Federal Reserve Bulletin, 1993-12

VOLUME 79 • NUMBER 12 • DECEMBER 1993 FEDERAL RESERVE BULLETIN BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn • J. Virgil Mattingly, Jr. • Michael J. Prell • Richard Spillenkothen • Edwin M. Truman The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Graphics Center under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 1075 INTERSTATE BANKING: A STATUS 1098 Governor LaWare discusses the Board's REPORT views on H.R.2600, the Business, Commercial, and Community Development Second- All states except Hawaii now permit their ary Market Development Act, which has as banks to be acquired by bank holding compaits objective to promote economic growth nies headquartered in some or all other states. and credit formation by facilitating the devel- A few states allow banks to branch across opment of a secondary market for business, state lines. This article reports on the status commercial, and community development of interstate banking laws, compares interdebt and equity investments in the private state bank holding companies and interstate sector; he says that the Federal Reserve branch banks as alternative means of bank shares this important objective, before the expansion, provides some data on interstate Subcommittee on Economic Growth and banking organizations, and reviews the effect Credit Formation of the House Committee of interstate banking on bank concentration. on Banking, Finance and Urban Affairs, October 7, 1993. 1090 INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION FOR 1100 Alan Greenspan, Chairman, Board of Gover- SEPTEMBER 1993 nors, reviews the important issues raised by recent legislative initiatives to alter the struc- Industrial production increased 0.2 percent ture of the Federal Reserve System, includin September; the revised index showed ing provisions that would change the status gains of 0.1 percent in August and 0.2 per- of Reserve Bank presidents, broaden the cent in July. Utilization of total industrial authority of the General Accounting Office capacity, at 81.6 percent, has been essentially to audit the Federal Reserve, and mandate unchanged since February. additional disclosure of monetary policy decisions and discussions; he says that in his view it would be a mistake to legislate struc- 1093 STATEMENTS TO THE CONGRESS tural reform when, as in this case, compel- John P. LaWare, Member, Board of Gover- ling evidence of the need for change is nors, discusses the interstate banking and lacking, before the House Committee on insurance provisions of S.543, legislation Banking, Finance and Urban Affairs, Octothat would authorize interstate banking ber 13, 1993. nationwide through the acquisition of existing banks within a year after enactment and 1107 Chairman Greenspan provides his views on would also permit national banks to engage the appropriate degree of disclosure by the in insurance agency activities that are now Federal Open Market Committee (FOMC); permissible for state banks; he says that the he says that he firmly believes that a shift to Board supports legislation to remove restric- prompter disclosure of the substance of tions on geographic expansion and to pro- FOMC deliberations will adversely affect the vide for insurance agency activites by banks discussions and decisions and therefore monand bank holding companies, before the Sen- etary policy itself, before the House Commitate Committee on Banking, Housing, and tee on Banking, Finance and Urban Affairs, Urban Affairs, October 5, 1993. October 19, 1993. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1110 David W. Mullins, Jr., Vice Chairman, Board 1114 Lawrence B. Lindsey, Member, Board of of Governors, presents his views on the por- Governors, comments on provisions of tion of H.R.28, the Federal Reserve System H.R.28 that pertain to the release of informa- Accountability Act, dealing with disclosure tion on monetary policy and says that videoof FOMC deliberations; he says that in his taping the meetings would probably reduce view the current process works well and that the usefulness of them in that the give and substantial changes in disclosure of these take in the discussion among policymakers deliberations would threaten the quality of would be sharply reduced and more policy monetary policy decisions, before the House discussions would tend to take place outside Committee on Banking, Finance and Urban FOMC meetings, before the House Commit- Affairs, October 19, 1993. tee on Banking, Finance and Urban Affairs, October 19, 1993. 1111 Wayne D. Angell, Member, Board of Gover- 1115 Susan M. Phillips, Member, Board of Governors, presents his views on the accountability nors, presents her views on the reporting of of monetary policy, and says that the current FOMC actions, with specific reference to procedures regarding disclosure are on the sections of H.R.28 that focus on maintaining right track because they permit a careful a record of the FOMC meetings; she says review of alternative policies while allowing that if a videotape or a literal transcript of the Congress and the public to analyze both FOMC meetings were to be released, she the process by which decisions are reached believes that many members would feel conand the results, before the House Committee strained to speak only from prepared stateon Banking, Finance and Urban Affairs, ments, thereby losing the analytical approach October 19, 1993. now used in building on each other's observations in a truly deliberative process, before the House Committee on Banking, Finance 1112 Edward W. Kelley, Jr., Member, Board of and Urban Affairs, October 19, 1993. Governors, presents his views on H.R.28, and says that the existing procedures for 1116 The presidents of the twelve Federal Reserve release of FOMC decisions are responsive to District Banks discuss maintaining records the public's right to be informed and that of FOMC meetings, before the House there is complete accountability for results, Committee on Banking, Finance, and Urban before the House Committee on Banking, ' Affairs, October 19, 1993. Finance and Urban Affairs, October 19, 1993. 1127 Governor Lindsey discusses the Community Reinvestment Act (CRA) and the current efforts of the regulatory agencies to 1113 Governor LaWare comments on the intiastrengthen and improve its administration; he tives in H.R.28 that are purportedly designed says that he is aware of the concern about to improve the accountability of the FOMC whether the Federal Reserve's enforcement for monetary policy and specifically on the of the CRA has been vigorous enough and requirement for a full and timely accounting that the Federal Reserve's goal is to ensure of each FOMC meeting; he says that a verbathat all citizens are being treated fairly, tim transcript or a videotape recording of the before the Subcommittee on Consumer meetings of the FOMC might significantly Credit and Insurance of the House Commitinhibit the free exchange of ideas, a problem tee on Banking, Finance and Urban Affairs, that would be heightened by the knowledge October 21, 1993. that the matters under discussion are highly sensitive for financial markets here and 1132 Governor Angell speaks on the authority of around the world, before the House Commit- the General Accounting Office (GAO) to tee on Banking, Finance and Urban Affairs, audit Federal Reserve operations and the October 19, 1993. changes to that authority that would be made Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

by H.R.28; he says that the GAO has broad Availability of revised Lists of OTC Margin authority to audit most of the operations of Stocks and of Foreign Margin Stocks. both the Federal Reserve Board and the Fed- Change in Board staff. eral Reserve Banks and that expanding the GAO's audit authority over the Federal 1145 LEGAL DEVELOPMENTS Reserve into areas that are now exempt would be contrary to the public interest, Various bank holding company, bank service before the House Committee on Banking, corporation, and bank merger orders; and Finance and Urban Affairs, October 27, pending cases. 1993. A1 FINANCIAL AND BUSINESS STATISTICS 1135 President McDonough, of the New York Federal Reserve Bank, provides his views on These tables reflect data available as of the provisions of H.R.28 that relate to the October 27, 1993. audit of the Federal Reserve Banks by the GAO in the context of the implications of the A3 GUIDE TO TABULAR PRESENTATION proposal for the actions taken by the New A4 Domestic Financial Statistics York Bank in implementing FOMC deci- A44 Domestic Nonfinancial Statistics sions and in carrying out activities for for- A53 International Statistics eign accounts; he says that the current authority of the GAO to audit the New York A69 GUIDE TO STATISTICAL RELEASES Bank provides sufficient scope to address AND SPECIAL TABLES many of the concerns that have been raised, before the House Committee on Banking, A70 INDEX TO STATISTICAL TABLES Finance and Urban Affairs, October 27, 1993. A72 BOARD OF GOVERNORS AND STAFF 1137 Governor Phillips presents the views of the A74 FEDERAL OPEN MARKET COMMITTEE Board on issues of safety and soundness AND STAFF; ADVISORY COUNCILS associated with derivatives activities of banking organizations; she says that the Board A76 FEDERAL RESERVE BOARD believes that it and the other banking super- PUBLICATIONS visors have made significant progress in strengthening policies relating to bank deriv- A78 SCHEDULE OF RELEASE DATES FOR atives activities and have the authority neces- PERIODIC RELEASES sary to address such issues as accounting and financial reporting, before the House Com- A80 INDEX TO VOLUME 79 mittee on Banking, Finance and Urban Affairs, October 28, 1993. A94 MAPS OF THE FEDERAL RESERVE SYSTEM 1143 ANNOUNCEMENTS Issuance of warning on the use of question- A96 FEDERAL RESERVE BANKS, BRANCHES, able financial instruments. AND OFFICES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interstate Banking: A Status Report Donald T. Savage, of the Board's Division of holding companies across state lines, only nineteen Research and Statistics, prepared this article. multistate bank holding companies were operating in 1956. In the late 1980s, about a decade after Maine The Bank Holding Company Act of 1956 introbecame the first state to permit some form of duced barriers to the interstate expansion of bank interstate banking, thirty states had interstate bank holding companies. The Douglas Amendment to holding company laws in effect and another seven the bill, introduced in floor debate, prohibits a had enacted laws that had not yet taken effect. holding company from acquiring a bank outside its Fifty-one multistate bank holding companies were home state unless the acquisition is specifically in operation, but only 6 percent of domestic com- permitted by the statutes of the home state of the mercial banking assets were held by banks owned bank to be acquired. In 1956, no state had a statute by out-of-state bank holding companies.1 permitting bank acquisitions by out-of-state bank The picture has changed considerably over the holding companies; therefore, no new multistate past several years. All states except Hawaii now organizations could be formed. have interstate bank holding company laws in Although it effectively prohibited new interstate effect, and several states have interstate branch banking organizations, the Bank Holding Company banking laws. The number of multistate bank hold- Act of 1956 did provide grandfather rights for the ing companies has risen to 178 (as of June 30, nineteen existing multistate companies. Most of the 1993), and the share of domestic commercial bank- grandfathered companies were quite small; the four ing assets held by out-of-state organizations has largest together held 86 percent of the total deposincreased to 21.3 percent (as of December 31, its of the nineteen. 1992). The 1956 act regulated only holding companies This article reports on the status of interstate that owned more than one bank. The smaller multibanking laws, discusses the issues involved in the bank, multistate companies chose to reorganize and choice between interstate bank holding companies give up their grandfathered rights to operate in and interstate branch banking as alternative means more than one state so as to avoid the new federal of geographic expansion, provides some data on regulations being applied to multibank holding interstate banking organizations, and reviews the companies. Over time, the number of grandfatheffect of interstate banking on bank concentration. ered multistate bank holding companies decreased to seven. The states' option to allow bank acquisitions by HISTORICAL BACKGROUND out-of-state holding companies, provided by the Douglas Amendment, went unused until 1975. In Before 1956, federal laws and regulations did not that year, a general revision of the Maine state prohibit bank holding companies from owning sub- banking code made it possible for out-of-state bank sidiary banks in more than one state, although both holding companies, beginning in 1978, to acquire federal and state laws did prohibit banks from Maine banks. The Maine legislation was motivated establishing branches across state lines. Despite the in large measure by a desire to attract new investlack of statutory barriers to the expansion of bank ment capital to the state. The law initially required reciprocity: Bank holding companies headquartered in another state, Massachusetts, for example, 1. The early stages of interstate banking were described in could acquire Maine banks only if bank holding Donald T. Savage, "Interstate Banking Developments," Federal companies headquartered in Maine were allowed Reserve Bulletin, vol. 73 (February 1987), pp. 79-92. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1076 Federal Reserve Bulletin • December 1993 to acquire Massachusetts banks. Because of this of 1991, that act contained no provisions for the reciprocity requirement, no acquisitions of Maine deregulation of geographic expansion by banks and banks were possible until another state enacted a bank holding companies. statute allowing the acquisition of its banks by Although the Congress has not made any major Maine bank holding companies. changes in the federal statutes regarding branching Other interstate banking statutes began appear- or bank holding company expansion since 1956, ing in the early 1980s, with Alaska, Massachusetts, the issue continues to be under active considerand New York passing laws that became effective ation. John R LaWare, member of the Board of in 1982. Since then, all the remaining states except Governors of the Federal Reserve System, has in Hawaii have enacted some form of interstate bank recent months presented the Board's views on holding company law. various aspects of several interstate banking bills Despite congressional consideration of various before committees of both the U.S. Senate and the changes in federal laws, the movement to inter- U.S. House of Representatives.2 state bank holding companies has largely been a product of state action. However, after several unsuccessful attempts to pass such legislation, the THE INTERSTATE BANK HOLDING Garn-St Germain Depository Institutions Act of COMPANY LAWS 1982 amended the Bank Holding Company Act of 1956 to allow for the interstate acquisition of large The interstate bank holding company laws enacted failed banks, regardless of state laws. This pro- by the states and the District of Columbia since vision had been sought, especially by the federal 1975 differ in several respects. The states' reasons bank regulatory agencies, for many years. Its pur- for passing the laws also vary. pose was not to promote interstate banking, but rather to increase the number of firms that would be eligible to acquire a large failed bank. In many The Forces of Change states, the argument went, there would be few potential buyers if one of the state's largest banks Why did so many states decide to permit entry by were to fail; expanding the number of potential out-of-state bank holding companies, especially purchasers would, supporters contended, lower the considering that some of them still restricted cost of resolving the failure. in-state branching and bank holding company In February 1991, the U.S. Department of the expansion? The events leading to passage of the Treasury, as required by the Financial Institutions legislation in each state probably were unique to Reform, Recovery and Enforcement Act of 1989, that state. Several factors that may have played a produced a report to the Congress on reforming role in changing the opinions of bankers and state and strengthening the banking system. The report, legislators are identified below, but undoubtedly Modernizing the Financial System: Recommenda- the list is not exhaustive. tions for Safer, More Competitive Banks, recommended that three years after enactment of en- • In some states, legislators believed that interabling legislation, bank holding companies be state banking would lead to an inflow of investallowed to acquire banks in all states, regardless of ment capital. state laws. Further, the report recommended that • Large banks in major financial centers wanted national banks immediately be allowed to branch to expand geographically, but the states they into those states in which their parent holding wanted to expand into required reciprocity; the company could acquire a bank. The report also recommended that state banks be given any necessary federal permission to branch across state lines, 2. Statements before the Subcommittee on Financial Institutions Supervision, Regulation and Deposit Insurance of the Committee and that the states retain control over branching on Banking, Finance and Urban Affairs, U.S. House of Representawithin states. Although many of the other propos- tives, June 22, 1993, Federal Reserve Bulletin, vol. 79 (August als made in the report were included in the Federal 1993), pp. 772-77; and before the Committee on Banking, Housing and Urban Affairs, U.S. Senate, October 5, 1993, appearing on Deposit Insurance Corporation Improvement Act pp. 1093-97 of this issue. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interstate Banking: A Status Report 1077 changes in their home state laws accommodated institutions, the widespread use of credit cards, and the wishes of the large banks. Elsewhere, the views the provision of financial services by nonfinancial of large banks, which traditionally favored geo- firms not subject to geographic limitations all made graphic expansion, came to outweigh the views the traditional restrictions on the geographic expanof smaller banks, which traditionally opposed sion of banks more difficult to explain and justify. expansion. If so many financial services could be provided • Many bankers, especially at medium-sized, across state lines by these various means, why regional banks, believed that their banks could shouldn't deposit-taking institutions be allowed to survive and attain competitive operating cost levels expand as well? only by growing larger. Wanting to enhance their • Finally, many in the industry came to believe banks' ability to compete, some states decided to that interstate banking was inevitable, and that the allow interstate banking. banks in their states should be permitted to partici- • Interstate activity allows expansion into mar- pate in the evolution to a new financial structure, kets that may be considered more attractive than lest they be left behind. markets within a bank's home state. Funds may be less expensive than in the home state, or the investment opportunities may promise higher Characteristics of the Laws yields at lower risk or offer portfolio diversification. Many banks wanted the right to explore these Provisions of the interstate banking laws of fortyopportunities. nine states and the District of Columbia are listed • Many banks wanted to be able to establish in table 1. Thirty-four states now allow acquisition offices throughout a market area made up of parts of banks in their state by holding companies headof two or more states. Some wanted to follow their quartered in any other state. Many of these thirtycustomers to suburbs in adjacent states or to their four states at first allowed acquisition by holding homes in popular retirement states. companies headquartered in only a limited number • Some banking organizations may have argued of states; later, either on a predetermined "trigger" for interstate banking because they expected to be date or by subsequent legislation, they began to acquired. For a bank that expects to be acquired allow entry from all other states. in a consolidation of the industry, there is an U'Twenty-one of the thirty-four states that allow advantage to increasing the number of potential entry from all other states require reciprocal entry purchasers. rights for bank holding companies headquartered in • In some states, imitation and "level playing their state. For example, New York has a nationfield" effects played a role as bankers argued that wide reciprocal interstate banking law; a bank to be competitive with banks in neighboring states, holding company headquartered in any other state they too had to have interstate banking rights. can acquire banks in New York if its home state • The views of some opponents of change were allows acquisition of that state's banks by New countered by the argument that large out-of-state York bank holding companies. Because not all companies would not enter the smaller local bank- states allow entry by New York holding compaing markets served by many of the small banks, nies, not all holding companies can enter New but instead would be competitors for the state's York. The thirteen states whose interstate banking large banks. In addition, some smaller banks laws do not require reciprocity can be entered by thought the out-of-state bankers would not know bank holding companies headquartered in any other the local market and would not be able to compete state, regardless of the law of the home state of the as effectively as the banks that were being entering holding company. acquired. Fifteen states and the District of Columbia allow • Everyone in the industry increasingly recog- entry only by bank holding companies headquarnized that interstate banking was occurring despite tered in selected states within a region. Currently laws prohibiting it. The proliferation of loan pro- defined regions range from areas as small as the six duction offices, nonbank subsidiaries of bank hold- adjacent states to areas as large as sixteen states ing companies, nonbank banks, and interstate thrift and the District of Columbia. All the states that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1078 Federal Reserve Bulletin • December 1993 1. State legislation on interstate bank holding companies, November 1, 19931 State Area covered and reciprocity requirement State Area covered and reciprocity requirement Alabama Reciprocal, 13 states (AR, FL, GA, KY, LA, Missouri Reciprocal, 8 states (AR, IA, IL, KS, KY, NE, MD, MS, NC, SC, TN, TX, VA, WV) OK, TN) and DC Montana Reciprocal, 7 states (CO, ID, MN, ND, SD, WI, Alaska .. National, no reciprocity WY) Arizona . National, no reciprocity Nebraska National, reciprocal Arkansas Reciprocal, 16 states (AL, FL, GA, KS, LA, MD, Nevada National, no reciprocity MO, MS, NC, NE, OK, SC, TN, TX, VA, New Hampshire National, no reciprocity WV) and DC New Jersey National, reciprocal California National, reciprocal New Mexico ... National, no reciprocity Colorado National, no reciprocity New York National, reciprocal Connecticut National, reciprocal North Carolina2 Reciprocal, 13 states (AL, AR, FL, GA, KY, LA, Delaware National, reciprocal MD, MS, SC, TN, TX, VA, WV) and DC District of Columbia Reciprocal, 11 states (AL, FL, GA, LA, MD, North Dakota .. National, reciprocal MS, NC, SC, TN, VA, WV) Ohio National, reciprocal Florida . Reciprocal, 11 states (AL, AR, GA, LA, MD, Oklahoma National, no reciprocity for initital entry; after MS, NC, SC, TN, VA, WV) and DC initial entry, bank holding company must Georgia Reciprocal, 10 states (AL, FL, KY, LA, MD, be from state offering reciprocity or wait MS, NC, SC, TN, VA) and DC 4 years to expand Idaho .... National, no reciprocity Oregon National, no reciprocity Illinois ... National, reciprocal Pennsylvania .. National, reciprocal Indiana .. National, reciprocal Rhode Island .. National, reciprocal Iowa Reciprocal, 6 states (IL, MN, MO, NE, SD, WI) South Carolina Reciprocal, 12 states (AL, AR, FL, GA, KY, LA, Kansas ... Reciprocal, 6 states (AR, CO, IA, MO, NE, OK) MD, MS, NC, TN, VA, WV) and DC Kentucky National, reciprocal South Dakota . National, reciprocal Louisiana National, reciprocal Tennessee National, reciprocal Maine ... National, no reciprocity Texas National, no reciprocity Maryland Reciprocal, 14 states (AL, AR, DE, FL, GA, KY, Utah National, no reciprocity LA, MS, NC, PA, SC, TN, VA, WV) Vermont National, reciprocal and DC Virginia Reciprocal, 12 states (AL, AR, FL, GA, KY, LA, Massachusetts National, reciprocal MD, MS, NC, SC, TN, WV) and DC Michigan National, reciprocal Washington .. National, reciprocal Minnesota Reciprocal, 16 states (CO, IA, ID, IL, IN, KS, West Virginia National, reciprocal MI, MO, MT, ND, NE, OH, SD, WA, WI, Wisconsin ... Reciprocal, 8 states (IA, IL, IN, KY, MI, MN, WY) MO, OH) Mississippi Reciprocal, 13 states (AL, AR, FL, GA, KY, LA, Wyoming National, no reciprocity MO, NC, SC, TN, TX, VA, WV) 1. Not listed in the table is Hawaii, which has not enacted interstate bank SOURCE. Financial Structure Section, Division of Research and Statistics, holding company legislation. Board of Governors of the Federal Reserve System. 2. On July 1,1996, will become national, reciprocal. allow entry only by bank holding companies head- quartered in its region but have more than a minor quartered in a limited region require reciprocity for part of their operations in states outside the region. their bank holding companies. As the states have crafted their legislation, they Although regions such as New England and the have placed a variety of other conditions on intersoutheast were initially thought of as interstate state banking activity. compact areas, states in these regions did not develop formal compacts or treaties among them- • Many states restrict de novo entry. Out-ofselves. Instead, each state defined its region as it state bank holding companies may not enter these thought best. Today, only states in the southeast are states by forming a new bank, but must acquire a a somewhat cohesive unit, generally allowing entry bank that has been in existence for a certain period, from the other states in the region and generally typically between three and six years. Although excluding entry from states outside the region. few large bank holding companies have chosen to Even within the southeast, however, the states enter new markets within their home state by formdiffer in their definition of "region." For example, ing a de novo bank, a desire to protect the franchise some of the states include Texas and Arkansas in value of existing bank charters has prompted many their region, but others do not. Also, some states states to erect barriers to the formation of new permit a holding company headquartered in their banks by out-of-state holding companies. region to enter only if a certain high percentage of • Eighteen states place a cap on the share of the holding company's deposits (in most cases, state deposits that may be controlled by any single 80 percent) are in banks in states in the region. banking organization (in most states, the cap With such a restriction, a state is able to prevent applies to in-state as well as out-of-state organizaentry by bank holding companies that are head- tions). These restrictions were prompted by the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interstate Banking: A Status Report 1079 arguments of many opponents of interstate banking region were to allow nationwide entry. In midthat the entering out-of-state bank holding com- 1993, North Carolina established a mid-1996 date pany would have major operating advantages over for allowing nationwide entry; whether this change local banking organizations or would use unfair will lead to similar action by other southeastern tactics to acquire an overwhelming share of the states and to a breaking down of the regional state's deposits. system is uncertain. The cap on the share of state deposits that may be held by any one organization ranges from as low THE INTERSTATE BRANCHING LAWS as 10 percent in Iowa to as high as 30 percent in Minnesota. The base against which the cap is mea- The likely final step in the geographic expansion of sured also differs among states: In some states the banking will be interstate branch banking. Historicap is stated as a percentage of deposits at banks, cally, both the federal government and the states but in other states the base includes deposits at have prohibited interstate branch banking. Howthrift institutions and credit unions as well as banks. ever, eight states have enacted laws that permit • Some states promote specific forms of ecosome degree of interstate branching for state nonnomic activity. For example, Delaware encourages member banks (state-chartered banks that are not holding companies from other states to establish members of the Federal Reserve System) (table 2). banks in that state for the purpose of issuing credit The main reason the interstate branching laws have cards and processing credit card transactions. Many been enacted is a belief among bankers that interof these special-purpose banks concentrate on their state branch banks could provide bank serdefined purpose and do not compete generally with vices at a lower cost than interstate bank holding local banks. companies. • A few states allow individual banks to "opt The process of deregulating interstate branch out" of the interstate banking provisions, making banking will be different from that for interstate them ineligible for acquisition by an out-of-state bank holding companies. The Douglas Amendment organization. In some cases, banks choosing to provided the states with the means of controlling avoid acquisition in this way are themselves not the expansion of interstate bank holding compaallowed to acquire banks in other states. nies. However, the states do not have such wide • Some states differentiate between out-of-state authority to control interstate expansion via branch bank holding companies and foreign banking orgabanking. The states can permit interstate branching nizations. Foreign ownership of a full-service, only by state-chartered banks that are not members state-chartered commercial bank is prohibited in a of the Federal Reserve System. The McFadden Act number of states. Other states require that a certain of 1927 as amended, which sets the branching laws percentage of the directors of a bank must be for national banks and for state-chartered banks citizens of the United States or impose requirethat are members of the Federal Reserve System, ments on foreign banks that are not applied to prohibits these banks from branching outside their banks chartered in the United States. home state. Although not all states allow nationwide entry 2. State legislation on interstate branch banking, yet, the laws have become more permissive over November 1, 1993 time. As more states allow entry from all states, bank holding company expansion opportunities Area covered State Effective date and reciprocity increase. Treating each pair of states (and the Dis- requirement trict of Columbia) as a combination results in 2,550 Alaska January 1, 1994 National, reciprocal Massachusetts Currently National, reciprocal possible two-state combinations (for example, Ala- Nevada Currently Permitted in counties bama entry into Alaska is one combination, and with population less than 100,000 Alaska entry into Alabama is a second). At this New York Currently National, reciprocal North Carolina Currently National, reciprocal time, entry is permitted in 1,570 (62 percent) of the November 4, 1993 National, reciprocal 2,550 possible instances. The percentage would Rhode Island Currently National, reciprocal Utah Currently National, no reciprocity increase significantly if the states in the southeast Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1080 Federal Reserve Bulletin • December 1993 If branching across state lines is to grow sub- INTERSTATE EXPANSION: stantially, federal legislation granting interstate WHICH APPROACH IS BEST? branching powers to national banks and statechartered Federal Reserve System member banks Most of the benefits of interstate banking will be will be necessary. These banks typically are larger, achieved regardless of whether holding company and have more branch offices, than state non- expansion across state lines or interstate branching member banks. At the end of 1992, 3,555 national is ultimately the main vehicle for interstate expanbanks and 1,001 state member banks were in sion. Either way, interstate banking will increase operation; the average national bank had customer convenience and will enable banking $507.7 million in domestic banking assets and organizations to diversify their loan portfolios over 7.9 branches, and the average state member a wide geographic area. The removal of barriers to bank had $509.0 million in domestic banking entry into new banking markets will also help assets and 7.5 branches. In contrast, the averages promote and protect competition; the knowledge for the 6,873 insured state nonmember banks that any other bank in the nation can, if it chooses, were $120.6 million in domestic banking assets enter its market area should serve as a significant and 2.7 branches. Because the nation's larger deterrent to anticompetitive practices on the part of banks, which have a greater propensity to an existing bank. branch, are not state nonmember banks, interstate The means by which these gains are to be branch banking is likely to be limited until the achieved have been discussed extensively. Many McFadden Act is further amended or repealed— observers believe that holding companies that own unless banking organizations are willing to give up more than one bank, whether within one state or in their national charter or Federal Reserve System multiple states, are merely a product of restrictions membership. on branch banking. By this line of thought, inter- A change in the McFadden Act could take one of state bank holding companies serve only as a trantwo courses. Under one approach, national banks sition between a system that limits interstate bankcould be allowed to branch nationwide. Removal ing and a full nationwide branch banking system. of the McFadden Act's restrictions on national Other observers believe that multibank holding bank branching would provide uniform branching companies offer advantages and argue that such rights for all national banks, regardless of their companies would continue to exist even if full home state; state member banks would remain sub- interstate branch banking were permitted. Several ject to the interstate branching restrictions imposed issues have emerged in the debate about the best by their home state. If national banks were permit- way to achieve interstate banking. ted to branch across state lines, the states likely would be pressured to provide equal opportunities for state-chartered banks, and this pressure would Customer Service almost surely result eventually in changes in state laws. The original issue in the discussion of the relative Alternatively, a change in the McFadden Act merits of the two forms of interstate banking is that could leave control over branching with the states, of customer convenience. Although two banks may as the Douglas Amendment left to the states the be owned by the same holding company, they are decision about bank holding companies. This not "branches" of each other, and there are limits option would follow the dual banking system's on the services that one bank can provide to the approach to regulating branching within states. customers of the other. For example, a customer National and state-chartered member banks would moving from one state to another would most be allowed to branch interstate to the same extent likely need to move his or her account to the that their home state allowed state nonmember subsidiary bank located in the new state of resibanks to branch, just as national and state member dence. Interstate branch banking would eliminate banks are currently allowed to branch within a state that need; the customer would be able to obtain to the same extent that state-chartered nonmember services at any branch office of the bank. Oppobanks are allowed to branch within that state. nents of branching, whether within one state or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interstate Banking: A Status Report 1081 across state lines, note that in this case only branch compete. The fact that, within states, some banks office services would be available, instead of the choose the branching format while others choose full line of services typically provided at the main the multibank holding company format suggests office of a bank. that there may be little cost difference between the The ability to provide customers with easy two approaches. access to cash from their account while they are Even if there are cost differences between the away from home was once a major argument for two formats, there may also be offsetting revenue allowing branching. This pressure for geographic differences. The multibank format, though requirderegulation has been alleviated by the spread of ing separate boards of directors for each bank automated teller machine (ATM) networks that can owned by the holding company, may give the bankconnect a consumer with his or her bank account ing organization greater identification with the local from machines all over the nation, and in a growing market; each bank is essentially a local bank rather number of foreign countries as well. Most likely, than a branch of an out-of-town bank. Likewise, no one bank would ever be able to provide a branch although multiple boards of directors must be paid, office network comparable in size or coverage to the separate board may increase the bank's income the major ATM networks. The development of by bringing in new loan customers, and may lower ATM networks has also reduced the magnitude of the bank's costs by providing information on the one of the claimed advantages of banks that have local market that reduces loan losses. many branches; through ATM networks, a small Although questions concerning the least costly bank can provide customers with access to funds means of providing interstate banking services are over just as wide an area as can a large bank that interesting to researchers, different banking organihas many branches. zations may find different organizational structures more efficient. Some organizations might choose to have one bank with numerous branch offices in Cost of Operation many states. Others might choose to be multibank holding companies having perhaps one bank in Cost is a second issue in the debate about the best each state and branches radiating from that bank. If approach to geographic expansion. Proponents of one form of organization were vastly superior to interstate branching argue that it is much less others, the market would lead all banking organizaexpensive to operate branches than to maintain a tions to adopt that structure. More likely, however, large number of separately incorporated subsidi- cost differences are not significant across forms of ary banks. Branching should offer savings on organization, and banks should be free to find the administrative costs because only one bank must be structure that leads to the achievement of their examined and one set of regulatory reports filed, organizational goals. In the long run, a variety of and because the bank has only one board of organizational structures probably would coexist. directors and one set of officers. Although a bank holding company can centralize some operating functions—such as personnel management and Effect on Small Banks training, data processing, and advertising—in the parent organization, each bank is a separate legal A third issue in the debate over interstate branch entity, and some functions must be performed at banking versus interstate bank holding companies each subsidiary. is their potentially different impact on small banks. Research findings raise questions about the claim Some small banks believe that requiring a new that the operating costs of branch banking organi- organization to enter a community by opening a zations are indeed lower than those of multibank full-service bank, rather than a branch, would holding companies. If one form of organization reduce the likelihood that the new organization were substantially less costly than an alternative would be able to lower prices, cut services, and form, the difference would be reflected in profit- drive out the small bank. However, this point of ability and long-run survival; the bank organized in view is undercut by the demonstrated ability of the less efficient manner would not be able to many small banks to compete with large banks Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1082 Federal Reserve Bulletin • December 1993 within their home state. Out-of-state banking orga- of a new bank. Since 1979, more than 3,500 new nizations should pose no new problems. In addi- banks have been chartered, though more than 5,000 tion, small banks typically earn a rate of return on existing banks have been absorbed by mergers; in assets as high as, or higher than, that earned by addition, more than 24,000 new branches have large banks, and there is no evidence that they are been opened, while 10,500 existing branches have any less competitive when they are competing with been closed. These numbers suggest that the indusa branch office than when they are competing with try does respond to the needs of markets. If, as is a full-service bank. likely the case, entry via the opening of a new branch is less costly than entry via the chartering of a new bank, the achievement of community rein- Service to the Local Community vestment objectives may be accomplished more Another issue in the debate is service to the local easily by lowering restrictions on branching. community and the measurement of that service. Community groups often argue that large banks from outside the area drain funds from the local The Dual Banking System community, collecting deposits but not extending loans to local businesses and consumers. To an Finally, the debate about the best way to achieve extent, service to the local community is easier to interstate banking has implications for the preservameasure in the context of interstate bank holding tion of the dual banking system. Many observers companies. Banks report on deposits held by indi- believe that a bank with branches in more than one vidual branch offices once a year, but they are not state would be chartered as a national bank. If that required to report loans originated on a branch were the case, all the bank's branches would be office basis. For that reason, monitoring of lending regulated by the federal authority, the Comptroller at the local level (absent additional reporting of the Currency. If, on the other hand, a bank with requirements) would be more difficult with branch branches in more than one state were to be statebanking. In contrast, each bank owned by a holding chartered, it would be subject to regulation by each company must report quarterly on both its deposits of the states in which it had a branch. Although the and its loans. banking authorities of the various states could make Funds flow into and out of communities accord- agreements as to how such an organization would ing to the forces of supply and demand. Measuring be examined and which state's regulations would the flow is difficult because bank loans and invest- prevail, many issues would have to be resolved. An ments can be local or nonlocal. For example, a individual bank, having a choice of regulators, bank invests in its local community when it makes might find it less costly to deal with the national loans to local businesses and consumers, but it bank regulators. invests local deposits outside the market when it Although banks planning multistate branch netpurchases government securities or sells federal works might find it more efficient to be regulated as funds. national banks, the rate of formation of interstate Although the Community Reinvestment Act banks thus far suggests that relatively few large requires banks to serve their community or commu- multistate organizations will be formed. Because of nities, the market also plays a major role in this the apparent lack of significant scale economies, as cause. A bank or branch that does not serve its evidenced by direct studies of the subject as well as community is likely to face competition from one the observed profitability of small banks, thousands that provides better service. So long as new bank- of banks will probably survive into the future. ing organizations are allowed to enter the market Some of these institutions will likely choose to be and the costs of entry are low, the failure of exist- state-regulated banks, and the dual banking system ing banks to make worthwhile loans and to provide will continue. other needed services to the community should attract new banking institutions into the market. In summary, several important issues will be New entry occurs via acquisition of an existing debated as policymakers continue to discuss potenbank, formation of a new branch, or the chartering tial changes in the geographic regulation of bank- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interstate Banking: A Status Report 1083 ing. The resolution of these issues will determine Interstate Bank Holding Companies the structure of the banking system of the future. Regardless of the method of geographic expansion, Beyond the few interstate branches, the remaining however, the current large number of financial interstate banking activity is conducted through institutions and the evidence suggesting that multistate bank holding companies. As of June 30, smaller institutions are surviving seem to ensure 1993, 170 U.S. bank holding companies and that the U.S. banking system will continue to 8 foreign bank holding companies owned banks in be characterized by a large number of financial more than one state. These 178 companies repreinstitutions. sent only 3.2 percent of the 5,509 bank holding companies currently active in the United States. Although many of these companies are major banking organizations, as suggested by their average THE INTERSTATE BANKING ORGANIZATIONS holdings of U.S. deposits of just over $8 billion, 71 of the 178 companies have domestic deposits of This section turns from the issues involved in a less than $1 billion. geographic restructuring of the banking system Many of the multistate bank holding to an examination of progress in the development companies—111 of the 178—have subsidiary of interstate banking. banks in only two states, their home state and one other state. Another 45 have banks in three or four states, and 17 have subsidiaries in five to nine Interstate Branch Banking states. Only 5 holding companies have subsidiary banks in ten or more states, and 2 of these 5 were The few state laws permitting interstate branch among the grandfathered interstate bank holding banking have not yet been widely utilized. As companies that had acquired some of their out-ofof June 30, 1992, 146 branches were being oper- state subsidiary banks before the Bank Holding ated across the borders of states, territories, or Company Act of 1956. Clearly, only a few banking possessions, according to the Summary of Depos- organizations have used the state interstate banking its, an annual survey conducted by the Federal laws to make significant progress toward becoming Deposit Insurance Corporation (FDIC) that truly nationwide banks. reports the amount of deposits each bank has at each of its offices. These 146 branches represent only a tiny fraction of the more than 56,000 branch EXTENT OF INTERSTATE BANKING offices operated by commercial and savings banks insured by the FDIC. Most of the 146 were Although the share of deposits held by out-of-state branches of U.S. banks headquartered in the United bank holding companies nationwide has grown in States but operating branches in territories and recent years, the record differs from state to state. possessions of the United States (for example, a In some states, interstate banking activity is still branch on Guam of a bank headquartered in insignificant, but in others, nearly all deposits are California). Others were U.S. branches of banks held by banks that are owned by out-of-state holdheadquartered in a U.S. territory or possession ing companies. (for example, a New York branch of a Puerto Rican bank). Only 43 of the 146 branches were operating Share at the National Level across state lines. These branches exist as a result of a variety of historical exceptions to the general The share of domestic commercial banking assets prohibitions: Some were grandfathered from earlier controlled by interstate bank holding companies periods, some were permitted as a means of resolv- has expanded substantially over time, though not as ing a bank failure or potential failure, and some are rapidly as many observers, particularly the oppobranches of banks serving more than one military nents of change, had expected. In February 1987, installation. 6 percent of domestic banking assets were held by Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1084 Federal Reserve Bulletin • December 1993 banks controlled by out-of-state bank holding com- 3. Share of domestic banking deposits held by insured panies, compared with 21.3 percent at the end of commercial banks owned by out-of-state bank holding companies, by state, June 30, 19931 1992. Looking at a different measure of activity, at Percent the end of June 1993, 22.8 percent of domestic banking deposits were held by insured commercial State Share banks that were subsidiaries of out-of-state bank Alabama 3.19 holding companies. 23.55 89.69 The slower-than-expected increase in interstate Arkansas 1.99 California 1.10 banking activity may be due to several factors. The financial problems encountered by some of the Colorado 56.89 Connecticut 49.40 nation's largest banks during the period when many Delaware 37.96 District of Columbia 58.70 states were enacting their interstate bank holding 50.04 company laws provide one explanation. Many of 42.19 the holding companies that had been expected to 8.42 56.67 expand rapidly did not have the resources to grow 15.31 53.42 at the anticipated rate. Therefore, as the condition of the banking system continues to improve, addi- 23.16 10.15 tional interstate expansion can be expected. Kentucky 35.44 Louisiana 5.34 Research on the post-acquisition performance of 78.15 bank holding companies provides another possible Maryland 24.60 explanation for the slower-than-expected growth in Massachusetts .. 29.81 Michigan 3.58 interstate banking. Although some holding compa- Minnesota 3.15 Mississippi 2.18 nies have been able to make numerous large acquisitions, integrate the new banks into their organiza- Missouri .18 Montana 31.14 tions, and in the process increase their profit rate, Nebraska 10.15 89.41 studies of hundreds of mergers within and across New Hampshire 23.43 state boundaries suggest that, on average, mergers New Jersey 21.12 do not increase the profitability or efficiency of the New Mexico ... 32.93 New York 6.46 combined firm. As noted earlier, studies have not North Carolina . .25 North Dakota 30.66 found the economies of scale that would require firms to become very large in order to be competi- Ohio 3.36 Oklahoma 12.69 tive and profitable. Thus, smaller banks are not 48.23 Pennsylvania ... 10.66 under great pressure to be acquired; the vast major- Rhode Island :. . " . 2266..8855 ity can remain independent and still be profitable. South Carolina . 64.15 The slow growth of interstate banking may also South Dakota .. 52.96 Tennessee 29.46 be explained by the fact that most acquisitions Texas 53.01 Utah 27.45 must be negotiated. Only a relatively few bank holding companies have publicly traded stock that Vermont 4.40 Virginia 39.73 could be acquired in a hostile takeover. Therefore, Washington 81.19 West Virginia .. 26.97 if the target firm does not want to be acquired, or is Wisconsin 16.66 not willing to accept the per share price offered by Wyoming 11i fW 53.58 the acquiring firm, the takeover attempt is usually National average 22.81 unsuccessful. 1. Based on Reports of Condition and Income for June 30, 1993, but covers acquisitions approved and reported in the Federal Reserve Bulletin through September 1993. Excludes data for foreign banks, except foreignowned bank holding companies that have bank subsidiaries in two or more Share at the State Level states; also excludes special-purpose banks, nonbank banks, and nondeposit trust companies. State-by-state data reveal large differences among states in the percentage of domestic banking depos- sidiaries of out-of-state bank holding companies. In its held by insured commercial banks that are sub- four states, more than 75 percent of domestic bank- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interstate Banking: A Status Report 1085 ing deposits are held by banks owned by out-of- 4. Multistate bank holding companies, by state, state holding companies (table 3). In nine states, Jupe 30, 1993 50 percent to 75 percent of deposits are under Share of total out-of-state ownership; in twenty-five states, Total domestic domestic deposits held 10 percent to 50 percent; and in the remaining State Number deposits by out-of-state (billions of subsidiary thirteen states, less than 10 percent. dollars) banks The states in which banks owned by out-of-state (percent) holding companies hold more than 75 percent of Alabama 5 30.72 26.85 domestic banking deposits are Arizona, Maine, Arkansas 4 4.99 20.84 California 5 183.75 35.01 Nevada, and Washington. Before they allowed Connecticut 1 15.58 46.98 District of Columbia ... 1 3.67 13.35 interstate banking, these four states had relatively few banking organizations and relatively few large Florida 2 32.35 3.49 7 38.66 60.87 banking organizations, and a relatively high per- Hawaii 1 4.87 1.64 Idaho 1 5.37 48.79 centage of deposits were held by the largest banks. Illinois 14 58.43 13.18 Thus, only a few acquisitions by out-of-state firms Indiana 5 6.22 24.60 were required to bring more than 75 percent of 3 .67 22.42 5 6.22 20.28 banking deposits under out-of-state control. Kentucky 3 3.92 8.52 Maryland 7 24.52 16.64 Bank failures are another important factor explaining levels of out-of-state ownership. In a Massachusetts 3 29.20 19.32 Michigan 6 80.65 29.65 few states, most notably Texas, the relatively high Minnesota 8 51.07 55.00 Mississippi 4 9.55 21.99 percentage of deposits held by out-of-state holding Missouri 11 47.40 33.38 companies (53 percent) is due in large part to the Nebraska 8 3.81 12.31 failure of one or more major banking organizations New Jersey 7 52.88 29.80 New Mexico 2 3.35 43.02 in the state and their subsequent acquisition by New York 11 243.25 23.70 North Carolina 7 166.40 74.23 out-of-state holding companies. ; • : North Dakota 1 1.05 68.57 Several possible explanations can be offered for Ohio 10 126.09 48.97 the low percentages of out-of-state control of Oklahoma 1 .18 27.78 Oregon 1 15.10 48.54 deposits in some states. Some states may be viewed Pennsylvania 7 78.95 18.07 as not particularly attractive for entry because of Rhode Island 1 31.41 83.06 their low income levels or low rates of economic South Carolina 1 .38 65.79 South Dakota 1 .23 13.04 growth. Other states, such as New York, are home Tennessee 5 11.84 8.07 Utah 2 8.37 32.38 to many very large banks; few out-of-state entrants would be able to acquire one of these large banks Virginia 4 24.84 22.95 Washington 2 1.11 10.81 and gain a large share of the state's deposits. West Virginia 5 2.70 10.44 Wisconsin 6 19.73 23.18 Finally, in some of the states the largest banks hold relatively small shares of total deposits; several of SOURCES. Reports of Condition and Income, June 30, 1993, and NIC (the Federal Reserve's National Information Center for Systemwide Structure and the largest banks in those states could be acquired Financial Information). without transferring a large percentage of total deposits in the states to out-of-state firms. Thirty-nine states (including the District of INTERSTATE BANKING Columbia) are home to at least one banking organi- AND DEPOSIT CONCENTRATION zation that has acquired an out-of-state subsidiary (table 4). In most of these states, the ratio of Critics of the concept of interstate banking have out-of-state deposits to total deposits held by the argued that the removal of traditional barriers to state's multistate bank holding companies is not nationwide banking would result in a more concenparticularly high. In a few states, such as Minne- trated banking system. Over time, they have mainsota, North Carolina, Georgia, Rhode Island, and tained, the number of banks would decline and the Ohio, the state's multistate banking organizations remaining banks would control an increasingly obtain a large share of their total deposits through large share of total banking system deposits. In this their out-of-state subsidiaries. more concentrated system, the users of bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1086 Federal Reserve Bulletin • December 1993 services—consumers and businesses—would be 5. Shares of domestic commercial banking deposits held harmed because the few remaining firms would be by largest U.S. banking organizations, selected years, 1960-931 free to charge higher prices than would prevail in a Percent more competitive environment. Banking concentration has been examined on a Year Largest 10 Largest 25 Largest 50 Largest 100 number of levels. Nationwide concentration has 1960 20.4 31.7 40.3 49.6 been of historical interest because of a concern 1965 21.3 32.7 40.9 49.8 1970 20.0 30.8 38.9 48.1 about the overall control of credit in the United 1975 19.9 30.6 38.7 48.2 States that dates back to the earliest years of the 1980 18.6 29.1 37.1 46.8 nation. Concentration at the state level has been 1985 17.0 28.5 40.5 52.6 1986 17.6 29.6 42.4 55.6 examined because, traditionally, banking organiza- 1987 18.1 31.1 44.1 57.4 tions could expand only within the boundaries of 1988 19.2 33.2 47.5 59.9 1989 19.9 34.1 48.1 60.5 their home state. As these barriers are broken 1990 20.0 34.9 48.9 61.4 down, the relevance of state concentration 1991 22.7 37.5 49.6 61.3 decreases. Concentration at the local level is of 1992 24.1 39.2 51.7 62.6 1993 25.0 40.4 53.1 64.0 paramount concern because the local banking mar- 1. Banking organizations are ranked by volume of domestic commercial ket is where most bank customers—such as housebanking deposits. Rankings and shares for 1960-92 are as of December 31; holds and small businesses—seek out financial for 1993, as of June 30. SOURCES. Reports of Condition and Income and NIC database. services. To the extent that these customers are restricted to the local banking market, the preservation of unconcentrated markets that provide a ciated with the formation and growth of multistate high level of competition for banking services is bank holding companies and large mergers in critical. which the merged banks were headquartered in the In discussing banking concentration, especially same state. changes in concentration over time, it is important The percentage of domestic deposits held by to note that the concentration data reported in this the ten largest banking organizations has risen section are based on insured commercial banks. more slowly. As recently as 1990, the ten The numbers do not capture any increase in finan- largest organizations held a smaller percentage of cial activity by other depository and nondepository deposits than they did in 1960. Over the past two institutions. To the extent that other institutions and one-half years, however, the ten largest bankperform financial services that were once the exclu- ing organizations have increased their share of sive province of commercial banks, an increase in a deposits. This recent growth reflects several concentration ratio that is based solely on banking events. Some of the fastest growing organizawill almost surely overstate the actual change in tions have moved into the top ten, replacing banks financial concentration. that were acquired by other bank holding companies or that, in spite of their size, were not able to maintain their relative rank in a dynamic industry. National Concentration In addition, improvements in their financial condition removed a barrier to the expansion of some At the national level, banking has become much major bank holding companies. Finally, mergers more concentrated over the period during occurred between some very large banking which interstate banks have been formed. The organizations. increased concentration is particularly noticeable The relative importance of in-state and interstate for the nation's 100 largest insured commercial acquisitions in the increase in national concentrabanking organizations (as measured by volume of tion can be seen in data on turnover, over time, deposits). For several decades, the percentage of among the 100 largest banking organizations. total domestic deposits held by the 100 largest Beginning with the largest 100 organizations as of banking organizations hovered just below 50 per- June 1985 and tracing these firms forward in cent (table 5). Now, that percentage is 64 percent. time, 49 had been acquired by mid-1993. Of the The rise is a result of both interstate mergers asso- 49 firms, 34 were acquired by an out-of-state bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interstate Banking: A Status Report 1087 holding company, while 15 were acquired by high also have a relatively high level of out-of-state another firm in their home state. ownership. The high level of statewide concentration may have contributed to a high percentage of out-of-state ownership, because in the highly con- Concentration at the State Level centrated states only a few acquisitions were necessary to bring a high percentage of the state's depos- Concentration at the state level has also increased its under the control of out-of-state bank holding substantially. Table 6 gives data for 1980 and mid- companies. 1993, by state, on the shares of domestic banking deposits in the state held by the three largest banking organizations, individually and as a group. In Local Banking Market Concentration eleven states and the District of Columbia, the three-firm share decreased; in the other states, the Most bank customers are concerned with competishare increased. The average of the state three-firm tion at the local level, rather than the national or concentration ratios increased from 42.0 percent in state level. A large business might seek banking 1980 to 50.5 percent in June 1993. services over a wide geographic area, but a house- Table 6 also identifies the banking organizations hold or small business typically does not search among the largest three in each state that are owned the nation or the state for banking services. The by out-of-state bank holding companies. In 1980, relevant banking market for the vast majority of these organizations were the subsidiaries of the households and small businesses is a local banking multistate bank holding companies that were grand- market. fathered by the Bank Holding Company Act of The 1989 Survey of Consumer Finances demon- 1956. By the end of June 1993, the number of strated the importance of the local market to houseinstances in which one or more of the three largest holds.3 Nearly 96 percent of the households surfirms were controlled by an out-of-state bank hold- veyed indicated that their primary financial instituing company had increased substantially. tion was a local bank, thrift institution, or credit Although in many states one or more of the union. Fewer than 20 percent of the households three largest banks are owned by out-of-state reported using a nonlocal financial institution for bank holding companies, this does not mean that any services. concentration has increased as a result of inter- The importance of the local market for small state banking. It simply means that an out-of-state businesses was revealed by the 1988-89 National owner has replaced the in-state owner of the bank; Survey of Small Business Finances.4 The survey the bank's share of state deposits has not necessar- concluded that the vast majority of small busiily changed. Thus, to the extent that out-of-state nesses rely on local firms for the bulk of their firms have merely gained control of shares previ- financial needs. Only 20 percent of the firms surously held by in-state firms, interstate banking veyed reported using a financial institution located has not led to increased concentration at the state thirty miles or more from the firm's home office. level. Concentration in a state increases when the Because households and small businesses rely so out-of-state firm is able to increase the share of heavily on local financial institutions, the local state deposits held by its subsidiary, or when the banking market is generally considered the approout-of-state firm subsequently acquires additional priate market for analysis under antitrust laws. banks in the state so as to increase its state share. Although a more exact definition of the market is Evidence suggests that firms entering new markets by acquiring large banks in the market are not, on average, able to increase the market share of the acquired bank. 3. Gergory E. Elliehausen and John D. Wolken, "Banking Markets and the Use of Financial Services by Households," Federal The data in tables 3 and 6 appear to suggest a Reserve Bulletin, vol. 78 (March 1992), pp. 169-81. positive relationship between the percentage of out- 4. Gregory E. Elliehausen and John D. Wolken, "Banking Markets and the Use of Financial Services by Small and Medium-Sized of-state ownership and the level of state concentra- Businesses," Federal Reserve Bulletin, vol. 76 (October 1990), tion. Many of the states where concentration is pp. 801-17. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1088 Federal Reserve Bulletin • December 1993 6. Shares of domestic commercial banking deposits held by largest banking organizations in state, by state, 1980 and 19931 Percent Largest Second largest Third largest Sum of CChhaannggee iinn organization organization organization three largest sshhaarree ffoorr SSttaattee organizations tthhrreeee llaarrggeesstt oorrggaanniizzaattiioonnss,, 1980 1993 1980 1993 1980 1993 1980 1993 11998800 ttoo 11999933 Alabama 15.3 18.3 11.6 17.6 11.3 17.2 38.2 53.1 14.9 Alaska 30.9 42.3 22.5 25.5 10.3 18.6* 63.7 86.3 22.6 Arizona 42.1 31.5* 27.3* 25.0* 15.5 21.7* 84.8 78.2 -6.6 Arkansas 6.7 13.1 3.2 10.3 3.1 4.7 13.0 28.0 15.0 California 35.1 36.5 12.9 17.3 10.0 7.2 58.0 61.1 3.1 Colorado 15.8 24.1* 15.3 16.6* 9.9 9.1* 41.1 49.7 8.6 Connecticut 19.1 32.3 18.7 24.3* 9.3 9.4** 47.1 66.1 19.0 Delaware 34.3 16.2 21.8 15.5* 18.1 11.0* 74.1 42.6 -31.5 District of Columbia 32.3 33.1 28.4 21.4* 10.5 12.7* 71.2 67.2 -4.0 Florida 10.5 26.1 9.2 17.9* 7.3 14.0* 27.0 58.0 31.0 Georgia 16.5 13.6* 11.9 13.1 11.5 12.9* 39.8 39.5 -.3 Hawaii 38.6 42.5 32.5 37.1 8.2** 9.3** 79.2 88.9 9.7 Idaho 36.6 35.0 26.0* 28.3* 11.6* 12.5* 74.2 75.8 1.6 Illinois 16.8 13.5 12.0 7.1 4.5 5.2** 33.3 25.8 -7.5 Indiana 6.4 18.3* 6.1 11.7* 4.9 8.5* 17.4 38.5 21.1 Iowa 7.4* 12.3* 5.9 6.7* 5.3 5.2 18.6 24.1 5.4 Kansas 4.7 14.9 2.7 4.1* 1.8 3.8 9.1 22.8 13.7 Kentucky 9.5 12.3* 8.9 10.8* 4.4 10.3 22.8 33.4 10.6 Louisiana 6.7 15.1 4.1 12.1 3.8 9.5 14.6 36.6 22.0 Maine 18.4 32.3* 16.5 28.3* 14.0 14.2* 48.9 74.8 25.9 Maryland 20.9 19.2 13.3 12 9** 10.7 10.4 44.9 42.4 -2.5 Massachusetts 23.9 23.8 12.6 15.7 10.9 13.1* 47.5 52.7 5.2 Michigan 15.4 19.9 11.6 19.3 9.4 14.6 36.4 53.8 17.4 Minnesota 26.1 25.6 24.8 22.4 2.4 2.6 53.3 50.5 -2.8 Mississippi 12.1 16.2 10.9 15.1 4.2 8.6 27.2 39.9 12.6 Missouri 11.1 21.9 10.0 12.2 8.5 10.9 29.5 45.0 15.5 Montana 24.0* 16.9* 12.0* 11.0* 5.9 10.3 41.9 38.2 -3.7 Nebraska 7.8* 14.8 6.5 11.8 5.1 10.0* 19.4 36.6 17.2 Nevada 47.5* 34.6* 22.4 32.9* 13.6* 9.6* 83.5 77.1 -6.4 New Hampshire 15.5 23.4* 11.7 18.7 7.3 14.9 34.5 57.0 22.5 New Jersey 8.5 20.4** 8.4 11.2 7.9 10.5 24.7 42.1 17.3 New Mexico 23.1 25.1* 11.9* 14.7 8.9 11.0 43.9 50.8 6.8 New York 15.3 20.2 12.7 15.1 12.2 12.7 40.1 48.0 7.9 North Carolina 19.9 18.8 19.3 18.4 11.9 14.0 51.2 51.3 .1 North Dakota 16.2* 13.7* 15.8* 10.7* 6.8* 6.3* 38.8 30.7 -8.1 Ohio 9.2 15.9 8.7 14.9 7.1 14.5 25.0 45.3 20.3 Oklahoma 7.8 9.1 6.4 7.0 4.7 4.8* 18.9 20.9 2.0 Oregon 34.4 37.8 33.8* 24.9* 7.8 12.3* 76.0 75.0 -1.0 Pennsylvania 12.3 16.7 6.3 15.0 4.7 8.7 23.2 40.3 17.1 Rhode Island 41.5 57.5 25.1 28.2* 24.0 8.3** 90.6 94.0 3.4 South Carolina 19.1 24.5* 13.4 24.0* 12.8 8.6* 45.4 57.0 11.7 South Dakota 23.0* 26.7* 17.0* 18.3* 3.2 4.4* 43.2 49.5 6.2 Tennessee 11.5 15.0 8.1 12.1 7.9 10.2* 27.5 37.2 9.7 Texas 9.0 16.4* 8.2 11.8* 8.1 10.0* 25.3 38.2 12.9 Utah 27.8 31.5 20.6 23.6 11.2* 9.1* 59.6 64.2 4.6 Vermont 17.2 27.0 13.2 20.9 12.8 15.4 43.2 63.2 20.0 Virginia 13.7 16.4* 10.8 14.6 10.1 12.3* 34.5 43.4 8.9 Washington 37.0 35.8* 18.7 17.0* 8.6* 14.4* 64.3 67.1 2.8 West Virginia 3.8 14.3* 2.6 14.2 1.8 7.7 8.2 36.1 28.0 Wisconsin 13.3 15.8 8.3 13.4 7.0 10.5* 28.7 39.7 11.0 Wyoming 16.0 23.7* 12.9* 7.9* 9.7 6.8 38.7 38.4 -.3 1. Banking organizations are ranked by volume of domestic commercial * Out-of-state bank holding company. banking deposits. Rankings and shares for 1980 are as of December 31; for ** Foreign bank holding company. 1993, as of June 30. Components may not sum to totals because of rounding. SOURCES. NIC database and Reports of Condition and Income. necessary when an application for a specific bank frequently approximated by a metropolitan statistimerger or bank holding company acquisition is cal area, as defined by the federal government, or being reviewed, the local banking market is by a nonmetropolitan county. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interstate Banking: A Status Report 1089 7. Average share of domestic commercial banking mergers had not been competitors in the same local deposits held by the three largest banking banking market, their combination did not increase organizations in metropolitan statistical areas and local market concentration. In some cases in which nonmetropolitan counties, 1976-92 the merging banks were major competitors in Metropolitan statistical Nonmetropolitan the same local market, divestitures were used to Year areas counties limit the impact of the merger on local market 1976 68.5 90.0 concentration. 1977 67.9 89.9 lljfjgfff 1978 67.4 89.9 1979 66.8 89.7 1980 66.4 89.6 SUMMARY 1981 66.1 89.4 1982 65.9 89.4 1983 66.0 89.4 1984 66.4 89.4 Nearly all states now have some form of law permitting interstate bank holding companies, some 1985 66.7 89.5 1986 67.5 89.5 have laws allowing interstate branch banking, and 1987 67.7 89.5 1988 67.8 89.7 more will be considering the liberalization of their 1989 67.5 89.7 laws in coming years. The debate in the next few 1990 67.3 89.6 years will likely focus on the relative merits of 1991 66.7 89.3 1992 67.5 89.2 interstate bank holding companies and interstate branch banking as a means of geographic expan- SOURCE. Federal Deposit Insurance Corporation, Summary of Deposits, 1976-92. sion. Today, however, there are still relatively few interstate banking organizations. Although the share of deposits owned by out-of-state bank hold- These local banking markets have not, on aver- ing companies has grown substantially, it is less age, become more concentrated over recent years than many had predicted. Interstate banking has (table 7). In spite of the thousands of mergers that contributed to an increase in the concentration have occurred, the average concentration in local of deposits at the national level, but, thus far, banking markets has remained remarkably stable local banking markets have not become more over time. Because many of the banks involved in concentrated. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1090 Industrial Production and Capacity Utilization for September 1993 Released for publication October 15 4 percent last month, boosting output in the related categories of durable consumer goods, transit Industrial production increased 0.2 percent in Sep- equipment, and durable goods materials. Utilities tember; the revised index showed gains of 0.1 per- output, which had risen sharply over the previous cent in August and 0.2 percent in July. The produc- three months because of the extreme weather, fell tion of motor vehicles and parts rose nearly back to a more normal level in September and Industrial production indexes Twelve-month percent change Twelve-month percent change 1988 1989 1990 1991 1992 1993 1988 1989 1990 1991 1992 1993 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 Production ^_ y^ Production 80 80 1 1 1 1 1 1 1 1 1 1 1 1 I 1 1 1 Percent of capacity Percent of capacity Total industry Manufacturing 90 90 Utilization Utilization 80 80 ^ —^ - 70 70 i i i i I ll 1981 1983 1985 1987 1989 1991 1993 1981 1983 1985 1987 1989 1991 1993 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

1091 Industrial production and capacity utilization1 Industrial production, index, 1987=100 Percentage change Category 1993 19932 Sept. 1992 to Juner July' Aug.r Sept. f Juner July1 Aug.1 Sept. i Sept. 1993 Total 110.5 110.7 110.9 111.0 .2 .2 .1 .2 4.6 Previous estimate 110.4 110.9 111.1 .2 .4 .2 Major market groups Products, total3 109.4 109.8 109.8 110.0 .1 .4 .0 .2 4.4 Consumer goods ... 107.3 107.5 107.2 107.2 .0 .2 -.3 .0 2.7 Business equipment 136.1 136.6 137.1 138.3 .5 .4 .4 .8 10.6 Construction supplies 96.8 98.2 98.3 98.9 -.9 1.5 .1 .6 6.4 Materials 112.1 112.0 112.4 112.5 .5 .0 .3 .1 4.8 Major industry groups Manufacturing 111.3 111.5 111.6 112.0 .0 .2 .1 .4 4.9 Durable 114.6 115.2 115.4 116.1 -.2 .6 .1 .6 7.3 Nondurable 107.2 106.9 107.0 107.1 .3 -.3 .1 .1 1.8 Mining 98.0 97.2 97.1 98.2 .7 -.8 -.1 1.1 1.1 Utilities 114.9 116.2 117.3 113.6 2.5 1.1 .9 -3.1 2.2 MMMEEEMMMOOO Capacity utilization, percent CCCaaapppaaaccciiitttyyy,,, pppeeerrr--ccceeennntttaaagggeee 1992 1993 ccchhhaaannngggeee,,, AAvveerraaggee,, LLooww,, HHiigghh,, SSSeeepppttt... 111999999222 11996677--9922 11998822 11998888--8899 Sept. Juner Julyr Aug.r Sept.P tttooo SSSeeepppttt... 111999999333 Total 81.9 71.8 84.8 79 3 81.5 81.6 81.6 81.6 1.6 Manufacturing 81.2 70.0 85.1 78.4 80.6 80.6 80.6 80.8 1.8 Advanced processing 80.7 71.4 83.3 77.0 78.9 79.0 78.9 79.1 2.2 Primary processing . 82.2 66.8 89.1 81.7 84.5 84.6 84.7 84.7 .9 Mining 87.4 80.6 87.0 86.5 87.9 87.3 87.2 88.3 -.8 Utilities 86.7 76.2 92.6 84.5 86.6 87.5 88.3 85.4 1.1 1. Data seasonally adjusted or calculated from seasonally adjusted 3. Contains components in addition to those shown, monthly data. r Revised, 2. Change from preceding month. p Preliminary. reduced the output of nondurable consumer goods In August and September, the production of busiand energy materials. The production of business ness equipment other than motor vehicles grew an equipment and construction supplies rose again, average of about 0.4 percent per month, whereas it while the output of defense and space equipment grew at nearly twice that rate over the preceding was curtailed further. At 111.0 percent of its 1987 three months. The deceleration in growth was conannual average, total industrial production was centrated in information processing equipment and 4.6 percent above its year-earlier level, but growth industrial equipment. Even so, production of busiin the third quarter was 1.8 percent at an annual ness equipment has grown more than 10 percent rate. Utilization of total industrial capacity, at over the past year; about half of this gain reflected 81.6 percent, has been essentially unchanged since increased production of computers. February. The output of materials, held down by the When analyzed by market group, the data show decline in electricity generation, was about that the output of consumer goods excluding utili- unchanged last month. Along with the gains in ties and motor vehicles has changed little since parts for motor vehicles and for computers, a February. Over this period, the production of dura- rebound in iron ore mining following the settlebles edged up, but the output of nondurables ment of a strike boosted production of durable declined, in part, because of weakness in clothing goods materials. Output of nondurable materials output. also rose, led by gains in textiles and chemicals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1092 Federal Reserve Bulletin • December 1993 When analyzed by industry group, the data show September but was still a bit below levels seen last that manufacturing output increased 0.4 percent. spring; apart from machinery and furniture, operat- The rise in production of motor vehicles and parts ing rates for most major industries remained below accounted for about one-half of the overall gain in their April levels. The rate for primary-processing manufacturing. Output also grew significantly in industries, at 84.7 percent, also was unchanged but machinery, petroleum products, and construction- has risen since last spring; the only major indusrelated industries such as lumber, but production of tries that have not shown improvement over this steel and apparel fell. period are paper, fabricated metals, and rubber and The utilization of manufacturing capacity, at plastic products. 80.8 percent, has changed little over the past The production at mines rose 1.1 percent; the six months. The operating rate for advanced- iron ore strike ended, and coal output rose sharply processing industries increased to 79.1 percent in despite an ongoing strike. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1093 Statements to the Congress Statement by John P. LaWare, Member, Board of borrowers around the nation and the world, have Governors of the Federal Reserve System, before the solicited deposits throughout the country, have en- Committee on Banking, Housing, and Urban Affairs, gaged in a trust business for customers domiciled U.S. Senate, October 5, 1993 outside the banks' local markets, and—through bank holding companies—have operated mortgage banking, I am pleased to appear on behalf of the Federal consumer finance, and similar affiliates without geo- Reserve Board to discuss the interstate banking and graphic restraint. Since the early 1980s, moreover, insurance provisions of S.543 as approved by the individual states have modified their statutes to per- Senate in 1991. For many years, the Board has be- mit—under the Douglas Amendment to the Bank lieved that full interstate banking would benefit bank Holding Company Act—out-of-state bank holding customers and lead to a stronger and safer banking companies to own banks within their jurisdiction. system, and it has supported the thrust of various Indeed, today only Hawaii prohibits bank ownership legislative initiatives to accomplish that goal. Simi- by out-of-state bank holding companies. larly, the Board has long been on record in support of Although state legislatures have supported interlegislation to update the nation's banking statutes to state banking and more than one-fifth of domestic allow banks to adapt to changes in the financial ser- banking assets are already held in banks controlled by vices marketplace and to better serve consumers. In out-of-state bank holding companies, the Board bethis context, we have consistently supported the pro- lieves that there is a need for congressional action. Our vision of insurance activities by banks and bank hold- dual banking system has a desirable genius for resisting companies. Thus, we support the provisions of ing government-imposed uniformity, but the large S.543, which would permit national banks to engage in number of significant differences among the states insurance agency activities permissible for state banks impedes the interstate delivery of services to the but oppose other provisions that limit bank insurance public and reduces the efficiency of the banking busiactivities. ness. The differences in state laws are discussed in the This morning, besides making some specific com- first appendix to this statement, but notable examples ments about the 1991 legislation, I would like to include restrictions on the home state of banking explain the reasons for our support of interstate bank- organizations allowed to enter some states, reciprocity ing and provide information about the current status of requirements in some other states, the prohibition of interstate activities. To assist the committee in its de novo entry, and variable caps on the deposit shares deliberations, the appendixes to my statement provide of new entrants in still other states. In short, the states an up-to-date summary of state laws regarding inter- have made clear that they accept—and perhaps prestate banking, a discussion of recent trends, and fer—interstate banking, and their legislatures have several statistical tables providing information rele- made interstate banking a substantial reality today, but vant to the issue.1 actions at the state level have resulted in a hodgepodge of laws and regulations that permit interstate banking but in an inefficient and high-cost manner. NATIONWIDE BANKING Restrictions on both intra- and interstate banking It is perhaps best to start with the observation that were imposed in an era in which commercial banks interstate banking is now a reality and has been for were the dominant provider of financial services to some time. For years, banks—both domestic and households and businesses. These restrictions were foreign—have maintained loan production offices out- clearly intended to limit competition and thereby inside their home states, have issued credit cards nation- sulate local banks from market pressures. Over time, ally, have made loans from their head offices to branching and other geographic restraints became part of the totality of regulations designed to protect bank profits through limitations on entry and deposit rate 1. The attachments to this statement are available from Publications competition. In recent years, however, banks have Services, Board of Governors of the Federal Reserve System, Washseen their market position eroded by nonbank providington, DC 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1094 Federal Reserve Bulletin • December 1993 ers of financial services that are not subject to banklike restraints would provide an important tool in diversiregulation. Indeed, the unwinding of the historically fying individual bank risk, providing for stability of the protected position of banks, such as the removal of banking system, and improving the flow of credit to deposit rate ceilings, has proceeded on most fronts as local economies under duress. a lagged response to market developments that had Third, interstate banking would facilitate the allocathemselves been encouraged by those same restraints tion of resources to regions that offer both safety and on banks. Attempts to maintain antiquated geographic higher returns and assist in the reduction of excess restrictions will only protect inefficient banks, disad- banking capacity. The United States will continue to vantage users of bank services, particularly those like be a dynamic economy with both expanding and small businesses that still have relatively few alterna- declining industries and expanding and temporarily tive sources of credit, encourage the entry of less declining regions. Banks pinned by artificial georegulated nonbank competitors, and increase the po- graphic restrictions to local areas experiencing diffitential stress on the safety net as the long-run viability culties have no choice but to pull in their horns, as it of banks is undermined. were, to protect their own viability. Only through Action to provide more uniform rules for interstate interbank credit extensions and loan participations can banking would provide several public benefits. First, they diversify their portfolio and make loans to borreducing obsolete barriers to entry would increase rowers unaffected by the depressed local economy. In actual and potential competition in the provision of fact, many of these institutions no doubt tend to have financial services to those customers that for one lower loan-to-deposit ratios, in part, because of their reason or another, have, at best, very limited access to inability to find bankable local credits. Note that, out-of-market banks, nonbank lenders, or the securi- given banks' long-run interest in geographic diversification, banking offices would still remain in regions ties markets. Bank customers would benefit from the experiencing difficulty but would be in a stronger resulting lower price's for credit, higher rates on their position to finance local expansion when growth opdeposits, and improved quality and easier access to portunities return. banking and related services. In addition, a significant proportion of our citizens live in areas in which state borders intersect; interstate banking would provide households and businesses in these regions with sig- COMMENTS ON S.543 nificantly increased convenience in conducting their banking business. The benefits from removal of restrictions on geo- Second, greater opportunities for geographic diver- graphic expansion could occur through either the sification through interstate banking could help to acquisition or de novo chartering of bank subsidiaries restore a level of stability to the banking system that of bank holding companies headquartered in another once was accomplished, in part, through protection of state or through the establishment of branches of a local banks from competition. Although increased bank in another state. All of the interstate banking competition from nonbanks has undermined the pro- laws enacted by the states provide for interstate banktection intended to be provided to banks through ing through bank subsidiaries of bank holding compacontrolled entry and geographic constraints, those nies, although some states permit interstate banking same restrictions have made it more difficult for banks through branches for state nonmember banks. S.543 to diversify their risks and seek out new opportunities. would authorize interstate banking on a nationwide Thus, many banks operating in a region that has basis through the acquisition of existing banks one experienced a local economic contraction have been year after enactment. The Board strongly supports neither protected by limits on bank competition nor such statutory change and would recommend that able to avoid the disastrous effects of dependence on the Congress authorize the interstate acquisition of one market for both deposits and loans. Being able to de novo banks as well. Authorizing de novo banking cushion losses in one region with earnings in others should enhance competition in many markets, alwould make banks better able to contribute to the though we recognize that most expansion would occur recovery of their local economy, and more diversified through acquisition. The Board also supports removbanks would expose the federal safety net to fewer ing entirely the McFadden Act's restrictions on interlosses. Clearly, greater geographic diversification state branching for national and state member banks. would have provided more stability over the past This would permit banking organizations to choose decade to banks operating in the agricultural areas of between alternative combinations of subsidiary banks the Midwest, the oil patch of the Southwest, and the and branches in the manner that best balances their high tech and defense regions of New England and own perceived costs and benefits. S.543 takes the California. In short, the elimination of geographic intermediate step of requiring the states to individually Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1095 authorize interstate branching outside the holding We support the solution to this problem proposed in company structure. The Board believes that the posi- S.543. As we understand it, the state in which tive experience with interstate banking, and the effi- branches of an out-of-state bank operate would negociencies that can be gained by some institutions tiate a supervisory agreement with the bank's home through branching, provide a compelling case for state supervisor that is acceptable to both states and to authorizing interstate branching without further delay. the relevant primary federal regulator. Failure to reach Moreover, this cautious approach to branching could agreement would require the primary federal superviput independent banks at a competitive disadvantage sor to conduct examinations without deferring to the in branching against banks in holding companies. state authorities. Such an approach creates desirable A limited number of studies comparing the costs of incentives for the states to reach reasonable accord. operating an interstate banking network with the costs When interstate banking is implemented through of operating a branching system have been done. bank subsidiaries, the bank in each state has all the Those studies suggest that, on average, both delivery powers that go with its charter—national or state. systems have about the same cost structure. However, However, should interstate banking occur through this finding is not inconsistent with the view that for branches, legislation must clarify whether those some banks branching may have the lowest cost branches must limit their activities to those permitted structure. Indeed, as a matter of logic, the Board to banks chartered in their host state, to activities believes that the cost savings from elimination of permitted to banks in their home states, or—for naseparate boards of directors, separate management tional or state banks—to the powers granted to nateams, and separate capitalization for banks that could tional banks. The issue of the powers that interstate be branches would be significant for some organiza- branches should be permitted to exercise requires tions. In any event, we believe that no good public balancing several competing concerns, including prepolicy purpose is served by restraining the freedom of serving the dual banking system and creating incenchoice of individual banking organizations that know tives that could make certain types of bank charters best what is the least cost operating structure for them. more attractive than others. We read the Senate bill as We therefore support the provision of S.543 that attempting the balance by providing that interstate would permit interstate banking offices to be con- branches of state-chartered banks may not engage in verted to branches should a banking organization any activities in the host state that are not permitted choose to do so. for banks chartered by the host state, although na- We also support the bill's approach of extending tional banks would retain the same powers in all interstate branching powers only to those banks that states. Under the bill, out-of-state branches of national are at least adequately capitalized and adequately banks would be subject to the same state laws governmanaged (which we assume means having acceptable ing intrastate branching, consumer protection, fair supervisory ratings). In the Board's testimony during lending, and community reinvestment as apply to the drafting of and debate about the Federal Deposit national banks headquartered in that state. Insurance Corporation Improvement Act of 1991, the I should note also that the Board supports permit- Board supported the principle of expanded activities ting foreign banks to establish and operate interstate only for strongly capitalized banks. In drafting recent branches on the same terms and conditions as apply to regulations, the banking agencies have attempted, national and state banks. The Board believes that the when possible, to apply this principle. A policy that provisions of S.543 that prohibit foreign banks from rewards stronger banks is a desirable supplement to opening new interstate branches except through an the regulatory limits imposed on weaker banks. Pro- insured subsidiary bank are not consistent with the visions authorizing the regulators to approve interstate principle of national treatment and should be reviewed combinations to improve the financial condition of to ensure that foreign banks receive parity of treatcritically undercapitalized bank holding companies are ment in their interstate operations. also desirable. Whether interstate banking is achieved through State supervisors would no doubt prefer interstate bank subsidiaries, bank branches, or both, and regardoperations through separate banks in each state be- less of how powers are exported from the home state cause it is much easier for them to supervise the to the branching host state, the arguments used by activities of a single organization in their jurisdiction. those that oppose interstate banking must be carefully It seems to the Board, however, that the criterion of reviewed. ease of regulation for states is only one part of a The first concern is that interstate banking would broader cost-benefit test. So long as safety and sound- result in undue concentration—and ultimately higher ness are not compromised, efficiency and least cost are loan rates and lower deposit rates—as large out-offar more important factors on which to base policy. state banks drive small in-state banks out of business. 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1096 Federal Reserve Bulletin • December 1993 In-state market evidence simply does not support this local markets despite the substantial overall consolicontention. All of the relevant evidence indicates that dation in banking in recent years. Local competition small banks generally survive entry by large out-of- has been maintained, in part, because many bank market banks and are very frequently more profitable mergers have been between firms operating in different than the entrant. Similar evidence indicates that new local markets. In addition, increased concentration large bank entrants to local markets, whether by has been avoided by factors already noted: the antide novo or by acquisition, are able to expand market trust laws, limited ability of new large banks to inshare by only modest amounts, if at all. crease market share, and the continued vitality of In the 1970s, for example, when statewide branching small local competitors. was authorized in New York State, several large New The importance of local markets and the evidence of York City banks sought an upstate presence by acquir- little change in local market concentration suggest that ing small banks in these markets. By the early 1980s, attempts to ensure competition through statewide or the acquired banks had gained on average less than 1 national deposit caps are unnecessary at best and may, percentage point in market share, with the largest gain in fact, be anticompetitive to the extent that they less than 3 percentage points. The acquired banks or prohibit entry. The Board would recommend deletion branches continue to have small market shares or they of the imposition of statewide and national deposit have been sold to local banks, as the New York City share caps. banks have exited the market. Experience in California Another concern of some is that new entrants will also illustrates the ability of small banks to remain vacuum up local deposits and channel them to out-ofviable in the face of competition from much larger market loans or that managers brought into local marorganizations. California has permitted unrestricted kets will be insensitive to, or have no authority to adjust statewide branching since 1927, and several of the to, local demands. However, it is important to recall state's banking organizations, most notably Bank- that an insured bank must fulfill its Community Rein- America, have operated extensive branch networks for vestment Act (CRA) responsibilities in all the markets years. In spite of these extensive branch banks, Cali- in which it operates. Moreover, the ease of entry, just fornia continues to have many successful independent discussed, should soften concerns that out-of-market banking organizations. For example, as of year-end entrants will ignore local customers. If a local branch 1992, there were 395 banking organizations in Califor- does not meet both the deposit needs and credit denia of which 101 had less than $50 million in assets. mands of the community, it will not succeed and it will Interestingly, in the period 1981 through 1991, 311 attract a rival that will. In this context, the Board sees de novo banks (almost 11 percent of the U.S. total of no need for the provisions of S.543, which would de novo banks formed in those years) began operation require the promulgation of regulations prohibiting the in this unlimited branching state. establishment of branches for the purposes of deposit Besides their difficulties in winning customers away production. from existing banks, entrants by acquisition are often However, because the Board realizes that the exsoon confronted with competition from a de novo bank pansion of nationwide banking raises several issues organized by local citizens, at times led by the former regarding the impact on local community credit needs, managers of the acquired bank. The potential for it supports provisions of S.543, which would amend entry—both de novo and by acquisitions by other the CRA to require that performance of interstate banks outside the market—plus evidence of continued institutions be assessed on a statewide or metropolitan small bank success suggest that it is unlikely that there area basis. This approach would maintain the concept would be consumer harm from interstate banking. It is embodied in the CRA that insured banks should be well to remember that since 1979, although more than evaluated on overall performance without imposing 5,000 banks were absorbed by merger, about 3,500 arbitrary or costly regulatory requirements at the level new banks were chartered. In addition, although al- of the individual branch and would, in the Board's most 10,500 branches were closed, 24,000 new ones view, provide adequate information to determine that were opened in that period. The vast majority of local an interstate institution is meeting community needs in banking markets in the United States are incredibly the markets it serves. dynamic and sensitive to consumer demand, and in- Finally, in considering the needs of local markets, terstate banking seems likely to make them more so. the Congress should consider the fact that large banks The concern that interstate banking would lead to have higher loan-to-deposit ratios than small banks. excessive concentration in local banking markets is This implies that large banks entering new markets further mitigated by the fact that antitrust enforcement could make both more in-market loans and more in banking focuses on maintaining competitive local out-of-market loans. Many assume that most of the markets. Concentration ratios have not increased in loans would, in fact, be made outside the community. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1097 However, as I noted, banks must both meet their CRA The Board has consistently supported the provirequirements and service their customers to remain sion of insurance agency activities by banks and competitive in the market. It should also be kept in bank holding companies and believes that increased mind that small, independent banks also export funds: bank participation will enhance competition and im- They are relatively large lenders to other banks through prove customer convenience without adversely afthe federal funds and correspondent deposit markets fecting safety and soundness. Thus, the Board sees and purchase relatively more Treasury and out-of- no argument on either competitive or risk-managemarket state and local bonds than do large banks. ment grounds to retain or impose limitations on insurance agency activities. Several states already permit their state-chartered LIMITATIONS ON BANK INSURANCE ACTIVITIES banks to engage in insurance agency activities. The Board supports the bill's provisions to amend the The committee has also requested the Board's views National Bank Act to authorize national banks to of the insurance provisions included in S.543 as ap- conduct insurance agency activities to the same proved on the Senate floor. S.543 would permit na- degree permitted for state banks in those states. tional banks to engage in insurance agency activities in However, the proposed limitations on existing austates that permit state-chartered banks to conduct thority to conduct insurance agency activities outthese activities. In these states, national banks would side the state in which the bank is headquartered and be subject to the same rules and limitations that govern the limitations on insurance activities in small towns state banks that conduct insurance agency activities. promise continuation of the fractured and anticon- The bill would also prohibit any banking organiza- sumer rules that currently hobble the banking industion—state or national—located in a state that autho- try, stifle competition and innovation, and divert rizes banks to sell insurance from selling insurance in resources toward legal and regulatory maneuvering. another state unless that state also had authorized the Particularly in the context of today's debate over the sale of insurance by banking organizations. nature of appropriate regulation, little justification Another provision of the bill would restrict the exists for devising a system of artificial controls authority of national banks to sell insurance in small based on the kind of statutory limits on population towns in which the state has not otherwise authorized and geography proposed in S.543. state banks to act as an insurance agent. The bill would It is also the position of the Board that insuranceoverrule the Office of the Comptroller of the Curren- underwriting activities should be authorized for bankcy's current interpretation permitting national banks ing organizations so long as the activities are conto use small towns as a base for selling insurance ducted in a separate holding company subsidiary. products broadly. Under the bill, national banks would Although certain types of insurance-underwriting acbe restricted to selling insurance to residents, busi- tivities pose more risk, those risks can be successfully nesses, and workers within towns of 5,000 and within managed and insulated from the deposit insurance a 7.5 mile radius of these towns. fund through the umbrella of the holding company. An insurance provision of S.543 that was enacted as The Board sees no reason to prohibit insurancepart of the Federal Deposit Insurance Company Im- underwriting activities when they are conducted in a provement Act prohibits state banks from engaging in holding company. insurance underwriting activities other than underwrit- In sum, the Board believes that interstate banking ing credit-related insurance. The bill retains the gen- and branching and broader insurance authority would eral prohibitions on bank holding companies selling or provide wider household and business choices at betunderwriting insurance and does not expand the lim- ter prices. These needed reforms would also ited exceptions to these prohibitions, which currently strengthen our nation's banking system by increasing limit bank holding companies primarily to credit-re- competitive efficiency, eliminating unnecessary costs lated insurance activities, certain grandfathered insur- associated with the delivery of services, and encourance activities, and insurance agency activities within aging the reduction of risk through geographic and small towns. product diversification. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1098 Federal Reserve Bulletin • December 1993 Statement by John P. LaWare, Member, Board of prises is also of great importance. These enterprises Governors of the Federal Reserve System, before the support projects—such as improving the stock of af- Subcommittee on Economic Growth and Credit For- fordable housing and providing financing to minoritymation of the Committee on Banking, Finance and owned businesses—that are crucial to the economic Urban Affairs, U.S. House of Representatives, advancement of disadvantaged urban areas and dis- October 7, 1993 tressed rural communities. An important factor in the success of smaller firms I am here today to discuss the Federal Reserve and community development projects is their ability to Board's views on the Business, Commercial, and acquire adequate credit accommodation. Historically, Community Development Secondary Market Devel- the commercial banking system has been the primary opment Act (H.R.2600). The objective of this legisla- source of financing to smaller businesses, which have tion is to promote economic growth and credit forma- few funding alternatives. Community development tion by facilitating the development of a secondary programs also tend to rely on commercial banks for market for business, commercial, and community de- financing. velopment debt and equity investments in the private As is well known, however, many smaller busisector. The Federal Reserve shares this important nesses and community development enterprises have objective. Many businesses, particularly smaller bus- encountered difficulty in obtaining financing from deinesses, have been encountering difficulties in obtain- pository institutions in recent years. These instituing credit. Moreover, there is a well-recognized need tions, having experienced substantial loan-quality for community development financing. problems—which stemmed from nearly a decade of Securitization can confer benefits to financial orga- aggressive lending often on terms more liberal than nizations as well as the credit customers they serve, as warranted by the credit standing of their borrowers— we have seen in other sectors of the credit markets in significantly tightened their lending standards in the which securitization of bank-generated loans is com- late 1980s and early years of this decade. Recently, mon. While borrowers in these sectors have benefited with improving asset quality and profitability, banks from an increased availability of credit, banking orga- appear ready to begin increasing lending activity, as nizations and other financial institutions have been indicated by our surveys. This development should able to improve their liquidity and diversification of benefit the small business sector and community derisk. This experience suggests that similar salubrious velopment programs. Nonetheless, given the imporbenefits could result from the development of a sec- tance of smaller businesses and community developondary market that would encourage the securitization ment enterprises to the well-being of our country, of loans to businesses and community development innovations that can appropriately increase their acprojects. In this regard, the Federal Reserve favors the cess to financial resources would be most welcome. approach of H.R.2600 of promoting securitization in I should note here that to promote greater availabilthese sectors by relying on the private sector rather ity of credit, the Federal Reserve and the other bank than by creating a new governmental program that supervisory agencies have recently implemented sevwould extend an explicit full faith and credit U.S. eral initiatives designed to ensure that regulatory pracgovernment guarantee to achieve that end. tices, or perceptions of regulatory procedures, do not The bill's objective of providing additional sources impede lending by banking institutions. Some of these of credit to the business community is, we believe, initiatives were designed particularly to benefit smaller particularly important as it pertains to smaller busi- business borrowers and low-income and minority nesses. Over the past two decades, such businesses neighborhoods, possibly through community develophave become increasingly important to the U.S. econ- ment programs. omy. Most of the recent gains in employment are One such initiative was a program to allow banks to largely attributable to industries that are dominated by establish a "basket" of loans that will be judged on the smaller businesses, such as retailing. In the aggregate, basis of performance and not be criticized on the basis the volume of business activity generated by small and of documentation deficiencies. Another important inimedium-sized firms accounts for approximately one- tiative is the agencies' proposal to increase from half of the employment and receipts in the nonfinan- $100,000 to $250,000 the threshold amount below which cial, nonfarm business sector. Clearly, the prospect real estate-related loans—including loans to businesses for the future growth and prosperity of our economy is that are collateralized by property—do not require closely tied to the health and vigor of smaller busi- appraisals under Title XI of the Financial Institutions nesses. Reform, Recovery, and Enforcement Act of 1989. The bill's objective of enhancing the availability of In addition, an interagency letter was issued giving financial resources to community development enter- guidance on fair lending. The letter stressed the seri- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1099 ous nature of violations of antidiscrimination laws and of such loans tend to differ widely because they are included guidance on the steps that financial institu- most often individually negotiated to suit each borrowtions can take to ensure compliance with relevant fair er's unique credit needs. As a result, these types of lending statutes and regulations. loans have a wide range of maturities and repayment Given the importance of ensuring an adequate flow of terms, different degrees of documentation, and disparfinancial resources to businesses and community devel- ate amounts of information regarding the underlying opment enterprises, new means for promoting that end financial conditions of the obligors. The high degree of should be sought, and, as H.R.2600 points out, securi- heterogeneity among these loans greatly complicates tization might serve that purpose. Banks and other the ability to predict future cash flows that will be financial institutions have been active in the securitiza- produced by pools of even the highest credit quality. tion of other types of loans, such as mortgages, and it is Pools of business and community development possible that they could also be active in the pooling loans often also exhibit diversity with regard to credit and securitizing of business and community develop- quality, which, coupled with diversity in documentament loans. This activity is altogether appropriate for tion standards, greatly complicates the task of perbanking organizations if it is done in a manner consis- forming due diligence and reaching a judgment on the tent with safe and sound banking practices. overall quality of the pool. Finally, the lack of a Asset securitization consists of placing loans into a historical database on business loan performance that pool and issuing securities that entitle the holders to is sufficiently broad and deep makes actuarial methods the proceeds of the principal and interest payments of estimating loan losses extremely difficult. flowing from the underlying loans. Bank lenders that Furthermore, community development loans may engage in securitization can benefit from improved manifest even more heterogeneity. These loans are liquidity, enhanced fee income, and—if a true sale has often quite large, entail extensions of credit to several occurred resulting in the removal of the assets from borrowers with different credit standings, and exhibit their balance sheets—less need for capital. On the complicated structures that may include public and other hand, investors are able to purchase securities private sector involvement on several different levels. that require no management of the underlying loans For example, a single loan to a program for the and provide an attractive return for instruments that revitalization of several properties within a particular bear little or no credit risk, depending upon the nature neighborhood could involve several borrowers having of the credit enhancement. varying degrees of experience and financial capacity Thus, securitized assets can offer improved diversi- and be supported by numerous state, federal, and fication and a greater selection of risk and return private assistance programs. alternatives. Purchases of asset-backed securities may The heterogeneity of business and community debe valuable to smaller banks that do not have the velopment loans not only represents a hurdle to their capability of diversifying their portfolio geographically successful widespread securitization but also causes or according to industrial sector. securities markets to require substantial credit en- The impressive growth in the residential mortgage- hancements on pools of such loans. At the same time, backed securities market and in the markets for secu- the special nature of business and community develrities based on auto loans and other consumer loans opment loans makes it relatively difficult for banks to has dramatically demonstrated the benefits that secu- accurately assess the riskiness of issuing such credit ritization has to offer. In view of these benefits, the enhancements. On the other hand, underwriting such Federal Reserve believes that it is important to give loans to have similar maturities, repayment schedules, significant thought to all proposals designed to pro- and yield could make them more homogeneous and, mote this activity and expand it to other types of assets thus, could facilitate their securitization. However, such as loans to businesses and community develop- these types of loans are often specifically tailored to ment enterprises. meet the unique needs of each borrower. Nonetheless, it should be recognized that the nature A standardized loan product would introduce inflexof business and community development loans differs ibility into the business lending process and could significantly from the types of loans—such as residen- preclude banks from extending credit to certain firms tial mortgages and credit card receivables—that are and organizations because they do not fit the "mold." now being securitized. Although these latter types of In addition, the standardization of business and comloans are relatively homogeneous, business and com- munity development loans could increase the amount munity development loans tend to be quite heteroge- of documentation needed to obtain such loans. In this neous in nature, in part because of the differences regard, it should be noted that since the advent of among the enterprises themselves. Moreover, the terms securitization of residential mortgages, mortgage lend- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1100 Federal Reserve Bulletin • December 1993 ers have tended to require significantly more docu- the regulation and supervision of insured depository mentation to facilitate the sale of mortgages into the institutions and consolidated banking organizations. secondary market. It is possible that rigid and inflex- Thus, we believe that, with respect to financial ible underwriting standards and increased documenta- institutions that already are regulated by a federal tion requirements could actually curtail the amount of government agency such as the Federal Reserve, the available credit for businesses and for community Federal Deposit Insurance Corporation, the Office of development. the Comptroller of the Currency, and the Office of Given the amount of innovation in the securitization Thrift Supervision, this legislation would create a market over the past several years, we do not believe parallel regulatory structure that duplicates the work that the hurdles to securitizing business and commu- of those agencies. As we have discussed with commitnity development loans are insurmountable. As I men- tee staff members, the Federal Reserve will continue tioned earlier, this activity may be appropriate for to work with the committee to address these issues. banking organizations if it is conducted in a safe and As the Congress continues to consider ways to sound banking manner. In our view, one of these facilitate securitization of business and community safeguards would require that adequate capital be development loans, we believe that the preferable maintained against participating organizations' risk approach would be to fashion legislation directing the exposure. In this regard, the banking agencies are primary federal regulatory agencies to develop apcurrently drafting proposals that are aimed at revising propriate standards. This legislation would enable the capital treatment of recourse arrangements, which the agencies to address the securitization of such we believe, when finalized, should reduce any obsta- loans in a manner that would be consistent with the cles in our current capital rules that may be hindering prudential framework for securitization more generthe securitization of business and community develop- ally. We believe that such an approach is more likely ment loans. to promote economic efficiency and bank safety and Turning to the provisions of H.R.2600, I would soundness. It also would avoid the rigidities that reiterate that the reliance on the private sector is the result when technical and complex regulatory repreferable approach. However, we have concerns quirements are written into law. The agencies need about certain aspects of the legislation. We believe flexibility to be able to adjust the rules to later that it would create a new regulatory structure for experience in the market. secondary market facilitating organizations, or As I said earlier, we support the overall objectives SMFOs. These institutions would be certified by the of H.R.2600. The bill places a reliance on the private Treasury Department, which would also establish cap- sector to develop the secondary market for business, ital standards and loss reserve requirements, promul- commercial, and community development loans, and gate minimum operating standards and reporting re- we find that aspect of the bill attractive. It is imperaquirements, and arrange for regulatory examinations. tive that in attempting to facilitate the securitization of These are traditional regulatory and supervisory func- these types of loans we avoid creating another governtions, but under the legislation none of them would be ment agency or increasing government liabilities by carried out by the agencies currently responsible for extending additional government guarantees. • Statement by Alan Greenspan, Chairman, Board of Reserve, and mandate additional disclosure of mone- Governors of the Federal Reserve System, before the tary policy decisions and discussions. Committee on Banking, Finance and Urban Affairs, The appropriate role of a central bank in a demo- U.S. House of Representatives, October 13, 1993 cratic society is an important and controversial issue. The performance of such an institution has profound I appreciate this opportunity to discuss the important implications for the nation's economy and the people's issues raised by recent legislative initiatives to alter standard of living. Americans have pondered the questhe structure of the Federal Reserve System. I will tion of the appropriate role and structure for the begin my remarks this morning by placing these issues central bank at length, beginning with the debate over in some historical perspective before commenting spe- the First Bank of the United States, which George cifically on provisions that would change the status of Washington signed into existence in 1791. Reserve Bank presidents, broaden the authority of the Echoing the earlier discussions surrounding the General Accounting Office (GAO) to audit the Federal chartering of the First and Second Banks of the United Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1101 States, extended debate and compromise preceded the like other governmental institutions in a democracy, establishment of the Federal Reserve System. Much of must ultimately be subject to the will of the people. the focus of the debate was on the balance that should In this regard, the Federal Reserve's activities are be struck between public and private authorities in constantly scrutinized by this committee and others in governing the central bank. the Congress. The Federal Reserve Board reports In 1908, in response to the periodic financial crises semiannually both to the House of Representatives that had plagued the country in the latter part of the and to the Senate pursuant to the Humphrey-Hawkins nineteenth century and in the early years of the Act, and we regularly respond to other congressional twentieth century, a National Monetary Commission, requests for testimony. We recognize our obligation to consisting entirely of members of the Congress, was do so and appreciate the importance of maintaining established by legislation. Four years later, the com- open communication with the nation's elected repremission, in submitting its report to the Congress, sentatives. We also provide a great deal of information called for the creation of a National Reserve Associa- about our operations directly to the public. And we tion to provide stability to our financial system. Both consult frequently with those responsible for ecothe commission's plan and an alternative, proposed by nomic and financial policy in the Administration. President Woodrow Wilson, envisioned the central We have to be sensitive to the appropriate degree of bank as containing public and private elements. Pres- accountability accorded a central bank in a democratic ident Wilson's plan won the approval of the Congress society. If accountability is achieved by putting the and established the Federal Reserve System as our conduct of monetary policy under the close influence nation's central bank. Over the intervening years, the of politicians subject to short-term election-cycle pres- Congress has initiated many reviews of the System's sures, the resulting policy would likely prove disapstructure but with rare exceptions has chosen to leave pointing over time. That is the conclusion of financial the basic structure intact. analysts, of economists, and of others who have The major piece of legislation affecting the Federal studied the experiences of central banks around the Reserve's organization since its inception in 1913 was globe, and of the legislators who built the Federal the Banking Act of 1935, which established the Fed- Reserve. eral Open Market Committee (FOMC) in its current The lure of short-run gains from gunning the econform as the central decisionmaking body for monetary omy can loom large in the context of an election cycle, policy. When it was clear by the 1930s that the buying but the process of reaching for such gains can have and selling of securities by the Federal Reserve was a costly consequences for the nation's economic perforcrucial monetary policy instrument, there was again mance and standards of living over the longer term. debate in the Congress over whether it should be The temptation is to step on the monetary accelerator, carried out entirely by government appointees or or at least to avoid the monetary brake, until after the whether the Reserve Bank presidents, who were not next election. Giving in to such temptations is likely to politically appointed, should share in that policymak- impart an inflationary bias to the economy and could ing role. In the 1935 act, the Congress reaffirmed that lead to instability, recession, and economic stagnathe Reserve Bank presidents should have a substan- tion. Interest rates would be higher, and productivity tive voice in policy. They were granted five of the and living standards lower, than if monetary policy twelve positions on the FOMC, while the seven mem- were freer to approach the nation's economic goals bers of the Board constituted the majority. with a longer-term perspective. The wisdom of the Congress in setting up the The recognition that monetary policies that are in structure of the System has stood the test of time. the best long-run interest of the nation may not always Federal District Court Judge Harold Greene, in com- be popular in the short run has led not only the United menting in 1986 on the constitutionality of the FOMC, States but also most other developed nations to limit noted, "The current system[,]. . . the product of an the degree of immediate control that legislatures and unusual degree of debate and reflection[,]. . . repre- administrations have over their central banks. More sents an exquisitely balanced approach to an ex- and more countries have been taking actions to intremely difficult problem." crease the amount of separation between monetary The role of a central bank in a democratic society policy and the political sphere. requires a very subtle balancing of priorities between In this nation, several aspects of the current setup the need for sound, farsighted monetary policy and the promote the central bank's distance from the political imperative of effective accountability by policymak- fray. The fourteen-year terms of the governors on the ers. Accountability and control by the electorate are Federal Reserve Board are one of those elements, with vital; the nation cannot allow any instrument of gov- only two vacancies scheduled to occur during the four ernment to operate unchecked. The central bank, just years of any single presidential term. Once in office, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1102 Federal Reserve Bulletin • December 1993 those governors cannot be removed by the President prudent injections of liquidity and with constant conover a policy dispute. In addition, regional Reserve sultations with depository institutions during the cri- Bank presidents—who are selected at some remove sis. The bulk of our efforts in this area, however, of from political channels—are included on the FOMC. necessity garners considerably less publicity, as it is To prevent political pressure from being applied on directed at ongoing efforts to fend off financial sector monetary policymakers via the power of the purse, the problems before those problems emerge as full-blown Federal Reserve is not required to depend upon ap- crises that could threaten American jobs and living propriated funds to meet its expenses. standards. Much of our success over the years, there- H.R.28, The Federal Reserve System Accountabil- fore, reflects crises that did not happen. In working ity Act of 1993, would remove some of that insulation. with other regulatory agencies, the Federal Reserve I would view the enactment of legislation of this type has also brought its broad perspective to bear on as a major mistake. Provisions that, in effect, increase supervisory actions that could have had macroecopolitical leverage on Federal Reserve decisionmaking nomic or monetary policy implications. amount to assaults on the defenses that Congress has In practice, the central bank of the United States consciously put in place to ensure the appropriate works, and it works well. On paper, however, its degree of central bank independence. Weaken those structure can appear unwieldy—an amalgam of redefenses, and, I firmly believe, the economy is at risk. gional and centralized authority and of public and The Federal Reserve must be free to focus on advanc- private interests. If we were constructing a central ing the nation's ultimate economic goals. bank for the United States now, starting from scratch, In an amendment to the Federal Reserve Act, the would it be identical to the Federal Reserve System Congress has charged the central bank with furthering described in current law? Perhaps not. But the Federal the goals of "maximum employment, stable prices, Reserve has evolved to be well suited to today's policy and moderate long-term interest rates." To promote tasks. those objectives, the Federal Reserve must take a One of the reasons why the Federal Reserve is long-run perspective. effective is that its basic structure has been in place for In that vein, as I have indicated to this committee on a long time. The institution has been able to take that previous occasions, the determination of the effective- framework as a given and to adapt and build on it ness of a federal agency has to be based, in the end, on during decades of invaluable experience in the finanwhether it has carried out the objectives the Congress cial and economic setting of this country. has set for it. In discharging its tasks over the years, As the Federal Reserve has evolved over the years, the Federal Reserve has faced a variety of challenges; it has been permeated by a culture of competence and our economy has been buffeted by swings in fiscal dedication to public service. As a consequence, the policy and by strong external forces, including oil Federal Reserve has attracted highly skilled analysts, price shocks and wars. In often difficult economic technicians, and policymakers. Although we might circumstances, the Federal Reserve has implemented imagine a different initial structure for our central policies aimed at promoting the nation's economic bank, implementing a major change at this stage could, health. We have not always been entirely successful, for all intents and purposes, destroy the exceptionally but we have learned from experience what monetary valuable culture that has evolved over time and that policy can do and what it cannot do. continues to serve this nation well. And there is In my view, current Federal Reserve policy is always the risk that changing a complex organization, promoting conditions vital to maximizing the produc- even with the laudable goal of improving one or more tive potential of the U.S. economy. Monetary policy parts of it, may well have unforeseen and unfortunate is, and will continue to be, directed toward fostering consequences elsewhere in the structure. sustained growth in economic output and employ- Nonetheless, the Federal Reserve recognizes that ment. an organization that does not appropriately respond to As the nation's central bank, the Federal Reserve changes in the environment in which it functions will stands at the nexus of monetary policy, supervisory soon become ineffectual. Accordingly, the Federal policy, and the payments system. Part of our task is to Reserve has suggested, initiated, and instituted several minimize the risk of systemic crises while endeavoring measured changes over the years. When confronted to implement a macroeconomic policy that supports with a new development requiring change, we advomaximum sustainable economic growth. When, for cate change. For example, not long ago we recogexample, threats to the nation's financial system nized, as did this committee, an apparent weakness in loomed large in the wake of the 1987 stock market the way the discount window could be used in the case crash, the Federal Reserve effectively contained the of insured failing institutions, a condition that we had secondary consequences of the crash with prompt but rarely before experienced. We saw change as a con- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1103 structive response, and, while we were prepared to Those Reserve Bank presidents then receive topimplement the change by adapting our regulations, we secret clearances from our government and are subject cooperated with this committee, which chose to to the federal conflict-of-interest statute. They can be amend our discount window procedures as part of the removed by the Federal Reserve Board, and it is the Federal Deposit Insurance Corporation Improvement Board that sets their pay. Upon joining the FOMC, Act of 1991. they take an oath of office to uphold the Constitution I hope, and I expect, that the Federal Reserve will of the United States, and—uniformly in my expericontinue to change but always prudently—in response ence—they are dedicated to the service of our counto clearly identified problems—and only for the better. try. One area in which I see major need for change is the However, regardless of whether the presidents of inadequate pace at which women and minorities have the Reserve Banks are viewed as more public than moved into the top echelons of the Federal Reserve. private or more private than public, the real question We share your concerns in this regard and are working remains, Does their participation on the FOMC make diligently to improve opportunities for women and for better monetary policy? I can assure you that it minorities throughout the System. does. In the remainder of my remarks this morning, I The input of Reserve Bank presidents who reside in would like to address three specific issues, under the and represent the various regions of the country has more general topic of Federal Reserve accountability. been an extremely useful element in the deliberations These issues are, first, the status of the Reserve Bank of the FOMC. By virtue of their day-to-day location presidents on the FOMC, second the General Ac- and their ongoing ties to regions and communities counting Office's purview in auditing the Federal Re- outside of the nation's capital, the presidents see and serve System, and, third, the disclosure of FOMC understand developments that we in Washington can deliberations and decisions. overlook. They consult routinely with a wide variety of sources within their districts, drawing information from manufacturing concerns, retail establishments, agricultural interests, financial institutions, consumer THE STATUS OF RESERVE BANK PRESIDENTS groups, labor and community leaders, and others. Moreover, because their selection is apolitical, they The Federal Reserve Banks represent a unique blend tend to bring different skills and perspectives to the of the public and private sectors. I believe that those policymaking process. who label the Reserve Bank presidents as representa- The public and private and the regional makeup of tives of the banking interests, as opposed to the public the Federal Reserve System was chosen by the Coninterest, misunderstand the position of the presi- gress, in preference to a unitary public central bank, dents—and the Reserve Banks—in the Federal Re- only after long and careful debate. The system was serve System. designed to avoid an excessive concentration of au- The Federal Reserve Banks are instrumentalities of thority in federal hands and to ensure responsiveness the U.S. government organized on a regional basis. to local needs. Nonetheless, then as now, the opera- They are in a tangible sense "owned" by the federal tions of the Reserve Banks were placed under the government. The bulk of their net income is handed general supervision of the Board of Governors. When over to the government each year. Their accumulated the FOMC was given its current form in 1935, five surplus, were they to be liquidated, would revert to the Reserve Bank presidents were placed on that commit- U.S. Treasury. And although a portion of the capital of tee, but their presence was outweighed by the seven the Reserve Banks represents contributions by mem- presidentially appointed members of the Board. ber commercial banks, those member banks are not This blending of public and quasipublic institutions free to withdraw the capital, their dividends are fixed has a long history in this country and has been by statute, and their capital stake in no way affords reaffirmed repeatedly in the Congress. Nonetheless, them the usual attributes of control and financial the presence of Reserve Bank presidents on the interest. FOMC periodically resurfaces as an issue. This occurs The member commercial banks do select the major- despite the long and successful history of the presiity of the directors of their local Reserve Bank. But the dents' membership on the FOMC, which counters a Federal Reserve Board chooses the remaining direc- similarly lengthy history of claims that their participation would be detrimental to our nation. The involvetors and, among those directors, designates a chairment of quasigovernment officials in monetary policyman and a deputy chairman. The directors, in turn, making has survived a series of challenges over the select the Reserve Bank's president, but their selecyears. It has survived the test of time. One must tion is subject to the Board's approval. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1104 Federal Reserve Bulletin • December 1993 wonder why we would wish to tinker with a unique them would be unwise on only one count—that of partnership of the public and the private that has adversely affecting the conduct of the nation's moneworked well for more than half a century. tary policy. However, Reserve Bank presidents also Some who agree that the Reserve Bank presidents run large organizations charged with such tasks as provide a unique perspective would nonetheless argue collecting data, processing currency, operating the that such input could still be obtained by reducing the book entry system, and auctioning Treasury bills. The Reserve Bank presidents' role to an advisory one. I twelve Banks must operate as one in these various doubt that, for two reasons. First, let us not delude areas, and the Congress has given the Board general ourselves: Anyone permanently denied a vote sees his oversight of the Banks to ensure that they do. A or her influence diminish markedly. Not only would proposal that divested the Board of the power to the presidents' varied experiences and regional per- remove a Reserve Bank president from office would spectives likely become less well reflected in policy subtly but significantly undermine the ability of the decisions, but their ability to solicit real-time informa- Board to manage the Federal Reserve System. tion from their communities would be diminished as well. Second, I believe that a fair number of my colleagues who serve as presidents of the Reserve SCOPE OF GAO AUDITS Banks would have declined that office had voting rights on the FOMC not attached to it. These people As you know, the passage in 1978 of the Federal do not lack for opportunities. If the Reserve Bank Banking Agency Audit Act made most of the operapresidents were denied votes, we could not attract tions of both the Federal Reserve Board and the individuals of the same caliber to these jobs that we do Federal Reserve Banks subject to review by the Gentoday. As a result, the advice received would be eral Accounting Office. Since then, the GAO has adversely affected, and FOMC deliberations would be completed more than 100 reports on various aspects of less productive. System operations, as well as numerous others that A different proposal would retain the Reserve Bank involved us less directly. At present, the GAO has presidents on the FOMC but would have them ap- roughly twenty-five audits of the Federal Reserve pointed by the President of the United States. Such a under way and maintains several of its staff in resiproposal is not new: It was considered and rejected by dence at the Board and at selected Reserve Banks. this committee as recently as 1976. The clearest draw- The GAO has free rein to audit the System, with the back to this suggestion is one that I have already explicit exemption of only three functions: Those are mentioned, that is, the potential for increased parti- deliberations, decisions, or actions on monetary policy sanship that would erode the quality of policy, as the matters; transactions made under the direction of the central bank was drawn more closely into the ambit of FOMC; and transactions with, or for, foreign official daily political concerns. In addition, however, such an entities. By excluding these areas, the 1978 act reprearrangement would create significant managerial prob- sented another effort to balance, on the one hand, the lems for the Federal Reserve System as an organiza- public accountability of the Federal Reserve with, on tion. the other hand, its ability to perform its policy func- Under current law, Reserve Bank presidents are tions most effectively. directly accountable to the Board for their perfor- The benefits, if any, of broadening the GAO's aumance in carrying out Systemwide policies in such thority into the monetary policy and FOMC areas areas as bank supervision, payments systems respon- would be small, in part because a GAO audit would sibilities, and discount window administration. The tend to duplicate functions that are already performed. Board's ultimate defense against a Bank president who With regard to purely financial audits, the Federal is either incompetent or purposely obstructing the Reserve Act already requires that the Board conduct effective implementation of System policy is its power an annual financial examination of each Reserve Bank, to remove that person from office. including open market and international operations. If the heads of the Reserve Banks were instead And these exams are complemented by other Board presidentially appointed, we presume that they could reviews of Reserve Bank effectiveness and efficiency, be constitutionally removed only by the President. In as well as by comprehensive audits conducted by each that circumstance, Systemwide coordination of poli- Reserve Bank's independent internal audit function. cies and interbank cooperation could be seriously To provide the Board with additional assurance of the impaired. quality and comprehensiveness of the Board's audit In sum, if the sole duty of Reserve Bank presidents process, complete financial audits are currently being were to vote on the FOMC, granting the President of conducted by nationally recognized independent acthe United States the power to appoint and remove counting firms at Reserve Banks. Two such audits Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1105 were conducted this year. The results of these audits there the principal issue is one of sensitive proprietary to date have confirmed the integrity and quality of the information about foreign governments, foreign cen- System's audit process. In addition, the Board itself is tral banks, and international organizations. audited annually by an independent public accounting In sum, I believe that the current structure of firm, and the results of those audits are furnished internal controls and audits and congressional review regularly to the Congress. strikes the right balance between public accountability More broadly, the Congress has, in effect, mandated and policy effectiveness. its own review of monetary policy by requiring semiannual monetary policy reports and by holding hearings. In addition, a vast and continuously updated FOMC DISCLOUSRE literature of expert evaluations of U.S. monetary policy exists. In this environment, the contribution The issue of fuller or more immediate disclosure of that a GAO audit would make to the active public FOMC discussions and decisions has been a controdiscussion of the conduct of monetary policy is not versial one historically. In the Congress, the financial likely to outweigh the negatives. markets, and academia, this topic has been debated Those negatives would include a potential compro- repeatedly over the years. The FOMC itself has fremising of Federal Reserve effectiveness, in part, be- quently reviewed policies and procedures in this area cause the change could peel away a layer of the central and has revised its practices several times. At the bank's insulation from day-to-day political pressures. heart of this issue is, again, balance. The appropriate Even what appears to be a very limited audit of the degree of openness comes from striking the right efficiency of our operations could, in fact, turn into balance between the public's right to know and the pressure for a change in monetary policy itself as the need for effective policymaking and implementation. 1978 act understood. For example, the question being In a democratic society, all public policymaking posed to Comptroller Bowsher in these hearings of should be in the open, except when such a forum whether the magnitude of our open market operations impedes the primary function assigned to an institution reflects unnecessary buying and selling of government by law. Accordingly, the Federal Reserve makes its securities is a monetary policy question, not an effi- decisions public immediately, except when doing so ciency question. The volume of transactions that the could undercut the efficacy of policy or compromise Open Market Desk completes in carrying out the the integrity of the policy process. When we change FOMC's directive correlates directly with the sub- the discount rate or reserve requirements, those decistance of the policy in place. sions are announced at once. When we establish new GAO scrutiny of policy deliberations, discussions, ranges for money and credit growth, those ranges are and actions could also impede the process of formu- set forth promptly in our reports to the Congress. And lating policy. A free discussion of alternative policies when the Congress requests our views, we come and possible outcomes is essential to minimize the before this committee and others to testify. Moreover, chance of policy errors. The prospect of GAO review we publish our balance sheet every week with just a of formative discussions, background documents, and one-day lag, enabling analysts to review our operapreliminary conclusions could have an adverse effect tions in considerable detail. on the free interchange and consensus building that What we do not disclose immediately are the impleleads to good policy. menting decisions with respect to our open market Transactions made under the direction of the FOMC operations. However, any changes in our objectives in primarily involve domestic monetary policy opera- reserve markets are quickly and publicly signalled by tions but also include foreign exchange operations. our open market operations. We publish a lengthy Expanding GAO audit authority into this latter area record of the policy deliberations and decisions from would risk impairing our sensitive working relations each FOMC meeting shortly after the next regular with foreign central banks and governments. Impor- meeting has taken place. tant daily contacts and exchanges of information with Nevertheless, the Federal Reserve has a reputation, foreign monetary authorities now take place in a along with other central banks, of being secretive. I candid and constructive atmosphere. The possibility suspect this is largely a result of the nature of a central of a GAO audit of our foreign exchange operations bank's mission. The operations of central banks have would reduce the willingness of foreign authorities to a direct impact on financial and exchange markets; share information with us and thereby would reduce therefore, these institutions often find themselves in the effectiveness and efficiency of our operations. This the position in which premature openness and disclocaution also applies to the third exempted area— sure could inhibit or even thwart the implementation transactions with or for foreign entities; however, of their public purpose. 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1106 Federal Reserve Bulletin • December 1993 Suppose, for example, a central bank that operated videotape, audiotape, or transcript of them would so by targeting the foreign exchange rate decided that it seriously constrain the process of formulating policy might be appropriate to change the target rate at a as to render those meetings nearly unproductive. The given point in the future. Or, to bring the discussion candid airing of views, the forthright give and take, closer to home, say that the central bank phrased its and the tentative posing of new ideas would likely policies in terms of contingency plans—that is, if a disappear. Monetary policy would suffer, and the given economic or financial event occurs, a particu- economy with it. lar policy action would ensue. If those decisions In open forum, several important items currently were made public, markets would tend to incorporate discussed at FOMC meetings simply could not be the changes immediately, preventing the policies mentioned. We would no longer have the benefit of from being effectively carried out as planned. sensitive information from foreign central banks More broadly, immediate disclosure of these types and other official institutions or of proprietary inforof contingencies would tend to produce increased mation from private sector sources, as we could not volatility in financial markets, as market participants risk the publication of information given us in confireacted not only to actual Federal Reserve actions dence. but also to possible Federal Reserve actions. It is Moreover, to avoid creating unnecessary volatility often the case that the FOMC places a bias toward in financial and exchange markets, the FOMC might change into its directive to the Open Market Desk, have to forgo explorations of the full range of policy without any change in instrument settings in fact options. Our discussions would, in effect, become resulting. In such circumstances, the release of those self-censored to prevent the voicing of any views directives during the period in which they are in force that might prove unsettling to the markets. Even a would only add to fluctuations in financial markets, lag in releasing a verbatim record of the meetings moving rates when no immediate change was in- would not eliminate this problem but only attenuate tended. it. Unconventional policy prescriptions and rumina- As a consequence, a disclosure requirement would tions about the longer-term outlook for economic impair the usefulness of the directives, as Committee and financial market developments might never be members, concerned about the announcement effect surfaced at meetings, for fear of igniting a speculative of a directive biased either toward ease or tightening, reaction when the discussion was disclosed. would tend to shy away from anything but a vote It has been averred that because the minutes we of immediate change or of no change at the meeting. release do not indicate which individuals voiced An important element of flexibility in the current which views at the meetings, the FOMC members procedures would be lost, which can scarcely serve themselves escape accountability for their actions. the public interest. Immediate disclosure of the This is contrary to fact. The vote of each FOMC directive would change the nature of monetary poli- member is recorded, by name, and the reasons for cymaking, and it would not be a change for the that vote are also recorded. In the case of a dissent better. from the majority, the reasoning behind the vote is Of course, our current policies on information generally explained separately. In the case of a vote release are grounded on an assumption of confiden- cast with the majority, the members assure themtiality. Any unauthorized, premature release of selves that the minutes accurately reflect their views FOMC decisions is a very serious matter, and it and the reasons for voting as they did. undermines our policies. Such leaks are abhorrent. In both the Freedom of Information Act (FOIA) As I noted in my recent letter to you, leaks of FOMC and the Government in the Sunshine Act, the Conproceedings are clearly unfair to the public, poten- gress explicitly recognized that types of information tially disruptive of the policymaking process, and and kinds of meetings should be protected from undoubtedly destructive of public confidence in the dissemination to the public. Certain exemptions have Federal Reserve. We have taken steps that we be- been provided in the FOIA for information that, for lieve will be effective to curb any further unautho- example, is of a confidential financial nature and in rized release of information. the Sunshine Act for meetings that would prompt To repeat, as a general matter, public institutions speculation in financial markets. In the exempted are obliged to conduct their business in open forums. areas, it was determined that information release The Federal Reserve endorses this principle and ad- would not be in the public interest. As I have heres to it, except when doing so would prevent us indicated, I believe that the consequences of requirfrom fulfilling our fundamental mission of producing ing the prompt release of a verbatim record of FOMC sound public policy. meetings would most certainly not be in the nation's Holding open meetings of the FOMC or releasing a best interest. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1107 CONCLUSION nomenon—turn virulent in too many nations around the world. To a considerable degree, then, both the You have made it clear that, in your view, this earnestness with which we approach our task and the legislation does not represent an attempt to politicize unique position accorded the Federal Reserve in our the Federal Reserve or to infringe on its independence. governmental structure derive from the potential for I feel I must respond that, whatever its intent, legisla- just such dire consequences of monetary policy mistion of this type would have precisely that deleterious management. effect. In imposing significant change on the Federal Re- I take this legislative initiative seriously not only serve System, we would run the risk of real damage to because it would emanate from this committee but also the institution's effectiveness from unintended, adbecause of monetary policy's key position in the verse consequences. The Federal Reserve is not a nation's overall economic policy. At the flashpoint of flawless institution. It is, however, a very good one. In financial crisis, monetary policy, if mishandled, can my view, it would be a mistake to legislate structural pose a threat to our economic system. And in this reform when, as in this case, compelling evidence of century we have witnessed inflation—a monetary phe- the need for change is lacking. • Statement by Alan Greenspan, Chairman, Board of reserve markets are quickly and publicly signalled by Governors of the Federal Reserve System, before the our open market operations. And we publish minutes Committee on Banking, Finance and Urban Affairs, of the policy deliberations and decisions from each U.S. House of Representatives, October 19, 1993 FOMC meeting shortly after the next regular meeting has taken place. These minutes, a copy of which for I appreciate this opportunity to provide my views on the meeting of February 1993 I have attached to this the appropriate degree of disclosure by the Federal statement, can run from fifteen to more than thirty Open Market Committee (FOMC). pages, presenting a comprehensive record of the eco- The issue of fuller or more immediate disclosure of nomic factors and analysis and alternative policy ap- FOMC discussions and decisions has been a contro- proaches considered in reaching our decisions. 1 versial one historically. In the Congress, the financial Nevertheless, the Federal Reserve, like other cenmarkets, and academia, this topic has been debated tral banks, has a reputation for being secretive. I repeatedly over the years. The FOMC itself has re- suspect that this is largely a result of the nature of a viewed its policies and procedures in this area fre- central bank's mission. The operations of central quently and has revised its practices several times. At banks have a direct impact on financial and foreign the heart of this issue is balance: The appropriate exchange markets; therefore, these institutions often degree of openness comes from striking the right find themselves in the position in which complete balance between the public's right to know and the openness and disclosure could inhibit, or even thwart, need for effective policymaking and implementation. the implementation of their public purpose. In a democratic society, public policy decisions Suppose, for example, a central bank that operated should be in the open, except when exposure impedes by targeting the foreign exchange rate decided that it the primary function assigned to an institution by law. might be appropriate to change the target rate at a Accordingly, the Federal Reserve makes its decisions given point in the future. Or, to bring the discussion public immediately, except when doing so could un- closer to home, say that the central bank phrased its dercut the efficacy of policy or compromise the integ- policies in terms of contingency plans—that is, if rity of the policy process. When we change the dis- certain economic or financial conditions prevailed, a count rate or reserve requirements, those decisions particular action would be taken. If those decisions are announced at once. When we establish new ranges were made public, markets would tend to incorporate for money and credit growth, those ranges are set forth the changes immediately, preventing the policies from promptly in our reports to the Congress. Moreover, being effectively carried out as planned. we publish our balance sheet every week with just a More broadly, immediate disclosure of these types of one-day lag, enabling analysts to review our opera- contingencies would tend to produce increased volatiltions in considerable detail. ity in financial markets, as market participants reacted What we do not disclose immediately are the implementing decisions with respect to our open market 1. See "Minutes of Federal Open Market Committee Meeting," operations. However, any changes in our objectives in Federal Reserve Bulletin, vol. 79 (May 1993), pp. 479-93. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1108 Federal Reserve Bulletin • December 1993 not only to actual Federal Reserve actions but also to conventional policy prescriptions and ruminations possible Federal Reserve actions. It is often the case about the longer-term outlook for economic and finanthat the FOMC expresses a predisposition toward a cial market developments might never be surfaced at policy change in its directive to the Open Market Desk. meetings, for fear of igniting a speculative reaction Such a predisposition, for example toward easing, when the discussion was disclosed. implies that the FOMC is more concerned about devel- Let me take a moment to describe more fully the opments that would dictate an easing of policy rather process followed at FOMC meetings to reach decithan a tightening and therefore wants to respond rela- sions on monetary policy. After staff presentations of tively promptly to information suggesting the need for recent developments and emerging economic trends, a such action. We often express this predisposition with- roundtable discussion of all nineteen participants beout any change in instrument settings in fact resulting. gins. The Reserve Bank presidents describe conditions In such circumstances, the release of those directives and developments within their districts, and both they during the period in which they are in force would only and the members of the Board of Governors go on to add to fluctuations in financial markets, moving rates evaluate the outlook for the U.S. economy. All memwhen no immediate change was intended. bers bring in, when relevant, international economic As a consequence, a disclosure requirement would and financial considerations. In light of this discussion, impair the usefulness of the directives, as Committee we then consider whether the stance of monetary members, concerned about the announcement effect policy needs to be adjusted, either immediately, or of a directive biased either toward ease or tightening, possibly in the future under particular circumstances. would tend to shy away from anything but a vote of A considerable amount of free discussion and probimmediate change or of no change at the meeting. An ing questioning by the participants of each other and of important element of flexibility in the current proce- key FOMC staff members takes place. In the widedures would be lost, which can scarcely serve the ranging debate, new ideas are often tested, many of public interest. Immediate disclosure of the directive which are rejected. Ideas initiated by one participant would change the nature of monetary policymaking, are frequently built upon by others. This type of and it would not be a change for the better. discourse is an invaluable ingredient of our policymak- To repeat, as a general matter, it is desirable for ing process. public institutions to conduct their business in the As I indicated before this committee last week, the open. The Federal Reserve endorses this principle and prevailing views of many participants change as eviadheres to it, except when doing so would prevent us dence and insights emerge. This process has proved to from fulfilling our fundamental mission of producing be a very effective procedure for gaining a consensus sound public policy. around which a directive to the Open Market Desk can Holding open meetings of the FOMC or releasing a be crafted. It could not function effectively if particivideotape, audiotape, or transcript of them would so pants had to be concerned that their half-thoughtseriously constrain the process of formulating policy through, but nonetheless potentially valuable, notions as to render those meetings nearly unproductive. The would soon be made public. candid airing of views, the forthright give and take, I fear in such a situation that the public record would and the tentative posing of new ideas likely would be a sterile set of bland pronouncements scarcely disappear. Monetary policy would suffer and the econ- capturing the necessary debates that are required of omy with it. monetary policymaking. A tendency would arise for Several important items currently discussed at one-on-one premeeting discussions, with public meet- FOMC meetings simply could not be mentioned in ings merely announcing already agreed-upon positions open forum. We would no longer have the benefit of or for each participant to enter the meeting with a final sensitive information from foreign central banks and position not subject to the views of others. Such a other official institutions or of proprietary information record would be far less informative than the minutes from private sector sources, as we could not risk the we currently publish. publication of information given us in confidence. It has been averred that, because the minutes we Moreover, to avoid creating unnecessary volatility release do not indicate which individuals voiced which in financial and foreign exchange markets, the FOMC views at the meetings, the FOMC members themmight have to forgo explorations of the full range of selves escape accountability for their actions. This is policy options. Our discussions would, in effect, be- contrary to fact. The vote of each FOMC member is come self-censored to prevent the voicing of any views recorded, by name, and the reasons for that vote are that might prove unsettling to the markets. Even a lag also recorded. In the case of a dissent from the in releasing a verbatim record of the meetings would majority, the reasoning behind the vote is generally not eliminate this problem but only attenuate it. Un- explained separately. In the case of a vote cast with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1109 the majority, the members review drafts of the minutes information about FOMC meetings, I would again to assure themselves that the record will accurately state my strong view that any unauthorized release of reflect their views and the reasons for voting as they FOMC decisions is a very serious matter. Leaks of did. FOMC proceedings are clearly unfair to the public, In both the Freedom of Information Act (FOIA) and potentially disruptive of the policymaking process, the Government in the Sunshine Act, the Congress and undoubtedly destructive of public confidence in explicitly recognized that there were types of informa- the Federal Reserve. tion and kinds of meetings that should be protected Any leaks that may have occurred were most from dissemination to the public. Certain exemptions assuredly not orchestrated or directed by the FOMC. have been provided in the FOIA for information that, A deliberate premature leak of information is repugfor example, is of a confidential financial nature and in nant. Our current policies that call for delayed rethe Sunshine Act for meetings that would prompt lease of information are in place for good reasons, as speculation in financial markets. In the various ex- I indicated previously. They are grounded on an empted areas, it was determined that release of infor- assumption of confidentiality; leaks undermine these mation would not be in the public interest. For similar policies. reasons, I believe that the consequences of requiring I suspect that, to an extent, what appear to be the prompt release of a verbatim record of FOMC deliberate leaks may instead represent something quite meetings would most certainly not be in the nation's different. In some cases, FOMC participants who best interest. speak to the press may believe that they have revealed In your letter of invitation to this hearing, you also nothing about recent monetary policy decisions, but posed several specific questions related to the mainte- they may, in fact, have inadvertently provided enough nance of notes or records of FOMC meetings and to of a sense of the policy considerations to allow conthe premature release of FOMC information. I would clusions to be drawn, especially for experienced relike to turn now to the answers to those three ques- porters speaking to several sources. This puts us in a tions. difficult situation. We should not reveal confidential At FOMC meetings, I take very brief, rough notes information about our decisions. At the same time, we on the views expressed by participants. These notes cannot, and should not, wall ourselves off entirely assist me in keeping track of Committee sentiment as from the media; it is our obligation to explain the broad the meeting progresses and thus in judging when a considerations that motivate monetary policy, to corconsensus may be reached with respect to monetary rect certain misimpressions, and to convey as much policy. After the meeting, the notes are kept in a information as possible, without roiling markets, crelocked file cabinet along with other FOMC materials. ating inequities, or violating the trust of our col- Others attending the FOMC meetings may also be leagues. taking notes, and I am sure they will tell you about The FOMC has discussed this issue extensively, and them in their own responses. I have suggested to the we have taken several steps that we believe will curb Reserve Bank presidents that they respond to your any further unauthorized release of information. We questions regarding whatever records may be kept at have reemphasized the necessity of avoiding contact their own Banks; I will cover records made by the with the press during the periods surrounding FOMC Board staff" and, in particular, by the FOMC secretar- meetings and of caution at other times. Moreover, it iat. has been made clear that any future leak from an Some individual members of the Board staff take FOMC meeting will be followed up very aggressivehandwritten notes and retain them to help them in ly—by a full investigation that will include gathering discharging their responsibilities. The meetings are sworn statements from all attendees. recorded electronically by the FOMC secretariat. As to whether I personally played a part in past These audiotapes are used to assist in the preparation leaks of FOMC information, I can assure you that I of the minutes that are released to the public after the have never knowingly released to the press or to other subsequent meeting; thereafter, the tapes are recorded members of the public any information about the over. In the process of putting together the minutes, an results of an FOMC meeting before the formal, schedunedited transcript is prepared from the tapes, as are uled release. I would include one footnote to this detailed notes on selected topics discussed in the statement, however: From time to time, I have briefed course of the meeting. These materials are generally members of various administrations about the outseen only by the staff members involved in preparing comes of FOMC meetings because that knowledge the minutes, and the documents are kept under lock could assist them in the formulation of government and key by the FOMC secretariat. policies for which they have responsibility. This qual- With regard to your final query, on the release of ification has not, however, been a relevant one over Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1110 Federal Reserve Bulletin • December 1993 the past year or so, as the Federal Reserve has not Should we have to change our policy as a result, it altered its instrument settings. would be unfortunate, for I firmly believe that a shift to I trust the problem of leaks is behind us. If I am prompter disclosure of the substance of our deliberawrong about this, the FOMC's policy on delayed tions will adversely affect our discussions and decidisclosure of decisions will have to be reevaluated. sions and therefore monetary policy itself. • Statement by David W. Mullins, Jr., Vice Chairman, cussions would only serve to focus attention on the Board of Governors of the Federal Reserve System, sensational—the differences in opinion, the fears before the Committee on Banking, Finance and Urban about individual institutions, and the concerns about Affairs, U.S. House of Representatives, October 19, worst-case scenarios—that normally have little conse- 1993 quence on net to the setting of policy and that would distract people from more fundamental issues, almost I appreciate your invitation to report my views on that certainly heightening market volatility. portion of H.R.28, The Federal Reserve System Ac- Secondly, and this is generalizing from a frustration countability Act, dealing with disclosure. I would like that I likely share with anyone who has sat in many to offer this committee a perspective that was gained public meetings, the prospect of detailed and complete from my career both inside and outside the Beltway. exposure tends to cast a chill on some proceedings. A Before I arrived in Washington, I taught and con- speaker has to weigh the effects of every word, guardducted research in financial economics for more than a ing against the possibility that subtle distinctions in decade. Many of my professional writings explored opinion or conditional speculations will be splashed the estimable ability of financial market participants to about the newspapers. One possible outcome of this absorb and interpret information and then reflect that fear of unfortunate headlines is that the critical conknowledge in market prices. As a policymaker in duct of policy gets pushed onto the sidelines, where Washington, serving in a variety of jobs at the Trea- fewer people can participate. The result could be less sury and the Federal Reserve, I have been exposed to public disclosure of the policy process. My chief concern is that the quality of policymaking would the flow of confidential intelligence on the condition of suffer, with adverse consequences for the nation. If financial institutions, the settings of policy instrutoo many participants in a deliberative group speak to ments, contingency plans for a wide array of conceivthe record rather than to each other, innovative ideas able emergencies, the views of other agencies, and the do not get their due and the search for a consensus operations of foreign official institutions. I have rousettles too quickly on the status quo or the easiest, tinely participated in meetings with other officials and though not the best, solutions. staff members of the Federal Reserve, the Congress, the Treasury, and banking and securities regulators, as Third, from my experience, the monetary policy well as representatives of foreign governments and process is open where it counts. Our actions matter, international institutions. From this experience I not just our deliberations. It is our actions that affect would respectfully offer three points. interest rates and the economy, and those actions are First, what often makes news is not always infor- made public immediately. Changes in reserve condimative. As the members of this panel are well aware, tions are transparent to the market by 11:30 a.m. on part of the deliberative process is actually thinking out the day of the change in the open forum of the financial loud. In my current role, whether in meetings of the market. The reasons for the action are laid out in the Board or the Federal Open Market Committee minutes of the meeting that are released just six weeks (FOMC) or in less formal settings, I routinely engage later, and all votes are tallied and dissents explained. in dialogues with others who are concerned about the Discount rate changes are also publicly announced. To nation's interest, exchanging views on possible policy provide a broader overview to the Congress, the options, planning for contingencies that none of us Chairman of the Federal Reserve offers a semiannual hope will happen but that must not catch us unpre- review to members of the Banking Committee and pared, and contemplating the market's reaction to their counterparts in the Senate encompassing recent what we might do. Much of the job of a central banker policy decisions, a summary of the economic forecasts involves worrying about events that have a small of members of the Board and Reserve Bank presiprobability of occurrence but would impose large costs dents, and plans for policy for the coming year. On a on the financial system and the economy were they to more irregular schedule, members of the Board, Reoccur. Unfortunately, the public release of such dis- serve Bank presidents, and officials of the Federal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1111 Reserve System often sit before committees of the which are subsequently kept in my locked confidential Congress to discuss aspects of monetary policy. files and are destroyed after approximately one year's Meanwhile, System staff members produce a steady time. I also keep edited notes of some of my personal stream of analyses of the economy and critiques of oral interventions in the FOMC meetings in my locked policy that are published in the Federal Reserve files. I have observed others present at FOMC meet- Bulletin, Reserve Bank reviews, and the academic ings occasionally engaged in notetaking as well. As I press. believe Chairman Greenspan plans to discuss, I am To sum up my views on the issue of disclosure, the aware that FOMC staff members do retain some central concern is the quality of monetary policy detailed, though edited, notes and rough transcripts decisionmaking, which depends upon the effectiveness for use in preparation of FOMC minutes. of the FOMC deliberative process. I believe that a As for your third question, I do not know of any substantial degree of confidentiality is necessary to case of willful or intentional leaking of confidential ensure the effectiveness of this deliberative process. It FOMC information to the press or the public, although is my view that, on the whole, the current process I am aware that there has been confidential communiworks well and proposed substantial changes in dis- cation with appropriate senior administration officials. closure of FOMC deliberations would threaten the Although all involved are very careful to avoid release quality of monetary policy decisions, and therefore of confidential information, it is possible that leaked such proposed changes would not, in my view, serve stories may have resulted from inadvertence or skillful the public interest. inferences. In my view, it is imperative that we ensure With respect to the other information requested in the confidentiality of FOMC information, and I can your letter of invitation, during FOMC meetings I do assure the committee that we are making every effort occasionally note very rough summary observations, to do so. • Statement by Wayne D. Angell, Member, Board of by exempting the budget of the Federal Reserve Governors of the Federal Reserve System, before the System from congressional appropriations of funds. Committee on Banking, Finance and Urban Affairs, But at the same time, the Congress has provided for U.S. House of Representatives, October 19, 1993 full accountability of monetary policy. As you know, the Board of Governors is required to report to the I appreciate this opportunity to give you my views on Congress on its monetary policy plans and objectives the accountability of monetary policy. As I have twice each year. In hearings before this committee and indicated previously in correspondence with you, my the corresponding body in the Senate, the Chairman of perspective is of one who throughout his career as an the Board presents testimony on the monetary policy elected and appointed official has been in favor of report and responds fully to your questions on moneopening government proceedings to the public and the tary policy. Federal Reserve policymakers also testify press. Our democracy demands that the actions of its as requested before this committee and other congresgovernment be conducted "in the sunshine" to the sional committees about monetary policy and other greatest extent possible to ensure that the process of matters of interest, including a detailed accounting of public policy formulation is appropriate and equitable; our expenditures. it also demands that government agencies adopt the Beyond the statutory requirements, the Federal very best policies. In some cases, there is a tradeoff Reserve provides significant additional information to between these two objectives. As my statement will the public about the conduct of monetary policy. In explain, I believe the current legislative requirements particular, the Federal Open Market Committee for monetary policy accountability and the Federal (FOMC) publishes minutes of each of its meetings. Reserve's current policies regarding the provision of These minutes summarize fully the discussion and monetary policy information strike a reasonable bal- indicate the attendance at the meetings. They show the ance between these objectives. results of all recorded votes, including statements that Monetary policy is best formulated within a frame- explain dissenting votes. Significant decisions taken work that provides an appropriate degree of insulation by the FOMC should always be made on the basis of from day-to-day political pressures while requiring full recorded votes—in accord with an important principle accountability. The Congress gave the Federal Re- of accountability. Each member of the Committee is serve some insulation, for example, by establishing afforded an opportunity to participate in the preparalong terms for members of the Board of Governors and tion of the minutes so that no individual or shared Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1112 Federal Reserve Bulletin • December 1993 views are omitted. In my view, the minutes present an oping a consensus view through an open contrarian accurate account of each FOMC meeting. forum is essential if monetary policy is to lead toward With regard to the timeliness of the release of such monetary stability. minutes, as you know they are published shortly after For these reasons, I believe that the relevant provithe following Committee meeting. It seems to me that sions of H.R.28 would do little to make the monetary such a lag is appropriate. The immediate release of policy process more transparent and, unfortunately, information on the Committee's plans for contingen- would do much to make the conduct of monetary cies could increase market volatility, particularly in policy less effective. In my view, our current procecircumstances when the contingencies do not eventu- dures regarding disclosure are on the right track: They ate. Such volatility is unnecessary and could be espe- permit a careful review of alternative policies while cially counterproductive if concerns about possible allowing the Congress and the public to analyze both volatility deterred some members of the Federal Open the process by which our decisions are reached and Market Committee from discussing such contingencies their results. or drove them to relying on implicit or behind-the- Besides soliciting my comments on the accountabilscenes understandings. On balance, the market and ity of monetary policy, you also asked about notes or the public are better served by more detail and more records regarding FOMC meetings and about premaopenness with delayed publication as compared with ture release of information pertaining to the discussion the realistic alternative of less specificity that would at such meetings. It has been my practice to take likely accompany earlier publication. sketchy notes during the course of FOMC meetings; Similarly, I believe that provisions in the Federal the notes are kept, solely for my own use, in a locked Reserve System Accountability Act (H.R.28) that file cabinet in my office at the Federal Reserve. Others would require release of videotapes or transcripts of may also take notes, but I have no information regard- Committee meetings would have deleterious conse- ing the location and disposition, and I assume the quences. In any setting, the recognition that one's others will answer your question themselves. Some remarks will be reported verbatim will dampen partic- years ago I became aware of the existence of rough ipation of most members in the discussion. In the transcripts of the meetings when I was writing a context of monetary policy, such provisions likely dissenting statement. The Secretary of the FOMC would cause many policymakers to be much less made available to me a transcript of my statements, willing to conjecture about future economic and finan- and only my statements, from the previous meeting. cial developments, to explore alternative policies, or With regard to premature disclosure of confidential to challenge others' views. Under those conditions, FOMC information, over the years I have been troudiscussions during FOMC meetings are less likely to bled by the appearance in the press of information that lead to appropriate policy decisions. The willingness serves to give credence to conjecture and thereby of individual members to explore verbally what may damages Federal Reserve credibility. I have no knowlseem to be low probability events may be the begin- edge as to the source of such information. ning of a new perspective that elicits more careful Thank you again for the opportunity to testify on watching and continued debate. The process of devel- this important subject. • Statement by Edward W. Kelly, Jr., Member, Board of Question 1: I have generated rough pencil notes of Governors of the Federal Reserve System, before the my own thoughts, and summaries of the views of other Committee on Banking, Finance and Urban Affairs, members as I understood them, at most meetings. U.S. House of Representatives, October 19, 1993 These notes reside in a locked file in my office. Question 2: I would assume that various persons present at the meetings prepare and keep notes and Thank you for an opportunity to present my views on records of their own, including the FOMC secretariat, H.R.28, the Federal Reserve System Accountability but I am unaware of specifically who does what in this Act of 1993. Pursuant to the request in the Chairman's regard. Doubtless others will report on their own letter of invitation, I shall first answer, in order, the activities. three specific questions posed therein and then offer Question 3:1 have no information whatsoever about my perspectives on the bill in the area of maintaining a unauthorized or premature release of FOMC informarecord of the Federal Open Market Committee tion. (FOMC) meetings. Let me move on to comment on H.R.28, which Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1113 would require, among other things, complete release policy is created. To expose this process to public of FOMC meeting proceedings within sixty days. I scrutiny would, in my view, very clearly introduce an must oppose this proposal. atmosphere that would be detrimental to the final It seems to me that the issue here is the reconcilia- result. The quality of the final result, sound monetary tion of two basic principles for conducting public policy to undergird and support our economy, is the business in a democracy. The first is the obvious most important of the interests in question. I believe requirement that public policy be generated to further that H.R.28 would be counterproductive in this rethe public interest in the soundest possible way. The spect. second is that the public has the right to know what its The requirement remains that the public be as leaders are doing in the conduct of its business, informed as possible in these matters and that those including how and why they are doing it. Although involved in the process be accountable. I believe that these two principles can often be fully accommodated, the existing procedures for release of FOMC decisions there are clearly cases wherein the second, fully are responsive to the public's right to be informed. implemented, can potentially degrade the first. In such Concerning accountability, FOMC decisions are the cases, the overriding requirement is that public policy result of the votes of the participating members, and must be of the highest possible quality. each participant's vote is recorded and made public. The meetings of the FOMC are such a case. In these Affirmative votes are explained in the minutes as meetings twelve voting members, augmented by the released, and dissenting votes are accompanied by seven additional Reserve Bank presidents, debate and individual explanations. Thus, there is complete acdecide important public matters of monetary policy. countability for results. To work well, such arrangements must proceed in In summary, I feel that the public's interest in this private, where the participants may freely and easily matter is best served by maintaining a system wherein exchange perspectives and confidential information, the process is confidential and the policy results are dispute, alter viewpoints, and work toward discovery made public in appropriate ways, with personal and of common ground. In this manner, responsible public group accountability for such results. • Statement by John P. LaWare, Member, Board of Open Market Committee's deliberations and even less Governors of the Federal Reserve System, before the purpose in a videotape record of the proceedings, Committee on Banking, Finance and Urban Affairs, which might provide prime time competition for con- U.S. House of Representatives, October 19, 1993 gressional committee hearings and speeches on the floor of the House, which I do not believe have I am here with my Federal Open Market Committee particularly high ratings. (FOMC) colleagues to comment on the initiatives in A verbatim transcript or a videotape recording of H.R.28 that are purportedly designed to improve the the meetings of the Federal Open Market Committee accountability of the Federal Open Market Committee might significantly inhibit the members from the free for monetary policy. Specifically, you have asked for exchange of ideas, which presently characterizes our comment on the proposed requirement for a full and meetings. We are, after all, human, and we all have a timely accounting of each FOMC meeting. certain amount of self-consciousness about being "on I would strongly urge that the committee continue, stage," as we would certainly be under the suggested as in the past, to concentrate its appropriate oversight protocol. This problem would be heightened by the efforts on the substance of monetary policy rather than knowledge that the matters under discussion are on the procedures by which it is determined. The highly sensitive for financial markets here and around mandated Humphrey-Hawkins testimony, presented the world. Consultation "in camera" gives the memtwice a year and intensely scrutinized and analyzed by bers of the Federal Open Market Committee the same the Congress and the media, provides a rather full privileges of open communication and free exchange description of policy moves, historic economic perfor- enjoyed by juries. Importantly, it also gives the Commance, and future objectives for policy, expressed in mittee members the same right to change their minds terms prescribed by the statute. It is perhaps the as jurors enjoy. I cannot imagine how juries might fullest public accounting of monetary policy provided deliberate in the presence of a scribe or a tape recorder by any central bank in the world. or a video camera. I am sure that the quality of jury I can honestly see no purpose to be gained by decisions would be significantly changed. I am equally publication of a verbatim transcript of the Federal sure that the process of developing monetary policy Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1114 Federal Reserve Bulletin • December 1993 would suffer under such a regime of public perfor- impulsively on such news, to no one's best interest mance. except speculators. And, internally, such a stricture I am much less concerned that the quality of policy against asymmetric language would inhibit quick decisions would be adversely affected by a memoran- intermeeting response to changing market condidum of discussion carefully edited to delete market- tions. sensitive information provided on a confidential basis As to the three specific questions in your letter of and released on some delayed schedule, perhaps one invitation: year after the meeting it described. Even there, some 1. I make no notes at FOMC meetings other than behavioral change on the part of members of the brief bullet points to outline my own comments to Federal Open Market Committee could be expected, assure coherence. These, together with all analytical but I would not think it would be sufficient to signifi- materials supplied by the staff before the meeting, are cantly inhibit the deliberations of the Committee or given by me to my executive assistant for destruction alter the course of policy. as soon as the FOMC meeting adjourns. Finally, the issue of the timely release of the direc- 2. I have no knowledge of notes or records made or tive for open market operations is a tricky one. On the retained by other members of the Committee. one hand, the market knows at 11:30 a.m. or so the 3. I have no knowledge of the source of the notorimorning after the FOMC meetings whether there has ous "leaks" of FOMC information. Such leaks are been a policy shift. This is almost immediately discern- irresponsible and reprehensible. If they are unintenible from the way the Desk at the Federal Reserve tional, they reflect a naivete that should not be allowed Bank of New York enters the market. So, from this to lurk anywhere near the FOMC. If they are intenperspective, little is to be gained or lost from the tional, they should be punished to the full extent of publication of FOMC decisions within a week, as whatever remedies are available, no matter who the proposed under H.R.28. On the other hand, immedi- culprit may be. ate release of the directive would probably discourage the use of asymmetric language in the directive I appreciate the opportunity to participate in this because asymmetry reflects the tilt of the Committee hearing and look forward to answering any further either toward ease or tightening. Markets might react questions the committee may have. • Statement by Lawrence B. Lindsey, Member, bers of the Congress and with members of the Board of Governors of the Federal Reserve System, Administration and their staffs. We publish numerbefore the Committee on Banking, Finance and ous articles relating to monetary policy in System Urban Affairs, U.S. House of Representatives, publications. October 19, 1993 Members of the Board and presidents of Federal Reserve Banks have an obligation to the public to I appreciate this opportunity to comment on provi- explain their policy positions, and we often therefore sions of the Federal Reserve System Accountability speak out through speeches and other forums, not Act (H.R.28) that pertain to the release of information just on monetary policy but on economic policy more on monetary policy. generally. We go out into communities across the The Federal Reserve currently provides a great nation, partly to understand the economic circumdeal of information to the public about the monetary stances and concerns of all Americans but also to policymaking process both formally and informally. articulate the Federal Reserve's position on the We report to the Congress semiannually on our economy. For example, I have visited the fine city of objectives and plans for monetary policy, and we San Antonio twice during my twenty-three months as provide additional testimony on request. We publish a Governor and have met with citizens from all walks a considerable volume of timely data on our mone- of life to listen to their needs and to explain our tary policy actions. In addition, we publish minutes mission. In fact, in virtually every city to which I of each Federal Open Market Committee (FOMC) have travelled, more than thirty in all since becoming meeting shortly after the following meeting. These a Governor, I have met with local business people, minutes fully summarize the discussion at Committee bankers, and citizens to discuss the economy and its meetings and are reasonably timely. Federal Reserve direct impact on their businesses and daily lives. I officials frequently discuss the economic situation consider the process of carrying on a public dialogue and monetary policy in informal contacts with mem- to be central to my responsibilities. There are no Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1115 mysteries regarding my position or thinking. And I there may be some advantages, there are also costs. believe the same is true of my colleagues. Under current procedures, market participants and In my view, the provisions of the proposed legis- others are able to recognize an actual shift in the lation directed at increasing the availability of infor- Federal Reserve's policy stance on the morning that mation on monetary policy probably would suffer the change is implemented. Thus, an immediate verbal from the law of unintended consequences. Videotap- statement on policy changes would provide no addiing FOMC meetings would likely reduce the useful- tional information to the market. A requirement to ness of these meetings considerably. Participants publish information could be damaging in cases in would hesitate to use hypothetical or speculative which policy contingencies are part of the FOMC examples to explain points because these examples directive. In fact, increased market volatility could could be misinterpreted and cause unnecessary vol- potentially result because of market speculation. atility in the financial markets. Information learned Moreover, such a requirement could diminish the from meetings and travels is often proprietary in Committee's ability to provide instructions to the nature and thus could not be shared if the meetings Federal Reserve Bank of New York to respond to were taped. More generally, the give and take in the contingencies, potentially hobbling the Federal Rediscussion among policymakers would be sharply serve's ability to resolve financial crises. reduced. Policy discussions would tend to take place Let me turn next to the three specific questions that outside Committee meetings, and members of the you posed in your letter of invitation to this hearing. Board and Reserve Bank presidents would come into First, I do take very sketchy notes during FOMC meetings with preconceived views to a much greater meetings to help organize my own comments. These degree than is the case currently. Videotapes of these notes are discarded by me after each meeting. Second, meetings might, in fact, consist of nothing more than I believe that others will be describing their own prepared speeches by the Board members and Re- notetaking practices and that the Chairman will deserve Bank Presidents. scribe the notetaking process of the FOMC Secretar- The ideas that arise in the current process of open, iat. Finally, I have no information for the committee candid discussion would no longer be produced at on any premature release of FOMC confidential mate- Committee meetings and thus would not be reported in rial. FOMC minutes. Their loss would limit the flexibility In summary, I believe that there will always be a and give and take of the policy process and in so doing tension between the benefits of an open and ongoing produce the unintended consequence of actually re- public debate on economic policy and the benefits of ducing the net amount of publicly available informed confidentiality. Although the current system is imperdebate on monetary policy. fect, it is probably better than resolving the current I am also skeptical that, on balance, immediate tension in favor of either fuller openness or greater release of the directive would be useful. Although confidentiality. • Statement by Susan M. Phillips, Member, Board of monetary policy. This information gathering or eco- Governors of the Federal Reserve System, before the nomic monitoring is done through a variety of means— Committee on Banking, Finance and Urban Affairs, advisory and consultative committees to the Board U.S. House of Representatives, October 19, 1993 and individual Reserve Banks, studies requiring specialized surveys or data gathering, financial reports I am pleased to have the opportunity to appear before submitted to the Board as part of the regulatory this committee to present my views on the reporting of oversight process, Reserve Bank reports, and the Federal Open Market Committee (FOMC) actions, various analyses and studies undertaken as backwith specific reference to sections of H.R.28, Federal ground for the Beige Book and staff FOMC docu- Reserve System Accountability Act of 1993, that focus ments. The cooperation received by the Federal Reon maintaining a record of the FOMC meetings. I am serve System in this enormous task of economic the newest member of the Board of Governors and am monitoring is no doubt attributable to the serious therefore also a voting member of the FOMC. manner, and in some cases the confidentiality, in Since joining the Federal Reserve Board, I have which business and economic information is treated by been deeply impressed by the care and attention given the Board and the Reserve Banks. This cooperation throughout the System to the incorporation of a broad demonstrates considerable confidence in the FOMC's range of viewpoints in the development and conduct of processes and is likely bolstered by the unique quasi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1116 Federal Reserve Bulletin • December 1993 public organizational structure of the Federal Reserve initial statements may limit their flexibility to adjust System, carefully crafted by the Congress to contain their positions. The current approach to constructing an inherent number of checks and balances, with the and releasing the minutes, which allows complete private sector an integral part of the System. recordation of the subjects discussed and views pre- The manner in which the Board and the FOMC sented without specific attribution, contributes to this communicate with the markets and the public is cru- analytical deliberative process. All members have an cial not only to maintain trust and confidence in the opportunity to edit the minutes before the next meetnation's central bank but also to assist members of the ing. FOMC in gathering sufficient information to assess the I review the draft to ensure that my own views are various trends in both the real and financial sectors of adequately reflected in the minutes and make editorial the economy. The ability to receive and relay to the suggestions as appropriate. To assist in this process, I FOMC confidential financial information is vital to a take sporadic personal notes during some parts of the full understanding of the complex U.S. economy. I FOMC meetings to remind myself of, for example, believe that releasing a literal transcription or video- economic conditions noted by other members and my tape of the meetings would seriously inhibit members' own positions on various issues. Those handwritten abilities to obtain and relate such information because notes are retained in my personal confidential files, of its potential market sensitivity. shared with no one. I presume other members will A videotape or transcript also could have other comment on their own or their staff members' notes. harmful effects on the nature of discussions at FOMC The preparation, circulation, and editing of the meetings. The structure of those meetings allows all minutes takes some time, but in any case the process is Board members and Bank presidents an opportunity to complete before the next meeting. I know of no one present their views. These voting and nonvoting mem- who shares this information with members of the bers come from very diverse backgrounds, represent- public or the press before its official release. ing different parts of the country and varying perspec- Earlier release of the minutes, or very rapid retives on the macroeconomy and the operation of lease of the Committee's decisions and directives, monetary policy. The process of explaining different would curtail the flexibility of the Committee's deciviewpoints and reconciling them requires significant sions. Those directives frequently contain or referexplanations and considerable give and take. Efforts ence longer-run strategies the Committee wishes to are made by members to compare and contrast their adopt, although the precise form those strategies particular regional or economic observations with would take depends on subsequent economic develthose of other members, rendering the use of complete opments. No major market participant can announce prepared statements extremely difficult. If a literal its future strategy without having an impact on the transcript or videotape of FOMC meetings were to be market itself. Such announcements would be selfreleased, I believe many members would feel con- defeating and would limit the Federal Reserve's strained to speak only from prepared statements, flexibilities and ability to affect the market when it thereby losing the analytical approach now used in wishes to do so. building upon each other's observations in a truly I hope these comments are helpful to the committee deliberative process. Moreover, there would be re- in its deliberations. I would be pleased to respond to duced capability to reach a consensus, as members' additional questions. • Statement by Richard F. Syron, President, Federal made more public. However, the key issue to me is Reserve Bank of Boston, before the Committee on what will provide the best policy for the people of the Banking, Finance and Urban Affairs, U.S. House of United States and of the First District. I believe there Representatives, October 19, 1993 are difficult trade-offs between openness and the effectiveness of the deliberations that lead to monetary policy. I would like to mention two specific reasons Thank you for this opportunity to share my views on that contribute to this trade-off. maintaining a more extensive record of Federal Open Market Committee (FOMC) meetings. First, I am concerned that a highly detailed account- Being involved in the making of monetary policy is ing of FOMC deliberations, unless its release were a great honor and something in which I take deep delayed several years, would impair the ability of the personal pride. Thus, from a purely personal perspec- FOMC to obtain and discuss confidential information tive, I might welcome my views and positions being on individual companies and foreign central banks— Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1117 information that is essential to conducting monetary Second, much of the discussion and economic policy. information disclosed in FOMC meetings pertains to New England's experience in the recent recession is the valuation of assets priced continuously in world a relevant case in point. The recession began earlier in financial markets. Fluctuations in asset values can New England, and proportionately many more jobs have a significant impact on the jobs of workers and were lost in the region than in the rest of the country. on the incomes of investors. Public disclosure of As a consequence, some problems surfaced in New preliminary and exploratory FOMC discussions England before they emerged elsewhere. could generate unintended value changes that could For example, the difficulties experienced by New lead to harmful reactions and unnecessary volatility England banks contributed to a "credit crunch" for in the economy. small and medium-sized businesses. These problems In summary, the ultimate objective of monetary were discussed at FOMC meetings and helped shape policy is to promote the highest standard of living policy. It would not have been possible to convey the possible for Americans. The policymaking process seriousness of the banking problems in New England, should be as open as it can be, without diminishing our the potential for reduced credit availability, and its ability to achieve that objective. impact on the economy as a whole without reference In regard to the three specific questions you posed, to individual borrowers and lenders. Yet to make such I generally take rough, handwritten notes at FOMC information public would have violated confidences; meetings; these notes are subsequently kept in a indeed, much information would never have been locked drawer. Any notes taken by the senior econovolunteered, and our understanding of the problems mist accompanying me are also kept securely or would have suffered greatly. Again, trade-offs are disposed of according to procedures governing confiinvolved: The more specific are the references in the dential documents. Except for the Secretary's mainterecord of FOMC deliberations, the longer would be nance of Committee records, I have no direct inforthe time lag required before disclosure if access to mation about how others may keep notes. I have no valuable but confidential information on individual information about individuals imparting information companies is to be maintained and used. about FOMC meetings before official release. • Statement by William J. McDonough, President, Fed- Manager of the Federal Reserve System Open Mareral Reserve Bank of New York, before the Committee ket Account with responsibility for the day-to-day on Banking, Finance and Urban Affairs, U.S. House execution of FOMC decisions. In the hope of adding of Representatives, October 19, 1993 some specialized value to the committee's consideration, I will direct my consideration to the market You invited me to appear before the committee to effect of one aspect of H.R.28, release of the policy present my independent views regarding the account- decision of the FOMC within seven days as coming of Federal Open Market Committee (FOMC) meet- pared with the releases of the directive the Friday ings. As you know, it is not possible for me to appear after the subsequent meeting, that is, with a delay of at the hearings, but I submit herewith my views, as about seven weeks. well as the answers to three questions to me in your We all may have differing views either in general or letter of September 20. from time to time regarding the right direction of I believe that the primary responsibility of the monetary policy. But whatever these views, the actual Federal Open Market Committee is to develop and carrying out of monetary policy in the best interest of carry out a monetary policy that contributes to sus- the American people must involve flexibility. Why? tained economic growth with price stability. There- It is frequently the case that the right monetary fore, I address myself to the question before us guided policy conclusion is not an immediate change in polessentially by whether the present accounting of the icy. On occasion, the FOMC decides that there should FOMC meetings is more or less supportive of that be a tilt between meetings towards a shift in monetary responsibility than would be the case under the provi- policy; that tilt may or may not result in an actual sions proposed in the legislation being considered, policy change, depending on how circumstances in H.R.28. the economy and in financial markets play out. The Besides serving as president of the Federal Re- present policy of releasing the minutes and the direcserve Bank of New York and vice chairman of the tive after the following meeting permits this flexibility FOMC, I also bring to this consideration a period as because by the time of release under the present Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1118 Federal Reserve Bulletin • December 1993 policy, it is a clear fact whether policy has been First, I have made no notes or records of the FOMC changed or not. meetings I have attended. A person who has not spent much of his or her life Second, an officer of the Open Market Function at in these markets may say that nothing would be lost by the New York Fed attends the FOMC meetings to immediate disclosure. That is simply not so. I can provide backup for the Manager for Domestic Operaassure the committee, based on more than two dec- tions. That officer prepares informal written notes ades of private sector experience in financial markets, during the meeting that are not intended to be a record that the disclosure of an FOMC policy tilt would be of events but rather a guide to the officers of the translated by the financial markets, in moments after Federal Open Market Committee in the day-to-day the release, to an execution of the policy shift. A management of the account between meetings. These policy change that the FOMC thought might make notes are given very limited distribution within the sense only if certain economic circumstances evolve New York Fed: to the president, the first vice presiwould become an executed policy as market partici- dent, the general counsel, and the other System acpants acted instantly to either profit or avoid loss. In count officers, a total of about seven people. Recipiother words, market participants would immediately ents return the notes to the officer who has prepared assume that the policy tilt would become reality and them, and they are immediately destroyed. No file is protect themselves by immediately moving market maintained. rates accordingly. With that being the case, the FOMC The research director of the New York Fed is my would be deprived of the intermeeting flexibility that I principal adviser on monetary policy matters. He believe is essential for carrying out the optimum attends the FOMC meetings and keeps handwritten monetary policy. The Committee would be convinced notes; these notes are not transcribed and are kept in that it could not choose a tilt, even if it thought a tilt the Research Director's own files, not those of the was the right decision. The FOMC would be left with Research Group. only the binary choice of maintaining present policy or I have no personal knowledge of any other notes or changing it immediately. Monetary policy is simply records that others may have made at FOMC meetings too important to the good of the American people to or the release of FOMC meeting information before force it into that kind of arbitrary and inappropriate the official release of that information. straightjacket. The greater good of the best monetary As president of the Federal Reserve Bank of New policy that the FOMC can devise and carry out must York, I appreciate this opportunity to address myself be given priority over a great, but lesser, good of to the committee. The Federal Reserve was created by immediately informing the public. the Congress, and we are accountable to the American You asked that I also respond to three specific people through the Congress as the people's elected questions included in your letter to me of September representatives. I hope that these comments are help- 20. I provided these answers as follows: ful to you in your deliberations. • Statement by Edward G. Boehne, President, Federal to speculate about the effects of alternative policies, Reserve Bank of Philadelphia, before the Committee the general give and take among members, and the on Banking, Finance and Urban Affairs, U.S. House ability to reach a consensus. The challenge is how to of Representatives, October 19, 1993 maintain an effective deliberative process and still achieve meaningful disclosure and accountability. I I am pleased to testify on the provisions of section 4 of believe that the FOMC's existing procedures provide a H.R.28, the Federal Reserve System Accountability workable balance between the need for a process that Act of 1993, that involve public disclosure of Federal allows for the formulation of an effective monetary Open Market Committee (FOMC) meetings. policy and the need for public disclosure and accountability. Let me begin by saying that I take very seriously my role in FOMC proceedings and have a natural bias Let me comment briefly on the specific provisions of toward public disclosure and personal accountability. the bill. I believe that the FOMC already complies I also take seriously the collective responsibility of the with the provision of H.R.28 that requires that a FOMC to formulate the best possible monetary policy. written copy of the minutes of each FOMC meeting be An essential ingredient in formulating the best possible made available to the public within sixty days of the monetary policy is an effective deliberative process— meeting. The FOMC currently releases minutes of its one that fosters the free flow of information, the ability meetings six to eight weeks after each meeting, which Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1119 is consistent with the bill's proposed sixty-day period. devil's advocate in proposing policy alternatives, and For those who read them regularly, these minutes are the quality of monetary policy decisionmaking would quite comprehensive. They include information about suffer accordingly. current and prospective economic and financial condi- With regard to the bill's proposal for public release tions, the pros and cons of alternative policy actions, of the directive or other FOMC decisions within one the reasons why a majority favored a particular action, week, I believe that such a provision would not be plus comments, by name, of those members dissent- very helpful to the public. The directive is best read ing. along with minutes of the meeting. Indeed, the two are The minutes the Committee now releases are not as currently released together within sixty days of each detailed as the Memorandum of Discussion that was meeting. To release the directive earlier is likely to released before 1976. But in my view the old memo- confuse, rather than clarify, people's perceptions of randum had some disadvantages that hindered the the stance for monetary policy because they will not FOMC's deliberative process. I attended FOMC meet- have the full context in which the directive was ings in the early 1970s when the memorandum was still prepared. Consequently, I do not favor this provision being prepared. At those meetings, as I recall, mem- of the bill. bers of the Committee tended to stick to their prepared In your letter of invitation to appear today, you also statements, and there was less give and take about requested my comments on three other areas. Let me alternative views of the economy and policy options. now turn to those. First, during my tenure as president This occurred even though the memorandum was of the Federal Reserve Bank of Philadelphia, which released only with a long lag of five years. I believe began in 1981, I have not taken notes during FOMC that the current arrangement of releasing the minutes meetings. My economic adviser usually takes handof the FOMC meeting in summary form—but much written notes during meetings, which are then kept in more promptly than the memorandum—has served the a locked file cabinet with other materials prepared for deliberative process well, while at the same time each FOMC meeting. He uses these notes to identify providing relatively prompt public disclosure. issues that should be investigated for future pre- For the same reasons, I believe that the bill's FOMC economic briefings. And finally, I am aware, of provisions to require a verbatim transcript or video- course, of news stories that have discussed the pretape of each meeting would impede the FOMC's mature release of information about FOMC meetings. deliberative process. They would tend to lock mem- I deplore such leaks. Security of FOMC information is bers into prepared statements and reduce the give and taken very seriously at the Federal Reserve Bank of take of discussion. Innovative proposals could easily Philadelphia, and I do not have any direct knowledge be stifled. Members would be less willing to play about how such leaks occurred. • Statement by Jerry L. Jordan, President, Federal could easily reflect misplaced priorities. The Congress Reserve Bank of Cleveland, before the Committee on could best contribute to a clarification of the FOMC's Banking, Finance and Urban Affairs, U.S. House of policy direction by enacting the Neal Resolution, Representatives, October 19, 1993 which specifies an ultimate goal of achieving the highest sustainable rate of real economic growth I welcome the opportunity to appear before you this through the maintenance of purchasing power stabilmorning to discuss the release of information about the ity. The timing and content of disclosure become less meetings of the Federal Open Market Committee contentious issues in the presence of a credible frame- (FOMC). work for monetary policy. Before I respond to the three specific questions Markets operate more efficiently with knowledge of raised in your letter of September 24, 1993, I would the collective thought process that generates Commitlike to address a general issue that I believe is highly tee decisions. Such information allows people to deal relevant. with uncertainties about how policy actions might The questions of what information to release and respond to unknowable future developments. when to release it must be answered in the context of It takes some time to ensure members' agreement accountability for achieving clear, unambiguous objec- on an accurate portrayal of a meeting and to remove tives for monetary policy. If the FOMC is charged sensitive material. Thus, the minutes of a meeting, with conflicting or unattainable objectives, discussions describing the climate and substance of Federal Open about the appropriate timing and content of disclosure Market Committee decisionmaking, are released only Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1120 Federal Reserve Bulletin • December 1993 after their formal acceptance, at the next regularly questions. First, I do not take notes at an FOMC scheduled meeting. meeting. At the first few meetings I attended in 1992,1 Meeting minutes are released through an orderly took a few notes during Committee meetings to remind process that guarantees equal access for everyone who me later of issues raised in the course of discussion, wants to receive them, simultaneously, at numerous but soon decided that I did not need notes to remind sites nationwide. In the interim before release, actions me of the important issues. If I want staff analyses of in the open market are taken in accordance with a theoretical or empirical issues in preparation for subpublicly understood procedure. Within seconds of any sequent meetings, I discuss the issues with senior market action, electronic information services com- policy advisers. All this is done in accordance with the municate the facts nationwide. Committee's standard rules for maintaining confiden- As a member of the Committee, I find it objection- tial FOMC information. We adhere to a "need to able to see news stories that are not written on the know" policy when relating information to research basis of the Committee's well-defined, orderly proce- economists conducting studies on policy issues. Secdures for information security and release. I do not ond, I have not questioned any other participants in condone the actions of individuals who unilaterally FOMC meetings about the procedures they follow and release such information, even through inadvertence. consequently am not aware of whether they keep Chairman Greenspan indicated last week that mea- notes or records of the meetings. Finally, I have no sures have been taken to ensure that the procedures information about the premature disclosure of FOMC adopted by the Committee are followed. meeting materials by anyone employed at the Federal You have asked me to respond to three specific Reserve. • Statement by J. AlfredBroaddus, Jr., President, Fed- immediately after the meeting. It also signals, through eral Reserve Bank of Richmond, before the Committee the symmetry or asymmetry of some of its language, on'Banking, Finance and Urban Affairs, U.S. House the most likely direction of any prospective changes in of Representatives, October 19, 1993 policy during the period up to the next meeting. Currently, the directive for a particular FOMC I am pleased to be here today to discuss the proce- meeting is released immediately after the next meeting dures that the Federal Open Market Committee along with a record of policy actions. This record (FOMC) follows in recording policy information and provides a lengthy and thorough summary of the releasing it to the public. My views in this area are discussion leading up to the Committee's policy decibased on two principles. First, these procedures sion. It indicates in considerable detail the views of should enable us to make the best possible monetary those supporting the decision and contains a full policy decisions. Second, in general we should release explanation of any dissenting votes. It also lists by as much information to the public on our policy name the Committee members voting for or against the decisions as promptly as possible, provided such re- policy decision. As a long-time attendee at FOMC meetings, I can attest that the record of policy actions lease does not compromise our ability to make sound always conveys the content and flavor of the Commitdecisions. My views also reflect substantial experience tee's deliberations, as well as its specific decisions, with the Committee. Although I have been in my fully and accurately. In my view, the record fully present position only since the beginning of the year, I satisfies the need for the Committee to be accountable previously attended Committee meetings as an adviser to the public. over a period of approximately twenty years. At each FOMC meeting, the Committee reviews H.R.28 would change these procedures in two ways. current and prospective economic conditions, dis- First, it would require that videotapes of FOMC cusses current policy issues, and then decides on an meetings be made and released along with verbatim appropriate policy direction. This decision is commu- transcripts within sixty days. Second, it would require nicated to the Trading Desk at the Federal Reserve that Committee decisions (that is, the directive) be Bank of New York in a directive that instructs the released within one week. Let me comment on each of Desk to take actions in the money market that are these changes. consistent with the desired policy direction. The direc- FOMC Policy Discussions. My views on releasing tive is the Committee's primary policy document. It videotapes and verbatim transcripts of FOMC meetcontains the Committee's decision on whether to ease ings have not changed since I responded to Chairman or tighten reserve conditions or leave them unchanged Gonzalez on this issue earlier this year. I believe that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1121 the prospect of a literal record, even if it were released soon after the meeting, interest rates typically would after a long period of time, inevitably would introduce react immediately to any policy action contemplated in a self-consciousness into Committee proceedings that the directive even though the actual policy action had would seriously inhibit the flow of information and not yet been taken. If the action subsequently did not ideas. Members would almost certainly be reluctant to take place, then the initial reaction of rates would be speak and argue as freely and frankly as they do now reversed. if they knew that their statements would be recorded One can distinguish, of course, between the part of and released publicly. In sum, I believe that releasing the directive that announces the Committee's decia literal record of Committee meetings in any form sion regarding any immediate policy actions and the would restrain Committee members in debate, under- part that may predispose the Committee to undertake mine the deliberative process, and therefore risk low- a particular future action. It is the latter, conditional ering the quality of policy decisions. part of the current directive that causes my concern Although I cannot support release of a videotape or regarding financial volatility because it suggests a any other verbatim transcript of the FOMC meetings, direction in future policy that may or may not be I do believe that there might be benefits from releasing implemented subsequently. This problem could be a nonliteral but relatively complete record of FOMC dealt with by removing the conditional language from proceedings similar to the "memorandum of discus- the directive. Doing so, however, could well reduce sion" that we prepared until 1976 if there were a long the usefulness of the directive, both as a policy and enforceable delay of the release. As I said in my instruction to the Trading Desk and as a focal point earlier letter, such a record would assist researchers for the Committee's deliberations. The Committee interested in monetary policy by helping them focus would need to consider very carefully the potential more clearly on the issues that most concerned the loss from changing the form of the directive before Committee at a particular meeting and by strengthen- making any such change. ing their appreciation of some of the more practical Notes on FOMC Meetings. Let me respond now to aspects of formulating policy. Over a long period of the specific questions raised in Chairman Gonzalez's time it might also provide a clearer picture of the letter regarding my knowledge of notes made at evolution of the positions of various members of the FOMC meetings. As I indicated earlier, I have at- FOMC than is currently available, which some re- tended FOMC meetings for a number of years, mostly searchers might find useful. as the adviser to the president of the Richmond I believe strongly that such a nonliteral record Reserve Bank. While I was in this advisory position, I should be released only after a delay of several years, took notes so I could serve the president more effecsuch as the five-year period in the case of the memo- tively. Monetary policy is a continuous process in randum of discussion. Early release of even a nonlit- which particular issues, such as how to interpret the eral record like the memorandum could inhibit FOMC behavior of the monetary aggregates, frequently recur discussion and reduce the quality of monetary policy at subsequent meetings. Consequently, it is sometimes decisions. Consequently, I think it is essential that any helpful, in preparing for a meeting, to be able to review reinstitution of something like the memorandum of the discussion of a particular issue at an earlier meetdiscussion be accompanied by a legislative guarantee ing. I used my notes for this purpose during my years that it would not be released prematurely. as an adviser. The notes were handwritten, were never FOMC Policy Decisions. The second change pro- transcribed to typewritten or any other form, and were posed in H.R.28 is to release the directive one week not distributed to anyone. I have always kept these after an FOMC meeting. Arguments can be made both notes in locked, confidential files. I should add that I for and against this proposal. Earlier release would be have taken only very partial notes since assuming my consistent with the general principle that we should current position at the beginning of the year. I now inform the public of policy decisions as soon as rely on the notes taken by my adviser, who follows possible. At the same time, I believe that early release exactly the same procedures I did. of the directive could well have announcement effects I have only limited knowledge of notes or records that could create unnecessary volatility in interest made by other FOMC participants and have not read rates. The FOMC's policy decision at a particular or used any such notes. Finally, I do not personally meeting is often conditional on economic data that know of any information that has been released by become available in the period after the meeting, and anyone at the Federal Reserve Bank of Richmond or the language of the directive frequently reflects this elsewhere in the Federal Reserve to persons outside conditional element. If the directive were released the Federal Reserve before its official release. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1122 Federal Reserve Bulletin • December 1993 Statement by Silas Keehn, President, Federal Reserve are now proving unreliable. In such an environment, I Bank of Chicago, before the Committee on Banking, find the regional information derived from local con- Finance and Urban Affairs, U.S. House of Represen- tacts, both about the Seventh District and elsewhere in tatives, October 19, 1993 the country, essential to the policy process. In the context of these hearings, it is important to understand that much of the information that these contacts pro- As requested, let me briefly summarize my views on vide is highly proprietary and very confidential in the question of the appropriate recordkeeping and nature. I have absolutely assured these contacts that public release of the deliberations of the Federal Open the source and nature of the data will not be divulged Market Committee (FOMC). in a way that they would find compromising. I have As I stated in my letter of January 13 of this year to never had anyone decline to speak with me about their the chairman of this committee, I fully support Chair- activities. If I could not provide such assurances, then man Greenspan's previously stated position on the much of this significant information would not be various proposals for maintaining and releasing a more forthcoming and the development of monetary policy detailed record of the FOMC's deliberations. In my would be impeded. view, the minutes of the FOMC, as they are currently It is precisely this type of information about local written, provide the right level of reporting and detail businesses, communities, and financial institutions necessary to communicate the current policy concerns that demonstrates the value of the regional structure of and actions of the Committee. The minutes explicitly the Federal Reserve System and District representadocument the full range of policy arguments made tion on the FOMC. The impact of releasing such during the discussion, and when a member of the information as part of the written record of the FOMC Committee disagrees with the resulting consensus that without a significant delay would only result in the member's dissent becomes an integral part of the exclusion of this vital information from the FOMC public policy record. policy discussion. In my view, this would not be in the Based on my participation in FOMC deliberations, I public interest, especially when the current system of believe that releasing more detailed minutes, most disclosure is able to convey an accurate description of especially a verbatim transcript of the meeting, with- the key issues and arguments underlying the FOMC out a significant delay would be counterproductive and decisions as well as record individual votes and diswould impede the development of sound monetary senting positions. If it became necessary to prepare policy—first, by limiting the free flow of necessary more detailed minutes, then they should only be information into the policy process and second, by released after a period of five years and with all hindering the consensus process so essential if policy confidential information about individual corporations is to adequately reflect economic conditions in all excised, as well as confidential information about regions of the country. foreign countries, foreign central banks, and interna- As president of the Federal Reserve Bank of tional institutions. Chicago, I have an important responsibility to con- As to the specific questions you asked us to address: vey to the FOMC the economic conditions of the I prepare an outline of economic conditions in the Seventh Federal Reserve District. To meet this re- District, which forms the basis for my remarks at each sponsibility, I and other senior members of our staff meeting of the FOMC. After the meeting, these notes maintain extensive contacts with District businesses are kept secured in my office until the next meeting, at (large and small), community groups, and state and which time I destroy them. I do not maintain notes on local government officials. From these individuals we the discussion that takes place at the meeting itself, are able to gather a wide array of highly significant and Chairman Greenspan is in a better position to information about the District that cannot be derived describe the records that are kept by the FOMC from the public data sources—information not only secretariat. about current economic conditions but also about As to the premature release of information from the changes in business practices, future production, FOMC meetings, I have not talked to the press or labor negotiations, investment and hiring plans, and other outside contacts nor to other Federal Reserve a host of other issues that have important value to the officials who do not have authorized access to FOMC policy process. information, and my only direct knowledge of such This type of information is particularly important at premature releases arises from articles that I have seen the present time. The economy is going through a very in various newspapers. I completely concur with different phase than any that we have experienced in Chairman Greenspan that premature releases of this the past. Many of the economic indicators that have type are highly inappropriate and totally unacceptbeen useful guideposts in developing policy in the past able. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1123 Statement by Thomas C. Melzer, President, Federal with the deliberative process and would lessen the Reserve Bank of St. Louis, before the Committee on flexibility with which the Federal Reserve can respond Banking, Finance and Urban Affairs, U.S. House of to changing economic conditions. If directives were Representatives, October 19, 1993 released immediately, the FOMC might be reluctant, even if economic conditions warranted, to take a I am pleased to appear before the committee today to timely subsequent action because of concern that such testify on section 4 of the Federal Reserve System action would add to the uncertainty in financial mar- Accountability Act of 1993, entitled "Prompt Public kets. In addition, the FOMC would be less inclined to Disclosure of Open Market Committee Meetings." As bias its directives toward ease or restraint, in effect, a creation of the Congress, the Federal Reserve Sys- limiting its policy options. Consequently, reaching a tem is fully accountable to the public for its monetary consensus among FOMC members would be difficult policy actions. One way the Federal Reserve ensures and might delay policy actions and add uncertainty to this accountability is by releasing information about its financial markets. policy decisions. The Federal Open Market Commit- Finally, let me turn to the specific questions that I tee (FOMC) provides a full accounting of its actions in was asked to address in my statement. its Minutes of the Federal Open Market Committee • In response to your inquiry about my own notes or (minutes). records, I usually take some notes at FOMC meetings The minutes contain all important information about for my personal use. They are not typed, copied, or FOMC decisions, including the policy directive agreed shared with anyone else and are maintained in a locked upon by the majority and the reasons underlying file cabinet in my office. policy decisions. Any significant differences among • Your second question concerns my knowledge of those voting with the majority, as well as the views of notes or records that others have made at FOMC any dissenting members, are included in the docu- meetings. Although others who attend FOMC meetment. The minutes are released upon their approval by ings sometimes appear to take notes, I am unaware of Committee members at the next FOMC meeting. The their content, disposition, or location. public record thus contains the outcome of FOMC • In response to your third query, I have no knowldeliberations and the policy views of each member of edge about the release of information on FOMC meetthe Committee. ings before its official release by the Federal Reserve. I am not in favor of producing a further detailed To sum up, the Federal Open Market Committee is account of FOMC deliberations, either in the form of an committed to informing the public of its policies, edited transcript, such as the "memorandum of discus- which ultimately must be judged by their results. The sion," verbatim minutes, or an audiotape or videotape. Minutes of the Federal Open Market Committee fully Such a release would impede the deliberative process convey the relevant information about FOMC deciand thereby impair policymaking. Arriving at appropri- sions and do so in a timely way. Thus, in my view, ate policy often involves considerable give and take, little is to be gained by providing detailed minutes or consensus building, and debate of alternative actions. mechanical reproduction of FOMC deliberations be- Because of the possibility that a particular statement cause the adverse consequences of doing so are might be misunderstood or taken out of context, FOMC potentially very great. In addition, the benefits of members would be reticent to engage in the kind of immediate release of the policy directive would not seem to outweigh the potential costs of doing so. By open discussion that leads to good policymaking if they inhibiting the frank exchange of views and possibly knew that all of their statements would be in the public reducing the willingness of the FOMC to take acrecord. Furthermore, the release of verbatim minutes tions, public release of the details of Committee or any other detailed record of deliberations would deliberations or immediate release of the policy discourage other parties from supplying the FOMC directive could harm the policymaking process. Alwith confidential information that is useful in determinthough the proposed changes intend to increase the ing appropriate policy. accountability of FOMC members, those specified in Turning to the timing of the release of the FOMC H.R.28 may thus impede monetary policy perforpolicy directives, I believe that immediate release of mance. • the outcome of FOMC deliberations would interfere Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1124 Federal Reserve Bulletin • December 1993 Statement by Gary H. Stern, President, Federal Re- view, and I do not find merit in suggestions to serve Bank of Minneapolis, before the Committee of prepare and release, at any time, a literal record of Banking, Finance and Urban Affairs, U.S. House of FOMC deliberations—through videotaping or other Representatives, October 19, 1993 vehicles. Three issues, in particular, concern me. First, given the gravity of our responsibilities, I I appreciate this opportunity to discuss issues related believe it imperative that the quality of our deliberto maintaining a record of Federal Open Market Com- ations be maintained. Open discussion of ideas, of mittee (FOMC) meetings and procedures followed at policy alternatives, and of significant potential risks the Federal Reserve Bank of Minneapolis to handle to the economy are critical to sound policymaking. confidential monetary policy material. These matters Second, some of the information we discuss is volare indeed significant. untarily provided on a confidential basis. Much of As I indicated in my January correspondence, I am this information would be lost if we have an obligaconvinced that there is considerable value in our tion to respect anonymity and confidentiality. Third, current report of FOMC proceedings. As you know, I believe that our procedures carefully balance the we release extensive minutes of each FOMC meeting need to provide information to the pubic with the shortly after the subsequent meeting. The minutes necessities of effective monetary policy. Even small describe the discussion and the votes of individual changes carry the considerable risk that they will members. More specifically, they include an assess- disturb, perhaps unknowingly and unintentionally, ment of business conditions here and abroad, price this balance, with adverse consequences for financial developments, and the performance of financial mar- markets and economic performance. kets and monetary aggregates. They report the Com- As I indicated in my earlier correspondence, I mittee's views of prospects for the economy and believe that there could be some merit in reintroducing frequently include information gleaned from personal something like the "memorandum of discussion," a contacts in individual Federal Reserve Districts. The very detailed, although edited, accounting of FOMC minutes also report discussion of monetary policy discussions, provided that the confidentiality of such options as well as the decision ultimately reached by material is assured for several years. As I see it, such the Committee, including dissents, if any, and the logic a document could be useful to historians and students underpinning the dissents. of monetary policy when they investigate the broad In light of these minutes, I believe that the views of context of policy decisions and the evolution of the the Committee members are known. In addition, policymaking process. FOMC members reveal their policy positions in other Finally, in response to your specific inquiries about ways. Certainly, I take full responsibility for my confidentiality, I am unaware of any unauthorized positions at FOMC meetings, and I have presented my release of monetary policy information ever having policy views in Federal Reserve Bank of Minneapolis emanated from the Federal Reserve Bank of Minnepublications, among other places. (Two examples, one apolis. My economic adviser and I leave highly from 1990 and one from 1993, are appended to this confidential material at the Board of Governors and document).1 In addition, the Congress can at any time do not return with it to Minneapolis. I take limited ask us about our views, as the Senate Banking Com- notes during the meeting, as does my adviser. All mittee did last March. notes and other materials are handled according to Thus, a good deal of information is available, in my strict guidelines, the essence of which is to limit their distribution and access and assure proper disposal. A copy of our Bank's procedure is appended to this 1. The attachments to this statement are available from the Federal testimony. • Reserve Bank of Minneapolis, Minneapolis, MN 55401. Statement by Thomas M. Hoenig, President, Federal Bank serves the Tenth Federal Reserve District, Reserve Bank of Kansas City, before the Committee which includes Colorado, Kansas, Nebraska, Oklaon Banking, Finance and Urban Affairs, U.S. House homa, Wyoming, the northern half of New Mexico, of Representatives, October 19, 1993 and the western third of Missouri. I am pleased to have the opportunity to express my views on the My name is Thomas M. Hoenig, and I am president disclosure of information from Federal Open Market of the Federal Reserve Bank of Kansas City. This Committee (FOMC) meetings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1125 The Federal Reserve must be accountable for its effective balance between timely disclosure and the actions and has an obligation to disclose as much need for flexibility in the conduct of monetary policy. information as possible about its deliberations and These procedures, which provide for the release of the decisions, subject to maintaining the highest possible minutes shortly after the subsequent meeting, allow level of policy effectiveness. It is my belief that the the FOMC to respond flexibly to various contingencies Federal Reserve's current disclosure policies achieve over the intermeeting period. Earlier release of the these ends. minutes would restrict this flexibility and could have The current policies provide a detailed accounting of the unintended effect of contributing to market vola- FOMC deliberations and decisions. The minutes of tility. FOMC meetings are comprehensive. They document With regard to the three specific questions posed to the information considered during a meeting and the me in Chairman Gonzalez's letter of September 24, decision of each voting member. Moreover, the min- 1993, my answers are as follows: First, I make brief utes provide the rationale for the majority's decision notes for my personal use during FOMC meetings. and include statements filed by members who dissent Our Bank's research director also occasionally takes from the majority. In addition, the Federal Reserve notes. These notes are kept in locked files, as is other reports regularly and frequently to the Congress, en- confidential FOMC material. Second, I have observed suring further that we are accountable for our mone- other participants taking notes during FOMC meettary policy actions. ings, but I have no knowledge of their content or Current procedures foster an environment of open disposition. Third, I have no information about the and candid discussion among the members of the release of information by anyone employed at the FOMC. Valuable information from a variety of Federal Reserve about FOMC meetings before the sources is brought to the discussion, and some of it is official release of that information by the Federal provided with the understanding that it be kept confi- Reserve. dential. The give and take among members provides In closing, let me reiterate that I believe the FOMC an opportunity to clarify issues and allows the FOMC must be accountable for its actions, and I believe that to synthesize a range of views. Any proposals that its current disclosure policies are appropriate and would impair this deliberative process, given current effective in achieving this end. They provide the public procedures that ensure accountability, would compro- with comprehensive information about the FOMC's mise the quality and effectiveness of Federal Reserve decisions and deliberative process, and they enhance monetary policy. the Federal Reserve's ability to pursue the nation's Current procedures, in my opinion, also strike an objectives of economic growth and price stability. • Statement by Robert D. McTeer, Jr., President, Fed- pated in FOMC meetings since 1991 but did not vote eral Reserve Bank of Dallas, before the Committee on until this year. Banking, Finance and Urban Affairs, U.S. House of You asked us to respond to three specific questions Representatives, October 19, 1993 regarding notetaking in FOMC meetings. Regarding my own practice, I do not take notes of the type I Thank you for your invitation to testify on H.R.28. As assume you mean. I do a lot of reading and homework requested, I will limit my testimony to the issue of before the meeting, and I go into the meeting with Federal Open Market Committee (FOMC) records, some tentative ideas in mind. I doodle during our although I do have opinions on other parts of H.R.28, discussion and occasionally write down a word or especially the part that puts me out of work. phrase for reference when I speak. I do not write down I became president of the Federal Reserve Bank of decisions because they are simple and easy to remem- Dallas in February 1991, so I am a relative newcomer ber and come at the end of the meeting. My doodles both to the FOMC and to your great state of Texas. As and notes would be of no use to traders or journalists. the bumper sticker says, "I wasn't born in Texas, but I destroy them after the meeting and rely only on I got there as soon as I could." official documents for future reference. Before moving to Texas two and a half years ago, I Regarding your second question, notes kept by was with the Federal Reserve Bank of Richmond for others, my impression is that most other FOMC memtwenty-three years, the last eleven of which I served bers and staff members probably follow a pattern as manager of its Baltimore Branch. I have partici- similar to my own because all who are present pre- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1126 Federal Reserve Bulletin • December 1993 sumably have access to the official records and docu- Given this dilemma, I believe that the current arments. At least, I have no knowledge to the contrary. rangement is best. Markets are able to discern the In answer to your third question, I have no infor- immediate decision by watching the federal funds rate mation about the premature release of FOMC infor- the following morning, and we retain maximum fleximation by anyone at the Federal Reserve. Let me add bility to react to incoming data and changing circumthat, in my opinion, if someone wanted to leak valu- stances without misleading anyone. Then as soon as able information about the Committee's decisions, another meeting is behind us, we release the directive such notes would not be necessary nor even very that includes the prevailing circumstances, the ratiohelpful. Although the decision process may be diffi- nale for the decision, and the identity of any dissenters cult, the decisions themselves are simple and easy to and their reasons for dissenting. remember. Let me comment briefly on other aspects I, personally, have a greater problem with videotapof meeting records. As a former economist, I have ing and verbatim transcripts of discussions than with some sympathy for the idea of immediate release of prompt release of decisions. I believe that videotaping the directive. Immediate releases of the decision or verbatim transcripts, no matter when they are would eliminate any question of leaks or the appear- released to the public, would diminish the quality of ance of leaks. our deliberations. My colleagues and I are willing to The practical problem with immediate release of the listen to each other and adjust our initial leanings in the directive is that not ail decisions are clear-cut deci- interest of consensus building. We currently do not sions to ease, tighten, or remain unchanged. On occa- posture for the record or for the camera. There is no sion, the Committee votes to hold steady, pending winning or losing the debate. There is no playing to the further information or developments, and wishes to gallery or to the folks back home. This, I am afraid, give the Chairman extra leeway to act on his own would all change with videotaping or its equivalent. before the next scheduled meeting. More often than I would much prefer present arrangements even not, I believe, these "asymmetric directives" are not with more detail added, so long as the detail involves acted on, but occasionally they are. To announce a the substance of the discussions and decisions rather decision of "no change" without the proviso would be than the language used. I would also have no objection misleading, and to announce it with the proviso would to detailed minutes (not a verbatim transcript) being likely cause the markets to react in a way not neces- released after a lengthy period, so long as the legal sarily warranted by subsequent information. obstacles to a decent delay could be overcome. • Statement by Robert T. Parry, President, Federal in my letter to you dated January 13, 1993.) However, Reserve Bank of San Francisco, before the Committee in the case of FOMC deliberations, such a compelling on Banking, Finance and Urban Affairs, U.S. House reason exists. Given the importance of the decisions of Representatives, October 19, 1993 being made, it is essential to ensure the effectiveness of the decisionmaking process. To reach the best As president of the Federal Reserve Bank of San possible policy decisions, it is important that there be a free flow of information and ideas at each meeting. Francisco, one of my jobs is to contribute to Federal Reserve policy deliberations with information and Some of the information discussed at FOMC meetideas from my District. The Twelfth Federal Reserve ings is inherently confidential—for example, because it District is highly diverse: It is made up of nine western pertains to individual firms and was obtained under a states, which at present include three of the more promise of confidentiality, or, in some instances, berobust state economies in the country (Utah, Idaho, cause it pertains to confidential matters in other counand Nevada), and one of the weakest—California. In tries. Videotapes or verbatim records of our meetings fact, California has seen employment fall by 592,000 would severely limit the information that would be jobs (4.7 percent) since mid-1990. brought into the decisionmaking process. With that introduction, I would like to express my It is also important that members of the FOMC feel appreciation for this opportunity to discuss my views free to advance their ideas in the context of a freely on the disclosure of information about Federal Open flowing discussion. By the very nature of any produc- Market Committee (FOMC) meetings. I believe that tive discussion, some ideas are discarded or modified there should be a presumption that Federal Reserve in the process of reaching a consensus. Yet such deliberations should be fully disclosed unless there is a comments, which may include discussions at previous compelling reason not to do so. (I expressed this view meetings or collective institutional memories, could be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1127 seriously misinterpreted if taken out of the full con- that I have made in connection with FOMC meetings I text. I am concerned that verbatim records or video- have attended and any knowledge I have of notes that tapes would inhibit the free flow of comments at our others have made. meetings and, in the process, limit the effectiveness of I do not take notes on what is said at FOMC our policy discussions. meetings. However, I do take into the meetings notes I have considered the merits of returning to detailed concerning the comments I plan to make about the nonverbatim minutes with attribution revealed after a national and Twelfth Federal Reserve District econolong delay, as was done until the mid-1970s. If it was mies, about monetary policy, and occasionally about possible to ensure that such minutes would not be special topics that are on the agenda for a particular made public for an extended period of time—say, five meeting. These "talking points" are stored in locked years—after a meeting was held, many of my objec- files at the Federal Reserve Bank of San Francisco in tions would be assuaged. Such records might have accordance with FOMC security procedures. My acvalue to researchers studying U.S. monetary policy. tual statements often diverge somewhat from my However, I am skeptical that such delay in the release notes, and I also make impromptu comments at each of information could be guaranteed. Even the possi- meeting, for which I have no notes. I also take into bility of an early release of a transcript could hamper FOMC meetings a briefing book prepared by the the deliberations process at FOMC meetings. I might research department at the Bank. This book contains also add that the preparation of such detailed minutes analysis and forecasts of developments in the U.S. would be very burdensome, and I am not convinced economy, analysis of developments in the Twelfth that the social benefits would justify the costs. Federal Reserve District, occasionally discussions of special topics related to FOMC issues, and analysis of Also, I believe that the minutes of FOMC meetings monetary policy issues and recommendations by my that currently are made available provide an accurate staff members. and thorough distillation of all the comments made by me and my FOMC colleagues, while avoiding the The director of research at the San Francisco Reproblems associated with direct attribution or a verba- serve Bank, and occasionally his alternate, take handtim record. The current document accurately reflects written notes of comments made at FOMC meetings the issues and discussions leading to policy decisions when they attend as my adviser. These notes are for by clearly describing the views of the majority, as well their own use in directing FOMC policy analysis as contrary points raised in the discussion. Moreover, within the research department. They are stored in members who dissent from the final decision of the their locked files in the Federal Reserve Bank of San Committee explain their reasoning and are identified Francisco in accordance with FOMC security proceby name in the minutes. The document covers expec- dures. tations of policy over the period until the subsequent Finally, with respect to your question about "leaks" meeting and normally is released a few days after that of confidential FOMC information, I have never disubsequent meeting. vulged any FOMC information to unauthorized persons In your letter requesting me to attend this session, before the official release date, and I have no informayou asked for information concerning notes or records tion concerning anyone else having done so. • Statement by Lawrence B. Lindsey, Member, Board ship between thousands of banks and thrift institutions of Governors of the Federal Reserve System, before and their communities—particularly low- and moderthe Subcommittee on Consumer Credit and Insurance ate-income neighborhoods. Both large and small instiof the Committee on Banking, Finance and Urban tutions have struggled with the law's demands. Local Affairs, U.S. House of Representatives, October 21, groups have aggressively used the law—particularly in 1993 the applications process—to prompt commitments for increased lending to those who may have been overlooked before. The regulators have sought to enforce I appreciate the opportunity to appear before this the law fairly and fully in the face of the enormous subcommittee to discuss the Community Reinvestdiversity that exists among America's communities ment Act (CRA) and the current efforts of the agencies and its financial institutions. to strengthen and improve its administration. This statute has become an extremely important part of the The results of the CRA have seldom been to the full landscape of financial institution supervision in recent satisfaction of either the covered institutions or comyears. Across our nation it has affected the relation- munity groups, and the President has directed that the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1128 Federal Reserve Bulletin • December 1993 agencies conduct a thorough reexamination of our merous problems, which I will refer to later. But supervisory approach. This is a zero-based review that before doing that, an important point about the CRA is will take into account the views of all affected parties. often lost in the debate about its flaws. If this federal In doing so, it is important to start from a common statute has, in fact, had the considerable impact I have understanding of the road we have traveled since the described, it is important to note that this has been statute was enacted in 1977. accomplished without a huge appropriation of government dollars and without legions of bureaucrats to administer the program. These matters, of course, are IMPACT OF CRA very significant and topical—as current as the recently announced campaign to "reinvent" government in Although the total impact of the CRA is very hard to ways that emphasize these very characteristics. measure, I believe a fair assessment would have to The CRA established a national goal and put conconclude that it has generally made many depository siderable power in both supervisory agencies and the institutions more responsive to the needs of their public to enforce it but left the details of how this goal communities. Of course, the level of effort has varied would be accomplished to local communities and widely among institutions. Certainly it has not cured depository institutions. The CRA counted on the the disinvestment that plagues many of our cities. But unique economic needs, and the give and take in the the CRA has, in my view, been very instrumental in local social and political scene, to define the specifics opening channels of communication between banks of the CRA program for each community. No one in and thrift institutions and previously underserved seg- Washington has yet been employed to decide how ments of their communities. New relationships have much or what type of CRA lending should be made in been established with community groups and individ- the individual communities you represent. To my way uals, new products have been designed and marketed, of thinking, that has been a considerable strength of and many thousands of credit applications have been the law. In any review of the CRA I believe that we taken from those who previously had no banking must acknowledge the value of this approach at the relationship. Most important, I am convinced that same time that we search for improvements. thousands of loans have been made throughout the United States that would not have been made but for the CRA. I have personally traveled to many commu- NEED FOR IMPROVEMENT nities and toured numerous projects that are now helping to stabilize and revitalize communities as a But all is not perfect, as you well know. The flexibility result of the CRA. In addition, numerous witnesses that I have referred to has come with a price. Bankers from consumer and community organizations at hear- and many community groups alike complain that the ings held recently have testified to the valuable con- standards are too vague. Our own examiners would be tributions the CRA has made. more comfortable as they go about their very difficult But exactly what is the overall level of that lending? job of assessing compliance if the rules of the game I do not know, and I suspect that no one does. The were more precise. Despite the ever-increasing efforts community groups who track lending agreements with of the agencies over the years to define more specifiinstitutions point to more than $30 billion in commit- cally the various levels of performance used in our ments for new credit. Many of these commitments rating system, we are constantly faced with questions cover several years and therefore extend into the about "how much is enough," what loans get the CRA future. Moreover, I know of no overall assessment of credit, and exactly what "weight" different categories the extent to which the commitments have been real- of loans will receive. Living with the current uncerized. Although formal commitments to community tainty makes bankers nervous, community groups groups get considerable media attention, I suspect that dissatisfied with their ability to hold institutions acmost CRA-related activity goes on outside the high countable, and everyone involved concerned about profile negotiated agreements that receive so much ensuring fair and consistent evaluations by the agenattention. My own belief is that the true impact of the cies. And believe me, no one would be happier than CRA has far exceeded any number derived strictly those in my agency, who are charged with the day-tofrom the formal commitments. If the figure is, for day enforcement of the law, if we were "going by the example, double the committed amount, it is a formi- book." dable amount indeed, and this fact should not be Common agreement also appears that too much overlooked as we evaluate the CRA's effectiveness. emphasis has been placed on paperwork and process Whatever the degree of new lending attributable to as opposed to performance. There is undoubtedly the CRA, it has not been accomplished without nu- some truth to this despite the agencies' efforts to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1129 ensure otherwise. But, it is important to keep in mind Working together is not new to us in this area. To that, in some sense, the focus on process is a natural promote uniformity in the approach to the CRA, the outgrowth of leaving the definition of an appropriate Board, along with the other banking and thrift regulalevel of performance up to the needs of the community tory agencies, has worked through the Federal Finanand the capacity of its institutions. Nevertheless, the cial Institutions Examination Council (FFIEC) for concern about focusing on paperwork rather than some time. For example, through the FFIEC the results is widespread enough to require careful evalu- agencies developed a common approach to the reguation. lation, interagency CRA examination procedures, a And, of course, there are other criticisms as well— uniform format for CRA public disclosures, and other that the CRA is "too much stick and too little carrot" regulatory material. We have a commitment to coopand that we must search for more incentives to en- eration and uniformity, and I am confident that tocourage good performance, that too many institutions gether we can meet the President's goals and that any receive satisfactory or better ratings, and that either revision of CRA will be adopted on a common basis. too much or too little emphasis is given to the CRA in Initially, our focus has been on ensuring wide public the context of application processing. Suffice it to say input. The agencies have held public CRA meetings that there are numerous areas of controversy in which across the country to solicit comments on how to improvements may be desirable. improve the CRA process. We have heard the views of Thus, we have what to me is a rather confusing more than 250 bankers, community groups, and small scene. On the one hand, we have an important national business owners, as well as members of the general program that appears to have stimulated considerable public. From these meetings, we have been told what lending and revitalization in low-income and minority is working with CRA, what is not working, and what communities. And it has done so in a period of great we need to consider to "fix" it. I can tell you that shortage of federal dollars and without the rules and many of the stories I have heard—from bankers, small red tape that bedevil so many government efforts. On business owners, and community groups—have been the other hand, I know of no other regulatory area in compelling. The stories, however, point up as many which there is such common agreement that all is not differences in perspective among the various groups as right and that some "reform" is necessary. My overall they do common concerns. sense, however, is that in focusing so much on the For example, although many may agree that it is imperfections of the CRA, we may have lost sight of important to find new incentives to encourage better its considerable benefits. CRA performance, there is great disagreement about what they might be. Very understandably, banks that have sought and achieved an "outstanding" rating REVIEW PROCESS would like to see this rewarded with a "safe harbor" from protests. Community groups, to put it mildly, do But surely we can do better. And, it was in response to not favor the idea. Although there is common concern widespread concern that the CRA can be improved about paperwork, there is a growing recognition that that the President issued his charge to the agencies to any movement toward more quantifiable standards rethink their administration of this law. In the Presi- may require more, not less, data, and this is not a dent's CRA reform request, he asked the agencies to happy thought for many. Likewise, concern about the address several specific areas. These include the fol- disproportionate burden on small institutions has lowing: caused some to suggest an exemption for small insti- • Developing new regulations and procedures that tutions. Others find this untenable. The idea of more replace paperwork and uncertainty with greater per- precision in the requirements has widespread support, formance, clarity, and objectivity but difficult and controversial issues arise when it • Developing a core of well-trained CRA examiners comes to defining what the specific numbers might be • Working together to promote consistency, and or even the process by which they might be set. even-handedness, to improve public CRA perfor- Moreover, there is broadbased concern that in atmance evaluations, to institute more effective sanc- tempting to be precise, we may fall into the credit tions against financial institutions with consistently allocation trap. In short, although there may be widepoor performance, and to develop more objective, spread agreement that the CRA requires some major performance-based CRA assessment standards that repairs, there is very little agreement about the approminimize the compliance burden on financial institu- priate fix. tions, while stimulating CRA performance. At this point, we are still analyzing the information As you are aware, we are presently working with the we have collected, and it would be premature for us to other agencies to carry out the President's initiative. offer any proposals. The Board, along with the other Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1130 Federal Reserve Bulletin • December 1993 agencies, will continue this process of assessing the pared with those in other communities. This too will various arguments and concerns. I expect that a pro- advance our knowledge of the problem and how to posal will be published for additional public comment help solve it. in the next few weeks. With regard to examinations, the Board supervises You have asked whether the statutory language will approximately 1,000 state member banks for complipermit the necessary reforms. There may or may not ance with fair lending laws. This supervision involves be a constructive role for legislation at some point, but consumer compliance examinations, consumer comit seems premature to make that judgment now. We plaint investigations, and community affairs efforts. will be in a much better position to provide meaningful The consumer compliance examinations are conthoughts on whether legislation is needed at a later ducted by examiners at the Reserve Banks who are date. specially trained in consumer affairs and civil rights examination techniques. The Board and each of the Reserve Banks also have staff members who deal with FAIR LENDING ENFORCEMENT consumer complaints. In addition, the System has a substantial community affairs program, many of Finally, you have asked for information on the steps whose activities help to advance fair lending. The that we have taken to ensure compliance with fair Board provides general guidance and oversight to lending laws. Reserve Banks in these areas. Initially, let me say that no single consumer compli- The Board first established a specialized consumer ance issue is of more concern to the Board, and me compliance examination program in 1977. Through it, personally, than assuring that the credit-granting pro- the twelve Reserve Banks conduct examinations of cess is absolutely free of unfair bias. state member banks to determine compliance with Fairness in assessing credit applications, without consumer protection legislation by using a group of regard to race, sex, or other prohibited bases, is specially trained examiners. The scope of these examabsolutely essential in our country. Let no one have inations specifically includes the Equal Credit Opporany misunderstanding on the point. Racial discrimina- tunity and Fair Housing Acts. From the beginning, the tion, no matter how subtle—and whether intended or examiners were instructed to place special emphasis not—cannot be tolerated. It robs the lending industry on violations involving potential discrimination of the and our economy of growth potential and harms both kind prohibited by those statutes. individuals and society. The Federal Reserve System's consumer compli- We have a coordinated approach to this issue at the ance examinations are scheduled at regular intervals Federal Reserve that focuses both narrowly on exam- and are comprehensive. Each state member bank is ination for compliance with fair lending laws and more examined on a regular basis. An average of two-thirds broadly at trying to ensure that credit is made widely of state member banks are examined each year. In available to low- and moderate-income areas of our general, examinations are scheduled every eighteen country—including those with substantial minority months for a bank with a satisfactory record. A limited populations. Our approach to fair lending issues is thus number of banks with exceptional records can be a comprehensive one that goes beyond examinations. examined every two years. Those banks with less than It also involves an aggressive program to investigate satisfactory records are to be examined every six consumer complaints, provide consumer and creditor months or every year, depending on the severity of education, and gain insight through research. Let me their problems. describe each segment briefly. The examination procedures focus primarily on In the research area, the study by the Federal comparing the treatment of members of a protected Reserve Bank of Boston is well known. In my view, class with other loan applicants. First, the bank's loan despite its shortcomings, that study has done more policies and procedures are reviewed. This is done by than any other single effort to advance our understand- reviewing bank documents, as well as interviewing ing—and increase our concern—about fair lending in loan personnel. During this phase, the examiner will the mortgage market. Other research pieces on Home seek to determine, among other things, the bank's Mortgage Disclosure Act (HMDA) data, household credit standards. After the standards have been idendebt, credit shopping practices, the secondary market, tified, the examiner will determine whether those and other related subjects have also added to our standards were, in fact, uniformly applied using a knowledge. Within the next few weeks we will be sample of actual loan applicants. Special note will be releasing a comprehensive report to the Congress taken of applications received from minorities, comparing the risks and returns of lending in low women, and others whom the laws were designed to income, minority, and distressed neighborhoods, com- protect. This means that the examiner is looking at the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1131 same information that the bank used to make its credit sort through vast quantities of data to focus attention decision, including credit history, income, and total on specific lending markets and draw comparisons debt burden. If those standards appear not to have between an individual HMDA reporter's performance been used, or not used consistently, this would be and that of all lenders in the area. With these capabildiscussed with lending personnel, and a more inten- ities, examiners can more readily determine whether a sive investigation would typically be undertaken. Fi- bank is effectively serving all segments of its market, nally, an overall analysis of the bank's treatment of including low- and moderate-income and minority applications from minorities, women, and others with neighborhoods. We have been holding HMDA training the characteristics described in the fair lending laws is sessions on how to use this system around the country conducted to determine whether there are any patterns for our examiners, as well as those from other agenor individual instances when such applicants were cies. treated less favorably than other loan applicants. The Federal Reserve has also developed the capa- Another regular part of the examination includes bility to map by computer the geographic location of a conversations with persons in the community who are bank's lending products, including mortgage loans. knowledgeable about local credit needs. The examin- This mapping includes demographic information for ers will routinely ask about public perceptions of the the bank's local community. We believe that this type availability of credit to minorities and low- and mod- of analysis and presentation will enhance our ability to erate-income persons. This information may suggest assess a bank's CRA performance in meeting the that a particular area of the bank needs additional credit needs of its local community, including minority scrutiny and may provide insights into how the bank is areas. It should also be helpful in evaluating a bank's serving the credit needs of its local community, par- geographic delineation of its local CRA service area to ticularly those protected by the antidiscrimination ensure that it does not exclude low- and moderatestatutes. Violations found through the techniques de- income neighborhoods. scribed above require correction by the institution, notification to the applicant, and referral to the Department of Justice in appropriate cases. CONSUMER COMPLAINT PROGRAM As you know, despite these efforts we have rarely found evidence that we can be sure proves racial The Federal Reserve's consumer complaint program is discrimination. Consequently, we have been con- an important element in our overall effort to enforce cerned about providing examiners with better tools to fair lending laws. The investigation procedures in this help them get the job done. Recently, the Federal regard provide special guidance with respect to com- Reserve System developed a computerized model for plaints involving loan discrimination. Such complaints using HMDA data in connection with the fair lending can prompt an on-site investigation by Reserve Bank portion of the examination. This model allows exam- personnel at the state member bank accused of disiners to match minority and nonminority pairs of crimination. We have a referral agreement with the applicants with similar credit characteristics, but dif- Department of Housing and Urban Development ferent loan outcomes, for a more extensive fair lending (HUD) for mortgage complaints, and we have referred review. Once the pairs are selected, examiners pull the several complaints to that agency for further investicredit files for the applicants to determine if discrimi- gation. Like our examinations area, we are devoting nation played a part in the credit-granting process. considerable attention to strengthening our complaint- Although a comparison of minority and majority ap- processing system by increasing oversight, tightening plicants has always been a part of the Federal Re- deadlines for investigation, assuring more personal serve's fair lending examination, we believe that this contact, and making the public more aware of our computerized selection process will enable examiners procedures. to focus their efforts and spend more time on the actual fair lending review of loan files. Besides this "micro" use of the HMDA data, the EDUCATIONAL EFFORTS Federal Reserve has developed, on behalf of the Federal Financial Institutions Examination Council We believe that education is an important part of our (FFIEC), a computerized system for analyzing the coordinated approach. We have distributed a brochure expanded data collected under the Home Mortgage to all the institutions we supervise entitled Home Disclosure Act. The system is extremely versatile and Mortgage Lending and Equal Treatment. The broallows the data to be segmented by demographic chure identifies and cautions lenders about lending characteristics such as race, gender, and income lev- standards and practices that may produce unintended els, or geographic boundaries. Examiners can now discriminatory effects. It focuses on race and includes Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1132 Federal Reserve Bulletin • December 1993 examples of subtle forms of discrimination, such as mental entities, businesses, and community groups to unduly conservative appraisal practices in minority develop community lending programs that help finance areas; property standards such as size and age, which affordable housing, small and minority business, and may exclude homes in minority and low-income areas; other revitalization projects. Overall the Reserve and unrealistically high minimum-loan amounts. More Bank's Community Affairs program sponsors or corecently, a comprehensive booklet was published by sponsors about a hundred programs a year involving the Federal Reserve Bank of Boston entitled Closing thousands of participants as a way to encourage eco- The Gap: A Guide To Equal Opportunity Lending. It nomic development and ensure fair lending. too has been widely circulated. It is another useful tool for lenders that suggests adjustments in institutional behavior to correct racially disparate loan practices CONCLUSION that may be occurring in spite of bank policies to the contrary. We have also published a brochure, entitled Our commitment to fair lending has been emphasized Home Mortgages: Understanding the Process and by Chairman Greenspan and the heads of each of the Your Right to Fair Lending, to inform consumers other federal financial institutions supervisory agenabout the mortgage application process and about their cies in a letter to every bank and thrift institution in the rights under fair lending and consumer protection country. That letter dated May 27,1993, expressed the laws. agencies' concern that some minority consumers and small business owners may be experiencing discriminatory treatment when trying to obtain credit. The COMMUNITY AFFAIRS PROGRAM letter put the institutions on notice of our very serious concern and urged financial institutions to aggressively The Board believes that the goal of ensuring fair undertake lending programs. Various suggestions access to credit can also be advanced by focusing on were provided on how institutions could help ensure positive actions that a lender may take to address such fair lending. concerns. Consequently, through its Community Af- In spite of these efforts, I am well aware of the fairs program, the Federal Reserve conducts outreach, concern about whether our enforcement—indeed our education, and technical assistance activities to help overall program—has been vigorous enough. I can financial institutions and the public understand and only assure you of our commitment to routing out address community development and reinvestment every instance of unfair treatment and helping to issues. We have increased resources devoted to Com- ensure more opportunities for all our citizens. The munity Affairs activities at the Reserve Banks—now actions we are taking to augment our traditional exstaffed with more than fifty people—to enable the amination techniques through new computer assisted Federal Reserve System to respond to the growing analysis should help us considerably. Moreover, our number of requests for information and assistance many efforts to encourage and instruct banks in ways from banks and others on the Community Reinvest- to broaden their lending to low- and moderate-income ment Act, fair lending, and community development borrowers should provide more open access. It is my topics. Efforts have been expanded to work with goal and it is the goal of the Federal Reserve System to financial institutions, banking associations, govern- ensure that all our citizens are being treated fairly. • Statement by Wayne D. Angell, Governor, Board of audit authority from the perspective of the Federal Governors of the Federal Reserve System, before the Reserve Bank of New York. Committee on Banking, Finance and Urban Affairs, At the outset, I would like to dispel the notion I have U.S. House of Representatives, October 27, 1993 frequently heard that the Federal Reserve is not subject to GAO audit. In 1978 the Federal Banking Agency Audit Act gave the GAO broad authority to I am pleased to have this opportunity to speak on the audit most of the operations of both the Federal authority of the General Accounting Office (GAO) to Reserve Board and the Federal Reserve Banks. Since audit Federal Reserve operations and the changes to then, the GAO has completed more than 100 reports that authority that would be made by H.R.28, "The on various aspects of System operations, as well as Federal Reserve System Accountability Act of 1993." numerous other reports that involved us less directly. President McDonough is addressing the scope of GAO At present, the GAO has roughly twenty-five audits of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1133 the Federal Reserve under way and maintains several in carrying out the FOMC's directive correlates diof its staff in residence at the Board and at selected rectly with the substance of the policy in place. Reserve Banks. Indeed, a comprehensive audit of these operations The GAO has free rein to audit the System, subject would likely require a comparison of the actual results to explicit exemptions for deliberations, decisions, or of the operations with intended results. actions on monetary policy matters, including dis- GAO scrutiny of policy deliberations, discussions, count window credit operations, reserves of member and actions could also impede the process of formubanks, securities credit, interest on deposits and open lating policy. A free discussion of alternative policies market operations; transactions made under the direc- and possible outcomes is essential to minimize the tion of the FOMC; transactions with, or for, foreign chance of policy errors. The prospect of GAO review central banks and governmental entities; and discus- of formative discussions, background documents, and sions or communications among or between members preliminary conclusions could have an adverse effect of the Board and officers and employees of the Federal on the free interchange and consensus building that Reserve System related to these matters and transac- leads to good policy. tions. By excluding these areas, the act attempts to Transactions made under the direction of the Fedbalance the need for public accountability of the eral Open Market Committee (FOMC) include foreign Federal Reserve through GAO audits against the need exchange operations. The efficacy of these operations to insulate the central bank's monetary policy func- is crucially dependent on confidentiality. Important tions from short-term political pressures and the need daily contacts and exchanges of information with to ensure that foreign central banks and governmental foreign monetary authorities are an integral part of entities can transact business in U.S. financial markets these operations. They now take place in a candid and through the Federal Reserve on a confidential basis. constructive atmosphere. The possibility of a GAO The precise line differentiating those specific opera- audit of our foreign exchange operations would reduce tions of the Federal Reserve and activities that are the willingness of foreign authorities to share informasubject to GAO audit under the Banking Agency Audit tion with us and would thereby reduce the effective- Act and those that are exempt from audit is difficult to ness and efficiency of our operations, which are fredraw in the abstract. Over the years since the passage quently coordinated with foreign authorities. This of the act, the Federal Reserve has worked with the caution also applies to the exemption for transactions GAO to define those limited areas that are not subject that the Federal Reserve carries out as agent for to audit on a case-by-case basis in the context of foreign entities; however, there the principal issue is individual audits. In those cases, the Federal Reserve one of sensitive proprietary information about foreign has worked with the GAO to further the GAO's audit governments, foreign central banks, and international objectives while honoring the statutory exemptions financial organizations. designed to ensure the independent conduct of mone- The benefits, if any, of broadening the GAO's autary policy and the confidentiality of foreign transac- thority into the areas of monetary policy and transactions. In the future, we will continue to work with the tions with foreign official entities would be small. With GAO to address its concerns consistent with the regard to purely financial audits, the Federal Reserve mandate of the act. Act already requires that the Board conduct an annual Expanding the GAO's audit authority over the Fed- financial examination of each Reserve Bank. The eral Reserve into the exempt areas would be contrary Federal Reserve places great importance on both the to the public interest. Such an expansion could ad- Reserve Banks' internal audit responsibilities and the versely affect Federal Reserve effectiveness in the Board's responsibilities for examination of Federal conduct of monetary policy. As the Banking Agency Reserve Banks, in part, because it recognizes that its Audit Act recognized, such a change could reduce the ability to police Federal Reserve Bank operations is central bank's insulation from day-to-day political critical to public and congressional confidence in the pressures. Even what appears to be a very limited Federal Reserve System. audit of the efficiency of monetary policy operations The process of conducting annual financial audits is could, in fact, turn into pressure for a change in reviewed by a public accounting firm to confirm that monetary policy itself. For example, the questions the methods and techniques being employed are effecposed to Comptroller Bowsher in connection with tive and that the program follows generally accepted these hearings as to whether the magnitude of our auditing standards applicable to the audit of Federal open market operations reflects unnecessary buying Reserve Banks. These examinations are compleand selling of government securities are monetary mented by extensive Board oversight and supervision policy questions, not efficiency questions. The number of Federal Reserve Bank activities, including Board of transactions that the Open Market Desk completes operations reviews of Reserve Bank effectiveness and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1134 Federal Reserve Bulletin • December 1993 efficiency, as well as by comprehensive audits con- Finally, and more broadly, the Congress has, in ducted by each Reserve Bank's independent internal effect, mandated its own review of monetary policy by audit function. Oversight and supervision of Federal requiring semiannual reports to the Congress on mon- Reserve Bank activities include review of Federal etary policy under the Full Employment and Balanced Reserve Bank budgets and expenditures as well as Growth Act of 1978 (also known as the Humphreypersonnel and operating policies. Hawkins Act) and by holding hearings on various The Board's annual financial examinations of Fed- monetary policy issues as they arise. In addition, there eral Reserve Banks, operations reviews, and its over- is a vast and continuously updated body of literature sight and supervision of Federal Reserve Bank activ- and expert evaluation of U.S. monetary policy. In this ities specifically include examinations, operations environment, the contribution that a GAO audit would reviews, and oversight of open market and foreign make to the active public discussion of the conduct of transactions. The annual financial examinations in- monetary policy is not likely to outweigh the disadclude review of all accounts for accuracy, compliance vantages of expanding GAO audit authority in this with internal controls, and confirmation that balances area. reflected on the books agree with the records of In sum, we believe that the Board's supervision account holders. Operations reviews for effectiveness and oversight of Federal Reserve Bank activities and and efficiency of open market and foreign operations the Board's own audit functions have served the are conducted by multidisciplinary teams, including public interest well, particularly in the area of confieconomists familiar with FOMC operations, and spe- dentiality of monetary policy information. In this cialists in data and physical security, automation, regard, you have asked about the security checks on communication, accounting, and secondary market personnel involved in the monetary policy process trading and settlement. These operations reviews also and incidents of so-called insider trading by Federal include the Federal Reserve Bank of New York's Reserve officials. Attendees at FOMC meetings are internal audit attentions to the open market account. now required to have "secret" or higher clearances, Further, a private accounting firm audits the and over the years, there have been only three Board's balance sheet, and the Board's Inspector known incidents in which monetary policy informa- General audits the effectiveness and efficiency of tion may have been used for private gain. In the first Board programs and operations under the Inspector instance, in October 1979, there were errors in the General Act of 1978 as amended. deposit data reported by a large New York commer- The Board has continually reviewed its procedures cial bank. These errors were technical or clerical and for examinations and oversight of Federal Reserve were not intentional on the part of the bank. The activities. For example, recently the Board has con- Federal Reserve's screening procedures flagged the tracted for independent private audits of two Federal data as possible errors, but the bank stated that the Reserve Banks (Kansas City and Cleveland) to pro- numbers were correct as reported. The data therevide an independent evaluation of the Reserve Banks' fore resulted in overstatements of the estimates of control environments and the Board's examination the money supply published by the Board. Subseprocedures and to determine the feasibility of substi- quent data submitted by the bank indicated that the tuting, from time to time, outside audits for financial deposit data were indeed incorrect; as a result the examinations by the Board's examiners. These audits bank revised its deposit data and the money supply have indicated that previous financial examinations of figures were revised downward correspondingly. At these Reserve Banks were at least as thorough as the the request of the House Committee on Banking, outside audits, that those Reserve Banks were well Finance and Urban Affairs, the Board conducted an controlled, and that financial controls may be regarded investigation to determine if any institution or indias satisfactory from an audit perspective. Indeed these vidual had improperly profited from the errors. audits have indicated that many policies are uniquely To ensure objectivity in the investigation, the Board applicable to Federal Reserve Banks and that in these engaged the services of a private law firm to conduct a areas the Board's examiners have a significant advan- complete inquiry and prepare a report. That firm, with tage in auditing for Reserve Bank compliance. the Board's concurrence, in turn, engaged a private The Board is strongly committed to ensuring that its accounting firm to review trading activity. The report examinations, both internal and external, oversight concluded that neither the bank that had made the and supervision of the Federal Reserve Banks, as well reporting error nor persons connected with it, the as its own internal audit function and external audits, Board, or the Federal Reserve Bank of New York had are as effective as possible and will continue to review improperly and knowingly profited from the erroneous these functions with an eye to ensuring their future estimates or revision of the erroneous money supply effectiveness. estimates. Nor did the report find that any other Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1135 institution or individual had improperly and knowingly ney's office contacted the Federal Reserve Bank of profited from that error. New York concerning a former director of that Re- Nevertheless the report did identify one transaction serve Bank. After further investigation by both the that gave rise to an appearance of a conflict of interest Reserve Bank and the U.S. Attorney's office, the U.S. in which an officer of the Federal Reserve Bank of Attorney's office brought a criminal proceeding New York who had knowledge of the impending against the former director. In 1989, the former direcrevision of the money supply data had purchased units tor pleaded guilty to charges of bank fraud based on of a municipal bond fund immediately after the revised the illegal disclosure of sensitive, and nonpublic infordata had become publicly available. That officer re- mation regarding changes in the discount rate and was signed from the Reserve Bank shortly thereafter. sentenced to a jail term, probation, and community In the second incident, in 1982, an ex-employee of service. Again, Board and Reserve Bank procedures the Board managed to gain telephonic access to con- were revised after this event to prevent a recurrence. fidential money supply data stored in the Board's We believe that the paucity and nature of the computer system shortly after the employee had left incidents that have occurred over the eighty-year the Board to work for a private firm. This access was history of the Federal Reserve System are strong identified quickly, and the matter was promptly re- evidence of the integrity of the monetary policy proferred to the Federal Bureau of Investigation. The cess of the Federal Reserve. Further, it is doubtful that individual ultimately pleaded guilty to one count of any of these incidents would have been prevented by a wire fraud and received one year's probation. Subse- broadened GAO audit authority. quently, additional security measures were imple- For these reasons and the reasons stated previously, mented to prevent a recurrence of similar data security we believe that enactment of the provisions of H.R.28 violations. that would expand the GAO's audit authority by In the third incident, in 1986, in connection with the removing the current exception for monetary policy U.S. Attorneys' investigation of allegations of securi- matters; transactions made under the direction of the ties fraud and tax evasion by former principals of a FOMC; and transactions with, or for, foreign official failed government securities dealer, the U.S. Attor- entities would be counter to the public interest. • Statement by William J. McDonough, President, Fed- can be taken to further ensure the effectiveness of eral Reserve Bank of New Yor/c, before the Committee GAO audits of the Bank, within the GAO's current on Banking, Finance and Urban Affairs, U.S. House authority. In my opinion, that authority provides sufof Representatives, October 27, 1993 ficient scope to address many of the concerns you have asked me to discuss today. I welcome the opportunity to appear before the com- I believe that the elimination of the current exempmittee today to provide my views on the provisions of tion would interfere with the Federal Reserve's ability H.R.28, the Federal Reserve System Accountability to formulate and execute an optimal monetary policy. Act of 1993, which relate to the audit of Reserve Banks It would introduce the unmistakable potential for by the Government Accounting Office. H.R.28 would political influence; every movement and nuance of eliminate the exemptions in the Federal Banking policy would then have to be examined in light of that Agency Audit Act for foreign central banks and gov- potential. At the core of my concern is the fact that the ernment transactions, monetary policy deliberations, process by which we implement monetary policy is decisions, and actions, and Federal Open Market inextricably entwined with the policy itself. For exam- Committee (FOMC) transactions. Governor Angell ple, questions regarding the volume of open market will be addressing the concerns of the Board of Gov- operations may appear on the surface to be questions ernors on this legislative proposal. I will focus on the of efficiency. In fact, they relate to the policy intent to implications of the proposal for the actions taken by avoid undue volatility in the markets. The idea that the the Federal Reserve Bank of New York in implement- process of executing open market operations may be ing FOMC decisions and carrying out activities for our audited without imposing judgments about the policy foreign accounts. itself is simply not realistic. I want to comment on the scope of the current Simply put, optimal monetary policy is achieved exemption and to make clear to the committee my only when the public and the markets perceive no appreciation and respect for the audit process. Also, I short-term political influence. This issue is not new, would like to take this opportunity to note steps that nor is it a new conclusion on my part. I have had Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1136 Federal Reserve Bulletin • December 1993 plenty of opportunity to consider the import of the as liaison to assist them in the orderly completion of exclusion of the GAO from auditing monetary policy their tasks. In addition, we take seriously their findings in my former role as manager of both the domestic and and are responsive to their suggestions for improveforeign open market accounts. I have no doubt that the ments. Although I do not want to wax too poetic and potential for damage to a credible and effective mon- imply that we love their result of each and every audit, etary policy would be very real if the exclusion were to I do want to make clear that we have a great apprecibe lifted. This potential for damage would clearly ation for the role of auditors. outweigh any possible benefit to the public from GAO The conduct of Bank personnel with responsibility audits of monetary policy operations. for monetary policy matters is subject to the Bank's I feel equally strongly about the impairment of our rules of conduct, stringent standards regarding outside policy implementation if the exclusion were to be lifted financial interests, and potential conflicts stemming on the foreign side. Foreign exchange intervention is from family and other personal relationships. The conducted not only in conjunction with the Treasury, GAO always has had full audit authority over Reserve through the Exchange Stabilization Fund, which is Banks' personnel policies and practices, disclosure exempt from GAO audit, but also frequently with or statements, and the like and, thus, has been able to on behalf of foreign central banks and monetary au- assure itself and the Congress of the ethical standards thorities. and practices of all our employees. We hold a very large amount—more than $300 We are not, however, resting on our laurels. There billion at present—of marketable U.S. government are always ways to enhance the effectiveness of opersecurities, representing dollar reserves of these official ations, and audits by GAO can contribute significantly foreign entities. I cannot presume to gauge the re- to that process. I plan to call Comptroller General sponse of all of these central bank governors and Bowsher from time to time to offer suggestions as to finance ministers, but I can tell you with absolute how the GAO might be even more useful to the Bank. certainty that some number of them, and perhaps a I would now like to respond to matters raised in large number, would question the appropriateness of Chairman Gonzalez's October 21 letter to me regardtheir reserve activity being scrutinized by the GAO ing our policy on meals and entertainment and our and the Congress. This would almost certainly be ethics officer. As I have noted, there is no limitation on damaging to the relationships that are so central to the GAO that prevents its looking at our meals and international monetary cooperation and, perhaps, to entertainment practices or policy. Moreover, we do the role of the dollar. Certainly, it would impair the not impart information on monetary policy or our ability of the U.S. monetary authorities to conduct foreign account relationships to any outsiders, at luntheir foreign exchange intervention policies on a coor- cheons or elsewhere. To the contrary, we use meetdinated basis with the same effectiveness and effi- ings with knowledgeable people to gain information ciency we enjoy today. about market conditions that is helpful in our mone- Having said that, I want to reiterate that I do not tary policy deliberations. have some sort of reflexive distaste for auditors or the The chairman asked a question regarding the cost of audit process. To the contrary, as someone who has meals at expensive restaurants hosted by regulated had managerial responsibility for large organizations in institutions. Because others paid for these approxiboth the public and private sectors, I have a keen mately two dozen meals that were identified as having appreciation for the role of auditors and the improve- occurred over a period of a year and a half, we do not ments they bring to the table in the form of operational have that cost information. We are however, very quality and effectiveness. sensitive to the appearances of such things, and our I view auditors as an important asset for manage- internal rules specifically caution against accepting ment. There is a long tradition at the Federal Reserve inappropriate entertainment, lavish meals, or frequent of recognizing the value of independent oversight. meals from a particular institution. Further, we con- Indeed, I believe we subject ourselves to an extraor- cluded that we do not have an adequate audit trail. dinarily rigorous series of performance and opera- Therefore, we are about to issue a policy requiring that tional appraisals. Within each Reserve Bank an inde- all business meals paid by regulated institutions or pendent audit function reports directly to the board of vendors be documented as to restaurant, purpose, and directors and performs comprehensive audits of all attendees, to provide an audit trail for us, the Board of aspects of that Bank's work. Governors, and the GAO going forward. At the New York Federal Reserve Bank, we have Finally, as the chairman noted, we recently named had a constructive and positive relationship with the an ethics officer. That does not mean that this role was GAO for almost fifteen years. We supply the GAO not being previously performed within the Bank. That permanent space in the Bank and have assigned staff function was fulfilled by the Bank's first vice presi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1137 dent, its general counsel, and the personnel officers. Bank's staff in their compliance with these rules. We We concluded that we would focus those responsibil- regard his efforts as a continuation and refinement of ities in a single individual, a senior vice president of the policies we have already put in place. As far as I the Bank. Since his appointment as ethics officer, he am concerned, GAO staff members have access to has responded to inquiries from members of the those policies and procedures, and I look forward to Bank's staff regarding ethics and conflict of interest receiving GAO's input on them. questions. He also has participated in redrafting our I appreciate this opportunity to participate in this rules of conduct, which should be concluded by year- hearing and look forward to answering any further end, and other documents that will be helpful to the questions the committee members may have. • Statement by Susan M. Phillips, Member, Board of interest rate derivatives did not emerge until the early Governors of the Federal Reserve System, before the 1980s, but today these instruments are available and Committee on Banking, Finance and Urban Affairs, actively used in all of the major financial centers in U.S. House of Representatives, October 28, 1993 North America, Europe, and Asia. Foreign exchange contracts are also actively traded over the counter and Thank you for this opportunity to present the views on exchanges in all the major financial centers, and of the Federal Reserve Board on safety and sound- commodity-linked and equity-linked derivatives are now widely available. ness issues associated with derivatives activities of banking organizations. The Board believes that these The Board believes that the development of new issues are important and is devoting substantial re- derivative products and the overall expansion of sources to improving understanding of derivatives derivatives activities have provided important and to developing appropriate public policies for public benefits. The primary economic function of these instruments. Today I shall begin by sharing derivatives is to transfer market risk, that is, the risk with you our perspective on the public benefits and of an adverse change in the price of an asset or a public policy concerns associated with the use of portfolio of assets. The importance of this function derivatives by banks and by others. Then I shall has increased, as competitive pressures have intensummarize the Board's strategy for addressing those sified in many economic sectors and interest rates, concerns and discuss the specific policy actions that exchange rates, and other asset prices have tended to be quite volatile. In this environment, many financial we have taken and are planning to take to implement and nonfinancial businesses, federally sponsored that strategy. agencies, and state and local governments have concluded that active management of their expoures to financial market risks is essential. They PUBLIC BENEFITS AND PUBLIC POLICY recognize that such risks, if left unmanaged, can CONCERNS jeopardize their ability to successfully perform their primary economic functions. Because derivatives, A derivative is a financial contract whose value is especially customized OTC derivatives, allow finanderived from the values of one or more underlying cial market risks to be adjusted more precisely and at assets or reference rates or indexes of asset values. lower cost than is possible with other financial instru- Derivatives include standardized contracts that are ments, many entities have come to rely on such traded on futures and securities exchanges and also contracts to achieve their risk management objeccustomized, privately negotiated contracts known as tives. over-the-counter (OTC) derivatives. Both types of derivatives have been in existence for hundreds of At the same time, the Board recognizes that derivyears. In the United States, commodity futures ex- atives are complex instruments and that, if not clearly changes date to the mid-nineteenth century, and for- understood and properly managed, their use can eign exchange forward contracts have been offered by threaten the safety and soundness of banks and other some U.S. banks since early this century. users. To date, few institutions have suffered signifi- Since around 1980, however, the scale, diversity, cant losses from derivatives activities, and no comand complexity of derivatives activities have increased mercial bank has failed as a result of such activities. greatly. On the futures exchanges, interest rate deriv- But the potential clearly exists for an individual bank atives, which were first introduced in the mid-1970s, or other institution to misuse derivatives in ways that today account for more than half of total activity. OTC create risk exposures that could materially weaken its Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1138 Federal Reserve Bulletin • December 1993 financial condition, either because of ignorance or derivatives activities of the institutions it regulates are because of an imprudent attitude toward risk. prudently managed and do not pose a threat to the The Board is also concerned that derivatives activ- deposit insurance fund. Along with other banking ities could have implications for the stability of the supervisors in the United States and abroad, the financial system. Whether derivatives have increased Federal Reserve has worked to incorporate such risks or decreased systemic risk is still a subject of ongoing into regulatory minimum capital requirements. At the review and analysis. Derivatives have fostered greater same time, however, the Board's policies have emphaawareness and understanding of risks and enhanced sized the responsibility of a bank's senior management methods of risk management. It is clear, however, that for ensuring that risks of the institution's derivatives derivatives activities have become a significant factor activities are effectively controlled and are limited to in the overall risk profiles of some banks and other levels that do not pose a threat of seriously impairing financial intermediaries. Although these institutions its capital. This emphasis reflects the Board's belief are still relatively few in number, they are among the that regulation cannot substitute for effective risk largest and most active in the financial and banking management, especially in the case of activities as markets. If one of them failed to manage its derivatives complex and diverse as derivatives activities. activities prudently, its financial condition could be Second, the Federal Reserve has strongly encourweakened, and concern about its financial health could aged private sector initiatives to foster sound risk jeopardize the smooth operation of financial markets. management of derivatives activities. Because banks More generally, derivatives have been a major factor are not the only large-scale users of derivatives, conin tightening linkages among markets and potentially cerns about risks to individual institutions and to the altering the transmission of economic and financial financial system must extend to other entities, some of shocks. If a firm that was very active in these markets which are not subject to prudential regulation by came under extreme financial stress, regardless of the banking supervisors or by other authorities. Private source of its difficulties, the unwinding of its outstand- sector initiatives offer the promise of strengthening ing derivatives positions and related positions in other risk management practices of both regulated and unfinancial markets could pose significant challenges regulated entities in the United States and abroad. both to the firm and to regulatory authorities seeking Third, the Board has worked with users of derivato contain the effects of its difficulties. tives, other regulators in the United States and abroad, It is also clear that weaknesses in the financial and legislators to strengthen the financial infrastrucinfrastructure for derivatives activities are a potential ture for derivatives activities. To date, these efforts source of systemic problems. In fact, the largest single have focused on legal enforceability issues. Further source of losses from derivatives activities to date efforts are needed, both on legal issues and on other resulted from a court decision that invalidated deriva- issues, notably accounting and financial reporting istives contracts with certain local authorities in the sues. United Kingdom. In the United States, before the passage of the Futures Trading Practices Act of 1992 and subsequent regulatory action by the Commodity BANK REGULATORY AND SUPERVISORY Futures Trading Commission (CFTC), the exchange- POLICIES trading restriction of the Commodity Exchange Act had raised serious concerns about the legal enforce- Before discussing the specific regulations and superviability of many OTC derivatives contracts. Of remain- sory policies and procedures that the Federal Reserve ing infrastructure problems, perhaps the most serious has implemented to address the risks of bank derivarelate to the legal enforceability of so-called netting tives activities, several points about the extent and agreements for derivatives contracts, which still is nature of such activities should be noted. Most imporquestionable in several important foreign jurisdictions. tant, very few banking organizations make use of derivatives. As of midyear, only 13 percent of U.S. bank holding companies and just 8 percent of state- A STRATEGY FOR ADDRESSING PUBLIC POLICY chartered member banks reported any positions in CONCERNS either exchange-traded or OTC derivative contracts. Moreover, for the vast majority even of these bank- The strategy that the Federal Reserve has pursued to ing organizations, exposures related to derivatives address concerns about the risks associated with de- activities do not appear significant relative to their rivatives activities has three basic elements. First, the exposures from their other activities or relative to their Board has used its banking supervisory authority to capital. In fact, most of these institutions appear to use attempt to ensure that the risks associated with the derivatives solely or at least primarily for hedging, that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1139 is, to reduce the interest rate risks and other market Committee to revise the Basle Accord. The revisions risks associated with their traditional portfolios of would recognize reductions in credit risk from use of loans, securities, and deposits. The use of derivatives, legally enforceable netting arrangements for derivaespecially OTC derivatives, by these institutions does tives contracts and would incorporate measures of create credit exposures to counterparties. Analysis of market risks on foreign exchange and traded debt and reported data indicates, however, that these credit equity positions, including derivatives positions. Imexposures tend to be quite small relative to credit plementation of the netting proposal would provide exposures from traditional activities. incentives for wider use of netting agreements in legal By contrast, for at most a dozen or so very large jurisdictions in which concerns about enforceability banks and bank holding companies, nearly all of which have been addressed; it also would encourage efforts have their headquarters in New York or Chicago, to reduce legal uncertainty in the remaining jurisdicderivatives activities have become a significant com- tions, through legislation if necessary. With regard to ponent of their overall risk profile. Like the other market risk, the treatment of derivatives is an integral banks, these banks use derivatives to hedge market component of the proposal. Market risk would be risks associated with more traditional activities, but by assessed on a portfolio basis, taking into account the far the largest share of their activity relates to their cash flows associated with both derivatives and the role as "dealers" in OTC derivatives. These banks underlying instruments. compete with other large financial institutions in the The incorporation of risks associated with deriva- United States and abroad to meet demands from a tives in risk-based capital requirements has required wide range of end users for customized derivatives banking regulators to set out rather complex and contracts to achieve specific risk management objec- detailed rules. Nonetheless, the rules arguably do not tives. They also use derivatives (both exchange-traded fully capture the complexity and diversity of the risks and OTC) as vehicles for proprietary trading, that is, involved. In particular, the proposed treatment of trading designed to profit from movements in absolute market risks on options positions is crude and may or relative levels of interest rates, foreign exchange need to be revised in light of public comments and rates, or other asset prices. Internal bank data gath- further analysis. More elaborate rules could be develered in the examination process suggest that the de- oped, but the added complexity would be burdensome rivatives activities of these dealer banks have been to banks and still might not fully capture the risks of quite profitable and no serious losses have been in- complex portfolios. These difficulties underscore a curred. Nonetheless, the magnitude and complexity of point I made earlier—regulation simply cannot substithe risks these banks manage quite naturally have been tute for effective risk management, especially managea focus of concern for the Federal Reserve and other ment of such complex activities. One potential solubanking supervisors. tion to these difficulties is to allow banks to use their own internal models to compute capital requirements A key element of the Board's efforts to strengthen for market risk, subject to examiner review of the regulatory and supervisory policies relating to derivamodels and in accordance with parameters set by tives activities has been the incorporation of measures regulators. Indeed, the Basle supervisors have reof credit risks, market risks, and interest rate risks quested comment on the merits of such an approach to associated with these activities into risk-based capital assessing market risks on complex options portfolios requirements. Risk-based capital requirements for and on foreign exchange positions. Likewise, the credit exposures on OTC derivative contracts were Federal Reserve and other U.S. bank regulators have part of the original Basle Accord that was published in proposed the use of internal models, subject to exam- 1989. These requirements provide a methodology for iner review, as a means of determining capital requiretranslating market values and notional amounts of ments for interest rate risk. derivatives contracts into amounts that are comparable to credit exposures on balance sheet assets. It is The on-site examination and evaluation of internal important to note that these "credit equivalent risk management models, systems, and controls are amounts," which include both the current exposure to already the most important elements of our superviloss from default of a counterparty and an estimate of sion and regulation of derivatives activities. Examinpotential future increases in exposure, are a very small ers assess the risk management systems and internal fraction of the notional values. Nonetheless, for a few controls in the banking organization's core trading and of the largest U.S. bank holding companies these derivatives activities and devote special attention to credit equivalent amounts equal as much as 20 percent new products and new approaches to risk management to 35 percent of their balance sheet assets. and control. Accordingly, the Federal Reserve has made the continuous updating and strengthening of At the end of April, the Board made available for policies and procedures for on-site examination of public comment proposals by the Basle Supervisors Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1140 Federal Reserve Bulletin • December 1993 derivatives activities a top priority. These efforts have porting requirements may be appropriate for U.S. built on our many years of experience supervising banks whose derivatives activities are a significant foreign exchange derivatives and on experience with element in their overall risk profile and profitability. supervising merchant bank subsidiaries in London, The Board believes that the Interagency Task Force which were among the first entities to begin actively on Derivatives, which has recently been formed by trading OTC interest rate derivatives in the mid-1980s. banking regulators, should focus on assisting other In fact, our first attempt to formalize examination existing interagency groups in resolving these accountobjectives and procedures for derivatives activities ing and reporting issues. was contained in a Merchant and Investment Bank Examination Manual, which was field tested in 1987 and published in 1988. ENCOURAGEMENT AND SUPPORT FOR Just recently, Federal Reserve staff members, in- PRIVATE-SECTOR INITIATIVES cluding examiners from the Federal Reserve Bank of New York who have considerable experience with The Board believes that concerns about risks to indibank derivatives activities, have completed an exten- vidual institutions and systemic risks cannot be fully sive effort to consolidate and enhance examination addressed unless actions by regulators are compleprocedures for derivatives activities and trading activ- mented by private efforts to promote sound risk manities generally. The result is a new Trading Activities agement. Users of derivatives are a broad and diverse Examination Manual, which provides examiners with group. Of the leading derivatives dealers, only a procedures for evaluating a firm's organizational struc- handful are U.S. banking organizations. Other leading ture, front office and back office operations and sys- dealers in these highly competitive markets include tems, and its approaches to measuring and managing some U.S. securities firms and insurance companies market, credit, and liquidity risks associated with and many of the leading banks and securities firms in derivatives. Examiners in each of the Reserve Banks Canada, France, Germany, Japan, Switzerland, the have begun field testing this new manual. When the United Kingdom, and other countries. Major end testing is complete, the Board will review the pro- users include a variety of regulated and unregulated posed manual and make revisions where necessary. entities in the United States and many other countries. Of course, examiners need to be trained to make Accordingly, the Board has encouraged and supeffective use of these new materials. As with other ported private sector initiatives to address risks in banking activities, examiner expertise in derivatives derivatives activities. In particular, the Board believes activities is being developed through an apprenticeship that the Global Derivatives Study, which was pubprogram that combines various types of formal educa- lished recently by the Group of Thirty, holds considtion programs with on-the-job training under the su- erable promise for strengthening the risk management pervision of senior examiners. The Federal Reserve practices of a wide range of derivatives dealers and and the other bank regulatory agencies have been end users. The study is a complete and lucid source of working for some time to enhance the coverage of information on the nature of derivatives activities and derivatives activities in the core examination curricu- the types of risks that such activities entail. Potentially lum and have offered a variety of specialized courses, an even more important contribution of the study is conferences, and seminars on derivatives issues. The the practical guidance it provides on risk management. Federal Reserve is also making special efforts to This potential may not be realized, however, unless ensure a sharing of expertise in examining derivatives concerted efforts are made to ensure implementation activities between Federal Reserve Districts in which of the recommended practices. A survey conducted as this activity is widespread and those in which it is just part of the study revealed that significant numbers of developing. dealers and end users have not yet implemented the Looking ahead, the Board believes that accounting recommended practices. Moreover, implementation of and financial reporting standards for bank derivatives some of the recommendations is not straightforward activities will require further attention from U.S. and and may be quite costly. Partly in response to conforeign regulators. The accounting profession in the cerns that Board members and other regulators ex- United States has not yet developed consistent ac- pressed about prospects for implementation, the Intercounting principles for derivatives activities, and there national Swaps and Derivatives Association (ISDA) is a diversity of accounting practice among major U.S. recently announced a set of new initiatives to foster banks. With respect to financial reporting of deriva- adoption of the report's recommendations by derivatives activities, U.S. banks already report more infor- tives users. These initiatives include a follow-up surmation than most foreign banks have been required or vey of practices, conferences, and workshops, and have chosen to divulge. Nonetheless, expanded re- special efforts to reach end users through their trade Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 1141 associations. The Board believes that further efforts of The Federal Reserve also has worked with the this kind, whether by the Group of Thirty, ISDA, or Commodity Futures Trading Commission and the other groups, are highly desirable. Congress to eliminate the threat that OTC derivatives contracts could be deemed unenforceable off-exchange futures contracts, an event that, were it to have EFFORTS TO STRENGTHEN THE occurred, clearly could have caused systemic prob- INFRASTRUCTURE FOR DERIVATIVES ACTIVITIES lems. The Futures Trading Practices Act of 1992 provided the CFTC with explicit authority to exempt The Board has worked with central banks in other OTC derivatives from most provisions of the Comcountries to develop a clearer understanding of the modity Exchange Act, including the exchange trading implications of derivatives activities for systemic risk. restriction that had posed the threat. When the CFTC These efforts have culminated in publication by the moved promptly to utilize the new authority to elimi- Bank for International Settlements of several reports. nate the threat to OTC derivatives, the Board sup- In particular, a working group chaired by a Board staff ported its action. member prepared a Report on Recent Developments in As I have indicated in discussing bank supervisory International Interbank Relations, which provides per- issues, one area of the infrastructure that needs immehaps the most complete discussion of the systemic risk diate attention is the development of consistent acissues. This report emphasized not only the importance counting and financial reporting standards for derivaof sound risk management practices at individual insti- tives. The Federal Reserve and other banking tutions but also the need to strengthen the legal and regulatory agencies plan to press ahead in developing institutional infrastructure for derivatives activities. appropriate standards for U.S. banking organizations. As I have noted, in the United States, legislators, But, clearly it would be preferable for the Financial regulatory authorities, and derivatives users already Accounting Standards Board (FASB) to develop and have taken a series of steps to ensure the legal enforce- implement standards that would apply to all U.S. ability of netting agreements for derivatives. The firms. The Working Paper of the Accounting and Board believes that the enforceability of such con- Reporting Subcommittee, which was included in the tracts is critical from a systemic risk perspective. If a Group of Thirty's Global Derivatives Study, discussed counterparty measures its credit exposure on a net some promising approaches to these issues that debasis but the netting agreement is not enforceable, the serve further consideration by banking regulators and by FASB. The FASB and the banking regulators have true exposure is the gross exposure. The counterparty been discussing these issues but need to intensify thus could face losses and liquidity pressures far larger discussions with each other and with dealers and end than expected and, perhaps, larger than could readily users of derivatives. Ultimately, it will be important to be absorbed. work toward international harmonization of account- The latest effort to address enforceability concerns ing and reporting standards for both regulated and was a far-reaching provision of the FDIC Improveunregulated entities. ment Act. This provision validated under U.S. law all netting contracts between and among depository institutions, securities brokers or dealers, and futures commission merchants. Furthermore, it authorized CONCLUSION the Federal Reserve Board to broaden the coverage to other financial institutions if it determined that doing so was appropriate to promote market efficiency or to In conclusion, the Board believes that it has developed reduce systemic risk. In early May, the Board issued a a sound and appropriate strategy for addressing public proposed rule that would broaden the definition of policy concerns about potential risks from derivatives financial institution to include all legal entities that are activities. The Federal Reserve and other banking large-scale dealers in the OTC derivatives markets. supervisors have made significant progress in strength- Implementation of this proposal would eliminate un- ening policies relating to bank derivatives activities certainty about the legal enforceability of netting and have the authority necessary to address such agreements between certain affiliates of securities issues as accounting and financial reporting. With firms and insurance companies that are active dealers respect to other users of derivatives, at this time the in the OTC derivatives market and banks and other Board believes that official encouragement of private entities that already meet the statutory definition of sector initiatives is the most effective way of addressfinancial institution. The Board is currently consider- ing public policy concerns about risks to individual ing public comments on the proposal and plans to take institutions and systemic risks. Nonetheless, the final action early next year. Board continues to analyze these issues and plans to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1142 Federal Reserve Bulletin • December 1993 monitor carefully the progress of the private sector and supervisory programs related to derivatives activinitiatives and to consider carefully the results of the ities of banking institutions will be reviewed frequently study on OTC derivatives regulation that the CFTC as these instruments evolve and as banks' use of them just recently completed. At the same time, regulatory develops further. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1143 Announcements ISSUANCE OF WARNING ON THE USE OF broker-dealers. There are two additions to and four QUESTIONABLE FINANCIAL INSTRUMENTS deletions from the Foreign List, which now contains 299 foreign equity securities. Federal regulators issued a warning on October 21, The changes that have been made to the revised 1993, to financial institutions on the increased use OTC List, which now contains 3,553 OTC stocks, of questionable instruments in complex and possi- are as follows: bly illegal schemes aimed at defrauding borrowers and investors as well as banks. • Two hundred twelve stocks have been The questionable instruments are known by such included for the first time, 165 under National names as "prime bank notes," "prime bank guaran- Market System (NMS) designation. tees," and "prime bank letters of credit." • Eighteen stocks previously on the list have Staff members of the bank and thrift regulatory been removed for substantially failing to meet the agencies are unaware of the legitimate use of any requirements for continued listing. financial instrument known by these names and • Twenty-nine stocks have been removed for cautioned financial institutions to be aware of the reasons such as listing on a national securities potential dangers associated with any transactions exchange or involvement in an acquisition. using this type of instrument. The OTC List is published by the Board for the AVAILABILITY OF REVISED LISTS information of lenders and the general public. It OF OTC MARGIN STOCKS AND includes all over-the-counter securities designated OF FOREIGN MARGIN STOCKS by the Board pursuant to its established criteria as well as all OTC stocks designated as NMS securi- The Federal Reserve Board published on Octo- ties for which transaction reports are required to be ber 22, 1993, a revised list of over-the-counter made pursuant to an effective transaction reporting (OTC) stocks that are subject to its margin regula- plan. Additional OTC securities may be designated tions. Also published was the List of Foreign Mar- as NMS securities in the interim between the gin Stocks (Foreign List) for foreign equity securi- Board's quarterly publications and will be immedities that meet the criteria in Regulation T (Credit ately marginable. The next publication of the by Brokers and Dealers). Board's list is scheduled for January 1994. The lists were effective November 8, 1993, and Besides NMS-designated securities, the Board supersede the previous lists that were effective will continue to monitor the market activity of August 9,1993. other OTC stocks to determine which stocks meet The Foreign List specifies those foreign equity the requirements for inclusion and continued inclusecurities that are eligible for margin treatment at sion on the OTC List. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1145 Legal Developments FINAL RULE—AMENDMENTS TO REGULATIONS Fabri-Centers of America, Inc.: 6-lA% convertible G, T, U AND X subordinated debentures F.F.O. Financial Group, Inc.: $.10 par common The Board of Governors is amending 12 C.F.R. Parts 207, 220, 221 and 224, its Regulations G, T, U and X Genetics Institute Inc.: $4.00 convertible exchange- (Securities Credit Transactions; List of Marginable able preferred OTC Stocks; List of Foreign Margin Stocks). The List of Marginable OTC Stocks (OTC List) is composed of NHD Stores, Inc.: $.10 par common stocks traded over-the-counter (OTC) in the United States that have been determined by the Board of Perceptronics, Inc.: $.001 par common Governors of the Federal Reserve System to be sub- Price/Stern/Sloan, Inc.: $.10 par common ject to the margin requirements under certain Federal Reserve regulations. The List of Foreign Margin Sahara Resorts: $.20 par common Stocks (Foreign List) is composed of foreign equity Sciclone Pharmaceuticals Inc.: Warrants (expire securities that have met the Board's eligibility criteria 03-16-97) under Regulation T. The OTC List and the Foreign List are published four times a year by the Board. This Sierra Real Estate Equity Trust '84: No par common documents sets forth additions to and deletions from the previous OTC List and the Foreign List. United Coasts Corporation: $.01 par common Effective November 8, 1993, accordingly, pursuant to the authority of sections 7 and 23 of the Securities Warehouse Club, Inc.: Warrants (expire 11-13-94) Exchange Act of 1934, as amended (15 U.S.C. 78g and Stocks Removed for Listing on a National 78w), and in accordance with 12 C.F.R. 207.2(k) and Securities Exchange or Being Involved in an 207.6 (Regulation G), 12 C.F.R. 220.2(u) and 220.17 Acquisition (Regulation T), and 12 C.F.R. 221.2(j) and 221.7 (Regulation U), there is set forth below a listing of deletions American National Petroleum Company: $.01 par from and additions to the OTC List and the Foreign common List. ATKM Metals Center Inc.: No par common Aztar Corporation: $.01 par common Deletions from the List of Marginable OTC Stocks Ballard Medical Products: $.10 par common Stocks Removed for Failing Continued Listing Centennial Savings Bank, FSB: $1.00 par common Requirements Columbia Hospital Corporation: $.01 par common Commerce Banc Corporation: $1.25 par common All American Semiconductor, Inc.: Class A, Warrants Commonwealth Bancshares Corp.: $3.50 par common (expire 06-18-97) Costar Corporation: $.10 par common American City Business Journals, Inc.: 6% convertible debentures Crestar Financial Corporation: $5.00 par common American Health Services Corp.: $.03 par common Cybertek Corporation: $.01 par common Assix International, Inc.: $.001 par common Dahlberg, Inc.: $.10 par common Bruno's Inc.: 6.5% convertible subordinated debentures Enclean, Inc.: $.10 par common BTR Realty Inc.: $.01 par common Equitable of Iowa Companies: No par common Cimflex Tecknowledge Corporation: $.01 par common Franklin First Financial Corp.: $.01 par common Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1146 Federal Reserve Bulletin • December 1993 H D R Power Systems Inc.: $.01 par common Cairn Energy USA, Inc.: $.01 par common Home Intensive Care Inc.: $.01 par common Capital Gaming International, Inc.: No par common Carolina First Corporation: Series 1993, 7.50% non- ICF Kaiser International Inc.: $.01 par common cumulative convertible preferred Casino & Credit Services, Inc.: $.001 par common; La Petite Academy, Inc.: $.10 par common Warrants (expire 08-10-98) Casino Resource Corporation: $.01 par common; National Community Banks, Inc.: $2.00 par common; Class A, Warrants (expire 09-15-96) CB Bancorp, Inc. (Indiana): $.01 par common Series B, $2.00 par cumulative convertible preferred Cencall Communications Corporation: $.001 par com- Nay lor Industries, Inc.: $.01 par common mon Perception Technology Corporation: $.10 par common Central Garden & Pet Company: $.01 par common Pioneer Bancorp, Inc.: $1.00 par common Central Virginia Bankshares, Inc.: $2.50 par common Pioneer Fed Bancorp, Inc.: $.01 par common CFI Proservices, Inc.: No par common Preston Corporation: $1.00 par common Checkmate Electronics, Inc.: $.01 par common Churchill Downs Incorporated: No par common Protective List Corporation: $.50 par common Cobancorp, Inc. (Ohio): No par common Cobra Gulf Incorporated: $.001 par common USA Waste Services, Inc.: $.01 par common Commander Aircraft Company: $.50 par common Commercial Bankshares Inc. (Florida): $.08 par com- Vari-Care Inc.: $.01 par common mon Village Financial Services Ltd.: $.01 par common Community First Bank (Florida): $2.00 par common Complink, Ltd.: $.01 par common Additions to the List of Marginable OTC Computer Concepts Corp.: $.0001 par common Stocks Comstock Bank (Nevada): $.50 par common Conductus, Inc.: $.0001 par common A Pea in the Pod, Inc.: $.01 par common Cornerstone Imagings, Inc.: $.01 par common A+ Communications, Inc.: $.01 par common CSB Financial Corporation (Virginia): $.01 par com- Actel Corporation: $.001 par common mon Aetrium Incorporated: $.001 par common Cygne Designs, Inc.: $.01 par common Air Methods Corporation: $.06 par common Cyrix Corp.: $.004 par common Allied Holdings Inc.: No par common American Oilfield Divers, Inc.: No par common Dataware Technologies, Inc.: $.01 par common Antec Corporation: $.01 par common Davco Restaurants, Inc.: $.001 par common APS Holding Corporation: Class A, $.01 par common Diasonics Ultrasound, Inc.: $.01 par common Aramed, Inc.: $.01 par common Discovery Zone Inc.: Liquid Yield Option Notes due Arbor Health Care Company: $.03 par common 10-14-2013 Arethusa (Off-Shore) Limited: $.10 par common Dual Drilling Company: $.01 par common Arrow Transportation Company: No par common Asyst Technologies Inc.: No par common Elek-Tek, Inc.: $.01 par common Atchison Casting Corporation: $.01 par common Envirofil Inc.: $.001 par common Atlantic Coast Airlines, Inc.: $.02 par common EP Technologies, Inc.: $.01 par common Equivest Finance, Inc.: $.05 par common Baker, J., Inc.: 1% convertible subordinated deben- EV Environmental, Inc.: $.01 par common tures due 2002 Evans Systems, Inc.: $.01 par common Bank of Nashville, The: $6.00 par common Excel Technology, Inc.: Class B, Warrants (expire Benton Oil & Gas Company: $.01 par common 02-08-98) Best Power Technology, Incorporated: $.01 par com- Executone Information Systems, Inc.: Series A, mon preferred Big Rock Brewery Ltd.: No par common EZ Communications, Inc.: Class A, $.01 par common Billy Blues Food Corporation: $.05 par common Biosafety Systems, Inc.: $.01 par common FCB Financial Corporation: $.01 par common Broadcasting Partners Inc.: Class A, $.01 par common FFW Corporation: $.01 par common Builders Transport, Incorporated: 8% convertible de- First Colonial Group, Inc. (Pennsylvania): $5.00 par bentures due 2005 common Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1147 First Federal Savings and Loan (Ohio): $.01 par com- Landry's Seafood Restaurants, Inc.: $.01 par common mon Las Began Entertainment Network, Inc.: $.001 par First Midwest Financial, Inc.: $.01 par common common First Palm Beach Bancorp, Inc. (Florida): $.01 par Laurel Bancorp, Inc. (Maryland): $.01 par common common LCI International, Inc.: 5% cumulative convertible First Southeast Financial Corporation: $.01 par com- exchangeable preferred mon Leader Financial Corporation: $1.00 par common Founders Financial Corporation (Florida): $1.00 par Level One Communications Incorporated: No par common common Futuremedia Public Limited Company: American De- Lidak Pharmaceuticals: Class A, No par common; positary Receipts; Warrants (expire 08-19-96) Class B, Warrants (expire 05-08-95); Class C, Warrants (expire 05-26-95) Gartner Group Inc.: Class A, $.001 par common Life Medical Sciences, Inc.: $.01 par common General Atlantic Resources, Inc.: $.01 par common Live Entertainment Inc.: Series B, No par cumulative Gensia, Inc.: Warrants (expire 12-31-96) preferred Govett & Company Limited: American Depositary Loewenstein Furniture Group, Inc.: $.01 par common Receipts Great American Management and Investment, Inc.: M-Systems Flash Disk Pioneers Ltd.: Ordinary $.01 par common Shares, NIS $.001 Great Central Mines, N.L.: American Depository Re- Madge, N.V.: lg par common ceipts Magnetech Corporation: $.000025 par ocmmon Great Wall Electronic International Ltd.: American Manugistics Group, Inc.: $.002 par common Depositary Receipts Maxim Group, Inc., The: $.001 par common; War- Greenfield Industries, Inc.: $.01 par common rants (expire 09-30-98) Grow Biz International, Inc.: No par common MDL Information Systems, Inc.: $.01 par common GTE California, Inc.: 4.5% 1956 cumulative preferred Metrocall, Inc.: $.01 par common Micro Component Technology Inc.: $.01 par common Hariston Corporation: No par common Microprobe Corporation: $.001 par common; War- Haven Bancorp Inc. (New York): $.01 par common rants (expire 09-28-98) Hollinger, Inc.: No par common Mid Ocean Limited: Class A, $.20 par ordinary shares Hollywood Entertainment Corporation: No par com- Milgray Electronics, Inc.: $.25 par common mon Momentum Corporation: $1.00 par common Home State Holdings, Inc.: $.01 par common Monaco Coach Corporation: $.01 par common Hometown Buffet, Inc.: $.01 par common Monarch Casino & Resort, Inc.: $.01 par common Morgan Group, Inc., The: Class A, $.015 par common Image Industries, Inc.: $.01 par common Mountain Parks Financial Corporation: $.001 par com- Inbrand Corporation: $.10 par common mon Independence Bancorp, Inc. (New Jersey): $1.00 par MRS Technology, Inc.: $.01 par common preferred Innodata Corporation: Warrants (expire 08-09-97) National Gypsum Company: $.01 par common; War- INVG Mortgage Securities Corp.: $.01 par common rants (expire 07-01-2000) Invitro International: Warrants (expire 05-16-96) National Picture & Frame Company: $.01 par common IVI Publishing Inc.: $.01 par common National R. V. Holdings Inc.: $.01 par common Johnstown America Industries Inc.: $.01 par common National Record Mart, Inc.: $.01 par common Netmanage, Inc.: $.01 par common K-Tel International, Inc.: $.01 par common Network Solutions, Inc.: $.10 par common Kenetech Corporation: $.0001 par common Neurex Corporation: $.01 par common Kentucky Electric Steel Inc.: $.01 par common North American Savings Bank (Missouri): $1.00 par Key Technology, Inc.: No par common common Kurzweil Applied Intelligence, Inc.: $.01 par common North American Watch Corporation: $.01 par common Lady Luck Gaming Corporation: $.001 par common North Coast Energy, Inc.: Series B, $.01 par cumula- Lam Research Corporation: 6% convertible subordi- tive preferred nated debentures due 2003 NSD Bancorp, Inc.: $1.00 par common Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1148 Federal Reserve Bulletin • December 1993 Octus, Inc.: No par common Suburban Bancorporation, Inc. (Ohio): $.01 par com- OHSL Financial Corp.: $.01 par common mon Old Lyme Holding Corporation: $.01 par common Sudbury, Inc.: $.01 par common Omega Environmental, Inc.: $.0025 par common Summa Four, Inc.: $.01 par common Omni Insurance Group, Inc.: $.01 par common Oroamerica, Inc.: $.001 par common Taro-Vit Industries Ltd.: Ordinary shares (NIS .0001 par common) Pairgain Technologies, Inc.: $.001 par common Thomas Group, Inc.: $.01 par common Panhandle Royalty Company: Class A, $.10 par com- Tinsley Laboratores, Inc.: No par common mon Triangle Pacific Corporation: $.01 par common Park View Federal Savings Bank (Ohio): $.01 par common Ultratech Stepper, Inc.: $.001 par common Performance Food Group Company: $.01 par common Uniflex, Inc.: $.10 par common Petsmart, Inc.: $.0001 par common Union Bankshares Corporation: $5.00 par common Philadelphia Consolidated Holding Company : No par United International Holdings, Inc.: Class A, $.01 par common common Phillips & Jacobs, Incorporated: $.01 par common Urethane Technologies, Inc.: $.01 par common Preferred Entertainment, Inc.: $.01 par common Price Company, The: Convertible subordinated de- Vaalco Energy, Inc.: $.10 par common bentures due 2012 Valley Fashions Corporation: Class A, $.01 par com- Price Reit, Inc., The: Series B, $.01 par common mon Valuevision International, Inc.: $.01 par ocmmon Quickresponse Services, Inc.: No par common Victoria Financial Corporation: $.01 par common Redman Industries, Inc.: $.01 par common Washington Mutual Savings Bank (Washington): Renal Treatment Centers, Inc.: $.01 par common Series E, 7.6% No par non-cumulative perpetual Revenue Properties Company Limited: No par compreferred mon Wellcare Management Group, Inc., The: $.01 par RFS Hotel Investors, Inc.: $.01 par common common RHNB Corporation: $2.50 par common Wonderware Corporation: $.001 par common Rimage Corporation: $.01 par common River Oaks Furnitures, Inc.: $.01 par common Royal Grip, Inc.: $.001 par common Zale Corporation: $.01 par common; Class A, War- Rural/Metro Corporation: $.01 par common rants (expire 07-29-98) Zonagen, Inc.: $.001 par common Schuler Homes, Inc.: 6-1/2% convertible subordinated debentures due 2003 Scientific Games Holding Corporation: $.001 par com- Additions to the List of Foreign Margin Stocks mon Servicios Financieros Quadrum, S.A.: American De- Canadian Natural Resources Ltd.: No par common positary Receipts SFX Broadcasting, Inc.: Class A, $.01 par common Nippon Paper Industries Co., Ltd.: ¥50 par common Shuffle Master, Inc.: $.01 par common Si Diamond Technology, Inc.: $.001 par common Simmons Outdoor Corporation: $.01 par common Deletions from the List of Foreign Margin Speizman Industries, Inc.: $.10 par common Stocks SPSS, Inc.: $.01 par common Stant Corporation: $.01 par common Jujo Paper Company Ltd.: ¥50 par common Starcraft Automotive Corporation: No par common Starsight Telecast, Inc.: No par common Midland Bank PLC: Ordinary shares, par value 100 p Statesman Group, Inc., The: 6-1/4% convertible subordinated debentures due 2003 Rank Hovis McDougall PLC: Common, par value 25 p Steck-Vaughn Publishing Corporation: $.01 par common Sanyo-Kokusaku Pulp Co., Ltd.: ¥50 par common Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1149 FINAL RULE—AMENDMENT TO RULES tion"), and thereby indirectly acquire Orange Bank REGARDING DELEGATION OF AUTHORITY ("Orange Bank"), both of Orlando, Florida.1 Notice of the application, affording interested per- The Board of Governors is amending 12 C.F.R. Part sons an opportunity to submit comments, has been 265, its Rules Regarding Delegation of Authority, to published (58 Federal Register 39,815 (1993)). The grant individual waivers under the federal conflicts of time for filing comments has expired, and the Board interest statute in cases in which the employee's has considered the application and all comments refinancial interest is not so substantial as to be likely to ceived in light of the factors set forth in section 3 of the affect the integrity of the employee's services to the BHC Act. Board. This delegation of authority will reduce the AmSouth, with total consolidated assets of administrative burden of acting on such waiver re- $11.2 billion, controls subsidiary banks in Alabama, quests. Florida, Georgia, and Tennessee.2 AmSouth is the Effective September 1, 1993, 12 C.F.R. Part 265 is fifth largest commercial banking organization in Floramended as follows: ida, controlling deposits of $2.2 billion, representing 1.9 percent of total deposits in commercial banks in Part 265—Rules Regarding Delegation of the state.3 Orange Corporation is the 30th largest Authority commercial banking organization in Florida, controlling deposits of $318.8 million, representing less than 1 1. The authority citation for Part 265 continues to read percent of total deposits in commercial banks in the as follows: state. Upon consummation of this proposal, AmSouth would remain the fifth largest commercial banking Authority: 12 U.S.C. 248(i) and (k). organization in Florida, controlling deposits of $2.5 billion, representing 2.1 percent of total deposits in 2. Section 265.6 is amended by adding paragraph (g) to commercial banks in the state.4 read as follows: AmSouth and Orange Corporation do not compete directly in any relevant banking market. Based on all Section 265.6—Functions delegated to General the facts of record, the Board concludes that consum- Counsel. mation of this proposal would not result in any significantly adverse effects on competition in any relevant banking market. (g) Conflicts of interest waivers. To issue individual Convenience and Needs Considerations conflicts of interest waivers under 18 U.S.C. 208(b)(1) to employees and officials other than Board members. In reviewing an application to acquire a depository institution under the BHC Act, the Board must consider the convenience and needs of the communities to be served, and take into account the records of the ORDERS ISSUED UNDER BANK HOLDING relevant depository institutions under the Community COMPANY ACT Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA requires the federal financial Orders Issued Under Section 3 of the Bank Holding Company Act 1. Upon consummation of this proposal, Orange Corporation will merge into AmSouth and Orange Bank will merge into AmSouth's AmSouth Bancorporation subsidiary bank, AmSouth Bank of Florida, Pensacola, Florida. In Birmingham, Alabama this regard, AmSouth has filed an application with the Federal Deposit Insurance Corporation pursuant to the Bank Merger Act (12 U.S.C. § 1828(c)) for approval of this bank merger. Order Approving the Acquisition of a Bank Holding 2. Asset data are as of June 30, 1993. Company 3. State deposit data are as of June 30, 1993, and include acquisitions by AmSouth of Charter Banking Corp., St. Petersburg, Florida (see AmSouth Bancorporation, 79 Federal Reserve Bulletin 951 AmSouth Bancorporation, Birmingham, Alabama (1993)), and Mid-State Federal Savings Bank, Ocala, Florida (see AmSouth Bancorporation, 79 Federal Reserve Bulletin 981 (1993)). ("AmSouth"), a bank holding company within the 4. The Board previously has determined that the interstate banking meaning of the Bank Holding Company Act ("BHC statute of Florida permits an Alabama bank holding company to Act"), has applied under section 3 of the BHC Act acquire banking organizations in Florida. See SouthTrust Corporation, 74 Federal Reserve Bulletin 56 (1988). Thus, consummation of (12 U.S.C. § 1842) to acquire all the voting shares of this transaction is not barred by section 3(d) of the BHC Act Orange Banking Corporation ("Orange Corpora- (12 U.S.C. § 1842(d)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1150 Federal Reserve Bulletin • December 1993 supervisory agencies to encourage financial institu- cial Supervisory Agencies Regarding the Community tions to help meet the credit needs of the local com- Reinvestment Act ("Agency CRA Statement").8 munities in which they operate, consistent with the safe and sound operation of such institutions. To A. CRA Performance Examinations accomplish this end, the CRA requires the appropriate federal supervisory authority to "assess the institu- The Agency CRA Statement provides that a CRA tion's record of meeting the credit needs of its entire examination is an important, and often controlling, community, including low- and moderate-income factor in the consideration of an institution's CRA neighborhoods, consistent with the safe and sound record, and that these reports will be given great operation of such institution," and to take that record weight in the applications process.9 The record in this into account in its evaluation of bank holding company case indicates that all of AmSouth's subsidiary banks applications.5 have received "outstanding" or "satisfactory" ratings In this regard, the Board has received comments during the most recent examinations of their CRA from the Southern Christian Leadership Conference performance. In particular, AmSouth's lead subsidiary ("Protestant")6 critical of the record of AmSouth's bank, AmSouth Bank, N.A., Birmingham, Alabama, subsidiary bank, AmSouth Bank of Florida, Pensa- received an "outstanding" rating for CRA perforcola, Florida ("AmSouth Bank-Florida"), in meeting mance from its primary regulator, the Office of the the credit needs of African-American residents within Comptroller of the Currency ("OCC"), in October its delineated community.7 In particular, Protestant 1992, and AmSouth Bank-Florida received an "outalleges that AmSouth Bank-Florida has not adequately standing" CRA rating from the Federal Deposit Insurprovided credit to the African-American community ance Corporation ("FDIC") in January 1993.10 In for low- and middle-income housing or for the revital- addition, Orange Bank received a "satisfactory" CRA ization of business and residential districts. The Board rating from the FDIC in February 1993. has carefully reviewed the CRA performance records of AmSouth, Orange Corporation, and their subsidiary B. Other Aspects of CRA Performance banks, as well as the comments received, AmSouth's responses to those comments, and all other relevant The Board has carefully reviewed the CRA perforfacts of record in light of the CRA, the Board's mance record of AmSouth Bank-Florida, including its regulations, and the Statement of the Federal Finan- most recent CRA examination and information the bank is required to file under the Home Mortgage Disclosure Act ("HMDA"), in light of the allegations made by Protestant. In this regard, the most recent 5. 12 U.S.C. § 2903. CRA examination found no evidence of illegal discrim- 6. The Board also has received comments from the Alabama Community Reinvestment Alliance ("ACRA") alleging that AmSouth ination or other illegal credit practices at AmSouth has not met the convenience and needs of low- and moderate-income Bank-Florida. This examination also found no evi- African-American residents in Jefferson County and Birmingham, dence of any practices or procedures that would Alabama, and that AmSouth has not made direct investments in inner-city neighborhoods. These comments were considered by the discourage or attempt to discourage credit applica- Board in connection with AmSouth's acquisition of Charter Banking, tions, and noted that AmSouth Bank-Florida's credit Corp., St. Petersburg, Florida. See 79 Federal Reserve Bulletin 951 extensions, applications, and denials reflected a rea- (1993) ("Charter Banking Order'"). Based on all the facts of record, and for the reasons discussed in the Charter Banking Order and in this sonable penetration into all segments of its delineated order, the Board does not believe that these comments warrant denial communities. of this proposal. 7. Protestant also asserts that AmSouth Bank-Florida has not Lending and Investment Programs. In its most implemented an affirmative action program, does not employ any recent CRA examination of AmSouth Bank-Florida, African-American males, and that African-Americans are, on the whole, under-represented at the bank. AmSouth has responded to the FDIC indicated that the bank's lending record is these allegations by stating that AmSouth Bank-Florida has an affir- "exceptional" and consistent with credit needs idenmative action program in place that has resulted in the employment of African-Americans in several capacities at the bank. AmSouth also indicates that 50 percent of the bank's 1993 management trainees are African-Americans and that African-Americans serve on the bank's advisory boards of directors in Pensacola and Panama City. Because AmSouth Bank-Florida employs more than 50 people and 8. 54 Federal Register 13,742 (1989). acts as an agent to sell or redeem U.S. savings bonds and notes, it is 9. 54 Federal Registers 13,745 (1989). required by Treasury Department and Department of Labor regula- 10. AmSouth's other subsidiary banks have received the following tions to: CRA ratings: AmSouth Bank of Tennessee, Nashville, Tennessee, (1) File annual reports with the Equal Employment Opportunity received a "satisfactory" rating from the FDIC in September 1992, Commission; and and AmSouth Bank of Walker County, Jasper, Alabama, received a (2) Have in place a written affirmative action program which states "satisfactory" rating from the FDIC in January 1991. AmSouth Bank its intentions, efforts, and plans to achieve equal opportunity in the of Georgia, Summerville, Georgia, opened for business in February employment, hiring, promotion, and separation of personnel. 1993, and has not yet been examined for CRA performance. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1151 tified within its delineated community.11 In particular, proved by the Department of Housing and Urban AmSouth Bank-Florida offers a variety of products Development, and the Panama City branch has exand services to attempt to meet the credit needs of tended a loan to the Panama City Housing Authority low- and moderate-income and minority communi- for the provision of low-income housing. ties.12 For example, in July 1992, the bank introduced AmSouth Bank-Florida also participates in various a special mortgage loan program for borrowers making programs designed to provide credit to local small 80 percent or less of the median income in the com- businesses. For example, the bank's CRA examinamunity. This program, which provides 100 percent tion indicates that it is an active participant in Comfinancing for homes with a maximum purchase price of munity Equity Investment, Inc. ("CEII"), an organi- $50,000, has resulted in the bank's extending 151 new zation which helps minority-owned businesses obtain loans totalling $5.7 million. AmSouth Bank-Florida credit. AmSouth Bank-Florida, as an authorized Small also has developed the "Affordable Housing Pro- Business Administration ("SBA") lender, also had gram" designed to provide low-income housing within extended 63 SBA-guaranteed loans totalling $9 million its community. as of January 1993. Additionally, as of April 1992, A review of HMDA data filed by AmSouth Bank- AmSouth Bank-Florida had 1,055 business loans of Florida shows an increase in the number of loan $100,000 or less outstanding, totalling $32.1 million. applications received by the bank from African- Americans and an increase in the number of loans C. Conclusion Regarding the Convenience and originated to African-Americans. In particular, 1992 Needs Factor HMDA data indicate that AmSouth Bank-Florida has nearly tripled the number of loans extended to Afri- The Board has carefully considered the entire record can-American residents in certain census tracts within of the CRA performance of AmSouth, Orange Corpoits delineated community as compared to 1991. At the ration, and their subsidiary banks, including the comsame time, the number of mortgage applications re- ments filed in this case by Protestant, in reviewing the ceived by the bank from African-Americans in Florida convenience and needs factors under the BHC Act. has significantly increased, as has AmSouth Bank- Based on a review of the entire record of performance Florida's ratio of loan originations to loan applica- by AmSouth, Orange Corporation, and their subsidtions.13 iary banks, the Board believes that the record of AmSouth Bank-Florida also has provided credit for AmSouth, Orange Corporation, and their subsidiary the construction or renovation of low-income rental banks in helping to meet the credit needs of all housing. For example, the bank has extended a loan to segments of the communities they serve, including a minority-owned developer to build low-income low- and moderate-income neighborhoods, are consisapartment units in the Ft. Walton, Florida area. tent with approval.14 For these reasons, and on the AmSouth Bank-Florida also has provided financing to basis of all the facts of record, the Board concludes a nonprofit developer to finance the purchase and that the convenience and needs considerations, includrenovation of 90 low-income rental units. In addition, ing the CRA performance of AmSouth, Orange Corthe Ft. Walton branch of AmSouth Bank-Florida has poration, and their subsidiary banks, are consistent provided financing for low-income housing loans ap- with approval of this application.15 11. In addition, AmSouth Bank-Florida recently received an award 14. Protestant asserts that AmSouth Bank-Florida has not employed from the Escambia County, Florida, division of the National Associ- African-American vendors or firms. AmSouth Bank-Florida indicates ation for the Advancement of Colored People (NAACP) for its efforts that it recognizes the need to expand the use of minority vendors in in meeting local credit needs. Florida and presently is taking steps to address this issue. While the 12. Protestant asserts that AmSouth Bank-Florida has not marketed Board fully supports affirmative action programs designed to promote available credit products to African-Americans in its delineated com- equal opportunities for third-party contractors, the Board believes munity. In this regard, the most recent CRA examination for Am- that the bank's contracting practices are beyond the scope of factors South Bank-Florida notes that the bank has developed marketing and that may be assessed under the CRA. advertising programs to inform all segments of the bank's delineated 15. ACRA has requested that the Board hold a public meeting or communities about available credit products and services. hearing on this application. The Board is not required under section 13. Protestant asserts that AmSouth has allocated $35 million in 3(b) of the BHC Act to hold a hearing on an application unless the mortgage financing to minorities in four states and requests that appropriate banking authority for the bank to be acquired makes a AmSouth account for disbursement of these funds. AmSouth denies timely written recommendation of denial of the application. In this having made such a representation, and states that its $35 million case, the Florida Comptroller has not recommended denial. special low-income mortgage loan program, developed in mid-1992, is Generally, under the Board's rules, the Board may, in its discretion, designed to meet the credit needs of all low- and moderate-income hold a public hearing or meeting on an application to clarify factual residents within its delineated communities, including, but not limited issues related to the application, and to provide an opportunity for to, minorities. Through this program, AmSouth Bank-Florida has testimony, if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). The originated 217 loans, totalling $8.4 million, to low-income applicants Board has carefully considered this request. In the Board's view, since mid-1992. interested parties have had a sufficient opportunity to present written Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1152 Federal Reserve Bulletin • December 1993 Other Considerations Inc. ("Mid States"), and thereby indirectly acquire The First National Bank of Moline ("Moline Bank"), The Board also concludes that the financial and man- both of Moline, Illinois.1 agerial resources and future prospects of AmSouth, Notice of the application, affording interested per- Orange Corporation, and their subsidiary banks, and sons an opportunity to submit comments, has been other supervisory factors the Board must consider published (58 Federal Register 41,090 (1993)). The under section 3 of the BHC Act, are consistent with time for filing comments has expired, and the Board approval. has considered the application and all comments re- Based on all the facts of record, the Board has ceived in light of the factors set forth in section 3(c) of determined that this application should be, and hereby the BHC Act. is, approved. The Board's approval is specifically Banc One, with total deposits of approximately conditioned upon compliance by AmSouth with all the $59.2 billion, controls banking subsidiaries in Ohio, commitments made in connection with this applica- Indiana, Michigan, Wisconsin, Illinois, Colorado, tion. For the purpose of this action, these commit- Kentucky, West Virginia, Texas, Arizona, Utah, Calments and conditions will both be considered condi- ifornia, Oklahoma, and Nebraska.2 Banc One is the tions imposed in writing and, as such, may be enforced ninth largest commercial banking organization in Illiin proceedings under applicable law. nois, controlling deposits of $3.3 billion, representing This acquisition shall not be consummated before 2.3 percent of the total deposits in commercial banks the thirtieth calendar day following the effective date in the state. Mid States is the 117th largest commercial of this Order, or later than three months after the banking organization in Illinois, controlling deposits of effective date of this Order, unless such period is $165.2 million, representing less than 1 percent of the extended for good cause by the Board or by the total deposits in commercial banks in the state. Upon Federal Reserve Bank of Atlanta, acting pursuant to consummation of this proposal, Banc One would redelegated authority. main the ninth largest commercial banking organiza- By order of the Board of Governors, effective tion in Illinois, controlling 2.3 percent of the total October 18, 1993. deposits in commercial banks in the state.3 Banc One and Mid States do not compete directly in Voting for this action: Chairman Greenspan and Governors any relevant banking markets. Based on all the facts of Angell, Kelley, LaWare, Lindsey, and Phillips. Absent and record, the Board concludes that consummation of not voting: Governor Mullins. this proposal would not result in any significantly adverse effects on competition in any relevant banking JENNIFER J. JOHNSON market. Associate Secretary of the Board Convenience and Needs Considerations Banc One Corporation Columbus, Ohio In acting on an application to acquire a depository institution under the BHC Act, the Board must con- Banc One Illinois Corporation sider the convenience and needs of the communities to Springfield, Illinois be served, and take into account the records of the relevant depository institutions under the Community Order Approving the Acquisition of a Bank Holding Reinvestment Act (12 U.S.C. § 2901 et seq.) Company ("CRA"). The CRA requires the federal financial Banc One Corporation, Columbus, Ohio, and Banc One Illinois Corporation, Springfield, Illinois (together 1. Banc One proposes to merge Mid States and Banc One's "Banc One"), bank holding companies within the subsidiary, Banc One Illinois Corporation, with Banc One Illinois meaning of the Bank Holding Company Act ("BHC Corporation surviving the merger. 2. State deposit data are as of June 30, 1993, and include acquisi- Act"), have applied under section 3 of the BHC Act tions approved by the Board as of that date. The Board recently has (12 U.S.C. § 1842) to acquire Mid States Bancshares, approved applications by Banc One to control banks in Oklahoma and Nebraska. See Banc One Corporation, 79 Federal Reserve Bulletin 1055 (1993) ("Central Banking Order") and Banc One Corporation, 79 Federal Reserve Bulletin 1168 (1993) ("FirsTier Order"). submissions, and have submitted substantial written comments that 3. The Board previously has determined that the interstate banking have been considered by the Board. On the basis of all the facts of statute of Illinois permits an Ohio bank holding company to acquire record, the Board has determined that a public meeting or hearing is banking organizations in Illinois. See Banc One Corporation, not necessary to clarify the factual record in this application, or 79 Federal Reserve Bulletin 519 (1993). Thus, consummation of this otherwise warranted in this case. Accordingly, the request for a public transaction is not barred by section 3(d) of the BHC Act (12 U.S.C. meeting or hearing on this application is hereby denied. § 1842(d)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1153 supervisory agencies to encourage financial institu- A. Bank's Performance Under the CRA tions to help meet the credit needs of the local communities in which they operate consistent with the safe Examination Record for CRA Performance. The and sound operation of such institutions. To accom- Board has carefully reviewed the CRA performance of plish this end, the CRA requires the appropriate fed- Bank in light of Protestant's comments, relevant reeral supervisory authority to "assess the institution's ports of examination and data required to be filed record of meeting the credit needs of its entire com- under the Home Mortgage Disclosure Act munity, including low- and moderate-income neigh- ("HMDA"). Initially the Board notes that the Office of borhoods, consistent with the safe and sound opera- the Comptroller of the Currency ("OCC") determined tion of such institution," and to take that record into that Bank has a "satisfactory" record of meeting account in its evaluation of applications.4 community credit needs in an examination that was In connection with this application, the Board has completed on June 29, 1993. In this regard, the Agency received comments from the Black State Employees CRA Statement provides that a CRA examination is an Association of Texas, Inc. ("Protestant"), criticizing important and often controlling factor in the considerthe CRA performance of Banc One and Mid States. ation of an institution's CRA record and that these Protestant generally alleges that Banc One, through its reports will be given great weight in the applications subsidiary bank, Bank One Texas, N.A., Dallas, process.7 Texas ("Bank"), has not complied with the spirit and The most recent examination for CRA compliance requirements of various laws and regulations designed and performance of Bank found no evidence of illegal to prevent discrimination in bank credit practices, discrimination. Examiners concluded that Bank affirincluding the CRA, in attempting to meet the credit matively encourages credit applications from all segneeds of the African-American and ethnic minority ments of its delineated community, including low- and communities in Dallas, Fort Worth, Irving and Grand moderate-income neighborhoods, for all types of Prairie, all in Texas.5 credit being offered. OCC examiners noted that Bank The Board has carefully reviewed the CRA perfor- is in substantial compliance with laws and regulations mance records of Banc One and its subsidiary banks, that ensure fair lending practices, and that Bank rethe comments received and Banc One's responses to cently initiated a "second-look process" that reviews those comments, as well as all other relevant facts of all minority mortgage and home improvement loan record, in light of the CRA, the Board's regulations, applications that have been denied. In addition, Bank and the Statement of the Federal Financial Supervi- has hired an independent consulting firm to ensure that sory Agencies Regarding the Community Reinvest- the lending practices at each of its branches is not ment Act ("Agency CRA Statement").6 discriminatory. Lending Programs. Bank offers a variety of credit products and services designed to meet the credit needs of low- and moderate-income and minority neighborhoods within its delineated communities. In this regard, the bank's most recent CRA examination indicates that its total loan production in 1992 in low- 4. See 12 U.S.C. § 2903. 5. Specifically, Protestant alleges that: and moderate-income census tracts was approxi- (1) Bank has not developed a plan, or any lending, marketing and mately $300 million, including more than 650 loans outreach programs, to meet the credit needs of low- income African-Americans and other minorities in these communities; totalling $28 million originated by Bank through its (2) Banc One has "redlined" these communities by not providing Affordable Housing Lenders in Dallas, Austin, Fort bank branches or sufficient credit to individuals in these communi- Worth, Houston, Midcities, and San Antonio. In 1992, ties, as indicated by data Bank has filed under the Home Mortgage Disclosure Act; and Bank also introduced the American Dream Mortgage (3) Bank has provided no technical assistance or other support to Program. Through this program, which provides flexindividuals and organizations with an understanding of the credit ible underwriting criteria, Bank extended $9.5 million needs of these communities, such as African-American managers of Bank, community groups, and consulting groups. in 1992. Bank also offers a First Time Borrowers 6. 54 Federal Register 13,742 (1989). The Board also has received program for individuals who have no established credit comments from the Coalition of Neighborhoods alleging that Banc One and its subsidiary bank, Banc One Cincinnati, N.A., Cincinnati, history. Ohio, generally have not met the credit needs of minorities, women, Bank has taken steps to assist in meeting the credit and low- and moderate-income individuals in the Cincinnati area. needs of the African-American community in its These comments were considered by the Board in connection with Banc One's acquisition of Central Banking Group, Inc., Oklahoma City, Oklahoma. See Central Banking Order. Based on all the facts of record, and for the reasons discussed in the Central Banking Order, 7. 54 Federal Register at 13,745 (1989). The Board also notes that the FirsTier Order, and in this order, the Board does not believe that Moline Bank received an "outstanding" CRA rating from the OCC in these comments warrant denial of this proposal. September 1990. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1154 Federal Reserve Bulletin • December 1993 service area. For example, Bank extended over 1,000 Bank meets with small businesses in South Dallas in loans totalling over $10 million in the Dallas commu- order to assess and meet their financing needs.8 These nity of Southeast Oak Cliff in 1992. These loans community contacts have led to the development of a included mortgages, home-improvement, small busi- variety of products and services for small businesses, ness, and consumer loans. In addition, through its including the Flat Fee Small Business Checking Acrelationship with the Voice of Hope organization, count and the Small Business Loan Center.9 In addi- Bank provided the financing necessary to construct tion, Bank's Texas Small Business Loan Kit and new housing units in a predominantly African-Amer- Business Banking Guide help small business owners ican section of West Dallas. Bank also has estab- assess their financial needs and in preparing loan lished relationships with other Dallas-based commu- applications. To supplement this information, Bank's nity groups, such as the Oak Cliff Development Texas Small Business group sponsored over 60 semi- Corporation and the Inner-city Community Develop- nars with over 3,000 participants in Dallas in 1992. ment Corporation, who work in predominantly Afri- Bank's CRA examination states that Bank has escan-American communities. Similar relationships tablished branches throughout its twenty-three delinwith Rainbow Bridge and the Dallas West Interde- eated communities, including low- and moderatenominational Ministerial Alliance have resulted in income and minority neighborhoods, to attempt to new housing construction in South Dallas/Fair Park meet community credit needs. Moreover, the record in and other West Dallas communities. this case indicates that Bank operates branches that Marketing Efforts and Community Involvement. In serve each of the communities identified by Protesits most recent CRA examination of Bank, the OCC tant, including a branch on Martin Luther King Bouindicated that the bank has implemented sound mar- levard that Bank established in 1992 to address the keting and advertising programs to inform all segments banking needs of low- and moderate-income neighborof its delineated communities about available credit hoods in South Dallas. products and services. It is the responsibility of Bank's statewide marketing department to develop B. Other Aspects of Banc One's CRA marketing programs that are targeted to various con- Performance sumer segments. In this regard, Bank's marketing program recently has targeted African-Americans, In reviewing recent acquisitions by Banc One, the Hispanics, small businesses, and low- and moderate- Board has carefully considered the record of perforincome individuals. Bank's marketing efforts in the mance of Banc One and its various subsidiary banks African-American community are directed by an under the CRA.10 The record in this case indicates that African-American advertising agency and include all but two of Banc One's 78 subsidiary banks have print advertisements in the Minority Opportunity received either "outstanding" or "satisfactory" ratings News, a publication that focuses specifically on the from their primary regulators in their most recent African-American market. examinations of their CRA performance, and that one Bank's CRA examination also indicates that Bank of these banks was assigned this rating prior to being has established ongoing relationships with various acquired by Banc One.11 Additionally, Banc One's lead community groups to help address affordable housing subsidiary bank, Bank One Columbus, N.A., Columneeds in inner-city communities in Texas. In this bus, Ohio, received an "outstanding" rating for CRA regard, Bank communicates with the Voice of Hope performance from its primary regulator, the OCC, in and the Dallas Affordable Housing Partnership, as April 1993. well as local and state government agencies, to better The Board is continuously reviewing Banc One's understand community credit needs and to partici- CRA program and the effectiveness of this program in pate in local community development projects. Bank addressing identified deficiencies in the CRA programs also has an ongoing relationship with the Dallas Urban League whereby Bank gives informational seminars on home ownership and mortgage products 8. In the Southern Dallas market, Bank's Small Business Lenders have made over 1,350 calls on small businesses and others in the to targeted segments of the African-American combusiness community since January 1992. munity. In addition, through the Center for Housing 9. The Small Business Loan Center attempts to meet the special Resources ("CHR"), Bank provides technical assis- credit needs of small businesses in a variety of ways, including offering to process applications for credit of $100,000 or less within four days. tance to non-profit housing and neighborhood com- 10. See, e.g., Banc One Corporation, 79 Federal Reserve Bulletin munity groups in Dallas. Bank also is holding home 524 (1993) ("Valley National Order"); Banc One Corporation, improvement seminars in the Dalworth neighbor- 79 Federal Reserve Bulletin 872 (1993) ("Colorado Western Order"); and FirsTier Order. hood of Grand Prairie. 11. See FirsTier Order p. 6 at note 14. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1155 in its subsidiary banks that are rated less than satis- and, as such, may be enforced in proceedings under factory.12 In this regard, the record indicates that Banc applicable law. One has, to date, taken successful steps to correct any This transaction shall not be consummated before of the identified weaknesses in the CRA programs of the thirtieth calendar day following the effective date its subsidiary banks.13 of this Order, or later than three months after the effective date of this Order, unless such period is C. Conclusion Regarding Convenience and extended for good cause by the Federal Reserve Bank Needs Factor of Cleveland, acting pursuant to delegated authority. By order of the Board of Governors, effective The Board has carefully considered all the facts of October 18, 1993. record, including the comments received, in reviewing the convenience and needs factor under the BHC Act. Voting for this action: Chairman Greenspan and Governors Based on a review of the entire record of performance Angell, Kelley, LaWare, Lindsey, and Phillips. Absent and not voting: Governor Mullins. by Banc One, Mid States, and their subsidiary banks, the Board believes that the efforts of Banc One, Mid JENNIFER J. JOHNSON States, and their subsidiary banks to help meet the Associate Secretary of the Board convenience and needs of all segments of the communities they serve, including the credit needs of lowand moderate-income neighborhoods, are consistent Barnett Banks, Inc. with approval of this proposal.14 Jacksonville, Florida Other Considerations Order Approving Acquisition of a Bank, Merger of Banks, and Increase of Investment in Bank Premises The Board concludes that the financial and managerial resources, supervisory factors, and future prospects of Barnett Banks, Inc., Jacksonville, Florida ("Bar- Banc One, Mid States, and their respective subsidiar- nett"), a bank holding company within the meaning of ies, are consistent with approval of this proposal. the Bank Holding Company Act ("BHC Act"), has Based on the foregoing and other facts of record, the applied under section 3(a)(3) of the BHC Act Board has determined that the application should be, (12 U.S.C. § 1842(a)(3)) to acquire all the voting and hereby is, approved. The Board's approval is shares of The Citizens and Peoples National Bank of specifically conditioned upon compliance with all of Pensacola, Pensacola, Florida ("Citizens Bank"), a the commitments made by Banc One in connection wholly owned subsidiary bank of Bank South Corpowith this application. For purposes of this action, ration, Atlanta, Georgia. In addition, Barnett Bank of these commitments and conditions will both be con- West Florida, Pensacola, Florida ("West Florida sidered conditions imposed in writing by the Board Bank"), a wholly owned, state member subsidiary bank of Barnett, has applied under section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. § 1828(c)) ("Bank Merger Act") to merge with Citizens Bank, 12. See FirsTier Order at p. 16. with West Florida Bank to be the surviving entity. 13. See FirsTier Order at pp. 16-17 (review of steps by Bank One West Florida Bank has also applied to increase its Cleveland, N.A., Cleveland, Ohio to address its "needs to improve" rating). investment in bank premises pursuant to section 24A 14. Protestant has requested that the Board hold a public meeting or of the Federal Reserve Act (12 U.S.C. § 371d). hearing on this application. The Board is not required under section 3(b) of the BHC Act to hold a hearing on an application unless the Notice of the applications, affording interested perappropriate banking authority for the bank to be acquired makes a sons an opportunity to submit comments, has been timely written recommendation of denial of the application. In this given in accordance with the BHC Act, the Bank case, the OCC has not recommended denial of this proposal. Generally, under the Board's rules, the Board may, in its discretion, Merger Act, and the Board's Rules of Procedure hold a public hearing or meeting on an application to clarify factual (12 C.F.R. 262.3(b)). As required by the Bank Merger issues related to the application, and to provide an opportunity for Act, reports on the competitive effects of the merger testimony, if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). The Board has carefully considered this request. In the Board's view, were requested from the United States Attorney Geninterested parties have had a sufficient opportunity to present written eral, the Office of the Comptroller of the Currency submissions, and have submitted substantial written comments that have been considered by the Board. On the basis of all the facts of ("OCC"), and the Federal Deposit Insurance Corporecord, the Board has determined that a public meeting or hearing is ration ("FDIC"). The time for filing comments has not necessary to clarify the factual record in this application, or expired, and the Board has considered the applications otherwise warranted in this case. Accordingly, the request for a public meeting or hearing on this application is hereby denied. and all comments received in light of the factors set Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1156 Federal Reserve Bulletin • December 1993 forth in the BHC Act, the Bank Merger Act, and the member of the southeast regional interstate banking Federal Reserve Act. compact, and permits the entry of bank holding com- Barnett, with total consolidated assets of panies from fourteen other states and the District of $38.2 billion, operates 34 subsidiary banks in Florida Columbia. Since 1990, one thrift institution has made a and Georgia.1 Barnett is the largest commercial banking de novo entry, and four commercial banking organizaorganization in Florida, controlling deposits of tions, including two large regional commercial banking $31.8 billion, representing 26.8 percent of total deposits organizations, have entered the market by acquisition. in commercial banking organizations in the state. Citi- The Attorney General, the OCC, and the FDIC have zens Bank is the 25th largest commercial banking not objected to consummation of this proposal or organization in Florida, controlling deposits of indicated that the proposal would have any significantly $330.7 million, representing less than 1 percent of total adverse competitive effects. deposits in commercial banking organizations in the Based on all the facts of record, and for the reasons state.2 discussed above, the Board concludes that consum- West Florida Bank and Citizens Bank compete mation of this proposal would not have a significantly directly in the Pensacola banking market.3 Barnett is adverse effect on competition or the concentration of the second largest depository institution in the market, banking resources in the Pensacola banking market or controlling deposits of $369.7 million, representing any other relevant banking market.6 15.2 percent of total deposits in depository institutions The Board also concludes that the financial and in the market ("market deposits").4 Citizens Bank is managerial resources, future prospects, and supervithe third largest depository institution in the market, sory factors of Barnett and Citizens Bank are consistent controlling deposits of $330.7 million, representing with approval of these applications.7 In addition, the 13.6 percent of market deposits. Upon consummation, Board has reviewed the convenience and needs factor Barnett would become the largest depository institu- in light of comments filed in connection with these tion in the market, controlling total deposits of applications, and has determined that considerations $700.4 million, representing 28.9 percent of market relating to the convenience and needs of the communideposits. The Herfindahl-Hirschman Index ("HHI") ties to be served are consistent with approval.8 would increase by 415 points to 1662, and, therefore, would not exceed the threshold standards in the Department of Justice's revised guidelines.5 A number of other factors also indicate that this 6. In reviewing the competitive factors, the Board has carefully proposal would not have a significantly adverse effect considered a comment from an individual ("Commenter") alleging that on competition. For example, following consummation this proposal would adversely affect competition in Florida by increasing Barnett Bank's presence in the state. The Board continues to of this proposal, fifteen competitors, including seven believe that the appropriate banking market for reviewing the competlarge regional and super-regional commercial banking itive effects of a proposed bank acquisition is local in nature. See, e.g., organizations, would continue to serve the market. In SouthTrust Corporation, 78 Federal Reserve Bulletin 710 (1992); First Hawaiian, Inc., 11 Federal Reserve Bulletin 52 (1991); United States v. addition, the legal barriers to entry are low. Florida is a Philadelphia National Bank, 374 U.S. 321 (1963). For the reasons discussed above, the Board concludes that these comments do not raise issues that would warrant denial of the proposal. 7. Commenter also generally alleges that Barnett has treated its 1. Asset data are as of March 31, 1993. employees unfairly by over-compensating senior officers and eliminat- 2. State and market deposit data are as of June 30, 1992. ing positions through consolidation. The Board notes that Barnett 3. The Pensacola banking market is approximated by Escambia and received no criticism of its salary or employment practices during its Santa Rosa Counties, both in Florida. most recent supervisory examination as of June 1992 or in previous 4. In this context, depository institutions include commercial banks examinations. Based on all the facts of record, including reports of and savings banks. Market share data are based on calculations in examination and information collected in the examination process, the which the deposits of thrift institutions are included at 50 percent. The Board does not believe that these comments warrant denial of this Board previously has indicated that thrift institutions have become, or application. have the potential to become, major competitors of commercial 8. The Board also has considered Commenter's general assertion banks. See Midwest Financial Group, 75 Federal Reserve Bulletin 386 that Barnett has a deficient record of lending to small businesses, (1989); National City Corporation, 70 Federal Reserve Bulletin 743 minorities, and lower-income customers, in light of its performance (1984). under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.) 5. Under the revised Department of Justice Merger Guidelines, ("CRA"). All Barnett subsidiary banks have received "satisfactory" 49 Federal Register 26,823 (1984), a market in which the post-merger or "outstanding" evaluations for CRA performance in their most HHI is between 1000 and 1800 is considered moderately concentrated. recent examinations by their primary regulators. In addition, Bamett The Department of Justice has informed the Board that a bank merger has announced a five-year, $2 billion lending goal, beginning in 1993, or acquisition generally will not be challenged (in the absence of other targeted to housing for low- and moderate-income families and credit factors indicating anticompetitive effects) unless the post-merger HHI for small businesses owned by women and minorities. During the first is at least 1800 and the merger or acquisition increases the HHI by at two quarters of 1993, Barnett made approximately $300 million of least 200 points. The Department of Justice has stated that the higher loans in Florida as part of this effort. In light of all the facts of record, than normal HHI thresholds for screening bank mergers for anticom- including the CRA and supervisory examinations of Barnett and its petitive effects implicitly recognizes the competitive effect of limited subsidiary banks, the Board does not believe that these comments warrant denial of these applications. purpose lenders and other non-depository financial entities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1157 West Florida Bank also has applied under section First Delta Corporation 24A of the Federal Reserve Act (12 U.S.C. § 371d) to Helena, Arkansas increase its investment in bank premises. The Board has considered the factors it is required to consider Order Approving the Acquisition of a Bank when reviewing an application for increasing investment in bank premises and finds those factors to be First Delta Corporation, Helena, Arkansas ("First consistent with approval. Delta"), a bank holding company within the meaning Based on the foregoing and other facts of record, of the Bank Holding Company Act ("BHC Act"), has the Board has determined that the applications under applied under section 3(a)(3) of the BHC Act the BHC Act, the Bank Merger Act, and the Federal (12 U.S.C. § 1842(a)(3)) to acquire at least 75.2 per- Reserve Act should be, and hereby are, approved.9 cent of the voting shares of The Delta State Bank, The Board's approval is specifically conditioned Elaine, Arkansas ("Bank"). upon compliance with all the commitments made by Notice of the application, affording interested per- Barnett in connection with these applications. For sons an opportunity to submit comments, has been purposes of this action, both the commitments and published (58 Federal Register 43,897 (1993)). The conditions relied upon by the Board in reaching its time for filing comments has expired, and the Board decision are commitments imposed in writing by the has considered the application and all comments re- Board in connection with its findings and decision, ceived in light of the factors set forth in section 3(c) of and, as such, may be enforced in proceedings under the BHC Act. applicable law. First Delta, which operates one subsidiary bank, This transaction shall not be consummated before First National Bank of Phillips County, Helena, Arthe thirtieth calendar day following the effective date kansas ("First National"), is the 54th largest commerof this Order, or later than three months following the cial banking organization in Arkansas, controlling deeffective date of this Order, unless such period is posits of approximately $88.4 million, representing extended for good cause by the Board or by the less than 1 percent of total deposits in commercial Federal Reserve Bank of Atlanta, acting pursuant to banking organizations in the state.1 Bank is the 184th delegated authority. largest commercial banking organization in the state, By order of the Board of Governors, effective controlling deposits of $1 million, representing less October 25, 1993. than 1 percent of total deposits in commercial banking organizations in the state. Upon consummation of this Voting for this action: Chairman Greenspan and Governors proposal, First Delta will become the 53d largest Angell, Kelley, La Ware, and Phillips. Absent and not voting: commercial banking organization in the state with Governors Mullins and Lindsey. deposits of $89.4 million, representing less than 1 percent of total deposits in commercial banking organiza- JENNIFER J. JOHNSON tions in the state. Associate Secretary of the Board First Delta and Bank compete directly in the Phillips County, Arkansas, banking market.2 First Delta is the largest commercial banking organization,3 controlling deposits of $88.4 million, representing 35.5 percent of total deposits in commercial banking organizations in the market ("market deposits").4 Bank is the fourth largest commercial banking organization in the mar- 9. Commenter has asked to participate in any public hearing or ket, controlling market deposits of $1 million, repremeeting convened involving Barnett, and the Board has carefully senting less than 1 percent of market deposits. Upon considered this request. The Board is not required under section 3 of the BHC Act to hold a public hearing or meeting unless the OCC or the consummation of this proposal, First Delta would state supervisory authority for the bank to be acquired does not remain the largest commercial banking organization in approve the proposal. In this case, the state supervisory authority for the market, controlling deposits of $89.4 million, the bank does not object to the proposal. Generally, under the Board's rules, the Board may, in its discretion, representing 35.9 percent of market deposits. The hold a public hearing or meeting on an application to clarify factual issues related to the application and to provide an opportunity for testimony, if appropriate. See 12 C.F.R. 262.3(e) and 262.25(d). In the Board's view, Commenter has had ample opportunity to present submissions, and has submitted substantial written comments that 1. Deposit data are as of June 30, 1992. have been considered by the Board. In light of these facts, the Board 2. The Phillips County, Arkansas banking market is approximated has determined that a public hearing or meeting is neither necessary to by Phillips County, Arkansas. clarify the factual record in these applications nor otherwise war- 3. No thrift institutions operate in the Phillips County, Arkansas, ranted in this case. Accordingly, a public hearing or meeting on these banking market. applications will not be convened. 4. Market data are as of June 30, 1992. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1158 Federal Reserve Bulletin • December 1993 Herfindahl-Hirschman Index ("HHI") for the market Voting for this action: Chairman Greenspan and Governors would increase by 29 points to 3345.5 Angell, Kelley, LaWare, and Phillips. Absent and not voting: Governors Mullins and Lindsey. The increase in market concentration, as measured by the HHI, is relatively small and does not exceed the JENNIFER J. JOHNSON Department of Justice merger guidelines. In addition, Associate Secretary of the Board three commercial banking organizations would remain in the Phillips County banking market with compara- Orders Issued Under Section 4 of the Bank ble market shares, and each competitor in the market Holding Company Act would control over 30 percent of market deposits. After considering the competition offered by other Banc One Corporation commercial banking organizations in the market, the Columbus, Ohio relatively small increase in market share and market concentration, and all other facts of record, the Board CoreStates Financial Corp concludes that consummation of the proposal would Philadelphia, Pennsylvania not have a significantly adverse effect on competition in the Phillips County banking market or any other PNC Financial Corp relevant banking market. Pittsburgh, Pennsylvania The Board also concludes that the financial and managerial resources and future prospects of First Society Corporation Delta, First National, and Bank are consistent with Cleveland, Ohio approval. Convenience and needs considerations and other supervisory factors that the Board is required to Order Approving Applications to Conduct Certain consider under section 3 of the BHC Act also are Data Processing and Other Nonbanking Activities consistent with approval of this application. Based on the foregoing and other facts of record, the Banc One Corporation, Columbus, Ohio ("Banc Board has determined that the application should be, One"), CoreStates Financial Corp, Philadelphia, and hereby is, approved. The Board's approval of this Pennsylvania ("CoreStates"), PNC Financial Corp, transaction is specifically conditioned upon compli- Pittsburgh, Pennsylvania ("PNC"), and Society Corance with the commitments given in connection with poration, Cleveland, Ohio ("Society") (collectively, this application. For the purposes of this action, the "Applicants"), bank holding companies within the commitments and conditions relied on in reaching this meaning of the Bank Holding Company Act ("BHC decision are both considered to be conditions imposed Act"), have applied for the Board's approval under in writing by the Board and, as such, may be enforced section 4(c)(8) of the BHC Act (12 U.S.C. in proceedings under applicable laws. The transaction § 1843(c)(8)) and section 225.23(a) of the Board's approved in this Order shall not be consummated Regulation Y (12 C.F.R. 225.23(a)) to engage de novo, before the thirtieth calendar day following the effective through their joint venture corporation, Electronic date of this Order, or later than three months after the Payment Services, Inc., Wilmington, Delaware effective date of this Order, unless such period is ("Company"), in certain nonbanking activities, inextended for good cause by the Board or by the cluding data processing and data transmission activi- Federal Reserve Bank of St. Louis, pursuant to deleties pursuant to section 225.25(b)(7) of Regulation Y. gated authority. Applicants currently provide data processing and By order of the Board of Governors, effective transmission services through Company to retail mer- October 25, 1993. chants using point-of-sale ("POS") terminals and to banks who are members of Company's automated 5. Under the revised Department of Justice Merger Guidelines, teller machine ("ATM") network.1 Applicants now 49 Federal Register 26,823 (June 29, 1984), a market in which the propose to offer through Company certain data propost-merger HHI is above 1800 is considered highly concentrated. In cessing and transmission services and electronic paysuch markets, the Justice Department is likely to challenge a merger that increases the HHI by more than 50 points. The Justice Depart- ment services that have not previously been considment has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by at least 200 points. The Justice Department has stated that the higher than normal threshold for an increase in the HHI when screening bank mergers and acqui- 1. On November 30, 1992, acting pursuant to delegated authority, sitions for anticompetitive effects implicitly recognizes the competi- the Federal Reserve Banks of Cleveland and Philadelphia approved a tive effect of limited-purpose lenders and other non-depository finan- proposal by Applicants to form Company through the consolidation of cial entities. their respective ATM and POS networks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1159 ered by the Board. In particular, Company proposes to deposits. CoreStates operates subsidiary banks in provide: Pennsylvania, New Jersey, and Delaware, and en- (1) Electronic Benefit Transfer Services. Data pro- gages through its subsidiaries in a broad range of cessing and transmission services required to permit banking and permissible nonbanking activities. the delivery of governmental program benefits (such PNC, with $53.3 billion in total consolidated assets, as welfare payments and food stamps) through the is the tenth largest commercial banking organization in POS and ATM terminals of participating merchants the United States, controlling $27.9 billion in deposits. and banks ("Benefits services"). Under a Benefits PNC operates subsidiary banks in Pennsylvania, Ohio, services system, a benefit recipient would be issued Kentucky, Indiana, and Delaware, and engages dia magnetically encoded card, similar to an ATM rectly and through its subsidiaries in a broad range of card, which could be used to obtain access to a banking and permissible nonbanking activities. government benefit account maintained on behalf of Society, with $26 billion in total consolidated assets, the recipient. is the 28th largest commercial banking organization in (2) Stored Value Card Services. Data processing and the United States, controlling $16.6 billion in deposits. transmission services and electronic payment ser- Society operates subsidiary banks in Ohio, Indiana, vices related to stored value cards, which are cards and Michigan, and engages directly and through its similar to credit or debit cards to which funds could subsidiaries in a broad range of banking and permissibe credited through magnetic stripe or computer ble nonbanking activities. chip technology. These services would be provided in connection with both single- vendor stored value Closely Related to Banking Analysis card systems and multiple-vendor systems currently in development. Section 4(c)(8) of the BHC Act provides that a bank (3) Electronic Data Interchange Services. The pro- holding company may, with Board approval, engage in vision to retail merchants of data collected from any activity that the Board determines to be "so sales transactions processed at the merchants' POS closely related to banking or managing or controlling terminals ("Data services"). These data would re- banks as to be a proper incident thereto." An activity late to specific product purchases and customer may be deemed to be closely related to banking if it is purchasing patterns, and could be used by the demonstrated that: merchants for inventory control, targeted market- (1) Banks generally provide the proposed services; ing, and other purposes. or (2) Banks generally provide services that are oper- Applicants propose to engage in these activities ationally or functionally so similar to the proposed throughout the United States. services as to equip them particularly well to pro- Notice of these applications, affording interested vide the proposed services; or persons an opportunity to submit comments, has been (3) Banks generally provide services that are so published (57 Federal Register 44,571 (1992)). The integrally related to the proposed services as to time for filing comments has expired, and the Board require their provision in a specialized form. See has considered the applications and all comments National Courier Association v. Board of Governors received in light of the factors set forth in section of the Federal Reserve System, 516 F.2d 1229, 1237 4(c)(8) of the BHC Act. (D.C. Cir. 1975).3 Banc One, with $75.4 billion in,total consolidated assets, is the eighth largest commercial banking orga- The Board has determined that certain data pronization in the United States, controlling $59.4 billion cessing activities are closely related to banking and, in deposits.2 Banc One operates subsidiary banks in therefore, permissible for bank holding companies Ohio, Kentucky, Indiana, Michigan, Illinois, Wiscon- under section 4(c)(8) of the BHC Act. Section sin, Texas, Colorado, Arizona, California, Utah, and 225.25(b)(7) of Regulation Y permits bank holding West Virginia, and engages directly and through its companies to provide data processing and data transsubsidiaries in a broad range of banking and permissi- mission services, facilities, data bases, or access to ble nonbanking activities. CoreStates, with $23.6 billion in total consolidated assets, is the 33d largest commercial banking organi- 3. In addition, the Board may consider any other basis that may demonstrate that the proposed activity has a reasonable or close zation in the United States, controlling $16.5 billion in connection or relationship to banking or managing or controlling banks. See Board Statement Regarding Regulation Y, 49 Federal Register 806 (1984); Securities Industry Association v. Board of Governors of the Federal Reserve System, 468 U.S. 207, 210-11 n. 5 2. Asset and deposit data are as of June 30, 1993. (1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1160 Federal Reserve Bulletin • December 1993 such services, facilities, or data bases by any techno- access and authorization requests submitted to, and logical means, so long as the data to be processed or electronic payments originating from, financial acfurnished are "financial, banking, or economic" in counts on the same basis as transactions initiated with nature.4 traditional debit and credit cards. Based on the record, Electronic Benefit Transfer Services. Under a Ben- the Board has concluded that the proposed Benefits efits services program, a benefit recipient would have services constitute financial data processing and transaccess to a benefit account maintained by a govern- mission activities, are closely related to banking, and mental agency or by the agency's transaction pro- are permissible for bank holding companies under the cessor on behalf of the recipient. The account would BHC Act. be credited by the agency or transaction processor Stored Value Card Services. Company proposes to with the amount of benefits to which the recipient is provide data processing and transmission services and entitled, such as for welfare payments or food stamps. electronic payment services related to stored value The recipient would be issued a magnetic card, similar cards, which are cards similar to credit or debit cards to an ATM card, which could be used (i) at ATM to which funds could be credited through magnetic terminals to receive cash benefits from the account, stripe or computer chip technology. Company's serand (ii) at POS terminals to pay for food or other vices would be provided in connection with both in-kind entitlements, or to obtain cash benefits in the "closed" and "open" stored value card systems. account. "Closed systems" include both single-vendor stored The proposed Benefits services would be provided value card systems and systems designed for singlethrough Company's existing ATM and POS networks, site use, such as at a college or university. An "open and, in general, the system would operate like existing system", by contrast, refers to a multiple-vendor, electronic fund transfer systems. As in the operation multiple-site stored value card system. of an ATM or POS network, Company's primary Closed Systems. Currently, open systems are in activities would consist of processing and transmitting developmental stages only, while closed systems are access requests and payment authorizations entered in limited operation in the United States. In current into the Benefits services system. In addition, Com- closed systems, in general, cash must be deposited in pany may function as the transaction processor for one a particular vendor's card-dispensing terminal, and the or more governmental agencies. In this role, Company card received from the terminal may be used only for would provide record maintenance and payment au- purchases from that specific vendor. The card itself is thorization services similar to those currently fur- disposable, and the only account reconciliation that nished to Company's financial institution customers.5 may be required would involve the vendor's own cash These activities represent the electronic payment of receipts, the amount of funds debited from the cards at government benefits and are financial activities that turnstiles or other points of sale, and the amount of the are operationally and functionally similar to the elec- vendor's liabilities stored on outstanding cards. Comtronic payment and data processing services provided pany does not intend to play a role in the operation of by banks and bank holding companies in the operation this basic type of closed system. of ATM and POS networks. In particular, the pro- Company does propose to play a role in the develposed Benefits services involve the processing of opment and operation of more complex closed systems. These systems would use a plastic card containing electronic technology such as a computer chip or 4. Regulation Y also requires that the services be provided pursuant to a written agreement, and places certain limitations on the facilities magnetic stripe to which funds could be credited, and and hardware provided with the data processing services. See from which funds could be debited, for an indefinite 12 C.F.R. 225.25(b)(7). See also Association of Data Processing period of time. Company's primary activities would Service Organizations, Inc. v. Board of Governors of the Federal Reserve System, 745 F.2d 677 (D.C. Cir. 1984). Applicants have include the performance of accounting functions in represented that Company will provide the proposed services pursu- such customer accounts, as well as the level of the ant to a written agreement, and will provide facilities and hardware vendor's stored value liabilities. In this capacity, Comwithin the limitations established by Regulation Y. The hardware to be provided by Company consists of debit and credit access cards, the pany also would be responsible for settlement and ATM and POS terminals that will be used in delivering the proposed reconciliation of these customer and vendor accounts. services, and special terminals designed for use in a stored value card Company also would perform other functions, such as system. 5. The eligibility of recipients of government benefits, and the embossing and issuing cards and arranging for funds eligibility of items for purchase under the food stamp program and collection. other in-kind benefit programs, are currently decided by governmental agencies, with individual merchants making determinations as to the Closed systems also may be developed—for examqualification of particular items at the point of sale. Company has ple, in a university setting—in which pre-paid acindicated that it does not propose at this time to furnish software for, counts are maintained by the vendor or some central or provide other services relating to, any such determination of eligibility. party (in this example, the university) on behalf of a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1161 customer (in this case, a student or other member of ly-designed collection cards issued by Company. The the university community). In such a system, value collection cards would then be submitted to Company could be placed on a stored value card either at a so that funds can be properly credited. Once these cash-to-card machine or through a direct electronic transactions occur, Company would be responsible for debit to one's pre-paid account. Such a direct debit making settlement by transferring funds to the acwould be made at an ATM-type machine specially counts of participating merchants and other appropriadapted for that purpose ("value transfer machine"). ate parties. Closed systems also may involve multiple vendors at a Closely Related to Banking Analysis. The Board single site. For example, in the university case, the believes that Company's activities in providing stored stored value cards could be used to pay charges at value card services, in both closed and open systems, locations such as student centers, cafeterias, book- are closely related to banking. These activities involve stores, and copy machines. In each case, however, processing debits and credits to the stored value cards, Company's activities in connection with these more and performing related accounting and settlement complex closed systems would be essentially the same functions. This aspect of the proposal is a data proas the accounting, settlement, and reconciliation func- cessing activity in which financial balances are maintions and other activities described in the preceding tained and adjusted at POS and other terminals as the paragraph. In addition, Company may operate value customer purchases various items, or adds value to the transfer machines used in these more complex closed card, and constitutes the processing of banking, finansystems. cial, or economic data within the meaning of Regula- Open Systems. Applicants anticipate that stored tion Y. In addition, aspects of Company's stored value value cards eventually will operate in an open system card services are functionally similar to the issuance similar to a POS network, so that value stored on the and sale of consumer payment instruments such as card could be used with a wide range of participating travelers checks, which also are activities that banks vendors. Applicants expect that Company's principal conduct and that the Board has previously determined stored value card activities would involve the devel- are closely related to banking within the meaning of opment and operation of such open systems. the BHC Act.6 For these reasons, and based on the In an open system, customers' debit cards would record, the Board has concluded that Company's hold an integrated computer chip or comparable tech- proposed services in connection with stored value nology capable of storing value for use in stored value cards, in either an open system or a closed system, are card transactions. Value could be placed on the card at closely related to banking. an ATM adapted to read and place value on the chip, Electronic Data Interchange Services. Company also at a limited purpose ATM-type machine whose only proposes to furnish retail merchants with data collected functions would be to add value to the chip and to from sales transactions consummated at the merchant's transfer stored value back to the customer's account, place of business ("Data services").7 The data collected or at a cash-to-card machine or other value transfer and furnished would relate to specific items and quantities device (collectively, "Value Terminals"). These of products purchased by the customer, as well as cus- Value Terminals would be operated, in at least some tomer purchasing patterns over a period of time. The data cases, by Company. Once value is placed on a card, would be formatted so that it could be used by the equivalent funds would be transferred to Company, merchant for inventory control, targeted marketing, and which would hold the funds for payment of stored other purposes. Company's Data services generally value card transactions. Stored value would leave the would be furnished to merchants as an adjunct to Comchip when the customer purchases goods or services pany's POS transaction processing services, and would either at a POS terminal (which may be operated by be rendered through a retail merchant's POS terminals. Company) or at a vending machine, telephone booth, Company does not intend to offer Data services on an mass transit turnstile, or other unmanned delivery independent basis. In addition, data collected by Comlocation (collectively, "Reader Terminals"), or when pany would be furnished only to the merchant that is party the customer transfers funds back to an account at a to the underlying sales transaction: that is, Company does Value Terminal. Reader Terminals generally would be not intend to provide such information to third parties. off-line devices, not connected to Company's ATM or POS networks. Instead of a direct electronic connection, a Reader Terminal would retain, for a period of 6. See 12 C.F.R. 225.25(b)(12). See also Citicorp, 79 Federal Reserve Bulletin 42 (1993). time, value representing the amount of customer pur- 7. Ordinarily, the sales transaction and the related payment would chases at the terminal. Then, at the vendor's conve- be processed electronically through Company's POS network. Hownience, Company, the vendor, or a third party would ever, Data services also could be furnished when cash payments are tendered, through the use of a merchant proprietary card held by the collect value from the Reader Terminals using special- consumer. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1162 Federal Reserve Bulletin • December 1993 Company's Data services would be limited to cap- Other Considerations turing, formatting, and furnishing data collected from sales transactions consummated at a particular mer- In every case involving a nonbanking acquisition by a chant's place of business. In addition, the data col- bank holding company under section 4 of the BHC Act, lected would be furnished only to that merchant, and the Board considers the financial condition and resources only in accordance with the merchant's specific in- of the applicant and its subsidiaries and the effect of the structions. Company does not intend to provide soft- transaction on these resources.10 Based on all the facts of ware or render advice or provide other services asso- record, the Board concludes that financial considerations ciated with the marketing or other uses of the data.8 are consistent with approval of these applications. The Applicants do anticipate, however, that Company managerial resources of each of the Applicants also are could provide additional related functions, such as the consistent with approval. issuance at POS terminals of store coupons or credits In order to approve these applications, the Board related to a merchant's marketing programs. also must find that the performance of the proposed The Board believes that the sales data that would be activities by Applicants through Company "can reaprocessed under the proposed Data services are financial sonably be expected to produce benefits to the public and economic data within the meaning of Regulation Y. In . . . that outweigh possible adverse effects, such as 1971, the Board determined that the processing of "bank- undue concentration of resources, decreased or unfair ing, financial, or related economic data, such as perform- competition, conflicts of interests, or unsound banking ing payroll, accounts receivable or payable, or billing practices." 12 U.S.C. § 1843(c)(8). The Board exservices", was an activity closely related to banking and pects that the participation of Company in the market therefore permissible for bank holding companies under for the proposed data processing and electronic paythe BHC Act. In 1982, the regulatory standard was ment services would increase the level of competition expanded to include all types of economic data. This among providers of those services. The Board also includes the processing of microeconomic data, such as anticipates that Company's proposed activities would data collected in the performance of accounts receivable result in new products, improved service, greater and payable functions and inventory and sales analyses. efficiencies, and increased convenience for consum- On the basis of the record and these considerations, the ers. In particular, the electronic delivery of govern- Board has concluded that Company's proposed Data ment benefits offers opportunities for improving the services, which involve the processing of financial and delivery service to recipients, maximizing the effisales data, are within the range of financial and economic ciency of operations at state agencies, and minimizing data processing activities contemplated by Regula- costs for all parties.11 The Board also notes that tion Y. services rendered in connection with stored value Other Enhanced ATM and POS Functions. Applicants cards would extend the benefits associated with elechave stated that Company will place significant emphasis tronic funds transfer systems to a greater range of on research relating to and the development and provision consumer transactions. of new and enhanced ATM and POS services. For this In addition, there is no evidence in the record that reason, Applicants have requested authority for Company consummation of the proposed activities would result to provide such new or enhanced services (in addition to in any significantly adverse effects, such as undue the activities discussed above) without further applica- concentration of resources, decreased or unfair comtion, under a general authority to provide data processing petition, conflicts of interests, or unsound banking services pursuant to Regulation Y. The Board believes practices.12 Accordingly, the Board has concluded that the enhanced functions that Applicants have specifically proposed, such as providing electronic access to additional government benefit programs, and developing Applicants must consult with the Federal Reserve System before the ability to cash checks, to allocate deposits, or to make commencing any new activity not described in this order to ensure that the activity will satisfy the criteria set forth in the BHC Act and loan payments at an ATM, as well as bill paying services Regulation Y, and to allow the Federal Reserve System an opportuand account maintenance functions such as check order- nity to consider whether a separate application should be reviewed in ing, constitute the processing of banking, financial, or any particular case. economic data, and are permissible under the BHC Act.9 10. See 12 C.F.R. 225.24. See also The Fuji Bank, Limited, 75 Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve Bulletin 155 (1987). 11. Electronic Transfer of Government Benefits, 11 Federal Reserve Bulletin 203 (1991). 8. In addition, Company will not furnish software that provides 12. In this regard, the Board notes that Applicants have committed broad-based marketing or demographic analysis. to provide to the Federal Reserve System data regarding the aggregate 9. Applicants have indicated that, in the future, Company may balances being held by Company in connection with its stored value develop other data processing and transmission services that are not card activities. The Board's approval is subject to compliance with described in the applications, and are not discussed in this order. this commitment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1163 that the balance of the public interest factors that it is Board's Regulation Y (12 C.F.R. 225.23), to engage required to consider under section 4(c)(8) of the BHC de novo through its wholly owned subsidiary, BA Act is favorable. Securities, Inc., Seattle, Washington ("Company"), Based on all the facts of record, the Board has in the following securities-related activities: determined that the applications should be, and hereby (1) Acting as agent in the private placement of all are, approved. The Board's approval is specifically types of securities, including providing related adconditioned on compliance with the commitments visory services; made in connection with these applications and with (2) Buying and selling all types of securities on the the conditions referred to in this order. The Board's order of investors as a "riskless principal"; and determination also is subject to all of the conditions set (3) Providing securities brokerage and investment forth in Regulation Y, including those in sections advisory services, both separately and in combina- 225.4(d) and 225.23(b) of Regulation Y, and to the tion.1 Board's authority to require such modification or termination of the activities of a bank holding com- Applicant would conduct the proposed activities pany or any of its subsidiaries as the Board finds throughout the United States and the world.2 necessary to ensure compliance with, and to prevent Notice of the application, affording interested perevasion of, the provisions of the BHC Act and the sons an opportunity to submit comments, has been Board's regulations and orders issued thereunder. For published (58 Federal Register 35,003, 44,838 (1993)). purposes of this action, these commitments and con- The time for filing comments has expired, and the ditions are deemed to be conditions imposed in writing Board has considered the application and all comby the Board in connection with its findings and ments received in light of the public interest factors set decision, and, as such, may be enforced in proceedforth in section 4(c)(8) of the BHC Act. ings under applicable law. Applicant, with total consolidated assets of This transaction shall not be consummated later $185.5 billion, is the second largest commercial bankthan three months after the effective date of this Order, unless such period is extended for good cause by the Board, or by the Federal Reserve Bank of 1. In connection with this proposal, Applicant intends to transfer to Company certain securities-related businesses and activities currently Cleveland or the Federal Reserve Bank of Philadel- being conducted by Applicant's lead bank, Bank of America National phia, acting pursuant to delegated authority. Trust and Savings Association, San Francisco, California ("Bank"). In particular, Applicant proposes to transfer certain investment ad- By order of the Board of Governors, effective visory and securities brokerage activities from Bank to Company. October 28, 1993. Applicant also would transfer Bank's primary dealer activities to Company. Company also proposes to act as agent for Bank and other bank Voting for this action: Chairman Greenspan and Governors affiliates with respect to loan syndications and securities brokerage Angell, Kelley, La Ware, and Phillips. Absent and not voting: transactions in accordance with the servicing exemption of section Governors Mullins and Lindsey. 4(c)(1)(C) of the BHC Act and section 225.22(a) of the Board's Regulation Y. See 12 U.S.C. § 1843(c)(1)(C); 12 C.F.R. 225.22(a). Moreover, Company intends to enter into contracts with Bank, JENNIFER J. JOHNSON whereby Bank would provide various legal, audit, premises and Associate Secretary of the Board equipment, bookkeeping, securities clearing, and other back office support services. All inter-affiliate activities would be conducted in BankAmerica Corporation accordance with sections 23A and 23B of the Federal Reserve Act, and the conditions and limitations that the Board has imposed on bank San Francisco, California holding companies engaging in underwriting and dealing in bankineligible securities ("section 20 firewalls"). See 12 U.S.C. §§ 371c, 371c-l; Citicorp, et al„ 73 Federal Reserve Bulletin 473 (1987), ajfd Order Approving an Application to Engage in sub nom. Securities Industry Ass'n v. Board of Governors of the Various Securities-Related Activities Federal Reserve System, 839 F.2d 47 (2d Cir.), cert, denied, 486 U.S. 1059 (1988). Upon consummation of the proposal, Company also would act BankAmerica Corporation, San Francisco, California under existing authority pursuant to sections 225.25(b)(1) and (b)(18) ("Applicant"), a bank holding company within the of Regulation Y to make -and service loans and other extensions of credit, and to act as a futures commission merchant ("FCM") in meaning of the Bank Holding Company Act ("BHC executing and clearing exchange-traded financial contracts for Com- Act"), has applied under section 4(c)(8) of the BHC pany's own account for hedging purposes. See 12 C.F.R. 225.25(b)(1), Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of the (b)(18). Company would not act as an FCM for the accounts of customers. Applicant has committed that Company will abide by the Board's policy statement on trading derivatives for one's own account. See 12 C.F.R. 225.142. 2. Upon consummation of the proposal, Applicant intends to In addition, the Board's approval is subject to the requirement that, transfer Company's principal place of business from Seattle, Washto the extent the proposed activities are subject to state or federal laws ington, to San Francisco, California, and to establish branch offices in relating to branching, deposit-taking and other matters, the activities Los Angeles, California; New York, New York; Atlanta, Georgia; and will be conducted in conformity with all such legal requirements. Dallas, Texas. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1164 Federal Reserve Bulletin • December 1993 ing organization in the United States, and engages the public. Applicant has committed that Company directly and through subsidiaries in a broad range of will not privately place registered securities, and will permissible nonbanking activities.3 Company is en- only place securities with "institutional customers" as gaged in limited bank-eligible and bank-ineligible se- that term is defined in section 225.2(g) of the Board's curities underwriting and dealing activities permissible Regulation Y (12 C.F.R. 225.2(g)). under section 20 of the Glass-Steagall Act (12 U.S.C. "Riskless principal" is the term used in the securi- § 377).4 Company also is, and will continue to be, a ties business to refer to a transaction in which a broker-dealer registered with the Securities and Ex- broker-dealer, after receiving an order to buy (or sell) change Commission ("SEC"), and a member of the a security from a customer, purchases (or sells) the National Association of Securities Dealers, Inc. security for its own account to offset a contemporane- ("NASD"). Accordingly, Company is subject to the ous sale to (or purchase from) the customer.6 "Riskrecordkeeping, reporting, fiduciary standards, and less principal" transactions are understood in the other requirements of the Securities Exchange Act of industry to include only transactions in the secondary 1934 (15 U.S.C. § 78a et seq.), the SEC, and the market. Thus, Applicant proposes that Company NASD. would not act as a "riskless principal" in selling securities at the order of a customer that is the issuer Securities Brokerage and Investment Advisory of the securities to be sold, or in any transaction where Activities Company has a contractual agreement to place the securities as agent of the issuer. Company also would The Board has previously determined by regulation not act as a "riskless principal" in any transaction that the provision of securities brokerage and invest- involving a security for which it makes a market. ment advisory services, either separately or in combi- The Board previously has determined by order that, nation, are activities closely related to banking under subject to prudential limitations that address the posection 4(c)(8) of the BHC Act.5 Applicant has com- tential for conflicts of interests, unsound banking mitted that Company will engage in the proposed practices, and other adverse effects, the proposed securities brokerage and investment advisory activi- private placement and riskless principal activities are ties in accordance with all the conditions and limita- closely related to banking as to be a proper incident tions placed on those activities as set forth in Regula- thereto within the meaning of section 4(c)(8) of the tion Y. BHC Act.7 The Board also previously has determined that acting as agent in the private placement of secu- Private Placement and "Riskless Principal" rities, and purchasing and selling securities on the Activities order of investors as a "riskless principal", do not constitute underwriting and dealing in securities for Private placement involves the placement of new purposes of section 20 of the Glass-Steagall Act issues of securities with a limited number of sophisti- (12 U.S.C. § 377), and that revenue derived from such cated purchasers in a nonpublic offering. A financial activities is not subject to the 10 percent revenue intermediary in a private placement transaction acts limitation on bank-ineligible securities underwriting solely as an agent of the issuer in soliciting purchasers, and dealing.8 Applicant has committed that Company and does not purchase the securities and attempt to will conduct its private placement and "riskless prinresell them. Securities that are privately placed are not cipal" activities using the same methods and procesubject to the registration requirements of the Securi- dures, and subject to the same prudential limitations ties Act of 1933, and are offered only to financially established by the Board in Bankers Trust and J.P. sophisticated institutions and individuals and not to Morgan,9 including the comprehensive framework of 6. See Securities and Exchange Commission Rule 10b-10. 17 C.F.R. 3. Asset and ranking data are as of June 30, 1993. Applicant's 240.10b-10(a)(8)(i). subsidiary banks operate approximately 2,300 branches in 11 states, 7. See J.P. Morgan & Company Incorporated, 76 Federal Reserve excluding those branches that Applicant has agreed to divest in Bulletin 26 (1990) V'J.P. Morgan"); Bankers Trust New York Corpoconnection with its merger with Security Pacific Corporation. See ration, 75 Federal Reserve Bulletin 829 (1989) ("Bankers Trust"). BankAmerica Corporation, 78 Federal Reserve Bulletin 338 (1992). 8 .Id. Applicant acquired Company (formerly Security Pacific Securities, 9. Among the prudential limitations detailed more fully in Bankers Inc.) through this merger. Trust and J.P. Morgan are that Company will maintain specific 4. Company may underwrite and deal in municipal revenue bonds, records that will clearly identify all "riskless principal" transactions, 1-4 family mortgage-related securities, commercial paper, and and that Company will not engage in any "riskless principal" transconsumer-receivable-related securities. See Security Pacific Corpora- actions for any securities carried in its inventory. When acting as a tion, 73 Federal Reserve Bulletin 622 (1987); Chemical New York "riskless principal", Company will only engage in transactions in the Corporation, et al., 73 Federal Reserve Bulletin 731 (1987). secondary market, and not at the order of a customer that is the issuer 5. See 12 C.F.R. 225.25(b)(4) and (15). of the securities to be sold; will not act as "riskless principal" in any Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1165 restrictions designed to avoid potential conflicts of There would be no employees in common between interests, unsound banking practices, or other adverse Company and any of its bank affiliates or their subsideffects imposed by the Board in connection with iaries. In addition, Company's arrangement to sell underwriting and dealing in securities.10 bank-eligible securities through Bank or Bank's broker-dealer subsidiary would not be an exclusive Cross-Marketing Activities arrangement; thus, Company also would sell its bankeligible securities both directly and through other As part of this application, Applicant proposes to act, brokers, and Bank and its broker-dealer subsidiary through a wholly owned broker-dealer subsidiary of would sell bank-eligible securities underwritten or Bank, BA Investment Services, Inc. ("BAIS"), as a dealt in by other broker-dealers. Moreover, Applicant riskless principal or broker for customers in buying has committed that Company's role in underwriting or and selling bank-eligible securities that Company un- dealing in the securities that are being brokered by its derwrites or deals in. Applicant contends that this national bank subsidiary will be fully disclosed to the activity is consistent with the section 20 firewall bank's brokerage customers, and that Company's bro- ("cross-marketing firewall") that prohibits bank and kerage transactions in such securities will be conthrift affiliates of a section 20 company from acting as ducted on an arm's length basis. Based on the foregoan agent for, or engaging in marketing activities on ing and all the facts of record, the Board has behalf of, the underwriting company. Applicant pro- determined that BAIS may act as a riskless principal poses to have a broker-dealer subsidiary of its lead or broker for customers in buying and selling bankbank cross-market only those securities that the bank eligible securities that Company underwrites or deals itself could underwrite or deal in, i.e., bank-eligible in.11 securities. One of the principal purposes of the section 20 Financial Factors, Managerial Resources, and Other firewalls is to ensure that the bank-ineligible securities Considerations activities of a bank holding company are conducted in a corporation over which affiliated banks have no In order to approve this application, the Board is ownership, or financial or managerial control. Appli- required to determine that the performance of the cant has committed that Company would remain sep- proposed activities by Applicant can reasonably be arately incorporated, capitalized, and funded, and expected to produce public benefits that outweigh would be operationally distinct from its bank affiliates. adverse effects under the proper incident to banking standard of section 4(c)(8) of the BHC Act. In this regard, in every case under section 4 of the BHC Act, transaction involving a security for which it makes a market; and will the Board considers the financial condition and renot hold itself out as making a market in the securities that it buys and sells as a "riskless principal". Moreover, Company will not engage in sources of the applicant and its subsidiaries, and the "riskless principal" transactions on behalf of its foreign affiliates that effect of the proposed transaction on these resourcengage in securities dealing activities outside the United States and es.12 Based on the facts of this case, the Board will not act as "riskless principal" for registered investment company securities. In addition, Company will not act as a "riskless principal" concludes that the financial considerations are consiswith respect to any securities of investment companies that are tent with approval of this application. The managerial advised by Applicant or any of its affiliates. With regard to private resources of Applicant also are consistent with applacement activities, Applicant has committed that Company will not privately place registered investment company securities or securities proval. of investment companies that are advised by Applicant or any of its Under the framework established in this and prior affiliates. 10. In previous orders approving riskless principal activities, the Board decisions, consummation of this proposal is not Board has relied on commitments by bank holding companies to likely to result in any significantly adverse effects, refrain from entering quotes for specific securities in the NASDAQ or such as an undue concentration of resources, deany other dealer quotation system in connection with riskless principal transactions. Bankers Trust, at 832. Applicant proposes that creased or unfair competition, conflicts of interests, or Company, in acting as a riskless principal, may: unsound banking practices. Moreover, the Board ex- (i) enter bid or ask quotations; or (ii) publish "offering wanted" or "bid wanted" notices on trading systems other than an exchange or the NASDAQ. In order to ensure that Company would not hold itself out as a market maker with respect to securities for which it acts as riskless principal, 11. In 1990, the Board sought public comment on a proposal to Applicant has committed that Company would not enter price quota- modify or remove the cross-marketing restriction as it applied to all tions on different sides of the market for a particular security for two activities of a section 20 affiliate, including bank-ineligible underwritbusiness days. In other words, Company would not enter an "ask" ing activities. 55 Federal Register 28,295 (1990). Applicant's proposal quote for two business days after entering a "bid" quote with respect is narrower in scope than the Board's 1990 proposal, and would apply to the same security, and vice versa. The Board previously has only to bank-eligible securities. The Board notes that no comments determined that these activities do not constitute underwriting and were received in opposition to Applicant's limited proposal, and one dealing in securities for purposes of the Glass-Steagall Act. Dauphin comment was submitted in favor of the proposal. Deposit Corporation, 77 Federal Reserve Bulletin 672 (1991). 12. 12 C.F.R. 225.24. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1166 Federal Reserve Bulletin • December 1993 pects that the de novo entry of Applicant into the sider Applicant's proposal regarding the cross-marketmarket for the proposed services in the United States ing firewall. The proposal by Applicant raises issues would provide added convenience to Applicant's cus- that, in my opinion, would be more appropriate for the tomers, and would increase the level of competition Board to consider in the context of a rulemaking. I, among existing providers of these services. Accord- therefore, would reserve judgment on this aspect of ingly, the Board has determined that the performance the application. of the proposed activities by Applicant can reasonably October 18, 1993 be expected to produce public benefits that would outweigh possible adverse effects under the proper Irwin Financial Corporation incident to banking standard of section 4(c)(8) of the Columbus, Indiana BHC Act. Based on the foregoing and all the facts of record, Order Approving an Application to Engage in the Board has determined to, and hereby does, ap- "Riskless Principal" Activities prove the application subject to all of the terms and conditions set forth in this Order, and in the above Irwin Financial Corporation, Columbus, Indiana noted Board orders that relate to these activities. The ("Applicant"), a bank holding company within the Board's determination is also subject to all the terms meaning of the Bank Holding Company Act ("BHC and conditions set forth in Regulation Y, including Act"), has applied under section 4(c)(8) of the BHC those in sections 225.4(d) and 225.23(b), and to the Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of the Board's authority to require modification or termina- Board's Regulation Y (12 C.F.R. 225.23) to engage tion of the activities of a bank holding company or any de novo through its subsidiary, Irwin Union Securiof its subsidiaries as the Board finds necessary to ties, Inc., Columbus, Indiana ("Company"), in buying assure compliance with, and to prevent evasion of, the and selling all types of securities on the order of provisions of the BHC Act, and the Board's regula- investors as a "riskless principal." tions and orders issued thereunder. The Board's deci- Notice of the application, affording interested persion is specifically conditioned on compliance with all sons an opportunity to submit comments, has been the commitments made in connection with this appli- published (58 Federal Register 41,091 (1993)). The cation, including the commitments discussed in this time for filing comments has expired, and the Board Order and the conditions set forth in the above noted has considered the application and all comments re- Board regulations and orders. These commitments and ceived in light of the public interest factors set forth in conditions shall be deemed to be conditions imposed section 4(c)(8) of the BHC Act. in writing by the Board in connection with its findings Applicant, with total consolidated assets of approxand decisions, and, as such, may be enforced in imately $693 million, is the 16th largest commercial proceedings under applicable law. banking organization in Indiana, controlling approxi- This transaction shall not be consummated later mately 1 percent of deposits in commercial banking than three months after the effective date of this organizations in the state.1 Applicant controls one Order, unless such period is extended for good cause bank subsidiary in Indiana, and engages directly and by the Board or by the Federal Reserve Bank of San through subsidiaries in a broad range of permissible Francisco, pursuant to delegated authority. nonbanking activities. By order of the Board of Governors, effective Company is registered with the Securities and Ex- October 18, 1993. change Commission ("SEC"), and is a member of the National Association of Securities Dealers, Inc. Voting for this action: Chairman Greenspan and Governors ("NASD"). Accordingly, Company is subject to the Angell, Kelley, LaWare, Lindsey, and Phillips. Absent and recordkeeping, reporting, fiduciary standards, and not voting: Governor Mullins. other requirements of the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.), the SEC, and the JENNIFER J. JOHNSON NASD. Associate Secretary of the Board "Riskless Principal" Activities Concurring Statement of Governor Angell "Riskless principal" is the term used in the securities I would approve Applicant's proposal to engage in business to refer to a transaction in which a brokerprivate placement, riskless principal and other securities activities. However, I do not believe that this application is a proper context for the Board to con- 1. Asset, deposit, and ranking data are as of June 30, 1993. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1167 dealer, after receiving an order to buy (or sell) a adverse effects imposed by the Board in connection security from a customer, purchases (or sells) the with underwriting and dealing in securities. security for its own account to offset a contemporaneous sale to (or purchase from) the customer.2 "Risk- Financial Factors, Managerial Resources, and Other less principal" transactions are understood in the Considerations industry to include only transactions in the secondary market. Thus, Applicant proposes that Company In order to approve this application, the Board is would not act as a "riskless principal" in selling required to determine that the performance of the securities at the order of a customer that is the issuer proposed activities by Applicant can reasonably be of the securities to be sold, or in any transaction where expected to produce public benefits that outweigh Company has a contractual agreement to place the adverse effects under the proper incident to banking securities as agent of the issuer. Company also would standard of section 4(c)(8) of the BHC Act. In this not act as a "riskless principal" in any transaction regard, in every case under section 4 of the BHC Act, involving a security for which it makes a market. the Board considers the financial condition and re- The Board previously has determined by order that, sources of the applicant and its subsidiaries, and the subject to prudential limitations that address the po- effect of the proposed transaction on these resources.6 tential for conflicts of interests, unsound banking Based on the facts of this case, the Board concludes practices, and other adverse effects, the proposed that the financial considerations are consistent with riskless principal activities are so closely related to approval of this application. The managerial resources banking as to be a proper incident thereto within the of Applicant also are consistent with approval. meaning of section 4(c)(8) of the BHC Act.3 The Board Under the framework established in this and prior also has previously determined that purchasing and Board decisions, consummation of this proposal is not selling securities on the order of investors as a "risk- likely to result in any significantly adverse effects, less principal" does not constitute underwriting and such as an undue concentration of resources, dedealing in securities for purposes of section 20 of the creased or unfair competition, conflicts of interests, or Glass-Steagall Act (12 U.S.C. § 377), and that reve- unsound banking practices. Moreover, the Board exnue derived from such activities is not subject to the pects that the de novo entry of Applicant into the 10 percent revenue limitation on bank-ineligible secu- market for the proposed "riskless principal" services rities underwriting and dealing.4 Applicant has com- in the United States would provide added convenience mitted that Company will conduct its "riskless princito Applicant's customers, and would increase the level pal" activities using the same methods and of competition among existing providers of these serprocedures, and subject to the same prudential limitavices. Accordingly, the Board has determined that the tions established by the Board in Bankers Trust and performance of the proposed activities by Applicant J.P. Morgan, 5 including the comprehensive framecould reasonably be expected to produce public benwork of restrictions designed to avoid potential conefits that would outweigh possible adverse effects flicts of interests, unsound banking practices, or other under the proper incident to banking standard of section 4(c)(8) of the BHC Act. Based on the foregoing and all the facts of record, 2. See Securities and Exchange Commission Rule 10b-10. 17 C.F.R. the Board has determined to, and hereby does, ap- 240.10b-10(a)(8)(i). prove the application subject to all the terms and 3. See J.P. Morgan & Company Incorporated, 76 Federal Reserve Bulletin 26 (1990) V'J.P. Morgan"); Bankers Trust New York Corpo- conditions set forth in this Order, and in the above ration, 75 Federal Reserve Bulletin 829 (1989) ("Bankers Trust"). noted Board orders that relate to these activities. The 4. Id. Board's determination is also subject to all the terms 5. Among the prudential limitations detailed more fully in Bankers Trust and J.P. Morgan are that Company will maintain specific and conditions set forth in Regulation Y, including records that will clearly identify all "riskless principal" transactions, those in section 225.4(d) and 225.23(b), and to the and that Company will not engage in any "riskless principal" trans- Board's authority to require modification or terminaactions for any securities carried in its inventory. When acting as a "riskless principal", Company will only engage in transactions in the tion of the activities of a bank holding company or any secondary market, and not at the order of a customer that is the issuer of its subsidiaries as the Board finds necessary to of the securities to be sold; will not act as "riskless principal" in any transaction involving a security for which it makes a market; and will ensure compliance with, and to prevent evasion of, the not hold itself out as making a market in the securities that it buys and provision of the BHC Act, and the Board's regulations sells as a "riskless principal." Moreover, Company will not engage in and orders issued thereunder. The Board's decision is "riskless principal" transactions on behalf of its foreign affiliates that engage in securities dealing activities outside the United States and specifically conditioned on compliance with all the will not act as "riskless principal" for registered investment company securities. In addition, Company will not act as a "riskless principal" with respect to any securities of investment companies that are advised by Applicant or any of its affiliates. 6. 12 C.F.R. 225.24. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1168 Federal Reserve Bulletin • December 1993 commitments made in connection with this applica- section 4(c)(8) of the BHC Act (12 U.S.C. § 1843) to tion, including the commitments discussed in this acquire the nonbanking subsidiaries of FirsTier.2 Order and the conditions set forth in the above noted Notice of the applications, affording interested per- Board regulations and orders. These commitments and sons an opportunity to submit comments, has been conditions shall be deemed to be conditions imposed published (58 Federal Register 39,026 (1993)). The in writing by the Board in connection with its findings time for filing comments has expired, and the Board and decisions, and, as such, may be enforced in has considered the applications and all comments proceedings under applicable law. received in light of the factors set forth in sections 3(c) This transaction shall not be consummated later and 4(c)(8) of the BHC Act. than three months after the effective date of this Banc One, with total deposits of approximately Order, unless such period is extended for good cause $59.2 billion, controls banking subsidiaries in Ohio, by the Board or by the Federal Reserve Bank of Indiana, Michigan, Wisconsin, Illinois, Colorado, Chicago, acting pursuant to delegated authority. Kentucky, West Virginia, Texas, Arizona, Utah, Cal- By order of the Board of Governors, effective ifornia, and Oklahoma.3 Banc One does not currently October 4, 1993. control any banks in Nebraska. FirsTier is the second largest commercial banking organization in Nebraska, Voting for this action: Chairman Greenspan and Governors controlling deposits of $2.3 billion, representing Mullins, Angell, Kelley, LaWare, and Phillips. Absent and 11.8 percent of the total deposits in commercial banks not voting: Governor Lindsey. in the state. Upon consummation of this proposal, Banc One would become the second largest commer- JENNIFER J. JOHNSON cial bank in Nebraska, controlling 11.8 percent of the Associate Secretary of the Board total deposits in commercial banks in the state. Banc One and FirsTier do not compete directly in Orders Issued Under Sections 3 and 4 of the any relevant banking market.4 Based on all the facts of Bank Holding Company Act record, the Board concludes that Banc One's acquisition of FirsTier and its subsidiary banks would not Banc One Corporation result in any significantly adverse effects on competi- Columbus, Ohio tion in any relevant banking market. Banc One Beta Corporation Douglas Amendment Analysis Columbus, Ohio Section 3(d) of the BHC Act, the Douglas Amend- Order Approving Merger of Bank Holding ment, prohibits the Board from approving an applica- Companies and Acquisition of Banks tion by a bank holding to acquire control of any bank located outside of the bank holding company's home Banc One Corporation and Banc One Beta Corpora- state, unless such acquisition is "specifically authotion, both of Columbus, Ohio (together "Banc One"), bank holding companies within the meaning of the Bank Holding Company Act ("BHC Act"), have 2. Banc One has applied to acquire the following FirsTier nonbankapplied under sections 3 and 4 of the BHC Act ing subsidiaries: (1) Firstier Mortgage Company, Omaha, Nebraska, and thereby (12 U.S.C. §§ 1842 and 1843) to acquire FirsTier Fi- engage in mortgage banking activities pursuant to section nancial, Inc., Omaha, Nebraska ("FirsTier"), and 225.25(b)(1) of the Board's Regulation Y; (2) Firstier Insurance, Inc., Omaha, Nebraska, and thereby engage thereby indirectly acquire Firstier Bank, N.A., in the sale of credit-related insurance in connection with extensions Omaha; Firstier Bank, N.A., Lincoln; Firstier Bank, of credit by affiliated banks, pursuant to section 225.25(b)(8)(i) of N.A., Scottsbluff; and Firstier Bank, N.A., Norfolk, Regulation Y; and all in Nebraska.1 Banc One also has applied under (3) Wyoming Trust & Management Co., Gillette, Wyoming, and thereby engage in providing trust and asset management services pursuant to section 225.25(b)(3) of Regulation Y. 3. State deposit data are as of June 30, 1993, and include acquisitions approved by the Board as of that date. The Board recently has approved an application by Banc One to acquire banks in Oklahoma. See Banc One Corporation, 79 Federal Reserve Bulletin 1055 (1993) 1. Banc One proposes to merge FirsTier and Banc One Beta ("Central Banking Order"). Corporation with FirsTier surviving the merger. The surviving corpo- 4. The Board has carefully considered a comment maintaining that ration will be renamed Banc One Nebraska Corporation. In connec- this proposal could result in anti-competitive effects in Nebraska. tion with the proposed acquisition, Banc One also seeks approval to Because this proposal represents Banc One's initial entry into Neacquire an option to purchase up to 18 percent of the voting shares of braska, the proposed acquisition of FirsTier will not increase market FirsTier, which option will become moot upon consummation of the concentration or eliminate any existing competition in any relevant proposed acquisition. banking market in Nebraska. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1169 rized by the statute laws of the State in which such acquisition based on the CRA performance of both bank is located, by language to that effect and not Banc One and FirsTier.9 The Board also has received merely by implication."5 For purposes of the Douglas comments from The Main Street Business Association Amendment, the home state of Banc One is Ohio.6 ("MSBA") generally critical of Banc One's corporate This proposal represents the initial entry of an Ohio CRA program and its record of lending to individuals bank holding company into Nebraska. In considering in cities throughout Ohio.10 this proposal, the Board has analyzed the interstate The Board has carefully reviewed the CRA perforbanking statutes of Ohio and Nebraska, and has con- mance records of Banc One and its subsidiary banks, cluded that Banc One is authorized under the laws of the comments received and Banc One's responses to Nebraska to acquire the subsidiary banks of FirsTier.7 those comments, as well as all other relevant facts of Accordingly, the Board's approval of this proposal is record, in light of the CRA, the Board's regulations, not prohibited by the Douglas Amendment. Approval and the Statement of the Federal Financial Superviof the proposed transaction is conditioned, however, sory Agencies Regarding the Community Reinvestupon Banc One receiving the necessary approval from ment Act ("Agency CRA Statement").11 the Nebraska Director of Banking and Finance. Record of Performance Under the CRA Convenience and Needs Considerations The Board believes that in reviewing an application by In acting upon an application to acquire a depository a bank holding company to acquire a bank under institution under the BHC Act, the Board must con- section 3 of the BHC Act, the Board should look at the sider the convenience and needs of the communities to entire record of performance of the applicant bank be served, and take into account the records of the holding company in meeting the convenience and relevant depository institutions under the Community needs of the community, including the record of all its Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). subsidiary banks under the CRA.12 In reviewing the The CRA requires the federal financial supervisory record of each institution under the CRA, the Agency agencies to encourage financial institutions to help meet CRA Statement provides that a CRA examination is an the credit needs of the local communities in which they important and often controlling factor in the consideroperate consistent with the safe and sound operation of ation of an institution's CRA record and that these such institutions. To accomplish this end, the CRA reports will be given great weight in the applications requires the appropriate federal supervisory authority process.13 The record in this case indicates that all but to "assess the institution's record of meeting the credit two of Banc One's 78 subsidiary banks have received needs of its entire community, including low- and either "outstanding" or "satisfactory" ratings from moderate-income neighborhoods, consistent with the their primary regulators in their most recent examinasafe and sound operation of such institution," and to tions of their CRA performance, and that one of these take that record into account in its evaluation of appli- banks was assigned this rating prior to being acquired cations.8 by Banc One.14 Additionally, Banc One's lead subsid- In connection with these applications, the Board has received a number of comments from public officials, small businesses, and local community groups in Ne- 9. The Board received comments from the Nebraska Community braska, expressing their support for the proposed Re-Investment Act Coalition ("Coalition") expressing concern about Banc One's level of commitment to working with non-profit community groups in Nebraska. As a result of a meeting between Banc One representatives and members of the Coalition, some members of the Coalition have expressed their support for this proposal. 5. 12 U.S.C. § 1842(d). 10. The Board also has received comments from the Coalition of 6. A bank holding company's home state is that state in which the Neighborhoods alleging that Banc One and its subsidiary bank, Banc operations of the bank holding company's banking subsidiaries were One Cincinnati, N.A., Cincinnati, Ohio, generally have not met the principally conducted on July 1, 1966, or the date on which the credit needs of minorities, women and low- and moderate-income company became a bank holding company, whichever is later. individuals in the Cincinnati area. These comments were considered 7. See Neb. Rev. Stat. § 8-902.02 (1991); Ohio Rev. Code. Ann. by the Board in connection with Banc One's acquisition of Central 1101.05. Nebraska's interstate banking statute permits an out-of-state Banking Group, Inc., Oklahoma City, Oklahoma. See Central Bankbank holding company to acquire a bank in Nebraska provided that ing Order. Based on all the facts of record, and for the reasons the applicant's home state authorizes the acquisition or control of discussed in the Central Banking Order and in this Order, the Board banks in that state by a Nebraska bank or bank holding company does not believe that these comments warrant denial of this proposal. under conditions no more restrictive than those imposed by the laws 11. 54 Federal Register 13,742 (1989). of Nebraska as determined by the Nebraska Director of Banking and 12. See, e.g., SunTrust Banks, Inc., 76 Federal Reserve Bulletin 542 Finance. The Nebraska Director of Banking and Finance has indi- (1990). cated that the interstate statutes of Nebraska and Ohio are reciprocal, 13. 54 Federal Register at 13,745 (1989). and has preliminarily indicated that this proposal is permissible under 14. The second rating of "needs to improve" was assigned to Nebraska banking law. Nicholas County Bank, Summersville, West Virginia ("Summersville 8. See 12 U.S.C. § 2903. Bank"), at its most recent examination conducted by the Federal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1170 Federal Reserve Bulletin • December 1993 iary bank, Bank One Columbus, N.A., Columbus, indicates that Banc One's subsidiary banks have taken Ohio ("Bank One Columbus"), received an "out- steps to ensure that all loan applicants are handled in a standing" rating for CRA performance from the Office non-discriminatory manner. of the Comptroller of the Currency ("OCC") in April Columbus. Banc One's lead subsidiary bank, Bank 1993.15 One Columbus, participates in a variety of programs designed to meet the credit needs of low- and A. CRA Performance of Banc One in moderate-income and inner-city neighborhoods in Inner-City Areas in Ohio Columbus. For example, Bank One Columbus offers direct and subsidized home-loan products through MSB A alleges that Banc One, along with its various both the Community Home Buyers Program and the subsidiaries, has denied equal access to credit to Ohio Housing Finance Agency First Time Homebuyindividuals residing in low- and moderate-income and ers Program, in which Bank One Columbus extended inner-city neighborhoods in Columbus, Cincinnati, 70 loans totalling $3.5 million from 1990-1992. Bank Cleveland, Mansfield, Youngstown, Dayton, Lima, One Columbus also participates in various govern- Akron, and Steubenville. The Board has carefully ment-sponsored loan programs. For the years 1990reviewed the CRA performance record of Banc One's 1992, Bank One Columbus extended 209 FHA houssubsidiary banks in Ohio in light of the allegations ing loans totalling $12.6 million, and 97 VA housing made by the MSB A. In particular, the Board has loans totalling $6.7 million. Bank One Columbus also reviewed information relating to the CRA programs of participates in the Columbus Housing Partnership, each of Banc One's subsidiary banks that service which has developed and financed over 550 homes communities the MSBA contends have been under- for low-income families. Furthermore, through its served by Banc One (the "Ohio Banks"), including Community Banking Group, Bank One Columbus the most recent CRA examinations of each bank, and has extended approximately $674.5 million in local information that each bank is required to file under the consumer loans. Home Mortgage Disclosure Act ("HMDA"). Bank One Columbus also addresses the needs of The most recent examinations for CRA compliance local small businesses throughout the Columbus MSA. and performance of each of the Ohio Banks conducted In this regard, Bank One Columbus's Business Bankby each institution's primary regulator found no evi- ing Group extended 1,709 commercial loans totalling dence of illegal discrimination or other illegal credit $171.6 million to local small businesses from 1991 practices. Examiners also found no evidence of any through the first quarter of 1993. During this period, practices or procedures which would discourage ap- Bank One Columbus also extended 1,627 small busiplications for available credit for any segment of the ness loans totalling $61.5 million, $47 million of which delineated communities of the Ohio Banks. Moreover, was generated by branches serving low- and moderatethese examinations indicate that the geographic distri- income areas. The bank also participates in the Small bution of each institution's credit extensions, applica- Business Administration's ("SBA") certified and pretions, and denials reflect reasonable penetration in all ferred lender programs. Over the period 1990 through segments of their delineated communities, including 1992, Bank One Columbus made 73 SBA loans totallow- and moderate-income areas.16 The record also ling $8.7 million and, in partnership with another local financial institution, produced start-up business loans through an SBA loan program. Moreover, as part of Deposit Insurance Corporation ("FDIC") as of December 1991. The The City of Columbus Business Development Fund Board also has considered information collected in the course of and Neighborhood Revitalization Program, Bank One certain ongoing examinations of subsidiary banks of Banc One. Columbus extended eight loans for $617,000. Bank 15. All of FirsTier's subsidiary banks have received either "outstanding" or "satisfactory" ratings for CRA performance from the One Columbus recently invested $23.5 million in local OCC at their most recent examinations. FirsTier's lead subsidiary bond issuances throughout its delineated community. bank, Firstier Bank, N.A., Omaha received an "outstanding" rating These investments provide financing for Columbus from the OCC in December 1992; Firstier Bank, N.A., Lincoln received an "outstanding" rating from the OCC in December 1992; urban development, local school districts, hospitals, Firstier Bank, N.A., Scottsbluff received a "satisfactory" rating from and for the State of Ohio's subsidized real estate the OCC in September 1990; and Firstier Bank, N.A., Norfolk mortgage down-payment assistance program for firstreceived an "outstanding" rating from the OCC in November 1988. 16. The most recent CRA examination of Bank One Cleveland, time homebuyers. N.A., Cleveland, Ohio, noted weaknesses in the bank's geographic Cincinnati. Bank One Cincinnati, N.A. ("Bank One distribution of housing-related lending throughout its entire delineated community, particularly in low- and moderate-income census tracts. Cincinnati"), has taken certain measures to increase Examiners indicated, however, that Bank One Cleveland is aware of the availability of mortgage financing for low- and disparities that exist in the geographic distribution of its credit moderate-income individuals, including hiring an ofextensions, and that Bank One Cleveland has taken certain steps to improve its record of lending in low- and moderate-income areas. ficer specializing in affordable housing lending and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1171 developing the "Welcome Home" loan program.17 As of September 1993, 44 loans totalling $1.2 million This program is designed to facilitate home ownership have been extended as part of this program. for low- and moderate-income individuals by reducing In April 1993, Bank One Youngstown introduced down payment requirements and closing costs, elimi- the Community Home Improvement Program nating mortgage guaranty insurance, and employing ("CHIP") to provide home improvement financing to flexible underwriting guidelines. As of June 30, 1993, low- and moderate-income individuals in its delineated 131 applications had been approved from low- and community. As of September 1, 1993, Bank One moderate-income borrowers under this program, in- Youngstown has extended seven loans totalling cluding 22 applications from African-American bor- $15,000 through this program. Bank One Youngstown rowers, for a total of approximately $7.8 million in also participates in various lending programs sponhousing loans. sored by the State of Ohio, including the Withrow With respect to small business lending, Bank One Linked Deposit Program, the Ohio Energy Action Cincinnati formed a Small Business Banking Division Loan Program, and the Ohio Mini-Loan Fund in 1992 to promote lending to area firms with annual (designed to provide an affordable financing alternasales of less than $2 million. During the first half of tive for low- and moderate-income individuals and 1993, Bank One Cincinnati generated 71 applications small businesses). from low- and moderate-income neighborhoods, and Dayton. Bank One Dayton, N.A. ("Bank One Dayhas made 30 of these loans. The bank also has intro- ton"), recently has developed several credit products duced a revolving line of credit designed to meet the in response to ascertained community needs.20 In needs of small business borrowers. particular, Bank One Dayton provides credit for Mansfield. The most recent CRA examination of affordable housing to low- and moderate-income indi- Bank One Mansfield ("Bank One Mansfield"), con- viduals through its Sponsored Purchase Mortgage Producted by the Federal Reserve Bank of Cleveland in gram and through the extension of "Visionloans." March 1992, indicates that the bank serves local com- Bank One Dayton also recently has established the munity credit needs through various government- Neighborhood Development Mortgage loan for firstguaranteed and internally-developed special loan pro- time homebuyers and the bank's Community Home grams.18 From September 1990 through March 1992, Buyer's Program features reduced down payment and Bank One Mansfield extended $3.8 million through its underwriting cost requirements for low- to moderateparticipation in the following loan programs: City of income individuals. Mansfield Revolving Loan Fund, FmHA loans, Ohio Bank One Dayton is an active participant in the City Pooled Bond Program, Ohio energy action loans, small of Dayton Neighborhood Lending Program (designed business loans, student loans, FHA/VA loans, and to make housing and home improvement loans avail- Withrow Linked Deposit Loans (loans designed to able in low- and moderate-income neighborhoods), stimulate small business development and job growth). Dayton's Home Purchase and Purchase-Rehab Pro- The examination also indicates that, in response to the gram, and the Ohio Housing Finance Agency's Firstascertained need for small business credit, Bank One time Homebuyer's Program, which offers below- Mansfield has become active in creating credit oppor- market interest rates and reduced down payment tunities for minority-owned small businesses within its requirements. Bank One Dayton also extends delineated community. FHA/VA loans and is a certified SBA lender. Youngstown. Bank One Youngstown, N.A. ("Bank Lima. As part of its CRA program, Bank One Lima, One Youngstown"), has introduced two new credit N.A. ("Bank One Lima"), has a formal program products designed to service the credit needs of low- designed to ascertain the credit needs of its delineated and moderate-income communities.19 In October community.21 In this regard, Bank One Lima has 1992, Bank One Youngstown introduced the "Ameri- identified home improvement loans, purchase money can Dream Program" which offers first mortgage loans mortgages (especially for first-time home buyers), reon more liberal credit terms to individuals with house- habilitation loans, and small business start-up and hold incomes of less than $26,209 and who are pur- working capital loans as some of the banking needs of chasing houses with a maximum sales price of $40,000. low- and moderate-income neighborhoods within its delineated community. 17. Banc One Cincinnati received a "satisfactory" rating for CRA performance from the OCC in July 1993. 18. In this March 1992 examination, Bank One Mansfield received 20. Banc One Dayton received a "satisfactory" rating for CRA an "outstanding" rating for CRA performance. performance from the OCC in June 1993. 19. Banc One Youngstown received a "satisfactory" rating for 21. Banc One Lima received an "outstanding" rating for CRA CRA performance from the OCC in April 1993. performance from the OCC in March 1993. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1172 Federal Reserve Bulletin • December 1993 The most recent examination of its CRA perfor- B. CRA Performance of Bank One Cleveland mance indicates that, in response to these identified needs, Bank One Lima has developed and marketed MSBA also alleges that the "needs to improve" rating several credit products. For example, the bank partic- assigned by the OCC to Bank One Cleveland, N.A., ipates in the "Fix Up Lima Program," which provides Cleveland, Ohio ("Bank One Cleveland"), in April below-market interest rate loans for property improve- 1993, indicates that there are deficiencies in the corment, and the Bank One Community Home Buyers porate CRA program of Banc One that have contrib- Program which provides special credit counselling and uted to weaknesses in the CRA programs of its sublow-money-down mortgages to low- and moderate- sidiary banks, and that the present applications should income individuals. The most recent CRA examina- be denied because of these alleged deficiencies. The tion of Bank One Lima noted that the bank also has Board has, in several recent cases, reviewed in detail appointed an officer to specialize and oversee the the corporate CRA policies of Banc One and found bank's government loan program, including SBA, VA/ those policies to be satisfactory.24 The Board notes FHA, and FmHA loans. that these policies have contributed to at least a Akron. The most recent CRA examination of Bank satisfactory CRA evaluation at nearly all of Banc One, Akron, N.A. ("Bank One Akron"), indicates One's subsidiary banks. that the bank has a comprehensive program for ascer- The Board also has recognized the CRA perfortaining the credit needs of individuals within its delin- mance deficiencies at Bank One Cleveland, and coneated community.22 In response to ascertained credit sidered Banc One's proposals to address those defineeds, Bank One Akron established an affordable ciencies. In approving Banc One's acquisition of housing lending department and developed the "Own- Valley National Corporation, Phoenix, Arizona ("Val- A-Home Program," an affordable housing loan prod- ley National"), the Board required Banc One to subuct targeting low- and moderate-income individuals in mit to the Board, when delivered to the OCC, a copy its delineated community. Through this program, of its plan to address the deficiencies in the CRA Bank One Akron extended 77 loans totalling $2.8 mil- program of Bank One Cleveland, and to submit perilion in 1992. odic reports on the progress of this plan.25 The Board Bank One Akron also extended 385 small business believes that progress has been shown since the Valley loans totalling $31.9 million in 1992, and participates in National acquisition to improve Bank One Cleveland's various government-sponsored loan programs such as CRA performance. For example, Bank One Cleveland FHA/VA. In addition, Bank One Akron extends home has introduced several new loan products designed to meet the credit needs of low- and moderate-income improvement loans through the Ohio Energy Action communities including: Program, and extends credit to small businesses in conjunction with the Akron Regional Development (1) A home mortgage product with low down pay- Board. ment requirements and flexible underwriting crite- Steubenville. In its most recent examination of Bank ria; One Steubenville, N.A. ("Bank One Steubenville"), (2) A mortgage loan product that will cover both the OCC indicated that the bank's efforts to ascertain acquisition costs and rehabilitation costs; the credit needs of its community, including low- and (3) A secured home-improvement loan product; and moderate-income areas, are "excellent."23 Bank One (4) A mortgage loan for one-to-eight unit rental Steubenville performed an extensive analysis of local properties. demographic data and reviewed the results of professionally generated market research data to develop an Bank One-Cleveland also has recruited a new CRA understanding of its local community. In addition, the Officer, who reports directly to the chief executive bank performed a geocoding analysis of loans ex- officer and board of directors of the bank. This CRA tended. Although this analysis showed no exclusion- Officer will coordinate the efforts of an expanded CRA ary lending patterns within its delineated community, staff, including regional CRA coordinators, a commu- Bank One Steubenville developed two residential real nity lending officer, and a low- and moderate-income estate loan products designed to address the needs of market analyst. In addition, Bank One-Cleveland has low- to moderate-income neighborhoods. reorganized its CRA Management Committee to in- 24. See Banc One Corporation, 79 Federal Reserve Bulletin 524 22. Banc One Akron received a "satisfactory" rating for CRA ("Valley National Order"); Banc One Corporation, 79 Federal Reperformance from the OCC in February 1993. serve Bulletin 872 (1993)("Colorado Western Order"); and Central 23. Banc One Steubenville received a "satisfactory" rating for CRA Banking Order. performance from the OCC in May 1992. 25. See Valley National Order. 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Legal Developments 1173 elude members of the bank's senior management. The must consider under section 3 of the BHC Act, also Board will continue to monitor the progress of this are consistent with approval. bank in improving its CRA program, including review- Banc One also has applied, pursuant to section 4 of ing progress reports when they are submitted.26 the BHC Act, to acquire the nonbanking subsidiaries The Board believes that it is important that Bank of FirsTier that engage in mortgage banking activi- One Cleveland improve its record of performance ties, the sale of credit-related insurance in connecunder the CRA, especially in light of the relative size tion with extensions of credit by affiliated banks, and of this institution and its presence in the communities trust and asset management services. As noted in which it operates. At the same time, the Board above, the Board previously has determined that believes that the CRA performance of Banc One must these activities are permissible for bank holding be considered in light of the performance of the entire companies under section 4(c)(8) of the BHC Act and organization, including the satisfactory CRA perfor- the Board's Regulation Y,28 and Banc One proposes mance of the other subsidiary banks, representing to conduct these activities in accordance with the approximately 95 percent of the assets controlled by Board's regulations. The record in this case indicates Banc One. For these reasons, and based on all the that there are numerous providers of these nonbankfacts of record, including the steps already taken by ing services, and there is no evidence in the record to Bank One Cleveland, the Board believes that, overall, indicate that consummation of this proposal is likely the CRA performance record of Banc One is consis- to result in any significantly adverse effects, such as tent with approval of this proposal. Based on a review undue concentration of resources, decreased or unof the entire record, including information provided by fair competition, conflicts of interests, or unsound the MSB A and other commenters, Banc One's re- banking practices that would outweigh the public sponses to these comments, and relevant reports of benefits of this proposal. Accordingly, the Board has examination, the Board believes that the convenience determined that the balance of public interest factors and needs considerations, including the CRA perfor- it must consider under section 4(c)(8) of the BHC Act mance records of Banc One, FirsTier, and their sub- is favorable and consistent with approval of Banc sidiary banks, are consistent with approval of these One's application to acquire FirsTier's nonbanking applications.27 subsidiaries. Other Considerations Conclusion The financial and managerial resources and future Based on the foregoing and other facts of record, the prospects of Banc One, FirsTier, and their respective Board has determined that the applications should be, subsidiaries, and other supervisory factors the Board and hereby are, approved. The Board's approval is expressly conditioned upon compliance with all the commitments made by Banc One in connection with these applications. The commitments and conditions 26. The FDIC has indicated to the Board that it recently conducted relied on by the Board in reaching this decision are a limited review of Summersville Bank's CRA program and procedeemed to be conditions imposed in writing by the dures, and believes that this bank has strengthened its CRA program and has addressed concerns raised by examiners at the 1991 exami- Board in connection with its findings and decision, nation. See Central Banking Order at note 13. The Board will continue and, as such, may be enforced in proceedings under to monitor the progress of Banc One in addressing the problems in the applicable law. CRA program of Summersville Bank. 27. Several comments received by the Board during the processing The determinations as to the nonbanking activities period requested that the Board hold a public meeting or hearing on are subject to all of the conditions in the Board's these applications. The Board is not required under section 3(b) of the BHC Act to hold a hearing on an application unless the appropriate Regulation Y, including those in sections 225.4(d) and banking authority for the bank to be acquired makes a timely written 225.23(b)(3) (12 C.F.R. 225.4(d) and 225.23(b)(3)), and recommendation of denial of the application. In this case, the OCC has to the Board's authority to require such modification not recommended denial of this proposal. Generally, under the Board's rules, the Board may, in its discretion, or termination of the activities of a holding company or hold a public hearing or meeting on an application to clarify factual any of its subsidiaries as the Board finds necessary to issues related to the application, and to provide an opportunity for assure compliance with, or to prevent evasions of, the testimony, if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). The Board has carefully considered this request. In the Board's view, provisions and purposes of the BHC Act and the interested parties have had a sufficient opportunity to present written Board's regulations and orders issued thereunder. submissions, and have submitted substantial written comments that have been considered by the Board. On the basis of all the facts of record, the Board has determined that a public meeting or hearing is not necessary to clarify the factual record in these applications, or otherwise warranted in this case. Accordingly, the request for a public meeting or hearing on these applications is hereby denied. 28. See 12 C.F.R. 225.25(b)(1),(8)(i) and (3). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1174 Federal Reserve Bulletin • December 1993 The acquisition of FirsTier's subsidiary banks (12 U.S.C. § 1828(c)) (the "Bank Merger Act").1 The shall not be consummated before the thirtieth calen- proposed transaction is also subject to review under dar day following the effective date of this Order, and the Bank Merger Act by the Office of the Comptroller the acquisition of FirsTier's subsidiary banks and of the Currency ("OCC"), the primary banking regunonbanking subsidiaries shall not be consummated lator for SouthTrust-Jacksonville. later than three months after the effective date of this Notice of the application, affording interested per- Order, unless such period is extended for good cause sons an opportunity to submit comments, has been by the Board or by the Federal Reserve Bank of given in accordance with the Bank Merger Act and the Cleveland, acting pursuant to delegated authority. Board's Rules of Procedure (12 C.F.R. 262.3(b)). Re- By order of the Board of Governors, effective ports on the competitive effects of the merger were October 12, 1993. requested from the United States Attorney General, the OCC, and the Federal Deposit Insurance Corpo- Voting for this action: Chairman Greenspan and Governors ration. The time for filing comments has expired, and Angell, La Ware, and Phillips. Absent and not voting: Gov- the Board has considered the application and all ernors Mullins, Kelley, and Lindsey. comments received in light of the factors set forth in the Bank Merger Act and section 5(d)(3) of the FDI JENNIFER J. JOHNSON Act. Associate Secretary of the Board SouthTrust, with consolidated assets of approximately $13.7 billion, controls 41 subsidiary banks in Alabama, Florida, Georgia, North Carolina, South ACTIONS TAKEN UNDER THE FEDERAL DEPOSIT Carolina, and Tennessee.2 SouthTrust is the fifth larg- INSURANCE CORPORATION IMPROVEMENT ACT est depository institution3 in Florida, controlling total deposits of $1.3 billion, representing approximately By the Board 1 percent of total deposits in depository institutions in the state.4 The Fernandina Beach and St. Augustine SouthTrust Corporation branches of Anchor collectively control deposits of Birmingham, Alabama $52.4 million, representing less than 1 percent of total deposits in depository institutions in Florida. Upon Order Approving the Acquisition of Two Branches of consummation of the proposed transaction, Southa Savings Bank Trust would remain the fifth largest depository institution in Florida, controlling deposits of $1.4 billion, SouthTrust Corporation, Birmingham, Alabama representing approximately 1 percent of total deposits ("SouthTrust"), and SouthTrust of Florida, Inc., in depository institutions in the state. Jacksonville, Florida (collectively, "Applicants"), SouthTrust proposes to acquire Anchor branches in propose to acquire certain assets and assume certain the St. Johns County banking market and the Jacksonliabilities of the Fernandina Beach and St. Augustine, ville Area banking market. SouthTrust and Anchor Florida, branch offices of Anchor Savings Bank, FSB, compete directly only in the Jacksonville Area banking Hewlett, New York ("Anchor"), by merging these offices with SouthTrust Bank of Jacksonville, N.A. ("SouthTrust-Jacksonville"), a wholly owned national 1. 12 U.S.C. § 1815(d)(3)(E). These factors include considerations bank subsidiary of SouthTrust of Florida, Inc. Appli- relating to competition, financial and managerial resources, future cants have requested the Board's approval of this prospects of the existing and proposed institutions, and the convenience and needs of the communities to be served. 12 U.S.C. transaction pursuant to section 5(d)(3) of the Federal § 1828(c). Deposit Insurance Act (12 U.S.C. § 1815(d)(3) ("FDI 2. Asset data are as of June 30, 1993. Act")), as amended by the Federal Deposit Insurance 3. In this context, depository institutions include commercial banks, savings banks, and savings associations. State and market share data Corporation Improvement Act of 1991 (Pub. L. No. before consummation are based on calculations in which the deposits 102-242, § 501, 105 Stat. 2236, 2388-2392 (1991)). Sec- of thrift institutions are included at 50 percent. The Board previously tion 5(d)(3) of the FDI Act requires the Board to has indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See WM review any proposed merger between a Savings Asso- Bancorp, 76 Federal Reserve Bulletin 788 (1990); National City ciation Insurance Fund member and any Bank Insur- Corporation 70 Federal Reserve Bulletin 743 (1984). Because the ance Fund ("BIF") member if the acquiring or result- deposits of the Fernandina Beach and St. Augustine branch offices of Anchor will be transferred to a commercial bank under this proposal, ing institution is a BIF insured subsidiary of a bank those deposits are included at 100 percent in the calculation of holding company, and, in reviewing these proposals, pro forma state and market share. See Norwest Corporation, 78 to follow the procedures and consider the factors Federal Reserve Bulletin 452 (1992); First Banks, Inc., 76 Federal Reserve Bulletin 669, 670 n.9 (1990). set forth in Section 18(c) of the FDI Act. 4. State deposit data are as of June 30, 1992. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1175 market.5 SouthTrust is the fifth largest depository Board also has considered the record of performance of institution in that market, controlling deposits of SouthTrust under the CRA and the programs that South- $216 million, representing approximately 3 percent of Trust has in place to serve community needs. total deposits in depository institutions in the market ("market deposits").6 The Fernandina Beach branch A. CRA Examinations office of Anchor is one of four Anchor branch offices located in the Jacksonville Area banking market. It All of SouthTrust's subsidiary banks that have been controls deposits of $25.1 million, representing less evaluated for CRA performance have received "outthan 1 percent of market deposits. Upon consumma- standing" or "satisfactory" ratings from their primary tion of this proposal, SouthTrust would control regulators in their most recent examinations for CRA $241.1 million in deposits, representing approximately performance. SouthTrust's lead subsidiary bank, 3.4 percent of market deposits. Anchor would remain SouthTrust Bank of Alabama, N.A., Birmingham, as a competitor in the market; the post-merger Herfin- Alabama ("SouthTrust-Alabama"), which includes dahl-Hirschman Index ("HHI") for this market would Birmingham and Jefferson County in its delineated be 2536, and would not appreciably increase as a result service area, received an "outstanding" rating for of this transaction.7 CRA performance from the OCC in October 1991. Based on all the facts of record in this case, includ- This rating reflects an improvement from the "satising the fact that the number of competitors would factory" rating received from the OCC in July 1989. In remain unchanged and there would be no significant addition, SouthTrust-Jacksonville received a "satisincrease in market concentration in the Jacksonville factory" rating from the OCC in October 1992. Area banking market, the Board concludes that consummation of this proposal would not have a signifi- B. HMDA Data and Lending Practices cantly adverse effect on competition or the concentration of banking resources in this market. The Board The Board has carefully reviewed data filed by Southalso concludes that consummation of this proposal Trust-Alabama and its wholly owned subsidiaries, would not have a significantly adverse effect on com- SouthTrust Mortgage Corporation ("STMC") and petition in any other relevant banking market. SouthTrust Mobile Services ("SMS"), under the Home Mortgage Disclosure Act (12 U.S.C. § 2801 Convenience and Needs Considerations et seq.) ("HMDA") for the years 1990 through 1992. These data indicate some disparities in approvals and In analyzing the convenience and needs factor, the denials of loan applications according to racial group Board has carefully considered comments submitted and income status in the Birmingham Metropolitan to the Board by the Alabama Community Reinvest- Statistical Area ("MSA").8 Because all banks are ment Alliance, Birmingham, Alabama ("Protestant"). obligated to adopt and implement lending practices Protestant alleges that SouthTrust has not met the that ensure not only safe and sound lending, but also convenience and needs of low- and moderate-income equal access to credit by creditworthy applicants African-American residents in Jefferson County and regardless of race, the Board is concerned when the Birmingham, Alabama. record of an institution indicates disparities in lending In assessing the impact of this proposal on the conve- to minority credit applicants. The Board recognizes, nience and needs of the communities to be served, the however, that HMDA data alone provide only a limited measure of any given institution's lending in its community. The Board also recognizes that HMDA 5. The Jacksonville Area banking market is defined as Baker, Clay, data have limitations that make the data an inadequate Duval, and Nassau Counties and Ponte Vedra in St. Johns County, all located in Florida, and the city of Folkston in Charlton County, basis, absent other information, for conclusively de- Georgia. termining whether an institution has engaged in illegal 6. Market deposit data are as of June 30, 1992. discrimination on the basis of race or ethnicity in 7. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the making lending decisions. post-merger HHI is above 1800 is considered to be highly concen- None of the recent CRA performance examinations trated. In such markets, the Justice Department is likely to challenge for SouthTrust-Alabama found any evidence of illegal a merger that increases the HHI by more than 50 points. The Justice Department has informed the Board that a bank merger or acquisition discrimination or illegal credit practices. In addition, generally will not be challenged (in the absence of other factors the OCC recently performed a targeted fair lending indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. review of STMC's residential mortgage lending and The Justice Department has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders and other non-depository financial institutions. 8. The Birmingham MSA includes Jefferson County, Alabama. 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1176 Federal Reserve Bulletin • December 1993 found no indication of violations of any fair lending In addition, SouthTrust-Alabama and STMC aclaws. The OCC examiners reviewed all denied conven- tively participate in projects that support community tional mortgage applications and 75 percent of denied development activities in providing housing for lowgovernment-insured mortgage applications received and moderate-income individuals. In this regard, from minorities during a 12-month period, and com- STMC has committed to provide $300,000 in first pared them to a large sample of approved non-minority mortgage financing at favorable interest rates for the mortgage applications received during the same pe- purchase by eligible low- and moderate-income famiriod. The OCC found no evidence of disparate treat- lies of housing units being developed by Rosedale ment based on race or ethnicity. SouthTrust-Alabama Community Development Corporation. The housing and STMC have also instituted a secondary review units are located in a low-income area of Birmingham. process, pursuant to which a committee reviews the In addition, STMC has allocated $350,000 for residenfile of every mortgage application recommended for tial first mortgage loans to be used in conjunction with denial to insure that the recommendation is appropri- downpayment funding provided through the City of ate. Furthermore, the 1991 CRA examination of Birmingham to the Smithfield Neighborhood, Incorpo- SouthTrust-Alabama indicated that the geographic dis- ration.11 SouthTrust-Alabama made a $900,000 investtribution of the bank's credit extensions, applications, ment in connection with the rehabilitation of a 64-unit, and denials reflected a reasonable penetration of all multifamily project located in a low-income area of the City of Birmingham. Subsequent to that investment, segments of the local community, including low- and the SouthTrust Community Reinvestment Corporamoderate-income tracts. tion, a corporation established by SouthTrust, made a The Board notes that SouthTrust-Alabama and its firm commitment of $1 million for the development of subsidiary, STMC, have undertaken a number of a multifamily housing project located in another lowsteps to increase their lending activities in low- and income area of the City of Birmingham. As further moderate-income and minority areas in the Birmingevidence of its support for the community, Southham MSA. SouthTrust-Alabama has developed mar- Trust-Alabama joined with eight banks to form a keting programs to address lending weaknesses in two Community Development Corporation which provides communities with heavy concentrations of minority financial assistance to small businesses which are residents. The programs include advertising in news considered "disadvantaged" under the City of Birpublications and on radio stations that target the mingham's Disadvantaged Business Enterprise Prominority population living in those communities. In gram. SouthTrust-Alabama has committed to provide addition, SouthTrust-Alabama has developed a Blue- 29.6 percent of the $1.5 million to be spent each year print Loan program that offers home purchase and under this program. Loans totalling $4.5 million have home improvement products designed to meet the been made under this program. specific housing needs of low- and moderate-income individuals. The home purchase product has low downpayment requirements, and both the home pur- C. Other Aspects of CRA Performance chase and home improvement products offer financing of closing costs and flexible underwriting criteria. The SouthTrust-Alabama has in place many of the ele- Blueprint Loan program was initiated in April 1993. As ments of an effective CRA program. The board of of September 1, 1993, SouthTrust-Alabama has ap- directors of SouthTrust-Alabama has approved a comproved 18 home purchase loans totalling $725,899, prehensive CRA policy that outlines goals, objectives, and 34 home improvement loans totalling $143,000. and levels of responsibility and accountability for SouthTrust-Alabama, through STMC, also offers res- management and employees of the bank. STMC has idential loans with more flexible lending criteria under implemented a formal community outreach program the Birmingham Residential Mortgage Plan.9 As of which includes seminars on the availability and use of August 31, 1993, STMC has closed 31 loans totalling mortgage loan products. In addition, STMC has a $1.3 million under this program.10 housing specialist who meets with nonprofit and neighborhood associations in an effort to create products that meet the credit needs of low- and moderateincome communities. 9. The Birmingham Residential Mortgage Plan was initiated by eight lenders in the Birmingham area who committed to provide a total of For the foregoing reasons, and based on all the facts $25 million in residential mortgage loans under favorable lending of record in this case, including Protestant's comments criteria. Loans made under this program offer reduced closing costs, minimum downpayments of 3 percent, and underwriting criteria similar to FHA loan requirements. 10. STMC is also a provider of FHA and VA home mortgage loans in Alabama. In 1992, STMC originated 237 FHA/VA loans totaling 11. Loans under this program offer flexible underwriting criteria and $15.6 million. special financing terms. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1177 and SouthTrust's response to these comments, the Based on the foregoing and all other facts of Board concludes that convenience and needs consid- record, the Board has determined that this applicaerations, including the records of SouthTrust, South- tion should be, and hereby is, approved. This ap- Trust-Alabama and SouthTrust-Jacksonville under the proval is subject to SouthTrust-Jacksonville obtain- CRA, are consistent with approval of this application. ing the OCC's approval for the proposed transaction under the Bank Merger Act. The Board's approval of Other Considerations this application also is conditioned upon Applicants' compliance with the commitments made in connec- The Board also concludes that the financial and man- tion with this application. For purposes of this acagerial resources and future prospects of SouthTrust- tion, the commitments and conditions relied on in Jacksonville are consistent with approval of this appli- reaching this decision are conditions imposed in cation. Moreover, the record in this case shows that: writing by the Board and, as such, may be enforced (1) The transaction will not result in the transfer of in proceedings under applicable law. This approval is any federally insured depository institution's federal limited to the proposal presented to the Board by the deposit insurance from one federal deposit insur- Applicants, and may not be construed as applying to ance fund to the other ; any other transaction. (2) Applicants and SouthTrust-Jacksonville cur- This transaction may not be consummated before rently meet, and upon consummation of the pro- the thirtieth calendar day after the effective date of this posed transaction will continue to meet, all applica- Order, or later than three months after the effective ble capital standards; and date of this Order, unless such period is extended by (3) The proposed transaction would comply with the the Board or the Federal Reserve Bank of Atlanta, interstate banking provisions of the Bank Holding acting pursuant to delegated authority. Company Act (the "BHC Act") (12 U.S.C. By order of the Board of Governors, effective § 1842(d)) if Anchor were a state bank that South- October 12, 1993. Trust was applying to acquire directly. See 12 U.S.C. § 1815(d)(3).12 Voting for this action: Chairman Greenspan and Governors Angell, LaWare and Phillips. Absent and not voting: Governors Mullins, Kelley and Lindsey. 12. The Board previously has determined that the interstate banking statute of Florida permits an Alabama bank holding company to acquire banking organizations in Florida (see SouthTrust Corporation, 74 Federal Reserve Bulletin 56 (1988)). Thus, consummation of this JENNIFER J. JOHNSON transaction is not barred by section 3(d) of the BHC Act (12 U.S.C. § 1842(d)). Associate Secretary of the Board ACTIONS TAKEN UNDER THE FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991 By the Secretary 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 Acquiring Approval Bank Holding Company Thrift Bank(s) Date Southern National Corporation, First Savings Bank, Southern National October 28, 1993 Lumberton, North Carolina Greenville, South Bank of South Carolina Carolina, Columbia, South Carolina Southern National Corporation, First Savings Bank, Inc., Southern National October 28, 1993 Lumberton, North Carolina Hickory, North Bank of North Carolina Carolina, Davidson Savings Bank, Lumberton, North Inc., Carolina Digitized for FRASER Lexington, North http://fraser.stlouisfed.org/ Carolina Federal Reserve Bank of St. Louis

1178 Federal Reserve Bulletin • December 1993 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 Acquiring Approval Bank Holding Company Thrift Bank(s) Date Blue Ridge Bank, Inc., Shenandoah Federal City Holding October 15, 1993 Martinsburg, West Virginia Savings Association, Company, Martinsburg, West Charleston, West Virginia Virginia First Citizens Bancshares Federal Savings Bank, Citizens Bank, October 19, 1993 Company, Rogers, Arkansas Marion, Arkansas Marion, Arkansas 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 First Security Corporation, First National Financial Corporation, October 4, 1993 Salt Lake City, Utah Albuquerque, New Mexico First United Bancshares, Inc., Commerce Financial Corporation, October 25, 1993 El Dorado, Arkansas Alma, Arkansas Southern National Corporation, Regency Bancshares, Inc., October 28, 1993 Lumberton, North Carolina Hickory, North Carolina Section 4 Effective Applicant(s) Bank(s) First Bank System, Inc., FBS Information Services Corporation, October 14, 1993 Minneapolis, Minnesota St. Paul, Minnesota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1179 APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant(s) Bank(s) Bank Date Anchor Financial Corporation, Topsail State Bank, Richmond October 15, 1993 Myrtle Beach, South Carolina Hampstead, North Carolina Boatmen's Bancshares, Inc., First Amarillo St. Louis September 29, 1993 St. Louis, Missouri Bancorporation, Inc., FAB Acquisition Company, Amarillo, Texas St. Louis, Missouri CBT Corporation, Pennyrile Bancshares, St. Louis October 5, 1993 Paducah, Kentucky Inc., Hopkinsville, Kentucky Centura Banks, Inc., Canton Interim Bank, Richmond September 29, 1993 Rocky Mount, North Carolina Canton, North Carolina Commerce Bancshares, Inc., Firstbank Investment Co., Kansas City October 8, 1993 Kansas City, Missouri Inc., CBI-Kansas, Inc., Lawrence, Kansas Kansas City, Missouri Community Bancshares, Inc., City and County Bank of Atlanta October 13, 1993 Blountsville, Alabama McMinn County, Athens, Tennessee CSB Bancorp, Inc., The Colorado State Bank Kansas City October 15, 1993 Walsh, Colorado of Walsh, Walsh, Colorado FEO Investments, Inc., Elkhorn Valley Bank, Kansas City October 15, 1993 Hoskins, Nebraska Norfolk, Nebraska GP FINANCIAL CORP., The Green Point Savings New York October 12, 1993 Flushing, New York Bank, Brooklyn, New York Heritage Bancshares Group, Inc. Geiger Corporation, Chicago Minneapolis, Minnesota Minneapolis, Minnesota October 8, 1993 Heritage Bancshares, Inc., Minneapolis, Minnesota Klein Bancorporation, Inc., R.O.M. Financial Minneapolis Chaska, Minnesota Services, Inc., September 28, 1993 Chanhassen, Minnesota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1180 Federal Reserve Bulletin • December 1993 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date Mabrey Bancorporation, Inc. Mabrey Insurance Kansas City September 24, 1993 Okmulgee, Oklahoma Agency, Inc., Okmulgee, Oklahoma Haskell Bancorporation, Inc., Haskell, Oklahoma Weleetka Bancorporation, Inc., Weleetka, Oklahoma MNB Bancshares, Inc., First Sheridan St. Louis October 1, 1993 Malvern, Arkansas Bancshares, Inc., Sheridan, Arkansas National City Bancshares, Inc., Sure Financial St. Louis October 14, 1993 Evansville, Indiana Corporation, Washington, Indiana Olney Bancshares, Inc., Graham National Bank, Dallas September 28, 1993 Olney, Texas Graham, Texas Olney Bancorp of Delaware, Inc., Olney, Texas PCM Acquisition Group, Inc., Florida First International Atlanta October 8, 1993 Deerfield, Florida Bank, Hollywood, Florida The Peoples BancTrust CeeBee Corporation, Atlanta October 20, 1993 Company, Inc., Prattville, Alabama Selma, Alabama The Poca Valley Bankshares, The Poca Valley Bank, Richmond October 18, 1993 Inc., Walton, West Virginia Walton, West Virginia Smithdown Investments, Hinsdale Bank & Trust Chicago September 24, 1993 Lake Forest, Illinois Company, Hinsdale, Illinois Texas Financial Bancorporation, First National Bank of Dallas October 8, 1993 Inc., Grapevine, Minneapolis, Minnesota Grapevine, Texas First Bancorp, Inc., Denton, Texas First Delaware Bancorp, Inc., Dover, Delaware Whitman Bancorporation, Inc., Bank of Whitman, San Francisco October 15, 1993 Colfax, Washington Colfax, Washington Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1181 Section 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date Central Bancshares of the South, First Federal Savings Atlanta October 13, 1993 Inc., Bank of Northwest Birmingham, Alabama Florida, Fort Walton Beach, Florida Central Bancshares of the South, The Peoples Holding Atlanta October 13, 1993 Inc., Company, Birmingham, Alabama Fort Walton Beach, Florida Huntington Bancshares, Huntington Federal Cleveland October 15, 1993 Incorporated, Savings Bank of Columbus, Ohio Illinois, Huntington Bancshares, Indiana, Chicago, Illinois Inc., Columbus, Ohio Lena Spitzer Limited Helmuth Spitzer Minneapolis October 6, 1993 Partnership, Insurance, Streeter, North Dakota Streeter, North Dakota The Magnolia State Corporation, Jones County Finance Atlanta October 8, 1993 Bay Springs, Mississippi Company, Laurel, Mississippi Mid-America Bancorp., Mid-America Bank, St. Louis October 6, 1993 Louisville, Kentucky Federal Savings Bank, Pewee Valley, Kentucky The Peoples Holding Company, Liberty Interim, F.S.B., Atlanta October 13, 1993 Fort Walton Beach, Florida Fort Walton Beach, Florida PNC Bank Corp., Sears Savings Bank, FSB, Cleveland October 8, 1993 Pittsburgh, Pennsylvania Glendale, California Security Capital Corporation, to engage de novo in St. Louis September 30, 1993 Batesville, Mississippi making loans Security Richland FirstWest Insurance, Inc., Minneapolis October 15, 1993 Bancorporation, Miles City, Montana Miles City, Montana The Toronto-Dominion Bank, Toronto-Dominion Capital New York October 15, 1993 Toronto, Canada Markets USA, Inc., New York, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1182 Federal Reserve Bulletin • December 1993 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 Canton Interim Bank, Centura Bank, Richmond September 29, 1993 Canton, North Carolina Rocky Mount, North Carolina Fourth Financial Corporation, Western National Kansas City October 8, 1993 Wichita, Kansas Bancorporation, Inc., Tulsa, Oklahoma Triangle Bank and Trust New East Bank of Richmond September 27, 1993 Company, Greenville, Raleigh, North Carolina Greenville, North Carolina New East Bank of New Bern, New Bern, North Carolina New East Bank of Goldsboro, Goldsboro, North Carolina New East Bank of the Cape Fear, Fayetteville, North Carolina New East Bank of the Albemarle, Elizabeth City, North Carolina PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits Richardson v. Board of Governors, et al., No. 93-C against the Federal Reserve Banks in which the Board 836A (D. Utah, filed August 30, 1993). Action of Governors is not named a party. against Board and others for damages and injunctive relief for alleged constitutional and statutory violations caused by issuance of Federal Reserve notes. Scott v. Board of Governors, No. 930905843CV (Dist. On September 20, 1993, the Board filed a motion to Ct., Salt Lake County, Utah, filed October 8, 1993). dismiss. Action against Board and others for damages and injunctive relief for alleged constitutional and statu- Kubany v. Board of Governors, et al., No. 93-1428 tory violations caused by issuance of Federal Re- (D. D.C., filed July 9, 1993). Action challenging serve notes. Board determination under the Freedom of Infor- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1183 mation Act. The Board's motion to dismiss was FINAL ENFORCEMENT ORDERS ISSUED BY THE filed on October 15, 1993. BOARD OF GOVERNORS Bennett v. Greenspan, No. 93-1813 (D. D.C., filed April 20, 1993). Employment discrimination action. Florida First International Bank Amann v. Prudential Home Mortgage Co., et al., No. Hollywood, Florida 93-10320 WD (D. Massachusetts, filed February 12, 1993). Action for fraud and breach of contract The Federal Reserve Board announced on October 5, arising out of a home mortgage. On April 17, 1993, 1993, the issuance of a Prompt Corrective Action the Board filed a motion to dismiss. Directive by Consent against Florida First Interna- Adams v. Greenspan, No. 93-0167 (D. D.C., filed tional Bank, Hollywood, Florida. January 27,1993). Action by former employee under the Civil Rights Act of 1964 and the Rehabilitation Sentry Bancorp, Inc. Act of 1973 concerning termination of employment. Edina, Minnesota Sisti v. Board of Governors, No. 93-0033 (D. D.C., filed January 6, 1993). Challenge to Board staff The Federal Reserve Board announced on October 4, interpretation with respect to margin accounts. The 1993, the issuance of Orders of Assessment of a Civil Board's motion to dismiss was granted on May 13, Money Penalty against Sentry Bancorp, Inc., Edina, 1993. On June 3,1993, the petitioner filed a notice of Minnesota, and Robert J. Ziton, an officer and director appeal. Cross-motions for summary disposition of Sentry Bancorp, Inc.. were filed on August 13, 1993. U.S. Check v. Board of Governors, No. 92-2892 (D. United Mizrahi Bank, Ltd. D.C., filed December 30, 1992). Challenge to partial Tel Aviv, Israel denial of request for information under the Freedom of Information Act. The Federal Reserve Board announced on October 1, CBC, Inc. v. Board of Governors, No. 92-9572 (10th 1993, the joint issuance with the Federal Deposit Cir., filed December 2, 1992). Petition for review of Insurance Corporation and the Superintendent of civil money penalty assessment against a bank hold- Banks of the State of California of a Cease and Desist ing company and three of its officers and directors Order against the United Mizrahi Bank, Ltd., Tel for failure to comply with reporting requirements. Aviv, Israel, and the United Mizrahi Bank's branch in Oral argument is scheduled for November 8, 1993. Los Angeles, California. DLG Financial Corporation v. Board of Governors, The Federal Reserve Board also issued an Order of No. 392 Civ. 2086-G (N.D. Texas, filed October 9, Assessment of a Civil Money Penalty against the 1992). Action to enjoin the Board and the Federal United Mizrahi Bank. Reserve Bank of Dallas from taking certain enforcement actions, and seeking money damages on a variety of tort and contract theories. On October 9, 1992, the court denied plaintiffs' motion for a tem- TERMINATION OF ENFORCEMENT ACTIONS porary restraining order. On March 30, 1993, the court granted the Board's motion to dismiss as to it, The Federal Reserve Board announced on October 8, and also dismissed certain claims against the Re- 1993, the termination of the following enforcement serve Bank. On April 29, the plaintiffs filed an actions: amended complaint. The Board's motion to dismiss the amended complaint was filed on May 17. Bank of Boston Corporation Boston, Massachusetts Zemel v. Board of Governors, No. 92-1056 (D. D.C., filed May 4, 1992). Age Discrimination in Employment Act case. The parties' cross-motions for sum- Written Agreement dated September 3, 1991, termimary judgment are pending. nated October 7, 1993. Board of Governors v. Ghaith R. Pharaon, No. 91- CIV-6250 (S.D. New York, filed September 17, Buffalo Bank 1991). Action to freeze assets of individual pending Eleanor, West Virginia administrative adjudication of civil money penalty assessment by the Board. On September 17, 1991, Written Agreement dated January 31, 1991, terminated the court issued an order temporarily restraining the June 28, 1993. Cease and Desist Order dated transfer or disposition of the individual's assets. August 12, 1992, terminated June 28, 1993. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1184 Federal Reserve Bulletin • December 1993 Credit and Commerce American Holdings, N.V. Presidential Holdings, Inc. Netherlands Antilles Bourbonnais, Illinois Joseph A. Ferante Consent Order dated February 1, 1991, terminated James E. Malecha June 23, 1993. Anthony J. Unruh Written Agreement dated November 25, 1993, termi- First American Corporation nated August 5, 1993. Washington, D.C. Society for Savings Bancorp, Inc. Hartford, Connecticut First American Bankshares, Inc. Washington, D.C. Written Agreement dated January 24,1992, terminated September 27, 1993. Written Agreement dated September 10, 1991, terminated June 23, 1993. South Texas Bancshares, Inc. Beeville, Texas First State Bank of Maple Park Maple Park, Illinois Written Agreement dated May 20, 1991, terminated Bruce Madden October 1, 1993. Joe A. Pruess State Bank and Trust of Colorado Springs Colorado Springs, Colora Cease and Desist Order dated December 19, 1990, terminated July 23, 1993. Cease and Desist Order dated April 14, 1992, terminated August 5, 1993. Multibank Financial Corp. Dedham, Massachusetts WRITTEN AGREEMENTS APPROVED BY FEDERAL RESERVE BANKS Written Agreement dated February 28, 1992, terminated September 27, 1993. Banco Boliviano Americana, S.A. La Paz, Boliva Paonia Financial Services, Inc. The Federal Reserve Board announced on October 26, Paonia, Colorado 1993, the execution of a Written Agreement among the George J. Murphy, Jr. Federal Reserve Bank of Atlanta, the Office of the Comptroller of the State of Florida, Banco Boliviano Written Agreement dated September 21, 1993, termi- Americana, S.A., La Paz, Boliva, and Banco Bolivinated June 21, 1993. ano Americana's agency in Miami, Florida. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1 Financial and Business Statistics CONTENTS WEEKLY REPORTING COMMERCIAL BANKS Assets and liabilities A3 Guide to Tabular Presentation A22 Large reporting banks A24 Branches and agencies of foreign banks Domestic Financial Statistics MONEY STOCK AND BANK CREDIT FINANCIAL MARKETS A4 Reserves, money stock, liquid assets, and debt A25 Commercial paper and bankers dollar measures acceptances outstanding A5 Reserves of depository institutions, Reserve Bank A25 Prime rate charged by banks on short-term credit business loans A6 Reserves and borrowings—Depository A26 Interest rates—money and capital markets institutions A27 Stock market—Selected statistics A7 Selected borrowings in immediately available funds—Large member banks FEDERAL FINANCE POLICY INSTRUMENTS A28 Federal fiscal and financing operations A8 Federal Reserve Bank interest rates A29 U.S. budget receipts and outlays A9 Reserve requirements of depository institutions A30 Federal debt subject to statutory limitation A10 Federal Reserve open market transactions A30 Gross public debt of U.S. Treasury—Types and ownership A31 U.S. government securities FEDERAL RESERVE BANKS dealers—Transactions A32 U.S. government securities dealers—Positions All Condition and Federal Reserve note statements and financing A12 Maturity distribution of loan and security A3 3 Federal and federally sponsored credit holdings agencies—Debt outstanding MONETARY AND CREDIT AGGREGATES SECURITIES MARKETS AND A13 Aggregate reserves of depository institutions and monetary base CORPORATE FINANCE A14 Money stock, liquid assets, and debt measures A34 New security issues—Tax-exempt state and local A16 Deposit interest rates and amounts outstanding— governments and corporations commercial and BIF-insured banks A35 Open-end investment companies—Net sales A17 Bank debits and deposit turnover and assets A18 Loans and securities—All commercial banks A35 Corporate profits and their distribution A35 Nonfarm business expenditures on new COMMERCIAL BANKING INSTITUTIONS plant and equipment A36 Domestic finance companies—Assets and A19 Major nondeposit funds liabilities, and consumer, real estate, and business A20 Assets and liabilities, Wednesday figures credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • December 1993 Domestic Financial Statistics—Continued A54 U.S. reserve assets A54 Foreign official assets held at Federal Reserve Banks REAL ESTATE A55 Foreign branches of U.S. banks—Balance A37 Mortgage markets sheet data A3 8 Mortgage debt outstanding A57 Selected U.S. liabilities to foreign official institutions CONSUMER INSTALLMENT CREDIT REPORTED BY BANKS A39 Total outstanding IN THE UNITED STATES A39 Terms A57 Liabilities to and claims on foreigners A58 Liabilities to foreigners FLOW OF FUNDS A60 Banks' own claims on foreigners A61 Banks' own and domestic customers' claims on A40 Funds raised in U.S. credit markets foreigners A42 Summary* of financial transactions A61 Banks' own claims on unaffiliated foreigners A43 Summary of credit market debt outstanding A62 Claims on foreign countries—Combined A44 Summary of financial assets and liabilities domestic offices and foreign branches Domestic Nonfinancial Statistics REPORTED BY NONBANKING BUSINESS ENTERPRISES IN THE UNITED STATES SELECTED MEASURES A63 Liabilities to unaffiliated foreigners A45 Nonfinancial business activity—Selected A64 Claims on unaffiliated foreigners measures A45 Labor force, employment, and unemployment SECURITIES HOLDINGS AND TRANSACTIONS A46 Output, capacity, and capacity utilization A47 Industrial production—Indexes and gross value A65 Foreign transactions in securities A49 Housing and construction A66 Marketable U.S. Treasury bonds and A50 Consumer and producer prices notes—Foreign transactions A51 Gross domestic product and income A52 Personal income and saving INTEREST AND EXCHANGE RATES International Statistics A67 Discount rates of foreign central banks A67 Foreign short-term interest rates SUMMARY STATISTICS A68 Foreign exchange rates A53 U.S. international transactions—Summary A69 Guide to Statistical Releases and A54 U.S. foreign trade Special Tables Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

3 Guide to Tabular Presentation SYMBOLS AND ABBREVIATIONS c Corrected G-10 Group of Ten e Estimated GNMA Government National Mortgage Association n.a. Not available GDP Gross domestic product n.e.c. Not elsewhere classified HUD Department of Housing and Urban P Preliminary Development r Revised (Notation appears on column heading IMF International Monetary Fund when about half of the figures in that column IO Interest only are changed.) IPCs Individuals, partnerships, and corporations * Amounts insignificant in terms of the last decimal IRA Individual retirement account place shown in the table (for example, less than MMDA Money market deposit account 500,000 when the smallest unit given is millions) NOW Negotiable order of withdrawal 0 Calculated to be zero OCD Other checkable deposit Cell not applicable OPEC Organization of Petroleum Exporting Countries ATS Automatic transfer service OTS Office of Thrift Supervision BIF Bank insurance fund 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 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 1993 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 1992 1993 1993 MMoonneettaarryy oorr ccrreeddiitt aaggggrreeggaattee Q4 Qlr Q2r Q3 Mayr Juner July Aug. Sept. Reserves of depository institutions1 1 Total 25.8 9.3 10.8 12.4 36.5 5.1 9.4 9.7 16.7 2 Required 25.3 8.7 12.4 12.3 39.5 7.0 5.7 12.8 14.1 3 Nonborrowed 27.1 9.5 10.6 10.9 35.5 3.8 8.1 7.5 15.3 4 Monetary base3 12.6 9.1 9.8 11.5 13.8 10.9 9.5 11.5 15.2 Concepts of money, liquid assets, and debt4 5 Ml 16.8 6.5 10.5 13.2 27.3 7.2 13.6 10.5 14.0 6 M2 2.6r -1.9 2.2 3.3 10.5 2.5 2.0r 1.7 4.3 7 M3 -,4r -3.8 2.5 1.3 8.6 .0 -,7r .8 3.7 8 L 1.4r -2.3 3.4 n.a. 9.5 .7 -.4 1.6 n.a. 9 Debt 4.3 3.8 4.6 n.a. 4.8 6.2 5.4 5.3 n.a. Nontransaction components 10 In M2 -3.1? -5.4 -1.4 -1.1 3.3 .4 -3.2r -2.1 -.1 11 In M3 only6 -13.8 4.1 -9.0 -1.6 -13.0 -15.2r -4.4 .6 Time and savings deposits Commercial banks 12 Savings, including MMDAs 12.9 1.6 4.6 5.4 14.0 6.4 ..88 6.9 5.4 13 Small time -17.2 -7.9 -7.9 -10.5 -10.1 -10.2 --1122..00rr -10.7 -7.8 14 Large time • -20.0r -20.0 .2 -8.7 3.5 -12.1 -i9.r 3.1 -7.1 Thrift institutions 15 Savings, including MMDAs 8.7 -.2 .8 2.9 9.3 2.8 2.2r 1.7 1.4 16 Small time' . -23.T -18.6 -10.5 -12.5 -8.7 -12.3 -14.91" -11.1 -13.1 17 Large time ' -10.8r -15.5 -10.1 -7.2 -16.6 -9.3 -3.8r -9.4 .0 Money market mutual funds 18 General purpose and broker-dealer -4.2 -10.2 -.7 -.6 17.7 -.7 -l.lr -5.7 -6.8 19 Institution-only -19.4 -14.1 .5 -12.6 14.4 -27.8 -18.8 -10.5 5.0 Debt components4 20 Federal 6.7r 7.6 10.4 n.a. 10.2 12.2 7.4 9.1 n.a. 21 Nonfederal 3.5r 2.5 2.5 n.a. 2.8 4.1 4.7 4.0 n.a. 1. Unless otherwise noted, rates of change are calculated from average tax-exempt, institution-only money market funds. Excludes amounts held by amounts outstanding during preceding month or quarter. depository institutions, the U.S. government, money market funds, and foreign 2. Figures incorporate adjustments for discontinuities, or "breaks," associ- banks and official institutions. Also excluded is the estimated amount of overnight ated with regulatory changes in reserve requirements. (See also table 1.20.) RPs and Eurodollars held by institution-only money market funds. Seasonally 3. The seasonally adjusted, break-adjusted monetary base consists of (1) adjusted M3 is computed by adjusting its non-M2 component as a whole and then seasonally adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adding this result to seasonally adjusted M2. adjusted currency component of the money stock, plus (3) (for all quarterly L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term reporters on the "Report of Transaction Accounts, Other Deposits, and Vault Treasury securities, commercial paper, and bankers acceptances, net of money Cash" and for all weekly reporters whose vault cash exceeds their required market fund holdings of these assets. Seasonally adjusted L is computed by reserves) the seasonally adjusted, break-adjusted difference between current vault summing U.S. savings bonds, short-term Treasury securities, commercial paper, cash and the amount applied to satisfy current reserve requirements. and bankers acceptances, each seasonally adjusted separately, and then adding 4. Composition of the money stock measures and debt is as follows: this result to M3. Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the Debt: Debt of domestic nonfinancial sectors consists of outstanding credit vaults of depository institutions, (2) travelers checks of nonbank issuers, (3) market debt of the U.S. government, state and local governments, and private demand deposits at all commercial banks other than those owed to depository nonfinancial sectors. Private debt consists of corporate bonds, mortgages, coninstitutions, the U.S. government, and foreign banks and official institutions, less sumer credit (including bank loans), other bank loans, commercial paper, bankers cash items in the process of collection and Federal Reserve float, and (4) other acceptances, and other debt instruments. Data are derived from the Federal checkable deposits (OCDs), consisting of negotiable order of withdrawal (NOW) Reserve Board's flow of funds accounts. Data on debt of domestic nonfinancial and automatic transfer service (ATS) accounts at depository institutions, credit sectors are monthly averages, derived by averaging adjacent month-end levels. union share draft accounts, and demand deposits at thrift institutions. Seasonally Growth rates for debt reflect adjustments for discontinuities over time in the levels adjusted Ml is computed by summing currency, travelers checks, demand of debt presented in other tables. deposits, and OCDs, each seasonally adjusted separately. 5. Sum of (1) overnight RPs and Eurodollars, (2) money market fund balances M2: Ml plus (1) overnight (and continuing-contract) repurchase agreements (general purpose and broker-dealer), (3) savings deposits (including MMDAs), (RPs) issued by all depository institutions and overnight Eurodollars issued to and (4) small time deposits. U.S. residents by foreign branches of U.S. banks worldwide, (2) savings (includ- 6. Sum of (1) large time deposits, (2) term RPs, (3) term Eurodollars of U.S. ing MMDAs) and small time deposits (time deposits—including retaQ RPs—in residents, and (4) money market fund balances (institution-only), less (5) a amounts of less than $100,000), and (3) balances in both taxable and tax-exempt consolidation adjustment that represents the estimated amount of overnight RPs general-purpose and broker-dealer money market funds. Excludes individual and Eurodollars held by institution-only money market funds. This sum is retirement accounts (IRAs) and Keogh balances at depository institutions and seasonally adjusted as a whole. money market funds. Also excludes all balances held by U.S. commercial banks, 7. Small time deposits—including retail RPs—are those issued in amounts of money market funds (general purpose and broker-dealer), foreign governments less than $100,000. All IRA and Keogh account balances at commercial banks and and commercial banks, and the U.S. government. Seasonally adjusted M2 is thrift institutions are subtracted from small time deposits. computed by adjusting its non-Mi component as a whole and then adding this 8. Large time deposits are those issued in amounts of $100,000 or more, result to seasonally adjusted Ml. excluding those booked at international banking facilities. M3: M2 plus (1) large time deposits and term RP liabilities (in amounts of 9. Large time deposits at commercial banks less those held by money market $100,000 or more) issued by all depository institutions, (2) term Eurodollars held funds, depository institutions, U.S. government and foreign banks and official by U.S. residents at foreign branches of U.S. banks worldwide and at all banking institutions. offices in the United Kingdom and Canada, and (3) balances in both taxable and 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 d A ai v ly er a fi g g e u r o e f s Average of daily figures for week ending on date indicated Factor 1993 1993 July Aug. Sept. Aug. 18 Aug. 25 Sept. 1 Sept. 8 Sept. 15 Sept. 22 Sept. 29 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 354,700r 356,229 363,813 357,156 354,833 357,696 360,756 361,001 366,623 366,653 U.S. government securities 2 Bought outright—System account 313,725 314,668 320,040 314,821 315,522 316,136 319,765 320,041 320,653 320,456 3 Held under repurchase agreements ... 3,235 4,033 4,891 4,540 2,948 4,729 2,442 2,832 6,567 7,284 Federal agency obligations 4 Bought outright 5,011 4,936 4,835 4,964 4,947 4,839 4,839 4,839 4,839 4,824 5 Held under repurchase agreements ... 278 207 539 237 158 231 236 416 671 570 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 16 119 273 32 7 111 632 4 126 22 8 Seasonal credit 211 235 236 236 247 245 224 227 234 259 9 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float 490 434 369 493 343 262 671 341 428 -13 11 Other Federal Reserve assets 31,734 31,597 32,631 31,832 30,661 31,143 31,947 32,301 33,104 33,250 12 Gold stock 11,057 11,057 11,056 11,057 11,057 11,056 11,056 11,056 11,056 11,056 13 Special drawing rights certificate account . 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 14 Treasury currency outstanding 21,731 21,780 21,843 21,778 21,793 21,808 21,822 21,836 21,850 21,864 ABSORBING RESERVE FUNDS 15 Currency in circulation 346,485 348,213 351,133 348,801 348,223 348,405 351,317 352,124 350,871 350,368 16 Treasury cash holdings 414 385 378 386 386 383 383 377 374 377 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 6,266 5,764 9,633 5,675 5,970 5,544 5,949 5,117 16,981 10,104 18 Foreign 222 230 230 238 186 186 222 276 181 209 19 Service-related balances and adjustments 6,186 6,097 6,117 6,095 6,159 6,117 6,117 6,102 6,082 6,169 20 Other 274 281 329 294 268 282 328 319 336 334 21 Other Federal Reserve liabilities and capital 9,232 9,423 9,640 9,403 9,387 9,662 9,964 9,548 9,448 9,565 22 Reserve balances with Federal Reserve Banks' 26,428 26,691 27,269 27,116 25,119 27,998 27,372 28,047 23,274 30,465 End-of-month figures Wednesday figures July Aug. Sept. Aug. 18 Aug. 25 Sept. 1 Sept. 8 Sept. 15 Sept. 22 Sept. 29 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 352,092 359,057 369,482 359,567 354,757 359,676 362,683 363,513 385,116 366,583 U.S. government securities 2 Bought outright—System account 314,614 316,985 319,357 315,117 315,630 315,426 321,238 320,070 320,287 319,344 3 Held under repurchase agreements ... 0 4,790 6,296 7,675 2,825 6,570 2,274 3,601 22,036 7,594 Federal agency obligations 4 Bought outright 4,964 4,839 4,804 4,964 4,839 4,839 4,839 4,839 4,839 4,804 5 Held under repurchase agreements ... 0 70 2,146 170 184 781 95 1,866 1,506 1,621 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 11 7 2,680 38 6 6 3 10 74 7 8 Seasonal credit 223 229 239 243 252 226 216 231 248 262 9 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float 460 720 939 429 292 139 2,112 375 1,123 -441 11 Other Federal Reserve assets 31,819 31,417 33,022 30,931 30,727 31,688 31,906 32,520 35,004 33,392 12 Gold stock 11,057 11,057 11,057 11,057 11,057 11,056 11,056 11,056 11,056 11,057 13 Special drawing rights certificate account . 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 14 Treasury currency outstanding 21,748 21,808 21,878 21,778 21,793 21,808 21,822 21,836 21,850 21,864 ABSORBING RESERVE FUNDS 15 Currency in circulation 346,113 349,169 351,536 348,732 348,112 349,695 352,336 351,738 350,651 350,856 16 Treasury cash holdings 386 383 384 387 383 384 378 373 376 384 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5,818 7,975 17,289 6,650 6,202 4,659 4,116 5,974 26,895 11,438 18 Foreign 284 187 501 221 201 194 191 444 211 294 19 Service-related balances and adjustments 6,076 6,117 6,107 6,095 6,159 6,117 6,117 6,102 6,082 6,169 20 Other 232 272 306 261 280 335 338 353 333 348 21 Other Federal Reserve liabilities and capital 9,349 10,164 9,687 9,256 9,240 9,837 9,420 9,306 9,383 9,400 22 Reserve balances with Federal Reserve Banks3 24,658r 25,673 24,624 28,818 25,048 29,337 30,683 30,133 32,111 28,631 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 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 1993 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages RReesseerrvvee ccllaassssiiffiiccaattiioonn 1990 1991 1992 1993 Dec. Dec. Dec. Mar. Apr. May June July Aug. Sept. 1 Reserve balances with Reserve Banks2 30,237 26,659 25,368 24,383 26,975 25,968 26,462 26,562r 26,564 27,279 2 Total vault cash3 31,789 32,510 34,535 33,293 32,721 33,462 34,106 34,535 34,516 35,217 3 Applied vault cash 28,884 28,872 31,172 29,912 29,567 30,133 30,776 31,189 31,203 31,863 4 Surplus vault cash 2,905 3,638 3,364 3,381 3,154 3,329 3,330 3,347 3,313 3,355 5 Total reserves6 59,120 55,532 56,540 54,296 56,541 56,101 57,238 57,750 57,767 59,142 6 Required reserves 57,456 54,553 55,385 53,083 55,445 55,104 56,328 56,661 56,815 58,050 7 Excess reserve balances at Reserve Banks ... 1,664 979 1,155 1,213 1,096 996 911 1,089 952 1,092 8 Total borrowings at Reserve Banks 326 192 124 91 73 121 181 244 352 428 9 Seasonal borrowings 76 38 18 26 41 84 142 210 234 236 10 Extended credit9 23 1 1 0 0 0 0 0 0 0 Biweekly averages of daily figures for weeks ending on date indicated 1993 June 9 June 23 July 7 July 21 Aug. 4 Aug. 18 Sept. 1 Sept. 15 Sept. 29 Oct. 13 1 Reserve balances with Reserve Banks 26,543 26,352 26,579 27,489 25,251r 26,939 26,564 27,719 26,846 27,891 2 Total vault cash 33,685 34,237 34,385 34,026 35,354 34,869 33,879 35,332 35,157 35,805 3 Applied vault cash4 30,391 30,897 31,032 30,772 31,883 31,483 30,693 31,999 31,781 32,275 4 Surplus vault cash5 3,294 3,341 3,354 3,255 3,471r 3,386 3,187 3,333 3,377 3,530 5 Total reserves6 56,933 57,248 57,610 58,261 57,133r 58,422 57,257 59,718 58,626 60,166 6 Required reserves 56,109 56,477 56,311 57,294 56,021 57,673 56,136 58,845 57,322 59,046 7 Excess reserve balances at Reserve Banks ... 824 772 1,299 967 1,112 750 1,121 874 1,305 1,120 8 Total borrowings at Reserve Banks8 118 158 311 220 232 431 305 544 321 420 9 Seasonal borrowings 101 145 190 211 222 227 246 226 247 222 10 Extended credit9 0 0 0 0 0 0 0 0 0 0 1. Data in this table also appear in the Board's H.3 (502) weekly statistical institutions (that is, those whose vault cash exceeds their required reserves) to release. For ordering address, see inside front cover. satisfy current reserve requirements. 2. Excludes required clearing balances and adjustments to compensate for float 5. Total vault cash (line 2) less applied vault cash (line 3). and includes other off-balance-sheet "as-of adjustments. 6. Reserve balances with Federal Reserve Banks (line 1) plus applied vault cash 3. Total "lagged" vault cash held by depository institutions subject to reserve (line 3). requirements. Dates refer to the maintenance periods during which the vault cash 7. Total reserves (line 5) less required reserves (line 6). can be used to satisfy reserve requirements. The maintenance period for weekly 8. Also includes adjustment credit. reporters ends sixteen days after the lagged computation period during which the 9. Consists of borrowing at the discount window under the terms and condivault cash is held. Before Nov. 25,1992, the maintenance period ended thirty days tions established for the extended credit program to help depository institutions after the lagged computation period. deal with sustained liquidity pressures. Because there is not the same need to 4. All vault cash held during the lagged computation period by "bound" repay such borrowing promptly as with traditional short-term adjustment credit, institutions (that is, those whose required reserves exceed their vault cash) plus the money market impact of extended credit is similar to that of nonborrowed the amount of vault cash applied during the maintenance period by "nonbound" reserves. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A7 1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Banks1 Millions of dollars, averages of daily figures 1993, week ending Monday SSoouurrccee aanndd mmaattuurriittyy Aug. 2 Aug. 9 Aug. 16 Aug. 23 Aug. 30 Sept. 6 Sept. 13 Sept. 20 Sept. 27 Federal funds purchased, repurchase agreements, and other selected borrowings From commercial banks in the United States 1 For one day or under continuing contract 74,855 75,728 72,871 69,075 71,269 78,371 78,121 71,293 69,004 2 For all other maturities 13,557 13,880 13,175 12,567 12,520 12,657 12,213 12,592 13,249 From other depository institutions, foreign banks and official institutions, and U.S. government agencies 3 For one day or under continuing contract 15,641 15,437 15,026 17,891 14,103 15,563 17,201 16,123 17,454 4 For all other maturities 19,524 20,420 22,755 22,720 25,095 23,077 22,806 22,381 24,744 Repurchase agreements on U.S. government and federal agency securities Brokers and nonbank dealers in securities 5 For one day or under continuing contract 17,674 15,624 17,180 16,819 13,481 16,211 17,836 16,939 16,829 6 For all other maturities 43,227 48,249 44,438 41,710 41,795 40,350 40,442 42,366 44,700 All other customers 7 For one day or under continuing contract 28,358 26,244 27,070 29,762 29,013 30,159 29,925 30,865 31,152 8 For all other maturities 14,649 14,267 14,357 14,730 14,833 15,095 15,293 15,520 16,278 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 42,558 42,575 43,825 39,502 38,110 45,295 41,258 42,051 39,579 10 To all other specified customers2 28,326 27,033 31,094 27,852 28,986 28,858 27,828 30,603 27,736 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 1993 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 28 n / 93 Effective date Previous rate 10/ O 28 n / 93 Effective date Previous rate 10/ O 28 n / 93 Effective date Previous rate Boston 3 7/2/92 3.5 3.10 10/28/93 3.15 3.60 10/28/93 3.65 New York 7/2/92 10/28/93 10/28/93 Philadelphia 7/2/92 10/28/93 10/28/93 Cleveland 7/6/92 10/28/93 10/28/93 Richmond 7/2/92 10/28/93 10/28/93 Atlanta 7/2/92 10/28/93 10/28/93 Chicago 7/2/92 10/28/93 10/28/93 St. Louis 7/7/92 10/28/93 10/28/93 Minneapolis 7/2/92 10/28/93 10/28/93 Kansas City 7/2/92 10/28/93 10/28/93 Dallas 7/2/92 10/28/93 10/28/93 San Francisco ... 3 7/2/92 3.5 3.10 10/28/93 3.15 3.60 10/28/93 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. B o a f n k Effective A le l v l e F l) . — R. B o an f k Effective date A le l v l e F l) . — R. Ba o n f k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1977 6 6 1981-—May 5 13-14 14 1986—Aug. 21 5.5-6 5.5 14 14 22 5.5 5.5 1978—Jan. 9 6-6.5 6.5 Nov. 7 13-14 13 20 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 12 7 7 July 3 7-7.25 7.25 1982---JJuullyy 70 11.5-12 11.5 1988—Aug. 9 6-6.5 6.5 10 7.25 7.25 73 11.5 11.5 11 6.5 6.5 Aug. 21 7.75 7.75 Aug. 7 11-11.5 11 Sept. 22 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 20 8.5 8.5 ?7 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. 17 9.5-10 9.5 1990—Dec. 19 13 9.5 9.5 6-6.5 6 1979—July 20 10 10 Nov. 77 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 20 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 21 11 11 17 8.5 8.5 Sept. 13 5 5 Oct. 8 11-12 12 17 4.5-5 4.5 10 12 12 1984-——AApprr.. <> 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. 71 8.5-9 8.5 Dec. 20 3.5 3.5 19 13 13 76 8.5 8.5 24 May 29 12-13 13 Dec. 74 1992—July 2 3-3.5 3 30 12 12 7 3 3 June 13 11-12 11 1985-—May 70 7.5-8 7.5 16 11 11 74 7.5 7.5 29 10 10 In effect Oct. 28, 1993 3 3 July 28 10-11 10 1986-—Mar. 7 7-7.5 7 Sept. 26 11 11 10 7 7 Nov. 17 12 12 Apr. 71 6.5-7 6.5 Dec. 5 12-13 13 July 11 6 6 1. Available on a short-term basis to help depository institutions meet tempo- ordinarily is charged on extended-credit loans outstanding less than thirty days; rary needs for funds that cannot be met through reasonable alternative sources. however, at the discretion of the Federal Reserve Bank, this time period may be The highest rate established for loans to depository institutions may be charged on shortened. Beyond this initial period, a flexible rate somewhat above rates on adjustment-credit loans of unusual size that result from a major operating problem market sources of funds is charged. The rate ordinarily is reestablished on the first at the borrower's facility. business day of each two-week reserve maintenance period, but it is never less 2. Available to help relatively small depository institutions meet regular than the discount rate applicable to adjustment credit plus 50 basis points. seasonal needs for funds that arise from a clear pattern of intrayearly movements 4. For earlier data, see the following publications of the Board of Governors: in their deposits and loans and that cannot be met through special industry Banking and Monetary Statistics, 1914-1941, and 1941-1970-, and the Annual lenders. The discount rate on seasonal credit takes into account rates on market Statistical Digest, 1970-1979. sources of funds and ordinarily is reestablished on the first business day of each In 1980 and 1981, the Federal Reserve applied a surcharge to short-term two-week reserve maintenance period; however, it is never less than the discount adjustment-credit borrowings by institutions with deposits of $500 million or more rate applicable to adjustment credit. that had borrowed in successive weeks or in more than four weeks in a calendar 3. May be made available to depository institutions when similar assistance is quarter. A 3 percent surcharge was in effect from Mar. 17, 1980, through May 7, not reasonably available from other sources, including special industry lenders. 1980. A surcharge of 2 percent was reimposed on Nov. 17, 1980; the surcharge Such credit may be provided when exceptional circumstances (including sus- was subsequently raised to 3 percent on Dec. 5, 1980, and to 4 percent on May 5, tained deposit drains, impaired access to money market funds, or sudden 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, and to 2 deterioration in loan repayment performance) or practices involve only a partic- percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the ular institution, or to meet the needs of institutions experiencing difficulties surcharge was changed from a calendar quarter to a moving thirteen-week period. adjusting to changing market conditions over a longer period (particularly at times The surcharge was eliminated on Nov. 17, 1981. of deposit disintermediation). The discount rate applicable to adjustment credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A9 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Type of deposit Net transaction accounts3 1 $0 million-$46.8 million... 12/15/92 2 More than $46.8 million4.. 12/15/92 3 Nonpersonal time deposits^ 12/27/90 4 Eurocurrency liabilities6. . 12/27/90 1. Required reserves must be held in the form of deposits with Federal Reserve permit no more than six preauthorized, automatic, or other transfers per month, Banks or vault cash. Nonmember institutions may maintain reserve balances with of which no more than three may be checks, are not transaction accounts (such a Federal Reserve Bank indirectly on a pass-through basis with certain approved accounts are savings deposits). institutions. For previous reserve requirements, see earlier editions of the 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. 15, foreign banks, and Edge Act corporations. 1992, for institutions reporting quarterly, and Dec. 24, 1992, for institutions 2. The Garn-St Germain Depository Institutions Act of 1982 (Public Law reporting weekly, the amount was increased from $42.2 million to $46.8 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 1V5 years was reduced from 3 on an annual basis as of June 30. No corresponding adjustment is to be made in percent to IVi percent for the maintenance period that began Dec. 13, 1990, and the event of a decrease. On Dec. 15, 1992, the exemption was raised from $3.6 to zero for the maintenance period that began Dec. 27, 1990. The reserve million to $3.8 million. The exemption applies in the following order: (1) net requirement on nonpersonal time deposits with an original maturity of 1 Vi years negotiable order of withdrawal (NOW) accounts (NOW accounts less allowable or more has been zero since Oct. 6, 1983. deductions); and (2) net other transaction accounts. The exemption applies only to For institutions that report quarterly, the reserve requirement on nonpersonal accounts that would be subject to a 3 percent reserve requirement. time deposits with an original maturity of less than 1 Vi years was reduced from 3 3. Include all deposits against which the account holder is permitted to make percent to zero on Jan. 17, 1991. withdrawals by negotiable or transferable instruments, payment orders of with- 6. The reserve requirement on Eurocurrency liabilities was reduced from 3 drawal, and telephone and preauthorized transfers in excess of three per month percent to zero in the same manner and on the same dates as was 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 1 Vi years (see note 4). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Financial Statistics • December 1993 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 1993 TTyypp aa ee nn dd oo ff mm ttrr aa aa tt nn uu ss rrii aa tt cc yy tt iioonn 11999900 11999911 11999922 Feb. Mar. Apr. May June July Aug. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 24,739 20,158 14,714 0 0 121 349 7,280 0 902 2 Gross sales 7,291 120 1,628 0 0 0 0 0 0 0 3 Exchanges 241,086 277,314 308,699 19,832 23,796 30,124 26,610 24,821 35,943 27,775 4 Redemptions 4,400 1,000 1,600 0 0 0 0 0 0 0 Others within one year 5 Gross purchases 425 3,043 1,096 0 279 244 0 0 0 100 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shifts 25,638 24,454 36,662 2,892 4,303 1,950 4,108 4,002 0 0 8 Exchanges -27,424 -28,090 -30,543 -6,044 -2,602 -1,100 -4,013 -2,152 0 0 9 Redemptions 0 1,000 0 0 0 0 0 0 0 0 One to five years 10 Gross purchases 250 6,583 13,118 0 1,441 2,490 0 0 200 1,100 11 Gross sales 200 0 0 0 0 0 0 0 0 0 12 Maturity shifts -21,770 -21,211 -34,478 -2,617 -4,303 -1,630 -3,652 -4,002 666 0 13 Exchanges 25,410 24,594 25,811 4,564 2,602 800 3,245 2,152 0 0 Five to ten years 14 Gross purchases 0 1,280 2,818 0 716 1,147 0 0 0 500 15 Gross sales 100 0 0 0 0 0 0 0 0 0 16 Maturity shifts -2,186 -2,037 -1,915 -98 0 -320 -333 0 -666 0 17 Exchanges 789 2,894 3,532 1,000 0 300 468 0 0 0 More than ten years 18 Gross purchases 0 375 2,333 0 705 1,110 0 0 0 100 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shifts -1,681 -1,209 -269 -177 0 0 -123 0 0 0 21 Exchanges 1,226 600 1,200 480 0 0 300 0 0 0 All maturities 22 Gross purchases 25,414 31,439 34,079 0 3,141 5,111 349 7,280 200 2,702 23 Gross sales 7,591 120 1,628 0 0 0 0 0 0 0 24 Redemptions 4,400 1,000 1,600 0 0 0 0 0 0 0 Matched transactions 25 Gross sales 1,369,052 1,570,456 1,482,467 111,491 146,563 127,115 124,462 111,726 115,504 136,037 26 Gross purchases 1,363,434 1,571,534 1,480,140 113,349 143,049 128,924 123,227 113,095 117,074 135,705 Repurchase agreements 27 Gross purchases 219,632 310,084 378,374 28,544 37,815 30,197 33,987 53,051 41,190 53,053 28 Gross sales 202,551 311,752 386,257 25,889 33,714 36,953 28,640 43,342 56,246 48,263 29 Net change in U.S. Treasury securities 24,886 29,729 20,642 4,513 3,728 163 4,461 18,357 -13,286 7,160 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 0 0 0 0 0 0 0 0 0 0 31 Gross sales 0 5 0 0 0 0 0 0 0 0 32 Redemptions 183 292 632 85 101 28 41 22 366 125 Repurchase agreements 33 Gross purchases 41,836 22,807 14,565 1,107 1,811 197 2,105 2,968 3,479 2,485 34 Gross sales 40,461 23,595 14,486 832 1,519 764 2,105 2,019 4,428 2,415 35 Net change in federal agency obligations 1,192 -1,085 -554 190 191 -595 -41 927 -1,315 -55 36 Total net change in System Open Market Account 26,078 28,644 20,089 4,703 3,918 -431 4,420 19,284 -14,601 7,105 1. Sales, redemptions, and negative figures reduce holdings of the System Open Market Account; all other figures increase such holdings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Banks All 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month Account 1993 1993 Sept. 1 Sept. 8 Sept. 15 Sept. 22 Sept. 29 July 31 Aug. 31 Sept. 30 Consolidated condition statement ASSETS 1 Gold certificate account 11,056 11,056 11,056 11,056 11,057 11,057 11,057 11,057 2 Special drawing rights certificate account 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 3 379 370 367 377 378 398 382 378 Loans 4 To depository institutions 233 219 241 321 268 234 236 2,918 5 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 4,839 4,839 4,839 4,839 4,804 44,,996644 44,,883399 44,,880044 8 Held under repurchase agreements 781 95 1,866 1,506 1,621 0 70 2,146 9 Total U.S. Treasury securities 321,996 323,512 323,671 342,323 326,938 314,614 321,775 325,653 10 Bought outright2 315,426 321,238 320,070 320,287 319,344 314,614 316,985 319,357 11 Bills 152,377 154,164 152,9% 153,212 152,069 153,366 153,936 151,982 1? Notes 125,211 128,297 128,297 128,297 128,497 123,772 125,211 128,597 n Bonds 37,838 38,778 38,778 38,778 38,778 37,477 37,838 38,778 14 Held under repurchase agreements 6,570 2,274 3,601 22,036 7,594 0 4,790 6,296 15 Total loans and securities 327,849 328,665 330,618 348,990 333,632 319,813 326,920 335,521 16 Items in process of collection 6,206 9,435 6,210 6,277 5,001 4,958 7,560 4,349 17 Bank premises 1,044 1,045 1,045 1,046 1,047 1,043 1,044 1,047 Other assets 18 Denominated in foreign currencies 22,902 22,922 22,938 22,999 23,011 22,352 22,899 2233,,227722 19 All other4 7,782 8,120 8,470 10,397 9,379 8,336 7,485 8,771 20 Total assets 385,236 389,632 388,722 409,160 391,523 375,975 385,364 392,412 LIABILITIES 21 Federal Reserve notes 328,650 331,262 330,642 329,554 329,755 325,149 328,125 330,421 22 Total deposits 41,204 41,663 43,173 65,298 47,535 37,062 40,368 48,030 73 Depository institutions 36,017 37,018 36,402 37,860 35,455 30,725 31,931 29,934 7.4 U.S. Treasury—General account 4,659 4,116 5,974 26,895 11,438 5,818 7,975 17,289 25 Foreign—Official accounts 194 191 444 211 294 284 187 501 26 Other 335 338 353 333 348 232 272 306 77 Deferred credit items 5,545 7,287 5,600 4,925 4,833 4,415 6,707 4,275 28 Other liabilities and accrued dividends5 2,408 2,460 2,351 2,387 2,418 2,369 2,408 2,460 29 Total liabilities 377,807 382,671 381,767 402,163 384,541 368,995 377,608 385,186 CAPITAL ACCOUNTS 30 Capital paid in 3,318 3,318 3,328 3,329 3,331 3,299 3,317 3,331 31 Surplus 3,054 3,054 3,054 3,054 3,054 3,054 3,054 3,054 32 Other capital accounts 1,058 589 574 613 598 628 1,385 842 33 Total liabilities and capital accounts 385,236 389,632 388,722 409,160 391,523 375,975 385,364 392,412 MEMO 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts 326,229 325,559 328,957 333,061 332,545 316,176 332,238 330,479 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) 391,919 392,708 393,919 394,873 395,304 389,182 391,822 395,420 36 LESS: Held by Federal Reserve Banks 63,268 61,446 63,277 65,319 65,549 64,034 63,697 64,999 37 Federal Reserve notes, net 328,650 331,262 330,642 329,554 329,755 325,149 328,125 330,421 Collateral held against notes, net: 38 Gold certificate account 11,056 11,056 11,056 11,056 11,057 11,057 11,057 11,057 39 Special drawing rights certificate account 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. Treasury and agency securities 309,576 312,188 311,568 310,480 310,680 306,073 309,051 311,346 42 Total collateral 328,650 331,262 330,642 329,554 329,755 325,149 328,125 330,421 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 Nonfinancial Statistics • December 1993 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding Millions of dollars Wednesday End of month TTTyyypppeee ooofff hhhooollldddiiinnnggg aaannnddd mmmaaatttuuurrriiitttyyy 1993 1993 Sept. 1 Sept. 8 Sept. 15 Sept. 22 Sept. 29 July 30 Aug. 31 Sept. 30 1 Total loans 232 219 241 321 268 234 236 2,918 2 Within fifteen days' 60 60 185 284 235 103 99 2,793 3 Sixteen days to ninety days 173 158 57 38 34 132 137 125 4 Ninety-one days to one year 0 0 0 0 0 0 0 0 5 Total acceptances 0 0 0 0 0 0 0 0 6 Within fifteen days1 0 0 0 0 0 0 0 0 7 Sixteen days to ninety days 0 0 0 0 0 0 0 0 8 Ninety-one days to one year 0 0 0 0 0 0 0 0 9 Total U.S. Treasury securities 321,996 323,512 323,671 342,323 319,351 314,614 316,985 319,357 10 Within fifteen days1 17,048 17,149 19,169 37,971 11,886 7,871 6,730 4,423 11 Sixteen days to ninety days 78,503 76,033 74,184 77,639 77,157 79,998 82,664 76,689 12 Ninety-one days to one year 101,665 101,737 101,724 98,119 101,514 104,466 102,812 109,686 13 One year to five years 72,679 74,979 74,979 74,979 75,179 71,241 72,679 74,942 14 Five years to ten years 21,707 22,505 22,504 22,505 22,505 20,940 21,707 22,505 15 More than ten years 30,394 31,111 31,111 31,111 31,111 30,099 30,394 31,111 16 Total federal agency obligations 5,620 4,934 6,705 6,345 6,426 4,964 4,839 4,804 17 Within fifteen days1 781 95 1,901 1,761 1,841 101 302 220 18 Sixteen days to ninety days 439 704 694 474 555 747 439 550 19 Ninety-one days to one year 1,461 1,197 1,172 1,172 1,102 1,087 1,142 1,102 20 One year to five years 2,150 2,150 2,198 2,198 2,187 2,156 2,168 2,187 21 Five years to ten years 647 647 599 599 599 732 647 599 22 More than ten years 142 142 142 142 142 142 142 142 1. Holdings under repurchase agreements are classified as maturing within fifteen 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 1993 I-tem D 19 e 8 c 9 . D 19 e 9 c 0 . D 19 e 9 c 1 . D 19 e 9 c 2 . Feb. Mar. Apr. May June July Aug. Sept. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 40.49 41.77 45.53 54.35 54.92 55.17 55.20 56.88 57.12 57.57 58.03 58.84 2 Nonborrowed reserves4 40.23 41.44 45.34 54.23 54.88 55.07 55.12 56.76 56.94 57.32 57.68 58.42 3 Nonborrowed reserves plus extended credit5 40.25 41.46 45.34 54.23 54.88 55.07 55.12 56.76 56.94 57.32 57.68 58.42 4 Required reserves 39.57 40.10 44.56 53.20 53.82 53.95 54.10 55.88 56.21 56.48 57.08 57.75 5 Monetary base6 267.73 293.19 317.17 350.80 355.73 358.37 360.63 364.77 368.07 370.98 374.53 379.27 Not seasonally adjusted 6 Total reserves 41.77 43.07 46.98 56.06 53.81 54.18 56.37 55.88 56.96 57.42 57.38 58.69 7 Nonborrowed reserves 41.51 42.74 46.78 55.93 53.77 54.09 56.29 55.76 56.78 57.17 57.03 58.27 8 Nonborrowed reserves plus extended credit5 41.53 42.77 46.78 55.93 53.77 54.09 56.29 55.76 56.78 57.17 57.03 58.27 9 Required reserves 40.85 41.40 46.00 54.90 52.71 52.96 55.27 54.88 56.05 56.33 56.43 57.60 10 Monetary base9 271.18 296.68 321.07 354.55 353.18 356.00 361.64 364.08 368.73 372.02 374.10 377.76 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves11 62.81 59.12 55.53 56.54 53.88 54.30 56.54 56.10 57.24 57.75 57.77 59.14 12 Nonborrowed reserves 62.54 58.80 55.34 56.42 53.84 54.20 56.47 55.98 57.06 57.51 57.42 58.71 13 Nonborrowed reserves plus extended credit5 62.56 58.82 55.34 56.42 53.84 54.20 56.47 55.98 57.06 57.51 57.42 58.71 14 Required reserves 61.89 57.46 54.55 55.39 52.78 53.08 55.45 55.10 56.33 56.66 56.82 58.05 15 Monetary base12 292.55 313.70 333.61 360.90 359.56 362.59 368.18 370.46 375.19 378.48 380.53 384.26 16 Excess reserves .92 1.66 .98 1.16 1.10 1.21 1.10 1.00 .91 1.09 .95 1.09 17 Borrowings from the Federal Reserve .27 .33 .19 .12 .05 .09 .07 .12 .18 .24 .35 .43 1. Latest monthly and biweekly figures are available from the Board's H.3 (502) what required reserves would have been in past periods had current reserve weekly statistical release. Historical data and estimates of the impact on required requirements been in effect. Break-adjusted required reserves include required reserves of changes in reserve requirements are available from the Monetary and reserves against transactions deposits and nonpersonal time and savings deposits Reserves Projections Section, Division of Monetary Affairs, Board of Governors (but not reservable nondeposit liabilities). of the Federal Reserve System, Washington, DC 20551. 9. The break-adjusted monetary base equals (1) break-adjusted total reserves 2. Figures reflect adjustments for discontinuities, or "breaks," associated with (line 6), plus (2) the (unadjusted) currency component of the money stock, plus (3) regulatory changes in reserve requirements. (See also table 1.10) (for all quarterly reporters on the "Report of Transaction Accounts, Other 3. Seasonally adjusted, break-adjusted total reserves equal seasonally Deposits and Vault Cash" and for all those weekly reporters whose vault cash adjusted, break-adjusted required reserves (line 4) plus excess reserves (line 16). exceeds their required reserves) the break-adjusted difference between current 4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally vault cash and the amount applied to satisfy current reserve requirements. adjusted, break-adjusted total reserves (line 1) less total borrowings of depository 10. Reflects actual reserve requirements, including those on nondeposit liabilinstitutions from the Federal Reserve (line 17). ities, with no adjustments to eliminate the effects of discontinuities associated 5. Extended credit consists of borrowing at the discount window under with changes in reserve requirements. the terms and conditions established for the extended credit program to help 11. Reserve balances with Federal Reserve Banks plus vault cash used to depository institutions deal with sustained liquidity pressures. Because there is satisfy reserve requirements. not the same need to repay such borrowing promptly as with traditional short- 12. The monetary base, not break-adjusted and not seasonally adjusted, term adjustment credit, the money market impact of extended credit is similar to consists of (1) total reserves (line 11), plus (2) required clearing balances and that of nonborrowed reserves. adjustments to compensate for float at Federal Reserve Banks, plus (3) the 6. The seasonally adjusted, break-adjusted monetary base consists of (1) currency component of the money stock, plus (4) (for all quarterly reporters on seasonally adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally the "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all adjusted currency component of the money stock, plus (3) (for all quarterly those weekly reporters whose vault cash exceeds their required reserves) the reporters on the "Report of Transaction Accounts, Other Deposits and Vault difference between current vault cash and the amount applied to satisfy current Cash" and for all those weekly reporters whose vault cash exceeds their required reserve requirements. Since the introduction of changes in reserve requirements reserves) the seasonally adjusted, break-adjusted difference between current vault (CRR), currency and vault cash figures have been measured over the computation cash and the amount applied to satisfy current reserve requirements. periods ending on Mondays. 7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) 13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14). plus excess reserves (line 16). 8. To adjust required reserves for discontinuities that are due to regulatory changes in reserve requirements, a multiplicative procedure is used to estimate Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • December 1993 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1993 iItt emm D 19 e 8 c 9 . D 19 e 9 c 0 . D 19 e 9 c 1 . D 19 e 9 c. 2 " June1 July" Aug. Sept. Seasonally adjusted Measures2 1 Ml 794.6 827.2 899.3 1,026.6 1,073.1 1,085.3 1,094.8 1,107.6 2 M2 3,233.3 3,345.5 3,445.8 3,494.9 3,510.9 3,516.8 3,521.9 3,534.5 3 M3 4,056.1 4,116.8r 4,168.1 4,162.5 4,167.5 4,165.1 4,167.9 4,180.7 4 L 4,886.1 4,966.6 4,982.3r 5,039.5 5,070.2 5,068.4 5,075.2 n.a. i Debt 10,030.7r 10,670. lr ll,141.9r 11,718.6 11,972.0 12,025.9 12,079.5 n.a. Ml components 6 Currency3 222.7 246.7 267.2 292.3 306.8 309.6 312.6 316.4 7 Travelers checks 6.9 7.8 7.8 8.1 8.0 7.9 7.8 7.8 8 Demand deposits5 279.8 278.2 290.5 340.8 360.5 365.7 370.7 376.5 9 Other checkable deposits6 285.3 294.5 333.8 385.2 397.8 402.2 403.8 406.9 Nontransaction components 10 In M2* 2,438.7 2,518.3 2,546.6 2,468.3 2,437.8 2,431.4 2,427.1 2,426.9 11 In M3 822.8 771.3r 722.3 667.7 656.6 648.3 645.9 646.2 Commercial banks 12 Savings deposits, including MMDAs 541.4 582.2 666.2 756.1 769.0 769.5 773.9 777.4 13 Small time deposits9 534.9 610.3 601.5 506.9 488.7 483.8 479.5 476.4 14 Large time deposits10, 11 387.7 368,8r 341.3 288.1 276.0 271.6 272.3 270.7 Thrift institutions 15 Savings deposits, including MMDAs 349.6 338.6 376.3 429.9 429.8 430.6 431.2 431.7 16 Small time deposits9. 617.8 562.0 463.2 360.4 338.0 333.8 330.7 327.1 17 Large time deposits10 161.1 120.9 83.4 67.5 63.8 63.6 63.1 63.1 Money market mutual funds 18 General purpose and broker-dealer 317.4 350.5 363.9 342.3 336.2 335.9 334.3 332.4 19 Institution-only 108.8 135.9 182.1 202.3 198.1 195.0 193.3 194.1 Debt components 20 Federal debt 2,247.6r 2,490.7r 2,763.8r 3,068.4 3,207.9 3,227.8 3,252.2 n.a. 21 Nonfederal debt 7,783.1r 8,179.4r 8,378. lr 8,650.2 8,764.1 8,798.1 8,827.4 n.a. Not seasonally adjusted Measures2 22 Msl8 811.5 843.7 916.4 1,045.7 1,072.6 1,084.1 1,088.4 1,099.3 23 M2 3,245.1 3,357.0 3,457.9 3,509.1 3,506.5 3,513.3 3,514.7 3,520.8 24 M3 4,066.4 4,126.3 4,178.1 4,174.6 4,162.6 4,158.6 4,165.7 4,168.0 23 L 4,906.0 4,988.0 5,004.2 5,064.0 5,057.1 5,050.4 5,062.4 n.a. 26 Debt 10,026.5r 10,667.7r 11,141.0" 11,717.2 11,937.8 11,984.5 12,040.4 n.a. Ml components 27 Currency 225.3 249.5 269.9 295.0 307.4 311.0 312.8 314.8 28 Travelers checks 6.5 7.4 7.4 7.8 8.2 8.4 8.4 8.2 29 Demand deposits5 291.5 289.9 302.9 355.2 359.4 365.4 367.4 373.0 30 Other checkable deposits6 288.1 296.9 336.3 387.7 397.5 399.1 399.8 403.3 Nontransaction components 31 In M2 22,,443333..66 2,513.2 2,541.5 2,463.4 2,434.0 2,429.2 2,426.3 2,421.5 32 In M38 821.3r 769.3 720.1 665.5 656.1 645.3 651.0 647.1 Commercial banks 33 Savings deposits, including MMDAs 543.0 580.1 663.3 752.3 772.3 772.2 774.5 775.3 34 Small time deposits . 533.8 610.5 602.0 507.7 486.9 483.7 479.6 477.1 35 Large time deposits10, 386.9 367.7 340.1 287.1 277.5 271.2 273.4 271.1 Thrift institutions 36 Savings deposits, including MMDAs 347.4 337.3 374.7 427.8 431.6 432.1 431.6 430.5 37 Small time deposits9 616.2 562.1 463.6 360.9 336.8 333.8 330.8 327.6 38 Large time deposits10 162.0 120.6 83.1 67.3 64.1 63.6 63.4 63.2 Money market mutual funds 39 General purpose and broker-dealer 315.7 348.4 361.5 340.0 333.0 331.7 331.5 329.8 40 Institution-only 109.1 136.2 182.4 202.4 194.3 191.8 193.3 190.7 Repurchase agreements and Eurodollars 41 Overnight 77.5 74.7 76.3 74.8 73.5 75.7 78.3 81.3 42 178.4 158.3 130.1 126.2 140.6 140.7 141.8 142.4 Debt components 43 Federal debt 2,247.5 2,491.3 2,765.0 3,069.8 3,188.9 3,201.8 3,229.4 n.a. 44 Nonfederal debt 7,779.0" 8,176.3r 8,376.0" 8,647.4 8,748.9 8,782.7 8,810.9 n.a. Footnotes appear on 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) market fund holdings of these assets. Seasonally adjusted L is computed by weekly statistical release. Historical data are available from the Money and summing U.S. savings bonds, short-term Treasury securities, commercial paper, Reserves Projection Section, Division of Monetary Affairs, Board of Governors of and bankers acceptances, each seasonally adjusted separately, and then adding the Federal Reserve System, Washington, DC 20551. this result to M3. 2. Composition of the money stock measures and debt is as follows: Debt: Debt of domestic nonfinancial sectors consists of outstanding credit Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the market debt of the U.S. government, state and local governments, and private vaults of depository institutions, (2) travelers checks of nonbank issuers, (3) nonfinancial sectors. Private debt consists of corporate bonds, mortgages, condemand deposits at all commercial banks other than those owed to depository sumer credit (including bank loans), other bank loans, commercial paper, bankers institutions, the U.S. government, and foreign banks and official institutions, less acceptances, and other debt instruments. Data are derived from the Federal cash items in the process of collection and Federal Reserve float, and (4), other Reserve Board's flow of funds accounts. Debt data are based on monthly checkable deposits (OCDs), consisting of negotiable order of withdrawal (NOW) averages. This sum is seasonally adjusted as a whole. and automatic transfer service (ATS) accounts at depository institutions, credit 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of union share draft accounts, and demand deposits at thrift institutions. Seasonally depository institutions. adjusted Ml is computed by summing currency, travelers checks, demand 4. Outstanding amount of U.S. dollar-denominated travelers checks of nondeposits, and OCDs, each seasonally adjusted separately. bank issuers. Travelers checks issued by depository institutions are included in M2: Ml plus (1) overnight (and continuing-contract) repurchase agreements demand deposits. (RPs) issued by all depository institutions and overnight Eurodollars issued to 5. Demand deposits at commercial banks and foreign-related institutions other U.S. residents by foreign branches of U.S. banks worldwide, (2) savings (includ- than those owed to depository institutions, the U.S. government, and foreign ing MMDAs) and small time deposits (time deposits—including retail RPs—in banks and official institutions, less cash items in the process of collection and amounts of less than $100,000), and (3) balances in both taxable and tax-exempt Federal Reserve float. general-purpose and broker-dealer money market funds. Excludes individual 6. Consists of NOW and ATS account balances at all depository institutions, retirement accounts (IRAs) and Keogh balances at depository institutions and credit union share draft account balances, and demand deposits at thrift institumoney market funds. Also excludes all balances held by U.S. commercial banks, tions. money market funds (general purpose and broker-deader), foreign governments 7. Sum of (1) overnight RPs and overnight Eurodollars, (2) money market fund and commercial banks, and the U.S. government. Seasonally adjusted M2 is balances (general purpose and broker-dealer), (3) savings deposits (including computed by adjusting its non-Mi component as a whole and then adding this MMDAs), and (4) small time deposits. result to seasonally adjusted Ml. 8. Sum of (1) large time deposits, (2) term RPs, (3) term Eurodollars of U.S. M3: M2 plus (1) large time deposits and term RP liabilities (in amounts of residents, and (4) money market fund balances (institution-only), less (5) a $100,000 or more) issued by all depository institutions, (2) term Eurodollars held consolidation adjustment that represents the estimated amount of overnight RPs by U.S. residents at foreign branches of U.S. banks worldwide and at all banking and Eurodollars held by institution-only money market funds. offices in the United Kingdom and Canada, and (3) balances in both taxable and 9. Small time deposits—including retail RPs—are those issued in amounts of tax-exempt, institution-only money market funds. Excludes amounts held by less than $100,000. All IRAs and Keogh accounts at commercial banks and thrift depository institutions, the U.S. government, money market funds, and foreign institutions are subtracted from small time deposits. banks and official institutions. Also excluded is the estimated amount of overnight 10. Large time deposits are those issued in amounts of $100,000 or more, RPs and Eurodollars held by institution-only money market funds. Seasonally excluding those booked at international banking facilities. adjusted M3 is computed by adjusting its non-M2 component as a whole and then 11. Large time deposits at commercial banks less those held by money market adding this result to seasonally adjusted M2. funds, depository institutions, U.S. government, and foreign banks and official L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term institutions. Treasury securities, commercial paper, and bankers acceptances, net of money Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Nonfinancial Statistics • December 1993 1.22 DEPOSIT INTEREST RATES AND AMOUNTS OUTSTANDING Commercial and BIF-insured saving banks1 1993 IItteemm Jan. Feb. Mar. Apr. Mayr Juner Julyr Aug. Sept. Interest rates (annual effective yields) INSURED COMMERCIAL BANKS 1 Negotiable order of withdrawal accounts ... 3.76 2.33 2.32 2.27 2.21 2.15 2.12 2.09 2.06 2.01 1.96 2 Savings deposits2 4.30 2.88 2.85 2.80 2.73 2.68 2.65 2.61 2.59 2.55 2.51 Interest-bearing time deposits with balances of less than $100,000, by maturity 3 7 to 91 days 4.18 2.90 2.86 2.81 2.75 2.72 2.70 2.68 2.67 2.66 2.63 4 92 to 182 days 4.41 3.16 3.13 3.08 3.03 2.99 2.97 2.97 2.97 2.96 2.92 5 183 days to 1 year 4.59 3.37 3.35 3.29 3.22 3.19 3.18 3.19 3.18 3.17 3.12 6 More than 1 year to 2Vi years 4.95 3.88 3.88 3.83 3.74 3.66 3.64 3.65 3.64 3.63 3.56 / More than 2V5 years 5.52 4.77 4.72 4.59 4.52 4.47 4.47 4.44 4.43 4.40 4.28 BIF-INSURED SAVINGS BANKS3 8 Negotiable order of withdrawal accounts ... 4.44 2.45 2.40 2.37 2.32 2.25 2.20 2.13 2.09 2.07 2.01 Y Savings deposits 4.97 3.20 3.17 3.14 3.05 2.98 2.93 2.88 2.83 2.80 2.73 Interest-bearing time deposits with balances of less than $100,000, by maturity 10 7 to 91 days 4.68 3.13 3.06 3.01 2.95 2.91 2.87 2.86 2.80 2.79 2.76 11 92 to 182 days 4.92 3.44 3.38 3.35 3.28 3.23 3.19 3.17 3.15 3.12 3.05 12 183 days to 1 year 4.99 3.61 3.58 3.57 3.52 3.48 3.45 3.44 3.40 3.37 3.33 13 More than 1 year to 2Vt> years 5.23 4.02 3.94 3.89 3.83 3.86 3.76 3.79 3.72 3.73 3.68 14 More than 2Vi years 5.98 5.00 5.02 4.97 4.89 4.84 4.79 4.75 4.73 4.73 4.62 Amounts outstanding (millions of dollars) INSURED COMMERCIAL BANKS 15 Negotiable order of withdrawal accounts ... 244,637 286,541 277,271 279,944 287,811 280,073 283,860 287,555 284,496 287,675 286,046 16 Savings deposits 652,058 738,253 733,836 742,952 747,809 745,038 753,452 754,790 757,716 761,919 758,627 17 Personal 508,191 578,757 579,701 585,189 591,388 586,863 591,231 592,545 593,448 593,318 592,003 18 Nonpersonal 143,867 159,496 154,135 157,764 156,422 158,175 162,221 162,245 164,268 168,601 166,624 Interest-bearing time deposits with balances of less than $100,000, by maturity 19 7 to 91 days 47,094 38,474 38,256 36,738 35,459 34,675 33,213 31,743 30,803 30,017 30,307 20 92 to 182 days 158,605 127,831 128,083 128,209 125,630 122,136 119,0% 114,846 112,497 109,603 107,778 21 183 days to 1 year 209,672 163,098 160,630 159,631 158,173 156,957 157,559 156,549 156,431 155,074 153,059 22 More than 1 year to 2 V2 years 171,721 152,977 151,905 151,798 147,798 146,830 144,330 144,804 143,605 141,377 140,086 23 More than 2 Vi years 158,078 169,708 169,371 172,362 177,558 178,657 179,761 179,297 180,983 181,762 184,375 24 IRA/Keogh Plan deposits 147,266 147,350 147,069 146,841 148,515 147,463 146,450 146,549 146,234 145,624 144,965 BIF-INSURED SAVINGS BANKS3 25 Negotiable order of withdrawal accounts 9,624 10,871 9,858 9,821 10,199 9,876 10,000 10,313 10,457 10,468 10,459 26 Savings deposits2 71,215 81,786 79,271 79,649 77,390 76,970 77,352 77,495 78,390 78,387 78,196 27 Personal 68,638 78,695 76,337 76,634 74,430 74,077 74,376 74,569 75,049 75,153 74,992 28 Nonpersonal 2,577 3,091 2,934 3,016 2,961 2,893 2,976 2,926 3,341 3,234 3,204 Interest-bearing time deposits with balances of less than $100,000, by maturity 29 7 to 91 days 4,146 3,867 3,541 3,468 3,201 3,167 3,103 3,022 2,871 2,928 2,886 30 92 to 182 days 21,686 17,345 16,088 15,857 14,468 14,328 14,129 13,808 13,773 13,525 13,261 31 183 days to 1 year 29,715 21,780 20,627 20,301 19,074 18,778 18,520 18,427 18,454 18,143 17,798 32 More than 1 year to 2Vi years 25,379 18,442 17,524 17,387 16,842 16,433 16,155 15,972 16,250 16,200 16,160 33 More than 2 Vi years 18,665 18,845 18,461 18,759 18,564 18,646 18,725 18,989 19,229 19,331 19,610 34 IRA/Keogh Plan accounts 23,007 21,713 21,320 21,260 20,089 19,969 19,861 19,855 19,920 19,802 19,766 1. BIF, Bank Insurance Fund. Data in this table also appear in the Board's H.6 seasonally adjusted and include IRA/Keogh deposits and foriegn currency denom- (508) Special Supplementary Table monthly statistical release. For ordering inated deposits. Data exclude retail repurchase agreements and deposits held in address, see inside front cover. Estimates are based on data collected by the U.S. branches and agencies of foreign banks. Federal Reserve System from a stratified random sample of about 460 commercial 2. Includes personal and nonpersonal money market deposits. banks and 80 savings banks on the last Wednesday of each period. Data are not 3. BIF-insured savings banks include both mutual and federal savings banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A17 1.23 BANK DEBITS AND DEPOSIT TURNOVER1 Debits are in billions of dollars; turnover is ratio of debits to deposits; monthly data are at annual rates 1993 BBaannkk ggrroouupp,, oorr ttyyppee ooff ccuussttoommeerr Feb. Mar. Apr/ Mayr June July DEBITS Seasonally adjusted Demand deposits3 1 All insured banks 277,157.5 277,758.0 315,806.1 331,126.3 331,026.3 324,638.7 306,642.9 335,248.5 330,562.7 2 Major New York City banks 131,699.1 137,352.3 165,572.7 176,683.2 166,866.6 163,540.1 155,495.0 170,062.9 166,870.0 3 Other banks 145,458.4 140,405.7 150,233.5 154,443.1 164,159.7 161,098.6 151,147.9 165,185.6 163,692.7 4 Other checkable deposits4 3,349.0 3,645.5 3,788.1 3,601.4 3,572.6 3,524.7 3,284.7 3,620.9 3,390.6 5 Savings deposits (including MMDAs) 3,483.3 3,266.1 3,331.3 3,363.3 3,562.8 3,523.3 3,436.1 3,637.4 3,665.9 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 797.8 803.5 832.4 817.3 811.3 792.3 722.8 791.3 777.1 7 Major New York City banks 3,819.8 4,270.8 4,797.9 4,525.8 4,129.1 4,120.9 3,852.9 4,197.5 4,291.2 8 Other banks 464.9 447.9 435.9 421.9 446.6 435.4 393.7 431.1 423.5 9 Other checkable deposits4 16.5 16.2 14.4 12.6 12.5 12.5 11.2 12.3 11.5 10 Savings deposits (including MMDAs) 6.2 5.3 4.7 4.5 4.8 4.7 4.5 4.7 4.8 DEBITS Not seasonally adjusted Demand deposits3 11 All insured banks 277,290.5 277,715.4 315,808.2 303,619.8 339,172.4 324,530.2 306,746.1 345,368.7 332,500.1 12 Major New York City banks 131,784.7 137,307.2 165,595.0 161,174.1 170,855.0 161,923.2 154,606.6 176,874.8 168,018.4 13 Other banks 145,505.8 140,408.3 150,213.3 142,445.7 168,317.4 162,607.0 152,139.5 168,493.9 164,481.7 14 Other checkable deposits4 3,346.7 3,645.6 3,788.1 3,296.7 3,630.2 3,741.6 3,201.0 3,645.9 3,314.9 15 Savings deposits (including MMDAs) ... . 3,483.0 3,267.7 3,329.0 3,080.3 3,529.2 3,741.3 3,445.0 3,758.1 3,676.3 DEPOSIT TURNOVER Demand deposits3 16 All insured banks 798.2 803.4 832.5 771.7 854.5 787.0 738.2 818.3 776.7 17 Major New York City banks 3,825.9 4,274.3 4,803.5 4,213.4 4,385.4 4,108.4 3,948.9 4,412.6 4,265.3 18 Other banks 465.0 447.9 436.0 401.1 470.2 436.0 404.2 441.1 423.1 19 Other checkable deposits4 16.4 16.2 14.4 11.6 12.6 12.8 11.1 12.5 11.4 20 Savings deposits (including MMDAs)5 6.2 5.3 4.7 4.1 4.7 5.0 4.5 4.9 4.8 1. Historical tables containing revised data for earlier periods can be obtained 2. Annual averages of monthly figures. from the Banking and Money Market Statistics Section, Division of Monetary 3. Represents accounts of individuals, partnerships, and corporations and of Affairs, Board of Governors of the Federal Reserve System, Washington, DC states and political subdivisions. 20551. 4. Accounts authorized for negotiable orders of withdrawal (NOWs) and Data in this table also appear in the Board's G.6 (406) monthly statistical accounts authorized for automatic transfer to demand deposits (ATSs). release. For ordering address, see inside front cover. 5. Money market deposit accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic NonfinancialS tatistics • December 1993 1.24 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars, averages of Wednesday figures 1992 1993 IItteemm Oct. Nov. Dec. Jan. Feb. Mar. Apr. Mayr June1 Julyr Aug. Sept. Seasonally adjusted 1 Total loans, leases, and securities2 . 2,926.0 2,932.4 2,937.6 2,935.3 2,943.9 2,960.2r 2,971.3r 2,992.5 3,016.0 3,038.6 3,047.2 3,058.1 2 U.S. government securities 647.3 651.4 657.1 656.5 666.2 680.3r 691.3r 693.9 704.5 708.2 714.6 720.2 3 Other securities 178.8 177.3 176.0 174.5 176.4 178.8r 180.4r 181.0 179.7 181.2 182.1 182.2 4 Total loans and leases2 2,099.8 2,103.8 2,104.6 2,104.4 2,101.3 2,101.1 2,099.6r 2,117.7 2,131.8 2,149.2 2,150.6 2,155.7 5 Commercial and industrial ..... 600.8 600.5 597.6 598.0 596.7 593. lr 587.6r 590.7 592.3 591.2 590.6 587.5 6 Bankers acceptances held ... 7.5 7.9 7.7 7.3 8.4 8.5 8.5 9.1 9.0 9.6 10.0 9.2 7 Other commercial and industrial 593.3 592.6 589.9 590.7 588.3 584.5r 579.lr 581.6 583.3 581.6 580.6 578.3 8 U.S. addressees 582.6 582.3 580.2 581.2 578.8 574.9r 570.0r 572.3 574.7 572.6 571.6 569.0 9 Non-U.S. addressees4 10.7 10.3 9.7 9.6 9.5 9.7 9.1 9.3 8.7 9.0 9.0 9.3 10 Real estate 890.7 892.5 892.4 890.8 890.1 892.0" 892.8r 898.5 904.3 907.6 910.6 914.2 11 Individual 355.8 355.4 355.5 358.4 361.9 362.3 364. lr 367.0 368.1 371.8 373.9 375.1 12 Security 64.7 64.2 64.8 63.5 62.8 64.3 62.6 69.1 72.2 8822..55 80.5 83.4 13 Nonbank financial institutions 43.9 44.7 43.6 45.1 44.6 44.2 44.8 45.5 45.4 46.0 46.3 45.6 14 Agricultural 35.1 35.2 35.0 34.5 34.3 34.0 34.0 34.2 34.1 34.5 34.6 34.7 15 State and political subdivisions 25.4 25.1 24.8 24.2 23.8 23.7 23.4 23.5 23.6 23.7 23.6 23.2 16 Foreign banks 7.6 7.5 7.7 7.7 8.8 8.5 8.4 8.5 8.7 9.2 9.6 8.8 17 Foreign official institutions 2.4 2.8 2.8 2.9 3.2 3.2 3.2 3.1 3.3 3.3 3.2 3.5 18 Lease-financing receivables .... 30.8 30.9 30.9 30.4 30.6 30.6 30.7 31.0 31.3 31.7 31.8 31.9 19 All other loans 42.6 45.0 49.5 48.8 44.5 45.3 47.9r 46.5 48.7 47.9 45.8 47.7 Not seasonally adjusted 20 Total loans, leases, and securities2 . 2,925.2 2,939.0 2,947.4 2,937.4 2,946.7 2,963.9r 2,972.8r 2,987.4 3,015.7 3,026.8 3,038.8 3,054.9 21 U.S. government securities 645.1 654.1 655.8 656.9 669.8 685.9" 693. lr 692.8 702.3 703.5 712.9 717.8 22 Other securities 179.2 178.3 176.2 175.0 176.6 178.6r 179.8r 180.5 179.2 180.1 181.9 181.8 23 Total loans and leases2 2,100.9 2,106.6 2,115.4 2,105.5 2,100.3 2,099.4 2,099.9 2,114.1 2,134.3 2,143.3 2,144.0 2,155.3 24 Commercial and industrial 598.4 600.8 600.6 596.4 595.9 596.2r 590.6r 592.4 594.1 590.2 586.9 584.0 25 Bankers acceptances held3 ... 7.4 8.2 8.0 7.4 8.8 8.6 8.4 9.0 8.8 9.3 9.7 9.0 26 Other commercial and industrial 591.0 592.6 592.5 589.0 587.1 587,6r 582.2r 583.4 585.3 580.8 577.2 575.0 27 U.S. addressees4. 580.7 582.8 583.0 579.5 577.5 578. lr 573.0" 574.2 575.8 571.5 568.0 565.8 28 Non-U.S. addressees4 10.3 9.8 9.5 9.5 9.5 9.5 9.2 9.2 9.5 9.3 9.2 9.2 29 Real estate 891.5 893.9 893.7 890.5 888.3 889.5r 891.61 898.6 904.6 907.9 911.4 915.0 30 Individual 356.2 356.3 360.0 362.5 361.9 359.8r 361.5r 365.2 366.2 369.4 373.4 376.8 31 Security 64.2 63.5 65.6 65.0 65.8 66.4 66.0 65.9 71.5 78.3 77.5 81.4 32 Nonbank financial institutions 43.5 45.0 45.6 45.3 44.5 43.9 44.2 44.9 46.0 45.7 46.1 45.0 33 Agricultural 36.1 35.2 34.8 33.6 32.9 32.71 33.2 33.8 34.6 35.4 35.8 36.1 34 State and political subdivisions 25.5 25.2 24.8 24.0 23.7 23.7 23.4 23.5 23.6 23.6 23.6 23.4 35 Foreign banks 7.8 7.8 8.2 7.8 8.6 8.2 8.1 8.3 8.5 9.2 9.3 9.0 36 Foreign official institutions 2.4 2.8 2.8 2.9 3.2 3.2 3.2 3.1 3.3 3.3 3.2 3.5 37 Lease-financing receivables .... 30.8 30.8 30.9 30.8 30.8 30.8 30.8 31.0 31.3 31.4 31.6 31.7 38 All other loans 44.4 45.4 48.6 46.6 44.6 45.0 47.4 47.3 50.7 48.9 45.3 49.4 1. All commercial banks include domestically chartered insured banks, U.S. large branches and agencies and quarterly reports of all domestically chartered branches and agencies of foreign banks, New York state investment companies insured banks and all agencies, branches, investment companies, and Edge Act majority owned by foreign banks, and Edge Act and agreement corporations and agreement corporation engaged in banking. owned by domestically chartered foreign banks. Data are prorated averages of 2. Adjusted to exclude loans to commercial banks in the United States. Wednesday estimates for domestically chartered and foreign related institutions, 3. Includes nonfinancial commercial paper held. based on weekly reports of a sample of domestically chartered insured banks and 4. United States includes the fifty states and the District of Columbia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions A19 1.25 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Billions of dollars, monthly averages 1992 1993 SSoouurrccee ooff ffuunnddss Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept. Seasonally adjusted 1 Total nondeposit funds 303.9r 307.7r 311.4r 314.1" 317.4" 331.7" 344.0 341.8 354.3 378.8 389.8 401.3 2 Net balances owed to related foreign offices .. 62.6 67.3 71.1 74.2 73.6 79.5 89.5 84.0 87.2 101.4 115.9 120.7 3 Borrowings from other than commercial banks in United States4 241.3r 240.4r 240.3r 239.9" 243.9" 252.2" 254.5 257.8 267.1 277.4 273.9 280.6 4 Domestically chartered banks 155.4r 154.8r 155.9" 156.8" 157.2" 161.4" 167.1 167.5 176.2 186.7 184.1 188.4 5 Foreign-related banks 85.9 85.6 84.4 83.1 86.6 90.8 87.4 90.3 90.9 90.7 89.8 92.2 Not seasonally adjusted 6 Total nondeposit funds2 306.2r 313.0" 311.4r 312.9" 321.8" 336.7" 340.4 346.6 353.6 372.5 384.6 395.6 7 Net balances owed to related foreign offices .. 63.8 68.9 75.2 76.8 75.4 80.2 86.5 86.1 85.3 98.1 112.1 118.4 8 Domestically chartered banks -13.4 -12.4 -15.0 -15.8 -10.6 -7.0 -9.4 -9.7 -15.3 -15.2 -13.6 -11.2 9 Foreign-related banks 77.2 81.4 90.2 92.6 86.0 87.2 96.0 95.8 100.6 113.4 125.7 129.6 10 Borrowings from other than commercial banks in United States4 242.4r 244.lr 236.2r 236.1" 246.4" 256.4" 253.8 260.5 268.3 274.4 272.5 277.2 11 Domestically chartered banks 156.5r 159.2r 154.9" 153.7" 159.0" 164.3" 165.1 169.2 176.0 182.8 182.8 187.0 12 Federal funds and security RP borrowings 153.0" 155.lr 151.0" 150.1" 155.8" 160.9" 161.6 165.4 172.1 178.6 178.7 182.6 1133 Other6 3.6 4.1 4.0 3.6 3.2 3.3 3.5 3.8 3.8 4.3 4.0 4.4 14 Foreign-related banks6 85.9 84.8 81.2 82.4 87.4 92.2 88.7 91.4 92.3 91.6 89.7 90.2 MEMO Gross large time deposits 13 Seasonally adjusted 375.7 371.3 366.5 359.9 358.4 355.7 355.0 356.3 352.6 344.6 339.7 335.4 16 Not seasonally adjusted 374.9 371.1 365.5 358.0 358.0 356.5 354.2 357.9 354.1 344.2 340.8 335.8 U.S. Treasury demand balances at commercial banks 17 Seasonally adjusted 21.5 20.7 20.4 25.6 23.6 18.8 24.2 19.1 26.1 30.1 29.4 24.3 18 Not seasonally adjusted 21.9 16.5 19.5 33.1 29.5 17.4 20.3 20.3 26.5 25.6 23.8 28.8 1. Commercial banks are nationally and state-chartered banks in the fifty states borrowings from Federal Reserve Banks and from foreign banks, term federal and the District of Columbia, agencies and branches of foreign banks, New York funds, loan RPs, and sales of participations in pooled loans. State investment companies majority owned by foreign banks, and Edge Act and 5. Figures are based on averages of daily data reported weekly by approxiagreement corporations owned by domestically chartered and foreign banks. mately 120 large banks and on quarterly or annual data reported by other banks. Data in this table also appear in the Board's G.10 (411) monthly statistical 6. Figures are partly averages of daily data and partly averages of Wednesday release. For ordering address, see inside front cover. data. 2. Includes federal funds, repurchase agreements (RPs), and other borrowing 7. Time deposits in denominations of $100,000 or more. Estimated averages of from nonbanks and net balances due to related foreign offices. daily data. 3. Reflects net positions of U.S. chartered banks, Edge Act corporations, and 8. U.S. Treasury demand deposits and Treasury tax and loan notes at com- U.S. branches and agencies of foreign banks with related foreign offices plus net mercial banks. Averages of daily data. positions with own international banking facilities (IBFs). 4. Borrowings through any instrument, such as a promissory note or due bill, given for the purpose of borrowing money for the banking business. This includes Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic NonfinancialS tatistics • December 1993 1.26 ASSETS AND LIABILITIES OF COMMERCIAL BANKS1 Wednesday figures Millions of dollars 1993 AAccccoouunntt Aug. 4 Aug. 11 Aug. 18 Aug. 25 Sept. 1 Sept. 8 Sept. 15 Sept. 22 Sept. 29 ALL COMMERCIAL BANKING INSTITUTIONS2 Assets 1 Loans and securities 3,204,820 3,182,857 3,185,357 3,166,924 3,208,336 3,190,241 3,226,220 3,187,847 3,200,916 2 Investment securities 849,654 847,402 849,265 843,317 852,285 852,837 855,140 855,801 850,057 3 U.S. government securities 683,627 681,024 683,530 678,576 686,597 687,391 689,114 690,288 684,415 4 Other 166,027 166,378 165,734 164,742 165,688 165,446 166,026 165,513 165,642 5 Trading account assets 47,544 44,931 48,856 44,491 48,092 46,601 46,701 44,546 47,166 6 U.S. government securities 31,726 29,252 32,206 28,180 31,484 30,186 30,626 28,704 30,807 7 Other securities 2,897 2,831 2,947 2,724 2,929 2,868 2,711 2,815 2,727 8 Other trading account assets 12,922 12,849 13,703 13,587 13,679 13,547 13,363 13,028 13,632 9 Total loans 2,307,622 2,290,525 2,287,236 2,279,116 2,307,959 2,290,803 2,324,379 2,287,500 2,303,693 10 Interbank loans 154,377 148,046 147,786 142,063 154,923 145,568 158,140 136,332 145,262 11 Loans excluding interbank 2,153,244 2,142,478 2,139,450 2,137,053 2,153,036 2,145,234 2,166,239 2,151,167 2,158,431 1?. Commercial and industrial 591,639 589,170 587,628 583,457 584,295 579,810 585,574 584,828 585,726 N Real estate 910,746 912,608 909,808 909,991 913,913 915,396 915,884 912,665 915,920 14 Revolving home equity 74,520 74,520 74,653 74,662 74,793 74,755 74,799 74,778 74,860 15 Other 836,226 838,088 835,155 835,329 839,120 840,641 841,085 837,888 841,060 16 Individual 372,122 371,702 373,618 374,071 375,171 374,475 376,374 377,421 378,993 17 All other 278,738 268,999 268,397 269,534 279,658 275,553 288,408 276,253 277,792 18 Total cash assets 212,413 206,202 209,816 203,215 245,502 230,370 245,790 211,764 221,957 19 Balances with Federal Reserve Banks 29,555 30,699 30,602 27,708 31,973 33,294 31,776 34,400 31,828 2.0 Cash in vault 30,545 32,701 33,018 33,405 32,989 33,585 33,812 33,445 33,898 21 Demand balances at U.S. depository institutions .. 30,975 28,768 29,593 29,403 33,477 32,556 35,701 28,847 31,380 n Cash items 80,123 73,299 75,033 72,042 107,350 89,924 104,076 75,062 83,476 21 Other cash assets 41,214 40,735 41,570 40,658 39,714 41,012 40,425 40,010 41,374 24 Other assets 284,023 281,279 275,690 271,449 275,510 282,104 280,847 271,188 275,011 25 Total assets 3,701,255 3,670,338 3,670,863 3,641,587 3,729,348 3,702,715 3,752,857 3,670,798 3,697,883 Liabilities 26 Total deposits 2,520,742 2,503,524 2,486,856 2,478,736 2,546,143 2,532,645 2,570,122 2,470,501 2,491,559 27 Transaction accounts 791,838 776,399 770,731 763,156 831,726 811,387 854,312 767,444 791,887 28 Demand, U.S. government 3,593 2,998 2,927 2,897 5,880 3,056 26,299 3,956 3,284 29 Demand, depository institutions 39,413 36,238 36,820 38,685 44,750 42,613 46,655 37,350 38,939 10 Other demand and all checkable deposits 748,832 737,163 730,985 721,575 781,097 765,717 781,359 726,138 749,663 31 Savings deposits (excluding checkable) 773,168 776,633 769,418 768,047 771,584 778,572 773,510 766,761 764,202 32 Small time deposits 614,213 612,142 610,928 609,552 611,121 610,347 609,177 607,183 606,940 33 Time deposits over $100,000 341,524 338,350 335,778 337,981 331,712 332,339 333,123 329,112 328,532 34 Borrowings 524,520 512,355 519,993 500,525 520,737 503,276 524,039 534,563 534,156 35 Treasury tax and loan notes 17,805 21,407 17,689 19,180 24,817 10,561 12,531 34,553 35,277 36 Other 506,715 490,948 502,304 481,345 495,920 492,715 511,508 500,010 498,879 37 Other liabilities 365,490 362,701 371,153 369,495 370,263 371,167 363,409 369,877 379,360 38 Total liabilities 3,410,752 3,378,580 3,378,001 3,348,756 3,437,144 3,407,088 3,457,570 3,374,940 3,405,075 39 Residual (assets less liabilities)3 290,503 291,759 292,861 292,832 292,205 295,627 295,287 295,858 292,808 Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions A21 1.26 ASSETS AND LIABILITIES OF COMMERCIAL BANKS1 Wednesday figures—Continued Millions of dollars Aug. 4 Aug. 11 Aug. 18 Aug. 25 Sept. 1 Sept. 8 Sept. 15 Sept. 22 Sept. 29 DOMESTICALLY CHARTERED COMMERCIAL BANKS4 Assets 4 5 4 4 4 4 4 4 4 4 4 5 5 5 5 5 5 5 5 5 6 6 6 6 9 4 0 1 2 3 4 5 6 7 8 0 1 2 3 5 6 7 8 9 0 1 2 3 O T L o o t T T D I B C O C h t a n a r o e a a n a e t l v O O a I O L U U r h t l s s s m n d e a a h c h e o t t t . a . l t s C R n i a A I h a r a h h S S a e s n n t i i n c n s l e e e . . e o l n s m r n g t c o d h d O R l e r d r r b e a e s m a g g s a i e l v m o t a e a t v s t s o a o s s n b e m n h a r v n h t c e e w i e s s v s v x a t a h u e d k o c c s s c e e e l d i c r e a l u o t u l e u s r t a t r r r l i a v l h s a c e u t r n r u n n n o s t s i l i i i c n e g d c m m n a t e t F a u t i i e g i n l t e e e e a e r n s s s a s s i d a g n c n h t s a t n e t c i o s t e i d r o e m n s s s a u U t e e l t i s e n e c c n . R t r u u S d e b r r . e u a q a i i s s s u t t d n e i i t s i e k e e r r e t i p s s y v t a s o e l s B ito an ry k s i nstitutions . 2 2 1 , , , 8 0 4 8 7 7 6 3 8 2 1 1 1 1 3 1 4 3 7 3 6 8 7 3 7 8 2 3 2 7 1 3 1 4 1 8 8 4 4 7 3 2 0 3 8 4 1 2 1 2 9 7 8 0 2 3 2 2 8 7 4 , , , , , , , , , , , , , , , , , , , , , , , , 6 7 5 1 3 1 5 7 1 2 6 1 8 6 4 6 6 5 2 9 6 1 3 4 4 4 7 4 2 0 1 2 2 2 1 9 9 5 6 9 3 1 1 2 5 2 5 4 2 1 3 4 5 6 5 0 6 2 8 8 7 9 4 4 4 9 1 2 7 8 6 1 2 2 1 , , , 0 8 7 6 4 8 7 8 3 2 1 1 1 1 0 4 7 2 3 6 9 3 7 2 7 7 0 3 3 2 7 1 4 2 1 8 7 3 1 4 4 2 0 5 0 1 3 9 6 1 9 0 7 2 1 2 7 2 5 8 9 , , , , , , , , , , , , , , , , , , , , , , , , 4 0 9 5 8 2 2 3 8 7 0 4 8 0 3 0 6 0 4 2 8 9 0 1 6 9 3 5 3 0 8 6 3 2 1 6 7 2 6 6 5 4 5 3 1 4 0 0 2 4 2 2 1 2 1 1 1 0 9 3 4 7 3 5 8 4 0 3 9 1 3 6 2 2 1 , , , 0 8 7 6 4 8 7 3 2 8 1 1 1 1 4 7 0 2 8 3 2 7 6 3 2 7 0 7 7 2 3 2 1 4 8 8 1 4 1 8 3 2 8 0 9 2 2 2 3 8 8 3 4 9 2 7 2 3 2 0 8 , , , , , , , , , , , , , , , , , , , , , , , , 6 3 1 9 8 8 1 8 8 8 6 6 2 4 0 2 7 1 9 0 7 7 6 6 5 6 5 4 8 5 1 7 1 9 0 0 0 2 8 9 7 4 8 8 0 0 0 9 7 1 3 7 1 6 5 5 8 9 9 6 3 3 5 3 9 4 0 3 5 8 9 6 2 1 1 , , , 8 7 6 4 8 7 3 2 9 8 1 1 1 1 0 4 7 8 6 2 2 6 2 2 6 7 0 9 7 2 3 2 4 1 1 7 7 4 9 4 2 6 8 6 7 1 8 9 4 8 6 9 1 7 3 4 1 3 5 7 5 , , , , , , , , , , , , , , , , , , , , , , , , 6 9 7 3 4 0 1 3 0 6 8 3 9 2 1 1 3 4 1 9 5 8 3 9 5 6 7 1 2 9 1 2 1 8 9 8 2 5 1 9 4 6 8 8 1 5 9 1 4 2 1 2 4 1 8 8 6 8 1 5 6 9 2 4 5 9 7 0 1 0 9 3 2 2 1 , , , 0 8 7 6 4 8 7 3 2 8 2 1 1 1 1 2 4 7 6 7 2 9 4 3 3 7 1 8 3 3 3 1 1 3 8 0 4 1 2 4 8 5 7 8 0 7 1 4 2 5 7 8 2 2 0 7 5 3 3 5 2 7 , , , , , , , , , , , , , , , , , , , , , , , , 6 7 5 0 0 7 7 4 7 1 9 3 5 9 2 0 9 9 2 9 2 6 4 1 6 9 6 9 1 2 7 7 8 6 6 2 5 9 2 4 6 0 0 1 0 9 7 5 1 3 7 2 5 5 4 1 4 4 8 9 4 7 6 8 5 1 0 7 4 0 9 9 2 2 1 , , , 0 4 8 7 6 8 7 3 2 2 8 1 1 1 1 2 4 7 3 6 9 7 3 3 1 7 0 8 3 3 3 8 2 1 4 8 1 1 6 4 6 6 7 2 8 5 6 0 2 4 4 2 1 2 3 7 6 3 2 7 8 , , , , , , , , , , , , , , , , , . , , . , , , 4 6 7 2 1 4 4 4 4 8 4 8 1 6 8 9 1 6 5 5 5 5 4 0 3 0 5 0 7 6 5 6 0 2 1 5 8 7 8 5 4 4 0 4 4 4 1 1 1 2 1 5 8 5 3 7 8 8 1 3 0 5 6 4 2 7 8 8 1 5 7 1 2 2 1 , , , 4 0 8 7 6 8 7 3 2 2 8 1 1 1 1 3 4 7 3 6 6 3 9 7 8 3 2 1 9 3 3 3 3 4 1 1 0 8 0 6 2 4 4 1 7 7 2 6 0 0 9 4 8 4 0 3 5 2 3 8 1 6 , , , , , , , , , , , , , , , , , , , , , , , , 5 7 7 7 7 4 9 3 4 6 5 4 3 6 2 1 1 7 7 9 3 0 4 0 0 7 0 1 8 9 7 7 2 2 6 6 0 7 3 6 2 9 1 7 9 6 8 5 8 3 1 1 5 9 4 4 5 6 0 9 8 1 5 0 3 7 3 3 5 3 2 2 2 2 1 , , , 0 8 6 4 7 7 8 3 8 2 1 1 1 1 0 2 3 3 4 2 7 8 7 6 8 2 7 8 1 3 3 1 4 1 8 8 1 0 6 8 0 4 2 8 4 9 7 4 0 2 7 5 3 3 3 4 2 3 4 0 8 , , , , , , , , , , , , , , , , , , , , , , , , 7 5 1 7 7 8 1 5 8 4 6 9 0 3 7 9 4 7 5 4 6 0 2 1 7 0 3 2 0 0 1 9 4 7 7 2 1 9 5 1 0 2 2 6 5 2 1 5 8 5 5 1 4 1 5 7 6 5 5 7 1 0 5 4 4 3 6 0 2 8 6 3 2 2 1 , , , 0 8 7 6 4 8 7 3 8 2 1 1 1 1 4 1 3 6 3 3 9 7 3 7 7 2 8 9 1 3 3 2 1 4 9 8 1 7 5 9 8 1 4 3 0 6 2 4 4 8 9 0 6 0 3 1 3 2 3 0 8 , , , , , , , , , , , , , , , , , , , , , , , , 1 3 0 6 0 1 8 2 7 2 5 8 9 0 9 1 9 1 6 2 8 7 7 9 0 6 1 1 4 0 6 2 4 6 6 6 4 9 4 4 3 9 0 7 6 6 9 1 1 5 4 5 0 7 7 7 1 6 0 0 8 3 2 6 2 4 7 1 0 2 5 8 64 Total assets 3,206,446 3,186,881 3,186,766 3,160,952 3,249,950 3,226,725 3,265,880 3,191,043 3,213,720 Liabilities 65 Total deposits 2,372,855 2,358,619 2,343,632 2,333,088 2,404,960 2,391,976 2,426,497 2,328,555 2,347,370 66 Transaction accounts 780,536 765,745 760,355 752,456 820,050 800,068 841,930 754,542 778,126 67 Demand, U.S. government 3,593 2,998 2,926 2,8% 5,878 3,056 26,294 3,955 3,283 68 Demand, depository institutions 36,776 33,891 34,408 36,320 42,255 40,014 44,185 34,933 36,256 69 Other demand and all checkable deposits 740,167 728,856 723,021 713,240 771,917 756,998 771,451 715,653 738,587 70 Savings deposits (excluding checkable) 768,502 771,933 764,767 763,392 766,984 773,959 768,910 762,247 759,739 71 Small time deposits 611,733 609,679 608,512 607,101 608,681 607,926 606,749 604,764 604,550 72 Time deposits over $100,000 212,084 211,262 209,998 210,140 209,245 210,023 208,908 207,003 204,955 7 7 7 7 5 6 3 4 O Bo t T O h r e r r t o e r h a w e l s r i i a u n b r g y i s l i t t a ie x s and loan notes 4 3 1 0 8 1 4 3 6 7 2 , , , , 8 0 8 2 8 7 0 3 2 7 5 6 3 3 1 2 7 9 4 1 7 9 0 , , , , 6 4 0 5 2 0 3 0 4 7 1 3 4 3 1 1 9 1 3 3 5 7 9 , , , , 5 8 6 7 0 2 8 9 9 0 9 3 3 3 1 7 9 1 4 4 3 9 4 , , , , 1 2 7 1 1 9 6 8 8 8 5 0 4 3 1 1 2 8 4 4 1 6 4 , , , , 8 6 8 1 1 3 5 6 7 9 6 0 3 3 1 8 9 4 1 9 9 2 0 , , , , 3 9 2 5 5 1 3 6 7 8 4 1 4 3 1 0 9 4 1 6 3 0 2 , , , , 3 7 8 5 0 7 2 3 4 3 3 1 4 3 1 9 2 3 4 4 9 4 0 , , , , 4 0 5 6 9 4 5 1 0 3 3 7 4 3 1 3 3 % 4 1 5 5 , , , , 1 4 2 1 7 4 7 2 0 7 7 5 77 Total liabilities 2,918,973 2,898,152 2,896,934 2,871,150 2,960,775 2,934,127 2,973,623 2,898,215 2,923,942 78 Residual (assets less liabilities)3 287,473 288,729 289,832 289,802 289,175 292,598 292,257 292,828 289,778 1. Excludes assets and liabilities of international banking facilities. 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 investment corporations majority owned by foreign banks. Data are estimates securities data are estimates for the last Wednesday of the month based on a for the last Wednesday of the month based on a sample of weekly reporting sample of weekly reporting banks and quarter-end condition reports. foreign-related and domestic institutions and quarter-end condition reports. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 DomesticN onfinancial Statistics • December 1993 1.27 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS Millions of dollars, Wednesday figures 1993 AAccccoouunntt Aug. 4 Aug. 11 Aug. 18 Aug. 25 Sept. 1 Sept. 8 Sept. 15 Sept. 22 Sept. 29 ASSETS 1 Cash and balances due from depository institutions 106,925 103,659 107,047 101,589 135,356 120,015 135,185 110,278 115,939 2 U.S. Treasury and government securities 302,136 300,574 304,744 2%,879 305,747 305,009 305,666 304,336 301,852 3 Trading account 28,975 26,640 29,432 25,650 28,814 27,841 28,292 25,858 26,905 4 Investment account 273,161 273,934 275,312 271,229 276,933 277,168 277,374 278,479 274,946 5 Mortgage-backed securities' 87,578 87,353 86,800 86,236 86,712 8866,,661133 8855,,776666 8877,,226633 8877,,221155 All others, by maturity 6 One year or less 47,964 48,114 50,883 50,269 50,905 50,735 50,761 51,517 49,328 7 One year through five years 70,480 70,694 70,573 69,923 70,517 71,487 72,847 70,629 70,226 8 More than five years 67,140 67,773 67,057 64,802 68,799 68,333 68,000 69,070 68,177 9 Other securities 56,898 57,049 57,322 56,843 57,156 57,195 56,939 56,549 56,277 10 Trading account 2,800 2,734 2,851 2,628 2,832 2,772 2,614 2,717 2,629 11 Investment account 54,098 54,315 54,472 54,216 54,325 54,423 54,326 53,831 53,647 12 State and political subdivisions, by maturity 19,467 19,574 19,744 19,752 19,687 19,742 19,810 19,919 19,997 13 One year or less 3,487 3,522 3,560 3,574 3,548 3,619 3,655 3,701 3,761 14 More than one year 15,980 16,052 16,184 16,178 16,139 16,123 16,154 16,218 16,236 15 Other bonds, corporate stocks, and securities 34,631 34,742 34,727 34,464 34,638 34,681 34,516 33,912 33,650 16 Other trading account assets 12,258 12,094 13,136 12,823 13,039 12,952 12,763 12,650 13,265 17 Federal funds sold2 91,587 85,317 87,870 86,848 93,973 86,414 102,655 82,726 87,655 18 To commercial banks in the United States 56,407 51,264 53,219 52,207 57,861 49,600 60,424 45,736 52,365 19 To nonbank brokers and dealers 30,389 30,081 30,338 30,391 31,779 31,7% 36,209 31,301 29,664 20 To others3 4,791 3,972 4,314 4,250 4,333 5,018 6,022 5,689 5,626 21 Other loans and leases, gross 991,250 986,923 983,851 981,326 991,789 987,173 993,324 988,109 995,412 22 Commercial and industrial 273,749 271,2% 270,334 268,378 270,071 267,690 271,234 270,683 271,309 23 Bankers acceptances and commercial paper 3,375 3,388 3,417 3,283 3,308 3,230 3,190 3,071 2,829 24 All other 270,374 267,908 266,916 265,095 266,763 264,459 268,045 267,612 268,480 25 U.S. addressees 268,771 266,279 265,284 263,514 265,181 262,952 266,529 266,084 266,958 26 Non-U.S. addressees 1,603 1,629 1,632 1,581 1,582 1,507 1,515 1,528 1,522 27 Real estate loans 402,739 404,323 401,720 400,307 403,003 404,132 403,841 401,2% 403,254 28 Revolving, home equity 43,666 43,717 44,164 44,138 44,220 44,150 44,173 44,050 44,090 29 All other 359,073 360,606 357,556 356,169 358,782 359,981 359,668 357,246 359,164 30 To individuals for personal expenditures 189,712 189,495 190,486 191,122 191,526 190,906 191,707 192,364 193,458 31 To financial institutions 39,682 37,074 36,082 35,588 37,361 36,594 35,691 35,964 36,949 32 Commercial banks in the United States 14,580 13,823 13,865 13,504 13,580 12,556 12,207 13,510 13,365 33 Banks in foreign countries 4,242 2,516 2,168 2,415 2,869 2,678 2,500 2,304 2,414 34 Nonbank financial institutions 20,861 20,735 20,049 19,669 20,912 21,360 20,984 20,149 21,170 35 For purchasing and carrying securities 15,505 15,966 16,271 17,428 18,955 17,848 19,6% 17,590 19,294 36 To finance agricultural production 5,850 5,831 5,803 5,778 5,802 5,800 5,775 5,736 5,7% 37 To states and political subdivisions 13,664 13,688 13,707 13,679 13,587 13,442 13,380 13,448 13,398 38 To foreign governments and official institutions 1,285 1,336 1,142 1,210 1,285 1,272 1,318 1,259 1,499 39 All other loans 24,084 22,956 23,379 22,890 25,183 24,480 25,631 24,698 25,288 40 Lease-financing receivables 24,981 24,959 24,927 24,946 25,017 25,009 25,050 25,071 25,167 41 LESS: Unearned income 2,096 2,104 2,053 2,048 2,031 2,018 2,007 2,055 2,033 42 Loan and lease reserve5 35,728 35,794 35,782 35,761 35,743 35,968 36,017 35,924 35,604 43 Other loans and leases, net 953,426 949,026 946,015 943,517 954,015 949,188 955,299 950,130 957,776 44 Other assets 172,891 170,625 167,281 162,849 169,057 170,%2 171,368 166,586 167,347 45 Total assets 1,6%, 120 1,678,344 1,683,415 1,661,348 1,728,343 1,701,735 1,739,875 1,683,255 1,700,110 Footnotes appear on the following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A23 1.27 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued Millions of dollars, Wednesday figures Aug. 4 Aug. 11 Aug. 18 Aug. 25 Sept. 1 Sept. 8 Sept. 15 Sept. 22 Sept. 29 LIABILITIES 46 Deposits 1,120,441 1,111,225 1,102,743 1,094,028 1,144,6% 1,128,826 1,163,389 1,090,582 1,103,563 47 Demand deposits 280,691 274,039 274,219 269,278 312,046 291,209 330,484 272,075 290,592 48 Individuals, partnerships, and corporations 230,291 228,027 225,372 221,587 253,265 239,411 255,717 223,077 237,155 49 Other holders 50,401 46,012 48,848 47,691 58,781 51,798 74,767 48,998 53,438 50 States and political subdivisions 9,276 8,374 8,815 8,390 9,857 7,952 9,242 8,932 8,672 51 U.S. government 2,295 1,821 1,763 1,806 3,954 1,866 20,438 2,882 2,148 52 Depository institutions in the United States ... 22,478 20,248 21,249 22,670 27,578 24,929 28,668 20,960 22,406 53 Banks in foreign countries 5,315 5,289 4,608 5,182 5,084 5,451 5,503 5,760 5,559 54 Foreign governments and official institutions .. 801 716 721 627 632 689 629 618 556 55 Certified and officers' checks 10,236 9,564 11,691 9,016 11,677 10,911 10,288 9,845 14,0% 56 Transaction balances other than demand deposits . 122,554 119,861 119,366 117,887 122,574 123,429 123,601 118,063 117,095 57 Nontransaction balances 717,1% 717,325 709,158 706,863 710,076 714,188 709,305 700,444 695,875 58 Individuals, partnerships, and corporations 693,335 693,365 685,488 682,%3 686,727 691,110 686,906 678,149 673,866 59 Other holders 23,861 23,960 23,670 23,900 23,349 23,078 22,399 22,2% 22,009 60 States and political subdivisions 18,932 19,044 19,069 19,257 18,863 18,919 18,262 18,172 18,185 61 U.S. government 2,694 2,705 2,671 2,672 2,633 2,317 2,310 2,310 1,991 62 Depository institutions in the United States ... 1,922 1,898 1,614 1,658 1,544 1,514 1,494 1,482 1,502 63 Foreign governments, official institutions, and banks . 313 312 317 313 308 328 333 332 330 64 Liabilities for borrowed money5 312,968 307,224 319,779 301,370 317,547 307,965 312,500 328,700 329,202 65 Borrowings from Federal Reserve Banks 0 0 30 0 0 0 0 0 0 66 Treasury tax and loan notes 15,094 18,417 15,400 16,524 21,442 9,165 10,881 29,860 30,306 67 Other liabilities for borrowed money6 297,874 288,807 304,349 284,846 2%, 105 298,800 301,619 298,840 298,8% 68 Other liabilities (including subordinated notes and debentures) 110,304 107,699 107,784 112,589 112,565 110,488 109,140 109,118 113,858 69 Total liabilities 1,543,713 1,526,148 1,530,306 1,507,987 1,574,809 1,547,279 1,585,029 1,528,400 1,546,623 70 Residual (total assets less total liabilities)7 152,407 152,196 153,109 153,362 153,534 154,456 154,846 154,855 153,487 MEMO 7 7 7 7 7 7 7 5 6 7 2 3 4 1 T F N T L o i o o e m O C r t t a e a o e t n o i l h m s g w d e l n o r m e s e a o p d b e n l o r d r s t a s c o i n o i a t a c s u n r l h e d t i r l a n i a c n l g t e r a d e h e a m d t d s i e n i o t i t o s d n u , e u s n a x t g s t f i s t t r f t r e o i u i o l n s a t i f i a d s l o , t e $ n e d 1 a s s 0 d 9 t 0 a j o u b , 0 s U r 0 t o e 0 . a S d d o . , r p r l m e u s s o i r d s e e e n cu ts ri '" ti . e .. s 1, - 3 1 1 2 8 0 8 1 3 4 , , , , 4 8 1 3 4 8 4 3 4 4 5 1 2 0 9 3 1 3 9 1 2 1 - ,3 1 2 2 7 0 0 1 6 3 , , , , 8 6 8 4 4 8 4 6 5 7 8 1 1 0 3 3 0 1 5 6 1 1 - ,3 1 1 2 7 0 8 1 9 2 , , , , 2 9 8 1 4 8 4 2 3 3 4 1 1 0 0 9 6 7 4 4 0 1,3 1 - 2 6 0 8 1 9 2 , , , , 6 5 0 2 4 4 8 6 5 0 6 1 0 1 6 2 8 5 4 0 4 1, - 3 1 1 2 9 0 4 1 0 1 , , , , 0 2 2 7 4 3 7 1 6 9 4 0 8 8 4 4 9 7 2 9 7 1, - 3 1 1 2 8 0 7 1 6 2 , , , , 4 8 5 1 7 4 3 4 2 8 2 8 8 0 0 5 6 8 4 6 2 1 - ,3 1 1 2 9 0 6 1 8 1 , , , , 4 5 1 7 7 4 3 4 9 1 1 0 8 8 7 1 2 6 2 4 6 1, - 3 1 9 2 8 0 9 1 5 , , , , 5 0 1 3 7 4 3 3 5 2 0 0 8 8 1 7 3 3 2 5 6 1,3 - % 2 8 9 0 8 , , , , 7 7 6 7 8 4 4 1 9 8 3 2 2 0 5 5 8 0 7 8 1 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

A24 Domestic Nonfinancial Statistics • December 1993 1.28 LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS Assets and Liabilities1 Millions of dollars, Wednesday figures 1993 AAccccoouunntt Aug. 4 Aug. 11 Aug. 18 Aug. 25 Sept. 1 Sept. 8 Sept. 15 Sept. 22 Sept. 29 ASSETS 1 Cash and balances due from depository institutions 18,578 18,029 18,057 18,157 18,0% 1188,,332255 18,324 1188,,001188 1188,,779977 2 U.S. Treasury and government agency securities 34,469 32,277 34,084 33,723 33,571 33,267 33,324 33,405 32,542 3 Other securities 8,627 8,698 8,604 8,243 8,406 8,311 8,382 8,372 8,497 4 Federal funds sold1 28,367 25,129 24,059 22,056 23,073 21,770 26,035 25,025 26,975 5 To commercial banks in the United States ... 5,913 6,099 6,027 4,259 5,462 4,871 7,295 6,550 7,791 6 To others2 22,454 19,030 18,032 17,797 17,612 16,899 18,741 18,474 19,184 7 Other loans and leases, gross 161,714 160,915 161,010 161,226 161,705 158,976 161,693 160,633 159,255 8 Commercial and industrial 97,719 98,357 98,084 9966,,660044 9955,,997799 9944,,990044 9955,,775599 9955,,445544 9955,,334477 9 Bankers acceptances and commercial paper 2,800 2,795 2,879 2,752 2,776 2,708 2,664 2,616 2,466 10 All other 94,919 95,562 95,204 93,851 93,203 92,1% 93,095 92,838 92,881 11 U.S. addressees 91,710 92,270 91,902 90,529 89,876 88,835 89,742 89,506 89,565 12 Non-U.S. addressees 3,209 3,293 3,303 3,322 3,327 3,360 3,353 3,332 3,316 13 Loans secured by real estate 30,937 30,835 30,720 31,562 31,516 31,500 31,403 31,301 31,226 14 To financial institutions 26,380 25,980 26,416 26,745 26,281 25,094 25,629 25,157 23,545 15 Commercial banks in the United States.. 5,419 5,327 5,321 5,273 5,248 5,253 5,411 5,219 5,628 16 Banks in foreign countries 2,322 2,097 2,293 2,191 2,208 2,202 2,288 2,051 1,946 17 Nonbank financial institutions 18,639 18,557 18,802 19,282 18,825 17,640 17,930 17,887 15,971 18 For purchasing and carrying securities 3,817 3,016 2,946 3,508 5,175 4,099 55,,337711 5,070 55,,223333 19 To foreign governments and official institutions 395 390 411 412 435 418 467 472 497 20 All other 2,467 2,337 2,433 2,394 2,319 2,959 3,065 3,178 3,407 21 Other assets (claims on nonrelated parties) .. 32,268 32,062 31,352 31,113 31,060 31,814 31,553 30,764 32,466 22 Total assets3 309,383 302,055 302,468 300,233 299,435 297,234 304,327 299,665 302,511 LIABILITIES 23 Deposits or credit balances owed to other than directly-related institutions 95,274 93,629 93,261 94,332 90,944 90,850 92,160 91,297 93,056 24 Demand deposits4 4,395 4,083 4,008 44,,116633 44,,558899 44,,553300 44,,999911 55,,223300 55,,770066 25 Individuals, partnerships, and corporations 33,,229900 3,097 3,161 3,301 3,403 3,712 3,856 3,878 4,260 26 Other 1,105 985 847 863 1,186 818 1,135 1,351 1,445 27 Nontransaction accounts 90,879 89,546 89,253 9900,,116699 8866,,335555 8866,,332200 8877,,116699 8866,,006688 8877,,335500 28 Individuals, partnerships, and corporations 62,969 61,237 61,017 62,124 59,466 60,054 61,263 60,438 60,570 29 Other 27,911 28,309 28,236 2288,,004455 2266,,888888 2266,,226677 2255,,990066 2255,,662299 2266,,778800 30 Borrowings from other than directlyrelated institutions ., 87,563 82,716 77,645 78,555 80,645 76,788 86,750 78,680 76,345 31 Federal funds purchased 51,458 46,956 4411,,110055 4400,,447733 4411,,884444 3388,,006644 4488,,118822 3399,,111122 3388,,000099 32 From commercial banks in the United States 16,309 13,249 9,770 12,960 13,633 11,291 19,563 9,475 12,027 33 From others 35,149 33,707 31,335 27,513 28,211 26,774 28,619 29,638 25,982 34 Other liabilities for borrowed money 36,106 35,760 36,540 38,081 38,801 3388,,772233 3388,,556688 3399,,556688 3388,,333366 35 To commercial banks in the United States 6,892 6,321 6,7% 5,682 4,856 4,380 4,884 4,360 4,519 36 To others 29,214 29,439 29,744 32,399 33,945 34,343 33,684 35,208 33,817 37 Other liabilities to nonrelated parties 31,202 29,389 29,241 29,494 29,319 29,581 29,000 29,407 30,258 38 Total liabilities6 309,383 302,055 302,468 300,233 299,435 297,234 304,327 299,665 302,511 MEMO 39 Total loans (gross) and securities, adjusted7.. 221,845 215,594 216,409 215,717 216,045 212,200 216,729 215,665 213,850 40 Net owed to related institutions abroad 69,982 71,377 77,019 72,138 75,003 75,244 71,403 76,833 78,872 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 owed to related institutions abroad for U.S. branches and 3. Includes net due from related institutions abroad for U.S. branches and agencies of foreign banks having a net "due to" position. agencies of foreign banks having a net "due from" position. 7. Excludes loans to and federal funds transactions with commercial banks in 4. Includes other transaction deposits. the United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A25 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period Year ending December 1993 IItteemm 1988 1989 1990 1991 1992 Mar. Apr. May June July Aug. Commercial paper (seasonally adjusted unless noted otherwise) 11 AAllll iissssuueerrss 458,464 525,831 562,656 531,724 549,433 534,118 535,966 541,761 544,107 539,149 545,527 FFiinnaanncciiaall ccoommppaanniieess'' DDeeaalleerr--ppllaacceedd ppaappeerr 22 TToottaall 159,777 183,622 214,706 213,823 228,260 218,925 210,230 214,558 221,834 210,224 216,245 33 BBaannkk--rreellaatteedd ((nnoott sseeaassoonnaallllyy aaddjjuusstteedd)) 1,248 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. DDiirreeccttllyy ppllaacceedd ppaappeerr44 44 TToottaall 194,931 210,930 200,036 183,379 172,813 171,959 175,384 174,558 171,479 170,192 172,093 55 BBaannkk--rreellaatteedd ((nnoott sseeaassoonnaallllyy aaddjjuusstteedd)) 43,155 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 66 NNoonnffiinnaanncciiaall ccoommppaanniieess55 103,756 131,279 147,914 134,522 148,360 143,234 150,352 152,645 150,794 158,733 157,189 Bankers dollar acceptances (not seasonally adjusted)6 7 Total 66,631 62,972 54,771 43,770 38,200 34,939 35,317 34,927 34,149 33,120 32,572 By holder 8 Accepting banks 9,086 9,433 9,017 11,017 10,561 11,036 10,688 11,0% 11,568 11,422 12,370 9 Own bills 8,022 8,510 7,930 9,347 9,103 9,162 9,315 9,786 10,236 10,140 10,663 10 Bills bought from other banks 1,064 924 1,087 1,670 1,458 1,873 1,372 1,310 1,333 1,282 1,707 Federal Reserve Banks7 11 Foreign correspondents 1,493 1,066 918 1,739 1,276 1,108 909 690 613 582 635 12 Others 56,052 52,473 44,836 31,014 26,364 22,795 23,720 23,141 21,%7 21,116 19,567 By basis 13 Imports into United States 14,984 15,651 13,095 12,843 12,212 11,129 10,746 10,274 10,066 10,149 10,422 14 Exports from United States 14,410 13,683 12,703 10,351 8,0% 7,304 7,629 7,809 7,650 7,673 7,534 15 All other 37,237 33,638 28,973 20,577 17,893 16,506 16,942 16,844 16,433 15,299 14,616 1. Institutions engaged primarily in commercial, savings, and mortgage bank- 5. Includes public utilities and firms engaged primarily in such activities as ing; sales, personal, and mortgage financing; factoring, finance leasing, and other communications, construction, manufacturing, mining, wholesale and retail trade, business lending; insurance underwriting; and other investment activities. transportation, and services. 2. Includes all financial-company paper sold by dealers in the open market. 6. Data on bankers dollar acceptances are gathered from approximately 100 3. Series were discontinued in January 1989. institutions. The reporting group is revised every January. 4. As reported by financial companies that place their paper directly with 7. In 1977 the Federal Reserve discontinued operations in bankers dollar investors. acceptances for its own account. 1.33 PRIME RATE CHARGED BY BANKS Short-Term Business Loans1 Percent per year Av r e a r t a e g e Period Av r e a r te a ge Period 10.50 1990 10.01 1991— Jan. 9.52 1992— June .. 10.00 1991 8.46 Feb. 9.05 July ... 1992 6.25 Mar. 9.00 Aug. .. 9.50 Apr. 9.00 Sept. . 9.00 1990—Jan. . 10.11 May 8.50 Oct. .. 8.50 Feb. 10.00 June 8.50 Nov. . 8.00 Mar. 10.00 July 8.50 Dec. .. 7.50 Apr. 10.00 Aug. 8.50 6.50 May 10.00 Sept. 8.20 1993— June 10.00 Oct. 8.00 Feb. .. 6.00 July . 10.00 Nov. 7.58 Aug. 10.00 Dec. 7.21 Sept. 10.00 Oct. 10.00 1992— Jan. 6.50 Nov. 10.00 Feb. 6.50 July ... Dec. 10.00 Mar. 6.50 Aug. .. Apr. 6.50 Sept. . May 6.50 Oct. 1. The prime rate is one of several base rates that banks use to price short-term size, based on the most recent Call Report. Data in this table also appear in the business loans. The table shows the date on which a new rate came to be the Board's H.15 (519) weekly and G.13 (415) monthly statistical releases. For predominant one quoted by a majority of the twenty-five largest banks by asset ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Nonfinancial Statistics • December 1993 1.35 INTEREST RATES Money and Capital Markets Averages, percent per year; figures are averages of business day data unless otherwise noted 1993 1993, week ending IItteemm 11999900 11999911 11999922 June July Aug. Sept. Aug. 27 Sept. 3 Sept. 10 Sept. 17 Sept. 24 MONEY MARKET INSTRUMENTS 1 Federal funds1-2-3 8.10 5.69 3.52 3.04 3.06 3.03 3.09 2.98 3.08 2.99 3.03 3.12 2 Discount window borrowing2, 6.98 5.45 3.25 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 Commercial paper3,5,6 3 1-month 8.15 5.89 3.71 3.19 3.15 3.14 3.14 3.11 3.14 3.12 3.14 3.15 4 3-month 8.06 5.87 3.75 3.25 3.20 3.18 3.16 3.14 3.16 3.13 3.15 3.16 5 6-month 7.95 5.85 3.80 3.38 3.35 3.33 3.25 3.27 3.27 3.22 3.24 3.26 Finance paper, directly placed3,5,7 6 1-month 8.00 5.73 3.62 3.12 3.08 3.08 3.07 3.03 3.07 3.05 3.07 3.08 7 3-month 7.87 5.71 3.65 3.16 3.12 3.13 3.09 3.11 3.11 3.09 3.09 3.09 8 6-month 7.53 5.60 3.63 3.16 3.15 3.16 3.11 3.15 3.13 3.10 3.11 3.11 Bankers acceptances3-5*8 9 3-month 7.93 5.70 3.62 3.16 3.12 3.10 3.07 3.08 3.08 3.06 3.08 3.08 10 6-month 7.80 5.67 3.67 3.28 3.26 3.23 3.17 3.20 3.18 3.16 3.18 3.17 Certificates qf deposit, secondary marker'9 11 1-month 8.15 5.82 3.64 3.13 3.10 3.09 3.09 3.09 3.09 3.08 3.09 3.10 12 3-month 8.15 5.83 3.68 3.21 3.16 3.14 3.12 3.14 3.13 3.11 3.12 3.11 13 6-month 8.17 5.91 3.76 3.36 3.34 3.32 3.24 3.27 3.26 3.22 3.26 3.24 14 Eurodollar deposits, 3-month3,10 8.16 5.86 3.70 3.21 3.17 3.14 3.08 3.13 3.11 3.06 3.08 3.06 U.S. Treasury bills Secondary market ,5 13 3-month 7.50 5.38 3.43 3.07 3.04 3.02 2.95 3.00 2.99 2.96 2.96 2.93 16 6-month 7.46 5.44 3.54 3.20 3.16 3.14 3.06 3.10 3.09 3.06 3.07 3.06 17 1-year 7.35 5.52 3.71 3.39 3.33 3.30 3.22 3.24 3.21 3.18 3.24 3.26 Auction average • • 18 3-month 7.51 5.42 3.45 3.10 3.05 3.05 2.% 3.02 3.02 2.95 2.98 2.93 19 6-month 7.47 5.49 3.57 3.23 3.15 3.17 3.06 3.12 3.11 3.03 3.06 3.06 20 1-year 7.36 5.54 3.75 3.40 3.42 3.30 3.27 3.30 n.a. n.a. n.a. 3.27 U.S. TREASURY NOTES AND BONDS Constant maturities12 21 1-year 7.89 5.86 3.89 3.54 3.47 3.44 3.36 3.37 3.34 3.32 3.38 3.39 22 2-year 8.16 6.49 4.77 4.16 4.07 4.00 3.85 3.88 3.83 3.79 3.88 3.90 23 3-year 8.26 6.82 5.30 4.53 4.43 4.36 4.17 4.22 4.16 4.09 4.19 4.22 24 5-year 8.37 7.37 6.19 5.22 5.09 5.03 4.73 4.87 4.76 4.66 4.73 4.80 25 7-year 8.52 7.68 6.63 5.61 5.48 5.35 5.08 5.18 5.09 5.00 5.10 5.16 26 10-year 8.55 7.86 7.01 5.96 5.81 5.68 5.36 5.51 5.41 5.28 5.35 5.44 27 30-year 8.61 8.14 7.67 6.81 6.63 6.32 6.00 6.16 6.06 5.90 5.98 6.09 Composite 28 More than 10 years (long-term) 8.74 8.16 7.52 6.55 6.34 6.18 5.94 6.08 5.97 5.84 5.93 6.03 STATE AND LOCAL NOTES AND BONDS Moody's series13 29 6.96 6.56 6.09 5.35 5.27 5.37 n.a. 5.33 5.33 5.33 5.27 5.23 30 Baa 7.29 6.99 6.48 5.80 5.74 5.84 n.a. 5.82 5.82 5.82 5.78 5.74 31 Bond Buyer series 7.27 6.92 6.44 5.63 5.57 5.45 5.29 5.35 5.35 5.24 5.27 5.30 CORPORATE BONDS 32 Seasoned issues, all industries15 9.77 9.23 8.55 7.66 7.50 7.19 6.98 7.04 6.95 6.87 6.% 7.08 Rating group 33 Aaa 9.32 8.77 8.14 7.33 7.17 6.85 6.66 6.71 6.61 6.51 6.66 6.79 34 Aa 9.56 9.05 8.46 7.51 7.35 7.06 6.85 6.91 6.82 6.74 6.85 6.96 35 A 9.82 9.30 8.62 7.74 7.53 7.25 7.05 7.11 7.02 6.95 7.02 7.15 36 Baa 10.36 9.80 8.98 8.07 7.93 7.60 7.34 7.43 7.34 7.26 7.33 7.43 37 A-rated, recently offered utility bonds16 10.01 9.32 8.52 7.59 7.43 7.16 6.94 6.97 6.83 6.85 6.99 7.07 MEMO Dividend-price ratio 38 Preferred stocks 8.% 8.17 7.46 6.97 6.89 6.83 6.70 6.85 6.85 6.79 6.76 6.76 39 Common stocks 3.61 3.24 2.99 2.81 2.81 2.76 2.73 2.73 2.71 2.75 2.72 2.76 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 & Poor's corporate series. Preferred stock ratio is 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 ratio is based on the 500 stocks in the price index. 10. Bid rates for Eurodollar deposits at 11:00 a.m. London time. Data are for NOTE. Data in this table also appear in the Board's H.15 (519) weekly and G.13 indication purposes only. (415) monthly statistical releases. 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

Financial Markets A27 1.36 STOCK MARKET Selected Statistics 1993 IInnddiiccaattoorr 11999900 11999911 11999922 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) 183.66 206.35 229.00 239.75 243.41 248.12 244.72 246.02 247.16 247.85 251.93 254.86 2 Industrial 226.06 258.16 284.26 292.11 294.40 298.75 292.19 297.83 298.78 295.34 298.83 300.92 3 Transportation 158.80 173.97 201.02 221.00 226.96 229.42 237.97 237.80 234.30 238.30 250.82 247.74 4 Utility 90.72 92.64 99.48 105.52 109.45 112.53 113.78 111.21 113.27 116.27 118.72 122.32 5 Finance 133.21 150.84 179.29 203.38 209.93 217.01 216.02 209.40 209.75 218.89 224.96 229.35 6 Standard & Poor's Corporation (1941-43 = 10)1 335.01 376.20 415.75 435.40 441.76 450.15 443.08 445.25 448.06 447.29 454.13 459.24 7 American Stock Exchange (Aug. 31, 1973 = 50? 338.32 360.32 391.28 402.75 409.39 418.56 418.54 429.72 436.13 434.99 444.75 454.91 Volume of trading (thousands of shares) 8 New York Stock Exchange 156,359 179,411 202,558 266,011 288,540 251,170 279,778 255,843 250,230 247,574 247,324 261,770 9 American Stock Exchange 13,155 12,486 14,171 17,184 18,154 16,150 15,521 20,433 17,753r 17,744r 19,352 18,889 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers 28,210 36,660 43,990 44,020 44,290 45,160 47,420 48,630 49,550 49,080 52,760 53,700 Free credit balances at brokers4 11 Margin accounts5 8,050 8,290 8,970 8,980 9,790 9,650 9,805 9,560 9,820 9,585 9,480 10,030 12 Cash accounts 19,285 19,255 22,510 20,360 22,190 21,395 21,450 21,610 22,625 21,475 21,915 23,170 Margin requirements (percent of market value and effective date)5 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

A28 Domestic Financial Statistics • December 1993 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn 1993 11999911 11999922 11999933 Apr. May June July Aug. Sept. U.S. budget1 1 Receipts, total 1,054,264 1,090,453 1,153,175 132,021r 70,640r 128,568r 80,633r 86,741r 127,469 2 On-budget 760,380 788,027 841,241 96,312r 44,518r 98,662r 57,146r 62,060r 98,609 3 Off-budget 293,885 302,426 311,934 35,709 26,122 29,906 23,487 24,681 28,860 4 Outlays, total 1,323,785 l,380,794r 1,408,122 123,930r 107,603r 117,469r 120,21 lr 109,8191 119,168 5 On-budget 1,082,098 l,128,455r 1,142,110 101,757r 83,208r 103,475r %,245r 84,953r 91,039 6 Off-budget 241,687 252,339r 266,012 22,174 24,395 13,994 23,%5 24,867 28,130 7 Surplus or deficit (-), total -269,521 -290,340r -254,948 8,091 -36,%3 11,099 -39,577 —23,078r 8,300 8 On-budget -321,719 —340,428r -300,869 -5,445 -38,690 -4,813 -39,099 -22,893r 7,570 9 Off-budget 52,198 50,087r 45,922 13,535 1,727 15,912 -478 -186 730 Source of financing (total) 10 Borrowing from the public 276,802 310,918 248,619 5,464 30,832 24,757 1,055 54,301 -9,346 11 Operating cash (decrease, or increase (-)) ... -1,329 -17,305 6,283 -18,945 20,1% -40,288 32,447 -12,652 -11,713 12 Other1 -5,952 -3,273r 46 5,390 -14,065 4,432 6,075 —18,571r 12,759 MEMO 13 Treasury operating balance (level, end of period) 41,484 58,789 52,506 40,4% 20,300 60,588 28,141 40,793 52,506 14 Federal Reserve Banks 7,928 24,586 17,289 7,273 5,787 28,386 5,818 7,975 17,289 15 Tax and loan accounts 33,556 34,203 35,217 33,223 14,514 32,202 22,324 32,818 35,217 1. In accordance with the Balanced Budget and Emergency Deficit Control Act monetary assets; accrued interest payable to the public; allocations of SDRs; of 1985, all former off-budget entries are now presented on-budget. Federal deposit funds; miscellaneous liability (including checks outstanding) and asset Financing Bank (FFB) activities are now shown as separate accounts under the accounts; seigniorage; increment on gold; net gain or loss for U.S. currency agencies that use the FFB to finance their programs. The act has also moved two valuation adjustment; net gain or loss for IMF loan-valuation adjustment; and social security trust funds, (federal old-age survivors insurance and federal profit on sale of gold. disability insurance) off-budget. The Postal Service is included as an off-budget SOURCES. U.S. Department of the Treasury, Monthly Treasury Statement of item in the Monthly Treasury Statement beginning in 1990. Receipts and Outlays of the U.S. Government and Office of Management and 2. Includes special drawing rights (SDRs); reserve position on the U.S. quota Budget, Budget of the U.S. Government. in the International Monetary Fund (IMF); loans to the IMF; other cash and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A29 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Fiscal year Calendar year Source or type 1991 1993 1992r 1993 H2 HI July Aug. Sept. RECEIPTS 1 AU sources 1,090,453 1,153,175 519,165 560,318 540,472r 593,200r 80,633r 86,741 127,469 2 Individual income taxes, net 475,964 509,680 234,939 236,576 246,938r 255,556r 37,483r 39,440 55,653 4 3 P W re it s h i h d e e l n d t ial Election Campaign Fund . 408,35 3 2 0 430,42 2 7 8 210,552 1 198,86 2 8 0 215,59 1 1 0 210,06 25 6 36,396 2 36,751 0 31,991 0 5 6 R N e o f n u w n i d t s h held 1 8 4 1 9 , , 7 3 6 4 0 2 1 7 5 5 4 , , 5 7 4 7 6 2 3 8 3 , , 9 2 1 9 0 6 1 7 1 3 0 , , 3 9 0 9 8 5 3 7 9 , , 9 2 3 84 7 r 1 6 1 7 3 , , 4 4 6 8 8 2 2 1 , , 7 6 5 6 9 8 3 1 , , 9 2 2 3 8 5 25 1 , , 5 9 7 1 9 8 Corporation income taxes 7 Gross receipts 117,951 131,548 54,016 61,682 58,022 69,044 3,848 2,422 25,909 8 Refunds 17,680 14,027 8,649 9,403 7,219 7,198 1,154 479 1,398 9 Social insurance taxes and contributions, net 413,689 428,300 186,839 224,569 192,599 227,177 32,284 36,657 37,768 10 Employment taxes and contributions 385,491 396,939 175,802 208,110 180,758 208,776 30,156 31,447 36,908 11 Self-employment taxes and contributions 24,421 20,604 3,306 20,434 3,988 16,270 104 0 4,231 12 Unemployment insurance 23,410 26,556 8,721 14,070 9,397 16,074 1,709 4,810 413 13 Other net receipts 4,788 4,805 2,317 2,389 2,445 2,326 419 400 447 14 Excise taxes 45,569 48,057 24,429 22,389 23,456 23,398 4,214 4,295 4,385 15 Customs deposits 17,359 18,802 8,694 8,146 9,497 8,860 1,761 1,828 1,646 16 Estate and gift taxes 11,143 12,577 5,507 5,701 5,733 6,494 944 1,150 1,049 17 Miscellaneous receipts5 26,459 18,239 13,390 10,658 ll,446r 9,867 1,252 1,429 2,456 OUTLAYS 18 All types 1,380,794 1,408,122 694,345 704,266 723,515' 673,328r 120,211r 109,819 119,168 19 National defense 298,350 290,590 147,669 147,065 155,501 140,535 25,916 21,278 24,903 20 International affairs 16,107 17,175 7,691 8,540 9,911 6,565 1,241 493 1,556 21 General science, space, and technology . 16,409 17,055 8,472 7,951 8,521 7,996 1,521 1,556 1,388 2 2 3 2 N En a e tu rg ra y l resources and environment 2 4 0 , , 4 0 9 2 9 5 2 4 0 , ,0 4 8 4 8 5 1 1 1 , , 6 1 9 3 8 0 8 1 , , 5 4 9 4 4 2 ll 3 , , 4 1 6 0 7 9 r 2 8 . , 4 5 6 8 2 8 1,4 1 2 9 1 8 1, 4 48 0 7 0 1 -2 ,9 7 0 6 7 24 Agriculture 15,205 20,257 7,418 7,526 8,881 11,824 206 171 205 25 Commerce and housing credit 10,118 -23,532 36,534 15,615 -7,694r -15,112 -2,014 -2,855 3,003 26 Transportation 33,333 35,238 17,074 15,651 18,421r 16,077 3,250 3,270 3,760 27 Community and regional development .. 6,838 10,395 3,783 3,903 4,540 4,935 962 876 1,168 28 Education, training, employment, and social services 45,250 48,872 21,114 23,767 21,026r 23,983 3,113 4,326 29 Health 89,497 99,249 41,459 44,164 47,232r 49,882 8,023 8,632 9,080 30 Social security and Medicare 406,569 435,137r 193,098 205,500 232,109 195,933 37,670 36,334 36,697 31 Income security 196,891 207,933 87,693 104,537 98,579r 108,559 18,665 14,925 15,696 32 Veterans benefits and services 34,133 35,715 17,425 15,597 18,561 16,385r 4,289 2,063 3,010 33 Administration of justice 14,426 14,983 6,574 7,435 7,238r 7.463 1,350 1,122 1,415 34 General government 12,945 13,039 6,794 5,050 8,226r 5,205 340 848 1,712 35 Net interest6 199,439 198,870 99,149 100,161 98,709* 99,635 17,159 17,473 15,440 36 Undistributed offsetting receipts -39,280 -37,386 -20,436 -18,229 -20,914 -17,035 -3,094 -3,187 -5,823 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 1994. disability hind. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Nonfinancial Statistics • December 1993 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1991 1992 1993 IItteemm Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 1 Federal debt outstanding 3,683 3,820 3,897 4,001 4,083 4,196 4,250 4,373 n.a.r 2 Public debt securities 3,665 3,802 3,881 3,985 4,065 4,177 4,231 4,352 4,412r 3 Held by public 2,746 2,833 2,918 2,977 3,048 3,129 3,188 3,252 n.a.r 4 Held by agencies 920 969 964 1,008 1,016 1,048 1,043 1,100 n.a.r 5 Agency securities 18 19 16 16 18 19 20 21 n.a.r 6 Held by public 18 19 16 16 18 19 20 21 n.a." 7 Held by agencies 0 0 0 0 0 0 0 0 n.a.r 8 Debt subject to statutory limit 3,569 3,707 3,784 3,891 3,973 4,086 4,140 4,256 4,316r 9 Public debt securities 3,569 3,706 3,783 3,890 3,972 4,085 4,139 4,256 4,315r 10 Other debt1 0 0 0 0 0 0 0 0 o" MEMO 11 Statutory debt limit 4,145 4,145 4,145 4,145 4,145 4,145 4,145 4,370 4,900" 1. Consists of guaranteed debt of U.S. Treasury and other federal agencies, SOURCES. U.S. Department of the Treasury, Monthly Statement of the Public specified participation certificates, notes to international lending organizations, Debt of the United States and Treasury Bulletin. and District of Columbia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 1992 1993 TTyyppee aanndd hhoollddeerr 11998899 11999900 11999911 11999922 Q4 Q1 Q2 Q3 1 Total gross public debt 2,953.0 3,364.8 3,801.7 4,177.0 4,177.0 4,230.6 4,352.0 4,411.5 By type 2 Interest-bearing 2,931.8 3,362.0 3,798.9 4,173.9 4,173.9 4,227.6 4,349.0 4,408.6 3 Marketable 1,945.4 2,195.8 2,471.6 2,754.1 2,754.1 2,807.1 2,860.6 2,904.9 4 Bills 430.6 527.4 590.4 657.7 657.7 659.9 659.3 658.4 5 Notes 1,151.5 1,265.2 1,430.8 1,608.9 1,608.9 1,652.1 1,698.7 1,734.2 6 Bonds 348.2 388.2 435.5 472.5 472.5 480.2 487.6 497.4 7 Nonmarketable1 986.4 1,166.2 1,327.2 1,419.8 1,419.8 1,420.5 1,488.4 1,503.7 8 State and local government series 163.3 160.8 159.7 153.5 153.5 151.6 152.8 149.5 9 Foreign issues2 6.8 43.5 41.9 37.4 37.4 37.0 43.0 42.5 10 Government 6.8 43.5 41.9 37.4 37.4 37.0 43.0 42.5 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes 115.7 124.1 135.9 155.0 155.0 161.4 164.4 167.0 13 Government account series3 695.6 813.8 959.2 1,043.5 1,043.5 1,040.0 1,097.8 1,114.3 14 Non-interest-bearing 21.2 2.8 2.8 3.1 3.1 3.0 2.9 2.9 By holder 4 15 U.S. Treasury and other federal agencies and trust funds 707.8 828.3 968.7 1,047.8 1,047.8 1,043.2 1,099.8 16 Federal Reserve Banks 228.4 259.8 281.8 302.5 302.5 305.2 328.2 17 Private investors 2,015.8 2,288.3 2,563.2 2,839.9 2,839.9 2,895.0 2,938.4 18 Commercial banks 164.9 171.5 233.4 294.0" 294.0" 310.0" 322.0 19 Money market funds 14.9 45.4 80.0 79.4" 79.4" 77.7" 75.8 20 Insurance companies 125.1 142.0 168.7 190.3 190.3 194.0 198.0 21 Other companies 93.4 108.9 150.8 192.5 192.5 199.3 206.1 n.a. 22 State and local treasuries 487.5 490.4 520.3 534.8 534.8 541.0" 546.0 Individuals 23 Savings bonds 117.7 126.2 138.1 157.3 157.3 163.6 166.5 24 Other securities 98.7 107.6 125.8 131.9 131.9 134.1 136.4 25 Foreign and international 392.9 458.4r 491.8r 549.2" 549.2" 564.4" 567.5 26 Other miscellaneous investors 520.7 637.7r 651.3r 710.5" 710.5r 710.8" 720.0 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, 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

Federal Finance A31 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Millions of dollars, daily averages 1993 1993, week ending IItteemm Juner Julyr Aug. Aug. 4 Aug. 11 Aug. 18 Aug. 25 Sept. 1 Sept. 8 Sept. 15 Sept. 22 Sept. 29 IMMEDIATE TRANSACTIONS2 By type of security U.S. Treasury securities 1 Bills 44,236 38,518 39,177 38,473 36,552 38,359 43,128 39,068 41,911 43,125 45,908 4444,,665511 Coupon securities, by maturity 2 Less than 3.5 years 44,070 41,112 50,523 43,909 53,289 50,165 57,205 44,119 44,623 55,450 5533,,333322 4477,,445566 3 3.5 to 7.5 years 39,730 38,413 39,718 35,633 33,711 42,549 44,158 41,199 44,681 50,829 49,365 51,469 4 7.5 to 15 years 19,269 21,192 26,988 25,006 29,867 28,630 23,261 27,482 28,220 30,835 22,532 25,102 5 15 years or more 15,950 17,907 27,557 24,005 28,833 32,315 26,059 24,553 25,125 25,866 22,962 19,735 Federal agency securities Debt, by maturity 6 Less than 3.5 years 7,228 6,647 8,361 7,993 7,431 8,001 9,537 8,778 7,256 8,084 7,887 1100,,668877 7 3.5 to 7.5 years 624 605 512 478 440 575 517 540 790 450 584 864 8 7.5 years or more 428 712 650 743 651 612 639 640 756 779 391 689 Mortgage-backed 9 Pass-throughs 17,002 19,563 18,926 14,078 23,813 24,340 15,200 14,345 22,011 28,261 18,158 16,316 10 All others3: 2,949 3,266 3,079 2,486 2,850 3,106 2,842 4,070 3,493 4,066 2,121 3,273 By type of counterparty Primary dealers and brokers 11 U.S. Treasury securities 100,173 97,390 114,324 103,464 116,099 117,729 120,938 107,725 111,771 129,147 128,459 117,580 Federal agency securities 12 Debt 1,147 1,073 1,554 1,518 1,454 1,548 1,727 1,497 1,487 1,245 1,361 1,751 13 Mortgage-backed 8,852 10,157 9,462 6,141 11,519 12,741 7,832 7,318 9,210 12,866 9,445 8,015 Customers 14 U.S. Treasury securities 63,082 59,751 69,638 63,562 66,153 74,289 72,873 68,695 72,789 76,958 65,639 7700,,883344 Federal agency securities 15 Debt 7,134 6,891 7,968 7,697 7,068 7,640 8,966 8,461 7,315 8,069 7,501 1100,,448888 16 Mortgage-backed 11,099 12,672 12,544 10,424 15,145 14,705 10,211 11,097 16,294 19,461 10,833 11,575 FUTURES AND FORWARD TRANSACTIONS By type of deliverable security U.S. Treasury securities 17 Bills 3,189 2,511 1,906 1,960 1,250 2,289 1,999 2,090 2,637 3,364 2,080 1,980 Coupon securities, by maturity 18 Less than 3.5 years 1,931 2,055 2,264 1,675 2,334 2,190 2,367 2,582 2,197 2,562 2,997 11,,440066 19 3.5 to 7.5 years 1,943 1,382 2,062 2,234 1,106 1,603 2,274 3,435 3,075 2,174 2,388 1,359 20 7.5 to 15 years 2,990 2,751 3,398 3,516 2,901 3,640 3,810 3,112 3,198 3,155 3,409 2,626 21 15 years or more 9,228 11,588 14,008 12,656 11,841 14,207 15,604 15,486 12,076 14,267 15,204 11,387 Federal agency securities Debt, by maturity 22 Less than 3.5 years 222 86 80 64 137 65 28 104 63 71 221122 227711 23 3.5 to 7.5 years 54 105 124 128 50 192 161 81 59 133 123 47 24 7.5 years or more 84 23 35 94 19 4 7 82 33 22 44 6 Mortgage-backed 25 Pass-throughs 23,647 23,296 24,157 20,286 30,715 24,255 20,778 22,966 25,088 36,462 22,545 2222,,662211 26 Others3 1,463 2,026 2,093 1,487 2,135 1,929 2,430 2,281 1,221 1,863 2,647 1,917 OPTIONS TRANSACTIONS5 By type of underlying security U.S. Treasury, coupon securities, by maturity 27 Less than 3.5 years 1,002 1,512 1,205 1,218 869 1,241 1,252 1,513 1,940 2,149 1,659 1,484 28 3.5 to 7.5 years 438 801 739 622 722 687 872 744 1,217 486 975 903 29 7.5 to 15 years 571 1,019 982 903 1,209 913 1,229 536 1,103 998 847 724 30 15 years or more 799 2,503 2,758 3,062 3,075 2,324 2,472 3,033 4,472 3,446 3,804 3,564 Federal agency, mortgagebacked securities 31 Pass-throughs 600 533 598 496 591 499 572 842 942 855 685 786 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 are based on the number of trading specify delayed delivery. All futures transactions are included regardless of time days in the period. Immediate, forward, and futures transactions are reported at to delivery. Forward contracts for U.S. Treasury securities and federal agency principal value, which does not include accrued interest; options transactions are debt securities are included when the time to delivery is more than five business 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 business 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 business because of insufficient activity. days or less. Stripped securities are reported at market value by maturity of coupon or Data for several types of options transactions—U.S. Treasury securities, bills; corpus. Federal agency securities, debt; and federal agency securities, mortgage-backed, 3. Includes such securities as collateralized mortgage obligations (CMOs), real other than pass-throughs—are no longer available because activity is insufficient. estate mortgage investment conduits (REMICs), interest-only securities (iOs), and principal-only securities (POs). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • December 1993 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1993 1993, week ending item June July Aug. Aug. 4 Aug. 11 Aug. 18 Aug. 25 Sept. 1 Sept. 8 Sept. 15 Sept. 22 Positions2 NET IMMEDIATE POSITIONS3 By type of security U.S. Treasury securities 1 Bills 4,999r 5,394 8,508 7,443 7,501 66,,008899 1133,,663366 77,,223344 33,,333322 77,,222222 1122,,662288 Coupon securities, by maturity 2 Less than 3.5 years 10,982 9,704 7,631 6,092 8,607 5,828 11,797 4,760 8,450 -1,040 570 3 3.5 to 7.5 years -16,778 -17,643 -21,963 -17,778 -21,026 -25,283 -22,767 -21,034 -21,637 -23,757 -21,007 4 7.5 to 15 years -10,050* -5,042 -1,200 -4,628 -1,023 -582 -394 -781 -927 -3,511 -3,378 5 15 years or more ll,817r 10,367 6,931 5,103 4,778 9,028 6,348 88,,889955 1100,,668888 1111,,998877 1100,,552200 Federal agency securities Debt, by maturity 6 Less than 3.5 years 6,578r 7,924 9,611 10,638 9,930 9,423 9,611 8,775 10,149 10,093 8,002 7 3.5 to 7.5 years 2,192r 3,023 2,899 2,953 2,854 2,825 2,909 2,990 3,112 3,172 3,262 8 7.5 years or more 2,916r 3,568 3,783 3,616 33,,558800 33,,777788 33,,889900 44,,001144 44,,441122 44,,001111 33,,778877 Mortgage-backed 9 Pass-throughs 36,731 37,760 44,748 34,151 44,214 49,801 50,430 39,910 45,730 60,078 58,332 10 All others 26,354 25,204 24,588 24,101 22,447 2233,,443311 2244,,005577 2299,,337788 2299,,999922 2266,,663388 2255,,999977 Other money market instruments 11 Certificates of deposit 3,280 2,673* 3,251 3,479 2,584 3,574 3,599 3,0% 2,910 2,518 2,621 12 Commercial paper 6,950 6,669* 7,093 7,804 7,106 6,580 5,873 8,627 6,646 10,216 7,351 13 Bankers acceptances 1,048 1,114 1,135 1,168 1,211 1,399 949 931 1,097 1,016 1,051 FUTURES AND FORWARD POSITIONS5 By type of deliverable security U.S. Treasury securities 14 Bills -5,751 -6,396 -7,235 -5,230 -5,999 -10,144 -7,834 --55,,992200 --44,,669955 --66,,118877 --66,,770077 Coupon securities, by maturity 15 Less than 3.5 years -3,212r -1,787 -1,741 -1,794 -2,548 -1,510 -1,213 -1,649 -1,983 -2,641 -1,691 16 3.5 to 7.5 years 3,432r 4,012 3,649 4,146 4,176 5,341 3,606 778 387 22,,331111 981 17 7.5 to 15 years 2,013 4,208 6,989 7,657 8,657 5,790 6,017 7,130 7,605 88,,998888 8,229 18 15 years or more -6,174r -6,493* -8,172 -7,044 -8,375 -9,372 -9,159 --66,,113388 --88,,224499 --77,,228811 --66,,%%22 Federal agency securities Debt, by maturity 19 Less than 3.5 years 38 4 -18 -11 37 -172 25 44 120 187 83 20 3.5 to 7.5 years -33 -72 11 -113 5 115 36 -52 -56 94 -19 21 7.5 years or more 85 33 36 48 -3 32 -9 132 30 16 -91 Mortgage-backed 22 Pass-throughs -15,023r -20,369 -26,253 -14,319 -27,181 -31,780 -29,7% -22,547 -31,821 -48,895 -45,603 23 All others 1,764 2,782 5,513 2,456 6,390 7,824 5,574 3,759 3,980 7,335 10,297 24 Certificates of deposit -149,595* -178,5% -198,937 -178,774 -206,357 -202,067 -200,180 -198,623 -226,976 -219,241 -206,633 Financing6 Reverse repurchase agreements 25 Overnight and continuing 221,171 244,345* 246,671 259,418 248,234 259,657 234,378 235,540 246,529 249,390 235,263 26 Term 370,986 406,245* 400,077 417,217 435,607 379,%1 403,705 366,433 385,406 397,434 417,557 Repurchase agreements 27 Overnight and continuing 410,307* 452,885* 468,541 468,663 449,937 493,309 462,812 467,950 475,861 489,909 470,579 28 Term 340,843* 370,581* 371,613 376,215 408,875 349,947 386,980 332,424 339,056 360,260 389,234 Securities borrowed 29 Overnight and continuing 129,101 128,685 134,639 131,003 133,048 136,8% 133,887 137,165 139,030 140,492 132,625 30 Term 41,518 46,807 45,868 45,232 46,163 44,037 47,523 46,154 42,470 42,281 40,553 Securities loaned 31 Overnight and continuing 4,774 ' 5,355 5,760 5,776 5,634 5,219 5,449 6,891 5,735 6,330 7,869 32 Term 639 773 981 790 864 1,062 1,057 1,061 1,136 1,612 1,799 Collateralized loans 33 Overnight and continuing 14,128 16,304 16,061 14,405 17,888 17,417 16,819 12,566 16,452 16,779 16,173 MEMO: Matched book7 Reverse repurchase agreements 34 Overnight and continuing 149,942 161,088 166,820 170,341 164,772 178,568 159,176 162,073 160,205 169,168 162,151 35 Term 317,835 351,971* 342,286 357,002 375,482 322,989 347,003 310,758 332,579 340,953 358,656 Repurchase agreements 36 Overnight and continuing 210,760* 222277,,774422** 224,1% 235,648 224,628 240,968 210,005 213,048 222,078 223,808 212,838 37 Term 256,609* 278,162* 274,942 285,124 308,755 253,082 285,973 241,341 246,361 262,542 288,254 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 business 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 business 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 different types of collateralization. 5. Futures positions reflect standardized agreements 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 for FsRpeAcifSy EdeRla yed delivery. All futures positions are included regardless of time to activity. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A33 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1993 AAggeennccyy 11998899 11999900 11999911 11999922 Mar. Apr. May June July 1 Federal and federally sponsored agencies 411,805 434,668 442,772 483,970 494,656 0 0 0 0 3 2 Fe D de e r f a e l n a se g e D n e c p ie a s r tment f 35,664 7 42,159 7 41,035 7 41,829 7 42,05 7 1 42,619 7 42,738 7 42,218 7 44,65 7 6 4 Export-Import Bank2'3 10,985 11,376 9,809 7,208 6,749 6,749 6,749 6,258 6,258 5 Federal Housing Administration 328 393 397 374 259 263 271 283 97 6 Government National Mortgage Association certificates of participation 0 0 0 0 0 0 0 0 0 7 Postal Service 6,445 6,948 8,421 10,660 10,440 10,440 10,440 10,182 10,182 8 Tennessee Valley Authority 17,899 23,435 22,401 23,580 24,5% 25,160 25,271 25,488 28,112 9 United States Railway Association 0 0 0 0 0 0 0 0 0 10 Federally sponsored agencies7 375,428 392,509 401,737 442,141 452,605 459,749 466,894 469,854 477,838 11 Federal Home Loan Banks 136,108 117,895 107,543 114,733 115,272 117,363 120,172 127,289 125,448 12 Federal Home Loan Mortgage Corporation 26,148 30,941 30,262 29,631 41,183 47,903 46,555 35,572 42,291 13 Federal National Mortgage Association 116,064 123,403 133,937 166,300 165,818 165,135 170,768 176,527 180,730 14 Farm Credit Banks8 54,864 53,590 52,199 51,910 51,630 51,210 51,538 51,686 51,698 15 Student Loan Marketing Association 28,705 34,194 38,319 39,650 38,776 38,209 37,%7 38,884 37,801 16 Financing Corporation1® 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 17 Farm Credit Financial Assistance Corporation11 847 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 18 Resolution Funding Corporation12 4,522 23,055 29,9% 29,9% 29,9% 29,9% 29,9% 29,9% 29,9% MEMO 19 Federal Financing Bank debt13 134,873 179,083 185,576 154,994 146,097 140,807 137,215 132,953 132,307 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 10,979 11,370 9,803 7,202 6,743 6,743 6,743 6,252 66,,225522 21 Postal Service6 6,195 6,698 8,201 10,440 10,440 10,440 10,440 10,182 10,182 22 Student Loan Marketing Association 4,880 4,850 4,820 4,790 4,790 4,790 4,790 4,790 4,790 23 Tennessee Valley Authority 16,519 14,055 10,725 6,975 6,675 6,675 6,575 6,575 6,575 24 United States Railway Association6 0 0 0 0 0 0 0 0 0 Other lending14 25 Farmers Home Administration 53,311 52,324 48,534 42,979 42,979 41,629 40,379 39,729 39,129 26 Rural Electrification Administration 19,265 18,890 18,562 18,172 17,966 18,008 17,970 17,895 17,883 27 Other 23,724 70,8% 84,931 64,436 56,504 52,522 50,318 47,530 47,4% 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 year 1969 by the Government tions Reform, Recovery and Enforcement Act of 1989, undertook its first National Mortgage Association acting as trustee for the Fanners Home Admin- borrowing in October 1989. istration, the Department of Health, Education, and Welfare, the Department of 13. The FFB, which began operations in 1974, is authorized to purchase or sell Housing and Urban Development, the Small Business Administration, and the obligations issued, sold, or guaranteed by other federal agencies. Because FFB Veterans' Administration. incurs debt solely for the purpose of lending to other agencies, its debt is not 6. Off-budget. included in the main portion of the table in order to avoid double counting. 7. Includes outstanding noncontingent liabilities: notes, bonds, and deben- 14. Includes FFB purchases of agency assets and guaranteed loans; the latter tures. Some data are estimated. are loans guaranteed by numerous agencies, with the 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 on line 17. consists exclusively of agency assets, whereas the Rural Electrification Admin- 9. Before late 1982, the Association obtained financing through the Federal istration 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

A34 Domestic NonfinancialS tatistics • December 1993 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1993 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11999900 11999911 11999922 Feb. Mar. Apr. May June July Aug. Sept. 1 All issues, new and refunding1 120,339 154,402 215,191 18,285 28,920 20,956 27,178 28,529 21,603 21,258 21,555 By type of issue 2 General obligation 39,610 55,100 78,611 6,%3 8,254 8,272 9,452 8,415 7,713 6,065 5,455 3 Revenue 81,295 99,302 136,580 11,322 20,666 12,684 17,726 20,114 13,890 15,193 16,100 By type of issuer 4 State 15,149 24,939 25,295 3,485 2,139 1,463 2,910 3,562 2,944 2,319 2,758 5 Special district or statutory authority2 72,661 80,614 129,686 10,146 19,804 9,923 15,441 18,132 10,043 10,632 11,321 6 Municipality, county, or township 32,510 48,849 60,210 4,654 6,977 9,570 8,827 6,835 8,616 8,307 7,476 7 Issues for new capital 103,235 116,953 120,272 4,775r 9,741r 4,941r 8,681r 11,208" 7,737 7,029 8,350 By use of proceeds 8 Education 17,042 21,121 22,071 1,264 1,482 833 1,5% 2,208 l,723r 1,883 1,886 9 Transportation 11,650 13,395 17,334 131 2,111 699 813 772 653r 1,062 789 10 Utilities and conservation 11,739 21,039 20,058 423 538 806 955 1,629 922r 1,646 1,255 11 Social welfare 23,099 25,648 21,7% 618 1,556 942 1,756 2,073 1,555 681 2,199 12 Industrial aid 6,117 8,376 5,424 69 765 134 601 1,042 429 212 329 13 Other purposes 34,607 30,275 33,589 2,131 3,264 1,971 3,665 3,046 2,455 1,545 1,892 1. Par amounts of long-term issues based on date of sale. SOURCES. Securities Data Company beginning January 1993; Investment 2. Includes school districts. Dealer's Digest before then. 1.46 NEW SECURITY ISSUES U.S. Corporations Millions of dollars 1993 TTyyppee ooff iissssuuee,, ooffffeerriinngg,, oorr iissssuueerr 11999900 11999911 11999922 Jan. Feb. Mar. Apr. May June July Aug. 1 All issues1 340,049 465,243 559,449 50,692 59,427 56,265r 40,654" 42,961" 65,574" 49,987 54,156 2 Bonds2 299,884 389,822 471,125 45,458 49,367 47,427' 34,403r 34,263" 55,780" 40,219 44,894 By type of offering 3 Public, domestic 188,848 286,930 377,681 41,575 47,084 42,223r 31,199" 30,934" 51,183" 37,569 41,050 4 Private placement, domestic3 86,982 74,930 65,853 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Sold abroad 23,054 27,%2 27,591 3,884 2,283 5,203 3,204 3,329 4,597" 2,650 3,845 By industry group 6 Manufacturing 51,779 86,628 81,998 9,393 8,150 8,137 6,515" 3,690 8,397" 2,448 6,278 7 Commercial and miscellaneous 40,733 36,666 42,869 3,074 2,268 2,695 2,194 3,015 2,505 5,491 2,331 8 Transportation 12,776 13,598 9,979 316 248 1,067 123 685 948 607 723 9 Public utility 17,621 23,945 48,055 4,282 5,624 7,058 5,767 2,857 5,849" 5,687 3,212 10 Communication 6,687 9,431 15,394 3,019 2,890 3,270 2,015 1,820 2,473 2,331 2,979 11 Real estate and financial 170,288 219,750 272,830 25,374 30,187 25,201" 17,788" 22,1%" 35,608" 23,654 29,372 12 Stocks2 40,175 75,424 88,325 5,234 10,060 8,838 6,251 8,698 9,794 9,768 9,262 By type of offering 13 Public preferred 3,998 17,085 21,339" 1,112 1,898 1,647 702 3,124 876 2,113 3,376 14 Common 19,442 48,230 57,118r 4,122 8,161 7,191 5,549 5,574 8,918 7,655 5,886 15 Private placement 16,736 10,109 9,867 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. By industry group 16 Manufacturing 5,649 24,111 22,723 722 2,616 1,741 1,387 1,413 1,982 1,810 1,961 17 Commercial and miscellaneous 10,171 19,418 20,231 1,688 2,021 2,488 1,564 2,836 2,025 2,505 1,456 18 Transportation 369 2,439 2,595 65 64 336 250 111 168 114 405 19 Public utility 416 3,474 6,532 310 350 743 412 753 893 495 582 20 Communication 3,822 475 2,366 0 0 7 30 279 65 n.a. 115 21 Real estate and financial 19,738 25,507 33,879 2,438 5,009 3,522 2,579 3,307 4,660 4,844 4,732 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., Securities Data Company, and the investment companies other than closed-end, intracorporate transactions, equi- Board of Governors of the Federal Reserve System. ties sold abroad, and Yankee bonds. Stock data include ownership securities issued by limited partnerships. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Market and Corporate Finance A35 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets1 Millions of dollars 1993 IItteemm 11999911 11999922 Jan. Feb. Mar. Apr. May Juner July Aug. 1 Sales of own shares2 463,645 647,055 71,607 60,676 69,080 66,766 60,504 68,373 72,503 73,294 2 Redemptions of own shares 342,547 447,140 46,545 39,684 47,414 46,518 38,752 46,923 44,922 46,473 3 Net sales 121,098 199,915 25,062 20,992 21,666 20,248 21,759 21,650 27,581 26,821 4 Assets4 808,582 1,056,310 1,082,653 1,116,784 1,154,445 1,178,663 1,219,863 1,255,377 1,284,842 1,344,261 5 Cash5 60,292 73,999 76,764 79,763 81,536 87,140 85,677 84,177 93,345 94,489 6 Other 748,290 982,311 1,005,889 1,037,021 1,072,910 1,091,523 1,134,186 1,171,200 1,191,497 1,249,772 1. Data on sales and redemptions exclude money market mutual funds but 4. Market value at end of period, less current liabilities. include limited-maturity municipal bond funds. Data on asset positions exclude 5. Includes all U.S. Treasury securities and other short-term debt securities. both money market mutual funds and limited-maturity municipal bond funds. SOURCE. Investment Company Institute. Data based on reports of membership, 2. Includes reinvestment of net income dividends. Excludes reinvestment of which comprises substantially all open-end investment companies registered with capital gains distributions and share issue of conversions from one fund to another the Securities and Exchange Commission. Data reflect underwritings of new in the same group. companies. 3. Excludes sales and redemptions resulting from transfers of shares 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 1991r 1992r 1993 AAccccoouunntt 11999900rr 11999911rr 11999922rr Q3 Q4 Q1 Q2 Q3 Q4 Qlr Q2 1 Profits with inventory valuation and capital consumption adjustment 380.6 369.5 407.2 359.0 378.8 409.9 411.7 367.5 439.5 432.1 458.1 2 Profits before taxes 365.7 362.3 395.4 362.0 373.5 404.3 409.5 357.9 409.9 419.8 445.6 3 Profits tax liability 138.7 129.8 146.3 132.5 133.4 147.0 153.0 130.1 155.0 160.9 173.3 4 Profits after taxes 227.1 232.5 249.1 229.5 240.1 257.3 256.5 227.8 254.9 258.9 272.3 5 Dividends 153.5 137.4 150.5 133.4 133.9 138.0 146.1 155.2 162.9 167.5 168.5r 6 Undistributed profits 73.6 95.2 98.6 96.1 106.1 119.3 110.4 72.7 92.0 91.4 103.9 7 Inventory valuation -11.0 4.9 -5.3 -3.0 1.9 -4.6 -13.7 -7.8 4.9 -12.7 — 12.2r 8 Capital consumption adjustment 25.9 2.2 17.1 .0 3.5 10.2 16.0 17.4 24.7 25.1 24.7r SOURCE. U.S. Department of Commerce, Survey of Current Business. 1.50 NONFARM BUSINESS EXPENDITURES New Plant and Equipment Billions of dollars; quarterly data at seasonally adjusted annual rates 1992 1993 IInndduussttrryy 11999911 11999922 1199993311 Ql Q2 Q3 Q4 Ql Q2 Q31 Q41 1 Total nonfarm business 528.39 546.60 585.20 534.85 541.41 547.40 559.24 564.13 579.79 598.91 597.98 Manufacturing 2 Durable goods industries 77.64 73.32 80.94 73.98 74.07 72.09 73.30 79.11 80.88 82.73 81.06 3 Nondurable goods industries 105.17 100.69 98.95 99.85 97.91 100.77 103.56 95.94 96.21 103.96 99.69 Nonmanufacturing 4 Mining 10.02 8.88 9.29 8.92 9.20 8.98 8.47 8.89 9.10 9.65 99..5522 Transportation 5 Railroad 5.95 6.67 6.57 6.63 6.32 6.70 7.04 6.00 6.00 7.17 7.09 6 Air 10.17 8.93 7.25 8.76 9.65 9.69 7.60 7.30 6.54 8.35 6.82 7 Other 6.54 7.04 9.16 6.44 7.19 7.52 6.97 9.17 9.04 8.90 9.53 Public utilities 8 Electric 43.76 48.22 52.11 46.11 48.35 48.17 49.57 49.92 50.51 54.81 53.20 9 Gas and other 22.82 23.99 23.54 22.89 24.29 24.01 24.50 23.59 24.04 23.06 23.46 10 Commercial and other2 246.32 268.84 297.39 261.27 264.46 269.46 278.24 284.21 297.46 300.26 307.62 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

A36 Domestic NonfinancialS tatistics • December 1993 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1 Billions of dollars, end of period; not seasonally adjusted 1991 1992 1993 AAccccoouunntt 11999900 11999911 11999922 Q4 Ql Q2 Q3 Q4 Ql Q2 ASSETS 1 Accounts receivable, gross2 492.3 480.6 482.1 480.6 475.6 476.7 473.9 482.1 469.6 469.3 2 Consumer 133.3 121.9 117.1 121.9 118.4 116.7 116.7 117.1 111.9 111.3 i Business 293.6 292.9 296.5 292.9 290.8 293.2 288.5 296.5 289.6 290.7 4 Real estate 65.5 65.8 68.4 65.8 66.4 66.8 68.8 68.4 68.1 67.2 5 LESS: Reserves for unearned income 57.6 55.1 50.8 55.1 53.6 51.2 50.8 50.8 47.4 48.1 6 Reserves for losses 9.6 12.9 15.8 12.9 13.0 12.3 12.0 15.8 15.5 15.8 7 Accounts receivable, net 425.1 412.6 415.5 412.6 409.0 413.2 411.1 415.5 406.6 405.4 8 All other 113.9 149.0 150.6 149.0 145.5 139.4 146.5 150.6 155.0 156.9 9 Total assets 539.0 561.6 566.1 561.6 554.5 552.6 557.6 566.1 561.6 562.3 LIABILITIES AND CAPITAL 10 Bank loans 31.0 42.3 37.6 42.3 38.0 37.8 38.1 37.6 34.1 29.5 11 Commercial paper 165.3 159.5 156.4 159.5 154.4 147.7 153.2 156.4 149.8 144.5 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 Owed to parent 37.5 34.5 37.8 34.5 34.5 34.8 34.9 37.8 41.9 44.9 15 Not elsewhere classified 178.2 191.3 195.3 191.3 189.8 191.9 191.4 195.3 195.1 195.1 16 All other liabilities 63.9 69.0 71.2 69.0 72.0 73.4 73.7 71.2 74.2 81.3 17 Capital, surplus, and undivided profits 63.7 64.8 67.8 64.8 66.0 67.1 68.1 67.8 66.6 67.1 18 Total liabilities and capital 539.6 561.2 566.1 561.2 554.6 552.7 559.4 566.1 561.7 562.4 1. Includes finance company subsidiaries of bank holding companies but not of 2. Before deduction for unearned income and losses, retailers and banks. Data are amounts carried on the balance sheets of finance companies; securitized pools are not shown, as they are not on the books. 1.52 DOMESTIC FINANCE COMPANIES Consumer, Real Estate, and Business Credit1 Millions of dollars, amounts outstanding, end of period 1993 TTyyppee ooff ccrreeddiitt 11999900 11999911 11999922 Mar. Apr. May June July Aug. Seasonally adjusted 11 TToottaall 522,474 519,910 534,845 528,046 529,552 523,111 522,981 523,539 525,744 22 CCoonnssuummeerr 160,468 154,822 157,707 156,257 156,441 153,275 152,979 153,228 153,420 33 RReeaall eessttaattee22 65,147 65,383 68,011 68,726 69,803 66,396 67,223 67,426 67,216 44 BBuussiinneessss 2%,858 299,705 309,127 303,062 303,308 303,440 302,778 302,885 305,109 Not seasonally adjusted 5 Total 525,888 523,192 538,158 528,172 531,380 524,180 526,818 523,389 6 Consumer 161,360 155,713 158,631 154,913 155,440 152,708 152,995 153,733 7 Motor vehicles 75,045 63,415 57,605 53,508 53,977 53,878 55,592 56,817 8 Other consumer3 58,213 58,522 59,522 58,346 58,546 55,433 55,737 56,259 9 Securitized motor vehicles4 19,837 23,166 29,775 32,904 32,527 33,174 31,642 30,787 10 Securitized other consumer4 8,265 10,610 11,729 10,155 10,390 10,223 10,023 9,870 11 Real estate2 65,509 65,760 68,410 68,135 69,356 66,150 67,230 67,649 12 Business 299,019 301,719 311,118 305,123 306,584 305,322 306,593 302,007 13 Motor vehicles 92,125 90,613 87,456 87,542 88,692 89,317 90,263 87,745 14 Retail5.... 26,454 22,957 19,303 16,961 17,228 16,513 16,995 17,561 15 Wholesale6 33,573 31,216 29,962 31,788 32,064 32,242 31,787 27,442 16 Leasing 32,098 36,440 38,191 38,792 39,400 40,562 41,481 42,743 17 Equipment 137,654 141,399 151,607 145,878 145,877 145,237 146,487 146,408 18 Retail 31,968 30,962 32,212 32,560 32,170 32,384 32,775 33,209 19 Wholesale6 11,101 9,671 8,669 8,656 8,642 8,556 8,482 8,224 20 Leasing 94,585 100,766 110,726 104,662 105,066 104,297 105,230 104,975 21 Other business 63,773 60,900 57,464 56,153 56,144 54,487 53,987 53,243 22 Securitized business assets 5,467 8,807 14,590 15,551 15,870 16,281 15,856 14,611 23 Retail 667 576 1,118 904 1,434 1,375 1,324 1,268 24 Wholesale 3,281 5,285 8,756 9,824 9,745 9,590 9,539 8,318 25 Leasing 1,519 2,946 4,716 4,823 4,691 5,316 4,993 5,025 1. Includes finance company subsidiaries of bank holding companies but not of 5. Passenger car fleets and commercial land vehicles for which licenses are retailers and banks. Data are before deductions for unearned income and losses. required. Data in this table also appear in the Board's G.20 (422) monthly statistical release. 6. Credit arising from transactions between manufacturers and dealers, that is, For ordering address, see inside front cover. floor plan financing. 2. Includes all loans secured by liens on any type of real estate, for example, 7. includes loans on commercial accounts receivable, factored commercial first and junior mortgages and home equity loans. accounts, and receivable dealer capital; small loans used primarily for business or 3. Includes personal cash loans, mobile home loans, and loans to purchase other farm purposes; and wholesale and lease paper for mobile homes, campers, and types of consumer goods such as appliances, apparel, general merchandise, and travel trailers. recreation vehicles. Digitized for FR4A. SOuEtsRta nding balances of pools upon which securities have been issued; these balances are no longer carried on the balance sheets of the loan originator. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate A37 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 1993 IItteemm 11999900 11999911 11999922 Mar. Apr. May June July Aug. Sept. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms1 1 Purchase price (thousands of dollars) 153.2 155.0 158.1 156.2 150.9 153.1 185.6 168.7 158.1 155.3 2 Amount of loan (thousands of dollars) 112.4 114.0 118.1 121.5 115.0 118.8 125.3 127.4 122.2 120.8 3 Loan-to-price ratio (percent) 74.8 75.0 76.6 79.3 78.5 79.5 75.3 77.8 78.4 78.5 4 Maturity (years) 27.3 26.8 25.6 26.9 24.9 26.9 25.4 26.2 26.4 26.5 5 Fees and charges (percent of loan amount)2 1.93 1.71 1.60 1.50 1.23 1.43 1.32 1.28 1.21 1.13 Yield (percent per year) 6 Contract rate1 9.68 9.02 7.98 7.22 7.26 7.14 7.02 6.99 6.86 6.76 7 Effective rate1,3 10.01 9.30 8.25 7.46 7.46 7.37 7.23 7.20 7.05 6.95 8 Contract rate (HUD series) 10.08 9.20 8.43 7.59 7.51 7.59 7.33 7.31 6.89 6.94 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203)5 10.17 9.25 8.46 7.57 7.56 7.59 7.52 7.51 7.02 7.03 10 GNMA securities6 9.51 8.59 7.77 6.79 6.77 6.79 6.75 6.55 6.43 6.21 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 113,329 122,837 142,833 161,147 163,719 166,849 171,232 174,674 177,992 180,057 12 FHA/VA insured 21,028 21,702 22,168 22,700 22,682 22,691 22,656 22,761 22,834 22,810 13 Conventional 92,302 101,135 120,664 138,447 141,037 144,158 148,576 151,913 155,158 157,247 Mortgage transactions (during period) 14 Purchases 23,959 37,202 75,905 4,730 6,761 7,526 9,131 7,854 8,176 8,866 Mortgage commitments (during period) 15 Issued7 23,689 40,010 74,970 6,644 7,764 7,791 8,697 7,760 8,581 9,814 16 To sell8 5,270 7,608 10,493 0 112 30 323 458 2,585 0 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)* 17 Total 20,419 24,131 29,959 35,421 38,361 39,960 42,477 43,119 44,3% 46,858 18 FHA/VA insured 547 484 408 337 330 325 319 314 324 323 19 Conventional 19,871 23,283 29,552 35,084 38,031 39,635 42,158 42,805 44,072 46,536 Mortgage transactions (during period) 20 Purchases 75,517 99,965 191,125 12,587 15,885 18,842 21,529 19,700 19,636 18,372 21 Sales 73,817 92,478 179,208 10,286 13,807 17,532 18,968 18,631 18,008 16,230 Mortgage commitments (during period)9 22 Contracted 102,401 114,031 261,637 21,103 20,731 18,908 28,831 21,722 17,085 16,495 1. Weighted averages based on sample surveys of mortgages originated by 6. Average net yields to investors on fully modified pass-through securities major institutional lender groups for purchase of newly built homes; compiled by backed by mortgages and guaranteed by the Government National Mortgage the Federal Housing Finance Board in cooperation with the Federal Deposit Association (GNMA), assuming prepayment in twelve years on pools of thirty- Insurance Corporation. year mortgages insured by the Federal Housing Administration or guaranteed by 2. Includes all fees, commissions, discounts, and "points" paid (by the the Department of Veterans Affairs. borrower or the seller) to obtain a loan. 7. Does not include standby commitments issued, but includes standby com- 3. Average effective interest rate on loans closed for purchase of newly built mitments converted. homes, assuming prepayment at the end of ten years. 8. Includes participation loans as well as whole loans. 4. Average contract rate on new commitments for conventional first mort- 9. Includes conventional and government-underwritten loans. The Federal gages; from U.S. Department of Housing and Urban Development (HUD). Based Home Loan Mortgage Corporation's mortgage commitments and mortgage transon transactions on the first day of the subsequent month. actions include activity under mortgage securities swap programs, whereas the 5. Average gross yield on thirty-year, minimum-downpayment first mort- corresponding data for FNMA exclude swap activity. gages insured by the Federal Housing Administration (FHA) for immediate delivery in the private secondary market. Based on transactions on first day of subsequent month. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 DomesticN onfinancial Statistics • December 1993 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1992 1993 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11998899 11999900 11999911 Q2 Q3 Q4 Qlr Q2P 1 All holders 3,549,290r 3,761,262r 3,922,980r 3,981,827r 4,019,409r 4,041,59©r 4,056,749 4,085,483 By type of property 2 One- to four-family residences 2,408,342r 2,615,344r 2,778,716r 2,856,601r 2,911,354r 2,953,464r 2,976,287 3,014,387 3 Multifamily residences 306,472r 309,326r 306,392r 304,792r 301,957r 294,959* 293,382 291,029 4 Commercial 754,0001 758,189r 758,739r 740,702r 726,273r 713,408r 707,041 699,994 5 Farm 80,476 78,403r 79,133r 79,733r 79,824r 79,759r 80,040 80,073 By type of holder 6 Major financial institutions 1,931,537 1,914,315 l,846,726r l,803,836r l,793,492r l,769,267r 1,751,941 1,758,285 7 Commercial banks2 767,069 844,826 876, IOC 884,962r 891,445r 894,593r 890,672 910,867 8 One- to four-family 389,632 455,931 483,623' 493,199" 502,075r 507,830" 506,976 526,394 9 Multifamily 38,876 37,015 36,935r 37,724r 38,757r 38,027r 37,596 37,840 10 Commercial 321,906 334,648 337,095r 334,488r 330,705r 328,854r 326,128 326,033 11 Farm 16,656 17,231 18,447r 19,552r 19,908r 19,882 19,972 20,600 12 Savings institutions 910,254 801,628 705,367 659,624 648,178 627,972 617,141 608,528 n One- to four-family 669,220 600,154 538,358 508,545 501,604 489,622 480,398 473,949 14 Multifamily 106,014 91,806 79,881 74,788 73,723 69,791 70,656 69,408 15 Commercial 134,370 109,168 86,741 75,947 72,517 68,235 65,755 64,837 16 Farm 650 500 388 345 334 324 332 334 17 Life insurance companies 254,214 267,861 265,258 259,250r 253,869r 246,702r 244,128 238,890 18 One- to four-family 12,231 13,005 11,547 12,041r ll,779r ll,441r 11,316 11,071 19 Multifamily 26,907 28,979 29,562 29,226r 28,591r 27,77C 27,466 26,871 70 Commercial 205,472 215,121 214,105 208,665r 204,132r 198,2691 196,100 191,852 21 Farm 9,604 10,756 10,044 9,318r 9,366r 9,222r 9,246 9,095 22 Federal and related agencies 197,778 239,003 266,146 278,091 277,485 285,965 287,182 299,214 23 Government National Mortgage Association 23 20 19 23 27 30 45 45 24 One- to four-family 23 20 19 23 27 30 37 38 75 Multifamily 0 0 0 0 0 0 8 7 26 Farmers Home Administration4 41,176 41,439 41,713 41,628 41,671 41,695 41,630 41,669 77 One- to four-family 18,422 18,527 18,496 17,718 17,292 16,912 18,149 18,313 28 Multifamily 9,054 9,640 10,141 10,356 10,468 10,575 10,235 10,197 29 Commercial 4,443 4,690 4,905 4,998 5,072 5,158 4,934 4,915 30 Farm 9,257 8,582 8,171 8,557 8,839 9,050 8,313 8,245 31 Federal Housing and Veterans' Administrations 6,087 8,801 10,733 11,480 11,768 12,581 13,027 12,945 32 One- to four-family 2,875 3,593 4,036 4,403 4,531 5,153 5,631 5,635 33 Multifamily 3,212 5,208 6,697 7,077 7,236 7,428 7,3% 7,311 34 Resolution Trust Corporation 0 32,600 45,822 44,624 37,099 32,045 27,331 21,973 35 One- to four-family 0 15,800 14,535 15,032 12,614 12,960 11,375 8,955 36 Multifamily 0 8,064 15,018 13,316 11,130 9,621 8,070 6,743 37 Commercial 0 8,736 16,269 16,276 13,356 9,464 7,886 6,275 38 Farm 0 0 0 0 0 0 0 0 39 Federal National Mortgage Association 99,001 104,870 112,283 122,939 126,476 137,584 141,192 151,513 40 One- to four-family 90,575 94,323 100,387 110,223 113,407 124,016 127,252 137,340 41 Multifamily 8,426 10,547 11,896 12,716 13,069 13,568 13,940 14,173 4? Federal Land Banks 29,640 29,416 28,767 28,775 28,815 28,365 28,536 28,592 43 One- to four-family 1,210 1,838 1,693 1,693 1,695 1,669 1,679 1,682 44 Farm 28,430 27,577 27,074 27,082 27,119 26,696 26,857 26,909 45 Federal Home Loan Mortgage Corporation 21,851 21,857 26,809 28,621 31,629 33,665 35,421 42,477 46 One- to four-family 18,248 19,185 24,125 26,001 29,039 31,032 32,831 39,905 47 Multifamily 3,603 2,672 2,684 2,620 2,591 2,633 2,589 2,572 48 Mortgage pools or trusts5 917,848 1,079,103 1,250,666 1,341,338 1,385,460 1,425,546 1,461,612 1,472,844 49 Government National Mortgage Association 368,367 403,613 425,295 422,922 422,255 419,516 421,514 413,166 50 One- to four-family 358,142 391,505 415,767 413,828 413,063 410,675 412,798 404,425 51 Multifamily 10,225 12,108 9,528 9,094 9,192 8,841 8,716 8,741 52 Federal Home Loan Mortgage Corporation 272,870 316,359 359,163 382,797 391,762 407,514 420,932 422,882 53 One- to four-family , 266,060 308,369 351,906 376,177 385,400 401,525 415,279 417,646 54 Multifamily 6,810 7,990 7,257 6,620 6,362 5,989 5,654 5,236 55 Federal National Mortgage Association 228,232 299,833 371,984 413,226 429,935 444,979 457,316 465,220 56 One- to four-family 219,577 291,194 362,667 403,940 420,835 435,979 448,483 456,645 57 Multifamily 8,655 8,639 9,317 9,286 9,100 9,000 8,833 8,575 58 Farmers Home Administration 80 66 47 43 41 38 44 45 59 One- to four-family 21 17 11 9 9 8 10 10 60 Multifamily 0 0 0 0 0 0 0 0 61 Commercial 26 24 19 18 18 17 18 19 6? Farm 33 26 17 15 14 13 16 16 63 Private mortgage conduits 48,299 59,232 94,177 122,350 141,468 153,499 161,805 171,532 64 One- to four-family 43,325 53,335 84,000 105,700 123,000 132,000 137,000 145,000 65 Multifamily 462 731 3,698 5,796 5,796 6,305 6,662 7,410 66 Commercial 4,512 5,166 6,479 10,855 12,673 15,194 18,143 19,121 67 Farm 0 0 0 0 0 0 0 0 68 Individuals and others6 502,127r 528,841r 559,442r 558,562r 562,971r 560,812r 556,015 555,140 69 One- to four-family 318,782r 348,547r 367,546r 368,068r 374,984r 372,613r 367,072 367,378 70 Multifamily 84,228r 85,926r 83,778r 86,174r 85,942r 85,410" 85,561 85,947 71 Commercial 83,272r 80,636r 93,126r 89,456r 87,802r 88,217r 88,077 86,941 72 Farm 15,846 13,732r 14,992r 14,864r 14,243r 14,572r 15,304 14,874 1. Based on data from various institutional and governmental sources; figures 5. Outstanding principal balances of mortgage-backed securities insured or for some quarters estimated in part by the Federal Reserve. Multifamily debt guaranteed by the agency indicated. refers to loans on structures of five or more units. 6. Other holders include mortgage companies, real estate investment trusts, 2. Includes loans held by nondeposit trust companies but not loans held by state and local credit agencies, state and local retirement funds, noninsured bank trust departments. pension funds, credit unions, and finance companies. 3. Includes savings banks and savings and loan associations. SOURCES. Based on data from various institutional and government sources. 4. FmHA-guaranteed securities sold to the Federal Financing Bank were Separation of nonfarm mortgage debt by type of property, if not reported directly, reallocated from FmHA mortgage pools to FmHA mortgage holdings in 1986:Q4 and interpolations and extrapolations, when required, are estimated mainly by the because of accounting changes by the Farmers Home Administration. Federal Reserve. Line 64, from Inside Mortgage Securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumer Installment Credit A39 1.55 CONSUMER INSTALLMENT CREDIT1 Millions of dollars, amounts outstanding, end of period 1993 HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt 11999900 11999911 11999922 Mar. Apr.r Mayr Juner July Aug. Seasonally adjusted 11 TToottaall 738,765 733,510 741,093 750,131r 752,193 750,293 752,428 757,465 761,093 22 AAuuttoommoobbiillee 284,739 260,898 259,627 262,313r 262,463 264,007 265,388 267,468 268,382 33 RReevvoollvviinngg 222,552 243,564 254,299 259,661 261,450 262,690 263,338 266,938 269,781 44 OOtthheerr 231,474 229,048 227,167 228,157r 228,280 223,596 223,701 223,058 222,931 Not seasonally adjusted 5 Total 752,883 749,052 756,944 743,133r 746,447 744,778 748,830 753,645 761,859 By major holder 6 Commercial banks 347,087 340,713 331,869 329,764 332,266 333,415 335,592 339,948 344,040 7 Finance companies 133,258 121,937 117,127 111,854 112,523 109,311 111,330 113,076 111,864 8 Credit unions 93,057 92,681 97,641 99,778 101,534 103,019 104,781 106,027 108,095 9 Retailers 43,464 39,832 42,079 38,030 38,218 38,681 38,813 39,043 39,688 10 Savings institutions 52,164 45,965 43,461 41,695 40,275 39,210 37,250 36,485 35,919 11 Gasoline companies 4,822 4,362 4,365 4,080 4,280 4,486 4,567 4,668 4,728 12 Pools of securitized assets 79,030 103,562 120,402 117,932r 117,351 116,656 116,497 114,398 117,525 By major type of credit3 13 Automobile 284,903 261,219 259,964 259,945r 260,857 262,860 265,345 267,646 270,090 14 Commercial banks 124,913 112,666 109,743 111,287 111,121 112,700 114,901 116,729 118,130 15 Finance companies 75,045 63,415 57,605 53,508 53,977 53,878 55,592 56,817 55,247 16 Pools of securitized assets 24,620 28,915 33,878 36,085r 36,262 36,431 34,701 33,673 35,569 17 Revolving 234,801 256,876 267,949 256,233 257,783 259,566 260,993 264,100 268,695 18 Commercial banks 133,385 138,005 132,582 128,079 129,550 130,871 129,921 132,984 134,498 19 Retailers 38,448 34,712 36,629 32,681 32,838 33,254 33,328 33,505 34,099 20 Gasoline companies 4,822 4,362 4,365 4,080 4,280 4,486 4,567 4,668 4,728 21 Pools of securitized assets 45,637 63,595 74,243 70,890 69,919 69,054 70,842 69,935 71,562 22 Other 233,178 230,957 229,031 226,955r 227,807 222,352 222,491 221,899 223,073 23 Commercial banks 88,789 90,042 89,544 90,398 91,595 89,844 90,770 90,235 91,412 24 Finance companies 58,213 58,522 59,522 58,346 58,546 55,433 55,737 56,259 56,616 25 Retailers 5,016 5,120 5,450 5,349 5,380 5,427 5,485 5,538 5,589 26 Pools of securitized assets 8,773 11,052 12,281 10,957r 11,170 11,171 10,954 10,790 10,394 1. The Board's series on amounts of credit covers most short- and 2. Outstanding balances of pools upon which securities have been issued; these intermediate-term credit extended to individuals that is scheduled to be repaid (or balances are no longer carried on the balance sheets of the loan originator. has the 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 1993 IItteemm 11999900 11999911 11999922 Feb. Mar. Apr. May June July Aug. INTEREST RATES Commercial banks2 1 48-month new car 11.78 11.14 9.29 8.57 n.a. n.a. 8.17 n.a. n.a. 7.98 2 24-month personal 15.46 15.18 14.04 13.57 n.a. n.a. 13.63 n.a. n.a. 13.45 3 120-month mobile home 14.02 13.70 12.67 12.38 n.a. n.a. 12.00 n.a. n.a. 11.53 4 Credit card 18.17 18.23 17.78 17.26 n.a. n.a. 17.15 n.a. n.a. 16.59 Auto finance companies 5 New car 12.54 12.41 9.93 10.32 9.95 9.61 9.51 9.45 99..3377 99..2211 6 Used car 15.99 15.60 13.80 13.90 13.21 12.74 12.61 12.55 12.46 12.48 OTHER TERMS3 Maturity (months) 7 New car 54.6 55.1 54.0 54.3 54.6 54.5 54.4 54.6 54.7 54.9 8 Used car 46.0 47.2 47.9 49.0 49.0 48.9 48.9 49.0 49.0 49.0 Loan-to-value ratio 9 New car 87 88 89 91 90 90 91 91 91 91 10 Used car 95 % 97 98 98 98 98 98 98 99 Amount financed (dollars) 11 New car 12,071 12,494 13,584 13,849 14,013 14,021 14,146 14,296 14,430 14,324 12 Used car 8,289 8,884 9,119 9,457 9,641 9,731 9,829 9,912 9,996 10,054 1. The Board's series on amounts of credit covers most short- and intermedi- 2. Data are available for only the second month of each quarter, ate-term credit extended to individuals that is scheduled to be repaid (or has the 3. At auto finance companies, option of repayment) in two or more installments. Data in this table also appear in the Board's G.19 (421) monthly statistical release. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic NonfinancialS tatistics • December 1993 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1 Billions of dollars; quarterly data at seasonally adjusted annual rates 1991 1992 1993 Transaction rateonrv nr sertnr 11998888 11998899 Q4 Q1 Q2 Q3 Q4 Ql Q2 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors .. 752.6 723.0 631.0 475.5 581.5 411.4 603.0 584.6 611.3 526.9 400.2 667.2 By sector and instrument 2 U.S. government 155.1 146.4 246.9 278.2 304.0 272.5 323.8 352.9 299.1 240.1 229.6 348.2 3 Treasury securities 137.7 144.7 238.7 292.0 303.8 268.7 335.0 352.5 290.1 237.4 226.4 344.1 4 Agency issues and mortgages 17.4 1.6 8.2 -13.8 .2 3.8 -11.2 .4 9.0 2.7 3.2 4.1 5 Private 597.5 576.6 384.1 197.3 277.5 138.9 279.2 231.8 312.1 286.8 170.7 319.0 By instrument 6 Tax-exempt obligations 53.7 65.3 57.3 69.6 65.7 77.6 68.0 76.6 75.8 42.4 62.1 60.7 7 Corporate bonds 103.1 73.8 47.1 78.8 67.3 60.2 76.3 77.8 61.3 53.7 75.0 65.0 8 Mortgages 279.6 269.1 188.7 165.1 120.0 145.2 183.2 71.0 135.0 90.9 95.8 118.7 9 Home mortgages 219.6 212.5 177.2 166.0 176.0 176.5 216.5 111.6 203.3 172.7 126.2 155.4 10 Multifamily residential 16.1 12.0 3.4 -2.5 -11.1 .2 11.6 -16.3 -11.1 -28.5 -5.6 -10.6 11 Commercial 48.5 47.3 8.9 .9 -45.5 -28.6 -46.9 -24.6 -57.6 -53.0 -26.0 -26.2 12 Farm -4.6 -2.7 -.8 .7 .6 -2.9 2.0 .4 .4 -.3 1.1 .1 13 Consumer credit 50.1 49.5 13.4 -13.1 9.3 -10.7 -9.8 -14.7 13.5 48.2 20.0 30.7 14 Bank loans n.e.c 44.7 36.4 4.2 -46.8 -4.7 -53.7 -43.6 27.3 -24.3 22.0 -36.1 35.9 15 Commercial paper 11.9 21.4 9.7 -18.4 8.6 -5.0 2.5 -2.6 9.3 25.4 -24.2 34.8 16 Other loans 54.3 61.0 63.6 -37.8 11.2 -74.9 2.6 -3.5 41.5 4.2 -21.9 -26.9 By borrowing sector 17 Household 300.1 276.7 207.7 168.4 215.9 193.8 202.9 176.1 217.6 267.0 139.7 216.8 18 Nonfinancial business 248.4 236.3 121.9 -33.4 2.2 -129.0 14.2 -11.2 21.1 -15.3 -39.9 39.5 19 Farm -10.0 .5 1.8 2.4 .6 -4.6 2.1 3.2 -.5 -2.5 -1.5 3.3 20 Nonfarm noncorporate 57.2 49.4 19.4 -24.5 -39.5 -57.9 -21.7 -47.7 -37.5 -50.9 -28.8 -36.6 21 Corporate 201.3 186.5 100.7 -11.3 41.0 -66.5 33.7 33.3 59.1 38.0 -9.6 72.8 22 State and local government 48.9 63.5 54.5 62.3 59.4 74.0 62.1 66.9 73.5 35.1 70.9 62.7 23 Foreign net borrowing in United States 6.4 10.2 23.9 13.9 24.2 34.3 1.9 57.7 37.8 -.6 50.3 26.9 24 Bonds 6.9 4.9 21.4 14.1 17.3 18.5 4.9 21.9 20.3 22.2 75.6 30.4 23 Bank loans n.e.c -1.8 -.1 -2.9 3.1 2.3 6.5 1.5 14.1 3.9 -10.3 1.6 6.3 26 Open market paper 8.7 13.1 12.3 6.4 5.2 14.9 -8.0 27.8 13.1 -12.1 -21.7 -.6 27 U.S. government loans -7.5 -7.6 -7.0 -9.8 -.6 -5.6 3.6 -6.1 .5 -.4 -5.3 -9.2 28 Total domestic plus foreign 759.0 733.1 654.9 489.4 605.7 445.6 604.9 642.3 649.1 526.3 450.5 694.1 Financial sectors 29 Total net borrowing by financial sectors 239.9 213.7 193.5 150.4 209.8 190.5 167.6 204.6 294.8 172.2 148.7 121.2 By instrument 30 U.S. government-related 119.8 149.5 167.4 145.7 155.8 150.4 126.8 195.2 169.3 131.8 165.8 62.6 31 Government-sponsored enterprises securities 44.9 25.2 17.1 9.2 40.3 32.6 11.5 48.3 67.7 33.6 32.2 68.7 32 Mortgage pool securities 74.9 124.3 150.3 136.6 115.6 117.9 115.3 146.9 101.6 98.4 133.6 -6.1 33 Loans from U.S. government .0 .0 -.1 .0 .0 -.1 .0 .0 .0 -.1 .0 .0 34 Private 120.1 64.2 26.1 4.6 54.0 40.1 40.8 9.4 125.5 40.4 -17.1 58.6 35 Corporate bonds 49.0 37.3 40.8 56.8 58.7 73.7 28.6 59.1 73.0 74.2 60.1 53.6 36 Mortgages .3 .5 .4 .8 .0 1.2 -.4 -1.5 .0 2.0 .9 .2 37 Bank loans n.e.c -3.8 6.0 1.1 17.1 -4.8 3.8 22.0 -39.1 16.9 -19.2 -21.2 -10.6 38 Open market paper 54.8 31.3 8.6 -32.0 -.7 -9.9 1.1 -14.8 17.5 -6.5 -75.5 -18.1 39 Loans from Federal Home Loan Banks 19.7 -11.0 -24.7 -38.0 .8 -28.6 -10.4 5.8 18.1 -10.1 18.6 33.5 By borrowing sector 40 Government sponsored enterprises 44.9 25.2 17.0 9.1 40.2 32.5 11.5 48.3 67.7 33.5 32.2 68.7 41 Federally related mortgage pools 74.9 124.3 150.3 136.6 115.6 117.9 115.3 146.9 101.6 98.4 133.6 -6.1 42 Private 120.1 64.2 26.1 4.6 54.0 40.1 40.8 9.4 125.5 40.4 -17.1 58.6 43 Commercial banks -3.0 -1.4 -.7 -11.7 8.8 -9.5 3.2 5.5 12.1 14.5 5.4 10.4 44 Bank affiliates 5.2 6.2 -27.7 -2.5 2.3 7.0 10.9 -9.2 6.6 .8 21.1 10.8 45 Funding corporations 39.1 13.8 12.5 -13.6 2.1 -14.0 16.1 28.6 -5.7 -30.5 -54.2 -5.7 46 Savings institutions 21.7 -15.1 -30.2 -44.5 -6.7 -34.0 -18.3 -5.4 11.2 -14.4 7.9 18.3 47 Credit unions .0 .0 .0 .0 .0 .0 .0 .0 .0 .1 .0 .3 48 Life insurance companies .0 .0 .0 .0 .0 .0 .0 .0 .2 -.2 .1 .6 49 Finance companies 23.9 27.4 24.0 18.6 -3.6 39.0 -35.6 -20.1 21.2 19.9 -33.1 -41.4 50 Mortgage companies -6.2 3.0 -4.0 5.7 .1 1.9 27.5 -35.3 14.4 -6.4 -10.4 10.3 51 Real estate investment trusts (REITs) 1.8 1.3 1.0 1.6 .1 3.3 1.7 .3 .9 -2.7 -1.4 .7 52 Securitized credit obligation (SCO) issuers 37.6 28.9 51.1 51.0 51.0 46.5 35.3 45.0 64.4 59.2 47.5 54.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A41 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1—Continued 1991 1992 1993 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998888 11998899 11999900 11999911 11999922 Q4 Ql Q2 Q3 Q4 Ql Q2 All sectors 5533 TToottaall nneett bboorrrroowwiinngg,, aallll sseeccttoorrss 998.8 946.8 848.4 639.8 815.5 636.2 772.5 847.0 943.9 698.5 599.2 815.2 5544 UU..SS.. ggoovveerrnnmmeenntt sseeccuurriittiieess 274.9 295.8 414.4 424.0 459.8 423.0 450.6 548.1 468.5 372.0 395.3 410.8 5555 TTaaxx--eexxeemmpptt sseeccuurriittiieess 53.7 65.3 57.3 69.6 65.7 77.6 68.0 76.6 75.8 42.4 62.1 60.7 5566 CCoorrppoorraattee aanndd ffoorreeiiggnn bboonnddss 159.0 116.0 109.2 149.6 143.3 152.4 109.8 158.8 154.6 150.1 210.8 149.0 5577 MMoorrttggaaggeess 280.0 269.6 189.1 165.8 120.1 146.5 182.8 69.5 135.0 93.0 96.7 118.9 5588 CCoonnssuummeerr ccrreeddiitt 50.1 49.5 13.4 -13.1 9.3 -10.7 -9.8 -14.7 13.5 48.2 20.0 30.7 5599 BBaannkk llooaannss nn..ee..cc 39.2 42.3 2.4 -26.6 -7.2 -43.4 -20.2 2.3 -3.4 -7.5 -55.7 31.6 6600 OOppeenn mmaarrkkeett ppaappeerr 75.4 65.9 30.7 -44.0 13.1 .0 -4.5 10.3 39.9 6.8 -121.4 16.1 6611 OOtthheerr llooaannss 66.6 42.4 31.8 -85.6 11.4 -109.3 -4.2 -3.8 60.0 -6.5 -8.7 -2.6 External corporate equity funds raised in United States 62 Total net share issues -98.6 -59.6 22.2 210.6 293.5 290.6 271.6 306.1 283.3 313.1 332.3 469.8 63 Mutual funds 6.1 38.5 67.9 150.5 215.4 208.9 174.4 240.7 223.3 223.0 263.8 357.5 64 All other -104.7 -98.1 -45.7 60.1 78.2 81.7 97.2 65.3 60.0 90.1 68.5 112.3 65 Nonfinancial corporations -129.5 -124.2 -63.0 18.3 26.8 48.0 46.0 36.0 11.0 14.0 27.0 32.0 66 Financial corporations 23.9 8.8 9.9 11.2 20.8 10.0 22.1 18.2 14.2 28.6 9.5 30.0 67 Foreign shares purchased in United States .9 17.2 7.4 30.7 30.6 23.7 29.1 11.2 34.8 47.5 31.9 50.3 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

A42 Domestic NonfinancialS tatistics • December 1993 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 1991 1992 1993 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998888 11998899 11999900 11999911 11999922 Q4 Ql Q2 Q3 Q4 Ql Q2 NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 998.8 946.8 848.4 639.8 815.5 636.2 772.5 847.0 943.9 698.5 599.2 815.2 2 Private domestic nonfinancial sectors 196.1 122.6 162.8 -16.1 69.1 -70.7 136.6 93.4 -43.4 89.9 -174.4 -83.5 3 Households 170.3 78.6 140.1 -49.7 40.2 -123.3 119.3 52.1 -80.7 70.2 -144.7 -93.7 4 Nonfarm noncorporate business 3.1 -.7 -1.7 -4.2 -2.4 -2.6 -3.9 -2.7 -2.0 -1.0 -3.7 -3.0 5 Nonfinancial corporate business 5.7 13.6 -5.3 4.3 36.3 11.0 25.1 36.8 46.5 36.9 -18.5 5.1 6 State and local governments 17.1 31.1 29.6 33.5 -5.0 44.2 -3.9 7.2 -7.1 -16.3 -7.5 8.1 7 U.S. government -10.6 -3.1 33.7 10.5 -11.9 -20.0 15.2 -23.0 -26.7 -13.1 -24.1 -27.8 8 Foreign 108.6 84.4 82.1 25.6 100.0 41.3 94.4 138.9 79.3 87.6 74.6 92.4 9 Financial sectors 704.8 742.9 569.9 619.8 658.2 685.6 526.3 637.7 934.7 534.2 723.1 834.2 10 Government sponsored enterprises 33.2 -4.1 16.4 14.2 68.7 24.9 92.7 38.6 73.0 70.5 15.8 144.1 11 Federally related mortgage pools 74.9 124.3 150.3 136.6 115.6 117.9 115.3 146.9 101.6 98.4 133.6 -6.1 12 Monetary authority 10.5 -7.3 8.1 31.1 27.9 16.9 28.5 19.0 15.7 48.3 44.5 32.6 13 Commercial banking 156.5 177.2 125.1 84.3 94.8 120.4 85.1 72.7 148.0 73.3 86.4 147.9 14 U.S. commercial banks 126.4 146.1 94.9 39.2 69.8 56.9 76.3 13.3 123.5 66.0 100.4 142.0 15 Foreign banking offices 29.4 26.7 28.4 48.5 16.5 64.9 -.5 56.7 5.2 4.8 -12.5 3.8 16 Bank holding companies -.1 2.8 -2.8 -1.5 5.6 .0 7.1 -.4 16.4 -.6 -4.3 -.4 17 Banks in U.S. affiliated areas .8 1.6 4.5 -1.9 2.9 -1.5 2.2 3.2 3.0 3.0 2.9 2.6 18 Private nonbank finance 429.7 452.9 270.0 353.7 351.3 405.5 204.8 360.5 596.3 243.7 442.8 515.5 19 Thrift institutions 114.8 -86.6 -153.3 -123.0 -59.9 -56.7 -104.6 -76.3 -43.6 -15.2 -27.2 15.0 20 Insurance 199.0 257.4 181.6 234.3 166.1 199.3 96.6 188.3 221.7 157.8 295.7 166.8 21 Life insurance companies 104.0 101.8 94.4 83.2 82.4 24.6 73.7 66.9 85.1 103.7 122.1 119.5 22 Other insurance companies 29.2 29.7 26.5 32.3 12.7 28.9 28.8 16.4 -2.8 8.3 8.9 10.6 23 Private pension funds 29.2 81.1 17.2 85.3 38.9 135.0 -33.8 77.0 103.9 8.4 122.3 -9.1 24 State and local government retirement funds 36.6 44.7 43.5 33.5 32.2 10.8 27.8 28.0 35.6 37.4 42.4 45.9 25 Finance n.e.c 115.9 282.2 241.7 242.3 245.2 263.0 212.8 248.5 418.2 101.1 174.3 333.8 26 Finance companies 38.1 32.0 28.4 -12.1 1.7 -28.0 -5.3 -16.0 4.0 24.0 -34.0 -22.8 27 Mortgage companies -7.4 6.1 -8.0 11.4 .1 3.9 23.0 -38.5 28.9 -12.8 -20.9 21.0 28 Mutual funds 11.9 23.8 41.4 90.3 132.3 137.9 95.1 171.1 138.6 124.5 156.8 191.2 29 Closed-end funds 19.8 6.3 .0 15.2 12.3 13.5 17.9 9.4 8.7 13.1 8.9 13.0 30 Money market funds 10.7 67.1 80.9 30.1 1.3 44.6 19.1 10.0 4.7 -28.4 -65.0 51.8 31 Real estate investment trusts (REITs) .9 .5 -.7 -1.0 .6 -1.9 .3 2.6 -.3 -.1 2.9 .9 32 Brokers and dealers -8.2 96.3 34.9 49.0 40.2 50.5 -2.4 73.0 180.3 -90.2 79.5 14.7 33 Asset-backed securities (ABSs) 35.9 27.7 49.9 49.0 48.6 44.2 33.0 45.2 62.6 53.6 47.0 49.5 34 Bank personal trusts 14.3 22.4 14.8 10.4 8.0 -1.8 32.2 -8.4 -9.3 17.3 -.9 14.4 RELATION OF LIABILITIES TO FINANCIAL ASSETS 35 Net flows through credit markets 998.8 946.8 848.4 639.8 815.5 636.2 772.5 847.0 943.9 698.5 599.2 815.2 Other financial sources 36 Official foreign exchange 4.0 24.8 2.0 -5.9 -1.6 -5.0 3.5 -6.5 -8.5 5.1 3.4 -3.5 37 Treasury currency and special drawing rights .5 4.1 2.5 .0 -1.8 .5 .1 .3 .2 -7.7 .3 .4 38 Life insurance reserves 25.3 28.8 25.7 25.7 28.4 19.2 33.8 22.7 27.3 29.8 51.4 41.0 39 Pension fund reserves 140.1 309.7 158.1 358.8 228.4 419.6 118.0 191.6 301.3 302.9 371.7 196.9 40 Interbank claims 2.9 -16.5 34.2 -3.7 51.8 10.3 32.1 39.4 82.9 52.8 12.7 47.2 41 Deposits at financial institutions 278.6 284.8 98.1 48.2 9.3 48.5 -.7 4.6 175.3 -142.2 -4.6 272.7 42 Checkable deposits and currency 43.2 6.1 44.2 75.8 122.7 102.8 86.4 108.2 201.2 95.1 30.1 233.7 43 Small time and savings deposits 121.6 100.4 59.0 16.7 -60.8 8.7 -40.1 -81.8 -83.6 -37.7 -157.8 -27.6 44 Large time deposits 53.1 13.9 -65.7 -60.8 -80.0 -108.8 -72.9 -109.9 -52.9 -84.2 -.6 -19.8 45 Money market fund shares 21.9 90.1 70.3 41.2 3.9 30.5 44.4 27.5 -22.0 -34.1 -37.7 66.8 46 Security repurchase agreements 23.7 77.8 -24.2 -16.5 33.6 23.8 8.1 103.7 89.6 -67.1 180.3 17.2 47 Foreign deposits 15.2 -3.6 14.6 -8.2 -10.2 -8.4 -26.6 -43.2 43.0 -14.2 -18.8 2.4 48 Mutual fund shares 6.1 38.5 67.9 150.5 215.4 208.9 174.4 240.7 223.3 223.0 263.8 357.5 49 Corporate equities -104.7 -98.1 -45.7 60.1 78.2 81.7 97.2 65.3 60.0 90.1 68.5 112.3 50 Security credit 3.0 15.6 3.5 51.4 4.2 118.0 -66.7 -4.9 82.8 5.5 39.7 37.4 51 Trade debt 89.6 59.4 32.1 -2.2 57.9 -16.3 79.8 56.5 57.8 37.5 28.6 42.5 52 Taxes payable 5.3 2.0 -4.5 -8.5 7.7 -3.3 8.5 6.1 6.5 9.9 9.7 6.6 53 Noncorporate proprietors' equity -24.0 -31.1 -35.5 -12.5 -13.3 12.9 -21.9 7.1 -39.6 1.3 -15.9 -7.3 54 Investment in bank personal trusts 7.2 23.1 21.5 29.8 -7.5 10.8 40.2 20.2 -55.4 -35.2 -10.1 35.8 55 Miscellaneous 199.2 292.1 98.2 169.9 203.9 256.4 103.2 284.8 214.4 213.3 255.9 332.1 56 Total financial sources 1,632.0 1,883.8 1,306.5 1,501.3 1,676.4 1,798.4 1,374.0 1,774.9 2,072.2 1,484.7 1,674.2 2,286.7 Floats not included in assets (-) 57 U.S. government checkable deposits 1.6 8.4 3.3 -13.1 .7 -88.2 11.3 -9.5 4.4 -3.6 .1 6.1 58 Other checkable deposits .8 -3.2 2.5 2.0 1.6 -5.5 13.8 2.0 -11.7 2.3 -21.8 -11.4 59 Trade credit -6.2 -1.9 2.5 8.1 21.7 -14.1 25.0 11.3 44.6 5.7 -11.8 -2.1 Liabilities not identified as assets (-) 60 Treasury currency -.1 -.2 .2 -.6 -.2 -.1 -.4 -.1 -.3 -.1 -.1 -.2 61 Interbank claims -3.0 -4.4 1.6 26.2 -4.0 16.6 8.2 -18.2 -5.3 -.6 9.3 -2.3 62 Security repurchase agreements -29.6 32.4 -31.5 5.2 31.1 66.7 -26.7 84.1 45.5 21.4 136.6 2.2 63 Taxes payable 6.3 2.3 .5 .4 6.7 .5 -7.6 7.0 23.8 3.7 -11.1 24.4 64 Miscellaneous 47.3 -77.8 -23.6 -32.1 -15.2 -7.6 -60.3 -51.2 10.7 40.0 39.9 -59.2 65 Total identified to sectors as assets 1,614.8 1,928.2 1,351.0 1,505.2 1,634.2 1,830.2 1,410.7 1,749.5 1,960.5 1,416.0 1,533.2 2,329.2 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 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

Flow of Funds A43 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 1991 1992 1993 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998899 11999900 11999911 11999922 Q4 Ql Q2 Q3 Q4 Ql Q2 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 10,054.3 10,692.0 11,160.6 11,742.1 11,160.6 11,285.2 11,422.7 11,576.1 11,742.1 11,817.8 11,973.8 By lending sector and instrument 2 U.S. government 2,251.2 2,498.1 2,776.4 3,080.3 2,776.4 2,859.7 2.923.3 2,998.9 3,080.3 3,140.2 3,201.2 3 Treasury securities 2,227.0 2,465.8 2,757.8 3,061.6 2,757.8 2,844.0 2.907.4 2,980.7 3,061.6 3,120.6 3,180.6 4 Agency issues and mortgages 24.2 32.4 18.6 18.8 18.6 15.8 15.9 18.1 18.8 19.6 20.6 5 Private 7,803.1 8,193.9 8,384.3 8,661.8 8,384.3 8,425.5 8,499.4 8,577.2 8,661.8 8,677.6 8,772.6 By instrument 6 Tax-exempt obligations 1.004.7 1,062.1 1,131.6 1,197.3 1,131.6 1,145.5 1,163.7 1,186.4 1,197.3 1,209.9 1.224.0 7 Corporate bonds 961.1 1,008.2 1,086.9 1,154.2 1,086.9 1,106.0 1.125.4 1,140.8 1,154.2 1.173.0 1,189.2 8 Mortgages 3.512.8 3,715.4 3,880.4 4,000.4 3,880.4 3,917.2 3,940.9 3,979.0 4,000.4 4,015.4 4,051.2 9 Home mortgages 2,380.5 2,580.6 2,746.6 2,922.6 2,746.6 2,791.7 2.825.5 2,880.7 2,922.6 2.945.1 2.990.1 10 Multifamily residential 304.3 305.5 303.0 291.9 303.0 305.9 301.8 299.0 291.9 290.5 287.8 11 Commercial 747.6 750.8 751.7 706.2 751.7 740.0 733.8 719.4 706.2 699.7 693.2 12 Farm 80.5 78.4 79.1 79.8 79.1 79.6 79.7 79.8 79.8 80.0 80.1 13 Consumer credit 799.5 813.0 799.9 809.2 799.9 777.6 776.9 784.5 809.2 793.9 804.5 14 Bank loans n.e.c 750.8 747.8 701.0 696.3 701.0 686.3 694.7 686.8 696.3 683.9 693.8 15 Commercial paper 107.1 116.9 98.5 107.1 98.5 110.4 112.0 108.2 107.1 114.6 125.0 16 Other loans 667.0 730.6 685.9 697.1 685.9 682.4 685.8 691.6 697.1 686.9 684.9 By borrowing sector 17 Household 3,371.4 3,594.8 3,762.7 3,976.0 3,762.7 3,782.6 3.836.6 3,898.7 3,976.0 3,979.4 4.043.2 18 Nonfinancial business 3,615.7 3.728.5 3,688.7 3,693.5 3,688.7 3,697.6 3,701.8 3,695.5 3,693.5 3,691.2 3,707.8 19 Farm 134.4 134.9 134.8 135.4 134.8 133.1 136.4 137.1 135.4 132.8 136.0 20 Nonfarm noncorporate 1.199.6 1,219.0 1,192.3 1,152.9 1,192.3 1,186.1 1.175.7 1,163.4 1,152.9 1,144.6 1.137.3 21 Corporate 2.281.7 2.374.6 2,361.6 2,405.3 2,361.6 2,378.5 2,389.7 2,394.9 2,405.3 2,413.9 2.434.5 22 State and local government 816.1 870.5 932.8 992.2 932.8 945.3 961.0 983.1 992.2 1,007.0 1.021.6 23 Foreign credit market debt held in United States 261.2 285.1 298.9 313.8 298.9 288.7 304.7 312.9 313.8 324.8 333.2 24 Bonds 94.1 115.4 129.5 146.9 129.5 130.8 136.2 141.3 146.9 165.8 173.4 25 Bank loans n.e.c 21.4 18.5 21.6 23.9 21.6 22.0 25.5 26.5 23.9 24.3 25.9 26 Open market paper 63.0 75.3 81.8 77.7 81.8 70.5 77.4 80.7 77.7 72.3 72.1 27 U.S. government loans 82.7 75.8 66.0 65.4 66.0 65.5 65.6 64.4 65.4 62.5 61.8 28 Total credit market debt owed by nonfinancial sectors, domestic and foreign 10,315.5 10,977.1 11,459.5 12,055.9 11,459.5 11,573.9 11,727.4 11,889.0 12,055.9 12,142.6 12,307.0 Financial sectors 29 Total credit market debt owed by financial sectors 2,362.7 2,559.4 2,709.7 2,928.8 2,709.7 2,751.2 2,805.3 2,877.1 2,928.8 2,962.1 2,995.5 By instrument 30 U.S. government-related 1,247.8 1,418.4 1,564.2 1,720.0 1,564.2 1,590.3 1,641.6 1,683.5 1,720.0 1,755.8 1,774.4 31 Government-sponsored enterprises securities 373.3 393.7 402.9 443.1 402.9 405.7 417.8 434.7 443.1 451.2 468.3 32 Mortgage pool securities 869.5 1,019.9 1,156.5 1,272.0 1,156.5 1,179.8 1,219.0 1,244.0 1,272.0 1,299.8 1,301.3 33 Loans from U.S. government 5.0 4.9 4.8 4.8 4.8 4.8 4.8 4.8 4.8 4.8 4.8 34 Private 1,114.8 1,140.9 1,145.6 1,208.9 1,145.6 1,160.9 1,163.7 1,193.6 1,208.9 1,206.3 1,221.0 35 Corporate bonds 509.1 549.9 606.6 665.4 606.6 613.8 628.6 646.8 665.4 680.4 693.8 36 Mortgages 4.0 4.3 5.1 5.1 5.1 5.0 4.6 4.6 5.1 5.4 5.4 37 Bank loans n.e.c 50.9 52.0 69.1 64.2 69.1 72.7 63.1 67.3 64.2 56.9 54.6 38 Open market paper 409.1 417.7 385.7 394.3 385.7 393.2 390.5 394.6 394.3 378.7 375.2 39 Loans from Federal Home Loan Banks 141.8 117.1 79.1 79.9 79.1 76.3 76.9 80.2 79.9 85.0 92.1 By borrowing sector 40 Government-sponsored enterprises 378.3 398.5 407.7 447.9 407.7 410.5 422.6 439.5 447.9 456.0 473.1 41 Federally related mortgage pools 869.5 1,019.9 1,156.5 1,272.0 1,156.5 1,179.8 1,219.0 1,244.0 1,272.0 1,299.8 1,301.3 42 Private financial sectors 1,114.8 1,140.9 1,145.6 1,208.9 1,145.6 1,160.9 1,163.7 1,193.6 1,208.9 1,206.3 1,221.0 43 Commercial banks 77.4 76.7 65.0 73.8 65.0 63.8 66.2 69.0 73.8 73.1 76.7 44 Bank affiliates 142.5 114.8 112.3 114.6 112.3 115.0 112.7 114.4 114.6 119.9 122.6 45 Funding corporations 125.4 137.9 124.3 135.7 124.3 137.6 144.8 143.3 135.7 127.6 126.1 46 Savings institutions 169.2 139.1 94.6 87.8 94.6 89.8 87.6 89.2 87.8 90.3 93.6 47 Credit unions .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .1 48 Life insurance companies .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .2 4 5 9 0 Mo F r i t n g a a n g c e e c c o o m m p p a a n n ie ie s s 35 1 0 1 . . 4 3 37 7 4 . . 3 4 39 1 3 3 . . 0 0 38 1 9 3 . . 4 0 39 1 3 3 . . 0 0 38 1 2 9 . . 2 8 37 1 7 1 . . 4 0 38 1 2 4 . . 7 6 38 1 9 3 . . 4 0 37 1 9 0 . . 1 4 36 1 9 3 . . 1 0 51 Real estate investment trusts (REITs).. 11.4 12.4 14.0 14.1 14.0 14.4 14.5 14.8 14.1 13.7 13.9 52 Securitized credit obligation (SCO) issue 227.3 278.3 329.4 380.4 329.4 338.2 349.5 365.6 380.4 392.2 405.8 All sectors 53 Total credit market debt, domestic and foreign. 12,678.2 13,536.5 14,169.3 14,984.7 14,169.3 14,325.1 14,532.7 14,766.1 14,984.7 15,104.7 15,302.5 54 U.S. government securities 3,494.1 3,911.7 4,335.7 4,795.5 4,335.7 4,445.2 4,560.1 4,677.6 4,795.5 4,891.2 4,970.9 55 Tax-exempt securities 1,004.7 1,062.1 1,131.6 1,197.3 1,131.6 1,145.5 1,163.7 1,186.4 1,197.3 1,209.9 1,224.0 56 Corporate and foreign bonds 1,564.3 1,673.5 1,823.1 1,966.4 1,823.1 1,850.5 1,890.2 1,928.9 1,966.4 2,019.1 2,056.4 57 Mortgages 3,516.8 3,719.7 3,885.5 4,005.6 3,885.5 3,922.2 3,945.5 3,983.6 4,005.6 4,020.7 4,056.6 58 Consumer credit 799.5 813.0 799.9 809.2 799.9 777.6 776.9 784.5 809.2 793.9 804.5 59 Bank loans n.e.c 823.0 818.3 791.7 784.5 791.7 780.9 783.3 780.6 784.5 765.2 774.3 60 Open market paper 579.2 609.9 565.9 579.0 565.9 574.1 579.9 583.6 579.0 565.5 572.3 61 Other loans 896.5 928.4 835.8 847.2 835.8 829.0 833.0 841.0 847.2 839.2 843.6 Digitized for FRASER 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical http://fraser.sretlleoasuei, sfteabdle.so rLg.2/ through L.4. For ordering address, see inside front cover. Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • December 1993 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1 Billions of dollars except as noted, end of period 1991 1992 1993 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998899 11999900 11999911 11999922 Q4 QL Q2 Q3 Q4 QL Q2 CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 12,678.2 13,536.5 14,169.3 14,984.7 14,169.3 14,325.1 14,532.7 14,766.1 14,984.7 15,104.7 15,302.5 2 Private domestic nonfinancial sectors 2,096.4 2,246.8 2,205.8 2,280.8 2,205.8 2,211.7 2,219.0 2,212.2 2,280.8 2,228.3 2,189.6 3 Households 1,326.8 1,454.6 1,380.0 1,426.1 1,380.0 1,389.1 1,381.1 1,371.7 1,426.1 1,389.6 1,342.3 4 Nonfarm noncorporate business 56.5 54.9 50.7 48.3 50.7 49.3 48.7 48.1 48.3 47.0 46.3 5 Nonfinancial corporate business 181.2 175.8 180.1 216.4 180.1 180.0 192.6 199.5 216.4 204.5 209.8 6 State and local governments 531.9 561.5 595.1 590.0 595.1 593.3 596.6 592.9 590.0 587.3 591.1 7 U.S. government 205.4 239.1 247.0 235.1 247.0 251.2 246.3 239.2 235.1 229.5 223.4 8 Foreign 778.7 897.5 936.2 1,030.4 936.2 959.8 994.5 1,014.3 1,030.4 1,040.5 1,063.6 9 Financial sectors 9,597.7 10,153.1 10,780.3 11,438.5 10,780.3 10,902.4 11,072.9 11,300.3 11,438.5 11,606.5 11,825.9 10 Government-sponsored enterprises 355.4 371.8 397.7 466.4 397.7 419.9 429.0 446.3 466.4 464.1 499.2 11 Federally related mortgage pools 869.5 1,019.9 1,156.5 1,272.0 1,156.5 1,179.8 1,219.0 1,244.0 1,272.0 1,299.8 1,301.3 12 Monetary authority 233.3 241.4 272.5 300.4 272.5 271.8 282.6 285.2 300.4 303.6 318.2 13 Commercial banking 2,647.4 2,772.5 2,856.8 2,951.6 2,856.8 2,864.5 2,887.6 2,928.2 2,951.6 2,960.9 3,001.8 14 U.S. commercial banks 2,371.9 2,466.7 2,506.0 2,575.7 2,506.0 2,517.3 2,525.2 2,560.0 2,575.7 2,594.6 2,633.8 15 Foreign banking offices 242.3 270.8 319.2 335.8 319.2 313.3 328.2 328.9 335.8 326.7 328.2 16 Bank holding companies 16.2 13.4 11.9 17.5 11.9 13.6 13.1 17.5 17.5 16.4 15.9 17 Banks in U.S. affiliated areas 17.1 21.6 19.7 22.5 19.7 20.2 21.0 21.8 22.5 23.3 23.9 18 Private nonbank finance 5,491.9 5,747.4 6,096.7 6,448.1 6,096.7 6,166.5 6,254.8 6,396.6 6,448.1 6,578.0 6,705.4 19 Thrift institutions 1,475.4 1,324.6 1,197.3 1,137.3 1,197.3 1,168.6 1,150.5 1,141.3 1,137.3 1,127.9 1,132.7 20 Insurance 2,320.7 2,473.7 2,708.0 2,874.1 2,708.0 2,736.4 2,788.0 2,843.3 2,874.1 2,953.0 2,999.9 21 Life insurance companies 1,022.0 1,116.5 1,199.6 1,282.0 1,199.6 1,222.3 1,243.6 1,264.7 1,282.0 1,317.3 1,352.3 22 Other insurance companies 317.5 344.0 376.3 389.0 376.3 383.5 387.6 386.9 389.0 391.2 393.8 23 Private pension funds 590.2 607.4 692.7 731.5 692.7 684.2 703.4 729.4 731.5 762.3 760.0 24 State and local government retirement funds... 390.9 405.9 439.4 471.6 439.4 446.3 453.3 462.2 471.6 482.2 493.7 25 Finance n.e.c 1,695.9 1,949.1 2,191.5 2,436.6 2,191.5 2,261.5 2,316.2 2,412.0 2,436.6 2,497.1 2,572.8 26 Finance companies 468.6 497.0 484.9 486.6 484.9 479.5 480.5 477.8 486.6 473.7 473.5 27 Mortgage companies 22.6 14.6 25.9 26.1 25.9 31.7 22.1 29.3 26.1 20.8 26.1 28 Mutual funds 307.2 360.2 450.5 582.8 450.5 478.8 522.0 557.5 582.8 626.6 674.7 29 Closed-end funds 37.1 37.1 52.4 64.6 52.4 56.8 59.2 61.3 64.6 66.9 70.1 30 Money market funds 291.8 372.7 402.7 404.1 402.7 424.0 413.5 408.8 404.1 404.5 404.0 31 Real estate investment trusts (REITs) 8.4 7.7 6.8 7.4 6.8 6.8 7.5 7.4 7.4 8.1 8.3 32 Brokers and dealers 142.9 177.9 226.9 267.1 226.9 226.3 244.6 289.6 267.1 287.0 290.6 33 Asset-backed securities (ABSs) 219.3 269.1 318.1 366.7 318.1 326.3 337.6 353.3 366.7 378.4 390.8 34 Bank personal trusts 198.0 212.9 223.3 231.2 223.3 231.3 229.2 226.9 231.2 231.0 234.6 RELATION OF LIABILITIES TO FINANCIAL ASSETS 35 Total credit market debt 12,678.2 13,536.5 14,169.3 14,984.7 14,169.3 14,325.1 14,532.7 14,766.1 14,984.7 15,104.7 15,302.5 Other liabilities 36 Official foreign exchange 53.6 61.3 55.4 51.8 55.4 52.7 54.4 55.4 51.8 54.5 53.9 37 Treasury currency and special drawing rights certificates 23.8 26.3 26.3 24.5 26.3 26.3 26.4 26.5 24.5 24.6 24.7 38 Life insurance reserves 354.3 380.0 405.7 434.1 405.7 414.2 419.8 426.7 434.1 447.0 457.2 39 Pension fund reserves 3,356.1 3,400.3 4,056.5 4,420.2 4,056.5 4,077.9 4,134.5 4,265.7 4,420.2 4,560.8 4,618.3 40 Interbank claims 32.4 64.0 65.2 116.8 65.2 64.6 70.8 103.7 116.8 111.4 118.2 41 Deposits at financial institutions 4,736.7 4,836.8 4,885.2 4,892.1 4,885.2 4,878.6 4,870.2 4,909.2 4,892.1 4,886.8 4,941.5 42 Checkable deposits and currency 888.6 932.8 1,008.5 1,131.0 1,008.5 984.3 1,032.3 1,071.6 1,131.0 1,093.4 1,170.7 43 Small time and savings deposits 2,277.4 2,336.3 2,353.0 2,292.2 2,353.0 2,351.3 2,325.8 2,303.7 2,292.2 2,261.6 2,249.2 44 Large time deposits 603.4 537.7 476.9 397.2 476.9 459.2 427.5 418.4 397.2 397.7 388.7 45 Money market fund shares 428.1 498.4 539.6 543.6 539.6 572.0 557.2 553.2 543.6 556.6 549.9 46 Security repurchase agreements 396.5 372.3 355.8 389.4 355.8 367.0 393.5 417.6 389.4 443.5 448.2 47 Foreign deposits 142.8 159.4 151.3 138.8 151.3 144.7 133.9 144.6 138.8 134.1 134.7 48 Mutual fund shares 566.2 602.1 813.9 1,050.2 813.9 860.4 928.3 971.2 1,050.2 1,155.7 1,256.5 49 Security credit 133.9 137.4 188.9 217.3 188.9 194.6 193.3 214.5 217.3 225.1 234.5 50 Trade debt 904.2 936.4 926.7 984.7 926.7 938.0 950.0 970.5 984.7 982.6 991.5 51 Taxes payable 81.8 77.4 68.9 76.6 68.9 73.1 70.7 74.5 76.6 81.3 78.6 52 Investment in bank personal trusts 503.2 509.9 596.7 619.1 596.7 612.9 612.7 610.9 619.1 625.0 635.6 53 Miscellaneous 2,591.1 2,732.4 2,884.3 3,052.8 2,884.3 2,891.2 2,951.9 3,023.6 3,052.8 3,086.1 3,145.5 54 Total liabilities 26,015.5 27,300.7 29,143.0 30,924.9 29,143.0 29,409.7 29,815.8 30,418.2 30,924.9 31,345.6 31,858.4 Financial assets not included in liabilities (+) 55 Gold and special drawing rights 21.0 22.0 22.3 19.6 22.3 22.0 22.7 23.2 19.6 19.8 20.0 56 Corporate equities 3,812.9 3,543.7 4,869.4 5,540.6 4,869.4 4,925.6 4,837.0 4,995.4 5,540.6 5,725.7 5,743.8 57 Household equity in noncorporate business 2,508.1 2,440.6 2,344.6 2,269.2 2,344.6 2,353.5 2,337.5 2,316.3 2,269.2 2,239.9 2,248.0 Floats not included in assets (-) 58 U.S. government checkable deposits 6.1 15.0 3.8 6.8 3.8 .9 1.4 4.0 6.8 3.4 3.5 59 Other checkable deposits 26.5 28.9 30.9 32.5 30.9 29.5 32.6 23.3 32.5 22.2 22.1 60 Trade credit -148.6 -146.0 -144.1 -121.8 -144.1 -142.7 -151.1 -144.0 -121.8 -129.5 -141.9 Liabilities not identified as assets (-) 61 Treasury currency -4.3 -4.1 -4.8 -5.0 -4.8 -4.9 -4.9 -5.0 -5.0 -5.0 -5.1 62 Interbank claims -31.0 -32.0 -4.2 -8.4 -4.2 -1.8 -4.0 -4.3 -8.4 -5.2 -4.5 63 Security repurchase agreements 13.7 -17.7 -12.5 18.6 -12.5 -4.8 19.6 33.6 18.6 67.1 71.9 64 Taxes payable 20.6 17.8 15.5 28.5 15.5 10.4 18.9 24.0 28.5 27.9 28.3 65 Miscellaneous -210.7 -213.4 -254.6 -265.7 -254.6 -295.1 -293.7 -279.6 -265.7 -291.7 -295.7 66 Total identified to sectors as assets 32,685.1 33,658.6 36,749.2 39,068.7 36,749.2 37,119.2 37,394.2 38,101.1 39,068.7 39,641.7 40,191.5 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 and L.7. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A45 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, and indexes 1987= 100, except as noted 1993 MMeeaassuurree 11999900 11999911 11999922 Jan. Feb. Mar. Apr. May" June" July" Aug. Sept. 1 Industrial production1 106.0 104.1 106.5 109.3 109.9 110.1 110.4 110.2 110.5 110.7 110.9 111.0 Market groupings ? Products, total 105.5 103.1 105.6 108.5 109.2 109.5 109.6 109.3 109.4 109.8 110099..88 111100..00 3 107.0 105.3 108.2 111.9 112.4 112.7 112.8 112.5 112.7 113.0 113.0 113.3 4 Consumer goods 103.4 102.8 105.2 107.6 108.5 108.6 108.1 107.3 107.3 107.5 107.2 107.2 5 Equipment 112.1 108.9 112.7 118.1 118.0 118.7 119.7 119.9 120.4 120.8 121.3 122.2 6 Intermediate 101.2 96.5 97.6 98.2 99.3 99.6 100.0 99.7 99.4 100.2 100.1 100.0 7 Materials 106.8 105.5 107.9 110.4 110.9 110.9 111.5 111.6 112.1 112.0 112.4 112.5 Industry groupings 8 Manufacturing 106.1 103.7 106.9 109.9 110.5 110.8 111.4 111.3 111.3 111111..55 111111..66 111122..00 9 Capacity utilization, manufacturing (percent) 81.1 77.8 78.8 80.3 80.5 80.6 80.9 80.7 80.6 80.6 80.6 80.8 10 Construction contracts3 95.3 89.7 96. lr 100.0 95.0 94.0 94.0 91.0 104.0 98.0 99.0 101.0 11 Nonagricultural employment, total4 107.3 106.2 106.4 107.1 107.4 107.5 107.7 107.9 108.0 108.2 108.2 108.3 17. Goods-producing, total 101.2 96.6 94.9 93.2 93.5 93.3 93.1 93.2 93.0 93.0 92.8 92.8 13 Manufacturing, total 100.6 97.1 95.8 94.4 94.5 94.4 94.0 93.8 93.5 93.5 93.2 93.1 14 Manufacturing, production workers ... 100.2 96.3 95.3 94.3 94.5 94.4 94.0 93.8 93.5 93.5 93.2 93.1 15 Service-producing 109.8 109.3 110.0 111.6 111.9 112.0 112.4 112.6 112.8 113.1 113.1 113.3 16 Personal income, total 122.9r 127.6r 135.3r 137.4 138.1" 139.1" 141.1" 141.5 141.3 140.9 142.8 n.a. 17 Wages and salary disbursements 121.4r 124.5r 131.5r 131.4r 131.6" 131.6" 135.7" 136.8 136.5 137.2 138.4 n.a. 18 Manufacturing 113.4r 113.7r 117.8r 114.0r 114.5" 114.2" 118.8" 118.4 118.0 118.2 118.7 n.a. 19 Disposable personal income 123.lr 128.6r 136.8r 138.9" 139.6" 140.8" 142.5" 142.8 142.6 142.1 144.1 n.a. 20 Retail sales6 120.2 121.3 127.2 132.0 131.9 130.5 133.0 133.9 134.6 135.2 135.9 136.1 Prices7 71 Consumer (1982-84= 100) 130.7 136.2 140.3 142.6 143.1 143.6 144.0 144.2 144.4 144.4 144.8 114455..11 22 Producer finished goods (1982=100) 119.2 121.7 123.2 124.2 124.5 124.7 125.5" 125.8 125.6 125.3 124.3 123.9 1. A major revision of the industrial production index and the capacity 6. Based on data from U.S. Department of Commerce, Survey of Current utilization rates was released in April 1990. See "Industrial Production: 1989 Business. Developments and Historical Revision," Federal Reserve Bulletin, vol. 76 (April 7. Based on data not seasonally adjusted. Seasonally adjusted data for changes 1990), pp. 187-204. in the price indexes can be obtained from the U.S. Department of Labor, Bureau 2. Ratio of index of production to index of capacity. Based on data from the of Labor Statistics, Monthly Labor Review. Federal Reserve, DRI McGraw-Hill, U.S. Department of Commerce, and other NOTE. Basic data (not indexes) for series mentioned in notes 4, 5,and 6, and sources. indexes for series mentioned in notes 3 and 7 can also be found in the Survey of 3. Index of dollar value of total construction contracts, including residential, Current Business. nonresidential, and heavy engineering, from McGraw-Hill Information Systems Figures for industrial production for the latest month are preliminary, and many Company, F.W. Dodge Division. figures for the three months preceding the latest month have been revised. See 4. Based on data from U.S. Department of Labor, Employment and Earnings. "Recent Developments in Industrial Capacity and Utilization," Federal Reserve Series covers employees only, excluding personnel in the armed forces. Bulletin, vol. 76 (June 1990), pp. 411-35. See also "Industrial Production Capacity 5. Based on data from U.S. Department of Commerce, Survey of Current and Capacity Utilization since 1987," Federal Reserve Bulletin, vol. 79, (June Business. 1993), pp. 590-605. 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data seasonally adjusted except as noted 1993 CCaatteeggoorryy 11999900 11999911 11999922 Feb. Mar. Apr. May June July Aug. Sept. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 189,686 191,329 193,142 194,298 194,456 194,618 194,767 194,933 195,104 195,275 195,453 ? 126,424 126,867 128,548 128,839 128,926 128,833 129,615 129,604 129,541 129,852 129,457 3 Civilian labor force 124,787 125,303 126,982 127,327 127,429 127,341 128,131 128,127 128,070 128,370 127,975 4 Nonagricultural industries 114,728 114,644 114,391 115,335 115,483 115,356 116,203 116,195 116,262 116,729 116,362 5 Agriculture 3,186 3,233 3,207 3,116 3,082 3,060 3,070 3,024 3,039 2,980 3,095 Unemployment Number 6,874 8,426 9,384 8,876 8,864 8,925 8,858 8,908 8,769 88,,666611 88,,551177 7 Rate (percent of civilian labor force) 5.5 6.7 7.4 7.0 7.0 7.0 6.9 7.0 6.8 6.7 6.7 8 Not in labor force 63,262 64,462 64,594 65,459 65,530 65,785 65,152 65,329 65,563 65,423 65,996 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 109,419 108,256 108,519 109,539 109,565 109,820 110,058 110,101" 110,338" 110,297 110,453 10 Manufacturing 19,117 18,455 18,192 17,954 17,935 17,863 17,827 17,771" 17,760" 17,712 17,694 11 Mining 709 689 631 600 600 600 602 596 595" 592 597 1? Contract construction 5,120 4,650 4,471 4,515 4,481 4,517 4,577 4,574" 4,593" 4,591 4,5% 13 Transportation and public utilities 5,793 5,762 5,709 5,725 5,724 5,720 5,719 5,711" 5,709" 5,693 5,705 14 Trade 25,774 25,365 25,391 25,726 25,707 25,758 25,827 25,861" 25,916" 25,903 25,948 15 6,709 6,646 6,571 6,577 6,574 6,585 6,588 6,590" 6,604" 6,601 6,611 16 27,934 28,336 29,053 29,665 29,756 29,977 30,099 30,175" 30,320" 30,370 30,3% 17 Government 18,304 18,402 18,653 18,777 18,788 18,800 18,819 18,823" 18,841 18,835 18,906 1. Persons sixteen years of age and older, including Resident Armed Forces. pay for, the pay period that includes the twelfth day of the month; excludes Monthly figures are based on sample data collected during the calendar week that proprietors, self-employed persons, household and unpaid family workers, and contains the twelfth day; annual data are averages of monthly figures. By members of the armed forces. Data are adjusted to the March 1984 benchmark, definition, seasonality does not exist in 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 1993 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1992 1993 1992 1993 1992 1993 Q4 Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql Q2r Q3 Output (1987=100) Capacity (percent of 1987 output) Capacity utilization rate (percent)2 1 Total industry 108.3 109.7 110.4 110.9 134.2 134.8 135.3 135.9 80.7 81.4 81.6 81.6 2 Manufacturing 108.7 110.4 111.3 111.7 136.6 137.2 137.8 138.5 79.6 80.5 80.8 80.7 3 Primary processing3 104.7 106.4 107.2 107.9 126.6 126.8 127.1 127.4 82.7 83.9 84.3 84.7 4 Advanced processing 110.6 112.3 113.2 113.5 141.3 142.1 142.9 143.7 78.3 79.0 79.2 79.0 5 Durable goods 110.8 113.6 114.8 115.6 142.6 143.4 144.1 144.9 77.7 79.2 79.7 79.8 6 Lumber and products 98.5 99.7 97.3 99.4 112.5 112.6 112.7 112.9 87.6 88.5 86.3 88.0 7 Primary metals 101.5 105.0 104.8 105.9 125.0 124.9 124.9 124.9 81.2 84.1 83.9 84.8 8 Iron and steel 105.0 109.1 109.1 111.1 129.9 129.8 130.0 130.1 80.8 84.1 84.0 85.4 9 Nonferrous 96.7 99.3 98.8 98.6 118.2 118.1 117.9 117.7 81.8 84.1 83.8 83.8 10 Nonelectrical machinery 132.4 137.1 144.2 149.0 162.1 163.7 165.5 167.3 81.7 83.8 87.1 89.1 11 Electrical machinery 124.0 127.1 129.6 132.7 152.6 154.1 155.7 157.3 81.2 82.5 83.2 84.3 12 Motor vehicles and parts 111.4 120.6 117.6 111.6 154.5 155.8 156.8 157.7 72.1 77.4 75.0 70.7 13 Aerospace and miscellaneous transportation equipment . 97.7 95.7 93.2 91.4 135.8 135.7 135.5 135.4 72.0 70.5 68.8 67.5 14 Nondurable goods 106.1 106.5 107.0 107.0 129.1 129.6 130.1 130.6 82.1 82.2 82.3 81.9 15 Textile mill products 105.2 106.2 106.1 107.2 116.7 116.9 117.1 117.3 90.1 90.8 90.6 91.4 16 Paper and products 107.9 110.0 113.1 113.4 122.1 122.5 122.9 123.3 88.4 89.8 92.0 92.0 17 Chemicals and products 116.9 116.9 118.3 118.5 143.5 144.4 145.4 146.3 81.4 80.9 81.4 81.0 18 Plastics materials 106.6 111.7 113.1 128.8 129.5 130.5 82.8 86.2 86.7 19 Petroleum products 104.2 104.2 103.9 103.2 116.2 115.9 115.7 115.4 89.7 89.9 89.8 89.4 20 Mining 97.9 96.5 97.2 97.5 112.0 111.7 111.5 111.3 87.4 86.3 87.2 87.6 21 Utilities 114.7 116.0 113.8 115.7 131.8 132.2 132.5 132.9 87.1 87.8 85.9 87.1 22 Electric 114.3 115.2 114.7 116.6 128.5 129.0 129.4 129.9 89.0 89.3 88.6 89.7 1973 1975 Previous cycle2 Latest cycle3 1992 1993 High Low High Low High Low Sept. Apr. May Juner Julyr Aug.r Sept.p Capacity utilization rate (percent)2 1 Total industry 99.0 82.7 87.3 71.8 84.8 78.3 79.3 81.7 81.5 81.5 81.6 81.6 81.6 2 Manufacturing 99.0 82.7 87.3 70.0 85.1 76.6 78.4 80.9 80.7r 80.6 80.6 80.6 80.8 3 Primary processing3 99.0 82.7 89.7 66.8 89.1 77.9 81.7 84.3 84.2r 84.5 84.6 84.7 84.7 4 Advanced processing4 99.0 82.7 86.3 71.4 83.3 76.1 77.0 79.5 79.3r 78.9 79.0 78.9 79.1 5 Durable goods 99.0 82.7 86.9 65.0 83.9 73.8 76.1 79.9 79.7 79.4 79.7 79.6 80.0 6 Lumber and products 99.0 82.7 87.6 60.9 93.3 76.8 84.3 87.1 86.4r 85.5 87.8 87.6 88.6 7 Primary metals 99.0 82.7 102.4 46.8 92.9 74.3 78.2 83.6 83.5r 84.6 84.5 85.3 84.4 8 Iron and steel 99.0 82.7 110.4 38.3 95.7 72.3 78.3 83.4 83.2 85.3 86.0 85.7 84.4 9 Nonferrous 99.0 82.7 90.5 62.2 88.9 75.9 78.1 83.9 83.9r 83.6 82.2 84.8 84.5 10 Nonelectrical machinery 99.0 82.7 92.1 64.9 83.7 73.0 79.4 86.6 87.lr 87.5 88.7 89.0 89.5 11 Electrical machinery 99.0 82.7 89.4 71.1 84.9 76.8 80.1 83.1 83.3 83.3 84.4 84.3 84.4 12 Motor vehicles and parts 99.0 82.7 93.0 44.5 84.5 57.9 66.8 77.0 75.3 72.7 70.0 69.8 72.4 13 Aerospace and miscellaneous transportation equipment. 99.0 82.7 81.1 66.9 88.3 78.1 72.7 69.5 69.1 67.7 67.8 67.6 67.2 14 Nondurable goods 99.0 82.7 87.0 76.9 86.8 80.4 81.7 82.3 82.2r 82.3 81.9 81.9 81.9 15 Textile mill products 99.0 82.7 91.7 73.8 92.1 78.7 90.1 89.0 91.2 91.4 91.8 91.0 91.5 16 Paper and products 99.0 82.7 94.2 82.0 94.9 86.0 89.9 92.2 91.2r 92.8 91.9 92.2 91.9 17 Chemicals and products 99.0 82.7 85.1 70.1 85.9 78.5 80.6 81.2 81.3 81.7 81.0 81.0 80.9 18 Plastics materials 99.0 82.7 90.9 63.4 97.0 75.5 85.4 87.7 85.7 86.7 85.0 19 Petroleum products 99.0 82.7 89.5 68.2 88.5 84.2 86.8 90.1 89.6 89.9 88.6 88.5 91.1 20 Mining 99.0 82.7 96.6 80.6 87.0 86.8 86.5 86.4 87.2r 87.9 87.3 87.2 88.3 21 Utilities 99.0 82.7 88.3 76.2 92.6 83.4 84.5 86.4 84.6r 86.6 87.5 88.3 85.4 22 Electric 99.0 82.7 88.3 78.7 94.8 87.4 86.6 88.6 88. lr 89.2 90.3 91.3 87.7 1. Data in this table also appear in the Board's G.17 (419) monthly statistical 3. Primary processing includes textiles; lumber; paper; industrial chemicals; release. For ordering address, see inside front cover. For a detailed description of petroleum refining; rubber and plastics; stone, clay, and glass; and primary and the series, see "Recent Developments in Industrial Capacity and Utilization," fabricated metals. Federal Reserve Bulletin, vol. 76 (June 1990), pp. 411-35. See also "Industrial 4. Advanced processing includes food, tobacco, apparel, furniture, printing, Production Capacity and Capacity Utilization Since 1987," Federal Reserve chemical products such as drugs and toiletries, leather and products, machinery, Bulletin, vol. 79, (June 1993), pp. 590-605. transportation equipment, instruments, miscellaneous manufacturing, and ord- 2. Capacity utilization is calculated as the ratio of the Federal Reserve's nance. seasonally adjusted index of industrial production to the corresponding index of 5. Monthly highs, 1978 through 1980; monthly lows, 1982. capacity. 6. Monthly highs, 1988-89; monthly lows, 1990-91. 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 1992 1993 GGrroouupp p p o ro r- - aa 1 vv 9 gg 9 .. 2 tion Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Ma/ Juner Julyr AAuugg..rr SSeepptt..PP Index (1987 = 100) MAJOR MARKETS 111.0 1 Total index 100.0 106.5 106.2 107.5 108.4 108.9 109.3 109.9 110.1 110.4 110.2 110.5 110.7 110.9 ? 60.8 105.6 105.3 107.1 107.8 108.2 108.5 109.2 109.5 109.6 109.3 109.4 109.8 109.8 110.0 Final products 46.0 108.2 108.1 110.1 111.0 111.5 111.9 112.4 112.7 112.8 112.5 112.7 113.0 113.0 113.3 4 Consumer goods, total 26.0 105.2 104.4 106.4 107.1 107.5 107.6 108.5 108.6 108.1 107.3 107.3 107.5 107.2 107.2 Durable consumer goods 5.6 102.5 100.9 104.1 105.7 107.9 110.9 111.3 111.5 112.2 110.8 107.9 109.0 107.7 108.6 6 Automotive products 2.5 99.4 97.3 103.1 104.1 108.7 112.7 111.9 111.2 112.1 109.7 105.3 103.3 102.8 105.8 7 Autos and trucks 1.5 96.9 93.5 101.5 102.9 111.7 116.8 114.6 113.4 114.3 110.1 105.0 100.3 99.2 104.1 8 Autos, consumer .9 79.0 77.9 78.5 79.6 86.9 86.6 90.2 90.5 90.2 86.5 83.5 78.2 71.8 75.4 9 Trucks, consumer .6 127.9 120.4 141.3 143.3 154.6 169.1 156.9 153.1 155.9 150.9 142.3 138.6 146.7 153.9 10 Auto parts and allied goods... 1.0 103.7 103.7 105.9 106.0 103.8 105.8 107.4 107.5 108.5 109.1 105.8 108.4 108.7 108.7 11 Other 3.1 105.2 104.1 104.9 107.1 107.2 109.3 110.7 111.7 112.3 111.8 110.2 114.1 112.0 111.1 1? Appliances, A/C, and TV .8 110.4 112.9 110.8 110.8 110.5 116.0 117.6 125.0 124.3 121.1 116.1 130.4 122.4 118.9 11 Carpeting and furniture .9 99.9 98.2 98.5 103.7 105.4 105.5 106.7 104.5 106.2 108.9 109.1 110.1 109.2 108.6 14 Miscellaneous home goods ... 1.4 105.6 102.9 105.8 107.1 106.6 108.0 109.5 108.9 109.6 108.4 107.6 107.4 107.8 108.2 If Nondurable consumer goods 20.4 105.9 105.3 107.1 107.5 107.4 106.7 107.7 107.7 106.9 106.3 107.2 107.1 107.1 106.8 16 Foods and tobacco 9.1 104.7 104.9 105.9 105.2 104.8 104.6 105.5 104.3 103.9 104.3 104.7 104.5 104.9 104.8 17 Clothing 2.6 95.0 94.3 94.5 95.9 96.0 95.7 95.0 94.6 94.9 94.2 94.6 93.6 93.3 92.4 18 Chemical products 3.5 118.7 118.5 121.1 123.3 121.7 122.4 121.1 123.7 123.1 122.6 123.0 123.6 122.7 122.7 19 Paper products 2.5 100.8 100.4 100.1 100.9 100.9 100.2 101.8 102.1 101.7 101.8 102.6 101.6 100.9 101.4 70 Energy 2.7 108.3 104.6 111.1 112.0 114.4 109.5 115.5 116.0 111.5 107.4 110.4 112.1 112.7 110.9 71 Fuels .7 104.7 103.5 109.8 107.7 106.1 106.5 108.9 107.1 106.6 106.5 105.8 105.0 104.5 109.6 22 Residential utilities 2.0 109.6 105.1 111.6 113.6 117.5 110.7 118.0 119.5 113.4 107.7 112.2 114.9 115.9 111.4 71 20.0 112.7 113.5 115.4 116.7 117.2 118.1 118.0 118.7 119.7 119.9 120.4 120.8 121.3 122.2 74 Business equipment 13.9 123.2 125.0 127.5 129.0 129.6 131.2 131.7 133.4 134.8 135.4 136.1 136.6 137.1 138.3 ?5 Information processing and related .. 5.6 134.7 138.2 142.2 142.9 143.2 144.4 146.1 149.1 150.6 153.5 155.7 157.7 158.3 159.6 76 Office and computing 1.9 168.3 178.3 183.1 184.5 186.4 192.0 198.0 203.3 209.5 216.5 221.0 226.0 230.0 233.0 77 4.0 108.5 109.6 110.1 112.0 112.3 113.1 112.2 113.7 115.0 115.0 115.6 116.6 116.8 116.9 78 Transit 2.5 137.1 134.5 137.4 140.4 144.1 146.7 146.5 145.0 145.0 142.5 138.0 133.2 132.9 136.3 79 1.2 117.9 114.7 121.7 123.9 131.4 136.7 136.8 135.8 136.2 133.1 127.2 118.9 119.6 126.5 10 Other 1.9 104.7 107.3 108.8 110.7 109.2 112.6 113.4 114.9 117.5 116.2 117.6 118.6 120.7 121.1 11 Defense and space equipment 5.4 85.9 84.4 83.5 83.2 82.5 82.0 81.5 80.7 80.5 79.5 78.6 78.5 78.2 78.0 17 Oil and gas well drilling .6 78.3 76.3 82.7 86.4 91.2 89.0 77.9 71.1 72.4 75.1 82.4 81.0 87.8 90.5 33 Manufactured homes .2 99.7 100.9 110.4 118.5 128.6 129.4 127.1 116.2 114.9 112.1 113.6 118.5 116.2 14 Intermediate products, total 14.7 97.6 96.9 97.8 98.1 98.3 98.2 99.3 99.6 100.0 99.7 99.4 100.2 100.1 100.0 15 Construction supplies 6.0 93.8 93.0 94.7 95.1 94.5 94.8 97.5 96.4 96.4 97.7 96.8 98.2 98.3 98.9 36 Business supplies 8.7 100.1 99.5 99.9 100.0 100.8 100.5 100.5 101.8 102.5 101.0 101.1 101.5 101.4 100.7 17 39.2 107.9 107.4 108.1 109.3 110.0 110.4 110.9 110.9 111.5 111.6 112.1 112.0 112.4 112.5 1 1 9 8 Du D ra u b ra le b l g e o c o o d n s s m um at e e r r i p al a s r ts 1 4 9 . . 2 4 1 1 0 0 1 8 . . 5 9 1 9 0 8 7 . . 5 6 1 10 0 9 1 . . 7 8 1 1 0 1 4 1 . . 3 1 1 1 1 0 1 7 . . 9 5 1 11 1 3 0 . . 3 8 1 1 1 1 4 1 . . 2 8 1 1 1 1 4 2. . 2 1 1 11 1 2 4 . . 6 9 1 1 1 1 4 1 . . 8 6 1 11 1 0 4 . . 2 9 1 10 1 9 5 . . 6 3 1 11 1 0 5 . . 1 6 1 1 1 1 6 1 . . 3 1 40 Equipment parts 7.3 116.5 116.2 118.3 119.3 119.7 120.4 121.0 121.3 122.7 123.5 124.1 124.7 125.7 127.1 4 4 7 1 Ot B he a r s ic metal materials 2 7 . . 8 9 1 1 0 0 6 8 . . 0 3 1 1 0 0 4 5 . . 6 8 1 10 0 6 8 . . 2 3 1 10 0 7 9 . . 4 8 1 10 0 7 8 . . 5 8 1 1 1 0 0 8 . . 4 6 1 10 1 9 3 . . 7 2 1 1 0 0 9 8 . . 9 9 1 1 0 1 9 0 . . 5 3 1 1 0 1 9 1 . . 2 1 1 1 0 1 9 1 . . 4 3 1 11 1 1 0 . . 5 0 1 1 0 1 9 0 . . 7 8 1 11 0 0 9 . . 7 8 41 Nondurable goods materials 9.0 110.9 111.7 110.7 112.0 111.5 112.4 112.1 112.8 113.8 114.1 114.8 114.3 114.8 115.1 44 1.2 102.8 103.3 102.7 103.4 102.9 104.2 103.2 104.2 102.7 104.3 104.9 105.7 104.8 105.7 45 Pulp and paper materials 1.9 109.9 112.3 109.1 110.2 110.7 110.7 111.9 112.8 115.3 114.1 115.9 114.0 114.0 113.5 46 Chemical materials 3.8 114.2 114.5 114.4 115.6 114.6 114.9 114.6 115.6 116.1 117.2 118.6 117.4 118.9 119.3 47 Other 2.1 110.4 110.5 109.7 112.0 111.3 114.1 112.5 112.6 114.2 113.6 112.3 113.6 113.7 114.2 48 10.9 103.4 103.6 103.0 103.9 105.1 103.4 103.8 103.5 103.4 103.4 104.6 104.2 104.4 103.3 49 Primary energy 7.2 99.7 99.6 99.4 100.2 101.3 100.4 98.3 97.4 99.9 101.6 100.9 99.1 99.3 99.1 50 Converted fuel materials 3.7 110.6 111.4 110.0 111.1 112.4 109.1 114.6 115.4 110.3 106.8 111.7 114.0 114.5 111.5 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.3 106.6 106.3 107.4 108.4 108.6 108.9 109.5 109.7 110.1 110.0 110.4 110.8 111.0 111.0 52 Total excluding motor vehicles and parts... 95.3 106.6 106.4 107.5 108.4 108.6 108.7 109.3 109.6 109.9 109.8 110.3 110.7 110.9 110.9 51 Total excluding office and computing machines 97.5 105.0 104.5 105.7 106.6 107.1 107.3 107.8 107.8 108.0 107.7 110077..88 110088..00 110088..00 110088..11 54 Consumer goods excluding autos and 24.5 105.7 105.1 106.8 107.4 107.3 107.0 108.1 108.2 107.6 107.1 110077..55 110088..11 110077..88 110077..44 55 Consumer goods excluding energy 23.3 104.8 104.3 105.9 106.6 106.8 107.4 107.7 107.7 107.6 107.3 107.0 107.0 106.6 106.7 56 Business equipment excluding autos and trucks 12.7 123.7 125.9 128.0 129.5 129.5 130.7 131.3 133.2 134.6 135.6 136.8 113388..11 113388..66 113399..33 57 Business equipment excluding office and computing equipment 12.0 115.7 116.1 118.1 119.7 120.1 121.0 120.6 112211..66 122.2 121.8 112211..88 112211..55 112211..55 112222..33 58 Materials excluding energy 28.4 109.5 108.8 110.0 111.4 111.8 113.0 113.6 113.7 114.6 114.6 114.9 115.0 115.4 116.0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • December 1993 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1987 1992 Group c S o I d C e 2 p p r o o r - - a 1 v 99 g 2 . tion Sept. Oct. Nov. Dec Jan. Feb. Mar. Apr. Mayr Juner Julyr Aug.r Sept.? Index (1987 = 100) MAJOR INDUSTRIES 59 Total index 100.0 106.5 106.2 107.5 108.4 108.9 109.3 109.9 110.1 110.4 110.2 110.5 110.7 110.9 111.0 60 Manufacturing 84.3 106.9 106.8 108.0 108.9 109.2 109.9 110.5 110.8 111.4 111.3 111.3 111.5 111.6 112.0 61 Primary processing 27.1 103.8 103.3 104.1 105.1 105.0 105.8 106.9 106.4 107.1 107.1 107.5 107.7 108.0 108.1 62 Advanced processing 57.1 108.3 108.4 109.9 110.7 111.3 111.9 112.2 112.9 113.4 113.3 113.0 113.3 113.3 113.9 63 Durable goods 46.5 108.1 108.1 109.8 110.9 111.8 112.9 113.8 114.1 115.0 114.9 114.6 115.2 115.4 116.1 64 Lumber and products... '"24 2.1 96.4 94.7 97.8 99.8 98.0 99.3 101.8 98.0 98.1 97.4 96.5 99.1 98.9 100.1 65 Furniture and fixtures... 25 1.5 99.0 100.5 100.4 102.3 103.9 105.2 106.0 107.3 108.8 108.4 109.5 111.1 111.2 110.4 66 Clay, glass, and stone products 32 2.4 96.0 96.5 96.8 97.6 98.0 97.0 98.9 98.6 99.8 99.6 100.5 101.1 100.7 101.2 67 Primary metals 33 3.3 101.1 98.0 100.5 101.6 102.4 102.8 108.0 104.2 104.4 104.2 105.7 105.5 106.6 105.5 68 Iron and steel 331,2 1.9 104.7 102.0 104.1 103.6 107.4 107.0 112.9 107.6 108.4 108.1 110.9 111.9 111.5 109.9 69 Raw steel .1 101.2 98.9 99.8 102.8 104.6 103.4 105.9 102.0 102.6 105.1 106.8 108.2 106.2 70 Nonferrous 333-6,9 1.4 96.1 92.4 95.6 98.7 95.7 97.1 101.4 99.4 98.9 98.9 98.5 96.8 99.8 993 71 Fabricated metal products 34 5.4 96.7 96.5 97.5 97.6 97.8 99.8 99.7 100.3 101.4 100.6 100.1 101.0 100.7 100.3 72 Industrial and commercial machinery and computer equipment . 35 8.5 124.8 127.9 130.6 132.8 133.8 135.0 136.7 139.6 142.8 144.2 145.4 147.8 148.9 150.2 73 Office and computing machines 357 2.3 168.3 178.3 183.1 184.5 186.4 192.0 198.0 203.3 209.5 216.5 221.0 226.0 230.0 233.0 74 Electrical machinery 36 6.9 119.8 121.5 122.6 124.4 124.8 125.8 127.1 128.5 129.0 129.7 130.1 132.3 132.6 133.2 75 Transportation equipment 37 9.9 102.6 100.5 103.0 103.6 106.3 108.4 107.8 106.9 106.9 105.5 102.6 100.7 100.5 102.3 76 Motor vehicles and parts 371 4.8 104.8 102.6 108.0 109.9 116.2 120.9 120.7 120.1 120.4 118.1 114.3 110.1 110.2 114.5 77 Autos and light trucks 2.2 101.4 97.9 104.1 105.4 114.4 118.2 117.8 116.9 117.5 113.1 108.2 102.8 99.9 104.8 78 Aerospace and miscellaneous transportation equipment... 372-6,9 5.1 100.6 98.6 98.3 97.7 97.1 96.7 95.8 94.6 94.2 93.7 91.8 91.8 91.4 90.9 79 Instruments 38 5.1 104.2 103.7 103.7 103.6 103.3 103.0 102.2 103.3 102.6 102.5 102.5 102.4 101.6 102.0 80 Miscellaneous 39 1.3 109.7 108.7 110.5 111.4 111.8 110.9 111.9 112.6 114.3 113.1 112.1 112.3 112.4 113.9 81 Nondurable goods 37.8 105.4 105.2 105.8 106.4 106.0 106.4 106.4 106.6 106.9 106.9 107.2 106.9 107.0 107.1 82 Foods "20 8.8 106.0 105.6 106.8 106.4 106.2 105.9 106.9 106.7 106.7 106.7 107.1 106.7 107.1 107.0 83 Tobacco products 21 1.0 99.2 101.7 102.4 101.9 96.1 100.5 99.3 92.4 90.2 92.1 89.1 92.0 92.9 94.1 84 Textile mill products 22 1.8 104.7 105.1 103.5 106.0 106.0 106.9 106.2 105.4 104.2 106.9 107.1 107.6 106.7 107.4 85 Apparel products 23 2.3 92.3 91.5 91.7 92.9 92.7 93.1 92.5 92.1 92.0 91.2 91.1 90.7 90.6 89.6 86 Paper and products 26 3.6 108.2 109.5 107.3 108.2 108.3 108.6 110.4 111.1 113.1 112.1 114.2 113.2 113.7 113.4 87 Printing and publishing.. 27 6.5 95.0 94.1 94.5 94.2 94.7 94.7 94.0 94.7 95.6 94.7 94.5 93.8 93.2 93.3 88 Chemicals and products. 28 8.8 115.0 115.2 116.2 117.7 116.7 116.8 116.2 117.6 117.8 118.1 119.1 118.3 118.6 118.7 89 Petroleum products 29 1.3 102.0 101.1 105.3 103.9 103.4 103.2 104.7 104.7 104.3 103.6 103.9 102.4 102.1 105.1 90 Rubber and plastic products 30 3.2 109.7 108.5 109.9 111.3 111.3 113.6 112.7 112.9 113.6 113.8 112.8 114.2 114.4 114.5 91 Leather and products ... 31 .3 92.6 93.8 95.1 96.6 96.7 97.1 99.0 99.1 100.1 98.2 97.0 96.8 96.6 97.6 92 Mining 8.0 97.6 97.1 97.6 97.8 98.2 98.3 95.9 95.3 96.4 97.3 98.0 97.2 97.1 98.2 93 Metal "lO .3 161.7 159.8 168.1 171.6 158.1 167.7 163.0 158.2 162.5 169.3 164.4 167.8 157.4 164.0 94 Coal 11,12 1.2 105.5 103.6 103.8 103.5 107.9 108.2 101.7 102.3 108.2 106.4 106.7 101.0 95.9 102.1 95 Oil and gas extraction 13 5.8 92.6 92.7 92.7 92.8 93.4 92.7 90.9 90.4 90.5 91.6 93.1 92.8 94.1 93.9 96 Stone and earth minerals .. 14 .7 93.8 91.9 93.6 94.4 92.6 93.8 95.2 93.4 92.3 94.0 91.7 93.2 95.0 95.3 97 Utilities 7.7 112.0 111.2 112.7 114.7 116.8 112.8 117.5 117.8 114.4 112.1 114.9 116.2 117.3 113.6 98 Electric 49i,3PT 6.1 111.6 110.9 112.6 114.1 116.4 112.9 116.5 116.3 114.5 114.0 115.6 117.2 118.6 114.0 99 Gas 492,3PT 1.6 113.2 112.0 113.2 117.3 118.2 112.4 121.4 123.3 113.9 104.9 112.2 112.6 112.6 112.4 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 79.5 107.0 107.1 108.0 108.8 108.8 109.3 109.8 110.2 110.8 110.9 111.1 111.6 111.7 111.9 101 Manufacturing excluding office and computing machines 81.9 105.1 104.8 105.9 106.7 107.0 107.6 108.0 108.1 108.6 108.3 108.1 108.2 108.2 108.6 Gross value (billions of 1987 dollars, annual rates) MAJOR MARKETS 102 Products, total 1,707.0 1,806.4 1,799.9 1,835.6 1,846.7 1,857.5 1,864.9 1,880.2 1,880.3 1,882.8 1,872.6 1,873.2 1,875.5 1,872.4 1,881.7 103 Final 1,314.6 1,420.1 1,415.7 1,448.1 1,457.1 1,466.8 1,476.4 1,485.7 1,484.3 1,485.6 1,477.9 1,477.5 1,477.7 1,475.2 1,485.3 104 Consumer goods 866.6 913.0 905.1 928.4 931.6 936.3 940.0 949.4 946.1 943.6 936.1 935.5 936.0 931.7 936.4 105 Equipment 448.0 507.1 510.6 519.7 525.5 530.5 536.5 536.3 538.2 541.9 541.8 541.9 541.7 543.5 548.9 106 Intermediate 392.5 386.4 384.2 387.4 389.6 390.7 388.4 394.5 396.0 397.3 394.7 395.7 397.8 397.1 396.4 1. Data in this table also appear in the Board's G.17 (419) monthly statistical was released in May 1993. See "Industrial Production, Capacity, and Capacity release. For ordering address, see inside front cover. Utilization since 1987," Federal Reserve Bulletin, vol. 79 (June 1993), pp. 590-605. A revision of the industrial production index and the capacity utilization rates 2. Standard industrial classification. 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 1992 1993 IItteemm 11999900 11999911 11999922 Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 1,111 949 1,095 1,136 1,196 1,157 1,141 1,034 1,101 1,121 1,115 1,162 1,242 7 One-family 794 754 911 963 1,037 972 957 871 925 919 925 977 1,015 3 Two-or-more-family 317 195 184 173 159 185 184 163 176 202 190 185 227 4 Started 1,193 1,014 1,200 1,226 1,286 1,171 1,180 1,124 1,206 1,248 1,248 1,232 1,314 One-family 895 840 1,030 1,089 1,133 1,051 1,036 987 1,059 1,107 1,079 1,064 1,176 6 Two-or-more-family 298 174 169 137 153 120 144 137 147 141 169 168 138 7 Under construction at end of period1.. 711 606 612 641 644 641 641 635 637 645 649 661 668 8 One-family 449 434 473 498 501 506 508 502 506 515 517 528 537 9 Two-or-more-family 262 173 140 143 143 135 133 133 131 130 132 133 131 10 Completed 1,308 1,091 1,158 1,229 1,227 1,136 1,241 1,108 1,222 1,129 1,158 1,084 1,207 11 One-family 966 838 964 1,002 1,016 980 1,049 995 1,075 987 987 942 1,047 1? Two-or-more-family 342 253 194 227 211 156 192 113 147 142 171 142 160 13 Mobile homes shipped 188 171 210 244 266 267 262 247 241 230 237 241 245 Merchant builder activity in one-family units 14 Number sold 535 507 610 615 662 603 597 602 66889911 629 647 636 661166 15 Number for sale at end of period1 ... 321 284 265 262 265 266 268 270 271 274 274 277 288 Price of units sold (thousands of dollars)2 16 Median 122.3 120.0 121.3 128.9 126.0 118.0 129.4 125.0 127.0 112299..99 112233..00 112233..00 112288..00 17 Average 149.0 147.0 144.9 147.2 146.2 138.9 149.4 146.6 148.4R 152.3 145.8 142.4 153.6 EXISTING UNITS (one-family) 18 Number sold 3,211 3,219 3,520 3,860 4,040 3,780 3,460 3,370 3,450 3,620 3,680 3,860 3,810 Price of units sold (thousands of dollars)2 19 Median 95.2 99.7 103.6 102.7 104.2 103.1 103.6 105.1 105.8 106.5 109.3 110088..55 110099..00 20 Average 118.3 127.4 130.8 128.8 131.0 129.4 129.6 131.5 133.0 132.8 137.4 136.0 135.8 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 442,142 403,439 436,043 449,269 455,239 451,271 453,820 454,465 449,054r 453,256 460,680 461,250 455,964 77 Private 334,681 293,536 317,256 328,196 335,354 335,484 334,801 336,972 328,1501 332,231 335,028 332,652 331,338 73 Residential 182,856 157,837 187,820 199,304 206,417 207,214 205,730 205,519 197,317r 198,380 200,4% 200,383 201,495 74 Nonresidential 151,825 135,699 129,436 128,892 128,937 128,270 129,071 131,453 130,833r 133,851 134,532 132,269 129,843 75 Industrial buildings 23,849 22,281 20,720 19,246 19,961 19,600 20,484 22,152 19,458r 20,091 19,316 19,681 19,282 76 Commercial buildings 62,866 48,482 41,523 41,143 39,602 41,414 42,317 41,323 42,426r 42,428 42,723 41,358 40,424 71 Other buildings 21,591 20,797 21,494 21,517 20,900 21,123 21,564 21,484 22,568r 23,293 23,849 23,776 24,233 28 Public utilities and other 43,519 44,139 45,699 46,986 48,474 46,133 44,706 46,494 46,381r 48,039 48,644 47,454 45,904 79 Public 107,461 109,900 118,784 121,073 119,885 115,786 119,019 117,493 120,904r 121,025 125,652 128,599 124,626 30 Military 2,664 1,837 2,502 2,557 2,394 2,621 2,703 2,586 2,533r 2,393 2,234 2,355 2,366 31 Highway 32,108 32,026 34,929 37,698 33,411 30,648 33,009 33,413 34,534 34,320 37,649 36,769 33,719 37 Conservation and development... 4,557 4,861 5,918 6,441 8,144 5,732 6,688 7,112 5,875r 6,019 6,103 5,971 5,871 33 Other 68,132 71,176 75,435 74,377 75,936 76,785 76,619 74,382 77,962r 78,293 79,666 83,504 82,670 1. Not at annual rates. Institute and seasonally adjusted by the Census Bureau, and (2) sales and prices 2. Not seasonally adjusted. of existing units, which are published by the National Association of Realtors. All 3. Recent data on value of new construction may not be strictly comparable back and current figures are available from the originating agency. Permit with data for previous periods because of changes by the Bureau of the Census in authorizations are those reported to the Census Bureau from 17,000 jurisdictions its estimating techniques. For a description of these changes, see Construction beginning in 1984. Reports (C-30-76-5), issued by the Census Bureau in July 1976. SOURCE. Bureau of the Census estimates for all series except (1) mobile homes, which are private, domestic shipments as reported by the Manufactured Housing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • December 1993 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,,, 1992 1993 1993' SSSeeepppttt 11999922 11999933 111999999333111 SSeepptt.. SSeepptt.. Dec. Mar. June Sept. May June July Aug. Sept. CONSUMER PRICES2 (1982-84=100) 1 All items 3.0 2.7 3.2 4.0 2.2 1.4 .1 .0 .1 .3 .0 145.1 2 Food 1.8 1.9 1.4 2.6 1.4 1.7 .4 -.4 .0 .3 .1 141.1 3 Energy items 2.2 -.7 1.9 3.1 -3.8 -3.4 -1.0 -.2 .0 -.5 -.4 105.2 4 All items less food and energy 3.3 3.2 3.8 4.3 2.9 1.9 .2 .1 .1 .3 .1 152.9 5 Commodities 2.5 1.5 1.5 4.6 .6 -.3 .0 -.1 .0 .3 -.4 135.1 6 Services 3.6 4.0 4.7 4.4 4.1 2.7 .3 .2 .2 .3 .2 163.1 PRODUCER PRICES (1982=100) 7 Finished goods 1.6 .5 -.3 4.3 .6 -2.5 .0 -,4r -.2 -.6 .2 123.9 8 Consumer foods .5 1.9 3.3 -1.6 1.3 4.6 .0* -l.tf -.1 .5 .7 125.6 9 Consumer energy 2.1 -1.6 -10.2 16.6 -3.5 -6.9 -,5r -,6r -1.0 -.8 .0 79.5 10 Other consumer goods 2.2 -.3 1.2 3.2 1.2 -6.4 .R -,4r .1 -1.7 .0 136.0 11 Capital equipment 1.5 1.7 .6 4.4 1.2 1.2 ,IR .R .1 .2 .0 130.3 Intermediate materials 12 Excluding foods and feeds 1.1 .8 -2.1 5.7 .3 -.3 -.3r .3 -.2 .0 .1 117.0 13 Excluding energy 1.2 1.3 -.3 4.7 -.3 1.0 -.2 .0* .1 .2 .0 124.0 Crude materials 14 Foods -.1 4.5 5.1 1.9 -1.5 12.2 .5 -3.3r 1.2 1.6 .1 107.5 15 Energy 8.8 -10.6 -17.8 -10.1 19.3 -27.6 4.2r -.R -4.9 -1.8 -1.2 74.9 16 Other 3.8 6.5 1.9 24.3 10.9 -7.9 1.3r .0* .6 -2.6 .0 138.9 1. Not seasonally adjusted. SOURCE. U.S. Department of Labor, 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 1992r 1993r 11999900** 11999911rr 11999922rr Q2 Q3 Q4 Ql Q2 GROSS DOMESTIC PRODUCT 1 Total 5,546.1 5,722.9 6,038.5 5,991.4 6,059.5 6,194.4 6,261.6 6,327.6 By source 2 Personal consumption expenditures 3,761.2 3,906.4 4,139.9 4,099.9 4,157.1 4,256.2 4.296.2 4,359.9 3 Durable goods 468.2 457.8 497.3 487.8 500.9 516.6 515.3 531.6 4 Nondurable goods 1,229.2 1,257.9 1,300.9 1,288.2 1,305.7 1,331.7 1.335.3 1,344.8 5 Services 2,063.8 2,190.7 2,341.6 2,323.8 2,350.5 2,407.9 2,445.5 2,483.4 6 Gross private domestic investment 808.9 736.9 796.5 799.7 802.2 833.3 874.1 874.1 7 Fixed investment 802.0 745.5 789.1 786.8 792.5 821.3 839.5 861.0 8 Nonresidential 586.7 555.9 565.5 566.3 569.2 579.5 594.7 619.1 9 Structures 201.6 182.6 172.6 174.5 170.8 171.1 172.4 177.6 10 Producers' durable equipment 385.1 373.3 392.9 391.7 398.4 408.3 422.2 441.6 11 Residential structures 215.3 189.6 223.6 220.6 223.3 241.8 244.9 241.9 12 Change in business inventories 6.9 -8.6 7.3 12.9 9.7 12.0 34.6 13.1 13 Nonfarm 3.8 -8.6 2.3 6.2 4.4 9.5 33.0 16.8 14 Net exports of goods and services -71.4 -19.6 -29.6 -33.9 -38.8 -38.8 -48.3 -65.1 15 Exports 557.1 601.5 640.5 632.4 641.1 654.7 651.3 660.0 16 Imports 628.5 621.1 670.1 666.3 679.9 693.5 699.6 725.0 17 Government purchases of goods and services .. 1,047.4 1,099.3 1,131.8 1,125.8 1,139.1 1,143.8 1,139.7 1,158.6 18 Federal 426.5 445.9 448.8 444.6 452.8 452.4 442.7 447.5 19 State and local 620.9 653.4 683.0 681.2 686.2 691.4 697.0 711.1 By major type of product 20 Final sales, total 5.539.3 5.731.6 6,031.2 5,978.6 6,049.9 6.182.5 6,227.1 6,314.5 21 Goods 2.178.4 2,227.0 2.305.5 2,278.4 2,308.6 2.365.6 2,362.9 2.395.0 22 Durable 933.6 934.3 975.8 963.2 978.4 1,008.3 1,003.5 1,037.8 23 Nondurable 1,244.8 1,292.8 1.329.6 1.315.1 1.330.2 1,357.3 1,359.3 1.357.1 24 Services 2.849.5 3.032.7 3,221.1 3.196.2 3.239.3 3,296.1 3,341.8 3,388.1 25 Structures 511.5 471.9 504.7 504.0 501.9 520.8 522.4 531.5 26 Change in business inventories 6.9 -8.6 7.3 12.9 9.7 12.0 34.6 13.1 27 Durable goods -2.1 -12.9 2.1 16.7 5.7 -1.2 15.0 2.7 28 Nondurable goods 9.0 4.3 5.3 -3.8 4.0 13.2 19.5 10.4 MEMO 4,897.3 4,861.4 4,986.3 4,956.5 4,998.2 5,068.3 5,078.2 5,102.1 29 Total GDP in 1987 dollars NATIONAL INCOME 4,491.0 4,598.3 4,836.6 4,814.6 4,800.8 4,975.8 5,038.9 5,104.0 30 Total 3,297.6 3,402.4 3.582.0 3,558.1 3.603.6 3,658.6 3.705.1 3.750.6 31 Compensation of employees 2,745.0 2,814.9 2.953.1 2,933.6 2.970.7 3,015.8 3,054.3 3.082.7 32 Wages and salaries 516.0 545.3 567.5 566.9 569.7 574.2 584.1 586.3 33 Government and government enterprises .. 2,229.0 2,269.6 2,385.6 2,366.8 2,401.0 2,441.6 2.470.2 2,496.3 34 Other 552.5 587.5 629.0 624.5 632.9 642.8 650.7 668.0 35 Supplement to wages and salaries 278.3 290.6 306.3 304.6 306.9 311.3 312.2 321.4 36 Employer contributions for social insurance 274.3 296.9 322.7 319.9 326.0 331.5 338.5 346.6 37 Other labor income 38 Proprietors' income1 363.3 376.4 414.3 411.1 408.1 431.2 444.1 439.4 39 Business and professional1 321.4 339.5 370.6 366.2 371.3 383.6 388.4 392.4 40 Farm1 41.9 36.8 43.7 44.9 36.8 47.6 55.7 47.0 41 Rental income of persons2 -14.2 -12.8 -8.9 -7.2 -18.5 -1.2 7.5 12.7 42 Corporate profits' 380.6 369.5 407.2 411.7 367.5 439.5 432.1 458.1 43 Profits before tax3 365.7 362.3 395.4 409.5 357.9 409.9 419.8 445.6 44 Inventory valuation adjustment -11.0 4.9 -5.3 -13.7 -7.8 4.9 -12.7 -12.2 45 Capital consumption adjustment 25.9 2.2 17.1 16.0 17.4 24.7 25.1 24.7 46 Net interest 463.7 462.8 442.0 440.8 440.1 447.7 450.1 443.2 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 1993 2.17 PERSONAL INCOME AND SAVING Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1992r 1993r AAccccoouunntt 11999900rr 11999911rr 11999922rr Q2 Q3 Q4 Ql Q2 PERSONAL INCOME AND SAVING 1 Total personal income 4,673.8 4,850.9 5,144.9 5,093.8 5,139.8 5,328.3 5,254.7 5,373.2 2 Wage and salary disbursements 2,745.0 2,815.0 2,973.1 2,933.6 2,970.7 3,095.8 2,974.3 3,082.7 3 Commodity-producing industries 745.7 738.1 756.5 750.0 751.6 783.3 740.7 765.1 555.6 557.2 577.6 571.2 573.3 602.0 559.7 580.3 635.1 648.0 682.0 672.2 682.5 709.9 682.9 709.1 848.3 883.5 967.0 944.6 966.8 1,028.4 966.6 1,022.2 7 Government and government enterprises 515.9 545.4 567.5 566.9 569.7 574.2 584.1 586.3 274.3 296.9 322.7 319.9 326.0 331.5 338.5 346.6 9 Proprietors' income1 363.3 376.4 414.3 411.1 408.1 431.2 444.1 439.4 10 Business and professional1 321.4 339.5 370.6 366.2 371.3 383.6 388.4 392.4 11 Farm1 41.9 36.8 43.7 44.9 36.8 47.6 55.7 47.0 12 Rental income of persons2 -14.2 -12.8 -8.9 -7.2 -18.5 -1.2 7.5 12.7 144.4 127.9 140.4 136.0 144.9 152.3 157.0 157.8 698.2 715.6 694.3 696.0 692.2 694.5 695.4 693.1 15 Transfer payments 687.6 769.9 858.4 852.4 866.1 877.4 894.4 905.5 16 Old-age survivors, disability, and health insurance benefits ... 352.0 382.3 413.9 412.0 416.6 420.8 433.1 435.0 17 LESS: Personal contributions for social insurance 224.9 237.8 249.3 248.1 249.8 253.3 256.6 264.5 18 EQUALS: Personal income 4,673.8 4,850.9 5,144.9 5,093.8 5,139.8 5,328.3 5,254.7 5,373.2 19 LESS: Personal tax and nontax payments 623.3 620.4 644.8 634.6 642.8 670.7 657.1 681.0 20 EQUALS: Disposable personal income 4,050.5 4,230.5 4,500.2 4,459.2 4,497.0 4,657.6 4,597.5 4,692.2 21 LESS: Personal outlays 3,880.6 4,029.0 4,261.5 4,221.3 4,277.3 4,377.9 4,419.7 4,483.6 22 EQUALS: Personal saving 170.0 201.5 238.7 237.9 219.6 279.7 177.9 208.7 MEMO Per capita (1987 dollars) 19,593.0 19,237.9 19,518.0 19,430.4 19,536.7 19,754.1 1199,,774444..44 1199,,778855..44 24 Personal consumption expenditures 13,093.0 12,895.2 13,080.9 13,002.5 13,097.8 13,240.9 13,234.2 13,311.6 25 Disposable personal income 14,101.0 13,965.0 14,219.0 14,142.0 14,169.0 14,490.0 14,163.0 14,326.0 26 Saving rate (percent) 4.2 4.8 5.3 5.3 4.9 6.0 3.9 4.4 GROSS SAVING 27 Gross saving 722.7 733.7 717.8 715.5 727.0 718.8 762.0 766.7 28 Gross private saving 861.1 929.9 986.9 987.7 1,016.5 969.4 1,024.8 988.3 29 Personal saving 170.0 201.5 238.7 237.9 219.6 279.7 177.9 208.7 30 Undistributed corporate profits1 88.5 102.3 110.4 112.6 82.3 121.7 103.7 116.3 31 Corporate inventory valuation adjustment -11.0 4.9 -5.3 -13.7 -7.8 4.9 -12.7 -12.2 Capital consumption allowances 368.2 383.2 396.6 391.5 410.3 396.5 440022..22 440055..22 33 Noncorporate 234.5 242.8 261.3 245.7 304.3 251.5 261.0 258.1 34 Government surplus, or deficit (-), national income and product accounts -138.4 -196.2 -269.1 -272.2 -289.5 -250.6 -262.8 --222211..55 35 Federal -163.5 -203.4 -276.3 -279.9 -290.7 -264.2 -263.5 -222.6 36 State and local 25.1 7.3 7.2 7.8 1.2 13.5 .8 1.1 37 Gross investment 730.4 743.3 741.4 739.1 742.7 750.9 796.5 778.7 38 Gross private domestic 808.9 736.9 796.5 799.7 802.2 833.3 874.1 874.1 39 Net foreign -78.5 6.4 -55.1 -60.6 -59.4 -82.4 -77.6 -95.4 40 Statistical discrepancy 7.8 9.6 23.6 23.6 15.7 32.1 34.4 12.0 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 Item credits or debits 1991 1992 Q2 Q3 Q4 Qlr Q2P 1 Balance on current account -91,861 -8,324 -66,400 -18,253 -17,775 -23,687 -22,308 -26,934 2 Merchandise trade balance -109,033 -73,802 -96,138 -24,801 -27,612 -25,962 -29,309 -34,388 3 Merchandise exports 389,303 416,937 440,138 108,306 109,493 113,992 111,530 113,125 4 Merchandise imports -498,336 -490,739 -536,276 -133,107 -137,105 -139,954 -140,839 -147,513 5 Military transactions, net -7,834 -5,851 -2,751 -727 -617 -836 -145 23 6 Other service transactions, net 38,485 51,733 59,163 14,378 15,898 14,265 14,769 14,772 7 Investment income, net 20,348 13,021 6,222 907 1,703 -806 -37 -275 8 U.S. government grants -17,434 24,073 -14,688 -3,234 -2,783 -5,883 -3,242 -2,578 9 U.S. government pensions and other transfers -2,934 -3,461 -3,735 -1,118 -940 -846 -978 -975 10 Private remittances and other transfers -13,459 -14,037 -14,473 -3,659 -3,424 -3,619 -3,366 -3,513 11 Change in U.S. government assets other than official reserve assets, net (increase, -) 2,307 2,905 -1,609 -293 -305 -737 535 55 12 Change in U.S. official reserve assets (increase, -) -2,158 5,763 3,901 1,464 1,952 1,542 -983 720 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -192 -177 2,316 -168 -173 2,829 -140 -166 15 Reserve position in International Monetary Fund 731 -367 -2,692 1 -118 -2,685 -228 211 16 Foreign currencies -2,697 6,307 4,277 1,631 2,243 1,398 -615 675 17 Change in U.S. private assets abroad (increase, -) -44,280 -68,643 -53,253 -9,866 -12,445 -31,243 -11,910 -26,203 18 Bank-reported claims 16,027 3,278 24,948 4,050 6,584 -3,481 28,055 4,743 19 Nonbank-reported claims -4,433 1,932 4,551 1,294 -3,214 1,132 -4,774 20 U.S. purchases of foreign securities, net -28,765 -44,740 -47,961 -8,276 -13,787 -17,405 -26,889 -20,180 21 U.S. direct investments abroad, net -27,109 -29,113 -34,791 -6,934 -2,028 -11,489 -8,302 -10,766 22 Change in foreign official assets in United States (increase, +) .. 34,198 17,564 40,684 21,008 -7,378 5,931 10,929 17,839 23 U.S. Treasury securities 29,576 14,846 18,454 11,240 -323 -7,379 1,039 6,042 24 Other U.S. government obligations 667 1,301 3,949 1,699 912 874 710 1,082 25 Other U.S. government liabilities 2,156 1,542 2,542 678 864 943 -395 191 26 Other U.S. liabilities reported by U.S. banks3 3,385 -1,484 16,427 7,466 -7,831 11,219 8,171 9,425 27 Other foreign official assets5 -1,586 1,359 -688 -75 -1,000 274 1,404 1,099 28 Change in foreign private assets in United States (increase, +).. 70,976 65,875 88,895 23,442 33,828 32,914 14,789 20,453 29 U.S. bank-reported liabilities 16,370 -11,371 18,609 -528 23,647 -1,171 -18,862 -2,462 30 U.S. nonbank-reported liabilities 7,533 -699 741 979 1,553 -2,717 2,057 31 Foreign private purchases of U.S. Treasury securities, net -2,534 18,826 36,893 10,168 4,870 21,232 13,599 ' -411 32 Foreign purchases of other U.S. securities, net 1,592 35,144 30,274 10,453 2,730 12,478 9,394 15,000 33 Foreign direct investments in United States, net 48,015 23,975 2,378 2,370 1,028 3,092 8,601 8,326 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 3 3 6 5 Di D sc u r e e p to an s c e y a sonal adjustment 30,820 -15,140 -12,218 -17,5 6 0 5 2 3 -6 2 , , 7 1 5 2 4 3 15 1 , ,2 2 2 8 2 0 8 5 , , 9 8 4 1 8 4 14,0 8 7 1 0 6 37 Before seasonal adjustment 30,820 -15,140 -12,218 -18,155 8,877 14,058 3,134 13,254 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -2,158 5,763 3,901 1,464 1,952 1,542 -983 720 39 Foreign official assets in United States, excluding line 25 (increase, +) 32,042 16,022 38,142 20,330 -8,242 4,988 11,324 17,648 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) 1,707 -4,882 5,857 -2,113 3,051 2,336 -940 1. Seasonal factors are 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 5. 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, Bureau of Economic Analysis, brokers and dealers. Survey of Current Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • December 1993 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data seasonally adjusted 1993 IItteemm 11999900 11999911 11999922 Feb. Mar. Apr. May Juner Julyr Aug.p 1 Exports of domestic and foreign merchandise, excluding grant-aid shipments 393,592 421,730 448,164 36,928 38,895 38,479 38,930 37,639 37,109 38,212 2 General imports including merchandise for immediate consumption plus entries into bonded warehouses 495,311 488,453 532,665 44,832 49,347 48,660 47,306 49,698 47,534 47,925 3 Trade balance -101,718 -66,723 -84,501 -7,904 -10,453 -10,182 -8,376 -12,058 -10,425 -9,713 1. Government and nongovernment shipments of merchandise between foreign the United States. Since Jan. 1, 1987, merchandise trade data have been released countries and the fifty states, including the District of Columbia, Puerto Rico, the forty-five days after the end of the month; the previous month is revised to reflect U.S. Virgin Islands, and U.S. Foreign Trade Zones. Data exclude (1) shipments late documents. among the United States, Puerto Rico, the U.S. Virgin Islands, and other U.S. Data in this table differ from figures for merchandise trade shown in the U.S. affiliated insular areas, (2) shipments to U.S. Armed Forces and diplomatic balance of payments accounts (table 3.10, lines 2 through 4) primarily for reasons missions abroad for their own use, (3) U.S. goods returned to the United States by of coverage. For both exports and imports, a large part of the difference is the its Armed Forces, (4) personal and household effects of travelers, and (5) treatment of military sales and purchases. The military sales to foreigners in-transit shipments. Data reflect the total arrival of merchandise from foreign (exports) and purchases from foreigners (imports) that are included in this table as countries that immediately entered consumption channels, warehouses, or U.S. merchandise trade are shifted, in the balance of payments accounts, from Foreign Trade Zones (general imports). Import data are Customs value; export "merchandise trade" into the broader category "military transactions." data are F.A.S. value. Since 1990, data for U.S. exports to Canada have been SOURCE. (U.S. Department of Commerce, Bureau of the Census), FT900, U.S. derived from import data compiled by Canada; similarly, in Canadian statistics, Merchandise Trade. Canadian exports to the United States are derived from import data compiled by 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1993 Asset 1992 Apr. May June July Aug. Sept." 1 Total 83,316 77,719 71,323 74,378 75,644 76,711 73,968 74,139 75,231 2 Gold stock, including Exchange Stabilization Fund 11,058 11,057 11,056 11,054 11,054 11,053 11,057 11,057 11,057 3 Special drawing rights ,3 10,989 11,240 8,503 8,787 8,947 9,147 8,987 8,905 9,133 4 Reserve position in International Monetary Fund 9,076 9,488 11,759 12,184 12,317 12,195 11,926 12,083 12,118 5 Foreign currencies 52,193 45,934 40,005 42,353 43,326 44,316 41,998 42,094 42,923 1. Gold held "under earmark" at Federal Reserve Banks for foreign and 1981, five currencies have been used. U.S. SDR holdings and reserve positions in international accounts is not included in the gold stock of the United States; see the IMF 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, sixteen currencies were used; since January 4. Valued at current market exchange rates. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1 Millions of dollars, end of period 1993 AAsssseett 11999900 11999911 11999922 Mar. Apr. May June July Aug. Sept.p 1 Deposits 369 968 205 317 221 193 286 284 357 501 Held in custody 2 U.S. Treasury securities 278,499 281,107 314,481 326,486 339,396 345,060 343,672 343,378 356,671 358,860 3 Earmarked gold 13,387 13,303 13,686 12,989 12,924 12,854 12,829 12,756 12,686 12,562 1. Excludes deposits and U.S. Treasury securities held for international and 3. Held in foreign and international accounts and valued at $42.22 per fine troy regional organizations. ounce; not included in the gold stock of the United States. 2. Marketable U.S. Treasury bills, notes, and bonds and nonmarketable U.S. Treasury securities payable at face value in dollars or foreign currencies. 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 1993 AAccccoouunntt 11999900 11999911 11999922 Feb. Mar. Apr. May June July Aug. ASSETS All foreign countries 1 Total payable in any currency 556,925 548,999 542,545 554,127' 547,425r 544,497r 548,893" 562,590" 551,342 560,539 7 Claims on United States 188,4% 176,487 166,798 172,776r 172,132r 164,652r 162,355" 176,025" 163,793 166,817 Parent bank 148,837 137,695 132,275 139,642r 139,016r 129,121" 127,126" 141,024" 127,474 130,865 4 Other banks in United States 13,296 12,884 9,703 9,249 9,073 10,830 9,169 9,498 8,993 9,457 5 Nonbanks 26,363 25,908 24,820 23,885 24,043 24,701 26,060 25,503 27,326 26,495 6 Claims on foreigners 312,449 303,934 318,071 317,473r 314,912 316,001r 321,065" 316,533" 316,989 325,948 7 Other branches of parent bank 135,003 111,729 123,256 115,991r 112,598 109,966r 111,314 111,708 105,095 108,071 8 Banks 72,602 81,970 82,190 83,264r 84,819" 86,940" 88,188" 85,972" 88,648 90,008 9 Public borrowers 17,555 18,652 20,756 19,934r 19,005" 18,577" 18,251 18,183 17,687 18,364 10 Nonbank foreigners 87,289 91,583 91,869 98,284 98,490 100,518r 103,312 100,670" 105,559 109,505 11 Other assets 55,980 68,578 57,676 63,878r 60,381 63,844r 65,473" 70,032" 70,560 67,774 12 Total payable in U.S. dollars 379,479 364,078 365,824 361,729r 353,799r 345,053r 344,926" 355,298" 340,948 338,896 N 14 Cla P i a m re s n o t n b U an n k i ted States 1 1 4 8 2 0 , , 1 % 7 2 4 1 1 3 6 3 9 , , 6 8 6 4 2 8 1 16 2 2 9 , , 1 3 2 2 5 9 1 1 3 6 7 8 , , 1 2 2 4 2 5 r r 1 1 3 6 6 7 , , 4 5 2 3 3 5 r r 1 1 2 6 6 0 , , 7 1 6 2 0 0 " " 1 1 2 5 3 6 , , 9 4 5 1 7 8 " " 1 1 3 6 7 9 , , 7 5 1 0 1 2 " " 1 1 2 5 4 5 , , 0 3 7 8 2 7 1 1 2 5 7 7 , , 0 5 2 3 8 8 15 Other banks in United States 12,513 12,025 9,266 8,704 8,336 10,168 8,209 8,638 8,270 8,475 16 Nonbanks 24,699 24,161 23,530 22,419 22,776 23,192 24,252 23,153 23,045 22,035 17 Claims on foreigners 174,451 167,010 183,527 174,726 170,338 169,360" 170,475" 168,824" 167,183 164,318 18 Other branches of parent bank 95,298 78,114 83,117 77,681 75,871 73,049 73,068 73,014" 70,293 68,567 19 Banks 36,440 41,635 47,250 43,067 41,266 43,783r 44,920" 43,674" 44,262 42,378 70 Public borrowers 12,298 13,685 14,313 13,710 13,068 12,537 12,244 12,049 11,951 11,999 71 Nonbank foreigners 30,415 33,576 38,847 40,268 40,133 39,991r 40,243 40,087" 40,677 41,374 22 Other assets 24,854 27,220 20,172 18,758r 15,926 15,573r 18,033" 16,972" 18,378 17,040 United Kingdom 23 Total payable in any currency 184,818 175,599 165,850 164,507r 162,122 163,193" 165,044 173,158 167,046 172,710 74 Claims on United States 45,560 35,257 36,403 34,919 34,989 33,353 31,239 37,038 34,032 35,491 75 Parent bank 42,413 31,931 33,460 32,779 31,719 29,605 27,523 33,059 29,184 30,612 26 Other banks in United States 792 1,267 1,298 783 892 757 747 1,006 808 877 77 Nonbanks 2,355 2,059 1,645 1,357 2,378 2,991 2,%9 2,973 4,040 4,002 28 Claims on foreigners 115,536 109,692 111,623 110,025r 106,944 108,%3r 111,830 109,528 107,799 114,150 79 Other branches of parent bank 46,367 35,735 46,165 41,317 39,466 39,450" 41,458 40,130 37,164 39,778 30 Banks 31,604 36,394 33,399 36,206r 34,914 37,823r 37,282 36,848" 38,543 40,332 31 Public borrowers 3,860 3,306 3,329 2,542 2,531 2,513r 2,420 2,342 2,341 2,606 32 Nonbank foreigners 33,705 34,257 28,730 29,960 30,033 29,177r 30,670 30,208" 29,751 31,434 33 Other assets 23,722 30,650 17,824 19,563r 20,189 20,877r 21,975 26,592 25,215 23,069 34 Total payable in U.S. dollars 116,762 105,974 109,493 99,761r 94,870 95,612 97,431 100,422 %,200 93,739 35 Claims on United States 41,259 32,418 34,508 32,929 32,783 31,233 28,634 34,110 30,573 31,753 36 Parent bank 39,609 30,370 32,186 31,559 30,443 28,420 25,9% 31,265 27,580 28,938 37 Other banks in United States 334 822 1,022 428 413 393 326 533 300 308 38 Nonbanks 1,316 1,226 1,300 942 1,927 2,420 2,312 2,312 2,693 2,507 39 Claims on foreigners 63,701 58,791 66,335 60,695 57,530 60,180 61,742 60,479 58,944 56,603 40 Other branches of parent bank 37,142 28,667 34,124 28,856 30,017 29,388 30,753 30,287 27,814 27,713 41 Banks 13,135 15,219 17,089 16,800 13,422 16,903 17,073 16,658" 17,590 15,466 47 Public borrowers 3,143 2,853 2,349 1,883 1,949 1,888 1,808 1,804 1,744 1,832 43 Nonbank foreigners 10,281 12,052 12,773 13,156 12,142 12,001 12,108 11,730" 11,796 11,592 44 Other assets 11,802 14,765 8,650 6,137r 4,557 4,637 7,055 5,833 6,683 5,383 Bahamas and Cayman Islands 45 Total payable in any currency 162,316 168,512 147,422 151,647r 149,351r 144,524r 142,737" 148,814" 140,256 140,172 46 Claims on United States 112,989 115,430 %,280 103,308r 101,171r 97,339" 94,759" 101,941" 93,412 93,661 47 Parent bank 77,873 81,706 66,608 74,297r 73,325r 67,700" 66,035" 73,855" 66,039 67,055 48 Other banks in United States 11,869 10,907 7,828 7,892 7,424 9,279 7,184 7,651 7,477 7,360 49 Nonbanks 23,247 22,817 21,844 21,119 20,422 20,360 21,540 20,435 19,8% 19,246 50 Claims on foreigners 41,356 45,229 44,509 40,821 41,314 40,5%r 41,378" 40,437" 39,609 39,588 51 Other branches of parent bank 13,416 11,098 7,293 7,311 6,650 6,873 6,999 7,009 6,772 7,226 5? Banks 16,310 20,174 21,212 17,440 18,797 17,816r 18,527" 18,117" 17,688 16,863 53 Public borrowers 5,807 7,161 7,786 7,422 7,188 6,690 6,527 6,334 6,185 6,102 54 Nonbank foreigners 5,823 6,7% 8,218 8,648 8,679 9,217 9,325 8,977 8,964 9,397 55 Other assets 7,971 7,853 6,633 7,518 6,866 6,589" 6,600" 6,436" 7,235 6,923 56 Total payable in U.S. dollars 158,390 163,957 142,861 147,281r 145,NR I40,016r 138,067" 143,732" 135,701 135,698 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 1993 3.14 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data1—Continued 1993 A Feb. Mar. Apr. May June July Aug. LIABILITIES All foreign countries 57 Total payable in any currency 556,925 548,999 542,545 554,127' 547,425' 544,497' 548,893' 562,590' 551,342 560,539 58 Negotiable certificates of deposit (CDs) .. 18,060 16,284 10,032 ll,871r 11,596 13,748 14,348 14,154 14,568 14,604 59 To United States 189,412 198,307 189,444 184,627r 187,572' 176,747' 175,442' 186,374' 174,089 172,074 60 Parent bank 138,748 136,431 134,339 124,595r 126,134' 119,752' 117,207' 129,486' 120,953 118,724 61 Other banks in United States 7,463 13,260 12,182 12,373 13,306 11,952 14,062 13,514 10,440 9,561 62 Nonbanks 43,201 48,616 42,923 47,659 48,132 45,043' 44,173' 43,374' 42,6% 43,789 63 To foreigners 311,668 288,254 309,704 319,409r 312,417 316,661 322,140 318,956' 319,464 333,015 64 Other branches of parent bank 139,113 112,033 125,160 119,601 115,535 113,845 115,189 115,725 108,925 113,550 65 Banks 58,986 63,097 62,189 70,086r 68,411 68,381 69,323 67,243' 71,491 73,663 66 Official institutions 14,791 15,596 19,731 21,469 18,312 21,326 22,271 22,466 23,147 23,049 67 Nonbank foreigners 98,778 97,528 102,624 108,253r 110,159 113,109 115,357 113,522 115,901 122,753 68 Other liabilities 37,785 46,154 33,365 38,220' 35,840 37,341' 36,963 43,106' 43,221 40,846 69 Total payable in U.S. dollars 383,522 370,710 368,773 363,528r 353,840' 344,532' 344,319' 357,116' 342,287 339,344 70 Negotiable CDs 14,094 11,909 6,238 6,640 6,519 7,062 7,248 8,138 7,958 7,370 71 To United States 175,654 185,472 178,674 172,695r 175,763' 164,38C 162,328' 172,708' 160,499 157,841 72 Parent bank 130,510 129,669 127,948 117,700r 119,524' 112,736' 110,161' 121,922' 113,313 110,881 73 Other banks in United States 6,052 11,707 11,512 11,418 12,467 11,282 13,126 12,862 9,789 8,842 74 Nonbanks 39,092 44,096 39,214 43,577 43,772' 40,362' 39,041' 37,924' 37,397 38,118 75 To foreigners 179,002 158,993 172,189 170,527r 160,774 163,149 165,162 166,1301 163,567 165,055 76 Other branches of parent bank 98,128 76,601 83,700 79,594 77,685 75,682 75,313 75,783 72,900 72,467 77 Banks 20,251 24,156 26,118 25,571 21,227 22,150 22,969 23,440' 23,631 24,522 78 Official institutions 7,921 10,304 12,430 14,034 10,762 12,627 12,653 12,951 12,868 12,031 79 Nonbank foreigners 52,702 47,932 49,941 51,328r 51,100 52,690 54,227 53,956 54,168 56,035 80 Other liabilities 14,772 14,336 11,672 13,666 10,784 9,941 9,581 10,14C 10,263 9,078 United Kingdom 81 Total payable in any currency 184,818 175,599 165,850 164,507' 162,122 163,193' 165,044 173,158 167,046 172,710 82 Negotiable CDs 14,256 11,333 4,517 5,596r 4,753 5,414 5,644 6,566 6,364 6,674 83 To United States 39,928 37,720 39,174 33,092 38,011 34,661 37,272 39,514 35,521 36,600 84 Parent bank 31,806 29,834 31,100 24,250 29,759 26,781' 28,095 30,410 27,183 28,076 85 Other banks in United States 1,505 1,438 1,065 1,633 1,192 1,110 1,652 1,097 850 741 86 Nonbanks 6,617 6,448 7,009 7,209 7,060 6,770' 7,525 8,007 7,488 7,783 87 To foreigners 108,531 98,167 107,176 110,285r 104,356 108,670 106,834 106,725' 105,949 112,121 88 Other branches of parent bank 36,709 30,054 35,983 35,143 33,424 33,545 31,437 32,275 28,408 30,534 89 Banks 25,126 25,541 25,231 27,227 23,985 26,082 27,184 25,848' 28,504 29,039 90 Official institutions 8,361 9,670 12,090 12,938 10,531 12,342 11,752 12,139 11,885 11,575 91 Nonbank foreigners 38,335 32,902 33,872 34,977r 36,416 36,701 36,461 36,463 37,152 40,973 92 Other liabilities 22,103 28,379 14,983 15,534r 15,002 14,448' 15,294 20,353' 19,212 17,315 93 Total payable in U.S. dollars 116,094 108,755 108,214 101,113' 95,892 94,159 96,152 98,465 93,360 92,066 94 Negotiable CDs 12,710 10,076 3,894 4,444 3,765 4,214 4,392 5,462 5,197 4,890 95 To United States 34,697 33,003 35,417 28,874 33,552 30,170 32,457 34,523 30,669 31,579 96 Parent bank 29,955 28,260 29,957 23,097 28,405 25,315' 26,631 28,747 25,753 26,600 97 Other banks in United States 1,156 1,177 709 1,097 707 676 1,311 847 637 476 98 Nonbanks 3,586 3,566 4,751 4,680 4,440 4,179' 4,515 4,929 4,279 4,503 99 To foreigners 60,014 56,626 62,048 59,414r 51,850 54,407 54,576 53,282' 52,336 51,256 100 Other branches of parent bank 25,957 20,800 22,026 20,516 19,516 18,958 17,449 17,691 16,198 16,063 101 Banks 9,488 11,069 12,540 10,359 6,702 8,327 9,065 8,305' 8,347 7,666 102 Official institutions 4,692 7,156 8,847 9,967 7,008 8,803 8,210 8,812 8,720 8,042 103 Nonbank foreigners 19,877 17,601 18,635 18,572r 18,624 18,319 19,852 18,474 19,071 19,485 104 Other liabilities 8,673 9,050 6,855 8,381 6,725 5,368 4,727 5,198' 5,158 4,341 Bahamas and Cayman Islands 105 Total payable in any currency 162,316 168,512 147,422 151,647' 149,351' 144,524' 142,737' 148,814' 140,256 140,172 106 Negotiable CDs 646 1,173 1,350 1,142 1,713 1,692 1,812 1,535 1,562 1,307 107 To United States 114,738 130,058 111,861 111 ,201r 110,875' 106,560' 102,764' 109,128' 100,819 99,418 108 Parent bank 74,941 79,394 67,347 62,808r 60,152' 60,033' 57,082' 64,508' 59,152 58,031 109 Other banks in United States 4,526 10,231 10,445 10,059 11,492 10,291 11,220 11,567 8,603 7,791 110 Nonbanks 35,271 40,433 34,069 38,334 39,231 36,236' 34,462' 33,053' 33,064 33,5% 111 To foreigners 44,444 35,200 32,556 37,690 35,369 34,773 36,146 36,563 35,866 37,808 112 Other branches of parent bank 24,715 17,388 15,169 18,056 18,015 17,462 18,626 18,927 18,104 19,103 113 Banks 5,588 5,662 6,422 7,967 6,476 6,219 6,123 6,382 6,954 7,766 114 Official institutions 622 572 805 1,036 858 905 1,052 1,025 897 836 115 Nonbank foreigners 13,519 11,578 10,160 10,631 10,020 10,187 10,345 10,229 9,911 10,103 116 Other liabilities 2,488 2,081 1,655 1,614 1,394 1,499 2,015 1,588 2,009 1,639 117 Total payable in U.S. dollars 157,132 163,789 143,150 147,347' 144,700' 139,406' 137,712' 143,846' 135,569 135,483 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 1993 IItteemm 11999911rr 11999922'' Feb.r Mar.r Apr/ Mayr Juner Julyr Aug.P 1 Total1 360,530 398,672 413,185 410,078 413,660 424,298 427,399 426,695 436,657 By type 2 Liabilities reported by banks in the United States 38,396 54,823 66,464 63,079 62,814 69,199 72,552 67,116 68,540 3 U.S. Treasury bills and certificates 92,692 104,596 113,594 113,547 113,293 120,194 119,860 128,843 136,488 U.S. Treasury bonds and notes 4 Marketable 203,677 210,553 203,209 202,593 205,302 201,878 201,118 196,238 196,990 5 Nonmarketable 4,858 4,532 4,592 4,622 5,431 5,417 5,451 5,487 5,453 6 U.S. securities other than U.S. Treasury securities5 20,907 24,168 25,326 26,237 26,820 27,610 28,418 29,011 29,186 By area 7 Europe1 171,317 191,708 201,930 189,804 187,899 193,673 193,378 188,892 191,866 8 Canada 7,460 7,920 7,886 9,326 8,302 8,899 8,297 8,808 8,075 9 Latin America and Caribbean 33,554 40,015 42,457 44,464 49,145 48,130 48,524 53,763 55,275 10 Asia 139,465 152,142 154,019 158,017 159,860 164,947 169,389 168,867 174,678 11 Africa 2,092 3,565 3,866 3,919 3,782 3,782 3,621 2,844 3,109 12 Other countries6 6,640 3,320 3,025 4,546 4,670 4,865 4,188 3,519 3,652 1. Includes the Bank for International Settlements. 5. Debt securities of U.S. government corporations and federally sponsored 2. Principally demand deposits, time deposits, bankers acceptances, commer- agencies, and U.S. corporate stocks and bonds. cial paper, negotiable time certificates of deposit, and borrowings under repur- 6. Includes countries in Oceania and Eastern Europe. chase agreements. SOURCE. Based on Treasury Department data and on data reported to the 3. Includes nonmarketable certificates of indebtedness (including those payable Treasury Department by banks (including Federal Reserve Banks) and securities in foreign currencies through 1974) and Treasury bills issued to official institutions dealers in the United States and on the 1984 benchmark survey of foreign portfolio of foreign countries. investment in the United States. 4. Excludes notes issued to foreign official nonreserve agencies. Includes bonds and notes payable in foreign currencies; zero coupon bonds are included at current value. 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 1992 1993 IItteemm 11998899 11999900 11999911 Sept. Dec. Mar.r June 1 Banks' liabilities 67,835 70,477 75,129 84,162 72,7% 80,999 74,697 2 Banks' claims 65,127 66,7% 73,195 72,165r 62,789 64,057 55,161 3 Deposits 20,491 29,672 26,192 28,074 24,240 24,928 23,449 4 Other claims 44,636 37,124 47,003 44,091r 38,549 39,129 31,712 5 Claims of banks' domestic customers 3,507 6,309 3,398 3,987 4,432 2,625 3,234 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 1993 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 1993 Item 1990 1992r Feb.r Mar.r Apr.r Mayr Juner July HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 759,634 756,066 811,371 816,438 799,660 792,760 793,584 821,911 819,783 2 Banks' own liabilities 577,229 575,374 607,556 607,718 587,716 582,931 574,822 598,591 591,193 3 Demand deposits 21,723 20,321 21,824 22,310 21,572 22,243 22,144 21,467 21,815 4 Time deposits 168,017 159,649 160,476 148,482 143,9% 148,064 147,923 151,965 151,392 5 Other3 65,822 66,305 93,824 105,047 97,128 101,148 104,513 108,495 108,807 6 Own foreign offices 321,667 329,099 331,432 331,879 325,020 311,476 300,242 316,664 309,179 7 Banks' custodial liabilities5 182,405 180,692 203,815 208,720 211,944 209,829 218,762 223,320 228,590 8 U.S. Treasury bills and certificates6 96,7% 110,734 127,644 135,298 137,059 138,014 144,129 144,059 153,365 9 Other negotiable and readily transferable instruments 17,578 18,664 21,974 20,721 22,303 21,539 24,515 30,056 26,455 10 Other 68,031 51,294 54,197 52,701 52,582 50,276 50,118 49,205 48,770 11 Nonmonetary international and regional organizations 5,918 8,981 9,350 11,538 9,295 10,731 8,934 9,130 9,387 12 Banks' own liabilities 4,540 6,827 6,951 8,884 6,037 5,834 6,481 6,070 6,197 13 Demand deposits 36 43 46 47 1% 33 35 19 29 14 Time deposits2 1,050 2,714 3,214 2,321 2,722 1,687 2,989 3,407 2,920 15 Other3 3,455 4,070 3,691 6,516 3,119 4,114 3,457 2,644 3,248 16 Banks' custodial liabilities5 1,378 2,154 2,399 2,654 3,258 4,897 2,453 3,060 3,190 17 U.S. Treasury bills and certificates6 364 1,730 1,908 2,348 2,876 4,461 1,883 2,320 2,635 18 Other negotiable and readily transferable instruments 1,014 424 486 306 382 433 564 740 549 19 Other 0 0 5 0 0 3 6 0 6 20 Official institutions9 119,303 131,088 159,419 180,058 176,626 176,107 189,393 192,412 195,959 21 Banks' own liabilities 34,910 34,411 51,058 62,697 59,576 59,393 63,575 62,810 61,714 22 Demand deposits 1,924 2,626 1,274 1,764 1,457 1,361 1,386 2,204 1,519 23 Time deposits 14,359 16,504 17,823 19,006 18,814 19,166 21,682 19,408 18,626 24 Other3 18,628 15,281 31,961 41,927 39,305 38,866 40,507 41,198 41,569 25 Banks' custodial liabilities5 84,393 %,677 108,361 117,361 117,050 116,714 125,818 129,602 134,245 26 U.S. Treasury bills and certificates6 79,424 92,692 104,5% 113,594 113,547 113,293 120,194 119,860 128,843 27 Other negotiable and readily transferable instruments7 4,766 3,879 3,726 3,648 3,411 3,284 5,480 9,602 5,297 28 Other 203 106 39 119 92 137 144 140 105 29 Banks10 540,805 522,265 547,988 532,148 521,961 512,921 503,421 525,513 517,384 30 Banks' own liabilities 458,470 459,335 476,785 464,562 452,894 446,694 436,547 459,617 450,380 31 Unaffiliated foreign banks 136,802 130,236 145,353 132,683 127,874 135,218 136,305 142,953 141,201 32 Demand deposits 10,053 8,648 10,168 10,974 10,485 10,883 11,386 9,918 10,713 33 Time deposits2 88,541 82,857 90,368 78,991 74,331 79,592 76,439 83,143 84,751 34 Other3 38,208 38.731 44,817 42,718 43,058 44,743 48,480 49,892 45,737 35 Own foreign offices4 321,667 329,099 331,432 331,879 325,020 311,476 300,242 316,664 309,179 36 Banks' custodial liabilities5 82,335 62.930 71,203 67,586 69,067 66,227 66,874 65,8% 67,004 37 U.S. Treasury bills and certificates 10,669 7,471 11,087 9,2% 9,976 9,908 10,837 10,546 10,627 38 Other negotiable and readily transferable instruments 5,341 5,694 7,555 6,682 7,946 7,349 7,397 7,741 9,049 39 Other 66,325 49,765 52,561 51,608 51,145 48,970 48,640 47,609 47,328 40 Other foreigners 93,608 93.732 94,614 92,694 91,778 93,001 91,836 94,856 97,053 41 Banks' own liabilities 79,309 74,801 72,762 71,575 69,209 71,010 68,219 70,094 72,902 42 Demand deposits 9,711 9,004 10,336 9,525 9,434 9,966 9,337 9,326 9,554 43 Time deposits 64,067 57,574 49,071 48,164 48,129 47,619 46,813 46,007 45,095 44 Other3 5,530 8,223 13,355 13,886 11,646 13,425 12,069 14.761 18,253 45 Banks' custodial liabilities5 14,299 18.931 21,852 21,119 22,569 21,991 23,617 24.762 24,151 46 U.S. Treasury bills and certificates6 6,339 8,841 10,053 10,060 10,660 10,352 11,215 11,333 11,260 47 Other negotiable and readily transferable instruments 6,457 8,667 10,207 10,085 10,564 10,473 11,074 11,973 11,560 48 Other 1,503 1,423 1,592 974 1,345 1,166 1,328 1,456 1,331 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 7,073 7,456 9,111 9,4% 9,545 9,409 9,582 10,388 9,389 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 owed 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 owed to head office or parent International Settlements. foreign bank, and foreign branches, agencies, or wholly owned subsidiaries of 10. Excludes central banks, which are included in "Official institutions." head office 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 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1—Continued 1993 IItteemm 11999900 11999911 11999922 Feb. Mar. Apr. May June July Aug.p AREA 1 Total, all foreigners 759,634 756,066 811,371r 816,438r 799,660" 792,760" 793,584" 821,911" 819,783 843,093 2 Foreign countries 753,716 747,085 802,021r 804,900r 790,365r 782,029" 784,650" 812,781" 810,396 830,936 3 Europe 254,452 249,097 308,423R 304,755R 293,374" 298,984 313,834 324,951" 322,868 336,911 4 Austria 1,229 1,193 1,611 1,942 1,256 1,497 1,525 1,496 1,415 1,514 5 Belgium and Luxembourg 12,382 13,337 20,572 19,729 19,475 19,775 21,099 21,817 20,805 23,391 6 Denmark 1,399 937 3,060 2,835 1,536 1,229 2,464 3,088 3,983 3,024 7 602 1,341 1,299 2,049 2,297 2,265 2,185 2,580 2,873 2,940 8 France 30,946 31,808 41,459 32,457 31,712 31,087 33,825 33,744" 33,%3 36,224 9 Germany 7,485 8,619 18,631 18,934 16,069" 19,912 23,959 22,752 24,498 22,198 10 Greece 934 765 913R 758 763 742 859 819 1,078 1,122 11 Italy 17,735 13,541 10,041 10,701 88,,888899 8,094 9,089 10,402 10,721 11,426 1? Netherlands 5,350 7,161 7,372 11,702 1111,,440099 11,502 13,903 11,271 10,443 10,792 13 Norway 2,357 1,866 3,319 2,521 2,350 2,355 2,690 2,840 2,757 2,833 14 Portugal 2,958 2,184 2,465 2,508 2,489 2,476 2,674 2,764 2,894 3,015 15 Russia 119 241 577 497 535 726 847 1,129 1,447 2,307 16 Spain 7,544 11,391 9,796 17,233 15,735 14,055 13,588 15,484 16,593 17,157 17 Sweden 1,837 2,222 2,986 1,902 1,619 3,149 2,140 2,336 2,210 1,460 18 Switzerland 36,690 37,238 39,440 40,227 39,596 39,703 41,775" 41,270" 40,494 40,987 19 Turkey 1,169 1,598 2,666 2,862 2,520 2,664 2,761 2,497" 2,882 2,618 70 United Kingdom 109,555 100,292 112,456R 105,513R 106,394 109,553 106,638 116,035 115,169 120,774 71 Yugoslavia" 928 622 504 512 523 507 510 512 501 511 22 Other Europe and former U.S.S.R.12 13,234 12,741 29,256 29,873 28,207 27,693 31,303" 32,115" 28,142 32,618 23 Canada 20,349 21,605 22,746 22,898 25,045" 22,303" 21,331 20,051" 22,264 23,900 74 Latin America and Caribbean 332,997 345,529 317,236R 322,662R 319,872" 317,876" 303,630" 312,647" 311,950 311,676 75 Argentina 7,365 7,753 9,477 10,608 11,569" 11,066" 11,339" 11,289" 14,120 14,579 76 Bahamas 107,386 100,622 82,288R 87,863R 83,633" 81,763" 80,333" 80,673 73,401 73,780 77 Bermuda 2,822 3,178 7,079 6,508 6,271" 6,135 5,297 6,074" 6,%9 6,889 78 Brazil 5,834 5,704 5,584 5,304 5,462 5,466" 5,339" 4,936" 5,425 5,299 79 British West Indies 147,321 163,620 153,035R 151,600" 152,448" 148,628" 138,9%" 147,753" 147,618 144,708 30 Chile 3,145 3,283 3,035 3,420 3,325 3,480" 3,520" 3,552" 3,934 3,5% 31 Colombia 4,492 4,661 4,580 4,417 4,183 4,360" 4,338" 4,405" 4,464 4,383 37 Cuba 11 2 3 3 3 2 2 3 5 5 33 Ecuador 1,379 1,232 993 889R 931" 923" 956" 924" 889 860 34 Guatemala 1,541 1,594 1,377 1,311 1,382 1,352 1,323 1,397 1,304 1,315 35 Jamaica 257 231 371 279 309 293 289 341 341 364 36 Mexico 16,650 19,957 19,456 21,196 21,762 24,896 23,351 22,295 24,114 24,813 37 Netherlands Antilles 7,357 5,592 5,205 4,870R 4,222" 4,537 3,813" 4,059" 4,162 5,491 38 Panama 4,574 4,695 4,177 4,208R 3,918" 4,135" 4,054" 3,747" 3,747 3,657 39 Peru 1,294 1,249 1,080 1,045 995 1,070 977 979 891 898 40 Uruguay 2,520 2,096 1,955 2,061 1,815 1,775" 1,742" 1,775" 1,775 1,822 41 Venezuela 12,271 13,181 11,387 10,989" 11,452" 11,517" 11,644 12,242" 12,373 12,782 42 Other 6,779 6,879 6,154R 6,091R 6,192" 6,478" 6,317" 6,203" 6,418 6,435 43 136,844 120,462 143,561R 143,749" 140,519" 131,117" 134,032" 143,566" 143,337 147,755 China 44 People's Republic of China 2,421 2,626 3,202 3,007 2,957 3,527 3,008 2,885 22,,772288 33,,229922 45 Republic of China (Taiwan) 11,246 11,491 8,379 9,102 9,042 8,884 8,790 9,638 9,992 9,477 46 Hong Kong 12,754 14,269 18,509 19,543 17,041 16,353 15,832 16,212 16,417 15,832 4477 India 1,233 2,418 1,396 1,377 1,399 989 1,341 1,312 1,050 1,220 4488 Indonesia 1,238 1,463 1,480 1,460 1,871 1,464 1,861 2,132 1,688 1,582 49 Israel 2,767 2,015 3,775 3,373R 3,932" 3,765" 3,163" 2,764 2,790 2,705 50 Japan 67,076 47,069 58,466R 58,121R 57,014" 51,204" 54,462" 62,784" 62,226 68,049 51 Korea (South) 2,287 2,587 3,337R 3,471R 3,330" 3,584" 3,922" 3,842" 4,298 3,873 57 Philippines 1,585 2,449 2,275 2,746 2,774 2,785 2,458 2,933 3,1% 2,648 53 Thailand 1,443 2,252 5,582 5,375 5,342 4,967 5,377 5,233 5,830 6,058 54 Middle Eastern oil-exporting countries13 15,829 15,752 21,446 19,897 19,718 19,687 19,272 20,325 18,407 19,139 55 Other 16,965 16,071 15,714 16,277 16,099 13,908 14,546 13,506" 14,715 13,880 56 Africa 4,630 4,825 5,884 6,361R 6,508 6,441" 6,477" 6,537" 5,742 5,721 57 Egypt 1,425 1,621 2,472 3,077 3,084 2,938 2,922 2,784 1,880 2,018 58 Morocco 104 79 76 92 87 151 144 181 200 150 59 South Africa 228 228 190 319 243 246 198 265 172 233 60 Zaire 53 31 19 17 13 14 16 15 25 20 61 Oil-exporting countries1 1,110 1,082 1,346 1,135 1,239 1,294 1,368 1,332 1,417 1,279 62 Other 1,710 1,784 1,781 L,721R 1,842 1,798" 1,829" 1,960" 2,048 2,021 63 Other 4,444 5,567 4,171 4,475 5,047 5,308 5,346 5,029" 4,235 4,973 64 Australia 3,807 4,464 3,047 3,388 4,013 4,056 4,449 4,078 3,253 3,892 65 Other 637 1,103 1,124 1,087 1,034 1,252 897 951" 982 1,081 66 Nonmonetary international and regional 5,918 8,981 9,350 11,538 9,295 10,731 8,934 9,130 99,,338877 1122,,115577 67 International15 4,390 6,485 7,434 8,857 6,251 7,590 5,388 5,612 5,828 8,159 68 Latin American regional16 1,048 1,181 1,415 1,738 2,021 2,223 2,412 2,318 2,077 2,737 69 Other regional17 479 1,315 501 943 1,023 918 1,134 1,200 1,482 1,261 11. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 14. Comprises Algeria, Gabon, Libya, and Nigeria. 12. Includes the Bank for International Settlements and Eastern European 15. Principally the International Bank for Reconstruction and Development, countries not listed in line 23. Since December 1992, includes all parts of the Excludes "holdings of dollars" of the International Monetary Fund. former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. 16. Principally the Inter-American Development Bank. Comprises Bulgaria, Czechoslovakia, Hungary, Poland, and Romania. 17. Asian, African, Middle Eastern, and European regional organizations, 13. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and except the Bank for International Settlements, which is included in "Other United Arab Emirates (Trucial States). Western Europe." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • December 1993 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 1993 AArreeaa aanndd ccoouunnttrryy 11999900 11999911 11999922 Feb. Mar/ Apr.r Mayr June* July* Aug.? 1 Total, all foreigners 511,543 514,339 500,511R 498,439R 477,782 471,288 461,179 483,017 471,905 463,351 2 Foreign countries 506,750 508,056 495,429R 494,331R 474,460 468,871 459,497 480,937 470,598 461,399 3 Europe 113,093 114,310 123,999* 124,650* 122,504 120,313 118,213 122,356 124,472 118,494 4 Austria 362 327 33 lr 520r 894 1,013 941 1,080 587 691 5 Belgium and Luxembourg 5,473 6,158 6,404 5,886 6,273 6,177 5,513 5,955 6,127 6,554 6 Denmark 497 686 707 785 682 645 628 721 835 693 7 Finland 1,047 1,907 1,419 1,226 1,010 998 885 1,225 1,007 724 8 France 14,468 15,112 14,803r 14,650* 13,235 13,141 11,614 11,818 11,832 11,486 9 Germany 3,343 3,371 4,229 5,370 5,725 5,322 6,089 6,236 7,746 6,765 10 Greece 727 553 718 668 583 618 5% 564 509 508 11 Italy 6,052 8,242 9,048 8,466 8,418 8,724 8,218 9,250 8,053 8,839 12 Netherlands 1,761 2,546 2,472r 3,254* 2,676 2,607 3,278 2,764 3,260 3,078 13 Norway 782 669 356 750 645 714 676 789 823 944 14 Portugal 292 344 325 494 454 513 593 670 710 803 15 Russia 530 1,970 3,147 3,154 2,906 2,889 3,080 3,045 2,799 2,591 16 Spain 2,668 1,881 2,772 4,158 3,859 3,642 3,441 3,607 5,117 4,184 17 Sweden 2,094 2,335 4,929 5,155 4,809 4,509 4,229 4,062 5,131 4,273 18 Switzerland 4,202 4,540 4,722 4,971 4,348 4,361 4,735 4,123 5,193 5,634 19 Turkey 1,405 1,063 %2 1,041 943 1,285 1,508 1,584 1,492 1,549 20 United Kingdom 65,151 60,395 63,928r 61,375r 62,241 60,725 59,703 62,639 60,825 55,233 21 Yugoslavia2 1,142 825 569 567 553 551 550 548 547 547 22 Other Europe and former U.S.S.R.3 1,095 1,386 2,158 2,160 2,250 1,879 1,936 1,676 1,879 3,398 23 Canada 16,091 15,113 14,155r 14,906r 18,287 16,977 16,393 16,693 17,776 17,365 74 Latin America and Caribbean 231,506 246,137 218,133r 215,167r 205,7% 202,149 197,039 212,642 208,231 208,098 25 Argentina 6,967 5,869 4,958r 4,869r 4,844 3,931 3,942 4,066 4,842 4,740 7,6 Bahamas 76,525 87,138 60,868r 65,624r 59,018 59,418 56,188 59,979 56,832 56,266 27 Bermuda 4,056 2,270 5,934 2,851 3,910 5,609 3,089 4,319 8,578 7,160 28 Brazil 17,995 11,894 10,774r 10,513r 10,871 10,815 10,710 12,319 10,842 10,926 29 British West Indies 88,565 107,846 101,523r 97,341r 93,8% 88,975 89,853 97,307 91,566 93,924 30 Chile 3,271 2,805 3,397 3,795 3,638 3,552 3,718 3,675 3,898 3,7% 31 Colombia 2,587 2,425 2,750 2,819 2,807 2,786 2,876 2,847 2,886 2,916 32 Cuba 0 0 0 0 0 0 0 1 0 0 33 Ecuador 1,387 1,053 884 845r 819 807 770 771 732 739 34 Guatemala 191 228 262 258r 274 269 256 266 240 256 35 Jamaica 238 158 162r 164 168 161 165 184 182 181 36 Mexico 14,851 16,567 14,997r 15,990* 15,115 15,534 14,967 15,300 15,685 15,591 37 Netherlands Antilles 7,998 1,207 1,379 1,938 2,105 1,971 2,354 3,011 3,172 3,243 38 Panama 1,471 1,560 4,654r 2,489* 2,721 2,491 2,440 2,549 2,532 2,361 39 Peru 663 739 730 708 650 691 675 657 651 667 40 Uruguay 786 599 936 844 846 787 778 904 807 816 41 Venezuela 2,571 2,516 2,525 2,485 2,558 2,495 2,542 2,803 3,001 2,876 42 Other 1,384 1,263 1,400 l,634r 1,556 1,857 1,716 1,684 1,785 1,640 43 138,722 125,262 131,857r 132,080* 120,213 122,414 120,983 122,128 112,897 111,163 China 44 People's Republic of China 620 747 906 892 939 1,388 881 1,898 860 638 45 Republic of China (Taiwan) 1,952 2,087 2,046 1,585 1,630 1,670 1,561 1,840 1,549 1,585 46 Hong Kong 10,648 9,617 9,673 10,298 10,563 9,215 10,420 9,747 10,637 9,390 47 India 655 441 529 549 443 549 489 438 470 439 48 Indonesia 933 952 1,189 1,292 1,469 1,432 1,386 1,504 1,283 1,290 49 Israel 774 860 820 809 8% 1,057 814 777 733 792 50 Japan 90,699 84,807 79,189r 80,356r 67,887 71,681 71,908 71,327 62,501 64,837 51 Korea (South) 5,766 6,048 6,180 6,753 6,938 7,048 7,152 7,421 7,587 7,245 52 Philippines 1,247 1,910 2,145 1,842 1,713 1,645 1,521 1,402 1,357 1,250 53 Thailand 1,573 1,713 1,867 1,737 1,678 1,794 1,763 1,865 2,006 2,018 54 Middle Eastern oil-exporting countries4 10,749 8,284 18,559 17,775 19,048 17,909 17,937 17,437 16,946 15,917 55 Other 13,106 7,7% 8,754r 8,192r 7,009 7,026 5,151 6,472 6,968 5,762 56 Africa 5,445 4,928 4,279r 4,183r 3,907 3,767 3,661 3,810 3,854 3,901 57 Egypt 380 294 186r 291 192 151 151 177 148 168 58 Morocco 513 575 441 403 3% 3% 420 416 437 443 59 South Africa 1,525 1,235 1,041 1,030 1,011 924 803 746 740 704 60 Zaire 16 4 4 3 3 3 3 3 4 4 61 Oil-exporting countries5 1,486 1,298 l,002r 1,108 1,140 1,128 1,144 1,156 1,232 1,224 62 Other 1,525 1,522 1,605 1,348r 1,165 1,165 1,140 1,312 1,293 1,358 63 Other 1,892 2,306 3,006r 3,345 3,753 3,251 3,208 3,308 3,368 2,378 64 Australia 1,413 1,665 2,262r 2,552 3,117 2,635 2,534 2,574 2,443 1,847 65 Other 479 641 744 793 636 616 674 734 925 531 66 Nonmonetary international and regional organizations6 4,793 6,283 5,082 4,108 3,322 2,417 1,682 2,080 1,307 1,952 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. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 5. Comprises Algeria, Gabon, Libya, and Nigeria. 3. Includes the Bank for International Settlements and Eastern European 6. Excludes the Bank for International Settlements, which is included in countries not listed in line 23. Since December 1992, includes all parts of the "Other Western Europe." former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. Comprises Bulgaria, Czechoslovakia, Hungary, Poland, and Romania. 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 Claim 1990 1991 1992r Feb.r Mar/ Apr/ Ma/ Juner July7 1 Total 579,044 579,683 560,549 530,698 531,488 2 Banks' claims 511,543 514,339 500,511 498,439 477,782 471,288 461,179 483,017 471,905 3 Foreign public borrowers 41,900 37,126 31,376 30,370 33,722 30,390 29,601 29,409 32,579 4 Own foreign offices2 304,315 318,800 304,623 308,762 294,513 287,119 282,587 298,973 280,121 5 Unaffiliated foreign banks 117,272 116,602 109,643 102,610 97,041 97,747 94,727 94,016 92,895 6 Deposits 65,253 69,018 61,277 50,637 48,778 47,816 47,327 46,139 44,713 7 Other 52,019 47,584 48,366 51,973 48,263 49,931 47,400 47,877 48,182 8 All other foreigners 48,056 41,811 54,869 56,697 52,506 56,032 54,264 60,619 66,310 9 Claims of banks' domestic customers' 67,501 65,344 60,038 52,916 48,471 10 Deposits 14,375 15,280 15,452 14,363 12,600 11 Negotiable and readily transferable instruments 41,333 37,125 31,454 24,976 22,436 12 Outstanding collections and other claims 11,792 12,939 13,132 13,577 13,435 MEMO 13 Customer liability on acceptances... 8,974 8,121 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States .. 44,638 40,297 33,604 36,801 36,425 32,962 33,814 29,686 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 in the accounts 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 1992 1993 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa22 11998899 11999900 11999911 Sept/ Dec/ Mar/ Junep 1 Total 238,123 206,903 195,302 187,468 195,560 182,873 183,271 By borrower 2 Maturity of one year or less 178,346 165,985 162,573 155,074 163,775 152,673 154,704 3 Foreign public borrowers 23,916 19,305 21,050 17,905 17,809 21,210 17,941 4 All other foreigners 154,430 146,680 141,523 137,169 145,966 131,463 136,763 5 Maturity of more than one year 59,776 40,918 32,729 32,394 31,785 30,200 28,567 6 Foreign public borrowers 36,014 22,269 15,859 13,333 13,279 12,220 11,252 7 All other foreigners 23,762 18,649 16,870 19,061 18,506 17,980 17,315 By area Maturity of one year or less 8 Europe 53,913 49,184 51,835 55,819 53,707 55,292 54,431 9 Canada 5,910 5,450 6,444 5,926 6,096 7,890 8,011 10 Latin America and Caribbean 53,003 49,782 43,597 45,411 50,398 45,141 48,605 11 Asia 57,755 53,258 51,059 40,664 45,726 37,895 38,812 17 Africa 3,225 3,040 2,549 2,183 1,784 1,680 1,715 13 All other3 4,541 5,272 7,089 5,071 6,064 4,775 3,130 Maturity of more than one year 14 Europe 4,121 3,859 3,878 6,624 5,367 4,896 4,546 15 Canada 2,353 3,290 3,595 3,222 3,282 3,117 2,877 16 Latin America and Caribbean 45,816 25,774 18,277 15,291 15,312 14,567 13,812 17 Asia 4,172 5,165 4,459 4,872 5,034 5,054 4,795 18 Africa 2,630 2,374 2,335 2,107 2,380 2,130 2,048 19 All other3 684 456 185 278 410 436 489 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 1993 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 1991 1992 1993 AArreeaa oorr ccoouunnttrryy 11998899 11999900 June Sept. Dec. Mar. June Sept. Dec. Mar. June 1 Total 340.9 320.1 322.3 338.4 343.6 351.7r 359.4r 346.0r 347.6r 363.0r 377.7r 2 G-10 countries and Switzerland 152.9 132.2 130.3 135.0 137.6 130.9* 136.2r 137.4r 133.9r 143.6r 149.7r 3 Belgium and Luxembourg 6.3 5.9 6.1 5.8 6.0 5.3 6.2 6.2 5.6 6.1 7.0 4 France 11.7 10.4 10.5 11.1 11.0 10.0 ll^ 15.3r 15,3r 13.6 13.8 5 Germany 10.5 10.6 8.3 9.7 8.3 8.4 8.8 10.9 9.3 9.9 10.8 6 Italy 7.4 5.0 3.6 4.5 5.6 5.4 8.0 6.4 6.5 6.7 7.6 7 Netherlands 3.1 3.0 3.3 3.0 4.7 4.3 3.3 3.7 2.8 3.7 3.7 8 Sweden 2.0 2.2 2.5 2.1 1.9 2.0 1.9 2.2 2.3 3.0 2.5 9 Switzerland 7.1 4.4 3.3 3.9 3.4 3.2 4.6 5.2 4.8 5.3 4.7r 10 United Kingdom 67.2 60.9 59.5 65.6 68.5 64.8 65.9 61.8r 61.3r 66.3r 73.6r 11 Canada 5.4 5.9 8.2 5.8 5.8 6.5r 6.7 6.7 6.6 8.6 8.1 12 Japan 32.3 24.0 25.1 23.5 22.6 21.1 18.7 18.9 19.3r 20.4 YJ.9 13 Other industrialized countries 21.0 22.9 21.3 22.1 22.8 21.4r 25.5 25.1 24.0r 25.5 27.2 14 Austria 1.5 1.4 1.1 1.0 .6 .8 .8 .7r 1.2 1.2 1.3 15 Denmark 1.1 1.1 1.2 .9 .9 .8 1.3 1.5 .9 .8 1.0 16 Finland 1.0 .7 .8 .6 .7 .8 .8 1.0 .7 .7 .9 17 Greece 2.5 2.7 2.4 2.3 2.6 2.3 2.8 3.0 3.0 2.8 3.1 18 Norway 1.4 1.6 1.5 1.4 1.4 1.5 1.7 1.6 1.2 1.8 1.8 19 Portugal .4 .6 .6 .5 .6 .5 .5 .5 .4 .7 .9 20 Spain 7.1 8.3 7.1 8.3 8.3 7.7 10.1 9.8 9.0 9.5 10.5 21 Turkey 1.2 1.7 1.9 1.6 1.4 1.2 1.5 1.5 1.3 1.4 2.1r 22 Other Western Europe 1.0 1.2 1.1 1.3 1.8 1.5 2.0 1.5 1.7 2.0 1.7r 23 South Africa 2.0 1.8 1.8 1.6 1.9 1.8 1.7 1.7 1.7 1.6 1.3 24 Australia 1.6 1.8 2.0 2.4 2.7 2.3 2.3 2.3 2.9 2.9 2.5 25 OPEC2 17.1 12.8 14.0 15.6 14.5 15.8 16.2 15.9 16.1 16.9 15.9 26 Ecuador 1.3 1.0 .9 .8 .7 .7 .7 .7 .6 .6 .6 27 Venezuela 7.0 5.0 5.3 5.6 5.4 5.4 5.3 5.4 5.2 5.3 5.6 28 Indonesia 2.0 2.7 2.6 2.8 2.7 3.0 3.0 3.0 3.0 3.1 3.1 29 Middle East countries 5.0 2.5 3.7 5.0 4.2 5.3 5.9 5.4 6.2 6.7 5.4 30 African countries 1.7 1.7 1.5 1.5 1.5 1.4 1.4 1.4 1.1 1.1 l.lr 31 Non-OPEC developing countries 77.5 65.4 64.4 64.7 63.9 69.7 68.1 72.8r 72. lr 74.3r 76.51 Latin America 32 Argentina 6.3 5.0 4.6 4.5 4.8 5.0 5.1 6.2 6.6 7.0 6.6 33 Brazil 19.0 14.4 11.6 10.5 9.6 10.8 10.6 10.8 10.8 11.6 12.3r 34 Chile 4.6 3.5 3.6 3.7 3.6 3.9 4.0 4.2 4.4 4.6 4.6r 35 Colombia 1.8 1.8 1.6 1.6 1.7 1.6 1.6 1.7 1.8 1.9 1.9 36 Mexico 17.7 13.0 14.3 16.2 15.5 17.7 16.3 17.1 16.0 16.8 16.7r 37 Peru .6 .5 .5 .4 .4 .4 .4 .5 .5 .4 .4 38 Other 2.8 2.3 2.0 1.9 2.1 2.2 2.2 2.5 2.6 2.6 2.7r Asia China 39 Peoples Republic of China .3 .2 .6 .4 .3 .3 .3 .3 .7 .6 1.6 40 Republic of China (Taiwan) 4.5 3.5 4.1 4.1 4.1 4.8 4.6 5.0 5.2 5.3 5.9 41 India 3.1 3.3 3.0 2.8 3.0 3.6 3.8 3.6 3.2 3.1 3.1 42 Israel .7 .5 .5 .5 .5 .4 .4 .4 .4 .5 .4 43 Korea (South) 5.9 6.2 6.9 6.5 6.8 6.9 6.9 7.4 6.6 6.5 6.9 44 Malaysia 1.7 1.9 2.1 2.3 2.3 2.5 2.7 3.0 3.1r 3.3 3.7 45 Philippines 4.1 3.8 3.7 3.6 3.7 3.6 3.1 3.6 3.6 3.4 2.9 46 Thailand 1.3 1.5 1.7 1.9 1.7 1.7 1.9 2.2 2.2 2.2 2.4 47 Other Asia3 1.0 1.7 1.8 2.0 2.0 2.3 2.5 2.7 2.7 2.7 2.6 Africa 48 Egypt ..44 .4 .4 .4 .4 .3 .5 .3 .2 .2 .2 49 Morocco .9 .8 .7 .7 .7 .7 .7 .6 .6 .5 .6 50 Zaire .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 1.0 1.0 .8 .8 .7 .7 .6 .9 1.0 .8 .9 52 Eastern Europe 3.5 2.3 2.1 1.8 2.4 2.9 3.0 3.1 3.1 2.9 3.2r 53 Russia .7 .2 .4 .4 .9 1.4 1.7 1.8 1.9 1.7 1.9 54 Yugoslavia 1.6 1.2 1.0 .8 .9 .8 .7 .7 .6 .6 .6 55 Other 1.3 .9 .7 .7 .7 .6 .6 .7 .6 .7 .T 56 Offshore banking centers 38.4 44.7 50.2 54.6 54.2 61.5r 54.6r 58.4r 60.2r 57.8r 57 Bahamas 5.5 2.9 6.8 6.7 11.9 15.3r 9.0r 6.9r 9.6r 6.9 58 Bermuda 1.7 4.4 4.2 7.1 2.3 3.9 5.1 3.8 6.2 4.1 4.5 59 Cayman Islands and other British West Indies 9.0 11.7 14.9 13.8 15.8 18.6r 19.3r 16.9r 21.8r 17.6 \5.T 60 Netherlands Antilles 2.3 7.9 1.4 3.9 1.2 1.0 .8 .7 1.1 1.6 2.5 61 Panama4 1.4 1.4 1.3 1.3 1.4 1.6r 2.0r 2.0r 2.r 62 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 63 Hong Kong 11.3 9.7 14.3 14.0 14.4 14.0 15.0 15.2 13.8 16.7 16.8 64 Singapore 7.0 6.6 7.2 7.7 7.1 8.5 6.4 6.8 6.5 8.4 9.3r 65 Other3 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated6 30.5 39.9 40.0 44.4 48.0 47.8 48.6 36.8 39.7r 39.5r 47.3r 1. The banking offices covered by these data are the U.S. offices and foreign by an increase in the reporting threshold for "shell" branches from $50 million to branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks. $150 million equivalent in total assets, the threshold now applicable to all Offices not covered include (1) U.S. agencies and branches of foreign banks, and reporting branches. (2) foreign subsidiaries of U.S. banks. U.S. office data include other types of 2. Organization of Petroleum Exporting Countries, shown individually; other U.S.-owned depository institutions as well as some types of brokers and dealers. members of OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, To minimize duplication, the data are adjusted to exclude the claims on foreign Saudi Arabia, and United Arab Emirates); and Bahrain and Oman (not formally branches held by a U.S. office or another foreign branch of the same banking members of OPEC). institution. The data in this table combine foreign branch claims in table 3.14 (the 3. Excludes Liberia. sum of lines 7 through 10) with the claims of U.S. offices in table 3.18 (excluding 4. Includes Canal Zone. those held by agencies and branches of foreign banks and those constituting 5. Foreign branch claims only. claims on own foreign branches). 6. Includes New Zealand, Liberia, and international and regional Since June 1984, reported claims held by foreign branches have been reduced 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 1992 1993 TTyyppee ooff lliiaabbiilliittyy aanndd aarreeaa oorr ccoouunnttrryy 11998899 11999900 11999911 Mar. June Sept. Dec. Mar. Junep 1 38,764 46,043 43,453 44,193 44,109 45,184 43,144 44,111" 46,141 7 Payable in dollars 33,973 40,786 38,061 38,735 37,616 36,792 35,739 36,074r 36,602 3 Payable in foreign currencies 4,791 5,257 5,392 5,458 6,493 8,392 7,405 8,037r 9,539 By type 4 Financial liabilities 17,879 21,066 21,872 22,185 21,756 23,281 22,047 22,840" 24,219 5 Payable in dollars 14,035 16,979 17,760 17,957 16,714 16,546 15,700 16,189" 16,262 6 Payable in foreign currencies 3,844 4,087 4,112 4,228 5,042 6,735 6,347 6,651" 7,957 7 Commercial liabilities 20,885 24,977 21,581 22,008 22,353 21,903 21,097 21,271" 21,922 8 Trade payables 8,070 10,683 8,662 9,125 9,715 9,586 9,046 9,873 9,692 9 Advance receipts and other liabilities 12,815 14,294 12,919 12,883 12,638 12,317 12,051 11,398" 12,230 10 Payable in dollars 19,938 23,807 20,301 20,778 20,902 20,246 20,039 19,885" 20,340 11 Payable in foreign currencies 947 1,170 1,280 1,230 1,451 1,657 1,058 1,386 1,582 By area or country Financial liabilities 1? Europe 11,660 10,978 11,805 12,349 12,728 13,767 12,530 12,995 1144,,335555 13 Belgium and Luxembourg 340 394 217 174 194 256 434 299 268 14 France 258 975 2,106 1,997 2,324 2,785 1,608 1,610 2,295 15 Germany 464 621 682 666 634 738 740 751 781 16 Netherlands 941 1,081 1,056 1,025 979 980 606 639 690 17 Switzerland 541 545 408 355 490 627 569 503 554 18 United Kingdom 8,818 6,357 6,329 7,238 7,244 7,580 7,910 8,632 9,112 19 610 229 267 283 337 320 491 551 492 70 Latin America and Caribbean 1,357 4,153 4,404 4,092 3,373 3,462 3,515 3,624" 3,428 71 Bahamas 157 371 537 3% 343 220 349 509" 404 77 Bermuda 17 0 114 114 114 115 114 114 124 73 Brazil 0 0 6 8 10 18 19 18 18 74 British West Indies 724 3,160 3,144 2,960 2,232 2,408 2,342 2,307" 2,202 75 Mexico 6 5 7 7 8 12 12 13 11 26 0 4 4 4 4 5 6 5 5 77 4,151 5,295 5,338 5,366 5,229 5,642 5,477 5,620" 5,764 78 Japan 3,299 4,065 4,102 4,107 4,136 4,609 4,451 4,648" 4,621 29 Middle East oil-exporting countries 2 5 13 13 10 17 19 24 19 30 2 2 6 7 0 5 6 6 130 31 Oil-exporting countries 0 0 4 6 0 0 0 0 123 32 Allother4 100 409 52 88 89 85 28 44 50 Commercial liabilities 33 Europe 9,071 10,310 8,126 7,666 7,309 6,879 6,704 66,,664400"" 66,,994455 34 Belgium and Luxembourg 175 275 248 256 240 173 287 143 267 35 France 877 1,218 957 678 659 688 663 669 769 36 1,392 1,270 944 880 702 744 621 613 634 37 Netherlands 710 844 709 574 605 601 556 666 710 38 Switzerland 693 775 575 543 461 430 398 532 435 39 United Kingdom 2,620 2,792 2,310 2,445 2,404 2,262 2,250 2,135" 2,186 40 Canada 1,124 1,261 990 1,095 1,077 1,085 892 929 933 41 Latin America and Caribbean 1,224 1,672 1,352 1,701 1,803 1,496 1,586 1,620 1,814 47 41 12 3 13 8 3 6 18 6 43 Bermuda 308 538 310 493 409 338 293 437 356 44 Brazil 100 145 219 230 212 115 203 107 225 45 British West Indies 27 30 107 108 73 85 57 87 16 46 Mexico 323 475 304 375 475 322 444 385 659 47 Venezuela 164 130 94 168 279 125 130 167 163 48 7,550 9,483 9,330 9,890 10,439 11,006 10,787 10,840 10,965 49 Japan 2,914 3,651 3,720 3,549 3,537 3,909 3,994 4,007 3,723 50 Middle Eastern oil-exporting countries'2'5 1,632 2,016 1,498 1,591 1,778 1,813 1,792 1,723 1,771 51 886 844 713 644 775 675 556 574 603 52 Oil-exporting countries 339 422 327 253 389 335 295 236 315 53 Other4 1,030 1,406 1,070 1,012 950 762 572 668 662 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 1993 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1992 1993 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998899 11999900 11999911 Mar. June Sept. Dec. Mar.r June" 1 Total 33,173 35,348 42,233 40,899 41,037 38,345 38,039 44,811 40,849 2 Payable in dollars 30,773 32,760 39,688 38,281 38,071 35,460 35,562 42,086 37,797 3 Payable in foreign currencies 2,400 2,589 2,545 2,618 2,966 2,885 2,477 2,725 3,052 By type 4 Financial claims 19,297 19,874 25,264 24,289 24,037 21,311 21,041 25,823 21,480 5 Deposits 12,353 13,577 17,290 16,262 15,056 12,436 12,615 16,463 11,598 6 Payable in dollars 11,364 12,552 16,415 15,076 13,717 11,353 11,826 15,407 10,682 7 Payable in foreign currencies 989 1,025 875 1,186 1,339 1,083 789 1,056 916 8 Other financial claims 6,944 6,297 7,974 8,027 8,981 8,875 8,426 9,360 9,882 9 Payable in dollars 6,190 5,280 7,094 7,305 8,277 7,868 7,688 8,634 8,985 10 Payable in foreign currencies 754 1,017 880 722 704 1,007 738 726 897 11 Commercial claims 13,876 15,475 16,969 16,610 17,000 17,034 16,998 18,988 19,369 12 Trade receivables 12,253 13,657 14,244 14,044 14,538 14,330 14,711 16,924 16,939 13 Advance payments and other claims 1,624 1,817 2,725 2,566 2,462 2,704 2,287 2,064 2,430 14 Payable in dollars 13,219 14,927 16,179 15,900 16,077 16,239 16,048 18,045 18,130 15 Payable in foreign currencies 657 548 790 710 923 795 950 943 1,239 By area or country Financial claims 16 Europe 8,463 9,645 13,724 14,243 13,225 11,433 9,514 10,162 9,407 17 Belgium and Luxembourg 28 76 13 12 25 16 8 6 13 18 France 153 371 314 279 788 811 776 905 774 19 Germany 152 367 335 285 377 319 399 364 377 20 Netherlands 238 265 385 727 732 767 537 544 499 21 Switzerland 153 357 591 682 780 602 507 478 460 22 United Kingdom 7,496 7,971 11,445 11,669 8,789 7,915 6,130 6,833 6,350 23 Canada 1,904 2,934 2,716 2,753 2,533 2,245 1,721 2,090 1,758 24 Latin America and Caribbean 8,020 6,201 7,689 6,200 6,849 6,452 8,326 9,553 6,612 25 Bahamas 1,890 1,090 758 493 523 1,099 618 320 697 26 Bermuda 7 3 8 12 12 65 40 79 258 27 Brazil 224 68 144 143 134 396 4% 592 590 28 British West Indies 5,486 4,635 6,304 5,124 5,759 4,449 6,530 8,101 4,558 29 Mexico 94 177 212 212 244 239 286 235 270 30 Venezuela 20 25 40 34 32 26 29 23 24 31 Asia 590 860 675 642 975 727 846 3,263 2,961 32 Japan 213 523 385 380 728 481 683 3,066 2,444 33 Middle East oil-exporting countries 8 8 5 3 4 4 3 8 10 34 Africa 140 37 57 60 57 71 79 128 125 35 Oil-exporting countries 12 0 1 0 0 1 9 1 1 36 All other4 180 195 403 391 398 383 555 627 617 Commercial claims 37 Europe 6,209 7,044 7,935 7,842 8,087 7,742 7,442 8,274 8,770 38 Belgium and Luxembourg 242 212 192 181 255 172 184 167 170 39 France 964 1,240 1,542 1,560 1,561 1,739 11,,339922 1,397 1,452 40 Germany 696 807 940 933 905 870 888800 939 964 41 Netherlands 479 555 643 646 666 588 541 724 555 42 Switzerland 313 301 295 323 394 294 260 426 441 43 United Kingdom 1,575 1,775 2,084 2,082 2,169 1,973 1,799 2,282 2,506 44 Canada 1,091 1,074 1,109 1,115 1,058 1,105 1,192 1,186 1,285 45 Latin America and Caribbean 2,184 2,375 2,562 2,544 2,653 3,113 2,827 3,381 3,376 46 Bahamas 58 14 11 11 9 7 18 18 16 47 Bermuda 323 246 263 272 291 245 237 195 239 48 Brazil 297 326 418 364 438 395 336 820 780 49 British West Indies 36 40 41 45 32 43 39 17 42 50 Mexico 508 661 801 865 829 942 837 963 876 51 Venezuela 147 192 202 206 251 302 317 336 310 52 Asia 3,570 4,127 4,558 4,343 4,456 4,300 4,649 5,289 5,029 53 Japan 1,199 1,460 1,878 1,782 1,786 1,793 1,850 2,148 1,824 54 Middle Eastern oil-exporting countries 518 460 621 635 609 511 677 769 659 55 Africa 429 488 418 418 422 430 540 453 507 56 Oil-exporting countries 108 67 95 75 73 60 78 75 97 57 Other4 393 367 387 348 324 344 348 405 402 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 1993 1993 Transaction and area or country 1991 1992 J A a u n g .- . Feb. Mar.' Apr.r Mayr June* Julyr Aug.P U.S. corporate securities STOCKS 1 Foreign purchases 211,207 221,426r 198,087 28,766* 27,061 25,123 23,094 24,310 24,439 26,111 2 Foreign sales 200,116 226,548r 189,928 25,995* 24,615 25,454 22,308 23,467 25,042 23,687 3 Net purchases or sales (-) 11,091 —5,122r 8,159 2,771r 2,446 -331 786 843 -603 2,424 4 Foreign countries 10,522 —5,155r 7,811 2,681r 2,289 -339 790 815 -650 2,397 5 Europe 53 —4,913r 2,936 2,269* 972 -650 -619 415 -185 676 6 France 9 -1,350 -255 223 -183 -154 -86 -66 45 -9 7 Germany -63 -66r 811 95* 100 137 6 99 76 202 8 Netherlands -227 -262 -222 -11 68 32 35 -91 -452 133 9 Switzerland -131 168 2,293 501 356 280 50 178 369 354 10 United Kingdom -352 -3,301 -646 1,135 475 -1,140 -689 195 -73 -199 11 Canada 3,845 1,407 -2,218 57 167 91 -132 -532 -1,400 -128 12 Latin America and Caribbean 2,177 2,203 2,304 -235 403 246 509 72 413 591 13 Middle East1 -134 -88 -306 -65 -13 7 56 -22 -133 -44 14 Other Asia 4,255 -3,943 5,054 593 763 2 910 1,073 632 1,204 15 Japan 1,179 -3,598 1,292 -624 250 -530 452 230 626 860 16 Africa 153 10 29 27 2 -48 10 20 -49 63 17 Other countries 174 169 12 35 -5 13 56 -211 72 35 18 Nonmonetary international and regional organizations 568 33 348 90 157 8 -4 2288 4477 2277 BONDS2 19 Foreign purchases 153,096 214,922r 173,866 22,184* 25,216 20,817 19,325 24,091 22,738 22,288 20 Foreign sales 125,637 175,737* 142,592 18,573* 23,264 15,765 15,514 16,825 20,730 16,475 21 Net purchases or sales (-) 27,459 39,185r 31,274 3,611' 1,952 5,052 3,811 7,266 2,008 5,813 22 Foreign countries 27,590 38,069r 31,652 3,737r 2,088 5,073 3,843 7,229 2,018 5,807 23 Europe 13,112 17,540* 9,670 2,761* 31 1,616 360 2,710 -1,001 2,108 24 France 847 1,203 1,566 311 75 508 595 -12 -76 64 25 Germany 1,577 2,480* 682 54* -55 815 228 -241 2 -207 26 Netherlands 482 540 -135 -133 -178 108 -7 -134 11 317 27 Switzerland 656 -579 -574 -38 11 -239 -219 -56 172 -327 28 United Kingdom 8,931 12,526* 7,433 2,992* -237 975 -303 3,033 -1,214 1,853 29 Canada 1,623 237 936 145 138 291 20 397 218 164 30 Latin America and Caribbean 2,672 9,300 7,589 437* 490 632 1,262 1,770 901 1,678 31 Middle East1 1,787 3,166 1,896 248 263 463 115 202 147 158 32 Other Asia 8,459 7,545 10,717 149 1,216 2,082 2,062 2,089 1,382 1,432 33 Japan 5,767 -450 5,449 61 595 991 940 863 890 919 34 Africa 52 354 749 27 -10 0 21 2 224 317 35 Other countries -116 -73 95 -30 -40 -11 3 59 147 -50 36 Nonmonetary international and regional organizations -131 1,116 -378 -126 -136 -21 -32 3377 --1100 6 Foreign securities 37 Stocks, net purchases or sales (~)3 -31,967 -32,295* -38,916 -1,561* -4,583 -4,029 -3,793 -6,317 -7,768 -8,517 38 Foreign purchases 120,598 150,037* 139,821 15,063* 17,436 19,297 16,465 18,523 19,620 20,682 39 Foreign sales3 152,565 182,332* 178,737 16,624* 22,019 23,326 20,258 24,840 27,388 29,199 40 Bonds, net purchases or sales (-) -14,828 -19,585* -41,913 -9,528 -4,631 -2,913 -545 -7,528 -10,608 -1,053 41 Foreign purchases 330,311 486,238 494,180 56,046 70,132 55,766 58,771 70,377 68,779 75,764 42 Foreign sales 345,139 505,823* 536,093 65,574 74,763 58,679 59,316 77,905 79,387 76,817 43 Net purchases or sales (-), of stocks and bonds -46,795 —51,880r -80,829 -11,089* -9,214 -6,942 -4,338 -13,845 -18,376 -9,570 44 Foreign countries -46,711 -55,216* -80,546 -ll,227r -8,945 -7,221 -4,671 -13,907 -18,486 -9,641 45 Europe -34,452 -37,284* -58,863 -6,663* -3,098 -3,252 -5,382 -11,719 -15,279 -6,985 46 Canada -7,004 -6,635 -11,229 -5,028 -3,034 -818 11 -1,277 -2,557 1,635 47 Latin America and Caribbean 759 -3,881* -2,461 25 68 -2,551 1,092 421 -647 -1,064 48 Asia -7,350 -6,654* -6,290 546* -2,481 -531 -185 -780 131 -2,600 49 Africa -9 -2 -192 3 -18 -18 -186 9 18 7 50 Other countries 1,345 -760 -1,511 -110* -382 -51 -21 -561 -152 -634 51 Nonmonetary international and regional organizations -84 3,336 -283 138 -269 279 333 62 110 71 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, 3. In a July 1989 merger, the former stockholders of a U.S. company received Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). $5,453 million in shares of the new combined U.K. company. This transaction is 2. Includes state and local government securities and securities of U.S. not reflected in the data, government agencies and corporations. Also includes issues of new debt securities sold abroad by U.S. corporations organized to finance direct investments abroad. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 International Statistics • December 1993 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1993 1993 Country or area 1991 1992 J A a u n g .- . Feb. Mar. Apr/ May" Juner July" Aug." Transactions, net purchases or sales (—) during period1 1 Estimated total 19,865 39,288 15,457 -1,273 6,581r 4,232 -1,159 -5,710 -1,531 13,878 2 Foreign countries 19,687 37,935 14,516 -2,166 6,029" 4,393 -877 -5,955 -1,144 14,380 3 Europe 8,663 19,625 580 -382 -3,379" 1,518 -190 1,473 -1,539 3,679 4 Belgium and Luxembourg 523 1,985 1,259 45 640" -387 647 86 505 -218 5 Germany -4,725 2,076 -12,183 -1,632 -2,757 -1,382 -3,396 -1,100 -2,918 305 6 Netherlands -3,735 -2,959 -30 206 66 731 108 -393 524 -34 7 Sweden -663 -804 1,211 258 -540 -100 649 673 32 293 8 Switzerland 1,007 488 -2,243 -455 -1,569 -719 108 888 -223 -74 9 United Kingdom 6,218 24,184 15,940 183 742" 2,659 2,948 2,147 1,455 3,781 10 Other Europe and former U.S.S.R 10,037 -5,345 -3,374 1,013 39" 716 -1,254 -828 -914 -374 11 Canada -3,019 562 10,509 82 2,490 1,386 522 133 2,270 324 12 Latin America and Caribbean 10,285 -3,222 -2,452 445 -537 -2,020 -3,880 -1,419 -333 6,787 13 Venezuela 10 539 384 179 154 74 152 5 2 -7 14 Other Latin America and Caribbean 4,179 -1,956 -3,801 -1,656 -471 1,096 -1,863 711 510 1,181 15 Netherlands Antilles 6,097 -1,805 965 1,922 -220 -3,190 -2,169 -2,135 -845 5,613 16 Asia 3,367 23,517 7,350 -1,032 7,220" 3,813 2,994 -5,687 -2,587 3,765 17 Japan -4,081 9,817 12,413 804 3,457 3,324 3,291 -301 -980 3,561 18 689 1,103 316 -139 -66 67 -2 81 116 292 19 Other -298 -3,650 -1,787 -1,140 301 -371 -321 -536 929 -467 20 Nonmonetary international and regional organizations 178 1,353 941 893 552 -161 -282 245 -387 -502 21 International -358 1,018 -287 581 56 -228 -318 402 -321 -687 22 Latin American regional -72 533 620 235 1 16 -17 106 -21 30 MEMO 23 Foreign countries 19,687 37,935 14,516 -2,166 6,029" 4,393 -877 -5,955 -1,144 14,380 24 Official institutions 1,190 6,876 -13,563 -4,364 -616" 2,709 -3,424 -760 -4,880 752 25 Other foreign2 18,496 31,059 28,079 2,198 6,645" 1,684 2,547 -5,195 3,736 13,628 Oil-exporting countries 26 Middle East2 -6,822 4,317 -7,114 -1,855 811 114 -1,070 -2,443 -1,261 -1,172 27 Africa3 239 11 4 0 0 -4 0 0 0 0 1. Official and private transactions in marketable U.S. Treasury securities 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and having an original maturity of more than one year. Data are based on monthly United Arab Emirates (TruciaJ States), transactions reports. Excludes nonmarketable U.S. Treasury bonds and notes 3. Comprises Algeria, Gabon, Libya, and Nigeria, held by official institutions of foreign countries. 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. 30, 1993 Rate on Oct. 30, 1993 Rate on Oct. 30, 1993 Country Country Country e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e Austria.. 5.75 Oct. 1993 Germany... 5.75 Oct. 1993 Norway 7.0 Oct. 1993 Belgium . 6.0 Oct. 1993 Italy 8.0 Oct. 1993 Switzerland 4.25 Oct. 1993 Canada.. 4.63 Oct. 1993 Japan 1.75 Sept. 1993 United Kingdom 12.0 Sept. 1992 Denmark 7.25 Oct. 1993 Netherlands 5.25 Oct. 1993 France2.. 6.45 Oct. 1993 1. Rates shown are mainly those at which the central bank either discounts or 2. Since February 1981, the rate has been that at which the Bank of France makes advances against eligible commercial paper or government securities for discounts Treasury bills for seven to ten days. commercial banks or brokers. For countries with more than one rate applicable to such discounts or advances, the rate shown is the one at which it is understood that the central bank transacts the largest proportion of its credit operations. 3.27 FOREIGN SHORT-TERM INTEREST RATES1 Percent per year, averages of daily figures 1993 Type or country 1990 1992 Apr. May July Aug. Sept. Oct. 1 5 6 2 3 4 8 7 9 1 0 G C N S U J I F B E t a w r a a e e u e n p a l l n r t r i i y g a n h m t o t a n e z i c e d d u d a e e r o a m n r l l l a y K l a n a n i d r n d s s g dom. 1 1 1 1 8 8 8 9 8 7 4 2 3 0 . . . . . . . . . . 5 7 4 7 7 1 7 0 2 1 7 1 1 0 5 6 3 0 0 1 1 1 5 9 9 8 9 9 7 9 1 2 . . . . . . . . . . 0 1 1 3 3 8 0 4 4 0 7 5 9 3 0 6 1 9 7 4 1 1 9 7 9 3 6 9 9 4 3 0 . . . . . . . . . . 2 5 6 3 4 3 7 7 9 1 5 6 7 1 2 9 0 6 1 4 1 4 7 3 5 5 7 7 8 3 1 . . . . . . . . . . 9 4 9 4 8 1 9 2 7 4 7 3 4 3 1 0 0 2 3 1 1 4 6 5 5 7 7 7 3 3 0 . . . . . . . . . . 9 9 9 4 2 1 2 4 1 7 7 8 1 1 4 6 9 8 2 4 1 4 6 5 4 7 6 3 7 3 0 . . . . . . . . . . 6 9 9 5 8 8 2 2 1 1 4 9 1 1 7 3 3 1 9 8 4 4 6 5 7 9 7 3 7 3 . . . . . . . . . . 4 6 4 1 1 8 4 2 7 1 5 2 8 2 2 8 2 2 2 7 4 4 6 5 6 9 3 7 9 3 . . . . . . . . . . 2 5 7 5 4 0 1 4 0 2 7 6 9 9 4 8 2 0 5 2 r r r r 4 6 5 4 6 9 7 9 2 3 . . . . . . . . . . 2 6 5 8 8 9 0 5 0 0 6 1 2 2 8 0 5 9 7 8 4 6 4 6 5 9 3 6 8 2 . . . . . . . . . . 5 4 7 2 7 0 4 8 2 6 3 4 4 0 6 5 4 5 6 9 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 1993 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar except as noted 1993 Country/currency unit 11999900 11999911 11999922 May June July Aug.r Sept. Oct. 1 Australia/dollar2 78.069 77.872 73.521 69.859 67.492 67.788 67.736 65.167 66.100 2 Austria/schilling 11.331 11.686 10.992 11.305 11.637 12.071 11.920 11.402 11.540 3 Belgium/franc 33.424 34.195 32.148 33.044 34.009 35.483 35.985 34.847 35.674 4 Canada/dollar 1.1668 1.1460 1.2085 1.2698 1.2789 1.2820 1.3080 1.3215 1.3263 5 China, P.R./yuan 4.7921 5.3337 5.5206 5.7392 5.7504 5.7756 5.7906 5.8015 5.8013 6 Denmark/krone 6.1899 6.4038 6.0372 6.1751 6.3380 6.6531 6.8976 6.6336 6.6379 7 Finland/markka 3.8300 4.0521 4.4865 5.4847 5.5674 5.7852 5.8315 5.7868 5.7554 8 France/franc 5.4467 5.6468 5.2935 5.4180 5.5700 5.8464 5.9298 5.6724 5.7541 9 Germany/deutsche mark. 1.6166 1.6610 1.5618 1.6071 1.6547 1.7157 1.6944 1.6219 1.6405 10 Greece/drachma 158.59 182.63 190.81 218.12 225.45 234.77 237.64 232.56 237.93 11 Hong Kong/dollar 7.7899 7.7712 7.7402 7.7290 7.7362 7.7556 7.7515 7.7384 7.7307 12 India/rupee 17.492 22.712 28.156 31.613 31.668 31.600 31.612 31.578 31.505 13 Ireland/pound 165.76 161.39 170.42 151.65 147.47 140.83 139.05 143.40 143.19 14 Italy/lira 1,198.27 1,241.28 1,232.17 1,475.66 1,505.05 1,586.02 1,603.75 1,569.10 1,600.93 15 Japan/yen 145.00 134.59 126.78 110.34 107.41 107.69 103.77 105.57 107.02 16 Malaysia/ringgit 2.7057 2.7503 2.5463 2.5661 2.5696 2.5672 2.5514 2.5475 2.5478 17 Netherlands/guilder 1.8215 1.8720 1.7587 1.8026 1.8559 1.9299 1.9062 1.8214 1.8438 18 New Zealand/dollar2 59.619 57.832 53.792 54.290 53.949 54.900 55.261 55.157 55.260 19 Norway/krone 6.2541 6.4912 6.2142 6.8027 6.9986 7.3179 7.3579 7.0829 7.1755 20 Portugal/escudo 142.70 144.77 135.07 151.89 157.63 167.87 173.27 166.28 169.60 21 Singapore/dollar 1.8134 1.7283 1.6294 1.6136 1.6175 1.6206 1.6100 1.5972 1.5735 22 South Africa/rand 2.5885 2.7633 2.8524 3.1787 3.2408 3.3518 3.3660 3.4135 3.3924 23 South Korea/won 710.64 736.73 784.58 803.19 805.91 809.58 811.94 811.84 813.45 24 Spain/peseta 101.96 104.01 102.38 121.30 127.11 134.93 138.51 130.54 132.18 25 Sri Lanka/rupee 40.078 41.200 44.013 47.965 48.073 48.643 48.750 48.854 48.954 26 Sweden/krona 5.9231 6.0521 5.8258 7.3271 7.4541 7.9802 8.0466 8.0170 8.0195 27 Switzerland/franc 1.3901 1.4356 1.4064 1.4504 1.4769 1.5147 1.4966 1.4182 1.4432 28 Taiwan/dollar 26.918 26.759 25.160 25.978 26.267 26.682 26.950 26.931 26.865 29 Thailand/baht 25.609 25.528 25.411 25.234 25.214 25.331 25.191 25.1% 25.269 30 United Kingdom/pound2. 178.41 176.74 176.63 154.77 150.82 149.55 149.14 152.48 150.23 MEMO 31 United States/dollar3 89.09 89.84 86.61 90.24 91.81 94.59 94.32 92.07 93.29 1. Averages of certified noon buying rates in New York for cable transfers. the 1972-76 average world trade of that country divided by the average world Data in this table also appear in the Board's G.5 (405) monthly statistical release. trade of all ten countries combined. Series revised as of August 1978 (see Federal For ordering address, see inside front cover. Reserve Bulletin, vol. 64 (August 1978), p. 700). 2. Value in U.S. cents. 3. Index of weighted-average exchange value of U.S. dollar against the currencies of ten industrial countries. The weight for each of the ten countries is 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 December 1993 A78 SPECIAL TABLES—Quarterly Data Published Irregularly, with Latest Bulletin Reference Title and Date Issue Page Assets and liabilities of commercial banks September 30, 1992 February 1993 A70 December 31, 1992 May 1993 A70 March 31, 1993 August 1993 A70 June 30, 1993 November 1993 A70 Terms of lending at commercial banks November 1992 February 1993 A76 February 1993 May 1993 A76 May 1993 August 1993 A76 August 1993 November 1993 A76 Assets and liabilities of U.S. branches and agencies of foreign banks September 30, 1992 February 1993 A80 December 31, 1992 May 1993 A80 March 31, 1993 August 1993 A80 June 30, 1993 November 1993 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 September 30, 1992 March 1993 A71 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, 22, 23 Ownership by individuals, partnerships, and Assets and liabilities (See also Foreigners) corporations, 24 Banks, by classes, 20-23 Turnover, 17 Domestic finance companies, 36 Depository institutions Federal Reserve Banks, 11 Reserve requirements, 9 Financial institutions, 28 Reserves and related items, 4, 5, 6, 13 Foreign banks, U.S. branches and agencies, 24 Deposits {See also specific types) Automobiles Banks, by classes, 4, 20-23, 24 Consumer installment credit, 39 Federal Reserve Banks, 5, 11 Production, 47, 48 Interest rates, 16 Turnover, 17 BANKERS acceptances, 10, 23, 26 Discount rates at Reserve Banks and at foreign central banks and Bankers balances, 20-23. (See also Foreigners) foreign countries {See Interest rates) Bonds (See also U.S. government securities) Discounts and advances by Reserve Banks {See Loans) New issues, 35 Dividends, corporate, 35 Rates, 26 Branch banks, 24, 55 EMPLOYMENT, 45 Business activity, nonfinancial, 45 Eurodollars, 26 Business expenditures on new plant and equipment, 35 Business loans (See Commercial and industrial loans) FARM mortgage loans, 38 Federal agency obligations, 5, 10, 11, 12, 31, 32 Federal credit agencies, 33 CAPACITY utilization, 46 Federal finance Capital accounts Debt subject to statutory limitation, and types and ownership Banks, by classes, 20 of gross debt, 30 Federal Reserve Banks, 11 Receipts and outlays, 28, 29 Central banks, discount rates, 67 Treasury financing of surplus, or deficit, 28 Certificates of deposit, 26 Treasury operating balance, 28 Commercial and industrial loans Federal Financing Bank, 28, 33 Commercial banks, 18, 22 Federal funds, 7, 19, 22, 23, 24, 26, 28 Weekly reporting banks, 22-24 Federal Home Loan Banks, 33 Commercial banks Federal Home Loan Mortgage Corporation, 33, 37, 38 Assets and liabilities, 20-23 Federal Housing Administration, 33, 37, 38 Commercial and industrial loans, 18, 20, 21, 22, 23, 24 Federal Land Banks, 38 Consumer loans held, by type and terms, 39 Federal National Mortgage Association, 33, 37, 38 Deposit interest rates of insured, 16 Federal Reserve Banks Loans sold outright, 22 Condition statement, 11 Nondeposit funds, 19 Discount rates {See Interest rates) Real estate mortgages held, by holder and property, 38 U.S. government securities held, 5, 11, 12, 30 Time and savings deposits, 4 Federal Reserve credit, 5, 6, 11, 12 Commercial paper, 25, 26, 36 Federal Reserve notes, 11 Condition statements {See Assets and liabilities) Federally sponsored credit agencies, 33 Construction, 45, 49 Finance companies Consumer installment credit, 39 Assets and liabilities, 36 Consumer prices, 45, 46 Business credit, 36 Consumption expenditures, 52, 53 Loans, 39 Corporations Paper, 25, 26 Nonfinancial, assets and liabilities, 35 Financial institutions, loans to, 22, 23, 24 Profits and their distribution, 35 Float, 51 Security issues, 34, 65 Flow of funds, 40, 42, 43, 44 Cost of living {See Consumer prices) Foreign banks, assets and liabilities of U.S. branches and Credit unions, 39 agencies, 23, 24 Currency in circulation, 5, 14 Foreign currency operations, 11 Customer credit, stock market, 27 Foreign deposits in U.S. banks, 5, 11, 22, 23 Foreign exchange rates, 68 DEBITS to deposit accounts, 17 Foreign trade, 54 Debt {See specific types of debt or securities) Foreigners Demand deposits Claims on, 55, 57, 60, 61, 62, 64 Banks, by classes, 20-24 Liabilities to, 23, 54, 55, 57, 58, 63, 65, 66 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 GOLD REAL estate loans Certificate account, 11 Banks, by classes, 18, 22, 23, 38 Stock, 5, 54 Terms, yields, and activity, 37 Government National Mortgage Association, 33, 37, 38 Type of holder and property mortgaged, 38 Gross domestic product, 51 Repurchase agreements, 7, 19, 22, 23, 24 Reserve requirements, 9 HOUSING, new and existing units, 49 Reserves Commercial banks, 20 INCOME, personal and national, 45, 51, 52 Depository institutions, 4, 5, 6, 13 Industrial production, 45, 47 Federal Reserve Banks, 11 Installment loans, 39 U.S. reserve assets, 54 Insurance companies, 30, 38 Residential mortgage loans, 37 Interest rates Retail credit and retail sales, 39, 40, 45 Bonds, 26 Consumer installment credit, 39 SAVING Deposits, 16 Flow of funds, 40, 42, 43, 44 Federal Reserve Banks, 8 National income accounts, 51 Foreign central banks and foreign countries, 67 Savings and loan associations, 38, 39, 40. (See also SAIF-insured Money and capital markets, 26 institutions) Mortgages, 37 Savings banks, 38, 39 Prime rate, 25 Savings deposits (See Time and savings deposits) International capital transactions of United States, 53-67 Securities (See also specific types) International organizations, 57, 58, 60, 63, 64 Federal and federally sponsored credit agencies, 33 Inventories, 51 Foreign transactions, 65 Investment companies, issues and assets, 35 New issues, 34 Investments (See also specific types) Prices, 27 Banks, by classes, 20, 21, 22, 23, 24 Special drawing rights, 5, 11, 53, 54 Commercial banks, 4, 18, 20-23 State and local governments Federal Reserve Banks, 11, 12 Deposits, 22, 23 Financial institutions, 38 Holdings of U.S. government securities, 30 New security issues, 34 LABOR force, 45 Ownership of securities issued by, 22, 23 Life insurance companies (See Insurance companies) Rates on securities, 26 Loans (See also specific types) Stock market, selected statistics, 27 Banks, by classes, 20-23 Stocks (See also Securities) Commercial banks, 4, 18, 20-23 New issues, 34 Federal Reserve Banks, 5, 6, 8, 11, 12 Prices, 27 Financial institutions, 38 Student Loan Marketing Association, 33 Insured or guaranteed by United States, 37, 38 TAX receipts, federal, 29 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, 16, 19, 20, 21, 22, 23, 24 Margin requirements, 27 Trade, foreign, 54 Member banks (See also Depository institutions) Treasury cash, Treasury currency, 5 Federal funds and repurchase agreements, 7 Treasury deposits, 5, 11, 28 Reserve requirements, 9 Treasury operating balance, 28 Mining production, 48 UNEMPLOYMENT, 45 Mobile homes shipped, 49 U.S. government balances Monetary and credit aggregates, 4, 13 Commercial bank holdings, 20, 21, 22, 23 Money and capital market rates, 26 Treasury deposits at Reserve Banks, 5, 11, 28 Money stock measures and components, 4, 14 U.S. government securities Mortgages (See Real estate loans) Bank holdings, 20-23, 24, 30 Mutual funds, 35 Dealer transactions, positions, and financing, 32 Mutual savings banks (See Thrift institutions) Federal Reserve Bank holdings, 5, 11, 12, 30 Foreign and international holdings and NATIONAL defense outlays, 29 transactions, 11, 30, 66 National income, 51 Open market transactions, 10 Outstanding, by type and holder, 28, 30 OPEN market transactions, 10 Rates, 25 U.S. international transactions, 53-67 PERSONAL income, 52 Utilities, production, 48 Prices Consumer and producer, 45, 50 VETERANS Administration, 37, 38 Stock market, 27 Prime rate, 25 WEEKLY reporting banks, 22-24 Producer prices, 45, 50 Wholesale (producer) prices, 45, 50 Production, 45, 47 Profits, corporate, 35 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 HI, 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 LAWRENCE SLIFMAN, Associate Director OFFICE OF THE SECRETARY DAVID J. STOCKTON, Associate Director MARTHA BETHEA, Deputy Associate Director WILLIAM W. WILES, Secretary PETER A. TINSLEY, Deputy Associate Director JENNIFER J. JOHNSON, Associate Secretary MYRON L. KWAST, Assistant Director BARBARA R. LOWREY, Associate Secretary PATRICK M. PARKINSON, Assistant Director MARTHA S. SCANLON, Assistant Director DIVISION OF BANKING JOYCE K. ZICKLER, Assistant Director SUPERVISION AND REGULATION JOHN J. MINGO, Adviser RICHARD SPILLENKOTHEN, Director LEVON H. GARABEDIAN, Assistant Director STEPHEN C. SCHEMERING, Deputy Director (Administration) DON E. KLINE, Associate Director WILLIAM A. RYBACK, Associate Director DIVISION OF MONETARY AFFAIRS FREDERICK M. STRUBLE, Associate Director HERBERT A. BIERN, Deputy Associate Director DONALD L. KOHN, Director DAVID E. LINDSEY, Deputy Director ROGER T. COLE, Deputy Associate Director BRIAN F. MADIGAN, Associate Director JAMES I. GARNER, Deputy Associate Director RICHARD D. PORTER, Deputy Associate Director HOWARD A. AMER, Assistant Director NORMAND R.V. BERNARD, Special Assistant to the Board GERALD A. EDWARDS, JR., Assistant Director JAMES D. GOETZINGER, Assistant Director DIVISION OF CONSUMER STEPHEN M. HOFFMAN, JR., Assistant Director AND COMMUNITY AFFAIRS LAURA M. HOMER, Assistant Director JAMES V. HOUPT, Assistant Director GRIFFITH L. GARWOOD, Director JACK P. JENNINGS, Assistant Director GLENN E. LONEY, Associate Director MICHAEL G. MARTINSON, Assistant Director DOLORES S. SMITH, Associate Director RHOGER H PUGH, Assistant Director MAUREEN P. ENGLISH, Assistant Director SIDNEY M. SUSSAN, Assistant Director IRENE SHAWN MCNULTY, Assistant Director MOLLY S. WASSOM, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JOHN P. LAWARE SUSAN M. PHILLIPS LAWRENCE B. LINDSEY OFFICE OF DIVISION OF RESERVE BANK OPERATIONS STAFF DIRECTOR FOR MANAGEMENT AND PAYMENT SYSTEMS S. DAVID FROST, Staff Director CLYDE H. FARNSWORTH, JR., Director WILLIAM SCHNEIDER, Special Assignment: DAVID L. ROBINSON, Deputy Director (Finance and Project Director, National Information Center Control) PORTIA W. THOMPSON, Equal Employment Opportunity 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 JOHN R. WEIS, Associate Director FLORENCE M. YOUNG, Assistant 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 DONALD L. ROBINSON, Assistant Inspector General OFFICE OF THE CONTROLLER BARRY R. SNYDER, Assistant Inspector General GEORGE E. LIVINGSTON, Controller STEPHEN J. CLARK, Assistant Controller (Programs and Budgets) DARRELL R. PAULEY, Assistant Controller (Finance) DIVISION OF SUPPORT SERVICES ROBERT E. FRAZIER, Director GEORGE M. LOPEZ, Assistant Director DAVID L. WILLIAMS, Assistant Director DIVISION OF INFORMATION RESOURCES MANAGEMENT STEPHEN R. MALPHRUS, Director BRUCE M. BEARDSLEY, Deputy Director 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 1993 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman WILLIAM J. MCDONOUGH, Vice Chairman WAYNE D. ANGELL EDWARD W. KELLEY, JR. DAVID W. MULLINS, JR. EDWARD G. BOEHNE JOHN P. LAWARE SUSAN M. PHILLIPS SILAS KEEHN LAWRENCE B. LINDSEY GARY H. STERN ROBERT D. MCTEER, JR. ALTERNATE MEMBERS J. ALFRED BROADDUS, JR. JERRY L. JORDAN ROBERT T. PARRY ROBERT P. FORRESTAL JAMES H. OLTMAN STAFF DONALD L. KOHN, Secretary and Economist RICHARD W. LANG, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary DAVID E. LINDSEY, Associate Economist JOSEPH R. COYNE, Assistant Secretary LARRY J. PROMISEL, Associate Economist GARY P. GILLUM, Assistant Secretary ARTHUR J. ROLNICK, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel HARVEY ROSENBLUM, Associate Economist ERNEST T. PATRIKIS, Deputy General Counsel KARL A. SCHELD, Associate Economist MICHAEL J. PRELL, Economist CHARLES J. SIEGMAN, Associate Economist EDWIN M. TRUMAN, Economist THOMAS D. SIMPSON, Associate Economist RICHARD G. DAVIS, Associate Economist LAWRENCE SLIFMAN, Associate Economist JOAN E. LOVETT, Manager for Domestic Operations, System Open Market Account PETER R. FISHER, Manager for Foreign Operations, System Open Market Account FEDERAL ADVISORY COUNCIL E. B. ROBINSON, JR., President JOHN B. MCCOY, Vice President MARSHALL N. CARTER, First District EUGENE A. MILLER, Seventh District CHARLES S. SANFORD, JR., Second District ANDREW B. CRAIG, III, Eighth District ANTHONY P. TERRACCIANO, Third District JOHN F. GRUNDHOFER, Ninth District JOHN B. MCCOY, Fourth District DAVID A. RISMILLER, Tenth District EDWARD E. CRUTCHFIELD, JR., Fifth District CHARLES R. HRDLICKA, 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 DENNY D. DUMLER, Denver, Colorado, Chairman JEAN POGGE, Chicago, Illinois, Vice Chairman BARRY A. ABBOTT, San Francisco, California BONNIE GUITON, Charlottesville, Virginia 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 RONALD HOMER, Boston, Massachusetts DOUGLAS D. BLANKE, St. Paul, Minnesota THOMAS L. HOUSTON, Dallas, Texas GENEVIEVE BROOKS, Bronx, New York HENRY JARAMILLO, Belen, New Mexico TOYE L. BROWN, Boston, Massachusetts EDMUND MIERZWINSKI, Washington, D.C. CATHY CLOUD, Washington, D.C. JOHN V. SKINNER, Irving, Texas MICHAEL D. EDWARDS, Yelm, Washington LOWELL N. SWANSON, Portland, Oregon MICHAEL FERRY, St. Louis, Missouri MICHAEL W. TIERNEY, Washington, D.C. NORMA L. FREIBERG, New Orleans, Louisiana GRACE W. WEINSTEIN, Englewood, New Jersey LORI GAY, Los Angeles, California JAMES L. WEST, Tijeras, New Mexico DONALD A. GLAS, Hutchinson, Minnesota ROBERT O. ZDENEK, Greenwich, Connecticut THRIFT INSTITUTIONS ADVISORY COUNCIL DANIEL C. ARNOLD, Houston, Texas, President BEATRICE D'AGOSTINO, Somerville, New Jersey, Vice President WILLIAM A. COOPER, Minneapolis, Minnesota CHARLES JOHN KOCH, Cleveland, Ohio PAUL L. ECKERT, Davenport, Iowa ROBERT MCCARTER, New Bedford, Massachusetts GEORGE R. GLIGOREA, Sheridan, Wyoming NICHOLAS W. MITCHELL, JR., Winston-Salem, North Carolina THOMAS J. HUGHES, Merrifield, Virginia STEPHEN W. PROUGH, Irvine, California KERRY KILLINGER, Seattle, Washington THOMAS R. RICKETTS, Troy, Michigan Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, FEDERAL RESERVE REGULATORY SERVICE. Looseleaf; updated MS-138, Board of Governors of the Federal Reserve System, at least monthly. (Requests must be prepaid.) Washington, DC 20551 or telephone (202) 452-3244 or FAX Consumer and Community Affairs Handbook. $75.00 per (202) 728-5886. When a charge is indicated, payment should year. accompany request and be made payable to the Board of Monetary Policy and Reserve Requirements Handbook. Governors of the Federal Reserve System. Payment from for- $75.00 per year. eign residents should be drawn on a U.S. bank. Securities Credit Transactions Handbook. $75.00 per year. The Payment System Handbook. $75.00 per year. Federal Reserve Regulatory Service. 3 vols. (Contains all four Handbooks plus substantial additional material.) THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS. $200.00 per year. 1984. 120 pp. Rates for subscribers outside the United States are as follows ANNUAL REPORT. and include additional air mail costs: ANNUAL REPORT: BUDGET REVIEW, 1991-92. Federal Reserve Regulatory Service, $250.00 per year. FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or Each Handbook, $90.00 per year. $2.50 each in the United States, its possessions, Canada, THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MULTIand Mexico. Elsewhere, $35.00 per year or $3.00 each. COUNTRY MODEL, May 1984. 590 pp. $14.50 each. ANNUAL STATISTICAL DIGEST: period covered, release date, WELCOME TO THE FEDERAL RESERVE. March 1989. 14 pp. number of pages, and price. 1981 October 1982 239 pp. $ 6.50 INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. 440 pp. $9.00 each. 1982 December 1983 266 pp. $ 7.50 1983 October 1984 264 pp. $11.50 FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. December 1986. 264 pp. $10.00 each. 1984 October 1985 254 pp. $12.50 1985 October 1986 231 pp. $15.00 FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY- SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. 1986 November 1987 288 pp. $15.00 1987 October 1988 272 pp. $15.00 1988 November 1989 256 pp. $25.00 CONSUMER EDUCATION PAMPHLETS 1980-89 March 1991 712 pp. $25.00 Short pamphlets suitable for classroom use. Multiple copies are 1990 November 1991 185 pp. $25.00 available without charge. 1991 November 1992 215 pp. $25.00 Consumer Handbook on Adjustable Rate Mortgages Consumer Handbook to Credit Protection Laws SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF CHARTS. Weekly. $30.00 per year or $.70 each in the A Guide to Business Credit for Women, Minorities, and Small United States, its possessions, Canada, and Mexico. Else- Businesses where, $35.00 per year or $.80 each. How to File A Consumer Credit Complaint 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 A Consumer's Guide to Mortgage Lock-Ins ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— A Consumer's Guide to Mortgage Settlement Costs Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. A Consumer's Guide to Mortgage Refinancings Vol. II (Irregular Transactions). 1969. 116 pp. Each vol- Home Mortgages: Understanding the Process and Your Right ume $2.25; 10 or more of same volume to one address, to Fair Lending $2.00 each. Making Deposits: When Will Your Money Be Available? INTRODUCTION TO FLOW OF FUNDS. 1980. 68 pp. $1.50 each; When Your Home is on the Line: What You Should Know 10 or more to one address, $1.25 each. About Home Equity Lines of Credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

All STAFF STUDIES: Only Summaries Printed in the 161. A REVIEW OF CORPORATE RESTRUCTURING ACTIVITY, 1980-90, by Margaret Hastings Pickering. May 1991. BULLETIN 21pp. Studies and papers on economic and financial subjects that are of general interest. Requests to obtain single copies of the full 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM text or to be added to the mailing list for the series may be sent MORTGAGE LOAN RATES IN TWENTY CITIES, by Stephen A. Rhoades. February 1992. 11 pp. to Publications Services. 163. CLEARANCE AND SETTLEMENT IN U.S. SECURITIES MAR- KETS, by Patrick Parkinson, Adam Gilbert, Emily Gollob, Staff Studies 1-145 are out of print. Lauren Hargraves, Richard Mead, Jeff Stehm, and Mary Ann Taylor. March 1992. 37 pp. 146. THE ROLE OF THE PRIME RATE IN THE PRICING OF 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, by BUSINESS LOANS BY COMMERCIAL BANKS, 1977-84, by James T. Fergus and John L. Goodman, Jr. July 1993. Thomas F. Brady. November 1985. 25 pp. 20 pp. 147. REVISIONS IN THE MONETARY SERVICES (DIVISIA) IN- 165. THE DEMAND FOR TRADE CREDIT: AN INVESTIGATION OF DEXES OF THE MONETARY AGGREGATES, by Helen T. Farr MOTIVES FOR TRADE CREDIT USE BY SMALL BUSINESSES, and Deborah Johnson. December 1985. 42 pp. by Gregory E. Elliehausen and John D. Wolken. Septem- 148. THE MACROECONOMIC AND SECTORAL EFFECTS OF THE ber 1993. 18 pp. ECONOMIC RECOVERY TAX ACT: SOME SIMULATION RESULTS, by Flint Brayton and Peter B. Clark. December 1985. 17 pp. REPRINTS OF SELECTED BULLETIN ARTICLES 149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS IN BANKING BEFORE AND AFTER ACQUISITION, by Stephen Some Bulletin articles are reprinted. The articles listed below A. Rhoades. April 1986. 32 pp. are those for which reprints are available. Most of the articles 150. STATISTICAL COST ACCOUNTING MODELS IN BANKING: reprinted do not exceed twelve pages. Limit often copies. A REEXAMINATION AND AN APPLICATION, by John T. Rose and John D. Wolken. May 1986. 13 pp. Recent Developments in the Bankers Acceptance Market. 1/86. 151. RESPONSES TO DEREGULATION: RETAIL DEPOSIT PRICING The Use of Cash and Transaction Accounts by American FROM 1983 THROUGH 1985, by Patrick I. Mahoney, Alice Families. 2/86. P. White, Paul F. O'Brien, and Mary M. McLaughlin. Financial Characteristics of High-Income Families. 3/86. January 1987. 30 pp. Prices, Profit Margins, and Exchange Rates. 6/86. 152. DETERMINANTS OF CORPORATE MERGER ACTIVITY: A Agricultural Banks under Stress. 7/86. REVIEW OF THE LITERATURE, by Mark J. Warshawsky. Foreign Lending by Banks: A Guide to International and U.S. April 1987. 18 pp. Statistics. 10/86. 153. STOCK MARKET VOLATILITY, by Carolyn D. Davis and Recent Developments in Corporate Finance. 11/86. Alice P. White. September 1987. 14 pp. Measuring the Foreign-Exchange Value of the Dollar. 6/87. 154. THE EFFECTS ON CONSUMERS AND CREDITORS OF Changes in Consumer Installment Debt: Evidence from the PROPOSED CEILINGS ON CREDIT CARD INTEREST RATES, 1983 and 1986 Surveys of Consumer Finances. 10/87. by Glenn B. Canner and James T. Fergus. October 1987. Home Equity Lines of Credit. 6/88. 26 pp. Mutual Recognition: Integration of the Financial Sector in the 155. THE FUNDING OF PRIVATE PENSION PLANS, by Mark J. European Community. 9/89. Warshawsky. November 1987. 25 pp. The Activities of Japanese Banks in the United Kingdom and in 156. INTERNATIONAL TRENDS FOR U.S. BANKS AND BANKING the United States, 1980-88. 2/90. MARKETS, by James V. Houpt. May 1988. 47 pp. Industrial Production: 1989 Developments and Historical 157. M2 PER UNIT OF POTENTIAL GNP AS AN ANCHOR FOR Revision. 4/90. THE PRICE LEVEL, by Jeffrey J. Hallman, Richard D. Recent Developments in Industrial Capacity and Utilization. Porter, and David H. Small. April 1989. 28 pp. 6/90. 158. THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIRE- Developments Affecting the Profitability of Commercial Banks. MENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE 7/90. PRODUCTS, by Mark J. Warshawsky with the assistance of Recent Developments in Corporate Finance. 8/90. Dietrich Earnhart. September 1989. 23 pp. U.S. Exchange Rate Policy: Bretton Woods to Present. 11/90. 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSID- The Transmission Channels of Monetary Policy: How Have IARIES OF BANK HOLDING COMPANIES, by Nellie Liang They Changed? 12/90. and Donald Savage. February 1990. 12 pp. Changes in Family Finances from 1983 to 1989: Evidence from 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- the Survey of Consumer Finances. 1/92. VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by U.S. International Transactions in 1991. 5/92. Gregory E. Elliehausen and John D. Wolken. September 1990. 35 pp. 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 SYSTEM 1 (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, three 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, one 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 Fifth working day of Second month previous 1.56] month • Debits and Deposit Turnover at Commercial Banks. $5.00 Twelfth of month Previous month G.6 (406) [1.22] • Finance Companies. G.20 (422) [1.51, 1.52] $ 5.00 Fifth working day of Second month previous month • Foreign Exchange Rates. G.5 (405) [3.28] $5.00 First of month Previous month • Industrial Production and Capacity Utilization. G.17 $15.00 Midmonth Previous month (419) [2.12, 2.13] • Loans and Securities at all Commercial Banks. G.7 $5.00 Third week of month Previous month (407) [1.23] • Major Nondeposit Funds of Commercial Banks. $ 5.00 Third week of month Previous month G. 10 (411) [1.24] • Research Library—Recent Acquisitions. G. 15 (417) Free of First of month Previous month charge • Selected Interest Rates. G.13 (415) [1.35] $ 5.00 First 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.7 (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 (111) [4.23] March, June, November September, and December • List of OTC Margin Stocks. E.7 (117) Free of January, April, February, May, August, and charge 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 79 GUIDE TO PAGE REFERENCES IN MONTHLY ISSUES Issue Text "A" Pages Issue Text "A" pages Index to Index to tables tables January 1- 76 1-80 70-71 July 649- 750 1-80 70-71 February 77-166 1-94 84-85 August 751- 826 1-94 84-85 March 167-250 1-82 72-73 September 827- 912 1-80 70-71 April 251-378 1-80 70-71 October 913-1000 1-80 70-71 May 379-568 1-94 84-85 November 1001-1074 1-94 84-85 June 569-648 1-82 70-71 December 1075-1184 1-94 80-81 The "A" pages consist of statistical tables and reference information. Statistical tables are indexed separately (see p. A80 of this issue). Pages Pages 1981 Financial Center Development Act, Delaware law .... 400 Articles—Continued A Guide to HMDA Reporting, Getting it Right, U.S. branches and agencies of foreign banks: FFIEC publication 310 A new look 913 Accounting by Creditors for Impairment of a Loan, U.S. international transactions in 1992 379 Financial Accounting Standards Board Statement No. 114 783 Agriculture, 1987 Census of 426 BAKER Hughes rig count 450 Agriculture, U.S. Department of 421, 432 Bank of Credit and Commerce International, article Alaska Pipeline 454 on foreign bank supervision 2 American Bankers Association, study on regulatory Bank credit data on diskette 790 burden 264, 655 Bank Enterprise Act of 1991 266 American Bar Association 256 Bank Holding Company Act of 1956 American Council of Life Insurance 83 Foreign Bank Supervision Enhancement Act, article 3 Ameritech 419 Interstate banking, article 1075 Angell, Wayne D. Orders issued under Federal Reserve System Accountability Act, H.R.28, 215 Holding Co 813 statement 1111 A.N.B. Holding Company, Ltd 813 General Accounting Office, statement on authority 1132 ABC Employee Stock Ownership Plan 548 Annual Report, 79th, 1992, publication announcement 478 Albrecht Financial Services, Inc 69 Annual Survey of Manufactures, U.S. Bureau Algemene Maatschappij voor Nijverheidskrediet N.V., of the Census 590, 601 Antwerp, Belgium 816 Annunzio-Wylie Anti-Money-Laundering Act 691 Allendale Bancorp, Inc 813 ARCO Oil Company 450 Alpha-Omega Holding Company 548 Articles AMBANC Corp 643 Anatomy of the medium-term note market 751 Amboy Bancorporation 71 Community Reinvestment Act: Evolution and current AMCORE Financial, Inc 887 issues 251 American Bancorp of Edmond, Inc 550 Foreign Bank Supervision Enhancement Act of 1991 .... 1 American Bancorp of Oklahoma, Inc 906 Herfindahl-Hirschman index 188 AmSouth Bancorporation 813, 951, 1149 Industrial production, capacity, and capacity utilization AmTrade International Bank of Georgia 336 since 1987 590 Anchor Financial Corporation 1179 Interstate banking: A status report 1075 Archer, Inc 548 Monetary policy report to the Congress 167, 827 Area Bancshares Corporation 69, 548 Profits and balance sheet developments at U.S. Associated Banc-Corp 745 commercial banks in 1992 649 Bailey Financial Corporation 1069 Recent developments in the market for privately Banc Ed Corp 814 placed debt 77 Banc One Beta Corporation 1168 Recent trends in the mutual fund industry 1001 Banc One Colorado Corporation 872 Reserve requirements: History, current practice, Banc One Corporation 156, 519, 524, 872, and potential reform 569 1055, 1152, 1158, 1168 Treasury and Federal Reserve foreign exchange Banc One Illinois Corporation 1152 operations 11, 268, 674, 926 Banco Santander, S.A., Madrid, Spain 622 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, Inc 988 Citizens Bancshares Company 370 Banc West Bancorp, Inc 814, 1069 Citizens Bancshares of El Reno, Inc 814 BancWest, Inc 154 Citizens Bancshares of Woodville, Inc 243 Bank Corporation of Georgia 745 Citizens Banking Corporation 986 Bank of Boston Corporation 793, 795 Citizens Bankshares, Inc 245 Bank of Montana System 550 Citizens Financial Group, Inc 1060 Bank of Montreal, Montreal, Quebec, Canada 1049 Citizens Holding Corporation 69 Bank of New York Company, Inc 547, 814 Citizens Holding Corporation and Bank ESOP 986 Bank of Tokyo, Ltd., Tokyo, Japan 645 Citizens National Corporation 69 Bank South Corporation 716 City Holding Company 69, 986 BankAmerica Corporation 245, 1163 Clear Creek Bank Corp 548 Bankers Trust New York Corporation 746 CNB Bancshares, Inc 72, 644, 748, 1071 BANKFIRST Corporation, Inc 1069 CNB Financial Corporation 155, 243 Bankmont Financial Corp 1049 Columbia Banking System, Inc 907 Banterra Corp 371 Comerica Incorporated 31, 72, 155, 500 Barnett Banks, Inc 44, 800, 1155 Commerce Bancshares, Inc 155, 548, 745, 1069, 1179 Barnett Merger Corporation 245 Commerce Bank Corporation 370 BayBanks, Inc 547 Commerzbank Aktiengesellschaft, Frankfurt am Main, BB&T Financial Corporation 342, 371, 909, 985, 989 Federal Republic of Germany 961 BBS Corp 548 Community Banc-Corp. of Sheboygan 989 Big Bend Bancshares Corp 814 Community Bancs of Oklahoma, Inc 986 Birthright, Inc 814 Community Bancshares, Inc 1179 BNMHC Acquisition Corporation 985 Community Bank Group, Inc 548 Boatmen's Bancshares, Inc 814, 1179 Community Bankers, Inc 989 BOI Financial Corp 154 Community Bankshares, Inc 705 BOK Financial Corporation 643 Community First Bankshares, Inc 644, 1069 Bourbonnais Bancorp, Inc 644 Community National Bank Corporation 986 Bremer Financial Corporation 550, 988 Concord EFS, Inc 73 Britton & Koontz Capital Corporation 816 Consolidated Holding Company 156 Broadstreet, Inc 336 Continental Bank Corporation 888 Brooke Corporation 156 Continental Security Bancshares, Inc 986 Brooke Holdings, Inc 156 CoreStates Financial Corp 157, 909, 1158 Button Gwinnett Bancorp, Inc 155 Corte Banc Corporation 986 C.S.B. Bancshares, Inc 814 Craco, Inc 548 Caisse Nationale de Credit Agricole, Paris, France .... 747 Credit Commercial de France S.A., Paris, France 157 Capital Bancorporation, Inc 31, 116 Credit Commercial de France, Paris, France 157 Carbon County Holding Company 985 Crestar Financial Corporation 989 Cardinal Bancshares, Inc 745 Crested Butte State Bank Holding Company 644 Carolina First Corporation 1071 CSB Bancorp, Inc 1180 Cashton Bancshares, Inc 644 CTC Bancorp Inc 745 Castle BancGroup, Inc 985 D Bancorp, Inc 986 Castle Rock Bank Holding Company 985 Dai-Ichi Kangyo Bank, Ltd. Tokyo, Japan 131 CB Financial Corporation 118 Dairyland Bancorp, Inc 986 CBI Security Corporation 548, 1069 Dairyland Bank Holding Corporation 370 CBI-Central Kansas, Inc 745 Dakota Company, Inc 986 CBI-Kansas, Inc 155, 1179 Davis BanCorporation, Inc 644 CBT Corporation 1179 Deutsche Bank AG, Frankfurt, Federal Republic of CCB Corporation 907 Germany 133 CCB Financial Corporation 370, 1069 DeWitt Bancorp, Inc 986 Centennial Bank Holdings, Inc 155 Dickinson Bancorporation, Inc 955 Central Bancshares of the South, Inc 1071, 1181 Dickinson Financial Corporation 548, 986 Central Bancshares, Inc 645 Dimeco, Inc 644 Central Bankshares, Inc 745 Donley County State Bank Holding Company 814 Central Financial Corporation 907 Drummond Banking Company 1069 Central Mortgage Bancshares, Inc 907 Dunn County Bankshares, Inc 371 Centura Banks, Inc 69, 71, 814, 907, 909, 1179 Early Bancshares, Inc 548 Century Bancorp, Inc 548 East Dubuque Bancshares, Inc 986 Chambanco, Inc 989 El Paso Bancshares, Inc 155 Charter Bancshares, Inc 549 Elkhart Bancorporation, Inc 986 Chase Manhattan Corporation 547, 745 Employees Stock Ownership Plan and Trust of Chemical Banking Corporation 71, 131, 547, Southwest Georgia Financial Corporation 243 719, 747, 989 Enevoldsen Management Company 986 Chemical Financial Corporation 907 Estes Park Bank Restated Employees Stock Cherokee County Banshares, Inc 985 Ownership 401(k) Plan and Retirement Trust 814 Cheshire Financial Corporation 989 Eva Bancshares, Inc 504 Chico Bancorp, Inc 814 Exchange National Bancshares, Inc 548 Chisholm Bancshares, Inc 69 F & M Bancorporation 746 Citicorp 42, 747 F & M National Corporation 815 Citizens (U.K.) Limited, Edinburgh, Scotland 1060 F&A Financial Company 371, 988 Citizens Bancorp Investment, Inc 747 F.N.B. Corporation 72, 1070 Citizens Bancorporation of New Ulm, Inc 69 F.S.B. Properties, Inc., ESOP 244 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A82 Federal Reserve Bulletin • December 1993 Pages Pages Bank Holding Company Act of 1956—Continued Bank Holding Company Act of 1956—Continued Orders issued under—Continued Orders issued under—Continued F.S.B., Inc 549 First Virginia Banks, Inc 815 F.W.S.F. Corporation 907 First Western Corporation 70, 72 FAB Acquisition Company 1179 First Wilton Bancshares, Ltd 244 Fairfield Bancshares, Inc 814 Firstar Corporation 907 Fairmount Banking Company 69 FirstBank Holding Company of Colorado 643 Fairview Bancorporation, Inc 69 FirstBank Holding Company of Colorado Farmers & Merchants Bancshares, Inc 549 Employee Stock Ownership Plan 643, 906, 1068 Fanners & Traders Bancshares, Inc 745 Firstbank Holding Company of Colorado 906 Farmers National Bancshares, Inc 155 FirstPerryton Bancorp, Inc 644 Farmers State Bancshares of Andrew County, Inc 644 Fleet Financial Group, Inc 68, 547 Farmers State Corporation 987, 989 Florida Barnett Corporation 244 FBOP Corporation 370 FMB Bancshares, Inc 907 FCFT, Inc 214 FMSB Bancorp 817 FCNB Corp 216 FNB Financial Services, Inc., Employee Stock FEO Investments, Inc 1180 Ownership Plan 987 Fidelity Bancorp, Inc 370 FNB, Inc 987 Fifth Third Bancorp 909 FNBR Holding Corporation 644 Finger Interests Number One, Ltd 987 FNS, Inc 815 First Abilene Bankshares, Inc 371 Ford Bank Group Holdings, Inc 956 First Alabama Bancshares, Inc 745, 989, 990 Ford Bank Group, Inc 956 First American Corporation 987 Fort Bancorp, Inc 988 First Bancorp of Louisiana, Inc 987 Fort Ridgely National Bancorporation, Inc 1070 First Bancorp of Louisiana, Inc., Employee Stock Fortress Bancshares, Inc 1070 Ownership Plan Trust 987 Fourth Financial Corporation 70, 155, 549, 645, 746 First Bancorp, Inc 1181 Frandsen Financial Corporation 70 First Bancorporation, Inc 814 Franklin Bancorp, Inc 155 First Bank System, Inc 50, 369, 534, 1179 GAB Bancorp 155 First Breckinridge Bancshares, Inc 644 Garwin Bancorporation 371 First Busey Corporation 155 Gaylord Bancorporation, Ltd 747 First Chicago Corporation 747 GBC Holdings, Inc 36 First Citizens BancShares, Inc 990 GFH Corp 746 First Colonial Bankshares Corporation 706 GNB Bancorporation 54 First Commercial Corporation 338, 506, 1068 Golden Plains Bankshares, Inc 68 First Community Bancorp, Inc 69 GP FINANCIAL CORP 1180 First Community Bancshares, Inc 987 Great Lakes Financial Resources, Inc., Employee First Community Financial Corporation 907 Stock Ownership Plan 70 First Dakota Financial Corporation 70 Green-Top, Inc 549, 550 First Delaware Bancorp, Inc 1181 Guaranty Financial, M.H.C 748 First Delta Corporation 1157 Gulf Coast Bank Holding Company, Inc 815 First Fabens Bancorporation, Inc 155 H & H Holding Company 70 First Fidelity Bancorporation 622 Hansen-Lawrence Agency, Inc 73 First Financial Bancorp 70 Harlingen Bancshares, Inc 156 First Financial Corporation 877 Harris Financial, MHC 988 First Hawaiian, Inc 966 Hawkeye Bancorporation 549 First Independence Bancshares, Inc 509 HeartWay Bancorporation 988 First Insurance Finance Company 360 Heritage Bancshares Group, Inc 1180 First Interstate BancSystem of Montana, Inc 745 Heritage Financial Services, Inc 70 First Linden Bancshares, Inc 644 HN Bancshares of Delaware, Inc 156 First National Bancorp 745 HNB Holding Company, Inc 746 First National Bank of Berryville Employee Stock Holcomb Bancshares, Inc 988 Ownership Trust 243 Hollandale Capital Corporation 815 First National Bank of Boston 157 Hopeton Bancshares, Inc 244 First National Bank of Sauk Centre Retirement Horizon Bancorp, Inc 370 Savings Plan and Trust 243 HSBC Holdings BV, Amsterdam, The Netherlands .... 547 First National Beatrice Corporation Employee Stock HSBC Holdings PLC, London, Great Britain 547 Ownership Plan 814 Huntington Bancshares Incorporated 141 First National of Nebraska, Inc 644, 1070 Huntington Bancshares West Virginia, Inc 907 First Neighborhood Bancshares, Inc 644 Huntington Bancshares, First Rushmore Bancorporation, Inc 243 Incorporated 733, 907, 1071, 1181 First Security Bancorp, Inc 987 Huntington Bancshares, Indiana, Inc 1181 First Security Corporation 643, 1069, 1179 Illinois State Bancorp, Inc 645 First Sonora Bancshares, Inc 987 Independent Bank Corporation 988 First Sonora Delaware Bancshares, Inc 987 Independent Bankshares, Inc 907 First State Bancshares of DeKalb County, Inc 907 Independent Financial Corp 907 First State Bancshares, Inc 644 First Tennessee National Corporation 157 Industrial Bank of Japan, Ltd., Tokyo, Japan 747 First Texas Bancorp, Inc 1071 Industry Bancshares, Inc 988 First Trust Financial Corporation 814 Integra Financial Corporation 154 First Union Corporation ... 72, 157, 232, 371, 709, 721, 990 International Bancorporation 746 First United Bancshares, Inc 1179 International Brotherhood of Boilermakers, Iron Ship First United Bank Group, Inc 956 Builders, Blacksmiths, Forgers & Helpers 645 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 79 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 Internationale Nederlanden Group N.V., Amsterdam, Northern Bankshares, Inc 990 The Netherlands 990 Northern Trust Company 723 Intervest Bancshares Corporation 625 Northern Trust Corporation 370 Irwin Financial Corporation 1166 Northome Bancshares, Inc 244 ISB Bancshares, Inc 549 Norwest Colorado, Inc 71 J.E. Coonley Company 907 Norwest Corporation 71, 73, 156, 157, 245, J.P. Morgan & Co. Incorporated 747 517, 747, 817, 878, 1047, 1070 Jewell County Bank 549 Nowata Bancshares, Inc 908 Key Bancshares of New York, Inc 218 Old Kent Financial Corporation 371 KeyCorp 154, 218, 748 Old National Bancorp 55, 124, 369, 813 Killbuck Bancshares, Inc 70 Oliver Bancorporation, Inc 645 Klein Bancorporation, Inc 1180 Olney Bancorp of Delaware, Inc 71, 1180 Kredietbank, N.V., Brussels, Belgium 816 Olney Bancshares, Inc 71, 1180 Lansing Financial Corporation 907 OMNIBANCORP 244 Lena Spitzer Limited Partnership 1181 Omnibank Corporation 156 Lenawee Bancorp, Inc 746 ONBANCorp, Inc 39, 988 LeRoy C. Darby, Inc 645 Oostburg Bancorp, Inc 815 Liberty Bancorp, Inc 815, 988 Orchard Valley Financial Corporation 815 Liberty National Bancorp, Inc 369, 1069 Osceola Insurance, Inc 548 Lincoln Trail Bancshares, Inc 645 Otto Bremer Foundation 550, 988 Overton Financial Corporation 339 Lincolnshire Bancshares, Inc 550 LNB Acquisition Corp 369 Paloma Bancshares, Inc 908 Panhandle Bancshares, Inc 643 Long-Term Credit Bank of Japan, Limited, PCM Acquisition Group, Inc 1180 Tokyo, Japan 345, 347, 371, 816 Peoples BancTrust Company, Inc 1180 Lucan Bancshares, Inc 244 Peoples Financial Corporation 815 M & F Bancshares, Inc 815 Peoples Financial Services, Inc 157 M & F Financial Corporation 815 Peoples Holding Company 1181 Mabrey Bancorporation, Inc 1180 Peoples Mid-Illinois Corporation 156 Magna Group, Inc 1070, 1071 Peotone Bancorp, Inc 550, 988 Magnolia State Corporation 1181 Pinnacle Banc Group, Inc 72 Mansura Bancshares, Inc 37 Pinnacle Bancorp, Inc 815, 816, 880 Mark Twain Bancshares, Inc 244, 907 Pioneer Bancorporation 1070 Marquette Bancshares, Inc 72, 907 PMI Acquisition Corporation 156 MCB Financial Corporation 815 PNC Bank Corp 958, 990, 1181 Mellon Bank Corporation 157, 626 PNC Financial Corp 156, 1158 Menomonie Financial Services, Inc 909 Poca Valley Bankshares, Inc 1180 Mercantile Bancorporation, Inc 244 Prairie State Bancshares, Inc 244 Merchants & Farmers Bancshares, Inc 1070 Premier Acquisition Company 799 Merchants Holding Company 645, 746 Premier Financial Services, Inc 799 Meridian Bancorp, Inc 220, 895, 1070 Prestige Financial Corp 908 Metro Amored Courier, Inc 352 PSB Corporation 71 Metrocorp, Inc 352 Quad City Holdings, Inc 816 Mid Am, Inc 72, 1070 Quick Bancorp, Inc 1070 Mid-America Bancorp 1181 R. Banking Limited Partnership 898 Midland Capital Company 813 Random Lake Bancorp., Limited 156 Midlothian State Bank Employee Stock Ownership Raton Capital Corporation 370 Trust 645 Redwood Empire Bancorp 72 Midstate Bancorp, Inc 549 Republic Bancorp, Inc 801 Midwest National Bancshares, Inc 549 Republic Bancshares, Inc 816 Milk River Investments, Inc 70 Republic of New York Corporation 988 Minnesota Banc Holding Company 70 Rice Insurance Agency, Inc 883 Minowa Bancshares, Inc 746 Rio Bancshares Corporation 814 Missoula Bancshares, Inc 988 Rio Blanco Holding Company 712 MNB Bancshares, Inc 1180 Rio Blanco State Bank 712 Mobile National Corporation 744 River Forest Bancorp, Inc 816 Montgomery Bancshares, Inc 908 River Valley Bancorp, Inc 988 Mountain Bancshares, Inc 815 RNYC Holdings Limited, Marina Bay, Mountain Parks Financial Corporation 909 City of Gibraltar 977, 988 Nashville Holding Company 746 Rockhold BanCorp 715 National Bank of Indianapolis Corporation 1070 Rolla Holding Company, Inc 908 National City Bancshares, Inc 1180 Royal Bank of Scotland Group, pic, National City Corporation 906 Edinburgh, Scotland 747, 1060 National Commerce Bancorporation 890 Royal Bank of Scotland, pic, National Penn Bancshares, Inc 1070 Edinburg, Scotland 747, 1060 National Westminster Bank PLC, London, Great Britain 547 Saban, S.A., Marina Bay, City of Gibraltar 977, 988 NationsBank Corporation 225, 549, 892, 969, 1053 Sakura Bank Limited, Tokyo, Japan 728 NETEX Bancorporation 815 SC Bancorp, Inc 550 Newberry Bancorp, Inc 550 Security Capital Corporation 1181 NJIC, Inc 746 Security Richland Bancorporation 72, 1182 Northeast Bancorp, Inc 908 Smithdown Investments 1180 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A84 Federal Reserve Bulletin • December 1993 Pages Pages Bank Holding Company Act of 1956—Continued Bank holding companies—Continued Orders issued under—Continued Futures Commission merchant activities, reduction Snyder Holding Corporation 988 in prior approval requirements 695 Society Corporation 156, 157, 1158 Interagency policy statement regarding branch closings . 1037 South Dakota Bancotp, Inc 986 Interstate banking, article 1075 South Dakota Financial Bancorporation, Inc 986 Risk-based capital guidelines, South Plains Financial, Inc 908 issuance of final rule 97, 110, 614 Southeast Capital Corporation ESOP 908 Bank lending trends, statement 609 Southern Bank Group, Inc 157 Bank Merger Act Southern National Corporation 985 Orders issued under SouthTrust Corporation 154, 885, 908 1st Source Bank 237 Southwest Bancorp, Inc 550 Alice Bank of Texas 362 Southwest Bancshares, Inc 816 Banco Popular de Puerto Rico 748, 979 St. Stephen BanGroup, Inc 71 Bank of Montana 817 State First Financial Corporation 71 Bank of Neosho 158 Story County Bancorporation 72 Bank of New York 61 Stuart Kansas City Limited Partnership 746 Bank of Woodward 646 Suburban Bancorp, Inc 816 Belcaro Bank 158 Sumitomo Bank, Limited, Chuo-ku, Osaka, Japan 550 California Center Bank 748 SunTrust Banks, Inc 369 Canton Interim Bank 1182 Susquehanna Bancshares, Inc 908 Centura Interim Bank 73 Synder Holding Corporation 371 Chemical Bank 736 T R Financial Corp 746 Colorado National Bank-Grand Junction 909 TeamBanc, Inc 71 Commonwealth Bank 646 TeamBanc, Inc., Employees'Stock Ownership Plan .. 71 Community Bank and Trust Company 158 Texas East BanCorp, Inc 243 F & M Bank-Winchester 909 Texas Financial Bancorporation, Inc 1181 Fanners State Bank of Worden 73 Toronto-Dominion Bank 1182 Fifth Third Bank 246 Tower Bancshares, Inc 245 First Florida Bank 246 Trans Financial Bancorp, Inc 813 First United Bank 158 Twin River Financial Corporation 816 Fourth Financial Corporation 1182 U B & T Holding Co 156 Granby Bancshares, Inc 158 U.S. Trust Corporation 158, 909 Interim Bank 909 UJB Financial Corp 371 Jackson State Bank 240 Union Bancorp, Inc 989 KSB Bank 73 Union Planters Corporation 156, 157, 158, 371 Meridian Bank 817 United Bankshares, Inc 906 New Bank 910 United Missouri Bancshares, Inc 126, 244 Old Kent Bank 73 United Subsidiary, Inc 244 Premier Bank & Trust 991 Upper Rio Grande Bank Corporation 244 SouthTrust Bank of West Florida 68, 547 Valentine Bancorporation 989 Sulphur Springs State Bank 991 Valley Financial Corp 746 Sun Bank of Tampa Bay 910 Van Buren Bancorporation, Employee Stock Suntrust Banks, Inc 245 Ownership Plan 989 Triangle Bank and Trust Company 1182 Van Diest Investment Company 371 Union Bank and Trust Company 910 VSB Bancorp, Inc 156 Union Colony Bank 748 Wally Bancorp, Inc 244 VectraBank 1071 Washington Investment Company 817 Bank of Canada 585 Watford City Bancshares, Inc 1070 Bank of England 584 West Coast Bancorp, Inc 817 Bank of Japan 585 West River Holding Company, Inc 71 Bank Secrecy Act 282, 468, 689, 690 Westamerica Bancorporation 510 Bank Secrecy Act, examinations 693 Western Bancshares, Inc 908 Bank's Small Business and Agricultural Whitaker Bancorp, Inc 990 Advisory Council 398, 410 Whitaker Bank Corporation of Kentucky 990 BankAmerica 775 Whitman Bancorporation, Inc 1181 BankAmerica Corporation 259 Wilmington Trust Corporation 989 Banking Act of 1935 1101 Wisconsin Bancshares, Inc 908 Banking Supervision Department, Cayman Islands Wishek Bancorporation, Inc 158 Government, in foreign banking, article 915 Withee Bank Shares, Inc 245 Basle Accord 4, 612, 661 Worthen Banking Corporation 516 Basle Committee on Banking Supervision 5, 474, 614 Worthen Financial Corporation 516 Basle Minimum Supervision Standards 6 Bank Holding Company Supervision Manual Basle risk-based regulatory capital standards 392 Publication of December 1992 edition 99 BB&T Financial Corporation 278 Revision 790 Beaufort Sea 454 Bank holding companies Bell Atlantic Corporation 401 Capital adequacy guidelines, issuance of final rule 317 Bell Helicopter 450 Deferred tax asset reporting 98 Bergstrom Air Force Base 450 Federal Deposit Insurance Corporation Improvement Bethlehem Steel 401 Act of 1991, final rule to implement 199 Board of Governors (See also Federal Reserve System) Foreign Bank Supervision Enhancement Act of 1991, Consumer Advisory Council (See Consumer Advisory final rule to implement 199 Council) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 79 A85 Pages Pages Board of Governors—Continued Check clearing and collection, same-day settlements, Consumer and Community Affairs Division, announcement 788 restructuring 18 Chevron Oil Company 450 Federal Open Market Committee (See Federal Open Chicago Board of Trade 421 Market Committee) Chrysler Motor Company 421, 434, 595 Litigation (See Litigation) Citicorp 277 Policy statement on large-value fund transfers for Clean Air Act Amendments of 1990 429, 599 money laundering 97 Closing the Gap, FRB Boston brochure 785 Publications (See Publications in 1993) Commerce, U.S. Department of 451 Regulations (See Regulations) Commercial and industrial loans of commercial banks 651 Staff Commercial bank profits in 1992, article 649 Changes Commercial Club of Chicago 419 Brown, MaryEllen A 937 Commodity Futures Trading Commission 464, 470 Danker, Deborah 478, 1038 Community Affairs Program 288, 313 Division of Consumer and Community Affairs, Community Development Corporations 682 restructuring 18 Community Development Investments, publication 274 English, Maureen P. 19 Community development corporations Hoffman, Stephen M„ Jr. 478 Community Reinvestment Act 285 Loney, Glenn E 19 Statement 274 Madigan, Brian 478 Community Investment Program, Federal Home Loan McNulty, Irene Shawn 19 Bank System 262 Porter, Richard 478 Community Reinvestment Act Robinson, Donald L 98 Article 251 Smith, Dolores S 19 Community development activity 682 Studies (See Staff studies) Efforts to strengthen administration 1020 Statements to the Congress (See Statements to the Examinations process 935 Congress) Statements of status 285, 934, 1127 Thrift Institutions Advisory Council, new member Compliance, equal opportunity, by bank holding appointments 96 companies 311 Boehne, Edward G., President, Federal Reserve Bank of Comptroller of the Currency, Office of the 2, 97, 252, 282, Philadelphia 307, 331, 467, 784, 1082 Economy in Philadelphia District, statement 399 Congressional Budget Office 471 Federal Open Market Committee, appropriate Consumer Advisory Council disclosure, statement 1118 Appointment nominations sought 788 Boeing 446, 462 Meetings 477, 695, 1037 Boeing Helicopter 400 Members, new appointments 197 Branch Banking and Trust Company 278 Consumer Bankers Association 262 Broaddus, J. Alfred, Jr., President, Federal Reserve Consumer Complaint Program 313 Bank of Richmond Consumer Compliance Handbook 312 Economy in Richmond District, statement 409 Consumer loans, commercial banks 653 Federal Open Market Committee, appropriate Corrigan, E. Gerald, President, Federal Reserve Bank disclosure, statement 1120 of New York Brown, MaryEllen A., retirement 937 Economy in New York District, statement 398 Brunner, Allan D., article 649 Resignation 197 Budget deficit, statement 471 Council of Great Lakes Governors 435 Bureau of Economic Analysis 193 Council of Great Lakes Industries 419, 435 Business Outlook Survey, published by Federal Reserve CRA Advanced Examination Techniques course 287 Bank of Philadelphia 402 Crabbe, Leland E„ article 751 Business, Commercial, and Community Development Credit Secondary Market Development Act, H.R.2600, Availability, statement 279, 392 statement 1098 Crunch for real estate, staff study 676 Businesses, small, credit availability to 392, 473, 929 Discrimination in mortgage lending, statement 307 Economically Disadvantaged, conference 313, 785 Small businesses, availability to 473, 929 Criminal Referral Report, amendment to change C&S/SOVRAN Corporation 259 regulations H, K, and Y 949, 1037 Cummins Engine 419, 422 Canada, Bank of 585 Currency Transaction Reports 693 Capital Adequacy Guidelines, final rule, issuance, Customs Service, U.S 691 announcement 317 Capital Equivalency Report 4 Capital, changes in at commercial banks 660 Carey, Mark S., article 77 DANKER, Deborah Carswell Air Force Base 450 Promoted to Assistant Director, Division of Case 422 Monetary Affairs 478 Cash Task Force, Working Group on Money Laundering .. 690 Resignation 1038 Caterpillar 419, 422 Decatur Federal Savings and Loan 291 Cellular service increase 598 Deere & Company 422 Census of Manufactures 604 Defense, U.S. Department of 414 Census, 1987 Agricultural 426 Deferred tax asset reporting 98 Census, U.S. Bureau of the 590, 601 Denver International Airport 445 Charles Schwab 452 Depository institutions (See also specific types) Chase Field Naval Air Station 450 Reserve requirements 18, 27 Chase Manhattan Corporation 277 Depository Trust Company 90 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A86 Federal Reserve Bulletin • December 1993 Pages Pages Depository Trust Corporation 763 Federal Deposit Insurance Corporation Improvement Derivatives activities of banking organizations, statement .. 1137 Act of 1991 (FDICIA)—Continued Diamond-Star 421 Actions taken under—Continued Dickey, John W., foreign exchange articles 268, 674 CBT Corporation 739 Directors, Federal Reserve Banks and Branches, list 553 CCB Financial Corporation 744 Directory: Bank Holding Company Community Central Bancshares of the South, Inc 546 Development Investments, publication 274 CNB, Inc 1067 Diskettes, statistical data now available on 788 CoBancorp 983 Donnelly 423 Colonial BancGroup, Inc 67, 983 Douglas Amendment 1075, 1079 Commerce Bancorp 811 Dover Air Force Base 400 CoreStates Financial Corp 1067 Dow Chemical 419, 423, 434 Evergreen Bancshares, Inc 546, 1067 DuPont Inc 401 Fifth Third Bancorp 153 First Alabama Bancshares, Inc 67, 983 First Bank System, Inc 811 ECONOMY First Citizens Bancorp of Indiana 67 In 1992 171 First Citizens Bancorporation of South Carolina, Inc. .. 67 In 1993 831 First Citizens Bancshares Company 1178 Monetary policy, statement 292, 302 First Citizens BancShares, Inc 642, 811, 983, 1067 Statement on major tendencies (Chairman Greenspan) ... 193 First Community Bankshares, Inc 1067 Statements First Interstate Bancorp 369 Atlanta District 412 First of America Bank Corporation 153 Boston District 395 First Staunton Bancshares, Inc 811 Chicago District 418 First Tennessee National Corporation 740 Cleveland District 405 First Union Corporation 67, 153, 812 Dallas District 448 FirsTier Financial, Inc 744 Kansas City District 444 Fishback Insurance Agency, Inc 153 Minneapolis District 440 Fourth Financial Corporation 67 New York District 398 Grenada Sunburst System Corporation 242 Philadelphia District ., 399 Heritage Financial Services 67 Richmond District 409 Independent Bank Corporation 812 San Francisco District 453 IntetfCounty Bancshares, Inc 984 St. Louis District 436 Lake Bancshares Corporation 812 Elliehausen, Gregory E., staff study 929 LaSalle National Corporation 153, 1068 Energy, Department of 599 Liberty Holding Company, Inc 905 England, Bank of 584 Merchants National Bank of Montgomery 1067 English, Maureen P., appointed Assistant Director, Mid Am, Inc 546, 640 Division of Consumer and Community Affairs 19 Mid-Citco Incorporated 67 English, William B., article 649 Mountain Holding Corporation 984 Equal Credit Opportunity Act Old Kent Financial Corporation 68, 1067 Community reinvestment 291 Old Kent-Illinois, Inc 68 Compliance examinations 311 Pickens County Bancshares, Inc 642 Fair lending practices 785 PNC Bank Corp 1067 Euro-MTNs 766 Pueblo Bancorporation, Inc 984 European Bank for Reconstruction and Development 110 Shoreline Financial Corporation 812 European currencies 12 Southern BancShares (N.C.), Inc 744, 812 Southern National Corporation 984, 1178 SouthTrust Corporation 812, 984, 1174 FAIR Housing Act 310, 311 SouthTrust of Florida, Inc 812 Fannie Mae 263 State Financial Services Corporation 902 Farmers & Merchants Bank of Long Beach 260 Stichting Administratiekantoor ABN AMRO Holding, Farmers Holding Company 277 Amsterdam, The Netherlands 153, 1068 Federal Banking Agency Audit Act 1104 Stichting Prioriteit ABN AMRO Holding, Amsterdam, Federal Bureau of Investigation 691 The Netherlands 153, 1068 Federal Deposit Insurance Corporation 3, 96, 97, 252, Summit Bancorporation 984 Synovus Financial Corp 984 Federal Deposit Insurance Corporation Improvement Texas Bancshares, Inc 812 Act of 1991 (FDICIA) United Bancorp, Inc 68 Actions taken under United Carolina Bancshares Corporation 812 ABN AMRO Bank N.V., Amsterdam, Valley National Bancorp 153 The Netherlands 153, 1068 Wes-Tenn Bancorp, Inc 546 ABN AMRO Holding, N.V., Amsterdam, Capital adequacy guidelines, issuance of final rule 317 The Netherlands 153, 1068 Credit availability statement 393 ABN AMRO North America, Inc 153, 1068 Credit availability to small businesses 474 AmSouth Bancorporation 67, 153, 981 Final rule to implement 199 BankAmerica Corporation 148 Interstate banking, article 1076 BB&T Financial Corporation 744,811 Interstate banking, statement 774 Blue Ridge Bank, Inc 1178 Legislative effects on commercial banks 662 BOK Financial Corporation 67 Limitations on interbank liabilities, Regulation F 96 Britton & Koontz Capital Corporation 811 Real estate lending standards, Regulation H 97 Button Gwinnett Financial Corporation 983 Regulation C, amendment 18, 27 California Bancshares, Inc 1067 Regulations H, and Y, amendment 331 Capital City Bank Group, Inc 67 Regulation Y, amendment 112 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 79 A87 Pages Pages Federal Deposit Insurance Corporation Improvement Federal Reserve System Accountability Act of 1993, Act of 1991 (FDICIA)—Continued H.R.28, statements 1102, 1110, 1111, Regulatory burden 281, 467, 781 1112, 1113, 1114, 1115 Federal Financial Institutions Examination Council Federal Reserve System Working Group on Money Community Reinvestment Act 253, 287 Laundering, activities 689 Credit discrimination in mortgage lending 307 Federal Trade Commission 310 Economically underserved neighborhoods, study 682 Fedgazette, Minneapolis Federal Reserve Bank's Regulatory burden study 281, 467 newspaper 440 Reporting requirements for foreign banks 915 Fedwire, money laundering through 691 Training to detect money-laundering schemes 690 Fees (for Federal Reserve services to depository institutions) Federal Home Loan Bank System 262 Check clearing and collection Federal Home Loan Mortgage Corporation 263, 654 Same-day check settlements, new service 788 Federal National Mortgage Association 263, 654 Schedules for 1993 18 Federal Open Market Committee Feinman, Joshua N., article 569 Federal Reserve System structure 1101 Fergus, James T., staff study 676 Meetings Financial Accounting Standards Board 783 Appropriate disclosure, Financial Accounting Standards Board Statement no. 109 .. 98 statements 1100, 1107, 1110, 1112, 1113, Financial Crimes Enforcement Network, Department 1114, 1115, 1116, 1117, of the Treasury 691 1118, 1119, 1120, 1122, Financial developments in 1992 181 1123, 1124, 1125, 1126 Financial Enforcement, Department of the Treasury 690 Minutes 479, 696, 859, 938, 1039 Financial Institutions Examination Council 98 Policy actions, record 20, 100, 323 Financial Institutions Reform, Recovery, and Federal Reserve Act 573, 1104 Enforcement Act of 1989 Orders issued under Community Reinvestment Act 256 Barnett Bank of Naples 1063 Credit availability, statement 393 Farmers & Merchants Bank of Long Beach 365 Credit to small businesses, statement 475 Morgan Guaranty International Finance Corporation .. 66 Real estate appraisal requirements 682 Texas State Bank 633 Regulatory burden, statement 781 Federal Reserve and Treasury foreign exchange operations Financial instruments, warning on use of questionable (See Foreign exchange operations) types, announcement 1143 Federal Reserve Banks Financial Markets Group 469 Atlanta, economy in district, statement 412 Financial needs of economically underserved Board of Directors, Chairmen and Deputy Chairmen, neighborhoods, statement 681 appointments 1036 First Bank of the United States 1100 Boston First Bank System 278 Closing the Gap, brochure 785 First Executive Corporation 86 Credit availability, statement 279 First Interstate BancSystem 261 Credit issues for Native Americans, conference 313 First Union Corporation 260 Economy in New England, statement 395 First Union Corporation of Florida 260 Mortgage denial study 291, 308 FirstBank of Illinois Company 277 Mortgage lending study, statement 314 Fleet Financial Group 778 Study to analyze compliance of mortgage lenders 785 Flooding in Midwest, actions to ease financial stress 856 Chicago, economy in district, statement 418 Florida National Banks of Florida, Inc 260 Flow of funds data on diskette 789 Cleveland, economy in district, statement 405 Ford Motor Company 421, 434, 595 Dallas Foreign Bank Supervision Enhancement Act of 1991 Cash flow study 691 Article 1 Economy in district, statement 448 Changing legislation in foreign banking 914 Directors, list 553 Final rule to implement 199, 206 Kansas City Foreign bank applications, new procedures 477 Credit and the Economically Disadvantaged, Interstate banking, statement 775 conference 313, 785 Proposed action for Regulation K 98 Economy in district, statement 444 Foreign bank applications, new procedures 477 Minneapolis, economy in district, statement 440 Foreign banks, U.S. branches and agencies, article 913 New York Foreign exchange operations, articles 11, 268, 674, 926 Corrigan, E. Gerald, resignation as president 197 Foreign margin stocks, lists available 201, 203, 614, 615, Credit issues for Native Americans, conference 313 856, 867, 1143, 1145 Economy in district, statement 398 Forrestal, Robert P., President and Chief Executive Officer, Government securities market, surveillance 464, 469 Federal Reserve Bank of Atlanta, economy McDonough, William J., appointed president 856 in Atlanta District, statement 412 Operating income, preliminary figures available 200 Freddie Mac 263 Philadelphia, economy in district, statement 399 Freedom of Information Act 1106 Richmond, economy in district, statement 409 Full Employment and Balanced Growth Act of 1978 (See San Francisco, economy in district, statement 453 Monetary policy: Reports to the Congress) St. Louis, economy in district, statement 436 Futures Commission merchant activities, reduction Federal Reserve Board (See Board of Governors) in prior approval requirements 695 Federal Reserve System (See also Board of Governors) Creation of, in reserve requirements article 573 Initiatives to alter structure, statement 1100 Operating income, preliminary figures available 200 GARN-ST GERMAIN Depository Postwar membership 575 Institutions Act of 1982 578, 1076 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A88 Federal Reserve Bulletin • December 1993 Pages Pages Garwood, Griffith L., article, Community Reinvestment Home Ownership and Equity Protection Act of 1993, Act 251 statement 684 GE Aerospace 400 Humphrey-Hawkins Act (See Monetary policy: General Accounting Office, statements Reports to the Congress) on authority 1100, 1132, 1135 Housing and Community Development Act of 1992 General Agreement on Tariffs and Trade (NAFTA) 433 Community development lending, statement 684 General Assistance program, State of Michigan 427 Regulation C, amendment 477, 495 General Dynamics 450 Regulation DD, amendment 477, 498 General Motors Acceptance Corporation 752 Regulation O, amendment 621 General Motors Corporation 419, 421, 425, 595 Housing and Urban Development, Giddings & Lewis 422 U.S. Department of 27, 310, 785 Goodman, John L., Jr., staff study 676 Hurricane Andrew 385, 413, 415, 416 Gore-Bronson Bancorp, Inc 260 Hurricane Iniki 385 Government in the Sunshine Act 1106 Government National Mortgage Association 653 Government Securities Act of 1986 470 ILLINOIS Department of Commerce and Government securities market Community Affairs 427 Statement 464 Independent Bankers Association of America, Surveillance 469 regulatory burden, study 264, 283 Great Depression, The 574 Industrial production and capacity utilization Greene, Judge Harold 1101 data on diskette 789 Greene, Margaret L. Senior Vice President and Industrial production and capacity Deputy Manager, ( Federal Reserve Bank of New York, utilization, releases 15, 93, 190, 271, article 926 389, 606, 678, 769, Greenspan, Alan 846, 931, 1013, 1090 Budget deficit, statement 471 Industrial production, capacity, and capacity Credit availability to small businesses, statement 473 utilization since 1987, article 590 Economy and monetary policy, statements 292, 302, 849 Industrial Roundtable 418 Economy, major tendencies in, statement 193 Interagency policy statement regarding branch closings, Federal Open Market Committee meetings, appropriate announcement 1037 disclosure, statement 1107 Interagency Working Group on Market Surveillance 464 Initiatives to alter structure of Federal Reserve, Interest income and expense, commercial banks 659 statement 1100 Interest on demand, amendment to Regulation Q to Guardsman Auto Supply 423 extend deletion of advertising rules 499 Guide to the Flow of Funds Accounts, publication 695 International Banking Act of 1978 "Guidelines for Disclosure of Written Evaluations FBSEA final rule 206 and Revised Assessment Rating System," Foreign bank supervision, article 1 issued by FFIEC 254 Legislative changes 914 Guidelines for Real Estate Appraisal and Orders issued under Evaluation Programs 496 Banco de Sabadell, S.A., Sabadell, Spain 366 Bank of Taiwan, Taipei, Taiwan 541 Banque Transatlantique, Paris, France 900 Chiao Tung Bank, Taipei, Taiwan 543 Citizens National Bank, Seoul, Korea 805 H.R.2235, on nationwide interstate banking 774 Coutts & Co., AG, Zurich, Switzerland 636 H.R.28, Federal Reserve System Korea First Bank, Seoul, Korea 1064 Accountability Act, statements 1110, 1111, 1112, Medium Business Bank of Taiwan, Taipei, Taiwan — 807 1113, 1114, 1115 Singer & Friedlander, Ltd., London, England 809 H.R.459, Nationwide Banking and Branching Act 774 TaipeiBank, Taipei City, Taiwan 143 H.R.618 465 United World Chinese Commercial Bank, Helkie, William L., article 379 Taipei, Taiwan 146 Herfindahl-Hirschman index, article 188 International Finance Corporation 110 Herman-Miller 423 International Paper 437 Hitachi 422 International transactions, article 379 Hoenig, Thomas M., President, Federal Reserve Interstate banking Bank of Kansas City Article 1075 Economy in Kansas City District, statement 444 Statements 772, 777, 1093 Federal Open Market Committee, appropriate Interstate Banking Efficiency Act 776 disclosure, statement 1124 Iowa Business Council 419 Hoffman, Stephen M., Jr., appointed Assistant Director, International Supervision, Division of Banking Supervision and Regulation 478 J.B. Hunt Transport Services 437 Home Mortgage Disclosure Act J.P. Morgan and Company 277 Community reinvestment 291 James River Corporation 437 Computerized system developed to analyze data 287, 307 Japan, Bank of 585 Data for 1990 and lending patterns 314 Japanese currencies 13 Housing and Community Development Act of 1992, Joint Report on the Government Securities Market, amendments to implement provisions 477, 495 joint agency publication 464 Proposed amendment to Regulation C 98 Jordan, Jerry L., President, Federal Reserve Bank of Regulation C amendment, new exemption standard 27 Cleveland Home Mortgage Lending and Equal Treatment, Economy in Cleveland district, statement 405 FFIEC brochure 310 Federal Open Market Committee, appropriate Home Mortgages: Understanding the Process and Your disclosure, statement 1119 Right to Fair Lending, FRB brochure 310 Justice, U.S. Department of 188, 291, 308, 310, 692, 785 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 79 A89 Pages Pages KEANE, Frank, Foreign exchange article 926 Litigation—Continued Keehn, Silas, President, Federal Reserve Bank of Chicago Final enforcement orders—Continued Economy in Chicago District, statement 418 Lawrence, Gaylon M., Sr. 75 Federal Open Market Committee, appropriate disclosure, LeMaster, Frank P. 750 statement 1122 Miles, Randolph S 552 Kelly, Edward W., Jr., Federal Reserve System Mission Bancshares, Inc 165 Accountability Act, H.R.28, statement 1112 One Security, Inc 165 Kennecott Smelter 461 Pacific Inland Bancorp 647 Komatsu 422 Piedmont Trust Bank 998 Purdy Bancshares, Inc 750 Sandquist Corporation 165 Sands, Leonard S., and Ada P. 750 LABOR Statistics, U.S. Bureau of 604 Sentry Bancorp, Inc 1183 LaWare, John P. Silicon Valley Bancshares, Inc 647 Bank lending trends, statement 609 Stout, Cynthia 552 Business, Commercial, and Community Development Stuwe, Donald E 377 Secondary Market Development Act, H.R.2600, United Mizrahi Bank, Ltd., Tel Aviv, Israel 1183 statement 1098 Valley View Bancshares, Inc 165 Credit discrimination in mortgage lending, statement .... 307 Vickery, E.D 1073 Federal Reserve System Accountability Act, H.R.28, Walker, Kenneth G 750 statement 1113 Pending cases involving the Interstate banking, statement 772, 1093 Board of Governors 74, 159, 246, 372, Mention in interstate banking article 1076 551, 646, 749, 818, Money-laundering, efforts to control, statement 689 910, 991, 1072, 1183 North American Free Trade Agreement, statement 1026 Termination of enforcement actions 1184 Regulatory burden, statements 281, 466, 781 Written agreements approved by Federal Reserve Banks Small Business Loan Securitization and Secondary American Pacific Bank 911 Market Enhancement Act, S.384, statement 1016 Arrow Financial Corporation 647 Legislation (See subject or specific name of act) Banco Boliviano Americana, S.A., La Paz, Boliva .... 1184 Life insurance companies, in private placements, article ... 77 Britton Bancshares, Inc 1073 Lindsey, Lawrence B. BSD Bancorp, Inc 377 Community Reinvestment Act, statements .... 285, 1020, 1127 Carney Bank 377 Federal Reserve System Accountability Act, Citizens First Bancorp, Inc 647 H.R.28, statement 1114 Citizens State Bank and Trust Company 1073 Home Ownership and Equity Protection Act of 1993, Columbus Junction State Bank 75 statement 684 Commerce Exchange Bank 998 Litigation Daingerfield Bancshares, Inc 250 Final enforcement decisions issued by Board of Governors Dollar Savings and Trust Company 911 Brooks, Preston J 992 First Bank of Berne 165 CBC, Inc 247 First Bank of Philadelphia 1073 First National Bank of Deport, N.A 992 Glendale Bancorporation 911 Godfrey, Wesley Jr. 372 Heritage Bank 75 Knoerzer, John S 818 Khalid Bin Mahfouz, Saudi Arabia 75 Metropolitan National Bank, N.A 821 Marin National Bancorp 552 O'Connell, Michael A 821 Maryland Bankcorp, Inc 750 Owen, Tommie J 375, 376 Missouri State Financial Corporation 826 Texas National Bank-Dallas 818 NESB Corp 75 Vic Sather & Associates, Inc 160 New East Bancorp 552 Final enforcement orders issued by Board of Governors Ohio Bancorp 911 Blackshear Bank 165 People's Mutual Holdings 75 Bosshard Banco, Ltd 1072 Perry County Bancorp, Inc 647 CBC, Inc 74 Pitcairn Bancorp, Inc 165 Ciccarello, Arthur T. 551 PT Bank Niaga, Jakarta, Indonesia 250 Colonial Bancshares, Inc 911 Southeast Capital Corporation Employee Stock Country Hill Bancshares, Inc 826 Ownership Plan 1073 Country Hill Bank 749, 1072 Sparta State Bank 998 Ditta, Sammy 1073 Union State Bank 377 Dollar Savings and Trust Company 911 United Bank Corporation of New York 165 Farmers and Merchants Bank of Long Beach 165 Wahoo State Bank 75 First Pacific Bancorp, Inc 647 Loney, Glenn E., promotion to Assistant Director, Florida First International Bank 1183 Division of Consumer and Community Affairs 19 Gardner, J.D 1073 Geiger, Dan S 911 Greater Ohio River Company 165 Guardian Bank 551 MAASTRICHT Treaty 12 Hagan, Charles W. Jr. 750 Machinery manufacturing since 1987, article 597 Haigh, George W. 1073 Harrison, John Ray 1073 Mack, Phillip R., article 1001 Hornberger, Fred 1073 Market risk and bank capital, documents 614 Industrial Bancshares, Inc 165 Madigan, Brian, promoted to Associate Director, International Bancshares, Inc 911 Division of Monetary Affairs 478 Irausquin, Victor J. Vargas 826 Management and Budget, Office of 200, 471 Jawhary, Sayed, Luxembourg, Luxembourg 551 Manufacturing, developments since 1987, article 592 Joe R. Clarke III 249 Marathon Oil Company 450 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A90 Federal Reserve Bulletin • December 1993 Pages Pages Market Surveillance Function 469 NATIONAL Association of Insurance Commissioners 85 Martin Marietta 400,411 National Association of Purchasing Management, Inc 601 Massachusetts Community and Banking Council 280 National Association of Securities Dealers 465 Mazda Corporation 421 National Bank Act 572, 1097 McDonnell Douglas 438 National bank notes 573 McDonough, William J., President, Federal Reserve National Bureau of Economic Research 451 Bank of New York National Credit Union Administration 307 Appointed, announcement 856 National Equity Fund 277 Federal Open Market Committee, appropriate National Federation of Independent Business 473 disclosure, statement 1117 National Market System 201, 614, 857, 1143 Foreign exchange articles 11, 268, 674 National Monetary Commission 1101 Government securities market surveillance, statement ... 469 National Reserve Association 1101 McFadden Act 774, 1079, 1094 National Survey of Small Business Finances, 1988-89 1087 McGuire Air Force Base 400 Nationwide Banking and Branching Act, H.R.459 774 McNulty, Irene Shawn, appointed Assistant Director, NCNB Corporation 259 Division of Consumer and Community Affairs 19 Neal Amendment 411 McTeer, Robert D., Jr., President, Federal Reserve Net transaction accounts Bank of Dallas Three percent reserve requirement 18 Economy in Dallas district, statement 448 New York Stock Exchange 465 Federal Open Market Committee, appropriate Nordic Investment Bank 110 disclosure, statement 1125 North American Electric Reliability Council 600 Medicaid costs, State of Michigan 428 North American Free Trade Agreement Medium-term note market, article 751 (NAFTA) 433, 447, 1026 Melzer, Thomas C., President, Federal Reserve Bank of Novell 461 St. Louis Nucor 437 Economy in St. Louis District, statement 436 Federal Open Market Committee, appropriate disclosure, statement 1123 OHIO Equity Fund 277 Member banks Omnibus Budget Reconciliation Act of 1990 473 Capital adequacy guidelines, issuance of final rule 317 Organisation for Economic Co-operation and Interagency policy statement regarding branch closings . 1037 Development 97 Interstate banking, article 1075 Other Red Estate Owned, loan category 783 Risk-based capital guidelines, issuance of final rule .. 614, 620 Over-the-counter stocks, list of marginable .. 201, 203, 614, 615, Mercantile Exchange 421 856, 867, 1143, 1145 Merrill Lynch 452 Metropolitan Statistical Area designations, announcement to continue 1992 designations 200 PARRY, Robert T., President, Federal Reserve Michigan's Department of Commerce 427 Bank of San Francisco Midwest flooding, actions to ease financial stress 856 Economy in San Francisco District, statement 453 Mines, Bureau of, Department of Energy 600 Federal Open Market Committee, appropriate Mining, developments since 1987, article 598 disclosure, statement 1126 Misback, Ann E., article 1 Peoples Bank of Lakeland 261 Mitsui Taiyo Kobe Bank Limited 259 Perry Bancshares, Inc 278 Mobil Oil Company 450 Persian Gulf War 379, 386, 450, 596 Modernizing the financial system: Recommendations Phillips Oil Company for safer, more competitive banks, report 1076 Phillips, Susan M. Modine 422 Derivatives activities of banking organizations, Monetary aggregates, data on diskette 789 statement 1137 Monetary Control Act of 1980, reserve Federal Reserve System Accountability Act, requirements, article 578, 586 H.R.28, statement 1115 Monetary policy Policy actions, Federal Open Market Committee, Article 849 record 20, 100, 323 Reports to the Congress 167, 827 Policy statement Money laundering Large-value fund transfers for money laundering 97 Efforts to control, statement 689 Porter, Richard, promoted to Deputy Associate Large-value fund transfers, policy statement 97 Director, Division of Monetary Affairs 478 Money Laundering Section, Department of Justice, Prime bank guarantees, warning announcement on use of .. 1143 Criminal Division 692 Prime bank letters of credit, warning announcement Money stock data, revisions 317 on use of 1143 Mortgage and consumer finance, data on diskette 789 Prime bank notes, warning announcement on use of 1143 Mortgage lending discrimination, Boston Reserve Private placements, article on developments in 77 Bank study 308 Production, industrial (See Industrial production Mortgage lending patterns, statement on study by Boston and capacity utilization) Reserve Bank 314 Proposed actions Motor vehicles, manufacturing since 1987 594 Capital adequacy guidelines, limitations of Moxham Bank Corporation 277 deferred tax assets, February 11, 1993 317 Mullins, David W., Jr. Financial institution, expansion of definition, Credit for small businesses, statement 392 May 13, 1993 695 Federal Reserve System Accountability Act, Real estate appraisals, July 19, 1993 790 H.R.28, statement 1110 Regulation A, to implement section 142, FDICIA, Government securities market, statement 464 August 20, 1993 937 Mutual Benefit Life Insurance Company 86 Regulation C, Home Mortgage Disclosure Act, Mutual fund industry, recent trends, article 1001 December 28, 1992 98 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 79 A91 Pages Pages Proposed actions—Continued Regulations (Board of Governors, See also Rules)— Regulation E, extension of provision to electronic Continued benefit transfer programs, February 8, 1993 317 Amendments and revisions—Continued Regulation H, uniform multiagency criminal K, International Banking Operations—Continued referral form, January 6, 1993 200 Foreign Bank Supervision Enhancement Act Regulation K of 1991, final rule 5, 199, 206 Foreign Bank Enhancement Act of 1991, Proposed actions, in article 98 to implement, December 31, 1992 98 O, Loans to Executive Officers, Directors, and Uniform multiagency criminal referral form, Principal Shareholders of Member Banks January 6, 1993 200 Aggregate insider lending 621, 695 Regulation O, aggregate insider lending, May 7, 1993 ... 695 Federal Reserve Act responsibility 112 Regulation Y, uniform multiagency criminal referral Q, Prohibition Against the Payment of Interest form, January 6, 1993 200 on Demand Regulation Z, revision, December 1, 1992 18 Advertising rules extended 499 Prowse, Stephen D., article 77 T, Credit by Brokers and Dealers Proxmire, Senator William A., in community OTC and foreign margin stocks, reinvestment article 251 list, revisions 201, 203, 614, 615, Publications in 1993 856, 867, 1143, 1145 79th Annual Report, 1992 478 U, Credit by Banks for the Purpose of Purchasing or Bank Holding Company Supervision Manual 99, 790 Carrying Margin Stocks Community Development Investments in 1993 274 OTC and foreign margin stocks, Directory: Bank Holding Company Community Development Investments 274 856, 867, 1143, 1145 Guide to the Flow of Funds Accounts 695 X, Borrowers of Securities Credit Market risk and bank capital documents, papers by OTC and foreign margin stocks, Basle Committee on Banking Supervision 614 Puget Sound 462 856, 867, 1143, 1145 Y, Bank Holding Companies and Change in Bank Control Capital adequacy guidelines 331 RADDOCK, Richard D., article 590 Criminal Referral Report 949, 1037 Rea, John D., article 77 Federal Deposit Insurance Corporation Real estate Improvement Act, final rule 112, 199 Appraisal guidelines, new procedures 496 Foreign Bank Supervision Enhancement Act Appraisals, interagency rule to amend regulations, of 1991, final rule 5, 199, 206 proposed action 790 Guidelines for real estate appraisals, new Commercial bank loans 652 procedures 496 Lending standards, amendment to Regulation H 97 Real estate appraisals, proposed action 790 Loans, and regulatory burden 782 Risk-based capital guidelines, amendment 620 Regulations (Board of Governors, See also Rules) Z, Truth in Lending Amendments and revisions Preprinted form use, temporary exception 871 A, Extensions of Credit by Federal Reserve Banks Regulatory provision, clarifications 496 Proposed action to implement section 142, CC, Availability of Funds and Collection of Checks FDICIA 937 Conformity to Uniform Commercial Code, C, Home Mortgage Disclosure amendment 114 Housing and Community Development Act DD, Truth in Savings of 1992, provisions 477, 495 Housing and Community Development Act Mortgage companies to disclose data on home of 1992, to implement changes 477, 498 lending activity 18 Regulatory burden, statements 466, 781 New exemption standard for nondepository Regulatory Uniformity Project 466 mortgage lenders 27 Reserve requirements Proposed action on home lending activity 98 Graduated 577 D, Reserve Requirements of Depository Institutions History of, article 569 Net transaction accounts, increase in with Lagged 577 3 percent reserve requirement 18, 27 Net transaction accounts increase for 3 percent F, Limitations on Interbank Liabilities New regulation to implement interbank liability requirement 18, 27 provisions under FDICIA 96, 107 Reserves of depository institutions data on diskette 790 G, Securities Credit Transactions Resolution Trust Corporation OTC and foreign margin stocks, Monetary policy statement 430 list, revisions 201, 203, 614, 615, Statement on economic tendencies 195 856, 867, 1143, 1145 Resolution Trust Corporation Refinancing, Restructuring, H, Membership of State Banking Institutions and Improvement Act of 1991 in the Federal Reserve System Lending to economically underserved neighborhoods .... 682 Additional bank names added to list of multilateral Risk-based capital guidelines, amendment 97, 620 institutions 110 Revenue test for securities activities, alternative Capital adequacy guidelines 331 method of adjustment 200 Criminal Referral Report 949, 1037 Reverse redlining 685 Real estate appraisals, proposed action 790 Rhoades, Stephen A., article 188 Real estate lending standards, implementation Riegle, Senator Donald W„ Jr. 307 of uniform 97 Risk-based capital guidelines Risk-based capital guidelines, amendment 620 Final rule issuance 614, 620 K, International Banking Operations Modification on collateralized transactions 97 Criminal Referral Report 949, 1037 Standards 4 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A92 Federal Reserve Bulletin • December 1993 Pages Pages Robinson, Donald L„ appointed Assistant Inspector Statements to the Congress—Continued General, Office of Inspector General 98 Credit availability Rocky Mountains 445 Low income communities (Richard F. Syron, Rule 144A, relation to private placements, article 77, 88 President, Federal Reserve Bank of Boston) 279 Rules of Procedure, publication requirements for Small businesses notice of applications 1047 Chairman Greenspan 473 Rules Regarding Delegation of Authority Vice Chairman Mullins 392 Conflicts of interest waivers 1149 Credit discrimination in mortgage lending Federal Deposit Insurance Act, amendment 622 (Governor LaWare) 307 Rutledge, William L., Senior Vice President, Federal Economy Reserve Bank of New York, statement 934 Atlanta District (Robert P. Forrestal, President and Chief Executive Officer, Federal Reserve Bank of Atlanta) 412 Boston District (Richard F. Syron, President, Federal S.384, Small Business Loan Securitization and Reserve Bank of Boston) 395 Secondary Market Enhancement Act, statement 1016 Chicago District (Silas Keehn, President, Federal S.543, interstate banking 1094 Reserve Bank of Chicago) 418 Salomon Brothers 464, 469 Cleveland District (Jerry L. Jordan, President, Federal Same-day check settlements, announcement 788 Reserve Bank of Cleveland) 405 Sasser, Jim, Senator, U.S. Senate, Committee on Banking, Dallas District (Robert D. McTeer, Jr., President, Housing, and Urban Affairs 196 Federal Reserve Bank of Dallas) 448 Savage, Donald T., article 1075 Kansas City District (Thomas M. Hoenig, President, Sears Roebuck and Company 401, 419, 431 Federal Reserve Bank of Kansas City) 444 Section 20 companies, quarterly table of factors, release ... 615 Major tendencies (Chairman Greenspan) 193 Securities Minneapolis District (Gary H. Stern, President, Commercial bank holdings 654 Federal Reserve Bank of Minneapolis) 440 Government market, statement 464 Monetary policy (Chairman Greenspan) 292, 302 Government, surveillance of market 469 New York District (E. Gerald Corrigan, President, Private placement, Rule 144A 90 Federal Reserve Bank of New York) 398 Revenue test, alternative method of adjustment 200 Philadelphia District (Edward G. Boehne, President, Securities and Exchange Commission 77, 464, 469, 752 Federal Reserve Bank of Philadelphia) 399 Securities Exchange Act of 1934 470 Richmond District (J. Alfred Broaddus, Jr., President, Security Pacific Corporation 259 Federal Reserve Bank of Richmond) 409 Selected interest rate data on diskette 790 San Francisco District (Robert T. Parry, President, Semiconductors, increased use 598 Federal Reserve Bank of San Francisco) 453 Senior Loan Officer Opinion Survey, Bank Lending St. Louis District (Thomas C. Melzer, President, Practices 651 Federal Reserve Bank of St. Louis) 436 Shell Oil Company 450 Small Business and Agricultural Federal Open Market Committee, appropriate disclosure Advisory Council 418, 431, 432, 435 Chairman Greenspan 1107 Small Business Loan Securitization and Secondary Boehne, Edward G., President, Federal Reserve Market Enhancement Act, S.384, statement 1016 Bank of Philadelphia 1118 Small businesses Broaddus, J. Alfred, Jr., President, Federal Bank of Credit availability, statement 392 Richmond 1120 Trade credit by, staff study 929 Hoenig, Thomas M., President, Federal Reserve Bank Smith, Dolores S. of Kansas City 1124 Community Reinvestment Act, article 251 Jordan, Jerry L., President, Federal Reserve Bank of Promotion to Assistant Director, Division of Consumer Cleveland 1119 and Community Affairs 19 Keehn, Silas, President, Federal Reserve Bank Special Counsel 692 of Chicago 1122 Spillenkothen, Richard, financial needs of economically McDonough, William J., President, Federal Reserve underserved neighborhoods, statement 681 Bank of New York 1117 Staff studies McTeer, Robert D., Jr., President, Federal Reserve 1989-92 Credit Crunch for Real Estate 676 Bank of Dallas 1125 Demand for Trade Credit: An Investigation of Motives Melzer, Thomas C., President, Federal Reserve Bank for Trade Credit Use by Small Businesses 929 of St. Louis 1123 Standard Industrial Classification, 1987 601 Parry, Robert T., President, Federal Reserve Bank State bank notes 573 of San Francisco 1126 State member banks (See also Member banks) Stern, Gary H., President, Federal Reserve Bank of Risk-based capital guidelines 97, 110 Minneapolis 1124 State, U.S. Department of 693 Syron, Richard F., President Federal Reserve Bank Statements to the Congress (including reports and letters) of Boston 1116 Bank lending trends (Governor LaWare) 609 Federal Reserve System Accountability Act, statements Budget deficit (Chairman Greenspan) 471 Governor Angell 1111 Business, Commercial, and Community Development Governor Kelly 1112 Secondary Market Development Act Governor LaWare 1113 (Governor LaWare) 1098 Governor Lindsey 1114 Community development corporations (Griffith L. Governor Phillips 1115 Garwood, Director, Division of Consumer Vice Chairman Mullins 1110 and Community Affairs) 274 Federal Reserve System, initiatives to alter structure Community Reinvestment Act (Chairman Greenspan) 1100 Governor Lindsey 285, 1020, 1127 Financial needs of economically underserved William L. Rutledge, Senior Vice President, Federal neighborhoods (Richard Spillenkothen, Director, Reserve Bank of New York 934 Division of Banking Supervision and Regulation) 681 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 79 A93 Pages Pages Statements to the Congress—Continued System Open Market Account . 201 General Accounting Office, authority Governor Angell 1132 William J. McDonough, President, Federal Reserve TABLES (For index to tables published monthly, Bank of New York 1135 {see guide at top of page A80; for special tables Government securities market published during the year, see list on page A69.) Statement on (Vice Chairman Mullins) 464 Taiyo Kobe Bank and Trust Company 259 Surveillance (William J. McDonough, Executive Vice Tax Reform Act of 1986 654 President, Federal Reserve Bank of New York) 469 Tenth District Economic Advisory Council 447 Home Ownership and Equity Protection Act of 1993, Terrell, Henry S., article 913 S.924 (Governor Lindsey) 684 Texas Instruments 450 Interstate banking Thrift Institutions Advisory Council, new member Governor LaWare 772 appointments 96 Richard F. Syron, President, Federal Reserve Bank of Thrift Supervision, Office of 97, 252, 282, 307, 331, 467 Boston 777 Trade credit, use by small businesses, staff study 929 Interstate banking (Governor LaWare) 1093 Training Monetary policy report to the Congress (Chairman CRA Advanced Examination Techniques 287 Greenspan) 167, 849 Expanded Educational, Informational, and Technical Money laundering, Federal Reserve's efforts to control Assistance activities 288 (Governor LaWare) 689 Treasury and Federal Reserve foreign Mortgage lending patterns (Richard F. Syron, President, exchange operations, article 11, 268, 674, 926 Federal Reserve Bank of Boston) 314 Treasury, U.S. Department of the 3, 282, 394, 464, North American Free Trade Agreement 468, 469, 693, 1076 (Governor LaWare) 1026 Tri-County Community Development Corporation 277 Regulatory burden (Governor LaWare) 281, 466, 781 Truth in lending, amendment to Regulation Z to clarify Small Business Loans Securitization and Secondary provisions 496 Market Enhancement Act (Governor LaWare) 1016 Truth in Savings, Housing and Community Statistical data, released on diskette 788 Development Act of 1992, implementation of Steelcase 423 changes to 477, 498 Stern, Gary H., President, Federal Reserve Bank of Tyson Foods 437 Minneapolis Economy in Minneapolis District, statement 440 Federal Open Market Committee, appropriate disclosure, statement 1124 U.S. branches and agencies of foreign banks, article 913 Stock market credit, over-the-counter stocks (See U.S. international transactions, article 379 Over-the-counter stocks, list of marginable; Foreign Udell, Gregory F., article 77 stocks, list of marginable, and Regulations: Uniform Commercial Code, amendment to Regulation CC . 114 G, T, U, and X) United Air Lines 419 Study on Regulatory Burden, Federal Financial Institutions Upjohn 423 Examination Council 466 Uruguay Round of General Agreement on Tariffs Summary of Deposits, FDIC annual publication 1083 and Trade 447 SunTrust Banks, Inc 261 Survey of Consumer Finances, 1989 1087 Survey of Plant Capacity, U.S. Bureau of the Census 590 VOUGHT Aircraft 450 Survey of Terms of Bank Lending, Federal Reserve Board 652 Swiss National Bank 584 Syron, Richard F., President, Federal Reserve Bank WAL-MART Stores 437 of Boston West Texas intermediate 384 Credit availability, statement 279 Westinghouse 411 Economy in New England, statement 395 Whirlpool 419 Federal Open Market Committee, appropriate disclosure, Wisconsin Equity Fund 277 statement 1116 Wisconsin Strategic Development Commission 419 Interstate banking, statement 777 Wolken, John D., staff study 929 Mortgage lending patterns, statement 314 World War II 575 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A94 Maps of the Federal Reserve System l 9 BOSTON MINNEAPOLIS® 2 " 7 - • NEW YORK 12 CHICAGO • CLEVILAND • PHILADELPHIA • SAN FRANCISCO 10 4 a KANSAS CITY • RICHMOND STY LOUIS 5 8 U. 11 . DALLAS ALASKA HAWAII 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

A95 1-A 2-B 3-C 4-D 5_E Baltimore Pittsburgh { J / C T Charlotte • Cincinnati Buffalo MAB CT V„ NJ NY BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 6-F 7-G 8-H • Nashville ™ J\—— Birmingham, AL \ m WI MI ^ \ Louisville MS / GA [A Detroit • it m —— LA • ^ Jacksonville IN • Memphis y New Orleans m Littlf Rock Miami ATLANTA * CHICAGO ST. LOUIS 9-1 • Helena MINNEAPOLIS 10-J 12-L WY / NF. CO -1 Omaha • • ^ MO Denver PR M Oklahoma City • OK KANSAS CITY 11-K Salt Lake City • ( Ho • u ston • Los Angeles San Antonio! DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A96 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK Chairman President Vice President branch, or facility Zip ' Deputy Chairman First Vice President in charge of branch BOSTON* 02106 Jerome H. Grossman Richard F. Syron Warren B. Rudman Cathy E. Minehan NEW YORK* 10045 Ellen V. Futter William J. McDonough Maurice R. Greenberg James H. Oltman Buffalo 14240 Joseph J. Castiglia James O. Aston PHILADELPHIA 19105 Jane G. Pepper Edward G. Boehne James M. Mead William H. Stone, Jr. CLEVELAND* 44101 A. William Reynolds Jerry L. Jordan G. Watts Humphrey, Jr. Sandra Pianalto Cincinnati 45201 Marvin Rosenberg Charles A. Cerino1 Pittsburgh 15230 Robert P. Bozzone Harold J. Swart1 RICHMOND* 23219 Anne Marie Whittemore J. Alfred Broaddus, Jr. Henry J. Faison Jimmie R. Monhollon Baltimore 21203 Rebecca Hahn Windsor 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 Donald E. Boomershine FredR. Herr1 Jacksonville 32231 Joan D. Ruffier James D. Hawkins1 Miami 33152 R. Kirk Landon James T. Curry III Nashville 37203 James R. TuerfF Melvyn K. Purcell New Orleans 70161 Lucimarian Roberts 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 Robert H. Quenon Thomas C. Melzer Janet McAfee Weakley James R. Bowen Little Rock 72203 Robert D. Nabholz, Jr. Karl W. Ashman Louisville 40232 John A. Williams Howard Wells Memphis 38101 Seymour B. Johnson John P. Baumgartner MINNEAPOLIS 55480 Delbert W. Johnson Gary H. Stern Gerald A. Rauenhorst Colleen K. Strand Helena 59601 James E. Jenks 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 W. Thomas Beard, III Sammie C. Clay Houston 77252 Judy Ley Allen Robert Smith, III1 San Antonio 78295 Erich Wendl Thomas H. Robertson SAN FRANCISCO 94120 James A. Vohs Robert T. Parry Judith M. Runstad Patrick K. Barron Los Angeles 90051 Donald G. Phelps John F. Moore1 Portland 97208 William A. Hilliard E. Ronald Liggett1 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; East Rutherford, 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) 482-1986. 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, A A, 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. A Consumer's Guide to Mortgage Lock-Ins Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis