130 831 -501 -216 182 -1,653 11 Canada 886 3,809 3,809 383 159 439 16 385 694 131 12. Latin America and Caribbean -1,330 2,177 2,177 287 160 315 25 366 -197 -280 13 Middle East1 -2,435 -126 -126 -460 272 67 -402 -6 39 -35 14 Other Asia -3,477 4,263 4,263 96 110 -33 210 267 735 -665 15 Japan -2,891 1,181 1,181 74 -15 -96 135 156 158 -429 16 Africa -63 153 153 9 6 4 -7 20 14 7 17 Other countries -298 158 158 165 423 61 -125 -215 -91 25 18 Nonmonetary international and regional organizations 71 568 568 44 23 136 110 45 37 -17 BONDS2 19 Foreign purchases 118,764 152,507 152,507 12,427 9,994 14,989 14,492 12,844 15,842 14,977 20 Foreign sales 102,047 125,001 125,001 8,754 7,681 10,812 12,315 10,558 13,059 12,351 21 Net purchases, or sales (—) 16,717 27,506 27,506 3,673 2,313 4,177 2,177 2,286 2,783 2,626 22 Foreign countries 17,187 27,637 27,637 3,735 2,340 4,274 2,216 2,349 2,682 2,583 73 Europe 10,079 13,498 13,498 2,167 921 1,727 -111 1,873 1,091 968 74 France 373 854 854 2 15 -26 93 -25 110 75 25 Germany -377 1,577 1,577 -120 -1 106 156 213 274 113 26 Netherlands 172 482 482 130 -1 47 -18 44 91 13 77 Switzerland 284 661 661 327 9 116 -52 -64 -449 162 28 United Kingdom 10,383 9,301 9,301 1,744 629 1,405 384 2,029 714 90 79 Canada 1,906 1,340 1,340 68 34 -40 -155 86 51 114 30 Latin America and Caribbean 4,291 2,449 2,449 538 378 172 130 -365 110 627 31 Middle East1 76 2,185 2,185 160 430 449 350 182 313 253 37 Other Asia 1,083 8,237 8,237 898 558 2,015 2,027 526 1,164 543 33 Japan 727 5,730 5,730 685 285 1,818 1,149 237 874 149 34 Africa % 56 56 -1 -1 4 -2 12 13 11 35 Other countries -344 -128 -128 -96 20 -53 -23 35 -60 67 36 Nonmonetary international and regional organizations -471 -131 -131 -62 -27 -97 -39 -63 101 43 Foreign securities 37 Stocks, net purchases, or sales (-)3 -9,205 -34,912 -34,912 -3,590 -3,155 -3,521 -2,159 -2,370r -1,538 -5,686 38 Foreign purchases 122,641 119,646 119,646 10,053 10,174 9,586 9,913 11,292 13,121 10,941 39 Foreign sales 131,846 154,558 154,558 13,643 13,329 13,107 12,072 13,662r 14,659 16,627 40 Bonds, net purchases, or sales (-) -22,412 -15,842 -15,842 -1,945 -807 -2,168 -1,138 -4,750r 787 -1,769 41 Foreign purchases 314,645 324,642 324,642 19,918 22,041 22,186 23,442 33,201 29,925 26,2% 42 Foreign sales 337,057 340,484 340,484 21,863 22,848 24,354 24,580 37,951r 29,138 28,065 43 Net purchases, or sales (—), of stocks and bonds .... -31,617 -50,754 -50,754 -5,536 -3,962 -5,689 -3,297 —7,120r -751 -7,455 44 Foreign countries -28,943 -50,466 -50,466 -5,816 -4,476 -5,794 -3,477 —6,753r -1,186 -7,825 45 Europe -8,443 -38,064 -38,064 -3,428 -5,035 -4,769 -2,666 -5,691r -4,546 -8,334 46 Canada -7,502 -7,608 -7,608 -1,011 278 -1,009 -352 -1,619 675 36 47 Latin America and Caribbean -8,854 993 993 -26 130 108 454 549 1,136 -470 48 -3,828 -7,043 -7,043 -1,172 105 -305 -1,153 -197 1,502 388 49 Africa -137 -8 -8 -198 8 -7 2 1 -41 159 50 Other countries -180 1,265 1,265 19 38 188 238 204 88 3% 51 Nonmonetary international and regional organizations -2,673 -288 -288 280 514 105 180 -367 435 370 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 International Statistics • April 1992 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1991 1991 Country or area 1990 1991 J D an ec .- . June July Aug. Sept. Oct. Nov. Dec.p Transactions, net purchases or sales (-) during period1 1 Estimated total2 18,927 22,546 22,546 -5,740 725 1,356 -3,862 414 5,449r 4,671 2 Foreign countries2 18,764 22,318 22,318 -5,271 407 722 -2,804 -171 5,355 3,912 3 Europe2 18,455 9,654 9,654 -4,184 -1,082 1,554 464 228 5,033 2,900 4 Belgium-Luxembourg 10 568 568 -104 -109 71 -190 1 183 42 5 Germany2 5,880 -4,725 -4,725 -1,458 684 -360 195 326 707 -139 6 Netherlands 1,077 -3,735 -3,735 -727 -997 -372 -426 549 -25 -888 7 Sweden 1,152 -662 -662 31 -299 -239 3 46 -74 582 8 Switzerland2 112 1,005 1,005 207 -218 292 -184 195 l,105r -778 9 United Kingdom -1,260 5,649 5,649 -1,249 -398 388 -32 -311 212 2,351 10 Other Western Europe 11,463 11,540 11,540 -886 258 1,774 1,090 -578 2,938r 1,720 11 Eastern Europe 13 13 13 3 -3 0 8 0 -13 10 12 Canada -4,627 -2,745 -2,745 -114 395 -118 78 -838 -441 -1,840 13 Latin America and Caribbean 14,734 11,552 11,552 161 1,669 1,436 -1,076 -2,086 -3,840 1,086 14 Venezuela 33 10 10 20 7 -20 -2 20 7 122 15 Other Latin America and Caribbean 3,943 5,329 5,329 -233 242 -2,010 -1,883 -14 -523 -1,054 16 Netherlands Antilles 10,757 6,213 6,213 374 1,420 3,466 809 -2,092 -3,324 2,018 17 Asia -10,952 3,467 3,467 -879 -491 -2,115 -2,067 3,467 3,700 869 18 Japan -14,785 -4,054 -4,054 1,422 45 -364 -3,625 4,111 503 -1,352 19 Africa 313 689 689 104 7 27 10 39 -26 318 20 All other 842 -299 -299 -358 -91 -62 -213 -981 929 579 21 Nonmonetary international and regional organizations 163 228 228 -469 318 634 -1,058 585 94r 759 22 International 287 -308 -308 3 168 654 -1,211 287 95r 836 23 Latin American regional -2 -72 -72 -9 150 -146 152 72 -133 -156 MEMO 24 Foreign countries2 18,764 22,318 22,318 -5,271 407 722 -2,804 -171 5,355 3,912 25 Official institutions 23,218 5,496 5,4% -5,832 -704 -289 830 512 7,197r 2,629 26 Other foreign -4,453 16,822 16,822 560 1,111 1,011 -3,634 -683 -1,842r 1,283 Oil-exporting countries 27 Middle East3 -387 -6,822 -6,822 -505 -643 -3,731 -795 313 % -163 28 0 239 239 0 0 0 0 0 0 219 1. Estimated official and private transactions in marketable U.S. Treasury 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and securities having an original maturity of more than one 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 Feb. 29, 1992 Rate on Feb. 29, 1992 Rate on Feb. 29, 1992 CCoouunnttrryy CCoouunnttrryy CCoouunnttrryy Percent e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e 88888.....00000 DDDDDeeeeeccccc..... 11111999999999911111 GGeerrmmaannyy,, FFeedd.. RReepp.. ooff...... 88888.....00000 DDDDDeeeeeccccc..... 11111999999999911111 111000...555000 JJJuuulllyyy 111999999000 88888.....55555 DDDDDeeeeeccccc..... 11111999999999911111 IIttaallyy 1111122222.....00000 NNNNNooooovvvvv..... 11111999999999911111 Switzerland 777...000 AAAuuuggg... 111999999111 77777.....5555500000 FFFFFeeeeebbbbb..... 11111999999999922222 44444.....55555 DDDDDeeeeeccccc..... 11111999999999911111 United Kingdom2 99999.....55555 DDDDDeeeeeccccc..... 11111999999999911111 88888.....55555 DDDDDeeeeeccccc..... 11111999999999911111 France* 99999.....66666 DDDDDeeeeeccccc..... 11111999999999911111 1. Since Feb. 1981, the rate has been that at which the Bank of France or makes advances against eligible commercial paper or government securities for discounts Treasury bills for seven to ten days. commercial 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 1992 TTyyppee oorr ccoouunnttrryy 11998899 11999900 11999911 Aug. Sept. Oct. Nov. Dec. Jan. Feb. 1 9.16 8.16 5.86 5.65 5.50 5.34 4.96 4.48 4.06 4.05 -> 13.87 14.73 11.47 10.85 10.24 10.38 10.44 10.73 10.60 10.33 3 12.20 13.00 9.07 8.73 8.59 8.29 7.75 7.50 7.23 7.42 4 7.04 8.41 9.15 9.23 9.16 9.28 9.33 9.48 9.45 9.51 5 6.83 8.71 8.01 7.80 7.90 8.09 7.89 7.99 7.55 7.28 6 7.28 8.57 9.19 9.27 9.21 9.27 9.32 9.59 9.45 9.52 7 9.27 10.20 9.49 9.46 9.30 9.20 9.41 9.97 9.86 9.93 8 Italy 12.44 12.11 12.04 11.86 11.63 11.44 11.66 12.46 12.00 12.17 9 8.65 9.70 9.30 9.25 9.01 9.22 9.39 9.61 9.41 9.50 1100 5.39 7.75 7.33 7.31 6.70 6.41 6.22 6.02 5.18 5.19 NOTE. Rates are for three-month interbank loans, with the following exceptions: 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 • April 1992 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar 1991 1992 Country/currency 11998899 11999900 11999911 Sept. Oct. Nov. Dec. Jan. Feb. 1 Australia/dollar^ 79.186 78.069 77.872 79.369 79.251 78.660 77.122 74.756 75.178 2 Austria/schilling 13.236 11.331 11.686 11.910 11.887 11.408 11.003 11.108 11.391 3 Belgium/franc 39.409 33.424 34.195 34.878 34.787 33.391 32.198 32.501 33.307 4 Canada/dollar 1.1842 1.1668 1.1460 1.1370 1.1279 1.1302 1.1467 1.1571 1.1825 5 China, P.R./yuan 3.7673 4.7921 5.3337 5.3869 5.3917 5.3994 5.4232 5.4618 5.4776 6 Denmark/krone 7.3210 6.1899 6.4038 6.5367 6.5246 6.2947 6.0831 6.1257 6.2763 7 Finland/markka 4.2963 3.8300 4.0521 4.1241 4.1155 4.1953 4.2447 4.2971 4.4230 8 France/franc 6.3802 5.4467 5.6468 5.7621 5.7583 5.5391 5.3406 5.3858 5.5088 9 Germany/deutsche mark 1.8808 1.6166 1.6610 1.6933 1.6893 1.6208 1.5630 1.5788 1.6186 10 Greece/drachma 162.60 158.59 182.63 188.07 188.50 183.68 179.52 182.42 187.13 11 Hong Kong/dollar 7.8008 7.7899 7.7712 7.7524 7.7542 7.7591 7.7738 7.7612 7.7582 12 India/rupee 16.213 17.492 22.712 25.834 25.797 25.802 25.818 25.863 25.992 13 Ireland/pound 141.80 165.76 158.26 157.87 158.21 164.75 170.46 168.73 164.87 14 Italy/lira 1,372.28 1,198.27 1,241.28 1,266.25 1,263.20 1,221.04 1,182.21 1,189.76 1,215.92 15 Japan/yen 138.07 145.00 134.59 134.30 130.77 129.63 128.04 125.46 127.70 16 Malaysia/ringgit 2.7079 2.7057 2.7503 2.7577 2.7469 2.7412 2.7417 2.6891 2.6012 17 Netherlands/guilder 2.1219 1.8215 1.8720 1.9084 1.9039 1.8269 1.7618 1.7780 1.8218 18 New Zealand/dollar2 59.561 59.619 57.832 57.989 56.306 56.352 55.256 54.194 54.177 19 Norway/krone 6.9131 6.2541 6.4912 6.6266 6.6136 6.3643 6.1558 6.2044 6.3472 20 Portugal/escudo 157.53 142.70 144.77 145.64 145.41 141.43 138.90 136.92 139.47 21 Singapore/dollar 1.9511 1.8134 1.7283 1.7002 1.6940 1.6709 1.6453 1.6337 1.6361 22 South Africa/rand 2.6214 2.5885 2.7633 2.8316 2.8314 2.7916 2.7665 2.7831 2.8156 23 South Korea/won 674.29 710.64 736.73 744.18 753.54 757.44 761.68 767.09 769.93 24 Spain/peseta 118.44 101.% 104.01 106.28 106.54 102.56 99.70 100.05 101.73 25 Sri Lanka/rupee 35.947 40.078 41.200 41.935 42.179 42.374 42.523 42.665 42.879 26 Sweden/krona 6.4559 5.9231 6.0521 6.1652 6.1552 5.9246 5.7158 5.7461 5.8764 27 Switzerland/franc 1.6369 1.3901 1.4356 1.4803 1.4781 1.4348 1.3855 1.4039 1.4561 28 Taiwan/dollar 26.407 26.918 26.759 26.559 26.406 25.975 25.759 25.150 25.049 29 Thailand/baht 25.725 25.609 25.528 25.617 25.397 25.497 25.431 25.328 25.463 30 United Kingdom/pound 163.82 178.41 176.74 172.65 172.31 177.96 182.72 180.90 177.78 MEMO 31 United States/dollar3 98.60 89.09 89.84 91.18 90.69 87.98 85.65 86.09 88.04 1. Averages of certified noon buying rates in New York for cable transfers. currencies of ten industrial countries. The weight for each of the ten countries is Data in this table also appear in the Board's G.5 (405) monthly statistical the 1972-76 average world trade of that country divided by the average world release. For ordering address, see inside front cover. trade of all ten countries combined. Series revised as of August 1978 (see Federal 2. Value in U.S. cents. Reserve 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

69 Guide to Statistical Releases and Special Tables STATISTICAL RELEASES—List Published Semiannually, with Latest BULLETIN Reference Issue Page Anticipated schedule of release dates for periodic releases December 1991 A86 SPECIAL TABLES—Quarterly Data Published Irregularly, with Latest BULLETIN Reference Title and Date Issue Page Assets and liabilities of commercial banks December 31, 1990 May 1991 All March 31, 1991 August 1991 A72 June 30, 1991 November 1991 A70 September 30, 1991 February 1992 A70 Terms of lending at commercial banks February 1991 August 1991 A78 May 1991 October 1991 A72 August 1991 December 1991 A70 November 1991 March 1992 A70 Assets and liabilities of U.S. branches and agencies of foreign banks December 31, 1990 June 1991 A72 March 31, 1991 November 1991 A76 June 30, 1991 December 1991 A74 September 30, 1991 February 1992 A80 Pro forma balance sheet and income statements for priced service operations June 30, 1990 October 1990 A72 March 31, 1991 August 1991 A82 June 30, 1991 November 1991 A80 September 30, 1991 January 1992 A70 Assets and liabilities of life insurance companies June 30, 1991 December 1991 A79 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

70 Index to Statistical Tables References are to pages A3-A68 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Demand deposits—Continued Agricultural loans, commercial banks, 20, 21 Ownership by individuals, partnerships, and corporations, Assets and liabilities (See also Foreigners) 22 Banks, by classes, 19—21 Turnover, 16 Domestic finance companies, 34 Depository institutions Federal Reserve Banks, 11 Reserve requirements, 9 Financial institutions, 26 Reserves and related items, 4, 5, 6, 13 Foreign banks, U.S. branches and agencies, 22 Deposits (See also specific types) Automobiles Banks, by classes, 4, 19-21, 22 Consumer installment credit, 37, 38 Federal Reserve Banks, 5,11 Production, 47, 48 Turnover, 16 Discount rates at Reserve Banks and at foreign central banks and foreign countries (See Interest rates) BANKERS acceptances, 10, 23, 24 Discounts and advances by Reserve Banks (See Loans) Bankers balances, 19—21. (See also Foreigners) Dividends, corporate, 33 Bonds (See also U.S. government securities) New issues, 33 Rates, 24 EMPLOYMENT, 45 Branch banks, 22, 55 Eurodollars, 24 Business activity, nonfinancial, 44 Business expenditures on new plant and equipment, 33 Business loans (See Commercial and industrial loans) FARM mortgage loans, 36 Federal agency obligations, 5, 10, 11, 12, 29, 30 CAPACITY utilization, 46 Federal credit agencies, -31 Capital accounts Federal finance Banks, by classes, 19 Debt subject to statutory limitation, and types and ownership Federal Reserve Banks, 11 of gross debt, 28 Central banks, discount rates, 67 Receipts and outlays, 26, 27 Certificates of deposit, 24 Treasury financing of surplus, or deficit, 26 Commercial and industrial loans Treasury operating balance, 26 Commercial banks, 17, 20 Federal Financing Bank, 26, 31 Weekly reporting banks, 20-22 Federal funds, 7, 18, 20, 21, 22, 24, 26 Commercial banks Federal Home Loan Banks, 31 Assets and liabilities, 19-21 Federal Home Loan Mortgage Corporation, 31, 35, 36 Commercial and industrial loans, 17, 19, 20, 21, 22 Federal Housing Administration, 31, 35, 36 Consumer loans held, by type and terms, 37, 38 Federal Land Banks, 36 Loans sold outright, 20 Federal National Mortgage Association, 31, 35, 36 Nondeposit funds, 18 Federal Reserve Banks Real estate mortgages held, by holder and property, 36 Condition statement, 11 Time and savings deposits, 4 Discount rates (See Interest rates) Commercial paper, 23, 24, 34 U.S. government securities held, 5, 11, 12, 28 Condition statements (See Assets and liabilities) Federal Reserve credit, 5, 6, 11, 12 Construction, 44, 49 Federal Reserve notes, 11 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, 23, 24 Security issues, 32, 65 Financial institutions Cost of living (See Consumer prices) Loans to, 20, 21, 22 Credit unions, 37 Selected assets and liabilities, 26 Currency and coin, 19 Float, 51 Currency in circulation, 5, 14 Flow of funds, 39,41,42, 43 Customer credit, stock market, 25 Foreign banks, assets and liabilities of U.S. branches and agencies, 21, 22 DEBITS to deposit accounts, 16 Foreign currency operations, 11 Debt (See specific types of debt or securities) Foreign deposits in U.S. banks, 5,11, 20, 21 Demand deposits Foreign exchange rates, 68 Banks, by classes, 19-22 Foreign trade, 54 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

71 Foreigners REAL estate loans Claims on, 55, 57, 60, 61, 62, 64 Banks, by classes, 17, 20, 21, 36 Liabilities to, 21, 54, 55, 57, 58, 63, 65, 66 Financial institutions, 26 Terms, yields, and activity, 35 GOLD Type of holder and property mortgaged, 36 Certificate account, 11 Repurchase agreements, 7, 18, 20, 21, 22 Stock, 5, 54 Reserve requirements, 9 Government National Mortgage Association, 31, 35, 36 Reserves Gross national product, 51 Commercial banks, 19 Depository institutions, 4, 5, 6, 13 HOUSING, new and existing units, 49 Federal Reserve Banks, 11 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, 28, 36 SAVING Interest rates Flow of funds, 39,41, 42, 43 Bonds, 24 National income accounts, 51 Consumer installment credit, 38 Savings and loan associations, 36, 37, 39. (See also SAIF-insured Federal Reserve Banks, 8 institutions) Foreign central banks and foreign countries, 67 Savings Association Insurance Funds (SAIF) insured institutions, 26 Money and capital markets, 24 Savings banks, 26, 36, 37 Mortgages, 35 Savings deposits (See Time and savings deposits) Prime rate, 23 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, 25 Investments (See also specific types) Special drawing rights, 5, 11, 53, 54 Banks, by classes, 19, 20, 21, 22, 26 State and local governments Commercial banks, 4, 17, 19-21 Deposits, 20, 21 Federal Reserve Banks, 11, 12 Holdings of U.S. government securities, 28 Financial institutions, 36 New security issues, 32 Ownership of securities issued by, 20, 21 LABOR force, 45 Rates on securities, 24 Life insurance companies (See Insurance companies) Stock market, selected statistics, 25 Loans (See also specific types) Stocks (See also Securities) Banks, by classes, 19—21 New issues, 32 Commercial banks, 4, 17, 19-21 Prices, 25 Federal Reserve Banks, 5, 6, 8, 11, 12 Financial institutions, 26, 36 Student Loan Marketing Association, 31 Insured or guaranteed by United States, 35, 36 TAX receipts, federal, 27 Thrift institutions, 4. (See also Credit unions and Savings and MANUFACTURING loan associations) Capacity utilization, 46 Time and savings deposits, 4, 14, 18, 19, 20, 21, 22 Production, 46, 48 Trade, foreign, 54 Margin requirements, 25 Treasury cash, Treasury currency, 5 Member banks (See also Depository institutions) Treasury deposits, 5, 11, 26 Federal funds and repurchase agreements, 7 Treasury operating balance, 26 Reserve requirements, 9 Mining production, 48 UNEMPLOYMENT, 45 Mobile homes shipped, 49 U.S. government balances Monetary and credit aggregates, 4, 13 Commercial bank holdings, 19, 20, 21 Money and capital market rates, 24 Treasury deposits at Reserve Banks, 5, 11, 26 Money stock measures and components, 4, 14 U.S. government securities Mortgages (See Real estate loans) Bank holdings, 19-21, 22, 28 Mutual funds, 33 Dealer transactions, positions, and financing, 30 Mutual savings banks (See Thrift institutions) Federal Reserve Bank holdings, 5, 11, 12, 28 Foreign and international holdings and transactions, 11, 28, NATIONAL defense outlays, 27 66 National income, 51 Open market transactions, 10 Outstanding, by type and holder, 26, 28 OPEN market transactions, 10 Rates, 23 U.S. international transactions, 53-67 PERSONAL income, 52 Utilities, production, 48 Prices Consumer and producer, 44, 50 VETERANS Administration, 35, 36 Stock market, 25 Prime rate, 23 WEEKLY reporting banks, 20-22 Producer prices, 44, 50 Wholesale (producer) prices, 44, 50 Production, 44,47 Profits, corporate, 33 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

72 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 DALE W. HENDERSON, Associate Director LYNN S. Fox, Special Assistant to the Board DAVID H. HOWARD, Senior Adviser WINTHROP P. HAMBLEY, Special Assistant to the Board DONALD B. ADAMS, Assistant Director BOB STAHLY MOORE, Special Assistant to the Board PETER HOOPER III, Assistant Director DIANE E. WERNEKE, Special Assistant to the Board KAREN H. JOHNSON, Assistant Director RALPH W. SMITH, JR., Assistant Director LEGAL DIVISION DIVISION OF RESEARCH AND STATISTICS J. VIRGIL MATTINGLY, JR., General Counsel SCOTT G. ALVAREZ, Associate General Counsel MICHAEL J. PRELL, Director RICHARD M. ASHTON, Associate General Counsel EDWARD C. ETTIN, Deputy Director OLIVER IRELAND, Associate General Counsel WILLIAM R. JONES, Associate Director RICKI R. TIGERT, Associate General Counsel THOMAS D. SIMPSON, Associate Director KATHLEEN M. O'DAY, Assistant General Counsel LAWRENCE SLIFMAN, Associate Director MARYELLEN A. BROWN, Assistant to the General Counsel DAVID J. STOCKTON, Associate Director MARTHA BETHEA, Deputy Associate Director OFFICE OF THE SECRETARY PETER A. TINSLEY, Deputy Associate Director MYRON L. KWAST, Assistant Director WILLIAM W. WILES, Secretary JENNIFER J. JOHNSON, Associate Secretary PATRICK M. PARKINSON, Assistant Director MARTHA S. SCANLON, Assistant Director BARBARA R. LOWREY, Associate Secretary JOYCE K. ZICKLER, Assistant Director RICHARD C. STEVENS, Assistant Secretary1 JOHN J. MINGO, Adviser DIVISION OF CONSUMER LEVON H. GARABEDIAN, Assistant Director (Administration ) AND COMMUNITY AFFAIRS GRIFFITH L. GARWOOD, Director DIVISION OF MONETARY AFFAIRS GLENN E. LONEY, Assistant Director ELLEN MALAND, Assistant Director DONALD L. KOHN, Director DAVID E. LINDSEY, Deputy Director DOLORES S. SMITH, Assistant Director BRIAN F. MADIGAN, Assistant Director DIVISION OF BANKING RICHARD D. PORTER, Assistant Director NORMAND R.V. BERNARD, Special Assistant to the Board SUPERVISION AND REGULATION RICHARD SPILLENKOTHEN, Director OFFICE OF THE INSPECTOR GENERAL STEPHEN C. SCHEMERING, Deputy Director BRENT L. BOWEN, Inspector General DON E. KLINE, Associate Director BARRY R. SNYDER, Assistant Inspector General WILLIAM A. RYBACK, Associate Director FREDERICK M. STRUBLE, Associate Director HERBERT A. BIERN, 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 Information Resources Management. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JOHN P. LAWARE SUSAN M. PHILLIPS LAWRENCE B. LINDSEY 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 JEFFREY C. MARQUARDT, Assistant Director DAVID L. SHANNON, Director JOHN H. PARRISH, Assistant Director JOHN R. WEIS, Associate Director LOUISE L. ROSEMAN, Assistant Director ANTHONY V. DIGIOIA, Assistant Director FLORENCE M. YOUNG, Assistant Director JOSEPH H. HAYES, JR., 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 DAY W. RADEBAUGH, JR., Assistant Director ELIZABETH B. RIGGS, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Federal Reserve Bulletin • April 1992 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman E. GERALD CORRIGAN, Vice Chairman WAYNE D. ANGELL JOHN P. LAWARE DAVID W. MULLINS, JR. THOMAS H. HOENIG LAWRENCE B. LINDSEY SUSAN M. PHILLIPS JERRY L. JORDAN THOMAS C. MELZER RICHARD F. SYRON EDWARD W. KELLEY, JR. ALTERNATE MEMBERS EDWARD G. BOEHNE ROBERT D. MCTEER, JR. JAMES H. OLTMAN SILAS KEEHN GARY H. STERN STAFF DONALD L. KOHN, Secretary and Economist JOHN M. DAVIS, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary RICHARD G. DAVIS, Associate Economist JOSEPH R. COYNE, Assistant Secretary THOMAS E. DAVIS, Associate Economist GARY P. GILLUM, Assistant Secretary DAVID E. LINDSEY, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel ALICIA H. MUNNELL, Associate Economist ERNEST T. PATRIKIS, Deputy General Counsel LARRY J. PROMISEL, Associate Economist MICHAEL J. PRELL, Economist CHARLES J. SIEGMAN, Associate Economist EDWIN M. TRUMAN, Economist THOMAS D. SIMPSON, Associate Economist ANATOL B. BALBACH, Associate Economist DAVID J. STOCKTON, Associate Economist PETER D. STERNLIGHT, Manager for Domestic Operations, System Open Market Account WILLIAM J. MCDONOUGH, Manager for Foreign Operations, System Open Market Account FEDERAL ADVISORY COUNCIL RONALD G. STEINHART, President TERRENCE A. LARSEN, Vice President IRA STEPANIAN, First District EUGENE A. MILLER, Seventh District CHARLES S. SANFORD, JR., Second District DAN W. MITCHELL, Eighth District TERRENCE A. LARSEN, Third District JOHN F. GRUNDHOFER, Ninth District JOHN B. MCCOY, Fourth District DAVID A. RISMILLER, Tenth District EDWARD E. CRUTCHFTELD, Fifth District RONALD G. STEINHART, Eleventh District E.B. ROBINSON, JR., Sixth District RICHARD M. ROSENBERG, Twelfth District HERBERT V. PROCHNOW, Secretary WILLIAM J. KORSVIK, Associate Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

75 CONSUMER ADVISORY COUNCIL COLLEEN D. HERNANDEZ, Kansas City, Missouri, Chairman DENNY D. DUMLER, Denver, Colorado, Vice Chairman BARRY A. ABBOTT, San Francisco, California JOYCE HARRIS, Madison, Wisconsin JOHN R. ADAMS, Philadelphia, Pennsylvania GARY S. HATTEM, New York, New York JOHN A. BAKER, Atlanta, Georgia JULIA E. HILER, Marietta, Georgia VERONICA E. BARELA, Denver, Colorado HENRY JARAMILLO, Belen, New Mexico MULGUGETTA BIRRU, Pittsburgh, Pennsylvania KATHLEEN E. KEEST, Boston, Massachusetts GENEVIEVE BROOKS, Bronx, New York EDMUND MIERZWINSKI, Washington, D.C. TOYE L. BROWN, Boston, Massachusetts BERNARD F. PARKER, JR., Detroit, Michigan CATHY CLOUD, Washington, D.C. OTIS PITTS, JR., Miami, Florida MICHAEL D. EDWARDS, Yelm, Washington JEAN POGGE, Chicago, Illinois GEORGE C. GALSTER, Wooster, Ohio JOHN V. SKINNER, Irving, Texas E. THOMAS GARMAN, Blacksburg, Virginia NANCY HARVEY STEORTS, Dallas, Texas DONALD A. GLAS, Hutchinson, Minnesota LOWELL N. SWANSON, Portland, Oregaon DEBORAH B. GOLDBERG, Washington, D.C. MICHAEL W. TIERNEY, Philadelphia, Pennsylvania MICHAEL M. GREENFIELD, St. Louis, Missouri SANDRA L. WILLETT, Boston, Massachusetts THRIFT INSTITUTIONS ADVISORY COUNCIL LYNN W. HODGE, Greenwood, South Carolina, President DANIEL C. ARNOLD, Houston, Texas, Vice President JAMES L. BRYAN, Richardson, Texas PRESTON MARTIN, San Francisco, California VANCE W. CHEEK, Johnson City, Tennessee RICHARD D. PARSONS, New York, New York BEATRICE D'AGOSTINO, Somerville, New Jersey THOMAS R. RICKETTS, Troy, Michigan THOMAS J. HUGHES, Merrifield, Virginia EDMOND M. SHANAHAN, Chicago, Illinois RICHARD A. LARSON, West Bend, Wisconsin WOODBURY C. TITCOMB, Worcester, Massachusetts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

76 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, Monetary Policy and Reserve Requirements Handbook. MS-138, Board of Governors of the Federal Reserve System, $75.00 per year. Washington, D.C. 20551 or telephone (202) 452-3244 or FAX Securities Credit Transactions Handbook. $75.00 per year. (202) 728-5886. When a charge is indicated, payment should The Payment System Handbook. $75.00 per year. accompany request and be made payable to the Board of Federal Reserve Regulatory Service. 3 vols. (Contains all Governors of the Federal Reserve System. Payment from for- four Handbooks plus substantial additional material.) eign residents should be drawn on a U.S. bank. $200.00 per year. Rates for subscribers outside the United States are as follows and include additional air mail costs: THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS. Federal Reserve Regulatory Service, $250.00 per year. 1984. 120 pp. Each Handbook, $90.00 per year. ANNUAL REPORT. THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MULTI- ANNUAL REPORT: BUDGET REVIEW, 1990-91. COUNTRY MODEL, May 1984. 590 pp. $14.50 each. FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or $2.50 each in the United States, its possessions, Canada, WELCOME TO THE FEDERAL RESERVE. March 1989. 14 pp. and Mexico. Elsewhere, $35.00 per year or $3.00 each. INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. 440 pp. $9.00 each. ANNUAL STATISTICAL DIGEST 1974-78. 1980. 305 pp. $10.00 per copy. FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. December 1986. 264 pp. $10.00 each. 1981. 1982. 239 pp. $ 6.50 per copy. 1982. 1983. 266 pp. $ 7.50 per copy. FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY- SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. 1983. 1984. 264 pp. $11.50 per copy. 1984. 1985. 254 pp. $12.50 per copy. 1985. 1986. 231 pp. $15.00 per copy. 1986. 1987. 288 pp. $15.00 per copy. 1987. 1988. 272 pp. $15.00 per copy. 1988. 1989. 256 pp. $25.00 per copy. CONSUMER EDUCATION PAMPHLETS 1980-89. 1991. 712 pp. $25.00 per copy. Short pamphlets suitable for classroom use. Multiple copies 1990. 1991. 196 pp. $25.00 per copy. are available without charge. SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF CHARTS. Weekly. $30.00 per year or $.70 each in the Consumer Handbook on Adjustable Rate Mortgages United States, its possessions, Canada, and Mexico. Else- Consumer Handbook to Credit Protection Laws where, $35.00 per year or $.80 each. A Guide to Business Credit for Women, Minorities, and Small THE FEDERAL RESERVE ACT and other statutory provisions Businesses affecting the Federal Reserve System, as amended through How to File A Consumer Credit Complaint August 1990. 646 pp. $10.00. Series on the Structure of the Federal Reserve System REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL The Board of Governors of the Federal Reserve System RESERVE SYSTEM. The Federal Open Market Committee ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— Federal Reserve Bank Board of Directors Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. Federal Reserve Banks Vol. II (Irregular Transactions). 1969. 116 pp. Each vol- Organization and Advisory Committees ume $2.25; 10 or more of same volume to one address, A Consumer's Guide to Mortgage Lock-Ins $2.00 each. A Consumer's Guide to Mortgage Settlement Costs Introduction to Flow of Funds. 1980. 68 pp. $1.50 each; 10 or A Consumer's Guide to Mortgage Refinancing more to one address, $1.25 each. Home Mortgages: Understanding the Process and Your Right Federal Reserve Regulatory Service. Looseleaf; updated at to Fair Lending least monthly. (Requests must be prepaid.) Making Deposits: When Will Your Money Be Available? Consumer and Community Affairs Handbook. $75.00 per When Your Home is on the Line: What You Should Know year. About Home Equity Lines of Credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

77 STAFF STUDIES: Summaries Only Printed in the 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- Bulletin VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by Gregory E. Elliehausen and John D. Wolken. September Studies and papers on economic and financial subjects that are 1990. 35 pp. of general interest. Requests to obtain single copies of the full text or to be added to the mailing list for the series may be sent 161. A REVIEW OF CORPORATE RESTRUCTURING ACTIVITY, 1980-90, by Margaret Hastings Pickering. May 1991. to Publications Services. 21pp. 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM Staff Studies 1-145 are out of print. MORTGAGE LOAN RATES IN TWENTY CITIES, by Stephen A. Rhoades. February 1992. 11 pp. 146. THE ROLE OF THE PRIME RATE IN THE PRICING OF 163. CLEARANCE AND SETTLEMENT IN U.S. SECURITIES MAR- BUSINESS LOANS BY COMMERCIAL BANKS, 1977-84, by KETS, by Patrick Parkinson, Adam Gilbert, Emily Gollob, Thomas F. Brady. November 1985. 25 pp. Lauren Hargraves, Richard Mead, Jeff Stehm, and Mary 147. REVISIONS IN THE MONETARY SERVICES (DIVISIA) IN- Ann Taylor. March 1992. 37 pp. DEXES OF THE MONETARY AGGREGATES, by Helen T. Farr and Deborah Johnson. December 1985. 42 pp. 148. THE MACROECONOMIC AND SECTORAL EFFECTS OF THE REPRINTS OF SELECTED Bulletin ARTICLES ECONOMIC RECOVERY TAX ACT: SOME SIMULATION Some Bulletin articles are reprinted. The articles listed below RESULTS, by Flint Brayton and Peter B. Clark. December are those for which reprints are available. Most of the articles 1985. 17 pp. reprinted do not exceed twelve pages. 149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS IN BANKING BEFORE AND AFTER ACQUISITION, by Stephen Limit of ten copies A. Rhoades. April 1986. 32 pp. 150. STATISTICAL COST ACCOUNTING MODELS IN BANKING: Recent Developments in the Bankers Acceptance Market. 1/86. A REEXAMINATION AND AN APPLICATION, by John T. The Use of Cash and Transaction Accounts by American Rose and John D. Wolken. May 1986. 13 pp. Families. 2/86. 151. RESPONSES TO DEREGULATION: RETAIL DEPOSIT PRICING Financial Characteristics of High-Income Families. 3/86. FROM 1983 THROUGH 1985, by Patrick I. Mahoney, Alice Prices, Profit Margins, and Exchange Rates. 6/86. P. White, Paul F. O'Brien, and Mary M. McLaughlin. Agricultural Banks under Stress. 7/86. January 1987. 30 pp. Foreign Lending by Banks: A Guide to International and U.S. 152. DETERMINANTS OF CORPORATE MERGER ACTIVITY: A Statistics. 10/86. REVIEW OF THE LITERATURE, by Mark J. Warshawsky. Recent Developments in Corporate Finance. 11/86. April 1987. 18 pp. Measuring the Foreign-Exchange Value of the Dollar. 6/87. 153. STOCK MARKET VOLATILITY, by Carolyn D. Davis and Changes in Consumer Installment Debt: Evidence from the Alice P. White. September 1987. 14 pp. 1983 and 1986 Surveys of Consumer Finances. 10/87. 154. THE EFFECTS ON CONSUMERS AND CREDITORS OF Home Equity Lines of Credit. 6/88. PROPOSED CEILINGS ON CREDIT CARD INTEREST RATES, Mutual Recognition: Integration of the Financial Sector in the by Glenn B. Canner and James T. Fergus. October 1987. European Community. 9/89. 26 pp. The Activities of Japanese Banks in the United Kingdom and in 155. THE FUNDING OF PRIVATE PENSION PLANS, by Mark J. the United States, 1980-88. 2/90. Warshawsky. November 1987. 25 pp. Industrial Production: 1989 Developments and Historical 156. INTERNATIONAL TRENDS FOR U.S. BANKS AND BANKING Revision. 4/90. MARKETS, by James V. Houpt. May 1988. 47 pp. Recent Developments in Industrial Capacity and Utilization. 157. M2 PER UNIT OF POTENTIAL GNP AS AN ANCHOR FOR 6/90. THE PRICE LEVEL, by Jeffrey J. Hallman, Richard D. Developments Affecting the Profitability of Commercial Banks. Porter, and David H. Small. April 1989. 28 pp. 7/90. 158. THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIRE- Recent Developments in Corporate Finance. 8/90. MENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE U.S. Exchange Rate Policy: Bretton Woods to Present. 11/90. PRODUCTS, by Mark J. Warshawsky with the assistance of The Transmission Channels of Monetary Policy: How Have Dietrich Earnhart. September 1989. 23 pp. They Changed? 12/90. 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSID- U.S. International Transactions in 1990. 5/91. IARIES OF BANK HOLDING COMPANIES, by Nellie Liang Changes in Family Finances from 1983 to 1989: Evidence from and Donald Savage. February 1990. 12 pp. the Survey of Consumer Finances. 1/92. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

78 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 Ellen V. Futter E. Gerald Corrigan Maurice R. Greenberg James H. Oltman Buffalo 14240 Herbert L. Washington James O. Aston PHILADELPHIA 19105 Peter A. Benoliel Edward G. Boehne Jane G. Pepper William H. Stone, Jr. CLEVELAND* 44101 John R. Miller Jerry L. Jordan A. William Reynolds William H. Hendricks Cincinnati 45201 Marvin Rosenberg 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 Walter A. Varvel1 Culpeper Communications John G. Stoides1 and Records Center 22701 ATLANTA 30303 Edwin A. Huston Robert P. Forrestal Leo Benatar Jack Guynn Donald E. Nelson1 Birmingham 35283 Nelda P. Stephenson Fred R. Herr1 Jacksonville 32231 Lana Jane Lewis-Brent James D. Hawkins1 Miami 33152 Michael T. Wilson James T. Curry III Nashville 37203 Harold A. Black Melvyn K. Purcell New Orleans 70161 Victor Bussie Robert J. Musso CHICAGO* 60690 Richard G. Cline Silas Keehn Robert M. Healey Daniel M. Doyle Detroit 48231 J. Michael Moore Roby L.Sloan1 ST. LOUIS 63166 H. Edwin Trusheim Thomas C. Melzer Robert H. Quenon James R. Bowen Little Rock 72203 James R. Rodgers Karl W. Ashman Louisville 40232 Daniel L. Ash Howard Wells Memphis 38101 Seymour B. Johnson Ray Laurence MINNEAPOLIS 55480 Delbert W. Johnson Gary H. Stern Gerald A. Rauenhorst Thomas E. Gainor Helena 59601 J. Frank Gardner John D. Johnson KANSAS CITY 64198 Burton A. Dole, Jr. Thomas M. Hoenig Herman Cain Henry R. Czerwinski Denver 80217 Barbara B. Grogan Kent M. Scott Oklahoma City 73125 Ernest L. Holloway David J. France Omaha 68102 Sheila Griffin Harold L. Shewmaker DALLAS 75222 Leo E. Linbeck, Jr. Robert D. McTeer, Jr. Henry G. Cisneros Tony J. Salvaggio El Paso 79999 Alvin T. Johnson Sammie C.Clay Houston 77252 Judy Ley Allen Robert Smith, III1 San Antonio 78295 Roger R. Hemminghaus Thomas H. Robertson SAN FRANCISCO 94120 James A. Vohs Robert T. Parry Robert F. Erburu Patrick K. Barron Los Angeles 90051 Walfred J. Fassler John F. Moore1 Portland 97208 William A. Hilliard Leslie R. Watters Salt Lake City 84125 Gary G. Michael Andrea P. Wolcott Seattle 98124 George F. Russell, Jr. Gordon Werkema1 *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

79 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories —— mam IL r*.E »RR/ I i TT— — E , rv Htlt*, © ; — 1 — Tl(lili Minneapolis^ !© Detroit i t I © OmahM*i , I r-j/4 ) \S,l'L,keCi,y •M tco Denv • er I I Kansas Cir,® ), illillrtliliB Iktakoma City iemphNtsa Nsktv illS 1*f}/rs . \ / I \ ^ Little Rock BirmingMnn^Jj^^ Dallas® ' " ® 1: 'M Antonio ^^^m^mmxmm 4 HV H•MHMINMHfli LEGEND Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities Boundaries of Federal Reserve Branch * Federal Reserve Branch Cities Territories Federal Reserve Bank Facility Q Board of Governors of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

Federal Reserve Statistical Releases Available on the Commerce Department's Economic Bulletin Board The Board of Governors of the Federal Reserve scription. For further information regarding a System makes some of its statistical releases avail- subscription to the economic bulletin board, able to the public through the U.S. Department of please call 202-377-1986. The releases transmitted Commerce's economic bulletin board. Computer to the economic bulletin board, on a regular basis, access to the releases can be obtained by sub- are the following: Reference Number Statistical release Frequency of release H.3 Aggregate Reserves Weekly/Thursday H.4.1 Factors Affecting Reserve Balances Weekly/Thursday H.6 Money Stock Weekly/Thursday H.8 Assets and Liabilities of Insured Domestically Chartered Weekly/Monday and Foreign Related Banking Institutions H.10 Foreign Exchange Rates Weekly/Monday H.15 Selected Interest Rates Weekly/Monday G.5 Foreign Exchange Rates Monthly/end of month G.17 Industrial Production and Capacity Utilization Monthly/midmonth G.19 Consumer Installment Credit Monthly/fifth business day Z.7 Flow of Funds Quarterly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis