Federal Reserve Bulletin, 1992-09

VOLUME 78 • NUMBER 9 • SEPTEMBER 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 633 MONETARY POLICY REPORT 667 INDUSTRIAL PRODUCTION AND TO THE CONGRESS CAPACITY UTILIZATION Economic activity has increased on balance The index of industrial production declined since the beginning of the year, but rather 0.3 percent in June, after having risen about hesitantly in recent months, and inflationary Vi percent in each of the preceding four pressures have continued to abate. Against months. Total industrial capacity utilization this backdrop, and with money and credit fell 0.4 percentage point in June, to exhibiting renewed weakness in the second 78.5 percent. quarter, the Federal Reserve has eased money market conditions twice—in April and again 670 STATEMENTS TO THE CONGRESS in early July. The descent of domestic interest rates, which began in 1989, has now carried Richard F. Syron, President, Federal Reserve nominal yields on many market instruments to Bank of Boston, discusses his views on the the lowest levels in two or three decades. current availability of credit and bank capital standards and says that some improvement is evident in the ability of banks to raise new 652 DEVELOPMENTS IN THE PRICING OF capital as well as in an increased appreciation CREDIT CARD SERVICES by regulators of the macroeconomic impact of capital regulations, before the House Commit- Interest rates on credit cards have typically tee on Small Business, July 2, 1992. fluctuated within a narrower range—and at higher levels—than rates for most other types 673 Alan Greenspan, Chairman, Board of Goverof credit. Historically, special conditions, such nors, presents the semiannual Monetary Polas high start-up costs and state-mandated icy Report to the Congress (see the Report on rate ceilings, have curbed movements in page 633 of this issue) and says that the recent credit card rates. More generally, the behavior easing of reserve conditions should help to of credit card rates has reflected, on the shore up the economy and, coming in the supply side, a cost structure in which funding context of a solid trend toward lower inflation, costs are outweighed by relatively high oper- has contributed to laying a foundation for ating costs and default risks and, on the sustained expansion of the U.S. economy, bedemand side, a consumer demand for credit fore the Senate Committee on Banking, Houscard services that has been relatively insensi- ing, and Urban Affairs, July 21, 1992. (Chairtive to rate differences. Although consumers man Greenspan presented identical testimony have for some time been offered a much before the House Committee on Banking, wider range of interest rates in the market- Finance and Urban Affairs, on July 22, 1992.) place than is often recognized, recent months have seen more competition based on rate 678 John P. La Ware, Member, Board of Goverreductions than in the past. In the past year, nors, discusses the Federal Reserve's supervivirtually all major card issuers have lowered sion of bank lending on commercial real estate interest rates for all or certain segments of and the international coordination of supervitheir cardholders. sory efforts in general and says that conditions Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

within the U.S. banking system generally ap- that in the context of the Committee's longpear to be improving, although problem real run objectives for price stability and sustainestate credits remain a principal concern to able economic growth, and giving careful major bank lenders and to the supervisory consideration to economic, financial, and agencies, before the House Committee on monetary developments, slightly greater or Banking, Finance and Urban Affairs, July 30, slightly lesser reserve restraint might be 1992. acceptable during the intermeeting period. The reserve conditions contemplated under this directive were expected to be consistent 685 ANNOUNCEMENTS with growth of M2 and M3 at annual rates of Change in the discount rate. around 2Vi percent and IV2 percent respec- Nominations sought for appointments to the tively over the two-month period from April Consumer Advisory Council. through June. Issuance of report by the Basle Committee on 697 LEGAL DEVELOPMENTS Banking Supervision. Various bank holding company, bank service Approval of amendments to Regulation Y. corporation, and bank merger orders; and Adoption of final rule regarding home equity pending cases. disclosures. A1 FINANCIAL AND BUSINESS STATISTICS Proposal for uniform real estate lending standards to implement section 304 of the Federal These tables reflect data available as of Deposit Insurance Corporation Improvement July 29, 1992. Act of 1991 (FDICIA); proposal to implement interbank liability provisions under section A3 GUIDE TO TABULAR PRESENTATION 308 of FDICIA; proposed rulemaking under A4 Domestic Financial Statistics section 132 of FDICIA; proposed rulemaking A44 Domestic Nonfinancial Statistics on revising risk-based capital standards as pre- A53 International Statistics scribed by section 305 of FDICIA; proposal for alternative methods to adjust the 10 per- A69 GUIDE TO STATISTICAL RELEASES AND cent revenue test limiting ineligible securities SPECIAL TABLES activities of section 20 subsidiaries of bank holding companies. A86 INDEX TO STATISTICAL TABLES Publication of revised Lists of Marginable OTC Stocks and of Foreign Margin Stocks. A88 BOARD OF GOVERNORS AND STAFF Changes in Board staff. A90 FEDERAL OPEN MARKET COMMITTEE AND STAFF; ADVISORY COUNCILS 689 RECORD OF POLICY ACTIONS OF THE FEDERAL OPEN MARKET COMMITTEE A92 FEDERAL RESERVE BOARD At its meeting on May 19, 1992, the Commit- PUBLICATIONS tee adopted a directive that called for maintaining the existing degree of pressure on re- A94 MAPS OF THE FEDERAL RESERVE serve positions and that did not include a SYSTEM presumption about the likely direction of any adjustments to policy during the intermeeting A96 FEDERAL RESERVE BANKS, BRANCHES, period. Accordingly, the directive indicated AND OFFICES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress Report submitted to the Congress on July 20, 1992, At the same time, however, considerable impetus pursuant to the Full Employment and Balanced to activity was thought to be already in train, partly Growth Act of 19781 as a result of the substantial easing of money market conditions that the System had implemented in the second half of 1991. Among other effects, MONETARY POLICY AND THE ECONOMIC the decline in short- and long-term interest rates OUTLOOK FOR 1992 AND 1993 was reducing debt-servicing obligations and was facilitating needed balance sheet restructuring by Economic activity has increased on balance since borrowers and lenders. In assessing the situation as the beginning of the year, but rather hesitantly in of last February, the Board members and Reserve recent months, and inflationary pressures have con- Bank presidents recognized that the uncertainties in tinued to abate. Against this backdrop, and with the outlook were unusually large, but they believed money and credit exhibiting renewed weakness in that a moderate pickup in output from the espethe second quarter, the Federal Reserve has eased cially sluggish pace of the fourth quarter of 1991, money market conditions twice—in April and coupled with further improvement in underlying again in early July. The descent of domestic inter- price trends, was the most likely prospect in 1992. est rates, which began in 1989, has now carried In the event, economic growth did move back nominal yields on many market instruments to the into a moderate range in the first quarter of 1992. lowest levels in two or three decades. After keeping a tight grip on their expenditures In mid-February, when the Board presented its during the holiday shopping season, consumers last semiannual report on monetary policy to the stepped up their spending sharply in early 1992; Congress, the economy seemed to be struggling to simultaneously, purchases of new houses soared, regain forward momentum. Growth had come spurred in part by lower mortgage interest rates. An almost to a standstill in the final quarter of 1991, unusually mild winter also helped to buoy activity and, while a hint of improvement was evident in in January and February. Although businesses were some of the indicators that were available in mid- able to accommodate much of the burst in spending February, convincing signs of a strengthening of through a drawdown of inventories, the rise in activity had not yet appeared. Moreover, in looking demand sparked a rebound in industrial output. ahead at that time, growth seemed likely to con- Consumer sentiment, which had deteriorated in late tinue to be retarded by the still incomplete resolu- 1991 and early 1992, began to tilt back up in late tion of major structural adjustments in a variety of winter and early spring, and business executives sectors, financial and nonfinancial. Chief among expressed greater optimism. Economic growth, as those structural impediments were persistent prob- measured by the annualized rate of change in real lems in commercial real estate markets, budgetary gross domestic product, moved up to 23A percent in stress at all levels of government, a downsizing of the first quarter, the largest quarterly gain in more the defense industry, exceptional caution among than three years. financial intermediaries, and ongoing efforts of The strength in final demand that seemed to be businesses and households to reduce the level of emerging in the early part of the year does not their indebtedness. appear to have carried through the second quarter, however. Households, restrained by a soft labor market and the lack of significant gains in real 1. The charts for the report are available on request from Publi- income, clamped down on their spending after the cations Services, Board of Governors of the Federal Reserve Sysburst early in the year; real consumption expenditem, Washington, DC 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

634 Federal Reserve Bulletin • September 1992 tures appear to have grown little, if at all, in the incoming data on spending and production, the second quarter, and new home sales fell steadily weakness in both money and credit added to confrom February through May. In addition, exports, cerns about the ongoing strength of the expansion. which, over the past several years, had been an area In this environment, the System eased money of strength in the economy, showed little growth market conditions slightly in April and impleover the first five months of 1992. Although manu- mented a reduction of V2 percentage point in the facturers boosted production in April and May, discount rate on July 2, along with a commensurate they tended to do so more by stretching the hours further easing of money market conditions. In total, of their workers, rather than by adding employees short-term interest rates have declined about 3A of a to their payrolls. Declines in production became percentage point since the beginning of the year. evident in the industrial sector in June, as firms Longer-term rates backed up early in the year as apparently moved quickly to forestall unintended the economic expansion appeared stronger than inventory accumulation. In the labor market, the many people had expected, raising market condata for May and June showed a disturbing rise in cerns about a revival of inflationary pressures. the unemployment rate, to a level of 7.8 percent. However, in recent months many bond and mort- On the whole, the growth of total output in the gage rates have retraced their earlier increases. economy likely was positive again in the second Broad indexes of stock prices have remained close quarter—as it had been in each of the four preced- to record levels. In foreign exchange markets, the ing quarters. But, as the Federal Reserve had antic- weighted average value of the dollar, in terms of ipated at the start of the year, the drag from ongo- the currencies of other Group of Ten (G-10) couning structural adjustments has remained heavy. tries, appreciated until early March, but recent Inflationary forces have been muted this year. depreciation, occasioned primarily by a less robust Prices accelerated somewhat in the first quarter, but outlook for the U.S. economy, has left the dollar that flare-up proved to be short-lived, as increases somewhat below its 1991 year-end level. in the consumer price index were small, on aver- Declining interest rates in recent years have conage, in the second quarter. The "core" rate of tributed to sizable reductions in debt-service obliinflation, as measured by the change in the CPI gations, as both long- and short-term debt has been excluding food and energy, averaged 3.8 percent at rolled over or refinanced at lower rates. In addition, an annual rate in the first six months of 1992; this lower long-term rates and high price-earnings ratios rate of rise was a little lower than the average rate on stocks have encouraged businesses to reduce the of increase during 1991, and it was considerably interest rate risk and the uncertainty associated less than the increase seen during 1990. With infla- with short-term funding by relying more heavily on tion expectations down appreciably from recent issuance of long-term debt and equity. Households highs, and with firms striving to reduce their costs also have taken advantage of lower rates to refion all fronts, a trend toward gradual reduction in nance existing debt, especially mortgages. In addithe rate of price increase appears to be well estab- tion, over-leveraged households, facing uncertain lished at the present time. income and employment prospects and wide Growth in the broad measures of money was spreads between rates charged on consumer credit quite weak in the second quarter, leaving both M2 and yields on monetary assets, have moved to limit and M3 in June below the lower bounds of their debt growth. annual ranges. Measured from its average level in The resulting improvements in the financial conthe fourth quarter of 1991, M2 increased at an ditions of households and businesses are evident annual rate of IV2 percent through June, while M3 in several indicators: Delinquencies on consumer edged down at a rate of lA percent over that same loans and home mortgages have declined, ratings period. As is discussed in more detail below, the for a number of firms have been upgraded, and sluggishness of money during this period seemed yield spreads have narrowed on private fixedto be more a reflection of changing patterns of income securities relative to Treasury obligations. finance than of restraint on nominal income growth. Of course, not all parties have benefited from Still, private credit growth also was relatively slow, lower interest rates; households holding short-term and, in the context of renewed softness in the deposits have experienced a sizable decline in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 635 interest income. On balance, however, lower inter- both monetary aggregates appear to have registered est rates have helped households and businesses sizable increases in their income velocities in the strengthen their balance sheets, thereby building a first half of the year. The rise in M2 velocity is firmer financial foundation for future economic particularly notable, given the marked drop in expansion. short-term interest rates in the latter part of 1991. Efforts to return to more sustainable leverage Ordinarily, velocity tends to fall for a time after a positions have contributed to slow expansion of the decline in short-term rates. debt of nonfederal sectors in the first half of this year. Heavy borrowing by the federal government has kept total debt expanding at the lower end of Monetary Objectives for 1992 and 1993 the Federal Open Market Committee's (FOMC) monitoring range of 4V2 to SV2 percent, based on In reviewing the annual ranges for the monetary current estimates. Depository credit remains espe- aggregates in 1992, the Committee noted the subcially weak, reflecting not only muted private loan stantial uncertainties created by the unusual behavdemands, but also continued caution among depos- ior of M2 and M3 velocity thus far this year. If itories. Commercial banks no longer appear to be portfolio shifts ebb and more normal relationships tightening their nonprice terms of lending, but the of depository credit to spending begin to emerge, degree of credit restraint remains substantial and growth of the monetary aggregates within the existspreads between loan rates and the cost of funds ing ranges would be consistent with the Commitremain unusually wide. Bank capital positions have tee's objectives for making progress toward price improved substantially over the past year; nonethe- stability and fostering economic growth. However, less, banks are likely to continue working to bolster it is unclear whether the forces giving rise to the capital, partly as a consequence of incentives con- unusual behavior of the aggregates will wane in tained in the FDIC Improvement Act. coming months or continue unabated. Faced with The contraction of depository credit has been these uncertainties, the Committee chose to retain mirrored by the meager advance in the monetary the 2Vi to 6V2 percent range for M2 and the 1 to aggregates. This is seen clearly in M3, which 5 percent range for M3 announced earlier this year includes most of the liabilities banks and thrift for 1992. institutions use to fund loans and other assets. But The Committee also reaffirmed the existing 1992 M2 has also been affected. Banks and thrift institu- monitoring range for the aggregate debt of domestions have not actively pursued deposit funding in tic nonfinancial sectors. The more cautious attilight of weak loan growth, and retail deposit rates tudes toward borrowing that have damped credit have fallen considerably over the course of the growth this year, and the improving balance sheets year. Consumers consequently have sought higher- of borrowers, should lay the groundwork for susyielding assets outside M2, including those in the tained economic expansion in years to come. capital market where—despite the greater risks The ongoing structural changes in the financial involved—returns have appeared more attractive. system and the tentative nature of the recovery In addition, given the wide deposit-loan rate greatly complicated the task of choosing ranges for spreads, some M2 holders likely have opted to pay the coming year. The Committee recognized that down debt rather than to hold monetary assets. The rechanneling of credit flows away from 1. Ranges for growth of monetary and debt aggregates1 depositories and the associated sluggish money Percent growth have not been entirely benign; many bor- Provisional rowers face higher costs and stricter terms of credit Aggregate 1991 1992 range for 1993 now than in the past at given levels of market interest rates. Nonetheless, weakness of the mone- M2 2V2-6V2 2V2-6V2 2V2-6V2 M3 1-5 1-5 1-5 tary aggregates has not been associated with a Debt2 4'/2-8>/2 W2-SV2 4V2-SV2 similar degree of restraint on aggregate demand. 1. Change from average for fourth quarter of preceding year to average Indeed, growth in nominal spending has consider- for fourth quarter of year indicated. Ranges for monetary aggregates are ably outpaced that of M2 and M3; put differently, targets; range for debt is a monitoring range. 2. Domestic nonfinancial sector. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

636 Federal Reserve Bulletin • September 1992 the range for M2 probably would need to be 2. Economic projections for 1992 and 1993 reduced at some point to be consistent with the FOMC members and Federal Reserve's long-run objective of reasonable other FRB presidents price stability. However, pending further analysis of the recent relationship of money stock move- RD anSe te C n e d n e t n r c a y l ments to income and interest rates, the Committee 1992 chose to carry forward the 1992 ranges for the PPeerrcceenntt cchhaannggee,, monetary aggregates and debt as provisional ranges ffoouurrtthh qquuaarrtteerr ttoo ffoouurrtthh qquuaarrtteerr11 for 1993. NNoommiinnaall GGDDPP 55--6611//44 55''//44--66 RReeaall GGDDPP 22--33''AA 22>>//44--2233//44 CCCooonnnsssuuummmeeerrr ppprrriiiccceee iiinnndddeeexxx 222 33--33''//22 33--33''//>> AAAvvveeerrraaagggeee llleeevvveeelll,,, fffooouuurrrttthhh qqquuuaaarrrttteeerrr (((pppeeerrrccceeennnttt))) UUUnnneeemmmpppllloooyyymmmeeennnttt rrraaattteee333 77--7711//22 77>>//44--7711//22 Economic Projections for 1992 and 1993 1993 The members of the Board of Governors and the PPPeeerrrccceeennnttt ccchhhaaannngggeee,,, Reserve Bank presidents, all of whom participate fffooouuurrrttthhh qqquuuaaarrrttteeerrr tttooo fffooouuurrrttthhh qqquuuaaarrrttteeerrr111 NNNooommmiiinnnaaalll GGGDDDPPP 4411//22--77 551144--6611//44 in the discussions of the Federal Open Market RRReeeaaalll GGGDDDPPP 22 >>//22--33''//22 2233//44--33 Consumer price index 2 22VV22--AA 22%%--33''//44 Committee, generally believe that the most likely scenario for the economy in the second half of Average level, fourth quarter (percent) Unemployment rate3 66''//22--77ii//44 6611//22--77 1992 is one in which real GDP increases at a 1. From average for fourth quarter of 1990 to average for fourth quarter moderate pace and job growth is sufficient to imof 1992. part a downward tilt to the unemployment rate. In 2. All urban consumers. 3. Percentage of civilian labor force. 1993, output growth is expected to pick up slightly further from the 1992 pace, bringing additional small reductions in the unemployment rate. Infla- have been encouraging. In the market for commertion will likely hold to a gradual downward trend cial real estate, which has been the most striking over the next year and a half. area of weakness in the economy in recent quarters, In quantifying their views of the prospects for downward pressures on the prices of existing propeconomic growth, the Board members and Reserve erties seem to have begun to diminish, and die rate Bank presidents ended up with forecasts that are of decline in new construction appears to be slowsomewhat stronger than those made in February. A ing. In addition, businesses and households also large majority of them see the most likely outcome have made considerable progress in strengthening for this year as being one in which real gross their finances, and even though that improvement domestic product rises 2lA percent to 23A percent evidently has not yet generated more expansive over the four quarters of 1992; the central tendency attitudes toward spending and investing, such a of the forecasts for 1993 spans a range of 23A to shift probably will be forthcoming at some point. 3 percent. With regard to the unemployment rate, An obvious risk in the outlook is that these, and the central tendency of the governors' and Bank the other, structural adjustments could persist presidents' forecasts for the fourth quarter of 1992 with greater intensity than is anticipated; but, covers a range of 7XA to IV2 percent, as compared alternatively, a faster resolution of the structural with the second-quarter average of IV2 percent; the problems—and a stronger pickup of the corresponding central tendency range for the final economy—is not out of the question either. quarter of 1993 is 6V2 to 7 percent. The governors and Bank presidents expect the The achievement of the projected GDP growth rise in the consumer price index over the four will depend in part on the progress in resolving the quarters of 1992 to end up in the range of 3 to various structural adjustments noted earlier. In gen- 3V2 percent. Although an increase of this magnieral, the Board members and Reserve Bank presi- tude is to the high side of that realized in 1991, dents believe that these structural problems will inflation rates were held down last year by the continue to exert negative drag on the economy in unwinding of the oil price shock that had occurred coming quarters, but that their force will gradually in 1990. Core inflation this year is expected to be lessen. On that score, some of the recent trends lower than it was in 1991, and most Board mem- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 637 bers and Reserve Bank presidents believe that sus- ment rate moved up sharply toward midyear, to a tained progress toward the containment of costs June level of 7.8 percent—about 3A of a percentage and a further easing of inflation expectations will point above the rate at the end of 1991. keep the trend rate of price increase on a course of The first-quarter surge in final sales was largely a gradual slowing next year as well. With neither reflection of a firming of demand in the domestic food nor energy prices anticipated to depart in any economy. Consumer spending strengthened markmeaningful way from the broad trends of inflation, edly in the opening months of the year, housing the total CPI is also expected to slow in 1993, to a starts and home sales jumped, and business fixed range of 2% to 3 lA percent, according to the central investment increased for the first time in several tendency of the FOMC participants' forecasts. quarters. In the second quarter, domestic demand Earlier this year, in the Economic Report of the appears to have risen further, but, on the whole, at a President and the Budget, the Administration slower pace than in the first quarter. By contrast, issued forecasts that showed nominal GDP growth the external sector of the economy, which had in 1992 and 1993 that falls within the ranges antic- contributed appreciably to growth of the economy ipated by Federal Reserve officials. Consequently, in 1990 and 1991, has provided little or no impetus there would appear to be no inconsistency between to activity this year; exports have been limited the System's plans for monetary policy and the recently by the continued sluggishness of many short-term goals of the Administration. foreign industrial economies, and imports appear to Looking more toward the long term, the pros- have moved up after a couple quarters of flatness. pect of a sustained period of declining inflation, Although price movements were erratic from together with a resolution of the many structural month to month in the first half of 1992, there was problems that currently afflict the economy, sug- ample evidence that the underlying processes of gests the opportunity for substantial economic disinflation still were at work. Wage increases modgains and a broadening prosperity. The Federal erated further, and productivity increases also con- Reserve, for its part, can best contribute to the tributed importantly to the containment of costs. achievement of those objectives by keeping its The twelve-month change in the consumer price sight firmly on the long-run goal of price stability. index excluding food and energy, a rough gauge of But the longer-range progress of American living the underlying rate of inflation in the economy, standards will depend on more than monetary sta- dropped below the 4 percent mark; as recently as bility. Sound fiscal policies and an open world the first quarter of 1991, that measure had been trading system are essential if we are to enhance running as high as 5Vi percent. The total CPI rose capital formation and achieve the greatest possible only 3 percent over the twelve months ended in productivity of our human and physical resources. June, held down by small increases in food and energy prices over that twelve-month period. THE PERFORMANCE OF THE ECONOMY IN 1992 The Household Sector After coming almost to a standstill in the final quarter of 1991, economic activity showed more Indicators of the economic health of households vitality in the early part of 1992. Buoyed by a surge were mixed in the first half of 1992. Households in final sales, real gross domestic product rose at an continued to make gradual progress in reducing annual rate of 23/4 percent in the first quarter. their debt burdens in the first half of the year, and Growth evidently slowed considerably in the sec- the incidence of financial stress seemed to diminond quarter; in that period, signs of softness began ish. However, neither income nor wealth displayed to surface once again in a number of the indicators. the degree of vigor needed to sustain strength in Most notably, industrial production and payroll household expenditures. employment turned down in June, after four When the year began, consumer spending was a months of increases, and, with an influx of jobseek- major question mark in the economic outlook. Coners into the labor market, the civilian unemploy- sumer outlays for goods had weakened appreciably Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

638 Federal Reserve Bulletin • September 1992 in the final quarter of 1991, and consumer confi- altered the timing of tax payments to some extent, dence, which had gone into an alarming plunge delaying a portion of those payments until 1993. during the autumn, continued to soften into early A combination of restrained debt growth and 1992. But—such pessimism notwithstanding— lower interest rates has led to reductions in the consumers pushed expenditures up at a very rapid debt-servicing burdens of households, although, pace in January and raised them further in Febru- measured relative to income, the repayment burden ary; although spending softened in March, the rise still is relatively high by historical standards. The in real consumption expenditures for the first quar- incidence of financial stress among households also ter as a whole amounted to 5 percent at an annual appears to have eased somewhat in the most recent rate, the strongest quarterly advance in four years. quarters for which data are available. Delinquency Purchases of durable goods rose briskly, and solid rates on consumer loans and home mortgages, gains were also recorded for a wide range of non- which rose sharply from mid-1990 to mid-1991, durables. Given the size of those increases—and turned down in the second half of last year and with housing sales also rising sharply in the early declined further in the first quarter of 1992. part of the year—it seemed for a time that the Real outlays for residential investment have been forces of expansion might be gathering consider- rising since the start of 1991. The first-quarter able strength. gain—113A percent at an annual rate—took outlays However, the first-quarter surge did not carry to a level close to 10 percent above that of a year over into the spring. Indeed, it appears that real earlier. Even so, spending gains over the year consumption expenditures probably were little ended in the first quarter of 1992 recouped less changed in the second quarter as a whole. Never- than half of the sharp decline of the preceding four theless, a bright spot in the recent spending data quarters. has been the firmness of motor vehicle sales. After For a brief time early this year, residential investbottoming out in January at an annual rate of about ment seemed to be picking up considerably more 12 million units, the sales of cars and light trucks momentum. In the latter part of 1991, mortgage rebounded to a rate of about \2xh million units in interest rates had dropped to their lowest levels in the next three months and then moved up further to more than fifteen years, and the sales of new singlea level of 13% million units in June. Although a family houses, which had already been moving up portion of the recent strength in auto sales appar- at the end of last year, surged in January and ently is a reflection of increased business invest- remained strong in February. Reacting to the rise in ment in motor vehicles, it also seems likely that demand—and aided by an unusually mild winter— households that have put off buying new cars and builders boosted the pace of single-family housing trucks in the past couple of years are now entering starts to the highest seasonally adjusted level in the market in greater numbers. two years. In March, however, sales of new homes Real disposable personal income fell after the oil plummeted, and they weakened further in April price shock of 1990 and then turned up in the and May. Starts also retreated; the number of spring of 1991. Growth since then has been posi- single-family units started in the second quarter tive in each quarter, but a bit erratic and, on aver- was 6 percent below the first-quarter average. age, relatively slow. The level of real income in the Several factors have affected the recent patterns first quarter of this year was about 2 percent above of the housing indicators. The mild winter weather the recession low of a year earlier; the average for evidently permitted some starts to be undertaken a April and May was up less than 2 percent from the bit sooner than they otherwise would have been. In level of a year ago. Growth of wage and salary addition, a substantial backup of mortgage interest income has remained sluggish this year, and inter- rates after January undoubtedly cut into demand to est income has continued to decline. By contrast, some degree; rates on thirty-year fixed-rate convengovernment transfer payments to individuals have tional mortgages rose from about %lA percent in continued to grow rapidly in recent quarters, mid-January to 9 percent by March and remained buoyed, in part, by a rise in unemployment bene- above 8V2 percent until June. Discussion of a posfits. Starting in March, disposable income also was sible tax credit for first-time homebuyers also lifted by a change in tax withholding schedules that appears to have raised demand temporarily. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 639 Moreover, the recovery in housing activity prob- ately over the four-month period beginning in Febably has continued to be retarded to some degree ruary; a small portion of those gains was reversed by negative influences that were evident in 1991. A in June, however. Bolstered by strong gains in the significant number of potential homebuyers are production of office and computing equipment, being deterred by concerns about jobs and incomes. output of business equipment (other than motor Others now view the purchase of a home as being a vehicles) rose in each month from February riskier, less attractive investment than it once through June. seemed, owing to the sharp declines seen in house Manufacturing and trade inventories, measured prices in some regions in recent years and to the in real terms, fell further in February. Thereafter, lack of much price appreciation more generally. inventories appear to have risen somewhat, on net. High vacancy rates and unfavorable demographic In manufacturing, the level of inventories at the trends continue to be formidable obstacles to recov- end of May was relatively low, compared to the ery in the multifamily sector. By contrast, an level of sales. But, in parts of the trade sector, increasingly favorable factor is the improved stocks may have been slightly higher than desired, affordability of housing: Lower mortgage interest and with household demand looking sluggish once rates—in part a reflection of the less inflationary again, some businesses may have felt it appropriate environment of recent years—have substantially to pull back a bit on orders for additional merchanreduced the size of the monthly payment associated dise, triggering the production adjustments that with the purchase of a home, measured relative to were evident in June. personal income. In that regard, the latest round of Business profits, which came under considerable cuts in mortgage interest rates, to the lowest level pressure during the recession, began rising noticesince 1973, appears to have stimulated some pickup ably in the latter part of 1991 and increased sharply in real estate activity very recently. in the first quarter of 1992. The before-tax economic profits of all U.S. corporations jumped 12V2 percent in the first quarter and were at the The Business Sector highest level since the first half of 1989. The profits of financial corporations have been boosted by When the year began, the business sector of the sharp reductions in interest expenses and by a economy was still in the process of adjusting to the strengthening of their loan portfolios. The ecosluggishness of demand and the mild backup of nomic profits of nonfinancial corporations from inventories that had emerged in the second half of their domestic operations also have been rising; in 1991. Industrial production, which had declined in the first quarter of 1992, these profits, on a pre-tax the final two months of last year, fell further in basis, were more than 20 percent above their quar- January; assemblies of motor vehicles dropped terly low of late 1990. That rise in profits was sharply in that month, and cutbacks in output were the result of small increases in volume, a moderate reported in other industries as well. Those produc- increase in the margin over unit labor costs, and tion cuts, coupled with the January surge in house- substantial reductions in net interest expenses. hold spending, led to a reduction in business inven- Stress has continued to be evident this year in tories, clearing away most of the excess stocks that several industries—notably retailing, airlines, and had accumulated in the final four months of 1991. commercial real estate. Overall, however, corpo- Industrial production turned up in February, and, rate balance sheets have been strengthening. with orders and shipments trending up, additional Issuance of equity by nonfinancial corporations has gains followed in each of the next three months. been outstripping share retirements in recent quar- Assemblies of motor vehicles rose considerably ters, after several years in which the balance ran during this period and, by May, were at the highest markedly in the other direction. In addition, the level since the fall of 1990; although assemblies growth of business debt has remained sluggish this were reduced by a small amount in June, automak- year, as internal sources of funds have proved to be ers have announced plans to step up assemblies in large enough to finance a subdued level of business the third quarter. Production of consumer goods investment. Lower bond yields have enabled firms other than motor vehicles also increased moder- to replace higher-cost debt and have encouraged a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

640 Federal Reserve Bulletin • September 1992 shifting out of short-term liabilities. Among farm for gas and oil drilling fell further in the first businesses, income has dropped back from the rela- quarter, and the outlays for construction of office tively high levels of 1989 and 1990, and farmers buildings continued to decline. have cut back on their investment in machinery and In total, the first-quarter level of spending for equipment. However, farmers' balance sheets offices and other commercial structures was about appear to be considerably stronger at this point 40 percent below the level of two years earlier, but than they were in the mid-1980s, when the sector there are tentative indications that the steepest went through an extended period of severe finan- part of this protracted decline may now be over. cial stress. Although spending for the construction of office Business fixed investment turned up in the first buildings has continued to fall rapidly this year, the quarter of this year, after declining in each quarter outlays for commercial structures other than from late 1990 to the end of 1991. Real outlays for offices—a category that includes such things as equipment increased moderately in the first quarter, warehouses, shopping malls, and other retail and business investment in new structures turned outlets—have changed little, on net, over the past up, after five quarters of sharp declines. The several months. In addition, there are indications second-quarter indicators that are in hand suggest that the rate of decline in prices of existing comthat equipment spending probably increased mercial properties has slowed, and transactions in enough to raise total real business fixed investment commercial real estate reportedly have picked up in further in that period. some areas of the country this year. The first-quarter rise in equipment spending amounted to about 3V6 percent at an annual rate. Increased outlays for computers and related devices The Government Sector more than accounted for the first-quarter gain; spending for that type of equipment has been rising Government purchases of goods and services—the briskly since mid-1991, boosted by product innova- part of government spending that is included in tions, extensive price-cutting by computer manu- gross domestic product—increased at an annual facturers, and the ongoing efforts of businesses to rate of 3 percent in real terms in the first quarter of achieve efficiencies through the utilization of new 1992, after declining about IV2 percent over the information-processing technologies. By contrast, four quarters of 1991. Federal purchases, which fell spending for aircraft, which had been strong in 3 percent last year, rose at an annual rate of about 1990 and for most of 1991, has weakened substan- 1 percent in the first quarter; nondefense purchases tially since last autumn; a first-quarter uptick in moved higher, and the decline in defense purchases those outlays retraced only a small part of the was smaller than those seen in previous quarters. fourth-quarter plunge. Business outlays for motor State and local purchases, which had declined vehicles were down moderately in the first quarter, slightly over the course of 1991, were boosted in but they appear to have firmed in the second quar- the first quarter of 1992 by a surge in the outlays ter. Spending for all other types of equipment, for structures. roughly half of which is industrial machinery, was Budgetary problems continue to confront many down further in the first quarter in 1992, but at a governmental units. At the federal level, the unified much slower pace than in 1991. In total, equipment budget deficit over the first eight months of fiscal investment appears to be exhibiting the traditional 1992—the period from October to May—totaled lagged response to changes in aggregate economic $232 billion; this total was about $56 billion larger activity, the recent pickup being supported by the than the deficit recorded in the first eight months of rise in profits and increased cash flow. the previous fiscal year. Federal receipts in the Real outlays for nonresidential structures rose at current fiscal year are up only 1 percent from the an annual rate of 2xh percent in the first quarter. same period of a year earlier, while outlays have Investment in industrial structures was up for the climbed about IV2 percent. On the receipts side of second quarter in a row, and increases also were the ledger, the income taxes paid by individuals reported for utilities, private educational facilities, have been damped by slow income growth, and, and hospitals and institutions. However, spending despite a pickup recently, the revenue from corpo- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 641 rate profits taxes has been weak for the fiscal year Last year's progress in reducing the combined to date. Receipts from excise taxes have risen con- state and local budget deficit was achieved partly siderably this fiscal year, but these do not account through tax increases and partly through spending for a very large share of total federal revenue. restraint. With deficits still large this year, legisla- The sharp rise in federal spending this year tors and administrators are facing yet another round partly reflects a diminished flow of contributions to of painful choices. Tax hikes have been implethe United States from our allies in the Gulf War; mented in some places this year, and efforts to curb these contributions are counted as negative outlays spending appear to be widespread, even as the in the federal budget, and their shrinkage therefore demands for many types of government services translates into a rise in recorded outlays. By con- have continued to rise. Increases in the wages and trast, spending has been held down this year by a benefits of state and local workers have slowed reduction in outlays for deposit insurance pro- considerably in recent quarters, with wage freezes grams. This reduction stems, in part, from delays in being imposed in some cases. Although state and funding the activities of the Resolution Trust Cor- local employment has risen a little in recent poration (RTC), the federal agency that is responsi- months, partly because of election activity, the ble for cleaning up the problems of insolvent thrift cumulative growth in the number of state and local institutions. jobs over the past year has been quite sluggish, and Excluding the allied contributions and the spend- some governments have furloughed workers teming for deposit insurance programs, federal outlays porarily in order to hold down expenditures. have risen about 5Vz percent this fiscal year. Fed- Against the backdrop of these widespread attempts eral financing of health care has continued to rise at to restrain spending, the substantial first-quarter a very rapid pace in fiscal 1992; grants to states for rise in real state and local purchases may well have Medicaid, the fastest growing category in the health been a temporary bulge, rather than the harbinger care budget, are running more than 30 percent of a renewed uptrend in state and local spending. above the level of a year ago. In addition, slow growth of the economy and actions taken to extend unemployment benefits have pushed federal spend- The External Sector ing for income support programs sharply higher, and outlays for social security have been boosted For the year to date, the foreign exchange value of by cost-of-living adjustments and increases in the the dollar, in terms of the currencies of the other number of beneficiaries. Combined federal spend- Group of Ten (G-10) countries, has declined someing for other functions has risen only slightly in what, on balance, from its level at the end of 1991. nominal terms this fiscal year. The mix of this Appreciation early in the year has been offset by spending is changing, however. Outlays for some subsequent depreciation. nondefense functions—notably law enforcement, From its low point at the end of 1991, the dollar education, and health programs other than appreciated through about mid-March, reaching a Medicaid—have risen fairly rapidly in fiscal 1992; level nearly 9 percent above where it was at yearoutlays for defense have been cut back, even in end. The dollar was lifted during this period by nominal terms, once adjustment is made for the data pointing to increasing strength in the recovery diminished flow of allied contributions. of U.S. economic activity, which also worked to Many state and local governments still are grap- raise U.S. long-term interest rates relative to those pling with severe budgetary imbalances, and fur- in other countries. From mid-March through April, ther progress toward correcting those imbalances exchange rates fluctuated in a fairly narrow range. was not evident in the first quarter of 1992. After Beginning in May, however, the dollar began to four quarters in which state and local governments decline as long-term interest rates eased, and as of had managed to chip away steadily at the deep mid-July, it had more than reversed the rise earlier deficit in their combined operating and capital in the year. The market's reassessment of the prosaccounts, that deficit is estimated to have widened pects for a strong U.S. economic recovery appears a little in the first quarter, to a total, excluding to have been a major factor underlying the declines social insurance funds, of about $26 billion. in both the dollar and long-term rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

642 Federal Reserve Bulletin • September 1992 Developments abroad reinforced these factors. With growth of the U.S. economy still on a The dollar rose sharply against both the Japanese relatively slow track, real merchandise imports yen and the German mark early in the year. Signs remained about unchanged in the first quarter, after of further weakening of economic growth in Japan only a small increase in the fourth quarter of 1991. and the decline of the Japanese stock market Increases in imports of capital goods in the first worked to depress the yen. Reports of a decline in quarter were about offset by declines in imports of German output in the fourth quarter of 1991 and consumer goods. Data for April and May show the increasing expectations that the Bundesbank would quantities of imports of most categories of goods not move further toward tightening German mone- moving up noticeably from their first-quarter tary policy contributed to the weakness of the mark. averages. Beginning in late April, the dollar started to decline Export volume, which had climbed sharply in against the yen and the mark. News of a substantial the final quarter of 1991, held around its fourthwidening of Japan's current account surplus and a quarter pace in the first five months of 1992. belief that the Group of Seven nations supported Despite its recent flatness, export volume in this appreciation of the yen contributed to a turnaround five-month period was about IV2 percent above the in the dollar's exchange rate against that currency. level of a year earlier. The strongest growth in In Germany, economic activity proved stronger exports over the past year has been in capital than expected in the first quarter and, along with goods, particularly to developing countries, reflectrapid money growth in that country, led both to a ing strong investment demand in Latin America reevaluation of the prospects for an early easing by (especially Mexico), the Middle East, and in Asia. the Bundesbank and to a rise in the mark. However, the general slowdown in growth in the On balance, the dollar declined more than 3 per- major industrial countries last year, and the recescent against the mark and was little changed against sions in some countries, generally continued during the yen from the start of the year to mid-July. The the first half of 1992, depressing the growth of U.S. dollar appreciated against the Canadian dollar; with exports to these countries. At the same time, spe- Canadian real GNP flat in the fourth quarter of cial factors that contributed to the strength in 1991 and posting only a small rise in the first exports last year—notably the surge in investment quarter of this year, Canadian authorities eased demand in Latin America and replacement interest rates and appeared to welcome the associ- demands from the Persian Gulf countries after the ated decline in their currency as a way to help war—have been less pronounced this year. stimulate economic activity. By contrast, the dollar The merchandise trade deficit narrowed to an depreciated moderately against the currencies of annual rate of $70 billion in the first quarter of major developing countries over the first half of 1992, slightly below the deficit recorded in the 1992, after adjustment for movements in relative fourth quarter of 1991 and also a little below the price levels. 1991 average. The current account showed a deficit Prices of U.S. non-oil imports accelerated to a of $21 billion at an annual rate in the first quarter, 6V4 percent annual rate of increase in the first compared with a deficit of $4 billion for calendarquarter of 1992, more than double the rate of rise in year 1991. However, excluding unilateral transfers the fourth quarter of 1991. The jump in import associated with Operation Desert Storm in both prices most likely reflected the lagged effects of the periods, the current account deficit in the first depreciation of the dollar that occurred during the quarter—$23 billion at an annual rate—was about latter part of 1991. Most of the price increase of the half the deficit seen in 1991. This improvement in first quarter was reversed in April and May. The current account transactions reflected a further widprice of oil imports declined 15 percent in the first ening of the substantial surplus on net service transquarter in response to strong OPEC production and actions (particularly in the areas of medical, eduwarmer-than-normal weather. However, that oil cational, and other professional and business price decline was reversed in the second quarter in services) and an increase in net investment income response to production restraint by Saudi Arabia receipts. and to indications that the Kingdom may be pre- A large net capital inflow was recorded in the pared to target prices at a somewhat higher level. first quarter of 1992; foreign official holdings of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 643 reserve assets in the United States rose strongly, Elsewhere, employment in the health services and private capital transactions showed a small industry continued to rise in the first half of 1992, net inflow. Within the private-sector accounts, the but in many of the other major sectors employment first quarter brought substantial capital outflows either changed little or declined. The number of that were associated with U.S. purchases of for- jobs in the construction business in the second eign securities and increased direct investment quarter was about the same as in the final quarter abroad—particularly in intercompany debt flows to of last year. Employment in retail trade was also Canada and the United Kingdom. These outflows about flat over that same period. In manufacturing, were largely offset by a sizable net capital inflow employment fell slightly over the first half of the reported by banks, and by private foreign pur- year, with small declines reported across a wide chases of U.S. securities other than Treasury secu- range of industries. rities. Inflows associated with foreign direct In total, about 200,000 new jobs were created in investment in the United States amounted to less the first half of 1992, according to the payroll data than $1 billion in the first quarter, down sharply obtained from business establishments and governfrom the average pace in recent years; acquisitions ments. An alternative employment series, compiled of U.S. businesses by foreigners fell sharply, and from the monthly survey of households, showed slow growth in the United States produced reduced the number of persons with jobs rising by a larger earnings to be reinvested in this country. The net amount—about 850,000—over that same period. capital inflow in the first quarter exceeded the Although a complete accounting of the reasons for current account deficit by a wide margin, implying the recent disparity between these two surveys is a substantial statistical discrepancy in the interna- not possible, one possibility is that the payroll tional accounts—$16 billion at a quarterly rate. survey might not be fully capturing job growth at The discrepancy in 1991 had amounted to only newly created establishments. If that is the case, $1 billion over the year as a whole. then actual employment growth in the first half of this year may have been somewhat stronger than the payroll data indicate, although it still was not Labor Market Developments comparable to the gains seen at a similar stage of previous economic recoveries. Payroll employment, which had declined some- Despite the rise in employment in the household what in the final quarter of 1991, fell further in survey, there were further sharp increases in the January of this year. Thereafter, employment rose number of unemployed, and the civilian unemployin each month from February through May, before ment rate rose from 7.1 percent in December to a turning down once again in June. In the private level of 7.8 percent in June. Unemployment rates sector, the level of payroll employment in June was moved up, on net, for most occupational and demoup only slightly from its level at the end of 1991, graphic groups during the first half of the year, with and it remained well below the pre-recession peak especially large increases for adult men and teenof 1990. agers. Much of the rise in unemployment in the The sectoral patterns of change in the number of first half consisted of persons who had lost their workers on private payrolls continued to vary con- jobs. In addition, unemployment was boosted by a siderably in the first half of 1992. Employment at rise in the number of persons who had entered or establishments that provide services to other busi- re-entered the labor force, but were unable to find nesses rose fairly briskly, especially in the period jobs; this influence was especially pronounced in from February through May. Those gains seemed May and June, the two months in which most to be a reflection of a firming of activity in the of the first-half rise in the unemployment rate business sector, but they also may have been symp- occurred. tomatic of businesses' hesitation to push aggres- The civilian labor force—the sum of those persively into expansion; it appears that firms may sons who are employed and those who are seeking simply have been turning temporarily to outside work but cannot find it—grew very rapidly in the help, rather than committing themselves to the first half of 1992—about 3 percent at an annual expansion of their own payrolls. rate. However, this surge in the labor force follows Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

644 Federal Reserve Bulletin • September 1992 a period in which labor force growth had been recent peak. The 3 percent rate of rise in the quite weak, and the percentage increase over the consumer price index over the past year is roughly past year is much smaller—about IV2 percent. half the rate at which that index increased in 1990; Moreover, with the labor force participation rate swings in energy prices account for a sizable part now back to its previous peak and the working-age of that slowdown, but most non-energy prices have population estimated to be rising rather slowly in slowed as well. A halving of the rate of price rise coming quarters, it does not seem likely that labor also is evident in the fixed-weight price index for force growth can be maintained at its recent pace gross domestic purchases, a measure that takes for very long. account of the prices paid by businesses and gov- The softening of labor markets and easing of ernments as well as those paid by consumers. Meainflation expectations since mid-1990 has been sures of price change that are related to domestic reflected in a gradual, but persistent deceleration production (rather than to domestic spending) have of labor compensation rates over the past couple slowed by smaller, but still appreciable, amounts. of years. The twelve-month rate of change in the For example, the fixed-weight price index for gross employment cost index for private compensation, domestic product, the broadest measure of price after peaking at 5.2 percent in the first half of 1990, change for goods and services produced domestideclined to 4.6 by the end of that year, slowed to cally, rose less than 3 percent over the four quarters 4.4 percent in 1991, and eased still further, to ended in early 1992; that index had moved up at 4.2 percent in the twelve-month period that ended rates of 4 to AV2 percent in each year from 1988 to this past March. The annual rate of increase in 1990. straight-time wages has been running at less than Consumer energy prices have continued to fluc- Vh percent in recent quarters. However, the cost of tuate since the end of the Gulf War, but those benefits that firms provide to their employees has fluctuations have been relatively subdued. Energy continued to rise rapidly, propelled by the steep prices at the retail level fell early in 1992, influclimb in the cost of medical insurance and by enced by the mildness of the winter, the further cut increases in payments for workers' compensation. in U.S. industrial production early in the year, the Nonetheless, the slower rate of increase in nominal persistence of sluggish growth in other industrial compensation per hour, coupled with a somewhat countries, and the high level of OPEC production. faster rate of deceleration in consumer prices, has Later in the winter, however, energy prices began been translating into increases in real hourly to firm. The upswing in U.S. industrial activity that compensation. began in February gave some lift to prices, as did Productivity has been picking up. In the first the return to more normal weather patterns in late quarter of 1992, output per hour worked in the winter. Further impetus to prices came in the nonfarm business sector was 1.9 percent above the spring, with the apparent mid-May shift by Saudi level of a year earlier, a four-quarter improvement Arabia toward somewhat greater production last achieved in early 1988 when the economy restraint than had been expected. In response to was still growing rapidly. At the same time that these developments, the spot price of West Texas employers have been cautious in expanding output, intermediate moved up from a February low of they have continued to move aggressively to econ- about $18 per barrel to a level of more than $22 per omize on labor input, thus boosting output per barrel in June. The CPI for energy, basically folhour. The increase in productivity, together with lowing the lead provided by the oil markets, rose the slowing of hourly compensation, held the rise moderately in March, April, and May, and then in unit labor costs to just 1.2 percent over the year jumped 2 percent in June. These increases more ended in the first quarter of 1992, the smallest than reversed the declines seen early in the year. four-quarter increase in labor costs in eight years. Even so, the CPI for energy in June was up only moderately from the level of a year earlier, most of the price swings of the past twelve months having Price Developments essentially cancelled out. In the oil market, the price of West Texas intermediate has softened a All the measures of aggregate price change show little, on net, since June and recently has been in a inflation to have eased substantially from its most Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 645 range not much different from that of a year earlier. period, the reports of recent months appear to be Food prices have slowed considerably over the depicting a gradual, but broadly based, slowing past year and a half. The CPI for food rose more in the trend of consumer prices. The twelve-month than 5 percent in each year from 1988 to 1990. But change in the CPI for services excluding energy, a last year they rose only 2 percent, and in the first category that has a weight of more than 50 percent half of this year, they changed little on net. A in the CPI total, has dropped back about 2 percenttemporary runup in fruit and vegetable prices in age points since early 1991, to a pace of 4 lA perlate winter was reversed in the spring, and in- cent; deceleration is evident for most types of sercreases in the prices of other foods were small on vices included in that total. A slower, rate of price average during the first half of the year. As of June increase also has emerged across a broad range of the CPI for food was only 0.1 percent above the CPI commodities, although, somewhat surprislevel of a year earlier. ingly, the slowing there has not proceeded as rap- The marked slowing of food prices since the end idly as in the markets for services. of 1990 is partly the result of declines in the prices A sustained easing of inflation pressures also is received by farmers for their products. In addition, widely evident in the data on prices received however, the food sector is being affected by forces by domestic producers. In June, the producer price similar to those that are shaping price trends in index for finished goods other than food and energy other parts of the economy: Demand growth has was 2Vi percent above the level of a year earlier; been relatively sluggish in the food sector, competi- toward the end of the 1980s, this index had been tion is intense in both food retailing and the fast moving up at more than a 4 percent rate. The prices food business, and increases in labor costs have received by producers of intermediate materials been restrained. Price increases at grocery stores other than food and energy have risen less than over the past year have been small even for those Vi percent, on balance, over the past year; their foods for which farm products account for only a cumulative increase over the past three years small portion of value added, and the twelve-month amounts to just PA percent. The prices of indusrise in prices of food consumed away from home, a trial commodities, which tend to track roughly the category dominated by nonfarm inputs, has been contours of the business cycle, have firmed in the running in the lowest range since the mid-1960s. first half of this year, after sharp declines from The CPI excluding food and energy, which had the autumn of 1990 to the end of 1991; however, in increased at an annual rate of only 3 percent during the context of a still hesitant recovery, the recent the final three months of 1991, climbed at a rate of finning of these prices has been relatively subdued 43A percent in the first three months of 1992. The compared with the increases seen during many past prices of non-energy services rose a little faster in periods of stronger expansion in industrial activity. the first quarter than they had in the latter part of 1991, and the prices of commodities other than food and energy, which had changed little in the MONETARY AND FINANCIAL DEVELOPMENTS fourth quarter, surged ahead at an annual rate of IN 1992 5lA percent. Apparel prices, which had declined in late 1991, moved up rapidly in the first quarter, and Monetary policy in 1992 has continued to be fairly large increases were reported for several directed toward the goal of securing a sustained other commodities. But, the first-quarter flare-up economic expansion while making progress toward of price increases dissipated in the spring, as the price stability. In furtherance of these objectives, annual rate of increase in the CPI excluding food the Federal Reserve this year has eased money and energy dropped to less than 3 percent over the market conditions twice—once in association with three months ending in June. The price indexes for a cut in the discount rate—and lowered reserve both commodities and services rose much less rap- requirements. idly during this period than they had in the first On balance, most signs from financial markets quarter. this year have been consistent with a moderate Looking beyond the many twists and turns that pace of expansion in economic activity, but also inevitably show up in the price data over any short seemed to indicate questions about lasting gains in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

646 Federal Reserve Bulletin • September 1992 reducing inflation. Short-term real and nominal dence were up, M2 growth surged in late January interest rates have declined to unusually low levels, and February, a wave of refinancing activity indiand the yield curve has been extraordinarily steep cated households and businesses were successfully while share prices have been at near-record reducing debt-servicing costs, and the ebullient levels—a pattern often associated with market tone in the stock market anticipated even stronger expectations of a strengthening economy. In addi- economic fundamentals in the future. The Federal tion, the risk premiums on private credit instru- Open Market Committee noted these positive ments relative to Treasury obligations have nar- developments at its meetings during the late winter rowed, indicating growing market confidence in and spring, but in view of ongoing impediments to private borrowers and ample credit availability in robust expansion—including still-strained balance securities markets. Households and businesses sheets and limitations on credit availability— improved their balance sheets by constraining total concluded that the recovery was still fragile. Recdebt growth, issuing equity, and refinancing costly ognizing the tentative nature of the recovery and existing debt with longer-term debt at lower rates. confident that a disinflationary trend had been As a result of these actions and the decline in firmly established, the Committee remained espeinterest rates, borrowers have been successful in cially alert in this period to the potential need for reducing the ratio of debt-service payments relative further easing of money market conditions if the to income. economy failed to show continued improvement. In contrast with the positive signals from other During the early months of the year, the bond financial variables, the advance in the money and market seemed to focus on the possibility of a credit aggregates has been very subdued. M2 and strong recovery, and long-term interest rates M3 in June stood below the lower end of their backed up about V2 percentage point from early annual growth cones, and the debt of domestic January through March. A robust recovery could nonfinancial sectors was running at the lower end rekindle upward price pressures and would produce of its range. In part, the sluggish expansion of M2 stronger demands for credit. In addition, looming and M3 seemed to be related to the actions of U.S. budget deficits and potential credit needs of borrowers and lenders to restructure balance sheets countries undergoing the transition from centrally and was not reflected in commensurate weakness in planned to market economies were seen as adding spending. Under pressure to improve their capital to upward pressure on interest rates in the future. positions and earnings and facing weak loan Despite the rise in long-term rates, corporate demand from borrowers relying more heavily on bond yields remained well below levels prevailing longer-term debt from market sources, banks and in recent years. Eager to refinance costly existing thrift institutions have not been aggressively seek- debt and to reduce the uncertainty and interest rate ing to expand loan portfolios. In these circum- risk of short-term funding, many firms issued bonds stances, depositories have cut deposit rates substan- and used a portion of the proceeds to pay down tially this year, and many customers have shifted bank loans. Faced with tepid loan demand and their funds to alternative assets or applied their continuing pressures on earnings and capital posideposit balances toward debt repayment. These tions, banks lowered deposit rates promptly as maractions have resulted in appreciable increases in the ket rates declined and did not raise them when velocities of the broad aggregates—a situation the intermediate and long-term market rates backed up FOMC has taken into account in assessing how in the first quarter. Households responded by shiftmuch weight to place on slow growth in the aggre- ing funds into nonmonetary assets and by paying gates in making policy decisions. down debt at the expense of deposit accumulation. Although these and other portfolio adjustments appeared to play a prominent role in the deceleration of M2, the possibility that income growth Implementation of Monetary Policy might also be slackening, perhaps due to tight lending terms at banks and the reluctance of busi- Early in the year, economic releases and financial nesses and households to borrow, could not be market indicators signaled an improvement in ecoruled out. Incoming data over the spring suggested nomic activity—consumer expenditures and confi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 647 only a modest further rise in economic activity markets and debt restructuring. On balance, despite after February, and given the Committee's con- continued weakness in the broad monetary cerns about the sustainability of the recovery, the aggregates, many financial variables appeared to Federal Reserve slightly eased the degree of reserve indicate that conditions conducive to a moderate market pressure in mid-April. The federal funds economic expansion were in place. rate declined to 33A percent, its lowest sustained Still, overall credit growth remained quite subtrading level since the 1960s; other short-term dued, suggesting that some impediments to borrowrates generally followed suit, edging down about ing and spending remained, and M2 and M3 turned 25 basis points. Long-term rates registered little down further in June. In these circumstances, and response to the policy action; the rate on the thirty- with direct readings on the economy indicating year Treasury bond was essentially unchanged in some weakening relative to earlier in the year, the the days following the move. Federal Reserve in early July cut the discount rate The Federal Reserve's easing of reserve market V2 percentage point to 3 percent and allowed pressure in April came only days after implementa- this reduction to show through as a similartion of a previously announced reduction in reserve sized easing of money market conditions. Banks requirements. Reserve requirements are effectively responded quickly to the policy actions, cutting the a tax on depository intermediation; the cut in prime rate by V2 percentage point to 6 percent. reserve requirements on transaction deposits from On balance, short-term rates generally have 12 to 10 percent was intended to reduce this burden declined about 3A of a percentage point this year. on depositories and their customers and thereby to Long-term rates, after falling in recent months, stimulate flows of credit. The effect on credit have about returned to their lows of early January. should come directly as sterile reserves are freed The foreign exchange value of the dollar generally for lending and indirectly as increased earnings has tracked the course of long-term rates, appreciatimprove depository institutions' access to capital ing from January through March and depreciating and their willingness to lend. This year's reduction more recently. On a trade-weighted basis in terms in reserve requirements sparked little of the height- of the currencies of the other G-10 countries, the ened volatility of the federal funds rate that ensued dollar in mid-July stood at a level somewhat below from the reserve requirement cut in 1990. In large its 1991 year-end level. measure, the smoother transition this year reflected the higher level of reserve balances available to cover daily clearing needs; balances have been Monetary and Credit Flows boosted in recent months by a higher level of transaction deposits in concert with a sizable Overall credit flows have been damped this year, increase in bank clearing balances at the Federal reflecting a moderate pickup in spending and Reserve. efforts by borrowers to pare debt burdens. Al- Neither the April easing of reserve market pres- though demands for credit by the federal governsure nor the cut in reserve requirements revived ment have been heavy, growth in the debt of other the broad monetary aggregates. Other financial sectors has been lethargic, and, as a result, the total indicators, however, suggested that the markets debt aggregate has remained around the lower were anticipating continued economic expansion. bound of its annual range throughout much of Spreads on commercial paper and corporate bonds 1992. Reacting to the difficulties that resulted from relative to Treasury rates continued to narrow, carrying heavily leveraged positions in a period of especially for less-than-prime issues, evidencing weak economic growth and to wide spreads easier access to market sources of funds for busi- between the cost of borrowing and the returns on nesses. Improvement in banks' capital positions holding financial assets—especially deposits— placed them in a better position to meet loan households and businesses have sought to reduce demand, and many reported that they were no debt and restructure balance sheets. Total debt, longer tightening credit standards. In addition, including that of the federal sector, grew about in long-term interest rates edged down from their line with nominal GDP after many years in which March peak, providing some stimulus to mortgage debt growth exceeded income. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

648 Federal Reserve Bulletin • September 1992 Along with limiting debt growth, borrowers have Not only has total borrowing been muted, but sought to strengthen their balance sheets by refi- banks and thrift institutions are accounting for a nancing existing debt at lower rates. By issuing sharply decreasing share of the total. In fact, credit equity and refinancing debt, businesses have been at depositories has declined over the past two and successful in reducing debt-service burdens; the one-half years even as total credit in the economy ratio of net interest payments to cash flow for continued to advance, and this pattern has left its businesses has declined appreciably this year. The imprint on the monetary aggregates and their velocdecline in rates over the past year or so has been ities. Part of this rerouting of credit flows reflects especially evident for high-yield bonds, indicating the closure of insolvent thrift institutions; the RTC that lower-rated borrowers are regaining some of usually assumes the assets of closed thrift instituthe access to capital markets lost during the credit tions and effectively finances them with Treasury distress in late 1990 and 1991. A substantial num- obligations rather than deposits. Moreover, when ber of firms this year have been upgraded by rating the assets are later sold, depositories are not always agencies, reflecting improved economic prospects the acquirers. The shift in credit flows away from and the salutary effects of lower interest rates and depositories also reflects ongoing market and regustronger balance sheets on financial conditions. latory pressure on banks and thrift institutions to Many households also have refinanced debt at bolster earnings and capital. Responding to inmore attractive rates. Mortgage refinancing began creased deposit insurance costs, to past and proto increase late in 1991 and was very heavy early spective loan losses, and to regulatory restrictions this year after mortgage rates fell sharply. Later, as triggered as capital-asset ratios fall below the highmortgage rates backed up, mortgage refinancing est levels, depositories have maintained wide applications subsided, but they remained brisk rela- spreads between loan rates and deposit rates. The tive to recent years. Households evidently shared prime lending rate, for example, has remained the view of businesses that long-term rates pre- unusually high relative to market rates and the sented an opportunity to lock in attractive financ- depository cost of funds, and depositories have ing, and many opted to refinance with longer-term tightened nonprice terms of credit as well in recent fixed-rate mortgages rather than risk future interest years. On the deposit side, rates have fallen considrate increases with adjustable-rate mortgages. erably as depositories have moved to limit balance sheet growth and bolster net interest margins. Just as for businesses, refinancings and debt reduction appear to have helped relieve the stress Bank credit from the fourth quarter of 1991 to on household balance sheets. The ratio of house- June managed only a 23A percent growth rate, hold debt-service payments to personal disposable slower than in 1991. Bank lending to businesses income has declined appreciably through May. has contracted in 1992, leaving total loan growth at Delinquencies on consumer loans, auto loans, and banks essentially flat. Overall, the contraction in home mortgages have fallen this year as well. On bank business lending in 1992, which has been at the other hand, many households with financial an even faster pace than the decline in 1991, assets substantially exceeding debt have seen their appears to reflect primarily weaker demand, as spendable income decrease as a result of lower firms have opted to borrow directly in the market interest rates. Some of the decline in interest rates and have relied on strong increases in internal compensates for lower inflation—the purchasing funds. Evidence from survey data indicates very power of the principal invested is not falling as little, if any, additional tightening of credit terms rapidly as in previous years—but real returns have by depositories this year. However, the cumulative declined as well, especially for short-dated assets. degree of tightening over the past two years re- State and local governments have exhibited a mains substantial, and many banks apparently are similar trend in credit demand; on net, total debt still responding to concerns about the condition of growth has been restrained, but gross issuance of borrowers, cumulative loan losses, and pressures to bonds has ballooned as municipalities refinance meet or exceed fully phased-in capital requireexisting debt. A substantial portion of the debt ments. Foreign banks, which had been aggressively being refinanced likely was issued during the high seeking new business in the recent past, have reined interest rate episodes of the early 1980s. in balance sheet growth and have tightened the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 649 terms of lending this year by somewhat more than velocity of total depository credit in recent years, domestic banks. and this trend has continued in 1992. M3, espe- With loans falling relative to deposits, banks cially, has been hindered by the lack of growth of have elected to expand their security investment depository credit this year. This aggregate was portfolios, pushing the share of government securi- essentially unchanged in June from its fourthties in total bank credit to its highest level in twenty quarter 1991 level and fell below the 1 to 5 percent years. It seems likely that some of this increase annual range set by the FOMC. With retail deposits represents banks taking advantage of the steep yield expanding—if only sluggishly—and depository curve to improve earnings by funding these securi- credit subdued, banks and thrift institutions have ties with short-term deposits bearing low interest shed large time deposits and other managed liabilirates. The sharp rise in bank security investments ties. At branches and agencies of foreign banks, has also been spurred by capital considerations: large time deposits (Yankee CDs), having deceler- Mortgage-backed securities issued by government ated sharply from last year's rapid growth, have sponsored enterprises (GSEs) are treated more been flat this year. Market concerns that lower favorably than the underlying loans by risk-based Japanese stock prices had impaired the capital posicapital standards. As a result, many banks have tions of Japanese banks evidently tarnished the sold a substantial share of their home mortgage appeal of Yankee CDs for some institutional invesloan portfolios to GSEs and replaced them with the tors. In response, U.S. branches and agencies of securities issued by these same agencies. Japanese banks cut back issuance of Yankee CDs, Although continued loan losses and increased shed liquid assets, and relied more heavily on funddeposit insurance premiums have added to bank ing in Eurodollar markets. costs, bank profitability has improved. Earnings Institution-only money market funds were the have been bolstered by wider net interest margins only source of strength in the non-M2 portion of and some improvement in the quality of loan port- M3 during the first half of 1992. Investors capitalfolios. The market has looked favorably on these izing on the sluggish adjustment of money market developments, as gains on bank share prices this fund yields to declining market rates accounted for year have outstripped advances in broad stock price much of the strength in money funds. In addition, indexes. some institutional investors, finding their resources Conditions in the thrift industry appear to have augmented rapidly by inflows from former bank improved this year, at least for solvent institutions. depositors, likely have parked some of the cash Thrift institutions in fairly secure financial condi- inflow in money market funds. tion have experienced better profit trends analo- The implications of depository retrenchment and gous to those of banks, and share prices of better household balance sheet adjustments for longstandcapitalized SAIF-insured institutions have fared ing empirical relationships between money and well over the first half of this year. Still, the spending have been perhaps most pronounced for improved profit picture for a portion of the thrift M2 growth. Despite the pickup in nominal income industry has not implied any expansion in overall growth this year and very substantial stimulus from thrift balance sheets; total thrift credit is estimated drops in short-term interest rates last year, M2 to have contracted at a 3!/2 percent rate from the advanced at only a 1V2 percent annual rate from the fourth quarter of 1991 to June. A large part of this fourth quarter of 1991 to June, placing its June contraction owes to the significant volume of RTC level below the lower bound of its annual range. resolutions conducted through early April of this The decoupling of the historical relationships year. However, additional funds to cover losses among M2, GDP growth, and short-term interest have not been appropriated, bringing RTC resolu- rates is evident in the behavior of M2 velocity. M2 tions to a halt after early April. usually rises relative to income (its velocity falls) The limited growth in total bank and thrift bal- when market rates drop because rates on M2 deposance sheets has carried important implications for its do not decline one for one with market rates, the monetary aggregates. The velocities of the de- inducing portfolio shifts into M2 assets. But in posit components of the broader aggregates, M2 recent months, M2 velocity has risen markedly and M3, have tracked the upward trajectory of the despite a substantial decline in market rates and a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

650 Federal Reserve Bulletin • September 1992 standard measure of opportunity costs—the differ- month or two, apparently as acquiring institutions ence between short-term market rates and returns abrogate time deposit contracts and depositors take on M2 assets. the opportunity to reallocate their portfolios in light In this period of extraordinary retrenchment, of the current configuration of deposit rates and depositories apparently have reduced deposit rates market rates. Thus the RTC resolutions in March in ways not captured in standard measures of aver- and April likely played a role in slowing M2 age deposit rates, and the pull of market alterna- growth during April and perhaps even in May. tives has been stronger than is captured by compar- As the weakness in M2 persisted, however, it isons of deposit rates to short-term market rates. became increasingly clear that these special factors For example, banks and thrift institutions appear to were not the whole story. If the deceleration of M2 have made larger cuts in the relatively high rates in March and April reflected evolving seasonal tax offered to individuals with larger balances and in patterns, May and June should have witnessed an the rates offered on brokered deposits; holders of appreciable rebound in M2 growth. In fact, M2 both types of accounts might be especially sensi- continued to founder, leaving its level in June well tive to rates on alternative investments. In addition, below its February level and also below the lower depositories have been particularly hesitant to bound of its annual range. Furthermore, RTC resocompete for funds at intermediate and longer lutions halted abruptly when additional funding for maturities. As a result, longer-term bank and thrift losses was not forthcoming. By June, M2 should CDs have not been attractive investments for sav- have been largely free of RTC effects, but growth ers seeking to raise returns by moving out the of M2 in June was, in fact, even weaker than in upward sloping yield curve. In effect, depositories April and May. On balance, these special factors have used retail time deposits as managed liabili- appeared to figure prominently in the month-toties in making balance sheet adjustments. The month variations of M2 growth, but the overall result has been large outflows of retail time depos- advance of M2 this year was impeded by more its, with a relatively large portion of the outflow fundamental forces. finding its way to higher-yielding, nonmonetary These fundamental forces, involving balance assets. Depositors, witnessing substantial declines sheet adjustments by depositories and money holdin the rates on their accounts relative to market ers, appear to be boosting the velocity of M2. alternatives, apparently exited M2 in favor of stock There is considerable uncertainty, however, about and bond funds or direct equity and bond invest- how long this process will persist, and whether it ments. Of course, in doing so, these depositors will permanently affect the equilibrium level or sacrificed the benefits of deposit insurance and cyclical behavior of M2 velocity. One means of accepted the risk of asset price fluctuations. evaluating this question will be observations of the For a time, the depressing effects of depository future performance of the P-star model in predictretrenchment and investor portfolio shifts on M2 ing inflation. This model is based on M2 per unit were obscured by the confluence of various special of potential output, normalized by equilibrium factors. Early in the year, demand deposits surged velocity, which had proved to be constant. Persisas lower rates required businesses to build up com- tent underpredictions of inflation by this model pensating balances and as mortgage servicers held would suggest that the rise in velocity relative to larger balances during the mortgage refinancing its historical average may be a more permanent boom. Later, the abrupt deceleration in M2 phenomenon. appeared related to the effects of tax flows and While highly interest-responsive depositors were RTC resolutions. Federal nonwithheld taxes this tilting their portfolios toward capital market instruyear were weak relative to previous years, and this ments, less rate-sensitive, more risk-averse housemay have resulted in a smaller deposit buildup in holds simply rolled over a portion of their maturing March and April than could be anticipated by nor- small time deposit holdings into more liquid M2 mal seasonal adjustment factors. In late March and deposits, at little or no sacrifice in yield. In fact, early April, the RTC resolved a substantial number while M2 growth overall this year has been moriof institutions. In the past, a heavy volume of RTC bund, growth in its liquid components has been resolutions has appeared to damp M2 growth for a robust and more in line with historical relationships Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 651 3. Growth of money and debt Percent Debt of domestic Period M2 M3 nonfinancial sectors 8.9 9.5 9.3 1 • 9.3 12.3 10.1 9.1 9.9 12.2 9.9 .a IS" 8.0 10.8 14.2 ft® 8.7 7.6 13.9 a§ g-g | 9.2 9.0 14.1 4.3 5.9 10.4 ig • 5.2 6.4 9.4 : 4.8 3.6 8.1 ! 4.0 1.7 7.0 2.8 1.2 2.1 4.5 4.3 -51 3.8 .0 5.1 1. From average for fourth quarter of preceding year to average for fourth 2. Adjusted for shift to NOW accounts in 1981. quarter of year indicated. 3. From average for preceding quarter to average for quarter indicated. to income and interest rates. Ml, for example, has aggregates. Two alternatives that have received grown at a 12 percent pace through June, a rate some attention are M2 plus stock and bond mutual well above its average during 1991 of 8 percent. funds and M2 plus institution-only money funds Especially since the introduction of NOW accounts less small time deposits. Both alternative aggrein the early 1980s, the demand for Ml has become gates have grown substantially more rapidly than quite interest sensitive, leading to wide fluctuations M2 in recent quarters. The former adds back into in the velocity of Ml, and the drop in Ml velocity M2 the apparent destination of much of the recent this year is consistent with that pattern. Foreign outflows from M2; the latter subtracts the weakest demands for U.S. currency have been more sub- component of M2—retail time deposits—to create dued this year, and currency growth has slowed a a highly liquid aggregate, which behaves over time bit relative to the pace of 1990 and 1991. Even so, very much like Ml. Both alternatives recently moderate growth in currency, together with the appear to have followed more closely historical brisk advance in transaction deposits, has fueled relationships with income and opportunity costs growth in the monetary base of 13A percent from than has M2. However, both show periods in the the fourth quarter of 1991 to June. past in which their velocities have been highly The unusual behavior of the velocity of M3 and, variable and difficult to predict. The Federal especially, of M2 this year has sparked renewed Reserve is continuing to analyze these experimeninterest in alternative definitions of the monetary tal monetary measures carefully. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

652 Federal Reserve Bulletin • September 1992 Developments in the Pricing of Credit Card Services This article was prepared by Glenn B. Canner and ally all the nation's largest issuers have reduced Charles A. Luckett of the Board's Division of rates for all or significant portions of their credit Research and Statistics. Wayne C. Cook and Mark card customers. As will be seen, consumers face a A. Peirce provided research assistance. much wider range of interest rates in the marketplace than is generally recognized. Interest rates on credit card accounts have typically That said, however, it is also true that interest fluctuated within a narrower range—and at higher rates on credit card accounts have been stickier levels—than rates for most other types of credit. than rates for most other types of credit. The fol- The contrast receives particular attention when lowing analysis examines possible explanations for other rates are dropping sharply, which often occurs their relative rigidity. The historical development during periods of economic weakness. At such of the consumer credit card market is reviewed times, some observers look upon stubbornly high first, because that history sheds considerable light credit card rates as a potential impediment to con- on some idiosyncrasies of the credit card product sumer spending, and therefore to economic recov- and its pricing. The discussion then shifts to the ery, while others regard high rates primarily as an cost structure of credit card operations and the abuse of market power that should be curtailed as a characteristics of consumer demand for credit card matter of equity. services. Since 1972, the average "most common" interest rate on credit card receivables at a sample of banks surveyed by the Federal Reserve has stayed HISTORICAL DEVELOPMENT between 17 percent and 19 percent, while rates on OF THE CREDIT CARD MARKET most other types of loans, even loans to consumers, have fluctuated over a range of 8 percentage points Credit cards were first made broadly available to or more (chart l).1 The stability of credit card rates individuals for consumer spending in the early has suggested to some that the credit card market is insufficiently competitive, and has periodically spurred congressional efforts to legislate a national ceiling for these rates. Ironically, the most recent 1. Interest rates on mortgage and consumer debt, 1972-92 attempt to set a national ceiling, in November 1991, came at a time when competition in the credit card market may have been more intense than at any time in the past, and when more of that competition than ever before was beginning to focus on rates. Since the beginning of 1992, virtu- 1. The survey asks banks to report the rate that applies to the largest dollar amount of their credit card receivables (in other l I l l I I I I I I I words, the "most common" rate) during the first full week of the middle month of each quarter. A simple unweighted average of the 1975 1980 1985 1990 1992 responses is calculated as an estimate of the average rate on credit SOURCES. Federal Reserve Board and Federal Home Loan Mortgage card accounts for the banking industry. Corporation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in the Pricing of Credit Card Services 653 1950s by major department store chains.2 The cards were willing to pay high rates of interest to obtain were furnished as a convenience to the stores' unsecured credit conveniently. Marketed mainly by regular "charge account" customers; they also pro- banks, the general-purpose credit card for individvided a more efficient means of processing transac- ual consumers came into broad use in the mid- to tions and managing accounts. Customers were late 1960s. To make bank cards appealing to conexpected to pay for charged items in full when they sumers who already had department store cards, received the monthly bill, and no interest fee was the banks granted cardholders the same interestimposed. Retail firms believed that customers free "grace period" of twenty-five to thirty days might spend more freely if they could "buy now that was customary for store cards. However, the and pay later" and might more frequently shop at banks also imposed servicing fees (called merchant stores where they had charge accounts. The firms discounts) on card-honoring merchants, mainly were willing to receive payment on a delayed basis, smaller retail businesses that were persuaded to and without interest, in exchange for a larger vol- accept bank credit cards as a means of competing ume of sales. Most stores levied a penalty fee of with the major chain stores. 1 percent or 1 Vi percent per month if full payment For many years, bank credit card operations were was not received within the billing period. The fee only marginally profitable, despite interest rates was set relatively high (compared with general comparable to those on store cards, as start-up and interest rates) as much to discourage customers operating costs per dollar of receivables were relafrom making partial payment as to generate income tively high and a sizable proportion of cardholders by extending longer-term credit. remained "convenience users," paying balances in Gradually, however, stores became more inclined full each month and thereby avoiding finance to allow customers the option of paying either in charges. To some extent, banks may have been full or by installments, subject to "interest" or reluctant to impose higher rates than consumers "finance charges" rather than "late fees." Sears were accustomed to paying on store cards. In addiand Montgomery Ward were leaders in this shift to tion, statutory limits on rates were in effect in most "revolving" or "option" accounts, as they found states until the early 1980s; rates typically were such accounts to be particularly useful in providing capped at IV2 percent per month (18 percent per a means for consumers to finance purchases of year). The ceilings in most states had originally major appliances, which made up an important part been established for revolving credit at retailers of these stores' sales. Previously, major purchases and represented the general consensus among lawtypically had been financed through secured "sales makers about how high a rate businesses needed to finance contracts," which had to be established and charge to cover the cost of providing credit.3 approved separately for each transaction. Developments in the 1980s Entry of Banks into the Market Over the years, the profitability of bank credit card operations improved as operating efficiencies were Commercial banks eventually began to recognize the potential profitability of providing open-end 3. State-legislated ceilings on rates are, in fact, a hodgepodge of financing to consumers, many of whom apparently laws designed to facilitate consumer lending by easing earlier restraints on interest rates. At the turn of the century, most states had a single law or constitutional provision that established a limit 2. Some hotels were issuing credit cards to regular patrons as on the "legal rate of interest," often 5 percent or 6 percent per year. early as 1900, and some department stores and gasoline companies As installment sales contracts for automobiles and other consumer were issuing cards before 1920. The practice was very limited, durable goods were being developed in the present century, state however, and was restricted to the most highly valued customers. legislatures recognized that higher rates would have to be permitted Relatively wide distribution of credit cards did not occur until after to cover the costs of installment lending, and in most states a series World War II. The major "travel and entertainment" cards (Ameri- of laws evolved that established higher ceilings for certain types of can Express, Carte Blanche, and Diners Club) were established in consumer lending. Department store credit card programs typically 1949 and 1950. Although initially issued mainly to individuals for operated under a state's "retail installment sales act," which authobusiness-related use, often through the recipient's employer, these rized a "time price differential" that was defined to be legally cards helped set the stage for the introduction of general-purpose distinct from "interest" and in most states was set at a maximum of bank-issued credit cards. 1V2 percent per month. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

654 Federal Reserve Bulletin • September 1992 developed and as credit cards were distributed and number of different plans they offer; many of the used more widely. When profits came under intense new plans are targeted at selected subsets of conpressure in the late 1970s and early 1980s from sumers, and many charge lower interest rates. At sharp inflation-induced increases in funding costs, the same time, nonbank firms, such as AT&T (Uniinstitutions began imposing annual fees on credit versal Card), Sears (Discover Card), and American cards to supplement income from interest. Many Express (Optima Card), have garnered significant also adopted more restrictive lending practices, market shares, in part by differentiating their plans which had the effect of curbing the growth of credit by forgoing annual fees or by offering rebates on card use temporarily. Meanwhile, state legislatures purchases or discounts on selected services. one by one moved to raise or remove the ceilings on credit card rates. Current Industry Structure The spread of credit card rate deregulation was triggered partly by a 1978 Supreme Court decision Today, although the largest institutions command a (.Marquette National Bank v. First of Omaha Sersizable share of the total market, thousands of vice Corporation), which held that a nationally issuers provide credit cards. Approximately 6,000 chartered bank may provide credit at the rate ceilcommercial banks and other depository institutions ing of the state in which it is located, regardless of market general-purpose credit cards (predomithe ceiling in the borrower's state. In the early nantly under the VISA or MasterCard label), each 1980s, several banks moved their credit card operasetting the terms and conditions on the cards they tions to states that had raised or removed rate issue.5 Another 12,000 depository institutions act ceilings on credit cards.4 Currently, sixteen states as agents for issuers and distribute credit cards to do not specify ceilings and fourteen specify ceilconsumers. Major retailers continue to provide ings above 18 percent per year. store-specific credit cards; Sears' store card, for These developments helped restore profitability example, is estimated to rank second in total receivto the industry, and, as funding costs moved subables among all types of cards. Many smaller retailstantially lower in the mid-1980s, credit card operers have given up direct management of their credit ations became highly profitable. Responding to incard operations but provide store-identified cards to creased profitability, many banks, especially those their customers through "private label" programs operating nationwide, became much more aggresmanaged and funded by other institutions. sive in marketing credit card accounts, both by Given the large number of institutions competing relaxing credit standards and by offering more card in the credit card market, it is not surprising that "enhancements," such as travel accident insurance, consumers are offered a wide variety of plans. The auxiliary rental car insurance, and other distinctive diversity is often overlooked in public discussions, features that varied among issuers. The enhancewhich tend to focus on a national average rate or on ments initially were available mainly on "preprominent high-rate plans. However, the Federal mium" card plans, which charged higher annual Reserve's semiannual E.5 statistical release, The fees and, in many cases, somewhat lower interest Terms of Credit Card Plans, reveals some of this rates; more recently, some combination of enhancediversity, which extends to rates as well as other ments has been available with nearly all "stanterms. The E.5 release provides detailed data on dard" plans as well. In addition, over the past few credit card plans at more than 150 institutions, years, individual institutions have increased the primarily commercial banks that operate large credit card programs. Seventeen percent of the 4. In March 1980, for example, South Dakota raised its ceiling issuers included in the March 1992 E.5 release on credit card interest rates to 1.65 percent per month (19.8 percent per year), and Citicorp promptly moved its credit card operations from New York to that state. New York at the time permitted 5. VISA and MasterCard run the two primary systems for set- 18 percent per year on balances up to $500, but only 12 percent on tling interbank accounts, that is, between banks that process charge balances above $500. Between 1980 and 1985, fifteen states re- slips submitted by merchants and banks that extend credit to moved their ceilings (including South Dakota a year after it raised cardholders. Although VISA and MasterCard operate the interbank its ceiling), and many other states raised their ceilings to levels well settlement systems and collect fees for these services from banks, above those needed to cover costs (including New York, which they do not control the terms these banks offer to cardholders and now has a ceiling on credit card rates of 25 percent per year). merchants. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in the Pricing of Credit Card Services 655 charged rates below 16 percent per year. Nearly In contrast to bank cards, the holding of credit one-fourth offered variable-rate plans (plans that tie cards issued by retail stores has expanded very the interest rate to an index, such as the prime rate, little in recent years. In 1970, store cards were held that normally moves in line with other interest by 35 percent of all families; the proportion had rates); an additional 4 percent offered plans with a jumped to 54 percent by 1977 but has risen little tiered rate structure, in most cases assessing lower since then. rates on higher balances. Undoubtedly, the variety in the marketplace is even greater, as the survey on which the E.5 release is based asks institutions FUNCTIONS OF CREDIT CARDS about only their largest plan.6 Credit cards serve two distinct functions for consumers: a means of payment and a source of CURRENT CREDIT CARD HOLDING credit.8 Consumer sensitivity to various aspects of credit card pricing reflects these two types of use. In the thirty years or so since commercial banks entered the market in significant numbers, the credit card has become a familiar financial tool to Credit Cards as a Means of Payment the vast majority of American families. Today, roughly 70 percent of all U.S. families have at least Although cash and checks continue to be the domione credit card account, up from about 50 percent nant means of completing transactions, credit cards in 1970 (table 1). Most card-holding families, in are an important and growing alternative. In 1990, fact, have several different accounts. A 1989 sur- according to one private-sector source, credit cards vey of consumers sponsored by the Federal were used by consumers to purchase some Reserve found that three-quarters of card-holding $445 billion worth of goods and services. In that families had more than two credit card accounts, year, credit card charges accounted for about with the average number of accounts held by all 13 percent of all consumer expenditures, up from card-holding families approaching six.7 10.8 percent in 1980.9 Not only has credit card holding become much The growing share of consumer expenditures more prevalent in the past twenty years, but the completed by credit card attests to the advantages types of cards held have changed dramatically of this means of conducting transactions, including (table 1). In particular, the holding of bank cards convenience, safety, automatic recordkeeping, and, (defined in the survey as "bank type" cards, in most cases, an interest-free grace period for including VISA, MasterCard, Discover, and settling accounts. Although some card issuers Optima) has risen substantially. In 1977, 38 percent charge consumers a fee for each purchase, most do of all U.S. families had a bank card, up from not (fewer than 2 percent of the roughly 160 issuers 16 percent in 1970. By 1989, the proportion had covered by the March 1992 E.5 statistical release increased to 54 percent. Bank-card holding likely assessed a transaction fee on each purchase). On has edged up since then, with the development of many plans, cardholders are assessed an annual fee major new plans by recent entrants into the market to hold a card, but most annual fees are unrelated to and continued growth in the operations of long- the volume and frequency of purchases. time market participants. Consumers who use a credit card principally as a payment device most likely would, in selecting a card, focus on the level of any annual fee, the 6. The E.5 statistical release is available from Publications Serlength of the grace period, the availability of desirvices, mail stop 138, Board of Governors of the Federal Reserve System, Washington, DC 20551. A single copy can be obtained able enhancements, and the level of authorized without charge; a subscription costs $5 per year. The E.5 release is also available at the roughly 1,300 libraries in the Government Depository Library System. 7. 1989 Survey of Consumer Finances, sponsored by the Federal 8. Credit cards also have become important as a source of Reserve in cooperation with other agencies. The data are available identification and as a convenient means of making reservations on request from the National Technical Information Service, 5285 (for example, for hotels, automobile rental, and travel). Port Royal Rd„ Springfield, VA 22161. 9. The Nilson Report, no. 499 (May 1991), p. 3. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

656 Federal Reserve Bulletin • September 1992 1. Consumer holding of selected types of credit card accounts, by family characteristics, selected years, 1970-891 Percentage distribution within groups Any credit card Bank card Store card2 Family cchhaarraacctteerriissttiicc 11997700 1977 11998833 1989 1970 1977 1983 1989 1970 1977 1983 1989 Family income •pp»p (1989 dollars) I BB Less than 10,000 20 28 25 30 2 ii 10 16 12 23 22 25 10,000-19,999 28 42 51 56 5 18 27 37 15 33 44 48 20,000-29,999 50 64 72 79 14 33 42 63 31 55 63 65 30,000-49,999 69 76 85 87 22 49 60 74 52 66 75 77 50,000 or more 79 89 95 95 35 67 80 87 60 80 87 85 spfjpi^ Age of family head (years) • P ll Less than 25 42 40 41 38 12 18 20 29 25 32 36 28 25-34 61 67 63 63 20 43 39 48 41 59 56 55 35-44 57 76 74 73 23 52 54 62 42 68 66 65 45-54 59 71 73 77 19 43 50 63 43 60 66 67 55-64 46 64 75 69 12 • 42 53 57 33 57 65 59 65 or more 31 47 56 67 5 22 53 49 21 39 49 56 ^ttiaiH tftmi Education of family head ppitiiii 0-8 grades 25 35 35 39 5 16 16 23 15 28 31 32 9-11 grades 40 47 49 45 10 s 24 28 32 28 41 41 38 High school diploma 54 66 65 67 17 36 39 49 36 58 59 58 Some college 61 72 73 79 20 46 50 65 44 63 65 66 College degree 82 89 90 93 34 71 71 85 63 78 81 83 All families 51 63 66 68 16 38 43 54 35 54 58 58 IjSiglllll MEMO Mean number of accounts ... n.a. n.a. n.a. 5.6 n.a. n.a. n.a. 1.9 n.a. n.a. n.a. 3.5 charges (the credit limit). The stated interest rate is substantially in the specific ways they use their unlikely to be of much importance to consumers cards. As is discussed later, these differences can who view their cards mainly as a transactions bear significantly on the interest rate sensitivity of device. consumers and the nature of competition in the credit card market. Credit Cards as a Source of Credit COSTS OF CREDIT CARD OPERATIONS The interest rate charged may be more critical to consumers who view a credit card as a debt instru- Both the level of credit card interest rates and the ment and regularly roll over part of their balances changes in rates over time reflect the costs of to future billing periods, incurring interest charges to do so. Credit cards today account for a substan- 2. Revolving credit as a percentage of total consumer installment debt, 1980-92" tial and growing share of consumer installment debt (chart 2). Revolving credit (mainly outstanding balances on credit cards) stood at $60 billion at the end of 1980, representing 19 percent of all consumer installment debt. By the end of 1991, revolving credit had risen to more than $240 billion and accounted for roughly one-third of consumer installment debt outstanding. The portion of this amount that represents convenience use is unknown, as it is impossible to break down the aggregate statistics into balances owed by different types of users. No doubt a substantial portion of outstanding balances at any one time are accruing 1. Revolving credit consists mainly of outstanding balances on credit card interest charges. However, even people who use accounts, but also includes borrowing under check credit and overdraft plans, and unsecured personal lines of credit. credit cards as a means of borrowing may differ SOURCE. Federal Reserve Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in the Pricing of Credit Card Services 657 1.—Continued Family characteristic Family income (1989 dollars) Less than 10,000 . 10,000-19,999 ... 20,000-29,999 ... 30,000-49,999 ... 50,000 or more Age of family head f; Less than 25 .. 25-34 35-44 45-54 55-64 65 or more Education of family head 0-8 grades 9-11 grades High school diploma Some college College degree All families ... MEMO Mean number of accounts 1. Figures for 1970 are based on card use; therefore, card holding in that Research, Survey Research Center, 1971); Thomas A. Durkin and Gregory year is somewhat understated. E. Elliehausen, 1977 Consumer Credit Survey (Board of Governors of the 2. Includes local store cards as well as national chain retail cards, such as Federal Reserve System, 1978); and the 1983 and 1989 Surveys of Con- Sears, J.C. Penney, and Montgomery Ward. sumer Finances (sponsored by the Federal Reserve in cooperation with other 3. Includes travel and entertainment cards, such as American Express and agencies; data available from the National Technical Information Service, Carte Blanche, as well as other cards, such as car rental and airline cards. 5285 Port Royal Road, Springfield, VA 22161). SOURCES. George Katona, Lewis Mandell, and Jay Schmiedeskamp, 1970 Survey of Consumer Finances (University of Michigan Institute for Social providing credit card services. Therefore, an under- bank lending. Credit extended through credit cards, standing of the behavior of credit card interest rates unlike most other forms of bank credit, is unserests in part on an examination of costs. Two cured.10 Once available, a line of credit is exercised aspects of the cost issue warrant particular atten- at the cardholder's option, and the card issuer has tion: comparative performance across product lines little control over how leveraged the cardholder and comparative performance among different card may become through additional borrowing elseissuers. where. A cardholder may be inclined to use the credit line under conditions least favorable to the lender, that is, when the cardholder's net worth is Differences Across Product Lines low or his liquidity is impaired (due, for example, to loss of employment). The cost structure of credit card operations differs significantly from the cost structures of other types of bank lending. On balance, credit card activities 10. Not all credit card debt is unsecured. A "secured credit card involve much higher operating costs and greater account" is a relatively new product tailored to individuals who have low incomes or poor credit histories. Applicants for such risks of default per dollar of receivables than do cards deposit money ($500 to $1,000 or so) in a savings account other types of bank lending. In addition, the cost of that serves as collateral for the credit line and typically pays the funds is a relatively less important component of passbook rate of interest. The advantages of such an arrangement to the consumer would seem limited, though not nonexistent. the total cost of credit card operations than it is for Although holders of secured accounts in essence pay a premium to other types of credit. borrow their own money, they do benefit from the liquidity and convenience that credit cards provide; in addition, such accounts The degree of credit risk is a key feature that can help some individuals establish a credit history or repair a poor distinguishes credit card lending from most other credit record. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

658 Federal Reserve Bulletin • September 1992 Data on bank charge-off experience (net of re- In 1991, the costs of credit card activities totaled coveries) for credit card and other types of bank about 23 percent of outstanding balances at FCAlending illustrate the relatively high loss rates asso- participating banks. Operating costs (including ciated with credit card lending (chart 3). Over the such diverse activities as servicing accounts, solicpast decade, the credit card charge-off rate has iting new customers, and processing merchant consistently exceeded the charge-off rate for bank credit card receipts) accounted for nearly 60 perlending as a whole. At the end of 1991, for exam- cent of the total cost, and the cost of funds ple, the charge-off rate for credit card loans was 27 percent. roughly double the rate for total bank lending. The cost picture at FCA-participating banks was Moreover, the data on credit card charge-oflfs seem considerably different for other types of bank lendto reveal a secular trend toward higher losses, ing. Overall costs for mortgage, commercial, and likely reflecting the relaxation of credit standards installment loans totaled between 8 percent and and the sizable expansion of card issuance during 10 percent of outstanding balances. Operating the 1980s. expenses for these products amounted to 1.4 per- Information on the costs and revenues associated cent to 3.4 percent of outstanding balances and with the credit card operations of a sample of accounted for between 18 percent and 33 percent card-issuing banks is available from the Functional of total costs. The cost of funds, on the other hand, Cost Analysis (FCA) program, a nationwide cost- accounted for 60 percent of total expenses for accounting system operated by the Federal Reserve installment lending, about 70 percent for commer- Banks (table 2). The program provides similar cial lending, and nearly 80 percent for mortgage information on other kinds of credit extended by lending. participating depository institutions, including in- These data suggest that credit card issuers must stallment, real estate mortgage, and commercial generate relatively higher levels of revenue per lending. dollar of receivables to cover costs than is neces- Although advances in automated processing have sary for other types of lending. Although card substantially improved operating efficiency over issuers obtain noninterest revenue from merchant the years, the costs associated with processing a discounts and from a variety of fees (such as anlarge volume of relatively small transactions and of nual membership fees, penalty charges, and fees servicing a large number of accounts make credit for cash advances), the amount is not large enough card operations more costly per dollar of receiv- in most instances to eliminate the need for substanables than other types of bank lending. As noted, tial interest income from credit cards. Furthermore, losses on credit card plans (including losses due to interest actually received on credit card balances is fraud) have also been higher than losses on other much less than the stated rate might indicate, types of credit. because convenience users generate little or no revenue from finance charges. In 1991, the gross interest return on credit card receivables for FCA- 3. Bank charge-off rates net of recoveries, 1978-92' participating banks was about 15 percent. The FCA does not collect data on the stated interest rates on credit cards issued by program participants, but other sources indicate that, industrywide, stated rates during 1991 generally ran between 16 percent and 20 percent. Differences Among Card Issuers of Different Sizes Cost structures differ not only across product lines, but also among card issuers. The differences reflect, 1. Data for all bank lending before 1982 not available. among other factors, the scale of operations and the SOURCES. FFIEC quarterly Report of Condition and Income, and VISA underlying level of credit risk the issuer is willing U.S.A. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in the Pricing of Credit Card Services 659 2. Cost and revenue ratios for selected types of bank credit, 19911 Credit card Installment Real estate mortgage Commercial and other U ,sM - * 1- - - i, IItteemm Percent of Percent of Percent of Percent of Percentage Percentage Percentage Percentage outstanding outstanding outstanding outstanding balances2 distribution balances2 distribution balances2 distribution balances2 distribution •.-i'-'i* Revenue I N n o te n r i e n s t t e rest3 ... 1141..90 4 5 2 7 11. . 5 4 9933 10. . 2 5 95 5 10. . 0 3 97 3 Total revenue 2266..00 100 11.9 100 10.7 100 10.3 100 Cost 2 Operating 13.1 57 3.4 1.4 18 :S 23 Credit losses . 3.5 15 .7 37 .3 4 9 Cost of funds 6.2 27 6.2 6600 6.3 79 6.2 68 Total cost.. 22.8 100 10.3 110000 8.0 100 9.1 100 Net earnings before taxes 3.1 1.7 . . . 2.7 1.1 . . . 1. Data reflect averages of cost and revenue categories weighted by 3. For credit cards, includes merchant discounts, and penalty and cashaverage outstanding balances for three size groups presented in the 1991 advance fees. National Average Report. Components may not sum to totals because of SOURCE. Federal Reserve Banks, "Functional Cost Analysis: 1991 rounding. National Average Report." 2. Outstanding balances are average amounts outstanding for the year. to accept.11 Although the FCA program is the only and that, as a group, they accept a wider range of source of data for comparing cost and revenue credit risks in building their credit card portfolios. among different bank credit products, it is domi- The differences in funding costs may reflect differnated by small and medium-size institutions (over- ences in the source of funds: Large issuers tend to whelmingly, institutions having less than $1 billion rely more on managed liabilities (such as large in assets) that offer a wide range of services to the time deposits or commercial paper), whereas public. Because none of the nation's largest credit smaller issuers use less-expensive retail deposits card issuers currently participate in the program, more heavily. the FCA data do not indicate the extent to which the cost and revenue structures of the largest card issuers differ from those of smaller card issuers. 3. Cost and revenue ratios of credit card issuers, 19911 Comparison of FCA data and a combined income statement derived from a nationally repre- :: Maste V rC IS a A rd a i n s d su ers2 FCA banks3 sentative cross section of VISA and MasterCard IItteemm PPPPeeeerrrrcccceeeennnntttt ooooffff PPPeeerrrccceeennnttt ooofff PPPPeeeerrrrcccceeeennnnttttaaaaggggeeee PPeerrcceennttaaggee issuers does, however, provide some insight into oooouuuu bbbb tttt aaaa ssss llll tttt aaaa aaaa nnnn nnnn cccc dddd eeee iiiinnnn ssss gggg ddddiiiissssttttrrrriiiibbbbuuuuttttiiiioooonnnn ooouuutttssstttaaannndddiiinnnggg ddiissttrriibbuuttiioonn the differences between the FCA banks and the f Revenue larger issuers that tend to dominate industry statistics (table 3). Several differences between the FCA Noninterest4 1 4 5 . . 7 4 7 2 6 3 1141..90 4 5 2 7 Total revenue ... 20.2 100 26.0 100 data and the VISA and MasterCard data are worth Cost •> noting. Operating expenses account for a much Operating 4.4 26 13.1 57 smaller proportion of the total cost for the large Credit losses 4.9 29 3.5 15 Cost of funds 7.4 44 6.2 27 issuers than for the FCA banks, while credit losses Total cost 16.8 100 22.8 100 and the cost of funds account for larger proportions Net earnings of the total cost (and are higher per dollar of before taxes .. 3.4 . . . 3.1 receivables) for the major issuers. These differ- 1. Components may not sum to totals because of rounding. 2. Estimates based on data supplied by a representative cross section of ences suggest that large card issuers enjoy some VISA and MasterCard issuers. Figures based on balances outstanding at the benefits of economies of scale in their operations end of the year. 3. Data reflect averages of cost and revenue categories weighted by average outstanding balances for three size groups presented in the 1991 National Average Report. Outstanding balances are average amounts out- 11. For a discussion of economies of scale in credit card operastanding for the year. tions, see Christine Pavel and Paula Binkley, "Costs and Competi- 4. Includes merchant discounts, penalty and cash-advance fees, and other tion in Bank Credit Cards," Federal Reserve Bank of Chicago, miscellaneous income. Economic Prospectives, vol. xi, no. 2 (March/April 1987), SOURCES. The Nilson Report, no. 511 (November 1991) and Federal pp. 3-13. Reserve Banks, "Functional Cost Analysis: 1991 National Average Report." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

660 Federal Reserve Bulletin • September 1992 INTEREST RATE RIGIDITY 1991.13 Data on charge-off rates from VISA U.S.A. further document the recent recession-related accel- Although the cost data in tables 2 and 3 help eration in credit card losses and suggest that loss explain the relatively high level of credit card inter- rates are generally higher for credit card accounts est rates generally, and also point to some of the than for other bank lending (chart 3).14 reasons for the differences in credit card pricing The historical unresponsiveness of credit card among issuers (and among the various plans rates to general rate movements, however, seems to offered by a single issuer), they do little to explain reflect special period-specific circumstances as the rigidity of credit card interest rates in the face much as any particular recurrent condition. In the of changes in funding costs over time. Rates might 1960s and into the 1970s, funding costs were relabe expected to fluctuate with changes in funding tively stable while operating costs moved through a costs regardless of the width of the gap between the high-cost start-up phase into a period of increasing rate charged to cardholders and the marginal cost efficiency. As discussed earlier, bank cards initially of raising funds. Only if changes in other costs were priced in line with store cards and earned moved systematically to offset changes in funding rather meager profits; as operating efficiency imcosts (or were expected to move in this direction) proved, rates held steady instead of declining with would it seem reasonable for rates charged to costs, and profits rose from low levels. It was not remain stable when funding costs move sharply. until the inflationary period of the late 1970s and Of course, if funding costs were a trivial compo- early 1980s that market interest rates soared and nent of total credit card costs, there would be little deregulation of rates on deposits led to sharp reason to expect rates to move noticeably with increases in funding costs. At that time, however, changes in funding costs. In fact, funding costs in statutory ceilings prevented much upward adjustrecent years have accounted for roughly 25 percent ment of credit card rates, and by the time states to 50 percent of total costs of credit card opera- acted to raise ceilings, interest rates generally had tions, depending on the size of the program crested. When funding costs began to decline sig- (table 3). Although certainly not a trivial propor- nificantly after 1981, credit card rates remained tion, it is considerably smaller than for some other mostly at their existing levels, in part because they types of lending. Therefore, it is more likely that had been constrained from rising to an equilibrium noninterest costs will play a larger role, and fund- level when funding costs were climbing; the ing costs a smaller role, in the behavior of credit decline in funding costs tended to restore equilibcard rates than in the behavior of rates on other rium. In addition, demand for credit card credit types of lending. rose sharply after 1982, as is evident in the rapid growth of such borrowing as the economic recov- There is little apparent reason to believe that ery picked up steam. The strong demand allowed operating costs would move substantially in an credit card issuers to expand their receivables withoffsetting direction to funding costs; however, some out having to compete intensively for market share, basis exists for thinking that the costs of bad debts might behave that way.12 General interest rate lev- minimizing the pressure to reduce prices.15 els are typically driven down during times of economic sluggishness, which also tend to be times 13. American Bankers Association, Consumer Credit Delinwhen delinquencies and write-offs on credit card quency Bulletin (Washington, ABA, quarterly reports, 1981-92). 14. For further discussion of the relationship between credit risk accounts are climbing. The most recent period of and interest rate stickiness, see Alexander Raskovich and Luke decline in market interest rates is a case in point. Froeb, "Has Competition Failed in the Credit Card Market?" U.S. Delinquency rates on credit cards began a sharp Department of Justice, Antitrust Division, Economic Analysis Group Discussion Paper EAG 92-7 (June 12,1992). rise in 1990 and continued at high levels through 15. In commenting on the surge in credit card debt in the mid-1980s, Christopher DeMuth remarked, "It is, however, consistent with the operation of competitive markets for firms, faced with declining costs and growing demand, to expand output and im- 12. Some types of operating expenses may move in a counter- prove product quality at a constant market price. That is just what cyclical manner, particularly if costs associated with the servicing happens when a credit card issuer offers more features and larger of accounts rise with delinquencies. Moreover, rates of response to credit lines" (p. 230). See Christopher DeMuth, "The Case Against credit card solicitations may fall when economic growth stalls, Credit Card Interest Rate Regulation," Yale Journal on Regulation increasing the cost of acquiring new accounts as well. (Spring 1986), pp. 201^12. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in the Pricing of Credit Card Services 661 By 1984, the profitability of credit cards had 4. Net before-tax earnings on selected types of bank risen above that of most other forms of lending, credit, 1974-91 and it remained relatively high through the end of Percent of outstanding balances1 the decade. This rather long period of high profits Diversified banks raises the question of why competition did not at LLaarrggee in the Functional Cost Analysis3 ccrreeddiitt YYeeaarr some point exert heavier downward pressure on bbaa ccaa nn rr kk dd ss 22 Credit Install- e R st e a a t l e Com cia m l ercredit card rates. One possible answer is that, as card ment mortgage and other banks broadened the market by distributing cards 1974 .77 1.56 2.21 3.49 to individuals of lower creditworthiness, a larger 1975 1.58 2.34 2.74 2.60 1976 2.73 2.45 2.85 1.84 risk premium was incorporated into the rate struc- 1977 3.09 2.75 3.18 1.86 ture, tending to keep rates up. The persistently high 1978 2.55 2.82 2.70 2.86 1979 1.62 2.32 2.06 4.02 credit card interest rates in the latter half of the 1980 -1.61 1.57 1.65 4.58 1980s may have reflected anticipation of higher 1981 1.00 1.69 .73 5.38 credit losses, but the unusually long economic 1982 2.32 2.81 .91 3.26 1983 2.36 3.17 2.16 1.49 expansion postponed the realization of those 1984 3.42 2.81 2.10 1.95 expected losses.16 1985 3.97 2.70 2.86 1.40 1986 3.45 3.28 2.57 2.37 .97 1987 3.33 3.38 2.31 3.05 1.34 1988 2.78 2.53 2.23 2.70 1.96 1989 2.99 1.20 2.21 2.67 2.43 CREDIT CARD PROFITABILITY 1990 3.43 1.51 1.92 1.66 .79 1991 2.57 3.12 1.72 2.72 1.12 MEMO Data on the performance of credit card operations 1974-91 average . 2.16 2.33 2.30 2.41 suggest that higher levels of credit card delin- Standard deviation ... 1.32 .48 .69 1.30 quency and default have raised the costs of credit 1. For large credit card banks, outstanding balances have been adjusted to card operations in recent quarters. A reduction in include balances underlying credit card securities. the cost of funds during the same period, however, 2. Large credit card banks are commercial banks with assets exceeding $200 million that have the bulk of their assets in loans to individuals has largely offset the losses, helping to maintain (consumer lending) and conduct 90 percent of their consumer lending relatively strong earnings for the industry as a through credit cards and related plans. Data from FFIEC (Federal Financial Institutions Examination Council) Report of Condition and Income. whole. 3. Net earnings rates are weighted averages for three size groups of banks Table 4 summarizes historical data from the FCA presented in the National Average Report (Federal Reserve Banks, "Functional Cost Analysis: 1991 National Average Report" and the corresponding on the net before-tax earnings on credit cards and document for each of the years 1974-90). other types of credit of small and medium-size banks. The table also provides data on credit card average, for the period 1974-91, earnings of banks profits of large credit card banks compiled from the participating in the FCA were slightly lower for FFIEC (Federal Financial Institutions Examination credit cards than for other types of credit. For these Council) Report of Condition and Income.17 On institutions, credit card earnings were considerably more volatile than earnings on installment or real estate loans (as measured by the standard devia- 16. Randall Pozdena has developed an option-pricing model of credit card interest rates that emphasizes the credit risk inherent in tion) and were comparable in volatility to comlending through unsecured lines of credit. Pozdena found that an mercial lending. On the whole, earnings on credit options-based model fit actual data well: Credit card rates showed cards at these small and medium-size institutions little response to T-bill rates, and model parameters were "consisdo not appear to have been out of line historically tent with the representation of credit card debt as costly-to-service, unsecured credit extended to relatively high-risk borrowers." See with other lending activities. Credit card earnings Randall Pozdena, "Solving the Mystery of High Credit Card did outpace income from other sources over the Rates," Federal Reserve Bank of San Francisco, Weekly Letter years 1984 through 1987, but other loan products (November 29, 1991), unpaginated. 17. Credit card banks are so designated by meeting two criteria: had similar runs of higher-than-average earnings at (1) the bulk of their assets are loans to individuals (consumer other times. lending) and (2) 90 percent or more of their consumer lending involves credit card or related plans. Large credit card banks are The data for the large credit card banks suggest a those whose assets exceeded $200 million at the end of 1991. At somewhat different pattern of recent experience. that time, thirty-one banks were in this category, accounting for Compared with the FCA banks, the large credit 61 percent of all credit card receivables and securitized credit card debt at commercial banks. card banks earned similar or higher returns from Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

662 Federal Reserve Bulletin • September 1992 1986 through 1990, but reported earnings dropped tive and current cardholders.18 The theory postubelow the earnings of FCA banks in 1991. The lates that consumers will continue to seek informadifferent experiences of the two groups of card tion about the prices and attributes of a product up issuers may be related to their selection of custom- to the point at which the additional cost of obtainers. The large credit card banks have typically ing information equals the additional benefit they solicited more marginal credit risks than the smaller may gain from their extra search effort. Therefore, institutions. The difference is reflected in the loan it is postulated that a reduction in the time, effort, loss experience of the two groups. While FCA and cost associated with the search for information banks have had annual fraud and credit losses of will promote additional product shopping.19 It is about 2 percent of outstanding balances during also axiomatic that the effort consumers put into most of the past decade, the large credit card banks the search will rise as the potential benefit to them have had consistently higher losses, generally increases. between 3 percent and 5 percent of outstanding Information theory implies that certain types of balances. These differences suggest that the large cardholders are more likely than others to be sensicredit card banks are selecting a different point on tive to, and to shop for, lower rates. Consumers the risk-return frontier than their smaller counter- who regularly borrow large amounts on their credit parts. Consequently, it would be expected that cards would seem more likely to search extensively when the economy is performing well, as it did and to apply for cards having low finance rates than during the mid-1980s, issuers that bear more risk cardholders who rarely carry a balance from month would outperform more conservative issuers. In to month or carry forward only a small balance. weak economic periods, such as the most recent one, however, the performance of large issuers would be expected to suffer from sharply rising Repayment Practices credit losses. Users of credit cards fall into two broad categories—convenience users and revolvers. Con- CONSUMER SENSITIVITY TO INTEREST RATES venience users are those who usually pay off their balance in full during the interest-free grace period, Full exploration of the behavior of credit card rates thereby avoiding finance charges; revolvers are requires an examination of the demand side of the those who usually do not pay their balances in full market as well as the supply side. In general, one and thereby incur finance charges. would expect markets where buyers are highly Credit card users may occasionally deviate from sensitive to price (in this case, to interest rates) to their usual repayment pattern: Convenience users exhibit more competition in pricing than markets might repay an unusually large purchase in installfor products where some other attribute, such as ments, or an unforeseen income disruption might convenience or the level and quality of service, is cause them to alter their customary behavior; the overriding concern. revolvers might sometimes repay their outstanding Whether credit card issuers compete to attract balance in full, for instance, when they receive a and hold customers by lowering interest rates de- Christmas bonus or a tax refund, or when they pends in part on the sensitivity of current and consolidate debts. potential cardholders to differences in rates among issuers. The repayment habits of cardholders are, in turn, a key determinant of their responsiveness to interest rates charged. 18. The basic theory was first developed by George J. Stigler in "The Economics of Information," Journal of Political Economy, vol. 69 (June 1961), pp. 213-25. 19. The implications of information theory underlie enactment Implications of Information Theory of the Credit and Charge Card Disclosure Act of 1988. The act requires issuers of credit cards to disclose, in their solicitations, information about the terms of their credit card plans. The purpose Information theory provides a useful framework of the act was to promote competition in the credit card market by for assessing the interest rate sensitivity of prospec- facilitating credit shopping by consumers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in the Pricing of Credit Card Services 663 Several consumer surveys have explored the 5. Distribution of credit card holders by amount of repayment practices of cardholders and have outstanding credit card debt, 1989 obtained highly consistent results over time. In Amount outstanding1 surveys sponsored by the Federal Reserve in (dollars) Percentage distribution 1977, 1983, and 1989, roughly half the families 1-199 15 that reported using credit cards said that they 200-499 17 nearly always paid their bill in full each month.20 5 1 0 ,0 0 0 - 0 9 - 9 1 9 ,999 1 1 8 8 The latest of these surveys, however, also indicates 2,000 or more 32 Total 100 that a higher fraction of cardholders are revolving MEMO balances at any one time than their responses to 2,090 questions about customary repayment practices Median2 1,252 Proportion with debt (percent) ... 60 suggest. The 1989 Survey of Consumer Finances 1. Amount outstanding on bank and store credit cards after most recent found that 60 percent of surveyed cardholders had payment was made. carried over balances from the previous month 2. Excludes credit card holders who have zero balances. SOURCE. 1989 Survey of Consumer Finances. (table 5); industry statistics generally show that about two-thirds of accounts are revolving at any rate card.22 In this context it is important to note point. Nonetheless, the important factor is how that, although the amount of credit card debt owed consumers perceive their own behavior, as it is this by cardholders who revolve varies substantially, a perception that will guide their credit-shopping large fraction owe relatively small amounts. The activities and their sensitivity to credit card interest 1989 Survey of Consumer Finances, for example, rates. revealed that, among cardholders with debt, 32 per- Information theory suggests that revolvers would cent owed less than $500 at the time of the survey, be much more likely than convenience users to be and an additional 18 percent owed between $500 sensitive to the level of the interest rate assessed on and $1,000 (table 5). Thus, a significant number of credit cards, although convenience users may be those who use credit cards as a borrowing device quite sensitive to the amount of the annual fee and may have balances small enough to render the the length of the interest-free grace period. Results interest rate a secondary consideration in deciding of a 1986 survey of cardholders by Payment which cards to hold. Systems, Inc. (PSI), support these implications of information theory.21 The survey found that revolvers were more likely than convenience users Practical Considerations to read credit card solicitation materials, and a larger proportion of revolvers said that they The foregoing analysis implies that one reason would apply for a card with a lower rate if it were credit card rates have not varied greatly over time offered. is that a large proportion of cardholders are likely The PSI survey also found that the larger the to be relatively insensitive to the finance rates outstanding balance a revolver carried, the more charged on their cards. Interest rates are largely likely the cardholder would be to apply for a lower- irrelevant, of course, for convenience users. But even for many who revolve balances, the dollar amounts at stake may be fairly small. For example, 20. Thomas A. Durkin and Gregory E. Elliehausen, 1977 Con- for a family owing the median amount of credit sumer Credit Survey (Board of Governors of the Federal Reserve System, 1978) and 1983 and 1989 Surveys of Consumer Finances, sponsored by the Federal Reserve in cooperation with other agen- 22. The survey by Payment Systems, Inc., also found convecies (data available from the National Technical Information nience users and revolvers to be equally likely to respond to Service). solicitations for credit cards that charge no annual fee. In addition, 21. Results of the survey are discussed in A. Charlene Sullivan, convenience users found offers of higher credit limits more attrac- "How Disclosure Legislation May Affect Consumer Shopping for tive than did revolvers. The attraction to higher credit limits proba- Credit Cards," Credit Card Management, vol. 1, no. 4 (September/ bly reflects convenience users' tendency, on average, to charge October 1988), pp. 86-88; and in Debra Drecnik Worden and more than revolvers during a given month. For example, during the Robert M. Fisher, "Perceived Costs and Benefits of Shopping for month before the 1989 Survey of Consumer Finances, the mean Credit: The Case of Credit Cards" (unpublished study, Purdue amount charged by convenience users was $524, compared with University Credit Research Center, February 1987), pp. 1-14. $334 for revolvers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

664 Federal Reserve Bulletin • September 1992 card debt in 1989—roughly $1,250 (table 5)—a reduce interest revenue on balances of all exist- 3 percentage point drop in the rate would reduce ing cardholders who revolve their accounts— the annual interest charge by less than $40. It is customers who apparently were willing to pay the questionable whether a $40 annual saving would be original rate. (In contrast, for most other types of enough to induce a cardholder to switch from a loans to individuals, when a bank changes its rate card that has been providing satisfactory service or quotation, the new rate is available only to new attractive enhancements. borrowers. A reduction in auto loan rates, for There are other reasons cardholders might be example, does not result in a loss of revenue on relatively insensitive to interest rates. In many existing loans.) instances, the credit limit is lower on a newly Julio Rotemberg and Garth Saloner have shown issued card. Also, there is no guarantee that the rate that a relatively inelastic demand for a product can on the new card will stay low, or that the new card lead to price stickiness for both price increases and issuer's performance on such key matters as avoid- decreases, as long as there is some positive cost to ing or rapidly rectifying billing errors will measure suppliers associated with changing prices.24 They up to the previous card issuer's record. Factoring in argue that firms that face more inelastic, or other disutilities of switching cards, such as the "steeper," demand curves gain less than other firms nuisance of filling out applications and comparing by changing prices from a level that does not the nonrate features of different cards, the inertia of maximize profits to one that does. For such firms, many cardholders with respect to rate differences any given divergence between the price currently does not seem unreasonable.23 charged and the profit-maximizing price involves Finally, some cardholders, including a portion less of a divergence between the current quantity who carry high levels of credit card debt from and the profit-maximizing quantity. If, in fact, month to month, may be willing but unable to credit card issuers face a relatively inelastic switch to credit card plans that offer reduced rates demand, owing to high costs to consumers of because they cannot qualify for these plans. Poor switching cards (or for any other reason), and bedebt repayment records or high levels of debt rela- cause issuers would incur some cost by changing tive to income make these potential switchers rela- rates, reductions (or increases) in funding costs tively unattractive high-risk prospects to issuers of may not bring about commensurate changes in lower-rate cards. rates.25 According to this reasoning, the gain from changing prices simply may not justify the cost of doing so for firms facing relatively inelastic Applicable Studies of Price Stickiness demand curves. A somewhat different demand-side explanation Historically, the credit card industry has generally for the stickiness of credit card interest rates has regarded consumers as unresponsive to rate incentives. In this view, cardholders are not likely to increase their borrowing very much in response to 24. Julio J. Rotemberg and Garth Saloner, "The Relative Rigida reduction of 1 or 2 percentage points in the ity of Monopoly Pricing," American Economic Review, vol. 77, no. 5 (December 1987), pp. 917-26. interest rate, and, for the reasons outlined earlier, For a discussion of a theory suggesting that imperfect consumer most of them are thought unlikely to switch cards information may lead to interest rate stickiness, see J. Michael to save on interest payments. Expecting to gain Woolley, "Imperfect Information, Adverse Selection and Interest Rate Sluggishness in the Pricing of Bank Credit Cards," Finance relatively little incremental volume from either new and Economics Discussion Series 37 (Board of Governors of the or existing cardholders by lowering rates, issuers Federal Reserve System, September 1988). have had minimal economic incentive to reduce 25. The costs of changing rates include costs associated with rates to the broad spectrum of their cardholders (as revising advertising and solicitation materials and notifying cardholders of changes. In addition, regulatory barriers come into play opposed to selected subsets of customers). Lowerwhen rates are increased. Federal regulations (Truth-in-Lending) ing the interest rate on standard card plans would and many state laws have requirements about notification of rate increases, and some states require that cardholders be allowed to pay off existing balances at the old (lower) rate. If lenders adjusted 23. For additional discussion of the implications of the costs of rates downward when funding costs declined, they would have to switching cards, see Paul S. Calem, "The Strange Behavior of the comply with these regulations whenever a subsequent rise in fund- Credit Card Market," Federal Reserve Bank of Philadelphia, Busi- ing costs made a rate increase seem appropriate. Some states are ness Review (January/February 1992), pp. 3-14. currently reviewing these regulations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in the Pricing of Credit Card Services 665 been proposed by Lawrence Ausubel.26 Ausubel to be relatively insensitive to interest rate levels in recognizes cardholder "switching costs" as one their decisions to acquire or to keep a particular deterrent to rate competition, but he attributes most card. Consequently, card issuers have tended to of the rate insensitivity to a certain peculiarity of compete on factors other than price. cardholder psychology. Many people, Ausubel be- In the past several months, however, much of the lieves, do not expect to revolve their balances when rigidity in credit card pricing has been breaking they acquire a card, and therefore are not con- down, with a growing number of issuers reducing cerned with the interest rate charged. Some, in fact, rates 2 to 4 percentage points. This development do turn out to be true convenience users who pay has not been readily apparent in published meano finance charges, but a large segment of these sures and lists of credit card rates, in part because cardholders, Ausubel argues, wind up making only lower rates have been made available to selected partial payments and incurring interest costs after groups rather than across the board. all. These customers are attractive to a credit card Exerting downward pressure on credit card rates issuer, but, because the customers do not expect to has been an unusually steep decline recently in the pay interest, the issuer need not solicit their busi- cost of funds, possibly coupled with a charge-off ness with a low rate. The problem with this argu- experience during the 1990-91 recession that may ment is that it depends on cardholders persistently have been less damaging than allowed for in past misperceiving their own behavior. Although it may pricing decisions. For example, rates that banks be reasonable to believe that many consumers first pay on certificates of deposit of various maturities acquire a card with erroneous expectations about have dropped as much as 3 percentage points since their future payment habits, it is harder to argue the middle of 1991, the sharpest decrease in this that they will in fact regularly revolve their bal- key element of funding costs in a decade. Meanances and yet maintain the assumption that they while, the rise in delinquencies and charge-offs will not do so in the future. At some point, it would during the latest recession appears not to have seem, such cardholders might recognize their greatly exceeded increases during other periods, actual payment patterns and seek out a low-rate despite the expansive lending practices of the precard—if, that is, dollar differences in interest costs ceding few years. Perhaps reassured by this relawere really large enough to matter to them. tively favorable loss experience, card issuers may now be willing to build a smaller margin for potential write-offs into rates charged. Thus, as a result of both sharp declines in funding costs and a more RECENT COMPETITIVE DEVELOPMENTS optimistic assessment of risk, issuers may believe that they now have more latitude to reduce rates Several reasons for the relative rigidity of credit than they have had before. card interest rates in the past have been cited here. Historically, special conditions, such as high start- Another factor that may be applying downward up costs and state-mandated rate ceilings, have pressure on credit card rates is the increased diffistifled movements of credit card rates. On the sup- culty of acquiring new customers in a relatively ply side of the market, changes in funding costs are mature product market. The great expansion in less important to credit card operations than to card holding during the 1980s has brought the other credit activities, and the risks inherent in this market nearer to saturation, making it more costly unsecured form of lending seem generally to to attract new customers without offering substanincrease at times when costs of funds are declining. tial enhancements, waiving annual fees, or accept- Because funding costs account for a comparatively ing greater credit risks. The high costs of attracting small part of total costs for credit card programs, new customers in a competitive, saturated market the favorable effect of declining funding costs is places a premium on retaining existing customers, more likely to be offset by increases in other costs. particularly those who revolve balances and pay on On the demand side, credit card users have tended time. Reducing rates is one way to curtail attrition. For the most part, card issuers have lowered rates selectively. In some cases, they have targeted 26. Lawrence M. Ausubel, "The Failure of Competition in the their solicitations to individuals deemed to have Credit Card Market," American Economic Review, vol. 81, no. 1 certain desirable characteristics, an approach made (March 1991), pp. 50-81. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

666 Federal Reserve Bulletin • September 1992 more feasible by the development of extensive data An important catalyst increasing the focus on bases and improved techniques for screening poten- rates as a marketing tool has been the willingness tial cardholders. Some of the largest national issu- of some prominent card issuers to take the lead. ers have segmented their cardholder bases accord- AT&T's entrance into the market as an aggressive ing to risk characteristics, offering reduced rates to price competitor has been significant. The firm's a select group of existing customers who have emphasis on price has been exemplified first by its good payment records; higher-risk late-paying cus- offer to "charter members" of a lifetime exemption tomers are still charged higher rates.27 Many of the from annual fees, and lately by its heavy advertislower-rate programs involve variable rates; because ing of the declines in rates for all cardholders the rates on such accounts change automatically as resulting from its variable-rate formula. After the index rates move, the use of variable-rate proce- American Express introduced its risk-based pricing dures avoids some of the regulatory and public structure for the Optima card in February 1992, relations problems involved in raising rates (when other major issuers lowered rates in some fashion funding costs rise) under a fixed-rate plan. to some customers. One reason these actions are In addition to these supply-side developments, not more evident in published averages is that in some increase in consumer sensitivity to rates is most cases issuers have kept rates for the largest probably also contributing to the recent reductions portion of their standard plan customers at their in credit card rates. Whether the relative impor- previous levels. The Federal Reserve's series for tance of interest rates to consumers has changed is the national average bank-card rate mentioned earnot clear—such factors as service or enhancements lier, for example, includes a bank's "most commay still carry more weight with most cardholders. mon" rate, and that rate is still usually the bank's However, spreads between credit card rates and high standard-plan rate. rates received by consumers on deposits or other Card issuers also may have felt pressure to reinterest-bearing assets are wider than they have duce rates in the aftermath of a brief effort in the been for two decades. Moreover, with nonmortgage Congress in November 1991 to legislate a national interest payments no longer deductible on federal ceiling on credit card rates. A bill to do so was income tax returns, a given rate of interest is effec- passed by the Senate but did not become law. How tively higher than in the past for those who itemize critical a role that effort played might be quesdeductions. Therefore, other things equal, card- tioned, however, in view of the lack of any discernholders likely are more prone to respond to lower- ible effect from a similar attempt to control rates in rate offers than they have been in the past. In 1986, when two such bills were proposed. Coming addition, the weak economy of the past two years at a time when other forces were working to lower has forged a thriftier, generally more cautious con- rates, however, the recent congressional attention sumer, one more likely to be concerned about the may have hastened the process. size of interest payments. Increased media atten- In the future, segmented rate structures will tion to the topic and the widespread availability of probably become more widespread as lenders lists comparing rates charged by different issuers continue to try to categorize accounts by their have probably fostered at least some increase in profitability and to price them accordingly. Flexioverall awareness of credit card rates. bility in rates will likely persist, with more issuers converting to variable-rate plans or offering a choice of fixed- or variable-rate plans. "Quantity 27. In February 1992, for example, American Express announced such a three-tiered pricing structure for its Optima card discounts" whereby lower rates are charged on program. Currently, Optima cardholders who have a record of higher balances may become more common as substantial card use and ontime payment are charged the prime rate well. Further consolidation in the industry seems plus 6.5 percent on revolved balances, and chronic late-payers are charged prime plus 12.25 percent. New cardholders and those not likely, too, as less-efficient operations are sold to meeting the spending criteria are charged prime plus 8.25 percent. lower-cost issuers. Nevertheless, levels of credit Citicorp began a similar plan in June. Holders of the standard card card rates seem certain to remain comparatively who qualify pay prime plus 9.4 percent (down from a fixed rate of 19.8 percent), and holders of "preferred cards" who qualify pay high, because revenues still will have to be large prime plus 7.4 percent (down from 16.8 percent). Citicorp esti- enough to cover comparatively high operating and mated that about 9 million of its 21 million cardholders would default costs. • qualify for the reduced rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

667 Industrial Production and Capacity Utilization Released for publication July 15 June; the drop in coal mining occurred primarily as a result of the brief rail strike that took place in late June. At 108.2 percent of its 1987 annual average, The index of industrial production declined 0.3 per- total industrial production in June was 0.8 percent cent in June, after having risen about Vi percent in above its year-ago level. For the second quarter as each of the preceding four months. Sizable declines a whole, industrial production increased at an anin output were evident in motor vehicles, construc- nual rate of 4.5 percent, after having fallen 2.9 pertion supplies, and energy materials, mainly coal, in cent in the first quarter. 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 —— TToottaall iinndduussttrryy 140 — Manufacturing 140 Capacity CCaappaacciittyy - 120 — — 120 100 - 100 Production 80 Production 80 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Percent of capacity Percent of capacity Total industry Manufacturing Utilization Utilization J I I L J I I L J I I I I I I L J I 1980 1982 1984 1986 1988 1990 1992 1980 1982 1984 1986 1988 1990 1992 All series are seasonally adjusted. Latest series, June. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

668 Federal Reserve Bulletin • September 1992 Industrial production and capacity utilization Industrial production, index, 1987=100' Percentage change Category 1992 19922 June 1991 to Mar.' Apr.' May' June? Mar.' Apr.' Mayr Junep June 1992 Total 107.6 108.1 108.6 108.2 .4 .5 .5 -.3 .8 Previous estimate 107.7 108.1 108.8 .5 .4 .6 Major market groups Products, total 108.5 109.0 109.6 109.1 .4 .5 .5 -.4 .5 Consumer goods 109.3 110.1 110.5 110.0 .5 .7 .3 -.4 1.9 Business equipment 121.5 123.0 124.2 124.0 .4 1.2 1.0 -.1 1.7 Construction supplies 96.7 96.3 97.3 96.1 .7 -.4 1.1 -1.2 -1.3 Materials 106.1 106.7 107.1 106.9 .3 .5 .4 -.3 1.4 Major industry groups Manufacturing 108.5 108.9 109.6 109.3 .4 .4 .6 -.3 1.7 Durable 107.0 107.5 108.8 108.4 .0 .5 1.2 -.4 1.0 Nondurable 110.4 110.7 110.5 110.5 .7 .3 -.2 -.1 2.6 Mining 97.5 99.1 98.9 97.5 -.9 1.6 -.1 -1.4 -4.5 Utilities 107.7 108.1 107.7 107.4 1.2 .4 -.4 -.2 -3.6 Capacity utilization, percent MMMEEEMMMOOO CCCaaapppaaaccciiitttyyy,,, pppeeerrr--ccceeennntttaaagggeee 1991 1992 ccchhhaaannngggeee,,, AAvveerraaggee,, LLooww,, HHiigghh,, JJJuuunnneee 111999999111 11996677--9911 11998822 11998888--8899 June Mar.r Apr.r Mayr June? tttooo JJJuuunnneee 111999999222 Total 82.1 71.8 85.0 79.6 78.4 78.6 78.9 78.5 2.3 Manufacturing 81.4 70.0 85.1 78.3 77.5 77.7 78.0 77.6 2.6 Advanced processing 81.0 71.4 83.6 77.6 76.1 76.3 76.7 76.2 3.0 Primary processing . 82.3 66.8 89.0 79.9 80.8 81.0 81.1 80.9 1.6 Mining 87.4 80.6 87.2 89.2 84.9 86.3 86.2 85.0 .2 Utilities 86.7 76.2 92.3 86.7 83.1 83.4 83.0 82.7 1.0 1. Seasonally adjusted. r Revised, 2. Change from preceding month to month indicated. p Preliminary. utilization fell 0.4 percentage point in June, to supplies fell sharply last month, retracing the gain 78.5 percent. in May; the output in this sector has changed little, When analyzed by market group, the data show on balance, since February. The output of materials that the output of consumer goods decreased decreased 0.3 percent, mainly reflecting the brief 0.4 percent in June, as the cutback in auto and truck curtailment in coal mining. Among other materials, assemblies accounted for about half of the overall the production of steel and paper advanced, but the loss. Elsewhere, the production of appliances and output of most other major materials groups was furniture continued to improve, but the output of nearly flat. many nondurables, including food and clothing, When analyzed by industry group, the data show declined. The production of business equipment that manufacturing output fell 0.3 percent in June also edged down last month, mainly because of the and that factory utilization declined 0.4 percentage decline in motor vehicles. Among other major cate- point, to 77.6 percent. In June, the level of utilizagories within business equipment, overall output tion was more than 1 percentage point below that was up a bit as the production of information- in the third quarter of last year. Overall utilization processing equipment, which includes the produc- rates for both primary- and advanced-processing tion of computers, posted another gain; however, industries dropped back in June to about their the output of industrial equipment, which surged in March levels. Among primary-processing indus- May as a result of the end of a strike, was down tries, the most significant losses last month slightly in June. The production of construction occurred in construction-related industries; by Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization 669 contrast, operating rates for primary metals, par- Mining output fell nearly P/2 percent, as the ticularly steel, rose sharply. Within advanced- drop in coal accounted for all of the decline. Proprocessing industries, declines in utilization were duction at utilities remained weak in June and was widespread in June, as motor vehicles posted the nearly 4 percent below that of a year ago. largest drop. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

670 Statements to the Congress Statement by Richard F. Syron, President, Fed- is consistent with the needs of the economy. I eral Reserve Bank of Boston, before the Com- will conclude on a positive note. We are seeing mittee on Small Business, U.S. House of Repre- some improvements in the ability of banks to sentatives, July 2, 1992 raise new capital, as well as greater appreciation of the macroeconomic impact of capital regula- I appreciate this opportunity to appear before tions. you to discuss questions about the current availability of credit and bank capital standards. I would like to emphasize at the outset that these THE ROLE OF CAPITAL views are my own and not necessarily those of the Federal Reserve System. In the interest of Bank capital should be a financial shock abyour time, I propose making a fairly brief state- sorber, drawn down during periods of economic ment and request that our Annual Report, which distress and replenished when economic circumfocuses on this issue in more detail, be included stances improve. In the past, when large loan in the record.1 losses occurred, the majority of banks drew The past recession and the ongoing recovery down their capital while continuing to finance have been unusual because of the financial diffi- projects that would improve their future earnculties in the banking sector. These difficulties ings. This role for capital is currently in danger, may also have constricted the lending critical to however, because of economic and political a successful recovery. Bank lending policies dur- forces evolving from the savings and loan ing much of the 1980s were too lax, undoubtedly debacle. contributing to a real estate bubble in several The extent of the taxpayer bailout of the regions of the United States. Reversing past Savings and Loan Insurance Fund, coupled with laxity is both desirable and prudent. However, it the financial condition of many commercial is essential that in addressing this past laxity we banks, has changed the perception of the approavoid overreacting in a way that may dampen priate role of capital. Increasingly, bank capital is economic growth. seen primarily as providing a cushion for the Today I will outline what I believe should be deposit insurance fund rather than a buffer for the appropriate use of bank capital, that is, to the economy. In this environment it is attractive cushion economic shocks during periods of eco- to require substantially more capital per dollar of nomic distress. However, I will argue that in assets to reduce taxpayers' potential future exsome cases capital regulation has penalized posure to problems in the banking industry. I banks for bad loans, that is, for bets lost, rather agree that higher target capital ratios should be than for increased risk in the portfolio, that is, for implemented for many banks, but how and when bets taken. capital standards are raised has important implications for the economy. Undeniably, many banks built up too little capital during the 1980s, and I am in favor of Regulation of bank capital has undergone generally improved capital positions. My con- many changes recently. The Basle Accord, cern, however, is that this be done in a way that which I consider a significant step forward, provided international standards for commercial banks. It promoted a more even playing field among banks, whose operations increasingly 1. See Federal Reserve Bank of Boston, Annual Report cross national boundaries, and it explicitly rec- 1991 (FRB Boston, n.d.). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 671 ognized the large risks to banks that could arise THE EFFECTS OF CHANGING CAPITAL from off-balance-sheet items. The objective of RATIOS IN NEW ENGLAND these new regulations was to better match bank capital with the risks inherent in the bank's The New England economy would be experiencassets. Because banks with riskier portfolios ing problems even if no difficulties had occurred have a greater probability of large losses, requir- in the banking sector. Slower defense spending, ing higher capital for riskier institutions is a regional concentrations in shrinking sectors of substantial improvement. the computer industry, and the restructuring of Because asset classifications under the Basle the financial services industry made New En- Accord were not sufficiently precise to adjust for gland more sensitive to an economic downturn all types of risk, and in particular because inter- than the rest of the United States. Nonetheless, est rate risk was not incorporated into the origi- the regional recession clearly has been comnal ratios, regulators adopted an additional re- pounded by problems in banking and real estate. quirement for U.S. banks, the "leverage ratio." The Boston District has suffered a much more This ratio sets a minimum capital-to-asset ratio of severe decline in employment in the recent re- 3 percent for institutions with the best supervi- cession than any of the other Federal Reserve sory rating but does not weight the assets of the Districts. In addition, those other regions that bank according to risk. The leverage ratio was experienced banking problems and a slowdown intended to provide a floor for bank capital that in real estate prices, such as the Mid-Atlantic all banks were expected to satisfy, regardless of states, have also shown significant declines in risk. Unfortunately, implementation of the lever- employment. age ratio requirement has caused some unfore- The current problems in New England actually seen problems. began in the 1980s. New England commercial First, higher leverage ratios have been re- banks expanded rapidly, doubling assets bequired for banks that have been downgraded on tween 1984 and 1989. Much of the growth was the basis of loan losses. Although this would due to real estate loans, which grew 370 percent seem to be common sense, the raising of capital in New England over this period, much faster standards to reflect current and past problems than in the nation as a whole. Bank financing of rather than prospective problems related to asset the real estate boom in New England signifirisk may well have caused bank lending to be- cantly increased bank exposure to risk. Although come procyclical. the boom in New England enabled the region's Second, for many institutions, particularly for commercial banks to increase their capital, their those in New England, this leverage ratio assets grew so fast that they achieved only adjusted for the condition of the bank has be- modest increases in their capital-to-asset ratios. come the most binding capital ratio, making the In retrospect, this was an significant missed risk-weighted capital ratios irrelevant. New En- opportunity. Had institutions chosen to improve gland was the first region that experienced both a their capital-to-asset ratios by growing more dramatic decrease in bank capital and the effects slowly, they would likely have expanded less of the new bank capital regulations. Its experi- aggressively in construction and commercial real ence suggests some ways in which the new estate loans, whose value eventually declined approach should be modified. significantly. If, in addition, they had chosen to In my view, the better approach would be to raise new capital while their prospects were good determine the appropriate risk-based capital ra- and their stock prices high, they would have had tios for an institution ahead of time and then stick a much larger buffer when the real estate bubble to them. Reducing these ratios to allow for losses burst. It should be recognized, however, that real would be forbearance that I would object to. estate was seen in the 1980s as a much more However, increasing the ratios in response to secure investment than it is today. actual losses creates a procyclical problem. In Because their capital had not risen enough short, I believe the target should be based on during the good times, banks were inadequately future risks rather than on realized losses. prepared for the bad times. Ideally, banks set Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

672 Federal Reserve Bulletin • September 1992 loan-loss reserves to anticipate any expected after controlling for mergers, loan sales, and loan loan losses and maintain equity capital as a reclassifications. reserve against anticipated loan losses. Unfortu- With so many institutions short of capital, nately, in retrospect, neither reserve was raised some banks have begun to examine "gimmicks" sufficiently during the real estate boom. Futher- as possible ways to satisfy the leverage ratio. For more, during the ensuing bust, as banks depleted example, a bank can shrink artificially by moving their capital by writing off bad real estate loans, securitized assets into nonbank subsidiaries. we began to require troubled banks to achieve This practice has perverse results for the Federal higher leverage ratios than banks that had yet to Deposit Insurance Corporation (FDIC). The experience difficulties. least liquid and most risky assets remain in the Ideally, poorly capitalized banks would raise bank under the FDIC insurance umbrella, while new equity quickly to replenish their capital. the more liquid and less risky assets are removed Because most troubled banks have small or from the bank. Should this strategy be adopted negative earnings, restoring capital by retaining by many institutions, eventually the FDIC will be profits is not feasible. Similarly, new equity insuring much riskier institutions than it has in issues may not be a feasible alternative because the past. potential investors cannot make accurate assessments of troubled banks without an in- CONCLUSION depth appraisal of the loan portifolio. Thus, banks that have recently lost capital but are still In my judgment, bank capital should return to its viable have difficulty convincing investors that historical role of serving as a shock absorber. prospects for the future, rather than problems This can best be achieved by allowing riskof the past, motivate the new equity issue. weighted capital ratios to return to center stage. When new equity issues are not feasible for All banks should be required to satisfy the riskcapital-depleted banks, they are forced to weighted capital ratios agreed upon in the Basle shrink. (Although the capital-to-asset ratio of Accord, and in addition a flat 3 percent or 4 New England banks has been increasing in the percent leverage ratio. If the leverage ratio were past two years, this improvement is primarily no longer adjusted upward for bets lost and were the result of shrinking assets rather than of restored to its original role of providing a floor for capital growth.) bank capital regardless of risk, most institutions Recently, efforts to shrink have caused some could focus once again on the risk-weighted banks to downsize in ways that can impair the capital ratios. Once interest rate risk has been long-run prospects of the institution and the local incorporated into the risk-weighted ratios, the economy it serves. Banks not only reduce their leverage ratio could be eliminated. new lending but also cut back on current lending, I am hopeful that the situation is now improveither by demanding repayment of outstanding ing. All of us are coming to recognize the macroloans or by refusing to renew credit. This is a economic impact of regulatory policy. This is greater problem for small businesses, which are most essential if banks are to help finance the more dependent on local bank financing, than for economic recovery. larger businesses, which have better access to The financial condition of New England banks national credit markets. is also improving. Several large banks in the Research conducted at the Federal Reserve region have recently announced new stock is- Bank of Boston has found that poorly capitalized sues. The higher stock prices of many New institutions have shrunk more than their better England banks should provide an opportunity for capitalized competitors. This research also re- more banks to raise capital with new equity veals that banks that are required to increase issues. Improved capital positions will not only capital levels over a very short period reduce reduce the FDIC's possible exposure but should their lending activity more than would be ex- also enable banks to return to the business of pected at this stage of the business cycle, even making loans to creditworthy borrowers. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 673 Statement by Alan Greenspan, Chairman, Board have been associated with a far more robust of Governors of the Federal Reserve System, economic expansion. before the Committee on Banking, Housing, and Clearly the structural imbalances in the econ- Urban Affairs, U.S. Senate, July 21, 1992 omy have proved more severe and more enduring than many had previously thought. The economy still is recuperating from past excesses I am pleased to have this opportunity to present involving a generalized overreliance on debt to the Board's semiannual Monetary Policy Report to the Congress.1 Earlier this month, when the finance asset accumulation. Many of these activities were based largely on inflated expectations Federal Open Market Committee (FOMC) forof future asset prices and income growth. In mulated its plans and objectives for the next year short, an overbuilding and an overbuying of and a half, it did so against the backdrop of an certain capital and consumer goods were made economy still working its way through serious possible by overleverage. And when realities structural imbalances that have inhibited the inevitably fell short of expectations, businesses pace of economic expansion. In light of the and individuals who were left with debt-burresulting sluggishness in the economy and of dened balance sheets diverted cash flows to debt persistent weakness in credit and money, the repayment at the expense of spending, while System on July 2 cut the discount rate Vi perlenders turned considerably more cautious. centage point and eased reserve market condi- This phenomenon is not unique to the United tions commensurately. These actions followed a States. To a greater or lesser extent, similar reduction in the federal funds rate in early April. adjustments have gripped Japan, Canada, Aus- The recent easing of reserve conditions should tralia, the United Kingdom, and several northern help to shore up the economy and, coming in the European countries. For the first time in a half context of a solid trend toward lower inflation, century or more, several industrial countries have contributed to laying a foundation for a have been confronted at roughly the same time sustained expansion of the U.S. economy. with asset-price deflation and the inevitable consequences. Despite widespread problems, we seem to have at least avoided the crises that THE U.S. ECONOMY AND MONETARY historically have been associated with such peri- POLICY ods in the past. In the United States especially, important eco- Our recent policy moves were just the latest in a nomic dynamics ensued as the speculative acquiseries of twenty-three separate easing steps that sition of physical assets financed by debt outbegan more than three years ago. In total, shortpaced fundamental demands. In some markets term market interest rates have been reduced by for physical assets, such as office buildings, a two-thirds. The federal funds rate, for example, severe oversupply emerged, and prices plumhas declined from almost 10 percent in mid-1989 meted. In others, such as residential housing, to 3V4 percent currently. The discount rate has average price appreciation unexpectedly came to been cut to 3 percent—a twenty-nine-year low. a virtual standstill, and prices fell substantially in Despite the cumulative size of these steps, the some regions. Firms that had been subject to economic recovery to date has nonetheless been leveraged buyouts based on overly optimistic very hesitant. Based on experience over the past assumptions about the future values at which three or four decades, most forecasters would assets could be sold began to encounter debthave predicted that a reduction of the magnitude servicing problems. seen in short-term interest rates, nominal and More generally, disappointing earnings and real, during the past three years would by now downward adjustment in the values of assets brought about reduced net worth positions and worsened debt-repayment burdens. Creditors naturally pulled back from making risky loans 1. See "Monetary Policy Report to the Congress," in this and investments, and as pressures mounted on issue. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

674 Federal Reserve Bulletin • September 1992 lenders' earnings and capital, some features of a disposable personal income have retraced about "credit crunch" appeared. As borrowers them- one-half of the runup that occurred during the selves became more cautious about taking on previous expansion, and further progress apmore debt, as well as about spending, credit pears in train. Similarly, nonfinancial corporaflows to nonfederal sectors diminished apprecia- tions' gross interest payments as a percent of bly. cash flow are estimated to have retraced much of It is not that this process was unforeseeable in the increase of roughly 10 percentage points that the latter years of the 1980s. The sharp increase occurred in the expansion. The improvements in in debt and the unprecedented liquidation of balance sheets, together with the beneficial efcorporate equity clearly were unsustainable and fects of lower interest rates, have been reflected would eventually require a period of adjustment. in reduced delinquencies on consumer loans and What was unclear was the point at which finan- home mortgages, increased upgradings of firms' cial problems would begin to constrain spending debt ratings, and narrowed quality spreads on and how strong those constraints would be. corporate securities. Furthermore, lower interest Forecasts of difficulties with debt and strained rates, along with two reductions in reserve rebalance sheets had surfaced from time to time quirements, have appreciably cut the funding over the past decade. But only in recent years did costs of depository lenders, materially improved it become apparent that debt leverage had interest margins, and fostered the replenishment reached its limits, inducing consumers and busi- of depository institution capital. nesses to retrench. Moreover, the degree of Although greatly moderating the potential adretrenchment has turned out to be much greater verse effects of the necessary adjustment process than experience since World War II would have on economic activity, monetary stimulus also has suggested. stretched out the period over which adjustments The successive monetary easings have served will occur. A more drawn-out adjustment of to counter these contractionary forces, fending impaired balance sheets, as we now are experioff the classic "bust" phase that seemed invari- encing, obviously is much preferable to the alterably to follow speculative booms in pre-World native: an adjustment through massive financial War II economic history. During those severe and economic contraction. Yet the ongoing corepisodes, sharp declines in output and income rective process has meant that the economic were associated with a freezing up of credit expansion has been hobbled in part by the conavailability, widespread bankruptcies by borrow- tinued restraint on spending by still overleverers, and closings of newly insolvent financial aged and hence cautious debtors. Balance sheets institutions. Thus, balance sheets were cleansed ultimately will reach comfortable configurations, only through the massive writing off of loans, but even before then we should experience a involving a widespread destruction of creditor quickening pace of economic activity as the grip capital. of debt-burden pressures begins to relax. Last To be sure, elements of this historical process year I characterized this process as the economy have been at work in recent years, but the struggling against a fifty-mile-an-hour headwind. monetary policy stimulus since mid-1989 has Today its speed is decidedly less but still appreforestalled such a severe breakdown. Lower ciable. interest rates have lessened repayment burdens Uncertainty about how far the process of balthrough the refinancing and repricing of out- ance sheet adjustment would have to go and for standing debt and, together with higher stock how long the spending retrenchment of overprices, have facilitated the restructuring of bal- leveraged debtors would continue has been a ance sheets. Indeed, considerable progress in factor in shaping Federal Reserve policy over the this regard has become evident for both house- past few years. This uncertainty has been shared holds and businesses. The much more subdued by many other observers, who, based on past rate of household and business credit expansion experience, were somewhat skeptical about the has reduced the leverage of both sectors. House- strength and persistence of spending restraint by hold debt service payments as a percent of both the private and public sectors and dubious Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 675 about the persistence of disinflationary forces. United States. Fortunately, continued rapid eco- Against that background, more rapid or forceful nomic growth on the part of developing countries, easing actions more than likely would have been whose imports from the United States have grown interpreted by market participants as risking a in relative importance, has prevented a greater resurgence of inflation. That would have led to weakening in the expansion of our exports. higher rather than lower long-term interest rates. As I have indicated many times before this committee, lower long-term rates are crucial in promoting progress toward more stable balance THE U.S. ECONOMIC OUTLOOK sheet structures in support of sustained economic expansion. Clearly in this environment, with conflicting In fact, long-term interest rates have stayed forces of expansion and contraction continuing disturbingly high in the face of sharply lower to vie for supremacy, any projection must be short-term rates. A greater decline in long rates viewed as tenuous. In this context, the central would have encouraged additional restructuring tendencies of the projections of Federal Reserve of business and household balance sheets and Board members and Reserve Bank presidents are fostered stronger spending on business fixed in- given in the Board's report. They project that the vestment goods, housing, and consumer durables. economic expansion is likely to strengthen mod- Bond yields have not come down more primarily erately, to a range of 23A to 3 percent over 1993. because investors have been inordinately worried Such a pace is expected to reduce the unemployabout future inflation risks. Although investors ment rate noticeably over the next year and a seem to exhibit only modest concern over a half. This outlook is supported by several conreemergence of stronger inflation during the next siderations, including the stimulus now in train few years, they apparently fear a resurgence fur- from recent interest rate declines and the progther in the future, to a large extent as a conse- ress being made by borrowers and lenders in quence of expected outsized budget deficits exert- repairing strained balance sheets. Some pent-up ing pressure for monetary accommodation. demand for business capital goods, housing, and Other forces have added to the restraint on the consumer durables should surface as the inceneconomy associated with balance sheet adjust- tives for spending retrenchment abate. ments. The scaling back of defense spending has In our judgment, the interest rate declines to been retarding near-term economic growth. A date, working to offset spending constraints resignificant reallocation of resources is an inevita- lated to balance sheet strains, should not endanble consequence of the phasedown of defense ger the further ebbing of inflationary pressures. spending, involving the redeployment of military Even as the anticipated strengthening of ecopersonnel as well as industrial and technological nomic activity occurs, monetary policy will concapacity into civilian activities. Such shifting of tinue to promote ongoing progress toward the resources away from military production prom- longer-run objective of price stability, which ises a welcome boost to long-run prospects for should lay the foundation for sustained economic the nation's productivity and growth. Nonethe- expansion. The financial fundamentals, such as less, the process of transition involves significant money and credit growth, point to a continuation frictions and lags, and in the meantime the falloff of disinflationary trends, and the central tenof the military budget has represented a drag on dency of our projections for Consumer Price aggregate demand. At the same time, budgetary Index (CPI) inflation next year is 23A to 3*A problems among states and localities have forced percent. If this were realized, inflation would be painful cutbacks by those units and burdensome about back to a pace last seen on a sustained tax increases as well. basis around a quarter century ago. As I often In addition, the noticeable slowdown in eco- have noted to this committee, the most important nomic growth in other major industrial countries contribution the Federal Reserve can make to since mid-1990 has further tended to depress encouraging the highest sustainable growth the demand for goods and services produced in the U.S. economy can deliver over time is to provide Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

676 Federal Reserve Bulletin • September 1992 a backdrop of reasonably stable prices on aver- nonprice lending terms and credit standards apage for business and household decisionmaking. preciably and widening the spread of lending rates relative to costs of funds. Upward pressure on bank loan rates was augmented as investors, RECENT BEHAVIOR OF THE MONETARY concerned about adequate bank capitalization, AGGREGATES raised risk premiums on bank debt and short-term managed liabilities. In addition, regulatory initia- The relationship between money and spending tives, such as stricter capital standards, higher also has been profoundly affected by the process insurance premiums, and more intense superviof balance sheet restructuring. The broad mone- sory scrutiny, raised the cost of depository intertary aggregates, M2 and M3, currently stand mediation. Reserve requirement cuts have reprebelow their annual growth ranges, despite the sented only a partial offset. As intermediation earlier substantial declines in short-term interest costs rose, banks further increased loan spreads rates. My previous testimonies to the Congress and redoubled efforts to securitize loans and othnoted that aberrant monetary behavior emerged erwise constrain expansion in their balance in 1990 and has since intensified. We at the sheets. Federal Reserve have expended a great deal of More recently, the decline in short-term market effort in studying this phenomenon and have rates, combined with the improvement in asset made some progress in understanding it. To quality that was partly associated with the modest summarize our findings to date: The weakness of economic expansion, has considerably boosted the broad monetary aggregates appears impor- bank earnings. Banks also have strengthened their tantly to have reflected the variety of pressures financial condition by improving their liquidity that rechannelled credit flows away from depos- position and by taking steps that should reduce itory institutions, lessening their need to issue noninterest expenses over the long run through monetary liabilities. The public, in the process of restructuring and, in some cases, consolidation. restructuring and deleveraging balance sheets, Several banks—especially large banks—have found that monetary assets had become less conserved capital by reducing dividends. Banks attractive relative to certain nonmonetary finan- have regained access to capital markets and have cial assets or to debt repayment. significantly rebuilt their capital positions. Inter- The reduced depository intermediation mediation costs and pressures to bolster capital, stemmed from emerging problems of asset qual- however, have been further elevated by the ity, which, in turn, prompted both the pulling added restrictions contained in the Federal Deback of depositories from lending and responses posit Insurance Corporation Improvement Act by regulators that reinforced those tendencies. (FDICIA). Partly as a consequence, lending One such response was the shutting down or sale spreads have stayed relatively high, as suggested by a prime rate that is a substantial 23A percentage of insolvent thrift institutions. In the process, poiijjs above the federal funds rate. Recent survey about $90 billion of thrift assets have been taken responses suggest that nonprice terms and lending onto the books of the Resolution Trust Corporastandards, though not tightening further, also tion, where they are funded by government secuhave remained stringent. rities instead of depository liabilities. The managed liabilities of depositories have been most Bank lending has shown few signs of strengthaffected by this shift. However, retail depositors ening, as demands for bank loans have stayed also have been induced to shift into other instru- dormant. The internal cash flows of nonfinancial ments by the abrogation of their original contracts businesses have strengthened, and many firms by acquiring institutions and the consequent dis- have raised substantial funds in equity markets, ruption of their banking relationships. so overall credit demands have been light. Large At banks and solvent thrift institutions as well, firms, especially those with good credit ratings, problems of asset quality, especially for commer- have preferred bond markets over banks as a cial real estate, were mounting as the 1980s came place to borrow. Meanwhile, households, feeling the strain of debt-service burdens, have rechanto a close. Banks reacted by tightening their Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 677 nelled cash flows away from retail deposits to the of this year, and the Federal Reserve has had to repayment of consumer debt at banks and other take the emerging behavior of velocity into aclenders. They were also encouraged to delever- count in deciding how much weight to place on age their balance sheets by the wider spread slow M2 growth in guiding its policy actions. between consumer loan rates and retail deposit rates, which was accentuated on an after-tax basis by the phaseout of the tax deductibility of PROSPECTIVE BEHAVIOR OF THE interest payments on consumer loans. MONETARY AGGREGATES With little need for new funding, banks and thrift institutions have lowered rates on retail time Looking ahead, the recent increases in M2 vedeposits, especially on intermediate- and long- locity may well continue, although the uncertainterm accounts, by more than market rates have ties in this regard are considerable. Returns on declined. Under regulatory pressure, banks also short-term market instruments relative to rates have cut back reliance on, and returns to, bro- on M2 balances have dropped to unprecedented kered deposits. Even on negotiable order of with- lows. Depositories may well reduce liquid dedrawal accounts, savings deposits, and money posit rates further to restore longer-run relationmarket deposit accounts, to which inflows have ships with money market rates. Should this ocstrengthened, returns on the larger accounts— cur, the resulting shifts in assets would reduce likely involving the most interest-sensitive depos- M2 demand without much influencing spending, itors—have dropped much faster than have the further boosting the velocity of this aggregate. most common rates paid. The comparatively high The velocity of M2 also would tend to increase if returns on longer-term debt and equity instru- any pickup in credit availability at banks associments also have drawn household assets out of ated with stronger economic expansion were retail deposits. Bond and stock mutual funds in funded out of their sizable holdings of liquid particular have recorded substantial inflows. securities and newly issued managed liabilities Thus, the weakness in the broader monetary rather than through recourse to retail deposits. aggregates, which has been even more pro- Another significant imponderable involves the nounced this year, can be seen as an aspect of the public's demand for M2 balances. The extent to entire process of rechannelling credit flows away which households will continue to repay or avoid from depositories and of restructuring the public's debt by drawing down M2 balances is difficult to balance sheets. However, the disintermediation foresee with any precision, as one cannot accuand restructuring forces, which have acted pow- rately gauge households' desired leverage posierfully to depress the growth of money, have tions. An early completion of household balance exerted a less powerful constraint on spending; sheet adjustments would help restore incentives that is, slower money growth has not tended to to build liquid money balances, cutting into inshow through percentage point for percentage creases in M2 velocity. Any decline in long-term point to reduce expansion of nominal gross do- market rates could dissuade households from mestic product. Accordingly, these disintermedi- reaching for better returns out the yield curve ation and restructuring forces have tended to beyond M2 maturities and thereby bolster M2 boost the velocity of the broader aggregates. demands even more than it would spending. This Increasing M3 velocity has been evident for some would further offset the tendency for disintermeyears, but the tendency for M2 velocity to rise diation and deleveraging to raise M2 velocity. All was obscured until recent quarters by the oppos- told, predicting either the share of depository intering influence of declines in short-term market mediation in overall credit flows or the share of rates. Lower short rates reduced the potential money in the public's overall demand for financial returns given up by holding liquid M2 balances, assets is currently more difficult than usual. thereby providing support to demands for M2 and Against this background of considerable uncountering the emerging tendency for its velocity certainty about evolving monetary relationships, to increase. But M2 velocity appears to have the committee retained the current ranges for registered an appreciable increase in the first half money and credit growth this year. These growth Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

678 Federal Reserve Bulletin • September 1992 ranges are 2Vi to 6V2 percent for M2, 1 to 5 until such time as additional experience and analpercent for M3, and AVi to 8V2 percent for debt. ysis could be brought to bear on the issue of On a provisional basis, the same ranges also were monetary behavior. In any event, the FOMC will carried over to next year. revisit the issue of its money and credit ranges for If velocities were to show little further in- 1993 no later than its meeting next February. By crease, then growth of the monetary aggregates then more evidence will have accumulated about within these specified ranges for both years evolving monetary relationships. In light of the would be consistent with the achievement of difficulties in predicting velocity, signals connoninflationary economic expansion. The reduc- veyed by monetary data will have to continue to tion in short-term interest rates resulting from be interpreted together with other sources of our recent policy action enhances the odds on information about economic developments. money growing within these ranges. On the other hand, if the unusual velocity increases seen so far this year were to persist over the next six quarters, then growth of M2 and M3 around or even below CONCLUDING REMARKS the lower bounds of their ranges could still be acceptable. I expect that the economic expansion will soon In any case, the current ranges represent a way gain momentum, which lower inflation should station on the road to reasonable price stability. help to maintain. Although the economy still is Even with a return to the traditional secular working its way through structural impediments stability of M2 velocity, the midpoint of the cur- to more vigorous activity, the advances that rent ranges would still be higher than needed to already have been made in this regard augur well support long-run economic growth in the context for the future. Banks and other lenders, having of price stability. And, if velocity increases do, in made considerable strides in rebuilding capital, fact, occur during a transition period to a higher have greater capacity to meet enlarged credit long-run equilibrium level, then ranges somewhat demands. The strengthening of household filower than the current specifications would be nances to date has established a firmer foundawarranted over this interval. But in light of the tion for future consumer outlays. And the reconsiderable uncertainties about nearer-term ve- structuring of business balance sheets so far, locity developments, the Federal Open Market together with improved labor productivity and Committee did not commit itself to new, respeci- profitability, has better positioned producers to fied ranges for M2 or M3 for 1992. Such a respeci- support sustainable output gains. These gains fication would carry the presumption that the new would be even larger if the federal government range was clearly more consistent with broader can make significant progress toward bringing economic objectives, and in view of the uncertain the budget into balance, releasing saving for relationships involved, the FOMC did not wish to productive private investment, and brightening convey that impression. This year's ranges were further the prospects for ongoing advances in carried forward on a provisional basis for 1993 living standards for all Americans. • Chairman Greenspan presented identical testimony before the Subcommittee on Domestic Monetary Policy of the House Committee on Banking, Finance and Urban Affairs, July 22, 1992. Statement by John P. LaWare, Member, Board of I am pleased to have this opportunity to discuss the Governors of the Federal Reserve System, before theF ederal Reserve's supervision of bank lending on Committee on Banking, Finance and Urban Affairs,c ommercial real estate and the international coordina- U.S. House of Representatives, July 30,1992 tion of supervisory efforts, in general. As requested, I Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 679 will also provide an assessment of commercial real To understand conditions today, it is helpful to estate markets throughout the United States and de- consider views commonly held during much of scribe steps we have taken to alert examiners about the 1980s when most of the excess construction potential risks. occurred. Over that period, contractors and lend- In brief, conditions within the U.S. banking system ers alike seemed to believe that nearly all real generally appear to be improving and, for some insti- estate projects would prove profitable, for a long tutions, to be improving in significant ways. This time. That view was supported by experiences in progress flows from several sources, including a gen- which properties were generally worth more by eral stabilizing of commercial real estate markets, the time they were completed than all the costs albeit at a relatively depressed level in all too many included in their construction. Even banks that cases. Nevertheless, problem real estate credits re- held problem real estate investment trust (REIT) main a principal concern to major bank lenders loans in the mid-1970s had seen those problems throughout the United States and also, of course, to largely disappear as rising inflation rates gave the supervisory agencies. It is important to leam from real estate values a boost. Although inflation past events, and steps are being taken by both banks rates had declined since then, many developers and the agencies to prevent the recurrence of problems and lenders still felt that real estate values would of the scope we have experienced in recent years. continue to increase. These expectations, as well as favorable tax treatment accorded by 1982 legislation and the general ebullience of the economy, encouraged IMPORTANCE OF COMMERCIAL many builders to expand their activities. At the REAL ESTATE LENDING same time, thrift institutions looking for added revenues to offset other problems, banks experi- Although real estate lending has always been encing a loss of customers to other lenders and to important to U.S. commercial banks, it became the open market, and foreign banks seeking to even more critical to the industry during the past expand their presence in the United States, all decade, as all loans secured by real estate in- decided to lend aggressively in the real estate creased from 14.5 percent of total commercial sector. bank assets at the end of 1980 to nearly one- A principal result of this intense competition quarter of the industry's assets at the end of was that many institutions liberalized their terms 1991. Currently, loans secured by real estate of lending. In particular, they became more willrepresent the largest asset class held by banks ing to finance land acquisition and construction today and at $850 billion exceed the volume of projects and also to provide so-called "minicommercial and industrial loans by more than perm" loans to carry projects several years be- $330 billion. In absolute terms, real estate loans yond construction. That financing allowed develhave accounted for more than one-half of the opers and other real estate borrowers to industry's loan growth since 1980. undertake projects without the permanent take- This growth in real estate lending includes out financing traditionally provided by long-term substantial increases in home mortgages as well investors. During their first few years of operaas commercial real estate loans, but it is the tion the projects were to become fully, or at least latter, of course, that has mainly presented the mostly, leased and permanent financing obproblems to the banking industry. Commercial tained. Clearly, though, as commercial real esreal estate lending has also been the fastest tate markets deteriorated in the face of excessive growing real estate segment, as loans outstanding capacity, many properties failed to lease up, and nearly quadrupled during the 1980s. This lending, relatively few long-term lenders have stepped combined with that provided by thrift institu- forward. Thus, banks have been unable to extritions, fueled a dramatic expansion in commercial cate themselves from many of these credits. real estate building nationwide that has left mar- As the committee knows, the resulting expokets in most cities throughout the United States sure from mini-perms and from other commercial significantly overbuilt. real estate lending has placed substantial stress Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

680 Federal Reserve Bulletin • September 1992 on the banking industry, has been a main con- mentation. Besides determining whether the poltributor to the failure of several large banking icies and stated procedures are adequate, our institutions, and has led to the merger or acqui- examiners also undertake to confirm that the sition of others. At the end of March 1992, U.S. policies are being followed by reviewing loan commercial banks held more than $26 billion of portfolios and credit files. nonperforming commercial real estate loans and Traditionally, in assessing individual loans and another $21 billion of foreclosed commercial loan portfolios, examiners have been advised to properties. These high levels remain despite the consider the borrower's fundamental ability to large charge-offs the industry has taken in recent meet his or her obligations and to not place years. The main positive note is that the increase undue reliance on the collateral value of a loan. in problem real estate loans has slowed sharply Therefore, if the collateral's value declines but from the explosive pace of 1990 and, even includ- other factors remain sound, a loan is not autoing foreclosed assets, has virtually stopped since matically classified or criticized. The wisdom of the middle of last year. that approach has been demonstrated by recent experience, as the value of many commercial real estate properties declined below previously ap- SUPERVISORY PROCEDURES FOR praised values. Nevertheless, when a credit does REAL ESTATE CREDITS become troubled and the borrower is unable to meet an obligation, the role of the collateral With that background, I would like to discuss the increases in importance. It is critical, therefore, Federal Reserve's procedures for reviewing real that banks have sound appraisal policies and estate loans and for assessing the lending activi- standards in place. ties of state member banks. These procedures There are several ways to estimate a properare contained in our Commercial Bank Examina- ty's value that are accepted by appraisers, banktion Manual and in other supplementary docu- ers, and the regulatory agencies. They typically ments that provide guidance on the supervision consider a variety of factors, including the hisof real estate lending that the Federal Reserve torical cost less appropriate depreciation, the has followed for many years. current market comparisons, and the capitalized An assessment of real estate lending activities value of revenues that the property is reasonably rests heavily on the payment performance of expected to provide. When appraisals are coneach borrower, the value of the collateral sup- sidered to be out of date or otherwise deficient, porting individual loans, and a review of the examiners replace inaccurate or outdated asbank's own operating policies and procedures. sumptions and generally follow procedures sim- Examiners also determine whether the bank has ilar to those used in the appraisals. Because complied with applicable laws and regulations commercial real estate loans of banks are often and whether its portfolio is consistent with gen- made on relatively new properties, examiners eral principles of diversity. When weaknesses generally consider estimated stabilized income are found, examiners are instructed to ensure streams when making their assessments. They that corrective measures are adopted. also look for indications of troubled loans such as Lending policies are reviewed to see that they rent concessions, declining market prices, or are well documented and complete and that they payment problems. Consideration is also given to cover relevant aspects of a sound lending activ- the unique characteristics of real estate properity. Examiners also consider the following: ties, which can be either beneficial or harmful to whether, for example, policies define the geo- their underlying value. graphic limits within which the bank will lend; After their review, examiners assign a specific the types of properties acceptable to the bank; rating to each problem loan. Those loans rated the required internal authorizations; the type and substandard are likely to produce losses to the frequency of information to be required from the lender unless deficiencies are corrected. Doubtborrower and the appraiser; the maximum ac- ful loans are those for which collection in full is ceptable exposures; and the standards for docu- highly questionable and improbable, while assets Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 681 rated loss are considered uncollectible and not Examiners did not insist on conservative pracappropriate to report as bankable assets. Besides tices as much as they should have. But in boom assigning ratings, examiners should attempt to times, it is hard to argue with success. determine the amount of a loan that should It is important to emphasize, in this connecproperly be charged off or reserved and then tion, that examiners do not dictate that bankers classify the remainder, as appropriate. extend, or not extend, credit in specific cases. Not yet mentioned are other possible supervi- That responsibility properly belongs to the sory standards for real estate lending that have banker. The examiner, rather, should review been recently proposed as a result of require- procedures for safety and soundness and help ments of the Federal Deposit Insurance Corpo- ensure that the bank's financial statements rearation Improvement Act (FDICIA). Earlier in sonably reflect the condition of the bank. Pro- July the Board issued for public comment its vided bank policies and procedures are reasonproposal regarding section 304 of FDICIA, a able, appraisals appear sound, and the credit is section that requires the agencies to adopt uni- performing as agreed, it is difficult and inapproform regulations prescribing standards for real priate for examiners to criticize loans or to estate lending. If the proposal were adopted, it override the banker's judgment about the outwould reimpose a concept of regulatory maxi- look for future market conditions. mum loan-to-value (LTV) ratios for real estate However, as asset quality deteriorates and it lending that was repealed for national banks by becomes clear that conditions have changed and the Congress in the early 1980s. that management's strategy has not worked as Tentatively, the ratios would serve as guide- planned, the bank's activities may begin to lines for a variety of different types of real estate threaten the safety net. At that point, the examloans. Under one alternative method, lenders iner and other supervisors obviously have a more would individually establish LTV ratio limits important voice in the approach management within or below a range of supervisory limits takes in resolving its problems, and they more prescribed in uniform regulations and subject to forcefully impose their views. Corrective measupervisory review. The low end of the range sures required of the bank may take several would be considered as a benchmark ratio for forms, including capital plans, restrictions on that category of loan. Institutions would be able lending, and the development of stronger credit to select a higher maximum ratio (within the standards. If necessary, supervisory demands specified range) on the basis of demonstrated can be backed by cease-and-desist orders and expertise in that particular type of lending and can involve the removal of key officers and other factors. Under the second alternative, the directors and, ultimately, seizure of the bank. agencies would prescribe maximum LTV ratio standards in their regulations that institutions could not exceed. RECENT INITIATIVES Several exemptions to these standards are proposed, such as loans guaranteed or insured by Concerns about excessive tightening of credit the U.S. government, and a provision allows for standards by many banks and the inability of a limited amount of nonconforming loans. The apparently creditworthy borrowers to obtain or agencies are also considering exemptions for renew bank financing in the wake of examiner loans to organizations or projects promoting the criticisms of commercial real estate credits led economic rehabilitation and development of low- the agencies to undertake an extensive review of income areas. The final details of the standard their examination practices throughout much of will depend upon the comments received and any last year. In recognition that banks had shifted further agency reviews. Uniform regulations are markedly in their willingness to lend, the agenrequired to be adopted by March 1993. cies undertook special efforts to coordinate and In hindsight, more stringent standards and clarify their supervisory policies. more vigorous supervision might have helped Much of the reduced willingness to lend was prevent many of the problems we have seen. understandable given weak economic conditions, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

682 Federal Reserve Bulletin • September 1992 the level of excess capacity in commercial real the importance of balance. Examiners were not estate markets, and the asset-quality problems of to overlook problems, but neither were they to many banks. Moreover, some strengthening of assume that weak or illiquid markets would recredit standards was needed in much of the main that way indefinitely when they evaluated industry, and those changes would necessarily commercial real estate credits. affect the lending policies of many banks. Nev- I would stress that the regulatory agencies ertheless, the agencies felt that banks might be took great care to indicate that these initiatives tightening unduly because of concerns about did not represent an exercise in forbearance. supervisory actions. We wanted to ensure that Indeed, they were compatible with the longbanks did not misunderstand our supervisory standing supervisory procedures described earpolicies or believe that examiners would auto- lier. matically criticize all new loans to troubled industries or borrowers. Accordingly, building on earlier initiatives, in INTERNATIONAL COORDINATION March 1991 the agencies issued a joint statement to address this matter. That statement sought to The committee also asked about efforts to coorencourage banks to lend to sound borrowers and dinate bank supervision on an international bato work constructively with borrowers experi- sis, so I will offer a few remarks on that topic. As encing temporary financial difficulties, provided you know, the Basle Committee on Banking they did so in a manner consistent with safe and Supervision was established as a permanent sound banking practices. The statement also body by the governors of the Bank for Internaindicated that failing to loan to sound borrowers tional Settlements to provide a forum for excan frustrate bank efforts to improve the quality changing views and information on bank superand diversity of their loan portfolios. Undercap- visory matters. It is currently chaired by E. italized institutions and those with real estate or Gerald Corrigan, President of the Federal Reother asset concentrations were expected to sub- serve Bank of New York. mit plans to improve their positions, but they Regular meetings of the committee include a could continue sound lending activities provided "tour de table," during which representatives the lending was consistent with programs that from all nations comment on areas of concern. addressed their underlying problems. When appropriate, topics would include com- At other times during the year, and particularly mercial real estate markets and overall bank in early November, the agencies expanded on exposure to that market in nations experiencing a that March statement and issued further guid- problem with commercial real estate. During ance regarding the review and classification of these meetings, ample opportunity also exists for commercial real estate loans. The intent was to an informal exchange of views, experiences, and ensure that examiners reviewed loans in a con- problems and for open and frank discussions. sistent, prudent, and balanced fashion. This sec- In the vast majority of cases, credit problems ond statement emphasized that evaluation of real in the commercial real estate industry tend to be estate loans should be based not only on the uniquely national in nature, but when they are liquidation value of collateral, but also on a not, informal conversations are held with other review of the borrower's willingness and ability regulators. This is particularly true when foreign to repay and on the income-producing capacity branches and subsidiaries of U.S. banks have of the properties. significant exposures in foreign markets that are Finally, in December, to ensure that these experiencing problems in a particular sector such policies were properly understood by examiners as commercial real estate. One example would be and to promote uniformity, the agencies held a the situation in Australia several years ago when joint meeting in Baltimore of senior examiners commercial real estate problems there had a from throughout the United States in one more major effect on the asset quality of several U.S. effort to achieve the objectives just described. bank holding companies with a banking presence Once again, the principal message was to convey in Australia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 683 From time to time, a major cross-border prob- OLYMPIA AND YORK lem will arise, the most recent and most serious one being the credit and liquidity problems of One of the largest and most recent commercial Olympia and York Developments Ltd. In that real estate problems involves the Olympia and particular situation, extensive and informal dis- York (O&Y) group, which has substantial propcussions were held with central banks and super- erties in Canada, the United States, and the visory authorities in the United Kingdom and United Kingdom. As the committee may know, Canada, as well as with major creditor banks in in late May, the company sought bankruptcy the United States. Finally, a discussion was held protection in the British courts for Canary at the April meeting of the G-10 central bank Wharf, after similar filings earlier in the month governors at the Bank for International Settle- for its Canadian companies. O&Y's U.S. compaments. This meeting occurred just after the initial nies have not sought bankruptcy, and the parent intensive press coverage of the Olympia and has stated publicly that it has not planned any York situation. Chairman Greenspan and Secre- filings for them. tary Brady were kept apprised of major develop- The bulk of O&Y loans appears to be financed ments as they occurred. primarily by foreign banks, insurance companies, and public debt holders. Although some U.S. banks—a half dozen or so—also have sizable claims on O&Y, their exposures constitute a ASSESSMENT OF U.S. REAL ESTATE relatively small share of overall O&Y debt and MARKETS do not appear to be unmanagable or to pose a threat to the lending institutions. Loans to Ca- As I noted in my opening comments, the worst nary Wharf, in turn, are a small portion of U.S. seems to be behind us in terms of declining bank claims on O&Y. commercial real estate markets in most sections Although O&Y is not a major problem in itself of the United States, but only because the de- for any U.S. bank, the conditions that produced cline has stopped or at least slowed markedly. problems for the company continue to depress There remains little real improvement to be seen real estate markets and are made worse by the in any major market nationwide, and conditions weakness of this exceptionally large developer. in southern California continue to be a concern. That broader issue, which is the principal focus Basically, the volume of excess real estate ca- of these hearings, is the more serious concern. pacity will take years for the nation to absorb and for the banking industry to overcome. That said, the industry's performance during recent quar- RECENT EXAMINER ADVICE ters offers encouragement that banks will generate sufficient revenues to resolve their problems As I have indicated, examiners have received a more quickly than many have believed. significant amount of guidance from the agencies Although the initial and, we hope, worst reval- during the past year or so about the assessment uation phase appears to be over, further write- of commercial real estate loans and about condidowns undoubtedly lie ahead. Metropolitan of- tions in that market. In addition, their recent fice vacancy rates, which reflect both downtown personal experiences evaluating these loans have and suburban experiences, remain about 19 per- sensitized them to the risks in this area, not only cent nationwide, about where they have been for in the United States but also in other nations several years. Some communities, such as Dal- where real estate values have declined. las, Fort Lauderdale, and Stamford, have va- Beyond statements already described, the cancy rates exceeding 25 percent. Such condi- Federal Reserve has, through various Federal tions will continue to place pressure on Reserve System meetings, discussed risks in commercial real estate values and to dampen other aspects of the economy and bank lending. earnings of some banks for at least the near These discussions occur at meetings of memfuture. bers of the Board and Reserve Bank presidents, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

684 Federal Reserve Bulletin • September 1992 at various conferences, and at seminars of and the bank supervisory agencies must learn senior examiners and other supervisory offi- from this experience, from a regulatory perspeccials, during weekly conference calls involving tive, solutions may be difficult to find. the heads of supervision at the Board and at FDICIA contains numerous provisions that each Reserve Bank, and through other internal urge bankers to take greater care, including those activities. involving prompt corrective action, and regula- The Federal Financial Institutions Examina- tors have had more responsibilities handed to tion Council also provides a forum for discussing them. Requirements such as annual examinasupervisory issues and for developing advisories tions should help supervisors identify problems or policy statements for bankers and bank exam- earlier and hold down the FDIC's costs. We must iners on an interagency basis. One statement be careful, however, in turning constantly to issued early this year dealt with investment prac- barriers, prohibitions, and controls when sometices of banks, especially those involving instru- thing goes wrong. Too many restrictions will ments whose values were exceptionally sensitive unduly restrain risk-taking and curtail economic to changing interest rates. In short, this state- growth. We cannot have examiners making dement defines such "high risk" instruments and cisions that are the responsibility of bankers in requires depository institutions that hold them to our private enterprise system. be able to demonstrate clearly that they serve to Although many changes were needed, the reduce the overall exposure of their investments Congress should consider the more fundamental to market rate changes. causes of the problems and not address merely the unwanted symptoms we see. Times have changed, and banking laws need to change, too. CONCLUSION U.S. banks must have the legal authority to manage their businesses efficiently and to pursue In closing, the outlook for domestic commercial opportunities that arise. Without the ability to real estate markets and for most of their major branch interstate and to expand into related bank lenders is more encouraging now than it financial businesses, I fear that many U.S. banks was a year ago. The excess capacity in the will continue to operate under profit pressures, a commercial sector of the market, however, will situation not conducive to a healthy banking take years to absorb. Although both the industry system. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

685 Announcements CHANGE IN THE DISCOUNT RATE Nine new members will be selected from the nominations to serve three-year terms that will The Federal Reserve Board approved on July 2, begin in January 1993. The Board expects to 1992, a reduction in the discount rate from V-h per- announce the selection of new members by yearcent to 3 percent, effective immediately. end 1992. Action was taken in light of sustained weakness Nominations should be submitted in writing and in credit and money growth, continued movement should include the address and telephone number toward price stability, and the uneven progress of of the nominee. In addition, information about past the economic recovery. and present positions held, and special knowledge, In making the change, the Board voted on a interests, or experience related to consumer credit recommendation submitted by the board of direc- or other consumer financial services should be tors of the Federal Reserve Bank of Chicago. The included. Board subsequently approved similar actions by The written nominations must be received by the boards of directors of the Federal Reserve August 30, 1992, and should be addressed to Banks of Boston, New York, Philadelphia, Rich- Dolores S. Smith, Assistant Director, Division of mond, Atlanta, Minneapolis, Kansas City, Dallas, Consumer and Community Affairs, Board of Govand San Francisco, effective July 2; by the board of ernors of the Federal Reserve System, Washington, directors of the Federal Reserve Bank of Cleve- DC 20551. Information about nominees will be land, effective July 6; and by the board of directors available for inspection on request. of the Federal Reserve Bank of St. Louis, effective July 7. REPORT ISSUED BY THE BASLE COMMITTEE ON BANKING SUPERVISION NOMINATIONS SOUGHT FOR APPOINTMENTS TO THE CONSUMER ADVISORY COUNCIL The Basle Committee on Banking Supervision has The Federal Reserve Board announced on July 7, released a report that sets out proposed minimum 1992, that it is seeking nominations of qualified standards for the supervision of international bankindividuals for nine appointments to its Consumer ing groups and their cross-border establishments. Advisory Council, to replace members whose terms The report is the result of a review of the Basle expire on December 31, 1992. Concordat and international supervisory practices The Consumer Advisory Council comprises in light of several recent developments, including thirty representatives of consumer and community the BCCI affair and the events in the Atlanta branch interests and of the financial services industry. The of Banca Nazionale del Lavoro. council was established by the Congress in 1976, The Basle Committee concluded that the princiat the suggestion of the Board, to advise the Board ples contained in the Basle Concordat and its supon the exercise of its responsibilities under the plement of 1990 remain valid but that greater Consumer Credit Protection Act and on other mat- efforts are needed to ensure that these principles ters on which the Board seeks its advice. The are applied in practice. Accordingly, certain of council by law represents the interests both of these principles have been reformulated as miniconsumers and of the financial community. The mum standards, which supervisory authorities from group meets in Washington, D.C., three times a the Group of Ten (G-10) countries expect each year. other to observe. Supervisors from non-G-10 coun- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

686 Federal Reserve Bulletin • September 1992 tries are also being encouraged to endorse these ately, but compliance is optional until October 1, standards. 1993. The minimum standards, while permitting flexi- While the Board requested public comment on bility to account for the differing legal and struc- rules that set forth the way creditors disclose distural circumstances in different countries, seek to counted initial rates and certain payment examples ensure that no international bank will be able to for home equity lines, no changes were adopted to operate in the future without being subject to effec- these rules. tive consolidated supervision. The federal banking agencies welcome these standards and are committed to their implementa- PROPOSED ACTIONS tion. The standards reinforce the approaches presently being taken in the United States and are fully The Federal Reserve Board requested on July 14, consistent with goals of the Foreign Bank Super- 1992, public comment on proposed uniform real vision Enhancement Act. estate lending standards to implement section 304 of the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA). Comments should be received by August 31, 1992. AMENDMENTS TO REGULATION Y APPROVED The Federal Reserve Board on July 14, 1992, also requested public comment on proposals to The Federal Reserve Board announced on July 2, implement interbank liability provisions under sec- 1992, approval of amendments to Regulation Y tion 308 of the FDICIA. Comments should be (Bank Holding Companies and Change in Bank received by September 16, 1992. Control) that streamline certain procedural require- The Federal Reserve Board on July 15, 1992, ments to reduce unnecessary regulatory burden. requested public comment on an interagency The amendments, which are effective immediadvance notice of proposed rulemaking under secately, will accomplish the following: tion 132 of the FDICIA. Comments should be received by September 14, 1992. • Increase the size of nonbank companies that The Federal Reserve Board on July 30, 1992, can be acquired by bank holding companies under requested public comment on an interagency adthe fifteen-day expedited notice procedures vance notice of proposed rulemaking on revising • Increase the relative size of nonbank assets risk-based capital standards as prescribed by secthat can be acquired by bank holding companies in tion 305 of FDICIA. Comments should be received the ordinary course of business without prior Sysby October 5, 1992. tem approval The Federal Reserve Board requested public • Describe the criteria for determining when an comment on July 23, 1992, on alternative methods application pursuant to Section 3 of the Bank Holdto adjust the 10 percent revenue test limiting ineliing Company Act may be waived in connection gible securities activities of section 20 subsidiaries with certain bank mergers. of bank holding companies. Comment is requested by August 27, 1992. ADOPTION OF FINAL RULE REGARDING HOME EQUITY DISCLOSURES PUBLICATION OF REVISED LISTS OF MARGINABLE OTC STOCKS AND OF The Federal Reserve Board announced on July 31, FOREIGN MARGIN STOCKS 1992, the adoption of a final rule regarding home equity disclosures that affects the Board's Regula- The Federal Reserve Board published on July 24, tion Z (Truth in Lending). 1992, a revised List of Marginable OTC Stocks The final rule resolves a conflict between the (OTC List) for over-the-counter (OTC) stocks that home equity rules and laws dealing with loans to are subject to its margin regulations. It also pubexecutive officers. This rule is effective immedi- lished the List of Foreign Margin Stocks (Foreign Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 687 List) for foreign equity securities that are subject to volume, and complexity of the Federal Reserve's Regulation T (Credit by Brokers and Dealers). The supervisory activities and responsibilities. Five new Lists are effective August 10, 1992, and supersede programs will be established within the new orgathe previous lists that were effective May 11, 1992. nization structure: (1) Special Investigations and The Foreign List indicates those foreign equity Examinations, (2) International Regulatory and securities that are eligible for margin treatment at Examination Policy, (3) Regulatory Reporting and broker-dealers. There were no new additions, dele- Accounting Issues, (4) Supervisory Reviews and tions, or changes to the Foreign List, which con- Evaluations, and (5) National Information Center. tains 300 securities. As a result of the restructuring, the Board The changes that have been made to the revised announced on July 9, 1992, the following promo- OTC List, which now contains 3,071 OTC stocks, tions and appointments: are as follows: Herbert A. Biern, Roger T. Cole, and James I. • One hundred fifty-eight stocks have been Garner were promoted to the position of Deputy included for the first time, 136 under National Associate Director; Howard A. Amer, Gerald A. Market System (NMS) designation Edwards, Jr., James V. Houpt, Jack P. Jennings, • Twenty-six stocks previously on the list have Rhoger H Pugh, and Molly S. Wassom were apbeen removed for substantially failing to meet the pointed to the position of Assistant Director; and requirements for continued listing Frederick M. Struble was transferred from the posi- • Thirty-three stocks have been removed for tion of Associate Director for Planning and Adminreasons such as listing on a national securities istration to Associate Director for Policy. Laura M. exchange or involvement in an acquisition. Homer, formerly Securities Credit Officer, became Assistant Director. The OTC List is published by the Board for the Mr. Amer joined the Board's staff in July 1977 information of lenders and the general public. It as a Review Examiner in the Financial Institutions includes all OTC securities designated by the Board Supervision Section. Before joining the Board's pursuant to its established criteria as well as all staff, Mr. Amer was, from 1972 through 1977, a OTC stocks designated as NMS securities for Bank Holding Company Analyst for the Federal which transaction reports are required to be made Reserve Bank of Boston. Mr. Amer holds a B.S. pursuant to an effective transaction reporting plan. from City College of New York and an M.B.A. Additional OTC securities may be designated as from Northeastern University. NMS securities in the interim between the Board's Mr. Edwards joined the Board in 1979 as a quarterly publications and will be immediately Co-op Education Student assigned to the Office of marginable. The next publication of the Board's the Staff Director for Management. Mr. Edwards is list is scheduled for October 1992. a certified public accountant and holds a B.B.A. in Besides NMS-designated securities, the Board accounting from Howard University and an M.B.A. will continue to monitor the market activity of from the University of Maryland. other OTC stocks to determine which stocks meet Mr. Houpt joined the Division's staff in August the requirements for inclusion and continued inclu- 1975 as a Foreign Banking Analyst. In January sion on the OTC List. 1989, he became Manager of the Financial Analysis Section. He holds a B.S. from Indiana State University and an M.B.A. from George Washington University. CHANGES IN BOARD STAFF Mr. Jennings joined the Board in December 1988 The Board of Governors has approved the restruc- as a Supervisory Financial Analyst assigned to the turing of the Division of Banking Supervision and Special Examinations Response Section. Before Regulation. The new alignment is designed to meet joining the Board's staff, he was a Senior Bank the increased responsibilities associated with the Examiner at the Federal Reserve Bank of Richpassage of recent banking reform legislation, as mond. Mr. Jennings holds a B.A. from the Univerwell as other changes that have expanded the scope, sity of Virginia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

688 Federal Reserve Bulletin • September 1992 Mr. Pugh joined the Board's staff as a Coordina- Jack Dennis, formerly Assistant Director for Systor, State Liaison Activities, for the Federal Finan- tem Automation Planning and Capacity Managecial Institutions Council in October 1982. Before ment and System Communications and EDP joining the Board's staff, he was a National Bank Review, will become the Assistant Director for Examiner for the Controller of the Currency. Mr. Financial Examinations and Audit Review. Pugh holds a B.S. from the University of Southern Louise L. Roseman, formerly responsible for the California. ACH and Check sections, will assume responsibil- Ms. Wassom joined the Board's staff in May ity as Assistant Director for the System Automa- 1983 as a Program-Budget Analyst in the Board's tion Planning and Capacity Management (Automa- Office of the Controller. After transferring to the tion), System Communications Planning and EDP Division of Banking Supervision and Regulation, Review (Communications), and Building Planning she became a manager in 1988. Ms. Wassom holds programs. a B.A. from the University of Texas and an M.B.A. Florence M. Young, formerly responsible for the from the University of Utah. Payment System Risk and Net Settlement program, will be Assistant Director for the ACH and Check The Board of Governors has also approved the programs. restructuring of the Division of Reserve Bank Earl G. Hamilton, who will retain his current Operations and Payment Systems. As a result of responsibilities as Assistant Director for the the restructuring, the Board announced on July 24, Accounting and Federal Reserve Bank Budget, 1992, the following official staff reassignments: Expense and Revenue programs, will also assume responsibility for the Protection program. Bruce J. Summers, formerly Deputy Director for Jeffrey C. Marquardt will continue as Assistant Payments and Automation, will become Senior Director for the Payment System Studies program, Adviser. and he will also assume the responsibility for the John H. Parrish, formerly Assistant Director for Payment System Risk and Net Settlement program. the Financial Examinations program, will assume Charles W. Bennett will continue as Assistant responsibility for the new Fedwire Section as Director for the Cash and Fiscal Agency/Definitive Assistant Director. (FA/DEF) programs. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

689 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON MAY 19, 1992 continued to rise in April but was still well below its pre-recession high. Retail sales rebounded in April after a sizable 1. Domestic Policy Directive decline in March; for the two months combined, retail spending was little changed following strong The information reviewed at this meeting was gains in the first two months of the year. Purchases mixed, but it suggested on balance that economic of nondurable goods, particularly general merchanactivity was expanding at a moderate pace. Retail dise items, were down on balance for the Marchspending and homebuying apparently had softened April period, while spending for durable goods after sharp gains early in the year, but recent data rose further. Single-family housing starts fell conon contracts and orders pointed toward some firm- siderably for a second month in April. The declines ing in business capital spending. Industrial produc- followed sizable increases earlier in the year that tion and employment had firmed in recent months. appeared to have reflected lower mortgage rates, Incoming data on prices and labor costs suggested unusually warm winter weather, and the prospect little change from recent trends. of a tax credit for first-time homebuyers. Starts in Total nonfarm payroll employment continued to the multifamily sector in April reversed the jump increase in April, with more than half of the job in March. Vacancy rates for multifamily units gains occurring in service industries, notably in remained at historically high levels. health and business services. In addition, employ- Business fixed investment apparently firmed in ment in retail trade establishments registered a the first quarter after declining moderately over the relatively strong rise, the number of manufacturing preceding several quarters. Shipments of nonjobs increased for a third straight month, and state defense capital goods rose somewhat further in the and local governments added more workers. By first quarter, largely as a result of continued growth contrast, construction employment was down in outlays for office and computing equipment. slightly in April and had changed little on balance Recent data on orders pointed to a pickup in busisince the beginning of the year. The civilian unem- ness spending for a broad range of industrial equipployment rate edged down to 7.2 percent in April, ment over coming months. Nonresidential conand initial claims for unemployment insurance fell struction activity contracted less rapidly in the first somewhat further. quarter. While outlays for office buildings contin- Industrial production rose appreciably further in ued to plummet in response to the substantial over- April, and in the three months ending with that hang of unoccupied space, spending for other commonth, industrial output retraced most of the de- mercial buildings declined more slowly, and cline that had occurred between October and Janu- construction of industrial and public utility strucary. The April advance reflected in part some fur- tures increased. Recent information on building ther recovery in motor vehicle assemblies as well permits and contracts suggested some further slowas another solid gain in the production of industrial ing of the decline in nonresidential construction. equipment, especially office and computing equip- Business inventories increased considerably in ment. Output of construction supplies also March after changing little in February. At the advanced more rapidly, and the production of retail level, about half of the rise in March was in consumer goods other than automobiles increased stocks at automobile dealers. For other retailers, the slightly further. Total industrial capacity utilization buildup of stocks reversed most of the drawdowns Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

690 Federal Reserve Bulletin • September 1992 posted in the preceding two months. Inventory-to- might be acceptable or slightly lesser reserve sales ratios rose for most categories of retail stores restraint would be acceptable in the intermeeting but remained well below the elevated levels at the period. The reserve conditions contemplated under end of last year. Manufacturing inventories were this directive were expected to be consistent with essentially unchanged in March from the lower growth of M2 and M3 over the period from March levels that prevailed in January and February. For through June at annual rates of about 3Vi and many industries, stock-to-sales ratios in March 1 Vi percent respectively. were at their lowest levels in more than a decade. Open market operations during the intermeeting By contrast, stocks held by wholesalers increased period initially were directed toward maintaining again in March, and inventory-to-sales ratios were the existing degree of pressure on reserve posilittle changed from the relatively high level at the tions. Prior to mid-April, however, operations were end of last year. adjusted to implement some easing in the degree of The nominal U.S. merchandise trade deficit reserve pressure. This action was taken in light of declined in February, and its average for January- the significant weakness in the broad monetary February was somewhat lower than the average aggregates and of indications that the economic rate in the fourth quarter. Exports for the two- expansion was not as strong as its pace early in the month period were about unchanged from the year and that underlying inflation would continue strong fourth-quarter rate but were considerably to trend lower. The management of reserves was higher than a year earlier. Imports in January and complicated to some extent during this period by February were down from the fourth-quarter rate; the uncertainties associated with the mid-April tax most of the decline was associated with a fall in date. A reduction in reserve requirements on transprices of oil imports. The available data on first- actions deposits from 12 percent to 10 percent quarter economic activity in the major foreign implemented on April 2 had only minor effects on industrial countries were mixed; signs of strength- demands for excess reserves and on volatility in ening activity in Europe were offset by indications money markets. Expected levels of adjustment plus of continued weakness in Japan and Canada. seasonal borrowing were raised in the intermeeting Producer prices of finished goods rose at a period in anticipation of a slight rise in seasonal slightly faster pace in March and April, as energy borrowing. Over the three complete reserve mainteprices partially retraced earlier declines. Excluding nance periods during the intermeeting interval, food and energy, producer prices increased over the adjustment plus seasonal borrowing averaged a March-April period at about the subdued average little more than $100 million. The federal funds monthly rate seen over the twelve months ending rate remained around 4 percent early in the interin April. At the consumer level, prices jumped in meeting period but averaged a little below 33/4 per- March and rose more moderately in April. Prices of cent in the weeks after the easing action. nonfood, non-energy consumer items increased a Most other short-term interest rates fell more little more rapidly on balance in March and April than the federal funds rate. Many market particithan over the twelve-month period ending in April. pants, interpreting incoming data as suggesting that Total hourly compensation for private industry the economic expansion would remain subdued workers advanced in the first quarter at a rate close and that the weakness in the broad monetary aggreto that recorded during the second half of 1991. gates would persist, concluded that some further At its meeting on March 31, 1992, the Commit- easing in policy was likely in the near term. Bond tee adopted a directive that called for maintaining yields also fell, but generally by less than shortthe existing degree of pressure on reserve positions term rates, and they remained above the lows and that included a bias toward possible easing reached around the turn of the year. Changes in during the intermeeting period. Accordingly, the broad indexes of stock prices were mixed over the directive indicated that in the context of the Com- intermeeting period. mittee's long-run objectives for price stability and Questions about the prospects for the economic sustainable economic growth, and giving careful recovery in the United States and the related outconsideration to economic, financial, and monetary look for interest rates affected the value of the developments, slightly greater reserve restraint dollar in foreign exchange markets. On a trade- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 691 weighted basis in terms of the other G-10 curren- ness activity. Although some sectors of the econcies, the dollar remained within a fairly narrow omy remained troubled, reports from many parts of range until late in the period, when growing market the country suggested that economic activity was expectations of a near-term easing in U.S. mone- expanding and that business executives were betary policy exerted downward pressure on its value. coming more confident that a sustained recovery M2 and M3 contracted in March and April. The was under way. Several members noted, however, performance of these aggregates was considerably that in the absence of strong momentum in any weaker than the Committee's expectations at the sector of the economy, the advance was proceeding time of the March meeting. Expansion in transac- at a pace that was well below the typical rate of tions balances, which had accounted for much of growth in the early phases of past cyclical upthe growth in the broader aggregates over previous swings. In such circumstances, a faltering in the months, slowed markedly. Some of the slowdown recovery, such as had occurred in 1991, could not perhaps reflected a reduced need for liquid bal- be ruled out, especially given the financial difficulances to make personal tax payments, which were ties still being experienced by many business firms, unusually weak in April. In addition, some retail consumers, and lending institutions that in turn time deposit funds evidently were shifted into the appeared to be reflected in the continued weakness capital markets in response to the low offering rates in broad measures of money and credit. A differing on these deposits relative to market rates. Through view gave more weight to the recently abnormal April, expansion of M2 was slightly above and that behavior of the velocities of broad money and debt of M3 was slightly below the lower ends of the and the possibility that, once the recovery was ranges established by the Committee for the year. more firmly established, some sectors of the econ- The staff projection prepared for this meeting omy and thus the economy more generally might pointed to a continuing recovery in economic activ- generate more strength than was currently proity. In the near term, expansion in consumer spend- jected. With regard to the outlook for inflation, the ing was expected to be considerably below the recent performance of some key indicators of labor rapid first-quarter pace, and growth in spending on compensation and prices was somewhat disappointresidential construction was likely to moderate in ing. However, members continued to view further response to the earlier backup in mortgage interest progress as likely, given the persisting though rates. On the other hand, stronger orders for nonde- diminishing slack that was projected in labor and fense capital goods portended some pickup in busi- other production resources. ness fixed investment despite the continuing drag Many of the members commented that the variexerted by the persisting, though abating, weakness ous financial constraints on the expansion were in nonresidential construction; in addition, inven- diminishing and that a sounder financial foundation tory liquidation was likely to slow from the first- to support sustained economic recovery was being quarter pace. Over time, some easing of restraints established. Considerable restructuring of balance on credit supplies and the progress achieved in sheets by both business firms and households had restructuring business and household balance been accomplished; these developments together sheets would help set the stage for sustained, mod- with lower interest rates had reduced interest burerate growth in spending. The projection did not dens and had increased the capacity to borrow and incorporate any major new fiscal initiatives at the spend. In the financial sector, banking institutions federal level. The considerable margin of slack in were continuing to work down problem credits in resource utilization, though decreasing, was pro- their loan portfolios and, in the context of growing jected to be associated with appreciable further profits associated with relatively wide interest marslowing in the underlying rate of inflation. gins on loans, were rebuilding their capital posi- In the Committee's discussion, members referred tions. The access of lending institutions to the to the indications that the rate of economic growth capital markets had improved, and there were inhad slowed since earlier in the year, but they inter- creasing indications, not yet reflected in the loan preted the recent statistical and anecdotal informa- data, that banks were seeking lending opportunities tion as consistent on balance with a continuing and more actively in many parts of the country and that relatively broad-based expansion in overall busi- loan demand from small and medium-size busi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

692 Federal Reserve Bulletin • September 1992 nesses was tending to revive. Thus, while banking extended period in many areas as excess capacity institutions remained cautious lenders and their was absorbed. On the positive side, rates of occuloan rates were on the high side in relation to pancy and prices of existing buildings appeared to market rates, members saw some signs that a more be approaching bottom or stabilizing in many areas, accommodating climate was emerging in loan thereby facilitating sales of repossessed property markets. on the books of financiali nstitutions. Other nonres- In their reports on business conditions in various idential construction activity was mixed; oil and parts of the country, members noted that at least gas drilling was still quite weak, but the construcmodest growth seemed to be occurring in most tion of manufacturing and wholesale space was regions, while with some exceptions activity in displaying some strength in various parts of the other areas appeared to be stabilizing after declin- country. Gains in final demand, if sustained, were ing earlier. Business confidence seemed to be expected to foster appreciable further increases in improving, indeed appreciably so in some areas, the production of business equipment. and was described as more optimistic even in sec- Government purchases of goods and services tions of the country that did not appear to be continued to be constrained by budgetary probparticipating thus far in the economic recovery. lems, including the severe financial difficulties of Nonetheless, business concerns about the sustain- many state and local governments, and with ability of the expansion were being reflected in defense spending projected to decline substantially, cautious hiring and investment decisions. On bal- the government sector appeared likely to remain a ance, current business attitudes pointed to continu- negative influence on economic activity over the ing economic expansion, though many business next several quarters. With regard to the outlook executives did not anticipate a robust recovery and for exports, members referred to reports of relathe overall state of confidence appeared to be some- tively strong sales abroad by firms in some parts of what fragile. the country. More generally, prospective growth in Turning to individual sectors of the economy, exports to some key industrial nations could be members observed that the strong growth in con- relatively sluggish if recent economic trends in sumer spending in the early months of the year, those nations were to persist, though exports to a apparently outpacing the expansion in income, number of developing countries appeared to be seemed to have slowed more recently. Nonetheless, rising fairly briskly. At the same time, the recovery improving consumer sentiment against the back- in the domestic economy was likely to foster relaground of reduced debt burdens and strengthening tively rapid growth in imports. On the whole, net employment opportunities pointed to further gains exports were expected to make little or no contriin consumer spending. Over time, such spending bution to the expansion in domestic economic was likely to be associated more closely with activity. developments in labor markets and the related Despite the somewhat disappointing inflation growth in disposable incomes, though the demand news in recent months, the members generally for consumer durables also would respond to viewed a slow downtrend in the rate of inflation as changing conditions in the housing markets. In a plausible outcome for the year ahead. Reports those markets, anecdotal reports from around the from various parts of the country emphasized the country tended to confirm recent data indicating highly competitive markets for many producer some slowing of activity from the pace at the start goods and the inability of many sellers to increase of the year, but conditions varied substantially profit margins or to pass on rising costs through across the nation. Housing activity had tended higher prices. Commodity prices had tended to to display considerable sensitivity to changes in fluctuate in a narrow range and appeared consistent mortgage rates, and the recent declines in the latter with progress toward price stability. Consumer along with gains in consumer confidence were seen resistance to rising prices was described as strong. as likely to encourage some pickup in housing In the context of the relatively limited pressures on demand and residential construction. Nonresiden- production resources associated with the members' tial construction, especially that of office buildings outlook for economic activity and an appropriate and hotels, was expected to remain weak for an monetary policy, the slow process of reducing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 693 inflation was believed likely to continue for some term market assets. In these circumstances, time. satisfactory economic expansion would tend to be In the Committee's discussion of policy for the consistent with weaker growth and a higher velocintermeeting period ahead, all of the members ity of M2 than would be suggested by historical endorsed a proposal to maintain an unchanged relationships. Some members viewed the strength degree of pressure in reserve markets. The mem- of Ml and reserves as indicative of a quite accombers agreed that policy seemed to be appropriately modative monetary policy in recent quarters, and positioned at this point to accommodate sustained they felt that continued rapid expansion in these economic expansion while also encouraging measures could raise questions about the consisprogress toward price stability. tency of current monetary policy with progress In the course of the Committee's discussion, toward price stability. members devoted considerable attention to the The members expressed differing preferences behavior of the monetary aggregates. They ex- with regard to possible adjustments to the degree of pressed varying degrees of concern about the slow reserve pressure during the intermeeting period, growth of M2 and M3 in 1992, including declines but all indicated that they could accept a symmetric in March and April. Some emphasized that the directive. Some preferred such a directive because lagging growth of those aggregates this year was it would tend to underscore their view that the risks occurring after relatively limited expansion over to the expansion and the possible need to adjust the previous year or so. Although the growth rates policy were now fairly evenly balanced in either and velocities of the broader aggregates were sub- direction. In light of the information on the econject to considerable short-run variations and had to omy reviewed at this meeting, they felt that current be evaluated in the context of surrounding eco- monetary policy was likely to remain properly nomic and financial circumstances, average growth positioned to accommodate the Committee's objecover longer periods of time had been quite sub- tives for some time and that any adjustment to dued. Plausible explanations, relating importantly policy should be approached with considerable cauto temporary factors such as the unexpectedly weak tion. In the context of persisting concerns about build-up of balances associated with the April tax inflation, an easing in reserve conditions and lower date, permitted at least some discounting of the short-term interest rates might well fail at this time recent weakness of the broader aggregates, and to induce lower interest rates in long-term debt growth of both M2 and M3 according to a staff markets, though circumstances might change. In analysis was likely to resume at a modest pace over any event, the Committee should keep its options the balance of the second quarter. However, in the open and changing circumstances might warrant a opinion of a number of members, continuing weak- Committee consultation during the weeks ahead. ness in these aggregates could be indicative of an A number of members expressed a preference increase in the downside risks to the expansion and for continuing to bias the directive toward possible would thus be a matter of growing concern. easing during the intermeeting period. In this view, Other members tended to discount to an extent the risks to the expansion appeared to be tilted at the sluggish behavior of the broader aggregates. In least marginally to the downside, and while a this view, a variety of developments that were steady policy course might well prove to be approreflected in the channeling of credit away from priate until the next meeting, these members depository institutions seemed to have altered pre- believed it would be desirable for policy to be vious relationships between M2 and M3 and mea- adjusted fairly promptly should the incoming evisures of spending and income. To an important dence suggest a faltering expansion, especially if degree, current spending was being financed inter- money growth were still lagging. Other members nally or, especially in the case of business firms, by preferred a bias toward possible firming during the raising funds in the capital markets. Moreover, intermeeting period. They believed that a relatively against the background of weak loan demand and stimulative monetary policy was in place and that relatively low deposit offering rates and an unusu- the next move in policy might well need to be to ally steep yield curve, many depositors were shift- the tightening side if, in the context of a strengthening funds from M2 into higher-yielding, longer- ing economy, the Committee was to continue to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

694 Federal Reserve Bulletin • September 1992 pursue its long-run objectives of sustainable eco- The Federal Open Market Committee seeks monetary nomic growth and progress toward price stability. and financial conditions that will foster price stability and promote sustainable growth in output. In furtherance At the conclusion of the Committee's discussion, of these objectives, the Committee at its meeting in all of the members indicated that they favored a February established ranges for growth of M2 and M3 of directive that called for maintaining the existing 2'/2 to 6Vz percent and 1 to 5 percent, respectively, degree of pressure on reserve positions. The mem- measured from the fourth quarter of 1991 to the fourth bers also noted that they preferred or could accept a quarter of 1992. The monitoring range for growth of total domestic nonfinancial debt was set at AVi to directive that did not include a presumption about 8V2 percent for the year. With regard to M3, the Committhe likely direction of any adjustments to policy tee anticipated that the ongoing restructuring of deposiduring the intermeeting period. Accordingly, in the tory institutions would continue to depress the growth of context of the Committee's long-run objectives for this aggregate relative to spending and total credit. The price stability and sustainable economic growth, behavior of the monetary aggregates will continue to be evaluated in the light of progress toward price level and giving careful consideration to economic, stability, movements in their velocities, and developfinancial, and monetary developments, slightly ments in the economy and financial markets. greater or slightly lesser reserve restraint might be In the implementation of policy for the immediate acceptable during the intermeeting period. The future, the Committee seeks to maintain the existing reserve conditions contemplated at this meeting degree of pressure on reserve positions. In the context of were expected to be consistent with growth of M2 the Committee's long-run objectives for price stability and sustainable economic growth, and giving careful and M3 at annual rates of around 2VI percent and consideration to economic, financial, and monetary 1 xh percent respectively over the two-month period developments, slightly greater reserve restraint or from April through June. slightly lesser reserve restraint might be acceptable in At the conclusion of the meeting the following the intermeeting period. The contemplated reserve conditions are expected to be consistent with growth of M2 domestic policy directive was issued to the Federal and M3 over the period from April through June at Reserve Bank of New York: annual rates of about V-h and IV2 percent, respectively. The information reviewed at this meeting suggests on Votes for this action: Messrs. Greenspan, Corrigan, balance that economic activity is expanding at a moder- Angell, Hoenig, Jordan, Melzer, Mullins, Kelley, ate pace. Total nonfarm payroll employment increased LaWare, Lindsey, Ms. Phillips, and Mr. Syron. Votes somewhat in April, and the civilian unemployment rate against this action: None. edged down to 7.2 percent. Industrial production rose appreciably further in April partly reflecting some further recovery in motor vehicle assemblies. A rebound in retail sales in April about offset the decline in March. 2. Authorization for Domestic Single-family housing starts fell considerably for a sec- Open Market Operations ond month in April. Recent data on orders and shipments of nondefense capital goods indicate appreciable increases in outlays for business equipment, and build- The Committee approved a temporary increase of ing contracts point to some slowing of the decline in $2 billion, to a level of $10 billion, in the limit on nonresidential construction. The nominal U.S. merchan- changes between Committee meetings in System dise trade deficit in January-February was somewhat Account holdings of U.S. government and federal below its average rate in the fourth quarter. Incoming agency securities. The increase amended paragraph data on prices and labor costs suggest little change from recent trends. 1(a) of the Authorization for Domestic Open Mar- Most interest rates have fallen since the Committee ket Operations and was effective for the intermeetmeeting on March 31. In foreign exchange markets, the ing period ending with the close of business on trade-weighted value of the dollar in terms of the other July 1, 1992. G-10 currencies declined on balance over the intermeeting period. Votes for this action: Messrs. Greenspan, Corrigan, M2 and M3 contracted in March and April; and Angell, Hoenig, Jordan, Melzer, Mullins, Kelley, expansion in transactions balances, which had accounted LaWare, Lindsey, Ms. Phillips, and Mr. Syron. Votes for much of the growth in the broader aggregates over against this action: None. previous months, slowed markedly. Through April, expansion of M2 was slightly above and that of M3 was slightly below the lower ends of the ranges established The Manager for Domestic Operations advised by the Committee for the year. the Committee that the current leeway of $8 billion Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 695 for changes in System Account holdings might not date a seasonal bulge in currency in circulation, an suffice to meet the potentially large need to add increase in required reserves, and other factors that reserves over the intermeeting period to accommo- might call for substantial reserve additions. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

697 Legal Developments FINAL RULE—AMENDMENT TO REGULATION A 3. Section 201.52 is revised to read as follows: The Board of Governors is amending 12 C.F.R. Part 201, Section 201.52—Extended credit for depository its Regulation A (Extensions of Credit by Federal Reserve institutions. Banks) to reflect its approval of a reduction in the basic discount rate at each Federal Reserve Bank. The Board (a) Seasonal credit. The rate for seasonal credit exhas also amended Regulation A to change the rate for tended to depository institutions under section seasonal credit from a fixed rate to a flexible rate. The 201.3(b)(1) is a flexible rate that takes into account Board acted on requests submitted by the Boards of rates on market sources of funds, but in no case will Directors of the twelve Federal Reserve Banks. the rate charged be less than the rate for short-term The amendments to Regulation A were effective adjustment credit as set out in section 201.51. July 27, 1992. The discount rate changes for short-term adjustment credit and for other extended credit were (b) Other extended credit. The rates for other extended effective on the dates specified in sections 201.51 and credit provided to depository institutions under sus- 201.52(b), respectively. The discount rate changes for tained liquidity pressures or where there are excepseasonal credit were effective January 9,1992. The Board tional circumstances or practices involving a particular of Governors is amending 12 C.F.R. Part 201 as follows: institution under section 201.3(b)(2) are: Part 201—Extensions of Credit by Federal Federal Reserve Bank Rate Effective Reserve Banks Boston 3.0 July 2, 1992 1. The authority citation for 12 C.F.R. Part 201 con- New York 3.0 July 2, 1992 Philadelphia 3.0 July 2, 1992 tinues to read as follows: Cleveland 3.0 July 6, 1992 3.0 July 2, 1992 Authority: Sections 10(a), 10(b), 13, 13a, 14(d) and 19 3.0 July 2, 1992 Chicago 3.0 July 2, 1992 of the Federal Reserve Act (12 U.S.C. 347a, 347b, 343 St. Louis 3.0 July 7, 1992 et seq., 347c, 348 et seq., 357, 374, 374a and 461); and Minneapolis 3.0 July 2, 1992 Kansas City 3.0 July 2, 1992 section 7(b) of the International Banking Act of 1978 Dallas 3.0 July 2, 1992 (12 U.S.C. 347d). San Francisco 3.0 July 2, 1992 2. Section 201.51 is revised to read as follows: These rates apply for the first 30 days of borrowing. For credit outstanding for more than 30 days, a flexible Section 201.51—Short-term adjustment credit rate will be charged that takes into account rates on for depository institutions. market sources of funds, but in no case will the rate charged be less than the rate for short-term adjustment The rates for short-term adjustment credit provided to credit, as set out in section 201.51, plus one-half depository institutions under section 201.3(a) are: percentage point. Where extended credit provided to a particular depository institution is anticipated to be Federal Reserve Bank Rate Effective outstanding for an unusually prolonged period and in relatively large amounts, the 30-day time period may Boston 3.0 July 2, 1992' New York 3.0 July 2, 1992 be shortened. Philadelphia 3.0 July 2, 1992 Cleveland 3.0 July 6, 1992 Richmond 3.0 July 2, 1992 Atlanta 3.0 July 2, 1992 FINAL RULE—AMENDMENT TO REGULATION Y Chicago 3.0 July 2, 1992 St. Louis 3.0 July 7, 1992 Minneapolis 3.0 July 2, 1992 Kansas City 3.0 July 2, 1992 The Board of Governors is amending 12 C.F.R. Part Dallas 3.0 July 2, 1992 225, its Regulation Y (Bank Holding Companies and San Francisco 3.0 July 2, 1992 Change in Bank Control) to provide expressly that a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

698 Federal Reserve Bulletin • September 1992 bank holding company or its nonbank subsidiary may Board of Governors, 468 U.S. 207 (1984); see also act as an agent for customers in the brokerage of Securities Industry Ass'n v. Board of Governors, 821 shares of an investment company advised by the F.2d 810 (D.C. Cir. 1987), cert, denied, 484 U.S. holding company or any of its subsidiaries. In addi- 1005 (1988). Accordingly, the Board believes that a tion, the revision will provide that a bank holding bank holding company or any of its nonbank subsidcompany or its nonbank subsidiary may provide in- iaries that has been authorized by the Board under vestment advice to customers regarding the purchase the Bank Holding Company Act to conduct securities or sale of shares of an investment company advised by brokerage activities (either separately or in combinaa holding company affiliate. In both instances, the tion with investment advisory activities) may act as Board requires certain disclosures to be made to agent, upon the order and for the account of customaddress potential conflicts of interests or adverse ers of the holding company or its nonbank subsideffects. iary, to purchase or sell shares of an investment Effective August 10, 1992, 12 C.F.R. Part 225 is company for which the bank holding company or any amended as follows: of its subsidiaries acts as an investment adviser. In addition, a bank holding company or any of its Part 225—Bank Holding Companies and nonbank subsidiaries that has been authorized by the Change in Bank Control Board under the Bank Holding Company Act to provide investment advice to third parties generally 1. The authority citation for Part 225 continues to read (either separately or in combination with securities as follows: brokerage services) may provide investment advice to customers with respect to the purchase or sale of Authority: 12 U.S.C. 1817(j)(13), 1818, 1831i, shares of an investment company for which the 1843(c)(8), 1844(b), 3106, 3108, 3907, 3909, 3310, and holding company or any of its subsidiaries acts as an 3331-3351. investment adviser. In the event that a bank holding company or any of its nonbank subsidiaries provides 2. In section 225.125, paragraph (h) is revised to read brokerage or investment advisory services (either as follows: separately or in combination) to customers in the situations described above, at the time the service is Section 225.125—Investment adviser activities. provided the bank holding company should instruct its officers and employees to caution customers to read the prospectus of the investment company before investing and must advise customers in writing (h) Under section 20 of the Glass-Steagall Act, a that the investment company's shares are not insured member bank is prohibited from being affiliated with by the Federal Deposit Insurance Corporation, and a company that directly, or through a subsidiary, are not deposits, obligations of, or endorsed or engages principally in the issue, flotation, underwrit- guaranteed in any way by, any bank, unless that ing, public sale, or distribution of securities. A bank happens to be the case. The holding company or holding company or its nonbank subsidiary may not nonbank subsidiary must also disclose in writing to engage, directly or indirectly, in the underwriting, the customer the role of the company or affiliate as public sale or distribution of securities of any invest- adviser to the investment company. These discloment company for which the holding company or any sures may be made orally so long as written disclononbank subsidiary provides investment advice ex- sure is provided to the customer immediately therecept in compliance with the terms of section 20, and after. To the extent that a bank owned by a bank only after obtaining the Board's approval under holding company engages in providing advisory or section 4 of the Bank Holding Company Act and brokerage services to bank customers in connection subject to the limitations and disclosures required by with an investment company advised by the bank the Board in those cases. The Board has determined, holding company or a nonbank affiliate, but is not however, that the conduct of securities brokerage required by the bank's primary regulator to make activities by a bank holding company or its nonbank disclosures comparable to the disclosures required to subsidiaries, when conducted individually or in com- be made by bank holding companies providing such bination with investment advisory activities, is not services, the bank holding company should require deemed to be the underwriting, public sale, or distri- its subsidiary bank to make the disclosures required bution of securities prohibited by the Glass-Steagall in this paragraph to be made by a bank holding Act, and the U.S. Supreme Court has upheld that company that provides such advisory or brokerage determination. See Securities Industry Ass'n v. services. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 699 FINAL RULE—AMENDMENT TO REGULATION Z (f)(2)(i) The Board of Governors is amending 12 C.F.R. Part 226, its Regulation Z (Truth in Lending). The Board is (ii) The consumer fails to meet the repayment terms (1) revising Regulation Z to provide that depository of the agreement for any outstanding balance; institutions may retain the right to demand payment of (iii) Any action or inaction by the consumer a home equity line of credit extended to their own adversely affects the creditor's security for the executive officers when required by federal law; and plan, or any right of the credit in such security; or (2) not changing the rules in Regulation Z that set forth (iv) Federal law dealing with credit extended by a the way creditors disclose discounted initial rates and depository institution to its executive officers specertain payment examples for home equity lines. The cifically requires that as a condition of the plan the rules in question relate to the Home Equity Loan credit shall become due and payable on demand, Consumer Protection Act of 1988, which requires provided that the creditor includes such a provicreditors to provide consumers with information for sion in the initial agreement. open-end credit plans secured by the consumer's dwelling, and places certain substantive limitations on the way in which those lines may be structured. With ORDERS ISSUED UNDER BANK HOLDING regard to the revision, depository institutions that COMPANY ACT currently include such a provision in their executive officers' contracts will not be affected by this amend- Orders Issued Under Section 3 of the Bank ment. With regard to (2) above, the approach adopted Holding Company Act by the Board for disclosure of the discounted initial rate and certain payment examples has been examined Banc One Corporation by the U.S. Court of Appeals for the District of Columbus, Ohio Columbia Circuit in recent litigation, and remanded to the Board for further consideration. After such recon- Banc One Ohio Corporation sideration and analysis of the comment letters, the Columbus, Ohio Board has decided to retain the existing rules. Effective July 29, 1992, but compliance optional Order Approving Merger With a Bank Holding until October 1, 1993, 12 C.F.R. Part 226 is amended Company as follows: Banc One Corporation, and its wholly owned subsid- Part 226—Truth in Lending iary, Banc One Ohio Corporation, both of Columbus, Ohio (together, "Banc One"), bank holding compa- 1. The authority citation for Part 226 continues to read nies within the meaning of the Bank Holding Company as follows: Act ("BHC Act"), have applied under section 3 of the BHC Act (12 U.S.C. § 1842) to acquire First Security Authority: Section 105, Truth in Lending Act, as Corporation of Kentucky, and its wholly owned subamended by section 605, Pub. L. 96-221, 94 Stat. 170 sidiary, First Security Affiliates, Inc., both of Lexing- (15 U.S.C. 1604 et seq.)\ Section 1204(c), Competitive ton, Kentucky (together "First Security"), and Equality Banking Act, Pub. L. 100-86, 101 Stat. 552. thereby indirectly acquire First Security's subsidiary banks: First Security National Bank and Trust Com- 2. Section 226.5b is amended by revising paragraphs pany of Lexington, Lexington ("FSNB"); First Secu- (f)(2)(ii) and (f)(2)(iii), and by adding paragraph rity Bank and Trust Company of Clark County, Win- (f)(2)(iv) to read as follows: chester; First Security Bank and Trust Company of Danville, Danville; and First Security Bank and Trust Company of Madison County, Richmond, all in Ken- Subpart B—Open-End Credit tucky.1 1. Banc One will acquire First Security through the merger of First Section 226.5b—Requirements for home equity Security into Banc One Ohio Corporation. In connection with this plans. acquisition, Banc One also has applied to acquire an option to purchase, under certain conditions, up to 19.9 percent of First Security's common stock. This option will terminate upon consummation of the proposed merger of Banc One and First Security. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

700 Federal Reserve Bulletin • September 1992 Notice of the application, affording interested per- Competitive, Financial, Managerial and Supervisory sons an opportunity to submit comments, has been Considerations published (57 Federal Register 6606 (1992)). The time for filing comments has expired, and the Board has Banc One and First Security compete in the Lexingconsidered the application and all comments received ton, Kentucky banking market.6 Banc One is the in light of the factors set forth in section 3(c) of the fourth largest of 28 depository institutions in the BHC Act. market with total deposits of $303.5 million repre- Banc One, with total deposits of $39.6 billion, con- senting 8 percent of total deposits in depository trols banking subsidiaries in Ohio, Indiana, Michigan, institutions in the market.7 First Security is the Wisconsin, Illinois, Texas and Kentucky.2 Banc One largest depository institution in the market controloperates one subsidiary bank in Kentucky, Bank One, ling two banks with total deposits of $1.1 billion Lexington, N.A., Lexington, Kentucky ("BOL"). representing 28.7 percent of total deposits in depos- BOL is the 18th largest commercial banking organiza- itory institutions in the market. Upon consummation tion in Kentucky, controlling $289.8 million in depos- of this proposal, Banc One would become the largest its, representing less than 1 percent of total deposits in depository institution in the market controlling decommercial banks in Kentucky. First Security is the posits of $1.4 billion, representing 36.7 percent of fourth largest commercial banking organization in total deposits in depository institutions, and the Kentucky, controlling $1.3 billion in deposits, repre- Herfindahl-Hirschman Index ("HHI") for the market would increase by 458 points to 1673.8 The senting 3.7 percent of total deposits in commercial Lexington, Kentucky, banking market would remain banks in the state. Upon consummation of this promoderately concentrated, and eighteen commercial posal, Banc One would become the fourth largest banking organizations and nine thrifts would concommercial banking organization in the state, controltinue to operate in the market after consummation of ling $1.6 billion in deposits, representing 4.5 percent of this proposal. After review of the concentration total deposits in commercial banking organizations in levels, the number of competitors that will remain, Kentucky. and the other facts of record, the Board has determined that consummation of the proposal is not Douglas Amendment likely to result in a significantly adverse effect on competition in the Lexington, Kentucky, banking Section 3(d) of the BHC Act, the Douglas Amendmarket or any other relevant banking market. ment, prohibits the Board from approving an application by a bank holding company to acquire control of The financial and managerial resources, and future any bank located outside the bank holding company's prospects of Banc One, First Security and their rehome state, unless such acquisition is "specifically spective subsidiaries, and the other factors the Board authorized by the statute laws of the State in which must consider under section 3 of the BHC Act are [the] bank is located, by language to that effect and not consistent with approval of this proposal. merely by implication."3 As part of this proposal, Banc One, which has Ohio as its home state, proposes to acquire First Security, which has Kentucky as its home state.4 The Board previously has determined 6. The Lexington, Kentucky banking market includes Fayette, that the interstate banking statutes of Kentucky permit Bourbon, Clark, Jessamine, Powell, Scott, and Woodford Counties in Kentucky. the acquisition of Kentucky banking organizations by 7. In this context, depository institutions include commercial banks, banking organizations located in Ohio.5 Accordingly, savings banks and savings associations. Market share data are based on calculations in which the deposits of thrift institutions are included Board approval of this proposal is not prohibited by at 50 percent. The Board previously has indicated that thrift instituthe Douglas Amendment. Approval of this proposal, tions have become, or have the potential to become, major competihowever, is conditioned upon Banc One's receiving all tors of commercial banks. See Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Federal required state regulatory approvals. Reserve Bulletin 743 (1984). 8. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the 2. State data are as of December 31, 1991; market data are as of post-merger HHI is above 1000 and below 1800 is considered moder- September 30, 1991. ately concentrated. The Department of Justice has informed the Board 3. 12 U.S.C. § 1842(d). that a bank merger or acquisition generally will not be challenged (in 4. A bank holding company's home state is that state in which the the absence of other factors indicating anticompetitive effects) unless operations of the bank holding company's banking subsidiaries were the post-merger HHI is at least 1800 and the merger increases the HHI principally conducted on July 1, 1966, or the date on which the by at least 200 points. The Justice Department has stated that the company became a bank holding company, whichever is later. higher than normal HHI thresholds for screening bank mergers and 12 U.S.C. § 1842. acquisitions for anticompetitive effects implicitly recognizes the com- 5. See Fifth Third Bancorp, 72 Federal Reserve Bulletin 47 (1986); petitive effect of limited-purpose lenders and other non-depository Ky. Rev. Stat. Ann. § 287.900 (Michie 1988). financial entities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 701 Convenience and Needs Considerations cies Regarding the Community Reinvestment Act ("Agency CRA Statement")." In considering the applications under section 3 of the Initially, the Board notes that both BOL and FSNB BHC Act, the Board must consider the convenience have received satisfactory ratings from their primary and needs of the communities to be served by the supervisor, the Office of the Comptroller of the Curinstitutions and take into account the records of the rency ("OCC"), in the most recent examinations of relevant depository institutions under the Community their CRA performance.12 In addition, all of the other Reinvestment Act (12 U.S.C. § 2901 et seq.) subsidiary banks of Banc One and First Security have ("CRA"). The CRA requires the federal financial received satisfactory or outstanding ratings from their supervisory agencies to encourage financial institu- primary regulators in the most recent examinations of tions to help meet the credit needs of the local com- their CRA performance. The Agency CRA Statement munities in which they operate consistent with the safe provides that a CRA examination is an important and and sound operation of such institutions. To accom- often controlling factor in the consideration of an plish this end, the CRA requires the appropriate fed- institution's CRA record and that these reports will be eral supervisory authority to "assess the institution's given great weight in the applications process.13 The record of meeting the credit needs of its entire com- Board also notes that BOL and FSNB will account for munity, including low- and moderate-income neigh- less than 5 percent of the assets of Banc One after borhoods, consistent with the safe and sound opera- consummation of this transaction. tion of such institution," and to take that record into Corporate Policies. Banc One and BOL have in account in its evaluation of bank holding company place the types of programs and policies outlined in applications.9 the Agency CRA Statement that contribute to an In connection with this application, the Board has effective CRA program and these efforts will be received comments supporting and opposing the pro- implemented after the acquisition of First Security posal. For example, the Commissioner of Housing of and FSNB.14 BOL's program is monitored at the the Lexington Fayette County Urban County Govern- holding company level by Banc One's Corporate ment stated that BOL actively supports local housing CRA Committee, which oversees the CRA perforinitiatives and that BOL supplies assistance for mance of all subsidiary banks. This committee reprojects that provide affordable housing for low- and views quarterly reports on subsidiary banks' CRA moderate-income residents of Lexington. The Com- activities and presents the results of these reports to munity Reinvestment Alliance of Lexington Banc One's board of directors. ("CRAL") was critical of the efforts of BOL and Banc One also has established holding company FSNB in meeting the mortgage credit needs of lower subsidiaries that provide assistance for CRA programs income minority residents in certain inner city census to banks in the Banc One system. For example, Banc tracts in Lexington, Kentucky, and BOL's refusal to One has a corporate Community Development Corpoagree to a low-income mortgage plan suggested by ration ("CDC") with resources to assist all bank CRAL.10 affiliates in financing projects designed to promote The Board has carefully reviewed the CRA perfor- community welfare, housing availability and economic mance record of BOL and FSNB, as well as CRAL's comments and BOL's response to those comments, in light of the CRA, the Board's regulations and the Statement of the Federal Financial Supervisory Agen- 11. The Agency CRA Statement provides guidance on the types of policies and procedures that the supervisory agencies believe financial institutions should have in place in order to fulfill their responsibilities under the CRA on an ongoing basis and the procedures that the supervisory agencies will use during the application process to review 9. 12 U.S.C. § 2903. an institution's CRA compliance and performance. The agency CRA 10. CRAL also alleges that FSNB has not met lending goals Statement also explains that decisions by agencies to allow financial established under a mini-mortgage program designed to meet the institutions to expand will be made pursuant to an analysis of the needs of low- and moderate-income individuals. Under this program, institution's overall CRA performance and will be based on the actual FSNB offers mortgage loans for the purchase of one-to-four family record of performance of the institution. 54 Federal Register 13,742 homes to applicants with household incomes of $20,000 or less. This (1989). product features a 25-year, below-market, variable rate loan with a 20 12. Performance under the CRA for BOL was rated "satisfactory" percent down payment requirement and a fixed monthly payment. as of August 13, 1990, and for FSNB was rated "satisfactory" as of CRAL maintains that FSNB has not met the five-year lending goals in May 31, 1991. the census tracts targeted under this program and has refused to 13. 54 Federal Register at 13,745. reduce the minimum down payment for this mortgage product to 5 14. Banc One has committed that following consummation of the percent. Banc One responds that, while FSNB has not fully realized proposed merger of First Security's bank subsidiaries with BOL, BOL its five-year mini-mortgage lending goals, FSNB has exceeded other will undertake immediate and comprehensive training of all First five-year lending goals for community development, small business, Security personnel to ensure consistent and aggressive implementaand home purchase lending under its agreement with CRAL. tion of Banc One's CRA policies and procedures. 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702 Federal Reserve Bulletin • September 1992 development.15 Banc One also has a mortgage subsid- homebuyers.18 In addition, BOL provides home mortiary, Banc One Mortgage Corporation, which assists gage loans to low- and moderate-income first-time affiliates by offering specialized mortgage products homebuyers through a mortgage credit certificate prodesigned for low- and moderate- income applicants. gram sponsored by local government.19 BOL has par- Banc One's corporate CRA Research Division assists ticipated in the Lexington-Fayette Urban County Gov- Banc One's subsidiary banks in collecting and analyz- ernment's Vacant Lot Program by providing below ing lending data to monitor the distribution of loan market-rate permanent financing and participated in a products throughout their delineated market areas. rental rehabilitation program. Banc One also has pro- BOL's CRA officer and other officers periodically vided financing for affordable multi-family housing.20 report to BOL's board of directors on progress made FSNB also offers VA and FHA guaranteed loans. under the bank's CRA program in meeting the credit During 1990 FSNB originated 96 FHA and VA loans needs of all its communities, including low- and mod- totalling approximately $6 million. In addition, like erate-income areas. BOL, FSNB is a member of the KHC program that Ascertainment and Marketing. BOL ascertains assists first time homebuyers, and FSNB has commitcredit needs through interviews with community lead- ted to lend $3 million through this program. FSNB has ers, an established calling program, and participation been active in the redevelopment of downtown Lexin community organizations. BOL also has established ington both through lending and grants for community a Community Advisory Council which meets quarterly projects. with bank officers to discuss the credit needs of the BOL and FSNB also provide loans guaranteed by community and to propose programs to address those the Small Business Administration ("SBA").21 Beneeds.16 tween January 1 and June 30, 1990, BOL made nine BOL has taken several steps to target its marketing SBA loans totalling $1.3 million. Six of these loans toward low- and moderate-income neighborhoods. For were in amounts less than $50,000. With the Kentucky example, BOL, in conjunction with the Lexington- Small Business Development Center and local Lexing- Fayette Urban County government, will repeat a live ton government agencies, BOL co-sponsors a new television call-in program for prospective homebuyers pilot incubator program to encourage minority-owned this year. In addition, BOL has co-sponsored an business development. This program is intended to affordable housing seminar with a local government. assist new minority-owned businesses to acquire funds In an effort to increase its accessibility to low- and for working capital and equipment, locate technical moderate-income applicants, BOL also instituted a assistance, prepare operating plans, and organize adprogram whereby small loan applications can be sub- ministrative functions.22 BOL sponsors seminars promitted at local government offices for forwarding to viding technical assistance to small business owners, the bank. BOL representatives visit predominately especially small businesses owned by minorities or minority local churches to advise congregations on the women. BOL provides government guaranteed stuavailable banking products and services. dent loans,23 and BOL has established with local Lending and Other Activities. BOL has been an active participant in federal and state governmentsponsored home mortgage loan programs, including 18. Under this program low- and moderate-income first-time homeprograms sponsored by the Veterans Administration buyers are offered 30-year, fixed-rate loans that are FHA or VA ("VA"), Federal Housing Administration ("FHA"), insured. During 1990 and 1991, BOL originated 386 loans, totalling $16.6 million under this program. Federal National Mortgage Association ("FNMA"), 19. Under this program low- and moderate-income first-time homeand Federal Home Loan Mortgage Association buyers receive dollar-for-dollar federal income tax credits for 20 ("FHLMC").17 BOL joined the Kentucky Housing percent of the interest paid on their home mortgage loans. 20. For example, BOL has provided construction and permanent Corporation ("KHC") and 23 other lenders in offering financing for a small multi-family housing development in the Prallthe "EPIC" or "KHC" program to assist first time town section of Lexington. 21. FSNB made 24 SBA guaranteed loans totalling $2.3 million during 1990, and had 67 SBA guaranteed loans outstanding totalling $4.7 million as of year-end 1990. FSNB also extended 26 farm loans totalling approximately $946,000 during 1990, and has provided loans 15. Banc One's CDC has invested nationwide over $10 million in and grants for the redevelopment of downtown Lexington. equity in low-income housing projects utilizing the low-income hous- 22. BOL has financed a minority contractor's purchase of two ing tax credit to date. undeveloped property lots in a low- to moderate-income neighbor- 16. Two representatives of CRAL serve on this council. hood and has identified a low-income first-time homebuyer who will 17. The OCC's most recent CRA performance examination com- purchase the first completed home through financing by BOL and the mended BOL's participation in these programs, noting that between KHC. January 1, 1989, and June 30, 1990, BOL made 30 VA loans totalling 23. Between January 1 and June 30, 1990, BOL made 10,498 approximately $2.0 million; 193 FHA loans totalling approximately guaranteed student loans totalling approximately $14.6 million. Under $11.6 million; and 60 FNMA and FHLMC loans totalling approxi- this proposal, government guaranteed student loans would become mately $4.9 million in the Lexington Metropolitan Statistical Area. available to customers of FSNB. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 703 government support a neighborhood financial center in and/or construct affordable housing, and BOL will Lexington operated by young adults to provide basic provide financing through FHA-insured mortgage financial services to the community and instructional loans and the G.E. Community Homebuyer program. opportunities in financial transactions. Under the Community Homebuyer Program, low- and Home Mortgage Disclosure Act ("HMDA") Data moderate-income home mortgage applicants who comand Lending Practices. The Board has reviewed the plete homebuyer counseling sessions may apply for 1989 and 1990 HMDA data reported by subsidiaries of home mortgages with flexible underwriting require- Banc One and First Security, and CRAL's comments ments and favorable terms.25 regarding these data. Due to recent amendments to the Banc One has committed that it will offer its Afford- HMDA effective in 1990, these banks were required able Housing Lender Program in Lexington. Through for the first time to report the information regarding this program sponsored by Banc One Mortgage Corboth loan approvals and denials to the banking agen- poration, Banc One plans to offer additional products cies and the public. This information includes data on and services to low- and moderate-income homebuythe race, gender and income of individual applicants, er s in Lexington. BOL will also appoint a mortgage as well as the location of the property securing the loan originator to serve only low- and moderatepotential loan and the disposition of the application. income homebuyers, including residents in the census These data indicate that loan originations vary for tracts identified by CRAL. BOL by racial or ethnic group and income level in Conclusion. The Board has carefully considered all certain areas in Lexington. of the facts of record, including the comments filed in Because all banks are obligated to ensure that their this case, in reviewing the convenience and needs lending practices are based on criteria that assure not factors under the BHC Act. Based on a review of the only safe and sound lending, but also assure equal entire record of performance, including information access to credit by creditworthy applicants regardless provided by commenters supporting and opposing the of race, the Board is concerned when the record of an proposal and the performance examinations by the institution indicates disparities in lending to minority banks' primary regulators, the Board believes that the applicants. The Board recognizes, however, that efforts of Banc One and First Security to help meet the HMDA data alone provide only a limited measure of credit needs of all segments of the communities served any given institution's lending in the communities that by these banks, including low- and moderate-income the institution serves. The Board also recognizes that neighborhoods, are generally satisfactory. Moreover, HMDA data have limitations that make the data an BOL has initiated and has committed to initiate steps inadequate basis, absent other information, for con- designed to strengthen home mortgage lending in clusively determining whether an institution has en- Lexington. gaged in illegal discrimination on the basis of race or On the basis of all the facts of record, the Board ethnicity in making lending decisions. concludes that the convenience and needs consider- The most recent examinations for CRA compliance ations, including the CRA records of Banc One and and performance conducted by bank supervisory First Security, are consistent with approval of this agencies found no evidence of illegal discrimination or application. The Board expects Banc One to impleother illegal credit practices in BOL or FSNB.24 Banc ment fully the CRA initiatives and commitments dis- One has also taken steps designed to improve its cussed in this Order and contained in its application. lending to minorities and low- and moderate-income Banc One's progress in implementing these initiatives neighborhoods in Lexington. and commitments will be monitored by the Board in BOL proposes to increase the supply of affordable future applications to expand its deposit-taking facilihousing in low- and moderate-income areas, including ties. in areas identified by CRAL, through Banc One's community development corporation by acquiring properties suitable for development or redevelopment. 25. Banc One proposes to make available a loan program to all low- The community development corporation will employ and moderate-income customers of BOL and FSNB that provides for an FHA-certified minority contractor to rehabilitate 15- or 30-year conventional fixed-rate, fully amortizing mortgages. Under this program, there will be no minimum loan amount, and the maximum loan to value ratio is 95 percent of the lesser of: (1) the sales price including rehabilitation cost, if any; or (2) the appraised value after completion of rehabilitation. The 24. Examiners noted in three Banc One subsidiary banks—not borrower's minimum equity requirement is 5 percent, with at least including BOL—certain failures to comply with the Equal Credit 3 percent provided from the borrower's own funds. The remaining Opportunity Act, including instances where spousal income was 2 percent may be provided from a gift by a relative or a grant from required in loan applications. Banc One has taken prompt corrective a nonprofit organization or public entity. This program will replace action and has addressed these weaknesses to the satisfaction of the FSNB's mini-mortgage program which required a 20 percent downappropriate federal bank regulatory agencies. payment and had a maximum loan term of 25 years. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

704 Federal Reserve Bulletin • September 1992 Based on the foregoing, including the conditions and Notice of the applications, affording interested percommitments described in this Order and those made sons an opportunity to submit comments, has been in the application, and all of the facts of record, the published (57 Federal Register 13,103 (1992)). The Board has determined that the application should be, time for filing comments has expired, and the Board and hereby is, approved. The Board's approval of this has considered the applications and all comments proposal is specifically conditioned on compliance by received in light of the factors set forth in section 3(c) Banc One and its subsidiaries with these conditions of the BHC Act. and commitments, which are conditions imposed in CB&T, with five subsidiary banks, is the fourth writing by the Board in connection with its findings largest commercial banking organization in West Virand decision and may be enforced in proceedings ginia, controlling total deposits of $559.1 million, repunder applicable law. resenting 3.6 percent of total deposits in commercial The acquisition shall not be consummated before banks in the state.2 First State is the 80th largest the thirtieth calendar day after the effective date of this commercial banking organization in the state, control- Order, or later than three months after the effective ling $36.7 million in deposits, representing less than date of this Order, unless such period is extended for 1 percent of total deposits in commercial banks in the good cause by the Board or by the Federal Reserve state. Upon consummation of this proposal, CB&T Bank of Cleveland, acting pursuant to delegated au- would remain the fourth largest commercial banking thority. organization in the state, controlling $595.8 million in By order of the Board of Governors, effective deposits, representing 3.8 percent of total deposits in July 6, 1992. commercial banks in the state. CB&T and First State compete in the Randolph Voting for this action: Chairman Greenspan and Governors County, West Virginia, banking market.3 CB&T is the Angell, Kelley, LaWare, Lindsey, and Phillips. Absent and fifth largest of seven commercial banking organizations not voting: Governor Mullins. in the market, with deposits of $27.3 million, representing 8.9 percent of total deposits in commercial banking JENNIFER J. JOHNSON organizations in the market. First State is the third Associate Secretary of the Board largest commercial banking organization in the market with deposits of $36.7 million, representing 12.0 percent CB&T Financial Corporation of total deposits in commercial banking organizations in Fairmont, West Virginia the market. Upon consummation of this proposal, CB&T would become the third largest commercial banking organization in the market with deposits of $64 CB&T Clarksburg Corporation million, representing 20.9 percent of total deposits in Fairmont, West Virginia commercial banking organizations in the market. The Herfindahl-Hirschman Index ("HHI") for the market Order Approving Acquisition of Bank Holding would increase by 213 points to 2629, and the Randolph Company and Banks County banking market would remain highly concentrated.4 CB&T Financial Corporation and its wholly owned A number of characteristics of the Randolph County subsidiary, CB&T Clarksburg Corporation, both of banking market indicate that the increase in concen- Fairmont, West Virginia (together, "CB&T"), bank tration levels as measured by the HHI for this market holding companies within the meaning of the Bank overstates the possible effect of this proposal on Holding Company Act ("BHC Act"), have applied under section 3 of the BHC Act (12 U.S.C. § 1842) to acquire First State Bancorporation, Inc., Elkins, West 2. All data are as of December 31, 1991. Virginia ("First State"), and thereby indirectly ac- 3. The Randolph County, West Virginia banking market is approximated by Randolph County, West Virginia. quire its subsidiary bank, First State Bank, Elkins, 4. Under the revised Department of Justice Merger Guidelines, 49 West Virginia.1 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI is above 1800 is considered highly concentrated. The Department of Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive efiFects) unless the post-merger HHI is at least 1800 and the merger increases the 1. First State will merge with and into CB&T Clarksburg Corpora- HHI by at least 200 points. The Justice Department has stated that tion. In addition, CB&T Clarksburg Corporation has applied for the higher than normal HHI thresholds for screening bank mergers approval to acquire Community Bank & Trust National Association of and acquisitions for anticompetitive effects implicitly recognizes the Randolph County, Elkins, West Virginia, a direct subsidiary of CB&T competitive effect of limited-purpose lenders and other non-depos- Financial Corporation. itory financial entities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 705 competition in this market. Upon consummation of First American Bank of Virginia this proposal, six commercial banking organizations McLean, Virginia would remain as competitors, including the market's two largest competitors. Together the two largest Order Approving Acquisition of a Bank banks control 64.1 percent of the total market deposits, with each bank controlling over a 30 percent share First American Bank of Virginia, McLean, Virginia of the market's deposits. Accordingly, CB&T would ("Virginia Bank"), has applied pursuant to section not become the dominant bank in the market as a 3(a)(1) of the Bank Holding Company Act result of this transaction. (12 U.S.C. § 1842(a)(1)) ("BHC Act") to acquire In addition, the Randolph County banking market 100 percent of the voting shares of First American has certain characteristics that make it attractive for Bank of Georgia, N.A. (In Liquidation), Marietta, potential competitors to enter. For example, this mar- Georgia ("Georgia Bank"),1 and thereby become a ket has, on average, more banking deposits per bank- bank holding company. ing office than other rural West Virginia counties. Notice of the application, affording interested per- Between 1987 and 1990, the market experienced an sons an opportunity to submit comments, has been overall 8.2 percent increase in total banking deposits published (57 Federal Register 24,498 (1992)). The compared to an average 4.4 percent increase for other time for filing comments has expired, and the Board rural West Virginia counties during the same time has considered the application and all comments reperiod. West Virginia law permits statewide branching ceived in light of the factors set forth in section 3(c) of and nationwide reciprocal acquisitions, and three the BHC Act. banks have entered the Randolph County banking Virginia Bank is the largest banking subsidiary of market since 1987, one by de novo entry. As a result of First American Bankshares, Inc., Washington, D.C. new competition, the market became less concen- ("FABI"), controlling $2.4 billion in deposits.2 Geortrated from 1985 to 1991, with the HHI for the market gia Bank is a liquidating national bank controlling decreasing by 475. deposits of $204 million.3 This proposal represents a Based on these and other facts of record, the Board reorganization by FABI, and would result in Virginia has determined that consummation of the proposal is Bank owning all of the shares of Georgia Bank,4 while not likely to result in a significantly adverse effect on Georgia Bank completes liquidation of its assets and competition in the Randolph County banking market liabilities.5 or any other relevant banking market. The BHC Act does not specifically prohibit a bank The financial and managerial resources, and future from acquiring control of another insured depository prospects of CB&T, First State and their respective institution. The Board, however, has previously found subsidiaries, and the other factors the Board must that the ownership structure in which a bank owns and consider under section 3 of the BHC Act are consis- operates another insured depository institution reflects tent with approval of this proposal. The Board also adversely on the financial factors and convenience and finds that considerations relating to the convenience needs considerations in the BHC Act, and has denied and needs of the communities to be served are consis- several proposals by a bank to acquire ownership of tent with approval. another bank.6 Based on the foregoing and other facts of record, the The Board believes, however, that in light of the Board has determined that the applications should be, unique facts of this case, the concerns expressed by and hereby are, approved. The acquisition shall not be consummated before the thirtieth calendar day after the effective date of this Order, or later than three 1. Although Georgia Bank is a bank in liquidation, it is a "bank" for purposes of the BHC Act because Georgia Bank is FDIC-insured. months after the effective date of this Order, unless 2. Deposit data are as of April 30, 1992. such period is extended for good cause by the Board or 3. Georgia Bank has already transferred most of its assets and by the Federal Reserve Bank of Richmond, acting liabilities to SouthTrust Bank of Atlanta, N.A., Atlanta, Georgia. 4. 12 U.S.C. § 1813(h). As a state-chartered nonmember bank, pursuant to delegated authority. Virginia Bank is not precluded by law from acquiring the shares of By order of the Board of Governors, effective another bank. Cf. 12 U.S.C. §§ 24(7) and 335 (generally prohibiting national banks and state-chartered member banks from acquiring July 6, 1992. shares in commercial banks). The Federal Deposit Insurance Corporation has indicated preliminarily that Virginia Bank's acquisition of the shares of Georgia Bank is not prohibited under relevant law. Voting for this action: Chairman Greenspan and Governors 5. Georgia Bank has committed not to accept new deposits or to Angell, Kelley, LaWare, Lindsey, and Phillips. Absent and renew any deposits that mature, or to make new loans. The Office of not voting: Governor Mullins. the Comptroller of the Currency has indicated that it has no objection to Virginia Bank's acquisition of Georgia Bank. JENNIFER J. JOHNSON 6. See, e.g., Depositors Trust Company, 64 Federal Reserve Associate Secretary of the Board Bulletin 213 (1978). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

706 Federal Reserve Bulletin • September 1992 the Board in previous cases are not present in this Taylor Bancshares, Inc. case. Georgia Bank is in the process of liquidation, and North Mankato, Minnesota expects to wind down its operations within the next two years.7 During this liquidation period, Georgia Order Approving Acquisition of a Bank Bank will not accept new deposits or make additional loans.8 Thus, this proposal does not represent an Taylor Bancshares, Inc., North Mankato, Minnesota attempt by Virginia Bank to expand its operations. ("Bancshares"), has applied pursuant to section Based on all the facts of record in this case, including 3(a)(3) of the Bank Holding Company Act, as amended the fact that Georgia Bank is a liquidating bank and is (12 U.S.C. § 1842(a)(3)) ("BHC Act"), to acquire all scheduled to cease its operations, the Board concludes of the voting shares of State Bank and Trust Company, that considerations relating to the financial and mana- New Ulm, Minnesota ("State Bank"). gerial resources and future prospects of the banks Notice of the application, affording interested perinvolved in this proposal are consistent with approval sons an opportunity to submit comments, has been of this application. Because Virginia Bank and Georgia published (57 Federal Register 14,398 (1992)). The Bank do not compete in the same banking markets, time for filing comments has expired, and the Board consummation of this proposal would not result in any has considered the application and all comments resignificantly adverse competitive effects in any releceived in light of the factors set forth in section 3(c) of vant banking markets. Considerations relating to the the BHC Act. convenience and needs of the communities to be Bancshares is the 22nd largest commercial banking served and the other factors the Board must consider organization in Minnesota, controlling deposits of under section 3 of the BHC Act are also consistent $143.8 million, representing less than 1 percent of total with approval of this application. deposits in commercial banking organizations in the Based on the foregoing and other facts of record, the state.1 State Bank is the 45th largest commercial Board has determined that the application should be, banking organization in Minnesota, controlling deposand hereby is, approved. The Board's approval of this its of $94.8 million, representing less than 1 percent of transaction is specifically conditioned upon compli- total deposits in commercial banking organizations in ance with the commitments made by Virginia Bank the state. Upon consummation of this proposal, Bancand Georgia Bank in connection with this application. shares would become the 13th largest commercial All of the commitments and conditions relied upon by banking organization in Minnesota, controlling deposthe Board in reaching its decision are commitments its of $238.6 million, representing less than 1 percent of imposed in writing by the Board in connection with its total deposits in commercial banks in the state. Bancfindings and decision and may be enforced in proceed- shares and State Bank do not compete directly in any ings under applicable laws. This approval is also banking market. Accordingly, consummation of the conditioned upon Virginia Bank receiving all neces- proposal would not result in any significantly adverse sary Federal and state approvals. The transaction effect upon competition in any relevant banking approved in this Order shall not be consummated market. before the thirtieth calendar day following the effective The Board believes that financial and managerial date of this Order, or later than three months after the factors, as well as the future prospects of the compaeffective date of this Order, unless such period is nies involved, are consistent with approval of this extended for good cause by the Federal Reserve Bank proposal. Considerations relating to the convenience of Richmond, pursuant to delegated authority. and needs of the community to be served also are By order of the Board of Governors, effective consistent with approval of the application. July 2, 1992. Based on the foregoing and other facts of record, the Board has determined that the application should be, Voting for this action: Chairman Greenspan and Governors and hereby is, approved. The Board's approval is Mullins, Angell, Kelley, La Ware, Lindsey, and Phillips. specifically conditioned on compliance with commitments made by Bancshares in the application. Further, JENNIFER J. JOHNSON these commitments and conditions relied on by the Associate Secretary of the Board Board in reaching its decision in this case are conditions imposed in writing by the Board in connection with its findings and decision and may be enforced under applicable laws. The acquisition shall not be 7. As of April 30,1992, Georgia Bank had $343 million in total assets and $204 million in deposits. Georgia Bank expects to reduce its assets to $173.8 million and its deposits to $24 million by November 30,1992, and to wind down all its operations as soon as possible thereafter. 8. See supra, note 5. 1. Deposit data are as of December 31, 1991. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 707 consummated before the thirtieth calendar day follow- required that savings associations acquired by bank ing the effective date of this Order, or later than three holding companies conform their direct and indirect months after the effective date of this Order, unless activities to those activities permissible for bank holdsuch period is extended for good cause by the Board or ing companies under section 4 of the BHC Act. In this the Federal Reserve Bank of Minneapolis, acting regard, the Board has previously determined that the pursuant to delegated authority. activities of HonFed's nonbanking subsidiaries listed By order of the Board of Governors, effective in the Appendix are permissible activities for bank July 13, 1992. holding companies.3 In considering applications under section 4(c)(8) of Voting for this action: Vice Chairman Mullins and Gover- the BHC Act, the Board is required to determine nors Angell, Kelley, Lindsey, and Phillips. Absent and not whether the performance of the proposed activities by voting: Chairman Greenspan and Governor La Ware. the applicant "can reasonably be expected to produce benefits to the public ... that outweigh possible adverse JENNIFER J. JOHNSON effects, such as undue concentration of resources, Associate Secretary of the Board decreased or unfair competition, conflicts of interests, or unsound banking practices." 12 U.S.C. § 1843(c)(8). Orders Issued Under Section 4 of the Bank BAC, with total consolidated assets of approxi- Holding Company Act mately $200.8 billion, controls 25 insured commercial banks and thrift organizations ("depository institu- BankAmerica Corporation tions") in Arizona, California, Idaho, Nevada, New San Francisco, California Mexico, Oregon, Texas, Utah, and Washington.4 BAC controls a commercial banking organization Order Approving Acquisition of a Savings and a thrift in Oregon. BAC is the third largest Association depository institution in Oregon, controlling a total of $3.3 billion in deposits, representing approxi- BankAmerica Corporation, San Francisco, California mately 12.9 percent of the total deposits in deposi- ("BAC"), a bank holding company within the meaning tory institutions in the state.5 H.F. Holdings is the of the Bank Holding Company Act ("BHC Act"), has third largest depository institution in Hawaii with applied pursuant to section 4(c)(8) of the BHC Act total consolidated assets of $2.6 billion, controlling (12 U.S.C. § 1843(c)(8)) and section 225.23 of the $2 billion in deposits, representing approximately Board's Regulation Y (12 C.F.R. 225.23), to acquire 10.9 percent of the total deposits in depository instiindirectly HonFed Bank, a Federal Savings Bank, tutions in Hawaii.6 BOA Savings and HonFed do not Honolulu, Hawaii ("HonFed").1 BAC also has apcompete in any banking market, and upon consumplied to acquire the nonbanking subsidiaries of Honmation of the proposed acquisition, BOA Savings Fed and engage in nonbanking activities pursuant to would become the third largest depository institution sections 225.25(b)(1), (b)(7), and (b)(8) of the Board's in Hawaii, controlling $2 billion in deposits in Hawaii, Regulation Y.2 representing approximately 10.9 percent of total depos- Notice of the application, affording interested per- its in depository institutions in the state. Accordingly, sons an opportunity to submit comments, has been published (57 Federal Register 51 Ml (1992)). The time for filing comments has expired, and the Board has considered the application and all comments re- 3. BAC has committed to divest any impermissible real estate investments within two years of consummation of the proposal and ceived in light of the factors set forth in section 4(c)(8) will not undertake new impermissible projects or investments during of the BHC Act. this period. BAC proposes to limit the activities of HonFed's elec- The Board has determined that the operation of a tronic equipment repair company to servicing BAC and its subsidiaries and to operate this company pursuant to section 4(c)(1)(C) of the savings association is closely related to banking and BHC Act. BAC has committed that all impermissible activities of this permissible for bank holding companies. 12 C.F.R. company will cease within one year of consummation and that no new impermissible projects or investments will be undertaken during this 225.25(b)(9). In making this determination, the Board period. In addition, BAC has committed to terminate all impermissible insurance activities engaged in by HonFed or any of its subsidiaries on or before consummation of the proposed acquisition, although for up 1. BAC will acquire HonFed by merging HonFed's parent holding to two years following consummation HonFed or its subsidiaries may company, H.F. Holdings, Inc., Marina del Rey, California ("H.F. continue to service those impermissible policies existing at the time of Holdings"), into an existing second tier company, with H.F. Holdings consummation. HonFed also owns an inactive securities broker/ as the surviving entity. After the merger of HonFed with BAC's dealer subsidiary that has not commenced business activities and will wholly owned subsidiary federal savings association, Bank of Amer- be dissolved. ica, a Federal Savings Bank, Portland, Oregon ("BOA Savings"), 4. Asset data for BAC are as of April 30, 1992. H.F. Holdings will be dissolved. 5. State deposit data are as of June 30, 1990. 2. A list of the nonbanking subsidiaries is set forth in the Appendix. 6. Asset data for H.F. Holdings are as of March 31, 1992. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

708 Federal Reserve Bulletin • September 1992 the Board concludes that consummation of this pro- may acquire and operate HonFed as branch offices of posal would not have a significantly adverse effect on BOA Savings under this authority. For these reasons, competition in any relevant banking market. the Board believes that BOA Savings has the authority to acquire and operate HonFed as interstate branches. Interstate Branching Considerations The Board also notes that section 4(c)(8) of the BHC Act and the Board's regulations do not prohibit the Following the acquisition of the shares of HonFed, operation of interstate branches by thrift institutions BAC proposes to merge HonFed into BOA Savings, owned by bank holding companies. The Board which will result in BAC operating branch offices in amended its list of permissible nonbanking activities in Oregon and Hawaii. While the Board has permitted Regulation Y to include the acquisition of a savings bank holding companies to acquire and operate several association, and imposed only the condition that the savings associations that each operate in a different savings association engage only in deposit-taking, lendstate, the Board has not to date approved an acquisi- ing, and other activities that are permissible for bank tion that would result in a savings association operat- holding companies.11 In taking this action, the Board ing branches interstate. Accordingly, this proposal removed restrictions that the Board had previously raises the question of whether a federal savings asso- imposed on the ability of savings associations owned by ciation owned by a bank holding company may branch bank holding companies to establish branches.12 into a state other than its home state. For the reasons discussed above, the Board con- Section 5(r) of the Home Owners Loan Act of 1933 cludes that the BAC proposal is permitted under the ("HOLA"), enacted by the Garn-St Germain Depos- existing branching authorization for federal savings itory Institutions Act of 1982 ("Garn-St Germain associations and is consistent with the regulatory Act"), permits a federal savings association to operate framework of savings association acquisitions under branches outside the association's home state if the the BHC Act. association qualifies as a domestic building and loan association under the Internal Revenue Code,7 and the interstate branches result from a transaction authorized pursuant to section 13(k) of the Federal Deposit the comment period for this application, the Hawaii Attorney Gener- Insurance Act, 12 U.S.C. § 1823(k) ("FDI Act").* al's Office filed comments maintaining that certain interstate limita- BAC acquired BOA Savings in 1990 as the successor tions imposed on a multiple savings and loan holding company controlling savings associations in more than one state were applicato The Benjamin Franklin Federal Savings and Loan ble to the BAC proposal. See Section 10(e)(3) of HOLA, Association in an assisted emergency transaction under 12 U.S.C. § 1467a(e)(3) ("section 10(e)(3)"). The OTS concluded section 13(k) of the FDI Act. In approving that trans- that, although BAC would become a multiple savings and loan holding company (defined as a company controlling two or more federal action, the Office of Thrift Supervision ("OTS") savings associations) for an instant in the multi-stepped merger granted BOA Savings authority to branch at a later date transaction, BAC would remain a unitary savings and loan holding into Hawaii, Illinois, and Texas.9 The OTS has con- company upon completion of the merger of HonFed into BOA Savings and thus that the interstate limitations of section 10(e)(3) do not apply firmed in this case that BOA Savings may operate to this proposal. Alternatively, the OTS reasoned that in the event that branches interstate under HOLA and the OTS regula- section 10(e)(3) applied to the proposal, BOA Savings was authorized tions.10 BAC asserts, and the OTS agrees, that BAC to establish an interstate branch pursuant to section 13(k) of the FDI Act and thus exempted from the limitations of section 10(e)(3). See 12 U.S.C. § 1467a(e)(3)(A). The Hawaii Attorney General's Office subsequently withdrew its comments in light of this interpretative guidance from the OTS. 7. See 12 U.S.C. § 1464(r)(l). The Internal Revenue Code gener- 11. See 54 Federal Register 37,301 (Sept. 8, 1989) (codified at ally requires that at least 60 percent of a savings association's assets 12 C.F.R. 225.25(b)(9)). be invested in qualified thrift investments (e.g. mortgages, home 12. Before the enactment of section 601 of the Financial Institutions improvement loans and government obligations). 26 U.S.C. Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), the § 7701(a)(19). This test is similar to the "qualified thrift lender" test Board imposed a number of conditions in approving the interstate imposed in section 10(m) of HOLA which requires that at least 70 acquisition of failing or failed thrifts, including conditions that new percent of a savings association's assets be invested in qualified thrift branches of the savings association be established only at locations investments, and that these investments continue to equal or exceed permissible for national banks in the state in which the savings 65 percent of the savings association's portfolio assets on a monthly association was headquartered, and that the savings association not be average basis in nine out of every 12 months. See 12 U.S.C. operated in tandem with any holding company affiliate (the so-called § 1467a(m). At this time BOA Savings meets this test. "tandem operations conditions"). These conditions were imposed in 8. See 12 U.S.C. § 1464(r)(2)(A). Section 5(r) of HOLA also per- part to prevent the bank holding company from using the acquired mits interstate branching under other circumstances, including where savings association to acquire additional thrift institutions on an interstate basis and to ensure that the savings association would not be the state in which the branch is to be located permits interstate operated as a branch of the bank holding company's subsidiary bank branching. See 12 U.S.C. § 1464(r)(2)(C). in violation of the bank branching restrictions. The Board removed the 9. See OTS Order No. 90-1659 (Sept. 7, 1990); see also 12 C.F.R. branching restrictions and tandem operations conditions at the time 556.5(a)(3)(ii). the Board amended its regulatory list of permissible activities for a 10. See Letter from Howard C. Bluver, Deputy Chief Counsel for bank holding company to include the operation of a savings associa- Corporate Transactions, OTS, to Deborah D. Emerson, Deputy tion. See 54 Federal Register 37,301 (Sept. 8, 1989). Attorney General for the State of Hawaii (May 29, 1992). During Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 709 Other Considerations by the Board or by the Federal Reserve Bank of San Francisco, pursuant to delegated authority. The financial and managerial resources of BAC and its By order of the Board of Governors, effective subsidiaries and HonFed are consistent with approval. July 13, 1992. In assessing the financial factors, the Board believes that bank holding companies must maintain adequate Voting for this action: Vice Chairman Mullins and Governors Angell, Kelley, Lindsey, and Phillips. Absent and not capital at savings associations they propose to acquire. voting: Chairman Greenspan and Governor La Ware. Upon consummation, BOA Savings will meet all applicable capital requirements and will meet all current JENNIFER J. JOHNSON and future minimum capital ratios adopted for savings Associate Secretary of the Board associations by the OTS or the Federal Deposit Insurance Corporation. Appendix In considering BAC's acquisition of the nonbanking activities of HonFed, the Board notes that these Nonbanking Subsidiaries of HonFed Bank, a subsidiaries compete in geographic markets that are Federal Savings Bank regional or national in scope. These markets are Permissible Activities served by numerous competitors, and BAC does not have a significant market share in any of these (1) HonFed Financial Services Corporation, Honomarkets. Accordingly, the Board concludes that lulu, Hawaii, a wholly owned interim holding company consummation of this proposal would not have a of HonFed which serves solely as the holding comsignificant adverse effect on competition in any rele- pany for First Collateral Services, Inc. vant market. The record does not indicate that (2) First Collateral Services, Inc., Concord, Califorconsummation of this proposal is likely to result in nia, which is engaged in mortgage warehouse lending any significant adverse effects, such as undue con- pursuant to 12 C.F.R. 225.25(b)(1). centration of resources, decreased or unfair compe- (3) H.F. Mortgage, Inc., Honolulu, Hawaii, which is tition, conflicts of interests, or unsound banking engaged in application processing, underwriting and practices. loan production services for mortgage loans to be Based upon consideration of all the facts in this made by HonFed pursuant to 12 C.F.R. 225.25(b)(1). case, the Board has determined that the balance of (4) SLH, Inc., Honolulu, Hawaii, which is engaged in the public interest factors it is required to consider operating an electronic funds transfer system for savunder section 4(c)(8) of the BHC Act is favorable and ings associations and credit unions in Hawaii pursuant consistent with approval of BAC's application to to 12 C.F.R. 225.25(b)(7). acquire HonFed. Accordingly, the Board has deter- (5) Honofed Ben Lomond Corporation, Honolulu, mined that the application should be, and hereby is, Hawaii, which is engaged in holding a mortgage loan approved. The Board's approval is specifically con- pursuant to 12 C.F.R. 225.25(b)(1), and which holds ditioned upon compliance with all of the commit- 51 percent of North Ogden Center (to be divested ments made by BAC in connection with this applica- pursuant to BAC's divestiture commitments). tion and the conditions imposed in this Order. This (6) Weber Mortgage Corporation, North Ogden, Utah, determination is also subject to all of the conditions which is engaged in holding and servicing mortgage set forth in the Board's Regulation Y, including loans pursuant to 12 C.F.R. 225.25(b)(1). sections 225.4(d) and 225.23, and to the Board's (7) Honofed Insurance, Inc., Honolulu, Hawaii, which authority to require such modifications or termina- is engaged in acting as an agent and/or broker of tion of the activities of a bank holding company or insurance products, specifically credit life and credit any of its subsidiaries as the Board finds necessary to disability insurance, fixed rate annuities, and referrals assure compliance with, or to prevent evasion of, the to brokers for property and casualty insurance and life provisions and purposes of the BHC Act and the insurance. Honofed Insurance will only engage in Board's regulations and Orders issued thereunder. credit related insurance activities permissible for bank All of the commitments and conditions relied on by holding companies pursuant to 12 C.F.R. 225.25(b)(8) the Board in reaching its decision in this case are upon consummation of the proposal. conditions imposed in writing by the Board in con- (8) Tel-Tec Hawaii, Inc., Honolulu, Hawaii, which nection with its findings and decision and may be buys, sells, leases, services, and repairs electronic enforced in proceedings under applicable laws. equipment. Tel-Tec will only engage in servicing ac- This transaction shall not be consummated later tivities pursuant to section 4(c)(1)(C) of the BHC Act, than three months after the effective date of this and all impermissible activities for third parties will be Order, unless such period is extended for good cause divested pursuant to BAC's divestiture commitments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

710 Federal Reserve Bulletin • September 1992 Impermissible Activities to be Terminated Pursuant ("SouthTrust Bank"), all in Marianna, Florida. This to BAC's Divestiture Commitments proposal requires the Board's approval pursuant to section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) (9) Honvest Corporation, Honolulu, Hawaii, a wholly and section 5(d)(3) of the Federal Deposit Insurance owned interim holding company of HonFed that Act ("FDI Act"), as amended by the Federal Deserves as the holding company for six subsidiaries of posit Insurance Corporation Improvement Act of HonFed and owns a 50 percent interest in Healani 1991, Pub. L. No. 102-242, § 501, 105 Stat. 2236, Ventures (a general partnership in the process of 2388 (1991). In considering proposals under section liquidation). 5(d)(3) of the FDI Act, the Board must consider the (10) Honofed Development Corporation, Honolulu, factors and follow the procedures established in the Hawaii, which is engaged in real estate development Bank Merger Act.1 through its wholly owned subsidiaries, Honofed Bel Notice of the applications, affording interested per- Mar Corporation and Honofed Ben Lomond Corpora- sons an opportunity to submit comments, has been tion, and through a 50 percent interest in Bel Mar published (57 Federal Register 15,086 (1992)). As Estates. required by the Bank Merger Act, reports on the (11) Honofed Bel Mar Corporation, Honolulu, Hawaii, competitive effects of the merger were requested from which is a general partner in Bel Mar Estates. the United States Attorney General, the Office of the (12) Bel Mar Estates, a California general partnership Comptroller of the Currency, and the Federal Deposit (consisting of Honofed Development Corporation and Insurance Corporation. The time for filing comments Honofed Bel Mar Corporation) which owns a three has expired, and the Board has considered the appliacre parcel of undeveloped property in California and cation and all comments received in light of the public holds a 12 percent limited partnership interest in a interest factors set forth in section 4(c)(8) of the BHC limited partnership which is developing certain resi- Act and in the Bank Merger Act. dential property in California. The Board has previously determined that the oper- (13) North Ogden Center, North Ogden, Utah, a ation of a savings association is closely related to partnership 51 percent of which is held by Honofed banking and permissible for bank holding companies. Ben Lomond Corporation and 49 percent of which is 12 C.F.R. 225.25(b)(9). In making this determination, held by unrelated parties, which owns a 10 acre parcel the Board requires that savings associations acquired in Utah. by bank holding companies conform their direct and (14) HFSL Corporation, Honolulu, Hawaii, which indirect activities to those permissible for bank holding holds a masterlease in a Honolulu office building and companies under section 4 of the BHC Act. Southsubleases space under that masterlease. Trust has committed to conform all activities of Savings Bank to the requirements of section 4 of the BHC Inactive Subsidiaries to be Terminated Act and the Board's Regulation Y. The Board must also consider the competitive as- (15) Advanced Computer Systems Corporation, Hono- pects of each proposal under section 4(c)(8) of the lulu, Hawaii, which is an inactive data processing BHC Act.2 In addition, the Bank Merger Act prohibits company. approval of any proposal that would substantially (16) HFB Securities, Inc., Honolulu, Hawaii, which is lessen competition in any relevant banking market an inactive securities broker/dealer. unless the agency finds that the anticompetitive effects of the proposed transaction are clearly outweighed in SouthTrust Corporation the public interest by the probable effect of the trans- Birmingham, Alabama action in meeting the convenience and needs of the community to be served. 12 U.S.C. § 1828(c). Order Denying Acquisition of a Savings Association SouthTrust, the sixth largest commercial banking organization in Florida, controls nine banks in Florida SouthTrust Corporation, Birmingham, Alabama ("SouthTrust"), a bank holding company within the 1. These factors include considerations relating to competition, meaning of the Bank Holding Company Act ("BHC financial and managerial resources, and future prospects of the Act"), has proposed to acquire First Federal Enter- existing and proposed institutions, and the convenience and needs of prises, Inc. ("First Federal"), and thereby indirectly the communities to be served. 12 U.S.C. § 1828(c). 2. Section 4(c)(8) of the BHC Act requires the Board to determine acquire First Federal's savings association subsid- that the acquisition of Savings Bank "can reasonably be expected to iary, First Federal Savings Bank ("Savings Bank"); produce benefits to the public . . . that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair and to merge Savings Bank with SouthTrust's subcompetition, conflicts of interests, or unsound banking practices." sidiary bank, SouthTrust Bank of Northwest Florida 12 U.S.C. § 1843(c)(8). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 711 with total deposits of approximately $1.2 billion, rep- Dothan is located approximately 41 road miles from resenting 1 percent of total deposits in commercial Marianna, Florida, where Savings Bank and Southbanks in the state. First Federal, is the 65th largest Trust Bank are located. The Ranally Metro Area thrift organization in Florida, controlling one savings ("RMA") for Dothan includes portions of Dale, association with total deposits of approximately Henry, Houston, and Geneva Counties, all in Ala- $87.6 million, which represents less than 1 percent of bama, but does not extend into Florida.9 An RMA is a total thrift deposits in the state. Upon consummation privately defined geographic locality that is demoof this proposal, SouthTrust would remain the sixth graphically and commercially integrated. The Board largest commercial banking organization in Florida, has previously found RMA definitions to be helpful as controlling total deposits of approximately $1.3 billion, a guide in defining relevant geographic banking marrepresenting 1.1 percent of total deposits in commer- kets.10 cial banking organizations in the state.3 In addition, 1990 commuting data from the Census Bureau suggest that there is not significant commuting Definition of the Marianna Banking Market to Dothan from Marianna or its surrounding communities. The percentages of employed residents com- SouthTrust Bank and Savings Bank compete directly muting to Houston County in 1990 from the counties in the banking market of Marianna/Chattahoochee/ contained in the Marianna banking market are as Chipley/Bonifay in Florida (the "Marianna banking follows: Holmes County (3.8 percent), Jackson market").4 The Board has previously indicated that County (3.9 percent), and Washington County (1.6 the relevant banking market must reflect the commer- percent). cial and banking realities and should consist of the In May 1992, the Federal Reserve Bank of Atlanta localized area where the banks involved offer their conducted a telephone survey of customers in the services and where local customers can practically Marianna area, and the results of this survey indicated turn for alternatives.5 that consumers in this market did not rely significantly In this regard, the Board has carefully considered on Dothan financial institutions for banking services. SouthTrust's arguments that the relevant banking mar- Only one of the 80 respondents who maintained a ket in this case should be defined to include the City of primary checking account had this account in a finan- Dothan, Alabama ("Dothan"), the county seat of cial institution in Dothan, and only five of the 59 loans Houston County, Alabama.6 SouthTrust relies on data outstanding were from Dothan financial institutions. from the Dothan Chamber of Commerce, which des- Based on these and all other facts of record, the Board ignate trade and labor-shed areas from Dothan that believes that Dothan, Alabama, and the Alabama extend into Florida.7 SouthTrust has also provided the Counties of Dale, Henry, Houston, and Geneva results of an informal survey of Marianna residents should not be included in the geographic banking and account data from its Dothan bank to support the market in this case and that the relevant geographic inclusion of Dothan within the Marianna banking banking market is the Marianna banking market as market.8 defined above. Competitive Effects in the Marianna Banking Market 3. State deposit data are as of December 31, 1991. 4. The Marianna banking market is comprised of Jackson County, SouthTrust Bank is the second largest of 12 depository the eastern two-thirds of Holmes County (including Westville), the institutions in the market, controlling deposits of northern part of Washington County (excluding Vernon and Wausau), and the city of Chattahoochee in Gadsden County, all in Florida. $118.4 million, representing 26.6 percent of total de- 5. See St. Joseph Valley Bank, 68 Federal Reserve Bulletin 673, 674 posits in depository institutions in the market ("mar- (1982). 6. Dothan is located IS miles from the Florida/Alabama state line which serves as the northern boundary for the Marianna banking market. The Board has previously defined Dothan as a separate are no legal impediments to interstate financial transactions. Southbanking market approximated by Houston County, Midland City and Trust also asserts that Dothan banks compete with banks in Marianna Grimes in Dale County, and Headland and Newville in Henry County, for commercial accounts, particularly from realtors and car dealerall in Alabama. See SouthTrust Corporation, 75 Federal Reserve ships. Bulletin 77, 77 n.l (1989). 9. The Dothan MSA consists of the Alabama Counties of Dale and 7. SouthTrust has also submitted a consultant's study based on 1980 Houston. Census Bureau commuting data. The study indicates, among other 10. See St. Joseph Valley Bank, supra note 5. An RMA is defined things, that extrapolations of commuting times suggest that Dothan is generally as a compact area with relatively high population density a likely destination for commuters in the Marianna banking market. that is linked by commuting, retail, and wholesale trade patterns, and 8. According to SouthTrust, conversations with Marianna residents by definition will include a central city or cities and all adjacent suggest that these residents prefer Dothan for shopping, health care, continuously built up areas, as well as certain other areas. Where and entertainment. In addition, SouthTrust states that its Dothan bank appropriate, an RMA may include communities that border different maintains 750 accounts from 401 households located in the Florida states. See 1992 Commercial Atlas & Marketing Guide (Rand Mccounties of Jackson, Holmes, and Washington, and notes that there Nally and Company 1992). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

712 Federal Reserve Bulletin • September 1992 ket deposits").11 Savings Bank is the fourth largest of the market's 22 bank and thrift offices with only one depository institution in the market, controlling depos- competing firm controlling more than two bank and its of $74.9 million, representing approximately 8.4 thrift offices.13 Moreover, most of the remaining depercent of total market deposits. If the proposed pository institutions in the market are relatively small merger were consummated, SouthTrust Bank would and have small market shares. Seven of the remaining become the largest depository institution in the mar- 11 competitors after consummation of the proposal ket, controlling $193.3 million in deposits, represent- would control market shares of 5 percent or less.14 ing approximately 40.1 percent of total market depos- The Board also believes that a number of characterits. The Herfindahl-Hirschman Index ("HHI") for the istics make this market unattractive for entry. The Marianna banking market would increase by 672 Marianna banking market is a rural market, relatively points to 2488. The Marianna banking market is con- small and poor by Florida standards, and has experisidered to be highly concentrated, and this increase enced slow population growth.15 In addition, populawould exceed the permissible levels under the merger tion and deposits per bank and banking office in the guidelines of the Department of Justice.12 Marianna banking market were generally below the SouthTrust maintains that several factors mitigate average for all non-MSA markets in Florida.16 The the anticompetitive effects of the proposal. SouthTrust weighted average growth for deposits in this market notes that a large number of competitors will remain in was 6.3 percent from 1989 to 1990 compared with 9 the market after consummation and that these compet- percent for all Florida non-MSA markets. Accorditors are healthy and profitable. In addition, South- ingly, this market does not possess the characteristics Trust points to the recent entry of a commercial bank that typically attract new competitors. Moreover, aland a thrift as evidence of the market's attractiveness though the Office of Thrift Supervision ("OTS") apto potential competitors. proved the acquisition of a banking office in the The Board believes that the measures under the Marianna banking market in May 1992,17 there has not merger guidelines are particularly significant in light of been de novo entry into this market since prior to the structure of the Marianna banking market, and that 1987.18 the anticompetitive effects suggested under these guidelines are not mitigated by other factors. Upon consummation, SouthTrust Bank would become the 13. Citizens Bancorp currently controls three banking offices, and market's largest competitor, with a market share more seven of the 12 competitors in the Marianna banking market control than 50 percent greater than that of the second largest only one bank or thrift office. 14. Upon consummation of the SouthTrust proposal, SouthTrust firm. In addition, SouthTrust Bank would control eight Bank and its second largest competitor would control 66.1 percent of market deposits. 15. The population of the Marianna banking market is approximately 75,000 and it is a non-MSA (metropolitan statistical area) 11. Deposit and market share data are as of June 30, 1991. In this Florida "panhandle" market. Between 1980 and 1990, population in context, depository institutions include commercial banks, savings the three counties largely comprising this banking market increased by banks and savings associations. Market share data before consumma- a weighted average of 9.4 percent, while the average population tion are based on calculations in which the deposits of thrift institu- increase for all non-MSA Florida counties was 46.3 percent. The tions are included at 50 percent. The Board previously has indicated average per capita income for this area is approximately $9,200 which that thrift institutions have become, or have the potential to become, is 80 percent of the average for non-MSA Florida counties. major competitors of commercial banks. See Midwest Financial 16. Population per bank in the Marianna banking market in 1991 was Group, 75 Federal Reserve Bulletin 386 (1989); National City Corpo- 7,885 compared with 11,243 for all non-MSA markets in Florida; and ration, 70 Federal Reserve Bulletin 743 (1984). Because the deposits of deposits per bank in the Marianna banking market were $39.9 million Savings Bank would be transferred to a commercial bank under this compared to $97.4 million for all non-MSA markets in Florida. During proposal, those deposits are included at 100 percent in the calculation the same period, deposits per banking office in this market were $21.2 of the pro forma market share. See Norwest Corporation, 78 Federal million compared with $32.1 million for all Florida non-MSA markets; Reserve Bulletin 452 (1992); First Banks, Inc., 76 Federal Reserve while population per banking office was slightly higher in this market Bulletin 669, 670 n.9 (1990); with 5,166 compared with 4,580 for all Florida non-MSA markets. 12. Under the revised Department of Justice Merger Guidelines, 49 17. The OTS approved Peoples First Financial Savings and Loan Federal Register 26,823 (June 29, 1984), a market in which the Association, Panama City, Florida, which is located in an adjacent post-merger HHI is above 1800 is considered highly concentrated. Florida banking market, to acquire an office of Farmers Bank of The Department of Justice has informed the Board that a bank merger Malone, Malone, Florida, one of the smaller banking competitors in or acquisition generally will not be challenged (in the absence of other the Marianna banking market. factors indicating anticompetitive effects) unless the post-merger HHI 18. Within the last five years there have been several indirect is at least 1800 and the merger increases the HHI by at least 200 acquisitions of branch offices located in the Marianna banking market. points. The Justice Department has stated that the higher than normal In each case, however, the entry occurred through the acquisition of HHI thresholds for screening bank mergers and acquisitions for a single branch office of a firm that was headquartered outside of the anticompetitive effects implicitly recognizes the competitive effect of Marianna banking market. For example, in 1991 First Union Corpolimited-purpose lenders and other non-depository financial entities. ration, Charlotte, North Carolina, acquired Southeast Banking Cor- If thrift deposits are weighted at 50 percent both before and after poration, Miami, Florida, and thereby acquired a branch of Southeast consummation of SouthTrust's proposal, SouthTrust Bank's market Banking Corporation located in the Marianna banking market. Simishare would increase to 35 percent and the HHI would increase by 448 larly, in 1987 Gadsden City Bank Group, Gadsden, Florida, acquired points to 2264, a level still in excess of the Department of Justice Pioneer Savings, Quincy, Florida, and thereby acquired a branch of merger guidelines. Pioneer Savings located in the Marianna banking market. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 713 SouthTrust also maintains that the anticompetitive Accordingly, it is the Board's judgment that apeffects of the proposed merger would be lessened proval of these applications is not warranted, and the because SouthTrust Bank and Savings Bank do not Board hereby denies these applications under section directly compete in several banking product lines.19 In 4(c)(8) of the BHC Act and section 5(d)(3) of the FDI particular, SouthTrust notes that the merger would not Act. diminish commercial lending in the market because By order of the Board of Governors, effective Savings Bank does not make commercial loans. South- July 9, 1992. Trust's analysis differs from the cluster of bank products and services approach used by the Board. For the Voting for this action: Chairman Greenspan and Governors reasons explained in previous decisions, the Board Mullins, Angell, Kelley, Lindsey, and Phillips. Voting against continues to believe that the competitive analysis of this action: Governor LaWare. bank expansion proposals should be based on the WILLIAM W. WILES availability of the cluster of banking services to a range Secretary of the Board of customers in the local banking market.20 Based on a review of all the facts of record, includ- Orders Issued Under Sections 3 and 4 of the ing the demographic and economic factors of the Bank Holding Company Act Marianna banking market, the number of competitors, and the resulting control of market share and bank and Glacier Bancorp, Inc. thrift offices after the merger, the Board believes that Kalispell, Montana the proposed transaction would have a significantly adverse effect on competition. Order Approving Formation of a Bank Holding The Board also believes these significant competi- Company tive effects are not clearly outweighed in the public interest by benefits to the convenience and needs of Glacier Bancorp, Inc., Kalispell, Montana ("Glacier"), the communities to be served or other benefits to the has applied under section 3(a)(1) of the Bank Holding public. Savings Bank is in satisfactory financial condi- Company Act ("BHC Act") (12 U.S.C. § 1842(a)(1)) to tion with strong earnings and a solid equity base, and become a bank holding company by acquiring all of the it is an important provider of financial services in the voting shares of Evergreen Bancorporation, Kalispell Marianna banking market. For example, the record ("Evergreen"), and thereby indirectly acquiring First indicates that Savings Bank is a significant lender for National Bank of Whitefish, Whitefish ("Whitefish 1-4 family residential mortgages in the market and is Bank"), and First National Bank of Eureka, Eureka second in this product line only to SouthTrust Bank. ("Eureka Bank"), all in Montana. Glacier also has In addition, Savings Bank and SouthTrust Bank are applied under section 4(c)(8) of the BHC Act to retain the only lenders in the market providing both convenits interest in First Federal Savings Bank of Montana, tional and VA/FHA mortgage loans. The Board does Kalispell, Montana ("First Federal"), and thereby ennot believe that, in light of all the facts of record, gage in operating a savings association and in securities public benefits associated with this proposal would brokerage activities pursuant to the Board's Regulation clearly outweigh the likely adverse effects of the Y (12 C.F.R. 225.25(b)(9) and (15)). proposal on competition in the Marianna banking Notice of the applications, affording interested permarket. sons an opportunity to submit comments, has been For these reasons, and based on all of the facts of published (57 Federal Register 18,495 (1992)). The record, the Board concludes that considerations relattime for filing comments has expired, and the Board ing to the competitive effects of this proposal are not has considered the applications and all the comments consistent with approval. Considerations relating to received in light of the factors set forth in sections 3(c) the financial and managerial resources and future and 4(c)(8) of the BHC Act.1 prospects of the existing and proposed institutions, and the convenience and needs of the communities to Competitive Considerations be served, do not lend sufficient weight to warrant approval of these applications. Glacier owns the 19th largest insured depository institution in Montana, controlling deposits of $52.4 mil- 19. SouthTrust argues that Savings Bank primarily provides mortgage loans while SouthTrust Bank concentrates on small business and consumer credit. 1. The Board has received comments from an individual ("Protes- 20. See First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991); tant") relating to competitive, convenience and needs, managerial and United States v. Philadelphia National Bank, 374 U.S. 321 (1963). financial considerations regarding this proposal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

714 Federal Reserve Bulletin • September 1992 lion, representing less than 1 percent of total deposits Convenience and Needs Considerations in bank and thrift institutions ("depository institutions") in the state.2 Evergreen is the 41st largest In analyzing the effect of this merger on the convedepository institution in Montana, controlling deposits nience and needs of the communities to be served by of $37.2 million, representing less than 1 percent of Glacier and Evergreen, the Board has taken into actotal deposits in depository institutions in the state. count the record of performance of Whitefish Bank, Upon consummation of the proposed transaction, Gla- Eureka Bank and First Federal under the Community cier would become the eighth largest depository insti- Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). tution in Montana, controlling deposits of $142.0 mil- The CRA requires the federal financial supervisory lion, representing approximately 2 percent of total agencies to encourage financial institutions to help deposits in depository institutions in the state. meet the credit needs of the local communities in Glacier and Evergreen compete directly in the Kal- which they operate, consistent with the safe and sound ispell banking market.3 Evergreen is the eighth largest operation of such institutions. To accomplish this end, depository institution in the market, controlling depos- the CRA requires the appropriate federal supervisory its of $35.5 million, representing approximately authority to "assess an institution's record of meeting 6.5 percent of total deposits in depository institutions the credit needs of its entire community, including in the market ("market deposits"). Glacier is the sixth low- and moderate-income neighborhoods, consistent largest depository institution in the market, controlling with the safe and sound operation of the institution," deposits of $45.2 million, representing approximately and to take that record into account in its evaluation of 8.2 percent of market deposits. Upon consummation bank holding company applications.6 of this proposal, Glacier would control $125.9 million The Board has carefully reviewed the CRA perforin deposits, representing approximately 21.2 percent mance records of Whitefish Bank, Eureka Bank and of market deposits. The Herfindahl-Hirschman Index First Federal, as well as Protestant's comments and ("HHI") for this market would increase by 175 points Glacier's responses to those comments, and all of the to 1414,4 and ten other depository institutions would other relevant facts, in light of the CRA, the Board's continue to compete in this market. Based on all the regulations, and the Statement of the Federal Finanfacts of record, the Board concludes that consumma- cial Supervisory Agencies Regarding the Community tion of this proposal would not result in a significantly Reinvestment Act ("Agency CRA Statement").7 adverse effect on competition in the Kalispell banking Initially, the Board notes that First Federal received market or any other relevant market.5 an "outstanding" rating for CRA performance from its 2. State deposit data are as of June 30,1991. Market deposit data are the Mountain Bank of Whitefish, the only banking competitor for the as of June 30, 1990. Deposit data before consummation are based on Evergreen subsidiary banks to be acquired in these submarkets, own calculations in which the deposits of thrift institutions are included at shares in the Evergreen banks. Annex A to the Stock Purchase 50 percent. The Board previously has indicated that thrift institutions Agreement relied on by Protestant, however, documents principals' have become, or have the potential to become, major competitors of debt to, not ownership interest in, the Evergreen subsidiary banks, commercial banks. See Midwest Financial Group, 75 Federal Reserve and there is no evidence in the record of ownership as alleged by Bulletin 386 (1989); National City Corporation, 70 Federal Reserve Protestant. In addition, the evidence of record supports the inclusion Bulletin 743 (1984). Because the deposits of First Federal would be of Eureka and Whitefish in the Kalispell banking market. For examcontrolled by a commercial banking organization under Glacier's ple, both towns are connected to Kalispell by good roads, with proposal, those deposits are included at 100 percent in the calculation Whitefish located 13 miles and Eureka located 65 miles from Kalispell. of the pro forma market share. See Norwest Corporation, Federal The Bureau of Business and Economic Research at the University of Reserve Bulletin 452 (1992); First Banks, Inc., 76 Federal Reserve Montana in Missoula also defines Kalispell as a "second level trading Bulletin 669, 670 n.9 (1990). center" and one of the fastest growing areas in Montana, and several 3. The Kalispell banking market is approximated by Lincoln and Kalispell banks indicate that they have a large number of accounts Flathead Counties, as well as Big Fork-Swan River and Poison from Eureka and Whitefish. Moreover, even if the Eureka and division in Lake County, all in Montana. Whitefish submarkets were relevant in this case, Glacier does not 4. Under the revised Department of Justice Merger Guidelines, 49 compete in either of these submarkets and, accordingly, its entry Federal Register 26,823 (June 29, 1984), a market in which the post- through the proposed acquisition would have no competitive effect on merger HHI is between 1000 and 1800 is deemed moderately concen- these markets. trated. The Justice Department has informed the Board that a bank 6. 12 U.S.C. § 2903. merger or acquisition generally will not be challenged (in the absence of 7. 54 Federal Register 13,742 (1989). The Agency CRA Statement other factors indicating anticompetitive effects) unless the post-merger provides guidance regarding the types of policies and procedures that HHI is at least 1800 and the merger increases the HHI by more than 200 the supervisory agencies believe financial institutions should have in points. The Justice Department has stated that the higher-than-normal place in order to fulfill their responsibilities under the CRA on an HHI thresholds for screening bank mergers for anticompetitive effects ongoing basis and the procedures that the supervisory agencies will implicitly recognize the competitive effect of limited-purpose lenders use during the application process to review an institution's CRA and other non-depository financial institutions. compliance and performance. The Agency CRA Statement also indi- 5. Protestant asserts that financial institutions in the Kalispell cates that decisions by agencies to allow financial institutions to banking market in practice compete in local Montana submarkets, expand will be made pursuant to an analysis of the institution's overall especially in Eureka and Whitefish. In Protestant's view, this proposal CRA performance and will be based on the actual record of perforwould have an adverse effect on competition because two principals of mance of the institution. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 715 primary regulator, the Office of Thrift Supervision On the basis of all the facts of record, including ("OTS"), in its most recent examination for CRA comments received and relevant examination reports, performance in November 1990.8 Whitefish Bank and the Board concludes that convenience and needs con- Eureka Bank also received "outstanding" and "satis- siderations, including the CRA performance records of factory" ratings, respectively, in their most recent Glacier and Evergreen, are consistent with approval of examinations for CRA performance from their primary these applications. regulator, the Office of the Comptroller of the Currency ("OCC").9 The Agency CRA Statement pro- Financial, Managerial and Other Considerations vides that a CRA examination is an important and often controlling factor in the consideration of an The Board also concludes that the financial and maninstitution's CRA record and that these reports will be agerial resources and future prospects of Glacier, given great weight in the applications process.10 Evergreen and its subsidiary banks, and other factors Protestant alleges that Glacier engages in insufficient required to be considered under the BHC Act are commercial lending and that this proposal will curtail consistent with approval.12 the commercial lending of Whitefish Bank and Eureka Glacier also has applied pursuant to section 4(c)(8) Bank. In support of these allegations, Protestant notes of the BHC Act to retain its interest in First Federal, that First Federal's annual report indicates that only 2 and thereby engage in operating a savings association percent of its loan receivables were commercial loans.11 and in securities brokerage activities. The Board has Glacier responds that Protestant's comments do not previously determined that the operation of a savings account for First Federal's loans secured by real association and securities brokerage activities are estate, including loans for five-or-more unit apart- closely related to banking for purposes of section ments and construction loans for residential proper- 4(c)(8) of the BHC Act, and permissible for bank ties, motels and other commercial purposes. With holding companies.13 In assessing the financial factors, these loans, lending for business purposes comprises the Board believes that bank holding companies must 14.6 percent of First Federal's total loan portfolio. maintain adequate capital at savings associations that Glacier also proposes to expand its commercial they operate. Upon consummation, First Federal will lending operations through the proposed acquisition of meet all applicable capital requirements and Glacier Evergreen's subsidiary banks. As indicated by the has committed that First Federal will meet all current March 1992 Call Reports of Whitefish Bank and Eu- and future minimum capital ratios adopted for savings reka Bank, commercial and industrial loans comprise associations by the OTS or the Federal Deposit Insur- 62 percent of Whitefish Bank's loan portfolio and 53 ance Corporation. percent of Eureka Bank's loan portfolio. Glacier will In order to approve the retention of First Federal continue to operate Whitefish Bank and Eureka Bank under section 4 of the BHC Act, the Board also is as separate banks with the same staffs as are currently required to determine that the performance of the in place and will continue their current banking prac- proposed activities by Glacier "can reasonably be tices regarding commercial lending. In addition, First expected to produce benefits to the public . . . that Federal intends to use the commercial lending experi- outweigh possible adverse effects, such as undue ence of these banks to increase its commercial loan concentration of resources, decreased or unfair comactivity, to the extent permissible under statute, and petition, conflicts of interests, or unsound banking has recently expanded its commercial lending staff by practices." 12 U.S.C. § 1843(c)(8). employing an experienced commercial loan officer. 8. The OTS examination commended First Federal's ascertainment efforts though community contact with public and private groups and 12. Protestant suggests that three civil actions involving Evergreen market studies to determine community credit needs. First Federal, and Whitefish Bank since 1986 raise managerial and financial conthrough its board of directors, has been responsive to community cerns. Glacier responds that two of these suits were collection actions credit needs through product development, which has included loans and that one action was initiated by Protestant. These proceedings will for residential homes, housing rehabilitation and small businesses. provide Protestant and other litigants with an adequate remedy if the The OTS also found that First Federal effectively markets its prod- alleged misconduct can be established in the individual loan transacucts, and that the geographic distribution of its loans indicates that all tions. On the basis of all the facts of record, including examination segments of the community are being reached. First Federal's partic- reports from Whitefish Bank's primary regulator and confidential ipation in local community development activities was also found to financial information, the Board concludes that Protestant's combe commendable. ments regarding adverse managerial and financial considerations are 9. Whitefish Bank was examined as of August 1989 and Eureka not supported by the record of these applications. Bank was examined as of January 1987. 13. 12 C.F.R. 225.25(b)(9) and (15). Glacier currently engages in 10. 54 Federal Register at 13,745. insurance activities that are impermissible for bank holding companies 11. Federal regulations limit the amount of loans classified as under section 4(c)(8) of the BHC Act. Glacier has committed to divest commercial loans, other than loans secured by real estate, by a federal all insurance activities prior to consummation of its acquisition of savings association to 10 percent of its assets. 12 C.F.R. 545.46. Evergreen. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

716 Federal Reserve Bulletin • September 1992 Glacier has stated that the proposal will result in an Orders Issued Under Bank Merger Act increase in services for customers of Glacier and Evergreen. The record does not indicate that consum- Farmers State Bank of Western Illinois mation of this proposal is likely to result in any New Windsor, Illinois significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, Order Approving Acquisition of Certain Assets and conflicts of interests, or unsound banking practices. Assumption of Certain Liabilities of a Bank and the There is no evidence in the record to indicate that Establishment of Branches consummation of this proposal is likely to result in any other significantly adverse effects, such as undue Farmers State Bank of Western Illinois, New Windconcentration of resources, decreased or unfair com- sor, Illinois ("Farmers Bank"), a state member bank, petition, conflicts of interests, or unsound banking has applied, pursuant to section 18(c) of the Federal practices that are not outweighed by the public bene- Deposit Insurance Act (12 U.S.C. § 1828(c)) (the fits in this case. Based on consideration of all the facts "Bank Merger Act"), to purchase certain assets from in this case, the Board has determined that the balance and assume certain liabilities of the Bank of Alexis, of public interest factors it must consider under sec- Alexis, Illinois ("Alexis Bank"). Farmers Bank also tion 4(c)(8) of the BHC Act is favorable and consistent has applied, pursuant to section 9 of the Federal with approval of the applications. Reserve Act ("FRA") (12 U.S.C. § 321 et seq.), to Based on the foregoing and other facts of record, establish branch offices at Alexis Bank's former site and subject to the commitments made by Glacier in and at 320 N. Division Street, Woodhull, Illinois, and this case, the Board has determined that the applica- for permission to make an additional investment in tions should be, and hereby are, approved. This ap- bank premises pursuant to section 24A of the Federal proval is specifically conditioned on compliance by Reserve Act (12 U.S.C. § 371(d)). This proposal rep- Glacier with all of the commitments made in connec- resents a corporate reorganization of Farmers Bank's tion with these applications and with the conditions parent holding company, Alpha Banco Inc., Alpha, referenced in this order. The determinations as to Illinois. Glacier's nonbanking activities are also subject to all Notice of these applications, affording interested the conditions contained in the Board's Regulation Y, persons an opportunity to submit comments, has been including those in sections 225.4(d) and 225.23(b)(3) given in accordance with the Bank Merger Act and the (12 C.F.R. 225.4(d) and 225.23(b)(3)), and to the Board's Rules of Procedure (12 C.F.R. 262.3(b)). As Board's authority to require such modification or required by the Bank Merger Act, reports on the termination of the activities of a holding company or competitive effects of the merger were requested from any of its subsidiaries as it finds necessary to assure the United States Attorney General, the Office of the compliance with, or prevent evasions of, the provi- Comptroller of the Currency, and the Federal Deposit sions and purposes of the BHC Act and the Board's Insurance Corporation. The time for filing comments regulations and orders issued thereunder. The commit- has expired, and the Board has considered the appliments and conditions relied on in reaching this deci- cations and all comments received in light of the sion are conditions imposed in writing by the Board in factors set forth in the Bank Merger Act connection with its findings and decision and may be (12 U.S.C. § 1828(c)(5)) and in section 9 of the FRA. enforced in proceedings under applicable law. Farmers Bank is the 409th largest commercial The acquisition of Evergreen shall not be consum- banking organization in Illinois, controlling deposits mated before the thirtieth calendar day after the effec- of $42.4 million.1 Alexis Bank is the 698th largest tive date of this Order, or later than three months after banking organization in Illinois, controlling approxithe effective date of this Order, unless such period is mately $12.9 million in deposits. Farmers Bank opextended for good cause by the Board or by the erates in the Mercer County, Illinois, banking mar- Federal Reserve Bank of Minneapolis, acting pursuant ket,2 while Alexis Bank operates in the Warren to delegated authority. County, Illinois banking market.3 Since Farmers By order of the Board of Governors, effective Bank and Alexis Bank do not compete in the same July 20, 1992. Voting for this action: Chairman Greenspan and Governors Mullins, Angell, Kelley, and Lindsey. Absent and not voting: 1. Data are as of December 31, 1990. 2. The Mercer County, Illinois banking market includes Mercer Governors La Ware and Phillips. County, and Drury and Buffalo Prairie Townships in Rock Island County, all in Illinois. JENNIFER J. JOHNSON 3. The Warren County, Illinois banking market is approximated by Associate Secretary of the Board Warren County, Illinois. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 87 banking market, and since this proposal represents By order of the Board of Governors, effective only a corporate reorganization, the Board con- July 27, 1992. cludes, based on these and all the other facts of record, that consummation of the proposal would not Voting for this action: Chairman Greenspan and Governors have a significantly adverse effect on competition in Mullins, Angell, Kelley, LaWare, and Lindsey. Absent and any relevant banking market. not voting: Governor Phillips. The Board also concludes, on the basis of all the JENNIFER J. JOHNSON facts of record, that the managerial resources of Farm- Associate Secretary of the Board ers Bank and its parent holding company are consistent with approval.4 Considerations relating to the convenience and needs of the communities to be ACTIONS TAKEN UNDER THE FEDERAL DEPOSIT served also are consistent with approval. In addition, INSURANCE CORPORATION IMPROVEMENT ACT the Board concludes on the basis of all the facts of record that the financial resources and future pros- By the Board pects of Farmers Bank and its parent holding company are consistent with approval.5 The Board also has considered the factors it is July 20, 1992 required to consider when reviewing applications for establishing branches pursuant to section 9 of the FRA Mr. Bruce Rigelman (12 U.S.C. § 322) and finds those factors to be consis- Senior Attorney tent with approval of Farmers Bank's application Banc One Corporation under section 9 to establish branches at Alexis Bank's 100 East Broad Street former site and at Woodhull, Illinois. In connection Columbus, Ohio 43271-0261 with its application to establish a branch at Woodhull, Illinois, Farmers Bank has requested permission under Dear Mr. Rigelman: section 24A of the Federal Reserve Act to make an additional investment in bank premises. The Board Banc One Corporation, Columbus, Ohio ("Banc One"), concludes that Farmers Bank's additional investment has proposed to acquire certain assets and assume certain in bank premises will support Farmers Bank's acquiliabilities of Diamond Saving and Loan Company, Findsition of the Woodhull branch and is consistent with lay, Ohio, through four of its bank subsidiaries (collectiveapproval. ly, "Banks").1 Banc One has requested Board approval Based on the foregoing and all the facts of record, of this transaction pursuant to section 5(d)(3) of the the Board has determined that the applications should Federal Deposit Insurance Act (12 U.S.C. § 1815(d)(3) be, and hereby are, approved. This transaction should ("FDI Act")), as amended by the Federal Deposit Insurnot be consummated before the thirtieth calendar day ance Corporation Improvement Act of 1991 (Pub. L. No. following the effective date of this Order, unless such 102-242, § 501, 105 Stat. 2236, 2388-2392 (1991)). Section period is extended for good cause by the Board or the 5(d)(3) of the FDI Act requires the Board to follow the Federal Reserve Bank of Chicago, acting pursuant to procedures and consider the factors set forth in the Bank delegated authority. Merger Act (12 U.S.C. § 1828(c)). 12 U.S.C. § 1815(d) (3)(E).2 Banc One and Diamond compete in the Port 4. The Board has carefully considered comments opposing these Clinton, Celina-St. Marys, Lima, Sandusky and Van applications from two individuals ("Protestants") who are also plaintiffs in a suit filed for damages resulting from two separate loan Wert banking markets, all in Ohio. In the Port Clinton transactions involving Protestants. Protestants filed suit in August banking market,3 Banc One is the fourth largest of nine 1985. Based on all of the facts of record, including the information commercial banking or thrift institutions (together, provided by Protestants and Farmers Bank and the recent examination reports relating to the management of Farmers Bank, the Board "depository institutions"), controlling deposits of does not believe that Protestants' allegations, if true, reflect so adversely on the management of Fanners Bank as to warrant denial of these applications. The Board also notes that the pending civil action will provide Protestants with an opportunity to fully press their claims 1. The four bank subsidiaries are Bank One, Fremont, N.A., and obtain a remedy, if their allegations are proved and a remedy is Fremont; Bank One Lima, N.A., Lima; Bank One, Marion, Marion; appropriate. and Bank One, Sidney, N.A., Sidney, all in Ohio. 5. The Board notes that this proposal is a corporate reorganization. 2. These factors include considerations relating to competition, In light of all of the facts of record, consummation of the proposal financial and managerial resources, and future prospects of the would not adversely affect Farmers Bank's ability to pay any dam- existing and proposed institutions, and the convenience and needs of ages, which are speculative at this point, that may be awarded in the the communities to be served. 12 U.S.C. § 1828(c). Protestants' civil action, or materially affect the financial condition of 3. The Port Clinton banking market is approximated by Ottawa Farmers Bank. County, except Allen, Clay, Benton and Harris townships, all in Ohio. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

718 Federal Reserve Bulletin • September 1992 $41.1 million, representing approximately 14.5 percent on competition in any of the other relevant banking of total deposits in depository institutions in the mar- markets.9 ket ("market deposits").4 Diamond controls deposits The Board also concludes that the financial and of $35 million. With thrift deposits in the market managerial resources and future prospects of Banc weighted at 50 percent,5 Diamond is the fifth largest One and Banks are consistent with approval of this depository institution in the market, representing ap- application. Considerations relating to the conveproximately 6.2 percent of market deposits. Upon nience and needs of the communities to be served also consummation of this proposal, Banc One would con- are consistent with approval.10 Moreover, the record trol $76.1 million in deposits, representing approxi- in this case shows that: mately 25.3 percent of market deposits.6 The Herfin- (1) the transaction will not result in the transfer of dahl-Hirschman Index ("HHI") for this market would any federally insured depository institution's federal increase by 207 points to 2081.7 deposit insurance from one federal deposit insur- Seven commercial banking organizations and one ance fund to the other; thrift institution would continue to operate in the (2) Banc One and Banks currently meet, and upon Port Clinton banking market following consumma- consummation of the proposed transaction will contion of the proposal. In addition, the Port Clinton tinue to meet, all applicable capital standards; and banking market has certain features that make the (3) since Banks are located in Ohio and are acquiring market attractive to potential entrants.8 In light of certain assets and assuming certain liabilities of an the number of competitors remaining in the market, Ohio federal savings bank, the proposed transaction certain features that make the market attractive to would comply with the Douglas Amendment if Diapotential entrants, and other facts of record in this mond were a state bank that Banc One was applying case, the Board concludes that consummation of this to acquire directly. See 12 U.S.C. § 1815(d)(3). proposal would not have a significantly adverse effect Based on the foregoing and all of the facts of record, on competition or the concentration of banking re- the Board has determined that this application should sources in the Port Clinton banking market. The be, and hereby is, approved.11 This approval is subject Board also concludes that consummation of this to Banks obtaining the required approval of the approproposal would not have a significantly adverse effect priate Federal banking agency for the proposed merger under the Bank Merger Act. The Board's approval of this application also is conditioned upon Banc One's compliance with the commitments made in connection 4. Deposit data are as of June 30, 1991. 5. See, e.g., First Hawaiian, Inc., 77 Federal Reserve Bulletin 52, with this application. The commitments and conditions 55 (1991); First Union Corporation, 16 Federal Reserve Bulletin 83, 85 referred to above are conditions imposed in writing by (1990). the Board in connection with its findings and decision, 6. Because the deposits of Diamond would be transferred to a commercial bank under Banc One's proposal, those deposits are and may be enforced under applicable provisions of included at 100 percent after Banc One's assumption of these deposits. See First Banks, Inc., 76 Federal Reserve Bulletin 669, 670 n.9 (1990); Norwest Corporation, 78 Federal Reserve Bulletin 452 (1992). 9. In the Celina-St. Marys banking market, Banc One would 7. Under the revised Department of Justice Merger Guidelines, 49 become the third largest depository institution, and the HHI would Federal Register 26,823 (June 29, 1984), a market in which the increase by 42 points to 1381. Banc One would remain the largest post-merger HHI is above 1800 is deemed to be highly concentrated. depository institution in the Lima banking market, and the HHI would In such markets, the Justice Department is likely to challenge a merger increase by 323 points, to a level of 1469. In the Sandusky banking that increases the HHI by more than 50 points. However, the Justice market, Banc One would become the fourth largest depository insti- Department has informed the Board that a bank merger or acquisition tution, and the HHI would decrease by 44 points to 2425. Banc One generally will not be challenged (in the absence of other factors would remain the third largest depository institution in the Van Wert indicating anticompetitive effects) unless the post-merger HHI is at banking market, and the HHI would increase by 35 points, to a level least 1800 and the merger increases the HHI by more than 200 points. of 2428. The Justice Department has stated that the higher-than-normal HHI 10. The Board received a comment from two customers of Diamond thresholds for screening bank mergers for anticompetitive effects alleging that Banc One has uncompetitive interest rates and a less than implicitly recognize the competitive effect of limited-purpose lenders satisfactory selection of banking services. Banc One has stated that and other non-depository financial institutions. after consummation of the proposal it will offer a variety of retail 8. These aspects of the market include: banking products and services. For example, Diamond's checking (1) greater deposits per office than other non-MSA markets in Ohio, accounts will be converted into Bank One Regular or Money Market on average ($23.2 million in 1990, compared to $22 million for other Checking Accounts, which offer unlimited transactions with a mininon-MSA markets in Ohio); mum monthly balance of $500 and $1,000, respectively. Bank One also (2) greater median household effective buying income than other claims that its interest rates are competitive, and that the passbook MSA and non-MSA markets in Ohio, on average ($33,705 in 1990, savings rate of Bank One Lima, N.A., is higher than the current compared to $23,836 for other non-MSA markets in Ohio and passbook savings rate of Diamond. Based on a review of all of the $28,340 for MSA markets); and facts of record, the Board does not believe that these comments (3) greater personal income per capita than other MSA and non- warrant denial of the proposal. MSA markets in Ohio, on average ($17,612 in 1989, compared to 11. Voting for this action: Chairman Greenspan and Governors $13,354 for other non-MSA markets in Ohio and $15,849 for MSA Mullins, Angell, Kelley, and Lindsey. Absent and not voting: Govermarkets). nors LaWare and Phillips. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 719 law. This approval is limited to the proposal presented West Shore, with $93.4 million in deposits, is the to the Board by Banc One, and may not be construed as 53d largest commercial banking organization in Michapplying to any other transaction. igan.2 Bank and Great Lakes compete in the Luding- This transaction may not be consummated before ton, Michigan, banking market.3 Bank is the largest of the thirtieth calendar day after the effective date of eight depository institutions in the market, controlling this letter, or later than three months after the deposits of $88.8 million, representing approximately effective date of this letter, unless such period is 24.7 percent of total deposits in depository institutions extended by the Board or the Federal Reserve Bank in the market ("market deposits").4 Great Lakes is the of Cleveland, acting pursuant to delegated authority. seventh largest depository institution in the market, In connection with this provision, advice of the fact controlling $24.6 million in deposits, representing apof consummation should be given in writing to the proximately 3.4 percent of market deposits. Upon Reserve Bank. consummation of this proposal, Bank would control $113.3 million in deposits, representing approximately Very truly yours, 30.5 percent of market deposits. The Herfindahl- Hirschman Index ("HHI") for this market would increase by 240 points to 1930.5 A number of charac- JENNIFER J. JOHNSON Associate Secretary of the Board teristics of the Ludington banking market indicate that the increase in concentration levels as measured by cc: Federal Reserve Bank of Cleveland the HHI for this market overstates the possible effect Tom Hesselbrock, Federal Deposit Insurance of the proposal on competition. Upon consummation Corporation of this proposal, seven depository institutions would remain as competitors and four of the remaining com- Office of the Comptroller of the Currency petitors would have market shares of at least Department of Justice 13 percent. In addition, three of the market's remaining firms, ranked second, third and fourth in the July 20, 1992 market, are among the largest banking organizations in Michigan.6 In contrast, Great Lakes is one of the Donald L. Johnson 171 Monroe Avenue, N.W. Suite 800 2. Deposit and market data are as of June 30, 1990. 3. The Ludington banking market is approximated by Mason Grand Rapids, Michigan 49503 County except Grant, Freesoil and Meade townships; Lake County except Elk and Eden townships; Oceana County; and the northern Dear Mr. Johnson: one-third of Newaygo County; all in Michigan. 4. In this context, depository institutions include commercial banks, West Shore Bank Corporation, Scottville, Michigan savings banks and savings associations. Market share data before ("West Shore"), has proposed to acquire certain assets consummation are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously has and assume certain liabilities of the Ludington, Michi- indicated that thrift institutions have become, or have the potential to gan, branch of Great Lakes Bancorp, F.S.B., Ann become, major competitors of commercial banks. See Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Arbor, Michigan ("Great Lakes"), through its bank Corporation, 70 Federal Reserve Bulletin 743 (1984). Because the subsidiary, State Savings Bank of Scottville, Scottville, deposits of Great Lakes would be transferred to a commercial bank Michigan ("Bank"). West Shore has requested Board under this proposal, those deposits are included at 100 percent in the calculation of the pro forma market share. See Norwest Corporation, approval of this transaction pursuant to section 5(d)(3) 78 Federal Reserve Bulletin 452 (1992); First Banks, Inc. 76 Federal of the Federal Deposit Insurance Act (12 U.S.C. Reserve Bulletin 669, 670 n.9 (1990). West Shore and a second banking organization in the Ludington § 1815(d)(3) ("FDI Act")), as amended by the Federal market, Lake Osceola State Bank, are commonly owned. Accord- Deposit Insurance Corporation Improvement Act of ingly, these two banking organizations have been combined for 1991 (Pub. L. No. 102-242, § 501, 105 Stat. 2236, purposes of this analysis. 5. Under the revised Department of Justice Merger Guidelines, 49 2388-2392 (1991)). Section 5(d)(3) of the FDI Act re- Federal Register 26,823 (June 29, 1984), a market in which the quires the Board to follow the procedures and consider post-merger HHI is above 1800 is deemed to be highly concentrated. the factors set forth in the Bank Merger Act The Justice Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other (12 U.S.C. § 1828(c)). 12 U.S.C. § 1815(d)(3)(E).1 factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Justice Department has stated that the higher-than-normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders 1. These factors include considerations relating to competition, and other non-depository financial institutions. financial and managerial resources, and future prospects of the 6. These competitors are First Michigan, Holland, Michigan; First existing and proposed institutions, and the convenience and needs of of America, Kalamazoo; and Old Kent, Grand Rapids, all in Michithe communities to be served. 12 U.S.C. § 1828(c). gan. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

720 Federal Reserve Bulletin • September 1992 smallest competitors in the market and has not been be, and hereby is, approved.8 This approval is subject effective in increasing its market share.7 Finally, the to Bank obtaining the required approval of the prolegal barriers to entry under state law in the Ludington posed merger under the Bank Merger Act. The banking market are low. Board's approval of this application also is condi- Based on these and other facts of record, the Board tioned upon West Shore's compliance with the comhas determined that consummation of this proposal is mitments made in connection with this application. not likely to have a significantly adverse effect on The commitments and conditions referred to above are competition in the Ludington banking market or any conditions imposed in writing by the Board in connecother relevant banking market. tion with its findings and decision, and may be en- The Board also concludes that the financial and forced under applicable provisions of law. This apmanagerial resources and future prospects of Great proval is limited to the proposal presented to the Lakes and West Shore and their subsidiaries are con- Board by West Shore, and may not be construed as sistent with approval of this application. Considerations applying to any other transaction. relating to the convenience and needs of the community This transaction may not be consummated before to be served are also consistent with approval. More- the thirtieth calendar day after the effective date of this over, the record in this case shows that: letter, or later than three months after the effective (1) the transaction will not result in the transfer of date of this letter, unless such period is extended by any federally insured depository institution's federal the Board or the Federal Reserve Bank of Chicago, deposit insurance from one federal deposit insur- acting pursuant to delegated authority. In connection ance fund to the other; with this provision, advice of the fact of consumma- (2) West Shore and Bank currently meet, and upon tion should be given in writing to the Reserve Bank. consummation of the proposed transaction will continue to meet, all applicable capital standards; and Very truly yours, (3) because Bank is located in Michigan and is acquiring certain assets and assuming certain liabilities of a JENNIFER J. JOHNSON Michigan branch office of a federal savings bank, the Associate Secretary of the Board proposed transaction would comply with the Douglas Amendment if the Ludington branch of Great Lakes cc: Federal Reserve Bank of Chicago were a state bank that West Shore was applying to Tom Hesselbrock, Federal Deposit Insurance acquire directly. See 12 U.S.C. § 1815(d)(3). Corporation Based on the foregoing and all of the facts of record, Department of Justice the Board has determined that this application should 8. Voting for this action: Chairman Greenspan and Governors 7. Great Lakes's share of market deposits has declined 0.6 percent Mullins, Angell, Kelley, and Lindsey. Absent and not voting: Goverfrom 1986 through 1990. nors La Ware and Phillips. ACTIONS TAKEN UNDER THE FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991 ("FDICIA ORDERS") 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 Amalgamated Clothing and Amalgamated Bank of Bayside Federal Savings June 26, 1992 Textile Workers Union, New York, Bank, New York, New York New York, New York Jericho, New York ASB Bankcorp, Inc., Adrian State Bank, First Federal Savings July 8, 1992 Adrian, Michigan Adrian, Michigan and Loan, Adrian, Michigan Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 721 FDICIA Orders—Continued Acquired Surviving Approval Bank Holding Company Thrift Bank(s) Date Commercial National Financial Commercial National Great Lakes Bancorp, July 6, 1992 Corporation, Bank, FSB, Ithaca, Michigan Alma, Michigan Ann Arbor, Michigan FBOP Corporation, Sterling Federal Savings First Bank of Oak Park, July 2, 1992 Oak Park, Illinois and Loan Association Oak Park, Illinois of Chicago, Chicago, Illinois The George Gale Foster The Fishkill National First Nationwide Bank, July 13, 1992 Corporation, Bank, A Federal Savings Poughkeepsie, New York Poughkeepsie, New Bank, Fishkill National Corporation, York San Francisco, Beacon, New York California APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Applicant(s) Bank(s) ^ I^ate^ Bancorp of Mississippi, Inc., Volunteer Bancshares, Inc., July 24, 1992 Tupelo, Mississippi Jackson, Tennessee Bowbells Holding Company, First National Bank, July 9, 1992 Bowbells, North Dakota Minot, North Dakota APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant(s) Bank(s) Bank Date American Bancshares, Inc., American Commercial Savings Richmond July 10, 1992 Monroe, North Carolina Bank, Inc., SSB, Monroe, North Carolina BanCentral Corporation, Singer & Associates, Inc., Chicago July 2, 1992 Champaign, Illinois Mattoon, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

722 Federal Reserve Bulletin • September 1992 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date Banc One Corporation, Jefferson Bancorp, Inc., Cleveland July 3, 1992 Columbus, Ohio Peoria, Illinois Banc One Illinois Corporation, Springfield, Illinois Bigfork Bancshares, Inc., First State Bank of Bigfork, Minneapolis July 2, 1992 Bigfork, Minnesota Bigfork, Minnesota Central Delaware Financial Lorena State Bank, Dallas June 26, 1992 Bancorp, Inc., Lorena, Texas Dover, Delaware Central Financial Bancorp, Inc., Central Delaware Financial Dallas June 26, 1992 Lorena, Texas Bancorp, Inc., Dover, Delaware Lorena State Bank, Lorena, Texas Community Bank Group, Inc., Klossner State Bank, Minneapolis July 10, 1992 Eden Prairie, Minnesota Klossner, Minnesota Crossroads Bancshares, Inc., Crossroads Bank of Georgia, Atlanta July 1, 1992 Perry, Georgia Perry, Georgia Dickinson Financial Corporation, Atchison County Investment Kansas City July 8, 1992 Kansas City, Missouri Company, Rock Port, Missouri Donnelly Bancshares, Inc., Baron Bancshares, Inc., Minneapolis July 15, 1992 Donnelly, Minnesota White Bear Lake, Minnesota Firstar Corporation, Geneva Capital Corporation, Chicago June 26, 1992 Milwaukee, Wisconsin Lake Geneva, Wisconsin F.W.S.F. Corporation, Milwaukee, Wisconsin First Citizens Bancorp, Basin Bancorp, Inc., Atlanta July 20, 1992 Cleveland, Tennessee Ducktown, Tennessee MSB Bancorp, Inc., Middletown Savings Bank, New York June 26, 1992 Middletown, New York Middletown, New York NoDak Bancorporation, First Southwest Bank-Bismarck, Minneapolis July 6, 1992 Mandan, North Dakota Bismarck, North Dakota Peach State Bankshares, Inc., Peach State Bank, Atlanta July 6, 1992 Riverdale, Georgia Riverdale, Georgia Porter Bancshares, Inc., First National Bank of Porter, Kansas City July 2, 1992 Porter, Oklahoma Porter, Oklahoma Security Bancshares, Inc., Southern Bancshares, Inc., St. Louis July 6, 1992 Des Arc, Arkansas West Helena, Arkansas Society Corporation, First of America Bank-Monroe, Cleveland July 21, 1992 Cleveland, Ohio Monroe, Michigan Stock Exchange Financial Stock Exchange Bank, Kansas City July 10, 1992 Corporation, Caldwell, Kansas Caldwell, Kansas West One Bancorp, Yakima Valley Bank, San Francisco July 15, 1992 Boise, Idaho Yakima, Washington West One Bancorp, Washington, Bellevue, Washington Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 723 Section 4 Nonbanking Activity/ Reserve Effective Applicant(s) Company Bank Date Bankers Trust New York to engage in community New York June 26, 1992 Corporation, development activities New York, New York BMC Bankcorp, Inc., United Commonwealth St. Louis July 14, 1992 Benton, Kentucky Bank, Federal Savings Bank, Murray, Kentucky Commercial Bancorp of Georgia, to engage in the activity Atlanta July 3, 1992 Inc., of making and servicing Atlanta, Georgia loans FBOP Corporation, Sterling Federal Savings Chicago July 2, 1992 Oak Park, Illinois and Loan Association of Chicago, Chicago, Illinois J.P. Morgan & Co., to engage in community New York June 26, 1992 Incorporated, development activities New York, New York Michigan National Corporation, Banc A Corporation, Chicago July 15, 1992 Farmington Hills, Michigan Dallas, Texas Northland Bancshares, Inc., North American Credit Kansas City July 16, 1992 Kansas City, Missouri Service, Inc., Kansas City, Missouri Norwest Corporation, to engage in consumer Minneapolis July 16, 1992 Minneapolis, Minnesota finance activities and Norwest Financial Services, Inc. credit-related insurance Des Moines, Iowa activities Norwest Financial, Inc., Des Moines, Iowa Sections 3 and 4 Nonbanking Activity/ Reserve Effective Applicant(s) Company Bank Date Boatmen's Bancshares, Inc., Sunwest Financial St. Louis July 16, 1992 St. Louis, Missouri Services, Inc., Albuquerque, New Mexico Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

724 Federal Reserve Bulletin • September 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 The Bank of Hampton Roads, Coastal Virginia Bank, Richmond July 9, 1992 Chesapeake, Virginia Virginia Beach, Virginia Citizens Fidelity Bank and Trust Citizens Fidelity Bank St. Louis July 17, 1992 Company, and Trust Company Louisville, Kentucky Oldham County, LaGrange, Kentucky Johnstown Bank and Trust Peoples Bank One, Philadelphia July 1, 1992 Company, West Lebanon, Johnstown, Pennsylvania Pennsylvania Vectra Bank, Vectra Bank of Denver, Kansas City July 16, 1992 Denver, Colorado Denver, Colorado Vectra Bank of Lake wood, Lake wood, Colorado Vectra Bank of Thornton, Thornton, Colorado Vectra Bank of Englewood, Vectra Bank of Wheat Kansas City July 16, 1992 Englewood, Colorado Ridge, Wheat Ridge, Colorado Vectra Bank of Federal Heights, Federal Heights, Colorado PENDING CASES INVOLVING THE BOARD OF Fields v. Board of Governors, No. 3:92CV7118 (N.D. GOVERNORS Ohio, filed March 3, 1992). Federal Tort Claims Act complaint alleging misrepresentation during This list of pending cases does not include suits application process. Motion to dismiss filed May 4, against the Federal Reserve Banks in which the Board 1992. of Governors is not named a party. State of Idaho, Department of Finance v. Board of Governors, No. 92-70107 (9th Cir., filed February Board of Governors v. bin Mahfouz, No. 92-CIV-5096 24, 1992). Petition for review of Board order return- (S.D. New York, filed July 8, 1992). Action to freeze ing without action a bank holding company applicaassets of individual pending administrative adjudication tion to relocate its subsidiary bank from Washington of civil money penalty assessment by the Board. On to Idaho. The Board's brief was filed on June 29, July 8, 1992, the court issued a temporary restraining 1992. order restraining the transfer or disposition of the Davis v. Board of Governors, No. 91-6972 (Supreme individual's assets. On July 23, the court denied the Court, filed December 4, 1991). Petition for certioindividual's motion for expedited discovery on the rari seeking review of Burke v. Board of Governors, ground that, as a fugitive from a criminal indictment, he 940 F.2d 1360 (10th Cir. 1991), in which the court of is disentitled from seeking relief from the court. appeals upheld Board orders assessing civil money Zemel v. Board of Governors, No. 92-1057 (D. District penalties and issuing orders of prohibition. The of Columbia, filed May 4, 1992). Age Discrimination Supreme Court denied the petition for certiorari on in Employment Act case. May 18, 1992. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 725 In re Subpoena Served on the Board of Governors, ment was granted in part and its motion to dismiss Nos. 91-5427, 91-5428 (D.C. Cir., filed December was denied on June 23, 1992. 27, 1991). Appeal of order of district court, dated MCorp v. Board of Governors, No. CA3-88-2693 December 3, 1991, requiring the Board and the (N.D. Texas, filed October 10, 1988). Application Office of the Comptroller of the Currency to produce for injunction to set aside temporary cease and confidential examination material to a private liti- desist orders. The case is pending. gant. On June 26,1992, the court of appeals affirmed the district court order in part, but held that the bank examination privilege was not waived by the agencies' provision of examination materials to the ex- FINAL ENFORCEMENT ORDERS ISSUED BY THE amined institution, and remanded for further consid- BOARD OF GOVERNORS eration of the privilege issue. Greenberg v. Board of Governors, No. 91-4200 (2d James V. Foster Cir., filed December 4, 1991). Petition for review of Bay Port, Michigan orders of prohibition issued by the Board on October 28, 1991. The Board's orders were affirmed on The Federal Reserve Board announced on July 22, June 19, 1992. 1992, the issuance of an Order of Prohibition against First Interstate BancSystem of Montana, Inc. v. James V. Foster, an instutution-affiliated party of Bay Board of Governors, No. 91-1525 (D.C. Cir., filed Port Associates, Bay Port, Michigan. November 1, 1991). Petition for review of Board's order denying on Community Reinvestment Act Habib Bank AG Zurich grounds the petitioner's application under section 3 Zurich, Switzerland of the Bank Holding Company Act to merge with Commerce BancShares of Wyoming, Inc. Petition- The Federal Reserve Board announced on July 7, ers' brief is due August 21, 1992. On July 29, 1992, 1992, the joint issuance with the Federal Deposit the petitioners filed a motion to stay the proceed- Insurance Corporation and the Superintendent of ings. Banks of the State of California of a Cease and Desist Board of Governors v. Kemal Shoaib, No. CV 91-5152 Order against the Habib Bank AG Zurich, Zurich, (C.D. California, filed September 24, 1991). Action Switzerland, and the Habib Bank's branch in Los to freeze assets of individual pending administrative Angeles. The Federal Reserve Board also issued an adjudication of civil money penalty assessment by Order of Assessment of a Civil Money Penalty against the Board. On October 15, 1991, the court issued a the Habib Bank AG Zurich. preliminary injunction restraining the transfer or disposition of the individual's assets. Thomas J. Sexton Board of Governors v. Ghaith R. Pharaon, No. Eden Valley, Minnesota 91-CIV-6250 (S.D. New York, filed September 17, 1991). Action to freeze assets of individual pending The Federal Reserve Board announced on July 8, administrative adjudication of civil money penalty 1992, the issuance of an Order of Assessment of a Civil assessment by the Board. On September 17, 1991, Money Penalty and a Cease and Desist Order against the court issued an order temporarily restraining Thomas J. Sexton, an institution-affiliated party of the transfer or disposition of the individual's Eden Valley Bancshares, Inc., Eden Valley, Minneassets. sota, and the Farmers & Merchants Agency, Inc., In re Smouha,No. 91-B-13569 (Bkr. S.D. New York, Pierz, Minnesota. filed August 2, 1991). Ancillary proceeding under the U.S. Bankruptcy Code brought by provisional Dennis J. Zaun liquidators of BCCI Holdings (Luxembourg) Eden Valley, Minnesota S.A. and affiliated companies. On August 15, 1991, the bankruptcy court issued a temporary restraining order staying certain judicial and adminis- The Federal Reserve Board announced on July 8, trative actions, which has been continued by con- 1992, the issuance of an Order of Assessment of a Civil sent. Money Penalty and a Cease and Desist Order against Fields v. Board of Governors, No. 3:91CV069 (N.D. Dennis J. Zaun, an institution-affiliated party of Eden Ohio, filed February 5, 1991). Appeal of denial of Valley Bancshares, Inc., Eden Valley, Minnesota, and request for information under the Freedom of Infor- the Farmers & Merchants Agency, Inc., Pierz, mation Act. The Board's motion for summary judg- Minnesota. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

726 Federal Reserve Bulletin • September 1992 WRITTEN AGREEMENTS APPROVED BY FEDERAL Cuyamaca Bank RESERVE BANKS Santee, California Arrow Financial Corporation The Federal Reserve Board announced on July 2, Glens Falls, New York 1992, the execution of a Written Agreement between the Federal Reserve Bank of San Francisco and the The Federal Reserve Board announced on July 27, Cuyamaca Bank, Santee, California. 1992, the execution of a Written Agreement involving the Federal Reserve Bank of New York, Arrow Financial Corporation, Glens Falls, New York, and Arrow First Bancorp of Oklahoma, Inc. Vermont Corporation, Rutland, Vermont. Tonkawa, Oklahoma Bank of Boston Corporation The Federal Reserve Board announced on July 27, Boston, Massachusetts 1992, the execution of a Written Agreement between the Federal Reserve Bank of Kansas City and First The Federal Reserve Board announced on July 31, Bancorp of Oklahoma, Inc., Tonkawa, Oklahoma, and 1992, the execution of an Amendment to the Written Louis A. Weingart, an official of First Bancorp of Agreement, dated September 11, 1991, between the Oklahoma, Inc. Federal Reserve Bank of Boston and Bank of Boston Corporation, Boston, Massachusetts. Constellation Bancorp First Eastern Corp. Elizabeth, New Jersey Wilkes-Barre, Pennsylvania The Federal Reserve Board announced on July 23, The Federal Reserve Board announced on July 21, 1992, the execution of a Written Agreement among the 1992, the execution of a Written Agreement between Federal Reserve Bank of New York and Constellation the Federal Reserve Bank of Philadelphia and First Bancorp, Elizabeth, New Jersey. Eastern Corp., Wilkes-Barre, Pennsylvania. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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 A3 3 Open-end investment companies—Net sales and asset position COMMERCIAL BANKING INSTITUTIONS A33 Corporate profits and their distribution A33 Total nonfarm business expenditures on new A18 Major nondeposit funds plant and equipment A19 Assets and liabilities, last-Wednesday-of-month A34 Domestic finance companies—Assets and series liabilities and business credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • September 1992 Domestic Financial Statistics—Continued REPORTED BY BANKS IN THE UNITED STATES REAL ESTATE A57 Liabilities to and claims on foreigners A3 5 Mortgage markets A58 Liabilities to foreigners A3 6 Mortgage debt outstanding A60 Banks' own claims on foreigners A61 Banks' own and domestic customers' claims on foreigners CONSUMER INSTALLMENT CREDIT A61 Banks' own claims on unaffiliated foreigners A62 Claims on foreign countries—Combined A3 7 Total outstanding and net change domestic offices and foreign branches A3 8 Terms REPORTED BY NONBANK1NG BUSINESS FLOW OF FUNDS ENTERPRISES IN THE UNITED STATES A39 Funds raised in U.S. credit markets A41 Direct and indirect sources of funds to credit A63 Liabilities to unaffiliated foreigners markets A64 Claims on unaffiliated foreigners A42 Summary of credit market debt outstanding A43 Summary of credit market claims, by holder SECURITIES HOLDINGS AND TRANSACTIONS A65 Foreign transactions in securities Domestic Nonfinancial Statistics A66 Marketable U.S. Treasury bonds and notes—Foreign transactions SELECTED MEASURES A44 Nonfinancial business activity—Selected INTEREST AND EXCHANGE RATES measures A45 Labor force, employment, and unemployment A67 Discount rates of foreign central banks A46 Output, capacity, and capacity utilization A67 Foreign short-term interest rates A47 Industrial production—Indexes and gross value A68 Foreign exchange rates A49 Housing and construction A50 Consumer and producer prices A69 Guide to Statistical Releases and A51 Gross domestic product and income Special Tables A52 Personal income and saving SPECIAL TABLES International Statistics A70 Terms of lending at commercial banks, SUMMARY STATISTICS November 1991 A74 Terms of lending at commercial banks, A53 U.S. international transactions—Summary February 1992 A54 U.S. foreign trade A78 Terms of lending at commercial banks, May 1992 A54 U.S. reserve assets A82 Assets and liabilities of U.S. branches and agencies A54 Foreign official assets held at Federal Reserve of foreign banks, March 31, 1992 Banks A55 Foreign branches of U.S. banks—Balance sheet data A57 Selected U.S. liabilities to foreign official institutions 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 many of the tables, details do not sum to totals because of include not fully guaranteed issues) as well as direct obligarounding. tions of the Treasury. "State and local government" also in- Minus signs are used to indicate (1) a decrease, (2) a negative cludes municipalities, special districts, and other political figure, or (3) an outflow. subdivisions. "U.S. government securities" may include guaranteed issues of U.S. government agencies (the flow of funds figures also Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Financial Statistics • September 1992 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 1991 1992 1992 MMoonneettaarryy aanndd ccrreeddiitt aaggggrreeggaattee Q3 Q4 Q1 Q2 Feb. Mar. Apr. May June Reserves of depository institutions1 1 Total 8.3 15.2 23.4 14.9 40.5 18.4 13.0 12.1 -6.3 2 Required 9.0 15.4 23.5 15.4 39.8 19.7 10.5 15.8 -4.3 3 Nonborrowed 4.7 20.0 24.0 14.8 44.8 18.0 13.0 10.5 -8.1 4 Monetary base3 6.6 8.2 9.2 7.1 13.9 4.1 7.4 7.7 3.9 Concepts of money, liquid assets, and debt4 5 Ml 7.5 11.1 16.5 10.0 27.2 10.3 5.0 14.8r -2.9 6 M2 .6 2.3 4.3 .0 9.6 -,6r -2.0r ,5r -3.7 7 M3 -1.3 .f 2.2r -1.9 7.4 -2.8r -4.2r -,7r -4.3 8 L .7 ,2r 1.5r n.a. 7.0r 1.8r -2.2r -2.2 n.a. 9 Debt 4.5 4.2 3.8 n.a. 4.6 5.3 5.1 4.9 n.a. Nontransaction components 10 In M2y -1.6 -.7 .0 -3.7 3.3 -4.5 -4.6r -4.8 -4.0 11 In M3 only6 -9.9 -5.3r -7.4r -10.6 -3.0 -13.6r -14.9r -6.8r -7.3 Time and savings deposits Commercial banks 12 Savings, including MMDAs 13.2 16.0 19. r 12.0 22.9 ll.O1 13.8 8.0r 4.7 13 Small time 1.5 -8.4 -18.9 -13.4 -23.5 -14.6 -7.0 -17.2 -14.2 14 Large time • -8.0 -14.4 -18.2 -14.4 -16.3 -17.2 -17.5 -8.3r -11.3 Thrift institutions 15 Savings, including MMDAs 9.8 10.2 22.4 19.0 30.5 23.4 15.8 19.4 5.2 16 Small time -24.2 -22.5 -24.2 -29.2 -30.6r -26.8r -39.3 -24.3 -18.4 17 Large time8' -40.3 -36.5 -29.7 -37.0 -33.9 -45.5 -36.3 -42.3 -25.3 Money market mutual funds 18 General purpose and broker-dealer -4.7 -4.0 1.0 -7.2 12.7 -19.5 -13.1 3.0 -5.7 19 Institution-only 11.4 37.2 26.9 20.0 38.2 -18.5 25.3 35.5 30.2 Debt components4 20 Federal 13.9 12.3 8.2 n.a. 7.0 15.0 13.1 12.7 n.a. 21 Nonfederal 1.6 1.6 2.3 n.a. 3.8 2.2 2.4 2.4 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, or "breaks," associ- depository institutions, the U.S. government, money market funds, and foreign ated with regulatory 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 (includ- deposits. ing MMDAs) and small time deposits (time deposits—including retail repurchase 6. Sum of (1) large time deposits, (2) term RPs, (3) term Eurodollars of U.S. agreements (RPs)—in amounts of less than $100,000), and (3) balances in both residents, and (4) money market fund balances (institution-only), less (5) a taxable and tax-exempt general-purpose and broker-dealer money market funds. consolidation adjustment that represents the estimated amount of overnight RPs Excludes individual retirement accounts (IRAs) and Keogh balances at depository and Eurodollars held by institution-only money market funds. This sum is institutions and money market funds. Also excludes all balances held by U.S. seasonally adjusted as a whole. commercial banks, money market funds (general purpose and broker-dealer), 7. Small time deposits—including retail RPs—are those issued in amounts of foreign governments and commercial banks, and the U.S. government. Season- less than $100,000. All IRA and Keogh account balances at commercial banks and ally adjusted M2 is computed by adjusting its non-Mi component as a whole and thrift institutions are subtracted from small time deposits. then adding this result to seasonally adjusted Ml. 8. Large time deposits are those issued in amounts of $100,000 or more, M3: M2 plus (1) large time deposits and term RP liabilities (in amounts of excluding those booked at international banking facilities. $100,000 or more) issued by all depository institutions, (2) term Eurodollars held 9. Large time deposits at commercial banks less those held by money market by U.S. residents at foreign branches of U.S. banks worldwide and at all banking funds, depository institutions, and foreign banks and official institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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 1992 1992 Apr. May June May 13 May 20 May 27 June 3 June 10 June 17 June 24 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 305,176 306,356 310,962 307,317 304,889 307,952 308,735 309,925 309,859 312,505 U.S. government securities 2 Bought outright—system account 266,478 267,310 274,177 266,690 266,344 267,758 271,063 274,504 274,103 274,553 3 Held under repurchase agreements ... 938 2,380 706 2,548 2,433 4,886 2,033 0 0 1,666 Federal agency obligations 4 Bought outright 5,910 5,879 5,717 5,910 5,910 5,865 5,737 5,719 5,719 5,719 5 Held under repurchase agreements ... 12 102 33 79 0 372 114 0 0 26 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 59 57 75 116 36 52 42 11 21 56 8 Seasonal credit 47 99 149 79 103 122 128 122 131 168 9 Extended credit 2 0 0 0 0 0 0 0 0 0 10 Float 823 356r 388 283 250 40 510 171 310 395 11 Other Federal Reserve assets 30,907 30,174 29,716 31,611 29,812 28,858 29,109 29,398 29,576 29,922 12 Gold stock 11,057 11,057 11,058 11,057 11,057 11,057 11,057 11,057 11,057 11,059 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 21,157 21,191 21,241 21,184 21,192 21,201 21,210 21,224 21,238 21,252 ABSORBING RESERVE FUNDS 15 Currency in circulation 305,492 308,110 310,194 307,764 307,802 309,054 309,875 310,215 310,452 310,125 16 Treasury cash holdings 707 692 639 697 691 684 682 675 627 619 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 4,868 5,108 6,904 5,012 5,070 5,438 5,540 4,916 6,657 8,136 18 Foreign 202 212 216 222 213 212 226 216 228 200 19 Service-related balances and adjustments 4,846 5,249 5,282 4,939 5,214 5,191 5,249 5,210 5,299 5,311 20 Other 268 261 259 264 266 263 251 282 265 230 21 Other Federal Reserve liabilities and capital 8,155 8,227 8,361 8,101 8,187 8,382 8,700 8,450 8,226 8,209 22 Reserve balances with Federal Reserve Banks3 22,869 20,764r 21,424 22,577 19,713 21,003 20,497 22,260 20,418 22,005 End-of-month figures Wednesday figures 1992 1992 Apr. May June May 13 May 20 May 27 June 3 June 10 June 17 June 24 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 306,002 306,376r 314,764 308,746 301,070 313,298 310,837 311,659 309,879 315,807 U.S. government securities 2 Bought outright—system account 267,945 270,808 276,883 266,414 266,010 266,776 273,112 275,877 274,186 276,743 3 Held under repurchase agreements ... 0 244 0 3,716 0 10,436 1,712 0 0 2,453 Federal agency obligations 4 Bought outright 5,910 5,750 5,710 5,910 5,910 5,750 5,719 5,719 5,719 5,719 5 Held under repurchase agreements — 0 0 0 0 0 660 215 0 0 61 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 49 22 1,173 673 56 80 11 10 88 58 8 Seasonal credit 66 128 185 92 114 123 128 121 143 179 9 Extended credit 0 0 1 0 0 0 0 0 0 0 10 Float 928 376r -162 180 -573 369 910 481 65 469 11 Other Federal Reserve assets 31,103 29,048 30,975 31,761 29,554 29,104 29,030 29,451 29,678 30,125 12 Gold stock 11,057 11,057 11,060 11,057 11,057 11,057 11,057 11,057 11,060 11,060 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 21,175 21,210 21,266 21,184 21,192 21,201 21,210 21,224 21,238 21,252 ABSORBING RESERVE FUNDS 15 Currency in circulation 306,373 309,719 310,944 307,979 308,251 309,769 310,045 310,513 310,477 309,991 16 Treasury cash holdings 705 682 612 692 684 682 682 628 620 612 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 4,692 5,583 13,630 4,816 4,703 5,195 5,698 4,480 9,858 7,649 18 Foreign 206 217 219 193 209 191 202 218 447 213 19 Service-related balances and adjustments 5,717 5,249r 5,329 4,939 5,214 5,191 5,249 5,210 5,299 5,311 20 Other 260 224 249 249 272 270 246 315 263 218 21 Other Federal Reserve liabilities and capital 7,906 8,716 9,415 8,061 8,008 8,301 8,223 8,099 8,025 8,034 22 Reserve balances with Federal Reserve Banks 22,392 18,270r 16,710 24,078 15,996 25,974 22,778 24,495 17,206 26,108 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 Financial Statistics • September 1992 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages Reserve classification 1989 1990 1991 1991 1992 Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. May June 1 Reserve balances with Reserve Banks2 35,436 30,237 26,659 26,659 25,416 24,918 28,057 22,655 21,071 21,224 2 Total vault cash3 29,828 31,786 32,513 32,513 34,135 34,218 31,647 31,071 31,197 31,729 3 Applied vault cash4. 27,374 28,884 28,872 28,872 30,3% 30,320 28,225 27,800 27,754 28,273 4 Surplus vault cash5 2,454 2,903 3,641 3,641 3,739 3,897 3,422 3,271 3,442 3,456 5 Total reserves 62,810 59,120 55,532 55,532 55,812 55,238 56,282 50,455 48,825 49,496 6 Required reserves 61,887 57,456 54,553 54,553 54,809 54,174 55,254 49,318 47,825 48,584 7 Excess reserve balances at Reserve Banks 923 1,664 979 979 1,003 1,065 1,028 1,137 1,000" 912 8 Total borrowings at Reserve Banks8 265 326 192 192 233 77 91 90 155 229 9 Seasonal borrowings 84 76 381 381 171 22 32 47 980 1409 10 Extended credit9 20 23 2 2 2 Biweekly averages of daily figures for weeks ending 1992 Mar. 4 Mar. 18 Apr. 1 Apr. 15 Apr. 29 May 13 May 27 June 10 June 24 July 8 1 Reserve balances with Reserve Banks2 25,922 29,111 27,578 22,885 22,137 21,746 20,356 21,374*" 21,205 21,016 2 Total vault cash3 32,944 30,564 32,414 30,456 31,643 30,346 32,069 30,909 31,946 32,589 3 Applied vault cash , 29,169 27,398 28,826 27,353 28,225 27,091 28,418 27,591 28,487 28,908 4 Surplus vault cash 3,775 3,166 3,588 3,103 3,418 3,256 3,651 3,318 3,459 3,681 5 Total reserves6 55,091 56,509 56,403 50,238 50,362 48,836 48,774 48,965r 49,692 49,924 6 Required reserves 54,151 56,001 54,788 49,174 49,150 48,209 47,277 48,492 48,521 48,885 7 Excess reserve balances at Reserve Banks ... 941 508 1,616 1,065 1,212 628 1,497 474r 1,171 1,039 8 Total borrowings at Reserve Banks8 63 75 117 56 118 153 157 152 188 455 9 Seasonal borrowings 24 29 38 37 57 75 113 125 150 187 10 Extended credit9 3 2 1 1 4 0 0 0 0 1 1. Data in this table also appear in the Board's H.3 (502) weekly statistical institutions (that is, those whose vault cash exceeds their required reserves) to release. For ordering address, see inside front cover. Components may not sum to satisfy current reserve requirements. totals because of rounding. 5. Total vault cash (line 2) less applied vault cash (line 3). 2. Excludes required clearing balances and adjustments to compensate for float 6. Reserve balances with Federal Reserve Banks (line 1) plus applied vault cash and includes other off-balance-sheet "as-of" adjustments. (line 3). 3. Total "lagged" vault cash held by depository institutions subject to reserve 7. Total reserves (line 5) less required reserves (line 6). requirements. Dates refer to the maintenance periods during which the vault cash 8. Also includes adjustment credit. can be used to satisfy reserve requirements. Under contemporaneous reserve 9. Consists of borrowing at the discount window under the terms and condirequirements, maintenance periods end thirty days after the lagged computation tions established for the extended credit program to help depository institutions periods during which the balances are held. deal with sustained liquidity pressures. Because there is not the same need to 4. All vault cash held during the lagged computation period by "bound" repay such borrowing promptly as there is with traditional short-term adjustment institutions (that is, those whose required reserves exceed their vault cash) plus credit, the money market impact of extended credit is similar to that of the amount of vault cash applied during the maintenance period by "nonbound" nonborrowed reserves. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A7 1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Banks1 Millions of dollars, averages of daily figures 1992, week ending Monday SSoouurrccee aanndd mmaattuurriittyy Mar. 30 Apr. 6 Apr. 13 Apr. 20 Apr. 27 May 4 May 11 May 18 May 25 Federal funds purchased, repurchase agreements, and other selected borrowings From commercial banks in the United States 1 For one day or under continuing contract 73,215 78,301 79,263 85,767 74,098 77,746 75,962 77,015 73,697 2 For all other maturities 15,967 14,822 16,018 1166,,770044 1166,,443311 16,454 1166,,335522 1166,,118899 1166,,556677 From other depository institutions, foreign banks and official institutions, and U.S. government agencies 3 For one day or under continuing contract 18,107 17,157 16,276 15,407 18,013 21,470 17,550 16,367 18,994 4 For all other maturities 20,489 19,898 19,454 21,761 22,239 20,338 21,792 21,629 21,853 Repurchase agreements on U.S. government and federal agency securities Brokers and nonbank dealers in securities 5 For one day or under continuing contract 12,219 11,942 10,160 10,060 9,487 9,200 8,893 9,365 8,479 6 For all other maturities 17,192 15,195 15,240 15,029 15,667 15,691 15,868 14,792 14,796 All other customers 7 For one day or under continuing contract 26,121 25,001 24,979 24,005 24,382 23,624 23,402 23,112 23,685 8 For all other maturities 12,788 13,181 12,683 13,334 12,968 12,515 12,791 12,996 13,212 MEMO: Federal funds loans and resale agreements in immediately available funds in maturities of one day or under continuing contract 9 To commercial banks in the United States 47,483 52,484 49,818 50,401 47,103 45,909 42,793 49,154 43,918 10 To all other specified customers 20,703 19,607 21,322 24,606 21,913 24,798 21,236 17,655 17,239 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 Financial Statistics • September 1992 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit2 Extended credit3 FFeeddeerraall RReesseerrvvee BBaannkk 7/3 O 0 n /9 2 Effective date Previous rate 7/3 O 0 n /9 2 Effective date Previous rate 7/3 O 0 n /9 2 Effective date Previous rate Boston 3 7/2/92 3.5 3.30 7/23/92 3.60 3.80 7/23/92 4.10 New York 7/2/92 7/23/92 7/23/92 Philadelphia 7/2/92 7/23/92 7/23/92 Cleveland 7/6/92 7/23/92 7/23/92 Richmond 7/2/92 7/23/92 7/23/92 Atlanta 7/2/92 7/23/92 7/23/92 Chicago 7/2/92 7/23/92 7/23/92 St. Louis 7/7/92 7/23/92 7/23/92 Minneapolis 7/2/92 7/23/92 7/23/92 Kansas City 7/2/92 7/23/92 7/23/92 Dallas 7/2/92 7/23/92 7/23/92 San Francisco ... 3 7/2/92 3.5 3.30 7/23/92 3.60 3.80 7/23/92 4.10 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 an f k Effective date A le l v l e F l) . — R. B o an f k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1977 6 6 1981-—May 5 13-14 14 1986—Aug. 21 5.5-6 5.5 14 14 22 5.5 5.5 1978—Jan. 9 6-6.5 6.5 Nov. ? 13-14 13 20 6.5 6.5 6 13 13 1987—Sept. 4 5.5-6 6 MMaayy 11 6.5-7 7 Dec. 4 12 12 11 6 6 12 7 7 JJuullyy 3 7-7.25 7.25 1982--July 7r0\ 11.5-12 11.5 1988—Aug. 9 6-6.5 6.5 10 7.25 7.25 11.5 11.5 11 Aug. 21 7.75 7.75 Aug. ? 11-11.5 11 Sept. 22 8 8 * 11 11 1989—Feb. 24 6.5-7 7 Oct. 16 8-8.5 8.5 16 10.5 10.5 7 7 20 8.5 8.5 77 10-10.5 10 27 Nov. 1 8.5-9.5 9.5 30 10 10 6.5 6.5 3 9.5 9.5 Oct. 1? 9.5-10 9.5 1990—Dec. 19 n 9.5 9.5 6.65 6 1979—July 20 10 10 Nov. ?? 9-9.5 9 1991—Feb. 1 6 6 AAuugg.. 17 10-10.5 10.5 ?6 9 9 4 5.5-6 5.5 20 10.5 10.5 Dec. 14 8.5-9 9 Apr. 30 5.5 5.5 SSeepptt.. 19 10.5-11 11 15 8.5-9 8.5 May 2 5-5.5 5 21 11 11 17 8.5 8.5 Sept. 13 5 5 Oct. 8 11-12 12 Sept. 17 4.5-5 4.5 10 12 12 1984-——AApprr.. •» 8.5-9 9 Nov. 6 4.5 4.5 n 9 9 7 3.5-4.5 3.5 1980—Feb. 15 12-13 13 Nov. 71 8.5-9 8.5 Dec. 20 3.5 3.5 19 13 13 76 8.5 8.5 24 MMaayy 29 12-13 13 Dec. 74 1992—July 2 3-3.5 3 30 12 12 7 3 3 June 13 11-12 11 1985-——MMaayy 70 7.5-8 7.5 16 11 11 74 7.5 7.5 29 10 10 In effect July 30, 1992 3 3 July 28 10-11 10 1986--Mar. 7 7-7.5 7 Sept. 26 11 11 10 7 7 Nov. 17 12 12 Apr. 71 6.5-7 6.5 Dec. 5 12-13 13 July 11 6 6 1. Available on a short-term basis to help depository institutions meet tempo- ordinarily is charged on extended-credit loans outstanding less than thirty days; rary needs for funds that cannot be met through reasonable alternative sources. however, at the discretion of the Federal Reserve Bank, this time period may be The highest rate established for loans to depository institutions may be charged on shortened. Beyond this initial period, a flexible rate somewhat above rates on adjustment-credit loans of unusual size that result from a major operating problem market sources of funds is charged. The rate ordinarily is reestablished on the first at the borrower's facility. business day of each two-week reserve maintenance period, but it is never less 2. Available to help relatively small depository institutions meet regular than the discount rate applicable to adjustment credit plus 50 basis points. seasonal needs for funds that arise from a clear pattern of intrayearly movements 4. For earlier data, see the following publications of the Board of Governors: in their deposits and loans and that cannot be met through special industry Banking and Monetary Statistics, 1914-1941, and 1941-1970; and the Annual lenders. The discount rate on seasonal credit takes into account rates on market Statistical Digest, 1970-1979. sources of funds and ordinarily is reestablished on the first business day of each In 1980 and 1981, the Federal Reserve applied a surcharge to short-term two-week reserve maintenance period; however, it is never less than the discount adjustment-credit borrowings by institutions with deposits of $500 million or more rate applicable to adjustment credit. that had borrowed in successive weeks or in more than four weeks in a calendar 3. May be made available to depository institutions when similar assistance is quarter. A 3 percent surcharge was in effect from Mar. 17, 1980, through May 7, not reasonably available from other sources, including special industry lenders. 1980. A surcharge of 2 percent was reimposed on Nov. 17, 1980; the surcharge Such credit may be provided when exceptional circumstances (including sus- was subsequently raised to 3 percent on Dec. 5, 1980, and to 4 percent on May 5, tained deposit drains, impaired access to money market funds, or sudden 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, and to 2 deterioration in loan repayment performance) or practices involve only a partic- percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the ular 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.. 4/2/92 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 permit no more than six preauthorized, automatic, or other transfers per month, Banks or vault cash. Nonmember institutions may maintain reserve balances with of which no more than three may be checks, are not transaction accounts (such a Federal Reserve Bank indirectly on a pass-through basis with certain approved accounts are savings deposits). institutions. For previous reserve requirements, see earlier editions of the Annua/ 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 1 Vi 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 report 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. Include all deposits against which the account holder is permitted to make percent to zero on Jan. 17, 1991. withdrawals by negotiable or transferable instruments, payment orders of with- 6. The reserve requirement on Eurocurrency liabilities was reduced from 3 drawal, and telephone and preauthorized transfers in excess of three per month percent to zero in the same manner and on the same dates as were the reserve for the purpose of making payments to third persons or others. However, money requirement on nonpersonal time deposits with an original maturity of less than market deposit accounts (MMDAs) and similar accounts subject to the rules that IV2 years (see note 4). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Financial Statistics • September 1992 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 1991 1992 TTyyppee ooff ttrraannssaaccttiioonn 11998899 11999900 11999911 Nov. Dec. Jan. Feb. Mar. Apr. May U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 14,284 24,739 20,158 2,823 837 0 123 505 0 4,110 2 Gross sales 12,818 7,291 120 0 0 1,628 0 0 0 0 3 Exchanges 231,211 241,086 277,314 24,141 21,967 26,750 24,435 21,674 27,526 24,275 4 Redemptions 12,730 4,400 1,000 0 0 1,600 0 0 0 45 Others within one year 5 Gross purchases 327 425 3,043 178 0 0 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 1,655 1,570 1,298 6,020 2,552 1,100 3,754 8 Exchanges -25,783 -27,424 -28,090 -2,585 -3,562 -989 -2,742 -2,512 -1,863 -5,225 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 2,133 300 0 1,027 1,425 0 0 11 Gross sales 490 200 0 0 0 0 0 0 0 0 12 Maturity shifts -25,534 -21,770 -21,211 -1,492 -1,570 -1,174 -6,020 -2,552 -877 -2,113 13 Exchanges 23,250 25,410 24,594 2,135 3,562 539 2,292 2,512 1,484 4,311 Five to ten years 14 Gross purchases 287 0 1,280 880 0 0 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 -163 0 -124 0 0 -223 -346 17 Exchanges 1,934 789 2,894 300 0 451 300 0 379 614 More than ten years 18 Gross purchases 284 0 375 375 0 0 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 1,226 600 150 0 0 150 0 0 300 All maturities 22 Gross purchases 16,617 25,414 31,439 6,390 1,137 0 1,150 1,930 0 4,310 23 Gross sales 13,337 7,591 120 0 0 1,628 0 0 0 0 24 Redemptions 13,230 4,400 1,000 0 0 1,600 0 0 0 45 Matched transactions 25 Gross sales 1,323,480 1,369,052 1,570,456 98,063 118,127 136,922 123,000 128,230 125,999 118,972 26 Gross purchases 1,326,542 1,363,434 1,571,534 97,925 118,263 136,282 124,654 126,673 128,149 117,524 Repurchase agreements2 27 Gross purchases 129,518 219,632 310,084 14,165 51,345 21,412 9,824 48,758 18,432 38,777 28 Gross sales 132,688 202,551 311,752 22,879 36,000 33,228 13,353 46,953 20,237 38,533 29 Net change in U.S. government securities -10,055 24,886 29,729 -2,462 16,619 -15,684 -725 2,178 345 3,062 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 0 0 0 0 0 0 0 0 0 0 31 Gross sales 0 0 5 0 0 0 0 0 0 0 32 Redemptions 442 183 292 51 45 85 0 0 49 115 Repurchase agreements2 33 Gross purchases 38,835 41,836 22,807 275 1,744 390 571 1,640 224 1,281 34 Gross sales 40,411 40,461 23,595 294 1,191 808 706 1,640 224 1,281 35 Net change in federal agency obligations -2,018 1,192 -1,085 -70 508 -503 -135 0 -49 -115 36 Total net change in System Open Market Account -12,073 26,078 28,644 -2,532 17,127 -16,186 -860 2,178 295 2,946 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 A11 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of Month Account 1992 1992 May 27 June 3 June 10 June 17 June 24 Apr. 30 May 31 June 30 Consolidated condition statement 1 Gold certificate account 11,057 11,057 11,057 11,060 11,060 11,057 11,057 11,060 2 Special drawing rights certificate account 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 3 Coin 495 489 498 498 495 554 492 482 Loans 4 To depository institutions 203 139 131 230 237 115 150 1,359 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 1 Bought outright 5,750 5,719 5,719 5,719 5,719 5,910 5,750 5,710 8 Held under repurchase agreements 660 215 0 0 61 0 0 0 9 Total U.S. Treasury securities. 277,212 274,824 275,877 274,186 279,196 267,945 271,052 276,883 10 Bought outright2 266,776 273,112 275,877 274,186 276,743 267,945 270,808 276,883 11 Bills 130,272 136,609 135,843 134,153 136,710 131,642 134,304 136,849 12 Notes 104,160 104,160 106,974 106,974 106,974 104,260 104,160 106,974 13 Bonds 32,343 32,343 33,059 33,059 33,059 32,043 32,343 33,059 14 Held under repurchase agreements 10,436 1,712 0 0 2,453 0 244 0 15 Total loans and securities 283,825 280,897 281,727 280,136 285,213 273,971 276,952 283,952 16 Items in process of collection 74,125 61,938 49,575 54,865 54,467 46,721 47,538 72,160 17 Bank premises 1,021 1,022 1,023 1,026 1,026 1,014 1,021 1,026 Other assets 18 Denominated in foreign currencies3 22,856 23,102 23,143 23,193 23,273 23,964 23,099 24,487 19 All other4 5,342 4,951 5,295 5,481 5,890 6,196 4,901 5,517 20 Total assets 342,026 337,730 337,718 336,899 342,422 331,447 332,293 343,757 LIABILITIES 21 Federal Reserve notes 289,745 290,006 290,415 290,357 289,847 286,457 289,684 290,772 22 Total deposits 37,140 34,098 34,546 33,276 39,942 32,960 29,527 36,839 23 Depository institutions 31,484 27,953 29,533 22,707 31,862 27,801 23,503 22,740 24 U.S. Treasury—General account 5,195 5,698 4,480 9,858 7,649 4,692 5,583 13,630 25 Foreign—Official accounts 191 202 218 447 213 206 217 219 26 Other 270 246 315 263 218 260 224 249 27 Deferred credit items 6,840 5,403 4,658 5,241 4,600 4,124 4,367 6,732 28 Other liabilities and accrued dividends5 2,088 2,041 2,113 2,050 2,030 2,052 2,089 1,908 29 Total liabilities. 335,813 331,548 331,732 330,924 336,419 325,593 325,667 336,251 CAPITAL ACCOUNTS 30 Capital paid in 2,811 2,811 2,818 2,809 2,818 2,790 2,813 2,832 31 Surplus 2,652 2,652 2,652 2,652 2,652 2,652 2,652 2,652 32 Other capital accounts 750 719 516 513 534 413 1,162 2,023 33 Total liabilities and capital accounts 342,026 337,730 337,718 336,899 342,422 331,447 332,293 343,757 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international accounts . 275,242 277,619 276,678 278,765 279,902 274,023 276,920 279,403 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Bank) — 360,671 361,054 361,560 361,992 362,503 358,760 360,961 362,337 36 LESS: Held by Federal Reserve Bank 70,927 71,048 71,146 71,635 72,657 72,303 71,277 71,565 37 Federal Reserve notes, net 289,745 290,006 290,415 290,357 289,847 286,457 289,684 290,772 Collateral held against notes, net: 38 Gold certificate account 11,057 11,057 11,057 11,060 11,060 11,057 11,057 11,060 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 268,670 268,931 269,340 269,279 268,769 265,382 268,609 269,694 42 Total collateral. 289,745 290,006 290,415 290,357 289,847 286,457 289,684 290,772 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 Financial Statistics • September 1992 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding 1 Millions of dollars Wednesday End of month Type and maturity grouping 1992 1992 May 27 June 3 June 10 June 17 June 24 Apr. 30 May 29 June 30 1 Total loans 203 139 131 230 237 115 150 1,360 2 Within fifteen day s 189 69 56 213 217 92 104 1,277 3 Sixteen days to ninety days . 14 69 75 18 20 24 47 82 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.. 266,786 274,824 275,877 274,186 276,746 267,945 270,808 276,883 10 Within fifteen days2 12,428 15,758 9,204 13,211 15,709 13,540 7,584 9,835 11 Sixteen days to ninety days. 62,345 68,285 69,106 63,588 63,685 57,553 72,122 70,373 12 Ninety-one days to one year 86,614 85,866 89,407 89,227 89,192 93,608 85,703 88,814 13 One year to five years 64,889 64,406 66,399 66,399 66,399 63,302 64,889 66,100 14 Five years to ten years 15,615 15,615 16,212 16,212 16,212 15,347 15,615 16,212 15 More than ten years 24,894 24,894 25,549 25,549 25,549 24,594 24,894 25,549 16 Total federal agency obligations 5,751 5,934 5,719 5,719 5,780 5,910 5,750 5,710 17 Within fifteen days2 322 255 9 219 280 105 321 222 18 Sixteen days to ninety days . 496 826 817 687 687 677 496 721 19 Ninety-one days to one year 1,460 1,380 1,405 1,325 1,325 1,499 1,460 1,301 20 One year to five years 2,577 2,577 2,579 2,579 2,579 2,733 2,577 2,557 21 Five years to ten years 742 742 755 755 755 742 742 755 22 More than ten years 154 154 154 154 154 154 154 154 1. Holdings under repurchase agreements are classified as maturing within 15 days in accordance with maximum maturity of the agreements. 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 .. Nov. Dec. Jan. Feb. Mar. Apr. May June Seasonally adjusted AADDJJUUSSTTEEDD FFOORR CCHHAANNGGEESS IINN RREESSEERRVVEE RREEQQUUIIRREEMMEENNTTSS22 11 TToottaall rreesseerrvveess33 40.47 40.56 41.83 45.60 44.79 45.60 46.19 47.75 48.48 49.00 49.49 49.23 22 NNoonnbboorrrroowweedd rreesseerrvveess44 38.75 40.29 41.51 45.41 44.68 45.41 45.95 47.67 48.38 48.91 49.34 49.00 33 NNoonnbboorrrroowweedd rreesseerrvveess pplluuss eexxtteennddeedd ccrreeddiitt 40.00 40.31 41.53 45.41 44.68 45.41 45.95 47.67 48.39 48.91 49.34 49.00 44 RReeqquuiirreedd rreesseerrvveess 39.42 39.64 40.17 44.62 43.89 44.62 45.18 46.68 47.45 47.86 48.49 48.32 55 MMoonneettaarryy bbaassee66 256.97 267.77 293.29 317.25 315.33 317.25 319.70 323.41 324.51 326.50 328.58r 329.65 Not seasonally adjusted 6 Total reserves 41.65 41.77 43.07 46.97 44.86 46.97 47.35 46.85 47.69 50.01 48.62 49.25 7 Nonborrowed reserves ^ 39.93 41.51 42.74 46.78 44.75 46.78 47.11 46.77 47.59 49.92 48.47 49.02 8 Nonborrowed reserves plus extended credit 41.17 41.53 42.77 46.78 44.75 46.78 47.11 46.77 47.60 49.93 48.47 49.02 9 Required reserves 40.60 40.85 41.40 46.00 43.97 46.00 46.34 45.78 46.66 48.88 47.62 48.33 10 Monetary base9 260.41 271.18 296.68 321.06 315.15 321.06 320.43 320.38 322.69 327.45 328.37 330.94 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves11 63.75 62.81 59.12 55.53 53.06 55.53 55.81 55.24 56.28 50.45 48.82r 49.50 12 Nonborrowed reserves 62.03 62.54 58.79 55.34 52.95 55.34 55.58 55.16 56.19 50.36 48.67 49.27 13 Nonborrowed reserves plus extended credit 63.27 62.56 58.82 55.34 52.95 55.34 55.58 55.16 56.19 50.37 48.67 49.27 14 Required reserves 62.70 61.89 57.46 54.55 52.16 54.55 54.81 54.17 55.25 49.32 47.82 48.58 15 Monetary base 283.00 292.55 313.70 333.61 326.88 333.61 333.09 333.19 335.82 332.69 333.79 336.44 16 Excess reserves 1.05 .92 1.66 .98 .89 .98 1.00 1.06 1.03 1.14 1.00 .91 17 Borrowings from the Federal Reserve 1.72 .27 .33 .19 .11 .19 .23 .08 .09 .09 .15 .23 1. Latest monthly and biweekly figures are available from the Board's H.3 (502) changes in reserve requirements, a multiplicative procedure is used to estimate weekly statistical release. Historical data and estimates of the impact on required what required reserves would have been in past periods had current reserve reserves of changes in reserve requirements are available from the Monetary and requirements been in effect. Break-adjusted required reserves include required Reserves Projections Section, Division of Monetary Affairs, Board of Governors reserves against transactions deposits and nonpersonal time and savings deposits of the Federal Reserve System, Washington, DC 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. (See also table 1.10) (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 Financial Statistics • September 1992 21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURESi Billions of dollars, averages of daily figures 1992 1988 1989 1990 1991 IItteemm Dec. Dec. Dec. Dec. Mar. Apr. May June Seasonally adjusted Measures2 1 Ml 786.9 794.1 826.1 898.1 939.0 942.9 954.5 952.2 2 M2 3,071.1 3,227.3 3,339.0 3,438.9 3,473.? 3,468.2r 3,469.5r 3,458.8 3 M3 3,923.1 4,059.8 4,114.6 4,170.4r 4,190.5r 4,175.7r 4,173. lr 4,158.0 4 L 4,677.9 4,891.7 4,966.6 4,989.3r 5,019.5r 5,010.3r 5,001.2 n.a. 5 Debt 9,316.1 10,060.0 10,747.0 11,203.6 11,325.0 11,373.1 11,420.0 n.a. Ml components 6 Currency3 212.3 222.6 246.8 267.3 271.8 273.6 274.7 276.2 7 Travelers checks 7.5 7.4 8.3 8.2 8.0 8.0 8.0r 7.9 8 Demand deposits 286.5 279.0 277.1 289.5 309.6r 311.2r 315.2 311.0 9 Other checkable deposits6 280.6 285.1 293.9 333.2 349.5 350.lr 356.7r 357.0 Nontransaction components 10 In M2j 2,284.2 2,433.2 2,512.9 2,540.8 22,,553344^^ 2,525.2r 22,,551155..00rr 2,506.6 11 In M3 852.0 832.5 775.6 731.5r 716.5r 707.6r 703.6r 699.3 Commercial banks 12 Savings deposits, irrcluding MMDAs 542.7 541.4 581.9 664.9 695.2r 703.2r 707.9 710.7 13 Small time deposits'.. 447.0 531.0 606.4 598.5 569.2 565.9 557.8 551.2 14 Large time deposits10, 11 366.9 398.2 374.0 354.0 336.8 331.9 329.6r 326.5 Thrift institutions 15 Savings deposits, including MMDAs 383.5 349.7 338.8 377.7 402.7 408.0 414.6 416.4 16 Small time deposits 585.9 617.5 562.3 464.5 433.7 419.5 411.0 404.7 17 Large time deposits 174.3 161.1 120.9 83.1 76.1 73.8 71.2 69.7 Money market mutual funds 18 General purpose and broker-dealer 241.9 316.3 348.9 360.5 358.0 354.1 355.0 353.3 19 Institution-only 91.0 107.2 133.7 179.1 185.3 189.2 194.8 199.7 Debt components 20 Federal debt 2,101.5 2,249.8 2,493.6 2,767.2 2,832.2 2,863.2 2,893.4 n.a. 21 Nonfederal debt 7,214.6 7,810.2 8,253.3 8,436.4 8,492.8 8,509.9 8,526.7 n.a. Not seasonally adjusted Measures2 22 Ml 804.1 811.9 844.1 917.3 930.8 954.8 944.3r 952.5 23 M2 3,083.8 3,240.0 3,351.9 3,452.8 3,474.5r 3,486.2r 3,451.8r 3,454.7 24 M3 3,934.7 4,070.3 4,124.7 4,181.1r 4,195.5r 4,192.5r 4,158.8r 4,155.2 25 L 4,694.9 4,911.0 4,986.4 5,009.6r 5,026.4r 5,025.2r 4,984.6 n.a. 26 Debt 9,301.5 10,045.6 10,734.2 11,190.2 11,287.6 11,336.3 11,375.8 n.a. Ml components 27 Currency3 214.8 225.3 249.5 270.0 271.0 273.4 275.7 277.3 28 Travelers checks'* 6.9 6.9 7.8 7.7 7.7 7.6 7.7 8.2 29 Demand deposits 298.9 291.5 289.9 303.0 302.0r 312.9 307.5 310.7 30 Other checkable deposits6 283.5 288.1 296.9 336.5 sso-o1" 360.9r 353.3r 356.4 Nontransaction components 31 In M2 2,279.7 2,428.1 2,507.8 2,535.5 2,543.7r 2,531.4r 22,,550077..55rr 2,502.1 32 In M38 850.8 830.3 772.8 728.4r 721.01 706.3r 707.0r 700.5 Commercial banks 33 Savings deposits, including MMDAs 543.8 543.0 580.0 662.4 696.8 706.1 707.9 714.0 34 Small time deposits 446.0 529.5 606.3 598.7 569.5 565.4 556.1 549.2 35 Large time deposits10, 11 365.9 397.1 373.0 352.8 337.3 330.9 330.8r 327.8 Thrift institutions 36 Savings deposits, including MMDAs 381.1 347.6 337.7 376.3 403.7 409.7 414.6 418.4 37 Small time deposits® 584.9 616.0 562.2 464.6 433.8r 419.1 409.7r 403.3 38 Large time deposits10 175.2 162.0 120.6 82.8 76.2r 73.6 71.5 70.0 Money market mutual funds 39 General purpose and broker-dealer 240.8 314.6 346.8 358.1 366.9 360.4 352.3 348.9 40 Institution-only 91.4 107.8 134.4 180.3 191.4 190.9 195.5 195.7 Repurchase agreements and eurodollars 41 Overnight 83.2 77.5 74.7 75.3 73.1 70.8r 6666..99"" 68.4 42 Term 227.4 178.5 158.3 128. r 131.6r 127.3r 124.3r 121.2 Debt components 43 Federal debt 2,098.9 2,247.5 2,491.3 2,765.0 2,834.7 2,863.5 2,884.1 n.a. 44 Nonfederal debt 7,202.5 7,798.1 8,242.9 8,425.2 8,453.0 8,472.8r 8,491.7 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, DC 20551. and bankers acceptances, each seasonally adjusted separately, and then adding 2. Composition of the money stock measures and debt is as follows: this result to M3. Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults Debt: Debt of domestic nonfinancial sectors consists of outstanding credit of depository institutions; (2) travelers checks of nonbank issuers; (3) demand market debt of the U.S. government, state and local governments, and private deposits at all commercial banks other than those due to depository institutions, nonfinancial sectors. Private debt consists of corporate bonds, mortgages, conthe U.S. government, and foreign banks and official institutions, less cash items in sumer credit (including bank loans), other bank loans, commercial paper, bankers the process of collection and Federal Reserve float; and (4), other checkable acceptances, and other debt instruments. Data are derived from the Federal deposits (OCDs), consisting of negotiable order of withdrawal (NOW) and Reserve Board's flow of funds accounts. Debt data are based on monthly automatic transfer service (ATS) accounts at depository institutions, credit union averages. This sum is seasonally adjusted as a whole. share draft accounts, and demand deposits at thrift institutions. Seasonally 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of adjusted Ml is computed by summing currency, travelers checks, demand depository institutions. deposits, and OCDs, each seasonally adjusted separately. 4. Outstanding amount of U.S. dollar-denominated travelers checks of non- M2: Ml plus (1) overnight (and continuing-contract) repurchase agreements bank issuers. Travelers checks issued by depository institutions are included in (RPs) issued by all depository institutions and overnight Eurodollars issued to demand deposits. U.S. residents by foreign branches of U.S. banks worldwide, (2) savings (includ- 5. Demand deposits at commercial banks and foreign-related institutions other ing MMDAs) and small time deposits (time deposits—including retail RPs—in than those due to depository institutions, the U.S. government, and foreign banks amounts of less than $100,000), and (3) balances in both taxable and tax-exempt and official institutions, less cash items in the process of collection and Federal general purpose and broker-dealer money market funds. Excludes individual Reserve float. retirement accounts (IRAs) and Keogh balances at depository institutions and 6. Consists of NOW and ATS account balances at all depository institutions, money market funds. Also excludes all balances held by U.S. commercial banks, credit union share draft account balances, and demand deposits at thrift institumoney market funds (general purpose and broker-dealer), foreign governments tions. and commercial banks, and the U.S. government. Seasonally adjusted M2 is 7. Sum of (1) overnight RPs and overnight Eurodollars, (2) money market fund computed by adjusting its non-Mi component as a whole and then adding this balances (general purpose and broker-dealer), (3) MMDAs, and (4) savings and 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 Financial Statistics • September 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 Nov. Dec. Jan. Feb. Mar. Apr. DEBITS TO Seasonally adjusted Demand deposits3 1 All insured banks 256,150.4 277,916.3 281,050.1 278,234.2 293,941.3 306,523.0 298,098.7 305,837.0 315,651.2 2 Major New York City banks 129,319.9 131,784.0 140,905.5 140,769.6 149,502.5 161,915.3 154,751.0 164,171.5 167,177.5 3 Other banks 126,830.5 146,132.3 140,144.6 137,464.6 144,438.8 144,607.7 143,347.7 141,665.5 148,473.7 4 ATS-NOW accounts4 2,910.5 3,349.6 3,624.6 3,553.7 3,786.5 3,719.4 3,787.2 3,670.2 3,957.0 5 Savings deposits 547.5 558.8 1,377.4 3,233.1 3,296.1 3,089.7 3,142.5 3,361.0 3,356.5 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 735.1 800.6 817.6 787.3 841.8 870.1 817.6 832.5 857.4 7 Major New York City banks 3,421.5 3,804.1 4,391.9 4,214.7 4,657.4 4,997.4 4,633.3 4,974.4 5,029.1 8 Other banks 408.3 467.7 449.6 429.6 453.9 452.1 432.8 423.7 443.3 9 ATS-NOW accounts4 15.2 16.5 16.1 14.8 15.7 15.1 15.1 14.5 15.6 10 Savings deposits 3.0 2.9 3.3 5.0 5.0 4.7 4.7 4.9 4.7 DEBITS TO Not seasonally adjusted Demand deposits3 11 All insured banks 256,133.2 277,400.0 280,922.8 267,995.2 301,642.6 306,706.9 276,158.6 313,513.5 314,388.6 12 Major New York City banks 129,400.1 131,784.7 140,563.0 136,592.8 153,462.8 158,932.3 143,476.0 168,122.2 164,994.4 13 Other banks 126,733.0 145,615.3 140,359.7 131,402.4 148,179.8 147,774.6 132,682.6 145,391.3 149,394.3 14 ATS-NOW accounts4 2,910.7 3,342.2 3,622.4 3,314.0 3,841.0 4,130.2 3,450.5 3,747.2 4,104.5 15 MMDAs6 2,677.1 2,923.8 n.a n.a n.a n.a n.a n.a n.a 16 Savings deposits5 546.9 557.9 1,408.3 2,939.5 3,331.1 3,364.7 2,872.0 3,363.7 3,459.2 DEPOSIT TURNOVER Demand deposits3 17 All insured banks 735.4 799.6 817.5 751.7 823.7 851.5 778.4 878.2 849.3 18 Major New York City banks 3,426.2 3,810.0 4,370.1 4,059.4 4,461.1 4,633.6 4,387.6 5,308.9 5,042.4 19 Other banks 408.0 466.3 450.6 406.9 445.1 453.6 412.0 446.9 442.7 20 ATS-NOW accounts4 15.2 16.4 16.1 13.9 15.7 16.4 13.7 14.7 15.7 21 MMDAs6 7.9 8.0 n.a n.a n.a n.a n.a n.a n.a 22 Savings deposits 2.9 2.9 3.4 4.5 5.1 5.1 4.2 4.9 4.9 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 Banks' Billions of dollars, averages of Wednesday figures 1991 1992 IItteemm July Aug. Sept. Oct.* Nov.r Dec. Jan. Feb. Mar.r Apr/ Mayr June Seasonally adjusted 1 Total loans and securities2 2,773.8r 2,776.9* 2,789. lr 2,805.5 2,822.8 2,838.©r 2,847.3r 2,847.8r 2,854.1 2,866.3 2,864.2 2,869.0 2 U.S. government securities 502.4 512.6 523.0 538.7 550.8 562.5 565.7 570.4 578.3 589.8 598.5 607.3 3 Other securities 175.8 174.4 176.3 177.9 178.8 179.3 178.5 178.6 175.9 176.1 174.3 172.7 4 Total loans and leases2 2,095,5r 2,089.9* 2,089.8* 2,088.9 2,093.2 2,096.2* 2,103.1* 2,098.8* 2,099.9 2,100.3 2,091.4 2,089.0 5 Commercial and industrial ..... 623.8 619.5 622.0 622.6 621.7 617.8 615.9* 611.5 608.7 605.7 602.2 598.5 6 Bankers acceptances held3... 7.5r 7.7 7.2 6.6 7.2 7.3 7.2 7.4 7.3 7.1 7.2 6.8 7 Other commercial and industrial 616.3 611.8 614.7* 616.1 614.6 610.5 608.7* 604.1 601.4 559988..66 559944..99 559911..77 8 U.S. addressees 610.6 605.9 608.6* 609.4 607.9 603.1* 602.4* 597.8* 595.0 592.1 588.2 585.2 9 Non-U.S. addressees 5.7 5.9 6.1 6.7 6.7 7.4 6.3 6.3 6.4 6.5 6.7 6.5 10 Real estate 867.3 866.7 868.1* 869.8 871.9 873.1* 873.3* 876.9 878.6 880.8 882.1 881.0 11 Individual 370.9 370.3 367.3* 364.2 363.1 363.5* 363.1 363.5* 362.1 361.0 359.4 360.0 12 Security 47.4 48.4 50.0 51.1 53.4 54.5 59.5 57.1 60.5 65.0 61.8 64.1 13 Nonbank financial institutions 37.7 36.9 37.1 37.2 37.8 40.4 39.8* 40.8r 41.3 4400..66 4400..99 4400..44 14 Agricultural 34.0 34.3 34.5* 34.1 33.8 34.0* 33.6 33.5 34.2 34.1 33.9 34.2 15 State and political subdivisions 31.0r 30.6* 30.3* 29.7 29.4 29.1* 28.0 28.2* 28.2 2277..99 2277..77 2277..44 16 Foreign banks 6.4 6.5 6.8 6.6 6.9 7.4 7.3 6.8 6.5 6.7 7.3 88..11 17 Foreign official institutions 2.3 2.2 2.3 2.4 2.5 2.4 2.3 2.2 2.2 2.1 2.1 22..11 18 Lease-financing receivables .... 32.5r 31.9* 31.8* 31.6 31.5 31.7* 31.5 31.6 31.5 31.5 31.4 31.6 19 All other loans 42.3r 42.7* 39.8* 39.5 41.1 42.4* 48.9 46.7* 46.1 45.0 42.6 41.8 Not seasonally adjusted 20 Total loans and securities2 2,767.0r 2,774.0r 2,789.3r 2,808.3 2,828.1 2,844.5* 2,844.0r 2,850.4r 2,854.8 2,865.4 2,859.8 2,869.9 21 U.S. government securities 500.3 511.1 521.6 537.6 551.7 558.5 565.2 574.3 583.6 592.1 598.6 606.3 22 Other securities 174.9 174.5 176.3 178.3 179.0 179.6 179.1* 178.7* 176.0 175.8 174.0 172.7 23 Total loans and leases2 2,091.9* 2,088.4* 2,091.4* 2,092.4 2,097.4 2,106.4* 2,099.7* 2,097.4* 2,095.2 2,097.6 2,087.2 2,090.8 24 Commercial and industrial ..... 623.6 617.7 619.1 621.1 620.4 619.1 612.7* 610.7 611.3 608.5 604.5 600.5 25 Bankers acceptances held3 ... 7.1 7.5 7.2 6.6 7.3 7.6 7.2 7.5 7.2 6.8 7.2 6.9 26 Other commercial and industrial 616.5 610.1* 611.9 614.5 613.1 611.5* 605.5* 603.1* 604.1 601.7 597.3 593.5 27 U.S. addressees4 610.8 604.3 605.9 608.3 606.9 604.5* 598.7* 596.4* 597.5 594.9 590.6 586.7 28 Non-U.S. addressees4 5.8 5.8 6.0 6.2 6.2 7.0 6.8 6.7 6.6 6.8 6.7 6.9 29 Real estate 868.4 868.6 869.0 871.2 873.2 873.4* 872.7* 873.9 875.1 879.5 882.7 881.3 30 Individual 368.2 369.3 368.7 365.1 364.5 368.1* 367.4 363.5* 359.6 358.3 357.8 357.9 31 Security 46.2 47.3 48.6 50.8 53.5 55.1 59.0 61.7 62.3 66.5 58.4 63.9 32 Nonbank financial institutions 37.9 37.0 36.7 36.9 38.1 41.7 40.2r 40.4* 40.7 40.2 40.3 40.7 33 Agricultural 34.7 35.2 35.5 35.0 34.1 33.9 33.2 32.6 32.9 33.1 33.5 34.4 34 State and political subdivisions 30.8* 30.5* 30.2* 29.8 29.4 29.0* 28.4 28.3* 28.2 27.9 27.7 27.4 35 Foreign banks 6.3 6.4 6.9 6.9 7.3 7.9 7.1 6.7 6.4 6.5 7.2 7.8 36 Foreign official institutions 2.3 2.2 2.3 2.4 2.5 2.4 2.3 2.2 2.2 2.1 2.1 2.1 37 Lease-financing receivables 32.3* 31.7* 31.7* 31.8 31.6 31.7* 31.8 31.7 31.7 31.5 31.4 31.3 38 All other loans 41.1* 42.5* 42.8* 41.6 42.6 44.1* 45.0* 45.6* 44.9 43.5 41.6 43.7 1. Data have been revised to reflect new seasonal adjustment factors and 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.Components 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 Financial Statistics • September 1992 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Billions of dollars, monthly averages 1991 1992r Source of funds July Aug.r Sept. Oct/ Nov. Dec." Jan. Feb. Mar. Apr. May June Seasonally adjusted 1 Total nondeposit funds2 248.8r 246.6 249.3 263.9 267.0" 280.8 284.4 288.8 289.3 292.2 292.8 296.5 2 Net balances due to related foreign offices3 18.1 18.2 20.3 30.9 33.1 39.2 43.7 42.7 45.5 50.1 55.3 61.2 3 Borrowings from other than commercial banks in United States4 230.8r 228.3 229.0 232.9 233.9" 241.6 240.7 246.1 243.7 242.1 237.6 235.2 4 Domestically chartered banks 161.0r 156.4 155.lr 153.9 150.8 153.7 155.6 158.8 154.6 151.7 148.5 147.4 5 Foreign-related banks 69.8r 72.0 74.0r 79.1 83.1" 87.8 85.1 87.3 89.1 90.4 89.1 87.8 Not seasonally adjusted 6 Total nondeposit funds 245.0" 243.3 246.7 265.1 271.3" 279.0 280.4 289.4 293.1 289.4 298.6 298.0 7 Net balances due to related foreign offices3 14.8 16.4 19.5 30.5 34.0 42.7 44.4 42.9 45.9 48.6 57.7 60.9 8 Domestically chartered banks -7.3 -7.2 -8.8 -7.2 -4.4 -3.8 -4.9 -1.0 -1.2 -5.4 -4.2 -6.3 9 Foreign-related banks 22.1 23.6 28.3 37.7 38.5 46.5 49.3 43.9 47.2 54.0 61.9 67.2 10 Borrowings from other than commercial banks in United States4 230.2r 226.9 227.2 234.6 237.3" 236.3 235.9 246.6 247.2 240.8 240.9 237.1 11 Domestically chartered banks 159.2r 154.6 154.0" 154.7 155.1 152.4 151.4 159.3 157.7 149.8 151.1 147.6 12 Federal funds and security RP borrowings 156.0" 151.0 150.5r 151.5 151.9 149.3 147.9 155.8 154.4 146.3 147.3 143.5 13 Other6 3.2 3.7 3.5 3.2 3.2 3.1 3.4 3.5 3.3 3.4 3.9 4.1 14 Foreign-related banks6 70.9 72.3 73.2r 79.9 82.2" 83.8 84.6 87.2 89.5 91.0 89.8 89.5 MEMO Gross large time deposits1 15 Seasonally adjusted 437.5 438.2 436.0 429.5 426.1 423.9 416.0 413.7 406.9 399.8 396.6 392.4 16 Not seasonally adjusted 437.1 440.0 437.5 429.7 425.8 422.6 413.6 412.6 407.3 398.8 397.9 393.7 U.S. Treasury demand balances at commercial banks8 17 Seasonally adjusted 22.8 25.3 23.8 29.2 34.2 26.4 27.8 19.5 21.8 19.9 17.0 25.8 18 Not seasonally adjusted 20.7 17.2 26.9 28.7 28.5 25.4 33.1 25.2 20.1 17.7 21.0 25.1 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 Series' Billions of dollars 1991 1992 AAccccoouunntt Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr.r Mayr June ALL COMMERCIAL BANKING INSTITUTIONS2 1 Total assets 3,402.5 3,431.6 3,473.1 3,514.4 3,545.4 3,502.8 3,502.3 3,499.7 3,514.7 3,520.2 3,502.7 ? Loans and securities 2,933.3 2,952.0 2,982.5 3,005.1 3,026.7 3,017.1 3,017.5 3,021.1 3,023.7 3,017.7 3,017.4 3 Investment securities 654.2 663.4 687.3 696.7 705.5 706.1 712.1 720.8 724.7 732.1 744.9 4 U.S. government securities 491.9 500.0 522.6 530.7 538.0 541.2 548.6 558.5 563.8 572.3 586.8 5 Other 162.3 163.4 164.7 166.0 167.4 164.9 163.5 162.3 161.0 159.7 158.0 6 Trading account assets 31.3 32.3 35.3 36.4 33.8 38.0 37.7 39.2 37.9 36.7 34.9 7 Total loans 2,247.7 2,256.2 2,259.9 2,271.9 2,287.5 2,273.0 2,267.7 2,261.2 2,261.1 2,248.9 2,237.6 8 Interbank loans 161.1 163.3 169.5 173.6 175.1 177.5 175.4 170.0 166.4 168.5 154.2 9 Loans excluding interbank 2,086.7 2,093.0 2,090.4 2,098.3 2,112.4 2,095.5 2,092.3 2,091.2 2,094.6 2,080.3 2,083.4 10 Commercial and industrial 616.7 619.0 619.1 621.6 621.1 611.1 610.5 610.3 606.3 602.4 598.2 11 Real estate 868.4 867.9 872.3 872.5 872.8 872.9 872.1 873.5 881.3 880.2 879.1 1? Individual 369.4 368.8 365.3 363.5 369.9 366.8 362.4 359.5 359.3 358.0 359.0 13 All other 232.1 237.3 233.7 240.7 248.5 244.7 247.3 247.8 247.8 239.7 247.2 14 Total cash assets 197.3 203.7 206.0 224.2 229.2 201.6 204.8 203.7 208.2 222.5 203.0 15 Reserves with Federal Reserve Banks .. 22.6 26.1 25.9 24.7 29.2 23.7 27.4 28.5 23.7 28.6 28.8 16 Cash in vault 31.0 30.2 30.7 29.6 30.8 31.1 30.7 29.8 30.8 32.2 30.8 17 Cash items in process of collection ... 71.9 75.5 75.5 90.6 87.7 72.9 73.5 71.5 78.4 84.1 69.5 18 Demand balances at U.S. depository institutions 27.6 27.2 29.2 32.7 33.3 28.4 2288..99 28.3 2288..66 3311..77 2288..77 19 Other cash assets 44.2 44.7 44.7 46.5 48.3 45.5 44.2 45.7 46.7 45.9 45.2 20 Other assets 271.9 275.9 284.5 285.1 289.5 284.1 279.9 274.9 282.7 280.0 282.4 21 Total liabilities 3,056.6 3,083.2 3,131.4 3,172.8 3,199.8 3,147.7 3,147.4 3,144.2 3,163.9 3,166.9 3,250.0 ?? Total deposits 2,326.7 2,325.2 2,345.5 2,388.6 2,392.6 2,339.7 2,347.6 2,354.9 2,359.8 2,370.9 2,339.7 23 Transaction accounts 612.5 614.4 629.7 672.2 685.4 646.2 654.8 665.9 676.2 686.9 665.7 24 Savings deposits (excluding checkable) 627.5 631.4 643.7 651.8 657.7 666699..44 668811..99 669922..66 669944..22 770022..55 770044..11 75 Time deposits 1,086.7 1,079.4 1,072.1 1,064.6 1,049.5 1,024.2 1,010.9 996.4 989.4 981.6 969.9 76 Borrowings 467.5 484.8 504.5 491.1 504.8 507.7 504.8 495.3 501.0 492.6 500.2 ?7 Other liabilities 262.4 273.2 281.4 293.1 302.4 300.7 295.5 294.6 303.8 303.9 307.7 28 Residual (assets less liabilities)3 345.9 348.4 341.7 341.6 345.7 354.7 354.3 354.9 350.1 352.7 355.1 DOMESTICALLY CHARTERED COMMERCIAL BANKS4 29 Total assets 2,987.3 3,002.4 3,027.7 3,055.2 3,072.0 3,032.2 3,031.6 3,034.8 3,048.7 3,051.8 3,032.4 30 Loans and securities 2,651.9 2,660.4 2,677.0 2,691.6 2,698.6 2,692.7 2,692.8 2,702.4 2,700.0 2,695.2 2,688.8 31 Investment securities 613.7 621.6 640.0 646.5 652.2 654.7 662.1 670.2 674.7 678.9 690.7 3? U.S. government securities 470.3 477.3 494.7 500.7 506.4 511.1 519.8 529.4 534.6 540.1 552.7 33 Other 143.4 144.3 145.3 145.8 145.8 143.6 142.3 140.8 140.2 138.7 137.9 34 Trading account assets 31.3 32.3 35.3 36.4 33.8 38.0 37.7 39.2 37.9 36.7 34.9 35 Total loans 2,006.8 2,006.5 2,001.8 2,008.7 2,012.6 2,000.1 1,993.0 1,993.0 1,987.4 1,979.6 1,963.2 36 Interbank loans 141.3 142.3 144.1 150.1 149.4 154.2 151.0 149.0 138.2 142.8 129.4 37 Loans excluding interbank 1,865.5 1,864.2 1,857.6 1,858.6 1,863.2 1,845.9 1,842.0 1,844.0 1,849.2 1,836.8 1,833.8 38 Commercial and industrial 475.8 473.0 471.5 469.1 464.5 455.9 455.6 455.9 454.3 450.4 446.1 39 Real estate 815.6 814.9 818.6 818.8 819.0 818.6 817.7 818.8 827.2 826.0 825.5 40 Revolving home equity 67.3 68.1 69.2 69.4 70.0 70.3 69.9 69.8 70.5 70.9 71.5 41 Other real estate 748.3 746.8 749.4 749.4 749.0 748.3 747.8 749.0 756.7 755.1 754.0 4? Individual 369.4 368.8 365.3 363.5 369.9 366.8 362.4 359.5 359.3 358.0 359.0 43 All other 204.7 207.6 202.2 207.1 209.8 204.6 206.3 209.8 208.4 202.3 203.2 44 Total cash assets 171.5 176.4 179.0 197.5 201.7 175.9 179.7 177.7 182.1 194.4 173.9 45 Reserves with Federal Reserve Banks. 22.1 24.9 25.1 24.0 28.5 23.3 26.8 28.0 23.0 26.9 28.0 46 Cash in vault 31.0 30.1 30.7 29.6 30.7 31.1 30.7 29.8 30.8 32.2 30.8 47 Cash items in process of collection ... 70.3 74.0 73.7 88.4 85.6 71.1 71.8 69.0 75.9 81.8 66.4 48 Demand balances at U.S. depository institutions 25.7 25.1 27.3 30.7 31.1 2266..55 27.1 2266..99 2277..22 3300..22 2277..22 49 Other cash assets 22.4 22.3 22.3 24.8 25.8 24.0 23.3 24.1 25.2 23.3 21.5 50 Other assets 163.9 165.6 171.6 166.2 171.7 163.6 159.0 154.6 166.6 162.2 169.8 51 Total liabilities 2,755.0 2,769.4 2,795.4 2,821.8 2,836.5 2,793.7 2,792.2 2,794.7 2,807.3 2,807.9 2,783.9 5? Deposits 2,289.5 2,287.1 2,301.9 2,342.0 2,344.0 2,293.0 2,302.7 2,309.1 2,314.4 2,322.5 2,288.3 53 Transaction accounts 603.2 605.4 620.3 662.0 674.9 636.1 645.3 655.8 666.5 677.2 655.5 54 Savings deposits (excluding checkable) 623.8 627.6 639.9 664477..99 653.7 666655..33 667777..99 668888..55 669900..11 669988..33 669999..66 55 Time deposits 1,062.6 1,054.1 1,041.7 1,032.0 1,015.4 991.6 979.6 964.8 957.7 947.0 933.2 56 Borrowings 340.1 356.1 362.3 346.5 356.4 365.2 359.2 354.3 367.2 360.2 367.4 57 Other liabilities 125.4 126.2 131.2 133.3 136.1 135.5 130.3 131.3 125.7 125.0 128.2 58 Residual (assets less liabilities)3 232.4 233.0 232.3 233.4 235.5 238.5 239.3 240.1 241.4 244.0 248.5 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 Financial Statistics • September 1992 1.26 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS1 Millions of dollars, Wednesday figures 1992 AAccccoouunntt Apr. 29" May 6r May 13r May 20" May 27r June 3 June 10 June 17 June 24 ASSETS 1 Cash and balances due from depository institutions 135,126 99,064 131,205 100,620 108,050 101,925 102,449 99,506 115,389 2 U.S. Treasury and government securities 241,237 241,934 242,951 239,561 237,301 243,606 244,423 241,152 239,476 3 Trading account 20,792 22,556 23,912 21,861 22,700 23,919 22,961 22,420 21,312 4 Investment account 220,445 219,379 219,039 217,701 214,601 219,687 221,462 218,731 218,163 5 Mortgage-backed securities 81,745 82,279 81,516 81,392 80,881 81,491 81,086 80,006 80,719 All others, by maturity 6 One year or less 26,987 27,473 28,464 26,893 25,773 25,494 25,750 24,529 24,462 7 One year through five years 63,326 61,712 61,547 62,529 61,987 63,352 65,397 65,333 64,876 8 More than five years 48,387 47,914 47,513 46,887 45,960 49,351 49,229 48,864 48,106 9 Other securities 54,582 54,7% 55,007 55,004 54,507 54,390 54,147 53,870 53,349 10 Trading account 1,434 1,104 1,153 1,513 1,670 1,703 1,590 1,560 1,367 11 Investment account 53,148 53,692 53,854 53,491 52,837 52,687 52,557 52,309 51,982 12 State and political subdivisions, by maturity 21,897 21,898 21,867 21,822 21,855 21,707 21,685 21,701 21,713 13 One year or less 3,298 3,315 3,331 3,284 3,308 3,252 3,252 3,256 3,247 14 More than one year 18,599 18,583 18,536 18,539 18,547 18,455 18,433 18,445 18,465 15 Other bonds, corporate stocks, and securities 31,251 31,794 31,987 31,669 30,982 30,980 30,872 30,608 30,269 16 Other trading account assets 11,643 12,908 12,989 12,759 11,679 12,476 12,232 12,367 11,478 17 Federal funds sold3 96,426 96,068 117,449 98,444 92,7% 88,400 84,231 86,147 87,633 18 To commercial banks in the United States 65,371 65,612 75,698 58,977 58,423 57,411 56,066 56,874 60,379 19 To nonbank brokers and dealers 25,684 25,873 35,961 35,087 29,144 26,817 24,217 25,688 23,386 20 To others4 5,370 4,583 5,790 4,381 5,228 4,172 3,948 3,586 3,869 21 Other loans and leases, gross 1,008,265 998,075 1,003,512 9%,207 999,109 997,536 997,074 992,490 990,964 22 Commercial and industrial 290,797 288,365 289,283 287,500 287,411 288,422 286,756 285,186 284,044 23 Bankers acceptances and commercial paper 1,376 1,399 1,487 1,405 1,438 1,776 1,699 1,625 1,635 24 Mother 289,421 286,965 287,7% 286,095 285,973 286,645 285,058 283,561 282,409 25 U.S. addressees 288,135 285,689 286,474 284,723 284,552 285,142 283,798 282,209 281,045 26 Non-U.S. addressees 1,286 1,276 1,322 1,372 1,420 1,503 1,260 1,352 1,364 27 Real estate loans 402,061 402,426 402,114 400,817 402,694 403,835 404,680 402,603 400,669 28 Revolving, home equity 40,875 40,851 41,005 41,112 41,270 41,475 41,526 41,504 41,545 29 All other 361,186 361,575 361,108 359,705 361,424 362,360 363,154 361,099 359,124 30 To individuals for personal expenditures 181,121 180,325 180,299 180,874 181,269 178,510 178,493 178,290 178,389 31 To financial institutions 45,150 43,627 42,912 42,388 43,225 43,140 42,085 41,700 42,400 32 Commercial banks in the United States 19,439 18,921 18,666 18,8% 18,902 18,482 18,295 18,061 19,046 33 Banks in foreign countries 2,065 1,925 1,841 1,770 2,167 1,951 1,720 2,036 1,999 34 Nonbank financial institutions 23,646 22,781 22,405 21,722 22,156 22,707 22,070 21,602 21,355 35 For purchasing and carrying securities 15,888 13,114 17,393 14,021 14,143 14,111 14,642 14,473 14,035 36 To finance agricultural production 5,797 5,811 5,831 5,856 5,878 5,833 5,874 5,866 5,907 37 To states and political subdivisions 17,040 16,961 16,906 16,811 16,822 16,718 16,676 16,638 16,971 38 To foreign governments and official institutions 912 928 886 857 873 882 1,131 855 %7 39 All other loans' 23,890 20,949 22,369 21,588 21,371 20,725 21,351 21,454 22,084 40 Lease-financing receivables 25,610 25,570 25,518 25,495 25,423 25,359 25,387 25,425 25,497 41 LESS: Unearned income 2,971 2,960 2,%7 2,956 2,961 2,838 2,840 2,830 2,819 42 Loan and lease reserve6 37,498 37,589 37,827 37,614 37,654 38,382 38,425 38,418 38,384 43 Other loans and leases, net 967,795 957,526 962,718 955,637 958,494 956,317 955,809 951,242 949,761 44 Other assets 156,257 156,516 157,036 153,089 155,669 158,623 160,338 155,095 152,615 45 Total assets 1,663,066 1,618,811 1,679,356 1,615,115 1,618,496 1,615,737 1,613,628 1,599,378 1,609,701 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 Account Apr. 29" May 6r May 13r May 20" May 27r June 3 June 10 June 17 June 24 LIABILITIES 46 Deposits 1,164,432 1,134,856 1,180,465 1,116,109 1,116,837 1,122,110 1,117,274 1,109,643 1,117,137 47 Demand deposits 276,054 240,819 286,441 237,430 244,259 241,047 239,049 238,063 247,897 48 Individuals, partnerships, and corporations 216,902 195,780 216,705 189,193 194.141 195,536 194,933 191,461 194,837 49 Other holders 59,152 45,040 69,736 48,237 50,118 45,512 44,116 46,602 53,061 50 States and political subdivisions 8,602 7,480 8,305 8,656 8,149 8,440 7,453 7,983 8,098 51 U.S. government 3,857 1,846 14,514 3,624 3,429 1,467 1,201 1,743 1,410 52 Depository institutions in the United States ... 28,538 20,682 29,049 20,448 21,618 21,162 20,211 21,571 25,315 53 Banks in foreign countries 5,486 4,850 5,553 4,885 5,114 4,904 4,851 4,944 5,817 54 Foreign governments and official institutions .. 747 574 703 629 600 484 890 568 571 55 Certified and officers' checks 11,921 9,607 11,612 9,996 11,208 9,055 9,511 9,793 11,851 56 Transaction balances other than demand deposits5 . 106,996 107,817 111,621 105,859 101,435 104,916 102,365 102,006 101,774 57 Nontransaction balances 781,382 786,220 782,403 772,820 771.142 776,146 775,859 769,573 767,466 58 Individuals, partnerships, and corporations 751,218 755,522 751,184 741,588 739,968 744,233 743,795 737,562 735,978 59 Other holders 30,164 30,698 31,219 31,233 31,174 31,914 32,064 32,011 31,489 60 States and political subdivisions 25,027 25,265 25,048 25,103 25,157 25,857 25,971 25,993 25,506 61 U.S. government 1,985 2,144 2,171 2,191 2,131 2,201 2,214 2,220 2,218 62 Depository institutions in the United States ... 2,873 3,015 3,728 3,663 3,614 3,584 3,614 3,528 3,491 63 Foreign governments, official institutions, and banks . 279 275 273 276 272 271 265 271 274 64 Liabilities for borrowed money6 274,975 259,6550 275,9230 277,3990 281,5860 268,7500 269,472 264,8010 272,4150 65 Borrowings from Federal Reserve Banks 551 650 66 Treasury tax and loan notes 4,543 2,895 4,105 24,417 28,067 11,175 13,032 11,013 11,932 67 Other liabilities for borrowed money7 269,881 256,759 271,817 252,982 253,519 257,575 255,790 253,787 260,482 68 Other liabilities (including subordinated notes and debentures) 102,122 102,236 101,179 98,707 97,888 102,175 103,509 101,906 97,191 69 Total liabilities 1,541,530 1,496,747 1,557,566 1,492,216 1,496,311 1,493,035 1,490,255 1,476,350 1,486,743 70 Residual (total assets less total liabilities)8 121,537 122,065 121,790 122,899 122,185 122,702 123,373 123,029 122,958 MEMO , 71 Total loans and leases, gross, adjusted, plus securities 1,327,343 1,319,248 1,337,545 1,324,102 1,318,067 1,320,515 1,317,746 1,311,090 1,303,475 72 Time deposits in amounts of $100,000 or more 151,112 153,583 152,274 150,519 150,454 151,809 150,608 149,507 148,827 73 Loans sold outright to affiliates10 1,205 1,197 1,204 1,191 1,209 1,195 1,184 1,183 1,180 74 Commercial and industrial 676 683 683 684 691 682 673 675 675 75 Other 529 514 522 508 519 514 512 509 505 76 Foreign branch credit extended to U.S. residents" ... 22,911 22,645 22,875 22,872 22,912 22,883 22,905 23,026 23,319 77 Net due to related institutions abroad -3,365 -6,622 -7,087 -4,938 -6,720 -6,807 -4,947 -2,554 -4,767 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 Financial Statistics • September 1992 1.30 LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS Assets and Liabilities1 Millions of dollars, Wednesday figures 1992 AAccccoouunntt Apr. 29 May 6 May 13 May 20 May 27 June 3 June 10 June 17 June 24 1 Cash and balances due from depository institutions 16,998 16,537 16,451 17,012 18,376 17,655 18,696 18,300 19,020 2 U.S. Treasury and government agency securities 20,027 21,544 21,639 21,118 22,097 22,315 21,559 21,896 23,454 3 Other securities 8,381 8,330 8,506 8,530 8,466 8,462 8,284 7,936 8,071 4 Federal funds sold1 14,124 12,726 12,277 12,375 12,302 12,797 14,199 12,171 13,882 5 To commercial banks in the United States ... 5,959 5,610 5,101 4,847 5,125 4,852 5,515 3,182 4,222 6 To others 8,165 7,115 7,176 7,528 7,177 7,945 8,684 8,989 9,660 7 Other loans and leases, gross 162,761r 163,270* 162,569* 162,260* 161,783* 163,228 161,943 162,602 163,517 8 Commercial and industrial 95,604r 95,657 95,546 95,797 95,642 96,149 95,732 95,843 95,685 9 Bankers acceptances and commercial paper 2,335 2,549 2,511 2,403 2,371 2,360 2,346 2,3% 2,425 10 All other 93,269* 93,108 93,035 93,395 93,271 93,789 93,386 93,447 93,260 11 U.S. addressees 90,358r 90,229* 90,138* 90,527* 90,310* 90,765 90,371 90,419 90,228 1? Non-U.S. addressees 2,912r 2,879* 2,896* 2,868* 2,961* 3,024 3,015 3,028 3,032 13 Loans secured by real estate 36,613 36,716 36,672 36,731 36,703 36,663 36,568 36,388 36,293 14 To financial institutions 22,313r 22,437* 22,516* 22,424* 22,230* 22,542 22,504 22,591 24,053 15 Commercial banks in the United States.. 8,262r 8,419 8,248 7,985 7,774 8,145 7,754 8,061 7,983 16 Banks in foreign countries l,684r 1,855 1,806 2,176 1,985 2,041 2,264 1,955 2,254 17 Nonbank financial institutions 12,367r 12,162* 12,462* 12,263* 12,471* 12,356 12,486 12,575 13,816 18 For purchasing and carrying securities 5,726 5,938 5,429 4,891 4,793 5,358 4,758 5,383 5,018 19 To foreign governments and official institutions 324 335599 332288 330044 229977 310 281 262 360 20 All other 2,179 2,164 2,077 2,112 2,118 2,206 2,100 2,135 2,107 21 Other assets (claims on nonrelated parties) .. 28,113 28,538 28,711 27,786 28,085 28,459 27,687 27,948 26,695 22 Total assets3 289,31C 291,204* 291,558* 290,986* 290,850* 296,711 295,546 291,387 292,103 23 Deposits or credit balances due to other than directly related institutions 95,633 94,556* 95,630 9966,,662299** 96,775* 97,271 95,914 95,993 95,436 24 Demand deposits4 3,333 3,345* 3,214 3,259* 3,542* 3,146 3,332 3,412 3,789 25 Individuals, partnerships, and corporations 2,618 22,,662299** 2,588 2,607 2,678 2,518 2,507 2,655 2,656 26 Other 715 716 626 651* 863* 628 825 758 1,133 27 Nontransaction accounts 92,300 91,211 92,415 93,370* 93,234 94,125 92,582 92,580 91,646 28 Individuals, partnerships, and corporations 66,200 65,711 65,985 6666,,331100** 6666,,111199** 67,415 66,489 66,860 66,120 2,9 Other 26,100 25,499 26,430 27,060 27,115* 26,710 26,093 25,721 25,526 30 Borrowings from other than directly related institutions 94,295 101,254 95,944 96,232* 93,307 101,622 99,741 %,421 93,606 31 Federal funds purchased5 43,892 46,494 42,883 46,937 47,611 55,100 53,982 53,420 50,012 32 From commercial banks in the United States 15,551r 14,693 13,139 13,363 15,485 17,945 17,395 16,506 12,323 33 From others 28,34 f 31,800 29,743 33,573 32,125 37,154 36,587 36,914 37,689 34 Other liabilities for borrowed money 50,404 54,761 53,061 49,296* 45,696 46,523 45,759 43,001 43,594 35 To commercial banks in the United States ll,981r 11,313* 10,653* 10,665* 10,757* 10,621 10,678 10,086 9,838 36 To others 38,423r 43,448* 42,408* 38,630* 34,939* 35,901 35,081 32,914 33,755 37 Other liabilities to nonrelated parties 26,249 26,763* 27,055 27,028* 26,355* 26,801 26,522 25,541 26,391 38 Total liabilities6 289,310r 291,204r 291,558r 290,986* 290,850"" 296,711 295,546 291,387 292,103 MEMO 39 Total loans (gross) and securities, adjusted .. 191,071*" 119911,,884400** 191,641* 191,451* 191,748* 193,805 192,716 193,363 196,719 40 Net due to related institutions abroad 34,227* 28,371* 31,524* 29,192* 34,671* 27,222 30,191 32,900 39,207 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 1987 1988 1989 1990 1991 Dec. Dec. Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. May Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 358,997 458,464 525,831 561,142 530,300 530,300 533,342 527,941 539,749 537,020 533,719 Financial companies2 Dealer-placed paper 2 Total 102,742 159,777 183,622 215,123 214,445 214,445 220,208 210,686 219,287 225,989 226,552 3 Bank-related (not seasonally adjusted)4 1,428 1,248 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Directly placed paper 4 Total 174,332 194,931 210,930 199,835 183,195 183,195 180,224 117788,,999955 181,485 172,136 168,914 5 Bank-related (not seasonally adjusted)3 43,173 43,155 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 6 Nonfinancial companies6 81,923 103,756 131,279 146,184 132,660 132,660 132,910 138,260 138,977 138,895 138,253 Bankers dollar acceptances (not seasonally adjusted)7 7 Total 70,565 66,631 62,972 54,771 43,770 43,770 43,112 41,375 39,309 39,335 38,384 Holder 8 Accepting banks 10,943 9,086 9,433 9,017 11,017 11,017 11,291 10,578 9,640 9,821 8,701 9 Own bills 9,464 8,022 8,510 7,930 9,347 9,347 9,273 8,831 8,296 8,427r 7,432 10 Bills bought 1,479 1,064 924 1,087 1,670 1,670 2,018 1,747 1,344 l,394r 1,269 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 1,739 1,574 1,364 1,492 1,598 1,477 13 Others 58,658 56,052 52,473 44,836 31,014 31,014 30,247 29,423 28,177 27,915 28,207 Basis 14 Imports into United States 16,483 14,984 15,651 13,096 12,843 12,843 12,995 12,853 11,569 12,045 11,893 15 Exports from United States 15,227 14,410 13,683 12,703 10,351 10,351 9,740 9,252 9,403 9,168 8,702 16 All other 38,855 37,237 33,638 28,973 20,577 20,577 20,377 19,269 18,337 18,121 17,790 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 Rate Period Av r e a r te a ge Period Av r e a r te a ge Period 1101..0500 1989 10.87 1990-—Apr. .. 10.00 1991-—July ... 1990 10.01 10.00 Aug. .. 1111..0500 199 1 8.46 10.00 Sept. .. July ... 10.00 Oct. ... 10.50 1989—Jan. 10.50 Aug. .. 10.00 Nov. .. Feb. 10.93 Sept. .. 10.00 Dec. .. 10.00 Mar. 11.50 Oct. ... 10.00 Apr. 11.50 Nov. .. 10.00 1992-—Jan. ... 9.50 May 11.50 Dec. .. 10.00 Feb. 9.00 June 11.07 Mar. .. 8.50 July 10.98 1991-—Jan. ... 9.52 8.00 Aug. 10.50 Feb. .. 9.05 7.50 Sept. 10.50 9.00 June .. 6.50 Oct. 10.50 9.00 JJuullyy Nov. 10.50 8.50 6.00 Dec. 10.50 June .. 8.50 1990—Jan. 10.11 Feb. 10.00 Mar. 10.00 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 Financial Statistics • September 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 Mar. Apr. May June May 29 June 5 June 12 June 19 June 26 MONEY MARKET INSTRUMENTS 1 Federal funds1'2'3 9.21 8.10 5.69 3.98 3.73 3.82 3.76 3.80 3.85 3.69 3.73 3.72 2 Discount window borrowing ' 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 4.28 4.02 3.87 3.91 3.92 3.94 3.91 3.89 3.89 4 3-month 8.99 8.06 5.87 4.30 4.04 3.88 3.92 3.93 3.97 3.93 3.91 3.89 5 6-month 8.80 7.95 5.85 4.38 4.13 3.97 3.99 4.03 4.05 4.01 3.97 3.95 Finance paper, directly placed3'5'7 6 1-month 8.99 8.00 5.73 4.18 3.89 3.76 3.81 3.82 3.84 3.82 3.80 3.79 7 3-month 8.72 7.87 5.71 4.20 3.91 3.77 3.82 3.83 3.86 3.83 3.80 3.79 8 6-month 8.16 7.53 5.60 4.15 3.89 3.77 3.80 3.80 3.85 3.81 3.80 3.76 Bankers acceptances3,5,8 9 3-month 8.87 7.93 5.70 4.19 3.92 3.76 3.80 3.84 3.84 3.81 3.79 3.79 10 6-month 8.67 7.80 5.67 4.29 3.99 3.85 3.88 3.93 3.93 3.89 3.87 3.85 Certificates of deposit, secondary marker9 1121 . 1-month 9.11 8.15 5.82 4.23 3.97 3.79 3.83 3.86 3.88 3.83 3.81 3.81 3-month 9.09 8.15 5.83 4.25 4.00 3.82 3.86 3.89 3.91 3.86 3.83 3.84 13 6-month 9.08 8.17 5.91 4.42 4.13 3.96 3.97 4.03 4.04 3.97 3.94 3.92 14 Eurodollar deposits, 3-month3,10 9.16 8.16 5.86 4.26 4.05 3.84 3.87 3.91 3.94 3.86 3.84 3.85 U.S. Treasury bills Secondary market3. 15 3-month 8.11 7.50 5.38 4.04 3.75 3.63 3.66 3.71 3.71 3.67 3.63 3.64 16 6-month 8.03 7.46 5.44 4.18 3.87 3.75 3.77 3.84 3.86 3.80 3.73 3.74 17 1-year 7.92 7.35 5.52 4.40 4.09 3.99 3.98 4.06 4.08 3.99 3.93 3.94 Auction average • ' 18 3-month 8.12 7.51 5.42 4.05 3.81 3.66 3.70 3.75 3.75 3.71 3.66 3.67 19 6-month 8.04 7.47 5.49 4.19 3.93 3.78 3.81 3.90 3.90 3.83 3.75 3.77 20 1-year 7.91 7.36 5.54 4.37 4.34 4.20 4.07 n.a. 4.07 n.a. n.a. n.a. U.S. TREASURY NOTES AND BONDS Constant maturities12 21 1-year 8.53 7.89 5.86 4.63 4.30 4.19 4.17 4.27 4.27 4.18 4.12 4.14 22 2-year 8.57 8.16 6.49 5.69 5.34 5.23 5.05 5.26 5.21 5.10 5.00 4.96 23 3-year 8.55 8.26 6.82 6.18 5.93 5.81 5.60 5.83 5.77 5.67 5.55 5.49 24 5-year 8.50 8.37 7.37 6.95 6.78 6.69 6.48 6.70 6.61 6.56 6.44 6.40 25 7-year 8.52 8.52 7.68 7.26 7.15 7.06 6.90 7.07 7.01 6.98 6.87 6.82 26 10-year 8.49 8.55 7.86 7.54 7.48 7.39 7.26 7.40 7.35 7.32 7.24 7.20 27 30-year 8.45 8.61 8.14 7.97 7.96 7.89 7.84 7.89 7.87 7.87 7.83 7.82 Composite13 28 Over 10 years (long-term) 8.58 8.74 8.16 7.93 7.88 7.80 7.72 7.81 7.78 7.77 7.70 7.68 STATE AND LOCAL NOTES AND BONDS Moody's series14 79 7.00 6.96 6.56 6.45 6.36 6.25 6.25 6.21 6.25 6.14 6.17 6.19 30 Baa 7.40 7.29 6.99 6.88 6.85 6.67 6.67 6.59 6.64 6.52 6.55 6.56 31 Bond Buyer series 7.23 7.27 6.92 6.76 6.67 6.57 6.49 6.58 6.57 6.52 6.46 6.42 CORPORATE BONDS 32 Seasoned issues, all industries16 9.66 9.77 9.23 8.81 8.77 8.71 8.63 8.69 8.67 8.66 8.61 8.61 Rating group 33 9.26 9.32 8.77 8.35 8.33 8.28 8.22 8.24 8.24 8.24 8.22 8.20 34 Aa 9.46 9.56 9.05 8.73 8.69 8.63 8.56 8.61 8.59 8.57 8.54 8.54 35 A 9.74 9.82 9.30 8.89 8.87 8.81 8.70 8.80 8.76 8.73 8.67 8.66 36 Baa 10.18 10.36 9.80 9.25 9.21 9.13 9.05 9.11 9.09 9.08 9.02 9.02 37 A-rated, recently offered utility bonds17 9.79 10.01 9.32 8.91 8.82 8.70 8.62 8.65 8.65 8.65 8.61 8.56 MEMO: Dividend-price ratio18 38 Preferred stocks 9.05 8.% 8.17 7.64 7.75 7.61 7.53 7.62 7.61 7.53 7.47 7.51 39 Common stocks 3.45 3.61 3.25 3.01 3.02 2.99 3.06 3.01 3.00 3.05 3.09 3.08 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 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Prices and trading volume (averages of daily figures) Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 180.13 183.66 206.35 213.10 213.25 214.26 229.34 228.12 225.21 224.55 228.55 224.68 2 Industrial 228.04 226.06 258.16 265.68 264.89 266.01 286.62 286.09 282.36 281.60 285.17 279.54 3 Transportation 174.90 158.80 173.97 187.45 188.52 185.47 201.55 205.53 204.09 201.28 207.88 202.02 4 Utility 94.33 90.72 92.64 95.25 96.78 98.08 99.31 96.19 94.16 94.92 98.24 97.23 5 Finance 162.01 133.21 150.84 158.94 159.78 159.96 174.50 174.05 173.49 171.05 175.89 174.82 6 Standard & Poor's Corporation (1941-43 = 10)' 323.05 335.01 376.20 386.88 385.87 388.51 416.08 412.56 407.36 407.41 414.81 408.27 7 American Stock Exchange (Aug. 31, 1973 = 50? 356.67 338.32 360.32 376.82 382.38 373.08 409.08 413.74 404.09 388.06 392.63 385.56 Volume of trading (thousands of shares) 8 New York Stock Exchange 165,568 156,359 179,411 177,502 187,191 197,914 239,903 226,476 185,581 206,251 182,027 195,Of" 9 American Stock Exchange 13,124 13,155 12,486 13,764 14,487 17,475 20,444 18,126 15,654 14,096 13,455 11,216 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers3 34,320 28,210 36,660 33,360 34,840 36,660 36,350 38,200 39,090 38,750 39,890 39,690 Free credit balances at brokers* 11 Margin accounts 7,040 8,050 8,290 6,965 7,040 8,290 7,865 7,620 7,350 8,780 7,700 7,780 12 Cash accounts 18,505 19,285 19,255 17,100 17,780 19,255 19,990 20,370 19,305 16,400 18,695 19,610 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 8 0 65 55 65 50 14 Convertible bonds 50 60 50 50 50 50 15 Short sales 70 8 0 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 Financial Statistics • September 1992 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1991 1992 AAccccoouunntt 11998899 11999900 July Aug. Sept. Oct.r Nov/ Dec.r Jan.r Feb/ Mar/ Apr. SAIF-insured institutions 1 Assets 1,249,055 1,084,821 984,964 972,521 949,006 937,787 934,539 919,979 909,090 906,219 883,528 872,105 2 Mortgages 733,729 633,385 586,302 578,294 566,419 561,152 555577,,551133 555511,,332222 554455,,665533 554411,,665588 552299,,112211 552244,,880044 3 Mortgage-backed securities 170,532 155,228 137,098 135,751 135,246 113344,,889955 113333,,334411 112299,,446611 112277,,337722 112277,,776677 112255,,440011 112244,,993355 4 Contra-assets to mortgage assets1 . 25,457 16,897 14,245 14,037 13,128 12,445 12,303 12,307 11,914 11,614 10,919 10,972 5 Commercial loans 32,150 24,125 20,301 20,390 18,166 17,765 17,147 17,139 16,827 16,051 15,394 15,063 6 Consumer loans 58,685 48,753 44,352 43,258 42,422 43,064 42,763 41,775 4400,,994400 3399,,999911 3388,,778833 3388,,007711 7 Contra-assets to nonmortgage loans . 3,592 1,939 1,676 1,545 1,398 1,373 1,150 1,239 1,111 1,115 990 982 8 Cash and investment securities 166,053 146,644 130,262 132,009 125,911 120,824 123,380 120,077 118,614 121,973 119,413 116,298 9 Other 116,955 95,522 82,570 78,403 75,368 73,905 73,849 73,751 72,708 71,508 67,324 64,888 10 Liabilities and net worth . 1,249,055 1,084,821 984,964 972,521 949,006 937,787 934,539 919,979 909,090 906,219 883,528 872,105 11 Savings capital 945,656 835,496 775,434 763,751 749,376 741,360 737,555 731,937 721,099 717,026 703,827 689,777 12 Borrowed money 252,230 197,353 146,901 142,908 132,727 127,356 125,147 121,923 119,965 118,554 110,031 111,262 13 FHLBB 124,577 100,391 76,104 74,424 68,816 66,609 66,005 65,842 62,642 63,138 62,628 62,268 14 Other 127,653 96,962 70,797 68,484 63,911 60,747 59,142 56,081 57,323 55,416 47,403 48,994 15 Other 27,556 21,332 21,654 22,648 19,080 20,381 21,690 17,560 19,004 21,398 18,356 18,964 16 Net worth 23,612 30,640 40,975 43,214 47,824 48,690 50,148 48,559 49,022 49,242 51,314 52,101 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 111999888999 111999999000 111999999111 Jan. Feb. Mar. Apr. May June U.S. budget2 1 Receipts, total 990,701 1,031,308 1,054,265 104,091 62,056 72,917 138,430 62,244 120,909 2 On-budget 727,035 749,652 760,382 79,937 38,290 46,353 103,405 36,867 91,427 3 Off-budget 263,666 281,656 293,883 24,154 23,766 26,564 35,025 25,377 29,482 4 Outlays, total 1,144,020 1,251,766 1,323,757 119,742 111,230 123,629 123,821 109,029r 117,126 5 On-budget 933,107 1,026,711 1,082,072 97,188 88,006 100,700 102,795 86,340r 102,318 6 Off-budget 210,911 225,065 241,685 22,553 23,224 22,929 21,026 22,690 14,807 7 Surplus or deficit (-), total -153,319 -220,469 -269,492 -15,650 -49,174 -50,712 14,609 -46,786r 3,783 8 On-budget -206,072 -277,059 -321,690 -17,251 -49,716 -54,347 610 -49,473r -10,891 9 Off-budget 52,753 56,590 52,198 1,601 542 3,635 13,999 2,687 14,675 Source of financing (total) 10 Borrowing from the public 141,806 220,101 276,802 11,449 20,938 50,138 6,292 33,840 22,318 11 Operating cash (decrease, or increase (-)) ... 3,425 818 -1,329 925 30,975 -2,961 -21,262 20,977 -26,919 12 Other3 8,088 -451 -5,981 3,276 -2,739 3,535 361 -8,03 r 818 MEMO 13 Treasury operating balance (level, end of period) 40,973 40,155 41,484 47,857 16,882 19,843 41,105 20,128 47,047 14 Federal Reserve Banks 13,452 7,638 7,928 10,828 5,477 6,846 4,692 5,583 13,630 15 Tax and loan accounts 27,521 32,517 33,556 37,028 11,405 12,997 36,413 14,545 33,417 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 A27 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Calendar year Fiscal Fiscal Source or type year year 1991 1992 1990 1991 HI HI Apr. May June RECEIPTS 1 All sources 1,031,308 1,054,265 503,123 540,504 519,293 560,647 138,430 62,244 120,909 2 Individual income taxes, net 466,884 467,827 230,745 232,389 233,983 235,244 67,993 12,012 53,072 4 6 5 3 R P W N r e o e i f t n s u h i w n h d i e d e t l s n h d t h i e al l d E lection Campaign Fund . 3 1 7 8 5 2 8 1 , , , 8 3 2 1 8 8 3 7 4 5 2 4 1 0 7 4 4 9 2 , , , 1 0 6 5 5 9 3 2 0 3 2 2 3 0 8 1 7 , , , 4 4 7 5 6 2 5 9 8 3 1 1 7 0 9 0 9 3 , , , 4 4 4 8 0 4 3 7 5 0 1 2 3 1 9 3 0 , , , 8 5 2 6 5 9 7 2 6 1 1 1 7 1 9 4 0 8 , , , 6 9 8 3 9 6 1 9 5 8 9 5 3 1 6 0 8 , , , 8 1 9 - 6 1 7 6 2 2 5 2 1 2 9 9 , , , 4 4 9 4 2 7 1 7 2 0 7 2 3 1 3 1 , , , 1 5 5 - 0 7 9 4 4 0 9 Corporation income taxes 7 Gross receipts 110,017 113,599 54,044 58,903 54,016 61,681 16,693 3,606 21,631 8 Refunds 16,510 15,513 7,603 7,904 7,956 8,056 2,495 915 9 Social insurance taxes and contributions, net 380,047 396,011 178,468 214,303 186,839 224,554 47,461 40,362 38,380 10 Employment taxes and contributions 353,891 370,526 167,224 199,727 175,802 208,110 44,432 32,005 37,355 11 Self-employment taxes and contributions 21,795 25,457 2,638 22,150 3,306 20,433 12,588 1,472 4,409 12 Unemployment insurance 21,635 20,922 8,9% 12,296 8,721 14,070 2,608 7,991 642 13 Other net receipts 4,522 4,563 2,249 2,279 2,317 2,375 422 366 384 14 Excise taxes 35,345 42,430 17,535 20,703 24,690 22,358 3,871 3,440 4,226 15 Customs deposits 16,707 15,921 8,568 7,488 8,694 8,145 1,374 1,224 1,477 16 Estate and gift taxes 11,500 11,138 5,333 5,631 5,521 5,714 1,477 853 842 17 Miscellaneous receipts 27,316 22,852 16,032 8,991 13,508 11,005 2,057 1,662 2,127 OUTLAYS 18 All types 1,251,776 l,323,757r 647,461 632,153 694,474r 704,577 123,821 109,029r 117,126 19 National defense 299,331 272,514 149,497 122,089 147,531 146,%3 23,901 24,324 25,851 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 c r f c e f e , a s i s r p a s n a d c e e , n a v n i d r o t n e m ch e n n o t logy . 1 1 1 1 2 3 4 7 1 , , , , , 3 7 4 0 9 7 6 6 4 5 2 2 7 4 8 1 1 1 1 2 6 5 4 8 , , , , , 5 1 8 9 7 1 6 6 4 0 7 4 6 8 1 r 8 8 9 6 l, , , , , 2 9 9 8 0 2 4 3 7 8 3 2 3 8 1 r 7 8 7 7 l, , , , , 2 5 3 6 4 3 9 2 8 % 2 4 4 5 r 1 8 7 7 1 1 , , , , , 6 4 3 2 5 5 7 3 2 3 1 3 5 1 6 r 8 7 8 7 1 , , , , , 4 9 6 5 4 6 5 2 1 4 4 2 5 4 2 2 1 1 1 , , , , 5 6 3 7 3 9 4 6 8 4 5 7 6 8 8 1 1 1 , , , 4 3 4 3 6 0 6 6 1 2 1 9 0 2 9 r 1, 9 9 6 6 1 5 3 2 7 4 1 0 6 8 0 25 Commerce and housing credit 67,160 75,639 37,491 17,992 36,579 15,583 5,147 -3,251 1,719 26 Transportation 29,485 31,531 16,218 14,748 17,094 15,681 2,463 2,747 3,352 27 Community and regional development .. 8,498 7,432 3,939 3,552 3,784 3,901 762 619 638 28 Education, training, employment, and social services 38,497 41,479 18,988 21,234 23,224 4,321 3,938 29 Health 57,716 71,183 31,424 35,608 41,458 43,698 7,460 6,684 8,635 30 Social security and medicare 346,383 373,495 176,353 190,247 193,156 205,443 34,270 33,808 37.446 31 Income security 147,314 171,618 75,948 88,778 87,923 105,435 18,830 17,158 13,565 32 Veterans benefits and services 29,112 31,344 15,479 14,326 17,425 15,597 2,926 2,704 2,527 33 Administration of justice 10,004 12,295 5,265 6,187 6,586 7,438 1,517 1,188 1,400 34 General government 10,724 11,358 6,976 5,212 6,821 5,525 675 387 1,456 35 Net interest6 184,221 195,012 94,650 98,556 99,405 100,324 16,838 17,080 15.447 36 Undistributed offsetting receipts -36,615 -39,356 -19,829 -18,702 -20,435 -18,229 -3,034 -2,787 -3,172 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 ftind. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Financial Statistics • September 1992 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION1 Billions of dollars, end of month 1990 1991 1992 IItteemm June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 1 Federal debt outstanding 3,175.50 3,266.10 3,397.30 3,491.70 3,562.90 3,683.10 3,820.40 n.a. n.a. 2 Public debt securities 3,143.80 3,233.30 3,364.80 3,465.20 3,538.00 3,665.30 3,801.70 3,881.30 33,,998844..7700 3 Held by public 2,368.80 2,437.60 2,536.60 2,598.40 2,642.90 2,745.70 2,833.00 2,917.60 44 4 Held by agencies 775.00 795.80 828.30 866.80 895.10 919.60 968.70 963.70 1 5 Agency securities 31.70 32.80 32.50 26.50 25.00 17.80 18.70 15.90 n.a. 6 Held by public 31.60 32.60 32.40 26.40 24.80 17.60 18.60 15.80 I 7 Held by agencies .20 .20 .10 .10 .10 .10 .10 .10 t 8 Debt subject to statutory limit 3,077.00 3,161.20 3,281.70 3,377.10 3,450.30 3,569.30 3,706.80 3,783.60 3,890.80 9 Public debt securities 3,076.60 3,160.90 3,281.30 3,376.70 3,449.80 3,569.00 3,706.40 3,783.20 3,890.30 10 Other debt2 .40 .40 .40 .40 .40 .30 .40 .40 .40 11 MEMO: Statutory debt limit 3,122.70 3,195.00 4,145.00 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 TTyyppee aanndd hhoollddeerr 11998888 11998899 11999900 11999911 Q3 Q4 Q1 Q2 1 Total gross public debt 2,684.4 2,953.0 3,364.8 3,801.7 3,665.3 3,801.7 3,881.3 3,984.7 By type 2 Interest-bearing 2,663.1 2,931.8 3,362.0 3,798.9 3,662.8 3,798.9 3,878.5 3,981.8 3 Marketable 1,821.3 1,945.4 2,195.8 2,471.6 2,390.7 2,471.6 2,552.3 2,605.1 4 Bills 414.0 430.6 527.4 590.4 564.6 590.4 615.8 618.2 5 Notes 1,083.6 1,151.5 1,265.2 1,430.8 1,387.7 1,430.8 1,477.7 1,517.6 6 Bonds 308.9 348.2 388.2 435.5 423.4 435.5 443.8 454.3 7 Nonmarketable2 841.8 986.4 1,166.2 1,327.2 1,272.1 1,327.2 1,326.2 1,376.7 8 State and local government series 151.5 163.3 160.8 159.7 158.1 159.7 157.8 161.9 9 Foreign issues 6.6 6.8 43.5 41.9 41.6 41.9 42.0 38.7 10 Government 6.6 6.8 43.5 41.9 41.6 41.9 42.0 38.7 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes 107.6 115.7 124.1 135.9 133.5 135.9 139.9 143.2 13 Government account series 575.6 695.6 813.8 959.2 908.4 959.2 956.1 1,002.5 14 Non-interest-bearing 21.3 21.2 2.8 2.8 2.5 2.8 2.8 2.9 By holder 5 15 U.S. Treasury and other federal agencies and trust funds 589.2 707.8 828.3 968.7 919.6 968.7 963.7 16 Federal Reserve Banks 238.4 228.4 259.8 281.8r 264.7 281.8* 267.6 17 Private investors 1,858.5 2,015.8 2,288.3 2,563.2 2,489.4 2,563.2 2,664.0 18 Commercial banks 184.9 164.9 171.5 233.9" 216.9 233.9* 240.0 19 Money market funds 11.8 14.9 45.4 80.0 64.5 80.0 84.8 20 Insurance companies 118.6 125.1 142.0 172.9* 162.9 172.9* 175.0 21 Other companies 87.1 93.4 108.9 150.8 142.0 150.8 166.0 n.a. 22 State and local treasuries 471.6 487.5 490.4 498.8* 491.4 498.8* 500.0 Individuals 23 Savings bonds 109.6 117.7 126.2 138.1 135.4 138.1 142.0 24 Other securities 79.2 98.7 107.6 125.8 122.1 125.8 126.1 25 Foreign and international6 362.2 392.9 421.7 453.4* 439.4* 453.4* 468.0 26 Other miscellaneous investors 433.0 520.7 674.5r 709.5* 714.8* 709.5* 762.1 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 A29 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Millions of dollars, daily averages, par value 1992 1992, week ending IItteemm Mar. Apr. May Apr. 29 May 6 May 13 May 20 May 27 June 3 June 10 June 17 June 24 IMMEDIATE TRANSACTIONS2 By type of security U.S. Treasury securities 1 Bills 36,555 40,313 41,651 38,531 39,496 47,244 41,575 36,564 42,345 35,994 3388,,990077 3355,,889900 Coupon securities, by maturity 2 Less than 3.5 years 42,685 45,264r 50,118 46,448r 48,922 57,920 53,667 44,298 3355,,777711 3366,,223300 3333,,446655 4444,,669944 3 3.5 to 7.5 years 31,442r 32,994r 34,305 32,738 26,767 36,169 37,369 37,178 31,317 25,053 28,140 36,188 4 7.5 to 15 years 13,835 13,123r 18,162 15,425 18,474r 21,297 19,127 14,821 13,966 11,871 14,149 14,481 5 15 years or more 13,122 11,899 14,862 13,096 13,723 17,424 14,827 14,431 11,682 11,545 11,570 13,419 Federal agency securities Debt, maturing in 6 Less than 3.5 years 4,585 4,518 3,977 4,921 4,165 3,603 4,100 3,9% 4,192 33,,552233 33,,995588 44,,551133 7 3.5 to 7.5 years 618 712r 539 572 498r 730 497 374 578 496 618 449 8 7.5 years or more 667 600 514 367 416 668 596 306 538 508 585 620 Mortgage-backed securities 9 Pass-throughs 12,503 ll,948r 12,941 10,071r 9,241r 14,183 16,281 10,907 1122,,995555 14,661 1166,,335544 1133,,885500 10 All others 2,499 2,954 3,586 3,345 3,749 4,162 3,862 2,646 3,006 3,522 3,980 4,213 By type of counterparty Primary dealers and brokers 11 U.S. Treasury securities 87,201 89,144 99,351 90,524 93,228 111,426 102,876 92,974 8855,,334466 76,406 7799,,116611 9911,,000088 Federal agency securities 12 Debt 1,239 1,199 1,023 1,174 912 1,122 1,245 748 994 884433 889944 11,,004488 13 Mortgage-backed 7,054 6,681r 7,308 5,778r 5,477r 8,095 8,208 6,662 8,043 7,809 8,734 9,017 Customers 14 U.S. Treasury securities 50,438r 54,448r 59,747 55,714r 54,154r 68,629 63,689 54,318 49,735 44,287 47,071 53,664 Federal agency securities 15 Debt 4,630 4,630r 4,007 4,685 4,167r 3,879 3,948 3,928 4,314 3,684 44,,226688 44,,553344 16 Mortgage-backed 7,949 8,222r 9,219 7,638r 7,513r 10,250 11,935 6,891 7,918 10,374 11,601 9,046 FUTURES AND FORWARD TRANSACTIONS By type of deliverable security U.S. Treasury securities 17 Bills 4,728 3,509 3,584 4,081 2,910 3,477 2,518 5,326 4,379 2,374 33,,991188 44,,665500 Coupon securities, by maturity 18 Less than 3.5 years 1,826 1,710 2,327 1,801 2,071 2,260 1,966 33,,220000 22,,116644 22,,004422 11,,444455 11,,335522 19 3.5 to 7.5 years 1,323 876 1,362 961 938 1,286 1,346 1,639 1,881 1,114 1,412 1,258 20 7.5 to 15 years 1,332 900 1,281 1,080 901r 1,442 1,172 1,373 1,722 929 1,096 1,261 21 15 years or more 8,875 6,333r 8,763 7,444 7,330r 11,709 7,593 7,993 8,728 6,164 6,730 6,348 Federal agency securities Debt, maturing in 22 Less than 3.5 years 54 68 27 108 37 18 27 2277 3311 4488 1133 9988 23 3.5 to 7.5 years 36 68 42 95 125 14 11 32 43 109 101 30 24 7.5 years or more 37 12 19 11 NA 5 12 4 104 11 7 6 Mortgage-backed 25 Pass-throughs3 14,143 12,638r 13,257 10,341 10,585r 15,587 14,578 12,164 11,656 17,095 12,913 9,301 26 Others 2,114 2,311 2,441 1,810 2,588 2,326 2,163 3,020 1,969 3,112 2,859 2,629 OPTIONS TRANSACTIONS5 By type of underlying security U.S. Treasury, coupon securities, by maturity 27 Less than 3.5 years 1,222 1,369 1,222 1,439 994 998 1,397 1,540 1,166 1,893 888822 884444 28 3.5 to 7.5 years 402 269 265 171 118 376 263 223 374 211 311 221 29 7.5 to 15 years 396 482 546 412 445 461 1,043 343 126 439 617 565 30 15 years or more 1,989 2,148r 2,803 2,653r 1,623 2,947 4,755 2,072 1,385 2,147 1,663 1,243 Federal agency, mortgagebacked securities 31 Pass-throughs 356 253 404 144 311 603 404 242 418 248 332244 443344 1. Transactions are market purchases and sales of securities as reported to the 4. Futures transactions are standardized agreements arranged on an exchange. Federal Reserve Bank of New York by the U.S. government securities dealers on Forward transactions are agreements made in the over-the-counter market that its published list of primary dealers. Averages for transactions are based on the specify delayed delivery. All futures transactions are included regardless of time number of trading days in the period. Immediate, forward, and future transactions to delivery. Forward contracts for U.S. Treasury securities and federal agency are reported at principal value, which does not include accrued interest; options debt securities are included when the time to delivery is more than five days. transactions are reported at the face value of the underlying securities. Forward contracts for mortgage-backed securities are included when the time to Dealers report cumulative transactions for each week ending Wednesday. delivery is more than thirty days. 2. Transactions for immediate delivery include purchases or sales of securities 5. Options transactions are purchases or sales of put-and-call options, whether (other than mortgage-backed agency securities) for which delivery is scheduled in arranged on an organized exchange or in the over-the-counter market, and include five business days or less and "when-issued" securities that settle on the issue options on futures contracts on U.S. Treasury and federal agency securities. date of offering. Transactions for immediate delivery of mortgage-backed securities NOTE. In tables 1.42 and 1.43, the term "n.a." refers to data that are not include purchases and sales for which delivery is scheduled in thirty days or less. published because of insufficient activity. Stripped securities are reported at market value by maturity of coupon or corpus. Data formerly shown under options transactions for U.S. Treasury securities, 3. Includes such securities as collateralized mortgage obligations (CMOs), real bills; Federal agency securities, debt; and mortgage-backed securities, other than estate mortgage investment conduits (REMICs), interest only securities (IOs), pass-throughs are no longer available because of insufficient activity. and principal only securities (POs). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Nonfinancial Statistics • September 1992 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1992 1992, week ending IItteemm Mar. Apr. May Apr. 29 May 6 May 13 May 20 May 27 June 3 June 10 June 17 Positions2 NET IMMEDIATE TRANSACTIONS3 By type of security U.S. Treasury securities 1 Bills 16,979 10,753r 9,333 4,566 7,612 13,472 7,829 6,929 11,507 9,067 5,457 Coupon securities, by maturity 2 Less than 3.5 years -1,536 —2,263r -4,079 -2,493 -3,358 -4,320 -686 -4,669 -9,647 —8,961 -9,974 3 3.5 to 7.5 years -7,280r -4,372r -5,501 -3,889 -5,828 -5,823 -7,019 -3,875 -4,635 -6,542 -9,017 4 7.5 to 15 years -5,987 -7,lllr -2,882 -6,674 -2,299 -3,791 -3,448 -1,837 -3,003 -3,176 -3,846 5 15 years or more -2,340 -2,205 -792 -3,042 -2,844 -1,406 741 81 -848 -1,222 915 Federal agency securities Debt, maturing in 6 Less than 3.5 years 4,638 3,564 4,744 3,270 2,966 4,611 5,372 5,941 4,447 4,984 5,616 7 3.5 to 7.5 years 3,572 2,216 1,833 1,909 1,772 1,763 1,942 1,829 1,864 1,931 2,294 8 7.5 years or more 3,599 3,609 3,229 3,322 3,385 3,221 3,270 3,091 3,175 3,225 3,571 Mortgage-backed securities 9 Pass-throughs 25,550 32,097r 29,282 29,31 r 24,004 32,333 32,387 30,469 24,347 32,402 38,915 10 All others 14,209 15,680 18,134 16,271 16,043 18,265 18,902 19,295 17,668 15,086 18,569 Other money market instruments 11 Certificates of deposit 2,593 2,882 3,093 3,032 3,014 2,986 3,082 3,246 3,147 2,310 2,479 12 Commercial paper 5,032 6,942 6,628 7,482 6,124 6,578 6,446 7,046 7,057 5,921 5,886 13 Bankers acceptances 894 960 1,222 714 1,053 1,165 1,379 1,257 1,237 1,092 1,012 FUTURES AND FORWARD TRANSACTIONS5 By type of deliverable security U.S. Treasury securities 14 Bills -1,303r -763r 131 689 3,131 36 -1,518 -1,263 1,126 1,304 3,152 Coupon securities, by maturity 15 Less than 3.5 years 1,216 9% 2,291 1,200 3,468 2,766 2,563 505 2,342 2,071 1,779 16 3.5 to 7.5 years 3,177 3,852 4,256 3,156 2,816 4,659 5,203 4,759 3,175 3,851 3,177 17 7.5 to 15 years 1,233 831 814 741 1,462 1,295 56 352 1,137 1,026 -352 18 15 years or more -6,388 -7,323 -7,131 -5,668 -7,601 -5,246 -7,897 -7,723 -7,350 -7,531 -8,134 Federal agency securities Debt, maturing in 19 Less than 3.5 years -29 -24 52 20 33 45 236 -73 -7 26 12 20 3.5 to 7.5 years 5 104 -46 491 -11 -39 -50 -79 -47 65 -35 21 7.5 years or more 30 17 -3 15 -1 16 21 -16 -60 -22 1 Mortgage-backed securities 22 Pass-throughs. -6,280"^ -14,896r -18,064 -13,732 —7,961 -18,441 -22,388 -22,343 -17,503 -24,530 -30,474 23 All others 3,027 1,659 948 1,371 171 1,786 145 1,313 1,415 2,384 1,603 24 Certificates of deposit -129,643 -138,412 -195,169 -139,661 -164,071 -180,645 -196,200 -214,265 -232,008 -223,931 -214,525 Financing6 Reverse repurchase agreements 25 Overnight and continuing 211,356 201,359 205,626 203,326 211,084 216,107 203,594 191,019 208,214 209,093 205,236 26 Term 262,127 289,867 295,243 290,727 295,164 312,695 286,833 292,036 285,150 312,009 314,980 Repurchase agreements 27 Overnight and continuing 320,589 328,181 336,107 342,323 336,056 336,954 343,177 328,884 334,967 330,811 343,789 28 Term 241,871 257,388 261,671 254,963 249,081 277,7% 259,066 268,666 244,653 271,529 285,818 Securities borrowed 29 Overnight and continuing 75,832 78,173 81,269 80,113 80,942 80,181 80,785 82,189 82,900 84,029 83,658 30 Term 31,014 30,570 31,415 32,971 31,727 31,585 30,089 31,721 32,433 34,242 35,655 Securities loaned 31 Overnight and continuing 7,613 7,424 7,746 8,833 7,655 7,316 7,821 8,466 7,241 7,100 7,693 32 Term 1,864 3,042 1,542 3,637 975 1,015 873 3,683 741 920 952 Collateralized loans 33 Overnight and continuing 16,817 17,398 16,610 14,712 16,433 16,357 17,253 16,601 16,211 15,797 13,918 MEMO: Matched book7 Reverse repurchase agreements 34 Overnight and continuing 153,365 149,760 146,537 149,027 150,174 151,105 145,240 138,668 149,128 148,305 145,190 35 Term 221,746 245,889 250,339 244,605 253,355 265,844 242,087 246,161 240,437 265,047 269,188 Repurchase agreements 36 Overnight and continuing 177,773 178,680 186,552 188,776 196,990 189,866 184,138 177,829 184,588 187,153 188,118 37 Term 180,439 197,396 197,971 193,419 193,727 217,181 190,921 197,514 183,858 207,518 213,604 1. Data for positions and financing are obtained from reports submitted to the delivery. Forward contracts for U.S. Treasury securities and federal agency debt Federal Reserve Bank of New York by the U.S. government securities dealers on securities are included when the time to delivery is more than five business days. its published list of primary dealers. Weekly figures are close-of-business Wednes- Forward contracts for mortgage-backed agency 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 agency 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 such securities 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 princi- numbers are not always equal because of the "matching" of securities of different pal-only (POs) securities. values or types of collateralization. 5. Future positions are standardized contracts arranged on an exchange. NOTE. Data for futures 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 A31 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1991 1992 AAggeennccyy 11998888 11998899 11999900 11999911 Dec. Jan. Feb. Mar. Apr. 1 Federal and federally sponsored agencies 341,386 381,498 411,805 434,668 442,772 440,317 445,895 445,646 449,472 2 Federal agencies 37,981 35,668 35,664 42,159 41,035 42,872 40,791 41,322 40,788 3 Defense Department1 13 8 7 7 7 7 7 7 7 4 Export-Import Bank2,3 11,978 11,033 10,985 11,376 9,809 9,809 9,809 8,644 8,644 5 Federal Housing Administration4 183 150 328 393 397 335 372 421 419 6 Government National Mortgage Association certificates of participation 1,615 0 0 00 0 0 0 0 00 7 Postal Service6 6,103 6,142 6,445 6,948 8,421 8,421 8,421 9,771 9,771 8 Tennessee Valley Authority 18,089 18,335 17,899 23,435 22,401 24,300 22,182 22,479 21,947 9 United States Railway Association6 0 0 0 0 0 0 0 0 0 10 Federally sponsored agencies7 303,405 345,830 375,407 392,509 401,737 397,496r 405,104 404,324 408,684 11 Federal Home Loan Banks 115,727 135,836 136,108 117,895 107,543 104,607 106,341 106,511 107,011 12 Federal Home Loan Mortgage Corporation 17,645 22,797 26,148 30,941 30,262 29,332 26,824 25,154 25,232 13 Federal National Mortgage Association 97,057 105,459 116,064 123,403 133,937 133,988 141,315 141,315 145,856 14 Farm Credit Banks8 55,275 53,127 54,864 53,590 52,199 51,673 51,867 52,651 52,368 15 Student Loan Marketing Association9 16,503 22,073 28,705 34,194 38,319 38,419 39,280 39,216 38,739 16 Financing Corporation 1,200 5,850 8,170 8,170 8,170 8,170 8,170 8,170 8,170 17 Farm Credit Financial Assistance Corporation11 0 690 847 1,261 1,261 1,261 1,261 1,261 1,261 18 Resolution Funding Corporation 0 0 4,522 23,055 29,996 29,996 29,9% 29,996 29,9% MEMO 19 Federal Financing Bank debt13 152,417 142,850 134,873 179,083 185,576 183,098 182,737 185,849 186,879 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 11,972 11,027 10,979 1111,,337700 99,,880033 99,,880033 99,,880033 88,,663388 88,,663388 21 Postal Service6 5,853 5,892 6,195 6,698 8,201 8,201 8,201 9,551 9,551 22 Student Loan Marketing Association 4,940 4,910 4,880 4,850 4,820 4,820 4,820 4,820 4,820 23 Tennessee Valley Authority 16,709 16,955 16,519 14,055 10,725 10,725 10,025 10,025 9,325 24 United States Railway Association 0 0 0 0 0 0 0 0 0 Other lending14 25 Farmers Home Administration 59,674 58,496 53,311 52,324 48,534 48,534 48,534 48,534 47,634 26 Rural Electrification Administration 21,191 19,246 19,265 18,890 18,562 18,534 18,494 18,424 18,440 27 Other 32,078 26,324 23,724 70,896 84,931 82,481 82,860 85,857r 88,471 1. Consists of mortgages assumed by the Defense Department between 1957 10. The Financing Corporation, established in August 1987 to recapitalize the and 1963 under family housing and homeowners assistance programs. Federal Savings and Loan Insurance Corporation, undertook its first borrowing in 2. Includes participation certificates reclassified as debt beginning Oct. 1,1976. October 1987. 3. On-budget since Sept. 30, 1976. 11. The Farm Credit Financial Assistance Corporation, established in January 4. Consists of debentures issued in payment of Federal Housing Administration 1988 to provide assistance to the Farm Credit System, undertook its first insurance claims. Once issued, these securities may be sold privately on the borrowing in July 1988. securities market. 12. The Resolution Funding Corporation, established by the Financial Institu- 5. Certificates of participation issued before fiscal 1969 by the Government tions Reform, Recovery, and Enforcement Act of 1989, undertook its first National Mortgage Association acting as trustee for the Fanners Home Admin- borrowing in October 1989. istration, the Department of Health, Education, and Welfare, the Department of 13. The FFB, which began operations in 1974, is authorized to purchase or sell Housing and Urban Development, the Small Business Administration, and the obligations issued, sold, or guaranteed by other federal agencies. Because FFB Veterans' Administration. incurs debt solely for the purpose of lending to other agencies, its debt is not 6. Off-budget. included in the main portion of the table in order to avoid double counting. 7. Includes outstanding noncontingent liabilities: notes, bonds, and deben- 14. Includes FFB purchases of agency assets and guaranteed loans; the latter tures. Some data are estimated. are loans guaranteed by numerous agencies, with the guarantees of any one 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, agency generally being small. The Farmers Home Administration entry consists shown in line 17. exclusively of agency assets, while the Rural Electrification Administration entry 9. Before late 1982, the Association obtained financing through the Federal consists of both agency assets and guaranteed loans. Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is shown on line 22. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • September 1992 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1991 1992 TTyyppee ooff iissssuuee oorr iissssuueerr,, 11998899 11999900 11999911 oorr uussee Nov. Dec. Jan. Feb. Mar. Apr. May June 1 All issues, new and refunding1 113,646 120,339 154,402 17,734 15,796 12,612 14,032 15,956 15,141 14,155 20,501 By type of issue 2 General obligation 35,774 39,610 55,100 6,510 5,871 3,954 6,102 6,212 4,455 5,429 7,213 3 Revenue 77,873 81,295 99,302 11,224 9,925 8,658 7,930 9,744 10,686 8,726 13,288 By type of issuer 4 State 11,819 15,149 24,939 1,171 1,671 1,036 4,404 3,174 575 1,165 2,063 5 Special district or statutory authority2 71,022 72,661 80,614 10,817 9,435 8,243 6,605 7,511 9,802 8,251 12,894 6 Municipality, county, or township 30,805 32,510 48,849 5,746 4,690 3,333 4,404 5,271 4,764 4,739 5,544 7 Issues for new capital, total 84,062 103,235 116,953 13,495 12,020 7,127 9,467 10,637 9,020 9,259 14,096 By use of proceeds 8 Education 15,133 17,042 21,664 1,297 1,924 2,385 2,604 1,075 2,208 1,651 2,132 9 Transportation 6,870 11,650 13,395 2,682 488 1,194 1,996 1,412 921 1,669 2,618 10 Utilities and conservation 11,427 11,739 21,447 1,915 1,931 1,953 800 2,104 1,380 771 1,851 11 Social welfare 16,703 23,099 26,121 2,621 3,070 868 1,925 1,811 2,582 2,045 4,266 12 Industrial aid 5,036 6,117 8,542 349 1,083 218 123 528 558 133 724 13 Other purposes 28,894 34,607 n.a. 4,631 3,524 n.a. 2,019 3,707 1,371 2,990 2,505 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 iissssuuee,, ooffffeerriinngg,, 11998899 11999900 11999911 oorr iissssuueerr Oct. Nov. Dec. Jan. Feb. Mar. Apr. May 1 All issues' 377,836 339,052 455,291 34,893 34,286 32,391 44,959r 37,424" 38,161r 26,759" 45,388 2 Bonds2 319,965 298,814 389,933 26,029 25,233 24,871 38,275r 27,888r 31,804r 21,421" 38,472 By type of offering 3 Public, domestic 179,694 188,778 287,041 23,469 23,164 23,326 34,604r 26,26lr 29,275r 2222,,000000"" 35,500 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 27,962 2,560 2,070 1,544 3,671 1,626 2,529 1,305" 2,972 By industry group 6 Manufacturing 76,175 52,635 85,535 4,732 4,761 4,980 77,,228822rr 3,910" 88,,775555rr 3,744" 5,936 7 Commercial and miscellaneous 49,465 40,018 37,809 1,209 1,819 1,953 2,698 1,664 3,768 2,168" 2,472 8 Transportation 10,032 12,711 13,628 744 180 150 455 1,004 641r 190" 621 9 Public utility 18,656 17,621 23,994 1,430 3,073 2,238 3,761 3,569 1,896 3,385" 3,200 10 Communication 8,461 6,597 9,331 958 226 1,085 2,467 416 725r 1,077" 1,590 11 Real estate and financial 157,176 169,231 219,637 16,957 15,175 14,464 21,613r 17,324r 16,020* 10,857" 24,653 12 Stocks2 57,870 40,165 75,467 8,864 9,053 7,520 6,684 9,536 6,357 5,338 6,916 By type of offering 13 Public preferred 6,194 3,998 17,408 3,527 3,240 2,771 739 4,306 625 334 1,552 14 Common 26,030 19,443 47,860 5,337 5,813 4,749 5,945 5,230 5,732 5,004 5,364 15 Private placement 25,647 16,736 10,109 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. By industry group 16 Manufacturing 9,308 5,649 2244,,115544 3,623 4,054 2,684 2,098 2,541 2,637 1,523 2,499 17 Commercial and miscellaneous 7,446 10,171 19,418 2,095 2,158 2,535 993 3,194 1,595 1,162 2,010 18 Transportation 1,929 369 2,439 16 0 0 426 78 193 n.a. 176 19 Public utility 3,090 416 3,474 320 174 233 268 489 704 577 826 20 Communication 1,904 3,822 475 25 84 17 163 n.a. 53 333 12 21 Real estate and financial 34,028 19,738 25,507 2,622 2,583 2,014 2,736 3,234 1,175 1,691 1,324 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 Oct. Nov. Dec. Jan Feb. Mar. Apr.r May 1 Sales of own shares2 344,420 464,488 45,218 41,365 51,018 66,048 48,015 50,462 52,309 48,127 2 Redemptions of own shares 288,441 342,088 27,957 28,454 39,050 41,917 30,869 35,464 39,302 31,409 3 Net sales3 55,979 122,400 17,261 12,911 11,968 24,131 17,146 14,998 13,007 16,718 4 Assets4 568,517 807,001 753,344 752,798 807,077 823,767 846,868 848,842 870,011 896,950 5 Cash5 48,638 60,937 59,902 59,689 60,292 62,289 64,022 64,216 67,632 67,142 6 Other 519,875 746,064 695,492 693,109 746,785 761,478 782,846 781,626 802,379 829,808 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 assets exclude both 5. Includes all U.S. Treasury securities and other short-term debt securities. 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 Q4 Ql Q2 Q3 Q4 Ql 1 Profits with inventory valuation and capital consumption adjustment 362.8 361.7 346.3 384.0 351.4 344.0 349.6 347.3 341.2 347.1 384.0 2 Profits before taxes 342.9 355.4 334.7 355.8 367.0 354.7 337.6 332.3 336.7 332.3 366.1 3 Profits tax liability 141.3 136.7 124.0 137.6 143.0 133.7 121.3 122.9 127.0 125.0 136.4 4 Profits after taxes 201.6 218.7 210.7 218.2 224.0 221.0 216.3 209.4 209.6 207.4 229.7 5 Dividends 134.6 149.3 146.5 148.7 150.6 151.9 150.6 146.2 145.1 143.9 143.6 6 Undistributed profits 67.1 69.4 64.2 69.5 73.4 69.1 65.7 63.2 64.5 63.4 86.2 7 Inventory valuation -17.5 -14.2 3.1 3.8 -32.6 -21.2 6.7 9.9 -4.8 .7 -5.4 8 Capital consumption adjustment 37.4 20.5 8.4 24.4 17.0 10.5 5.3 5.1 9.3 14.1 23.3 SOURCE. Survey of Current Business (U.S. Department of Commerce). 1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment Billions of dollars; quarterly data at seasonally adjusted annual rates 1990 1991 1992 IInndduussttrryy 11999900 11999911 1199992211 Q4 Ql Q2 Q3 Q4 Ql Q2 Q31 1 Total nonfarm business 532.61 529.20 553.86 530.13 535.50 524.57 527.86 528.88 536.49 558.50 557.55 Manufacturing 2 Durable goods industries 82.58 77.95 75.18 79.03 81.24 79.69 74.51 76.36 74.49 76.64 74.39 3 Nondurable goods industries 110.04 105.66 104.03 110.69 109.90 107.66 102.54 102.54 99.72 108.59 105.24 Nonmanufacturing 4 Mining 9.88 10.02 8.98 10.12 9.89 10.09 10.09 10.00 8.83 9.53 9.08 Transportation 5 Railroad 6.40 5.92 7.41 6.81 5.59 6.27 6.50 5.32 6.06 7.41 8.73 6 Air 8.87 10.22 10.00 7.54 11.18 10.10 9.81 9.79 9.12 10.68 10.13 7 Other 6.20 6.55 7.14 6.82 6.48 6.68 6.52 6.54 6.44 7.35 6.82 Public utilities 8 Electric 44.10 43.67 49.41 45.88 43.36 42.87 43.09 45.36 45.73 50.30 50.13 9 Gas and other 23.11 22.84 23.40 24.36 23.68 21.71 23.38 22.60 23.08 22.69 28.31 10 Commercial and other2 241.43 246.37 268.31 238.87 244.19 239.50 251.42 250.37 263.02 265.31 269.21 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 • September 1992 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities Billions of dollars, end of period; not seasonally adjusted 1990R 1991R 1992 AAccccoouunntt 11998888RR 11998899RR 11999900RR Q3 Q4 Q1 Q2 Q3 Q4 QL ASSETS 1 Accounts receivable, gross1 437.3 462.9 492.9 491.0 492.9 482.9 488.5 484.7 480.3 475.7 2 Consumer 144.7 138.9 133.9 138.9 133.9 127.1 127.5 125.3 121.9 118.4 3 Business 245.3 270.2 293.5 288.6 293.5 291.7 295.2 293.2 292.6 291.6 4 Real estate 47.3 53.8 65.5 63.6 65.5 64.1 65.7 66.2 65.8 65.8 5 LESS: Reserves for unearned income 52.4 54.7 57.6 57.9 57.6 57.2 58.0 57.6 55.1 53.6 6 Reserves for losses 7.8 8.4 9.6 9.4 9.6 10.7 11.1 13.1 12.9 13.0 7 Accounts receivable, net 377.1 399.8 425.7 423.8 425.7 415.0 419.3 414.1 412.3 409.1 8 All other 86.6 102.6 113.9 109.3 113.9 118.7 122.8 136.4 149.0 145.5 9 Total assets 463.7 502.4 539.6 533.1 539.6 533.7 542.1 550.5 561.2 554.6 LIABILITIES AND CAPITAL 10 Bank loans 15.4 14.5 19.4 15.6 19.4 22.0 22.7 24.0 24.3 38.0 11 Commercial paper 142.0 149.5 152.7 148.6 152.7 141.2 140.6 138.1 141.3 154.4 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 82.0 82.7 77.8 81.7 87.4 83.0 34.5 15 Not elsewhere classified 137.9 147.8 157.0 156.6 157.0 162.4 164.2 163.4 170.6 189.8 16 All other liabilities 59.8 62.6 66.0 68.7 66.0 68.0 72.2 72.1 73.7 72.0 17 Capital, surplus, and undivided profits 35.6 39.4 42.8 41.6 42.8 43.7 43.0 42.1 43.5 66.0 18 Total liabilities and capital 463.7 502.4 539.6 533.1 539.6 533.7 542.1 550.5 561.2 554.6 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 11999911 Dec. Jan. Feb. Mar. Apr. May SEASONALLY ADJUSTED 1 Total 481,436r 523,023r 519,573r 519,573r 524,135r 525,570"" 521,174r 520,242 519,668 2 Consumer 157,766 161,070 154,786 154,786 155,388 157,226 157,106 156,103 154,989 3 Real estate 53,518 65,147 65,388 65,388 66,169 66,267 66,323 67,032 n.a. 4 Business 270,152r 296,807r 299,400* 299,400r 302,579r 302,077r 297,744r 297,107 297,781 NOT SEASONALLY ADJUSTED 5 483,537r 526,404 526,404 526,398r 525,363r 524,843r 524,629r 491,847r 520,682r 6 Consumer 162,961r 167,489r 161,358r 161,358r 160,960* 160, 179* 160,440"" 124,936r 154,414 7 Motor vehicles 84,126 75,045 63,413 63,413 62,206 61,959 60,655 61,717 59,399 8 Other consumer 26,053 29,116 29,483 29,483 28,280 27,901 27,517 26,477 26,074 9 Securitized motor vehicles4 13,690 19,837 23,166 23,166 24,879 24,016 25,723 24,697 26,529 10 Securitized other consumer4 5,994 8,265 10,610 10,610 11,182 11,172 11,678 12,045 11,746 11 Real estate 53,781r 65,509* 65,764r 65,764r 66,118r 65,527r 65,752r 66,604r 66,650* 12 Business 266,795r 293,406r 299,276r 299,276r 298,285r 299,137r 298,437r 300,307* 299,618* 13 Motor vehicles 90,416 92,072 90,319 90,319 88,359 88,535 88,006 89,105 n.a. 14 Retail5..., 29,505r 26,401r 22,507r 22,507r 21,896r 21,745r 20,688r 20,842 20,143r 15 Wholesale6 34,093r 33,573r 31,216r 31,216r 30,080"" 30,82 lr 30,799"" 31,161 30,893* 16 Leasing 26,818r 32,098r 36,596r 36,596r 36,383r 35,969r 36,519"" 37,102 37,549* 17 Equipment n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 18 Retail 29,828r 31,968r 30,962r 30,962r 31,634r 31,516r 31,601r 31,824 31,569* 19 Wholesale6 6,452r n.ior 9,671r 9,67 r 9,552r 9,646r 9,265r 9,217 9,116* 20 Leasing 85,966r 94,585r 100,766r 100,766r 101,623r 101,400" 101,830*" 102,469 102,746* 21 Other business 47,055 53,532 51,583 51,583 53,787 53,537 51,179 49,717 n.a. 22 Securitized business assets n.a. 5,467 8,807 8,807 8,593 8,244 8,199 8,360 n.a. 23 Retail 710 667 576 576 531 526 480 206 196 24 Wholesale n.a. 3,281 5,285 5,285 5,312 5,071 5,098 5,137 5,147 25 Leasing 1,311 1,519 2,946 2,946 2,750 2,647 2,621 2,776 2,968 1. Includes finance company subsidiaries of bank holding companies but not of balances are no longer carried on the balance sheets of the loan originator. retailers and banks. Data are before deductions for unearned income and losses. 5. Passenger car fleets and commercial land vehicles for which licenses are Data in this table also appear in the Board's G.20 (422) monthly statistical release. required. For ordering address, see inside front cover. 6. Credit arising from transactions between manufacturers and dealers, that is, 2. Includes all loans secured by liens on any type of real estate, for example, floor plan financing. first and junior mortgages and home equity loans. 7. includes loans on commercial accounts receivable, factored commercial 3. Includes personal cash loans, mobile home loans, and loans to purchase other accounts, and receivable dealer capital; small loans used primarily for business or types of consumer goods such as appliances, apparel, general merchandise, and farm purposes; and wholesale and lease paper for mobile homes, campers, and recreation vehicles. travel trailers. 4. Outstanding balances of pools upon which securities have been issued; these Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate A35 1.53 MORTGAGE MARKETS Conventional Mortgages on New Homes Millions of dollars, except as noted 1991 1992 IItteemm 11998899 11999900 11999911 Dec. Jan. Feb. Mar. Apr. May June Terms and yields in primary and secondary markets PRIMARY MARKETS Terms1 1 Purchase price (thousands of dollars) 159.6 153.2 155.0 159.1 153.9 154.7 167.0 162.5 158.7 154.4 2 Amount of loan (thousands of dollars) 117.0 112.4 114.0 113.8 114.9 110.2 123.2 122.7 119.7 116.1 3 Loan-price ratio (percent) 74.5 74.8 75.0 73.1 75.2 72.9 76.1 76.9 77.3 77.3 4 Maturity (years) 28.1 27.3 26.8 26.4 26.2 24.5 25.2 26.6 26.4 25.0 5 Fees and charges (percent of loan amount)2 2.06 1.93 1.71 1.50 1.85 1.84 1.75 1.88 1.69 1.57 6 Contract rate (percent per year) 9.76 9.68 9.02 8.28 8.17 8.29 8.21 8.26 8.30 8.15 Yield (percent per year) 7 OTS series3 10.11 10.01 9.30 8.53 8.49 8.65 8.51 8.58 8.59 8.43 8 HUD series4 10.21 10.08 9.20 8.30 8.69 8.74 8.91 8.78 8.66 8.42 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series) 10.24 10.17 9.25 8.10 8.72 8.74 8.85 8.79 8.66 8.56 10 GNMA securities6 9.71 9.51 8.59 7.81 7.81 8.01 8.20 8.10 8.00 7.90 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 104,974 113,329 122,837 128,983 131,058 133,399 136,506 139,808 140,899 142,148 12 FHAW A-insured 19,640 21,028 21,702 21,796 21,981 21,980 21,902 21,914 21,924 22,218 13 Conventional 85,335 92,302 101,135 107,187 109,077 111,419 114,604 117,894 118,975 119,930 Mortgage transactions (during period) 14 Purchases 22,518 23,959 37,202 5,114 4,809 5,358 7,282 7,258 5,576 5,809 Mortgage commitments (during period)1 15 Issued8 n.a. 23,689 40,010 5,285 7,129 6,589 6,738 5,400 4,392 4,662 16 To sell9 n.a. 5,270 7,608 78 249 343 1,143 2,219 1,695 1,831 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)9 17 Total 20,105 20,419 24,131 26,809 27,384 27,030 28,821 30,077 28,710 28,621 18 FHAA'A-insured 590 547 484 460 456 450 446 438 432 426 19 Conventional 19,516 19,871 23,283 26,349 26,928 26,580 28,376 29,639 28,278 28,195 Mortgage transactions (during period) 20 Purchases 78,588 75,517 97,727 11,475 11,475 12,190 16,001 18,109 16,405 14,222 21 Sales 73,446 73,817 92,478 9,537 10,521 11,998 13,639 16,139" 17,214* 13,740 Mortgage commitments (during period)10 22 Contracted 88,519 102,401 114,031 16,961 15,683 23,278 19,098 23,748 13,334 19,114 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 often 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 • September 1992 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1991 1992 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11998888 11998899 11999900 Q1 Q2 Q3 Q4 Qlp 1 All holders 3,270,118 3,676,616 3,912,587r 3,948,048r 3,999,815r 4,015,902r 4,049,054 4,079,088 By type of property 2 One- to four-family residences 2,201,231 2,549,935 2,765,344r 2,790,897r 2,838,164r 2,870,066r 2,905,401 2,939,419 3 Multifamily residences 291,405 303,416 307,077r 310,757r 311,820" 307,615r 309,291 310,572 4 Commercial 692,236 739,240 756,203r 762,452r 766,060" 755,076r 750,622 745,206 5 Farm 85,247 84,025 83,962 83,942 83,771 83,145 83,740 83,891 By type of holder 6 Major financial institutions 1,831,472 1,931,537 ll,,991144,,331155rr l,902,398r l,898,308r l,860,372r 1,852,489 1,837,642 7 Commercial banks 674,003 767,069 844,826r 856,848r 871,416r 870,938r 876,282 880,321 8 One- to four-family 334,367 389,632 455,93 lr 462, 13C 476,363r 478,851r 486,573 492,837 9 Multifamily 33,912 38,876 37,015r 38,390r 37,564r 36,398r 37,420 37,711 10 Commercial 290,254 321,906 334,648r 338,821r 339,450" 337,365r 333,853 330,855 11 Farm 15,470 16,656 17,231 17,507 18,039 18,323 18,436 18,919 12 Savings institutions 924,606 910,254 801,628 776,551 755,219 719,341 705,249 686,414 13 One- to four-family 671,722 669,220 600,154 583,694 570,044 547,455 538,113 525,639 14 Multifamily 110,775 106,014 91,806 88,743 86,448 81,880 79,912 77,604 15 Commercial 141,433 134,370 109,168 103,647 98,280 89,603 86,836 82,806 16 Farm 676 650 500 468 447 402 388 364 17 Life insurance companies 232,863 254,214 267,861 269,000 271,674 270,094 270,958 270,907 18 One- to four-family 11,164 12,231 13,005 11,737 11,743 11,720 11,763 11,483 19 Multifamily 24,560 26,907 28,979 29,493 30,006 29,962 30,115 30,407 20 Commercial 187,549 205,472 215,121 216,768 219,204 218,179 218,111 217,984 21 Farm 9,590 9,604 10,756 11,001 10,721 10,233 10,%8 11,033 22 Finance companies4 37,846 45,476 48,777 48,187 48,972 50,658 51,567 50,573 23 Federal and related agencies 200,570 209,498 250,761 264,189 276,798 282,500" 283,375 2%,821 24 Government National Mortgage Association 26 23 20 22 22 22 23 23 25 One- to four-family 26 23 20 22 22 22 23 23 26 Multifamily 0 0 0 0 0 0 0 0 27 Farmers Home Administration 42,018 41,176 41,439 41,307 41,430 41,566 41,713 41,791 28 One- to four-family 18,347 18,422 18,527 18,522 18,521 18,598 18,496 18,488 29 Multifamily 8,513 9,054 9,640 9,720 9,898 9,990 10,141 10,270 30 Commercial 5,343 4,443 4,690 4,715 4,750 4,829 4,905 4,961 31 Farm 9,815 9,257 8,582 8,350 8,261 8,149 8,171 8,072 32 Federal Housing and Veterans' Administrations 5,973 6,087 8,801 9,492 10,210 10,440r 11,056 11,387 33 One- to four-family 2,672 2,875 3,593 3,600 3,729 3,740" 4,056 4,110 34 Multifamily 3,301 3,212 5,208 5,891 6,480 6,700" 7,000 7,277 35 Federal National Mortgage Association 103,013 110,721 116,628 119,196 122,806 125,451 128,983 136,506 36 One- to four-family 95,833 102,295 106,081 108,348 111,560 113,6% 117,087 124,137 37 Multifamily 7,180 8,426 10,547 10,848 11,246 11,755 11,896 12,369 38 Federal Land Banks 32,115 29,640 29,416 29,253 29,152 29,053 28,970 28,875 39 One- to four-family 1,890 1,210 1,838 1,884 2,041 2,124 2,225 2,334 40 Farm 30,225 28,430 27,577 27,368 27,111 26,929 26,745 26,541 41 Federal Home Loan Mortgage Corporation 17,425 21,851 21,857 23,221 23,649 23,906 26,809 28,895 42 One- to four-family 15,077 18,248 19,185 20,570 21,120 21,489 24,125 26,182 43 Multifamily 2,348 3,603 2,672 2,651 2,529 2,417 2,684 2,713 44 Mortgage pools or trusts6 811,847 946,766 1,110,555 1,144,876 1,186,251 1,228,788 1,264,935 1,293,914 45 Government National Mortgage Association 340,527 368,367 403,613 409,929 413,707 422,501 425,295 422,695 46 One- to four-family 331,257 358,142 391,505 397,631 401,304 409,826 412,536 409,295 47 Multifamily 9,270 10,225 12,108 12,298 12,403 12,675 12,759 13,400 48 Federal Home Loan Mortgage Corporation 226,406 272,870 316,359 328,215 341,132 348,843 359,163 367,878 49 One- to four-family 219,988 266,060 308,369 319,978 332,624 341,183 351,906 360,887 50 Multifamily 6,418 6,810 7,990 8,237 8,509 7,660 7,257 6,991 51 Federal National Mortgage Association 178,250 228,232 299,833 312,101 331,089 351,917 371,984 389,853 52 One- to four-family 172,331 219,577 291,194 303,554 322,444 343,430 362,667 380,617 53 Multifamily 5,919 8,655 8,639 8,547 8,645 8,487 9,317 9,236 54 Farmers Home Administration 104 80 66 62 55 52 47 43 55 One- to four-family 26 21 17 14 13 12 11 10 56 Multifamily 0 0 0 0 0 0 0 0 57 Commercial 38 26 24 23 21 20 19 18 58 Farm 40 33 26 24 21 20 17 16 59 Individuals and others7 426,229 588,815 636,955 636,585 638,457 644,241 648,256 650,711 60 One- to four-family 259,971 414,763 449,440 447,344 447,339 451,988 454,841 457,115 61 Multifamily 79,209 81,634 84,408 84,227 83,452 83,740 83,772 83,688 62 Commercial 67,618 73,023 83,816 85,790 88,495 89,424 90,628 90,961 63 Farm 19,431 19,395 19,291 19,224 19,171 19,089 19,014 18,947 1. Based on data from various institutional and governmental sources; figures 4. Assumed to be entirely loans on one- to four-family residences. for some quarters estimated in part by the Federal Reserve. Multifamily debt 5. Securities guaranteed by the Farmers Home Administration (FmHA) sold to refers to loans on structures of five or more units. the Federal Financing Bank were reallocated from FmHA mortgage pools to 2. Includes loans held by nondeposit trust companies but not loans held by FmHA mortgage holdings in 1986:4 because of accounting changes by the FmHA. bank trust departments. 6. Outstanding principal balances of mortgage-backed securities insured or 3. Includes savings banks and savings and loan associations. Beginning 1987:1, guaranteed by the agency indicated. Includes private pools, which are not shown data reported by institutions insured by the Federal Savings and Loan Insurance as a separate line item. Corporation include loans in process and other contra-assets (credit balance 7. Other holders include mortgage companies, real estate investment trusts, accounts that must be subtracted from the corresponding gross asset categories to state and local credit agencies, state and local retirement funds, noninsured yield net asset levels). pension funds, credit unions, and other U.S. agencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumer Installment Credit A37 1.55 CONSUMER INSTALLMENT CREDIT Total Outstanding and Net Change1 Millions of dollars, amounts outstanding, end of period 1991 1992 HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt 11998888 11998899 11999900 Dec. Jan Feb. Mar. Apr. May Seasonally adjusted 1 Total 662,553 716,825 735,338 727,799 728,618 728,395 727,404 723,821 721,412 2 Automobile 285,364 292,002 284,993 263,003 263,134 261,659 262,125 260,376 258,677 3 Revolving.. 174,269 199,308 222,950 242,785 244,288 245,974 245,259 245,905 246,060 4 Other 202,921 225,515 227,395 222,012 221,1% 220,762 220,020 217,541 216,675 Not seasonally adjusted 5 Total 673,320 728,877 748,524 742,058 733,294 725,882 721,091 718,676 716,911 By major holder 6 Commercial banks 324,792 342,770 347,087 339,565 335,320 330,464 327,697 326,205 324,899 7 Finance companies 144,677 138,858 133,863 121,901 119,206 120,280 118,353 118,364 116,138 8 Credit unions 88,340 93,114 93,057 92,254 91,894 91,469 91,164 91,339 91,366 9 Retailers 48,438 44,154 44,822 44,030 41,567 40,015 39,454 39,553 39,674 10 Savings institutions 63,399 57,253 46,969 40,315 39,448 38,479 37,142 36,499 35,913 11 Gasoline companies 3,674 3,935 4,822 4,362 4,377 4,151 3,988 4,094 4,193 12 Pools of securitized assets .. n.a. 48,793 77,904 99,631 101,482 101,024 103,293 102,622 104,728 By major type of credit* 13 Automobile 285,421 292,060 285,050 263,108 261,871 259,723 259,530 258,449 257,513 14 Commercial banks 123,392 126,288 124,913 111,912 110,707 110,077 110,047 109,056 108,738 15 Finance companies .. 98,338 84,126 75,045 63,413 62,204 61,957 60,655 61,717 59,399 16 Pools of securitized assets n.a. 18,185 24,428 28,057 29,460 28,480 29,942 28,679 30,336 1 1 7 8 Re C v o ol m v m in e g r cial banks 1 1 8 2 4 3 , , 0 0 4 2 5 0 2 1 1 3 0 0 , , 3 8 1 1 0 1 2 1 3 3 5 3 , , 0 3 5 8 6 5 r 2 1 5 3 5 7 , , 8 9 9 6 5 8 r 2 1 4 3 9 3 , , 3 8 2 39 0 " 2 1 4 3 5 0 , , 0 8 8 4 8 8 r 2 1 4 2 2 8 , , 2 55 6 0 7 * 2 1 4 2 2 8 , , 7 5 0 0 8 6 r 2 1 4 2 3 7 , , 1 9 5 4 6 3 2 2 1 0 1 9 G P R o a e o s ta o ls i l l i e o n r f e s s c e o c m ur p i a ti n z i e e d s assets 4 n 3 3 . , , a 8 6 . 3 7 3 4 3 23 9 3 , , , 4 9 5 7 3 8 7 5 3 4 44 4 0 , , , 3 8 0 3 2 0 5 2 3 6 3 4 0 9 , , , 3 1 3 6 3 5 2 9 2 6 3 0 4 6 , , , 0 3 9 8 7 5 7 7 3 6 3 4 0 5 , , , 1 6 4 5 3 3 1 3 8 6 3 0 4 3 , , , 9 8 9 5 9 8 3 2 8 6 3 4 1 4 , , , 0 1 9 9 9 8 4 0 9 3 6 4 1 5 , , , 1 9 0 5 9 9 1 3 5 22 Other 203,854 226,507 228,418 223,055 222,103 221,071 219,294 217,519 216,242 23 Commercial banks 78,380 85,671 88,789 89,685 90,774 89,539 89,100 88,643 88,218 24 Finance companies 46,339 54,732 58,818 58,488 57,002 58,323 57,698 56,647 56,739 2 2 5 6 P R o e o ta ls il e o r f s securitized assets n 4 . , a 6 . 0 5 4 7 , , 5 1 7 3 1 1 4 9, , 1 8 4 1 1 9 1 4 1 , , 6 4 7 3 8 5 1 4 1 , , 6 9 1 3 4 5 1 4 1 , , 5 9 7 1 7 1 1 4 2 , , 5 3 6 9 2 8 1 4 2 , , 5 7 6 5 4 3 1 4 2 , , 5 4 7 4 9 1 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 • September 1992 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT1 Percent per year, except as noted 1991 1992 IItteemm 11998899 11999900 11999911 Nov. Dec. Jan. Feb. Mar. Apr/ May INTEREST RATES Commercial banks* 1 48-month new car3 12.07 11.78 11.14 10.61 n.a. n.a. 9.89 n.a. n.a. 9.52 2 24-month personal 15.44 15.46 15.18 14.88 n.a. n.a. 14.39 n.a. n.a. 14.28 3 120-month mobile home 14.11 14.02 13.70 13.37 n.a. n.a. 12.93 n.a. n.a. 12.82 4 Credit card 18.02 18.17 18.23 18.19 n.a. n.a. 18.09 n.a. n.a. 17.97 Auto finance companies 5 New car 12.62 12.54 12.41 10.79 10.41 10.04 10.19 10.92 10.84 1100..6677 6 Used car 16.18 15.99 15.60 15.06 14.90 14.34 14.00 14.19 14.14 14.01 OTHER TERMS4 Maturity (months) 7 New car 54.2 54.6 55.1 54.1 53.7 53.5 53.8 54.3 54.5 5544..77 8 Used car 46.6 46.0" 47.2 47.0 46.9 48.4 48.0 48.0 47.8 47.9 Loan-to-value ratio 9 New car 97r 95r 95r 96' 93r 97r 97r 97r 97 97 10 Used car 91r 87r 88r 88r 88r 89r 89r 89r 89 89 Amount financed (dollars) 11 New car 12,001 12,071 12,494 13,245 13,476 13,135 13,340 13,137 13,208 1133,,337733 12 Used car 7,954 8,289 8,884 9,029 9,105 9,007 8,912 8,908 8,905 9,247 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 1992 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998877 11998899 11999900 11999911 Q3 Q4 Ql Q2 Q3 Q4 Ql Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors 722.8 643.9 445.7 592.7 479.4 438.0 512.4 463.4 By lending sector and instrument 2 U.S. government 143.9 155.1 146.4 246.9 278.2 242.3 271.5 199.2 269.1 365.5 3 Treasury securities 142.4 137.7 144.7 238.7 292.0 243.6 272.5 223.2 275.3 394.3 4 Agency issues and mortgages 1.5 17.4 1.6 8.2 -13.8 -1.3 -1.0 -24.0 -6.2 -28.8 5 Private 578.9 612.1 568.4 167.4 350.5 208.0 238.8 243.3 97.9 By instrument 6 Debt capital instruments 487.1 463.5 414.9 328.3 246.3 276.9 251.1 282.1 310.0 168.8 7 Tax-exempt obligations 83.5 53.7 65.0 45.5 31.8 36.5 18.3 25.3 35.6 37.7 8 Corporate bonds 79.1 103.4 74.3 47.1 78.6 29.8 65.2 76.7 96.5 81.3 9 Mortgages 324.5 306.5 275.7 235.7 135.9 210.6 167.6 180.2 177.8 49.9 10 Home mortgages 234.9 231.0 218.0 215.4 140.1 187.6 159.2 140.4 161.3 114.1 11 Multifamily residential 24.4 16.7 16.4 3.6 2.0 17.0 3.7 14.7 4.3 -17.1 12 Commercial 71.6 60.8 42.7 16.8 -6.0 4.8 4.5 24.9 14.5 -44.5 1 1 1 1 1 1 8 5 6 7 3 4 Ot O B O C he a o t p F h r n n e e a k n d s r r u e m l m m b o t a a e n r i r k n s c e s n r t t e r . u p e d . m a i c t p e e n r ts - 4 9 3 6 9 6 1 3 1 . . . . . . 4 8 9 8 5 6 1 - 4 4 5 1 4 2 5 0 0 1 8 . . . . . . 1 8 5 4 9 6 1 - 4 4 3 2 5 1 9 1 9 3 3 . . . . . . 5 1 4 9 1 5 4 6 1 - 9 3 8 1 4 . . . . 1 . . 7 7 1 8 3 - - - - - 1 1 3 1 7 8 - 5 2 2 8 . . . . . . 2 4 8 6 1 9 - 4 7 1 1 6 7 3 9 3 1 . . . . . 9 . 7 6 3 4 3 - - - 3 2 4 - 1 4 4 2 3 7 . . . . . . 2 4 1 2 2 6 - - - 4 1 2 -6 6 3 0 . . . . . . 9 0 4 6 2 2 - - - - 1 3 6 1 -2 6 7 6 6 2 . . . . . . 3 2 6 1 7 0 - - - - 2 4 1 7 - 1 2 5 2 9 0 6 . . . . . . 4 4 6 6 9 5 By borrowing sector 19 State and local government 83.0 48.9 63.2 42.6 24.5 34.6 12.4 25.5 28.0 20.2 20 Household 302.2 315.8 287.3 257.6 157.1 223.8 165.0 177.2 176.4 115.6 21 Nonfinancial business 193.7 247.4 217.9 96.9 -14.2 92.0 30.6 36.1 38.9 -37.9 22 Farm -10.6 -7.5 1.6 2.5 1.7 8.7 1.1 4.2 .1 .3 23 Nonfarm noncorporate 65.9 62.4 50.0 15.3 -23.4 11.2 4.8 11.4 2.5 -52.7 24 Corporate 138.5 192.5 166.3 79.0 7.5 72.1 24.6 20.5 36.3 14.6 25 Foreign net borrowing in United States 6.2 6.4 10.6 23.5 15.1 26.2 19.0 62.8 -59.6 18.7 26 Bonds 7.4 6.9 5.3 21.6 16.0 1.9 28.6 11.5 14.7 15.8 27 Bank loans n.e.c -3.6 -1.8 -.1 -2.9 3.1 2.0 -5.2 8.1 -3.5 1.4 28 Open market paper 3.8 8.7 13.1 12.3 6.4 25.6 15.6 46.7 -51.9 16.0 29 U.S. government loans -1.4 -7.5 -7.7 -7.5 -10.4 -3.3 -20.0 -3.5 -18.8 -14.5 30 Total domestic plus foreign 729.0 773.6 725.3 667.4 460.8 618.9 498.4 500.8 452.8 482.1 Financial sectors 31 Total net borrowing by financial sectors 264.1 213.4 191.0 169.7 143.7 93.7 222.4 126.7 87.7 172.7 187.4 95.7 By instrument 32 U.S. government-related 171.8 119.8 151.0 167.4 147.8 146.2 185.6 149.6 118.1 172.9 150.7 123.2 33 Sponsored-credit-agency securities 30.2 44.9 25.2 17.1 9.2 13.7 37.1 13.1 -29.7 20.6 32.6 11.4 34 Mortgage pool securities 142.3 74.9 125.8 150.3 138.6 132.5 148.9 136.5 147.8 152.3 117.9 111.6 35 Loans from U.S. government -.8 .0 .0 -.1 .0 .0 -.5 .0 .0 .0 .2 .2 36 Private 92.4 93.7 40.0 2.3 -4.2 -52.5 36.8 -22.8 -30.4 -.2 36.7 -27.5 37 Corporate bonds 44.2 18.2 17.7 17.0 62.1 -62.4 26.5 63.5 67.4 41.7 75.6 -69.8 38 Mortgages .4 .3 .0 .3 .6 .1 .6 .1 -.1 .9 1.5 .0 39 Bank loans n.e.c -3.6 .6 1.9 1.2 3.2 2.0 1.1 1.3 -2.9 9.6 4.8 6.4 40 Open market paper 26.9 54.8 31.3 8.6 -32.0 35.1 24.2 -52.0 -46.3 -16.0 -13.7 45.4 41 Loans from Federal Home Loan Banks .., 24.4 19.7 -11.0 -24.7 -38.0 -27.3 -15.7 -35.8 -48.5 -36.4 -31.5 -9.5 By borrowing sector 42 Sponsored credit agencies 29.5 44.9 25.2 17.0 9.2 13.7 36.7 13.1 -29.7 20.6 32.8 11.5 43 Mortgage pools 142.3 74.9 125.8 150.3 138.6 132.5 148.9 136.5 147.8 152.3 117.9 111.6 44 Private 92.4 93.7 40.0 2.3 -4.2 -52.5 36.8 -22.8 -30.4 -.2 36.7 -27.5 45 Commercial banks 6.2 -3.0 -1.4 -1.1 -13.3 -5.8 14.2 -17.9 -11.9 -8.5 -15.0 7.9 46 Bank affiliates 14.3 5.2 6.2 -27.7 -2.8 -42.0 -30.8 -8.0 -3.3 -7.8 8.0 -.6 47 Savings and loan associations 19.6 19.9 -14.1 -29.7 -38.6 -29.2 -18.9 -42.0 -49.4 -39.6 -23.5 -17.2 48 Mutual savings banks 8.1 1.9 -1.4 -.5 -3.5 -2.7 1.3 1.9 -.9 -6.2 -8.7 5.6 49 Finance companies 4.7 33.5 31.1 23.2 23.4 1.1 25.1 10.8 7.3 22.0 53.6 -46.7 50 Real estate investment trusts (REITs) .4 3.6 -1.9 -1.9 -1.5 -1.4 .3 -.6 -.1 .0 -5.2 -1.2 51 Securitized credit obligation (SCO) issuers 39.1 32.5 21.4 40.1 32.1 27.5 45.6 32.9 28.0 40.0 27.6 24.6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • September 1992 1.57—Continued 1990 1991 1992 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998877 11998888 11998899 11999900 11999911 Q3 Q4 Q1 Q2 Q3 Q4 Ql All sectors 52 Total net borrowing, all sectors 993.1 987.0 916.3 837.1 604.4 712.7 720.8 627.5 540.5 654.8 594.9 633.4 53 U.S. government securities 316.4 274.9 297.3 414.4 426.0 388.5 457.5 348.8 387.3 538.4 429.5 439.5 54 State and local obligations 83.5 53.7 65.0 45.5 31.8 36.5 18.3 25.3 35.6 37.7 28.5 32.0 55 Corporate and foreign bonds 130.7 128.5 97.3 85.7 156.7 -30.7 120.4 151.7 178.7 138.8 157.9 16.0 56 Mortgages 324.9 306.7 275.7 236.0 136.5 210.7 168.2 180.3 177.7 50.8 137.1 156.3 57 Consumer credit 33.5 50.4 43.1 14.3 -12.1 13.4 -4.2 -10.6 -16.0 -19.6 -2.3 1.7 58 Bank loans n.e.c 2.7 39.3 41.6 -.6 -26.3 -2.8 -26.2 9.6 -43.6 -14.4 -56.9 -9.0 59 Open market paper 32.3 75.4 65.9 30.7 -44.0 79.9 5.4 -12.2 -114.3 -42.5 -6.9 22.7 60 Other loans 69.1 58.1 30.4 11.4 -64.1 17.1 -18.6 -65.3 -64.8 -34.4 -92.1 -25.8 61 MEMO: U.S. government, cash balance -7.9 10.4 -5.9 8.3 14.5 18.4 24.2 34.6 -35.8 -14.6 73.6 -79.7 Totals net of changes in U.S. government cash balances 62 Net borrowing by domestic nonfinancial sectors 730.7 756.8 720.6 635.6 431.2 574.3 455.2 403.4 548.2 447788..11 229955..11 649.6 63 Net borrowing by U.S. government 151.8 144.7 152.3 238.6 263.8 223.8 247.3 164.6 304.9 380.2 205.4 396.1 External corporate equity funds raised in United States 64 Total net share issues 7.1 -119.3 -65.4 15.8 199.7 -19.5 27.0 101.2 179.7 235.0 282.9 282.5 65 Mutual funds 70.2 6.1 38.5 65.7 150.6 45.9 83.7 97.6 125.2 178.1 201.3 191.5 66 All other -63.1 -125.4 -103.9 -50.0 49.1 -65.4 -56.7 3.7 54.5 56.9 81.5 91.0 67 Nonfinancial corporations -75.5 -129.5 -124.2 -63.0 17.5 -74.0 -61.0 -12.0 11.0 17.0 54.0 51.0 68 Financial corporations 14.5 3.2 3.0 6.1 1.4 6.5 2.8 -10.6 6.8 5.6 3.9 8.8 69 Foreign shares purchased in United States -2.1 .9 17.3 6.9 30.2 2.2 1.6 26.2 36.6 34.3 23.6 31.2 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 1992 Transaction category or sector 11998877 11998888 11998899 11999900 11999911 Q3 Q4 Ql Q2 Q3 Q4 Ql 1 Total funds advanced in credit markets to domestic nonfinancial sectors 722.8 767.2 714.7 643.9 445.7 592.7 479.4 438.0 512.4 463.4 368.7 569.9 2 Total net advances by federal agencies and foreign sectors 248.0 208.1 188.1 261.7 244.4 347.4 190.8 289.8 212.2 285.4 190.3 330.2 By instrument 3 U.S. government securities 70.1 85.2 30.2 74.4 98.9 142.0 45.6 140.1 50.9 122.7 82.1 172.3 4 Residential mortgages 139.1 86.3 137.9 184.1 164.7 176.3 180.5 176.0 186.8 176.8 119.3 161.0 5 Federal Home Loan Bank advances to thrifts 24.4 19.7 -11.0 -24.7 -38.0 -27.3 -15.7 -35.8 -48.5 -36.4 -31.5 -9.5 6 Other loans and securities 14.3 16.8 31.0 27.8 18.8 56.4 -19.6 9.4 23.1 22.2 20.5 6.4 By lender 7 U.S. government -7.9 -9.4 -2.6 33.6 10.7 63.6 -3.7 35.0 27.3 .4 -20.0 10.5 8 Sponsored credit agencies and mortgage pools 169.3 112.0 125.3 166.7 152.9 182.4 141.9 164.0 124.1 185.0 138.5 204.4 9 Monetary authority 24.7 10.5 -7.3 8.1 31.1 26.2 -24.2 60.2 1.8 57.4 5.0 36.1 10 Foreign 61.8 95.0 72.7 53.2 49.8 75.1 76.8 30.6 59.1 42.5 66.8 79.2 Agency and foreign borrowing not included in line 1 11 Sponsored credit agencies and mortgage pools 171.8 119.8 151.0 167.4 147.8 146.2 185.6 149.6 118.1 172.9 150.7 123.2 12 Foreign 6.2 6.4 10.6 23.5 15.1 26.2 19.0 62.8 -59.6 18.7 38.7 -32.1 13 Total private domestic funds advanced 652.8 685.3 688.2 573.1 364.2 417.8 493.2 360.5 358.7 369.6 367.9 330.8 14 U.S. government securities 246.3 189.7 267.2 340.0 327.1 246.6 411.9 208.7 336.4 415.8 347.5 267.3 15 State and local obligations 83.5 53.7 65.0 45.5 31.8 36.5 18.3 25.3 35.6 37.7 28.5 32.0 16 Corporate and foreign bonds 67.5 94.4 65.5 62.8 75.6 26.6 95.1 66.5 89.3 77.2 69.5 61.6 17 Residential mortgages 120.2 161.3 96.5 34.8 -22.7 28.2 -17.7 -20.9 -21.2 -79.8 31.3 15.9 18 Other mortgages and loans 159.8 205.9 183.1 65.4 -85.7 52.6 -30.1 45.2 -130.0 -117.6 -140.4 -55.5 19 LESS: Federal Home Loan Bank advances 24.4 19.7 -11.0 -24.7 -38.0 -27.3 -15.7 -35.8 -48.5 -36.4 -31.5 -9.5 20 Total credit market funds advanced by private financial institutions 498.1 539.2 535.5 391.3 337.0 294.5 516.3 311.8 169.4 452.8 414.0 372.0 By lending institution 21 Commercial banks 135.3 157.0 177.0 121.2 83.4 107.6 61.8 123.3 30.1 77.5 102.8 109.2 22 Savings institutions 137.6 118.7 -90.2 -150.8 -144.9 -165.7 -174.0 -184.1 -167.9 -178.6 -49.0 -98.6 23 Insurance and pension funds 149.1 176.4 197.9 183.7 202.6 135.6 188.3 228.7 208.3 247.4 126.1 117.7 24 Other financial institutions 76.2 87.1 250.8 237.2 195.9 216.9 440.2 144.0 98.9 306.4 234.1 243.7 By source of funds 25 Private domestic deposits and repurchase agreements . 173.8 229.6 209.5 53.4 -10.6 45.6 -22.7 240.9 -126.9 -49.0 -107.4 188.9 26 Credit market borrowing 92.4 93.7 40.0 2.3 -4.2 -52.5 36.8 -22.8 -30.4 -.2 36.7 -27.5 27 Other sources 231.9 216.0 286.0 335.6 351.8 301.5 502.2 93.8 326.7 502.0 484.7 210.7 28 Foreign funds 43.7 9.3 -9.9 24.0 -17.7 87.5 -28.5 9.4 -65.6 11.3 -25.8 -11.1 29 Treasury balances -5.8 7.3 -3.4 5.3 5.5 13.7 3.4 20.6 -22.3 5.7 17.9 -42.5 30 Insurance and pension reserves 94.9 174.1 192.0 164.1 219.6 128.3 222.1 287.9 171.3 277.4 141.6 99.9 31 Other, net 99.2 25.2 107.3 142.2 144.4 72.0 305.2 -224.2 243.3 207.7 350.9 164.4 Private domestic nonfinancial investors 32 Direct lending in credit markets 247.1 239.8 192.7 184.1 23.0 70.8 13.7 25.8 158.9 -83.4 -9.4 -68.8 33 U.S. government securities 99.4 134.5 125.5 126.4 26.8 133.9 -6.9 8.3 163.5 -21.9 -42.7 11.5 34 State and local obligations 96.1 57.3 62.7 24.9 7.8 7.6 -13.5 14.9 20.0 16.0 -19.6 8.4 35 Corporate and foreign bonds 6.7 -32.9 -27.1 -11.8 2.6 -109.4 -2.2 42.0 49.3 -106.8 26.0 -120.0 36 Open market paper 13.3 41.9 2.9 17.1 -33.5 8.8 -4.6 -52.6 -96.6 14.0 1.4 .3 37 Other loans and mortgages 31.5 39.0 28.7 27.6 19.2 29.8 41.0 13.2 22.7 15.3 25.5 31.1 38 Deposits and currency 190.3 233.1 225.7 83.0 18.4 74.2 20.4 257.4 -103.4 -14.9 -65.3 210.7 39 Currency 19.0 14.7 11.7 22.6 19.8 30.9 16.9 38.7 6.0 8.0 26.6 5.9 40 Checkable deposits -.3 12.5 .6 .4 47.8 -3.6 -23.1 49.4 12.3 109.0 20.6 154.1 41 Small time and savings accounts 76.0 122.4 98.2 59.7 11.2 40.7 60.1 103.4 .1 -43.3 -15.3 -10.8 42 Money market fund shares 28.9 21.2 86.7 56.0 25.8 106.0 42.1 184.3 -71.8 -2.7 -6.6 101.4 4 4 4 3 4 5 L D Se a e c r p g u o e r s i i t t y t i s m r i e e n p d f u e o r p r c e o h i s g a i n s ts e c a o g u r n e t e r m ies e nts - 4 2 2 7 1 . . . 5 6 6 -1 4 3 1 0 2 . . . 2 6 9 1 9 4 4 . . . 1 4 9 - - 4 2 2 0 7 . . . 2 5 1 - - 8 1 1 3 9 . . . 7 7 2 - -2 7 -2 6 1 . . . 2 5 0 - - 6 3 2 5 6 6 . . . 2 6 3 - - -2 4 4 2 7 8 . . . 2 9 3 -6 - 1 6 1 7 . . . 4 1 5 -1 -1 0 2 2 0 6 . . . 1 0 1 -11 1 1 7 1 5 . . . 5 5 5 -6 1 5 9 5 . . . 0 2 9 46 Total of credit market instruments, deposits, and currency 437.4 472.9 418.4 267.2 41.4 145.0 34.2 283.2 55.5 -98.3 -74.7 141.9 MEMO 47 Public holdings as percent of total 34.0 26.9 25.9 39.2 53.0 56.1 38.3 57.9 46.9 59.2 46.7 61.4 48 Private financial intermediation (percent) 76.3 78.7 77.8 68.3 92.5 70.5 104.7 86.5 47.2 122.5 112.5 112.5 49 Total foreign funds 105.5 104.3 62.8 77.2 32.1 162.6 48.3 40.0 -6.5 53.8 41.0 68.1 Corporate equities not included above 50 Total net issues 7.1 -119.3 -65.4 15.8 199.7 -19.5 27.0 101.2 179.7 235.0 282.9 282.5 51 Mutual fund shares 70.2 6.1 38.5 65.7 150.6 45.9 83.7 97.6 125.2 178.1 201.3 191.5 52 Other equities -63.1 -125.4 -103.9 -50.0 49.1 -65.4 -56.7 3.7 54.5 56.9 81.5 91.0 53 Acquisitions by financial institutions 22.2 4.1 18.9 27.5 85.9 -44.4 53.2 81.7 74.3 106.4 81.0 101.6 54 Other net purchases -15.1 -123.3 -84.3 -11.7 113.8 24.9 -26.2 19.6 105.3 128.6 201.8 180.9 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. Aiso 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. Digitized for FR2A9. SDEemRa nd deposits and note balances at commercial banks. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • September 1992 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING Billions of dollars, end of period 1990 1991 1992 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998888 11998899 11999900 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 9,242.3 9,987.1 10,759.9 11,196.4 10,597.3 10,759.9 10,821.8 10,940.1 11,062.9 11,196.4 11,304.3 By lending sector and instrument 2 U.S. government 2,104.9 2,251.2 2,498.1 2,776.4 2,410.4 2,498.1 2,548.8 2,591.9 2,687.2 2,776.4 2,859.7 3 Treasury securities 2,082.3 2,227.0 2,465.8 2,757.8 2,377.8 2,465.8 2,522.4 2,567.1 2,669.6 2,757.8 2,844.0 4 Agency issues and mortgages 22.6 24.2 32.4 18.6 32.6 32.4 26.4 24.8 17.6 18.6 15.8 5 Private 7,137.4 7,735.9 8,261.8 8,420.0 8,186.9 8,261.8 8,273.0 8,348.2 8,375.7 8,420.0 8,444.5 By instrument 6 Debt capital instruments 5,035.8 5,467.9 5,932.1 6,178.4 5,868.0 5,932.1 5,989.7 6,073.0 6,121.4 6,178.4 6,233.1 7 Tax-exempt obligations 939.4 1,004.4 1,049.8 1,081.6 1,043.0 1,049.8 1,052.8 1,060.1 1,072.3 1,081.6 1,086.2 8 Corporate bonds 852.6 926.9 974.0 1,052.6 957.7 974.0 993.1 1,017.2 1,037.6 1,052.6 1,072.7 9 Mortgages 3,243.8 3,536.6 3,908.4 4,044.3 3,867.3 3,908.4 3,943.8 3,995.6 4,011.5 4,044.3 4,074.3 10 Home mortgages 2,173.9 2,404.3 2,765.3 2,905.4 2,726.0 2,765.3 2,790.9 2,838.2 2,870.1 2,905.4 2,939.4 11 Multifamily residential 286.7 304.4 305.7 307.7 304.8 305.7 309.4 310.4 306.1 307.7 309.0 12 Commercial 696.4 742.6 753.4 747.4 752.3 753.4 759.6 763.2 752.1 747.4 742.0 13 Farm 86.8 85.3 84.0 83.7 84.3 84.0 83.9 83.8 83.1 83.7 83.9 14 Other debt instruments 2,101.6 2,268.0 2,329.6 2,241.6 2,318.9 2,329.6 2,283.3 2,275.2 2,254.3 2,241.6 2,211.4 1.5 Consumer credit 743.6 794.7 808.9 797.1 798.7 808.9 785.3 784.9 786.1 797.1 775.7 16 Bank loans n.e.c 710.0 759.8 753.8 724.2 750.5 753.8 747.8 739.9 733.2 724.2 712.1 17 Open market paper 85.7 107.1 116.9 98.5 131.8 116.9 120.8 119.4 107.0 98.5 110.3 18 Other 562.3 606.4 650.1 621.8 637.9 650.1 629.5 631.0 628.0 621.8 613.4 By borrowing sector 19 State and local government 752.5 815.7 858.3 882.8 852.9 858.3 861.3 866.7 874.6 882.8 885.4 20 Household 3,188.9 3,501.5 3,897.6 4,058.1 3,841.9 3,897.6 3,917.3 3,966.0 4,004.3 4,058.1 4,080.0 21 Nonfinancial business 3,196.0 3,418.7 3,505.9 3,479.2 3,492.0 3,505.9 3,494.4 3,515.4 3,4%.8 3,479.2 3,479.1 22 Farm 137.6 139.2 140.5 139.6 141.6 140.5 136.8 139.6 140.4 139.6 138.3 23 Nonfarm noncorporate 1,130.5 1,180.5 1,194.3 1,163.5 1,195.1 1,194.3 1,191.8 1,192.7 1,175.9 1,163.5 1,150.4 24 Corporate 1,927.9 2,098.9 2,171.1 2,176.1 2,155.4 2,171.1 2,165.8 2,183.1 2,180.6 2,176.1 2,190.5 25 Foreign credit market debt held in United States 255.7 265.4 288.9 304.0 283.4 288.9 301.4 288.8 293.5 304.0 292.3 26 Bonds 94.0 98.5 120.1 136.1 112.9 120.1 122.9 126.6 130.6 136.1 137.4 27 Bank loans n.e.c 21.5 21.4 18.5 21.6 19.8 18.5 20.5 19.7 20.0 21.6 21.2 28 Open market paper 49.9 63.0 75.3 81.8 71.5 75.3 87.0 74.0 78.0 81.8 70.5 29 U.S. government loans 90.2 82.5 75.0 64.6 79.3 75.0 70.9 68.4 64.9 64.6 63.2 30 Total credit market debt owed by nonfinancial sectors, domestic and foreign 9,498.0 10,252.5 11,048.8 11,500.4 10,880.7 11,048.8 11,123.2 11,228.8 11,356.4 11,500.4 11,596.6 Financial sectors 31 Total credit market debt owed by financial sectors 1,999.8 2,219.4 2,511.1 2,660.5 2,446.4 2,511.1 2,541.0 2,562.2 2,604.6 2,660.5 2,678.4 By instrument 32 U.S. government-related 1,098.4 1,249.3 1,418.4 1,566.2 1,367.9 1,418.4 1,452.1 1,480.4 1,524.4 1,566.2 1,593.7 33 Sponsored credit-agency securities 348.1 373.3 393.7 402.9 384.4 393.7 397.0 389.6 394.7 402.9 405.7 34 Mortgage pool securities 745.3 871.0 1,019.9 1,158.5 978.5 1,019.9 1,050.3 1,086.0 1,124.8 1,158.5 1,183.1 35 Loans from U.S. government 5.0 5.0 4.9 4.9 5.0 4.9 4.9 4.9 4.9 4.9 4.9 36 Private 901.4 970.0 1,092.6 1,094.3 1,078.5 1,092.6 1,088.8 1,081.9 1,080.3 1,094.3 1,084.7 37 Corporate bonds 331.9 378.2 515.0 582.9 510.2 515.0 540.1 555.8 565.9 582.9 569.6 38 Mortgages 3.4 3.4 4.2 4.8 4.1 4.2 4.2 4.2 4.4 4.8 4.8 39 Bank loans n.e.c 35.6 37.5 38.6 41.8 36.7 38.6 36.5 37.0 39.0 41.8 41.1 40 Open market paper 377.7 409.1 417.7 385.7 409.6 417.7 400.9 390.1 387.0 385.7 392.9 41 Loans from Federal Home Loan Banks 152.8 141.8 117.1 79.1 117.9 117.1 107.0 94.7 83.9 79.1 76.3 By borrowing sector 42 Sponsored credit agencies 353.1 378.3 398.5 407.7 389.4 398.5 401.8 394.4 399.5 407.7 410.6 43 Mortgage pools 745.3 871.0 1,019.9 1,158.5 978.5 1,019.9 1,050.3 1,086.0 1,124.8 1,158.5 1,183.1 44 Private financial sectors 901.4 970.0 1,092.6 1,094.3 1,078.5 1,092.6 1,088.8 1,081.9 1,080.3 1,094.3 1,084.7 45 Commercial banks 78.8 77.4 76.3 63.0 70.7 76.3 68.1 65.9 64.6 63.0 60.8 46 Bank affiliates 136.2 142.5 114.8 112.0 122.9 114.8 114.4 113.3 110.6 112.0 113.5 47 Savings and loan associations 159.3 145.2 113.1 74.5 114.9 113.1 102.2 89.3 77.6 74.5 70.6 48 Mutual savings banks 18.6 17.2 16.7 13.2 16.2 16.7 16.4 16.6 15.2 13.2 13.8 49 Finance companies 361.4 392.5 536.0 563.0 529.8 536.0 542.3 544.1 549.6 563.0 551.3 .50 Real estate investment trusts (REITs) 11.4 10.1 10.6 9.9 10.3 10.6 10.6 10.8 11.0 9.9 9.8 51 Securitized credit obligation (SCO) issuers... 135.7 185.1 225.2 258.7 213.8 225.2 234.8 241.8 251.8 258.7 264.9 All sectors 52 Total credit market debt, domestic and foreign.. 11,497.8 12,471.9 13,559.8 14,160.9 13,327.1 13,559.8 13,664.2 13,791.1 13,%1.0 14,160.9 14,275.0 53 U.S. government securities 3,198.3 3,495.6 3,911.7 4,337.7 3,773.4 3,911.7 3,9%. 1 4,067.5 4,206.7 4,337.7 4,448.5 54 State and local obligations 939.4 1,004.4 1,049.8 1,081.6 1,043.0 1,049.8 1,052.8 1,060.1 1,072.3 1,081.6 1,086.2 55 Corporate and foreign bonds 1,278.5 1,403.6 1,609.0 1,771.6 1,580.8 1,609.0 1,656.2 1,699.6 1,734.1 1,771.6 1,779.7 56 Mortgages 3,247.2 3,540.1 3,912.6 4,049.1 3,871.4 3,912.6 3,948.0 3,999.8 4,015.9 4,049.1 4,079.1 57 Consumer credit 743.6 794.7 808.9 797.1 798.7 808.9 785.3 784.9 786.1 797.1 775.7 58 Bank loans n.e.c 767.2 818.6 810.9 787.7 807.0 810.9 804.8 7%.5 792.2 787.7 774.4 59 Open market paper 513.4 579.2 609.9 565.9 612.9 609.9 608.8 583.6 572.0 565.9 573.7 60 Other loans 810.2 835.7 847.0 770.3 840.0 847.0 812.2 799.0 781.7 770.3 757.8 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 1992 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998888 11998899 11999900 11999911 Q3 Q4 Q1 Q2 Q3 04 Q1 1 Total funds advanced in credit markets to domestic nonfinancial sectors 9,242.3 9,987.1 10,759.9 11,196.4 10,597.3 10,759.9 10,821.8 10,940.1 11,062.9 11,196.4 11,304.3 2 Total held by federal agencies and foreign sector 2,223.2 2,413.1 2,673.3 2,915.2 2,611.3 2,673.3 2,728.1 2,788.1 2,853.5 2,915.2 2,983.1 By instrument 3 U.S. government securities 651.5 688.9 763.3 862.2 745.6 763.3 789.5 808.7 835.7 886622..22 896.0 4 Residential mortgages 900.4 1,038.4 1,221.0 1,385.8 1,171.8 1,221.0 1,261.4 1,306.8 1,351.7 1,385.8 1,422.7 5 Federal Home Loan Bank advances to thrifts 152.8 141.8 117.1 79.1 117.9 117.1 107.0 94.7 83.9 79.1 76.3 6 Other loans and securities 518.5 544.1 571.9 588.2 576.0 571.9 570.3 577.9 582.1 588.2 588.2 By type of lender 7 U.S. government 214.6 207.0 240.6 248.7 242.7 240.6 247.3 255.4 254.8 248.7 251.9 8 Sponsored credit agencies and mortgage pools 1,113.0 1,238.2 1,403.4 1,556.3 1,360.5 1,403.4 1,438.8 1,468.7 1,514.2 1,556.3 1,603.0 9 Monetary authority 240.6 233.3 241.4 272.5 240.8 241.4 247.3 253.7 264.7 272.5 271.8 10 Foreign 655.0 734.6 787.9 837.6 767.5 787.9 794.7 810.3 819.7 837.6 856.5 Agency and foreign debt not in line 1 11 Sponsored credit agencies and mortgage pools 1,098.4 1,249.3 1,418.4 1,566.2 1,367.9 1,418.4 1,452.1 1,480.4 1,524.4 11,,556666..22 11,,559933..77 12 Foreign 255.7 265.4 288.9 304.0 283.4 288.9 301.4 288.8 293.5 304.0 292.3 13 Total private domestic holdings 8,373.2 9,088.7 9,793.9 10,151.4 9,637.3 9,793.9 9,847.2 9,921.2 10,027.3 10,151.4 10,207.2 14 U.S. government securities 2,546.8 2,806.7 3,148.4 3,475.5 3,027.7 3,148.4 3,206.5 3,258.8 3,371.1 3,475.5 3,552.6 15 State and local obligations 939.4 1,004.4 1,049.8 1,081.6 1,043.0 1,049.8 1,052.8 1,060.1 1,072.3 1,081.6 1,086.2 16 Corporate and foreign bonds 744.8 809.8 872.6 948.3 850.0 872.6 890.0 911.6 932.1 948.3 964.6 17 Residential mortgages 1,560.2 1,670.4 1,850.0 1,827.4 1,859.0 1,850.0 1,838.9 1,841.8 1,824.5 1,827.4 1,825.7 18 Other mortgages and loans 2,734.7 2,939.2 2,990.1 2,897.8 2,975.4 2,990.1 2,965.9 2,943.6 2,911.2 2,897.8 2,854.5 19 LESS: Federal Home Loan Bank advances 152.8 141.8 117.1 79.1 117.9 117.1 107.0 94.7 83.9 79.1 76.3 20 Total credit market claims held by private financial institutions 7,056.8 7,605.0 8,119.5 8,552.5 7,982.4 8,119.5 8,280.0 8,333.3 8,441.7 88,,555522..55 88,,663322..77 By holding institution 71 Commercial banks 2,476.2 2,643.9 2,765.1 2,851.2 2,739.0 2,765.1 2,778.6 2,793.1 2,815.3 22,,885511..22 22,,885588..77 7,7 Savings institutions 1,566.7 1,480.4 1,332.1 1,187.3 1,378.3 1,332.1 1,285.5 1,245.6 1,202.1 1,187.3 1,162.2 23 Insurance and pension funds 1,836.1 2,034.0 2,218.1 2,522.7 2,173.8 2,218.1 2,381.8 2,434.0 2,494.2 2,522.7 2,557.4 24 Other finance 1,177.9 1,446.7 1,804.2 1,991.3 1,691.3 1,804.2 1,834.2 1,860.6 1,930.1 1,991.3 2,054.5 By source of funds 25 Private domestic deposits and repurchase agreements 3,581.3 3,790.4 3,843.8 3,811.3 3,812.2 3,843.8 3,858.2 3,818.7 3,800.7 33,,881111..33 33,,883322..33 76 Credit market debt 901.4 970.0 1,092.6 1,094.3 1,078.5 1,092.6 1,088.8 1,081.9 1,080.3 1,094.3 1,084.7 77 Other sources 2,574.1 2,844.6 3,183.1 3,646.9 3,091.7 3,183.1 3,333.0 3,432.8 3,560.7 3,646.9 3,715.7 78 Foreign funds 71.6 62.1 86.1 68.5 86.6 86.1 84.8 63.7 68.5 68.5 62.1 79 U.S. Treasury balances 29.0 25.6 30.9 36.4 36.6 30.9 26.3 36.0 38.5 36.4 16.7 30 Insurance and pension reserves 1,723.2 1,908.2 2,067.7 2,429.1 2,018.6 2,067.7 2,278.2 2,324.1 2,387.2 2,429.1 2,453.9 31 Other, net 750.4 848.8 998.3 1,112.8 949.9 998.3 943.7 1,008.9 1,066.5 1,112.8 1,183.0 Private domestic nonfinancial investors 37 Credit market claims 2,217.8 2,453.7 2,767.0 2,693.2 2,733.4 2,767.0 2,656.0 2,669.7 2,665.9 22,,669933..22 22,,665599..22 33 U.S. government securities 1,050.7 1,169.0 1,297.1 1,279.9 1,276.2 1,297.1 1,250.7 1,263.7 1,268.0 1,279.9 1,281.8 34 State and local obligations 486.7 549.4 574.2 581.9 573.8 574.2 568.0 576.0 583.1 581.9 574.3 35 Corporate and foreign bonds 50.9 62.5 185.0 144.8 186.8 185.0 155.7 163.8 139.7 144.8 118.5 36 Open market paper 243.0 245.9 266.9 225.7 267.4 266.9 243.1 222.3 224.6 225.7 222.9 37 Other loans and mortgages 386.5 427.0 443.8 461.0 429.2 443.8 438.6 443.9 450.4 461.0 461.8 38 Deposits and currency 3,814.5 4,039.7 4,122.8 4,119.4 4,076.1 4,122.8 4,134.4 4,107.0 4,094.2 4,119.4 4,139.0 39 Currency 220.1 231.8 254.4 274.2 247.2 254.4 262.0 265.9 264.8 274.2 273.9 40 Checkable deposits 532.9 532.9 533.2 579.6 503.4 533.2 512.3 520.6 538.2 579.6 584.1 41 Small time and savings accounts 2,156.2 2,254.7 2,314.0 2,325.2 2,297.0 2,314.0 2,343.0 2,339.0 2,327.4 2,325.2 2,325.6 47 Money market fund shares 318.9 405.6 461.6 487.4 452.1 461.6 512.9 490.9 490.1 487.4 517.7 43 Large time deposits 390.3 399.3 357.5 255.5 373.1 357.5 325.0 304.7 284.3 255.5 239.5 44 Security repurchase agreements 182.9 197.9 177.4 163.6 186.6 177.4 165.1 163.5 160.7 163.6 165.4 45 Deposits in foreign countries 13.1 17.6 24.6 33.9 16.8 24.6 14.3 22.5 28.7 33.9 32.8 46 Total of credit market instruments, deposits, and currency 6,032.3 6,493.5 6,889.8 6,812.6 6,809.5 6,889.8 6,790.4 6,776.7 6,760.0 6,812.6 6,798.2 MEMO 47 Public holdings as percent of total 23.4 23.5 24.2 25.3 24.0 24.2 24.5 24.8 25.1 25.3 25.7 48 Private financial intermediation (percent) 97.2 94.2 87.8 82.0 90.5 87.8 86.7 85.7 83.5 82.0 80.5 49 Total foreign funds 726.6 796.7 873.9 906.1 854.1 873.9 879.5 874.0 888.2 906.1 918.6 Corporate equities not included above 50 Total market value 3,619.8 4,374.8 4,084.6 5,210.3 3,824.0 4,084.6 4,631.4 4,665.6 4,932.5 55,,221100..33 55,,337766..88 51 Mutual fund shares 478.3 555.1 578.5 852.4 547.3 578.5 643.0 681.3 764.0 852.4 912.1 57 Other equities 3,141.6 3,819.7 3,506.2 4,358.0 3,276.8 3,506.2 3,988.4 3,984.3 4,168.4 4,358.0 4,464.7 53 Holdings by financial institutions 1,113.6 1,416.9 1,342.1 1,939.0 1,232.6 1,342.1 1,634.2 1,644.7 1,789.5 1,939.0 1,979.1 54 Other holdings 2,506.2 2,958.0 2,742.6 3,271.4 2,591.4 2,742.6 2,997.2 3,020.9 3,143.0 3,271.4 3,397.7 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 • September 1992 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, 1987= 100, except as noted 1991 1992 MMeeaassuurree 11998899 11999900 11999911 Oct. Nov. Dec. Jan. Feb. Mar. Apr.r Mayr June 1 Industrial production1 108.1 109.2 107.1 108.4 108.1 107.4 106.6 107.2 107.6r 108.1 108.6 108.2 Market groupings 2 Products, total 108.6 110.1 108.1 109.0 109.0 108.4 107.5 108.1 108.5r 109.0 109.6 109.1 3 Final, total 109.1 110.9 109.6 110.6 110.6 109.9 108.7 109.4 109.8r 110.6 111.1 110.7 4 Consumer goods 106.7 107.3 107.5 109.7 110.0 109.1 108.1 108.8 109.3r 110.1 110.5 110.0 5 Equipment 112.3 115.5 112.2 111.9 111.4 110.9 109.4 110.2 110.4r 111.3 112.0 111.7 6 Intermediate 106.8 107.7 103.4 104.1 103.9 103.8 103.9 104.0 104.4 104.0 104.6 104.2 7 Materials 107.4 107.8 105.5 107.4 106.6 105.8 105.2 105.8 106. lr 106.7 107.1 106.9 Industry groupings 8 Manufacturing 108.9 109.9 107.4 109.0 108.6 108.1 107.4 108.1 108.5r 108.9 109.6 109.3 9 Capacity utilization, manufacturing (percent)2 83.9 82.3 78.2 78.7 78.2 77.7 77.0 77.4 77.5 77.7 78.0 77.6 10 Construction contracts3 105.2 95.3 89.3 96.0 82.0 97.0 95.0 100.0 96.0 93.0 86.0 90.0 11 Nonagricultural employment, total4 106.0 107.6 106.6 106.0 105.8 105.8 105.8 105.8 105.9 106.0 106.1 106.0 12 Goods-producing, total 102.5 101.0 96.4 95.9 95.6 95.5 95.2 95.2 95.2 95.2 95.3 94.9 13 Manufacturing, total 102.2 100.5 96.9 96.7 96.5 96.3 96.1 96.1 96.1 96.1 96.0 95.7 14 Manufacturing, production worker 102.3 100.0 96.0 95.9 95.8 95.6 95.5 95.6 95.7 95.7 95.7 95.4 15 Service-producing 107.1 109.7 109.9 109.2 109.1 109.1 109.1 109.2 109.3 109.5 109.6 109.6 16 Personal income, total 115.2 123.1 127.2 128.4 128.3 129.6 129.3 130.7r 131.3r 131.4 131.7 n.a. 17 Wages and salary disbursements 114.4 121.1 124.2 125.2 125.4 126.2 125.5 126.9 127.4 127.4 127.9 n.a. 18 Manufacturing 110.6 113.4 113.5 115.6 114.5 115.4 113.4 114.4 114.6 115.2 115.7 n.a. 19 Disposable personal income 115.2 123.4 128.2 129.7 129.5 130.9 130.8r 132.2r 133.5r 133.5 133.9 n.a. 20 Retail sales6 113.5 118.7 119.8 120.5 120.2r 120.3 123.lr 124.6r 123.1 123.5 124.0 124.6 Prices7 21 Consumer (1982-84= 100) 124.0 130.7 136.2 137.4 137.8 137.9 138.1 138.6 139.3 139.5 139.7 140.2 22 Producer finished goods (1982=100) 113.6 119.2 121.7 122.2 122.3 121.9 121.8 122.1r 122.0 122.2 123.1 123.7 1. A major revision of the industrial production index and the capacity 6. Based on U.S. Bureau of the Census data published in Survey of Current utilization rates was released in April 1990. See "Industrial Production: 1989 Business. Developments and Historical Revision," Federal Reserve Bulletin, vol. 76 (April 7. Based on data not seasonally adjusted, as published in Monthly Labor 1990), pp. 187-204. Review. Seasonally adjusted data for changes in the price indexes can be obtained 2. Ratio of index of production to index of capacity. Based on data from the from the Bureau of Labor Statistics, U.S. Department of Labor. Federal Reserve, DRI McGraw-Hill, U.S. Department of Commerce, and other sources. NOTE. Basic data (not indexes) for series mentioned in notes 4, 5,and 6, and 3. Index of dollar value of total construction contracts, including residential, indexes for series mentioned in notes 3 and 7 can also be found in the Survey of nonresidential, and heavy engineering, from McGraw-Hill Information Systems Current Business. Co., F.W. Dodge Division. Figures for industrial production for the latest month are preliminary, and many 4. Based on data in Employment and Earnings (U.S. Department of Labor). figures for the three months preceding the latest month have been revised. See Series covers employees only, excluding personnel in the armed forces. "Recent Developments in Industrial Capacity and Utilization," Federal Reserve 5. Based on data in Survey of Current Business (U.S. Department of Com- Bulletin, vol. 76 (June 1990), pp. 411-35. merce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A45 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data seasonally adjusted except as noted 1991 1992 CCaatteeggoorryy 11998899 11999900 11999911 Nov. Dec. Jan. Feb. Mar. Apr. May June HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 188,601 190,216 191,883 192,522 192,661 192,796 192,906 193,036 193,168 193,295 193,431 2 Labor force (including Armed Forces)1 126,077 126,954 127,421 127,444 127,675 128,083 128,309 128,604 128,830 129,148 129,525 3 Civilian labor force 123,869 124,787 125,303 125,374 112255,,661199 112266,,004466 112266,,228877 112266,,559900 112266,,883300 112277,,116600 112277,,554499 Employment 4 Nonagncultural industries2 114,142 114,728 114,644 113,500 113,545 113,951 113,811 114,155 114,465 114,478 114,322 5 Agriculture 3,199 3,186 3,233 3,272 3,183 33,,116666 33,,223322 33,,119944 33,,220099 33,,117788 33,,225522 Unemployment 6 Number 6,528 6,874 8,426 8,602 8,891 8,929 9,244 9,242 9,155 9,504 9,975 7 Rate (percent of civilian labor force) 5.3 5.5 6.7 6.9 7.1 7.1 7.3 7.3 7.2 7.5 7.8 8 Not in labor force 62,524 63,262 64,462 65,078 64,986 64,713 64,597 64,432 64,338 64,147 63,906 ESTABLISHMENT SURVEY DATA 9 Nonagncultural payroll employment3 108,329 109,971 108,975 108,139 108,154 108,100 108,142 108,200 108,377r 108,470r 108,353 10 Manufacturing 19,442 19,111 18,427 18,361 18,329 18,283 18,290 18,278 18,279r 18,271r 18,213 11 Mining 693 711 697 667 663 657 653 651 646 642r 636 12 Contract construction 5,187 5,136 4,696 4,585 4,592 4,587 4,582 4,603 4,605r 4,627r 4,595 13 Transportation and public utilities 5,644 5,826 5,823 5,761 5,758 5,746 5,753 5,754 5,746r 5,742r 5,752 14 Trade 25,770 25,843 25,412 25,161 25,133 25,128 25,146 25,089 25,170r 25,127r 25,091 15 Finance 6,695 6,739 6,707 6,666 6,670 6,665 6,673 6,675 6,682r 6,682r 6,677 16 Service 27,120 28,240 28,778 28,514 28,559 28,577 28,584 28,643 28,707r 28,820" 28,805 17 Government 17,779 18,322 18,434 18,424 18,450 18,457 18,461 18,507 18,542r 18,559 18,584 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; 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 • September 1992 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1991 1992 1991 1992 1991 1992 SSeerriieess Q3 Q4 Qlr Q2 Q3 Q4 Ql Q2 Q3 Q4 Qlr Q2 Output (1987=100) Capacity (percent of 1987 output) Capacity utilization rate (percent) 1 Total industry 108.1 107.9 107.1 108.3 135.3 136.2 137.0 137.7 79.9 79.3 78.2 78.7 2 Manufacturing 108.5 108.6 108.0 109.3 137.9 138.9 139.7 140.6 78.7 78.2 77.3 77.7 3 Primary processing 104.1 104.1 104.0 105.0 128.1 128.8 129.3 129.6 81.2 80.8 80.5 81.0 4 Advanced processing 110.6 110.7 109.9 111.2 142.4 143.5 144.6 145.6 77.7 77.1 76.0 76.4 5 Durable goods 108.1 107.7 106.6 108.3 141.8 142.8 143.7 144.4 76.2 75.4 74.2 74.9 6 Lumber and products 95.1 95.1 98.5 96.0 125.4 125.7 125.9 126.1 75.8 75.7 78.2 76.2 7 Primary metals 102.0 102.5 102.2 101.3 129.0 129.3 129.1 128.3 79.1 79.2 79.2 78.9 8 Iron and steel 100.3 103.2 103.8 101.4 134.0 134.5 134.1 132.7 74.8 76.7 77.4 76.4 9 Nonferrous 104.5 101.4 100.0 101.1 121.7 121.9 122.1 122.2 85.8 83.2 81.9 82.8 10 Nonelectrical machinery 123.5 122.7 122.1 125.5 161.2 162.8 164.3 165.9 76.6 75.4 74.3 75.7 11 Electrical machinery 111.2 110.4 110.5 111.5 145.3 146.6 147.9 149.1 76.5 75.3 74.7 74.7 12 Motor vehicles and parts 95.9 97.0 91.7 100.4 134.9 135.6 136.2 136.7 71.1 71.5 67.3 73.5 13 Aerospace and miscellaneous transportation equipment . 105.2 102.8 99.3 97.2 138.7 139.6 140.4 140.9 75.9 73.7 70.8 69.0 14 Nondurable goods 109.1 109.7 109.8 110.6 132.9 133.8 134.8 135.6 82.1 82.0 81.5 81.5 15 Textile mill products 104.1 104.1 104.3 106.1 118.0 118.3 118.8 119.2 88.2 88.0 87.9 88.9 16 Paper and products 107.6 107.4 105.8 106.2 117.9 118.7 119.3 119.9 91.2 90.5 88.7 88.6 17 Chemicals and products ...... 112.1 113.0 113.6 115.5 141.0 142.3 143.4 144.3 79.5 79.4 79.2 80.1 18 125.4 126.2 124.4 142.6 146.1 148.7 87.9 86.4 83.7 19 Petroleum products 108.1 107.1 107.7 110.4 121.4 121.4 121.4 121.5 89.0 88.2 88.7 90.8 7.0 Mining 101.8 99.7 97.9 98.5 114.6 114.7 114.7 114.7 88.9 87.0 85.3 85.9 ?1 Utilities 110.4 109.4 107.0 107.8 128.8 129.2 129.5 129.8 85.7 84.7 82.6 83.0 22 Electric 115.2 111.6 109.7 110.6 124.7 125.2 125.6 126.0 92.4 89.1 87.3 87.8 Previous cycle2 Latest cycle3 1991 1991 1992 High Low ' High Low June Nov. Dec. Jan. Feb. Mar.r Apr.r Mayr Junep Capacity utilization rate (percent) 1 Total industry 89.2 72.6 87.3 71.8 79.6 79.3 78.7 78.0 78.3 78.4 78.6 78.9 78.5 2 Manufacturing 88.9 70.8 87.3 70.0 78.3 78.2 77.7 77.0 77.4 77.5 77.7 78.0 77.6 3 Primary processing 92.2 68.9 89.7 66.8 79.9 80.8 80.2 80.2 80.4 80.8 81.0 81.1 80.9 4 Advanced processing 87.5 72.0 86.3 71.4 77.6 77.1 76.6 75.7 76.1 76.1 76.3 76.7 76.2 5 Durable goods 88.8 68.5 86.9 65.0 76.0 75.5 74.8 73.8 74.5 74.3 74.6 75.4 74.9 6 Lumber and products 90.1 62.2 87.6 60.9 77.2 76.7 75.7 77.4 78.5 78.8 77.1 76.7 74.8 7 Primary metals 100.6 66.2 102.4 46.8 74.9 80.0 78.3 79.2 79.5 78.7 78.4 78.5 79.9 8 Iron and steel 105.8 66.6 110.4 38.3 69.5 78.5 75.5 78.1 77.4 76.7 75.9 75.7 77.8 9 Nonferrous 92.9 61.3 90.5 62.2 83.5 82.5 82.6 81.0 82.9 81.8 82.3 82.9 83.1 10 Nonelectrical machinery 96.4 74.5 92.1 64.9 77.1 75.4 74.7 74.1 74.2 74.5 75.1 76.1 75.9 11 Electrical machinery 87.8 63.8 89.4 71.1 77.2 75.5 75.2 74.6 74.8 74.8 74.4 75.1 74.6 17, Motor vehicles and parts 93.4 51.1 93.0 44.5 68.9 70.7 69.6 64.0 68.9 69.1 72.2 75.1 73.1 13 Aerospace and miscellaneous transportation equipment. 77.0 66.6 81.1 66.9 76.8 73.9 72.3 71.2 70.9 70.2 69.3 69.0 68.6 14 Nondurable goods 87.9 71.8 87.0 76.9 81.4 81.9 81.6 81.4 81.3 81.7 81.8 81.5 81.3 15 Textile mill products 92.0 60.4 91.7 73.8 86.4 88.2 86.5 86.9 88.2 88.5 89.3 88.9 88.6 16 Paper and products 96.9 69.0 94.2 82.0 89.7 89.4 90.0 89.9 87.6 88.5 89.3 88.1 88.3 17 Chemicals and products 87.9 69.9 85.1 70.1 78.2 79.4 78.9 78.7 79.1 79.9 80.1 80.1 80.0 18 102.0 50.6 90.9 63.4 84.1 87.2 82.5 83.1 8833..00 85.0 85.3 19 Petroleum products 96.7 81.1 89.5 68.2 90.2 87.9 89.5 87.8 8888..11 90.3 90.9 90.5 91.1 20 Mining 94.4 88.4 96.6 80.6 89.2 86.8 86.2 85.3 85.7 84.9 86.3 86.2 85.0 71 Utilities 95.6 82.5 88.3 76.2 86.7 85.9 83.4 82.6 82.2 83.1 83.4 83.0 82.7 22 Electric 99.0 82.7 88.3 78.7 94.1 90.0 87.7 87.1 86.8 88.1 88.2 87.7 87.4 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 pro- 1991 Group por- avg. tion June July Aug. Sept Oct. Nov. Dec. Jan Feb. Mar.r Apr/ May1" Junep Index (1987 = 100) MAJOR MARKETS 1 Total index 100.0 107.1 107.3 108.1 108.0 108.4 108.4 108.1 107.4 106.6 107.2 107.6 108.1 108.6 108.2 2 Products 60.8 108.1 108.6 108.7 108.5 108.9 109.0 109.0 108.4 107.5 108.1 108.5 109.0 109.6 109.1 6 9 3 4 5 7 8 Fin C a o l D n p u s A r u r o a m u A d b t u e o l u e T r A c m t t o r g c u s o u s o o t t c o i n o a k v s d s n , e s u d s , c , m p c o t t r r o e o n o u r n t s d c a s u g u k l u m o s c m o t e s d e r s r 4 2 5 2 6 6 1 . . . . . . . 6 5 0 9 0 6 5 1 1 1 9 9 8 9 0 0 0 0 7 4 9 2 7 9 . . . . . . . 2 8 6 6 3 5 6 1 1 1 1 1 9 8 0 0 0 1 0 2 3 0 7 4 0 8 . . . . . . . 5 8 4 1 2 1 0 1 1 1 1 1 9 9 0 0 1 0 0 2 8 2 5 0 6 8 . . . . . . . 8 1 3 2 9 5 3 1 1 1 1 9 9 8 0 0 0 0 0 8 3 2 9 4 8 . . . . . . . 2 6 0 2 4 8 0 1 1 1 1 1 1 9 0 1 1 0 0 0 4 6 7 0 3 7 9 . . . . . . . 6 5 1 4 0 7 4 1 1 1 1 1 1 9 0 0 2 0 0 1 2 6 5 6 7 9 0 . . . . . . . 6 7 1 1 5 7 6 1 1 1 1 1 9 8 0 0 1 1 1 9 9 3 6 4 0 0 . . . . . . . 0 8 6 0 5 0 6 1 1 1 1 1 9 8 0 0 1 0 0 8 6 1 9 1 4 9 . . . . . . . 2 7 3 1 0 6 9 1 1 1 9 9 8 7 0 0 0 4 3 9 4 8 8 1 . . . . . . . 2 1 0 3 1 7 3 1 1 1 1 1 9 8 1 0 0 0 0 4 4 0 9 1 5 8 . . . . . . . 3 8 2 4 6 3 8 1 1 1 1 1 9 8 0 1 0 0 0 5 1 3 8 9 6 9 . . . . . . . 7 9 6 8 8 2 3 1 1 1 1 1 1 9 0 0 1 1 1 0 3 6 2 8 0 0 7 . . . . . . . 2 5 5 3 1 6 7 1 1 1 1 1 1 9 0 1 2 1 1 1 8 7 0 3 1 1 0 . . . . . . . 7 9 3 4 1 1 5 1 1 1 1 1 1 9 0 0 1 1 1 1 7 8 4 0 0 4 0 . . . . . . . 6 5 0 2 0 7 7 10 Auto parts and allied goods.. 1.0 109.3 112.2 108.6 111.3 111.8 109.1 110.5 108.2 109.1 112.6 115.5 112.5 114.0 115.4 11 Other 33..11 105.8 107.3 108.1 108.3 108.7 108.1 108.0 107.2 106.9 108.3 108.3 108.6 111.7 111.5 12 Appliances, A/C, and TV.... ..88 99.5 104.8 100.6 99.6 104.1 102.1 102.3 98.9 99.6 102.9 103.5 101.5 108.2 108.5 13 Carpeting and furniture .9 99.4 99.2 103.1 103.9 101.8 101.8 101.6 101.5 101.1 102.4 102.5 104.4 105.9 105.5 14 Miscellaneous home goods .. 1.4 113.4 113.8 115.5 115.9 115.6 115.6 115.2 115.5 114.7 115.0 114.7 115.3 117.3 117.0 15 Nondurable consumer goods 20.4 109.0 109.0 109.0 109.6 109.8 110.3 111.1 110.3 110.0 109.8 110.2 110.7 110.3 109.9 16 Foods and tobacco 9.1 106.7 106.9 106.9 107.1 107.8 107.8 108.1 107.0 107.3 107.4 107.8 107.7 107.1 106.5 17 Clothing 2.6 93.5 93.9 94.3 94.8 95.2 96.3 96.5 96.2 95.0 95.2 95.1 95.3 95.8 95.3 18 Chemical products 3.5 115.8 114.3 115.4 117.4 117.3 117.0 117.9 118.0 118.1 118.3 119.4 120.8 121.0 121.1 19 Paper products 2.5 123.6 123.3 122.1 122.6 124.8 125.6 126.4 126.8 126.8 124.7 124.6 125.1 123.9 123.3 20 Energy 2.7 108.5 110.0 109.4 109.5 106.7 108.5 112.0 109.3 106.8 106.4 107.0 108.9 108.0 108.2 21 Fuels .7 103.5 104.9 105.2 104.0 104.4 103.5 103.6 104.3 103.8 103.5 103.7 105.2 103.6 105.5 22 Residential utilities 2.0 110.4 111.9 110.9 111.5 107.6 110.3 115.1 111.2 108.0 107.5 108.2 110.2 109.6 109.2 23 Equipment 20.0 112.2 112.8 112.8 111.6 111.8 111.9 111.4 110.9 109.4 110.2 110.4 111.3 112.0 111.7 24 Business equipment 13.9 121.5 121.9 122.5 121.3 122.2 122.3 121.8 121.4 119.9 121.0 121.5 123.0 124.2 124.0 25 Information processing and related . 5.6 131.5 130.9 131.1 130.3 130.3 131.7 133.4 134.0 134.1 134.6 136.0 137.7 138.2 138.9 26 Office and computing 1.9 155.5 154.0 156.0 153.1 152.2 156.0 157.8 159.1 160.6 162.4 164.9 168.2 170.0 171.9 27 Industrial 4.0 108.0 109.1 109.0 108.6 108.2 106.8 104.2 102.3 100.7 101.3 101.3 101.7 103.6 103.5 28 Transit 2.5 126.8 128.0 131.2 126.7 132.7 133.1 130.5 129.5 124.2 129.2 128.9 132.0 133.8 132.0 29 Autos and trucks 1.2 88.6 90.8 96.6 86.2 99.3 101.1 96.5 96.1 84.9 94.7 95.0 101.3 105.6 101.7 30 Other 1.9 113.6 114.8 114.0 114.8 114.2 113.6 113.8 114.1 113.1 112.2 112.2 113.1 114.2 113.5 31 Defense and space equipment 5.4 91.1 91.0 90.0 89.8 89.1 89.1 88.8 88.1 86.7 86.2 85.6 84.6 84.3 83.9 32 Oil and gas well drilling .6 93.3 103.0 97.8 86.7 80.1 79.0 78.1 75.8 71.8 73.9 76.2 79.2 79.1 74.5 33 Manufactured homes .2 85.5 90.8 86.5 90.3 86.2 86.3 87.0 87.9 98.3 101.7 99.7 100.7 100.3 100.7 34 Intermediate products, total 14.7 103.4 104.0 104.0 104.4 104.3 104.1 103.9 103.8 103.9 104.0 104.4 104.0 104.6 104.2 35 Construction supplies 6.0 96.0 97.4 96.9 96.7 96.5 95.4 95.9 95.0 95.5 96.0 96.7 96.3 97.3 96.1 36 Business supplies 8.7 108.4 108.5 109.0 109.7 109.7 110.1 109.4 110.0 109.9 109.6 109.7 109.4 109.6 109.8 37 Materials 39.2 105.5 105.4 107.0 107.2 107.5 107.4 106.6 105.8 105.2 105.8 106.1 106.7 107.1 106.9 38 Durable goods materials 19.4 107.1 106.7 108.2 109.1 109.3 108.8 108.6 108.1 107.0 108.1 108.3 108.6 109.6 109.6 39 Durable consumer parts 4.2 96.4 97.3 100.2 100.1 101.3 101.6 100.5 97.0 95.3 97.1 97.9 99.1 101.6 101.5 40 Equipment parts 7.3 114.4 113.6 113.5 114.3 113.9 113.6 113.7 114.2 114.1 115.2 115.1 114.7 115.9 115.8 41 Other 7.9 106.0 105.3 107.5 109.0 109.3 108.2 108.3 108.4 106.7 107.5 107.5 107.9 108.1 108.2 42 Basic metal materials 2.8 106.0 105.9 108.8 110.2 109.5 107.7 108.1 108.1 105.1 107.3 106.3 106.1 105.9 107.2 43 Nondurable goods materials 9.0 105.9 104.9 108.1 107.8 108.3 109.6 107.7 107.1 107.3 107.1 108.9 109.3 109.2 109.1 44 Textile materials 1.2 97.0 98.1 101.4 101.5 99.5 101.8 99.9 98.5 98.9 101.5 102.0 103.3 102.8 102.6 45 Pulp and paper materials 1.9 106.9 106.9 110.3 108.2 110.4 112.0 108.6 109.6 107.4 106.8 107.8 109.2 107.5 108.3 46 Chemical materials 3.8 106.1 103.9 107.7 107.9 108.2 109.9 108.3 107.0 107.6 106.6 109.3 109.4 109.9 109.9 47 Other 2.1 109.7 108.6 110.5 110.9 111.3 111.2 110.1 109.7 111.2 111.2 112.7 112.6 113.0 112.1 48 Energy materials 10.9 102.3 103.4 104.1 103.3 103.6 103.1 102.2 100.4 100.4 100.5 100.1 101.3 100.9 100.1 49 Primary energy 7.2 102.4 104.7 106.2 104.5 103.8 102.8 100.9 100.4 100.5 100.6 98.2 99.8 99.4 98.3 50 Converted fuel materials 3.7 102.0 101.0 100.1 101.0 103.4 103.8 104.5 100.5 100.2 100.4 103.8 104.1 103.9 103.5 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.3 107.6 107.8 108.4 108.5 108.6 108.5 108.3 107.7 107.3 107.6 107.9 108.3 108.6 108.4 52 Total excluding motor vehicles and parts.. 95.3 107.9 108.1 108.6 108.8 108.8 108.8 108.7 108.0 107.6 107.8 108.2 108.6 108.9 108.6 53 Total excluding office and computing machines 97.5 105.8 106.2 106.9 106.8 107.3 107.2 106.8 106.1 105.3 105.8 106.1 106.6 107.1 106.6 54 Consumer goods excluding autos and trucks 24.5 108.6 108.9 108.9 109.5 109.8 109.9 110.7 109.8 109.6 109.7 110.2 110.5 110.6 110.3 55 Consumer goods excluding energy 23.3 107.4 107.7 108.1 108.3 109.7 109.8 109.8 109.1 108.3 109.1 109.6 110.2 110.7 110.2 56 Business equipment excluding autos and trucks 12.7 124.8 125.0 125.0 124.7 124.4 124.4 124.3 123.8 123.3 123.6 124.1 125.1 126.0 126.2 57 Business equipment excluding office and computing equipment 12.0 116.0 116.7 117.0 116.2 117.3 116.9 116.0 115.3 113.3 114.3 114.5 115.7 116.8 116.3 58 Materials excluding energy 28.4 106.7 106.1 108.2 108.7 109.0 109.1 108.3 107.8 107.1 107.8 108.5 108.8 109.5 109.4 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • September 1992 2.13—Continued 1987 1991 1992 GGrroouupp c S o I d C e p p o ro r- - a 1 v 99 g 1 . tion June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar.r Apr.r Mayr June" Index (1987 = 100) MAJOR INDUSTRIES 1 Total index 100.0 107.1 107.3 108.1 108.0 108.4 108.4 108.1 107.4 106.6 107.2 107.6 108.1 108.6 108.2 2 Manufacturing 84.4 107.4 107.5 108.3 108.4 108.9 109.0 108.6 108.1 107.4 108.1 108.5 108.9 109.6 109.3 3 Primary processing 26.7 102.4 102.1 103.7 104.1 104.4 104.7 104.1 103.5 103.6 103.9 104.5 104.9 105.1 105.0 4 Advanced processing 57.7 109.8 109.9 110.5 110.3 111.0 111.0 110.7 110.3 109.2 110.0 110.3 110.8 111.7 111.2 5 Durable goods 47.3 107.1 107.3 108.1 107.8 108.4 108.2 107.8 107.1 105.8 107.0 107.0 107.5 108.8 108.4 6 Lumber and products ... "'24 2.0 94.2 96.7 94.8 95.3 95.2 93.8 %.4 95.2 97.4 98.8 99.2 97.2 %.7 94.3 7 Furniture and fixtures ... 25 1.4 99.1 99.4 100.5 101.3 101.2 100.5 99.9 100.6 98.7 98.1 98.6 101.1 103.3 103.5 8 Clay, glass, and stone products 32 2.5 94.9 95.0 95.8 95.5 94.4 94.4 92.8 93.0 92.8 94.6 95.0 95.5 97.6 97.0 9 Primary metals 33 3.3 99.5 96.4 101.2 102.6 102.3 102.6 103.5 101.3 102.5 102.7 101.4 100.8 100.8 102.3 10 Iron and steel 331,2 1.9 98.0 92.9 99.5 100.6 100.8 102.4 105.6 101.7 105.0 103.7 102.5 101.0 100.4 102.8 11 Raw steel .1 97.3 94.0 102.6 102.4 100.9 101.3 99.1 97.6 103.3 102.7 98.8 100.0 98.6 102.6 12 Nonferrous 333333--66,,99 1.4 101.5 101.5 103.5 105.5 104.4 102.9 100.5 100.8 98.9 101.2 99.9 100.5 101.3 101.5 13 Fabricated metal products 34 5.4 100.4 99.8 100.9 101.4 101.9 101.9 101.8 101.2 99.7 100.5 100.0 100.6 102.1 101.5 14 Nonelectrical machinery. 35 8.6 123.5 123.4 123.9 123.3 123.1 123.5 122.8 121.9 121.4 121.9 122.9 124.1 126.2 126.2 15 Office and computing machines 357 2.5 155.5 154.0 156.0 153.0 152.2 155.9 157.8 159.1 160.5 162.4 164.9 168.2 170.0 172.0 16 Electrical machinery 36 8.6 110.1 111.5 111.0 111.5 111.0 109.8 110.7 110.6 110.0 110.7 110.9 110.7 112.1 111.6 17 Transportation equipment 37 9.8 98.6 99.7 101.3 99.0 102.2 102.4 99.7 98.0 93.8 %.8 %.5 98.0 99.8 98.4 18 Motor vehicles and parts 371 4.7 90.4 92.5 96.7 91.6 99.5 100.4 95.9 94.6 87.1 93.8 94.2 98.5 102.7 100.1 19 Autos and light trucks 2.3 89.4 91.2 97.3 89.1 101.8 103.2 97.6 95.5 83.5 92.9 93.7 101.1 106.5 103.0 20 Aerospace and miscellaneous transportation equipment.. 372-6,9 5.1 106.0 106.1 105.4 105.6 104.6 104.3 103.1 101.2 99.8 99.6 98.6 97.6 97.2 %.8 21 Instruments 38 3.3 118.2 117.3 116.5 116.9 118.1 118.2 118.7 119.0 118.3 118.6 118.6 118.8 119.0 119.2 22 Miscellaneous 39 1.2 119.3 119.8 121.6 123.2 121.5 120.6 120.7 121.0 121.2 120.0 120.0 118.9 118.0 118.1 23 Nondurable goods 37.2 107.9 107.6 108.6 109.0 109.6 110.1 109.6 109.5 109.5 109.6 110.4 110.7 110.5 110.5 24 Foods "20 8.8 108.6 108.6 108.3 108.7 109.5 109.4 110.1 109.6 109.2 109.6 110.2 109.9 109.4 108.9 25 Tobacco products 21 1.0 99.7 99.4 102.6 103.1 102.7 102.2 97.7 94.7 98.8 99.4 101.3 99.7 97.4 97.5 26 Textile mill products 22 1.8 100.5 101.7 104.2 104.7 103.2 105.5 104.4 102.5 103.1 104.7 105.3 106.4 106.0 105.8 27 Apparel products 23 2.4 96.2 96.2 97.8 98.3 98.1 98.7 98.8 99.0 97.5 97.7 97.8 98.0 99.0 98.6 28 Paper and products 26 3.6 105.1 105.3 108.1 106.5 108.0 109.0 106.1 107.0 107.1 104.6 105.8 107.0 105.6 106.0 29 Printing and publishing .. 27 6.4 112.3 111.2 111.9 112.3 113.3 114.4 114.2 114.5 114.8 114.4 113.8 114.1 114.4 114.3 30 Chemicals and products . 28 8.6 110.9 109.6 111.5 112.3 112.6 113.5 113.0 112.6 112.7 113.4 114.8 115.3 115.6 115.6 31 Petroleum products 29 1.3 107.5 109.6 108.3 107.3 108.6 106.0 106.7 108.6 106.6 106.9 109.7 110.4 110.0 110.7 32 Rubber and plastic products 30 3.0 110.0 110.5 110.1 112.6 113.8 113.2 112.6 113.0 113.2 114.0 115.4 116.5 116.2 116.5 33 Leather and products ... 31 .3 88.1 90.9 91.0 87.1 85.8 83.9 84.3 83.2 83.0 81.4 82.9 83.9 84.4 82.9 34 Mining 7.9 101.1 102.1 102.7 101.3 101.4 100.7 99.6 98.8 97.8 98.4 97.5 99.1 98.9 97.5 35 Metal "l0 .3 150.2 157.0 153.0 155.5 153.1 146.5 151.5 154.0 144.2 152.9 155.8 154.1 152.6 150.5 36 Coal 11,12 1.2 109.2 110.2 116.0 110.8 110.1 107.9 108.4 107.6 107.3 107.9 103.0 104.0 107.6 100.1 37 Oil and gas extraction 13 5.7 95.8 96.9 96.4 95.7 %.O %.O 94.1 93.0 92.4 92.7 91.9 94.2 93.0 92.9 38 Stone and earth minerals .. 14 .7 108.1 106.4 107.8 107.0 107.3 105.9 105.8 106.4 104.8 103.5 107.4 105.9 108.4 107.6 39 Utilities 7.6 109.2 111.5 110.9 110.7 109.7 109.4 111.0 107.9 106.8 106.4 107.7 108.1 107.7 107.4 40 Electric 49UPT 6.0 112.8 117.1 116.6 115.6 113.4 112.2 112.7 109.9 109.3 109.0 110.7 111.0 110.5 110.2 41 Gas 492,3PT 1.6 96.0 90.7 89.7 92.4 95.8 98.9 104.7 100.5 97.5 %.9 %.7 97.5 97.4 97.1 SPECIAL AGGREGATES 42 Manufacturing excluding motor vehicles and parts 79.8 108.4 108.3 109.0 109.3 109.5 109.5 109.3 108.9 108.6 108.9 109.3 109.5 110.0 109.8 43 Manufacturing excluding office and computing machines 82.0 106.0 106.1 106.9 107.0 107.6 107.6 107.1 106.6 105.8 106.5 106.8 107.2 107.8 107.4 Gross value (billi ons of 15> 82 dollars, annu IL rates) MAJOR MARKETS 44 Products, total 1,734.8 1,880.0 1,890.5 1,895.3 1,885.5 1,901.8 1,911.4 1,904.9 1,888.9 1,869.5 1,889.7 1,902.8 1,913.8 1,927.4 1,923.0 45 Final 1,350.9 1,481.8 1,490.5 1,4%. 1 1,484.5 1,501.5 1,510.0 1,504.1 1,488.0 1,468.7 1,490.8 1,501.5 1,515.1 1,526.7 1,523.9 46 Consumer goods 833.4 879.8 884.2 888.3 882.7 898.3 902.4 902.2 894.5 877.6 890.2 8%.2 904.1 908.1 904.0 47 Equipment 517.5 602.0 606.2 607.8 601.8 603.3 607.6 601.8 593.5 591.1 600.6 605.3 611.0 618.5 619.9 48 Intermediate 384.0 398.2 400.1 399.2 401.0 400.3 401.4 400.8 401.0 400.7 398.9 401.2 398.7 400.7 399.1 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 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar.' Apr.' May Private residential real estate activity (thousands of units, except as noted) NEW UNITS 1 Permits authorized 1,339 1,111 949 940 974 994 979 1,073 1,106 1,146 1,094 1,058 1,054 2 One-family 932 794 754 764 782 788 792 873 913 946 907 873 879 3 Two-or-more-family 407 317 195 176 192 206 187 200 193 200 187 185 175 4 Started 1,376 1,193 1,014 11,,005533 1,020 11,,008855 1,085 1,118 1,180 1,257 1,340 1,086 1,205 5 One-family 1,003 895 840 888811 864 888877 907 972 989 1,109 1,068 933 1,035 6 Two-or-more-family 373 298 174 172 156 198 178 146 191 148 272 153 170 7 Under construction at end of period .. 850 711 606 648 632 631 633 633 640 629 657 660 662 8 One-family 535 449 434 455 452 451 454 458 466 464 482 487 491 9 Two-or-more-family 315 262 173 193 180 180 179 175 174 165 175 173 171 10 Completed 1,423 1,308 1,091 1,051 1,193 1,073 1,021 1,021 1,043 1,097 1,127 1,052 1,187 11 One-family 1,026 966 838 821 870 879 824 851 838 908 975 888855 1,005 12 Two-or-more-family 396 342 253 230 323 194 197 170 205 189 152 116677 182 13 Mobile homes shipped 198 188 171 175 172 171 171 176 192 197 197 199 189 Merchant builder activity in one-family units 650 535 507 522 499 526 578 578 667 662277** 554466 553311 550011 15 Number for sale at end of period1 ... 365 321 283 292 292 289 286 283 281 269 277 275 274 Price of units sold (thousands of dollars) 120.4 122.3 120.0 120.8 120.0 122.6 118.5 122.0 120.0 117.2* 120.0 119.9 106.0 17 Average 148.3 149.0 147.0 141.8 147.3 147.4 141.7 143.0 144.2 144.8* 145.6 143.7 143.2 EXISTING UNITS (one-family) 18 Number sold 3,346 3,211 3,219 3,190 3,120 3,150 3,230 3,310 3,220 3,490 3,510 3,490 3,460 Price of units sold (thousands of dollars) 19 Median 92.9 95.2 99.7 102.0 100.3 99.1 97.9 100.3 102.4 102.8 104.0 103.3 102.5 20 Average 118.0 118.3 127.4 130.9 127.8 126.4 124.9 127.3 130.5 128.8 130.2 130.6 130.6 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 443,401r 442,066r 400,955' 404,842r 406,048* 406,114r 401,247* 398,736r 407,121r 411,767' 421,512 422,417 423,203 22 Private 345,327r 334,153* 290,707* 291,757* 293,632* 291,714* 288,345* 287,383* 292,540* 294,758* 301,142 304,137 301,641 23 Residential 196,551 182,856 157,837* 161,478* 164,164* 164,696* 164,491* 164,133* 169,548* 169,772* 172,660 177,453 177,004 24 Nonresidential, total 148,776r 151,297* 132,870* 130,279* 129,468* 127,018* 123,854* 123,250* 122,992* 124,986* 128,482 126,684 124,637 25 Industrial buildings 20,412 23,849 22,281* 21,423* 20,680* 21,119* 21,566* 22,411* 21,258* 21,651* 23,721 21.356 20,839 26 Commercial buildings 65,496 62,866 48,482* 47,171* 46,683* 44,301* 41,612* 40,898* 41,196* 41,591* 42,108 40,755 39,817 27 Other buildings 19,683 21,591 20,797* 20,362* 20,719* 21,162* 20,114* 20,480* 19,751* 20,630* 21,479 21.357 21,913 28 Public utilities and other 43,185r 42,991* 41,310* 41,323* 41,386* 40,436* 40,562* 39,461* 40,787* 41,114* 41,174 43,216 42,068 29 Public 98,071r 107,909* 110,247* 113,085* 112,416* 114,400* 112,901* 111,353* 114,581* 117,009* 120,370 118,280 121,562 30 Military 3,520 2,664* 1,837* 1,650* 2,681* 1,141* 1,790* 2,633* 2,039 2,206 2,548 2,329 2,668 31 Highway 28,837r 31,154* 29,918* 31,284* 29,416* 30,098* 29,594* 29,562* 30,221* 32,744* 30,895 31,689 33,297 32 Conservation and development... 5,009* 4,607* 4,958* 4,891* 4,433* 6,068* 6,611* 5,363* 5,480* 5,283* 6,197 5,806 5,170 33 Other 60,705r 69,484* 73,534* 75,260* 75,886* 77,093* 74,906* 73,795* 76,841* 76,776* 80,730 78,456 80,427 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 • September 1992 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data except as noted C m h o a n n t g h e s f e ro a m rli e 1 r 2 Change f ( r a o n m n u 3 a l m r o a n te th ) s earlier Change from 1 month earlier IIInnndddeeexxx llleeevvveeelll,,, IIIttteeemmm 1991 1992 1992 JJJuuunnneee 11999911 11999922 111999999222111 JJuunnee JJuunnee Sept. Dec. Mar. June Feb.r Mar/ Apr. May June CONSUMER PRICES2 (1982-84=100) 1 All items 4.7 3.1 3.0 3.2 3.5 2.6 .3 .5 .2 .1 .3 140.2 2 Food 3.9 .1 -2.3 2.7 1.5 -1.2 .3 .5 -.1 -.4 .1 137.4 3 Energy items 4.0 2.3 1.2 3.6 -6.9 12.5 -.9 .6 .4 .6 2.0 105.9 4 All items less food and energy 5.0 3.8 4.6 3.1 4.8 2.8 .4 .5 .3 .2 .2 146.9 5 Commodities 4.1 3.0 4.4 .6 5.3 2.1 .6 .5 .2 .4 .0 132.2 6 Services 5.3 4.2 4.6 4.3 4.8 2.9 .3 .5 .3 .1 .3 155.3 PRODUCER PRICES (1982=100) 7 Finished goods 3.5 1.5 1.3 1.0 .7 3.3 .2 .1 .2 .4 .2 123.7 8 Consumer foods .9 -1.8 -4.4 -1.0 .7 -1.9 1.0 -.4 -.3 -.4 .2 123.0 9 Consumer energy 16.0 3.1 3.7 -.5 -7.0 16.1 .5 .5 .5 .9 2.3 80.8 10 Other consumer goods 3.5 3.0 3.6 2.4 3.0 3.0 .0 .1 .4 .7 -.3 137.3 11 Capital equipment 3.3 1.9 1.3 1.9 1.9 2.5 .1 -.1 .2 .5 -.1 128.9 Intermediate materials 12 Excluding foods and feeds 1.3 .9 .4 -1.7 .0 5.0 .4 .2 .1 .4 .7 115.5 13 Excluding energy .7 .4 -1.3 .0 1.7 1.3 .2 .2 .0 .1 .2 121.9 Crude materials 14 Foods -7.1 -.1 -6.6 -4.9 12.6 .8 2.0 -.8 -1.4 .9 .8 107.3 15 Energy 11.1 2.7 -.5 5.3 -21.2 34.8 1.5 -2.6 2.7 2.5 2.3 79.2 16 Other -8.0 1.6 -4.9 -5.9 13.6 4.8 1.7 1.7 .2 .9 .2 128.8 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 Account 11998899 11999900 11999911 Ql Q2 Q3 Q4 Qlr 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 5,820.6 By source 3 2 Pe D rs u o r n a a b l le c o g n o s o u d m s ption expenditures 3, 4 5 5 1 9 7 . . 8 9 3. 4 7 6 4 5 2 . . 9 6 3,8 4 8 45 9 . . 2 1 3, 4 8 4 2 0 7 . . 7 7 3. 4 8 4 68 0 . . 5 0 3,9 4 1 52 6 . . 9 4 3,9 44 4 7 3 . . 3 7 4.0 4 2 65 0 . . 7 6 4 Nondurable goods 1,146.9 1.217.7 1,251.9 1,246.3 1,252.9 1,257.4 1.251.1 1.272.7 5 Services 1,911.2 2,059.0 2,191.9 2,140.7 2.175.6 2,206.1 2.245.2 2,282.1 6 Gross private domestic investment 837.6 802.6 726.7 709.3 708.8 740.9 747.9 728.4 7 Fixed investment 801.6 802.7 745.2 748.4 745.8 744.5 742.0 750.2 8 Nonresidential 570.7 587.0 550.1 560.0 554.6 546.8 539.0 541.7 9 Structures 193.1 198.7 174.6 184.0 180.0 169.0 165.2 165.8 10 Producers' durable equipment 377.6 388.3 375.5 375.9 374.7 377.8 373.8 375.9 11 Residential structures 230.9 215.7 195.1 188.4 191.2 197.7 203.0 208.5 12 Change in business inventories 36.0 .0 -18.5 -39.2 -37.1 -3.6 6.0 -21.8 13 Nonfarm 35.5 -2.0 -15.0 -35.0 -34.0 -3.2 12.1 -18.9 14 Net exports of goods and services -82.9 -74.4 -30.7 -36.8 -17.2 -37.3 -31.4 -24.2 15 Exports 504.9 550.4 591.3 565.9 589.8 597.0 612.5 617.7 16 Imports 587.8 624.8 622.0 602.7 607.0 634.3 643.8 641.9 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 1,095.9 18 Federal 401.4 424.9 445.1 451.5 452.1 444.9 432.0 440.6 19 State and local 570.0 618.0 642.4 637.3 640.4 644.2 647.5 655.3 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 5,842.5 21 Goods 2,062.1 2,167.6 2,211.7 2,208.6 2,223.2 2,214.1 2,200.8 2,243.1 22 Durable 892.9 934.7 926.5 916.4 939.5 929.4 920.5 936.1 23 Nondurable 1.169.2 1,233.0 1.285.2 1,292.1 1.283.7 1,284.7 1,280.3 1,307.1 24 Services 2,634.7 2,834.0 3,012.9 2,951.7 2,999.0 3,035.1 3,065.7 3,121.4 25 Structures 511.3 512.2 466.5 467.9 467.4 463.5 467.3 478.0 26 Change in business inventories 36.0 .0 -18.5 -39.2 -37.1 -3.6 6.0 -21.8 27 Durable goods 26.9 -7.0 -25.2 -43.5 -33.5 -9.2 -14.5 -27.0 28 Nondurable goods 9.1 7.0 6.7 4.3 -3.6 5.6 20.4 5.2 MEMO 4,836.9 4,884.9 4,848.8 4,824.0 4,840.7 4,862.7 4,868.0 4,900.9 29 Total GDP in 1987 dollars NATIONAL INCOME 4,244.7 4,459.6 4,542.2 4,489.8 4,530.8 4,559.8 4,588.3 4,662.6 30 Total 3,101.3 3,290.3 3,388.2 3,342.9 3,377.4 3.405.3 3,427.4 3,459.8 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 478.6 514.0 540.5 536.0 540.1 541.8 544.2 552.4 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 2,310.6 34 Other 515.5 551.4 580.0 571.8 577.2 582.9 588.1 596.8 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 . 347.0 373.2 379.7 364.2 380.0 382.5 392.0 403.6 39 Business and professional' 305.5 330.7 344.5 331.4 340.4 350.5 355.9 367.2 40 Farm1 41.4 42.5 35.1 32.8 39.6 32.0 36.1 36.4 41 Rental income of persons2 -7.9 -12.9 -12.7 -11.9 -11.7 -14.2 -13.1 -9.3 42 Corporate profits' 351.7 319.0 306.8 302.1 303.5 306.1 315.6 355.4 43 Profits before tax3 344.5 332.3 312.4 309.1 306.2 318.2 316.1 348.8 44 Inventory valuation adjustment -17.5 -14.2 3.1 6.7 9.9 -4.8 .7 -4.0 45 Capital consumption adjustment 24.7 .8 -8.7 -13.6 -12.6 -7.3 -1.3 10.6 46 Net interest 452.6 490.1 480.2 492.6 481.6 480.1 466.5 453.1 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. Survey of Current Business (U.S. Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics • September 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 Q1 Q2 Q3 Q4 QLR 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 4,958.9 7 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 723.8 745.4 738.7 733.4 735.2 742.3 744.1 738.2 4 Manufacturing 542.1 555.8 556.5 549.3 552.3 559.9 564.3 559.4 5 Distributive industries 607.5 634.6 641.2 635.1 642.0 644.0 643.9 648.2 6 Service industries 775.9 845.0 887.8 866.5 883.0 894.4 907.2 924.3 7 Government and government enterprises 478.6 514.0 540.6 535.8 540.5 541.8 544.2 552.4 8 Other labor income 253.7 274.0 290.6 284.2 288.5 292.8 297.0 301.1 9 Proprietors' income1 347.0 373.2 379.7 364.2 380.0 382.5 392.0 403.6 10 Business and professional1 305.5 330.7 344.5 331.4 340.4 350.5 355.9 367.2 11 Farm1 41.4 42.5 35.1 32.8 39.6 32.0 36.1 36.4 12 Rental income of persons -7.9 -12.9 -12.7 -11.9 -11.7 -14.2 -13.1 -9.3 N Dividends 119.8 124.8 128.5 128.7 127.4 128.7 129.4 129.4 14 Personal interest income 669.0 721.3 718.6 730.1 721.8 716.7 705.7 688.8 15 Transfer payments 624.4 684.9 759.5 737.2 751.5 763.7 785.4 827.4 16 Old-age survivors, disability, and health insurance benefits ... 325.1 352.0 380.0 373.1 377.2 381.7 388.1 403.4 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 4,958.9 19 LESS: Personal tax and nontax payments 591.7 621.0 616.1 617.1 613.6 615.1 618.4 611.1 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 4,347.8 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 4,131.2 22 EQUALS: Personal saving 166.1 205.8 219.3 212.6 228.8 212.5 223.4 216.5 MEMO Per capita (1987 dollars) 73 Gross domestic product 19,550.5 19,540.2 19,189.8 19,166.5 1199,,118877..77 19,220.9 19,184.8 1199,,226655..55 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 13,016.7 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 14,076.0 26 Saving rate (percent) 4.4 5.1 5.2 5.1 5.4 5.0 5.2 5.0 GROSS SAVING 27 Gross saving 743.4 710.9 715.2 746.9 713.1 697.2 703.8 675.4 28 Gross private saving 826.5 850.4 886.8 873.0 892.1 875.5 906.6 920.9 29 Personal saving 166.1 205.8 219.3 212.6 228.8 212.5 223.4 216.5 30 Undistributed corporate profits 85.8 49.9 44.6 45.0 43.4 39.4 50.6 79.2 31 Corporate inventory valuation adjustment -17.5 -14.2 3.1 6.7 9.9 -4.8 .7 -4.0 Capital consumption allowances 37 Corporate 350.5 365.5 383.6 380.1 383.2 384.6 386.6 384.5 33 Noncorporate 224.0 229.3 239.3 235.3 236.8 239.1 246.1 240.7 34 Government surplus, or deficit (-), national income and product accounts -83.0 -139.5 -171.6 -126.1 -179.1 -178.4 -202.9 -245.5 35 Federal -124.2 -165.3 -201.6 -146.4 -206.7 -210.2 -243.1 -284.4 36 State and local 41.1 25.7 30.0 20.4 27.6 31.8 40.3 38.9 37 Gross investment 740.7 719.0 734.3 764.9 729.6 719.1 723.4 709.7 38 Gross private domestic 837.6 802.6 726.7 709.3 708.8 740.9 747.9 728.4 39 Net foreign -96.8 -83.6 7.6 55.7 20.8 -21.8 -24.5 -18.7 40 Statistical discrepancy -2.7 8.1 19.0 18.0 16.5 22.0 19.6 34.2 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 1991 1992 Item 1989 1990 1991 Q1 Q2 Q3 Q4 Q1 1 Balance on current account.. -101,142 -90,428 -3,681 12,193 2,431 -11,087 -7,218 -5,303 2 Merchandise trade balance -115,668 -108,853 -73,436 -18,326 -16,397 -20,174 -18,539 -17,468 Merchandise exports 361,697 388,705 415,962 100,636 103,324 104,151 107,851 107,825 Merchandise imports -477,365 -497,558 -489,398 — 118,962 -119,721 -124,325 -126,390 -125,293 Military transactions, net -6,837 -7,818 -5,524 -2,564 -1,427 -995 -540 -228 Other service transactions, net 32,604 39,873 50,821 11,919 12,209 13,018 13,676 14,427 Investment income, net 14,366 19,287 16,430 6,965 3,931 3,076 2,458 4,710 U.S. government grants -10,773 -17,597 24,487 18,181 8,214 -1,986 78 -2,490 U.S. government pensions and other transfers -2,517 -2,945 -3,462 -794 -796 -793 -1,080 -856 Private remittances and other transfers -12,316 -12,374 -12,996 -3,188 -3,303 -3,233 -3,271 -3,398 11 Change in U.S. government assets other than official reserve assets, net (increase, -) 1,271 2,304 3,397 1,073 -420 3,180 -437 -112 12 Change in U.S. official reserve assets (increase, -). -25,293 -2,158 5,763 -353 1,014 3,878 1,226 -1,057 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -535 -192 -177 31 -190 6 -23 -172 15 Reserve position in International Monetary Fund. 471 731 -367 -341 72 -114 17 111 16 Foreign currencies -25,229 -2,697 6,307 -43 1,132 3,986 1,232 -996 17 Change in U.S. private \ abroad (increase, -). -90,923 -56,467 -71,378 -1,360 -7,644 -17,426 -44,947 1,724 18 Bank-reported -51,255 7,469 -4,753 17,909 -1,846 2,403 -23,219 21,708 19 Nonbank-reported claims 11,398 -2,477 5,526 2,251 2,304 -298 1,269 20 U.S. purchases of foreign securities, net. -22,070 -28,765 -45,017 -9,526 -11,783 -12,403 -11,305 ' -8,679 21 U.S. direct investments abroad, net -28,996 -32,694 -27,134 -11,994 3,681 -7,128 -11,692 -11,305 22 Change in foreign official assets in United States (increase, +) 8,489 33,908 18,407 5,650 -4,178 4,115 12,819 20,747 23 U.S. Treasury securities 149 29,576 15,815 1,125 -3,553 5,624 12,619 14,631 24 Other U.S. government obligations 1,383 667 1,301 -29 -219 474 1,075 540 25 Other U.S. government liabilities4 146 1,866 1,600 868 421 654 -344 -32 26 Other U.S. liabilities reported by U.S. banks3 4,976 3,385 -1,668 2,920 -942 -2,732 -914 5,495 27 Other foreign official assets5 1,835 -1,586 1,359 766 115 95 383 113 28 Change in foreign private assets in United States (increase, +).. 205,205 65,471 48,574 -13,490 7,137 18,818 36,110 -273 29 U.S. bank-reported liabilities 63,382 16,370 -13,678 -18,240 -27,411 8,508 23,465 -4,778 30 U.S. nonbank-reported liabilities 5,565 4,906 -405 -1,430 -1,275 1,575 725 31 Foreign private purchases of U.S. Treasury securities, net 29,618 -2,534 16,241 2,850 13,289 -1,306 1,408 "'-649 32 Foreign purchases of other U.S. securities, net 38,767 1,592 34,918 4,862 15,212 10,012 4,832 4,459 33 Foreign direct investments in United States, net 67,873 45,137 11,498 -1,532 7,322 29 5,680 695 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 35 Discrepancy 2,394 47,370 -1,078 -3,713 1,660 -1,478 2,447 -15,726 36 Due to seasonal adjustment 4,636 883 -6,137 613 3,967 37 Statistical discrepancy in recorded data before seasonal adjustment 2,394 47,370 -1,078 -8,349 777 4,659 1,835 -19,693 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -25,293 -2,158 5,763 -353 1,014 3,878 1,226 -1,057 39 Foreign official assets in United States excluding line 25 (increase, +) 8,343 32,042 16,807 4,782 -4,599 3,461 13,163 20,779 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) 10,738 1,707 -5,604 660 -2,699 -4,288 1,023 2,452 1. Seasonal factors not calculated for lines 12-16, 18-20, 22-34, and 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). brokers and dealers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • September 1992 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data seasonally adjusted 1991 1992 IItteemm 11998899 11999900 11999911 Nov. Dec. Jan. Feb. Mar. Apr.1 Mayp 1 Exports of domestic and foreign merchandise, (F.A.S. value), excluding grant-aid shipments 333666333,,,888111222 333999333,,,555999222 444222111,,,777333000 333777,,,222666999 333666,,,000555333 333555,,,444666777 333777,,,666555444 333777,,,000888555 333666,,,444000666 333555,,,444888555 2 General imports (customs value), including merchandise for immediate consumption plus entries 444777333,,,222111111 444999555,,,333111111 444888777,,,111222999 444111,,,333888222 444111,,,666777555 444111,,,222666666 444000,,,999444888 444222,,,666666888rrr 444333,,,444666999 444222,,,888666555 ---111000999,,,333999999 ---111000111,,,777111888 ---666555,,,333999999 ---444,,,111111333 ---555,,,666222222 ---555,,,777999999 ---333,,,222999444 ---555,,,555888444 ---777,,,000666333 ---777,,,333888000 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 1988 1989 1990 Dec. Jan. Feb. Mar. Apr. May 1 Total 47,802 74,609 83,316 77,719 75,868 75,088 74,657 74,712 74,587 2 Gold stock, including Exchange Stabilization Fund1 11,057 11,059 11,058 11,057 11,058 11,058 11,057 11,057 11,057 3 Special drawing rights '3 9,637 9,951 10,989 11,240 10,980 11,020 10,947 10,930 11,315 4 Reserve position in International Monetary Fund2 9,745 9,048 9,076 9,488 9,113 8,9% 8,994 8,968 9,175 5 Foreign currencies 17,363 44,551 52,193 45,934 44,717 44,014 43,659 43,757 43,040 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 million; 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 Dec. Jan. Feb. Mar. Apr. May June" 1 Deposits 347 589 369 968 321 264 262 206 217 219 Held in custody 2 U.S. Treasury securities2 232,547 224,911 278,499 281,107 293,958 297,834 300,277 303,413 307,562 307,337 3 Earmarked gold3 13,636 13,456 13,387 13,303 13,303 13,305 13,304 13,304 13,295 13,268 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 Nov. Dec. Jan. Feb. Mar. Apr. May All foreign countries 1 Total, all currencies 505,595 545,366 556,925 550,777 548,901 547,704 550,358 562,142 549,477 2 Claims on United States 169,111 198,835 188,4% 177,828 176,301 180,052 178,026 193,228 177,761 3 Parent bank 129,856 157,092 148,837 137,165 137,509 142,277 142,019 156,923 143,559 4 Other banks in United States . 14,918 17,042 13,2% 13,543 12,884 11,675 10,837 11,612 9,993 5 Nonbanks 24,337 24,701 26,363 27,120 25,908 26,100 25,170 24,693 24,209 6 Claims on foreigners 299,728 300,575 312,449 304,212 303,934 297,400 301,900 300,026 302,766 7 Other branches of parent bank 107,179 113,810 135,003 107,343 111,729 103,456 108,052 112,326 111,369 8 Banks 96,932 90,703 72,602 84,980 81,970 82,332 83,904 79,311 83,412 9 Public borrowers 17,163 16,456 17,555 18,940 18,652 18,223 18,421 18,328 18,743 10 Nonbank foreigners 78,454 79,606 87,289 92,949 91,583 93,389 91,523 90,061 89,242 11 Other assets 36,756 45,956 55,980 68,737 68,666 70,252 70,432 68,888 68,950 12 Total payable in U.S. dollars 357,573 382,498 379,479 365,143 363,941 359,487 365,000 380,907 364,367 13 Claims on United States 163,456 191,184 180,174 171,701 169,662 173,827 172,377 187,538 173,106 14 Parent bank 126,929 152,294 142,962 133,984 133,476 138,686 138,754 153,653 141,033 15 Other banks in United States . 14,167 16,386 12,513 12,668 12,025 10,924 10,006 10,956 9,255 16 Nonbanks 22,360 22,504 24,699 25,049 24,161 24,217 23,617 22,929 22,818 17 Claims on foreigners 177,685 169,690 174,451 165,653 167,010 157,338 163,623 163,877 162,817 18 Other branches of parent bank 80,736 82,949 95,298 75,986 78,114 70,637 75,087 78,067 75,342 19 Banks 54,884 48,3% 36,440 42,808 41,635 39,964 42,488 39,671 41,100 20 Public borrowers 12,131 10,961 12,298 13,671 13,685 13,202 13,136 13,217 12,994 21 Nonbank foreigners 29,934 27,384 30,415 33,188 33,576 33,535 32,912 32,922 33,381 22 Other assets 16,432 21,624 24,854 27,789 27,269 28,322 29,000 29,492 28,444 United Kingdom 23 Total, all currencies 156,835 161,947 184,818 174,648 175,599 174,467 172,479 169,275 170,775 24 Claims on United States 40,089 39,212 45,560 32,531 35,257 36,620 34,655 37,015 35,451 25 Parent bank 34,243 35,847 42,413 28,901 31,931 32,765 31,302 34,048 32,379 26 Other banks in United States . 1,123 1,058 792 1,259 1,267 1,392 1,211 1,158 1,228 27 Nonbanks 4,723 2,307 2,355 2,371 2,059 2,463 2,142 1,809 1,844 28 Claims on foreigners 106,388 107,657 115,536 111,323 109,692 108,046 107,645 101,627 104,467 29 Other branches of parent bank 35,625 37,728 46,367 36,637 35,735 33,357 33,924 33,599 34,061 30 Banks 36,765 36,159 31,604 36,709 36,394 36,537 37,349 33,499 36,126 31 Public borrowers 4,019 3,293 3,860 3,512 3,306 3,377 3,144 3,060 3,108 32 Nonbank foreigners 29,979 30,477 33,705 34,465 34,257 34,775 33,228 31,469 31,172 33 Other assets 10,358 15,078 23,722 30,794 30,650 29,801 30,179 30,633 30.857 34 Total payable in U.S. dollars 103,503 103,208 116,762 103,591 105,974 103,833 102,341 102,283 102,285 35 Claims on United States 38,012 36,404 41,259 30,054 32,418 33,801 31,788 34,464 33,298 36 Parent bank 33,252 34,329 39,609 27,689 30,370 31,239 29,724 32,645 31,022 37 Other banks in United States . 964 843 334 894 822 901 678 725 853 38 Nonbanks 3,7% 1,232 1,316 1,471 1,226 1,661 1,386 1,094 1,423 39 Claims on foreigners 60,472 59,062 63,701 59,200 58,791 55,281 55,985 52,306 54,129 40 Other branches of parent bank 28,474 29,872 37,142 29,210 28,667 26,827 26,747 25,933 25,922 41 Banks 18,494 16,579 13,135 15,480 15,219 14,106 15,438 13,154 14,829 42 Public borrowers 2,840 2,371 3,143 2,848 2,853 2,707 2,657 2,623 2,545 43 Nonbank foreigners 10,664 10,240 10,281 11,662 12,052 11,641 11,143 10,5% 10,833 44 Other assets 5,019 7,742 11,802 14,337 14,765 14,751 14,568 15,513 14.858 Bahamas and Cayman Islands 45 Total, all currencies 170,639 176,006 162,316 170,846 168,326 167,648 168,972 175,687 162,490 46 Claims on United States 105,320 124,205 112,989 118,164 115,244 ? 16,488 115,400 122,556 111,849 47 Parent bank 73,409 87,882 77,873 83,348 81,520 84,506 84,499 91,343 82,592 48 Other banks in United States . 13,145 15,071 11,869 11,457 10,907 9,626 8,%9 9,809 8,115 49 Nonbanks 18,766 21,252 23,247 23,359 22,817 22,356 21,932 21,404 21,142 50 Claims on foreigners 58,393 44,168 41,356 44,177 45,229 42,866 44,033 44,285 41,779 51 Other branches of parent bank 17,954 11,309 13,416 10,268 11,098 10,549 11,528 11,278 10,156 52 Banks 28,268 22,611 16,310 19,865 20,174 18,998 19,311 19,645 18,256 53 Public borrowers 5,830 5,217 5,807 7,363 7,161 6,600 6,545 6,599 6,332 54 Nonbank foreigners 6,341 5,031 5,823 6,681 6,7% 6,719 6,649 6,763 7,035 55 Other assets 6,926 7,633 7,971 8,505 7,853 8,294 9,539 8,846 8,862 56 Total payable in U.S. dollars 163,518 170,780 158,390 166,582 163,771 163,078 164,548 171,114 157,815 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 • September 1992 3.14—Continued 1991 1992 LLiiaabbiilliittiieess Nov. Dec. Jan. Feb. Mar. Apr. May All foreign countries 57 Total, all currencies 505,595 545,366 556,925 550,777 548,901 547,704 550,358 562,142 549,477 568,991 58 Negotiable certificates of deposit (CDs) .. 28,511 23,500 18,060 18,334 16,284 16,156 15,988 14,498r 12,749" 14,008 59 To United States 185,577 197,239 189,412 188,686 198,121 189,083 190,885 210,151r l%,262r 198,060 60 Parent bank 114,720 138,412 138,748 131,383 136,431 127,532 123,775 142,551 138,131*" 136,001 61 Other banks in United States 14,737 11,704 7,463 12,892 13,260 13,683 12,674 14,137 15,075 13,944 62 Nonbanks 56,120 47,123 43,201 44,411 48,430 47,868 54,436 53,463r 43,056r 48,115 63 To foreigners 270,923 296,850 311,668 298,152 288,254 295,861 299,046 292,659 2%,580" 308,394 64 Other branches of parent bank 111,267 119,591 139,113 109,085 112,033 105,873 108,744 113,314 111,968 115,235 65 Banks 72,842 76,452 58,986 67,945 63,097 72,407 71,346 63,060 65,055" 68,391 66 Official institutions 15,183 16,750 14,791 19,394 15,5% 16,704 16,972 15,697 16,083 19,465 67 Nonbank foreigners 71,631 84,057 98,778 101,728 97,528 100,877 101,984 100,588 103,474 105,303 68 Other liabilities 20,584 27,777 37,785 45,605 46,242 46,604 44,439 44,834 43,886 48,529 69 Total payable in U.S. dollars 367,483 396,613 383,522 369,515 370,561 360,322 363,582 380,178 365,539 377,755 70 Negotiable CDs 24,045 19,619 14,094 13,813 11,909 11,442 11,515 10,278 8,462 9,641 71 To United States 173,190 187,286 175,654 176,254 185,286 176,635 179,178 198,143 185,160" 186,601 72 Parent bank 107,150 132,563 130,510 124,625 129,669 121,098 117,272 135,761 131,702" 129,813 73 Other banks in United States 13,468 10,519 6,052 11,436 11,707 12,191 11,532 13,036 14,217 12,840 74 Nonbanks 52,572 44,204 39,092 40,193 43,910 43,346 50,374 49,346 39,241 43,948 75 To foreigners 160,766 176,460 179,002 164,275 158,993 156,339 156,744 156,216 157,139" 162,011 76 Other branches of parent bank 84,021 87,636 98,128 76,224 76,601 70,839 74,466 77,492 75,780 77,000 77 Banks 28,493 30,537 20,251 24,501 24,156 25,781 23,665 21,910 22,569" 24,063 78 Official institutions 8,224 9,873 7,921 13,375 10,304 10,555 10,652 9,625 10,413 13,102 79 Nonbank foreigners 40,028 48,414 52,702 50,175 47,932 49,164 47,%1 47,189 48,377 47,846 80 Other liabilities 9,482 13,248 14,772 15,173 14,373 15,906 16,145 15,541 14,778 19,502 United Kingdom 81 Total, all currencies 156,835 161,947 184,818 174,648 175,599 174,467 172,479 169,275 170,775 179,939 82 Negotiable CDs 24,528 20,056 14,256 13,506 11,333 10,993 10,581 9,677r 7,324" 8,458 83 To United States 36,784 36,036 39,928 30,560 37,720 31,018 30,631 35,364r 36,610" 33,236 84 Parent bank 27,849 29,726 31,806 22,629 29,834 23,112 23,464 27,937 29,317 25,637 85 Other banks in United States 2,037 1,256 1,505 1,934 1,438 2,325 1,891 1,201 2,011 1,638 86 Nonbanks 6,898 5,054 6,617 5,997 6,448 5,581 5,276 6,226r 5,282" 5,%1 87 To foreigners 86,026 92,307 108,531 102,299 98,167 104,868 104,432 %,702 99,804 106,603 88 Other branches of parent bank 26,812 27,397 36,709 26,977 30,054 27,561 27,864 27,937 28,239 30,429 89 Banks 30,609 29,780 25,126 27,959 25,541 31,929 30,686 26,017 27,046 27,549 90 Official institutions 7,873 8,551 8,361 12,628 9,670 10,432 10,685 9,277 9,539 12,732 91 Nonbank foreigners 20,732 26,579 38,335 34,735 32,902 34,946 35,197 33,471 34,980 35,893 92 Other liabilities 9,497 13,548 22,103 28,283 28,379 27,588 26,835 27,532 27,037 31,642 93 Total payable in U.S. dollars 105,907 108,178 116,094 104,433 108,755 103,232 100,882 101,602 100,799 107,698 94 Negotiable CDs 22,063 18,143 12,710 12,042 10,076 9,236 9,061 8,562 6,136 6,%7 95 To United States 32,588 33,056 34,697 25,517 33,003 26,419 26,261 30,993 32,510 28,936 % Parent bank 26,404 28,812 29,955 20,923 28,260 21,663 21,788 26,272 27,904 24,435 97 Other banks in United States 1,752 1,065 1,156 1,481 1,177 1,954 1,639 1,032 1,796 1,184 98 Nonbanks 4,432 3,179 3,586 3,113 3,566 2,802 2,834 3,689 2,810 3,317 99 To foreigners 47,083 50,517 60,014 57,527 56,626 57,522 55,216 52,059 52,625 57,489 100 Other branches of parent bank 18,561 18,384 25,957 18,678 20,800 18,498 18,863 18,792 18,136 19,497 101 Banks 13,407 12,244 9,488 10,542 11,069 13,061 11,188 9,861 9,435 10,799 102 Official institutions 4,348 5,454 4,692 9,995 7,156 7,580 7,698 6,628 6,998 9,915 103 Nonbank foreigners 10,767 14,435 19,877 18,312 17,601 18,383 17,467 16,778 18,056 17,278 104 Other liabilities 4,173 6,462 8,673 9,347 9,050 10,055 10,344 9,988 9,528 14,306 Bahamas and Cayman Islands 105 Total, all currencies 170,639 176,006 162,316 170,846 168,326 167,648 168,972 175,687 162,490 166,300 106 Negotiable CDs 953 678 646 1,034 1,173 1,382 1,709 932 1,538 1,644 107 To United States 122,332 124,859 114,738 129,781 129,872 130,285 131,009 138,990 124,232" 128,054 108 Parent bank 62,894 75,188 74,941 83,057 79,394 79,585 73,744 82,050 75,944" 76,585 109 Other banks in United States 11,494 8,883 4,526 9,728 10,231 10,045 9,733 11,696 12,060 11,085 110 Nonbanks 47,944 40,788 35,271 36,996 40,247 40,655 47,532 45,244 36,228 40,384 Ill To foreigners 45,161 47,382 44,444 37,857 35,200 34,106 34,425 34,002 34,899" 35,021 112 Other branches of parent bank 23,686 23,414 24,715 19,555 17,388 16,590 17,050 17,100 16,933 16,842 113 Banks 8,336 8,823 5,588 5,984 5,662 5,497 5,054 5,139 6,009" 6,346 114 Official institutions 1,074 1,097 622 646 572 450 490 536 736 731 115 Nonbank foreigners 12,065 14,048 13,519 11,672 11,578 11,569 11,831 11,227 11,221 11,102 116 Other liabilities 2,193 3,087 2,488 2,174 2,081 1,875 1,829 1,763 1,821 1,581 117 Total payable in U.S. dollars 162,950 171,250 157,132 166,157 163,603 162,637 164,241 171,049 157,866 161,441 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 Nov. Dec. Jan.r Feb.r Mar.r Apr/ Mayp 1 Total1 312,477 344,529 362,375 360,495 372,277 375,249 381,589 385,595 394,286 By type 2 Liabilities reported by banks in the United States 36,496 39,880 42,935 38,361 41,427 42,507 43,895 44,537 47,108 3 U.S. Treasury bills and certificates3 76,985 79,424 92,855 92,692 92,711 94,731 102,143 102,968 111,224 U.S. Treasury bonds and notes 4 Marketable 179,269 202,487 201,156 203,677 212,364 212,171 209,035 210,747 207,948 5 Nonmarketable 568 4,491 4,827 4,858 4,892 4,922 4,956 4,989 5,021 6 U.S. securities other than U.S. Treasury securities5 19,159 18,247 20,602 20,907 20,883 20,918 21,560 22,354 22,985 By area 7 Western Europe 132,849 167,191 172,544 168,316 173,122 173,129 178,003 179,199 184,988 8 Canada 9,482 8,671 9,578 7,460 7,642 8,251 7,016 7,855 9,347 9 Latin America and Caribbean 9,313 21,184 31,491 33,554 34,659 35,658 38,015 39,130 39,651 10 Asia 153,338 138,0% 137,395 139,463 146,127 147,830 148,688 148,646 149,157 11 Africa 1,030 1,434 1,383 2,092 2,409 2,408 2,011 2,392 2,792 12 Other countries 6,469 7,955 9,982 9,608 8,316 7,971 7,854 8,371 8,34° 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 1991r 1992 IItteemm 11998888 11998899 11999900 June Sept. Dec. Mar/ 1 Banks' liabilities 77774444,,,,999988880000 66667777,,,,888833335555 77770000,,,,444477777777 55559999,,,,222266669999 66663333,,,,111133330000 77774444,,,,999922221111 66667777,,,,666600002222 66668888,,,,999988883333 66665555,,,,111122227777 66666666,,,,7777%%%% 66660000,,,,444477772222 66663333,,,,444477779999 77773333,,,,000066665555 66660000,,,,666600004444 22225555,,,,111100000000 22220000,,,,444499991111 22229999,,,,666677772222 22227777,,,,777722220000 22229999,,,,555566667777 22226666,,,,222200001111 22223333,,,,999988885555 44443333,,,,888888884444 44444444,,,,666633336666 33337777,,,,111122224444 33332222,,,,777755551111 33333333,,,,999911112222 44446666,,,,888866664444 33336666,,,,666611119999 5 Claims of banks' domestic customers2 333366664444 3333,,,,555500007777 6666,,,,333300009999 1111,,,,666644448888 2222,,,,333344448888 3333,,,,222277774444 2222,,,,888866662222 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 • September 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 Holder and type of liability 11998899 11999900 11999911 Nov. Dec. Jan. Feb. Mar. Apr. May" 1 All foreigners 736,878 759,634 755,673r 759,504r 755,673r 751,877" 755,059" 772,577" 767,963" 780,439 2 Banks' own liabilities 577,498 577,229 574,395r 576,333r 574,395r 571,682" 574,213" 581,590" 577,128" 581,237 3 Demand deposits 22,032 21,723 20,320r 21,630 20,320" 19,309 18,906 19,286 19,045 19,679 4 Time deposits 168,780 168,017 159,844 154,290" 159,844 148,133" 145,836" 147,865" 153,400" 149,607 5 Other. 67,823 65,822 66,001r 75,679 66,001r 72,948" 75,861 75,321 75,870" 82,044 6 Own foreign offices4 318,864 321,667 328,230r 324,734r 328,230" 331,292" 333,610" 339,118" 328,813" 329,907 7 Banks' custody liabilities3 159,380 182,405 181,278r 183,171r 181,278" 180,195" 180,846 190,987 190,835 199,202 8 U.S. Treasury bills and certificates 91,100 %,7% 110,734 110,938 110,734 110,000 112,172 119,882 120,924 129,312 9 Other negotiable and readily transferable instruments 19,526 17,578 18,664 17,206 18,664 17,745 16,894 18,429 17,797 17,901 10 Other 48,754 68,031 51,880" 55,027r 51,880" 52,450" 51,780 52,676 52,114 51,989 11 Nonmonetary international and regional organizations 4,894 5,918 8,947 8,721 8,947 9,895 10,615 10,469 9,947 10,146 12 Banks' own liabilities 3,279 4,540 6,793 6,828 6,793 8,112 8,879 8,567 8,064 8,191 13 Demand deposits 96 36 43 24 43 39 35 144 29 46 14 Time deposits2 927 1,050 2,764 2,392 2,764 2,049 2,058 1,442 1,642 1,831 15 Other. 2,255 3,455 3,986 4,412 3,986 6,024 6,786 6,981 6,393 6,314 16 Banks' custody liabilities5 1,616 1,378 2,154 1,893 2,154 1,783 1,736 1,902 1,883 1,955 17 U.S. Treasury bills and certificates6 197 364 1,730 1,530 1,730 1,328 1,317 1,225 1,442 1,461 18 Other negotiable and readily transferable instruments 1,417 1,014 424 363 424 455 417 637 441 494 19 Other 2 0 0 0 0 0 2 40 0 0 20 Official institutions9 113,481 119,303 131,053 135,790r 131,053 134,138" 137,238 146,038" 147,505" 158,332 21 Banks' own liabilities 31,108 34,910 34,376 39,110r 34,376 37,917" 38,623 39,795" 40,584" 43,204 22 Demand deposits 2,1% 1,924 2,642 1,621 2,642 1,480 1,297 1,342 1,360 1,321 23 Time deposits2 10,495 14,359 16,474 13,295r 16,474 16,307 14,655 17,687" 18,607" 18,893 24 Other. 18,417 18,628 15,260 24,194 15,260 20,130" 22,671 20,766 20,617" 22,990 25 Banks' custody liabilities5 82,373 84,393 %,677 %,680 %,677 96,221 98,615 106,243 106,921 115,128 26 U.S. Treasury bills and certificates 76,985 79,424 92,692 92,855 92,692 92,711 94,731 102,143 102,968 111,224 27 Other negotiable and readily transferable instruments 5,028 4,766 3,879 3,611 3,879 3,422 3,697 4,019 3,812 3,717 28 Other 361 203 106 214 106 88 187 81 141 187 29 Banks10 515,275 540,805 521,576r 522,727r 521,576" 516,474" 517,477" 526,849" 520,805" 526,351 30 Banks' own liabilities 454,273 458,470 458,329" 456,463r 458,329" 451,905" 453,730" 460,663" 455,050" 459,821 31 Unaffiliated foreign banks 135,409 136,802 130,099" 131,729" 130,099" 120,613" 120,120" 121,545" 126,237 129,914 32 Demand deposits 10,279 10,053 8,63 r 11,3% 8,631" 8,807 8,369 8,543 8,753 9,299 33 Time deposits 90,557 88,541 82,936 80,049" 82,936 73,938" 74,535" 74,231" 79,698" 77,107 34 Other. 34,573 38,208 38,532r 40,284 38,532" 37,868" 37,216 38,771 37,786" 43,508 35 Own foreign offices4 318,864 321,667 328,230" 324,734r 328,230" 331,292" 333,610" 339,118" 328,813" 329,907 36 Banks' custody liabilities5 61,002 82,335 63,247r 66,264r 63,247" 64,569" 63,747 66,186 65,755" 66,530 37 U.S. Treasury bills and certificates6 9,367 10,669 7,471 7,855 7,471 7,713 7,733 8,344 8,410 8,946 38 Other negotiable and readily transferable instruments 5,124 5,341 5,694 5,852 5,694 5,853 5,999 6,733 7,127" 7,038 39 Other 46,510 66,325 50,082r 52,557r 50,082" 51,003" 50,015 51,109 50,218 50,546 40 Other foreigners 103,228 93,608 94,097 92,266r 94,097 91,370" 89,729 89,221" 89,706" 85,610 41 Banks' own liabilities 88,839 79,309 74,897 73,932r 74,897 73,748" 72,981 72,565" 73,430" 70,021 42 Demand deposits 9,460 9,711 9,004 8,589 9,004 8,983 9,205 9,257 8,903 9,013 43 Time deposits 66,801 64,067 57,670 58,554" 57,670 55,839 54,588 54,505" 53,453" 51,776 44 Other. 12,577 5,530 8,223 6,789 8,223 8,926" 9,188 8,803 11,074 9,232 45 Banks' custody liabilities5 14,389 14,299 19,200 18,334 19,200 17,622 16,748 16,656 16,276" 15,589 46 U.S. Treasury bills and certificates6 4,551 6,339 8,841 8,698 8,841 8,248 8,391 8,170 8,104 7,681 47 Other negotiable and readily transferable instruments 7,958 6,457 8,667 7,380 8,667 8,015 6,781 7,040 6,417" 6,652 48 Other 1,880 1,503 1,692 2,256 1,692 1,359 1,576 1,446 1,755 1,256 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 7,203 7,073 7,456 7,137 7,456 7,855 8,049 8,110 7,624 7,579 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 Area and country 11998899 11999900 11999911 Nov. Dec. Jan. Feb. Mar. Apr. MayP 1 Total 736,878 759,634 755,673" 759,504r 755,673r 751,877r 755,059r 772,577r 767,963r 780,439 2 Foreign countries 731,984 753,716 746,726r 750,783r 746,726" 741,982r 744,444r 762,108' 758,016r 770,293 3 Europe 237,501 254,452 249,010" 251,682r 249,010" 244,530r 246,160" 255,959 262,195r 270,730 4 5 A Be u l s g tr i i u a m -Luxembourg 1 1 0 , , 2 6 3 4 3 8 12 1 , , 3 2 8 2 2 9 13 1 , , 3 1 3 9 7 3 14 1 , , 6 3 0 1 0 3 1 1 3, , 3 1 3 9 7 3 13 1 , , 3 04 4 1 8 15 1 , , 1 0 5 3 6 0 16 1 , , 2 23 5 0 3 1 1 5 , , 2 8 1 1 9 8 " r 1 1 7 , , 3 3 3 4 7 6 6 Denmark 1,415 1,399 937 1,143 937 991 997 892 %1 1,331 7 8 9 G F F i r e n a r l n m a c n a e d n y 26 7 , , 9 5 5 0 7 7 3 8 0 3 7 0 , , 4 9 6 8 4 0 5 6 2 3 8 1 1 , , , 6 8 3 1 0 4 9 8 1 " 3 8 1 1 , , , 0 0 0 3 9 8 2 5 0 31 8 1 , , , 6 8 3 1 0 4 9 8 1 " 2 7 9 , , 8 1 8 8 5 9 6 3 9 r r 2 9 6 , , 5 4 6 1 4 2 9 4 3 r 2 9 6 1 , , , 5 0 0 5 2 1 6 6 4 2 9 7 1 , , , 2 6 0 5 7 0 7 5 2 r r 26 8 , , 9 3 7 9 1 6 5 9 4 10 Greece 1,028 934 765 890 765 873 895 1,058 1,134 1,254 11 Italy 16,169 17,735 13,541 13,288 13,541 10,798 9,554 9,915 10,035 10,055 12 Netherlands 6,613 5,350 7,161 6,124 7,161 7,%5 7,322 9,250 9,352 9,572 13 Norway 2,401 2,357 1,866 1,452 1,866 1,922 1,398 1,286 899 1,429 14 Portugal 2,418 2,958 2,184 2,223 2,184 1,114 2,540 2,071 2,217 2,391 15 Spain 4,364 7,544 11,391 11,148 11,391 9,371 10,653 13,504 14,435 14,216 16 Sweden 1,491 1,837 2,222 1,105 2,222 1,887 2,544 2,106 2,888 2,007 17 Switzerland 34,4% 36,690 37,236 36,711 37,236 35,658r 34,709 37,103 33,603 36,662 18 Turkey 1,818 1,169 1,598 1,836 1,598 1,476 1,677 1,600 1,362 1,691 19 United Kingdom 102,362 109,555 100,257r 100,083r 100,257r 102,334r 102,160 103,285 108,002 110,335 20 Yugoslavia . 1,474 928 622 544 622 493 529 504 569 524 21 Other Western Europe11 13,563 11,689 9,224 15,357 9,224 13,764r 14,017 15,448 17,189" 19,844 22 U.S.S.R .,. 350 119 241 236 241 161 238 168 287 451 23 Other Eastern Europe12 608 1,545 3,467 3,422 3,467 3,3% 4,155 3,690 4,291 4,207 24 Canada 18,865 20,349 21,581r 23,150" 21,581r 18,665r 20,456r 20,906r 20,475r 22,533 25 Latin America and Caribbean 311,028 332,997 345,253r 346,214r 345,253r 349,73 lr 348,552r 350,407r 340,754" 338,966 26 Argentina 7,304 7,365 7,758 7,452 7,758 7,899 7,878 8,310 8,654 9,381 27 Bahamas 99,341 107,386 100,743r 101,063r 100,743r 101,291r 99,736 102,083 98,411 100,158 28 Bermuda 2,884 2,822 3,178 3,295 3,178 3,658 3,478 3,364 3,368 3,009 29 Brazil 6,351 5,834 5,942 5,811 5,942 5,785 5,760 5,745 5,752 5,399 30 British West Indies 138,309 147,321 162,816r 163,802r 162,816r 165,462r 167,122r 166,167r 159,904" 157,443 31 Chile 3,212 3,145 3,284 3,388 3,284 3,322 3,408 3,623 3,507" 3,792 32 Colombia 4,653 4,492 4,662 4,797 4,662 4,627 4,713 4,972 4,915" 4,902 33 Cuba 10 11 2 12 2 6 5 11 9 6 34 Ecuador 1,391 1,379 1,232 1,236 1,232 1,248 1,217 1,168 1,128 1,150 35 Guatemala 1,312 1,541 1,594 1,589 1,594 1,554 1,549 1,539 1,489 1,438 36 Jamaica 209 257 231 201 231 234 227 271 234 242 37 Mexico 15,423 16,650 19,957 20,499 19,957 20,372 20,319 21,540 21,361 20,841 38 Netherlands Antilles 6,310 7,357 5,592 5,924 5,592 6,272 6,231 5,205 5,986 5,347 39 Panama 4,362 4,574 4,695 4,563 4,695 4,349 4,404 4,158 4,216 4,100 40 Peru 1,984 1,294 1,249 1,240 1,249 1,233 1,221 1,187 1,094 1,098 41 Uruguay 2,284 2,520 2,111 2,373 2,111 2,313 2,158 2,054 2,171 2,119 42 Venezuela 9,482 12,271 13,181 12,171 13,181 13,520 12,424 12,190 11,874 11,704 43 Other 6,206 6,779 7,026r 6,798 7,026r 6,586 6,702 6,820 6,681 6,837 44 Asia 156,201 136,844 120,491r l iw 120,491r 119,173*" 120,104r 125,727r 125,255" 128,152 China 45 Mainland 1,773 2,421 2,625 2,783 2,625 2,739 2,607 2,677 2,751 2,363 46 Taiwan 19,588 11,246 11,500" 11,683r 11,500"" 10,955r 10,594r 10,602r 10,479" 10,274 47 Hong Kong 12,416 12,754 14,365r 13,785r 14,365r 15,151r 14,%7 14,722r 16,248" 17,990 48 India 780 1,233 2,418 2,613 2,418 2,297 2,256 2,028 1,792 1,671 49 Indonesia 1,281 1,238 1,463 1,412 1,463 1,037 1,276 1,516 1,109 1,133 50 Israel 1,243 2,767 2,015 2,108 2,015 2,193 2,137 2,536 3,792 3,432 51 Japan 81,184 67,076 47,041r 45,986r 47,041r 46,076r 44,771r 49,510" 47,316 46,162 52 Korea 3,215 2,287 2,535r 2,546" 2,535r 2,433r 2,754 2,827 2,975 3,111 53 Philippines 1,766 1,585 2,449 2,139 2,449 2,256 2,462 2,638 2,266 1,629 54 Thailand 2,093 1,443 2,252 3,581 2,252 2,933 3,224 3,330 3,147 6,990 55 Middle-East oil-exporting countries13 . 13,370 15,829 15,752 16,301 15,752 15,901 18,410 19,311 18,614 18,256 56 Other 17,491 16,%5 16,076 15,053 16,076 15,202 14,646 14,030 14,766 15,141 57 Africa 3,824 4,630 4,824r 4,465 4,824r 5,042 4,919 4,886 4,864 5,430 58 Egypt 686 1,425 1,621 1,060 1,621 1,620 1,632 1,337 1,610 2,001 59 Morocco 78 104 79 93 79 86 82 90 88 77 60 South Africa 206 228 228 173 228 201 199 191 188 399 61 Zaire .. 86 53 31 32 31 28 30 35 27 26 62 Oil-exporting countries14 1,121 1,110 1,082 1,280 1,082 1,204 1,214 1,428 1,277 1,257 63 Other 1,648 1,710 1,783r 1,827 l,783r 1,903 1,762 1,805 1,674 1,670 64 Other countries 4,564 4,444 5,567 5,282 5,567 4,841 4,253 4,223 4,473 4,482 65 Australia 3,867 3,807 4,464 4,116 4,464 3,619 3,065 3,100 3,575 3,211 66 All other 697 637 1,103 1,166 1,103 1,222 1,188 1,123 898 1,271 67 Nonmonetary international and regional organizations 4,894 5,918 8,947 8,721 8,947 9,895 10,615 10,469 9,947 10,146 68 International15 3,947 4,390 6,451 6,180 6,451 7,439 8,292 8,063 7,199 7,233 69 Latin American regional 684 1,048 1,181 1,366 1,181 1,422 1,500 1,785 1,788 1,903 70 Other regional16 263 479 1,315 1,175 1,315 1,034 823 621 960 1,010 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 • September 1992 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1991 1992 AArreeaa aanndd ccoouunnttrryy 11998899 11999900 11999911 Nov. Dec. Jan." Feb." Mar." Apr." May" 1 Total 534,492 511,543 514,375" 514,709" 514,375" 509,490 508,876 512,995 506,838 503,392 2 Foreign countries 530,630 506,750 508,002r 511,419" 508,002" 504,884 502,336 506,532 501,959 499,083 3 Europe 119,025 113,093 114,310" 107,796" 114,310" 112,655 110,850 112,702 123,627 120,704 4 Austria 415 362 327 325 327 211 447 375 444 456 5 Belgium-Luxembourg 6,478 5,473 6,158 6,962 6,158 6,724 7,451 7,005 6,967 6,487 6 Denmark 582 497 686 671 686 792 709 737 871 994 7 Finland 1,027 1,047 1,912 1,378 1,912 1,854 1,586 1,321 1,475 1,536 8 France 16,146 14,468 15,112 14,813 15,112 15,179 13,742 14,062 13,706 14,031 9 Germany 2,865 3,343 3,371r 2,866" 3,371" 3,305 3,405 3,788 3,117 4,044 10 Greece 788 727 553 555 553 550 562 537 567 492 11 Italy 6,662 6,052 8,242 6,362 8,242 8,000 7,346 8,584 9,835 10,282 12 Netherlands 1,904 1,761 2,539 2,220 2,539 2,664 2,454 2,259 2,680 2,634 13 Norway 609 782 669 776 669 801 665 687 569 733 14 Portugal 376 292 344 358 344 360 350 368 361 398 15 Spain 1,930 2,668 . 1,844 2,480 1,844 2,487 2,120 3,310 3,692 2,687 16 Sweden 1,773 2,094 2,335r 2,362" 2,335" 2,756 2,928 2,636 3,062 2,992 17 Switzerland 6,141 4,202 4,540 4,469 4,540 4,497 3,921 3,375 4,095 4,159 18 Turkey 1,071 1,405 1,063 1,151 1,063 1,062 1,076 943 927 1,130 19 United Kingdom 65,527 65,151 60,435" 55,917 60,435" 56,624 57,082 57,880 66,316 62,480 20 Yugoslavia 1,329 1,142 824 848 824 822 810 807 780 735 21 Other Western Europe2 1,302 597 789 1,001 789 1,152 1,116 879 821 894 22 U.S.S.R 1,179 530 1,970 1,689 1,970 2,331 2,491 2,659 2,824 2,948 23 Other Eastern Europe 921 499 597 593 597 484 589 490 518 592 24 Canada 15,451 16,091 15,094" 15,875" 15,094" 14,845 15,849 15,441 15,039 16,327 25 Latin America and Caribbean 230,438 231,506 246,006" 252,793" 246,006" 250,236 245,565 251,762 239,387 237,973 26 Argentina 9,270 6,967 5,869 5,778 5,869 5,823 5,834 5,788 5,949 5,956 27 Bahamas 77,921 76,525 87,173 87,190" 87,173 89,258 84,183 88,846 82,088 84,633 28 Bermuda 1,315 4,056 2,191" 4,108" 2,191" 3,535 4,444 3,649 6,372 4,108 29 Brazil 23,749 17,995 11,845 11,687 11,845 12,419 12,746 12,365 12,311 12,161 30 British West Indies 68,749 88,565 107,831" 111,921" 107,831" 107,627 106,758 109,403 100,762 99,936 31 Chile 4,353 3,271 2,805 2,833 2,805 2,817 2,746 2,779 2,922 3,055 32 Colombia 2,784 2,587 2,425 2,574 2,425 2,374 2,330 2,339 2,322 2,328 33 Cuba 1 0 0 0 0 0 0 0 2 0 34 Ecuador 1,688 1,387 1,053 1,090 1,053 1,044 1,034 993 986 939 35 Guatemala 197 191 228 195 228 214 230 233 216 171 36 Jamaica 297 238 158 161 158 157 158 152 150 143 37 Mexico 23,376 14,851 16,611" 17,402" 16,611" 17,059 17,365 17,354 17,406 16,818 38 Netherlands Antilles 1,921 7,998 1,126 1,122 1,126 1,112 898 1,098 1,185 1,132 39 Panama 1,740 1,471 1,563 1,641 1,563 1,651 1,662 1,707 1,837 1,929 40 Peru 771 663 739 724 739 735 669 644 715 666 41 Uruguay 929 786 599 550 599 546 604 604 685 717 42 Venezuela 9,652 2,571 2,527 2,634 2,527 2,610 2,611 2,368 2,191 2,019 43 Other 1,726 1,384 1,263 1,183 1,263 1,255 1,293 1,440 1,288 1,262 44 157,474 138,722 125,358" 127,232" 125,358" 119,796 122,616 119,700 116,735 117,161 China 45 Mainland 634 620 747 698 747 813 699 719 660 729 46 Taiwan 2,776 1,952 2,087" 1,578" 2,087" 1,914 1,881 1,969 2,008 1,808 47 Hong Kong 11,128 10,648 9,715" 10,169" 9,715" 9,852 9,721 10,582 8,520 9,127 48 India 621 655 441 450 441 445 418 518 504 475 49 Indonesia 651 933 952 872 952 1,012 1,043 1,079 1,034 1,111 50 Israel 813 774 855 907 855 873 943 901 836 874 51 Japan 111,300 90,699 84,813" 85,532" 84,813" 80,585 80,247 74,595 72,106 74,420 52 Korea 5,323 5,766 6,045" 5,819" 6,045" 5,696 6,292 6,420 6,220 5,798 53 Philippines 1,344 1,247 1,910 1,971 1,910 1,849 1,789 1,831 1,690 1,618 54 Thailand 1,140 1,573 1,713 1,803 1,713 1,633 1,621 1,599 1,618 1,703 55 Middle East oil-exporting countries 10,149 10,749 8,284 9,957 8,284 8,073 10,976 12,284 14,557 13,356 56 Other 11,594 13,106 7,796 7,476 7,796 7,051 6,986 7,203 6,982 6,142 57 Africa 5,890 5,445 4,928 5,242 4,928 4,870 4,741 4,758 4,818 4,579 58 Egypt 502 380 294 351 294 255 223 271 242 218 59 Morocco 559 513 575 583 575 591 550 547 547 529 60 South Africa 1,628 1,525 1,235 1,493 1,235 1,217 1,189 1,176 1,239 1,128 61 Zaire 16 16 4 7 4 4 4 4 4 4 62 Oil-exporting countries 1,648 1,486 1,298 1,320 1,298 1,116 1,112 1,164 1,160 1,162 63 Other 1,537 1,525 1,522 1,488 1,522 1,687 1,663 1,596 1,626 1,538 64 Other countries 2,354 1,892 2,306 2,481 2,306 2,482 2,715 2,169 2,353 2,339 65 Australia 1,781 1,413 1,665 1,718 1,665 1,473 1,478 1,388 1,424 1,188 66 All other 573 479 641 763 641 1,009 1,237 781 929 1,151 67 Nonmonetary international and regional organizations6 3,862 4,793 6,373 33,,229900 6,373 4,606 6,540 6,463 4,879 4,309 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 1991r 1992 Type of claim 11998899 11999900 11999911rr Nov. Dec. Jan.r Feb.r Mar.r Apr.r Mayp 1 Total 593,087 579,044 580,345 567,307 580,345 2 Banks' own claims on foreigners 534,492 511,543 514,248 499,931 511,082 514,637 514,248 508,616 509,007 512,911 3 Foreign public borrowers 60,511 41,900 37,247 35,680 35,261 36,323 37,247 35,171 38,609 37,043 4 Own foreign offices2 296,011 304,315 318,952 304,518 313,021 313,783 318,952 307,625 306,286 318,432 5 Unaffiliated foreign banks 134,885 117,272 116,449 113,872 119,829 120,218 116,449 121,900 118,985 113,911 6 Deposits 78,185 65,253 69,125 68,482 72,534 71,610 69,125 71,884 70,784 66,921 7 Other 56,700 52,019 47,324 45,390 47,295 48,608 47,324 50,016 48,201 46,990 8 All other foreigners 43,085 48,056 41,600 45,861 42,971 44,313 41,600 43,920 45,127 43,525 9 Claims of banks' domestic customers3. 58,594 67,501 66,097 67,376 66,097 10 Deposits 13,019 14,375 15,240 19,512 15,240 11 Negotiable and readily transferable instruments 30,983 41,333 37,918 35,054 37,918 12 Outstanding collections and other claims 14,592 11,792 12,939 12,810 12,939 13 MEMO: Customer liability on acceptances 12,899 13,628 7,418 8,739 7,418 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States3 . 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 1992 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa 11998888 11998899 11999900 June Sept. Dec. Mar. 1 233,184 238,123 206,903 199,216 199,517 195,164 195,079 By borrower 2, Maturity of one year or less 172,634 178,346 165,985 158,660 160,346 159,829 160,694 3 Foreign public borrowers 26,562 23,916 19,305 21,794 19,286 17,461 20,841 4 All other foreigners 146,071 154,430 146,680 136,866 141,060 142,368 139,853 5 Maturity of more than one year2 60,550 59,776 40,918 40,555 39,171 35,335 34,385 6 Foreign public borrowers 35,291 36,014 22,269 22,417 20,820 17,925 16,189 7 All other foreigners 25,259 23,762 18,649 18,138 18,352 17,410 18,196 By area Maturity of one year or less 8 Europe 55,909 53,913 49,184 49,840 50,368 51,207 5511,,884499 9 Canada 6,282 5,910 5,450 5,939 7,309 5,682 6,425 10 Latin America and Caribbean 57,991 53,003 49,782 42,670 41,127 47,280 42,973 11 46,224 57,755 53,258 53,993 53,150 49,462 49,961 1? 3,337 3,225 3,040 3,008 2,937 2,815 2,535 13 All other3 2,891 4,541 5,272 3,212 5,455 3,383 6,951 Maturity of more than one year 14 Europe 4,666 4,121 3,859 4,128 3,832 3,717 3,876 15 Canada 1,922 2,353 3,290 3,390 3,823 3,676 3,546 16 Latin America and Caribbean 47,547 45,816 25,774 24,962 23,220 19,232 18,741 17 3,613 4,172 5,165 5,414 5,645 6,095 5,460 18 Africa 2,301 2,630 2,374 2,426 2,456 2,393 2,349 19 AM other3 501 684 456 237 195 222 413 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 • September 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 1990 1991 1992 Area or country lyoo 1989 Mar. June Sept. Dec. Mar. June Sept. Dec. Mar. 1 Total . 346.3 338.8 333.9 321.7 331.5 317.8 325.4r 320.8r 335.5r 341.6r 348.1' 2 G-10 countries and Switzerland 152.7 152.9 146.6 139.3 143.6 132.1 129.9 130. r 134.0 137.3r 130.8r 3 Belgium-Luxembourg 9.0 6.3 6.7 6.2 6.5 5.9 6.2 6.1 5.8 6.0 5.3 4 France 10.5 11.7 10.4 10.2 11.1 10.4 9.7 10.5 11.1 11.0 9.9 5 Germany 10.3 10.5 11.2 11.2 11.1 10.6 8.8 8.3 9.7 8.3r 8.5 6 Italy 6.8 7.4 5.9 5.4 4.4 5.0 4.0 3.6 4.5 5.6 5.4 7 Netherlands 2.7 3.1 3.1 2.7 3.8 3.0 3.3 3.3 3.0 4.7 4.3 8 Sweden 1.8 2.0 2.1 2.3 2.3 2.2 2.0 2.5 2.1 1.9 2.0 9 Switzerland 5.4 7.1 6.2 6.3 5.6 4.4 3.7 3.3 3.9 3.4 3.2 10 United Kingdom 66.2 67.2 64.0 59.9 62.6 60.8 62.2r 59.8 64.9 68.5 65.(f 11 Canada 5.0 5.4 4.8 5.1 5.0 5.9 6.8 8.2 5.9 5.9 6.6r 12 Japan 34.9 32.2 32.2 30.1 31.3 23.9 23.2 24.6 23.2 22.2 20.7 13 Other developed countries 21.0 20.7 23.0 22.4 23.0 22.6 23.1 21.1 21.7 22.6 21.2 14 Austria 1.5 1.5 1.5 1.5 1.6 1.4 1.4 1.1 1.0 .6 .8 15 Denmark 1.1 1.1 1.2 1.1 1.1 1.1 .9 1.2 .9 .9 .8 16 Finland 1.1 1.0 1.1 .9 .8 .7 1.0 .8 .7 .7 .8 17 Greece 1.8 2.5 2.6 2.7 2.8 2.7 2.5 2.4 2.3 2.6 2.3 18 Norway 1.8 1.4 1.7 1.4 1.6 1.6 1.5 1.5 1.4 1.4 1.5 19 Portugal .4 .4 .4 .8 .6 .6 .6 .6 .5 .6 .5 20 Spain 6.2 7.1 8.2 7.8 8.4 8.3 9.0 7.0 8.3 8.2 7.6 21 Turkey 1.5 1.2 1.3 1.4 1.6 1.7 1.7 1.9 1.6 1.4 1.2 22 Other Western Europe 1.3 .7 1.0 1.1 .7 .9 .8 .9 1.0 1.6 1.3 23 South Africa 2.4 2.0 2.0 1.9 1.9 1.8 1.8 1.8 1.6 1.9 1.8 24 Australia 1.8 1.6 2.1 1.8 2.0 1.8 1.9 2.0 2.4 2.7 2.3 25 OPEC countries2 16.6 17.1 15.5 15.3 14.2 12.8 17.1 14.0 15.6 14.6 16.0 26 Ecuador 1.7 1.3 1.2 1.1 1.1 1.0 .9 .9 .8 .7 .7 27 Venezuela 7.9 7.0 6.1 6.0 6.0 5.0 5.1 5.3 5.6 5.4 5.4 28 Indonesia 1.7 2.0 2.1 2.0 2.3 2.7 2.8 2.6 2.8 2.8 3.3 29 Middle East countries 3.4 5.0 4.3 4.4 3.1 2.5 6.6 3.7 5.0 4.2 5.3 30 African countries 1.9 1.7 1.8 1.8 1.7 1.7 1.6 1.5 1.5 1.5 1.4 31 Non-OPEC developing countries 85.3 77.5 68.8 66.7 67.1 65.4 66.4 65.0 65.0 64.3 70.5 Latin America 32 Argentina 9.0 6.3 5.6 5.2 5.0 5.0 4.7 4.6 4.5 4.8 5.0 33 Brazil 22.4 19.0 17.5 16.7 15.4 14.4 13.9 11.6 10.5 9.5 10.8 34 Chile 5.6 4.6 4.3 3.7 3.6 3.5 3.6 3.6 3.7 3.6 3.9 35 Colombia 2.1 1.8 1.8 1.7 1.8 1.8 1.7 1.6 1.6 1.7 1.6 36 Mexico 18.8 17.7 12.8 12.6 12.8 13.0 13.7 14.3 16.2 15.5 18.2 37 Peru .8 .6 .5 .5 .5 .5 .5 .5 .4 .4 .4 38 Other 2.6 2.8 2.8 2.3 2.4 2.3 2.2 2.0 1.9 2.1 2.2 Asia China 39 Mainland .3 .3 .3 .2 .2 .2 .4 .6 .4 .3 .3 40 Taiwan 3.7 4.5 3.8 3.6 4.0 3.5 3.6 4.1 4.1 4.1 4.7 41 India 2.1 3.1 3.5 3.6 3.6 3.3 3.5 3.0 2.8 3.0 3.6 42 Israel 1.2 .7 .6 .7 .6 .5 .5 .5 .5 .5 .4 43 Korea (South) 6.1 5.9 5.3 5.6 6.2 6.2 6.8 6.9 6.5 6.8 6.9 44 Malaysia 1.6 1.7 1.8 1.8 1.8 1.9 2.0 2.1 2.3 2.3 2.5 45 Philippines 4.5 4.1 3.7 3.9 3.9 3.8 3.7 3.7 3.6 3.7 3.6 46 Thailand 1.1 1.3 1.1 1.3 1.5 1.5 1.6 1.7 1.9 1.7 1.7 47 Other Asia3 .9 1.0 1.2 1.1 1.6 1.7 2.1 2.3 2.3 2.4 2.7 Africa 48 Egypt .4 .4 .4 .5 .4 .4 .4 .4 .4 .4 .3 49 Morocco .9 .9 .9 .9 .9 .8 .8 .7 .7 .7 .7 50 Zaire , .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 1.1 1.0 .9 .8 .8 1.0 .8 .8 .8 .7 .7 52 Eastern Europe 3.6 3.5 3.3 2.9 2.7 2.3 2.1 2.1 1.8 2.4 2.9 53 U.S.S.R .7 .7 .8 .4 .4 .2 .3 .4 .4 .9 1.4 54 Yugoslavia 1.8 1.6 1.4 1.4 1.3 1.2 1.0 1.0 .8 .9 .8 55 Other 1.1 1.3 1.2 1.1 1.1 .9 .8 .7 .7 .7 .6 56 Offshore banking centers 44.2 36.6 43.1 40.3 42.6 42.5 50. lr 48.3r 52.4r 51.9r 58.5r 57 Bahamas 11.0 5.5 9.2 8.5 8.9 2.8 8.4 6.8 6.7 12.0 14.0 58 Bermuda .9 1.7 1.2 2.5 4.5 4.4 4.4 4.2 7.1 2.2 3.9 59 Cayman Islands and other British West Indies 12.9 9.0 10.9 8.5 9.3 11.5 14. r 14.97 13.8r 15.9 17.4r 60 Netherlands Antilles 1.0 2.3 2.6 2.3 2.2 7.9 1.1 1.4 3.5 1.2 1.0 61 Panama 2.5 1.4 1.3 1.4 1.5 1.4 1.5r 1.3 1.3 1.3 1.3 62 Lebanon J J J 2 2 J j 2 2 63 Hong Kong 9.6 9.1 9^8 io!o 8 '.1 1.1 1L6 12.4 \2.\ 12*2 12^2 64 Singapore 6.1 7.0 8.0 7.0 7.5 6.6 8.9 1.2 1.1 7.1 8.5 65 Other5 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated6 22.6 30.3 33.3 34.5 38.1 39.8 36.5 40.0 44.7 48.3 48.1 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 by an increase in the reporting threshold for "shell" branches from $50 million to organizations. 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"" Dec. Mar." June" Sept." Dec." Mar.p 1 32,952 38,764 44,988 44,988r 41,978 40,652 42,148 41,514 43,432 ? Payable in dollars 27,335 33,973 39,791 39,791r 37,402 36,182 37,442 36,261 38,139 3 Payable in foreign currencies 5,617 4,791 5,197 5,197r 4,576 4,469 4,706 5,253 5,293 By type 4 14,507 17,879 20,010 20,010" 18,606 18,260 20,350 20,180 21,600 5 10,608 14,035 15,984 15,984" 15,266 14,947 16,675 16,187 17,505 6 Payable in foreign currencies 3,900 3,844 4,026 4,026" 3,340 3,313 3,675 3,993 4,095 7 Commercial liabilities 18,445 20,885 24,977 24,977" 23,372 22,392 21,798 21,334 21,832 8 6,505 8,070 10,512 10,512" 8,789 8,576 8,359 8,185 8,703 9 Advance receipts and other liabilities 11,940 12,815 14,465 14,465" 14,583 13,815 13,439 13,149 13,129 10 16,727 19,938 23,807 23,807" 22,135 21,235 20,767 20,074 20,634 11 Payable in foreign currencies 1,717 947 1,170 1,170" 1,236 1,157 1,031 1,260 1,198 By area or country 1? 9,962 11,660 10,346 10,346" 9,559 9,634 11,403 1100,,775500 1122,,000000 13 Belgium-Luxembourg 289 340 394 394" 335 355 397 187 144 14 359 258 700 700 632 556 1,747 1,5% 2,002 15 699 464 621 621" 561 658 652 658 644 16 880 941 1,081 1,081" 1,036 1,026 1,050 1,058 1,026 17 1,033 541 516 516" 517 484 468 361 357 18 United Kingdom 6,533 8,818 6,395 6,395" 5,810 5,932 6,521 6,260 6,919 19 388 610 229 229 278 293 305 268 289 70 Latin America and Caribbean 839 1,357 4,153 4,153" 4,255 3,808 3,883 4,308 4,048 71 184 157 371 371 392 375 314 537 3% ?? 0 17 0 0 0 12 0 114 114 73 Brazil 0 0 0 0 0 0 6 6 88 74 British West Indies 645 724 3,160 3,160" 3,293 2,816 2,961 3,047 22,,991155 75 1 6 5 5 6 6 6 8 8 26 0 0 4 4 4 4 4 4 4 77 3,312 4,151 4,872 4,872" 4,510 4,515 4,755 4,7% 5,168 78 Japan 2,563 3,299 3,637 3,637" 3,432 3,339 3,605 3,557 3,906 29 Middle East oil-exporting countries2 3 2 5 5 1 4 19 13 13 30 Africa 2 2 2 2 2 9 3 6 7 31 Oil-exporting countries 0 0 0 0 0 7 2 4 6 32 All other4 4 100 409 409 2 2 1 52 88 Commercial liabilities 33 7,319 9,071 10,310 10,310 9,772 88,,770033 88,,224400 77,,887799 77,,552200 34 Belgium-Luxembourg 158 175 275 275 261 249 229 247 255 35 455 877 1,218 1,218 1,215 1,193 1,003 884 668 36 1,699 1,392 1,270 1,270 1,383 1,040 916 945 872 37 587 710 844 844 729 744 768 704 558 38 Switzerland 417 693 775 775 661 580 492 473 475 39 United Kingdom 2,079 2,620 2,792 2,792 2,817 2,336 2,250 2,304 2,464 40 1,217 1,124 1,261 1,261" 1,251 1,208 1,018 992 1,090 41 Latin America and Caribbean 1,090 1,224 1,672 1,672" 1,602 1,622 1,518 1,357 1,722 47 49 41 12 12 14 5 14 3 21 43 286 308 538 538 494 504 450 310 493 44 Brazil 95 100 145 145 216 180 211 219 230 45 British West Indies 34 27 30 30 35 49 46 107 108 46 217 323 475 475 343 358 291 303 375 47 Venezuela 114 164 130 130 129 119 102 94 171 48 6,915 7,550 9,483 9,483" 8,622 8,827 8,918 9,274 9,837 49 3,094 2,914 3,651 3,651" 3,423 3,411 3,363 3,648 3,463 50 Middle East oil-exporting countries2,5 1,385 1,632 2,016 2,016 1,566 1,700 1,809 1,497 1,606 51 576 886 844 844" 656 5% 836 762 646 52 Oil-exporting countries3 202 339 422 422 226 226 357 358 253 53 All other4 1,328 1,030 1,406 1,406 1,469 1,436 1,268 1,070 1,017 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 • September 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 11999900rr Dec. Mar.1" June1" Sept."" Dec/ Mar." 1 Total 33,805 33,173 35,240 35,240* 35,447 37,045 38,126 41,481 40,481 2 Payable in dollars 31,425 30,773 32,652 32,652r 33,148 34,958 35,788 39,000 37,906 3 Payable in foreign currencies 2,381 2,400 2,589 2,589* 2,299 2,087 2,338 2,481 2,575 By type 4 Financial claims 21,640 19,297 19,841 19,841r 19,694 20,904 22,433 24,614 24,205 5 Deposits 15,643 12,353 13,697 13,697 13,044 12,549 16,167 17,134 16,852 6 Payable in dollars 14,544 11,364 12,552 12,552r 12,012 11,758 15,147 16,283 15,670 7 Payable in foreign currencies 1,099 989 1,145 l,145r 1,032 790 1,020 851 1,182 8 Other financial claims 5,997 6,944 6,144 6,144r 6,650 8,355 6,266 7,480 7,353 9 Payable in dollars 5,220 6,190 5,247 5,247 5,948 7,656 5,568 6,660 6,689 10 Payable in foreign currencies 777 754 8% 8%r 702 700 698 820 664 11 Commercial claims 12,166 13,876 15,400 15,400 15,753 16,141 15,693 16,867 16,276 12 Trade receivables 11,091 12,253 13,544 13,544r 13,706 13,979 13,270 14,129 13,654 13 Advance payments and other claims 1,075 1,624 1,856 1,856r 2,047 2,163 2,423 2,738 2,622 14 Payable in dollars 11,660 13,219 14,852 14,852 15,187 15,544 15,073 16,057 15,547 15 Payable in foreign currencies 505 657 548 548 566 597 620 810 729 By area or country Financial claims 16 Europe 10,278 8,463 9,601 9,601r 10,640 11,875 13,077 13,429 14,035 17 Belgium-Luxembourg 18 28 76 76 86 74 76 13 13 18 France 203 153 371 371r 208 271 255 312 233 19 Germany 120 152 367 367 312 298 434 342 291 20 Netherlands 348 238 265 265 380 429 420 385 728 21 Switzerland 217 153 357 357 422 433 580 591 682 22 United Kingdom 9,039 7,4% 7,921 7,921r 9,016 10,222 10,943 11,150 11,518 23 Canada 2,325 1,904 2,934 2,934r 1,889 2,017 2,113 2,560 2,669 24 Latin America and Caribbean 8,160 8,020 6,201 6,201r 6,266 5,926 6,269 7,652 6,483 25 Bahamas 1,846 1,890 1,090 1,090"" 825 457 652 758 400 26 Bermuda 19 7 3 3 6 4 19 8 12 27 Brazil 47 224 68 68 68 127 124 115 109 28 British West Indies 5,763 5,486 4,635 4,635r 4,937 4,957 5,106 6,380 5,670 29 Mexico 151 94 177 177 179 161 171 179 150 30 Venezuela 21 20 25 25 28 29 32 40 34 31 Asia 623 590 860 860 568 747 619 605 661 32 Japan 354 213 523 523 246 398 277 343 423 33 Middle East oil-exporting countries2 5 8 8 8 11 4 3 5 3 34 Africa 106 140 37 37 62 64 61 57 60 35 Oil-exporting countries3 10 12 0 0 3 1 1 1 0 36 All other4 148 180 207 207r 269 275 294 311 297 Commercial claims 37 Europe 5,181 6,209 7,038 7,038 7,051 7,456 6,878 7,817 7,517 38 Belgium-Luxembourg 189 242 212 212 226 220 190 192 176 39 France 672 964 1,240 1,240 1,273 1,402 1,330 1,538 1,545 40 Germany 669 6% 806 806 873 956 856 931 921 41 Netherlands 212 479 555 555 604 707 641 637 644 42 Switzerland 344 313 301 301 324 2% 258 287 308 43 United Kingdom 1,324 1,575 1,774 1,774 1,638 1,816 1,806 2,072 1,835 44 Canada 983 1,091 1,073 1,073 1,212 1,240 1,231 1,141 1,137 45 Latin America and Caribbean 2,241 2,184 2,371 2,371 2,331 2,429 2,489 2,561 2,540 46 Bahamas 36 58 14 14 15 16 8 11 12 47 Bermuda 230 323 246 246 231 245 255 263 264 48 Brazil 299 297 324 324 326 309 384 397 353 49 British West Indies 22 36 40 40 49 43 37 41 43 50 Mexico 461 508 661 661 653 710 740 827 885 51 Venezuela 227 147 192 192 181 195 1% 201 202 52 Asia 2,993 3,570 4,064 4,064 4,292 4,137 4,210 4,468 4,253 53 Japan 946 1,199 1,399 1,399 1,757 1,587 1,742 1,788 1,714 54 Middle East oil-exporting countries 453 518 460 460 497 500 495 620 631 55 Africa 435 429 488 488 394 428 431 417 407 56 Oil-exporting countries3 122 108 67 67 68 63 80 95 73 57 All other4 333 393 366 366 473 452 454 463 422 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 1991r 1992 Transaction and area or country 1990 1991r Jan.- Nov. Dec. Jan.r Feb.r Mar/ Apr/ May" May U.S. corporate securities STOCKS 1 Foreign purchases 173,293 211,204 99,707 20,589 14,714 23,302 21,429 18,884 17,549 18,543 188,419 200,116 103,197 19,590 17,440 25,900 21,193 19,457 18,045 18,602 2 Foreign sales -15,126 11,088 -3,490 999 -2,726 -2,598 236 -573 -496 -59 3 Net purchases, or sales (-) ... -15,197 10,520 -3,460 962 -2,709 -2,479 237 -595 -529 -94 4 Foreign countries -8,479 50 -2,089 -232 -1,888 -1,318 -105 -95 -728 157 5 Europe -1,234 9 -617 -50 -126 -28 -224 -27 -217 -121 6 France -367 -63 -74 22 45 -160 30 -45 -47 148 7 Germany -397 -227 -49 -42 -52 44 -114 -17 -38 76 8 Netherlands -2,866 -131 492 -507 -10 -286 304 261 91 122 9 Switzerland -2,980 -354 -1,887 259 -1,639 -882 -304 -236 -334 -131 10 United Kingdom 886 3,845 1,547 694 131 260 235 410 412 230 11 Canada -1,330 2,177 1,150 -198 -282 1,025 359 -322 45 43 12 Latin America and Caribbean . -2,435 -134 -59 39 -36 -271 101 121 -95 85 13 Middle East1 -3,477 4,255 -4,208 735 -666 -2,211 -3% -886 -158 -557 14 Other Asia -2,891 1,179 -4,024 158 -429 -2,194 -615 -496 -318 -401 15 Japan -63 153 51 14 7 13 15 4 -1 20 16 Africa -298 174 148 -90 25 23 28 173 -4 -72 17 Other countries 18 Nonmonetary international and regional organizations 71 568 -30 37 -17 -119 -1 22 33 35 BONDS2 19 Foreign purchases 118,764 152,821 86,111 16,020 15,061 16,498 18,045 17,338 16,655 17,575 20 Foreign sales 102,047 125,398 68,065 13,061 12,347 14,367 14,731 14,321 11,488 13,158 21 Net purchases, or sales (-) ... 16,717 27,422 18,046 2,959 2,714 2,131 3,314 3,017 5,167 4,417 22 Foreign countries 17,187 27,553 17,793 2,858 2,671 2,098 3,308 2,927 4,972 4,488 23 Europe 10,079 13,116 9,120 1,275 1,054 1,390 2,390 1,201 2,114 2,025 2 2 4 5 G Fr e a r n m c a e n y -3 3 7 7 7 3 1,5 8 7 4 7 7 1, 3 4 4 5 0 2 2 1 7 0 4 9 1 7 1 5 3 5 - 9 2 4 2 5 7 8 7 - 1 3 2 4 2 3 3 6 9 3 2 -4 6 5 7 26 Netherlands 172 482 -115 91 13 -113 12 -15 -122 123 27 Switzerland 284 656 -90 -452 162 -67 252 124 -359 -40 28 United Kingdom 10,383 8,935 6,684 707 95 905 1,801 758 1,609 1,611 29 Canada 1,906 1,623 -109 52 113 -153 97 -72 87 -68 30 Latin America and Caribbean . 4,291 2,468 4,445 109 625 506 768 1,456 612 1,103 31 Middle East1 76 2,185 662 313 253 -75 -71 257 258 293 32 Other Asia 1,083 8,224 3,543 1,148 543 339 101 121 1,818 1,164 33 Japan 727 5,732 831 874 149 257 -121 -316 687 324 34 Africa % 52 % 13 11 28 15 28 19 6 35 Other countries -344 -116 36 -52 72 63 8 -64 64 -35 36 Nonmonetary international and regional organizations -471 -131 253 101 43 33 6 90 195 -71 Foreign securities 37 Stocks, net purchases, or sales (-)3 -9,205 -31,909 -11,338 -2,033 -1,846 -2,551 -2,303 -2,944 -2,563 -977 38 Foreign purchases 122,641 120,598 60,815 13,217 11,027 12,509 10,647 12,824 11,040 13,795 39 Foreign sales3 131,846 152,507 72,153 15,250 12,873 15,060 12,950 15,768 13,603 14,772 40 Bonds, net purchases, or sales (-) -22,412 -15,377 -5,318 801 -1,595 -1,316 418 -484 -1,259 -2,677 41 Foreign purchases 314,645 325,133 163,716 30,085 26,296 35,543 33,050 32,287 29,850 32,986 42 Foreign sales 337,057 340,510 169,034 29,284 27,891 36,859 32,632 32,771 31,109 35,663 43 Net purchases, or sales (-), of stocks and bonds -31,617 -47,286 -16,656 -1,232 -3,441 -3,867 -1,885 -3,428 -3,822 -3,654 44 Foreign countries -28,943 -47,202 -18,587 -1,825 -3,811 -4,118 -2,050 -3,762 -4,977 -3,680 45 Europe -8,443 -34,421 -11,068 -4,896 -4,319 -4,507 -2,267 -730 -3,299 -265 4 4 4 4 5 6 7 8 9 0 C A A O La a s f th r t i n a i i e a n c r d a A a c o m u e n r t i r c i a e s a nd Caribbean - - - 8 7 3 - - , , , 1 1 8 5 8 3 8 5 0 2 7 0 4 2 8 - - 7 7 1 , , 5 3 , 8 3 - 7 5 4 1 9 8 0 5 1 - - - - 1 2 1 1 - , , , , 1 9 7 0 7 0 2 0 2 6 4 1 3 3 8 1 - , 5 9 4 4 9 9 4 8 1 5 1 0 6 -4 3 5 1 - 6 0 1 5 4 3 0 6 9 2 - - 8 , 9 - 1 4 - 1 2 8 5 5 8 6 3 -1 - 1 , 2 - , 5 7 3 1 7 1 0 0 0 2 3 4 8 -1 - - - , 3 4 6 5 2 7 5 8 1 9 3 0 1 - - -1 8 8 1 5 3 2 3 2 7 9 9 1 - -1 1 - - , , 6 2 1 - 2 9 6 3 4 7 9 4 3 2 7 51 Nonmonetary international and regional organizations -2,673 -84 1,931 593 370 251 165 334 1,155 26 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 • September 1992 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1992 1991 1992 Country or area 1990 1991r J M an ay .- Nov. Dec. Jan. Feb. Mar. Apr/ Mayp Transactions, net purchases or sales (-) during period1 1 Estimated total2 18,927 18,359 3,568 5,446 4,483 10,621r 3,175 -8,820 6,515 -7,923 2 Foreign countries2 18,764 18,181 4,563 5,352 3,774 9,864r 3,558 -9,451 7,536 -6,944 3 Europe2 18,455 8,078 3,544 5,023 2,779 5,324 7,326 -4,903 3,161 -7,364 4 Belgium-Luxembourg 10 523 1,095 201 -21 559 296 -91 21 310 5 Germany 5,880 -4,725 1,515 707 -139 805 287 -313 410 326 6 Netherlands 1,077 -3,735 -3,215 -25 -888 -1,936 -967 245 -219 -338 7 Sweden 1,152 -663 456 -74 582 180 300 102 -123 -3 8 Switzerland2 112 1,007 -1,227 1,105 -778 142 -388 -411 9 -579 9 United Kingdom -1,260 5,656 3,953 212 2,349 2,649 6,234 -1,844 2,781 -5,867 10 Other Western Europe 11,463 10,001 951 2,910 1,664 2,925 1,524 -2,601 282 -1,179 11 Eastern Europe 13 13 16 -13 10 0 40 10 0 -34 12 Canada -4,627 -2,720 1,793 -441 -1,841 962r -1,549 -430 183 2,627 13 Latin America and Caribbean 14,734 9,056 -2,205 -3,842 1,075 -2,920 -1,191 -554 2,783 -323 14 Venezuela 33 10 188 7 122 266 169 73 -124 -1% 15 Other Latin America and Caribbean 3,943 2,834 243 -525 -1,065 -357 -444 -108 3,627 -2,475 16 Netherlands Antilles 10,757 6,213 -2,636 -3,324 2,018 -2,829 -916 -519 -720 2,348 17 -10,952 3,376 2,948 3,709 864 7,675 -430 -3,322 1,365 -2,340 18 Japan -14,785 -4,034 -3,632 503 -1,332 -398 -1,933 -3,044 658 1,085 19 Africa 313 689 665 -26 318 207 100 125 193 40 20 All other 842 -298 -2,182 929 579 -1,384 -698 -367 -149 416 21 Nonmonetary international and regional organizations 163 178 -995 94 709 757 -383 631 -1,021 -979 22 International 287 -358 -739 95 786 197 -228 801 -762 -747 23 Latin American regional -2 -72 63 -133 -156 -58 51 0 74 -4 MEMO 24 Foreign countries2 18,764 18,181 4,563 5,352 3,774 9,864r 3,558 -9,451 7,536 -6,944 25 Official institutions 23,218 1,190 4,271 7,194 2,521 8,687 -193 -3,136 1,712 -2,799 26 Other foreign -4,453 16,990 292 -1,842 1,253 l,177r 3,751 -6,315 5,824 -4,145 Oil-exporline countries 27 Middle EasP -387 -6,822 30 % -163 623 1,679 233 556 -3,061 28 Africa4 0 239 63 0 219 48 0 0 15 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 July 31, 1992 Rate on July 31, 1992 Rate on July 31, 1992 Country Country Country e M ffe o c n t t i h v e e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e Austria.. 8.0 Dec. 1991 Germany... 8.75 July 1992 Norway 10.50 July 1990 Belgium . 8.5 Dec. 1991 Italy 13.75 July 1992 Switzerland 7.0 Aug. 1991 Canada.. 5.42 July 1992 Japan 3.25 July 1992 United Kingdom3 Denmark 9.5 Dec. 1991 Netherlands 8.5 Dec. 1991 France2.. 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 1992 TTyyppee oorr ccoouunnttrryy 11998899 11999900 11999911 Jan. Feb. Mar. Apr. May June July 1 Eurodollars 9.16 8.16 5.86 4.06 4.05 4.26 4.05 3.84 3.87 3.40 2 United Kingdom 13.87 14.73 11.47 10.60 10.33 10.58 10.56 10.00 9.94 10.10 3 Canada 12.20 13.00 9.07 7.23 7.42 7.63 7.10 6.60 6.03 5.58 4 Germany 7.04 8.41 9.15 9.45 9.51 9.59 9.63 9.70 9.66 9.69 5 Switzerland 6.83 8.71 8.01 7.55 7.28 8.16 8.48 8.77 9.04 8.67 6 Netherlands 7.28 8.57 9.19 9.45 9.52 9.52 9.42 9.43 9.45 9.50 7 France 9.27 10.20 9.49 9.86 9.93 9.99 9.92 9.83 9.98 10.11 8 Italy 12.44 12.11 12.04 12.00 12.17 12.25 12.38 12.39 13.38 15.54 9 Belgium 8.65 9.70 9.30 9.41 9.50 9.56 9.50 9.51 9.50 9.54 10 Japan 5.39 7.75 7.33 5.18 5.19 4.95 4.72 4.72 4.60 4.32 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 • September 1992 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar, except as noted 1992 CCoouunnttrryy//ccuurrrreennccyy uunniitt 11998899 11999900 11999911 Feb. Mar. Apr. May June July 1 Australia/dollar2 79.186 78.069 77.872 75.178 75.865 76.241 75.587 75.561 74.507 2 Austria/schilling 13.236 11.331 11.686 11.391 11.693 11.620 11.422 11.068 10.500 3 Belgium/franc 39.409 33.424 34.195 33.307 34.189 33.927 33.386 32.362 30.717 4 Canada/dollar 1.1842 1.1668 1.1460 1.1825 1.1928 1.1874 1.1991 1.1960 1.1924 5 China, P.R./yuan 3.7673 4.7921 5.3337 5.4776 5.4871 5.5098 5.5182 5.4893 5.4564 6 Denmark/krone 7.3210 6.1899 6.4038 6.2763 6.4462 6.3906 6.2678 6.0573 5.7409 7 Finland/markka 4.2963 3.8300 4.0521 4.4230 4.5325 4.5023 4.4076 4.2846 4.0803 8 France/franc 6.3802 5.4467 5.6468 5.5088 5.6400 5.5773 5.4548 5.2940 5.0321 9 Germany/deutsche mark 1.8808 1.6166 1.6610 1.6186 1.6616 1.6493 1.6225 1.5726 1.4914 10 Greece/drachma 162.60 158.59 182.63 187.13 192.26 192.83 192.09 190.69 182.89 11 Hong Kong/dollar 7.8008 7.7899 7.7712 7.7582 7.7463 7.7404 7.7421 7.7343 7.7341 12 India/rupee 16.213 17.492 22.712 25.992 28.378 28.896 28.542 28.519 28.564 13 Ireland/pound 141.80 165.76 161.39 164.87 160.50 161.65 164.62 169.80 178.76 14 Italy/lira 1,372.28 1,198.27 1,241.28 1,215.92 1,248.28 1,241.55 1,220.95 1,189.52 1,129.83 15 Japan/yen 138.07 145.00 134.59 127.70 132.86 133.54 130.77 126.84 125.88 16 Malaysia/ringgit 2.7079 2.7057 2.7503 2.6012 2.5779 2.5521 2.5223 2.5187 2.4999 17 Netherlands/guilder 2.1219 1.8215 1.8720 1.8218 1.8706 1.8568 1.8268 1.7719 1.6819 18 New Zealand/dollar2 59.793 59.619 57.832 54.177 54.790 54.138 53.514 54.201 54.609 19 Norway/krone 6.9131 6.2541 6.4912 6.3472 6.5188 6.4606 6.3311 6.1493 5.8581 20 Portugal/escudo 157.53 142.70 144.77 139.47 143.26 141.09 135.23 130.79 126.24 21 Singapore/dollar 1.9511 1.8134 1.7283 1.6361 1.6601 1.6567 1.6408 1.6240 1.6142 22 South Africa/rand 2.6214 2.5885 2.7633 2.8156 2.8830 2.8783 2.8483 2.8077 2.7577 23 South Korea/won 674.29 710.64 736.73 769.93 775.68 782.55 786.83 793.60 789.93 24 Spain/peseta 118.44 101.96 104.01 101.73 104.88 103.90 101.47 99.02 94.88 25 Sri Lanka/rupee 35.947 40.078 41.200 42.879 42.744 43.231 43.445 43.941 44.014 26 Sweden/krona 6.4559 5.9231 6.0521 5.8764 6.0263 5.9667 5.8462 5.6792 5.4084 27 Switzerland/franc 1.6369 1.3901 1.4356 1.4561 1.5094 1.5194 1.4907 1.4250 1.3347 2.8 Taiwan/dollar 26.407 26.918 26.759 25.049 25.407 25.308 25.016 24.770 24.783 29 Thailand/baht 25.725 25.609 25.528 25.463 25.637 25.644 25.550 25.400 25.293 30 United Kingdom/pound 163.82 178.41 176.74 177.78 172.38 175.66 180.95 185.51 191.77 MEMO 31 United States/dollar3 98.60 89.09 89.84 88.04 90.44 89.84 88.30 85.91 82.57 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.S (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 June 30, 1991 November 1991 A70 September 30, 1991 February 1992 A70 December 31, 1991 May 1992 A70 March 31, 1992 August 1992 A70 Terms of lending at commercial banks August 1991 December 1991 A70 November 1991 September 1992 A70 February 1992 September 1992 A74 May 1992 September 1992 A78 Assets and liabilities of U.S. branches and agencies of foreign banks June 30, 1991 December 1991 A74 September 30, 1991 February 1992 A80 December 31, 1991 May 1992 A76 March 31, 1992 September 1992 A82 Pro forma balance sheet and income statements for priced service operations March 31, 1991 August 1991 A82 June 30, 1991 November 1991 A80 September 30, 1991 January 1992 A70 March 30, 1992 August 1992 A80 Assets and liabilities of life insurance companies June 30, 1991 December 1991 A79 September 30, 1991 May 1992 A81 December 31, 1991 August 1992 A83 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Special Tables • September 1992 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 4-8, 19911 A. Commercial and Industrial Loans Weighted Loan rate (percent) Loans Loans Amount of Average average secured made Partici- Characteristic ($ l 1 o , a 0 n 0 s 0 ) ($1 s , i 0 ze 0 0) ma D tu a r y i s t y2 W e a f v f e e e i c g r t a h i g t v e e e d 3 Standard c (p o e ll r b a c y t e e n ra t) l ( c p o u m e m n r e c d m n e e t n r i t t - ) (p p l e o a r t a c i n o e s n n t ) ALL BANKS 1 Overnight6 8,512,037 4,937 5.70 6.7 7.3 2 One month and under (excluding overnight) 5,674,042 721 19 6.48 33.9 84.1 11.6 3 Fixed rate 4,407,110 1,059 19 6.20 29.2 82.0 11.8 4 Floating rate 1,266,933 342 19 7.45 50.4 91.3 11.0 5 Over one month and under a year . 9,933,945 152 147 7.48 51.8 79.5 10.3 6 Fixed rate 3,934,374 160 110 6.74 36.1 71.2 9.0 7 Floating rate 5,999,571 148 171 7.97 62.1 85.0 11.2 8 Demand7 15,152,616 266 7.53 62.5 74.2 8.5 9 Fixed rate 2,828,925 751 6.15 30.1 84.6 25.5 10 Floating rate 12,323,690 232 7.84 69.9 71.8 4.6 11 Total short term 39,272,640 298 6.97 43.6 74.7 9.2 12 Fixed rate (thousands of dollars) .. 19,521,442 571 32 6.09 21.1 72.5 11.3 13 1-99 382,020 14 135 10.32 74.2 37.5 1.2 14 100-499 632,464 237 103 8.15 74.0 65.7 7.1 15 500-999 372,029 683 52 6.70 39.4 73.0 13.2 16 1,000-4,999 3,600,122 2,234 37 6.32 33.7 81.4 10.2 17 5,000-9,999 3,930,616 6,541 23 6.05 17.4 71.1 9.7 18 10,000 and over 10,604,190 17,848 26 5.73 12.5 71.7 12.8 19 Floating rate (thousands of dollars) 19,751,198 203 141 7.83 65.8 76.8 7.0 20 1-99 1,890,569 25 171 9.17 79.4 80.2 2.4 21 100-499 3,446,291 202 152 8.82 79.7 85.3 5.7 22 500-999 1,747,472 682 165 8.48 66.9 85.9 6.0 23 1,000-4,999 4,468,412 1,991 136 7.99 61.7 85.6 10.4 24 5,000-9,999 2,210,022 6,688 109 7.37 58.9 85.5 9.1 25 10,000 and over 5,988,432 22,510 131 6.71 58.7 58.2 6.2 Months 26 Total long term 5,089,014 210 8.08 73.7 71.2 4.9 27 Fixed rate (thousands of dollars) .. 943,589 90 7.82 67.0 71.5 3.0 28 1-99 148,831 16 10.37 90.4 27.1 .0 29 100-499 133,855 185 9.66 84.7 29.9 2.9 30 500-999 40,332 730 8.62 80.2 61.6 2.9 31 1,000 and over 620,570 4,018 6.75 56.7 91.8 3.7 32 Floating rate (thousands of dollars) 4,145,425 300 8.14 75.2 71.2 5.3 33 1-99 244,406 26 9.79 85.3 38.1 1.4 34 100-499 661,433 222 8.97 82.5 50.1 5.5 35 500-999 506,116 694 8.34 77.0 58.0 7.9 36 1,000 and over 2,733,470 3,560 7.76 72.3 81.6 5.2 Loan rate (percent) Days Effective3 Nominal8 LOANS MADE BELOW PRIME 0 37 Overnight6 8,280,683 7,151 5.63 62.5 7.4 38 One month and under (excluding overnight) 4,837,371 2,573 18 6.09 6.03 28.4 83.2 11.8 39 Over one month and under a year 5,108,667 735 116 6.05 5.99 33.7 83.0 11.8 40 Demand7 6,823,794 1,949 5.95 5.87 44.6 63.7 12.1 41 Total short term 25,050,516 1,857 5.89 5.84 26.3 10.4 42 Fixed rate 17,992,687 2,483 5.84 5.79 17.3 73.2 11.7 43 Floating rate 7,057,829 1,131 6.03 5.94 49.3 65.5 7.2 Months 44 Total long term 1,880,736 686 47 6.55 6.46 59.1 79.0 4.6 45 Fixed rate .. 559,333 434 6.31 6.26 54.6 92.2 3.9 46 Floating rate 1,321,403 911 6.66 6.54 61.1 73.4 5.0 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A79 4.23—Continued Characteristic A ( m $ l 1 o o , a u 0 n n 0 s t 0 o ) f A ($ v 1 s e , i 0 z ra e 0 g 0 e ) W m av e a e i t g u ra h r g i t t e e y d W av L e e i o g r a a h n g t e e r d a te (p S er ta c n en d t a ) r d c s o L e l c l o b a u a y t r n e e r s d a l c L o u m m m n o a e d a m d n n e e t i r s t - (p P p l e a a o r r t a c t i i n o e c s n n i - t ) Days effective error (percent) (percent) LARGE BANKS 1 Overnight6 6,892,355 6,982 60.9 2 One month and under (excluding overnight) 4,341,523 2,818 18 6.31 30.6 83.2 6.3 3 Fixed rate 3,451,828 4,585 19 6.13 28.2 80.8 6.1 4 Floating rate 889,695 1,129 17 6.99 39.7 92.7 7.1 5 Over one month and under a year . 5,298,626 862 133 6.88 47.7 87.4 14.5 6 Fixed rate 2,112,606 2,427 108 6.16 33.1 83.8 10.3 7 Floating rate 3,186,020 604 150 7.35 57.4 89.7 17.3 8 Demand7 9,878,668 425 7.29 63.4 65.7 9.7 9 Fixed rate 1,893,860 2,060 5.97 23.0 80.8 34.4 10 Floating rate 7,984,807 358 7.61 73.0 62.1 3.8 11 Total short term 26,411,172 827 48 6.63 39.8 71.7 9.8 12 Fixed rate (thousands of dollars) .. 14,195,449 4,034 25 5.91 17.5 72.2 11.7 13 1-99 18,978 25 122 8.82 57.8 51.5 1.7 14 100-499 123,469 235 57 7.42 46.8 78.4 4.5 15 500-999 214,488 687 41 6.58 38.3 78.6 7.8 16 1,000-4,999 2,353,630 2,273 33 6.33 30.4 83.0 8.5 17 5,000-9,999 2,671,108 6,579 20 6.05 17.8 71.7 9.4 18 10,000 and over 8,813,775 18,633 23 5.72 13.0 69.2 13.5 19 Floating rate (thousands of dollars) 12,215,724 430 116 7.46 65.7 71.1 7.5 20 1-99 546,427 28 164 8.85 80.4 72.8 1.8 21 100-499 1,229,215 205 148 8.59 75.0 81.0 3.4 22 500-999 760,698 679 139 8.26 66.6 83.2 7.8 23 1,000-4,999 2,721,302 2,147 127 7.79 61.6 83.6 9.5 24 5,000-9,999 1,765,663 6,731 94 7.41 64.6 85.3 10.2 25 10,000 and over 5,192,419 23,673 108 6.78 64.3 55.3 7.2 Months 26 Total long term 3,522,402 683 7.73 72.2 77.8 27 Fixed rate (thousands of dollars) .. 492,526 1,181 6.53 51.2 94.3 2.1 28 1-99 6,561 28 9.60 84.4 30.9 .0 29 100-499 21,472 253 8.46 77.9 60.9 5.5 30 500-999 14,163 700 8.33 63.1 60.1 8.4 31 1,000 and over 450,330 5,975 6.33 49.1 97.9 1.7 32 Floating rate (thousands of dollars) 3,029,876 640 7.92 75.6 75.1 6.0 33 1-99 72,552 34 8.78 85.8 44.9 2.1 34 100-499 355,865 235 8.47 81.1 55.7 9.2 35 500-999 325,172 694 8.28 79.1 63.6 8.4 36 1,000 and over 2,276,286 3,693 7.76 73.9 80.7 5.3 Loan rate (percent) Days Effective3 Nominal8 LOANS MADE BELOW PRIME10 37 Overnight6 6,723,748 7,718 5.64 5.61 60.0 38 One month and under (excluding overnight) 3,913,144 4,613 18 6.06 6.01 27.7 82.0 5.3 39 Over one month and under a year 3,514,055 3,599 108 5.97 5.93 37.5 87.0 13.6 40 Demand7 5,050,918 4,145 5.88 5.79 50.9 51.5 13.4 41 Total short term 19,201,865 4,906 32 5.85 5.80 27.3 67.2 42 Fixed rate 13,636,135 5,581 5.82 5.78 15.4 71.3 11.6 43 Floating rate 5,565,730 3,784 5.92 5.84 56.4 57.2 6.4 Months 44 Total long term 1,387,559 2,204 45 6.21 6.13 55.1 45 Fixed rate .. 407,332 3,804 6.01 5.97 49.2 97.3 1.6 46 Floating rate 980,227 1,876 6.30 6.19 57.5 71.4 6.7 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

All Special Tables • September 1992 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 4-8, 1991'—Continued Commercial and industrial loans—Continued Weighted Loan rate (percent) Loans Loans Amount of Average average secured made Partici- Characteristic ($ l 1 o , a 0 n 0 s 0 ) ($1 s , i 0 ze 0 0) m D at a u y ri s t y W e a f v e f e e ig r c a h ti g t v e e e d St e a r n r d o a r rd c (p o e ll r b a c y t e e n ra t) l ( c p o u m e m n r e c d m n e e t n i r t t - ) (p p l e o a r t a c i n o e s n n t ) OTHER BANKS 1 Overnight6 1,619,682 2,198 5.67 74.2 2 One month and under (excluding overnight) 1,332,519 211 21 7.03 44.8 86.8 28.9 3 Fixed rate 955,281 280 20 6.44 32.6 86.2 32.3 4 Floating rate 377,237 129 23 8.54 75.7 88.1 20.2 5 Over one month and under a year . 4,635,319 79 162 8.18 56.4 70.6 5.5 6 Fixed rate 1,821,768 77 112 7.41 39.5 56.5 7.6 7 Floating rate 2,813,551 194 8.67 67.4 79.6 4.2 8 Demand7 5,273,948 157 7.% 60.8 90.3 6.3 9 Fixed rate 935,065 328 6.53 44.6 92.3 7.4 10 Floating rate 4,338,883 141 8.27 64.3 89.9 6.1 11 Total short term 12,861,468 129 7.66 51.3 80.8 7.8 12 Fixed rate (thousands of dollars) .. 5,325,993 174 51 6.56 30.5 73.5 10.2 13 1-99 363,042 13 135 10.40 75.0 36.8 1.2 14 100-499 508,9% 238 113 8.33 80.5 62.7 7.7 15 500-999 157,541 677 69 6.87 40.9 65.3 20.5 16 1,000-4,999 1,246,492 2,164 47 6.31 39.9 78.6 13.4 17 5,000-9,999 1,259,509 6,461 27 6.04 16.4 69.9 10.3 18 10,000 and over 1,790,415 14,781 39 5.78 9.8 83.7 9.4 19 Floating rate (thousands of dollars) 7,535,475 109 174 8.43 66.0 86.0 6.2 20 1-99 1,344,142 24 172 9.30 79.0 83.2 2.7 21 100-499 2,217,076 200 153 8.95 82.2 87.7 7.0 22 500-999 986,774 684 179 8.65 67.1 88.0 4.6 23 1,000-4,999 1,747,111 1,789 156 8.29 61.9 88.7 11.9 24 5,000-9,999 444,359 6,521 201 7.20 36.5 86.3 5.1 25 10,000 and over 7%,013 17,047 285 6.28 22.8 77.2 .0 Months 26 Total long term 1,566,612 82 8.88 77.1 56.5 3.7 27 Fixed rate (thousands of dollars) .. 451,063 45 9.22 84.2 46.7 3.9 28 1-99 142,270 15 10.41 90.7 27.0 .0 29 100-499 112,383 176 9.88 85.9 24.0 2.4 30 500-999 26,169 747 8.78 89.4 62.4 .0 31 1,000 and over 170,240 2,153 7.87 76.8 75.7 8.9 32 Floating rate (thousands of dollars) 1,115,548 123 8.74 74.3 60.4 3.6 33 1-99 171,854 24 10.21 85.0 35.2 1.1 34 100-499 305,568 208 9.56 84.0 43.7 1.2 35 500-999 180,943 694 8.46 73.4 48.0 6.9 36 1,000 and over 457,183 3,020 7.76 64.1 86.1 4.7 Loan rate (percent) Days Effective3 Nominal8 LOANS MADE BELOW PRIME10 37 Overnight6 1,556,935 5,427 5.57 5.51 73.3 1.9 38 One month and under (excluding overnight) 924,228 8% 20 6.21 6.12 31.6 88.5 39.5 39 Over one month and under a year 1,594,612 267 133 6.21 6.14 25.2 74.2 7.8 40 Demand7 1,772,876 777 6.17 6.10 26.8 98.3 8.4 41 Total short term 5,848,651 611 57 6.03 5.96 23.0 83.5 11.4 42 Fixed rate 4,356,552 907 36 5.90 5.84 23.1 79.1 12.0 43 Floating rate 1,492,099 313 189 6.41 6.31 22.6 %.4 9.9 Months 44 Total long term 493,177 234 7.51 7.40 3.1 45 Fixed rate .. 152,001 128 7.10 7.03 69.1 78.6 9.9 46 Floating rate 341,175 368 7.69 7.56 71.4 79.4 .0 For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A73 NOTES TO TABLE 4.23 1. As of Sept. 30, 1990, assets of most of the large banks were at least $7.0 6. Overnight loans mature on the following business day. billion. For all insured banks, total assets averaged $275 million. 7. Demand loans have no stated date of maturity. 2. Average maturities are weighted by loan size and exclude demand loans. 8. Nominal (not compounded) annual interest rates are calculated from the 3. Effective (compounded) annual interest rates are calculated from the stated stated rate and other terms of the loans and weighted by loan size. rate and other terms of the loans and weighted by loan size. 9. The prime rate reported by each bank is weighted by the volume of loans 4. The chances are about two out of three that the average rate shown would extended and then averaged. differ by less than this amount from the average rate that would be found by a 10. The proportion of loans made at rates below the prime may vary substancomplete survey of lending at all banks. tially from the proportion of such loans outstanding in banks' portfolios. 5. The most common base rate is that used to price the largest dollar volume of NOTE. Results of the surveys for November 1991 and February 1992 are being loans. Base pricing rates include the prime rate (sometimes referred to as a bank's republished because of revisions. The survey results for May 1992 have been "basic" or "reference" rate); the federal funds rate; domestic money market revised and differ from those published in the E. 2 (III) quarterly statistical release rates other than the federal funds rate; foreign money market rates; and other base dated June 12. rates not included in the foregoing classifications. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Special Tables • September 1992 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, February 3-7, 19921 Commercial and industrial loans Weighted Loan rate (percent) Loans Loans Amount of Average average secured made Partici- Characteristic ($ l 1 o , a 0 n 0 s 0 ) ($1 si ,0 ze 0 0) maturity2 W av e e ig ra h g te e d Standard coll b a y te ral co u m m n e d m n e t i r t - (p p l e o a r t a c i n o e s n n t ) Days effective3 (percent) (percent) ALL BANKS 1 Overnight6 8,852,551 4.73 63.0 1.2 2 One month and under (excluding overnight) 6,860,670 873 20 5.48 32.3 83.5 11.3 3 Fixed rate 5,273,654 1,337 20 5.21 26.5 81.0 8.7 4 Floating rate 1,587,016 405 22 6.40 51.5 91.7 19.9 5 Over one month and under a year . 9,259,577 147 155 6.51 59.9 82.6 11.7 6 Fixed rate 3,454,955 148 141 5.92 52.5 70.1 16.2 7 Floating rate 5,804,623 147 163 6.86 64.3 90.0 9.0 8 Demand7 17,092,623 308 6.10 56.7 66.0 13.5 9 Fixed rate 4,417,607 781 5.50 41.6 82.5 32.8 10 Floating rate 12,675,016 254 6.31 61.9 60.3 6.8 11 Total short term 42,065,420 329 5.80 42.7 71.9 10.2 12 Fixed rate (thousands of dollars) .. 21,998,765 638 34 5.18 25.3 72.3 11.7 13 1-99 447,808 16 146 9.09 76.1 35.5 .3 14 100-499 447,427 198 107 7.42 72.5 57.4 11.1 15 500-999 428,562 662 66 6.32 50.2 75.4 17.3 16 1,000-4,999 3,347,431 2,316 37 5.39 29.1 83.3 9.4 17 5,000-9,999 3,735,157 6,731 41 5.03 21.7 72.8 7.1 18 10,000 and over 13,592,380 18,904 25 4.94 21.4 71.1 13.7 19 Floating rate (thousands of dollars) 20,066,655 215 133 6.47 61.8 71.4 8.5 20 1-99 1,873,627 26 154 8.10 82.5 84.0 2.4 21 100-499 3,278,056 201 149 7.58 77.8 89.0 6.1 22 500-999 1,842,735 649 122 7.26 70.0 86.1 11.6 23 1,000-4,999 3,981,468 1,912 135 6.94 65.4 86.0 15.0 24 5,000-9,999 2,116,783 6,727 114 6.24 51.7 79.0 15.9 25 10,000 and over 6,973,986 24,941 123 5.12 47.6 45.2 4.4 Months 26 Total long term 5,793,480 233 6.74 57.5 76.6 12.9 27 Fixed rate (thousands of dollars) .. 1,921,688 162 6.33 53.3 80.7 21.3 28 1-99 224,393 21 9.53 94.9 13.9 1.6 29 100-499 172,766 210 8.82 91.6 60.9 10.3 30 500-999 58,944 692 6.68 56.0 64.4 6.5 31 1,000 and over 1,465,585 6,640 5.53 42.3 94.0 26.2 32 Floating rate (thousands of dollars) 3,871,792 298 6.95 59.6 74.5 33 1-99 237,723 26 8.43 85.5 44.5 3.4 34 100-499 631,358 220 7.74 79.6 69.8 8.5 35 500-999 345,444 680 7.22 63.8 80.6 17.1 36 1,000 and over 2,657,267 4,753 6.59 51.9 77.5 8.3 Loan rate (percent) Days Effective3 Nominal8 LOANS MADE BELOW PRIME1" 37 Overnight6 8,825,419 8,116 4.72 4.69 5.9 62.9 38 One month and under (excluding overnight) 5,776,881 4,085 19 5.06 5.04 23.3 83.4 9.3 39 Over one month and under a year 4,367,112 642 153 5.07 5.02 39.9 85.9 17.4 40 Demand7 8,667,206 2,375 4.76 4.71 39.4 50.4 11.9 41 Total short term 27,636,617 2,133 4.86 4.82 25.4 66.9 8.8 42 Fixed rate 19,502,696 2,942 29 4.86 4.82 18.4 71.9 10.0 43 Floating rate 8,133,922 1,285 117 4.87 4.81 42.2 54.8 5.8 Months 44 Total long term 2,237,453 727 5.21 5.16 50.1 21.1 45 Fixed rate .. 1,261,121 865 5.25 5.19 40.4 96.6 30.1 46 Floating rate 976,333 603 5.16 5.12 62.7 81.9 9.4 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A79 4.23—Continued Weighted Loan rate (percent) Loans Loans Characteristic A ( m $ l 1 o o , a u 0 n n 0 s t 0 ) o f A ($ v 1 s e , i 0 z ra e 0 g 0 e ) m av a e tu ra ri g t e y W av e e ig ra h g te e d St e a r n r d o a r rd c ( s p o e e l c l r b a u c y t r e e e n r d a t) l co u m m m n a e d m d n e e t i r t - (p P p l e a o a r r t a c t i i n o e c s n n i - t ) Days effective (percent) LARGE BANKS 1 Overnight6 7,313,490 8,444 3.8 1.4 2 One month and under (excluding overnight) 5,603,683 3,567 19 5.25 26.6 82.7 7.7 3 Fixed rate 4,623,736 5,404 19 5.15 23.3 80.3 6.7 4 Floating rate 979,948 1,370 20 5.71 42.0 94.3 12.5 5 Over one month and under a year . 4,778,871 859 154 5.77 52.8 86.5 17.1 6 Fixed rate 2,294,739 2,147 150 5.28 48.5 79.7 19.5 7 Floating rate 2,484,132 553 157 6.22 56.7 92.9 14.9 8 Demand7 11,587,794 688 5.79 54.1 56.8 14.6 9 Fixed rate 3,408,457 1,804 5.53 44.9 78.9 40.6 10 Floating rate 8,179,337 547 5.89 58.0 47.6 3.8 11 Total short term 29,283,838 1,179 48 5.41 36.1 66.8 10.4 12 Fixed rate (thousands of dollars) .. 17,640,422 3,769 31 5.06 22.7 70.4 12.7 13 1-99 43,853 28 123 8.00 76.7 64.5 1.6 14 100-499 154,698 233 72 6.63 60.2 81.0 7.0 15 500-999 234,061 673 54 5.68 38.4 85.0 8.6 16 1,000-4,999 2,533,449 2,321 34 5.38 28.0 80.6 9.8 17 5,000-9,999 2,724,722 6,714 46 4.99 20.0 66.1 7.7 18 10,000 and over 11,949,640 19,512 26 4.97 21.2 68.9 14.7 19 Floating rate (thousands of dollars) 11,643,417 577 118 5.95 56.4 61.2 6.9 20 1-99 379,676 30 149 7.72 79.8 85.2 1.6 21 100-499 1,066,362 210 144 7.31 71.2 89.6 5.6 22 500-999 678,627 664 131 7.10 61.8 90.0 9.6 23 1,000-4,999 2,133,926 2,062 133 6.77 60.4 88.5 13.2 24 5,000-9,999 1,598,747 6,802 105 6.23 45.5 82.0 11.5 25 10,000 and over 5,786,078 28,207 105 5.06 53.0 35.1 3.6 Months 26 Total long term 3,982,697 1,162 6.30 48.9 85.0 16.0 27 Fixed rate (thousands of dollars) .. 1,281,753 1,740 5.48 46.2 97.7 30.0 28 1-99 9,137 24 8.74 90.4 36.6 2.4 29 100-499 30,403 244 7.28 69.8 74.5 7.2 30 500-999 47,005 707 6.55 51.2 74.6 8.1 31 1,000 and over 1,195,208 7,179 5.37 45.0 99.6 31.6 32 Floating rate (thousands of dollars) 2,700,944 1,004 6.69 50.2 79.0 9.3 33 1-99 33,599 37 7.76 75.7 70.7 8.6 34 100-499 241,735 229 7.46 72.9 82.9 12.7 35 500-999 209,906 695 7.20 59.6 86.0 18.6 36 1,000 and over 2,215,704 5,303 6.54 46.4 78.0 8.1 Loan rate (percent) Days Effective3 Nominal8 LOANS MADE BELOW PRIME10 37 Overnight6 7,293,607 8,629 4.71 3.8 1.4 38 One month and under (excluding overnight) 5,137,714 5,948 19 5.08 5.05 22.1 82.2 7.1 39 Over one month and under a year 3,196,368 4,253 149 4.97 4.92 43.0 86.3 21.2 40 Demand7 6,880,124 5,723 4.70 4.65 44.5 38.1 12.9 41 Total short term 22,507,814 6,145 37 4.80 61.2 42 Fixed rate 16,121,155 6,421 4.86 4.83 17.6 68.4 10.5 43 Floating rate 6,386,659 5,543 4.76 4.71 47.0 43.2 5.3 Months 44 Total long term 1,843,965 4,255 42 5.02 4.96 49.3 94.5 45 Fixed rate .. 1,057,743 4,635 5.09 5.02 40.5 99.5 35.3 46 Floating rate 786,222 3,832 4.93 4.88 61.2 87.7 10.3 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

All Special Tables • September 1992 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, February 3-7, 1992'—Continued Commercial and industrial loans—Continued Weighted Loan rate (percent) Loans Loans Amount of Average average secured made Partici- Characteristic ($ l 1 o , a 0 n 0 s 0 ) ($1 si ,0 ze 0 0) m D at a u y ri s t y W e a f v e f e e ig r c a h ti g t v e e e d St e a r n r d o a r r d c (p o e ll r b a c y t e e n ra t) l ( c p o u e m m n r e c d m n e e t n i r t t - ) (p p l e o a r t a c i n e o s n n t ) OTHER BANKS 1 Overnight6 1,539,061 2,153 4.77 15.8 89.3 2 One month and under (excluding overnight) 1,256,987 200 24 6.52 57.5 87.0 27.1 3 Fixed rate 649,918 210 24 5.59 48.7 86.5 22.6 4 Floating rate 607,069 190 24 7.52 66.9 87.5 32.0 5 Over one month and under a year . 4,480,706 78 156 7.31 67.5 78.4 5.9 6 Fixed rate 1,160,215 52 124 7.20 60.2 51.2 9.5 7 Floating rate 3,320,490 95 168 7.34 70.1 87.9 4.6 8 Demand7 5,504,829 142 6.75 62.0 85.5 11.2 9 Fixed rate 1,009,149 268 5.39 30.6 94.8 6.8 10 Floating rate 4,495,679 129 7.06 69.1 83.5 12.2 11 Total short term 12,781,582 124 6.69 57.9 83.6 9.6 12 Fixed rate (thousands of dollars) .. 4,358,343 146 48 5.68 35.9 80.0 7.5 13 1-99 403,956 15 147 9.21 76.0 32.4 .2 14 100-499 292,729 183 117 7.84 79.0 44.9 13.3 15 500-999 194,501 650 78 7.10 64.4 63.8 27.8 16 1,000-4,999 813,983 2,301 44 5.39 32.6 91.9 8.0 17 5,000-9,999 1,010,434 6,780 28 5.16 26.3 90.9 5.5 18 10,000 and over 1,642,740 15,407 18 4.73 22.7 87.4 6.8 19 Floating rate (thousands of dollars) 8,423,239 115 146 7.21 69.3 85.5 10.7 20 1-99 1,493,951 25 154 8.20 83.1 83.7 2.7 21 100-499 2,211,694 197 151 7.71 80.9 88.7 6.4 22 500-999 1,164,109 641 119 7.34 74.8 83.9 12.8 23 1,000-4,999 1,847,541 1,764 137 7.13 71.2 83.1 17.1 24 5,000-9,999 518,036 6,505 141 6.25 70.7 69.9 29.4 25 10,000 and over 1,187,908 15,946 168 5.41 21.4 94.0 8.4 Months 26 Total long term 1,810,783 84 7.71 76.4 58.1 6.2 27 Fixed rate (thousands of dollars).. 639,936 57 8.04 67.5 46.8 3.8 28 1-99 215,256 21 9.56 95.1 13.0 1.6 29 100-499 142,363 203 9.15 96.2 58.0 11.0 30 500-999 11,940 637 7.21 74.8 24.2 .0 31 1,000 and over 270,377 4,984 6.28 30.0 68.9 2.0 32 Floating rate (thousands of dollars) 1,170,847 114 7.54 81.3 64.3 7.5 33 1-99 204,124 25 8.54 87.1 40.2 2.6 34 100-499 389,623 215 7.91 83.8 61.7 5.9 35 500-999 135,538 659 7.23 70.3 72.4 14.7 36 1,000 and over 441,563 3,127 6.83 79.6 75.3 9.1 Loan rate (percent) Days Effective3 Nominal8 LOANS MADE BELOW PRIME10 37 Overnight6 1,531,811 6,327 4.75 4.69 15.8 89.6 38 One month and under (excluding overnight) 639,167 1,161 24 4.95 4.90 33.5 93.0 27.0 39 Over one month and under a year 1,170,744 193 163 5.36 5.29 31.5 84.9 7.3 40 Demand7 1,787,082 730 4.99 4.93 19.9 97.8 7.9 41 Total short term 5,128,803 62 5.00 23.0 91.8 7.8 42 Fixed rate 3,381,541 821 27 4.86 4.80 22.2 88.9 7.9 43 Floating rate 1,747,262 338 167 5.27 5.19 24.6 97.4 7.6 Months 44 Total long term 393,488 149 38 6.09 6.06 54.1 45 Fixed rate .. 203,378 165 6.07 6.05 40.0 81.8 2.7 46 Floating rate 190,111 134 6.12 6.08 69.2 58.1 5.7 For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A73 NOTES TO TABLE 4.23 1. As of Sept. 30, 1990, assets of most of the large banks were at least $7.0 6. Overnight loans mature on the following business day. billion. For all insured banks, total assets averaged $275 million. 7. Demand loans have no stated date of maturity. 2. Average maturities are weighted by loan size and exclude demand loans. 8. Nominal (not compounded) annual interest rates are calculated from the 3. Effective (compounded) annual interest rates are calculated from the stated stated rate and other terms of the loans and weighted by loan size. rate and other terms of the loans and weighted by loan size. 9. The prime rate reported by each bank is weighted by the volume of loans 4. The chances are about two out of three that the average rate shown would extended and then averaged. differ by less than this amount from the average rate that would be found by a 10. The proportion of loans made at rates below the prime may vary substancomplete survey of lending at all banks. tially from the proportion of such loans outstanding in banks' portfolios. 5. The most common base rate is that used to price the largest dollar volume of NOTE. Results of the surveys for November 1991 and February 1992 are being loans. Base pricing rates include the prime rate (sometimes referred to as a bank's republished because of revisions. The survey results for May 1992 have been "basic" or "reference" rate); the federal funds rate; domestic money market revised and differ from those published in the E. 2 (III) quarterly statistical release rates other than the federal funds rate; foreign money market rates; and other base dated June 12. rates not included in the foregoing classifications. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Special Tables • September 1992 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 4-8, 19921 Commercial and industrial loans Weighted Loan rate (percent) Loans Loans Amount of Average average secured made Partici- Characteristic ($ l 1 o , a 0 n 0 s 0 ) ($1 s , i 0 ze 0 0) maturity2 W av e e ig ra h g te e d Standard coll b at y e ral co u m m n e d m n e t i r t - (p p l e o a r t a c i n o e s n n t ) Days effective3 (percent) (percent) ALL BANKS 1 Overnight6 9,801,367 .27 60.9 8.9 2 One month and under (excluding overnight) 5,927,806 620 14 5.18 23.3 82.6 9.0 3 Fixed rate 4,382,878 1,032 13 4.70 13.7 81.0 10.4 4 Floating rate 1,544,927 290 17 6.53 50.6 87.1 5.0 5 Over one month and under a year . 9,498,676 148 153 6.36 63.0 84.6 14.1 6 Fixed rate 4,071,455 153 112 5.85 59.8 80.9 21.7 7 Floating rate 5,427,221 145 184 6.74 65.5 87.4 8.4 8 Demand7 13,980,395 246 6.23 67.4 68.6 10.3 9 Fixed rate 2,611,382 502 5.11 32.8 78.4 28.7 10 Floating rate 11,369,013 220 6.48 75.4 66.3 6.1 11 Total short term 39,208,244 297 5.66 45.0 72.7 10.7 12 Fixed rate (thousands of dollars) .. 20,864,840 554 29 4.87 22.7 71.2 14.2 13 1-99 516,129 16 141 9.10 77.4 45.5 1.8 14 100-499 493,785 183 111 7.59 68.3 60.6 5.4 15 500-999 360,578 678 75 5.63 43.0 74.3 11.1 16 1,000-4,999 3,816,775 2,382 46 5.11 35.3 82.2 15.5 17 5,000-9,999 3,977,021 6,718 24 4.84 16.0 70.0 12.3 18 10,000 and over 11,700,551 18,678 17 4.48 16.0 69.5 15.4 19 Floating rate (thousands of dollars) 18,343,404 194 147 6.56 70.4 74.3 6.7 20 1-99 1,775,314 24 163 8.05 83.2 83.6 2.5 21 100-499 3,021,335 199 161 7.43 76.3 87.0 4.5 22 500-999 1,7%, 099 666 167 7.38 71.2 90.5 7.0 23 1,000-4,999 4,241,619 1,977 143 6.73 65.0 87.4 8.3 24 5,000-9,999 2,138,041 6,570 195 6.46 57.0 83.8 19.5 25 10,000 and over 5,370,9% 23,812 85 5.22 72.0 44.6 2.8 26 Total long term 5,672,136 231 7.11 70.6 78.8 18.7 27 Fixed rate (thousands of dollars) .. 1,266,741 116 59 7.27 76.5 64.7 8.9 28 1-99 157,943 16 47 9.83 90.3 23.3 2.4 29 100-499 188,553 205 51 8.79 90.6 48.3 7.9 30 500-999 123,545 6% 113 8.64 94.5 22.8 22.9 31 1,000 and over 796,700 4,845 54 6.19 67.6 83.3 8.3 32 Floating rate (thousands of dollars) 4,405,395 323 41 7.06 68.9 82.8 21.6 33 1-99 250,726 27 45 8.44 85.8 45.9 1.8 34 100-499 575,983 211 53 7.71 81.4 64.3 11.2 35 500-999 675,806 706 45 7.39 80.8 70.7 9.0 36 1,000 and over 2,902,881 4,030 38 6.73 62.2 92.5 28.3 Loan rate (percent) Days Effective3 Nominal8 LOANS MADE BELOW PRIME1" 37 Overnight6 9,600,429 8,009 4.43 38 One month and under (excluding overnight) 4,900,931 3,682 13 4.60 4.58 13.6 83.5 9.4 39 Over one month and under a year 4,601,876 672 116 4.93 4.91 46.2 90.6 18.8 40 Demand7 6,104,679 2,278 4.60 4.55 57.2 48.3 15.0 41 Total short term 25,207,915 2,091 28.3 12.3 42 Fixed rate 19,076,999 2,904 23 4.58 4.56 18.3 72.1 14.8 43 Floating rate 6,130,916 1,118 100 4.66 4.60 59.3 54.2 4.6 Months 44 Total long term 1,209,099 439 40 5.12 5.07 50.7 85.7 45 Fixed rate .. 499,063 586 5.28 5.24 53.0 75.0 4.9 46 Floating rate 710,036 374 5.01 4.95 49.1 93.3 24.9 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A79 4.23—Continued Characteristic A ( m $ l 1 o o , a u 0 n n 0 s t 0 ) o f A ($ v 1 s e i ,0 z ra e 0 g 0 e ) W m av e a e i t g u ra h r g i t t e e y d W av L e e i o g r a a h n g t e e r d a te (p S er ta c n en d t a ) r d c s o L e l c l o b a u a y t r n e e r s d a l c L o u m m m n o a e d a m d n n e e t r i s t - ( P p p l e a o a r r t a c t i i n o e c s n n i - t) Days effective error (percent) (percent) LARGE BANKS 1 Overnight6 7,993,617 8,385 4.51 .23 6.3 52.2 10.8 2 One month and under (excluding overnight) 4,274,878 2,905 13 5.07 20.4 79.8 8.9 3 Fixed rate 3,411,157 5,646 13 4.70 12.6 78.0 9.6 4 Floating rate 863,721 9% 16 6.57 51.5 86.9 6.1 5 Over one month and under a year . 4,738,174 819 129 5.64 51.1 87.8 7.2 6 Fixed rate 2,305,434 2,182 88 5.22 46.4 85.4 8.2 7 Floating rate 2,432,740 514 167 6.04 55.5 90.1 6.3 8 Demand7 9,271,501 545 5.83 64.5 59.7 11.8 9 Fixed rate 1,984,113 1,831 4.87 26.1 76.9 34.9 10 Floating rate 7,287,388 457 6.09 74.9 55.1 5.5 11 Total short term 26,278,170 1,042 5.27 37.2 65.8 10.2 12 Fixed rate (thousands of dollars) .. 15,694,321 4,244 19 4.70 16.1 65.8 13.2 13 1-99 22,602 27 95 7.44 57.9 48.8 .6 14 100-499 110,510 234 76 6.24 54.2 77.0 3.5 15 500-999 205,993 702 70 5.51 40.5 79.4 11.0 16 1,000-4,999 2,632,624 2,391 28 5.13 28.1 77.7 10.5 17 5,000-9,999 3,410,697 6,761 23 4.82 14.7 66.7 13.0 18 10,000 and over 9,311,895 19,443 13 4.49 12.1 61.7 14.3 19 Floating rate (thousands of dollars) 10,583,848 492 127 6.12 68.5 65.7 5.7 20 1-99 417,212 31 150 7.71 80.4 87.0 1.8 21 100-499 1,110,304 204 143 7.31 70.9 88.7 4.0 22 500-999 710,263 672 151 6.95 63.6 90.0 6.4 23 1,000-4,999 2,230,488 2,017 146 6.65 55.2 87.5 9.1 24 5,000-9,999 1,297,321 6,595 151 6.30 51.1 81.8 12.1 25 10,000 and over 4,818,259 25,735 5.29 78.6 40.6 3.2 26 Total long term 3,474,104 941 6.78 .20 65.2 92.1 23.9 27 Fixed rate (thousands of dollars) .. 492,970 877 6.57 .39 73.0 90.0 3.5 28 1-99 9,358 27 9.44 .22 91.9 37.4 .0 29 100-499 26,7% 230 8.59 .71 84.2 50.2 2.8 30 500-999 14,779 671 7.% .99 53.8 27.5 .0 31 1,000 and over 442,038 6,101 6.34 .48 72.5 95.6 3.8 32 Floating rate (thousands of dollars) 2,981,133 952 6.81 .13 63.9 92.4 27.3 33 1-99 44,589 35 7.70 .07 85.0 71.5 4.4 34 100-499 238,990 232 7.50 .07 77.2 80.3 8.8 35 500-999 235,532 687 7.29 .12 70.1 83.3 16.2 36 1,000 and over 2,462,022 4,993 6.69 .38 61.6 94.8 30.6 Loan rate (percent) Days Effective3 Nominal8 LOANS MADE BELOW PRIME1" 37 Overnight6 7,815,361 8,616 4.45 4.43 6.4 52.3 11.1 38 One month and under (excluding overnight) 3,752,869 5,897 13 4.65 4.63 13.7 80.0 8.6 39 Over one month and under a year 2,966,097 3,471 101 4.65 4.64 37.4 90.7 7.2 40 Demand7 5,044,801 5,190 4.53 4.48 62.2 38.3 16.2 41 Total short term 19,579,128 5,810 4.54 4.51 59.8 11.3 42 Fixed rate 14,866,358 6,115 17 4.56 4.54 13.6 65.4 13.7 43 Floating rate 4,712,770 5,018 100 4.49 4.43 68.7 42.1 4.0 Months 44 Total long term 782,079 3,103 4.82 4.78 52.0 95.5 22.4 45 Fixed rate .. 214,416 2,959 5.04 5.03 54.2 91.4 3.2 46 Floating rate 567,662 3,161 4.74 4.68 51.2 97.0 29.7 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

All Special Tables • September 1992 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 4-8, 1992'—Continued Commercial and industrial loans—Continued Weighted Loan rate (percent) Loans Loans Amount of Average average secured made Partici- Characteristic ($ l 1 o , a 0 n 0 s 0 ) ($1 si ,0 ze 0 0) m D at a u y r s it y W e a f v e f e e ig r c a h ti g t v e e e d St e a r n r d o a r rd c (p o e ll r b a c y t e e n ra t) l ( c p o u e m m n r e c d m n e e n t i r t t - ) (p p l e o a r t a c i n o e s n n t ) OTHER BANKS 1 Overnight6 1,807,751 3,268 4.38 19.6 99.3 2 One month and under (excluding overnight) 1,652,928 204 17 5.45 30.7 89.8 9.1 3 Fixed rate 971,721 267 16 4.72 17.5 91.6 13.1 4 Floating rate 681,207 153 18 6.48 49.5 87.2 3.5 5 Over one month and under a year. 4,760,502 82 177 7.07 74.9 81.4 20.9 6 Fixed rate 1,766,021 69 143 6.66 77.2 75.0 39.2 7 Floating rate 2,994,481 92 197 7.32 73.6 85.2 10.0 8 Demand7 4,708,894 118 7.01 73.2 86.0 7.5 9 Fixed rate 627,269 152 5.86 53.7 83.3 9.2 10 Floating rate 4,081,625 114 7.18 76.2 86.4 7.2 11 Total short term 12,930,075 121 6.46 60.9 86.7 11.6 12 Fixed rate (thousands of dollars) .. 5,170,519 152 60 5.40 43.0 87.6 17.0 13 1-99 493,528 16 142 9.18 78.3 45.3 1.8 14 100-499 383,275 172 118 7.98 72.4 55.8 5.9 15 500-999 154,585 649 81 5.78 46.4 67.5 11.3 16 1,000-4,999 1,184,151 2,363 82 5.07 51.3 92.4 26.4 17 5,000-9,999 566,324 6,471 31 4.94 24.1 89.4 8.0 18 10,000 and over 2,388,656 16,191 31 4.46 31.1 100.0 19.8 19 Floating rate (thousands of dollars) 7,759,556 107 164 7.17 72.9 86.0 8.0 20 1-99 1,358,101 23 165 8.15 84.1 82.5 2.7 21 100-499 1,911,031 197 168 7.51 79.4 86.0 4.8 22 500-999 1,085,836 663 175 7.67 76.2 90.8 7.4 23 1,000-4,999 2,011,131 1,934 141 6.83 75.9 87.2 7.4 24 5,000-9,999 840,720 6,532 285 6.70 66.2 86.8 31.0 25 10,000 and over 552,736 14,420 75 4.63 15.1 79.9 .0 Months 26 Total long term 2,198,033 105 54 7.62 79.1 57.8 10.5 27 Fixed rate (thousands of dollars) .. 773,771 75 56 7.71 78.7 48.6 12.3 28 1-99 148,585 16 47 9.85 90.2 22.4 2.6 29 100-499 161,757 202 50 8.82 91.7 48.0 8.7 30 500-999 108,766 700 121 8.73 100.0 22.1 26.1 31 1,000 and over 354,663 3,856 42 6.00 61.5 68.0 13.9 32 Floating rate (thousands of dollars) 1,424,262 135 53 7.57 79.3 62.8 9.6 33 1-99 206,137 26 47 8.60 85.9 40.4 1.3 34 100-499 336,993 199 63 7.86 84.4 52.9 13.0 35 500-999 440,273 716 50 7.45 86.5 63.9 5.2 36 1,000 and over 440,859 1,940 50 7.00 65.2 79.6 15.2 Loan rate (percent) Days Effective3 Nominal8 LOANS MADE BELOW PRIME10 37 Overnight6 1,785,068 6,121 4.34 4.29 19.7 99.5 38 One month and under (excluding overnight) 1,148,062 1,653 15 4.45 4.42 13.4 94.9 11.8 39 Over one month and under a year 1,635,779 273 144 5.42 5.40 62.3 90.5 39.9 40 Demand7 1,059,878 621 4.94 4.89 33.3 95.9 9.4 41 Total short term 5,628,788 648 56 4.79 4.75 33.4 95.3 15.8 42 Fixed rate 4,210,641 1,018 46 4.65 4.61 35.1 95.6 18.9 43 Floating rate 1,418,146 312 100 5.22 5.16 28.4 94.4 6.7 Months 44 Total long term 427,020 171 38 5.68 5.60 48.3 67.8 6.1 45 Fixed rate .. 284,647 365 5.47 5.39 52.1 62.6 6.2 46 Floating rate 142,373 83 6.11 6.01 40.7 78.2 6.0 For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A73 NOTES TO TABLE 4.23 1. As of Sept. 30, 1990, assets of most of the large banks were at least $7/ 6. Overnight loans mature on the following business day. billion. For all insured banks, total assets averaged $275 million. 7. Demand loans have no stated date of maturity. 2. Average maturities are weighted by loan size and exclude demand loans. 8. Nominal (not compounded) annual interest rates are calculated from the 3. Effective (compounded) annual interest rates are calculated from the stated stated rate and other terms of the loans and weighted by loan size. rate and other terms of the loans and weighted by loan size. 9. The prime rate reported by each bank is weighted by the volume of loans 4. The chances are about two out of three that the average rate shown would extended and then averaged. differ by less than this amount from the average rate that would be found by a 10. The proportion of loans made at rates below the prime may vary substancomplete survey of lending at all banks. tially from the proportion of such loans outstanding in banks' portfolios. 5. The most common base rate is that used to price the largest dollar volume of NOTE. Results of the surveys for November 1991 and February 1992 are being loans. Base pricing rates include the prime rate (sometimes referred to as a bank's republished because of revisions. The survey results for May 1992 have been "basic" or "reference" rate); the federal funds rate; domestic money market revised and differ from those published in the E. 2 (III) quarterly statistical release rates other than the federal funds rate; foreign money market rates; and other base dated June 12. rates not included in the foregoing classifications. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A82 Special Tables • September 1992 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 19921 Millions of dollars All states New York California Illinois IItteemm in I T c B l o u t F d a s i l n g I o B n F ly 's in I T c B l o u F t d a ' i s l n g I o B n F ly 's in I T c B l o u F t d a ' i s l n g I o B n F ly 's in I T c B l o u F t d a ' i s l n g I o B n F ly s 1 Total assets4 683,493 287,168 508,220 224,912 84,606 35,870 53,382 18,199 2 Claims on nonrelated parties 583,627 202,064 425,253 165,870 76,923 16,802 53,018 15,492 3 Cash and balances due from depository institutions 147,971 122,889 124,587 101,223 8,848 8,240 12,864 12,545 4 Cash items in process of collection and unposted debits 2,431 0 2,308 0 2277 0 6677 00 5 Currency and coin (U.S. and foreign) 25 n.a. 18 n.a. 2 n.a. 1 n.a. 6 Balances with depository institutions in United States .. 82,814 61,833 69,625 49,934 5,423 4,867 6,917 6,679 7 U.S. branches and agencies of other foreign banks (including their IBFs) 76,134 58,584 64,025 47,034 4,978 4,737 6,481 66,,447733 8 Other depository institutions in United States (including their IBFs) 6,680 3,248 5,600 2,900 444455 130 443366 220077 9 Balances with banks in foreign countries and with foreign central banks 62,130 61,056 52,202 51,289 3,378 3,373 5,867 5,866 10 Foreign branches of U.S. banks 1,769 1,626 1,518 1,375 56 56 190 190 11 Other banks in foreign countries and foreign central banks 60,361 59,431 50,683 49,914 3,322 3,317 5,677 5,676 12 Balances with Federal Reserve Banks 572 n.a. 434 n.a. 18 n.a. 13 n.a. 13 Total securities and loans 365,380 68,493 243,658 55,895 60,603 7,304 35,720 2,465 14 Total securities, book value 63,968 14,657 58,475 13,549 3,419 656 1,633 400 15 U.S. Treasury 18,024 n.a. 17,808 n.a. 70 n.a. 111 n.a. 16 Obligations of U.S. government agencies and corporations 11,255 n.a. 1100,,882244 n.a. 226600 n.a. 110088 n.a. 17 Other bonds, notes, debentures and corporate stock (including state and local securities) 34,689 14,657 29,843 13,549 3,089 656 1,414 400 18 Federal funds sold and securities purchased under agreements to resell 21,700 2,664 19,782 1,810 924 560 587 117755 19 U.S. branches and agencies of other foreign banks 9,137 1,362 8,082 1,069 423 150 467 125 70 Commercial banks in United States 2,752 100 2,573 100 30 0 34 0 21 Other 9,811 1,202 9,127 641 471 410 87 50 22 Total loans, gross 301,543 53,849 185,269 42,357 57,216 6,649 34,093 2,065 73 Less: Unearned income on loans 131 12 86 11 32 1 6 0 24 Equals: Loans, net 301,412 53,836 185,183 42,346 57,184 6,648 34,086 2,065 Total loans, gross, by category 75 Real estate loans 54,449 585 27,918 329 1177,,224488 220022 55,,334422 5544 26 Loans to depository institutions 45,015 29,763 33,581 22,369 6,040 4,393 3,158 1,435 27 Commercial banks in United States (including IBFs) 24,765 12,757 18,020 9,185 4,290 2,660 2,069 843 28 U.S. branches and agencies of other foreign banks ... 21,532 11,460 15,771 8,144 3,927 2,420 1,602 882288 29 Other commercial banks in United States 3,233 1,296 2,249 1,041 363 240 467 1155 30 Other depository institutions in United States (including IBFs) 7 0 00 00 7 00 00 00 31 Banks in foreign countries 20,243 17,007 15,560 13,184 1,743 1,733 1,089 592 3? Foreign branches of U.S. banks 521 465 398 342 120 120 3 3 33 Other banks in foreign countries 19,722 16,542 15,162 12,842 1,623 1,613 1,087 589 34 Other financial institutions 15,588 813 13,055 712 878 49 1,340 31 35 Commercial and industrial loans 166,316 14,376 93,836 11,769 31,648 1,741 23,574 384 36 U.S. addressees (domicile) 144,602 518 77,272 384 29,064 119 22,990 7 37 Non-U.S. addressees (domicile) 21,714 13,857 16,565 11,385 2,584 1,622 584 377 38 Acceptances of other banks 1,971 35 927 32 684 0 230 0 39 U.S. banks 1,147 0 481 0 598 0 2 0 40 Foreign banks 824 35 446 32 86 0 229 0 41 Loans to foreign governments and official institutions (including foreign central banks) 9,379 8,103 7,960 7,026 338877 226644 117700 116611 42 Loans for purchasing or carrying securities (secured and unsecured) 4,983 2233 44,,776633 2233 221166 00 4 00 43 All other loans 3,842 150 3,231 97 115 0 274 0 44 All other assets 48,576 8,018 37,226 6,942 6,548 699 3,847 307 45 Customers' liability on acceptances outstanding 18,694 n.a. 12,893 n.a. 4,407 n.a. 998888 n.a. 46 U.S. addressees (domicile) 11,773 n.a. 6,975 n.a. 3,791 n.a. 990077 n.a. 47 Non-U .S. addressees (domicile) 6,921 n.a. 5,918 n.a. 616 n.a. 81 n.a. 48 Other assets including other claims on nonrelated parties 29,882 8,018 24,333 6,942 2,141 699 2,859 307 49 Net due from related depository institutions3 99,867 85,103 82,967 59,041 7,683 19,068 363 2,707 50 Net due from head office and other related depository institutions5 99,867 n.a. 82,967 n.a. 7,683 n.a. 363 n.a. 51 Net due from establishing entity, head offices, and other related depository institutions5 n.a. 8855,,110033 n.a. 5599,,004411 n.a. 1199,,006688 n.a. 22,,770077 52 Total liabilities4 683,493 287,168 508,220 224,912 84,606 35,870 53,382 18,199 53 Liabilities to nonrelated parties 575,595 240,218 452,243 186,082 72,512 35,291 31,369 11,719 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A83 4.30—Continued Millions of dollars All states New York California Illinois ex I T c B l o u F t d a 's i l n g I o B n F ly 's ex I T c B l o u F t d a 's i l n g I o B n F ly 's ex I T c B l o u F t d a 's i l n g I o B n F ly 's ex I T c B l o u F t d a 's i l n g 54 Total deposits and credit balances 149,359 174,815 127,462 155,304 4,149 10,048 8,508 55 Individuals, partnerships, and corporations 107,466 14,443 88,151 8,639 3,793 600 7,450 56 U.S. addressees (domicile) 91,631 362 78,524 361 1,872 0 6,427 57 Non-U.S. addressees (domicile) 15,835 14,081 9,627 8,278 1,921 600 1,024 58 Commercial banks in United States (including IBFs). 29,905 55,241 28,082 50,298 93 3,201 1,007 59 U.S. branches and agencies of other foreign banks 11,101 49,710 10,731 45,571 58 2,755 262 60 Other commercial banks in United States 18,804 5,530 17,350 4,727 35 446 745 61 Banks in foreign countries 4,353 87,094 4,197 79,757 5 5,193 32 62 Foreign branches of U.S. banks 1,442 6,131 1,412 4,978 0 851 30 63 Other banks in foreign countries 2,912 80,963 2,785 74,779 5 4,342 2 64 Foreign governments and official institutions (including foreign central banks) 2,073 16,991 1,752 15,565 225 1,053 65 All other deposits and credit balances 5,143 1 045 4,918 1.045 10 0 66 Certified and official checks 418 361 22 67 Transaction accounts and credit balances (excluding IBFs) 7,806 6,429 298 296 68 Individuals, partnerships, and corporations 5,558 4,399 254 283 69 U.S. addressees (domicile) 4,036 3,414 215 278 7 7 0 1 Co N m o m n e -U rc . i S a . l a b d a d n r k e s s s in e e U s n ( i d t o ed m i S c t i a le t ) e s (including IBFs). 1,5 1 2 0 2 3 9 % 85 39 3 5 0 72 U.S. branches and agencies of other foreign banks 29 26 2 0 73 Other commercial banks in United States 74 70 1 0 74 Banks in foreign countries 1,124 1,029 5 2 75 Foreign branches of U.S. banks 9 8 0 0 76 Other banks in foreign countries 1,116 1,021 5 2 77 Foreign governments and official institutions (including foreign central banks) 287 247 78 All other deposits and credit balances 316 298 79 Certified and official checks 418 361 80 Demand deposits (included in transaction accounts and credit balances) 7,117 6,031 230 284 81 Individuals, partnerships, and corporations 5,145 4,257 199 271 82 U.S. addressees (domicile) 3,874 3,356 173 267 83 Non-U.S. addressees (domicile) 1,270 901 25 5 84 Commercial banks in United States (including IBF)s. 33 29 0 0 85 U.S. branches and agencies of other foreign banks 17 16 0 0 86 Other commercial banks in United States 16 13 0 0 87 Banks in foreign countries 1,013 922 5 2 88 Foreign branches of U.S. banks 9 8 0 0 89 Other banks in foreign countries 1,004 914 5 2 90 Foreign governments and official institutions (including foreign central banks) 230 190 3 1 91 All other deposits and credit balances 278 272 1 1 92 Certified and official checks 418 361 22 9 93 Non-transaction accounts (including MMDAs, excluding IBFs) 141,553 121,032 3,852 8,213 94 Individuals, partnerships, and corporations 101,909 83,753 3,539 7,167 95 U.S. addressees (domicile) 87,595 75,110 1,657 6,148 % Non-U.S. addressees (domicile) 14,313 8,643 1,882 1,019 97 Commercial banks in United States (including IBFs). 29,802 27,986 90 1,007 98 U.S. branches and agencies of other foreign banks 11,072 10,706 57 262 99 Other commercial banks in United States 18,730 17,280 34 744 100 Banks in foreign countries 3,229 3,168 0 30 101 Foreign branches of U.S. banks 1,433 1,403 0 30 102 Other banks in foreign countries 1,796 1,765 0 0 103 Foreign governments and official institutions (including foreign central banks) 1,786 1,505 222 1 104 All other deposits and credit balances 4,828 4,621 0 7 105 IBF deposit liabilities 174,815 155,304 10,048 106 Individuals, partnerships, and corporations 14,443 8,639 600 107 U.S. addressees (domicile) 362 361 0 108 Non-U.S. addressees (domicile) 14,081 8,278 600 109 Commercial banks in United States (including IBFs). 55,241 50,298 3,201 110 U.S. branches and agencies of other foreign banks 49,710 45,571 2,755 111 Other commercial banks in United States 5,530 4,727 446 112 Banks in foreign countries 87,094 79,757 5,193 113 Foreign branches of U.S. banks 6,131 4,978 851 114 Other banks in foreign countries 80,963 74,779 4,342 115 Foreign governments and official institutions (including foreign central banks) 16,991 15,565 1,053 116 All other deposits and credit balances 1,045 1,045 0 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A82 Special Tables • September 1992 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 19921—Continued Millions of dollars All states New York California Illinois IItteemm in I T c B l o u t F d a s i l n g I o B n F ly s in I T c B l o u t F d a s i l n g I o B n F ly s in I T c B l o u t F d a s i l n g I o B n F ly s in I c T B l o u F t d a ' i s l n g I o B n F ly s 117 Federal funds purchased and securities sold under agreements to repurchase 79,221 5,786 62,057 2,890 11,943 1,815 4,537 1,011 118 U.S. branches and agencies of other foreign banks 11,372 1,807 6,662 547 3,338 946 1,181 283 119 Other commercial banks in United States 27,772 451 19,966 227 5,524 144 1,991 80 120 Other 40,077 3,528 35,429 2,116 3,081 726 1,365 648 121 Other borrowed money 124,623 53,199 70,587 22,419 40,034 22,705 11,839 7,535 122 Owed to nonrelated commercial banks in United States (including IBFs) 48,175 21,637 20,432 5,302 21,424 13,202 4,813 2,879 123 Owed to U.S. offices of nonrelated U.S. banks 15,813 2,641 8,967 996 4,646 1,192 1,740 426 124 Owed to U.S. branches and agencies of nonrelated foreign banks 32,361 18,996 11,465 4,306 16,779 12,010 3,073 2,454 125 Owed to nonrelated banks in foreign countries 29,472 28,250 15,127 14,062 9,504 9,387 4,548 4,516 126 Owed to foreign branches of nonrelated U.S. banks ... 2,662 2,530 654 522 1,464 1,464 540 540 127 Owed to foreign offices of nonrelated foreign banks 26,810 25,720 14,474 13,540 8,040 7,923 4,008 3,976 128 Owed to others 46,976 3,312 35,027 3,055 9,106 117 2,478 140 129 All other liabilities 47,576 6,418 36,833 5,469 6,338 723 3,495 183 130 Branch or agency liability on acceptances executed and outstanding 22,301 n.a. 1166,,556688 n.a. 44,,440033 n.a. 667766 n.a. 131 Other liabilities to nonrelated parties 25,275 6,418 20,265 5,469 1,935 723 2,819 183 132 Net due to related depository institutions5 107,899 46,949 55,977 38,830 12,095 579 22,013 6,481 133 Net due to head office and other related depository institutions 107,899 n.a. 55,977 n.a. 12,095 n.a. 2222,,001133 n.a. 134 Net due to establishing entity, head office, and other related depository institutions n.a. 46,949 n.a. 38,830 n.a. 579 n.a. 6,481 MEMO 135 Non-interest bearing balances with commercial banks in United States 1,281 0 979 0 132 0 79 0 136 Holding of commercial paper included in total loans 22,,220044 2,025 84 84 137 Holding of own acceptances included in commercial and industrial loans 33,,448811 2,853 341 144 138 Commercial and industrial loans with remaining maturity of one year or less 98,755 54,552 19,082 14,175 139 Predetermined interest rates 60,300 n.a. 32,422 n.a. 11,141 n.a. 10,156 n.a. 140 Floating interest rates 3388,,445555 22,129 77,,994400 4,019 141 Commercial and industrial loans with remaining maturity of more than one year 67,561 39,285 12,567 9,399 142 Predetermined interest rates 21,563 11,587 4,033 4,230 143 Floating interest rates 45,999 27,698 8,533 5,169 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A85 4.30—Continued Millions of dollars All states New York California Illinois IItteemm ex T cl o u t d a i l n g IBFs ex T cl o u t d a i l n g IBFs ex T cl o u t d a i l n g IBFs ex T cl o u t d a i l n g IBFs IBFs only IBFs only IBFs only IBFs only 111144444444 CCCCoooommmmppppoooonnnneeeennnnttttssss ooooffff ttttoooottttaaaallll nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ttttoooottttaaaallll ddddeeeeppppoooossssiiiittttssss aaaannnndddd ccccrrrreeeeddddiiiitttt bbbbaaaallllaaaannnncccceeeessss ooooffff nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnnaaaallll aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddiiiinnnngggg IIIIBBBBFFFFssss 150,064 t 130,641 1 4,155 1 8,206 t 111144445555 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 112,446 96,999 2,344 6,571 111144446666 OOOOtttthhhheeeerrrr ttttiiiimmmmeeee ddddeeeeppppoooossssiiiittttssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 111144447777 TTTTiiiimmmmeeee oooo rrrr CCCC mmmm DDDDssss oooo rrrr iiii eeee nnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 23,212 n1.a. 20,401 nt.a. 1,093 n.1a. 1,371 n1.a. wwwwiiiitttthhhh rrrreeeemmmmaaaaiiiinnnniiiinnnngggg mmmmaaaattttuuuurrrriiiittttyyyy ooooffff mmmmoooorrrreeee tttthhhhaaaannnn 11112222 mmmmoooonnnntttthhhhssss ........ 14,406 13,241 718 265 All states2 New York California Illinois in T c I l B o u t F d a s i l n g I o B n F ly s in T c I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s 111144448888 MMMMaaaarrrrkkkkeeeetttt vvvvaaaalllluuuueeee ooooffff sssseeeeccccuuuurrrriiiittttiiiieeeessss hhhheeeelllldddd 62,951 14,344 57,312 13,214 3,449 680 1,603 399 111144449999 IIIImmmmmmmmeeeeddddiiiiaaaatttteeeellllyyyy aaaavvvvaaaaiiiillllaaaabbbblllleeee ffffuuuunnnnddddssss wwwwiiiitttthhhh aaaa mmmmaaaattttuuuurrrriiiittttyyyy ggggrrrreeeeaaaatttteeeerrrr tttthhhhaaaannnn oooonnnneeee ddddaaaayyyy iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ooootttthhhheeeerrrr bbbboooorrrrrrrroooowwwweeeedddd mmmmoooonnnneeeeyyyy 75,383 n.a. 39,350 n.a. 27,390 n.a. 6,995 n.a. 111155550000 NNNNuuuummmmbbbbeeeerrrr ooooffff rrrreeeeppppoooorrrrttttssss ffffiiiilllleeeedddd6666 579 0 271 0 134 0 52 0 1. Data are aggregates of categories reported on the quarterly form FFIEC 002, that no IBF data re reported for that item, either because the item is not an eligible "Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign IBF asset or liability or because that level of detail is not reported for IBFs. From Banks." Details may not add to totals because of rounding. This form was first December 1981 through September 1985, IBF data were included in all applicable used for reporting data as of June 30, 1980, and was revised as of December 31, items reported. 1985. From November 1972 through May 1980, U.S. branches and agencies of 4. Total assets and total liabilities include net balances, if any, due from or due foreign banks had filed a monthly FR 886a report. Aggregate data from that report to related banking institutions in the United States and in foreign countries (see were available through the Federal Reserve statistical release G. 11, last issued on footnote 5). On the former monthly branch and agency report, available through July 10, 1980. Data in this table and in the G. 11 tables are not strictly comparable the G.ll statistical release, gross balances were included in total assets and total because of differences in reporting panels and in definitions of balance sheet liabilities. Therefore, total asset and total liability figures in this table are not items. comparable to those in the G.ll tables. 2. Includes the District of Columbia. 5. "Related banking institutions" includes the foreign head office and other 3. Effective December 1981, the Federal Reserve Board amended Regulations U.S. and foreign branches and agencies of the bank, the bank's parent holding D and Q to permit banking offices located in the United States to operate company, and majority-owned banking subsidiaries of the bank and of its parent International Banking Facilities (IBFs). As of December 31, 1985 data for IBFs holding company (including subsidiaries owned both directly and indirectly). are reported in a separate column. These data are either included in or excluded 6. In some cases two or more offices of a foreign bank within the same from the total columns as indicated in the headings. The notation "n.a." indicates metropolitan area file a consolidated report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A86 Index to Statistical Tables References are to pages A3-A85 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Demand deposits—Continued Agricultural loans, commercial banks, 20, 21 Ownership by individuals, partnerships, and corporations, 22 Assets and liabilities (See also Foreigners) Turnover, 16 Banks, by classes, 19—21 Depository institutions Domestic finance companies, 34 Reserve requirements, 9 Federal Reserve Banks, 11 Reserves and related items, 4, 5, 6, 13 Financial institutions, 26 Deposits (See also specific types) Foreign banks, U.S. branches and agencies, 22, 82-85 Banks, by classes, 4, 19-21, 22 Automobiles Federal Reserve Banks, 5,11 Consumer installment credit, 37, 38 Turnover, 16 Production, 47, 48 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, 82-85. (See also Foreigners) Dividends, corporate, 33 Bonds (See also U.S. government securities) New issues, 33 EMPLOYMENT, 45 Rates, 24 Eurodollars, 24 Branch banks, 22, 55 Business activity, nonfinancial, 44 FARM mortgage loans, 36 Business expenditures on new plant and equipment, 33 Federal agency obligations, 5, 10, 11, 12, 29, 30 Business loans (See Commercial and industrial loans) Federal credit agencies, 31 Federal finance CAPACITY utilization, 46 Debt subject to statutory limitation, and types and ownership Capital accounts of gross debt, 28 Banks, by classes, 19 Receipts and outlays, 26, 27 Federal Reserve Banks, 11 Treasury financing of surplus, or deficit, 26 Central banks, discount rates, 67 Treasury operating balance, 26 Certificates of deposit, 24 Federal Financing Bank, 26, 31 Commercial and industrial loans Federal funds, 7, 18, 20, 21, 22, 24, 26 Commercial banks, 17, 20, 70-81 Federal Home Loan Banks, 31 Weekly reporting banks, 20-22 Federal Home Loan Mortgage Corporation, 31, 35, 36 Commercial banks Federal Housing Administration, 31, 35, 36 Assets and liabilities, 19-21, 70-81 Federal Land Banks, 36 Commercial and industrial loans, 17, 19, 20, 21, 22 Federal National Mortgage Association, 31, 35, 36 Consumer loans held, by type and terms, 37, 38 Federal Reserve Banks Loans sold outright, 20 Condition statement, 11 Nondeposit funds, 18, 82-85 Discount rates (See Interest rates) Real estate mortgages held, by holder and property, 36 U.S. government securities held, 5, 11, 12, 28 Terms of lending, 70-81 Federal Reserve credit, 5, 6, 11, 12 Time and savings deposits, 4 Federal Reserve notes, 11 Commercial paper, 23, 24, 34 Federally sponsored credit agencies, 31 Condition statements (See Assets and liabilities) Finance companies Construction, 44, 49 Assets and liabilities, 34 Consumer installment credit, 37, 38 Business credit, 34 Consumer prices, 44, 46 Loans, 37, 38 Consumption expenditures, 52, 53 Paper, 23, 24 Corporations Financial institutions Nonfinancial, assets and liabilities, 33 Loans to, 20, 21, 22 Profits and their distribution, 33 Selected assets and liabilities, 26 Security issues, 32, 65 Float, 51 Cost of living (See Consumer prices) Flow of funds, 39,41,42,43 Credit unions, 37 Foreign banks, assets and liabilities of U.S. branches and Currency and coin, 19 agencies, 21, 22, 82-85 Currency in circulation, 5, 14 Foreign currency operations, 11 Customer credit, stock market, 25 Foreign deposits in U.S. banks, 5, 11, 20, 21 Foreign exchange rates, 68 DEBITS to deposit accounts, 16 Foreign trade, 54 Debt (See specific types of debt or securities) Foreigners Demand deposits Claims on, 55, 57, 60, 61, 62, 64 Banks, by classes, 19-22 Liabilities to, 21, 54, 55, 57, 58, 63, 65, 66 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A87 GOLD Real estate loans—Continued Certificate account, 11 Financial institutions, 26 Stock, 5, 54 Terms, yields, and activity, 35 Government National Mortgage Association, 31, 35, 36 Type of holder and property mortgaged, 36 Gross domestic product, 51 Repurchase agreements, 7, 18, 20, 21, 22 Reserve requirements, 9 HOUSING, new and existing units, 49 Reserves Commercial banks, 19 INCOME, personal and national, 44, 51, 52 Depository institutions, 4, 5, 6, 13 Industrial production, 44, 47 Federal Reserve Banks, 11 Installment loans, 37, 38 U.S. reserve assets, 54 Insurance companies, 28, 36 Residential mortgage loans, 35 Interest rates Retail credit and retail sales, 37, 38, 44 Bonds, 24 Commercial banks, 70-81 SAVING Consumer installment credit, 38 Flow of funds, 39, 41, 42, 43 Federal Reserve Banks, 8 National income accounts, 51 Foreign central banks and foreign countries, 67 Savings and loan associations, 36, 37, 39. (See also SAIF-insured Money and capital markets, 24 institutions) Mortgages, 35 Savings Association Insurance Funds (S AIF) insured institutions, 26 Prime rate, 23 Savings banks, 26, 36, 37 International capital transactions of United States, 53-67 Savings deposits (See Time and savings deposits) International organizations, 57, 58, 60, 63, 64 Securities (See also specific types) Inventories, 51 Federal and federally sponsored credit agencies, 31 Investment companies, issues and assets, 33 Foreign transactions, 65 Investments (See also specific types) New issues, 32 Banks, by classes, 19, 20, 21, 22, 26 Prices, 25 Commercial banks, 4, 17, 19-21 Special drawing rights, 5, 11, 53, 54 Federal Reserve Banks, 11, 12 State and local governments Financial institutions, 36 Deposits, 20, 21 Holdings of U.S. government securities, 28 LABOR force, 45 New security issues, 32 Life insurance companies (See Insurance companies) Ownership of securities issued by, 20, 21 Loans (See also specific types) Rates on securities, 24 Banks, by classes, 19—21 Stock market, selected statistics, 25 Commercial banks, 4, 17, 19-21 Stocks (See also Securities) Federal Reserve Banks, 5, 6, 8, 11, 12 New issues, 32 Financial institutions, 26, 36 Prices, 25 Insured or guaranteed by United States, 35, 36 Student Loan Marketing Association, 31 MANUFACTURING Capacity utilization, 46 TAX receipts, federal, 27 Production, 46, 48 Thrift institutions, 4. (See also Credit unions and Savings and Margin requirements, 25 loan associations) Member banks (See also Depository institutions) Time and savings deposits, 4, 14, 18, 19, 20, 21, 22 Federal funds and repurchase agreements, 7 Trade, foreign, 54 Reserve requirements, 9 Treasury cash, Treasury currency, 5 Mining production, 48 Treasury deposits, 5, 11, 26 Mobile homes shipped, 49 Treasury operating balance, 26 Monetary and credit aggregates, 4, 13 UNEMPLOYMENT, 45 Money and capital market rates, 24 U.S. government balances Money stock measures and components, 4, 14 Commercial bank holdings, 19, 20, 21 Mortgages (See Real estate loans) Treasury deposits at Reserve Banks, 5, 11, 26 Mutual funds, 33 U.S. government securities Mutual savings banks (See Thrift institutions) Bank holdings, 19-21, 22, 28 Dealer transactions, positions, and financing, 30 NATIONAL defense outlays, 27 Federal Reserve Bank holdings, 5, 11, 12, 28 National income, 51 Foreign and international holdings and transactions, 11, 28, 66 OPEN market transactions, 10 Open market transactions, 10 Outstanding, by type and holder, 26, 28 PERSONAL income, 52 Rates, 23 Prices U.S. international transactions, 53-67 Consumer and producer, 44, 50 Utilities, production, 48 Stock market, 25 Prime rate, 23 Producer prices, 44, 50 VETERANS Administration, 35, 36 Production, 44,47 Profits, corporate, 33 WEEKLY reporting banks, 20-22 Wholesale (producer) prices, 44, 50 REAL estate loans Banks, by classes, 17, 20, 21, 36 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A88 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 Counsel LAWRENCE SLIFMAN, Associate Director DAVID J. STOCKTON, Associate Director OFFICE OF THE SECRETARY MARTHA BETHEA, Deputy Associate Director PETER A. TINSLEY, Deputy Associate Director WILLIAM W. WILES, Secretary JENNIFER J. JOHNSON, Associate Secretary MYRON L. KWAST, Assistant Director PATRICK M. PARKINSON, Assistant Director BARBARA R. LOWREY, Associate Secretary MARTHA S. SCANLON, Assistant Director RICHARD C. STEVENS, Assistant Secretary1 JOYCE K. ZICKLER, Assistant Director JOHN J. MINGO, Adviser DIVISION OF BANKING LEVON H. GARABEDIAN, Assistant Director SUPERVISION AND REGULATION (Administration ) RICHARD SPILLENKOTHEN, Director STEPHEN C. SCHEMERING, Deputy Director DIVISION OF MONETARY AFFAIRS DON E. KLINE, Associate Director WILLIAM A. RYBACK, Associate Director DONALD L. KOHN, Director FREDERICK M. STRUBLE, Associate Director DAVID E. LINDSEY, Deputy Director HERBERT A. BIERN, Deputy Associate Director BRIAN F. MADIGAN, Assistant Director ROGER T. COLE, Deputy Associate Director RICHARD D. PORTER, Assistant Director JAMES I. GARNER, Deputy Associate Director NORMAND R.V. BERNARD, Special Assistant to the Board HOWARD A. AMER, Assistant Director DIVISION OF CONSUMER GERALD A. EDWARDS, JR., Assistant Director AND COMMUNITY AFFAIRS JAMES D. GOETZINGER, Assistant Director LAURA M. HOMER, Assistant Director GRIFFITH L. GARWOOD, Director JAMES V. HOUPT, Assistant Director GLENN E. LONEY, Assistant Director JACK P. JENNINGS, Assistant Director ELLEN MALAND, Assistant Director MICHAEL G. MARTINSON, Assistant Director DOLORES S. SMITH, Assistant Director ROBERT S. PLOTKIN, Assistant Director RHOGER H PUGH, Assistant Director SIDNEY M. SUSSAN, Assistant Director MOLLY S. WASSOM, Assistant Director 1. On loan from the Division of Information Resources Management. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

A90 Federal Reserve Bulletin • September 1992 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman E. GERALD CORRIGAN, Vice Chairman WAYNE D. ANGELL JOHN P. LAWARE DAVID W. MULLINS, JR. THOMAS H. HOENIG LAWRENCE B. LINDSEY SUSAN M. PHILLIPS JERRY L. JORDAN THOMAS C. MELZER RICHARD F. SYRON EDWARD W. KELLEY, JR. ALTERNATE MEMBERS EDWARD G. BOEHNE ROBERT D. MCTEER, JR. JAMES H. OLTMAN SILAS KEEHN GARY H. STERN STAFF DONALD L. KOHN, Secretary and Economist JOHN M. DAVIS, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary RICHARD G. DAVIS, Associate Economist JOSEPH R. COYNE, Assistant Secretary THOMAS E. DAVIS, Associate Economist GARY P. GILLUM, Assistant Secretary DAVID E. LINDSEY, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel ALICIA H. MUNNELL, Associate Economist ERNEST T. PATRIKIS, Deputy General Counsel LARRY J. PROMISEL, Associate Economist MICHAEL J. PRELL, Economist CHARLES J. SIEGMAN, Associate Economist EDWIN M. TRUMAN, Economist THOMAS D. SIMPSON, Associate Economist ANATOL B. BALBACH, Associate Economist DAVID J. STOCKTON, Associate Economist PETER D. STERNLIGHT, Manager for Domestic Operations, System Open Market Account WILLIAM J. MCDONOUGH, Manager for Foreign Operations, System Open Market Account FEDERAL ADVISORY COUNCIL RONALD G. STEINHART, President TERRENCE A. LARSEN, Vice President IRA STEPANIAN, First District EUGENE A. MILLER, Seventh District CHARLES S. SANFORD, JR., Second District DAN W. MITCHELL, Eighth District TERRENCE A. LARSEN, Third District JOHN F. GRUNDHOFER, Ninth District JOHN B. MCCOY, Fourth District DAVID A. RISMILLER, Tenth District EDWARD E. CRUTCHFIELD, JR., 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

A91 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, Oregon DEBORAH B. GOLDBERG, Washington, D.C. MICHAEL W. TIERNEY, Philadelphia, Pennsylvania MICHAEL M. GREENFIELD, St. Louis, Missouri 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

A92 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, Monetary Policy and Reserve Requirements Handbook. MS-138, Board of Governors of the Federal Reserve System, $75.00 per year. Washington, D.C. 20551 or telephone (202) 452-3244 or FAX Securities Credit Transactions Handbook. $75.00 per year. (202) 728-5886. When a charge is indicated, payment should The Payment System Handbook. $75.00 per year. accompany request and be made payable to the Board of Federal Reserve Regulatory Service. 3 vols. (Contains all Governors of the Federal Reserve System. Payment from for- four Handbooks plus substantial additional material.) eign residents should be drawn on a U.S. bank. $200.00 per year. Rates for subscribers outside the United States are as follows and include additional air mail costs: THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS. Federal Reserve Regulatory Service, $250.00 per year. 1984. 120 pp. Each Handbook, $90.00 per year. ANNUAL REPORT. THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MULTI- ANNUAL REPORT: BUDGET REVIEW, 1990-91. COUNTRY MODEL, May 1984. 590 pp. $14.50 each. FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or $2.50 each in the United States, its possessions, Canada, WELCOME TO THE FEDERAL RESERVE. March 1989. 14 pp. and Mexico. Elsewhere, $35.00 per year or $3.00 each. INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. 440 pp. $9.00 each. ANNUAL STATISTICAL DIGEST 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- SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. 1984. 1985. 254 pp. $12.50 per copy. 1985. 1986. 231 pp. $15.00 per copy. 1986. 1987. 288 pp. $15.00 per copy. 1987. 1988. 272 pp. $15.00 per copy. 1988. 1989. 256 pp. $25.00 per copy. CONSUMER EDUCATION PAMPHLETS 1980-89. 1991. 712 pp. $25.00 per copy. Short pamphlets suitable for classroom use. Multiple copies are 1990. 1991. 196 pp. $25.00 per copy. 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 Refinancings 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

A93 STAFF STUDIES: Summaries Only Printed in the 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- Bulletin VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by Gregory E. Elliehausen and John D. Wolken. September Studies and papers on economic and financial subjects that are 1990. 35 pp. of general interest. Requests to obtain single copies of the full text or to be added to the mailing list for the series may be sent 161. A REVIEW OF CORPORATE RESTRUCTURING ACTIVITY, 1980-90, by Margaret Hastings Pickering. May 1991. to Publications Services. 21pp. 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM Staff Studies 1-145 are out of print. MORTGAGE LOAN RATES IN TWENTY CITIES, by Stephen A. Rhoades. February 1992. 11 pp. 146. THE ROLE OF THE PRIME RATE IN THE PRICING OF 163. CLEARANCE AND SETTLEMENT IN U.S. SECURITIES MAR- BUSINESS LOANS BY COMMERCIAL BANKS, 1977-84, by KETS, by Patrick Parkinson, Adam Gilbert, Emily Gollob, Thomas F. Brady. November 1985. 25 pp. Lauren Hargraves, Richard Mead, Jeff Stehm, and Mary 147. REVISIONS IN THE MONETARY SERVICES (DIVISIA) IN- Ann Taylor. March 1992. 37 pp. DEXES OF THE MONETARY AGGREGATES, by Helen T. Farr and Deborah Johnson. December 1985. 42 pp. 148. THE MACROECONOMIC AND SECTORAL EFFECTS OF THE REPRINTS OF SELECTED Bulletin ARTICLES ECONOMIC RECOVERY TAX ACT: SOME SIMULATION Some Bulletin articles are reprinted. The articles listed below RESULTS, by Flint Brayton and Peter B. Clark. December are those for which reprints are available. Most of the articles 1985.17 pp. reprinted do not exceed twelve pages. 149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS IN BANKING BEFORE AND AFTER ACQUISITION, by Stephen Limit of ten copies A. Rhoades. April 1986. 32 pp. 150. STATISTICAL COST ACCOUNTING MODELS IN BANKING: Recent Developments in the Bankers Acceptance Market. 1/86. A REEXAMINATION AND AN APPLICATION, by John T. The Use of Cash and Transaction Accounts by American Rose and John D. Wolken. May 1986. 13 pp. Families. 2/86. 151. RESPONSES TO DEREGULATION: RETAIL DEPOSIT PRICING Financial Characteristics of High-Income Families. 3/86. FROM 1983 THROUGH 1985, by Patrick I. Mahoney, Alice Prices, Profit Margins, and Exchange Rates. 6/86. P. White, Paul F. O'Brien, and Mary M. McLaughlin. Agricultural Banks under Stress. 7/86. January 1987. 30 pp. Foreign Lending by Banks: A Guide to International and U.S. 152. DETERMINANTS OF CORPORATE MERGER ACTIVITY: A Statistics. 10/86. REVIEW OF THE LITERATURE, by Mark J. Warshawsky. Recent Developments in Corporate Finance. 11/86. April 1987. 18 pp. Measuring the Foreign-Exchange Value of the Dollar. 6/87. 153. STOCK MARKET VOLATILITY, by Carolyn D. Davis and Changes in Consumer Installment Debt: Evidence from the Alice P. White. September 1987. 14 pp. 1983 and 1986 Surveys of Consumer Finances. 10/87. 154. THE EFFECTS ON CONSUMERS AND CREDITORS OF Home Equity Lines of Credit. 6/88. PROPOSED CEILINGS ON CREDIT CARD INTEREST RATES, Mutual Recognition: Integration of the Financial Sector in the by Glenn B. Canner and James T. Fergus. October 1987. European Community. 9/89. 26 pp. The Activities of Japanese Banks in the United Kingdom and in 155. THE FUNDING OF PRIVATE PENSION PLANS, by Mark J. the United States, 1980-88. 2/90. Warshawsky. November 1987. 25 pp. Industrial Production: 1989 Developments and Historical 156. INTERNATIONAL TRENDS FOR U.S. BANKS AND BANKING Revision. 4/90. MARKETS, by James V. Houpt. May 1988. 47 pp. Recent Developments in Industrial Capacity and Utilization. 157. M2 PER UNIT OF POTENTIAL GNP AS AN ANCHOR FOR 6/90. THE PRICE LEVEL, by Jeffrey J. Hallman, Richard D. Developments Affecting the Profitability of Commercial Banks. Porter, and David H. Small. April 1989. 28 pp. 7/90. 158. THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIRE- Recent Developments in Corporate Finance. 8/90. MENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE U.S. Exchange Rate Policy: Bretton Woods to Present. 11/90. PRODUCTS, by Mark J. Warshawsky with the assistance of The Transmission Channels of Monetary Policy: How Have Dietrich Earnhart. September 1989. 23 pp. They Changed? 12/90. 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSID- 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

A94 Maps of the Federal Reserve System 1 9 BOSTON MINNEAPOLIS! 2 " 7 ^ • NEW YORK 12 CHICAGO! • PHILADELPHIA CLEVELAND • SAN FRANCISCO • 10 4 KANSAS CITYB O", RICISIOND ST. LOUIS 5 8 11 DALLAS ALASKA LEGEND HAWAII 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

A95 1-A 2-B 3-C 4-D 5-E Baltimore Pittsburgh / Charlotte NH • Cincinnati sc Buffalo • ^ MAH - K¥ CT X.B NJ NY BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 6-F 7-G 8-H • Nashville Birmingham, W1 MI Louisville IA Detroit • KY —^ TN LA • ' Jacksonville IN • Memphis New Orleans y„ Littl?^ MS Rock Miami ATLANTA # CHICAGO ST. LOUIS 9-1 MT . 1 ND MN • Helena 1 MI WI 1 SD • 1 MINNEAPOLIS 10-J 12-L WY / NH CO Omaha • • ) iin Denver • Oklahoma City • OK KANSAS CITY 11-K Salt Lake City Houston • Los Angeles San Antonio DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A96 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 75201 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 Donald G. Phelps 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 CONSUMER CREDIT PUBLICATIONS The Federal Reserve Board publishes a series of Three booklets on the mortgage process are also pamphlets covering individual credit laws and topics, available: A Consumer's Guide to Mortgage Lock-Ins, as pictured below. The series includes such subjects A Consumer's Guide to Mortgage Refinancings, and as how the Equal Credit Opportunity Act protects A Consumer's Guide to Mortgage Settlement Costs. women against discrimination in their credit dealings, These booklets were prepared in conjunction with the how to use a credit card, and how to resolve a billing Federal Home Loan Bank Board and in consultation error. with other federal agencies and trade and consumer The Board also publishes the Consumer Handbook groups. to Credit Protection Laws, a complete guide to con- Copies of consumer publications are available free sumer credit protections. This forty-four-page booklet of charge from Publications Services, mail stop 138, explains how to shop and obtain credit, how to main- Board of Governors of the Federal Reserve System, tain a good credit rating, and how to dispute unfair Washington, DC 20551. Multiple copies for classcredit transactions. room use are also available free of charge. A Consumer's Guide to Mortgage Lock-Ins 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 Flow of Funds Quarterly 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 of marginable OTC stocks and its list of foreign functions, the Board publishes the Federal Reserve margin stocks. Regulatory Service, a three-volume looseleaf service The Consumer and Community Affairs Handbook containing all Board regulations as well as related contains Regulations B, C, E, M, Z, AA, and BB, and statutes, interpretations, policy statements, rulings, associated materials. and staff opinions. For those with a more specialized The Payment System Handbook deals with expeinterest in the Board's regulations, parts of this ser- dited funds availability, check collection, wire transvice are published separately as handbooks pertaining fers, and risk-reduction policy. It includes Regulation to monetary policy, securities credit, consumer affairs, CC, Regulation J, the Expedited Funds Availability and the payment system. Act and related statutes, the official Board commen- These publications are designed to help those who tary on Regulation CC, and policy statements on risk must frequently refer to the Board's regulatory mate- reduction in the payment system. rials. They are updated monthly, and each contains For domestic subscribers, the annual rate is $200 citation indexes and a subject index. for the Federal Reserve Regulatory Service and $75 The Monetary Policy and Reserve Requirements for each Handbook. For subscribers outside the Handbook contains Regulations A, D, and Q, plus United States, the price including additional air mail related materials. costs is $250 for the Service and $90 for each Hand- The Securities Credit Transactions Handbook con- book. All subscription requests must be accompanied tains Regulations G, T, U, and X, dealing with exten- by a check or money order payable to the Board of sions of credit for the purchase of securities, together Governors of the Federal Reserve System. Orders with related statutes, Board interpretations, rulings, should be addressed to Publications Services, mail and staff opinions. Also included are the Board's list stop 138, Board of Governors of the Federal Reserve System, Washington, DC 20551. U.S. MONETARY POLICY AND FINANCIAL MARKETS U.S. Monetary Policy and Financial Markets by Ann- context, examining first the evolution of Federal Marie Meulendyke offers an in-depth description of Reserve 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 em- policy operates most directly through the banking ployed to implement policy at the Open Market Trad- system and the financial markets and describes key ing Desk. Written from her perspective as a senior features of both. Finally, the book turns its attention to economist in the Open Market Function at the Federal the transmittal of monetary policy actions to the U.S. Reserve Bank of New York, Ann-Marie Meulendyke economy and throughout the world. describes the tools and the setting of policy, including The book is $5.00 a copy for U.S. purchasers and many of the complexities that differentiate the process $10.00 for purchasers outside the United States. Copfrom simpler textbook models. Included is an account ies are available from the Public Information Departof a day at the Trading Desk, from morning ment, Federal Reserve Bank of New York, 33 Liberty information-gathering through daily decisionmaking Street, New York, NY 10045. Checks must accomand the execution 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