Federal Reserve Bulletin, 1992-12

VOLUME 78 • NUMBER 12 • DECEMBER 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. Kvles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 879 THE EVOLUTION OF THE July. The utilization of total industrial capac- U.S. COMMERCIAL PAPER MARKET ity fell 0.3 percentage point in September, to SINCE 1980 78.4 percent. The U.S. commercial paper market, an impor- 905 STATEMENT TO THE CONGRESS tant source of short-term funds for corporations, changed in many ways over the past John P. LaWare, member, Board of Goverdecade. At the start of the 1980s, the market nors, addresses developments in the banking was reserved primarily for the largest and system and the near-term outlook for bank most creditworthy U.S. companies, and inves- failures and says that, although a significant tor holdings of commercial paper were distrib- number of commercial banks remain troubled, uted about evenly over several investor a turnaround in the commercial banking groups. Over the next ten years, the market industry seems well under way, before the grew to about five times its 1979 size; many Senate Committee on Banking, Housing, and new issuers and some new dealers arrived on Urban Affairs, October 26, 1992. the scene; some long-standing issuers all but withdrew from the market; holdings of paper 909 ANNOUNCEMENTS became more concentrated by investor group; and a new form of commercial paper emerged. Revisions to the program for payments system This article describes these changes and the risk reduction. forces that helped produce them. Amendments to Regulation C. Proposed policy statement regarding branch 892 THE STATE AND LOCAL GOVERNMENT closings by state member banks; proposal to SECTOR: LONG-TERM TRENDS AND change the opening time for the Fedwire funds RECENT FISCAL PRESSURES transfer service; extension of comment period State and local governments continue to face on an advance notice of proposed rulemaking budget pressures. The sector has reported a in connection with a review of Regulation T. deficit in its combined operating and capital Publication of revised Lists of OTC Stocks account for five and one-half years now. and of Foreign Margin Stocks. The fiscal difficulties appear to reflect both recent developments—including increased Publication of the Annual Statistical Digest, demand for certain services and the economic 1991. recession—and long-term trends in spending, taxation, and federal grants. This article 911 RECORD OF POLICY ACTIONS OF THE focuses on these long-term factors and gives a FEDERAL OPEN MARKET COMMITTEE brief perspective on the outlook. At its meeting on August 18, 1992, the Committee adopted a directive that called for main- 902 INDUSTRIAL PRODUCTION AND taining the existing degree of pressure on CAPACITY UTILIZATION reserve positions and that included a bias Industrial production decreased 0.2 percent in toward possible easing during the intermeet- September, following a decline of 0.4 percent ing period. Accordingly, in the context of the in August and an increase of 0.8 percent in Committee's long-run objectives for price Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

stability and sustainable economic growth, A69 GUIDE TO STATISTICAL RELEASES AND and giving careful consideration to economic, SPECIAL TABLES financial, and monetary developments, slightly greater reserve restraint might be A70 INDEX TO STATISTICAL TABLES acceptable or slightly lesser reserve restraint would be acceptable during the intermeeting A72 BOARD OF GOVERNORS AND STAFF period. The reserve conditions contemplated at this meeting were expected to be consistent A74 FEDERAL OPEN MARKET COMMITTEE with growth in M2 and M3 at annual rates of AND STAFF; ADVISORY COUNCILS about 2 percent and V2 percent respectively over the six-month period from June through A76 FEDERAL RESERVE BOARD December. PUBLICATIONS 918 LEGAL DEVELOPMENTS A78 ANTICIPATED SCHEDULE OF RELEASE DATES FOR PERIODIC RELEASES Various bank holding company, bank service corporation, and bank merger orders; and A80 INDEX TO VOLUME 78 pending cases. A92 MAPS OF THE FEDERAL RESERVE A1 FINANCIAL AND BUSINESS STATISTICS SYSTEM These tables reflect data available as of October 28, 1992. A94 FEDERAL RESERVE BANKS, BRANCHES, AND OFFICES A3 GUIDE TO TABULAR PRESENTATION A4 Domestic Financial Statistics A44 Domestic Nonfinancial Statistics A53 International Statistics Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Evolution of the U.S. Commercial Paper Market since 1980 Mitchell A. Post, of the Board's Division of growing pains and took another turn in its evolu- Research and Statistics, prepared this article. tion. A series of defaults on commercial paper Michael A. Schoenbeck and Joyce A. Payne pro- began in 1989, and tighter regulations were vided research assistance. imposed on money market mutual fund holdings of medium-grade paper; these events heightened the The U.S. commercial paper market, an important concern about credit quality—always paramount— source of short-term funds for corporations, to the point that investors effectively forced many changed in many ways over the past decade. At the medium-quality issuers to cut back sharply on their start of the 1980s, the market was reserved pri- use of the commercial paper market. Some other marily for the largest and most creditworthy U.S. issuers of long standing, rated just above mediumcompanies, and investor holdings of commercial grade, also cut back on their use of the market. paper were distributed about evenly over several A further change has arisen in the commercial investor groups. Over the next ten years, the mar- paper market in the area of services supplied by ket grew to about five times its 1979 size; many banks. As a result of financial stress on banks and new issuers and some new dealers arrived on the with pressure from the markets and regulators for scene; some long-standing issuers all but withdrew banks to raise capital levels, the banks' costs of from the market; holdings of paper became more providing letters of credit and backup liquidity to concentrated by investor group; and a new form of the commercial paper market have increased. The commercial paper emerged. efforts of banks to increase profit margins on loans In the 1980s, relatively high rates on long-term are tending to make commercial paper funding funds and bank loans and an expanding economy relatively more attractive. Existing and potential fueled a rapid expansion of commercial paper commercial paper issuers, however, must minimize issuance. Old-line borrowers were a large part of their use of these now more costly services to keep the growth, but in addition, many new issuers— costs down. including smaller U.S. corporations, foreign corpo- Overall, the U.S. commercial paper market rations, and foreign financial institutions—were remains an important source of short-term funds attracted to the market. The heavy activity in for corporations. New issuers of high credit quality mergers and acquisitions in the second half of the will continue to be attracted by the liquidity and decade helped drive up issuance. The development low cost of funds available in the market. of the swaps market also stimulated the issuance of commercial paper, as borrowers combined paper with swaps to create liabilities in other currencies. Asset-backed commercial paper also came into use, SOURCES OF GROWTH IN THE 1980S providing off-balance-sheet financingf or trade and credit card receivables. Finally, the growth of Over the 1980s, commercial paper outstanding money market mutual funds, coupled with a shift grew at an average annual compound rate of about in the composition of their investments toward 17 percent (chart 1, table 1). In 1988, the size of the commercial paper, made them the largest single commercial paper market even temporarily sursource of funds to the market. passed that of the U.S. Treasury bill market. As the 1990s unfolded in economic recession, Several market forces fueled the dramatic growth the commercial paper market began to exhibit some of the commercial paper market in the 1980s. First, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

880 Federal Reserve Bulletin • December 1992 1. Commercial paper outstanding, 1975-911 2. Spread of the London interbank offered rate over the composite rate for thirty-day commercial paper placed Billions of dollars by dealers, 1975-911 Basis points 1. Seasonally adjusted. Shading indicates periods of recession as defined by the National Bureau of Economic Research (NBER). Vertical line 1975 1980 1985 1990 indicates peak; NBER has not yet determined the trough of the 1990-91 recession. 1. The rate for commercial paper is the average of offering rates of several SOURCE. Federal Reserve Bank of New York. leading dealers for industrial firms whose bond rating is AA or the equivalent; the average has been converted to a coupon equivalent to be consistent movements in interest rates stimulated the issuance with LIBOR. SOURCE. Board of Governors of the Federal Reserve System and the of commercial paper early in the decade. Commer- Federal Reserve Bank of New York. cial paper consists of short-term, unsecured promissory notes issued mostly by corporations. Maturi- ing by all firms. Moreover, the base rate on bank ties range up to 270 days, with most issues loans (the London interbank offered rate) increased maturing within 60 days; thus, nonbank firms seek- markedly relative to the commercial paper rate ing short-term funds regard commercial paper as an (chart 2); the large spread encouraged many firms alternative to bank loans. At the outset of the to enter the commercial paper market for the first 1980s, when the Federal Reserve sought reductions time. By the end of the decade, the amount of in the trend rate of money growth to lower the high nonfinancial commercial paper outstanding was rate of inflation, all interest rates soared, and the about 21 percent of outstanding commercial and high longer-term rates favored short-term borrow- industrial loans at banks, compared with about 11 percent at the start (table 2). 1. Commercial paper outstanding, by type of issuer, Second, in 1983, the economy began an expan- 1979-91 sion that lasted to the end of the decade. In typi- Billions of dollars at year-end, seasonally adjusted cal fashion, the issuance of commercial paper Financial firms expanded with the economy as nonfinancial NNoonn-- YYeeaarr TToottaall ffiinn ffii aa rr nn mm cc ss iiaa ll Total Dealer- Directly firms—manufacturers, commercial concerns, and placed placed utilities—financed growing production, new inven- 1979 112.8 30.7 82.2 17.4 64.8 tories, or new receivables; and as financial firms, 1980 124.4 36.9 87.5 19.6 67.9 including banks and finance companies, raised 1981 165.8 53.8 112.0 30.3 81.7 1982 166.4 47.4 119.0 34.6 84.4 funds to finance the growing needs of their 1983 187.7 46.2 141.5 44.5 97.0 1984 237.6 70.6 167.0 56.5 110.5 customers. Third, the wave of mergers and acquisitions in 1985 298.8 85.0 213.7 78.4 135.3 1986 331.3 77.7 253.6 101.7 151.9 the latter half of the 1980s also produced new 1987 359.0 81.9 277.0 102.7 174.3 1988 458.5 103.8 354.7 159.8 194.9 issues because firms often temporarily financed the 1989 525.8 131.3 394.5 183.6 210.9 transactions with commercial paper before tapping 1990 561.1 146.2 414.9 215.1 199.8 more permanent sources of funding. ? 1991 530.3 132.7 397.6 214.4 183.2 Fourth, the development of the derivatives mar- MEMO Average annual kets, especially for swaps, added to market growth compound in the second half of the decade. The growing growth rate (percent) internationalization of financial markets allowed 1979-89 16.6 15.6 17.0 26.5 12.5 1989-91 .4 .5 .4 8.1 -6.8 domestic and foreign investment-grade firms to tap any market for funds, including the commercial SOURCE. Federal Reserve Bank of New York. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Evolution of the U.S. Commercial Paper Market since 1980 881 2. Nonfinancial commercial paper outstanding as a 3. Commercial paper held by taxable money market proportion of banks' commercial and industrial loans mutual funds as a share of total fund assets and total outstanding, 1979-91 commercial paper outstanding, 1980-91 Billions of dollars except as noted, December average, Year-end, not seasonally adjusted seasonally adjusted Fund holdings of commercial paper Commercial Nonfinancial Paper as a TToottaall Year and l i o n a d n u s s trial com p m ap e e r r c ial per lo ce a n n t s of YYeeaarr ((bb aa ff ii ss ll uu ss ll nn ii ee oo dd tt nn ss ss Total As a per A ce s n a t of ooff (billions percent of total 1979 284.8 30.1 10.6 ddoollllaarrss)) of dollars) total assets commercial paper 1980 321.0 37.7 11.7 1981 360.6 55.2 15.3 1980 74.4 25.0 33.6 20.6 1982 399.0 50.7 12.7 1981 181.9 56.8 31.2 35.3 1983 422.5 47.0 11.1 1982 206.6 50.3 24.4 31.0 1984 484.5 72.4 14.9 1983 162.6 46.8 28.8 25.5 1984 209.7 78.3 37.3 33.8 1985 511.3 86.9 17.0 1986 548.1 81.1 14.8 1985 207.4 87.6 42.2 29.9 1987 575.9 84.4 14.7 1986 228.4 94.9 41.5 29.1 1988 620.3 103.5 16.7 1987 254.5 100.4 39.4 26.9 1989 653.9 134.1 20.5 1988 272.0 117.0 43.0 25.9 1989 357.5 178.5 49.9 34.2 1990 659.8 150.5 22.8 1991 636.7 134.9 21.2 1990 414.8 200.6 48.4 36.0 1991 448.3 187.6 41.8 35.5 SOURCES. Board of Governors of the Federal Reserve System and the Federal Reserve Bank of New York. SOURCES. Investment Company Institute and Federal Reserve Bank of New York. paper market, and then to transform the funds into the currency, maturity, or interest rate index of All of these investors regard commercial paper choice. as they do other money market instruments, as assets that are highly liquid and have highly stable market values. The liquidity of commercial paper THE INVESTORS AND THEIR SENSITIVITY arises, in part, from the vast amount of short-term TO CREDIT RATINGS funds invested every day. Moreover, dealers bid regularly on paper that they have placed for issuers, The creation of wealth during the long economic and direct issuers of paper will often prepay on expansion made vast sums of investible funds their paper at the request of investors. Investors, available to meet the burgeoning supply of comhowever, typically hold paper to maturity, largely mercial paper. The six-fold increase in the assets of because the maturities of commercial paper are set money market mutual funds between 1980 and the to suit investor requirements. end of 1991 accommodated a significant part of the growth in total commercial paper (table 3). By Because commercial paper primarily is the debt year-end 1991, the money market mutual fund of corporations, default risk is a major concern of industry held about one-third of all commercial investors. Accordingly, investors place heavy paper outstanding and was the largest single inves- emphasis on the evaluations made by the credit tor group in the market (table 4). Bank trust compa- rating agencies concerning the financial health of nies, on behalf of individuals, were second in share firms that issue commercial paper. Virtually all of paper owned.1 Other important investors in com- commercial paper is rated by at least one of the mercial paper in 1991 were nonfinancial corpora- four major credit rating organizations (see box). tions, life insurance companies, and the retirement Top-rated paper carries a 1+ or 1, and mediumand savings plans for state and local government grade paper generally carries a 2; a 3 is the lowest employees. investment-grade rating. The rating agencies grade commercial paper programs according to the inherent credit quality of 1. Flow of Funds Section, Board of Governors of the Federal the issuers. A firm that agencies consider worthy of Reserve System; these data include bankers acceptances. Bank trusts are part of the sector in the flow of funds accounts that covers a rating of 3 or better, however, generally receives households, personal trusts, and nonprofit organizations; bank trust the rating only if it also maintains alternative departments probably account for most of the commercial paper sources of liquidity sufficient to pay off its outheld in the sector. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

882 Federal Reserve Bulletin • December 1992 4. Distribution of commercial paper and bankers acceptances, by type of investor, selected years, 1980-91 Billions of dollars except as noted, at year-end, not seasonally adjusted 1980 1985 1991 TTyyppee ooff iinnvveessttoorr Amount Percent Amount Percent Amount Percent Money market mutual funds 31.6 19.3 99.1 27.6 191.9 33.9 Households, trusts, and nonprofit corporations ... 42.6 26.0 122.1 34.1 165.7 29.3 Nonfinancial corporate business 19.4 11.8 45.3 12.6 53.4 9.4 State and local government retirement plans and savings plans n.a. n.a. n.a. n.a. 29.4 5.2 Private pension plans 19.5 11.9 19.9 5.6 28.4 5.0 Mutual funds 3.8 2.3 4.1 1.1 21.5 3.8 Life insurance companies 8.3 5.1 20.0 5.6 20.8 3.7 Commercial banks 15.8 9.6 9.7 2.7 10.6 1.9 Other1 22.8 13.9 38.3 10.7 44.2 7.8 Total 163.8 100 358.5 100 565.9 100 MEMO Commercial paper outstanding 121.6 293.9 528.1 1. Includes federally sponsored credit agencies, thrift institutions, and SOURCE. Flow of Funds Section, Board of Governors of the Federal securities brokers and dealers. Reserve System. standing commercial paper and other short-term rating agencies generally require that backup liabilities in full at maturity.2 Backup liquidity pro- liquidity should equal 100 percent of the size of the vides funds if the issuer suddenly finds that it commercial paper program and of other short-term cannot roll over maturing paper, but only if the obligations. Top-rated issuers, however, can get by issuer otherwise remains creditworthy. Thus, with less. backup liquidity does not guarantee investors that Backup liquidity may come in several forms, they will be paid off under all circumstances. The but often the issuer sets up lines of credit with banks. The rating agencies prefer that bank lines be revolving credits with same-day availability of 2. See, for example, Solomon Samson and Mark Bachmann, "Paper Backup Policies Revised," Standard & Poor's CreditWeek, funds. With a revolving line, an issuer has a con- September 10, 1990, pp. 23-24; and Jane Maxwell Grant and tractual agreement from the banks, in exchange for others, Alternative Liquidity for Commercial Paper Issuers, a fee, that the banks will lend up to the stated Moody's Special Report (Moody's Investors Service, February 1992). amount of money when needed. Nonetheless, most Short-Term Ratings by the Major Credit Rating Agencies1 Duff & Phelps Fitch Moody's Standard & Category Credit Investors Investors Poor's Rating Co. Service Service Corporation Investment grade Duff 1+ F-1+ A-1+ Duff 1 F-l P-l A-l Duff 1- Duff 2 F-2 P-2 A-2 Duff 3 F-3 P-3 A-3 Noninvestment grade Duff 4 F-S NP (Not Prime) B * H I. ma^M C In default Duff 5 D D 1. The definition of ratings varies by rating agency. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Evolution of the U.S. Commercial Paper Market since 1980 883 contractual backup commitments also contain a 3. Number of issuers in the U.S. commercial paper so-called material-adverse-change (MAC) clause, market, 1980-911 which permits the bank to terminate its commit- Number ment if the financial condition of the would-be N borrower deteriorates sufficiently to jeopardize repayment to the lending institution. — 1200 — — 1000 THE CHANGING COMPOSITION OF BORROWERS AND OUTSTANDING ISSUES — 800 A snapshot of issuers at the end of the 1980s would I i 1 1 1 1 1 1 1 1 1 1 1 have revealed a collection of firms far different 1980 1982 1984 1986 1988 1990 1. For programs rated by Moody's Investors Service. from those in the market at the beginning of the SOURCE. Moody's Investors Service. decade. At the end of 1989, about 1,250 corporations and other entities had paper programs in the U.S. commercial paper market (chart 3), about 500 reaches $500 million or more. Many issuers surmore than in 1980.3 Many of the new issuers were pass that level, but only about 110—mostly the foreign firms and smaller, less well known U.S. major finance companies and large banking organifirms, whereas the traditional commercial paper zations that also distribute wholesale liabilities such issuer had been a large, well known U.S. corpora- as CDs—place their paper directly. Only a few tion. Because of the stringent credit preferences of nonfinancial firms are direct issuers of paper, and investors, however, about 95 percent of paper they account for a small portion of outstanding issuers in 1989 were rated 1 or 2, close to the share nonfinancial paper. at the start of the decade.4 The direct issuers responded to the growing credit needs of businesses and consumers alike during the economic expansion. The large finance The Increasing Importance companies grew rapidly, particularly after the Tax of Dealer-Placed Paper Act of 1981 promoted business use of leasing. Unlike banks, these institutions rely largely on the Early in the 1980s, commercial paper sold directly public markets to fund their loans. Accordingly, to investors by the borrower constituted about their use of bonds and commercial paper grew with 60 percent of all issuance. Direct issuers of their assets. Likewise, bank holding companies paper—most of them traditional issuers—borrow continued to use the commercial paper market to in sufficient size and frequency that the costs of support parent company operations and lending by developing an in-house distribution system are less nonbank subsidiaries. By the end of the decade, than the costs of placing paper through a dealer. outstanding paper placed directly by financial firms For nonbanks, an in-house system may become surpassed $200 billion, more than triple the level at economical when outstanding commercial paper the start of the decade. The steady increase in paper placed directly, however, failed to keep pace with paper issued by 3. These data are for commercial paper programs in the U.S. firms that used dealers to distribute their obligamarket and rated by Moody's Investors Service. tions. By 1989, dealer-placed paper accounted for 4. These percentages are for all issues rated by Moody's, includ- 60 percent of all commercial paper outstanding, up ing Eurocommercial paper and foreign domestic programs (Jerome S. Fons and Andrew E. Kimball, Defaults and Orderly Exits of sharply from about 40 percent at the start of the Commercial Paper Issuers, 1972-1991, Moody's Special Report, decade (chart 4). A firm ordinarily requires a dealer Moody's Investors Service, February 1992, p. 16). to place its paper if it lacks the name recognition In the 1980s, a number of investors were willing to accept noninvestment-grade or unrated paper. Some of this so-called junk necessary to attract investors or if its funding recommercial paper was associated with the merger and acquisition quirements either are too limited or infrequent to boom in the latter half of the 1980s ;the outstanding value of such warrant building its own distribution system. paper has probably never exceeded $8 billion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

884 Federal Reserve Bulletin • December 1992 4. Commercial paper outstanding, directly placed The Growth of Guaranteed Paper and dealer-placed, 1980-911 The share of commercial paper programs that were fully (100 percent) enhanced by credit guarantees—often bank letters of credit—from highly rated third parties grew dramatically in the first half of the decade. In fact, programs with such credit enhancements accounted for about all the net increase in the number of commercial paper issuers rated by Moody's over that period.6 Presumably, most of these programs were small because their outstandings accounted for less than 10 percent of 1980 1982 1984 1986 1988 1990 all outstanding paper. 1. Seasonally adjusted. Almost all commercial paper issued by nonfinancial firms is dealer-placed; the small amount that is directly placed is These guarantees ensure that the commercial included in the totals for dealer-placed paper. paper will be paid in full at maturity regardless of SOURCE. Federal Reserve Bank of New York. the financial condition of the issuer itself. Because investors in such paper rely on the guarantor, rather Most dealers are a part of investment banking than the issuer, to make payment in full upon organizations. In actions taken in 1986 and 1987, maturity of the paper, the paper carries the rating of however, the Federal Reserve Board authorized the guarantor. Whereas traditional issuers entered certain so-called section 20 subsidiaries of bank the market on the strength of their own credit holding companies to deal in commercial paper to quality (or that of their parent), many of the new a limited extent; by year-end 1991, these subsidicommercial paper programs of the first half of the aries accounted for about 14 percent of outstanding 1980s gained access to the market on the strength dealer-placed paper.5 of guarantees by unrelated entities.7 In an issue of dealer-placed paper, the dealer generally purchases the paper from the issuer and resells it to investors at a higher price, with the The Growth of Dealer-Placed Financial Paper price difference constituting the dealer's compensation for placing the paper. Dealers have extensive Dealers proved particularly successful in marketing distribution systems that can accommodate the new financial programs. In fact, outstandings of paper of a large number of issuers, and new and dealer-placed financial paper, which accounted for smaller issuers are thus able to sell their paper at a only 26 percent of total paper issued by financial lower cost than if they tried to place it directly. The firms in December 1979, overtook outstandings of increase in the share of dealer-placed paper outdirectly placed financial paper in 1990. standing in the 1980s in part reflected the changed During the mid- to late-1980s, the presence of composition of issuers: Dealers were required for foreign financial institutions in the U.S. market the aggressive marketing required to package and grew, and these firms generally required dealer sell new issuers and new types of commercial assistance to promote their names to U.S. investors paper programs. (table 5). By year-end 1991, these firms had outstandings in excess of $110 billion, slightly more 5. Section 20 of the Glass-Steagall Act prohibits these subsidiaries from being "engaged principally" in the underwriting of, or dealing in, securities that are so proscribed for national banks. The 6. Moody's Commercial Paper Record (vol. 5, December 1985), Supreme Court has determined that commercial paper is an ineligi- and the Statistical Supplement to the December 1980 issue. ble security under the act. The Board has ruled that, to qualify as 7. A subsidiary of a highly rated firm may obtain ratings close to not "engaged principally" in the underwriting of, or dealing in, or equal to those of its parent if it has the explicit or implicit ineligible securities, a subsidiary must limit revenues from such support of its parent. But these forms of support may not have the activities to 10 percent of its gross revenues. See "Legal Develop- strength of a credit guarantee. For example, even in an explicit ments" in the following editions of vol. 73 of the Federal Reserve support agreement, the parent may pledge only to maintain the Bulletin: February 1987, pp. 138-54; and June 1987, pp. 473-508; subsidiary's fixed charge coverage or net worth at some minimum and "Announcements," Federal Reserve Bulletin, vol. 75 (Novem- level; in contrast, a guarantor promises the holder of the guaranteed ber 1989), p. 751. paper to redeem it at maturity. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Evolution of the U.S. Commercial Paper Market since 1980 885 5. Outstanding dealer-placed commercial paper issued by financial institutions Billions of dollars at month-end, not seasonally adjusted Foreign firms DDDaaattteee TTToootttaaalll UUU...SSS... Banks Other fffiiirrrmmmsss TToottaall U.S. Foreign U.S. Foreign Total Total subsidiaries offices subsidiaries offices 1986 January 79.3 47.3 32.0 25.2 9.3 15.9 6.8 3.3 3.5 December 102.6 56.3 46.3 36.2 15.3 20.9 10.1 3.7 6.4 December 1987 115.0 61.9 53.1 41.2 19.3 21.9 11.9 5.1 6.8 1988 161.5 89.4 72.1 52.0 26.2 25.8 20.1 7.9 12.2 1989 188.6 99.8 88.8 57.4 31.0 26.4 31.4 11.0 20.4 1990 221.4 107.2 114.2 62.6 36.3 26.3 51.6 23.1 28.5 1991 221.1 109.5 111.6 61.0 39.1 21.9 50.6 16.8 33.8 SOURCE. Federal Reserve Bank of New York. than half of all dealer-placed financial paper. tic entities—also grew rapidly, to $110 billion at Almost all of these programs entered the market year-end 1991. Asset-backed commercial paper with a rating of 1 or 1+. Highly rated foreign banks programs accounted for about 45 percent of out- (or their U.S. subsidiaries) accounted for 55 percent standings in this category. About 25 percent of of this paper. nonbank financial paper was placed by dealers on About half of the paper from foreign financial behalf of their own investment banking firms. institutions in 1991 was issued by their U.S. subsid- Smaller finance companies, bank holding compaiaries. Many U.S. money market investors are lim- nies, insurance companies, and other firms too ited by statute or bylaws to issues of U.S.-chartered small to issue commercial paper directly made up corporations. To attract funds from these investors, the remainder of these companies. foreign corporations—most often banks—establish U.S. funding subsidiaries, which typically channel ASSET-BACKED COMMERCIAL PAPER the proceeds to their affiliated branches and agencies in the United States or move them offshore. One of the most significant developments in the U.S. subsidiaries of foreign nonbank financial insticommercial paper market in the 1980s was the tutions, such as Japanese leasing companies, issue growth of asset-backed paper, a form of asset secucommercial paper primarily to finance U.S. lending ritization used predominantly to finance credit card operations. receivables and trade receivables. Asset-backed The remaining half of commercial paper of paper expands the funding options available to foreign-related financial institutions was issued by existing issuers of commercial paper and opens the entities outside the United States, generally the market to a wide range of new firms. Asset-backed parents themselves, who discovered that they could paper also reduces the use of capital by financial tap the liquidity and low dollar cost of the U.S. intermediaries, an important factor in recent years, commercial paper market. If so desired, the issuer when the marketplace and regulators have prescould swap the proceeds into the home currency or sured many intermediaries to build capital levels. other currency of choice. For example, British building societies—the primary mortgage lenders in the United Kingdom—found the U.S. commer- The Structure of an Asset-Backed Program cial paper market highly receptive to their paper. After obtaining cheap dollar funds, they then often The issuer in a typical asset-backed program conswapped into sterling, obtaining an all-in cost of sists of a business entity called a special-purpose funds below the cost of raising funds directly in vehicle (SPV), established as a going concern. The sterling markets. SPV purchases pools of receivables from partici- Outstanding paper placed by dealers on behalf of pating firms (or lends to these firms with thendomestic nonbank financial firms—purely domes- receivables as collateral); the SPV acquires the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

886 Federal Reserve Bulletin • December 1992 funds for these transactions by issuing commercial Firms may choose to sell assets to, or borrow paper.8 In a typical bank-advised program, a bank- from, an SPV for several reasons. By selling ing organization evaluates the credit quality of receivables, the firm removes them from its balparticipants—that is, sellers of receivables—and of ance sheet and limits its use of leverage. At the the pools and may provide other services. same time, the selling firm maintains customer To obtain the highest possible ratings, a neces- relationships by servicing the receivables. In addisity for funding, these programs are designed care- tion, an asset-backed program can provide a useful fully to protect holders of the commercial paper means of diversifying sources of liquidity. Highly issued by the SPVs. First, and perhaps most impor- rated firms with their own commercial paper protant, an asset-backed program is designed so that grams nonetheless tap asset-backed programs for the SPV is "bankruptcy remote."9 Such a condition funds for these reasons. Finally, a firm that is too is based, in large part, on an agreement by the small or rated too low to participate in the commerentities that do business with the SPV, other than cial paper market directly can sell its receivables to the commercial paper investors themselves, that an asset-backed program, effectively financing its they not file the SPV into bankruptcy for one year receivables at commercial paper rates (plus its plus one day after the last paper matures. In addi- share of the cost of operating the program). tion, the SPV is owned by a party unaffiliated with a participant and the bank advisers (if any), often a The Development of Asset-Backed nonprofit organization or employees of an invest- Commercial Paper ment bank; in the event of the bankruptcy or receivership of a participating firm or advisory banking The development of the asset-backed sector of the organization, this arrangement minimizes the like- commercial paper market arose from several faclihood that the SPV would be consolidated, to the tors. U.S. banking organizations saw an opportunity detriment of investors in its commercial paper, into to generate fee income from potential participants the distressed entity. in their programs—many of which were the same Second, the face value of the receivables pur- investment-grade firms that they had lost as loan chased by the program exceeds the purchase price customers to the commercial paper market. These paid for them: The excess over the discount banking organizations also became more familiar required for payment of interest provides an equity with asset securitization. This familiarity resulted, cushion to commercial paper investors. The amount in part, from increased market and regulatory presof this over-collateralization depends on the loss sure to increase their capital ratios. Asset securitiexperience of existing or similar pools of receiv- zation, and asset-backed commercial paper in ables and usually is set at several multiples of such particular, permitted banks to channel would-be losses. borrowers to funding off of bank balance sheets. Third, investors require a second level of credit Another factor was that, as discussed earlier, enhancement, generally in the form of a bank letter financial markets became increasingly familiar of credit or insurance company surety bond on with, and thus more willing to accept, programs some fraction of the maximum program size. that required structuring, such as those with credit Finally, the rating agencies require liquidity guarantees. Dealers saw opportunities to market backup, as in any commercial paper program.10 asset-backed programs to companies seeking to increase liquidity or to reduce leverage, regardless of size or rating. Moreover, they already had 8. Pools of receivables must be of high credit quality either proved successful in marketing lower-rated firms to through diversification that reduces risk or by virtue of the credit the commercial paper market via guaranteed proquality of each entity in the pool. 9. For a detailed discussion of the concept of being bankruptcy- grams and realized that a pool of potential business remote, see, for example, Standard & Poor's Corporation, S&P's existed in companies that were too small to tap the Structured Finance Criteria (New York, 1988), pp. 75-76. commercial paper market through their own guar- 10. The high rating of an SPV requires a high rating for the banks providing such support. See Barbara Kavanaugh, Thomas R. anteed programs. Boemio, and Gerald A. Edwards, Jr., "Asset-Backed Commercial Thus, banking organizations formed bank- Paper Programs," Federal Reserve Bulletin (vol. 78, February 1992), pp. 107-16. advised asset-backed programs, relying on dealers Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Evolution of the U.S. Commercial Paper Market since 1980 887 to market the paper. Most bank-advised programs 5. Asset-backed commercial paper, bank-advised entail the purchase of trade credit and credit card and other, 1985-91 receivables from a large number and variety of Numbers investment-grade corporations. The first such program was established in 1983. The advising banking organization had multiple fee-generating roles: Its asset-based lending subsidiary established minimum credit standards for participating firms and pools of receivables and determined the appropriate "haircut" (over-collateralization) necessary for receivables; the subsidiary also monitored the SPV's portfolio of receivables. The advising bank itself made commitments to purchase receivables from the program at par to ensure payment of maturing commercial paper, effectively combining 100 percent credit enhancement and liquidity backup in one facility. Nonbank programs have also formed, some targeted at lower-rated firms, which banking organizations have avoided for the most part in their programs. A nonbank program typically specializes in one type of receivable and, in some cases, in the receivables of one firm. Examples of the latter case 1. Not seasonally adjusted. were nonbank programs, each established to pur- SOURCES. Asset Sales Reports, American Banker-Bond Buyer Newsletters; Moody's Global Short-Term Market Record, Moody's Investors Serchase the private-label credit card receivables gen- vice; and Short-Term Ratings and Research Guide, Duff and Phelps Credit erated by sales at the department store chains of an Rating Co. operator that had a noninvestment-grade credit ratbacked programs, but the average amount of outing and that could not tap the paper market directly. standing commercial paper in bank-advised pro- Several of these department store operators have grams is far greater. filed for bankruptcy since the creation of the dedicated SPVs, triggering the orderly liquidation of their asset-backed programs without loss to paper FINANCIAL STRESSES AND MARKET holders.11 RETRENCHMENT IN THE 1990S The number of asset-backed programs increased from three in 1985 to eighty-nine by year-end The composition of firms issuing commercial paper 1991, and these programs accounted for virtually has continued to change in the 1990s, in large part all the increase in the number of U.S. commer- because events fostered a sharp decline in the issucial paper issuers (as rated by Moody's) after ance of medium-grade paper (mostly 2-rated), December 1989 (chart 5). Outstandings doubled in some of which was from the ranks of traditional 1989 and again in 1990, and by year-end 1991, borrowers. The primary engine of growth for the asset-backed paper accounted for about 9 percent commercial paper market in the mid-to-late 1980s, of all outstanding commercial paper. As indicated the long economic expansion, came to an end with in chart 5, the number of bank-advised programs is the close of the decade. Recession set in during the not much larger than the number of other asset- summer of 1990, and the economy since has been in an extraordinarily slow recovery. Consumers and firms cut bac|L 00;borrowing, investors and 11. Some new asset-backed commercial paper programs, each dedicated to financing the receivables of a bankrupt operator, have banks became more wary of extending credit, and emerged from the ashes of the earlier programs. The bankrupt downgrades became more frequent. In a pattern operators, in effect, borrow from these SPVs using receivables for typical of recessions, the interest rate premium collateral. Each operator in bankruptcy can thus continue to finance receivables at low cost. required by investors to hold medium-grade paper Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis A

888 Federal Reserve Bulletin • December 1992 6. Spread of rates for paper rated A-2/P-2 over rates advise it to withdraw from the market. As the firm for paper rated A-1+/P-1, 1974-911 relied less on commercial paper, it increasingly drew on its backup lines of credit at banks or other Basis points \ backup sources of liquidity. Thus, in most cases, an i issuer with declining credit quality would have M1 i — 150 time to cease issuing commercial paper and to have its outstanding paper mature well before a default 11" became imminent. Moody's has described this pro- UT i cess as an "orderly exit."13 fl w- In contrast, the defaults in the U.S. commercial paper market at the end of the decade reflected 1 i i i i i i i i 1 1 1 1 some of the structural shifts that occurred in the 1975 1980 1985 1990 market over the 1980s. An increasing number of 1. For this measure, companies rated A-1+/P-1 include only those with a investors became receptive to low-quality credits rating of AAA/Aaa on their long-term debt. Shading indicates periods of recession as defined by the National Bureau of Economic Research (NBER). during the 1980s, including paper considered to be Vertical line indicates peak; NBER has not yet determined the trough of the noninvestment grade; and banks became more 1990-91 recession. SOURCE. Board of Governors of the Federal Reserve System. likely to resist providing adequate backup liquidity to those firms under financial stress and unable to rose (chart 6). The slowdown in economic activity roll over their maturing paper.14 In mid-1989, the and the increased risk premium curbed the growth U.S. commercial paper market was hit with the first of commercial paper; but in addition, defaults of default (other than Manville's litigation-related several commercial paper issuers and a new SEC default in 1982) in eighteen years; two more folpolicy that restricted money market fund invest- lowed that year and four more in 1990. ments in medium-grade paper exacerbated the mar- The 1989 defaults created some concern among ket's normal response to recession. investors, primarily for paper rated 3 or below, but broad effects on the market for higher-rated paper did not materialize until the default of Mortgage & Defaults Realty Trust (MRT), in March 1990.15 Two agencies had rated MRT at 2, or medium-grade, in the Between 1971 and mid-1989, the U.S. commercial month before its default; at the time, money market paper market was free of defaults except for the mutual funds were allowed to hold medium-grade abrupt litigation-related default of Manville Corpo- paper without an overall limit, and such funds were ration, in 1982.12 The absence of defaults has been among the holders of MRT's defaulted paper. Fund attributed to the fact that most commercial paper advisers chose to make up the shortfall rather than investors did not purchase paper of low quality and let fund investors lose money.16 Subsequently, to the requirement of rating agencies that an issuer investors began to demand a larger interest rate maintain adequate backup liquidity. Thus, as the credit quality of a highly rated issuer deteriorated, investors required increasingly greater compensa- 13. See Douglas J. Lucas and Donald E. Noe, Defaults and tion for risk, ultimately refusing to purchase new Orderly Exits of U.S. and European Commercial Paper Issuers, 1972-1989, Moody's Special Report (Moody's Investors Service, paper at any interest rate that the issuer willingly November 1989). would pay. For the protection of such a firm, of 14. Fons and Kimball, Defaults and Orderly Exits, pp. 16-17. investors and of itself, the firm's dealer often would 15. In February 1990, Drexel Burnham Lambert Group, Inc., a major dealer of junk commercial paper, defaulted on its own paper (rated 3 by two agencies until just before the default). With the fall of Drexel, the market in junk paper withered; outstandings of 12. On August 26, Manville defaulted on its commercial paper unrated paper shrank from a high of $5 billion in January 1990 to after filing in bankruptcy court for protection against potential $700 million at the end of 1991. The rest of the commercial paper liability under litigation regarding asbestos sickness. In Moody's market, however, was little affected by the demise of Drexel. rating, all the defaulted paper had a prime rating (P-2) from the 16. 55 Federal Register 30239, July 25,1990, p. 30241. Money time it was issued to the day of default. Immediately after the filing, funds also held some of the paper on which Integrated Resources, Manville's short-term rating dropped to noninvestment grade (Fons Inc., defaulted in June 1989. At the time of its default, the firm was and Kimball, Defaults and Orderly Exits, pp. 9 and 21). rated 2 by one credit rating agency. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Evolution of the U.S. Commercial Paper Market since 1980 889 premium on the commercial paper of other premium that medium-grade firms had to pay over medium-grade credits, presumably because of top-rated firms continued to rise, and many found MRT's relatively high rating before default. that borrowing at banks was the cheaper funding alternative. Dealers encouraged other mediumgrade issuers to test the availability of their backup Amendments to SEC Rule 2a-7 lines at banks. The new risk-based capital guidelines for banks would become effective at year-end, In response to concerns about the effect of the however, and market participants grew increascommercial paper defaults on the portfolios of ingly uncertain about the capacity of banks to money market mutual funds, the Securities and honor all their loan commitments. As a result, rates Exchange Commission (SEC) proposed in July paid on commercial paper, even by highly rated 1990 to limit money fund holdings of medium- firms, jumped in December. grade paper through amendments to its Rule 2a-7, December 1990 proved, however, to be the point which governs the investments of money funds. of maximum stress. The financial markets calmed The amendments, approved in February 1991 and somewhat and thereafter were capable of handling efective in June 1991, were complex but for the the funding needs of medium-grade firms. most part raised the minimum acceptable credit Medium-grade issuers successfully tapped bank quality of paper with two or more ratings from that lines of credit or their commercial paper dealers, of a single rating of 2 to at least two ratings of 2. In while asset-backed commercial paper absorbed addition, the amendments created two categories of some of the needs of these firms and grew rapidly. such eligible paper: first-tier paper, which generally But investors remained wary of medium-grade requires at least two ratings of 1; and second-tier paper. Interest rates on it spiked again both at paper, which generally either has one rating of 1 midyear and at year-end 1991 because many invesand one rating of 2 or two ratings of 2. Second-tier tors did not want to show such holdings on their paper essentially includes all paper that is generally published financial statements. The June 1991 considered medium-grade, such as paper rated A-2 default of Columbia Gas, a second-tier issuer until by Standard & Poor's and P-2 by Moody's. just before its default, renewed concerns about the In addition, before the amendments, money safety of medium-grade paper. With the persistence funds could hold unlimited aggregate amounts of of concerns about credit quality, many mediumwhat became defined as second-tier paper. After grade firms that had turned to their banks in 1990 the amendments, money funds could hold no more still found banks cheaper than the commercial than 5 percent of their assets in such paper; and paper market. they could hold no more than 1 percent of their Overall, these events sharply curtailed the marassets in the paper of any one second-tier issuer, a ket for medium-grade commercial paper. In 1988 sharp reduction from earlier limits.17 and 1989, money market mutual funds with at least some private instruments held, in the aggregate, up to 8 percent of their assets in medium-grade paper THE EFFECTS OF CREDIT CONCERNS (table 6). Money funds started to cut back on such ON THE MARKET paper in the first half of 1990, presumably in response to the defaults that prompted the SEC rule In the months after the SEC's July 1990 proposal, change. Just before the SEC's July 1990 proposal, dealers faced growing investor resistance to however, they still held an estimated $14 billion in medium-grade issues, especially for paper matur- medium-grade paper. By year-end 1990, these ing past the end of the year. The interest rate holdings had fallen to $6 billion, and by year-end 1991, six months after the SEC amendments took effect, second-tier paper vanished from money fund portfolios. Other investors also cut back on their 17. Some of the complications in the amendments concerned unrated paper and paper with a rating from only one agency. The investments in such paper: Paper rated P-2 by amendments to Rule 2a-7 and a comparison of them with the Moody's declined by about half in absolute terms preceding version of the rule are in 56 Federal Register 8113, from July 1990 to December 1991, far in excess of February 27, 1991. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

890 Federal Reserve Bulletin • December 1992 6. Money fund holdings of second-tier commercial paper 7. Outstanding commercial paper issued by U.S. banking and the size of the second-tier market, 1988-91 organizations and directly placed by nonbank financial Billions of dollars except as noted, not seasonally adjusted institutions, 1980-911 Mo s n e e c y o n f d u - n t d ie h r o p l a d p in e g r s 1 of P-2 paper outstanding2 Billions of dollars Directly placed by nonbank financial institutions PPeerriioodd Percent of Percent of rated Amount fund Amount assets3 commercial paper 1988:H1 12.9 5.6 n.a. n.a. H2 16.2 7.0 n.a. n.a. 1989:H1 19.6 7.7 94 14.8 H2 24.7 8.2 97 14.4 1990:H1 13.8 4.2 102 14.4 December ... 6.0 1.3 94 12.7 1980 1982 1984 1986 1988 1990 1991 June 1.4 .4 n.a. n.a. 1. Not seasonally adjusted. Commercial paper issued by U.S. banking September ... .4 .1 n.a. n.a. December ... * .0 48 7.7 organizations is almost all directly placed. SOURCES. Board of Governors of the Federal Reserve System and the 1. Average portfolio weights for sixty money market mutual funds, as Federal Reserve Bank of New York. developed by the SEC. For 1988 and 1989, the data cover fund holdings of paper rated P-2 by Moody's Investors Service; for 1990:H1, the data cover fund holdings of paper (i) rated P-2 by Moody's or A-2 by Standard and declines in their base of investors if they received a Poor's Corp. and (2) rated not less than P-2 or A-2. downgrade to 2. Much of the 1991 decline in For 1988:H1 through 1990:H1, dollar levels are the sample portfolio weights, as developed by the SEC, multiplied by the total assets of all outstanding financial paper placed directly by nonnon-government-only taxable money market funds, as reported by the Invest- banks was due to efforts by first-tier firms to forement Company Institute; for December 1990, the data are an SEC staff estimate; for 1991, the data are from IBC/Donoghue's Money Fund Report. stall potential further ratings changes and potential 2. Jerome S. Fons and Andrew E. Kimball, Defaults and Orderly Exits of losses of their investor base (chart 7). Commercial Paper Issuers, 1972-1991, Moody's Special Report (Moody's Investors Service, February 1992); and Douglas J. Lucas and Donald E. Noe Credit problems also plagued a number of the Defaults and Orderly Exits of U.S. and European Commercial Paper Issuers, large bank holding companies. Ratings downgrades 1972-1989, Moody's Special Report (Moody's Investors Service, November 1989). of U.S. banking organizations picked up in 3. Excludes government-only funds. response to large loan losses and the need to raise * Less than $50 million. n.a. Not available. capital ratios. Accordingly, outstanding commercial paper of bank holding companies—almost all the amount held by money funds; and as a share of directly issued—started a decline from a peak of all outstanding paper rated by Moody's, P-2 paper $52 billion in January 1990 to $43 billion just fell from 14 percent to 8 percent over the same before the SEC proposed its rule change.19 By period.18 year-end 1991, outstanding paper of bank holding These developments—defaults, deteriorating companies had fallen to $24 billion, around where credit quality, and the SEC's amendments—also it has since stabilized. contributed to a runoff in directly placed financial paper after 1990. Firms on the border between firstand second-tier by that time faced potentially sharp THE EFFECT OF RISING COSTS OF BANK SERVICES 18. These data are for all short-term issuers rated by Moody's, including Eurocommercial paper and foreign domestic commercial With steps taken by regulators to raise bank capital paper. The absolute decline in the level of P-2 paper therefore overstates the actual decline of paper outstanding of medium-grade standards, the financial stresses placed on banks issuers in the U.S. market. To some extent, the decline in P-2 paper also reflects movements of firms among ratings categories. A sample of firms that carried P-2 ratings throughout the sample period significantly reduced their 19. Leland Crabbe and Mitchell A. Post, "The Effect of a Rating reliance on commercial paper to fund assets relative to a sample of Change on Commercial Paper Outstandings," Board of Governors firms rated P-l throughout. See Leland Crabbe and Mitchell A. of the Federal Reserve System, August 1992. The authors show Post, "The Effect of SEC Amendments to Rule 2a-7 on the Com- that a downgrade to the short-term rating of a banking organization mercial Paper Market," Finance and Economics Discussion Series conveys new information about the deteriorating financial condi- 199 (Board of Governors of the Federal Reserve System, May tion of the company. As a result, its outstandings decline signifi- 1992). cantly in the weeks after the downgrade. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Evolution of the U.S. Commercial Paper Market since 1980 891 have reduced their ability to provide letters of costly in terms of the capital backing now required. credit and lines of credit to the commercial paper Accordingly, many of these programs were restrucmarket. As the financial health of banks has deteri- tured in 1991. To isolate the problems of one bank orated, the number of those with the high ratings from the asset-backed program that it advises, necessary to provide these services has diminished. backup liquidity most often now is provided by a In addition, the new risk-based capital standards number of highly rated banks. Credit enhancement have raised the capital backing required for busi- now is kept to a necessary minimum, and alternaness loans relative to U.S. Treasury securities and tives to bank guarantees—such as insurance comoff-balance-sheet items such as letters of credit and pany surety bonds or cash collateral accounts— credit lines with original maturities in excess of have been used in newer programs. one year. In turn, the increased capital required More generally, the increased cost to banks of presumably raises the cost of the products for those carrying out their business appears to have imporbanks with capital ratios at or below the required tant ramifications for the loan and commercial levels. paper markets, at least in the near-term. The Before these constraints emerged, highly rated upward pressure on the cost of bank loans will tend commercial banks competed fiercely to supply to make commercial paper the more attractive backup lines and letters of credit. Much of this funding alternative for firms. Because bank letters competitive pressure came from Japanese banks, of credit on commercial paper also have become and more recently, European banks, attempting to more costly, however, potential new entrants of gain U.S. market share. As a result of this competi- low credit quality may have to resort to guarantees tion, the banks probably were less than fully com- provided by nonbanks to obtain any cost savings. pensated for the risks borne and other costs of Finally, backup lines of credit provided by banks providing these services. As the number of domes- now typically carry maturities of less than one year. tic and foreign banks capable of supplying these services in the United States has dwindled, the remaining banks have responded to the incentives OUTLOOK FOR THE COMMERCIAL of the new capital guidelines by passing on the PAPER MARKET costs of added capital to users of these services. Other financial intermediaries have entered the Despite the market's recent setbacks and its somemarkets for these services as profit margins have what changed operating environment, the investor widened, but the reduced availability and increased base remains, and the commercial paper market cost remain factors affecting the commercial paper continues to be a major source of short-term funds market. for corporations. Among the new issuers that enter For example, the current climate rendered uneco- the market will be highly rated foreign firms nomic several of the earlier bank-advised asset- attracted by the liquidity and low cost of the market backed structures. In those programs, the bank and other programs carefully structured to obtain adviser provided all the credit enhancement and the high ratings at low cost. The market already has liquidity backup. The enhancement, moreover, devised some of these structures: The prototypical covered 100 percent of the outstanding paper, modern asset-backed program minimizes credit enan excessive amount given the levels of over- hancement provided by banks; and banking organicollateralization and previous loss experience. zations have formed SPVs that simply make loans When the bank itself was downgraded, the rating to a limited number of medium-grade firms that the agencies also earmarked the programs advised by banks otherwise would have booked on their own the bank for possible downgrades; moreover, the balance sheets and that therefore would have excess of credit enhancement became particularly entailed capital backing. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

892 The State and Local Government Sector: Long-Term Trends and Recent Fiscal Pressures This article was prepared by Laura S. Rubin of putting a squeeze on state and local government the Board's Division of Research and Statistics. budgets. Katie Fagan and Monica Leimone provided The state and local government sector has research assistance. recorded sizable deficits at other times since World War n. Throughout the 1950s and 1960s, the m& Many state and local governments have been under tor's operating and capital account remained in pressure in recent years to deal with significant deficit. To a large extent, the deficits reflected erosion in their fiscal positions, and in the aggre- heavy capital spending, which ran 25 percent or gate, the state and local government sector has more as a share of state and local expenditures, reported a deficit in its combined operating and excluding social insurance funds. (See box for a capital account since the end of 1986 (chart 1, discussion of these funds.) The rapid pace of public upper panel).1 Much of the imbalance can be traced construction began to abate in the late 1960s, and to the expansion of spending programs in the late over the next fifteen years the budget position of 1980s in combination with the reduced revenue state and local governments was, on net, in rough growth that accompanied the recent recession and the subsequent slow pace of economic recovery. The recent fiscal difficulties have been reinforced 1. Budget surplus (deficit) of the state and local by longer-term trends in state and local spending government sector, 1959-921 and taxation, by a growing number of mandates to provide services, and by decreasing federal support. The rise in state and local outlays in recent years has been concentrated in education, corrections, and Medicaid. Demographic and social changes have resulted in increased demands in all three areas. Moreover, spending on elementary and secondary education has been boosted by national and state efforts to improve the quality of schooling; outlays on prisons have been increased to comply with court orders to alleviate overcrowding; and Medicaid expenditures have risen sharply, in part because of federal mandates to expand coverage. As these demands have mounted, receipts have been restrained by the weak economic expansion, 1. Much of this analysis is based on data (through 1992:Q2) from the national income and product accounts (NIPA). The most 1960 1965 1970 1975 1980 1985 1990 recently revised data date back only to 1959, however, and state- 1. National income and product accounts basis; excludes social insurance ments about trends over the early part of the post-World War II funds. Shading indicates periods of recession as defined by the National period are based on unrevised data. Revisions to early figures are Bureau of Economic Research (NBER). Vertical line indicates peak; NBER unlikely to alter the story presented here. has not yet determined the trough of the 1990-91 recession. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

893 balance, with deficits developing during periods of Separate data for state governments and local recession and surpluses during periods of expan- governments are available only for the period sion. The pattern was broken with the emergence 1959-88. Even if the database were more current, of large budget gaps in late 1986, nearly four years it is not clear that these two levels of government before the most recent cyclical peak. Consequently, should be separated when examining general trends it appears that the current problem extends consid- in spending and taxation, because the division of erably beyond a cyclical imbalance and that state responsibilities between states and localities varies and local governments will need to make funda- considerably from state to state. Some states permental adjustments to restore fiscal health.2 form functions that are carried out by local govern- An understanding of the current structural diffi- ments in other states. For example, Hawaii adminculties confronting state and local governments isters the state's public elementary and secondary requires that recent developments be viewed from a schools and funds 92 percent of expenditures, longer-term perspective. Over the postwar period, whereas New Hampshire funds only 7 percent of the role of state and local governments has public school expenditures. The mix of state and expanded noticeably; total expenditures (excluding local taxes shows a similarly wide divergence. The social insurance funds) rose more than 4lA percent- percentage of total state and local own-source genage points as a share of gross domestic product eral revenue that is raised by states varies from a (GDP) between 1959 and the mid-1970s. Early on, high of 69 percent in Hawaii to a low of 39 percent the expansion was funded, in part, by grants from in New Hampshire and Colorado. the federal government. When the growth of federal grants was trimmed in the 1980s, however, state and local spending on many of these pro- THE STATE AND LOCAL GOVERNMENT grams was not cut back. To some extent, the SECTOR decrease in federal resources has been offset by an increase in state and local tax burdens. However, The state and local government sector accounts for the magnitude of the current aggregate deficit of a relatively large share of economic activity in the the state and local government sector suggests that United States. Employment by state and local govmany difficult decisions remain ahead. This article ernments grew steadily over the quarter century examines some of the trends in spending, taxation, beginning in 1945, from llA percent of nonagriculand grants that underlie the fiscal difficulties, which tural employment in that year to 14 percent in have now persisted for five and one-half years. 1970; it has remained at roughly that share ever since. Likewise, purchases of goods and services by these governments as a share of GDP grew from STATISTICAL PRELIMINARIES 8J/2 percent in 1959 to more than 11 percent in the first half of 1992. Analysis of the state and local government sector is By composition of spending, purchases account limited by the quantity and quality of economic for most state and local government expenditures, data. One of the complications arises from the excluding those of social insurance funds. The bulk enormous number of government units—more than of the remaining outlays are for transfer payments 80,000. Definitions, fiscal reporting periods, and to individuals, which rose from about 10 percent of the range of spending priorities vary widely within state and local government expenditures in the as well as across states. The national income and 1960s to more than 20 percent in the first half of product accounts, which provide information about 1992, primarily a reflection of the growing importhese governments on a conceptually consistent tance of Medicaid. By function, the largest share of basis, form the framework for much of the macro- expenditures is for education, which has hovered economic analysis of the sector. around 40 percent over the past thirty years (table 1). The second largest function is income support, at around 22 percent of expenditures. 2. Roughly half the recent fiscal squeeze is estimated to have The magnitude of income support programs has come from structural imbalances, and half from the cyclical grown dramatically over the past three decades. downturn. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

894 Federal Reserve Bulletin • December 1992 Selected components of state and local government expenditures, by function, selected years, 196Q-91 Percentage of total government expenditures (excluding social insurance funds) fEducation 37.1 40.9 Income support and '11K.9 15«.4 §Transportation M Administration — J? Health and hospitals Police a Corrections ... 1.4 1.4 By contrast, the share of expenditures for transpor- construction. (In contrast to spending for school tation, largely highways and mass transit, exceeded buildings, highway construction was financed in that of income support programs by a considerable large part by federal grants to states.) By the late margin in 1960 but has diminished significantly 1960s, the school-age population had peaked and since then. highway construction had begun to wind down. As a result, state and local spending on construction fell, both in real terms and as a share of GDP, until PURCHASES OF GOODS AND SERVICES the 1980s, when the school-age population began to increase once again and governments were Purchases of goods and services by state and local called upon to expand and upgrade many infragovernments rose as a share of GDP between structure projects. The per capita stock of state and World War II and the mid-1970s. Since then, the local public structures then resumed an upward share has fluctuated between 10 percent and 12 per- trend after having drifted downward slightly for cent (chart 2, left panel). The separate patterns for several years (chart 2, right panel). state governments and local governments (not shown) were quite similar. The overall pattern of state and local spending TRANSFER PAYMENTS TO INDIVIDUALS has been driven, to a large extent, by demographic and social factors. The 1950s was a decade of During the first half of 1992, transfer payments to rising birth rates, increasing per capita real income, individuals by the state and local government secand expanding suburbanization. In response to tor reached $225 billion; excluding payments to these developments, real outlays for construction retirees, transfer payments to individuals totaled rose rapidly. Enrollment in public schools soared, nearly $170 billion, or 3 percent of GDP. Transfer necessitating construction of new educational facil- payments as a percentage of GDP have risen ities. In addition, the federal interstate highway throughout the past three decades (chart 3, upper system, begun in 1956, produced a surge in road panel), with sharp increases in the late 1960s and 2. State and local government purchases and stock of structures1 BJSSI1S1 Percent Thousands of 1987 dollars Purchases (in current dollars) as a percentage of GDP Per capita stock of structures 2 12 — / Total purchases — 10 .v.: '-rrv -m - iMfeSlllliiil *e*. i< \ »• A." — Purchases of structures i-'"'r- • ^v'wii-Kfi: I s. 1 I I 1 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I 1 I I I II I II I M I I I I I 1960 1965 1970 1975 1980 1985 1990 1950 1960 1970 1980 1990 1. National income and product accounts basis. 2. Net of depreciation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The State and Local Government Sector: Long-Term Trends and Recent Fiscal Pressures 895 3. Transfer payments by state and local governments to The increase in state Medicaid spending in recent individuals, 1959-921 years partly reflects advances in medical technology, the rapid increase in the cost of medical care, Percent and the recent weakness in aggregate economic Transfers as a percentage of GDP (calendar years) activity. Another important factor boosting the cost of Medicaid to the states has been the imposition of federal mandates requiring states to expand their coverage. Federal mandates concerning Medicaid added an estimated $2.6 billion—or roughly 5 percent—more to the states' portion of Medicaid costs in fiscal year 1992. To illustrate, in 1988, states were given until July 1990 to cover pregnant women and infants up to age one in families with Transfers for Medicaid as a percentage income below the poverty line. The requirementof state and local expenditures was later changed to include pregnant women and (fiscal years) infants in families with income less than 133 percent of the poverty level as well as children up to age six in families with income below the poverty line. The Omnibus Budget Reconciliation Act of 1990 further expanded coverage, phasing in coverage so that by die year 2002, all children eighteen years and younger in families with income below 1. National income and product accounts basis; excludes transfer pay- the poverty line will be covered. ments for social insurance. The Medicaid program began in 1966. Likewise, in recent years, federal mandates have further expanded AFDC, a program for needy chilagain in the 1990s. Because a large proportion of dren that is administered and financed like Medistate and local government transfer payments to caid. The Family Support Act of 1988 mandated individuals goes to Medicaid and Aid to Families two important changes to the program, effective with Dependent Children (AFDC)—73 percent and October 1, 1990, that appear to have raised costs 14 percent respectively in the second quarter of for at least some states. First, states are now re- 1992—the explanations for the recent sharp rise quired to include children in two-parent families in can be found by examining developments in those which the principal wage earner is unemployed programs. (before the change, coverage was optional, though Medicaid is administered by the states but is all large states were already including these chilfinanced by both the states and the federal govern- dren in the program). Second, all states must operment; the federal share differs from state to state ate job opportunity and basic skills (JOBS) proand ranges from 50 percent to 78 percent, depend- grams to provide education, job training, and, if ing on the state's per capita income. After remain- necessary, day care, along with other developmening below 4 percent of state and local expenditures tal and support services. (excluding social insurance fund payments) during the first half of the 1980s, Medicaid spending from state sources rose to above 6.0 percent in fiscal year TAXES 1992 (chart 3, lower panel).3 Taxes and fees constitute nearly 80 percent of the receipts (excluding contributions to social insur- 3. Total federal and state oudays for Medicaid increased an ance funds) of state and local governments. The average of nearly 30 percent a year over the two and one-half years ending in the second quarter of 1992, compared with annual gains ratio of tax revenues to GDP is a simple gauge of in nominal GDP of about 4 percent over the same period. Indeed, tax burdens. Total receipts from state and local total Medicaid spending rose from 0.9 percent to 2.1 percent of personal and corporate income taxes and indirect GDP between the late 1970s and 1991, with much of the increase in share occurring in the past two years. business taxes (sales, excise, and property taxes) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

896 Federal Reserve Bulletin • December 1992 including fees and charges—that is, state and decline that was accelerated later that decade by a local government own-source revenues—have wave of tax revolts in many states. The trend was risen from about 7 percent to more than 10 per- reversed in the late 1980s, and since then there has cent of GDP over the past thirty years (chart 4, been a small, but steady, pickup in property taxes upper panel). Hence, it appears that the tax burden as a share of GDP. at the state and local level has increased over the For the most part, state and local governments postwar period. rely on different sources of revenue. Most property Among the components of total receipts, state tax revenue is collected by local governments, and and local personal tax and nontax receipts rose most income and sales taxes are paid to state govfrom about 1 percent of GDP following World ernments. For example, in 1988, the most recent War II to 2.5 percent in the late 1980s (chart 4, year for which separate data are available, state lower panel); indeed, these receipts increased governments collected 86 percent of personal from around 16 percent of state and local revenue income and sales taxes, while local governments (excluding contributions to social insurance funds) collected 97 percent of property taxes. in the late 1970s to more than 20 percent a decade later. Among indirect business taxes, sales and excise tax receipts as a percentage of GDP moved GRANTS up until the early 1970s and then stabilized at just over 3 percent of GDP. Profits tax receipts of state Federal aid to state and local governments totaled and local governments (not shown) remained at a nearly $170 billion in the first lialf of 1992, very low level as a percentage of GDP throughout accounting for more than 20 percent of their revethe period. State and local property tax collections nues, excluding social insurance funds. About as a share of GDP rose until 1971 and then began a 12 percent of the federal aid was earmarked for highways, mass transit, and waste treatment and was spent by state and local governments primarily on construction. Around half was for Medicaid and 4. State and local tax and nontax receipts other public assistance programs, especially AFDC. as a percentage of GDP, 1959-921 The remainder covered a wide range of special Percent programs, from disaster assistance to aid for vocational and adult education. 11 The postwar growth of federal aid to state and local governments was suspended in 1980, largely reflecting the scaling back and eventual elimination of revenue sharing.4 Federal aid as a share of state and local revenue (excluding social insurance funds) fell from 27 percent in 1980 to 19 percent in 1989 (chart 5, upper panel); over the same period, federal grants to state and local governments as Percent a percentage of GDP slipped from 3lA percent to 23/4 percent. Indeed, federal support actually declined in nominal terms, from nearly $89 billion in 1980 to $84 billion justtwo years Ifffffv reduction in federal aid was felt by both state and 4. Federal grants for revenue sharing, which began in 1972, reached $7.1 billion in 1973, accounting for 17 percent of total grants to state and local governments that year. The dollar amount 1960 1965 1970 1975 1980 1985 1990 peaked at $8.3 billion in 1977, accounting for 12 percent of total grants. While total grants rose through 1980, funds for revenue 1. National income and product accounts basis; receipts exclude grants and contributions to social insurance funds. sharing remained between $6 billion and $7 billion until 1981, 2. Includes sales and excise taxes and nontaxes. when the amount was cut back to $4.6 billion (5 percent of total 3. Includes income and other taxes, fees, and charges. grants). The revenue sharing program was discontinued in 1987. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The State and Local Government Sector: Long-Term Trends and Recent Fiscal Pressures 897 5. Grants as a percentage of receipts, 1959-921 example, more than half the respondents to an early 1992 survey of the 100 most populous counties Percent reported reduced aid from states.5 As a percentage of state and local receipts More recently, federal aid to state and local governments has rebounded sharply, rising at a 15 percent annual rate, in nominal terms, during the past two and one-half years, compared with an average annual increase of just 4 percent during the preceding ten years. Nearly all the recent acceleration has been in increases in grants for Medicaid, which account for more than 40 percent of federal aid to these governments.6 During the two and one-half year period, Medicaid grants have grown at about a 30 percent annual rate. As a result, federal aid for Medicaid as a share of total state and local receipts has risen dramatically, while the share of grants for all other programs has changed little (chart 6). 1960 1965 1970 1975 1980 1985 1990 5. National Association of Counties, Counties in Crisis: A Fis- 1. National income and product accounts basis; receipts exclude contribu- cal Survey of 80 of the Nation's Largest Counties (Washington, tions to social insurance funds. Data for grants to localities after 1988 are not D.C.: NAC, February 1992). available. 6. Of course, an increase in Medicaid grants, in and of itself, does not relieve budgetary pressures on state and local governments, as federal grants must be matched, primarily by the states. local governments. In 1975, 30 percent of state revenue came from federal grants, but by the end of the 1980s the figure had slipped to 24 percent. The decline was more dramatic for local governments: The federal contribution to local revenue fell from Percent 13 percent in 1978 to 4 percent in 1988 (chart 5, lower panel). The sharp cutback in federal aid to state governments did not lead to an immediate reduction in state aid to local governments during the 1980s. Indeed, state aid held up well, and throughout the 1980s state grants continued to represent around 36 percent of local revenue, about the same as during the 1970s. State grants as a percentage of all grants to localities increased from 73 percent in 1978 to 91 percent by 1988. That year, states provided local governments with $145 billion in aid, two-thirds of which was intended to support primary and secondary education. Other programs receiving significant contributions were higher education, highways, hospitals, and welfare and social services. However, state support has been slipping in the past few years, as many states, as part of their budget-balancing efforts, have reduced aid to local governments and to school districts. For 1. National income and product accounts basis; receipts exclude contributions to social insurance funds. The Medicaid program began in 1966. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

898 Federal Reserve Bulletin • December 1992 Actual and proposed federal grants to state and local governments, selected years, 1991-97 Billions of dollars, except as noted Total Medicaid Excluding Medicaid Transportation Community and regional development Education, training, employment, and ^ social senices If' I I I ill 1. Actual; figures for all other years proposed. SOURCE. Budget of the U.S. Government, Fiscal Year 1993. The Administration's fiscal year 1993 budget property values boosted tax receipts. But when the proposed an increase in federal aid to state and pace of revenues slowed, there was, at least inilocal governments of around 10 percent per tially, little corresponding slowdown in the growth year, on average, over the period 1992-97 of state and local spending. (table 2). Increases in grants for Medicaid are Much of the recent pressure on state and local expected to average 16 percent a year, while annual spending reflects the confluence of relatively new growth in aid for all other categories is projected to developments and the underlying upward trends in average around 2.5 percent.7 Under this scenario, spending and taxes. Currently, nearly two-thirds of Medicaid grants would rise from 35 percent of state general fund budgets is dedicated to educafederal aid in fiscal year 1991 to 55 percent in fiscal tion, Medicaid, and corrections—and demographic year 1997. trends point to further increases in these areas in coming years. Furthermore, court orders related to prison overcrowding have added to the financial LONG-TERM TRENDS pressures in many states, and the repair and expan- AND SHORT-RUN PRESSURES sion of the public infrastructure have become important goals in many states and localities.8 By most measures, the responsibilities of state and Mandates also have added to outlays for many local governments have increased over the postwar state and local programs. The 1980s were notable period. Purchases, transfer payments, and taxes are for the increasing number of new, unfunded or a larger share of GDP than they were thirty years partly funded mandates imposed on states by the ago. Yet, federal aid to these governments has federal government and the courts. In addition to fallen from 3.5 percent to 2.7 percent of GDP over Medicaid and AFDC, mandates have concerned the past decade and a half, after rising earlier in nursing homes, wildlife, drinking water, child welthe postwar period. The reduction in aid was fare, environmental cleanup, and highway safety. apparently not a major problem for state and local The lack of funding for these new programs pregovernments during the mid-1980s, when strong sents significant financial obstacles. One such overall economic growth and rapidly escalating example is a 1990 law requiring coastal states to test beach water regularly. The Congress autho- 7. About 60 percent of federal grants to state and local govern- rized $3 million a year to cover the costs, but ments are for entidement programs and are subject to the pay-astesting the Florida waters alone was expected to you-go rules for mandatory spending stated in the Omnibus Budget Reconciliation Act of 1990. Medicaid accounts for nearly 60 per- cost $2 million annually, and twenty other states cent of this entidement spending, and the remainder goes largely have shoreline.9 for family support (AFDC), child nutrition, and housing assistance programs. Other federal grants are considered part of the discretionary portion of the federal budget, which in total must grow in line 8. See Laura S. Rubin, "The Current Fiscal Situation in State with inflation. In this category are grants for physical capital, such and Local Governments," Federal Reserve Bulletin, vol. 76 as highways, airports, mass transit, sewage treatment plants, and (December 1990), pp. 1009-18. community development, and for education, training, employment, 9. David Rapp, "Just What Your State Wanted: Great New Gifts and social services. from Congress," Governing, vol. 4, no. 4 (January 1991), p. 53. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The State and Local Government Sector: Long-Term Trends and Recent Fiscal Pressures 899 Similar to the response of the federal govern- League of Cities.11 Even for many communities ment, state governments have been responding to that did not raise rates, property tax collections fiscal difficulties by imposing increased burdens on were bolstered by increases in assessed values that local governments. In addition to hiking taxes and reflected price advances during the late 1980s. cutting spending across-the-board, state govern- However, given recent real estate price developments have employed a variety of strategies, ments, rising property assessments are no longer including reducing state aid, providing no reim- likely to provide widespread relief to local bursements for new mandates, and requiring local governments. governments to pay for services provided by the In addition to the potential for hikes in property state. Examples are numerous. The State of Califor- taxes, some states are beginning to expand local nia now retains, as compensation for its administra- option taxes. For example, the county of Philadeltive expenses, a portion of the receipts it collects phia, faced with severe fiscal erosion in 1991, was for a local option cigarette tax. In Minnesota, cities allowed to piggyback an additional percentage are paying higher fees for water certification. point onto the existing state sales tax, and other According to a 1988 U.S. General Accounting counties were allowed to add on an additional Office report, Illinois passed fifty-seven unfunded Vi percent. Also in 1991, a court decision in Calimandates between 1981 and 1989 that cost local fornia did away with the requirement for a twogovernments $148 million each year.10 And in Mil- thirds majority popular vote of approval to increase waukee County, Wisconsin, the portion of property county sales taxes, paving the way for future tax collections used for state-required programs increases. has risen from 32 percent several years ago to 46 percent. To deal with shortfalls in their general fund THE ROLE OF DEBT FINANCING accounts, most local governments must choose between reducing services and raising taxes. Some In addition to reductions in spending and increases of each will likely occur in the years ahead. in a variety of taxes and fees, debt financing has With no significant decline in constituent demands played a more prominent role in recent years. for services, especially education, local govern- Offerings of public-purpose bonds for new capital, ments will have to look at raising taxes, particu- the proceeds of which are intended to finance capilarly property taxes. About a third of total local tal projects, rose to a record high in 1991 (chart 7, government receipts, and more than half of these upper panel), and issuance appears to have governments' own-source receipts (that is, exclud- remained strong during the first half of 1992.12 ing grants as well as contributions to social Historically, state and local governments financed insurance funds), come from property taxes; there- around 40 percent of capital construction with taxfore, the property tax is a logical place for these exempt debt raised in the credit markets; another governments to look for additional revenue when 40 percent was financed with current receipts, and budgets are tight. Indeed, property tax collections the remaining 20 percent came from grants. In the have assumed a somewhat more prominent role mid-1980s, the portion financed by bonds rose to in state and local government finance: Between 1988 and the second quarter of 1992, property tax collections rose from 27 percent to 30 percent of revenue raised through state and local taxes, fees, 11. The property tax hike was the second most common source and other charges. of additional revenue; 72 percent of cities had increased the level of other fees and charges or imposed new ones during the preceding The rise in the share of property tax collections twelve months. The most common means of dealing with fiscal was due partly to rate hikes: Nearly three in every imbalances was reducing the rate of growth of operating outlays, reported by 73 percent of surveyed cities. In addition, 61 percent ten municipalities raised property tax rates in fiscal had reduced the actual level of capital spending. year 1992, according to a survey by the National 12. Data for the first half of 1992 are not shown in chart 7, as they are not available on a seasonally adjusted basis and would be inconsistent with the annual figures shown. The surge in offerings of public-purpose bonds in 1985 was due to a rush to beat proposed 10. "Around the Nation," MuniWeek, April 13, 1992. legislative deadlines related to tax reform. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

900 Federal Reserve Bulletin • December 1992 State and Local Insurance Funds: A Source of Saving and Revenue Concern about the fiscal position of the government can be attributed to the increase in public sector employsector has increased in the last two decades as the federal ment. Had this employment growth occurred in the prideficit has risen as a share of GDP. Indeed, the combined vate sector instead of the public sector—for example, deficit of all governments has grown, even though total through greater dependence on private schools or prigovernment purchases of goods and services as a percent- vately operated services—then, other things equal, public age of GDP have remained relatively constant. At the pension fund balances would have been lower, and pristate and local government level, total sector revenues vate pension fund balances higher. Private pension funds may appear to exceed total outlays, but the apparent are considered part of personal saving; because state and surplus reflects the inclusion of social insurance funds. local government employee pension funds have similar When these funds—primarily state and local government characteristics and are not available for day-to-day govemployee retirement funds, but also, in some states, ernment operations, they, too, may be thought of as workers compensation and disability insurance funds— personal saving. As such, these contributions are not are excluded from the figures, a different picture emerges appropriately considered part of the tax burden or as an (chart 8). This article looks at state and local government indicator of the fiscal status of the state and local sector. receipts and expenditures excluding these funds so as An important distinction should be noted between the to focus on the fiscal picture for the governments state's contribution and the corpus, or assets, of the trust themselves. itself. The assets of these funds are considered to be Social insurance funds grow through contributions outside the general fund and capital accounts of state and from employers and employees and through interest and local governments and are rarely touched, even in the dividend earnings. Offsetting these revenues are transfer event of severe fiscal deterioration. Their fiduciary responpayments to beneficiaries and administrative expenses. sibility requires the administrators of social insurance The surpluses, along with the assets, of state and local funds to guard the corpus and to earn the highest return social insurance funds are invested in the credit and possible. Although states rarely borrow money directly equity markets and are a source of savings that is avail- from the corpus of the funds, it is not uncommon for able to the rest of the economy; in the first half of 1992, public employers to reduce their contributions to social the surpluses amounted to around $58 billion. insurance funds in response to budgetary distress. To Although social insurance funds are a source of facilitate such adjustments, some accounting device typinational saving, they are not generally available for oper- cally is used to decrease contributions, such as assuming ation of state and local governments, but are dedicated to that the corpus will be earning a higher rate of return in retirement annuity and other payments. Much of the the future, and that therefore the state can contribute less. long-run growth in state and local social insurance funds around one-half, as less construction was financed 1980s apparently was in response to recessionary with current receipts.13 pressures. State and local governments have traditionally Although the practice is limited in scope, some sold short-term securities to help during a cash state and local governments have also issued longcrunch. These securities are usually called tax- or term debt to cover operating deficits. For example, revenue-anticipation notes, as they are issued in the Louisiana Recovery District was created in anticipation of future funds. In 1991, gross offer- 1988 and in that year issued $1 billion in bonds to ings of these notes rose above $40 billion, about relieve accumulating state deficits. In recent years, 15 percent above the amount issued in the preced- both New York and Massachusetts considered such ing year (chart 7, lower panel). The increase in measures. In February 1991, the Local Government recent years is probably the result of the current Assistance Corporation of New York sold the first pressing fiscal situation, just as the rise in the early in a series of bonds with maturities of thirty years or less to replace short-term borrowings; by mid- 1992, a little more than half the total $4.7 billion in 13. John E. Petersen, Catherine Holstein, and Barbara Weiss, bonds had been sold. In addition, since 1989, New The Future of Infrastructure Needs and Financing (Washington, York has sold deficit notes to finance interyear D.C.: Government Finance Research Center of the Government shortfalls; sales of these notes rose to more than Finance Officers Association, December 1988), p. II—2. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The State and Local Government Sector: Long-Term Trends and Recent Fiscal Pressures 901 7. State and local debt offerings, 1975-91 8. Budget surplus (deficit) of the state and local government sector as a percentage of GDP, 1959-921 : — Excluding social insurance funds — 1 I I I I II I I I I I I I I I 1 1960 1965 1970 1975 1980 1985 1990 1. National income and product accounts basis. factors that affect important programs likely will continue to put pressure on budgets for years to come. Nearly two-thirds of state general fund budgets are dedicated to education, Medicaid, and corrections—and population trends point to further 1975 1977 1979 1981 1983 1985 1987 1989 1991 increases in these areas in the coming years. Also 1. Includes new capital bonds for eduction, transportation, and utilities. 2. Offerings with maturities of thirteen months or less. adding to state spending requirements are quality goals (particularly for public school education), court orders (primarily concerning public school $1 billion in 1991 and then fell to about half that education, corrections, and Medicaid), and federal level in spring 1992. mandates (particularly for Medicaid coverage). In addition, the repair and expansion of the public infrastructure has become an important objective in THE OUTLOOK many states and localities. Continued economic The restoration of fiscal balance to the state and expansion should help to lift revenues, but probalocal government sector is not likely to be easy. bly not enough to close existing budget gaps. Con- Postwar trends indicate that the responsibility of sequently, many difficult decisions lie ahead for state and local governments has expanded in a state and local governments. • number of areas, and demographic and social Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

902 Industrial Production and Capacity Utilization Released for publication October 16 production of electric utilities moved up sharply, more than retracing its August decline. The assem- Industrial production decreased 0.2 percent in Sep- blies of cars and trucks were little changed in tember, following a decline of 0.4 percent in September, when strikes at two key parts plants August and an increase of 0.8 percent in July. In held output below industry plans. September, the output of defense and space equip- At 108.6 percent of its 1987 annual average, ment, construction supplies, and durable materials total industrial production in September was about declined significantly. On the positive side, the the same as its year-ago level. For the third quarter Industrial production indexes Twelve-month percent change Twelve-month percent change 1987 1988 1989 1990 1991 1992 1987 1988 1989 1990 1991 1992 Capacity and industrial production Ratio scale, 1987 production = 100 Ratio scale, 1987 production = 100 — Total industry — 140 — Manufacturing 140 Capacity _ Capacity ' 120 120 100 ~ - 100 ^ ^N/ Production — 80 Production — 80 II 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Percent of capacity Percent of capacity Total industry Manufacturing — — 90 — _ 9900 Utilization Utilization 80 80 70 70 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1980 1982 1984 1986 1988 1990 1992 1980 1982 1984 1986 1988 1990 1992 All series are seasonally adjusted. Latest series, September. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

903 Industrial production and capacity utilization Industrial production, index, 1987 = 1001 Percentage change Category 1992 19922 Sept. 1991 to Juner July' Aug. Sept.* Juner July1 Aug.r Sept. i Sept. 1992 Total 108.5 109.3 108.9 108.6 -.4 .8 -.4 -.2 .2 Previous estimate 108.5 109.2 108.6 -.4 .6 -.5 Major market groups Products, total 109.0 109.5 109.3 109.1 -.6 .5 -.2 -.2 .2 Consumer goods ... 109.6 110.3 110.1 110.2 -1.1 .6 -.2 .1 .8 Business equipment 124.1 124.5 125.1 124.7 -.3 .3 .6 -.3 2.1 Construction supplies 97.2 98.0 97.9 96.8 -.6 .8 -.1 -1.2 .3 Materials 107.6 108.9 108.2 107.9 -.1 1.2 -.7 -.2 .4 Major industry groups Manufacturing 109.6 110.1 109.8 109.4 -.3 .5 -.3 -.4 .4 Durable 108.5 109.0 109.0 108.2 -.6 .5 .0 -.7 -.1 Nondurable 111.0 111.6 110.9 110.8 .0 .6 -.6 .0 1.1 Mining 98.0 100.6 99.3 98.1 -1.7 2.6 -1.2 -1.2 -3.2 Utilities 106.7 109.3 108.2 111.0 -.6 2.4 -.9 2.6 1.2 Capacity utilization, percent MMMEEEMMMOOO CCCaaapppaaaccciiitttyyy,,, pppeeerrr--ccceeennntttaaagggeee 1991 1992 ccchhhaaannngggeee,,, AAvveerraaggee,, LLooww,, HHiigghh,, SSSeeepppttt... 111999999111 11996677--9911 11998822 11998888--8899 Sept. June' Julyr Aug.r Sept. P tttooo SSSeeepppttt... 111999999222 Total 82.1 71.8 85.0 79.9 78.6 79.1 78.7 78.4 2.2 Manufacturing 81.4 70.0 85.1 78.8 77.8 78.0 77.7 77.2 2.5 Advanced processing 81.0 71.4 83.6 77.7 76.3 76.2 76.1 75.7 3.0 Primary processing . 82.3 66.8 89.0 81.3 81.4 82.5 81.5 81.0 1.3 Mining 87.4 80.6 87.2 88.5 85.4 87.6 86.5 85.5 .2 Utilities 86.7 76.2 92.3 85.1 82.1 84.1 83.2 85.3 1.0 1. Seasonally adjusted. r Revised, 2. Change from preceding month to month indicated. p Preliminary. as a whole, industrial production rose at an annual output of transit equipment, which includes trucks rate of 1.6 percent; it grew at a 5.2 percent annual and commercial aircraft, fell sharply. The output of rate in the second quarter. The utilization of total materials edged down further in September. Among industrial capacity fell 0.3 percentage point in durables, the output of parts and materials used by September, to 78.4 percent. the motor vehicle industry fell sharply, partly as a When analyzed by market group, the data show result of strikes at two major parts plants. In addithat the output of consumer goods changed little tion, the production of basic metals, particularly since July. The output of durable consumer goods steel, dropped noticeably. The output of nondurable fell in September, mainly because of the reduced materials, which declined 1.4 percent in August, production of goods for the home. The output of was unchanged, with gains in paper and textiles consumer nondurables rose, however, with particu- offsetting a drop in chemicals. Higher electricity larly sharp increases in the use of residential elec- output boosted the production of energy materials, tricity and gasoline; elsewhere within consumer but reduced coal mining and the lingering effects of nondurables, overall production was unchanged. Hurricane Andrew on oil and gas extraction tem- The output of business equipment, which rose pered this gain. 0.6 percent in August, decreased 0.3 percent in When analyzed by industry group, the data show September. The production of information- that the output in manufacturing declined 0.4 perprocessing equipment rose a bit, but the production cent in September and that factory utilization fell of industrial equipment remained weak, and the 0.5 percentage point, to 77.2 percent. The level of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

904 Federal Reserve Bulletin • December 1992 capacity utilization in manufacturing has fallen points below their rates in May. Despite some 1 percentage point since May, its high this year. recent weakness in output, the operating rate for The overall factory operating rate for advanced- primary metals was still well above its level in the processing industries has dropped more than 1 per- spring of this year. The utilization rates in centage point since May; the most significant losses construction-related industries have been little have been in transportation equipment, apparel, changed, on balance, in recent months. furniture, instruments, and printing. For primary- The utilization rate in mining in September was processing industries as a whole, the utilization rate about 2 percentage points below its level in July; rose sharply in July but has fallen off in the past the disruptions in the oil and gas extraction industwo months and now stands 0.5 percentage point try caused by Hurricane Andrew and reduced coal below the May level. In September, the capacity mining have contributed to the decline. At utilities, utilization rates for petroleum refining and fabri- the operating rate has been volatile lately, oscillatcated metal products were about IV2 percentage ing between 82 percent and 85 percent since spring. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

905 Statement to the Congress Statement by John P. LaWare, Member, Board Such favorable events explain the pace of bank of Governors of the Federal Reserve System, closings better than charges of an orchestrated before the Committee on Banking, Housing, and slowdown. Urban Affairs, U.S. Senate, October 26, 1992 In the remainder of my remarks I will provide an assessment of the outlook for the commercial I am pleased to be here to address developments banking industry, and, as requested, I will indiin the banking system and the near-term outlook cate the capitalization and undercapitalization of for bank failures. This topic has attracted in- particular groups of banks. However, I will defer creasing attention because recently released to the Federal Deposit Insurance Corporation studies suggest that the commercial banking in- (FDIC) for other specific figures regarding the dustry has problems of the magnitude approach- number and estimated costs of near-term bank ing what we have seen among thrift institutions. failures and the general strength of the Bank This possibility was raised even during the latest Insurance Fund (BIF). Presidential debates. One study, in particular, states that the number and assets of failed commercial banks will soon surge. A significant number of commercial banks SIGNIFICANT PROBLEMS REMAIN remain troubled, and their assets are substantial indeed. However, in my view, there should be no During my testimony in June regarding the conso-called "December surprise." Several com- dition of the commercial banking system, I cited mercial banks will be closed in the coming the stubbornly high number of banks that were months, partly because of implementation of new considered to be problem institutions—those authority for prompt corrective action but mainly banks with supervisory ratings of 4 or 5. Alas a result of procedures that are already in though the figure has improved slightly since place. The costs of these failures may be larger then, more than 950 banks with assets of nearly than we would like, but they should be a small $500 billion remain troubled. This current level fraction of some estimates that were recently represents significant progress in reducing the cited in the press. number of problem banks from its peak of nearly Mention has also been made of the recent pace of 1,600 institutions at the end of 1987, but their bank and thrift closings, which have been fewer combined assets are clearly large. than previously expected so far this year. In the case Through mid-October, eighty-five BIF-insured of thrift institutions, some slowdown has resulted commercial and savings banks holding $28 billion simply because of lack of funding needed by the in assets have failed this year, but only $4.3 Resolution Trust Corporation to resolve institutions billion of these assets were related to commercial that should be closed. However, I am aware of no banks. So far, savings banks, which are operareduction in the pace of resolutions for commercial tionally more akin to thrift institutions, have banking institutions that was not warranted by con- dominated this year's results. By comparison, ditions at each bank. ninety commercial banks with $42 billion in as- This year has been an especially favorable sets had failed by this time last year. In the period for many banks, and the industry's im- normal course of events, we can expect that proved profitability has helped some institutions additional commercial banks will fail during the remain at least temporarily solvent beyond the remaining months of 1992, and not all of them period in which they had been expected to fail. will be small. Overall, however, their number Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

906 Federal Reserve Bulletin • December 1992 and especially the amount of affected assets dercapitalized banks face other regulatory sancshould be well below the 1991 totals. tions if their ratios do not improve. When evaluating these figures, note that not all problem banks have ratios that show them as PROMPT CORRECTIVE ACTION being undercapitalized. For that reason, the legislation also permits the agencies to reduce by The provision for prompt corrective action of the one category the assessment of a bank's capital Federal Deposit Insurance Corporation Improve- adequacy on the basis of factors other than ment Act (FDICIA) becomes effective near year- capital, with the exception that a bank may not end and will change the rules for closing troubled be downgraded in this manner to the critically banks. Beginning December 19, 1992, authorities undercapitalized level. Such reclassifications will be able to close institutions that are "criti- could occur for any institution deemed to be cally undercapitalized," although still technically engaged in an unsafe or unsound practice, and solvent. Banks critically undercapitalized, in FDICIA permits that finding on the basis of a turn, are defined by statute as those having less-than-satisfactory examination rating and tangible equity equal to or less than 2.0 percent failure by the institution to correct the defiof total assets. The act provides for specific steps ciency. Although these procedures are not yet to be taken at that point and at other less-than- implemented, they will alter the initial classificaadequate levels of capital. tions derived from published financial state- Institutions that are critically undercapitalized ments. must be placed in conservatorship or receivership within ninety days, unless the appropriate federal banking agency and the FDIC determine RECENT STUDIES that other actions are best. To avoid seizure, such institutions must have positive net worth I would like at this point to comment on studies and must be improving their condition in several that have been cited recently in the press, parspecified ways. Although we are still developing ticularly the book entitled Banking on the Brink.2 operating procedures to implement these require- In my view, and as I have stated on behalf of the ments, presumably some of the critically under- Federal Financial Institutions Examination capitalized institutions would meet the necessary Council, this publication has serious errors and tests and continue to survive. Others, however, shortcomings. Important assumptions are exshould expect to be closed in the coming months. tremely pessimistic and outdated; its methodol- The committee requested information on the ogy is poor; and important calculations reflect a number of banks in each category of capital misunderstanding of bank regulations. As a rerating. As of midyear, 98 percent of all BIF- sult, its conclusions significantly overstate the insured commercial banks met the minimum cap- likely cost of resolving problem banks and conital standard for being at least adequately capi- tribute to misperceptions about the state of the talized, and 93 percent of the industry was industry's health. Other studies have also foreconsidered "well capitalized".1 About 230 casted large costs to the public for resolving banks, however, were undercapitalized and troubled commercial banks. They, too, overstate could be directly affected by prompt corrective their case and, so far, have been wrong. action in some way. Of these banks, less than Forecasting is difficult, and the best forecastfifty institutions with total assets of roughly $8 ers can make mistakes. Especially in banking, billion risk being closed because of their critically the industry's outlook depends heavily on future undercapitalized designation. The remaining un- economic conditions, and those conditions—as I well know—are hard to predict. Current eco- 1. The attachment to this statement is available from Publications Services, Board of Governors of the Federal 2. See Vaughan, Robert, and Edward Hill, Banking on the Reserve System, Washington, DC 20551. Brink (Washington Post Company Briefing Books, 1992). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statement to the Congress 907 nomic growth is slow, and any decline could the year-end 1992 minimum standard of 8.0 peradversely affect many banks, reverse recent cent. As mentioned, 98 percent of all banks had progress, and increase resolution costs. Fore- already met that standard by midyear. casters, however, and especially public officials, The principal concern to the industry and the have obligations to be reasonable as well as main reason that banks fail are poor credit deciforthcoming. Considering my outlook for the sions and the subsequent drop in the quality of economy and that of the Federal Reserve, I their loans. The 1980s were rough years for many strongly disagree with assertions that we are banks, as developing country, agriculture, enfacing a "hidden" or unexpected surge of prob- ergy, and commercial real estate loans produced lem banks or a surge in resolution activities. large losses and caused the volume of problem loans to surge. This experience has left many bankers with a greater appreciation of the need to maintain sound credit standards and to price RECENT PERFORMANCE OF THE their loans right. BANKING SYSTEM Fortunately, however, the tide of growing Part of my more optimistic assessment rests on problems seems to have turned. Since June 1991, the recent performance of the industry, which the volume of nonaccruing loans has steadily continues to improve: Earnings are at record declined, although loss reserves have increased. levels; average capital ratios are at twenty-five- At midyear, reserves covered nearly 90 percent year highs; and nonperforming assets continue to of the industry's aggregate volume of nonaccrudecline. Investors have also recognized improve- ing loans. The level of foreclosed real estate, ments and look more positively on publicly which increased sharply in 1990 and 1991, is traded bank stocks. showing signs that it is beginning to stabilize. During the first half of this year (the latest Office vacancy rates remain high, and that probperiod for which industry data are available), lem will not be quickly resolved. Commercial commercial banks earned almost $16 billion and real estate markets remain weak in many regions more than 0.90 percent on assets—the strongest throughout the United States, and some markets annualized rate of profitability in the post-World- continue to decline. Generally, however, the War II era. This increased profitability was also implications of these problems for commercial widespread, with nearly 62 percent of all banks banks seem to have improved. reporting returns on assets of more than 1.0 Stock markets, generally early indicators, also percent. If that share of highly profitable banks is view banks with increased favor. Market prices maintained for the year, it would be the largest for the industry's fifty largest companies insince 1981. Partial third-quarter results suggest creased from an average of less than 90 percent that improvement remains strong, with about 250 of book value at year-end 1990 to nearly 150 of the largest banking companies that have re- percent earlier this month. Gains in stock prices ported indicating nine-month profits averaging 35 of large banks sharply outpaced those of the percent greater than those for the same period Standard and Poor's 500 index and provided last year. market opportunities for many banking institu- Increased earnings, reduced dividends, and tions. Since the beginning of 1991, the largest record stock sales have also helped substantially fifty companies, alone, have taken advantage of to strengthen the capitalization of commercial the improvement to issue a record $14 billion of banking organizations and to intensify a trend new common and preferred stock in public and that has been observable for a decade. The private offerings. Still other issues are in process. industry's equity capital of nearly $250 billion Although the industry continues to have probrepresents 7.23 percent of assets, the highest lems, important restructuring and consolidation ratio since 1966. The industry's average risk- efforts should also provide a boost, enabling based capital ratio improved 0.78 percentage banks to reduce their costs and eliminate excespoint during the first six months of this year, sive pressures to compete. The financial services alone, climbing to 11.53 percent, and well above industry increased rapidly during the 1980s, as Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

908 Federal Reserve Bulletin • December 1992 foreign and nonbank organizations expanded building the fund to 1.25 percent of insured their market shares. Mergers and acquisitions deposits will be met well within the allowed have helped bankers and regulators strengthen fifteen-year period. weak banks in the past, and they should help in Some banking institutions remain weak, but the future as well. the industry's progress should not be overlooked. A few sizable savings banks have been closed in recent months, and other large savings DEPOSIT INSURANCE SYSTEM and commercial banks may be closed in the months ahead. In general, though, a turnaround The FDIC can best estimate the effect of recent in the commercial banking industry seems well events on the strength of the Bank Insurance under way. Reports of huge future losses make Fund. Of course, much depends on the manner in sensational headlines, but the economy would which bank failures can be resolved. I believe need to decline dramatically from current levels that experience suggests that merging weak to produce losses that approach estimates seen banks with strong ones, rather than liquidating recently in the media. them, is generally the best approach. That pro- Although recent events are clearly positive, I cedure seems to offer greater possibilities today, do not want to leave the impression that there are given the improved performance of much of the no concerns with the banking industry. Its unindustry, including that of many large banks. derlying costs and competitive pressures remain The continued strengthening of the industry great, and fundamental reform of banking laws is and the recently announced higher insurance still needed. The Congress should consider legpremium rates should also begin to reduce pres- islation to permit the integration of our financial sures and help rebuild the insurance fund. Nev- system similar to developments in Canada, Euertheless, although the FDIC has provided sub- rope, and Japan and should act to remove barristantial reserves for future costs that are ers to interstate branching as well. Reducing the available to use, the Bank Insurance Fund has regulatory burden on banks should also be conbeen depleted, and some Treasury or further sidered. Such changes would help to further working capital borrowings may be needed be- improve the profitability and the long-term comfore the fund is made whole. In the final analysis, petitiveness and viability of the U.S. banking however, I believe that statutory goals for re- system. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

909 Announcements REVISIONS TO THE PROGRAM FOR AMENDMENTS TO REGULATION CC PAYMENTS SYSTEM RISK REDUCTION The Federal Reserve Board issued on October 7, 1992, amendments to its Regulation CC (Avail- The Federal Reserve Board issued on October 7, ability of Funds and Collection of Checks), that 1992, revisions to its program for payments system call for same-day settlement of checks presented risk reduction. by private-sector banks. The amendments require One key provision of the revised program is the paying banks to settle for checks presented by adoption of a fee for daylight overdrafts that occur private-sector banks on the day of presentment in the reserve and clearing accounts of depository without the imposition of presentment fees if specinstitutions. Another key aspect revises the proceified conditions are met. The rule becomes effecdures used to measure the amount of overdrafts in tive on January 3, 1994. reserve and clearing accounts during the day. Under the new rule, a check would qualify for The Board made the changes after receiving same-day settlement if it is presented by 8:00 a.m. comments on two occasions over the past three (local time of the place of presentment) at a locayears. tion designated by the paying bank. The settlement Under an amendment to the Board's Regulamust be made by the close of Fedwire on the tion J (Check Collection and Funds Transfer), a business day the check is presented by credit to an paying bank will be required to settle for checks as account at a Federal Reserve Bank. The rule holds early as one hour after presentment of those checks all parties to a good faith standard. Provisions of from a Federal Reserve Bank. This change is this rule can be varied by agreement. needed to implement procedures for posting check debits and credits to reserve and clearing accounts of depository institutions to measure daylight over- PROPOSED ACTIONS drafts more accurately. This provision as well as the modified measurement procedures go into effect The Federal Reserve Board issued for public comon October 14, 1993. ment on October 2, 1992, a proposed policy state- A fee of 25 basis points at an annual rate, phased ment regarding branch closings by state member in over a two-year period, will be assessed against banks. Comments should be received by Decemthe average daily total daylight overdraft of a ber 4, 1992. depository institution. Fees of $25 or less per two- The Federal Reserve Board issued for public week period will be waived to reduce the adminis- comment on October 7, 1992, a proposal that trative burden on affected institutions. would change the opening time for the Fedwire The first phase of overdraft pricing—10 basis funds transfer service from 8:30 a.m. Eastern Time points at an annual rate for the current ten-hour (ET) to 6:30 a.m. ET, effective October 4, 1993. Fedwire operating day—will go into effect on The Board's proposal also calls for comment on April 14, 1994. The fee will rise to 20 basis points whether the Fedwire securities transfer service one year later and to 25 basis points a year after should open concurrently with the funds transfer that. service. In addition, the Board requests input from The Board estimated that, when fully phased in, depository institutions, their customers, and the fewer than 300 institutions will be subject to actual financial markets regarding the costs and benefits payment of the fee under current conditions. of possible further expansion of Fedwire operating Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

910 Federal Reserve Bulletin • December 1992 hours over time. Comment is requested by Jan- The OTC List is published by the Board for the uary 8, 1993. information of lenders and the general public. It The Federal Reserve Board announced on Octo- includes all OTC securities designated by the Board ber 13, 1992, that it had extended the period to pursuant to its established criteria as well as all receive public comments on an advance notice of OTC stocks designated as NMS securities for proposed rulemaking in connection with a review which transaction reports are required to be made of Regulation T (Credit by Brokers and Dealers). pursuant to an effective transaction reporting plan. Comments were due by November 16, 1992, Additional OTC securities may be designated as instead of October 16, 1992. NMS securities in the interim between the Board's quarterly publications and will be immediately marginable. The next publication of the Board's list is scheduled for January 1993. PUBLICATION OF REVISED LISTS OF OTC Besides NMS-designated securities, the Board STOCKS AND OF FOREIGN MARGIN STOCKS will continue to monitor the market activity of other OTC stocks to determine which stocks meet The Federal Reserve Board published on October the requirements for inclusion and continued inclu- 23, 1992, a revised List of Marginable OTC Stocks sion on the OTC List. (OTC List) for over-the-counter (OTC) stocks that are subject to its margin regulations. Also published was the List of Foreign Margin Stocks PUBLICATION OF THE (Foreign List) for foreign equity securities that are Annual Statistical Digest, 1991 subject to Regulation T (Margin Credit Extended by Brokers and Dealers). The lists are effective The Annual Statistical Digest, 1991 is now avail- November 9, 1992, and supersede the previous lists able. This one-year Digest is designed as a compact that were effective August 10, 1992. source of economic, and especially financial, data. The Foreign List indicates those foreign equity The Digest provides a single source of historical securities that are eligible for margin treatment at continuations of the statistics carried regularly in broker-dealers. There were seven new additions the Federal Reserve Bulletin. and six deletions from the Foreign List, which now This issue of the Digest covers only 1991 unless contains 301 foreign equity securities. data were revised for earlier years. It serves to The changes that have been made to the revised maintain the historical series first published in OTC List, which now contains 3,110 OTC stocks, Banking and Monetary Statistics, 1941-1970, and are as follows: the Digest for 1970-79, for 1980-89, and yearly issues. A Concordance of Statistics will be in- • One hundred twenty-six stocks have been cluded with all orders. The Concordance provides included for the first time, 103 under National a guide to tables that cover the same material in the Market System (NMS) designation current and the previous single-year issues of the • Forty stocks previously on the list have been Digest, the ten-year Digest for 1980-89, and the removed for substantially failing to meet the Bulletin. requirements for continued listing Copies of the Digest at $25.00 each are available • Forty-four stocks have been removed for from Publications Services, mail stop 138, Board reasons such as listing on a national securities of Governors of the Federal Reserve System, exchange or involvement in an acquisition. Washington, DC 20551. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

911 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON AUGUST 18,1992 schedules indicated that domestic assemblies of motor vehicles would increase in August. The utili- The information reviewed at this meeting sug- zation of total industrial capacity slipped on balgested that economic activity was continuing to ance over June and July but remained a little above expand, although at a subdued pace. Consumer its December 1991 level. spending had firmed recently; business purchases Retail sales increased moderately in July after of capital equipment had risen further; and falling registering little growth in the second quarter. Genmortgage interest rates, which appeared to have eral merchandisers reported sharp gains following triggered a wave of mortgage refinancings, likely a period of sluggish sales since April, and sales were providing some impetus to housing demand. rose considerably further at apparel outlets and On the other hand, industrial production and furniture and appliance stores. Sales of motor vehiemployment had increased little on balance, and a cles dropped back in July from an elevated June sizable expansion in the labor force had raised the pace. With mortgage rates falling, sales of new unemployment rate to a cyclical high. Recent data single-family homes increased in June after levelon wages and prices indicated that inflation was ing off in May, and reports indicated that mortgage slowing. applications for home purchases were rising. Per- A rebound in total nonfarm payroll employment mits issued for the construction of new housing in July more than offset a decline in June; however, units advanced slightly in July, but starts of such about half the rise over June and July reflected units declined further. temporary hiring associated with a federally spon- Shipments of nondefense capital goods were sored summer jobs program that recently had been up sharply in June, partly reflecting continued enacted. Apart from the jobs program, moderate increases in shipments of office and computing gains in employment were recorded in service equipment. Data on new orders pointed to a further industries, while payrolls declined in both manu- substantial rise in business purchases of durable facturing and construction. The average workweek equipment in coming months. Nonresidential conof production or nonsupervisory workers during struction slackened again in June; weakness in the June-July period was at its lowest level of the industrial construction added to persisting contracyear, and the civilian unemployment rate averaged tions in outlays for commercial office buildings. 73A percent. Recent information on new contracts continued to Industrial production, which had increased suggest that nonresidential construction would noticeably in earlier months, was about unchanged decline more slowly over the months ahead. on balance over June and July, as a rise in July Business inventories surged in June after declinretraced a decline that had occurred in June. Much ing a little in May. At the retail level, inventories of the July advance stemmed from a higher level of increased by a substantial amount, with the accuoutput in mining and utilities, where special factors mulation spread about equally among durable and had held down production in earlier months. Fac- nondurable goods. The jump in inventories lifted tory output was unchanged in July after a small retailers' stocks-to-sales ratios to the upper end of decline in June; production of computers and other the range of the past year. Wholesale trade inveninformation processing equipment continued to tories also expanded sharply in June, with runups increase at a rapid rate, but output of motor vehi- reported for a wide range of goods; sales increased cles and parts fell in both months. Production by more, however, and the inventory-to-sales ratio Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

912 Federal Reserve Bulletin • December 1992 in wholesale trade fell slightly. By contrast, manu- the intermeeting period. Accordingly, the directive facturing stocks edged down in June, and the indicated that in the context of the Committee's inventory-to-shipments ratio dropped to its lowest long-run objectives for price stability and sustainlevel since the middle of 1979. able economic growth, and giving careful consider- The nominal U.S. merchandise trade deficit wid- ation to economic, financial, and monetary develened again in May. For April and May combined, opments, slightly greater reserve restraint might be the deficit was substantially larger than its average acceptable or slightly lesser reserve restraint would rate in the first quarter. The value of exports fell be acceptable during the intermeeting period. The considerably over the two-month period, with contemplated reserve conditions were expected to reduced shipments of aircraft accounting for the be consistent with a resumption of growth in M2 bulk of the decline. The value of imports rose and M3 at annual rates of about 2 percent and substantially, as imports of oil rebounded from V2 percent respectively over the three-month period first-quarter lows and imports of a wide range of from June through September. other goods also increased. Economic activity in The day after the meeting, the Board of Goverthe major foreign industrial countries appeared to nors approved a reduction in the discount rate from have slowed on balance in recent months. Canada, 3Vi to 3 percent, and open market operations were France, and Italy seemed to have experienced mod- directed at allowing the full amount of the reducest economic growth, but activity apparently had tion to be reflected in money market rates. These slowed or declined in Germany and Japan, and actions were taken in the context of a continuing there was little indication that a recovery had begun downtrend in inflation and in light of incoming in the United Kingdom. information that suggested flagging momentum in Producer prices of finished goods increased mod- the economic recovery and persisting softness in estly over June and July. Abstracting from the credit and money. Later in the intermeeting period, sometimes volatile food and energy components, a technical increase was made to expected levels of prices of otherf inished goods rose at a significantly adjustment plus seasonal borrowing to reflect rising slower pace in the twelve months ended in July demands for seasonal credit. Adjustment plus seathan in the preceding twelve months. At the con- sonal borrowing averaged close to expected levels sumer level, prices advanced only a little in July during the two full reserve maintenance periods after a June increase that had been boosted some- completed since the meeting. The federal funds what by a temporary bulge in energy prices. Food rate, which had been around 3% percent prior to prices, which were unchanged on balance over the monetary easing action, averaged 3VA percent June and July, continued to hold down overall subsequently. increases in consumer prices. Excluding food and Other market interest rates declined considerably energy items, consumer price inflation over the in early July, reflecting both the sluggishness poryear ended in July was markedly lower than in the trayed by incoming economic data and the monepreceding year. Measures of labor costs also evi- tary policy easing. Commercial banks also lowered denced smaller increases. Hourly compensation of their prime rate from 6V2 percent to 6 percent. In private industry workers rose at a substantially subsequent weeks, with a steady flow of new inforslower pace in the second quarter and in the twelve mation pointing to a hesitant recovery and more months ended in June. The deceleration in overall favorable trends in wages and prices, yields on compensation reflected slower growth in both its intermediate- and long-term Treasury securities benefits and its wage and salary components. For dropped further. Over the intermeeting period, production or nonsupervisory workers, average yields on most private securities tended to decline hourly earnings were unchanged in July, and the by amounts comparable to those on Treasury twelve-month change in this measure was substan- instruments, but rates on fixed-rate home morttially reduced. gages fell by somewhat less, apparently owing in large part to heightened mortgage investor con- At its meeting on June 30-July 1, the Committee cerns about prepayment risk stemming from a adopted a directive that called for maintaining the surge in refinancing activity. Broad indexes of existing degree of pressure on reserve positions and stock prices changed little over the period. that included a bias toward possible easing during Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 913 In foreign exchange markets, the trade-weighted balance sheets and reducing debt-servicing burvalue of the dollar in terms of the other G-10 dens, in conjunction with improving job prospects, currencies declined on balance over the intermeet- were expected to foster growth in consumer spending period. Early in the period, the dollar fell in ing more in line with the expansion of income. In response to the more uncertain prospects for near- addition, some stimulus to domestic production term growth in the United States and the concur- was projected to emerge over the forecast horizon rent easing of U.S. monetary policy. Later, the from improving export demand as a result of the dollar fell further following an increase in the dis- depreciation of the dollar in recent months and count rate in Germany and the issuance of unfavor- some anticipated strengthening of economic activable U.S. trade data for May. Conceited central- ity in the major foreign industrial countries. In the bank intervention in foreign exchange markets was government sector, continuing cutbacks in defense undertaken to brake the decline of the dollar, and spending were expected to damp federal expendithe latter tended to stabilize over the remainder of tures, and budget problems at state and local levels the intermeeting period. of government to constrain spending and result in M2 and M3 contracted somewhat further in July, tax increases. A persisting though decreasing mardespite a resumption of rapid growth in Ml. Both gin of slack in resource utilization was projected to broad monetary aggregates were substantially be associated with further progress toward price weaker in July than had been anticipated at the stability. time of the June 30-July 1 meeting. The declines in In the Committee's discussion of current and these aggregates apparently reflected in part the prospective economic developments, members continuing redirection of household holdings of referred to statistical and anecdotal indications that time deposits toward bond and stock funds or the the rate of economic expansion had slowed to a repayment of debt, and in part the reduced funding relatively subdued pace since the early months of needs of depository institutions owing to the fur- the year. A number of factors seemed to be restrainther rechanneling of credit demands outside the ing the expansion, including efforts by business depository sector, a development that was encour- firms and households to restructure balance sheets, aged by the declines in interest rates in long-term some apparent deterioration in business and condebt markets. To some extent, the persisting weak- sumer sentiment, and sluggish economic growth ness in money also might have been associated abroad. Nonetheless, the low levels of real and with relatively slow expansion in income since the nominal interest rates in short-term debt markets, early months of the year. Through July, both M2 recent decreases in intermediate- and long-term and M3 were appreciably below the lower ends of interest rates and in the foreign exchange value of the Committee's ranges for their growth in 1992. the dollar, and the fairly ample liquidity suggested The staff projection prepared for this meeting by some measures all were consistent with expectapointed to a continuation of subdued economic tions of some strengthening in business activity in expansion in the near term followed by a gradual coining quarters. Still, in the view of a number of pickup in growth through next year. The forecast members, the economic expansion was likely to be took account of the further easing of reserve condi- on a slightly lower track over the next several tions in early July and the substantial rally that had quarters than they previously had anticipated. At taken place in the bond markets. Housing construc- the same time, many commented that they were tion was expected to pick up in response to the encouraged by the accumulating signs of diminishdeclines in mortgage interest rates; and in the busi- ing price and wage inflation, and some observed ness sector, lower interest rates and improved prof- that faster and more convincing progress was being its and cash flows were projected to enhance access made toward achieving price stability than they had to sources of finance and to provide the basis for an anticipated earlier. acceleration in plant and equipment spending as the The members recognized that the outlook for the recovery gained momentum. The slow pace of hir- economy was subject to major uncertainties. A ing and the modest expansion of incomes currently number commented that they could not identify were tending to restrain consumer spending, but any sector of the economy that seemed primed to continued progress by households in restructuring provide the impetus needed for a vigorous expan- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

914 Federal Reserve Bulletin • December 1992 sion, but they also acknowledged the difficulty of sumer and government expenditures. While spendanticipating the pattern and trajectory of an expan- ing for equipment was growing at a fairly brisk sion. With regard to domestic economic develop- pace, spurred by efforts to modernize production ments, the ongoing restructuring activities by finan- facilities for competitive reasons, business concial and nonfinancial firms and by households were struction continued to be deterred by an overcontinuing to exert a restraining effect on economic supply of space in commercial structures, espeactivity by diverting cash flows from business cially office buildings, in numerous areas around investment and consumer expenditures. Consider- the country. Cautious inventory investment able progress appeared to have been made toward reflected lackluster demand as well as continuing redressing earlier over-expansion and credit efforts to manage inventories more tightly in relaexcesses. Over time, cash flows would be redi- tion to sales. rected toward more normal patterns of spending for The outlook for housing activity appeared to goods and services, with stimulative implications have improved somewhat after the recent declines for the economy. However, the timing and extent of in mortgage rates, though the available data and such a development could not be predicted with anecdotal reports on housing market developments any degree of confidence, and in any case the were mixed. While mortgage refinancing activity positive effects probably would be felt only gradu- had turned sharply upward across the nation, mortally and there could be substantial restraint on gage loan demand for home purchases was still economic activity for a longer period than was lagging in many areas. anticipated earlier. On the more positive side, bank- Given serious budgetary problems at all levels of ing institutions had made a good deal of progress in government, the public sector of the economy was improving their capital positions and strengthening not viewed as likely to provide stimulus to the their portfolios, and many of these institutions now expansion over the next several quarters. At the were reported to be seeking lending opportunities federal level, continuing declines in defense spendmore actively, though the demand for loans ing were expected to be offset only in part by fairly remained unusually depressed. slow growth in other expenditures for goods and Turning to developments in key sectors of the services, and some of the most depressed areas of economy, members noted that, for now, consumers the country were strongly affected by trends in the continued to be affected by a high degree of cau- defense industry. At the state and local government tion that appeared to stem especially from concerns levels, the well-publicized budget problems of about job security and job opportunities in an envi- California were shared to one degree or another by ronment of continuing business consolidations, cut- many other parts of the country; spending curbs backs by state and local governments, and reduc- seemed likely to hold down any impetus to demand tions in defense spending. Against the background from this sector of the economy, while increases in of quite limited growth in overall demand, which state and local taxes would tend to restrain business could be met largely through improvements in pro- and household demand. ductivity and lengthening workweeks, business The outlook for the nation's foreign trade balfirms were continuing to hold back in their hiring ance was difficult to evaluate. The decline in the of new workers. Ongoing efforts by many consum- foreign exchange value of the dollar had favorable ers to reduce their debt burdens and lower interest implications for net exports over time, but the income from declining rates on deposits and mar- outlook for relatively restrained expansion in key ket instruments were contributing to the softness in industrial countries pointed to limited growth in the consumer spending. Against this background, some demand for U.S. exports. At the same time, even members indicated that they would not rule out a moderate economic growth in the U.S. economy further rise in the personal saving rate. could be expected to foster some further increases Overall spending by business firms on fixed in imports over coming quarters despite the lower investment and inventories was believed likely to dollar. remain relatively moderate, at least in the quarters With regard to the outlook for inflation, many of immediately ahead, in light of the negative busi- the members commented on what they viewed as ness sentiment associated in turn with lagging con- increasingly persuasive evidence of slower rates of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 915 increase in wages and prices. Against the back- to respond vigorously, if necessary, to a weakerground of relatively restrained growth in economic than-expected economy or to disruptive conditions activity and the related outlook for limited pres- in financial markets, should they develop at some sures on labor and other productive resources, a point. number of members indicated that they had low- Members who leaned toward some near-term ered their inflation forecasts for the next several easing of reserve conditions commented that such a quarters. There were widespread reports of strong policy move was not likely to foster inflationary competitive pressures in most industries and of pressures under current or prospective economic successful efforts to hold down costs through conditions, given the appreciable margin of unused improvements in productivity. On the negative side, resources in the economy. At the same time, an the considerable depreciation of the dollar in recent easier monetary policy would accelerate balancemonths and lingering concerns about future price sheet restructuring activities .and tend to compenpressures, apparently associated especially with sate for the adverse effects of such activities on worries about the outlook for the federal budget, spending. A greater degree of monetary policy could tend to impair progress toward price stability. easing than had been needed in the past seemed to On balance, however, members saw the prospects be required to overcome the depressing effects of for significantly less inflation over the projection the restructuring activities and to cushion an horizon as quite promising. already sluggish expansion against the possibility Turning to policy for the intermeeting period, of some further loss in momentum. a majority of the members indicated that they One factor weighing in favor of careful considerfavored an unchanged policy, while some ation of a more accommodative posture in reserve expressed a preference for further easing either at markets was the behavior of the broad monetary this meeting or in the near future. The members aggregates. The staff analysis prepared for this who supported a steady policy course recognized meeting suggested that some pickup in the growth that in a period characterized by relatively sluggish of M2 and M3, though to a still quite sluggish pace, economic expansion and a wide variety of risks to was likely over the months ahead on the assumpthe economy, conditions might emerge that would tion of unchanged conditions in reserve markets. warrant consideration of some further easing. For Members observed that the indications of some the time being, however, they preferred a wait-and- renewed M2 growth since late July tended to supsee approach in view of the recent easing of reserve port that conclusion; some also drew encourageconditions and the considerable declines in longer- ment from the sharp upturn in the growth of term interest rates and in the foreign exchange reserves and Ml in July. The members noted that value of the dollar. The Committee should continue growth of the broader aggregates in line with curto evaluate a variety of indicators for signs that the rent expectations implied expansion for the year at expansion might be falling short of an acceptable rates somewhat below the lower ends of the Comgrowth path. mittee's ranges. Such a development would be Some members commented that an easing of consistent with the Committee's policy objectives monetary policy under current conditions would if, as expected, unusual strength in the velocity of incur too great a risk of adversely affecting domes- M2 and M3 were to persist over the balance of the tic bond markets. One aspect of that risk was the year. In the circumstances, monetary growth and possibility of a destabilizing decline of the dollar in indicators of velocity behavior would need to be foreign exchange markets; the potential for such a monitored carefully over coming months. decline had prompted the recent exchange market In the Committee's discussion of possible interintervention in support of the dollar by the United meeting adjustments to the degree of reserve pres- States and several other nations. Any further easing sure, a majority of the members indicated their in this view should be implemented only under preference or acceptance of a directive that was conditions or circumstances in which the System's biased toward possible easing during the weeks commitment to its price stability objective was not ahead. Members who preferred some easing over likely to be brought into question. An unchanged the near term indicated that they could support a policy also would give the Committee more room directive that gave particular weight to develop- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

916 Federal Reserve Bulletin • December 1992 ments that might call for an easing move. Some goods indicate further increases in outlays for business others noted that while they might have preferred a equipment, while nonresidential construction has symmetric directive in current circumstances, the remained soft. The nominal U.S. merchandise trade deficit in April-May was substantially above its average rate proposed bias in the directive was acceptable in the first quarter. Incoming data on wages and prices because an easing of reserve conditions was more suggest that inflation is slowing. likely than a tightening in the intermeeting period. Interest rates have declined considerably since the Moreover, a return to a symmetric directive might Committee meeting on June 30-July 1. The Board of well be misread as a change in policy that the Governors approved a reduction in the discount rate from V/z to 3 percent on July 2. In foreign exchange Committee did not intend at this point. Two memmarkets, the trade-weighted value of the dollar in terms bers expressed a strong preference for a symmetric of the other G-10 currencies declined further over the directive because they were persuaded that mone- first several weeks of the intermeeting period, but it has tary policy should not be eased except in response stabilized more recently. to compelling new evidence that current policy was M2 and M3 contracted somewhat further in July. Through July, both aggregates were appreciably below impeding an expansion of the economy in line with the lower ends of the ranges established by the Commitits long-run potential. They noted that a symmetric tee for the year. directive would not rule out a policy change, in The Federal Open Market Committee seeks monetary either direction, during the intermeeting period if and financial conditions that will foster price stability such a change appeared to be warranted by the and promote sustainable growth in output. In furtherance incoming economic or financial information. of these objectives, the Committee at its meeting on June 30-July 1 reaffirmed the ranges it had established At the conclusion of the Committee's discussion, in February for growth of M2 and M3 of 2Vi to 6V2 perall but two of the members indicated that they cent and 1 to 5 percent respectively, measured from the favored or could accept a directive that called for fourth quarter of 1991 to the fourth quarter of 1992. The Committee anticipated that developments contributing to maintaining the existing degree of pressure on unusual velocity increases could persist in the second reserve positions and that included a bias toward half of the year. The monitoring range for growth of total possible easing during the intermeeting period. domestic nonfinancial debt also was maintained at 4V2 to Accordingly, in the context of the Committee's 8V2 percent for the year. For 1993, the Committee on a long-run objectives for price stability and sustain- tentative basis set the same ranges as in 1992 for growth of the monetary aggregates and debt measured from the able economic growth, and giving careful considerfourth quarter of 1992 to the fourth quarter of 1993. The ation to economic, financial, and monetary develbehavior of the monetary aggregates will continue to be opments, slightly greater reserve restraint might be evaluated in the light of progress toward price level acceptable or slightly lesser reserve restraint would stability, movements in their velocities, and developbe acceptable during the intermeeting period. The ments in the economy and financial markets. reserve conditions contemplated at this meeting In the implementation of policy for the immediate future, the Committee seeks to maintain the existing were expected to be consistent with growth in M2 degree of pressure on reserve positions. In the context of and M3 at annual rates of about 2 percent and the Committee's long-run objectives for price stability Vi percent respectively over the six-month period and sustainable economic growth, and giving careful from June through December. consideration to economic, financial, and monetary developments, slightly greater reserve restraint might or At the conclusion of the meeting, the following slightly lesser reserve restraint would be acceptable in domestic policy directive was issued to the Federal the intermeeting period. The contemplated reserve con- Reserve Bank of New York: ditions are expected to be consistent with growth of M2 and M3 over the period from June through December at The information reviewed at this meeting suggests annual rates of about 2 and Vi percent, respectively. that economic activity is continuing to expand at a subdued pace. Total nonfarm payroll employment re- Votes for this action: Messrs. Greenspan, Corrigan, bounded in July after declining in June, and the civilian Angell, Hoenig, Jordan, Kelley, Lindsey, Mullins, Ms. unemployment rate edged down to 7.7 percent. Manufac- Phillips, and Mr. Syron. Votes against this action: turing output was unchanged in July, but overall indus- Messrs. LaWare and Melzer. trial production was boosted by a higher level of mining and utility output. Retail sales increased moderately in Messrs. LaWare and Melzer dissented because July. Permits issued for the construction of new housing they did not favor a directive that was biased units rose slightly in July, but housing starts fell. Recent data on orders and shipments of nondefense capital toward possible easing during the intermeeting Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 917 period. In their view, monetary policy already was tary policy—one that was less predisposed to react appropriately stimulative, as evidenced in part by to near-term weakness in economic data and that the low level of short-term interest rates and by the allowed more time for the effects of earlier easing rapid growth in reserves since early this year, and actions to be reflected in the economy. Indeed, an was consistent with the promotion of economic easing move in present circumstances might well growth in line with the economy's long-run poten- stimulate inflationary concerns by reducing confitial. Business and consumer confidence were in dence in the System's willingness to pursue fact at low levels, but they reflected a variety of an anti-inflationary policy and thus could have problems facing the economy that were unrelated adverse repercussions on domestic bond markets to the stance of monetary policy. Accordingly, what and further damaging effects on the dollar in was needed at this point was a more patient mone- foreign exchange markets. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

918 Legal Developments FINAL RULE—AMENDMENTS TO REGULATIONS Cedar Group, Inc.: $.001 par common; Class A, war- G, T, U, AND X rants (expire 11-08-94) Chemical Leaman Corporation: $2.50 par common The Board of Governors is amending 12 C.F.R. Parts Concorde Career Colleges, Inc.: $.10 par common 207, 220, 221, and 224, its Reglations G, T, U, and X Consul Restaurant Corporation: $.10 par common (Securities Credit Transactions; List of Marginable Cytogen Corporation: $2.50 par convertible exchange- OTC Stocks; and List of Foreign Margin Stocks). The able preferred List of Marginable OTC Stocks (OTC List) is comprised of stocks traded over-the-counter (OTC) in the EIP Microwave, Inc.: No par common United States that have been determined by the Board Employers Casualty Company: $.25 par common of Governors of the Federal Reserve System to be subject to the margin requirements under certain Fed- First of American Bank Corporation: Series E, coneral Reserve regulations. The List of Foreign Margin vertible preferred; 9% convertible preferred, $11,00 Stocks (Foreign List) represents foreign equity secu- par value rities that have met the Board's eligibility criteria under Regulation T. The OTC List and the Foreign Glenex Industries, Inc.: No par common List are published four times a year by the Board. This Griffith Consumers Company: $.01 par common document sets forth additions to and deletions from GV Medical, Inc.: $.05 par common the previous OTC List and the Foreign List. Both Lists were last published on July 27, 1992 and effective Health Professionals Inc.: $.02 par common on August 10, 1992. Howard Savings Bank, The (New Jersey): $2.00 par Effective November 9, 1992, accordingly, pursuant common to the authority of sections 7 and 23 of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78g and Jean Philippe Fragrances, Inc.: Warrants (expire 78w), and in accordance with 12 C.F.R. 207.2(k) and 01-15-93) 207.6 (Regulation G), 12 C.F.R. 220.2(u) and 220.17 John Adams Lift Corporation: No par common (Regulation T), and 12 C.F.R. 221.2(j) and 221.7 (Regulation U), there is set forth below a listing of deletions Long Lake Energy Corporation: $.001 par common from and additions to the OTC List and the Foreign List. Major Realty Corporation: $.01 par common Mass Microsystems, Inc.: No par common Deletions from the List of Marginable OTC Medical Technology Systems, Inc.: Warrants (expire Stocks 08-15-92) Stocks Removed for Failing Continued Listing Natec Resources, Inc.: No par common Requirements Nu-Med, Inc.: $.01 par common Nucorp, Inc.: Paired Warrants (expire 10-31-92); B&H Bulk Carriers, Ltd.: $.01 par common Class C, Warrants (expire 06-30-93) Banyan Mortgage Investors L.P.: Depositary units representing $10.00 par units of limited partnership Pioneer Standard Electronics, Inc.: 9% convertible Banyan Mortgage Investments L.P. II: Depositary subordinated debentures units of limited partnership interest Bobbie Brooks Incorporated: $.001 par common Reserve Industries Corporation: $1.00 par common Brajdas Corporation: $.10 par common Smith International, Inc.: Class A, Warrants (expire Calgene, Inc.: $.001 par convertible exchangeable 02-28-95) preferred Sonora Gold Corporation: No par common Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 919 Tel-Offshore Trust: No par units of beneficial interest Niagra Exchange Corporation: $1.00 par common Transtech Industries, Inc.: $.50 par common Nova Pharmaceutical Corporation: $.01 par common; Class C, Warrants (expire 06-30-93); Class D, War- Wolverine Exploration Company: $.50 par common; rants (expire 06-30-98) $1.00 par convertible exchangeable preferred; Class A, Warrants (expire 12-31-93) PHP Healthcare Corporation: $.01 par common Provident Life & Accident Insurance Company of Stocks Removed for Listing on a National America: Class A, $1.00 par common; Class B, Securities Exchange or Being Involved in an $1.00 par common Acquisition Quantronix Corporation: $.01 par common Allied Research Corporation: $.10 par common Applied Power, Inc.: Class A, $.20 par common Security Financial Group Inc.: $.10 par common Automated Security Holdings PLC: American Depos- Society Corporation: $1.00 par common itary Receipts Sunrise Medical Inc.: $1.00 par common Sunwest Financial Services, Inc.: No par common Basic American Medical, Inc.: No par common Surgical Care Affiliates, Inc.: $.25 par common Consolidated-Tamoka Land Co.: $1.00 par common T2 Medical Inc.: $.01 par common Cousins Properties Inc.: $1.00 par common Washington Energy Company: $5.00 par common Durr-Fullauer Medical, Inc.: $.50 par common; 7% Wicat Systems, Inc.: $.01 par common convertible subordinated debentures Wiland Services, Inc.: $.10 par common Federated Bank, S.S.B, (Wisconsin): $.10 par com- Additions to the List of Marginable OTC mon Stocks First American Bancorp: $1.00 par common First Federal of Alabama, FSB: $.01 par common 3CI Complete Compliance Corporation: $.01 par com- First Federal Savings & Loan Association of Lenamon wee: $1.00 par common 4th Dimension Software Ltd.: Ordinary Shares, NIS First National Pennsylvania Corp.: $4,166 par com- .01 par value mon First Peoples Financial Corporation: $6.00 par com- Abiomed, Inc.: $.01 par common mon Adelphia Communications Corporation: Class A, $.01 First Savings Bancorp: $1.00 par common par common First Security Corporation of Kentucky: No par com- Alden Press Company, The: $.01 par common mon Alpine Meadows of Tahoe, Inc.: $.25 par common Fred Meyer, Inc.: $.01 par common Amber's Stores, Inc.: $.01 par common American Insurance Group, Inc.: $.10 par common Goal Systems International, Inc.: No par common American Life Holding Company: $.01 par redeem- Golden Corral Realty Corporation: $.01 par common able cumulative preferred Health Insurance of Vermont, Inc.: $3.00 par common American Residential Holdings Corporation: $.04 par Henley Group, Inc., The: $.01 par common common HMO America, Inc.: $.01 par common American Studios, Inc.: $.001 par common Amity Bancshares, Inc.: $.01 par common Intermagnetics General Corporation: $.10 par com- Ampex Incorporated: Class A, $.01 par common mon Anchor Bancorp Wisconsin, Inc.: $.10 par common Appliance Recycling Centers of America, Inc.: No par KMC Enterprises, Inc.: $.001 par common common Arbor National Holdings, Inc.: $.01 par common Magna International, Inc.: Class A, No par subordi- Arch Petroleum, Inc.: $.01 par common nated voting shares Metro Bancshares Inc.: $.01 par common B.V.R. Technologies Limited: Ordinary Shares NIS .50 par value New London Inc.: $.10 par common Bank of East Tennessee: $2.00 par common Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

920 Federal Reserve Bulletin • December 1992 Banyan Systems Incorporated: $.01 par common First Federal Savings Bank of Colorado: $1.00 par Base Ten Systems, Inc.: Series A, rights (expire common 11-09-92) First Interstate Bank of Southern Louisiana: $2.50 par Bestop, Inc.: $.002 par common common BII Enterprises, Inc.: No par common First Pacific Networks, Inc.: $.001 par common Biomedical Waste Systems, Inc.: $.001 par common; First United Corporation (Maryland): $5.00 par com- Class B, Warrants (expire 06-04-96) mon Biotime, Inc.: No par common Firstrock Bancorp, Inc.: $.01 par common Bolsa Chica Company, The: Series A, convertible preferred Genzyme Corporation: Series N, Warrants (expire Branford Savings Bank (Connecticut): $1.00 par com- 12-31-96) mon Hi-Tech Pharmacal Company, Inc.: $.01 par common California Jamar, Inc.: $.01 par common Cam-Net Communications: No par common Interface, Inc.: 8% convertible subordinated deben- Capitol Multimedia Inc.: $.10 par common tures due 2013 Caraustar Industries, Inc.: $.10 par common International Petroleum Corporation: No par common Cenit Bancorp, Inc. (Virginia): $.01 par common Chai-Na-Ta Ginseng Products Limited: No par com- Jones Spacelink, Ltd.: Class A, $.01 par common mon Just Toys, Inc.: $.01 par common Cheesecake Factory Incorporated, The: $.01 par common Kennedy-Wilson, Inc.: $.01 par common Clinicom Incorporated: $.001 par common Clinicorp, Inc.: $.01 par common Layne, Inc.: $.01 par common Columbia Banking Systems, Inc. (Washington): No Lifecell Corporation: $.001 par common par common Lifequest Medical, Inc.: $.001 par common Comcentral Corporation: $.02 par common Littelfuse, Inc.: $.01 par common; Warrants (expire Compania Cervecerias Unides S.A.: American Depos- 12-31-2001) itary Receipts Control Data Systems, Inc.: $.01 par common McAfee Associates, Inc.: $.01 par common Corrections Corporation of America: Warrants (expire Medco Containment Services, Inc.: 6% convertible 09-14-96) subordinated debentures Creative Technologies Ltd.: $.25 par ordinary shares Medic Computer Systems, Inc.: $.01 par common Crownamerica, Inc.: No par common Medical Marketing Group, Inc.: 7.5% convertible sub- Cryenco Sciences Inc.: Class A, $.01 par common ordinated debentures Cynagen, Inc.: $.01 par common Medrad, Inc.: $.10 par common Megafoods Stores, Inc.: $.001 par common Danskin, Inc.: $.01 par common Micro Bio-Medics, Inc.: $.03 par common Data Race, Inc.: No par common Microtek Medical, Inc.: $.01 par common DSP Technology, Inc.: No par common Mobile America Corporation: $.10 par common Money Store, Inc., The: No par common Eagle Hardware & Garden, Inc.: No par common MSB Bancorp, Inc. (New York): $.01 par common Electronics for Imaging, Inc.: No par common Mutual Savings Bank, F.S.B. (Michigan): $.01 par Encore Wire Corporation: $.01 par common common Energy Conversion Devices, Inc.: $.01 par common Envirogen, Inc.: $.01 par common Netrix Corporation: $.06 par common Ezcony Interamerica Inc.: No par common Noise Cancellation Technologies, Inc.: $.01 par common F&M Distributors, Inc.: $.01 par common Northstar Computer Forms, Inc.: $.05 par common Fabri-Centers of America, Inc.: 6V4% convertible sub- Nu-Kote Holding, Inc.: Class A, $.01 par common ordinated debentures First Banks, Inc.: Class C, 9% increasing rate redeem- On Assignment, Inc.: $.01 par common able cumulative preferred First Charter Corporation (North Carolina): $5.00 par Paco Pharmaceutical Services, Inc.: $.01 par common common PDK Labs, Inc.: $.01 par common; Series A, $.01 par Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 921 cumulative convertible preferred; Class B, Warrants Nippon Telegraph & Telephone Corporation: ¥ 50,000 (expire 04-14-97); Class C, Warrants (expire par common 04-14-97) Peak Technologies Group, Inc., The: $.01 par com- Shimachu Co. Ltd.: ¥ 50 par common mon Petroleum Heat and Power Company, Inc.: Class A, Deletions from the List of Foreign Margin $.10 par common Stocks Pyxis Corporation: $.01 par common Hammerson Property Investment and Development Research Frontiers Incorporated: $.125 par common Corporation PLC: Common, par value 25 p Hawker Siddeley Group PLC: Common, par value Scios Nova Inc.: Class C, Warrants (expire 06-30-93); 25 p Class D, Warrants (expire 06-30-98) Maxwell Communication Corporation PLC: Ordinary Softimage Inc.: No par common shares, par value 25 p Somanetics Corporation: $.01 par common; Class B, Warrants (expire 03-20-96) Taylor Woodrow PLC: Common, par value 20 p Sportmart, Inc.: $.01 par common Trafalgar House PLC: Common, par value 20 p Sports & Recreation, Inc.: $.01 par common Sports Heros, Inc.: Warrants (expire 11-20-95) Ultramar PLC (Lasmo PLC): Ordinary shares, par Stratacom, Inc.: $.01 par common value 25 p Swing-N-Slide Corporation: $.01 par common Synetic, Inc.: 1% convertible subordinated debentures FINAL RULE—AMENDMENT TO REGULATION J Theragenics Corporation: $.01 par common Todhunter International, Inc.: $.01 par common The Board of Governors is amending 12 C.F.R. Part Tops Appliance City, Inc.: No par common 210, its Regulation J (Collection of Checks and Other Transamerican Waste Industries, Inc.: $.001 par com- Items by Federal Reserve Banks and Funds Transfers mon; Class A, Warrants (expire 11—16—96); Class B, Through Fedwire) to require paying banks that receive Warrants (expire 11-12-96) presentment of checks from a Federal Reserve Bank TW Holdings, Inc.: Series A, 9% cumulative convert- to settle for those checks as soon as one hour after ible exchangeable preferred receipt of the checks. This amendment is necessary to implement the procedures for posting debits and cred- U.S. Bancorp (Oregon): Series A, 8'/s% par cumula- its to depository institutions' reserve and clearing tive preferred accounts in order to measure daylight overdrafts ac- Union Bank (California): Series A, 8.375% preferred curately under the Board's payments system risk stock reduction program. The intent of the program is to Uniroyal Technology Corporation: $.01 par common reduce both Federal Reserve and overall payments Universal Standard Medical Laboratories, Inc.: No system risk. The Board is also making other technical and clarifying amendments to Regulation J. par common Effective October 14, 1993, 12 C.F.R. Part 210 is Value-Added Communications, Inc.: $.01 par com- amended as follows: mon Part 210—Regulation J (Collection of Checks Zoll Medical Corporation: $.01 par common and Other Items by Federal Reserve Banks and Funds Transfers Through Fedwire) Additions to the List of Foreign Margin Stocks 1. The authority citation for part 210 continues to read Canon Inc.: ¥ 50 par common as follows: Cathay Pacific Airways, Ltd.: HK$.20 par common Citic Pacific Ltd.: HK$.40 par common Authority: Federal Reserve Act, sec. 13 (12 U.S.C. 342), sec. ll(i) and (j) (12 U.S.C. 248(i) and (j)), sec. 16 Hong Kong & China Gas Co. Ltd.: HK$.25 par (12 U.S.C. 248(o) and 360), and sec. 19(f) (12 U.S.C. common 464); and the Expedited Funds Availability Act Hopewell Holdings Ltd.: HK$.50 par common (12 U.S.C. 4001 et seq.). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

922 Federal Reserve Bulletin • December 1992 2. The table of contents for subpart A is amended by Fedwire on the day it receives the item, whichever revising the entry for 210.9 to read "Settlement and is earlier. Payment." (2)(i) On the day a paying bank receives a cash item directly or indirectly from a Reserve Bank, it shall 3. Section 210.2 is amended by revising paragraph (d) settle for the item so that the proceeds of the and the last sentence of paragraph (g) and adding new settlement are available to the Reserve Bank, or paragraphs (n) and (o) before the concluding text to return the item, by the latest of: read as follows: (A) The next clock hour that is at least one hour after the paying bank receives the item; Section 210.2—Definitions. (B) One hour after the scheduled opening of Fedwire; or (C) Such later time as provided in the Reserve (d) Banking day means the part of a day on which a Bank's operating circular. bank is open to the public for carrying on substantially (ii) If the paying bank fails to settle for or return a all of its banking functions. cash item in accordance with paragraph (a)(2)(i) of this section, it shall be subject to any applicable overdraft charges. Settlement under paragraph (g)* * * Item does not include a check that cannot be (a)(2)(i) of this section satisfies the settlement collected at par, or a payment order as defined in requirements of paragraph (a)(1) of this section. section 210.26(i) and handled under subpart B of this (3)(i) If a paying bank closes voluntarily on a day part. that is a banking day for a Reserve Bank, and the Reserve Bank makes a cash item available to the paying bank on that day, the paying bank shall either: (n) Clock hour means a time that is on the hour, such (A) On that day, settle for the item so that the as 1:00, 2:00, etc. proceeds of the settlement are available to the (o) Fedwire has the same meaning as that set forth in Reserve Bank, or return the item, by the latest section 210.26(e) of this part. of: (1) The next clock hour that is at least one hour after the paying bank ordinarily would have received the item; 4. Section 210.9 is amended by revising the heading (2) One hour after the scheduled opening of and paragraph (a) to read as follows: Fedwire; or (5) Such later time as provided in the Reserve Section 210.9—Settlement and Payment. Bank's operating circular; or (B) On the next day that is a banking day for (a) Cash items. (1) On the day a paying bank receives1 both the paying bank and the Reserve Bank, a cash item directly or indirectly from a Reserve settle for the item so that the proceeds of the Bank, it shall settle for the item such that the settlement are available to the Reserve Bank by proceeds of the settlement are available to the the later of: Reserve Bank by the close of Fedwire on that day, (1) One hour after the scheduled opening of or it shall return the item by the later of the close of Fedwire on that day; or the paying bank's banking day or the close of (2) Such later time as provided in the Reserve Fedwire. If the paying bank fails to settle for or Bank's operating circular; and compensate return a cash item in accordance with this paragraph the Reserve Bank for the value of the float (a)(1), it is accountable for the amount of the item as associated with the item in accordance with of the close of its banking day or the close of procedures provided in the Reserve Bank's operating circular. (ii) If a paying bank closes voluntarily on a day that is a banking day for a Reserve Bank, and the Reserve Bank makes a cash item available to the 1. A paying bank is deemed to receive a cash item on its next banking day if it receives the item: paying bank on that day, the paying bank is not (1) On a day other than a banking day for it; or considered to have received the item until its next (2) On a banking day for it, but after a "cut-off hour" established by it in accordance with state law. banking day, but it shall be subject to any appli- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 923 cable overdraft charges if it fails to settle for or Section 210.28—Agreement of sender. return the item in accordance with paragraph (a)(3)(i) of this section. The settlement requirements of paragraphs (a)(1) and (a)(2) of this section (b)* * * do not apply to a paying bank that settles in (5) If a sender, other than a government sender accordance with paragraph (a)(3)(i) of this section. described in section 210.25(d) of this part, incurs an (4)(i) If a paying bank receives a cash item directly or overdraft in its account as a result of a debit to the indirectly from a Reserve Bank on a banking day account by a Federal Reserve Bank under paragraph that is not a banking day for the Reserve Bank: (a) of this section, the account will be subject to any (A) The paying bank shall: applicable overdraft charges, regardless of whether (/) Settle for the item so that the proceeds of the overdraft has become due and payable. A Fedthe settlement are available to the Reserve eral Reserve Bank may debit a sender's account Bank by the close of Fedwire on the Reserve under paragraph (a) of this section immediately on Bank's next banking day; or acceptance of the payment order. (2) Return the item by midnight of the day it receives the item. If the paying bank fails to settle for or return a cash item in accordance with this paragraph (a)(4)(i)(A), it shall become accountable for the FINAL RULE—AMENDMENT TO REGULATION CC amount of the item as of the close of the its banking day on the day it receives the item. (B) The paying bank shall: The Board of Governors is amending 12 C.F.R. Part (7) Settle for the item so that the proceeds of 229, its Regulation CC (Availability of Funds and the settlement are available to the Reserve Collection of Checks) to require paying banks to Bank by one hour after the scheduled open- provide same-day settlement for checks presented by ing of Fedwire on the Reserve Bank's next 8:00 a.m. local time at specified locations. The amendbanking day or such later time as provided in ments will eliminate presentment fees for these checks the Reserve Bank's operating circular; or and thereby facilitate their collection. The Board has (2) Return the item by midnight of the day it adopted these amendments pursuant to its responsibilreceives the item. ities under the Expedited Funds Availability Act to If the paying bank fails to settle for or return a regulate the receipt, payment, collection, or clearing cash item in accordance with this paragraph of checks in order to carry out the provisions of the (a)(4)(i)(B), it shall be subject to any applicable Act and to improve the check collection system. overdraft charges. Settlement under this para- Effective January 3, 1994, 12 C.F.R. Part 229 is graph (a)(4)(i)(B) satisfies the settlement re- amended as follows: quirements of paragraph (a)(4)(i)(A) of this section. Part 229—[Amended] (ii) The settlement requirements of paragraphs (a)(1) and (a)(2) of this section do not apply to a 1. The authority citation for part 229 continues to read paying bank that settles in accordance with para- as follows: graph (a)(4)(i) of this section. (5) Settlement with a Reserve Bank under para- Authority: 12 U.S.C. 4001 et seq. graphs (1) through (4) of this section shall be made by debit to an account on the Reserve Bank's books, 2. In the table of contents to part 229, the entry for cash, or other form of settlement to which the section 229.34 is revised to read as follows: Reserve Bank agrees. (6) If a cash item is unavailable for return, the paying Part 229—Availability of Funds and Collection bank may send a notice in lieu of return as provided of Checks in section 229.30(f) of this title. Subpart C—Collection of Checks 5. Section 210.28 is amended by adding a new paragraph (b)(5) to read as follows: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

924 Federal Reserve Bulletin • December 1992 Section 229.34—Warranties. (12 C.F.R. Part 210), or section 229.36(f)(2) of this part is extended: $ $ * £ $ 3. In section 229.1, the last sentence of paragraph 6. In section 229.34, the heading is revised, paragraphs (b)(3) is revised to read as follows: (c) and (d) are revised and redesignated as paragraphs (d) and (e), respectively, and a new paragraph (c) is Section 229.1—Authority and purpose; added to read as follows: organization. Section 229.34—Warranties. (b)* * * (3)* * * These rules cover the direct return of (c) Warranty of settlement amount, encoding, and checks, the manner in which the paying bank and offset. (1) Each bank that presents one or more checks returning banks must return checks to the deposito a paying bank and in return receives a settlement tary bank, notification of nonpayment by the paying or other consideration warrants to the paying bank bank, indorsement and presentment of checks, that the total amount of the checks presented is same-day settlement for certain checks, the liability equal to the total amount of the settlement deof banks for failure to comply with subpart C of this manded by the presenting bank from the paying part, and other matters. bank. (2) Each bank that transfers one or more checks or 4. In section 229.2, paragraph (mm) is redesignated as returned checks to a collecting, returning, or deposparagraph (pp) and new paragraphs (mm), (nn), and itary bank and in return receives a settlement or (oo) are added to read as follows: other consideration warrants to the transferee bank that the accompanying information, if any, accu- Section 229.2—Definitions. rately indicates the total amount of the checks or returned checks transferred. (3) Each bank that presents or transfers a check or (mm) Fedwire has the same meaning as that set forth in returned check warrants to any bank that subsesection 210.26(e) of this chapter, quently handles it that, at the time of presentment or (nn) Good faith means honesty in fact and the obsertransfer, the information encoded after issue in vance of reasonable commercial standards of fair magnetic ink on the check or returned check is dealing. correct. (oo) Interest compensation means an amount of (4) A paying bank may set off the amount by which money calculated at the average of the Federal Funds the settlement paid to a presenting bank exceeds the rates published by the Federal Reserve Bank of New total amount of the checks presented against subse- York for each of the days for which interest compenquent settlements for checks presented by that sation is payable, divided by 360. The Federal Funds presenting bank. rate for any day on which a published rate is not (d) Damages. Damages for breach of these warranties available is the same as the published rate for the last shall not exceed the consideration received by the preceding day for which there is a published rate. bank that presents or transfers a check or returned check, plus interest compensation and expenses related to the check or returned check, if any. (e) Tender of defense. If a bank is sued for breach of a 5. In section 229.30, paragraph (c) introductory text is warranty under this section, it may give a prior bank in revised to read as follows: the collection or return chain written notice of the litigation, and the bank notified may then give similar Section 229.30—Paying bank's responsibility notice to any other prior bank. If the notice states that for return of checks. the bank notified may come in and defend and that failure to do so will bind the bank notified in an action later brought by the bank giving the notice as to any (c) Extension of deadline. The deadline for return or determination of fact common to the two litigations, notice of nonpayment under the U.C.C., Regulation J the bank notified is so bound unless after seasonable Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 925 receipt of the notice the bank notified does come in If the closing is voluntary, unless the paying bank and defend. settles for or returns the check in accordance with paragraph (f)(2) of this section, it shall pay interest 7. In section 229.36, a new paragraph (f) is added to compensation to the presenting bank for each day read as follows: after the business day on which the check was presented until the paying bank settles for the Section 229.36—Presentment and issuance of check, including the day of settlement. checks. 8. In section 229.39, paragraph (d) is redesignated as paragraph (e), and a new paragraph (d) is added to read (f) Same-day settlement. (1) A check is considered as follows: presented, and a paying bank must settle for or return the check pursuant to paragraph (f)(2) of this Section 229.39—Insolvency of bank. section, if a presenting bank delivers the check in accordance with reasonable delivery requirements established by the paying bank and demands pay- (d) Preference against presenting bank. If a paying ment under this paragraph — bank settles with a presenting bank for one or more (i) At a location designated by the paying bank for checks, and if the presenting bank breaches a warranty receipt of checks under this paragraph that is in specified in section 229.34(c)(1) or (3) of this part with the check processing region consistent with the respect to those checks and suspends payments before routing number encoded in magnetic ink on the satisfying the paying bank's warranty claim, the paycheck and at which the paying bank would be ing bank has a preferred claim against the presenting considered to have received the check under bank for the amount of the warranty claim. paragraph (b) of this section or, if no location is designated, at any location described in paragraph (b) of this section; and (ii) By 8:00 a.m. on a business day (local time of the location described in paragraph (f)(l)(i) of this APPENDIX E TO PART 229—[AMENDED] section). A paying bank may require that checks presented 9. The Commentary to section 229.2 is amended by for settlement pursuant to this paragraph (f)(1) be adding and reserving a new paragraph (mm) and separated from other forward-collection checks or adding new paragraphs (nn) and (oo) to read as folreturned checks. lows: (2) If presentment of a check meets the requirements of paragraph (f)(1) of this section, the paying bank is Section 229.2—Definitions, accountable to the presenting bank for the amount of the check unless, by the close of Fedwire on the business day it receives the check, it either: (mm) [Reserved] (i) Settles with the presenting bank for the amount (nn) Good faith. This definition of good faith derives of the check by credit to an account at a Federal from U.C.C. section 3-103(a)(4). Reserve Bank designated by the presenting bank; (oo) Interest compensation. This calculation of interest or compensation derives from U.C.C. section 4A-506(b). (ii) Returns the check. (See sections 229.34(d) and 229.36(f).) (3) Notwithstanding paragraph (f)(2) of this section, 10. The Commentary to section 229.30(c) is amended if a paying bank closes on a business day and receives presentment of a check on that day in by revising the introductory text, the first two senaccordance with paragraph (f)(1) of this section, the tences in numbered paragraph (1), the second sentence paying bank is accountable to the presenting bank in numbered paragraph (2), the first sentence of the for the amount of the check unless, by the close of paragraph immediately following numbered paragraph Fedwire on its next banking day, it either: (2), and the last two paragraphs to read as follows: (i) Settles with the presenting bank for the amount of the check by credit to an account at a Federal Section 229.30—Paying Bank's Responsibility Reserve Bank designated by the presenting bank; for Return of Checks. or (ii) Returns the check. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

926 Federal Reserve Bulletin • December 1992 (c) Extension of deadline. This paragraph permits ex- presents and receives settlement for checks warrants tension of the deadlines for returning a check for which to the paying bank that the settlement it demands the paying bank has previously settled (generally mid- (e.g., as noted on the cash letter) equals the total night of the banking day following the banking day on amount of the checks it presents. This paragraph gives which the check is received by the paying bank) and for the paying bank a warranty claim against the presentreturning a check without settling for it (generally ing bank for the amount of any excess settlement made midnight of the banking day on which the check is on the basis of the amount demanded, plus expenses. received by the paying bank, or such other time pro- If the amount demanded is understated, a paying bank vided by section 210.9 of Regulation J (12 C.F.R. Part discharges its settlement obligation under U.C.C. sec- 210) or section 229.36(f)(2) of this part), but not of the tion 4-301 by paying the amount demanded, but duty of expeditious return, in two circumstances: remains liable for the amount by which the demand is 1. A paying bank may have a courier that understated; the presenting bank is nevertheless liable leaves after midnight (or after any other appli- for expenses in resolving the adjustment. cable deadline) to deliver its forward- When checks or returned checks are transferred to a collection checks. This paragraph removes the collecting, returning, or depositary bank, the transconstraint of the deadline for returned checks feror bank is not required to demand settlement, as is if the returned check reaches either the depos- required upon presentment to the paying bank. Howitary bank or the returning bank to which it is ever, often the checks or returned checks will be sent on that bank's banking day following the accompanied by information (such as a cash letter expiration of the applicable deadline. * * * listing) that will indicate the total of the checks or 2. * * * In such a case, the U.C.C. deadline returned checks. Paragraph (c)(2) provides that if the for returning checks received and settled for transferor bank includes information indicating the on Friday, or for returning checks received total amount of checks or returned checks transferred, on Saturday without settling for them, might it warrants that the information is correct (i.e., equals require the bank to return the checks by the actual total of the items). midnight Saturday. * * * Paragraph (c)(3) provides that a bank that presents The time limits that are extended in each case are the or transfers a check or returned check warrants the paying bank's midnight deadline for returning a check accuracy of the magnetic ink encoding that was placed for which it has already settled and the paying bank's on the item after issue, and that exists at the time of deadline for returning a check without settling for it in presentment or transfer, to any bank that subsequently U.C.C. sections 4-301 and 4-302, sections 210.9 and handles the check or returned check. Under U.C.C. 210.12 of Regulation J (12 C.F.R. 210.9 and 210.12), section 4-209(a), only the encoder (or the encoder and and section 229.36(f)(2) of this part. * * * the depositary bank, if the encoder is a customer of the The paying bank satisfies its midnight or other return depositary bank) warrants the encoding accuracy, thus deadline by dispatching returned checks to another any claims on the warranty must be directed to the bank by courier, including a courier under contract with encoder. Paragraph (c)(3) expands on the U.C.C. by the paying bank, prior to expiration of the deadline. providing that all banks that transfer or present a This paragraph directly affects U.C.C. sections check or returned check make the encoding warranty. 4-301 and 4-302 and sections 210.9 and 210.12 of In addition, under the U.C.C., the encoder makes the Regulation J (12 C.F.R. 210.9 and 210.12) to the extent warranty to subsequent collecting banks and the paythat this paragraph applies by its terms, and may affect ing bank, while paragraph (c)(3) provides that the other provisions. warranty is made to banks in the return chain as well. A paying bank that settles for an overstated cash 11. The Commentary to section 229.34 is amended by letter because of a misencoded check may make a revising the heading, revising and redesignating para- warranty claim against the presenting bank under graphs (c) and (d) as paragraphs (d) and (e), respec- paragraph (c)(1) (which would require the paying bank tively, and adding a new paragraph (c) to read as to show that the check was part of the overstated cash follows: letter) or an encoding warranty claim under paragraph (c)(3) against the presenting bank or any preceding bank that handled the misencoded check. Section 229.34—Warranties. Paragraph (c)(4) provides that the paying bank may set off any excess settlement made against settlement owed to the presenting bank for checks presented (c) Warranty of settlement amount, encoding, and subsequently. offset. Paragraph (c)(1) provides that a bank that (d) Damages. This paragraph adopts for the warranties Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 927 in section 229.34(a), (b), and (c) the damages provided routing number associated with a single check proin U.C.C. section 4-207(c) and 4A-506(b). (See defini- cessing region may designate, for purposes of this tion of "interest compensation" in section 229.2(oo).) paragraph, one or more locations in that check pro- (e) Tender of defense. This paragraph adopts for this cessing region at which checks will be accepted, but regulation the vouching-in provisions of U.C.C. sec- the paying bank must accept any checks with a routing tion 3-119. number associated with that check processing region at each designated location. A paying bank may des- 12. The Commentary to section 229.36 is amended by ignate a presentment location for travelers checks with adding a new paragraph (f) to read as follows: an 8000-series routing number anywhere in the country because these travelers checks are not associated Section 229.36—Presentment and Issuance of with any check processing region. The paying bank, Checks. however, must accept at that presentment location any other checks for which it is paying bank that have a routing number consistent with the check processing (f) Same-day settlement. This paragraph provides that, region of that location. under certain conditions, a paying bank must settle If the paying bank does not designate a presentment with a presenting bank for a check on the same day the location, it must accept presentment for same-day check is presented in order to avail itself of the ability settlement at any location identified in section to return the check on its next banking day under 229.36(b), i.e., at an address of the bank associated sections 4-301 and 4-302 of the U.C.C. This para- with the routing number on the check, at any branch or graph does not apply to checks presented for immedi- head office if the bank is identified on the check by ate payment over the counter. Settling for a check name without address, or at a branch, head office, or under this paragraph does not constitute final payment other location consistent with the name and address of of the check under the U.C.C. This paragraph does not the bank on the check if the bank is identified on the supersede or limit the rules governing collection and check by name and address. A paying bank and a return of checks through Federal Reserve Banks that presenting bank may agree that checks will be acare contained in subpart A of Regulation J (12 C.F.R. cepted for same-day settlement at an alternative locapart 210). tion (e.g., at an intercept processor located in a (1) Presentment requirements—Location and time. different check processing region) or that the cut-off For presented checks to qualify for mandatory time for same-day settlement be earlier or later than same-day settlement, information accompanying the 8:00 a.m. local time. checks must indicate that presentment is being made In the case of a check payable through a bank but under this paragraph—e.g. "these checks are being payable by another bank, this paragraph does not presented for same-day settlement"—and must in- authorize direct presentment to the bank by which the clude a demand for payment of the total amount of check is payable. The requirements of same-day setthe checks together with appropriate payment in- tlement under this paragraph would apply to a paystructions in order to enable the paying bank to able-through or payable-at bank to which the check is discharge its settlement responsibilities under this sent for payment or collection. paragraph. In addition, the check or checks must be Reasonable delivery requirements. A check is conpresented at a location designated by the paying sidered presented when it is delivered to and payment bank for receipt of checks for same-day settlement is demanded at a location specified in paragraph (f)(1). by 8:00 a.m. local time of that location. The desig- Ordinarily, a presenting bank will find it necessary to nated presentment location must be a location at contact the paying bank to determine the appropriate which the paying bank would be considered to have presentment location and any delivery instructions. received a check under section 229.36(b). The pay- Further, because presentment might not take place ing bank may not designate a location solely for during the paying bank's banking day, a paying bank presentment of checks subject to settlement under may establish reasonable delivery requirements to this paragraph; by designating a location for the safeguard the checks presented, such as use of a night purposes of section 229.36(f), the paying bank depository. If a presenting bank fails to follow reasonagrees to accept checks at that location for the able delivery requirements established by the paying purposes of section 229.36(b). bank, it runs the risk that it will not have presented the The designated presentment location also must be checks. However, if no reasonable delivery requirewithin the check processing region consistent with the ments are established or if the paying bank does not nine-digit routing number encoded in magnetic ink on make provisions for accepting delivery of checks the check. A paying bank that uses more than one during its non-business hours, leaving the checks at Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

928 Federal Reserve Bulletin • December 1992 the presentment location constitutes effective present- presented for same-day settlement on the next business ment. day. Sorting of checks. A paying bank may require that (3) Closed paying bank—There may be certain busichecks presented to it for same-day settlement be ness days that are not banking days for the paying sorted separately from other forward-collection bank. Some paying banks may continue to settle for checks it receives as a collecting bank or returned checks presented on these days (e.g., by opening checks it receives as a returning or depositary bank. their back office operations or by using an intercept For example, if a bank provides correspondent check processor). In other cases, a paying bank may be collection services and receives unsorted checks from unable to settle for checks presented on a day it is a respondent bank that include checks for which it is closed. If the paying bank closes on a business day the paying bank and that would otherwise meet the and checks are presented to the paying bank in requirements for same-day settlement under this sec- accordance with paragraph (f)(1), the paying bank is tion, the collecting bank need not make settlement in accountable for the checks unless it settles for or accordance with paragraph (f)(2). If the collecting returns the checks by the close of Fedwire on its next bank receives sorted checks from its respondent bank, banking day. In addition, checks presented on a consisting only of checks for which the collecting bank business day on which the paying bank is closed are is the paying bank and which meet the requirements considered received on the paying bank's next bankfor same-day settlement under this paragraph, the ing day for purposes of the U.C.C. midnight deadline collecting bank may not charge a fee for handling those (U.C.C. 4-301 and 4-302) and this regulation's expechecks and must make settlement in accordance with ditious return and notice of nonpayment provisions. this paragraph. If the paying bank is closed on a business day (2) Settlement—If a bank presents a check in accor- voluntarily, the paying bank must pay interest comdance with the time and location requirements for pensation, as defined in section 229.2(oo), to the presentment under paragraph (f)(1), the paying bank presenting bank for the value of the float associated must either settle for the check on the business day with the check from the day of the voluntary closing it receives the check without charging a presentment until the day of settlement. Interest compensation is fee or return the check prior to the time for settle- not required in the case of an involuntary closing on a ment. (This return deadline is subject to extension business day, such as a closing required by state law. under section 229.30(c).) The settlement must be in In addition, if the paying bank is closed on a business the form of a credit to an account designated by the day due to emergency conditions, settlement delays presenting bank at a Federal Reserve Bank (e.g., a and interest compensation may be excused under Fedwire transfer). The presenting bank may agree section 229.38(e) or U.C.C. section 4-109(b). with the paying bank to accept settlement in another Good faith—Under section 229.38(a), both presentform (e.g., credit to an account of the presenting ing banks and paying banks are held to a standard of bank at the paying bank or debit to an account of the good faith, defined in section 229.2(nn) to mean honpaying bank at the presenting bank). The settlement esty in fact and the observance of reasonable commermust occur by the close of Fedwire on the business cial standards of fair dealing. For example, designating day the check is received by the paying bank. Under a presentment location or changing presentment locathe provisions of section 229.34(c), a settlement tions for the primary purpose of discouraging banks owed to a presenting bank may be set off by adjust- from presenting checks for same-day settlement might ments for previous settlements with the presenting not be considered good faith on the part of the paying bank. (See also section 229.39(d).) bank. Similarly, presenting a large volume of checks Checks that are presented after the 8:00 a.m. (local without prior notice could be viewed as not meeting time) presentment deadline for same-day settlement reasonable commercial standards of fair dealing and and before the paying bank's cut-off hour are treated as therefore may not constitute presentment in good if they were presented under other applicable law and faith. In addition, if banks, in the general course of settled for or returned accordingly. However, for pur- business, regularly agree to certain practices related to poses of settlement only, the presenting bank may same-day settlement, it might not be considered conrequire the paying bank to treat such checks as pre- sistent with reasonable commercial standards of fair sented for same-day settlement on the next business dealing, and therefore might not be considered good day in lieu of accepting settlement by cash or other faith, for a bank to refuse to agree to those practices if means on the business day the checks are presented to agreeing would not cause it harm. the paying bank. Checks presented after the paying U.C.C. sections affected—This paragraph directly bank's cut-off hour or on non-business days, but other- affects the following provisions of the U.C.C. and may wise in accordance with this paragraph, are considered affect other sections or provisions: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 929 1. Section 4-204(b)(l), in that a presenting Section 229.38—Liability. bank may not send a check for same-day settlement directly to the paying bank, if the (a) Standard of care; liability; measure of damages. paying bank designates a different location in * * * The standard of care is similar to the standard accordance with paragraph (f)(1). imposed by U.C.C. sections 1-203 and 4-103(a) and 2. Section 4-213(a), in that the medium of includes a duty to act in good faith, as defined in settlement for checks presented under this section 229.2(nn) of this regulation. paragraph is limited to a credit to an account at a Federal Reserve Bank and that, for checks presented after the deadline for same- 15. The Commentary to section 229.39 is amended by day settlement and before the paying bank's redesignating paragraph (d) as paragraph (e) and addcut-off hour, the presenting bank may require ing a new paragraph (d) as follows: settlement on the next business day in accordance with this paragraph rather than accept settlement on the business day of present- Section 229.39—Insolvency of Bank. ment by cash. 3. Section 4-301(a), in that, to preserve the ability to exercise deferred posting, the time (d) Preference against presenting bank. This paralimit specified in that section for settlement or graph gives a paying bank a preferred claim against a return by a paying bank on the banking day a closed presenting bank in the event that the presenting check is received is superseded by the re- bank breaches an amount or encoding warranty as quirement to settle for checks presented un- provided in section 229.34(c)(1) or (3) and does not der this paragraph by the close of Fed wire. reimburse the paying bank for adjustments for a set- 4. Section 4-302(a), in that, to avoid account- tlement made by the paying bank in excess of the value ability, the time limit specified in that section of the checks presented. This preference is intended to for settlement or return by a paying bank on have the effect of a perfected security interest and is the banking day a check is received is super- intended to put the paying bank in the position of a seded by the requirement to settle for checks secured creditor for purposes of the receivership propresented under this paragraph by the close visions of the Federal Deposit Insurance Act and of Fed wire. similar provisions of state law. 13. The Commentary to section 229.37 is amended by adding two new paragraphs after lettered paragraph (f) as follows: ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT Section 229.37—Variations by Agreement. Orders Issued Under Section 3 of the Bank Holding Company Act g. A presenting bank may agree with a paying bank to present checks for same-day settlement at a location AMCORE Financial, Inc. that is not in the check processing region consistent Rockford, Illinois with the routing number on the checks. (See section 229.36(f)( 1 )(i).) Order Approving Acquisition of a Bank Holding h. A presenting bank may agree with a paying bank to Company present checks for same-day settlement by a deadline earlier or later than 8:00 a.m. (See section 229.36(f)(l)(ii).) AMCORE Financial, Inc., Rockford, Illinois ("AM- CORE"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has 14. The Commentary to section 229.38 is amended by applied under section 3(a)(3) of the BHC Act revising the last sentence of the first paragraph of (12 U.S.C. § 1842(a)(3)) to acquire by merger Dixon paragraph (a) as follows: Bancorp, Inc. ("Dixon"), and thereby indirectly to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

930 Federal Reserve Bulletin • December 1992 acquire its subsidiary bank, Dixon National Bank tants") alleging that AMCORE's subsidiary bank, ("Bank"), both of Dixon, Illinois.1 AMCORE Bank N.A., Rockford, Rockford, Illinois Notice of the application, affording interested per- ("Rockford Bank"), has failed to meet the commercial sons an opportunity to submit comments, has been credit needs of low-income and minority developers in published (57 Federal Register 20,686 (1992)). The southwest Rockford. The Board has carefully retime for filing comments has expired, and the Board viewed the CRA performance records of AMCORE, has considered the application and all comments re- Dixon and their subsidiary banks, as well as all comceived in light of the factors set forth in section 3(c) of ments received, and the responses to those comments, the BHC Act. and all of the other relevant facts of record, in light of AMCORE, with total consolidated assets of $1.31 the CRA, the Board's regulations, and the Statement billion,2 controls six subsidiary banks, all located in of the Federal Financial Supervisory Agencies Re- Illinois. AMCORE is the thirteenth largest commercial garding the Community Reinvestment Act ("Agency banking organization in that state, controlling deposits CRA Statement").4 of $1.1 billion, representing less than 1 percent of total deposits in commercial banks in Illinois. Dixon, with Record of Performance Under the CRA one subsidiary bank, controls deposits of $210 million, representing less than 1 percent of total deposits in A. CRA Performance Examinations commercial banks in that state. Upon consummation of the proposal, AMCORE would be the tenth largest The federal banking agencies have indicated in the commercial banking organization in that state. Agency CRA Statement that a CRA examination is an The banking subsidiaries of AMCORE and Dixon do important, and often controlling, factor in the considnot compete in any of the same banking markets. eration of an institution's CRA record.5 In this case, Accordingly, the Board has concluded that this pro- the Board notes that all of AMCORE's subsidiary posal would not have a significantly adverse effect on banks have received "outstanding" or "satisfactory" competition in any relevant banking market. ratings from their primary supervisors during the most recent examination of each institution's CRA perfor- Convenience and Needs Considerations mance. In particular, AMCORE's lead subsidiary bank, Rockford Bank, received a "satisfactory" rating In considering an application under section 3 of the for CRA performance from the OCC as of October 10, BHC Act, the Board must consider the convenience 1991.6 Bank received an "outstanding" rating for CRA and needs of the communities to be served and take performance in its most recent examination.7 into account the records of the relevant depository institutions under the Community Reinvestment Act B. Business Lending in Low- and (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA re- Moderate-Income Areas quires the federal financial supervisory agencies to encourage financial institutions to help meet the credit Rockford Bank provides business and development needs of the local communities in which they operate loans in low- and moderate-income and minority areas consistent with the safe and sound operation of such to assist in meeting commercial credit needs. For institutions. To accomplish this end, the CRA requires example, for the period 1990-91, Rockford Bank made the appropriate federal supervisory authority to "as- 285 small business loans totalling $32.2 million within sess the institution's record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with the 4. 54 Federal Register 13,742 (1989). safe and sound operation of such institution", and to 5. Id. take that record into account in its evaluation of bank 6. The OCC's examination revealed technical violations of the holding company applications.3 Consumer Credit Protection Act and certain problems in collecting data under the Home Mortgage Disclosure Act. The OCC has noted In connection with this application, the Board has that Rockford Bank has taken satisfactory steps to correct these received comments from two organizations ("Protes- deficiencies. AMCORE's other subsidiary banks have been most recently rated for CRA performance as follows: AMCORE Bank, N.A., Sterling, Sterling Illinois, received an "outstanding" performance rating from the OCC on March 31, 1991; AMCORE Bank, N.A., Woodstock, Woodstock, Illinois, received an "outstanding" 1. Under the terms of the merger agreement between AMCORE and performance rating from the OCC on June 18, 1990; AMCORE Bank, Dixon, AMCORE will form a shell subsidiary corporation to merge N.A., Pekin, Pekin, Illinois, received a "satisfactory" performance directly with Dixon, with Dixon to be the surviving corporate entity. rating from the OCC on April 25, 1990; and AMCORE Bank, Ogle AMCORE may liquidate Dixon at a later date, and hold Bank directly. County, Mount Morris, Illinois, received a "satisfactory" rating from 2. Assets and deposit data are as of March 31, 1992. the FDIC on August 11, 1989. 3. 12 U.S.C. § 2903. 7. Bank was examined by the OCC in June 1989. 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Legal Developments 931 12 of the 15 low- and moderate-income or integrated As of August 1, 1992, Rockford Bank also held muand minority census tracts in the City of Rockford.8 As nicipal housing bonds in the face amount of $350,000, of September 15, 1992, Rockford Bank had commer- and held fire department bonds in the face amount of cial loans in the original amount of $55 million out- $270,000 to finance projects in southwest Rockford. standing to businesses located in integrated and minority census tracts in the City of Rockford, and Additional Elements of CRA Performance commercial loans in the original amount of $240.1 million outstanding to businesses located in low- The Board also has considered other elements of income census tracts in that city. In addition, the bank AMCORE and Rockford Bank's CRA performance. participates in the State of Illinois Economically Tar- The record reveals that AMCORE has in place the geted Investment Program, a linked deposit program types of policies and procedures outlined in the that promotes economic development for small and Agency CRA Policy Statement that contribute to emerging businesses and the creation of affordable effective CRA programs. For example, AMCORE has housing through special interest-rate financing.9 Rock- policies and procedures governing CRA performance ford Bank also co-sponsors and participates in the at its subsidiary banks, including Rockford Bank, that presentation of programs designed to provide practical ensure board of director participation and review. In guidance in financial management for small busi- addition, Rockford Bank ascertains the credit needs of nesses. its community through formal call programs and par- In addition to small business commercial lending, ticipation in various community and governmental Rockford Bank makes loans to low-income, first-time organizations. Market efforts for the bank's services home buyers for the acquisition or rehabilitation of and products include the use of neighborhood newsproperties in the City of Rockford through a number of papers and billboards that target low- and moderatepublic and private programs. These programs include: income consumers. Rockford Bank also engages in (1) Tri-Way Housing Partnership (low-interest home community development and redevelopment activities rehabilitation loans to low-income homeowners); through the Rockford Local Development Corporation (2) City of Rockford Homestead Partnership (low- (revolving loan funds for higher risk ventures to create interest mortgage loans to low-income, first-time or retain jobs) and the Linked Deposit Program of the homebuyers of newly acquired and rehabilitated Illinois State Treasurer (use of state deposits to fund homes); low-interest economic development loans). (3) UDAG (Urban Development Action Grant) The Board has carefully considered the entire Housing Partnership Program (home rehabilitation record of the CRA performance of AMCORE, includloans for borrowers meeting annual income limita- ing the comments filed in this case by Protestants, in tions); reviewing the convenience and needs factors under the (4) West Side Alive Participation Certificate Pur- BHC Act. Protestants have raised both specific and chase Program (new housing for low-income indi- general concerns about the adequacy of the existing viduals); and CRA programs of AMCORE. Based on a review of the (5) Illinois Homestart Mortgage Partnership (linked entire record of performance by AMCORE, including deposit program offering low-interest mortgage the information provided by the Protestants and the loans, credit counseling, and flexible underwriting CRA performance examinations by the Rockford criteria for low- and moderate-income homebuyers). Bank's primary regulator, the Board concludes, with respect to convenience and needs considerations under the BHC Act, that the efforts of AMCORE and Dixon to help meet the credit needs of all segments of 8. The average loan amount was approximately $113,000. 9. Protestants allege that Rockford Bank failed to provide conven- the communities served by their subsidiary banks, tional financing, in connection with this program, for the development including the CRA performance records of the releof a supermarket and pharmacy to be located in a low-income area of vant banks, are consistent with approval of this applisouthwest Rockford. In response to Protestants' allegations, Rockford Bank has submitted its credit analysis of this project. The Board cation.10 also notes that Rockford Bank has participated in the Economically Targeted Investment Program, formerly the Linked Deposit Program, to fund other projects, in the aggregate amount of $1.1 million. These projects included the rehabilitation of apartment units for low-income 10. Protestants have requested information regarding attendance at tenants, refinancing an emergency shelter for adolescent women who a public hearing, and the Board has treated these comments as a are pregnant or have children, and upgrading a tire rubber recycling request that the Board hold a public hearing or meeting on this facility. In light of all of the facts of record, the Board does not believe application. However, the Board is not required under section 3 of the that the decision of the Rockford Bank to refrain from participating in BHC Act to hold a public meeting or hearing unless the primary funding the supermarket and pharmacy project identified by Protes- supervisor for the bank to be acquired does not approve the proposal. tants indicates that the Rockford Bank has failed to help meet the In this case, the primary supervisor for Bank has not objected to this credit needs of its community. proposal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

932 Federal Reserve Bulletin • December 1992 Other Considerations panies within the meaning of the Bank Holding Company Act ("BHC Act"), have applied for the Board's Considerations relating to the financial and managerial approval under section 3 of the BHC Act resources and future prospects of AMCORE, its sub- (12 U.S.C. § 1842) to acquire Team Bancshares, Inc., sidiary banks, and Bank, and other factors required to Dallas, Texas ("Team Bancshares"), and its wholly be reviewed by the Board under the BHC Act also are owned subsidiary, Team Bancshares II, Inc., Wilmconsistent with approval of this proposal. ington, Delaware ("Team II") (together, "Team"), Based on the foregoing and other facts of record, the and thereby indirectly acquire Team's subsidiary Board has determined that the application should be, bank, Team Bank, Fort Worth, Texas.1 and hereby is, approved. The Board's approval of this Notice of the application, affording interested pertransaction is specifically conditioned upon compli- sons an opportunity to submit comments, has been ance with the commitments made by AMCORE in published (57 Federal Register 32,219 (1992)). The connection with this application. For purposes of this time for filing comments has expired, and the Board action, all these commitments are conditions imposed has considered the application and all comments rein writing by the Board and, as such, may be enforced ceived in light of the factors set forth in section 3(c) of in proceedings under applicable laws. The transaction the BHC Act. approved in this Order shall not be consummated Banc One, with total deposits of $43.9 billion, conbefore the thirtieth calendar day following the effective trols banking subsidiaries in Ohio, Indiana, Michigan, date of this Order, or later than three months after the Wisconsin, Illinois, Texas, and Kentucky.2 Banc One effective date of this Order, unless such period is operates one subsidiary bank in Texas, Bank One extended for good cause by the Board or by the Texas, N.A., Dallas, Texas ("BOT"). BOT is the Federal Reserve Bank of Chicago, pursuant to dele- third largest commercial banking organization in gated authority. Texas, controlling $13.6 billion in deposits, represent- By order of the Board of Governors, effective ing 8.1 percent of total deposits in commercial banks in October 26, 1992. Texas. Team Bank is the fifth largest commercial banking organization in Texas, controlling $5.4 billion Voting for this action: Chairman Greenspan and Governors in deposits, representing 3.2 percent of total deposits Mullins, Angell, Kelley, Lindsey, and Phillips. Absent and in commercial banks in the state. Upon consummation not voting: Governor La Ware. of this proposal, Banc One would become the second largest commercial banking organization in the state, JENNIFER J. JOHNSON controlling $19 billion in deposits, representing 11.3 Associate Secretary of the Board percent of total deposits in commercial banking organizations in Texas. Banc One Corporation Columbus, Ohio Competitive, Financial, Managerial and Supervisory Considerations Banc One Texas Corporation Columbus, Ohio Banc One and Team compete in eight Texas banking markets.3 The Board has considered the competitive Order Approving the Merger of Bank Holding effects of the proposal on depository institutions in Companies each of these markets.4 Upon consummation, all banking markets would remain moderately concentrated or Banc One Corporation, and its wholly owned subsidunconcentrated as measured by the Herfindahliary, Banc One Texas Corporation, both of Columbus, Ohio (together, "Banc One") and bank holding com- 1. Banc One will acquire Team Bancshares through the merger of Team Bancshares and Team II into Banc One Texas Corporation. Banc One Texas Corporation will continue as a second-tier subsidiary Under its rules, the Board may, in its discretion, hold a public of Banc One Corporation. hearing or meeting on an application to clarify factual issues related to 2. State data are as of December 31, 1991; market data are as of the application and to provide an opportunity for testimony, if June 30, 1990. appropriate. 12 U.S.C. §§ 262.3(e) and 262.25(d). In the Board's 3. These markets are: Austin, Dallas, Fort Worth, Houston, view, all interested parties have had ample opportunity to present Longview, Sherman-Denison, Williamson, and Wichita Falls. written submissions, and have submitted substantial written com- 4. In this context, depository institutions include commercial banks, ments. In light of these submissions and all the facts of record, the savings banks, and savings associations. The Board previously has Board has determined that a public meeting or hearing is not necessary indicated that thrift institutions have become, or have the potential to to clarify the factual record in these applications, or is otherwise become, major competitors of commercial banks. See Midwest Finanwarranted in this case. Accordingly, the request by Protestants for a cial Group, 75 Federal Reserve Bulletin 386 (1989); National City public meeting or hearing on this application is hereby denied. Corporation, 70 Federal Reserve Bulletin 743 (1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 933 Hirschman Index ("HHI").5 After considering the moderate-income neighborhoods, consistent with the competition offered by other depository institutions in safe and sound operation of such institution," and to the market, the number of competitors remaining in take this record into account in its evaluation of bank the market, the increase in concentration, and the holding company applications.7 other facts of record, the Board has concluded that In connection with this application, the Board has consummation of the proposal would not result in a received comments that support and comments that significantly adverse effect on competition in these or oppose the proposal. For example, some commenters any other relevant banking markets.6 have commended the CRA efforts of Banc One and The financial and managerial resources, and future Team Bank in the Dallas community, especially in the prospects of Banc One, Team, and their respective area of small and minority-owned businesses in the subsidiaries, and the other supervisory factors the Southern Dallas community. Several commenters also Board must consider under section 3 of the BHC Act, support Banc One's current CRA activities and beare consistent with approval of this proposal. lieve that Banc One is building an effective relationship with low- and moderate-income neighborhoods.8 Convenience and Needs Considerations Other commenters ("Protestants") have criticized the CRA record of performance of Banc One and In considering the convenience and needs of the Team Bank as insufficient in meeting the need for communities to be served by these institutions under credit and deposit services in low- and moderatesection 3 of the BHC Act, the Board has taken into income and minority neighborhoods.9 Specifically, account the record of the subsidiary banks of BOT and Protestants allege that BOT has an inadequate record Team under the Community Reinvestment Act in the following areas: (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA re- (1) Lending under government-insured programs quires the federal financial supervisory agencies to such as the FHA, VA and SBA; encourage financial institutions to help meet the credit (2) Locating branches in low- and moderate-income needs of the local communities in which they operate neighborhoods; and consistent with the safe and sound operation of such (3) Delineating its service community narrowly institutions. To accomplish this end, the CRA requires enough to permit effective credit services to lowthe appropriate federal supervisory authority to "as- and moderate-income neighborhoods. sess the institution's record of meeting the credit needs of its entire community, including low- and In addition, Protestants believe that Team Bank's performance has been inadequate in: (1) Meeting the credit needs of low- and moderateincome neighborhoods in Dallas County ; and 5. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the (2) Ascertaining the need for and publicizing the post-merger HHI is above 1800 is considered to be highly concen- availability of mortgage loans. trated. The Justice Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post- Protestants also allege, on the basis of data reported merger HHI is at least 1800 and the merger increases the HHI by more under the Home Mortgage Disclosure Act than 200 points. The Justice Department has stated that the higher than normal HHI thresholds for screening bank mergers for anticom- ("HMDA"), that subsidiary banks of Banc One and petitive effects implicitly recognize the competitive effect of limited- Team Bank do not make a sufficient number of loans in purpose lenders and other non-depository financial entities. predominately minority communities and have a high 6. Consummation of the proposal would result in the following post-merger shares of market deposits (market share data are based on rate of denying loan applications from minority borcalculations in which the deposits of thrifts are included at 50 percent) rowers.10 and changes in the HHI: (1) Austin market—18.8 percent with an increase of 173 points to 12% points; (2) Dallas market—19.2 percent with an increase of 118 points to 1106 points; 7. 12 U.S.C. § 2903. (3) Fort Worth market—22.8 percent with an increase of 260 points 8. The Southern Dallas Development Corporation, The Minority to 953 points; Opportunity News ("TMON"), and the Malcolm X Community (4) Houston market—11.5 percent with an increase of 27 points to Council ("MXCC") commented favorably upon BOT's CRA record. 816 points; 9. Rainbow Bridge, Inc. has filed comments relating to Banc One (5) Longview market—21.0 percent with an increase of 167 points to and Team Bank. Comments received from TMON and MXCC raise 1106 points; issues related to Team Bank. (6) Sherman-Denison market—23.2 percent with an increase of 251 10. Protestants also suggest that BOT's staff and management points to 1107 points; should reflect the ethnic diversity of its local community. While the (7) Williamson market—3.5 percent with an increase of 6 points to Board fully supports affirmative programs designed to promote equal 777; and opportunity in every aspect of a bank's personnel policies and (8) Wichita Falls market—28.5 percent with an increase of 356 practices in the employment, development, advancement, and treatpoints to 1425 points. ment of employees and applicants for employment, the Board believes Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

934 Federal Reserve Bulletin • December 1992 The Board has carefully reviewed the CRA perfor- ment.15 Banc One also has a mortgage subsidiary, mance records of Banc One's subsidiary banks and Banc One Mortgage Corporation, which assists affili- Team Bank, as well as Protestants' comments and ates by offering specialized mortgage products de- Banc One's responses to those comments, in light of signed for low- and moderate-income applicants. Banc the CRA, the Board's regulations, and the Statement One's corporate CRA Research Division assists Banc of the Federal Financial Supervisory Agencies Re- One's subsidiary banks in collecting and analyzing garding the Community Reinvestment Act ("Agency lending data to monitor the distribution of loan prod- CRA Statement")." ucts throughout their delineated market areas. BOT's CRA officer and other officers periodically report to Record of Performance Under the CRA BOT's board of directors on progress made under the bank's CRA program in meeting the credit needs of all A. CRA Performance Examinations its communities, including low- and moderate-income areas. The Agency CRA Statement provides that a CRA examination is an important and often controlling C. Ascertainment and Marketing factor in the consideration of an institution's CRA record and that these reports will be given great weight BOT annually develops a plan that includes specific in the applications process.12 The Board notes that programs for identifying banking needs in each of its BOT and Team Bank have received "satisfactory" markets. Findings made pursuant to the plan are ratings at their most recent examinations for CRA reviewed at the holding company level on a quarterly performance.13 In addition, all of the other sixty sub- basis. BOT also has undertaken activities to ascertain sidiary banks of Banc One have received either "sat- the credit needs of its eighteen markets in Texas.16 For isfactory" or "outstanding" ratings from their primary example, BOT has contacted a broad array of groups supervisors in the most recent examinations of their and individuals including community and neighbor- CRA performance. hood improvement or development organizations, consumer credit organizations, private businesses, re- B. Corporate Policies ligious leaders, members of various ethnic organizations, and housing and other public officials. In addi- The Board recently has concluded that Banc One's tion, several bank offices have established Community corporate CRA policies and procedures contribute to Advisory Councils to provide a method for assessing an effective CRA program,14 and Banc One has com- needs on an ongoing basis. mitted that these policies and procedures will be Banc One markets specific banking products by implemented at Team Bank. These policies include advertising on television, radio, and in print. In addimonitoring CRA performance at the holding company tion, BOT has taken several steps to target its marketlevel through quarterly reports from subsidiary banks ing to minority and low- and moderate-income areas of that are submitted to Banc One's corporate CRA its community. BOT conducts advertising campaigns Committee. in low-and moderate-income areas by the use of direct Banc One also has established holding company mail, flyers placed on door knobs, and specialized subsidiaries that assist banks in the Banc One system print. The types of credit advertised in these targeted in their CRA programs. For example, Banc One has a campaigns include home-improvement and other corporate Community Development Corporation housing loans, and loans related to used car, debt ("CDC") with resources to assist all bank affiliates in consolidation, and income tax payments. As part of financing projects designed to promote community these campaigns, Spanish language materials are used welfare, housing availability and economic develop- where appropriate.17 BOT also conducts public education seminars in both English and Spanish to instruct individuals on the home buying process in general and that the bank's general personnel practices are beyond the scope of 15. To date, the CDC has provided $18 million in equity for factors that may be assessed under the CRA. low-income housing projects utilizing the low-income housing tax 11. 54 Federal Register 13,732 (1989). credit. 12. 54 Federal Register 13,745 (1989). 16. The most recent performance examination by the OCC noted 13. BOT received a satisfactory rating by the Office of the Comp- certain markets, which are not the subject of Protestants' comments, troller of the Currency, its primary federal supervisor, as of March 31, in which BOT's ascertainment efforts could be improved. The Board 1991. Team Bank received a satisfactory rating by the FDIC, its expects BOT to take steps to address these issues. primary federal supervisor, as of January 25, 1991. 17. In addition, BOT provides Spanish language instruction for 14. Banc One Corporation, 78 Federal Reserve Bulletin 699, 701-02 certain of its customer contact employees, and provides ATM ma- (1992). chines with Spanish-language screens. 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Legal Developments 935 on how to apply for credit products. The OCC noted of Housing and Community Affairs loans, and parthat BOT's marketing efforts have been responsive to ticipates in the GE Capital Community Homebuyers identified community needs. Program. BOT has its own program in which it offers Bank One "American Dream" loans. All of these D. Lending and Other Activities credit products are offered through BOT's affordable lender program. BOT has instituted or participates in a range of BOT established a small business lending unit at the programs designed to provide a variety of credit end of 1991 that targets low- and moderate-income products to low- and moderate-income borrowers. census tracts. In 1992, $8.5 million of the $12.3 million BOT employs eight lenders to originate loans under in loans extended by the unit have been in low- and its affordable lender program. In Dallas, a total of moderate-income census tracts. Approval rates in five employees (two loan officers) are employed to both upper income and low- and moderate-income originate and process mortgage loans in low- and tracts are approximately equal. BOT is the largest moderate-income areas of Dallas. In 1991, through contributor to the Southern Dallas Development Fund its affordable housing lender program, BOT made 99 and also participates as a substantial lender.20 In mortgage loans, for a total of $4 million, in low- and addition, BOT is a certified lender in the Dallas/Ft. moderate-income areas, most of which were in South Worth Minority and Women Owned Business Consor- Dallas. In 1992, BOT has made 150 loans for a total tium. BOT has also organized a task force to work of $6.6 million in these same areas. BOT also has with the Association of General Contractors to assist played a leading role in the establishment and fund- small contractors to obtain contracts through a "big ing of the Dallas Affordable Housing Partnership, brother" program. which seeks to develop housing opportunities for low-income residents of Dallas. E. Branch Offices and Service Area BOT has responded to ascertained needs for housing-related lending in local communities with specific The OCC's examination noted that BOT is seeking to programs. For example, BOT developed a program to expand its network of branch offices. Since January provide loans for closing costs as part of an "urban 1990, BOT has acquired branch offices in transactions homesteading" program in Abilene. In Houston and involving failed institutions, and this program has several other markets, BOT promoted the availability resulted in expansion into previously unserved or of home improvement loans with longer than normal underserved low- and moderate-income areas in Dalterms (fifteen years) and lower than normal minimum las. For example, BOT has opened, through acquisiincome limits in response to a perceived need for those tion or de novo, two new offices in Dallas and one in loans. In San Antonio, BOT worked with the Eastside Houston in low- and moderate-income areas of those Development Council to provide purchase and reha- cities. BOT now has a total of six offices in low- and bilitation loans for homes held by HUD and the RTC. moderate-income areas of Dallas. BOT also supports more than a dozen other neighbor- The OCC's examination also concluded that BOT's hood development groups, several of which are lo- service area was generally reasonable and that none of cated in Dallas.18 the community delineations excludes low- and moder- In addition, BOT has become recertified within the ate-income neighborhoods. In some areas, however, last two years to issue VA and FHA loans after these examiners noted that BOT's delineated market was certifications lapsed under prior owners of its banks. geographically larger than its existing resources could BOT also offers Fannie Mae/Community Homebuyer effectively serve.21 BOT has revised its market delinloans. BOT's mortgage company affiliate is now eations in response to its most recent CRA examinaoffering, on a limited basis, the HUD 203(k) pur- tion by the OCC, and has stated to the OCC that it will chase-rehabilitation loan program.19 BOT also offers make additional revisions as further acquisitions are Texas Veterans Land Board and Texas Department completed. 18. For example, BOT supports Dallas Adopt-A-Block; the Dallas Center for Nonprofit Management; the Downtown Family Shelter of 20. BOT has loaned $220,000 as participations in four Southern Dallas; Inter-Faith Housing of Dallas; Consumer Credit Counseling of Dallas Development Corporation ("SDDC")-sponsored projects and Greater Dallas; the Nonprofit Loan Center of Dallas; and the Oak Cliff made an $800,000 investment in a multi-bank community development Development Corporation of Dallas. corporation sponsored by the SDDC that provides debt and equity 19. BOT's loan volume under all governmental guaranteed loan financing to small and minority-owned businesses. programs has increased as a result of its marketing efforts. The Board 21. Examiners also found that BOT made a concerted effort to serve expects BOT to continue its efforts under these programs and will extensive low- and moderate-income neighborhoods in some market review its progress in future applications. areas regardless of the locations of its offices. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

936 Federal Reserve Bulletin • December 1992 F. HMD A Data and Lending Practices borrowers proposed to be denied. Through August 1992, BOT has exceeded its total 1991 lending to low- The Board has reviewed the 1990 and 1991 HMDA and moderate-income areas in Dallas under this prodata reported by subsidiaries of Banc One and Team, gram by more than 50 percent. In addition, although and comments from the commenters regarding these the number of housing-related loans made by Banc data. Data cited by the Protestants indicate some One in the Dallas MSA increased 52 percent from 1990 disparities in rates of housing-related loan applica- to 1991, the number of housing-related loans made to tions, and in approvals and denials that vary by racial black borrowers in the Dallas MSA increased more or ethnic group in certain areas served by BOT and than 70 percent over the same period. Team. Because all banks are obligated to ensure that their G. Conclusion Regarding Convenience and lending practices are based on criteria that assure not Needs Factors only safe and sound lending, but also assure equal access to credit by creditworthy applicants regardless The Board has carefully considered all of the facts of of race, the Board is concerned when the record of an record, including the comments filed in this case, in institution indicates disparities in lending to minority reviewing the convenience and needs factors under the applicants. The Board recognizes, however, that BHC Act. Based on a review of the entire record of HMDA data alone provide only a limited measure of performance, including information provided by comany given institution's lending in the communities that menters supporting and opposing the proposal and the the institution serves. The Board also recognizes that performance examinations by the banks' primary reg- HMDA data have limitations that make the data an ulators, the Board believes that the efforts of Banc inadequate basis, absent other information, for con- One and Team to help meet the credit needs of all clusively determining whether an institution has en- segments of the communities served by their subsidgaged in illegal discrimination on the basis of race or iary banks, including low- and moderate-income ethnicity in making lending decisions. neighborhoods, are consistent with approval. The most recent examinations for CRA compliance The Board recognizes that the record compiled in and performance conducted by bank supervisory this application points to some areas for improvement agencies found no evidence of illegal discrimination at in the CRA performance of BOT and Team Bank. The BOT or Team.22 In the case of BOT, examiners Board expects Banc One to continue its progress in concluded that the bank affirmatively encourages addressing the housing-related credit needs of lowcredit applications from all segments of the commu- and moderate-income and minority neighborhoods in nity, including low- and moderate-income neighbor- its service communities, and to implement fully the hoods, for all types of credit offered. The examination CRA initiatives and commitments discussed in this report of BOT also indicated that in no instance were Order and contained in its application. Banc One's low- and moderate-income areas being excluded from progress in these areas will be monitored by the obtaining loans, and that BOT's efforts to increase Federal Reserve Bank of Cleveland and in future lending were reasonable and appropriate. applications requiring the Board's review of its CRA HMDA data for 1991 show that Team and BOT have performance record.23 made progress in improving their lending records in low- and moderate-income neighborhoods, including the Dallas MSA. In addition, BOT's housing-related lending in these Dallas neighborhoods has increased 23. Protestants have requested a public hearing or meeting on the significantly under its affordable housing lender pro- issues raised in their comments, including the role of race and income in lending in South Dallas. Section 3(b) of the BHC Act does not gram. This program features flexible underwriting require the Board to hold a hearing on an application unless the standards and a review by a regional underwriting appropriate supervisory authority for the bank to be acquired makes a timely written recommendation of denial of the application. In this manager of all mortgage applications from minority case, the Texas State Banking Commissioner has not recommended denial of the proposal. Generally, under the Board's rules, the Board may, in its discretion, 22. Examiners noted some violations of anti-discrimination laws hold a public hearing or meeting on an application to clarify factual involving procedures and income calculations which had not ad- issues related to the application and to provide an opportunity for versely affected any individual borrowers. The OCC examiners rec- testimony, if appropriate. 12 U.S.C. §§ 262.3(e) and 262.25(d). The ommended uniform policies, review procedures and forms for all the Board has carefully considered this request. In the Board's view, BOT branches to address these issues, and BOT management has Protestants have had ample opportunity to present written submiscommitted to undertake sufficient actions to preclude the recurrence sions, and Protestants have submitted written comments that have of these violations. The OCC has advised the Board that Banc One is been considered by the Board. Further, Protestants have not identitaking appropriate actions to address recommendations made by the fied facts that are material to the Board's decision and that are in OCC in BOT's most recent CRA performance examination, and that dispute. Therefore, the Board has determined that a public meeting or these actions support a satisfactory CRA performance record at BOT. hearing is not necessary to clarify the factual record in this applica- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 937 Based on the foregoing, including the conditions and banking organization in South Carolina, controlling commitments described in this Order and those made deposits of $283.6 million, representing approximately in the application, and all of the facts of record, the 1.5 percent of the total deposits in commercial banking Board has determined that the application should be, organizations in the state.2 ComSouth is the 21st and hereby is, approved. The Board's approval of this largest commercial banking organization in South proposal is specifically conditioned on compliance by Carolina, controlling deposits of $83.3 million, repre- Banc One and its subsidiaries with these conditions senting less than one percent of the total deposits in and commitments. For the purposes of this action, commercial banking organizations in the state. commitments and conditions will both be considered The Board has carefully reviewed comments filed by conditions imposed in writing and, as such, may be some members of ComSouth's board of directors enforced in proceedings under applicable law. opposing this proposal ("Protestants"). Protestants The acquisition shall not be consummated before the assert that the presence of CFC as a significant minorthirtieth calendar day after the effective date of this ity shareholder would increase dissension within the Order, or later than three months after the effective ComSouth board of directors. Protestants also believe date of this Order, unless such period is extended for that such an investment would impair the ability of good cause by the Board or by the Federal Reserve Bank ComSouth to obtain a more desirable merger partner of Cleveland, acting pursuant to delegated authority. and to raise capital. By order of the Board of Governors, effective The Board previously has approved the acquisition October 28, 1992. by a bank holding company of less than a controlling interest in a bank, noting that "nothing in section 3(c) Voting for this action: Vice Chairman Mullins and Gover- of the [BHC] Act requires denial of an application nors Angell, Kelley, LaWare, Lindsey, and Phillips. Absent solely because a bank holding company proposes to and not voting: Chairman Greenspan. acquire less than a controlling interest in a bank or bank holding company."3 CFC has indicated that it JENNIFER J. JOHNSON will remain a passive investor in ComSouth following Associate Secretary of the Board consummation of this proposal, and CFC has made commitments of the type relied on by the Board in Carolina First Corporation previous cases that ensure that CFC will not exercise Greenville, South Carolina a controlling influence over ComSouth.4 These commitments include a commitment not to seek or accept Order Approving Acquisition of Shares of a Bank any representation on the board of directors of Com- Holding Company South, and a commitment not to attempt to influence the management or policies of ComSouth. CFC may Carolina First Corporation, Greenville, South Caronot, therefore, participate in the deliberation or decilina ("CFC"), a bank holding company within the sionmaking of the ComSouth board of directors. In meaning of the Bank Holding Company Act (the addition, CFC may not participate in the evaluation or "BHC Act"), has applied for the Board's approval acceptance of future merger proposals involving Comunder section 3(a)(3) of the BHC Act South other than through the exercise of its voting (12 U.S.C. § 1842(a)(3)) to acquire up to 9.8 percent of rights as a shareholder of ComSouth. the outstanding voting shares of ComSouth Bank- Protestants have not provided any significant supshares, Inc., Columbia, South Carolina ("Corn- South").1 port for their contention that this investment will interfere with the ability of ComSouth to raise capital, Notice of the application, affording interested perand the Board's experience in evaluating other, simisons an opportunity to submit comments, has been published (57 Federal Register 36,649 (1992)). The time for filing comments has expired, and the Board has considered the application and all comments re- 2. All banking data are as of June 30, 1992; state ranking data are as of December 31, 1991. ceived in light of the factors set forth in section 3(c) of 3. United Counties Bancorporation, supra; Marine Midland Banks, the BHC Act. CFC is the tenth largest commercial Inc., 75 Federal Reserve Bulletin 455 (1989); Midlantic Banks, Inc., 70 Federal Reserve Bulletin 776 (1984). The Board has noted in these orders that the requirement in section 3(a)(3) of the BHC Act that the Board's approval be obtained before a bank holding company acquires tion, or otherwise warranted in this case, and the request for a public more than 5 percent of the voting shares of a bank also suggests that meeting or hearing on this application is denied. Congress contemplated the acquisition by bank holding companies of between 5 and 25 percent of the voting shares of banks. 1. ComSouth controls two subsidiary banks, Commercial Bank of 4. Summit Bancorp, Inc., 77 Federal Reserve Bulletin 952 (1991); the South, N.A., Columbia, South Carolina, and Bank of Charleston, United Counties Bancorporation, 75 Federal Reserve Bulletin 114 N.A., Charleston, South Carolina. (1989). These commitments are set forth in the Appendix. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

938 Federal Reserve Bulletin • December 1992 lar, proposals under the BHC Act has not indicated, as effective date of this Order, unless such period is a general matter, any diminished capacity to raise extended for good cause by the Board or by the capital in other cases involving passive minority inves- Federal Reserve Bank of Richmond, acting pursuant tors.5 Based on the facts of record and CFC's commit- to delegated authority. ments, the Board has concluded that CFC would not By order of the Board of Governors, effective acquire control or the ability to exercise a controlling October 26, 1992. influence over ComSouth upon consummation of this proposal.6 Voting for this action: Chairman Greenspan and Governors CFC and ComSouth do not operate bank subsidiar- Mullins, Angell, Kelley, Lindsey, and Phillips. Absent and ies in the same banking markets. Moreover, CFC has not voting: Governor La Ware. committed that there will be no officer or director JENNIFER J. JOHNSON interlocks between CFC and ComSouth, that the in- Associate Secretary of the Board vestment by CFC in ComSouth will remain passive, and that CFC will not act alone or in concert with any other entity to control ComSouth. On the basis of the Appendix record, the Board concludes that consummation of this proposal would not have a significantly adverse As part of this proposal, CFC has committed that it effect on competition in any relevant banking market.7 will not, without the Board's prior approval: In light of all the facts of record, the Board concludes that the financial and managerial resources and (1) Exercise or attempt to exercise a controlling influfuture prospects of CFC and ComSouth and their ence over the management or policies of ComSouth or subsidiaries, and other factors the Board must con- its bank subsidiaries; sider under section 3 of the BHC Act, are consistent (2) Have or seek to have any employees or represenwith approval of this application. Considerations re- tative serve as an officer, agent or employee of Comlating to the convenience and needs of the communi- South or its bank subsidiaries; ties to be served by CFC's and ComSouth's subsidiary (3) Take any action causing ComSouth or its bank banks also are consistent with approval. subsidiaries to become a subsidiary of Carolina First; Based on the foregoing, including the conditions and (4) Acquire or retain shares that would cause the commitments described in this Order and those made combined interest of Carolina First and its officers, in the application, and all of the facts of record, the directors and affiliates to equal or exceed 25% of the Board has determined that the application should be, outstanding voting shares of ComSouth; and hereby is, approved. The Board's approval of this (5) Propose a director or slate of directors in opposiproposal is specifically conditioned on compliance by tion to a nominee or slate of nominees proposed by the CFC and its subsidiaries with all of the conditions and management or board of directors of ComSouth; commitments referenced in this order or made in the (6) Attempt to influence the dividend policies or pracapplication as supplemented. The commitments and tices of ComSouth or its bank subsidiaries; conditions relied on in reaching this decision are (7) Solicit or participate in soliciting proxies with conditions imposed in writing by the Board in connec- respect to any matter presented to the shareholders of tion with its findings and decision, and may be en- ComSouth; forced in proceedings under applicable law. (8) Attempt to influence the loan and credit decisions The transaction shall not be consummated before or policies of ComSouth and its bank subsidiaries, the the thirtieth calendar day following the effective date pricing of services, any personnel decision, the locaof this Order, or later than three months after the tion of any officers, branching, the hours of operation, or similar activities of ComSouth and its bank subsidiaries; 5. See Summit Bancorp, Inc., and United Counties Bancorporation, (9) Dispose or threaten to dispose of shares of Comsupra. See also, The Summit Bancorporation, 75 Federal Reserve Bulletin 712 (1989). South in any manner as a condition of specific action 6. The Office of the Comptroller of the Currency, the primary or nonaction by ComSouth; regulator of the subsidiary banks of ComSouth, has informed the (10) Enter into any other banking or nonbanking Board that it has no objection to approval of this proposal. 7. The Board has previously noted that noncontrolling interests in transactions with ComSouth, except that Carolina competing banks or bank holding companies may raise serious ques- First may establish and maintain deposit accounts with tions under the BHC Act. The Board believes that one company need not acquire control of another in order to substantially lessen compe- bank subsidiaries of ComSouth, provided that the tition between them, and that the specific facts of each case will aggregate balances of all such accounts do not exceed determine whether the minority investment in a company will be $500,000 and that the accounts are maintained on anticompetitive. See Sun Banks, Inc., 71 Federal Reserve Bulletin 243 (1985). substantially the same terms as those prevailing for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 939 comparable accounts of persons unaffiliated with resenting 9.0 percent of the total deposits in commer- ComSouth; or cial banking organizations in the state.2 This proposal (11) Seek or accept representation on the board of represents a reorganization of FIBM's subsidiary directors of ComSouth. banks and the establishment of new branches. Accordingly, consummation of the proposal would not have a First Interstate BancSystem of Montana, Inc. significantly adverse effect on competition in any Billings, Montana relevant banking market. Order Approving Acquisition of Bank, Membership Considerations Under the Convenience and Needs in the Federal Reserve System, and Merger of Banks Factor First Interstate BancSystem of Montana, Inc., Bill- A. Colstrip Bank ings, Montana ("FIBM"), a bank holding company within the meaning of the Bank Holding Company Act In considering applications under section 3 of the BHC ("BHC Act"), has applied under section 3 of the BHC Act, the Bank Merger Act and the Federal Reserve Act (12 U.S.C. § 1842), to acquire First Interstate Act, the Board must consider the convenience and Bank of South Missoula, N.A., a de novo bank needs of the community to be served, and take into ("South Missoula Bank"). A subsidiary bank of account the records of the relevant depository institu- FIBM, First Interstate Bank of Commerce, Billings, tions under the Community Reinvestment Act Montana ("Billings Bank"), also has applied pursuant (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA reto section 9 of the Federal Reserve Act quires the federal financial supervisory agencies to (12 U.S.C. § 321) for membership in the Federal Re- encourage financial institutions to help meet the credit serve System. In addition, Billings Bank has applied needs of the local communities in which they operate pursuant to section 18(c) of the Federal Deposit Insur- consistent with the safe and sound operation of such ance Act (12 U.S.C. § 1828(c)) (the "Bank Merger institutions. To accomplish this end, the CRA requires Act") to merge South Missoula Bank and its six other the appropriate federal supervisory authority to "assubsidiary banks1 into Billings Bank, and to establish sess the institution's record of meeting the credit branches at the present offices of these banks listed in needs of its entire community, including low- and the Appendix pursuant to section 9 of the Federal moderate-income neighborhoods, consistent with the Reserve Act. safe and sound operation of such institution," and to Notice of the applications, affording interested per- take this record into account in its evaluation of bank sons an opportunity to submit comments, has been holding company applications.3 published (57 Federal Register 39,203 (1992)) and In October 1991, the Board denied an application by given in accordance with applicable law. As required FIBM to merge with an affiliated holding company on by the Bank Merger Act, reports on the competitive the basis of the record of performance under the CRA effects of the merger were requested from the United of one of FIBM's subsidiary banks, Colstrip Bank.4 States Attorney General, the Office of the Comptroller The Board found that deficiencies in Colstrip Bank's of the Currency ("OCC"), and the Federal Deposit record of meeting the credit needs of its community, Insurance Corporation ("FDIC"). The time for filing particularly on the Northern Cheyenne Indian Resercomments has expired, and the Board has considered vation ("Reservation"), had continued through conthe applications and all the comments received in light secutive CRA performance examinations by Colstrip of the factors set forth in section 3(c) of the BHC Act, Bank's primary supervisor, the FDIC. The Board also the Bank Merger Act and the Federal Reserve Act. found that FIBM had not taken sufficient steps to Billings Bank and all of the other banks to be merged address these deficiencies. The Colstrip Order noted into Billings Bank, except for the newly chartered that the denial of FIBM's application was without South Missoula bank, are subsidiaries of FIBM. FIBM prejudice to future applications by FIBM at such time is the third largest commercial banking organization in as Colstrip Bank's CRA record of performance was in Montana, controlling deposits of $576.7 million, rep- place and that its policies and programs were working well. 1. These banks are: First Interstate Bank of Missoula, N.A., Missoula; First Interstate Bank of Hardin, Hardin ("Hardin Bank"); First Interstate Bank of West Billings, Billings; First Interstate Bank 2. All banking data are as of June 30, 1992. of Miles City, Miles City; First Interstate Bank of Billings Heights, 3. 12 U.S.C. § 2903. Billings; and First Interstate Bank of Colstrip, Colstrip ("Colstrip 4. First Interstate BancSystems of Montana, Inc., 77 Federal Bank"), all in Montana. Reserve Bulletin 1007 (1991) ("Colstrip Order"). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

940 Federal Reserve Bulletin • December 1992 The Colstrip Order outlined specific aspects of Col- of the Reservation aware of its credit products and strip Bank's CRA performance that the Board be- services. In addition, a bank loan officer visits the lieved should be addressed, including Colstrip Bank's Reservation on a monthly basis to take loan applicadelineation of its service community, ascertainment tions and to provide general assistance to potential and marketing efforts related to the Reservation, and borrowers. record of offering and extending credit to the residents Colstrip Bank has increased the amount of lending of the Reservation. For example, the Board noted that to Reservation residents since its lending activities the bank had excluded the Reservation from its service were reviewed by the FDIC and the Board. For the area, and had only recently undertaken some steps to first two quarters in 1992, Colstrip Bank overall made increase its contacts in order to ascertain the credit $315,000 in new loans to Reservation borrowers, comneeds of the residents of the Reservation. In addition, pared to total lending in 1991 of $309,000. Agricultural Colstrip Bank's efforts to market credit-related ser- loans to Reservation borrowers during this same pevices to the residents of the Reservation were found to riod total $120,000, compared to $53,000 in total agribe minimal. The Board also found only nominal cultural lending in 1991. amounts of lending to residents of the Reservation, Colstrip Bank also has shown some improvement in including housing-related loans and government spon- the types of credit products it offers to borrowers on sored lending programs. the Reservation. The bank has started making FHA The Board believes that the ability of Colstrip Bank home improvement loans on the Reservation and has to demonstrate that its CRA record of performance is started accepting loan applications under the FHA 248 in place and that its programs and policies are working loan program which lessens restrictions under federal well is an important consideration in light of the law regarding liens on real property located on the Board's findings in the Colstrip Order. The record of Reservation. Colstrip Bank also actively supports sevthese applications reflects additional steps taken by eral programs designed to benefit the Reservation's Colstrip Bank to address the deficiencies noted in the small businessmen, including the Circle Banking Proj- Colstrip Order. ect and MicroBusiness Finance Program. Colstrip Bank has revised its community delineation FIBM and Colstrip Bank have committed to take to include all of the Reservation and FIBM has com- additional steps to enhance the CRA record of performitted that it will not amend the community delinea- mance regarding the Reservation. These steps include tion for any of its banks or branches without the prior establishing a liaison committee that will meet quarapproval of the Federal Reserve Bank of Minneapolis. terly, increasing its participation in government lend- In addition, Colstrip Bank has expanded its ascertain- ing programs, providing technical assistance to small ment efforts regarding the Reservation through a num- businesses, and establishing flexible lending criteria ber of steps that include direct mail surveys, commu- for loans. In addition, FIBM and Colstrip Bank have nity and consumer panel meetings, and presentations set a goal of $4 million in new lending to Reservation to residents of the Reservation. Colstrip Bank officers residents over the next five years. and directors have also met with local community and On the basis of these and other facts of record, the business organization such as the Northern Cheyenne Board concludes that the CRA performance record of Livestock Association and the Northern Cheyenne Colstrip Bank is now consistent with approval under Chamber of Commerce.5 Other outreach efforts that the convenience and needs factor. The Board expects Colstrip Bank is arranging include intercultural train- FIBM to continue its progress in improving this pering for the staff, officers and directors of the bank. formance and to comply with all commitments regard- Colstrip Bank's board of directors has convened its ing its CRA activities on the Reservation. Upon conmeetings on the Reservation to permit discussions summation of this proposal, Colstrip Bank will with residents.6 become a branch of a state member bank, and the Marketing efforts for the Reservation have been Federal Reserve Bank of Minneapolis will have superimproved by a number of activities. For example, visory authority over these activities and will monitor Colstrip Bank now uses direct mailings and other FIBM's progress and compliance. In addition, the traditional marketing techniques to make the residents Board will closely review this record in future applications by FIBM that require consideration of its CRA performance record. 5. An officer of Colstrip Bank currently serves as treasurer for the Chamber of Commerce which focuses on economic development B. Hardin and Billings Banks issues related to the Reservation. 6. A Reservation resident and Northern Cheyenne tribal member serves on the Colstrip Bank board of directors and this director will In reviewing the convenience and needs factor, the continue to serve as a director of Billings Bank following the proposed mergers. Board also has considered comments from the Crow Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 941 Tribal Council and several individuals (collectively, service area includes the Crow Reservation and the "Protestants") critical of the CRA performance of bank's ascertainment activities within this service area Hardin Bank and Billings Bank.7 Protestants allege include calls on customers and non-customers to obgenerally that: tain information concerning credit and deposit needs (1) Hardin Bank has not adequately ascertained the and communicate services available to the local comcredit needs of Crow Tribal members;8 munity. Ascertainment efforts are also conducted (2) Hardin Bank has not provided adequate banking through officer and employee involvement in local services to the Crow Reservation; and community groups. For example, Hardin Bank man- (3) Hardin Bank and the FIBM banks in Billings9 do agement has discussed FHA 248 financing for real not make sufficient loans to Crow Tribal members. estate loans on trust land held by the Bureau of Indian Affairs ("BIA") with both the Cheyenne and Crow The Board has carefully reviewed the CRA perfor- tribal councils. In addition, Hardin Bank has particimance records of Hardin Bank and the Billings banks, pated in workshops in Crow Agency and Hardin for as well as Protestants' comments and the responses of Native American business borrowers. FIBM to those comments, and all of the other relevant Hardin Bank also markets its banking products facts, in light of the CRA, the Board's regulations, and throughout its service area by mixed media advertising the jointly issued Statement of the Federal Financial that includes local television, radio and newspaper. In Supervisory Agencies Regarding the Community Re- addition, Hardin Bank has recently mailed a brochure investment Act ("Agency CRA Statement").10 to Crow Reservation residents describing its services. Initially, the Board notes that both Hardin Bank and After consummation of the proposal, the CRA comthe Billings banks have received a "satisfactory" rating mittees at Hardin Bank and Billings Bank, as well as the for CRA performance from their primary regulators, other subsidiary FIBM banks, will become branch the FDIC or the OCC, in their most recent examina- CRA committees and will meet regularly with Commutions for CRA performance.11 The Agency CRA State- nity Advisory Boards to address CRA concerns. FIBM ment provides that a CRA examination is an important states that the Community Advisory Boards will play a and often controlling factor in the consideration of an central role in identifying community credit needs, institution's CRA record and that these reports will be working with bank and branch management on efforts given great weight in the applications process.12 to address such needs and assessing the success of Ascertainment and Marketing. Hardin Bank's board these efforts. Records of these meetings will be forof directors has formalized a CRA policy and a written warded to FIBM's CRA committee and will be pre- Community Reinvestment Act Goals and Description sented to the Billings Bank's board of directors at each of Needs Ascertainment Program for its ascertainment regular meeting. FIBM's board of directors will comefforts throughout its delineated service area. This municate directly with the Community Advisory Boards and branch management on matters of CRA policy. 7. One commenter has alleged that Billings Bank did not approve a Lending Activities. Lending to residents of the Crow business loan because of (1) her age and sex, and (2) the fact that her Reservation for housing-related, consumer and small corporation was a small business. FIBM has responded that Billings business purposes comprises a substantial percentage Bank denied the loan on the basis of the applicant's financial condition. Based on all the facts of record, including relevant reports of of Hardin Bank's overall lending activity, and the bank examination, the Board concludes that these comments do not war- currently has a number of these types of loans outstandrant denial of these applications. 8. Protestants also allege that Crow Tribal members are inade- ing that were originated to Crow Reservation borrowquately represented on the Hardin Bank's board of directors. Two ers.13 For example, Hardin Bank has 30 home mortgage Crow Tribal members, including the Hardin Bank's president, curand home improvement loans with total balances of rently sit on its board of directors. The Board believes that the adequacy of a group's representation on the board of a bank is approximately $700,000, and 425 consumer loans with generally beyond the scope of factors that are required to be assessed total balances of approximately $1.7 million. Small under the CRA. business loans total 27 with current balances totaling 9. In addition to FIBM's lead Billings Bank, two small FIBM subsidiaries, First Interstate Bank of West Billings ("West Billings approximately $1.1 million. Hardin Bank's outstanding Bank") and First Interstate Bank of Billings Heights ("Billings agricultural loans originated to the Crow Reservation Heights Bank"), are located in Billings, Montana. currently total 107 loans, with total balances of approx- 10. 54 Federal Register 13,742 (1989). 11. The most recent CRA examination by the FDIC for Hardin Bank imately $3.2 million.14 was as of August 1991, and the most recent CRA examination by the OCC for Billings Bank was as of November 1988. In addition, West Billings Bank and Billings Heights Bank were most recently examined by the FDIC as of December 1990. None of these examinations found 13. All FIBM lending data are as of September 1992. any evidence of illegal discriminatory lending practices by these 14. Hardin Bank also has an additional 5 real estate loans for FIBM subsidiary banks. agricultural properties to the Crow Reservation totaling approxi- 12. 54 Federal Register at 13,745. mately $700,000. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

942 Federal Reserve Bulletin • December 1992 FIBM's lending activities in Billings for Crow Res- pursuant to section 9 of the Federal Reserve Act and ervation borrowers are conducted primarily through finds those factors to be consistent with approval. the lead Billings Bank. For example, Billings Bank Based on the foregoing and other facts of record, the currently has 204 consumer loans originated to Crow Board has determined that the applications should be, Reservation borrowers with total balances of approx- and hereby are, approved. This approval is specifically imately $1.2 million. In addition, Billings Bank had conditioned upon compliance by FIBM and its subsidextended 5 agricultural loans totaling approximately iaries with the commitments made in connection with $400,000 to the Crow Reservation.15 these applications. For purposes of this action, all of On the basis of all the facts of record, including all of the commitments and conditions will be considered the comments received and relevant examination re- conditions imposed in writing and, as such, may be ports, the Board believes that the CRA performance enforced in proceedings under applicable law. These records of Hardin Bank and the Billings banks, as well transactions shall not be consummated before the as the other FIBM subsidiary banks, are consistent thirtieth calendar day following the effective date of with approval of these applications.16 this Order, or later than three months after the effective date of this Order, unless such period is extended Other Considerations for good cause by the Board or by the Federal Reserve Bank of Minneapolis, acting pursuant to delegated The Board also concludes that the financial and man- authority. agerial resources and future prospects of FIBM, Bill- By order of the Board of Governors, effective ings Bank, South Missoula Bank, and all the other October 26, 1992. subsidiary banks of FIBM, as well as other factors required to be considered by the Board, are consistent Voting for this action: Chairman Greenspan and Governors with approval under the BHC Act and the Bank Mullins, Angell, Kelley, Lindsey, and Phillips. Absent and Merger Act.17 not voting: Governor La Ware. Billings Bank also has applied under section 9 of the JENNIFER J. JOHNSON Federal Reserve Act to become a member of the Associate Secretary of the Board Federal Reserve System and to establish branches at the present offices of the banks to be merged into Appendix Billings Bank. The Board has considered the factors it is required to consider when reviewing applications Billings Bank will establish the following branches: (1) 101 E. Front Street, Missoula, Montana; 15. The total number of agricultural loans extended by all FIBM affiliates to the Crow Reservation is 125, with total outstanding (2) 402 North Center, Hardin, Montana; balances of approximately $4.6 million. (3) 1115 Main Street, Miles City, Montana; 16. One Protestant has requested that the Board hold a public hearing or meeting to assess further facts surrounding the CRA (4) 730 Main Street, Billings, Montana; performance of FIBM and its subsidiary banks relating to the Crow (5) 2501 Central Avenue, Billings, Montana; Reservation. The Board is not required under the Federal Reserve (6) 12 Cherry Street, Colstrip, Montana; and Act, the Bank Merger Act or the BHC Act to hold a public hearing or meeting in this case. Under the Board's rules, the Board may, in its (7) 3502 Brooks, Missoula, Montana. discretion, hold a public hearing or meeting on an application to clarify factual issues related to the application and to provide an opportunity Meridian Bancorp, Inc. for testimony, if appropriate. 12 U.S.C. §§ 262.3(e) and 262.25(d). The Board has carefully considered this request. In the Board's Reading, Pennsylvania view, interested parties have had a sufficient opportunity to present written submissions, and have submitted written comments that have been considered by the Board. In light of this, the Board has Order Approving Acquisition of a Bank Holding determined that a public meeting or hearing is not necessary to clarify Company the factual record in these applications, or otherwise warranted in this case. Accordingly, the request for a public meeting or hearing on these applications is hereby denied. Meridian Bancorp, Inc., Reading, Pennsylvania ("Me- 17. Several commenters have alleged that shareholders of FIBM ridian"), a bank holding company within the meaning may have violated section 2 of the Crow Indian Allotment Act, 41 Stat. 751 (1920), as amended by 54 Stat. 252 (1940), by purchasing real of the Bank Holding Company Act ("BHC Act"), has estate located on the Crow Reservation. These allegations do not applied for the Board's approval under section 3 of the involve any actions by management on behalf of FIBM banks. In addition, these allegation are subject to ongoing court proceedings BHC Act (12 U.S.C. § 1842) to acquire all of the that will provide the plaintiffs with an adequate remedy if the alleged voting shares of Peoples Bancorp, Inc., Lebanon, misconduct can be established. Based on a review of all the facts of Pennsylvania ("Peoples"), and thereby to acquire record, the Board concludes that these comments do not provide a basis for denying these applications. indirectly Peoples' subsidiary bank, The Peoples Na- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 943 tional Bank of Lebanon, Lebanon, Pennsylvania organization ("depository institution") in the market, ("Peoples Bank"). Meridian's wholly owned subsid- controlling $559 million in deposits in the market, iary state member bank, Meridian Bank, Reading, representing 8.1 percent of total deposits held by Pennsylvania ("Meridian Bank"), also has applied for depository institutions in the market ("market deposthe Board's approval under section 18(c) of the Fed- its").5 Peoples is the tenth largest depository institueral Deposit Insurance Act (the "Bank Merger Act") tion in the market, controlling $131 million in deposits, to merge with Peoples Bank and under section 9 and representing 1.9 percent of market deposits. The marsection 24A of the Federal Reserve Act to establish ket would remain moderately concentrated upon conadditional branches and invest in bank premises.1 summation of the proposal, and the Herfindahl- Notice of the applications, affording interested per- Hirschman Index ("HHI") would increase by 31 sons an opportunity to submit comments, has been points to 1047.6 Thirty-five depository institutions oppublished (57 Federal Register 34,494 (1992)). The erating a total of 235 offices would remain in the time for filing comments has expired, and the Board market. The Board also has sought comments conhas considered these applications and all comments cerning the competitive effects of this proposal from received in light of the factors set forth in section 3(c) the United States Attorney General, the OCC, and the of the BHC Act, the Bank Merger Act, and the Federal FDIC. None of these agencies has provided any Reserve Act.2 As required by the Bank Merger Act, objection to consummation of this proposal nor indireports on the competitive effects of the merger were cated that the proposal would have any significantly requested from the United States Attorney General, adverse competitive effects. the Office of the Comptroller of the Currency After considering the competition offered by other ("OCC"), and the Federal Deposit Insurance Corpo- depository institutions in the market, the number of ration ("FDIC"). competitors remaining in the market, the increase in Meridian, with approximately $11.9 billion in con- concentration as measured by the HHI Index, and solidated assets, controls two subsidiary banks located other facts of record, the Board has concluded that in Pennsylvania and one subsidiary bank located in consummation of the proposal would not result in a Delaware.3 Meridian controls deposits of $9 billion in significantly adverse effect on competition in the Har- Pennsylvania, and is the fourth largest commercial risburg/Lebanon/Carlisle MSA banking market or in banking organization in that state. Peoples, with ap- any other relevant banking markets.7 proximately $143 million in consolidated assets, controls one bank in Pennsylvania. Upon consummation Convenience and Needs Considerations of the transaction, Meridian would remain the fourth largest commercial banking organization in Pennsylva- In considering an application under section 3 of the nia, controlling deposits of approximately $9.1 billion BHC Act, the Bank Merger Act, and the Federal in that state, representing 6.6 percent of deposits in Reserve Act, the Board must consider the convecommercial banks in that state. nience and needs of the communities to be served, and Competitive Considerations 5. Market share data are based on calculations in which the deposits Meridian and Peoples compete directly in the Harris- of thrift institutions are included at 50 percent. The Board previously burg/Lebanon/Carlisle MSA banking market.4 Merid- has indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. Midwest ian is the fifth largest commercial banking or thrift Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Market deposit data are as of June 30, 1991, and have been updated to reflect mergers and acquisitions since that date. 1. Meridian will establish branches at the following locations: 6. Under the revised Department of Justice Merger Guidelines, (1) 8th and Cumberland Streets, Lebanon, Pennsylvania; 49 Federal Register 26,823 (June 29, 1984), a market in which the (2) East Walnut at Cumberland Street, Lebanon, Pennsylvania; post-merger HHI is between 1000 and 1800 is considered moderately (3) North Eighth Street, Lebanon, Pennsylvania; concentrated. The Justice Department has informed the Board that a (4) East Chocolate Avenue and Derry Road, Hershey, Pennsyl- bank merger or acquisition generally will not be challenged (in the vania; and absence of other factors indicating anti-competitive effects) unless the (5) Dutch Way Farm Market Complex, Schaefferstown, Pennsyl- post-merger HHI is at least 1800 and the merger increases the HHI by vania. 200 points. The Justice Department has stated that the higher than 2. The Board has also considered comments filed after the close of normal HHI thresholds for screening bank mergers for anti-competithe comment period. Under the Board's rules, the Board may in its tive effects implicitly recognize the competitive effect of limiteddiscretion take into consideration the substance of such comments. purpose lenders and other non-depository financial entities. 12 C.F.R. 262.3(e). 7. The Board has received comments opposing the proposal on the 3. Asset and state deposit data are as of June 30, 1992. grounds that Meridian would exercise monopoly or near-monopoly 4. The Harrisburg/Lebanon/Carlisle MSA banking market com- power in this local banking market. For the reasons discussed above, prises Cumberland, Dauphin, Lebanon, and Perry Counties in Penn- the Board does not believe that the proposal would result in signifisylvania. cantly anti-competitive effects in any relevant banking market. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

944 Federal Reserve Bulletin • December 1992 take into account the records of the relevant depos- Record of Performance Under the CRA itory institutions under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). The A. CRA Performance Examinations CRA requires the federal financial supervisory agencies to encourage financial institutions to help meet The Agency CRA Statement indicates that decisions the credit needs of the local communities in which by agencies to allow financial institutions to expand they operate consistent with the safe and sound will be made pursuant to an analysis of the institution's operation of such institutions. To accomplish this overall CRA performance and will be based on the end, the CRA requires the appropriate federal super- actual record of performance of the institution. The visory authority to "assess the institution's record of Board also has reviewed the CRA examination records meeting the credit needs of its entire community, of these institutions.11 including low- and moderate-income neighborhoods, Initially, the Board notes that Meridian Bank reconsistent with the safe and sound operation of such ceived an "outstanding" rating from the bank's priinstitution," and to take that record into account in mary federal regulator, the Federal Reserve Bank of its evaluation of bank holding company applica- Philadelphia, in its most recent examination for CRA tions.8 performance as of July 1, 1991 (the "1991 Examina- In connection with this application, the Board has tion"). Additionally, Peoples Bank and the other subreceived comments from an organization ("Protes- sidiary banks of Meridian received "outstanding" or tant") alleging that Meridian has failed to ascertain or "satisfactory" ratings from their primary federal regmeet the credit needs of low-income and minority ulators in their most recent CRA performance examineighborhoods, and minority-owned small businesses, nations.12 in North Philadelphia. Protestant also alleges that Meridian Bank has illegally discriminated in making B. Corporate Policies housing-related loans in North Philadelphia on the basis of 1990 data submitted under the Home Mort- Meridian Bank has in place the types of policies and gage Disclosure Act ("HMDA").9 procedures that the Board and other federal bank The Board has carefully reviewed the CRA perfor- supervisory agencies have indicated contribute to an mance records of Meridian's subsidiary banks and effective CRA program. Meridian Bank established Peoples Bank, as well as the comments received and the Meridian Community Partnership Program Meridian's response to those comments, in light of the ("MCPP") in 1988 to institutionalize its CRA activi- CRA, the Board's regulations, and the Statement of ties. MCPP is administered and implemented by the the Federal Financial Supervisory Agencies Regarding Corporate Community Affairs Department of the the Community Reinvestment Act ("Agency CRA bank. This department is headed by the bank's CRA Statement").10 officer. Meridian Bank also has established a CRA Monitoring Committee, which meets quarterly and is responsible for reviewing the bank's CRA performance and making CRA-related policy decisions. This 8. 12 U.S.C. § 2903. 9. Several other commenters have questioned Meridian Bank's ability to maintain an adequate level of responsiveness to local banking needs in Lebanon County, Pennsylvania, where Peoples 11. The Agency CRA Statement provides that a CRA examination Bank is located. Meridian has responded that its retail and commercial is an important and often controlling factor in the consideration of an functions are organized on a geographic basis, and following consum- institution's CRA record and that these reports will be given great mation of this proposal, the bank's retail manager and commercial weight in the applications process. 54 Federal Register 13,745 (1989). manager for its Susquehanna Valley division will maintain offices in Protestant alleges that the most recent examination of Meridian Bank Lebanon County. In addition, Meridian has stated that the lending for CRA performance does not accurately reflect the bank's CRA authority of these managers and of other lending officers based in performance because the chairman of the board and chief executive Lebanon County will approximate the legal lending limit of Peoples officer of Meridian is a Class A member of the board of directors of the Bank, and that the variety of products and services offered by Federal Reserve Bank of Philadelphia, the bank's primary federal Meridian Bank will be broader than those of Peoples Bank. The main regulator. Federal Reserve Bank directors do not participate in the office of Peoples Bank and three of its four branches will continue to direct supervision of banks or bank holding companies or in matters be operated as branches of Meridian Bank. The Hershey, Pennsylva- such as applications processing, examinations, or enforcement pronia, branch of Peoples Bank will be closed because Meridian Bank ceedings, and did not participate in or review the CRA examination in operates four branches within two miles of this branch. this case. Other commenters have raised issues regarding potential unemploy- 12. Peoples Bank received a "satisfactory" performance rating ment as a result of this proposal, which issues are not related to from the OCC on January 22, 1990; Delaware Trust Company, Meridian's record of performance under the CRA. Meridian has Wilmington, Delaware, received an "outstanding" performance ratcommitted that it will assist any displaced employees to find employ- ing from the FDIC on July 20, 1990; and The First National Bank of ment with Meridian within the geographic area surrounding Lebanon Pike County, Milford, Pennsylvania, received a "satisfactory" per- County, and will provide severance benefits to persons who cannot be formance rating from the OCC on August 30, 1982. Delaware Trust so employed. Company and The First National Bank of Pike County are wholly 10. 54 Federal Register 13,742 (1989). owned subsidiaries of Meridian. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 945 committee includes the chairman of the board and munity and public sector organizations serving lowchief executive officer of Meridian, the president and and moderate-income groups. As a result of this parchief executive officer of Meridian Bank, and other ticipation, Meridian Bank has provided bridge financexecutive officers of Meridian Bank, Meridian Mort- ing to such organizations facing delays in the receipt of gage Corporation, the bank's mortgage banking sub- public funds. Officers and employees serve on over 40 sidiary ("MMC"), and other banking affiliates. such boards, including, in the City of Philadelphia, the Additional committees involving senior managers of North Broad Street Revitalization Project, North Phil- Meridian Bank exist to investigate, promote, or review adelphia Germantown/Lehigh Action Planning Com- CRA activities in specific areas, such as the use of tax mittee, Philadelphia Council for Community Advancecredits and the participation of the bank with commu- ment, and United Black Business Association. nity development corporations. MCPP and CRA ac- Meridian Bank also has invited leaders from nontivities in general are discussed at meetings of Merid- profit, public sector, minority, and religious organizaian Bank's board of directors.13 In addition, the 1991 tions to join with Meridian Bank employees on internal Examination found that the allocation of human and advisory committees established in each of the bank's financial resources by the bank to MCPP had in- four geographic divisions. Advisory committees meet creased and that the scope of the program had ex- at least quarterly to review the bank's loan activity panded since the previous examination. reports, geocoded loan data, and marketing information. The staff of the Corporate Community Affairs C. Ascertainment and Marketing Efforts Department reviews all records of these meetings to evaluate and develop the bank's products.14 Meridian Bank has an established program to gather Meridian Bank's market research department also and evaluate information about the communities it assembles and evaluates demographic data, informaserves, their credit needs, and the receptivity of those tion on consumer habits, and competitive data. It communities to the bank's products and services. This regularly conducts focus groups among Meridian Bank program also serves to facilitate the development of employees to improve the delivery of services. For new products and services to address the identified example, Meridian Bank has implemented suggestions needs. For example, the 1991 Examination noted that from these focus groups to hire bilingual personnel, Meridian Bank officers made calls on over 1,500 introduce Spanish language ATM screens, and decommunity organizations and public sector agencies velop Spanish and Korean language advertising mateduring the preceding two-year period. Information rials. The market research department also creates from these calls is entered into a central database, demographic profiles for each county and MSA served where it is reviewed by departmental managers and by Meridian Bank. These profiles are provided to bank the Corporate Community Affairs Department. Merid- management, included in the bank's CRA statement, ian Bank also operates the Meridian Community Fo- and made available to community organizations. The rum, a speakers bureau designed to educate the com- participation of community groups in this process has munities Meridian Bank serves concerning the bank's prompted additional ascertainment efforts.15 Market credit products and to learn from these communities research also tracks the distribution of Meridian about their credit needs. Forums frequently are con- Bank's housing, consumer, and commercial loan prodducted as workshops or seminars on specialized sub- ucts based on census tracts, gender, income, and race. jects; forum subjects have included non-profit organi- On the basis of this information, Meridian Bank has zation management, mortgage and small business introduced new products and altered the marketing of lending, and basic banking services. Over sixty forum old products. For example, NEED (Necessary Emerpresentations were made in Philadelphia alone during gency Expense Disbursement) Loans of up to $1,500, 1990 and 1991. repayable at an interest rate one-half percent below Meridian Bank also ascertains the credit needs of the communities it serves by encouraging its officers and employees to serve on advisory boards of com- 14. Advisory subcommittees also have been established when appropriate to address specific local needs. In the Susquehanna Valley division of the bank, an advisory subcommittee identified the need to increase minority lending in that area and arranged for the bank to 13. For example, during the two-year period preceding the 1991 make a lending commitment to Lancaster Enterprise, Inc., to be used Examination, the board of directors of Meridian twice approved an to fund smaller loans to minority businesses in Lancaster, Pennsylvaexpanded CRA statement for the bank and reviewed the bank's nia. community delineation and distribution of credits, the bank's low- 15. For example, in Berks County, Pennsylvania, community income housing tax credit activities, MCPP loan products, a proposal organizations identified the need for more detailed information about to establish a community development corporation subsidiary, and a local housing needs, and Meridian Bank participated in the creation of proposal to participate in a special financial assistance package for the a funding consortium to contract for the performance of the targeted City of Philadelphia during its fiscal crisis. survey. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

946 Federal Reserve Bulletin • December 1992 the prevailing consumer loan rate, were introduced as $14.5 million under all of its standard, governmentallya result of this analysis. assisted programs. Meridian Bank has also actively In addition, Meridian Bank has well-established participated in other special housing-related lending marketing and advertising programs. These programs programs in Philadelphia, including the Philadelphia are approved, reviewed, and monitored by senior Redevelopment Authority 203(K) Program (bridge fimanagement, and inform all communities served by nancing to support loans to individuals and investors the bank, including low- and moderate-income neigh- to acquire and rehabilitate deteriorated properties) and borhoods, of the availability of the bank's products the Philadelphia MEND Program (loans to developers and services. The bank uses minority newspapers, to rehabilitate abandoned and deteriorated properties business directories, and radio stations, and the bank's for low- to moderate-income housing). printed advertising reflects the diversity of the neigh- MMC, a wholly owned subsidiary of Meridian borhoods in its target markets. Many materials have Bank, provides financing for single-family housing, been produced in the Spanish language, and mass multi-unit housing, and low- and moderate-income mailings have been made to hispanic civic, commu- projects through a full line of fixed rate, variable rate, nity, and service organizations throughout Meridian FHA, and VA loans. MMC participates in the State of Bank's service communities. Newsletters have been Pennsylvania First Time Home Buyer's Mortgage developed specifically for distribution to non-profit Bond Program and in the Community Home Buyer's organizations, small businesses, and agribusinesses. Program (a partnership among the lender, a private Internally, CRA training manuals have been tailored to mortgage insurer, and the Federal National Mortgage each of the bank's four geographic divisions. These Association to permit less stringent loan underwriting manuals focus on the products, community contacts, and lower settlement costs and to provide credit and public sector agencies, and demographic data appro- home maintenance counseling). From January 1991 priate to that area. through August 1992, Meridian Bank and MMC made 77 mortgage loans totaling approximately $4.5 million D. Lending and Other Activities in census tracts located in North Philadelphia.18 Meridian Bank's small business lending activities Meridian Bank offers and participates in a number of are conducted through a separate department within programs designed to assist in meeting the housing- the bank, and its programs emphasize lending to small related credit needs of its service communities, includ- businesses in low- and moderate-income areas. During ing low- and moderate-income neighborhoods.16 For 1990, Meridian Bank extended 104 loans aggregating example, Meridian Bank's mortgage lending depart- $6.9 million to small businesses with an employee base ment, under the Meridian Community Partnership of 20 or less. Meridian Bank is a Certified Preferred Loan Program, offers a variety of conventional and SBA Lender, which reduces substantially the time governmentally insured, guaranteed, or subsidized required to process SBA loan applications, and the loan programs designed to meet the credit needs of bank is an active SBA lender.19 During 1990, Meridian low- and moderate-income homebuyers.17 Bank originated over $18.6 million in SBA loans, and Meridian Bank originated 148 loans in the aggregate during the first six months of 1991 it originated 25 loans amount of $7.9 million in 1990 under the Pennsylvania aggregating $8.5 million.20 In Philadelphia, Meridian Housing Finance Agency ("PHFA") conventional Bank participates in several credit programs designed loan program, and a total of 226 loans aggregating 18. The 1991 Examination expressed some concern that, when examined alone, MMC's presence as a mortgagor in low- and moder- 16. The 1991 examination found that the geographic distribution of ate-income census tracts in Philadelphia County, Pennsylvania, de- Meridian Bank's housing-related credit extensions, applications, and clined from 1989 to 1990. However, the 1991 Examination also noted denials demonstrated a reasonable penetration into all segments of the the increased emphasis that Meridian Bank had placed during that delineated service area. period on its newly formed internal mortgage lending department to 17. Meridian Bank's residential mortgage lending department offers deliver credit services in low- and moderate-income census tracts. a standard product array of fourteen permanent mortgage loan types, The 1991 Examination called for a more coordinated joint effort from four construction loan and permanent financing facilities, and various Meridian Bank and MMC. special credit programs. Special credit programs include FHA Section 19. Meridian Bank has been the largest volume SBA lender in the 203(B), which provides mortgage insurance for loans with loan-to- six-state mid-Atlantic region that includes Pennsylvania during each value ratios in excess of 80 percent, FHA Section 221(D)(2), which of the past six years. provides loans to low- and moderate-income homebuyers, Pennsylva- 20. Meridian Bank also has an agribusiness lending department that nia Housing Finance Agency programs, which finance loans to cred- offers a variety of credit and banking services to small, independent itworthy, low-income, first-time homebuyers at reduced interest rates, farming operations and to larger agricultural enterprises. Meridian with reduced or assisted settlement costs, and the Delaware Valley Bank is a Certified Preferred Lender under the Farmers Home Mortgage Plan, which offers low- to moderate-income homebuyers Administration guaranteed loan program, which, as in the SBA flexible underwriting criteria, reduced interest rates, higher loan-to- program, permits the bank to reduce substantially the time required to value ratios, and reduced settlement costs. process loan applications. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 947 to assist in meeting the credit needs of small busi- tions that make the data an inadequate basis, absent nesses, including the Philadelphia Commercial Devel- other information, for conclusively determining opment Corporation ("PCDC")(promotion of entre- whether an institution has engaged in illegal discrimipreneurial development, especially among women and nation on the basis of race or ethnicity in making minorities), the PCDC Housing Contractor Program, lending decisions. and the West Philadelphia Neighborhood Enterprise The 1991 Examination found no evidence of illegal Center (micro-loan pool and peer group lending facil- discrimination at Meridian Bank. In addition, the 1991 ity). Small business lending in North Philadelphia Examination found that Meridian Bank's board of census tracts from January 1991 through September directors and senior management periodically assess 1992 totalled 25 loans for approximately $1.7 million. the adequacy of its implemented nondiscriminatory Meridian Bank also offers special consumer credit policies, procedures, and training programs through products for low- and moderate-income consumers internal reviews and management reporting systems. under guidelines used by PHFA for its special credit The bank's policies and procedure manuals also conprograms. Qualified applicants are eligible for reduced tain information that is intended to inform operating interest rates, and the underwriting criteria are more personnel of the provisions of the various consumer flexible in evaluating the credit histories of low- and regulations adopted to prevent discriminatory or illemoderate-income consumers.21 Consumer lending gal credit practices. from January 1991 through June 1992 totalled 863 Meridian Bank has undertaken a number of steps loans amounting to approximately $5.4 million in designed to improve its lending to minorities and low- North Philadelphia census tracts. and moderate-income neighborhoods. For example, to Community development activities by Meridian assist potential borrowers, Meridian Bank has in- Bank also support residents in North Philadelphia. For creased its own credit counseling efforts and its efforts example, the bank supports the Allegheny West Foun- in conjunction with community groups, such as the dation with board participation, loans, and grants to Harrisburg Fair Housing Council. The bank has also promote housing development and related programs increased the promotion of the PHFA First Time for limited income families in North Philadelphia, Home Buyer's Lending Program to improve the lendincluding a 41-unit low-income rental housing project, ing opportunities for these borrowers. Meridian Bank and to encourage the development of neighborhood is also participating in programs such as the Commusmall businesses. Meridian Bank made 10 community nity Home Buyers Program with more flexible underdevelopment loans in North Philadelphia census tracts writing criteria which permit higher debt to income totalling approximately $1.2 million from January 1991 ratios. through October 1992. G. Conclusion Regarding Convenience and E. HMDA Data and Lending Practices Needs Factors The Board has reviewed the 1990 HMDA data re- The Board has carefully considered the entire record ported by Meridian Bank in light of Protestant's com- of this application, including the comments filed in this ments. Data cited by the Protestant indicate disparities case, in reviewing the convenience and needs factor in rates of housing-related loan applications, and in under the BHC Act. Based on a review of the entire approvals and denials that vary by racial or ethnic record of performance, including information provided group in certain areas served by Meridian Bank. by the commenters and the performance examinations Because all banks are obligated to ensure that their by the banks' primary regulators, the Board believes lending practices are based on criteria that assure not that the efforts of Meridian and Peoples to help meet only safe and sound lending, but also assure equal the credit needs of all segments of the community it access to credit by creditworthy applicants regardless serves, including low- and moderate-income neighborof race, the Board is concerned when the record of an hoods, are consistent with approval of this application. institution indicates disparities in lending to minority The Board recognizes that the record compiled in applicants. The Board recognizes, however, that these applications points to areas for improvement in HMDA data alone provide only a limited measure of the CRA performance of Meridian Bank. In this reany given institution's lending in its community. The gard, Meridian has initiated steps designed to Board also recognizes that HMDA data have limita- strengthen its housing-related lending to low- and moderate-income and minority borrowers. On the basis of all the facts of record, the Board concludes 21. Under these guidelines, Meridian Bank made 2,692 loans that the convenience and needs considerations, includtotalling $14.5 million during 1990, and it made 3,485 loans totalling ing the performance records of Meridian and Peoples $20.2 million during the first six months of 1991. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

948 Federal Reserve Bulletin • December 1992 Bank, are consistent with approval of these applica- Orders Issued Under Section 4 of the Bank tions. The Board expects Meridian Bank to implement Holding Company Act fully the CRA initiatives and commitments discussed in this Order and contained in its application. Meridian First Bank System, Inc. Bank's progress in implementing these initiatives and Minneapolis, Minnesota commitments will be monitored by the Federal Reserve Bank of Philadelphia and in future applications Order Approving Acquisition of a Savings to expand its deposit-taking facilities. Association Other Considerations First Bank System, Inc., Minneapolis, Minnesota ("FBS"), and its wholly owned subsidiary, Central The Board also concludes that the financial and man- Bancorporation, Inc., Denver, Colorado ("CBI"), agerial resources22 and future prospects of Meridian both bank holding companies within the meaning of and Peoples, and their subsidiary banks, and the other the Bank Holding Company Act ("BHC Act"), have factors that the Board must consider under section 3 of applied pursuant to section 4(c)(8) of the BHC Act the BHC Act and the Bank Merger Act are consistent (12 U.S.C. § 1843(c)(8)) to acquire Western Capital with approval. Meridian Bank also has applied under Investment Corporation, Denver, Colorado ("Westsections 9 and 24A of the Federal Reserve Act to ern Capital"), and its savings association subsidiary, establish branches and invest in branch premises. The Bank Western, Denver, Colorado, pursuant to the Board has considered the factors it is required to Board's Regulation Y (12 C.F.R. 225.25(b)(9)).1 Westconsider when reviewing applications pursuant to ern Capital has also applied to acquire the nonbanking these sections of the Federal Reserve Act and finds subsidiaries of Western Capital and thereby engage in those factors to be consistent with approval. mortgage lending activities, credit insurance, and general insurance agency activities pursuant to the Based on the foregoing and other facts of record, the Board's Regulation Y.2 Board has determined that the applications should be, and hereby are, approved. The Board's approval of Notice of the applications, affording interested perthis transaction is specifically conditioned upon com- sons an opportunity to submit comments, has been pliance by Meridian with the commitments it has made published (57 Federal Register 34,780 (1992)). The in connection with this application. For purposes of time for filing comments has expired, and the Board this action, these commitments are considered condi- has considered the applications and all the comments tions imposed in writing by the Board in connection received in light of the factors set forth in section with its findings and decision and may be enforced in 4(c)(8) of the BHC Act. proceedings under applicable laws. The transaction The Board has determined that the operation of a approved in this Order shall not be consummated savings association is closely related to banking and before the thirtieth calendar day following the effective permissible for bank holding companies. 12 C.F.R. date of this Order, or later than three months after the 225.25(b)(9). In making this determination, the Board effective date of this Order, unless such period is required that savings associations acquired by bank extended for good cause by the Federal Reserve Bank holding companies conform their direct and indirect of Philadelphia, pursuant to delegated authority. activities to those permissible for bank holding com- By order of the Board of Governors, effective panies under section 4 of the BHC Act. In this regard, October 26, 1992. Voting for this action: Chairman Greenspan and Governors 1. Western Capital will merge with and into CBI, with CBI as the Mullins, Angell, Kelley, Lindsey, and Phillips. Absent and surviving entity. FBS has also requested approval to acquire 19.9 not voting: Governor La Ware. percent of Western Capital's stock under a stock option agreement. This agreement becomes moot upon consummation of this proposal. JENNIFER J. JOHNSON 2. These nonbanking subsidiaries are: Field Mortgage Co., Denver, Colorado (mortgage lending activities pursuant to 12 C.F.R. Associate Secretary of the Board 225.25(b)(1)); and Teton National Insurance Company, Cheyenne, Wyoming (credit insurance activities pursuant to 12 C.F.R. 225.25(b)(8)(i)). FBS, a bank holding company grandfathered to engage in general insurance agency activities under section 4(c)(8)(G) of 22. The Board has considered a comment alleging that Meridian the BHC Act, has also applied to acquire Western Capital's Western Bank has employed wrongful demand and collection procedures in Insurance Services, Inc., Denver, Colorado, and thereby continue to connection with loans made to a minority-owned partnership. On the engage in these activities pursuant to 12 C.F.R. 225.25(b)(8)(vii). FBS basis of all the facts of record, including an investigation of the is seeking approval from the Colorado Insurance Commissioner to allegations and relevant reports of examination by the Federal Re- engage in these activities and the Board's action is specifically serve Bank of Philadelphia, the Board concludes that these comments conditioned upon obtaining approval to continue these activities from do not raise issues that would warrant a denial of these applications. the state commissioner. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 949 the Board has previously determined that the activities the Board has concluded that consummation of the of Western Capital's nonbanking subsidiaries that FBS proposal would not result in a significantly adverse and CBI propose to retain are permissible activities for effect on competition in any relevant banking market.7 bank holding companies.3 Accordingly, the Board concludes that consummation In considering applications under section 4(c)(8) of of this proposal would not result in a significantly the BHC Act, the Board is required to determine that adverse effect on competition in any relevant market. the performance of the proposed activities "can reasonably be expected to produce benefits to the public Community Reinvestment Act Considerations . . . that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair In considering applications to acquire a savings assocompetition, conflicts of interests, or unsound banking ciation under section 4 of the BHC Act, the Board also practices." 12 U.S.C. § 1843(c)(8). reviews the records of performance of the relevant FBS, with total consolidated assets of approxi- institutions under the Community Reinvestment Act mately $17.8 billion, controls 24 banks in Colorado, (12 U.S.C. § 2901 et seq.) ("CRA").8 The CRA re- Minnesota, Montana, North Dakota, Washington and quires the federal financial supervisory agencies to Wisconsin.4 FBS is the fourth largest commercial encourage financial institutions to help meet the credit banking organization in Colorado, controlling deposits needs of the local communities in which they operate, of $2.2 billion, representing 9.2 percent of total depos- consistent with the safe and sound operation of such its in commercial banking organizations in the state. institutions. To accomplish this end, the CRA requires Western Capital is the second largest thrift organiza- the appropriate federal supervisory authority to "astion in Colorado, controlling deposits of $2.1 billion, sess an institution's record of meeting the credit needs representing 31.2 percent of total thrift deposits in the of its entire community, including low- and moderatestate. Upon consummation of the proposed transac- income neighborhoods, consistent with the safe and tion, FBS would become the second largest bank and sound operation of the institution," and to take that thrift institution (together, "depository institutions") record into account in its evaluation of bank holding in Colorado, controlling deposits of $4.3 billion, rep- company applications.9 resenting 14.0 percent of total deposits in depository institutions in the state. FBS and Western Capital compete directly in the Colorado Springs, Denver, Fort Collins, Grand Juncfactors indicating anticompetitive effects) unless the post-merger HHI tion, Greeley and Pueblo banking markets, all in is at least 1800 and the merger increases the HHI by more than 200 Colorado. After considering the competition offered points. The Justice Department has stated that the higher-than-normal HHI thresholds for screening bank mergers for anticompetitive effects by other depository institutions in these markets,5 the implicitly recognize the competitive effect of limited-purpose lenders number of competitors remaining in the markets, the and other non-depository financial institutions. increase in concentration6 and other facts of record, 7. In the Colorado Springs banking market, FBS would become the fourth largest depository institution, representing 12.5 percent of total deposits in depository institutions in the market ("market deposits"), and the HHI would increase by 34 points to 1240. FBS would become 3. FBS has committed to divest any impermissible real estate the second largest depository institution in the Denver-Boulder bankinvestments within two years of consummation of the proposal. ing market, representing 16.8 percent of market deposits, and the HHI 4. Asset data are as of June 30, 1992. State deposit data are as of would increase by 131 points to 954. In the Fort Collins banking December 31, 1991. Market deposit data are as of June 30, 1990, for market, FBS would become the fourth largest depository institution, banks and March 31, 1990, for thrift institutions. representing 6.3 percent of market deposits, and the HHI would 5. Market deposit data before consummation are based on calcula- decrease by 59 points to 2081. FBS would become the second largest tions in which the deposits of thrift institutions are included at 50 depository institution in the Grand Junction banking market, reprepercent. The Board previously has indicated that thrift institutions senting 23.8 percent of market deposits, and the HHI would increase have become, or have the potential to become, major competitors of by 74 points to 1750. In the Greeley banking market, FBS would commercial banks. See Midwest Financial Group, 75 Federal Reserve become the fourth largest depository institution, representing 8.0 Bulletin 386 (1989); National City Corporation, 70 Federal Reserve percent of market deposits, and the HHI would decrease by 34 points Bulletin 743 (1984). Because the deposits of Western Capital would be to 1508. FBS would become the sixth largest depository institution in controlled by a commercial banking organization under FBS's pro- the Pueblo banking market, representing 13.5 percent of market posal, those deposits are included at 100 percent in the calculation of deposits, and the HHI would decrease by 13 points to 1593. the pro forma market share. See Norwest Corporation, 78 Federal 8. The Board previously has determined that the CRA by its terms Reserve Bulletin 452 (1992); First Banks, Inc., 76 Federal Reserve does not generally apply to applications by bank holding companies to Bulletin 669, 670 n.9 (1990). acquire nonbanking companies under section 4(c)(8) of the BHC Act. 6. Under the revised Department of Justice Merger Guidelines, 49 The Mitsui Bank, Ltd., 76 Federal Reserve Bulletin 381 (1990). The Federal Register 26,823 (June 29, 1984), a market in which the Board also has stated that, unlike other companies that may be post-merger HHI is less than 1000 is considered unconcentrated, a acquired by bank holding companies under section 4(c)(8) of the BHC market in which the post-merger HHI is between 1000 and 1800 is Act, savings associations are depository institutions, as that term is considered moderately concentrated, and a market in which the defined in the CRA, and thus, acquisitions of savings associations are post-merger HHI is above 1800 is considered highly concentrated. subject to review under the express terms of the CRA. Norwest The Justice Department has informed the Board that a bank merger or Corporation, 76 Federal Reserve Bulletin 873 (1990). acquisition generally will not be challenged (in the absence of other 9. 12 U.S.C. § 2903. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

950 Federal Reserve Bulletin • December 1992 In connection with these applications, the Board reports will be given great weight in the applications has reviewed comments received from the Denver process.13 Community Reinvestment Alliance ("Protestant") Bank Western, which is the insured depository regarding the lending activities of the FBS operations institution that FBS and CBI propose to acquire, in Denver on the basis of data submitted under the received a "needs to improve" CRA rating in its most 1990 Home Mortgage Disclosure Act ("HMDA"). recent examination by its primary regulatory, the Protestant also alleges that FBS Mortgage Corpora- Office of Thrift Supervision ("OTS"), in May 1992. tion ("FBS Mortgage"), a mortgage company sub- FBS has committed to initiate CRA training programs sidiary of FBS, has inadequate outreach and market- for Bank Western staff immediately upon consummaing efforts to minority communities in Denver and tion of this proposal. In addition, FBS has committed that FBS Mortgage denies a greater percentage of to institute its corporate CRA policies and programs, mortgage loans to minorities than to non-minorities discussed below, at Bank Western upon consummain Denver.10 tion of this proposal. The Board has carefully reviewed the CRA perfor- FBS Policies and Programs. FBS has a Vice-Presimance records of FBS and Bank Western, as well as dent for Community Relations that coordinates and Protestant's comments and FBS's responses to those provides support to all community reinvestment efcomments, and all of the other relevant facts, in light forts within FBS. In addition, FBS has a nine-member of the CRA, the Board's regulations, and the State- Senior CRA Policy Committee which is charged with ment of the Federal Financial Supervisory Agencies overseeing the overall CRA performance of FBS's Regarding the Community Reinvestment Act ("Agen- subsidiary banks and resolving any CRA issues that cy CRA Statement").11 arise. CBI also has its own full-time Community Initially, the Board notes that FBS's lead bank, First Relations Department to oversee FBS's CRA activi- Bank, Minneapolis, Minnesota, received a "satisfac- ties in Colorado markets and to provide technical tory" rating for CRA performance from its primary assistance on CRA matters. CBI will form a Senior regulator, the Office of the Comptroller of the Cur- CRA Policy Committee for Colorado.14 rency ("OCC"), in its most recent examination for Each of the subsidiary banks of FBS has a market CRA performance in January 1991.12 The Agency manager whose primary responsibility is developing CRA Statement provides that a CRA examination is an and implementing the local community reinvestment important and often controlling factor in the consider- efforts. To assist these market managers, FBS has ation of an institution's CRA record and that these developed a Community Reinvestment Evaluation and Planning Handbook ("CRA Handbook"). The CRA Handbook requires each of FBS's subsidiary banks to annually complete a six step CRA planning process 10. The Board also has considered that the Department of Housing which includes: delineating the bank's community; and Urban Development ("HUD") has been requested by a commu- evaluating the bank's CRA performance for the prior nity group to investigate the lending practices of FBS Mortgage in Denver. This request was made in early October 1992, and HUD is in year; assessing community needs through community the initial stages of the review of this matter. The Board will monitor involvement and analyzing pertinent economic and HUD's investigation and will take appropriate action, including sudemographic information; identifying specific commupervisory action, if appropriate, following completion of the review by HUD. nity credit needs, including for low- and moderate- 11. 54 Federal Register 13,742 (1989). income individuals; developing specific plans for meet- 12. All of the 24 subsidiary banks of FBS have received an "outstanding" or a "satisfactory" CRA rating from their primary ing these credit needs, including the development of regulator in their latest examination for CRA performance with the products and outreach mechanisms to targeted borexception of Central Bank Grand Junction, Grand Junction, Colorado rowers; and involving the bank's board of directors in ("GJ Bank"). GJ Bank, which constitutes less than 1 percent of FBS's consolidated assets, received a "needs to improve" CRA perfor- CRA planning.15 mance rating from the OCC as of June 1991. Following this examina- HMDA Data. The Board has reviewed the 1990 and tion, GJ Bank promptly undertook a number of steps to address 1991 HMDA data reported by FBS in Denver, and identified areas of weakness in CRA performance. For example, the bank has improved its efforts to ascertain community credit needs through a demographic analysis and community contacts. GJ Bank also increased its marketing efforts, including to low- and moderateincome communities, through media advertisements, direct mail, product brochures, telemarketing and realtor calls, and is working 13. 54 Federal Register at 13,745. directly with community groups involved in building low-income 14. Senior managers from Bank Western will also be included in housing. In addition, GJ Bank is participating in new lending programs CBI's Senior CRA Policy Committee for Colorado. to meet the needs of its community, such as the Community Enter- 15. Bank Western managers will receive a copy of FBS's CRA prise Loan Initiative, a microlending program. On the basis of these Handbook. FBS will work with Bank Western to develop and impleand other facts of record, the Board believes that these initiatives ment a written CRA plan for Bank Western for 1993. The CRA plan sufficiently address relevant areas of weakness in GJ Bank's record of will include the six steps set forth above in the CRA planning process performance under the CRA. as outlined in the CRA Handbook. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 951 Protestant's comments regarding these data.16 These includes several key organizations that represent midata indicate that loan originations vary for FBS nority communities.19 Central Bank N.A. also has Mortgage by racial or ethnic group and income level in provided $150,000 in grants to community organiza- Denver. tions in 1991, including Colorado Housing Assistance The Board has evaluated the HMDA data for FBS Corporation, Greater Denver Local Development Cor- Mortgage in light of several factors. First, the Board poration, and MiCasa Resource Center for Women. notes that FBS serves Denver through a combination FBS Mortgage has made 88 mortgage loans to lowof CBI's subsidiary banks in the Denver area (the and moderate-income areas in Denver totaling approx- "Central Banks")17 and FBS Mortgage. Thus, the imately $5.7 million in 1991. During 1992 to date, FBS Board has considered the combined record in Denver Mortgage has made 129 loans to low- and moderateof the Central Banks and FBS Mortgage. Second, the income areas in Denver for a total of approximately Board has considered, in light of the generally satis- $10.5 million. FBS Mortgage also assists in meeting factory record of FBS, the steps that FBS has com- the housing-related credit needs of low- and moderatemitted to take to improve the record of FBS Mortgage income residents in Denver by participating in special in Denver. programs. For example, FBS Mortgage made 100 The Board believes that the lending record of FBS loans in Denver, for a total of $4.2 million, in 1991 to Mortgage must be considered in the context of the low- and moderate-income persons in connection with Central Banks lending activities in the Denver area. the Colorado Housing Finance Agency ("CHFA"). For example, the Central Banks provide a number During 1992 to date, FBS Mortgage has made 78 loans credit products and services to residents and busi- in Denver, for a total of $3.5 million, in connection nesses located in low- and moderate-income and mi- with the CHFA. nority communities in Denver. As of year-end 1991, FBS Mortgage also has taken a number of steps the Central Banks originated $7.3 million in consumer designed to improve its record of ascertainment, marloans to consumers from low- and moderate-income keting and lending to minority and low- and moderatezip codes in the Denver MSA. Central Bank, N.A. income communities in Denver. For example, FBS also has outstanding approximately $11.4 million in Mortgage has hired a new Community Lending Manloans to minority-owned businesses and approxi- ager who is responsible for community outreach and mately $4.4 million in loans to businesses owned by marketing of affordable mortgage programs. FBS women. In addition, Central Bank, N.A. has commit- Mortgage is also hiring two additional mortgage origited to provide $300,000 over a three-year period to the nators who will devote their time exclusively to mort- Cole Coalition, a community development partnership gage programs for low- and moderate-income borrowinitiated to help strengthen a low-income neighbor- ers. In addition, FBS Mortgage and the Central Banks hood in Denver.18 The Central Banks have extended will convene at least four focus group meetings in the $500,000 in credit to support the construction of hous- Denver metropolitan area in 1993 to ascertain commuing for persons with disabilities in the Denver MSA. nity awareness of credit products and services offered In addition, the Central Banks have also recently by both the Central Banks and FBS Mortgage and to introduced the Community Enterprise Lending Initia- solicit feedback on performance.20 tive ("CELI") to provide technical assistance and FBS Mortgage also has introduced a new mortgage credit to small and emerging businesses. A CELI product, Home Advantage, for first mortgages. The Advisory Council that the Central Banks have formed Home Advantage product was designed with more to discuss the needs of small and emerging businesses flexible underwriting criteria and requires a downpayand to assess the effectiveness of the CELI program ment of only $1,000, which can be met in several different ways, including through a secured or unsecured loan. As part of the Home Advantage program, 16. Depository and mortgage company subsidiaries were required FBS Mortgage has established a Financial Assistance for the first time in 1990 to report the information regarding both loan Program to assist borrowers in obtaining funds, includapprovals and denials to the banking agencies and the public. This information includes data on the race, gender and income of individual applicants, as well as the location of the property securing the potential loan and the disposition of the application. 17. CBI's lead bank in Colorado, Central Bank, N.A., Denver, 19. The Central Banks also offer SBA lending and provide small Colorado, received a "satisfactory" CRA rating from its primary business loans through their Mainstreet Credit department. Mainregulator, the OCC, in its most recent examination for CRA perfor- street Credit uses simplified application forms and guarantees a mance in May 1991. The examination found no evidence of illegal 48-hour response after receiving a completed loan application. discrimination. 20. CBI is planning to conduct a survey in 1993 of all available 18. Senior officers and board members of Central Bank N.A. serve publications, including neighborhood newspapers and newspapers on the board of directors of several organizations related to commu- directed to specific ethnic populations, to determine appropriate nity development and affordable housing, including the Capital Hill vehicles for FBS Mortgage and the Central Banks to reach minority Community Center and the Cole Neighborhood Project. and low- and moderate-income communities in Colorado. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

952 Federal Reserve Bulletin • December 1992 ing through FBS Mortgage, for closing costs, down- progress in implementing these initiatives and commitpayment and property rehabilitation. In connection ments will be monitored by the Board and taken into with the Home Advantage program, FBS Mortgage account in the Board's consideration of future applialso plans to form partnerships with community orga- cations by FBS to expand its deposit-taking facilities. nizations and/or government entities in Denver to provide counseling, help with outreach and provide Financial, Managerial and Other Considerations feedback on product design. FBS Mortgage has also introduced a home equity The financial and managerial resources of FBS and its loan for home improvement with liberalized under- subsidiaries and Western Capital and its subsidiaries writing criteria. The minimum loan amount under this are consistent with approval. In assessing the financial program is $2,000, and borrowers may get loans for up factors, the Board believes that bank holding compato 100 percent of the equity in their home. In addition, nies must maintain adequate capital at savings associ- FBS Mortgage participates as an originator in the ations that they propose to acquire. Upon consumma- Colorado Housing & Finance Authority 1992 bond tion, FBS will meet all applicable capital requirements issue, which provides low interest rate mortgage loans and has committed that Bank Western will meet all to low- and moderate-income first time homebuyers current and future minimum capital ratios adopted for throughout Colorado. savings associations by the OTS or the FDIC.22 Based on a review of the entire record of perfor- In considering FBS's acquisition of the nonbanking mance of FBS, including relevant examination re- activities of Western Capital, the Board notes that ports, the Board believes that the efforts of FBS to these subsidiaries compete in geographic markets that help meet the credit needs of all segments of its are regional or national in scope. These markets are communities, including low- and moderate-income served by numerous competitors, and FBS does not neighborhoods, are generally consistent with approval have a significant market share in any of these marof this proposal. In reaching this conclusion, the Board kets. Accordingly, the Board concludes that consumhas also considered that FBS Mortgage has already mation of this proposal would not have a significant initiated some, and has committed to initiate addi- adverse effect on competition in any relevant market. tional, steps designed to strengthen home mortgage FBS has also stated that the proposal will result in an lending to minority and low- and moderate-income increase in credit availability and improved services communities in Denver. for customers of Bank Western. The record does not On the basis of all the facts of record, the Board indicate that consummation of this proposal is likely to concludes that convenience and needs considerations, result in any significantly adverse effects, such as including the CRA records of FBS and Western Cap- undue concentration of resources, decreased or unfair ital, are consistent with approval of these applica- competition, conflicts of interests, or unsound banking tions.21 The Board expects FBS to implement fully the practices. CRA initiatives and commitments discussed in this Based upon consideration of all the facts in this Order and contained in its application, including the case, the Board has determined that the balance of the steps FBS has proposed to improve the lending record public interest factors it must consider under section of FBS Mortgage and Bank Western in Denver. FBS's 4(c)(8) of the BHC Act is favorable and consistent with approval of the FBS's applications to acquire Western Capital. Accordingly, the Board has determined that the applications should be, and hereby are, approved. 21. Protestant has requested that the Board hold a public hearing or meeting to permit Protestant to attempt to elicit additional information This approval is specifically conditioned on compliregarding the mortgage lending performance of FBS Mortgage in ance by FBS with all of the commitments made in Denver and to obtain information on FBS's lending activities relating to disabled borrowers and to minority-owned small businesses. In connection with these applications and with the conconsidering this request, the Board has considered that Protestant has ditions referenced in this order. The determinations as been provided an opportunity to seek information directly from to Western Capital's nonbanking activities are also Applicant and to submit written comments to the Board regarding the CRA performance of Applicant, and has in fact submitted written subject to all the conditions contained in the Board's comments regarding its CRA allegations. In addition, in response to Regulation Y, including those in sections 225.4(d) and Protestant's request for a meeting with FBS, the Federal Reserve 225.23(b)(3) (12 C.F.R. 225.4(d) and 225.23(b)(3)), and Bank of Minneapolis moderated an informal meeting on October 20, 1992, as provided for under the Board's Rules of Procedure to the Board's authority to require such modification (12 C.F.R. 262.25(c)). In light of these facts and all the facts of record or termination of the activities of a holding company or relating to the CRA performance of FBS Mortgage and the Central Banks in Denver, including relevant examination information and the steps taken by FBS Mortgage to improve its housing-related lending in low-and moderate-income areas, the Board believes that a public 22. For purposes of this commitment, investments in impermissible hearing or meeting requested would serve no useful purpose or be real estate projects and developments will be excluded from the required in this case. definition of capital. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 953 any of its subsidiaries as it finds necessary to assure est banking organization in the world, and provides a compliance with, or prevent evasions of, the provi- full range of retail and wholesale banking services sions and purposes of the BHC Act and the Board's worldwide.1 In the United States, Applicant operates regulations and orders issued thereunder. For pur- numerous representative offices, branches in New poses of this approval, the commitments and condi- York and Illinois, an agency in California, and numertions relied on in reaching this decision are both ous nonbanking subsidiaries engaged in a variety of conditions imposed in writing by the Board and, as activities. Applicant also controls NatWest Holdings, such, may be enforced in proceedings under applicable Inc., New York, New York, and its subsidiaries, law. National Westminster Bank USA, New York, New The transaction shall not be consummated later than York, and National Westminster Bank NJ, Jersey three months after the effective date of this Order, City, New Jersey. Applicant engages in various activunless such period is extended for good cause by the ities in the United States under section 4(c)(8) of the Board or by the Federal Reserve Bank of Minneapolis, BHC Act. acting pursuant to delegated authority. Company is a wholly owned subsidiary of Burns Fry By order of the Board of Governors, effective Limited, Toronto, Canada, and is registered with the October 29, 1992. Commodity Futures Trading Commission ("CFTC") as a futures commission merchant ("FCM"). Com- Voting for this action: Vice Chairman Mullins and Gover- pany engages in the execution and clearance of futures nors Angell, Kelley, La Ware, Lindsey, and Phillips. Absent contracts and options on futures contracts set forth in and not voting: Chairman Greenspan. the Appendix and provides related investment advice on these instruments. JENNIFER J. JOHNSON The Board has previously determined by regulation Associate Secretary of the Board that the execution and clearance of futures contracts and options on futures contracts for a variety of National Westminster Bank PLC financial instruments, and providing advisory services London, England with respect to such futures contracts are activities that are closely related to banking.2 The Board by Order Approving Application to Engage in the Order has previously approved the execution and Execution and Clearance of Futures Contracts and clearance of, and the provision of advisory services Options on Futures Contracts and Providing with respect to, all the specific futures contracts, Investment Advice on These Instruments options thereon, and exchanges in this proposal, except the Nikkei Stock Average traded on the Chicago National Westminster Bank PLC, London, England Mercantile Exchange.3 The Nikkei Stock Average is ("Applicant"), a registered bank holding company, essentially identical to instruments previously approved by the Board.4 Based on the facts of record, has applied under section 4(c)(8) of the Bank Holding the Board concludes that the proposed activities, Company Act ("BHC Act"), 12 U.S.C. § 1843(c)(8), including trading Nikkei Stock Average futures conand section 225.23(a)(3) of the Board's Regulation Y, tracts and options thereon on the Chicago Mercantile 12 C.F.R. 225.23(a)(3), to acquire all of the outstand- Exchange, are closely related to banking. ing shares of Burns Fry Futures, Inc., Chicago, Illinois ("Company"), and, through Company, engage in the execution and clearance on major commodity exchanges of certain futures contracts and options on 1. Asset data are as of December 31, 1991. Ranking is as of futures contracts as a futures commission merchant December 31, 1990. ("FCM"), and provide investment advice on these 2. 12 C.F.R. 225.25(b)(18) and (la). instruments. The activities would be conducted in the 3. See, e.g., The Sanwa Bank, Limited, 77 Federal Reserve Bulletin 64 (1991); Chemical Banking Corporation, 76 Federal Reserve Bulle- United States and abroad. tin 660 (1990); The Long-Term Credit Bank of Japan, Limited, 76 Notice of the application, affording interested per- Federal Reserve Bulletin 554 (1990); The Long-Term Credit Bank of sons an opportunity to submit comments, has been Japan, Limited, 74 Federal Reserve Bulletin 573 (1988); The Chase Manhattan Corporation, 72 Federal Reserve Bulletin 203 (1986). duly published (57 Federal Register 1185 (1992)). The 4. The Nikkei Stock Average futures contract is a broad based bond time for filing comments has expired, and the Board index that has been approved by the Board on the Singapore International Monetary Exchange. The Board has also approved several has considered the application and all comments refutures contracts and options thereon traded on the Chicago Mercanceived in light of the public interest factors set forth in tile Exchange. See Chemical Banking Corporation, supra, and orders section 4(c)(8) of the BHC Act. cited therein. The Board also notes that in conducting investment advisory activities related to this instrument, an FCM is subject to Applicant, with total consolidated assets equivalent regulation under the Commodity Exchange Act and the regulations of to approximately U.S. $229.3 billion, is the 16th larg- the CFTC as a registered advisor. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

954 Federal Reserve Bulletin • December 1992 Under section 4 of the BHC Act, the Board is also thereunder. The commitments and conditions relied required to determine that the performance of the on in reaching this decision are conditions imposed in proposed activities by Applicant "can reasonably be writing by the Board in connection with its findings expected to produce benefits to the public . . . that and decision and may be enforced in proceedings outweigh possible adverse effects, such as undue under applicable law. concentration of resources, decreased or unfair com- This transaction shall not be consummated later petition, conflicts of interests, or unsound banking than three months after the effective date of this order, practices." 12 U.S.C. § 1843(c)(8). unless such period is extended for good cause by the In cases involving a nonbanking acquisition by a Board or by the Federal Reserve Bank of New York, bank holding company under section 4 of the BHC pursuant to delegated authority. Act, the Board considers the financial condition and By order of the Board of Governors, effective resources of the applicant and its subsidiaries and the October 7, 1992. effect of the transaction on these resources.5 In this case, the proposed activities will require a direct de Voting for this action: Chairman Greenspan and Governors minimis capital investment by Applicant. The Board Mullins, Kelley, LaWare, Lindsey, and Phillips. Absent and not voting: Governor Angell. also has considered Applicant's record of financial support to its U.S. operations to be an important JENNIFER J. JOHNSON factor in assessing this proposal. Based on all the facts Associate Secretary of the Board of record, the Board concludes that the financial and managerial resources of Applicant are consistent with Appendix approval. There is no evidence in the record that consummation of the proposal would result in any Chicago Board of Trade significant adverse effects such as undue concentration of resources, decreased or unfair competition, con- Major Market Index futures contract1 flicts of interests, or unsound banking practices. In Bond Buyer Municipal Board Index futures contract2 addition, the Board has taken into account and has Long-Term Municipal Bond Index futures contract3 relied on the regulatory framework established pursuant to law by the CFTC for the trading of futures, as Chicago Mercantile Exchange well as the conditions set forth in section 225.25(b)(18) of Regulation Y with respect to executing and clearing Standard & Poor's 500 Stock Price Index futures futures contracts and options on futures contracts, and contract ("S&P 500")4 in section 225.25(b)(19) of Regulation Y with respect to Options on the S&P 5005 the provision of investment advice as a FCM as to futures contracts or options thereon. Based on consid- Financiele Termijnmarkt Amsterdam NV eration of all the relevant facts, the Board concludes that the balance of the public interest factors that it is Dutch Government Bond Index futures contract6 required to consider under section 4(c)(8) is favorable. Based on all the facts of record, and subject to the Hongkong Futures Exchange Limited commitments made by Applicant, as well as all of the terms and conditions set forth in this order and in the Hang Seng Stock Index futures contracts7 above noted Board orders that relate to these activities, the Board has determined that the application Kansas City Board of Trade should be, and hereby is, approved. The Board's determination is also subject to all of the conditions set Value Line Futures (Maxi) Index futures contract8 forth in Regulation Y, including those in sections 225.4(d) and 225.23(b), and to the Board's authority to require modification or termination of the activities of a bank holding company or any of its subsidiaries as 1. Hongkong and Shanghai Banking Corporation, 76 Federal Rethe Board finds necessary to assure compliance with, serve Bulletin 770 (1990) ("Hongkong and Shanghai"). and to prevent evasion of, the provisions of the BHC 2. Id. Act and the Board's regulations and orders issued 3. Id. 4. Chemical Banking Corporation, 76 Federal Reserve Bulletin 660 (1990) ("Chemical"). 5. Id. 5. 12 C.F.R. 225.24; The Fuji Bank, Limited, 75 Federal Reserve 6. Hongkong and Shanghai. Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve 1. Id. Bulletin 155, 156 (1987). 8. Id. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 955 Value Line Futures (Mini) Index futures contract9 Saban, S.A. Panama City, Panama London International Financial Futures Exchange Republic New York Corporation New York, New York Financial Times-Stock Exchange 100 Index ("FT-SE 100")10 FT-SE 100 futures contracts and options thereon11 Order Approving Application to Engage in Various Options on foreign exchange12 Securities-Related Activities, Including Acting as a UK Bond futures contracts13 "Conduit" in Securities Borrowing and Lending Eurodollar and Sterling deposit interest rate futures contracts14 Saban, S.A., Panama City, Panama ("Saban"), and its subsidiary, Republic New York Corporation, New York, New York ("Republic")(together, the "Appli- Marche a Terme d'Instruments Financiers cant"), have applied pursuant to section 4(c)(8) of the French Government Bond Index futures contracts15 Bank Holding Company Act (12 U.S.C. § 1843(c)(8)) ("BHC Act") and section 225.23(a) of the Board's Regulation Y (12 C.F.R. 225.23(a)), for prior approval New York Futures Exchange to engage de novo, on a domestic and international basis, through the Applicant's wholly owned subsid- New York Stock Exchange Composite Index iary, Republic New York Securities Corporation, New ("NYSECI")16 York, New York ("Company"), in the following ac- Options of the NYSECI17 tivities: (1) Providing investment advisory services and fi- Singapore International Monetary Exchange nancial advisory services, including advice regarding mergers, acquisitions, and capital raising pro- Nikkei 225 futures contract18 posals by institutional customers, pursuant to section 225.25(b)(4) of Regulation Y; Sydney Futures Exchange (2) Providing securities brokerage services on an individual basis as well as in combination with All Ordinaries Share Index futures contracts19 investment advisory services ("full-service broker- Australian Government Bond futures contracts20 age"), including exercising limited investment discretion on behalf of institutional customers; Tokyo Stock Exchange (3) Purchasing and selling all types of securities on the order of institutional and retail customers as a Tokyo Stock Price Index futures contracts21 "riskless principal;" and Japanese Government Bond futures contracts22 (4) Engaging in securities credit activities under the Board's Regulation T, pursuant to section 225.25(b)(15)of Regulation Y, including acting as a "conduit" or "intermediary" in securities borrowing and lending. Notice of the application, affording interested persons an opportunity to submit comments, has been 9. id. duly published (57 Federal Register 2098 (1992)). The 10. Chase Manhattan Corporation, 72 Federal Reserve Bulletin 203 time for filing comments has expired, and the Board (1986). 11. Id. has considered the application and all comments re- 12. Hongkong and Shanghai. ceived in light of the factors set forth in section 4(c)(8) 13. Id. of the BHC Act. 14. Id. 15. Id. Republic, with $32.2 billion in total consolidated 16. Id. assets, is the 11th largest commercial banking organi- 17. Id. zation in New York State.1 Republic operates one 18. Id. 19. Id. 20. Id. 21. Id. 22. Id. 1. Asset data are as of March 31, 1992. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

956 Federal Reserve Bulletin • December 1992 subsidiary bank and one subsidiary savings bank in closely related to banking under section 4(c)(8) of New York, and engages directly and through its sub- the BHC Act.2 sidiaries in a broad range of permissible nonbanking activities throughout the United States. Applicant has committed that Company will conduct Saban is organized under the laws of Panama and these activities in accordance with the conditions and operates a branch office in Gibraltar and a second-tier limitations set forth in Regulation Y.3 holding company in Luxembourg. These jurisdictions "Riskless principal" is the term used in the securihave laws limiting the disclosure of business or bank- ties business to refer to a transaction in which a ing information. broker/dealer, after receiving an order to buy (or sell) To address the Board's concerns about issues a security from a customer, purchases (or sells) the arising from the operations of foreign companies that security for its own account to offset a contemporaneoperate banking organizations in the United States, ous sale to (or purchase from) the customer.4 Riskless Saban and its principal shareholder have exercised principal transactions are understood in the industry to their right to waive certain provisions of foreign include only transactions in the secondary market. secrecy laws and have made various commitments Applicant thus proposes that Company would not sell designed to enable the Board to have ready and securities at the order of a customer that is the issuer complete access to the books and records of Saban of the securities to be sold or in any transaction where and its affiliates, and to monitor the operations of Company has a contractual agreement to place the Saban and its affiliates in the same manner that the securities as agent of the issuer. In acting as a riskless Board inspects and monitors the activities of domes- principal, Company also would not engage in any tic banking organizations. Among other commit- transaction involving a security for which it makes a ments, Saban and its principal shareholder each have market. committed: The Board previously has determined by order that, (1) To submit to personal jurisdiction in the U.S. subject to certain prudential limitations that address with respect to all aspects of enforcement of U.S. the potential for conflicts of interests, unsound bankbanking laws, and have exercised their rights to ing practices or other adverse effects, the proposed waive certain defenses to assertions of personal riskless principal activities are so closely related to jurisdiction over Saban and its principal shareholder banking as to be a proper incident thereto within the in the U.S.; meaning of section 4(c)(8) of the BHC Act. The Board (2) To appoint a registered agent in the U.S. accept- also has determined that purchasing and selling secuable to the Board for service of process; and rities on the order of investors as a riskless principal (3) To permit the Board at any time to inspect books does not constitute underwriting and dealing in secuand records of Saban and its subsidiaries, as well as rities for purposes of section 20 of the Glass-Steagall the companies controlled by this shareholder. Act, and that revenue derived from this activity is not subject to the 10 percent revenue limitation on ineligi- Local counsel in relevant jurisdictions have given ble securities underwriting and dealing. Applicant has opinions that local law would not prevent access to committed that Company will conduct its riskless books and records of these companies under these principal activities using the same methods and procecircumstances. The Board believes that these steps are dures, and subject to the same prudential limitations important in order to ensure that the Board has access established by the Board in the Bankers Trust and J.P. to relevant information necessary to monitor compli- Morgan orders.5 ance with the banking laws and to ensure that the location of an applicant or affiliate in a foreign juris- 2. See 12 C.F.R. 225.25(b)(4), (b)(15). diction does not impede the Board's ability to enforce 3. See id. Company will provide discretionary investment managecompliance with applicable U.S. banking laws. ment for institutional customers only, in accordance with the provisions of sections 225.2(g) and 225.25(b)(15)(ii) of Regulation Y. The Board previously has determined by regulation 4. See Securities and Exchange Commission Rule 10b-10(a)(8)(i) that engaging in the proposed: (12 C.F.R. 240.10b-10(a)(8)(i)). 5. Bankers Trust New York Corporation, 75 Federal Reserve (1) Investment advisory and financial advisory ser- Bulletin 829 (1989) ("Bankers Trust"); J.P. Morgan and Company, vices, including providing advice regarding mergers, Inc., 76 Federal Reserve Bulletin 26 (1990) ("J.P. Morgan"). As acquisitions, and capital raising proposals by insti- detailed more fully in those orders, in addition to the commitments imposed by the Board in connection with underwriting and dealing in tutional customers; and securities, Company will maintain specific records that will clearly (2) Securities brokerage activities, including full-ser- identify all riskless principal transactions, and Company will not vice brokerage and exercising limited investment engage in any riskless principal transactions for any securities carried in its inventory. When acting as a riskless principal, Company will discretion on behalf of institutional customers, are only engage in transactions in the secondary market, and not at the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 957 Acting as a Conduit in Securities Borrowing and lender, the exchange of securities and collateral nec- Lending essary to the transaction.10 In order to approve an application submitted pursu- As part of its securities brokerage activities, Applicant ant to section 4(c)(8) of the BHC Act, the Board is proposes that Company engage in securities credit required to determine that the proposed activity is "so activities under the Board's Regulation T,6 including closely related to banking as to be a proper incident engaging in securities borrowing and lending activities. thereto." 12 U.S.C. § 1843(c)(8). Regulation T, which restricts the extent to which securities broker/dealers may obtain and extend credit, Closely Related!Proper Incident to Banking permits securities borrowing and lending transactions Analysis by broker/dealers if these activities are conducted "for the purpose of making delivery of the securities in the A. Closely Related to Banking Analysis case of short sales, failure to receive securities required to be delivered, or other similar situations."7 Under the National Courier test, the Board may find The Board previously has permitted a bank holding that an activity is closely related to banking for purcompany subsidiary to engage, as part of its securities poses of section 4(c)(8) if banks generally: brokerage activities, in lending and borrowing securi- (1) Conduct the proposed activity; ties that the bank or bank holding company holds on (2) Provide services that are operationally or funcbehalf of customers.8 In addition, banks and bank tionally so similar to the proposed activity as to holding companies are permitted to borrow and lend equip them particularly well to provide the proposed securities held in their own portfolios.9 services; or In this case, Applicant also proposes that Company (3) Provide services that are so integrally related to borrow and lend the securities of non-customer third the proposed service as to require their provision in parties. Company would seek out counterparties to a specialized form.11 securities borrowing and lending transactions and would assume much the same risk in these transac- The Board believes that banks generally perform tions as if Company were borrowing or lending its own services that are operationally or functionally so similar securities or its customers' securities. In this capacity, to the proposed conduit services as to equip them Company would act as a "conduit" or "intermediary" particularly well to provide these services. In particuin securities borrowing and lending. Company would lar, the proposed conduit activity is operationally and supply—upon the request of another broker/dealer functionally similar to the securities borrowing and who is unable to obtain securities needed to satisfy lending activities banks conduct. Currently, national customer investment or operational needs—securities and state banks are permitted to lend securities from not available in Company accounts or customer ac- their own portfolio and, with the customer's consent, counts by seeking out third party non-customer lend- from the accounts of customers, and banks regularly do ers. In addition to locating the securities, Company borrow securities to meet their own needs and the proposes to coordinate, on behalf of the borrower and needs of customers.12 The substitution of a third party in place of a trust or other customer of a bank does not change significantly the way in which the securities lending activity is conducted, either operationally or order of a customer that is the issuer of the securities to be sold, will not act as riskless principal in any transaction involving a security for which it makes a market, nor hold itself out as making a market in the security that it buys and sells as a riskless principal. Moreover, 10. Company will coordinate this exchange through accounts estab- Company will not engage in riskless principal transactions on behalf of lished at the Depository Trust Company ("DTC"), a privately-held its foreign affiliates that engage in securities dealing activities outside national clearinghouse for the settlement of transactions in corporate the United States. and municipal securities. Once Company has located the desired 6. See 12 C.F.R. 225.25(b)(15). securities, the securities will be transferred to an account maintained 7. See 12 C.F.R. 220.16. by Company at DTC and simultaneously delivered to an account of 8. See The Chase Manhattan Corporation, 69 Federal Reserve the borrower at DTC. At the same time, the borrower must post Bulletin 725 (1983) ("Chase Manhattan"). The Board found that collateral which Company will receive into its DTC account and securities borrowing and lending is closely related to banking and simultaneously deliver to an account maintained by the lender at incidental to permissible discount securities brokerage activities and the DTC. extension of margin credit under Regulation T. See also Canadian 11. See National Courier Association v. Board of Governors, 516 Imperial Bank of Commerce, 74 Federal Reserve Bulletin 571, 572 n.l F.2d 1229, 1237 (D.C. Cir. 1975)("National Courier")- The Board (1988). may also consider any other factor that an applicant may advance to 9. See the Federal Financial Institutions Examination Council's demonstrate a reasonable or close connection or relationship to ("FFIEC") Supervisory Policy Statement on Securities Lending, banking. 49 Federal Register 794, 806 (1984); Securities Industry F.R.R.S. § 3-1579.5 (1985) (articulating guidelines for securities Ass'n v. Board of Governors, 468 U.S. 207, 210-11 n.5. lending activities of banks). 12. See supra note 9. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

958 Federal Reserve Bulletin • December 1992 functionally. The same steps and procedures necessary significantly enhanced if it has developed a role in the to effectuate the loan of a customer's securities are marketplace as an intermediary. followed in loaning the securities of a non-customer 2. Adverse Effects. Applicant contends that acting third party. as a conduit in securities borrowing and lending poses The risk associated with the proposed conduit ac- the risks to Company that: tivity is substantially the same risk that a bank must (1) The borrower will not replace the securities manage in lending securities from its own portfolio or loaned; the portfolio of a customer. The risk to Company in (2) The lender of the securities will not return the acting as a conduit is limited to ensuring that the collateral posted by the borrower; and collateral posted by the borrower reflects continuously (3) The collateral posted by the borrower will not the market value of the securities loaned. Company cover sufficiently the value of the securities borhas committed to mark this collateral to market on a rowed. daily basis and make calls for supplemental collateral where necessary.13 Company also has represented that These risks are the same as the risks inherent in it will not provide any indemnification to non-cus- engaging in securities borrowing and lending involving tomer third party lenders of securities. customer securities or securities in the lending com- For these reasons, the Board believes that the pany's portfolio.14 proposed conduit activity is closely related to banking To minimize risk, Company would act as a conduit for purposes of section 4(c)(8) of the BHC Act. only in situations where the potential borrower and lender are matched before the transaction.15 In addi- B. Proper Incident to Banking Analysis tion, Company will take various measures to minimize operational risks, including conducting its conduit ac- In determining whether an activity is a proper incident tivities in accordance with the collateral requirements to banking, the Board must consider whether the activ- imposed on the borrowers of securities by Regulation ity "can reasonably be expected to produce benefits to T.16 At the end of each day, Company will mark to the public, such as greater convenience, increased market the collateral posted by the borrower in all competition, or gains in efficiency, that outweigh pos- transactions in which Company has loaned securities or sible adverse effects, such as undue concentration of acted as an intermediary for a lender. Company also resources, decreased or unfair competition, conflicts of proposes to establish credit guidelines for potential interests, or unsound banking practices." borrowers and lenders,17 and Applicant has committed 1. Public Benefits. Applicant maintains that perform- that Company's conduit activities will comply, in all ing the proposed conduit activity through Company will regards, with the guidelines, as applicable, set forth in provide competition to the relatively few institutions in the United States that engage in this activity. Additionally, the de novo participation of Company in this 14. In a 1947 Board interpretation of the parameters of securities activity should promote the efficient operation of the borrowing and lending under Regulation T, the Board acknowledged securities market by facilitating the completion of short that Regulation T does not require that securities be borrowed only from the customer accounts or portfolio of the broker/dealer lending sales and the satisfaction of the operational needs of the securities: "The present language of the provision does not require broker/dealers in the market. Acting as a conduit in that the delivery for which the securities are borrowed must be on a securities borrowing and lending also will provide transaction which the borrower has himself made, either as agent or as principal; he may borrow under the provision in order to relend to greater convenience both to Company's customers and someone else for the latter person to make such a delivery." 33 to other participants in the securities markets. In this Federal Reserve Bulletin 981 (1947). 15. A conduit transaction would only commence when a broker/ regard, Company maintains that its ability to borrow dealer needing to borrow securities approaches Company. Company securities for its own or its customers' accounts will be has committed that it will not, under any circumstances, borrow securities in anticipation of a transaction. 16. Applicant has committed that the Board's Regulation T— requiring that all securities borrowing and lending transactions be 13. If the price of the borrowed securities increases, the borrower is collateralized by at least 100 percent of the value of the securities as required under Regulation T to provide additional collateral to Com- computed on a daily basis—shall be Company's minimum guideline pany, which in turn through transactions at DTC, passes the collateral for posting collateral, and that Company will require many transacto the initial lender of the securities. In the event the borrower is tions to be collateralized in excess of 100 percent of the value of the unable to meet this requirement, Company will have the contractual securities marked-to-market. right to terminate the borrowing transaction by purchasing the secu- 17. These credit policies will include a review of all lenders and rities in the open market and delivering them to the lender, who will borrowers and the establishment of a credit committee which will then be obligated to return the borrower's collateral to Company. determine limits on the credit exposure of any single borrower. Because the borrowed securities will be marked to market by Com- Applicant proposes that Company will transact its business only with pany daily, the maximum exposure to Company in directly or indi- a select group of well-capitalized broker/dealers—most of which are rectly borrowing or lending securities is one day's movement in the members of the New York Stock Exchange—that will not be brokerprice of the borrowed securities. age customers of Company. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 959 the FFIEC Supervisory Policy Statement on Securities previous Board orders. The Board's determination also Lending.18 is subject to all of the conditions set forth in Regulation Based on all the facts of record, including the Y, including those in sections 225.4(d) and 225.23(b), termsand conditions under which the Applicant pro- and to the Board's authority to require modification or poses to conduct these activities, the Board believes termination of the activities of a bank holding company that Company's engaging in the proposed conduit or any of its subsidiaries as the Board finds necessary to activity is not likely to result in significantly adverse assure compliance with, and to prevent evasion of, the effects, such as undue concentration of resources, provisions of the BHC Act and the Board's regulations decreased or unfair competition, conflicts of interests, and orders issued thereunder. For purposes of this or unsound banking practices that would outweigh the action, these commitments and conditions are both public benefits of Applicant's proposal, such as greater considered conditions imposed in writing by the Board convenience, increased competition or gains in effi- in connection with its findings and decision and, as ciency.19 such, may be enforced in proceedings under applicable law. This transaction shall not be consummated later Other Considerations than three months after the effective date of this Order, unless such period is extended for good cause by the The financial and managerial resources of Applicant Board or by the Federal Reserve Bank of New York, and Company also are consistent with approval of this pursuant to delegated authority. application. The record also indicates that the conduct By order of the Board of Governors, effective of all of the activities that Applicant has applied to October 9, 1992. conduct through Company can reasonably be expected to produce public benefits that outweigh the possible Voting for this action: Chairman Greenspan and Governors adverse effects associated with this proposal. In partic- Mullins, Kelley, LaWare, Lindsey, and Phillips. Absent and ular, the de novo entry of Company into the markets for not voting: Governor Angell. all of these services should increase competition among WILLIAM W. WILES the providers of these services. Thus, based on consid- Secretary of the Board eration of all the relevant facts, the Board concludes that the balance of the public interest factors that it is required to consider under section 4(c)(8) is favorable. ACTIONS TAKEN UNDER THE FEDERAL DEPOSIT Accordingly, based on all the facts of record, and INSURANCE CORPORATION IMPROVEMENT ACT subject to all the conditions and commitments in this Order, the Board has determined that the proposed By the Board application should be, and hereby is, approved. Approval of this proposal is specifically conditioned Citizens Bancshares of Marysville, Inc. on compliance by Applicant and its principal share- Marysville, Kansas holder and Company with the commitments made in connection with this application, as supplemented, and Order Approving Conversion Transaction through with the conditions referenced in this Order and in Merger Pursuant to Section 5(d)(3) of the Federal Deposit Insurance Act 18. In addition to establishing credit policies and a credit committee, Citizens Bancshares of Marysville, Inc., Marysville, Company has committed that it will institute written policies and Kansas ("Citizens"), a bank holding company within procedures prescribed by the FFIEC, which include, among other provisions, the establishment of: the meaning of the Bank Holding Company Act, has (1) An adequate record-keeping system; applied pursuant to section 5(d)(3)(A)(ii) of the Federal (2) Administrative procedures for marking securities to market and making timely margin calls; Deposit Insurance Act ("FDI Act") (12 U.S.C. (3) Collateral requirements and procedures; and § 1815(d)(3)(A)(ii)) to acquire and assume, through its (4) Written guidelines for selecting investments for cash collateral subsidiary The Citizens State Bank of Marysville, where third party securities are loaned, and providing for written agreements with both borrowers and lenders of securities. Marysville, Kansas ("Bank"), a state non-member 19. Company would not be involved in making any public offering of bank, certain assets and liabilities of the Marysville, new securities as agent for an issuer, and thus, Company would not be Kansas, branch of First Savings Bank, F.S.B., Manengaged in underwriting. Moreover, Company would not be involved in the public sale of securities or in acting as a dealer for its own hattan, Kansas ("First Savings Branch").1 Section account in buying or selling securities. Instead, Company would be limited to borrowing or lending securities in transactions that do not involve the sale or distribution of securities. For these and other reasons, the proposed conduit activity does not appear to be prohib- 1. This transaction also is subject to approval by the Federal ited by the Glass-Steagall Act. Deposit Insurance Corporation ("FDIC") under the FDI Act and the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

960 Federal Reserve Bulletin • December 1992 5(d)(3) of the FDI Act requires the Board to approve the sidered as a thrift institution with its deposits weighted transfer of such assets and liabilities to a bank holding at 50 percent, the portion of First Savings Branch to be company's subsidiary bank that is a Bank Insurance acquired would constitute the seventh largest deposi- Fund member and to follow the procedures and con- tory institution in the market, holding deposits represider the factors set forth in the Bank Merger Act senting approximately 3 percent of market deposits. (12 U.S.C. § 1828(c)).2 Upon consummation of the proposed transaction, Cit- Notice of the application, affording interested per- izens would control deposits of $88.8 million, represons an opportunity to submit comments, has been senting approximately 36 percent of market deposits. given in accordance with the Bank Merger Act. As The Herfindahl-Hirschman Index ("HHI") would inrequired by the Bank Merger Act, reports on the crease by 395 points to 2224.7 competitive effects of the proposal were requested from A number of characteristics of the Marshall County the United States Attorney General, the Office of the banking market indicate that the increase in concentra- Comptroller of the Currency ("OCC"), and the FDIC. tion levels as measured by the HHI for this market The time for filing comments has expired, and the overstates the effect of this proposal on competition in Board has considered the application and all the com- the market. First, the market has experienced a signifments received in light of the factors set forth in the icant economic decline in recent years. Marshall Bank Merger Act and section 5(d)(3) of the FDI Act. County is a rural county in northeastern Kansas on the Citizens is the 70th largest commercial banking Nebraska border that has experienced a population organization in Kansas, controlling deposits of decrease of 9.3 percent to 11,600 between 1980 and $73.8 million, representing less than 1 percent of total 1990. During the same period, Kansas as a whole deposits in commercial banks in the state.3 Upon experienced a population increase of 5.4 percent. There acquiring First Savings Branch, Citizens would as- is currently one depository institution competitor for sume deposits of $15 million, and would become the every 967 residents in the market, a ratio that is more 51st largest commercial banking organization in Kan- than three times greater than the average for this ratio sas, controlling deposits of $88.8 million, representing statewide in Kansas. Moreover, per capita income in less than 1 percent of total deposits in commercial the market is approximately 78 percent of the state banks in the state.4 average. Banking organizations in the Marshall County Citizens and First Savings Branch compete in the banking market experience below-average profitability, Marshall County, Kansas, banking market.5 Citizens with an average return on assets of less than 1 percent is the largest commercial banking or thrift organization in 1991, which is approximately 15 percent below the (together, "depository institution") in the market, average in Kansas.8 These and other facts of record controlling deposits of $73.8 million, representing ap- regarding the market suggest that the ability of the proximately 29 percent of total deposits in depository Marshall County banking market to support a large institutions in the market ("market deposits").6 Con- number of competitors has deteriorated.9 The Board also notes that eleven depository institutions would continue to operate in the market after Bank Merger Act, and the FDIC has approved this proposal. See consummation of this proposal, and the second largest 12 U.S.C. §§ 1815(d)(3)(A)(i) and 1828(c). depository institution in the market would control ap- 2. These factors include considerations relating to competition, the financial and managerial resources and future prospects of the existing and proposed institutions, and the convenience and needs of the communities to be served. 12 U.S.C. § 1828(c). 3. Bank deposit data are as of December 31, 1991. Thrift deposit 452 (1992); First Banks, Inc., 76 Federal Reserve Bulletin 669, 670 data are as of June 30, 1991. n. 9 (1990). 4. First Savings Branch currently controls $38.2 million in deposits. 7. Under the revised Department of Justice Merger Guidelines, Citizens has committed that Bank will not assume deposits or acquire 49 Federal Register 26,823 (1984), a market in which the post-merger assets from First Savings Branch in an amount greater than HHI is above 1800 is considered to be highly concentrated. In such $15 million. markets, the Justice Department is likely to challenge a merger that 5. The Marshall County, Kansas, banking market is approximated increases the HHI by more than 50 points. The Department of Justice by Marshall County, Kansas. has informed the Board that, as a general matter, a bank merger or 6. In this context, depository institutions include commercial banks, acquisition will not be challenged, in the absence of other factors savings banks and savings associations. Market share data are based indicating anticompetitive effects, unless the post-merger HHI is at on calculations in which the deposits of thrift institutions are included least 1800 and the merger increases the HHI by 200 points. The Justice at 50 percent. The Board previously has indicated that thrift institu- Department has stated that the higher-than-normal HHI thresholds for tions have become, or have the potential to become, major competi- screening bank mergers for anticompetitive effects implicitly recogtors of commercial banks. See WM Bancorp, 76 Federal Reserve nize the competitive effect of limited-purpose lenders and other Bulletin 788 (1990); Midwest Financial Group, 75 Federal Reserve non-depository financial entities. Bulletin 386 (1989); National City Corporation, 70 Federal Reserve 8. Data are based on financial reports submitted by Kansas financial Bulletin 743 (1984). Because the assumed deposits would be controlled institutions and the Rand McNally Commercial Atlas and Marketing by a commercial banking organization under Citizens' proposal, those Guide (1992). deposits are included at 100 percent in the calculation of its pro forma 9. See, e.g., First Formoso, Inc., 76 Federal Reserve Bulletin 541 market share. See Norwest Corporation, 78 Federal Reserve Bulletin (1990). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 961 proximately 27 percent of market deposits. The Board (3) Since Bank is located in Kansas and is acquiring also has considered that the sale of First Savings certain assets and assuming certain liabilities of a Branch will assist First Savings Bank, F.S.B., to in- Kansas branch office of a federal savings bank, the crease its capital ratios and that there does not appear proposed transaction would comply with the Douglas to be an alternative purchaser. Amendment if First Savings Bank, F.S.B., were a The United States Attorney General has indicated state bank which Citizens were applying to acquire that the proposal would not have a significantly ad- directly. See 12 U.S.C. § 1815(d)(3)(E) and (F). verse effect on competition in any relevant banking market. The FDIC has approved this proposal pursu- Based on the foregoing and other facts of record, the ant to the FDI Act and the Bank Merger Act. The OCC Board has determined that the application should be, has not objected to consummation of this proposal or and hereby is, approved. This approval is specifically indicated that the proposal would have any significant conditioned upon compliance by Citizens with all of adverse competitive effects. the commitments made in connection with this appli- Based on these and other facts of record, the Board cation, and these commitments have been relied on in has determined that consummation of this proposal is reaching this decision. For the purpose of this action, not likely to result in a significantly adverse effect on these commitments will be considered conditions imcompetition in the Marshall County banking market or posed in writing by the Board in connection with its any other relevant banking market. findings and decision, and, as such, may be enforced in The financial and managerial resources and future proceedings under applicable law. The acquisition prospects of Citizens and Bank are consistent with shall not be consummated before the thirtieth calendar approval of this proposal. Considerations relating to day following the effective date of this Order, or later the convenience and needs of the communities to be than three months after the effective date of this served, and the other factors the Board must consider Order, unless such period is extended for good cause under provisions of the Bank Merger Act, also are by the Board or by the Federal Reserve Bank of consistent with approval. Kansas City, acting pursuant to delegated authority. Moreover, the record in this case shows that: By order of the Board of Governors, effective (1) The transaction will not result in the transfer of October 19, 1992. any federally insured depository institution's federal deposit insurance from one federal deposit insur- Voting for this action: Chairman Greenspan and Governors ance fund to the other; Mullins, Angell, Kelley, LaWare, Lindsey, and Phillips. (2) Citizens and Bank currently meet, and upon consummation of the proposed transaction will con- JENNIFER J. JOHNSON tinue to meet, all applicable capital standards; and Associate Secretary of the Board ACTIONS TAKEN UNDER THE FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991 By the Director of the Division of Banking Supervision and Regulation and the General Counsel of the Board Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Acquired Surviving Approval Bank Holding Company Thrift Bank(s) Date BW3 Bancorporation, Midland Savings Bank, Liberty Bank & September 25, 1992 West Des Moines, Iowa F.S.B., Trust, NA, Des Moines, Iowa Fonda, Iowa Citizens Bancshares of Eldon, United Savings and Loan Citizens Bank of October 8, 1992 Inc., Association, Eldon, Eldon, Missouri Lebanon, Missouri Eldon, Missouri Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

962 Federal Reserve Bulletin • December 1992 Actions taken—Continued Acquired Surviving Approval Bank Holding Company Thrift Bank(s) Date First Fidelity Bancorporation, The Howard Savings First Fidelity Bank, October 2, 1992 Lawrenceville, New Jersey Bank, N.A., New Jersey, Newark, New Jersey Newark, New Jersey Mid Am, Inc., The Citizens Loan and The Farmers Banking September 25, 1992 Bowling Green, Ohio Building Company, Company N.A., Lima, Ohio Lake view, Ohio Mid Am, Inc., Home Savings of The Farmers Banking October 2, 1992 Bowling Green, Ohio America, F.S.B., Company N.A., Irwindale, California Lake view, Ohio SouthTrust Corporation, Colony Bank SouthTrust Bank of October 30, 1992 Birmingham, Alabama Clearwater, Florida West Florida, SouthTrust of Florida Inc. St. Petersburg, Jacksonville, Florida Florida 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 Effective Applicant(s) Bank(s) Date Security Capital Bancorp, OMNIBANK, Inc., A State Savings October 30, 1992 Salisburg, North Carolina Bank, SSB, Salisbury, Maryland Citizens Savings, Inc., SSB Concord, North Carolina Home Savings Bank, Inc., SSB Kings Mountain, North Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 963 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 ABC Bancorp, Cairo Banking Company, Atlanta September 25, 1992 Moultrie, Georgia Cairo, Georgia Acquisition Corporation, LeavCorp, Inc., Kansas City October 13, 1992 Leawood, Kansas Leavenworth, Kansas Bellwood Community Holding Bank of the Valley, Kansas City October 13, 1992 Company, Bellwood, Nebraska Bellwood, Nebraska Boatmen's Bancshares, Inc., Catoosa Bancshares, Inc., St. Louis September 28, 1992 St. Louis, Missouri Catoosa, Oklahoma Boatmen's Bancshares, Inc., Security Bancshares, St. Louis September 28, 1992 St. Louis, Missouri Inc., Tulsa, Oklahoma BOK Financial Corporation, Southwest Trustcorp, Kansas City October 1, 1992 Tulsa, Oklahoma Inc., Oklahoma City, Oklahoma Carrollton Bancshares The First National Bank Kansas City September 29, 1992 Corporation, of Carrollton, Carrollton, Missouri Carrollton, Missouri Central Bancshares, Inc., The First Central Cleveland October 9, 1992 St. Paris, Ohio National Bank of St. Paris, St. Paris, Ohio Childress Bancshares, Inc., Childress Bancshares of Dallas October 19, 1992 Childress, Texas Delaware, Inc., Wilmington, Delaware First Bank & Trust of Childress, Childress, Texas Childress Bancshares of First Bank & Trust of Dallas October 19, 1992 Delaware, Inc., Childress, Wilmington, Delaware Childress, Texas Coal City Corporation, Manufacturers National Chicago September 25, 1992 Coal City, Illinois Corporation, Chicago, Illinois Decatur Investment, Inc., State Bank of Atwood, Kansas City October 8, 1992 Oberlin, Kansas Atwood, Kansas Deuel County Interstate Bank Deuel County State Bank, Kansas City October 6, 1992 Company, Chappell, Nebraska Chappell, Nebraska Dunlap Iowa Holding Co., Soldier Valley Financial Chicago September 28, 1992 Dunlap, Iowa Services, Inc., Soldier, Iowa Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

964 Federal Reserve Bulletin • December 1992 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date Firstar Corporation, DSB Corporation, Chicago October 6, 1992 Milwaukee, Wisconsin Deerfield, Illinois Firstar Corporation of Illinois, Milwaukee, Wisconsin First Bancorp of Kansas, WRB Bancshares, Inc., Kansas City October 16, 1992 Wichita, Kansas Oklahoma City, Oklahoma First Midwest Corporation of West Central Illinois Chicago October 13, 1992 Delaware, Bancorp, Inc., Elmwood Park, Illinois Monmouth, Illinois Georgia Bank Financial FCS Financial Atlanta October 21, 1992 Corporation, Corporation, Augusta, Georgia Martinez, Georgia Harbor Bankshares Corporation, The Harbor Bank of Richmond October 2, 1992 Baltimore, Maryland Maryland, Baltimore, Maryland Hawkeye Bancorporation, Jasand, Inc., Chicago October 13, 1992 Des Moines, Iowa Cedar Rapids, Iowa City National Bank of Cedar Rapids, Cedar Rapids, Iowa Heartland Bancorp, Inc., First National Bank and Chicago September 23, 1992 El Paso, Illinois Trust Company in Gibson City, Gibson City, Illinois Key Centurion Bancshares, Inc., Peoples Bank of Charles Richmond September 30, 1992 Charleston, West Virginia Town, Charles Town, West Virginia Liberty Bancorp, Inc., F & M Bancorporation, Kansas City October 16, 1992 Oklahoma City, Oklahoma Inc., Tulsa, Oklahoma Liberty Bancorp, Inc., Mid City Bank, N.A., Kansas City October 16, 1992 Oklahoma City, Oklahoma Midwest City, Oklahoma Mercantile Acquisition Johnson County St. Louis October 9, 1992 Corporation of Kansas I, Bankshares, Inc., St. Louis, Missouri Prairie Village, Kansas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 965 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date Mercantile Bancorporation Inc., Crown Bancshares II, St. Louis October 9, 1992 St. Louis, Missouri Inc., Shawnee Mission, Kansas Johnson County Bankshares, Inc., Prairie Village, Kansas MidAmerican Corporation, Shawnee Mission, Kansas MNB Bancshares, Inc., Manhattan National Kansas City October 20, 1992 Manhattan, Kansas Bank, Manhattan, Kansas Mohler Bancshares, Inc., First National Bank of Kansas City October 1, 1992 Harvey ville, Kansas Harvey ville, Harvey ville, Kansas New Mexico National Financial Western Bancshares of Dallas October 16, 1992 Incorporated, Truth or Consequences, Roswell, New Mexico Inc., Truth or Consequences, New Mexico FirstBank Truth or Consequences, Truth or Consequences, New Mexico Resource One, Inc., The Grant County State Kansas City October 22, 1992 Ulysses, Kansas Bank, Ulysses, Kansas Second Century Financial Bank of Perry, Kansas City October 7, 1992 Corporation, Perry, Kansas Perry, Kansas Sun Financial Corporation, The Security Bank of St. Louis October 8, 1992 Earth City, Missouri Mountain Grove, Mountain Grove, Missouri Synovus Financial Corporation, First Commercial Atlanta October 7, 1992 Columbus, Georgia Bancshares, Inc., TB&C Bancshares, Inc., Jasper, Alabama Columbus, Georgia Fort Rucker Bancshares, Inc., Fort Rucker, Alabama Synovus Financial Corporation, TB&C Bancshares, Inc., Atlanta October 7, 1992 Columbus, Georgia Columbus, Georgia Interim CB&T Bank of Russell County, Phenix City, Alabama Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

966 Federal Reserve Bulletin • December 1992 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date Tomoka Bancorp, Inc., Tomoka State Bank, Atlanta October 9, 1992 Ormond Beach, Florida Ormond Beach, Florida United Nebraska Financial First Security Bank of Kansas City October 16, 1992 Company, Holdrege, Grand Island, Nebraska Holdrege, Nebraska Section 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date Brooke Corporation, Brooke State Bank, Kansas City October 16, 1992 Jewell, Kansas Jewell, Kansas Fidelity Southern Corporation, Fidelity National Capital Atlanta October 15, 1992 Decatur, Georgia Investors, Inc., Decatur, Georgia Mercantile Bancorporation Inc., MidAmerican Insurance St. Louis October 9, 1992 St. Louis, Missouri Agency, Inc., Shawnee Mission, Kansas Mid Am, Inc., Ultra Bancorp, Cleveland October 2, 1992 Bowling Gree, Ohio Xenia, Ohio NBD Bancorp, Inc., INB Financial Chicago October 6, 1992 Detroit Michigan Corporation, NBD Indiana, Inc., Indianapolis, Indiana Detroit, Michigan BHC Financial, Inc., Philadelphia, Pennsylvania Norwest Corporation, PN Financial Services, Minneapolis October 8, 1992 Minneapolis, Minnesota Inc., Piscataway, New Jersey Prairieland Bancorp, Inc., Dunteman and Co., Chicago October 8, 1992 Bushnell, Illinois Bushnell and Lewistown, Illinois Wabasha Holding Company, First State Insurance of Minneapolis October 16, 1992 Wabasha, Minnesota Wabasha, Inc., Wabasha, Minnesota Sections 3 and 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date Deuel County Interstate Bank Community Insurance Kansas City October 6, 1992 Company, Agency, Inc., Chappell, Nebraska Hastun, Colorado Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 967 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 Centura Bank, Peoples Federal Savings Richmond October 7, 1992 Rocky Mount, North Carolina Bank, Wilmington, North Carolina Cole Taylor Bank, Cole Taylor Chicago October 9, 1992 Chicago, Illinois Bank/Yorktown, Lombard, Illinois Custer County Bank, Green Mountain Bank, Kansas City October 9, 1992 Westcliflfe, Colorado Fountain Branch, Fountain, Colorado Mellon Bank (MD), Standard Federal Savings Richmond October 2, 1992 Rockville, Maryland Bank, Gaithersburg, Maryland PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits dismiss on August 10, 1992. On September 14, 1992, against the Federal Reserve Banks in which the Board the plaintiff filed a notice of appeal. of Governors is not named a party. State of Idaho, Department of Finance v. Board of Governors, No. 92-70107 (9th Cir., filed February Castro v. Board of Governors, No. 92-1764 (D. Dis- 24, 1992). Petition for review of Board order returntrict of Columbia, filed July 29, 1992). Freedom of ing without action a bank holding company applica- Information Act case. tion to relocate its subsidiary bank from Washington Board of Governors v. bin Mahfouz, No. 92-CIV-5096 to Idaho. The Board's brief was filed on June 29, (S.D. New York, filed July 8, 1992). Action to freeze 1992. Oral argument was held October 6, 1992. assets of individual pending administrative adjudica- In re Subpoena Served on the Board of Governors, tion of civil money penalty assessment by the Board. Nos. 91-5427, 91-5428 (D.C. Cir., filed December On July 8, 1992, the court issued a temporary re- 27, 1991). Appeal of order of district court, dated straining order restraining the transfer or disposition December 3, 1991, requiring the Board and the of the individual's assets. On July 23, the court Office of the Comptroller of the Currency to produce denied the individual's motion for expedited discov- confidential examination material to a private litiery on the ground that, as a fugitive from a criminal gant. On June 26,1992, the court of appeals affirmed indictment, he is disentitled from seeking relief from the district court order in part, but held that the bank the court. examination privilege was not waived by the agen- Zemel v. Board of Governors, No. 92-1057 (D. District cies' provision of examination materials to the exof Columbia, filed May 4, 1992). Age Discrimination amined institution, and remanded for further considin Employment Act case. eration of the privilege issue. Fields v. Board of Governors, No. 92-3920 (6th Cir., First Interstate BancSystem of Montana, Inc. v. filed September 14, 1992). Federal Tort Claims Act Board of Governors, No. 91-1525 (D.C. Cir., filed complaint alleging misrepresentation during applica- November 1, 1991). Petition for review of Board's tion process. The district court for the Northern order denying on Community Reinvestment Act District of Ohio granted the Board's motion to grounds the petitioner's application under section 3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

968 Federal Reserve Bulletin • December 1992 of the Bank Holding Company Act to merge with FINAL DECISION Commerce BancShares of Wyoming, Inc. On August 19, 1992, the court granted petitioner First This is an administrative enforcement proceeding Interstate's motion for a stay of the proceedings. instituted by the enforcement staff ("Enforcement Counsel") of the Board of Governors of the Federal Board of Governors v. Kemal Shoaib, No. CV 91-5152 Reserve System (the "Board") against Respondent (C.D. California, filed September 24, 1991). Action James L. Magee, an officer and director of Farmers to freeze assets of individual pending administrative Bank and Trust Co., Blytheville, Arkansas ("FBT" adjudication of civil money penalty assessment by or the "Bank") and Farmers Bancorp, Inc., the Board. On October 15, 1991, the court issued a Blytheville, Arkansas, ("Bancorp"). Following an preliminary injunction restraining the transfer or administrative hearing, Administrative Law Judge disposition of the individual's assets. ("ALJ") Frederick M. Dolan, Jr. issued a Recom- Board of Governors v. Ghaith R. Pharaon, No. 91- mended Decision finding that from 1984 to 1990, CIV-6250 (S.D. New York, filed September 17, Magee used his official position at FBT to extract 1991). Action to freeze assets of individual pending from FBT's "Miscellaneous Expense" account payadministrative adjudication of civil money penalty ments to himself totalling hundreds of thousands of assessment by the Board. On September 17, 1991, dollars in excess of his salary and bonus, and that the court issued an order temporarily restraining the Magee caused FBT to pay to another individual, transfer or disposition of the individual's assets. Gaylon Lawrence, Sr. ("Lawrence"), hundreds of thousands of dollars in excess of the amount called Fields v. Board of Governors, No. 3.91CV069 (N.D. for in Lawrence's consulting agreement with FBT. Ohio, filed February 5, 1991). Appeal of denial of The ALJ found that this misconduct satisfies the request for information under the Freedom of Inforstatutory criteria for the Board to issue against mation Act. The Board's motion for summary judg- Magee an Order of Removal and Prohibition ("Proment was granted in part and its motion to dismiss hibition Order") pursuant to section 8(e)(1) of the was denied on June 23, 1992. Federal Deposit Insurance Act ("FDI Act") as amended, 12 U.S.C. § 1818(e)(1), prohibiting Magee from further participation in the affairs of any federally-supervised financial institution without the ap- FINAL ENFORCEMENT DECISION ISSUED BY THE proval of the appropriate supervisory agencies. BOARD OF GOVERNORS In his exceptions to the Recommended Decision, Magee does not deny that he caused the payments to United States of America be made, that the payments to himself constituted unsafe or unsound practices, or that he was negli- Before the Board of Governors of the Federal gent. Magee instead argues that the practices were Reserve System insufficiently grave in effect, and displayed insufficient culpability on his part, to justify his prohibition Washington, D.C. from banking. Magee has also, without stating any reasons, requested the opportunity to present oral argument before the Board with respect to his exceptions. Upon review of the administrative record, the In the Matter of Board hereby makes its Final Decision, and adopts the ALJ's Recommended Decision, Recommended James L. Magee Findings of Fact and Recommended Conclusions of Law, except as specifically supplemented or modi- An Institution-Affiliated fied herein. The Board therefore determines that the Party of Farmers Bank and attached Order of Removal and Prohibition shall Trust Company, Docket No. 91-024-E II issue against Magee, prohibiting him from future Blytheville, Arkansas and participation in the affairs of any federally-super- Farmers Bancorp, Inc. vised financial institution without the approval of the Blytheville, Arkansas appropriate supervisory agency. Because the legal and factual issues have been Respondent. thoroughly explained in the written submissions, the Board denies Magee's request for oral argument. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 969 Statement of the Case 2. Standards for Cease and Desist Order The FDI Act also provides that the Board may issue a A. Statutory Framework cease and desist notice against a financial institution or institution-affiliated party within its jurisdiction if the 1. Procedure and Standards for Prohibition Order Board has reasonable cause to believe, inter alia, that The FDI Act assigns responsibility to the ALJ for the the institution or party has engaged in an unsafe or conduct of an administrative hearing on a notice of unsound practice or has violated a law, rule, or reguintention to remove from office or prohibit participa- lation. 12 U.S.C. § 1818(b). tion. 12 U.S.C. § 1818(e)(4). Following the hearing, 3. Reporting Requirements the ALJ issues a recommended decision that is re- The Federal Reserve Act provides that banks that are ferred to the Board. The parties may then file with the members of the Federal Reserve System shall make Board exceptions to the ALJ's recommendations. The reports of condition upon the call of the appropriate Board makes the final findings of fact, conclusions of Federal Reserve Bank ("Call Reports") in the form law, and determination whether to issue an order of and containing the information prescribed by the prohibition. Id.; 12 C.F.R. 263.40 (1991).1 Board. 12 U.S.C. § 234 employees to civil and crimi- The Board is assigned substantive authority under nal penalties. Id.; 18 U.S.C. § 1005. the FDI Act to issue an order of prohibition against a bank official2 when the Board determines that the B. Related Proceedings record establishes each of three tiers of elements: (1) There must be a specified type of misconduct — The Board has initiated two other supervisory proviolation of law or regulatory restrictions, unsafe or ceedings related to this prohibition proceeding. On unsound practice, or breach of fiduciary duty; April 10, 1991, the same day that the Board issued the (2) The misconduct must have a prescribed effect — Notice that initiated this proceeding, the Board issued financial gain to the respondent, financial loss or an interim Order of Suspension from Office and Proother damage to the institution, or prejudice to the hibition of Participation that suspended Magee from depositors; and his positions pending the resolution of this prohibition (3) The misconduct must involve culpability of a proceeding. In addition, prior to the hearing in this certain degree — personal dishonesty or willful or case, the Board issued a cease and desist notice continuing disregard for the safety or soundness of against FBT and Bancorp that was the subject of a the institution.3 12 U.S.C. § 1818(e)(1), (e)(4). hearing before ALJ Dolan, who issued a recommended decision before FBT consented to issuance of Once an order of prohibition is issued against an the cease and desist order.4 official with respect to a particular bank, it is unlawful for that person to participate in any manner in the Findings and Conclusions conduct of the affairs of any federally insured depository institution, savings association, credit union, farm Upon review of the record of this proceeding, the credit bank, banking regulatory agency or any bank Board hereby adopts such of the ALJ's recommended holding company without the prior approval of the appropriate federal banking agency. 12 U.S.C. §§ 1818(b)(3), (e)(7) and (j). 4. Testimony from the cease-and-desist proceeding was introduced in this prohibition proceeding, and the ALJ made reference in his prohibition recommended decision to his previous recommended decision in the cease-and-desist proceeding. In the cease-and-desist proceeding, ALJ Dolan found that: (1) Magee, as Chairman and Chief Executive Officer of the Bank, had set his own compensation without disclosure of the amount to 1. While the Board's Rules of Practice and Procedure for Hearings, FBT's board of directors and consequently without the board's prior 12 C.F.R. Part 263, were amended during the pendency of this case, approval or contemporary ratification ("the Flawed Procedure"); the parties agree that the pre-Amendment rules govern this case. See (2) That Magee's total compensation was excessive and that the 12 C.F.R. Part 263 (1991). portion of Magee's total compensation that was accounted for as 2. As used in this Decision, "official" is used to denote an "miscellaneous expense" was unexplained and appeared to be "institution-affiliated party". See 12 U.S.C. § 1813(u). unjustified and without consideration (the "Excess Compensa- 3. While the specific substantive criteria for prohibition were tion"); modified by the 1989 amendments to the FDI Act effected by the (3) That the Call Report filed with the Federal Reserve was inac- Financial Institutions Reform, Recovery, and Enforcement Act of curate, in violation of the law, in that a portion of Magee's total 1989 ("FIRREA"), Pub. L. No. 101-73, 103 Stat. 183 (1989), which compensation was reported as "miscellaneous expense" rather became effective during the course of conduct at issue in this case, than as "Officers' Salary" (the "Inaccurate Call Reports"); and neither Enforcement Counsel nor Magee has suggested that the (4) That the record in the case showed that the payments to amendments have any substantive bearing on the issues in this case. Lawrence in excess of the amounts to which he was entitled under See, e.g., Magee Exceptions at ii (citing post-amendment law as the consulting agreement between Lawrence and FBT were undoccontrolling). umented and unjustified (the "Lawrence Payments"). RD 4-5. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

970 Federal Reserve Bulletin • December 1992 decision, findings, and conclusions as are not specifi- ment Counsel has established the Misconduct tier of cally modified herein as the findings and conclusions of elements necessary for entry of an order of prohibition. the Board, and incorporates by reference the ALJ's RD 44-45; Magee Exceptions ("Except.") ii. reasoning and citations to the record. The Board adopts the ALJ's findings and conclusions as the Magee's misconduct, as modified below,7 A. Relevant Individuals and Business Entities and therefore determines that the disguised payments to Magee reflected a number of unsafe and unsound FBT is a bank chartered by the state of Arkansas and banking practices and a violation of law a member of the Federal Reserve System. As such, (12 U.S.C. § 324) and that the payments to Lawrence FBT is subject to the provisions of the FDI Act and the also were an unsafe and unsound banking practice and supervision of the Federal Reserve System, including a breach of Magee's fiduciary duty to the Bank. both the Board and the Federal Reserve Bank of St. Louis (the "Reserve Bank"). 12 U.S.C. 1. The Disguised Payments to Magee § 1813(q)(2)(A). Bancorp is a bank holding company, The payments to Magee from the miscellaneous exalso subject to the Board's supervision (12 U.S.C. pense account began soon after Magee became Chair- § 1813(q)(2)(F», that owns all of FBT's outstanding man, CEO, and one of three members of the executive stock except for qualifying shares held by FBT's committee of FBT's board of directors in January directors. Recommended Decision ("RD") 7. Magee 1984. Every January, FBT's board of directors passed owns approximately 25 percent of Bancorp and is the a resolution delegating to its executive committee the sole voting trustee of the remaining 75 percent of authority to set officers' salaries. RD 45. Before Mag- Bancorp's outstanding shares, which are held in trust ee's time, officers' compensation consisted of a salary for the benefit of Lawrence's son. RD 8. plus a fixed ten percent bonus, which the officers At all times pertinent to this case, Magee has been considered to be part of their salary, with no discrethe chairman of FBT's board of directors, FBT's chief tionary bonuses. RD 45. When Magee became a executive officer, chairman of Bancorp's board of member of the executive committee in 1984, he estabdirectors, and president of Bancorp. Lawrence was a lished his own salary and ten percent bonus, which paid consultant to FBT, but was not an officer or were paid from FBT's "salary and bonus" account. employee. RD 8. RD 46-47. In addition to this compensation, however, Magee caused varying additional amounts of money to B. Misconduct be paid to him by FBT by charging the payments to FBT's miscellaneous expense account, an account The ALJ found that Magee's conduct embodied a normally reserved for expenses that cannot be categonumber of unsafe and unsound banking practices,5 a rized in any other general ledger account. RD 47. breach of his fiduciary duty to FBT, and a violation of Magee would instruct the Bank's Executive Secretary the Federal Reserve Act, which prohibits the filing of to have checks and debit tickets prepared and prefalse or misleading Call Reports with the Reserve Bank. sented to the Bank's president or executive vice 12 U.S.C. § 324. RD 44-57. While Magee continues to president — or in their absence to Magee himself — dispute in principle some of the ALJ's determinations for approval and signature. Board Exhibit ("Bd. Ex.") as to misconduct, Magee concedes that his conduct 23 ! 30. Magee initiated this practice unilaterally and represented an unsafe and unsound banking practice in determined in his sole discretion the amounts he would at least some respects,6 and so concedes that Enforce- take, without notifying the board of directors. RD 46. The ALJ found that, in so doing, Magee exceeded the authority delegated by the board of directors.8 RD 46. 5. While the FDI Act does not define the term "unsafe or unsound practice", which may be the predicate for cease and desist orders, prohibition orders, and civil money penalties (see 12 U.S.C. informing the board of directors, and the resulting inaccuracies in the §§ 1818(b)(1); 1818(e)(l)(A)(ii), 1818(i)(B)(i)(H), and 1818(i)(C)(i)(II)), Call Reports, constituted unsafe or unsound practices, but continues agencies and courts have interpreted the term to address any conduct to dispute in principle the ALJ's findings that the payments to contrary to prudent banking practices that potentially exposes a Lawrence were improper, and that the total amount of the payments financial institution to an abnormal risk of harm or loss. See, e.g., Van to Magee represented excessive compensation that was unsafe and Dyke v. Board of Governors, 876 F.2d 1377,1380 (8th Cir. 1989); First unsound. RD 44-45; Except, ii. Nat'I Bank of Eden v. Comptroller, 568 F.2d 610, 611 n.2 (8th Cir. 7. As explained below, the Board does not reach the ALJ's 1978) (per curiam); First Nat'l Bank of Bellaire v. Comptroller, 697 alternative finding that the amount of the payments to Magee, if F.2d 674,685 (5th Cir. 1983). The Van Dyke court affirmed the Board's viewed as legitimate compensation, would in itself have constituted an application of that standard to the related term, "disregard for safety unsafe or unsound practice. or soundness" as it relates to culpability. 876 F.2d at 1380; see 8. The ALJ found that the board of directors' delegation to the 12 U.S.C. § 1818(e)(l)(C)(ii). executive committee to establish "salaries" included the fixed ten 6. Magee concedes that the procedure by which he paid himself percent bonus, but did not constitute an open-ended authorization to amounts charged to the "miscellaneous expense" account without pay additional amounts to FBT's officers. RD 46 n.8. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 971 These "miscellaneous expense" amounts totalled hearing, Magee referred to the payments as "consult- $46,000 in 1984, $120,000 in 1985, $205,000 in 1986, ing fees", even though he testified that he did not have $200,000 in 1987, $75,500 in 1988, $139,200 in 1989, any management or consulting arrangement with FBT. and $159,250 in 1990. RD 48 n.9.9 RD 47-48; Bd. Ex. 23 1111 30,39.11 Magee testified at the The payments to Magee through the miscellaneous hearing that the payments were in the nature of expense account caused the nature of the payments to "discretionary bonuses" that he set based upon FBT's be disguised and FBT's reporting to be distorted in a performance measured against a formula that Magee number of respects. While various officers and other devised: FBT's return on assets, capital level, and employees were aware of the practice, Magee testified asset quality. RD 50. Magee testified that he did not that he made no disclosure of the practice to the full confide this formula to the board of directors. Tr. 271. board of directors. Transcript ("Tr.") 202. The prac- This testimony conflicted with Magee's previous detice resulted in inaccurate reporting of FBT's pay- nial to Reserve Bank examiners that any such "perments to Magee on its quarterly Call Reports, the formance criteria" existed. RD 50; Bd. Ex. 20 at formal mechanism for reporting to the Reserve Bank. (c)(1). The instructions on the Call Reports expressly require The ALJ did not credit the characterization of the that all payments to bank employees in connection payments as "discretionary bonuses" in light of the with their employment, however characterized conflicting prior statements by Magee, and in the (whether gross salaries, wages, overtime, bonuses, absence of a correlation between the "bonuses" and incentive compensation or extra compensation) be FBT's performance. RD 50-52.12 Furthermore, the reported as salaries and employee benefits. RD 63. ALJ determined that there was no appropriate author- Contrary to the instructions, FBT's call reports listed ity for Magee to set his own compensation.13 RD the excess payments to Magee under another category 46-47. In the absence of any credible explanation for — consistent with their nominal label of "miscellathese funds, the ALJ reasonably concluded that "Maneous expenses" — which, the ALJ found, had the gee was simply taking money from FBT for his own effect of concealing from Federal Reserve supervisors use." RD 48. The Board adopts these findings.14 and the public amounts that Magee was causing FBT to pay to him.10 RD 63-64. Similarly, the practice concealed the payments from other forms of formal disclosure, including an officer 11. Besides the services Magee performed in the normal course of his duties as chairman of FBT's board of directors and CEO, Magee questionnaire connected with the 1991 FBT examinaprovided no other documented services. RD 48. The ALJ therefore tion. RD 64. On FBT's audited financial statements reasonably concluded that the payments did not represent appropriate and tax returns, the payments to Magee were listed in management or consulting fees. RD 49. 12. The performance figures for the Bank, when compared to the categories of "consulting fees" or "managing Magee's "expense" payments and his total compensation, indicate fees", without attribution to Magee (or to any other that to the extent that Magee had a self-adopted scale for the recipient). RD 47. The payments were reported to the payments, he felt free to depart from that scale at will. For example, as the ALJ pointed out, FBT's return on assets and capital level Internal Revenue Service as income to Magee on declined from 1986 to 1987, but Magee still increased the overall total Form 1099 "Miscellaneous Income" forms, which of payments to himself in 1987. RD 51-52. report non-employee income, instead of on W-2 wage 13. The ALJ found that the payments exceeded the scope of the delegation of authority to the executive committee and that it would and salary forms. RD 47. have been an unsafe and unsound practice for the board of directors to Magee's characterization of the nature of the pay- authorize such a limitless delegation of authority over compensation. RD 46-47. ments has varied. In a sworn statement prior to the 14. The ALJ also found that, to the extent that the payments were viewed as procedurally legitimate compensation, the amounts of the payments were so excessive as to constitute a distinct unsafe or unsound practice. In light of its other findings as to Magee's miscon- 9. While the Notice made charges only with respect to the years duct, the Board need not and does not reach the issue of excessive 1988-1991, Magee introduced evidence relating to the years 1984-1987 compensation as an independent unsafe and unsound practice, and with respect to the payments from the miscellaneous expense account does not adopt either the ALJ's findings or Magee's proposed findings (see, e.g., Resp. Ex. 16) and therefore tacitly consented to the ALJ's as to this issue. and the Board's consideration of that evidence. In any event, the At the same time, however, the Board notes that the evidence nature of Magee's conduct with respect to those payments did not relating to the total amount Magee was taking from FBT as compared substantively change after 1987, so that the Board's conclusion would with the compensation of executives at other institutions supports the be the same whether or not the evidence relating to the years ALJ's findings as to Magee's motivation in paying himself from the 1984-1987 is considered. miscellaneous expense account, and thus his culpability. The ALJ 10. Magee signed some of the Call Reports in his capacity as a found that the practice of taking compensation from the "miscelladirector of FBT. See, e.g., Bd. Ex. 6,16. According to the Call Report neous expense" account was designed to disguise the nature of the form, the director's signatures "attest to the correctness of this Report payments so as to avoid inevitable regulatory criticism and that it had of Condition . . . and declare that it has been examined by us and to that effect for seven years. RD 54-55. The desire to avoid unwelcome the best of our knowledge and belief has been prepared in conform- attention from Bank regulators provides a plausible motive for Magance with the instructions issued by the appropriate Federal regula- ee's practice in the absence of any reasonable alternative explanation tory authority and is true and correct." Id. from Magee. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

972 Federal Reserve Bulletin • December 1992 2. The Lawrence Payments C. Effect The ALJ also found that Magee's practice of paying sums to Lawrence in excess of the amounts called for 1. Financial gain or other benefit to Magee in his consulting contract, a payment reserved to Under the FDI Act, the second tier of elements Magee's sole discretion, was another unsafe or un- necessary for an order of prohibition may be satisfied sound practice and a breach of Magee's fiduciary duty by a showing that the respondent "has received finanto FBT. RD 57; Recommended Conclusion of Law cial gain or other benefit by reason of' the miscon- ("RCL") 17. duct. 12 U.S.C. § 1818(e)(l)(B)(iii). The ALJ reason- The Reserve Bank made Magee aware of its con- ably concluded that Magee received financial gain cern about the amount of money paid to Lawrence as from the payments to himself from the miscellaneous a consultant when FBT's shareholders in 1987 filed expense account.15 RD 57-58. It is undisputed that the an application with the Reserve Bank to form a bank amounts extracted from the miscellaneous expense holding company, Bancorp, to hold the stock of account totalled, over a seven-year period, in over FBT. Recommended Finding of Fact ("RFF") 90- $900,000. RD 51.16 103. In order to allay the Reserve Bank's concerns, Magee's argument to the contrary is that he re- FBT submitted a new Lawrence consulting agree- ceived no material gain from the disputed practice ment, signed by Lawrence and by Magee on FBT's since, as a major shareholder, he could have behalf, that limited the services that Lawrence would achieved the same financial gain through legitimate perform for FBT and limited the corresponding pay- means, either by simply having the Bank pay diviments that Lawrence would receive from FBT to dends or through a straightforward compensation $96,000 per year plus $400 director's fees per FBT scheme approved by the board of directors. Except, board of directors meeting he attended. RFF 97-102. v-vii. The Board concludes that the ALJ properly The Reserve Bank relied upon the agreement in rejected these arguments. First, whether or not Maapproving the application. RFF 102. gee could have achieved the same financial result by In practice, Lawrence received payments in ex- legitimate means, the facts on the record of this case cess of those called for in the consulting agreement. are that in practice he incurred the gain illegitimately. In 1988, Lawrence was paid $25,000 from FBT's Second, it is not clear that Magee would have consultant fee account and $100,800 from the FBT's achieved the same gain had he made the total amount "miscellaneous expense" account. RFF 106-107. In of the payments known to the board of directors, to 1989, Lawrence was paid $100,800 under the consult- the public and to supervisors. The after-the-fact ing agreement and $115,000 in bonus. RFF 109. In ratification of the payments to Magee by the board of 1990, Lawrence was paid $215,400 in nonemployee directors17 does not necessarily mean that the direccompensation, of which $114,600 was in addition tors would have been equally generous at an earlier to the amount called for by the consulting agreement. and more uncertain time, and is not a substitute for RFF 110. Additional payments were made from the contemporaneous approval. In addition, disclosure "miscellaneous expense" account in 1991. RFF 111. to the Reserve Bank at an earlier time would have FBT's books and records contain no documentation run the risk that the Federal Reserve would act to of any services rendered by Lawrence to FBT. RFF reduce the amount of compensation paid to Magee, 113. as in fact happened when the disguised compensation Magee variously characterized the excess pay- came to light in 1991.18 RD 54. Furthermore, Magee ments to Lawrence as compensation for services could not have achieved the same financial result by rendered in addition to those called for in the con- paying himself dividends, since Bancorp became the sulting agreement (RFF 120; Magee Tr. 322) and as shareholder of FBT in 1988 and, as a bank holding bonuses based on the Bank's performance (RFF 115; 117, 121; Bd. Ex. 23 If 26, 37). Lawrence, in a sworn 15. The ALJ did not find that the payments to Lawrence caused any statement, stated that the payments were bonuses financial gain or other benefit to Magee. based on the Bank's performance. RFF 119; Bd. Ex. 16. This figure takes into account the $52,000 Magee returned to 22 11 15. FBT in 1988. RD 51-52. For the years 1988-1990 specified in the Notice, the amount totalled roughly $374,000. See RD 51. The ALJ reasonably concluded that the payments 17. In April, 1991, upon Magee's disclosure (under pressure from made to Lawrence in Magee's sole discretion and the Federal Reserve) of the amount and nature of the payments to him, in excess of the amounts specified in Lawrence's the board of directors adopted a resolution purporting to ratify the past miscellaneous expense payments to Magee as compensation. RFF 53. consulting agreement represented an unsafe or un- 18. Contrary to Magee's argument (Except, xi), he did not report his sound practice and a breach of Magee's fiduciary total compensation from FBT to the Reserve Bank in a meaningful duty to FBT. RD 57. The Board adopts these con- way. While he did disclose his total income from all sources to the Reserve Bank in 1987, the total was not broken down in such a way as clusions. to indicate the portion of his income that came from FBT. RFF 56. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 973 company, Bancorp is restricted in the dividends that Accordingly, the ALJ properly rejected Magee's it can pay relative to its outstanding debt. RD 58.19 argument that these payments did not cause financial loss to FBT within the meaning of the statute because 2. Financial Loss or Other Damage to FBT they were not so great as to create a risk to FBT's Because the payments extracted from the miscella- financial integrity. neous expense fund for Lawrence and Magee were unjustified by any corresponding benefit to FBT, the D. Culpability ALJ properly found that they caused loss or damage to FBT for purposes of the "effects" criterion for prohi- The culpability requirement for prohibition under the bition. RD 61.20 FDI Act requires a determination that the misconduct Magee's argument to the contrary depends upon a at issue misinterpretation of the statutory test for "loss or "(i) Involves personal dishonesty on the part of other damage" to the institution: Magee argues that such party; or the test is not satisfied unless there is a "direct and (ii) Demonstrates willful or continuing disregard substantial risk to the financial integrity of the institu- by such party for the safety or soundness of such tion and the government's insurance risks"21 and insured depository institution or business institusubmits that the test is not met here because FBT is in tion." a financially sound condition.22 Except, iii-x. The 12 U.S.C. § 1818(e)(1)(C). The ALJ found that the statutory language for the loss element simply states: misconduct at issue here reflected Magee's personal "(B) by reason of [the misconduct] — dishonesty as well as both willful and continuing (i) "such insured depository institution or busi- disregard for FBT's safety and soundness. RD 62-69. ness institution has suffered or will probably suffer financial loss or other damage". 1. Personal Dishonesty 12 U.S.C. § 1818(e)(l)(B)(i). There is no textual basis The ALJ properly rejected Magee's arguments that the for grafting onto this language the requirement that the proper test for "personal dishonesty" requires a losses or other damage be so severe as to threaten the "compelling sense of conscious wrong", an "intent to survival of the institution before the Board may bring deceive", or conduct that amounts to fraud (Except, a prohibition action.23 Such a rule would permit the xii-xiii), since the Board's past decisions apply a diversion of funds from a prosperous institution with broader standard that encompasses concepts such as a relative immunity so long as the institution remained lack of integrity, trustworthiness, fairness or straightsolvent.24 forwardness. See, e.g., Van Dyke v. Board of Governors, 876 F.2d at 1379 (8th Cir. 1989); Greenberg v. Board of Governors, 968 F.2d 164, 171 (2d Cir. 19. Bancorp undertook debt in order to purchase the shares of FBT. 1992)(dishonesty established by failure to disclose As part of the application to form Bancorp, the Reserve Bank required aspects of insider transactions to board of directors).25 Magee and Lawrence to file projections of the retirement of that debt Under this legal standard, the Board adopts the by means of dividends from FBT. RD 58. As Magee acknowledged, it is extremely doubtful that the Reserve Bank would have approved the ALJ's rejection of Magee's attempts to mitigate his payment of dividends from Bancorp to its shareholders, Magee and culpability. Magee acknowledges that his actions were the Trust, until Bancorp's debt had been reduced. Resp. Ex. 15A at 3. "negligent" (Except, xiv), but denies that his actions 20. Further, the ALJ noted that Bancorp was lagging behind its schedule of debt retirement and that it would not have been had FBT reflected any greater degree of culpability, arguing that paid the amount in dividends to Bancorp that was instead paid to his fault lay in his lack of education and understanding Magee in miscellaneous expenses. RD 58 n.12. of the correct procedures required, not in any intent to 21. Magee's cited authority for this proposition is inapposite in that it does not at all address the "loss" provision of section 1818(e), but deceive or defraud. Except, xvii. In support of the instead construes the meaning of an "unsafe or unsound practice" for purposes of a cease and desist order under section 1818(b). See Gulf Fed. Sav. & Loan Ass'n v. Federal Home Loan Bank Bd., 651 F.2d 259 (5th Cir. 1981), cert, denied 458 U.S. 1121 (1982). Indeed, Gulf with no lasting damage to the bank involved, "we think it unrealistic Federal involved interest overcharges by a savings and loan associa- for Van Dyke to suggest the Board is powerless to respond to an tion, a practice that financially benefitted the institution in the short officer's manipulative, self-dealing activity unless actual harm to the term and created virtually no risk of any real loss in the long term. bank occurs." Van Dyke, 876 F.2d at 1380 (interpreting meaning of Accordingly, the practice was found not to be unsafe or unsound. 651 "disregard for safety or soundness"). F.2d at 262 n.2. 25. In the Van Dyke case, the Eighth Circuit affirmed the Board's 22. It is not disputed that FBT is a financially sound institution, with rejection of a narrow standard limiting personal dishonesty to "an a composite rating of 2, the second-highest rating on the Board's intent to gain at the expense of others" and affirmed the Board's 5-point scale for rating banks. interpretation of "personal dishonesty" as extending beyond civil 23. Indeed, when Congress amended section 1818(e) in 1989, one of fraud to "encompass a broad range of conduct". Van Dyke, 876 F.2d the most significant changes was the deletion of the previous require- at 1379; see also In re Stanford C. Stoddard, No. AA-EC-85-44 at 42 ment that the losses be "substantial". n.24 (Jan. 29, 1988)(rejecting limitation of personal dishonesty to 24. As the Eighth Circuit held in Van Dyke v. Board of Governors, fraud), rev'd on other grounds, Stoddard v. Board of Governors, 894 876 F.2d 1377, 1380 (8th Cir. 1989), where a check kite was cleared F.2d 1499 (D.C. Cir. 1989). 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974 Federal Reserve Bulletin • December 1992 relative innocence of his actions Magee points out payments to be reduced. RD 63.26 The ALJ also that he owned 25% of the Bank from 1984 until 1987, properly rejected Magee's defense that he simply did and, thereafter, he owned 25% of Bancorp and was not know that there was anything wrong with the the sole voting trustee of the remaining 75% interest. practice of extracting funds from the miscellaneous Except, xiii-xiv. Magee argues that his policies and expense account because he had learned it from management caused the Bank to improve its profit- others. Nor did the ALJ accept Magee's argument ability and to receive consistent high ratings for that the federal and state banking examiners, other financial soundness. Except, xiv. He argues that the bank employees or his accountant should have misreporting of his compensation did not affect the alerted him to the impropriety of the payments. The overall picture of the Bank's financial position pre- ALJ found these arguments legally insufficient to sented to regulators, since the bottom line for the Bank shift Magee's responsibility as the president and was the same, whether the amounts were reported as CEO of FBT to other parties. RD 55. expenses or compensation. Magee states that he dis- The ALJ found other indications of dishonesty in the closed all of his compensation to the Internal Revenue conflicting explanations that Magee proffered after the Service, even though he misreported the nature of the payments were discovered by Federal Reserve exammiscellaneous expense payments. Magee argues that he iners in early 1991; Magee at various times characterdid not devise the method of taking payments charged ized the payments to himself as bonuses determined to miscellaneous expenses, but merely carried the prac- without regard to criteria, as consulting fees, and as tice over from another bank, where he had learned the discretionary bonuses based on self-determined critebusiness, and where it was a standard practice for ria. RD 66. The ALJ reasonably concluded that the management to take payments charged to miscella- pattern indicates a continuing attempt to mislead superneous expenses. Except, xvi. He argues that the prac- visors as to the nature of the payments. RD 66. The tices were never criticized from 1984 to 1990, notwith- ALJ found that Magee exhibited a similar lack of candor standing repeated examinations by state and federal with regard to the payments to Lawrence. RD 66-67. regulators, even though the "miscellaneous expense" The Board adopts the ALJ's conclusions as to Magtotals were above the average for FBT's peer banks, ee's dishonesty, which are based largely on credibility which should have flagged the practice for the regula- determinations. The nature of Magee's offenses, distors. Except, xvi. Furthermore, Magee argues that he guised payments to insiders, is the sort of insider abuse orally disclosed the total amount of his compensation to that can rapidly deplete a financial institution's capital the Arkansas State Banking Commissioner (though he and liquidity. Supervisors monitor payments to insiders did not detail the method by which he was taking the by means such as Call Reports, officer questionnaires, miscellaneous expense payments), and that the Com- and audited financial statements, the procedures that missioner stated that he was untroubled by the amount Magee circumvented in this case. The ALJ's factual so long as the earnings and capital position of the Bank finding that Magee deliberately concealed the payments remained strong. He states that he delegated the re- from supervisors displays a lack of integrity that satissponsibility for compliance with reporting requirements fies the statutory standard for personal dishonesty. to FBT's auditors. Except, xvi. The Board adopts the ALJ's rejection of these 2. Willful and Continuing Disregard for Safety or arguments, and determination, based in large part on Soundness the ALJ's credibility determinations, that Magee's The Board also adopts the ALJ's conclusion that Maactions reflected personal dishonesty. The ALJ gee's misconduct satisfied the statutory standard for found that Magee's method of extracting money from both willful and continuing disregard for safety or FBT evidenced deception, misrepresentation, and a soundness. A "willful disregard for safety or soundlack of candor. RD 62. There is no question that ness" is established by intentional conduct that consti- Magee did not inform the board of directors of his tutes an unsafe or unsound banking practice, i.e., that is claimed formula for self-payment, or the amounts he contrary to prudent banking practices, and that is of a was in fact taking, before the practice was brought to sort that potentially exposes an institution to abnormal light through the examination process. The ALJ risk of harm or loss. Van Dyke, 876 F.2d at 1380.27 found that the evidence indicated that Magee engaged in a "deliberate, concerted effort to mislead 26. The ALJ reasonably rejected Magee's arguments that he had regulators, FBT's depositors, and the public" with disclosed the nature of the payments to the state banking regulator and regard to the amounts he extracted from FBT. RD to the Federal Reserve, finding that the disclosures made to each regulator were sufficiently misleading as to disguise the nature of the 63. The ALJ found that Magee's motive for concealpayments from further regulatory inquiry. RD 65 n. 15. ing the payments was to reduce the risk that expo- 27. "Willfulness" has been defined as an "unreasonable failure to sure would cause pressure for the amount of the conform intentional conduct to the law's dictates", United States v. Donovan, No. 91-1574, slip op. at 11 (1st Cir. Feb.6, 1992) (criminal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 975 "Continuing" disregard has been held to require a FINAL ENFORCEMENT ORDERS ISSUED BY THE lesser showing of scienter akin to "recklessness." BOARD OF GOVERNORS Brickner v. Federal Deposit Insurance Corporation, 747 F.2d 1198, 1203 n.6 (8th Cir. 1984). The Genoa Banking Company Applying these standards to the facts of this case, it is Genoa, Ohio clear that Magee's conduct constituted both willful and continuing disregard for FBT's safety or soundness. The Federal Reserve Board announced on October 14, Magee concedes that his conduct constituted an unsafe 1992, the issuance of a Cease and Desist Order against or unsound banking practice. Furthermore, it is clear The Genoa Banking Company, Genoa, Ohio. that Magee "willfully" engaged in the practice, since he unilaterally controlled his practice of payments to him- Marshall County Bankshares, Inc. self and to Lawrence. Beattie, Kansas Indeed, Magee's own characterization of his actions displays an obliviousness to fundamental precepts of The Federal Reserve Board announced on October 5, banking governance and regulation, notwithstanding a 1992, the issuance of an Order of Assessment of a Civil career in banking that began in 1957 and included a Money Penalty against Marshall County Bankshares, short term as an examiner for the Arkansas Bank Inc., Beattie, Kansas and Edwin L. Nutt, an institu- Department and offices in statewide banking organiza- tion-affiliated party of Marshall County Bankshares, tions. Magee regarded it to be unnecessary to even Inc. inform his board of directors of his total compensation or of the self-generated formula he claims to have used Midwest Securities Trust Company to determine that compensation. Tr. 271. By his own Chicago, Illinois testimony, Magee was unconcerned as to how the payments from the miscellaneous expense account The Federal Reserve Board announced on October 29, were represented to the auditors, to regulators, or to the 1992, the issuance of a Cease and Desist Order against public, regarding that as a responsibility for someone Midwest Securities Trust Company, Chicago, Illinois. other than himself. Tr. 281-284. Notwithstanding the The Board's Order was issued in conjunction with Reserve Bank's manifest concern with the payments to enforcement proceedings initiated on October 29, Lawrence, Magee professed ignorance of the commit- 1992, by the Securities and Exchange Commission ments made on FBT's behalf and felt himself unfettered against Midwest Clearing Corporation, Chicago, Illiin his discretion to make additional payments to nois, and Midwest Securities Trust Company. Lawrence. Tr. 309-313. In sum, Magee portrays himself as deliberately engaging in actions that displayed a fundamental lack of understanding of sound banking practice, thereby supporting the Board's conclusion WRITTEN AGREEMENTS APPROVED BY FEDERAL that he acted with willful and continuing28 disregard for RESERVE BANKS safety or soundness, and warranting the issue of an order of prohibition against him. Farmers Savings Bank Norwood, Ohio Conclusion The Federal Reserve Board announced on October 30, For the foregoing reasons, the Board orders that the 1992, the execution of a Written Agreement among the attached Order of Removal and Prohibition shall Federal Reserve Bank of Cleveland, the Superintenissue. dent of Banks of the State of Ohio, and the Farmers Savings Bank, Norwood, Ohio. Glendale Bank of Pennsylvania currency transaction violation), and may be shown where an officer Philadelphia, Pennsylvania and directors in a heavily regulated industry, who is chargeable with responsibility for conducting his affairs in accordance with regulatory requirements, is conscious of the facts that constitute the misconduct. The Federal Reserve Board announced on October 5, Premex, Inc. v. CFTC, 785 F.2d 1403, 1406 n.9 (9th Cir. 1986). 28. "Continuing disregard for safety and soundness" is established 1992, the execution of a Written Agreement between in that the practices continued over a period of years and the the Federal Reserve Bank of Philadelphia and the determination that Magee's disregard was willful establishes, a Glendale Bank of Pennsylvania, Philadelphia, Pennfortiori, that Magee was "reckless" in so acting. See Brickner, 747 F.2d at 1203 n.6. sylvania. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

976 Federal Reserve Bulletin • December 1992 Guardian Bank Shawmut National Corporation Los Angeles, California Boston, Massachusetts The Federal Reserve Board announced on October 20, The Federal Reserve Board announced on October 6, 1992, the execution of a Written Agreement between 1992, the execution of an Amendment to the Written the Federal Reserve Bank of San Francisco and the Agreement, dated October 1, 1991, between the Guardian Bank, Los Angeles, California. Federal Reserve Bank of Boston and Shawmut National Corporation, with dual headquarters in High Point Financial Corp. Hartford, Connecticut and Boston, Massachusetts. Branch ville, New Jersey The Amendment eliminates the requirements for Shawmut National Corporation to obtain the written The Federal Reserve Board announced on October 26, approval of the Federal Reserve prior to declaring or 1992, the execution of a Written Agreement between paying preferred stock dividends. the Federal Reserve Bank of New York and High Point Financial Corp., Branchville, New Jersey. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A1 Financial and Business Statistics CONTENTS WEEKLY REPORTING COMMERCIAL BANKS A3 Guide to Tabular Presentation Assets and liabilities A21 All reporting banks A23 Branches and agencies of foreign banks Domestic Financial Statistics MONEY STOCK AND BANK CREDIT FINANCIAL MARKETS A4 Reserves, money stock, liquid assets, and debt A24 Commercial paper and bankers dollar measures acceptances outstanding A5 Reserves of depository institutions, Reserve Bank A24 Prime rate charged by banks on short-term credit business loans A6 Reserves and borrowings—Depository A25 Interest rates—money and capital markets institutions A26 Stock market—Selected statistics A7 Selected borrowings in immediately available A27 Selected financial institutions—Selected assets funds—Large member banks and liabilities POLICY INSTRUMENTS FEDERAL FINANCE A8 Federal Reserve Bank interest rates All Federal fiscal and financing operations A9 Reserve requirements of depository institutions A28 U.S. budget receipts and outlays A10 Federal Reserve open market transactions A29 Federal debt subject to statutory limitation A29 Gross public debt of U.S. Treasury—Types and ownership FEDERAL RESERVE BANKS A30 U.S. government securities dealers—Transactions All Condition and Federal Reserve note statements A31 U.S. government securities dealers—Positions A12 Maturity distribution of loan and security and financing holdings A3 2 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 A3 3 New security issues—State and local A17 Loans and securities—All commercial banks governments and corporations A34 Open-end investment companies—Net sales and asset position COMMERCIAL BANKING INSTITUTIONS A34 Corporate profits and their distribution A34 Total nonfarm business expenditures on new A18 Major nondeposit funds plant and equipment A19 Assets and liabilities, last-Wednesday-of-month A35 Domestic finance companies—Assets and series liabilities and business credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • December 1992 Domestic Financial Statistics—Continued A54 U.S. reserve assets A54 Foreign official assets held at Federal Reserve REAL ESTATE Banks A55 Foreign branches of U.S. banks—Balance A3 6 Mortgage markets sheet data A3 7 Mortgage debt outstanding A57 Selected U.S. liabilities to foreign official institutions CONSUMER INSTALLMENT CREDIT REPORTED BY BANKS A3 8 Total outstanding and net change IN THE UNITED STATES A3 8 Terms A57 Liabilities to and claims on foreigners A58 Liabilities to foreigners FLOW OF FUNDS A60 Banks' own claims on foreigners A39 Funds raised in U.S. credit markets A61 Banks' own and domestic customers' claims on A41 Direct and indirect sources of funds to credit foreigners markets A61 Banks' own claims on unaffiliated foreigners A42 Summary of credit market debt outstanding A62 Claims on foreign countries—Combined A43 Summary of credit market claims, by holder domestic offices and foreign branches Domestic Nonfinancial Statistics REPORTED BY NONBANKING BUSINESS ENTERPRISES IN THE UNITED STATES SELECTED MEASURES A63 Liabilities to unaffiliated foreigners A44 Nonfinancial business activity—Selected A64 Claims on unaffiliated foreigners measures A45 Labor force, employment, and unemployment A46 Output, capacity, and capacity utilization SECURITIES HOLDINGS AND TRANSACTIONS A47 Industrial production—Indexes and gross value A65 Foreign transactions in securities A49 Housing and construction A66 Marketable U.S. Treasury bonds and A50 Consumer and producer prices notes—Foreign transactions A51 Gross domestic product and income A52 Personal income and saving INTEREST AND EXCHANGE RATES International Statistics A67 Discount rates of foreign central banks A67 Foreign short-term interest rates SUMMARY STATISTICS A68 Foreign exchange rates A53 U.S. international transactions—Summary A69 Guide to Statistical Releases and A54 U.S. foreign trade Special Tables Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A3 Guide to Tabular Presentation SYMBOLS AND ABBREVIATIONS c Corrected GNMA Government National Mortgage Association e Estimated GDP Gross domestic product n.a. Not available HUD Department of Housing and Urban n.e.c. Not elsewhere classified Development P Preliminary IMF International Monetary Fund r Revised (Notation appears on column heading IO Interest only when about half of the figures in that column IPCs Individuals, partnerships, and corporations are changed.) IRA Individual retirement account * Amounts insignificant in terms of the last decimal MMDA Money market deposit account place shown in the table (for example, less than NOW Negotiable order of withdrawal 500,000 when the smallest unit given is millions) OCD Other checkable deposit 0 Calculated to be zero OPEC Organization of Petroleum Exporting Countries Cell not applicable OTS Office of Thrift Supervision ATS Automatic transfer service PO Principal only CD Certificate of deposit REIT Real estate investment trust CMO Collateralized mortgage obligation REMIC Real estate mortgage investment conduit FFB Federal Financing Bank RP Repurchase agreement FHA Federal Housing Administration RTC Resolution Trust Corporation FHLBB Federal Home Loan Bank Board SAIF Savings Association Insurance Fund FHLMC Federal Home Loan Mortgage Corporation SCO Securitized credit obligation FmHA Farmers Home Administration SDR Special drawing right FNMA Federal National Mortgage Association SIC Standard Industrial Classification FSLIC Federal Savings and Loan Insurance Corporation SMSA Standard metropolitan statistical area G-7 Group of Seven VA Veterans Administration G-10 Group of Ten GENERAL INFORMATION In many of the tables, components do not sum to totals because include not fully guaranteed issues) as well as direct obligaof rounding. 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 • December 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 Q4 Ql Q2 Q3 May June July Aug. Sept. Reserves of depository institutions 1 Total 15.2 23.4 14.9 9.3 12.1 -6.3 6.2 20.2r 24.4 2 Required 15.4 23.5 15.4 9.9 15.8 -4.3 5.0 21.3r 23.2 3 Nonborrowed 20.0 24.0 14.8 8.4 10.5 -8.1 4.9 21.lr 23.7 4 Monetary base 8.2 9.2 7.1 10.5 7.7 3.9 9.5 16.6r 16.7 Concepts of money, liquid assets, and debt4 5 Ml 11.1 16.5 9.9 10.5 14.6 -3.1 11.3 16.0 19.7 6 M2 2.4 4.2r •3r .1 .6 -3.2r 2.9r 3.6 7 M3 1.0 2.2r -1.3r -.3 -.2r -3.4r -1.1 3.1r 1.5 8 L .2 1.5 .5 n.a. -2.4r 2.7r -1.9" 4.2 n.a. 9 Debt 3.91 4.2r 5.2r n.a. 4.4r 5.3r 4.7r 4.5 n.a. Nontrqnsaction components 10 In M25 -.6 -.r -3.r -3.8 --44..77rr -3.2 -5.6r -2.0 -2.7 11 In M3 only6 -5.4 -7.5 -9.4r -2.3 —3.91 -4.6r —2.2r 3.91 -8.7 Time and savings deposits Commercial banks 12 Savings, including MMDAs 16.0 19.1 12.0 10.1 8.0 4.9 9.3 13.6 17.6 13 Small time -8.4 -18.9 —13.3r -16.4 -16.7 -14.2r -16.8r — 19.2r -16.4 14 Large time ' -14.4 -18.2 —14.8 -16.1 —8.3r -14.91 —24.0r —10.2r -16.7 Thrift institutions 15 Savings, including MMDAs 10.2 22.4 18.8 8.2 18.8 5.2 5.2 8.9 10.8 16 Small time -22.5 -24.3 -29.4 -19.9 -24.3 -17.8 -19.6 -21.7 -19.7 17 Large time • -36.5 -29.7 -36.7 -17.1 -40.7 -25.2 -5.2 -22.4 -3.5 Money market mutual funds 18 General purpose and broker-dealer -4.0 -,3r -4.8r -8.1 2.7r -6.4r — 11.5r -5.8r -17.2 19 Institution-only 37.2 26.9 20.0 40.0 35.5 30.2 48.1 54.9 .0 Debt components4 20 Federal 11.5r 1100..00"" 14.2r n.a. 12.3r 14.8r 10.7r 9.5 n.a. 21 Nonfederal 1.5r 2.4r 2.3r n.a. 1.8r 2.1r 2.6 2.7 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 Average of daily figures Average of daily figures for week ending on date indicated 1992 1992 July Aug. Sept. Aug. 19 Aug. 26 Sept. 2 Sept. 9 Sept. 16 Sept. 23 Sept. 30 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 313,136 315,617r 325,916 317,051 313,092r 317,517 320,853 323,716 324,993 335,310 U.S. government securities2 2 Bought outright—System account 274,511 276,117 280,746 276,050 276,435 277,088 281,700 280,4% 280,594 281,532 3 Held under repurchase agreements ... 772 1,699 6,452 2,698 0 3,248 1,477 4,167 5,901 13,947 Federal agency obligations 4 Bought outright 5,677 5,603 5,538 5,612 5,600 5,571 5,539 5,534 5,534 5,534 5 Held under repurchase agreements ... 7 26 293 76 0 36 11 168 195 855 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 87 28 94 45 35 29 23 244 24 102 8 Seasonal credit 202 224 192 223 232 220 191 182 194 197 9 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float 586 655r 541 807 715r 776 347 1,095 477 153 11 Other Federal Reserve assets 31,294 31,264r 32,060 31,541 30,076r 30,548 31,564 31,830 32,074 32,990 12 Gold stock 11,060 11,060 11,059 11,059 11,060 11,059 11,059 11,060 11,059 11,058 13 Special drawing rights certificate account . 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 14 Treasury currency outstanding 21,272 21,292r 21,324 21,292r 21,295r 21,298 21,309 21,320 21,331 21,342 ABSORBING RESERVE FUNDS 15 Currency in circulation 313,739 315,783r 318,628 316,302r 315,33 Ir 316,410 319,409 319,953 318,149 317,314 16 Treasury cash holdings 594 553 530 551 542 539 535 531 529 522 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5,666 5,729 11,390 5,291 5,620 5,744 5,923 6,284 13,697 21,297 18 Foreign 236 211 309 212 195 213 267 257 297 438 19 Service-related balances and adjustments 5,534 5,612 5,773 5,592 5,611 5,768 5,667 5,708 5,756 5,%3 20 Other 233 267 290 294 268 276 297 293 289 275 21 Other Federal Reserve liabilities and capital 8,493 8,496 8,508 8,269 8,184 8,665 9,058 8,274 8,235 8,279 22 Reserve balances with Federal Reserve Banks 20,991 21,336r 22,890 22,910 19,715r 22,279 22,084 24,814 20,450 23,641 End-of-month figures Wednesday figures July Aug. Sept. Aug. 19 Aug. 26 Sept. 2 Sept. 9 Sept. 16 Sept. 23 Sept. 30 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 313,930 319,410r 336,583 314,923 313,088r 322,658 323,399 325,472 333,889 336,583 U.S. government securities 2 Bought outright—System account 275,969 274,537 279,712 277,500 276,823 277,254 281,509 283,122 280,683 279,712 3 Held under repurchase agreements ... 0 7,616 16,685 582 0 7,452 4,775 2,682 14,303 16,685 Federal agency obligations 4 Bought outright 5,625 5,571 5,534 5,612 5,571 5,571 5,534 5,534 5,534 5,534 5 Held under repurchase agreements ... 0 53 1,475 0 0 100 40 307 224 1,475 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 29 28 425 70 46 31 20 1,398 44 425 8 Seasonal credit 227 216 184 230 229 208 181 191 200 184 9 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float 305 195r -229 518 480"^ 737 -606 154 136 -229 11 Other Federal Reserve assets 31,776 31,195r 32,796 30,412 29,939" 31,305 31,945 32,083 32,765 32,7% 12 Gold stock 11,059 11,059 11,058 11,059 11,059 11,059 11,060 11,060 11,059 11,058 13 Special drawing rights certificate account . 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 14 Treasury currency outstanding 21,286 21,298r 21,342 21,292r 21,295r 21,298 21,309 21,320 21,331 21,342 ABSORBING RESERVE FUNDS 15 Currency in circulation 314,338 316,136r 317,923 316,118r 315,712r 317,750 320,466 319,266 317,713 317,923 16 Treasury cash holdings 578 539 527 542 539 536 531 530 522 527 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 6,923 6,232 24,586 4,412 5,679 5,316 3,982 7,881 21,7% 24,586 18 Foreign 264 297 546 253 224 236 183 501 310 546 19 Service-related balances and adjustments 5,473 5,768 5,963 5,592 5,611 5,768 5,667 5,708 5,756 5,%3 20 Other 220 254 295 321 283 302 278 328 256 295 21 Other Federal Reserve liabilities and capital 8,846 9,275 8,023 8,086 8,010 9,032 8,119 8,104 8,107 8,023 22 Reserve balances with Federal Reserve Banks3 19,651 23,284r 21,138 21,967 19,403r 26,095 26,560 25,550 21,836 21,138 1. For amounts of cash held as reserves, see table 1.12. 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 scheduled to be bought back under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Financial Statistics • December 1992 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages RReesseerrvvee ccllaassssiiffiiccaattiioonn 1989 1990 1991 1992 Dec. Dec. Dec. Mar. Apr. May June July Aug. Sept. 1 Reserve balances with Reserve Banks2 35,436 30,237 26,659 28,057 22,655 21,071 21,223 21,206 21,272r 22,629 2 Total vault cash3 29,828 31,786 32,513 31,647 31,071 31,197 31,729 32,145 32,457 32,343 3 Applied vault cash 27,374 28,884 28,872 28,225 27,800 27,754 28,273 28,617 28,890 28,894 4 Surplus vault cash 2,454 2,903 3,641 3,422 3,271 3,442 3,456 3,528 3,567 3,448 5 Total reserves6 62,810 59,120 55,532 56,282 50,455 48,825 49,4% 49,823 50,162r 51,523 6 Required reserves 61,887 57,456 54,553 55,254 49,318 47,825 48,584 48,857 49,227r 50,517 7 Excess reserve balances at Reserve Banks ... 923 1,664 979 1,028 1,137 1,000 913 965 935r 1,006 8 Total borrowings at Reserve Banks 265 326 192 91 90 155 229 284 251 287 9 Seasonal borrowings 84 76 38 32 47 98 149 203 223 193 10 Extended credit9 20 23 1 2 2 0 0 0 0 0 Biweekly averages of daily figures for weeks ending 1992 May 27 June 10 June 24 July 8 July 22 Aug. 5 Aug. 19 Sept. 2 Sept. 16 Sept. 30 1 Reserve balances with Reserve Banks 20,356 21,374 21,205 21,014 21,277 21,264 21,515 20,991r 23,439 22,052 2 Total vault cash3 32,069 30,909 31,946 32,589 32,233 31,613 32,687 32,541 31,625 33,033 3 Applied vault cash4, 28,418 27,591 28,487 28,910 28,779 28,105 29,166 28,8% 28,438 29,351 4 Surplus vault cash 3,651 3,318 3,459 3,679 3,455 3,508 3,521 3,645 3,187 3,682 5 Total reserves6 48,774 48,965 49,692 49,924 50,056 49,369 50,681 49,887r 51,876 51,403 6 Required reserves 47,277 48,492 48,521 48,884 49,106 48,447 49,856 48,820r 51,081 50,1% 7 Excess reserve balances at Reserve Banks ... 1,497 474 1,171 1,041 950 922 825 l,067r 795 1,207 8 Total borrowings at Reserve Banks8 157 152 188 455 215 241 249 258 321 259 9 Seasonal borrowings 113 125 150 187 199 222 221 226 187 1% 10 Extended credit9 0 0 0 1 0 0 0 0 0 0 1. Data in this table also appear in the Board's H.3 (502) weekly statistical 5. Total vault cash (line 2) less applied vault cash (line 3). release. For ordering address, see inside front cover. 6. Reserve balances with Federal Reserve Banks (line 1) plus applied vault cash 2. Excludes required clearing balances and adjustments to compensate for float (line 3). and includes other off-balance-sheet "as-of' adjustments. 7. Total reserves (line 5) less required reserves (line 6). 3. Total "lagged" vault cash held by depository institutions subject to reserve 8. Also includes adjustment credit. requirements. Dates refer to the maintenance periods during which the vault cash 9. Consists of borrowing at the discount window under the terms and condican be used to satisfy reserve requirements. Under contemporaneous reserve tions established for the extended credit program to help depository institutions requirements, maintenance periods end thirty days after the lagged computation deal with sustained liquidity pressures. Because there is not the same need to periods during which the balances are held. repay such borrowing promptly as there is with traditional short-term adjustment 4. All vault cash held during the lagged computation period by "bound" credit, the money market impact of extended credit is similar to that of institutions (that is, those whose required reserves exceed their vault cash) plus nonborrowed reserves. the amount of vault cash applied during the maintenance period by "nonbound" institutions (that is, those whose vault cash exceeds their required reserves) to satisfy current reserve requirements. 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 July 6 July 13 July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 Federal funds purchased, repurchase agreements, and other selected borrowings From commercial banks in the United States 1 For one day or under continuing contract 74,072r 74,503 70,973 69,234 72,386 75,784 72,514 69,943 69,674 2 For all other maturities 19,118 16,208 15,230 14,941 15,291 15,877 15,772 15,760 15,420 From other depository institutions, foreign banks and official institutions, and U.S. government agencies 3 For one day or under continuing contract 17,450 18,725 18,371 21,257 19,314 17,607 17,988 18,137 17,874 4 For all other maturities 19,502 19,694 19,555 20,271 19,092 19,173 20,827 19,917 19,493 Repurchase agreements on U.S. government and federal agency securities Brokers and nonbank dealers in securities 5 For one day or under continuing contract 9,589" 10,969 11,284 11,841 12,644 13,697 13,289 15,753 15,305 6 For all other maturities 14,051 13,649 12,812 11,875 12,086 14,188 15,289 14,874 15,983 All other customers 7 For one day or under continuing contract 20,553r 22,983r 22,610r 24,561r 24,609 24,862 24,794 25,358 25,113 8 For all other maturities 15,292r 12,826r 12,903r 12,770 12,675 12,672 12,914 13,282 13,568 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 48,216r 42,555 43,544 40,404 45,321 41,718 42,271 40,058 42,411 10 To all other specified customers2 22,205r 21,153r 17,929" 17,881 16,393 20,327 19,248 18,911 17,663 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 • December 1992 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit2 Extended credit3 FFeeddeerraall RReesseerrvvee BBaannkk 10/ O 30 n / 92 Effective date Previous rate 10/ O 30 n / 92 Effective date Previous rate 10/ O 30 n / 92 Effective date Previous rate Boston 3 7/2/92 3.5 3.20 10/29/92 3.15 3.70 10/29/92 3.65 New York 7/2/92 10/29/92 10/29/92 Philadelphia 7/2/92 10/29/92 10/29/92 Cleveland 7/6/92 10/29/92 10/29/92 Richmond 7/2/92 10/29/92 10/29/92 Atlanta 7/2/92 10/29/92 10/29/92 Chicago 7/2/92 10/29/92 10/29/92 St. Louis 7/7/92 10/29/92 10/29/92 Minneapolis 7/2/92 10/29/92 10/29/92 Kansas City 7/2/92 10/29/92 10/29/92 Dallas 7/2/92 10/29/92 10/29/92 San Francisco ... 3 7/2/92 3.5 3.20 10/29/92 3.15 3.70 10/29/92 3.65 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 date A le l v l e F l) . — R. Ba of n k Effective date A le l v l e F l) . — R. Ba of n k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1977 1981—May 5 13-14 14 1986—Aug. 21 5.5-6 5.5 8 14 14 22 5.5 5.5 1978-—Jan. 9 6-6.5 6.5 Nov. 2 13-14 13 70 6.5 6.5 6 13 13 1987—Sept. 4 5.5-6 6 May 11 . . 6.5-7 7 Dec. 4 12 12 11 6 6 17 7 7 July 3 , . 7-7.25 7.25 1982—July 20 11.5-12 11.5 1988—Aug. 9 6-6.5 6.5 10 7.25 7.25 23 11.5 11.5 11 Aug. 71 7.75 7.75 Aug. 2 11-11.5 11 Sept. 77 8 8 3 11 11 1989—Feb. 24 6.5-7 7 Oct. 16 8-8.5 8.5 16 10.5 10.5 7 7 70 8.5 8.5 27 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. 12 9.5-10 9.5 1990—Dec. 19 13 9.5 9.5 6.65 6 1979--July 70 10 10 Nov. 22 9-9.5 9 1991—Feb. 1 6 6 Aug. 17 10-10.5 10.5 26 9 9 4 5.5-6 5.5 70 10.5 10.5 Dec. 14 8.5-9 9 Apr. 30 5.5 5.5 Sept. 19 10.5-11 11 15 8.5-9 8.5 May 2 5-5.5 5 71 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—Apr. 9 8.5-9 9 Nov. 6 4.5 4.5 13 9 9 7 3.5-4.5 3.5 1980--Feb. 15 12-13 13 Nov. 21 8.5-9 8.5 Dec. 20 3.5 3.5 19 13 13 26 8.5 8.5 24 May 79 12-13 13 Dec. 24 1992 —July 2 3-3.5 3 30 12 12 7 3 3 June 13 . . 11-12 11 1985—May 20 7.5-8 7.5 16 11 11 24 7.5 7.5 79 10 10 In effect Oct. 30, 1992 3 3 July 78 . . 10-11 10 1986—Mar. 7 7-7.5 7 Sept. 26.. 11 11 10 7 7 Nov. 17 12 12 Apr. 21 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 Requirements TTyyppee ooff ddeeppoossiitt22 P d e e r p ce o n s t i ts o f Effective date Net transaction accounts3 1 $0 million-$42.2 million 33333 1111122222/////1111177777/////9999911111 1111100000 44444/////22222/////9999922222 00000 1111122222/////2222277777/////9999900000 00000 1111122222/////2222277777/////9999900000 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 Annual The Monetary Control Act of 1980 requires that the amount of transaction Report or the Federal Reserve Bulletin. Under provisions of the Monetary accounts against which the 3 percent reserve requirement applies be modified Control Act, depository institutions include commercial banks, mutual savings annually by 80 percent of the percentage change in transaction accounts held by banks, savings and loan associations, credit unions, agencies and branches of all depository institutions, determined as of June 30 each year. Effective Dec. 17, foreign banks, and Edge corporations. 1991, for institutions reporting quarterly, and Dec. 24, 1991, for institutions 2. The Garn-St Germain Depository Institutions Act of 1982 (Public Law reporting weekly, the amount was increased from $41.1 million to $42.2 million. 97-320) requires that $2 million of reservable liabilities of each depository 4. The reserve requirement was reduced from 12 percent to 10 percent on Apr. institution be subject to a zero percent reserve requirement. The Board is to adjust 2, 1992, for institutions that report weekly, and on Apr. 16, 1992, for institutions the amount of reservable liabilities subject to this zero percent reserve require- that report quarterly. ment each year for the succeeding calendar year by 80 percent of the percentage 5. For institutions that report weekly, the reserve requirement on nonpersonal increase in the total reservable liabilities of all depository institutions, measured time deposits with an original maturity of less than 1 Vi years was reduced from 3 on an annual basis as of June 30. No corresponding adjustment is to be made in percent to 1 Vz 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 1V5 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 Vt> 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 M years (see note 4). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Financial Statistics • December 1992 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 1992 TTyyppee ooff ttrraannssaaccttiioonn 11998899 11999900 11999911 Feb. Mar. Apr. May June July Aug. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 14,284 24,739 20,158 123 505 0 4,110 306 0 271 2 Gross sales 12,818 7,291 120 0 0 0 0 0 0 0 3 Exchanges 231,211 241,086 277,314 24,435 21,674 27,526 24,275 22,392 27,755 25,041 4 Redemptions 12,730 4,400 1,000 0 0 0 (f 0 0 0 Others within one year 5 Gross purchases 327 425 3,043 0 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 6,020 2,552 1,100 3,754 2,152 687 5,415 8 Exchanges -25,783 -27,424 -28,090 -2,742 -2,512 -1,863 -5,225 -1,854 -1,669 -4,617 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 1,027 1,425 0 200r 2,278 0 400 11 Gross sales 490 200 0 0 0 0 0 0 0 0 12 Maturity shifts -25,534 -21,770 -21,211 -6,020 -2,552 -877 -2,113 -3,447 -216 -4,036 13 Exchanges 23,250 25,410 24,594 2,292 2,512 1,484 4,311 1,854 1,478 3,567 Five to ten years 14 Gross purchases 287 0 1,280 0 0 0 0 597 0 0 15 Gross sales 29 100 0 0 0 0 0 0 0 0 16 Maturity shifts -2,231 -2,186 -2,037 0 0 -223 -346 0 -471 -412 17 Exchanges 1,934 789 2,894 300 0 379 614 0 191 700 More than ten years 18 Gross purchases 284 0 375 0 0 0 0 655 0 195 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 0 300 0 0 350 All maturities 22 Gross purchases 16,617 25,414 31,439 1,150 1,930 0 4,310 3,836 0 866 23 Gross sales 13,337 7,591 120 0 0 0 t0 y 0 0 0 24 Redemptions 13,230 4,400 1,000 0 0 0 0 0 0 Matched transactions 25 Gross sales 1,323,480 1,369,052 1,570,456 123,000 128,230 125,999 118,972 126,977 127,051 104,873 26 Gross purchases 1,326,542 1,363,434 1,571,534 124,654 126,673 128,149 117,524 129,216 126,137 102,575 Repurchase agreements2 27 Gross purchases 129,518 219,632 310,084 9,824 48,758 18,432 38,777 10,792 12,224 39,484 28 Gross sales 132,688 202,551 311,752 13,353 46,953 20,237 38,533 11,036 12,224 31,868 29 Net change in U.S. government securities -10,055 24,886 29,729 -725 2,178 345 3,107r 5,831 -914 6,184 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 0 0 49 160" 40 85 54 Repurchase agreements2 33 Gross purchases 38,835 41,836 22,807 571 1,640 224 1,281 402 94 601 34 Gross sales 40,411 40,461 23,595 706 1,640 224 1,281 402 94 548 35 Net change in federal agency obligations -2,018 1,192 -1,085 -135 0 -49 -40 -85 -1 36 Total net change in System Open Market Account -12,073 26,078 28,644 -860 2,178 295 2,946 5,791 -1,000 6,183 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. acceptances in repurchase agreements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Banks All 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1992 1992 Sept. 2 Sept. 9 Sept. 16 Sept. 23 Sept. 30 July 31 Aug. 31 Sept. 30 Consolidated condition statement ASSETS 1 Gold certificate account 11,059 11,060 11,060 11,059 11,058 11,059 11,059 11,058 2 Special drawing rights certificate account 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 3 Coin 493 482 492 498 500 477 499 500 Loans 4 To depository institutions 239 201 1,589 244 609 256 244 609 5 Other 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Federal agency obligations 7 Bought outright 5,571 5,534 5,534 5,534 5,534 5,625 5,571 55,,553344 8 Held under repurchase agreements 100 40 307 224 1,475 0 53 1,475 9 Total U.S. Treasury securities 284,706 286,284 285,804 294,986 296,397 275,969 282,153 2%,397 10 Bought outright2 277,254 281,509 283,122 280,683 279,712 275,%9 274,537 279,712 11 Bills 136,626 137,049 138,162 135,072 133,752 135,935 133,908 133,752 12 Notes 107,822 110,876 111,376 112,026 112,376 106,974 107,822 112,376 13 Bonds 32,807 33,584 33,584 33,584 33,584 33,059 32,807 33,584 14 Held under repurchase agreements 7,452 4,775 2,682 14,303 16,685 0 7,616 16,685 15 Total loans and securities 290,616 292,060 293,235 300,988 304,015 281,849 288,020 304,015 16 Items in process of collection 6,248 7,093 6,354 5,426 5,125 4,428 2,267 5,125 17 Bank premises 1,016 1,017 1,020 1,019 1,019 1,014 1,015 1,019 Other assets 18 Denominated in foreign currencies 24,746 24,800 24,433 24,503 24,432 24,734 24,742 24,432 19 All other4 5,560 6,296 6,630 7,170 7,423 6,113 5,472 7,423 20 Total assets 349,755 352,825 353,241 360,681 363,591 339,692 343,093 363,591 LIABILITIES 21 Federal Reserve notes 297,481 300,169 298,968 297,402 297,609 294,107 295,876 297,609 22 Total deposits 39,273 57,086 40,454 50,533 53,094 40,270 36,206 53,094 23 Depository institutions 31,722 32,244 31,743 28,171 27,666 25,302 29,422 27,666 24 U.S. Treasury—General account 5,316 3,982 7,881 21,7% 24,586 6,923 6,232 24,586 25 Foreign—Official accounts 236 183 501 310 546 264 297 546 26 Other 302 278 328 256 295 220 254 295 27 Deferred credit items ^ 3,971 -12,548 5,715 4,637 4,865 -3,531 1,736 4,865 28 Other liabilities and accrued dividends 1,938 1,849 1,807 1,814 1,840 1,988 1,960 1,840 29 Total liabilities 342,662 346,556 346,944 354,387 357,407 332,834 335,778 357,407 CAPITAL ACCOUNTS 30 Capital paid in 2,958 2,959 2,972 2,974 2,977 2,931 2,957 2,977 31 Surplus 2,652 2,652 2,652 2,652 2,652 2,652 2,652 2,652 32 Other capital accounts 1,484 659 674 669 555 1,276 1,707 555 33 Total liabilities and capital accounts 349,755 352,825 353,241 360,681 363,591 339,692 343,093 363,591 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international accounts 295,956 294,432 291,497 282,343 283,556 291,950 2%,756 283,556 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Bank) 357,713 357,837 357,784 357,903 357,4% 360,881 357,972 357,4% 36 LESS: Held by Federal Reserve Bank 60,232 57,668 58,816 60,500 59,887 66,774 62,0% 59,887 37 Federal Reserve notes, net 297,481 300,169 298,968 297,402 297,609 294,107 295,876 297,609 Collateral held against notes, net: 38 Gold certificate account 11,059 11,060 11,060 11,059 11,058 11,059 11,059 11,058 39 Special drawing rights certificate account 10,018 10,018 10,018 10,018 10,018 10,018 10,018 10,018 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. Treasury and agency securities 276,403 279,091 277,890 276,326 276,533 273,030 274,799 276,533 42 Total collateral 297,481 300,169 298,968 297,402 297,615 294,107 295,876 297,615 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. 4. Includes special investment account at the Federal Reserve Bank of Chicago 2. Includes securities loaned—fully guaranteed by U.S. Treasury securities in Treasury bills maturing within ninety days. pledged with Federal Reserve Banks—and excludes securities sold and scheduled 5. Includes exchange-translation account reflecting the monthly revaluation at to be bought back under matched sale-purchase transactions. market exchange rates of foreign-exchange commitments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Financial Statistics • December 1992 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding 1 Millions of dollars Wednesday End of month TTTyyypppeee aaannnddd mmmaaatttuuurrriiitttyyy gggrrrooouuupppiiinnnggg 1992 1992 Sept. 2 Sept. 9 Sept. 16 Sept. 23 Sept. 30 July 31 Aug. 31 Sept. 30 1 Total loans 239 201 1,589 244 609 256 244 609 2i Within fifteen days 85 64 1,570 211 506 125 110 506 Sixteen days to ninety days 153 137 19 33 103 131 134 103 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 67 Within fifteen days 0 0 0 0 0 0 0 0 a Sixteen days to ninety days 0 0 0 0 0 0 0 0 Ninety-one days to one year 0 0 0 0 0 0 0 0 9 Total U.S. Treasury securities 284,706 286,284 285,804 294,986 296,397 275,969 282,153 296,397 10 Within fifteen days2 18,343 17,798 19,062 27,251 24,468 9,389 13,027 24,468 11 Sixteen days to ninety days 68,373 66,664 64,481 67,652 67,062 68,366 70,616 67,062 12 Ninety-one days to one year 89,647 89,997 89,937 87,108 91,423 89,667 90,167 91,423 13 One year to five years 66,029 68,029 68,529 69,179 69,648 67,064 66,029 69,648 14 Five years to ten years 16,415 17,165 17,165 17,165 17,165 15,932 16,415 17,165 15 More than ten years 25,899 26,631 26,631 26,631 26,631 25,549 25,899 26,631 16 Total federal agency obligations 5,671 5,574 5,841 5,758 7,009 5,625 5,624 7,009 17 Within fifteen days2 180 120 558 475 1,685 98 463 1,685 18 Sixteen days to ninety days 911 911 715 715 747 836 573 747 19 Ninety-one days to one year 1,278 1,278 1,223 1,223 1,221 1,297 1,286 1,221 20 One year to five years 2,391 2,354 2,454 2,454 2,465 2,483 2,391 2,465 21 Five years to ten years 757 757 737 737 737 757 757 737 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 1992 1988 1989 1990 1991 IItteemm Dec. Dec. Dec. Dec. Feb. Mar. Apr. May June July Aug. Sept. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 40.47 40.56 41.83 45.60 47.75 48.48 49.00 49.49 49.23 49.49 50.32 51.35 2 Nonborrowed reserves 38.75 40.29 41.51 45.41 47.67 48.39" 48.91 49.34 49.01r 49.21" 50.07 51.06 3 Nonborrowed reserves plus extended credit 40.00 40.31 41.53 45.41 47.67 48.39 48.91 49.34 49.01" 49.21" 50.07 51.06 4 Required reserves 39.42 39.64 40.17 44.62 46.68 47.45 47.86 48.49 48.32 48.52 49.39 50.34 5 Monetary base 256.97 267.77 293.29 317.25 323.41 324.51 326.50 328.58 329.64 332.26 336.87" 341.55 Not seasonally adjusted 6 Total reserves 41.65 41.77 43.07 46.98" 46.85 47.69 50.02" 48.62 49.25 49.52 49.81" 51.11 7 Nonborrowed reserves 39.93 41.51 42.74 46.78 46.77 47.59 49.93" 48.47 49.02 49.24 49.56" 50.83 8 Nonborrowed reserves plus extended credit 41.17 41.53 42.77 46.78 46.77 47.60 49.93 48.47 49.02 49.24 49.56" 50.83 9 Required reserves 40.60 40.85 41.40 46.00 45.78 46.66 48.88 47.62 48.33 48.56 48.88 50.11 10 Monetary base 260.41 271.18 296.68 321.07" 320.38 322.69 327.45 328.37 330.94" 334.09 336.59" 340.11 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS 0 11 Total reserves" 63.75 62.81 59.12 55.53 55.24 56.28 50.46" 48.83" 49.50 49.82 50.16" 51.52 12 Nonborrowed reserves 62.03 62.54 58.80" 55.34 55.16 56.19 50.37" 48.67 49.27 49.54 49.91 51.24 13 Nonborrowed reserves plus extended credit 63.28" 62.56 58.82 55.34 55.16 56.19 50.37 48.67 49.27 49.54 49.91 51.24 14 Required reserves 62.70 61.89 57.46 54.55 54.17 55.25 49.32 47.83" 48.58 48.86 49.23 50.52 15 Monetary base 283.00 292.55 313.70 333.61 333.19 335.82 332.69 333.79 336.43 339.87 342.49" 346.21 16 Excess reserves13 1.05 .92 1.66 .98 1.07" 1.03 1.14 1.00 .91 .97 .94 1.01 17 Borrowings from the Federal Reserve 1.72 .27 .33 .19 .08 .09 .09 .16" .23 .28 .25 .29 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 • December 1992 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1992 IItteemm 1988 1989 1990 1991 Dec. Dec. Dec. Dec. June July Aug. Sept. Seasonally adjusted Measures2 1 Ml 786.9 794.1 826.1 898.1 951.8 960.8 973.6 989.6 2 M2 3,071.1 3,227.3 3,339.0 3,439.9 3,463.4r 3,460.8" 3,469.3" 3,479.7 3 M3 3,923.1 4,059.8 4,114.6 4,171.0 4,165.9" 4,162.0 4,172.8" 4,178.1 4 L 4,677.lr 4,890.6r 4,965.2r 4,988.lr 5,013.1r 5,005.3" 5,023.0 n.a. 5 Debt 9,326.3r 10,076.7r 10,751.3r ll,200.4r 11,481.7" 11,526.2 11,569.1 n.a. Ml components 6 Currency3 212.3 222.6 246.8 267.3 276.2 279.0 282.3 286.4 8 7 T D r e a m v a e n le d r s d c e h p e o c s k it s s 5 286 7 . . 5 5 27 7 9 . . 4 0 27 8 7. . 1 3 28 8 9. . 5 2 31 7 1 . . 9 0 31 7 5 . . 8 6 320 7 . . 7 9 327 8 . . 8 3 9 Other checkable deposits6 280.6 285.1 293.9 333.2 356.7 358.4" 362.7 367.1 Nontransaction components 1 1 0 1 I I n n M M 2 3 8 2,2 8 8 5 4 2 . . 2 0 2,4 8 3 3 3 2 . . 2 5 2,5 7 1 7 2 5 . . 9 6 2,5 7 4 3 1 1. . 1 8 2,5 7 1 0 1 2 . . 6 5 " " 2,4 7 9 0 9 1 . . 9 2 " " 2,4 7 9 0 5 3 . . 8 5 " " 2,4 6 9 9 0 8 . . 1 4 Commercial banks 12 Savings deposits, including MMDAs 542.7 541.5r 581.9 664.9 710.8 716.3 724.4 735.0 13 Small time deposits 447.0 531.0 606.4 598.5 551.5" 543.8 535.1" 527.8 14 Large time deposits10, 11 366.9 398.2 374.0 354.0 325.5 319.0" 316.3" 311.9 Thrift institutions 15 Savings deposits, including MMDAs 383.5 349.7 338.8 377.7 416.2 418.0 421.1 424.9 1 1 6 7 S L m ar a g l e l t t i i m m e e d d e e p p o o s s i i t t s s 10 5 1 8 7 5 4 . . 9 3 6 1 1 6 7 1 . . 5 1 5 1 6 2 2 0 . . 3 9 46 8 4 3. . 1 5 40 6 4 9 . . 6 8 39 69 8 . . 5 0 3 6 9 8 0. . 8 2 3 6 8 8 4. . 4 0 Money market mutual funds 18 General purpose and broker-dealer . 241.9 316.3 348.9 360.5 354.2" 350.8" 349.1" 344.1 19 Institution-only 91.0 107.2 133.7 179.1 199.7 207.7 217.2 217.2 Debt components 20 Federal debt 2,101.5 2,249.5r 2,493.4r 2,764.8r 2,942.0" 2,968.2" 2,991.6 n.a. 21 Nonfederal debt 7,224.8r 7,827.2r 8,258.0" 8,435.6r 8,539.7" 8,558.0" 8,577.5 n.a. Not seasonally adjusted Measures2 22 Ml 804.1 811.9 844.1 917.3 952.1 963.3 971.1 984.0 23 M2 3,083.8 3,240.0 3,351.9 3,453.7 3,459.3" 3,463.9" 3,468.4" 3.471.1 24 M3 3,934.7 4,070.3 4,124.7 4,181.7 4,163.0" 4,163.0" 4,175.5" 4.169.2 25 L 4,694.2" 4,909.9" 4,984.9" 5,008.3" 5,000.3" 4,997.0" 5,016.6 n.a. 26 Debt 9,312.5" 10,063.6" 10,739.9" 11,190.5" 11,434.0" 11,480.8" 11,531.1 n.a. Ml components 2 2 2 7 8 9 T D C r e u a m r v r a e e n l n e d c r y s d c e h p e o c si k t s s 4 5 2 2 1 9 6 4 8 . . . 8 9 9 2 29 2 6 1 5 . . . 9 5 3 2 2 4 8 7 9 9 . . . 8 5 9 2 3 7 0 7 0 3 . . . 7 0 0 2 3 7 1 8 7 0 . . . 3 2 6 2 3 8 1 0 8 7 . . . 8 6 2 2 3 8 1 8 2 9 . . . 8 9 2 2 3 8 2 4 8 5 . . . 7 4 9 30 Other checkable deposits6 283.5 288.1 296.9 336.5 356.1 356.6 360.2" 365.0 Nontransaction components 3 3 1 2 I I n n M M2 3 8 2,2 8 7 5 9 0 . . 7 8 2,4 8 2 3 8 0 . . 1 3 2,5 7 0 7 7 2 . . 8 8 2,5 7 3 2 6 8 . . 5 0 2,5 7 0 0 7 3 . . 2 7 " " 2,5 6 0 9 0 9 . . 6 2 " " 2,4 7 9 0 7 7 . . 3 2 " " 2,4 6 8 98 7 . . 1 2 Commercial banks 33 Savings deposits, including MMDAs 543.8 543.0 580.0 662.4 714.1 719.9 726.2 734.0 34 Small time deposits . 446.0 529.5 606.3 598.7 549.5" 543.6 534.8 527.4 35 Large time deposits10, 365.9 397.1 373.0 352.8 326.8" 318.9 318.0" 313.1 Thrift institutions 36 Savings deposits, including MMDAs 381.1 347.6 337.7 376.3 418.2 420.1 422.2 424.3 37 Small time deposits 584.9 616.0 562.2 464.6 403.2 397.8 390.5 384.1 38 Large time deposits10 175.2 162.0 120.6 82.8 70.1 69.4 68.6 68.3 Money market mutual funds 39 General purpose and broker-dealer 240.8 314.6 346.8 358.1 349.8" 346.4" 347.4" 343.0 40 Institution-only 91.4 107.8 134.4 180.3 195.7 202.2 213.8 210.0 Repurchase agreements and eurodollars 41 Overnight 83.2 77.5 74.7 76.3 72.4 72.9" 76.1" 74.3 42 Term 227.4 178.5 158.3 127.7 125.3" 123.3" 122.5" 121.1 Debt components 43 Federal debt 2,098.9 2,247.5 2,491.3 2,765.0 2,912.2 2,937.5 2,970.3 n.a. 44 Nonfederal debt 7,213.5" 7,816.2" 8,248.6" 8,425.5" 8,521.9" 8,543.3" 8,560.8 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A15 NOTES TO TABLE 1.21 1. Latest monthly and weekly figures are available from the Board's H.6 (508) Treasury securities, commercial paper, and bankers acceptances, net of money weekly statistical release. Historical data are available from the Money and market fund holdings of these assets. Seasonally adjusted L is computed by Reserves Projection Section, Division of Monetary Affairs, Board of Governors of summing U.S. savings bonds, short-term Treasury securities, commercial paper, the Federal Reserve System, Washington, 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 • December 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 1992 Bank group, or type of customer 11998899 22 11999900 22 1199991122 Feb. Mar. Apr. May June July DEBITS TO Seasonally adjusted Demand deposits3 1 All insured banks 256.150.4 277,916.3 281,050.1 298,098.7 305,837.0 315,651.2 292,177.4 302.259.2 336,868.4 2 Major New York City banks.. 129,319.9 131,784.0 140.905.5 154,751.0 164,171.5 167,177.5 154,225.3 149.743.3 179,593.4 3 Other banks 126.830.5 146,132.3 140.144.6 143,347.7 141,665.5 148,473.7 137,952.1 152,515.9 157,275.0 4 ATS-NOW accounts4 2,910.5 3,349.6 3,624.6 3,787.2 3,670.2 3,957.0 3,552.6 4,070.7 4,024.0 5 Savings deposits 547.5 558.8 1,377.4 3,142.5 3,361.0 3,356.5 3,241.4 3,838.9 3,724.9 DEPOSIT TURNOVER Demand deposits3 735.1 800.6 817.6 817.6 832.5 857.4 771.2 814.2 910.5 6 All insured banks 3,421.5 3,804.1 4,391.9 4,633.3 4,974.4 5,029.1 4,438.0 4,470.1 5,425.1 7 Major New York City banks.. 408.3 467.7 449.6 432.8 423.7 443.3 400.9 451.6 466.9 8 Other banks 9 ATS-NOW accounts4 15.2 16.5 16.1 15.1 14.5 15.6 13.7 15.6 15.3 10 Savings deposits 3.0 2.9 3.3 4.7 4.9 4.7 4.4 5.1 5.0 DEBITS TO Not seasonally adjusted Demand deposits3 11 All insured banks 256,133.2 277,400.0 280,922.8 276,158.6 313,513.5 314,388.6 290,950.2 311,175.8 336,160.9 12 Major New York City banks.. 129,400.1 131,784.7 140,563.0 143,476.0 168,122.2 164,994.4 153,163.7 154,953.8 178,555.6 13 Other banks 126,733.0 145,615.3 140,359.7 132,682.6 145,391.3 149,394.3 137,786.5 156,222.0 157,605.3 1 1 4 5 A M T M S D -N A O s6 W accounts4 2 2, , 6 9 7 1 7 0 . . 1 7 2 3 , , 9 3 2 4 3 2 . . 8 2 3,62 n 2. . 4 a 3,45 n 0. . 5 a 3,74 n 7. . 2 a 4,10 n 4. . 5 a 3,51 n 5. . 5 a 4,03 n 2. . 5 a 3,92 n 5 . . a 6 16 Savings deposits 546.9 557.9 1,408.3 2,872.0 3,363.7 3,459.2 3,031.2 3,472.9 3,461.5 DEPOSIT TURNOVER Demand deposits3 17 All insured banks 735.4 799.6 817.5 778.4 878.2 849.3 785.8 842.5 903.0 18 Major New York City banks.. 3,426.2 3,810.0 4,370.1 4,387.6 5,308.9 5,042.4 4,551.3 4,668.3 5,312.2 19 Other banks 408.0 466.3 450.6 412.0 446.9 442.7 409.3 464.7 465.4 20 ATS-NOW accounts4 15.2 16.4 16.1 13.7 14.7 15.7 13.7 15.6 15.2 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 4.2 4.9 4.9 4.3 4.9 4.8 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, DC 4. Accounts authorized for negotiable orders of withdrawal (NOWs) and 20551. accounts authorized for automatic transfer to demand deposits (ATSs). Data in this table also appear on the Board's G.6 (406) monthly statistical 5. Excludes ATS and NOW accounts. release. For ordering address, see inside front cover. 6. Money market deposit accounts. 2. Annual averages of monthly figures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions A17 1.23 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars, averages of Wednesday figures 1991 1992 item Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept. Seasonally adjusted 1 Total loans and securities1 2,805.5 2,822.8 2,838.4 2,849.0 2,849.5 2,855.8r 2,868.3r 2,865.9r 2,870.0 2,870.0" 2,882.9r 2,898.4 2 U.S. government securities 538.7 550.8 562.6 565.7 570.4 578.6r 590.6 599.1 608.0" 615.4r 630.3r 634.5 i Other securities 177.9 178.8 179.2 178.5r 178.6 175.6 175.6 173.9 172.3r 174.3r 174.6r 174.9 4 Total loans and leases1 2,088.9 2,093.2 2,096.5 2,104.7 2,100.5 2,101.6r 2,102.1r 2,092.9" 2,089.7 2,080.2 2,078.0" 2,089.1 Commercial and industrial ..... 622.6 621.7 617.9 616.6 612.2 609.5 606.6r 603.0 598.9 596.4 594. lr 596.6 6 Bankers acceptances held ... 6.6 7.2 7.3 7.5 7.7 7.6 7.2 7.4 6.9 7.6 7.4 7.2 7 Other commercial and industrial 616.1 614.6 610.6 609.1 604.5 601.9 599.3 595.6 592.0 588.7r 586.7r 589.4 8 U.S. addressees3 609.4 607.9 603.2 602.7 598.1 595.4 592.7 588.8 585.3 581.6 579.7 582.2 9 Non-U.S. addressees3 6.7 6.7 7.4 6.4 6.4 6.5 6.6 6.8 6.7 7.1 7.0 7.2 10 Real estate 869.8 871.9 873.1 873.3 877.0 878.7 880.9 882.1 881.1 879.2 878.4 882.3 11 Individual 364.2 363.1 363.5 363.1 363.6 362.1 360.8 359.2 359.6 359.3 357.9 357.2 12 Security 51.1 53.5 54.5 59.4 57.1 60.4 65.2 61.9 64.3 61.1 63.0 66.7 13 Nonbank financial institutions 37.2 37.8 40.6 40.3 41.4 41.9 41.0 41.3 40.4 38.6 39.5 42.0 14 Agricultural 34.1 33.8 34.0 33.7 33.5 34.2 34.2 34.0 34.3 34.3r 34.7 34.8 15 State and political subdivisions 29.7 29.4 29.1 28.1 28.2 28.2 28.0 27.7 27.5 27.0 26.6 26.6 16 Foreign banks 6.6 6.9 7.4 7.2 6.7 6.5 6.6 7.2 8.0 8.3 7.6 8.6 17 Foreign official institutions 2.4 2.5 2.4 2.3 2.2 2.2 2.1 2.1 2.1 2.2 2.2 2.2 18 Lease-financing receivables 31.6 31.5 31.7 31.5 31.6 31.6 31.5 31.4 31.6 30.6 30.3 30.4 19 All other loans 39.5 41.1 42.4 49.2 47.0 46.4 45.3 42.9 42.0 43.2 43.7 41.7 Not seasonally adjusted 20 Total loans and securities1 2,808.3 2,828.1 2,844.8 2,845.7 2,852.1 2,856.5 2,867.4r 2,861.5r 2,870.9 2,862.5r 2,879.5r 2,897.8 21 U.S. government securities 537.6 551.7 558.5 565.2 574.3 583.9 592.8 599.2 607.0 612.7r 628. lr 632.4 22 Other securities 178.3 179.0 179.5 179.1 178.6r 175.7r 175.2 173.6 172.4 173.4r 174.7r 174.8 23 Total loans and leases1 2,092.4 2,097.4 2,106.7 2,101.4 2,099.1 2,096.9 2,099.3 2,088.7 2,091.5 2,076.4 2,076.6 2,090.6 24 Commercial and industrial ..... 621.1 620.4 619.2 613.5 611.4 612.1 609.4 605.4 600.9 596.2 592.5 593.9 25 Bankers acceptances held ... 6.6 7.3 7.6 7.5 7.8 7.5 7.0 7.4 7.0 7.2 7.2 7.1 26 Other commercial and industrial 614.5 613.1 611.6 605.9 603.6 604.7 602.4 598.0 593.9 589.0 585.2 586.8 27 U.S. addressees 608.3 606.9 604.6 599.1 596.8 598.0 595.5 591.2 586.9 581.8 578.3 579.6 28 Non-U.S. addressees 6.2 6.2 7.0 6.9 6.8 6.7 6.9 6.8 7.0 7.1 7.0 7.1 29 Real estate 871.2 873.2 873.4 872.7 874.0 875.2 879.6 882.8 881.4 880.4 880.4 883.3 30 Individual 365.1 364.5 368.1 367.4 363.6 359.6 358.2 357.6 357.4 356.6 357.0 358.5 31 Security 50.8 53.5 55.1 59.0 61.7 62.2 66.7 58.5 64.1 58.9 61.1 64.6 32 Nonbank financial institutions 36.9 38.1 41.9 40.7 41.0 41.3 40.5 40.6 40.7 38.8 39.7 41.5 33 Agricultural 35.0 34.1 34.0 33.2 32.6 32.9 33.2 33.6r 34.5 35.0 35.6 35.8 34 State and political subdivisions 29.8 29.4 29.0 28.5 28.3 28.2 27.9 27.7 27.4 26.8 26.5 26.6 35 Foreign banks 6.9 7.3 7.9 7.0 6.6 6.3 6.4 7.1 7.7 8.2 7.5 8.7 36 Foreign official institutions 2.4 2.5 2.4 2.3 2.2 2.2 2.1 2.1 2.1 2.2 2.2 2.2 37 Lease-financing receivables .... 31.8 31.6 31.7 31.8 31.8 31.7 31.5 31.4 31.3 30.4 30.1 30.3 38 All other loans 41.6 42.6 44.1 45.4 45.9 45.1 43.7 41.9 43.9 42.8 44.0 45.4 1. Adjusted to exclude loans to commercial banks in the United States. 3. United States includes the fifty states and the District of Columbia. 2. Includes nonfinancial commercial paper held. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics • December 1992 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Billions of dollars, monthly averages 1991 1992 SSoouurrccee ooff ffuunnddss Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept. Seasonally adjusted 1 Total nondeposit funds2 264.7 268.1 282.1 285.9 290.3 291.4 295.2 297.5 302.9 306.3 310.2 317.0 2 Net balances due to related foreign offices3 30.9 33.1 39.2 43.6 42.4 45.5 49.9 55.0 61.1 63.2 59.8 62.9 3 Borrowings from other than commercial banks in United States 233.8 235.0 242.9 242.3 248.0 245.8 245.3 242.5 241.8 243.0 250.4 254.0 4 Domestically chartered banks 154.7 151.9 155.1 157.2 160.6 156.6 154.7 153.2 153.8 154.8 160.7 162.2 5 Foreign-related banks 79.1 83.1 87.8 85.0 87.4 89.2 90.6 89.3 88.0 88.3 89.7 91.8 Not seasonally adjusted 6 Total nondeposit funds 266.0 272.4 280.3 281.7 290.9 295.3 292.4 303.4 304.4 302.6 307.1 314.3 7 Net balances due to related foreign offices3 30.5 34.0 42.7 44.3 42.5 45.9 48.4 57.4 60.8 59.7 58.2 62.3 8 Domestically chartered banks -7.2 -4.4 -3.8 -4.5 -.6 -.7 -4.9 -4.2 -6.3 -7.0 -9.3 -10.9 9 Foreign-related banks 37.7 38.5 46.5 48.8 43.1 46.6 53.4 61.6 67.1 66.7 67.5 73.1 10 Borrowings from other than commercial banks in United States 235.4 238.4 237.6 237.5 248.4 249.3 243.9 246.0 243.6 242.9 248.9 252.0 11 Domestically chartered banks 155.5 156.2 153.7 152.9 161.1 159.7 152.7 156.0 154.0 153.2 158.9 161.1 12 Federal funds and security RP borrowings5 152.3 153.0 150.6 149.5 157.6 156.4 149.3 152.1 149.9 149.0 155.0 157.3 13 Other 3.2 3.2 3.1 3.4 3.5 3.3 3.4 3.9 4.1 4.2 3.9 3.8 14 Foreign-related banks6 79.9 82.2 83.8 84.6 87.3 89.6 91.2 90.0 89.6 89.7 90.1 90.9 MEMO Gross large time deposits7 15 Seasonally adjusted 429.5 426.1 423.9 416.0 413.7 406.9 399.9 396.7 392.4 386.1 384.5 381.1 16 Not seasonally adjusted 429.7 425.8 422.6 413.6 412.6 407.4 398.8 398.0 393.7 385.9 386.1 382.3 U.S. Treasury demand balances at commercial banks8 17 Seasonally adjusted 29.2 34.2 26.4 27.8 19.5 21.8 19.9 17.0 25.8 21.9 32.6 25.4 18 Not seasonally adjusted 28.7 28.5 25.4 33.1 25.2 20.1 17.7 21.0 25.2 19.7 22.4 28.7 1. Commercial banks are nationally and state-chartered banks in the fifty states given for the purpose of borrowing money for the banking business. This includes and the District of Columbia, agencies and branches of foreign banks, New York borrowings from Federal Reserve Banks and from foreign banks, term federal investment companies majority owned by foreign banks, and Edge Act corpora- funds, loan RPs, and sales of participations in pooled loans. tions owned by domestically chartered and foreign banks. 5. Figures are based on averages of daily data reported weekly by approxi- Data in this table also appear in the Board's G.10 (411) release. For ordering mately 120 large banks and quarterly or annual data reported by other banks. address, see inside front cover. 6. Figures are partly averages of daily data and partly averages of Wednesday 2. Includes federal funds, repurchase agreements (RPs), and other borrowing data. from nonbanks and net balances due to related foreign offices. 7. Time deposits in denominations of $100,000 or more. Estimated averages of 3. Reflects net positions of U.S. chartered banks, Edge Act corporations, and daily data. U.S. branches and agencies of foreign banks with related foreign offices plus net 8. U.S. Treasury demand deposits and Treasury tax-and-loan notes at compositions with own International Banking Facilities (IBFs). mercial banks. Averages of daily data. 4. Borrowings through any instrument, such as a promissory note or due bill, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions A19 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKS Last-Wednesday-of-Month Series1 Billions of dollars 1992 AAccccoouunntt Aug. 5 Aug. 12 Aug. 19 Aug. 26 Sept. 2 Sept. 9 Sept. 16 Sept. 23 Sept. 30 ALL COMMERCIAL BANKING INSTITUTIONS2 1 Loans and securities 3,041.3 3,029.2 3,033.0 3,028.5 3,065.0 3,048.0 3,071.6 3,034.3 3,066.6 ? Investment securities 763.9 764.1 764.6 765.1 770.8 772.4 769.1 769.3 771.3 3 U.S. government securities 603.1 602.8 603.2 604.3 610.5 611.5 607.9 608.6 611.1 4 Other 160.8 161.3 161.4 160.9 160.3 160.9 161.3 160.7 160.2 5 Trading account assets 36.3 36.2 38.9 36.3 38.7 37.5 36.7 35.1 36.6 6 U.S. government securities 22.9 23.1 24.6 21.8 23.6 22.6 22.7 21.0 22.5 7 Other securities 1.7 1.6 2.3 2.2 2.4 2.5 2.4 2.5 2.8 8 Other trading account assets 11.7 11.6 12.0 12.4 12.7 12.4 11.6 11.6 11.3 9 Total loans 2,241.2 2,229.0 2,229.5 2,227.1 2,255.5 2,238.2 2,265.7 2,229.9 2,258.7 10 Interbank loans 165.2 156.1 156.8 150.4 169.0 156.2 171.1 141.6 160.5 11 Loans excluding interbank 2,076.0 2,072.9 2,072.7 2,076.7 2,086.6 2,082.0 2,094.6 2,088.2 2,098.2 1? Commercial and industrial 594.8 593.6 592.2 590.1 592.3 590.3 594.3 594.3 597.4 N Real estate 881.1 881.2 878.5 879.4 882.0 884.1 883.4 882.4 882.9 14 Revolving home equity 71.9 72.2 72.2 72.3 72.7 72.8 72.9 73.0 73.2 IS Other 809.1 809.0 806.2 807.1 809.3 811.3 810.4 809.3 809.8 16 Individual 356.0 355.8 357.0 357.5 358.3 357.7 358.7 359.4 358.2 17 All other 244.1 242.3 245.0 249.7 254.0 249.9 258.3 252.2 259.7 18 Total cash assets 215.8 202.1 201.8 201.3 222.4 229.7 224.4 205.4 215.3 19 Balances with Federal Reserve Banks 31.1 22.6 24.4 22.5 28.1 28.9 27.8 25.1 23.6 20 Cash in vault 28.4 30.4 30.6 31.2 30.6 31.7 31.3 31.1 31.0 21 Demand balances at U.S. depository institutions 29.6 29.2 28.8 29.3 31.0 31.2 31.1 27.3 27.7 22 Cash items 77.2 72.8 70.1 70.4 83.9 88.0 84.3 73.4 84.3 23 Other cash assets 49.4 46.9 47.9 47.9 48.8 49.9 49.9 48.6 48.7 24 Other assets 293.9 294.2 292.7 287.0 299.6 294.9 295.4 291.9 291.9 25 Total assets 3,551.0 3,525.5 3,527.5 3,516.8 3,587.0 3,572.7 3,591.4 3,531.6 3,573.8 26 Total deposits 2,486.0 2,475.7 2,460.3 2,455.8 2,499.7 2,511.1 2,505.0 2,454.7 2,488.2 27 Transaction accounts 706.1 696.5 685.5 682.2 721.3 728.9 728.8 688.5 727.7 28 Demand, U.S. government 3.6 2.9 2.9 2.8 3.5 3.7 7.3 3.3 4.0 29 Demand, depository institutions 38.5 36.6 37.4 37.0 40.1 43.1 41.0 37.7 39.9 30 Other demand and all checkable deposits 664.1 657.1 645.1 642.3 677.7 682.1 680.4 647.5 683.8 31 Savings deposits (excluding checkable) 720.8 722.0 720.2 719.4 726.1 730.5 731.0 725.4 726.0 37. Small time deposits 666.2 663.5 661.4 659.2 658.6 658.4 655.9 653.3 653.0 33 Time deposits over $100,000 392.8 393.7 393.2 395.0 393.6 393.2 389.3 387.6 381.5 34 Borrowings 495.2 483.6 493.4 482.6 509.2 484.0 515.7 495.9 493.4 35 Treasury tax and loan notes 13.8 17.8 17.4 17.3 24.7 10.3 31.9 34.2 34.1 36 Other 481.4 465.8 476.1 465.4 484.4 473.8 483.8 461.6 459.2 37 Other liabilities 311.1 306.7 314.2 318.0 316.2 314.3 308.0 318.4 329.3 38 Total liabilities 3,292.2 3,266.0 3,267.9 3,256.4 3,325.0 3,309.5 3,328.7 3,269.0 3,310.9 39 Residual (assets less liabilities)5 258.8 259.5 259.6 260.4 262.0 263.2 262.7 262.6 263.0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Financial Statistics • December 1992 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKS Last-Wednesday-of-Month Series1—Continued Billions of dollars 1992 AAccccoouunntt Aug. 5 Aug. 12 Aug. 19 Aug. 26 Sept. 2 Sept. 9 Sept. 16 Sept. 23 Sept. 30 DOMESTICALLY CHARTERED COMMERCIAL BANKS2 40 Loans and securities 2,708.1 2,701.6 2,702.6 2,697.2 2,727.7 2,716.9 2,732.2 2,700.1 2,725.7 41 Investment securities 707.5 707.7 708.7 709.6 715.6 715.8 713.5 713.8 715.0 42 U.S. government securities 567.9 567.7 568.6 569.8 576.1 576.2 573.6 574.3 575.6 43 Other 139.6 140.0 140.2 139.8 139.5 139.6 139.9 139.5 139.4 44 Trading account assets 36.3 36.2 38.9 36.3 38.7 37.5 36.7 35.1 36.6 45 U.S. government securities 22.9 23.1 24.6 21.8 23.6 22.6 22.7 21.0 22.5 46 Other securities 1.7 1.6 2.3 2.2 2.4 2.5 2.4 2.5 2.8 47 Other trading account assets 11.7 11.6 12.0 12.4 12.7 12.4 11.6 11.6 11.3 48 Total loans 1,964.4 1,957.7 1,955.0 1,951.3 1,973.4 1,963.7 1,982.1 1,951.2 1,974.1 49 Interbank loans 138.0 133.3 133.5 125.6 139.9 134.3 142.2 119.2 133.3 50 Loans excluding interbank 1,826.3 1,824.4 1,821.5 1,825.7 1,833.5 1,829.3 1,839.9 1,832.0 1,840.9 M Commercial and industrial 442.6 440.9 440.0 438.1 440.0 437.5 440.6 439.9 443.1 52 Real estate 827.7 827.8 825.1 826.1 828.8 831.0 830.3 829.3 831.5 53 Revolving home equity 71.9 72.2 72.2 72.3 72.7 72.8 72.9 73.0 73.2 54 Other 755.7 755.6 752.8 753.9 756.1 758.2 757.4 756.3 758.3 55 Individual 356.0 355.8 357.0 357.5 358.3 357.7 358.7 359.4 358.2 56 All other 200.1 199.9 199.4 204.0 206.4 203.1 210.2 203.5 208.1 57 Total cash assets 185.6 172.0 170.9 170.3 190.8 197.7 192.4 174.9 183.8 58 Balances with Federal Reserve Banks 30.3 22.2 23.8 21.9 27.4 28.4 27.0 24.7 22.5 59 Cash in vault 28.4 30.4 30.5 31.1 30.5 31.6 31.3 31.0 31.0 60 Demand balances at U.S. depository institutions 28.3 27.8 27.3 27.8 29.5 29.6 29.5 25.8 26.2 61 Cash items 75.1 70.3 67.7 67.9 81.2 85.8 82.1 71.1 81.9 62 Other cash assets 23.6 21.3 21.6 21.6 22.2 22.3 22.5 22.1 22.2 63 Other assets 173.2 173.0 169.7 166.3 174.7 171.1 173.0 171.0 174.6 64 Total assets 3,066.9 3,046.7 3,043.2 3,033.8 3,093.2 3,085.8 3,097.6 3,046.0 3,084.2 65 Total deposits 2,330.6 2,318.9 2,302.5 2,295.1 2,339.0 2,351.1 2,346.4 2,297.8 2,330.8 66 Transaction accounts 696.5 686.6 675.5 672.3 710.8 718.9 718.0 678.5 716.9 67 Demand, U.S. government 3.6 2.9 2.9 2.8 3.5 3.7 7.3 3.3 4.0 68 Demand, depository institutions 36.0 34.1 34.9 34.3 37.4 40.4 38.0 35.1 37.1 69 Other demand and all checkable deposits 656.9 649.6 637.6 635.1 669.9 674.7 672.7 640.1 675.9 70 Savings deposits (excluding checkable) 715.8 717,2 715.6 714.7 721.5 725.8 726.3 720.5 721.1 71 Small time deposits 663.5 660.8 658.7 656.5 655.9 655.8 653.3 650.6 650.3 7/2i Time deposits over $100,000 254.8 254.3 252.6 251.5 250.7 250.6 248.8 248.2 242.4 Borrowings 354.2 345.9 356.8 353.6 367.7 346.5 367.8 362.0 359.1 74 Treasury tax and loan notes 13.8 17.8 17.4 17.3 24.7 10.3 31.9 34.2 34.1 75 Other 340.5 328.1 339.5 336.3 343.0 336.2 335.9 327.8 325.0 76 Other liabilities 127.6 126.6 128.6 128.9 128.7 129.2 124.9 127.8 135.5 77 Total liabQities 2,812.4 2,791.4 2,787.8 2,777.6 2,835.4 2,826.8 2,839.1 2,787.6 2,825.4 78 Residual (assets less liabilities)5 254.6 255.3 255.4 256.2 257.8 259.0 258.5 258.4 258.8 1. Data are partly estimated. They include all bank-premises subsidiaries and and quarter-end condition reports. other significant majority-owned domestic subsidiaries. 3. This balancing item is not intended as a measure of equity capital for use in 2. Includes insured domestically chartered commercial banks, agencies and capital adequacy analysis. branches of foreign banks, Edge Act and Agreement corporations, and New York 4. Includes all member banks and insured nonmember banks. Loans and State foreign investment corporations. Data are estimates for the last Wednesday securities data are estimates for the last Wednesday of the month based on a of the month based on a sample of weekly reporting foreign-related institutions sample of weekly reporting banks and quarter-end condition reports. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A21 1.26 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS Millions of dollars, Wednesday figures 1992 AAccccoouunntt Aug. 5 Aug. 12 Aug. 19 Aug. 26 Sept. 2 Sept. 9 Sept. 16 Sept. 23 Sept. 30 ASSETS 1 Cash and balances due from depository institutions 109,889 97,852 96,869 96,810 111,924 116,759 113,616 102,325 105,797 2 U.S. Treasury and government securities 257,752 258,064 262,111 259,952 265,615 265,463 262,247 259,534 267,244 Trading account 20,126 20,503 22,337 19,588 21,295 20,464 20,778 19,105 20,482 4 Investment account 237,626 237,561 239,774 240,364 244,320 244,998 241,469 240,429 246,763 5 Mortgage-backed securities1 80,497 80,176 79,763 79,235 79,940 79,808 78,376 78,085 79,153 All others, by maturity 6 One year or less 24,920 24,644 24,701 24,762 25,479 26,413 26,504 26,394 26,684 7 One year through five years 74,131 74,581 76,828 78,170 77,656 77,925 77,020 76,409 76,558 8 More than five years 58,078 58,160 58,482 58,197 61,245 60,852 59,569 59,541 64,367 9 Other securities 54,473 54,513r 55,628r 55,385r 55,382 55,073 54,992 55,035 55,009 10 Trading account 1,537 1,425 2,145 2,087 2,291 2,376 2,299 2,384 2,715 11 Investment account 52,936 53,088r 53,483r 53,298r 53,090 52,697 52,693 52,651 52,293 12 State and political subdivisions, by maturity 21,720 21,518 21,568 21,659 21,594 20,975 21,019 21,049 20,988 N One year or less 4,007 3,838 3,919 4,007 4,009 3,375 3,397 3,432 3,411 14 More than one year 17,713 17,681 17,649 17,652 17,585 17,600 17,622 17,617 17,577 15 Other bonds, corporate stocks, and securities 31,216 31,570r 31,915r 31,639" 31,496 31,722 31,674 31,602 31,306 16 Other trading account assets 11,567 11,429 11,807 12,217 12,506 12,208 11,445 11,459 11,043 17 Federal funds sold2 84,964 82,146 84,247 80,060 89,941 80,429 97,332 78,322 83,823 18 To commercial banks in the United States 58,907 55,027 56,856 49,992 59,855 52,407 65,874 48,514 56,241 19 To nonbank brokers and dealers 21,892 22,676 22,295 24,932 24,412 22,565 25,371 23,917 24,064 20 To others3 4,164 4,443 5,095 5,135 5,674 5,457 6,087 5,892 3,518 21 Other loans and leases, gross 972,100 970,179r 966,612r 966,898r 971,352 969,311 974,624 968,733 977,704 22 Commercial and industrial 278,069r 277,077r 276,658r 274,857r 276,249 274,369 276,975 275,618 278,545 23 Bankers acceptances and commercial paper 1,776 1,722 1,646 1,791 1,713 1,578 1,599 1,635 1,594 24 All other 276,293r 275.3551 275,013r 273,066r 274,537 272,791 275,376 273,983 276,951 25 U.S. addressees 274,597r 273,642' 273,427r 271,532r 272,650 271,112 273,762 272,304 275,082 26 Non-U.S. addressees 1,696 1,713 1,585 1,534 1,887 1,679 1,614 1,679 1,869 27 Real estate loans 397,926r 397,499r 394,923r 395,412r 397,127 398,366 397,468 396,044 3%,986 28 Revolving, home equity 42,017 42,117 42,181 42,214 42,161 42,143 42,236 42,250 42,440 29 All other 355,909" 355,382r 352,743r 353,198r 354,966 356,223 355,232 353,794 354,546 30 To individuals for personal expenditures 175,938r 176,339* 177,113r 177,024r 177,109 176,719 177,629 177,953 176,908 31 To financial institutions 37,499 36,794 35,949 35,213 36,624 37,593 36,202 35,893 38,238 32 Commercial banks in the United States 14,058 14,213 13,649 13,549 13,382 13,749 12,502 12,723 13,555 33 Banks in foreign countries 2,529 1,940 2,043 1,672 1,940 2,533 2,519 2,347 3,018 34 Nonbank financial institutions 20,913 20,641 20,257 19,991 21,303 21,311 21,181 20,824 21,666 35 For purchasing and carrying securities 13,758r 14,563r 13,752r 15,762r 15,102 13,957 17,417 14,098 15,932 36 To finance agricultural production 6,199 6,339 6,420 6,356 6,306 6,256 6,243 6,188 6,244 37 To states and political subdivisions 15,650 15,592 15,569 15,619 15,596 15,541 15,552 15,614 15,632 38 To foreign governments and official institutions 871 1,052 944 888 925 844 953 853 906 39 All other loans 21,977r 20,812r 21,130" 21,615r 22,131 21,554 22,061 22,334 24,000 40 Lease-financing receivables 24,215 24,112 24,152 24,152 24,183 24,111 24,123 24,137 24,313 41 LESS: Unearned income 2,681 2,696 2,697 2,710r 2,717 2,754 2,750 2,741 2,693 42 Loan and lease reserve 38,264 38,432 38,403 38,308 38,524 38,776 38,733 38,232 37,583 43 Other loans and leases, net 931,156 929,051r 925,513r 925,8801 930,111 927,781 933,141 927,759 937,429 44 Other assets 162,227 163,151 160,629 157,773r 164,273 160,275 162,444 160,450 162,521 45 Total assets 1,612,028 l,596,206r l,596,803r l,588,077r 1,629,751 1,617,987 1,635,218 1,594,885 1,622,865 Footnotes appear on the following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Financial Statistics • December 1992 1.26 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued Millions of dollars, Wednesday figures 1992 Account Aug. 5 Aug. 12 Aug. 19 Aug. 26 Sept. 2 Sept. 9 Sept. 16 Sept. 23 Sept. 30 LIABILITIES 46 Deposits 1,116,383 1,109,309 1,098,709" 1,092,794" 1,120,896 1,125,407 1,128,443 1,093,056 1,111,373 47 Demand deposits 250,444 247,428 241,648" 240,185" 260,674 262,682 267,409 245,365 265,734 48 Individuals, partnerships, and corporations 202,092 202,658 195,789" 193,132" 210,992 210,261 213,431 195,861 215,315 49 Other holders 48,351 44,770 45,859 47,053 49,682 52,422 53,978 49,504 50,419 50 States and political subdivisions 8,188 7,527 8,002 7,802 8,548 8,010 8,692 8,246 8,484 51 U.S. government 2,227 1,747 1,794 1,750 2,106 2,494 5,291 2,272 2,359 52 Depository institutions in the United States ... 21,591 20,569 21,490 20,556" 23,127 24,211 23,213 21,048 21,856 53 Banks in foreign countries 5,359 4,792 4,812 4,802 4,935 6,084 5,168 5,418 6,524 54 Foreign governments and official institutions .. 646 528 710 677" 725 781 979 780 934 55 Certified and officers' checks 10,340 9,606 9,051 11,466 10,242 10,842 10,636 11,740 10,262 56 Transaction balances other than demand deposits4 . 107,674 105,089 104,540" 103,323" 107,543 107,981 107,748 102,969 106,317 57 Nontransaction balances 758,265 756,792 752,520" 749,286" 752,679 754,744 753,285 744,722 739,323 58 Individuals, partnerships, and corporations 730,61 lr 728,864" 724,640" 721,341" 724,884 727,031 726,501 718,074 713,718 59 Other holders 27,654r 27,929" 27,881" 27,945" 27,795 27,713 26,784 26,648 25,604 60 States and political subdivisions 22,665 22,820 22,801" 22,795 22,641 22,683 22,543 22,332 21,700 61 U.S. government 2,110 2,178 2,166 2,208 2,178 2,165 2,152 2,168 1,787 62 Depository institutions in the United States ... 2,614r 2,662" 2,605" 2,633 2,674 2,566 1,790 1,844 1,815 63 Foreign governments, official institutions, and banks . 265 269 309 309 302 299 299 304 303 6 6 4 5 Lia B b o i r li r t o ie w s in fo g r s b fr o o r m ro w Fe ed d e m ra o l n R e e y s 5 erve Banks 266,6802r 258,3080" 267,41 3 2 0 " 263,7180" 277,6270 260,4000 278 1 , , 7 3 3 5 4 0 270,1550 271,1 3 0 8 6 0 66 Treasury tax and loan notes 11,503 14,802 14,305 13,919 21,600 8,122 27,248 29,180 28,973 67 Other liabilities for borrowed money6 255,179" 243,506" 253,077" 249,799" 256,027 252,279 250,137 240,975 241,753 68 Other liabilities (including subordinated notes and debentures) 99,029" 98,030" 99,891" 100,344" 99,909 100,117 96,107 98,965 106,694 69 Total liabilities 1,482,093 1,465,648" 1,466,012" 1,456,856" 1,498,432 1,485,925 1,503,284 1,462,176 1,489,173 70 Residual (total assets less total liabilities)7 129,935 130,558 130,791 131,221 131,319 132,062 131,934 132,709 133,692 MEMO 71 Total loans and leases, gross, adjusted, plus securities' 1,307,891 1,307,091" 1,309,899" 1,310,970" 1,321,558 1,316,326 1,322,264 1,311,847 1,325,027 72 Time deposits in amounts of $100,000 or more 138,599" 138,281" 136,844" 135,921" 135,280 135,159 133,619 131,898 126,893 73 Loans sold outright to affiliates9 1,102 1,104 1,081 1,090 1,067 1,074 1,139 1,130 1,056 74 Commercial and industrial 638 639 618 613 587 592 596 585 515 75 Other 464 465 463 476 480 482 543 546 541 76 Foreign branch credit extended to U.S. residents1®... 24,848 24,744 24,476 24,371 24,547 24,551 24,674 24,747 24,834 77 Net due to related institutions abroad -9,788 -11,064 -9,538 -8,015 -14,127 -10,082 -14,043 -10,693 -12,044 1. Includes certificates of participation, issued or guaranteed by agencies of the 9, Affiliates include a bank's own foreign branches, nonconsolidated nonbank U.S. government, in pools of residential mortgages. affiliates of the bank, the bank's holding company (if not a bank), and noncon- 2. Includes securities purchased under agreements to resell. solidated nonbank subsidiaries of the holding company. 3. Includes allocated transfer risk reserve. 10. Credit extended by foreign branches of domestically chartered weekly 4. Includes negotiable order of withdrawal accounts (NOWs), automatic trans- reporting banks to nonbank U.S. residents. Consists mainly of commercial and fer service (ATS), and telephone and preauthorized transfers of savings deposits. industrial loans, but includes an unknown amount of credit extended to other than 5. Includes borrowings only from other than directly related institutions. nonfinancial businesses. 6. Includes federal funds purchased and securities sold under agreements to NOTE. Data that formerly appeared in table 1.28, Assets and Liabilities of Large repurchase. Weekly Reporting Commercial Banks in New York City, can be obtained from the 7. This balancing item is not intended as a measure of equity capital for use in Board's H.4.2 (504) weekly statistical release. For ordering address, see inside capital-adequacy analysis. front cover. 8. 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

Weekly Reporting Commercial Banks A23 1.30 LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS Assets and Liabilities1 Millions of dollars, Wednesday figures 1992 AAccccoouunntt Aug. 5 Aug. 12 Aug. 19 Aug. 26 Sept. 2 Sept. 9 Sept. 16 Sept. 23 Sept. 30 1 Cash and balances due from depository institutions 19,868 19,758 20,388 20,431 20,838 21,108 21,151 20,115 20,787 2 U.S. Treasury and government agency securities 24,253 24,127 23,848 23,717 23,683 24,255 23,577 23,610 2244,,441199 3 Other securities 8,540 8,624 8,562 8,492 8,363 8,596 8,636 8,520 8,368 4 Federal funds sold1 19,130 15,175 16,921 18,393 21,090 16,668 21,016 17,804 22,126 5 To commercial banks in the United States ... 5,831 3,999 4,331 5,246 7,051 3,773 7,193 4,162 6,822 6 To others2 13,299 11,176 12,591 13,147 14,039 12,895 13,823 13,643 15,303 7 Other loans and leases, gross 159,545 160,043 160,341 159,646 160,972 160,620 162,071 162,201 161,548 8 Commercial and industrial 95,859 96,127 95,823 95,728 95,846 96,217 96,778 97,231 97,185 9 Bankers acceptances and commercial paper 2,477 2,466 2,349 2,273 2,444 2,490 2,362 2,336 2,679 10 All other 93,382 93,661 93,474 93,455 93,401 93,727 94,416 94,895 94,505 11 U.S. addressees 90,521 90,775 90,573 90,583 90,559 90,878 91,443 91,908 91,511 1? Non-U.S. addressees 2,861 2,887 2,902 2,872 2,843 2,849 2,972 2,987 2,994 13 Loans secured by real estate 36,197 36,213 36,203 36,071 36,069 35,980 35,924 35,974 34,865 14 To financial institutions 21,904 22,123 22,471 21,903 22,560 22,651 22,880 22,531 22,772 15 Commercial banks in the United States.. 7,091 6,832 6,598 6,303 6,665 6,457 6,415 6,262 5,6% 16 Banks in foreign countries 2,107 2,119 2,184 2,055 2,045 2,241 2,486 2,307 2,610 17 Nonbank financial institutions 12,706 13,172 13,689 13,545 13,850 13,954 13,978 13,961 14,466 18 For purchasing and carrying securities .... 3,179 3,165 3,353 3,474 3,925 3,569 4,315 4,303 4,479 19 To foreign governments and official institutions 335566 352 338888 337722 385 385 381 377 337777 70 All other 2,051 2,062 2,104 2,098 2,187 1,817 1,794 1,785 1,870 21 Other assets (claims on nonrelated parties) .. 29,616 29,773 29,268 29,377 29,965 30,972 29,791 29,597 30,382 22 Total assets3 301,119 297,739 301,244 300,425 307,381 302,932 307,404 302,088 304,700 23 Deposits or credit balances due to other than directly related institutions 97,565 98,594 99,836 102,104 102,295 101,998 99,834 99,088 99,198 24 Demand deposits 3,265 3,4% 3,648 3,394 3,816 3,536 3,812 3,627 4,422 25 Individuals, partnerships, and corporations 2,517 2,583 2,669 2,610 2,800 2,745 2,824 2,751 3,442 76 Other 748 912 979 785 1,016 791 988 876 981 27 Nontransaction accounts 94,301 95,099 96,188 98,710 98,480 98,461 96,023 95,461 94,775 28 Individuals, partnerships, and corporations 67,668 68,524 69,136 70,692 71,241 70,431 68,784 69,391 68,639 79 Other 26,632 26,575 27,052 28,018 27,238 28,030 27,239 26,070 26,136 30 Borrowings from other than directly related institutions 99,397 97,082 96,297 90,953 99,719 96,979 104,344 94,369 94,624 31 Federal funds purchased 56,533 53,241 53,147 50,009 55,688 52,170 59,781 48,767 48,017 32 From commercial banks in the United States 15,734 15,589 13,431 12,633 16,966 14,183 22,620 10,836 17,050 33 From others 40,799 37,652 39,716 37,376 38,722 37,987 37,161 37,931 30,%7 34 Other liabilities for borrowed money 42,864 43,842 43,150 40,944 44,031 44,809 44,563 45,602 46,607 35 To commercial banks in the United States 10,522 10,249 9,577 9,607 9,892 9,030 9,117 8,822 9,766 36 To others 32,342 33,592 33,573 31,337 34,139 35,778 35,446 36,780 36,841 37 Other liabilities to nonrelated parties 28,538 28,618 28,854 29,421 29,741 30,061 29,690 29,878 30,338 38 Total liabilities6 301,119 297,739 301,244 300,425 307,381 302,932 307,404 302,088 304,700 MEMO 39 Total loans (gross) and securities, adjusted .. 198,546 197,137 198,744 198,699 200,391 199,909 201,692 201,712 203,942 40 Net due to related institutions abroad 35,451 33,205 34,341 37,578 33,155 33,181 32,374 38,512 43,470 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

A24 DomesticN onfinancial Statistics • December 1992 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period Year ending December 1992 IItteemm 1987 1988r 1989r 1990r 1991r Mar. Apr. May June July Aug. Commercial paper (seasonally adjusted unless noted otherwise) 11 AAllll iissssuueerrss 358,997 458,464 525,831 561,142 530,300 539,749 537,020 533,719 542,205 547,242 545,801 FFiinnaanncciiaall ccoommppaanniieess11 DDeeaalleerr--ppllaacceedd ppaappeerr 22 TToottaall 102,742 159,777 183,622 215,123 214,445 219,287 225,989 226,552 234,212 226,943 231,586 33 BBaannkk--rreellaatteedd ((nnoott sseeaassoonnaallllyy aaddjjuusstteedd)) 1,428 1,248 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. DDiirreeccttllyy ppllaacceedd ppaappeerr44 44 TToottaall 174,332 194,931 210,930 199,835 183,195 181,485 172,136 168,914 171,321 179,725 173,772 55 BBaannkk--rreellaatteedd ((nnoott sseeaassoonnaallllyy aaddjjuusstteedd)) 43,173 43,155 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 66 NNoonnffiinnaanncciiaall ccoommppaanniieess55 81,923 103,756 131,279 146,184 132,660 138,977 138,895 138,253 136,672 140,574 140,443 Bankers dollar acceptances (not seasonally adjusted)6 7 Total 70,565 66,631 62,972 54,771 43,770 39,309 39,335 38,384 37,767 37,733 37,090 Holder 8 Accepting banks 10,943 9,086 9,433 9,017 11,017 9,640 9,821 9,255 9,680 9,225 9,190 9 Own bills 9,464 8,022 8,510 7,930 9,347 8,296 8,427 7,954 8,129 7,808 7,744 10 Bills bought 1,479 1,064 924 1,087 1,670 1,344 1,394 1,301 1,551 1,417 1,446 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 1,492 1,598 1,477 1,338 1,269 1,851 13 Others 58,658 56,052 52,473 44,836 31,014 28,177 27,915 27,653 26,749 27,239 26,049 Basis 14 Imports into United States 16,483 14,984 15,651 13,0% 12,843 11,569 12,045 11,893 11,569 11,825 11,600 15 Exports from United States 15,227 14,410 13,683 12,703 10,351 9,403 9,168 8,702 9,062 9,015 7,861 16 All other 38,855 37,237 33,638 28,973 20,577 18,337 18,121 17,790 17,135 16,893 17,628 1. 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. 6. Data on bankers acceptances are gathered from institutions whose accep- 2. 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 3. Bank-related series were discontinued in January 1989. January. In January 1988, the group was reduced from 155 to 111 institutions. The 4. 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. 5. Includes public utilities and firms engaged primarily in such activities as 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans1 Percent per year Date of change Period Av r e a r t a e ge Av r e a r te a ge Period 1989—Jan. 1 10.50 1989 10.87 1990-—Apr. .. 10.00 1991—July ... Feb. 10 11.00 1990 10.01 May ... 10.00 24 11.50 1991 8.46 June .. 10.00 Sept. .. June 5 11.00 July ... 10.00 Oct. ... July 31 10.50 1989—Jan. 10.50 Aug. .. 10.00 Nov. .. Feb. 10.93 Sept. .. 10.00 Dec. .. 1990—Jan. 8 10.00 Mar. 11.50 Oct. ... 10.00 Apr. 11.50 Nov. .. 10.00 1992—Jan. ... 1991—Jan. 2 9.50 May 11.50 Dec. .. 10.00 Feb. .. Feb. 4 9.00 June 11.07 Mar. .. May 1 8.50 July 10.98 1991- 9.52 Apr. .. Sept. 13 . 8.00 Aug. 10.50 Feb. . 9.05 Nov. 6 7.50 Sept. 10.50 Mar. . 9.00 June .. Dec. 23 6.50 Oct. 10.50 9.00 July ... Nov. 10.50 May .. 8.50 Aug. .. 1992—July 2 6.00 Dec. 10.50 8.50 Sept. .. Oct. ... 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

Financial Markets A25 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 June July Aug. Sept. Aug. 28 Sept. 4 Sept. 11 Sept. 18 Sept. 25 MONEY MARKET INSTRUMENTS 1 Federal funds1,2'3 9.21 8.10 5.69 3.76 3.25 3.30 3.22 3.27 3.33 3.09 3.28 3.07 2 Discount window borrowing ,4 6.93 6.98 5.45 3.50 3.02 3.00 3.00 3.00 3.00 3.00 3.00 3.00 Commercial paper3,5,6 3 1-month 9.11 8.15 5.89 3.91 3.43 3.38 3.25 3.39 3.37 3.17 3.18 3.27 4 3-month 8.99 8.06 5.87 3.92 3.44 3.38 3.24 3.39 3.37 3.17 3.17 3.25 5 6-month 8.80 7.95 5.85 3.99 3.53 3.44 3.26 3.45 3.42 3.21 3.20 3.27 Finance paper, directly placed3'5'7 6 1-month 8.99 8.00 5.73 3.81 3.33 3.28 3.13 3.28 3.27 3.07 3.07 3.13 7 3-month 8.72 7.87 5.71 3.82 3.33 3.27 3.08 3.28 3.25 3.04 3.01 3.05 8 6-month 8.16 7.53 5.60 3.80 3.35 3.29 3.11 3.30 3.27 3.05 3.04 3.07 Bankers acceptances3'5'8 9 3-month 8.87 7.93 5.70 3.80 3.32 3.28 3.10 3.31 3.25 3.05 3.05 3.12 10 6-month 8.67 7.80 5.67 3.88 3.42 3.35 3.13 3.36 3.29 3.08 3.07 3.14 Certificates qf deposit, secondary marker,9 11 1-month 9.11 8.15 5.82 3.83 3.35 3.29 3.14 3.32 3.27 3.08 3.07 3.16 12 3-month 9.09 8.15 5.83 3.86 3.37 3.31 3.13 3.34 3.28 3.08 3.07 3.15 13 6-month 9.08 8.17 5.91 3.97 3.50 3.40 3.17 3.45 3.35 3.11 3.10 3.19 14 Eurodollar deposits, 3-month3,10 9.16 8.16 5.86 3.87 3.40 3.33 3.15 3.36 3.36 3.08 3.05 3.19 U.S. Treasury bills Secondary market3,5 15 3-month 8.11 7.50 5.38 3.66 3.21 3.13 2.91 3.16 3.10 2.91 2.89 2.89 16 6-month 8.03 7.46 5.44 3.77 3.28 3.21 2.96 3.25 3.16 2.94 2.92 2.93 17 1-year 7.92 7.35 5.52 3.98 3.45 3.33 3.06 3.38 3.26 3.04 3.03 3.04 Auction average • • 18 3-month 8.12 7.51 5.42 3.70 3.28 3.14 2.97 3.14 3.17 2.91 2.89 2.91 19 6-month 8.04 7.47 5.49 3.81 3.36 3.23 3.01 3.24 3.26 2.95 2.90 2.93 20 1-year 7.91 7.36 5.54 4.07 3.65 3.28 3.02 3.28 n.a. n.a. n.a. 3.02 U.S. TREASURY NOTES AND BONDS Constant maturities12 21 1-year 8.53 7.89 5.86 4.17 3.60 3.47 3.18 3.52 3.39 3.17 3.15 3.16 22 2-year 8.57 8.16 6.49 5.05 4.36 4.19 3.89 4.25 4.07 3.85 3.86 3.91 23 3-year 8.55 8.26 6.82 5.60 4.91 4.72 4.42 4.79 4.58 4.35 4.40 4.44 24 5-year 8.50 8.37 7.37 6.48 5.84 5.60 5.38 5.69 5.48 5.26 5.37 5.46 25 7-year 8.52 8.52 7.68 6.90 6.36 6.12 5.96 6.23 6.06 5.85 5.93 6.04 26 10-year 8.49 8.55 7.86 7.26 6.84 6.59 6.42 6.67 6.53 6.32 6.39 6.47 27 30-year .8.45 8.61 8.14 7.84 7.60 7.39 7.34 7.44 7.37 7.26 7.32 7.41 Composite 28 More than 10 years (long-term) 8.58 8.74 8.16 7.72 7.40 7.19 7.08 7.26 7.16 6.99 7.05 7.14 STATE AND LOCAL NOTES AND BONDS Moody's series13 29 7.00 6.% 6.56 6.19 5.72 5.67 5.92 5.95 6.02 5.91 5.83 5.94 30 Baa 7.40 7.29 6.99 6.57 6.10 6.03 6.27 6.28 6.35 6.26 6.19 6.31 31 Bond Buyer series14 7.23 7.27 6.92 6.49 6.13 6.16 6.25 6.31 6.24 6.16 6.27 6.33 CORPORATE BONDS 32 Seasoned issues, all industries15 9.66 9.77 9.23 8.63 8.44 8.29 8.26 8.32 8.28 8.19 8.23 8.31 Rating group 33 Aaa 9.26 9.32 8.77 8.22 8.07 7.95 7.92 7.97 7.93 7.87 7.91 7.% 34 Aa 9.46 9.56 9.05 8.56 8.37 8.21 8.17 8.25 8.20 8.11 8.15 8.22 35 A 9.74 9.82 9.30 8.70 8.49 8.34 8.31 8.37 8.33 8.25 8.29 8.37 36 Baa 10.18 10.36 9.80 9.05 8.84 8.65 8.62 8.69 8.64 8.54 8.58 8.69 37 A-rated, recently offered utility bonds16 9.79 10.01 9.32 8.62 8.38 8.16 8.11 8.20 8.08 8.06 8.10 8.17 MEMO: Dividend-price ratio17 38 Preferred stocks 9.05 8.% 8.17 7.53 7.47 7.21 7.14 7.11 7.19 7.16 7.12 7.14 39 Common stocks 3.45 3.61 3.25 3.06 3.00 2.97 n.a. 3.00 2.99 3.00 2.98 3.03 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. General obligations based on Thursday figures; Moody's Investors Service. of the current week; monthly figures include each calendar day in the month. 14. General obligations only, with twenty years to maturity, issued by twenty 3. Annualized using a 360-day year or bank interest. state and local governmental units of mixed quality. Based on figures for 4. Rate for the Federal Reserve Bank of New York. Thursday. 5. Quoted on a discount basis. 15. Daily figures from Moody's Investors Service. Based on yields to maturity 6. An average of offering rates on commercial paper placed by several leading on selected long-term bonds. dealers for firms whose bond rating is AA or the equivalent. 16. Compilation of the Federal Reserve. This series is an estimate of the yield 7. An average of offering rates on paper directly placed by finance companies. on recently offered, A-rated utility bonds with a thirty-year maturity and five 8. Representative closing yields for acceptances of the highest-rated money years of call protection. Weekly data are based on Friday quotations. center banks. 17. Standard and Poor's corporate series. Preferred stock ratio based on a 9. An average of dealer offering rates on nationally traded certificates of sample of ten issues: four public utilities, four industrials, one financial, and one deposit. transportation. Common stock ratios on the 500 stocks in the price index. 10. Bid rates for Eurodollar deposits at 11 a.m. London time. Data are for NOTE. These data also appear in the Board's H. 15 (519) and G. 13 (415) releases. indication purposes only. For ordering address, see inside front cover. 11. Auction date for daily data; weekly and monthly averages computed on an issue-date basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Nonfinancial Statistics • December 1992 1.36 STOCK MARKET Selected Statistics 1992 IInnddiiccaattoorr 11998899 11999900 11999911 Jan. Feb. Mar. Apr. May June July Aug. Sept. Prices and trading volume (averages of daily figures) Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 180.13 183.66 206.35 229.34 228.12 225.21 224.55 228.55 224.68 228.17 230.07 230.13 2 Industrial 228.04 226.06 258.16 286.62 286.09 282.36 281.60 285.17 279.54 281.90 284.44 285.76 3 Transportation 174.90 158.80 173.97 201.55 205.53 204.09 201.28 207.88 202.02 198.36 191.31 191.61 4 Utility 94.33 90.72 92.64 99.30 96.19 94.15 94.92 98.24 97.23 101.18 103.41 102.26 5 Finance 162.01 133.21 150.84 174.50 174.05 173.49 171.05 175.89 174.82 180.96 180.47 178.27 6 Standard & Poor's Corporation (1941-43 = 10)' 323.05 335.01 376.20 416.08 412.56 407.36 407.41 414.81 408.27 415.05 417.93 418.48 7 American Stock Exchange (Aug. 31, 1973 = 50? 356.67 338.32 360.32 409.08 413.74 404.09 388.06 392.63 385.56 384.07 385.80 382.67 Volume of trading (thousands of shares) 8 New York Stock Exchange 165,568 156,359 179,411 239,903 226,476 185,581 206,251 182,027 195,089 194,138 174,003 191,774 9 American Stock Exchange 13,124 13,155 12,486 20,444 18,126 15,654 14,096 13,455 11,216 10,722r 11,875 11,198 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers3 34,320 28,210 36,660 36,350 38,200 39,090 38,750 39,890 39,690 39,640 39,940 41,250 Free credit balances at brokers4 11 Margin accounts 7,040 8,050 8,290 7,865 7,620 7,350 8,780 7,700 7,780 7,920 8,060 8,060 12 Cash accounts 18,505 19,285 19,255 19,990 20,370 19,305 16,400 18,695 19,610 18,775 18,305 19,650 Margin requirements (percent of market value and effective date)6 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 13 Margin stocks 70 80 65 55 65 50 14 Convertible bonds 50 60 50 50 50 50 15 Short sales 70 80 65 55 65 50 1. Effective July 1976, includes a new financial group, banks and insurance on securities other than options are the difference between the market value (100 companies. With this change the index includes 400 industrial stocks (formerly percent) and the maximum loan value of collateral as prescribed by the Board. 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 Regulation T was adopted effective Oct. 15,1934; Regulation U, effective May 1, financial. 1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective Nov. 1, 2. On July 5, 1983, the American Stock Exchange rebased its index, effectively 1971. cutting previous readings in half. On Jan. 1, 1977, the Board of Governors for the first time established in 3. Since July 1983, under the revised Regulation T, margin credit at broker- Regulation T the initial margin required for writing options on securities, setting dealers has included credit extended against stocks, convertible bonds, stocks it at 30 percent of the current market value of the stock underlying the option. On acquired through the exercise of subscription rights, corporate bonds, and Sept. 30, 1985, the Board changed the required initial margin, allowing it to be the government securities. Separate reporting of data for margin stocks, convertible same as the option maintenance margin required by the appropriate exchange or bonds, 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 of the option plus 20 nors pursuant to the Securities Exchange Act of 1934, limit the amount of credit percent of the market value of the stock underlying the option (or 15 percent in the that can be used to purchase and carry "margin securities" (as defined in the case 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

Financial Markets A25 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1991 1992 AAccccoouunntt 11998899 11999900 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June1" July SAIF-insured institutions 1 Assets 1,249,055 1,084,821 937,787 934,539 919,979 909,077 906,204' 883,468r 872,088 870,396 861,524 856,379 2 Mortgages 733,729 633,385 561,152 557,513 551,322 545,682 541,688r 529,144r 524,937r 521,899r 516,709 512,312 3 Mortgage-backed securities 170,532 155,228 134,895 133,341 129,461 127,371 127,766 125,402 124,930 124,388 123,449 122,367 4 Contra-assets to mortgage assets . 25,457 16,897 12,445 12,303 12,307 11,916 11,607r 10,977r 10,953r 11,lW 11,278 11,048 5 Commercial loans 32,150 24,125 17,765 17,147 17,139 16,827 16,050 15,400 15,069 14,607 14,020 13,930 6 Consumer loans 58,685 48,753 43,064 42,763 41,775 40,903 39,954 38,740 38,027 37,889r 37,423 37,239 7 Contra-assets to nonmortgage loans .. 3,592 1,939 1,373 1,150 1,239 1,115 1,115 992 980 949"^ 947 908 8 Cash and investment securities 166,053 146,644 120,824 123,380 120,077 118,611 121,969" 119,410 116,291 120,5% 119,394 120,211 9 Other 116,955 95,522 73,905 73,849 73,751 72,714 71,498r 67,341r 64,766r 63,084r 61,753 62,276 10 Liabilities and net worth . 1,249,055 1,084,821 937,787 934,539 919,979 909,077 906,204r 883,468r 872,088 870,396 861,524 856,379 11 Savings capital 945,656 835,496 741,360 737,555 731,937 721,099 717,026 703,809 689,777 688,199 682,536 676,139 12 Borrowed money 252,230 197,353 127,356 125,147 121,923 119,965 118,554 110,031 111,262 110,126 108,941 109,034 13 FHLBB 124,577 100,391 66,609 66,005 65,842 62,642 63,138 62,628 62,268 61,439 62,759 62,358 14 Other 127,653 96,962 60,747 59,142 56,081 57,323 55,416 47,403 48,994 48,687 46,182 46,676 15 Other 27,556 21,332 20,381 21,690 17,560 19,003 21,391 18,357r 18,944 19,687 17,724 18,546 16 Net worth 23,612 30,640 48,690 50,148 48,559 49,010 49,233r 51,271r 52,105 52,384 52,322 52,658 1. Contra-assets are credit-balance accounts that must be subtracted from the NOTE. Components do not sum to totals because of rounding. Data for credit corresponding gross asset categories to yield net asset levels. Contra-assets to unions and life insurance companies have been deleted from this table. Starting in mortgage assets, mortgage loans, contracts, and pass-through securities—include the December 1991 issue, data for life insurance companies are shown in a special loans in process, unearned discounts and deferred loan fees, valuation allowances table of quarterly data. for mortgages "held for sale," and specific reserves and other valuation allow- SOURCE. Savings Association Insurance Fund (SAIF)-insured institutions: ances. Contra-assets to nonmortgage loans include loans in process, unearned Estimates by the Office of Thrift Supervision (OTS) for all institutions insured by discounts and deferred loan fees, and specific reserves and valuation allowances. the SAIF and based on the OTS thrift institution Financial Report. 2. Includes holding of stock in Federal Home Loan Bank and finance leases plus interest. 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn 1992 11999900 11999911 11999922 Apr. May June July Aug. Sept. U.S. budget1 1 Receipts, total 1,031,308 1,054,265 1,091,692 138,503r 62,303r 120,92C 79,080r 78,218r 118,344 2 On-budget 749,654 760,382 789,266 103,478r 36,926r 91,438r 55,977r 55,434r 92,813 3 Off-budget 281,654 293,883 302,426 35,025 25,377 29,482 23,103 22,784 25,531 4 Outlays, total 1,251,766 1,323,757 1,381,895 123,894r 109,089"^ 117,137r 122,226r 102,920" 112,943 5 On-budget 1,026,701 1,082,072 1,129,337 102,858r 86,402r 102,329r 99,935r 79,128 86,709 6 Off-budget 225,064 241,685 252,559 21,036r 22,687r 14,808r 22,291r 23,792r 26,235 7 Surplus or deficit (-), total -220,458 -269,492 -290,204 14,609 -46,786 3,783 -43,146 -24,702 5,400 8 On-budget -277,047 -321,690 -340,071 620" -49,476r -10,891 -43,958r -23,694r 6,104 9 Off-budget 56,590 52,198 49,867 13,989" 2,69c 14,674r 812r -1,008r -704 Source of financing (total) 10 Borrowing from the public 220,101 276,802 310,918 6,292 33,840 22,318 26,839 38,841 9,853 11 Operating cash (decrease, or increase (-)) ... 818 -1,329 -17,305 -21,262 20,977 -26,919 9,542 1,523 -22,807 12 Other 2 -461 -5,981 3,409 361 -8,031 818 6,765 -15,662 7,554 MEMO 13 Treasury operating balance (level, end of period) 40,155 41,484 58,789 41,105 20,128 47,047 37,505 35,982 58,789 14 Federal Reserve Banks 7,638 7,928 24,586 4,692 5,583 13,630 6,923 6,232 24,586 15 Tax and loan accounts 32,517 33,556 34,203 36,413 14,545 33,417 30,581 29,749 34,203 1. In accordance with the Balanced Budget and Emergency Deficit Control Act in the International Monetary Fund (IMF); loans to the IMF; other cash and of 1985, all former olf-budget entries are now presented on-budget. Federal monetary assets; accrued interest payable to the public; allocations of SDRs; Financing Bank (FFB) activities are now shown as separate accounts under the deposit funds; miscellaneous liability (including checks outstanding) and asset agencies that use the FFB to finance their programs. The act also moved two accounts; seigniorage; increment on gold; net gain or loss for U.S. currency social security trust funds (federal old-age survivors insurance and federal valuation adjustment; net gain or loss for IMF loan-valuation adjustment; and disability insurance) off budget. The Postal Service is included as an off-budget profit on sale of gold. item in the Monthly Treasury Statement beginning in 1990. SOURCES. Monthly Treasury Statement of Receipts and Outlays of the U.S. 2. Includes special drawing rights (SDRs); reserve position on the U.S. quota Government (MTS) and the Budget of the U.S. Government. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 DomesticN onfinancial Statistics • December 1992 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Calendar year Fiscal Fiscal Source or type year year 1990 1992 1990 1991 H2 HI July Aug. Sept. RECEIPTS 1 All sources 1,031,308 1,054,265 503,123 540,504 519,293 561,125r 79,080" 78,218" 118,344 2 Individual income taxes, net 466,884 467,827 230,745 232,389 234,949r 237,052r 35,192" 34,718" 55,4% 3 Withheld 388,384 404,152 207,469 193,440 210,552 198,868 34,034 32,584 33,184 4 Presidential Election Campaign Fund . 32 32 3 31 1 19 1 8 1 5 Nonwithheld 151,285 142,693 31,728 109,405 31,875r 110,995 2,920 3,184 24,161 6 Refunds 72,817 79,050 8,455 70,487 7,480r 74,163r 1,851" 1,058" 1,850 Corporation income taxes 7 Gross receipts 110,017 113,599 54,044 58,903 54,016 61,681 3,890 2,443 21,365 8 Refunds 16,510 15,513 7,603 7,904 8,649" 9,402r 1,087" 864 1,469 9 Social insurance taxes and contributions net 380,047 396,011 178,468 214,303 186,840" 224,569" 31,723" 33,142" 33,322 10 Employment taxes and contributions 353,891 370,526 167,224 199,727 175,802 208,110 29,514 28,9% 32,597 11 Self-employment taxes and contributions 21,795 25,457 2,638 22,150 3,306 20,433 0 0 3,988 12 Unemployment insurance 21,635 20,922 8,9% 12,2% 8,721 14,070 1,770 3,762 316 13 Other net receipts 4,522 4,563 2,249 2,279 2,317 2,389" 439" 384" 409 14 Excise taxes 35,345 42,430 17,535 20,703 24,428r 22,389" 3,546" 4,051 4,093 15 Customs deposits 16,707 15,921 8,568 7,488 8,694 8,145 1,658 1,579 1,552 16 Estate and gift taxes 11,500 11,138 5,333 5,631 5,507r 5,701" %2 827 1,004 17 Miscellaneous receipts3 27,316 22,852 16,032 8,991 13,508 10,992" 3,197" 2,323" 2,980 OUTLAYS 18 All types 1,251,776 1,323,757 647,461 632,153 694,474 705,068" 122,226" 102,920" 112,943 19 National defense 299,331 272,514 149,497 122,089 147,531 146,963 30,180 21,238 25,842 20 International affairs 13,762 16,167 8,943 7,592 7,651 8,464 684 186 1,727 21 General science, space, and technology . 14,444 15,946 8,081 7,4% 8,473 7,952 1,417 1,352 1,159 22 Energy 2,372 2,511 1,222 1,235 1,536 1,442 275 508 665 23 Natural resources and environment 17,067 18,708 9,933 8,324 11,221 8,625 1,677 1,516 1,742 24 Agriculture 11,958 14,864 6,878 7,684 7,335 7,514 468 381 195 25 Commerce and housing credit 67,160 75,639 37,491 17,992 36,579 15,583 846 -2,721 585 26 Transportation 29,485 31,531 16,218 14,748 17,094 15,681 3,144 2,818 3,618 27 Community and regional development .. 8,498 7,432 3,939 3,552 3,784 3,901 676 570 764 28 Education, training, employment, and social services 41,479 18,988 21,234 21,104 23,224 3,125 3,492 2,233 29 Health 57,716 71,183 31,424 35,608 41,458 43,698 7,164 7,593 8,834 30 Social security and medicare 346,383 373,495 176,353 190,247 193,156 205,443 35,553 33,593 34,460 31 Income security 147,314 171,618 75,948 88,778 87,923 105,911" 18,306" 14,616" 15,173 32 Veterans benefits and services 29,112 31,344 15,479 14,326 17,425 15,597 4,010 1,369 3,213 33 Administration of justice 10,004 12,295 5,265 6,187 6,586 7,438 1,217 1,155 1,277 34 General government 10,724 11,358 6,976 5,212 6,821 5,538 411 917 1,869 35 Net interest6 184,221 195,012 94,650 98,556 99,405 100,324 16,670 17,274 15,435 36 Undistributed offsetting receipts -36,615 -39,356 -19,829 -18,702 -20,435 -18,229 -3,597 -2,937 -5,847 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 1993. disability fund. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A29 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1990 1991 1992 IItteemm Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 1 Federal debt outstanding 3,266 3,397 3,492 3,563 3,683 3,820 3,897 n.a. n.a.r 2 Public debt securities 3,233 3,365 3,465 3,538 3,665 3,802 3,881 3,985 4,065r 3 Held by public 2,438 2,537 2,598 2,643 2,746 2,833 2,918 n.a. n.a.r 4 Held by agencies 796 828 867 895 920 969 964 n.a. n.a.r 5 Agency securities 33 33 27 25 18 19 16 n.a. n.a.r 6 Held by public 33 32 26 25 18 19 16 n.a. n.a.r 7 Held by agencies 0 0 0 0 0 0 0 n.a. n.a.r 8 Debt subject to statutory limit 3,161 3,282 3,377 3,450 3,569 3,707 3,784 3,891 3,973r 9 Public debt securities 3,161 3,281 3,377 3,450 3,569 3,706 3,783 3,890 3,972r 10 Other debt1 0 0 0 0 0 0 0 0 0" MEMO 11 Statutory debt limit 3,195 4,145 4,145 4,145 4,145 4,145 4,145 4,145 4,145r 1. Consists of guaranteed debt of Treasury and other federal agencies, specified SOURCES. U.S. Treasury Department, Monthly Statement of the Public Debt of participation certificates, notes to international lending organizations, and District the United States and Treasury Bulletin. of Columbia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 1991 1992 TTyyppee aanndd hhoollddeerr 11998888 11998899 11999900 11999911 Q4 Ql Q2 Q3 1 Total gross public debt 2,684.4 2,953.0 3,364.8 3,801.7 3,801.7 3,881.3 3,984.7 4,064.6 By type 2 Interest-bearing 2,663.1 2,931.8 3,362.0 3,798.9 3,798.9 3,878.5 3,981.8 4,061.8 3 Marketable 1,821.3 1,945.4 2,195.8 2,471.6 2,471.6 2,552.3 2,605.1 2,677.5 4 Bills 414.0 430.6 527.4 590.4 590.4 615.8 618.2 634.3 5 Notes 1,083.6 1,151.5 1,265.2 1,430.8 1,430.8 1,477.7 1,517.6 1,566.4 6 Bonds 308.9 348.2 388.2 435.5 435.5 443.8 454.3 461.8 7 Nonmarketable1 841.8 986.4 1,166.2 1,327.2 1,327.2 1,326.2 1,376.7 1,384.3 8 State and local government series 151.5 163.3 160.8 159.7 159.7 157.8 161.9 157.6 9 Foreign issues 6.6 6.8 43.5 41.9 41.9 42.0 38.7 37.0 10 Government 6.6 6.8 43.5 41.9 41.9 42.0 38.7 37.0 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes. 107.6 115.7 124.1 135.9 135.9 139.9 143.2 148.3 13 Government account series3 575.6 695.6 813.8 959.2 959.2 956.1 1,002.5 1,011.0 14 Non-interest-bearing 21.3 21.2 2.8 2.8 2.8 2.8 2.9 2.8 By holder 4 15 U.S. Treasury and other federal agencies and trust funds 589.2 707.8 828.3 968.7 968.7 963.7 16 Federal Reserve Banks 238.4 228.4 259.8 281.8 281.8 267.6 17 Private investors 1,858.5 2,015.8 2,288.3 2,563.2 2,563.2 2,664.0 18 Commercial banks 184.9 164.9 171.5 233.9 233.9 240.0 19 Money market funds 11.8 14.9 45.4 80.0 80.0 84.8 20 Insurance companies 118.6 125.1 142.0 172.9 172.9 175.0 n.a. n.a. 21 Other companies 87.1 93.4 108.9 150.8 150.8 166.0 22 State and local treasuries 471.6 487.5 490.4 498.8 498.8 500.0 Individuals 23 Savings bonds 109.6 117.7 126.2 138.1 138.1 142.0 24 Other securities 79.2 98.7 107.6 125.8 125.8 126.1 25 Foreign and international 362.2 392.9 421.7 453.4 453.4 468.0 26 Other miscellaneous investors6 433.0 520.7 674.5 709.5 709.5 762.1 1. Includes (not shown separately) securities issued to the Rural Electrification 5. Consists of investments of foreign balances and international accounts in the Administration, depository bonds, retirement plan bonds, and individual retire- United States. ment bonds. 6. Includes savings and loan associations, nonprofit institutions, credit unions, 2. Nonmarketable series denominated in dollars, and series denominated in mutual savings banks, corporate pension trust funds, dealers and brokers, certain foreign currency held by foreigners. U.S. Treasury deposit accounts, and federally sponsored agencies. 3. Held almost entirely by U.S. Treasury and other federal agencies and trust SOURCES. U.S. Treasury Department, data by type of security, Monthly funds. Statement of the Public Debt of the United States; data by holder, the Treasury 4. Data for Federal Reserve Banks and U.S. government agencies and trust Bulletin. funds are actual holdings; data for other groups are Treasury estimates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 DomesticN onfinancial Statistics • December 1992 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Millions of dollars, daily averages 1992 1992, week ending IItteemm June July Aug. Aug. 5 Aug. 12 Aug. 19 Aug. 26 Sept. 2 Sept. 9 Sept. 16 Sept. 23 Sept. 30 IMMEDIATE TRANSACTIONS2 By type of security U.S. Treasury securities 1 Bills 39,314 39,895 35,523 37,082 32,442 35,450 38,131 3344,,887755 3388,,333388 4411,,885511 4422,,776699 4444,,553311 Coupon securities, by maturity 2 Less than 3.5 years 37,879 42,881 45,267 45,115 47,289 43,465 50,806 35,819 39,308 42,698 45,148 41,634 3 3.5 to 7.5 years 31,278r 43,378r 36,672 41,506 34,995 37,334 37,657 31,889 35,730 39,574 37,171 40,468 4 7.5 to 15 years 13,912 19,672r 22,308 23,702 28,207 23,075 18,688 15,837 22,815 23,107 18,130 20,177 5 15 years or more 11,926 16,132 16,539 16,508 19,111 18,962 1144,,226644 1122,,003344 1144,,228866 1155,,336622 1144,,887744 1133,,332299 Federal agency securities Debt, maturing in 6 Less than 3.5 years 4,461 4,334 4,343 4,579 3,938 4,342 4,318 4,826 4,891 4,109 4,490 6,471 7 3.5 to 7.5 years 513 670 684 859 865 566 539 648 617 670 391 654 8 7.5 years or more 553 646 536 517 451 446 676 616 550099 991100 774422 11,,006699 Mortgage-backed 9 Pass-throughs 14,190r 13,806r 12,787 10,368 17,008 12,948 10,861 11,116 14,496 17,269 12,592 11,220 10 All others 3,865r 4,llO7 3,95lr 3,011r 3,159* 4,645 4,122 4,767 2,713 4,617 4,157 5,168 By type of counterparty Primary dealers and brokers 11 U.S. Treasury securities 83,394r 101,221r 99,904 103,687 103,519 100,019 104,664 8811,,997711 9911,,223377 110044,,669966 110022,,112255 110011,,887755 Federal agency securities 12 Debt 1,007 1,097 1,016 1,035 1,146 998 766 1,225 1,072 1,397 1,283 1,732 13 Mortgage-backed 8,405r 8,02 R 7,240 5,586r 99,,221144rr 77,,448899 66,,991133 55,,773355 77,,444411 99,,885544 88,,004499 55,,556688 Customers 14 U.S. Treasury securities 50,915r 60,737r 56,405 60,227 58,525 58,267 5544,,888833 4488,,448833 5599,,224400 5577,,88%% 5555,,996666 5588,,226644 Federal agency securities 15 Debt 4,520 4,554 4,548 4,921 4,108 4,354 4,768 4,865 4,944 4,292 4,340 6,463 16 Mortgage-backed 9,65 f 9,895r 9,498r 7,792r 10,953r 10,104 8,070 10,147 9,769 12,032 8,699 10,820 FUTURES AND FORWARD TRANSACTIONS4 By type of deliverable security U.S. Treasury securities 17 Bills 2,939r 2,886r 2,354r 2,096 2,501 2,588 22,,446677 11,,779911 22,,112211 44,,996600 22,,882277 22,,227711 Coupon securities, by maturity 1188 Less than 3.5 years 1,715 1,762 2,216 2,174 2,468 2,104 2,341 1,815 2,373 1,962 2,037 1,418 19 3.5 to 7.5 years l,391r l,326r 1,329* 1,420 1,217 1,060 1,280 1,952 2,224 1,857 1,820 1,545 20 7.5 to 15 years 1,319 1,969 2,713r 3,537 2,529 2,714 2,642 2,311 2,482 3,859 3,283 2,336 21 15 years or more 6,576 9,620 10,152r 10,453 10,359 10,025 1111,,009911 88,,115533 1100,,553355 1122,,117722 1100,,880088 77,,771122 Federal agency securities Debt, maturing in 22 Less than 3.5 years 45 20 81 9 11 185 31 182 8 13 132 59 23 3.5 to 7.5 years 63 61 147 47 120 329 87 87 156 141 58 11 24 7.5 years or more 22 37 44 10 18 115 21 44 8 1133 1122 6 Mortgage-backed 2255 Pass-throughs 1122,,886699"" 16,925r 15,902 17,486 21,058 13,493 14,087 12,766 17,497 17,826 15,341 17,327 26 Others 2,657 3,246r 2,832 2,977 2,306 3,207 2,941 2,755 1,845 2,490 2,410 2,920 OPTIONS TRANSACTIONS5 By type of underlying security U.S. Treasury, coupon securities, by maturity 27 Less than 3.5 years 1,255 1,550 1,431 1,377 1,463 1,434 1,817 784 1,365 1,052 807 1,287 28 3.5 to 7.5 years 317 635 433 251 572 226 688 301 619 603 808 568 29 7.5 to 15 years 484 685 1,054 728 1,014 641 1,693 1,070 1,132 633 1,064 436 30 15 years or more 1,576 2,520 2,795 3,037 3,247 2,239 33,,554488 11,,447711 22,,446699 11,,770000 33,,000000 11,,117744 Federal agency, mortgagebacked securities 31 Pass-throughs 389 499 343 302 290 257 456 427 1,079 401 308 155 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 futures transac- to delivery. Forward contracts for U.S. Treasury securities and federal agency tions are reported at principal value, which does not include accrued interest; debt securities are included when the time to delivery is more than five business options transactions are reported at the face value of the underlying securities. days. Forward contracts for mortgage-backed agency securities are included Dealers report cumulative transactions for each week ending Wednesday. when the time to 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 agency NOTE. In tables 1.42 and 1.43, "n.a." indicates that data are not published securities include purchases and sales for which delivery is scheduled in thirty days or because of insufficient activity. less. 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

Federal Finance A31 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1992 1992, week ending IItteemm June July Aug. Aug. 5 Aug. 12 Aug. 19 Aug. 26 Sept. 2 Sept. 9 Sept. 16 Sept. 23 Positions2 NET IMMEDIATE POSITIONS3 By type of security U.S. Treasury securities 1 Bills 9,816 10,399 8,264 7,100 6,846 7,888 8,132 12,122 13,595 12,450 18,295 Coupon securities, by maturity 2 Less than 3.5 years -7,838 -7,674 -2,799 -5,088 -789 -4,903 -621 -3,427 -3,476 --44,,115588 --113300 3 3.5 to 7.5 years -6,907 -7,629 -10,045 -8,602 -9,727 -11,509 -8,594 -11,916 -15,727 -14,788 -10,329 4 7.5 to 15 years -3,706 -6,825 -6,464 -9,255 -5,464 -4,950 -6,498 -7,148 -8,733 -10,700 -11,045 5 15 years or more -177 2,970 5,204 5,321 5,100 6,924 3,499 5,212 5,926 5,119 5,654 Federal agency securities Debt, maturing in 6 Less than 3.5 years 5,265 4,944 6,256r 5,349 6,571 6,540 5,526 7,348 6,432 5,595 7,071 7 3.5 to 7.5 years 2,178 2,908 3,194 3,288 3,226 3,267 3,093 3,0% 3,106 2,964 2,942 8 7.5 years or more 3,482 3,481 4,233 3,833 4,219 4,117 4,429 4,543 4,569 4,319 4,366 Mortgage-backed 9 Pass-throughs 31,088 30,255r 30,749"^ 21,276r 34,285 38,339 32,921 21,604 33,745 37,553 29,645 10 All others 18,708 22,090 23,366 23,942 23,490 21,812 23,314 24,863 24,672 26,538 28,267 Other money market instruments 11 Certificates of deposit 2,796 2,811 3,734 3,074 3,666 4,701 3,087 4,042 3,600 4,254 3,558 12 Commercial paper 6,416 6,021 5,542 5,524 5,552 5,191 5,611 5,941 6,545 6,919 5,713 13 Bankers acceptances 1,045 1,158 978 935 892 1,207 837 1,019 1,023 1,066 793 FUTURES AND FORWARD POSITIONS5 By type of deliverable security U.S. Treasury securities 14 Bills -2,667r -6,214r -6,189"^ -4,927r -6,994 -8,876 -5,121 -4,055 -5,734 -8,014 -6,015 Coupon securities, by maturity 15 Less than 3.5 years 2,178 2,260 1,543 1,931 1,912 757 1,820 1,354 1,826 1,807 11,,887766 16 3.5 to 7.5 years 3,201 3,031 3,030 2,458 3,333 4,042 2,824 2,050 1,639 1,665 2,609 17 7.5 to 15 years -493 -450 399 2,361 936 -687 -81 -121 -463 44 246 18 15 years or more -7,518 -7,870 -7,645 -9,349 -9,200 -9,381 -4,750 -5,384 -6,061 -4,254 -2,891 Federal agency securities Debt, maturing in 19 Less than 3.5 years 17 59 3r -10 32 -54 -2 65 -23 7 14 20 3.5 to 7.5 years -19 -79 -2 15 133 -143 -13 2 -76 -153 14 21 7.5 years or more -11 45 -20 73 -124 -70 102 -70 -81 -70 -10 Mortgage-backed 22 Pass-throughs -23,361 -20,201r -18,255 -10,082 -22,147 -27,277 -18,173 -8,463 -17,543 -22,571 -14,714 23 All others 2,486 4,672r 5,955 5,123 5,763 6,326 7,150 4,862 6,272 7,347 7,466 24 Certificates of deposit -222,803 -232,567 -251,401 -237,681 -243,912 -254,808 -265,826 -250,638 -251,740 -257,037 -226,981 Financing6 Reverse repurchase agreements 25 Overnight and continuing 208,440 214,805 218,808 226,800 219,461 227,464 210,614 209,252 220,175 214,663 220022,,%%11 26 Term 297,759 315,020 320,431 326,783 343,506 307,694 323,007 295,997 313,881 333,993 343,265 Repurchase agreements 27 Overnight and continuing 339,382 356,881 361,098 349,820 353,449 375,964 360,499 363,112 376,527 379,964 337711,,885522 28 Term 266,179 287,022 300,209 297,761 320,519 293,181 309,378 271,228 282,138 307,902 321,059 Securities borrowed 29 Overnight and continuing 84,573 92,740 97,726 96,914 97,500 97,303 97,898 99,204 102,780 103,327 103,169 30 Term 35,187 37,846 40,171 36,142 38,794 39,853 43,148 42,404 42,274 42,940 45,998 Securities loaned 31 Overnight and continuing 7,627 8,173 8,822 9,158 9,120 8,651 8,527 8,723 9,398 9,491 10,547 32 Term 801 1,008 1,496 955 941 1,431 3,007 790 667 839 1,317 Collateralized loans 33 Overnight and continuing 14,879 17,919 19,635 18,744 20,838 19,724 19,516 18,886 17,366 17,416 17,475 MEMO: Matched book7 Reverse repurchase agreements 34 Overnight and continuing 148,092 152,606 151,137 155,924 151,233 156,883 148,128 142,383 150,089 148,377 141,458 35 Term 255,829 269,912 272,361 280,990 296,730 258,105 269,495 253,585 269,694 288,004 294,999 Repurchase agreements 36 Overnight and continuing 187,957 194,278 182,822 182,920 183,944 179,657 179,467 190,283 188,294 195,613 183,730 37 Term 200,805 212,775 229,511 230,950 251,880 225,325 230,112 201,772 218,264 233,305 243,500 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 securities (IOs), numbers are not always equal because of the "matching" of securities of different and principal-only securities (POs). values or types of collateralization. 5. Futures 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 Digitized fosrp eFciRfyA dSelEayRed delivery. All futures positions are included regardless of time to activity. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • December 1992 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1992 AAggeennccyy 11998888 11998899 11999900 11999911 Mar. Apr. May June July 1 Federal and federally sponsored agencies 381,498 411,805 434,668 442,772 445,646 449,472 449,561 457,182 456,885 2 Federal agencies 35,668 35,664 42,159 41,035 41,322 40,788 40,535 40,388 39,773 3 Defense Department1 8 7 7 7 7 7 7 7 7 4 Export-Import Bank2, 11,033 10,985 11,376 9,809 8,644 8,644 8,644 8,156 8,156 5 Federal Housing Administration 150 328 393 397 421 419 427 432 194 6 Government National Mortgage Association certificates of participation 0 0 0 0 0 0 0 0 0 7 Postal Service6 6,142 6,445 6,948 8,421 9,771 9,771 9,771 10,123 10,123 8 Tennessee Valley Authority 18,335 17,899 23,435 22,401 22,479 21,947 21,686 21,670 21,293 9 United States Railway Association 0 0 0 0 0 0 0 0 0 10 Federally sponsored agencies7 345,830 375,407 392,509 401,737 404,324 408,684 409,026 416,794 417,112 11 Federal Home Loan Banks 135,836 136,108 117,895 107,543 106,511 107,011 106,368 106,050 107,343 12 Federal Home Loan Mortgage Corporation 22,797 26,148 30,941 30,262 25,154 25,233 27,612 32,479 33,959 13 Federal National Mortgage Association 105,459 116,064 123,403 133,937 141,315 145,856 144,655 149,013 147,377 14 Farm Credit Banks8 53,127 54,864 53,590 52,199 52,651 52,368 52,080 51,805 49,241 15 Student Loan Marketing Association9 22,073 28,705 34,194 38,319 39,216 38,739 38,885 38,020 39,765 16 Financing Corporation 5,850 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 17 Farm Credit Financial Assistance Corporation 1 690 847 1,261 1,261 1,261 1,261 1,261 1,261 1,261 18 Resolution Funding Corporation12 0 4,522 23,055 29,996 29,996 29,9% 29,9% 29,9% 29,9% MEMO 19 Federal Financing Bank debt13 142,850 134,873 179,083 185,576 185,849 186,879 179,617 180,848 177,700 Lending to federal and federally sponsored agencies 20 Export-Import Bank 11,027 10,979 11,370 9,803 8,638 8,638 8,638 8,150 8,150 21 Postal Service6 5,892 6,195 6,698 8,201 9,551 9,551 9,551 9,903 9,903 22 Student Loan Marketing Association 4,910 4,880 4,850 4,820 4,820 4,820 4,820 4,820 4,820 23 Tennessee Valley Authority 16,955 16,519 14,055 10,725 10,025 9,325 9,025 9,025 8,475 24 United States Railway Association6 0 0 0 0 0 0 0 0 0 Other lending14 25 Farmers Home Administration 58,496 53,311 52,324 48,534 48,534 47,634 45,434 44,784 43,209 26 Rural Electrification Administration 19,246 19,265 18,890 18,562 18,424 18,440 18,473 18,199 18,227 27 Other 26,324 23,724 70,896 84,931 85,857 88,471 83,676 85,%7 84,916 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 Farmers 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 amounts guaranteed by any 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, one agency generally being small. The Farmers Home Administration entry shown in line 17. consists exclusively of agency assets, while the Rural Electrification Administra- 9. Before late 1982, the Association obtained financing through the Federal tion entry 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

Securities Market and Corporate Finance A33 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1992 TTyyppee ooff ii oo ss rr ss uu uu ee ss ee oo rr iissssuueerr,, 11998899 11999900 11999911 Feb. Mar. Apr. May June July Aug. Sept. 1 All issues, new and refunding1 113,646 120,339 154,402 14,032 15,956 15,141 14,155 20,501 16,184 18,006 17,513 By type of issue 2 General obligation 35,774 39,610 55,100 6,102 6,212 4,455 5,429 7,213 6,808 6,451 7,095 3 Revenue 77,873 81,295 99,302 7,930 9,744 10,686 8,726 13,288 9,376 11,555 10,418 By type of issuer 4 State 11,819 15,149 24,939 3,023 3,174 575 1,165 2,063 2,836 1,933 1,857 5 Special district or statutory authority2 71,022 72,661 80,614 6,605 7,511 9,802 8,251 12,894 8,838 9,435 9,435 6 Municipality, county, or township 30,805 32,510 48,849 4,404 5,271 4,764 4,739 5,544 4,510 n.a. 6,221 7 Issues for new capital, total 84,062 103,235 116,953 9,467 10,637 9,020 9,259 14,096 7,565 11,993 11,046 By use of proceeds 8 Education 15,133 17,042 21,121 2,604 1,075 2,208 1,651 2,132 1,747 1,737 1,388 9 Transportation 6,870 11,650 13,395 1,996 1,412 921 1,669 2,618 571 2,130 1,962 10 Utilities and conservation 11,427 11,739 21,039 800 2,104 1,380 771 1,851 629 2,604 2,245 11 Social welfare 16,703 23,099 25,648 1,925 1,811 2,582 2,045 4,266 887 767 2,033 12 Industrial aid 5,036 6,117 8,376 123 528 558 133 724 91 503 1,092 13 Other purposes 28,894 34,607 30,275 2,019 3,707 1,371 2,990 2,505 3,640 4,252 2,326 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 1992 TTyyppee ooff iissssuuee,, ooffffeerriinngg,, 11998899 11999900 11999911 oorr iissssuueerr Jan. Feb. Mar. Apr. May June July Aug. 1 All issues' 377,836 339,052 455,291 45,017r 37,494r 38,303 28,948r 44,947" 47,985" 46,020" 36,586 2 Bonds2 319,965 298,814 389,933 38,333r 27,958r 31,946 23,610" 38,031" 38,988" 39,543" 31,310 By type of offering 3 Public, domestic 179,694 188,778 287,041 34,662r 26,33lr 29,417 22,236" 35,059" 35,960" 37,618" 28,500 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 3,671 1,626 2,529 1,373 2,972 3,027 1,924" 3,200 By industry group 6 Manufacturing 76,175 52,635 85,535 7,229 3,940" 8,955 4,170" 6,046" 7,263" 5,509" 4,694 7 Commercial and miscellaneous 49,465 40,018 37,809 2,751 1,664 3,670 2,351" 2,472 1,630 3,476" 2,230 8 Transportation 10,032 12,711 13,628 455 1,004 641 140" 621 899 766 393 9 Public utility 18,656 17,621 23,994 3,816r 3,569 1,8% 3,462 3,041 4,251 6,909" 4,401 10 Communication 8,461 6,597 9,331 2,467 416 725 1,205 1,590 1,028 2,081" 928 11 Real estate and financial 157,176 169,231 219,637 21,616 17,364 16,060 12,282" 24,261" 23,916" 20,801" 18,665 12 Stocks2 57,870 40,165 75,467 6,684 9,536 6,357 5,338 6,916 8,997 6,477 5,276 By type of offering 13 Public preferred 6,194 3,998 17,408 739 4,306 625 334 1,552 2,916 2,413 1,148 14 Common 26,030 19,443 47,860 5,945 5,230 5,732 5,004 5,364 6,081 4,064 4,129 15 Private placement3 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 24,154 2,098 2,541 2,637 1,523 2,499 3,000 857 713 17 Commercial and miscellaneous 7,446 10,171 19,418 993 3,194 1,595 1,162 2,010 1,070 1,599 1,287 18 Transportation 1,929 369 2,439 426 78 193 0 176 1,064 0 0 19 Public utility 3,090 416 3,474 268 489 704 577 826 610 564 921 20 Communication 1,904 3,822 475 163 0 53 333 12 0 0 0 21 Real estate and financial 34,028 19,738 25,507 2,736 3,234 1,175 1,691 1,324 3,254 3,457 2,327 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

A34 DomesticN onfinancial Statistics • December 1992 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets Millions of dollars 1992 IItteemm11 11999900 11999911 Jan Feb. Mar. Apr. May June Julyr Aug. 1 Sales of own shares2 344,420 464,488 66,048 48,015 50,462 52,309 48,127 51,457 54,915 50,627 2 Redemptions of own shares 288,441 342,088 41,917 30,869 35,464 39,302 31,409 37,457 34,384 35,223 3 Net sales3 55,979 122,400 24,131 17,146 14,998 13,007 16,718 14,000 20,703 15,404 4 Assets4 568,517 807,001 823,767 846,868 848,842 870,011 897,211 911,218 951,806 957,145 5 Cash5 48,638 60,937 62,289 64,022 64,216 67,632 67,270 69,508 72,732 77,245 6 Other 519,875 746,064 761,478 782,846 781,626 802,379 829,941 841,710 879,074 879,900 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 hinds 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 Q3 Q4 Q1 Q2 Q3 Q4 Ql Q2 1 Profits with inventory valuation and capital consumption adjustment 362.8 361.7 346.3 351.4 344.0 349.6 347.3 341.2 347.1 384.0 388.4 2 Profits before taxes 342.9 355.4 334.7 367.0 354.7 337.6 332.3 336.7 332.3 366.1 376.8 3 Profits tax liability 141.3 136.7 124.0 143.0 133.7 121.3 122.9 127.0 125.0 136.4 144.1 4 Profits after taxes 201.6 218.7 210.7 224.0 221.0 216.3 209.4 209.6 207.4 229.7 232.7 5 Dividends 134.6 149.3 146.5 150.6 151.9 150.6 146.2 145.1 143.9 143.6 146.6 6 Undistributed profits 67.1 69.4 64.2 73.4 69.1 65.7 63.2 64.5 63.4 86.2 86.1 7 Inventory valuation -17.5 -14.2 3.1 -32.6 -21.2 6.7 9.9 -4.8 .7 -5.4 -15.5 8 Capital consumption adjustment 37.4 20.5 8.4 17.0 10.5 5.3 5.1 9.3 14.1 23.3 27.0 SOURCE. U.S. Department of Commerce, Survey of Current Business. 1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment Billions of dollars; quarterly data at seasonally adjusted annual rates 1991 1992 IInndduussttrryy 11999900 11999911 1199992211 Ql Q2 Q3 Q4 Ql Q2 , Q3 Q41 1 Total nonfarm business 532.61 528.39 551.03 534.27 525.02 526.59 529.87 535.72 540.91 565.16 562.36 Manufacturing 2 Durable goods industries 82.58 77.64 75.70 80.99 79.31 74.94 76.40 74.19 74.26 76.10 78.25 3 Nondurable goods industries 110.04 105.17 101.72 109.84 107.20 102.55 102.66 99.79 97.52 106.69 102.86 Nonmanufacturing 4 Mining 9.88 10.02 9.21 9.94 10.08 10.09 9.99 8.87 9.18 9.76 9.01 Transportation 5 Railroad 6.40 5.95 6.74 5.68 6.25 6.32 5.44 6.65 6.50 7.08 6.74 6 Air 8.87 10.17 9.58 10.89 9.95 9.61 10.41 8.86 9.75 9.60 10.12 7 Other 6.20 6.54 7.34 6.41 6.67 6.63 6.45 6.37 7.27 7.77 7.95 Public utilities 8 Electric 44.10 43.76 48.85 43.62 43.09 43.27 44.75 46.06 48.45 50.16 50.74 9 Gas and other 23.11 22.82 23.85 23.40 22.00 23.25 22.67 22.75 24.19 24.37 24.11 10 Commercial and other2 241.43 246.32 268.05 243.51 240.46 249.94 251.11 262.17 263.80 273.62 272.59 1. Figures are amounts anticipated by business. SOURCE. U.S. Department of Commerce, Survey of Current Business. 2. "Other" consists of construction, wholesale and retail trade, finance and insurance, personal and business services, and communication. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets and Corporate Finance A35 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities Billions of dollars, end of period; not seasonally adjusted 1990 1991 1992 AAccccoouunntt 11998888 11998899 11999900 Q4 Q1 Q2 Q3 Q4 Q1 Q2 ASSETS 1 Accounts receivable, gross1 437.3 462.9 492.9 492.9 482.9 488.5 484.7 480.3 475.7 477.0 2 Consumer 144.7 138.9 133.9 133.9 127.1 127.5 125.3 121.9 118.4 116.7 3 Business 245.3 270.2 293.5 293.5 291.7 295.2 293.2 292.6 291.6 293.9 4 Real estate 47.3 53.8 65.5 65.5 64.1 65.7 66.2 65.8 65.8 66.4 5 LESS: Reserves for unearned income 52.4 54.7 57.6 57.6 57.2 58.0 57.6 55.1 53.6 51.2 6 Reserves for losses 7.8 8.4 9.6 9.6 10.7 11.1 13.1 12.9 13.0 12.3 7 Accounts receivable, net 377.1 399.8 425.7 425.7 415.0 419.3 414.1 412.3 409.1 413.6 8 All other 86.6 102.6 113.9 113.9 118.7 122.8 136.4 149.0 145.5 139.4 9 Total assets 463.7 502.4 539.6 539.6 533.7 542.1 550.5 561.2 554.6 553.0 LIABILITIES AND CAPITAL 10 Bank loans 23.9 27.0 31.0 31.0 35.6 36.9 39.6 42.3 38.0 37.8 11 Commercial paper 152.1 160.7 165.3 165.3 155.5 156.1 156.8 159.5 154.4 147.7 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 36.8 35.2 37.5 37.5 32.4 34.2 36.5 34.5 34.5 34.8 15 Not elsewhere classified 147.0 162.7 178.2 178.2 182.4 184.5 185.0 191.3 189.8 191.9 16 All other liabilities 60.0 61.5 63.9 63.9 64.3 67.1 68.8 69.0 72.0 73.4 17 Capital, surplus, and undivided profits 44.0 55.2 63.7 63.7 63.4 63.3 63.8 64.8 66.0 67.1 18 Total liabilities and capital 463.7 502.4 539.6 539.6 533.7 542.1 550.5 561.2 554.6 548.4 1. Excludes pools of securitized assets. 1.52 DOMESTIC FINANCE COMPANIES Business Credit Outstanding and Net Change1 Millions of dollars, end of period; seasonally adjusted except as noted 1992 TTyyppee ooff ccrreeddiitt 11998899 11999900 11999911 Mar. Apr. May June July Aug. SEASONALLY ADJUSTED 1 Total 481,436 523,023 519,573 521,174 520,242 519,668 520,804 522,834r 528,403 2 Consumer 157,766 161,070 154,786 157,106 156,103 154,989 154,850 153,588 155,044 3 Real estate2 53,518 65,147 65,388 66,323 67,032 66,898 66,433 66,843 67,913 4 Business 270,152 296,807 299,400 297,744 297,107 297,781 299,521 302,403 305,446 NOT SEASONALLY ADJUSTED 5 484,566 526,441 522,853 521,282 522,017 520,682 524,587 522,686r 523,740 6 Consumer 158,542 161,965 155,677 155,753 155,106 154,414 154,859 154,099" 155,846 7 Motor vehicles 84,126 75,045 63,413 60,655 61,717 59,399 60,056 60,400 60,670 8 Other consumer 54,732 58,818 58,488 57,697 56,647 56,740 56,634 56,568 56,821 9 Securitized motor vehicles4 13,690 19,837 23,166 25,723 24,697 26,529 26,195 25,392 26,852 10 Securitized other consumer 5,994 8,265 10,610 11,678 12,045 11,746 11,974 11,739 11,503 11 Real estate 53,781 65,509 65,764 65,752 66,604 66,650 66,437 67,065 68,264 12 Business 272,243 298,967 301,412 299,777 300,307 299,618 303,291 301,522 299,630 13 Motor vehicles 90,416 92,072 90,319 88,006 89,105 88,585 90,075 87,686" 85,470 14 Retail5 29,505 26,401 22,507 20,688 20,842 20,143 20,674 21,086 20,469 15 Wholesale6 34,093 33,573 31,216 30,799 31,161 30,893 30,505 27,158 n.a. 16 Leasing 26,818 32,098 36,596 36,519 37,102 37,549 38,8% 39,443 39,889 17 Equipment 122,246 137,654 141,399 142,6% 143,510 143,431 145,994 145,787 145,828 18 Retail 29,828 31,968 30,962 31,601 31,824 31,569 32,610 32,370 32,250 19 Wholesale6 6,452 11,101 9,671 9,265 9,217 9,116 9,194 9,128 9,084 20 Leasing 85,966 94,585 100,766 101,830 102,469 102,746 104,190 104,289 104,493 21 Other business 57,560 63,774 60,887 60,876 59,573 59,291 57,586 59,099" 58,%5 22 Securitized business assets n.a. 5,467 8,807 8,199 8,119 8,311 9,636 8,951" 9,367 23 Retail 710 667 576 480 206 1% 178 170 158 24 Wholesale n.a. 3,281 5,285 5,098 5,137 5,147 5,231 4,649 5,193 25 Leasing 1,311 1,519 2,946 2,621 2,776 2,968 4,227 4,132" 4,016 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

A36 DomesticN onfinancial Statistics • December 1992 1.53 MORTGAGE MARKETS Conventional Mortgages on New Homes Millions of dollars, except as noted 1992 IItteemm 11998899 11999900 11999911 Mar. Apr. May June July Aug. Sept. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms1 1 Purchase price (thousands of dollars) 159.6 153.2 155.0 167.0 162.5 158.7 154.4 173.5 148.4 146.0 2 Amount of loan (thousands of dollars) 117.0 112.4 114.0 123.2 122.7 119.7 116.1 132.6 113.6 109.3 3 Loan-price ratio (percent) 74.5 74.8 75.0 76.1 76.9 77.3 77.3 77.5 78.7 77.0 4 Maturity (years) 28.1 27.3 26.8 25.2 26.6 26.4 25.0 26.4 24.8 25.7 5 Fees and charges (percent of loan amount) 2.06 1.93 1.71 1.75 1.88 1.69 1.57 1.19 1.62 1.52 6 Contract rate (percent per year) 9.76 9.68 9.02 8.21 8.26 8.30 8.15 7.81 7.72 7.68 Yield (percent per year) 7 OTS series3 10.11 10.01 9.30 8.51 8.58 8.59 8.43 8.00 8.00 7.93 8 HUD series4 10.21 10.08 9.20 8.91 8.78 8.66 8.42 8.14 8.01 7.95 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series) 10.24 10.17 9.25 8.85 8.79 8.66 8.56 8.12 8.08 8.06 10 GNMA securities6 9.71 9.51 8.59 8.20 8.10 8.00 7.90 7.63 7.28 7.31 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 104,974 113,329 122,837 136,506 139,808 140,899 142,148 142,465 142,246 144,904 12 FHA/VA-insured 19,640 21,028 21,702 21,902 21,914 21,924 22,218 22,263 22,199 22,275 13 Conventional 85,335 92,302 101,135 114,604 117,894 118,975 119,930 120,202 120,047 122,629 Mortgage transactions (during period) 14 Purchases 22,518 23,959 37,202 7,282 7,258 5,576 5,809 4,191 3,651 6,779 Mortgage commitments (during period)1 15 Issued n.a. 23,689 40,010 6,738 5,400 4,392 4,662 4,663 6,053 8,880 16 To sell9 n.a. 5,270 7,608 1,143 2,219 1,695 1,831 807 10 148 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)9 17 Total 20,105 20,419 24,131 28,821 30,077 28,710 28,621 28,510 n.a. n.a. 18 FHA/VA-insured 590 547 484 446 438 432 426 419 n.a. n.a. 19 Conventional 19,516 19,871 23,283 28,376 29,639 28,278 28,195 28,091 n.a. n.a. Mortgage transactions (during period) 20 Purchases 78,588 75,517 97,727 16,001 18,109 16,405 14,222 12,172 n.a. n.a. 21 Sales 73,446 73,817 92,478 13,639 16,139 17,214 13,740 11,849"" 11,984 13,993 Mortgage commitments (during period 22 Contracted 88,519 102,401 114,031 19,098 23,748 13,334 19,114 26,488 n.a. n.a. 1. Weighted averages based on sample surveys of mortgages originated by Association (GNMA), assuming prepayment in twelve years on pools of thirtymajor institutional lender groups; compiled by the Federal Housing Finance year mortgages insured by the Federal Housing Administration or guaranteed by Board in cooperation with the Federal Deposit Insurance Corporation. the Department of Veterans Affairs carrying the prevailing ceiling rate. Monthly 2. Includes all fees, commissions, discounts, and "points" paid (by the figures are averages of Friday figures from the Wall Street Journal. borrower or the seller) to obtain a loan. 7. Includes some multifamily and nonprofit hospital loan commitments in 3. Average effective interest rates on loans closed, assuming prepayment at addition to one- to four-family loan commitments accepted in the Federal National the end of ten years; from Office of Thrift Supervision (OTS). Mortgage Association's (FNMA's) free market auction system, and through the 4. Average contract rates on new commitments for conventional first mort- FNMA-GNMA tandem plans. gages; from U.S. Department of Housing and Urban Development (HUD). 8. Does not include standby commitments issued, but includes standby 5. Average gross yields on thirty-year, minimum-downpayment, first mort- commitments converted. gages insured by the Federal Housing Administration (FHA) for immediate 9. Includes participation loans 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 of 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

Real Estate A37 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1991 1992 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11998888 11998899 11999900 Q2 Q3 Q4' Ql' Q2P 1 All holders 3,275,697r 3,561,685r 3,807,306r 3,898,924' 3,912,518' 3,927,396 3,971,687 3,999,102 By type of property 2 One- to four-family residences 2,203,973r 2,432,222r 2,649,436r 2,726,425r 2,758,976' 2,781,078 2,833,365 2,873,755 3 Multifamily residences 292,59C 304,612r 310,6191 315,404r 308,047' 308,844 308,510 301,007 4 Commercial 693,888r 740,826r 763,281r 773,315r 762,33C 754,300 746,902 740,760 5 Farm 85,247 84,025 83,%9r 83,779r 83,165' 83,173 82,910 83,579 By type of holder 6 Major financial institutions 1,831,472 1,931,537 1,914,315 l,898,492r 11,,886600,,771100'' 1,846,910 1,825,983 1,807,045 7 Commercial banks 674,003 767,069 844,826 871,416 870,937' 876,284 880,377 884,598 8 One- to four-family 334,367 389,632 455,931 476,363 478,851 486,572 492,910 4%,518 9 Multifamily 33,912 38,876 37,015 37,564 36,398 37,424 37,710 38,314 10 Commercial 290,254 321,906 334,648 339,450 337,365 333,852 330,837 330,229 11 Farm 15,470 16,656 17,231 18,039 18,323 18,436 18,919 19,538 12 Savings institutions 924,606 910,254 801,628 755,403r 719,679' 705,367 682,338 660,547 13 One- to four-family 671,722 669,220 600,154 570,015' 547,799' 538,358 524,536 509,397 14 Multifamily 110,775 106,014 91,806 86,483r 81,883' 79,881 77,166 74,837 15 Commercial 141,433 134,370 109,168 98,457r 89,595' 86,741 80,278 75,%9 16 Farm 676 650 500 448r 402 388 358 345 17 Life insurance companies 232,863 254,214 267,861 271,674 270,094 265,258 263,269 261,900 18 One- to four-family 11,164 12,231 13,005 11,743 11,720 11,547 11,214 11,087 19 Multifamily 24,560 26,907 28,979 30,006 29,962 29,562 29,693 29,745 20 Commercial 187,549 205,472 215,121 219,204 218,179 214,105 212,865 211,913 21 Farm 9,590 9,604 10,756 10,721 10,233 10,044 9,497 9,155 22 Finance companies4 37,846 45,476 48,777 48,972 50,658 51,567 50,573 55,933 23 Federal and related agencies 200,570 209,498 250,761 276,797' 282,115' 282,856 2%,664 297,618 24 Government National Mortgage Association 26 23 20 2 C 2C 19 19 23 25 One- to four-family 26 23 20 2C 2 C 19 19 23 26 Multifamily 0 0 0 0 0 0 0 0 27 Farmers Home Administration 42,018 41,176 41,439 41,430 41,566 41,713 41,791 41,628 28 One- to four-family 18,347 18,422 18,527 18,521 18,598 18,4% 18,488 17,718 29 Multifamily 8,513 9,054 9,640 9,898 9,990 10,141 10,270 10,356 30 Commercial 5,343 4,443 4,690 4,750 4,829 4,905 4,%1 4,998 31 Farm 9,815 9,257 8,582 8,261 8,149 8,171 8,072 8,557 32 Federal Housing and Veterans' Administrations 5,973 6,087 8,801 10,210 10,057' 10,733 11,332 11,798 33 One- to four-family 2,672 2,875 3,593 3,729 3,649' 4,036 4,254 4,124 34 Multifamily 3,301 3,212 5,208 6,480 6,408' 6,697 7,078 7,674 35 Federal National Mortgage Association 103,013 110,721 116,628 122,806 125,451 128,983 136,506 142,148 36 One- to four-family 95,833 102,295 106,081 111,560 113,6% 117,087 124,137 129,392 37 Multifamily 7,180 8,426 10,547 11,246 11,755 11,8% 12,369 12,756 38 Federal Land Banks 32,115 29,640 29,416 29,152 29,053 28,777 28,776 28,775 39 One- to four-family 1,890 1,210 1,838 2,041 2,124 1,693 1,693 1,693 40 Farm 30,225 28,430 27,577 27,111 26,929 27,084 27,083 27,082 41 Federal Home Loan Mortgage Corporation 17,425 21,851 21,857 23,649 23,906 26,809 28,895 28,621 42 One- to four-family 15,077 18,248 19,185 21,120 21,489 24,125 26,182 26,001 43 Multifamily 2,348 3,603 2,672 2,529 2,417 2,684 2,713 2,620 44 Mortgage pools or trusts6 811,847 946,766 1,110,555 1,188,626' 1,229,836' 1,262,685 1,302,217 1,339,172 45 Government National Mortgage Association 340,527 368,367 403,613 416,082' 422,500' 425,295 421,977 422,922 46 One- to four-family 331,257 358,142 391,505 403,679' 412,715' 415,767 412,574 413,828 47 Multifamily 9,270 10,225 12,108 12,403 9,785' 9,528 9,404 9,094 48 Federal Home Loan Mortgage Corporation 226,406 272,870 316,359 341,132 348,843 359,163 367,878 382,797 49 One- to four-family 219,988 266,060 308,369 332,624 341,183 351,906 360,887 376,177 50 Multifamily 6,418 6,810 7,990 8,509 7,660 7,257 6,991 6,620 51 Federal National Mortgage Association 178,250 228,232 299,833 331,089 351,917 371,984 389,853 413,226 52 One- to four-family 172,331 219,577 291,194 322,444 343,430 362,667 380,617 403,940 53 Multifamily 5,919 8,655 8,639 8,645 8,487 9,317 9,236 9,286 54 Farmers Home Administration 104 80 66 55 52 47 43 43 55 One- to four-family 26 21 17 13 12 11 10 9 56 Multifamily 0 0 0 0 0 0 0 0 57 Commercial 38 26 24 21 20 19 18 18 58 Farm 40 33 26 21 20 17 16 15 59 Individuals and others7 431,808r 473,884r 531,674r 535,009' 539,858' 534,945 546,823 555,267 60 One- to four-family 262,713r 297,050' 333,532r 333,256' 336,711' 330,062 340,561 348,631 61 Multifamily 80,394r 82,83C 87,95c 87,002' 87,351' 87,440 86,975 86,390 62 Commercial 69,270r 74, et^ 90,894r 95,573' %,687' 98,409 100,321 101,358 63 Farm 19,431 19,395 19,298r 19,178' 19,109' 19,034 18,966 18,887 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

A38 Domestic Nonfinancial Statistics • December 1992 1.55 CONSUMER INSTALLMENT CREDIT Total Outstanding and Net Change1 Millions of dollars, amounts outstanding, end of period 1992 HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt 11998888 11998899 11999900 Mar. Apr. May June Jul/ Aug. Seasonally adjusted 11 TToottaall 662,553 716,825 735,338 727,404 723,821 722,928 722,919' 721,820 720,861 22 AAuuttoommoobbiillee 285,364 292,002 284,993 262,125 260,376 259,834 257,339" 257.743 257,706 33 RReevvoollvviinngg 174,269 199,308 222,950 245,259 245,905 246,220 247,418r 247,332 247,909 44 OOtthheerr 202,921 225,515 227,395 220,020 217,541 216,874 218,162' 216.744 215,246 Not seasonally adjusted 5 Total 673,320 728,877 748,524 721,091 718,676 718,420 719,845' 718,599 722,189 By major holder 6 Commercial banks 324,792 342,770 347,087 327,697 326,205 324,791 324,171 323,899 323,866 7 Finance companies 144,677 138,858 133,863 118,353 118,364 116,138 116,690 117,002 117,491 8 Credit unions 88,340 93,114 93,057 91,164 91,339 91,605 92,340" 91,778 91,500 9 Retailers 48,438 44,154 44,822 39,454 39,553 37,824 37,438 37,219 38,791 10 Savings institutions 63,399 57,253 46,969 37,142 36,499 36,224 35,782r 35,552 35,029 11 Gasoline companies 3,674 3,935 4,822 3,988 4,094 4,193 4,360 4,506 4,542 12 Pools of securitized assets2 .. n.a. 48,793 77,904 103,293 102,622 107,645 109,064 108,643 110,970 By major type of credit3 13 Automobile 285,421 292,060 285,050 259,530 258,449 258,665 257,442* 258,104 259,897 14 Commercial banks 123,392 126,288 124,913 110,047 109,056 108,610 106,645 107,722 107,978 1 1 5 6 P F o in o a ls n c o e f c s o e m cu p r a it n iz ie e s d assets2 98.338 0 8 1 4 8 , , 1 1 2 8 6 5 7 24 5 , , 4 0 2 4 8 5 6 2 0 9 , , 6 9 5 4 5 2 6 2 1 8 , , 7 6 1 7 7 9 5 31 9 , , 4 3 0 9 6 9 6 3 0 1 , ,0 0 2 5 4 6 6 3 0 0 , , 4 4 0 5 0 4 6 31 0 , , 8 6 3 7 3 0 17 Revolving 184,045 210,310 235,056 242,267 242,708 243,315 245,092* 244,661 246,917 18 Commercial banks 123,020 130,811 133,385 128,550 128,506 128,013 127,925 127,476 126,922 19 Retailers 43,833 39,583 40,003 34,892 34,989 33,245 32,844 32,617 34,167 2 2 0 1 G Po a o so ls l i o n f e s c e o c m ur p it a i n z i e e d s assets2 n 3 . , a 6 . 7 4 23 3 , , 4 9 7 3 7 5 4 4 4 , , 8 3 2 3 2 5 60 3 , , 9 98 5 8 3 6 4 1 , , 0 1 9 9 4 0 6 4 3 , , 1 80 9 1 3 6 4 5 , , 3 78 6 4 0 6 4 5 , ,7 5 9 0 1 6 6 4 6 , , 5 9 4 8 2 5 22 Other 203,854 226,507 228,418 219,294 217,519 216,440 217,311' 215,834 215,375 23 Commercial banks 78,380 85,671 88,789 89,100 88,643 88,168 89,601 88,701 88,966 24 Finance companies 46.339 54,732 58,818 57,698 56,647 56,739 56,634 56,602 56,821 25 Retailers 4,605 4,571 4,819 4,562 4,564 4,579 4,594 4,602 4,624 26 Pools of securitized assets2 7,131 9,141 12,398 12,753 12,438 12,256 12,398 12,152 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. 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT1 Percent per year except as noted 1992 IItteemm 11998899 11999900 11999911 Feb. Mar. Apr. May June July Aug. INTEREST RATES Commercial bankS2 1 48-month new car 12.07 11.78 11.14 9.89 n.a. n.a. 9.52 n.a. n.a. 9.15 2 24-month personal 15.44 15.46 15.18 14.39 n.a. n.a. 14.28 n.a. n.a. 13.94 3 120-month mobile home 14.11 14.02 13.70 12.93 n.a. n.a. 12.82 n.a. n.a. 12.57 4 Credit card 18.02 18.17 18.23 18.09 n.a. n.a. 17.97 n.a. n.a. 17.66 Auto finance companies 5 New car 1122..6622 12.54 12.41 10.19 10.92 10.84 10.67 10.24 9.94 8.88 6 Used car 16.18 15.99 15.60 14.00 14.19 14.14 14.01 13.89 13.67 13.49 OTHER TERMS4 Maturity (months) 7 New car 5544..22 54.6 55.1 53.8 54.3 54.5 54.7 54.4 54.4 53.6 8 Used car 46.6 46.0 47.2 48.0 48.0 47.8 47.9 48.0 48.0 47.9 Loan-to-value ratio 9 New car 91 87 88 89 89 89 89 89 89 90 10 Used car 97 95 % 97 97 97 97 97 97 97 Amount financed (dollars) 11 New car 1122,,000011 12,071 12,494 13,340 13,137 13,208 13,373 13,369 13,570 13,745 12 Used car 7,954 8,289 8,884 8,912 8,908 8,905 9,247 9,201 9,293 9,238 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. Digitized for FRAS2. EDRat a are available for only the second month of each quarter. 4. At auto finance companies. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A39 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1 Billions of dollars; quarterly data at seasonally adjusted annual rates 1990 1991 1992 Q4 Ql Q2 Q3 Q4 Ql Q2 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors .. 721.2 775.8 740.8 665.0 452.5 503.9 455.4 544.4 404.5 405.7 648.2 534.9 By sector and instrument 2 U.S. government 143.9 155.1 146.4 246.9 278.2 270.8 227.4 276.7 288.4 320.4 368.9 351.9 3 Treasury securities 142.4 137.7 144.7 238.7 292.0 271.8 251.4 282.9 317.2 316.6 380.1 351.5 4 Agency issues and mortgages 1.5 17.4 1.6 8.2 -13.8 -1.0 -24.0 -6.2 -28.8 3.8 -11.2 .4 5 Private 577.3 620.7 594.4 418.2 174.3 233.0 228.0 267.7 116.1 85.3 279.3 183.0 By instrument 6 Debt capital instruments 487.2 474.1 441.8 342.3 254.5 277.9 296.0 331.1 180.8 210.0 293.6 223.9 7 Tax-exempt obligations 83.5 53.7 65.0 51.2 45.8 40.6 35.6 48.5 53.5 45.5 47.0 68.0 8 Corporate bonds 78.8 103.1 73.8 47.1 78.6 65.2 76.7 96.5 81.7 59.7 76.1 78.1 9 Mortgages 325.0 317.3 303.0 244.0 130.0 172.1 183.7 186.0 45.6 104.8 170.5 77.7 10 Home mortgages 235.3 241.8 245.3 219.4 142.2 162.3 153.0 158.1 122.4 135.1 203.4 137.0 11 Multifamily residential 24.4 16.7 16.4 3.7 -2.0 3.9 6.2 12.9 -29.7 2.7 -1.6 -33.5 12 Commercial 71.6 60.8 42.7 21.0 -9.4 7.2 24.5 15.6 -44.5 -33.1 -30.2 -28.5 13 Farm -6.4 -2.1 -1.5 -.1 -.8 -1.3 -.1 -.7 -2.5 .0 -1.1 2.7 14 Other debt instruments 90.1 146.6 152.6 75.8 -80.2 -44.9 -68.0 -63.3 -64.8 -124.7 -14.3 -40.9 15 Consumer credit 32.9 50.1 41.7 17.5 -12.5 -6.6 -10.4 -7.8 -24.0 -8.0 3.1 -13.5 16 Bank loans n.e.c 9.9 41.0 40.2 4.4 -33.4 -8.4 -15.0 -34.5 -18.2 -66.1 -26.9 -27.0 17 Open market paper 1.6 11.9 21.4 9.7 -18.4 -34.1 -14.3 -15.9 -36.3 -7.0 12.6 -3.4 18 Other 45.7 43.6 49.3 44.2 -15.8 4.3 -28.3 -5.2 13.7 -43.6 -3.2 3.1 By borrowing sector 19 State and local government 83.0 48.9 63.2 48.3 38.5 34.7 36.0 38.6 37.6 41.9 41.1 58.4 20 Household 296.4 318.6 305.6 254.2 158.0 159.8 160.8 188.8 136.1 146.3 208.8 155.4 21 Nonfinancial business 197.8 253.1 225.6 115.6 -22.3 38.6 31.1 40.3 -57.6 -103.0 29.4 -30.8 22 Farm -10.6 -7.5 1.6 2.5 .9 -.3 3.9 2.1 -.3 -2.2 -1.6 7.0 23 Nonfarm noncorporate 65.3 61.8 50.4 26.7 -23.6 7.9 13.2 9.8 -65.9 -51.5 -22.7 -67.6 24 Corporate 143.1 198.8 173.6 86.4 .4 31.0 14.0 28.4 8.6 -49.3 53.7 29.8 25 Foreign net borrowing in United States 6.2 6.4 10.2 23.9 14.1 24.2 63.1 -63.2 15.6 41.0 9.5 64.5 26 Bonds 7.4 6.9 4.9 21.4 14.9 29.6 11.1 10.6 15.5 22.3 4.7 12.6 27 Bank loans n.e.c -3.6 -1.8 -.1 -2.9 3.1 -5.2 8.1 -3.5 1.4 6.5 1.4 21.2 28 Open market paper 3.8 8.7 13.1 12.3 6.4 15.6 46.7 -51.9 16.0 14.9 -7.8 27.7 29 U.S. government loans -1.4 -7.5 -7.6 -6.9 -10.2 -15.8 -2.8 -18.3 -17.2 -2.7 11.2 2.9 30 Total domestic plus foreign 727.4 782.2 750.9 688.9 466.6 528.1 518.5 481.3 420.1 446.7 657.7 599.3 Financial sectors 31 Total net borrowing by financial sectors 259.0 211.4 220.1 187.1 139.2 296.8 108.9 103.1 144.3 200.5 108.7 217.5 By instrument 32 U.S. government-related 171.8 119.8 151.0 167.4 147.7 188.3 154.6 127.4 156.3 152.7 126.8 199.5 33 Sponsored-credit-agency securities 30.2 44.9 25.2 17.1 9.2 37.1 13.1 -29.7 20.6 32.6 11.5 48.3 34 Mortgage pool securities 142.3 74.9 125.8 150.3 138.6 151.6 141.5 157.1 135.8 120.1 115.3 151.2 35 Loans from U.S. government -.8 .0 .0 -.1 .0 -.5 .0 .0 .0 -.1 .0 .0 36 Private 87.2 91.7 69.1 19.7 -8.6 108.6 -45.7 -24.3 -12.0 47.8 -18.0 18.1 37 Corporate bonds 39.1 16.2 46.8 34.4 57.7 98.6 41.4 72.6 29.3 87.5 -24.2 25.0 38 Mortgages .4 .3 .0 .3 .6 .6 .2 -.2 .9 1.5 .9 .2 39 Bank loans n.e.c -3.6 .6 1.9 1.2 3.2 1.4 1.0 -2.9 10.2 4.5 7.2 4.9 40 Open market paper 26.9 54.8 31.3 8.6 -32.0 24.7 -52.5 -46.0 -16.7 -12.7 7.6 -17.6 41 Loans from Federal Home Loan Banks 24.4 19.7 -11.0 -24.7 -38.0 -16.7 -35.8 -47.7 -35.7 -33.0 -9.5 5.7 By borrowing sector 42 Sponsored credit agencies 29.5 44.9 25.2 17.0 9.1 36.7 13.1 -29.7 20.6 32.5 11.5 48.3 43 Mortgage pools 142.3 74.9 125.8 150.3 138.6 151.6 141.5 157.1 135.8 120.1 115.3 151.2 44 Private 87.2 91.7 69.1 19.7 -8.6 108.6 -45.7 -24.3 -12.0 47.8 -18.0 18.1 45 Commercial banks 6.2 -3.0 -1.4 -1.1 -13.3 14.7 -18.4 -11.7 -9.2 -14.1 7.2 -.6 46 Bank affiliates 14.3 5.2 6.2 -27.7 -2.5 -30.2 -9.3 -3.5 -6.8 9.6 2.7 -9.2 47 Savings and loan associations 19.6 19.9 -14.1 -29.9 -39.5 -20.7 -42.9 -48.7 -41.1 -25.1 -20.3 4.2 48 Mutual savings banks 8.1 1.9 -1.4 -.5 -3.5 1.4 2.0 -1.7 -5.5 -8.7 4.3 -1.2 49 Finance companies -.5 31.5 59.7 35.6 14.5 81.9 -10.3 3.4 12.2 52.9 -39.0 -20.9 50 Real estate investment trusts (REITs) .4 3.6 -1.9 -1.9 .0 .3 .1 -.8 .0 .8 4.6 2.4 51 Securitized credit obligation (SCO) issuers 39.1 32.5 22.0 45.2 35.6 61.3 33.2 38.7 38.5 32.3 22.4 43.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • December 1992 1.57—Continued 1990 1991 1992 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998877 11998888 11998899 11999900 11999911 Q4 Q1 Q2 Q3 Q4 Q1 Q2 All sectors 5522 TToottaall nneett bboorrrroowwiinngg,, aallll sseeccttoorrss 986.4 993.6 971.0 876.0 605.8 824.9 627.4 584.4 564.4 647.1 766.4 816.9 5533 UU..SS.. ggoovveerrnnmmeenntt sseeccuurriittiieess 316.4 274.9 297.3 414.4 426.0 459.6 382.0 404.1 444.8 473.2 495.7 551.4 5544 SSttaattee aanndd llooccaall oobblliiggaattiioonnss 83.5 53.7 65.0 51.2 45.8 40.6 35.6 48.5 53.5 45.5 47.0 68.0 5555 CCoorrppoorraattee aanndd ffoorreeiiggnn bboonnddss 125.2 126.3 125.5 102.9 151.2 193.4 129.2 179.7 126.4 169.5 56.6 115.7 5566 MMoorrttggaaggeess 325.4 317.5 303.0 244.3 130.6 172.8 183.9 185.8 46.5 106.2 171.4 77.9 5577 CCoonnssuummeerr ccrreeddiitt 32.9 50.1 41.7 17.5 -12.5 -6.6 -10.4 -7.8 -24.0 -8.0 3.1 -13.5 5588 BBaannkk llooaannss nn..ee..cc 2.7 39.9 41.9 2.8 -27.1 -12.2 -5.9 -40.9 -6.7 -55.1 -18.2 -.9 5599 OOppeenn mmaarrkkeett ppaappeerr 32.3 75.4 65.9 30.7 -44.0 6.1 -20.2 -113.8 -37.0 -4.9 12.4 6.7 6600 OOtthheerr llooaannss 68.0 55.8 30.6 12.4 -64.2 -28.8 -66.9 -71.2 -39.1 -79.3 -1.5 11.6 External corporate equity funds raised in United States 61 Total net share issues 7.1 -118.4 -65.7 22.1 198.8 28.2 112.4 178.9 235.2 268.9 271.8 283.6 62 Mutual funds 70.2 6.1 38.5 67.9 150.5 85.2 98.1 125.6 182.5 195.9 189.8 223.3 63 All other -63.2 -124.5 -104.2 -45.8 48.3 -57.0 14.3 53.3 52.7 72.9 82.0 60.3 64 Nonfinancial corporations -75.5 -129.5 -124.2 -63.0 18.3 -61.0 -6.0 12.0 19.0 48.0 46.0 36.0 65 Financial corporations 14.5 4.1 2.7 9.8 -.1 1.2 -6.7 4.7 -.4 2.0 6.0 2.9 66 Foreign shares purchased in United States -2.1 .9 17.2 7.4 30.2 2.8 27.0 36.6 34.1 22.9 30.0 21.4 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables F.2 through F.5. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A41 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates 1990 1991 1992 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998877 11998888 11998899 11999900 11999911 Q4 Q1 Q2 Q3 Q4 Ql Q2 NET LENDING IN CREDIT MARKETS1 1 Total net lending in credit markets 986.4 993.6 971.0 876.0 605.8 824.9 627.4 584.4 564.4 647.1 766.4 816.9 2 Private domestic nonfinancial sectors 237.4 226.2 209.6 203.8 21.4 54.8 49.0 190.8 -135.2 -18.8 86.2 65.2 Households 180.7 198.9 179.5 172.3 -14.1 7.9 12.0 174.4 -177.8 -65.1 93.6 62.0 4 Nonfarm noncorporate business -5.6 3.1 -.8 -1.4 -1.8 -1.9 -1.6 -2.0 -1.6 -2.1 -2.1 -2.5 5 Nonfinancial corporate business 18.5 5.7 12.9 6.6 21.1 13.3 -6.8 29.0 32.2 30.1 11.1 -1.5 6 State and local governments 43.9 18.6 17.9 26.2 16.3 35.5 45.4 -10.6 12.1 18.2 -16.5 7.2 7 U.S. government -7.9 -10.6 -3.1 33.7 10.0 -1.1 35.2 24.8 -2.1 -17.9 13.7 -12.1 8 Foreign 61.8 96.3 74.1 58.4 44.7 85.1 19.1 51.4 37.3 71.0 89.1 144.2 9 Financial sectors 695.0 681.8 690.4 580.2 529.7 686.0 524.1 317.4 664.3 612.9 577.4 619.6 10 Sponsored credit agencies 27.0 37.1 -.5 16.4 14.2 -8.4 27.4 -22.3 33.7 17.8 93.0 47.9 11 Mortgage pools 142.3 74.9 125.8 150.3 138.6 151.6 141.5 157.1 135.8 120.1 115.3 151.2 12 Monetary authority 24.7 10.5 -7.3 8.1 31.1 -11.6 58.1 -4.0 48.1 22.3 33.2 9.8 13 Commercial banking 135.3 157.1 176.8 125.4 84.0 69.5 114.4 34.7 82.4 104.3 97.9 53.2 14 U.S. commercial banks 99.1 127.1 145.7 95.2 38.9 30.7 77.0 6.4 26.5 45.6 90.7 .1 15 Foreign banking offices 34.2 29.4 26.7 28.4 48.5 37.9 42.2 33.7 56.7 61.3 .9 53.8 16 Bank affiliates 2.0 -.1 2.8 -2.8 -1.5 -1.7 -4.7 -2.6 2.4 -1.1 6.4 -1.7 17 Banks in U.S. possession .1 .7 1.6 4.5 -1.9 2.7 -.1 -2.8 -3.3 -1.5 .0 1.0 18 Private nonbank finance 365.8 402.2 395.7 279.9 261.8 484.8 182.7 152.0 364.4 348.3 238.0 357.6 19 Thrift institutions 136.9 119.0 -91.0 -151.9 -144.9 -178.5 -188.3 -164.8 -176.8 -49.7 -102.1 -51.4 20 Savings and loan associations 93.5 87.4 -93.9 -143.9 -140.9 -177.9 -179.8 -144.0 -156.3 -83.3 -137.9 -78.4 21 Mutual savings banks 25.6 15.3 -4.8 -16.5 -15.5 -9.8 -11.7 -31.1 -30.8 11.5 7.6 -3.7 22 Credit unions 17.8 16.3 7.7 8.5 11.5 9.2 3.3 10.2 10.3 22.2 28.2 30.6 23 Insurance 153.5 186.2 207.7 188.5 215.4 197.2 236.2 219.5 254.5 151.4 142.4 194.0 24 Life insurance companies 91.7 103.8 93.1 94.4 83.2 73.4 112.9 132.8 73.8 13.2 80.6 93.3 25 Other insurance companies 39.5 29.2 29.7 26.5 34.7 28.8 32.7 37.0 36.8 32.1 33.1 22.2 26 Private pension funds -4.7 18.1 36.2 16.6 60.6 55.6 42.1 .7 110.5 89.2 -18.9 41.3 27 State and local government retirement funds ... 27.0 35.1 48.7 51.0 37.0 39.5 48.5 49.0 33.4 17.0 47.6 37.2 28 Finance n.e.c 75.4 96.9 278.9 243.3 191.3 466.2 134.7 97.4 286.7 246.5 197.7 215.0 29 Finance companies 38.2 49.2 69.3 41.6 -13.1 26.0 -18.5 -14.5 -5.2 -14.1 .8 -23.0 30 Mutual funds 25.8 11.9 23.8 41.4 90.3 56.2 44.0 75.3 117.1 124.8 105.3 156.1 31 Money market funds 1.8 10.7 67.1 80.9 30.1 83.3 134.2 -68.9 1.1 53.9 61.8 -20.9 32 Real estate investment trusts (REITs) 1.0 .9 .5 -.7 -.7 -2.1 -1.2 -.1 -.6 -.9 -.7 -.5 33 Brokers and dealers -30.6 -8.2 96.3 34.9 49.0 241.5 -56.9 66.8 135.8 50.5 8.1 60.0 34 Securitized credit obligation (SCOs) issuers ... 39.1 32.5 22.0 45.2 35.6 61.3 33.2 38.7 38.5 32.3 22.4 43.3 RELATION OF LIABILITIES TO FINANCIAL ASSETS 35 Net flows through credit markets 986.4 993.6 971.0 876.0 605.8 824.9 627.4 584.4 564.4 647.1 766.4 816.9 Other financial sources 36 Official foreign exchange -9.7 4.0 24.8 2.0 -5.9 4.0 1.5 -4.8 -15.5 -5.0 3.5 -6.4 37 Treasury currency and special drawing rights .5 .5 4.1 2.5 .0 8.2 -1.2 .4 .4 .5 .1 .3 38 Life insurance reserves 26.0 25.3 28.8 25.7 22.0 23.7 19.9 29.4 19.4 19.2 21.2 24.6 39 Pension fund reserves 104.5 193.6 221.4 186.8 268.1 253.0 284.1 193.9 339.6 254.7 112.7 225.5 40 Interbank claims 34.8 2.9 -16.5 34.2 -2.1 -18.5 4.5 -81.6 97.9 -29.0 45.6 -12.6 41 Deposits at financial institutions 141.1 259.9 290.0 96.8 58.0 233.2 244.8 -75.4 27.3 35.3 152.0 -12.0 42 Checkable deposits and currency 3.9 43.2 6.1 44.2 75.8 59.5 76.2 7.9 104.5 114.4 89.4 97.6 43 Small-time and savings 76.5 120.8 96.7 59.9 16.7 69.1 97.3 -1.1 -42.4 13.0 -13.7 -77.4 44 Large-time 50.6 53.6 17.6 -66.7 -60.9 -69.0 15.1 -63.0 -78.1 -117.4 -82.0 -106.3 45 Money market fund shares 24.0 21.9 90.1 70.3 41.3 57.6 193.0 -58.7 4.0 26.8 106.1 -38.3 46 Security repurchase agreements -10.9 23.5 78.3 -23.5 -16.4 97.9 -160.7 43.1 36.3 16.0 15.4 96.5 47 Foreign deposits -3.1 -3.1 1.1 12.6 1.5 18.2 24.0 -3.6 3.0 -17.5 36.8 16.0 48 Mutual fund shares 70.2 6.1 38.5 67.9 150.5 85.2 98.1 125.6 182.5 195.9 189.8 223.3 49 Corporate equities -63.2 -124.5 -104.2 -45.8 48.3 -57.0 14.3 53.3 52.7 72.9 82.0 60.3 50 Security credit -27.4 3.0 15.6 3.5 51.4 36.5 -17.5 20.1 82.4 120.7 -70.0 -47.7 51 Trade debt 57.7 89.2 60.0 44.1 11.2 -13.1 -36.7 41.8 48.2 -8.5 70.1 58.8 52 Taxes payable 5.4 5.3 2.0 -.5 -9.1 -3.7 -34.8 -11.5 13.0 -3.3 -2.9 1.4 53 Noncorporate proprietors' equity -60.9 -31.2 -32.5 -39.3 -1.3 -22.2 -21.3 -34.1 44.9 5.1 -20.4 30.4 54 Miscellaneous 241.2 222.3 269.9 120.5 157.0 -34.7 273.7 84.9 41.3 228.3 82.8 204.2 55 Total financial sources 1,506.7 1,650.2 1,772.7 1,374.3 1,354.0 1,319.6 1,456.9 926.3 1,498.6 1,534.1 1,432.9 1,566.9 Floats not included in assets (—) 56 U.S. government checking deposits .0 1.6 8.4 3.3 -13.1 -8.0 -18.8 15.6 23.9 -73.1 4.4 -10.8 57 Other checkable deposits .4 .8 -3.2 2.5 2.0 7.7 13.3 3.0 -2.1 -6.1 -13.3 -17.5 58 Trade credit -8.5 -.9 .6 21.5 19.4 54.6 13.4 41.2 27.8 -4.8 27.7 1.2 Liabilities not identified as assets (-) 59 Treasury currency -.1 -.1 -.2 .2 -.6 1.5 -1.9 -.3 -.2 -.1 -.4 -.1 60 Interbank claims -4.0 -3.0 -4.4 1.6 26.2 -14.9 55.3 20.8 28.4 .2 13.4 -13.8 61 Security repurchase agreements -21.2 -29.8 23.9 -34.8 9.7 45.7 -115.4 76.2 36.9 41.1 -23.5 78.2 62 Taxes payable 6.7 6.3 2.3 6.5 7.4 14.9 -14.4 2.0 23.4 18.5 -16.7 16.3 63 Miscellaneous 10.0 4.4 -95.6 -13.8 -26.0 -112.2 -111.4 8.4 -195.4 194.3 -148.9 -128.3 64 Totals identified to sectors as assets 1,523.4 1,670.7 1,841.0 1,387.5 1,329.1 1,330.2 1,636.7 759.4 1,556.0 1,364.1 1,590.2 1,641.7 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical 2. Excludes corporate equities and mutual fund shares, release, tables F.6 and F.7. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Financial Statistics • December 1992 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 1990 1991 1992 11999911 Q4 Ql Q2 Q3 Q4 Ql Q2 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 9,316.3 10,087.1 10,760.8 11,210.7 10,760.8 10,832.3 10,960.5 11,082.5 11,210.7 11,331.7 11,459.8 By lending sector and instrument 2 U.S. government 2,104.9 2,251.2 2,498.1 2,776.4 2,498.1 2,548.8 2,591.9 2,687.2 2,776.4 2,859.7 2,923.3 3 Treasury securities 2,082.3 2,227.0 2,465.8 2,757.8 2,465.8 2,522.4 2,567.1 2,669.6 2,757.8 2,844.0 2,907.4 4 Agency issues and mortgages 22.6 24.2 32.4 18.6 32.4 26.4 24.8 17.6 18.6 15.8 15.9 5 Private 7,211.4 7,835.9 8,262.6 8,434.3 8,262.6 8,283.5 8,368.6 8,395.3 8,434.3 8,472.0 8,536.5 By instrument 6 Debt capital instruments 5,119.0 5,577.9 5,936.0 6,190.4 5,936.0 5,997.7 6,087.8 6,138.4 6,190.4 6,252.0 6,315.8 7 Tax-exempt obligations 939.4 1,004.4 1,055.6 1,101.4 1,055.6 1,061.5 1,072.5 1,089.3 1,101.4 1,110.3 1,126.1 8 Corporate bonds 852.2 926.1 973.2 1,051.8 973.2 992.3 1,016.5 1,036.9 1,051.8 1,070.8 1,090.4 9 Mortgages 3,327.3 3,647.5 3,907.3 4,037.3 3,907.3 3,943.8 3,998.9 4,012.2 4,037.3 4,070.8 4,099.4 10 Home mortgages 2,257.5 2,515.1 2,760.0 2,902.1 2,760.0 2,788.9 2,836.9 2,869.5 2,902.1 2,943.9 2,987.3 11 Multifamily residential 286.7 304.4 305.8 303.8 305.8 307.3 310.5 303.1 303.8 303.4 295.0 12 Commercial 696.4 742.6 757.6 748.2 757.6 763.7 767.6 756.5 748.2 740.7 733.5 13 Farm 86.8 85.3 84.0 83.2 84.0 83.9 83.8 83.1 83.2 82.9 83.6 14 Other debt instruments 2,092.5 2,258.0 2,326.7 2,243.9 2,326.7 2,285.8 2,280.8 2,256.9 2,243.9 2,220.0 2,220.6 IS Consumer credit 742.1 791.8 809.3 796.7 809.3 785.3 786.7 785.9 796.7 775.7 775.5 lb Bank loans n.e.c 710.6 760.7 758.0 724.6 758.0 748.3 742.0 734.1 724.6 712.5 708.1 17 Open market paper 85.7 107.1 116.9 98.5 116.9 120.8 119.4 107.0 98.5 110.3 111.7 18 Other 554.1 598.4 642.6 624.1 642.6 631.5 632.6 629.8 624.1 621.6 625.3 By borrowing sector 19 State and local government 752.5 815.7 864.0 902.5 864.0 870.1 878.5 891.4 902.5 910.0 923.4 20 Household 3,177.3 3,508.2 3,780.6 3,938.6 3,780.6 3,788.3 3,848.3 3,888.7 3,938.6 3,958.8 4,010.8 21 Nonfinancial business 3,281.6 3,512.0 3,618.0 3,593.2 3,618.0 3,625.2 3,641.8 3,615.3 3,593.2 3,603.2 3,602.3 22 Farm 137.6 139.2 140.5 138.8 140.5 136.8 139.6 140.4 138.8 136.3 140.2 23 Nonfarm noncorporate 1,127.1 1,177.5 1,204.2 1,180.6 1,204.2 1,207.1 1,210.8 1,191.0 1,180.6 1,174.4 1,159.0 24 Corporate 2,016.9 2,195.3 2,273.4 2,273.8 2,273.4 2,281.2 2,291.4 2,283.9 2,273.8 2,292.5 2,303.1 25 Foreign credit market debt held in United States 244.6 254.8 278.6 292.7 278.6 291.3 277.6 282.2 292.7 282.3 300.6 26 Bonds 83.1 88.0 109.4 124.2 109.4 112.1 114.8 118.6 124.2 125.4 128.5 27 Bank loans n.e.c 21.5 21.4 18.5 21.6 18.5 20.5 19.7 20.0 21.6 22.0 27.3 28 Open market paper 49.9 63.0 75.3 81.8 75.3 87.0 74.0 78.0 81.8 70.5 77.5 29 U.S. government loans 90.1 82.4 75.4 65.2 75.4 71.6 69.1 65.6 65.2 64.4 67.3 30 Total credit market debt owed by nonfinancial sectors, domestic and foreign 9,560.9 10,341.9 11,039.4 11,503.4 11,039.4 11,123.6 11,238.2 11,364.7 11,503.4 11,614.0 11,760.4 Financial sectors 31 Total credit market debt owed by financial sectors 2,082.9 2,333.0 2,524.2 2,667.8 2,524.2 2,546.3 2,571.1 2,608.2 2,667.8 2,686.9 2,739.7 By instrument 32 U.S. government-related 1,098.4 1,249.3 1,418.4 1,566.2 1,418.4 1,452.1 1,482.8 1,524.4 1,566.2 1,592.9 1,641.6 33 Sponsored credit-agency securities 348.1 373.3 393.7 402.9 393.7 397.0 389.6 394.7 402.9 405.7 417.8 34 Mortgage pool securities 745.3 871.0 1,019.9 1,158.5 1,019.9 1,050.3 1,088.4 1,124.8 1,158.5 1,182.4 11,,221199..00 35 Loans from U.S. government 5.0 5.0 4.9 4.8 4.9 4.9 4.9 4.9 4.8 4.8 44..88 36 Private 984.6 1,083.7 1,105.8 1,101.6 1,105.8 1,094.1 1,088.4 1,083.9 1,101.6 1,093.9 1,098.1 37 Corporate bonds 415.1 491.9 528.2 590.2 528.2 545.4 562.3 569.5 590.2 578.4 583.3 38 Mortgages 3.4 3.4 4.2 4.8 4.2 4.3 4.2 4.4 4.8 5.0 5.1 39 Bank loans n.e.c 35.6 37.5 38.6 41.8 38.6 36.5 37.0 39.0 41.8 41.3 43.7 40 Open market paper 377.7 409.1 417.7 385.7 417.7 400.9 390.1 387.0 385.7 392.9 389.2 41 Loans from Federal Home Loan Banks 152.8 141.8 117.1 79.1 117.1 107.0 94.7 83.9 79.1 76.3 76.9 By borrowing sector 42 Sponsored credit agencies 353.1 378.3 398.5 407.7 398.5 401.8 394.4 399.5 407.7 410.5 422.6 43 Mortgage pools 745.3 871.0 1,019.9 1,158.5 1,019.9 1,050.3 1,088.4 1,124.8 1,158.5 1,182.4 1,219.0 44 Private financial sectors 984.6 1,083.7 1,105.8 1,101.6 1,105.8 1,094.1 1,088.4 1,083.9 1,101.6 1,093.9 1,098.1 45 Commercial banks 78.8 77.4 76.3 63.0 76.3 68.1 65.9 64.6 63.0 60.8 61.3 46 Bank affiliates 136.2 142.5 114.8 112.3 114.8 114.4 113.3 110.6 112.3 115.0 112.4 47 Savings and loan associations 159.3 145.2 115.3 75.9 115.3 104.2 91.0 79.0 75.9 71.2 70.7 48 Mutual savings banks 18.6 17.2 16.7 13.2 16.7 16.4 16.6 15.2 13.2 13.5 13.9 49 Finance companies 444.6 504.2 539.8 557.9 539.8 539.6 540.4 543.7 557.9 547.1 541.8 SO Real estate investment trusts (REITs) 11.4 10.1 10.6 11.4 10.6 10.8 10.8 11.0 11.4 12.7 13.5 SI Securitized credit obligation (SCO) issuers... 135.7 187.1 232.3 268.0 232.3 240.6 250.3 259.9 268.0 273.6 284.4 All sectors 52 Total credit market debt, domestic and foreign.. 11,643.9 12,674.9 13,563.6 14,171.2 13,563.6 13,669.9 13,809.3 13,973.0 14,171.2 14,300.9 14,500.1 53 U.S. government securities 3,198.3 3,495.6 3,911.7 4,337.7 3,911.7 3,996.1 4,069.8 4,206.7 4,337.7 4,447.8 4,560.1 54 State and local obligations 939.4 1,004.4 1,055.6 1,101.4 1,055.6 1,061.5 1,072.5 1,089.3 1,101.4 1,110.3 1,126.1 SS Corporate and foreign bonds 1,350.4 1,506.0 1,610.7 1,766.2 1,610.7 1,649.9 1,693.5 1,725.0 1,766.2 1,774.6 1,802.2 56 Mortgages 3,330.7 3,650.9 3,911.5 4,042.1 3,911.5 3,948.1 4,003.1 4,016.7 4,042.1 4,075.8 4,104.4 57 Consumer credit 742.1 791.8 809.3 796.7 809.3 785.3 786.7 785.9 796.7 775.7 775.5 58 Bank loans n.e.c 767.7 819.6 815.1 788.0 815.1 805.3 798.7 793.2 788.0 775.8 779.1 59 Open market paper 513.4 579.2 609.9 565.9 609.9 608.8 583.6 572.0 565.9 573.7 578.4 60 Other loans 801.9 827.5 839.9 773.2 839.9 814.9 801.4 784.2 773.2 767.1 774.3 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables L.2 through L.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A43 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1 Billions of dollars, except as noted, end of period 1990 1991 1992 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998888 11998899 11999900 11999911 Q4 Ql Q2 Q3 Q4 Ql Q2 CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 11,643.9 12,674.9 13,563.6 14,171.2 13,563.6 13,669.9 13,809.3 13,973.0 14,171.2 14,300.9 14,500.1 2 Private domestic nonfinancial sectors 2,185.5 2,440.5 2,644.2 2,658.2 2,644.2 2,634.2 2,653.8 2,648.2 2,658.2 2,642.4 2,631.3 3 Households 1,485.1 1,710.1 1,882.3 1,860.8 1,882.3 1,875.1 1,881.7 1,875.3 1,860.8 1,859.2 1,837.2 4 Nonfarm noncorporate business 57.2 56.4 55.0 53.2 55.0 53.9 53.4 52.9 53.2 51.9 51.3 5 Nonfinancial corporate business 167.4 180.3 186.9 208.1 186.9 174.6 189.9 190.1 208.1 199.9 208.6 6 State and local governments 475.8 493.7 519.9 536.2 519.9 530.6 528.8 530.0 536.2 531.3 534.2 7 U.S. government 213.2 205.1 238.7 246.2 238.7 245.5 252.9 252.0 246.2 250.1 248.4 8 Foreign 653.2 734.2 792.4 848.8 792.4 797.1 810.0 819.3 848.8 871.1 907.2 9 Financial sectors 8,592.0 9,295.1 9,888.3 10,418.0 9,888.3 9,993.0 10,092.7 10,253.3 10,418.0 10,537.3 10,713.3 10 Sponsored credit agencies 367.7 367.2 383.6 397.7 383.6 388.5 382.7 389.5 397.7 419.9 431.0 11 Mortgage pools 745.3 871.0 1,019.9 1,158.5 1,019.9 1,050.3 1,088.4 1,124.8 1,158.5 1,182.4 1,219.0 12 Monetary authority 240.6 233.3 241.4 272.5 241.4 247.3 253.7 264.7 272.5 271.8 282.6 13 Commercial banking 2,476.3 2,643.9 2,769.3 2,853.3 2,769.3 2,780.2 2,796.6 2,817.8 2,853.3 2,860.3 2,881.3 14 U.S. commercial banks 2,231.9 2,368.4 2,463.6 2,502.5 2,463.6 2,470.8 2,480.0 2,488.7 2,502.5 2,513.7 2,521.5 15 Foreign banking offices 215.6 242.3 270.8 319.2 270.8 275.6 284.4 297.5 319.2 313.4 327.0 16 Bank affiliates 13.4 16.2 13.4 11.9 13.4 12.3 11.3 11.6 11.9 13.6 12.8 17 Banks in U.S. possession 15.4 17.1 21.6 19.7 21.6 21.6 20.9 20.0 19.7 19.7 19.9 18 Private nonbank finance 4,762.1 5,179.7 5,474.1 5,735.9 5,474.1 5,526.8 5,571.3 5,656.5 5,735.9 5,803.0 5,899.4 19 Thrift institutions 1,572.0 1,484.9 1,335.5 1,190.6 1,335.5 1,287.8 1,248.4 1,205.1 1,190.6 1,164.5 1,153.3 20 Savings and loan associations 1,184.2 1,088.9 945.1 804.2 945.1 901.3 866.3 826.1 804.2 771.1 752.4 21 Mutual savings banks 240.6 241.1 227.1 211.5 227.1 224.1 216.4 208.7 211.5 213.4 212.5 22 Credit unions 147.2 154.9 163.4 174.9 163.4 162.3 165.7 170.2 174.9 180.0 188.4 23 Insurance 1,932.6 2,140.3 2,329.1 2,544.6 2,329.1 2,392.0 2,448.8 2,511.7 2,544.6 2,584.7 2,635.5 24 Life insurance companies 920.0 1,013.1 1,116.5 1,199.6 1,116.5 1,148.5 1,183.7 1,201.4 1,199.6 1,224.3 1,250.0 25 Other insurance companies 287.9 317.5 344.0 378.7 344.0 352.2 361.4 370.7 378.7 387.0 392.5 26 Private pension funds 358.5 394.7 431.3 491.9 431.3 441.8 442.0 469.6 491.9 487.2 497.5 27 State and local government retirement funds . 366.2 414.9 437.4 474.3 437.4 449.5 461.7 470.1 474.3 486.2 495.5 28 Finance n.e.c 1,257.5 1,554.5 1,809.4 2,000.7 1,809.4 1,847.0 1,874.1 1,939.7 2,000.7 2,053.7 2,110.5 29 Finance companies 559.2 617.1 658.7 645.6 658.7 649.4 651.7 647.4 645.6 641.0 641.6 30 Mutual funds 283.4 307.2 360.2 450.5 360.2 374.6 394.4 421.4 450.5 480.3 520.4 31 Money market funds 224.7 291.8 372.7 402.8 372.7 411.4 389.9 389.5 402.8 423.1 413.5 32 Real estate investment trusts (REITs) 7.8 8.4 7.7 7.0 7.7 7.4 7.4 7.2 7.0 6.8 6.7 33 Brokers and dealers 46.7 142.9 177.9 226.9 177.9 163.6 180.4 214.3 226.9 228.9 243.9 34 Securitized credit obligation (SCOs) issuers .. 135.7 187.1 232.3 268.0 232.3 240.6 250.3 259.9 268.0 273.6 284.4 RELATION OF LIABILITIES TO FINANCIAL ASSETS 35 Total credit market debt 11,643.9 12,674.9 13,563.6 14,171.2 13,563.6 13,669.9 13,809.3 13,973.0 14,171.2 14,300.9 14,500.1 Other liabilities 36 Official foreign exchange 27.1 53.6 61.3 55.4 61.3 56.6 53.6 52.9 55.4 52.7 54.4 37 Treasury currency and special drawing rights certificates 19.8 23.8 26.3 26.3 26.3 26.0 26.1 26.2 26.3 26.3 26.4 38 Life insurance reserves 325.5 354.3 380.0 402.0 380.0 385.0 392.3 397.2 402.0 407.3 413.4 39 Pension fund reserves 2,755.0 3,210.5 3,303.0 3,882.3 3,303.0 3,520.6 3,555.8 3,720.8 3,882.3 3,889.4 3,962.7 40 Interbank claims 46.9 32.4 64.0 63.6 64.0 57.8 34.0 58.4 63.6 63.1 58.1 41 Deposits at financial institutions 4,354.7 4,644.6 4,741.4 4,799.4 4,741.4 4,776.4 4,765.7 4,769.5 4,799.4 4,812.9 4,817.9 42 Checkable deposits and currency 882.8 888.6 932.8 1,008.5 932.8 905.1 933.1 948.3 1,008.5 984.8 1,033.9 43 Small-time and savings 2,169.2 2,265.4 2,325.3 2,342.0 2,325.3 2,355.3 2,351.5 2,339.7 2,342.0 2,344.8 2,321.6 44 Large-time 596.9 615.4 548.7 487.9 548.7 553.1 532.6 517.1 487.9 468.6 437.3 45 Money market fund shares 338.0 428.1 498.4 539.6 498.4 551.7 532.8 533.1 539.6 571.0 557.2 46 Security repurchase agreements 325.0 403.2 379.7 363.4 379.7 348.6 354.0 368.9 363.4 376.4 396.7 47 Foreign deposits 42.8 43.9 56.6 58.0 56.6 62.6 61.7 62.4 58.0 67.2 71.2 48 Mutual fund shares 478.3 566.2 602.1 812.4 602.1 661.6 683.7 744.2 812.4 859.3 936.7 49 Security credit 118.3 133.9 137.4 188.9 137.4 132.5 137.5 158.1 188.9 195.1 183.3 50 Trade debt 838.4 903.9 938.0 951.6 938.0 914.1 920.2 946.3 951.6 950.3 960.3 51 Taxes payable 79.8 81.8 81.4 72.2 81.4 75.1 65.8 71.8 72.2 73.9 67.2 52 Miscellaneous 2,312.0 2,508.3 2,678.8 2,791.7 2,678.8 2,700.3 2,707.9 2,743.2 2,791.7 2,789.2 2,817.9 53 Total liabilities 22,999.5 25,188.3 26,577.2 28,217.1 26,577.2 26,975.8 27,151.8 27,661.5 28,217.1 28,420.4 28,798.6 Financial assets not included in liabilities (+) 54 Gold and special drawing rights 40.0 40.3 41.3 41.6 41.3 40.7 40.7 41.1 41.6 41.3 42.0 55 Corporate equities 3,141.6 3,819.7 3,506.6 4,630.0 3,506.6 4,047.2 4,104.7 4,338.5 4,630.0 4,502.5 4,565.8 56 Household equity in noncorporate business 2,373.1 2,524.9 2,449.4 2,372.6 2,449.4 2,478.4 2,509.5 2,496.0 2,372.6 2,384.5 2,370.1 Floats not included in assets (-) 57 U.S. government checking deposits 5.9 6.1 15.0 4.7 15.0 5.2 8.3 19.8 4.7 .3 -.2 58 Other checkable deposits 29.6 26.5 28.9 30.9 28.9 26.7 29.9 23.6 30.9 22.0 20.1 59 Trade credit -164.3 -159.7 -148.0 -123.2 -148.0 -147.0 -146.7 -143.0 -123.2 -119.1 -131.1 Liabilities not identified as assets (-) 60 Treasury currency -4.1 -4.3 -4.1 -4.8 -4.1 -4.6 -4.7 -4.7 -4.8 -4.9 -4.9 61 Interbank claims -28.5 -31.0 -32.0 -4.2 -32.0 -15.5 -9.9 -4.7 -4.2 -1.8 -3.6 62 Security repurchase agreements -12.4 11.5 -23.3 -13.7 -23.3 -39.6 -25.8 -10.6 -13.7 -6.4 8.8 63 Taxes payable 21.4 20.6 21.8 18.8 21.8 21.4 11.7 17.5 18.8 17.0 9.6 64 Miscellaneous -134.6 -253.3 -249.7 -307.2 -249.7 -260.9 -242.8 -301.8 -307.2 -304.4 -321.5 65 Totals identified to sectors as assets 28,841.1 31,956.8 32,966.0 35,659.8 32,966.0 33,956.5 34,186.7 34,941.0 35,659.8 35,746.0 36,199.2 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical 2. Excludes corporate equities and mutual fund shares, release, tables L.6 through L.7. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • December 1992 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, 1987= 100, except as noted 1991 1992 MMeeaassuurree 11998899 11999900 11999911 Dec. Jan. Feb. Mar. Apr. May June Julyr Aug. 1 Industrial production1 108.1 109.2 107.1 106.6 107.2 107.6 108.1 108.9 108.5 109.3 108.9 108.6 Market groupings 2 Products, total 108.6 110.1 108.1 107.5 108.1 108.5 109.0 109.7 109.01 109.5 109.3 109.1 i Final, total 109.1 110.9 109.6 108.7 109.4 109.8 110.6 111.4 110.5r 111.0 110.9 110.8 4 Consumer goods 106.7 107.3 107.5 108.1 108.8 109.3 110.1 110.8 109.6r 110.3 110.1 110.2 5 Equipment 112.3 115.5 112.2 109.4 110.2 110.4 111.3 112.3 111.6r 111.9 112.1 111.5 6 Intermediate 106.8 107.7 103.4 103.9 104.0 104.4 103.9 104.4 104.4r 104.8 104.4 104.0 / Materials 107.4 107.8 105.5 105.2 105.8 106.1 106.8 107.7 107.6r 108.9 108.2 107.9 Industry groupings 8 Manufacturing 108.9 109.9 107.4 107.4 108.1 108.5 109.0 109.9 109.6 110.1 109.8 109.4 9 Capacity utilization, manufacturing (percent)2 83.9 82.3 78.2 77.0 77.4 77.5 77.7 78.2 77.8 78.0 77.7 77.2 10 Construction contracts3 105.2 95.3 89.5 95.0 100.0 96.0 93.0 86.0 90.0 89.0 90.0 n.a. 11 Nonagricultural employment, total4 106.0 107.5r 106.0r 105.8 105.8 105.9 106.0 106.2 106.1 106.3 106.1 106.1 12 Goods-producing, total 102.5 101.0 96.4 95.2 95.2 95.2 95.2 95.3 95.0 94.9 94.6 94.4 13 Manufacturing, total 102.2 100.5 97 Xf 96.1 96.1 96.1 96.1 96.1 95.9 95.9 95.4 95.3 14 Manufacturing, production worker 102.3 ioo.r 96. lr 95.5 95.6 95.7 95.7 95.7 95.4 95.5 94.9 94.8 15 Service-producing 107.1 109.5r l.lr 109.1 109.2 109.3 109.5 109.6 109.6 109.9 109.8 109.8 16 Personal income, total 115.2 122.7 127.0 130.0 131.2 131.8 131.9 132.4 132.5 132.8 132.2 1/ Wages and salary disbursements 114.4 121.3 124.4 126.2 127.6 128.0 127.8 128.6 128.5 128.7 129.6 18 Manufacturing 110.6 113.5 113.6 113.7 114.5 114.6 115.0 115.5 ns.r 115.3 115.0 19 Disposable personal income 115.1 122.9 128.0 131.4 132.6 133.8 133.8 134.2 134.4 134.6 133.7 20 Retail sales6 113.5 118.7 119.8 123.1 124.6 123.1 123.5 124.1 124.0 125.4 125.3 125.7 Prices7 21 Consumer (1982-84= 100) 124.0 130.7 136.2 138.1 138.6 139.3 139.5 139.7 140.2 140.5 140.9 141.3 22 Producer finished goods (1982=100) 113.6 119.2 121.7 121.8 122.1 122.2 122.4 123.2r 123.7 123.7 123.5 123.3 1. A major revision of the industrial production index and the capacity 6. Based on data from U.S. Bureau of the Census, Survey of Current Business. utilization rates was released in April 1990. See "Industrial Production: 1989 7. Based on data not seasonally adjusted. Seasonally adjusted data for changes Developments and Historical Revision," Federal Reserve Bulletin, vol. 76 (April in the price indexes can be obtained from the Bureau of Labor Statistics, U.S. 1990), pp. 187-204. Department of Labor, Monthly Labor Review. 2. Ratio of index of production to index of capacity. Based on data from the NOTE. Basic data (not indexes) for series mentioned in notes 4, 5,and 6, and Federal Reserve, DRI McGraw-Hill, U.S. Department of Commerce, and other indexes for series mentioned in notes 3 and 7 can also be found in the Survey of sources. Current Business. 3. Index of dollar value of total construction contracts, including residential, Figures for industrial production for the latest month are preliminary, and many nonresidential, and heavy engineering, from McGraw-Hill Information Systems figures for the three months preceding the latest month have been revised. See Co., F.W. Dodge Division. "Recent Developments in Industrial Capacity and Utilization," Federal Reserve 4. Based on data from U.S. Department of Labor, Employment and Earnings. Bulletin, vol. 76 (June 1990), pp. 411-35. Series covers employees only, excluding personnel in the armed forces. 5. Based on data from U.S. Department of Commerce, Survey of Current Business. 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 1992 CCaatteeggoorryy 11998899 11999900 11999911 Jan. Feb. Mar. Apr. May June July Aug. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 188,601 190,216 191,883 192,906 193,036 193,168 193,295 193,431 193,588 193,749 193,893 2 Labor force (including Armed Forces)1 126,077 126,954 127,421 128,309 128,604 128,830 129,148 129,525 129,498 129,396 129,219 3 Civilian labor force 123,869 124,787 112255,,330033 126,287 112266,,559900 112266,,883300 112277,,116600 112277,,554499 112277,,553322 112277,,443377 112277,,227733 Employment 4 Nonagricultural industries 114,142 114,728 114,644 113,811 114,155 114,465 114,478 114,322 114,568 114,519 114,459 5 Agriculture 3,199 3,186 3,233 3,232 3,194 33,,220099 33,,117788 33,,225522 33,,220044 33,,221188 33,,224422 Unemployment 6 Number 6,528 6,874 8,426 9,244 9,242 9,155 9,504 9,975 9,760 9,700 9,572 7 Rate (percent of civilian labor force) — 5.3 5.5 6.7 7.3 7.3 7.2 7.5 7.8 7.7 7.6 7.5 8 Not in labor force 62,524 63,262 64,462 64,597 64,432 64,338 64,147 63,906 64,090 64,353 64,674 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 108,329 109,872 108,310 108,142 108,200 108,377 108,496 108,423 108,594' 108,466r 108,409 10 Manufacturing 19,442 19,117 18,455 18,290 18,278 18,279 18,275 18,236 18,242r 18,150 18,124 11 Mining 693 710 691 653 651 646 641 634 633 628r 629 12 Contract construction 5,187 5,133 4,685 4,582 4,603 4,605 4,632 4,600 4,584 4,586r 4,565 13 Transportation and public utilities 5,644 5,808 5,772 5,753 5,754 5,746 5,745 5,745 5,742 5,728r 5,737 14 Trade 25,770 25,877 25,328 25,146 25,089 25,170 25,143 25,144 25,156r 25,066r 25,057 15 Finance 6,695 6,729 6,678 6,673 6,675 6,682 6,681 6,672 6,660"^ 6,663r 6,668 16 Service 27,120 28,130 28,323 28,584 28,643 28,707 28,833 28,854 28,971r 28,964r 29,036 17 Government 17,779 18,304 18,380 18,461 18,507 18,542 18,546 18,538 18,606r 18,681r 18,593 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 U.S. Department of Labor, Employment and 3. Includes all full- and part-time employees who worked during, or received Earnings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • December 1992 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1991 1992 1991 1992 1991 1992 Q4 Qi Q2r Q3 Q4 Ql Q2 Q3 Q4 Ql Q2r Q3 Output (1987=100) Capacity (percent of 1987 output) Capacity utilization rate (percent) 1 Total industry 107.9 107.1 108.5 108.9 136.2 137.0 137.7 138.4 79.3 78.2 78.8 78.7 2 Manufacturing 108.6 108.0 109.5 109.8 138.9 139.7 140.6 141.4 78.2 77.3 77.9 77.7 3 Primary processing 104.1 104.0 105.4 106.1 128.8 129.3 129.6 129.9 80.8 80.5 81.3 81.7 4 Advanced processing 110.7 109.9 111.4 111.5 143.5 144.6 145.6 146.7 77.1 76.0 76.5 76.0 5 Durable goods 107.7 106.6 108.4 108.7 142.8 143.7 144.4 145.2 75.4 74.2 75.0 74.9 6 Lumber and products 95.1 98.5 96.7 98.0 125.7 125.9 126.1 126.3 75.7 78.2 76.7 77.6 7 Primary metals 102.5 102.2 101.7 104.5 129.3 129.1 128.3 127.5 79.2 79.2 79.2 81.9 8 Iron and steel 103.2 103.8 101.6 105.1 134.5 134.1 132.7 131.2 76.7 77.4 76.6 80.1 9 Nonferrous 101.4 100.0 101.7 103.7 121.9 122.1 122.2 122.3 83.2 81.9 83.3 84.8 10 Nonelectrical machinery 122.7 122.1 125.7 128.5 162.8 164.3 165.9 167.4 75.4 74.3 75.8 76.7 11 Electrical machinery 110.4 110.5 111.8 112.8 146.6 147.9 149.1 150.4 75.3 74.7 75.0 75.0 12 Motor vehicles and parts 97.0 91.7 100.5 98.4 135.6 136.2 136.7 137.2 71.5 67.3 7733..55 7711..77 13 Aerospace and miscellaneous transportation equipment 102.8 99.3 96.8 94.1 139.6 140.4 140.9 141.5 73.7 70.8 68.7 66.5 14 Nondurable goods 109.7 109.8 110.9 111.1 133.8 134.8 135.6 136.5 82.0 81.5 81.7 81.4 15 Textile mill products 104.1 104.3 106.2 106.8 118.3 118.8 119.2 119.7 88.0 87.9 89.0 89.2 16 Paper and products 107.4 105.8 106.7 107.4 118.7 119.3 119.9 120.5 90.5 88.7 89.0 89.1 17 Chemicals and products 113.0 113.6 116.8 117.1 142.3 143.4 144.3 145.1 79.4 79.2 81.0 8800..77 18 126.2 124.4 129.7 146.1 148.7 150 5 86 4 83 7 86 2 19 Petroleum products 107.1 107.7 109.2 107.1 121.4 121.4 121.5 121.6 88.2 88.7 89.9 88.1 20 Mining 99.7 97.9 98.9 99.3 114.7 114.7 114.7 114.8 87.0 85.3 86.2 86.6 21 Utilities 109.4 107.0 107.4 109.5 129.2 129.5 129.8 130.1 84.7 82.6 82.7 84.2 22 Electric 111.6 109.7 110.3 113.3 125.2 125.6 126.0 126.4 89.1 87.3 87.6 89.6 Previous cycle2 Latest cycle3 1991 1992 High Low High Low Sept. Feb. Mar. Apr. May Juner Julyr Aug/ Sept." Capacity utilization rate (percent) 1 Total industry 89.2 72.6 87.3 71.8 79.9 78.3 78.4 78.7 79.1 78.6 79.1 78.7 78.4 2 Manufacturing 88.9 70.8 87.3 70.0 78.8 77.4 77.5 77.7 78.2 77.8 78.0 77.7 77.2 3 Primary processing 92.2 68.9 89.7 66.8 81.3 80.4 80.8 81.1 81.5 81.4 82.5 81.5 81.0 4 Advanced processing 87.5 72.0 86.3 71.4 77.7 76.1 76.1 76.3 76.8 76.3 76.2 76.1 75.7 5 Durable goods 88.8 68.5 86.9 65.0 76.2 74.5 74.3 74.6 75.5 75.0 75.2 75.1 74.4 6 Lumber and products 90.1 62.2 87.6 60.9 75.8 78.5 78.8 77.1 77.2 75.6 78.7 77.7 76.5 7 Primary metals 100.6 66.2 102.4 46.8 79.3 79.5 78.7 78.5 79.5 79.7 82.7 82.2 81.0 8 Iron and steel 105.8 66.6 110.4 38.3 75.1 77.4 76.7 75.8 77.0 77.0 80.8 80.4 79.0 9 Nonferrous 92.9 61.3 90.5 62.2 85.7 82.9 81.8 82.6 83.3 83.9 85.5 84.8 84.0 10 Nonelectrical machinery 96.4 74.5 92.1 64.9 76.1 74.2 74.5 75.1 76.4 76.0 76.6 76.8 76.8 11 Electrical machinery 87.8 63.8 89.4 71.1 76.2 74.8 74.8 74.7 75.3 75.0 75.1 75.2 74.7 12 Motor vehicles and parts 93.4 51.1 93.0 44.5 73.6 68.9 69.1 72.2 75.1 73.3 7711..33 7722..33 7711..55 13 Aerospace and miscellaneous transportation equipment. 77.0 66.6 81.1 66.9 75.3 70.9 70.2 69.2 68.7 68.2 67.7 66.5 65.3 14 Nondurable goods 87.9 71.8 87.0 76.9 82.3 81.3 81.7 81.8 81.8 81.6 81.9 8811..22 81.0 15 Textile mill products 92.0 60.4 91.7 73.8 87.4 88.2 88.5 89.3 89.6 88.2 89.6 8888..88 89.2 16 Paper and products 96.9 69.0 94.2 82.0 91.4 87.6 88.5 89.3 88.3 89.3 91.1 88.1 88.2 17 Chemicals and products 87.9 69.9 85.1 70.1 79.6 79.1 79.9 80.4 81.1 81.3 81.1 8800..88 80.2 IK Plastics materials 102.0 50.6 90.9 63.4 87.0 8833..00 85.0 85.4 87.3 85 9 89 8 19 Petroleum products 96.7 81.1 89.5 68.2 89.4 8888..11 90.3 90.8 89.3 89.6 89.8 86.6 88.0 20 Mining 94.4 88.4 96.6 80.6 88.5 85.7 84.9 86.3 86.9 85.4 87.6 86.5 85.5 21 Utilities 95.6 82.5 88.3 76.2 85.1 82.2 83.1 83.4 82.7 82.1 84.1 83.2 85.3 22 Electric 99.0 82.7 88.3 78.7 90.8 86.8 88.1 88.2 87.5 87.0 89.5 88.4 91.1 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 GGrroouupp por- avg. tion Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Juner July* Aug.1" Sept.p Index (1987 = 100) MAJOR MARKETS 1 Total index 100.0 107.1 108.4 108.4 108.1 107.4 106.6 107.2 107.6 108.1 108.9 108.5 109.3 108.9 108.6 2 Products 60.8 108.1 108.9 109.0 109.0 108.4 107.5 108.1 108.5 109.0 109.7 109.0 109.5 109.3 109.1 3 Final products 46.0 109.6 110.4 110.6 110.6 109.9 108.7 109.4 109.8 110.6 111.4 110.5 111.0 110.9 110.8 4 Consumer goods, total 26.0 107.5 109.4 109.7 110.0 109.1 108.1 108.8 109.3 110.1 110.8 109.6 110.3 110.1 110.2 5 Durable consumer goods 5.6 102.3 107.7 107.5 106.0 104.6 101.3 105.3 106.2 107.9 111.1 109.2 108.5 108.8 108.1 6 Automotive products 2.5 97.8 106.5 106.7 103.6 101.3 94.2 101.6 103.6 106.5 110.6 108.0 106.4 106.0 106.2 7 Autos and trucks 1.5 90.2 103.0 105.1 99.0 96.7 84.3 94.3 95.7 102.5 107.8 104.0 100.5 100.0 100.4 8 Autos, consumer .9 84.6 94.6 92.6 89.8 88.2 79.1 84.8 81.9 93.1 98.6 97.6 92.3 86.2 90.2 9 Trucks, consumer .6 99.6 117.1 126.1 114.5 111.0 93.0 110.2 118.8 118.3 123.3 114.8 114.3 123.1 117.6 10 Auto parts and allied goods... 1.0 109.3 111.8 109.1 110.5 108.2 109.1 112.6 115.5 112.5 114.8 114.0 115.3 115.2 114.8 11 Other 3.1 105.8 108.7 108.1 108.0 107.2 106.9 108.3 108.3 109.1 111.5 110.2 110.1 111.0 109.6 12 Appliances, A/C, and TV .8 99.5 104.1 102.1 102.3 98.9 99.6 102.9 103.5 103.4 107.4 106.2 102.3 110.6 108.8 13 Carpeting and furniture .9 99.4 101.8 101.8 101.6 101.5 101.1 102.4 102.5 104.4 105.9 103.2 103.4 104.0 103.4 14 Miscellaneous home goods ... 1.4 113.4 115.6 115.6 115.2 115.5 114.7 115.0 114.7 115.2 117.3 116.9 118.8 115.8 114.1 15 Nondurable consumer goods 20.4 109.0 109.8 110.3 111.1 110.3 110.0 109.8 110.2 110.7 110.7 109.7 110.8 110.4 110.8 16 Foods and tobacco 9.1 106.7 107.8 107.8 108.1 107.0 107.3 107.4 107.8 107.6 107.7 107.2 108.5 108.4 108.6 17 Clothing 2.6 93.5 95.2 96.3 96.5 96.2 95.0 95.2 95.1 95.3 96.4 95.5 96.7 95.5 95.0 18 Chemical products 3.5 115.8 117.3 117.0 117.9 118.0 118.1 118.3 119.4 120.8 121.4 121.6 121.5 121.9 121.3 19 Paper products 2.5 123.6 124.8 125.6 126.4 126.8 126.8 124.7 124.6 125.1 124.3 121.7 121.9 121.8 122.3 20 Energy 2.7 108.5 106.7 108.5 112.0 109.3 106.8 106.4 107.0 108.9 107.2 104.8 107.4 105.6 108.4 21 Fuels .7 103.5 104.4 103.5 103.6 104.3 103.8 103.5 103.7 105.1 104.0 104.4 105.3 100.2 103.1 22 Residential utilities 2.0 110.4 107.6 110.3 115.1 111.2 108.0 107.5 108.2 110.3 108.4 105.0 108.2 107.6 110.4 23 Equipment 20.0 112.2 111.8 111.9 111.4 110.9 109.4 110.2 110.4 111.3 112.3 111.6 111.9 112.1 111.5 24 Business equipment 13.9 121.5 122.2 122.3 121.8 121.4 119.9 121.0 121.5 123.0 124.5 124.1 124.5 125.1 124.7 25 Information processing and related .. 5.6 131.5 130.3 131.7 133.4 134.0 134.1 134.6 136.0 137.9 139.2 140.4 141.9 142.9 143.4 26 Office and computing 1.9 155.5 152.2 156.0 157.8 159.1 160.6 162.4 164.9 168.2 170.5 174.0 178.0 180.5 184.0 27 Industrial 4.0 108.0 108.2 106.8 104.2 102.3 100.7 101.3 101.3 101.7 103.4 102.9 103.6 102.7 102.5 28 Transit 2.5 126.8 132.7 133.1 130.5 129.5 124.2 129.2 128.9 131.7 133.3 131.8 128.7 131.0 128.7 29 Autos and trucks 1.2 88.6 99.3 101.1 96.5 96.1 84.9 94.7 95.0 101.3 105.6 101.7 98.1 100.7 101.2 30 Other 1.9 113.6 114.2 113.6 113.8 114.1 113.1 112.2 112.2 113.2 115.0 111.5 111.9 112.9 111.9 31 Defense and space equipment 5.4 91.1 89.1 89.1 88.8 88.1 86.7 86.2 85.6 84.7 84.2 83.6 82.9 82.2 81.2 32 Oil and gas well drilling .6 93.3 80.1 79.0 78.1 75.8 71.8 73.9 76.2 79.2 79.2 74.6 78.6 75.0 74.3 33 Manufactured homes .2 85.5 86.2 86.3 87.0 87.9 98.4 99.7 98.7 100.7 100.3 97.1 112.0 106.1 106.3 34 Intermediate products, total 14.7 103.4 104.3 104.1 103.9 103.8 103.9 104.0 104.4 103.9 104.4 104.4 104.8 104.4 104.0 35 Construction supplies 6.0 96.0 96.5 95.4 95.9 95.0 95.5 96.0 96.7 96.5 97.8 97.2 98.0 97.9 96.8 36 Business supplies 8.7 108.4 109.7 110.1 109.4 110.0 109.9 109.6 109.7 109.0 109.0 109.4 109.6 108.8 109.0 37 Materials 39.2 105.5 107.5 107.4 106.6 105.8 105.2 105.8 106.1 106.8 107.7 107.6 108.9 108.2 107.9 38 Durable goods materials 19.4 107.1 109.3 108.8 108.6 108.1 107.0 108.1 108.3 108.7 110.4 110.2 111.1 111.1 110.4 39 Durable consumer parts 4.2 96.4 101.3 101.6 100.5 97.0 95.3 97.1 97.9 99.3 102.5 102.9 101.8 103.1 100.8 40 Equipment parts 7.3 114.4 113.9 113.6 113.7 114.2 114.1 115.2 115.1 114.7 116.2 116.2 117.5 117.2 117.0 41 Other 7.9 106.0 109.3 108.2 108.3 108.4 106.7 107.5 107.5 108.1 109.2 108.7 110.1 109.7 109.3 42 Basic metal materials 2.8 106.0 109.5 107.7 108.1 108.1 105.1 107.3 106.3 106.3 108.3 107.7 111.5 111.0 109.7 43 Nondurable goods materials 9.0 105.9 108.3 109.6 107.7 107.1 107.3 107.1 108.9 109.4 109.7 110.4 111.5 109.8 109.8 44 Textile materials 1.2 97.0 99.5 101.8 99.9 98.5 98.9 101.5 102.0 103.2 102.9 102.3 103.9 102.0 102.6 45 Pulp and paper materials 1.9 106.9 110.4 112.0 108.6 109.6 107.4 106.8 107.8 109.2 107.8 110.8 111.7 108.2 109.2 46 Chemical materials 3.8 106.1 108.2 109.9 108.3 107.0 107.6 106.6 109.3 109.9 111.2 110.9 112.7 111.3 110.7 47 Other 2.1 109.7 111.3 111.2 110.1 109.7 111.2 111.2 112.7 112.2 112.4 113.4 113.2 113.1 112.8 48 Energy materials 10.9 102.3 103.6 103.1 102.2 100.4 100.4 100.5 100.1 101.3 101.3 100.6 102.9 101.5 102.0 49 Primary energy 7.2 102.4 103.8 102.8 100.9 100.4 100.5 100.6 98.2 99.8 99.7 99.6 102.3 100.8 100.7 50 Converted fuel materials 3.7 102.0 103.4 103.8 104.5 100.5 100.2 100.4 103.8 104.1 104.3 102.6 104.1 103.0 104.4 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.3 107.6 108.6 108.5 108.3 107.7 107.3 107.6 107.9 108.3 109.0 108.6 109.6 109.1 108.9 52 Total excluding motor vehicles and parts... 95.3 107.9 108.8 108.8 108.7 108.0 107.6 107.8 108.2 108.6 109.2 108.8 109.9 109.3 109.2 53 Total excluding office and computing machines 97.5 105.8 107.3 107.2 106.8 106.1 105.3 105.8 106.1 106.6 107.4 106.8 107.6 107.1 106.7 54 Consumer goods excluding autos and trucks 24.5 108.6 109.8 109.9 110.7 109.8 109.6 109.7 110.2 110.6 110.9 109.9 110.9 110.7 110.8 55 Consumer goods excluding energy 23.3 107.4 109.7 109.8 109.8 109.1 108.3 109.1 109.6 110.3 111.2 110.1 110.6 110.6 110.4 56 Business equipment excluding autos and trucks 12.7 124.8 124.4 124.4 124.3 123.8 123.3 123.6 124.1 125.2 126.4 126.3 127.0 127.5 127.0 57 Business equipment excluding office and computing equipment 12.0 116.0 117.3 116.9 116.0 115.3 113.3 114.3 114.5 115.7 117.1 116.1 115.8 116.2 115.2 58 Materials excluding energy 28.4 106.7 109.0 109.1 108.3 107.8 107.1 107.8 108.5 108.9 110.2 110.3 111.3 110.7 110.2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • December 1992 2.13—Continued „ 1987 1991 11999922 Uroup SIC pro- 1991 code por- avg. tion Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Juner Julyr Aug.r Sept.p Index (1987 = 100) MAJOR INDUSTRIES 1 Total index 100.0 107.1 108.4 108.4 108.1 107.4 106.6 107.2 107.6 108.1 108.9 108.5 109.3 108.9 108.6 2 Manufacturing 84.4 107.4 108.9 109.0 108.6 108.1 107.4 108.1 108.5 109.0 109.9 109.6 110.1 109.8 109.4 3 Primary processing 26.7 102.4 104.4 104.7 104.1 103.5 103.6 103.9 104.5 105.0 105.6 105.6 107.1 105.9 105.4 4 Advanced processing 57.7 109.8 111.0 111.0 110.7 110.3 109.2 110.0 110.3 110.8 111.9 111.4 111.5 111.7 111.2 5 Durable goods 47.3 107.1 108.4 108.2 107.8 107.1 105.8 107.0 107.0 107.6 109.1 108.5 109.0 109.0 108.2 6 Lumber and products ... "'24 2.0 94.2 95.2 93.8 96.4 95.2 97.4 98.8 99.2 97.2 97.4 95.4 99.3 98.1 96.6 7 Furniture and fixtures ... 25 1.4 99.1 101.2 100.5 99.9 100.6 98.7 98.1 98.6 101.1 110033..33 100.3 100.8 110022..00 110000..44 8 Clay, glass, and stone products 32 2.5 94.9 94.4 94.4 92.8 93.0 92.8 94.6 95.0 95.6 96.7 96.6 96.5 97.2 97.0 9 Primary metals 33 3.3 99.5 102.3 102.6 103.5 101.3 102.5 102.7 101.4 100.9 102.0 102.1 105.6 104.8 103.1 10 Iron and steel 331,2 1.9 98.0 100.8 102.4 105.6 101.7 105.0 103.7 102.5 100.9 102.2 101.8 106.4 105.5 103.3 11 Raw steel .1 97.3 100.9 101.3 99.1 97.6 103.3 102.7 98.8 99.9 98.5 101.5 105.3 101.9 98.6 12 Nonferrous 333-6,9 1.4 101.5 104.4 102.9 100.5 100.8 98.9 101.2 99.9 100.9 101.8 102.5 104.5 110033..77 110022..88 13 Fabricated metal products 34 5.4 100.4 101.9 101.9 101.8 101.2 99.7 100.5 100.0 100.6 102.2 102.2 102.4 101.7 100.3 1144 Nonelectrical machinery. 35 8.6 123.5 123.1 123.5 122.8 121.9 121.4 121.9 122.9 124.1 126.7 126.4 127.9 112288..66 112288..99 15 Office and computing machines 357 2.5 155.5 152.2 155.9 157.8 159.1 160.5 162.4 164.9 168.2 170.5 174.0 178.0 180.5 184.0 1166 Electrical machinery 36 8.6 110.1 111.0 109.8 110.7 110.6 110.0 110.7 110.9 111.0 112.3 112.2 112.6 113.1 112.7 1177 equipment 37 9.8 98.6 102.2 102.4 99.7 98.0 93.8 96.8 96.5 98.0 99.6 98.2 9966..66 9966..55 9955..33 18 Motor vehicles and parts 371 4.7 90.4 99.5 100.4 95.9 94.6 87.1 93.8 94.2 98.5 102.7 100.4 97.7 9999..22 9988..33 19 Autos and light trucks 2.3 89.4 101.8 103.2 97.6 95.5 83.5 92.9 93.7 101.1 106.5 103.0 99.3 9977..99 9988..99 20 Aerospace and miscellaneous transportation equipment.. 372-6,9 5.1 106.0 104.6 104.3 103.1 101.2 99.8 99.6 98.6 97.4 96.8 96.3 95.6 94.1 92.6 2211 Instruments 38 3.3 118.2 118.1 118.2 118.7 119.0 118.3 118.6 118.6 119.0 119.8 118.5 118.6 118.5 117.7 22 Miscellaneous 39 1.2 119.3 121.5 120.6 120.7 121.0 121.2 120.0 120.0 118.9 118.4 117.8 120.1 118.3 117.9 23 Nondurable goods 37.2 107.9 109.6 110.1 109.6 109.5 109.5 109.6 110.4 110.7 110.9 111.0 111.6 110.9 110.8 24 Foods "20 8.8 108.6 109.5 109.4 110.1 109.6 109.2 109.6 110.2 109.6 109.3 109.0 110.2 110.4 110.5 25 Tobacco products 21 1.0 99.7 102.7 102.2 97.7 94.7 98.8 99.4 101.3 101.0 102.5 103.6 102.7 103.8 103.4 26 Textile mill products 22 1.8 100.5 103.2 105.5 104.4 102.5 103.1 104.7 105.3 106.3 106.8 105.3 107.1 106.3 106.9 27 Apparel products 23 2.4 96.2 98.1 98.7 98.8 99.0 97.5 97.7 97.8 98.0 99.0 98.1 99.3 97.7 96.5 28 Paper and products 26 3.6 105.1 108.0 109.0 106.1 107.0 107.1 104.6 105.8 107.0 105.8 107.3 109.6 106.1 106.5 29 Printing and publishing .. 27 6.4 112.3 113.3 114.4 114.2 114.5 114.8 114.4 113.8 113.7 113.4 113.0 112.3 112.3 112.2 30 Chemicals and products . 28 8.6 110.9 112.6 113.5 113.0 112.6 112.7 113.4 114.8 115.8 117.0 117.5 117.4 117.2 116.7 31 Petroleum products 29 1.3 107.5 108.6 106.0 106.7 108.6 106.6 106.9 109.7 110.3 110088..55 110088..99 109.1 110055..33 110077..00 32 Rubber and plastic products 30 3.0 110.0 113.8 113.2 112.6 113.0 113.2 114.0 115.4 116.5 117.1 117.3 118.4 117.7 117.9 33 Leather and products ... 31 .3 88.1 85.8 83.9 84.3 83.2 83.0 81.4 82.9 84.1 86.2 86.2 87.6 83.3 83.4 34 Mining 7.9 101.1 101.4 100.7 99.6 98.8 97.8 98.4 97.5 99.1 99.7 98.0 100.6 99.3 98.1 35 Metal "LO .3 150.2 153.1 146.5 151.5 154.0 144.2 152.9 155.8 154.2 166.4 154.0 164.1 165.7 165.8 36 Coal 11,12 1.2 109.2 110.1 107.9 108.4 107.6 107.3 107.9 103.0 104.0 107.6 98.6 112.0 107.5 104.3 37 Oil and gas extraction 13 5.7 95.8 96.0 96.0 94.1 93.0 92.4 92.7 91.9 94.2 93.4 93.9 94.0 93.0 92.0 38 Stone and earth minerals .. 14 .7 108.1 107.3 105.9 105.8 106.4 104.8 103.5 107.4 105.9 108.0 105.6 106.2 107.4 107.8 39 Utilities 7.6 109.2 109.7 109.4 111.0 107.9 106.8 106.4 107.7 108.2 107.3 106.7 109.3 108.2 111.0 40 Electric 49i,3PT 6.0 112.8 113.4 112.2 112.7 109.9 109.3 109.0 110.7 111.0 110.2 109.7 113.0 111.7 115.2 41 Gas 492,3PT 1.6 96.0 95.8 98.9 104.7 100.5 97.5 96.9 96.7 97.7 96.6 95.3 95.4 95.5 95.6 SPECIAL AGGREGATES 42 Manufacturing excluding motor vehicles and parts 79.8 108.4 109.5 109.5 109.3 108.9 108.6 108.9 109.3 109.6 110.3 110.1 110.8 111100..44 111100..00 43 Manufacturing excluding office and computing machines 82.0 106.0 107.6 107.6 107.1 106.6 105.8 106.5 106.8 107.2 108.1 107.6 108.1 107.7 107.2 Gross value (billions of 1982 dollars, annual rates) MAJOR MARKETS 44 Products, total 1,734.8 1,880.0 1,901.8 1,911.4 1,904.9 1,888.9 1,869.5 1,889.7 1,902.8 1,918.7 1,935.5 1,920.1 1,934.8 1,930.8 1,934.2 45 Final 1,350.9 1,481.8 1,501.5 1,510.0 1,504.1 1,488.0 1,468.7 1,490.8 1,501.5 1,518.2 1,532.1 1,519.1 1,530.1 1,528.1 1,533.5 46 Consumer goods 833.4 879.8 898.3 902.4 902.2 894.5 877.6 890.2 896.2 905.6 912.4 901.3 908.9 903.9 907.8 47 Equipment 517.5 602.0 603.3 607.6 601.8 593.5 591.1 600.6 605.3 612.7 619.7 617.8 621.2 624.2 625.7 48 Intermediate 384.0 398.2 400.3 401.4 400.8 401.0 400.7 398.9 401.2 400.5 403.4 401.1 404.7 402.7 400.7 1. Data in this table also appear in the Board's G.17 (419) monthly 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 19k). 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 Nov. Dec. Jan. Feb. Mar. Apr. May June Julyr Aug. Private residential real estate activity (thousands of units, except as noted) NEW UNITS 1 Permits authorized 1,339 1,111 949 979 1,073 1,106 1,146 1,094 1,058 1,054 1,032 1,080 1,076 2 One-family 932 794 754 792 873 913 946 907 873 879 872 879 877 3 Two-or-more-family 407 317 195 187 200 193 200 187 185 175 160 201 199 4 Started 1,376 1,193 1,014 1,085 1,118 1,180 1,257 1,340 1,086 1,196 1,147 1,100 1,239 5 One-family 1,003 895 840 907 972 989 1,109 1,068 933 1,019 999 956 1,058 6 Two-or-more-family 373 298 174 178 146 191 148 272 153 177 148 144 181 7 Under construction at end of period1.. 850 711 606 633 633 640 629 657 655 653 643 634 641 8 One-family 535 449 434 454 458 466 464 482 484 484 483 479 485 9 Two-or-more-family 315 262 173 179 175 174 165 175 171 169 160 155 156 10 Completed 1,423 1,308 1,091 1,021 1,021 1,043 1,097 1,127 1,067 1,204 1,184 1,221 1,132 11 One-family 1,026 966 838 824 851 838 908 975 889 1,011 982 1,013 956 12 Two-or-more-family 396 342 253 197 170 205 189 152 178 193 202 208 176 13 Mobile homes shipped 198 188 171 171 176 192 197 197 199 189 194 211 198 Merchant builder activity in one-family units 14 Number sold 650 535 507 578 578 667 627 555 546 554R 581 607 570 15 Number for sale at end of period ... 365 321 283 286 283 281 269 277 274 272 274 273 272 Price of units sold (thousands of dollars)2 16 Median 120.4 122.3 120.0 118.5 122.0 120.0 117.2 120.0 120.0 111133..00"" 122.9 118.0 121.0 17 Average 148.3 149.0 147.0 141.7 143.0 144.2 144.8 144.8 145.0 146.0" 146.0 137.2 140.2 EXISTING UNITS (one-family) 18 Number sold 3,346 3,211 3,219 3,230 3,310 3,220 3,490 3,510 3,490 3,460 3,350 3,450 3,310 Price of units sold (thousands of dollars)2 19 Median 92.9 95.2 99.7 97.9 100.3 102.4 102.8 104.0 103.3 102.5 105.1 102.7 104.6 20 Average 118.0 118.3 127.4 124.9 127.3 130.5 128.8 130.2 130.6 130.6 133.7 132.2 132.2 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 443,401 442,066 400,955 401,247 398,736 407,121 411,767 421,512 427,585" 427,980" 426,730 427,478 424,032 22 Private 345,327 334,153 290,707 288,345 287,383 292,540 294,758 301,142 309,832" 306,999" 312,182 308,119 304,448 23 Residential 196,551 182,856 157,837 164,491 164,133 169,548 169,772 172,660 182,644" 182,892" 184,630 183,217 186,764 24 Nonresidential, total 148,776 151,297 132,870 123,854 123,250 122,992 124,986 128,482 127,188" 124,107" 127,552 124,902 117,684 25 Industrial buildings 20,412 23,849 22,281 21,566 22,411 21,258 21,651 23,721 21,335" 21,008" 20,285 20,472 17,671 26 Commercial buildings 65,496 62,866 48,482 41,612 40,898 41,196 41,591 42,108 40,712" 39,643" 43,310 39,788 35,278 27 Other buildings 19,683 21,591 20,797 20,114 20,480 19,751 20,630 21,479 21,409" 21,993 21,991 22,211 21,543 28 Public utilities and other 43,185 42,991 41,310 40,562 39,461 40,787 41,114 41,174 43,732" 41,463" 41,966 42,431 43,192 29 Public 98,071 107,909 110,247 112,901 111,353 114,581 117,009 120,370 117,753" 120,981" 114,548 119,359 119,584 30 Military 3,520 2,664 1,837 1,790 2,633 2,039 2,206 2,548 2,329 2,668 2,503 2,258 2,152 31 Highway 28,837 31,154 29,918 29,594 29,562 30,221 32,744 30,895 31,447" 32,633" 31,496 32,605 33,444 32 Conservation and development... 5,009 4,607 4,958 6,611 5,363 5,480 5,283 6,197 5,818" 5,767" 5,889 5,665 5,382 33 Other 60,705 69,484 73,534 74,906 73,795 76,841 76,776 80,730 78,159" 79,913" 74,660 78,831 78,606 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 • December 1992 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data except as noted Change from 12 Change from 3 months earlier months earlier (annual rate) Change from 1 month earlier IIInnndddeeexxx IIIttteeemmm llleeevvveeelll,,, 1991 1992 1992 AAAuuuggg 11999911 11999922 111999999222111 AAuugg.. AAuugg.. Sept. Dec. Mar. June Apr. May June July Aug. CONSUMER PRICES2 (1982-84= 100) 1 All items 3.4 3.0 3.2 3.5 2.6 2.6 .1 .3 .1 .3 .2 141.3 2 Food 2.1 1.8 2.7 1.5 -1.2 4.7 -.4 .1 -.1 .9 .4 138.5 3 Energy items -4.8 2.2 3.6 -6.9 12.5 .4 .6 2.0 .3 -.2 .0 105.9 4 All items less food and energy 4.5 3.3 3.1 4.8 2.8 2.5 .2 .2 .2 .2 .2 148.1 Commodities 4.3 2.5 .6 5.3 2.1 2.1 .4 .0 .2 .2 .2 133.1 6 Services 4.7 3.6 4.3 4.8 2.9 2.6 .1 .3 .3 .3 .1 156.8 PRODUCER PRICES (1982=100) 7 Finished goods .8 1.6 1.0 1.0 3.0 2.0 .2 .2 .1 .1 .3 123.3 8 Consumer foods -1.2 .4 -1.0 .3 -1.6 4.3 -,2R .R .0 .7 ..44 123.2 9 Consumer energy -3.5 2.3 -.5 -7.0 16.1 1.0 1.0" 2.R -.4 -.1 ..88 80.9 10 Other consumer goods 3.4 2.2 2.4 3.6 2.4 1.2 ,5R -,4R .2 -.1 .2 136.3 11 Capital equipment 2.7 1.4 1.9 3.5 .9 .9 .1 .2 .1 .0 128.0 Intermediate materials 12 Excluding foods and feeds -1.4 1.0 -1.7 .0 5.0 .7 .4 .7 .1 .0 .1 115.9 13 Excluding energy -.3 1.1 .0 1.7 1.3 1.3 ,2R .2 .2 .2 .0 122.3 Crude materials 14 Foods -7.0 .0 -4.9 11.8 1.5 -5.9 I.R .6R -1.7 -.4 .6 103.0 15 Energy -21.8 8.1 5.3 -26.6 44.8 21.8 3.2 2.3 1.1 .2 3.6 83.2 16 Other -10.3 3.9 -5.9 15.0 3.5 3.8 .8R — .2R 1.3 .1 -.5 130.5 1. Not seasonally adjusted. SOURCE. Bureau of Labor Statistics. 2. Figures for consumer prices are for all urban consumers and reflect a rental-equivalence measure of homeownership. 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 AAccccoouunntt 11998899 11999900 11999911 Q2 Q3 Q4 Ql Q2 GROSS DOMESTIC PRODUCT 1 Total 5,250.8 5,522.2 5,677.5 5,657.6 5,713.1 5,753.3 5,840.2 5,902.2 By source 2 Personal consumption expenditures 3,523.1 3,748.4 3,887.7 3,871.9 3,914.2 3,942.9 4,022.8 4,057.1 3 Durable goods 459.4 464.3 446.1 441.4 453.0 450.4 469.4 470.6 4 Nondurable goods 1,149.5 1,224.5 1,251.5 1,254.2 1,255.3 1,251.4 1,274.1 1,277.5 5 Services 1,914.2 2,059.7 2,190.1 2,176.3 2,205.9 2,241.1 2,279.3 2,309.0 6 Gross private domestic investment 832.3 799.5 721.1 710.2 732.8 736.1 722.4 773.2 7 Fixed investment 798.9 793.2 731.3 732.0 732.6 726.9 738.2 765.1 8 Nonresidential 568.1 577.6 541.1 545.8 538.4 528.7 531.0 550.3 9 Structures 193.3 201.1 180.1 185.2 175.6 169.7 170.1 170.3 10 Producers' durable equipment 374.8 376.5 360.9 360.6 362.8 358.9 360.8 380.0 11 Residential structures 230.9 215.6 190.3 186.2 194.2 198.2 207.2 214.8 12 Change in business inventories 33.3 6.3 -10.2 -21.8 .2 9.2 -15.8 8.1 13 Nonfarm 31.8 3.3 -10.3 -27.0 -1.2 14.5 -13.3 6.4 14 Net exports of goods and services -79.7 -68.9 -21.8 -15.3 -27.1 -16.0 -8.1 -37.1 15 Exports 508.0 557.0 598.2 594.3 602.3 622.9 628.1 625.4 16 Imports 587.7 625.9 620.0 609.6 629.5 638.9 636.2 662.5 17 Government purchases of goods and services 975.2 1,043.2 1,090.5 1,090.8 1,093.3 1,090.3 1,103.1 1,109.1 18 Federal 401.6 426.4 447.3 449.9 447.2 440.8 445.0 444.8 19 State and local 573.6 616.8 643.2 640.8 646.0 649.5 658.0 664.3 By major type of product 20 Final sales, total 5,217.5 5,515.9 5,687.7 5,679.4 5,712.9 5,744.2 5,855.9 5,894.1 21 Goods 2,063.6 2,160.1 2,192.8 2,200.9 2,194.9 2,188.4 2,233.6 2,233.2 22 Durable 891.2 920.6 907.6 916.8 910.8 905.7 923.6 932.3 23 Nondurable 1,172.5 1,239.5 1,285.1 1,284.1 1,284.1 1,282.7 1,310.0 1,300.8 24 Services 2,642.2 2,846.4 3,030.3 3,013.8 3,053.6 3,090.3 3,142.2 3,173.4 25 Structures 511.7 509.4 464.7 464.7 464.4 465.5 480.1 487.6 26 Change in business inventories 33.3 6.3 -10.2 -21.8 .2 9.2 -15.8 8.1 27 Durable goods 25.2 -.9 -19.3 -26.5 -7.0 -8.1 -19.3 9.5 28 Nondurable goods 8.1 7.2 9.0 4.8 7.2 17.3 3.5 -1.4 MEMO 29 Total GDP in 1987 dollars 4,838.0 4,877.5 4,821.0 4,817.1 4,831.8 4,838.5 4,873.7 4,892.4 NATIONAL INCOME 30 Total 4,249.5 4,468.3 4,544.2 4,529.2 4,555.4 4,599.1 4,679.4 4,716.5 31 Compensation of employees 3,100.2 3,291.2 3,390.8 3,379.6 3,407.0 3,433.8 3,476.3 3,506.3 32 Wages and salaries 2,586.4 2,742.9 2,812.2 2,804.3 2,824.4 2,845.0 2,877.6 2,901.3 33 Government and government enterprises 478.5 514.8 543.5 543.4 544.3 546.4 554.6 561.4 34 Other 2,107.9 2,228.0 2,268.7 2,260.9 2,280.0 2,298.6 2,323.0 2,339.9 35 Supplement to wages and salaries 513.8 548.4 578.7 575.2 582.6 588.7 598.7 605.0 36 Employer contributions for social insurance 261.9 277.4 290.4 289.1 292.0 293.7 299.4 301.5 37 Other labor income 251.9 271.0 288.3 286.1 290.6 295.0 299.2 303.6 38 Proprietors' income1 347.3 366.9 368.0 370.4 367.1 377.9 393.6 398.4 39 Business and professional1 307.0 325.2 332.2 329.1 337.6 340.0 353.6 359.9 40 Farm1 40.2 41.7 35.8 41.3 29.5 37.9 40.1 38.5 41 Rental income of persons2 -13.5 -12.3 -10.4 -12.3 -10.3 -6.6 -4.5 3.3 42 Corporate profits1 362.8 361.7 346.3 347.3 341.2 347.1 384.0 388.4 43 Profits before tax3 342.9 355.4 334.7 332.3 336.7 332.3 366.1 376.8 44 Inventory valuation adjustment -17.5 -14.2 3.1 9.9 -4.8 .7 -5.4 -15.5 45 Capital consumption adjustment 37.4 20.5 8.4 5.1 9.3 14.1 23.3 27.0 46 Net interest 452.7 460.7 449.5 444.4 450.5 446.9 430.0 420.0 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. U.S. Department of Commerce, Survey of Current Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics • December 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 Ql Q2 Q3 Q4 Ql PERSONAL INCOME AND SAVING 1 Total personal income 4,380.3 4,664.2 4,828.3 4,806.9 4,846.2 4,907.2 4,980.5 5,028.9 2 Wage and salary disbursements 2,586.4 2,742.8 2,812.2 2,804.7 2,824.4 2,845.0 2,877.6 2,901.3 3 Commodity-producing industries 724.2 745.6 737.4 734.6 738.8 741.5 736.8 743.1 4 Manufacturing 542.2 556.1 556.9 553.4 559.0 563.9 559.9 564.7 5 Distributive industries 607.0 634.6 647.4 647.0 651.1 652.9 660.9 662.9 6 Service industries 776.8 847.8 883.9 879.4 890.2 904.3 925.3 933.9 7 Government and government enterprises 478.5 514.8 543.6 543.8 544.3 546.4 554.6 561.4 8 Other labor income 251.9 271.0 288.3 286.1 290.6 295.0 299.2 303.6 9 Proprietors' income1 347.3 366.9 368.0 370.4 367.1 377.9 393.6 398.4 10 Business and professional 307.0 325.2 332.2 329.1 337.6 340.0 353.6 359.9 11 Farm 40.2 41.7 35.8 41.3 29.5 37.9 40.1 38.5 12 Rental income of persons2 -13.5 -12.3 -10.4 -12.3 -10.3 -6.6 -4.5 3.3 13 Dividends 126.5 140.3 137.0 136.7 135.6 134.3 133.9 136.6 14 Personal interest income 668.2 694.5 700.6 696.2 701.8 703.3 684.8 675.2 15 Transfer payments 625.0 685.8 771.1 762.4 777.1 799.8 842.7 859.7 16 Old-age survivors, disability, and health insurance benefits ... 325.1 352.0 382.0 378.9 384.2 390.6 405.7 412.1 17 LESS: Personal contributions for social insurance 211.4 224.8 238.4 237.4 240.1 241.5 246.8 249.3 18 EQUALS: Personal income 4,380.3 4,664.2 4,828.3 4,806.9 4,846.2 4,907.2 4,980.5 5,028.9 19 LESS: Personal tax and nontax payments 593.3 621.3 618.7 617.2 618.6 622.3 619.6 617.1 20 EQUALS: Disposable personal income 3,787.0 4,042.9 4,209.6 4,189.7 4,227.6 4,284.9 4,360.9 4,411.8 21 LESS: Personal outlays 3,634.9 3,867.3 4,009.9 3,994.4 4,036.6 4,065.5 4,146.3 4,179.5 22 EQUALS: Personal saving 152.1 175.6 199.6 195.3 191.0 219.4 214.6 232.3 MEMO Per capita (1987 dollars) 23 Gross domestic product 19,555.6 19,513.0 19,077.1 19,090.6 19,094.0 19,066.0 19,158.5 19,181.8 24 Personal consumption expenditures 13,028.9 13,043.6 12,824.1 12,837.6 12,847.9 12,802.6 12,930.2 12,893.3 25 Disposable personal income 14,005.0 14,068.0 13,886.0 13,891.0 13,876.0 13,913.0 14,017.0 14,021.0 26 Saving rate (percent) 4.0 4.3 4.7 4.7 4.5 5.1 4.9 5.3 GROSS SAVING 27 Gross saving 741.8 718.0 708.2 701.3 679.4 698.2 677.5 682.9 28 Gross private saving 819.4 854.1 901.5 896.9 884.9 934.8 950.1 968.1 29 Personal saving 152.1 175.6 199.6 195.3 191.0 219.4 214.6 232.3 30 Undistributed corporate profits1 86.9 75.7 75.8 78.1 69.0 78.3 104.0 97.7 31 Corporate inventory valuation adjustment -17.5 -14.2 3.1 9.9 -4.8 .7 -5.4 -15.5 Capital consumption allowances 32 Corporate 352.4 368.3 383.0 382.5 383.5 386.3 386.1 391.2 33 Noncorporate 228.0 234.6 243.1 241.0 241.4 250.7 245.3 247.0 34 Government surplus, or deficit (-), national income and product accounts -77.5 -136.1 -193.3 -195.6 -205.6 -236.6 -272.6 -285.2 35 Federal -122.3 -166.2 -210.4 -212.2 -221.0 -258.7 -289.2 -302.9 36 State and local 44.8 30.1 17.1 16.5 15.4 22.0 16.6 17.7 37 Gross investment 742.9 723.4 730.1 728.4 709.9 714.6 706.5 713.8 38 Gross private domestic 832.3 799.5 721.1 710.2 732.8 736.1 722.4 773.2 39 Net foreign -89.3 -76.1 9.0 18.2 -22.9 -21.5 -16.0 -59.4 40 Statistical discrepancy 1.1 5.4 21.9 27.1 30.5 16.4 29.0 30.9 1. With inventory valuation and capital consumption adjustments. SOURCE. U.S. Department of Commerce, Survey of Current Business. 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 1992 Q2 Q3 Q4 Ql Q2P 1 Balance on current account -101,142 -90,428 -3,682 2,431 -11,087 -7,218 -5,903 -17,788 Merchandise trade balance -115,668 -108,853 -73,436 -16,397 -20,174 -18,539 -17,222 -24,418 Merchandise exports 361,697 388,705 415,962 103,324 104,151 107,851 107,946 107,580 Merchandise imports -477,365 -497,558 -489,398 -119,721 -124,325 -126,390 -125,168 -131,998 Military transactions, net -6,837 -7,818 -5,524 -1,427 -995 -540 -624 -641 Other service transactions, net 32,604 39,873 50,821 12,209 13,018 13,676 14,468 13,613 Investment income, net 14,366 19,287 16,429 3,931 3,076 2,458 4,474 1,377 U.S. government grants -10,773 -17,597 24,487 8,214 -1,986 78 -2,620 -3,011 U.S. government pensions and other transfers -2,517 -2,945 -3,462 -796 -793 -1,080 -858 -1,140 Private remittances and other transfers -12,316 -12,374 -12,996 -3,303 -3,233 -3,271 -3,521 -3,568 11 Change in U.S. government assets other than official reserve assets, net (increase, -) 1,271 2,304 3,397 -420 3,180 -437 -38 -209 12 Change in U.S. official reserve assets (increase, -). -25,293 -2,158 5,763 1,014 3,877 1,225 -1,057 1,464 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -535 -192 -177 -190 6 -23 -172 -168 15 Reserve position in International Monetary Fund. 471 731 -367 72 -114 17 111 1 16 Foreign currencies -25,229 -2,697 6,307 1,132 3,986 1,232 -9% 1,631 17 Change in U.S. private assets abroad (increase, -). -90,923 -56,467 -71,379 -7,644 -17,426 -44,947 -3,155 -6,987 18 Bank-reported claims -51,255 7,469 -4,753 -1,846 2,403 -23,219 15,859 12,592 19 Nonbank-reported claims 11,398 -2,477 5,526 2,304 -298 1,269 4,764 20 U.S. purchases of foreign securities, net -22,070 -28,765 -45,017 -11,783 -12,403 -11,305 -8,703 -8,573 21 U.S. direct investments abroad, net -28,996 -32,694 -27,135 3,681 -7,128 -11,692 -15,075 -11,006 22 Change in foreign official assets in United States (increase, +) .. 8,489 33,908 18,407 -4,178 4,115 12,819 21,192 21,071 23 U.S. Treasury securities 149 29,576 15,815 -3,553 5,624 12,619 14,909 11,615 2 2 5 4 O O t t h h e e r r U U . . S S . . g g o o v v e e r r n n m m e e n n t t o li b a l b i i g l a it t i i e o s n s 1,3 1 8 4 3 6 1, 6 8 6 66 7 1 1 , , 3 6 0 0 1 0 -2 4 1 2 9 1 6 4 5 7 4 4 - 1 3 ,0 4 7 4 5 5 % 40 1, 5 6 0 9 3 9 26 Other U.S. liabilities reported by U.S. banks3 4,976 3,385 -1,668 -942 -2,732 -914 5,534 7,329 27 Other foreign official assets 1,835 -1,586 1,359 115 95 383 113 -75 28 Change in foreign private assets in United States (increase, +).. 205,205 65,471 48,573 7,137 18,818 36,110 -2,629 22,016 29 U.S. bank-reported liabilities3 63,382 16,370 -13,678 -27,411 8,508 23,465 -4,474 -5,133 30 U.S. nonbank-reported liabilities 5,565 4,906 -405 -1,275 1,575 725 1,942 31 Foreign private purchases of U.S. Treasury securities, net 29,618 -2,534 16,241 13,289 -1,306 1,408 -828 ' 16,288* 32 Foreign purchases of other U.S. securities, net 38,767 1,592 34,918 15,212 10,012 4,832 4,551 10,872 33 Foreign direct investments in United States, net 67,873 45,137 11,497 7,322 29 5,680 -3,820 5,989 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 35 Discrepancy 2,394 47,370 -1,078 1,660 -1,478 2,447 -8,410 -19,567 36 Due to seasonal adjustment 883 -6,137 613 4,023 343 37 Before seasonal adjustment 2,394 47,370 777 4,659 1,835 -12,433 -19,910 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -25,293 -2,158 5,763 1,014 3,877 1,225 -1,057 1,464 39 Foreign official assets in United States, excluding line 25 (increase, +) 8,343 32,042 16,807 -4,599 3,461 13,163 21,096 20,568 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) 10,738 1,707 -5,604 -2,699 -4,288 1,023 2,459 -2,205 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. U.S. Department of Commerce, Survey of Current Business. brokers and dealers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • December 1992 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data seasonally adjusted 1992 IItteemm 11998899 11999900 11999911 Feb. Mar. Apr. May June Julyr Aug." 1 Exports of domestic and foreign merchandise, (F.A.S. value), excluding grant-aid shipments 363,812 393,592 421,730 37,654 37,085 36,406 35,718 38,165 37,806 35,507 2 General imports (customs value), including merchandise for immediate consumption plus entries into bonded warehouses 473,211 495,311 487,129 40,948 42,668 43,469 42,859 44,893 45,082 44,512 3 Trade balance -109,399 -101,718 -65,399 -3,294 -5,584 -7,063 -7,141 -6,729 -7,276 -9,005 1. The Census basis data differ from merchandise trade data shown in table Jan. 1, 1987, Census data have been released forty-five days after the end of the 3.10, lines 3-5, U.S. International Transactions Summary, because of coverage month; the previous month is revised to reflect late documents. Total exports and and timing. On the export side, the largest difference is the exclusion of military the trade balance reflect adjustments for undocumented exports to Canada. sales (which are combined with other military transactions and reported sepa- Components may not sum to totals because of rounding. rately in table 3.10, line 6). On the import side, this table includes imports of gold, SOURCE. FT900, Summary of U.S. Export and Import Merchandise Trade ship purchases, imports of electricity from Canada, and other transactions; (U.S. Department of Commerce, Bureau of the Census). military payments are excluded and shown separately in table 3.10, line 6. Since 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1992 AAsssseett 11998899 11999900 11999911 Mar. Apr. May June July Aug. Sept.p 1 Total 74,609 83,316 77,719 74,657 74,712 74,587 77,092 77,370 78,474 78,527 2 Gold stock, including Exchange Stabilization Fund 11,059 11,058 11,057 11,057 11,057 11,057 11,059 11,059 11,059 11,059 3 Special drawing rights ,3 9,951 10,989 11,240 10,947 10,930 11,315 11,597 11,702 12,193 12,111 4 Reserve position in International Monetary Fund 9,048 9,076 9,488 8,994 8,968 9,175 9,381 9,625 9,762 9,778 5 Foreign currencies 44,551 52,193 45,934 43,659 43,757 43,040 45,055 44,984 45,460 45,579 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 1992 AAsssseett 11998899 11999900 11999911 Mar. Apr. May June July Aug. Sept.p 1 Deposits 589 369 968 262 206 217 219 264 297 546 Held in custody 2 U.S. Treasury securities2 224,911 278,499 281,107 300,277 303,413 307,562 307,337 316,431 318,328 306,971 3 Earmarked gold 13,456 13,387 13,303 13,304 13,304 13,295 13,268 13,261 13,261 13,241 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 1992 AAccccoouunntt 11998899 11999900 Feb. Mar. Apr. May June July Aug. ASSETS All foreign countries 1 Total payable in any currency 545,366 556,925 548,901 550,520" 562,212" 549,858" 564,816" 564,466 537,529 544,570 2 Claims on United States 198,835 188,496 176,301 178,188" 193,434" 177,992" 182,554" 183,933 171,911 163,101 3 Parent bank 157,092 148,837 137,509 142,181" 157,129" 143,790" 145,974" 147,626 136,287 128,331 4 Other banks in United States 17,042 13,2% 12,884 10,837 11,612 9,993 11,640 10,418 9,576 9,181 5 Nonbanks 24,701 26,363 25,908 25,170 24,693 24,209 24,940 25,889 26,048 25,589 6 Claims on foreigners 300,575 312,449 303,934 301,900 299,890" 302,916" 314,569" 311,990 311,578 321,262 7 Other branches of parent bank 113,810 135,003 111,729 108,052 112,190" 111,369 115,688 115,664 112,177 116,674 8 Banks 90,703 72,602 81,970 83,904 79,311 83,562" 85,923" 84,467 85,448 86,978 9 Public borrowers 16,456 17,555 18,652 18,421 18,328 18,743 19,194 20,162 19,645 20,423 10 Nonbank foreigners 79,606 87,289 91,583 91,523 90,061 89,242 93,764 91,697 94,308 97,187 11 Other assets 45,956 55,980 68,666 70,432 68,888 68,950 67,693" 68,543 54,040 60,207 12 Total payable in U.S. dollars 382,498 379,479 363,941 365,162" 381,113" 364,748" 370,290" 369,561 349,145 340,848 13 Claims on United States 191,184 180,174 169,662 172,539" 187,744" 173,337" 177,311" 177,638 166,507 157,471 14 Parent bank 152,294 142,962 133,476 138,916" 153,859" 141,264" 142,874" 144,287 133,120 124,805 15 Other banks in United States 16,386 12,513 12,025 10,006 10,956 9,255 11,012 10,016 9,135 8,876 16 Nonbanks 22,504 24,699 24,161 23,617 22,929 22,818 23,425 23,335 24,252 23,790 17 Claims on foreigners 169,690 174,451 167,010 163,623 163,877 162,%7" 167,054" 168,586 162,843 161,306 18 Other branches of parent bank 82,949 95,298 78,114 75,087 78,067 75,342 77,165 76,912 72,250 70,693 19 Banks 48,396 36,440 41,635 42,488 39,671 41,250" 41,845" 43,095 41,718 40,156 20 Public borrowers 10,961 12,298 13,685 13,136 13,217 12,994 12,994 13,723 13,320 13,661 21 Nonbank foreigners 27,384 30,415 33,576 32,912 32,922 33,381 35,050 34,856 35,555 36,7% 22 Other assets 21,624 24,854 27,269 29,000 29,492 28,444 25,925" 23,337 19,795 22,071 United Kingdom 23 Total payable in any currency 161,947 184,818 175,599 172,479 169,139" 170,775 174,925" 171,027 159,317 165,832 24 Claims on United States 39,212 45,560 35,257 34,655 37,015 35,451 37,369 38,0% 38,763 37,511 25 Parent bank 35,847 42,413 31,931 31,302 34,048 32,379 34,433 35,343 35,542 34,593 26 Other banks in United States 1,058 792 1,267 1,211 1,158 1,228 970 756 1,065 744 27 Nonbanks 2,307 2,355 2,059 2,142 1,809 1,844 1,966 1,997 2,156 2,174 28 Claims on foreigners 107,657 115,536 109,692 107,645 101,491" 104,467 107,795 104,270 105,990 108,895 29 Other branches of parent bank 37,728 46,367 35,735 33,924 33,463" 34,061 35,331 36,952 35,359 37,732 30 Banks 36,159 31,604 36,394 37,349 33,499 36,126 37,548 34,783 36,777 37,711 31 Public borrowers 3,293 3,860 3,306 3,144 3,060 3,108 3,165 2,995 3,128 3,046 32 Nonbank foreigners 30,477 33,705 34,257 33,228 31,469 31,172 31,751 29,540 30,726 30,406 33 Other assets 15,078 23,722 30,650 30,179 30,633 30,857 29,761" 28,661 14,564 19,426 34 Total payable in U.S. dollars 103,208 116,762 105,974 102,341 102,283 102,285 104,392" 102,737 98,828 99,610 35 Claims on United States 36,404 41,259 32,418 31,788 34,464 33,298 35,185 35,376 36,133 34,948 36 Parent bank 34,329 39,609 30,370 29,724 32,645 31,022 33,059 33,751 33,936 32,786 37 Other banks in United States 843 334 822 678 725 853 677 627 785 625 38 Nonbanks 1,232 1,316 1,226 1,386 1,094 1,423 1,449 998 1,412 1,537 39 Claims on foreigners 59,062 63,701 58,791 55,985 52,306 54,129 56,615 56,888 56,264 55,812 40 Other branches of parent bank 29,872 37,142 28,667 26,747 25,933 25,922 27,482 28,541 26,751 26,825 41 Banks 16,579 13,135 15,219 15,438 13,154 14,829 15,348 15,380 15,930 15,565 42 Public borrowers 2,371 3,143 2,853 2,657 2,623 2,545 2,463 2,474 2,653 2,353 43 Nonbank foreigners 10,240 10,281 12,052 11,143 10,5% 10,833 11,322 10,493 10,930 11,069 44 Other assets 7,742 11,802 14,765 14,568 15,513 14,858 12,592" 10,473 6,431 8,850 Bahamas and Cayman Islands 45 Total payable in any currency 176,006 162,316 168,326 169,134" 175,893" 162,871" 167,139" 168,963 153,691 144,089 46 Claims on United States 124,205 112,989 115,244 115,562" 122,762" 112,080" 115,633" 114,467 102,850 94,595 47 Parent bank 87,882 77,873 81,520 84,661" 91,549" 82,823" 84,041" 83,316 72,107 64,454 48 Other banks in United States 15,071 11,869 10,907 8,%9 9,809 8,115 9,729 9,118 8,045 8,060 49 Nonbanks 21,252 23,247 22,817 21,932 21,404 21,142 21,863 22,033 22,698 22,081 50 Claims on foreigners 44,168 41,356 45,229 44,033 44,285 41,929" 42,828" 45,600 41,886 41,315 51 Other branches of parent bank 11,309 13,416 11,098 11,528 11,278 10,156 9,311 9,392 8,678 8,5% 52 Banks 22,611 16,310 20,174 19,311 19,645 18,406" 19,658" 21,548 18,837 17,570 53 Public borrowers 5,217 5,807 7,161 6,545 6,599 6,332 6,459 7,084 6,728 7,125 54 Nonbank foreigners 5,031 5,823 6,7% 6,649 6,763 7,035 7,400 7,576 7,643 8,024 55 Other assets 7,633 7,971 7,853 9,539 8,846 8,862 8,678" 8,8% 8,955 8,179 56 Total payable in U.S. dollars 170,780 158,390 163,771 164,710" 171,320" 158,196" 162,066" 163,313 147,905 138,348 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 • December 1992 3.14 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data1—Continued 1992 11998899 11999900 11999911 Feb. Mar. Apr. May June July Aug. LIABILITIES All foreign countries 57 Total payable in any currency 545,366 556,925 548,901 550,520r 562,212' 549,858' 564,816' 564,466 537,529 544,570 58 Negotiable certificates of deposit (CDs) 23,500 18,060 16,284 15,988 14,498 12,757' 14,010' 13,040 12,758 14,246 59 To United States 197,239 189,412 198,121 191,047r 210,357r 196,635' 198,897' 204,929 192,087 179,138 60 Parent bank 138,412 138,748 136,431 123,775 142,551 138,273' 136,195' 143,474 133,051 126,747 61 Other banks in United States 11,704 7,463 13,260 12,674 14,137 15,075 13,944 14,009 11,833 10,898 62 Nonbanks 47,123 43,201 48,430 54,598r 43,287' 48,758' 47,446 47,203 41,493 63 To foreigners 296,850 311,668 288,254 299,046 292,523r 2%,580 308,394 302,376 301,943 314,702 64 Other branches of parent bank ... 119,591 139,113 112,033 108,744 113,314 111,968 115,235 116,878 114,226 120,292 65 Banks 76,452 58,986 63,097 71,346 62,924r 65,055 68,391 65,865 65,419 68,366 66 Official institutions 16,750 14,791 15,596 16,972 15,697 16,083 19,465 16,399 18,058 18,241 67 Nonbank foreigners 84,057 98,778 97,528 101,984 100,588 103,474 105,303 103,234 104,240 107,803 68 Other liabilities 27,777 37,785 46,242 44,439 44,834 43,886 43,515' 44,121 30,741 36,484 69 Total payable in U.S. dollars 396,613 383,522 370,561 363,744r 380,384r 365,920' 373,679' 374,506 354,666 346,278 70 Negotiable CDs 19,619 14,094 11.909 11,515 10,278 8,470' 9,643' 8,475 8,531 8,755 71 To United States 187,286 175,654 185,286 179,340r 198,349' 185,533' 187,438' 192,792 179,395 166,309 72 Parent bank 132,563 130,510 129,669 117,272 135,761 131,844' 130,007' 136,273 125,647 119,302 73 Other banks in United States 10,519 6,052 11,707 11,532 13,036 14,217 12,840 13,251 10,816 9,835 74 Nonbanks 44,204 39,092 43.910 50,536r 49,552r 39,472' 44,591' 43,268 42,932 37,172 75 To foreigners 176,460 179,002 158,993 156,744 156,216 157,139 162,011 158,532 155,352 157,522 76 Other branches of parent bank ... 87,636 98,128 76,601 74,466 77,492 75,780 77,000 77,608 73,699 74,037 77 Banks 30,537 20,251 24,156 23,665 21,910 22,569 24,063 23,470 22,955 22,973 78 Official institutions 9,873 7,921 10,304 10,652 9,625 10,413 13,102 10,119 11,543 10,713 79 Nonbank foreigners 48,414 52,702 47,932 47,961 47,189 48,377 47,846 47,335 47,155 49,799 80 Other liabilities 13,248 14,772 14,373 16,145 15,541 14,778 14,587' 14,707 11,388 13,692 United Kingdom 81 Total payable in any currency .. 161,947 184,818 175,599 172,479 169,139' 170,775 174,925' 171,027 159,317 165,832 82 Negotiable CDs 20,056 14,256 11,333 10,581 9,677 7,324 8,458 7,612 7,731 8,083 83 To United States 36,036 39,928 37,720 30,631 35,364 36,610 33,236 36,660 37,164 35,527 84 Parent bank 29,726 31,806 29,834 23,464 27,937 29,317 25,637 28,201 29,104 27,695 85 Other banks in United States 1,256 1,505 1,438 1,891 1,201 2,011 1,638 1,326 1,315 1,632 86 Nonbanks 5,054 6,617 6,448 5,276 6,226 5,282 5,961 7,133 6,745 6,200 87 To foreigners 92,307 108,531 98,167 104,432 96,566' 99,804 106,603 100,340 100,738 104,892 88 Other branches of parent bank 27,397 36,709 30,054 27,864 27,937 28,239 30,429 31,464 30,205 31,234 89 Banks 29,780 25,126 25,541 30,686 25,881' 27,046 27,549 25,315 25,155 26,435 90 Official institutions 8,551 8,361 9,670 10,685 9,277 9,539 12,732 10,167 11,091 10,699 91 Nonbank foreigners 26,579 38,335 32,902 35,197 33,471 34,980 35,893 33,394 34,287 36,524 92 Other liabilities 13,548 22,103 28,379 26,835 27,532 27,037 26,628' 26,415 13,684 17,330 93 Total payable in U.S. dollars ... 108,178 116,094 108,755 100,882 101,602 100,799 102,783' 101,901 97,565 99,092 94 Negotiable CDs 18,143 12,710 10,076 9,061 8,562 6,136 6,967 5,750 6,139 5,890 95 To United States 33,056 34,697 33,003 26,261 30,993 32,510 28,936 32,300 32,178 30,357 96 Parent bank 28,812 29,955 28,260 21,788 26,272 27,904 24,435 26,720 27,351 25,873 97 Other banks in United States 1,065 1,156 1,177 1,639 1,032 1,796 1,184 1,084 857 1,088 98 Nonbanks 3,179 3,586 3,566 2,834 3,689 2,810 3,317 4,496 3,970 3,396 99 To foreigners 50,517 60,014 56,626 55,216 52,059 52,625 57,489 54,262 52,894 54,381 100 Other branches of parent bank 18,384 25,957 20,800 18,863 18,792 18,136 19,497 20,918 18,634 18,983 101 Banks 12,244 9,488 11,069 11,188 9,861 9,435 10,799 9,848 9,399 9,289 102 Official institutions 5,454 4,692 7,156 7,698 6,628 6,998 9,915 7,049 7,808 6,956 103 Nonbank foreigners 14,435 19,877 17,601 17,467 16,778 18,056 17,278 16,447 17,053 19,153 104 Other liabilities 6,462 8,673 9,050 10,344 9,988 9,528 9,391' 9,589 6,354 8,464 Bahamas and Cayman Islands 105 Total payable in any currency ... 176,006 162,316 168,326 169,134' 175,893' 162,871' 167,139' 168,963 153,691 144,089 106 Negotiable CDs 678 646 1,173 1,709 932 1,546' 1,646' 1,894 1,330 1,814 107 To United States 124,859 114,738 129,872 131,171' 139,196' 124,605' 128,891' 130,815 115,589 105,816 108 Parent bank 75,188 74,941 79,394 73,744 82,050 76,086' 76,779' 80,998 67,356 64,039 109 Other banks in United States . 8,883 4,526 10,231 9,733 11,696 12,060 11,085 11,708 9,641 8,491 110 Nonbanks 40,788 35,271 40,247 47,694' 45,450' 36,459' 41,027' 38,109 38,592 33,286 111 To foreigners 47,382 44,444 35,200 34,425 34,002 34,899 35,021 34,637 35,136 34,878 112 Other branches of parent bank 23,414 24,715 17,388 17,050 17,100 16,933 16,842 16,799 17,668 17,315 113 Banks 8,823 5,588 5,662 5,054 5,139 6,009 6,346 6,075 6,390 6,242 114 Official institutions 1,097 622 572 490 536 736 731 770 862 935 115 Nonbank foreigners 14,048 13,519 11,578 11,831 11,227 11,221 11,102 10,993 10,216 10,386 116 Other liabilities 3,087 2,488 2,081 1,829 1,763 1,821 1,581 1,617 1,636 1,581 117 Total payable in U.S. dollars 171,250 157,132 163,603 164,403' 171,255' 158,247' 162,280' 163,951 148,744 138,864 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 1992 IItteemm 11999900 11999911 Feb.r Mar.r Apr/ Mayr Juner Julyr Aug.P 1 Total1 344,529 360,546r 375,306 381,499 385,572 394,709 401,806 403,723 405,552 By type 2 Liabilities reported by banks in the United States 39,880 38,412r 42,633 43,874 44,583 47,471 51,432 48,860 51,389 3 U.S. Treasury bills and certificates3 79,424 92,692 94,731 102,143 102,968 111,224 109,278 114,781 113,307 U.S. Treasury bonds and notes 4 Marketable 202,487 203,677 212,178 209,042 210,754 208,069 213,363 212,290 212,977 5 Nonmarketable 4,491 4,858 4,922 4,956 4,989 5,021 4,625 4,582 4,476 6 U.S. securities other than U.S. Treasury securities 18,247 20,907 20,842 21,484 22,278 22,924 23,108 23,210 23,403 By area 7 Western Europe 167,191 168,365r 173,255 178,041 179,239 185,416 191,224 194,037 194,972 8 Canada 8,671 7,460 8,251 7,016 7,855 9,347 9,302 9,876 9,990 9 Latin America and Caribbean 21,184 33,554 35,663 37,961 39,130 39,732 39,433 39,121 38,310 10 Asia 138,096 139,465r 147,756 148,614 148,573 149,062 150,215 150,055 151,798 1,434 2,092 2,408 2,011 2,392 2,792 3,265 3,218 2,860 12 Other countries6 7,955 9,608 7,971 7,854 8,381 8,358 8,365 7,414 7,620 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 States1 Payable in Foreign Currencies Millions of dollars, end of period 1991 1992 IItteemm 11998888 11998899 11999900 Sept. Dec. Mar. June 74,980 67,835 70,477 63,291 75,129 67,874 70,764 68,983 65,127 66,796 63,724 73,318 60,844 58,968 25,100 20,491 29,672 29,812 26,192 23,269 23,462 43,884 44,636 37,124 33,912 47,126 37,575 35,506 364 33,,550077 66,,330099 22,,334488 33,,227744 22,,886622 4,428 1. Data on claims exclude foreign currencies held by U.S. monetary 2. Assets owned by customers of the reporting bank located in the United authorities. 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 • December 1992 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 1992 Item 11998899 11999900 11999911 Feb. Mar. Apr. May June July Aug.p HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 736,878 759,634 756,510 756,130 774,028 769,486 785,162 786,664 777,121 768,489 2 Banks' own liabilities 577,498 577,229 575,232 575,284 583,041 578,651 583,786 587,321 571,046 563,220 3 Demand deposits 22,032 21,723 20,321 18,905 19,287 19,043 19,606 20,931 19,739 21,698 4 Time deposits 168,780 168,017 159,649 145,973 147,994 153,383 150,373 152,024 148,670 144,624 5 Other. 67,823 65,822 66,185 76,448 76,074 76,149 82,654 85,132 82,078 85,294 6 Own foreign offices4 318,864 321,667 329,077 333,958 339,686 330,076 331,153 329,234 320,559 311,604 7 Banks' custodial liabilities5 159,380 182,405 181,278 180,846 190,987 190,835 201,376 199,343 206,075 205,269 8 U.S. Treasury bills and certificates6 91,100 %,7% 110,734 112,172 119,882 120,924 130,392 128,672 135,516 135,744 9 Other negotiable and readily transferable instruments 19,526 17,578 18,664 16,894 18,429 17,797 18,995 18,020 19,402 18,541 10 Other 48,754 68,031 51,880 51,780 52,676 52,114 51,989 52,651 51,157 50,984 11 Nonmonetary international and regional organizations 4,894 5,918 8,981 11,315 11,219 10,291 11,313 12,511 10,942 12,584 12 Banks' own liabilities 3,279 4,540 6,827 9,579 9,317 8,408 9,358 10,288 7,813 9,477 13 Demand deposits 96 36 43 35 144 29 46 40 24 21 14 Time deposits 927 1,050 2,714 2,216 1,686 1,819 2,520 3,788 3,014 2,630 15 Other 2,255 3,455 4,070 7,328 7,487 6,560 6,792 6,460 4,775 6,826 16 Banks' custodial liabilities5 1,616 1,378 2,154 1,736 1,902 1,883 1,955 2,223 3,129 3,107 17 U.S. Treasury bills and certificates6 197 364 1,730 1,317 1,225 1,442 1,461 1,687 2,602 2,654 18 Other negotiable and readily transferable instruments 1,417 1,014 424 417 637 441 494 534 527 453 19 Other 2 0 0 2 40 0 0 2 0 0 20 Official institutions9 113,481 119,303 131,104 137,364 146,017 147,551 158,695 160,710 163,641 164,6% 21 Banks' own liabilities 31,108 34,910 34,427 38,749 39,774 40.630 43,567 47,544 45,315 47,837 22 Demand deposits 2,1% 1,924 2,642 1,297 1,342 1,360 1,320 1,632 1,374 1,679 23 Time deposits 10,495 14,359 16,504 14,707 17,650 18.631 19,066 17,738 18,357 18,573 24 Other. 18,417 18,628 15,281 22,745 20,782 20,639 23,181 28,174 25,584 27,585 25 Banks' custodial liabilities5 82,373 84,393 %,677 98,615 106,243 106,921 115,128 113,166 118,326 116,859 26 U.S. Treasury bills and certificates6 76,985 79,424 92,692 94,731 102,143 102,968 111,224 109,278 114,781 113,307 27 Other negotiable and readily transferable instruments 5,028 4,766 3,879 3,697 4,019 3,812 3,717 3,602 3,459 3,466 28 Other 361 203 106 187 81 141 187 286 86 86 29 Banks10 515,275 540,805 522,424 517,825 527,683 522,084 527,455 526,461 514,721 502,190 30 Banks' own liabilities 454,273 458,470 459,177 454,078 461,497 456,309 460,919 459,699 448,109 435,109 31 Unaffiliated foreign banks 135,409 136,802 130,100 120,120 121,811 126,233 129,766 130,465 127,550 123,505 32 Demand deposits 10,279 10,053 8,632 8,369 8,543 8,753 9,229 9,704 8,440 9,848 33 Time deposits 90,557 88,541 82,857 74,564 74,266 79,632 77,098 80,009 77,407 73,202 34 Other. 34,573 38,208 38,611 37,187 39,002 37,848 43,439 40,752 41,703 40,455 35 Own foreign offices4 318,864 321,667 329,077 333,958 339,686 330,076 331,153 329,234 320,559 311,604 36 Banks' custodial liabilities5 61,002 82,335 63,247 63,747 66,186 65,775 66,536 66,762 66,612 67,081 37 U.S. Treasury bills and certificates6 9,367 10,669 7,471 7,733 8,344 8,410 8,946 8,927 9,444 10,557 38 Other negotiable and readily transferable instruments 5,124 5,341 5,694 5,999 6,733 7,147 7,044 6,647 7,129 6,920 39 Other 46,510 66,325 50,082 50,015 51,109 50,218 50,546 51,188 50,039 49,604 40 Other foreigners 103,228 93,608 94,001 89,626 89,109 89,560 87,699 86,982 87,817 89,019 41 Banks' own liabilities 88,839 79,309 74,801 72,878 72,453 73,304 69,942 69,790 69,809 70,797 42 Demand deposits 9,460 9,711 9,004 9,204 9,258 8,901 9,011 9,555 9,901 10,150 43 Time deposits 66,801 64,067 57,574 54,486 54,392 53,301 51,689 50,489 49,892 50,219 44 Other 12,577 5,530 8,223 9,188 8,803 11,102 9,242 9,746 10,016 10,428 45 Banks' custodial liabilities5 14,389 14,299 19,200 16,748 16,656 16,256 17,757 17,192 18,008 18,222 46 U.S. Treasury bills and certificates6 4,551 6,339 8,841 8,391 8,170 8,104 8,761 8,780 8,689 9,226 47 Other negotiable and readily transferable instruments 7,958 6,457 8,667 6,781 7,040 6,397 7,740 7,237 8,287 7,702 48 Other 1,880 1,503 1,692 1,576 1,446 1,755 1,256 1,175 1,032 1,294 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 7,203 7,073 7,456 8,049 8,110 7,624 7,642 7,351 6,976 7,279 1. Reporting banks include all types of depository institution, as well as some 6. Includes nonmarketable certificates of indebtedness and Treasury bills brokers and dealers. issued to official institutions of foreign countries. 2. Excludes negotiable time certificates of deposit, which are included in 7. Principally bankers acceptances, commercial paper, and negotiable time "Other negotiable and readily transferable instruments." certificates of deposit. 3. Includes borrowing under repurchase agreements. 8. Principally the International Bank for Reconstruction and Development, the 4. For U.S. banks, includes amounts due to own foreign branches and foreign Inter-American Development Bank, and the Asian Development Bank. Excludes subsidiaries consolidated in Consolidated Report of Condition filed with bank "holdings of dollars" of the International Monetary Fund. regulatory agencies. For agencies, branches, and majority-owned subsidiaries of 9. Foreign central banks, foreign central governments, and the Bank for foreign banks, consists principally of amounts due to head office or parent foreign International Settlements. bank, and foreign branches, agencies, or wholly owned subsidiaries of head office 10. Excludes central banks, which are included in "Official institutions." or parent foreign bank. 5. Financial claims on residents of the United States, other than long-term securities, held by or through reporting banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A59 3.17—Continued 1992 IItteemm 11998899 11999900 11999911 Feb. Mar. Apr. May June July Aug.? AREA 1 Total, all foreigners 736,878 759,634 756,510 756,130 774,028 769,486 785,162 786,664 777,121 768,489 2 Foreign countries 731,984 753,716 747,529 744,815 762,809 759,195 773,849 774,153 766,179 755,905 3 Europe 237,501 254,452 249,067 246,284 256,024 262,246 273,436 279,521 283,109 288,888 4 Austria 1,233 1,229 1,193 1,030 1,230 1,219 1,337 1,490 1,445 1,582 5 Belgium and Luxembourg 10,648 12,382 13,337 15,156 16,269 15,818 17,346 16,740 16,797 18,294 6 Denmark 1,415 1,399 937 997 892 961 1,331 1,263 1,348 1,329 7 Finland 570 602 1,341 623 1,014 1,005 764 843 720 976 8 France 26,903 30,946 31,808 26,456 26,036 27,667 27,005 30,132 28,900 29,456 9 Germany 7,578 7,485 8,619 9,572 9,556 9,272 8,319 8,018 8,967 10,982 10 Greece 1,028 934 765 895 1,058 1,134 1,254 1,374 998 934 11 Italy 16,169 17,735 13,541 9,554 9,915 10,035 10,055 10,362 10,164 10,992 12 Netherlands 6,613 5,350 7,161 7,322 9,250 9,352 9,572 9,456 9,653 10,422 13 Norway 2,401 2,357 1,866 1,398 1,286 899 1,429 1,359 1,421 1,341 14 Portugal 2,418 2,958 2,184 2,540 2,071 2,217 2,391 2,530 2,659 2,664 15 Spain 4,364 7,544 11,391 10,653 13,504 14,435 14,316 15,844 15,313 14,904 16 Sweden 1,491 1,837 2,222 2,544 2,106 2,888 2,007 4,125 3,710 4,162 17 Switzerland 34,496 36,690 37,238 34,710 37,104 33,604 36,663 35,987 39,568 40,599 18 Turkey 1,818 1,169 1,598 1,677 1,600 1,362 1,691 1,580 1,789 2,021 19 United Kingdom 102,362 109,555 100,262 102,166 103,319 108,023 112,828 111,712 111,878 111,521 20 Yugoslavia 1,474 928 622 529 504 569 524 555 547 554 21 Others in Western Europe 13,563 11,689 9,274 14,069 15,452 17,208 19,961 21,609 22,743 21,492 ?2 U.S.S.R 350 119 241 238 168 287 436 440 609 425 23 Other Eastern Europe 608 1,545 3,467 4,155 3,690 4,291 4,207 4,102 3,880 4,238 24 Canada 18,865 20,349 21,605 20,482 20,931 20,500 22,556 20,358 22,350 20,410 25 Latin America and Caribbean 311,028 332,997 346,025 348,826 351,067 341,925 339,862 339,517 325,885 311,451 26 Argentina 7,304 7,365 7,758 7,878 8,310 8,654 9,381 9,705 10,043 9,399 27 Bahamas 99,341 107,386 100,597 99,756 102,138 98,530 100,025 101,702 92,536 82,561 78 Bermuda 2,884 2,822 3,178 3,478 3,364 3,368 3,009 3,598 4,848 4,782 79 Brazil 6,351 5,834 5,942 5,760 5,745 5,752 5,399 5,612 5,522 5,484 30 British West Indies 138,309 147,321 163,872 167,589 166,802 160,991 158,515 156,761 151,857 148,455 31 Chile 3,212 3,145 3,284 3,408 3,623 3,506 3,792 3,702 3,611 3,394 32 Colombia 4,653 4,492 4,662 4,713 4,972 4,915 4,902 4,721 4,682 4,711 33 Cuba 10 11 2 5 11 9 6 3 12 9 34 Ecuador 1,391 1,379 1,232 1,217 1,168 1,128 1,150 1,137 1,074 1,214 35 Guatemala 1,312 1,541 1,594 1,549 1,539 1,489 1,438 1,447 1,420 1,432 36 Jamaica 209 257 231 227 271 234 242 309 271 267 37 Mexico 15,423 16,650 19,957 20,319 21,540 21,362 20,842 19,491 19,642 20,055 38 Netherlands Antilles 6,310 7,357 5,592 6,231 5,205 5,986 5,347 5,313 5,085 4,825 39 Panama 4,362 4,574 4,695 4,404 4,158 4,216 4,100 4,286 4,457 4,259 40 Peru 1,984 1,294 1,249 1,221 1,187 1,094 1,098 1,156 1,131 1,123 41 Uruguay 2,284 2,520 2,111 2,158 2,054 2,171 2,118 2,182 2,175 2,194 42 Venezuela 9,482 12,271 13,181 12,236 12,190 11,874 11,705 11,448 11,080 10,802 43 Other 6,206 6,779 6,888 6,677 6,790 6,646 6,793 6,944 6,439 6,485 44 156,201 136,844 120,440 120,051 125,678 125,187 128,083 124,549 124,894 125,214 China 45 People's Republic of China 1,773 2,421 2,626 2,608 2,678 2,753 2,364 2,378 2,292 2,508 46 Republic of China (Taiwan) 19,588 11,246 11,491 10,586 10,593 10,471 10,265 9,985 10,277 10,362 47 Hong Kong 12,416 12,754 14,269 14,863 14,610 16,125 17,885 16,980 16,840 17,775 48 India 780 1,233 2,418 2,256 2,028 1,792 1,671 1,715 1,567 1,480 49 Indonesia 1,281 1,238 1,463 1,276 1,516 1,109 1,133 1,387 1,256 958 50 Israel 1,243 2,767 2,015 2,137 2,536 3,791 3,432 2,976 2,850 2,620 51 Japan 81,184 67,076 47,047 44,783 49,528 47,337 46,183 44,265 45,815 45,682 5? Korea (South) 3,215 2,287 2,587 2,800 2,886 3,016 3,132 2,839 3,288 3,644 53 Philippines 1,766 1,585 2,449 2,462 2,638 2,266 1,630 1,813 1,994 1,920 54 Thailand 2,093 1,443 2,252 3,224 3,330 3,147 6,990 4,586 4,017 4,624 55 Middle Eastern oil-exporting countries 13,370 15,829 15,752 18,410 19,311 18,614 18,297 18,983 19,828 18,938 56 Other 17,491 16,965 16,071 14,646 14,024 14,766 15,101 16,642 14,870 14,703 57 Africa 1 3,824 4,630 4,825 4,919 4,886 4,864 5,430 5,810 5,516 5,314 58 Egypt 686 1,425 1,621 1,632 1,337 1,610 2,001 2,540 2,324 2,143 59 Morocco 78 104 79 82 90 88 77 87 85 93 60 South Africa 206 228 228 199 191 188 399 248 269 275 61 Zaire 86 53 31 30 35 27 26 29 17 24 62 Oil-exporting countries 1,121 1,109 1,082 1,214 1,428 1,277 1,257 1,232 1,211 1,088 63 Other 1,648 1,710 1,784 1,762 1,805 1,674 1,670 1,674 1,610 1,691 64 Other 4,564 4,444 5,567 4,253 4,223 4,473 4,482 4,398 4,425 4,628 65 Australia 3,867 3,807 4,464 3,065 3,100 3,575 3,211 3,192 3,066 3,322 66 Other 697 637 1,103 1,188 1,123 898 1,271 1,206 1,359 1,306 67 Nonmonetary international and regional organizations 4,894 5,918 8,981 11,315 11,219 10,291 11,313 12,511 10,942 12,584 68 International 3,947 4,390 6,485 8,992 8,813 7,543 8,400 9,536 7,023 9,361 69 Latin American regional 684 1,048 1,181 1,500 1,785 1,788 1,903 2,356 2,699 2,319 70 Other regional 263 479 1,315 823 621 960 1,010 619 1,220 904 11. Includes the Bank for International Settlements and Eastern European 15. Principally the Internationa] Bank for Reconstruction and Development. countries not listed in line 23. Excludes "holdings of dollars" of the International Monetary Fund. 12. Comprises Bulgaria, Czechoslovakia, Hungary, Poland, and Romania. 16. Principally the Inter-American Development Bank. 13. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and 17. Asian, African, Middle Eastern, and European regional organizations, United Arab Emirates (Trucial States). except the Bank for International Settlements, which is included in "Other 14. Comprises Algeria, Gabon, Libya, and Nigeria. Western Europe." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • December 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 1992 Area and country 11998899 11999900 11999911 Feb. Mar. Apr. May June July 1 Total, all foreigners 534,492 511,543 514,318 508,549 512,876 506,854 504,682 511,926 503,054 2 Foreign countries 530,630 506,750 508,035 502,099 506,503 502,065 499,881 505,932 499,633 3 Europe 119,025 113,093 114,355 110,871 112,774 123,696 120,739 126,212 124,478 4 Austria 415 362 327 447 375 444 456 433 647 5 Belgium and Luxembourg 6,478 5,473 6,158 7,451 7,005 6,967 6,487 6,166 6,475 6 Denmark 582 497 686 709 737 871 994 1,436 951 7 Finland 1,027 1,047 1,912 1,586 1,321 1,475 1,536 1,521 1,274 8 France 16,146 14,468 15,112 13,720 14,040 13,685 14,031 14,440 14,154 9 Germany 2,865 3,343 3,371 3,406 3,788 3,117 4,044 3,311 3,863 10 Greece 788 727 553 562 537 567 492 506 590 11 Italy 6,662 6,052 8,242 7,346 8,584 9,835 10,282 10,619 10,507 12 Netherlands 1,904 1,761 2,546 2,461 2,268 2,688 2,642 2,267 2,041 13 Norway 609 782 669 665 687 567 731 722 731 14 Portugal 376 292 344 350 368 361 398 367 382 15 Spain 1,930 2,668 1,881 2,155 3,355 3,726 2,687 3,880 3,730 16 Sweden 1,773 2,094 2,335 2,928 2,636 3,062 3,007 6,745 5,982 17 Switzerland 6,141 4,202 4,540 3,921 3,375 4,095 4,144 3,973 3,683 18 Turkey 1,071 1,405 1,063 1,076 943 927 1,130 976 1,173 19 United Kingdom 65,527 65,151 60,435 57,082 57,920 66,365 62,509 63,932 62,815 20 Yugoslavia 1,329 1,142 825 810 807 781 735 697 693 21 Others in Western Europe2 1,302 597 789 1,116 879 821 894 771 1,227 22 U.S.S.R 1,179 530 1,970 2,491 2,659 2,824 2,948 3,035 3,153 23 Other Eastern Europe 921 499 597 589 490 518 592 415 407 24 Canada 15,451 16,091 15,094 15,874 15,468 15,121 16,460 16,386 17,443 25 Latin America and Caribbean 230,438 231,506 246,064 245,236 251,703 239,307 238,502 243,517 234,112 26 Argentina 9,270 6,967 5,869 5,834 5,788 5,949 5,956 5,396 5,614 27 Bahamas 77,921 76,525 87.173 84,183 88,866 82,118 84,668 83,141 74,816 28 Bermuda 1,315 4,056 2,191 4,444 3,649 6,377 4,283 4,951 6,099 29 Brazil 23,749 17,995 11,845 12,749 12,375 12,321 12,183 12,020 12,186 30 British West Indies 68,749 88,565 107,866 106,758 109,453 100,777 100,352 106,661 104,181 31 Chile 4,353 3,271 2,805 2,746 2,779 2,922 3,055 3,227 3,118 32 Colombia 2,784 2,587 2,425 2,330 2,339 2,322 2,328 2,304 2,398 33 Cuba 1 0 0 0 0 2 0 0 0 34 Ecuador 1,688 1,387 1,053 1,034 993 986 939 936 950 35 Guatemala 197 191 228 230 233 216 171 173 167 36 Jamaica 297 238 158 158 152 150 143 150 151 37 Mexico 23,376 14,851 16,567 17,326 17,315 17,367 16,900 16,455 16,331 38 Netherlands Antilles 1,921 7,998 1,207 979 1,181 1,265 904 920 941 39 Panama 1,740 1,471 1,560 1,659 1,704 1,834 1,926 2,199 2,025 40 Peru 771 663 739 669 644 715 666 719 708 41 Uruguay 929 786 599 604 604 685 717 765 749 42 Venezuela 9,652 2,571 2,516 2,240 2,188 2,010 2,046 2,215 2,360 43 Other 1,726 1,384 1,263 1,293 1,440 1,291 1,265 1,285 1,318 44 Asia 157,474 138,722 125,288 122,662 119,631 116,770 117,259 112,406 115,961 China 45 People's Republic of China 634 620 747 699 719 660 729 685 642 46 Republic of China (Taiwan) 2,776 1,952 2,087 1,881 1,969 2,008 1,808 1,778 1,965 47 Hong Kong 11,128 10,648 9,617 9,721 10,466 8,520 9,127 8,272 9,103 48 India 621 655 441 418 518 504 475 458 512 49 Indonesia 651 933 952 1,061 1,096 1,055 1,132 11,,008855 1,090 50 Israel 813 774 860 943 901 837 874 888888 901 51 Japan 111,300 90,699 84,833 80,267 74,615 72,116 74,430 69,269 71,159 52 Korea (South) 5,323 5,766 6,048 6,295 6,423 6,218 5,796 5,927 6,063 53 Philippines 1,344 1,247 1,910 1,789 1,831 1,690 1,618 1,648 1,635 54 Thailand 1,140 1,573 1,713 1,621 1,599 1,618 1,703 1,756 1,705 55 Middle Eastern oil-exporting countries4 10,149 10,749 8,284 10,981 12,291 14,562 13,453 14,505 14,323 56 Other 11,594 13,106 7,796 6,986 7,203 6,982 6,114 6,135 6,863 57 Africa 5,890 5,445 4,928 4,741 4,758 4,818 4,582 4,548 4,452 58 Egypt 502 380 294 223 271 242 218 256 261 59 Morocco 559 513 575 550 547 547 529 527 496 60 South Africa 1,628 1,525 1,235 1,189 1,176 1,239 1,128 1,070 1,047 61 Zaire < 16 16 4 4 4 4 4 4 4 62 Oil-exporting countries 1,648 1,486 1,298 1,112 1,164 1,160 1,162 1,159 1,157 63 Other 1,537 1,525 1,522 1,663 1,596 1,626 1,541 1,532 1,487 64 Other 2,354 1,892 2,306 2,715 2,169 2,353 2,339 2,863 3,187 65 Australia 1,781 1,413 1,665 1,478 1,388 1,424 1,197 1,725 1,937 66 Other 573 479 641 1,237 781 929 1,142 1,138 1,250 67 Nonmonetary international and regional organizations6 3,862 4,793 6,283 6,450 6,373 4,789 4,801 5,994 3,421 1. Reporting banks include all types of depository institutions, as well as some 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and 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 1992 CCllaaiimm 11998899 11999900 11999911 Feb/ Mar/ Apr/ Mayr June1 Julyr Aug.P 1 Total 555555599999993333333,,,,,,,000000088888887777777 555555577777779999999,,,,,,,000000044444444444444 555555577777779999999,,,,,,,666666622222222222222 555555577777776666666,,,,,,,222222233333330000000 555555566666665555555,,,,,,,555555577777772222222 22 BBaannkkss'' ccllaaiimmss 555555533333334444444,,,,,,,444444499999992222222 555555511111111111111,,,,,,,555555544444443333333 555555511111114444444,,,,,,,333333311111118888888 508,549 555555511111112222222,,,,,,,888888877777776666666 506,854 504,682 555555511111111111111,,,,,,,999999922222226666666 503,054 479,305 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 66666660000000,,,,,,,555555511111111111111 44444441111111,,,,,,,999999900000000000000 33333337777777,,,,,,,111111133333330000000 38,341 33333336666666,,,,,,,888888899999992222222 34,585 34,637 33333335555555,,,,,,,999999955555556666666 32,936 31,983 44 OOwwnn ffoorreeiiggnn ooffffiicceess 222222299999996666666,,,,,,,000000011111111111111 333333300000004444444,,,,,,,333333311111115555555 333333311111118888888,,,,,,,888888899999994444444 305,943 333333311111118888888,,,,,,,333333355555550000000 302,551 308,342 333333311111114444444,,,,,,,666666611111113333333 302,221 288,011 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111133333334444444,,,,,,,888888888888885555555 111111111111117777777,,,,,,,222222277777772222222 111111111111116666666,,,,,,,555555566666669999999 119,029 111111111111113333333,,,,,,,999999933333336666666 120,195 116,823 111111111111112222222,,,,,,,000000011111112222222 113,882 105,129 66 DDeeppoossiittss 77777778888888,,,,,,,111111188888885555555 66666665555555,,,,,,,222222255555553333333 66666669999999,,,,,,,111111166666668888888 70,885 66666667777777,,,,,,,000000000000007777777 70,703 70,205 66666663333333,,,,,,,666666644444443333333 62,997 55,902 77 OOtthheerr 55555556666666,,,,,,,777777700000000000000 55555552222222,,,,,,,000000011111119999999 44444447777777,,,,,,,444444400000001111111 48,144 44444446666666,,,,,,,999999922222229999999 49,492 46,618 44444448888888,,,,,,,333333366666669999999 50,885 49,227 88 AAllll ootthheerr ffoorreeiiggnneerrss 44444443333333,,,,,,,000000088888885555555 44444448888888,,,,,,,000000055555556666666 44444441111111,,,,,,,777777722222225555555 45,236 44444443333333,,,,,,,666666699999998888888 49,523 44,880 44444449999999,,,,,,,333333344444445555555 54,015 54,182 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss33...... 55555558888888,,,,,,,555555599999994444444 66666667777777,,,,,,,555555500000001111111 66666665555555,,,,,,,333333300000004444444 66666663333333,,,,,,,333333355555554444444 55555553333333,,,,,,,666666644444446666666 11111113333333,,,,,,,000000011111119999999 11111114444444,,,,,,,333333377777775555555 11111115555555,,,,,,,222222244444440000000 11111117777777,,,,,,,555555522222222222222 11111117777777,,,,,,,000000099999998888888 11 Negotiable and readily transferable 33333330000000,,,,,,,999999988888883333333 44444441111111,,,,,,,333333333333333333333 33333337777777,,,,,,,111111122222225555555 33333333333333,,,,,,,111111111111115555555 22222224444444,,,,,,,222222244444440000000 12 Outstanding collections and other 11111114444444,,,,,,,555555599999992222222 11111111111111,,,,,,,777777799999992222222 11111112222222,,,,,,,999999933333339999999 11111112222222,,,,,,,777777711111117777777 11111112222222,,,,,,,333333300000008888888 13 MEMO: Customer liability on 11111112222222,,,,,,,888888899999999999999 11111113333333,,,,,,,666666622222228888888 8888888,,,,,,,999999977777774444444 7777777,,,,,,,888888888888887777777 7777777,,,,,,,555555577777771111111 1144 DDoollllaarr ddeeppoossiittss iinn bbaannkkss aabbrrooaadd,, rreeppoorrtteedd bbyy nnoonnbbaannkkiinngg bbuussiinneessss eenntteerrpprriisseess iinn tthhee UUnniitteedd SSttaatteess 45,767 44,638 38,888 39,117 37,028 34,255 32,963 33,083 34,092 n.a. 1. For banks' claims, data are monthly; for claims of banks' domestic custom- foreign bank, and foreign branches, agencies, or wholly owned subsidiaries of ers, data are quarterly. head office or parent foreign bank. Reporting banks include all types of depository institution, as well as some 3. Assets held by reporting banks for the account of their domestic customers. brokers and dealers. 4. Principally negotiable time certificates of deposit and bankers acceptances. 2. For U.S. banks, includes amounts due from own foreign branches and 5. Includes demand and time deposits and negotiable and nonnegotiable foreign subsidiaries consolidated in Consolidated Report of Condition filed with certificates of deposit denominated in U.S. dollars issued by banks abroad. For bank regulatory agencies. For agencies, branches, and majority-owned subsidiar- description of changes in data reported by nonbanks, see Federal Reserve ies of foreign banks, consists principally of amounts due from head office or parent Bulletin, vol. 65 (July 1979), 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 11998888rr 11998899rr 11999900** Sept. Dec. Mar. June 1 Total 233,184 238,123 206,903 195,275 195,187 194,219 196,909 By borrower 2 Maturity of one year or less2 172,634 178,346 165,985 160,395 162,515 161,266 162,438 3 Foreign public borrowers 26,562 23,916 19,305 17,601 21,047 20,241 20,491 4 All other foreigners 146,072 154,430 146,680 142,794 141,468 141,025 141,947 5 Maturity of more than one year 60,550 59,776 40,918 34,880 32,672 32,953 34,471 6 Foreign public borrowers 35,291 36,014 22,269 17,935 15,866 16,344 15,154 7 All other foreigners 25,259 23,762 18,649 16,945 16,806 16,609 19,317 By area Maturity of one year or less2 8 Europe 55,909 53,913 49,184 51,211 51,875 52,608 54,977 9 Canada 6,282 5,910 5,450 5,682 6,474 6,926 7,926 10 Latin America and Caribbean 57,991 53,003 49,782 47,289 43,521 48,597 49,189 11 Asia 46,224 57,755 53,258 50,010 51,007 43,605 41,386 12 Africa 3,337 3,225 3,040 2,815 2,549 2,486 2,142 13 All other3 2,891 4,541 5,272 33,,338888 77,,008899 77,,004444 66,,881188 Maturity of more than one year 14 Europe 4,666 4,121 3,859 3,733 3,883 4,355 6,791 15 Canada 1,922 2,353 3,290 3,706 3,546 3,250 3,178 16 Latin America and Caribbean 47,547 45,816 25,774 19,282 18,264 18,180 16,891 17 Asia 3,613 4,172 5,165 5,635 4,459 4,738 5,007 18 Africa 2,301 2,630 2,374 2,393 2,335 2,191 2,341 19 All other3 501 684 456 131 185 239 263 1. Reporting banks include all kinds of depository institutions besides commer- 2. Maturity is time remaining 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 • December 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 AArreeaa oorr ccoouunnttrryy 11998888 11998899 June Sept. Dec. Mar. June Sept. Dec. Mar. Junep 1 Total 346.3 338.8 321.7 331.5 317.8 325.4 320.8 335.5 341.5r 347.4r 355.2 2 G-10 countries and Switzerland 152.7 152.9 139.3 143.6 132.1 129.9 130.1 134.0 137.3 130.2r 135.5 3 Belgium and Luxembourg 9.0 6.3 6.2 6.5 5.9 6.2 6.1 5.8 6.0 5.3 6.2 4 France 10.5 11.7 10.2 11.1 10.4 9.7 10.5 11.1 11.0 9.9 11.8 5 Germany 10.3 10.5 11.2 11.1 10.6 8.8 8.3 9.7 8.3 8.4r 8.7 b 6.8 7.4 5.4 4.4 5.0 4.0 3.6 4.5 5.6 5.4 8.0 1 Netherlands 2.7 3.1 2.7 3.8 3.0 3.3 3.3 3.0 4.7 4.3 3.3 8 Sweden 1.8 2.0 2.3 2.3 2.2 2.0 2.5 2.1 1.9 2.0 2.0 9 Switzerland 5.4 7.1 6.3 5.6 4.4 3.7 3.3 3.9 3.4 3.2 4.6 10 United Kingdom 66.2 67.2 59.9 62.6 60.8 62.2 59.8 64.9 68.5 64.6r 65.9 11 Canada 5.0 5.4 5.1 5.0 5.9 6.8 8.2 5.9 5.9 6.6 6.7 12 Japan 34.9 32.2 30.1 31.3 23.9 23.2 24.6 23.2 22.2 20.7 18.3 13 Other industrialized countries 21.0 20.7 22.4 23.0 22.6 23.1 21.1 21.7 22.T 2211..22 25.4 14 Austria 1.5 1.5 1.5 1.6 1.4 1.4 1.1 1.0 .6 ..88 .8 15 Denmark 1.1 1.1 1.1 1.1 1.1 .9 11..22 .9 .9 ..88 11..33 lb Finland 1.1 1.0 .9 .8 .7 1.0 ..88 .7 .7 ..88 ..88 1/ Greece 1.8 2.5 2.7 2.8 2.7 2.5 2.4 2.3 2.6 2.3 2.8 18 Norway 1.8 1.4 1.4 1.6 1.6 1.5 1.5 1.4 1.4 1.5 1.7 19 Portugal .4 .4 .8 .6 .6 .6 .6 .5 .6 .5 .5 20 Spain 6.2 7.1 7.8 8.4 8.3 9.0 7.1r 8.3 8.3r l.T 10.1 21 Turkey 1.5 1.2 1.4 1.6 1.7 1.7 1.9 1.6 1.4 1.2 1.5 22 Other Western Europe 1.3 .7 1.1 .7 .9 .8 .9 1.0 1.6 1.3 1.9 23 South Africa 2.4 2.0 1.9 1.9 1.8 1.8 1.8 1.6 1.9 1.8 1.7 24 Australia 1.8 1.6 1.8 2.0 1.8 1.9 2.0 2.4 2.7 2.3 2.3 25 OPEC2 16.6 17.1 15.3 14.2 12.8 17.1 14.0 1155..66 14.6 15.8r 16.2 2b Ecuador 1.7 1.3 1.1 1.1 1.0 .9 .9 ..88 .7 .7 .7 27 Venezuela 7.9 7.0 6.0 6.0 5.0 5.1 5.3 5.6 5.4 5.4 5.3 28 Indonesia 1.7 2.0 2.0 2.3 2.7 2.8 2.6 2.8 2.8 3.QF 3.0 29 Middle East countries 3.4 5.0 4.4 3.1 2.5 6.6 3.7 5.0 4.2 5.3 5.9 30 African countries 1.9 1.7 1.8 1.7 1.7 1.6 1.5 1.5 1.5 1.4 1.4 31 Non-OPEC developing countries 85.3 77.5 66.7 67.1 65.4 66.4 65.0 65.0 64.3 70.6r 69.1 Latin America 32 Argentina 9.0 6.3 5.2 5.0 5.0 4.7 4.6 4.5 4.8 5.0 5.1 33 Brazil 22.4 19.0 16.7 15.4 14.4 13.9 11.6 10.5 9.5 10.8 10.6 34 Chile 5.6 4.6 3.7 3.6 3.5 3.6 3.6 3.7 3.6 3.9 4.0 35 Colombia 2.1 1.8 1.7 1.8 1.8 1.7 1.6 1.6 1.7 1.6 1.6 3b Mexico 18.8 17.7 12.6 12.8 13.0 13.7 14.3 16.2 15.5 18.2 16.5 il Peru .8 .6 .5 .5 .5 .5 .5 .4 .4 .4 .4 38 Other 2.6 2.8 2.3 2.4 2.3 2.2 2.0 1.9 2.1 2.2 2.2 Asia China 39 Peoples Republic of China .3 .3 .2 .2 .2 .4 .6 .4 .3 .3 .3 40 Republic of China (Taiwan) 3.7 4.5 3.6 4.0 3.5 3.6 4.1 4.1 4.1 4.8r 4.9 41 India 2.1 3.1 3.6 3.6 3.3 3.5 3.0 2.8 3.0 3.6 3.8 42 Israel 1.2 .7 .7 .6 .5 .5 .5 .5 .5 .4 .4 43 Korea (South) 6.1 5.9 5.6 6.2 6.2 6.8 6.9 6.5 6.8 6.9 6.9 44 1.6 1.7 1.8 1.8 1.9 2.0 2.1 2.3 2.3 2.5 2.7 45 Philippines 4.5 4.1 3.9 3.9 3.8 3.7 3.7 3.6 3.7 3.6 3.0 4 4 b 7 T O h th ai e l r a n A d s ia3 1 . . 9 1 1 1 . . 3 0 1 1. . 1 3 1 1 . . 5 6 1 1. . 7 5 2 1 . . 1 6 2 1 . . 3 7 2 1 . . 3 9 2 1 . . 4 7 2 1 . . 7 7 3 1 . . 1 9 Africa 4488 Egypt .4 .4 .5 .4 .4 .4 .4 .4 .4 .3 .5 4499 Morocco .9 .9 .9 .9 .8 .8 .7 .7 .7 .7 .7 5 5 0 1 Z O a th ir e e r Africa3 , 1 . . 0 1 1 . . 0 0 . . 0 8 . . 0 8 1 . . 0 0 . . 0 8 . . . . 0 8 0 8 .. .. 88 00 . . 0 7 . . 0 7 . . 0 6 52 Eastern Europe 3.6 3.5 2.9 2.7 2.3 2.1 2.1 1.8 2.4 2.9 3.0 53 U.S.S.R .7 .7 .4 .4 .2 .3 .4 ..44 .9 11..44 1.7 54 Yugoslavia 1.8 1.6 1.4 1.3 1.2 1.0 1.0 ..88 .9 ..88 .7 55 Other 1.1 1.3 1.1 1.1 .9 .8 .7 .7 .7 .6 .6 56 Offshore banking centers 44.2 36.6 40.3 42.6 42.5 50.1 48.3 52.4 51.9 58.5 56.6 5/ Bahamas 11.0 5.5 8.5 8.9 2.8 8.4 6.8 6.7 12.0 14. lr 12.1 58 Bermuda .9 1.7 2.5 4.5 4.4 4.4 4.2 7.1 2.2 3.9 5.1 59 Cayman Islands and other British West Indies 12.9 9.0 8.5 9.3 11.5 , 14.1 14.9 13.8 15.9 17.4 1188..00 60 Netherlands Antilles 1.0 2.3 2.3 2.2 7.9 1.1 1.4 3.5 1.2 1.0 ..88 bl Panama4 2.5 1.4 1.4 1.5 1.4 1.5 1.3 11..33 11..33 11..33 1.4 62 Lebanon .1 .1 .1 .1 .1 .1 .1 ..11 ..11 ..11 .1 b3 Hong Kong 9.6 9.7 10.0 8.7 7.7 11.6 12.4 12.1 12.2 12.2 12.7 64 Singapore 6.1 7.0 7.0 7.5 6.6 8.9 7.2 7.7 7.1 8.5 6.4 b5 Other5 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated6 22.6 30.3 34.5 38.1 39.8 36.4r 39.9r 44.6r 48.2r 48.0r 49.1 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 2k>ne 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 1991 1992 TTyyppee aanndd aarreeaa oorr ccoouunnttrryy 11998888rr 1199889911 11999900"" Mar. June Sept. Dec. Mar. June 1 Total 32,952 38,764 44,988 41,787 40,472 41,916 41,505 43,495 43,221 2 Payable in dollars 27,335 33,973 39,791 37,211 36,003 37,210 36,225 38,174 36,914 3 Payable in foreign currencies 5,617 4,791 5,197 4,576 4,469 4,706 5,280 5,321 6,307 By type 4 Financial liabilities 14,507 17,879 20,010 18,606 18,260 20,350 20,242 21,664 21,382 5 Payable in dollars 10,608 14,035 15,984 15,266 14,947 16,675 16,242 17,566 16,261 6 Payable in foreign currencies 3,900 3,844 4,026 3,340 3,313 3,675 4,000 4,098 5,121 7 Commercial liabilities 18,445 20,885 24,977 23,181 22,212 21,566 21,263 21,831 21,839 8 Trade payables 6,505 8,070 10,683 8,793 8,569 8,313 8,310 8,914 9,198 9 Advance receipts and other liabilities 11,940 12,815 14,294 14,388 13,644 13,253 12,953 12,917 12,641 10 Payable in dollars 16,727 19,938 23,807 21,945 21,056 20,535 19,983 20,608 20,653 11 Payable in foreign currencies 1,717 947 1,170 1,236 1,157 1,031 1,280 1,223 1,186 By area or country Financial liabilities 12 Europe 9,962 11,660 10,346 9,559 9,634 11,403 10,814 12,071 12,604 13 Belgium and Luxembourg 289 340 394 335 355 397 217 174 194 14 France 359 258 700 632 556 1,747 1,593 1,997 2,324 15 Germany 699 464 621 561 658 652 649 636 836 16 Netherlands 880 941 1,081 1,036 1,026 1,050 1,056 1,025 979 17 Switzerland 1,033 541 516 517 484 468 360 355 470 18 United Kingdom 6,533 8,818 6,395 5,810 5,932 6,521 6,294 6,977 6,925 19 Canada 388 610 229 278 293 305 267 283 337 20 Latin America and Caribbean 839 1,357 4,153 4,255 3,808 3,883 4,307 4,047 3,298 21 Bahamas 184 157 371 392 375 314 537 3% 343 22 Bermuda 0 17 0 0 12 0 114 114 114 23 Brazil 0 0 0 0 0 6 6 8 10 24 British West Indies 645 724 3,160 3,293 2,816 2,961 3,047 2,915 2,157 25 Mexico 1 6 5 6 6 6 7 7 8 26 Venezuela 0 0 4 4 4 4 4 4 4 27 Asia 3,312 4,151 4,872 4,510 4,515 4,755 4,796 5,168 5,054 28 Japan 2,563 3,299 3,637 3,432 3,339 3,605 3,557 3,906 3,958 29 Middle East oil-exporting countries 3 2 5 1 4 19 13 13 10 30 Africa 2 2 2 2 9 3 6 7 0 31 Oil-exporting countries3 0 0 0 0 7 2 4 6 0 32 Allother4 4 100 409 2 2 1 52 88 89 Commercial liabilities 33 Europe 7,319 9,071 10,310 9,666 8,607 8,084 7,808 7,491 6,907 34 Belgium and Luxembourg 158 175 275 261 245 225 248 256 238 35 France 455 877 1,218 1,203 1,185 992 830 671 641 36 Germany 1,699 1,392 1,270 1,383 1,040 911 944 878 650 37 Netherlands 587 710 844 729 729 751 709 574 588 38 Switzerland 417 693 775 661 580 492 488 482 396 39 United Kingdom 2,079 2,620 2,792 2,755 2,289 2,217 2,310 2,444 2,358 40 Canada 1,217 1,124 1,261 1,251 1,208 1,011 990 1,094 997 41 Latin America and Caribbean 1,090 1,224 1,672 1,589 1,619 1,512 1,352 1,701 1,794 42 Bahamas 49 41 12 14 5 14 3 13 8 43 Bermuda 286 308 538 494 504 450 310 493 406 44 Brazil 95 100 145 216 180 211 219 230 212 45 British West Indies 34 27 30 35 49 46 107 108 73 46 Mexico 217 323 475 343 358 291 304 375 473 47 Venezuela 114 164 130 129 119 102 94 168 278 48 Asia 6,915 7,550 9,483 8,595 8,752 8,855 9,330 9,889 10,419 49 Japan 3,094 2,914 3,651 3,423 3,411 3,363 3,720 3,548 3,547 50 Middle Eastern oil-exporting countries ' 1,385 1,632 2,016 1,543 1,657 1,780 1,498 1,591 1,778 51 Africa 576 886 844 617 596 836 713 644 775 52 Oil-exporting countries3 202 339 422 211 226 357 327 253 389 53 Other4 1,328 1,030 1,406 1,464 1,431 1,268 1,070 1,012 947 1. For a description of the changes in the international statistics tables, see 3. Comprises Algeria, Gabon, Libya, and Nigeria. Federal Reserve Bulletin, vol. 65, (July 1979), 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 • December 1992 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1991 1992 Type, and area or country 11998888rr 11998899rr 11999900"" Mar. June Sept. Dec. Mar. June 1 Total 33,805 33,173 35,365 35,578 37,124 38,345 42,386 41,746 41,067 2 Payable in dollars 31,425 30,773 32,777 33,279 35,037 35,982 39,829 39,135 38,161 3 Payable in foreign currencies 2,381 2,400 2,589 2,299 2,087 2,363 2,557 2,611 2,906 By type 4 Financial claims 21,640 19,297 19,891 19,746 20,904 22,566 25,320 25,029 24,263 5 Deposits 15,643 12,353 13,727 13,115 12,576 16,227 17,177 16,819 14,956 6 Payable in dollars 14,544 11,364 12,552 12,052 11,758 15,182 16,253 15,626 13,631 7 Payable in foreign currencies 1,099 989 1,175 1,063 817 1,045 924 1,193 1,325 8 Other financial claims 5,997 6,944 6,164 6,631 8,328 6,339 8,143 8,210 9,307 9 Payable in dollars 5,220 6,190 5,297 5,960 7,656 5,641 7,322 7,521 8,643 10 Payable in foreign currencies 111 754 866 671 673 698 821 689 664 11 Commercial claims 12,166 13,876 15,475 15,832 16,220 15,779 17,066 16,717 16,804 12 Trade receivables 11,091 12,253 13,657 13,843 14,120 13,429 14,389 14,168 14,389 13 Advance payments and other claims 1,075 1,624 1,817 1,989 2,100 2,350 2,677 2,549 2,415 14 Payable in dollars 11,660 13,219 14,927 15,266 15,623 15,159 16,254 15,988 15,887 15 Payable in foreign currencies 505 657 548 566 597 620 812 729 917 By area or country Financial claims 16 Europe 10,278 8,463 9,651 10,640 11,875 13,131 13,523 14,083 13,097 17 Belgium and Luxembourg 18 28 76 86 74 76 13 12 25 18 France 203 153 371 208 271 255 312 277 786 19 Germany 120 152 367 312 298 434 342 290 381 20 Netherlands 348 238 265 380 429 420 385 727 732 21 Switzerland 217 153 357 422 433 580 591 682 779 22 United Kingdom 9,039 7,4% 7,971 9,016 10,222 10,997 11,226 11,507 8,663 23 Canada 2,325 1,904 2,934 1,929 2,017 2,172 2,674 2,744 2,537 24 Latin America and Caribbean 8,160 8,020 6,201 6,278 5,926 6,289 7,793 6,836 6,990 25 Bahamas 1,846 1,890 1,090 825 457 652 758 400 523 26 Bermuda 19 7 3 6 4 19 8 12 12 27 Brazil 47 224 68 68 127 137 192 191 181 28 British West Indies 5,763 5,486 4,635 4,949 4,957 5,106 6,300 5,748 5,804 29 Mexico 151 94 177 179 161 176 321 318 343 30 Venezuela 21 20 25 28 29 32 40 34 32 31 Asia 623 590 860 568 747 619 %2 1,009 1,280 32 Japan 354 213 523 246 398 277 385 423 712 33 Middle East oil-exporting countries2 .. 5 8 8 11 4 3 5 3 4 34 Africa 106 140 37 62 64 61 57 60 57 35 Oil-exporting countries3 10 12 0 3 1 1 1 0 0 36 All other4 148 180 207 269 275 294 311 297 302 Commercial claims 4 4 3 4 4 3 3 1 2 9 0 3 7 8 Eu N G S U F B r w o r e e e n a p l t r i i g n h m t t e e z i c e u d e a e r m r n l l a K y a n a n i d n n d s d g d L om ux embourg 5 1 , , 1 6 6 2 3 3 1 8 4 1 7 6 2 8 1 4 2 2 9 4 9 6 1 , , 2 4 5 2 9 6 3 0 7 7 4 1 6 % 9 9 5 2 3 4 7 1 1 , , , 0 5 3 2 8 7 2 4 0 5 7 1 0 4 4 1 5 5 2 7 0 7 1 1 , , , 0 6 3 6 2 2 8 0 6 2 3 7 7 2 4 0 5 9 4 3 7 7 1 1 , , , 4 2 2 9 7 4 8 6 % 0 0 1 5 2 4 2 7 7 8 0 6 1 1 , , , 8 6 2 8 8 3 1 8 5 4 0 5 3 9 4 8 1 7 8 0 0 7 2 1 , , , 8 0 6 2 9 5 1 6 7 9 4 3 3 9 5 8 5 3 4 9 2 7 2 1 , , , 8 6 0 9 3 5 1 0 4 6 2 2 5 8 9 5 9 7 9 2 1 7 2 1 , , , 8 0 6 2 3 5 8 5 7 5 5 1 3 9 2 8 5 9 3 4 2 44 Canada 983 1,091 1,074 1,213 1,241 1,232 1,169 1,167 1,118 45 Latin America and Caribbean 2,241 2,184 2,375 2,334 2,433 2,494 2,590 2,564 2,619 46 Bahamas 36 58 14 15 16 8 11 11 9 47 Bermuda 230 323 246 231 247 255 263 272 283 48 Brazil 299 297 326 327 309 385 418 361 431 49 British West Indies 22 36 40 49 43 37 41 45 31 50 Mexico 461 508 661 653 710 741 828 889 846 51 Venezuela 227 147 192 181 195 196 202 206 246 52 Asia 2,993 3,570 4,127 4,357 4,201 4,282 4,552 4,326 4,387 53 Japan , 946 1,199 1,460 1,816 1,645 1,808 1,861 1,770 1,753 54 Middle Eastern oil-exporting countries' 453 518 460 498 501 4% 622 636 601 55 Africa 435 429 488 394 428 431 418 417 417 56 Oil-exporting countries3 122 108 67 68 63 80 95 75 70 57 Other4 333 393 367 474 454 456 472 434 411 1. For a description of the changes in the international statistics tables, see 3. Comprises Algeria, Gabon, Libya, and Nigeria. Federal Reserve Bulletin, vol. 65, (July 1979), 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 Transaction and area or country 1990" 1991 J A a u n g .- . Feb. Mar. Apr. May June July Aug. U.S. corporate securities STOCKS 1 Foreign purchases 173,293 211,204 148,025 21,429 18,857 17,536 18,664 16,525 18,547 13,165 2 Foreign sales 188,419 200,116 154,299 21,200 19,423 18,034 18,602 17,537 18,764 14,839 3 Net purchases or sales (-) -15,126 11,088 -6,274 229 -566 -498 62 -1,012 -217 -1,674 4 Foreign countries -15,197 10,520 -6,374 230 -588 -531 27 -1,170 -234 -1,629 5 Europe -8,479 50 -5,213 -108 -88 -730 278 -1,184 -964 -1,099 6 France -1,234 9 -801 -224 -27 -217 -121 -148 10 -46 7 Germany -367 -63 -109 30 -36 -48 149 -4 -14 -26 8 Netherlands -397 -227 -335 -115 -17 -38 76 -217 -14 -54 9 Switzerland -2,866 -131 275 304 260 90 122 -10 -55 -150 10 United Kingdom -2,980 -354 -3,865 -306 -237 -334 -11 -691 -741 -663 11 Canada 886 3,845 1,692 234 410 412 230 74 131 -59 12 Latin America and Caribbean -1,330 2,177 993 359 -322 45 43 -109 -24 -24 13 Middle East1 -2,435 -134 -15 101 121 -95 85 51 4 -11 14 Other Asia -3,477 4,255 -4,139 -399 -886 -158 -557 141 373 -442 15 Japan -2,891 1,179 -4,118 -617 -496 -318 -401 35 174 -301 16 Africa -63 153 42 15 4 -1 20 -1 -7 -1 17 Other countries -298 174 266 28 173 -4 -72 -142 253 7 18 Nonmonetary international and regional organizations 71 568 100 -1 22 33 35 158 17 -45 BONDS2 19 Foreign purchases 118,764 153,096 141,453 17,983 17,429 16,722 17,539 16,691 18,274 20,327 20 Foreign sales 102,047 125,634 113,337 14,790 14,398 11,666 13,222 12,407 16,301 16,202 21 Net purchases or sales (—) 16,717 27,462 28,116 3,193 3,031 5,056 4,317 4,284 1,973 4,125 22 Foreign countries 17,187 27,592 27,891 3,187 2,942 4,861 4,388 4,205 2,094 4,110 23 Europe 10,079 13,115 12,947 2,345 1,183 2,003 1,920 1,420 983 1,705 24 France 373 847 860 58 -34 363 -45 364 161 -5 25 Germany -377 1,577 1,406 277 116 391 67 11 -37 -13 26 Netherlands 172 482 148 12 -15 -122 123 64 177 22 27 Switzerland 284 656 -283 252 124 -393 -40 -53 -13 -93 28 United Kingdom 10,383 8,933 9,639 1,756 745 1,543 1,496 847 714 1,635 29 Canada 1,906 1,623 -253 97 -72 87 -68 -111 67 -100 30 Latin America and Caribbean 4,328 2,672 6,377 708 1,443 572 1,022 619 663 878 31 Middle East1 3 1,787 2,023 -27 349 338 455 376 239 284 32 Other Asia 1,120 8,459 6,778 41 75 1,778 1,088 1,904 231 1,364 33 Japan 727 5,767 403 -121 -316 687 324 740 -710 -458 34 Africa 96 52 113 15 28 19 6 -6 22 1 35 Other countries -344 -116 -94 8 -64 64 -35 3 -111 -22 36 Nonmonetary international and regional organizations -471 -131 225 6 89 195 -71 79 -121 15 Foreign securities 37 Stocks, net purchases or sales (-) -9,205 -31,967 -16,966 -2,293 -2,801 -2,295 -913 72 -3,240 -2,913 38 Foreign purchases 122,641 120,598 99,047 10,628 12,977 11,336 13,871 14,604 13,469 9,685 39 Foreign sales 131,846 152,565 116,013 12,921 15,778 13,631 14,784 14,532 16,709 12,598 40 Bonds, net purchases or sales (-) -22,412 -14,828 -11,917 269 -357 -1,318 -2,767 -1,626 -4,708 -43 41 Foreign purchases 314,645 330,311 291,689 33,576 33,045 30,421 33,109 40,145 42,414 42,7% 42 Foreign sales 337,057 345,139 303,606 33,307 33,402 31,739 35,876 41,771 47,122 42,839 43 Net purchases or sales (—), of stocks and bonds -31,617 -46,795 -28,883 -2,024 -3,158 -3,613 -3,680 -1,554 -7,948 -2,956 44 Foreign countries -28,943 -46,711 -32,144 -2,189 -3,492 -4,768 -3,706 -1,938 -8,807 -3,043 45 Europe -8,443 -34,452 -19,927 -2,251 -605 -2,972 -163 -1,437 -5,751 -2,238 46 Canada -7,502 -7,004 -4,912 1,154 -513 -904 -710 -852 -2,212 133 47 Latin America and Caribbean -8,854 759 -1,304 708 -479 -845 -1,278 -556 1,623 341 48 Asia -3,828 -7,350 -5,376 -1,524 -1,596 122 -1,235 372 -2,459 -1,252 49 Africa -137 -9 -72 -10 1 9 -99 7 14 11 50 Other countries -180 1,345 -553 -266 -300 -178 -221 528 -22 -38 51 Nonmonetary international and regional organizations -2,673 -84 3,261 165 334 1,155 26 384 859 87 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. In a July 1989 merger, the former stockholders of a U.S. company received government agencies and corporations. Also includes issues of new debt securi- $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 • December 1992 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1992 Country or area 1990F 1991 J A a u n g .- . Feb. Apr. May June July Aug. Transactions, net purchases or sales (-) during period1 1 Estimated total2 18,927 19,865 24,641 4,632 -9,464 6,558 -7,924 14,448 -1,873 6,994 2 Foreign countries2 18,764 19,687 22,908 5,015 -10,063 7,579 -6,945 11,758 -2,297 7,348 3 Europe2 18,455 8,663 9,236 7,751 -4,679 3,207 -7,302 3,828 -2,464 3,521 4 Belgium and Luxembourg 10 523 1,436 2% -91 21 289 -49 331 80 5 Germany 5,880 -4,725 1,870 287 -242 441 329 824 -829 255 6 Netherlands 1,077 -3,735 -3,667 -967 245 -219 -338 227 -1,046 367 7 Sweden 1,152 -663 -487 300 102 -123 -3 372 -26 -1,289 8 Switzerland2 112 1,007 -1,688 -388 -411 10 -579 3 -389 -76 9 United Kingdom -1,259 6,218 10,110 6,582 -1,663 2,820 -5,867 1,664 193 3,752 1 1 1 0 O Ea th st e e r rn W E es u t r e o r p n e Europe 11,46 1 3 3 10,02 1 4 3 1, 4 2 2 3 8 4 1,6 4 0 0 1 -2,62 1 9 0 25 0 7 -1, - 0 3 9 4 9 2 5 0 8 0 7 -8 1 9 9 5 7 41 1 7 5 12 Canada -4,627 -3,019 5,571 -1,169 -460 185 2,627 47 2,520 900 13 Latin America and Caribbean 14,734 10,285 -2,576 -539 -1,361 2,780 -320 3,589 -2,869 -1,563 14 Venezuela 33 10 315 169 73 -124 -1% -149 216 60 15 Other Latin America and Caribbean 3,943 4,179 1,017 -351 -262 3,723 -2,472 1,795 -589 -758 16 Netherlands Antilles 10,757 6,097 -3,908 -357 -1,172 -819 2,348 1,943 -2,4% -865 17 Asia -10,952 3,367 13,418 -430 -3,321 1,363 -2,406 4,129 1,791 4,604 18 Japan -14,785 -4,081 2,615 -1,933 -3,044 657 1,085 1,638 2,221 2,378 19 Africa 313 689 %2 100 125 193 40 92 149 56 20 Other 842 -298 -3,703 -367 -149 416 73 -1,424 -170 21 Nonmonetary international and regional organizations 163 178 1,733 -383 599 -1,021 -979 2,690 424 -354 2 2 2 3 L In a t t e in rn a A t m io e n r a i l c an regional 2 -2 8 7 -3 -7 5 2 8 1,88 4 7 7 -22 5 8 1 801 0 -76 7 2 4 -7 - 4 4 7 2,4 1 2 2 1 7 - 3 6 6 8 5 -1 -7 6 5 0 MEMO 24 Foreign countries2 18,764 19,687 22,908 5,015 -10,063 7,579 -6,945 11,758 -2,297 7,348 25 Official institutions 23,218 1,190 9,300 -192 -3,136 1,712 -2,685 5,294 -1,073 687 26 Other foreign -4,453 18,4% 13,608 5,207 -6,927 5,867 -4,260 6,464 -1,224 6,661 Oil-exporting countries 2 2 7 8 M Af i r d i d c l a e 4 EasP -387 0 -6,8 2 2 3 2 9 2,926 7 1,67 0 9 23 0 3 55 1 6 5 -3,061 0 - 9 5 4 6 7 856 0 1,093 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 Oct. 31, 1992 Rate on Oct. 31, 1992 Rate on Oct. 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 Oct. 1992 Germany... 8.25 Sept. 1992 Norway 10.50 July 1990 Belgium . 7.75 Oct. 1992 Italy 14.0 Oct. 1992 Switzerland 6.0 Sept. 1992 Canada.. 6.30 Oct. 1992 Japan 3.25 July 1992 United Kingdom 12.0 Sept. 1992 Denmark 9.5 Dec. 1991 Netherlands 7.75 Oct. 1992 France .. 9.6 Dec. 1991 1. Rates shown are mainly those at which the central bank either discounts or that the central bank transacts the largest proportion of its credit operations. makes advances against eligible commercial paper or government securities for 2. Since Feb. 1981, the rate has been that at which the Bank of France commercial banks or brokers. For countries with more than one rate applicable to discounts Treasury bills for seven to ten days. such discounts or advances, the rate shown is the one at which it is understood 3.27 FOREIGN SHORT-TERM INTEREST RATES1 Averages of daily figures, percent per year 1992 TTyyppee oorr ccoouunnttrryy 11998899 11999900 11999911 Apr. May June July Aug. Sept. Oct. 1 Eurodollars 10.87 10.01 8.46 4.05 3.84 3.87 3.40 3.33 3.15 3.30 2 United Kingdom 130.48 120.11 101.56 10.56 10.00 9.94 10.10 10.27 9.86 8.23 3 Canada 3,968.50 3,653.50 3,088.00 7.10 6.60 6.03 5.58 5.15 5.33 7.57 4 Germany 7.04 8.41 9.15 9.63 9.70 9.66 9.69 9.79 9.37 8.85 5 Switzerland 6.83 8.71 8.01 8.48 8.77 9.04 8.67 8.09 7.20 6.28 6 Netherlands 7.28 8.57 9.19 9.42 9.43 9.45 9.50 9.73 9.23 8.63 7 France 9.27 10.20 9.49 9.92 9.83 9.98 10.11 10.27 10.51 10.82 8 Italy 12.44 12.11 12.04 12.38 12.39 13.38 15.54 15.27 17.54 15.52 9 Belgium 8.65 9.70 9.30 9.50 9.51 9.50 9.54 9.71 9.44 8.70 10 Japan 5.39 7.75 7.33 4.72 4.72 4.60 4.32 3.87 3.89 3.85 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 • December 1992 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar, except as noted 1992 CCoouunnttrryy//ccuurrrreennccyy uunniitt 11998899 11999900 11999911 May June July Aug. Sept. Oct. 1 Australia/dollar2 10.870 10.010 8.460 75.587 75.561 74.507 72.479 72.255 71.481 2 Austria/schilling 130.480 120.110 101.560 11.422 11.068 10.500 10.199 10.214 10.436 3 Belgium/franc 3,968.500 3,653.500 3,088.000 33.386 32.362 30.717 29.824 29.917 30.581 4 Canada/dollar 1.1842 1.1668 1.1460 1.1991 1.1960 1.1924 1.1907 1.2225 1.2453 5 China, P.R./yuan 3.7673 4.7921 5.3337 5.5182 5.4893 5.4564 5.4417 5.5048 5.5486 6 Denmark/krone 7.3210 6.1899 6.4038 6.2678 6.0573 5.7409 5.5851 5.6203 5.7278 / Finland/markka 4.2963 3.8300 4.0521 4.4075 4.2846 4.0803 3.9773 4.4764 4.70% 8 France/franc 6.3802 5.4467 5.6468 5.4548 5.2940 5.0321 4.9119 4.9378 5.0370 9 Germany/deutsche mark 1.8808 1.6166 1.6610 1.6225 1.5726 1.4914 1.4475 1.4514 1.4851 10 Greece/drachma 162.60 158.59 182.63 192.09 190.69 182.89 179.12 182.70 192.50 11 Hong Kong/dollar 7.8008 7.7899 7.7712 7.7421 7.7343 7.7341 7.7318 7.7298 7.7298 12 India/rupee 16.213 17.492 22.712 28.542 28.519 28.564 28.464 28.476 28.477 13 Ireland/pound2 141.80 165.76 161.39 164.62 169.80 178.76 183.26 181.90 177.19 14 Italy/lira 1,372.28 1,198.27 1,241.28 1,220.95 1,189.52 1,129.83 1,100.00 1,176.21 1,309.64 15 Japan/yen 138.07 145.00 134.59 130.77 126.84 125.88 126.23 122.60 121.17 16 Malaysia/ringgit 2.7079 2.7057 2.7503 2.5223 2.5187 2.4999 2.4977 2.5029 2.5044 1 1 7 8 N N e ew th e Z rl e a a n la d n s/ d g / u d i o l l d l e a r r 2 5 2 9 . . 1 7 2 93 1 9 59 1 . . 6 8 1 2 9 1 5 57 1 . . 8 8 3 7 2 2 0 53 1 . . 5 8 1 2 4 6 8 54 1 . . 2 7 0 7 1 1 9 54 1 . . 6 6 0 8 9 1 9 54 1 . . 0 6 5 3 7 2 2 54 1 . . 1 6 1 3 2 4 8 53 1 . . 9 6 4 7 3 1 7 19 Norway/krone 6.9131 6.2541 6.4912 6.3311 6.1493 5.8581 5.7120 5.8116 6.0562 20 Portugal/escudo 157.53 142.70 144.77 135.23 130.79 126.24 124.98 127.86 132.33 21 Singapore/dollar 1.9511 1.8134 1.7283 1.6408 1.6240 1.6142 1.6077 1.5988 1.6081 22 South Africa/rand 2.6214 2.5885 2.7633 2.8483 2.8077 2.7577 2.7629 2.8037 2.8923 2i South Korea/won 674.29 710.64 736.73 786.83 793.60 789.93 792.56 788.76 786.79 24 Spain/peseta 118.44 101.96 104.01 101.47 99.02 94.88 93.05 98.19 105.74 25 Sri Lanka/rupee 35.947 40.078 41.200 43.445 43.941 44.014 44.050 44.159 44.276 26 Sweden/krona 6.4559 5.9231 6.0521 5.8462 5.6792 5.4084 5.2745 5.3685 5.6006 21 Switzerland/franc 1.6369 1.3901 1.4356 1.4907 1.4250 1.3347 1.2966 1.2780 1.3176 28 Taiwan/dollar 26.407 26.918 26.759 25.016 24.770 24.783 25.120 25.227 25.278 29 Thailand/baht 25.725 25.609 25.528 25.550 25.400 25.293 25.265 25.209 25.253 30 United Kingdom/pound2 163.82 178.41 176.74 180.95 185.51 191.77 194.34 184.65 165.29 MEMO 31 United States/dollar3 98.60 89.09 89.84 88.30 85.91 82.57 80.97 81.98 85.03 1. Averages of certified noon buying rates in New York for cable transfers. currencies often industrial countries. The weight for each of the ten countries is Data in this table also appear in the Board's G.5 (405) monthly statistical release. the 1972-76 average world trade of that country divided by the average world 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 September 30, 1991 February 1992 A70 December 31, 1991 May 1992 A70 March 31, 1992 August 1992 A70 June 30, 1992 November 1992 A70 Terms of lending at commercial banks November 1991 September 1992 A70 February 1992 September 1992 A74 May 1992 September 1992 A78 August 1992 November 1992 A76 Assets and liabilities of U.S. branches and agencies of foreign banks September 30, 1991 February 1992 A80 December 31, 1991 May 1992 A76 March 31, 1992 September 1992 A82 June 30, 1992 November 1992 A80 Pro forma balance sheet and income statements for priced service operations June 30, 1991 November 1991 A80 September 30, 1991 January 1992 A70 March 30, 1992 August 1992 A80 June 30, 1992 October 1992 A70 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 Index to Statistical Tables References are to pages A3-A68 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Demand deposits—Continued Agricultural loans, commercial banks, 20, 21 Ownership by individuals, partnerships, and Assets and liabilities (See also Foreigners) corporations, 22 Banks, by classes, 19-21 Turnover, 16 Domestic finance companies, 34 Depository institutions Federal Reserve Banks, 11 Reserve requirements, 9 Financial institutions, 26 Reserves and related items, 4, 5, 6,13 Foreign banks, U.S. branches and agencies, 22 Deposits (See also specific types) Automobiles Banks, by classes, 4, 19-21, 22 Consumer installment credit, 37, 38 Federal Reserve Banks, 5,11 Production, 47, 48 Turnover, 16 Discount rates at Reserve Banks and at foreign central banks and foreign countries (See Interest rates) BANKERS acceptances, 10, 23, 24 Bankers balances, 19-21. (See also Foreigners) Discounts and advances by Reserve Banks (See Loans) Bonds (See also U.S. government securities) Dividends, corporate, 33 New issues, 33 Rates, 24 EMPLOYMENT, 45 Branch banks, 22, 55 Eurodollars, 24 Business activity, nonfinancial, 44 Business expenditures on new plant and equipment, 33 FARM mortgage loans, 36 Business loans (See Commercial and industrial loans) Federal agency obligations, 5, 10, 11, 12, 29, 30 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 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 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 Discount rates (See Interest rates) Real estate mortgages held, by holder and property, 36 U.S. government securities held, 5, 11, 12, 28 Time and savings deposits, 4 Federal Reserve credit, 5,6, 11, 12 Commercial paper, 23, 24, 34 Federal Reserve notes, 11 Condition statements (See Assets and liabilities) Federally sponsored credit agencies, 31 Construction, 44, 49 Finance companies Consumer installment credit, 37, 38 Assets and liabilities, 34 Consumer prices, 44,46 Business credit, 34 Consumption expenditures, 52, 53 Loans, 37, 38 Corporations Paper, 23, 24 Nonfinancial, assets and liabilities, 33 Financial institutions Profits and their distribution, 33 Loans to, 20, 21, 22 Security issues, 32, 65 Selected assets and liabilities, 26 Cost of living (See Consumer prices) Float, 51 Credit unions, 37 Flow of funds, 39,41, 42, 43 Currency and coin, 19 Foreign banks, assets and liabilities of U.S. branches and Currency in circulation, 5, 14 agencies, 21, 22 Customer credit, stock market, 25 Foreign currency operations, 11 Foreign deposits in U.S. banks, 5, 11, 20, 21 DEBITS to deposit accounts, 16 Foreign exchange rates, 68 Debt (See specific types of debt or securities) Foreign trade, 54 Demand deposits Foreigners Banks, by classes, 19-22 Claims on, 55, 57, 60, 61, 62, 64 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 Foreigners—Continued REAL estate loans Liabilities to, 21, 54, 55, 57, 58, 63, 65, 66 Banks, by classes, 17, 20, 21, 36 Financial institutions, 26 GOLD Terms, yields, and activity, 35 Certificate account, 11 Type of holder and property mortgaged, 36 Stock, 5, 54 Repurchase agreements, 7, 18, 20, 21, 22 Government National Mortgage Association, 31, 35, 36 Reserve requirements, 9 Gross domestic product, 51 Reserves Commercial banks, 19 Depository institutions, 4, 5, 6, 13 HOUSING, new and existing units, 49 Federal Reserve Banks, 11 U.S. reserve assets, 54 INCOME, personal and national, 44, 51, 52 Residential mortgage loans, 35 Industrial production, 44, 47 Retail credit and retail sales, 37, 38,44 Installment loans, 37, 38 Insurance companies, 28, 36 SAVING Interest rates Flow of funds, 39,41,42, 43 Bonds, 24 National income accounts, 51 Consumer installment credit, 38 Savings and loan associations, 36, 37, 39. (See also SAIF-insured Federal Reserve Banks, 8 institutions) Foreign central banks and foreign countries, 67 Savings Association Insurance Funds (SAIF) insured institutions, 26 Money and capital markets, 24 Savings banks, 26, 36, 37 Mortgages, 35 Savings deposits (See Time and savings deposits) Prime rate, 23 Securities (See also specific types) International capital transactions of United States, 53-67 Federal and federally sponsored credit agencies, 31 International organizations, 57, 58, 60, 63, 64 Foreign transactions, 65 Inventories, 51 New issues, 32 Investment companies, issues and assets, 33 Prices, 25 Investments (See also specific types) Special drawing rights, 5, 11, 53, 54 Banks, by classes, 19, 20, 21, 22, 26 State and local governments Commercial banks, 4, 17, 19-21 Deposits, 20, 21 Federal Reserve Banks, 11, 12 Holdings of U.S. government securities, 28 Financial institutions, 36 New security issues, 32 Ownership of securities issued by, 20, 21 LABOR force, 45 Rates on securities, 24 Life insurance companies (See Insurance companies) Stock market, selected statistics, 25 Loans (See also specific types) Stocks (See also Securities) Banks, by classes, 19—21 New issues, 32 Commercial banks, 4, 17, 19-21 Prices, 25 Federal Reserve Banks, 5, 6, 8, 11,12 Financial institutions, 26, 36 Student Loan Marketing Association, 31 Insured or guaranteed by United States, 35, 36 TAX receipts, federal, 27 MANUFACTURING Thrift institutions, 4. (See also Credit unions and Savings and Capacity utilization, 46 loan associations) Production, 46, 48 Time and savings deposits, 4, 14, 18, 19, 20, 21, 22 Margin requirements, 25 Trade, foreign, 54 Member banks (See also Depository institutions) Treasury cash, Treasury currency, 5 Federal funds and repurchase agreements, 7 Treasury deposits, 5, 11, 26 Reserve requirements, 9 Treasury operating balance, 26 Mining production, 48 UNEMPLOYMENT, 45 Mobile homes shipped, 49 U.S. government balances Monetary and credit aggregates, 4, 13 Commercial bank holdings, 19, 20, 21 Money and capital market rates, 24 Treasury deposits at Reserve Banks, 5, 11, 26 Money stock measures and components, 4, 14 U.S. government securities Mortgages (See Real estate loans) Bank holdings, 19-21, 22, 28 Mutual funds, 33 Dealer transactions, positions, and financing, 30 Mutual savings banks (See Thrift institutions) Federal Reserve Bank holdings, 5, 11, 12, 28 Foreign and international holdings and NATIONAL defense outlays, 27 transactions, 11, 28, 66 National income, 51 Open market transactions, 10 Outstanding, by type and holder, 26, 28 OPEN market transactions, 10 Rates, 23 U.S. international transactions, 53-67 PERSONAL income, 52 Utilities, production, 48 Prices Consumer and producer, 44, 50 VETERANS Administration, 35, 36 Stock market, 25 Prime rate, 23 WEEKLY reporting banks, 20-22 Producer prices, 44, 50 Wholesale (producer) prices, 44, 50 Production, 44, 47 Profits, corporate, 33 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Federal Reserve Board of Governors and Official Staff ALAN GREENSPAN, Chairman WAYNE D. ANGELL DAVID W. MULLINS, JR., Vice Chairman EDWARD W. KELLEY, JR. OFFICE OF BOARD MEMBERS DIVISION OF INTERNATIONAL FINANCE JOSEPH R. COYNE, Assistant to the Board EDWIN M. TRUMAN, Staff Director DONALD J. WINN, Assistant to the Board LARRY J. PROMISEL, Senior Associate Director THEODORE E. ALLISON, Assistant to the Board for Federal CHARLES J. SIEGMAN, Senior Associate Director Reserve System Affairs DALE W. HENDERSON, Associate Director LYNN S. FOX, Special Assistant to the Board DAVID H. HOWARD, Senior Adviser WINTHROP P. HAMBLEY, Special Assistant to the Board DONALD B. ADAMS, Assistant Director BOB STAHLY MOORE, Special Assistant to the Board PETER HOOPER III, Assistant Director DIANE E. WERNEKE, Special Assistant to the Board KAREN H. JOHNSON, Assistant Director RALPH W. SMITH, JR., Assistant Director LEGAL DIVISION DIVISION OF RESEARCH AND STATISTICS J. VIRGIL MATTINGLY, JR., General Counsel SCOTT G. ALVAREZ, Associate General Counsel MICHAEL J. PRELL, Director RICHARD M. ASHTON, Associate General Counsel EDWARD C. ETTIN, Deputy Director OLIVER IRELAND, Associate General Counsel WILLIAM R. JONES, Associate Director KATHLEEN M. O'DAY, Associate General Counsel THOMAS D. SIMPSON, Associate Director MARYELLEN A. BROWN, Assistant to the General 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 MYRON L. KWAST, Assistant Director JENNIFER J. JOHNSON, Associate Secretary PATRICK M. PARKINSON, Assistant Director BARBARA R. LOWREY, Associate Secretary MARTHA S. SCANLON, Assistant Director ELLEN MALAND, Assistant Secretary 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 GERALD A. EDWARDS, JR., Assistant Director DIVISION OF CONSUMER JAMES D. GOETZINGER, Assistant Director AND COMMUNITY AFFAIRS LAURA M. HOMER, Assistant Director GRIFFITH L. GARWOOD, Director JAMES V. HOUPT, Assistant Director GLENN E. LONEY, Assistant Director JACK P. JENNINGS, Assistant Director DOLORES S. SMITH, Assistant Director MICHAEL G. MARTINSON, Assistant Director RHOGER H PUGH, Assistant Director SIDNEY M. SUSSAN, Assistant Director MOLLY S. WASSOM, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A73 JOHN P. LAWARE SUSAN M. PHILLIPS LAWRENCE B. LINDSEY OFFICE OF DIVISION OF RESERVE BANK OPERATIONS STAFF DIRECTOR FOR MANAGEMENT AND PAYMENT SYSTEMS S. DAVID FROST, Staff Director CLYDE H. FARNSWORTH, JR., Director WILLIAM SCHNEIDER, Special Assignment: DAVID L. ROBINSON, Deputy Director (Finance and Project Director, National Information Center Control) PORTIA W. THOMPSON, Equal Employment Opportunity CHARLES W. BENNETT, Assistant Director Programs Officer JACK DENNIS, JR., Assistant Director EARL G. HAMILTON, Assistant Director DIVISION OF HUMAN RESOURCES JEFFREY C. MARQUARDT, Assistant Director MANAGEMENT JOHN H. PARRISH, Assistant Director LOUISE L. ROSEMAN, Assistant Director DAVID L. SHANNON, Director FLORENCE M. YOUNG, Assistant Director JOHN R. WEIS, Associate Director ANTHONY V. DIGIOIA, Assistant Director OFFICE OF THE INSPECTOR GENERAL JOSEPH H. HAYES, JR., Assistant Director FRED HOROWITZ, Assistant Director BRENT L. BOWEN, Inspector General BARRY R. SNYDER, Assistant Inspector General OFFICE OF THE CONTROLLER GEORGE E. LIVINGSTON, Controller STEPHEN J. CLARK, Assistant Controller (Programs and Budgets) DARRELL R. PAULEY, Assistant Controller (Finance) DIVISION OF SUPPORT SERVICES ROBERT E. FRAZIER, Director GEORGE M. LOPEZ, Assistant Director DAVID L. WILLIAMS, Assistant Director DIVISION OF INFORMATION RESOURCES MANAGEMENT STEPHEN R. MALPHRUS, Director BRUCE M. BEARDSLEY, Deputy Director 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 RICHARD C. STEVENS, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Federal Reserve Bulletin • December 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 RICHARD G. DAVIS, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary THOMAS E. DAVIS, Associate Economist JOSEPH R. COYNE, Assistant Secretary DAVID E. LINDSEY, Associate Economist GARY P. GILLUM, Assistant Secretary ALICIA H. MUNNELL, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel LARRY J. PROMISEL, Associate Economist ERNEST T. PATRIKIS, Deputy General Counsel CHARLES J. SIEGMAN, Associate Economist MICHAEL J. PRELL, Economist THOMAS D. SIMPSON, Associate Economist EDWIN M. TRUMAN, Economist DAVID J. STOCKTON, Associate Economist JOHN M. DAVIS, Associate Economist WILLIAM J. MCDONOUGH, Manager of the System Open Market Account MARGARET L. GREENE, Deputy Manager for Foreign Operations JOAN E. LOVETT, Deputy Manager for Domestic Operations 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

A75 CONSUMER ADVISORY COUNCIL COLLEEN D. HERNANDEZ, Kansas City, Missouri, Chairman DENNY D. DUMLER, Denver, Colorado, Vice Chairman BARRY A. ABBOTT, San Francisco, California MICHAEL M. GREENFIELD, St. Louis, Missouri JOHN R. ADAMS, Philadelphia, Pennsylvania JOYCE HARRIS, Madison, Wisconsin JOHN A. BAKER, Atlanta, Georgia GARY S. HATTEM, New York, New York VERONICA E. BARELA, Denver, Colorado JULIA E. HILER, Marietta, Georgia MULUGETTA BIRRU, Pittsburgh, Pennsylvania HENRY JARAMILLO, Belen, New Mexico GENEVIEVE BROOKS, Bronx, New York KATHLEEN E. KEEST, Boston, Massachusetts TOYE L. BROWN, Boston, Massachusetts EDMUND MIERZWINSKI, Washington, D.C. CATHY CLOUD, Washington, D.C. BERNARD F. PARKER, JR., Detroit, Michigan 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 THRIFT INSTITUTIONS ADVISORY COUNCIL LYNN W. HODGE, Greenwood, South Carolina, President DANIEL C. ARNOLD, Houston, Texas, Vice President JAMES L. BRYAN, Richardson, Texas PRESTON MARTIN, San Francisco, California VANCE W. CHEEK, Johnson City, Tennessee RICHARD D. PARSONS, New York, New York BEATRICE D'AGOSTINO, Somerville, New Jersey THOMAS R. RICKETTS, Troy, Michigan THOMAS J. HUGHES, Merrifield, Virginia EDMOND M. SHANAHAN, Chicago, Illinois RICHARD A. LARSON, West Bend, Wisconsin WOODBURY C. TITCOMB, Worcester, Massachusetts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, Monetary Policy and Reserve Requirements Handbook. MS-138, Board of Governors of the Federal Reserve System, $75.00 per year. Washington, DC 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. 1984. 120 pp. Federal Reserve Regulatory Service, $250.00 per year. Each Handbook, $90.00 per year. ANNUAL REPORT. ANNUAL REPORT: BUDGET REVIEW, 1991-92. THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MULTI- FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or COUNTRY MODEL, May 1984. 590 pp. $14.50 each. $2.50 each in the United States, its possessions, Canada, WELCOME TO THE FEDERAL RESERVE. March 1989. 14 pp. and Mexico. Elsewhere, $35.00 per year or $3.00 each. INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. ANNUAL STATISTICAL DIGEST: period covered, release date, 440 pp. $9.00 each. number of pages, and price. FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. 1981 October 1982 239 pp. $ 6.50 December 1986. 264 pp. $10.00 each. 1982 December 1983 266 pp. $ 7.50 FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY- 1983 October 1984 264 pp. $11.50 SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. 1984 October 1985 254 pp. $12.50 1985 October 1986 231 pp. $15.00 1986 November 1987 288 pp. $15.00 CONSUMER EDUCATION PAMPHLETS 1987 October 1988 272 pp. $15.00 Short pamphlets suitable for classroom use. Multiple copies are 1988 November 1989 256 pp. $25.00 available without charge. 1980-89 March 1991 712 pp. $25.00 1990 November 1991 185 pp. $25.00 Consumer Handbook on Adjustable Rate Mortgages 1991 November 1992 215 pp. $25.00 Consumer Handbook to Credit Protection Laws SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES A Guide to Business Credit for Women, Minorities, and Small OF CHARTS. Weekly. $30.00 per year or $.70 each in the Businesses United States, its possessions, Canada, and Mexico. Else- How to File A Consumer Credit Complaint where, $35.00 per year or $.80 each. Series on the Structure of the Federal Reserve System THE FEDERAL RESERVE ACT and other statutory provisions The Board of Governors of the Federal Reserve System affecting the Federal Reserve System, as amended through The Federal Open Market Committee August 1990. 646 pp. $10.00. Federal Reserve Bank Board of Directors REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL Federal Reserve Banks RESERVE SYSTEM. Organization and Advisory Committees ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— A Consumer's Guide to Mortgage Lock-Ins Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. A Consumer's Guide to Mortgage Settlement Costs Vol. II (Irregular Transactions). 1969. 116 pp. Each vol- A Consumer's Guide to Mortgage Refinancings ume $2.25; 10 or more of same volume to one address, Home Mortgages: Understanding the Process and Your Right $2.00 each. to Fair Lending Introduction to Flow of Funds. 1980. 68 pp. $1.50 each; 10 or Making Deposits: When Will Your Money Be Available? more to one address, $1.25 each. When Your Home is on the Line: What You Should Know Federal Reserve Regulatory Service. Looseleaf; updated at About Home Equity Lines of Credit least monthly. (Requests must be prepaid.) Consumer and Community Affairs Handbook. $75.00 per year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A77 STAFF STUDIES: Summaries Only Printed in the 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- Bulletin VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by Gregory E. Elliehausen and John D. Wolken. September Studies and papers on economic and financial subjects that are 1990. 35 pp. of general interest. Requests to obtain single copies of the full 161. A REVIEW OF CORPORATE RESTRUCTURING ACTIVITY, text or to be added to the mailing list for the series may be sent 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

A78 ANTICIPATED SCHEDULE OF RELEASE DATES FOR PERIODIC RELEASES—BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM1 (PAYMENT MUST ACCOMPANY REQUESTS) Annual Approximate Date of period to which data Weekly Releases rate release days refer • Aggregate Reserves of Depository Institutions and $15.00 Thursday Week ended previous the Monetary Base. H.3 (502) [1.20] Wednesday • Actions of the Board: Applications and Reports $35.00 Friday Received. H.2 (501) Week ended previous Saturday • Assets and Liabilities of Insured Domestically $15.00 Monday Chartered and Foreign Related Banking Wednesday, 3 weeks earlier Institutions. H.8 (510) [1.25] • Factors Affecting Reserves of Depository $15.00 Thursday Week ended previous Institutions and Condition Statement of Federal Wednesday Reserve Banks. H.4.1 (503) [1.11] • Foreign Exchange Rates. H.10 (512) [3.28] $15.00 Monday Week ended previous Friday • Money Stock, Liquid Assets, and Debt Measures. $35.00 Thursday Week ended Monday of H.6 (508) [1.21] previous week • Selected Borrowings in Immediately Available $15.00 Wednesday Week ended Thursday of Funds of Large Commercial Banks. H.5 (507) previous week [1.13] • Selected Interest Rates. H.15 (519) [1.35] $15.00 Monday Week ended previous Saturday • Weekly Consolidated Condition Report of Large $15.00 Friday Wednesday, 1 week earlier Commercial Banks, and Domestic Subsidiaries. H.4.2 (504) [1.26, 1.30] Monthly Releases • Consumer Installment Credit. G.19 (421) [1.55, $ 5.00 5th working day of 2nd month previous 1.56] month • Debits and Deposit Turnover at Commercial Banks. $ 5.00 12th of month Previous month G.6 (406) [1.22] • Finance Companies. G.20 (422) [1.51, 1.52] $ 5.00 5th working day of 2nd month previous month • Foreign Exchange Rates. G.5 (405) [3.28] $ 5.00 1st of month Previous month • Industrial Production and Capacity Utilization. G.17 Previous month $15.00 Midmonth (419) [2.12, 2.13] • Loans and Securities at all Commercial Banks. G.7 Previous month $ 5.00 3rd week of month (407) [1.23] • Major Nondeposit Funds of Commercial Banks. Previous month $ 5.00 3rd week of month G.10 (411) [1.24] • Research Library—Recent Acquisitions. G. 15 (417) Free of 1st of month Previous month charge • Selected Interest Rates. G.13 (415) [1.35] $5.00 1st Tuesday of Previous month month 1. Release dates are those anticipated or usually met. However, please note that for some releases there is normally a certain variability because of reporting or processing procedures. Moreover, for all series unusual circumstances may, from time to time, result in a release date being later than anticipated. The respective Bulletin tables that report the data are designated in brackets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A79 Annual Approximate Date of period to which data Quarterly Releases rate release days refer • Agricultural Finance Databook. E. 15 (125) $ 5.00 End of March, January, April, July, and June, September, October and December • Country Exposure Lending Survey. E.16 (126) $ 5.00 January, April, Previous quarter July, and October • Flow of Funds Accounts: Seasonally Adjusted $25.00 23rd of February, Previous quarter and Unadjusted. Z.l (780) [1.57,1.58] May, August, and November • Flow of Funds Summary Statistics. Z.l (788) $ 5.00 15th of February, Previous quarter [1.59, 1.60] May, August, and November • Geographical Distribution of Assets and Liabilities $ 5.00 15th of March, Previous quarter of Major Foreign Branches of U.S. Banks. E.l 1 June, September, (121) and December • Survey of Terms of Bank Lending to Business. E.2 $ 5.00 Midmonth of February, May, August, and (HI) [4.23] March, June, November September, and December • List of OTC Margin Stocks. E.7 (117) $ 5.00 January, April, February, May, August, and July, and November October Semiannual Releases • Balance Sheets for the U.S. Economy. C.9 (108) $ 5.00 October and April Previous year • Report on the Terms of Credit Card Plans. E.5 $ 5.00 March and August January and June (115) Annual Releases • Aggregate Summaries of Annual Surveys of $ 5.00 February End of previous June Securities Credit Extension. C.2 (101) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A80 Index to Volume 78 GUIDE TO PAGE REFERENCES IN MONTHLY ISSUES Issue Text "A " Pages Issue Text "A " pages Index to Index to tables tables January 1-106 1-71 72-73 July 459-578 1-68 70-71 February 107-168 1-83 84-85 August 579-632 1-83 84-85 March 169-222 1-73 74-75 September .... 633-726 1-85 86-87 April 223-312 1-68 70-71 October 727-800 1-71 72-73 May 313-402 1-81 82-83 November .... 801-878 1-83 84-85 June 403-458 1-68 70-71 December 879-976 1-68 70-71 The "A" pages consist of statistical tables and reference information. Statistical tables are indexed separately (see p. A70 of this issue). Pages Pages ABU DHABI 509 Automated clearinghouses Agriculture, U.S. Department of 512 Services 729 Aid to Families with Dependent Children 894 Unit cost 515 Allison, Theodore E., statement 529 Amer, Howard A., appointed Assistant Director, Division of Banking Supervision and Regulation 687 BANC A Nazionale del Lavoro 512, 685 American Bankers Association 816 Bank for International Settlements, Basle 33, 600, 682 Angell, Wayne D. Bank Holding Company Act of 1956 Federal Reserve System, expenses and budget, statement . 515 Orders issued under Annual Statistical Digest, 1991, published 910 A.N.B. Holding Company, Ltd 627 Articles ABC Bancorp 963 An analysis of potential Treasury auction techniques 403 ABN AMRO Bank, N.V., Amsterdam, Asset-backed commercial paper programs 107 The Netherlands 296 Banking markets and the use of financial services by ABN AMRO Holding N.V., Amsterdam, households 169 The Netherlands 296 Changes in family finances from 1983 to 1989: ABN AMRO North America, Inc 296 Evidence from the survey of consumer finances Acquisition Corporation 963 Article 1 Allied Bank Capital, Inc 627 Errata 274 Allied Irish Banks pic, Dublin, Ireland 58 Deregulation and competition in Japanese banking 579 Alpha Financial Group, Inc 101, 456 Developments in the pricing of credit card services 652 AMCORE Financial, Inc 930 Evolution of the U.S. commercial paper market American Bancshares, Inc 721 since 1980 879 American Interstate Bancorporation, Inc 309 Expanded HMDA data on residential lending: Ames National Corporation 59 one year later 801 AmFirst Financial Services, Inc 163 Federal Reserve Banks as fiscal agents and APM Bancorp, Inc 218 depositories of the United States 727 Arlington State Banc Holding Company 627 Monetary policy report to the Congress 223, 633 Arvest Bank Group, Inc 379, 445 Recent developments affecting the profitability Associated Banc-Corp 380, 383 and practices of commercial banks 459 Aurora First National Company 380 State and local government sector: long-term trends Australia and New Zealand Banking Group Limited, and recent fiscal pressures 892 Melbourne, Australia 292 Treasury and Federal Reserve foreign Baily Financial Corporation 874 exchange operations 19, 242, 484, 738 Banc One Colorado Corporation 876 U.S. international transactions in 1991 313 Banc One Corporation .... 99, 159, 310, 573, 699, 722, 876 Atlanta Journal Constitution, publication of articles Banc One Mortgage Corporation 310 on mortgage lending 807 Banc One Ohio Corporation 699 Auction techniques by the U.S. Treasury, Banc One Texas Corporation 932 article on analysis 403 BanCentral Corporation 721 Australian government and indexed-linked bonds 606 Banco de Santander, S.A. de Credito, Ausubel, Lawrence 665 Santander, Spain 60, 72, 163 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A81 Pages Pages Bank Holding Company Act of 1956—Continued Bank Holding Company Act of 1956—Continued Orders issued under—Continued Orders issued under—Continued Bancorp of Mississippi, Inc 721 Community Bancorp of Louisiana, Inc 454 Banc West Bancorp, Inc 571 Community Bank Group, Inc 722 Bank Corporation of Georgia 874 Community Financial of Kentucky, Inc 163 Community First Bankshares, Inc 218, 309, 630, 874 Bank of New York Company, Inc 797 Community Group, Inc 454 BankAmerica Corporation 299, 338, 707 Continental Bancorporation 380 Bankers Trust New York Corporation 723 CoreStates Financial Corp 779 Banner Bancorp, Ltd 627 Country Bancorporation 99 Barnett Banks, Inc 218, 630 Country Bankers, Inc 628 Baylor Bancshares, Inc 628 County Bancshares, Inc 573 BB&T Financial Corporation 382, 454 Coweta Bancshares, Inc 218 Belleville Bancshares, Corporation 163 Cowlitz Bancorporation 163 Bellwood Community Holding Company 963 Crescent Banking Company 380 Berkshire Financial Services, Inc 571 Crossroads Bancshares, Inc 722 Big Sioux Financial, Inc 573 Crosswhite Bankshares, Inc 218 Bigfork Bancshares, Inc 722 CS Bancshares, Inc 380, 795 Blythedale Bancshares, Inc 630 CSB Bancorp Inc 99 BMC Bankcorp, Inc 723 Daupin Deposit Corporation 573 Boatmen's Bancshares, Inc 163, 370, 382, 723, 963 Dawson Corporation 380 BOK Financial Corporation 963 Decatur Investment, Inc 963 Bowbells Holding Company 721 Denmark Bancshares, Inc 876 BRAD, Inc 454 Deuel County Interstate Bank Company 963, 966 Brenton Banks, Inc 876 Dickinson Financial Corporation 722 Broadmoor Capital Corporation 795 Dixon Bancshares, Inc 380 Brooke Corporation 966 Donnelly Bancshares, Inc 722 Brooke Holdings, Inc 630, 797 DunC Corp 571 Browning Partners International, Inc 380 Dunlap Iowa Holding Co 963 Bushton Investment Company, Inc 218 Eagle Financial Services, Inc 99 BW3 Bancorporation 99 Edwards Brothers Holding Company, Inc 628 Camilla Bancshares, Inc 454 Elkton Holding Company 218 Capitol Bancorp Ltd 628 F & M Bancorporation 573 Cardinal Bancshares, Inc 797 F & M National Corporation 380 Carolina First BancShares, Inc 795 F. Calvin Packard Family Limited Partnership 218 Carolina First Corporation 937 F.N.B. Corporation 101 Carrollton Bancshares Corporation 963 F.S.B. Bancorporation, Inc. of Fort Morgan ESOP 219 CB Financial Corporation 218 F.S.B., Inc 550, 796 CB&T Clarksburg Corporation 704 F.W.S.F. Corporation 722 CB&T Financial Corp 628 Farmers National Bancorp, Inc 99 CB&T Financial Corporation 704 Farmers State Bancshares, Inc 571 CBA Bankshares, Inc 628 Farmers State Corporation 218 CBI-Illinois, Inc 454 Farmersville Bancshares, Inc 163 CBOC, Inc 163 FBOP Corporation 723 CBS Bancshares, Inc 309 Fidelity Southern Corporation 967 Central Bancompany, Inc 218 Fifth Third Bancorp 165, 573 Central Bancshares, Inc 797, 963 Financial Institutions, Inc 628 Central Delaware Financial Bancorp, Inc 722 Financial Investors of the South, Inc 219 Central Financial Bancorp, Inc 722 First Alabama Bancshares, Inc 101 Central Financial Corporation 795 First American Bank of Virginia 705 Centura Banks, Inc 99, 101, 876 First Autauga Bancshares, Inc 309 Chadwick Bancshares, Inc 218 First Bancorp of Kansas 964 Chase Manhattan Corporation 165 First Bancorp, Inc 101, 571 Chemical Bank 74 First Bancshares Corporation 628 Chemical Banking Corporation 74 First Bancshares of St. Landry, Inc 136 Childress Bancshares of Delaware, Inc 963 First Bank System, Inc 571, 948 Childress Bancshares, Inc 963 First Banks, Inc 454 Chuo Trust and Banking Company, Limited, First Beardstown Bancorp, Inc 163 Tokyo, Japan 446 First Busey Corporation 165 Citizens Bank Group, Inc 380 First Capital Bancorp, Inc 454 Citizens Holding Company, Inc 628 First Cecilian Bancorp, Inc 99 Citizens National Bancorp, Inc 874 First Central Bancshares, Inc 454 City Holding Company 454, 628 First Citizens Bancorp 722 CNB Bancshares, Inc 380 First Citizens Financial Corp 163 CNB of Central Indiana, Inc 380 First Commercial Bancshares, Inc 220 Coal City Corporation 963 First Commercial Corporation 98, 379 Colorado National Bankshares, Inc 874 First Commonwealth Financial Corporation 381 Columbia Bancorp 630 First Community Bancshares, Corp 628 Comerica Bank 554 First Community Bancshares, Inc 165, 310, 795 Comerica Incorporated 101, 554, 630 First Evergreen Corporation 99 Commerce Bancshares, Inc 454 First Fidelity Bancorp, Inc 795 Commercial Bancorp of Georgia, Inc 723 Commercial Financial Corp 454 First Financial Corporation 100, 795 Commonwealth Financial Corporation 874 First Financial Corporation of Idabel 100 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A82 Federal Reserve Bulletin • December 1992 Pages Pages Bank Holding Company Act of 1956—Continued Bank Holding Company Act of 1956—Continued Orders issued under—Continued Orders issued under—Continued First Holding Company of Park River Inc 163 Kansas Bank Corporation 164 First Integrity Bancshares, Inc 628 Key Centurion Bancshares, Inc 964 First Interstate BancSystem of Montana, Inc 939 Keystone Financial, Inc 572 First Maryland Bancorp 58 KLT Bancshares, Inc 309 First Metro Bancorp 628 KSAD, Inc 629 First Mid-Illinois Bancshares, Inc 631 Lake Forest Bancorp, Inc 100 First Midwest Corporation of Delaware 964 Lakeland First Financial Group, Inc 572 First National Agency of Bagley, Inc 454 Laredo National Bancshares, Inc 139 First National Bancorp 163, 874 Leachville State Bancshares, Inc 219 First National Bank of Artesia Employee Liberty Bancorp, Inc 964 Stock Ownership Plan, 163 Lindo, Inc 164 First National Johnson Bancshares, Inc 100 Lisco State Company 873 First Nebraska Bancs, Inc 873 Lockhart Bankshares, Inc 455 First Neighborhood Bancshares, Inc 219 Lockhart Bankshares-Delaware, Inc 455 First of America Bank Corporation 162, 371 LoLyn Financial Corporation 875 First Security Financial Corporation 627 Lost Pines Bancshares-Delaware, Inc 629 First Southeast Missouri Bancorporation 628 Mabrey Insurance Agency, Inc 455 First State Bancorp of Princeton, Illinois, Inc 795 Magna Acquisition Corporation 89 First State Bancshares, Inc 629 Magna Group, Inc 89 First Tule Bancorp of Delaware, Inc 454 Mahaska Investment Company 456 First Union Corporation 310, 335, 382, 797 Mahaska Investment Company ESOP 311, 456 Firstar Corporation 165, 219, 630, 722, 964 Mahoning National Bancorp, Inc 310 Firstar Corporation of Illinois 219, 965 Manufacturers National Corporation 573 FirstBank Holding Company Employee Marine Corporation 165 Stock Ownership Plan 99, 873 Marquette Bancshares, Inc 796 Firstbank of Illinois Co 874 Mason-Dixon Bancshares, Inc 310 Flatonia Bancshares-Delaware, Inc 164 Matewan BancShares, Inc 456 Flatonia Bancshares, Inc 164 McVille Financial Services, Inc 796 Fleet/Norstar Financial Group, Inc 570 Meigs County Bancshares, Inc 629 Flower Mound Bancshares, Inc 100 Mercantile Acquisition Corporation of Kansas I 964 FNB Bancorporation, Inc 164 Mercantile Bancorporation, Inc 100, 377, 966, 965 Forbes First Financial Corporation 381 Merchants Holding Company 164, 572 Fort Rucker Bancshares, Inc 965 Meridian Bancorp, Inc 379, 570 Fortress Bancshares, Inc 629 Merrill Merchants Bancshares, Inc 875 Fourth Financial Corporation 796 Mibank Corporation 796 Franklin Financial Services Corporation 573 Michigan National Corporation 65, 723 Friendship Bancshares, Inc 571 Mid Am, Inc 966 FSB Bankshares, Inc 874 Mid Penn Bancorp, Inc 100 Fuji Bank, Limited, Tokyo, Japan 382 Mid-Missouri Bancshares, Inc 381 Galatia Bancorp, Inc 309 Mid-South Bancorp, Inc 572 Georgia Bank Financial Corporation 164, 964 Mid-South Bancshares, Inc 219 Glacier Bancorp, Inc 713 MidAmerican Corporation 629 Glen Burnie Bancorp 454 Middle Georgia Corporation 629 Golden Financial Corporation 618 Midlothian State Bank Employee Stock Gore-Bronson Bancorp, Inc 784 Ownership Trust 572 Granville Bancshares, Inc 100 Minden Bancshares, Inc 381 Grayson Bankshares, Inc 454 Minden Exchange Company 381 Guaranty Development Company 874 Minnesota-Wisconsin Bancshares, Inc 381 Harbor Bankshares Corporation 964 MNB Bancshares, Inc 965 Hardwick Holding Company 100 Mohler Bancshares, Inc 965 Harleysville National Corporation 572 Montana Bancsystem, Inc 456 Haugo Bancshares, Inc 102 Montfort Bancorporation, Inc 573 Hawkeye Bancorporation 964 Morrill & Janes Bancshares, Inc 333 Heartland Bancorp, Inc 964 Morrill Bancshares, Inc 333 Heartland Bancshares, Inc 100 MSB Bancorp, Inc 722 Henning Bancshares, Inc 164 MSB Shares, Inc 219 Heritage Financial Services, Inc 100, 381 National City Corporation 310, 383, 552, 631 Hill Bancshares, Inc 629 National Westminster Bank PLC, London, England .... 953 Hinsbrook Bancshares, Inc 381 NBD Bancorp, Inc 164, 572, 573, 870, 966 HMS Holdings, Inc 214 NBD Indiana, Inc 966 HNB Corporation 455 NC Acquisition, Corp 383 Huntington Bancshares Inc 61 NCNB Corporation 92, 141, 162 Independence Bancshares, Inc 219 Nevada First Development Corporation 299 Independence Community Bank Corporation 383 New Mexico National Financial Incorporated 965 Independent Bankshares Corporation 874 NGLC, Inc 796 Interbank Holding Corporation 139 Nichols Bancorp Inc 219 Investors Banking Corporation 309 Niota Bancshares, Inc 455 J & L Holdings Limited Partnership 629 NoDak Bancorporation 722 J.P. Morgan & Co., Incorporated 723 North American Bancorp, Inc 629 Johnson Holdings, Inc 311 North Bank Corporation 875 Jones Bancorp, Inc 874 North Platte Corporation 381 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 78 A83 Pages Pages Bank Holding Company Act of 1956—Continued Bank Holding Company Act of 1956—Continued Orders issued under—Continued Orders issued under—Continued Northland Bancshares, Inc 723 Standard Bancorporation, Inc 100 Northwest Bancorporation, Inc 572 State Bancorp, Inc 219 Northwest Bancshares Corporation 629 State Financial Services Corporation 572 Northwest Financial Corp 455 State National Bancshares, Inc 164 Norwest Corporation 101, 165, 287, 456, Stearns Financial Services, Inc 102 573, 723, 875, 876, 966 Stichting Administratiekantoor ABN AMRO Holding, Norwest Financial Services, Inc 723 Amsterdam, The Netherlands 296 Oak Bancorporation 100 Stichting Prioriteit ABN AMRO Holding, Ohio Bancorp 381 Amsterdam, The Netherlands 296 Ohio County Community Bancshares, Inc 310 Stock Exchange Financial Corporation 722 Ohio Valley Banc Corp 875 Stockgrowers State Banc Corporation 796 Ohnward Bancshares, Inc 216 Sumitomo Bank, Limited 101 Old National Bancorp 219 Summit Bancorp, Inc 381, 796 Old Second Bancorp, Inc 164 Sun Banc, Corp 796 Old State Bank Corporation 455 Sun Banks, Inc 162 Orangeville Bancorp, Inc 219 Sun Financial Corporation 965 Otto Bremer Foundation and Bremer SunTrust Banks, Inc 162 Financial Corporation 876 Swainsboro Bankshares, Inc 630 P.N.B. Financial Corporation 796 Swisher Bankshares, Inc 382 Padgett Agency, Inc 219 Synovus Financial Corporation 965 Park Bankshares, Inc 629 Tate Financial Corporation 100 PBA Financial Corporation 381 Taylor Bancshares, Inc 706 Peach State Bankshares, Inc 722 TB&C Bancshares, Inc 455, 965 People's Savings Financial Corp 220 TCBankshares, Inc 219 Peoples Bancorporation, Inc 455 Tennessee Bancorp, Inc 219 Peoples Bancshares, Inc 572 Texas Regional Bancshares, Inc 289 Peoples First Corporation 381 Texas State Bank 289 Peoples Preferred Bancshares, Inc 572 Tomoka Bancorp, Inc 965 Peotone Bancorp, Inc 572 Trans Financial Bancorp, Inc 309 Phenix-Girard Bancshares, Inc 219 Triangle Bancorp, Inc 382 Pine State Bancshares, Inc 381 Tulsa Valley Bancshares Corporation 382 Pioneer Bancshares, Inc 629 U.K. Bancorporation, Inc 875 PNC Financial Corp 294, 797, 876 U.S. Bancorp 789 PNC Financial Corporation 876 U.S. Trust Corporation 336 Ponca Bancshares, Inc 100 Union Bancorp, Inc 455 Porter Bancshares, Inc 722 Union Bancorporation 165 Prairie Bancorp, Inc 629 Union Bancshares, Inc 164 Prairie Bancshares, Inc 164 Union Planters Corporation 70, 455, 796 Prairieland Bancorp, Inc 966 Union Savings Bancshares, Inc 165 Premier Financial Bancorp, Inc 629, 630 United Bank Corporation 101 Princeton National Bancorp, Inc 455 United Central Bancshares, Inc 382 Provident Bancorp, Inc 68, 381 United Community Banks, Inc 875 Pyramid Bancorp, Inc 875 United Missouri Bancshares, Inc 164 Regency Bancshares, Inc 875 United Nebraska Financial Company 310, 966 Republic Financial Corporation 164 United Security Bancorporation 102 Republic New York Corporation 955 USBANCORP, Inc 382, 796 Resource One, Inc 965 Valley Bancorporation 631 Rockwood Bancshares, Inc 796 Van Diest Investment Company 219 Romy Hammes Bancorp, Inc 100 Vidalia Bankshares, Inc 630 Roscoe (Delaware), Inc 796 Villages Bancorporation, Inc 455 Roscoe Financial Corporation 796 Vogel Bancshares, Inc 219 Saban, S.A., Panama City, Panama 955 Wabasha Holding Company 966 San Bancorp 455 Wabasso Bancshares, Inc 165 Sarasota BanCorporation, Inc 630 Wachovia Corporation 795 Second Bancorp, Inc 382 Wall Street Holding Company 382 Second Century Financial Corporation 965 Wellington Delaware Financial Corporation 875 Security Bancshares, Inc 722 Wes-Tenn Bancorp, Inc 165 Security Capital Bancorp 962 Wesbanco, Inc 572 Security Shares, Inc 787 West Milton Bancorp, Inc 572 Shawnee Bancshares, Inc 100 West One Bancorp 102, 722 Shorebank Corporation 619 Western Bancshares, Inc 875 Skandinaviska Enskilda Banken, Stockholm, Sweden .. 868 Western Washington Bancorp 797 Sky Valley Bank Corp 164 Whitaker Bancshares, Inc 630 Slippery Rock Financial Corporation 572 Society Corporation 302, 722 Whitaker Bank Corporation of Kentucky 165, 630 South Central Bancshares, Inc 630 Wilson Bank Holding Company 875 Southern Banking Corporation 455 Wilton Holding Company 310 Southern National Corporation 309, 626 Winton Jones Limited Partnership 797 SouthTrust Corporation 381, 570, 710, 873 Worthen Banking Corporation 101 SouthTrust of South Carolina, Inc 873 WSB Bancshares, Inc 875 Southwest Bancshares, Inc 164, 875 Bank Holding Company Performance Report 517 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A84 Federal Reserve Bulletin • December 1992 Pages Pages Bank holding companies Basle Capital Accord 587, 670 Nonbank subsidiary amendment to Regulation Y 697 Basle Committee on Banking Supervision 587, 682, 685 Streamlining of procedures for handling applications 752 Bennett, Charles W., appointed Assistant Director, U.S. in French market, proposed action, April 10, 1992 ... 429 Cash and Fiscal Agency/Definitive programs, Bank Insurance Fund 905, 908 Reserve Bank Operations and Payment Systems 688 Bank Merger Act Bermudez, Michael L., article 727 Orders issued under Biern, Herbert A., promoted to Deputy Associate Director, 1st Source Bank 94, 574 Division of Banking Supervision and Regulation — 687 1st United Bank 166 Board of Governors (See also Federal Reserve System) American Bank 574 Consumer Advisory Council (See Consumer Advisory Auburn State Bank 103 Council) BancFirst 798 Expenses and budget, statement 516 Bank of Hampton Roads 724 Federal Open Market Committee (See Federal Bank One, Champaign-Urbana 876 Open Market Committee) Centura Bank 967 Litigation (See Litigation) Centura Interim Bank 103 Members Chemical Bank 220,311 Greenspan, Alan, reappointment as Chairman 272 Chemical Bank Michigan 166 Lindsey, Lawrence B., appointment 36 Citizens Fidelity Bank and Trust Company ... 166, 574, 724 List, 1913-92 105, 576 City Center Bank of Colorado 798 Phillips, Susan Meredith, appointment 36 CivicBank of Commerce 383 Policy statements Clifton Trust Bank 103 Institutions to analyze lending patterns 332 Cole Taylor Bank 967 Relocation of subsidiaries to another state, rescission .. 332 Commercial and Savings Bank 103 Publications (See Publications in 1992) Commercial Trust and Savings Bank 631 Regulations (See Regulations) Commonwealth Bank 166 Staff Changes Custer County Bank 967 Amer, Howard A 687 DeMotte State Bank 876 Bennett, Charles W. 688 Farmers State Bank of Western Illinois 716 Biern, Herbert A 687 Fifth Third Bank, Cincinnati, Ohio 96, 166 Cole, Roger T. 687 Fifth Third Bank, Columbus, Ohio 96 Dennis, Jack 688 First of America Bank-Ann Arbor 450, 627 Edwards, Gerald A., Jr. 687 First State Bancorporation, Inc 103 Fox, Lynn S 332 First State Bank of Taos 103 Gamer, James 1 687 Fleet Bank of New York 798 Hambley, Winthrop P. 332 Fleet Bank-NH 217 Hamilton, Earl G 688 Interim Central Bank 383 Henderson, Dale W 127 Johnstown Bank and Trust Company 724 Homer, Laura M 687 King Bancshares, Inc 574 Houpt, James V. 687 Lorain County Bank 166 Howard, David H 126 Manufacturers and Traders Trust Company 102, 621 Jennings, Jack P. 687 Mellon Bank (MD) 967 Maland, Ellen 834 Meridian Bank 571 Marquardt, Jeffrey C 688 Old Kent Bank and Trust Company 220 Mingo, John J 127 Old Kent Bank-Chicago 166 Parrish, John H 688 Peoples State Bank 383 Plotkin, Robert S 754 Provident Bank 383 Pugh, Rhoger H 687 SouthTrust Bank of Pinellas County 103 Roseman, Louise L 688 State Bank and Trust Company 383 Struble, Frederick M 687 Tri-State Bank 383 Summers, Bruce J 688, 834 United Missouri Bank of Paris 103 Wassom, Molly S 687 Vectra Bank 724 Young, Florence M 688 Vectra Bank of Englewood 724 Zemel, Robert J 754 Wesbanco Bank 220 Commentary Bank mergers, statement 262 Regulation B, revision to clarify 428 Bank of Credit and Commerce International Studies (See Staff studies) Basle Committee report, announcement 685 Statements to the Congress (See Statements Foreign Bank Supervision Enhancement Act of 1991, to the Congress) announcement 428 Thrift Institutions Advisory Council (See Thrift Statement 504 Institutions Advisory Council) Bank Secrecy Act 521 Boemio, Thomas R., article 107 BankAmerica Corporation Bonds, indexed, statement 603 Extension of comment period on application 208 Book-entry securities 730, 735 Security Pacific Corporation, announcement Bretton Woods Agreements Act of 1945 512 regarding public meeting 126 British index-linked gilts 606 Banking markets Developments, statement 905 Bureau of Public Debt, U.S. Treasury 734 Household use of financial services, article 169 Japanese, article 579 Staff study on size, from mortgage loan rates 117 Banking on the Brink, publication in statement on banking CANNER, Glenn B„ articles 652, 801 developments 906 Census, Bureau of the 4 Banking system in the United States, statement 597 CenTrust Savings Bank 505 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 78 A85 Pages Pages Changes in family finances from 1983 to 1989: evidence EARNINGS and expenses (See Income and expenses) from the survey of consumer finances, errata 274 Economic conditions, analyzing affecting forces, statement . 191 Check collection, same day settlement, amendment 923 Economic Recovery Tax Act 267 Chrysler Motor Company, exports 320 Economy Civil disturbances, financial services to affected cities 532 Monetary policy report to the Congress Code to Federal Regulations, rule to exclude some Business 229, 639 transactions from section 23A of Federal Reserve Act .... 867 External 231, 641 Cole, Roger T., promoted to Deputy Associate Director, Government 230, 640 Division of Banking Supervision and Regulation 687 Household 228, 637 Columbia Gas 889 Labor 233, 643 Commercial Bank Examination Manual 680 Price developments 234, 644 Commercial banks Statements by Chairman Greenspan 264, 673 Assets 461 Poverty and inequality in America, aspects of, statement . 513 Capital 464 Statements by Chairman Greenspan 253, 329 Capital, in statement 670 Edwards, Gerald A., Jr. Liabilities 463 Appointed Assistant Director, Division Regulatory burden, statement 607 of Banking Supervision and Regulation 687 Commercial paper Article 107 Asset-backed 885 Elliehausen, Gregory E., article 169 Programs, article 107 Equal Credit Opportunity Act (Regulation B) 193, 808 Market, article 879 Ettin, Edward C., statement 262 Committee on Interbank Netting Schemes 182 European Community 33 Committee on Payment and Settlement Systems 182 Expedited Funds Availability Act Commodity Credit Corporation, 1990, program, statement ..511 Regulation CC, amendment 207 Community Reinvestment Act EZ clear, FRB services 734 Examination ratings availability 125 Fair-lending compliance 814 Home mortgage disclosure, statement 500 FAIR Housing Act 193, 808, 816 Home mortgage lending, statement on discrimination 194 Fair Housing and Equal Opportunity, Department Comptroller of the Currency, Office of .... 3, 273, 332, 532, 835 of Housing and Urban Development 819 Conference of State Bank Supervisors, joint agreement 834 Fair Trade in Financial Services Act of 1991, statement 31 Congressional Joint Committee on Taxation 3 Family finances, changes in, article 1 Conlan, Sandra 533 Family Support Act of 1988 895 Consumer Advisory Council Farmers Home Administration 802 Lease-Purchase Agreement Act, statement 612 Federal Deposit Insurance Corporation 273, 332, 505, 532, Meetings 332, 532, 832 597, 672, 728, 835, 905 Members, new appointments 204 Federal Deposit Insurance Corporation Nominations, announcement 685 Improvement Act of 1991 Consumer Credit Protection Act 532, 612 Actions taken under Consumer Finances, 1989 survey 663 Alex Sheshunoff & Company, Inc 622 Consumer finances, article 1 Amalgamated Clothing and Textile Workers Union 720 Consumer Handbook on Adjustable Rate Mortgages, ANB Corporation 794 brochure 273 ASB Bankcorp, Inc 720 Consumer Leasing Act 612 Banc One Corporation 717, 872 Consumer's Guide to Mortgage Lock-ins, brochure 273, 526 Belmont Bancorp 794 Consumer's Guide to Mortgage Refinancings, Buchanan Ingersoll, P.C 623 brochure 273, 526 Consumer's Guide to Mortgage Settlement Costs, brochure . 273 BW3 Bancorporation 961 CCNB Corporation 872 Corrigan, E. Gerald Citizens Bancshares of Eldon, Inc 961 President, Federal Reserve Bank of New York 682 Citizens Bancshares of Marysville, Inc 959 Statements 199, 258 CNB, Inc 794 Credit Colonial BancGroup, Inc 794 Availability and terms, statement 746 Commercial National Financial Corporation 721 Bank lending availability, statement 27 County Bancshares, Inc 570 Card services, development, article 652 FBOP Corporation 721 Ratings of investors, commercial paper market, article .... 881 First Banks, Inc 794 Credit and Commerce American Holdings, N.V. 505 First Farmers & Merchants Corporation 872 Current population survey 4 First Fidelity Bancorporation 962 Firstar Corporation 626 Fishkill National Corporation 721 George Gale Foster Corporation 721 DEALER-PLACED paper 883 Great Lakes Financial Resources, Inc., Decatur Federal Savings and Loan Association 807 Employee Stock Ownership Plan 794 Dennis, Jack, appointed Assistant Director, Financial Illinois Financial Services, Inc 570 Examinations and Audit Review, Division of Reserve Mid Am, Inc 962 Bank Operations and Payment Systems 688 NBD Bank, National Association 626 Depository institutions (See specific types) NBSC Corporation 872 Reserve requirements (See Reserve requirements and Norwest Corporation 452 Regulations: D) Old Kent Financial Corporation 873 Directors, Federal Reserve Banks and Branches, list 386 Panhandle Bancshares, Inc 453 Discount rate (See Interest rates) Peoples Bancshares, Inc 873 Discover card, Sears Roebuck and Company 654 Peoples Savings, Inc 873 Drexel Burnham Lambert Group 182 Puget Sound Bancorp 794 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A86 Federal Reserve Bulletin • December 1992 Pages Pages Federal Deposit Insurance Corporation Federal Reserve Banks—Continued Improvement Act of 1991—Continued Philadelphia 733 Actions taken under—Continued Richmond 734 Southern National Corporation 570 Federal Reserve Board (See Board of Governors) SouthTrust Corporation 570, 794, 962 Federal Reserve System (See also Board of Governors) SouthTrust of Florida, Inc 962 Expenses and budget, statement 515 SouthTrust of Georgia, Inc 570 Membership 1913-92, list 105, 576 West Shore Bank Corporation 719 Federal Tax Deposit Redesign 733 Banking system, statement 597, 609 Federal Trade Commission 504, 816 Credit availability 748 Fedline 425, 733, 734 H.R.5170, statement 525 Fedwire 731, 909 Monetary policy statement 676 Financial Institutions Reform, Recovery, Newspaper publication rule 833 and Enforcement Act of 1989 Prompt Corrective Action rule 833, 835 Orders issued under Real estate appraisal regulation, delay 126 Advance Bancorp, Inc 98 Regulation CC amendment to implement 207 Citizens Financial Services, Inc 162 Regulation O amendment 533 First Commercial Corporation 379 Regulation Y amendment 429, 533 First United Bancshares 379 Federal Financial Institutions Examination Council Meridian Bancorp, Inc 379 CRA examination ratings available 125 Simmons First National Corporation 379 Federal Reserve supervision of bank lending Real estate appraisal regulation 126 on commercial real estate, statement 684 Financial Management Service 733 Home mortgage disclosure, statements 193, 500 Financial services Home mortgage dislosure, article 801 Cities affected by civil disturbances 532 Household use, article 169 Policy statement 332 Financing (See Loans) Prompt corrective action provision 906 First American Banks 505, 506 Real estate appraisal requirements 828 First American Bankshares 508 Regulatory burden, statement 609 First American Corporation 508 Report of condition and income, credit card article 661 First Liberty Loan Bonds 727 Revised policy on securities activities 207 First of Omaha Service Corporation 654 Federal Home Loan Mortgage Corporation 108, 429, 819 Ford Motor Company, exports 320 Federal Housing Administration 528, 802 Foreign Bank Supervision Enhancement Act 601 Federal Institutions Reform, Recovery, H.R.4803, statement 496 and Enforcement Act of 1989 503 Foreign Bank Supervision Enhancement Act of 1991 Federal National Mortgage Association 108, 429, 819 Interim regulation, announcement 428 Federal Open Market Committee Statement 34 Government securities statement 198 Foreign Exchange Law of 1980 582 Policy actions, record .. 38, 128, 280, 431, 534, 689, 755, 911 Foreign exchange operations of the Treasury Federal Register, in statement 31 and Federal Reserve, reports 19, 242, 484, 738 Federal Reserve Act 523, 727, 833, 867 Foreign stocks, list of marginable 208, 429, 686, 910, 918 Federal Reserve and Treasury foreign exchange Fox, Lynn S., appointed Special Assistant operations (See Foreign exchange operations) to the Board for Congressional Liaison 332 Federal Reserve Bank Branch Modernization Act 523 Frankel, Allen B., article 579 Federal Reserve Banks Friedman, Milton, in article 403 Atlanta 733 Full Employment and Balanced Growth Act of 1978 Boston 809 (See Monetary policy: Reports to the Congress) Branches Functional Cost Analysis program 658 Birmingham 523 El Paso 524 Houston 523 Nashville 523 G-7 Summit 740 Pittsburgh 733 Garner, James I., promoted to Deputy Associate Director, San Antonio 524 Division of Banking Supervision and Regulation 687 Budgets 520 Garwood, Griffith L., statement 612 Cleveland 735 General Accounting Office 3, 510, 829 Depository services 728 General Motors, exports 320 Directors, list 386 Gilbert, Adam, staff study 182 District Banks, responsibility to government securities market 256 Glass-Steagall Act 603 EZ clear 734 Gollob, Emily, staff study 182 Fedline 734 Government National Mortgage Association 108, 465, 819 Fiscal agency services 729 Government Securities Act of 1986 257 Fiscal agents and depositories of U.S., article 727 Government securities markets, Kansas City 425, 519 statements 195, 199, 251, 256, 258 Letters of credit 734 Government, state and local, long-term trends, article 892 Minneapolis 733 Grandfathering rights, in statement 33 New York Grants, state and local government 896 East Rutherford Operations Center 520 Greene, Margaret L., report 19 Federal Reserve Bank services 735 Greenspan, Alan Government securities market, Analyzing the forces affecting the economy, statement .... 191 statements 196, 199, 258, 259, 425, 832 Bill Taylor, statement 752 Operating income, release of preliminary figures, Economy, the performance of, statements 253, 329 announcement 207 Indexed bonds, statement 603 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 78 A87 Pages Pages Greenspan, Alan—Continued JAPAN Fair Trade Commission 584 Monetary policy and nomination to second term, Japan's Securities and Exchange Law 586 statement 201 Japanese banking system 579 Monetary policy reports to the Congress, statements . 264, 673 Japanese economy 740 Reappointment as Chairman of the Board of Governors .. 272 Japanese stock market developments, statement 417 Stock market developments in Japan, statement 417 Jennings, Jack P., appointed Assistant Director, Tax policy, statement 120 Division of Banking Supervision and Regulation 687 Group of Ten (G-10) countries 315 Joint Report on the Government Securities Market 421 Justice, U.S. Department of 503, 505, 807, 816 H.R.I245, One dollar coin act of 1991, statement 529 KAVANAGH, Barbara, article 107 H.R.3927, government securities, statement 423 Kelley, Edward W„ Jr. H.R.4398, Federal Reserve Bank Branch Commodity Credit Corporation, 1990, statement 511 Modernization Act, statement 523 Federal Reserve System, expenses and budget, statement . 515 H.R.4450, Treasury auctions 422 Kennickell, Arthur, article 1 H.R.4803, Non-Proliferation of Weapons of Mass Kuwait, invasion of by Iraq 226, 227, 242, 253, 313 Destruction and Regulatory Improvements Act of 1992, statements 495, 499 H.R.5170, Mortgage Refinancing Reform Act of 1992, LAWARE, John P. statement 524 Banking system developments, statements 597, 905 Hambley, Winthrop P., appointed Special Assistant Current policies on examination to the Board for Congressional Liaison 332 and supervision of institutions, statement 188 Hamilton, Earl G., appointed Assistant Director, Mortgage lending discrimination, statement 193 Protection program, Division of Reserve Bank Non-Proliferation of Weapons of Mass Destruction and Operations and Payment Systems 688 Regulatory Improvements Act of 1992, statement 495 Hargraves, Lauren, staff study 182 Real estate appraisal requirements, statement 828 Health and Human Services, U.S. Department of 3 Regulatory burden, statement 607 Henderson, Dale W., Associate Director, Division Lease-Purchase Agreement Act 612 of International Finance 127 Legislation (See subject or specific name of act) Highly leveraged transactions, discontinuance Lindsey, Lawrence B. of supervisory definition, announcement 273 Home Mortgage Disclosure Act, statement 500 HMDA Task Force Report 817 Member, Board of Governors, appointment 36 Home equity lines of credit Mortgage Refinancing Reform Act of 1992, statement .... 524 Amendment to Regulation Z 699 Poverty and inequality in America, economic aspects, Disclosures, final rule adopted 686 statement 513 Home Mortgage Disclosure Act of 1990 Litigation Budget statement 517 Final enforcement decision issued by Board of Governors Data on residential lending, article 801 Magee, James L 968 H.R.5170, statement 525 Final enforcement orders issued by Board of Governors Lending discrimination, statement 193 Buffalo Bank 799 Statement 500 Correll, Blaine E 457 Home mortgage disclosure, article 801 Dellinger & Company 878 Home Mortgage Lending and Equal Treatment, FFIEC Farmers and Merchants Bank of Long Beach 384 publication 814 Foster, James V. 725 Home Mortgages: Understanding the Process Genoa Banking Company 975 and Your Right to Fair Lending, brochure 273, 814 Habib Bank AG Zurich, Zurich, Switzerland 725 Homer, Laura M„ appointed Assistant Director, Marshall County Bankshares, Inc 799, 975 Division of Banking Supervision and Regulation 687 Midwest Securities Trust Company 975 Houpt, James V., appointed Assistant Director, National Bank of Pakistan, Karachi, Pakistan 878 Division of Banking Supervision and Regulation 687 Sexton, Thomas J 725 Housing and Urban Development, Department of 504, 816 State Bank and Trust of Colorado Springs 457 Housing Initiatives Program 819 Thirty Second Avenue Corporation 799 Howard, David H., Senior Adviser, Zaun, Dennis J 725 Division of International Finance 126 Zeisberger, Claudia 799 Humphrey Hawkins Act (See Monetary policy: Pending cases involving Reports to the Congress) the Board of Governors 103, 166, 220, 311, 384, 456, 574, 631, 724, 798, 877, 967 Written agreements approved by Federal Reserve Banks American Bank & Trust of Polk County 799 INCOME and expenses Antioch Holding Company 575 Federal Reserve Banks, announcement 207 Arrow Financial Corporation 726 Independence Bank 508 B.M.J. Financial Corporation 221 Index-linked gilt, British 606 Baltimore Bancorp 799 Industrial production and capacity utilization Bank of Boston Corporation 726 Releases 24, 119, 185, 248, 326, 414, Bank of Forest 632 489, 594, 667, 743, 825, 902 Bank of the Commonwealth 221 Interest rates Bank of White Sulphur Springs 384 Discount rate change, amendment 45, 697 Bank South Corporation 457 Discount rate change, announcement 36, 125, 685 BankSouth Corporation 878 Internal Revenue Service 604, 733 Citizens Bank 878 International Banking Act of 1978, in statement 32 CivicBank of Commerce 878 International Monetary and Financial Policies 511 Connecticut Bancorp, Inc 457 International transactions in 1992 313 Constellation Bancorp 726 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A88 Federal Reserve Bulletin • December 1992 Pages Pages Litigation—Continued Money stock, revisions 274 Written agreements approved by Federal Reserve Montgomery Ward 653 Banks—Continued Moody's Investors Service 884 Cuyamaca Bank 726 Morgan, Paul B., article 579 Farmers National Bancorp of Cynthiana, Inc 457 Morisse, Kathryn A., article 313 Farmers Savings Bank 975 Mortgage and Realty Trust 888 First American Bank 799 Mortgage Bankers Association of America 817 First Bancorp of Oklahoma, Inc 726 Mortgage lending, statement on discrimination 193 First Eastern Corp 726 Mortgage Refinancing Reform Act of 1992, statement 524 First Indo-American Bank 632 Mullins, David W., Jr. First New York Business Bank Corp 167 Government securities markets, First Prairie Bankshares, Inc 167 statements 195, 251, 256, 421 First State Bancorp 878 Georgetown Bancorp, Inc 385 Glendale Bank of Pennsylvania 975 NATIONAL Advisory Council 511 Greater Chicago Financial Corporation 385 National Association of Realtors 514 Guaranty Bancshares Corporation 632 National Association of Securities Dealers 258 Guardian Bank 976 National Bank of Georgia 505 Hibemia Corporation 221 National Examiners Conference 188 High Point Financial Corp 976 National Housing Act 528 Home Port Bancorp, Inc 799 National Information Center 517 Ken-Caryl Investment Company 878 National Institute on Aging 3 Lincoln Financial Corporation 632 National Survey of Small Business Finances, Mount Vemon Bancshares, Inc 878 public-access data tape available 208 Multibank Financial Corp 385 National Technical Information Service, National Commercial Bank, Saudia Arabia 878 Federal Computer Products Center 209 Northeast Bancorp, Inc 457 National Treatment, study 32 Pacific Western Bancshares 575 New England states, changing capital ratios 671 Paonia Financial Services Inc 878 New York State Banking Department 810 Presidential Holdings, Inc 167 Newspaper publication requirement, reduction, Prosperity Bank & Trust Company 385 issuance of rule 833 Resource Bank 104 Nikkei Stock Average 591 Security Bank Corporation 457 Non-Proliferation of Weapons of Mass Destruction and Shawmut National Corporation 976 Regulatory Improvements Act of 1992, H.R.4803, Society for Savings Bancorp, Inc 221 statement 495 Union Texas Bancorporation, Inc 632 Noncumulative perpetual preferred stock in tier 1 capital .... 207 UST Corp 799 North American Free Trade Agreement 315 Val Cor Bancorporation, Inc 221 West Coast Bank 221 Westport Bancorp, Inc 104 OFFICE of Thrift Supervision 332 Loans Olympia and York Developments Ltd 683 Commercial real estate, statement on securitization of .... 492 Omnibus Budget Reconciliation Act of 1990 895 Local Government Assistance Corporation of New York .... 900 One Dollar Coin Act of 1991 529 Louisiana Recovery District 900 Optima card, American Express 654 Luckett, Charles A., article 652 Organisation for Economic Co-operation and Development 33, 319 Over-the-counter stocks, list of marginable Revision, announcement 208, 429, 686, 910, 918 MAASTRICHT treaty 739 Maland, Ellen, joined Office of the Secretary as Visiting Assistant Secretary 834 Management and Budget, Office of, study 829 PARKINSON, Patrick, staff study 182 Manville Corporation 888 Parrish, John H., Assistant Director, Fedwire Section, Manypenny, Gerald D., article 727 Division of Reserve Bank Operations Marquardt, Jeffrey C., appointed Assistant Director, and Payment Systems 688 Payment System Risk and Net Settlement program, Payment Systems, Inc 663 Division of Reserve Bank Operations Payments system risk program, reduction 909 and Payment Systems 688 Philadelphia National Bank case, Supreme Court decision .. 170 Marquette National Bank 654 Phillips, Susan Meredith Masterfile 520 Member, Board of Governors, appointment 36 Material adverse change clause 114 Plotkin, Robert S., Assistant Director, Division of Banking Mattingly, J. Virgil, statement 504 Supervision and Regulation, retirement 754 McAdoo, W.G., Secretary of the Treasury 727, 735 Post, Mitchell A., article 879 McDonough, William J., articles 484, 738 Poverty and inequality in America, economic aspects, McFadden Act 603 statement 513 McLaughlin, Mary M., article 459 Primary Dealers Act of 1988 832 Mead, Richard, staff study 182 Primary dealers controlled by French firm, announcement ... 832 Medicaid 894 Production, industrial (See Industrial production Milgrom, Paul, in article 403 and capacity utilization) Mingo, John J., appointed Adviser, Division Prompt corrective action, issuance of rule 833, 835 of Research and Statistics 127 Proposed actions Monetary policy Branch closings by state member banks, Reports to the Congress 223, 633 October 2, 1992 909 Statements 264, 673 Capital adequacy guidelines, revision, February 19, 1992 . 274 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 78 A89 Pages Pages Proposed actions—Continued Regulations (Board of Governors, See also Rules)— Federal Deposit Insurance Corporation Continued Improvement Act of 1991, uniform real Amendments and revisions—Continued estate lending standards, July 14, 1992 686 E, Electronic Fund Transfers Regulation B, interpretation regarding data collection Foreign Bank Supervision Enhancement on loan applications, December 23, 1991 126 Act of 1991, implementation 541 Regulation C, revise to expand coverage of independent F, Interbank Liabilities mortgage companies, August 4, 1992 754 Federal Deposit Insurance Corporation Regulation T, extension of comment period, Improvement Act of 1991, requirements 601 October 13, 1992 910 G, Securities Credit by Persons Other than Banks, Regulation T, review, August 13, 1992 754 Brokers, or Dealers Regulations O and Y, revise to conform OTC and foreign margin stocks, to the Federal Reserve Act, February 13, 1992 274 lists, revisions 211, 441, 686, 918 Reserve requirements, change in computing procedure, H, Membership of State Banking Institutions March 5, 1992 332 in the Federal Reserve System Risk-based capital guidelines, to modify Capital adequacy appendixes 753 April 10, 1992 429 Commodity swaps, interpretation 37, 56 July 30, 1992 686 Messenger services, interpretation 544, 601 Ten percent revenue test, July 23, 1992 686 J, Collection of Checks and Other Items Truth in lending, revisions for home equity lines and Wire Transfers of Funds of credit, December 26, 1991 126 by Federal Reserve Banks Truth in Savings Act, new regulation DD, April 3, 1992 . 429 Payments system risk program, reduction 921 Public Debt Accounting and Reporting System 733, 734 K, International Banking Operations Publications in 1992 Commodity swaps, interpretation 37, 56 78th Annual Report, 1991 332 Federal Deposit Insurance Corporation Actions of the Board: Applications and Reports Received . 125 Improvement Act of 1991, requirements 601 Annual Statistical Digest, 1991 910 M, Consumer Leasing Pugh, Rhoger H., appointed Assistant Director, Foreign Bank Supervision Enhancement Division of Banking Supervision and Regulation 687 Act of 1991, implementation 541 O, Loans to Executive Officers, Directors, and Principal Shareholders of Member Banks REAL estate Federal Deposit Insurance Corporation Appraisal Regulation, delay in effective date 126 Improvement Act of 1991, Appraisal requirements, statement 828 requirements 533, 544, 601 Commercial loans, statement on securitization of 492 Federal Reserve Act, amendment to revise Real Estate Settlement Procedures Act 524 to conform with 274 Regional Delivery System 520, 733 Q, Prohibition Against the Payment of Interest Regulations (Board of Governors, See also Rules) on Demand Deposits Amendments and revisions Truth in Savings Act implementation 844 A, Extensions of Credit by Federal Reserve Banks T, Credit by Brokers and Dealers Discount rate, reduction 45, 135, 697 OTC and foreign margin stocks, AA, Unfair or Deceptive Acts or Practices lists, revisions 211,441,686,918 Foreign Supervision Enhancement Act of 1991, U, Credit by Banks for the Purpose of Purchasing or implementation 541 Carrying Margin Stocks B, Equal Credit Opportunity OTC and foreign margin stocks, Data collection on loan applications, lists, revisions 211,441,686,918 proposed action 126 X, Borrowers of Securities Credit Foreign Bank Supervision Enhancement Act OTC and foreign margin stocks, of 1991, implementation 541 lists, revisions 211, 441, 686, 918 C, Home Mortgage Disclosure Y, Bank Holding Companies and Change Financial institutions to use 1990 census tract in Bank Control numbers, revision 37, 46 Bank holding companies may act as nonbank Foreign Bank Supervision Enhancement subsidiaries 697 Act of 1991, implementation 541 Capital adequacy appendixes 753 CC, Availability of Funds and Collection of Checks Federal Deposit Insurance Corporation Check settlement, same day 909, 923 Improvement Act of 1991, Federal Deposit Insurance Corporation requirements 533, 544, 601 Improvement Act of 1991 753 Federal Reserve Act, amendment to revise Federal Deposit Insurance Corporation to conform with 274 Improvement Act, amendment to implement 207 Financial advisory services provision 753 Holds on checks, exception extention 776 Interim rule 429 D, Reserve Requirements of Depository Institutions Leasing activities, expansion 548 Capital adequacy appendixes 753 Newspaper requirement, reduction in 844 Computation process, change 752 Permissable nonbanking activities, list augmentation . 774 Maintenance reserves, computation 769 Regulatory burden, amendments approved 686 Net transaction accounts, increase 53 Reduction in reserve requirements on net Z, Truth in lending transaction balances 333 Final rule on home equity lines of credit adopted 686 Subordinated debt, elimination of requirement Foreign Bank Supervision Enhancement for Board approval 770 Act of 1991, implementation 541 Teller's checks, clarification of definitions 765 Home equity lines of credit DD, Truth in Savings To officers 699 Implementation to carry out provisions 832, 845 Proposed action 126 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A90 Federal Reserve Bulletin • December 1992 Pages Pages Regulations (Board of Governors, See also Rules)— State member banks Continued Branch closings, amendment to Regulation CC 909 Real estate appraisal, announcement regarding delay of CRA examination ratings availability 125 effective date 126 Streamlining of procedures for handling applications 752 Regulatory Uniformity Project 747 Statements to the Congress (including reports and letters) Reinhart, Vincent, article 403 Analyzing the forces affecting the economy (Chairman Reserve requirements Greenspan) 188 Computation process, change 752 Bank credit availability (Richard Spillenkothen, Director, Net transaction account, increase 36 Division of Banking Supervision and Regulation) 27 Reduction on net transaction account balances, Bank mergers (Edward C. Ettin, Deputy Director, amendment 333 Division of Research and Statistics) 262 Transaction accounts, reduction in requirements 272 Bank of Credit and Commerce International Resolution Trust Corporation 266, 493, 905 (J. Virgil Mattingly, General Counsel) 504 Rhoades, Stephen A., staff study 117 Banking system (Governor LaWare) 597, 905 Risk-based capital guidelines, modifications 114, 207, 429 Commodity Credit Corporation, 1990, program Roseman, Louise L., appointed Assistant Director, (Governor Kelley) 511 Division of Reserve Bank Operations Credit and bank capital standards (Richard F. Syron, and Payment Systems 688 President, FRB Boston) 670 Rotemberg, Julio 664 Credit availability and terms (Richard Spillenkothen, Rubin, Laura S., article 892 Director, Division of Banking Supervision Rule of 78s 527 and Regulation) 746 Rules of Procedure, reduction in newspaper publication Discrimination in mortgage lending, perspective requirement 844 (Governor LaWare) 193 Rules Regarding Delegation of Authority Economy, the performance of Authority to approve applications extended (Chairman Greenspan) 253, 329 to Federal Reserve Banks 445 Examination and supervision of institutions, Capital adequacy appendixes 753 current policies (Governor LaWare) 188 Expansion of General Counsel duties, amendment 287 Fair Trade in Financial Services Act Subordinated debt, elimination of requirement (Governor LaWare) 31 for Board approval 770 Federal Reserve supervision of lending on commercial real estate 678 Federal Reserve System, expenses and budget (Governors Angell and Kelley) 515 SALOMON Brothers 196, 256, 259, 260, 425 Foreign Bank Supervision Enhancement Act of 1991 Saloner, Garth 664 (Governor LaWare) 31 Savings and Loan Insurance Fund 670 Government securities market Scher, Roger M., report 19 Automation of Treasury auctions (Peter D. Sears Roebuck and Company 653 Sternlight, Executive Vice President, SEC Rule 2a-7 889 Federal Reserve Bank of New York) 425 Second Banking Directive 33 Joint report (E. Gerald Corrigan, President, Securities Federal Reserve Bank of New York) 258 Book-entry 730, 735 Reforms to regulation Clearance and settlement in U.S. markets, staff study 182 (Vice Chairman Mullins) 195, 251, 256, 421 French government market 832 Report on improvements (E. Gerald Corrigan, Supervisory policy, revision 207 President, Federal Reserve Bank of New York) 199 U.S. government Home Mortgage Disclosure Act of 1990 Automation process, statement 425 (Governor Lindsey) 500 Market, statements 195, 199, 251, 256, 258 Indexed bonds, proposal (Chairman Greenspan) 603 Proposed legislation, statement 421 Lease-Purchase Agreement Act (Griffith L. Garwood, Securities and Exchange Commission ... 107, 196, 251, 256, 889 Director, Division of Consumer Security Pacific Corporation and Community Affairs) 612 BankAmerica Corporation, announcement Monetary policy and nomination to second term, of public meeting on acquisition 126 statement (Chairman Greenspan) 201 Extension of comment period on application 208 Monetary policy reports to the Congress Semkow, Brian, in article 587 (Chairman Greenspan) 264, 673 Senior Loan Officer Opinion Survey Mortgage Refinancing Reform Act of 1992 on Bank Lending Practices 461, 804 (Governor Lindsey) 524 Shack-Marquez, Janice, article 1 Non-Proliferation of Weapons of Mass Destruction Shoko Chukin Bank 496 and Regulatory Improvements Act of 1992 Small Business Administration 3 (Governor LaWare) 495 Smart Exchange 732 Poverty and inequality in America, economic aspects Smith, Dolores S., article 801 (Governor Lindsey) 513 Southeast Banking Corporation, in statement 27 Real estate appraisal requirements (Governor LaWare) 828 Special purpose entity, programs 109 Regulatory burden (Governor LaWare) 607 Special-purpose vehicle 885 Securitization of commercial real estate loans Spillenkothen, Richard (Donald H. Wilson, Federal Reserve Bank Commercial real estate loans securitization, statement .... 492 of Chicago) 492 Credit availability and terms, statement 746 Securitization of commercial real estate loans Staff studies (Richard Spillenkothen, Director, Division Clearance and settlement in U.S. securities markets 182 of Banking Supervision and Regulation) 492 Evidence on the size of banking markets Stock market developments in Japan from mortgage loan rates in twenty cities 117 (Chairman Greenspan) 417 Standard & Poor's Corporation 109, 889 Tax policy (Chairman Greenspan) 120 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 78 A91 Pages Pages Statements to the Congress (including reports and Treasury and Federal Reserve foreign exchange letters)—Continued operations (See Foreign exchange operations) United States One Dollar Coin Act of 1991 Treasury auctions, automation 425 (Theodore E. Allison, Assistant to the Board Treasury Direct 732 for Federal Reserve System Affairs) 529 Treasury Fiscal Service Stehm, Jeff, staff study 182 Bureau of the Public Debt 728 Sternlight, Peter D., statement 425 Financial Management Service 728 Stock market Treasury, U.S. Department of 3, 196, 251, 256, Developments in Japan, statement 417 403, 520, 529, 603, 727 Stock market credit, over-the-counter stocks Truth in lending, Regulation Z (See Regulation Z) (See Over-the-counter stocks, list of marginable; Truth in Lending Act 524, 526 Foreign stocks, list of marginable; and Regulations: Truth in Lending Simplification Act 612 G, T, U, and X) Truth in Savings Act (Regulation DD) 429, 832, 844 Strategic Petroleum Reserves 321 Struble, Frederick M., appointed Associate Director for Policy, Division of Banking Supervision U.S. Securities and Exchange Commission 403 and Regulation 687 Underwriters Association of Japan 587 Sumitomo Bank 582 Uniform Standards of Professional Appraisal Practice 829 Summers, Bruce J. United States One Dollar Coin Act of 1991 529 Appointed Senior Adviser, Division of Reserve Bank Universal card, American Telephone and Telegraph 654 Operations and Payment Systems 688 Uruguay Round 33 Returned to Federal Reserve Bank of Richmond as Senior Vice President 834 Supinski, Ron 533 VENDOR Express 729 Survey of Consumer Finances 1, 169, 171 Veterans Administration 802 Survey Research Center, University of Michigan, Vickrey, William, in article 403 in articles 2, 171 VISA U.S.A 660 Syron, Richard F., President, Federal Reserve Bank of Boston, statement 670 WASSOM, Molly S., appointed Assistant Director, Division of Banking Supervision and Regulation 687 TABLES (For index to tables published monthly, West Texas Intermediate 321 see guide at top of page A80; for special tables Wilson, Donald H., Financial Markets Officer, published during the year, see list on page A69.) Federal Reserve Bank of Chicago, statement 492 Taxes, state and local government 895 Wolken, John D., article 169 Taxlink-FRB 733 Taylor, Bill, statement by Chairman Greenspan 752 Taylor, Mary Ann, staff study 182 YOUNG, Florence M., appointed Assistant Director, Terms of credit card plans, statistical release 654 ACH and check programs, Division of Reserve Bank Testimony (See Statements to the Congress) Operations and Payment Systems 688 Thrift Institutions Advisory Council Members, new appointments 125 Thrift Supervision, Office of 532, 835 ZEMEL, Robert J., Senior Adviser, Division Trade, merchandise 317 of Information Resources Management, Transaction accounts, reduction in reserve requirements 272 retirement 754 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A92 Maps of the Federal Reserve System LEGEND Both pages Facing page • Federal Reserve Bank city • Federal Reserve Branch city • Board of Governors of the Federal — Branch boundary Reserve System, Washington, D.C. NOTE The Federal Reserve officially identifies Districts Commonwealth of Puerto Rico and the U.S. Virgin by number and Reserve Bank city (shown on both Islands; the San Francisco Bank serves American pages) and by letter (shown on the facing page). Samoa, Guam, and the Commonwealth of the In the 12th District, the Seattle Branch serves Northern Mariana Islands. The Board of Governors Alaska, and the San Francisco Bank serves Hawaii. revised the branch boundaries of the System most The System serves commonwealths and terri- recently in December 1991. tories as follows: the New York Bank serves the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A93 1-A 2-B 3-C 4-D 5_E Baltimore Pittsburgh i< / Charlotte NH MA« Buffalo • • \ NJ NY BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 6-F 7-G 8-H • Nashville Birmingham. fsrV MS t GA De « \ ^ * Jacksonville fill AR ' • Memphis New Orleans „ Y Miami ATLANTA CHICAGO 9-1 MT • Helena MI ••P^JHB11! '1 MINNEAPOLIS 10-J 12-L W FLHHNI / NE CCOO Omaha • i MO • ••MMIIHHHH NNMM HH ' | ••ppBBiiMMMMii1111 OklahomajCity KANSAS CITY 11-K DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A94 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 William C. Conrad 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. Cece Smith 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

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

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 US. dollars. 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. ^ Consumer Handbook to Credit Protection Laws Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis