Federal Reserve Bulletin, 1992-07

VOLUME 78 • NUMBER 7 • JULY 1992 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 459 RECENT DEVELOPMENTS AFFECTING cial Markets Officer, Federal Reserve Bank of THE PROFITABILITY AND PRACTICES OF Chicago, review the evolution and current COMMERCIAL BANKS state of the general asset-backed securities market and say that the securitization process Sluggish overall economic activity and conas it has evolved to date has been beneficial to tinuing problems with asset quality made 1991 both the originators of asset-backed securities another difficult year for U.S.-chartered and to investors, before the Subcommittee on insured commercial banks. As the year pro- Policy, Research, and Insurance of the House gressed, however, banks strengthened their Committee on Banking, Finance and Urban financial condition by making substantial fur- Affairs, May 6,1992. ther provisions against loan losses, improving their capital and liquidity positions, widening 495 John R LaWare, Member, Board of Govertheir lending margins, and taking actions that nors, presents the views of the Board on should reduce expenses over the longer run H.R.4803, the Non-Proliferation of Weapons through restructuring and, in some cases, of Mass Destruction and Regulatory Improveconsolidation. ments Act of 1992, focusing on title II, concerning the activities in the United States of 484 TREASURY AND FEDERAL RESERVE foreign banks that are controlled by foreign FOREIGN EXCHANGE OPERATIONS governments, and says that this legislation would severely curtail the U.S. activities of The dollar advanced against all major foreign such banks, before the House Committee on currencies during the February through April Banking, Finance and Urban Affairs, May 8, period as an improved outlook for the U.S. 1992. recovery contrasted with evidence of economic and financial fragility abroad. On bal- 500 Lawrence B. Lindsey, Member, Board of Govance, the dollar gained 2 LA percent against the ernors, addresses the concerns raised by the German mark, 6 percent against the Japanese 1990 Home Mortgage Disclosure Act yen, and 2LA percent on a trade-weighted basis (HMDA) data and says that the Federal as measured by the staff of the Federal Reserve is increasing its efforts considerably Reserve Board. toward better understanding the HMDA information and that the data will continue to pro- 489 INDUSTRIAL PRODUCTION AND vide Federal Reserve examiners with a basis CAPACITY UTILIZATION for further analysis of whether institutions are The index of industrial production increased considering all applicants fairly, before the 0.5 percent in April, after an upwardly revised Subcommittee on Housing and Community gain of 0.4 percent in March. Total industrial Development and the Subcommittee on Concapacity utilization rose 0.3 percentage point sumer Affairs and Coinage of the House Comin April, to 78.7 percent. mittee on Banking, Finance and Urban Affairs, May 14, 1992. 492 STATEMENTS TO THE CONGRESS 504 J. Virgil Mattingly, Jr., General Counsel, Richard Spillenkothen, Director, Division of Board of Governors, reports on the Federal Banking Supervision and Regulation, Board Reserve's actions regarding the Bank of Credit of Governors, and Donald H. Wilson, Finan- and Commerce International (BCCI) and says Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

that the Federal Reserve has continued to Estate Settlement Procedures Act, and says investigate the circumstances under which that the Board believes that the burden and BCCI gained control of the shares of U.S. expense of compliance with this legislation banking organizations, to prosecute enforce- would outweigh the consumer need for it, ment actions against those responsible for before the Subcommittee on Consumer Affairs wrongdoing by BCCI, and to work to ensure and Coinage of the House Committee on the separation and insulation of U.S. banking Banking, Finance and Urban Affairs, May 27, organizations from BCCI, before the Subcom- 1992. mittee on Terrorism, Narcotics and Interna- 529 Theodore E. Allison, Assistant to the Board tional Operations of the Senate Committee on for Federal Reserve System Affairs, presents Foreign Relations, May 14,1992. estimates of the effect on the Federal Reserve 511 Edward W. Kelley, Jr., Member, Board of System of substituting a one-dollar coin for Governors, comments on the Federal Re- the one-dollar bank note now in circulation, as serve's participation in the deliberations by would be required by H.R.I245—the United the National Advisory Council on Interna- States One Dollar Coin Act of 1991—and tional Monetary and Financial Policies (NAC) says that a dollar coin could produce sizable on the fiscal 1990 Commodity Credit Corpora- cost savings for the federal government as a tion (CCC) program for Iraq and says that the whole, before the Task Force on Economic Federal Reserve's reservations and opposition Policy, Projections, and Revenues of the related to the fiscal 1990 CCC program for House Committee on the Budget, May 28, Iraq were based on concerns about Iraq's cred- 1992. itworthiness at that time and had been reinforced by the unfolding of the Banca Nazion- 532 ANNOUNCEMENTS ale del Lavoro case in summer 1989, before the House Committee on Banking, Finance Meeting of the Consumer Advisory Council. and Urban Affairs, May 21, 1992. Provision of financial services to cities affected by civil disturbances. 513 Governor Lindsey discusses some of the economic aspects of poverty and inequality in Amendments to Regulation O (Loans to Exec- America and says that inflationary policies utive Officers, Directors, and Principal Sharedo not correspond with enhanced economic holders of Member Banks). opportunity; in fact, lower inflation and interest rates greatly increase the affordability of Amendments to Regulation Y (Bank Holding Companies and Change in Bank Control). housing in America, before the U.S. Commission on Civil Rights, May 22, 1992. Effective date of amendments to Regulations O and Y. 515 Wayne D. Angell, Member, Board of Governors, and Governor Kelley discuss and review the Federal Reserve System's expenses and 534 RECORD OF POLICY ACTIONS OF THE budget for 1992 and say that the existing FEDERAL OPEN MARKET COMMITTEE budget processes are working well in control- At its meeting on March 31, 1992, the Comling costs while at the same time encouraging mittee adopted a directive that called for mainquality improvements, before the Subcommittaining the existing degree of pressure on retee on Domestic Monetary Policy of the serve positions and that included some bias House Committee on Banking, Finance and toward easing during the intermeeting period. Urban Affairs, May 27,1992. Accordingly, in the context of the Commit- 524 Governor Lindsey offers the Board's com- tee's long-run objectives for price stability ments on H.R.5170, the Mortgage Refinanc- and sustainable economic growth, and giving ing Reform Act of 1992, which would amend careful consideration to economic, financial, both the Truth in Lending Act and the Real and monetary developments, slightly greater Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

reserve restraint might be acceptable or A3 GUIDE TO TABULAR PRESENTATION slightly lesser reserve restraint would be A4 Domestic Financial Statistics acceptable during the intermeeting period. A44 Domestic Nonfinancial Statistics The reserve conditions contemplated at this A53 International Statistics meeting were expected to be consistent with growth of M2 and M3 at annual rates of A69 GUIDE TO STATISTICAL RELEASES AND around 3V2 percent and IV2 percent respectively over the three-month period from SPECIAL TABLES March through June. A70 INDEX TO STATISTICAL TABLES 541 LEGAL DEVELOPMENTS Various bank holding company, bank service ALL BOARD OF GOVERNORS AND STAFF corporation, and bank merger orders; and A74 FEDERAL OPEN MARKET COMMITTEE pending cases. AND STAFF; ADVISORY COUNCILS 576 MEMBERSHIP OF THE BOARD OF A76 FEDERAL RESERVE BOARD GOVERNORS OF THE FEDERAL PUBLICATIONS RESERVE SYSTEM, 1913-92 List of appointive and ex officio members. A78 MAPS OF THE FEDERAL RESERVE SYSTEM A1 FINANCIAL AND BUSINESS STATISTICS These tables reflect data available as of A80 FEDERAL RESERVE BANKS, BRANCHES, May 27, 1992. AND OFFICES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks Allan D. Brunner, Diana Hancock, and Mary M. major types continued to increase last year. The McLaughlin, of the Board's Division of Monetary increase was particularly noticeable for real estate Affairs, prepared this article. Thomas Allard and loans, reflecting problems in the commercial real Andrew Laing provided research assistance. estate sector. The growth of bank credit in 1991 remained Sluggish overall economic activity and continuing subdued. Reflecting weak loan demand and tighter problems with asset quality made 1991 another standards and terms on new loans, the total dollar difficult year for U.S. commercial banks. As the volume of bank loans fell, and assets shifted drayear progressed, however, some signs of a revival matically toward U.S. government and federal of their health emerged. Banks strengthened their agency securities. These assets, which include financial condition by making substantial further government-guaranteed collateralized mortgage provisions against loan losses, improving their cap- obligations and mortgage pass-through securities, ital and liquidity positions, widening their lending rose nearly 24 percent. In line with the weak margins, and taking actions that should reduce growth of bank credit, banks bid unaggressively for expenses over the longer run through restructuring deposits. and, in some cases, consolidation. Financial mar- Prices of outstanding bank debt and equity rose kets responded favorably to these actions, as well markedly from the low levels of late 1990. Banks as to prospects for an improving economy, by increased their equity more than $13 billion and widening banks' access to capital and other sources supplemented their capital by a $1.5 billion inof funds. Although demand for bank credit had not crease in subordinated debt. The improved climate picked up as of late spring, impediments to banks' for banks in 1991 was due in part to a substantial ability to support a brisker pace of credit expansion decline in short-term interest rates stemming from appear to have diminished. Federal Reserve actions to ensure a sustainable Net income as a percentage of assets rose only 5 basis points last year, to 0.54 percent, despite a sharp increase in lending margins and large gains 1. Income and expense as a percentage of average net on securities (table 1). Profits were held down by a consolidated assets, all insured commercial banks, 1989-91 partial rollback of recent progress in reducing noninterest expenses (a rollback due in part to onetime Item 1989 1990 1991 restructuring charges) and also by an increased Net income .49 .49 .54 level of provisioning against loan losses. Chargeoff rates and delinquency rates for loans of all Gross interest income 10.00 9.57 8.59 Gross interest expense 6.46 6.13 4.98 Net interest margin 3.54 3.44 3.61 Loss provisions .95 .93 .98 NOTE: Except where otherwise indicated, data in this article are Noninterest income 1.57 1.63 1.73 from the quarterly Reports of Condition and Income for insured Noninterest expense 3.40 3.45 3.69 commercial banks and are consolidated (foreign and domestic Net noninterest margin -1.83 -1.82 -1.96 offices). Data for each year are adjusted for mergers and acquisi- Securities gains or losses .03 .02 .09 tions; die database contains all banks for which a complete year can be constructed. Size categories of banks, based on year-end fully Income before taxes .78 .70 .76 consolidated assets, are as follows: small, less than $300 million; Taxes and extraordinary items .29 .21 .22 Cash dividends declared .44 .42 .43 medium, $300 million to $5 billion; large, $5 billion or more, Retained income .05 .07 .11 excluding the ten largest banks; and the ten largest banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

460 Federal Reserve Bulletin • July 1992 1. Selected interest rates, 1985-92 ther actions to ease monetary policy and to reduce reserve requirements. Percent The number of federally insured commercial Mortgages Thirty-year conventional PPrriimmee 1122 banks that failed last year was 127, down from 169 in 1990 and a record high 220 in 1988. FDIC 10 outlays rose, however, as difficulties were more . 8 concentrated at larger banks, many of which were heavily exposed to commercial real estate loans. 6 Treasury bills Federal funds Though the number of banks classified by the Three-month — 4 FDIC as "problem banks" remained nearly the I I I! 1 1 1 1 same, year-end total assets at these banks increased 1985 1987 1989 1991 49 percent between 1990 and 1991, another indication that larger banks are having difficulty. recovery from the recession that began in mid-1990 (chart 1). The improvement also reflected a revised market outlook for long-term bank earnings. The BALANCE SHEET DEVELOPMENTS Federal Reserve and other bank supervisory agencies took several steps to improve bank lending Loan quality problems, weak credit demand stemmargins and otherwise encourage bank lending. In ming from the economic slowdown, a further tightlate 1990 the Federal Reserve reduced the reserve ening of loan standards, and a considerable effort requirement on nontransaction liabilities from by businesses to shift from short-term financing, 3 percent to zero, and early last year the Federal including bank loans, to longer-term funds contrib- Reserve and other bank regulators encouraged their uted to the sluggishness of overall growth in bank examiners to take a more balanced approach to balance sheets (table 2). These conditions also had assessing loan value by considering the strength of an important influence on the composition of total underlying cash flows in addition to current market bank credit and bank liabilities. (Appendix tables value. In early 1992 the Federal Reserve took fur- A.l and A.2 contain detailed information on 2. Annual rate of growth of balance sheet items, all insured commercial banks, 1985-911 Percent Item 1985 1986 1987 1988 1989 1990 1991 Total assets 8.5 7.7 2.0 4.4 5.9 2.8 2.6 Interest-earning assets2 9.3 8.0 3.9 4.1 6.3 2.4 3.3 Loans 7.5 7.5 4.1 6.0 6.8 2.4 -1.4 Commercial and industrial 2.2 4.3 -1.5 2.4 3.4 -.3 -7.8 Consumer 14.4 7.4 3.3 6.3 5.7 .4 -2.0 Credit card 22.9 12.8 6.7 8.7 10.2 .6 4.0 Installment and other 11.8 5.6 2.1 5.4 3.9 .3 -4.6 Real estate 13.1 17.7 16.6 13.8 13.6 9.1 4.7 Other 5.1 -.2 -4.7 -2.9 -.2 -6.6 -3.5 Securities 13.9 10.2 7.2 1.9 4.9 8.9 15.8 U.S. government 2.5 17.2 9.9 5.0 10.2 16.4 23.4 State and local government 33.0 -12.6 -13.7 -12.0 -9.8 -11.3 -11.9 Non-interest-earning assets 8.1 9.5 -5.5 1.9 5.5 -.5 -.3 Total liabilities 8.5 7.8 2.3 4.2 6.0 2.6 2.4 Deposits 7.7 7.9 2.3 4.2 5.4 4.1 3.0 Demand 9.0 14.0 -10.4 1.4 .7 1.0 -.8 Other checkable 17.8 33.3 8.3 8.1 2.7 6.7 16.4 Savings 23.8 13.4 39.9 1.2 1.0 6.6 16.0 Small-denomination time 2.8 -1.3 7.9 15.6 17.7 14.3 1.6 Large-denomination time 3.9 -2.0 11.5 8.8 7.4 -4.7 -19.0 Subordinated notes and debentures 43.7 14.6 3.5 -.5 15.4 21.1 6.9 8.8 7.1 -1.4 8.4 3.7 6.1 6.2 MEMO Loss reserves 24.2 24.8 74.5 -4.6 17.7 3.6 2.7 1. Growth rates calculated from year-end to year-end. 2. Includes trading account assets, federal funds sold, and interest-bearing balances. 3. Includes banks with negative as well as positive equity. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 461 2. Deposits and securities at insured commercial banks as 3. Spread of rates charged on floating-rate, prime-based a percentage of bank credit, 1973-911 loans made under commitment over federal funds rate, all commercial banks, by size of commitment, Percent Percent 1986-92 2 fS Deposits Basis points 28 \ f \ — 50 26 —I 1 —1 46 Less than $1 million—\ s-— 400 24 c— J i 42 ^ 300 7 Securities 22 1—1V M i 1 1 1 1 38 i 1 1 1 1 1 1 1 1 I 1975 1980 1985 1991 $1—$19.9 million $2° million or more 200 1. Weekly data for insured domestically chartered and foreign-related 1 V 1 1 1 1 1 banking institutions. Securities are U.S. government and federal agency 1987 1989 1991 securities. Shading indicates periods of recession as defined by the National SOURCE. Federal Reserve quarterly Survey of Terms of Bank Lending. Bureau of Economic Research (NBER). 2. Line indicates peak. NBER has not yet determined the trough of the 1990-91 recession. respondents to the Federal Reserve's periodic Senior Loan Officer Opinion Survey on Bank income, expenses, and portfolio composition for Lending Practices (LPS) in early 1991 reported the years 1985 through 1991.) tighter terms and standards for C&I loans; however, the net number reporting tightening (number reporting tightening minus number reporting Assets easing) declined over the year as capital pressures appeared to abate somewhat and the economy Total assets at commercial banks expanded at only began to expand, albeit slowly. a 2Vi percent pace in 1991. The total dollar volume of loans held in bank portfolios actually fell, with all three main types of loans—commercial and industrial, real estate, and consumer—weakening 4. Net percentage of selected large commercial banks tightening credit standards, 1990-92 appreciably. Partly as a result, banks increased their degree of liquidity significantly in 1991, much Percent Commercial and industrial loans, more than in previous periods of economic slowdown. Holdings of U.S. government and federal agency securities—including guaranteed mortgage instruments—rose particularly sharply (chart 2). The liquidity of these instruments and capital pressures have increased their attractiveness. Commercial and Industrial Loans. The total dollar volume of commercial and industrial loans Commercial real estate at commercial banks dropped sharply in 1991 after edging down in 1990 (table 2). The decline stemmed partly from restrictive actions by banks concerned about repayment prospects and sensitive to capital pressures. Banks' decreased willingness to lend was evident in wider spreads between interest rates on prime-based loans and shorterterm market rates, such as the federal funds rate (chart 3), and also in continued tightening of loan SOURCE. Federal Reserve Senior Loan Officer Opinion Survey on Bank standards throughout 1991 (chart 4). Many Lending Practices. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

462 Federal Reserve Bulletin • July 1992 5. Gross bond and equity issuance by U.S. nonfinancial Despite the continuing shrinkage of the thrift corporations, 1986-921 industry, however, the pace of residential lending Percent Billions of dollars by banks slowed as sluggish economic growth held down the demand for housing. Also, the large share of fixed-rate mortgage originations increased the share of loans eligible for securitization. This increased banks' opportunities to substitute mortgage-backed securities for direct real estate loan investment. More restrictive policies toward mortgage lending also may have played a minor role in the slow growth of mortgage loans, as a small number of banks responding to LPSs in Index Billions of dollars early 1991 reported tougher down-payment and payment-to-income requirements for residential mortgages. A glut of unoccupied office space and a bleak outlook for income from rental of commercial buildings depressed demand for all types of commercial real estate in 1991. In addition, many respondents to LPSs in 1991 had tightened standards for commercial real estate loans, though the share 1987 1989 1991 of respondents reporting further tightening dropped 1. 1992 issuance represents annualized preliminary data for January through April. as the year progressed (chart 4). Nonresidential mortgages likely would have weakened even more had it not been for difficulties Although supply conditions tightened in 1991, banks encountered with construction loans and somost of the decline in C&I loans appeared to reflect called mini-perm loans. Mini-perm loans, which slack demand. The downturn in economic activity, tend to have longer maturities than standard conwhich reduced desired inventory levels and busistruction loans and may extend through a buildness capital spending, together with a relatively ing's initial occupancy period, became prevalent in low level of merger activity, held down the need the mid-1980s for financing the construction of for funds. The downtrend in business loans at comincome properties. According to the June 1991 mercial banks also reflected a substitution of bond LPS, a significant share of mini-perm loans that and equity issuance for shorter-term sources of had come due during the twelve months preceding credit as long-term yields on bonds came down, the survey were not paid off in conformance with prices of equity shares soared, and businesses the original terms. In some cases the properties moved to lock in longer-term financing at rates securing the loans were foreclosed on, but in many below those of recent years (chart 5). The drop in other cases the banks provided temporary or perthe yield on corporate bonds in 1991 helped push manent (or "takeout") financing. Traditional lendup gross debt issuance by U.S. nonfinancial corpoers, such as life insurance companies, apparently rations to an average monthly level of $10.7 bilhave sharply limited the availability of long-term lion, the highest since 1986. Similarly, a 35 percent financing for these properties. increase in share prices lifted gross equity issuance by U.S. nonfinancial corporations to a record high Consumer Loans. Although credit card lending in 1991. expanded last year, after little growth in 1990, overall consumer lending contracted along with Real Estate Loans. The total dollar volume of installment lending. The decline in installment real estate loans extended by banks continued to debt evidently resulted from consumer efforts, in expand last year, though at a much reduced pace. response to uncertain economic conditions, to Most of the increase was for residential real estate. delay purchases of automobiles and other durable Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 463 goods and to reduce high debt-to-income levels changed somewhat in 1991, as banks shifted tothey had built up in earlier years. ward retail deposits and continued to reduce their In addition to weak demand, the growth of con- reliance on costly managed liabilities to fund asset sumer loans held by banks was depressed by the growth. securitization of more than $23 billion in consumer Although retail deposits continued to rise relareceivables last year, slightly above the large vol- tive to overall balance sheets, banks appeared to ume in 1990. By removing these loans from banks' pursue them rather unaggressively. Rates offered balance sheets, securitization reduces the amount on retail deposits fell broadly in line with money of capital that banks are required to hold and at market rates. In addition, a number of commercial the same time allows banks to earn fee income banks reduced expenditures on retail deposit adverby originating and servicing the securitized loans. tising, according to informal contacts. As yields on Securitizations were especially strong both in 1990, small-denomination time deposits fell to very low when the interim capital standards were imple- levels by standards of recent years, a portion of mented, and in 1991, the year before full imple- these funds apparently shifted into stock and bond mentation of capital standards. markets in a search for higher returns. As is typical when short-term rates decline, Securities. Banks increased their rate of deposit holders shifted some funds from maturing acquisition of securities further last year, to around retail certificates of deposit into NOW accounts 153A percent. Although a pickup in securities and savings deposits. The opportunity costs (that is, holdings is typical in recessionary environments, the rate of return forgone) of these liquid deposits the phenomenon was especially pronounced in fell last year as offering rates on them adjusted to 1991, in part because of the contraction in loans. lower short-term market rates more sluggishly than All the increase was in U.S. government and feddid yields on small-denomination time deposits eral agency securities, about half of which was in (chart 6). the form of mortgage-backed securities. Since the Although the opportunity costs of holding delast recession, a liquid market for mortgagemand deposits also fell last year, these deposits backed securities issued or guaranteed by U.S. declined slightly from year-end 1990 to year-end government agencies has made it possible for 1991. This decline likely owed in part to banks' banks to convert real estate loans to marketable efforts to hold down deposit insurance fees, which instruments—a practice that requires less capital are based on quarter-end deposits. Even on a than making loans under the risk-based capital fourth-quarter-average to fourth-quarter-average requirements. The practice allows banks to basis, demand deposits increased at a sluggish diversify their real estate portfolios geographically 31/2 percent rate, likely because corporations conand, because of government guarantees, to reduce tinued to shift away from compensating balances, credit risks. and toward fees, to pay for bank services. Securities issued by state and local governments continued to run off last year, as they have since 6. Rates on selected retail deposits at insured commercial passage of the Tax Reform Act of 1986, which banks and rate on six-month Treasury bills, 1989-921 reduced the attractiveness of holding such securities acquired after August 7, 1986. Since 1986, the proportion of state and local government securities Six-month Treasury bills in bank asset portfolios has declined 3 percentage Three- to six-month points, to about 2VA percent. time deposits Savings accounts Liabilities With bank funding needs weak, total deposits at commercial banks grew at a 3 percent rate in 1991 1989 1990 1991 1992 on a year-end basis, the slowest pace since 1987 1. Savings accounts include money market deposit accounts. (table 2). The composition of 6ank liabilities also SOURCE. Federal Reserve Monthly Survey of Selected Deposits. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

464 Federal Reserve Bulletin • July 1992 Capital bled in 1991, enabling them to retain income while increasing dividend payments. Small and Despite asset quality pressures and a higher rate of medium-size banks increased their capital at a provisioning against loan losses, bank equity capi- somewhat slower pace than did large banks, by tal increased $13.2 billion in 1991, or about 6 per- about 5VI and LLA percent respectively. Small and cent (table 3). More than $7 billion of the gain medium-size banks were a little more profitable came from additional holding company invest- than in 1990 and retained more to build equity ments in subsidiary banks. These parent institu- capital. In contrast to banks of other sizes, the ten tions took advantage of sharply rising stock prices largest banks made little overall progress in buildto issue additional shares and then "down- ing new capital in 1991, though the group did raise streamed" the funds to their subsidiary banks. Re- substantial equity capital in early 1992. These tained income provided another $3.5 billion in banks were considerably less profitable than banks equity capital, and most of the balance came from of other sizes and retained almost no earnings last the conversion of convertible debt, the exercising year. of stock options, and other equity sales. Improved By year-end 1992, banks must meet two riskinvestor confidence in the future profitability of the based capital-ratio requirements. First, tier 1 banking industry was evidenced by a narrowing of capital—mainly common equity and perpetual prethe spread between rates on subordinated notes and ferred stock—must amount to at least 4 percent of debentures for money center and regional banks risk-weighted assets. Second, total capital—tier 1 and rates on Treasury issues (chart 7). During plus tier 2—must amount to at least 8 percent of 1991, the industry added $1.5 billion in subordi- risk-weighted assets. Tier 2 capital includes other nated debt, a 6.9 percent increase. types of preferred stock, subordinated debt, loan Large banks other than the ten largest made the loss reserves (up to 1.25 percent of risk-based most progress in building equity, increasing equity assets), and mandatory convertible debt. In addicapital 9 percent. Net income at these banks dou- tion, tier 1 capital must equal at least 3 percent of 3. Retained income and change in total equity capital, insured commercial banks, by size of bank, 1985-911 Millions of dollars, except as noted Item 1985 1986 1987 1988 1989 1990 1991 Retained income All banks 9,358 8,073 -7,936 11,303 1,458 2,391 3,495 Small 2,057 1,164 1,406 1,575 2,235 1,911 2,347 Medium 3,123 2,792 815 2,236 2,092 50 244 Large, excluding ten largest . 2,852 2,491 -3,484 2,860 1,375 -1,124 873 Ten largest 1,325 1,627 -6,675 4,632 -4,244 1,554 31 Net change in equity capital All banks 13,373 11,883 -2,556 14,643 7,141 12,265 13,169 Small 3,167 2,294 2,382 2,546 3,006 2,890 3,127 Medium 5,013 4,437 2,279 2,978 3,823 3,607 4,332 Large, excluding ten largest. 3,373 3,110 -2,494 4,377 2,889 3,118 5,521 Ten largest 1,819 2,042 -4,723 4,743 -2,577 2,650 189 Change in equity capital (percent) All banks 8.8 7.1 -1.4 8.4 3.7 6.1 6.2 Small 6.2 4.4 4.5 4.9 5.6 5.3 5.6 Medium 12.0 9.5 4.4 5.7 6.9 6.2 7.2 Large, excluding ten largest . 10.8 8.5 -6.2 10.4 5.9 5.7 9.0 Ten largest 6.4 6.4 -13.9 16.2 -7.3 8.1 .5 Change in equity capital attributable to retained income (percent) All banks 70.0 67.9 77.2 20.4 19.5 26.5 Small 64.9 50.7 59.0 61.9 74.4 66.1 75.1 Medium 62.3 62.9 35.8 75.1 54.7 1.4 5.6 Large, excluding ten largest . 84.6 80.1 65.3 47.6 15.8 Ten largest 72.8 79.7 97.7 58.6 16.6 1. Includes banks with negative as well as positive equity. Change in equity capital calculated from year-end to year-end. Components may not sum to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 465 7. Stock price indexes, and spread of interest rates paid on 8. Risk-based capital ratios at insured commercial banks, bank subordinated debt over rates on comparable by size of bank, fourth quarter, 1990 and 19911 Treasury securities, 1987-921 Percent Index, January 9, 1991=100 — ^- j ^ j ^ j | j j [ ^ ^ | ^ Basis points 1990 1991 All Small Medium Large, excluding Ten largest Subordinated debt 1. See text for explanation of capital tiers teann ldar rgeisst k adjustments. all size categories made significant progress in increasing risk-based capital ratios, primarily by increasing their tier 1 capital (chart 8). Subordinated debt and intermediate-term preferred stock that qualified as tier 2 capital increased $1 billion, industrywide, in 1991. The ten largest banks 1988 1989 1990 1991 continued to rely relatively heavily on subordinated 1. Data in top panel are for eleven money center and twenty-four regional banks as defined by Salomon Brothers. Data in lower panel are for a subset debt (which is classified as tier 2 capital). of banks in each of these groups. Yields on Treasury securities and subordinated debt are based on actively traded issues adjusted to a ten-year constant maturity. TRENDS IN PROFITABILITY unweighted total assets (the leverage ratio). (In Although profitability in the commercial banking practice, regulators require a leverage ratio above industry remained depressed in 1991, the return on 3 percent for all but the most well-managed banks.) assets for all insured commercial banks edged up to Risk-weighted assets are calculated by multiply- 0.54 percent, and the return on equity increased to ing the amount of assets in each asset category by a 8.09 percent (chart 9). Sharp declines in short-term factor keyed to the credit risk of that category. interest rates and a steepening of the yield curve Riskier assets have higher weights and require helped boost income, as net interest margins widmore capital. Thus, a zero percent weight is ened and banks realized hefty gains on securities, assigned to U.S. Treasury securities, governmentbacked mortgages, and mortgage-backed securities 9. Return on equity and on assets, all insured commercial (MBSs) guaranteed by the Government National banks, 1970-91 Mortgage Association; a 20 percent weight to most other MBSs and federal agency securities; a 50 per- Percent Percent cent weight to qualifying one- to four-family con- urn on equity ventional mortgages and general obligation reve- / \ 10 nue bonds; and a 100 percent weight to most other 1.0 loans, including C&I, consumer, and commercial real estate. In addition, banks must maintain capital Return on assets against the credit exposures associated with most 0.5 U \ —5 off-balance-sheet transactions. The vast majority of banks meet the 1992 1 1 1 1 1 1 1 1 1 1 1 1 1 i i i i r M i ll capital-ratio requirements. In 1991, banks across 1970 1975 1980 1985 1991 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

466 Federal Reserve Bulletin • July 1992 which helped offset adverse effects on profitability 10. Return on assets of insured commercial banks, by bank of higher loss provisioning (table 4). Profitability earnings percentile, 1980-91 was also held down by elevated noninterest Percent expenses, particularly onetime charges associated with restructuring. Even with depressed profitability, however, dividends paid as a share of assets 90th remained at a high level for the banking system as a whole, and retained income, although up, was low for the third straight year. Profitability measures for the industry as a whole tended to follow the patterns typical of cyclical downturns and recoveries, turning down as the economy slumped and beginning to rebound as the economy turned around. The industry ended the recession in poor shape. As loan delinquency rates soared during the second half of 1990 and the first 1981 1983 1985 1987 1989 1991 half of 1991 with the weakening economy, net income was damped by increased provisions different sizes. Large banks other than the ten largagainst future loan losses. Weaker profits were not est made the most progress on earnings; their avera purely cyclical phenomenon, however. Net age return on assets increased 30 basis points in income was particularly low at banks that held high 1991, as their taxable equivalent net interest marproportions of commercial real estate loans, and it gins widened 27 basis points. At the ten largest deteriorated during the first half of 1991. banks, however, loss provisions rose sharply and Although most banks improved their earnings in return on assets fell 26 basis points. 1991, there were wide differences among banks of Looking at differences in earnings from bank to bank, rather than by size category, gives some 4. Income and expense items as a percentage of average perspective on heterogeneity in bank performance. net consolidated assets, insured commercial banks, The distribution of earnings in 1991 continued to by size of bank, 1989-91 narrow from the high degree of dispersion during the mid-1980s, a period of poor earnings for some Net interest Net Net Year and margin noninterest Loss income banks whose loans were concentrated in the energy size of bank (taxable provisions (return equivalent)1 margin on assets) and agricultural industries (chart 10). Poor performers (banks at the 5th earnings percentile) im- 1991 All banks 3.71 -1.96 .98 .54 proved their returns on assets during 1991, and Small 4.25 -2.52 .47 .82 Medium 4.08 -2.18 1.05 .53 banks at the 95th percentile continued to perform Large, excluding well notwithstanding the recession. The decrease in ten largest ... 3.58 -1.81 11..0099 ..5588 Ten largest 2.96 -1.42 1.20 .21 dispersion between 1990 and 1991 was also evi- 1990 dent in the standard deviation for the return on All banks 3.55 -1.82 .93 .49 assets, which declined from 1.14 to 1.05 percent. Small 4.25 -2.48 .49 .79 Medium 4.02 -2.04 1.11 .53 Bank profitability varied considerably across Large, excluding ten largest ... 3.31 -1.63 11..2200 ..2288 regions in 1991 (chart 11). Earnings of banks in the Ten largest 2.73 -1.26 .76 .47 San Francisco District deteriorated noticeably: 1989 Average return on assets fell from 1.01 percent in All banks 3.68 -1.83 .95 .49 Small 4.35 -2.49 .47 .85 1990 to 0.41 percent (compared with a national Medium 4.10 -2.10 .76 .74 average rate of return on assets of 0.54 percent Large, excluding ten largest ... 3.49 --11..5577 11..0066 ..5555 in 1991) as delinquencies on real estate credits Ten largest 2.82 -1.23 1.49 -.22 mounted and banks made substantial provisions 1. For each bank with profits before tax greater than zero, income from against future loan losses. Although banks in the tax-exempt state and local obligations was increased by [f/(l-f)] times the lesser of profits before tax or interest earned on tax-exempt obligations, Boston District on average experienced losses where t is the marginal federal income-tax rate. This adjustment approxi- again in 1991, they showed the largest improvemates the equivalent pretax return on tax-exempt obligations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 467 11. Change in return on assets from 1990 to 1991, all insured commercial banks, by Federal Reserve District Percentage points 1991 return on assets less than average 1991 return on assets near average • 1991 return on assets greater than average ment, with net income as a percentage of assets The ratios of dividends paid out to net income rising from -0.99 percent to -0.13 percent. declined in 1991 for banks of all sizes except the Progress in the Boston District was due to widen- ten largest, which maintained dividends at a high ing interest margins, which in 1991 increased level despite weaker earnings. The overall result 35 basis points—twice the national average—as was retained income of $3.5 billion for the industhe proportion of nonperforming assets declined. try. Retained income accounted for just over Decreased provisions against loan losses in the 25 percent of the increase in equity capital in 1991. Boston District likely reflected substantial charge- Two-thirds of the retained income was at small offs made in 1989 and 1990 and stabilization of the banks. regional economy. Banks in the central part of the country recorded profit rates well above the 1991 national average. Loan Losses These banks had a lower proportion of nonperforming assets, lower charge-off rates, and a smaller Loan quality at commercial banks continued to concentration of commercial real estate loans than deteriorate in 1991 (table 5). For the banking sysdid banks in the nation as a whole. Consequently, tem as a whole, net charge-offs rose to 1.55 percent they made smaller provisions against future loan of outstanding loans, from 1.40 percent in 1990 losses. Banks in the two southern Districts re- and 1.11 percent in 1989. Delinquencies at banks corded 1991 profit rates near but slightly above the also moved up, to 5.85 percent from 5.26 percent national average. Like banks in the central part of in 1990 and 4.77 percent in 1989. The rise in the country, these banks had a lower proportion of both charge-off and delinquency rates was particunonperforming assets and lower charge-off rates; larly sizable at the ten largest banks, where comhowever, their loans remained more concentrated mercial real estate loans, as a percentage of outin commercial real estate. standing loans, has been rising sharply for the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

468 Federal Reserve Bulletin • July 1992 5. Measures of loan quality, insured commercial banks, collection and legal fees as well as higher expenses by size of bank, 1989-91 for wages and salaries associated with problem Percentage of average outstanding loans loans also worsened noninterest margins at the Year and Net Delin- Loss Loss low-earnings banks. size of bank charge-offs quencies provisions reserves For the banking industry as a whole, loss 1991 reserves as a percentage of loans rose 8 basis points All banks 1.55 5.85 1.59 2.62 Small .72 4.33 .85 1.66 in 1991 (table 5). The ten largest banks made much Medium 1.42 5.32 1.68 2.28 larger loss provisions than in 1990; nevertheless, Large, excluding ten largest ... 1.54 5.69 1.73 22..7722 reflecting charge-offs, their loss reserves as a per- Ten largest 2.37 7.90 1.87 3.64 centage of loans still fell. In contrast, reserves at 1990 banks of other sizes were higher at the end of 1991, All banks 1.40 5.26 1.49 2.54 Small .69 4.18 .88 1.59 even though the rate of provisioning at these banks Medium 1.13 4.44 1.70 1.85 Large, excluding fell over the year. ten largest ... 1.65 5.36 1.88 2.53 Ten largest 1.93 6.95 1.18 4.13 1989 All banks 1.11 4.77 1.52 2.45 Net Interest Margin Small .70 4.12 .85 1.57 Medium .90 3.77 1.16 1.61 Large, excluding Net interest margins widened 17 basis points in ten largest ... 1.34 4.39 1.64 22..3377 Ten largest 1.42 7.07 2.38 4.36 1991. Although gross interest income fell about 1 percentage point as market rates and the prime rate dropped, gross interest expense declined more. past decade. Increases in property taken over by banks because of loan problems were pervasive 12. Charge-off and delinquency rates on loans by medium across banks of all sizes, in part reflecting the and large insured commercial banks, by type of loan, problems with mini-perm loans. 1982-9l1 Detailed data on net charge-offs and delinquen- Percent cies by type of loan are available for medium and large banks and for all banks with foreign offices (chart 12). For this large subset of banks, seasonally adjusted charge-off and delinquency rates for the major types of loans—commercial and industrial, real estate, and consumer—rose through the first half of 1991. For most types of loans, noticeable declines in charge-off and delinquency rates occurred over the second half of the year. Chargeoffs of real estate loans continued to rise during the second half, however. For all types of loans, measures of loan-performance problems remained at relatively high levels at the end of 1991. Not surprisingly, banks with the weakest earnings had the biggest problems with asset quality. Loss provisions as a percentage of average net consolidated assets were approximately twice as large at banks in the lowest earnings quartile as at 1983 1985 1987 1989 1991 banks in the highest quartile (table 6). Banks in the 1. Data are from FFIEC's quarterly Reports of Condition and Income for lowest earnings quartile also had relatively more banks with assets of at least $300 million and for all banks with foreign offices. Data are consolidated (foreign and domestic offices) and seasonally nonperforming loans as a percentage of assets, adjusted. Charge-off rate series began in 1982:Q1; rates are annualized which lowered their interest income and narrowed charge-offs, net of recoveries, divided by average outstanding loans. Delinquency rate series began in 1982:Q4; delinquent loans include loans past due their net interest margins considerably. Additional thirty days or more and still accruing interest and loans on nonaccrual status. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 469 6. Selected characteristics of insured commercial banks, by size of bank and earnings quartile, 1990 and 19911 Percentage of average net consolidated assets, except as noted Employee Net Net Net income Loss wages Year and size of bank interest noninterest (return on provisions and margin margin salaries assets) Lowest earnings quartile 1991 All banks 3.28 1.52 -2.20 1.65 -.29 Small 3.84 1.09 -3.25 1.78 -.40 Medium 3.39 1.77 -2.61 1.51 -.71 All large 3.16 1.51 -1.92 1.67 -.15 1990 All banks 3.03 1.49 -2.04 1.60 -.40 Small 3.82 1.25 -3.21 1.79 -.59 Medium 3.43 2.08 -2.30 1.42 -.66 All large 2.78 1.33 -1.77 1.63 -.29 Highest earnings quartile 1991 All banks 4.58 .79 -1.65 1.45 1.66 Small 4.39 .25 -2.03 1.51 1.58 Medium 4.69 .86 -1.51 1.49 1.65 All large 4.68 1.30 -1.39 1.36 1.75 1990 All banks 4.67 .66 -1.63 1.57 1.68 Small 4.42 .24 -2.02 1.53 1.59 Medium 4.57 .67 -1.51 1.57 1.70 All large 5.03 1.08 -1.38 1.62 1.73 1. Earnings are the return on average net consolidated assets. The speed at which interest income and expense time deposits and therefore did not realize the adjusted to changing market rates differed with benefit of lower interest rates until the latter part of bank size (chart 13). The margin at large banks the year, when a sizable portion of those deposits (excluding the ten largest) increased 28 basis matured and were redeposited or were moved into points. At the beginning of the year, these banks, more liquid accounts earning lower rates. which rely relatively heavily on overnight funding The gross return on banks' loan portfolios and on short-maturity deposits, generally had a (before interest expense and loss provisions), at greater proportion of their liabilities than assets 10.3 percent, declined more than 100 basis points eligible for near-term repricing compared with from 1990. This decrease compares with the fall in smaller banks. As a result, funding costs at large money market rates of about 2 percentage points banks dropped more quickly than returns on assets over the period and a decline in the average prime did. Interpretation of these data, however, is com- rate of 155 basis points (chart 1). The ten largest plicated by the increased involvement of large banks, a larger proportion of whose loans are banks in derivative markets and other off-balance- repriced in relation to money market yields rather sheet activities. Income and expenses from these than the prime rate, faced the steepest decline in the activities are included in noninterest income and average loan rate—about 180 basis points. The expenses and trading account income, though these smallest banks earned about 60 basis points less on flows may be closely related to interest income and their loans than they had a year earlier. expenses, for example, through hedging. Small banks earned more on their loan portfolios Interest margins rose more moderately at me- than the industry average—a reversal of the situadium banks and were essentially unchanged at tion just two years earlier. Business loans at small small banks. The liability structure of these institu- banks are more likely to be tied 1o the prime rate tions left them less well positioned to take advan- than to market rates. The widening spread of the tage of lower market rates. Small and medium-size prime rate over market rates (chat 1) thus helped banks tend to rely more heavily on longer-term buoy the returns on loan portfolio!} of small banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

16 Federal Reserve Bulletin • July 1992 13. Interest income and expense, and net interest margin, Industrywide, noninterest expenses increased insured commercial banks, by size of bank, 1980-91 24 basis points relative to average assets. Large banks (excluding the ten largest) registered an Percent of average assets Gross interest income increase triple that for small banks (chart 14). Expenses for wages and salaries grew faster than 12 Small Ten largest average assets, increasing 3 basis points, in contrast to the past two years, when these expenses as a 10 percentage of assets remained constant. Wage and Large Excluding ten salary expenses were boosted by outlays associated with restructuring, including costs related to layoffs Gross interest expense and early retirements. The ten largest banks, which reduced their staffs by more than 12,000 full-time equivalents, had particularly large increases in this expense category. Expenses for premises and fixed assets (net of rental income) as a percentage of assets remained unchanged from their 1990 level. Small banks kept these expenses in check, but at larger banks these expenses drifted up in 1991 relative to assets. 14. Noninterest income and expense, and net noninterest margin, insured commercial banks, by size of bank, 1980-91 In addition, the loan portfolios of small banks tend to have a larger proportion of loans secured by real Percent of average assets estate, which usually have longer terms and less Gross noninterest income Large volatile returns than the types of loans held by larger banks do. Finally, most real estate loans at small banks are secured by one- to four-family residential properties. These loans had lower delinquency rates than other types of real estate loans during 1991. Rates earned on virtually all types of securities Gross noninterest expense held by banks declined with market interest rates — 4 over the year. However, the drop in yields on securities, at 37 basis points, was not as severe as the drop in yields on loans, in part because the securities in banks' portfolios have relatively longer maturity periods. I 1 I I 1 1 I 1 I I 1 J Net noninterest margin Noninterest Expenses and Income Despite banks' efforts to control costs, noninterest expenses other than loss provisions were an important factor limiting gains in profits last year. (Noninterest expenses include wages and salaries, occupancy expenses, and other operating expenses.) 1981 1983 1985 1987 1989 1991 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 471 Operating expenses classified as "other" were were indistinguishable in 1990, the year before the responsible not only for the bulk of the increase in merger. Some mergers may reduce costs in the long operating costs but also for the variation among run because of economies of scale and scope in banks of different sizes. At small banks, these back-office operations and other overhead activiexpenses increased 9 basis points, compared with ties. However, implementation of a merger or a 22 basis points at all large banks. The jump in other change in structure evidently is expensive in the operating expenses partly reflected an industrywide short run, substantially so for some banks. Only increase in deposit insurance premiums. As a per- medium-size banks that merged were able to hold centage of deposits, premiums averaged 9 basis noninterest expenses below those! of their counterpoints higher in 1991 than in 1990. Higher insur- parts that did not merge during 1991. Large banks ance premiums would not, however, explain the (including the ten largest) had the largest difference variation in the increase in these expenses across in noninterest expenses between the two groups of banks of different sizes, particularly because larger banks. banks tend to rely less on deposits than do smaller Noninterest income as a percentage of assets banks. Larger banks, however, have had stronger also grew in 1991 across all sizes of banks (chart growth in off-balance-sheet activities and, most 14). Hikes in service charges on deposits accounted likely, the associated expenses. Some of the in- for more than 70 percent of the change in nonintercrease in other operating expenses also may have est income at large banks excluding the ten largest. been associated with the deterioration in loan qual- At the ten largest banks, however, most of the ity. In general, banks with sizable increases in these increase came from other fee incbme, particularly expenses also made large loan loss provisions, fees on credit cards, fees for processing securities, suggesting that higher noninterest expenses may consumer banking fees, and fees associated with stem from collection and legal expenses related to over-the-counter derivatives. loan performance problems. Since 1985, noninterest incotne has become Some of the variation in noninterest expenses is much more dispersed across bainks of different likely due to onetime expenses related to consolida- sizes. At small banks, increases have amounted to tion and restructuring. This interpretation is only a few basis points, while alt the ten largest strengthened by an analysis of banks according to banks noninterest income has clintibed about 1 permerger activity (table 7). Noninterest expenses as a centage point. For the largest banks, the increase percentage of average assets were 17 basis points essentially reflects greater eirtphasis on offhigher on average at banks that merged during balance-sheet activities, such as loan servicing, 1991 than at other banks, even though wages and mortgage banking, trust activities, and activities salaries as a percentage of average assets were associated with over-the-countet derivatives, as 8 basis points lower. These differences were statis- well as securitization. The strdng increases in tically significant at the 5 percent level in 1991 but noninterest income improved the noninterest margin steadily from 1985 to 1990„ with an overall decrease in the negative spread between noninter- Selected characteristics of insured commercial banks, est income and expense of 18 basis points. The net by size and merger activity, 1991 noninterest margin started to become more nega- Percentage of average net consolidated assets tive for banks with assets over $5 billion in 1990 Noninterest Net income and became more negative across all size categoexpense (return on assets) ries in 1991. For the industry, the net noninterest Banks that merged during margin widened 14 basis points in 1991, largely calendar year 1991 All banks 3.84 .46 offsetting the increase in the net interest margin. Small 3.57 .54 Medium 3.67 .83 All large 3.93 .30 Banks that did not merge DEVELOPMENTS IN EARLY 1992 during calendar year 1991 All banks 3.67 .55 Small 3.46 .84 Medium 3.76 .48 Although bank profitability has improved some- All large 3.72 .46 what and the recovery appears to be on a firmer Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

472 Federal Reserve Bulletin • July 1992 footing in early 1992, overall bank lending has yet part by aggressively cutting rates paid on retail to revive. Nevertheless, there is some indication deposits. Tighter expense control and improving that banks are more prepared to lend. Debt and credit quality should help bolster income for equity issuance by bank holding companies picked healthy banks; however, the assets of problem up in the first quarter of 1992. Responses to the banks are at record levels. Bank profitability likely January and May 1992 LPSs indicated that banks will continue to be depressed in the near term by had largely discontinued tightening their credit costs associated with further industry consolidastandards for most types of loans and that some tion, continued sluggish loan demand, lingering easing had occurred. Profit reports for the first credit quality problems, and higher deposit insurquarter of 1992 generally have been encouraging. ance premiums. Banks have held on to high net interest margins, in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 473 A.l. Report of income, all insured commercial banks, 1985-911 Millions of dollars Item 1985 1986 1987 1988 1989 1990 1991 Operating income, total 276,214 270,036 281,271 308,711 357,320 365,643 337,496 Interest income 245,513 234,642 240,577 265,093 308,895 312,379 280,932 Loans 181,733 173,371 177,249 196,185 231,924 232,638 207,103 Balances due from depositories 13,659 11,142 11,870 13,196 14,726 12,397 8,911 Gross federal funds sold and reverse repurchase agreements 9,395 8,926 8,808 10,034 12,598 12,181 8,819 Securities (excluding trading accounts) 37,392 37,871 38,699 40,755 45,219 49,799 51,398 Tax-exempt 6,235 10,598 9,086 8,015 7,180 6,252 5,358 Taxable 31,157 27,273 29,613 32,740 38,039 43,547 46,040 Trading account assets 3,333 3,331 3,950 4,922 4,427 5,365 4,700 Noninterest income 30,701 35,394 40,694 43,618 48,425 53,263 56,565 Service charges on deposits 7,336 7,917 8,663 9,332 10,153 11,347 12,711 Other operating income 23,365 27,477 32,031 34,286 38,272 41,916 43,854 Operating expense, total 254,570 251,645 274,935 275,524 333,928 343338 315,710 Interest expense 155,748 141,107 142,670 160,515 199,486 200,149 162,892 Deposits 129,524 116,072 113,697 126,010 153,556 158,130 135,182 In foreign offices 30,117 24,442 25,946 28,248 33,436 34,031 25,096 In domestic offices 99,407 91,631 87,751 97,762 120,120 124,099 110,086 Transaction accounts 8,285 8,923 9,266 9,692 9,625 Savings deposits (including MMDAs) 27,864 28,997 31,483 32,668 30,354 Large-denomination certificates of deposit ... 22,769 19,376 18,937 21,920 28,796 26,658 19,290 Other time deposits 32,665 37,922 50,575 55,080 50,817 Gross federal funds purchased and repurchase agreements 16,457 15,810 15,749 18,154 24,030 21,953 13,768 Other 9,768 9,225 13,224 16,351 21,899 20,066 13,942 Loss provisions 17,585 21,769 36,896 16,265 29,501 30,412 31,966 Noninterest expense 81,237 88,769 95,370 98,743 104,941 112,777 120,853 Salaries, wages, and employee benefits 39,504 42,333 44,477 45,624 48,156 50,823 51,997 Occupancy expense 13,148 14,327 15,045 15,511 16,262 17,159 17,410 Other operating expenses 28,584 32,109 35,848 37,609 40,523 44,795 51,446 Securities gains or losses 1,505 3,820 1,380 279 777 515 2,936 Income before taxes 23,149 22,209 7,715 33,466 24,169 22,820 24,723 Taxes 5,545 5,235 5,303 9,858 9,307 7,470 7,892 Extraordinary items 238 253 163 809 298 692 687 Net income 17,842 17,227 2,576 24,418 15,159 16,041 17,517 Cash dividends declared 8,485 9,153 10,512 13,115 13,701 13,651 14,022 Retained income 9,358 8,073 -7,936 11,303 1,458 2,391 3,495 1. Numbers in table have been revised from previous years using uniform Components may not sum to totals because of rounding, definitions across time and incorporating updated Call Report information. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

474 Federal Reserve Bulletin • July 1992 A.2. Portfolio composition, interest rates, and income and expense, insured commercial banks, by size of bank, 1985-911 A. All banks Item 1985 1986 1987 1988 1989 1990 1991 Balance sheet items as a percentage of average consolidated assets including loss reserves Interest-earning assets 86.59 86.98 87.43 87.94 87.86 87.71 87.95 Balances due from depositories 5.53 5.14 5.25 4.98 4.35 3.54 3.04 Loans 59.88 59.49 59.75 60.59 61.32 61.16 60.07 Commercial and industrial 22.02 20.80 19.92 19.41 19.06 18.49 17.34 U.S. addressees 17.29 16.80 16.51 16.44 16.48 15.98 14.98 Foreign addressees 4.72 4.00 3.41 2.97 2.58 2.51 2.35 Consumer 10.88 11.18 11.11 11.32 11.44 11.23 10.84 Credit card 2.56 2.88 2.98 3.14 3.30 3.31 3.31 Installment and other 8.31 8.30 8.13 8.18 8.14 7.92 7.53 Real estate 15.70 16.69 18.69 20.56 22.18 23.51 24.39 Construction and land development 3.20 3.49 3.87 4.01 4.14 3.97 3.37 Farmland .41 .43 .46 .49 .51 .51 .53 One- to four-family residential 7.19 7.30 8.00 9.18 9.93 10.95 11.96 Home equity n.a. n.a. n.a. 1.17 1.41 1.64 1.90 Other n.a. n.a. n.a. 8.01 8.52 9.30 10.06 Multifamily residential .44 .49 .56 .58 .59 .61 .64 Nonfarm nonresidential 4.00 4.42 5.21 5.77 6.29 6.72 7.12 Booked in foreign offices .46 .55 .59 .52 .72 .76 .77 Depository institutions 2.88 2.53 2.39 2.17 1.90 1.66 1.50 Foreign governments 1.56 1.42 1.34 1.23 1.03 .79 .76 Agricultural production 1.51 1.21 1.03 .99 .96 .96 1.02 Other 4.51 4.75 4.30 3.85 3.64 3.41 3.16 Lease financing receivables .84 .91 .97 1.07 1.11 1.11 1.07 Securities 15.52 16.09 16.67 16.84 16.73 17.25 18.66 U.S. government and other debt 10.58 10.79 12.33 13.15 13.38 14.35 16.08 U.S. government securities 9.49 9.24 10.03 10.35 10.77 11.85 13.59 U.S. Treasury 4.53 4.31 5.91 5.47 4.75 4.34 4.88 U.S. government agency and corporation obligations 4.96 4.93 4.12 4.88 6.03 7.51 8.70 Government-backed mortgage pools. .95 1.16 2.07 2.59 3.27 4.07 4.46 Collateralized mortgage obligations . n.a. n.a. n.a. n.a. n.a. 1.34 2.07 Other obligations 4.01 3.77 2.05 2.30 2.76 2.10 2.17 Other debt securities 1.08 1.55 2.29 2.80 2.61 2.50 2.49 State and local government 4.94 5.31 4.34 3.69 3.14 2.65 2.30 Taxable n.a. n.a. .06 .06 .08 .08 .07 Tax-exempt 4.94 5.31 4.29 3.63 3.06 2.57 2.23 Equity2 n.a. n.a. n.a. n.a. .26 .25 .28 Trading account assets 1.24 1.55 1.32 1.27 1.25 1.44 1.78 Gross federal funds sold and reverse repurchase agreements 4.42 4.71 4.43 4.26 4.20 4.33 4.40 Non-interest-eaming assets 12.61 12.09 11.20 10.51 10.63 10.73 10.47 Interest-bearing liabilities 72.16 72.31 72.87 73.91 74.59 75.09 75.11 Deposits 60.89 59.90 60.27 61.17 61.68 62.50 63.47 In foreign offices 12.18 11.17 10.94 10.46 9.65 9.16 8.59 In domestic offices 48.72 48.72 49.34 50.74 52.03 53.34 54.88 Transaction accounts 4.56 5.20 6.01 6.27 6.16 6.22 6.76 Savings deposits (including MMDAs) ... 16.35 17.41 18.22 17.52 16.36 16.56 17.95 Large-denomination time deposits 11.47 10.78 10.60 11.09 11.69 11.18 9.63 Small-denomination time deposits 16.33 15.33 14.63 15.86 17.82 19.38 20.55 Gross federal funds purchased and repurchase agreements 7.68 8.26 8.06 7.72 7.95 7.75 6.86 Other interest-bearing liabilities 3.59 4.15 4.54 5.02 4.96 4.85 4.79 Non-interest-bearing liabilities 21.66 21.48 21.08 20.00 19.14 18.65 18.34 Demand deposits 15.61 16.02 15.41 14.34 13.63 12.98 12.77 MEMO Money market liabilities 35.23 34.68 34.50 34.61 34.58 33.26 30.19 Loss reserves .80 .93 1.37 1.55 1.51 1.55 1.58 Equity capital3 6.18 6.21 6.05 6.09 6.27 6.26 6.55 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 475 A.2.—Continued A. All banks Item 1985 1986 1987 1988 1989 1990 1991 Effective interest rates (percent) Rates earned Interest-earning assets 11.69 10.39 9.99 10.70 11.11 10.62 9.52 Taxable equivalent 12.07 10.88 10.24 10.93 11.27 10.75 9.63 Loans, gross 11.94 10.72 10.18 10.80 11.97 11.41 10.30 Net of loss provisions 10.79 9.38 8.06 9.91 10.45 9.92 8.71 Securities 9.44 8.49 7.97 8.08 8.60 8.68 8.31 Taxable equivalent 10.67 10.30 8.90 8.85 9.16 9.15 8.70 State and local government 5.09 7.17 7.27 7.38 7.45 7.36 7.25 U.S. government and other debt 10.35 9.06 8.06 8.08 8.89 8.95 8.50 Equity n.a. n.a. n.a. n.a. 7.48 6.99 5.95 Trading account assets 10.12 7.83 10.05 12.65 11.11 10.13 7.58 Rates paid All interest-bearing liabilities 9.26 7.51 6.61 7.15 8.40 7.89 6.39 Gross federal funds purchased and repurchase agreements 7.97 6.78 6.51 7.39 9.21 7.95 5.72 Deposits 8.24 6.96 6.45 6.85 7.88 7.61 6.37 In foreign offices 9.48 7.78 7.90 8.91 10.88 10.71 8.55 In domestic offices 7.90 6.76 6.08 6.41 7.30 7.00 6.00 Transaction accounts n.a. n.a. 4.54 4.75 4.82 4.77 4.32 Savings deposits (including MMDAs) n.a. n.a. 5.26 5.50 6.15 5.95 5.07 Large-denomination certificates of deposit . 8.73 7.32 6.86 7.38 8.62 7.98 6.61 Other time deposits n.a. n.a. 6.97 7.29 8.26 7.93 6.87 Income and expense items as a percentage of average net consolidated assets Gross interest income 9.73 8.68 8.43 9.01 10.00 9.57 8.59 -Taxable equivalent 10.05 9.09 8.64 9.20 10.14 9.69 8.69 Loans 7.20 6.41 6.21 6.67 7.51 7.13 6.33 Securities 1.48 1.40 1.36 1.39 1.46 1.53 1.57 Gross federal funds sold and reverse • • • • NH repurchase agreements .37 .33 .31 .34 .41 .37 .27 Other .68 .54 .55 .61 .62 .54 .42 Gross interest expense 6.17 5.22 5.00 5.46 6.46 6.13 4.98 Deposits 5.13 4.29 3.98 4.28 4.97 4.84 4.13 Gross federal funds purchased and repurchase agreements .65 .58 .55 .62 .78 .67 .42 Other .39 .34 .46 .56 .71 .61 .43 Net interest margin 3.56 3.46 3.43 3.55 3.54 3.44 3.61 Taxable equivalent 3.88 3.87 3.64 3.75 3.68 3.55 3.71 Loss provisions .70 .81 1.29 .55 .95 .93 .98 Noninterest income 1.22 1.31 1.43 1.48 1.57 1.63 1.73 Service charges on deposits .29 .29 .30 .32 .33 .35 .39 Other .93 1.02 1.12 1.17 1.24 1.28 1.34 Noninterest expense 3.22 3.28 3.34 3.36 3.40 3.45 3.69 Salaries, wages, and employee benefits 1.57 1.57 1.56 1.55 1.56 1.56 1.59 Occupancy expense .52 .53 .53 .53 .53 .53 .53 Other 1.13 1.19 1.26 1.28 1.31 1.37 1.57 Net noninterest margin -2.00 -1.97 -1.91 -1.88 -1.83 -1.82 -1.96 Securities gains or losses .06 .14 .05 .01 .03 .02 .09 Income before taxes .92 .82 .27 1.14 .78 .70 .76 Taxes .22 .19 .19 .34 .30 .23 .24 Extraordinary items .01 .01 .01 .03 .01 .02 .02 Net income .71 .64 .09 .83 .49 .49 .54 Cash dividends declared .34 .34 .37 .45 .44 .42 .43 Retained income .37 .30 -.28 .38 .05 .07 .11 MEMO Return on equity for banks with positive equity ... 11.29 10.21 2.26 14.41 8.04 8.02 8.09 Average assets (billions of dollars) 2,582 2,784 2,923 3,007 3,160 3,323 3,344 1. See text note and notes to tables in the text. Numbers in table have 3. Includes banks with negative as well as positive equity, been revised from previous years using uniform definitions across time and n.a. not available incorporating updated Call Report information. 2. Before 1989, "equity" securities were combined with "other debt securities." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

476 Federal Reserve Bulletin • July 1992 A.2. Portfolio composition, interest rates, and income and expense, insured commercial banks, by size of bank, 1985-91—Continued B. Banks with less than $300 million in assets Item 1985 1986 1987 1988 1989 1990 1991 Balance sheet items as a percentage of average consolidated assets including loss reserves Interest-earning assets 89.85 90.00 90.50 90.83 90.97 91.17 91.35 Balances due from depositories 2.86 3.03 3.24 3.09 2.34 1.80 1.53 Loans 54.23 53.15 53.30 54.32 55.11 54.99 54.22 Commercial and industrial 14.48 13.71 12.95 12.36 12.04 11.49 10.62 U.S. addressees Foreign addressees Consumer 12.84 12.21 11.53 11.30 11.23 10.92 10.15 Credit card .56 .60 .68 .77 .82 .91 .84 Installment and other 12.28 11.62 10.84 10.53 10.41 10.00 9.31 Real estate 20.67 21.74 23.78 25.68 27.03 28.01 28.82 Construction and land development 2.22 2.22 2.22 2.19 2.27 2.37 2.14 Farmland 1.26 1.37 1.55 1.73 1.82 1.88 1.97 One- to four-family residential 11.00 11.48 12.55 14.12 14.59 15.12 15.67 Home equity n.a. n.a. n.a. .76 .95 1.14 1.25 Other n.a. n.a. n.a. 13.36 13.64 13.98 14.42 Multifamily residential .49 .53 .59 .59 .61 .63 .69 Nonfarm nonresidential 5.69 6.14 6.87 7.04 7.74 8.01 8.35 Booked in foreign offices .00 .00 .00 .00 .00 .00 .00 Depository institutions .81 .56 .61 .69 .66 .48 .40 Foreign governments n.a. n.a. n.a. n.a. n.a. n.a. n.a. Agricultural production 4.27 3.62 3.22 3.25 3.28 3.35 3.55 Other .94 1.10 1.03 .85 .70 .58 .53 Lease financing receivables .20 .19 .17 .17 .17 .16 .15 Securities 27.17 26.77 27.43 28.07 27.80 28.29 30.03 U.S. government and other debt 19.06 18.76 20.79 22.35 22.50 23.38 25.37 U.S. government securities 18.37 17.71 18.69 19.63 20.13 21.22 23.14 U.S. Treasury 3.82 3.61 10.56 9.77 8.78 8.73 9.30 U.S. government agency and corporation obligations 14.55 14.10 8.13 99..8866 1111..3355 1122..4499 1133..8844 Government-backed mortgage pools. 1.52 1.40 2.57 3.23 3.75 4.61 5.50 Collateralized mortgage obligations . n.a. n.a. n.a. n.a. n.a. .96 1.56 Other obligations 13.03 12.70 5.56 6.63 7.60 6.92 6.78 Other debt securities .69 1.06 2.10 2.72 2.37 2.16 2.23 State and local government 8.11 8.01 6.64 5.72 4.99 4.58 4.32 Taxable n.a. n.a. .17 .20 .22 .24 .24 Tax-exempt 8.11 8.01 6.47 5.52 4.77 4.34 4.08 Equity2 n.a. n.a. n.a. n.a. .38 .33 .34 Trading account assets .03 .06 .07 .06 .07 .07 .06 Gross federal funds sold and reverse repurchase agreements 5.55 7.00 6.45 5.29 5.66 6.03 5.52 Non-interest-earning assets 9.47 9.22 8.67 8.32 8.16 7.96 7.75 Interest-bearing liabilities 74.36 74.96 75.64 76.15 76.43 77.12 77.63 Deposits 72.13 72.97 73.67 74.19 74.47 75.23 75.78 In foreign offices In domestic offices 72.04 72.91 73.64 74.16 74.41 75.17 75.70 Transaction accounts 8.02 8.99 10.29 10.68 10.47 10.52 11.07 Savings deposits (including MMDAs) ... 21.05 22.19 23.35 21.94 19.54 18.57 19.23 Large-denomination time deposits 11.63 11.42 10.96 10.89 11.19 11.11 10.01 Small-denomination time deposits 31.33 30.31 29.21 30.65 33.20 34.97 35.39 Gross federal funds purchased and repurchase agreements 1.60 1.36 1.36 1.34 1.32 1.33 1.33 Other interest-bearing liabilities .63 .62 .61 .62 .63 .56 .52 Non-interest-bearing liabilities 17.59 17.03 16.28 15.61 15.19 14.44 13.86 Demand deposits 15.39 15.00 14.41 13.74 13.20 12.49 11.95 MEMO Money market liabilities 13.83 13.37 12.88 12.82 13.17 13.01 11.89 Loss reserves .69 .77 .84 .86 .86 .87 .90 Equity capital3 8.05 8.01 8.08 8.24 8.38 8.45 8.51 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks All A.2.—Continued B. Banks with less than $300 million in assets Item 1985 1986 1987 1988 1989 1990 1991 Effective interest rates (percent) Rates earned Interest-earning assets 13.19 11.88 11.28 11.72 10.48 10.28 9.60 Taxable equivalent 13.48 12.50 11.68 12.03 10.70 10.48 9.78 Loans, gross 12.44 11.45 10.75 10.96 11.70 11.52 10.92 Net of loss provisions 10.98 9.80 9.55 9.99 10.85 10.65 10.07 Securities 9.65 8.72 7.91 7.95 8.42 8.47 8.09 Taxable equivalent 10.22 10.30 8.95 8.66 9.05 9.03 8.57 State and local government 7.50 7.48 7.50 7.58 7.59 7.48 7.20 U.S. government and other debt 10.41 9.15 7.92 7.93 8.61 8.68 8.26 Equity n.a. n.a. n.a. n.a. 7.98 7.95 7.09 Trading account assets 10.90 8.64 9.41 15.03 14.95 9.73 8.91 Rates paid All interest-bearing liabilities 9.39 7.64 6.11 6.35 7.10 6.95 6.10 Gross federal funds purchased and repurchase agreements 7.83 6.58 6.29 6.78 8.43 7.69 5.72 Deposits 8.01 6.90 6.11 6.34 7.07 6.94 6.11 In foreign offices In domestic offices 8.01 6.90 6.11 6.34 7.07 6.94 6.11 Transaction accounts n.a. n.a. 4.93 4.99 5.07 5.01 4.60 Savings deposits (including MMDAs) n.a. n.a. 5.34 5.47 5.79 5.73 5.13 Large-denomination certificates of deposit . 8.68 7.32 6.54 7.10 8.34 7.89 6.69 Other time deposits n.a. n.a. 6.94 7.15 8.00 7.85 6.93 Income and expense items as a percentage of average net consolidated assets Gross interest income 10.22 9.26 8.69 8.95 9.65 9.50 8.89 Taxable equivalent 10.45 9.74 9.00 9.18 9.86 9.69 9.05 Loans 6.82 6.15 5.80 6.01 6.52 6.41 5.99 Securities 2.64 2.36 2.20 2.25 2.35 2.42 2.44 Gross federal funds sold and reverse repurchase agreements .49 .50 .45 .43 .55 .52 .33 Other .28 .25 .25 .26 .23 .15 .13 Gross interest expense 6.02 5.26 4.71 4.91 5.51 5.44 4.81 Deposits 5.85 5.12 4.57 4.76 5.34 5.30 4.70 Gross federal funds purchased and repurchase agreements .13 .09 .09 .10 .12 .10 .08 Other .05 .04 .05 .05 .05 .04 .03 Net interest margin 4.20 4.00 3.99 4.04 4.14 4.07 4.08 Taxable equivalent 4.42 4.49 4.29 4.27 4.35 4.25 4.25 Loss provisions .80 .89 .65 .53 .47 .49 .47 Noninterest income .82 .83 .84 .86 .91 .90 .95 Service charges on deposits .42 .42 .41 .41 .42 .43 .44 Other .40 .41 .43 .45 .49 .47 .51 Noninterest expense 3.37 3.39 3.36 3.38 3.40 3.38 3.47 Salaries, wages, and employee benefits 1.64 1.61 1.59 1.59 1.62 1.60 1.60 Occupancy expense .52 .52 .51 .50 .50 .48 .48 Other 1.21 1.26 1.26 1.28 1.28 1.30 1.39 Net noninterest margin -2.55 -2.56 -2.52 -2.52 -2.49 -2.48 -2.52 Securities gains or losses .07 .15 .03 .01 .01 .00 .06 Income before taxes .93 .71 .85 .99 1.19 1.10 1.15 Taxes .19 .15 .24 .29 .35 .33 .35 Extraordinary items .01 .02 .02 .02 .02 .02 .01 Net income .75 .58 .62 .72 .85 .79 .82 Cash dividends declared .43 .40 .41 .48 .51 .49 .47 Retained income .32 .18 .21 .24 .34 .29 .35 MEMO Return on equity for banks with positive equity— 9.40 7.60 8.08 9.63 10.56 9.42 9.67 Average assets (billions of dollars) 658 669 672 653 661 665 671 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

478 Federal Reserve Bulletin • July 1992 A.2. Portfolio composition, interest rates, and income and expense, insured commercial banks, by size of bank, 1985-91—Continued C. Banks with $300 million to $5 billion in assets Item 1985 1986 1987 1988 1989 1990 1991 Balance sheet items as a percentage of average consolidated assets including loss reserves Interest-earning assets 87.47 87.70 88.28 88.82 88.97 88.82 88.91 Balances due from depositories 4.02 3.36 3.21 2.93 2.33 2.02 1.80 Loans 59.74 60.54 62.00 63.24 64.32 63.31 61.09 Commercial and industrial 19.09 18.50 18.40 18.08 17.58 16.63 14.89 U.S. addressees 18.60 18.16 18.08 17.90 17.44 16.51 14.71 Foreign addressees .49 .34 .32 .18 .14 .12 .18 Consumer 14.14 14.32 14.29 14.67 15.26 15.00 14.32 Credit card 3.51 3.86 4.01 4.02 4.57 4.72 4.95 Installment and other 10.63 10.47 10.28 10.64 10.70 10.28 9.37 Real estate 17.96 19.56 22.01 24.25 25.91 26.86 27.24 Construction and land development 4.04 4.39 4.82 4.80 4.83 4.38 3.71 Farmland .20 .23 .24 .27 .27 .29 .29 One- to four-family residential 7.91 8.18 9.07 10.67 11.48 12.35 13.17 Home equity n.a. n.a. n.a. 1.77 2.05 2.24 2.37 Other n.a. n.a. n.a. 8.90 9.44 10.11 10.80 Multifamily residential .55 .64 .65 .66 .68 .70 .77 Nonfarm nonresidential 5.24 6.10 7.21 7.84 8.64 9.14 9.25 Booked in foreign offices .01 .01 .01 .01 .01 .01 .06 Depository institutions 1.95 1.58 1.36 1.19 1.06 1.01 .88 Foreign governments .43 .33 .33 .23 .15 .08 .06 Agricultural production .68 .56 .46 .46 .43 .48 .52 Other 4.71 4.88 4.42 3.57 3.07 2.42 2.35 Lease financing receivables .77 .81 .74 .79 .84 .84 .83 Securities 18.31 18.21 18.10 18.17 18.05 18.78 20.81 US. government and other debt 12.26 11.89 13.17 14.03 14.24 15.27 17.74 U.S. government securities 11.07 10.38 11.01 11.19 11.76 12.99 15.41 US. Treasury 7.95 7.19 6.86 6.37 5.62 5.28 5.88 U.S. government agency and corporation obligations 3.12 3.19 4.15 4.82 6.14 7.70 9.54 Government-backed mortgage pools. 1.00 1.17 2.13 2.38 3.06 3.77 4.49 Collateralized mortgage obligations . n.a. n.a. n.a. n.a. n.a. 1.79 2.74 Other obligations 2.12 2.02 2.02 2.43 3.08 2.14 2.31 Other debt securities 1.18 1.50 2.17 2.84 2.49 2.28 2.33 State and local government 6.05 6.32 4.93 4.15 3.51 3.18 2.69 Taxable n.a. n.a. .04 .05 .05 .07 .07 Tax-exempt 6.05 6.32 4.88 4.10 3.46 3.11 2.62 Equity2 n.a. n.a. n.a. n.a. .37 .33 .38 Trading account assets .29 .34 .26 .32 .37 .36 .56 Gross federal funds sold and reverse repurchase agreements 5.11 5.25 4.71 4.16 3.91 4.35 4.65 Non-interest-earning assets 11.76 11.45 10.70 10.15 10.00 10.01 9.70 Interest-bearing liabilities 71.90 72.08 73.28 74.67 75.40 75.94 75.83 Deposits 60.73 60.89 60.96 62.55 63.48 64.73 65.53 In foreign offices 2.66 2.37 2.49 2.30 1.95 1.76 1.57 In domestic offices 58.08 58.52 58.48 60.25 61.53 62.97 63.96 Transaction accounts 5.35 6.28 7.07 7.44 7.24 7.45 8.02 Savings deposits (including MMDAs) ... 20.70 21.95 22.26 21.25 19.83 19.75 20.69 Large-denomination time deposits 13.58 12.58 12.53 12.54 12.75 11.92 10.32 Small-denomination time deposits 18.44 17.71 16.75 19.03 21.71 23.86 24.92 Gross federal funds purchased and repurchase agreements 8.59 8.67 9.17 8.78 8.62 7.94 7.26 Other interest-bearing liabilities 2.58 2.53 3.16 3.33 3.30 3.26 3.04 Non-interest-bearin^ liabilities 21.71 21.39 20.22 18.76 17.86 17.21 17.14 Demand deposits 18.63 18.61 17.43 16.10 15.13 14.42 13.97 MEMO Money market liabilities 27.28 26.04 27.23 26.84 26.55 24.84 22.15 Loss reserves .77 .85 1.02 1.02 1.03 1.17 1.39 Equity capital3 6.40 6.53 6.49 6.58 6.74 6.85 7.03 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 479 A.2.—Continued C. Banks with $300 million to $5 billion in assets Item 1985 1986 1987 1988 1989 1990 1991 Effective interest rates (percent) Rates earned Interest-earning assets 11.04 10.04 9.56 9.79 10.74 10.37 9.47 Taxable equivalent 11.63 10.64 9.93 10.05 10.96 10.53 9.61 Loans, gross 11.78 10.74 10.11 10.58 11.56 11.13 10.28 Net of loss provisions 10.82 9.57 8.81 9.61 10.40 9.43 8.60 Securities 9.17 8.28 7.71 7.88 8.38 8.51 8.20 Taxable equivalent 10.92 10.14 8.81 8.65 9.04 9.01 8.61 State and local government 6.86 6.94 7.02 7.14 7.32 7.28 7.23 U.S. government and other debt 10.34 9.13 8.03 8.09 8.67 8.80 8.40 Equity n.a. n.a. n.a. n.a. 7.15 6.96 5.75 Trading account assets 8.46 7.34 5.53 6.31 7.56 10.54 6.36 Rates paid All interest-bearing liabilities 9.04 7.38 6.17 6.60 7.59 7.14 5.98 Gross federal funds purchased and repurchase agreements 7.83 6.59 6.38 7.35 8.98 7.85 55..5544 Deposits 7.84 6.72 6.09 6.47 7.34 6.99 6.01 In foreign offices 8.63 6.95 6.79 7.56 8.97 8.11 6.73 In domestic offices 7.82 6.74 6.08 6.44 7.30 6.98 6.00 Transaction accounts n.a. n.a. 4.62 4.75 4.85 4.74 4.27 Savings deposits (including MMDAs) n.a. n.a. 5.27 5.53 6.13 5.95 5.09 Large-denomination certificates of deposit . 8.57 7.25 6.79 7.38 8.71 7.98 6.55 Other time deposits n.a. n.a. 7.12 7.43 8.28 7.99 7.00 Income and expense items as a percentage of average net consolidated assets Gross interest income 9.66 8.81 8.42 8.86 9.77 9.43 8.62 Taxable equivalent 10.18 9.33 8.74 9.09 9.97 9.58 8.75 Loans 7.14 6.63 6.44 6.85 7.63 7.23 6.44 Securities 1.71 1.55 1.44 1.46 1.54 1.63 1.74 Gross federal funds sold and reverse repurchase agreements .42 .35 .30 .30 .37 .37 .29 Other .39 .28 .24 .25 .23 .20 .15 Gross interest expense 5.81 5.02 4.67 5.05 5.87 5.56 4.67 Deposits 4.90 4.24 3.83 4.15 4.78 4.64 4.04 Gross federal funds purchased and repurchase agreements .69 .59 .59 .66 .79 .64 .41 Other .22 .18 .24 .25 .30 .27 .21 Net interest margin 3.85 3.79 3.75 3.81 3.90 3.88 3.95 Taxable equivalent 4.37 4.32 4.07 4.04 4.10 4.02 4.08 Loss provisions .58 .72 .83 .63 .76 1.11 1.05 Noninterest income 1.35 1.32 1.34 1.35 1.37 1.45 1.57 Service charges on deposits .35 .35 .35 .36 .37 .38 .42 Other 1.00 .97 .99 .99 1.00 1.07 1.15 Noninterest expense 3.63 3.54 3.51 3.47 3.47 3.49 3.75 Salaries, wages, and employee benefits 1.71 1.62 1.55 1.50 1.50 1.48 1.50 Occupancy expense .57 .54 .53 .51 .50 .49 .50 Other 1.35 1.38 1.43 1.46 1.48 1.52 1.76 Net noninterest margin -2.28 -2.22 -2.17 -2.12 -2.10 -2.04 -2.18 Securities gains or losses .04 .12 .04 .00 .01 .01 .09 Income before taxes 1.03 .97 .78 1.06 1.05 .74 .81 Taxes .19 .19 .27 .31 .31 .21 .28 Extraordinary items .02 .01 .01 .01 .00 .00 .00 Net income .85 .79 .53 .75 .74 .53 .53 Cash dividends declared .38 .40 .42 .47 .49 .53 .50 Retained income .47 .39 .10 .28 .25 .01 .03 MEMO Return on equity for banks with positive equity ... 12.98 11.96 10.05 12.96 11.58 7.58 7.50 Average assets (billions of dollars) 691 749 816 813 852 884 885 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

480 Federal Reserve Bulletin • July 1992 A.2. Portfolio composition, interest rates, and income and expense, insured commercial banks, by size of bank, 1985-91—Continued D. Banks with more than $5 billion in assets, excluding ten largest Item 1985 1986 1987 1988 1989 1990 1991 Balance sheet items as a percentage of average consolidated assets including loss reserves Interest-earning assets 84.87 85.64 86.19 87.21 86.77 86.65 86.90 Balances due from depositories 7.85 6.92 6.75 6.15 5.48 4.51 4.28 Loans 62.96 61.97 62.54 63.36 63.11 62.02 60.89 Commercial and industrial 26.10 24.79 23.87 23.27 22.79 21.79 20.52 U.S. addressees 21.71 21.33 21.03 21.13 21.32 20.49 19.34 Foreign addressees 4.39 3.46 2.84 2.14 1.47 1.29 1.18 Consumer 10.34 11.49 11.79 12.22 12.09 11.42 10.97 Credit card 4.32 4.79 4.87 5.05 4.95 4.47 4.07 Installment and other 6.02 6.69 6.92 7.17 7.14 6.95 6.91 Real estate 12.50 12.64 14.93 17.31 18.93 20.17 21.40 Construction and land development 4.33 4.54 4.90 5.09 5.33 4.86 3.90 Farmland .08 .08 .09 .11 .13 .13 .13 One- to four-family residential 4.71 4.51 5.34 6.62 7.20 8.35 9.86 Home equity n.a. n.a. n.a. 1.21 1.45 1.71 2.13 Other n.a. n.a. n.a. 5.41 5.75 6.64 7.73 Multifamily residential .33 .30 .38 .42 .45 .48 .55 Nonfarm nonresidential 2.89 3.03 4.00 4.99 5.65 6.16 6.83 Booked in foreign offices .16 .17 .21 .09 .18 .19 .13 Depository institutions 3.82 3.07 2.76 2.16 1.74 1.57 1.66 Foreign governments 2.02 1.77 1.62 1.28 .86 .52 .38 Agricultural production .45 .33 .31 .30 .30 .29 .32 Other 6.64 6.66 5.74 5.16 4.71 4.63 4.18 Lease financing receivables 1.09 1.21 1.53 1.66 1.69 1.64 1.46 Securities 9.65 12.25 13.08 13.37 13.61 14.79 16.19 U.S. government and other debt 6.06 7.55 9.31 10.22 10.86 12.55 14.27 U.S. government securities 5.40 6.52 7.61 8.02 8.74 10.57 12.15 U.S. Treasury 4.06 4.48 4.75 4.54 3.67 3.05 3.73 U.S. government agency and corporation obligations 1.34 2.03 2.86 33..4488 55..0077 77..5522 88..4411 Government-backed mortgage pools . .91 1.43 2.13 2.87 4.08 5.36 5.32 Collateralized mortgage obligations . n.a. n.a. n.a. n.a. n.a. 1.75 2.53 Other obligations .42 .60 .73 .61 .99 .41 .56 Other debt securities .66 1.02 1.71 2.20 2.12 1.98 2.12 State and local government 3.59 4.70 3.76 3.15 2.66 2.09 1.76 Taxable n.a. n.a. .02 .01 .05 .03 .02 Tax-exempt 3.59 4.70 3.75 3.14 2.61 2.07 1.75 Equity2 n.a. n.a. n.a. n.a. .11 .14 .15 Trading account assets 1.24 1.46 .97 .84 .82 .96 .94 Gross federal funds sold and reverse repurchase agreements 3.17 3.05 2.85 3.48 3.75 4.37 4.59 Non-interest-earning assets 14.23 13.32 12.25 11.06 11.74 11.78 11.44 Interest-bearing liabilities 71.08 71.04 71.78 73.55 74.69 75.36 74.56 Deposits 52.92 50.31 51.63 54.11 55.53 56.80 58.90 In foreign offices 14.45 12.19 11.57 10.38 8.74 7.41 6.55 In domestic offices 38.47 38.12 40.06 43.73 46.79 49.39 52.36 Transaction accounts 3.10 3.43 4.21 4.61 4.76 4.91 5.59 Savings deposits (including MMDAs) ... 13.09 13.96 15.14 15.12 14.55 15.68 17.87 Large-denomination time deposits 12.26 11.50 11.65 13.15 14.07 13.28 11.17 Small-denomination time deposits 10.03 9.23 9.14 10.84 13.41 15.52 17.73 Gross federal funds purchased and 1 repurchase agreements 13.17 14.90 14.18 12.95 13.07 12.47 10.24 Other interest-bearing liabilities 5.00 5.83 5.97 6.50 6.09 6.09 5.42 Non-interest-bearing liabilities 23.51 23.47 22.99 21.27 19.83 19.10 19.40 Demand deposits 16.29 17.17 16.44 15.03 14.06 13.54 13.97 MEMO Money market liabilities 45.08 44.64 43.58 43.18 42.12 39.38 33.53 Loss reserves .91 1.04 1.55 1.73 1.50 1.57 1.66 Equity capital3 5.40 5.49 5.23 5.17 5.47 5.54 6.04 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 481 A.2.—Continued D. Banks with more than $5 billion in assets, excluding ten largest Item 1985 1986 1987 1988 1989 1990 1991 Effective interest rates (percent) Rates earned Interest-earning assets 11.08 9.80 9.48 9.88 11.06 10.35 9.25 Taxable equivalent 11.49 10.29 9.68 10.09 11.22 10.46 9.34 Loans, gross 11.63 10.43 9.89 10.46 11.66 10.96 9.85 Net of loss provisions 10.55 9.08 7.28 9.50 10.02 9.08 8.12 Securities 9.16 8.19 8.03 8.26 8.87 8.88 8.42 Taxable equivalent 11.07 10.38 8.90 9.08 9.48 9.25 8.76 State and local government 6.89 6.93 7.15 7.25 7.34 7.27 7.23 U.S. government and other debt 10.21 8.91 8.07 8.12 9.27 9.16 8.58 Equity n.a. n.a. n.a. n.a. 7.82 7.12 7.03 Trading account assets 9.60 6.83 7.23 7.96 8.66 8.03 6.89 Rates paid All interest-bearing liabilities 9.10 7.35 6.69 7.18 8.46 7.72 6.13 Gross federal funds purchased and repurchase agreements 8.10 6.86 6.64 7.45 9.37 8.11 5.70 Deposits 8.29 6.95 6.54 6.95 8.07 7.52 6.26 In foreign offices 9.33 7.67 7.80 8.90 11.15 10.08 8.27 In domestic offices 7.93 6.77 6.19 6.49 7.54 7.11 6.01 Transaction accounts n.a. n.a. 4.41 4.49 4.55 4.63 4.18 Savings deposits (including MMDAs) n.a. n.a. 5.21 5.46 6.26 6.00 4.99 Large-denomination certificates of deposit . 8.76 7.46 7.13 7.54 8.69 8.04 6.64 Other time deposits n.a. n.a. 7.20 7.42 8.63 8.05 6.90 Income and expense items as a percentage of average net consolidated assets Gross interest income 9.44 8.38 8.25 8.84 9.86 9.27 8.30 Taxable equivalent 9.78 8.80 8.43 9.03 10.01 9.36 8.39 Loans 7.42 6.50 6.36 6.81 7.57 7.00 6.19 Securities 0.89 1.04 1.08 1.14 1.23 1.35 1.39 Gross federal funds sold and reverse repurchase agreements .25 .20 .22 .29 .37 .38 .28 Other .88 .64 .59 .60 .69 .54 .44 Gross interest expense 6.14 5.13 4.97 5.47 6.51 6.05 4.80 Deposits 4.54 3.65 3.49 3.87 4.61 4.38 3.80 Gross federal funds purchased and repurchase agreements 1.12 1.06 .97 1.02 1.27 1.10 .65 Other .48 .42 .51 .58 .63 .58 .36 Net interest margin 3.30 3.25 3.28 3.37 3.35 3.22 3.50 Taxable equivalent 3.64 3.67 3.46 3.56 3.49 3.31 3.58 Loss provisions .69 .84 1.68 .63 1.06 1.20 1.09 Noninterest income 1.34 1.50 1.55 1.61 1.74 1.82 1.91 Service charges on deposits .26 .27 .29 .31 .32 .35 .42 Other 1.08 1.23 1.26 1.30 1.41 1.47 1.49 Noninterest expense 3.05 3.17 3.26 3.28 3.31 3.45 3.72 Salaries, wages, and employee benefits 1.49 1.50 1.50 1.50 1.49 1.48 1.53 Occupancy expense .48 .49 .49 .50 .50 .50 .51 Other 1.08 1.18 1.27 1.28 1.32 1.46 1.68 Net noninterest margin -1.71 -1.67 -1.71 -1.67 -1.57 -1.63 -1.81 Securities gains or losses .07 .17 .05 .00 .04 .03 .15 Income before taxes .97 .91 -.06 1.08 .75 .42 .75 Taxes .23 .22 .07 .30 .20 .15 .20 Extraordinary items .01 .01 .00 .02 .00 .01 .03 Net income .75 .70 -.13 .80 .55 .28 .58 Cash dividends declared .26 .32 .35 .45 .39 .39 .50 Retained income .48 .38 -.48 .35 .15 -.11 .09 MEMO Return on equity for banks with positive equity— 13.34 12.20 -2.44 15.97 9.71 5.82 9.40 Average assets (billions of dollars) 609 689 745 853 929 1,034 1,054 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

482 Federal Reserve Bulletin • July 1992 A.2. Portfolio composition, interest rates, and income and expense, insured commercial banks, by size of bank, 1985-91—Continued E. Ten largest banks Item 1985 1986 1987 1988 1989 1990 1991 Balance sheet items as a percentage of average consolidated assets including loss reserves Interest-earning assets 83.89 84.56 84.78 85.06 85.10 84.78 85.20 Balances due from depositories 7.75 7.39 8.02 7.76 7.16 5.55 4.13 Loans 62.99 62.06 60.37 59.97 61.18 62.94 63.02 Commercial and industrial 29.20 26.28 24.23 22.90 22.45 22.40 21.87 U.S. addressees 14.53 13.75 13.26 12.79 13.21 13.12 13.09 Foreign addressees 14.67 12.53 10.97 10.12 9.24 9.28 8.78 Consumer 5.71 6.37 6.20 6.24 6.25 6.74 7.08 Credit card 1.90 2.11 1.95 1.96 1.94 2.16 2.48 Installment and other 3.81 4.26 4.25 4.28 4.31 4.58 4.60 Real estate 11.08 12.64 13.87 15.37 17.49 20.14 21.21 Construction and land development 2.19 2.67 3.23 3.49 3.49 3.68 3.34 Farmland .07 .07 .06 .06 .08 .08 .08 One- to four-family residential 4.79 5.04 5.17 5.91 7.34 9.15 10.12 Home equity n.a. n.a. n.a. .81 1.02 1.29 1.60 Other n.a. n.a. n.a. 5.09 6.32 7.86 8.52 Multifamily residential .38 .49 .62 .65 .66 .66 .56 Nonfarm nonresidential 1.92 2.28 2.51 2.66 3.00 3.45 3.85 Booked in foreign offices 1.74 2.09 2.28 2.60 2.92 3.12 3.25 Depository institutions 5.16 4.96 4.95 4.73 4.27 3.63 3.02 Foreign governments 3.98 3.68 3.54 3.50 3.24 2.72 2.83 Agricultural production .54 .45 .36 .33 .29 .31 .31 Other 5.98 6.26 5.77 5.39 5.65 5.43 5.06 Lease financing receivables 1.34 1.43 1.44 1.50 1.53 1.57 1.65 Securities 5.89 7.10 8.37 8.90 9.00 8.95 9.23 U.S. government and other debt 4.19 4.99 6.33 7.01 7.22 7.66 8.18 U.S. government securities 2.39 2.37 3.06 3.45 3.62 3.87 4.72 U.S. Treasury 1.94 1.66 1.52 1.48 1.38 1.06 1.31 U.S. government agency and corporation obligations .45 .71 1.54 1.97 2.24 2.81 3.41 Government-backed mortgage pools. .35 .62 1.47 1.87 2.02 2.15 2.22 Collateralized mortgage obligations . n.a. n.a. n.a. n.a. n.a. .58 1.08 Other obligations .10 .09 .07 .10 .22 .07 .11 Other debt securities 1.80 2.61 3.27 3.56 3.60 3.79 3.46 State and local government 1.70 2.12 2.04 1.89 1.61 1.06 .76 Taxable n.a. n.a. .01 .01 .02 .02 .01 Tax-exempt 1.70 2.12 2.04 1.88 1.59 1.05 .75 Equity2 n.a. n.a. n.a. n.a. .22 .23 .29 Trading account assets 3.55 4.45 4.18 4.06 3.97 4.63 6.02 Gross federal funds sold and reverse repurchase agreements 3.71 3.56 3.84 4.37 3.79 2.71 2.80 Non-interest-earning assets 15.26 14.40 13.14 12.34 12.23 12.62 12.51 Interest-bearing liabilities 71.20 71.24 70.87 71.34 71.82 71.87 72.75 Deposits 57.01 55.62 55.71 55.95 55.73 56.34 56.30 In foreign offices 33.23 30.88 30.87 29.96 28.81 28.59 27.77 In domestic offices 23.79 24.74 24.84 25.99 26.92 27.74 28.52 Transaction accounts 1.47 2.06 2.54 2.77 2.72 2.71 2.96 Savings deposits (including MMDAs) ... 9.76 11.18 11.74 11.90 11.63 12.17 13.56 Large-denomination time deposits 8.21 7.42 6.84 7.00 7.81 7.44 6.23 Small-denomination time deposits 4.34 4.08 3.85 4.32 4.76 5.42 5.78 Gross federal funds purchased and repurchase agreements 7.75 7.88 6.67 6.03 6.64 6.68 6.57 Other interest-bearing liabilities 6.44 7.73 8.48 9.36 9.45 8.85 9.88 Non-interest-bearing liabilities 24.10 23.94 24.70 24.06 23.38 23.51 22.35 Demand deposits 11.84 12.97 12.86 11.98 11.67 10.91 10.33 MEMO Money market liabilities 56.97 55.20 54.32 53.73 54.07 52.97 51.80 Loss reserves .85 1.04 2.08 2.60 2.67 2.60 2.29 Equity capital3 4.70 4.82 4.43 4.59 4.80 4.61 4.90 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments Affecting the Profitability and Practices of Commercial Banks 483 A.2.—Continued E. Ten largest banks Item 1985 1986 1987 1988 1989 1990 1991 Effective interest rates (percent) Rates earned Interest-earning assets 11.31 9.69 9.55 10.78 12.27 11.62 9.91 Taxable equivalent 11.52 9.94 9.59 10.91 12.28 11.68 9.95 Loans, gross 11.96 10.37 10.09 11.38 13.13 12.27 10.45 Net of loss provisions 10.80 9.10 6.74 10.73 10.75 11.08 8.58 Securities 9.85 8.81 8.69 8.63 9.07 9.20 8.95 Taxable equivalent 11.44 10.60 8.96 9.48 9.17 9.59 9.18 State and local government 7.10 7.29 7.50 7.68 7.66 7.49 7.60 U.S. government and other debt 10.54 9.02 8.49 8.24 9.45 9.53 9.25 Equity n.a. n.a. n.a. n.a. 7.05 5.71 4.21 Trading account assets 10.43 8.20 11.16 14.50 12.13 10.75 7.84 Rates paid All interest-bearing liabilities 9.51 7.67 7.51 8.53 10.51 9.90 7.54 Gross federal funds purchased and repurchase agreements 7.95 6.87 6.50 7.42 9.27 7.74 5.97 Deposits 8.97 7.33 7.28 7.89 9.35 9.40 7.35 In foreign offices 9.61 7.89 8.03 9.03 10.93 11.11 8.76 In domestic offices 7.75 6.36 5.83 6.33 7.38 6.93 5.67 Transaction accounts n.a. n.a. 3.30 4.42 4.42 4.33 3.93 Savings deposits (including MMDAs) n.a. n.a. 5.15 5.55 6.54 6.20 5.09 Large-denomination certificates of deposit . 9.16 7.21 7.16 7.43 8.62 7.94 6.49 Other time deposits n.a. n.a. 6.25 7.14 8.34 7.74 6.07 Income and expense items as a percentage of average net consolidated assets Gross interest income 9.56 8.26 8.36 9.45 10.75 10.19 8.67 Taxable equivalent 9.73 8.47 8.39 9.57 10.76 10.25 8.71 Loans 7.47 6.35 6.17 6.92 8.19 7.82 6.70 Securities .58 .64 .74 .78 .84 .85 .83 Gross federal funds sold and reverse repurchase agreements .31 .27 .28 .36 .37 .25 .17 Other 1.20 1.00 1.17 1.39 1.35 1.27 .97 Gross interest expense 6.75 5.49 5.69 6.43 7.95 7.52 5.75 Deposits 5.20 4.17 4.11 4.49 5.31 5.32 4.19 Gross federal funds purchased and repurchase agreements .71 .60 .50 .57 .74 .63 .43 Other .84 .73 1.07 1.37 1.90 1.58 1.14 Net interest margin 2.81 2.77 2.67 3.02 2.81 2.67 2.92 Taxable equivalent 2.98 2.98 2.70 3.14 2.82 2.73 2.96 Loss provisions .72 .78 2.05 .39 1.49 .76 1.20 Noninterest income 1.37 1.60 1.96 2.08 2.19 2.23 2.37 Service charges on deposits .12 .13 .16 .19 .21 .23 .26 Other 1.25 1.46 1.80 1.89 1.98 2.00 2.11 Noninterest expense 2.77 3.01 3.20 3.30 3.42 3.49 3.79 Salaries, wages, and employee benefits 1.40 1.53 1.60 1.63 1.66 1.71 1.77 Occupancy expense .51 .56 .58 .61 .62 .64 .66 Other .86 .92 1.02 1.06 1.14 1.14 1.36 Net noninterest margin -1.40 -1.41 -1.24 -1.22 -1.23 -1.26 -1.42 Securities gains or losses .06 .12 .07 .03 .03 .01 .04 Income before taxes .74 .69 -.54 1.44 .13 .68 .34 Taxes .27 .22 .16 .45 .38 .26 .16 Extraordinary items .00 .00 .00 .08 .03 .06 .03 Net income .47 .47 -.70 1.07 -.22 .47 .21 Cash dividends declared .26 .23 .28 .38 .39 .26 .21 Retained income .22 .25 -.98 .68 -.60 .21 .00 MEMO Return on equity for banks with positive equity— 9.87 9.59 -15.61 22.82 -4.40 10.11 4.26 Average assets (billions of dollars) 624 676 690 688 718 740 734 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

484 Treasury and Federal Reserve Foreign Exchange Operations This quarterly report, covering the period Febru- while, short-term interest rates in Japan declined ary 1992 through April 1992, provides information 50 basis points over the period amid evidence of on Treasury and System foreign exchange opera- weakening domestic demand and turbulence in Japtions. It was presented by William J. McDonough, anese stock and bond markets. In Germany, short- Executive Vice President in charge of the Foreign term interest rates over the period edged up almost Group at the Federal Reserve Bank of New York 40 basis points as government borrowing remained and Manager of Foreign Operations for the System strong and market concerns about inflationary pres- Open Market Account. Vivek Moorthy was pri- sures failed to diminish. As a result, the interest marily responsible for preparation of the report.l rate gap favoring foreign short-term investments over their U.S. counterparts tended to narrow with The dollar advanced against all major foreign cur- Japan and widen with Germany. rencies during the February to April period as an improved outlook for the U.S. recovery contrasted with evidence of economic and financial fragility FEBRUARY TO MID-MARCH abroad. The dollar's rise was most pronounced against the mark and other European currencies The dollar's strong rise during the first half of the early in the period. By late February, however, the reporting period reflected an emerging sense of dollar had leveled off against the mark, and the optimism among market participants about the U.S. focus of market attention shifted to the yen. During economy. At the outset, sentiment toward the econlate March and April, the dollar largely consoli- omy was far from upbeat. Market participants were dated its gains, trading in a relatively narrow range concerned about the failure of the recovery to spur against both currencies. On balance, the dollar significant job growth and about the ongoing weakgained 2 LA percent against the German mark, 6 per- ness in consumer and business confidence. Indeed, cent against the Japanese yen, and 2LA percent on a the dollar opened the period with a soft tone, touchtrade-weighted basis as measured by the staff of the ing period lows of DM1.5570 and ¥124.70 after the Federal Reserve Board.2 release of a much weaker-than-expected January Shifts in short-term interest rate differentials re- employment report on February 7. flecting relative economic and financial conditions Anxiety about the U.S. recovery, however, soon in the major industrial countries supported the dol- gave way to the view that the economy was lar against the yen but weighed on it against the strengthening. In mid-February, the release of two mark. In the United States, most short-term interest sets of highly favorable economic reports covering rates rose slightly in February and March, as U.S. the month of January, one on retail sales and the economic reports encouraged a more optimistic other on housing starts, led to a rapid run-up of the view of the strength of the U.S. recovery, and then dollar. Then, in early March, a series of positive eased modestly during April to end the period 10 to reports, beginning with the February survey of 15 basis points below their opening levels. Mean- purchasing managers, pushed the dollar up to levels not seen since the fall of 1991. 1. The charts for the report are available on request from Publi- Statements by U.S. officials about this time reincations Services, Board of Governors of the Federal Reserve Sys- forced the market's more positive outlook toward tem, mail stop 138, Washington DC 20051. the U.S. economy and spurred the view that further 2. The trade-weighted basis is as measured by the Federal Reserve Board index. monetary easing was unlikely in the near term. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

485 Market participants paid particular attention to stable against the mark. But in mid-February, when statements by the Federal Reserve Chairman sug- expectations for an early ease in German monetary gesting that monetary easing already in the pipeline policy waned, the Swiss franc began a sharp was adequate. As the outlook for the U.S. economy decline against the mark, prompting heavy interimproved, short-term interest rates began to back vention by the Swiss authorities and an eventual up, and the narrowing of unfavorable interest rate rise in Swiss interest rates that exceeded any comdifferentials helped underpin the dollar. parable rise in German rates. The experience of the The dollar's rise was most pronounced against Swiss franc revealed to market participants the the mark and other European currencies early in risks facing the authorities in other European counthe period, although its advance against the yen tries experiencing weak growth, such as the United continued longer and was ultimately of greater Kingdom, if they eased policy without a corremagnitude. The different behavior of the dollar sponding move in Germany. against these two currencies in early to mid- Many of the factors that boosted the dollar February reflected both special factors affecting against the European currencies were also opera- Germany and Japan and market expectations that tive in the market for the yen. Evidence of a the authorities might intervene in the currency mar- pronounced slowdown in the Japanese economy kets to strengthen the yen. mounted. From early to late February, interest rate In early February, the market's view that Ger- differentials against the yen, although adverse to man interest rates had peaked and might begin to the dollar, narrowed considerably and did so to a decline as early as midyear helped support the greater extent than they did against the mark. Nevdollar against the mark and other European curren- ertheless, in February the dollar firmed less cies. This view was based on two assumptions. strongly against the yen than it did against the Market operatives believed that the strong reaction mark. both within Germany and throughout Europe to the The dollar's tendency in February to appreciate Bundesbank's move to tighten monetary policy in less against the yen than against the mark, in part, December 1991 would discourage further tighten- reflected expectations of official intervention to ing for some time. Meanwhile, growing evidence support the yen. At the time, Japanese officials of a German economic downturn appeared to make were making increasingly strong and frequent stateadditional policy action unnecessary. ments indicating that they would not tolerate an As February progressed, however, several devel- excessive yen decline. In the event, the Trading opments led market participants to reconsider the Desk at the Federal Reserve Bank of New York view that the German authorities would soon move entered the Tokyo market on February 17, in coopto lower interest rates. These developments in- eration with the Japanese authorities, to sell a total cluded reports showing a pickup in money supply of $100 million against the yen. This operation was growth and inflation in January as well as signs that followed on February 20 with the sale, again in wage negotiations in Germany in 1992 would re- Tokyo, of an additional $50 million against the sult in settlements larger than anticipated earlier. In yen. The February 17 operation was financed by this environment, market participants first pushed the U.S. Treasury. The February 20 operation was the date of expected policy easing further into the financed equally by the U.S. Treasury and the Fedfuture and then began to anticipate the possibility eral Reserve. of additional tightening. As a result, the dollar By late February, the dollar's relative movelevelled off against the mark at about DM1.65. ments against the mark and the yen reversed. Hav- The prospect of continued tight German mone- ing stabilized against the mark, the dollar contintary policy was seen in the market as having impli- ued to gain against the yen amid increasing signs of cations for other European currencies as well. With fragility in the Japanese economy and financial respect to the Swiss franc, the Swiss authorities had system and worries over the potential political ramchosen, in late 1991, not to take part in the German- ifications of ongoing financial scandals. Concerns led tightening of monetary policies in Europe to about the Japanese economy were reflected in an avoid aggravating Switzerland's year-long reces- additional decline in Japanese short-term rates in sion. During January, the franc managed to remain late February and March, which served to further Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

486 Federal Reserve Bulletin • July 1992 reduce interest differentials unfavorable to the currencies against one another, particularly the dollar. British pound and Swiss franc relative to the mark. At the same time, market participants concluded Market sentiment toward the U.S. economy that the growing negative sentiment toward the underwent a subtle shift in March and April. Al- Japanese currency would not be reversed by inter- though data generally reinforced the earlier view vention that was not perceived as concerted and that a recovery was under way, market participants sustained. Thus, they increasingly shrugged off the tended to focus less on the fact of recovery and possibility of intervention. In this environment, the more on its strength. Many people questioned dollar continued the steady advance against the yen whether the recovery would be vigorous enough to that had begun in early January, rising to levels warrant a reversal in the long-term downtrend in around ¥134 by mid-March. U.S. interest rates. Moreover, many of the economic reports that appeared favorable on the surface were attributed to special factors. For instance, MID-MARCH THROUGH APRIL the increase in February payrolls, though significantly higher than expected, was largely discounted After mid-March, the dollar traded in relatively on the grounds that a big increase in retail jobs may narrow ranges against the mark and the yen. The have partially reflected problems in seasonal adjustabsence of clear direction in dollar exchange rates ment. Subsequent favorable data on retail sales, reflected several offsetting trends. On the one hand, housing starts, and home sales were similarly atreports on the U.S. economy reinforced the view tributed to onetime factors. Thus, market particithat the recovery would remain weak by historical pants were generally reluctant to push the dollar up standards and thus offered little to justify a further further. Only when tensions mounted between the dollar appreciation. On the other hand, govern- U.N. inspection team and Iraq over Iraq's nuclear ments abroad appeared increasingly preoccupied weapons program did the dollar move above with domestic difficulties, a situation interpreted by DM1.68, the perceived top of its trading range, to market participants as precluding joint official ac- reach its period high against the mark of DM1.6860 tion to bring the dollar lower. With dollar markets on March 20. The dollar reached its period high relatively lackluster through April, position takers against the yen of ¥134.97 on April 2. tended to focus on movements of the European By early April, doubts about the strength of the U.S. recovery intensified. The March employment report released on April 3 showed a small decline in private nonfarm payrolls. Meanwhile, the M2 1. Federal Reserve reciprocal currency arrangements measure of money supply, having risen sharply Millions of dollars earlier in the year, fell toward the lower end of its Amount of target range, a decline that elicited expressions of facility, April 30, 1992 concern by several U.S. officials. On April 9, the Federal Reserve relaxed reserve pressures to an Austrian National Bank 250 National Bank of Belgium 1,000 extent consistent with a reduction of about LA per- Bank of Canada 2,000 National Bank of Denmark 250 centage point in the federal funds rate. In this Bank of England 3,000 environment, other U.S. short-term interest rates Bank of France 2,000 Deutsche Bundesbank 6,000 declined, interest rate differentials moved against Bank of Italy ... 3,000 Bank of Japan . 5,000 the dollar to varying degrees, and the dollar eased. Although the dollar received temporary support Bank of Mexico Netherlands Bank .. :::::::::::::::::::::: from favorable data in mid-April, most notably a Bank of Norway ... Bank of Sweden ... sharp reduction in the February merchandise trade Swiss National Bank deficit, on balance the dollar was unchanged Bank for International Settlements against the mark during April. Dollars against Swiss Francs 600 Dollars against other authorized European During the latter half of April, the mark received currencies 1,250 support from a rise in German short-term interest Total 30,100 rates, a rise that helped further widen the already Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 487 2. Drawings and repayments by foreign central banks under special swap arrangements with the U.S. Treasury1 Millions of dollars; drawings or repayments (-) Outstanding as Outstanding as Central bank drawing Amount of of January 31, February March April of April 30, on the U.S. Treasury facility 1992 1992 114433..0022 114433..00 --8855..00 --5588..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 and repaid in full on March 11. substantial advantage accruing to short-term mark ing up to the election, the strong downward presinvestments. The rise in German rates occurred as sure, coupled with sterling's position near its lower the Bundesbank issued warnings about the infla- intervention limit in the ERM, precluded any eastionary threat of rapid money supply growth and ing of monetary policy. In the end, sterling rose high wage settlements and as its operations served strongly after news of the Conservative party's to lift rates on domestic securities repurchase agree- victory in the April 9 election. Financial markets ments. Indeed, inflationary concerns were rein- also rallied, with a key stock market index gaining forced during April by a call to strike by German about 6 percent after the results were announced. public sector employees and by an unexpected The dollar remained remarkably stable against acceleration of growth in the M3 money supply the yen during mid-March and April despite evifrom 8.6 percent in February to 9.4 percent in dence of continuing weakness in the Japanese March—a rate well above the upper end of the economy and mounting financial woes. This stabil- Bundesbank's target range for M3 growth of ity occurred against a backdrop of relatively steady 5.5 percent. short-term interest rate differentials, with short- Meanwhile, the British pound came under pres- term rates in both the United States and Japan sure within the exchange rate mechanism (ERM) declining by roughly the same amount. The decline of the European Monetary System in response both in Japanese rates occurred throughout the period, to concerns over elections in the United Kingdom both in anticipation of, and in further reaction to, scheduled for April 9 and to the rise in German the cut of 75 basis points in the Japanese discount interest rates. Market participants expressed con- rate on April 1. cern that the British election would not result in a The decline in Japanese stock prices appeared to clear mandate for any party or that a new govern- have largely offsetting influences on the dollar-yen ment might not be committed to sterling's current exchange rate. On the one hand, weakness in the parity within the ERM. Despite the protracted stock market was seen both as increasing the prosweakness of the U.K. economy in the months lead- pects for further easing in Japan and as discouraging continued investment from abroad. On the other hand, market participants believed that Japanese 3. Net profits or losses (-) institutions were repatriating funds from abroad to on U.S. Treasury and Federal Reserve bolster bank capital ratios and that these capital foreign exchange operations1 inflows were providing support for Japanese cur- Millions of dollars rency. Data released subsequently indicated that U.S. Treasury Japanese residents were indeed large net sellers of Federal Exchange Period and item Reserve Stabilization foreign securities in March, resulting in an increase Fund in net inflows to Japan. Valuation profits and losses on outstanding assets and liabilities Toward the end of the month, the possibility of as of January 31, 1992 33,,661155..22 11,,994411..66 official action to support the yen again became a February 1-April 30, 1992 focus of market attention with the approach of the 00..00 00..00 Valuation profits and losses Group of Seven (G-7) meeting in Washington in on outstanding assets the last week of April. G-7 finance ministers and and liabilities as of April 30, 1992 22,,665533..11 11,,003399..55 central bank governors issued a statement on April 26 noting that "the decline of the yen since their 1. Data are on a value-date basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

488 Federal Reserve Bulletin • July 1992 last meeting was not contributing to the adjustment As of the end of April, cumulative bookkeeping process." Against the backdrop of this statement or valuation gains on outstanding foreign currency and subsequent comments by both U.S. and Japa- balances were $2,653.1 million for the Federal nese officials, the dollar declined from the higher Reserve and $1,039.5 million for the ESF. There end to the lower end of the range of ¥132 to ¥135 were no realized profits or losses during the period. in which it had traded for most of April. The Federal Reserve and the ESF regularly invest In other operations, the U.S. Treasury Exchange their foreign currency balances in a variety of in- Stabilization Fund (ESF) repurchased the remain- struments that yield market-related rates of return ing $2 billion equivalent of foreign currencies that and that have a high degree of quality and liquidity. it had warehoused with the Federal Reserve. The A portion of the balances is invested in securities ESF also received repayment in full from Panama issued by foreign governments. As of the end of on a $143 million special swap facility initiated in April, the Federal Reserve's holdings of these seculate January. As of the end of April, the U.S. rities totaled $8,776.8 million equivalent and the monetary authorities had no forward transactions Treasury's holdings totaled $8,852.7 million equivoutstanding. alent, valued at end-of-period exchange rates. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

489 Industrial Production and Capacity Utilization Released for Publication May 15 January. The April increase was led by a sharp rise in auto production; output of trucks was about The index of industrial production increased unchanged. Not including motor vehicles and parts, 0.5 percent in April, following an upwardly revised overall production advanced 0.3 percent last month, gain of 0.4 percent in March. With the three a rise similar to that in February and in March. At monthly increases of about Vi percent each from 108.2 percent of its 1987 annual average, total February through April, industrial production has industrial production in April was 2.5 percent retraced much of the decline between October and above its year-ago level. Total industrial capacity Industrial production indexes Twelve-month percent change Twelve-month percent change Durable manufacturing 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 Capacity Capacity 120 100 ^ ^ " - -S^ Production _ 80 Production — 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Percent of capacity Percent of capacity Total industry Manufacturing 90 Utilization Utilization 80 ——ww^"^ ~ 70 1 1 1 1 1 1 1 1 1 1 1 1 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, April. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

490 Federal Reserve Bulletin • July 1992 Industrial production and capacity utilization Industrial production, index, 1987 = 1001 Percentage change CCCaaattteeegggooorrryyy 11999922 19922 AApprr.. 11999911 ttoo Jan.r Feb.r Mar.r Apr.P Jan.r Feb.r Mar.r Apr.? AApprr.. 11999922 Total 106.6 107.2 107.6 108.2 -.7 .5 .4 .5 2.5 Previous estimate 106.4 106.9 107.2 -.9 .5 .2 Major market groups Products, total 107.5 108.1 108.6 109.1 -.8 .5 .5 .5 2.1 Consumer goods 108.1 108.8 109.5 109.9 -.9 .6 .6 .4 4.2 Business equipment 119.9 121.2 121.8 122.8 -1.2 1.1 .5 .8 1.2 Construction supplies 95.5 95.9 96.1 96.7 .5 .5 .3 .6 1.9 Materials 105.2 105.7 106.1 106.7 -.5 .5 .3 .6 3.1 Major industry groups Manufacturing 107.4 108.1 108.5 109.0 -.6 .6 .4 .5 2.9 Durable 105.8 107.0 107.2 108.0 -1.1 1.1 .2 .8 1.9 Nondurable 109.5 109.4 110.1 110.3 .0 .0 .6 .3 4.2 Mining 97.8 98.3 97.6 98.4 -1.0 .5 -.7 .8 -2.4 Utilities 106.8 106.4 108.9 108.7 -1.0 -.4 2.3 -.2 2.6 Capacity utilization, percent MEMO Capacity, cceennttaaggee 1991 1992 Average, Low, High, cchhaannggee,, AApprr.. 11999911 1967-91 1982 1988-89 Apr. Jan.r Feb/ Mar.r Apr.P ttoo AApprr.. 11999922 Total 82.1 71.8 85.0 78.6 78.0 78J 78.4 78.7 2.4 Manufacturing 81.4 70.0 85.1 77.5 77.0 77.3 77.5 77.7 2.7 Advanced processing 81.0 71.4 83.6 77.3 75.7 76.1 76.2 76.4 3.1 Primary processing . 82.3 66.8 89.0 78.2 80.2 80.3 80.5 80.8 1.8 Mining 87.4 80.6 87.2 88.3 85.3 85.7 85.1 85.8 .5 Utilities 86.7 76.2 92.3 82.6 82.6 82.2 84.0 83.8 1.1 1. Seasonally adjusted. r Revised, 2. Change from preceding month to month indicated. p Preliminary. utilization rose 0.3 percentage point in April, to months. Improvements have been most noticeable 78.7 percent. in parts and supplies used by the motor vehicle When analyzed by market group, the data show industry; in addition, the output of many nondurathat the output of durable consumer goods, apart bles, such as textiles and chemicals, has increased from automotive products (but including furniture in the past few months. and appliances) surged in February and on average When analyzed by industry group, the data show changed little in March and April. The production that manufacturing output rose 0.5 percent in April, of nondurable consumer goods was flat last month, about the same increase as in February and in and, on balance, has changed little since last fall. In March. Utilization at factories rose 0.2 percentage its third consecutive monthly increase, the output point, to 77.7 percent; even so, the operating rate of business equipment excluding motor vehicles for manufacturing remained about 1 percentage rose 0.4 percent in April. These recent gains reflect point below the level of last September, its most further increases in the production of information- recent high. The increases in the operating rates in processing equipment as well as a turnaround in April were about evenly split between advancedthe output of industrial equipment, which had processing and primary-processing industries. In declined for more than a year. The output of con- advanced processing, operating rates at auto and struction supplies increased 0.6 percent in April, light truck assembly facilities rose 5.1 percentage continuing its string of increases this year. The points in April, to 70.9 percent, while the rate for production of materials also has moved up in recent furniture manufacturers rose 1.1 percentage points Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization 491 to 77 percent. In contrast, operating rates for The production at mines increased 0.8 percent, apparel, for printing and publishing, and for instru- and the output of utilities edged down 0.2 percent. ments continued their recent downward trend. The The increase in mining mainly reflected a partial increases in the utilization rates in primary- rebound in coal mining, after a sharp decline in processing industries were more widespread, with March, as well as a moderate gain in oil and gas only the rate for lumber production declining. The extraction. largest increases came in the paper and chemical industries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

492 Statements to the Congress Statement by Richard Spillenkothen, Director, are not guaranteed by the government but gen- Division of Banking Supervision and Regulation, erally carry a credit enhancement provided by Board of Governors of the Federal Reserve Sys- the private sector, and those securities account tem, and Donald H. Wilson, Financial Markets for a significant portion of the entire market. Officer, Federal Reserve Bank of Chicago, be- Furthermore, as I will discuss shortly, a limited fore the Subcommittee on Policy, Research, and volume of commercial real estate loans have Insurance of the Committee on Banking, Fi- been securitized in recent years without the nance and Urban Affairs, U.S. House of Repre- benefit of government enhancement. sentatives, May 6, 1992 The range of terms available on securitized mortgage assets has also been greatly expanded I am happy to be here today to discuss the over time. In particular, the innovations of colsecuritization of commercial real estate loans and lateralized mortgage obligations (CMOs) and real the related questions you raised in your letter of estate mortgage investment conduits (REMICs) invitation, and I am most pleased that Mr. Don- have resulted in securities that provide different ald Wilson of the Federal Reserve Bank of Chi- claims and priorities on the principal and interest cago is with me. Mr. Wilson has worked exten- payments made on underlying loans, thus accomsively in the area of securitization and stands modating the various needs and preferences of ready to help answer any questions you may investors. have after my presentation. This very impressive growth and development To provide perspective, I will begin by review- of securitized loans has occurred because of the ing the evolution and current state of the general benefits they provide to both issuers and invesasset-backed securities market. This review will tors. Originators of loans that sponsor assetbe kept relatively brief because our colleague, backed securities benefit from improved liquid- Mr. Franklin Dreyer, of the Federal Reserve ity, enhanced fee income, and, to the extent that Bank of Chicago, presented an extended discus- assets are removed from their balance sheets, sion on securitization when he appeared before less need for capital. Investors, on the other this committee last summer. hand, acquire securities that require no manage- In the beginning, government-guaranteed ment of the underlying loans on their part and yet mortgages were placed in pools, and securities provide an attractive return for instruments that were issued that entitled the holders to the pro- pose, depending upon the nature of the credit ceeds of the principal and interest payments that enhancement, little or no credit risk. Furtherflowed from these mortgages. These securities more, as I have noted, these securities increaswere also guaranteed by the government. Non- ingly have been structured to meet varying invesgovernment-guaranteed residential mortgages tor preferences for safety and predictability of were also securitized, and most of the these cash flow and variability of values in relation to securities were backed by government-spon- changes in interest rates. The importance of the sored agencies. Today more than $1 trillion safety and predictability of cash flow deserves to worth of government-related mortgaged-backed be given special emphasis because, to date at securities are outstanding. Moreover, in the past least, these qualities have been primarily respondecade or so the process of securitization has sible for the wide and deep attraction that assetbeen extended to nonmortgage consumer loans backed securities have had for various groups of such as automobile loans and credit card receiv- investors. ables. Securities that are backed by these assets Given the benefits provided by asset-backed Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 493 securities, the Federal Reserve and other agen- affecting different borrowers, the loans are made cies that supervise insured depository institu- with considerably different maturities and repaytions have viewed their development as very ment terms. This heterogeneity greatly complisalutary. Moreover, the participation of deposi- cates the process of predicting the future cash tory institutions in this market as both issuers of, flows that even pools of the highest quality loans and investors in, these securities has been con- will produce. Without that predictability it is sidered altogether appropriate, provided that doubtful that demand for securities based on their participation is conducted in a safe and these pools will be broad. Given the innovations sound manner. To foster that end, we have in the market in recent years, this aspect of the issued guidance on how banking organizations heterogeneity problem—uncertainty in cash should carry out securitization activities and flow—may possibly be amenable to resolution by given instructions to our examiners on how to firms that are expert in designing securitized review these activities for purposes of safety and products. soundness. We have also issued guidance on, The lack of homogeneity among commercial and instructed our examiners to review, the real estate loans in terms of the credit quality of investments of banking organizations in asset- borrowers and of other characteristics that can backed securities. A principal concern in this affect the certainty of repayment is a much more regard is the interest rate risk that is inherent in formidable problem. This problem greatly comsome of the more complex tranches of securities plicates the task of performing due diligence on a issued under CMO and REMIC arrangements. loan pool and reaching judgments on the overall Finally, a key concern of our supervisory quality of a pool. A typical pool of securitized efforts has been to insure that the exposure to consumer loans, for example, consists of a large credit risk is properly reflected in capital posi- number of small loans, made on very similar tions of institutions that sell loans into pools with terms to borrowers who have all met or exceeded recourse or that provide guarantees of asset- pre-established and time-tested credit standards. backed securities. The supervisory agencies are Thus, these pools readily lend themselves to currently reviewing their common policies per- statistical assessments of loss expectation with a taining to these capital requirements under the high degree of predictability. Such refined actuauspices of the Federal Financial Institutions arial methods of loss estimation simply cannot be Examination Council, and I shall say more about applied to pools composed of a much smaller this effort toward the end of my remarks. number of large and diverse commercial real With that background now presented, it is estate loans. This characteristic and the market's appropriate to turn to the focus of this hearing, perception (based on the dramatic experience of which is the securitization of commercial real recent years) of the riskiness of commercial real estate loans. As I previously noted, to date there estate loans appear to be primarily working to has been very little securitization of commercial impede the securitization of these loans and the real estate loans and it is instructive to ask why development of a secondary market for securities that has been the case. Our basic answer is that, that are backed by them. Indeed, most of the because of the nature and quality of these loans, relatively small number of securitizations of the market generally has not been able to design commercial real estate loans that have been done a securitized product that meets the require- so far, until the recent offerings of the Resolution ments of investors without imposing unaccept- Trust Corporation (RTC), have been privately able costs on issuers. placed, and there has been no active secondary Commercial real estate loans are relatively market for any securities that are backed by heterogeneous in nature. Such loans are made to commercial real estate loans. finance a wide range of building projects and We understand that the recent offerings of the properties, including strip shopping centers, of- RTC were generally well received by the market, fice buildings, hotels, and various industrial and dealers are reported to be prepared to make plants and parks. Because of this diversity in an active market for them. The RTC has indiproperty use and because of the circumstances cated, moreover, that it intends to make similar Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

494 Federal Reserve Bulletin • July 1992 offerings in the future, and this securitization manner. We would, of course, expect any such activity may serve as a basis for the development securitized loans purchased by insured deposiof a broader market for securitized commercial tory institutions to be sufficiently protected from real estate loans. the riskiness of the underlying pool of loans so Whether that proves to be the case, however, that they are of investment grade. As for particremains to be seen, for the key to the success of ipation in the issuance of these securities, we the recently completed offering was the very would expect institutions to structure these sizable credit enhancements provided by the transactions properly to ensure satisfactory per- RTC. These enhancements included setting aside formance of contract terms and at the same time liquid assets to cover possible losses of approx- to achieve that structuring without incurring eximately 30 percent of the value of the loans in the cessive costs for credit enhancement and other pool, as well as structuring each securitization expenses. If these conditions are met, the particinto three tranches, with two of them subordi- ipation of depository institutions in securitized nated so that the third, senior tranche was pro- commercial real estate loans, either as investors vided additional protection against credit risk. or issuers, will provide the same benefits to Altogether these enhancements provide holders depository institutions that other securitized of the senior tranches of securities, which re- products have provided to them. ceived AAA ratings, with protection against loss Let me now turn to our policy pertaining to the on the pool of approximately 45 percent of its maintenance of capital when assets are sold with value. Market concern over the quality of com- recourse (that is, the seller agrees, under one of mercial real estate loans held by the RTC may several possible arrangements, to cover some or account for some important part of the excep- all losses on the assets). Our policy is predicated tional size of this enhancement, but it seems upon the principle that a government-insured clear that even better-grade commercial real es- depository institution should hold capital that is tate loans will require considerable credit en- commensurate with its risk exposure. That prinhancement, given the general characteristics of ciple translated into our current policy on rethese loans and the experience of recent years. course and other credit enhancements is that For example, a recent proposal, reviewed by generally banking organizations selling assets Board staff, to pool a combination of performing with any recourse must maintain capital as if they and nonperforming commercial real estate loans owned the assets.1 This reflects the long-held would have had the seller provide credit en- view of the agencies that when an institution's hancement by retaining a subordinated interest in obligation under a recourse agreement exceeds excess of 40 percent. the normal loss expectation on the underlying Thus, an ever-present tradeoff exists between assets, the institution is exposed to most, if not the nature and quality of loans to be securitized all, of the risks normally associated with owning and the level, and hence the cost, of enhance- those assets. ment that is necessary to make a securitized We emphasize that this policy has not preproduct marketable. Obviously, this tradeoff is cluded banking organizations from engaging in one of the most important determinants of the the securitization process. For example, in the viability of a securitized product, and the sub- case of consumer loans, banking organizations stantial credit enhancement demanded for commercial real estate loan securitization has, to date, been a principal obstacle to the issuance of 1. In the Federal Reserve Board's recent clarifications to its risk-based capital guidelines, the Board approved a limited such securities and the development of a secondrecourse exception with respect to the sale of residential ary market for them. mortgages with recourse. Banking organizations using this exception would not be required to maintain capital against With respect to the question of whether superresidential mortgages that they have sold with recourse if, at visors would have concerns about insured depos- the time of the transfer, the maximum possible recourse itories participating in such securitization activ- obligation is less than the expected loss on the transferred assets and a liability or specifically identified, noncapital ity, either as investors or issuers, our view is that reserve is established and maintained for an amount equal to it is acceptable if it is done in a safe and sound the maximum loss possible under the recourse provision. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 495 have taken the option of selling their loans with- that it is appropriate to consider the need to out recourse, in which case there is no capital refine our capital charges for transactions when requirement to the selling banking organization. the bank's risk is limited to an amount less than This has been accomplished by paying a third the normal capital charge associated with holding party to take the credit risk or by using a spread these assets on the balance sheet. Furthermore, account, which is an escrow account whose we are also considering the advisability of refinfunds are derived from a portion of the spread ing our capital charge in those cases in which a between the interest earned on the assets in the depository institution is in a junior loss posiunderlying pool and the lower interest paid on tion—that is, when its own risk position is prosecurities issued. These arrangements provide tected by credit enhancements provided by othprotection to investors without placing a bank's ers. Our study of these matters has been under capital at risk. way for some time, and we hope to request Finally, we would note that the rapid growth in public comments on concrete proposals in the size of the securitization market and the exten- not-too-distant future. sion of the securitization process to various kinds To sum up, it is clear that the securitization of consumer loans that has taken place in recent process as it has evolved to date has been years also suggest that our policy on recourse has beneficial to both the originators of asset-backed not been a major impediment to securitization securities and to investors. And, moreover, simactivities nor to bank participation in these activ- ilar benefits can be derived from the securitizaities. tion of commercial real estate loans if the prob- All this being said, however, the agencies have lems stemming from the heterogeneity and the recognized that there is a need to review carefully uncertainty of the risk in these assets can be and reassess our policies on recourse and other overcome. Such a development appears to reguarantee arrangements. In particular, we believe quire sufficient credit enhancement for such sethat the policy as it pertains to cases in which curities in a manner that is not prohibitively there is only very limited recourse exposure de- costly to issuers. As for the participation of serves scrutiny, and, more broadly, we are also insured depository institutions in the securitizaconsidering whether we need to make our capital tion of commercial real estate loans, we see no treatment of recourse arrangements more consis- regulatory problems, so long as their activities tent with that for other types of guarantees when are carried out in a safe and sound manner and a the same level of risk is involved. level of capital support is maintained against Although we will not presume to predict the credit risk exposure that is commensurate with outcome in any detail at this time, we do believe the degree of that exposure. • Statement by John P. LaWare, Member, Board remarks on title II, which concerns the activities of Governors of the Federal Reserve System, in the United States of foreign banks that are before the Committee on Banking, Finance and owned or controlled by foreign governments. If Urban Affairs, U.S. House of Representatives, enacted, this legislation would severely curtail May 8, 1992 the U.S. activities of such banks. It also would impose reporting requirements on all foreign I am pleased to appear before you this morning to banks and would provide for new sanctions on present the views of the Federal Reserve Board financial institutions for violations of export conon title II of H.R.4803, the Non-Proliferation of trol provisions. Weapons of Mass Destruction and Regulatory I will begin by providing you with an overview Improvements Act of 1992. We recognize the of the existing U.S. operations of foreign governbroad policy objectives of this legislation, which ment-owned banks and the manner in which will be addressed by the other witnesses before current law and regulation apply to them. I will the committee. As requested, I will focus my identify the issues that have been associated with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

496 Federal Reserve Bulletin • July 1992 government ownership of foreign banks and the amounts is set forth in Exhibit I to my testimoreasons why the Federal Reserve believes that ny.1 such issues do not require a prohibition on par- Banks owned by foreign governments, like ticipation by foreign government-owned banks in privately owned foreign banks, do business in the the U.S. market. Then I will discuss the specific United States primarily through branches and issues that are raised by the proposed legislation. agencies. Foreign government-owned banks op- At the outset, I would like to say that the erated 162 offices in the United States as of Federal Reserve appreciates the new authority to year-end 1991. Of those offices, 10 were bank regulate foreign banks in the United States that subsidiaries, 147 were branches and agencies, 2 was granted to us last year. As enacted by the were Edge corporations, and 3 were New York Congress, the Foreign Bank Supervision En- state-chartered Article XII investment compahancement Act improves substantially the regu- nies. The branches and agencies accounted for 87 latory authority available to the Federal Reserve percent ($105 billion) of the assets of foreign to monitor and examine the participation of all government-owned banks in the United States, foreign banks in the U.S. market. We are now although the assets of bank subsidiaries repreimplementing this legislation; in April, the Fed- sented only 11 percent ($13 billion) of the U.S. eral Reserve adopted a regulation governing the assets of foreign government-owned banks. The entry by foreign banks into the U.S. market, and remaining 2 percent is accounted for by Edge Act we are hiring 200 to 250 new examiners to corporations and Article XII companies. conduct frequent examinations of U.S. offices of Government-owned banks from thirty-seven foreign banks, including, for the first time, rep- countries currently operate in the United States. resentative offices of such banks. We intend to In terms of total assets of the U.S. operations, use our authority to enforce vigorously both the government-owned banks from countries in Eustatutory and supervisory standards applicable to rope clearly dominate. The European banks had foreign bank operations in the United States, U.S. assets of $83 billion as of December 31, whether conducted by government or privately 1991, which represented 70 percent of the total owned banks. assets of foreign government-owned banks, compared with $28 billion for Asian and Middle Eastern government-owned banks and $5 billion for Latin American banks. Italy, France, Israel, EXISTING U.S. OPERATIONS OF FOREIGN and Germany have the most significant U.S. GOVERNMENT-OWNED BANKS presence of foreign government-controlled banks. For foreign banks over all, the Japanese A foreign government is deemed to own or banks have the largest share of U.S. assets; control a bank if it directly or indirectly owns 25 however, all but one of the Japanese banks percent or more of the bank's voting shares or operating in the United States are privately otherwise controls the bank. Although the abso- owned. The one Japanese government-owned lute number of banks owned by foreign govern- bank, Shoko Chukin Bank, accounts for only 0.3 ments is large, such banks hold only a small percent of the assets of Japanese banks in this percentage of the total U.S. assets of foreign country. banks. As of December 31, 1991, 275 foreign Government ownership of foreign banks may banks were operating in the United States, and be either direct or indirect. That is, a foreign their U.S. offices had total assets of $888 billion. government, at the national, regional, or local Eighty-five of these foreign banks are owned by level, or an agency of the government, may own foreign governments; the assets of their U.S. the foreign bank directly, or a foreign governoperations amount to $120 billion, or about 13 ment may own or control a corporation that, in percent of the total assets of U.S. offices of foreign banks or 3 percent of the total assets of all 1. The attachments to this statement are available on banking offices in the United States. A regional request from Publications Services, Board of Governors of and country-by-country breakdown of these the Federal Reserve System, Washington, DC 20051. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 497 turn, owns a bank with U.S. operations. Most that have been identified thus far derive from the foreign government ownership is direct; how- fact that the restrictions on interstate banking ever, ten foreign banks that are indirectly owned and nonbanking activities in the Bank Holding by foreign governments are currently operating Company Act (BHC Act) do not apply to a in the United States. As of December 31, 1991, foreign government that owns one or more forthe U.S. operations of these ten banks, which eign banks with U.S. operations because a forconsisted of twenty-six branches and agencies eign government is not a "company." One conand one Edge corporation, had total assets of cern in this regard was that several governmentapproximately $24 billion. owned banks from a single country might act in a The Federal Reserve has considered the three coordinated fashion to select different states as types of issues that have been associated with their home states for purposes of avoiding the foreign government ownership of banks operat- limitations on multistate expansion of domestic ing in this country. First, foreign government- deposit-taking activities under the BHC Act and owned banks may have competitive advantages the International Banking Act. By contrast, a under U.S. law with respect to interstate bank- foreign privately owned company with several ing and nonbanking activities. Second, foreign foreign banks would be permitted only one home government-owned banks may make biased state. This concern has diminished significantly credit decisions based on priorities dictated by as interstate restrictions have become less of a the government owner that could unduly favor constraint on domestic banking organizations. In foreign nationals and, if such nationals were not any case, there has been no indication that creditworthy, could weaken the condition of foreign banks owned by the same foreign governtheir U.S. operations. Finally, foreign govern- ment behave in such a coordinated fashion to ment-owned banks may attempt to exploit com- take advantage of interstate opportunities. From petitive advantages to gain market share in the all available evidence, these banks operate inde- United States. Banks owned by foreign govern- pendently of one another and follow separate ments may have more advantageous access to business plans. For example, all seven Italian funding than private banks to the extent that government-owned banks operating in the they can benefit from implicit government guar- United States have selected New York as their antees. They also may have more flexibility in home state. pricing of services because government owners Another concern arose in connection with the may be willing to accept lower levels of profit- BHC Act's restrictions on nonbanking activities. ability. Some foreign governments, besides owning The Federal Reserve monitors the participa- banks that operate in the United States, also own tion of foreign government-owned banks in the companies that engage in extensive nonbanking U.S. market in light of these three issues. We activities. For example, both France and Italy, have found no evidence suggesting that govern- among others, own several banks with U.S. ment-owned banks as a class operate in the operations and also own national airlines. Such United States differently from other foreign cross-industry links may be incompatible with banks. Indeed, our information suggests that one of the stated purposes of the BHC Act—that these banks have operated, and continue to op- of maintaining a separation between commerce erate, competitively on market terms. In our and banking in the United States. The operation view, current law and regulation, including the of both banks and nonbanks in the United States increased regulatory authority granted in the controlled by the same government owner could Foreign Bank Supervision Enhancement Act en- be viewed as inconsistent with the purposes of acted last year, provide the Federal Reserve with the BHC Act. However, a strict application of the ability to regulate the activities of all foreign the act's nonbanking restrictions in these circumbanks, including those that are owned by foreign stances would have serious ramifications beyond governments. the regulatory realm and might preclude certain foreign government-owned banks from engaging The major competitive advantages potentially in any banking activities in the United States, available to a foreign government-owned bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

498 Federal Reserve Bulletin • July 1992 even when there is no evidence that the banks ment that also owns a bank, it could in principle and nonbanks act together or in any way derive apply to private borrowers of the same nationaladvantages in the United States from their com- ity. mon ownership. Another dimension of this concern is that a Although the nonbanking restrictions of the foreign government-owned bank might be oper- BHC Act do not apply to a foreign government ated in such a way as to support the general that owns a foreign bank, the bank regulatory political-economic agenda of the home country agencies address the potential for abuse in sev- (as distinct from a particular enterprise) by, for eral ways. If a foreign government-owned bank example, lending to support marketing agreeowns a subsidiary bank in the United States, the ments, cartels, or the government's foreign polrestrictions of section 23A of the Federal Re- icy objectives. The result of these types of lendserve Act apply to transactions between the U.S. ing policies could be that the U.S. bank would bank and any company that is owned by the become overexposed to the home country, to foreign government. This provision imposes lim- certain industries, or to groups of related borrowits on loans by banks to affiliates and establishes ers. strict collateral requirements. The application of However, as I stated earlier, foreign governsection 23A is designed to curtail practices that ment-owned banks, as a class, operate on market conflict with the purposes of the BHC Act; that terms. Indeed, the ratio of home country expois, it helps ensure the safety of the U.S. bank by sure to total assets for banks owned by foreign prohibiting unsound transactions with affiliated governments is lower than the comparable ratio government-owned companies and also ensures for privately owned foreign banks. Similarly, the that such companies do not have greater access ratio of nonperforming loans to total assets is to credit from the bank than nonaffiliated compa- lower for foreign government-owned banks than nies. In addition, the U.S. branches and agencies for privately owned banks. of foreign banks are monitored to ensure that Another possibility is that a foreign governthey do not engage in preferential lending to ment-owned bank may have funding advantages affiliates, including government-owned affiliates. over other banks. In contrast to private owners, In sum, our experience has been that govern- governments may be willing to provide funding at ment-owned banks do not enjoy competitive below-market cost to their banking entities and advantages in the U.S. market by virtue of the to accept lower levels of profitability. In theory, nonbanking companies owned by the same gov- this would allow such entities to grow at unusuernment nor do the nonbanking companies ob- ally high rates. Actual data on the growth of U.S. tain access to preferential credit. Similarly, we branches and agencies of foreign governmentsee no evidence that domestic banks are disad- owned banks, however, indicate that these entivantaged by such foreign organizations. ties have grown at a slower rate than branches We have also been concerned about the poten- and agencies of privately owned foreign banks. tial negative effect of government policies on the Furthermore, any potential advantage to for- U.S. operations of banks owned by foreign gov- eign government-owned banks in terms of capiernments. Such banks might not operate in a tal—that is, the ability to operate with very low fully market-oriented way through their U.S. levels of capital—has been eroded substantially branches and subsidiaries. In particular, govern- by the adoption of the Basle capital standards ment-owned banks might make biased credit and the emphasis placed by market participants judgments by discriminating in favor of compa- on capital strength. The Basle standards themnies headquartered in their home country. Such selves apply to all internationally active banks of biased credit judgments could give competitive the Group of Ten countries and Luxembourg, advantages to the companies so favored; these regardless of the ownership of such banks. Many biased judgments could also weaken the balance other governments have adopted these stansheet of the U.S. branch or subsidiary of the dards, and there is increasing pressure on banks foreign bank. Although this concern is greatest from all countries to meet the internationally with respect to companies owned by a govern- agreed upon capital rules. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 499 It must be kept in mind that a government can owned banks also may well have implications for subsidize its banks in several ways, other than by the most favored nation obligations set forth in direct provision of funding. These ways include treaties of the United States with foreign countax policies, cheap discount window credits, tries. Such restrictions would also make negoticontrolled interest rates in domestic markets, ation of additional international agreements in and toleration of noncompetitive domestic mar- financial services, which could provide substankets that favor local banks or provide a safety tial benefits to U.S. banks, much more difficult net. A government may provide these sorts of because access to the U.S. market by banks from subsidies to any of its banks, regardless of our trading partners would be curtailed. whether such banks are government owned. These provisions raise questions of consis- The Federal Reserve plans to continue to tency with the principle of national treatment and monitor the activities of government-owned for- may also raise the possibility that retaliatory eign banks in the United States in light of the action of some sort could be taken against U.S. issues I have outlined. To date, the Federal commercial banks operating overseas. As the Reserve has not found a pattern of abuse by Federal Reserve has testified before, the tradigovernment-owned banks or any measurable tional U.S. policy of national treatment seeks to competitive disadvantage to domestic banks. ensure that foreign and domestic banks have a Current law and regulations provide the Federal fair and equal opportunity to participate in our Reserve with adequate tools to supervise and markets. The motivation is not merely a commitregulate the U.S. activities of foreign govern- ment to equity and nondiscrimination, although ment-owned banks. such a commitment in itself is worthy. More fundamentally, the motivation also is to provide U.S. consumers of financial services with access ISSUES RAISED BY H.R.4803 to a deep, varied, competitive, and efficient banking market in which they can satisfy their I would now like to turn to the specific proposals financial needs on the best possible terms. set forth in title II of H.R.4803. The most trou- Current law applies the policy of national blesome proposal is section 202, which effec- treatment to all foreign banks alike, whether they tively denies access to the U.S. market by for- are privately owned or government owned. In eign government-owned banks. our view, the existing legal and regulatory frame- The bill would preclude foreign government- work, including the particular regulatory attenowned banks from engaging in any financial tion that has been paid to the U.S. operations of transactions in the United States, either through foreign government-owned banks, is adequate to any type of subsidiary, whether a bank or a deal with abuses by government-owned banks on nonbanking company, or through branches and a case-by-case basis. The Federal Reserve advoagencies, except for extensions of credit for trade cates a case-by-case approach in this area befinancing. Even trade financing would be difficult cause we have not observed a pattern of abuse. given the limitations on funding for such activi- Most government-owned banks operating in the ties that would be imposed by the legislation. In United States behave in a manner fully consisthe Federal Reserve's view, this proposal virtu- tent with market practices and in compliance ally to eliminate the activities in the United with law. Although we recognize that abuses States of all foreign government-owned banks have occurred, such abuses have been limited in cannot be justified and would have serious neg- number and cannot be attributed to the mere fact ative ramifications. The issues that I discussed of government ownership. earlier do not justify effectively closing the U.S. Section 201 of the bill would require each market to foreign government-owned banks. branch, agency, or representative office of a This bill would preclude participation in the U.S. foreign bank and each affiliate of a foreign bank market by some of the world's largest and sound- that is organized under the laws of any state or est institutions. Implementation of these restric- maintains an office in any state to report to the tions on the activities of foreign government- Federal Reserve annually the names of the de- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

500 Federal Reserve Bulletin • July 1992 pository institutions at which it retains deposit revocation of the charter or impose other comaccounts. In the Federal Reserve's view, this parable sanctions on any bank that is found to type of reporting does not appear to serve any have violated export control laws and regulameaningful purpose because, to the extent it is tions. Unlike the provisions that are applicable to needed, it can be obtained in the examination government-owned banks, these provisions are process. applied on a national treatment basis. I would The Federal Reserve already requires substan- note, however, that current law permits regulatial reporting by foreign banks. Branches, agen- tory authorities to terminate the U.S. activities of cies, and subsidiary banks of a foreign bank must a foreign bank that violates U.S. law and infile periodic call and country exposure reports. cludes any violation of export control provisions. These reports provide regulators with information to judge the behavior and performance of foreign banks. Information in these reports also CONCLUSION permits the Federal Reserve and the other regulatory agencies to compare foreign banks with In summary, the Federal Reserve believes that their domestic counterparts. Moreover, under existing regulatory tools, bolstered by the rethe recently enacted Foreign Bank Supervision cently passed Foreign Bank Supervision En- Enhancement Act, each branch, agency, and hancement Act, are sufficient to deal with the subsidiary bank of a foreign bank is examined at issues presented by the activities of foreign least annually and more frequently if necessary. banks that are owned by foreign governments. In contrast, the information required by this bill Accordingly, we oppose the bill's attempt to to be reported could become quickly outdated close the U.S. market to foreign governmentbecause deposits may be created and liquidated owned banks. If such a provision were enacted, quickly. the ultimate losers would be U.S. consumers of The requirement also would not appear to be financial services. The incidence of improper consistent with the principle of national treat- activities does not appear to be any greater for ment because comparable reporting is not re- government-owned banks than for other banks, quired of domestic banks and bank holding com- whether foreign or domestic. We recognize the panies. Finally, we are concerned about the need to monitor the activities of governmentextraterritorial reach of the provision: As owned banks, and we fully intend to take approdrafted, it may require reporting of deposits held priate enforcement action on a case-by-case baby a foreign affiliate of a foreign bank whether or sis. We also believe, however, that the problems not such deposits are related to U.S. operations. encountered do not justify the result called for in The final section of title II would require this legislation. • Statement by Lawrence B. Lindsey, Member, lending enforcement and Community Reinvest- Board of Governors of the Federal Reserve Sys- ment Act (CRA) activities. tem, before the Subcommittee on Housing and Last October, when Governor La Ware, as Community Development and the Subcommittee Chairman of the Federal Financial Institutions on Consumer Affairs and Coinage of the Com- Examination Council (FFIEC), announced the mittee on Banking, Finance and Urban Affairs, release of the 1990 HMD A data, he indicated that U.S. House of Representatives, May 14, 1992 he found the data troubling. I fully share his concern. The preliminary analysis of the nation- I am pleased to address this committee about the wide data showed that three-quarters of all mortconcerns raised by the 1990 Home Mortgage gage loan applications are approved. But the Disclosure Act (HMDA) data. I would also like statistics on applications that were not approved to describe how we, at the Federal Reserve, are showed significant differences in loan denial rates expanding our data analysis to strengthen our fair among racial and ethnic groups. For example, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 501 although 14 percent of whites applying for con- erably toward better understanding the HMDA ventional home purchase loans were denied, 21 information. In the interim, the HMDA data will percent of Hispanic and 34 percent of African continue to provide our examiners with a basis American applicants were turned down. Dispro- for further analysis of whether institutions are portionately high rejection rates for Hispanics considering all applicants fairly. I will turn to a and African Americans were evident even when discussion of these activities later in my testiapplicants with approximately the same income mony. were compared. Let me be absolutely clear about the position of the Board of Governors. Discrimination based BACKGROUND ON HMDA on race, gender, or ethnic background is not only illegal, it is morally repugnant. Indeed, there is The Home Mortgage Disclosure Act was passed only one legitimate criterion on which to base in 1975. The law is based on the concept that the loan decisions: the expectation that repayment public should have access to information about will be made according to the terms stipulated in the home lending activities of institutions that the loan agreement. Our efforts must be directed serve their communities. One purpose of the act at ensuring that only this criterion is used to is to encourage balanced lending through the make home mortgage or other loan decisions. provision of data to financial institutions, regula- The HMDA data make clear that the differ- tors, and the public. ences in denial rates when applicants are grouped To that end, the Federal Reserve Board's by race do not change notably regardless of efforts to collect and process the data, and make income. Turndown rates for minorities substan- it publicly available, have been in effect for some tially exceed the rate for whites whether one time. Since 1980, the Federal Reserve, on behalf looks at low-income or high-income groups. Sim- of the federal financial regulatory agencies, has ilar patterns exist if one looks at neighborhoods compiled information about the home lending instead of applicants. The proportion of loan activities of institutions covered by HMDA— denials for home purchases increases as the basically, those lending institutions with offices percentage of minority residents increases re- in metropolitan areas. By matching the specific gardless of the income level of the neighborhood. loans reported with demographic data from the The fact that denial rates differ among racial census file, we produced individual HMDA regroups in spite of statistically controlling for ports showing the home lending picture for each income underscores the troubling nature of these reporting lender, as well as aggregate reports for findings. lenders in each metropolitan area. Many observers have pointed out that the For regulators, HMDA data have augmented home mortgage picture is more complicated than other procedures for detecting illegal credit practhe preliminary analysis of the HMDA data indi- tices and discrimination in examinations for concates. These observers are undoubtedly correct. sumer compliance. For example, in checking for Income is not the primary reason for mortgage compliance with the Fair Housing and Equal denials. The 1990 HMDA data make clear that Credit Opportunity Acts, examiners draw samcredit history was the single most commonly ples of mortgage files to compare with the insticited reason for credit denial for whites, African tutions' stated underwriting policies to ensure Americans, and Hispanics. That fact should re- that all applicants are treated fairly. Similarly, in mind us that analysis of mortgage application assessing Community Reinvestment Act (CRA) decisions is analytically complicated and statisti- performance, HMDA data have often been a key cally tricky. Indeed, when the New York State indicator of how well banks are helping to meet Banking Department investigated the lending per- the credit needs of their entire communities, formance of ten savings banks in that state, they including low- and moderate-income and minorfound little suggestion of bias. ity areas. As a result of the complexity of this issue, the Many banks have found that HMDA data Federal Reserve is increasing its efforts consid- provide valuable marketing information, en- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

502 Federal Reserve Bulletin • July 1992 abling them to compare their performance with CAUTION REGARDING RAW DATA AND that of competitors. We have strongly encour- THE BOSTON STUDY aged banks to study their own HMDA data as a way to spot apparent "gaps" where credit ser- Although the HMDA data provide very useful vices may not be reaching certain segments of information, the data are not perfect, and we their communities. urge caution in drawing too many conclusions Community groups have often used the,data to from a preliminary review of the data. The probassess the home lending performance of institu- lem with drawing conclusions from the raw data tions currently doing business in their neighbor- is not just theoretical. It would be a mistake to hoods, as well as those seeking to do so by discount the effect of a variety of factors that are merging with or acquiring a local institution. at work in the loan process. According to the Through the CRA protest mechanism and other HMDA reports filed for 1990, credit history was means, these groups and others have the oppor- the single most common reason for credit denial. tunity to use the HMDA data and voice their However, the HMDA data do not contain any concerns about a banking organization's CRA information regarding applicants' credit histories performance. HMDA data have also provided or a wide range of other factors that lenders the basis for numerous studies over the consider in evaluating loan applications, such as years—by community groups, academic and debt-to-income ratio or job experience and news organizations, the Federal Reserve, and tenure. others—of how home loans are distributed We also must bear in mind the statistical across neighborhoods and income and racial ramifications of volume. For example, an instigroups. tution that has a very aggressive outreach pro- With the statutory changes that took effect in gram compared with an institution in which no 1990, HMDA data now provide an even more such effort is made will undoubtedly generate a valuable tool to all parties concerned—especially higher volume of applicants. However, the instito us, the regulators. For the first time, HMDA tution with the outreach program may be statisdata collected for 1990 included information tically penalized for the effort because gathering about applications that are denied or withdrawn; a greater number of applications may result in about the race, gender, and income of applicants; receiving a large number from less-qualified borand about the secondary market purchasers of rowers. This, in turn, may result in higher rejecloans sold by lending institutions. The data also tion rates in areas with high concentrations of include, in about 60 percent of cases, the princi- low- and moderate-income people. This could be pal reasons cited by lenders for credit denial. one reason why some minority-owned institu- Gathering and analyzing these new data rep- tions turned down requests for home purchase resent a substantial commitment of resources loans relatively more frequently than other by all the agencies. In fact, the new HMDA data HMDA lenders. were the most massive data collection effort The need for a better understanding of the data ever undertaken by the Federal Reserve, in- and more careful analysis is clear. Therefore, the volving nearly 9,300 reporting institutions, rep- Board has authorized the Federal Reserve Bank resenting about 24,000 reports for metropolitan of Boston to conduct—in consultation with other areas and more than 1.2 million pages of data. federal supervisory agencies—a detailed study About $2.8 million has been spent to develop that should help answer some of the questions the system to process the HMDA data, and as raised, at least in the Boston area, in our prelimof September of last year the agencies had spent inary review of the HMDA data. In the study, we an additional $2.6 million to process the 1990 plan to gather additional data on African Ameri- HMDA data. Last year we were able to release can, Hispanic, and white applicants from more the data to the public about six months after the than one hundred financial institutions operating reporting deadline, and we are looking at ways in the Boston area. We believe that these data to speed up the processing time beginning with may prove useful in designing programs to rethe 1991 data. duce racial disparities in mortgage rejections. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 503 The Boston study will give us an indication of cation of areas of both strength and weakness of which creditworthiness criteria are used by fi- institutions with respect to CRA. nancial institutions in making mortgage loan de- At the same time, we have been working to cisions. Let me stress that this does not mean develop additional practical applications of the ratifying the existing set of criteria. Some of enhanced data for the examination process. Exthese criteria may have evolved through custom aminers have access to the mainframe computer and may not be statistically linked to the likeli- by using our software capabilities. They can now hood of timely servicing of the loan. Information readily retrieve and analyze this wealth of new from the Boston study may stimulate financial data. We regard this automation capability as institutions to reassess their criteria for determin- essential, given that the new HMDA aggregation ing creditworthiness. The incoming information tables for a single institution can be several might also help us inform consumers about ac- hundred pages long. We continue to make additions they could take to improve their likelihood tional modifications to enhance the examination of loan approval. process for fair lending and CRA. To accomplish The second benefit of the Boston study will be this, the Federal Reserve has made a substantial an improved ability to determine how much of investment of resources and will give further the discrepancy in lending rates among racial advancement of this work high priority. groups is accounted for by key financial and We are not acting alone in this process, but in employment variables that loan officers consider concert with the other federal financial regulain their credit evaluations. To the extent that tory agencies, to implement the HMDA analysis these financial variables do not explain the dis- system. Because only 7 percent of the HMDA crepancies, we intend to use the HMDA data to lenders are under the direct supervision of the guide examiners to specific loan application files Federal Reserve, we have been sensitive to the for more extensive review. need to ensure that the other agencies have access to the HMDA data stored on the Board's mainframe and to coordinate with them any necessary adjustments or additions to the sys- OTHER STEPS TO IMPROVE ENFORCEMENT tem. An interagency working group has also been formed to work on more advanced analytical In spite of the limitations, the HMDA data are tools and training for examiners from all the already augmenting the work of our examiners. agencies. For example, in CRA examinations HMDA data Although we are working on the application of now provide a more precise picture of lending uses for the HMDA data to strengthen the exampatterns for individual banks, and for the market ination process, we have been drawing on other as a whole. For example, examiners can now methods at hand to promote compliance with fair look at how application activity is distributed lending laws. The Federal Institutions Reform, among various segments of the community; Recovery, and Enforcement Act of 1989 whether lending in low- and moderate-income (FIRREA) allowed the imposition of civil money neighborhoods is, in fact, proportional to low- penalties to address any violation of law and and moderate-income borrowers; to what extent regulation. We have already used this power to the gender of applicants seems to be related to impose fines in the consumer area, and other the bank's propensity to lend; whether approval such enforcement actions addressing violations rates are higher for different types of loan prod- of the Equal Credit Opportunity Act and nonucts (such as conventional vs. government- compliance with the CRA are in process. Alinsured mortgages); and how a bank that is being though to date the actions have involved fair examined compares with its peers in its share of lending issues other than racial discrimination, lending in specific neighborhoods. Such informa- we will not hesitate to impose the stiff fines that tion, along with information gathered about other the law now permits for all types of violations. aspects of CRA performance during the course of During 1991, we began a series of meetings the examination, can provide a more solid indi- with the Department of Justice, the Department Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

504 Federal Reserve Bulletin • July 1992 of Housing and Urban Development, the Federal ination—but we are not stopping there. The Trade Commission, and the other financial insti- ultimate goal of these laws is to ensure that safe tution regulators to discuss fair lending issues and sound lending takes place in every commuand our enforcement activities. In particular, we nity in the country and that it is done fairly. We have been in contact with staff members of the have long believed that this goal could be Department of Justice about an ongoing investi- achieved by other programs that serve as a gation of mortgage lending practices in Atlanta, counterpoint to enforcement activities. Consewhich may lead to new techniques for determin- quently, for many years the Federal Reserve, ing whether a lender has illegally discriminated through its Community Affairs Program, has against creditworthy applicants. The financial worked with lenders around the country to refine institution regulators are in the process of retain- strategies for community development lending. ing a consultant to review our civil rights en- In 1991, we shared this type of experience and forcement training and procedures. These efforts expertise through nine newsletters published by should help us design new tools for analyzing the Reserve Banks, 124 conferences and seminars, fairness of an institution's mortgage lending and more than 300 speeches at the invitation of activity. banking and community organizations. Exam- The Federal Financial Institutions Examina- ples of these efforts include a new community tion Council has just released a new brochure development finance curriculum designed to entitled Home Mortgage Lending and Equal teach bankers, nonprofit organizations, and oth- Treatment that will be useful as we continue to ers the basic skills of community development emphasize the education of lenders, as well as lending using actual case studies; the developconsumers, about potential pitfalls in the mort- ment of manuals and software by Reserve Banks gage lending process. The publication alerts lend- that can help lenders structure sound loans when ers to subtle forms of discrimination that can public and private funds are involved; and our occur, perhaps unknowingly, in the lending pro- provision of technical support to multibank mortcess and how to avoid them. We are sending gage lending pools that are attempting to make copies to all the banks we supervise, expecting housing credit more readily available to lower that it will prompt many of them to take a closer income and minority communities in several look at some of the long-accepted loan origina- states. Although many of these initiatives have a tion, underwriting, appraisal, and marketing broader focus than just minority housing conpractices that can have unintended discrimina- cerns, they all contribute to the assurance that tory effects. We published a similar guide for we are making progress in helping financial insticonsumers entitled Home Mortgages: Under- tutions serve their entire communities. standing the Process and Your Right to Fair In conclusion, I am concerned, as you are, Lending just over a year ago. about the direction and use of the HMDA data. I am also deeply concerned about the many complex problems that seem to underlie the data. COMMUNITY ECONOMIC DEVELOPMENT Obviously, there is a great deal to be done. The Federal Reserve stands ready to work with you, In short, we are committed to continued efforts the industry, consumers, and others in furthering that can detect and prevent illegal credit discrim- this important effort. • Statement by J. Virgil Mattingly, Jr., General I am pleased to appear again before this subcom- Counsel, Board of Governors of the Federal mittee to report on the Federal Reserve's actions Reserve System, before the Subcommittee on regarding the Bank of Credit and Commerce Terrorism, Narcotics and International Opera- International (BCCI). Since my last appearance, tions of the Committee on Foreign Relations, on August 1, 1991, the Federal Reserve has U.S. Senate, May 14, 1992 continued to investigate the circumstances under Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 505 which BCCI gained control of the shares of U.S. viduals concealed this illegal transaction from the banking organizations, to prosecute enforcement Federal Deposit Insurance Corporation (FDIC), actions against those responsible for wrongdoing the primary federal regulator of Independence by BCCI, and to work to ensure the separation Bank, as well as from the Federal Reserve. and insulation of U.S. banking organizations An additional notice was issued on July 29, from BCCI. Substantial progress has been made 1991, which alleged that BCCI had illegally acon each of these fronts and includes, most re- quired control of the shares of National Bank of cently, shareholder approval of the Federal Re- Georgia, CenTrust Savings Bank, and Credit and serve's proposal for an independent trustee to Commerce American Holdings, N.V. (CCAH), hold the shares of the First American banks. the parent holding company of First American Today, I will provide a status report on the Bankshares. The Federal Reserve assessed a investigation and describe the actions that the $200 million civil money penalty against BCCI Federal Reserve has taken to date regarding the and initiated proceedings against nine individuals First American banks and Independence Bank. associated with BCCI to bar them from any future involvement with U.S. banking organizations. These individuals included Kamal Adham, FEDERAL RESERVE ENFORCEMENT Faisal Saud Al-Fulaij, A.R. Khalil, and Sayed ACTIONS Jawhary, each of whom the Federal Reserve alleged served as a nominee for BCCI in acquir- The Federal Reserve is actively and aggressively ing shares of CCAH, and five others, including pursuing its investigation of BCCI and those who Abedi and Naqvi. assisted it in illegally and secretly gaining control At the request of the Department of Justice, of the shares of U.S. banking organizations. which had concerns about double jeopardy in the Because the investigation is ongoing, I must event of a criminal prosecution, the Federal refrain from divulging details that could prejudice Reserve deferred an assessment of civil money our case or the cases of the other law enforce- penalties against these individuals. In September ment officials with whom we are working. I can, 1991, after the Justice Department's withdrawal however, describe the charges that have been of its request for deferral with respect to Shoaib made public and the extent of the investigation to and Pharaon, the Federal Reserve assessed civil date. money penalties of $20 million against Shoaib As you may recall, on July 12, 1991, the and $37 million against Pharaon in connection Federal Reserve, acting on the basis of its inves- with the Independence Bank acquisition. These tigation of the BCCI matter over the preceding assessments are in addition to the $200 million months, took enforcement action against four assessed against BCCI. The Federal Reserve, individuals for their involvement with BCCI's represented by the Justice Department, moved in illegal acquisition of Independence Bank, U.S. District Court to freeze the U.S. assets of Encino, California. These individuals were Agha Shoaib, including certain deposit accounts. A Hasan Abedi and Swaleh Naqvi, the two former freeze order was entered on October 15, 1991. In senior officers of BCCI; Kemal Shoaib, a former March of this year, the Federal Reserve entered senior officer of BCCI and the former chairman a default judgment against Shoaib, after the recof Independence Bank; and Ghaith Pharaon, a ommendation of the administrative law judge Saudi Arabian businessman who was the owner assigned to the case. The Department of Justice of record of Independence Bank and a share- is now pursuing collection actions against assets holder of BCCI. The Federal Reserve's notice belonging to Shoaib. alleged that these individuals arranged for Phar- On September 17, 1991, the Federal Reserve, aon to acquire Independence Bank on behalf of again represented by the Justice Department, BCCI, thus establishing BCCI as an illicit bank moved in U.S. District Court to freeze substanholding company in violation of the Bank Hold- tially all of the U.S. assets of Pharaon, and a ing Company Act and Federal Reserve regula- freeze order was entered that same day. Pharations. The notice further alleged that these indi- on's frozen assets represent an amount greater Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

506 Federal Reserve Bulletin • July 1992 than the penalty assessed against him, although appointed fiduciaries agreed to comply with the there are competing claims to the assets. Pharaon Federal Reserve's order of March 4, which rehas, through counsel, contested the charges quires BCCI to divest its interest in CCAH, First against him in both the action for civil money American Bankshares' parent holding company. penalties and the action seeking to bar him from Third, as part of the agreement, the court- U.S. banking. A substantial motions practice has appointed fiduciaries for BCCI agreed to coopertaken place before the administrative law judge, ate in the Board's investigation of violations of and dispositive motions by Pharaon and the U.S. banking laws and thereby to provide certain Federal Reserve are currently pending. BCCI documents that we have been seeking for As for the other individuals whom the Federal some time. Reserve has charged in the matter, Adham and Even as adjudication of the charges that the Jawhary have filed answers contesting the Fed- Federal Reserve has brought to date proceeds, eral Reserve's July 29 charges, and one other the Federal Reserve continues its investigation of respondent has consented to the entry of a cease- BCCI and those who were responsible for its and-desist order. Service of other respondents illicit activities in the United States. Federal has proved difficult because they are generally Reserve investigators and examiners have travlocated in the Middle East. However, with the eled throughout the United States and to several assistance of the Department of State, several foreign nations to compile evidence regarding respondents have been located and served, and BCCI's illegal acquisition of U.S. banking orgaefforts are continuing to effect service on the nizations. To date, Federal Reserve investigators remaining respondents. The Federal Reserve has have interviewed more than sixty individuals, also moved for a default judgment against Abedi issued more than seventy-five subpoenas for the and Naqvi, who have been served. production of documents, and taken numerous On December 19, 1991, the fiduciaries ap- formal depositions comprising thousands of pointed by the courts in the United Kingdom, pages of testimony. Federal Reserve investiga- Luxembourg, and the Cayman Islands to admin- tors have also reviewed hundreds of thousands of ister BCCI's affairs in liquidation entered into an pages of documents. agreement with the Justice Department, the New The Federal Reserve's investigators have York County District Attorney, the Federal Re- sought the cooperation of foreign law enforceserve, and various federal and state regulatory ment and regulatory agencies. The Bank of Enagencies whereby BCCI agreed to plead guilty to gland has been particularly cooperative. Howfederal and state criminal charges and to forfeit ever, bank secrecy laws in other countries in its assets in the United States, estimated at more which BCCI operated continue to hinder the than $500 million. The agreement was approved ability of Federal Reserve investigators to obtain and the conviction entered by the U.S. District necessary information. Court for the District of Columbia on January 24, At home, the Federal Reserve's investigators 1992, and by the appropriate New York court on have continued to work with both the New York December 20, 1991. Under the agreement, BCCI County District Attorney's Office and the Justice also consented to the Federal Reserve's $200 Department, with whom the Federal Reserve has million civil money penalty action, with the Fed- established excellent, cooperative relationships, eral Reserve agreeing to stay collection of the to unravel the relationships of BCCI to U.S. penalty in light of the forfeiture to the Justice banks. Department of BCCI's U.S. assets. I would note that the Board agreed to the FEDERAL RESERVE ACTIONS REGARDING settlement because it achieved the Federal Re- U.S. BANKS serve's three primary aims. First, the assets forfeited under the plea agreement establish a First American Banks fund that is available to provide additional capital support to U.S. banking organizations that were Since the discovery in late 1990 of BCCI's conillegally acquired by BCCI. Second, the court- trol of certain shares of CCAH (First American Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 507 Bankshares' parent holding company), the Fed- force the court-appointed fiduciaries to sell eral Reserve has actively sought to achieve a BCCI's interest in CCAH, the fiduciaries would complete legal separation of the First American have first had to secure possession and title to the banks from BCCI. Arranging for divestiture has shares. Doing so would have entailed substantial been a difficult and complex process, plagued litigation regarding precisely which CCAH with uncertainties regarding the ownership of shares were controlled by BCCI, as well as certain CCAH shares and involving many parties foreclosure proceedings to secure title to the that are located in other countries and that often shares apparently pledged to BCCI as collateral have conflicting interests and claims. However, for loans to nominee shareholders. That process with the cooperation that the Federal Reserve could easily have involved years of litigation. has received from the Department of Justice and Because of these problems, the Federal Rethe New York County District Attorney, the serve pushed to transfer control of the First shares of the First American banks should American banks to an independent trust apshortly be placed in the hands of an independent proved by the record holders of CCAH shares as trustee with full authority to sell and convey title the most expeditious method of achieving the to the banks. The transfer of the banks to an divestiture on which the Federal Reserve inindependent trustee is designed to maintain pub- sisted. This would enable the banks to be sold lic confidence in the banks by providing them without the necessity of waiting for resolution of with an effective and complete insulation from the various claims to the CCAH shares. BCCI and related persons until they can be sold. During the fall of 1991, the Federal Reserve The process leading to the establishment of the and other involved parties agreed that divestiture trust began on March 4, 1991, when the Federal of the First American banks could be achieved Reserve ordered BCCI to submit a plan to divest most expeditiously by transferring to a trust all of its interest in CCAH. That order also restricted the shares of one of CCAH's subsidiary holding financial and other dealings between BCCI and companies, First American Corporation, rather the First American banks. BCCI submitted a than transferring BCCI's undetermined interest plan in May 1991 that provided for a trust to hold in CCAH shares. First American Corporation is the shares of CCAH and to sell the shares or the immediate parent of First American Bankassets of CCAH as soon as possible. shares, the holding company that controls the Before that plan could be implemented, how- First American banks.1 ever, overseas banking authorities closed BCCI This arrangement was deemed preferable to on July 5, 1991, and its affairs were placed in the the transfer of BCCI's interest in CCAH because hands of court-appointed fiduciaries in those the trustee would receive 100 percent of the foreign jurisdictions. Control of BCCI by the shares of a U.S. bank holding company, as court-appointed fiduciaries achieved a limited opposed to BCCI's lesser and disputed interest in separation of BCCI and the First American CCAH. The independent trustee would thereby banks, but the Federal Reserve continued to seek gain full and absolute control of the First Amerdivestiture to finally, completely, and irrevoca- ican banks and, because of this total control, will bly separate the two. be able to effect a sale and convey clear title to This effort was complicated by the fact that the banks. BCCI's interest in CCAH is not perfected, and Early this year, an individual trustee was identhe extent of that ownership interest is not clear. tified who was acceptable to all concerned, but BCCI is not the record owner of any shares of major issues remained, including funding and CCAH; the shares of CCAH are registered in the indemnification for the trust. The Board believed names of various individuals and corporate enti- that the plea agreement, which made funds forties. Rather, as the Board has charged, BCCI holds a beneficial interest—through nominee agreements and loans to shareholders—in more 1. First American Corporation is a wholly owned subsidthan 50 percent of those shares. Thus, although iary of Credit and Commerce American Investment, B.V. (CCAI), which, in turn, is a wholly owned subsidiary of the Federal Reserve might have attempted to CCAH. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

508 Federal Reserve Bulletin • July 1992 feited by BCCI available to support the First federal law. Under the Douglas Amendment to American banks, provided a method to resolve the Bank Holding Company Act, a bank holding these issues. The Justice Department provided company is prohibited from acquiring a bank in significant assistance in this regard. The depart- another state unless the acquisition is expressly ment proposed that the trust arrangement be permitted by the laws of the bank's home state. established through the U.S. District Court for Virginia, in which a large percentage of First the District of Columbia, which has jurisdiction American's banking assets are located, permits under the BCCI plea agreement. The New York the acquisition of banks in that state by holding County District Attorney and the proposed companies only from the southeastern United trustee endorsed this proposal, as did the board States. Therefore, banking organizations in the of directors of First American Bankshares, rest of the country are generally ineligible to which on April 30, 1992, recommended the pro- acquire the First American banks. posal to the CCAH shareholders. I should add that the Federal Reserve's pro- Because the trust arrangement required CCAH tective actions regarding the First American shareholder approval, the Board asked the man- banks have not been limited to arranging the aging directors of CCAH to call a special share- trust. The Federal Reserve has continued to holders meeting to consider the proposal. The monitor the banks' financial condition, to help meeting was called for May 12, and record hold- coordinate supervision of the banks among the ers of nearly 80 percent of the shares of CCAH relevant state and federal banking authorities, executed proxies directing the managing director and to encourage actions to maintain the banks' of First American Corporation's immediate par- capital. In this regard, over the last twelve ent, CCAI, to transfer the shares of First Amer- months the management of First American has ican Corporation to an independent trustee. arranged for the sale of individual First American Three CCAH record shareholders that hold the banks. The Valley Fidelity Bank and Trust Comremaining CCAH shares did not vote. pany of Knoxville, Tennessee, was sold on Sep- Under the terms of the trust agreement, the tember 2, 1991, and the First American Bank of trustee will, as I have indicated, hold all of the Pensacola was sold on January 15, 1992. In shares of First American Corporation and have addition, substantially all of the assets of the all the rights of a shareholder, including the First American Bank of Georgia were sold on exclusive right to vote the shares. The trustee is May 1, 1992. These actions have resulted in a directed to cause the sale of the First American substantial decrease in the assets of First Amerbanks expeditiously but within a one-year pe- ican Bankshares and have helped to maintain its riod, and it has the authority to transfer title to capital position. the banks without further CCAH shareholder approval or authorization. The trust agreement also establishes a process for determining which INDEPENDENCE BANK shares of CCAH are controlled by BCCI for the purpose of distribution of the proceeds of any Beginning in August 1991, Federal Reserve staff sale of the First American shares or assets held members began meeting with representatives of by the trust. The proceeds of any sale will be the FDIC, the Superintendent of Banks of the used to repay bona fide debts at the holding State of California, and the court-appointed fiducompanies, with the balance held by the court for ciaries for BCCI to obtain capital support for distribution to the legitimate shareholders of Independence Bank from the fiduciaries. Discus- CCAH. Proceeds of the sale attributable to sions proceeded through September and Octo- BCCI's interest in CCAH are forfeited to the ber, at which point the Justice Department en- Justice Department under the terms of the plea tered the negotiations and was able to conclude agreement. the plea agreement described above. Although Although the trustee now has authority to sell Independence Bank was ultimately closed by the the banks, the universe of prospective purchas- State of California, the plea agreement that folers for the banks may be somewhat reduced by lowed the Independence Bank negotiations pro- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 509 vides a fund from BCCI's forfeited assets that is BCCI documents located in Abu Dhabi that were available for repayment to the FDIC of the costs earlier withheld by BCCI on grounds of privilege. of resolving the bank. Those documents have recently been transferred to the court-appointed fiduciaries for BCCI, with whom the Board's request for access is pending. COOPERATION OF THE COURT-APPOINTED The Federal Reserve has also asked the Abu FIDUCIARIES AND ABU DHABI Dhabi government for access to former BCCI SHAREHOLDERS officers who were instrumental in the acquisition of First American and other persons in Abu In its efforts to effect the divestiture of BCCI's Dhabi who may have information regarding the interest in the First American organization, the acquisition. We are hopeful that favorable action Federal Reserve has sought the cooperation of will be taken on these requests in the near future. the court-appointed fiduciaries for BCCI and the Abu Dhabi shareholders of BCCI in connection with the trust proposal and other matters. EFFECT OF BCCI ON U.S. BANKING Soon after the fiduciaries' appointment on July ORGANIZATIONS 5, 1991, Federal Reserve staff members contacted the fiduciaries to determine their intention One of the primary questions on which Federal with respect to the divestiture plan that had been Reserve examiners and investigators have fosubmitted by BCCI before its closure. The fidu- cused is the degree to which BCCI affected the ciaries responded that they would cooperate with First American banks. The Federal Reserve has the Board in its efforts to achieve a trust agree- devoted considerable resources to determine ment, and they have recently joined with the whether and to what extent BCCI's illicit own- Federal Reserve and the other parties in support- ership resulted in harm to, or abuse of, the First ing the trust arrangement described above as a American banks. More than fifty experienced means of complying with the Federal Reserve's examiners from the twelve Federal Reserve Dis- March 1991 divestiture order and the plea agree- tricts have spent more than eight man-years in ment that incorporated that order. We also an- examining the First American Banks. Federal ticipate that the fiduciaries will provide certain Reserve staff members have also worked exten- BCCI documents that the Board has requested sively with other federal and state banking aurelating to the First American acquisition. thorities who have conducted examinations of The principal shareholders of CCAH—the the First American banks. ruler of Abu Dhabi and his eldest son and the Federal Reserve examiners have checked for Abu Dhabi Investment Authority—have been any business dealings between the First Ameriresponsive to the Board's requests regarding can banks and persons known or believed to be First American. Before the July 5 seizure of connected to BCCI. In addition, loan portfolios BCCI, the Abu Dhabi shareholders caused were sampled for any evidence of loans with BCCI, which they then controlled, to grant Fed- poor payment histories, frequent renewals or eral Reserve investigators access to many of the preferential terms, and for any other questiondocuments evidencing the BCCI nominee ar- able lending practices. The work of the Federal rangements regarding First American and Inde- Reserve examiners has included, among other pendence Bank. The Abu Dhabi shareholders procedures, a review of all loans of more than have also provided substantial financial support $50,000 that were charged off between 1982 and for the First American banking organization over 1991, selected overdraft reports for the last three the last eighteen months and have supported the years, all large loans repaid within six months of Federal Reserve's efforts to put in place a trust the examination, large depositor and high activarrangement that would include a transfer of ity accounts, personnel files and expense actheir CCAH shares to the trust. counts, and Bank Secrecy Act procedures. Ex- The Federal Reserve has made requests to the aminers also conducted an intensive review of Abu Dhabi government for access to certain wire transfer activities and reviewed real estate Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

510 Federal Reserve Bulletin • July 1992 transactions, securities purchases, and other came due after BCCI was closed on July 5, 1991, large-asset transactions. The Federal Reserve's and the BCCI subsidiary has not repaid the First workpapers and methodology have been reviewed American bank. The examinations produced no by the General Accounting Office and have been evidence that these transactions were undertaken made available to this subcommittee and others. other than in the ordinary course of business. In addition to these efforts, during the last In its July 29 notice, the Federal Reserve eighteen months, each of the primary federal and alleged that BCCI participated in certain managestate regulators for the First American banks has ment decisions of the First American Bank of conducted one or more full-scope examinations, New York, which included the selection of the which included in-depth reviews of all the banks' senior management of the bank and the purchase significant credit and deposit relationships. of branches. The notice also alleged that two of The Federal Reserve's examinations, and those the New York subsidiary's officers, who were of other federal and state regulators, have to date former officers of BCCI, monitored the First uncovered no evidence of abuse of the credit American bank's operations for BCCI. facilities of the First American banks for the With regard to the First American Bank of benefit of BCCI or its affiliates. The examinations Georgia, the examinations have not uncovered have not to date found any credits currently any direct loans to BCCI. Before the 1987 acquioutstanding to BCCI or its affiliates other than the sition of the National Bank of Georgia by First trade-related credits discussed below and a small American Bankshares, however, several inpayment under a letter of credit issued in connec- stances of common loan customers between the tion with a lease. At the holding company level, National Bank of Georgia and BCCI occurred, however, the Federal Reserve is continuing to and in at least two instances the bank made loans investigate the circumstances and terms under secured by standby letters of credit issued by which First American Bankshares acquired the BCCI. Loans to interests of Pharaon were also National Bank of Georgia in 1987 and the role that made. However, losses incurred on these loans BCCI or its agents played in the holding com- have been minor, and only one such transaction pany's decision to make that acquisition. since 1987 has surfaced. Two of the First American banks have received The Federal Reserve also continues to invesadditional scrutiny from the examiners: the First tigate a lease of certain property from Pharaon American Bank of New York because it served as entered into by the National Bank of Georgia in BCCI's correspondent bank in the United States 1985, from which Pharaon appears to have beneand the First American Bank of Georgia (formerly fited substantially. In addition, the National the National Bank of Georgia) because Pharaon Bank of Georgia, before its acquisition by First was the record owner before its acquisition by American, hired several individuals who had First American Bankshares in 1987. previously been employed by BCCI, and evi- Besides the review procedures described dence has appeared of BCCI influence over Naabove, Federal Reserve examiners reviewed all tional Bank of Georgia's management when clearing transactions of more than $100,000 by the Pharaon was the record owner. New York subsidiary over a two-year period. In Independence Bank was not a member of the addition, all transactions of more than $1,000,000 Federal Reserve System. As a nonmember bank for that period were analyzed by country of origin purporting to operate without a parent holding and by country of disposition. This effort was company, it was regulated by the State of Caliundertaken to determine whether BCCI improp- fornia and the FDIC. Representatives of the erly used the clearing functions of that bank. FDIC will discuss the results of their investiga- The review indicated that only certain trade- tion of Independence Bank. However, as noted related transactions between the First American above, the Federal Reserve has taken enforce- Bank of New York and a subsidiary of BCCI ment action against the former chairman of Inderesulted in a loss to the bank. Bankers acceptan- pendence Bank, Shoaib, charging him with havces issued by the First American Bank of New ing participated in BCCI's illegal acquisition of York on behalf of BCCI's Hong Kong subsidiary Independence Bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 511 CHANGES IN FOREIGN BANK SUPERVISION examination staff to carry out its new examination responsibilities and has promulgated in- The Federal Reserve is currently implementing terim rules to implement the entry standards the Foreign Bank Supervision Enhancement Act under the new act. The Federal Reserve hopes of 1991, legislation co-sponsored by Senator that the enhanced capabilities and new entry Kerry and passed by the Congress largely in standards will reduce the potential for a recurreaction to conduct at BCCI and Banca Nazion- rence of problems such as those presented by ale del Lavoro. The act provides a process to BCCI. Although new authority and expanded control the entry into the United States of foreign procedures cannot guarantee that criminal acbanks and to strengthen the authority of the tivity by foreign banks will not occur, they do Federal Reserve to supervise and regulate for- address the potential for illegal activities by (1) eign banks once they have entered. The new creating a bar to U.S. entry or operation in the entry standards established under the act include United States by weakly capitalized, poorly requirements of consolidated home country su- managed, or inadequately supervised foreign pervision and supervisory access to information banking organizations and (2) strengthening the regarding any foreign banking organization seek- Federal Reserve's capabilities to uncover illicit ing to do business in the United States. The act activity at foreign banks. also applies to foreign banks the same financial, managerial, and operational standards that govern U.S. banks. The act grants federal regulators additional authority to terminate the U.S. activ- CONCLUSION ities of a foreign bank that is engaging in illegal, unsafe, or unsound practices. The Federal Reserve is actively engaged in deal- In addition, the act grants the Federal Reserve ing with the BCCI matter and has deployed its authority to examine any office of a foreign bank most experienced and proven staff members to in the United States. The Federal Reserve is the task. The Federal Reserve will continue to authorized to coordinate examinations with other cooperate with federal, state, and foreign bank federal and state supervisors and is no longer supervisors and law enforcement agencies. Our directed to rely on the examinations of other immediate goals are to conclude our investigasupervisors in its examination of foreign banks. tion and initiate whatever additional enforcement Each branch and agency of a foreign bank must actions are warranted; to make the current sepbe examined at least once during each twelve- aration in fact between BCCI and U.S. banks a month period. complete and permanent separation in law so The Federal Reserve is working to strengthen that these banks can be relieved of any remaining significantly its supervisory capabilities and pro- BCCI taint and operate free and clear of this cesses with respect to the operation of foreign controversy; and to ensure that all wrongdoers banks in this country. For example, the Federal are prosecuted civilly and criminally to the ex- Reserve is in the process of expanding its tent provided by law. • Statement by Edward W. Kelley, Jr., Member, national Monetary and Financial Policies (NAC) Board of Governors of the Federal Reserve Sys- on the fiscal 1990 Commodity Credit Corporation tem, before the Committee on Banking, Finance (CCC) program for Iraq. and Urban Affairs, U.S. House of Representa- As you know, the NAC has been assigned by tives, May 21, 1992 the Congress the responsibility to assist in formulating U.S. positions in various international I am pleased to appear today to comment on the financial institutions and to evaluate the policies Federal Reserve's participation in the delibera- and practices of U.S. government agencies that tions by the National Advisory Council on Inter- make, or participate in making, foreign loans or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

512 Federal Reserve Bulletin • July 1992 provide various forms of credit guarantees as grams of CCC export credit sales guarantees that part of U.S. foreign lending programs. The Fed- were being proposed for Iraq by the U.S. Departeral Reserve was designated a member of the ment of Agriculture. The Federal Reserve, there- NAC under the Bretton Woods Agreements Act fore, was only willing to consider favorably conof 1945 and has participated in its deliberations siderably scaled-down programs of such credit since then. guarantees to Iraq. The NAC is an advisory body. The principal In considering the request for $1 billion in function of the seven members of the NAC is to additional CCC export credit sales guarantees for review proposed transactions, programs, and Iraq for fiscal 1990, Federal Reserve reservations policy issues related to those institutions—both were based on continued concerns about Iraq's national and multilateral in which the United creditworthiness at that time. The growing exter- States is a member—that are involved in making nal indebtedness of Iraq and questions about foreign loans. Iraq's ability and willingness to service this debt The diversity of interests, perspectives, and led to a growing Federal Reserve uneasiness in expertise represented by the member agencies of approving large, new CCC export credit sales the NAC allows a thorough airing of divergent guarantees for Iraq. The Federal Reserve also views on issues that come before the NAC. In noted Iraq's spotty debt-servicing record with most cases, a unanimity of views among NAC other bilateral official creditors that included incimember agencies is attained. On the occasions dents of unilateral and selective reschedulings. when no consensus is reached, it may indicate a Finally, the Federal Reserve questioned the apfundamental difference on a particular aspect of propriateness of allocating one-fifth of the CCC's the lending program under consideration that fiscal 1990 budget to one country and of the often reflects the particular vantage point and CCC's having such a disproportionate share of its institutional focus of the member agencies of the total CCC credits outstanding to one country. NAC. The unfolding Banca Nazionale del Lavoro In evaluating lending proposals and programs (BNL) case in the summer of 1989 reinforced the presented to the NAC, the Federal Reserve Federal Reserve's reservations and opposition draws on its financial perspective and expertise. about approving additional CCC export credit The Federal Reserve's principal contributions to sales guarantees for Iraq. The revelations of the the NAC process over time have been its ability BNL case, in fact, led the NAC to postpone a to assess objectively the financial and economic scheduled consideration of the fiscal 1990 prosoundness of proposals brought before the NAC gram of CCC export credit sales guarantees for and to share this expertise with other member Iraq. Only limited details concerning allegations agencies. concerning the connection between the BNL In light of this specialized focus of the Federal case and the CCC program to Iraq were known at Reserve in NAC deliberations, for those propos- the time that the NAC was considering the als that involve major considerations other than proposal for additional export credit sales guareconomic and financial issues in which the Fed- antees to Iraq. However, given the Federal Reeral Reserve has special expertise (for example, serve's ongoing and growing concern about when foreign policy or human rights issues are of Iraq's creditworthiness, even the limited allegaoverriding importance), the practice of the Fed- tions of linkages between the BNL case and the eral Reserve in NAC deliberations is not to take CCC export credit sales guarantee program proa position on these matters and to abstain in the vided, in our view, an additional reason to be formal NAC decisionmaking process. cautious about further extensions of such guarantees to Iraq. With regard to the Federal Reserve's position concerning the extension of CCC export credit The Federal Reserve's reservations and opposales guarantees for Iraq, even before the fiscal sition related to the fiscal 1990 CCC program for 1990 request for such guarantees, the Federal Iraq, therefore, were based on its evaluation of Reserve had become concerned about Iraq's Iraq's creditworthiness, which was reinforced by creditworthiness and about the size of the pro- the unfolding BNL case. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 513 Statement by Lawrence B. Lindsey, Member, different inflation scenarios. As such, a compar- Board of Governors of the Federal Reserve Sys- ison of the two can provide useful evidence for tem, before the U.S. Commission on Civil evaluating the proposition that inflationary poli- Rights, May 22, 1992 cies are useful in promoting economic opportunity. The first cycle ran from the 1973 peak to the 1981 peak, the second from the 1981 peak to the INFLATION AND ECONOMIC OPPORTUNITY 1990 peak. I believe that it is important to use peak-to-peak analysis to control for the effects of I am pleased to be able to be here today to the business cycle when determining levels of discuss some of the economic aspects of poverty household income. Although it is true that the and inequality in America. I would like to note at precise timing of business cycles is on a quarterthe outset that I am here as an individual and that to-quarter, or even a month-to-month, basis, the my views do not necessarily reflect those of my detailed data on household income and poverty colleagues on the Board of Governors of the rates are collected on an annual basis. Hence my Federal Reserve System. choice of the years 1973, 1981, and 1990 for In particular, I would like to address a wide- analytic purposes. spread misconception about macroeconomic pol- The 1973-81 business cycle was marked by an icy and economic opportunity. It is believed by aggressive fiscal and monetary policy posture many commentators that an aggressive and infla- that led to an increase in the year-over-year tionary monetary and fiscal policy environment inflation rate from 6.2 percent to 10.3 percent. is helpful for promoting economic opportunity. Not only was inflation accelerating over this The reason for this belief is twofold. First, the period, but it also maintained a relatively high creation of money and the consequent inflation average rate of more than 10 percent. By conprovide funds for the state while eroding the real trast, the 1981-90 cycle saw a deceleration in value of privately held financial wealth. Because inflation from 10.3 percent to 5.4 percent, with an financial wealth is relatively concentrated, this average rate of less than 5 percent. Certainly represents a highly progressive and redistributive these two periods should provide a test of the form of taxation. Second, other things equal, hypothesis that inflationary policies are good for inflation transfers real assets from creditors to opportunity and income distribution. debtors and effects a private redistribution be- The data suggest that this is probably not the sides the one carried out directly by the state. case. Table 1 shows the distribution of incomes The data that I wish to present today suggest of African American families in 1973, 1981, and that whatever the merits of this reasoning in 1990.1 The income levels have been adjusted for theory, it has not worked in practice. Rather than inflation and reflect 1990 price levels. During the massive quantities of fiscal or monetary stimulus, 1973-81 period little progress was made, on I believe that carefully targeted, incentive- average, by black American families. The real oriented policies are crucial to the advancement median income of black families fell nearly 11 of economic opportunity for all Americans. Al- percent, far more than the 8.8 percent decline for though for data reasons the emphasis of my white families. Most troubling was a sharp rise in comments will be on evaluating the economic the number of families with real incomes under standing of African Americans, I believe that my $10,000, although the deterioration in black famconclusions are probably applicable to other rel- ily income was indicated among all income atively disadvantaged ethnic and racial groups as groups. well as to individual Americans seeking eco- By contrast, the 1981-90 period saw a rise in nomic opportunity. median black family income of 12.3 percent, The U.S. economy is now in the early stages of compared with a 9.2 percent rise in white median the third business cycle we have experienced in the last two decades. The first two of these 1. The attachments to this statement are available on business cycles were marked by very different request from Publications Services, Board of Governors of sets of monetary and fiscal policies and very the Federal Reserve System, Washington, DC 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

514 Federal Reserve Bulletin • July 1992 family income. Most striking during this period do not correspond with enhanced economic was the sharp rise in the proportion of black opportunity. In fact, lower inflation helps to families with incomes over $50,000.1 think these advance one of the very important measures of data illustrate that significant gains were made by economic opportunity in America: home ownmany African Americans over the past decade as ership. The fact is, lower inflation and interest a significant black middle class emerged. Al- rates greatly increase the ajfordability of housthough this period was generally positive, I do ing in America. The National Association of find it troubling that more gains were not made Realtors puts out a housing affordability index. by the lowest income group. Although this group Today, by this measure, housing is more affordexpanded greatly during the 1970s, it failed to able to the typical family than it has been at any contract significantly during the 1980s. time since 1976. If one uses a slightly more One important adjustment to looking at income complicated statistic that adjusts for housing data is the role of family size. Table 2 presents quality, the favorable affordability comparison the income of African American families in var- dates back to 1973. That is particularly good ious quintiles relative to the poverty threshold news for those families seeking to get their feet for a family of that size. In the top three quintiles, firmly planted on the ladder of economic opporthe data indicate a relatively stable income-to- tunity and those entering the middle class. In poverty threshold pattern during the 1973-81 this regard, the lower inflation of the 1980s and period followed by a significant increase during the correspondingly lower level of interest rates the 1981-90 period. It should also be noted that were probably of tremendous assistance to black families in these income ranges made sig- those top two or three quintiles of African nificantly greater income gains than white fami- American families who experienced such a falies earning the same income levels. vorable income performance. However, the fourth quintile of black families Let me be clear on why lower inflation assists showed relatively little change in their income home ownership. Higher inflation and interest position, and the bottom quintile showed a rates impose a form of forced saving on homecontinuing decline in its income level. It should buyers. They must pay an inflation premium in be noted that these income data exclude in-kind their mortgage payment, which is offset by a rise transfer payments, which rose over this period. in the nominal value of their home. Lower infla- But the troubling fact remains that cash income tion lowers this forced saving component. As a for those black families who were least well off result, a lower cash flow is needed to finance an continued to deteriorate. A clear dichotomy identical house. Although the change may not exists between the quite favorable performance lower the long-term net benefits of home ownerof the top three-fifths of black families and the ship, it does allow more people to afford their much less favorable performance of other black own home. families. Our challenge today is to reach those who The third chart shows the impact of this on were not able to advance in the past. This the distribution of income among black Ameri- commission will be considering how to meet this cans. Between 1973 and 1990, the top quintile of challenge in the future. I believe that we need black families saw their share of total black incentive-oriented programs—lower effective family income rise 3.3 percentage points and rates of taxation, lower hurdles to owning one's the bottom two quintiles saw their share decline own business, and greater opportunities for 3.8 percentage points. Black family income home ownership. Each of these is targeted on today is less equally distributed than it was in individual initiative and attainment, which I be- 1973, and it is less equally distributed than is lieve is the key to success. What would be white family income. inappropriate, in my view, is a return to the I believe that all three charts document both inflationary policies of the 1970s. I believe that the success stories of the last decade and the such a return would not only be ineffective, but it challenges ahead of us in the 1990s. Most might also actually create new barriers to ecoimportant, they show that inflationary policies nomic progress for those who need it the most. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 515 Statement by Wayne D. Angell and Edward W. sury. Second, 9 percent ($158 million) of our Kelley, Jr., Members, Board of Governors of the expenses is for fiscal agency operations provided Federal Reserve System, before the Subcommit- to the Treasury Department and other agencies tee on Domestic Monetary Policy of the Commit- on a reimbursable basis. About 40 percent of tee on Banking, Finance and Urban Affairs of total reimbursable expenses was actually reimthe U.S. House of Representatives, May 27,1992 bursed in 1991. Altogether, about 55 percent of our total expenses is either recovered through It is a pleasure for Governor Kelley and me to pricing or is reimbursable. On a net basis the cost visit with this subcommittee today to discuss and to the public of the Federal Reserve System's review the Federal Reserve System's expenses operations is $776 million of the total $1.7 billion and budget. Today, as we look at the Federal budgeted for 1992. Besides priced service reve- Reserve System's budget for 1992, Governor nues the System has very large earnings on the Kelley will discuss the Board's budget and major System's portfolio of assets that are derived initiatives, and my comments will focus on the directly from required bank reserves, currency Reserve Bank budgets, as well as on major issuance activities, and foreign exchange activi- System initiatives. ties that enabled the Federal Reserve Banks to The Board has recently made available to the pay $21 billion to the Treasury in 1991. public and to this subcommittee copies of our publication, Annual Report: Budget Review, 1991-92, which presents detailed information HISTORICAL OVERVIEW about spending plans for 1992. The attached tables have been updated for 1991 actual experi- It might be helpful to put the budget for 1992 in ence, and, therefore, some variations exist from perspective by sketching the most recent tendata in that document.1 year history of System expenses. Between 1981 The actual increase in Federal Reserve System and 1991, Federal Reserve System expenses inexpenses from 1986 to 1991 has been 5.2 percent. creased at an average annual rate of 5.4 percent; This increase is not a cost increase for a constant System employment decreased at an average basket of services but reflects our response to annual rate of 0.1 percent; and volume in measupervision and regulation initiatives, expedited sured operations increased 30 percent over the funds availability (EFA) legislation require- ten-year period. Unit cost did increase in some ments, contingency planning initiatives, and sev- services in the early eighties as Federal Reserve eral major initiatives for the U.S. Treasury. Bank volumes fell after the implementation of For 1992, the Federal Reserve System has pricing under the Monetary Control Act. Howbudgeted operating expenses of $1.7 billion, an ever, after the transition to pricing was comincrease of 6.9 percent over the 1991 budget and pleted in 1983, the composite unit cost for all 7.4 percent above 1991 actual expenses. From functions has increased only 0.3 percent on an 1990 to 1991, expenses were up 6.3 percent, annual basis, even while improvements have reflecting a 0.5 percent underspending of the 1991 been made in the quality of services. budget. Before getting to the details of our 1992 For priced services, a decline in unit cost has plans, I would remind the subcommittee of two been particularly noticeable in the electronic aspects of Federal Reserve System operations payment areas. Automated clearinghouse (ACH) that affect our budget in unusual ways. First, 45 unit cost has decreased 7.7 percent per year percent of System expenses ($786 million) was (1981-91), and funds transfer unit cost has derecovered through priced service revenues. All creased 1.4 percent per year during this same increases in costs of priced services result in time period; since 1986, the decreases per year increased earnings returned to the U.S. Trea- have been 11.4 percent for ACH and 1.9 percent for funds. Volume growth has averaged almost 8 percent per year for funds transfer and 23 percent 1. The attachments to this statement are available on per year for ACH transactions (1981-91). In our request from Publications Services, Board of Governors of large check processing operation, on the other the Federal Reserve System, Washington, DC 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

516 Federal Reserve Bulletin • July 1992 hand, where there has been a significant effort to In presenting our spending plans for 1992, I improve the quality of service through increased would like to mention that both the Reserve availability and improved deposit deadlines, unit Bank budgets and the Board's budget must be cost has increased an average of 1.9 percent per approved by the Board of Governors. Reserve year since 1983. Many of these initiatives have Bank budgets are first approved by the Banks' resulted in reducing Federal Reserve float. The boards of directors and then reviewed by the daily average level of Federal Reserve float has Committee on Federal Reserve Bank Activities been reduced from $1.5 billion in 1983 to $348 before submission to the Board of Governors. million in 1991. Governor Kelley oversees the Board's budget, For our nonpriced cash operations—involv- and I will turn to him for that discussion. ing the distribution of currency and coin—unit costs have also been declining. Since 1983 the decline has averaged about 1.2 percent per BOARD OF GOVERNORS BUDGET year, with volumes increasing 4.4 percent per year. However, in our fiscal agency operations, The 1992 budget of the Board of Governors also nonpriced, unit costs have increased 4.8 comprises three parts: a Board operations budpercent per year since 1983, reflecting new get of $123.6 million, an extraordinary items operations and services for the Treasury. In this budget of $3.2 million for special projects of a area, the Federal Reserve System has managed unique or one-time nature, and an Office of several initiatives for the Treasury to improve Inspector General budget of $2.0 million. The long-term efficiency in Treasury securities and operations budget of $123.6 million is 12.5 persavings bonds and to improve the quality of cent greater than 1991 expenses. Increases in service to the public. Through 1991 the Federal salaries and benefits for current personnel and Reserve has added 468 staff members and spent in the price of goods and services account for 51 a cumulative $96 million on these Treasury percent of the rise. Initiatives to increase staffinitiatives. ing and improve automation, largely in the It is difficult to measure productivity im- supervision and regulation and monetary and provements in the supervision and regulation economic policy operational areas, account for area, and these activities have required signifi- the remaining 49 percent. cant increases in resources over the last ten The Board authorized 1,608 positions for the years. We do not have good data regarding the operational areas and 21 for the Office of Inspecbenefit to the banking system and the insurance tor General; no positions were required for the fund regarding the efficiency of additional su- extraordinary items budget. The budget added a pervision and regulation expenditures. Between total of 39 positions for the operational areas; of 1981 and 1991, the number of staff members for this total, 25 were for the supervision and regusupervision and regulation increased 610, and lation function. Coupled with positions added annual expenditures increased $137.5 million. during 1991 and fewer vacancies, the new posi- These resources have been employed to tions will enhance the Board's ability to manage strengthen the ability of the Reserve Banks to a growing work load in international supervision, identify and address problems in the banking enforcement, and litigation. The remaining 14 organizations under their jurisdiction. Obvi- positions were added for the monetary and ecoously, the Reserve Banks have had to deal with nomic policy function to strengthen and expand greatly increasing work loads in the past several long-term research, to help in a nationwide effort years as reflected in the record number of bank to improve the quality of government economic failures and problem banks, as well as in the statistics, and to enhance analytical capabilities increasingly complex issues they have had to through additional automation. face in reviewing and processing regulatory The budget did not fund any requirements that applications and in developing supervisory pol- might result from a proposed special investigaicies to deal with new and changing banking tive unit, pending further review of the requirerisks. ments and estimates of necessary resources. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 517 Operations Budget by Operational Area international supervision, policy analysis, applications, and litigation and enforcement. Monetary and Economic Policy. The budget Besides costs associated directly with new for the monetary and economic policy area is initiatives, the budget funded the Board's share $59.5 million, which is $4.5 million, or 8.2 per- of the automation costs for development of the cent, more than 1991 expenses. The budget pro- National Information Center (NIC). The NIC is vided an increased level of funding for the divi- the sole source of consolidated banking structure sions that support this function to meet an and financial data for bank holding companies. increasing work load, expand long-term re- When the entire NIC is established, complete search, and improve the quality of economic with national structure, supervisory, and certain data. Automation initiatives, including continua- financial data for financial and other related intion of the phased development of the research stitutions, it will be of major benefit to the computing system, were key elements of the supervision and regulation operational area. The divisions' plans to manage the work load. Be- 1992 funding was approved to continue the cause productivity improvements alone were not scheduled transition from existing software to sufficient to support these initiatives, fourteen software that can access the NIC database. The positions were added. completed NIC will reduce Systemwide costs, Investments in research automation have improve data integrity, and lead to more timely produced productivity gains that, combined and more meaningful analysis of applications, with adjustments in priorities and reductions in merger requests, and other actions. long-term research, have limited expenses and Substantial resources were also approved for the degree of staff growth for the monetary the rewrite of the programming that produces the policy function over the last five years. The Bank Holding Company Performance Report greater 1992 personnel authorizations, in large (BHCPR), an analytical tool used by all Reserve measure driven by an effort to meet analytical Banks and Board staff members. This report is requirements at the Board, also reflect in- utilized for determining the financial condition of creased requirements for support from the su- Bank Holding Companies in connection with pervision and regulation operational area. offsite analysis, on-site inspections, and reviews Questions on such topics as the farm credit of proposed mergers and acquisitions. system, insurance companies, interest-rate Finally, resources were approved for enrisk, capital standards, and regulation of gov- hanced software to access the Home Mortgage ernment-sponsored enterprises have added to Disclosure Act (HMDA) database to provide the work load. Studies on banking legislation, improved analysis of the data used in the examdeposit insurance, and consolidation in the ination, applications, and research areas. On an banking industry are typical of areas requiring annual basis, HMDA requires lending instituincreased attention. The additional staff re- tions that have more than $10 million in assets, sources will slow continued growth in the vol- and offices in metropolitan statistical areas, to ume of uncompensated staff overtime and will compile data regarding applications for originaallow for a moderate increase in long-term tion and purchases of mortgage and home imresearch. provement loans. These data are then submitted to the supervisory agencies and processed by the Supervision and Regulation. The budget for FFIEC to produce a disclosure statement that the supervision and regulation area is $38.5 the FFIEC must make available to the public. million; this amount is $6.4 million, or 19.9 Automation enhancements were approved to percent, over 1991 expenses. As noted earlier, replace obsolete equipment with equipment catwenty-five positions were added, which, in pable of greater interaction with the BHCPR, conjunction with positions added during 1991, NIC, HMDA, and other critical databases. The caused the majority of the increase. The addi- upgraded equipment improves the staff memtional positions were required to meet contin- bers' ability to meet tight deadlines with highued growth in the work load, particularly in quality analyses and finished products. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

518 Federal Reserve Bulletin • July 1992 Services to Financial Institutions and the staff increases to a minimum, the budget funded Public. Services to financial institutions and the increased use of contractual professional serpublic, which includes the payments function, vices to provide software development support has a budget of $3.3 million, an increase of $0.5 for important projects as well as expert advice million, or 15.8 percent, over 1991 expenses. The for data improvement and examiner training iniincrease was necessary to fund both improve- tiatives. The travel budget increased because of ment of cash tracking for the System and a lower higher airfares, a greater volume of travel to level of staff vacancies. resolve supervisory issues, and relocation costs for new staff members. Software expenses are System Policy Direction and Oversight. The higher as a result of rate increases for mainframe budget for System policy direction and oversight software and the changing technological needs of is $22.2 million, an increase of $2.4 million, or the Board. 12.0 percent, over 1991 expenses. The increase in this budget was tied to a lower level of vacancies, a new position, and the de- Capital Budget velopment of mainframe software to provide improved financial information. This budget also The capital budget for 1992 is $5.0 million, which funded continued upgrading of office automation is $54,600 greater than 1991 expenditures. The systems and the expansion of network facilities. budget provided for requirements in the areas of automation and telecommunications and improvements to facilities. Operations Budget by Object of Expense Continued investment by all the Board's divisions in workstation, network, and office auto- The most significant expense item in the Board's mation systems amounted to $3.3 million. The budget is for personnel, which accounts for about budget includes funds for a premises-wide net- 75 percent of operating expenses. The 1992 in- work, a document-management system, and a crease in the salary budget, $6.4 million, or 8.7 network for the administrative systems using percent, includes not only annual salary in- off-the-shelf software. creases for current personnel (4.9 percentage Facilities improvements include a multiyear points) but also salaries for new positions (3.8 effort to repair concrete slabs in the parking percentage points), both those added in late 1991 garage and a new air handler to improve heating, and the thirty-nine positions added for 1992. A ventilation, and air conditioning in the data cenlower vacancy rate also contributed to the in- ter. Capital funds will also be required for the crease. reconfiguration of office space. Retirement costs for 1992 are $0.8 million, or 16.3 percent, greater than 1991 expenses, primarily because of increases in the Board's matching Trends contribution to the thrift plan and in the wage base subject to social security and medicare The increase in the 1992 operations budget of the taxes. Board over 1991 expenses, 12.5 percent, was Insurance costs are $0.3 million, or 4.8 per- significantly greater than the 7.8 percent average cent, greater than 1991 expenses. The rate in- annual rate of increase for the past five years and crease for the health insurance plans, combined the 7.1 percent increase for the past ten years. with a higher level of staffing for new positions The larger increase reflects the surge in work and fewer vacancies, produced $0.5 million of load that has exceeded the ability of managers to increase. Partially offsetting these increases was absorb through improved productivity. a $0.2 million decrease in workers compensation, The average annual increase in Board costs reflecting a large one-time payout in 1991. since 1982 has been 6.3 percent. Although this The cost of goods and services accounted for figure is low relative to the substantial growth in 25 percent of the budget. To keep permanent work load, the annual rate of increase has been Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 519 rising. For example, in the ten years ending in crease reflects some reductions in the plan's 1990 the average annual increase was 6.0 per- benefits, necessary in light of the large and cent. The recent rise is attributable to a higher continuing increases that were projected to conlevel of staffing, adjustments of salaries resulting tinue indefinitely without management action. from a revised employee compensation program, and sharp increases in benefit costs, particularly for health insurance. The salary and benefit Extraordinary Items changes have had a particularly noticeable impact because 75 percent of the Board's budget is Three projects are covered by the extraordinary for staffing. For the first time since 1988, the items budget. The first is the 1992 Survey of goods and services budget increased at a faster Consumer Finances, which will collect important pace than the personnel budget. The shift is a financial data used for a wide variety of policy result of depreciation expenses on a larger stock analysis and monetary policy purposes. The projof capitalized automation equipment, costs of ect reflects the Board's interest in enhancing the maintaining the Board's facilities and providing quality of economic data by obtaining informaadditional office space, and a decision to satisfy tion on income, assets, debts, pensions, employsoftware requirements through temporary con- ment, use of financial services, savings behavior, tractual arrangements rather than hiring addi- and other characteristics of U.S. households. tional permanent staff. The latter decision was Cross-categorization of the data will allow impormade in recognition of the temporary nature of tant statistical observations that are useful in a the increased requirement for software develop- wide variety of economic studies. ment for major projects such as the NIC and The second project is an audit of the Federal HMD A. Reserve Bank of Kansas City by a public ac- Personnel costs have been affected by the counting firm, which was originally scheduled to increase in the total number of positions and the be performed in 1991. Because more lead time decline in the number of position vacancies. The was needed for procurement, the project was 1992 increase in positions, to a total of 1,608, rescheduled for 1992. The financial examinations returns the Board to the same number as in 1985. program in the Division of Reserve Bank Oper- In recent years, increases in the supervision and ations and Payment Systems will audit the other regulation operational area were offset by de- Reserve Banks as usual. The objective of the creases elsewhere. Between 1985 and 1991, the outside audit is to provide assurance that internal number of positions directly supporting the su- audits at the Reserve Banks achieve desired pervision and regulation function increased from controls and standards consistent with those 242 to 293, although the overall number of posi- applied by the accounting profession. tions at the Board declined. The 1992 budget The third project covered by the extraordinary provided an additional 25 positions in this area to items budget is a study by an outside consultant a new total of 318. to ensure the security of the transfer of funds and The combined effects of the revised employee securities via Fedwire. The study will focus on compensation program and the slowdown in the additional security enhancements that should be economy have resulted in a reduced rate of staff incorporated into the Federal Reserve System turnover and a lower level of vacancies. Turn- information security architecture to ensure secuover in 1991 was the lowest in many years, and a rity of the Fedwire system. low rate was projected in the 1992 budget. This is proving extremely important to the Board in meeting key requirements without further in- Office of Inspector General creases in the number of positions. The 1992 rate increase for the Board's health The 1992 Office of Inspector General (OIG) budinsurance plan, 6.3 percent, is significantly below get of $2.0 million was $0.4 million, or 28.0 the 22 percent average annual rate of increase in percent, higher than 1991 expenses. The increase the previous five years. The lower rate of in- was due largely to the addition of two new audit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

520 Federal Reserve Bulletin • July 1992 manager positions and related expenses. The request of the Treasury Department to bring office's goods and services expenses decreased operating efficiencies to the savings bond proslightly, primarily because of a one-time software gram. purchase in 1991 and reduced use of external Reserve Bank operations in today's environlegal services. ment require more reliable and secure computer Governor Angell will now discuss the Reserve systems, more office automation, and more com- Bank budgets. munication networks. These needs are met partly through the initiative for automation and contingency projects ($2.0 million). RESERVE BANK BUDGETS The remaining initiatives include $4.6 million for the last year of the plan to increase the The Reserve Banks' 992 expenses—both priced employer's share of the matching contribution to and nonpriced—were budgeted at 6.4 percent the thrift plan: In 1992 the employer's share will above the 1991 budget; the actual increase in increase from 70 cents to 80 cents on the dollar expenses between 1990 and 1991 was 6.2 per- up to 6 percent of salary. An additional $1.0 cent. Eight major initiatives account for almost a million is budgeted for currency processing third of the budgeted increase in Reserve Bank equipment and personnel to handle currency expenses. volume growth on the West Coast. The initiative with the largest expense impact Partially offsetting the above increases are is facility improvements, which will add $18.7 initiatives that will result in savings of $3.4 million to operating expenses in 1992, or 1.2 million. These savings are being achieved by percent of the operating budget. Expenses asso- increased productivity and consolidation of cerciated with two building projects account for tain operations in four Districts. nearly all of the increase: New York's East Rutherford Operations Center, $9.2 million, and Dallas's new building, $7.9 million. Expenses by Service Line Initiatives in supervision and regulation are expected to increase expenses by $8.5 million Besides these major initiatives, it may be helpful and employment by 108. A majority of the Re- to look at 1992 budgeted expenses on the basis of serve Banks see a need for additional staff mem- our four service lines. bers because of increased work loads, increased examination of foreign banks, and more problem Services to Financial Institutions and the institutions. Additional pressures result from the Public. Expenses for services to financial insti- 1991 passage of the FDIC Improvement Act. tutions and the public, which include all of the Travel and automation costs add to the salary priced services and some of the nonpriced serexpense burden for the additional staff members. vices, are budgeted at $1,042.1 million and ac- Nine Banks collectively have budgeted $2.8 count for two-thirds of total expenses. These million to improve the efficiency of check collec- expenses are increasing by $61.7 million, or 6.3 tion systems. Most of these projects are continu- percent, over 1991. Staffing for services to finaning efforts and are contributing to a reduction in cial institutions and the public is budgeted at check-staff levels. 8,974, a decrease of 70, or 0.8 percent. Expenses Expenses for fiscal initiatives, which are reim- of priced services (all of which are within this bursable, are expected to add $2.4 million. Most service line) are budgeted at $672.3 million, an of this increase is for the final phase of the increase of 4.0 percent; these services, inciden- Regional Delivery System, which involves cen- tally, are expected to generate revenues of about tralized issuance of over-the-counter savings $786 million. Nonpriced services within this serbonds. Another savings bond initiative, known vice line are budgeted at $369.8 million, an as Masterfile, provides for centralized processing increase of 7.5 percent. of payroll deductions and will also add expenses. Commercial check processing is by far the These projects are being implemented at the largest component in this service line ($504.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 521 million); it accounts for 48.5 percent of the continue to require special attention in the form service line's expenses and employs 5,480 peo- of extended examinations. The expense increase ple. The anticipated increase in expenses is $22.2 is also affected by initiatives for payment system million, or 4.6 percent, and employment is ex- risk and daylight overdraft pricing. In addition, pected to decline by 60, or 1.1 percent. The the passage of the FDIC Improvement Act of reduction in staff members results from contin- 1991 will require additional resources in 1992 ued automation in adjustments, conversion to mainly for the examination of branches of foreign optical disk storage systems, and improvements banks operating in this country. in return-item processing. Commercial check volume is budgeted to decrease 0.2 percent, and Services to the U.S. Treasury and Other unit costs are budgeted to increase 4.2 percent. Government Agencies. Expenses for services to Continuing efforts to increase automation in the the U.S. Treasury and other government agencommercial check service should continue to cies are budgeted at $180.1 million, an increase of lower unit costs in the future. $10.6 million, or 6.2 percent, over 1991. These Our other large operations in this service line expenses continue at about 11 percent of total are currency ($157.2 million and 1,524 people), expenses in 1992. Staffing levels are budgeted to automated clearinghouse ($89.5 million and 361 increase by thirty-two, or 1.7 percent. Operationpeople), and funds transfer ($75.7 million and 158 ally, the most significant development in this area people). Currency expenses are expected to in- is the continuing conversion of over-the-counter crease 10.8 percent over 1991 because of rising savings bonds to the Regional Delivery System, volumes and implementation of new high speed which is the main reason for the net staff inequipment. In automated clearinghouse, a 10.9 crease. Savings bond volume is expected to percent increase in expenses reflects an antici- increase 9.0 percent, and unit costs are budgeted pated volume increase of 15.9 percent. Funds to decrease by 0.4 percent. transfer is expecting stable growth and a decrease of 2 in its average number of personnel; Monetary and Economic Policy. Expenses in expenses will be up 8.8 percent primarily be- 1991 for the conduct of monetary and economic cause of increased data processing costs. policy at the Federal Reserve Banks total $113.0 million and account for about 7 percent of the Supervision and Regulation. Expenses for su- total budget. An increase of $6.3 million, or 5.9 pervision and regulation, budgeted at $261.2 mil- percent, is anticipated in 1992. Employment, lion for 1992, are expected to increase $23.9 budgeted at 794, reflects an employment increase million, or 10.1 percent, over 1991. This service of 11 over actual 1991. Besides providing for the line has been the fastest growing of the four and staff additions, the expense increase represents now constitutes 16.4 percent of total System salary administration actions and increased expenses, compared with 14.3 percent in 1987. equipment and data processing costs associated The budgeted level for staff members is 2,477, an with automation initiatives. increase of 135, or 5.8 percent, over 1991. The expense increase for supervision and regulation is concentrated in the salary and benefit Budgets by Object of Expense object for new and ongoing staff members as well as for travel, training, and automation (primarily Reserve Bank expenses on an object of expense laptop computers). Demands on the Federal Re- basis also might be useful to the subcommittee. serve Banks' examination staff members include more examinations of broader scope, increased Personnel. Operating expenses for personnel emphasis on Bank Secrecy Act issues, and the comprise officer and employee salaries, other need to monitor compliance with and pursue compensation to personnel, and retirement and enhancements to international risk-based capital other benefits. Total personnel costs account for standards. Also, our examination staff members 65.0 percent of Reserve Bank expenses and are must handle a large number of organizations that expected to increase 7.2 percent in 1992. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

522 Federal Reserve Bulletin • July 1992 Salaries and other personnel expenses account By their nature, capital outlays vary greatly for about 52 percent of 1992 Reserve Bank bud- from year to year. These expenditures are greatly geted expenses and are expected to be $47.5 affected by the near-completion of the Dallas million, or 6.1 percent, above 1991 expenses. building and New York's East Rutherford Oper- Salaries alone are budgeted to increase by $50.3 ations Center—and by outlays for datamillion, or 6.5 percent, and will be partially offset processing and data-communications equipment. by a decline in other personnel expense of $2.8 million, or 22.2 percent. The decrease in other personnel expenses results from a declining use SPECIAL BUDGET EMPHASIS of temporary help. Merit pay increases of $37.1 million, or 4.8 percent, account for about 74 The Board of Governors has continued to appercent of salary expense growth. Staffing level prove two research and development projects increases, promotions, reclassifications, and and has added a third project in the 1992 budget. structure adjustments account for about 26 per- These projects will provide long-range benefits to cent of salary expense growth. These increases the Federal Reserve and the banking industry are partially offset by position vacancies and and ultimately the American public. Because reduced overtime. spending on such projects is relatively high and Expenses for retirement and other benefits, short-term, the Federal Reserve accounts for which account for 13.0 percent of Reserve Bank them separately from its operating expenses. The budgets, are anticipated to increase $22.3 mil- budget for these special projects in 1992 is $20.1 lion, or 12.1 percent, in 1992. This increase.is the million. This amount includes $4.3 million for result of continued escalation in hospital and check image processing, $9.3 million for curmedical costs, a rise in social security, and an rency authentication sytems, and $6.5 million for increase in the thrift plan match in 1992. the new project in 1992—automation consolidation. Nonpersonnel. Nonpersonnel expenses ac- The check image processing project will concount for 35.0 percent of Reserve Bank expenses tinue to build on previous years' research—the and are projected to increase 6.2 percent in 1992. central concept is to test digital technologies to Equipment expenses are expected to increase record images for use in processing checks. The 8.1 percent and to account for 11.3 percent of focus in 1992 will be in three areas: (1) preparing total expenses in 1992. Most of the increase is in for sustained tests of high-speed image capture depreciation expenses resulting from acquisi- systems for the government check application; tions to expand data-processing and data-com- (2) developing low-speed personal computermunications capabilities because of increased based systems for the return-item application; work loads. and (3) leading efforts to develop industry stan- Shipping costs (primarily for check operations) dards for interchange of check images between account for 5.7 percent of the 1992 budget and banks. are projected to increase 3.5 percent in 1992. The primary concept of the second project, This relatively small increase is due primarily to currency authentication systems, is to improve savings in postage costs as a result of the imple- capabilities for detection of counterfeit notes in mentation of the Regional Delivery System for the processing of incoming currency deposits at savings bonds. the Reserve Banks—and thereby promote the Building expenses, which account for 9.2 per- integrity of U.S. currency in circulation. These cent of total expenses, are expected to increase efforts should lead to effective counterfeit detec- 10.3 percent in 1992 because of higher real estate tor devices that will be attached to the Federal Reserve's high-speed currency processing equiptaxes in several Districts and the full-year effect ment. of recently completed capital projects. New York's East Rutherford Operations Center and In 1992, the System will incur its first expenthe Dallas building project contribute heavily to ditures for automation consolidation. This projthe large increase in building expenses. ect involves the consolidation of all mainframe Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 523 computer operations at three sites within the management to obtain needed space through System—Richmond, Dallas, and New York. The leasing and renovating have provided only tem- 1992 project budget covers staffing of the project porary relief. Although the Federal Reserve does team and development of a detailed plan for lease space, experience has indicated that the achieving a consolidated automation environ- long-term costs of leasing are higher than the ment within the Federal Reserve System. costs of ownership. Before making any decisions Governor Kelley and I thank you for this related to the provision of space, I want to assure opportunity to address the subcommittee on the you that we thoroughly analyze the discounted Federal Reserve System budget. The existing life-cycle costs of several alternatives. budget processes are working well in controlling The latest analysis of projected building needs costs while at the same time encouraging quality from the Reserve Banks suggests that either improvements. We welcome your comments and renovations, additions, or new facilities may be would be pleased to address any questions you required in Birmingham, Nashville, Houston, may have on our budget. San Antonio, and El Paso in the next five to ten years. The remaining balance in the Branch fund prohibits us from addressing these needs. A brief TESTIMONY ON H.R.4398 description of each Branch's needs follows. You have also asked for our assessment of H.R.4398, the Federal Reserve Bank Branch Birmingham Branch Modernization Act, a bill introduced by Mr. Erdreich on March 5, 1992. This much-needed It is projected that the facility, constructed in action would remove outdated limitations on the 1927 with an addition constructed in 1959, will acquisition or construction of branch buildings soon be unable to accommodate the anticipated and should result in the least costly provision of demands and occupancy levels. The most signifspace for Federal Reserve operations. icant deficiencies are related to inadequate and The construction, expansion, or moderniza- inefficient operations facilities that include the tion of Branch Federal Reserve Bank Buildings is vault, the cash and check processing areas, and authorized in section 10 of the Federal Reserve the secure and general delivery areas. Also, in Act. Statutory limitations included in the act recent years the basement has been damaged place an accumulative ceiling on branch con- from a continuous influx of subsurface ground struction. As most recently amended in 1974, the water that necessitates continuous operation of a act places an aggregate cumulative limitation of sump pump. $140 million on funds that may be expended on Branch construction. Recently completed Branch buildings have exhausted the fund, and Nashville Branch as a result, the Federal Reserve is unable to pursue needed branch construction projects. The 1958 building will soon be inadequate to A few of our Branch buildings need attention accommodate facility and occupancy demands. not just because they are more than thirty years Specifically, the vaults and secure delivery court old, but more important because they do not are, or will soon be, inadequate to accommodate provide adequate types or amounts of space for volume levels. check and cash or provide efficient building support systems. The Federal Reserve has experienced significant changes in facility requirements Houston Branch in recent years, primarily related to automation of check and cash, that have exacerbated the The 1958 building is inadequately sized for the situation. Because many of the affected areas do long-term requirements. Specifically, the vault, not lend themselves to renovation—vaults and cash processing, and delivery court areas are not delivery courts, for instance—efforts by Branch adequate to allow efficient operations. In addi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

524 Federal Reserve Bulletin • July 1992 tion, should the Houston economy rebound to Those deficiencies are related to vault, operanear previous levels, the Branch's activities and tions areas, and delivery courts. subsequent facility demands will further increase Branches, even more so than head offices, are the pressure on the building. primarily engaged in providing services to financial institutions and the U.S. Treasury. These services include check collection, currency and coin processing and distribution, funds transfer San Antonio Branch services, processing of government payments, and other services. All costs to provide these Although the building, constructed in 1956, has services (including building costs) are recovered been well maintained, the facility does not proeither as reimbursable expenses (in the case of vide adequate vault, cash processing, and deliv- U.S. Treasury services) or by pricing the serery court areas. A significant upturn in the Texas vices. economy will require that additional space be To continue providing quality financial serprovided. vices in the most efficient manner, it is important that our facilities remain efficient. The provisions in the proposed amendment to section 10 would El Paso Branch enable us to provide facilities for delivering services efficiently to the nation's financial institu- The 1957 building exhibits deficiencies similar to tions and the Treasury. Therefore, we encourage those identified in the other Branch buildings. passage of H.R.4398. • Statement by Lawrence B. Lindsey, Member, any precomputed loan be provided on the con- Board of Governors of the Federal Reserve Sys- sumer's request. The bill would also amend the tem, before the Subcommittee on Consumer Af- Truth in Lending Act to regulate "lock-in" fairs and Coinage of the Committee on Banking, agreements by making a creditor's commitment Finance and Urban Affairs of the U.S. House of to a finance charge a requirement of the law, Representatives, May 27, 1992 unless the creditor clearly discloses that the offered finance charge is subject to change. The I am glad to appear before your subcommittee bill would also permit a consumer to withdraw an today to offer the Federal Reserve Board's com- application without additional obligation within ments on H.R.5170, the Mortgage Refinancing three days after receiving disclosures. Finally, Reform Act of 1992. The bill would amend both the bill would increase the amount of civil monthe Truth in Lending Act and the Real Estate etary penalties that could be imposed for violat- Settlement Procedures Act (RESPA) to require ing the act in residential mortgage transactions good faith estimates of costs in refinancings of and refinancings. home loans within three days after an application has been made. The bill also would add a new section to the Truth in Lending Act to require NEED FOR ADDITIONAL COMPLIANCE "prompt" refund of unearned finance charges BURDEN and insurance premiums when any consumer credit transaction is prepaid; prohibit the use of In our view, new regulation, even though well the "Rule of 78s" method for calculating the intended, must pass a basic test of balance and amount of finance charges to be rebated in pre- reasonableness. Consumer legislation should balpayments of precomputed loans, and instead ance the need to address problems with the cost require the use of the actuarial method or another of such regulation to both consumers and lendmethod that is as favorable to the consumer; and ers. This approach is not only in the interests of require that a disclosure of the amount due on the economy as a whole, it is also in the interests Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 525 of consumers. Although consumers may benefit cost information), three complaints about prein some sense from protective regulation of the payment penalties, and no specific complaints consumer credit market, for example, they may about the Rule of 78s rebate method. Further, we suffer if regulation leads to a restriction in the have not received many complaints about undue availability of low-cost credit options or if in- delays in loan processing causing lock-ins to creased costs are passed on to consumers. Pro- expire. We have recorded only about eighteen vision of additional paperwork in the mortgage complaints from consumers asserting delays in process, which is already paperwork intensive, is loan closings (including loss of locked-in rates). not costless to consumers. Although complaints are not a precise gauge of We understand the concerns that may have led the extent to which a consumer problem exists, to interest by the Congress in providing addi- the number of these complaints seems especially tional early information about costs in refinanc- small given the large volume of mortgage refiings and in restricting certain creditor practices nancings during that time.1 For example, accordin loan prepayments and in loan term commit- ing to data from the Home Mortgage Disclosure ments. However, we must express our general Act, in calendar year 1990, more than 700,000 opposition to the bill because we think that the (first and second lien) mortgages were refiburden and expense of compliance would out- nanced. We estimate that many more were refiweigh the consumer need for the legislation. nanced in 1991. Today, the need to consider the costs to finan- Based on these numbers, it does not appear cial institutions resulting from compliance with that widespread consumer problems exist. In the myriad of laws that regulate them is vital. The fact, we estimate that we may have received as Congress recognized this in the Federal Deposit many complaints from lenders about consumer Insurance Corporation Improvement Act of 1991 behavior in refinancings as from consumers by calling for the federal banking agencies to about lender behavior in refinancings. For examstudy the cost of compliance with banking regu- ple, lenders complain about consumers who lation. Because a significant increase in compli- make applications to several lenders, thus burance burden likely would result from enactment dening them with processing loan applications of the proposed amendments to the Truth in that likely will not become closed loans. Another Lending Act, we believe that a clear need for frequently mentioned complaint is that consumadditional legislation should be established be- ers threaten to rescind the refinanced loan after fore the Congress acts. We do not think that the closing—requiring the lender to refund all fees, degree to which problems exist has been suffi- including fees paid to third parties for appraisals ciently established to justify additional general regulation in the area of refinancing disclosures, rebate calculation methods, and rate commit- 1. The recent spate of refinancings may be over by the time ments. this legislation could be implemented. The latest refinancing boom seemed to reach a peak in January 1992, when rates for The existence of compliance burden does not fixed-rate loans were at a low of SlA percent, and the volume obviate the need for regulation when there is a has generally declined since that time. The last refinancing pressing need for additional consumer protec- boom was almost three and a half years ago; it lasted a few months from late 1986 to spring 1987. (According to the tion. At this point, however, the volume of weekly index of mortgage refinancing activity of mortgage complaints by consumers does not suggest that banking concerns published by the Mortgage Bankers Assosuch a pressing need exists. Since the beginning ciation, the greatest number of applications for refinancings was made during the week of January 17, when the index of 1991, the Federal Reserve System has regisreached a peak of 1,428.40. By the end of January, the index tered a total of almost 3,300 consumer com- was at 995.30. By the week of April 24, the index had plaints on various issues (about half of which declined almost 75 percent from the January 17 peak to a low of 341.50.) Because of provisions in the Truth in Lending Act, were referred to other regulatory agencies). Yet regulatory changes take effect only on October 1 and must be we received only thirteen complaints by consum- promulgated at least six months before that effective date. ers about various problems in refinancing loans Sufficient time also must be provided in advance of these statutory dates to develop implementing regulations and seek (five related to problems in getting a pay-off public comment. Thus, it is likely that the earliest this law amount and only three related to the adequacy of could be in effect is October 1, 1993. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

526 Federal Reserve Bulletin • July 1992 and credit reports—unless the lender negotiates a to explain these subjects and to give practical lower rate. advice to consumers (including a checklist of We also suggest bearing in mind that substan- questions to ask) so that they will be armed with tial new requirements already have been imposed adequate information when they shop for, and on real estate lending during the past few years. negotiate, loan terms. For example, A Con- For example, only two years ago, the Congress sumer's Guide to Mortgage Lock-ins informs amended RESPA to require several notices consumers that some lock-ins may expire beabout transferring mortgage servicing and about fore closing under certain circumstances and escrow account balances. About three years ago, also suggests that consumers carefully monitor a law was enacted that requires lenders to use the loan processing to help prevent any delays. only certified or licensed appraisers in most A Consumer's Guide to Mortgage Refinancings federally related mortgage transactions. Not that describes the types of fees that might be long ago, the Truth in Lending Act was amended charged and gives a range of their costs. We to require extensive early disclosures and other promoted the availability of these pamphlets in protections for home equity loans. All three of a press conference when they were initially these relatively new requirements have been published in June 1988 and again more recently identified by lenders as imposing great compli- by a press release in February 1992. We have ance burdens. And, of course, these require- printed 250,000 of these pamphlets to date. ments were added to the numerous consumer They are also available through the Consumer protection laws already governing real estate Information Center in Pueblo, Colorado, and lending. through the lending industry. Under the Truth in Lending Act, civil liability and statutory penalties of up to $1,000 per loan (and up to $500,000 in class actions) apply to COMMENTS ON PROPOSED AMENDMENTS certain violations of the disclosure require TO THE TRUTH IN LENDING ACT ments. Actual damages and court costs may also be recovered for a broader range of viola- We offer the following comments on the protions. The bill would add several new require- posed amendments to the Truth in Lending Act. ments that would be subject to monetary penalties and other penalties in case of successful recovery by a consumer in court. Furthermore, Early Disclosures for Refinancings the bill would increase these penalties tenfold for violations of the new requirements. It is The bill would amend section 128(b) of the critical to consider these potential and substan- Truth in Lending Act to require good faith tial financial risks to creditors from noncompli- estimates of disclosures about the cost of credit ance with the Truth in Lending Act when as- (such as the annual percentage rate (APR), sessing the burden that could be imposed by the finance charge, and payment schedule) whennew requirements. ever a home purchase mortgage that is subject A more desirable, and perhaps more feasible, to RESPA is satisfied and replaced with another alternative to extensive new legislation is to consumer credit transaction. The bill also encourage greater efforts by lenders to ensure would require that disclosures for these "refithat adequate information is provided voluntar- nancings" be given earlier (within three days ily to consumers about the costs of refinancings after application) than is now required. We and the degree to which a lock-in can be relied would like to mention some of the implications on. After the last refinancing boom in 1987, the of the amendment. Section 128(b), which cur- Board (along with other government agencies, rently requires early good faith estimates of and consumer and industry groups) prepared a Truth in Lending disclosures in purchase series of consumer information pamphlets money mortgages only, represents an exception about refinancings, settlement costs, and lock- to the general requirement that loan-specific ins. These information pamphlets were written Truth in Lending disclosures only need to be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 527 provided by consummation of the credit agree- Restrictions on Methods of Rebating ment (often at settlement). The statute requires Finance Charges disclosures to be given again at consummation if the APR for the loan varies from the early Proposed section 115 would require prompt reestimate by more than a small percentage. The bates of unearned finance charges and insurance bill would broaden the category of loans subject premiums upon prepayment of any consumer to early disclosure (and potentially redisclo- loan, regulate the methods for computing resure) requirements. Furthermore, as stated bates, and require disclosure of loan balances. above, the bill could also broaden creditors' The Board testified on a similar bill in the Senate exposure in litigation. in 1979 and continues to believe that the sum of Although under current Truth in Lending law the digits, or Rule of 78s, method for rebating consumers are not entitled to get estimated dis- unearned finance charges may be less fair to closures in refinancings of home loans within consumers who prepay longer-term loans in early three days after application, they do get more years than other methods, such as rebates calcuprecise credit disclosures before consummation. lated according to the actuarial method. Never- In addition, consumers possess another valuable theless, we do not recommend federal regulation protection under the law. When a consumer of the manner in which rebates are computed. refinances a home loan with a new creditor, or Under the Rule of 78s method, the finance increases his or her financial risk when refinanc- charge is earned faster than under the actuarial ing with the original creditor, that consumer is method. In general, the longer the loan term and entitled to the right of rescission. (A consumer the higher the rate, the less favorable the Rule of who refinances a loan with the original creditor 78s will be for the borrower who repays early and does not increase the loan amount may not compared with an actuarial method of computing rescind the loan.) The right of rescission allows a rebates. The Rule of 78s method is not typically consumer to cancel an obligation secured by a used in mortgages in which a periodic rate is principal dwelling for three days after the loan is applied to a declining balance and thus the issue closed. After rescission, the security interest in may not be closely linked to the perception of the home becomes void and the consumer is consumer problems in refinancing home purentitled to receive a refund of all fees paid to the chase loans. (As mentioned earlier, we have creditor or to a third party for the loan. Thus, if received no specific complaints by consumers consumers have been misled about closing costs since the beginning of 1991 about the use of the or finance charges, they have the right to rescind Rule of 78s in prepayments and very few comthe loan. plaints about prepayment penalties of any sort.) The proposed amendment could benefit some With some exceptions (such as home equity consumers by requiring early estimated disclo- loan restrictions and maximum APRs on adjustsures. However, in light of the relatively few able rate mortgages), the Truth in Lending Act complaints we have seen about consumer prob- generally does not involve the substantive regulems with refinancings, we are inclined to think lation of credit terms, such as the rate of interest that the existing disclosures and other protec- that can be imposed or the types of charges that tions that consumers have under the Truth in are permissible. Rather, the focus of the act is on Lending Act are probably adequate. If it is ensuring that consumers receive the most impordemonstrated that there is a widespread problem tant credit information before becoming contracwith consumers being misled about closing costs tually obligated. By venturing into substantive in refinancings, as suggested anecdotally in a regulation of credit terms through the Truth in recent newspaper article, a more targeted ap- Lending Act, proposed section 115(b) of the bill proach to the problem might be justified—such as would depart further from the statute's disclothe proposed amendment to section 3 of the sure orientation. RESPA to require good faith estimates of closing Traditionally, rebate methods like other yieldcosts (including points) within three days after producing terms, such as interest rates, the application. amount of transaction charges, and late charges, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

528 Federal Reserve Bulletin • July 1992 have been regulated by the states. More than half nance charges in mortgage loans will be honored of the states have either abolished or restricted if the loan is closed within a specified time. The the use of the Rule of 78s rebate method.2 bill would also impose additional disclosure re- Because the states consider all determinants of quirements on creditors. We would make many credit in fashioning their laws, they are probably of the same observations about these lock-in in a better position to regulate permissible rebate provisions as we have about the other provimethods in relationship to other terms. More- sions of the bill. First, the requirements would over, federal legislation prohibiting the Rule of involve another change in procedures and an- 78s could be viewed as the beginning of federal other new disclosure at a time when the comcontrol of a host of other terms that long have plaints about the burden of compliance with been controlled by the states. Rate (and insur- consumer protection laws affecting mortgage ance) regulation has been an important state lending are significant. Second, these provifunction, and we suggest great caution in over- sions also would expose creditors to substantial turning this tradition, particularly on a piecemeal additional civil liability risk in litigation by basis. creating a new set of requirements that will be Furthermore, it is uncertain whether the ben- subject to civil liability under the act generally efit to consumers of restricting rebate methods and by increasing these penalties for violations would exceed the associated costs to consumers of the new provisions tenfold. Third, we are not because creditors are likely to try to recapture aware of widespread problems with lenders any lost yield—possibly by assessing greater fees honoring their commitments. And finally, state to all borrowers, not just those who choose to regulation of loan terms in our opinion is prefprepay their obligations. erable to federal regulation, and we understand that more than half of the states already regu- The requirement in proposed section 115(c) of late lock-ins in some manner. the bill would impose an additional burden on creditors. That section requires a disclosure to be Proposed section 128(e)(1) would further transprovided, within five days of a consumer's re- form the disclosure orientation of the Truth in quest, of the amount necessary to prepay a loan Lending Act by making breaches of credit conwith precomputed interest. We also note that the tracts a violation of the act. Furthermore, an National Housing Act recently was amended to unintended result of this provision might be that require creditors to provide a similar statement creditors will avoid locking-in any elements of annually to borrowers on mortgages insured by the finance charge and instead make clear that the Federal Housing Administration. There might these "offers" are subject to change, as provided be additional burden to institutions from having to in proposed section 128(e)(2). comply with two sets of federal requirements on In another substantive provision, the bill disclosing the remaining principal balances that would allow consumers to withdraw their appliapply to different categories of loans. cations within three days after receipt of the disclosures, which are given within three days after application. A consequence of section Restrictions on Loan Term Commitments 128(e)(4) might be that creditors would wait six days after an application is received to begin The bill would also amend the Truth in Lending processing the application to see whether the Act to ensure that commitments relating to fi- consumer had mailed in a withdrawal. Thus, the bill could have the effect of increasing the length of time it takes to process a loan application. 2. We do not have information on the extent to which the Rule of 78s is being used to calculate rebates of unearned finance charges in prepayments. We suspect that it is not used widely in mortgage transactions. Furthermore, the CONCLUSION method already is restricted or prohibited in numerous jurisdictions. Based on information in a report by the Consumer In our experience, well-intentioned legislation Federation of America in January 1992, almost 60 percent of the states either restrict or prohibit the Rule of 78s method. and regulations, particularly as they pyramid one Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 529 on top of the other, involve a cumulative burden, and to recommend limited revisions designed to which is sometimes not fully appreciated. With reduce those burdens. All of us should be conthis in mind, the Congress has asked the federal cerned about the expense and burden of new banking agencies to study their regulations this rules when a need for legislation has not been year to assess the degree to which they impose clearly demonstrated. In our view, this need has unnecessary burdens on depository institutions not been established. • Statement by Theodore E. Allison, Assistant to would be affected by issuance of a dollar coin. As the Board for Federal Reserve System Affairs, will be seen, the budgetary impacts would be Board of Governors of the Federal Reserve Sys- somewhat complex, and the overall savings tem, before the Task Force on Economic Policy, would not come solely—or even predominant- Projections, and Revenues of the Committee on ly—through the Federal Reserve. the Budget, U.S. House of Representatives, Coins are placed into circulation in a process in May 28, 1992 which the Department of Treasury (1) mints new coins in accord with the needs of the public I am pleased to have this opportunity to present (using appropriated budget funds for all but the estimates of the impact on the Federal Reserve metal cost), (2) books a "profit" (called seignior- System of substituting a one-dollar coin for the age) equal to the difference between the face one-dollar bank note now in circulation, as would value of the coins and their cost of production, be required by H.R.1245, the United States One which is treated as a means of financing the Dollar Coin Act of 1991. In brief, a dollar coin federal budget, and (3) deposits the coins with could produce sizable cost savings for the federal the Federal Reserve Banks for credit to the government as a whole, for three reasons: First, Treasury Department's checking account. Thus, production costs for dollar coins, over time, in budgetary terms, production of additional would be lower than for dollar notes. Second, coins would (a) raise budgeted outlays by the Federal Reserve processing costs for incoming Treasury for Mint operations in the year of coin deposits would be lower than for incoming production and (b) increase seigniorage, and connote deposits. And, third, the Treasury's interest sequently reduce budgeted outlays for interest on saving as a result of one-dollar coin seigniorage the borrowing displaced thereby, in the year of would be greater than the Federal Reserve's production and in all future years. interest earnings derived from one-dollar notes The mechanism by which notes are placed into (this is true because the number of dollar coins in circulation is rather different: (1) The cost of new circulation is likely to exceed significantly the bank notes enters the federal budget indirectly: number of dollar notes). These savings would New notes are purchased by the Federal Reserve aggregate to about $400 million a year on aver- from the Bureau of Engraving and Printing, a unit age, in present value terms, over the next thirty of the Treasury Department, at a price set to years. recover the Bureau's full cost of production. The The potential savings can be achieved, how- Bureau's expenses are not included in the federal ever, only if the one-dollar note is withdrawn budget. Instead, the Federal Reserve's outlays from circulation. Moreover, the budgetary sav- for production of new notes are assessed against ings would be even larger—more than $500 mil- the earnings of the Reserve Banks, thereby relion a year—if the two-dollar note is not made ducing the net earnings of the System remitted to available. the Treasury Department and, accordingly, mis- Before turning to the impact of a dollar coin on cellaneous receipts in the budget of the federal the Federal Reserve's financial position and to government. (2) The "profit" on the bank note the specific questions raised in your invitation for issue also is accounted for differently than the this testimony, I would like to explain briefly the "profit" (or seigniorage) on the coin issue: Bank ways in which the federal government budget notes in circulation are a liability of the Federal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

530 Federal Reserve Bulletin • July 1992 Reserve Banks for which the Reserve Banks hold found in attachment l.)1 Thereafter, the Mint corresponding earning assets. Increases (or de- would incur the costs of producing only enough creases) in bank notes in circulation would result new one-dollar coins to replace those that were in higher (or lower) Federal Reserve portfolio lost or mutilated during the year and to satisfy earnings and concomitantly higher (or lower) the public's need for growth in the coin stock. budgetary miscellaneous receipts of the federal The average annual budgeted outlays of the Mint government. for one-dollar coins, discounted to the present, As a final budgetary implication, processing would be $20 million. incoming deposits of coins is less costly for the (2) Seigniorage and interest savings. Unlike Federal Reserve Banks than processing incoming tax receipts and other governmental receipts, deposits of notes. which are compared to governmental outlays in To summarize, the federal government budget- calculating the surplus or deficit, seigniorage— ary implications would fall into five categories: the difference between the face value and the (1) increased budgetary expenses at the Treasury cost of the year's coin production—is treated as Department's Bureau of the Mint, which would a means of financing a deficit (or of reducing debt produce the dollar coins; (2) Treasury interest in a year with a surplus). Seigniorage thus resavings as a consequence of the seigniorage duces the Treasury's borrowing requirements in derived from issuing one-dollar coins; (3) re- the year in which the coins are manufactured and duced Federal Reserve earnings on its portfolio in every year in the future in which the coins of securities, which would decline as a result of remain in circulation. In manufacturing the ninewithdrawing one-dollar notes from circulation billion-coin replacement stock and the smaller (and concomitant lower net Federal Reserve annual amounts thereafter, the Treasury would earnings paid to the Treasury as a budgetary realize seigniorage of $54 billion by the end of the miscellaneous receipt); (4) reduced costs at the thirty-year assumed life of the coin and would Federal Reserve for purchases of one-dollar avoid borrowing of the same amount. The avernotes (net of any increased cost of purchasing age annual interest savings, discounted to the two-dollar notes); and (5) reduced costs at the present, would be $430 million per year. Federal Reserve because processing incoming (3) Federal Reserve portfolio earnings. The deposits of dollar coins is more economical than Treasury will be receiving the Federal Reserve's processing incoming deposits of dollar notes. As earnings on assets associated with the stock of is clear, these budgetary effects are highly inter- six billion one-dollar Federal Reserve notes asrelated and therefore should be considered as a sumed to be outstanding at the outset of the whole. Let me now take up the budgetary im- replacement process. For purposes of the federal pacts in turn. budget, these earning are treated as a miscella- (1) Mint expenses. In the U.S. budgetary sys- neous receipt. If the one-dollar notes were withtem, Mint expenses other than for metal are drawn from circulation, and perhaps partially treated as outlays subject to the budget and replaced by two-dollar notes, there would be a appropriations processes. (Metal purchases are corresponding reduction in the Federal Remade through the Coinage Metal Fund, a revolv- serve's portfolio, and the Treasury would lose ing account not subject to budget or appropria- the Federal Reserve earnings thereon—estitions.) In manufacturing the replacement stock of mated at $170 million per year, on average, in nine billion one-dollar coins assumed to be nec- present value terms. essary at the outset of the replacement period, (4) Federal Reserve new-note costs. Upon the Mint initially would incur onetime budgeted introduction of a one-dollar coin, and consistent outlays of $164 million (nine billion coins at an with the Mint's ability to manufacture the initial assumed $80 per thousand coins times an as- replacement stock of one-dollar coins, the Fedsumed 20 percent share of the $80 for budgeted operating costs, plus an additional $20 million for design and start-up costs). (The specific assump- 1. Attachments to this statement are available on request from Publications Services, Board of Governors of the Fedtions used in estimating these impacts can be eral Reserve System, Washington, DC 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 531 eral Reserve would discontinue its purchases of that, without two-dollar notes, the average annew one-dollar notes and perhaps increase its nual savings would rise from $395 million to $511 purchases of new two-dollar notes. The net sav- million per year. ings in new-note costs would increase the Fed- You have invited us to address the possible eral Reserve's earnings paid to the Treasury by need for an additional currency printing facility an assumed average annual discounted amount for the Bureau of Engraving and Printing if a new of $109 million. one-dollar coin were not introduced. That ques- (5) Federal Reserve processing costs. Deposi- tion is difficult to answer, in part because we tory institutions deposit at Federal Reserve understand that the Bureau is developing new, Banks currency and coin that exceeds their re- and potentially much more efficient, printing quirements. Note deposits are verified by the equipment that could increase the capacity of the Reserve Banks in a process in which each note is present facilities significantly and in part because counted, examined for authenticity, checked for the Fort Worth facility has potential for horizonfitness, and, if unfit, shredded or, if fit, held in the tal expansion. It must be stressed, however, that vault for further circulation. Coin deposits, on all three relevant governmental entities—the the other hand, are verified in bulk—by weigh- Federal Reserve System, the Bureau of the Mint, ing—at about half the cost of processing notes. In and the Bureau of Engraving and Printing (not to addition, Reserve Banks would likely receive mention the multitude of currency handlers and fewer one-dollar coins from circulation, relative currency-equipment manufacturers in the private to the quantity in circulation, than they do one- sector)—are involved continuously in long-term dollar notes. Taking these differences into ac- planning for facilities and equipment so that they count, the Federal Reserve would realize dis- can be prepared to meet efficiently the public's counted average processing-cost savings of $47 need for currency and coin. Consequently, it is million per year. essential that in connection with any one-dollar The total financial impact on the federal gov- coin legislation there be an unequivocal commiternment would be the sum of the separate im- ment to discontinuing circulation of the onepacts described above—estimated to be a savings dollar note. Without such a commitment, the of $395 million per year. These impacts have all uncertainty about future requirements, as we been expressed as averages of discounted pre- wait for the public's preference to become clear, sent values of future costs and savings over the will inevitably lead the three entities as a whole thirty-year life of the coin. to overinvest in production and processing I might note that the budgetary savings of $395 equipment. million per year assumes that 25 percent of the I appreciate having this opportunity to present value of one-dollar notes in circulation would be our estimates of the budgetary impact of replacreplaced by two-dollar notes. Those savings ing the one-dollar note with a new coin. If you would be increased considerably if two-dollar have any questions, I would be pleased to try to notes were not made available. Our estimate is answer them. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

532 Announcements MEETING OF CONSUMER ADVISORY ble, at the Los Angeles Branch of the Federal COUNCIL Reserve Bank of San Francisco. 3. Supporting the development of a multibank The Federal Reserve Board announced that the community development corporation to focus on Consumer Advisory Council held a meeting on South Central Los Angeles. This corporation will Thursday, June 11, 1992. The meeting was open to provide technical assistance, loans, and equity inthe public. The Council's function is to advise the vestments for small businesses that are rebuilding, Board on the exercise of the Board's responsibili- relocating, or expanding in South Central Los ties under the Consumer Credit Protection Act and Angeles. on other matters on which the Board seeks its 4. Seeking passage of an amendment to the Fedadvice. eral Reserve Act to grant clear authority to state member banks to make equity investments in community development projects and corporations. At PROVISION OF FINANCIAL SERVICES TO present, bank holding companies and national CITIES AFFECTED BY CIVIL DISTURBANCES banks are authorized to make debt and equity investments in projects and corporations for public The Federal Reserve Board announced on May 12, purposes such as low-income housing, small busi- 1992, a series of steps designed to expedite the ness development, and job creation. provision of financial services and to help rebuild 5. Developing and sponsoring training programs areas of Los Angeles and other cities affected by for bankers and members of the community on the recent civil disturbances. specific programs that will be available to busi- Steps include a supervisory statement adopted by nesses and property owners who are rebuilding in the federal regulatory agencies regarding banks and Los Angeles. thrift institutions that are working in a constructive 6. Expediting the applications process for state and prudent fashion with borrowers experiencing member banks and bank holding companies that temporary difficulties. are expanding into the affected areas or are under- The statement from the Federal Deposit Insur- taking new activities designed to assist in the ecoance Corporation, the Federal Reserve Board, the nomic redevelopment of affected areas. Office of the Comptroller of the Currency, and the The Community Affairs office at the Federal Office of Thrift Supervision says that efforts to Reserve Bank of San Francisco routinely offers restructure debt or extend repayment terms—so training to bankers and community organizations long as these efforts are consistent with safe and on community reinvestment and finance. In exsound banking practice—should not be subject to panding this program to affected areas, business examiner criticism. and community training will include information Other steps approved by the Federal Reserve on the types and operation of programs that are include the following: available to assist them, and on how to develop business plans and structure financial statements 1. Taking into account investment in the affected for presentation to a financial institution. areas by state member banks located outside those Senior management from the Federal Reserve areas when assessing Community Reinvestment Bank of San Francisco has already been in con- Act (CRA) performance and evaluating applica- tact with the Los Angeles Mayor's office and tions submitted to the Federal Reserve. has extended general offers of assistance in the 2. Providing human resources to the Ueberroth efforts to restore communities affected by the program and providing space, to the extent possi- disturbances. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

533 To encourage financial institutions in areas not The higher aggregate limit will be effective for a directly affected by the disturbances to help in the one-year period during which the Board, in consulrebuilding effort, the Federal Reserve will give tation with the other federal banking agencies, will positive consideration in assessing CRA perfor- collect specific data on bank lending to insiders, mance for active participation by a financial institu- including directors, to analyze the effect of a limitation in programs in which most or all of the financ- tion on the ability of banks to attract directors and ing provided may ultimately benefit low- and to serve the credit needs of local communities. moderate-income borrowers or neighborhoods The Board also announced approval of an located outside the institution's delineated amendment to Regulation Y (Bank Holding Comcommunity. panies and Change in Bank Control) to implement In determining whether, and to what extent, a credit reporting requirement created by the positive consideration will be given, the Federal FDICIA that applies to executive officers and direc- Reserve will assess the activities undertaken in the tors of certain bank holding companies. context of an institution's overall CRA program. When such participation augments or complements an overall CRA program that is directly responsible AMENDMENTS TO REGULATION Y to the credit needs in an institution's delineated community, it will be considered favorably in The Federal Reserve Board announced on May 8, reaching an overall CRA conclusion. 1992, approval of amendments to Regulation Y For further information, banking and community (Bank Holding Companies and Change in Bank groups in the affected areas in California may Control) to expand the leasing activities that are telephone Ron Supinski at the Federal Reserve generally permissible for bank holding companies Bank of San Francisco at (415) 974-3231 or to include non-full-payout leasing. Sandra Conlan at the Los Angeles Branch at The amendments raise the maximum estimated (213) 683-2902. residual value of leased personal property on which bank holding companies may rely for their compensation in leasing transactions to up to 100 per- AMENDMENTS TO REGULATION O cent of the acquisition cost of the leased property, subject to certain conditions, including volume The Federal Reserve Board announced on May 7, limitations. 1992, approval of amendments to Regulation O These transactions remain subject to the pruden- (Loans to Executive Officers, Directors, and Princi- tial limitations previously set forth in Regulation Y. pal Shareholders of Member Banks) to implement the requirements of section 306 of the Federal Deposit Insurance Corporation Improvement Act EFFECTIVE DATE OF AMENDMENTS TO of 1991 (FDICIA). REGULATIONS O AND Y The most significant changes are the following: The Federal Reserve Board said on May 22, 1992, • A new aggregate lending limit applicable to all that the amendments to Regulations O and Y that of a bank's insiders the Board adopted on April 22, 1992, to implement • The extension of an existing Regulation O the requirements of section 306 of the FDICIA lending limit to loans to directors and their related were effective as of May 18, 1992. interests. The Board took this action in light of the fact In connection with the implementation of the that the requirements of section 306 of the FDICIA general aggregate limit on insider lending, the became effective on that date. The Board has issued Board has determined to exercise its discretion a notice to correct the effective date of the final rule under FDICIA to permit banks with deposits of published in the Tuesday, May 19, 1992, issue of less than $100 million to establish a higher limit up the Federal Register. The original notice in the to a maximum of two times the bank's unimpaired Federal Register contained an effective date of capital and unimpaired surplus. June 18, 1992, which was in error. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

534 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON MARCH 31, 1992 Retail sales registered large gains in January and February after edging down in the fourth quarter of 1991. The stronger sales were associated with siz- Domestic Policy Directive able increases for most types of durable and nondurable goods. Single-family housing starts rose sub- The information reviewed at this meeting sug- stantially further in January and February, reaching gested that domestic final demand, especially in the their highest level since the first quarter of 1990, consumer sector, had strengthened somewhat in and sales of both new and existing homes were up recent months. Production and employment had considerably on balance over the two months. With not picked up commensurately because businesses vacancy rates persisting at historically high levels, apparently were meeting much of their increased starts in the multifamily sector remained depressed. sales by drawing down inventories. Wage and price Shipments of nondefense capital goods increased increases had continued to trend downward. sharply in January and February, reflecting strength Total nonfarm payroll employment rebounded in in office and computing equipment and in business February from a large drop in January. The Febru- purchases of motor vehicles; in addition, shipments ary gain was concentrated in retail trade, but em- of aircraft rebounded in January from a very low ployment in services also rose moderately further level in the fourth quarter. Recent data on orders and manufacturing payrolls, after five months of pointed to further increases over coming months in decline, were lifted somewhat by the return of auto outlays for business equipment other than aircraft. workers from temporary layoffs. The average Nonresidential construction activity edged up in workweek increased substantially in manufacturing January but remained below its fourth-quarter averand in some service-producing industries. Although age. Further declines were recorded in the construcemployment picked up in February, appreciable tion of office buildings and hotels in January, and expansion of the labor force brought a rise in persisting weakness in commercial construction the civilian unemployment rate to 7.3 percent, and was signaled by continued decreases in appraised initial claims for unemployment insurance re- values of office properties in late 1991. mained elevated. Business inventories registered steep declines in Industrial production rose considerably in Febru- January after rising substantially in previous ary but was little changed on balance over the first months. Stocks at wholesale and retail trade estabtwo months of the year. Part of the increase re- lishments reversed a sizable portion of the accumuflected an upturn in motor vehicle assemblies, with lation that occurred in the fourth quarter; even so, the remainder being spread across a broad range of for many types of businesses in the trade sector, other goods. Among final products, gains were inventory-to-sales ratios remained at elevated levposted in both business products, notably office and els. In manufacturing, inventories were reduced computing equipment, and consumer goods. By further in January, with much of the drawdown contrast, utility output again was held down by occurring in defense aircraft and parts, food produnseasonably warm winter weather, and the pro- ucts, and petroleum. Inventory-to-shipments ratios duction of defense and space equipment continued in most manufacturing industries remained well to ebb. Total industrial capacity utilization moved below the cyclical peaks reached in early 1991. higher in February but remained well below its The nominal U.S. merchandise trade deficit pre-recession high. narrowed slightly in January and was essentially Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

535 unchanged from its average rate in the fourth quar- ing degree of pressure on reserve positions. Exter. A decline in exports was concentrated in air- pected levels of adjustment plus seasonal borrowcraft and automotive products. A slightly larger ing were raised modestly immediately after the drop in the value of imports reflected weakness in Committee meeting in anticipation of a slight rise both oil and consumer goods. The available data on in seasonal borrowing. In the event, adjustment fourth-quarter economic activity in the major for- plus seasonal borrowing remained quite low, avereign industrial countries indicated that real output aging a little less than $70 million over most of the declined in Canada, Germany, Japan, and the intermeeting period; seasonal borrowing, newly United Kingdom, while data for France pointed to subject to a market-based discount rate, increased little change. For the first quarter of this year, the relatively little and adjustment credit remained at limited data available showed some signs of recov- depressed levels. The federal funds rate averaged ery in continental Europe but suggested continued around 4 percent over most of the intermeeting sluggishness in the other major industrial countries. period, although late in the period the rate averaged Producer prices of finished goods edged down a little lower. on balance in January and February, as a reduction Many other market interest rates rose appreciain energy prices more than offset an increase in bly over the intermeeting period, as market particifood and other prices. Excluding the food and pants interpreted incoming data as indicating that energy components, producer prices rose over the the economic recovery was regaining some mo- January-February period at about the 1991 pace. mentum. The most pronounced increases occurred At the consumer level, food prices changed little at intermediate maturities, perhaps reflecting the over the two months while energy prices fell; prices improved cyclical outlook for business activity. of nonfood, non-energy items increased at about Although yields on investment-grade corporate the same rate as last year but significantly below debt rose in tandem with rates on U.S. Treasury that of 1990. Average hourly earnings of produc- securities, yields on lesser-rated securities were tion or nonsupervisory workers in February more unchanged to somewhat lower. Most broad indexes than reversed a small decline in January. However, of stock prices declined somewhat over the interover the twelve-month period ending in February, meeting period. this measure of worker earnings increased more In foreign exchange markets, the trade-weighted slowly than in the twelve months ending in Febru- value of the dollar in terms of the other G-10 ary 1991. currencies increased substantially over the period. At its meeting on February 4-5, 1992, the Com- The dollar declined initially on market expectations mittee adopted a directive that called for maintain- of additional monetary easing in the United States, ing the existing degree of pressure on reserve posi- but it subsequently appreciated in response to inditions but that included a bias toward possible cations of a strengthening of the recovery. Late in easing during the intermeeting period. Accord- the intermeeting period, a tightening of money ingly, the directive indicated that in the context of market conditions in Germany, where monetary the Committee's long-run objectives for price sta- growth continued to be quite rapid and concerns bility and sustainable economic growth, and giving over wage pressures were mounting, contributed to careful consideration to economic, financial, and a retreat in the dollar. The yen weakened on balmonetary developments, slightly greater reserve ance in relation to the dollar and other major restraint might be acceptable or slightly lesser currencies in response to indications of further reserve restraint would be acceptable in the inter- declines in economic growth and resultant expectameeting period. The reserve conditions contem- tions of another monetary easing action in Japan. plated under this directive were expected to be Growth of M2 and M3 accelerated sharply in consistent with growth of M2 and M3 at annual February, but M2 apparently leveled off or even rates of around 3 percent and W2 percent respec- declined slightly in March and M3 contracted tively over the three-month period from December somewhat. Growth of M2 and M3 from December through March. through March appeared to have been, respectively, Open market operations during the intermeeting somewhat above and close to the Committee's period were directed toward maintaining the exist- expectations. Much of the growth in both aggre- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

536 Federal Reserve Bulletin • July 1992 gates over recent months reflected a surge in trans- with their projections of a downtrend in the core actions balances that, in turn, resulted to an impor- rate of inflation. tant extent from narrow opportunity costs relative With regard to financial developments bearing to market interest rates and from a bulge in demand on the economic outlook, members stressed, as deposits associated with mortgage refinancings and they had at earlier meetings, that considerable other financial market activity. progress had been made in strengthening business The staff projection prepared for this meeting and consumer balance sheets. While media attenpointed to a continuing recovery in economic activ- tion continued to be focused on some large finanity. In the near term, growth in consumer spending cial and nonfinancial firms that were experiencing was expected to moderate after the first-quarter difficulties, most businesses now appeared to be spurt, but residential construction was likely to much more favorably positioned to weather adrecord further substantial gains, and the pace of verse developments and to finance spending that nonfarm inventory liquidation should slow. Over would support an expanding economy. The imtime, the cumulative effects of earlier declines in provement stemmed from ongoing efforts to interest rates, the progress achieved in strengthen- streamline operations and enhance productivity and ing household and business balance sheets, and to reduce balance-sheet leverage and interest costs. some diminution of credit supply restraints would For some business firms and many financial instituprovide continuing impetus to economic activity. tions, recent reports of a tendency for commercial Moreover, the retarding effects of depressed non- real estate values to stabilize was a particularly residential construction activity were expected to favorable omen. Consumer balance sheets also lessen as the expansion progressed. The projection were benefiting from lower interest rates that did not incorporate any major new fiscal initiatives tended to lessen debt loads in relation to income at the federal level, and it anticipated that spending and from the appreciated value of stock portfolios. for goods and services at all levels of government On the negative side, the restructuring of business would be restrained somewhat. The substantial, operations and balance sheets was still exerting though diminishing, margin of slack in resource considerable constraints on spending and lending utilization was projected to be associated with ap- activities, and it was unclear how much longer or to preciable further slowing in the underlying rate of what extent those constraints would last. A number inflation. of members also expressed concern that the relatively slow growth of the broader monetary aggre- In the Committee's discussion, the members gengates, were it to persist, might prove to be a harerally viewed the incoming information, including binger of continued restraint in lending and of anecdotal reports from around the country, as prounderlying weakness in the economy. viding substantial evidence of some quickening in the pace of overall economic activity. Final de- In their review of business conditions in different mands appeared to be strengthening in the context regions, members indicated that overall economic of improving business and consumer confidence. activity appeared to be rising in many parts of the Nonetheless, key sectors of the economy, such as nation while some signs of an emerging upturn defense spending and commercial real estate, re- could be discerned in most other areas. Improving mained weak and a back-up in long-term interest business conditions generally were associated with rates, owing in part to lagging savings and strong better retail sales since the start of the year and demand for credit by the Treasury, threatened to with the further recovery in housing demand. limit gains in housing and business investment. Indeed, the growing demands for consumer goods With these cross-currents and sources of uncer- stemmed to an extent from the strengthening of tainty raising at least some questions about the housing markets. These developments were accomsustainability of the expansion, careful, ongoing panied and bolstered by widespread indications of evaluation was warranted. On balance, however, some improvement in business and consumer conrelatively moderate but sustained growth was seen fidence, and some members commented that as the most probable outcome. The members gener- pent-up demands for many consumer durables ally regarded the prospects for some continuing might well materialize in the context of further slack in labor and product markets as consistent gains in overall consumer confidence. However, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 537 most business executives were still very cautious sustain the nation's exports and to meet competidespite increasing sales and a more favorable out- tion from foreign products in domestic markets. look for corporate profits, and consumer confi- Moreover, the improved health of many Latin dence remained well below earlier levels, appar- American economies was being reflected in higher ently reflecting to a major extent the persistence of export sales to such countries. Some parts of the anxieties about job security and employment country also were benefiting from large increases opportunities. Retail contacts and available statisti- in the number of foreign visitors. Nevertheless, cal reports suggested that an important part of the members suggested that the export sector was vulspurt in retail sales in January and February was nerable to weakness from abroad, and reports from met out of inventories. Further growth in such sales some business contacts tended to reinforce those would lead to efforts to rebuild inventories and concerns. induce related gains in production and incomes. Turning to the outlook for fiscal policy, members Sales of residential real estate and the construc- noted that market concerns about possible legislation of new homes, principally single-family dwell- tion that would substantially increase an already ings, were displaying considerable strength across massive federal deficit appeared to have subsided. the country. In a number of areas the increases Nonetheless, an important reason for the rise in were appreciably greater than expected, though the intermediate- and long-term interest rates since gains appeared to be due at least in part to favor- early January had been the apparently worsening able weather conditions and thus might represent outlook for federal deficit financing over the course some borrowing from the future. Even so, and of the next several years. Such deficits would tend despite the inhibiting effects of recent increases in to keep long-term interest rates fairly high, and in mortgage interest rates, the construction of single- association with the nation's relatively low savfamily homes and its spillover effects in related ings, they implied a financial constraint on the industries were believed likely to make an impor- ability of the U.S. economy to generate robust tant contribution to the overall expansion of eco- increases in investment. Because the volume of nomic activity over the next several quarters. savings available for investment was limited, inter- Construction of nonresidential structures contin- est rates had tended to react fairly strongly to ued to decline in many areas as work on existing indications of sizable gains in private spending. buildings was completed and few new projects The outlook for moderate economic growth and were started. Vacancy rates for office buildings the associated, if diminishing, slack in labor and remained high across the country, but there were product markets were likely to prove consistent in indications in at least some major cities that prices the view of many members with further progress in and rental rates for commercial real estate might be reducing the core rate of inflation. Competitive stabilizing or even tending to firm. However, the price pressures remained strong in many local marbetter tone in those markets had not translated itself kets, and efforts to raise prices very often did not into new building activity. Indeed, commercial con- succeed. In this competitive environment, business struction was likely to remain depressed for an firms seeking to maintain or increase profits were extended period and to hold down the growth in forced to concentrate on measures to curb costs overall business investment at a time when spend- rather than to raise prices. Labor markets were ing for business equipment might be trending described as generally soft, and most wage settleappreciably higher. ments continued to have favorable implications for The outlook for exports to a number of major future costs and inflation. The outlook for energy foreign industrial countries was less encouraging costs, while always subject to unanticipated develthan earlier, given financial and other difficulties opments, nonetheless seemed favorable at this that would tend to inhibit economic growth in point. those countries. On the favorable side, U.S. busi- In the Committee's discussion of policy, all of nesses had significantly enhanced their ability to the members indicated that they were in favor of compete in international markets over the course of maintaining unchanged conditions in reserve marrecent years, partly through gains in productivity, kets for the period immediately ahead. A majority and they were now in a better position both to also indicated a preference for retaining the current Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

538 Federal Reserve Bulletin • July 1992 bias in the directive toward possible easing during behavior of the monetary aggregates, in the weeks the intermeeting period, while the remaining mem- ahead. Moreover, in the view of some of these bers were in favor of moving to a symmetrical members, a directive that remained tilted toward directive. A steady policy course, at least for now, ease under prevailing circumstances could be miswas viewed as desirable in the context of encourag- read by domestic and international observers as ing evidence of a strengthening economy and the evidence of greater concern about the economic outlook for continuing expansion at a pace that was outlook than many members currently felt, or as an deemed likely to be consistent with further progress indication of a bias on the part of the Committee toward price stability. The members acknowledged toward bolstering the real economy rather than that the uncertainties in the economic outlook were securing further progress toward price stability. considerable, but given the ongoing stimulus stem- In the course of the discussion, members exming from earlier easing actions, they agreed that pressed varying degrees of concern about the for now an unchanged policy represented an appro- behavior of the monetary aggregates. According to priate balancing of the various risks to a satisfac- the most recently available data for March, M2 tory economic performance. In this connection, it apparently leveled off or declined slightly and M3 was suggested that substantial further easing at this contracted somewhat. Moreover, the weekly pattime might well fail to provide much added stimu- tern toward the end of March suggested the possilus; indeed, it could prove to be counterproductive bility of sluggish growth on average in April. While because of adverse repercussions in financial mar- this development needed to be assessed in the kets. Moreover, too much easing at this juncture context of emerging information on the economy could establish the basis for unduly rapid growth of and financial markets, it was suggested that a permoney and credit when the economic expansion sisting shortfall in the growth of M2 and M3 could gathered momentum. signal that monetary policy was not positioned to With regard to possible adjustments to the de- support a satisfactory expansion. For the year gree of reserve pressure during the intermeeting through March, growth of M2 had fallen somewhat period, many of the members endorsed the view short of the midpoint of the Committee's range for that it would be premature to move away from a 1992, and in the view of some members growth directive that was biased toward ease to a symmet- near the midpoint or somewhat higher in the range rical directive. While the members generally antic- might be more consistent with a desirable ecoipated that economic and financial developments nomic performance for the year. On the other hand, during the intermeeting period would not call for expansion of narrow money and reserves had been an adjustment to policy, many remained concerned quite robust for some time. In the view of at least about the vulnerability of the expansion to a variety one member, the possibility could not be ruled out of risks. In the circumstances, any policy adjust- that this rapid growth could be signaling an overly ments in the weeks ahead were more likely to be in accommodative monetary policy which, if continthe direction of some easing than toward restraint. ued, could boost inflation pressures at some point. A number of these members also commented that Conclusions could not be drawn on the basis of even though the risks of a deviation from the short-term movements in the narrow or broad monprojected path of the economy now seemed to be in etary aggregates, and in any event the implications better balance than earlier, the consequences of a for the economy of specific monetary growth rates substantial shortfall from expectations would be were clouded by a variety of developments that the much more severe than the effects of a comparable members had discussed at length at the February overshoot. Other members did not rule out the meeting. Nonetheless, against the background of possible need for an easing move in the period relatively sluggish growth in the broader aggreahead, but they believed that the more balanced gates for an extended period, many members risks that were now perceived to surround the eco- agreed that the ongoing performance of those nomic outlook warranted a symmetric directive. aggregates should be monitored closely. Indeed, Some observed that such a directive did not pre- some observed that concerns about the behavior of clude an easing action that might be triggered by the broader aggregates, rather than the currently economic or financial developments, including the available information on economic activity, per- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 539 suaded them that a directive that was tilted toward slightly lesser reserve restraint would be acceptable ease was preferable to a symmetrical directive at during the intermeeting period. The reserve condithis time. tions contemplated at this meeting were expected At this meeting, the Committee reviewed its to be consistent with growth of M2 and M3 at practices with regard to the maturity composition annual rates of around 3lA percent and I V2 percent of its portfolio of Treasury obligations. The overall respectively over the three-month period from approach in recent years had been to meet the March through June. long-term need for growth in the System's port- At the conclusion of the meeting the following folio through purchases in all maturity sectors of domestic policy directive was issued to the Federal the market for Treasury obligations, with a major Reserve Bank of New York: emphasis on ensuring substantial liquidity in the System's portfolio. With regard to the Treasury's The information reviewed at this meeting suggests a strengthening in domestic final spending, although inquarterly financings, the Manager had followed the dustrial production and overall employment do not appractice over the past several years of exchanging pear to have picked up correspondingly. Retail sales the bulk of the maturing securities held in the registered large gains in January and February, with data System account into the shortest issue offered on inventories, which are available through January, by the Treasury, while placing relatively small showing some offsetting decline in that month. Singlefamily housing starts increased substantially further in amounts in the longer-term Treasury offerings. This January and February. Recent data on orders and shipapproach had replaced the earlier practice of rolling ments of nondefense capital goods indicate an increase over maturing System holdings into the refinancing in outlays for business equipment, but nonresidential issues in roughly proportionate amounts to the size construction has remained in a steep decline. The nomiof those issues being offered to the public. The nal U.S. merchandise trade deficit narrowed slightly in January and was essentially unchanged from its average System's participation in Treasury financings had rate in the fourth quarter. Industrial production rose contributed importantly to the reduction in the averconsiderably in February, partly reflecting an upturn in age maturity of the System portfolio in recent motor vehicle assemblies, but was little changed on years; however, given Treasury techniques with balance over the first two months of the year. Total regard to accommodating System rollovers, the nonfarm payroll employment rebounded in February from a large decline in January. With the labor force System's actions did not have any effect on the growing appreciably in recent months, the civilian unemamounts or the maturity composition of the securiployment rate has risen to 7.3 percent. Wage and price ties being acquired by the public. The members increases have continued to trend downward. generally agreed that current practices for man- Most interest rates have risen appreciably since the aging the composition of the System's portfolio Committee meeting on February 4-5. In foreign exremained appropriate. Rollovers in Treasury change markets, the trade-weighted value of the dollar in terms of the other G-10 currencies increased substanfinancings would continue to be tilted toward the tially over the intermeeting period. shorter-maturity offerings, and net additions to Sys- Growth of M2 and M3 accelerated in February, but tem holdings would be made in all maturity areas, M2 appears to have leveled off and M3 to have declined taking account of the progress already made in in March. Much of the growth in the broader aggregates enhancing the liquidity of the System's portfolio. over recent months has been accounted for by a surge in transactions balances. At the conclusion of the Committee's discussion, The Federal Open Market Committee seeks monetary all of the members indicated that they favored a and financial conditions that will foster price stability directive that called for maintaining the existing and promote sustainable growth in output. In furtherance of these objectives, the Committee at its meeting in degree of pressure on reserve positions. The mem- February established ranges for growth of M2 and M3 bers also noted their preference for or acceptance of 2V2 to 6V2 percent and 1 to 5 percent, respectively, of a directive that included some bias toward eas- measured from the fourth quarter of 1991 to the fourth ing during the intermeeting period. Accordingly, in quarter of 1992. The monitoring range for growth of the context of the Committee's long-run objectives total domestic nonfinancial debt was set at AV2 to 8V2 percent for the year. With regard to M3, the Commitfor price stability and sustainable economic growth, tee anticipated that the ongoing restructuring of deposiand giving careful consideration to economic, tory institutions would continue to depress the growth of financial, and monetary developments, slightly this aggregate relative to spending and total credit. The greater reserve restraint might be acceptable or behavior of the monetary aggregates will continue to be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

540 Federal Reserve Bulletin • July 1992 evaluated in the light of progress toward price level slightly lesser reserve restraint would be acceptable in stability, movements in their velocities, and develop- the intermeeting period. The contemplated reserve conments in the economy andf inancialm arkets. ditions are expected to be consistent with growth of M2 In the implementation of policy for the immediate and M3 over the period from March through June at future, the Committee seeks to maintain the existing annual rates of about 31/2 and Wi percent, respectively. degree of pressure on reserve positions. In the context of the Committee's long-run objectives for price stability Votes for this action: Messrs. Greenspan, Corrigan, and sustainable economic growth, and giving careful Angell, Hoenig, Jordan, Kelley, LaWare, Lindsey, consideration to economic, financial, and monetary Melzer, Mullins, Ms. Phillips, and Mr. Syron. Votes developments, slightly greater reserve restraint might or against this action: None. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

541 Legal Developments FINAL RULE—AMENDMENTS TO REGULATIONS National banks and federal branches and federal B, C, E, M, Z, AND AA agencies of foreign banks The Board of Governors is amending 12 C.F.R. Parts District office of the Office of the Comptroller of the 202, 203, 205, 213, 226, and 227, its Regulations B, C, Currency for the district in which the institution is E, M, Z, and A A (Equal Credit Opportunity, Home located. Mortgage Disclosure, Electronic Fund Transfers, Consumer Leasing, Truth in Lending, and Unfair or State member banks, branches and agencies of Deceptive Acts or Practices) to implement the Forforeign banks (other than federal branches, federal eign Bank Supervision Enhancement Act of 1991, agencies, and insured state branches of foreign Subtitle A of Title II of the Federal Deposit Insurbanks), commercial lending companies owned or ance Corporation Improvement Act of 1991, which controlled by foreign banks, and organizations designated the administrative enforcement authority operating under section 25 or 25A of the Federal of federal agencies over United States branches and Reserve Act agencies of foreign banks, commercial lending company subsidiaries of foreign banks, and corporations Federal Reserve Bank serving the district in which the organized or operating under sections 25 and 25A of institution is located. the Federal Reserve Act. Effective May 13, 1992, 12 C.F.R. Parts 202, 203, Nonmember insured banks and insured state 205,213,226, and 227, are amended to read as follows: branches of foreign banks Federal Deposit Insurance Corporation Regional Di- Part 202—Equal Credit Opportunity rector for the region in which the institution is located. 1. The authority citation for part 202 continues to read Part 203—Home Mortgage Disclosure as follows: 1. The authority citation for part 203 continues to read Authority: 15 U.S.C. 1691-1691f. as follows: 2. Part 202 is amended by revising the first four Authority: 12 U.S.C. 2801-2810. paragraphs and the first three center headings of Appendix A to read as follows: 2. Part 203 is amended by revising the introductory text of paragraphs A, B and C under paragraph VI of Appendix A to read as follows: Appendix A to Part 202—Federal Enforcement Agencies Appendix A to Part 203—Form and Instructions for Completion of HMDA Loan/Application Register The following list indicates the federal agencies that enforce Regulation B for particular classes of credi- VI. Federal Supervisory Agencies tors. Any questions concerning a particular creditor should be directed to its enforcement agency. Terms Send your loan/application register and direct any that are not defined in the Federal Deposit Insurance questions to the office of your federal supervisory Act (12 U.S.C. 1813(s)) shall have the meaning given agency as specified below. If you are the nondeposito them in the International Banking Act of 1978 tory subsidiary of a bank, savings association, or (12 U.S.C. 3101). credit union, send the register to the supervisory Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

542 Federal Reserve Bulletin • July 1992 agency for your parent institution. Terms that are not shall have the meaning given to them in the Internadefined in the Federal Deposit Insurance Act tional Banking Act of 1978 (12 U.S.C. 3101). (12 U.S.C. 1813(s)) shall have the meaning given to them in the International Banking Act of 1978 National banks, and federal branches and federal (12 U.S.C. 3101). agencies of foreign banks A. National banks and their subsidiaries and federal District office of the Office of the Comptroller of the branches and federal agencies of foreign banks. Currency for the district in which the institution is located. District office of the Office of the Comptroller of the Currency for the district in which the institution is State member banks, branches and agencies of located. foreign banks (other than federal branches, federal agencies, and insured state branches of foreign B. State member banks of the Federal Reserve banks), commercial lending companies owned or System, their subsidiaries, subsidiaries of bank controlled by foreign banks, and organizations holding companies, branches and agencies of operating under section 25 or 25A of the Federal foreign banks (other than federal branches, federal Reserve Act agencies, and insured state branches of foreign banks), commercial lending companies owned or Federal Reserve Bank serving the district in which the controlled by foreign banks, and organizations institution is located. operating under section 25 or 25A of the Federal Reserve Act. Non-member insured banks and insured state branches of foreign banks Federal Reserve Bank serving the district in which the state member bank is located; for institutions other Federal Deposit Insurance Corporation regional directhan state member banks, the Federal Reserve Bank tor for the region in which the institution is located. specified by the Board of Governors. C. Nonmember insured banks (except for federal Savings institutions insured under the Savings savings banks) and their subsidiaries and insured Association Insurance Fund of the FDIC and state branches of foreign banks. federally-chartered savings banks insured under the Bank Insurance Fund of the FDIC (but not including Regional Director of the Federal Deposit Insurance state-chartered savings banks insured under the Corporation for the region in which the institution is Bank Insurance Fund) located. Office of Thrift Supervision Regional Director for the Part 205—Electronic Fund Transfers region in which the institution is located. 1. The authority citation for part 205 continues to read Federal credit unions as follows: Division of Consumer Affairs, National Credit Union Authority: Pub. L. 95-630, 92 Stat. 3730 (15 U.S.C. Administration, 2025 M Street, N.W., Washington, 1693b). D.C. 20456. 2. Appendix B to Part 205 is added to read as follows: Air carriers Appendix B to Part 205—Federal Enforcement Assistant General Counsel for Aviation Enforcement Agencies and Proceedings, Department of Transportation, 400 Seventh Street, S.W., Washington, D.C. 20590. The following list indicates which federal agency enforces Regulation E for particular classes of institutions. Any questions concerning compliance by a Brokers and dealers particular institution should be directed to the appropriate enforcing agency. Terms that are not defined in Division of Market Regulation, Securities and Exthe Federal Deposit Insurance Act (12 U.S.C. 1813(s» change Commission, Washington, D.C. 20549. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 543 Retail, department stores, consumer finance Authority: Truth in Lending Act, 15 U.S.C. 1604 and companies, certain other financial institutions, and 1637(d)(5); Sec. 1204(c), Competitive Equality Bankall nonbank debit card issuers ing Act, 12 U.S.C. 3806. Federal Trade Commission, Electronic Fund Trans- 2. Part 226 is amended by revising the first four fers, Washington, D.C. 20580. paragraphs and the the first three center headings of Appendix I to read as follows: Part 213—Consumer Leasing Appendix I—Federal Enforcement Agencies 1. The authority citation for part 213 continues to read as follows: The following list indicates which federal agency enforces Regulation Z for particular classes of busi- Authority: 15 U.S.C. 1604. nesses. Any questions concerning compliance by a particular business should be directed to the appropri- 2. Part 213 is amended by revising the first four ate enforcement agency. Terms that are not defined in paragraphs of Appendix D to read as follows: the Federal Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the meaning given to them in the Interna- Appendix D to Part 213—Federal Enforcement tional Banking Act of 1978 (12 U.S.C. 3101). Agencies National banks and federal branches and federal The following list indicates which federal agency enagencies of foreign banks forces Regulation M for particular classes of business. Any questions concerning compliance by a particular business should be directed to the appropriate enforce- District office of the Office of the Comptroller of the ment agency. Terms that are not defined in the Federal Currency for the district in which the institution is Deposit Insurance Act (12 U.S.C. 1813(s» shall have located. the meaning given to them in the International Banking Act of 1978 (12 U.S.C. 3101). State member banks, branches and agencies of foreign banks (other than federal branches, federal agencies, National banks and federal branches and federal and insured state branches of foreign banks), agencies of foreign banks: commercial lending companies owned or controlled by foreign banks, and organizations operating under District office of the Office of the Comptroller of the section 25 or 25A of the Federal Reserve Act Currency for the district in which the institution is located. Federal Reserve Bank serving the district in which the State member banks, branches and agencies of foreign institution is located. banks (other than federal branches, federal agencies, and insured state branches of foreign banks), Non-member insured banks and insured state commercial lending companies owned or controlled by branches of foreign banks foreign banks, and organizations operating under section 25 or 25A of the Federal Reserve Act: Federal Deposit Insurance Corporation Regional di- Federal Reserve Bank serving the district in which the rector for the region in which the institution is located. institution is located. Part 227—Unfair or Deceptive Acts or Practices Nonmember insured banks and insured state branches of foreign banks: 1. The authority citation for part 227, Subpart Federal Deposit Insurance Corporation Regional Di- B—Credit Practices Rule continues to read as follows: rector for the region in which the institution is located. Authority. 15 U.S.C. 57a. Part 226—Truth in Lending 2. In section 227.11, paragraphs (c)(1) through (3) are 1. The authority citation for part 226 continues to read revised and a new paragraph (d) is added to read as as follows: follows: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

544 Federal Reserve Bulletin • July 1992 Section 227.11—Authority, purpose, and scope. 1823(j), respectively); section 7(a) of the International Banking Act of 1978 (12 U.S.C. 3105); sections 907- 910 of the International Lending Supervision Act of (1) The Comptroller of the Currency, in the case of 1983 (12 U.S.C. 3906-3909); sections 2, 12(b), 12(g), national banks, banks operating under the code of 12(i), 15B(c)(5), 17, 17A, and 23 of the Securities laws for the District of Columbia, and federal Exchange Act of 1934 (15 U.S.C. 78b, 78/(b), 78/(g), branches and federal agencies of foreign banks; 78/(i), 78o-4(c)(5), 78q,78q-l, and 78w, respectively); (2) The Board of Governors of the Federal Reserve section 5155 of the Revised Statutes (12 U.S.C. 36) as System, in the case of banks that are members of amended by the McFadden Act of 1927; and sections the Federal Reserve System (other than banks 1101-1122 of the Financial Institutions Reform, Recovreferred to in paragraph (c)(1) of this section), ery, and Enforcement Act of 1989 (12 U.S.C. 3310 and branches and agencies of foreign banks (other than 3331-3351). federal branches, federal agencies, and insured state branches of foreign banks), commercial lending companies owned or controlled by foreign Section 208.110—[Removed]. banks, and organizations operating under section 25 or 25A of the Federal Reserve Act; and (3) The Federal Deposit Insurance Corporation, in the case of banks insured by the Federal Deposit 2. Section 208.110 is removed. Insurance Corporation (other than banks referred to in paragraphs (c)(1) and (c)(2) of this section), and insured state branches of foreign banks. FINAL RULE—AMENDMENTS TO REGULATIONS (d) The terms used in paragraph (c) of this section that O AND Y are not defined in the Federal Trade Commission Act or in section 3(s) of the Federal Deposit Insurance Act The Board of Governors is amending 12 C.F.R. Parts (12 U.S.C. 1813(s» shall have the meaning given to 215 and 225, its Regulations O and Y (Loans to them in section 1(b) of the International Banking Act Executive Officers, Directors, and Principal Shareof 1978 (12 U.S.C. 3101). holders of Member Banks ; Bank Holding Companies and Change in Bank Control) to conform the regulations to the amendments to section 22(h) of the FINAL RULE—AMENDMENT TO REGULATION H Federal Reserve Act (12 U.S.C. § 375b) made by section 306 of the Federal Deposit Insurance Corpo- The Board of Governors is amending 12 C.F.R. Part ration Improvement Act of 1991 ("FDICIA"). As 208, its Regulation H (Membership of State Banking amended by section 306, section 22(h) establishes a Institutions in the Federal Reserve System). The limit on the total amount a bank may lend to its Board is withdrawing an obsolete interpretation on executive officers, directors, and principal sharemessenger services provided by state member banks holders, and the related interests of those persons. and removing it from the Code of Federal Regula- Section 22(h), as amended, also subjects extensions tions. of credit to directors and their related interests to the Effective May 19, 1992, 12 C.F.R. Part 208 is same lending limit that applies currently to executive amended as follows: officers and principal shareholders and their related interests under section 22(h). See 12 C.F.R. 215.4(c). The final rule amends Regulation O to implement Part 208—Membership of State Banking these amendments. Institutions in the Federal Reserve System The final rule also amends Regulations O and Y to implement a reporting requirement required by section 1. The authority citation for part 208 continues to read 306 that relates to certain credit extended to executive as follows: officers and principal shareholders of certain banks and bank holding companies. In addition, the final rule Authority: Sections 9, 11(a), 11(c), 19, 21, 25 and 25(a) makes limited technical revisions to Regulation O to of the Federal Reserve Act, as amended (12 U.S.C. conform the regulation to section 306 and to correct 321-338, 248(a), 248(c), 461, 481-486, 601, and 611, existing ambiguities. respectively); sections 4 and 13(j) of the Federal De- Effective May 18, 1992, 12 C.F.R. Parts 215 and 225 posit Insurance Act, as amended (12 U.S.C. 1814 and are amended as follows: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 545 Part 215—Loans to Executive Officers, rated organization, or any other form of business Directors, and Principal Shareholders of entity not specifically listed herein. However, the term Member Banks does not include: (1) An insured depository institution (as defined in 1. The authority citation for part 215 is revised to read 12 U.S.C. 1813); or as follows: (2) A corporation the majority of the shares of which are owned by the United States or by any State. Authority: Sees. ll(i), 22(g), and 22(h), Federal Re- He * % * $ serve Act (12 U.S.C. 248(i), 375a, 375(b)(7)), 12 U.S.C. 1817(k)(3) and 1972(2)(F)(vi), and sec. 306 (c) Director of a member bank includes: of the Federal Deposit Insurance Corporation Im- (1) Any director of a member bank, whether or not provement Act of 1991 (Pub. L. No 102-242, 105 Stat. receiving compensation; 2236 (1991)). (2) Any director of a company of which the member bank is a subsidiary; and Subpart A—Loans by Member Banks to Their (3) Any director of any other subsidiary of that Executive Officers, Directors, and Principal company. An advisory director is not considered a Shareholders director if the advisory director— (i) Is not elected by the shareholders of the 2. In part 215, the footnotes are removed or redesig- company or bank; nated as shown in the following table: (ii) Is not authorized to vote on matters before the board of directors; and (iii) Provides solely general policy advice to the Section and paragraph Current number New number board of directors. 2 21 1 5 5 . . 4 4 ( ( d c) ) 4 3 rem 3 o ved (d)(1) Executive officer of a company or bank means a 215.5(a) 5 4 person who participates or has authority to partici- 215.8 6 5 pate (other than in the capacity of a director) in 215.9 7 6 215.10(a) 8 7 major policymaking functions of the company or 215.10(b) 9 8 bank, whether or not: the officer has an official title; the title designates the officer an assistant; or the 3. 12 C.F.R. 215.1 is amended by revising paragraph officer is serving without salary or other compensa- (a) to read as follows: tion.1 The chairman of the board, the president, every vice president, the cashier, the secretary, and Section 215.1—Authority, purpose, and scope. the treasurer of a company or bank are considered executive officers, unless: the officer is excluded, by (a) Authority. This subpart is issued pursuant to sec- resolution of the board of directors or by the bylaws tions 1 l(i), 22(g), and 22(h) of the Federal Reserve Act of the bank or company, from participation (other (12 U.S.C. 248(i), 375a, and 375b), 12 U.S.C. than in the capacity of a director) in major policy- 1817(k)(3), and section 306 of the Federal Deposit making functions of the bank or company; and the Insurance Corporation Improvement Act of 1991 (Pub. officer does not actually participate therein. L. No. 102-242, 105 Stat. 2236 (1991)). (2) For the purpose of sections 215.4 and 215.8 of this part, an executive officer of a member bank $ $ $ $ $ includes an executive officer of a company of which 4. 12 C.F.R. 215.2 is amended by revising paragraphs the member bank is a subsidiary; and any other (a), (c), and (d), redesignating paragraphs (e) through subsidiary of that company, unless the executive (1) as paragraphs (g) through (n), adding new para- officer of the subsidiary is excluded (by name or by graphs (e) and (f), and revising newly designated paragraphs (h), (i), (1), and (m) to read as follows: 1. The term is not intended to include persons who may have official titles and may exercise a certain measure of discretion in the perfor- Section 215.2—Definitions. mance of their duties, including discretion in the making of loans, but who do not participate in the determination of major policies of the bank or company and whose decisions are limited by policy standards fixed by the senior management of the bank or company. For (a) Company means any corporation, partnership, example, the term does not include a manager or assistant manager of a branch of a bank unless that individual participates, or is authorized trust (business or otherwise), association, joint vento participate, in major policymaking functions of the bank or comture, pool syndicate, sole proprietorship, unincorpo- pany. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

546 Federal Reserve Bulletin • July 1992 title) from participation in major policymaking func- (1) Principal shareholder means a person (other than tions of the member bank by resolutions of the an insured bank) that directly or indirectly, or acting boards of directors of both the subsidiary and the through or in concert with one or more persons, owns, member bank, and does not actually participate in controls, or has the power to vote more than 10 such major policymaking functions. percent of any class of voting securities of a member (e) Foreign bank has the meaning given in 12 U.S.C. bank or company. Shares owned or controlled by a 3101(7). member of an individual's immediate family are con- (f) Insider means an executive officer, director, or sidered to be held by the individual. A principal principal shareholder, and includes any related inter- shareholder of a member bank includes: est of such a person. (1) A principal shareholder of a company of which the member bank is a subsidiary ; and (2) A principal shareholder of any other subsidiary (h) The lending limit for a member bank is an amount of that company. equal to the limit of loans to a single borrower estab- (m) Related interest of a person means: lished by section 5200 of the Revised Statutes,2 (1) A company that is controlled by that person; or 12 U.S.C. 84. This amount is 15 percent of the bank's (2) A political or campaign committee that is conunimpaired capital and unimpaired surplus in the case trolled by that person or the funds or services of of loans that are not fully secured, and an additional 10 which will benefit that person. percent of the bank's unimpaired capital and unimpaired surplus in the case of loans that are fully secured by readily marketable collateral having a 5. 12 C.F.R. 215.3 is amended by revising paragraphs market value, as determined by reliable and continu- (a)(4), (a)(8), (b)(2) and (b)(5) to read as follows: ously available price quotations, at least equal to the amount of the loan. The lending limit also includes any Section 215.3—Extension of credit. higher amounts that are permitted by section 5200 of the Revised Statutes for the types of obligations listed therein as exceptions to the limit. A member bank's unimpaired capital and unimpaired surplus equals the (4) An acquisition by discount, purchase, exchange, sum of: or otherwise of any note, draft, bill of exchange, or (1) The "total equity capital" of the member bank other evidence of indebtedness upon which an inreported on its most recent consolidated report of sider may be liable as maker, drawer, endorser, condition filed under 12 U.S.C. 1817(a)(3); guarantor, or surety; (2) Any subordinated notes and debentures approved as an addition to the member bank's capital structure by the appropriate federal banking agency ; (8) Any other similar transaction as a result of which and a person becomes obligated to pay money (or its (3) Any valuation reserves created by charges to the equivalent) to a bank, whether the obligation arises member bank's income reported on its most recent directly or indirectly, or because of an endorsement consolidated report of condition filed under on an obligation or otherwise, or by any means 12 U.S.C. 1817(a)(3). whatsoever. (i) Member bank means any banking institution (b) * * * that is a member of the Federal Reserve System, (2) A receipt by a bank of a check deposited in or including any subsidiary of a member bank. The delivered to the bank in the usual course of business term does not include any foreign bank that unless it results in the carrying of a cash item for or maintains a branch in the United States, whether the granting of an overdraft (other than an inadvertor not the branch is insured (within the meaning of ent overdraft in a limited amount that is promptly 12 U.S.C. 1813(s)) and regardless of the operation repaid, as described in section 215(4)(e) of this part); of 12 U.S.C. 1813(h) and 12 U.S.C. 18280(2). (5) Indebtedness of $5,000 or less arising by reason of any general arrangement by which a bank: (i) Acquires charge or time credit accounts; or 2. Where State law establishes a lending limit for a state member (ii) Makes payments to or on behalf of participants bank that is lower than the amount permitted in section 5200 of the in a bank credit card plan, check credit plan, Revised Statutes, the lending limit established by applicable State laws shall be the lending limit for the state member bank. interest bearing overdraft credit plan of the type Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 547 specified in section 215.4(e) of this part, or similar open end credit plan; Provided: (A) The indebtedness does not involve prior (c) Lending limit. No member bank may extend credit to any of its executive officers, directors, or principal individual clearance or approval by the bank shareholders or to any related interest of that person in other than for the purposes of determining an amount that, when aggregated with the amount of authority to participate in the arrangement and all other extensions of credit by the member bank to compliance with any dollar limit under the that person and to all related interests of that person, arrangement; and exceeds the lending limit of the member bank specified (B) The indebtedness is incurred under terms in section 215.2(h) of this part. This prohibition does that are not more favorable than those offered not apply to an extension of credit by a member bank to the general public. to a company of which the member bank is a subsidiary or to any other subsidiary of that company. 6. 12 C.F.R. 215.4 is amended by revising paragraphs (d) Aggregate lending limit—(1) General limit. A member bank may not extend credit to any insider (a)(1), (b)(1) and (c), redesignating paragraphs (b)(2) unless the extension of credit is in an amount that, and (b)(3) as paragraphs (b)(3) and (b)(4), respectively, when aggregated with the amount of all outstanding adding a new paragraph (b)(2), redesignating paraextensions of credit by that bank to all of its insidgraph (d) as paragraph (e), and adding a new paragraph ers, does not exceed the bank's unimpaired capital (d) to read as follows: and unimpaired surplus (as defined in section 215.2(h) of this part). Section 215.4—General prohibitions. (2) Member banks with deposits of less than (si) ^ ^ $100,000,000. A member bank with deposits of less than $100,000,000 may by resolution of its board of (1) Is made on substantially the same terms (includdirectors increase the general limit specified in paraing interest rates and collateral) as, and following graph (d)(1) of this section for the one-year period credit underwriting procedures that are not less ending May 18, 1993, to a level not to exceed two stringent than, those prevailing at the time for comtimes the bank's unimpaired capital and unimpaired parable transactions by the bank with other persons surplus, if: that are not covered by this part and who are not (i) The board of directors determines that such employed by the bank; and higher limit is consistent with prudent, safe, and sound banking practices in light of the bank's experience in lending to its insiders and is neces- (b) Prior approval. (1) No member bank may extend sary to attract or retain directors or to prevent credit (which term includes granting a line of credit) restricting the availability of credit in small comto any of its executive officers, directors, or princimunities; pal shareholders or to any related interest of that (ii) The resolution sets forth the facts and reasonperson in an amount that, when aggregated with the ing on which the board of directors bases the amount of all other extensions of credit to that finding, including the amount of the bank's lendperson and to all related interests of that person, exceeds the higher of $25,000 or 5 percent of the ing to its insiders as a percentage of the bank's member bank's unimpaired capital and unimpaired unimpaired capital and unimpaired surplus as of surplus, unless: the date of the resolution; (iii) The bank has submitted the resolution to the (i) The extension of credit has been approved in appropriate Federal banking agency (as defined in advance by a majority of the entire board of 12 U.S.C. 1813(q)) with a copy to the Board of directors of that bank; and Governors; and (ii) the interested party has abstained from partic- (iv) The bank meets or exceeds, on a fully-phased ipating directly or indirectly in the voting. in basis, all applicable capital requirements estab- (2) In no event may a member bank extend credit to lished by the appropriate Federal banking agency. any one of its executive officers, directors, or principal shareholders, or to any related interest of that person, in an amount that, when aggregated with all other extensions of credit to that person, and all related interests of that person, exceeds $500,000, 7. 12 C.F.R. 215.5 is amended by revising newly except by complying with the requirements of this designated footnote 4 in paragraph (a) and by revising paragraph. paragraph (d) to read as follows: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

548 Federal Reserve Bulletin • July 1992 Section 215.5—Additional restrictions on loans Section 215.13—Civil penalties. to executive officers of member banks. Any member bank, or any officer, director, employee, (cl) 4 •I' ^ agent, or other person participating in the conduct of (d) Any extension of credit by a member bank to any the affairs of the bank, that violates any provision of of its executive officers shall be: this subpart (other than section 215.11) is subject to (1) Promptly reported to the member bank's board civil penalties as specified in section 29 of the Federal of directors; Reserve Act (12 U.S.C. 504). (2) In compliance with the requirements of section 215.4(a) of this part; Part 225—Bank Holding Companies and (3) Preceded by the submission of a detailed current Change in Bank Control financial statement of the executive officer; and (4) Made subject to the condition in writing that the 1. The authority citation for part 225 is revised to read extension of credit will, at the option of the member as follows: bank, become due and payable at any time that the officer is indebted to any other bank or banks in an Authority: 12 U.S.C. 1817(j)(13), 1818, 1831(i), aggregate amount greater than the amount specified 1843(c)(8), 1844(b), 3106, 3108, 3907, 3909, 3310, and for a category of credit in paragraph (c) of this 3331-3351, and sec. 306 of the Federal Deposit Insursection. ance Corporation Improvement Act of 1991 (Pub. L. No. 102-242, 105 Stat. 2236 (1991)). 8. 12 C.F.R. 215.11 is redesignated as §215.13, §§ 215.6 through 215.10 are redesignated as §§ 215.7 2. 12 C.F.R. 225.4 is amended by adding paragraph (f) through 215.11, respectively, and a new § 215.6 is to read as follows: added to read as follows: Section 225.4—Corporate practices. Section 215.6—Prohibition on knowingly receiving unauthorized extension of credit. (f) Reporting requirement for credit secured by cer- No executive officer, director, or principal shareholder tain bank holding company stock. Each executive of a member bank shall knowingly receive (or know- officer or director of a bank holding company the ingly permit any of that person's related interests to shares of which are not publicly traded shall report receive) from a member bank, directly or indirectly, annually to the board of directors of the bank holding any extension of credit not authorized under this part. company the outstanding amount of any credit that was extended to the executive officer or director and 9. A new 12 C.F.R. 215.12 is added to read as follows: that is secured by shares of the bank holding company. For purposes of this paragraph, the terms Section 215.12—Reporting requirement for "executive officer" and "director" shall have the credit secured by certain bank stock. meaning given in section 215.2 of Regulation O, 12 C.F.R. 215.2. Each executive officer or director of a member bank the shares of which are not publicly traded shall report annually to the board of directors of the member bank FINAL RULE—AMENDMENT TO REGULATION Y the outstanding amount of any credit that was extended to the executive officer or director and that is The Board of Governors is amending 12 C.F.R. Part secured by shares of the member bank. 225, its Regulation Y (Bank Holding Companies and Change in Bank Control) to expand the leasing activ- 10. Newly designated 12 C.F.R. 215.13 is revised to ities that are generally permissible for bank holding read as follows: companies. The rule allows bank holding companies to enter into leasing transactions in which the companies may rely for compensation of their full leasing costs, at the inception of the initial lease, on estimated residual values for the leased property of up to 100 percent of 4. Sections 215.5, 215.9, and 215.10 of this part implement section 22(g) of the Federal Reserve Act. For the purposes of those sections, the acquisition cost of the property, subject to certain an executive officer of a member bank does not include an executive conditions (so-called "higher residual value leasing"). officer of a bank holding company of which the member bank is a The Board has by order previously permitted bank subsidiary or any other subsidiary of that bank holding company. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 549 holding companies to engage in higher residual value mental entities only, reasonably anticipated fuleasing. The final rule requires that higher residual ture transactions4) will yield a return that will value leasing transactions conform to the current compensate the lessor for not less than the leasing provision in Regulation Y except with respect lessor's full investment in the property plus the to the residual value reliance limitation. The final rule estimated total cost of financing the property contains additional requirements applicable only to the over the term of the lease,5 from— (j) * * * expanded leasing activity. These requirements include a limit on the volume of such leasing transactions (2) * * * similar to the limitation placed on the leasing activities (3) the estimated residual value of the propof national banks under Section 108 of the Competitive erty at the expiration of the initial term of the Equality Banking Act (CEBA), amending the National lease, which in no case shall exceed 25 per- Bank Act. cent of the acquisition cost of the property to The final rule also alters the existing authority for a the lessor; and (4) * * * bank holding company to engage in full-payout leasing transactions by permitting bank holding companies to (E) * * * engage in these transactions and rely for compensation (F) at the expiration of the lease (including any of their full leasing costs, at the inception of the initial renewals or extensions with the same lessee), lease, on estimated residual values for the leased all interest in the property shall be either liquiproperty of up to 25 percent of the acquisition cost of dated or released on a nonoperating basis as the property. soon as practicable but in no event later than Effective May 14, 1992, 12 C.F.R. Part 225 is two years from the expiration of the lease;6 amended as follows: however, in no case shall the lessor retain any interest in the property beyond 50 years after its Part 225—Bank Holding Companies and acquisition of the property. Change in Bank Control (ii) Certain Higher Residual Value Leasing. Leasing tangible personal property or acting as agent, 1. The authority citation for Part 225 continues to read broker, or adviser in leasing such property, in as follows: which the lessor relies on an estimated residual value of the property in excess of the 25 percent Authority: 12 U.S.C. 18170(13), 1818, 1831i, 1843(c)(8), limitation described in paragraph (5)(i)(D)(3), if— 1844(b), 3106, 3108, 3907, and 3909. 2. In section 225.25, paragraph (b)(5) is redesignated as 4. The Board understands that some federal, state, and local paragraph (b)(5)(i); paragraphs (b)(5)(i) through (vi) are governmental entities may not enter into a lease for a period in excess redesignated as paragraphs (b)(5)(i)(A) through (F). Para- of one year. Such an impediment does not prohibit a company authorized to conduct leasing activities under this paragraph from graphs (b)(5)(iv)(A) through (D) are redesignated as paraentering into a lease with such governmental entities if the company graphs (b)(5)(i)(D)(/) through (4). Newly redesignated reasonably anticipates that the governmental entities will renew the paragraphs (b)(5)(i)(D), (b)(5)(i)(D)(3), and (b)(5)(i)(F) are lease annually until such time as the company is fully compensated for its investment in the leased property plus its costs of financing the revised, and paragraph (b)(5)(ii) is added to read as property. Further, a company authorized to conduct personal propfollows: erty leasing activities under this paragraph may also engage in so-called "bridge" lease financing of personal property, but not real property, if the lease is short-term pending completion of long-term Section 225.25—List of permissible nonbanking financing, by the same or another lender. activities. 5. The estimate by the lessor of the total cost of financing the property over the term of the lease should reflect, among other factors, the term of the lease, the modes of financing available to the lessor, the credit rating of the lessor and/or the lessee, if a factor in the financing, and prevailing rates in the money and capita] markets. (b)* * * 6. In the event of a default on, or early termination of, a lease (5) Leasing, (i) Leasing personal or real property. agreement prior to the expiration of the lease term, the lessor shall Leasing personal or real property or acting as either re-lease the property, subject to all the conditions of this paragraph, or liquidate the property as soon as practicable but in no agent, broker, or adviser in leasing such property event later than two years from the date of default on the lease if— agreement (in the event of a default) or termination of the lease (in the event of termination), or such additional time as the Board may permit (A) * * * ^g^ * * * under § 225.22(c)(1) of this regulation, as if the property were DPC property. During the period following default on, or expiration or * * * termination of a lease, the lessor may lease the property on a short-term basis in a lease that does not conform to the requirements (D) at the inception of the initial lease the effect of this paragraph provided that the property is liquidated or re-leased of the transaction (and, with respect to govern- in a conforming lease prior to the expiration of this period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

550 Federal Reserve Bulletin • July 1992 (A) the activity otherwise meets the require- holding company within the meaning of the Bank ments of paragraph (5)(i); Holding Company Act ("BHC Act"), has applied (B) the lessor in no case relies on an estimated under section 3(a)(5) of the BHC Act (12 U.S.C. residual value of the property in excess of 100 § 1842(a)(5)) to merge with Hardy Insurance Agency, percent of the acquisition cost of the property Inc. ("Hardy"), and thereby indirectly acquire Hardy to the lessor; State Bank ("Hardy Bank"), both of Hardy, Ne- (C)(1) the aggregate book value of all personal braska. In connection with this transaction, FSB's property described in subclause (2) does not subsidiary bank, Farmers State Bank & Trust Comexceed 10 percent of the bank holding com- pany of Superior, Superior, Nebraska ("Farmers pany's consolidated domestic and foreign as- Bank"), a state member bank, has applied under the sets; Bank Merger Act (12 U.S.C. § 1828(c)) to merge with (2) for purposes of calculating the limit pro- Hardy Bank, and thereby to establish a branch at the vided in subclause (1), the bank holding com- location of Hardy Bank pursuant to section 9 of the pany shall include all tangible personal prop- Federal Reserve Act (12 U.S.C. § 321). erty held for lease in transactions in which Notice of the applications, affording interested perthe bank holding company or any of its sons an opportunity to submit comments, has been nonbank subsidiaries acting under authority published (56 Federal Register 65,901 (1991)). The of this paragraph, or any domestic subsidiary time for filing comments has expired, and the Board bank of such holding company, relies on an has considered the applications and all the comments estimated residual value in excess of 25 per- received in light of the factors set forth in section 3(c) cent of the acquisition cost of the property, of the BHC Act, the Bank Merger Act, and the Federal (D) the initial term of the lease is at least 90 Reserve Act. days;7 FSB is a one-bank holding company by virtue of its (E) each company that conducts leasing trans- control of Farmers Bank. Since 1968, FSB's principals actions under this subparagraph (ii) maintains have controlled Hardy; thus, this proposal represents capitalization fully adequate to meet its obliga- the reorganization of an existing ownership interest. tions and support its activities, and commensu- FSB is the 89th largest commercial banking organizarate with industry standards for companies en- tion in Nebraska, controlling deposits of $37.3 million, gaged in comparable leasing activities; and representing less than one percent of total deposits in (F) the bank holding company maintains sepa- commercial banks in the state.1 Hardy is the 301st rately identifiable records of the leasing activi- largest banking organization in Nebraska, controlling ties conducted under subparagraphs (i) and (ii), deposits of $7.4 million, representing less than one where it conducts leasing activities under the percent of total deposits in commercial banks in the authority of both subparagraphs. state. Upon consummation, FSB would become the 75th largest commercial banking organization in Nebraska, controlling deposits of $44.7 million, repre- ORDERS ISSUED UNDER BANK HOLDING senting less than one percent of total deposits in COMPANY ACT commercial banks in the state. FSB and Hardy operate in the Nuckolls County Orders Issued Under Section 3 of the Bank banking market. FSB is the largest commercial bank- Holding Company Act ing or thrift organization (together, "depository institution") in the market, controlling deposits of $37.1 F.S.B., Inc. million, representing approximately 33.4 percent of Superior, Nebraska total deposits in depository institutions in the market ("market deposits").2 Hardy is the fifth largest depos- Order Approving Merger of Bank Holding Companies and Banks 1. State deposit data are as of June 30, 1991. Market deposit data are as of June 30, 1990. F.S.B., Inc., Superior, Nebraska ("FSB"), a bank 2. In this context, depository institutions include commercial banks, savings banks and savings associations. Market share data are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously has indicated that thrift institu- 7. This minimum lease term requirement is not intended to prohibit tions have become, or have the potential to become, major competia bank holding company from acquiring personal property subject to tors of commercial banks. See WM Bancorp, 76 Federal Reserve an existing lease with a remaining maturity of less than 90 days, Bulletin 788 (1990); Midwest Financial Group, 75 Federal Reserve provided that, at the inception of the lease, such lease conformed with Bulletin 386 (1989); National City Corporation, 70 Federal Reserve all of the requirements of this paragraph. Bulletin 743 (1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 551 itory institution in the market, controlling deposits of growth for the market was only 2.2 percent, which is $7.5 million, representing approximately 6.7 percent of less than one-half the rate for other rural Nebraska market deposits. Upon consummation of the proposed markets.9 Because the Nuckolls County banking transaction, FSB would control deposits of $44.6 market is relatively unattractive to entry compared million, representing approximately 40.1 percent of to other banking markets, the chance that Hardy market deposits. The market would remain highly Bank could be sold to a competitor outside of the concentrated, with a Herfindahl-Hirschman Index market is reduced. ("HHI") of 2889.3 Five depository institutions, including a branch of In other cases, the Board has noted that the HHI one of the largest thrift institutions in the state, will calculations may not accurately reflect the effect of a continue to operate in the market after consummation proposal on competition in the relevant banking of the proposal. The second largest depository institumarket in light of other facts regarding the structure, tion in the market would control 30.4 percent of make-up or other characteristics of the market.4 In market deposits, compared to a 40.1 percent market this case, several characteristics of the market indi- share for FSB. Approval of the acquisition also could cate that the competitive effects of the proposal are allow management to gain some financial and operanot as significant as represented by the market HHI tions efficiencies through elimination of duplicate figures. boards of directors and through the pooling of capital The Nuckolls County banking market is contract- accounts. ing. Nuckolls County is a sparsely populated area In view of all of the facts of record, in particular the that has experienced a steady decline in population.5 characteristics of the Nuckolls County banking mar- Between 1970 and 1990, Nuckolls County's popula- ket, the Board concludes that consummation of this tion decreased from 7,404 to 5,786, and since 1986, proposal would not have a significantly adverse effect the county's population has declined at an average on competition or the concentration of banking reannual rate of 5.6 percent.6 The number of retail sources in any relevant banking market.10 establishments in Nuckolls County declined by ap- The financial and managerial resources and future proximately 40 percent between 1982 and 1987.7 The prospects of FSB, Hardy, and their subsidiary banks banking market has fewer residents per bank office are consistent with approval of this proposal. Considthan the average for other rural banking markets in erations relating to the convenience and needs of the the state.8 Between 1987 and 1990, average deposit communities to be served and the other factors the Board must consider under section 3 of the BHC Act and the Bank Merger Act, also are consistent with approval. 3. Under the revised Department of Justice Merger Guidelines, 49 Farmers Bank also has applied under section 9 of Federal Register 26,823 (1984), a market in which the post-merger HHI is above 1800 is considered to be highly concentrated. In such the Federal Reserve Act (12 U.S.C. § 321 et seq.) to markets, the Justice Department is likely to challenge a merger that establish a branch at the present site of Hardy Bank. increases the HHI by more than 50 points. The Department of Justice The Board has considered the factors it is required to has informed the Board that, as a general matter, a bank merger or acquisition will not be challenged, in the absence of other factors consider when reviewing applications for establishing indicating anticompetitive effects, unless the post-merger HHI is at branches pursuant to section 9 of the Federal Reserve least 1800 and the merger increases the HHI by 200 points. The Justice Act (12 U.S.C. § 332) and finds these factors to be Department has stated that the higher-than-normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recog- consistent with approval. nize the competitive effect of limited-purpose lenders and other Based on the foregoing and other facts of record, the non-depository financial entities. The Department of Justice has informed the Board that the Depart- Board has determined that the applications should be, ment does not object to this acquisition on competitive grounds. and hereby are, approved. This approval is specifically 4. See, e.g., Laredo National Bancshares, Inc., 78 Federal Reserve Bulletin 139 (1992). 5. The Board has previously taken into account evidence of a declining market in evaluating the competitive effects of a proposal. See, e.g., Lisco State Company, 76 Federal Reserve Bulletin 31 (1990) McNally and Co., Rand McNally Commercial Atlas and Marketing (approving a proposal that increased the HHI from 2077 points to 5712 Guide (1992). in a declining rural market). See also Morrill Bancshares, Inc., 78 9. Id.\ McFadden Business Publications, American Financial Di- Federal Reserve Bulletin 333 (1992), and First Formosa Inc., 76 rectory (Spring 1991). Federal Reserve Bulletin 541 (1990). 10. In other cases involving the common ownership of banks, the 6. Rand McNally and Co., Rand McNally Commercial Atlas and Board has considered the competitive effects of a proposal at the time Marketing Guide (1992). of the application and at the time that the banks became affiliated. See, 7. Population and economic statistics are from the Nebraska e.g. Mid-Nebraska Bancshares, Inc. 64 Federal Reserve Bulletin 589 Statistical Handbook 1990-1991 (Nebraska Department of Economic (1978), ajf d, Mid-Nebraska Bancshares, Inc. v. Board of Governors Development (1990)). of the Federal Reserve System, 627 F.2d 266 (D.C. Cir. 1980). In light 8. The Nuckolls County banking market has 1,447 residents per of the changes in the market's characteristics discussed above, bank office compared to an average of 2,357 for rural markets in consummation of this proposal would not result in a significantly Nebraska and 13,087 for the RMA counties in the state. Rand adverse effect on competition at this time. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

552 Federal Reserve Bulletin • July 1992 conditioned upon compliance by FSB and its subsid- basis, in the following activities: iaries with the commitments made in connection with (1) the private placement, as agent, of all types of these applications. The commitments and conditions securities; relied on in reaching this decision are conditions (2) providing financial and transaction advice to imposed in writing by the Board in connection with its financial and nonfinancial institutions ("financial findings and decision and may be enforced in proceed- advisory services"), including ings under applicable law. The acquisitions shall not (i) advice regarding the structuring of, and arrangbe consummated before the thirtieth calendar day ing for, loan syndications, interest rate "swaps," following the effective date of this Order, or later than "caps," and similar transactions; three months after the effective date of this Order, (ii) advice in connection with financing and other unless such period is extended for good cause by the corporate transactions; Board or by the Federal Reserve Bank of Kansas City, (iii) valuation services; acting pursuant to delegated authority. (iv) advice in connection with merger, acquisition By order of the Board of Governors, effective and divestiture considerations; May 22, 1992. (v) fairness opinions in connection with merger, acquisition and similar transactions; and Voting for this action: Chairman Greenspan and Gover- (vi) conducting feasibility studies for companies; nors, Angell, Kelley, La Ware, Lindsey, and Phillips. Absent (3) providing investment and financial advice pursuand not voting: Governor Mullins. ant to section 225.25(b)(4) of the Board's Regulation Y; JENNIFER J. JOHNSON (4) arranging commercial real estate equity financing Associate Secretary of the Board pursuant to section 225.25(b)(14) of Regulation Y; (5) providing real estate and personal property ap- Orders Issued Under Section 4 of the Bank praising pursuant to section 225.25(b)(13) of Regu- Holding Company Act lation Y; and (6) providing management consulting to depository National City Corporation institutions pursuant to section 225.25(b)(ll) of Reg- Cleveland, Ohio ulation Y. Order Approving Application to Act as Agent in the Notice of the application, affording interested persons Private Placement of Securities and to Engage in an opportunity to submit comments, has been duly Securities-Related and Other Nonbanking Activities published (57 Federal Register 5887 (1992)). The time for filing comments has expired, and the Board has National City Corporation, Cleveland, Ohio considered the application and all comments received ("NCC"), a bank holding company within the meanin light of the factors set forth in section 4(c)(8) of the ing of the Bank Holding Company Act ("BHC Act"), BHC Act. has applied pursuant to section 4(c)(8) of the BHC Act NCC, with $23.7 billion in total consolidated assets, (12 U.S.C. § 1843(c)(8)) and section 225.23(a) of the is the second largest commercial banking organization Board's Regulation Y (12 C.F.R. 225.23(a)), to acin Ohio, controlling $18.5 billion in deposits.2 NCC quire, through its subsidiary, National City Venture operates 17 subsidiary banks in Ohio, Indiana, and Capital Corporation, Cleveland, Ohio ("Venture Cap- Kentucky, and engages directly and through its subital"), a limited partnership interest in Reserve Capital sidiaries in a broad range of permissible nonbanking Group Limited Partnership, Cleveland, Ohio ("Partactivities throughout the United States. nership"),1 which will engage de novo, on a domestic other than the proposed activities without the prior written consent of 1. Partnership is being organized as a Delaware Limited Partnership Venture Capital. of which Venture Capital will be the sole limited partner. Reserve If Partnership Capital Group, Inc., the sole general partner of Partnership ("General (i) engages in any activities impermissible under the BHC Act as Partner"), will conduct the day-to-day operations of Partnership. determined by the Board, or Venture Capital has committed that Partnership will conduct the (ii) conducts activities beyond those activities for which NCC has proposed activities in accordance with all applicable Board precedent received Board approval to conduct through Partnership, or and regulations. In this regard, section 1.3 of the partnership agree- (iii) does not conduct its activities in accordance with the comment limits Partnership's activities to those activities "that are not mitments relied upon by the Board in considering this application, contrary to the rules and regulations promulgated by the Board of NCC has committed that it will either correct any such violations Governors of the Federal Reserve System or the Bank Holding within a reasonable period of time or promptly divest its interest in Company Act of 1956, as amended." This section of the partnership Partnership. agreement also prohibits Partnership from engaging in any activities 2. Asset and deposit data are as of December 31, 1991. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 553 The Board previously has determined by regulation Partnership will conduct its private placement activithat conducting the proposed investment and financial ties using the same methods and procedures, and advisory activities, commercial real estate equity fi- subject to the same prudential limitations established nancing activities, real estate and personal property by the Board in the Bankers Trust and J.P. Morgan appraisal activities, and management consulting activ- orders. ities is closely related to banking under section 4(c)(8) In every case involving a nonbanking acquisition by of the BHC Act.^ NCC has committed that Partnership a bank holding company under section 4 of the BHC will conduct these activities subject to the limitations Act, the Board considers the financial condition and contained in Regulation Y.4 resources of the applicant and its subsidiaries and the The Board previously has determined by order that effect of the transaction on these resources.10 Based the proposed financial advisory services are closely on the facts of this case, the Board concludes that related to banking for purposes of section 4(c)(8) of the financial considerations are consistent with approval BHC Act.5 NCC has committed that Partnership will of this application. The managerial resources of NCC conduct these activities in accordance with the condi- also are consistent with approval. tions set forth in those orders.6 In order to approve this application, the Board is Private placement involves the placement of new required to determine that the performance of the issues of securities with a limited number of sophisti- proposed activities by NCC can reasonably be excated purchasers in a nonpublic offering. A financial pected to produce public benefits that would outintermediary in a private placement transaction acts weigh adverse effects under the proper incident to solely as an agent of the issuer in soliciting purchasers, banking standard of section 4(c)(8) of the BHC Act. and does not purchase the securities and attempt to Under the framework established in this and prior resell them. Securities that are privately placed are not decisions, consummation of this proposal is not subject to the registration requirements of the Securi- likely to result in any significantly adverse effects, ties Act of 1933, and are offered only to financially such as undue concentration of resources, decreased sophisticated institutions and individuals and not to or unfair competition, conflicts of interests, or unthe public. NCC has committed that Partnership will sound banking practices. In addition, the Board not privately place registered securities and will only expects that the de novo entry of Partnership into the place securities with customers who qualify as accred- market for these services would increase the level of ited investors.7 competition among providers of these services. Ac- The Board previously has determined by order that, cordingly, the Board has determined that the perforsubject to certain prudential limitations that address mance of the proposed activities by Partnership can the potential for conflicts of interests, unsound bank- reasonably be expected to produce public benefits ing practices or other adverse effects, the proposed that would outweigh adverse effects under the proper private placement activities are so closely related to incident to banking standard of section 4(c)(8) of the banking as to be a proper incident thereto within the BHC Act. meaning of section 4(c)(8) of the BHC Act.s The Board Based on all the facts of record, and subject to the also has previously determined that acting as agent in commitments made by NCC, as well as all of the the private placement of securities does not constitute terms and conditions set forth in this Order and in the underwriting and dealing in securities for purposes of above-noted Board orders, the Board has determined section 20 of the Glass-Steagall Act, and that revenue that the application should be, and hereby is, apderived from this activity is not subject to the 10 proved. Approval of this proposal is specifically percent revenue limitation on ineligible securities un- conditioned on compliance by NCC and Partnership derwriting and dealing.9 NCC has committed that with the commitments made in connection with its application, as supplemented, and with the conditions referenced in this order. The Board's determination also is subject to all of the conditions set forth 3. See 12 C.F.R. 225.25(b)(4); (b)(14); (b)(13); and (b)(ll). 4. See id. in Regulation Y, including those in sections 225.4(d) 5. See SunTrust Banks, Inc., 74 Federal Reserve Bulletin 256 (1988); and 225.23(b), and to the Board's authority to require Signet Banking Corporation, 73 Federal Reserve Bulletin 59 (1987). modification or termination of the activities of a bank 6. See id. 7. NCC has also committed that Partnership will not privately place holding company or any of its subsidiaries as the registered investment company securities. Further, Partnership will Board finds necessary to assure compliance with, not privately place any securities of investment companies that are advised by NCC or any of its affiliates. 8. Bankers Trust New York Corporation, 75 Federal Reserve Bulletin 829 (1989) ("Bankers Trust"). 10. 12 C.F.R. 225.24; The Fuji Bank, Limited, 75 Federal Reserve 9. J.P. Morgan and Company, Inc., 76 Federal Reserve Bulletin 26 Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve (1990) ("J.P. Morgan")-, Bankers Trust. Bulletin 155, 156 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

554 Federal Reserve Bulletin • July 1992 and to prevent evasion of, the provisions of the BHC subsidiaries listed in Appendix A.2 Comerica has also Act and the Board's regulations and orders issued provided notice pursuant to section 25(a) of the thereunder. The commitments and conditions relied Federal Reserve Act (12 U.S.C. § 611-631) ("Edge on in reaching this decision are conditions imposed in Act") and section 211.4 of the Board's Regulation K writing by the Board in connection with its findings (12 C.F.R. 211.4), to acquire Manufacturers-Detroit and decision and may be enforced in proceedings International Corporation, Detroit, Michigan under applicable law. ("MDIC"), an Edge Act corporation.3 This transaction shall not be consummated later Comerica Bank, Detroit, Michigan, a state member than three months after the effective date of this bank, has applied under section 18(c) of the FDI Act Order, unless such period is extended for good cause (12 U.S.C. § 1828(c)) ("Bank Merger Act") to merge by the Board or by the Federal Reserve Bank of with Manufacturers Bank with Comerica as the sur- Cleveland, pursuant to delegated authority. viving entity. In addition, Comerica Bank has applied By order of the Board of Governors, effective under section 9 of the Federal Reserve Act (12 U.S.C. May 18, 1992. § 321) to establish branches at the existing branch locations of Manufacturers Bank listed in Appendix B, and for permission to make an additional investment in Voting for this action: Chairman Greenspan and Governors Mullins, Angell, Kelley, LaWare, Lindsey, and Phillips. bank premises pursuant to section 24A of the Federal Reserve Act (12 U.S.C. § 371(d)). JENNIFER J. JOHNSON Notice of the applications, affording interested per- Associate Secretary of the Board sons an opportunity to submit comments, has been published (57 Federal Register 5885 (1992)). As re- Orders Issued Under Sections 3 and 4 of the quired by the Bank Merger Act, reports on the com- Bank Holding Company Act petitive effects of the merger were requested from the United States Attorney General, the Office of the Comerica Incorporated Comptroller of the Currency ("OCC") and the Federal Detroit, Michigan Deposit Insurance Corporation ("FDIC"). The time for filing comments has expired, and the Board has Comerica Bank considered the applications and all comments received Detroit, Michigan in light of the factors set forth in sections 3(c) and 4 of the BHC Act, the Bank Merger Act, the Edge Act and Order appproving Merger of Bank Holding the Federal Reserve Act. Companies and Merger of Banks Comerica, with approximately $14.2 billion in consolidated assets, controls five subsidiary banks lo- Comerica Incorporated, Detroit, Michigan ("Comercated in California, Michigan, Ohio, and Texas, and ica"), a bank holding company within the meaning of a savings association in Florida.4 Manufacturers, the Bank Holding Company Act ("BHC Act"), has with approximately $11.9 billion in consolidated asapplied under section 3 of the BHC Act (12 U.S.C. § 1842) to merge with Manufacturers National Corporation, Detroit, Michigan ("Manufacturers"), and 2. Pursuant to section 4(g) of the BHC Act, Manufacturers controls thereby indirectly acquire Manufacturers Bank, N.A., an insured depository institution with limited trust powers, Manufac- Detroit, Michigan ("Manufacturers Bank"); Manufac- turers Bank and Trust of Florida, N.A., Palm Beach Gardens, Florida turers National Bank of Ann Arbor, Ann Arbor, ("MBT"), that operates in Florida. Prior to consummation of this merger, Comerica proposes to merge MBT into an interim federal Michigan; and Manufacturers's subsidiary holding savings bank subsidiary and, subsequently, to merge the interim thrift company, Affiliated Banc Group, Inc., Morton Grove, with Comerica Bank-Florida, F.S.B., Clearwater, Florida, a SAIFinsured savings association. Comerica has applied for Board approval Illinois, and thereby indirectly acquire Affiliated Bank, of these transactions under section 4(c)(8) of the BHC Act, and has Franklin Park, Illinois ("Affiliated Bank"), and Stan- applied for approval from the Office of Thrift Supervision ("OTS"), ford State Bank, Stanford, Illinois.1 including approval under section 5(d)(3) of the Federal Deposit Insurance Act ("FDI Act"), as amended by the Federal Deposit Comerica has also applied under section 4(c)(8) of Insurance Corporation Improvement Act of 1991 (Pub. L. No. 102the BHC Act to acquire Manufacturers's nonbanking 242, § 501, 105 Stat. 2236, 2388 (1991). The OTS has approved this proposal. 3. MDIC is a subsidiary of Manufacturers Bank and will become a direct subsidiary of Comerica Bank. MDIC has two subsidiaries, 1. In connection with this proposal, Comerica and Manufacturers Manufacturers International (Australia) Properties Limited, Sydney, have granted to each other an option to purchase, under certain Australia, and Manufacturers-Detroit International (Canada) Limited, circumstances, up to approximately 19.9 percent of the outstanding Toronto, Ontario, Canada ("MDICL"), both of which are inactive. common stock of the other company. These options will terminate MDICL has an inactive subsidiary, Manufacturers Detroit Internaupon consummation of the proposed merger of Comerica and Manu- tional (Canada) Properties, Ltd., Toronto, Ontario, Canada. facturers. 4. Asset data are as of March 31, 1992. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 555 sets, controls five subsidiary banks in Florida, Illi- Competitive, Financial, Managerial and Supervisory nois, and Michigan. Upon consummation of the Considerations transaction, Comerica would become the largest commercial banking organization in Michigan, con- Comerica and Manufacturers compete directly in five trolling deposits of $16.5 billion, representing 22 banking markets in Michigan and Florida. After conpercent of the deposits in commercial banks in the sidering the competition offered by other depository state.5 In Florida, upon consummation of the pro- institutions in the market, the number of competitors posal, Comerica would become the 48th largest com- remaining in the market, the increase in concentration, mercial banking or thrift organization (together, "de- and the other facts of record, the Board has concluded pository institution") in the state, controlling that consummation of the proposal would not result in deposits of $170.4 million, representing less than 1 a significantly adverse effect on competition in the percent of total deposits in depository institutions in Michigan banking markets of Ann Arbor and Grand Florida.6 In Illinois, upon consummation of the pro- Rapids, and the Florida banking markets of East Palm posal, Comerica would become the 13th largest com- Beach and Naples.11 mercial banking organization in the state, controlling In the Detroit banking market,12 Comerica is the deposits of $1.3 billion, representing approximately 1 second largest depository institution, controlling depercent of the total deposits in commercial banks in posits of $8.4 billion, representing 18.3 percent of the Illinois.7 total deposits in depository institutions in the market ("market deposits"). Manufacturers is the third largest depository institution in the market, with deposits Douglas Amendment of $5.8 billion, representing approximately 12.7 percent of market deposits. Upon consummation, Com- Section 3(d) of the BHC Act, the Douglas Amend- erica would become the largest banking organization ment, prohibits the Board from approving an appli- in the market, with deposits of $14.2 billion, representcation by a bank holding company to acquire control ing 31 percent of market deposits, and the Herfindahlof any bank located outside of the bank holding Hirschman Index ("HHI") would increase by 465 company's home state, unless such acquisition is points to 1876.13 "specifically authorized by the statute laws of the A number of factors mitigate the potential anti- State in which bank is located, by language to that competitive effects of the proposed acquisition in the effect and not merely by implication."8 As part of Detroit market. Forty-seven commercial banking orthis proposal, Comerica, which has Michigan as its ganizations and thrift institutions, including some of home state, proposes to acquire the Illinois banking the largest depository institutions in Michigan, would subsidiaries of Manufacturers.9 The Board previ- remain in the Detroit market upon consummation of ously has determined that the interstate banking the proposal.14 In addition, the Detroit banking market statutes of Illinois permit the acquisition of Illinois banking organizations by banking organizations located in Michigan.10 Accordingly, Board approval of 11. Market share data are based on calculations in which the this proposal is not prohibited by the Douglas deposits of thrift institutions are included at 50 percent, except the deposits of Comerica's thrift subsidiary which are included at 100 Amendment. Approval of this proposal, however, is percent. The Board previously has indicated that thrift institutions conditioned upon Comerica receiving all required have become, or have the potential to become, significant competitors state regulatory approvals. of commercial banks. See Midwest Financial Group 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 50 Federal Reserve Bulletin 743 (1984). 12. The Detroit market is approximated by Oakland, Macomb, and Wayne Counties, and 33 cities and townships in the counties of Lapeer, St. Clair, Livingston, Washtenaw, and Monroe. 13. Under the revised Department of Justice Merger Guidelines, 49 5. Michigan deposit and ranking data are as of June 30, 1990. Federal Register 26,823 (June 29, 1984), a market in which the 6. Florida statewide data are as of June 30, 1991. Florida market post-merger HHI is above 1800 is considered highly concentrated. In data are as of June 30, 1990. such markets, the Justice Department is likely to challenge a merger 7. Illinois deposit and ranking data are as of June 30, 1991. that increases the HHI by more than 50 points. The Justice Depart- 8. 12 U.S.C. § 1842(d). ment has informed the Board that a bank merger or acquisition 9. A bank holding company's home state is that state in which the generally will not be challenged (in the absence of other factors operations of the bank holding company's banking subsidiaries were indicating anti-competitive effects) unless the post-merger HHI is at principally conducted on July 1, i966, or the date on which the least 1800 and the merger increases the HHI by 200 points. The Justice company became a bank holding company, whichever is later. Department has stated that the higher than normal HHI thresholds for 12 U.S.C. § 1842. screening bank mergers for anti-competitive effects implicitly recog- 10. 111. Ann. Stat. ch. 17, para. 2510.01 (Smith-Hurd 1991). See First nize the competitive effect of limited-purpose lenders and other of America Bank Corporation, 75 Federal Reserve Bulletin 836 (1989). non-depository financial entities. The Illinois Commissioner of Banks and Trust Companies has ap- 14. These data reflect the recently approved merger of First of proved Comerica's application to acquire Affiliated Banc Group, Inc. America Bank Corporation, Kalamazoo, Michigan, and Security Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

556 Federal Reserve Bulletin • July 1992 is the largest banking market in Michigan and is Convenience and Needs Considerations attractive for entry by banking organizations. In this regard, seven banking organizations without previous In considering the applications under section 3 of the representation in the Detroit market entered the mar- BHC Act, the Bank Merger Act, and the Federal ket between 1986 and 1990.15 The Detroit Metropolitan Reserve Act, the Board must consider the conve- Statistical Area ("MSA") has both the highest popu- nience and needs of the communities to be served by lation and deposit size per banking office, as well as the institutions and take into account the records of the highest per capita household income level, of any the relevant depository institutions under the Commu- MSA in the state.16 In addition, there are no significant nity Reinvestment Act (12 U.S.C. § 2901 et seq.) legal restrictions to market entry because Michigan ("CRA"). The CRA requires the federal financial law permits out-of-state banking organizations to ac- supervisory agencies to encourage financial instituquire Michigan banks, including through de novo tions to help meet the credit needs of the local comexpansion,17 and permits branching on a statewide munities in which they operate consistent with the safe basis.18 and sound operation of such institutions. To accom- The Board has sought comments from the United plish this end, the CRA requires the appropriate fed- States Attorney General, the OCC, and the FDIC on eral supervisory authority to "assess the institution's the competitive effects of this proposal. The Attorney record of meeting the credit needs of its entire com- General has indicated that the proposal would not munity, including low- and moderate-income neighhave significant adverse effects on competition in any borhoods, consistent with the safe and sound operarelevant banking market. Neither the OCC or the tion of such institution," and to take that record into FDIC has provided any objection to consummation of account in its evaluation of bank holding company this proposal or indicated that the proposal would have applications.21 any significant adverse competitive effects. Based on The Board has received fifty-one comments regardall the facts of record in this case, the Board concludes ing the CRA performance records of Comerica and that consummation of this proposal would not have a Manufacturers.22 Twenty-five Michigan community significantly adverse effect on competition or the con- organizations and individuals commented in support of centration of banking resources in the Detroit banking the merger and have commended the CRA activities of market or in any other relevant banking market.19 Comerica and Manufacturers in that state. A number The Board also concludes that the financial and of these commenters noted that both banking institumanagerial resources and future prospects of Comer- tions have provided financing and other support for ica, Manufacturers, and their subsidiary banks, and various community development activities, particuthe other factors the Board must consider under sec- larly within low- and moderate-income and minority tion 3 of the BHC Act also are consistent with approv- communities in Detroit. For example, the City of al.20 Detroit Finance Department commented that Comerica Bank and Manufacturers Bank played leadership roles in the creation of a CRA agreement for approx- Bancorp, Inc., Southgate, Michigan. See First of America Bank imately $2 billion between the City of Detroit and Corporation, 78 Federal Reserve Bulletin 371 (1992). Accounting for various lending institutions, and that both banks acthis merger in the Comerica proposal, the HHI in the Detroit market tively continue to contribute resources to community would be 1936. 15. Three organizations entered the market de novo and four by groups and major redevelopment initiatives in Detroit. acquisition. Twenty Illinois community organizations and individ- 16. The Detroit MSA closely approximates the Detroit banking uals, including two state legislators, also commented market. The Detroit MSA also ranks the highest among Michigan MSAs in terms of average bank profitability and total deposit and in support of the merger. These commenters praised household income growth. 17. Michigan law authorizes nationwide interstate banking on a reciprocal basis. Mich. Stat. Ann. § 23.710(130b)(4) (Callaghan 1991). 18. Mich. Stat. Ann. § 23.710(171) (Callaghan 1991). reviewed these comments in light of all the facts of record in this case, 19. The Board received one comment that asserted that the proposal including the examination reports by appropriate federal agencies and does not comply with applicable antitrust laws. For the reasons informal investigations of some complaints by the Federal Reserve discussed above, and based on all facts of record, the Board believes Bank of Chicago. Based on this review, and taking into account these the competitive factors are consistent with approval. comments, the Board concludes that the financial and managerial 20. Several comments were received regarding the financial and considerations relating to the proposal are favorable. managerial aspects of this proposal. One commenter believed that 21. 12 U.S.C. § 2903. Comerica is highly leveraged and that the merger will result in a 22. One comment not related to the CRA maintained that the merger weakened institution. Other commenters related individual com- will result in the loss of 1800 jobs. Comerica has responded that most plaints against Comerica's management, including one commenter's staff reductions will occur through early retirement under an enhanced inability to resolve a dispute involving two accounts and one com- retirement benefit program or attrition. Employees who are termimenter's unsubstantiated doubt regarding Comerica. Another com- nated as a result of the proposal will be entitled to a number of menter has questioned Comerica's denial of his application to partic- programs that include financial compensation, benefits continuation, ipate in a financing program for senior citizens. The Board has and employee career assistance. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 557 the CRA activities of Manufacturers's subsidiary Protestants also allege, on the basis of data reported bank, Affiliated Bank, in Illinois, noting that Affiliated under the Home Mortgage Disclosure Act Bank is actively involved in supporting community ("HMDA"), that subsidiary banks of Comerica and development groups, including efforts towards in- Manufacturers have engaged in illegal discriminatory creasing affordable housing.23 lending practices in Detroit and Grand Rapids.26 The Board also has received six comments from The Board has carefully reviewed the CRA perforindividuals and community organizations that raise mance records of Comerica, Manufacturers, and their concerns regarding the efforts by Comerica and Man- subsidiary banks, as well as all comments received, ufacturers to meet the credit needs of their entire and the responses to those comments, and all of the communities, including low- and moderate-income other relevant facts, in light of the CRA, the Board's neighborhoods, primarily in the cities of Detroit and regulations, and the Statement of the Federal Finan- Grand Rapids, Michigan, and Chicago, Illinois ("Prot- cial Supervisory Agencies Regarding the Community estants").24 Specifically, Protestants allege that: Reinvestment Act ("Agency CRA Statement").27 (1) CRA performance by Comerica Bank and Manufacturers Bank in low- and moderate-income neigh- Record of Performance under the CRA borhoods, particularly downtown Detroit, is inadequate in the areas of ascertaining credit needs, A. CRA Performance Examinations marketing credit products and lending; and (2) Comerica has failed to meet the credit needs of The Agency CRA Statement indicates that decisions low- and moderate-income and minority communi- by agencies to allow financial institutions to expand ties in Grand Rapids, particularly in the areas of will be made pursuant to an analysis of the institution's conventional and FHA mortgage lending and home overall CRA performance and will be based on the improvement lending.25 actual record of performance of the institution. The Board has reviewed the overall records of performance under the CRA of these institutions, as well as the programs and policies that Comerica and Manufacturers have in place to fulfill their CRA responsibil- 23. For example, one commenter praised Affiliated Bank for making ities on an ongoing basis in light of the information loans on single room occupancy properties ("SRO") in low- and moderate-income communities and participating in educational semi- provided and the views expressed by the commenters nars to increase the availability of SRO financing. Other commenters in this case. The Board has also reviewed the CRA praised Affiliated Bank's efforts to develop affordable housing for the examination records of these institutions.28 elderly. 24. These comments were submitted by Michigan Association of Initially, the Board notes that all of Comerica's Community Organizations For Reform Now and Michigan Apartment subsidiary banks have received at least a "satisfacto- Owners Association and Preservation Management Corporation, both in Detroit, Michigan; Coalition for Community Reinvestment (includ- ry" rating from their primary supervisors in their most ing South East Economic Development, Inc.) in Grand Rapids, recent examination for CRA performance.29 In partic- Michigan; Illinois Association of Community Organizations for Reform Now and Local 880 of the Service Employees International Union (AFL-CIO) jointly, both in Chicago, Illinois ("Chicago Protestants"); and an Illinois state legislator. Chicago Protestants' com- 26. Protestants in Grand Rapids have also criticized the accuracy of ments were subsequently withdrawn as a result of discussions be- Comerica's HMDA data and have noted that racial data are missing tween Chicago Protestants, Comerica, and Manufacturers that for certain loans denied by Comerica's bank in Grand Rapids. resulted in an agreement to address issues raised by the Chicago Comerica has responded that some of these loans were indirect mobile Protestants, including by establishing a special mortgage lending home applications from dealers who are not required to collect racial program for low-income areas in Chicago. data. These Protestants also have requested that the Board examine 25. One Protestant also expressed concern that the merger would Comerica's lending criteria and investigate its lending practices by jeopardize an existing agreement between a subsidiary bank of Man- using "testers." ufacturers and the Protestant regarding lending over a three-year 27. 54 Federal Register 13,742 (1989). period in certain Grand Rapids census tracts. After these comments 28. The Agency CRA Statement explains that decisions by agencies were filed, Comerica committed to honor this agreement. This Prot- to allow financial institutions to expand will be made pursuant to an estant also submitted a copy of a 1990 request for reconsideration of analysis of the institution's overall CRA performance and will be the Board's approval of Comerica's application to acquire two Cali- based on the actual record of performance of the institution. The fornia banks (Comerica, Incorporated, 77 Federal Reserve Bulletin Agency CRA Statement provides that a CRA examination is an 131 (1991)) and noted that it had not received a response. The Board important and often controlling factor in the consideration of an has no record of this request. Under the Board's Rules of Procedure, institution's CRA record and that these reports will be given great the standard for determining whether a reconsideration request will be weight in the applications process. 54 Federal Register 13,745 (1989). granted is whether the request presents "relevant facts that, for good 29. Comerica Bank-Texas, Dallas, Texas, received an "outstandcause shown, were not previously presented to the Board." The ing" performance rating from the FDIC as of October 1991. Plaza Board has reviewed the copy of the request submitted by Protestant Bank of Commerce, San Jose, California, and Comerica Bank Caliand concluded that the request takes exception to the Board's fornia (formerly Bank of Industry), City of Industry, California, both conclusions or weight given to the evidence in the record but fails to received "satisfactory" ratings from the FDIC in 1991 and 1988, provide relevant facts that were not previously presented to the although they were not Comerica subsidiaries at the time of their Board. Accordingly, this request would not have warranted reconsid- examinations. Comerica Bank-Florida, F.S.B., Clearwater, Florida eration of the Comerica Order. (formed by Comerica in late 1990) has been examined for CRA Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

558 Federal Reserve Bulletin • July 1992 ular, Comerica Bank, which is Comerica's lead bank Public Affairs Department and Corporate Community in Detroit and accounts for approximately 84 percent Reinvestment Division. of the assets of Comerica, received an "outstanding" Each Comerica subsidiary bank has policies and CRA performance rating from the Federal Reserve procedures in place to ensure that the bank's board of Bank of Chicago as of March 1991. directors and management are involved in formulating All of the subsidiary banks of Manufacturers also CRA policies and monitoring CRA performance. For have satisfactory CRA performance ratings in their example, Comerica Bank's board of directors has most recent examination by their primary regulators.30 established a CRA committee with responsibility for Manufacturers Bank, which is Manufacturers's lead monitoring CRA performance, which reports to the bank in Detroit and accounts for approximately 87 full board of directors on a quarterly basis. Comerica's percent of its assets, received a "satisfactory" CRA Corporate Community Reinvestment Officer adminisperformance rating from the OCC as of July 1990. ters and develops Comerica Bank's CRA plan and Affiliated Bank, Manufacturers's Illinois bank subsid- reports directly to the President of the bank. In addiiary, also received a "satisfactory" CRA performance tion, training and review procedures regarding CRA rating as of August 1991 from the FDIC. compliance have been incorporated throughout Comerica Bank's system. Its board of directors also re- B. Corporate Policies views the types of credit offered at least annually for compliance with the CRA. Comerica, Manufacturers and their subsidiary banks In 1991, Comerica Bank created the position of CRA have in place the types of policies and procedures that Coordinator to implement the CRA plan for eight the Board and other federal bank supervisory agencies Michigan regions outside of southeastern Michigan have indicated contribute to an effective CRA pro- that are within the service area of Comerica Bankgram. For example, Comerica has established a CRA Detroit (the "outstate regions").31 The CRA Coordiprogram to supervise and review the CRA perfor- nator monitors CRA efforts in each outstate region and mance of its subsidiary banks. CRA plans are devel- prepares a quarterly Community Reinvestment Plan oped for each subsidiary bank by the holding company status report which is made available to the public and and the Corporate Community Reinvestment Officer distributed to local organizations. The CRA Coordinawith input from each bank's executive management tor also conducts CRA training for branch and corpoand CRA Committee. The plans are developed after a rate personnel. review of each bank's self-assessment of its CRA Manufacturers also has instituted policies and proactivities and incorporate specific initiatives related to grams of the type outlined by the Agency CRA Statethe CRA performance categories and assessment fac- ment. For example, Manufacturers has adopted a tors designated by the federal banking regulators. corporate CRA Mission Statement and CRA staff Comerica's subsidiary banks prepare a quarterly conduct quarterly meetings for the Corporate CRA report reflecting the status of all initiatives addressed Coordinators' Committee and Corporate Community in the CRA Plan. The quarterly self-assessments and Support Committee. In addition, each of Manufacturstatus reports are reviewed by the holding company as ers^ subsidiary banks has a designated CRA compliwell as by each bank's CRA Committee and a com- ance officer that attends a CRA compliance review mittee of the bank's board of directors. Comerica's full sponsored by the holding company on a quarterly board of directors reviews the CRA activities of the basis where policies and procedures are reviewed. The subsidiary banks and monitors their performance with board of directors for Manufacturers' subsidiary banks the assistance of the holding company's Corporate review and approve the bank's CRA statement and each component of the CRA program on an annual basis. Comerica's CRA programs and policies will be adopted by the merged organization. After the consolperformance by the OTS; however, a public rating is not available. idation, each subsidiary bank will have a CRA board Comerica Bank-Midwest, N.A., Toledo, Ohio (a limited-purpose credit card bank), and Comerica Trust Company of Florida, N.A., committee to focus on that bank's CRA compliance Boca Raton, Florida, have not been examined for CRA performance by their primary regulator. 30. Manufacturers Bank-Wilmington, Newark, Delaware, a limitedpurpose credit card bank, has received a "satisfactory" rating from the FDIC as of January 1992. Manufacturers National Bank of Ann 31. These regions include Jackson, Kalamazoo, Lansing, Midland, Arbor, Ann Arbor, Michigan, and Manufacturers Bank and Trust Muskegon, Battle Creek, Ann Arbor, and Grand Rapids. Comerica Company of Florida, N.A., Palm Beach Gardens, Florida, both represents that management of Comerica Bank's operations in the received "satisfactory" CRA performance ratings as of July 1990 and outstate regions have each instituted their own CRA plans that are August 1991, respectively. Stanford State Bank, Stanford, Illinois, similar to the CRA plan for southeastern Michigan and are tailored to which is a limited-purpose, state chartered bank, currently is inactive. meet the specific credit needs of each market. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 559 strategy, and a CRA/Community Support Manage- which the bank ascertains community awareness of its ment Committee to ensure compliance with the CRA credit products and services. In Grand Rapids, quarthroughout the entire organization. These committees terly CRA Status Reports are sent to a number of will report to the parent holding company on a regular community and civic organizations to provide a means basis. In addition, the executive officer charged with for the community to become aware of and respond to overall CRA compliance for Comerica will be the Comerica Bank's efforts and provide input to improve senior vice president in charge of Corporate Public CRA performance. Affairs who will report directly to the President of the Comerica Bank uses information gathered through holding company. A Corporate CRA Coordinating its outreach process to develop credit products to help Committee, which will include the employees from meet identified credit needs and to market these prodeach depository institution with primary CRA respon- ucts. One example of a product developed by this sibility for that institution, will be established to en- process was a secured bankcard loan product introsure that all of Comerica's depository institutions are duced in 1990 to assist low-income loan applicants and uniformly applying corporate CRA-related policies others in establishing a retail credit history. Comerica and procedures and will meet on a scheduled basis. In Mortgage Corporation has also developed a mortgage addition, Comerica will incorporate into the existing application kit which is provided in response to loan Comerica CRA Plan those elements of Manufactur- requests and is available at each of the bank's branchers's Community Support Program that will expand es.35 and enhance the existing CRA Plan.32 Comerica Bank markets its products using various media, including local newspapers, radio stations, C. Ascertainment and Marketing Efforts community newspapers, brochures, and personal contacts designed to reach all members of its service Comerica Bank has a formal outreach program de- community, including low- and moderate-income cussigned to establish and maintain an ongoing line of tomers.36 A number of advertisements promoting recommunication between the bank and its community volving credit and home equity loans were placed with regarding the need for credit products and services. radio stations that target minority individuals. Comer- Comerica Bank ascertains credit needs through direct ica Bank also communicates information about credit forms of community contact initiated by directors, products and programs through its publication, "Comanagement, and staff of the bank. For example, the merica Partnerships," which is distributed quarterly to bank's branch managers have an established Branch over 3,000 community groups, to each of the bank's Manager's Calling Program for community contacts.33 branches, and to all employees. Comerica and the Other components of the calling program target small Michigan Small Business Development Center Netbusinesses and realtors.34 Comerica Bank solicits work have published a Small Business Resource Dicomments from customers at all bank facilities, and rectory that is distributed at seminars and similar the results of these comments and the bank's re- events to assist small business owners in obtaining sponses are reviewed by the bank's President and Vice credit. Chairman of the board of directors on a monthly basis. Manufacturers also ascertains community credit Members of Comerica Bank's board and management needs and markets credit products in a manner conalso ascertain community credit needs through partic- sistent with the Agency CRA Statement. For example, ipation in numerous community organizations. Manufacturers Bank maintains an ongoing dialogue Contacts with community groups are formally main- with governmental officials, community coalitions and tained through Comerica Bank's Community Rela- small business organizations. In addition, Manufacturtions Officer. Comerica Bank has also implemented a ers Bank has established an officer call program to series of Focus Group meetings for suburban and Detroit consumers and community leaders through 35. Comerica Mortgage Corporation's Market Focus Committee has responsibility for developing new products in response to identi- 32. Portions of Manufacturers's corporate policies and procedures fied credit needs. to be adopted for all banks in the Comerica system include uniform 36. Comerica's marketing efforts in Grand Rapids also account for standards, procedures and formatting for CRA statements, a corpo- low- and moderate-income consumers. For example, Comerica adverrate CRA Policy Implementation Committee to ensure consistent tises its mortgage and other housing credit products in Grand Rapids implementation of corporate CRA policy, internal audit standards for in a local daily newspaper, a local monthly magazine, two minority CRA compliance, and CRA compliance training. newspapers, and nine neighborhood newsletters. In addition, Comer- 33. Comerica managers made 5,000 calls to community groups, ica has placed Spanish advertisements in a Spanish language telebusinesses and individuals under this program in 1990. phone directory and has distributed a mortgage/home improvement 34. Comerica Bank's Real Estate calling program is conducted brochure in English and Spanish. Comerica intends to expand its through Comerica Mortgage Corporation, a subsidiary of Comerica efforts in targeted marketing to low- and moderate-income and minor- Bank. ity consumers in 1992. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

560 Federal Reserve Bulletin • July 1992 develop contacts with smaller neighborhood groups, the communities in which they are located, including and has surveyed by mail a significant number of the following. neighborhood and small business groups and Detroit Detroit. Comerica Bank's housing-related lending churches in 1989 and 1990 as part of its overall program features home improvement loans, an identiascertainment efforts. fied area of credit need in Detroit. In 1990, Comerica Manufacturers Bank's marketing efforts are also Bank extended 783 home improvement loans in Dedesigned to reach all segments of its community, troit, making 48 percent of these loans in low- and including low- and moderate-income neighborhoods. moderate-income neighborhoods and 58 percent in In addition to advertising credit products in traditional neighborhoods with a minority population greater than media sources, Manufacturers Bank uses outreach 89 percent. In addition, Comerica Bank engages in meetings with community groups, promotional mail- mortgage lending activities in low- and moderateings to Detroit realtors and home improvement con- income and minority neighborhoods in Detroit, and its tractors, and neighborhood billboard advertise- geographic distribution of mortgage loans in these ments.37 These marketing efforts have emphasized areas exceeds the average for all HMDA reporting mortgage and home improvement loans.38 lenders. The total dollar volume of housing-related Comerica has committed to enhance its ascertain- loans extended by Comerica Bank in Detroit also ment and marketing efforts by incorporating some of increased between 1989 and 1990.40 Manufacturers's initiatives for the combined institu- Total lending for home mortgage and home improvetions. In this regard, Comerica subsidiary banks will ment loans extended by Manufacturers Bank inuse the comprehensive written surveys for ascertain- creased substantially between 1989 and 1990.41 Maning local credit needs currently used by Manufactur- ufacturers Bank's housing loans were also ers^ banks. These surveys are sent biannually to geographically distributed throughout its service area. community leaders, neighborhood groups, churches Thirty-five percent of the bank's mortgages in Detroit and others interested in community and economic in 1990 were in low- and moderate-income neighbordevelopment. The results of the survey are analyzed hoods, while 14 percent of these loans were made to and reviewed with each bank's executive management borrowers in predominately minority neighborhoods and, as appropriate, issues identified are incorporated and 48 percent were in integrated census tracts. Maninto the development of each bank's CRA plan. Com- ufacturers Bank extended 59 percent of the home erica will also adopt certain non-traditional means of improvement loans in Detroit in 1990 to low- and marketing used by Manufacturers's banks to advertise moderate-income areas and 65 percent were extended its products to residents in low- and moderate-income to borrowers in predominately minority neighborneighborhoods.39 hoods. Comerica Bank and Manufacturers Bank are also D. Lending and Other Activities involved in programs that provide access to nonconventional mortgage financing, including federal, The Board has reviewed lending and other activities of state, and local programs. For example, Comerica Comerica and Manufacturers in light of the Protes- Bank and Comerica Mortgage Corporation increased tants' comments regarding CRA performance in vari- their FHA/VA loan volume from $500,000 in 1988 to ous communities. In each of these communities, Co- $31.8 million in 1990. In addition to offering FHA and merica and Manufacturers have put in place a number VA mortgages, both banks participate in the Michigan of programs designed to help meet the credit needs of State Housing Development Authority ("MSHDA") mortgage program. The MSHDA program offers home loans with lower than market interest rates and alternative credit guidelines to applicants within certain 37. Manufacturers Bank has a direct-mail marketing program that is income ranges. Both banks also participate in the designed to reach individuals living within the low-income and minor- Michigan Home Initiative, which, through the Federal ity neighborhoods within the city of Detroit. 38. Affiliated Bank also maintains regular contacts with individuals Home Loan Mortgage Corporation, provides mortand groups and ascertains credit needs by conducting surveys, initi- gages with flexible credit underwriting criteria to apating Community Assessment Questionnaires, and by making direct contacts through the bank's formal call programs. Senior management reviews the results of these outreach efforts and uses information gathered to develop new products. In addition, Affiliated Bank has 40. Comerica Bank made 956 housing-related loans in Detroit in established a marketing program for its credit products which includes 1990, totalling $10.2 million, and 1,201 loans in 1989, totalling $9.2 traditional advertising media as well as non-traditional methods to million. reach consumers in low- and moderate-income neighborhoods. 41. Government-guaranteed and conventional mortgage and home 39. These advertising methods include billboards, flyers, seminars, improvement lending by Manufacturers Bank in Detroit increased targeted direct mail, placards on buses, and selected use of television from 218 loans in 1989, totalling $2.6 million, to 1,199 loans in 1990, and radio stations with minority audiences. totalling $7 million. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 561 plicants who have received credit counseling under the local community through which it provides technical program. In addition, both banks participate in the assistance and financial expertise. Partners United Mortgage Program administered by a Comerica and Manufacturers also participate in a consortium of lenders that provides for lower down number of local community development projects in payments and alternative credit underwriting criteria Detroit. Comerica Bank's community development exclusively for properties within the city of Detroit. activities include the Detroit Neighborhood Invest- Comerica and Manufacturers are also involved in ment Corporation, Detroit Neighborhood Housing the development and offering of new mortgage prod- Services, Inc., and Housing Initiative Program of the ucts in Detroit. Comerica is participating in Phase II of United Way of Oakland County.44 Manufacturers has the Home Rehabilitation Program of the Detroit recently initiated the Manufacturers Bank Community Neighborhood Investment Corporation, which will Economic Development Fund, which is administered provide Detroit residents with below-market rate through the Community Foundation for Southeastern mortgage loans and use alternative underwriting crite- Michigan, for the purpose of making grants to commuria, and Comerica also acts as servicing agent for nity based economic and housing development pro- Phase I of the program. In addition, Comerica recently grams. Comerica has committed to continue this fund began offering a new mortgage product, the FHA after the merger, and will adopt Manufacturers's cri- 203(k) program, which is a federal program providing teria for involvement with community groups and funding for home improvements prior to purchase. corporate contribution guidelines designed to provide Under this program, the loan would begin as home direct financial support to organizations interested in improvement funding and would be converted to a community development. mortgage once the dwelling conforms to Detroit's Grand Rapids. Comerica restructured its CRAbuilding code requirements. related activities in Grand Rapids after the consolida- Both Comerica Bank and Manufacturers Bank em- tion in May 1991 of Comerica Bank, N.A., Jackson, ploy flexible underwriting criteria, such as a higher Michigan ("Comerica-Jackson"), into Comerica Bank allowable debt-to-income ratio, the use of rent, utility, in Detroit. The Grand Rapids region is now incorpoand other types of payments as a basis to develop rated into the community service area of Comerica credit history, and modification of usual minimum Bank, and Comerica's CRA Coordinator will impleemployment requirements. In addition, Comerica ment and monitor Comerica Bank's CRA program for Bank and Manufacturers Bank each participate in the the outstate regions to strengthen outreach, ascer- Detroit Mortgage Plan Review. Under this program, tainment and lending performance in minority comapplicants who are denied mortgage loans can request munities in Grand Rapids.45 As a result of this that their loan applications be reviewed by a commit- restructuring, Comerica has enhanced the steps initee composed equally of representatives from the tiated by Comerica-Jackson in CRA-related lending community and financial institutions.42 Both banks and other activities. also have internal review procedures for all mortgage For example, Comerica Bank and Comerica Mortloan applications in Detroit that are recommended for gage Corporation offer liberalized underwriting criteria denial.43 on conventional fixed rate mortgage products for low- In the area of small business lending, Comerica and moderate-income individuals in service areas, Bank has extended more than $11 million in new credit including Grand Rapids. These steps include increasin Detroit during the fourth quarter of 1991, for a total ing conventional mortgage underwriting ratios for of $30.9 million in 1991. Comerica Bank also made 15 housing expenses and total debt, permitting a down SB A loans for a total of $4.1 million in 1991. Comerica payment from sources other than borrower's own Bank has disbursed a total of 117 loans to small funds, use of alternative documentation to complete businesses, totalling $4.1 million, during 1991 under applicant's credit history, inclusion of non-taxable the Michigan Strategic Fund's Capital Access pro- income in gross income for purposes of underwriting gram. In addition, Comerica Bank sponsors many criteria, flexible considerations relating to applicant's small business workshops and presentations within its employment history, and consideration of nonfinancial equity for a down payment in conjunction with a formal program with a non-profit neighborhood hous- 42. Comerica and Manufacturers provide brochures explaining the Detroit Mortgage Plan and its procedures to individuals who are declined a mortgage or home improvement loans. These brochures are also available in the banks' branches. 44. Comerica Bank invests in a number of local bond issues and has 43. In addition, Comerica Bank has committed to continue to retain participated as underwriter (or selling group member) in a number of any loan not meeting guidelines for sale on the secondary market in its state authority issues. own mortgage portfolio in order to eliminate such considerations from 45. Four training sessions were held in the Grand Rapids region in credit decisions on applications for mortgage loans. 1991 under this program. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

562 Federal Reserve Bulletin • July 1992 ing organization. Comerica also has initiated flexible Comerica has also increased its efforts in small appraisal procedures. business lending in Grand Rapids and currently offers In addition, Comerica will introduce a special Com- conventional and government-guaranteed small busimunity Support Mortgage product into the Grand ness lending programs.49 The total dollar volume of Rapids service area. This credit product was devel- Comerica's small business loans increased in 1991 to oped by Manufacturers Bank in Detroit and was $8.9 million from $5.8 million in 1990. The percentage designed to overcome or minimize many of the factors of such loans to small businesses located in the central that neighborhood organizations believed prohibited city area of Grand Rapids increased to 49 percent in home ownership by low-income individuals.46 Comer- 1991, totalling $4.1 million, from 20 percent, totalling ica has committed to conduct a housing-related focus $1.2 million in 1990. Comerica has also participated group project with the University of Michigan to since 1990 in the Grand Rapids Commercial Lenders enhance the effectiveness of this product in low- Committee, a consortium of banks, community organiincome areas of Grand Rapids. zations, and the city of Grand Rapids, to develop a loan Comerica also has initiated steps to increase home program to help meet the needs of small businesses.50 improvement lending in service areas like Grand Rap- Comerica participates in government-sponsored small ids. In the case of creditworthy applicants, Comerica business lending programs such as the State of Michiwill advance 100 percent of the equity in the borrow- gan's Capital Access Loan Program and the SBA's 504 er's home as an exception to its normal 70 percent of loan program. equity limitation. Comerica also has eliminated in Community organizations serving low-income most cases its second mortgage lien requirement for and/or minority neighborhoods in Grand Rapids are home improvement loans under $7500, and makes also supported by Comerica. Comerica also particihome equity loans available to borrowers purchasing pates in special credit programs such as the Grand their home through land contracts. Rapids Neighborhood Development Interest Subsidy Low- and moderate-income housing initiatives in Program. Comerica has committed to establish a grant Grand Rapids are also supported by Comerica through program with the Grand Rapids Community Foundaits participation in the Michigan Multi-City Local tion targeted to provide financial assistance to specific Initiative Support Corporation ("LISC"). The Multi- groups interested in community development. City LISC has provided funding to support the devel- Chicago. Affiliated Bank was established by Manuopment of low-income housing units and commercial facturers in late 1990 by the consolidation of several space in Grand Rapids, and is developing a rent-to- bank subsidiaries into one institution, and will account own program for 30 homes in the Grand Rapids central for approximately 6 percent of the assets of Comerica city. Comerica's Regional President for Grand Rapids after consummation of the proposal. Following its serves on the LISC Board and members of his staff establishment, Affiliated Bank's management impleprovide technical support and services to the Multi- mented a substantial change in strategic planning from City LISC.47 wholesale banking to retail markets and significantly Comerica offers financial services designed to help redefined the bank's service areas. Accordingly, its in meeting the needs of low- and moderate-income CRA programs are not as well-established as Manuindividuals in Grand Rapids, including a basic check- facturers Bank's programs in Detroit. Nevertheless, ing and basic savings account. Comerica also provides Affiliated Bank has put in place corporate CRA poligovernment and non-customer check cashing services at a fee comparable to other banks in the area, and the bank's secured bankcard product is available to Grand Rapids customers. In addition, Comerica has commit- ATM alone. Comerica has committed that the proposed ATM will be ted to establish an automated teller machine ("ATM") a full service machine permitting withdrawals, transfers, inquiries, in the central city of Grand Rapids by year-end 1992.48 deposits and payments. 49. Comerica expanded its Small Business Loan Calling Program in Grand Rapids. In 1990, Comerica made 566 calls while in 1991 calls on existing and potential customers increased by 25 percent to 709. 46. These factors included closing costs and high down payments. Comerica also sponsors seminars on preparing loan proposals and The Community Support Mortgage product minimizes closing and other business issues and provides technical advice on loan proposals pre-paid expenses and is available with a 5 percent down payment and on behalf of the Grand Rapids Opportunities for Women and the requires no private mortgage insurance. Grand Rapids Area Chamber of Commerce. 47. Comerica has committed to lead a second fund-raising effort by 50. Comerica participated with the Committee to develop and the Multi-City LISC. distribute a small business information brochure containing informa- 48. Comerica had previously committed to explore the establish- tion on government loan programs and alternative sources of financing ment of an ATM in the central city area of Grand Rapids. See and assistance. The Committee also developed a system to track small Comerica, Incorporated, supra at 133. Comerica initially investigated business loan applications, denials, and withdrawals in an effort to the feasibility of establishing a branch combined with an ATM, but, in identify creditworthy applicants who are denied loans and to offer light of economic considerations, reinstated its plans to establish an alternative financing programs to such applicants. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 563 cies and programs to assist in meeting the credit needs centers will be designed in conjunction with neighborof low- and moderate-income communities. hood organizations and include non-traditional means For example, both directors and officers of Affiliated of advertising to reach the maximum number of poten- Bank are involved in planning and monitoring CRA tial mortgage loan applicants.57 In addition, Comerica performance through a CRA Management Plan. In will establish a fee-based incentive program for nonaddition, the bank has established special loan pro- profit organizations—operating in low-income areas grams in various communities for residential mort- and participating in Affiliated Bank's counseling progages on one-to-four family units and mixed-use and gram—that refer mortgage applicants to the bank. commercial acquisitions.51 Affiliated Bank has pro- Comerica also will establish a separate consumer vided financing for the purchase and rehabilitation of credit function staffed by six individuals with responmulti-family housing units for a local housing group, sibilities that include developing and promoting new rehabilitation of low-income apartment buildings, and products, working with community groups to develop acquisition of SRO buildings in response to commu- special programs to meet local credit needs, and nity needs. Affiliated Bank also participates in local developing effective advertising targeted to low- and community development projects and government moderate-income and minority areas. The consumer guaranteed loan programs.52 The credit needs of local credit function will target all consumers in the exmunicipalities are supported by Affiliated Bank panded area, including focused attention on low- and through the purchase or underwriting of bond issues.53 moderate-income and minority residents and commu- Local communities also are supported through partic- nity group cooperative.58 Comerica will also expand ipation in community organizations and events.54 Affiliated Bank's community outreach and calling pro- In response to comments filed in this application, grams through contacts with additional community Comerica has committed to expand significantly Affil- organizations in identified low-income areas.59 iated Bank's delineated service communities in Chi- In order to monitor the effectiveness of service to cago. This expansion will add approximately 270 new this expanded community, the Community Reinvestcensus tracts of which approximately 200 are in low- ment Representatives at Affiliated Bank will report and moderate-income areas.55 To serve this expanded directly to the Corporate Community Reinvestment area, Comerica has also committed to increase its Officer at the holding company level. Comerica will efforts in mortgage and consumer lending and to also establish a CRA Committee at Affiliated Bank monitor closely the effectiveness of Affiliated Bank's composed of representatives from executive manage- CRA-related activities in these communities.56 ment, branch system and consumer lending areas to Comerica will establish three mortgage loan origina- meet on a monthly basis to assess the activities of the tion centers within the northern, central and southern bank in the areas of community outreach and product portions of the new delineated area at strategic loca- development, marketing and ascertainment of credit tions to be determined after discussions with neighbor- needs, and lending activity in low- and moderatehood organizations. Marketing programs for these income communities within the expanded service area. The CRA Committee will be co-chaired by the Comerica's Corporate Community Reinvestment Of- 51. Affiliated Bank was recently certified as an FHA/VA lender and ficer or a designee from the corporate community Comerica has committed to hire an FHA/VA underwriter. reinvestment staff and will report quarterly to a stand- 52. Affiliated Bank had $1.5 million outstanding in SBA loans as of June 30, 1991. In addition, Affiliated Bank recently became an ing committee of Affiliated Bank's board of directors. authorized lender under the FHA Home Improvement (Title I) Loan In addition, Comerica's Corporate Community Rein- Program and is an authorized lender under the State of Illinois' vestment Officer will meet at least quarterly with the Guaranteed Student Loan Program. Affiliated Bank has also recently participated in community development programs such as the Illinois Federal Reserve Bank of Chicago staff to review Economic Recovery Deposit Program, and the Housing Linked De- Affiliated Bank's CRA program. posit Program, and is involved in the City of Chicago Bank Participation Program. 53. As of August 1991, local municipal issues represented $32.2 million, or 7 percent, of the bank's investment portfolio. The bank's loan portfolio includes industrial revenue bonds and other tax-exempt loans, primarily involving entities within the bank's delineated com- 57. Promotional programs will include brochures for direct mailings munity. and handouts by community groups, and advertising in community 54. Financing and technical assistance have been provided to and church newsletters. neighborhood economic development groups, including Howard Area 58. Consumer credit products offered will include personal loans Community Center, Howard/Paulina Development Corporation, Rog- and unsecured lines of credit, home equity and improvement loans, ers Park Community Council, and Edgewater Community Council. and automobile and student loans. 55. Affiliated Bank's new service area includes over 50 percent of 59. Comerica will establish a Community Advisory Council to the low- and moderate-income census tracts in Chicago. strengthen Affiliated Bank's ascertainment efforts in low-income com- 56. The FDIC will monitor compliance with these commitments in munities. This group will meet quarterly and will include representaan inspection visitation to be scheduled within 12 months of consum- tives from low-income areas within Affiliated Bank's delineated sermation of the acquisition. vice area. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

564 Federal Reserve Bulletin • July 1992 E. HMDA Data and Lending Practices and Chicago.61 In the case of Comerica Bank and Affiliated Bank, these examinations specifically con- The Board has reviewed the 1990 HMDA data re- sidered the results of 1990 HMDA data,62 and samported by subsidiaries of Comerica and Manufactur- plings of rejected loan applications. ers, and Protestants' comments regarding these data Comerica has also taken steps designed to improve and 1989 HMDA data. Due to recent amendments to its lending to minorities and low- and moderatethe HMDA, these banks were required for the first income neighborhoods in Detroit, Grand Rapids and time to report the information regarding both loan Chicago. For example, Comerica has recently instiapprovals and denials to the banking agencies and the tuted an action plan to encourage minority mortgage public. This information includes data on the race, applicants in regions served by its banks outside gender and income of individual applicants, as well as Detroit that focuses on community outreach, real the location of the property securing the potential loan estate agents and marketing as effective means to and the disposition of the application. increase loan applications from minorities.63 Under Data cited by the Protestants show disparities in this plan, targeted community, religious and civic rates for housing-related loan applications, approvals, organizations will be selected to assist Comerica in denials and withdrawals that vary by racial or ethnic reaching minority communities. group and income level in certain areas of Detroit, These groups will receive product brochures from Grand Rapids and Chicago.60 Several Protestants have Comerica Mortgage Corporation and mailings expressalleged illegal discriminatory lending practices on the ing Comerica's willingness to make mortgage loans to basis of these data in Detroit and Grand Rapids. their constituents and opportunities to meet with loan Because all banks are obligated to ensure that their officers from Comerica's Speakers Bureau program. In lending practices are based on criteria that assure not addition, Comerica's business development represenonly safe and sound lending, but also assure equal tative will target real estate agencies that are actively access to credit by creditworthy applicants regardless involved in listing and financing houses in low- and of race, the Board is concerned when the record of an moderate-income areas for increased outreach calls. institution indicates disparities in lending to minority Comerica also will develop a list of minority newspaapplicants. The Board recognizes, however, that pers, publications, community newsletters, church HMDA data alone provide only a limited measure of bulletins and special interest newsletter for marketing any given institution's lending in the communities that its mortgages to minority communities. The success of the institution serves. The Board also recognizes that these initiatives will be monitored by Comerica HMDA data have limitations that make the data an through its quarterly CRA reporting system in each of inadequate basis, absent other information, for con- its regions. clusively determining whether an institution has en- Comerica also will conduct credit counseling progaged in illegal discrimination on the basis of race or grams in Detroit, Grand Rapids and Chicago. In Deethnicity in making lending decisions. troit, credit counseling will be provided through Man- The most recent examinations for CRA compliance ufacturers's Homebuyer's Guidebook and Counseling and performance conducted by bank supervisory program. Under this program, Manufacturers provides agencies found no evidence of illegal discrimination or counseling services with participating community other illegal credit practices in the subsidiary banks of groups together with a Homebuyer's Guidebook de- Comerica and Manufacturers in Detroit, Grand Rapids veloped by the bank to help potential homebuyers better understand the home buying process and mortgage financing procedures.64 Comerica has also com- 60. One Protestant also maintains on the basis of 1990 HMDA data for loan applications by minorities that Manufacturers Bank of Lansing, Lansing, Michigan ("Manufacturers-Lansing"), is not meeting the credit needs of ihese communities. Analysis of these data shows 61. Affiliated Bank's CRA performance examination noted isolated, that Manufacturers-Lansing's incidence of applications from, and technical violations of applicable credit regulations. Management has lending to, minorities broadly corresponds to its approximately 10 committed to take corrective measures to address all these matters. percent minority population. This Protestant also submitted summa- 62. Examiners in Comerica Bank reviewed 1990 data from bank's ries of data based on 1990 HMDA reports regarding lending activities supporting documents that were used for the preparation of its 1990 by Comerica Mortgage Corporation in the outstate regions of Lansing, HMDA report Muskegon, Kalamazoo, Battle Creek, and Jackson. When these data 63. Comerica recently has installed geocoding and mapping softare considered with lending data from Comerica, N.A., Comerica's ware that will assist in monitoring distributions of loans on the basis of lending in these areas shows improvement but also indicates some geography and individual loans. areas where housing-related lending in less affluent and minority 64. Manufacturers developed the Homebuyer's Guidebook in 1990 communities could be strengthened. In this regard, Comerica has with input from the Manufacturers^ Community Advisory Council, established a CRA committee to develop specific programs and several neighborhood-based organizations, HUD, and the non-profit products for the outstate regions, and an action plan to increase loans Credit Counseling Centers, Inc. The counseling services are provided to minorities in these areas. by either a representative of Manufacturers or a professional in a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 565 mitted to initiate a homebuyers/housing counseling reflects Comerica's willingness to address promptly program in Grand Rapids in conjunction with the areas where improvements can be made to help meet Michigan Housing Coalition, and a home mortgage community credit needs. The Board believes that this counseling program in Chicago with the Illinois Asso- record, and the initiatives proposed by Comerica, will ciation of Community Organizations for Reform Now help the subsidiary banks of the resulting organization, ("Illinois ACORN"). particularly in Grand Rapids and Chicago, improve In addition to this counseling program, Comerica their CRA performance and address weaknesses deand Illinois ACORN have agreed to establish a special scribed by several commenters. mortgage program at Affiliated Bank targeted to Chi- In this light, and on the basis of all the facts of cago neighborhoods with median incomes below 80 record, the Board concludes that convenience and percent of median income for the MSA. Mortgages needs considerations, including the CRA performance made under this program will feature reduced closing records of Comerica and Manufacturers, are consisfees, flexible requirements for source of income for tent with approval of these applications. The Board cash down payments and income eligibility guidelines, expects Comerica to implement fully the CRA initiawaiver of cash reserve requirements, and flexible tives and commitments discussed in this Order and credit history guidelines. Illinois ACORN outreach contained in its applications. Comerica's progress in workers will distribute promotional material describ- implementing these initiatives and commitments will ing the program throughout the service area and be monitored by the Federal Reserve Bank of Chicago Illinois ACORN loan counselors will provide home- and in future applications to expand its deposit-taking buyer counseling to identify prospective applicants. facilities.65 Any application rejected under this program will be reviewed by Affiliated Bank's senior management. Other Considerations F. Conclusion Regarding Convenience and Comerica Bank has applied under the Bank Merger Needs Factors Act to merge with Manufacturers Bank. For the reasons discussed in this Order, the Board concludes that The Board has carefully considered the entire record, considerations relating to competition, financial and including the comments filed in this case, in reviewing managerial resources and future prospects of the exthe convenience and needs factor under the BHC Act. isting and proposed institutions, and convenience and Several commenters have raised both specific and needs of the communities to be served are consistent general concerns about the adequacy of the existing with approval. CRA programs of Comerica and Manufacturers. Other Comerica also has applied under section 4(c)(8) of comments have commended the CRA performance the BHC Act to acquire the nonbanking subsidiaries records of both institutions. Based on a review of the listed in the Appendix A. The Board has determined entire record of performance, including information by regulation or order that each of the activities of provided by the commenters and the performance these companies is closely related to banking and examinations by the banks' primary regulators, the generally permissible for bank holding companies un- Board believes that the efforts of Comerica and Man- der section 4(c)(8) of the BHC Act. The Board has ufacturers to help meet the credit needs of all segments approved applications by Manufacturers to own of the communities served by these bank, including shares of each of these companies. Comerica has low- and moderate-income neighborhoods, are consis- committed to abide by all of the parameters, conditent with approval. tions and commitments relied on by the Board in the The Board recognizes that the record compiled in these applications points to areas for improvement in the CRA performance of both institutions, particularly 65. Several Protestants have requested that the Board hold a public hearing or meeting on these applications. Under the Board's rules, the in Grand Rapids and Chicago. In this regard, Comerica Board may, in its discretion, hold a public hearing or meeting on an has initiated and has committed to initiate a number of application to clarify factual issues related to the application and to steps designed to strengthen the CRA performance of provide an opportunity for testimony, if appropriate. 12 U.S.C. §§ 262.3(e) and 262.25(d). the combined institutions. The outstanding CRA per- The Board has carefully considered these requests. In the Board's formance rating received by Comerica Bank, which view, interested parties have had an ample opportunity to present represents more than 80 percent of Comerica's assets, written submissions, and Protestants have submitted substantial written comments that have been considered by the Board. In light of these submissions and all the facts of record, the Board has determined that a public meeting or hearing is not necessary to clarify the factual record in these applications, or is otherwise warranted in this designated homeowners group who receives training from Manufac- case. Accordingly, the requests by Protestants for a public meeting or turers and then works directly with individuals in the community. hearing on this application is hereby denied. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

566 Federal Reserve Bulletin • July 1992 relevant orders and regulations regarding these com- the applications should be, and hereby are, approved. panies. The determinations as to Comerica's nonbanking ac- Comerica operates subsidiaries engaged in nonbank- tivities are also subject to all of the conditions coning activities that compete with Manufacturers's sub- tained in the Board's Regulation Y, including those in sidiaries. In each case, the markets for these services sections 225.4(d) and 225.23(b)(3) (12 C.F.R. 225.4(d) are unconcentrated and there are numerous providers and 225.23(b)(3)), and to the Board's authority to of these services. In light of these factors and the require such modification or termination of the activshares of each of the markets controlled by Comerica ities of a holding company or any of its subsidiaries as and Manufacturers, the Board concludes that consum- the Board finds necessary to assure compliance with, mation of this proposal would not have any signifi- or prevent evasions of, the provisions and purposes of cantly adverse effect on competition in the provision the BHC Act and the Board's regulations and orders of these services in any relevant market. Furthermore, issued thereunder. The Board's approval of this prothe record does not indicate that consummation of this posal is specifically conditioned on compliance by proposal is likely to result in any significantly adverse Comerica and its subsidiaries with these conditions effects, such as undue concentration of resources, and commitments which are conditions imposed in decreased or unfair competition, conflicts of interests, writing by the Board in connection with its findings or unsound banking practices. Accordingly, the Board and decision and may be enforced in proceedings has determined that the balance of public interest under applicable law. factors it must consider under section 4(c)(8) of the The acquisition of Manufacturers's banks and the BHC Act is favorable and consistent with approval of merger of the banks shall not be consummated before Comerica's application to acquire the nonbanking sub- the thirtieth calendar day following the effective date sidiaries of Manufacturers. of this Order, and the acquisition of Manufacturers's The Board also has considered Comerica's proposal banks and nonbanking companies shall not be consumto acquire MDIC under the Edge Act. Based on the mated later than three months after the effective date facts of record, and for the reasons discussed in this of this Order, unless such period is extended for good order, the Board believes that the financial and man- cause by the Board or by the Federal Reserve Bank of agerial resources of Comerica are consistent with Chicago, acting pursuant to delegated authority. approval of the acquisition. The acquisition would By order of the Board of Governors, effective result in the continuation of international services May 19, 1992. currently provided and would be in the public interest. Accordingly, the Board finds that the continued oper- Voting for this action: Chairman Greenspan and Governors ation of this corporation upon acquisition by Comerica Mullins, Angell, Kelley, LaWare, Lindsey, and Phillips. is consistent with the Edge Act and Regulation K. Comerica Bank has applied under section 9 of the JENNIFER J. JOHNSON Federal Reserve Act (12 U.S.C. § 321 et seq.) to Associate Secretary of the Board establish branches at the present sites of Manufactur- Appendix A ers Bank, N.A. listed in Appendix B. The Board has considered the factors it is required to consider when reviewing applications for establishing branches pur- Nonbanking Subsidiaries of Manufacturers suant to section 9 of the Federal Reserve Act National Corporation to be Acquired (12 U.S.C. § 322) and, for the reasons stated in this order, finds those factors to be consistent with ap- (1) Manucor Insurance Corporation, Detroit, Michiproval. In connection with its branch applications, gan, and thereby engage in underwriting, as reinsurer, Comerica has requested permission under section 24A credit life insurance directly related to extensions of of the Federal Reserve Act (12 U.S.C. § 371(d)) to credit by Manufacturers' banking subsidiaries pursumake an additional investment in bank premises. The ant to section 225.25(b)(8)(i) of the Board's Regulation Board concludes that Comerica's additional invest- Y; ment in bank premises will support Comerica's acqui- (2) Manucor Agency, Inc., Detroit, Michigan, and sition of the additional Manufacturers Bank premises, thereby engage in the sale of insurance directly related and is consistent with approval. to extensions of credit by Manufacturers' subsidiary Based on the foregoing, including the conditions banks to assure repayment in the event of death, described in this Order, and all of the facts of record, disability or involuntary unemployment pursuant to including the commitments made by Comerica and section 225.25(b)(8)(i) of the Board's Regulation Y; Manufacturers and all its subsidiaries in connection (3) Manufacturers Bank and Trust of Florida, N.A., with these applications, the Board has determined that Palm Beach Gardens, Florida, and thereby engage in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 567 trust company activities pursuant to section Clinton Township 225.25(b)(3) of the Board's Regulation Y; 10. 35795 Gratiot (4) Manufacturers, Federal Savings Bank (In Forma- 11. 39200 Hayes tion), Palm Beach Gardens, Florida, and thereby engage in operating a savings and loan association pursu- City of Dearborn ant to section 225.25(b)(9) of the Board's Regulation Y; 12. 13650 Michigan Avenue (5) Manufacturers Affiliated Trust Company, Chicago, 13. 22101 Michigan Avenue Illinois, and thereby engage in trust company activities 14. 13335 W. Warren pursuant to section 225.25(b)(3) of the Board's Regu- 15. 850 N. Telegraph lation Y; 16. 3655 S. Telegraph (6) Manufacturers Bank-Wilmington, Newark, Dela- 17. 16150 Michigan Avenue ware, and thereby engage in operating a credit card bank pursuant to section 225.25(b)(1) of the Board's City of Dearborn Heights Regulation Y; 18. 27300 Cherry Hill (7) Wilson, Kemp & Associates, Inc., Detroit, Michi- 19. 4401 S. Telegraph gan, and thereby engage in providing investment and financial advice pursuant to section 225.25(b)(4) of the Board's Regulation Y; City of Detroit 20. 100 Renaissance Center (8) Affiliated Asset-Based Lending Services, Inc., 21. 601 Shelby Morton Grove, Illinois, and thereby engage in lending 22. 14601 Gratiot Avenue activities pursuant to section 225.25(b)(1) of the 23. 20011 Plymouth Board's Regulation Y; 24. 2799 W. Grand Blvd. (9) NSCC Leasing Corporation, Morton Grove, Illi- 25. 21501 W. Eight Mile nois, and thereby engage in leasing activities pursuant 26. 1258 Washington Blvd. to section 225.25(b)(5) of the Board's Regulation Y; 27. 13233 E. Jefferson and 28. 3031 W. Grand Blvd. (10) ML, Inc. (d/b/a/ Magic Line), Dearborn, Michi- 29. 8060 W. Vernor gan, to acquire an additional 11.1 percent for a total of 30. 14530 Livernois 30.6 percent, and thereby engage in data processing 31. 16745 E. Warren activities pursuant to section 225.25(b)(7) of the 32. 14661 Fenkell Board's Regulation Y. 33. 12400 Kelly 34. 18900 Joy Road Appendix B 35. 2601 E. Seven Mile 36. 13401 W. Eight Mile Branches and Facilities of Manufacturers Bank 37. 20500 Greenfield to be Acquired by Comerica Bank 38. 19670 Sherwood 39. 2200 W. Fort Street Detroit 40. 13500 W. Chicago 41. 411 W. Lafayette Bloomfield Township 42. 11531 E. McNichols 1. 4057 W. Maple 2. 1166 N. Woodward 3. 1749 Woodward City of Farmington Hills 4. 4055 Telegraph 43. 29305 Orchard Lake 44. 33452 W. Eight Mile 5. 6001 Adams 45. 30840 Northwestern 46. 36600 Grand River Brownstown Township 6. 21333 Telegraph City of Fraser 47. 32200 Gresbeck Hwy. Canton Township 7. 44880 Ford Road 8. 43443 Joy Road City of Grosse Pointe Woods 48. 20200 Mack Avenue Village of Carleton 49. 21303 Mack Avenue 9. 1106 Monroe Street 50. 19419 Mack Avenue Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

568 Federal Reserve Bulletin • July 1992 Harrison Township Shelby Township 51. 36375 E. Jefferson 79. 7755 Twenty-Three Mile City of Highland Park City of Southfield 52. 14048 Woodward Avenue 80. 24770 Telegraph 81. 15565 Northland Drive City of Livonia 82. 2000 West Twelve Mile Road 53. 37601 Five Mile Road 83. 27100 Lahser 54. 31425 Five Mile Road 84. 29201 Telegraph Road 55. 30905 Plymouth Road 85. 25250 Southfield Road 56. 38047 Ann Arbor Road 86. 30455 Southfield Road 57. 17111 North Laurel Park Drive 87. 2000 Town Center, Suite 140 58. 39200 West Six Mile Road City of Sterling Heights Township of Macomb 88. 34642 Van Dyke 59. 15301 Hall Road 89. 34756 Dequindre 90. 43020 Van Dyke City of Melvindale 91. 1955 Eighteen Mile 60. 18225 Allen City of Sylvan Lake City of New Baltimore 92. 2340 Orchard Lake 61. 32777 23 Mile Road City of Taylor City of Northville 93. 20202 Eureka 62. 129 E. Main Street City of Troy Northville Township 94. 4035 Rochester Road 63. 41660 W. Six Mile City of Warren City of Novi 95. 23208 Van Dyke 64. 26222 Novi Road 96. 11441 Twelve Mile Road 65. 3000 Union Lake Road 66. 21211 Haggerty Road West Bloomfield Township 97. 4430 Orchard Lake City of Pleasant Ridge 98. 33390 Fourteen Mile Road 67. 24028 Woodward Avenue 99. 6070 W. Maple Road Plymouth Township City of Westland 68. 44560 Ann Arbor 100. 7126 N. Wayne 101. 360 S. Wayne Redford Township 102. 29049 Joy 69. 26095 Five Mile 70. 24525 Plymouth 71. 26716 W. Seven Mile Ann Arbor City of Rochester Hills City of Ann Arbor 72. 1875 W. Auburn Road 103. 75 Scio Church Road 73. 55 W. Avon Road 104. 101 N. Main Street 74. 1435 Walton Blvd Township of Cambridge 105. 7577 U.S. 12 at M-124 City of Romulus 75. 36450 Goddard City of Clinton 106. 169 W. Michigan Avenue City of St. Clair Shores 76. 30200 Harper 77. 24055 Jefferson Township of Pittsfield 78. 25901 Harper 107. 2795 Carpenter Road Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 569 Township of Raisin Township of Plainfield 108. 3737 N. Adrian Highway 128. 4564 West River Drive 129. 4214 Plainfield Avenue, N.E. City of Saline 109. 114 E. Michigan Avenue Township of Wright 110. 409 E. Michigan Avenue 130. 14695 16th Avenue Electronic Facilities Only Lansing City of Dearborn 1. 18900 Michigan Avenue Township of Delta 111. 5510 W. Saginaw Street 2. 18101 Oakwood Blvd. 112. 901 S. Creyts Road 3. Ford World Headquarters The American Road City of Lansing 113. 101 N. Washington Square City of Detroit 114. 329 E. Grand River Avenue 4. Renaissance Center 115. 3316 S. Logan Street Tower 100-Level 1 116. 5226 S. Cedar Street Tower 600-Main Level 117. 223 N. Clippert Street 5. 4160 John R. 118. 5101 N. Grand River Avenue 6. 300 River Front Park 119. 1110 E. Michigan Avenue 120. 7016 S. Cedar Street City of Flat Rock 7. 22000 Gibraltor Road Township of Meridian 121. 4829 Marsh Road City of Highland Park 8. 1200 Lynn Townsend Ave. City of Livonia 9. 29514 W. Seven Mile Grand Rapids Township of Alpine City of Northville 122. 857 Four Mile Road 10. 143 Dunlop City of Coopersville City of Southfield 123. 345 Main Street 11. 18000 W. Nine Mile Rd. 124. 31 68th Avenue City of Ann Arbor 12. 3693 Washtenaw City of Grand Rapids 125. 50 Monroe Avenue, N.W. Ste. 150 126. 1969 44th Street, S.E. City of Lansing 13. 1217 Oakland St. 14. 501 Executive Drive City of Grandville 127. 4350 44th Street, S.W. 15. 407 S. Waverly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

570 Federal Reserve Bulletin • July 1992 ACTIONS TAKEN UNDER THE FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991 By the Director of the Division of Banking Supervision and Regulation and the General Counsel of the Board Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Acquired Surviving Approval Bank Holding Company Thrift Bank(s) Date County Bancshares, Inc., First Federal Bank, FSB, Pike County Bank April 30, 1992 Troy, Alabama Tuscaloosa, Alabama Troy, Alabama (Troy, Alabama branch) Illinois Financial Services, Inc., Civic Federal Savings Metropolitan May 1, 1992 Chicago, Illinois Bank Bancorp, Inc., Chicago, Illinois Chicago, Illinois Southern National Corporation, First Security Savings & Southern National May 22, 1992 Lumberton, North Carolina Loan Association ,Inc., Bank of North Pinehurst, North Carolina, Carolina Lumberton, North Carolina SouthTrust Corporation, SouthTrust Bank of SouthTrust Bank of May 22, 1992 Birmingham, Alabama Georgia, Georgia, N.A., SouthTrust of Georgia, Inc., Roswell, Georgia Atlanta, Georgia Roswell, Georgia 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 Applicants) Bank(s) Date Fleet/Norstar Financial Group, The New York Switch May 11, 1992 Inc., Corporation, Providence, Rhode Island Hackensack, New Jersey Meridian Bancorp, Inc., C.A.S.E. Management, May 18, 1992 Reading, Pennsylvania Inc., Malvern, Pennsylvania SouthTrust Corporation, to engage de novo in May 1, 1992 Birmingham, Alabama community development activities Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 571 Sections 3 and 4 Effective Applicant(s) Bank(s) Date First Bank System, Inc., Siouxland Bank Holding Company, May 19, 1992 Minneapolis, Minnesota Scottsdale, Arizona APPLICATIONS APPROVED UNDER BANK MERGER 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. Effective Applicant(s) Bank(s) Date Meridian Bank, Equibank, May 1, 1992 Reading, Pennsylvania Pittsburgh, Pennsylvania 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 Banc West Bancorp, Inc., Westside Bank, Dallas May 11, 1992 Austin, Texas San Antonio, Texas Berkshire Financial Services, Lee Bank, Boston May 1, 1992 Inc., Lee, Massachusetts Lee, Massachusetts Lee National Banc Corp., Lee, Massachusetts DunC Corp., Capron Bancorp, Inc., Chicago May 12, 1992 Belvidere, Illinois Capron, Illinois Farmers State Bancshares, Inc., Farmers State Bank, Atlanta May 7, 1992 Mountain City, Tennessee Mountain City, Tennessee First Bancorp, Inc., The First Bank and Trust Richmond May 12, 1992 Lebanon, Virginia Company, Lebanon, Virginia Friendship Bancshares, Inc., Mid America Bank, St. Louis May 7, 1992 Meta, Missouri Linn, Missouri Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

572 Federal Reserve Bulletin • July 1992 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date Harleysville National Summit Hill Trust Philadelphia April 24, 1992 Corporation, Company, Harleysville, Pennsylvania Summit Hill, Pennsylvania Keystone Financial, Inc., Main Line Bancshares, Philadelphia May 14, 1992 Harrisburg, Pennsylvania Inc., Wayne, Pennsylvania Lakeland First Financial Group, Lakeland Savings Bank, New York May 1, 1992 Inc., Succasunna, New Succasunna, New Jersey Jersey The Merchants Holding BRAD, Inc., Minneapolis May 14, 1992 Company, Black River Falls, Winona, Minnesota Wisconsin Midlothian State Bank Employee Midlothian State Bank, Chicago April 29, 1992 Stock Ownership Trust, Midlothian, Illinois Midlothian, Illinois Mid-South Bancorp, Inc., First Citizens Bank, St. Louis April 24, 1992 Franklin, Kentucky Franklin, Tennessee NBD Bancorp, Inc., NBD Indiana, Inc., Chicago May 20, 1992 Detroit, Michigan Detroit, Michigan Summcorp, Fort Wayne, Indiana Northwest Bancorporation, Inc., South Main Bank, Dallas May 20, 1992 Houston, Texas Houston, Texas The Peoples Bancshares, Inc., The Peoples Bank, St. Louis April 24, 1992 Sardis, Tennessee Sardis, Tennessee Peoples Preferred Bancshares, Columbia Bancing Atlanta April 28, 1992 Inc., Company, Inc., Colquitt, Georgia Columbia, Alabama Peotone Bancorp, Inc., Rock River Chicago April 24, 1992 Peotone, Illinois Bancorporation, Inc., Oregon, Illinois Slippery Rock Financial The First National Bank Cleveland April 23, 1992 Corporation, of Slippery Rock, Slippery Rock, Pennsylvania Slippery Rock, Pennsylvania State Financial Services Eastbrook State Bank, Chicago May 6, 1992 Corporation, Brookfield, Wisconsin Hales Corners, Wisconsin Wesbanco, Inc., The First National Bank Cleveland May 6, 1992 Wheeling, West Virginia of Barnesville, Barnesville, Ohio West Milton Bancorp, Inc., West Milton State Bank, Philadelphia May 5, 1992 West Milton, Pennsylvania West Milton, Pennsylvania Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 573 Section 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date Banc One Corporation, Diamond Savings and Cleveland May 11, 1992 Columbus, Ohio Loan Company, Findlay, Ohio Diamond Mortgage Company, Findlay, Ohio Big Sioux Financial, Inc., Hamlin County Agency, Minneapolis April 29, 1992 Estelline, South Dakota Hayti, South Dakota County Bancshares, Inc., Pike County Federal Atlanta April 30, 1992 Troy, Alabama Savings Bank, Troy, Alabama F & M Bancorporation, American Trustcorp, Inc., Kansas City April 30, 1992 Tulsa, Oklahoma Tulsa, Oklahoma Fifth Third Bancorp, First Federal Savings and Cleveland April 30, 1992 Cincinnati, Ohio Loan Association of Lima, Lima, Ohio Franklin Financial Services FFSC Interim Federal Philadelphia May 4, 1992 Corporation, Savings Bank, Chambersburg, Pennsylvania Waynesboro, Pennsylvania Manufacturers National 100 Talon Centre Chicago May 1, 1992 Corporation, Associates Limited Detroit, Michigan Partnership, Rose ville, Michigan Montfort Bancorporation, Inc., Clare Enterprises of Chicago April 24, 1992 Platteville, Wisconsin Platte ville, Inc., Platte ville, Wisconsin NBD Bancorp, Inc., NBD Indiana, Inc., Chicago May 20, 1992 Detroit, Michigan Detroit, Michigan Summcorp Financial Services, Inc., Fort Wayne, Indiana Norwest Corporation, U.S. Recognition, Inc., Minneapolis April 27, 1992 Minneapolis, Minnesota Ringwood, New Jersey Sections 3 and 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date Daupin Deposit Corporation, FB&T Corporation, Philadelphia April 30, 1992 Harrisburg, Pennsylvania Hanover, Pennsylvania Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

574 Federal Reserve Bulletin • July 1992 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. Reserve Effective Applicant(s) Bank(s) Bank Date 1st Source Bank, Farmers State Bank of Chicago May 7, 1992 South Bend, Indiana Wyatt, Wyatt, Indiana American Bank American Bank of Platte Kansas City May 18, 1992 Kansas City, Missouri County, Kansas City, Missouri Mercantile Bank of Kansas City, Kansas City, Missouri Citizens Fidelity Bank and Trust Citizens Fidelity Bank St. Louis April 22, 1992 Company, and Trust Company Louisville, Kentucky Hardin County, Elizabethtown, Kentucky King Bancshares, Inc., Kingman Savings and Kansas City May 15, 1992 Kingman, Kansas Loan Association, Kingman, Kansas PENDING CASES INVOLVING THE BOARD OF Supreme Court denied the petition for certiorari on GOVERNORS May 18, 1992. In re Subpoena Served on the Board of Governors, Nos. 91-5427, 91-5428 (D.C. Cir., filed December This list of pending cases does not include suits 27, 1991). Appeal of order of district court, dated against the Federal Reserve Banks in which the Board December 3, 1991, requiring the Board and the of Governors is not named a party. Office of the Comptroller of the Currency to produce confidential examination material to a private liti- Fields v. Board of Governors, No. 3:92CV7118 (N.D. gant. The court of appeals stayed the district court Ohio, filed March 3, 1992). Federal Tort Claims Act order on January 7, 1992, and oral argument was complaint alleging misrepresentation during applica- held op the case on March 17, 1992. tion process. Motion to dismiss filed May 4, 1992. Greenberg v. Board of Governors, No. 91-4200 (2d Cir., filed December 4, 1991). Petition for review of State of Idaho, Department of Finance v. Board of Governors, No. 92-70107 (9th Cir., filed February orders of prohibition issued by the Board on Octo- 24, 1992). Petition for review of Board order return- ber 28, 1991. Oral argument was held on April 22, ing without action a bank holding company applica- 1992. tion to relocate its subsidiary bank from Washington First Interstate BancSystem of Montana, Inc. v. to Idaho. Board of Governors, No. 91-1525 (D.C. Cir., filed Davis v. Board of Governors, No. 91-6972 (Supreme November 1, 1991). Petition for review of Board's Court, filed December 4, 1991). Petition for certio- order denying on Community Reinvestment Act rari seeking review of Burke v. Board of Governors, grounds the petitioner's application under section 3 940 F.2d 1360 (10th Cir. 1991), in which the court of of the Bank Holding Company Act to merge with appeals upheld Board orders assessing civil money Commerce BancShares of Wyoming, Inc. Petitionpenalties and issuing orders of prohibition. The ers' brief is due August 21, 1992. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 575 Board of Governors v. Kemal Shoaib, No. CV 91-5152 the Court of Appeals vacated the Board's order, (C.D. California, filed September 24, 1991). Action ruling that the Board has no authority over interstate to freeze assets of individual pending administrative relocations of national banks. Synovus's petition for adjudication of civil money penalty assessment by rehearing was denied on March 27, 1992. the Board. On October 15, the court issued a pre- MCorp v. Board of Governors, No. CA3-88-2693 liminary injunction restraining the transfer or dispo- (N.D. Texas, filed October 10, 1988). Application sition of the individual's assets. for injunction to set aside temporary cease and Board of Governors v. Ghaith R. Pharaon, No. 91- desist orders. The case is pending. CIV-6250 (S.D. New York, filed September 17, 1991). Action to freeze assets of individual pending administrative adjudication of civil money penalty WRITTEN AGREEMENTS APPROVED BY FEDERAL assessment by the Board. On September 17, the RESERVE BANKS court issued an order temporarily restraining the transfer or disposition of the individual's assets. Antioch Holding Company In re Smouha, No. 91-B-13569 (Bkr. S.D. New York, Antioch, Illinois filed August 2, 1991). Ancillary proceeding under the U.S. Bankruptcy Code brought by provisional liquidators of BCCI Holdings (Luxembourg) S.A. The Federal Reserve Board announced on May 26, and affiliated companies. On August 15, 1991, the 1992, the execution of a Written Agreement among the bankruptcy court issued a temporary restraining Federal Reserve Bank of Chicago and Antioch Holdorder staying certain judicial and administrative ing Company, Antioch, Illinois. actions, which has been continued by consent. Fields v. Board of Governors, No. 3:91CV069 (N.D. Pacific Western Bancshares Ohio, filed February 5, 1991). Appeal of denial of San Jose, California request for information under the Freedom of Information Act. Motion to dismiss or for summary judgment filed June 7, 1991. The Federal Reserve Board announced on May 13, 1992, the execution of two Written Agreements involv- Synovus Financial Corp. v. Board of Governors, No. 89-1394 (D.C. Circuit, filed June 21, 1989). Petition ing the Federal Reserve Bank of San Francisco and for review of Board order permitting relocation of a Pacific Western Bancshares, San Jose, California, and bank holding company's national bank subsidiary its subsidiary bank, the Pacific Western Bank, San from Alabama to Georgia. On December 20, 1991, Jose, California. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

576 Membership of the Board of Governors of the Federal Reserve System, 1913-92 APPOINTIVE MEMBERS1 Federal Reserve Date of initial Other dates and information relating Name District oath of office to membership2 Charles S. Hamlin. .Boston Aug. 10, 1914 Reappointed in 1916 and 1926. Served until Feb. 3, 1936.3 Paul M. Warburg... .New York do. Term expired Aug. 9, 1918. Frederic A. Delano .Chicago do. Resigned July 21, 1918. W.P.G. Harding .Atlanta do. Term expired Aug. 9, 1922. Adolph C. Miller.... .San Francisco do. Reappointed in 1924. Reappointed in 1934 from the Richmond District. Served until Feb. 3, 1936.3 Albert Strauss New York .Oct. 26, 1918 Resigned Mar. 15, 1920. Henry A. Moehlenpah Chicago.... .Nov. 10, 1919 Term expired Aug. 9, 1920. Edmund Piatt New York June 8, 1920 Reappointed in 1928. Resigned Sept. 14, 1930. David C. Wills Cleveland ... .Sept. 29, 1920 Term expired Mar. 4, 1921. John R. Mitchell Minneapolis .May 12, 1921 Resigned May 12, 1923. Milo D. Campbell Chicago .Mar. 14, 1923 Died Mar. 22, 1923. Daniel R. Crissinger Cleveland... .May 1, 1923 Resigned Sept. 15, 1927. George R. James St. Louis.... .May 14, 1923 Reappointed in 1931. Served until Feb. 3, 1936.4 Edward H. Cunningham...Chicago do Died Nov. 28, 1930. Roy A. Young Minneapolis , .Oct. 4, 1927 Resigned Aug. 31, 1930. Eugene Meyer New York ... .Sept. 16, 1930 Resigned May 10, 1933. Wayland W. Magee Kansas City, .May 18, 1931 Term expired Jan. 24, 1933. Eugene R. Black Atlanta .May 19, 1933 Resigned Aug. 15, 1934. M.S. Symczak Chicago June 14, 1933 Reappointed in 1936 and 1948. Resigned May 31, 1961. J.J. Thomas Kansas City... do Served until Feb. 10, 1936.3 Marriner S. Eccles San Francisco .Nov. 15, 1934 Reappointed in 1936, 1940, and 1944. Resigned July 14, 1951. Joseph A. Broderick New York ... .Feb. 3, 1936 Resigned Sept. 30, 1937. John K. McKee Cleveland .... do Served until Apr. 4, 1946.3 Ronald Ransom Atlanta do Reappointed in 1942. Died Dec. 2, 1947. Ralph W. Morrison Dallas .Feb. 10, 1936 Resigned July 9, 1936. Chester C. Davis Richmond... June 25, 1936 Reappointed in 1940. Resigned Apr. 15, 1941. Ernest G. Draper New York ... .Mar. 30, 1938 Served until Sept. 1, 1950.3 Rudolph M. Evans Richmond... .Mar. 14, 1942 Served until Aug. 13, 1954.3 James K. Vardaman, Jr. ..St. Louis .Apr. 4, 1946 Resigned Nov. 30, 1958. Lawrence Clayton Boston .Feb. 14, 1947 Died Dec. 4, 1949. Thomas B. McCabe Philadelphia .Apr. 15, 1948 Resigned Mar. 31, 1951. Edward L. Norton Atlanta .Sept. 1, 1950 Resigned Jan. 31, 1952. Oliver S. Powell Minneapolis do Resigned June 30, 1952. Wm. McC. Martin, Jr New York ... .April 2, 1951 Reappointed in 1956. Term expired Jan. 31, 1970. A.L. Mills, Jr San Francisco .Feb. 18, 1952 Reappointed in 1958. Resigned Feb. 28, 1965. J.L. Robertson Kansas City... do Reappointed in 1964. Resigned Apr. 30, 1973. C. Canby Balderston Philadelphia... .Aug. 12, 1954 Served through Feb. 28, 1966. Paul E. Miller Minneapolis ... .Aug. 13, 1954 Died Oct. 21, 1954. Chas. N. Shepardson Dallas .Mar. 17, 1955 Retired Apr. 30, 1967. G.H. King, Jr Atlanta .Mar. 25, 1959 Reappointed in 1960. Resigned Sept. 18, 1963. George W. Mitchell Chicago .Aug. 31, 1961 Reappointed in 1962. Served until Feb. 13, 1976.3 J. Dewey Daane Richmond. .Nov. 29, 1963 Served until Mar. 8, 1974.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

577 Federal Reserve Date of initial Other dates and information relating Name District oath of office to membership2 Sherman J. Maisel San Francisco Apr. 30, 1965 Served through May 31, 1972. Andrew F. Brimmer Philadelphia Mar. 9, 1966 Resigned Aug. 31, 1974. William W. Sherrill Dallas May 1, 1967 Reappointed in 1968. Resigned Nov. 15, 1971. Arthur F. Burns New York Jan. 31, 1970 Term began Feb. 1, 1970. Resigned Mar. 31, 1978. John E. Sheehan St. Louis Jan. 4, 1972 Resigned June 1, 1975. Jeffrey M. Bucher San Francisco June 5, 1972 Resigned Jan. 2, 1976. Robert C. Holland Kansas City June 11, 1973 Resigned May 15, 1976. Henry C. Wallich Boston Mar. 8, 1974 Resigned Dec. 15, 1986. Philip E. Coldwell Dallas Oct. 29, 1974 Served through Feb. 29, 1980. Philip C. Jackson, Jr Atlanta July 14, 1975 Resigned Nov. 17, 1978. J. Charles Partee Richmond Jan. 5, 1976 Served until Feb. 7, 1986.3 Stephen S. Gardner Philadelphia Feb. 13, 1976 Died Nov. 19, 1978. David M. Lilly Minneapolis June 1, 1976 Resigned Feb. 24, 1978. G. William Miller San Francisco Mar. 8, 1978 Resigned Aug. 6, 1979. Nancy H. Teeters Chicago Sept. 18, 1978 Served through June 27, 1984. Emmett J. Rice New York June 20, 1979 Resigned Dec. 31, 1986. Frederick H. Schultz Atlanta July 27, 1979 Served through Feb. 11, 1982. Paul A. Volcker Philadelphia Aug. 6, 1979 Resigned August 11, 1987. Lyle E. Gramley Kansas City May 28, 1980 Resigned Sept. 1, 1985. Resigned April 30, 1986. Preston Martin San Francisco Mar. 31, 1982 Resigned March 11, 1991 Martha R. Seger Chicago July 2, 1984 Wayne D. Angell Kansas City Feb. 7, 1986 Manuel H. Johnson Richmond Feb. 7, 1986 Resigned August 3, 1990. H. Robert Heller San Francisco Aug. 19, 1986 Resigned July 31, 1989. Edward W. Kelley, Jr Dallas May 26, 1987 Reappointed in 1990. Alan Greenspan New York Aug. 11, 1987 Reappointed in 1992. John P. LaWare Boston Aug. 15, 1988 David W. Mullins, Jr St. Louis May 21, 1990 Lawrence B. Lindsey Richmond Nov. 26, 1991 Susan M. Phillips Chicago Dec. 2, 1991 Chairmen4 Vice Chairmen4 Charles S. Hamlin Aug. 10, 1914-Aug. 9, 1916 Frederic A. Delano Aug. 10, 1914-Aug. 9, 1916 W.P.G. Harding Aug. 10, 1916-Aug. 9, 1922 Paul M. Warburg Aug. 10, 1916-Aug. 9, 1918 Daniel R. Crissinger May 1, 1923-Sept. 15, 1927 Albert Strauss Oct. 26, 1918-Mar. 15, 1920 Roy A. Young Oct. 4, 1927-Aug. 31, 1930 Edmund Piatt July 23, 1920-Sept. 14, 1930 Eugene Meyer Sept. 16, 1930-May 10, 1933 J.J. Thomas Aug. 21, 1934-Feb. 10, 1936 Eugene R. Black May 19, 1933-Aug. 15, 1934 Ronald Ransom Aug. 6, 1956-Dec. 2, 1947 Marriner S. Eccles Nov. 15, 1934-Jan. 31, 1948 C. Canby Balderston Mar. 11, 1955-Feb. 28, 1966 Thomas B. McCabe Apr. 15, 1948-Mar. 31, 1951 J.L. Robertson Mar. 1, 1966-Apr. 30, 1973 Wm. McC. Martin, Jr. ..Apr. 2, 1951-Jan. 31, 1970 George W. Mitchell May 1, 1973-Feb. 13, 1976 Arthur F. Burns Feb. 1, 1970-Jan. 31, 1978 Stephen S. Gardner Feb. 13, 1976-Nov. 19, 1978 G. William Miller Mar. 8, 1978-Aug. 6, 1979 Frederick H. Schultz ...July 27, 1979-Feb. 11, 1982 Paul A. Volcker Aug. 6, 1979-Aug. 11, 1987 Preston Martin Mar. 31, 1982-Mar. 31, 1986 Alan Greenspan Aug. 11, 1987- Manuel H. Johnson Aug. 4, 1986-Aug. 3, 1990 David W. Mullins, Jr. ...July 24, 1991- EX-OFFICIO MEMBERS1 Secretaries of the Treasury Comptrollers of the Currency W.G. McAdoo Dec. 23, 1913-Dec. 15, 1918 John Skelton Williams...Feb. 2, 1914-Mar. 2, 1921 Carter Glass Dec. 16, 1918-Feb. 1, 1920 Daniel R. Crissinger Mar. 17, 1921-Apr. 30, 1923 David F. Houston Feb. 2, 1920-Mar. 3, 1921 Henry M. Dawes May 1, 1923-Dec. 17, 1924 Andrew W. Mellon Mar. 4, 1921-Feb. 12, 1932 Joseph W. Mcintosh Dec. 20, 1924-Nov. 20, 1928 Ogden L. Mills Feb. 12, 1932-Mar. 4, 1933 J.W. Pole Nov. 21, 1928-Sept. 20, 1932 William H. Woodin Mar. 4, 1933-Dec. 31, 1933 J.F.T. O'Connor May 11, 1933-Feb. 1, 1936 Henry Morgenthau Jr. ...Jan. 1, 1934-Feb. 1, 1936 1. Under the provisions of the original Federal Reserve Act, the composed of seven appointive members; that the Secretary of the Federal Reserve Board was composed of seven members, including Treasury and the Comptroller of the Currency should continue to five appointive members, the Secretary of the Treasury, who was serve as members until Feb. 1, 1936, or until their successors were ex-officio chairman of the Board, and the Comptroller of the Cur- appointed and had qualified; and that thereafter the terms of members rency. The original term of office was ten years, and the five original should be fourteen years and that the designation of Chairman and appointive members had terms of two, four, six, eight, and ten years Vice Chairman of the Board should be for a term of four years. respectively. In 1922 the number of appointive members was in- 2. Date after words "Resigned" and "Retired" denotes final day of creased to six, and in 1933 the term of office was increased to twelve service. years. The Banking Act of 1935, approved Aug. 23, 1935, changed the 3. Successor took office on this date. name of the Federal Reserve Board to the Board of Governors of the 4. Chairman and Vice Chairman were designated Governor and Federal Reserve System and provided that the Board should be Vice Governor before Aug. 23, 1935. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1 Financial and Business Statistics CONTENTS WEEKLY REPORTING COMMERCIAL BANKS Assets and liabilities A3 Guide to Tabular Presentation 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 A33 Open-end investment companies—Net sales and asset position A33 Corporate profits and their distribution COMMERCIAL BANKING INSTITUTIONS 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 • July 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 A39 Funds raised in U.S. credit markets A61 Banks' own and domestic customers' claims on A41 Direct and indirect sources of funds to credit foreigners markets A61 Banks' own claims on unaffiliated foreigners A42 Summary of credit market debt outstanding A62 Claims on foreign countries—Combined A43 Summary of credit market claims, by holder domestic offices and foreign branches Domestic Nonfinancial Statistics REPORTED BY NONBANKING BUSINESS ENTERPRISES IN THE UNITED STATES SELECTED MEASURES A63 Liabilities to unaffiliated foreigners A44 Nonfinancial business activity—Selected A64 Claims on unaffiliated foreigners measures A45 Labor force, employment, and unemployment A46 Output, capacity, and capacity utilization SECURITIES HOLDINGS AND TRANSACTIONS 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 A53 U.S. international transactions—Summary A69 Guide to Statistical Releases and A54 U.S. foreign trade Special Tables Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

3 Guide to Tabular Presentation SYMBOLS AND ABBREVIATIONS c Corrected GDP Gross domestic 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 DomesticN onfinancial Statistics • July 1992 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 1991 1992 1991 1992 MMoonneettaarryy aanndd ccrreeddiitt aaggggrreeggaattee Q2 Q3 Q4 Q1 Dec. Ian. Feb.r Mar.r Apr. Reserves of depository institutions 1 Total 3.0 7.4 15.3 24.9 24.1 13.7 45.3 19.4 4.5 2 Required 8.9 7.9 15.5 25.0 22.5 13.4 44.7 20.6 2.3 3 Nonborrowed 3.4 4.3 19.3 25.4 22.2 12.8 48.9 19.1 4.6 4 Monetary base3 4.2 6.6 8.4 9.8 7.8 9.1 16.4 3.9 4.9 Concepts of money, liquid assets, and debt4 i Ml 7.4 7.5 11.1 16.5r 9.0r 16.4r 27.2 10.3 5.2 6 M2 4.4 .6 2.3 4.2 2.8r 3.1 9.4 -.6 -1.9 7 M3 1.8 -1.3 1.0 2.2r 1.2 l.lr 7.2 -2.9 -3.3 8 L -1.9 .7 .r 2.0 -.5 -1.2r 8.1 3.5 n.a. 9 Debt 4.2 4.7 4.3 3.6 3.0 2.6r 4.2 5.9 n.a. Nontransaction components 10 In M2y 3.4 -1.6 -.7 -.lr .7 - 1.7r 3.1 -4.6 -4.5 11 In M3 only6 -9.7 -9.9 -5.2r -7.4r -6.4r -8.2r -3.5 -14.1 -10.2 Time and savings deposits Commercial banks 12 Savings, including MMDAs 13.1 13.2 16.0 19.2 17.4 20.0 22.9 11.1 14.0 13 Small time^ 1.1 1.5 -8.4 -18.9 -15.6 -21.7 -23.5 -14.6 -6.7 14 Large time • -3.3 -8.0 -14.4 -18.2r -10.4 -25.8 -16.3 -17.2 -15.7 Thrift institutions 15 Savings, including MMDAs 16.8 9.8 10.2r 22.4r 14.1r 23.8r 30.5 23.4 16.1 16 Small time' -14.2 -24.2 -22.5 -24.8r -21.1 -24.5 -31.6 -28.2 -39.7 17 Large time • -35.0 -40.3 -36.5 -29.7r -28.2 -24.5 -33.9 -45.5 -36.3 Money market mutual funds 18 General purpose and broker-dealer 7.6 -4.7 -4.0 .9 3.3 -1.7 12.3 -18.8 -12.7 19 Institution-only 28.8 11.4 37.2 26.9 38.0 22.1 38.2 -18.5 25.3 Debt components4 20 Federal 6.8 13.9 12.2 8.1 7.7 6.r 6.1 15.4 n.a. 21 Nonfederal 3.4 1.9 1.7 2.2 1.5 1.4r 3.6 2.8 n.a. 1. Unless otherwise noted, rates of change are calculated from average offices in the United Kingdom and Canada, and (3) balances in both taxable and amounts outstanding during preceding month or quarter. tax-exempt, institution-only money market funds. Excludes amounts held by 2. Figures incorporate adjustments for discontinuities associated with regula- depository institutions, the U.S. government, money market funds, and foreign tory changes in reserve requirements. (See also table 1.20.) banks and official institutions. Also excluded is the estimated amount of overnight 3. Seasonally adjusted, break-adjusted monetary base consists of (1) season- RPs and Eurodollars held by institution-only money market funds. Seasonally ally adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted M3 is computed by adjusting its non-M2 component as a whole and then adjusted currency component of the money stock, plus (3) (for all quarterly adding this result to seasonally adjusted M2. reporters on the "Report of Transaction Accounts, Other Deposits, and Vault L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Cash" and for all weekly reporters whose vault cash exceeds their required Treasury securities, commercial paper, and bankers acceptances, net of money reserves) the seasonally adjusted, break-adjusted difference between current vault market fund holdings of these assets. Seasonally adjusted L is computed by cash and the amount applied to satisfy current reserve requirements. summing U.S. savings bonds, short-term Treasury securities, commercial paper, 4. Composition of the money stock measures and debt is as follows: and bankers acceptances, each seasonally adjusted separately, and then adding Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults this result to M3. of depository institutions; (2) travelers checks of nonbank issuers; (3) demand Debt: Debt of domestic nonfinancial sectors consists of outstanding creditdeposits at 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 (I) 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 CREDIT1 Millions of dollars Monthly averages of Weekly averages of daily figures for week ending daily figures Factor 1992 1992 Feb. Mar. Apr. Mar. 18 Mar. 25 Apr. 1 Apr. 8 Apr. 15 Apr. 22 Apr. 29 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 304,147 308,062 305,176 310,221 306,913 308,715 304,422 305,495 305,370 304,656 U.S. government securities 2 Bought outright—system account 263,190 265,433 266,478 264,642 266,790 266,267 267,561 266,011 266,372 265,764 3 Held under repurchase agreements ... 776 3,466 938 6,323 863 3,163 0 2,338 0 1,152 Federal agency obligations 4 Bought outright 5,960 5,960 5910 5,960 5,960 5,953 5,910 5,910 5,910 5,910 5 Held under repurchase agreements ... 40 93 12 206 57 7 0 20 0 24 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 63 38 59 78 35 122 13 24 55 61 8 Seasonal credit 22 32 47 30 38 37 35 39 46 67 9 Extended credit 2 2 2 2 1 1 0 1 3 4 10 Float 688 576 823 433 529 327 443 370 2,099 415 11 Other Federal Reserve assets 33,406 32,462 30,907 32,547 32,639 32,839 30,460 30,783 30,884 31,260 12 Gold stock 11,058 11,058 11,057 11,058 11,058 11,057 11,057 11,057 11,057 11,057 13 Special drawing rights certificate account . 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 14 Treasury currency outstanding 21,078 21,120 21,173 21,119 21,128 21,138 21,152 21,166 21,180 21,194 ABSORBING RESERVE FUNDS 15 Currency in circulation 301,646 302,799 305,509 303,289 302,887 302,939 304,425 306,002 306,214 305,543 16 Treasury cash holdings 689 711 707 703 704 710 704 706 710 709 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 6,241 5,614 4,868 5,906 5,724 5,184 5,438 4,435 5,178 4,781 18 Foreign 225 218 202 232 205 241 198 212 173 221 19 Service-related balances and adjustments 4,529 4,665 4,846 4,498 4,900 4,610 4,888 n.a. n.a. n.a. 20 Other 242 278 268 288 281 285 284 299 245 239 21 Other Federal Reserve liabilities and capital 7,929 7,886 8,155 7,997 8,123 8,077 7,935 8,225 8,282 8,272 22 Reserve balances with Federal Reserve Banks 24,799 28,086 22,869 29,500 26,293 28,883 22,778 n.a. n.a. n.a. End-of-month figures Wednesday figures 1992 1992 Feb. Mar. Apr. Mar. 18 Mar. 25 Apr. 1 Apr. 8 Apr. 15 Apr. 22 Apr. 29 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 303,555 306,524 305,999 311,999 306,291 310,494 304,006 312,700 302,820 304,902 U.S. government securities2 2 Bought outright—system account ... 265,423 265,7% 267,945 265,244 265,834 266,449 266,803 266,234 265,598 266,321 3 Held under repurchase agreements .. 0 1,805 0 6,856 1,160 3,717 0 9,477 0 713 Federal agency obligations 4 Bought outright 5,960 5,960 5,910 5,960 5,960 5,910 5,910 5,910 5,910 5,910 5 Held under repurchase agreements .. 0 0 0 294 100 49 0 120 0 55 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 35 23 49 420 23 645 13 45 39 79 8 Seasonal credit 25 29 66 36 45 32 37 42 56 71 9 Extended credit 2 0 0 3 1 0 0 0 5 0 0 Float 290 512 926 422 346 993 603 -63 172 319 1 Other Federal Reserve assets 31,821 32,400 31,103 32,765 32,823 32,698 30,640 30,935 31,039 31,433 12 Gold stock 11,058 11,057 11,057 11,058 11,058 11,057 11,057 11,057 11,057 11,057 13 Special drawing rights certificate account 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 14 Treasury currency outstanding 21,099 21,138 21,208 21,119 21,128 21,138 21,152 21,166 21,180 21,194 ABSORBING RESERVE FUNDS 15 Currency in circulation 301,374 303,212 306,407 303,272 302,932 303,570 305,376 306,380 306,142 305,816 16 Treasury cash holdings 698 711 705 703 711 704 705 710 710 705 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5,477 6,846 4,692 4,533 4,631 2,531 4,886 4,129 4,836 5,806 18 Foreign 264 262 206 258 172 242 203 184 160 254 19 Service-related balances and adjustments 4,623 4,610 5,717 4,498 4,900 4,610 4,888 n.a. n.a. n.a. 20 Other 231 364 260 299 305 314 265 266 192 245 21 Other Federal Reserve liabilities and capital 7,222 8,098 7,906 7,991 7,990 7,750 7,958 7,961 8,158 7,918 22 Reserve balances with Federal Reserve Banks3 | 25,842 24,637 22,389 32,640 26,856 32,987 21,952 n.a. n.a. n.a. 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 • July 1992 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages RRReeessseeerrrvvveee ccclllaaassssssiiifffiiicccaaatttiiiooonnn 1989 1990 1991 1991 1992 Dec. Dec. Dec. Oct. Nov. Dec. Jan. Feb. Mar. Apr. 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss22222 35,436 30,237 26,659 23,197 25,004 26,659 25,416 24,918 28,057r 22,655 22222 TTTTToooootttttaaaaalllll vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh33333 29,828 31,786 32,513 32,299 31,714 32,513 34,135 34,218 31,647 31,071 33333 AAAAAppppppppppllllliiiiieeeeeddddd vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh44444 27,374 28,884 28,872 28,386 28,053 28,872 30,3% 30,320 28,225 27,800 44444 SSSSSuuuuurrrrrpppppllllluuuuusssss vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh 2,454 2,903 3,641 3,913 3,661 3,641 3,739 3,897 3,422 3,271 55555 TTTTToooootttttaaaaalllll rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss66666 62,810 59,120 55,532 51,584 53,057 55,532 55,812 55,238 56,282 50,456 7 6 7 6 77 666 7 EEEEE RRRRR xxxxx eeeeeqqqqq ccccc uuuuu eeeeesssss iiiiirrrrr sssss eeeeeddddd rrrrreeeee sssss rrrrr eeeee eeeee rrrrr sssss vvvvv eeeee eeeee rrrrr vvvvv bbbbb eeeee aaaaa sssss lllll aaaaannnnnccccceeeeesssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss iiiii .......... ..... ..... ..... ..... 61,8 9 8 2 7 3 57 1 , , 4 66 5 4 6 54,5 9 5 7 3 9 50 1 , , 5 0 0 8 1 3 52,1 8 6 9 5 2 54, 9 55 7 3 9 54 1 , , 8 0 0 0 9 3 54 1 , , 1 0 7 6 4 5 55 l, , 0 2 2 5 8 4 r r 49 1 , , 3 1 1 3 7 9 88888 TTTTToooootttttaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 265 326 192 261 108 192 233 77 91 90 99999 SSSSSeeeeeaaaaasssssooooonnnnnaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss 84 76 38 211 86 38 17 22 32 47 1111100000 EEEEExxxxxttttteeeeennnnndddddeeeeeddddd cccccrrrrreeeeedddddiiiiittttt 20 23 1 12 1 1 1 2 2 2 Biweekly averages of daily figures for weeks ending 1992 Jan. 8 Jan. 22 Feb. 5 Feb. 19 Mar. 4 Mar. 18 Apr. lr Apr. 15 Apr. 29 May 13 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss22222 27,557 26,147 22,374 25,108 25,922 29,111 27,578 22,885 22,138 21,752 22222 TTTTToooootttttaaaaalllll vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh33333 33,318 33,156 36,384 34,354 32,944 30,564 32,414 30,456 31,643 30,346 33333 AAAAAppppppppppllllliiiiieeeeeddddd vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh44444,,,,, 29,601 29,732 32,137 30,494 29,169 27,398 28,826 27,353 28,225 27,092 44444 SSSSSuuuuurrrrrpppppllllluuuuusssss vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh 3,717 3,424 4,248 3,860 3,775 3,166 3,588 3,103 3,418 3,255 55555 TTTTToooootttttaaaaalllll rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss66666 57,158 55,879 54,511 55,602 55,091 56,509 56,403 50,238 50,363 48,844 66666 RRRRReeeeeqqqqquuuuuiiiiirrrrreeeeeddddd rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss 56,020 54,966 53,488 54,435 54,151 56,001 54,788 49,174 49,149 48,206 77777 EEEEExxxxxccccceeeeessssssssss rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss ............... 1,138 913 1,023 1,168 941 508 1,616 1,065 1,214 638 88888 TTTTToooootttttaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 521 136 130 69 63 75 117 56 118 153 99999 SSSSSeeeeeaaaaasssssooooonnnnnaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss 22 13 20 22 24 29 38 37 57 75 1111100000 EEEEExxxxxttttteeeeennnnndddddeeeeeddddd cccccrrrrreeeeedddddiiiiittttt99999 1 0 2 2 3 2 1 1 4 0 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 depositor 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 Banks' Millions of dollars, averages of daily figures 1992, week ending Monday SSoouurrccee aanndd mmaattuurriittyy Feb. 3 Feb. 10 Feb. 17 Feb. 24 Mar. 2 Mar. 9 Mar. 16 Mar. 23 Mar. 30 Federal funds purchased, repurchase agreements, and other selected borrowings From commercial banks in the United States 1 For one day or under continuing contract 78,298 80,521 80,399 79,454 79,013 81,871 77,493 72,856 73,215 2 For all other maturities 16,179 15,834 15,725 15,685 16,533 16,364 16,666 16,554 15,967 From other depository institutions, foreign banks and official institutions, and U.S. government agencies 3 For one day or under continuing contract 20,786 19,659 21,232 25,031 22,497 19,725 19,359 19,026 18,107 4 For all other maturities 18,354 19,567 19,145 19,150 19,935 21,308 21,284 21,497 20,489 Repurchase agreements on U.S. government and federal agency securities Brokers and nonbank dealers in securities 5 For one day or under continuing contract 14,808 15,391 14,360 14,926 13,733 13,735 12,281 12,199 12,219 6 For all other maturities 14,302 14,679 15,956 14,527 15,230 15,525 17,124 17,656 17,192 All other customers 7 For one day or under continuing contract 25,417 25,678 26,202 26,841 26,888 25,523 25,290 25,761 26,121 8 For all other maturities 11,902 11,753 12,074 12,125 11,784 11,577 12,182 12,297 12,788 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 56,403 56,789 56,528 54,398 56,720 54,4% 51,403 49,600 47,483 10 To all other specified customers 21,704 22,260 20,403 21,138 20,638 21,459 23,411 22,527 20,703 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 • July 1992 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit2 Extended credit3 FFeeddeerraall RReesseerrvvee Bank 5/2 O 9 n / 92 Effective date Previous rate 5/2 O 9 n / 92 Effective date Previous rate 5/2 O 9 n / 92 Effective date Previous rate Boston 3.5 12/20/91 4.5 3.80 5/28/92 3.80 4.30 5/28/92 4.30 New York 12/20/91 5/28/92 5/28/92 Philadelphia 12/20/91 5/28/92 5/28/92 Cleveland 12/20/91 5/28/92 5/28/92 Richmond 12/20/91 5/28/92 5/28/92 Atlanta 12/20/91 5/28/92 5/28/92 Chicago 12/20/91 5/28/92 5/28/92 St. Louis 12/24/91 5/28/92 5/28/92 Minneapolis 12/23/91 5/28/92 5/28/92 Kansas City 12/20/91 5/28/92 5/28/92 Dallas 12/20/91 5/28/92 5/28/92 San Francisco ... 3.5 12/20/91 4.5 3.80 5/28/92 3. 80 4.30 5/28/92 4.30 Range of rates for adjustment credit in recent years4 Range (or F.R. Range (or F.R. Range (or F.R. Effective date A le l v l e F l) . — R. Ba o n f k Effective A le l v l e F l) . — R. B o a f n k Effective date A le l v l e F l) . — R. B o a f n 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 n 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 May 29, 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 tnan 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 Type of deposit2 Net transaction accounts3 1 $0 million-$42.2 million... 12/17/91 2 More than $42.2 million4.. 4/2/91 3 Nonpersonal time deposits1 12/27/90 4 Eurocurrency liabilities6 .. 12/27/90 1. Required reserves must be held in the form of deposits with Federal Reserve to the rules that permit no more than six preauthorized, automatic, or other Banks or vault cash. Nonmember institutions may maintain reserve balances with transfers per month, of which no more than three may be checks, are not a Federal Reserve Bank indirectly on a pass-through basis with certain approved transaction accounts (such accounts are savings deposits). institutions. For previous reserve requirements, see earlier editions of the Annual The Monetary Control Act of 1980 requires that the amount of transaction Report or the Federal Reserve Bulletin. Under provisions of the Monetary accounts against which the 3 percent reserve requirement applies be modified Control Act, depository institutions include commercial banks, mutual savings annually by 80 percent of the percentage change in transaction accounts held by banks, savings and loan associations, credit unions, agencies and branches of all depository institutions, determined as of June 30 each year. Effective Dec. 17, foreign banks, and Edge corporations. 1991, for institutions reporting quarterly, and Dec. 24, 1991, for institutions 2. The Garn-St Germain Depository Institutions Act of 1982 (Public Law reporting weekly, the amount was increased from $41.1 million to $42.2 million. 97-320) requires that $2 million of reservable liabilities of each depository 4. The reserve requirement was reduced from 12 percent to 10 percent on Apr. institution be subject to a zero percent reserve requirement. The Board is to adjust 2, 1992, for institutions that report weekly, and on Apr. 16, 1992, for institutions the amount of reservable liabilities subject to this zero percent reserve require- that report quarterly. ment each year for the succeeding calendar year by 80 percent of the percentage 5. For institutions that report weekly, the reserve requirement on nonpersonal increase in the total reservable liabilities of all depository institutions, measured time deposits with an original maturity of less than 1 Vi years was reduced from 3 on an annual basis as of June 30. No corresponding adjustment is to be made in percent to IVz percent for the maintenance period that began Dec. 13, 1990, and the event of a decrease. On Dec. 17, 1991, the exemption was raised from $3.4 to zero for the maintenance period that began Dec. 27, 1990. The reserve million to $3.6 million. The exemption applies in the following order: (1) net requirement on nonpersonal time deposits with an original maturity of 1 Vi years negotiable order of withdrawal (NOW) accounts (NOW accounts less allowable or more has been zero since Oct. 6, 1983. deductions); and (2) net other transaction accounts. The exemption applies only to For institutions that re(>ort quarterly, the reserve requirement on nonpersonal accounts that would be subject to a 3 percent reserve requirement. time deposits with an original maturity of less than 1 Vi years was reduced from 3 3. Transaction accounts include all deposits against which the account holder is percent to zero on Jan. 17, 1991. permitted to make withdrawals by negotiable or transferable instruments, pay- 6. The reserve requirement on Eurocurrency liabilities was reduced from 3 ment orders of withdrawal, and telephone and preauthorized transfers in excess of percent to zero in the same manner and on the same dates as were the reserve three per month for the purpose of making payments to third persons or others. requirement on nonpersonal time deposits with an original maturity of less than However, money market deposit accounts (MMDAs) and similar accounts subject 1 Vi years (see note 4). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Financial Statistics • July 1992 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 1991 1992 TTyyppee ooff ttrraannssaaccttiioonn 11998899 11999900 11999911 Sept. Oct. Nov. Dec. Jan. Feb. Mar. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 14,284 24,739 20,158 529 2,198 2,823 837 0 123 505 2 Gross sales 12,818 7,291 120 0 0 0 0 1,628 0 0 3 Exchanges 231,211 241,086 277,314 19,508 25,409 24,141 21,967 26,750 24,435 21,674 4 Redemptions 12,730 4,400 1,000 0 0 0 0 1,600 0 0 Others within one year 5 Gross purchases 327 425 3,043 200 0 178 0 0 0 0 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shifts 28,848 25,638 24,454 1,131 2,002 1,655 1,570 1,298 6,020 2,552 8 Exchanges -25,783 -27,424 -28,090 -2,202 -2,034 -2,585 -3,562 -989 -2,742 -2,512 9 Redemptions 500 0 1,000 0 0 0 0 0 0 0 One to five years 10 Gross purchases 1,436 250 6,583 650 0 2,133 300 0 1,027 1,425 11 Gross sales 490 200 0 0 0 0 0 0 0 0 12 Maturity shifts -25,534 -21,770 -21,211 -1,131 -1,877 -1,492 -1,570 -1,174 -6,020 -2,552 13 Exchanges 23,250 25,410 24,594 2,202 1,686 2,135 3,562 539 2,292 2,512 Five to ten years 14 Gross purchases 287 0 1,280 0 0 880 0 0 0 0 15 Gross sales 29 100 0 0 0 0 0 0 0 0 16 Maturity shifts -2,231 -2,186 -2,037 0 -126 -163 0 -124 0 0 17 Exchanges 1,934 789 2,894 0 347 300 0 451 300 0 More than ten years 18 Gross purchases 284 0 375 0 0 375 0 0 0 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 0 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 1,379 2,198 6,390 1,137 0 1,150 1,930 23 Gross sales 13,337 7,591 120 0 0 0 0 1,628 0 0 24 Redemptions 13,230 4,400 1,000 0 0 0 0 1,600 0 0 Matched transactions 25 Gross sales 1,323,480 1,369,052 1,570,456 116,266 137,073 98,063 118,127 136,922 123,000 128,230 26 Gross purchases 1,326,542 1,363,434 1,571,534 118,481 135,281 97,925 118,263 136,282 124,654 126,673 Repurchase agreements2 27 Gross purchases 129,518 219,632 310,084 40,447 12,432 14,165 51,345 21,412 99,,882244 4488,,775588 28 Gross sales 132,688 202,551 311,752 40,447 3,718 22,879 36,000 33,228 13,353 46,953 29 Net change in U.S. government securities -10,055 24,886 29,729 3,595 9,121 -2,462 16,619 -15,684 -725 2,178 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 0 0 0 0 0 0 0 0 0 0 31 Gross sales 0 0 5 5 0 0 0 0 0 0 32 Redemptions 442 183 292 0 14 51 45 85 0 0 Repurchase agreements2 33 Gross purchases 38,835 41,836 2222,,880077 3,061 714 275 1,744 390 557711 11,,664400 34 Gross sales 40,411 40,461 23,595 3,061 695 294 1,191 808 706 1,640 35 Net change in federal agency obligations -2,018 1,192 -1,085 -5 5 -70 508 -503 -135 0 36 Total net change in System Open Market Account -12,073 26,078 28,644 3,590 9,126 -2,532 17,127 -16,186 -860 2,178 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 Account 1992 1992 Apr. 1 Apr. 8 Apr. 15 Apr. 22 Apr. 29 Feb. 28 Mar. 31 Apr. 30 Consolidated condition statement ASSETS 1 Gold certificate account 11,057 11,057 11,057 11,057 11,057 11,058 11,057 11,057 2 Special drawing rights certificate account 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 3 Coin 597 599 588 571 561 632 599 554 Loans 4 To depository institutions 678 50 87 100 150 62 52 115 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 5,910 5,910 5,910 5,910 5,910 5,960 5,960 5,910 8 Held under repurchase agreements 49 0 120 0 55 0 0 9 Total U.S. Treasury securities. 270,166 266,803 275,711 265,598 267,034 265,423 267,601 267,945 10 Bought outright2 266,449 266,803 266,234 265,598 266,321 265,423 265,796 267,945 11 Bills 130,146 130,500 129,931 129,295 130,017 130,544 129,492 131,642 12 Notes 104,260 104,260 104,260 104,260 104,260 102,835 104,260 104,260 13 Bonds 32,043 32,043 32,043 32,043 32,043 32,043 32,043 32,043 14 Held under repurchase agreements 3,717 0 9,477 0 713 0 1,805 0 15 Total loans and securities 276,803 272,763 281,828 271,609 273,149 271,444 273,613 273,971 16 Items in process of collection 6,494 5,898 6,081 5,812 5,441 5,155 8,172 5,236 17 Bank premises 1,009 1,009 1,010 1,014 1,014 1,001 1,007 1,014 Other assets 18 Denominated in foreign currencies3 26,060 24,094 23,967 24,011 24,034 25,999 26,060 23,964 19 All other 5,689 5,608 6,064 6,056 6,404 5,041 5,444 6,197 20 Total assets 337,727 331,046 340,613 330,149 331,678 330,347 335,971 332,011 LIABILITIES 21 Federal Reserve notes 283,733 285,528 286,511 286,243 285,887 281,605 283,383 286,457 22 Total deposits 40,723 32,339 40,317 30,546 32,980 36,659 36,952 32,960 23 Depository institutions 37,636 26,985 35,737 25,358 26,675 30,688 29,480 27,801 24 U.S. Treasury—General account 2,531 4,886 4,129 4,836 5,806 5,477 6,846 4,692 25 Foreign—Official accounts 242 203 184 160 254 264 262 206 26 Other 314 265 266 192 245 231 364 260 27 Deferred credit items 5,522 5,221 5,824 5,202 4,894 4,860 7,538 4,688 28 Other liabilities and accrued dividends3 2,202 2,166 2,138 2,057 2,002 2,317 2,226 2,052 29 Total liabilities. 332,179 325,254 334,790 324,048 325,763 325,441 330,099 326,157 CAPITAL ACCOUNTS 30 Capital paid in 2,746 2,748 2,776 2,782 2,788 2,734 2,745 2,790 31 Surplus 2,597 2,619 2,632 2,652 2,652 2,171 2,598 2,652 32 Other capital accounts 205 426 414 669 476 0 529 413 33 Total liabilities and capital accounts 337,727 331,046 340,613 330,149 331,678 330,347 335,971 332,011 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international accounts .. 267,940 266,835 269,126 269,035 268,888 268,036 271,183 274,023 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Bank) .. 361,794 360,792 360,044 358,953 358,729 363,222 362,146 358,760 36 LESS: Held by Federal Reserve Bank 78,061 75,264 73,533 72,711 72,843 81,617 78,762 72,303 37 Federal Reserve notes, net 283,733 285,528 286,511 286,243 285,887 281,605 283,383 286,457 Collateral held against notes, net: 38 Gold certificate account 11,057 11,057 11,057 11,057 11,057 11,058 11,057 11,057 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 262,658 264,453 265,436 265,168 264,812 260,529 262,308 265,382 42 Total collateral. 283,733 285,528 286,511 286,243 285,887 281,605 283,383 286,457 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 • July 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 1992 Apr. 1 Apr. 8 Apr. 15 Apr. 22 Apr. 29 Feb. 28 Mar. 31 Apr. 30 1 Total loans 678 50 87 100 150 62 52 115 2 Within fifteen days 663 29 74 96 145 58 46 92 3 Sixteen days to ninety days 15 21 13 5 6 4 6 24 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 270,166 266,803 275,711 265,598 267,034 265,423 265,796 267,945 10 Within fifteen days2 15,705 12,038 19,454 13,009 14,707 8,559 6,571 13,540 11 Sixteen days to ninety days 64,311 67,692 65,933 62,279 61,967 69,052 67,222 57,553 17 Ninety-one days to one year 87,891 84,815 87,986 87,973 88,023 87,851 89,745 93,608 n One year to five years 62,473 62,473 62,396 62,396 62,396 60,175 62,473 63,302 14 Five years to ten years 15,192 15,192 15,347 15,347 15,347 15,192 15,192 15,347 15 More than ten years 24,594 24,594 24,594 24,594 24,594 24,594 24,594 24,594 16 Total Federal agency obligations 5,959 5,910 6,030 5,910 5,965 5,960 5,960 5,910 17 Within fifteen days2 69 20 164 149 160 403 220 105 18 Sixteen days to ninety days 524 734 702 612 677 502 524 677 19 Ninety-one days to one year 1,715 1,505 1,551 1,536 1,499 1,411 1,515 1,499 70 One year to five years 2,750 2,750 2,717 2,717 2,733 2,726 2,750 2,733 21 Five years to ten years 747 747 742 742 742 764 797 742 22 More than ten years 154 154 154 153 154 154 154 154 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 .. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Seasonally adjusted AADDJJUUSSTTEEDD FFOORR CCHHAANNGGEESS IINN RREESSEERRVVEE RREEQQUUIIRREEMMEENNTTSS22 11 TToottaall rreesseerrvveess33 47.60 47.73 49.10 53.75 51.15 51.82 52.69 53.75 54.37 56.42 57.33 57.55 22 NNoonnbboorrrroowweedd rreesseerrvveess44 45.88 47.46 48.78 53.56 50.50 51.56 52.59 53.56 54.13 56.34 57.24 57.46 33 NNoonnbboorrrroowweedd rreesseerrvveess pplluuss eexxtteennddeedd ccrreeddiitt55 47.12 47.48 48.80 53.56 50.80 51.57 52.59 53.56 54.13 56.34 57.24 57.46 44 RReeqquuiirreedd rreesseerrvveess 46.55 46.81 47.44 52.77 50.22 50.73 51.80 52.77 53.36 55.35 56.30 56.41 55 MMoonneettaarryy bbaassee66 263.77 274.57 300.35 325.22 318.50 320.93 323.13 325.22 327.68 332.15r 333.24r 334.60 Not seasonally adjusted 6 Total reserves 49.00 49.18 50.58 55.38 50.99 51.43 52.89 55.38 55.79 55.17 56.17 58.69 7 Nonborrowed reserves 47.29 48.91 50.25 55.18 50.35 51.17 52.78 55.18 55.56 55.10 56.08 58.60 888 NNNooonnnbbbooorrrrrrooowwweeeddd rrreeessseeerrrvvveeesss pppllluuusss eeexxxttteeennndddeeeddd cccrrreeedddiiittt 48.53 48.93 50.28 55.19 50.65 51.18 52.78 55.19 55.56 55.10 56.08 58.60 999 RRReeeqqquuuiiirrreeeddd rrreeessseeerrrvvveeesss888 47.96 48.26 48.91 54.40 50.07 50.35 51.99 54.40 54.79 54.11 55.14 57.55 111000 MMMooonnneeetttaaarrryyy bbbaaassseee999 267.46 278.30 304.04 329.35 317.28 319.14 323.06 329.35 328.75 328.58r 331.05r 335.80 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves" 63.75 62.81 59.12 55.53 51.13 51.58 53.06 55.53 55.81 55.24 56.28 50.46 12 Nonborrowed reserves 62.03 62.54 58.79 55.34 50.48 51.32 52.95 55.34 55.58 55.16 56.19 50.37 13 Nonborrowed reserves plus extended credit 63.27 62.56 58.82 55.34 50.78 51.33 52.95 55.34 55.58 55.16 56.19 50.37 14 Required reserves 62.70 61.89 57.46 54.55 50.20 50.50 52.16 54.55 54.81 54.17 55.25 49.32 1155 MMoonneettaarryy bbaassee1122 283.00 292.55 313.70 333.61 320.70 322.71 326.88 333.61 333.09 333.191 335.82r 332.71 1166 EExxcceessss rreesseerrvveess1133 1.05 .92 1.66 .98 •93 1.08 .89 .98 1.00 1.06 1.03 1.14 17 Borrowings from the Federal Reserve 1.72 .27 .33 .19 .65 .26 .11 .19 .23 .08 .09 .09 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 • July 1992 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1992r 1988 1989 1990 1991 Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. Seasonally adjusted Measures2 1 Ml 786.9 794.1 826.1 898. r 910.4 931.0 939.0 943.1 2 M2 3,071.1 3,227.3 3,339.0 3,439.3r 3,448.1 3,475.2 3,473.5 3,468.0 3 M3 3,923.1 4,059.8 4,114.6 4,171.4 4,175.1 4,200.1 4,189.9 4,178.3 4 L 4,677.9 4,891.7 4,966.6 4,988.2r 4,983.3 5,017.1 5,031.9 n.a. 5 Debt 9,312.6 10,059.6 10,749.9 11,216.2 11,240.1 11,279.3 11,335.1 n.a. Ml components 6 Currency3 212.3 222.6 246.8 267.3 269.4 271.6 271.8 273.6 7 Travelers checks 7.5 7.4 8.3 8.2 8.2 8.1 8.0 8.0 8 Demand deposits5 286.5 279.0 277.1 289.5 293.8 305.1 309.7 311.3 9 Other checkable deposits6 280.6 285.1 293.9 333.2 339.0 346.2 349.4 350.2 Nontransaction components 10 In M2 2,284.2 2,433.2 2,512.9 2,541.2 2,537.7 2,544.2 2,534.5 2,524.9 11 In M3 852.0 832.5 775.6 732.0" 727.0 724.9 716.4 710.3 Commercial banks 12 Savings deposits, iircluding MMDAs 542.7 541.4 581.9 664.9 676.0 688.9 695.3 703.4 13 Small time deposits9. 447.0 531.0 606.4 598.5 587.7 576.2 569.2 566.0 14 Large time deposits10, " 366.9 398.2 374.0 354.0 346.4 341.7 336.8 332.4 Thrift institutions 15 Savings deposits, ircluding MMDAs 383.5 349.7 338.8 377.7r 385.2 395.0 402.7 408.1 16 Small time deposits® 585.9 617.5 562.3 464.5 455.0 443.0 432.6 418.3 17 Large time deposits10 174.3 161.1 120.9 83.1 81.4 79.1 76.1 73.8 Money market mutual funds 18 General purpose and broker-dealer 241.9 316.3 348.9 360.5 360.0 363.7 358.0 354.2 19 Institution-only 91.0 107.2 133.7 179.1 182.4 188.2 185.3 189.2 Debt components 20 Federal debt 2,101.5 2,249.8 2,493.6 2,766.0 2,780.1 2,794.2 2,830.0 n.a. 21 Nonfederal debt 7,211.1 7,809.7 8,256.3 8,450.3 8,460.0 8,485.1 8,505.1 n.a. Not seasonally adjusted Measures2 22 Ml 804.1 811.9 844.1 917.3 918.2 916.8 930.8 955.0 23 M2 3,083.8 3,240.0 3,351.9 3,453.2 3,456.1 3,462.4 3,474.1 3,486.0 24 M3 3,934.7 4,070.3 4,124.7 4,182.1 4,180.2 4,189.6 4,194.9 4,195.1 25 L 4,694.9 4,911.0 4,986.4 5,008.4r 5,001.4 5,010.4 5,038.9 n.a. 26 9,298.0 10,045.1 10,737.2 11,203.6 11,228.1 11,249.9 11,300.4 n.a. Ml components 27 Currency 214.8 225.3 249.5 270.0 267.8 269.5 271.0 273.4 28 Travelers checks4 6.9 6.9 7.8 7.7 7.8 7.8 7.7 7.6 29 Demand deposits5 298.9 291.5 289.9 303.0 300.0 296.4 302.1 313.0 30 Other checkable deposits6 283.5 288.1 296.9 336.5 342.5 343.2 349.9 361.0 Nontransaction components 31 In M2 2,279.7 2,428.1 2,507.8 2,535.9 2,537.9 2,545.6 2,543.3 2,531.0 32 In M38 850.8 830.3 772.8 728.9 724.2 727.1 720.9 709.0 Commercial banks 33 Savings deposits, iincluding MMDAs 543.8 543.0 580.0 662.4 672.3 685.2 696.8 706.2 34 Small time deposits 446.0 529.5 606.3 598.7 589.5 577.6 569.5 565.5 35 Large time deposits10, " 365.9 397.1 373.0 352.8 344.0 340.6 337.3 331.3 Thrift institutions 36 Savings deposits, including MMDAs 381.1 347.6 337.7 376.3 383.1 392.9 403.7 409.8 37 Small time deposits 584.9 616.0 562.2 464.6 456.4 444.1 432.8 417.9 38 Large time deposits10 175.2 162.0 120.6 82.8 80.9 78.8 76.3 73.6 Money market mutual funds 39 General purpose and broker-dealer 240.8 314.6 346.8 358.1 359.5 368.8 366.9 360.5 40 Institution-only 91.4 107.8 134.4 180.3 188.1 196.9 191.4 190.9 Repurchase agreements and eurodollars 41 Overnight 83.2 77.5 74.7 75.7 77.1 77.0 73.6 71.2 42 227.4 178.5 158.3 128.6 126.6 128.1 131.4 128.4 Debt components 43 Federal debt 2,098.9 2,247.5 2,491.3 2,764.9 2,782.4 2,799.1 2,834.6 n.a. 44 Nonfederal debt 7,199.0 7,797.7 8,245.8 8,438.7 8,445.7 8,450.9 8,465.8 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 aJI 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 • July 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 1992 BBaannkk ggrroouupp,, oorr ttyyppee ooff ccuussttoommeerr 11998899 22 11999900 22 1199991122RR Sept. Oct. Nov. Dec/ Jan.r Feb. DEBITS TO Seasonally adjusted Demand deposits 1 All insured banks 256,150.4 277,916.3 281,050.1 281,469.0 287,974.5 278,234.2 293,941.3 306,523.0 298,098.7 2 Major New York City banks 129,319.9 131,784.0 140,905.5 142,143.2 144,228.7 140,769.6 149,502.5 161,915.3 154,751.0 3 Other banks 126,830.5 146,132.3 140,144.6 139,325.8 143,745.8 137,464.6 144,438.8 144,607.7 143,347.7 4 ATS-NOW accounts4 2,910.5 3,349.6 3,624.6 3,679.1 3,759.9 3,553.7 3,786.5 3,719.4 3,787.2 5 Savings deposits5 547.5 558.8 1,377.4 2,904.0 2,733.0 3,233.1 3,296.1 3,089.7 3,142.5 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 735.1 800.6 817.6 817.9 837.1 787.3 841.8 870.1 817.6 7 Major New York City banks 3,421.5 3,804.1 4,391.9 4,498.2 4,607.9 4,214.7 4,657.4 4,997.4 4,633.3 8 Other banks 408.3 467.7 449.6 445.9 459.6 429.6 453.9 452.1 432.8 9 ATS-NOW accounts4 15.2 16.5 16.1 15.7 15.9 14.8 15.7 15.1 15.1 10 Savings deposits5 3.0 2.9 3.3 4.7 4.4 5.0 5.0 4.7 4.7 DEBITS TO Not seasonally adjusted Demand deposits3 11 All insured banks 256,133.2 277,400.0 280,922.8 271,983.5 2%,037.8 267,995.2 301,642.6 306,706.9 276,158.6 12 Major New York City banks 129,400.1 131,784.7 140,563.0 137,659.5 149,704.6 136,592.8 153,462.8 158,932.3 143,476.0 13 Other banks 126,733.0 145,615.3 140,359.7 134,324.0 146,333.2 131,402.4 148,179.8 147,774.6 132,682.6 14 ATS-NOW accounts4 2,910.7 3,342.2 3,622.4 3,679.4 3,770.6 3,314.0 3,841.0 4,130.2 3,450.5 15 MMDAs 2,677.1 2,923.8 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 16 Savings deposits 546.9 557.9 1,408.3 3,110.7 3,132.6 2,939.5 3,331.1 3,364.7 2,872.0 DEPOSIT TURNOVER Demand deposits3 17 All insured banks 735.4 799.6 817.5 790.2 858.6 751.7 823.7 851.5 778.4 18 Major New York City banks 3,426.2 3,810.0 4,370.1 4,305.8 4,775.5 4,059.4 4,461.1 4,633.6 4,387.6 19 Other banks 408.0 466.3 450.6 430.2 466.8 406.9 445.1 453.6 412.0 20 ATS-NOW accounts4 15.2 16.4 16.1 15.9 16.2 13.9 15.7 16.4 13.7 21 MMDAs6 7.9 8.0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 22 Savings deposits5 2.9 2.9 3.4 4.9 4.9 4.5 5.1 5.1 4.2 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 1992r IItteemm May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Seasonally adjusted 1 Total loans and securities2 2,764.8 2,773.1 2,773.7 2,776.7 2,789.0 2,805.4 2,822.6 2,838.0 2,846.0 2,845.9 2,852.2 2,864.0 ? U.S. government securities 483.9 493.5 502.4 512.6 523.0 538.7 550.8 562.5 564.7 568.9 576.5 588.1 3 Other securities 176.8 176.3 175.8 174.4 176.3 177.9 178.8 179.5 179.3 179.2 176.9 177.5 4 Total loans and leases 2,104.0 2,103.4 2,095.4 2,089.8 2,089.6 2,088.7 2,093.0 2,095.9 2,102.1 2,097.8 2,098.7 2,098.4 5 Commercial and industrial ..... 630.5 625.8 623.8 619.5 622.0 623.0 622.1 617.8 615.7 611.3 609.0 605.7 6 Bankers acceptances held3... 8.1 7.6 7.4 7.7 7.2 6.6 7.1 7.3 7.1 7.3 7.2 7.0 7 Other commercial and 622.4 618.3 616.3 611.8 614.8 616.4 614.9 610.5 608.6 604.0 601.8 559988..66 8 U.S. addressees4 616.5 612.5 610.6 605.9 608.7 609.7 608.3 603.1 602.3 597.7 595.4 592.1 9 Non-U.S. addressees4 5.9 5.7 5.7 5.9 6.1 6.7 6.7 7.4 6.3 6.3 6.4 6.5 10 Real estate 863.8 868.5 867.3 866.7 868.0 869.5 871.6 872.9 873.3 876.9 877.8 879.1 11 Individual 373.8 373.1 370.9 370.3 367.2 364.1 363.0 363.6 363.1 363.5 362.2 361.3 12 Security 49.1 49.0 47.4 48.4 50.0 51.1 53.4 54.5 59.4 57.0 60.4 65.0 n Nonbank financial institutions 36.1 38.6 37.7 36.9 37.1 37.2 37.8 40.2 39.1 40.1 4400..55 4400..00 14 Agricultural 33.7 33.9 34.0 34.3 34.4 34.1 33.7 33.9 33.6 33.5 34.1 34.1 IS State and political subdivisions 31.7 31.3 30.9 30.5 30.1 29.5 29.1 2288..99 2288..00 2288..11 2288..11 2277..88 16 Foreign banks 6.4 6.3 6.4 6.5 6.8 6.6 6.9 7.5 7.3 6.8 6.5 6.7 17 Foreign official institutions 2.4 2.5 2.3 2.2 2.3 2.4 2.5 2.4 2.3 2.2 2.2 2.1 18 Lease-financing receivables 33.0 33.2 32.4 31.7 31.7 31.5 31.4 31.6 31.5 31.6 31.5 31.5 19 All other loans 43.4 41.3 42.4 42.8 39.9 39.8 41.5 42.6 48.9 46.8 46.3 45.2 Not seasonally adjusted 20 Total loans and securities2 2,760.7 2,774.2 2,766.9 2,773.8 2,789.1 2,808.1 2,827.9 2,844.4 2,842.7 2,848.4 2,852.9 2,863.1 21 U.S. government securities 483.9 492.7 500.3 511.1 521.6 537.6 551.7 558.5 564.2 572.8 581.8 590.4 7? Other securities 176.5 176.3 174.9 174.5 176.3 178.3 179.0 179.8 179.8 179.3 177.1 177.1 73 Total loans and leases 2,100.3 2,105.3 2,091.7 2,088.2 2,091.2 2,092.3 2,097.2 2,106.1 2,098.7 2,096.4 2,094.0 2,095.7 74 Commercial and industrial ..... 633.2 627.9 623.6 617.7 619.1 621.4 620.8 619.1 612.5 610.5 611.7 608.5 25 Bankers acceptances held3... 8.1 7.6 7.1 7.5 7.2 6.6 7.3 7.6 7.1 7.4 7.2 6.8 76 Other commercial and industrial 625.1 620.3 616.5 610.2 611.9 614.9 613.4 611.5 605.4 603.1 660044..55 660011..77 77 U.S. addressees 619.3 614.2 610.8 604.3 605.9 608.7 607.2 604.5 598.6 596.4 597.9 595.0 78 Non-U.S. addressees4 5.9 6.0 5.8 5.8 6.0 6.2 6.2 7.0 6.8 6.7 6.6 6.7 79 Real estate 864.3 868.8 868.4 868.6 869.0 870.9 872.9 873.2 872.7 873.9 874.3 877.8 30 Individual 372.1 371.0 368.2 369.3 368.7 365.0 364.4 368.3 367.4 363.6 359.7 358.6 31 Security 46.7 49.1 46.2 47.3 48.6 50.8 53.5 55.1 58.9 61.6 62.2 66.5 3? Nonbank financial institutions 35.7 38.9 37.9 37.0 36.7 36.9 38.1 41.5 39.5 39.7 40.0 39.5 33 Agricultural 33.3 34.1 34.7 35.2 35.5 34.9 34.1 33.9 33.2 32.6 32.8 33.1 34 State and political subdivisions 31.7 31.3 30.7 30.4 30.1 29.6 29.1 28.7 28.4 2288..22 2288..11 2277..88 35 Foreign banks 6.3 6.1 6.3 6.4 '6.9 6.9 7.3 8.0 7.1 6.7 6.4 6.6 36 Foreign official institutions 2.4 2.5 2.3 2.2 2.3 2.4 2.5 2.4 2.3 2.2 2.2 2.1 37 Lease-financing receivables 33.0 32.9 32.1 31.6 31.5 31.6 31.5 31.6 31.8 31.7 31.7 31.5 38 All other loans 41.4 42.7 41.3 42.7 42.9 41.9 42.9 44.3 45.1 45.7 45.0 43.7 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 • July 1992 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Billions of dollars, monthly averages 1991 1992 SSoouurrccee ooff ffuunnddss May June July Aug. Sept. Oct.r Nov.r Dec.r Jan.r Feb/ Mar.r Apr. Seasonally adjusted 1 Total nondeposit funds 260.8 250.4 248.5 246.9" 249.3r 264.3 267.4 280.4 284.7 289.0 289.6 291.5 2 Net balances due to related foreign offices 23.6 17.0 18.1 18.2 20.3 31.0 33.1 39.2 43.7 42.6 45.3 50.0 3 Borrowings from other than commercial banks in United States4 237.2 233.4 230.4 228.7r 229.0r 233.4 234.3 241.2 240.9 246.4 244.2 241.5 4 Domestically chartered banks 167.7 164.4 160.7 156.5 155.2 154.3 151.1 153.3 155.9 158.9 154.8 151.6 5 Foreign-related banks 69.5 69.0 69.7 72.1 73.8r 79.1 83.2 87.9 85.1 87.5 89.4 89.9 Not seasonally adjusted 6 Total nondeposit ninds2 267.0 251.4 244.7 243.6r 246.7r 265.6 271.7 278.6 280.6 289.7 293.4 288.8 7 Net balances due to related foreign offices3 26.2 16.5 14.8 16.4r 19.5r 30.6 34.0 42.7 44.4 42.8 45.7 48.6 8 Domestically chartered banks -.3 -3.7 -7.3 -7.2 -8.8 -7.2 -4.4 -3.8 -4.9 -1.0 -1.2 -5.4 9 Foreign-related banks 26.5 20.2 22.1 23.6 28.3 37.7 38.5 46.5 49.3 43.8 47.0 54.0 10 Borrowings from other than commercial banks in United States4 240.9 234.9 229.8 227.2 227.2r 235.0 237.6 235.9 236.2 246.9 247.7 240.2 11 Domestically chartered banks 170.9 164.6 158.9 154.8 154.1 155.1 155.4 152.0 151.6 159.4 157.9 149.7 12 Federal funds and security RP borrowings 168.1 161.7 155.7 151.1 150.6 151.9 152.1 148.8 148.1 155.9 154.6 146.3 13 Other 2.8 2.8 3.2 3.7 3.5 3.2 3.2 3.1 3.4 3.5 3.3 3.4 14 Foreign-related banks6 70.0 70.4 70.9 72.4 73. lr 79.9 82.3 83.9 84.6 87.4 89.8 90.5 MEMO Gross large time deposits1 15 Seasonally adjusted 442.5 441.5 437.5 438.2 436.0 429.5 426.1 423.9 416.0 413.7 406.9 399.8 16 Not seasonally adjusted 443.7 442.8 437.1 440.0 437.5 429.7 425.8 422.6 413.6 412.6 407.3 398.8 U.S. Treasury demand balances at commercial banks8 17 Seasonally adjusted 15.8 24.1 22.8 25.3 23.8 29.2 34.2 26.4 27.8 19.5 21.8 19.9 18 Not seasonally adjusted 19.9 23.6 20.7 17.2 26.9 28.7 28.5 25.4 33.1 25.2 20.1 17.7 1. Commercial banks are nationally and state-chartered banks in the fifty states 4. Borrowings through any instrument, such as a promissory note or due bill, and the District of Columbia, agencies and branches of foreign banks, New York given for the purpose of borrowing money for the banking business. This includes investment companies majority owned by foreign banks, and Edge Act corpora- borrowings from Federal Reserve Banks and from foreign banks, term federal tions owned by domestically chartered and foreign banks. funds, loan RPs, and sales of participations in pooled loans. Data in this table also appear in the Board's G.10 (411) release. For ordering 5. Figures are based on averages of daily data reported weekly by approxiaddress, see inside front cover. mately 120 large banks and quarterly or annual data reported by other banks. Data have been revised to reflect new seasonal adjustment factors and bench- 6. Figures are partly averages of daily data and partly averages of Wednesday marking to Call reports. Historical data may be obtained from the Banking and data. Money Market Statistics Section, Division of Monetary Affairs, Board of Gover- 7. Time deposits in denominations of $100,000 or more. Estimated averages of nors of the Federal Reserve System, Washington, DC 20551. daily data. 2. Includes federal funds, repurchase agreements (RPs), and other borrowing 8. U.S. Treasury demand deposits and Treasury tax-and-loan notes at comfrom nonbanks and net balances due to related foreign offices. mercial banks. Averages of daily data. 3. Reflects net positions of U.S. chartered banks, Edge act corporations, and U.S. branches and agencies of foreign banks with related foreign offices plus net positions with own International Banking Facilities (IBFs). 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 Series1 Billions of dollars 1991R 1992R AAccccoouunntt June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. ALL COMMERCIAL BANKING INSTITUTIONS2 1 Total assets 3,415.0 3,439.8 3,402.5 3,431.6 3,473.1 3,514.4 3,545.4 3,502.9 3,502.0 3,499.8 3,514.7 7 Loans and securities 2,939.5 2,944.5 2,933.3 2,952.0 2,982.5 3,005.1 3,026.7 3,015.4 3,015.7 3,019.0 3,021.9 3 Investment securities 640.3 649.7 654.2 663.4 687.3 696.7 705.5 705.3 711.1 719.7 723.3 4 U.S. government securities 477.2 487.4 491.9 500.0 522.6 530.7 538.0 539.6 546.7 556.5 561.7 5 Other 163.0 162.3 162.3 163.4 164.7 166.0 167.4 165.6 164.4 163.1 161.6 6 Trading account assets 30.1 33.4 31.3 32.3 35.3 36.4 33.8 38.0 37.7 39.2 38.5 7 Total loans 2,269.1 2,261.5 2,247.7 2,256.2 2,259.9 2,271.9 2,287.5 2,272.2 2,266.9 2,260.2 2,260.1 8 Interbank loans 161.5 168.9 161.1 163.3 169.5 173.6 175.1 178.0 175.8 170.4 167.0 9 Loans excluding interbank 2,107.6 2,092.6 2,086.7 2,093.0 2,090.4 2,098.3 2,112.4 2,094.2 2,091.1 2,089.8 2,093.1 10 Commercial and industrial 627.4 622.2 616.7 619.0 619.1 621.6 621.1 609.7 609.2 609.5 605.0 11 Real estate 868.7 867.2 868.4 867.9 872.3 872.5 872.8 873.6 872.8 873.6 880.9 1? Individual 371.0 369.4 369.4 368.8 365.3 363.5 369.9 367.0 362.6 359.7 359.9 13 All other 240.6 233.8 232.1 237.3 233.7 240.7 248.5 243.9 246.5 247.0 247.3 14 Total cash assets 210.6 212.7 197.3 203.7 206.0 224.2 229.2 201.5 204.8 203.8 208.5 15 Reserves with Federal Reserve Banks .. 29.3 24.3 22.6 26.1 25.9 24.7 29.2 23.7 27.4 28.5 23.7 16 Cash in vault 29.8 29.7 31.0 30.2 30.7 29.6 30.8 31.2 30.7 29.7 30.8 17 Cash items in process of collection ... 78.2 88.0 71.9 75.5 75.5 90.6 87.7 73.0 73.6 71.5 78.5 18 Demand balances at U.S. depository institutions 29.2 27.3 27.6 27.2 29.2 32.7 3333..33 2288..44 2299..00 2288..33 2288..77 19 Other cash assets 44.1 43.4 44.2 44.7 44.7 46.5 48.3 45.3 44.1 45.7 46.9 20 Other assets 264.9 282.5 271.9 275.9 284.5 285.1 289.5 286.0 281.5 277.0 284.3 21 Total liabilities 3,085.4 3,103.7 3,056.6 3,083.2 3,131.4 3,172.8 3,199.8 3,147.4 3,147.0 3,144.1 3,163.7 ?? Total deposits 2,312.5 2,349.9 2,326.7 2,325.2 2,345.5 2,388.6 2,392.6 2,339.5 2,347.1 2,354.3 2,359.3 23 Transaction accounts 611.5 639.8 612.5 614.4 629.7 672.2 685.4 646.2 654.8 666.0 676.3 24 Savings deposits (excluding checkable) 613.5 623.1 627.5 631.4 643.7 651.8 665577..77 666699..33 668811..99 669922..66 669944..22 75 Time deposits 1,087.5 1,087.0 1,086.7 1,079.4 1,072.1 1,064.6 1,049.5 1,023.9 1,010.4 995.8 988.9 76 Borrowings 499.9 489.4 467.5 484.8 504.5 491.1 504.8 508.0 505.3 496.0 500.8 77 Other liabilities 273.0 264.4 262.4 273.2 281.4 293.1 302.4 299.9 294.6 293.8 303.6 28 Residual (assets less liabilities)3 329.5 336.0 345.9 348.4 341.7 341.6 345.7 355.5 355.1 355.7 351.1 DOMESTICALLY CHARTERED COMMERCIAL BANKS4 29 Total assets 3,003.8 3,020.2 2,987.3 3,002.4 3,027.7 3,055.2 3,072.0 3,033.0 3,032.0 3,035.3 3,049.4 30 Loans and securities 2,655.6 2,663.8 2,651.9 2,660.4 2,677.0 2,691.6 2,698.6 2,691.4 2,691.2 2,700.7 2,698.7 31 Investment securities 601.9 610.8 613.7 621.6 640.0 646.5 652.2 653.4 660.6 668.8 673.0 3? U.S. government securities 456.8 466.7 470.3 477.3 494.7 500.7 506.4 509.8 518.4 528.0 532.9 33 Other 145.1 144.1 143.4 144.3 145.3 145.8 145.8 143.6 142.1 140.8 140.1 34 Trading account assets 30.1 33.4 31.3 32.3 35.3 36.4 33.8 38.0 37.7 39.2 38.5 35 Total loans 2,023.5 2,019.6 2,006.8 2,006.5 2,001.8 2,008.7 2,012.6 2,000.0 1,992.9 1,992.7 1,987.2 36 Interbank loans 136.7 146.2 141.3 142.3 144.1 150.1 149.4 154.4 151.2 149.2 138.6 37 Loans excluding interbank 1,886.8 1,873.5 1,865.5 1,864.2 1,857.6 1,858.6 1,863.2 1,845.6 1,841.7 1,843.5 1,848.5 38 Commercial and industrial 490.0 482.4 475.8 473.0 471.5 469.1 464.5 454.8 454.5 454.9 453.3 39 Real estate 816.9 814.8 815.6 814.9 818.6 818.8 819.0 819.3 818.3 819.2 826.8 40 Revolving home equity 66.0 66.6 67.3 68.1 69.2 69.4 70.0 70.8 70.4 70.3 71.0 41 Other real estate 750.9 748.2 748.3 746.8 749.4 749.4 749.0 748.5 747.8 748.8 755.8 47 Individual 371.0 369.4 369.4 368.8 365.3 363.5 369.9 367.0 362.6 359.7 359.9 43 All other 208.9 206.9 204.7 207.6 202.2 207.1 209.8 204.6 206.3 209.8 208.5 44 Total cash assets 185.2 187.7 171.5 176.4 179.0 197.5 201.7 176.0 179.8 177.8 182.4 45 Reserves with Federal Reserve Banks. 28.2 23.9 22.1 24.9 25.1 24.0 28.5 23.3 26.8 28.0 23.0 46 Cash in vault 29.8 29.7 31.0 30.1 30.7 29.6 30.7 31.1 30.7 29.7 30.8 47 Cash items in process of collection ... 76.2 86.3 70.3 74.0 73.7 88.4 85.6 71.2 71.8 69.0 76.0 48 Demand balances at U.S. depository institutions 27.3 25.5 25.7 25.1 27.3 30.7 31.1 2266..55 2277..22 2266..99 2277..22 49 Other cash assets 23.6 22.4 22.4 22.3 22.3 24.8 25.8 24.0 23.3 24.1 25.4 50 Other assets 163.1 168.7 163.9 165.6 171.6 166.2 171.7 165.6 161.0 156.7 168.3 51 Total liabilities 2,776.8 2,792.5 2,755.0 2,769.4 2,795.4 2,821.8 2,836.5 2,793.9 2,792.3 2,794.8 2,807.4 57 2,276.1 2,313.5 2,289.5 2,287.1 2,301.9 2,342.0 2,344.0 2,293.0 2,302.7 2,309.1 2,314.3 53 Transaction accounts 601.8 630.4 603.2 605.4 620.3 662.0 674.9 636.2 645.3 655.8 666.6 54 Savings deposits (excluding checkable) 609.8 619.4 623.8 627.6 639.9 664477..99 653.7 666655..33 667777..88 668888..55 669900..11 55 Time deposits 1,064.6 1,063.7 1,062.6 1,054.1 1,041.7 1,032.0 1,015.4 991.6 979.6 964.8 957.6 56 Borrowings 370.1 353.2 340.1 356.1 362.3 346.5 356.4 365.2 359.2 354.3 367.3 57 Other liabilities 130.6 125.8 125.4 126.2 131.2 133.3 136.1 135.7 130.4 131.4 125.8 58 Residual (assets less liabilities)3 226.9 227.7 232.4 233.0 232.3 233.4 235.5 239.1 239.6 240.4 242.0 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, DC 20551. Data in this and quarter-end condition reports. 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 • July 1992 1.26 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS1 Millions of dollars, Wednesday figures 1992 AAccccoouunntt Mar. 4r Mar. IT Mar. 18 Mar. 25 Apr. 1 Apr. 8 Apr. 15 Apr. 22 Apr. 29 ASSETS 1 Cash and balances due from depository institutions 111,597 106,470 107,885 104,112 135,173 99,114 131,036 101,414 108,229 2 U.S. Treasury and government securities 239,697 239,516 238,298 239,239" 241,435 241,963 242,981 239,287 237,027 3 Trading account 22,213 20,824 21,764 23,306 20,792 22,556 23,912 21,861 22,700 4 Investment account 217,483 218,691 216,534 215,932" 220,643 219,408 219,068 217,426 214,327 5 Mortgage-backed securities 81,617 81,442 80,522 80,670" 8811,,441100 81,941 81,178 80,780 80,270 All others, by maturity 6 One year or less 24,497 25,423 25,725 26,089 26,992 27,498 28,490 26,899 25,777 7 One year through five years 63,212 63,621 62,899 62,741 63,417 61,794 61,621 62,612 62,080 8 More than five years 48,157 48,205 47,388 46,432 48,824 48,175 47,780 47,135 46,200 9 Other securities 54,423 53,988 53,739 54,286" 54,582 54,797 55,009 55,004 54,507 10 Trading account 1,256 1,188 1,286 1,690 1,434 1,104 1,153 1,513 1,670 11 Investment account 53,166 52,800 52,453 52,5%" 53,148 53,693 53,855 53,491 52,837 12 State and political subdivisions, by maturity 22,155 22,152 22,116 22,064 21,897 21,898 21,867 21,822 21,855 13 One year or less 3,325 3,361 3,338 3,322 3,303 3,320 3,336 3,289 3,313 14 More than one year 18,830 18,790 18,779 18,742 18,594 18,578 18,531 18,533 18,541 15 Other bonds, corporate stocks, and securities 31,011 30,649 30,337 30,532" 31,251 31,795 31,988 31,669 30,982 16 Other trading account assets 12,456 12,346 12,281 11,804 11,646 12,910 12,991 12,761 11,681 17 Federal funds sold3 106,866 94,426 98,102 93,869 96,426 96,007 117,240 98,686 93,099 18 To commercial banks in the United States 69,704 60,048 63,756 60,083 65,371 65,531 75,469 59,218 58,726 19 To nonbank brokers and dealers 30,993 27,606 28,587 28,536 25,684 25,893 35,981 35,087 29,144 20 To others 6,168 6,772 5,759 5,250 5,370 4,583 5,790 4,381 5,228 21 Other loans and leases, gross 1,006,001 1,003,355 l,003,121r 1,002,180" 1,007,314 997,576 1,002,957 9%,203 999,441 22 Commercial and industrial 290,632 289,184 289,751r 289,079" 289,720 287,264 288,223 286,570 286,586 23 Bankers acceptances and commercial paper 1,751 1,750 l,631r 1,475" 1,377 1,403 1,493 1,411 1,445 24 All other 288,880 287,434 288,120" 287,604" 288,343 285,861 286,730 285,159 285,141 25 U.S. addressees 287,563 286,185 286,892r 286,339" 287,057 284,585 285,406 283,785 283,718 26 Non-U.S. addressees 1,317 1,250 l,227r 1,265" 1,286 1,276 1,324 1,374 1,424 27 Real estate loans 402,113 403,276 402,021r 400,734" 401,798 402,221 402,103 401,077 403,178 28 Revolving, home equity 41,438 41,367 41,337r 41,321 41,392 41,368 41,516 41,616 41,766 29 All other 360,675 361,909 360,684r 359,412" 360,406 360,853 360,588 359,461 361,411 30 To individuals for personal expenditures 182,880 182,228 182,160" 182,260" 181,216 180,410 180,411 180,988 181,581 31 To financial institutions 43,923 44,165 44,474r 44,946 45,351 43,898 43,084 42,581 43,244 32 Commercial banks in the United States 19,082 19,837 20,170" 20,428 19,699 19,178 18,903 19,155 19,092 33 Banks in foreign countries 1,819 1,490 1,710 2,020 2,069 1,928 1,845 1,774 2,172 34 Nonbank financial institutions 23,021 22,839 22,594 22,499 23,583 22,791 22,337 21,652 21,981 35 For purchasing and carrying securities 14,980 13,231 13,751 14,217 15,561 13,117 17,393 14,021 14,096 36 To finance agricultural production 5,805 5,804 5,784 5,784 5,810 5,826 5,844 5,870 5,895 37 To states and political subdivisions 17,193 17,116 17,118 17,083 17,031 16,961 16,889 16,812 16,823 38 To foreign governments and official institutions 855 861 915 852 904 920 892 863 881 39 All other loans 21,747 21,631 21,346r 21,439" 24,135 21,210 22,420 21,745 21,553 40 Lease-financing receivables 25,873 25,857 25,803r 25,787" 25,789 25,749 25,698 25,677 25,604 41 LESS: Unearned income 3,085 3,059 3,040r 3,030" 2,970 2,959 2,966 2,955 2,960 42 Loan and lease reserve 38,551 38,587 38,444 38,169 37,494 37,583 37,822 37,608 37,659 43 Other loans and leases, net 964,365 961,709 961,638r 960,981" 966,851 957,034 962,169 955,640 958,822 44 Other assets 153,192 151,354 151,595r 145,716" 157,066 156,927 157,557 152,514 155,483 45 Total assets 1,642,595 1,619,810 1,623,539" 1,610,006" 1,663,177 1,618,753 1,678,982 1,615,305 1,618,847 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 1992 Mar. 4r Mar. Ur Mar. 18 Mar. 25 Apr. 1 Apr. 8 Apr. 15 Apr. 22 Apr. 29 LIABILITIES 46 Deposits 1,139,926 1,127,578 l,117,010r 1,114,260"^ 1,164,482 1,134,881 1,180,113 1,116,397 1,117,130 47 Demand deposits 249,304 240,638 237,116r 236,942r 276,097 240,832 286,074 237,798 244,697 48 Individuals, partnerships, and corporations 198,899 192,683 191,250 188,978 216,902 195,793 216,531 189,504 194,4% 49 Other holders 50,405 47,955 45,866r 47,963r 59,194 45,039 69,543 48,294 50,200 50 States and political subdivisions 7.780 7,182 7,645 8,059 8,602 7,434 8,293 8,658 8.107 51 U.S. government 2,149 1,803 1,671 1,535 3,857 1,854 14,398 3,750 3,544 52 Depository institutions in the United States ... 22,341 21,645 20,922 20,999 28,581 20,722 28,985 20,378 21,629 5 5 4 3 F B o a r n e k i s g n i n g f o o v r e e r i n gn m e c n o t u s n t a r n i d e s official institutions .. 4,6 5 4 2 8 4 4,4 9 9 5 2 8 4,8 5 3 2 7 4 5,4 6 2 4 1 3 5, 7 4 4 8 7 6 4,8 57 4 4 9 5,5 7 5 0 4 3 4, 6 8 2 8 9 3 5. 6 1 0 08 0 55 Certified and officers' checks 12,963 11,874 10,266r 11,307r 11,921 9,606 11,609 9,9% 11,213 56 Transaction balances other than demand deposits5 . 106,718 103,847 103,223 102,384 106,995 107,843 111,624 105,872 101,447 57 Nontransaction balances 783,904 783,093 776,671 774,935 781,390 786,206 782,415 772,727 770,986 6 5 5 0 8 9 O In t d S h i t e v a r i t d e h s u o a l a l d n s e , d r s p p a o r l t i n ti e c r a s l h i s p u s b , d a iv n i d s i c o o n r s p orations 7 2 5 3 6 1 2 , , , 3 1 7 5 1 8 3 8 6 75 3 2 0 2 6 , , , 5 5 2 7 2 9 0 3 3 7 2 4 3 5 5 1 , , , 7 3 3 6 2 5 4 0 1 r r r 7 3 2 4 5 4 0 , , , 3 1 7 5 5 8 5 4 lr r r 7 2 5 3 5 0 1 , , , 0 1 2 2 6 2 7 4 6 75 3 25 5 0 , , , 2 5 7 6 0 0 6 6 0 75 3 2 1 5 1 , , , 1 0 2 9 4 2 4 8 0 74 3 2 1 1 5 , , , 4 2 1 9 3 0 4 3 3 73 3 2 9 5 1 , , , 8 1 1 1 5 7 2 7 4 61 U.S. government 1.781 1,819 1,824 1,843 1,985 2,144 2,171 2,191 2,131 62 Depository institutions in the United States ... 4,305 4,168 3,437 3,274 2,873 3,015 3,729 3,663 3,614 63 Foreign governments, official institutions, and banks . 279 290 296 309 279 275 273 276 272 64 Liabilities for borrowed money6 282,7770 269,8900 284,985r 270,744r 274,977 259,6530 275,9050 277,3940 281,6330 65 Borrowings from Federal Reserve Banks 350 0 551 66 Treasury tax and loan notes . 14,545 10,049 20,446 13,125 4,543 2,895 4,105 24,414 28,063 67 Other liabilities for borrowed money 268,233 259,842 264,189r 257,619r 269,883 256,757 271,800 252,980 253,571 68 Other liabilities (including subordinated notes and debentures) 99,137 101,613 100,608r 104,002r 102,213 102,1% 101,209 98,667 97,945 69 Total liabilities 1,521,840 1,499,081 l,502,603r 1,489,006' 1,541,672 1,496,730 1,557,227 1,492,458 1,496,708 70 Residual (total assets less total liabilities)8 120,755 120,729 120,937 121,000r 121,505 122,023 121,755 122,848 122,139 7 7 7 7 7 7 7 1 2 3 4 5 6 7 T T F L M N o o i o e E m O C t r t a M a e e o n t l d i O h s m g u d l e n o e s e m r o a p b t e n l o o d r r s s a c r i o n a i e t a s u n c l l h d a t i r t a n i e c l n g d e r a d h e a m t i d s i n e n i o t s t o s d u t , e i u n a t g x s u f ts t r f t t r e o i i i l o o n s a i f a s n d l , t s e $ e d a 1 s a d 1 0 b 0 t j 0 o r u , o 0 s U a 0 t d e 0 . S d o , . r p r e l m u s s o i d re s e e n c t u s r " i ti . e .. s 1,3 1 - 2 3 5 4 3 0 8 1 , , , , , 6 2 7 6 6 2 5 5 6 2 5 9 2 3 0 2 5 6 0 1 1 1,3 1 - 2 2 5 3 3 3 6 1 , , , , , 4 7 2 6 6 2 5 0 4 4 9 6 2 3 6 7 7 2 0 3 0 1,3 1 - 2 2 5 3 3 1 3 1 , , , , , 4 1 5 6 2 6 5 9 3 7 9 1 2 1 2 1 3 2 9 7 6 ' l,3 1 2 2 5 0 3 2 1 2 , , , , , 8 5 1 6 2 5 2 6 4 0 8 7 2 5 7 3 7 6 9 8 6 r r 1,3 1 - 2 2 5 3 2 6 1 1 , , , , , 3 9 3 1 6 2 5 6 1 1 3 0 7 2 5 1 2 2 5 6 9 1,3 1 - 2 1 5 6 2 8 3 1 , , , , , 6 6 5 5 1 6 5 2 4 8 4 9 1 8 2 4 4 5 7 4 3 1,3 1 - 2 3 5 7 2 6 2 1 , , , , , 0 8 8 2 6 2 5 8 7 0 7 0 8 2 7 5 5 2 4 3 2 1,3 1 - 2 2 5 4 2 3 0 1 , , , , , 9 5 8 5 6 1 5 3 6 7 2 9 8 0 8 8 2 3 1 4 8 1,3 1 - 2 1 5 6 2 7 0 1 , , , , , 7 9 9 4 2 6 5 2 1 3 1 0 9 1 0 2 6 3 9 1 9 1. Components may not sum to totals because of rounding. 10. Affiliates include a bank's own foreign branches, nonconsolidated nonbank 2. Includes certificates of participation, issued or guaranteed by agencies of the affiliates of the bank, the bank's holding company (if not a bank), and noncon- U.S. government, in pools of residential mortgages. solidated nonbank subsidiaries of the holding company. 3. Includes securities purchased under agreements to resell. 11. Credit extended by foreign branches of domestically chartered weekly 4. Includes allocated transfer risk reserve. reporting banks to nonbank U.S. residents. Consists mainly of commercial and 5. Includes negotiable order of withdrawal accounts (NOWs), automatic trans- industrial loans, but includes an unknown amount of credit extended to other than fer service (ATS), and telephone and preauthorized transfers of savings deposits. nonfinancial businesses. 6. Includes borrowings only from other than directly related institutions. NOTE. Data that formerly appeared in table 1.28, Assets and Liabilities of Large 7. Includes federal funds purchased and securities sold under agreements to Weekly Reporting Commercial Banks in New York City, can be obtained from the repurchase. Board's H.4.2 (504) weekly statistical release. For ordering address, see inside 8. This balancing item is not intended as a measure of equity capital for use in front cover. capital-adequacy analysis. 9. Excludes loans to and federal funds transactions with commercial banks in the United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • July 1992 1.30 LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS Assets and Liabilities1 Millions of dollars, Wednesday figures 1992 AAccccoouunntt Mar. 4 Mar. 11 Mar. 18 Mar. 25 Apr. 1 Apr. 8 Apr. 15 Apr. 22 Apr. 29 1 Cash and balances due from depository institutions 16,705 16,667 16,850 16,881 17,220 16,557 18,322 16,177 16,998 2 U.S. Treasury and government agency securities 20,005 19,865 19,5% 19,541 20,004 20,521 20,440 19,749 19,737 3 Other securities 9,021r 8,983 9,150 9,065 8,841 8,884 8,808 8,851 8,670 4 Federal funds sold1 13,795 12,652 12,233 9,194 12,271 11,616 13,137 16,622 14,124 5 To commercial banks in the United States ... 4,720 4,665 5,407 3,061 5,500 4,288 4,705 6,026 5,959 6 Toothers2 9,075 7,987 6,827 6,133 6,770 7,329 8,432 10,5% 8,165 7 Other loans and leases, gross 164,080r 161,985 162,906 163,909 162,9% 161,563 162,655 161,665 162,252 8 Commercial and industrial 98,171r 97,341 97,764 97,311r 97,785 97,718 97,292 %,665 95,446 9 Bankers acceptances and commercial paper 2,803r 2,601 2,507 2,455 2,592 2,516 2,531 2,401 2,335 10 All other 95,369r 94,740 95,257 94,855r 95,193 95,202 94,761 94,264 93,111 11 U.S. addressees 92,483r 91,875 92,376 92,015r 92,288 92,274 91,840 91,307 90,237 12 Non-U.S. addressees 2,885r 2,865 2,881 2,840 2,905 2,928 2,922 2,957 2,873 13 Loans secured by real estate 36,873 36,783 36,737 36,868r 36,256 36,122 36,137 36,284 36,658 14 To financial institutions 20,718 19,966 19,595 20,605 21,201 20,752 21,200 21,140 21,918 15 Commercial banks in the United States.. 7,854 7,687 7,407 7,476 7,479 7,682 8,315 7,951 8,329 16 Banks in foreign countries 1,681 1,493 1,598 1,687 1,748 1,677 1,720 1,568 1,689 17 Nonbank financial institutions 11,183 10,787 10,590 11,442 11,974 11,393 11,166 11,621 11,900 18 For purchasing and carrying securities 5,841 5,479 6,319 6,614r 5,385 4,361 5,369 5,165 5,726 19 To foreign governments and official institutions 354 381 369 363 359 376 347 326 324 20 All other 2,123 2,036 2,122 2,148 2,011 2,234 2,309 2,086 2,179 21 Other assets (claims on nonrelated parties) .. 28,475r 30,229 28,161 27,542 27,380 27,665 27,897 27,915 28,216 22 Total assets3 296,020r 291,646 293,101 288,400 294,648 289,267 295,290 291,034 288,894 23 Deposits or credit balances due to other than directly related institutions 97,864 99,802 101,485 101,039 100,750 97,576 %,445 %,542 95,633 24 Demand deposits 3,753 3,529 3,516 3,638 3,752 3,651 4,118 3,330 3,333 25 Individuals, partnerships, and corporations 2,731 2,729 2,804 2,882 2,951 2,766 2,%3 2,533 2,618 26 Other 1,022 800 713 756 801 885 1,155 797 715 27 Nontransaction accounts 94,112 96,273 97,%8 97,401 %,999 93,924 92,327 93,212 92,300 28 Individuals, partnerships, and corporations 66,395 68,454 69,857 69,699 69,435 67,033 65,961 67,177 66,128 29 Other 27,717 27,819 28,112 27,702 27,563 26,891 26,366 26,035 2266,,117722 30 Borrowings from other than directly related institutions in,7ir 104,905 104,804 99,924 105,253 104,494 110,422 106,323 94,141 31 Federal funds purchased 61,262r 49,828 49,472 45,861 51,167 51,652 57,181 45,753 43,892 32 From commercial banks in the United States 25,122 17,501 18,051 16,743 21,399 19,802 24,757 14,650 15,542 33 From others 36,140r 32,326 31,421 29,118 29,768 31,850 32,424 31,103 28,350 34 Other liabilities for borrowed money 50,449" 55,078 55,332 54,063 54,086 52,842 53,241 60,571 50,249 35 To commercial banks in the United States 12,917 13,945 14,537 14,520 13,484 13,828 13,314 13,350 12,363 36 To others 37,532r 41,133 40,795 39,543 40,602 39,014 39,928 47,221 37,886 37 Other liabilities to nonrelated parties 25,763r 25,939 24,329 24,183 23,597 24,428 24,664 24,914 26,365 38 Total liabilities6 296,020r 291,646 293,101 288,400 294,648 289,267 295,290 291,034 288,894 MEMO 39 Total loans (gross) and securities, adjusted .. 194,328r 191,134 191,071 191,171 191,132 190,615 192,021 192,911 190,4% 40 Net due to related institutions abroad 16,744r 19,735 18,279 20,985 19,111 20,309 19,728 23,201 33,860 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 1992 IItteemm DD 1199 ee 88 cc 77 .. DD 1199 ee 88 cc 88 .. DD 1199 ee 88 cc 99 .. DD 1199 ee 99 cc 00 .. DD 1199 ee 99 cc 11 .. Oct. Nov. Dec. Jan. Feb. Mar. Commercial paper (seasonally adjusted unless noted otherwise) 11 AAllll iissssuueerrss 358,997 458,464 525,831 561,142 530,300 532,342 534,969 530,300 533,342 527,941r 539,749 FFiinnaanncciiaall ccoommppaanniieess22 DDeeaalleerr--ppllaacceedd ppaappeerr 22 TToottaall 102,742 159,777 183,622 215,123 214,445 219,938 218,149 214,445 220,208 210,686r 219,287 33 BBaannkk--rreellaatteedd ((nnoott sseeaassoonnaallllyy aaddjjuusstteedd))44 1,428 1,248 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. DDiirreeccttllyy ppllaacceedd ppaappeerr 44 TToottaall 174,332 194,931 210,930 199,835 183,195 180,179 181,582 183,195 180,224 178,995 181,485 55 BBaannkk--rreellaatteedd ((nnoott sseeaassoonnaallllyy aaddjjuusstteedd))33 43,173 43,155 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 66 NNoonnffiinnaanncciiaall ccoommppaanniieess66 81,923 103,756 131,279 146,184 132,660 132,225 135,238 132,660 132,910 138,260 138,977 Bankers dollar acceptances (not seasonally adjusted)7 7 Total 70,565 66,631 62,972 54,771 43,770 44,910 43,947 43,770 43,112 41,375r 39,309 Holder 8 Accepting banks 10,943 9,086 9,433 9,017 11,017 9,876 10,750 11,017 11,291 10,578 9,640 9 Own bills 9,464 8,022 8,510 7,930 9,347 8,306 8,754 9,347 9,273 8,831 8,248 10 Bills bought 1,479 1,064 924 1,087 1,670 1,570 1,996 1,670 2,018 1,747 1,392 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 1,862 1,705 1,739 1,574 1,364 1,492 13 Others 58,658 56,052 52,473 44,836 31,014 33,172 31,491 31,014 30,247 29,423r 28,177 Basis 14 Imports into United States 16,483 14,984 15,651 13,0% 12,843 13,265 13,472 12,843 12,995 12,853r 11,569 15 Exports from United States 15,227 14,410 13,683 12,703 10,351 11,105 10,486 10,351 9,740 9,252r 9,403 16 All other 38,855 37,237 33,638 28,973 20,577 20,541 19,982 20,577 20,377 19.2691 18,337 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 Av r e a r te a ge 1989—Jan. 1 10.50 1989 10.87 1990—Jan 10.11 1991—Jan 9.52 Feb. 10 11.00 1990 10.01 Feb. 10.00 Feb 9.05 24 11.50 1991 8.46 Mar 10.00 Mar 9.00 June 5 11.00 Apr 10.00 Apr 9.00 July 31 10.50 1989—Jan. 10.50 May 10.00 May 8.50 Feb. 10.93 June 10.00 June 8.50 1990—Jan. 8 10.00 Mar. 11.50 July 10.00 July 8.50 Apr. 11.50 Aug 10.00 Aug 8.50 1991—Jan. 2 9.50 May 11.50 Sept 10.00 Sept 8.20 Feb. 4 9.00 June 11.07 Oct. 10.00 Oct 8.00 May 1 8.50 July 10.98 Nov 10.00 Nov 7.58 Sept. 13 8.00 Aug. 10.50 Dec 10.00 Dec 7.21 Nov. 6 7.50 Sept. 10.50 Dec. 23 6.50 Oct. 10.50 1992—Jan 6.50 Nov. 10.50 Feb 6.50 Dec. 10.50 Mar 6.50 Apr 6.50 May 6.50 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 Domestic Nonfinancial Statistics • July 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. 1992 1992, week ending IItteemm 11998899 11999900 11999911 Jan. Feb. Mar. Apr. Mar. 27 Apr. 3 Apr. 10 Apr. 17 Apr. 24 MONEY MARKET INSTRUMENTS 1 Federal funds1'2'3 9.21 8.10 5.69 4.03 4.06 3.98 3.73 3.94 4.09 3.98 3.65 3.47 2 Discount window borrowing '4 6.93 6.98 5.45 3.50 3.50 3.50 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 4.11 4.11 4.28 4.02 4.27 4.25 4.11 3.95 3.95 4 3-month 8.99 8.06 5.87 4.07 4.11 4.30 4.04 4.29 4.26 4.12 3.96 3.97 5 6-month 8.80 7.95 5.85 4.06 4.13 4.38 4.13 4.39 4.34 4.18 4.06 4.08 Finance paper, directly placed3,5,1 6 1-month 8.99 8.00 5.73 3.99 4.01 4.18 3.89 4.16 4.13 3.99 3.80 3.81 7 3-month 8.72 7.87 5.71 3.99 4.02 4.20 3.91 4.19 4.15 4.00 3.79 3.84 8 6-month 8.16 7.53 5.60 3.95 3.96 4.15 3.89 4.17 4.14 4.00 3.80 3.79 Bankers acceptances3,5,8 9 3-month 8.87 7.93 5.70 3.97 4.00 4.19 3.92 4.19 4.12 4.01 3.84 3.87 10 6-month 8.67 7.80 5.67 3.% 4.02 4.29 3.99 4.31 4.22 4.06 3.89 3.95 Certificates of deposit, secondary marker9 11 1-month 9.11 8.15 5.82 4.07 4.05 4.23 3.97 4.22 4.15 4.05 3.90 3.93 12 3-month 9.09 8.15 5.83 4.05 4.07 4.25 4.00 4.25 4.19 4.08 3.93 3.% 13 6-month 9.08 8.17 5.91 4.07 4.13 4.42 4.13 4.42 4.34 4.17 4.04 4.11 14 Eurodollar deposits, 3-month3'10 9.16 8.16 5.86 4.06 4.05 4.26 4.05 4.26 4.21 4.10 4.00 4.04 U.S. Treasury bills Secondary market3'5 15 3-month 8.11 7.50 5.38 3.80 3.84 4.04 3.75 4.03 4.01 3.80 3.63 3.68 16 6-month 8.03 7.46 5.44 3.87 3.93 4.18 3.87 4.18 4.11 3.89 3.74 3.84 17 1-year 7.92 7.35 5.52 3.95 4.08 4.40 4.09 4.40 4.27 4.06 3.95 4.11 Auction average1' • 18 3-month 8.12 7.51 5.42 3.84 3.84 4.05 3.81 4.08 4.08 3.95 3.60 3.69 19 6-month 8.04 7.47 5.49 3.88 3.94 4.19 3.93 4.27 4.19 4.02 3.73 3.86 20 1-year 7.91 7.36 5.54 3.84 4.01 4.37 4.34 n.a. n.a. 4.34 n.a. n.a. U.S. TREASURY NOTES AND BONDS Constant maturities12 21 1-year 8.53 7.89 5.86 4.15 4.29 4.63 4.30 4.64 4.50 4.25 4.14 4.32 22 2-year 8.57 8.16 6.49 4.96 5.21 5.69 5.34 5.75 5.53 5.26 5.21 5.40 23 3-year 8.55 8.26 6.82 5.40 5.72 6.18 5.93 6.26 6.09 5.81 5.77 6.02 24 5-year 8.50 8.37 7.37 6.24 6.58 6.95 6.78 7.00 6.86 6.69 6.65 6.89 25 7-year 8.52 8.52 7.68 6.70 6.96 7.26 7.15 7.29 7.20 7.09 7.03 7.24 26 10-year 8.49 8.55 7.86 7.03 7.34 7.54 7.48 7.56 7.49 7.40 7.38 7.58 27 30-year 8.45 8.61 8.14 7.58 7.85 7.97 7.96 7.97 7.92 7.89 7.89 8.04 Composite13 28 Over 10 years (long-term) 8.58 8.74 8.16 7.48 7.78 7.93 7.88 7.93 7.87 7.80 7.78 7.% STATE AND LOCAL NOTES AND BONDS Moody's series1* 29 Aaa 7.00 6.96 6.56 6.13 n.a. n.a. n.a. 6.50 6.40 6.43 6.35 6.29 30 Baa 7.40 7.29 6.99 6.47 n.a. n.a. n.a. 6.94 6.90 6.91 6.84 6.78 31 Bond Buyer series 7.23 7.27 6.92 6.54 6.74 6.76 6.67 6.77 6.73 6.66 6.60 6.68 CORPORATE BONDS 32 Seasoned issues, all industries16 9.66 9.77 9.23 8.64 8.75 8.81 8.77 8.81 8.78 8.75 8.73 8.80 Rating group 33 Aaa 9.26 9.32 8.77 8.20 8.29 8.35 8.33 8.36 8.35 8.32 8.28 8.33 34 Aa 9.46 9.56 9.05 8.51 8.67 8.73 8.69 8.73 8.69 8.66 8.64 8.73 35 A 9.74 9.82 9.30 8.72 8.83 8.89 8.87 8.90 8.86 8.84 8.82 8.90 36 Baa 10.18 10.36 9.80 9.13 9.23 9.25 9.21 9.25 9.21 9.19 9.16 9.24 37 A-rated, recently offered utility bonds17 9.79 10.01 9.32 8.57 8.79 8.91 8.82 8.87 8.77 8.78 8.81 8.90 MEMO: Dividend-price ratio18 38 Preferred stocks 9.05 8.96 8.17 7.54 7.54 7.64 7.75 7.76 7.78 7.77 7.75 7.76 39 Common stocks 3.45 3.61 3.25 2.90 2.94 3.01 3.02 3.01 3.03 3.11 2.95 3.01 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 New York 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 ten years, including one 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 governmental 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 ordering 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 11999900 11999911 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Prices and trading volume (averages of daily figures) Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 180.13 183.66 206.35 213.33 212.55 213.10 213.25 214.26 229.34 228.12 225.21 224.55 2 Industrial 228.04 226.06 258.16 268.22 266.21 265.68 264.89 266.01 286.62 286.09 282.36 281.60 3 Transportation 174.90 158.80 173.97 178.42 177.99 187.45 188.52 185.47 201.55 205.53 204.09 201.28 4 Utility 94.33 90.72 92.64 92.38 93.72 95.25 96.78 98.08 99.31 96.19 94.16 94.92 5 Finance 162.01 133.21 150.84 157.70 157.69 158.94 159.78 159.96 174.50 174.05 173.49 171.05 6 Standard & Poor's Corporation (1941-43 = 10)' 323.05 335.01 376.20 389.40 387.20 386.88 385.87 388.51 416.08 412.56 407.36 407.41 7 American Stock Exchange (Aug. 31, 1973 = 50? 356.67 338.32 360.32 367.38 369.55 376.82 382.38 373.08 409.08 413.74 404.09 388.06 Volume of trading (thousands of shares) 8 New York Stock Exchange 165,568 156,359 179,411 171,490 163,242 177,502 187,191 197,914 239,903 226,476 185,581 206,251 9 American Stock Exchange 13,124 13,155 12,486 12,514 13,378 13,764 14,487 17,475 20,444 18,126 15,654 14,096 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers3 34,320 28,210 36,660 32,240 33,170 33,360 34,840 36,660 36,350 38,200 39,090 38,750 Free credit balances at brokers4 11 Margin accounts 7,040 8,050 8,290 7,040 6,950 6,965 7,040 8,290 7,865 7,620 7,350 8,780 12 Cash accounts 18,505 19,285 19,255 17,040 17,595 17,100 17,780 19,255 19,990 20,370 19,305 16,400 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 • July 1992 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1991 1992 AAccccoouunntt 11998899 11999900 May June July Aug.r Sept.r Oct/ Nov/ Dec/ Jan/ Feb. SAIF-insured institutions 1 Assets 1,249,055 1,084,821 1,020,677 1,001,582 984,964r 972,521 949,007 937,799 934,556 920,087 909,218 906,329 2 Mortgages 733,729 633,385 605,947 5%,022 586,302r 578,294 566,419 560,768 557,231 555500,,997711 554455,,668899 554411,,664433 3 Mortgage-backed securities 170,532 155,228 141,582 139,536 137,098 135,751 135,246 134,957 133,344 112299,,555544 127,461 127,802 4 Contra-assets to mortgage assets1 . 25,457 16,897 14,438 14,625 14,245r 14,037 13,128 12,442 12,403 12,317 11,853 11,562 5 Commercial loans 32,150 24,125 21,724 20,645 20,301 20,390 18,166 18,148 17,509 17,540 16,846 16,068 6 Consumer loans 58,685 48,753 45,827 45,174 44,352 43,258 42,422 43,061 42,761 41,773 40,942 39,985 7 Contra-assets to nonmortgage loans . 3,592 1,939 1,739 1,745 1,676 1,545 1,398 1,770 1,153 1,254 1,121 1,068 8 Cash and investment securities 166,053 146,644 134,012 130,443 130,262r 132,009 125,911 120,765 123,421 120,122 118,532 121,985 9 Other5 116,955 95,522 87,757 86,133 82,570" 78,403 75,369 73,918 73,846 73,698 72,722 71,512 10 Liabilities and net worth . 1,249,055 1,084,821 1,020,677 1,001,582 984,964r 972,521 949,007 937,799 934,556 920,087 909,218 906,329 11 Savings capital 945,656 835,4% 801,678 792,923 775,434 763,751 749,376 741,360 737,554 732,069 721,099 717,034 12 Borrowed money 252,230 197,353 159,625 151,474 146,901 142,908 132,727 127,356 125,146 121,924 119,954 118,537 13 FHLBB 124,577 100,391 82,312 78,966 76,104 74,424 68,816 66,609 66,005 65,843 62,637 63,133 14 Other 127,653 %,%2 77,313 72,508 70,797 68,484 63,911 60,747 59,141 56,081 57,317 55,404 15 Other 27,556 21,332 23,647 20,480 21,654 22,649 19,080 20,390 21,695 17,468 18,995 21,365 16 Net worth 23,612 30,640 35,720 36,705 40,975r 43,214 47,824 48,699 50,159 48,640 49,170 49,392 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. Starting in "held for sale," and specific reserves and other valuation allowances. the December 1991 issue, data for life insurance companies are shown in a special 2. Contra-assets are credit-balance accounts that must be subtracted from the table of quarterly data. 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 Nov. Dec. Jan. Feb. Mar. Apr. U.S. budget2 1 Receipts, total 990,701 1,031,308 1,054,260 73,194 103,662 104,091 62,056 72,917 138,430 2 On-budget 727,035 749,652 760,377 50,898 80,172 79,937 38,290 46,353 103,405 3 Off-budget 263,666 281,656 293,883 22,2% 23,490 24,154 23,766 26,564 35,025 4 Outlays, total 1,144,020 1,251,766 1,323,750 117,878r 106,199 119,742 111,230' 123,629' 123,821 5 On-budget 933,107 1,026,711 1,082,067 95,585r 95,500 97,188' 88,006' 100,700 102,795 6 Off-budget 210,911 225,065 241,685 22,293 10,698 22,553 23,224 22,929' 21,026 7 Surplus or deficit (-), total -153,319 -220,469 -269,492 -44,684r -2,537 -15,650 -49,174' -50,712' 14,609 8 On-budget -206,072 -277,059 -321,690 -44,687r -15,328 -17,251r -49,716' -54,347 610 9 Off-budget 52,753 56,590 52,198 3 12,792 1,601 542 3,635' 13,999 Source of financing (total) 10 Borrowing from the public 141,806 220,101 276,802 25,641 22,825 11,449 20,938 50,138 6,292 11 Operating cash (decrease, or increase (-)) ... 3,425 818 -1,329 28,195 -24,258 925 30,975 -2,%1 -21,262 12 Other1 8,088 -451 -5,981 -9,152r 3,970 3,276 -2,739' 3,535' 361 MEMO 13 Treasury operating balance (level, end of period) 40,973 40,155 41,484 24,524 48,782 47,857 16,882 19,843 41,105 14 Federal Reserve Banks 13,452 7,638 7,928 6,317 17,697 10,828 5,477 6,846 4,692 15 Tax and loan accounts 27,521 32,517 33,556 18,207 31,085 37,028 11,405 12,997 36,413 1. Components may not sum to totals because of rounding. in the International Monetary Fund (IMF); loans to the IMF; other cash and 2. In accordance with the Balanced Budget and Emergency Deficit Control Act monetary assets; accrued interest payable to the public; allocations of SDRs; of 1985, all former off-budget entries are now presented on-budget. Federal deposit funds; miscellaneous liability (including checks outstanding) and asset Financing Bank (FFB) activities are now shown as separate accounts under the accounts; seigniorage; increment on gold; net gain or loss for U.S. currency agencies that use the FFB to finance their programs. The act also moved two valuation adjustment; net gain or loss for IMF loan-valuation adjustment; and social security trust funds (federal old-age survivors insurance and federal profit on sale of gold. disability insurance trust fund) off-budget. The Postal Service is included as an SOURCES. Monthly Treasury Statement of Receipts and Outlays of the U.S. off-budget item in the Monthly Treasury Statement beginning in 1990. Government (MTS) and the Budget of the U.S. Government. 3. Includes special drawing rights (SDRs); reserve position on the U.S. quota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance All 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Calendar year Fiscal Fiscal Source or type year year 1990 1990 1991 HI H2 HI Feb. Mar. Apr. RECEIPTS 1 All sources 1,031,308 1,054,260 548,861 503,123 540,504 519,288 62,056 72,917 138,430 2 Individual income taxes, net 466,884 467,827 243,087 230,745 232,389 233,983 22,213 19,503 67,993 3 Withheld 388,384 404,152 190,219 207,469 193,440 210,552 33,941 35,728 30,112 4 Presidential Election Campaign Fund . 32 32 30 3 31 1 5 7 -6 5 Nonwithheld 151,285 142,693 117,675 31,728 109,405 33,2% 1,056 3,925 56,862 6 Refunds 72,817 79,050 64,838 8,455 70,487 9,867 12,789 20,157 18,975 Corporation income taxes 7 Gross receipts 110,017 113,599 58,830 54,044 58,903 54,016 2,348 13,547 16,693 8 Refunds 16,510 15,513 8,326 7,603 7,904 7,956 1,129 1,805 2,495 9 Social insurance taxes and contributions, net 380,047 396,011 210,476 178,468 214,303 186,839 32,282 34,237 47,461 10 Employment taxes and contributions2 353,891 370,526 195,269 167,224 199,727 175,802 29,964 33,557 44,432 11 Self-employment taxes and contributions3 21,795 25,457 19,017 2,638 22,150 3,306 1,472 1,853 12,588 12 Unemployment insurance 21,635 20,922 12,929 8,9% 12,2% 8,721 1,945 265 2,608 13 Other net receipts4 4,522 4,563 2,278 2,249 2,279 2,317 373 415 422 14 Excise taxes 35,345 42,430 18,153 17,535 20,703 24,690 3,395 4,077 3,871 15 Customs deposits 16,707 15,921 8,096 8,568 7,488 8,694 1,291 1,412 1,374 16 Estate and gift taxes 11,500 11,138 6,442 5,333 5,631 5,521 733 879 1,477 17 Miscellaneous receipts5 27,316 22,847 12,106 16,032 8,991 13,503 923 1,066 2,057 OUTLAYS 18 All types 1,251,776 1,323,750 640,867 647,461 632,153 694,468r lll,230r 123,629* 123,821 19 National defense 299,331 272,514 152,733 149,497 122,089 147,531 24,265 22,947 23,901 2 2 2 2 2 4 0 1 2 3 A I G N E n n g e a t e e n r tu i r r e c g n r r u a y a a l l l t t i u r o s e r c n e s i a o e l u n a r c f c e f e , a s s i r p a s a n c d e, e n a v n i d r o t n ec m h e n n o t logy . 1 1 1 1 2 4 3 7 1 , , , , , 3 4 7 0 9 7 4 6 6 5 2 4 2 7 8 1 1 1 14 8 5 6 1 , , , , , 8 7 9 1 7 6 0 4 6 5 4 8 6 7 0 6 6 7 7 1 , , , , , 9 4 3 7 2 7 5 4 7 1 4 0 3 0 6 9 6 8 8 , , , , 8 0 9 9 9 7 8 3 4 7 8 3 3 9 1 7 7 7 8 , , , , 6 3 5 8 4 2 9 8 1 % 4 2 4 6 1 7 7 8 1 1 , , , , , 3 6 4 2 4 3 5 7 2 3 5 1 3 1 6 1 1 1 1 , , , , 2 3 0 2 2 1 5 5 4 1 2 4 5 4 7 1 1 1 1 , , , , 4 5 3 5 6 1 9 9 2 7 1 2 7 7 5 2 1 1 1 , , , , 5 3 6 7 3 9 4 4 6 8 5 8 7 8 6 25 Commerce and housing credit 67,160 75,639 38,672 37,491 17,992 36,579 -1,851 9,083r 5,147 26 Transportation 29,485 31,531 13,754 16,218 14,748 17,094 2,111 2,462 2,463 27 Community and regional development .. 8,498 7,432 3,987 3,939 3,552 3,784 540 743 762 28 Education, training, employment, and social services 38,497 41,479 19,537 18,988 21,234 21,104 3,750 3,642 4,321 29 Health 57,716 71,183 29,488 31,424 35,608 41,458 6,808 7,423 7,460 30 Social security and medicare 346,383 373,495 175,997 176,353 190,247 193,156 32,937 33,485 34,270 31 Income security 147,314 171,618 78,475 75,948 88,778 87,923r 18,465 19,754 18,830 32 Veterans benefits and services 29,112 31,344 15,217 15,479 14,326 17,425 3,142 1,833 2,926 33 Administration of justice 10,004 12,295 4,868 5,265 6,187 6,586 1,145 1,130 1,517 34 General government 10,724 11,358 4,916 6,976 5,212 6,821 1,189"" 881 675 35 Net interest6 184,221 195,012 91,155 94,650 98,556 99,405 16,498 16,884 16,838 36 Undistributed offsetting receipts7 -36,615 -39,356 -17,688 -19,829 -18,702 -20,435 -2,851 -3,238 -3,034 1. Functional details do not sum to total outlays for calendar year data because 5. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts. revisions to monthly totals have not been distributed among functions. Fiscal year 6. 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 for the outer continental shelf and U.S. the Budget have not been fully distributed across months. government 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 • July 1992 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION1 Billions of dollars, end of month 1990 1991 1992 IItteemm Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 1 Federal debt outstanding 3,081.90 3,175.50 3,266.10 3,397.30 3,491.70 3,562.90 3,683.10 3,820.40 n.a. 2 Public debt securities 3,052.00 3,143.80 3,233.30 3,364.80 3,465.20 3,538.00 3,665.30 3,801.70 3,881.30 3 Held by public 2,329.30 2,368.80 2,437.60 2,536.60 2,598.40 2,642.90 2,745.70 2,833.00 tA 4 Held by agencies 722.70 775.00 795.80 828.30 866.80 895.10 919.60 968.70 1 5 Agency securities 29.90 31.70 32.80 32.50 26.50 25.00 17.80 18.70 n.a. 6 Held by public 29.80 31.60 32.60 32.40 26.40 24.80 17.60 18.60 1 7 Held by agencies .20 .20 .20 .10 .10 .10 .10 .10 T 8 Debt subject to statutory limit 2,988.90 3,077.00 3,161.20 3,281.70 3,377.10 3,450.30 3,569.30 3,706.80 3,783.60 9 Public debt securities 2,988.60 3,076.60 3,160.90 3,281.30 3,376.70 3,449.80 3,569.00 3,706.40 3,783.20 10 Other debt2 .30 .40 .40 .40 .40 .40 .30 .40 .40 11 MEMO: Statutory debt limit 3,122.70 3,122.70 3,195.00 4,145.00 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. SOURCES. Treasury Bulletin and Monthly Statement of the Public Debt of the 2. Consists of guaranteed debt of Treasury and other federal agencies, specified United States. participation certificates, notes to international lending organizations, and District of Columbia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership1 Billions of dollars, end of period 1991 1992 Type and holder 11998888 11998899 11999900 11999911 Q2 Q3 Q4 Ql 1 Total gross public debt 2,684.4 2,953.0 3,364.8 3,801.7 3,538.0 3,665.3 3,801.7 3,881.3 By type 2 Interest-bearing 2,663.1 2,931.8 3,362.0 3,798.9 3,516.1 3,662.8 3,798.9 3,878.5 3 Marketable 1,821.3 1,945.4 2,195.8 2,471.6 2,268.1 2,390.7 2,471.6 2,552.3 4 Bills 414.0 430.6 527.4 590.4 521.5 564.6 590.4 615.8 5 Notes 1,083.6 1,151.5 1,265.2 1,430.8 1,320.3 1,387.7 1,430.8 1,477.7 6 Bonds 308.9 348.2 388.2 435.5 411.2 423.4 435.5 443.8 7 Nonmarketable2 841.8 986.4 1,166.2 1,327.2 1,248.0 1,272.1 1,327.2 1,326.2 8 State and local government series 151.5 163.3 160.8 159.7 161.0 158.1 159.7 157.8 9 Foreign issues 6.6 6.8 43.5 41.9 42.1 41.6 41.9 42.0 10 Government 6.6 6.8 43.5 41.9 42.1 41.6 41.9 42.0 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes. 107.6 115.7 124.1 135.9 131.3 133.5 135.9 139.9 13 Government account series 575.6 695.6 813.8 959.2 883.2 908.4 959.2 956.1 14 Non-interest-bearing 21.3 21.2 2.8 2.8 21.9 2.5 2.8 2.8 By holder5 15 U.S. Treasury and other federal agencies and trust funds. 589.2 707.8 828.3 968.7 895.1 919.6 968.7 16 Federal Reserve Banks 238.4 228.4 259.8 288.4 255.1 264.7 288.4 17 Private investors 1,858.5 2,015.8 2,288.3 2,563.2 2,397.9 2,489.4 2,563.2 18 Commercial banks 184.9 164.9 171.5 222.0 195.6 216.9 222.0 19 Money market funds 11.8 14.9 45.4 80.0 55.2 64.5 80.0 20 Insurance companies 118.6 125.1 142.0 168.0 152.5 162.9 168.0 21 Other companies 87.1 93.4 108.9 150.8 130.8 142.0 150.8 n.a. 22 State and local treasuries 471.6 487.5 490.4 490.0 489.3 491.4 490.0 Individuals 23 Savings bonds 109.6 117.7 126.2 138.1 133.2 135.4 138.1 24 Other securities 79.2 98.7 107.6 125.8 110.3 122.1 125.8 25 Foreign and international6 362.2 392.9 421.7 457.7 439.8 443.4 457.7 26 Other miscellaneous investors 433.0 520.7 674.4 730.8 691.1 710.8 730.8 1. Components may not sum to totals because of rounding. 6. Consists of investments of foreign balances and international accounts in the 2. Includes (not shown separately) securities issued to the Rural Electrification United States. Administration, depository bonds, retirement plan bonds, and individual retire- 7. Includes savings and loan associations, nonprofit institutions, credit unions, ment bonds. mutual savings banks, corporate pension trust funds, dealers and brokers, certain 3. Nonmarketable series denominated in dollars, and series denominated in U.S. Treasury deposit accounts, and federally sponsored agencies. foreign currency held by foreigners. SOURCES. Data by type of security, U.S. Treasury Department, Monthly 4. Held almost entirely by U.S. Treasury and other federal agencies and trust Statement of the Public Debt of the United States; data by holder, the Treasury funds. Bulletin. 5. Data for Federal Reserve Banks and U.S. government agencies and trust funds are actual holdings; data for other groups are Treasury estimates. 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 1992 1992, week ending Item Feb. Mar Mar. 4 Mar. 11 Mar. 18 Mar. 25 Apr. 1 Apr. 8 Apr. 15 Apr. 22 Apr. 29 IMMEDIATE TRANSACTIONS2 By type of security U.S. Treasury securities 1 Bills 37,212 36,927 36,555 41,031 41,049 33,803 30,858 38,144 46,265 43,263 33,788 Coupon securities, by maturity 2 Less than 3.5 years 48,693 50,004 42,685 50,196 42,751 42,544 41,682 38,399 41,172 49,269 44,717 3 3.5 to 7.5 years 43,820 32,906 31,441 33,266 31,151 33,283 29,279 30,834 34,638 38,199 28,083 4 7.5 to 15 years 19,367 17,537 13,835 14,253 15,785 14,483 12,516 11,920 12,516 12,545 11,177 5 15 years or more 17,455 14,718 13,122 14,638 14,612 12,385 12,277 12,100 10,870 12,866 10,358 Federal agency securities Debt, maturing in 6 Less than 3.5 years 5,301 5,702 4,585 5,094 4,010 4,285 4,955 4,833 3,918 4,275 4,965 7 3.5 to 7.5 years 652 615 618 830 711 570 486 567 833 762 753 8 7.5 years or more 681 596 667 875 654 762 626 458 605 890 604 Mortgage-backed securities 9 Pass-throughs 13,669 12,359 12,503r 9,800 14,170 16,382 10,350 10,290 15,268 13,138 10,189 10 All others 2,948 2,646 2,499 2,664 3,090 1,847 1,814 3,310 3,234 2,642 2,366 By type of counterparty Primary dealers and brokers 11 U.S. Treasury securities 105,664 95,816 87,201 96,260 93,941 85,834 81,295 81,072 90,527 95,526 8,795 Federal agency securities 12 Debt 1,456 1,463 1,239 1,521 1,146 1,147 1,188 1,322 1,202 1,261 1,192 13 Mortgage-backed 7,284 6,590 7,054r 5,892 8,244 8,217 6,390 5,815 7,735 7,572 6,052 Customers 14 U.S. Treasury securities 60,884 56,276 50,437 57,123 51,407 50,665 45,317 50,324 54,935 60,615 47,327 Federal agency securities 15 Debt 5,178 5,451 4,630 5,278 4,228 4,469 4,879 4,536 4,154 4,665 5,129 16 Mortgage-backed 9,332 8,416 7,949" 6,573 9,016 10,012 5,774 7,785 10,768 8,207 6,503 FUTURE AND FORWARD TRANSACTIONS4 By type of deliverable security U.S. Treasury securities 17 Bills 4,078 4,242 4,728 7,619 6,484 4,335 2,388 3,781 3,673 3,663 2,684 Coupon securities, by maturity 18 Less than 3.5 years 2,177 2,014 1,826 2,215 1,930 1,743 1,771 1,575 1,664 1,395 1,936 19 3.5 to 7.5 years 1,446 1,311 1,323 1,946 1,487 1,402 992 968 737 963 810 20 7.5 to 15 years 1,720 1,928 1,332 1,877 1,510 1,330 1,004 1,112 955 701 821 21 15 years or more 11,407 10,178 8,875 11,087 9,385 9,209 7,710 7,615 6,552 5,445 5,433 Federal agency securities Debt, maturing in 22 Less than 3.5 years 67 38 54 10 11 142 62 21 15 138 23 3.5 to 7.5 years 75 44 36 33 25 37 43 41 39 122 24 7.5 years or more 26 51 37 12 28 55 59 15 21 5 Mortgage-backed 25 Pass-throughs3 17,241 14,856 14,143r 13,844 16,000 14,989 13,333 12,003 13,558 14,670 12,521 26 Others 2,099 2,299 2,114 2,287 1,646 2,132 1,999 2,690 1,872 2,386 3,045 OPTION TRANSACTIONS5 By type of underlying security U.S. Treasury, coupon securities, by maturity 27 Less than 3.5 years 1,527 1,809 1,222 991 1,212 1,693 940 1,169 1,422 1,470 1,262 28 3.5 to 7.5 years 368 314 402 368 461 752 216 148 231 417 312 29 7.5 to 15 years 750 718 396 302 277 314 424 684 404 577 500 30 15 years or more 2,618 2,655 1,989 1,899 1,972 2,412 ,825 1,756 2,012 1,991 2,067 Federal agency, mortgagebacked securities 31 Pass-throughs 722 356r 385 458 451 193 258 184 1. Transactions are market purchases and sales of securities as reported to the 4. Future transactions are standardized agreements arranged on an exchange. Federal Reserve Bank of New Vork 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. Allfuture transactions are included regardless of time to number of trading days in the period. Immediate, forward, and future transactions delivery. Forward contracts for U.S. Treasury securities and federal agency debt are reported at principal value, which does not include accrued interest; option securities are included when the time to delivery is more than five days. Forward transactions are reported at the face value of the underlying securities. contracts for mortgage-backed securities are included when the time to delivery is Dealers report cumulative transactions for each week ending Wednesday. more than thirty days. 2. Transactions for immediate delivery include purchases or sales of securities 5. Options transactions are purchases or sales of put-and-call options, whether (other than mortgage-backed agency securities) for which delivery is scheduled in arranged on an organized exchange or in the over-the-counter market, and include five business days or less and "when-issued" securities that settle on the issue options on futures contracts on U.S. Treasury and federal agency securities. date of offering. Transactions for immediate delivery of mortgage-backed securities NOTE. In tables 1.42 and 1.43, the term "n.a." refers to data that are not incjude purchases and sales for which delivery is scheduled in thirty days or less. published because of insufficient activity. Stripped securities are reported at market value by maturity of coupon or corpus. Data formerly shown under option transactions for U.S. Treasury securities, 3. Includes such securities as collateralized mortgage obligations (CMOs), real bills; Federal agency securities, debt; and mortgage-backed securities, other than estate mortgage investment conduits (REMICs), interest 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 DomesticN onfinancial Statistics • July 1992 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1992 1992, week ending item Jan. Feb. Mar. Mar. 4 Mar. 11 Mar. 18 Mar. 25 Apr. 1 Apr. 8 Apr. 15 Apr. 22 Positions2 NET IMMEDIATE TRANSACTIONS3 By type of security U.S. Treasury securities 1 Bills 12,607 11,229 16,979 16,945 17,365 17,489 12,129 21,613 18,237 12,197 6,910 Coupon securities, by maturity 2 Less than 3.5 years 2,425 3,136 -1,536 2,364 -874 -3,546 -939 -3,258 -2,9% -4,357 815 3 3.5 to 7.5 years -7,485 -12,891 -7,305 -11,592 -7,546 -9,3% -2,721 -7,075 -2,646 -4,808 -5,637 4 7.5 to 15 years -6,185 -3,040 -5,987 -3,323 -4,875 -5,770 -7,744 -7,262 -7,798 -7,130 -7,508 5 15 years or more -1,643 -1,755 -2,340 -1,549 -2,075 -3,748 -2,225 -1,670 --22,,224466 --11,,553366 --11,,998833 Federal agency securities Debt, maturing in 6 Less than 3.5 years 4,190 5,788 4,638 5,403 3,883 5,598 4,145 4,464 3,132 4,234 3,577 7 3.5 to 7.5 years 3,536 4,208 3,572 4,120 3,850 3,518 3,523 3,002 2,609 2,287 2,012 8 7.5 years or more 3,597 3,705 3,599 3,656 3,731 3,598 3,586 3,425 33,,449999 33,,998877 33,,668877 Mortgage-backed securities 9 Pass-throughs 26,067 25,445 25,550 16,830 25,097 33,462 32,765 14,244 28,814 36,111 37,858 10 All others 18,947 16,417 14,209 15,546 14,383 12,738 13,598 1155,,554422 1144,,773377 1155,,884444 1155,,883377 Other money market instruments 11 Certificates of deposit 3,442 2,717 2,593 2,182 2,651 2,981 2,440 2,523 2,463 3,187 2,880 12 Commercial paper 5,228 6,266 5,032 6,153 5,156 4,822 4,432 5,085 4,550 9,554 6,565 13 Bankers acceptances 1,195 1,456 894 1,226 908 845 776 850 1,163 1,027 937 FUTURE AND FORWARD TRANSACTIONS5 By type of deliverable security U.S. Treasury securities 14 Bills -11,740 -7,362 -1,289 -2,168 -13 -42 -205 --44,,991111 --55,,115577 -308 11,,777711 Coupon securities, by maturity 15 Less than 3.5 years 1,776 1,810 1,216 1,786 1,750 1,283 910 491 737 752 1,016 16 3.5 to 7.5 years 2,550 2,817 3,177 1,849 2,256 3,745 3,782 3,768 3,%9 4,092 4,350 17 7.5 to 15 years 576 228 1,233 875 1,092 1,297 1,561 1,180 1,245 741 458 18 15 years or more -4,835 -5,093 -6,388 -6,388 -5,267 -5,551 -7,156 --77,,777766 --77,,552299 --88,,660077 --77,,338855 Federal agency securities Debt, maturing in 19 Less than 3.5 years 313 -24 -29 -19 -32 -21 -8 -66 -55 -23 -40 20 3.5 to 7.5 years 127 -37 5 29 39 100 -49 -98 -55 28 -2 21 7.5 years or more 17 59 30 65 -51 % 52 -2 -26 33 51 Mortgage-backed securities 22 Pass-throughs -7,680 -8,152 -6,630 1,829 -6,309 -12,371 -14,194 2,878 -7,466 -18,934 -22,980 23 All others 2,511 3,851 3,027 3,318 2,767 3,608 3,130 2,339 1,610 1,671 2,100 24 Certificates of deposit -144,496 -112,128 -129,643 -113,906 -131,487 -128,847 -133,253 -134,698 -141,629 -134,205 -135,019 Financing6 Reverse repurchase agreements 25 Overnight and continuing 203,915 211,815 211,356 219,297 208,649 217,530 213,295 199,757 199,495 206,913 194,542 26 Term 277,551 278,414 262,127 257,030 265,674 264,365 266,564 253,598 287,001 292,852 293,314 Repurchase agreements 27 Overnight and continuing 320,575 322,505r 332200,,558899'' 325,968r 318,936 333,579 321,683 302,500 304,994 338,665 329,285 28 Term 258,693 264,340 241,871 240,120 241,764 246,613 252,320 225,438 257,316 260,810 262,215 Securities borrowed 29 Overnight and continuing 66,170 71,618 75,832 71,504 76,597 75,785 75,457 78,315 77,141 75,264 79,757 30 Term 32,028 31,200 31,014 31,230 32,317 31,380 31,172 28,739 28,435 30,012 30,959 Securities loaned 31 Overnight and continuing 7,327 7,703 7,613 7,506 7,769 6,912 8,940 6,770 6,692 7,074 7,158 32 Term 1,556 1,436 1,864 1,544 1,754 1,698 1,715 2,572 2,392 3,335 3,165 Collateralized loans 33 Overnight and continuing 18,459 16,951 16,817 15,944 15,983 16,815 16,084 19,231 19,419 18,154 17,184 MEMO: Matched book7 Reverse repurchases 34 Overnight and continuing 144,047 150,143 153,365 153,438 151,839 155,228 155,195 150,788 150,841 153,516 145,449 35 Term 238,005 234,039 221,746 216,934 224,788 222,781 225,333 216,015 245,537 248,992 247,623 Repurchases 36 Overnight and continuing 173,994 176,327 177,773 182,566 179,428 181,513 174,770 171,789 171,600 177,700 175,011 37 Term 194,820 197,647 180,439 178,373 179,898 180,882 187,615 173,561 200,373 199,427 200,294 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. time to delivery is more than thirty days. 2. Securities positions are reported at market value. 6. Overnight financing refers to agreements made on one business day that 3. Net immediate positions include securities purchased or sold (other than mature on the next business day; continuing contracts are agreements that remain mortgage-backed agency securities) that have been delivered or are scheduled to in effect for more than one business day but have no specific maturity and can be be delivered in five business days or less and "when-issued" securities that settle terminated without advance notice by either party; term agreements have a fixed on the issue date of offering. Net immediate positions of mortgage-backed maturity of more than one business day. securities include securities purchased or sold that have been delivered or are 7. Matched-book data reflect financial intermediation activity in which the scheduled to be delivered in thirty days or less. borrowing and lending transactions are matched. Matched-book data are included 4. Includes securities such as collateralized mortgage obligations (CMOs), real in the financing breakdowns given above. The reverse repurchase and repurchase estate mortgage investment conduits (REMICs), interest only (IOs), and principal numbers are not always equal because of the "matching" of securities of different only (POs). values or types of collateralization. 5. Future positions are standardized contracts arranged on an exchange. NOTE. Data for future and forward commercial paper and bankers acceptances and Forward positions reflect agreements made in the over-the-counter market that for term financing of collateralized loans are no longer available because of insufficient specify delayed delivery. All futures positions are included regardless of time to activity. Digitized for FRASER 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 1992 AAggeennccyy 11998888 11998899 11999900 11999911 Oct. Nov. Dec. Jan. Feb. 1 Federal and federally sponsored agencies 381,498 411,805 434,668 442,772 438,032 439,670 442,772 440,317 0 2 Federal agencies 35,668 35,664 42,159 41,035 42,638 42,951 41,035 42,872 40,791 3 Defense Department 8 7 7 7 7 7 7 7 7 4 Export-Import Bank '3 11,033 10,985 11,376 9,809 11,267 11,267 9,809 9,809 9,809 5 Federal Housing Administration4 150 328 393 397 337 365 397 335 372 6 Government National Mortgage Association participation certificates 0 0 0 0 0 0 0 0 0 7 Postal Service 6,142 6,445 6,948 8,421 8,421 8,421 8,421 8,421 8,421 8 Tennessee Valley Authority 18,335 17,899 23,435 22,401 22,606 22,891 22,401 24,300 22,182 9 United States Railway Association6 0 0 0 0 0 0 0 0 0 10 Federally sponsored agencies7 345,830 375,407 392,509 401,737 395,394 3%,719 401,737 397,445 0 11 Federal Home Loan Banks 135,836 136,108 117,895 107,543 105,945 107,344 107,543 104,607 106,341 12 Federal Home Loan Mortgage Corporation 22,797 26,148 30,941 30,262 31,818 31,099 30,262 29,332 26,824 n Federal National Mortgage Association 105,459 116,064 123,403 133,937 128,594 130,197 133,937 133,988 141,315 14 Farm Credit Banks8 53,127 54,864 53,590 52,199 52,488 52,105 52,199 51,673 51,867 15 Student Loan Marketing Association 22,073 28,705 34,194 38,319 37,072 36,497 38,319 38,419 39,280 16 Financing Corporation10 5,850 8,170 8,170 8,170 8,170 8,170 8,170 8,170 0 17 Farm Credit Financial Assistance Corporation1 690 847 1,261 1,261 1,261 1,261 1,261 1,261 0 18 Resolution Funding Corporation12 0 4,522 23,055 29,9% 29,9% 29,9% 29,9% 29,9% 0 MEMO 19 Federal Financing Bank debt13 142,850 134,873 179,083 185,576 192,747 194,837 185,576 183,098 182,737 Lending to federal and federally sponsored agencies 70 Export-Import Bank3 11,027 1100,,997799 1111,,337700 99,,880033 1111,,226611 1111,,226611 99,,880033 99,,880033 99,,880033 71 Postal Service6 5,892 6,195 6,698 8,201 8,201 8,201 8,201 8,201 8,201 ??, Student Loan Marketing Association 4,910 4,880 4,850 4,820 4,820 4,820 4,820 4,820 4,820 23 Tennessee Valley Authority 16,955 16,519 14,055 10,725 11,375 11,375 10,725 10,725 10,025 24 United States Railway Association6 0 0 0 0 0 0 0 0 0 Other Lending14 75 Fanners Home Administration 58,496 53,311 52,324 48,534 48,534 48,534 48,534 48,534 4488,,553344 76 Rural Electrification Administration 19,246 19,265 18,890 18,562 18,599 18,628 18,562 18,534 18,494 27 26,324 23,724 70,8% 84,931 89,957 92,018 84,931 82,481 82,860 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 since 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 bon-owing 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 • July 1992 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1991 1992 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11998899 11999900 11999911 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. 1 All issues, new and refunding1 113,646 120,339 154,402 13,240 11,357 17,734 15,7% 12,612 12,256 15,956 15,141 By type of issue 2 General obligation 35,774 39,610 55,100 5,253 3,088 6,510 5,871 3,954 5,643 6,212 4,455 3 Revenue 77,873 81,295 99,302 7,987 8,269 11,224 9,925 8,658 6,613 9,744r 10,686 By type of issuer 4 State 11,819 15,149 24,939 3,371 7,195 1,171 1,671 1,036 3,021 3,174 575 5 Special district or statutory authority2 71,022 72,661 80,614 6,272 605 10,817 9,435 8,243 5,162 7,511 9,802 6 Municipality, county, or township 30,805 32,510 48,849 3,597 3,557 5,746 4,690 3,333 4,073 5,271 4,764 7 Issues for new capital, total 84,062 103,235 116,953 9,586 8,967 13,495 12,020 7,127 7,691 10,637 9,020 By use of proceeds 8 Education 15,133 17,042 21,664 1,507 1,511 1,297 1,924 2,385 1,974 1,075 2,208 9 Transportation 6,870 11,650 13,395 1,248 1,744 2,682 488 1,194 1,643 1,412 921 10 Utilities and conservation 11,427 11,739 21,447 1,573 1,825 1,915 1,931 1,953 894 2,104 1,380 11 Social welfare 16,703 23,099 26,121 2,793 1,276 2,621 3,070 868 1,683 1,811 2,582 12 Industrial aid 5,036 6,117 8,542 916 973 349 1,083 218 141 528 558 13 Other purposes 28,894 34,607 n.a. 1,549 1,638 4,631 3,524 n.a. n.a. 3,707 1,371 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 1992 TTyyppee ooff oo ii rr ss ss iiss uu ss ee uu ,, ee oo rr ffffeerriinngg,, 11998899 11999900 11999911 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. 1 All issues' 377,836 339,052 455,291 35,472 32,180 34,893 34,286 32,391 45,000 37,316r 37,154 2 Bonds2 319,965 298,814 389,933 28,742 26,759 26,029 25,233 24,871 38,202 27,780r 30,797 By type of offering 3 Public, domestic 179,694 188,778 287,041 26,867 23,856 23,469 23,164 23,326 34,530 26,200 28,700 4 Private placement, domestic 117,420 86,982 74,930 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Sold abroad 22,851 23,054 27,%2 1,875 2,902 2,560 2,070 1,544 3,671 1,626r 2,500 By industry group 6 Manufacturing 76,175 52,635 85,535 7,643 6,994 4,732 4,761r 4,980r 7,322r 3,844 8,713 7 Commercial and miscellaneous 49,465 40,018 37,809 1,388 %7 1,209 1,819* 1,953r 2,798r 1,664 3,672 8 Transportation 10,032 12,711 13,628 809 231 744 180 150 455 1,004 623 9 Public utility 18,656 17,621 23,994 1,897 1,315 1,430 3,073 2,238 3,761 3,569 1,8% 10 Communication 8,461 6,597 9,331 668 408 958 226 1,085 2,467 416 300 11 Real estate and financial 157,176 169,231 219,637 16,337 16,844 16,957 15,175 14,464 21,399 17,283r 15,595 12 Stocks2 57,870 40,165 n.a. 6,730 5,421 8,864 9,053 7,520 6,798 9,536 6,357 By type of offering 13 Public preferred 6,194 3,998 17,408 1,952 666 3,527 3,240 2,771 739 4,306 625 14 Common 26,030 19,443 47,860 4,778 4,755 5,337 5,813 4,749 6,060 5,230 5,732 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 A 16 Manufacturing 9,308 5,649 t 3,167 1,842 3,623 4,054 2,684 2,040 2,541 2,637 17 Commercial and miscellaneous 7,446 10,171 1 2,050 858 2,095 2,158 2,535 1,233 3,194 1,595 18 Transportation 1,929 369 n.a. 56 0 16 0 0 426 78 193 19 Public utility 3,090 416 1 150 55 320 174 233 200 489 704 20 Communication 1,904 3,822 1 8 0 25 84 17 163 n.a. 53 21 Real estate and financial 34,028 19,738 • 1,298 2,666 2,622 2,583 2,014 2,689 3,234 1,175 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 1992 IItteemm11 11999900 11999911 Aug. Sept. Oct. Nov. Dec. Jan Feb.r Mar. 1 Sales of own shares2 344,420 464,488 38,014 37,316 45,218 41,365 51,018 66,048 48,015 52,235 2 Redemptions of own shares 288,441 342,088 28,128 26,319 27,957 28,454 39,050 41,917 30,869 37,375 3 Net sales3 55,979 122,400 9,886 10,997 17,261 12,911 11,968 24,131 17,146 14,860 4 Assets4 568,517 807,001 712,782 730,426 753,344 752,798 807,077 823,767 846,868 847,707 5 Cash5 48,638 60,937 52,791 53,884 59,902 59,689 60,292 62,289 64,022 64,728 6 Other 519,875 746,064 659,992 676,543 695,492 693,109 746,785 761,478 782,846 782,979 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 1990 1991 1992 AAccccoouunntt 11998899 11999900 11999911 Q2 Q3 04 Ql Q2 Q3 Q4 Ql 1 Profits with inventory valuation and capital consumption adjustment 351.7 319.0 306.8 339.8 299.8 296.1 302.1 303.5 306.1 315.6 347.0 2 Profits before taxes 344.5 332.3 312.4 331.6 335.1 326.1 309.1 306.2 318.2 316.1 339.8 3 Profits tax liability 138.0 135.3 124.5 137.9 138.8 127.1 119.4 123.5 128.6 126.4 134.9 4 Profits after taxes 206.6 197.0 187.9 193.7 196.3 199.0 189.7 182.7 189.6 189.7 204.9 5 Dividends 127.9 133.7 137.8 132.5 133.8 136.2 137.8 136.7 138.1 138.5 138.6 6 Undistributed profits 78.7 63.3 50.2 61.2 62.5 62.8 51.9 46.1 51.5 51.2 66.2 7 Inventory valuation -17.5 -14.2 3.1 3.8 -32.6 -21.2 6.7 9.9 -4.8 .7 -2.9 8 Capital consumption adjustment 24.7 .8 -8.7 4.4 -2.7 -8.8 -13.6 -12.6 -7.3 -1.3 10.2 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 1991 19921 IInndduussttrryy 11999900 11999911 1199992211 Q3 Q4 Ql Q2 Q3 Q4 Ql Q2 1 Total nonfarm business 532.61 529.20 553.68 534.11 530.13 535.50 524.57 527.86 528.88 544.99 557.48 Manufacturing 2 Durable goods industries 82.58 77.95 78.18 82.48 79.03 81.24 79.69 74.51 76.36 80.32 79.63 3 Nondurable goods industries 110.04 105.66 104.63 111.57 110.69 109.90 107.66 102.54 102.54 101.52 106.64 Nonmanufacturing 4 Mining 9.88 10.02 9.12 9.97 10.12 9.89 10.09 10.09 10.00 9.12 9.29 Transportation 5 Railroad 6.40 5.92 6.44 5.66 6.81 5.59 6.27 6.50 5.32 5.33 6.53 6 Air 8.87 10.22 10.43 9.55 7.54 11.18 10.10 9.81 9.79 9.21 9.61 7 Other 6.20 6.55 7.56 5.87 6.82 6.48 6.68 6.52 6.54 6.88 7.70 Public utilities 8 Electric 44.10 43.67 47.67 43.80 45.88 43.36 42.87 43.09 45.36 47.08 49.22 9 Gas and other 23.11 22.84 23.63 23.88 24.36 23.68 21.71 23.38 22.60 23.32 23.17 10 Commercial and other2 241.43 246.37 266.00 241.32 238.87 244.19 239.50 251.42 250.37 262.20 265.68 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 • July 1992 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities Billions of dollars, end of period; not seasonally adjusted 1990 1991 AAccccoouunntt 11998888 11998899 11999900 Q2 Q3 Q4 Ql Q2 Q3 Q4 ASSETS 1 Accounts receivable, gross1 426.2 445.7 486.7 468.8 474.0 486.7 478.9 487.9 487.8 491.6 2 Consumer 146.2 140.8 136.0 138.6 140.9 136.0 131.6 133.9 132.5 129.6 3 Business 236.5 256.0 290.8 274.8 275.4 290.8 290.0 295.5 296.6 303.8 4 Real estate 43.5 48.9 59.9 55.4 57.7 59.9 57.3 58.5 58.7 58.1 5 LESS: Reserves for unearned income 50.0 52.0 56.6 54.3 55.1 56.6 57.0 58.7 59.6 58.5 6 Reserves for losses 7.3 7.7 9.2 8.2 8.6 9.2 10.3 10.8 12.9 13.2 7 Accounts receivable, net 368.9 386.1 420.9 406.3 410.3 420.9 411.6 418.4 415.2 419.9 8 All other 72.4 91.6 99.6 95.5 102.8 99.6 103.4 106.1 111.9 116.5 9 Total assets 441.3 477.6 520.6 501.9 513.1 520.6 515.0 524.5 527.1 536.4 LIABILITIES AND CAPITAL 10 Bank loans 15.4 14.5 19.4 15.8 15.6 19.4 22.0 22.7 24.0 24.3 11 Commercial paper 142.0 149.5 152.7 152.4 148.6 152.7 141.2 140.6 138.1 141.3 Debt 12 Other short-term n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 13 Long-term n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 14 Due to parent 50.6 63.8 82.7 72.8 82.0 82.7 77.8 81.7 87.4 83.0 15 Not elsewhere classified 137.9 147.8 157.0 153.0 156.6 157.0 162.4 164.2 163.4 170.6 16 All other liabilities 59.8 62.6 66.0 66.1 68.7 66.0 68.0 72.2 72.1 73.7 17 Capital, surplus, and undivided profits 35.6 39.4 42.8 41.8 41.6 42.8 43.7 43.0 42.1 43.5 18 Total liabilities and capital 441.3 477.6 520.6 501.9 513.1 520.6 515.0 524.5 527.1 536.4 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 1992 TTyyppee ooff ccrreeddiitt 11998899 11999900 Oct. Nov. Dec. Jan. Feb. Mar. 1 Total 258,957 292,638 309,709 310,876 311,632 309,709 306,905 308,162 306,698 Retail financing of installment sales 2 Automotive 39,479 38,110 33,204 3344,,116677 3333,,666644 3333,,220044 3311,,776644 3311,,888866 3300,,223300 3 Equipment 29,627 31,784 35,404 33,989 33,375 35,404 33,841 34,433 34,965 4 Pools of securitized assets 698 951 819 769 746 819 879 878 843 Wholesale 5 Automotive 33,814 32,283 32,487 31,831 32,292 32,487 31,788 32,877 32,123 6 Equipment 6,928 11,569 9,790 11,075 10,414 9,790 9,274 9,302 8,807 7 All other 9,985 9,126 8,459 8,407 8,418 8,459 8,072 8,271 8,554 8 Pools of securitized assets 0 2,950 4,905 4,458 4,639 4,905 4,661 4,690 4,717 Leasing 9 Automotive 26,804 39,129 44,445 45,837 45,299 44,445 4444,,227777 43,009 42,919 10 Equipment 68,240 75,626 87,821 87,701 90,079 87,821 88,849 88,958 90,481 11 Pools of securitized assets2 1,247 1,849 1,820 1,803 1,885 1,820 1,837 1,753 1,755 12 Loans on commercial accounts receivable and factored commercial accounts receivable 18,511 22,475 23,859 23,295 23,338 23,859 24,600 24,575 25,822 13 All other business credit 23,623 26,784 26,697 27,544 27,483 26,697 27,062 27,531 25,481 Net change (during period) 1 Total 24,066 33,681 17,071 3,277 756 -1,923 -2,804 1,257 -1,463 Retail financing of installment sales 2 Automotive 2,269 -1,369 -4,906 48 -503 -460 -1,440 122 -1,656 3 Equipment 1,442 2,157 3,619 -833 -614 2,029 -1,562 591 533 4 Pools of securitized assets -26 253 -132 -28 -23 73 60 -1 -35 Wholesale 5 Automotive 861 -1,532 204 1,759 461 195 -699 1,089 -755 6 Equipment 957 4,641 -1,779 481 -662 -624 -516 28 -495 7 All other 628 -859 -668 -289 11 41 -387 199 283 8 Pools of securitized assets2 0 2,950 1,955 405 181 266 -244 29 27 Leasing 9 Automotive 2,111 12,325 5,316 450 -538 -854 -168 --11,,226688 --8899 10 Equipment 10,581 7,386 12,195 969 2,378 -2,258 1,028 109 1,524 11 Pools of securitized assets2 526 602 -29 -41 82 -65 17 -84 2 12 Loans on commercial accounts receivable and factored commercial accounts receivable 825 3,964 1,383 91 43 520 741 -25 1,247 13 All other business credit 2,446 3,161 -87 264 -60 -786 366 469 -2,050 Digitized for FRASER 1. Data in this table also appear in the Board's G.20 (422) monthly statistical 2. Data on pools of securitized assets are not seasonally adjusted, http://fraser.strleoleuaissef. eFdo.r oorrgde/ ring 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 11999911 Oct. Nov. Dec. Jan. Feb. Mar. Apr. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms1 1 Purchase price (thousands of dollars) 159.6 153.2 155.0 153.4 162.6 159.1 153.9 154.7 167.0 162.5 2 Amount of loan (thousands of dollars) 117.0 112.4 114.0 115.0 116.0 113.8 114.9 110.2 123.2 122.7 3 Loan-price ratio (percent) 74.5 74.8 75.0 76.5 73.5 73.1 75.2 72.9 76.1 76.9 4 Matunty (years) 28.1 27.3 26.8 27.5 26.4 26.4 26.2 24.5 25.2 26.6 5 Fees and charges (percent of loan amount) 2.06 1.93 1.71 1.61 1.53 1.50 1.85 1.84 1.75 1.88 6 Contract rate (percent per year) 9.76 9.68 9.02 8.78 8.38 8.28 8.17 8.29 8.21 8.26 Yield (percent per year) 7 OTS series3 10.11 10.01 9.30 9.04 8.64 8.53 8.49 8.65 8.51 8.58 8 HUD series4 10.21 10.08 9.20 8.76 8.67 8.30 8.69 8.74 8.91 8.78 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series)3 10.24 10.17 9.25 8.71 8.69 8.10 8.72 8.74 8.85 8.79 10 GNMA securities6 9.71 9.51 8.59 8.34 8.09 7.81 7.81 8.01 8.20 8.10 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 104,974 113,329 122,837 125,884 126,624 128,983 131,058 133,399 136,506 139,808 12 FHA/V A-insured 19,640 21,028 21,702 21,576 21,547 21,796 21,981 21,980 21,902 21,914 13 Conventional 85,335 92,302 101,135 104,308 105,077 107,187 109,077 111,419 114,604 117,894 Mortgage transactions (during period) 14 Purchases 22,518 23,959 37,202 3,408 3,299 5,114 4,809 5,358 7,282 7,258 Mortgage commitments (during period)1 15 Issued8 n.a. 23,689 40,010 4,122 3,806 5,285 7,202 6,639 6,834 5,529 16 To sell9 n.a. 5,270 7,608 917 569 78 249 343 1,143 2,219 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)9 17 Total 20,105 20,419 24,131 24,922 25,239 26,809 27,384 27,030 28,821 n.a. 18 FHA/V A-insured 590 547 484 462 468 460 456 450 446 n.a. 19 Conventional 19,516 19,871 23,283 24,460 24,772 26,349 26,928 26,580 28,376 n.a. Mortgage transactions (during period) 20 Purchases 78,588 75,517 97,727 8,644 10,170 11,475 11,475 12,190 16,001 n.a. 21 Sales 73,446 73,817 92,478 7,449 9,545 9,537 10,521 ll,998r 13,639* 15,876 Mortgage commitments (during period)10 22 Contracted 88,519 102,401 114,031 6,358 11,594 16,961 15,683 23,278 19,098 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 • July 1992 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1990 1991 Type of holder and property 11998888 11998899 11999900 Q4 Q1 Q2 Q3 Q4P 1 All holders 3,270,118 3,676,616 3,912,217 3,912,217 3,947,700 3,999,621 4,016,644 4,048,767 By type of property 2 One- to four-family residences 2,201,231 2,549,935 2,765,111 2,765,111 2,790,684 2,837,989 2,870,100 2,904,287 3 Multifamily residences 291,405 303,416 307,069 307,069 310,746 311,817 308,357 310,276 4 Commercial 692,236 739,240 756,075 756,075 762,328 766,043 755,041 750,473 5 Farm 85,247 84,025 83,962 83,962 83,942 83,771 83,145 83,730 By type of holder 6 Major financial institutions 1,831,472 1,931,537 1,913,945 1,913,945 1,902,050 1,898,114 1,860,161 1,845,625 7 Commercial banks2 674,003 767,069 844,456 844,456 856,499 871,222 870,726 875,914 8 One- to four-family 334,367 389,632 455,698 455,698 461,916 476,188 478,678 484,596 9 Multifamily 33,912 38,876 37,008 37,008 38,379 37,562 36,394 37,523 10 Commercial 290,254 321,906 334,520 334,520 338,697 339,433 337,331 335,357 11 Farm 15,470 16,656 17,231 17,231 17,507 18,039 18,323 18,438 12 Savings institutions 924,606 910,254 801,628 801,628 776,551 755,219 719,341 698,754 13 One- to four-family 671,722 669,220 600,154 600,154 583,694 570,044 547,455 533,850 14 Multifamily 110,775 106,014 91,806 91,806 88,743 86,448 81,880 79,344 15 Commercial 141,433 134,370 109,168 109,168 103,647 98,280 89,603 85,183 16 Farm 676 650 500 500 468 447 402 377 17 Life insurance companies 232,863 254,214 267,861 267,861 269,000 271,674 270,094 270,958 18 One- to four-family 11,164 12,231 13,005 13,005 11,737 11,743 11,720 11,763 19 Multifamily 24,560 26,907 28,979 28,979 29,493 30,006 29,962 30,115 20 Commercial 187,549 205,472 215,121 215,121 216,768 219,204 218,179 218,111 21 Farm 9,590 9,604 10,756 10,756 11,001 10,721 10,233 10,968 22 Finance companies4 37,846 45,476 48,777 48,777 48,187 48,972 50,658 51,567 23 Federal and related agencies 200,570 209,498 250,761 250,761 264,189 276,798 283,455 282,731 24 Government National Mortgage Association 26 23 20 20 22 22 22 23 25 One- to four-family 26 23 20 20 22 22 22 23 26 Multifamily 0 0 0 0 0 0 0 0 27 Farmers Home Administration 42,018 41,176 41,439 41,439 41,307 41,430 41,566 41,713 28 One- to four-family 18,347 18,422 18,527 18,527 18,522 18,521 18,598 18,496 29 Multifamily 8,513 9,054 9,640 9,640 9,720 9,898 9,990 10,141 30 Commercial 5,343 4,443 4,690 4,690 4,715 4,750 4,829 4,905 31 Farm 9,815 9,257 8,582 8,582 8,350 8,261 8,149 8,171 32 Federal Housing and Veterans' Administrations 5,973 6,087 8,801 8,801 9,492 10,210 11,395 12,744 33 One- to four-family 2,672 2,875 3,593 3,593 3,600 3,729 3,948 4,384 34 Multifamily 3,301 3,212 5,208 5,208 5,891 6,480 7,446 8,360 35 Federal National Mortgage Association 103,013 110,721 116,628 116,628 119,196 122,806 125,451 128,578 36 One- to four-family 95,833 102,295 106,081 106,081 108,348 111,560 113,696 116,336 37 Multifamily 7,180 8,426 10,547 10,547 10,848 11,246 11,755 12,242 38 Federal Land Banks 32,115 29,640 29,416 29,416 29,253 29,152 29,053 28,970 39 One- to four-family 1,890 1,210 1,838 1,838 1,884 2,041 2,124 2,225 40 Farm 30,225 28,430 27,577 27,577 27,368 27,111 26,929 26,745 41 Federal Home Loan Mortgage Corporation — 17,425 21,851 21,857 21,857 23,221 23,649 23,906 24,881 42 One- to four-family 15,077 18,248 19,185 19,185 20,570 21,120 21,489 22,529 43 Multifamily 2,348 3,603 2,672 2,672 2,651 2,529 2,417 2,352 44 Mortgage pools or trusts6 811,847 946,766 1,110,555 1,110,555 1,144,876 1,186,251 1,228,788 1,272,155 45 Government National Mortgage Association— 340,527 368,367 403,613 403,613 409,929 413,707 422,501 429,772 46 One- to four-family 331,257 358,142 391,505 391,505 397,631 401,304 409,826 416,425 47 Multifamily 9,270 10,225 12,108 12,108 12,298 12,403 12,675 13,347 48 Federal Home Loan Mortgage Corporation 226,406 272,870 316,359 316,359 328,215 341,132 348,843 361,785 49 One- to four-family 219,988 266,060 308,369 308,369 319,978 332,624 341,183 354,214 50 Multifamily 6,418 6,810 7,990 7,990 8,237 8,509 7,660 7,571 51 Federal National Mortgage Association 178,250 228,232 299,833 299,833 312,101 331,089 351,917 372,107 52 One- to four-family 172,331 219,577 291,194 291,194 303,554 322,444 343,430 363,615 53 Multifamily 5,919 8,655 8,639 8,639 8,547 8,645 8,487 8,492 54 Farmers Home Administration 104 80 66 66 62 55 52 47 55 One- to four-family 26 21 17 17 14 13 12 11 56 Multifamily 0 0 0 0 0 0 0 0 57 Commercial 38 26 24 24 23 21 20 19 58 Farm 40 33 26 26 24 21 20 17 59 Individuals and others7 426,229 588,815 636,955 636,955 636,585 638,457 644,241 648,256 60 One- to four-family 259,971 414,763 449,440 449,440 447,344 447,339 451,988 454,841 61 Multifamily 79,209 81,634 84,408 84,408 84,227 83,452 83,740 83,772 62 Commercial 67,618 73,023 83,816 83,816 85,790 88,495 89,424 90,628 63 Farm 19,431 19,395 19,291 19,291 19,224 19,171 19,089 19,014 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 Ail 1.55 CONSUMER INSTALLMENT CREDIT Total Outstanding and Net Change1 Millions of dollars, amounts outstanding, end of period 1991 1992 HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt Oct. Nov. Dec. Jan Feb.r Mar. Seasonally adjusted 1 Total 664,049 718,863 735,102 730,317 730,147 729,420 729,473 729,007 727,400 2 Automobile 284,214 290,676 284,585 270,013 268,123 267,909 268,256 267,767 267,504 3 Revolving 174,104 199,082 220,110 233,661 234,666 234,504 234,816 235,950 236,005 4 Mobile home 25,348 22,471 20,919 18,943 19,059 19,116 18,649 18,259 18,312 5 Other 180,383 206,633 209,487 207,700 208,300 207,891 207,752 207,031 205,579 Not seasonally adjusted 6 Total 674,855 730,901 748,300 730,722 732,256 743,548 733,256 725,507 720,398 By mty'or holder 7 Commercial banks 324,792 342,770 347,466 335,258 334,904 340,930 335,983 331,367 328,313 8 Finance companies 146,212 140,832 137,450 131,778 130,679 129,566 126,677 127,281 125,658 9 Credit unions 88,340 93,114 92,911 92,746 92,373 92,779 91,922 91,471 90,917 10 Retailers 48,438 44,154 43,552 37,359 38,651 43,130 40,580 39,108 38,556 11 Savings institutions 63,399 57,253 45,616 37,424 36,987 36,014 35,153 34,193 33,687 12 Gasoline companies 3,674 3,935 4,822 4,529 4,388 4,362 4,377 4,151 3,988 13 Pools of securitized assets n.a. 48,843 76,483 91,628 94,274 96,767 98,564 97,936 99,379 By major type of credit* 14 Automobile 284,328 290,705 284,813 272,092 268,927 268,284 266,888 265,170 264,749 15 Commercial banks 123,392 126,288 126,259 119,276 118,502 117,494 116,750 116,197 115,810 16 Finance companies 97,245 82,721 74,396 69,364 67,907 66,549 65,151 65,412 64,464 17 Pools of securitized assets 0 18,235 24,537 26,803 26,237 27,997 29,431 28,482 29,848 18 Revolving 184,045 210,310 232,370 231,862 235,674 247,519 239,019 234,981 232,418 19 Commercial banks 123,020 130,811 132,433 126,234 125,734 132,625 126,736 123,913 121,748 20 Retailers 43,833 39,583 39,029 33,055 34,319 38,652 36,169 34,727 34,189 21 Gasoline companies 3,674 3,935 4,822 4,529 4,388 4,362 4,377 4,151 3,988 22 Pools of securitized assets2 n.a. 23,477 44,335 56,290 59,459 60,139 60,087 60,633 60,953 23 Mobile home 25,143 22,240 20,666 19,026 19,021 18,877 18,808 18,427 18,228 24 Commercial banks 9,025 9,112 9,763 9,600 9,656 9,552 9,638 9,409 9,298 25 Finance companies 7,191 4,716 5,252 5,358 5,401 5,520 5,509 5,509 5,524 26 Other 181,339 207,646 210,451 207,742 208,633 208,868 208,541 206,927 205,003 27 Commercial banks 69,355 76,559 79,011 80,148 81,012 81,259 82,859 81,848 81,357 28 Finance companies 41,776 53,395 57,801 57,056 57,371 1 57,497 56,017 56,360 55,670 29 Retailers 4,605 4,571 4,523 4,304 4,332 4,478 4,411 4,381 4,367 30 Pools of securitized assets2 n.a. 7,131 7,611 8,535 8,578 8,631 9,046 8,821 8,579 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 • July 1992 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT1 Percent per year, except as noted 1991 1992 IItteemm 11998899 11999900 11999911 Sept. Oct. Nov. Dec. Jan. Feb. Mar. INTEREST RATES Commercial bankS2 1 48-month new car 12.07 11.78 11.14 n.a. n.a. 10.61 n.a. n.a. 9.89 n.a. 2 24-month personal ^ 15.44 15.46 15.18 n.a. n.a. 14.88 n.a. n.a. 14.39 n.a. 3 120-month mobile home3 14.11 14.02 13.70 n.a. n.a. 13.37 n.a. n.a. 12.93 n.a. 4 Credit card 18.02 18.17 18.23 n.a. n.a. 18.19 n.a. n.a. 18.09 n.a. Auto finance companies 5 New car 12.62 12.54 12.41 12.38 12.23 10.79 10.41 10.04 10.19 1100..9922 6 Used car 16.18 15.99 15.60 15.60 15.46 15.06 14.90 14.34 14.00 14.19 OTHER TERMS4 Maturity (months) 7 New car 54.2 54.6 55.1 55.4 55.4 54.1 53.7 53.5 53.8 5544..33 8 Used car 46.6 46.1 47.2 47.2 47.0 47.0 46.9 48.4 48.0 48.0 Loan-to-value ratio 9 New car 91 87 88 87 88 88 88 89 89 89 10 Used car 97 95 96 % 97 96 93 97 97 97 Amount financed (dollars) 11 New car 12,001 12,071 12,494 12,460 12,684 13,245 13,476 13,135 13,340 13,137 12 Used car 7,954 8,289 8,884 8,996 9,077 9,029 9,105 9,007 8,912 10,042 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 for only 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 1990 1991 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998877 11998888 11998899 11999900 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors .. 722.8 767.2 714.7 644.5 465.9 669.3 593.2 479.9 434.5 538.9 476.1 414.1 By lending sector and instrument ? U.S. government 143.9 155.1 146.4 246.9 278.2 239.6 242.3 271.5 199.2 226699..11 336655..55 227788..77 3 Treasury securities 142.4 137.7 144.7 238.7 291.9 234.2 243.6 272.5 223.2 275.3 394.3 274.9 4 Agency issues and mortgages 1.5 17.4 1.6 8.2 -13.8 5.4 -1.3 -1.0 -24.0 -6.2 -28.8 3.8 5 Private 578.9 612.1 568.4 397.6 187.7 429.7 350.9 208.5 235.2 269.7 110.6 135.4 By instrument 6 Debt capital instruments 487.1 463.5 414.9 328.5 254.7 335.2 277.3 250.2 228899..33 332200..22 117799..88 222299..55 7 Tax-exempt obligations 83.5 53.7 65.0 45.5 32.3 56.2 36.5 18.3 25.3 37.7 37.9 28.2 8 Corporate bonds 79.1 103.4 74.3 47.7 85.8 66.8 30.2 65.7 83.7 104.1 88.3 67.1 9 324.5 306.5 275.7 235.3 136.6 212.2 210.6 166.1 180.3 178.4 53.6 134.2 10 Home mortgages 234.9 231.0 218.0 215.2 139.2 218.4 187.6 158.3 140.5 161.5 115.0 139.8 II Muitifamily residential 24.4 16.7 16.4 3.6 3.2 -7.5 17.0 3.6 14.7 4.3 -14.1 88..11 1? Commercial 71.6 60.8 42.7 16.7 -5.5 2.5 4.8 4.0 25.0 14.9 -44.6 --1177..55 13 Farm -6.4 -2.1 -1.5 -.1 -.2 -1.2 1.3 .2 .2 -2.3 -2.6 3.8 14 Other debt instruments 91.8 148.6 153.5 69.2 -67.0 94.5 73.6 -41.7 -54.0 -50.5 -69.2 -94.1 15 Consumer credit 33.5 50.4 43.1 14.3 -16.5 14.2 13.4 -4.2 -21.2 -7.0 -26.3 -11.3 16 Bank loans n.e.c 9.9 40.5 39.9 1.5 -25.7 26.7 -6.9 -20.6 3.2 -36.1 -22.9 -47.0 17 Open market paper 1.6 11.9 21.4 9.7 -18.4 -.7 19.3 -34.4 -6.9 -16.1 -42.4 -8.1 18 Other 46.8 45.8 49.1 43.7 -6.4 54.4 47.7 17.6 -29.1 8.7 22.4 -27.6 By borrowing sector 19 State and local government 83.0 48.9 63.2 42.6 24.4 48.9 3344..66 1122..44 2255..55 2288..00 2200..22 2233..88 70 302.2 315.8 287.3 257.8 160.3 274.5 223.8 165.5 169.7 186.9 108.3 176.1 71 Nonfinancial business 193.7 247.4 217.9 97.3 3.1 106.3 92.5 30.5 40.0 54.8 -17.9 -64.4 77 -10.6 -7.5 1.6 2.5 2.6 -5.5 8.7 1.1 4.7 1.6 .9 3.4 73 Nonfarm noncorporate 65.9 62.4 50.0 15.3 -21.6 14.1 11.2 4.8 5.8 6.6 -47.2 -51.7 24 138.5 192.5 166.3 79.5 22.1 97.8 72.6 24.6 29.4 46.6 28.5 -16.0 75 Foreign net borrowing in United States 6.2 6.4 10.6 23.5 15.6 36.3 26.2 19.0 62.8 -59.6 22.7 36.4 76 7.4 6.9 5.3 21.6 16.4 20.7 1.9 28.6 11.5 14.7 16.5 22.9 77 -3.6 -1.8 -.1 -2.9 4.0 1.3 2.0 -5.2 8.1 -3.5 1.4 9.9 78 Open market paper 3.8 8.7 13.1 12.3 6.4 23.1 25.6 15.6 46.7 -51.9 16.0 14.9 29 U.S. government loans -1.4 -7.5 -7.7 -7.5 -11.2 -8.8 -3.3 -20.0 -3.5 -18.8 -11.1 -11.4 30 Total domestic plus foreign 729.0 773.6 725.3 668.0 481.4 705.6 619.4 498.9 497.2 479.3 498.8 459.5 Financial sectors 31 Total net borrowing by financial sectors 264.1 213.4 191.0 168.3 135.4 192.3 92.0 220.7 101.3 83.2 141.8 215.3 By instrument 32 U.S. government-related 171.8 119.8 151.0 167.4 157.0 172.8 146.2 185.6 149.6 118.0 172.9 187.6 33 Sponsored-credit-agency securities 30.2 44.9 25.2 17.1 8.8 11.6 13.7 37.1 13.1 -29.7 20.6 31.1 34 Mortgage pool securities 142.3 74.9 125.8 150.3 148.2 161.2 132.5 148.9 136.5 147.6 152.3 156.3 35 Loans from U.S. government -.8 .0 .0 -.1 .0 .0 .0 -.5 .0 .0 .0 .2 36 Private 92.4 93.7 40.0 .9 -21.6 19.5 -54.3 35.2 -48.3 -34.7 -31.1 27.7 37 Corporate bonds 44.2 18.2 17.7 15.6 44.5 82.7 -64.1 24.9 38.1 63.1 10.8 66.0 38 Mortgages .4 .3 .0 .3 -.1 .2 .1 .6 .1 -.1 .9 -1.2 39 Bank loans n.e.c -3.6 .6 1.9 1.2 3.7 2.1 2.0 1.1 1.3 -2.9 9.6 6.7 40 Open market paper 26.9 54.8 31.3 8.6 -31.7 -38.6 35.1 24.2 -52.0 -46.3 -16.0 -12.3 41 Loans from Federal Home Loan Banks ... 24.4 19.7 -11.0 -24.7 -38.0 -26.9 -27.3 -15.7 -35.8 -48.5 -36.4 -31.5 By borrowing sector 42 Sponsored credit agencies 29.5 44.9 25.2 17.0 8.8 11.6 13.7 36.7 13.1 -29.7 20.6 31.3 43 Mortgage pools 142.3 74.9 125.8 150.3 148.2 161.2 132.5 148.9 136.5 147.6 152.3 156.3 44 Private 92.4 93.7 40.0 .9 -21.6 19.5 -54.3 35.2 -48.3 -34.7 -31.1 27.7 45 Commercial banks 6.2 -3.0 -1.4 -1.1 -12.9 -9.9 -5.8 14.2 -17.9 -11.9 -8.5 -13.1 46 Bank affiliates 14.3 5.2 6.2 -27.7 -5.4 -29.5 -42.0 -30.8 -8.0 -3.3 -7.9 -2.4 47 Savings and loan associations — 19.6 19.9 -14.1 -31.2 -39.6 -45.0 -30.9 -20.6 -43.2 -51.4 -37.7 -26.3 48 Mutual savings banks 8.1 1.9 -1.4 -.5 -2.7 4.1 -2.7 1.3 1.9 -.9 -3.3 -8.6 49 Finance companies 4.7 33.5 31.1 23.2 6.0 47.4 1.1 25.1 -9.4 -4.8 -6.8 45.0 50 Real estate investment trusts (REITs) .4 3.6 -1.9 -1.9 -.2 -2.7 -1.4 .3 -.6 -.1 4.0 -4.3 51 Securitized credit obligation (SCO) issuers 39.1 32.5 21.4 40.1 33.3 55.1 27.5 45.6 28.9 37.7 29.2 37.5 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • July 1992 1.57—Continued 1990 1991 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998877 11998888 11998899 11999900 11999911 Q2 Q3 Q4 Q1 Q2 Q3 Q4 All sectors 52 Total net borrowing, all sectors 993.1 987.0 916.3 836.3 616.9 897.8 711.3 719.7 598.5 562.5 640.6 665.8 53 U.S. government securities 316.4 274.9 297.3 414.4 435.1 412.4 388.5 457.5 348.8 387.1 538.4 466.1 54 State and local obligations 83.5 53.7 65.0 45.5 32.3 56.2 36.5 18.3 25.3 37.7 37.9 28.2 55 Corporate and foreign bonds 130.7 128.5 97.3 84.8 146.7 170.2 -32.0 119.2 133.2 182.0 115.5 156.1 56 Mortgages 324.9 306.7 275.7 235.6 136.5 212.3 210.7 166.8 180.4 178.3 54.5 133.0 57 Consumer credit 33.5 50.4 43.1 14.3 -16.5 14.2 13.4 -4.2 -21.2 -7.0 -26.3 -11.3 58 Bank loans n.e.c 2.7 39.3 41.6 -.2 -18.1 30.1 -2.8 -24.7 12.6 -42.5 -11.9 -30.4 59 Open market paper 32.3 75.4 65.9 30.7 -43.6 -16.3 79.9 5.4 -12.2 -114.3 -42.5 -5.5 60 Other loans 69.1 58.1 30.4 11.4 -55.6 18.6 17.1 -18.6 -68.4 -58.7 -25.1 -70.3 61 MEMO: U.S. government, cash balance -7.9 10.4 -5.9 8.3 14.7 -17.6 18.4 24.2 34.6 -35.8 -14.6 74.4 Totals net of changes in U.S. government cash balances 62 Net borrowing by domestic nonfinancial sectors 730.7 756.8 720.6 636.2 451.2 686.9 574.7 455.7 399.9 574.7 490.8 339.7 63 Net borrowing by U.S. government 151.8 144.7 152.3 238.6 263.5 257.2 223.8 247.3 164.6 304.9 380.2 204.2 External corporate equity funds raised in United States 64 Total net share issues 7.1 -119.3 -65.4 15.8 208.6 56.4 -19.5 27.0 116.1 179.8 237.5 300.9 65 Mutual funds 70.2 6.1 38.5 65.7 150.6 77.1 45.9 83.7 97.6 125.2 178.1 201.3 66 All other -63.1 -125.4 -103.9 -50.0 58.0 -20.7 -65.4 -56.7 18.5 54.6 59.4 99.6 67 Nonfinancial corporations -75.5 -129.5 -124.2 -63.0 17.5 -48.0 -74.0 -61.0 -12.0 11.0 17.0 54.0 68 Financial corporations 14.5 3.2 3.0 6.1 6.4 3.3 6.5 2.8 4.3 7.0 7.0 7.2 69 Foreign shares purchased in United States -2.1 .9 17.3 6.9 34.2 23.9 2.2 1.6 26.2 36.6 35.3 38.4 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 1990 1991 Transaction category or sector 1987 1989 1990 1991 Q2 Q3 Q4 Q1 Q2 Q3 1 Total funds advanced in credit markets to domestic nonfinancial sectors 722.8 767.2 714.7 644.5 465.9 669.3 593.2 479.9 434.5 538.9 2 Total net advances by federal agencies and foreign sectors 248.0 208.1 188.1 261.7 246.8 347.4 190.8 282.9 213.7 By instrument 3 U.S. government securities 70.1 85.2 30.2 74.4 99.4 100.9 142.0 45.6 140.1 50.9 4 Residential mortgages 139.1 86.3 137.9 184.1 173.7 185.2 176.3 180.5 176.0 186.6 5 Federal Home Loan Bank advances to thrifts 24.4 19.7 -11.0 -24.7 -38.0 -26.9 -27.3 -15.7 -35.8 -48.5 6 Other loans and securities 14.3 16.8 31.0 27.8 11.8 31.0 56.4 -19.6 2.5 24.6 By lender 7 U.S. government -7.9 -9.4 -2.6 33.6 9.8 36.1 63.6 -3.7 28.1 8 Sponsored credit agencies and mortgage pools 169.3 112.0 125.3 166.7 160.2 163.6 182.4 141.9 164.0 123.9 9 Monetary authority 24.7 10.5 -7.3 8.1 31.1 30.8 26.2 -24.2 60.2 1.8 10 Foreign 61.8 95.0 72.7 53.2 45.8 59.6 75.1 76.8 30.6 59.1 Agency and foreign borrowing not included in line 1 11 Sponsored credit agencies and mortgage pools 171.8 119.8 151.0 167.4 157.0 172.8 146.2 185.6 149.6 118.0 12 Foreign 6.2 6.4 10.6 23.5 15.6 36.3 26.2 19.0 62.8 -59.6 13 Total private domestic funds advanced 652.8 685.3 688.2 573.7 391.6 588.2 418.2 493.7 363.9 383.6 14 U.S. government securities 246.3 189.7 267.2 340.0 335.7 311.5 246.6 411.9 208.7 336.2 15 State and local obligations 83.5 53.7 65.0 45.5 32.3 56.2 36.5 18.3 25.3 37.7 16 Corporate and foreign bonds 67.5 94.4 65.5 63.4 83.2 75.7 27.1 95.6 73.5 97.0 17 Residential mortgages 120.2 161.3 96.5 34.6 -31.3 25.7 28.2 -18.6 -20.9 -20.8 18 Other mortgages and loans 159.8 205.9 183.1 65.6 -66.3 92.1 52.6 -29.2 41.5 -115.0 19 LESS: Federal Home Loan Bank advances 24.4 19.7 -11.0 -24.7 -38.0 -26.9 -27.3 -15.7 -35.8 -48.5 20 Total credit market funds advanced by private financial institutions 497.3 538.5 534.0 388.7 348.4 282.4 299.4 519.5 307.4 214.3 By lending institution 21 Commercial banks 135.3 157.0 177.0 121.2 92.7 140.9 107.6 61.8 123.3 30.1 22 Savings institutions 136.8 118.0 -90.9 -153.4 -157.3 -211.9 -160.8 -170.8 -173.6 -153.2 23 Insurance and pension funds 149.1 176.4 197.9 183.7 215.5 241.6 135.6 188.3 209.4 218.3 24 Other financial institutions 76.2 87.1 249.9 237.2 197.6 111.7 216.9 440.2 148.4 119.2 By source of funds 25 Private domestic deposits and repurchase agreements . 173.8 229.6 209.5 53.3 1.0 -5.7 45.5 -22.8 214.6 -118.1 26 Credit market borrowing 92.4 93.7 40.0 .9 -21.6 19.5 -54.3 35.2 -48.3 -34.7 27 Other sources 231.1 215.3 284.5 334.5 369.0 268.6 308.2 507.1 141.1 367.2 28 Foreign funds 43.7 9.3 -9.9 24.0 -20.7 23.5 87.5 -28.5 9.4 -99.3 29 Treasury balances -5.8 7.3 -3.4 5.3 5.7 -1.0 13.7 3.4 20.6 -22.3 30 Insurance and pension reserves 94.9 174.1 192.0 164.1 235.5 209.1 128.3 222.1 291.6 178.7 31 Other, net 98.4 24.5 105.8 141.0 148.5 36.9 78.7 310.1 -180.6 310.1 Private domestic nonfinancial investors 32 Direct lending in credit markets 247.9 240.5 194.2 185.9 21.7 325.4 64.6 9.4 8.2 134.5 33 U.S. government securities 100.5 134.5 125.5 123.3 47.7 175.4 134.6 -5.7 16.7 162.1 34 State and local obligations 96.1 57.3 62.7 24.9 9.6 40.0 7.6 -13.5 15.2 22.1 35 Corporate and foreign bonds 6.4 -32.2 -26.5 -23.4 -21.0 21.3 -120.3 -2.8 4.8 19.2 36 Open market paper 13.3 41.9 2.9 18.8 -36.6 53.0 12.8 -9.6 -46.6 -85.7 37 Other loans and mortgages 31.5 39.0 29.6 42.3 21.9 35.7 29.8 41.0 18.1 16.7 38 Deposits and currency 190.3 233.1 225.7 83.0 28.1 24.7 74.2 20.4 231.2 -94.7 39 Currency 19.0 14.7 11.7 22.6 19.7 22.6 30.9 16.9 38.7 6.0 40 Checkable deposits -.3 12.5 .6 .4 52.0 4.5 -4.1 -23.5 56.3 14.2 41 Small time and savings accounts 76.0 122.4 98.2 59.4 19.5 19.9 40.8 61.6 104.8 1.0 42 Money market fund shares 28.9 21.2 86.7 56.0 34.5 -32.7 106.0 42.1 171.0 -63.5 43 Large time deposits 47.6 40.6 9.1 -42.1 -91.2 -15.5 -70.7 -66.4 -60.8 -72.8 44 Security repurchase agreements 21.6 32.9 14.9 -20.5 -13.8 18.2 -26.5 -36.6 -56.7 3.0 45 Deposits in foreign countries -2.5 -11.2 4.4 7.1 7.5 7.8 -2.2 26.3 -22.2 17.5 46 Total of credit market instruments, deposits, and currency 438.2 473.6 419.9 268.9 49.8 138.7 29.8 239.3 39.8 MEMO 47 Public holdings as percent of total 34.0 26.9 25.9 39.2 51.3 41.1 56.1 38.2 56.9 44.6 48 Private financial intermediation (percent) 76.2 78.6 77.6 67.8 89.0 48.0 71.6 105.2 84.5 55.9 49 Total foreign funds 105.5 104.3 62.8 77.2 25.1 83.1 162.6 48.3 40.0 -40.2 Corporate equities not included above 50 Total net issues 7.1 -119.3 -65.4 15.8 208.6 56.4 -19.5 27.0 116.1 179.8 51 Mutual fund shares 70.2 6.1 38.5 65.7 150.6 77.1 45.9 83.7 97.6 125.2 52 Other equities -63.1 -125.4 -103.9 -50.0 58.0 -20.7 -65.4 -56.7 18.5 54.6 53 Acquisitions by financial institutions 22.2 4.1 18.9 27.5 76.5 64.6 -44.4 53.2 80.9 57.1 54 Other net purchases -15.1 -123.3 -84.3 -11.7 132.1 -8.3 24.9 -26.2 35.2 122.7 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 and 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 appear in the Board's Z.l (780) quarterly statistical release. For claims on foreign affiliates and deposits by banking institutions in foreign banks. ordering address, see inside front cover. 29. Demand deposits and note balances at commercial banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Financial Statistics • July 1992 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING Billions of dollars, end of period 1990 1991 Q2 Q3 Q4 Ql Q2 Q3 Q4 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 9,242.3 9,987.1 10,760.5 11,229.1 10,445.0 10,597.7 10,760.5 10,833.4 10,958.3 11,084.3 11,229.1 By lending sector and instrument 2 U.S. government 2,104.9 2,251.2 2,498.1 2,776.3 2,347.4 2,410.4 2,498.1 2,548.8 2,591.9 2,687.2 2,776.3 3 Treasury securities 2,082.3 2,227.0 2,465.8 2,757.7 2,314.4 2,377.8 2,465.8 2,522.4 2,567.1 2,669.6 2,757.7 4 Agency issues and mortgages 22.6 24.2 32.4 18.6 32.9 32.6 32.4 26.4 24.8 17.6 18.6 5 Private 7,137.4 7,735.9 8,262.4 8,452.8 8,097.6 8,187.3 8,262.4 8,284.6 8,366.4 8,397.0 8,452.8 By instrument 6 Debt capital instruments 5,035.8 5,467.9 5,932.3 6,187.0 5,793.2 5,868.4 5,932.3 5,991.7 6,077.6 6,128.7 6,187.0 7 Tax-exempt obligations 939.4 1,004.4 1,049.8 1,082.1 1,031.4 1,043.0 1,049.8 1,052.8 1,060.7 1,072.9 1,082.1 8 Corporate bonds 852.6 926.9 974.5 1,060.3 950.6 958.1 974.5 995.5 1,021.5 1,043.6 1,060.3 9 Mortgages 3,243.8 3,536.6 3,908.0 4,044.6 3,811.2 3,867.3 3,908.0 3,943.5 3,995.4 4,012.2 4,044.6 10 Home mortgages 2,173.9 2,404.3 2,765.1 2,904.3 2,675.7 2,726.0 2,765.1 2,790.7 2,838.0 2,870.1 2,904.3 11 Multifamily residential 286.7 304.4 305.7 308.9 300.5 304.8 305.7 309.3 310.4 306.9 308.9 12 Commercial 696.4 742.6 753.3 747.7 751.1 752.3 753.3 759.5 763.2 752.1 747.7 13 Farm 86.8 85.3 84.0 83.7 84.0 84.3 84.0 83.9 83.8 83.1 83.7 14 Other debt instruments 2,101.6 2,268.0 2,330.0 2,265.8 2,304.4 2,318.9 2,330.0 2,292.9 2,288.8 2,268.4 2,265.8 15 Consumer credit 743.6 794.7 808.9 792.5 789.4 798.7 808.9 782.3 784.2 783.7 792.5 16 Bank loans n.e.c 710.0 759.8 754.1 731.2 753.3 750.5 754.1 748.5 740.9 734.8 731.2 17 Open market paper 85.7 107.1 116.9 98.5 128.7 131.8 116.9 120.8 119.4 107.0 98.5 18 Other 562.3 606.4 650.1 643.7 633.1 637.9 650.1 641.3 644.3 642.8 643.7 By borrowing sector 19 State and local government 752.5 815.7 858.3 882.6 841.8 852.9 858.3 861.3 866.7 874.6 882.6 20 Household 3,188.9 3,501.5 3,897.7 4,060.7 3,777.2 3,841.9 3,897.7 3,914.9 3,966.3 4,002.6 4,060.7 21 Nonfinancial business 3,196.0 3,418.7 3,506.3 3,509.5 3,478.6 3,492.5 3,506.3 3,508.4 3,533.4 3,519.8 3,509.5 22 Farm 137.6 139.2 140.5 143.1 138.7 141.6 140.5 139.5 142.6 143.6 143.1 23 Nonfarm noncorporate 1,130.5 1,180.5 1,194.3 1,172.7 1,195.4 1,195.1 1,194.3 1,195.4 1,197.4 1,181.9 1,172.7 24 Corporate 1,927.9 2,098.9 2,171.5 2,193.7 2,144.6 2,155.8 2,171.5 2,173.5 2,193.4 2,194.3 2,193.7 25 Foreign credit market debt held in United States 255.7 265.4 288.9 304.4 277.0 283.4 288.9 301.4 288.8 294.5 304.4 26 Bonds 94.0 98.5 120.1 136.5 112.4 112.9 120.1 122.9 126.6 130.7 136.5 27 Bank loans n.e.c 21.5 21.4 18.5 22.5 19.3 19.8 18.5 20.5 19.7 20.0 22.5 28 Open market paper 49.9 63.0 75.3 81.8 65.1 71.5 75.3 87.0 74.0 78.0 81.8 29 U.S. government loans 90.2 82.5 75.0 63.7 80.2 79.3 75.0 70.9 68.4 65.7 63.7 30 Total credit market debt owed by nonfinancial sectors, domestic and foreign 9,498.0 10,252.5 11,049.4 11,533.5 10,721.9 10,881.2 11,049.4 11,134.8 11,247.0 11,378.8 11,533.5 Financial sectors 31 Total credit market debt owed by financial sectors 1,999.8 2,219.4 2,512.0 2,648.2 2,425.3 2,447.7 2,512.0 2,530.5 2,550.7 2,585.3 2,648.2 By instrument 32 U.S. government-related 1,098.4 1,249.3 1,418.4 1,575.4 1,330.1 1,367.9 1,418.4 1,452.1 1,480.3 1,524.3 1,575.4 33 Sponsored credit-agency securities 348.1 373.3 393.7 402.5 381.0 384.4 393.7 397.0 389.6 394.7 402.5 34 Mortgage pool securities 745.3 871.0 1,019.9 1,168.1 944.2 978.5 1,019.9 1,050.3 1,085.9 1,124.8 1,168.1 35 Loans from U.S. government 5.0 5.0 4.9 4.9 5.0 5.0 4.9 4.9 4.9 4.9 4.9 36 Private 901.4 970.0 1,093.5 1,072.7 1,095.1 1,079.8 1,093.5 1,078.4 1,070.3 1,061.0 1,072.7 37 Corporate bonds 331.9 378.2 515.9 561.2 528.0 511.6 515.9 529.7 544.2 546.7 561.2 38 Mortgages 3.4 3.4 4.2 4.1 4.0 4.1 4.2 4.2 4.2 4.4 4.1 39 Bank loans n.e.c 35.6 37.5 38.6 42.3 36.5 36.7 38.6 36.5 37.0 39.0 42.3 40 Open market paper 377.7 409.1 417.7 386.0 400.3 409.6 417.7 400.9 390.1 387.0 386.0 41 Loans from Federal Home Loan Banks 152.8 141.8 117.1 79.1 126.3 117.9 117.1 107.0 94.7 83.9 79.1 By borrowing sector 42 Sponsored credit agencies 353.1 378.3 398.5 407.4 385.9 389.4 398.5 401.8 394.4 399.5 407.4 43 Mortgage pools 745.3 871.0 1,019.9 1,168.1 944.2 978.5 1,019.9 1,050.3 1,085.9 1,124.8 1,168.1 44 Private financial sectors 901.4 970.0 1,093.5 1,072.7 1,095.1 1,079.8 1,093.5 1,078.4 1,070.3 1,061.0 1,072.7 45 Commercial banks 78.8 77.4 76.3 63.4 71.6 70.7 76.3 68.1 65.9 64.6 63.4 46 Bank affiliates 136.2 142.5 114.8 109.4 134.3 122.9 114.8 114.4 113.3 110.5 109.4 47 Savings and loan associations 159.3 145.2 114.0 74.4 125.6 116.2 114.0 102.8 89.4 78.2 74.4 48 Mutual savings banks 18.6 17.2 16.7 14.0 16.7 16.2 16.7 16.4 16.6 15.9 14.0 49 Finance companies 361.4 392.5 536.0 542.0 529.5 529.8 536.0 533.7 532.5 530.8 542.0 50 Real estate investment trusts (REITs) 11.4 10.1 10.6 11.1 10.4 10.3 10.6 10.6 10.8 12.0 11.1 51 Securitized credit obligation (SCO) issuers... 135.7 185.1 225.2 258.5 206.9 213.8 225.2 232.4 241.8 249.1 258.5 All sectors 52 Total credit market debt, domestic and foreign.. 11,497.8 12,471.9 13,561.3 14,181.7 13,147.2 13,328.9 13,561.3 13,665.3 13,797.7 13,964.1 14,181.7 53 U.S. government securities 3,198.3 3,495.6 3,911.7 4,346.8 3,672.5 3,773.4 3,911.7 3,9%. 1 4,067.4 4,206.7 4,346.8 54 State and local obligations 939.4 1,004.4 1,049.8 1,082.1 1,031.4 1,043.0 1,049.8 1,052.8 1,060.7 1,072.9 1,082.1 55 Corporate and foreign bonds 1,278.5 1,403.6 1,610.5 1,758.0 1,591.0 1,582.6 1,610.5 1,648.1 1,692.3 1,720.9 1,758.0 56 Mortgages 3,247.2 3,540.1 3,912.2 4,048.8 3,815.3 3,871.4 3,912.2 3,947.7 3,999.6 4,016.6 4,048.8 57 Consumer credit 743.6 794.7 808.9 792.5 789.4 798.7 808.9 782.3 784.2 783.7 792.5 58 Bank loans n.e.c 767.2 818.6 811.3 795.9 809.1 807.0 811.3 805.6 797.6 793.8 795.9 59 Open market paper 513.4 579.2 609.9 566.3 594.0 612.9 609.9 608.8 583.6 572.0 566.3 60 Other loans 810.2 835.7 847.0 791.4 844.6 840.0 847.0 824.0 812.4 797.3 791.4 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 1990 1991 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998888 11998899 11999900 11999911 Q2 Q3 Q4 QL Q2 Q3 Q4 1 Total funds advanced in credit markets to domestic nonfinancial sectors 9,242.3 9,987.1 10,760.5 11,229.1 10,445.0 10,597.7 10,760.5 10,833.4 10,958.3 11,084.3 11,229.1 2 Total held by federal agencies and foreign sector 2,223.2 2,413.1 2,673.3 2,920.2 2,529.9 2,611.3 2,673.3 2,729.0 2,789.3 2,855.9 2,920.2 By instrument 3 U.S. government securities 651.5 688.9 763.3 862.6 714.1 745.6 763.3 789.5 808.7 835.9 862.6 4 Residential mortgages 900.4 1,038.4 1,221.0 1,394.7 1,126.5 1,171.8 1,221.0 1,261.4 1,306.7 1,352.6 1,394.7 5 Federal Home Loan Bank advances to thrifts 152.8 141.8 117.1 79.1 126.3 117.9 117.1 107.0 94.7 83.9 79.1 6 Other loans and securities 518.5 544.1 571.9 583.8 563.1 576.0 571.9 571.1 579.1 583.4 583.8 By type of lender 7 U.S. government 214.6 207.0 240.6 250.3 227.4 242.7 240.6 248.2 256.6 257.1 250.3 8 Sponsored credit agencies and mortgage pools 1,113.0 1,238.2 1,403.4 1,563.6 1,315.0 1,360.5 1,403.4 1,438.8 1,468.7 1,514.2 1,563.6 9 Monetary authority 240.6 233.3 241.4 272.5 237.8 240.8 241.4 247.3 253.7 264.7 272.5 10 Foreign 655.0 734.6 787.9 833.7 749.8 767.5 787.9 794.7 810.3 819.9 833.7 Agency and foreign debt not in line 1 11 Sponsored credit agencies and mortgage pools 1,098.4 1,249.3 1,418.4 1,575.4 1,330.1 1,367.9 1,418.4 1,452.1 1,480.3 1,524.3 1,575.4 12 Foreign 255.7 265.4 288.9 304.4 277.0 283.4 288.9 301.4 288.8 294.5 304.4 13 Total private domestic holdings 8,373.2 9,088.7 9,794.4 10,188.8 9,522.1 9,637.7 9,794.4 9,857.9 9,938.1 10,047.2 10,188.8 14 U.S. government securities 2,546.8 2,806.7 3,148.4 3,484.1 2,958.5 3,027.7 3,148.4 3,206.5 3,258.7 3,370.8 3,484.1 15 State and local obligations 939.4 1,004.4 1,049.8 1,082.1 1,031.4 1,043.0 1,049.8 1,052.8 1,060.7 1,072.9 1,082.1 16 Corporate and foreign bonds 744.8 809.8 873.2 956.4 842.7 850.5 873.2 892.4 915.8 938.3 956.4 17 Residential mortgages 1,560.2 1,670.4 1,849.8 1,818.5 1,849.7 1,859.0 1,849.8 1,838.7 1,841.7 1,824.4 1,818.5 18 Other mortgages and loans 2,734.7 2,939.2 2,990.4 2,926.7 2,966.2 2,975.4 2,990.4 2,974.6 2,955.9 2,924.8 2,926.7 19 LESS: Federal Home Loan Bank advances 152.8 141.8 117.1 79.1 126.3 117.9 117.1 107.0 94.7 83.9 79.1 20 Total credit market claims held by private financial institutions 7,055.3 7,602.9 8,132.4 8,480.4 7,931.6 7,990.0 8,132.4 8,200.4 8,261.9 8,355.5 8,480.4 By holding institution 21 Commercial banks 2,476.2 2,643.9 2,765.1 2,860.5 2,709.5 2,739.0 2,765.1 2,778.6 2,793.1 2,815.2 2,860.5 22 Savings institutions 1,565.2 1,478.2 1,345.1 1,184.6 1,424.2 1,385.9 1,345.1 1,302.8 1,263.6 1,210.0 1,184.6 23 Insurance and pension fiinds 1,836.1 2,034.0 2,218.1 2,433.5 2,153.3 2,173.8 2,218.1 2,274.9 2,329.6 2,385.5 2,433.5 24 Other finance 1,177.9 1,446.7 1,804.2 2,001.8 1,644.5 1,691.3 1,804.2 1,844.1 1,875.6 1,944.8 2,001.8 By source of funds 25 Private domestic deposits and repurchase agreements 3,581.3 3,790.4 3,843.8 3,844.6 3,806.5 3,812.1 3,843.8 3,873.3 3,836.0 3,812.1 3,844.6 26 Credit market debt 901.4 970.0 1,093.5 1,072.7 1,095.1 1,079.8 1,093.5 1,078.4 1,070.3 1,061.0 1,072.7 27 Other sources 2,572.6 2,842.5 3,195.1 3,563.0 3,030.0 3,098.0 3,195.1 3,248.7 3,355.6 3,482.3 3,563.0 28 Foreign funds 71.6 62.1 86.1 65.5 63.5 86.6 86.1 84.8 55.3 64.8 65.5 29 U.S. Treasury balances 29.0 25.6 30.9 36.6 32.1 36.6 30.9 26.3 36.0 38.5 36.6 30 Insurance and pension reserves 1,723.2 1,908.2 2,067.7 2,286.3 1,983.0 2,018.6 2,067.7 2,126.8 2,174.6 2,237.4 2,286.3 31 Other, net 748.9 846.6 1,010.4 1,174.7 951.3 956.2 1,010.4 1,010.7 1,089.6 1,141.5 1,174.7 Private domestic nonfinancial investors 32 Credit market claims 2,219.3 2,455.9 2,755.5 2,781.1 2,685.7 2,727.6 2,755.5 2,736.0 2,746.5 2,752.7 2,781.1 33 U.S. government securities 1,050.7 1,169.0 1,278.0 1,325.7 1,214.5 1,256.8 1,278.0 1,277.7 1,290.5 1,298.7 1,325.7 34 State and local obligations 486.7 549.4 574.2 583.9 568.9 573.8 574.2 568.2 576.8 584.0 583.9 35 Corporate and foreign bonds 52.4 64.7 194.8 177.7 217.8 201.3 194.8 198.1 201.7 185.1 177.7 36 Open market paper 243.0 245.9 264.7 228.1 264.5 266.4 264.7 250.1 232.1 230.5 228.1 37 Other loans and mortgages 386.5 427.0 443.8 465.7 420.0 429.2 443.8 441.8 445.5 454.5 V 38 Deposits and currency 3,814.5 4,039.7 4,122.7 4,150.8 4,066.6 4,076.1 4,122.7 4,149.5 4,124.4 4,105.6 4,150.8 39 Currency 220.1 231.8 254.4 274.0 242.7 247.2 254.4 262.0 265.9 264.8 274.0 40 Checkable deposits 532.9 532.9 533.3 585.2 514.2 503.5 533.3 515.5 524.3 540.8 585.2 41 Small time and savings accounts 2,156.2 2,254.7 2,313.2 2,332.7 2,286.6 2,295.8 2,313.2 2,342.5 2,338.8 2,324.7 2,332.7 42 Money market fund shares 318.9 405.6 461.6 496.1 425.9 452.1 461.6 509.6 489.6 489.1 496.1 43 Large time deposits 390.3 399.3 358.3 267.1 387.1 374.1 358.3 342.9 319.7 297.8 267.1 44 Security repurchase agreements 182.9 197.9 177.4 163.6 192.7 186.6 177.4 162.9 163.6 159.8 163.6 45 Deposits in foreign countries 13.1 17.6 24.6 32.1 17.5 16.8 24.6 14.3 22.5 28.7 32.1 46 Total of credit market instruments, deposits, and currency 6,033.8 6,495.6 6,878.3 6,931.9 6,752.3 6,803.7 6,878.3 6,885.5 6,870.9 6,858.3 6,931.9 MEMO 47 Public holdings as percent of total 23.4 23.5 24.2 25.3 23.6 24.0 24.2 24.5 24.8 25.1 25.3 48 Private financial intermediation (percent) 97.2 94.2 87.8 82.1 91.6 90.5 87.8 86.7 85.7 83.5 82.1 49 Total foreign funds 726.6 796.7 873.9 899.2 813.3 854.1 873.9 879.5 865.6 884.7 899.2 Corporate equities not included above 50 Total market value 3,619.8 4,374.8 4,084.6 5,219.5 4,400.7 3,824.0 4,084.6 4,635.1 4,669.3 4,937.0 5,219.5 51 Mutual fund shares 478.3 555.1 578.5 852.4 587.9 547.3 578.5 643.0 681.3 764.0 852.4 52. Other equities 3,141.6 3,819.7 3,506.2 4,367.2 3,812.8 3,276.8 3,506.2 3,992.1 3,988.0 4,172.9 4,367.2 53 Holdings by financial institutions 1,113.6 1,416.9 1,342.1 1,844.4 1,459.6 1,232.6 1,342.1 1,572.0 1,577.7 1,708.0 1,844.4 54 Other holdings 2,506.2 2,958.0 2,742.6 3,375.1 2,941.1 2,591.4 2,742.6 3,063.2 3,091.6 3,229.0 3,375.1 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 appear in the Board's z.l (780) quarterly statistical release. For 29. Demand deposits and note balances at commercial banks. ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • July 1992 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, 1987=100, except as noted 1991 1992r MMeeaassuurree 11998899 11999900 11999911 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. 1 Industrial production1 108.1 109.2 107.1 108.0 108.4 108.4 108.1 107.4 106.6 107.2 107.6 108.2 Market groupings 2 Products, total 108.6 110.1 108.1 108.5 108.9 109.0 109.0 108.4 107.5 108.1 108.6 109.1 3 Final, total 109.1 110.9 109.6 109.8 110.4 110.6 110.6 109.9 108.7 109.5 110.0 110.6 4 Consumer goods 106.7 107.3 107.5 108.4 109.4 109.7 110.0 109.1 108.1 108.8 109.5 109.9 5 Equipment 112.3 115.5 112.2 111.6 111.8 111.9 111.4 110.9 109.4 110.3 110.7 111.5 6 Intermediate 106.8 107.7 103.4 104.4 104.3 104.1 103.9 103.8 103.9 103.9 104.3 104.5 7 Materials 107.4 107.8 105.5 107.2 107.5 107.4 106.6 105.8 105.2 105.7 106.1 106.7 Industry groupings 8 Manufacturing 108.9 109.9 107.4 108.4 108.9 109.0 108.6 108.1 107.4 110088..11 110088..55 110099..00 9 Capacity utilization, manufacturing (percent) 83.9 82.3 78.2 78.6 78.8 78.7 78.2 77.7 77.0 7777..33 7777..55 7777..77 10 Construction contracts (1982= 100)3 172.9 156.2 129.lr 150.0 143.0 157.0 134.0 152.0 95.0 100.0 94.0 n.a. 11 Nonagricultural employment, total4 106.0 107.6 106.6 106.6 106.7 106.7 106.5 106.5 106.4 106.5 106.6 106.7 12 Goods-producing, total 102.5 101.0 96.4 96.4 96.3 96.0 95.5 95.3 95.1 95.1 95.1 95.1 13 Manufacturing, total 102.2 100.5 96.9 96.9 96.8 96.6 96.4 96.2 95.9 95.9 95.9 96.0 14 Manufacturing, production worker 102.3 100.0 96.0 96.3 96.0 95.9 95.6 95.4 95.1 95.3 95.4 95.5 15 Service-producing 107.1 109.7 109.9 109.9 110.0 110.1 110.0 110.1 110.0 110.2 110.2 110.4 16 Personal income, total 115.2 123.1 127.2 127.7 128.2 128.4 128.3 129.6 129.3 130.5 131.3 n.a. 17 Wages and salary disbursements 114.4 121.1 124.2 124.9 125.4 125.2 125.4 126.2 125.4 126.9 127.5 n.a. 18 Manufacturing 110.6 113.4 113.5 114.4 114.6 115.6 114.5 115.4 113.4 114.5 114.7 n.a. 19 Disposable personal income 115.2 123.4 128.2 128.9 129.3 129.7 129.5 130.9 130.6 131.8 133.3 n.a. 20 Retail sales6 113.2 117.4 118.4r 118.6 119.0 118.9 118.9 118.8 121.3 123.3 122.1 123.2 Prices7 21 Consumer (1982-84=100) 124.0 130.7 136.2 136.6 137.2 137.4 137.8 137.9 138.1 138.6 139.3 139.5 22 Producer finished goods (1982=100) 113.6 119.2 121.7 121.7 121.4 122.2 122.3 121.9 121.7 121.9 122.0 122.2 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-Hili 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; except as noted 1991 1992 CCaatteeggoorryy 11998899 11999900 11999911 Sept. Oct. Nov. Dec. Jan. Feb.r Mar.r Apr. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 188,601 190,216 191,883 192,240 192,386 192,522 192,661 192,796 192,906 193,036 193,168 2 Labor force (including Armed Forces)1 126,077 126,954 127,421 127,708 127,605 127,444 127,675 128,083 128,309 128,604 128,830 3 Civilian labor force 112233,,886699 112244,,778877 125,303 112255,,559900 112255,,550088 112255,,337744 112255,,661199 112266,,004466 112266,,228877 112266,,559900 112266,,883300 Employment 4 Nonagncultural industries 114,142 114,728 114,644 113,806 113,663 113,500 113,545 113,951 113,811 114,155 114,465 5 Agriculture 3,199 3,186 3,233 3,283 3,204 3,272 3,183 3,166 3,232 3,194 3,209 Unemployment 6 Number 6,528 6,874 8,426 8,501 8,641 8,602 8,891 8,929 9,244 9,242 9,155 7 Rate (percent of civilian labor force) 5.3 5.5 6.7 6.8 6.9 6.9 7.1 7.1 7.3 7.3 7.2 8 Not in labor force 62,524 63,262 64,462 64,532 64,781 65,078 64,986 64,713 64,597 64,432 64,338 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 108,329 109,971 108,975 109,066 109,073 108,843 108,882 108,760 108,866 108,905 109,031 10 Manufacturing 19,442 19,111 18,427 18,414 18,377 18,337 18,293 18,238 18,245 18,246 18,254 11 Mining 693 711 697 684 679 674 670 666 663 661 655 12 Contract construction 5,187 5,136 4,6% 4,699 4,671 4,584 4,589 4,602 4,578 4,594 4,583 13 Transportation and public utilities 5,644 5,826 5,823 5,829 5,828 5,816 5,811 5,794 5,801 5,790 5,787 14 Trade 25,770 25,843 25,412 25,387 25,335 25,261 25,247 25,175 25,293 25,252 25,298 15 Finance 6,695 6,739 6,707 6,692 6,697 6,694 6,701 6,693 6,701 6,704 6,710 16 Service 27,120 28,240 28,778 28,937 29,019 29,008 29,057 29,073 29,075 29,091 29,163 17 Government 17,779 18,322 18,434 18,424 18,467 18,469 18,514 18,519 18,510 18,567 18,581 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 excludes 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 • July 1992 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1991 1992 1991 1992 1991 1992 Series Q2 Q3 Q4 Qlr Q2 Q3 Q4 Ql Q2 Q3 Q4 Qlr Output (1987=100) Capacity (percent of 1987 output) Capacity utilization rate (percent) 1 Total industry 106.4 108.1 107.9 107.2 134.5 135.3 136.2 137.0 79.1 79.9 79.3 78.2 2 Manufacturing 106.7 108.5 108.6 108.0 136.9 137.9 138.9 139.7 77.9 78.7 78.2 77.3 3 Primary processing 100.8 104.1 104.1 103.9 127.5 128.1 128.8 129.3 79.1 81.2 80.8 80.4 4 Advanced processing 109.4 110.6 110.7 109.9 141.3 142.4 143.5 144.6 77.4 77.7 77.1 76.0 5 Durable goods 106.7 108.1 107.7 106.7 140.9 141.8 142.8 143.7 75.7 76.2 75.4 74.2 6 Lumber and products 94.0 95.1 95.1 98.1 125.2 125.4 125.7 125.9 75.1 75.8 75.7 77.9 7 Primary metals 95.9 102.0 102.5 102.4 128.6 129.0 129.3 129.1 74.6 79.1 79.2 79.3 8 Iron and steel 92.8 100.3 103.2 104.3 133.5 134.0 134.5 134.1 69.5 74.8 76.7 77.8 9 Nonferrous 100.3 104.5 101.4 99.8 121.5 121.7 121.9 122.1 82.6 85.8 83.2 81.7 10 Nonelectrical machinery 123.5 123.5 122.7 122.2 159.5 161.2 162.8 164.3 77.4 76.6 75.4 74.4 11 Electrical machinery 110.6 111.2 110.4 110.6 144.0 145.3 146.6 147.9 76.8 76.5 75.3 74.8 12 Motor vehicles and parts 89.5 95.9 97.0 91.7 134.2 134.9 135.6 136.2 66.7 71.1 71.5 67.3 13 Aerospace and miscellaneous transportation equipment 106.4 105.2 102.8 99.7 137.9 138.7 139.6 140.4 77.2 75.9 73.7 71.0 14 Nondurable goods 106.7 109.1 109.7 109.7 131.9 132.9 133.8 134.8 80.9 82.1 82.0 81.4 15 Textile mill products 99.4 104.1 104.1 104.4 117.7 118.0 118.3 118.8 84.5 88.2 88.0 87.9 16 Paper and products 102.7 107.6 107.4 105.6 117.1 117.9 118.7 119.3 87.7 91.2 90.5 88.4 17 Chemicals and products 109.3 112.1 113.0 113.4 139.7 141.0 142.3 143.4 78.2 79.5 79.4 79.1 18 Plastics materials 115.6 125.4 126.2 139.2 142.6 146.1 83.0 87.9 86.4 85.2 19 Petroleum products 107.6 108.1 107.1 106.9 121.4 121.4 121.4 121.4 88.6 89.0 88.2 88.1 20 Mining 101.1 101.8 99.7 97.9 114.3 114.6 114.7 114.7 88.4 88.9 87.0 85.4 21 Utilities 109.6 110.4 109.4 107.4 128.4 128.8 129.2 129.5 85.3 85.7 84.7 82.9 22 Electric 114.4 115.2 111.6 109.9 124.3 124.7 125.2 125.6 92.1 92.4 89.1 87.5 Previous cycle Latest cycle 1991 1991 1992r High Low High Low Apr. Sept. Oct. Nov. Jan. Feb. Mar. Apr.p Capacity utilization rate (percent) 1 Total industry 89.2 72.6 87.3 71.8 78.6 79.9 79.8 79.3 78.7 78.0 78.3 78.4 78.7 2 Manufacturing 88.9 70.8 87.3 70.0 77.5 78.8 78.7 78.2 77.7 77.0 77.3 77.5 77.7 3 Primary processing 92.2 68.9 89.7 66.8 78.2 81.3 81.4 80.8 80.2 80.2 80.3 80.5 80.8 4 Advanced processing 87.5 72.0 86.3 71.4 77.3 77.7 77.6 77.1 76.6 75.7 76.1 76.2 76.4 5 Durable goods 88.8 68.5 86.9 65.0 75.4 76.2 75.9 75.5 74.8 73.8 74.5 74.5 74.9 6 Lumber and products 90.1 62.2 87.6 60.9 74.1 75.8 74.6 76.7 75.7 77.4 78.2 78.0 77.6 7 Primary metals 100.6 66.2 102.4 46.8 73.6 79.3 79.4 80.0 78.3 79.2 79.4 79.4 79.5 8 Iron and steel 105.8 66.6 110.4 38.3 68.7 75.1 76.2 78.5 75.5 78.1 77.3 78.1 77.6 9 Nonferrous 92.9 61.3 90.5 62.2 81.1 85.7 84.5 82.5 82.6 81.0 82.7 81.4 82.4 10 Nonelectrical machinery 96.4 74.5 92.1 64.9 77.7 76.1 76.1 75.4 74.7 74.1 74.3 74.7 75.0 11 Electrical machinery 87.8 63.8 89.4 71.1 76.4 76.2 75.1 75.5 75.2 74.6 74.9 74.9 74.8 12 Motor vehicles and parts 93.4 51.1 93.0 44.5 64.3 73.6 74.2 70.7 69.6 64.0 68.8 69.1 72.6 13 Aerospace and miscellaneous transportation equipment. 77.0 66.6 81.1 66.9 78.0 75.3 74.8 73.9 72.3 71.2 71.0 70.9 70.8 14 Nondurable goods 87.9 71.8 87.0 76.9 80.5 82.3 82.4 81.9 81.6 81.4 81.2 81.5 81.5 15 Textile mill products 92.0 60.4 91.7 73.8 82.7 87.4 89.2 88.2 86.5 86.9 88.1 88.7 88.8 16 Paper and products 96.9 69.0 94.2 82.0 86.7 91.4 92.1 89.4 90.0 89.9 87.6 87.9 88.9 17 Chemicals and products 87.9 69.9 85.1 70.1 78.3 79.6 80.0 79.4 78.9 78.7 79.0 79.5 79.6 18 Plastics materials 102.0 50.6 90.9 63.4 80.5 87.0 89.5 87.2 82.5 83.1 83.0 82.7 84.0 19 Petroleum products 96.7 81.1 89.5 68.2 87.1 89.4 87.3 87.9 89.5 87.8 88.1 88.3 88.8 20 Mining 94.4 88.4 96.6 80.6 88.3 88.5 87.9 86.8 86.2 85.3 85.7 85.1 85.8 21 Utilities 95.6 82.5 88.3 76.2 82.6 85.1 84.8 85.9 83.4 82.6 82.2 84.0 83.8 22 Electric 99.0 82.7 88.3 78.7 88.5 90.8 89.7 90.0 87.7 87.1 86.8 88.7 88.5 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 Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan.r Feb.r MMaarr..rr Apr.p Index (1987 = 100) MAJOR MARKETS 1 Total index 100.0 107.1 105.5 106.4 107.3 108.1 108.0 108.4 108.4 108.1 107.4 106.6 107.2 107.6 108.2 7 Products 60.8 108.1 106.9 107.7 108.6 108.7 108.5 108.9 109.0 109.0 108.4 107.5 108.1 108.6 109.1 3 Final products 46.0 109.6 108.7 109.3 110.1 110.2 109.8 110.4 110.6 110.6 109.9 108.7 109.5 110.0 110.6 4 Consumer goods, total 26.0 107.5 105.5 106.6 108.0 108.3 108.4 109.4 109.7 110.0 109.1 108.1 108.8 109.5 109.9 5 Durable consumer goods 5.6 102.3 99.3 101.1 104.2 105.5 104.0 107.7 107.5 106.0 104.6 101.3 105.3 105.9 107.9 6 Automotive products 2.5 97.8 94.2 97.4 100.4 102.3 98.6 106.5 106.7 103.6 101.3 94.2 101.6 103.3 107.5 7 Autos and trucks 1.5 90.2 85.0 89.2 92.5 98.1 90.2 103.0 105.1 99.0 96.7 84.3 94.3 95.7 102.5 8 Autos, consumer .9 84.6 78.3 81.9 83.8 92.8 83.0 94.6 92.6 89.8 88.2 79.1 84.8 81.9 93.2 9 Trucks, consumer .6 99.6 96.3 101.6 107.1 106.9 102.2 117.1 126.1 114.5 111.0 93.0 110.2 118.8 118.3 10 Auto parts and allied goods... 1.0 109.3 108.0 109.5 112.2 108.6 111.3 111.8 109.1 110.5 108.2 109.1 112.6 114.8 115.0 11 Other 3.1 105.8 103.4 104.1 107.3 108.1 108.3 108.7 108.1 108.0 107.2 106.9 108.2 108.0 108.2 1? Appliances, A/C, and TV .8 99.5 97.3 96.8 104.8 100.6 99.6 104.1 102.1 102.3 98.9 99.6 102.7 103.5 101.7 n Carpeting and furniture .9 99.4 97.0 96.9 99.2 103.1 103.9 101.8 101.8 101.6 101.5 101.1 102.4 102.0 103.7 14 Miscellaneous home goods ... 1.4 113.4 110.8 112.8 113.8 115.5 115.9 115.6 115.6 115.2 115.5 114.7 115.0 114.2 114.7 is Nondurable consumer goods 20.4 109.0 107.2 108.1 109.0 109.0 109.6 109.8 110.3 111.1 110.3 110.0 109.8 110.5 110.5 16 Foods and tobacco 9.1 106.7 105.3 106.2 106.9 106.9 107.1 107.8 107.8 108.1 107.0 107.3 107.3 107.6 107.7 17 Clothing 2.6 93.5 90.6 92.0 93.9 94.3 94.8 95.2 96.3 96.5 96.2 95.0 95.2 95.2 94.7 18 Chemical products 3.5 115.8 115.0 113.9 114.3 115.4 117.4 117.3 117.0 117.9 118.0 118.1 118.5 119.2 119.2 19 Paper products 2.5 123.6 122.7 121.8 123.3 122.1 122.6 124.8 125.6 126.4 126.8 126.8 124.7 125.3 125.7 70 2.7 108.5 104.4 109.0 110.0 109.4 109.5 106.7 108.5 112.0 109.3 106.8 106.4 109.1 109.3 ?1 Fuels .7 103.5 101.4 103.6 104.9 105.2 104.0 104.4 103.5 103.6 104.3 103.8 103.5 102.8 104.7 22 Residential utilities 2.0 110.4 105.5 111.0 111.9 110.9 111.5 107.6 110.3 115.1 111.2 108.0 107.5 111.5 111.0 ?3 20.0 112.2 112.8 112.7 112.8 112.8 111.6 111.8 111.9 111.4 110.9 109.4 110.3 110.7 111.5 74 Business equipment 13.9 121.5 121.3 121.7 121.9 122.5 121.3 122.2 122.3 121.8 121.4 119.9 121.2 121.8 122.8 75 Information processing and related .. 5.6 131.5 131.5 131.8 130.9 131.1 130.3 130.3 131.7 133.4 134.0 134.1 134.7 135.3 136.1 76 Office and computing 1.9 155.5 155.6 155.6 154.0 156.0 153.1 152.2 156.0 157.8 159.1 160.6 162.4 163.8 165.5 77 4.0 108.0 109.3 109.3 109.1 109.0 108.6 108.2 106.8 104.2 102.3 100.7 101.5 102.1 102.4 78 Transit 2.5 126.8 124.1 125.9 128.0 131.2 126.7 132.7 133.1 130.5 129.5 124.2 129.3 129.6 132.7 79 Autos and trucks 1.2 88.6 84.4 87.9 90.8 96.6 86.2 99.3 101.1 96.5 96.1 84.9 94.7 95.0 101.0 30 Other 1.9 113.6 112.7 113.0 114.8 114.0 114.8 114.2 113.6 113.8 114.1 113.1 112.9 113.5 113.8 31 Defense and space equipment 5.4 91.1 92.5 91.5 91.0 90.0 89.8 89.1 89.1 8888..88 8888..11 86.7 86.2 86.1 86.0 37 Oil and gas well drilling .6 93.3 105.1 101.3 103.0 97.8 86.7 80.1 79.0 7788..11 7755..88 71.8 73.9 76.2 79.2 33 Manufactured homes .2 85.5 83.1 86.6 90.8 86.5 90.3 86.2 86.3 87.0 87.9 98.4 99.7 98.7 101.5 34 Intermediate products, total 14.7 103.4 101.2 102.7 104.0 104.0 104.4 104.3 104.1 103.9 103.8 103.9 103.9 104.3 104.5 35 Construction supplies 6.0 96.0 94.9 95.8 97.4 96.9 96.7 96.5 95.4 95.9 95.0 95.5 95.9 96.1 96.7 36 Business supplies 8.7 108.4 105.6 107.5 108.5 109.0 109.7 109.7 110.1 109.4 110.0 109.9 109.5 110.1 110.0 37 39.2 105.5 103.4 104.5 105.4 107.0 107.2 107.5 107.4 106.6 105.8 105.2 105.7 106.1 106.7 38 Durable goods materials 19.4 107.1 104.9 106.2 106.7 108.2 109.1 109.3 108.8 108.6 108.1 107.0 108.1 108.3 108.8 39 Durable consumer parts 4.2 96.4 92.1 95.5 97.3 100.2 100.1 101.3 101.6 100.5 97.0 95.3 97.1 98.2 100.2 40 7.3 114.4 114.6 114.8 113.6 113.5 114.3 113.9 113.6 113.7 114.2 114.1 115.2 115.0 115.6 41 Other 7.9 106.0 102.6 103.8 105.3 107.5 109.0 109.3 108.2 108.3 108.4 106.7 107.4 107.5 107.0 47 Basic metal materials 2.8 106.0 101.6 103.0 105.9 108.8 110.2 109.5 107.7 108.1 108.1 105.1 107.1 106.5 106.3 43 Nondurable goods materials 9.0 105.9 103.1 103.7 104.9 108.1 107.8 108.3 109.6 107.7 107.1 107.3 107.1 108.0 108.7 44 Textile materials 1.2 97.0 94.7 96.8 98.1 101.4 101.5 99.5 101.8 99.9 98.5 98.9 101.5 101.8 102.0 45 Pulp and paper materials 1.9 106.9 102.0 101.5 106.9 110.3 108.2 110.4 112.0 108.6 109.6 107.4 106.7 106.7 108.5 46 Chemical materials 3.8 106.1 102.9 103.9 103.9 107.7 107.9 108.2 109.9 108.3 107.0 107.6 106.6 107.9 108.7 47 Other 2.1 109.7 109.0 109.2 108.6 110.5 110.9 111.3 111.2 110.1 109.7 111.2 111.1 112.5 112.5 48 10.9 102.3 101.1 102.4 103.4 104.1 103.3 103.6 103.1 102.2 100.4 100.4 100.5 100.5 101.3 49 7.2 102.4 100.5 101.2 104.7 106.2 104.5 103.8 102.8 100.9 100.4 100.5 100.6 99.3 100.6 50 Converted fuel materials 3.7 102.0 102.4 104.7 101.0 100.1 101.0 103.4 103.8 104.5 100.5 100.2 100.4 102.8 102.6 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.3 107.6 106.1 106.9 107.8 108.4 108.5 108.6 108.5 108.3 107.7 107.3 107.5 108.0 108.4 52 Total excluding motor vehicles and parts... 95.3 107.9 106.5 107.3 108.1 108.6 108.8 108.8 108.8 108.7 108.0 107.6 107.8 108.3 108.6 53 Total excluding office and computing machines 97.5 105.8 104.2 105.2 106.2 106.9 106.8 107.3 110077..22 106.8 110066..11 110055..33 110055..88 110066..22 110066..77 54 Consumer goods excluding autos and 24.5 108.6 106.7 107.6 108.9 108.9 109.5 109.8 110099..99 110.7 110099..88 110099..66 110099..77 111100..33 111100..44 55 Consumer goods excluding energy 23.3 107.4 105.6 106.3 107.7 108.1 108.3 109.7 109.8 109.8 109.1 108.3 109.1 109.5 110.0 56 Business eauioment excluding autos and trucks 12.7 124.8 125.2r 125.0 125.0 125.0 124.7 124.4 124.4 124.3 112233..99 112233..44 112233..99 112244..55 112255..00 57 Business equipment excluding office and computing equipment 12.0 116.0 115.7 116.3 116.7 117.0 116.2 117.3 116.9 116.0 111155..33 111133..33 111144..55 111155..00 111155..88 58 Materials excluding energy 28.4 106.7 104.3 105.4 106.1 108.2 108.7 109.0 109.1 108.3 107.8 107.1 107.7 108.2 108.7 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • July 1992 2.13—Continued 1987 1991 1992 Group c SS o IICC de 22 p p o ro r- - a 1 v 99 g 1 . tion Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan.r Feb/ Mar/ Apr.p Index (1987 = 100) MAJOR INDUSTRIES 1 Total index 100.0 107.1 105.5 106.4 107.3 108.1 108.0 108.4 108.4 108.1 107.4 106.6 107.2 107.6 108.2 2 Manufacturing 84.4 107.4 105.9 106.6 107.5 108.3 108.4 108.9 109.0 108.6 108.1 107.4 108.1 108.5 109.0 3 Primary processing 26.7 102.4 99.6 100.7 102.1 103.7 104.1 104.4 104.7 104.1 103.5 103.6 103.9 104.2 104.7 4 Advanced processing 57.7 109.8 108.9 109.3 109.9 110.5 110.3 111.0 111.0 110.7 110.3 109.2 110.0 110.4 111.0 5 Durable goods 47.3 107.1 106.0 106.7 107.3 108.1 107.8 108.4 108.2 107.8 107.1 105.8 107.0 107.2 108.0 6 Lumber and products ... ' ' 24 2.0 94.2 92.7 92.5 96.7 94.8 95.3 95.2 93.8 96.4 95.2 97.4 98.5 98.3 97.8 7 Furniture and fixtures ... 25 1.4 99.1 98.3 98.5 99.4 100.5 101.3 101.2 100.5 99.9 100.6 98.7 98.1 98.7 100.2 8 Clay, glass, and stone products 32 2.5 94.9 94.2 95.1 95.0 95.8 95.5 94.4 94.4 92.8 93.0 92.8 94.4 95.1 95.7 9 Primary metals 33 3.3 99.5 94.5 96.9 96.4 101.2 102.6 102.3 102.6 103.5 101.3 102.5 102.5 102.3 102.2 10 Iron and steel 331,2 1.9 98.0 91.6 94.0 92.9 99.5 100.6 100.8 102.4 105.6 101.7 105.0 103.6 104.3 103.3 11 Raw steel .1 97.3 91.0 88.9 94.0 102.6 102.4 100.9 101.3 99.1 97.6 103.3 102.7 98.8 98.6 12 Nonferrous 333333--66,,99 1.4 101.5 98.5 101.0 101.5 103.5 105.5 104.4 102.9 100.5 100.8 98.9 101.0 99.4 100.7 13 Fabricated metal products 34 5.4 100.4 98.0 99.1 99.8 100.9 101.4 101.9 101.9 101.8 101.2 99.7 100.5 100.1 100.7 14 Nonelectrical machinery. 35 8.6 123.5 123.5 123.6 123.4 123.9 123.3 123.1 123.5 122.8 121.9 121.4 122.1 123.2 124.0 15 Office and computing machines 357 2.5 155.5 155.6 155.6 154.0 156.0 153.0 152.2 155.9 157.8 159.1 160.5 162.4 163.9 165.5 16 Electrical machinery 36 8.6 110.1 109.7 110.6 111.5 111.0 111.5 111.0 109.8 110.7 110.6 110.0 110.8 111.0 111.2 17 Transportation equipment 37 9.8 98.6 97.2 98.2 99.7 101.3 99.0 102.2 102.4 99.7 98.0 93.8 96.9 97.1 99.4 18 Motor vehicles and parts 371 4.7 90.4 86.2 89.8 92.5 96.7 91.6 99.5 100.4 95.9 94.6 87.1 93.8 94.3 99.2 19 Autos and light trucks 2.3 89.4 84.0 88.2 91.2 97.3 89.1 101.8 103.2 97.6 95.5 83.5 92.9 93.7 101.1 20 Aerospace and miscellaneous transportation equipment.. 372-6,9 5.1 106.0 107.2 105.8 106.1 105.4 105.6 104.6 104.3 103.1 101.2 99.8 99.7 99.6 99.6 21 Instruments 38 3.3 118.2 118.6 118.2 117.3 116.5 116.9 118.1 118.2 118.7 119.0 118.3 118.7 117.9 117.9 22 Miscellaneous 39 1.2 119.3 117.5 118.7 119.8 121.6 123.2 121.5 120.6 120.7 121.0 121.2 120.2 119.9 120.8 23 Nondurable goods 37.2 107.9 105.9 106.5 107.6 108.6 109.0 109.6 110.1 109.6 109.5 109.5 109.4 110.1 110.3 24 Foods ' ' 20 8.8 108.6 107.6 107.8 108.6 108.3 108.7 109.5 109.4 110.1 109.6 109.2 109.5 110.1 110.4 25 Tobacco products 21 1.0 99.7 97.6 98.7 99.4 102.6 103.1 102.7 102.2 97.7 94.7 98.8 98.5 99.5 97.5 26 Textile mill products 22 1.8 100.5 97.2 99.2 101.7 104.2 104.7 103.2 105.5 104.4 102.5 103.1 104.6 105.5 105.7 27 Apparel products 23 2.4 96.2 93.2 95.2 96.2 97.8 98.3 98.1 98.7 98.8 99.0 97.5 97.5 97.6 97.0 28 Paper and products 26 3.6 105.1 101.3 101.3 105.3 108.1 106.5 108.0 109.0 106.1 107.0 107.1 104.5 105.0 106.5 29 Printing and publishing .. 27 6.4 112.3 110.7 110.6 111.2 111.9 112.3 113.3 114.4 114.2 114.5 114.8 114.2 114.4 114.5 30 Chemicals and products . 28 8.6 110.9 109.0 109.2 109.6 111.5 112.3 112.6 113.5 113.0 112.6 112.7 113.3 114.3 114.6 31 Petroleum products 29 1.3 107.5 105.7 107.5 109.6 108.3 107.3 108.6 106.0 106.7 108.6 106.6 106.9 107.3 107.9 32 Rubber and plastic products 30 3.0 110.0 106.6 109.2 110.5 110.1 112.6 113.8 113.2 112.6 113.0 113.2 114.0 114.8 115.3 33 Leather and products ... 31 .3 88.1 90.0 89.5 90.9 91.0 87.1 85.8 83.9 84.3 83.2 83.0 81.4 82.2 82.5 34 Mining 7.9 101.1 100.9 100.2 102.1 102.7 101.3 101.4 100.7 99.6 98.8 97.8 98.3 97.6 98.4 35 Metal 10 .3 150.2 145.7 148.0 157.0 153.0 155.5 153.1 146.5 151.5 154.0 144.2 152.9 153.1 150.8 36 Coal 11,12 1.2 109.2 105.9 103.4 110.2 116.0 110.8 110.1 107.9 108.4 107.6 107.3 107.9 103.0 105.6 37 Oil and gas extraction 13 5.7 95.8 96.6 96.0 96.9 96.4 95.7 96.0 96.0 94.1 93.0 92.4 92.7 92.3 92.9 38 Stone and earth minerals .. 14 .7 108.1 107.0 107.5 106.4 107.8 107.0 107.3 105.9 105.8 106.4 104.8 103.5 107.3 107.5 39 Utilities 7.6 109.2 105.9 111.4 111.5 110.9 110.7 109.7 109.4 111.0 107.9 106.8 106.4 108.9 108.7 40 Electric 491,3 PT 6.0 112.8 109.8 116.4 117.1 116.6 115.6 113.4 112.2 112.7 109.9 109.3 109.0 111.5 111.3 41 Gas 492,3PT 1.6 96.0 91.6 92.8 90.7 89.7 92.4 95.8 98.9 104.7 100.5 97.5 96.9 99.4 99.1 SPECIAL AGGREGATES 42 Manufacturing excluding motor vehicles and parts 79.8 108.4 107.1 107.6 108.3 109.0 109.3 109.5 109.5 109.3 108.9 108.6 108.9 109.3 109.6 43 Manufacturing excluding office and computing machines 82.0 106.0 104.4 105.1 106.1 106.9 107.0 107.6 107.6 107.1 106.6 105.8 106.4 106.8 107.3 Gross value (billions of 1982 dollars, annual rates) MAJOR MARKETS 44 Products, total 1,734.8 1,880.0 1,853.3 1,875.7 1,890.5 1,895.3 1,885.5 1,901.8 1,911.4 1,904.9 1,888.9 1,869.5 1,889.2 1,903.3 1,914.8 45 Final 1,350.9 1,481.8 1,464.6 1,478.1 1,490.5 1,496.1 1,484.5 1,501.5 1,510.0 1,504.1 1,488.0 1,468.7 1,491.5 1,501.8 1,513.4 46 Consumer goods 833.4 879.8 862.9 874.4 884.2 888.3 882.7 898.3 902.4 902.2 894.5 877.6 890.3 895.6 902.9 47 Equipment 517.5 602.0 601.7 603.7 606.2 607.8 601.8 603.3 607.6 601.8 593.5 591.1 601.1 606.2 610.5 48 Intermediate 384.0 398.2 388.7 397.6 400.1 399.2 401.0 400.3 401.4 400.8 401.0 400.7 397.7 401.5 401.4 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 1992 IItteemm 11998899 11999900 11999911 June July Aug. Sept. Oct. Nov. Dec. Jan.r Feb.r Mar. Private residential real estate activity (thousands of units, except as noted) NEW UNITS 1 Permits authorized 1,339 1,111 949R 956R 971R 940R 974R 994R 979R 1,073R 1,106 1,146 1,094 932 794 754R 759R 782R 764R 782 788R 792R 873R 913 946 907 3 Two-or-more-family 407 317 195R 197R 189R 176R 192R 206R 187R 200R 193 200 187 4 Started 1,376 1,193 1,014 1,036 1,053 1,053 1,020 1,085 1,085 1,118 1,180 1,257 1,344 1,003 895 840 870 881 881 864 887 907 972 989 1,109 1,077 6 Two-or-more-family 373 298 174 166 172 172 156 198 178 146 191 148 267 7 Under construction at end of period1.. 850 711 606 654 652 648 632 631 633 633 640 633 666 535 449 434 446 452 455 452 451 454 458 466 468 490 9 Two-or-more-family 315 262 173 208 200 193 180 180 179 175 174 165 176 10 Completed 1,423 1,308 1,091 1,104 1,065 1,051 1,193 1,073 1,021 1,021 1,043 1,087 1,104 ll One-family 1,026 966 838 817 809 821 870 879 824 851 838 910 952 12 Two-or-more-family 396 342 253 287 256 230 323 194 197 170 205 177 152 13 Mobile homes shipped 198 188 171 172 175 175 172 171 171 176 192 197 197 Merchant builder activity in one-family units 14 Number sold 650 535 507 513 505 522 499 526 557788 557788RR 664477 660022 551133 15 Number for sale at end of period ... 365 321 283 2% 295 292 292 289 286 283 281 269 276 Price of units sold (thousands of dollars) 120.4 122.3 120.0 119.0 120.0 120.8 120.0 122.6 118.5 122.0 123.3 118.0 119.9 17 Average 148.3 149.0 147.0 145.9 148.2 141.8 147.3 147.4 141.7 143.0R 144.3 147.1 146.5 EXISTING UNITS (one-family) 18 Number sold 3,346 3,211 3,219 3,480 3,260 3,190 3,120 3,150 3,230 3,310 3,220 3,490 3,510 Price of units sold (thousands of dollars) 19 Median 92.9 95.2 99.7 102.1 103.4 102.0 100.3 99.1 97.9 100.3 102.4 102.8 104.0 20 Average 118.0 118.3 127.4 130.6 132.2 130.9 127.8 126.4 124.9 127.3 130.5 128.8 130.2 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 443,720 446,433 403,955 398,189 398,409 403,151 406,983 408,779 405,482 400,825 409,731 413,342 419,889 22 Private 345,416 337,776 295,187 290,871 290,299 293,402 2%,621 2%,306 293,693 291,202 2%, 186 298,094 301,067 2 2 2 2 2 2 3 7 8 4 5 6 R N e o P O C I s n n i u o t r d d h b e m e u l e s n i s m r i c t t d i r b e e u a i r u a l n t c l i i t l l i i d i a b a t l i u i l n e , i b s g l t u d s o a i i t l n n a d d g l i s n o g t s h er 1 1 2 6 4 9 4 1 3 0 5 6 8 9 , , , , , , 2 4 4 5 8 6 7 5 1 9 6 8 4 1 2 6 5 3 1 1 6 4 2 2 8 5 6 2 1 3 2 4 , , , , , , 6 8 5 8 8 9 1 6 9 4 5 2 4 6 1 9 6 0 1 1 4 2 4 2 6 3 7 0 4 1 0 4 , , , , , , 9 7 1 7 5 6 6 9 0 3 9 2 1 7 7 2 0 6 1 1 4 4 2 2 5 3 0 0 7 3 8 2 , , , , , , 2 4 8 5 5 6 8 2 6 8 % % 2 9 8 9 1 1 4 4 2 2 5 3 3 7 0 0 8 2 , , , , , , 5 1 8 6 0 2 5 4 8 7 3 6 7 4 5 4 9 0 1 1 4 4 2 6 1 3 6 3 0 2 9 0 , , , , , , 3 8 4 8 6 9 4 7 1 0 0 7 1 0 8 0 2 3 1 1 4 4 2 2 6 3 3 5 0 0 6 0 , , , , , , 5 3 6 5 5 0 2 1 1 7 8 4 1 5 8 8 9 3 1 1 4 4 2 2 6 2 2 4 0 1 6 9 , , , , , , 5 5 6 5 9 3 7 1 5 7 8 8 7 9 7 3 0 7 1 1 4 4 2 2 6 2 3 2 0 1 6 7 , , , , , , 0 1 3 6 4 2 3 5 6 6 7 1 1 5 8 5 4 9 1 1 4 4 2 2 6 2 1 0 0 2 5 5 , , , , , , 8 7 7 4 3 8 1 6 7 7 7 2 9 3 0 2 8 4 1 1 4 3 2 2 7 2 3 9 0 2 0 6 , , , , , , 2 7 7 0 4 1 3 1 4 7 2 1 1 1 8 2 4 4 1 1 4 4 2 2 7 2 1 3 0 2 0 7 , , , , , , 0 1 8 3 7 3 6 4 7 0 0 8 2 9 1 5 7 9 1 1 4 2 4 2 7 2 2 0 1 3 3 7 , , , , , , 2 2 4 3 7 3 9 1 5 7 3 3 6 1 5 2 3 4 29 Public 98,303 108,655 108,769 107,318 108,110 109,749 110,361 112,472 111,790 109,624 113,545 115,249 118,821 30 Military 3,520 2,734 1,880 1,864 1,759 1,783 2,261 1,181 1,829 2,671 2,039 2,206 2,573 31 Highway 28,171 30,595 29,012 28,776 28,854 30,047 28,610 29,038 28,737 28,991 29,151 31,920 30,327 32 Conservation and development 4,989 4,718 5,331 5,807 4,688 4,901 4,226 6,095 6,812 5,412 5,346 5,766 6,013 33 Other 61,623 70,608 72,546 70,871 72,809 73,018 75,264 76,158 74,412 72,550 77,009 75,357 79,908 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 • July 1992 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data, except as noted Change from 12 Change from 3 months earlier months earlier (annual rate) Change from 1 month earlier IIInnndddeeexxx IIIttteeemmm llleeevvveeelll,,, 1991 1992 1991 1992 AAAppprrr... 11999911 11999922 111999999222 AApprr.. AApprr.. June Sept. Dec. Mar. Dec. Jan. Feb. Mar. Apr. CONSUMER PRICES2 (1982-84=100) 1 AH items 4.9 3.2 3.0 3.0 3.2 3.5 .2 .1 .3 .5 .2 139.5 2 Food 4.1 1.0 4.8 -2.3 2.7 1.5 .3 -.4 .3 .5 -.1 138.1 3 Energy items 4.0 .0 -.8 1.2 3.6 -6.9 .1 -1.5 -.9 .6 .4 99.5 4 All items less food and energy 5.1 3.9 3.2 4.6 3.1 4.8 .2 .3 .4 .5 .3 146.6 5 Commodities 4.0 3.0 2.2 4.4 .6 5.3 -.2 .2 .6 .5 .2 132.4 6 Services 5.8 4.3 3.3 4.6 4.3 4.8 .4 .4 .3 .5 .3 154.8 PRODUCER PRICES (1982=100) 7 Finished goods 3.3 .9 .7 1.3 1.0 .7 -.1 -.3 .2 .2 .2 122.2 8 Consumer foods 1.7 -1.9 -.6 -4.4 -1.0" .7" -.1" -.4" 1.1 -.5 -.3 122.9 9 Consumer energy 11.3 -.5 -1.5 3.7 -.5 -7.0 -1.4 -2.8 -.1 1.2 .5 75.3 10 Other consumer goods 4.2 2.7 1.8 3.6 2.4 3.0 .1 .4 .1 .2 .4 136.7 11 Capital equipment 3.3 1.7 1.6 1.3 1.9 1.9 .2 .2 .0 .2 .2 128.4 Intermediate materials 12 Excluding foods and feeds 1.2 -.1 -1.0 .4 -1.7 .0 -.1 -.5 .5 .0 .1 114.0 13 Excluding energy .8 .2 -.7 -1.3 .0 1.7 .1 -.2 .4 .2 .0 121.8 Crude materials 14 Foods -5.3 -3.2 -8.6 -6.6 -4.9" 12.6" -.6" 2.0" 2.2 -1.2 -1.4 105.5 15 Energy 4.9 -1.6 .5 -.5 5.3r -21.2" -3.9" -3.6" 1.2 -3.4 2.7 75.5 16 Other -3.7 -3.2 -14.1 -4.9 —5.9" 13.6" -.2" -.4" 1.4 2.2 .2 128.5 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 1992 11998899 11999900 11999911 Ql Q2 Q3 Q4 Ql GROSS DOMESTIC PRODUCT 1 Total 5,244.0 5,513.8 5,672.6 5,589.0 5,652.6 5,709.2 5,739.7 5,809.3 By source 2 Personal consumption expenditures 3,517.9 3.742.6 3,889.1 3,827.7 3.868.5 3,916.4 3,943.7 4,023.5 3 Durable goods 459.8 465.9 445.2 440.7 440.0 452.9 447.3 468.3 4 Nondurable goods 1,146.9 1.217.7 1,251.9 1,246.3 1,252.9 1,257.4 1.251.1 1,270.8 5 Services 1,911.2 2,059.0 2,191.9 2,140.7 2.175.6 2,206.1 2.245.2 2,284.5 6 Gross private domestic investment 837.6 802.6 726.7 709.3 708.8 740.9 747.9 712.4 7 Fixed investment 801.6 802.7 745.2 748.4 745.8 744.5 742.0 745.0 8 Nonresidential 570.7 587.0 550.1 560.0 554.6 546.8 539.0 535.3 9 Structures 193.1 198.7 174.6 184.0 180.0 169.0 165.2 161.1 10 Producers' durable equipment 377.6 388.3 375.5 375.9 374.7 377.8 373.8 374.2 11 Residential structures 230.9 215.7 195.1 188.4 191.2 197.7 203.0 209.8 12 Change in business inventories 36.0 .0 -18.5 -39.2 -37.1 -3.6 6.0 -32.7 13 Nonfarm 35.5 -2.0 -15.0 -35.0 -34.0 -3.2 12.1 -29.5 14 Net exports of goods and services -82.9 -74.4 -30.7 -36.8 -17.2 -37.3 -31.4 -22.7 15 Exports 504.9 550.4 591.3 565.9 589.8 597.0 612.5 613.6 16 Imports 587.8 624.8 622.0 602.7 607.0 634.3 643.8 636.3 17 Government purchases of goods and services .. 971.4 1,042.9 1,087.5 1,088.8 1,092.5 1,089.1 1,079.5 1,0%. 1 18 Federal 401.4 424.9 445.1 451.5 452.1 444.9 432.0 441.8 19 State and local 570.0 618.0 642.4 637.3 640.4 644.2 647.5 654.3 By major type of product 20 Final sales, total 5.208.1 5,513.8 5.691.1 5,628.2 5.689.6 5,712.8 5,733.8 5.842.0 21 Goods 2,062.1 2,167.6 2,211.7 2,208.6 2,223.2 2,214.1 2,200.8 2.251.1 22 Durable 892.9 934.7 926.5 916.4 939.5 929.4 920.5 941.7 23 Nondurable 1.169.2 1,233.0 1.285.2 1,292.1 1.283.7 1,284.7 1,280.3 1,309.3 24 Services 2,634.7 2,834.0 3,012.9 2,951.7 2,999.0 3,035.1 3,065.7 3,118.1 25 Structures 511.3 512.2 466.5 467.9 467.4 463.5 467.3 472.9 26 Change in business inventories 36.0 .0 -18.5 -39.2 -37.1 -3.6 6.0 -32.7 27 Durable goods 26.9 -7.0 -25.2 -43.5 -33.5 -9.2 -14.5 -23.7 28 Nondurable goods 9.1 7.0 6.7 4.3 -3.6 5.6 20.4 -9.0 MEMO 4,836.9 4,884.9 4,848.8 4,824.0 4,840.7 4,862.7 4,868.0 4,891.9 29 Total GDP in 1987 dollars NATIONAL INCOME 4,244.7 4,459.6 4,542.2r 4,489.8 4,530.8 4,559.8 4,588.3r n.a. 30 Total 3,101.3 3,290.3 3,388.2 3,342.9 3,377.4 3.405.3 3,427.4 3,459.7 31 Compensation of employees 2,585.8 2,738.9 2,808.2 2,771.1 2,800.2 2.822.4 2,839.3 2,863.0 32 Wages and salaries 478.6 514.0 540.5 536.0 540.1 541.8 544.2 552.6 33 Government and government enterprises .. 2,107.2 2,224.9 2,267.7 2,235.1 2,260.1 2,280.6 2,295.1 2,310.4 34 Other 515.5 551.4 580.0 571.8 577.2 582.9 588.1 596.7 35 Supplement to wages and salaries 261.7 277.3 289.4 287.5 288.7 290.2 291.1 295.7 36 Employer contributions for social insurance 253.7 274.0 290.6 284.2 288.5 292.8 297.0 301.1 37 Other labor income 38 Proprietors'income1 347.0 373.2 379.7 364.2 380.0 382.5 392.0 403.1 39 Business and professional1 305.5 330.7 344.5 331.4 340.4 350.5 355.9 366.2 40 Farm1 41.4 42.5 35.1 32.8 39.6 32.0 36.1 37.0 41 Rental income of persons2 -7.9 -12.9 -12.7 -11.9 -11.7 -14.2 -13.1 -10.7 42 Corporate profits' 351.7 319.0 306.8r 302.1 303.5 306.1 315.6r n.a. 43 Profits before tax3 344.5 332.3 312.4r 309.1 306.2 318.2 316.T n.a. 44 Inventory valuation adjustment -17.5 -14.2 3.1 6.7 9.9 -4.8 .7 -3.7 45 Capital consumption adjustment 24.7 .8 -8.7 -13.6 -12.6 -7.3 -1.3 10.4 46 Net interest 452.6 490.1 480.2 492.6 481.6 480.1 466.5 453.5 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 • July 1992 2.17 PERSONAL INCOME AND SAVING Billions of current dollars, except as noted; quarterly data at seasonally adjusted annual rates 1991 1992 AAccccoouunntt 11998899 11999900 11999911 QI Q2 Q3 Q4 QL PERSONAL INCOME AND SAVING 1 Total personal income 4,380.2 4,679.8 4,834.4 4,768.0 4,821.1 4,853.3 4,895.3 4,956.1 2 Wage and salary disbursements 2,585.8 2,738.9 2,808.3 2,770.9 2,800.6 2,822.4 2,839.3 2,863.0 3 Commodity-producing industries 723.8 745.4 738.7 733.4 735.2 742.3 744.1 738.1 4 Manufacturing 542.1 555.8 556.5 549.3 552.3 559.9 564.3 559.7 5 Distributive industries 607.5 634.6 641.2 635.1 642.0 644.0 643.9 648.3 6 Service industries 775.9 845.0 887.8 866.5 883.0 894.4 907.2 924.0 7 Government and government enterprises 478.6 514.0 540.6 535.8 540.5 541.8 544.2 552.6 8 Other labor income 253.7 274.0 290.6 284.2 288.5 292.8 297.0 301.1 9 Proprietors' income1 347.0 373.2 379.7 364.2 380.0 382.5 392.0 403.1 10 Business and professional1 305.5 330.7 344.5 331.4 340.4 350.5 355.9 366.2 11 Farm1 41.4 42.5 35.1 32.8 39.6 32.0 36.1 37.0 12 Rental income of persons2 -7.9 -12.9 -12.7 -11.9 -11.7 -14.2 -13.1 -10.7 13 Dividends 119.8 124.8 128.5 128.7 127.4 128.7 129.4 129.4 14 Personal interest income 669.0 721.3 718.6 730.1 721.8 716.7 705.7 688.1 15 Transfer payments 624.4 684.9 759.5 737.2 751.5 763.7 785.4 827.3 16 Old-age survivors, disability, and health insurance benefits ... 325.1 352.0 380.0 373.1 377.2 381.7 388.1 403.5 17 LESS: Personal contributions for social insurance 211.7 224.3 238.0 235.4 237.0 239.3 240.4 245.1 18 EQUALS: Personal income 4,380.2 4,679.8 4,834.4 4,768.0 4,821.1 4,853.3 4,895.3 4,956.1 19 LESS: Personal tax and nontax payments 591.7 621.0 616.1 617.1 613.6 615.1 618.4 617.0 20 EQUALS: Disposable personal income 3,788.6 4,058.8 4,218.4 4,151.0 4,207.5 4,238.2 4,276.8 4,339.1 21 LESS: Personal outlays 3,622.4 3,853.1 3,999.1 3,938.4 3,978.7 4,025.7 4,053.5 4,133.6 22 EQUALS: Personal saving 166.1 205.8 219.3 212.6 228.8 212.5 223.4 205.6 MEMO Per capita (1987 dollars) 23 Gross domestic product 19,550.5 19,540.2 19,189.8 19,166.5 19,187.7 19,220.9 19,184.8 19,230.6 24 Personal consumption expenditures 13,027.6 13,050.8 12,897.9 12,877.4 12,892.0 12,930.2 12,891.4 13,026.9 25 Disposable personal income 14,030.0 14,154.0 13,990.0 13,965.0 14,022.0 13,992.0 13,981.0 14,049.0 26 Saving rate (percent) 4.4 5.1 5.2 5.1 5.4 5.0 5.2 4.7 GROSS SAVING 27 Gross saving 743.4 710.9 715.2r 746.9 713.1 697.2 703.8r n.a. 28 Gross private saving 826.5 850.4 886.8r 873.0 892.1 875.5 906.6r n.a. 29 Personal saving 166.1 205.8 219.3 212.6 228.8 212.5 223.4 205.6 30 Undistributed corporate profits 85.8 49.9 44.6r 45.0 43.4 39.4 50.6r n.a. 31 Corporate inventory valuation adjustment -17.5 -14.2 3.1 6.7 9.9 -4.8 .7 -3.7 Capital consumption allowances 32 Corporate 350.5 365.5 383.6 380.1 383.2 338844..66 338866..66 384.7 33 Noncorporate 224.0 229.3 239.3 235.3 236.8 239.1 246.1 240.6 34 Government surplus, or deficit (-), national income and product accounts -83.0 -139.5 -171.6r -126.1 -179.1 -178.4 ——220022..99""^^ n.a. 35 Federal -124.2 -165.3 -201.6r -146.4 -206.7 -210.2 -243.lr n.a. 36 State and local 41.1 25.7 30.0 20.4 27.6 31.8 40.3r n.a. 37 Gross investment 740.7 719.0 734.3 764.9 729.6 719.1 723.4 688.0 38 Gross private domestic 837.6 802.6 726.7 709.3 708.8 740.9 747.9 712.4 39 Net foreign -96.8 -83.6 7.6 55.7 20.8 -21.8 -24.5 n.a. 40 Statistical discrepancy -2.7 8.1 W.O' 18.0 16.5 22.0 19.6r n.a. 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 1990 Item credits or debits 1990 1991 Q4 Q1 Q2 Q3 Q4 1 Balance on current account -106,304 -92,123 -8,615 -23,402 10,374 2,897 -11,617 -10,266 2 Not seasonally adjusted -25,136 15,507 4,593 -16,502 -12,213 3 Merchandise trade balance2 -115,917 - i 08,'115 -73,586 -27,728 -18,538 -15,537 -20,849 -18,662 4 Merchandise exports 361,451 389,550 416,517 100,580 100,549 103,889 104,018 108,061 5 Merchandise imports -477,368 -497,665 -490,103 -128,308 -119,087 -119,426 -124,867 -126,723 6 Military transactions, net -6,203 -7,219 -5,280 -2,243 -2,329 -1,484 -882 -584 7 Investment income, net 2,689 11,945 9,364 6,133 4,902 2,365 1,863 234 8 Other service transactions, net 28,618 33,595 41,158 9,716 9,420 10,445 11,131 10,163 9 Remittances, pensions, and other transfers -4,420 -4,843 -5,383 -1,201 -1,336 -1,336 -1,293 -1,417 10 U.S. government grants (excluding military) -11,071 -17,486 25,111 -8,079 18,255 8,444 -1,587 0 11 Change in U.S. government assets other than official reserve assets, net (increase, -) 1,320 2,976 3,572 4,759 1,422 -493 3,197 -553 12 Change in U.S. official reserve assets (increase, -) -25,293 -2,158 5,763 -1,092 -353 1,014 3,878 1,226 1 1 4 3 G Sp o e ld c ial drawing rights (SDRs) -535 0 -192 0 -177 0 -93 0 31 0 -190 0 0 6 -23 0 15 Reserve position in International Monetary Fund 471 731 -367 -4 -341 72 -114 17 16 Foreign currencies -25,229 -2,697 6,307 -995 -43 1,132 3,986 1,232 17 Change in U.S. private assets abroad (increase, -) -104,637 -58,524 -77,083 -38,370 -2,192 -15,702 -18,281 -40,908 18 Bank-reported claims3 -51,255 5,333 3,428 -24,513 20,598 1,215 2,325 -20,710 19 Nonbank-reported claims 2,581 -1,944 -4,798 -2,509 -1,308 -2,076 -1,414 20 U.S. purchases of foreign securities, net -22,575 -28,476 -46,215 -7,546 -9,430 -12,833 -12,533 -ii,419 21 U.S. direct investments abroad, net -33,388 -33,437 -29,498 -3,802 -12,052 -2,008 -6,659 -8,779 22 Change in foreign official assets in United States (increase, +) .. 8,624 32,425 20,585 20,301 6,631 -3,105 3,854 13,205 23 U.S. Treasury securities 149 28,643 18,623 20,119 2,381 -2,287 5,799 12,730 24 Other U.S. government obligations 1,383 667 926 708 -29 -219 407 767 25 Other U.S. government liabilities4 281 1,703 1,603 1,102 1,012 370 453 -232 26 Other U.S. liabilities reported by U.S. banks3 4,976 2,998 -1,856 -707 2,501 -1,084 -2,830 -443 27 Other foreign official assets5 1,835 -1,586 1,289 -921 766 115 25 383 28 Change in foreign private assets in United States (increase, +).. 207,925 53,879 58,919 18,732 -7,361 6,608 23,125 36,546 29 U.S. bank-reported liabilities3 63,382 9,975 -15,046 17,261 -18,795 -28,687 6,474 25,962 30 U.S. nonbank-reported liabilities 5,454 3,779 -511 -1,840 -1,616 -760 1,865 31 Foreign private purchases of U.S. Treasury securities, net 29,618 1,131 16,861 -2,029 3,409 13,434 -1,468 i ,486 3 3 2 3 F F o o r r e e i i g g n n d p i u r r e c c h t a i s n e v s e o st f m o e th n e ts r i U n . U S. n s it e e c d u r S it t i a e t s e , s , n n et e t 7 3 0 8 , , 5 9 5 2 1 0 37 1 , , 2 7 1 8 3 1 2 3 2 5 , , 1 4 9 1 8 7 4,5 8 3 0 8 2 4 5 , , 3 3 3 0 6 6 1 7 5 , , 5 0 4 7 8 3 1 6 0 , , 1 1 0 54 0 4 4 , , 8 2 8 1 4 4 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 35 Discrepancy 18,366 63,526 -3,139 19,072 -8,522 8,781 -4,156 750 36 Due to seasonal adjustment 2,007 4,322 4% -6,232 1,407 37 Statistical discrepancy in recorded data before seasonal adjustment 18,366 63,526 -3,139 17,066 -12,844 8,285 2,076 -657 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -25,293 -2,158 5,763 -1,092 -353 1,014 3,878 1,226 39 Foreign official assets in United States excluding line 25 (increase, +) 8,343 30,722 18,982 19,199 5,619 -3,475 3,401 13,437 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) 10,738 2,163 -3,656 575 988 -3,162 -4,352 2,870 1. Seasonal factors not calculated for lines 6, 10, 12-16, 18-20, 22-34, and brokers and dealers. 38-40. 4. Associated primarily with military sales contracts and other transactions 2. Data are on an international accounts basis. The data differ from the Census arranged with or through foreign official agencies. basis data, shown in table 3.11, for reasons of coverage and timing. Military 5. Consists of investments in U.S. corporate stocks and in debt securities of exports are excluded from merchandise trade data and are included in line 6. private corporations and state and local governments. 3. Reporting banks include all types of depository institution as well as some SOURCE. Survey of Current Business (U.S. Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • July 1992 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data seasonally adjusted 1991r 1992 IItteemm 11998899 11999900 11999911rr Sept. Oct. Nov. Dec. Jan.r Feb/ Mar." 1 Exports of domestic and foreign merchandise, (F.A.S. value),. excluding grant-aid shipments 363,812 393,592 421,730 35,283 36,842 37,269 36,053 35,467 37,654 36,975 2 General imports (customs value), including merchandise for immediate consumption plus entries into bonded warehouses 473,211 495,311 487,129 41,757 42,712 41,382 41,675 41,266 40,948 42,791 3 Trade balance -109,399 -101,718 -65,399 -6,475 -5,870 -4,113 -5,622 -5,799 -3,294 -5,816 1. The Census basis data differ from merchandise trade data shown in table 3.10, line 6. Since Jan. 1, 1987, Census data have been released forty-five days 3.10, lines 3-5, U.S. International Transactions Summary, because of coverage after the end of the month; the previous month is revised to reflect late documents. and timing. On the export side, the largest difference is the exclusion of military Total exports and the trade balance reflect adjustments for undocumented exports sales (which are combined with other military transactions and reported sepa- to Canada. Components may not sum to totals because of rounding. rately in the "service account" in table 3.10, line 6). On the import side, this table SOURCE. FT900, Summary of U.S. Export and Import Merchandise Trade includes imports of gold, ship purchases, imports of electricity from Canada, and (U.S. Department of Commerce, Bureau of the Census). other transactions; military payments are excluded and shown separately in table 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1992 Type 1989 1990 Oct. Nov. Dec. Jan. Feb. Mar. Apr.1 1 Total 47,802 74,609 83,316 74,508 74,651 77,719 75,868 75,088 74,657 2 Gold stock, including Exchange Stabilization Fund1 11,057 11,059 11,058 11,059 11,058 11,057 11,058 11,058 11,057 3 Special drawing rights 9,637 9,951 10,989 10,710 10,942 11,240 10,980 11,020 10,947 4 Reserve position in International Monetary Fund2 9,745 9,048 9,076 9,065 8,943 9,488 9,113 8,996 8,994 5 Foreign currencies 17,363 44,551 52,193 43,674 43,708 45,934 44,717 44,014 43,659 1. Gold held "under earmark" at Federal Reserve Banks for foreign and 5 currencies have been used. U.S. SDR holdings and reserve positions in the IMF international accounts is not included in the gold stock of the United States; see also have been valued on this basis since July 1974. table 3.13, line 3. Gold stock is valued at $42.22 per fine troy ounce. 3. Includes allocations of SDRs by the International Monetary Fund on Jan. 1 2. Special drawing rights (SDRs) are valued according to a technique adopted of the year indicated, as follows: 1970—$867 million; 1971—$717 million; 1972— by the International Monetary Fund (IMF) in July 1974. Values are based on a $710 million; 1979—$1,139 miUion; 1980—$1,152 million; 1981—$1,093 million; weighted average of exchange rates for the currencies of member countries. From plus net transactions in SDRs. July 1974 through December 1980, 16 currencies were used; since January 1981, 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 AAsssseett 11998888 11998899 11999900 Oct. Nov. Dec. Jan. Feb. Mar. Apr.P 1 Deposits 347 589 369 223 346 968 321 264 262 206 Held in custody 2 U.S. Treasury securities2 232,547 224,911 278,499 280,249 285,905 281,107 293,958 297,834 300,277 303,413 3 Earmarked gold 13,636 13,456 13,387 13,326 13,307 13,303 13,303 13,305 13,304 13,304 1. Excludes deposits and U.S. Treasury securities held for international and Treasury securities payable at face value in dollars or foreign currencies, regional organizations. 3. Held for foreign and international accounts and valued at $42.22 per fine 2. Marketable U.S. Treasury bills, notes, and bonds and nonmarketable U.S. troy ounce; not included in the gold stock of the United States. 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 1992 AAsssseettss 11998888 11998899 11999900 Sept. Oct. Nov. Dec. Jan. Feb. Mar. All foreign countries 1 Total, all currencies 505,595 545,366 556,925 547,038 546,570 550,777 548,901 547,938r 550,618 562,398 7 Claims on United States 169,111 198,835 188,4% 177,572 176,959 177,828 176,301 180,092r 178,026 193,228 3 Parent bank 129,856 157,092 148,837 137,036 136,570 137,165 137,509 142,277r 142,019 156,923 4 Other banks in United States 14,918 17,042 13,2% 13,692 13,432 13,543 12,884 11,715 10,837 11,612 5 Nonbanks 24,337 24,701 26,363 26,844 26,957 27,120 25,908 26,100 25,170 24,693 6 Claims on foreigners 299,728 300,575 312,449 299,910 299,915 304,212 303,934 297,360" 301,900 300,026 7 Other branches of parent bank 107,179 113,810 135,003 114,526 108,269 107,343 111,729 103,456 108,052 112,326 8 96,932 90,703 72,602 77,293 80,060 84,980 81,970 82,292r 83,255 79,311 9 Public borrowers 17,163 16,456 17,555 18,930 18,685 18,940 18,652 18,223 18,421 18,328 10 Nonbank foreigners 78,454 79,606 87,289 89,161 92,901 92,949 91,583 93,389" 92,172 90,061 11 Other assets 36,756 45,956 55,980 69,556 69,6% 68,737 68,666 70,486r 70,692 69,144 12 Total payable in U.S. dollars 357,573 382,498 379,479 367,828 365,223 365,143 363,941 359,621r 365,149 381,065 H Claims on United States 163,456 191,184 180,174 171,393 170,615 171,701 169,662 173,827r 172,377 187,538 14 Parent bank 126,929 152,294 142,%2 133,450 132,929 133,984 133,476 138,686r 138,754 153,653 15 Other banks in United States 14,167 16,386 12,513 13,109 12,904 12,668 12,025 10,924 10,006 10,956 16 Nonbanks 22,360 22,504 24,699 24,834 24,782 25,049 24,161 24,217 23,617 22,929 17 Claims on foreigners 177,685 169,690 174,451 166,677 164,543 165,653 167,010 157,338r 163,623 163,877 18 Other branches of parent bank 80,736 82,949 95,298 79,860 75,649 75,986 78,114 70,637 75,087 78,067 19 54,884 48,396 36,440 40,656 41,132 42,808 41,635 39,964r 41,839 39,671 70 Public borrowers 12,131 10,961 12,298 13,609 13,889 13,671 13,685 13,202 13,136 13,217 71 Nonbank foreigners 29,934 27,384 30,415 32,552 33,873 33,188 33,576 33,535r 33,561 32,922 22 Other assets 16,432 21,624 24,854 29,758 30,065 27,789 27,269 28,456r 29,149 29,650 United Kingdom 23 Total, all currencies 156,835 161,947 184,818 172,113 172,795 174,648 175,599 174,467 172,479 169,275 74 Claims on United States 40,089 39,212 45,560 34,409 32,615 32,531 35,257 36,660 34,655 37,015 75 Parent bank 34,243 35,847 42,413 31,205 29,021 28,901 31,931 32,765 31,302 34,048 76 Other banks in United States 1,123 1,058 792 997 1,502 1,259 1,267 1,432 1,211 1,158 77 Nonbanks 4,723 2,307 2,355 2,207 2,092 2,371 2,059 2,463 2,142 1,809 78 Claims on foreigners 106,388 107,657 115,536 105,699 108,397 111,323 109,692 108,006 107,645 101,627 79 Other branches of parent bank 35,625 37,728 46,367 39,077 36,757 36,637 35,735 33,357 33,924 33,599 30 36,765 36,159 31,604 31,658 33,375 36,709 36,394 36,497 36,700 33,499 31 Public borrowers 4,019 3,293 3,860 3,502 3,492 3,512 3,306 3,377 3,144 3,060 37 Nonbank foreigners 29,979 30,477 33,705 31,462 34,773 34,465 34,257 34,775 33,877 31,469 33 Other assets 10,358 15,078 23,722 32,005 31,783 30,794 30,650 29,801 30,179 30,633 34 Total payable in U.S. dollars 103,503 103,208 116,762 105,243 103,439 103,591 105,974 103,833 102,341 102,283 35 Claims on United States 38,012 36,404 41,259 31,772 29,995 30,054 32,418 33,801 31,788 34,464 36 Parent bank 33,252 34,329 39,609 29,673 27,404 27,689 30,370 31,239 29,724 32,645 37 Other banks in United States 964 843 334 727 1,378 894 822 901 678 725 38 Nonbanks 3,796 1,232 1,316 1,372 1,213 1,471 1,226 1,661 1,386 1,094 39 Claims on foreigners 60,472 59,062 63,701 56,354 57,155 59,200 58,791 55,281 55,985 52,306 40 Other branches of parent bank 28,474 29,872 37,142 30,840 28,655 29,210 28,667 26,827 26,747 25,933 41 Banks 18,494 16,579 13,135 12,485 13,269 15,480 15,219 14,106 14,789 13,154 47 Public borrowers 2,840 2,371 3,143 2,899 2,%9 2,848 2,853 2,707 2,657 2,623 43 Nonbank foreigners 10,664 10,240 10,281 10,130 12,262 11,662 12,052 11,641 11,792 10,5% 44 Other assets 5,019 7,742 11,802 17,117 16,289 14,337 14,765 14,751 14,568 15,513 Bahamas and Cayman Islands 45 Total, all currencies 170,639 176,006 162,316 169,898 170,529 170,846 168,326 167,648r 168,972 175,687 46 Claims on United States 105,320 124,205 112,989 116,263 117,782 118,164 115,244 116,488r 115,400 122,556 47 Parent bank 73,409 87,882 77,873 80,890 83,286 83,348 81,520 84,506r 84,499 91,343 48 Other banks in United States 13,145 15,071 11,869 12,063 11,028 11,457 10,907 9,626 8,%9 9,809 49 Nonbanks 18,766 21,252 23,247 23,310 23,468 23,359 22,817 22,356 21,932 21,404 50 Claims on foreigners 58,393 44,168 41,356 45,321 43,662 44,177 45,229 42,866r 44,033 44,285 51 Other branches of parent bank 17,954 11,309 13,416 10,326 9,086 10,268 11,098 10,549 11,528 11,278 57 Banks 28,268 22,611 16,310 20,535 20,300 19,865 20,174 18,998r 19,311 19,645 53 Public borrowers 5,830 5,217 5,807 7,149 7,435 7,363 7,161 6,600 6,545 6,599 54 Nonbank foreigners 6,341 5,031 5,823 7,311 6,841 6,681 6,7% 6,719" 6,649 6,763 55 Other assets 6,926 7,633 7,971 8,314 9,085 8,505 7,853 8,294r 9,539 8,846 56 Total payable in U.S. dollars 163,518 170,780 158,390 165,966 166,598 166,582 163,771 163,078r 164,548 171,114 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 • July 1992 3.14—Continued 1991 1992 11998899 11999900 Aug. Sept. Oct. Nov. Dec. Jan. Feb. All foreign countries 57 Total, all currencies 505,595 545,366 556,925 547,038 546,570 550,777 548,901 547,938r 550,618 562,398 58 Negotiable certificates of deposit (CDs) .. 28,511 23,500 18,060 17,579 18,928 18,334 16,284 16,156 15,988 14,637 59 To United States 185,577 197,239 189,412 188,381 186,246 188,686 198,121 189,083r 190,885 210,012 60 Parent bank 114,720 138,412 138,748 131,931 130,092 131,383 136,431 127,532r 123,775 142,551 61 Other banks in United States 14,737 11,704 7,463 11,843 10,356 12,892 13,260 13,683 12,674 14,137 62 Nonbanks 56,120 47,123 43,201 44,607 45,798 44,411 48,430 47,868r 54,436 53,324 63 To foreigners 270,923 296,850 311,668 295,393 295,282 298,152 288,254 295,861r 299,046 292,659 64 Other branches of parent bank 111,267 119,591 139,113 113,849 108,534 109,085 112,033 105,873r 108,744 113,314 65 Banks 72,842 76,452 58,986 62,665 68,286 67,945 63,097 72,407r 71,346 63,060 66 Official institutions 15,183 16,750 14,791 19,420 17,247 19,394 15,596 16,704 16,972 15,697 67 Nonbank foreigners 71,631 84,057 98,778 99,459 101,215 101,728 97,528 100,877r 101,984 100,588 68 Other liabilities 20,584 27,777 37,785 45,685 46,114 45,605 46,242 46,838r 44,699 45,090 69 Total payable in U.S. dollars 367,483 396,613 383,522 367,450 366,449 369,515 370,561 360,409r 363,680 380,079 70 Negotiable CDs 24,045 19,619 14,094 13,180 14,157 13,813 11,909 11,442 11,515 10,278 /I To United States 173,190 187,286 175,654 176,642 174,274 176,254 185,286 176,635r 179,178 197,958 72 Parent bank 107,150 132,563 130,510 125,429 123,399 124,625 129,669 121,098r 117,272 135,761 73 Other banks in United States 13,468 10,519 6,052 10,368 9,011 11,436 11,707 12,191 11,532 13,036 74 Nonbanks 52,572 44,204 39,092 40,845 41,864 40,193 43,910 43,346r 50,374 49,161 75 To foreigners 160,766 176,460 179,002 163,299 161,850 164,275 158,993 156,339r 156,744 156,216 76 Other branches of parent bank 84,021 87,636 98,128 79,427 75,243 76,224 76,601 70,839" 74,466 77,492 77 Banks 28,493 30,537 20,251 21,239 25,653 24,501 24,156 25,781r 23,665 21,910 7 8 Official institutions 8,224 9,873 7,921 12,591 10,565 13,375 10,304 10,555 10,652 9,625 79 Nonbank foreigners 40,028 48,414 52,702 50,042 50,389 50,175 47,932 49,164r 47,961 47,189 80 Other liabilities 9,482 13,248 14,772 14,329 16,168 15,173 14,373 15,993r 16,243 15,627 United Kingdom 81 Total, all currencies 156,835 161,947 184,818 172,113 172,795 174,648 175,599 174,467 172,479 169,275 82 Negotiable CDs 24,528 20,056 14,256 12,941 14,145 13,506 11,333 10,993 10,581 9,816 83 To United States 36,784 36,036 39,928 31,534 29,137 30,560 37,720 31,018 30,631 35,225 84 Parent bank 27,849 29,726 31,806 23,707 21,080 22,629 29,834 23,112 23,464 27,937 85 Other banks in United States 2,037 1,256 1,505 1,724 2,053 1,934 1,438 2,325 1,891 1,201 86 Nonbanks 6,898 5,054 6,617 6,103 6,004 5,997 6,448 5,581 5,276 6,087 87 To foreigners 86,026 92,307 108,531 98,572 100,267 102,299 98,167 104,868 104,432 96,702 88 Other branches of parent bank 26,812 27,397 36,709 29,898 26,879 26,977 30,054 27,561 27,864 27,937 89 Banks 30,609 29,780 25,126 23,525 28,254 27,959 25,541 31,929 30,686 26,017 90 Official institutions 7,873 8,551 8,361 12,071 10,045 12,628 9,670 10,432 10,685 9,277 91 Nonbank foreigners 20,732 26,579 38,335 33,078 35,089 34,735 32,902 34,946 35,197 33,471 92 Other liabilities 9,497 13,548 22,103 29,066 29,246 28,283 28,379 27,588 26,835 27,532 93 Total payable in U.S. dollars 105,907 108,178 116,094 104,303 103,238 104,433 108,755 103,232 100,882 101,417 94 Negotiable CDs 22,063 18,143 12,710 11,249 12,397 12,042 10,076 9,236 9,061 8,562 95 To United States 32,588 33,056 34,697 27,272 24,394 25,517 33,003 26,419 26,261 30,808 % Parent bank 26,404 28,812 29,955 22,228 19,391 20,923 28,260 21,663 21,788 26,272 97 Other banks in United States 1,752 1,065 1,156 1,259 1,704 1,481 1,177 1,954 1,639 1,032 98 Nonbanks 4,432 3,179 3,586 3,785 3,299 3,113 3,566 2,802 2,834 3,504 99 To foreigners 47,083 50,517 60,014 56,829 56,639 57,527 56,626 57,522 55,216 52,059 100 Other branches of parent bank 18,561 18,384 25,957 20,878 18,319 18,678 20,800 18,498 18,863 18,792 101 Banks 13,407 12,244 9,488 8,401 12,040 10,542 11,069 13,061 11,188 9,861 102 Official institutions 4,348 5,454 4,692 9,149 7,050 9,995 7,156 7,580 7,698 6,628 103 Nonbank foreigners 10,767 14,435 19,877 18,401 19,230 18,312 17,601 18,383 17,467 16,778 104 Other liabilities 4,173 6,462 8,673 8,953 9,808 9,347 9,050 10,055 10,344 9,988 Bahamas and Cayman Islands 105 Total, all currencies 170,639 176,006 162,316 169,898 170,529 170,846 168,326 167,648r 168,972 175,687 106 Negotiable CDs 953 678 646 1,055 981 1,034 1,173 1,382 1,709 932 107 To United States 122,332 124,859 114,738 128,150 130,223 129,781 129,872 130,285r 131,009 138,990 108 Parent bank 62,894 75,188 74,941 82,075 84,853 83,057 79,394 79,585r 73,744 82,050 109 Other banks in United States 11,494 8,883 4,526 8,841 7,070 9,728 10,231 10,045 9,733 11,696 110 Nonbanks 47,944 40,788 35,271 37,234 38,300 36,996 40,247 40,655r 47,532 45,244 111 To foreigners 45,161 47,382 44,444 38,616 36,861 37,857 35,200 34,106r 34,425 34,002 112 Other branches of parent bank 23,686 23,414 24,715 20,515 19,675 19,555 17,388 16,590r 17,050 17,100 113 Banks 8,336 8,823 5,588 5,431 5,218 5,984 5,662 5,497r 5,054 5,139 114 Official institutions 1,074 1,097 622 647 666 646 572 450 490 536 115 Nonbank foreigners 12,065 14,048 13,519 12,023 11,302 11,672 11,578 11,569*^ 11,831 11,227 116 Other liabilities 2,193 3,087 2,488 2,077 2,464 2,174 2,081 1,875r 1,829 1,763 117 Total payable in U.S. dollars 162,950 171,250 157,132 165,235 166,226 166,157 163,603 162,637r 164,241 171,049 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 1991r 1992 IItteemm 11998899 11999900 Sept. Oct. Nov. Dec. Jan.r Feb.r Mar." 1 Total1 312,477 344,529 351,193 357,956 366,235 364,505 376,278 379,241 385,282 By type 2 Liabilities reported by banks in the Umted States"' 36,4% 39,880 39,125 41,505 42,785 38,361 41,418 42,489 43,856 3 U.S. Treasury bills and certificates3 76,985 79,424 90,394 94,428 92,855 92,692 92,711 94,731 102,143 U.S. Treasury bonds and notes 4 Marketable 179,269 202,487 197,460 197,972 205,166 207,687 216,374 216,181 212,767 5 Nonmarketable 568 4,491 4,765 4,7% 4,827 4,858 4,892 4,922 4,956 6 U.S. securities other than U.S. Treasury securities 19,159 18,247 19,449 19,255 20,602 20,907 20,883 20,918 21,560 By area 7 Western Europe1 132,849 167,191 165,068 170,407 173,975 169,747 174,544 174,542 179,386 8 Canada 9,482 8,671 9,608 9,121 9,428 7,460 7,642 8,251 7,130 9 Latin America and Caribbean 9,313 21,184 31,925 32,583 33,975 36,038 37,143 38,142 40,134 10 Asia 153,338 138,0% 133,736 134,635 137,490 139,558 146,222 147,925 148,783 11 Africa , 1,030 1,434 1,558 1,519 1,383 2,092 2,409 2,408 2,011 12 Other countries 6,469 7,955 9,2% 9,689 9,982 9,608 8,316 7,971 7,836 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 1991 IItteemm 11998888 11998899 11999900 Mar. June Sept. Dec/ 1 Banks' liabilities 77774444,,,,999988880000 66667777,,,,888833335555 77770000,,,,444477777777 66664444,,,,888811115555 55559999,,,,333300006666 66663333,,,,000066663333 77774444,,,,999988886666 66668888,,,,999988883333 66665555,,,,111122227777 66666666,,,,7777%%%% 66665555,,,,444400004444 66660000,,,,555533334444 66663333,,,,555511118888 77773333,,,,111133337777 22225555,,,,111100000000 22220000,,,,444499991111 22229999,,,,666677772222 22227777,,,,555588887777 22227777,,,,777799995555 22229999,,,,666633332222 22226666,,,,333300007777 44443333,,,,888888884444 44444444,,,,666633336666 33337777,,,,111122224444 33337777,,,,888811118888 33332222,,,,777733339999 33333333,,,,888888886666 44446666,,,,888833330000 5 Claims of banks' domestic customers2 333366664444 3333,,,,555500007777 6666,,,,333300009999 4444,,,,333377775555 1111,,,,666644448888 2222,,,,333344448888 3333,,,,222277774444 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 • July 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 1992 HHoollddeerr aanndd ttyyppee ooff lliiaabbiilliittyy 11998899 11999900 11999911 Sept. Oct. Nov. Dec. Jan." Feb." Mar.p 1 All foreigners 736,878 759,634 754,203r 739,374 750,213 758,168 754,203" 750,966 754,080 771,452 2 Banks' own liabilities 577,498 577,229 573,600" 558,008 565,384 575,625 573,600" 571,373 573,756 580,949 3 Demand deposits 22,032 21,723 20,319 19,889 17,637 21,630 20,319 19,309 18,906 19,286 4 Time deposits2 168,780 168,017 159,844" 150,211 154,693 154,314 159,844" 148,183 145,861 147,957 5 Other. 67,823 65,822 65,614" 67,927 72,934 75,679 65,614" 73,006 75,861 75,255 6 Own foreign offices4 318,864 321,667 327,823" 319,981 320,120 324,002 327,823" 330,875 333,128 338,451 7 Banks' custody liabilities5 159,380 182,405 180,603 181,366 184,829 182,543 180,603 179,593 180,324 190,503 8 U.S. Treasury bills and certificates6 91,100 96,796 110,734 107,019 111122,,228800 110,938 111100,,773344 111100,,000000 111122,,117722 111199,,888822 9 Other negotiable and readily transferable instruments 19,526 17,578 18,664 16,791 17,047 17,206 18,664 17,745 16,894 18,429 10 Other 48,754 68,031 51,205 57,556 55,502 54,399 51,205 51,848 51,258 52,192 11 Nonmonetary international and regional organizations 4,894 5,918 8,947" 7,160 7,665 8,721 8,947" 9,895 10,615 10,182 12 Banks' own liabilities 3,279 4,540 6,793" 5,655 5,964 6,828 6,793" 8,112 8,879 8,280 13 Demand deposits % 36 43 36 28 24 43 39 35 144 14 Time deposits2 927 1,050 2,764" 2,307 2,490 2,392 2,764" 2,049 2,058 1,441 15 Other. 2,255 3,455 3,986 3,312 3,446 4,412 3,986 6,024 6,786 6,695 16 Banks' custody liabilities5 1,616 1,378 2,154 1,505 1,701 1,893 2,154 1,783 1,736 1,902 17 U.S. Treasury bills and certificates6 197 364 1,730 1,032 1,246 1,530 11,,773300 11,,332288 11,,331177 11,,222255 18 Other negotiable and readily transferable instruments 1,417 1,014 424 473 455 363 424 455 417 637 19 Other 2 0 0 0 0 0 0 0 2 40 20 Official institutions9 113,481 119,303 131,053" 129,519 135,933 135,640 131,053" 134,129 137,220 145,999 21 Banks' own liabilities 31,108 34,910 34,376" 34,603 37,559 38,960 34,376" 37,908 38,605 39,756 22 Demand deposits 2,196 1,924 2,642 1,645 1,307 1,621 2,642 1,480 1,297 1,342 23 Time deposits 10,495 14,359 16,474" 13,951 14,544 13,145 16,474" 16,307 14,655 17,657 24 Other. 18,417 18,628 15,260 19,007 21,708 24,194 15,260 20,121 22,653 20,757 25 Banks' custody liabilities5 82,373 84,393 96,677 94,916 98,374 96,680 96,677 96,221 98,615 106,243 26 U.S. Treasury bills and certificates6 76,985 79,424 92,692 90,394 94,428 92,855 9922,,669922 9922,,771111 9944,,773311 110022,,114433 27 Other negotiable and readily transferable instruments 5,028 4,766 3,879 4,102 3,811 3,611 3,879 33,,442222 3,697 4,019 28 Other 361 203 106 420 135 214 106 8888 187 81 29 Banks10 515,275 540,805 520,106" 511,935 515,954 521,517 520,106" 515,494 516,516 526,083 30 Banks' own liabilities 454,273 458,470 457,534" 442,303 447,730 455,881 457,534" 451,527 453,291 460,270 31 Unaffiliated foreign banks 135,409 136,802 129,711" 122,322 127,610 131,879 129,711" 120,652 120,163 121,819 32 Demand deposits 10,279 10,053 8,630 8,990 8,164 11,396 8,630 8,807 8,369 8,543 33 Time deposits2 90,557 88,541 82,936" 74,589 78,181 80,199 82,936" 73,988 74,560 74,473 34 Other\ 34,573 38,208 38,145" 38,743 41,265 40,284 38,145" 37,857 37,234 38,803 35 Own foreign offices 318,864 321,667 327,823" 319,981 320,120 324,002 327,823" 330,875 333,128 338,451 36 Banks' custody liabilities5 61,002 82,335 62,572 69,632 68,224 65,636 62,572 63,967 63,225 65,813 37 U.S. Treasury bills and certificates6 9,367 10,669 7,471 8,161 8,363 7,855 77,,447711 77,,771133 77,,773333 88,,334444 38 Other negotiable and readily transferable instruments 5,124 5,341 5,694 5,816 6,041 5,852 5,694 5,853 5,999 6,733 39 Other 46,510 66,325 49,407 55,655 53,820 51,929 49,407 50,401 49,493 50,736 40 Other foreigners 103,228 93,608 94,097" 90,760 90,661 92,290 94,097" 91,448 89,729 89,188 41 Banks' own liabilities 88,839 79,309 74,897" 75,447 74,131 73,956 74,897" 73,826 72,981 72,643 42 Demand deposits 9,460 9,711 9,004 9,218 8,138 8,589 9,004 8,983 9,205 9,257 43 Time deposits 66,801 64,067 57,670" 59,364 59,478 58,578 57,670" 55,839 54,588 54,386 44 Other. 12,577 5,530 8,223 6,865 6,515 6,789 8,223 9,004 9,188 9,000 45 Banks' custody liabilities5 14,389 14,299 19,200 15,313 16,530 18,334 19,200 17,622 16,748 16,545 46 U.S. Treasury bills and certificates6 4,551 6,339 8,841 7,432 8,243 8,698 8,841 8,248 8,391 88,,117700 47 Other negotiable and readily transferable instruments 7,958 6,457 8,667 6,400 6,740 7,380 8,667 8,015 6,781 7,040 48 Other 1,880 1,503 1,692 1,481 1,547 2,256 1,692 1,359 1,576 1,335 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 7,203 7,073 7,456 7,542 7,596 7,137 7,456 7,855 8,049 8,008 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 1992 AArreeaa aanndd ccoouunnttrryy 11998899 11999900 11999911 Sept. Oct. Nov. Dec. Jan. Feb.* Mar.p 1 736,878 759,634 754,203r 739,374 750,213 758,168 754,203* 750,966* 754,080 771,452 2 Foreign countries 731,984 753,716 745,256r 732,214 742,548 749,447 745,256* 741,071* 743,465 761,270 3 237,501 254,452 249,001 237,068 246,935 251,443 249,001 244,628* 245,881 256,070 4 Austria 1,233 1,229 1,193 1,109 1,232 1,313 1,193 1,041 1,030 1,230 5 Belgium-Luxembourg 10,648 12,382 13,337 13,992 13,659 14,600 13,337 13,348* 15,156 16,290 6 Denmark 1,415 1,399 937 1,038 912 1,143 937 991 997 892 7 Finland 570 602 1,341 618 938 1,080 1,341 893 623 1,190 8 France .. •. 26,903 30,946 31,808 27,467 30,491 31,095 31,808 29,244* 26,449 25,857 9 Germany 7,578 7,485 8,620 7,500 7,891 8,032 8,620 7,853* 9,235 9,531 10 Greece 1,028 934 765 944 840 890 765 873 895 1,058 11 Italy 16,169 17,735 13,541 12,507 12,274 13,288 13,541 10,798 9,554 9,893 17 Netherlands 6,613 5,350 7,161 6,311 6,546 6,124 7,161 7,%5* 7,322 9,254 13 Norway 2,401 2,357 1,866 1,459 1,173 1,452 1,866 1,922* 1,398 1,286 14 Portugal 2,418 2,958 2,184 2,391 2,431 2,223 2,184 1,114 2,540 2,071 15 Spain 4,364 7,544 11,391 10,834 12,279 11,148 11,391 9,371 10,653 13,487 16 Sweden 1,491 1,837 2,222 1,435 1,217 1,105 2,222 1,887 2,544 2,106 17 Switzerland 34,4% 36,690 37,236 38,343 36,733 36,711 37,236 35,667* 34,727 37,111 18 Turkey 1,818 1,169 1,598 1,538 1,493 1,836 1,598 1,476 1,677 1,598 19 United Kingdom 102,362 109,555 100,247 95,612 99,466 99,844 100,247 102,380* 102,160 103,415 70 Yugoslavia 1,474 928 622 854 807 544 622 493 529 504 7.1 Other Western Europe" 13,563 11,689 9,224 9,670 12,964 15,357 9,224 13,755* 13,999 15,439 77 U.S.S.R 350 119 241 117 178 236 241 161* 238 168 23 Other Eastern Europe12 608 1,545 3,467 3,329 3,411 3,422 3,467 3,3%* 4,155 3,690 24 Canada 18,865 20,349 21,563 24,039 24,685 23,131 21,563 18,646 20,437 20,884 75 Latin America and Caribbean 311,028 332,997 343,817r 342,851 340,473 345,107 343,817* 348,715* 347,827 349,441 76 Argentina 7,304 7,365 7,758 6,869 7,190 7,452 7,758 7,899* 7,878 8,310 77 99,341 107,386 99,834r 96,141 99,858 100,339 99,834* 100,689* 99,214 101,679 78 Bermuda 2,884 2,822 3,178 3,120 3,191 3,295 3,178 3,658 3,478 3,339 79 Brazil 6,351 5,834 5,942 6,069 5,998 5,811 5,942 5,785 5,760 5,770 30 British West Indies 138,309 147,321 162,427r 165,769 160,488 163,419 162,427* 165,048* 166,919 165,472 31 Chile 3,212 3,145 3,284 3,090 3,348 3,388 3,284 3,322 3,408 3,623 37 Colombia 4,653 4,492 4,662 4,642 4,823 4,797 4,662 4,627 4,713 4,912 33 Cuba 10 11 2 8 4 12 2 6 5 11 34 Ecuador 1,391 1,379 1,232 1,226 1,237 1,236 1,232 1,248* 1,217 1,168 35 Guatemala 1,312 1,541 1,594 1,585 1,541 1,589 1,594 1,554 1,549 1,539 36 Jamaica 209 257 231 213 202 201 231 234 227 271 37 Mexico 15,423 16,650 19,957 20,958 19,958 20,499 19,957 20,372* 20,319 21,540 38 Netherlands Antilles 6,310 7,357 5,592 5,565 5,499 5,924 5,592 6,272 6,231 5,219 39 4,362 4,574 4,695 4,374 4,450 4,563 4,695 4,349* 4,404 4,144 40 Peru 1,984 1,294 1,249 1,305 1,234 1,240 1,249 1,233 1,221 1,187 41 Uruguay 2,284 2,520 2,111 2,539 2,442 2,373 2,111 2,313 2,158 2,054 47 Venezuela 9,482 12,271 13,181 12,348 12,237 12,171 13,181 13,520* 12,424 12,383 43 Other 6,206 6,779 6,888 7,030 6,773 6,798 6,888 6,586 6,702 6,820 44 115566,,220011 136,844 120,486r 119,608 120,434 120,019 120,486* 119,199* 120,148 125,766 China 45 1,773 2,421 2,625r 2,198 2,494 2,783 22,,662255** 2,739 2,607 2,677 46 19,588 11,246 11,495 10,100 12,443 11,675 11,495 10,951 10,588 10,5% 47 Hong Kong 12,416 12,754 14,374 14,476 13,941 13,795 14,374 15,162 14,867 14,716 48 India 780 1,233 2,418 2,487 2,504 2,613 2,418 2,297 2,356 2,028 49 1,281 1,238 1,463 1,078 1,230 1,412 1,463 1,037 1,276 1,516 50 1,243 2,767 2,015 2,847 2,115 2,108 2,015 2,193 2,137 2,536 51 81,184 67,076 47,029* 48,091 47,068 46,004 47,029* 46,086* 44,821 49,593 57 3,215 2,287 2,538 2,131 2,169 2,555 2,538 2,442 2,754 2,827 1,766 1,585 2,449 1,651 1,926 2,139 2,449 2,256 2,462 2,638 54 Thailand 2,093 1,443 2,252 3,348 3,113 3,581 2,252 2,933 3,224 3,330 55 Middle-East oil-exporting countries 13,370 15,829 15,752 15,309 15,529 16,301 15,752 15,901 18,410 19,280 56 Other 17,491 16,%5 16,076 15,892 15,902 15,053 16,076 15,202 14,646 14,029 57 3,824 4,630 4,822 4,483 4,558 4,465 4,822 5,042 4,919 4,886 58 Egypt 686 1,425 1,621 1,125 1,241 1,060 1,621 1,620 1,632 1,337 59 78 104 79 82 78 93 79 86 82 90 60 South Africa 206 228 228 242 207 173 228 201 199 191 61 86 53 31 37 42 32 31 28 30 35 67 Oil-exporting countries14 1,121 1,110 1,082 1,145 1,182 1,280 1,082 1,204 1,214 1,428 63 Other 1,648 1,710 1,781 1,852 1,808 1,827 1,781 1,903 1,762 1,805 64 Other countries 4,564 4,444 5,567 4,165 5,463 5,282 5,567 4,841 4,253 4,223 65 Australia 3,867 3,807 4,464 3,231 4,445 4,116 4,464 3,619 3,065 3,100 66 All other 697 637 1,103 934 1,018 1,166 1,103 1,222 1,188 1,123 67 Nonmonetary international and regional 4,894 5,918 8,947r 7,160 77,,666655 88,,772211 88,,994477** 99,,889955** 1100,,661155 1100,,118822 68 International 3,947 4,390 6,451r 5,122 5,411 6,180 6,451* 7,439* 8,292 7,774 69 Latin American regional 684 1,048 1,181 1,094 1,242 1,366 1,181 1,422 1,500 1,786 70 Other regional1 263 479 1,315 944 1,012 1,175 1,315 1,034 823 622 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 • July 1992 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States' Payable in U.S. Dollars Millions of dollars, end of period 1991 1992 AArreeaa aanndd ccoouunnttrryy 11998899 11999900 11999911 Sept. Oct. Nov. Dec. Jan. Feb." Mar.P 1 Total 534,492 511,543 514,248r 499,931 511,082 514,637 514,248r 508,616r 509,007 512,911 2 Foreign countries 530,630 506,750 507,875" 497,224 509,301 511,347 507,875r 504,421r 502,467 506,502 3 Europe 119,025 113,093 114,252 103,340 103,710 107,754 114,252 112,665r 110,871 112,930 4 Austria 415 362 327 297 374 325 327 211 447 377 i Belgium-Luxembourg 6,478 5,473 6,158 7,175 7,677 6,%2 6,158 6,726 7,453 7,006 6 Denmark 582 497 686 670 624 671 686 792 709 736 '/ Finland 1,027 1,047 1,912 908 1,195 1,378 1,912 1,854 1,586 1,320 8 France 16,146 14,468 15,112 14,504 13,085 14,813 15,112 15,204" 13,742 14,055 9 Germany 2,865 3,343 3,339 2,678 2,077 2,839 3,339 3,295 3,405 3,782 10 Greece 788 727 553 473 487 555 553 550 562 537 11 Italy 6,662 6,052 8,242 6,541 6,370 6,362 8,242 8,000 7,346 8,584 12 Netherlands 1,904 1,761 2,539 1,949 2,169 2,220 2,539 2,664 2,454 2,277 13 Norway 609 782 669 679 682 776 669 801 665 687 14 Portugal 376 292 344 266 301 358 344 360 350 368 li Spain 1,930 2,668 1,844 2,337 2,410 2,480 1,844 2,487 2,120 3,317 16 Sweden 1,773 2,094 2,315 1,8% 1,842 2,347 2,315 2,751 2,923 2,636 17 Switzerland 6,141 4,202 4,540 4,048 4,195 4,469 4,540 4,497 3,921 3,370 18 Turkey 1,071 1,405 1,063 1,385 1,195 1,151 1,063 1,065 1,078 945 19 United Kingdom 65,527 65,151 60,429 54,243 55,436 55,917 60,429 56,619" 57,110 58,117 20 Yugoslavia 1,329 1,142 824 802 803 848 824 822 810 807 21 Other Western Europe 1,302 597 789 773 714 1,001 789 1,152 1,110 861 22 U.S.S.R 1,179 530 1,970 1,157 1,358 1,689 1,970 2,331 2,491 2,659 23 Other Eastern Europe3 921 499 597 559 716 593 597 484r 589 489 24 Canada 15,451 16,091 15,025r 14,750 16,099 15,845 15,025r 14,791r 15,792 15,391 25 Latin America and Caribbean 230,438 231,506 246,028r 250,%9 255,126 252,834 246,028r 249,880" 245,802 251,623 26 Argentina 9,270 6,967 5,869 5,749 5,735 5,778 5,869 5,823 5,834 5,794 27 Bahamas 77,921 76,525 87,173r 80,643 85,959 87,160 87,173r 89,258" 84,173 88,753 28 Bermuda 1,315 4,056 2,185 6,854 4,305 4,102 2,185 3,535 4,444 3,649 29 Brazil 23,749 17,995 11,845 11,885 11,499 11,687 11,845 12,421 12,747 12,367 30 British West Indies 68,749 88,565 107,864 112,790 116,429 111,999 107,864 107,268" 106,999 109,155 31 Chile 4,353 3,271 2,805 2,732 2,721 2,833 2,805 2,817 2,746 2,778 32 Colombia 2,784 2,587 2,425 2,432 2,542 2,574 2,425 2,374 2,330 2,338 33 Cuba 1 0 0 0 0 0 0 0 0 0 34 Ecuador 1,688 1,387 1,053 1,115 1,095 1,090 1,053 1,044 1,034 993 35 Guatemala 197 191 228 185 191 195 228 214 230 233 36 Jamaica 297 238 158 150 162 161 158 157 158 152 37 Mexico 23,376 14,851 16,606 16,441 16,874 17,401 16,606 17,058 17,364 17,350 38 Netherlands Antilles 1,921 7,998 1,126 3,619 1,247 1,122 1,126 1,112 898 1,099 39 Panama 1,740 1,471 1,563 1,478 1,546 1,641 1,563 1,651 1,662 1,707 40 Peru 771 663 739 712 722 724 739 735 669 647 41 Uruguay 929 786 599 577 555 550 599 548 604 604 42 Venezuela 9,652 2,571 2,527 2,463 2,406 2,634 2,527 2,610 2,611 2,562 43 Other 1,726 1,384 1,263 1,144 1,138 1,183 1,263 1,255 1,299 1,442 44 Asia 157,474 138,722 125,336" 120,533 112266,,997788 112277,,119911 112255,,333366rr 111199,,772299"" 112222,,554466 111199,,666622 China 45 Mainland 634 620 747 621 597 698 747 813 699 719 46 Taiwan 2,776 1,952 2,089 1,460 1,578 1,584 2,089 1,919 1,881 1,970 47 Hong Kong 11,128 10,648 9,723 9,567 10,204 10,172 9,723 9,859 9,721 10,582 48 India 621 655 441 459 482 450 441 445 418 518 49 Indonesia 651 933 952 869 841 872 952 1,012 1,043 11,,008844 50 Israel 813 774 855 945 994 907 855 873 943 889988 51 Japan 111,300 90,699 84,797r 80,532 84,767 85,504 84,797r 80,519" 80,197 74,605 52 Korea 5,323 5,766 6,029 5,164 5,363 5,797 6,029 5,683 6,272 6,390 53 Philippines 1,344 1,247 1,910 1,633 1,916 1,971 1,910 1,849 1,789 1,829 54 Thailand 1,140 1,573 l,713r 1,939 1,831 1,803 l,713r 1,633" 1,621 1,599 55 Middle East oil-exporting countries 10,149 10,749 8,284 10,433 9,973 9,957 8,284 8,073 10,976 12,265 56 Other 11,594 13,106 7,7% 6,911 8,432 7,476 7,7% 7,051" 6,986 7,203 57 Africa 5,890 5,445 4,928 5,281 5,273 5,242 4,928 4,874 4,741 4,762 58 Egypt 502 380 294 320 302 351 294 255 223 271 59 Morocco 559 513 575 579 589 583 575 591 550 547 60 South Africa 1,628 1,525 1,235 1,498 1,495 1,493 1,235 1,217 1,189 1,175 61 Zaire 16 16 4 8 9 7 4 4 4 4 62 Oil-exporting countries 1,648 1,486 1,298 1,270 1,260 1,320 1,298 1,116 1,112 1,164 63 Other 1,537 1,525 1,522 1,606 1,618 1,488 1,522 1,691 1,663 1,601 64 Other countries 2,354 1,892 2,306 2,351 2,115 2,481 2,306 2,482 2,715 2,134 65 Australia 1,781 1,413 1,665 1,526 1,503 1,718 1,665 1,473 1,478 1,353 66 All other 573 479 641 825 612 763 641 1,009 1,237 781 67 Nonmonetary international and regional organizations 3,862 4,793 6,373r 2,707 1,781 3,290 6,373r 4,195 6,540 6,409 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 1992 TTyyppee ooff ccllaaiimm 11998899 11999900 11999911rr Sept. Oct. Nov. Dec.r Jan.r Feb.1" Mar.p 1 Total 555555599999993333333,,,,,,,000000088888887777777 555555577777779999999,,,,,,,000000044444444444444 555555588888880000000,,,,,,,333333344444445555555 555555566666667777777,,,,,,,333333300000007777777 555555588888880000000,,,,,,,333333344444445555555 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 555555533333334444444,,,,,,,444444499999992222222 555555511111111111111,,,,,,,555555544444443333333 555555511111114444444,,,,,,,222222244444448888888 444444499999999999999,,,,,,,999999933333331111111 511,082 514,637 555555511111114444444,,,,,,,222222244444448888888 508,616 509,007 512,911 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 66666660000000,,,,,,,555555511111111111111 44444441111111,,,,,,,999999900000000000000 33333337777777,,,,,,,222222244444447777777 33333335555555,,,,,,,666666688888880000000 35,261 36,323 33333337777777,,,,,,,222222244444447777777 35,171 38,609 37,043 44 OOwwnn ffoorreeiiggnn ooffffiicceess22 222222299999996666666,,,,,,,000000011111111111111 333333300000004444444,,,,,,,333333311111115555555 333333311111118888888,,,,,,,999999955555552222222 333333300000004444444,,,,,,,555555511111118888888 313,021 313,783 333333311111118888888,,,,,,,999999955555552222222 307,625 306,286 318,432 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111133333334444444,,,,,,,888888888888885555555 111111111111117777777,,,,,,,222222277777772222222 111111111111116666666,,,,,,,444444444444449999999 111111111111113333333,,,,,,,888888877777772222222 119,829 120,218 111111111111116666666,,,,,,,444444444444449999999 121,900 118,985 113,911 66 DDeeppoossiittss 77777778888888,,,,,,,111111188888885555555 66666665555555,,,,,,,222222255555553333333 66666669999999,,,,,,,111111122222225555555 66666668888888,,,,,,,444444488888882222222 72,534 71,610 66666669999999,,,,,,,111111122222225555555 71,884 70,784 66,921 77 OOtthheerr 55555556666666,,,,,,,777777700000000000000 55555552222222,,,,,,,000000011111119999999 44444447777777,,,,,,,333333322222224444444 44444445555555,,,,,,,333333399999990000000 47,295 48,608 44444447777777,,,,,,,333333322222224444444 50,016 48,201 46,990 88 AAllll ootthheerr ffoorreeiiggnneerrss 44444443333333,,,,,,,000000088888885555555 44444448888888,,,,,,,000000055555556666666 44444441111111,,,,,,,666666600000000000000 44444445555555,,,,,,,888888866666661111111 42,971 44,313 44444441111111,,,,,,,666666600000000000000 43,920 45,127 43,525 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss33...... 55555558888888,,,,,,,555555599999994444444 66666667777777,,,,,,,555555500000001111111 66666666666666,,,,,,,000000099999997777777 66666667777777,,,,,,,333333377777776666666 66666666666666,,,,,,,000000099999997777777 11111113333333,,,,,,,000000011111119999999 11111114444444,,,,,,,333333377777775555555 11111115555555,,,,,,,222222244444440000000 11111119999999,,,,,,,555555511111112222222 11111115555555,,,,,,,222222244444440000000 1 i Negotiable and readily transferable 33333330000000,,,,,,,999999988888883333333 44444441111111,,,,,,,333333333333333333333 33333337777777,,,,,,,999999911111118888888 33333335555555,,,,,,,000000055555554444444 33333337777777,,,,,,,999999911111118888888 12 Outstanding collections and other 11111114444444,,,,,,,555555599999992222222 11111111111111,,,,,,,777777799999992222222 11111112222222,,,,,,,999999933333339999999 11111112222222,,,,,,,888888811111110000000 11111112222222,,,,,,,999999933333339999999 13 MEMO: Customer liability on 11111112222222,,,,,,,888888899999999999999 11111113333333,,,,,,,666666622222228888888 7777777,,,,,,,444444411111118888888 8888888,,,,,,,777777733333339999999 7777777,,,,,,,444444411111118888888 1144 DDoollllaarr ddeeppoossiittss iinn bbaannkkss aabbrrooaadd,, rreeppoorrtteedd bbyy nnoonnbbaannkkiinngg bbuussiinneessss eenntteerrpprriisseess iinn tthhee UUnniitteedd SSttaatteess 45,767 44,574 39,036 38,213 39,822 40,589 39,036 37,575 38,971 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 1991 Maturity, by borrower and area 1988 1989 1990 June Sept. 1 Total 233,184 238,123 206,903 199,216 199,517 195,164 By borrower 2 Maturity of one year or less2 172,634 178,346 165,985 158,660 160,346 159,829 3 Foreign public borrowers 26,562 23,916 19,305 21,794 19,286 17,461 4 All other foreigners 146,071 154,430 146,680 136,866 141,060 142,368 5 Maturity of more than one year2. 60,550 59,776 40,918 40,555 39,171 35,335 6 Foreign public borrowers 35,291 36,014 22,269 22,417 20,820 17,925 7 All other foreigners 25,259 23,762 18,649 18,138 18,352 17,410 By area Maturity of one year or less2 8 Europe 55,909 53,913 49,184 49,840 50,368 51,207 9 Canada 6,282 5,910 5,450 5,939 7,309 5,682 10 Latin America and Caribbean . 57,991 53,003 49,782 42,670 41,127 47,280 11 Asia 46,224 57,755 53,258 53,993 53,150 49,462 12 Africa 3,337 3,225 3,040 3,008 2,937 2,815 13 All other3 2,891 4,541 5,272 3,212 5.455 3,383 Maturity of more than one year2 14 Europe 4,666 4,121 3,859 4,128 3,832 3,717 15 Canada 1,922 2,353 3,290 3,390 3,823 3,676 16 Latin America and Caribbean . 47,547 45,816 25,774 24,962 23,220 19,232 17 Asia 3,613 4,172 5,165 5,414 5,645 6,095 18 Africa 2,301 2,630 2,374 2,426 2.456 2,393 19 All other3 501 684 456 237 195 222 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 • July 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 Area or country 198/ 19oo Dec. Mar. June Sept. Dec. Mar. June Sept. Dec. 1 Total 382.4 346.3 338.8 333.9 321.7 331.5 317.8 325.6 321.0 336.8 341.8r 2 G-10 countries and Switzerland 159.7 152.7 152.9 146.6 139.3 143.6 132.1 129.9 130.2 134.7 137.5 3 Belgium-Luxembourg 10.0 9.0 6.3 6.7 6.2 6.5 5.9 6.2 6.1 5.8 6.0 4 France 13.7 10.5 11.7 10.4 10.2 11.1 10.4 9.7 10.5 11.1 11.3 5 Germany 12.6 10.3 10.5 11.2 11.2 11.1 10.6 8.8 8.3 9.7 8.2 6 Italy 7.5 6.8 7.4 5.9 5.4 4.4 5.0 4.0 3.6 4.5 5.6 7 Netherlands 4.1 2.7 3.1 3.1 2.7 3.8 3.0 3.3 3.3 3.0 4.7 8 Sweden 2.1 1.8 2.0 2.1 2.3 2.3 2.2 2.0 2.5 2.1 1.9 9 Switzerland 5.6 5.4 7.1 6.2 6.3 5.6 4.4 3.7 3.3 3.9 3.4 10 United Kingdom 68.8 66.2 67.2 64.0 59.9 62.6 60.8 62.3 59.8 65.6 68.5 11 Canada 5.5 5.0 5.4 4.8 5.1 5.0 5.9 6.8 8.2 5.9 5.8 12 Japan 29.8 34.9 32.2 32.2 30.1 31.3 23.9 23.2 24.6 23.2 22.2 13 Other developed countries 26.4 21.0 20.7 23.0 22.4 23.0 22.6 23.1 21.1 21.7 22.6 14 Austria 1.9 1.5 1.5 1.5 1.5 1.6 1.4 1.4 1.1 1.0 .6 15 Denmark 1.7 1.1 1.1 1.2 1.1 1.1 1.1 .9 1.2 .9 .9 16 Finland 1.2 1.1 1.0 1.1 .9 .8 .7 1.0 .8 .7 .7 17 Greece 2.0 1.8 2.5 2.6 2.7 2.8 2.7 2.5 2.4 2.3 2.6 18 Norway 2.2 1.8 1.4 1.7 1.4 1.6 1.6 1.5 1.5 1.4 1.4 19 Portugal .6 .4 .4 .4 .8 .6 .6 .6 .6 .5 .6 20 Spain 8.0 6.2 7.1 8.2 7.8 8.4 8.3 9.0 7.0 8.3 8.2 21 Turkey 2.0 1.5 1.2 1.3 1.4 1.6 1.7 1.7 1.9 1.6 1.4 22 Other Western Europe 1.6 1.3 .7 1.0 1.1 .7 .9 .8 .9 1.0 1.6 23 South Africa 2.9 2.4 2.0 2.0 1.9 1.9 1.8 1.8 1.8 1.6 1.9 24 Australia 2.4 1.8 1.6 2.1 1.8 2.0 1.8 1.9 2.0 2.4 2.7 25 OPEC countries2 17.4 16.6 17.1 15.5 15.3 14.2 12.8 17.1 14.0 15.6 14.6 26 Ecuador 1.9 1.7 1.3 1.2 1.1 1.1 1.0 .9 .9 .8 .7 27 Venezuela 8.1 7.9 7.0 6.1 6.0 6.0 5.0 5.1 5.3 5.6 5.4 28 Indonesia 1.9 1.7 2.0 2.1 2.0 2.3 2.7 2.8 2.6 2.8 2.8 29 Middle East countries 3.6 3.4 5.0 4.3 4.4 3.1 2.5 6.6 3.7 5.0 4.2 30 African countries 1.9 1.9 1.7 1.8 1.8 1.7 1.7 1.6 1.5 1.5 1.5 31 Non-OPEC developing countries 97.8 85.3 77.5 68.8 66.7 67.1 65.4 66.4 65.0 65.2 64.3 Latin America 32 Argentina 9.5 9.0 6.3 5.6 5.2 5.0 5.0 4.7 4.6 4.7 4.8 33 Brazil 24.7 22.4 19.0 17.5 16.7 15.4 14.4 1*9 11.6 10.5 9.5 34 Chile 6.9 5.6 4.6 4.3 3.7 3.6 3.5 3.6 3.6 3.7 3.6 35 Colombia 2.0 2.1 1.8 1.8 1.7 1.8 1.8 1.7 1.6 1.6 1.7 36 Mexico 23.5 18.8 17.7 12.8 12.6 12.8 13.0 13.7 14.3 16.2 15.5 37 Peru 1.1 .8 .6 .5 .5 .5 .5 .5 .5 .4 .4 38 Other 2.8 2.6 2.8 2.8 2.3 2.4 2.3 2.2 2.0 1.9 2.1 Asia China 39 Mainland .3 .3 .3 .3 .2 .2 .2 .4 .6 .4 .3 40 Taiwan 8.2 3.7 4.5 3.8 3.6 4.0 3.5 3.6 4.1 4.1 4.1 41 India 1.9 2.1 3.1 3.5 3.6 3.6 3.3 3.5 3.0 2.8 3.0 42 Israel 1.0 1.2 .7 .6 .7 .6 .5 .5 .5 .5 .5 43 Korea (South) 5.0 6.1 5.9 5.3 5.6 6.2 6.2 6.8 6.9 6.5 6.8 44 Malaysia 1.5 1.6 1.7 1.8 1.8 1.8 1.9 2.0 2.1 2.3 2.3 45 Philippines 5.2 4.5 4.1 3.7 3.9 3.9 3.8 3.7 3.7 3.6 3.7 46 Thailand .7 1.1 1.3 1.1 1.3 1.5 1.5 1.6 1.7 1.9 1.7 47 Other Asia3 .7 .9 1.0 1.2 1.1 1.6 1.7 2.1 2.3 2.3 2.4 Africa 48 Egypt .6 .4 .4 .4 .5 .4 .4 .4 .4 .4 .4 49 Morocco .9 .9 .9 .9 .9 .9 .8 .8 .7 .7 .7 50 Zaire , .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 1.3 1.1 1.0 .9 .8 .8 1.0 .8 .8 .8 .7 52 Eastern Europe 3.2 3.6 3.5 3.3 2.9 2.7 2.3 2.1 2.1 1.8 2.4 53 U.S.S.R .3 .7 .7 .8 .4 .4 .2 .3 .4 .4 .9 54 Yugoslavia 1.8 1.8 1.6 1.4 1.4 1.3 1.2 1.0 1.0 .8 .9 55 Other 1.1 1.1 1.3 1.2 1.1 1.1 .9 .8 .7 .7 .7 56 Offshore banking centers 54.5 44.2 36.6 43.1 40.3 42.6 42.5 50.2 48.5 52.7 52.0 57 Bahamas 17.3 11.0 5.5 9.2 8.5 8.9 2.8 8.4 6.8 6.8 12.0 58 Bermuda .6 .9 1.7 1.2 2.5 4.5 4.4 4.4 4.2 7.1 2.2 59 Cayman Islands and other British West Indies 13.5 12.9 9.0 10.9 8.5 9.3 11.5 14.2 15.1 14.1 15.9 60 Netherlands Antilles 1.2 1.0 2.3 2.6 2.3 2.2 7.9 1.1 1.4 3.5 1.2 6 6 1 2 P L a e n b a a m no a n 4 3.7 1 2.5] 1.4j 1.3| 1.4 | 1.5 1 . . 4 1 1.4 | 1.3 1.3 1.3 63 Hong Kong 11.2 9.6 9.1 9.8 io!o S.7 7.7 1L6 12^4 12.1 12.2 64 Singapore 7.0 6.1 7.0 8.0 7.0 7.5 6.6 8.9 7.2 7.7 7.1 65 Other .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated6 23.2 22.6 30.3 33.3 34.5 38.1 39.8 36.5 40.0 44.7 48.3r 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. Organization of Petroleum Exporting Countries, shown individually; other (2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are members of OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, adjusted to exclude the claims on foreign branches held by a U.S. office or another Saudi Arabia, and United Arab Emirates); and Bahrain and Oman (not formally foreign branch of the same banking institution. The data in this table combine 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 11998888 11998899 11999900 Sept. Dec. Mar. June Sept. Dec. 1 32,952 38,764 43,417 45,614 43,417 40,982 39,794 40,653 40,823 7 Payable in dollars 27,335 33,973 38,535 40,034 38,535 36,415 35,317 36,174 36,098 3 Payable in foreign currencies 5,617 4,791 4,882 5,580 4,882 4,566 4,477 4,479 4,725 By type 4 Financial liabilities 14,507 17,879 18,467 20,347 18,467 17,557 17,280 18,175 18,690 5 Payable in dollars 10,608 14,035 14,737 16,059 14,737 14,188 13,928 14,686 15,186 6 Payable in foreign currencies 3,900 3,844 3,730 4,288 3,730 3,369 3,352 3,489 3,504 7 Commercial liabilities 18,445 20,885 24,949 25,267 24,949 23,424 22,515 22,478 22,133 8 Trade payables 6,505 8,070 10,494 10,960 10,494 8,842 8,699 9,039 9,018 9 Advance receipts and other liabilities 11,940 12,815 14,456 14,306 14,456 14,583 13,815 13,439 13,115 10 Payable in dollars 16,727 19,938 23,798 23,974 23,798 22,227 21,390 21,488 20,912 11 Payable in foreign currencies 1,717 947 1,152 1,292 1,152 1,197 1,125 990 1,221 By area or country Financial liabilities 1? Europe 9,962 11,660 9,866 11,299 9,866 9,219 9,318 9,835 99,,990000 13 Belgium-Luxembourg 289 340 344 350 344 285 297 347 162 14 France 359 258 700 463 700 632 556 416 1,247 15 Germany 699 464 622 606 622 561 659 654 658 16 Netherlands 880 941 990 942 990 945 917 943 932 17 Switzerland 1,033 541 576 628 576 577 535 510 316 18 United Kingdom 6,533 8,818 6,024 7,679 6,024 5,579 5,731 6,397 5,955 19 Canada 388 610 229 309 229 278 293 305 268 70 Latin America and Caribbean 839 1,357 3,400 3,560 3,400 3,636 3,308 3,472 3,854 71 184 157 371 395 371 392 375 314 512 77 Bermuda 0 17 0 0 0 0 12 0 0 73 Brazil 0 0 0 0 0 0 0 1 11 74 British West Indies 645 724 2,407 2,548 2,407 2,674 2,319 2,555 22,,773377 75 Mexico 1 6 5 4 5 6 6 6 8 26 Venezuela 0 0 4 0 4 4 4 4 4 77 3,312 4,151 4,562 4,697 4,562 4,420 4,350 4,559 4,610 78 Japan 2,563 3,299 3,360 3,562 3,360 3,347 3,297 3,530 3,533 29 Middle East oil-exporting countries 3 2 5 4 5 1 4 19 13 30 Africa 2 2 2 2 2 2 9 3 6 31 Oil-exporting countries3 0 0 0 0 0 0 7 2 4 32 All other4 4 100 409 479 409 2 2 1 52 Commercial liabilities 33 7,319 9,071 10,310 10,039 10,310 9,826 8,835 8,976 88,,772266 34 Belgium-Luxembourg 158 175 275 245 275 263 254 229 247 35 France 455 877 1,218 1,270 1,218 1,214 1,246 999 880 36 Germany 1,699 1,392 1,270 1,051 1,270 1,389 1,044 914 943 37 Netherlands 587 710 844 699 844 730 745 750 704 38 417 693 775 746 775 661 586 490 471 39 United Kingdom 2,079 2,620 2,792 2,839 2,792 2,813 2,328 3,071 3,168 40 Canada 1,217 1,124 1,251 1,263 1,251 1,231 1,186 1,018 992 41 Latin America and Caribbean 1,090 1,224 1,671 1,690 1,671 1,621 1,646 1,512 1,351 47 Bahamas 49 41 12 18 12 14 6 14 3 43 286 308 538 371 538 495 505 450 310 44 95 100 145 129 145 218 180 209 217 45 British West Indies 34 27 30 42 30 36 50 46 107 46 217 323 475 592 475 346 364 290 302 47 114 164 130 165 130 126 121 101 93 48 6,915 7,550 9,471 9,533 9,471 8,623 8,818 8,869 9,233 49 3,094 2,914 3,639 3,356 3,639 3,412 3,394 3,317 3,610 50 Middle East oil-exporting countries2,5 1,385 1,632 2,016 2,728 2,016 1,568 1,699 1,808 1,4% 51 576 886 841 1,334 841 655 594 835 761 52 Oil-exporting countries3 202 339 422 610 422 225 224 356 357 53 All other4 1,328 1,030 1,406 1,408 1,406 1,468 1,436 1,268 1,070 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 • July 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 11998888 11998899 11999900 Sept. Dec. Mar. June Sept. Dec. 1 Total 33,805 33,173 35,008 32,387 35,008 35,213 36,837 37,898 41,330r 2 Payable in dollars 31,425 30,773 32,499 29,902 32,499 32,945 34,779 35,585 38,890r 3 Payable in foreign currencies 2,381 2,400 2,509 2,485 2,509 2,268 2,058 2,313 2,440r By type 4 Financial claims 21,640 19,297 19,609 17,865 19,609 19,498 20,741 22,221 24,484r 5 Deposits 15,643 12,353 13,495 11,916 13,495 12,907 12,417 16,055 17,018r 6 Payable in dollars 14,544 11,364 12,400 10,640 12,400 11,901 11,644 15,070 16,209* 7 Payable in foreign currencies 1,099 989 1,095 1,276 1,095 1,006 773 985 809* 8 Other financial claims 5,997 6,944 6,114 5,949 6,114 6,590 8,325 6,166 7,466r 9 Payable in dollars 5,220 6,190 5,247 5,2% 5,247 5,894 7,637 5,493 6,646r 10 Payable in foreign currencies 777 754 866 652 866 6% 688 673 820" 11 Commercial claims 12,166 13,876 15,400 14,522 15,400 15,715 16,095 15,677 16,846r 12 Trade receivables 11,091 12,253 13,521 12,744 13,521 13,649 13,912 13,235 14,104r 13 Advance payments and other claims 1,075 1,624 1,878 1,778 1,878 2,066 2,183 2,442 2,742r 14 Payable in dollars 11,660 13,219 14,852 13,966 14,852 15,150 15,498 15,022 16,035r 15 Payable in foreign currencies 505 657 548 556 548 565 597 655 811 By area or country Financial claims 16 Europe 10,278 8,463 9,505 9,013 9,505 10,588 11,821 13,029 13,366r 17 Belgium-Luxembourg 18 28 76 27 76 85 74 76 13 18 France 203 153 358 145 358 193 255 245 252 19 Germany 120 152 367 142 367 312 298 434 337 20 Netherlands 348 238 265 264 265 380 429 420 386 21 Switzerland 217 153 357 228 357 422 433 580 589 22 United Kingdom 9,039 7,496 7,838 7,980 7,838 8,981 10,184 10,905 11,160* 23 Canada 2,325 1,904 2,904 2,006 2,904 1,850 1,986 2,084 2,565r 24 Latin America and Caribbean 8,160 8,020 6,0% 6,107 6,0% 6,161 5,849 6,118 7,561r 25 Bahamas 1,846 1,890 1,594 1,443 1,594 1,847 1,031 1,3% 11,,771177 26 Bermuda 19 7 3 4 3 6 4 19 88 27 Brazil 47 224 68 70 68 68 127 124 115 28 British West Indies 5,763 5,486 4,026 4,191 4,026 3,810 4,307 4,209 5,327r 29 Mexico 151 94 177 158 177 179 161 173 182r 30 Venezuela 21 20 25 23 25 28 29 32 40 31 Asia 623 590 860 531 860 568 747 637 624 32 Japan 354 213 523 207 523 246 398 279 343 33 Middle East oil-exporting countries 5 8 8 9 8 11 4 3 5 34 Africa 106 140 37 49 37 62 64 61 57 35 Oil-exporting countries 10 12 0 7 0 3 1 1 1 36 All other4 148 180 206 158 206 268 275 292 3ir Commercial claims 37 Europe 5,181 6,209 7,038 6,497 7,038 7,041 7,434 6,863 7,814r 38 Belgium-Luxembourg 189 242 212 188 212 226 220 186 192 39 France 672 964 1,240 1,206 1,240 1,273 1,388 1,328 1,538r 40 Germany 669 696 806 642 806 870 953 852 93 lr 41 Netherlands 212 479 555 491 555 604 707 641 637 42 Switzerland 344 313 301 300 301 324 2% 259 287 43 United Kingdom 1,324 1,575 1,774 1,673 1,774 1,636 1,813 1,803 2,062r 44 Canada 983 1,091 1,073 1,152 1,073 1,211 1,240 1,231 l,134r 45 Latin America and Caribbean 2,241 2,184 2,371 2,408 2,371 2,314 2,418 2,489 2,552r 46 Bahamas 36 58 14 25 14 15 16 8 11 47 Bermuda 230 323 246 340 246 231 245 255 263 48 Brazil 299 297 324 252 324 309 297 384 388 49 British West Indies 22 36 40 35 40 49 43 37 41 50 Mexico 461 508 661 652 661 653 711 740 827 51 Venezuela 227 147 192 224 192 181 195 1% 201 52 Asia 2,993 3,570 4,064 3,659 4,064 4,282 4,123 4,209 4,466r 53 Japan 946 1,199 1,399 1,223 1,399 1,756 1,582 1,742 1,786 54 Middle East oil-exporting countries 453 518 460 408 460 497 500 495 633r 55 Africa 435 429 488 372 488 394 428 431 417 56 Oil-exporting countries 122 108 67 72 67 68 63 80 95 57 All other4 333 393 366 434 366 473 452 454 463 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 1992 1991 1992 Transaction and area or country 1990 1991 Jan.- Sept. Oct. Nov. Dec. Jan.r Feb/ Mar.p Mar. U.S. corporate securities STOCKS 1 Foreign purchases 173,293 210,782 63,485 12,919 17,201 20,587 14,729 23,302 21,317 18,866 188,419 199,598 66,451 13,659 16,791 19,594 17,446 25,900 21,094 19,457 2 Foreign sales -15,126 11,183 -2,966 -740 410 993 -2,717 -2,598 223 -591 3 Net purchases, or sales (-) ... -15,197 10,615 -2,868 -850 365 956 -2,700 -2,479 224 -613 4 Foreign countries -8,479 182 -1,536 -567 -452 -238 -1,883 -1,318 -105 -113 5 Europe -1,234 18 -279 -95 -21 -50 -125 -28 -224 -27 6 France -367 -63 -175 62 12 22 44 -160 30 -45 7 Germany -397 -228 -87 38 6 -42 -52 44 -114 -17 8 Netherlands -2,866 -139 279 -48 -93 -508 -7 -286 304 261 9 Switzerland -2,980 -222 -1,440 -501 -216 254 -1,637 -882 -304 -254 10 United Kingdom 886 3,809 892 16 385 694 131 260 222 410 11 Canada -1,330 2,177 1,062 25 366 -197 -280 1,025 359 -322 12 Latin America and Caribbean . -2,435 -126 -49 -402 -6 39 -35 -271 101 121 13 Middle East' -3,477 4,263 -3,493 210 267 735 -665 -2,211 -3% -886 14 Other Asia -2,891 1,181 -3,305 135 156 158 -429 -2,194 -615 -496 15 Japan -63 153 32 -7 20 14 7 13 15 4 16 Africa -298 158 224 -125 -215 -91 25 23 28 173 17 Other countries 18 Nonmonetary international and regional organizations 71 568 -98 NO 45 37 -17 -119 -1 22 BONDS2 19 Foreign purchases 118,764 152,815 51,719 14,492 12,844 16,035 15,092 16,498 18,027 17,194 20 Foreign sales 102,047 125,146 43,319 12,315 10,709 13,051 12,348 14,367 14,731 14,221 21 Net purchases, or sales (-) ... 16,717 27,669 8,400 2,177 2,135 2,984 2,744 2,131 3,296 2,973 22 Foreign countries 17,187 27,800 8,271 2,216 2,198 2,883 2,701 2,098 3,290 2,883 23 Europe 10,079 13,651 4,927 -111 1,722 1,284 1,084 1,390 2,372 1,165 24 France 373 854 22 93 -25 110 75 -2 58 -34 25 Germany -377 1,577 993 156 213 274 113 594 277 122 26 Netherlands 172 482 -119 -18 44 91 13 -113 9 -15 27 Switzerland 284 572 309 -52 -64 -449 73 -67 252 124 28 United Kingdom 10,383 9,239 3,413 384 1,878 714 184 905 1,786 722 29 Canada 1,906 1,340 -136 -155 86 51 114 -153 97 -80 30 Latin America and Caribbean . 4,291 2,446 2,730 130 -365 110 624 506 768 1,456 31 Middle East' 76 2,185 111 350 182 313 253 -75 -71 257 32 Other Asia 1,083 8,237 561 2,027 526 1,164 543 339 101 121 33 Japan 727 5,730 -180 1,149 237 874 149 257 -121 -316 34 Africa % 56 71 -2 12 13 11 28 15 28 35 Other countries -344 -115 7 -23 35 -52 72 63 8 -64 36 Nonmonetary international and regional organizations — -471 -131 129 -39 -63 101 43 33 6 90 Foreign securities 37 Stocks, net purchases, or sales (-)3 -9,205 -31,446 -7,810 -2,163 -2,381 -2,016 -1,716 -2,554 -2,316 -2,940 38 Foreign purchases 122,641 119,853 35,886 9,940 11,310 13,155 11,015 12,485 10,590 12,811 39 Foreign sales3 131,846 151,299 43,6% 12,103 13,691 15,171 12,731 15,039 12,906 15,751 40 Bonds, net purchases, or sales (-) -22,412 -15,842 -1,344 -1,064 -4,721 779 -1,839 -1,389 451 -406 41 Foreign purchases 314,645 324,809 100,327 23,546 33,240 29,938 26,2% 35,511 32,538 32,278 42 Foreign sales 337,057 340,652 101,671 24,610 37,961 29,159 28,135 36,900 32,087 32,684 43 Net purchases, or sales (-), of stocks and bonds -31,617 -47,288 -9,154 -3,227 -7,102 -1,237 -3,555 -3,943 -1,865 -3,346 44 Foreign countries -28,943 -47,054 -9,898 -3,407 -6,766 -1,680 -3,925 -4,194 -2,030 -3,674 45 Europe -8,443 -34,377 -7,734 -2,594 -5,700 -4,898 -4,326 -4,604 -2,273 -857 4 4 4 4 6 8 9 7 A C A L a a s fr i n t a i i a n c d a a A merica and Caribbean - - - 7 8 3 - , , , 1 5 8 8 3 0 5 2 7 2 4 8 - - 7 7 , , 6 1 8 - 3 1 3 8 6 3 7 - - - 2 7 5 -1 2 0 8 4 1 2 9 -1 - , 3 1 4 5 5 5 2 5 4 2 -1 - , 1 6 5 9 1 4 8 9 6 1 1 - , 9 6 5 4 9 7 0 1 1 5 5 -4 3 1 7 1 5 8 6 8 9 2 - - , 9 8 1 - 0 1 8 5 5 8 3 -1 1 , - , 5 7 3 1 1 0 3 0 3 8 0 -1 - - , 6 4 3 4 7 7 6 9 2 1 50 Other countries -180 1,243 -638 238 204 88 3% -45 -272 -321 51 Nonmonetary international and regional organizations -2,673 -234 744 180 -336 443 370 251 165 328 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 • July 1992 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1992 1991 1992 Country or area 1990 1991 J M an ar .- . Sept. Oct. Nov. Dec. Jan. Feb. Mar.P Transactions, net purchases or sales (-) during period1 1 Estimated total2 18,927 22,342 4,877 -3,862 414 5,446 4,483 10,623 3,172r -8,918 2 Foreign countries2 18,764 22,161 3,872 -2,804 -171 5,352 3,774 9,866 3,555r -9,549 3 Europe2 18,455 9,507 7,747 464 228 5,023 2,779 5,324 7,326r -4,903 4 Belgium-Luxembourg 10 523 764 -190 1 201 -21 559 296 -91 5 Germany 5,880 -4,725 779 195 326 707 -139 805 287r -313 6 Netherlands 1,077 -3,735 -2,658 -426 549 -25 -888 -1,936 -967 245 7 Sweden 1,152 -662 582 3 46 -74 582 180 300 102 8 Switzerland2 112 1,005 -657 -184 195 1,105 -778 142 -388 -411 9 United Kingdom -1,260 5,647 7,039 -32 -311 212 2,349 2,649 6,234 -1,844 10 Other Western Europe 11,463 11,440 1,848 1,090 -578 2,910 1,664 2,925 l,524r -2,601 11 Eastern Europe 13 13 50 8 0 -13 10 0 40 10 12 Canada -4,627 -2,746 -1,028 78 -838 -441 -1,841 964 -1,552 -440 13 Latin America and Caribbean 14,734 11,539 -4,750 -1,076 -2,086 -3,842 1,075 -2,920 -1,191 -639 14 Venezuela 33 10 508 -2 20 7 122 266 169 73 15 Other Latin America and Caribbean 3,943 5,316 -994 -1,883 -14 -525 -1,065 -357 -444 -193 16 Netherlands Antilles 10,757 6,213 -4,264 809 -2,092 -3,324 2,018 -2,829 -916 -519 17 -10,952 3,471 3,938 -2,067 3,467 3,709 864 7,675 -430 -3,307 18 Japan -14,785 -4,034 -5,360 -3,625 4,111 503 -1,332 -398 -1,933 -3,029 19 313 689 432 10 39 -26 318 207 100 125 20 All other 842 -299 -2,467 -213 -981 929 579 -1,384 -698r -385 21 Nonmonetary international and regional organizations 163 181 1,005 -1,058 585 94 709 757 -383r 631 22 International 287 -355 770 -1,211 287 95 786 197 -228r 801 23 Latin American regional -2 -72 -7 152 72 -133 -156 -58 51 0 MEMO 24 Foreign countries2 18,764 22,161 3,872 -2,804 -171 5,352 3,774 9,866 3,555r -9,549 25 Official institutions 23,218 5,200 5,080 830 512 7,194 2,521 8,687r -193r -3,414 26 Other foreign2 -4,453 16,961 -1,208 -3,634 -683 -1,842 1,253 l,179r 3,748r -6,135 Oil-exporting^ countries 27 Middle East3 -387 -6,822 2,535 -795 313 96 -163 623 1,679 233 28 0 239 48 0 0 0 219 48 0 0 1. Estimated official and private transactions in marketable U.S. Treasury 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and securities 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 BANKS1 Percent per year Rate on May 31, 1992 Rate on May 31, 1992 Rate on May 31, 1992 Country Country Country Month Month Month effective effective effective Austria.. 8.0 Dec. 1991 Germany... 8.0 Dec. 1991 Norway 10.50 July 1990 Belgium . 8.5 Dec. 1991 Italy 12.0 Nov. 1991 Switzerland — 7.0 Aug. 1991 Canada.. 6.33 May 1992 Japan 3.75 Apr. 1992 United Kingdom3 Denmark 9.5 Dec. 1991 Netherlands 8.5 Dec. 1991 France .. 9.6 Dec. 1991 1. Rates shown are mainly those at which the central bank either discounts or that the central bank transacts the largest proportion of its credit operations. makes advances against eligible commercial paper or government securities for 2. Since Feb. 1981, the rate has been that at which the Bank of France commercial banks or brokers. For countries with more than one rate applicable to discounts Treasury bills for seven to ten days. such discounts or advances, the rate shown is the one at which it is understood 3. Minimum lending rate suspended as of Aug. 20, 1981. or makes advances 3.27 FOREIGN SHORT-TERM INTEREST RATES1 Averages of daily figures, percent per year 1991 1992 TTyyppee oorr ccoouunnttrryy 11998899 11999900 11999911 Nov. Dec. Jan. Feb. Mar. Apr. May 9.16 8.16 5.86 4.% 4.48 4.06 4.05 4.26 4.05 3.84 13.87 14.73 11.47 10.44 10.73 10.60 10.33 10.58 10.56 10.00 3 Canada 12.20 13.00 9.07 7.75 7.50 7.23 7.42 7.63 7.10 6.60 7.04 8.41 9.15 9.33 9.48 9.45 9.51 9.59 9.63 9.70 6.83 8.71 8.01 7.89 7.99 7.55 7.28 8.16 8.48 8.77 7.28 8.57 9.19 9.32 9.59 9.45 9.52 9.52 9.42 9.43 9.27 10.20 9.49 9.41 9.97 9.86 9.93 9.99 9.92 9.83 8 Italy 12.44 12.11 12.04 11.66 12.46 12.00 12.17 12.25 12.38 12.39 8.65 9.70 9.30 9.39 9.61 9.41 9.50 9.56 9.50 9.51 5.39 7.75 7.33 6.22 6.02 5.18 5.19 4.95 4.72 4.72 1. 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 • July 1992 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar, except as noted 1992 Country/currency unit 1989 1990 1991 Feb. Mar. Apr. 1 Australia/dollar2 79.186 78.069 77.872 77.122 74.756 75.178 75.865 76.241 2 Austria/schilling 13.236 11.331 11.686 11.003 11.108 11.391 11.693 11.620 3 Belgium/franc 39.409 33.424 34.195 32.198 32.501 33.307 34.189 33.927 4 Canada/dollar 1.1842 1.1668 1.1460 1.1467 1.1571 1.1825 1.1928 1.1874 5 China, P.R./yuan 3.7673 4.7921 5.3337 5.4232 5.4618 5.4776 5.4871 5.5098 6 Denmark/krone 7.3210 6.1899 6.4038 6.0831 6.1257 6.2763 6.4462 6.3906 7 Finland/markka 4.2963 3.8300 4.0521 4.2447 4.2971 4.4230 4.5325 4.5023 8 France/franc 6.3802 5.4467 5.6468 5.3406 5.3858 5.5088 5.6400 5.5773 9 Germany/deutsche mark 1.8808 1.6166 1.6610 1.5630 1.5788 1.6186 1.6616 1.6493 10 Greece/drachma 162.60 158.59 182.63 179.52 182.42 187.13 192.26 192.83 11 Hong Kong/dollar 7.8008 7.7899 7.7712 7.7738 7.7612 7.7582 7.7463 7.7404 12 India/rupee 16.213 17.492 22.712 25.818 25.863 25.992 28.378 28.896 13 Ireland/pound2 141.80 165.76 158.26 170.46 168.73 164.87 160.50 161.65 14 Italy/lira 1,372.28 1,198.27 1,241.28 1,182.21 1,189.76 1,215.92 1,248.28 1,241.55 15 Japan/yen 138.07 145.00 134.59 128.04 125.46 127.70 132.86 133.54 16 Malaysia/ringgit 2.7079 2.7057 2.7503 2.7417 2.6891 2.6012 2.5779 2.5521 17 Netherlands/guilder.... 2.1219 1.8215 1.8720 1.7618 1.7780 1.8218 1.8706 1.8568 18 New Zealand/dollar ... 59.561 59.619 57.832 55.256 54.194 54.177 54.790 54.138 19 Norway /krone 6.9131 6.2541 6.4912 6.1558 6.2044 6.3472 6.5188 6.4606 20 Portugal/escudo 157.53 142.70 144.77 138.90 136.92 139.47 143.26 141.09 21 Singapore/dollar 1.9511 1.8134 1.7283 1.6453 1.6337 1.6361 1.6601 1.6567 22 South Africa/rand 2.6214 2.5885 2.7633 2.7665 2.7831 2.8156 2.8830 2.8783 23 South Korea/won 674.29 710.64 736.73 761.68 767.09 769.93 775.68 782.55 24 Spain/peseta 118.44 101.96 104.01 99.70 100.05 101.73 104.88 103.90 25 Sri Laiika/rupee 35.947 40.078 41.200 42.523 42.665 42.879 42.744 43.231 26 Sweden/krona 6.4559 5.9231 6.0521 5.7158 5.7461 5.8764 6.0263 5.9667 27 Switzerland/franc 1.6369 1.3901 1.4356 1.3855 1.4039 1.4561 1.5094 1.5194 28 Taiwan/dollar 26.407 26.918 26.759 25.759 25.150 25.049 25.407 25.308 2 3 9 0 T U h n a i i t l e a d n d K /b in a g h d t om/pound^ 5 1 2 6 5 3 . . 7 82 2 5 1 2 7 5 8 . . 6 41 0 9 1 2 7 5 6 . . 5 7 2 4 8 1 2 8 5 2 . . 4 7 3 2 1 1 2 8 5 0 . . 3 90 2 8 1 2 7 5 7 . . 4 7 6 8 3 1 2 7 5 2 . . 6 38 3 7 1 2 7 5 5 . . 6 6 4 6 4 MEMO 31 United States/dollar... 98.60 89.09 89.84 85.65 86.09 88.04 90.44 89.84 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

A69 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 June 1992 A78 SPECIAL TABLES—Quarterly Data Published Irregularly, with Latest BULLETIN Reference Title and Date Issue Page Assets and liabilities of commercial banks March 31, 1991 August 1991 A72 June 30, 1991 November 1991 A70 September 30,1991 February 1992 A70 December 31, 1991 May 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 March 31, 1991 November 1991 A76 June 30, 1991 December 1991 A74 September 30,1991 February 1992 A80 December 31,1991 May 1992 A76 Pro forma balance sheet and income statements for priced service operations June 30, 1990 October 1990 All 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 September 30, 1991 May 1992 A81 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 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 Agricultural loans, commercial banks, 20, 21 Banks, by classes, 19-22 Assets and liabilities (See also Foreigners) Ownership by individuals, partnerships, and corporations, 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 Federal credit agencies, 31 CAPACITY utilization, 46 Federal finance Capital accounts Debt subject to statutory limitation, and types and ownership Banks, by classes, 19 of gross debt, 28 Federal Reserve Banks, 11 Receipts and outlays, 26, 27 Central banks, discount rates, 67 Treasury financing of surplus, or deficit, 26 Certificates of deposit, 24 Treasury operating balance, 26 Commercial and industrial loans Federal Financing Bank, 26, 31 Commercial banks, 17, 20 Federal funds, 7, 18, 20, 21, 22, 24, 26 Weekly reporting banks, 20-22 Federal Home Loan Banks, 31 Commercial banks Federal Home Loan Mortgage Corporation, 31, 35, 36 Assets and liabilities, 19-21 Federal Housing Administration, 31, 35, 36 Commercial and industrial loans, 17, 19, 20, 21, 22 Federal Land Banks, 36 Consumer loans held, by type and terms, 37, 38 Federal National Mortgage Association, 31, 35, 36 Loans sold outright, 20 Federal Reserve Banks Nondeposit funds, 18 Condition statement, 11 Real estate mortgages held, by holder and property, 36 Discount rates (See Interest rates) Time and savings deposits, 4 U.S. government securities held, 5, 11, 12, 28 Commercial paper, 23, 24, 34 Federal Reserve credit, 5, 6, 11, 12 Condition statements (See Assets and liabilities) Federal Reserve notes, 11 Construction, 44, 49 Federally sponsored credit agencies, 31 Consumer installment credit, 37, 38 Finance companies Consumer prices, 44,46 Assets and liabilities, 34 Consumption expenditures, 52, 53 Business credit, 34 Corporations Loans, 37, 38 Nonfinancial, assets and liabilities, 33 Paper, 23, 24 Profits and their distribution, 33 Financial institutions Security issues, 32,65 Loans to, 20,21,22 Cost of living (See Consumer prices) Selected assets and liabilities, 26 Credit unions, 37 Float, 51 Currency and coin, 19 Flow of funds, 39,41, 42, 43 Currency in circulation, 5,14 Foreign banks, assets and liabilities of U.S. branches and Customer credit, stock market, 25 agencies, 21, 22 Foreign currency operations, 11 Foreign deposits in U.S. banks, 5, 11, 20, 21 DEBITS to deposit accounts, 16 Foreign exchange rates, 68 Debt (See specific types of debt or securities) Foreign trade, 54 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 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 domestic 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 MANUFACTURING Thrift institutions, 4. (See also Credit unions and Savings and Capacity utilization, 46 loan associations) Production, 46, 48 Time and savings deposits, 4, 14, 18, 19, 20, 21, 22 Margin requirements, 25 Trade, foreign, 54 Member banks (See also Depository institutions) Treasury cash, Treasury currency, 5 Federal funds and repurchase agreements, 7 Treasury deposits, 5, 11, 26 Reserve requirements, 9 Treasury operating balance, 26 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 NATIONAL defense outlays, 27 transactions, 11, 28, 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

A72 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 KATHLEEN M. O'DAY, Associate General Counsel THOMAS D. SIMPSON, Associate Director MARYELLEN A. BROWN, Assistant to the General Cour I LAWRENCE SLIFMAN, Associate Director DAVID J. STOCKTON, Associate Director OFFICE OF THE SECRETARY MARTHA BETHEA, Deputy Associate Director WILLIAM W. WILES, Secretary PETER A. TINSLEY, Deputy Associate Director JENNIFER J. JOHNSON, Associate Secretary MYRON L. KWAST, Assistant Director PATRICK M. PARKINSON, Assistant Director BARBARA R. LOWREY, Associate Secretary RICHARD C. STEVENS, Assistant Secretary1 MARTHA S. SCANLON, Assistant Director JOYCE K. ZICKLER, Assistant Director DIVISION OF CONSUMER JOHN J. MINGO, Adviser LEVON H. GARABEDIAN, Assistant Director AND COMMUNITY AFFAIRS (Administration) GRIFFITH L. GARWOOD, Director GLENN E. LONEY, Assistant Director DIVISION OF MONETARY AFFAIRS ELLEN MALAND, Assistant Director DOLORES S. SMITH, Assistant Director DONALD L. KOHN, Director DAVID E. LINDSEY, Deputy Director DIVISION OF BANKING BRIAN F. MADIGAN, Assistant Director SUPERVISION AND REGULATION RICHARD D. PORTER, Assistant Director NORMAND R.V. BERNARD, Special Assistant to the Board RICHARD SPILLENKOTHEN, Director STEPHEN C. SCHEMERING, Deputy Director OFFICE OF THE INSPECTOR GENERAL DON E. KLINE, Associate Director BRENT L. BOWEN, Inspector General WILLIAM A. RYBACK, Associate Director BARRY R. SNYDER, Assistant Inspector General 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

A73 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 DAVID L. SHANNON, Director JEFFREY C. MARQUARDT, Assistant Director JOHN R. WEIS, Associate Director JOHN H. PARRISH, Assistant Director ANTHONY V. DIGIOIA, Assistant Director LOUISE L. ROSEMAN, Assistant Director JOSEPH H. HAYES, JR., Assistant Director FLORENCE M. YOUNG, Assistant Director FRED HOROWITZ, Assistant Director OFFICE OF THE CONTROLLER GEORGE E. LIVINGSTON, Controller STEPHEN J. CLARK, Assistant Controller (Programs and Budgets) DARRELL R. PAULEY, Assistant Controller (Finance) DIVISION OF SUPPORT SERVICES ROBERT E. FRAZIER, Director GEORGE M. LOPEZ, Assistant Director DAVID L. WILLIAMS, Assistant Director DIVISION OF INFORMATION RESOURCES MANAGEMENT STEPHEN R. MALPHRUS, Director BRUCE M. BEARDSLEY, Deputy Director ROBERT J. ZEMEL, Senior Adviser MARIANNE M. EMERSON, Assistant Director Po KYUNG KIM, Assistant Director RAYMOND H. MASSEY, Assistant Director EDWARD T. MULRENIN, Assistant Director 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 • July 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 R 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. CRUTCHFIELD, 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

A75 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 MULUGETTA 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 DEBORAF 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

A76 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. FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or COUNTRY MODEL, May 1984. 590 pp. $14.50 each. $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 1981. 1982. 239 pp. $ 6.50 per copy. FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. December 1986. 264 pp. $10.00 each. 1982. 1983. 266 pp. $ 7.50 per copy. 1983. 1984. 264 pp. $11.50 per copy. FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY- 1984. 1985. 254 pp. $12.50 per copy. SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. 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

A77 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 Bray ton 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- Changes in Family Finances from 1983 to 1989: Evidence from IARIES OF BANK HOLDING COMPANIES, by Nellie Liang the Survey of Consumer Finances. 1/92. and Donald Savage. February 1990. 12 pp. U.S. International Transactions in 1991. 5/92. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 Maps of the Federal Reserve System LEGEND Both pages Facing page • Federal Reserve Bank city • Federal Reserve Branch city • Board of Governors of the Federal — Branch boundary Reserve System, Washington, D.C. NOTE The Federal Reserve officially identifies Districts Commonwealth of Puerto Rico and the U.S. Virgin by number and Reserve Bank city (shown on both Islands; the San Francisco Bank serves American pages) and by letter (shown on the facing page). Samoa, Guam, and the Commonwealth of the In the 12th District, the Seattle Branch serves Northern Mariana Islands. The Board of Governors Alaska, and the San Francisco Bank serves Hawaii. revised the branch boundaries of the System most The System serves commonwealths and terri- recently in December 1991. tories as follows: the New York Bank serves the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A79 1-A 2-B 3-C 4-D 5_E Baltimore Pittsburgh 7 \ I NH • Cincinnati Buffalo • ^ MAB CT NJ NY BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 6-F 7-G 8-H • Nashville Birmingham WL Ml IA Detroit • fm " 1 Jacksonville >L • AR T M N emphis # IjSllli «lpl|i!ll Wmm New Orleans „ Littl? J Rock Miami ATLANTA • CHICAGO ST. LOUIS 9-1 • Helena MINNEAPOLIS 10-J 12-L Omaha • Denver | KS J MO ALASKA Oklahoma City KANSAS CITY 11-K Salt Lake City Houston • Los Angeles • C • San Antonio { HAWAII DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A80 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK Chairman President Vice President branch, or facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* 02106 Richard N. Cooper Richard F. Syron Jerome H. Grossman Cathy E. Minehan NEW YORK* 10045 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 To be announced 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

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

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