Federal Reserve Bulletin, 1994-02

VOLUME 80 • NUMBER 2 • FEBRUARY 1994 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 79 RESIDENTIAL LENDING TO LOW-INCOME ity utilization at the end of 1993 stood at AND MINORITY FAMILIES: EVIDENCE 83.5 percent, 2.5 percentage points above its FROM THE 1992 HMDA DATA year-ago level but still below its most recent 1988-89 peak. In recent years, the access of lower-income and minority households to mortgage credit has drawn considerable attention, as more 114 STATEMENT TO THE CONGRESS information about mortgage lending has J. Virgil Mattingly, General Counsel, Board of become available under the Home Mortgage Governors, testifies in connection with the Disclosure Act (HMDA). This article uses the hearing into requests that Sheikh Zayed HMDA data to analyze patterns of loan applial-Nahyan and two of his adult sons be cations and their disposition by the income, granted head-of-state immunity in connection race, or ethnicity of the applicant and by the with pending civil litigation relating to the location of the property pertaining to the loan. acquisition of the First American banking It also examines lending in different types of organization by the Bank of Credit and neighborhoods, including those in central city Commerce International, S.A. (BCCI) and and in noncentral city locations, and describes briefly summarizes the BCCI matter and the the role of mortgage originators and of institu- Board's enforcement actions relating to it, tions that purchase mortgages. Finally, it before the House Committee on Banking, reviews the use of HMDA data to monitor the Finance and Urban Affairs, December 9,1993. way institutions comply with laws pertaining to fair lending, community reinvestment, and 118 ANNOUNCEMENTS affordable housing. Appointment of new members to the Thrift 109 INDUSTRIAL PRODUCTION AND Institutions Advisory Council. CAPACITY UTILIZATION Amendments to Regulation A. Industrial production rose 0.9 percent in Amendments to Regulation B. November, following a revised gain of 0.7 percent in October. The recent strength in Amendments to the risk-based capital guideoutput boosted the utilization of total indus- lines affecting the treatment of certain multitrial capacity 0.6 percentage point in Novem- family housing loans. ber and 0.5 percentage point in October. Proposal to assess charges for examinations of Capacity utilization in November stood at U.S. branches, agencies, and representative 83.0 percent. offices of foreign banks; proposal to amend In December, industrial production rose the risk-based capital guidelines for state 0.7 percent. At 114.0 percent of its 1987 avermember banks and bank holding companies to age, industrial production in December was include in tier 1 capital net unrealized holding 4.6 percent above its level a year earlier. gains and losses on securities available for Reflecting the sustained strong growth in outsale. put, the utilization of total industrial capacity rose 0.5 percentage point in December. Capac- Change in Board staff. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

120 MINUTES OF OF THE FEDERAL OPEN A1 FINANCIAL AND BUSINESS STATISTICS MARKET COMMITTEE MEETING These tables reflect data available as of At its meeting on November 16, 1993, the December 28,1993. Committee adopted a directive that called for maintaining the existing degree of pressure on A3 GUIDE TO TABULAR PRESENTATION reserve positions and that did not include a A4 Domestic Financial Statistics presumption about the likely direction of any A45 Domestic Nonfinancial Statistics adjustment to policy during the intermeeting A53 International Statistics period. The directive stated that in the context of the Committee's long-run objectives for A69 GUIDE TO STATISTICAL RELEASES AND price stability and sustainable economic SPECIAL TABLES growth, and giving careful consideration to economic, financial, and monetary develop- A84 INDEX TO STATISTICAL TABLES ments, slightly greater or slightly lesser reserve restraint might be acceptable during the intermeeting period. The reserve condi- A86 BOARD OF GOVERNORS AND STAFF tions associated with this directive were A88 FEDERAL OPEN MARKET COMMITTEE expected to be consistent with modest growth AND STAFF; ADVISORY COUNCILS in M2 and M3 over coming months. A90 FEDERAL RESERVE BOARD 129 LEGAL DEVELOPMENTS PUBLICATIONS Various bank holding company, bank service corporation, and bank merger orders; and A92 MAPS OF THE FEDERAL RESERVE pending cases. SYSTEM A94 FEDERAL RESERVE BANKS, BRANCHES, AND OFFICES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Residential Lending to Low-Income and Minority Families: Evidence from the 1992 HMDA Data Glenn B. Canner and Wayne Passmore, of the active lenders, often extending credit in dozens of Board's Division of Research and Statistics, and metropolitan areas. Dolores S. Smith, of the Division of Consumer and This article uses the HMDA data to study devel- Community Affairs, prepared this article. Kim opments in the mortgage market and continues the Koenig, of the Division of Research and Statistics, analyses published in two previous Bulletin artiand Cyndi Johnson, Jeffrey Phipps, and Marilyn cles.2 It uses the 1992 data to analyze patterns of Rhyne, of the Division of Information Resources loan applications and their disposition by the Management, provided assistance. income, race, or ethnicity of the applicant and by ryjc the location of the property involved in the loan. It Since 1976, the Home Mortgage Disclosure Act examines lending in different types of neighbor- (HMDA) has required most depository institutions hoods, including those in central city and in nonwith offices in metropolitan areas to provide data central city locations, and describes the role of on the geographic location of the home purchase mortgage originators and of institutions that purand home improvement loans they originate or buy. chase mortgages. Finally, it reviews the use of In recent years, as more information about mort- HMDA data to monitor the way institutions comgage lending has become available under HMDA, ply with laws pertaining to fair lending, community the access of lower-income and minority house- reinvestment, and affordable housing. holds to mortgage credit has drawn considerable attention and has stimulated initiatives in the private and public sectors to increase availability. SUMMARY OF THE FINDINGS FOR 1992 The expanded data have come about as the result of legislative amendments in 1989 and 1991 that The HMDA data show that by far the most comincreased the scope of the information that lenders mon type of home loan requested by consumers must collect and the coverage of lenders required during 1992 was for refinancing, which accounted to report.1 Under HMDA, lenders now disclose for more than half of all home loan applications. information on the disposition of home loan appli- Among loans used to purchase homes, die share of cations and on the race or national origin, gender, loans insured by the Federal Housing Administraand annual income of loan applicants and borrow- tion (FHA) dropped sharply from the previous year. ers. They also disclose the type of secondary mar- The drop probably resulted from the recent ket purchaser for loans that are originated or bought increases in the costs to homebuyers of using FHAby the lender in the same year as the sale. Inde- insured loans and from the greater availability of pendent mortgage companies (firms not affiliated conventional loan products designed to reach lowwith a depository institution) now are among the and moderate-income homebuyers. lenders covered by the act; many of them are 2. See Glenn B. Canner and Dolores S. Smith, "Home Mortgage Disclosure Act: Expanded Data on Residential Lending," Federal 1. The Financial Institutions Reform, Recovery and Enforce- Reserve Bulletin, vol. 77 (November 1991), pp. 859-81; and Glenn ment Act of 1989 contains the 1989 amendments to HMDA; the B. Canner and Dolores S. Smith, "Expanded HMDA Data on Federal Deposit Insurance Corporation Improvement Act of 1991 Residential Lending: One Year Later," Federal Reserve Bulletin, contains the 1991 amendments. vol. 78 (November 1992), pp. 801-24. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

80 Federal Reserve Bulletin • February 1994 Most applications in 1992 for home loans were approved, particularly those to buy homes or to Denial Rates for Home Loans, by Racial or refinance existing loans. The rates of denial varied Ethnic Characteristics of Applicants among applicants grouped by their income and racial or ethnic characteristics (see the box "Denial The 1992 HMDA data show that rates of loan applica- Rates for Home Loans, by Racial or Ethnic Charac- tion denial vary by racial and ethnic characteristics. teristics of Applicants"). Differences in the distri- For example, for conventional home purchase loans, bution of applicants by income accounted for some about 36 percent of black applicants, 27 percent of of the differences in loan disposition rates among Hispanic applicants, 16 percent of white applicants, and 15 percent of Asian applicants were denied credit. racial or ethnic groups, but other factors also As discussed in detail in the text, many factors may seemed to be important because white applicants in account for these differences. all income groups had lower rates of denial than black or Hispanic applicants. These disparities raise Proportion of home loan applications denied, by the possibility of unlawful discrimination against purpose of loan and characteristics of applicant, 1992 some minority applicants. Percent The HMDA data provide little information about RRaacciiaall oorr Home purchase HHoommee other factors that might explain differences in eetthhnniicc RReeffiinnaanncciinngg iimmpprroovvee-denial rates among racial or ethnic groups. For cc oo hh ff aa rr aa aa pp cc pp ttee llii rr cc ii aa sstt nn ii tt cc Go b v a e c r k n e m d e 1 n t- C t o io n n v a e l n - mmeenntt example, the data do not include detailed informa- Asian/Pacific tion about the financial circumstances of loan appli- Islander.. 13.5 15.3 15.8 28.3 Black 23.8 35.9 23.6 39.7 cants or the characteristics of the properties that 18.5 27.3 24.5 41.1 White 12.8 15.9 10.4 18.8 applicants sought to purchase, refinance, or improve. When used in conjunction with other 1. Loans backed by the Federal Housing Administration, the Department of Veterans Affairs, or the Farmers Home information, however, the HMDA data facilitate Administration. assessment by government agencies of lenders' SOURCE. Federal Financial Institutions Examination Council, Home Mortgage Disclosure Act. compliance with the fair lending laws. The HMDA data show that the 1992 rates of loan approval rose and rates of denial fell from gage loans—the Federal National Mortgage Assothose of the previous year for black and for white ciation (Fannie Mae) and the Federal Home Loan applicants for government-backed and for conven- Mortgage Corporation (Freddie Mac). Recent legistional home purchase loans. They show a large lation directs both agencies to meet loan-purchase increase in the number of conventional home pur- targets for low-income and for central city borchase loans extended to low-income and to black rowers. The HMDA data have limitations for families. The types and quantities of home loans measuring Fannie Mae's and Freddie Mac's perforextended in 1992 varied considerably across neigh- mance in helping to meet these affordable housing borhoods grouped by median family income, racial goals. However, the data suggest that the mortor ethnic composition, and location (that is, gages purchased by other secondary market instituwhether central city or noncentral city); differences tions in 1992 generally included higher proportions in the socioeconomic and housing characteristics of of conventional home loans extended to lowerneighborhoods offer possible explanations for these income families and to families living in central lending patterns. cities relative to the purchases by Fannie Mae and The HMDA data also shed light on the second- Freddie Mac. ary market for mortgages. Institutions in the secondary mortgage market play a prominent role in the U.S. housing market. Secondary market partici- A BRIEF DESCRIPTION pants generally do not originate loans, but they do OF THE 1992 HMDA DATA specify the underwriting guidelines that loans must meet to be eligible for purchase or securitization. In 1992, 9,073 home lenders submitted HMDA Two government-sponsored enterprises dominate data, including 5,468 commercial banks, 1,395 savsecondary market purchases in conventional mort- ings associations, 1,706 credit unions, and 504 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Residential Lending to Low-Income and Minority Families: Evidence from the 1992 HMD A Data 81 1. Residential lending activity reported by financial institutions covered by HMDA, 1981-92 Public Access to HMDA Data Number of Number of Number of To make public access to HMDA data easier, the Year loans1 in re st p i o tu r t t i i o n n g s di r s e c p lo o s rt u s r e Federal Financial Institutions Examination Council (millions) (FFIEC) makes the data available for purchase in 1981 1.28 8,094 10,945 several media. Facsimiles of disclosure reports for the 1982 1.13 8,258 11,357 V '.•V.'J 1983 1.71 8,050 10,970 individual institutions and the aggregate reports for 1984 1.86 8,491 11,799 each metropolitan statistical area (MSA) are available 1985 1.98 9,072 12,567 1986 2.83 8,898 12,329 in hard copy and on microfiche. The HMDA Loan/ Application Register (HMDA-LAR) records and 1987 3.42 9,431 13,033 1988 3.39 9,319 13,919 ->Jr f. selected census data for each census tract in each MSA 1989 3.13 9,203 14,154 19902 6.59 9,332 24,041 t\i> are available on PC diskette, and those for the entire 1991 7.89 9,358 25,934 sT&ijSj nation are available on computer tape. In the near 1992 12.01 9,073 28,782 future, disclosure statements and HMDA-LAR records 1. Before 1990, includes only loans originated by covered institutions; will be available on CD-ROM. The sociodemographic beginning in 1990 (first year under revised reporting system), includes loans data used to prepare the HMDA disclosure reports originated and purchased, applications approved but not accepted by the applicant, applications denied or withdrawn, and applications closed because include data from the 1980 and the 1990 decennial information was incomplete. Census of Population and Housing and annual esti- 2. Revised from preliminary figures published in Glenn B. Canner and Dolores S. Smith, "Home Mortgage Disclosure Act: Expanded Data on mates of the median four-person family income for Residential Lending," Federal Reserve Bulletin, vol. 77 (November 1991), each MSA from the Department of Housing and p. 861, to reflect corrections and the reporting of additional data. Urban Development; these data can also be obtained SOURCE. FFIEC, Home Mortgage Disclosure Act. from the FFIEC. The FFIEC also makes available a series of reports mortgage companies, of which 224 were indepen- drawn from the HMDA data analysis system that has dent entities (table l).3 The number of creditors been developed by the regulatory agencies to enhance disclosing lending data fell about 3 percent from their fair lending enforcement and Community Rein- 1991, a decrease reflecting the effects of acquisi- vestment Act assessment efforts. These reports protions, mergers, and failures.4 Nonetheless, total vide information about the lending activity of individual institutions in forms different from the standard reported loan applications and purchased loans tables used for the disclosure statements. For instance, increased more than 50 percent, from 7.9 million to one report provides information about the number and 12.0 million. (For information on how members of dollar amount of loan applications and their disposithe public can receive HMDA data, see the box tion by census tract; it also displays a variety of "Public Access to HMDA Data.") socioeconomic data for each census tract. In 1992, lenders covered by HMDA acted on For information about the availability of data or to roughly 10.0 million home loan applications and request data from the FFIEC, contact the HMDA reported information on nearly 2.0 million loans Operations Unit, Mail Stop 502, Board of Governors they purchased from other institutions. Of the of the Federal Reserve System, Washington DC 3.5 million applications for home purchase loans, 20551. A copy of the HMDA data order form may 2.8 million (more than three-fourths) were for con- be obtained by calling the HMDA Assistance Line (202) 452-2016. ventional mortgage loans (table 2). The remainder were for government-backed credit—loans insured or guaranteed by the Federal Housing Administra- tion (FHA), the Department of Veterans Affairs (VA), or the Farmers Home Administration (FmHA). (See the box "How HMDA Data Are Collected and Distributed.") 3. The commercial bank total includes some savings banks whose primary federal regulator is the Federal Deposit Insurance Lending institutions specialize in different types Corporation, and the savings association total comprises only instiof loans (table 3). In 1992, depository institutions tutions regulated by the Office of Thrift Supervision. 4. For 1992 and previous years, only mortgage companies with originated about 60 percent of home loans of all $10 million or more in assets were required to report under the types; independent mortgage companies or the HMDA. Since 1993, mortgage companies that make 100 or more mortgage company affiliates of depository instituhome purchase loans or refinancings of home purchase loans are required to report, regardless of asset size. tions originated the rest. Home purchase loan orig- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

82 Federal Reserve Bulletin • February 1994 2. Number of applications for home loans, by purpose and type of loan, 19921 Number in thousands Loans on one- to four-family dwellings LLooaannss oonn mmuullttiiffaammiillyy TTyyppee ddwweelllliinnggss Home Refinancing Home ((ffiivvee oorr mmoorree purchase improvement ffaammiilliieess)) FHA-insured 557.1 196.6 94.4 * VA-guaranteed 223.3 104.7 1.9 * FmHA-insured 2.7 * * * Conventional 2,754.4 4,917.4 1,145.3 30.4 Total 3,537.5 5,218.8 1,241.7 30.6 MEMO: Conventional Conforming2 2,556.2 4,505.7 1,134.9 Nonconforming 198.1 411.5 10.3 1. In this and subsequent tables, components may not sum to totals * Fewer than 500. because of rounding. SOURCE. FFIEC, Home Mortgage Disclosure Act. 2. Loans less than $202,300 in size. inations of all types were about evenly divided a mortgage. Applications for refinancing grew between depositories and mortgage companies, almost 150 percent from the previous year, causing whereas almost three-fourths of the government- the total number of home loan applications to backed home purchase loans were originated by increase markedly. The substantial increase in mortgage companies (including those affiliated refinancing applications reflected lower mortgage with depositories). Depository institutions, exclud- rates, the greater availability of no-fee loans, and ing their mortgage company affiliates, were the the more efficient processing of applications.5 dominant source of home improvement and multi- In 1992, a decline in FHA activity from 1991 family loans, with commercial banks providing resulted in an increase in the conventional mortmost of the home improvement loans and savings gage share of home purchase loan applications. associations providing the majority of multifamily Applications for FHA-insured loans accounted for loans. 15.7 percent of all applications for home purchase APPLICATIONS FOR HOME LOANS 5. With a no-fee loan, the borrower incurs no out-of-pocket expenses for either closing costs or discount points on the loan. In 1992, by far the most common type of home Such loans are often written with a higher interest rate to compensate the lender, and closing costs are frequently added to the loan requested by consumers was for refinancing outstanding mortgage balance. 3. Home lending, by type and purpose of loan and by type of lender, 1992 Number of loans and percent distribution Type of lender PPPuuurrrpppooossseee ooofff llloooaaannn Commercial bank Savings association Credit union Mortgage company1 Total Number Percent Number Percent Number Percent Number Percent Number Percent Home purchase 621,514 25.2 544,438 22.1 34,570 1.4 1,263,301 51.3 2,463,823 100 FHA-insured 45,075 11.2 59,419 14.8 782 0.2 296,730 73.8 402,006 100 VA-guaranteed 19,958 12.2 23,637 14.5 2,079 1.3 117,646 72.0 163,320 100 FmHA-insured 662 39.6 477 28.5 2 0.1 531 31.8 1,672 100 Conventional 555,819 29.3 460,905 24.3 31,707 1.7 848,394 44.7 1,8%,825 100 Home refinancing 1,224,540 31.0 1,041,712 26.4 136,320 3.5 1,542,863 39.1 3,945,435 100 Home improvement... 563,764 71.2 81,532 10.3 84,969 10.7 61,773 7.8 792,038 100 Multifamily2 7,603 38.4 9,943 50.3 509 2.6 1,730 8.7 19,785 100 All 2,417,421 33.5 1,677,625 23.2 256,368 3.6 2,869,667 39.7 7,221,081 100 1. Includes independent mortgage companies and mortgage companies 2. Includes dwellings for five or more families, affiliated with a commercial bank or savings association. SOURCE. FFIEC, Home Mortgage Disclosure Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Residential Lending to Low-Income and Minority Families: Evidence from the 1992 HMD A Data 83 loans compared with 20.4 percent in 1991. Concurrently, the share of all home purchase loan origina- How HMDA Data Are Collected tions insured by the FHA fell from 20.5 percent to and Distributed 16.3 percent. Increases in the cost to homebuyers of using FHA-insured loans, along with the greater Under the provisions of the Federal Reserve Board's availability of conventional loan products for low- Regulation C (Home Mortgage Disclosure), each and moderate-income homebuyers, may have institution covered by HMDA completes and submits a HMDA Loan/Application Register (HMDA-LAR). encouraged the shift. Still, tens of thousands of The HMDA-LAR is a report form used to record data households—particularly first-time homebuyers— for each loan application acted on and for each loan used the program to buy homes.6 purchased. It includes information on the race or Homeowners infrequently use the FHA program, national origin, gender, and annual income of the compared with conventional loans, to refinance an applicants or borrowers; the size of the loan; the existing mortgage. In 1992, applications for FHA geographic location of the property; and the identity loans accounted for only 3.8 percent of the applica- I of the secondary market purchaser if the loan was tions for refinancing loans. The small share of sold. Lenders send this report form to their respective refinancings insured by the FHA is not surprising federal supervisory agency, which then forwards the because households that refinance often have suffi- data to the Board for processing. (Institutions supervised by the National Credit Union Administration, cient equity in their homes and have accumulated the Comptroller of the Currency, or the Federal enough other assets to cover the larger down- Deposit Insurance Corporation submit data— payment typically required for a conventional beginning with HMDA data for 1993—directly to the mortgage. M Federal Reserve Board.) The Board, acting on behalf In general, households with lower incomes are of the Federal Financial Institutions Examination more likely than households with higher incomes Council (FFIEC) and the Department of Housing and to use government-sponsored home loan programs, Urban Development (HUD) produces, for each covparticularly those of the FHA and the FmHA. In ered lender, a HMDA disclosure statement that 1992, one-third of applicants for home purchase m includes a report about the lender's activities for each m loans with incomes below the median family metropolitan statistical area (MSA) in which the income for their metropolitan statistical area lender has an office. For 1992, disclosure statements (MSA) applied for government-backed loans; in consisted of nearly 28,782 reports, an increase from the 25,934 prepared for 1991 (table 1). The Board contrast, only 13 percent of applicants with also produces aggregate reports describing overall incomes greater than 120 percent of the median lending activity by covered institutions in each MSA. family income for their MSA applied for such The public can obtain a copy of an individual loans (table 4). lender's disclosure statement from a central data The greater reliance of lower-income households depository (typically a library or an office of a local on government-backed loans reflects several fac- government agency) located in the MSA where the tors. The limits on the amount of FHA loan insur- lender has offices or from the lender itself. The central ance make these loans unavailable to households data depositories also make the aggregate MSA seeking to buy more expensive properties, and the reports available to the public. low downpayment requirements make them particularly attractive to lower-income households and to first-time homebuyers, who are likely to have fewer Among racial groups, applicants who are black financial resources for downpayments and closing are more likely than other applicant groups to seek costs. government-backed home purchase loans. In 1992, about 41 percent of the black applicants who applied for a home purchase loan sought a 6. In 1992, approximately 49 percent of those who used section government-backed mortgage; the comparable fig- 203(b) FHA loans (the principal type of FHA single-family loan ures for Hispanics, whites, and Asians were 31 perprogram) were first-time homebuyers. The proportion was even higher in 1991, when 57 percent of the borrowers were first-time cent, 21 percent, and 11 percent respectively. homebuyers. See U.S. Department of Housing and Urban Develop- As in previous years, the differences in the use of ment, Characteristics of FHA Single-Family Mortgages: Selected Sections of the National Housing Act, 1991 and 1992. government-backed home purchase loan programs Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

84 Federal Reserve Bulletin • February 1994 4. Home loan applications, by purpose of loan, characteristics of applicant, and characteristics of census tract in which property is located, 1992 Number and percent Home purchase HHoommee rreeffiinnaanncciinngg HHoommee iimmpprroovveemmeenntt Government-backed1 Conventional AAAppppppllliiicccaaannnttt ooorrr ccceeennnsssuuusss tttrrraaacccttt ccchhhaaarrraaacccttteeerrriiissstttiiiccc Percentage Percentage of group's of group's Number Percentage home Number Percentage home Number Percentage Number Percentage distribution distribution distribution distribution purchase purchase loans loans Race or ethnic group of applicant American Indian/ Alaskan native 3,809 .5 23.2 12,617 .5 76.8 19,569 .4 6,296 .6 Asian/Pacific Islander ... 11,641 1.5 10.6 98,073 3.8 89.4 224,845 4.6 21,116 2.0 Black 80,553 10.6 41.2 114,793 4.4 58.8 134,544 2.8 93,823 8.9 Hispanic 52,277 6.9 31.0 116,327 4.5 69.0 187,910 3.9 87,912 8.3 White 583,931 77.0 20.9 2,208,691 84.6 79.1 4,154,069 85.8 825,622 77.9 Other 2,353 .3 17.9 10,774 .4 82.1 23,023 .5 7,922 .7 Joint (white/minority) ... 23,432 3.1 31.6 50,662 1.9 68.4 98,877 2.0 17,245 1.6 Total 757,996 100 22.5 2,611,937 100 77.5 4,842,836 100 1,059,936 100 Income of applicant (percentage of MSA median)2 Less than 80 214,841 35.9 33.4 427,595 21.6 66.6 580,647 14.0 315,518 33.3 80-99 127,128 21.2 33.4 253,718 12.8 66.6 476,455 11.5 135,243 14.3 100-120 97,795 16.3 27.8 254,015 12.8 72.2 530,573 12.8 119,810 12.6 More than 120 158,962 26.6 13.2 1,046,010 52.8 86.8 2,556,198 61.7 376,994 39.8 Total 598,726 100 23.2 1,981,338 100 76.8 4,143,873 100 947,565 100 Racial composition of census tract (minorities as percentage of population) Less than 10 252,107 41.2 18.8 1,091,972 54.0 81.2 2,207,292 50.7 490,940 51.1 10-19 146,451 23.9 25.7 424,122 21.0 74.3 947,501 21.8 165,177 17.2 20-49 144,915 23.7 30.5 330,803 16.4 69.5 798,356 18.3 157,352 16.4 50-79 42,160 6.9 27.8 109,396 5.4 72.2 254,155 5.8 67,741 7.1 80-100 26,335 4.3 29.0 64,598 3.2 71.0 146,689 3.4 78,941 8.2 Total 611,968 100 23.2 2,020,891 100 76.8 4,353,993 100 960,151 100 Income of census tract3 Low or moderate 105,008 17.2 30.6 238,566 11.8 69.4 405,550 9.3 189,203 19.7 Middle 355,012 58.0 26.5 987,071 48.8 73.5 2,087,332 47.9 498,640 51.9 Upper 151,948 24.8 16.0 795,254 39.4 84.0 1,861,111 42.7 272,308 28.4 Total 611,968 100 23.2 2,020,891 100 76.8 4,353,993 100 960,151 100 Location of census tract4 Central city 295,878 48.0 27.6 775,516 38.1 72.4 1,570,342 35.8 429,625 44.2 Noncentral city 320,021 52.0 20.2 1,261,067 61.9 79.8 2,810,150 64.2 542,027 55.8 Total 615,889 100 23.2 2,036,583 100 76.8 4,380,492 100 971,652 100 1. Loans backed by the Federal Housing Administration, the Department or moderate, median family income for census tract less than 80 percent of of Veterans Affairs, and the Farmers Home Administration. median family income for MSA; Middle income, median family income 2. MSA median is median family income of the metropolitan statistical 80 percent to 120 percent of MSA median; Upper income, median family area (MSA) in which the property related to the loan is located. income more than 120 percent of MSA median. 3. Census tracts are categorized by the median family income for the tract 4. Includes only census tracts located in MSAs. relative to the median family income for the metropolitan statistical area SOURCE. FFIEC, Home Mortgage Disclosure Act. MSA in which the tract is located. Categories are defined as follows: Low by various racial groups reflected more than differ- have smaller holdings of liquid assets compared ences in income. For instance, among low-income with those of other low-income households.7 loan applicants, 53 percent of black applicants The patterns of applications for refinancings by sought FHA or VA loans compared with 40 percent the income and race or ethnic characteristics of the of Hispanic applicants, 31 percent of white appli- applicants differed from those for home purchase cants, and 22 percent of Asian applicants. One loans. Higher-income households accounted for possible explanation for this relatively greater reliance of black applicants on government-backed 7. Board of Governors of the Federal Reserve System, Survey of programs is that black households, on average, Consumer Finances (Board of Governors, various years). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Residential Lending to Low-Income and Minority Families: Evidence from the 1992 HMD A Data 85 62 percent of all refinancing applications and for tion about the size of loan for which they are likely 47 percent (calculated from table 4) of all applica- to qualify. This information comes from several tions for home purchase loans. Also, white appli- sources, including real estate agents, who are cants accounted for a higher proportion of refinanc- involved in most home purchase transactions, and ing applications than of home purchase loan loan officers, who are often asked to prequalify applications, reflecting the fact that, among home- prospective homebuyers. Many applicants also owners with mortgages, most are white. know from experience their likelihood of obtaining As noted earlier, lower-income and minority a home loan and tailor their search for a home with applicants were more likely to request government- that information in mind. Finally, prospective backed mortgages. Consistent with this pattern, borrowers have an incentive to learn about preapplicants who were seeking homes in low- vailing standards for credit and to postpone an or moderate-income neighborhoods requested application until they are likely to qualify because government-backed mortgage programs more often they usually incur some upfront costs in filing an than those seeking homes in upper-income neigh- application—to cover, at a minimum, a property borhoods. Requests for government-backed loans appraisal and a credit bureau report. These forms also accounted for a higher share of all home of prescreening are not as prevalent for home purchase loan applications in neighborhoods with improvement applications, and the result is a higher higher proportions of minority residents. rate of loan denials. THE DISPOSITION OF HOME LOAN Disposition Rates for Applicants Grouped by APPLICATIONS Income, Race, or Ethnicity \' The HMDA data show that lenders approve most Although most applications for home loans are home loan applications (table 5).8 In 1992, lenders approved, the rates of approval and denial vary approved nearly three-quarters of the applications among applicants grouped by their income and for home purchase loans and about 78 percent of racial or ethnic characteristics (table 6). the applications for refinancings. A lower propor- In 1992, about 81 percent of the applicants for tion, about two-thirds, of the applications for conventional home purchase loans whose incomes home improvement and multifamily loans were placed them in the highest income group were approved. Applications that were not approved may approved for loans, compared with 69 percent for have been denied by the lender or withdrawn or left the lowest income group. A similar relation incomplete by the applicant. (Applicants who were between approval rates and applicant income has denied at one institution but later accepted by been found for other types of home loans, includanother institution in the same year appear as both ing government-backed home purchase loans, refia denial and an approval in the HMDA data.) In nancings, and home improvement loans. general, relatively small proportions of the applica- Income can be expected to affect an applicant's tions for home purchase and refinancing loans are ability to qualify for a home purchase loan, but it is denied. just one element that lenders consider when evalu- The high rates of approval for home purchase ating creditworthiness. Other factors include the loans are to be expected. Before filing an applica- amount of the loan requested, nonhousing debt, tion, potential homebuyers often obtain informa- assets available for downpayment and closing costs, employment experience, and credit history. On average, low-income households have fewer assets and lower net worth and experience more frequent employment disruptions than high-income 8. The approval rate is the sum of the proportion of loans households; these factors combined with a low originated from the pool of applications and the proportion of loans approved but not accepted by the applicant. Applicants who do not income often result in higher loan denial rates. accept an approved loan may have decided not to complete the Compared with Asian and white applicants, transaction or may have applied for and accepted a loan from greater proportions of black and Hispanic loan another lender. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

86 Federal Reserve Bulletin • February 1994 5. Disposition of applications for home loans, by purpose and type of loan, 1992 Percentage distribution Home purchase Refinancing TTyyppee Approved Approved Approved Approved File File and but not Denied Withdrawn Total and but not Denied Withdrawn Total closed closed extended accepted extended accepted FHA-insured 72.2 2.1 14.9 9.3 1.5 100.0 74.4 1.7 7.4 12.8 3.7 100.0 VA-guaranteed ... 73.1 .6 14.0 10.6 1.7 100.0 77.4 1.4 6.3 12.2 2.7 100.0 FmHA-insured ... 61.1 .3 26.3 10.2 2.1 100.0 61.2 1.1 20.1 16.5 1.1 100.0 Conventional 68.9 4.0 17.8 8.1 1.2 100.0 75.6 2.2 12.7 8.3 1.2 100.0 Total 69.6 3.5 17.2 8.4 1.3 100.0 75.6 2.1 12.4 8.5 1.4 100.0 * Less than 0.05 percent. SOURCE. FFIEC, Home Mortgage Disclosure Act. applicants were turned down for mortgage credit in The comparable percentages were roughly 37 per- 1992. For conventional home purchase loans, about cent for blacks, 28 percent for Hispanics, and 36 percent of black applicants, 27 percent of His- 16 percent for Asians. Differences in the distribupanic applicants, 15 percent of Asian applicants, tion of applicants by income account for some, but and 16 percent of white applicants were denied clearly not all, of the differences in denial rates credit. Consistent with these findings, the HMDA among these groups. Within each income group, data indicate that the rate of denial for conventional white applicants for conventional home purchase home purchase loans generally increases as the loans had lower rates of denial than black or Hisproportion of minority residents in a neighborhood panic applicants (table 8). increases (table 7). The differences in denial rates between white Differences in denial rates for applicants grouped and black or Hispanic applicants have led some to by race or ethnicity reflect a variety of factors, conclude that widespread racial discrimination including differences in the proportion of each characterizes home lending. Although these dispargroup with relatively low income. In 1992, 21 per- ities raise questions, the reasons for the differences cent of the white applicants who applied for con- in denial rates are difficult to determine from the ventional home purchase loans had incomes that HMDA data. The HMDA data provide little were less than 80 percent of the median family information about the characteristics of the propincome for their MSA (data not shown in tables). erties that applicants seek to purchase, refinance, 6. Disposition of home loan applications, by purpose of loan and characteristics of applicant, 1992 Percentage distribution Home purchase Applicant Government-backed1 Conventional characteristic With- With- Approved Denied File closed Total Approved Denied File closed Total drawn drawn Race or ethnic group American Indian/ Alaskan native .. 68.6 17.5 11.7 2.2 100 63.5 26.6 8.7 1.2 100 Asian/Pacific Islander 74.0 13.5 11.1 1.4 100 72.5 15.3 10.7 1.6 100 Black 63.4 23.8 10.8 2.0 100 55.1 35.9 7.7 1.3 100 Hispanic 68.0 18.5 11.3 2.2 100 61.5 27.3 9.5 1.7 100 White 77.3 12.8 8.7 1.3 100 75.6 15.9 7.6 1.0 100 Other 69.8 16.0 11.7 2.5 100 67.1 21.0 10.2 1.7 100 Joint (white/minority) 74.5 14.8 9.6 1.1 100 72.6 17.6 8.6 1.2 100 Income (percentage of MSA median)2 Less than 80 74.8 15.4 8.4 1.4 100 68.9 23.3 6.9 .9 100 80-99 79.7 11.4 7.7 1.2 100 77.5 14.4 7.2 .9 100 100-120 80.1 10.9 7.9 1.1 100 79.5 12.2 7.4 .9 100 More than 120 79.5 10.7 8.6 1.1 100 80.5 10.2 8.2 1.1 100 1. Loans backed by the Federal Housing Administration, the Department 2. MSA median is median family income of the metropolitan statistical of Veterans Affairs, and the Farmers Home Administration. area in which the property related to the loan is located. SOURCE. FFIEC, Home Mortgage Disclosure Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Residential Lending to Low-Income and Minority Families: Evidence from the 1992 HMD A Data 87 5.—Continued Home improvement Multifamily dwellings TTyyppee Approved Approved Approved Approved File File and but not Denied Withdrawn Total and but not Denied Withdrawn Total closed closed extended accepted extended accepted FHA-insured 40.3 7.8 38.6 11.6 1.6 100.0 75.3 1.2 18.7 3.6 1.2 100.0 VA-guaranteed ... 80.9 1.2 5.5 9.1 3.2 100.0 66.7 * 25.0 # 8.3 100.0 FmHA-insured ... 50.6 * 37.3 12.0 * 100.0 19.0 * 76.2 * 4.8 100.0 Conventional 65.7 3.1 25.4 4.9 .8 100.0 64.7 3.0 19.0 12.2 1.1 100.0 Total 63.8 3.5 26.4 5.4 .9 100.0 64.7 3.0 19.1 12.1 1.1 100.0 or improve or of loan applicants' financial lower in 1992 than in 1991 (table 9).10 In 1992, circumstances—their levels of debt, debt repay- mortgage rates fell and home values were stable; ment records, employment experience, and other these and other developments contributed to the factors pertinent to an assessment of credit risk— decline. and no information about the specific underwriting Some lenders began making greater use of standards used to evaluate each application.9 Thus, affordable home loan programs sponsored by secthe data are not a solid basis on which to assess the ondary market institutions. Lenders also initiated fairness of the loan process. When used in conjunc- special conventional mortgage lending programs to tion with other information by government agen- help low- and moderate-income households, and cies, however, the HMDA data are valuable in those seeking to buy homes in low- and moderatehelping the agencies assess lenders' compliance income neighborhoods, qualify for credit. These with the fair lending laws. programs have often targeted prospective homebuyers with sufficient income to purchase a home but with inadequate savings to make substantial Differences in Disposition Rates for Home downpayments and pay closing costs.11 In some Purchase Loans between 1991 and 1992 Denial rates for home purchase loan applications, 10. Denial rates for refinancings dropped significantly, from both conventional and government-backed, were 15.9 percent to 12.4 percent (data not shown in tables). 11. Some programs established by lenders also target households with few financial assets but keep the monthly payment 9. Under HMDA, lenders may report the reasons for credit obligations within the borrower's reach by waiving the requirement denials: Lenders most frequently cited applicants' credit history that private mortgage insurance be obtained for these low downpayproblems and excessive debt levels relative to income. ment loans. 6.—Continued Home refinancing Home improvement AApppplliiccaanntt cchhaarraacctteerriissttiicc With- With- Approved Denied File closed Total Approved Denied File closed Total drawn drawn Race or ethnic group American Indian/ Alaskan native 70.1 17.6 10.4 2.0 100 67.2 27.6 4.6 .6 100 Asian/Pacific Islander 71.7 15.8 10.5 2.0 100 62.3 28.3 7.8 1.7 100 Black 64.1 23.6 10.4 1.9 100 54.4 39.7 5.3 .6 100 Hispanic 62.4 24.5 11.0 2.1 100 54.0 41.1 4.2 .7 100 White 80.8 10.4 7.7 1.1 100 75.9 18.8 4.7 .6 100 Other 66.8 20.5 10.6 2.1 100 56.8 33.7 8.0 1.6 100 Joint (white/minority) 76.6 13.6 8.5 1.3 100 71.1 23.2 4.9 .8 100 Income (percentage of MSA median)2 Less than 80 73.5 17.0 8.5 1.1 100 59.4 35.0 5.0 .6 100 80-99 79.0 12.5 7.5 1.0 100 67.4 27.0 5.0 .6 100 100-120 80.3 11.4 7.4 1.0 100 70.5 23.7 5.2 .7 100 More than 120 80.2 10.8 7.9 1.1 100 73.5 20.1 5.5 1.0 100 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

88 Federal Reserve Bulletin • February 1994 7. Disposition of home loan applications, by purpose of loan and characteristics of census tract in which property is located, 1992 Percentage distribution Home purchase Census tract Government-backed1 Conventional characteristic With- With- Approved Denied File closed Total Approved Denied File closed Total drawn drawn Racial composition (minorities as percentage of population) Less than 10 80.2 11.0 7.6 1.2 100 80.7 11.4 7.0 .9 100 10-19 78.3 11.7 8.5 1.4 100 76.1 13.7 8.8 1.4 100 20-49 74.3 13.9 10.1 1.8 100 71.2 17.7 9.6 1.5 100 50-79 68.0 19.1 10.8 2.1 100 65.7 22.8 9.9 1.6 100 80-100 64.2 21.1 12.3 2.4 100 60.5 27.5 10.2 1.8 100 Income 2 Low or moderate 71.1 17.0 10.0 1.8 100 67.1 23.0 8.6 1.3 100 Middle 77.6 12.6 8.4 1.4 100 76.3 15.0 7.7 1.1 100 Upper 78.9 10.7 9.0 1.4 100 80.1 10.1 8.4 1.3 100 Location of census tract3 Central city 75.4 14.0 9.0 1.6 100 75.4 15.1 8.3 1.3 100 Noncentral city 78.1 11.8 8.7 1.4 100 77.5 13.4 7.9 1.1 100 1. Loans backed by the Federal Housing Administration, the Department median family income for MSA; Middle income, median family income of Veterans Affairs, and the Farmers Home Administration. 80 percent to 120 percent of MSA median; Upper income, median family 2. Census tracts are categorized by the median family income for the tract income more than 120 percent of MSA median. relative to the median family income for the metropolitan statistical area 3. Includes only census tracts located in MSAs. (MSA) in which the tract is located. Categories are defined as follows: Low SOURCE. FFIEC, Home Mortgage Disclosure Act. or moderate, median family income for census tract less than 80 percent of programs, the traditional loan underwriting guide- From 1991 to 1992, the number of conventional lines have been made more flexible. For example, home loans extended to black borrowers increased under the affordable housing programs sponsored 26 percent, whereas those to white borrowers by Fannie Mae and Freddie Mac, the proportion of increased 21 percent and those to Hispanic and the downpayment and closing costs that must come Asian borrowers rose 8 percent and 6 percent from the applicant's own savings has been reduced, respectively. Within each racial or ethnic group, the and lenders may consider rent and utility payment changes were largest among lower-income borrowrecords in lieu of other credit history information.12 ers. For black borrowers whose incomes were Evaluating the effect of these targeted loan pro- below the median, the increase was 34 percent; for grams on homeownership by low- and moderate- whites, 28 percent; for Hispanics, 25 percent; and income households is difficult because many of the for Asians, 42 percent (data not shown in tables). programs have been operating only a short time. During the same period, rates of loan approval Still, the HMDA data may indicate that these pro- rose and rates of loan denial fell for black and for grams are having a positive effect. In particular, the white applicants for both government-backed and number of conventional home purchase loans conventional home purchase loans. For example, extended to applicants with incomes below the the denial rates nationwide for conventional home median family income for their respective MSA purchase loans were 37.4 percent for blacks and increased 27 percent from 1991 to 1992 (table 9, 17.3 percent for whites in 1991, compared with memo item), compared with an increase of 10 per- 35.9 percent and 15.9 percent respectively in 1992. cent for borrowers with incomes greater than In contrast, changes in the approval and denial 120 percent of the median family income. rates for Hispanic and Asian applicants were mixed. For low-income applicants, the approval rates 12. Other changes in the underwriting guidelines pertain to the treatment of nontaxable income and income from seasonal part- rose sharply and the denial rates fell for applicatime or second jobs, income continuity and job stability, debt-to- tions for both government-backed and convenincome ratios, the appraiser's neighborhood and home improvetional home purchase loans. For other income ment analyses, and the condition of the property. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Residential Lending to Low-Income and Minority Families: Evidence from the 1992 HMD A Data 89 7.—Continued Home refinancing Home improvement CCeennssuuss ttrraacctt cchhaarraacctteerriissttiicc With- With- Approved Denied File closed Total Approved Denied File closed Total drawn drawn Racial composition (minorities as percentage of population) Less than 10 83.3 8.8 7.0 .9 100 74.4 20.5 4.6 .4 100 10-19 76.8 12.7 8.9 1.6 100 67.8 25.3 5.8 1.1 100 20-49 73.0 15.6 9.8 1.7 100 61.4 31.1 6.2 1.3 100 50-79 68.1 19.6 10.4 1.8 100 54.2 38.5 6.0 1.3 100 80-100 60.7 26.2 11.1 2.1 100 46.9 45.7 6.2 1.2 100 Income 2 Low or moderate 69.1 19.4 9.9 1.6 100 55.6 37.9 5.6 .9 100 Middle 78.7 12.1 8.0 1.2 100 69.5 24.6 5.1 .7 100 Upper 79.9 10.6 8.2 1.4 100 72.0 21.6 5.4 1.0 100 Location of census tract3 Central city 76.5 13.2 8.8 1.5 100 63.9 29.7 5.5 .9 100 Noncentral city 79.4 11.5 7.9 1.2 100 70.4 23.8 5.1 .8 100 groups, changes in the disposition rates of loan teristics are often not important factors in determinapplications were more modest. ing the risk or profitability of loans.14 Lending in Neighborhoods with Different LENDING ACTIVITY IN NEIGHBORHOODS Median Incomes WITH DIFFERENT CHARACTERISTICS The 1992 HMDA data reveal that the types and Using the HMDA data, one can compare lending quantities of home loans extended by lenders vary activity across neighborhoods (that is, census considerably across neighborhoods grouped by tracts) in MSAs grouped by their residents' median their median family income, racial or ethnic comfamily income and by racial or ethnic composition. position, and central city or noncentral city loca- Comparisons of lending among neighborhoods in tion. The 1990 census information described in the the central city and noncentral city portions of MSAs are also possible.13 Considerable caution appendix provides possible explanations for these variations. should be exercised in making comparisons. Overall, roughly 10 percent of the home loans Although the Bureau of the Census draws the extended by lenders covered by HMDA in 1992 boundaries of census tracts to include relatively went to borrowers in low- or moderate-income homogenous populations, the residents of a given neighborhoods; nearly half the loans went to borcensus tract can and sometimes do differ considerrowers in middle-income neighborhoods; and the ably. Diversity across and within neighborhoods rest went to borrowers in upper-income neighborinfluences the volume and types of lending that hoods (table 10). These differences closely match flow to different communities. Once these variathe distribution of the home loan applications tions are taken into account, analyses suggest that received by lenders (data not shown in table). The neighborhood income and racial or ethnic characdistribution of the dollar value of home loans and of applications is more heavily skewed than the 13. For both census and HMDA data, if any portion of a census 14. Board of Governors of the Federal Reserve System, "Report tract falls within a central city boundary, the entire census tract is to the Congress on Community Development Lending by Deposiconsidered to be located in a central city. tory Institutions" (Board of Governors, 1993). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

90 Federal Reserve Bulletin • February 1994 Disposition of home loan applications, by purpose of loan and income and race of applicant, 1992 Percentage distribution Home purchase Applicant income and Government-backed2 Conventional With- With- Approved Denied File closed Total Approved Denied File closed Total drawn drawn Less than 80 American Indian/ Alaskan native 69.9 16.9 11.2 2.0 100 63.5 28.0 7.6 .9 100 Asian/Pacific Islander 74.7 14.0 10.0 1.3 100 72.6 17.5 8.7 1.2 100 Black 63.9 24.1 10.0 2.1 100 54.6 36.0 8.0 1.4 100 Hispanic 69.1 18.6 10.3 1.9 100 58.8 31.8 7.9 1.5 100 White 78.2 13.1 7.6 1.1 100 71.7 21.1 6.5 .7 100 Other 70.7 17.0 9.8 2.5 100 59.8 30.3 8.8 1.1 100 Joint (white/minority) 73.2 16.6 9.2 1.1 100 65.0 27.3 6.8 1.0 100 80-99 American Indian/ Alaskan native 77.0 13.4 7.7 1.9 100 70.9 18.8 9.1 1.2 100 Asian/Pacific Islander 77.4 12.2 8.9 1.6 100 75.6 14.3 9.1 1.1 100 Black 68.9 20.4 9.0 1.6 100 63.5 26.9 8.3 1.3 100 Hispanic 73.2 15.2 9.5 2.1 100 65.2 24.6 9.0 1.3 100 White 82.2 9.6 7.2 1.0 100 79.9 12.6 6.7 .8 100 Other 76.6 12.1 9.9 1.5 100 71.0 19.5 8.4 1.1 100 Joint (white/minority) 79.0 12.5 7.3 1.2 100 72.5 19.0 7.5 .9 100 100-120 American Indian/ Alaskan native 75.5 13.8 8.9 1.8 100 73.2 17.0 8.9 .8 100 Asian/Pacific Islander 79.5 9.8 9.9 .9 100 75.6 13.9 9.2 1.2 100 Black 69.2 20.3 9.0 1.4 100 65.0 24.3 9.3 1.4 100 Hispanic 72.7 15.2 10.3 1.8 100 67.0 22.3 9.2 1.5 100 White 82.5 9.2 7.3 .9 100 81.7 10.6 7.0 .7 100 Other 79.7 9.8 7.3 3.2 100 73.7 15.2 10.2 .9 100 Joint (white/minority) 78.5 12.5 8.3 .7 100 76.4 15.2 7.6 .8 100 More than 120 American Indian/ Alaskan native 74.4 13.8 10.5 1.3 100 75.9 12.9 9.8 1.4 100 Asian/Pacific Islander 74.4 14.1 10.3 1.1 100 73.5 14.2 10.8 1.5 100 Black 69.9 19.0 9.6 1.5 100 68.1 21.1 9.3 1.6 100 Hispanic 69.8 17.8 10.4 1.9 100 68.2 19.9 10.3 1.6 100 White 82.1 8.9 8.0 1.0 100 82.5 8.8 7.8 1.0 100 11.0 Other 75.3 11.7 2.0 100 72.8 15.1 10.4 1.7 100 Joint (white/minority) 79.4 11.1 8.7 .8 100 78.3 11.8 8.7 1.1 100 1. Applicant income shown as percentage of the median family income of 2. Loans backed by the Federal Housing Administration, the Department the metropolitan statistical area in which the property related to the loan is of Veterans Affairs, and the Farmers Home Administration. located. SOURCE. FFIEC, Home Mortgage Disclosure Act. number of home loans and applications toward average income for all residents of these neighborupper-income neighborhoods, reflecting factors that hoods was 58 percent. include the higher average home values in these When all neighborhoods are grouped by income, neighborhoods. there are fewer low- and moderate-income neigh- The HMDA data also indicate that borrowers borhoods than middle- or upper-income neighborwho buy, refinance, or improve their homes tend to hoods, and those low-income neighborhoods conhave incomes that are higher than the incomes of tain only about 26 percent of the housing units and other residents of their neighborhoods (compare a similar percentage of the population residing in table 10 with table A.1).15 Fbr example, in 1992 metropolitan areas. Lower levels of lending in lowborrowers in low- and moderate-income neighbor- and moderate-income neighborhoods result partly hoods had incomes equal to 101 percent of the from the existence of fewer homes and people. median family income of their MSA, whereas the Also, the relatively small proportion of home loans in these neighborhoods likely reflects the lower incomes of residents and the smaller proportion of 15. For more detail on the distributions discussed in this section, owner-occupied housing units relative to other see the "Report to the Congress on Community Development neighborhoods. Lending." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Residential Lending to Low-Income and Minority Families: Evidence from the 1992 HMD A Data 91 8.—Continued Home refinancing Home improvement AApppplliiccaanntt iinnccoommee aanndd rraaccee oorr eetthhnniicc ggrroouupp11 With- With- Approved Denied File closed Total Approved Denied File closed Total drawn drawn Alaskan native 66.3 22.3 10.1 1.4 100 62.3 33.5 3.8 .5 100 Asian/Pacific Islander 71.7 17.7 8.9 1.7 100 50.6 41.4 6.2 1.9 100 Black 58.9 28.8 10.7 1.6 100 49.7 44.4 5.4 .5 100 Hispanic 60.7 27.1 10.5 1.7 100 49.8 45.8 3.7 .7 100 White 77.1 14.5 7.5 .9 100 69.9 25.4 4.3 .4 100 Other 60.5 28.5 9.7 1.4 100 48.7 43.5 6.3 1.4 100 Joint (white/minority) 70.9 20.1 7.9 1.1 100 63.3 32.0 4.2 .5 100 80-99 American Indian/ Alaskan native 70.6 18.1 9.5 1.7 100 70.8 24.9 3.7 .6 100 Asian/Pacific Islander 73.8 15.7 9.1 1.5 100 58.5 33.4 6.9 1.2 100 Black 64.0 23.9 10.4 1.7 100 55.1 39.0 5.2 .7 100 Hispanic 63.5 24.4 10.3 1.7 100 52.7 42.5 4.1 .7 100 White 82.1 10.4 6.7 .8 100 76.5 18.8 4.2 .4 100 Other 66.1 22.3 10.1 1.4 100 55.6 35.9 6.8 1.7 100 Joint (white/minority) 76.8 14.6 7.6 .9 100 68.6 26.7 4.0 .7 100 100-120 American Indian/ Alaskan native 70.8 17.3 10.6 1.3 100 69.6 25.6 3.9 .9 100 Asian/Pacific Islander 74.2 14.9 9.3 1.6 100 63.1 28.2 7.1 1.6 100 Black 64.7 23.2 10.5 1.5 100 57.9 36.3 5.1 .7 100 Hispanic 64.6 23.6 10.1 1.7 100 54.8 39.9 4.5 .8 100 White 83.0 9.5 6.7 .8 100 78.5 16.6 4.3 .5 100 Other 69.9 19.4 9.1 1.7 100 59.5 28.6 10.7 1.2 100 Joint (white/minority) 77.7 13.5 7.6 1.1 100 71.9 22.1 5.2 .7 100 More than 120 American Indian/ Alaskan native 71.9 16.2 10.1 1.8 100 73.5 19.3 6.4 .8 100 Asian/Pacific Islander 72.2 15.4 10.3 2.1 100 65.8 24.4 7.9 1.8 100 Black 66.5 22.0 9.9 1.6 100 62.5 31.1 5.6 .9 100 Hispanic 64.6 23.0 10.5 1.9 100 58.3 36.0 5.0 .7 100 White 82.5 9.2 7.3 .9 100 80.7 13.8 4.8 .7 100 Other 70.9 17.8 9.6 1.7 100 63.1 26.9 8.1 1.8 100 Joint (white/minority) 78.0 12.7 8.2 1.1 100 74.4 19.6 5.0 1.0 100 Differences in the types of loans extended are different proportions of home improvement loans. also apparent across neighborhoods. Home For example, in 1992 the median home loan in improvement loans are relatively more common in low- and moderate-income neighborhoods equaled low- and moderate-income neighborhoods, where $63,600, compared with $124,000 in upper-income the housing units are, on average, older and proba- neighborhoods.16 The median 1990 home values in bly in greater need of repair or modernization. these neighborhoods were $69,000 and $179,000 FHA-insured home purchase loans are also more respectively (table 10). The high loan amounts common, reflecting the low downpayment require- relative to housing values in low- and moderatements, the relatively higher debt-to-income ratios income neighborhoods, particularly given the prevpermitted by FHA underwriting standards, and the limits placed on the size of loan that may be insured. Home purchase loans extended to non- 16. To calculate the median value of home loans for a category occupant owners (frequently landlords) are also of neighborhoods, a median value was determined for each census more common, a finding consistent with the tract, and then the median values for census tracts in a group were averaged. For home purchase loans in low- and moderate-income high proportion of rental properties in low- and neighborhoods, the median value was $60,100, and for highmoderate-income neighborhoods. income neighborhoods it was $115,200. Because these numbers are similar to the median values for all loans, dropping home improve- Median loan amounts across neighborhoods ment loans and refinancings does not significantly affect the median reflect large differences in home values and the loan amount in a census tract. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

92 Federal Reserve Bulletin • February 1994 9. Changes in loan application disposition rates for home purchase loans between 1991 and 1992, by characteristics of applicants Percent Type of home purchase loan Government-backed1 Conventional MMMEEEMMMOOO::: AAAApppppppplllliiiiccccaaaannnntttt PPPeeerrrccceeennntttaaagggeee ccchhhaaannngggeee cccchhhhaaaarrrraaaacccctttteeeerrrriiiissssttttiiiiccccssss iiinnn nnnuuummmbbbeeerrr Approved Denied Approved Denied ooofff cccooonnnvvveeennntttiiiooonnnaaalll hhhooommmeee pppuuurrrccchhhaaassseee llloooaaannnsss 1991 1992 1991 1992 1991 1992 1991 1992 fffrrrooommm 111999999111 tttooo 111999999222 Total 71.7 74.1 17.6 14.7 71.2 72.9 18.9 17.8 17.1 Race or ethnic group American Indian/ Alaskan native 64.2 68.6 22.1 17.5 62.9 63.5 27.0 26.6 13.8 Asian/Pacific Islander 79.8 74.0 12.5 13.5 72.8 72.5 14.9 15.3 5.6 Black 61.4 63.4 26.4 23.8 53.7 55.1 37.4 35.9 25.9 Hispanic 68.4 68.0 18.9 18.5 61.7 61.5 26.5 27.3 7.6 White 74.3 77.3 16.3 12.8 73.7 75.6 17.3 15.9 20.5 Other 68.7 69.8 16.3 16.0 67.7 67.1 19.6 21.0 -35.0 Joint (white/minority) 74.0 74.5 15.9 14.8 71.9 72.6 17.5 17.6 23.2 Income (percentage of MSA median)2 Less than 80 66.2 74.8 25.2 15.4 59.8 68.9 32.8 23.3 27.0 80-99 77.6 79.7 13.6 11.4 75.0 77.5 16.8 14.4 27.2 100-120 79.1 80.1 12.1 10.9 77.8 79.5 13.7 12.2 22.0 More than 120 79.8 79.5 11.0 10.7 79.1 80.5 11.1 10.2 10.3 1. Loans backed by the Federal Housing Administration, the Department 2. MSA median is median family income of the metropolitan statistical of Veterans Affairs, and the Farmers Home Administration. area in which the property related to the loan is located. SOURCE. FFIEC, Home Mortgage Disclosure Act. alence of home improvement loans, may reflect a Residents of predominantly white neighborhoods lack of wealth among borrowers purchasing homes received 54 percent of the home loans granted, and in these neighborhoods and thus relatively smaller residents of neighborhoods whose minority populadownpayments on home purchase loans. tion was between 10 and 50 percent of the total The distribution of borrowers by racial or ethnic population received the rest. The distribution of the group also differs by neighborhood income groups. dollar value of home loans across neighborhoods Asian borrowers, like Asian residents, are more grouped by racial or ethnic composition is similar uniformly spread across neighborhoods; both black to the distribution of the number of loans. and Hispanic borrowers, like black and Hispanic Predominantly minority neighborhoods contain residents, are more concentrated in low- and 18 percent of the housing units and 20 percent of moderate-income neighborhoods. Regardless of the population in metropolitan areas; these relaneighborhood income, however, lenders have tively small proportions partly account for the low higher proportions of Asian borrowers relative to percentage of all home loans extended in these the Asian population in the neighborhood groups neighborhoods (compare tables 11 and A.2). The and lower proportions of black and Hispanic bor- relatively low proportion of home loans also rowers compared with the proportions of black and reflects the lower income of residents and the com- Hispanic residents. These differences probably position of the housing stock, which contains a reflect the relatively higher incomes of Asian markedly higher proportion of rental units. residents. In neighborhoods grouped by racial or ethnic composition, as in neighborhoods grouped by income, borrowers who buy, refinance, or improve Lending in Neighborhoods with Different their homes tend to have higher incomes than the Racial or Ethnic Compositions incomes of the other residents of their neighbor- Overall, the 1992 HMDA data indicate that 8 per- hoods. For example, borrowers in predominantly cent of the home loans extended by lenders cov- white neighborhoods had incomes equal to 136 perered by HMDA were granted to borrowers in cent of the median family income of their MSA, predominantly minority neighborhoods (table 11). compared with 115 percent for all residents of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Residential Lending to Low-Income and Minority Families: Evidence from the 1992 HMD A Data 93 10. Distribution of loans, by neighborhood income, 19921 Low or Middle Upper Item moderate Total income income income Number (in thousands) 578 2,834 2,425 5,838 Distribution of loans (percentage of total)2 Number 9.9 48.6 41.5 Dollar amount 6.8 39.9 53.3 Type of loan Home purchase 38.1 34.1 31.3 Home improvement 16.3 11.1 7.8 Refinancings 45.6 54.8 61.0 Total 100.0 100.0 100.0 Distribution of home purchase loans by type (percentage of total) Conventional 67.2 72.6 83.7 76.3 FHA-insured 25.7 19.7 10.9 17.0 VA-guaranteed 7.0 7.6 5.3 6.6 Total 100.0 100.0 100.0 100.0 MEMO: Extended to nonoccupant owners 9.4 5.1 3.3 4.9 Borrowers and loan characteristics Median borrower income relative to MSA median family income for all loans 100.7 122.2 177.2 133.7 Median loan amount relative to MSA median family income for all loans3... 146.4 191.0 291.5 218.6 Median borrower income for all loans (thousands of dollars)3 42.4 51.4 74.5 57.9 Median loan amount for all loans (thousands of dollars)3 63.6 81.9 124.0 93.5 Race or ethnic group of borrower (percentage of the number of all loans) Black 11.8 3.3 1.9 3.5 Hispanic 10.9 3.7 2.5 3.9 Asian 4.6 3.5 4.2 3.9 1. Census tracts are categorized by the median family income for the tract to 120 percent of MSA median; Upper income, median family income more relative to the median family income for the metropolitan statistical area than 120 percent of MSA median. (MSA) in which the tract is located. Categories are defined as follows: Low 2. Excludes multifamily loans. or moderate, median family income less than 80 percent of the median 3. Averaged across census tracts in category. family income for MSA; Middle income, median family income 80 percent SOURCE. FFIEC, Home Mortgage Disclosure Act data. these neighborhoods. Borrowers in predominantly central city locations and the rest to borrowers in minority neighborhoods typically had incomes noncentral city locations (table 12). This lending equal to 112 percent of the median family MSA pattern closely matches the pattern of applications income, compared with 66 percent for all residents received by lenders (data not shown in table). of these neighborhoods. Roughly half of the housing units in MSAs are Matching the patterns found in low- and located in central cities, but the proportion of loans moderate-income neighborhoods, the proportion of extended in central cities is smaller. This difference home improvement loans granted is slightly higher, probably reflects the relatively higher proportions and the proportion of home purchase loans slightly of low-income families, unemployed individuals, lower, in predominantly minority neighborhoods. and renters in central cities. Also, borrowers tend to rely more on FHA- The mix of loans used by borrowers in central insured loans, and loans to nonoccupant-owners city locations is similar to that used by borrowers are more common in predominantly minority in noncentral city locations with a couple of excepneighborhoods. tions. Twenty percent of home purchase loans granted in central cities were FHA-insured compared with 15 percent in noncentral cities. Also the Lending in Central City and Noncentral City proportion of multifamily loans is higher in central Locations cities (data not shown in table), and partly reflects Of loans made to borrowers residing in MSAs, these areas' higher proportion of multifamily and roughly 38 percent were extended to borrowers in rental houses. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

94 Federal Reserve Bulletin • February 1994 11. Distribution of loans, by minority population 12. Distribution of loans, by MSA location, 19921 in census tracts, 19921 . Central Noncentral Item Item Predominantly Moderately Predominantly city city white minority minority Number (in thousands) 2,193 3,644 Number (in thousands) ... 3,155 2,216 467 Distribution of loans Distribution of loans (percentage of total)2 (percentage of total)2 37.6 62.4 Number 54.0 38.0 8.0 Dollar amount 36.1 63.9 Dollar amount 50.0 42.3 7.6 Type of loan Type of loan Home purchase 36.6 34.3 Home purchase 36.3 34.0 33.3 Home improvement 3.0 2.9 Home improvement ... 2.8 2.9 3.7 Refinancings 60.3 62.8 Total 100.0 100.0 Refinancings 60.8 63.1 62.9 Total 100.0 100.0 100.0 Distribution of home purchase Distribution of home loans by type (percentage of total) purchase loans by type Conventional 71.9 79.3 (percentage of total) FHA-insured 20.4 14.7 Conventional 81.2 70.9 70.1 VA-guaranteed 7.6 6.0 FHA-insured 14.2 19.7 23.0 Total 100.0 100.0 VA-guaranteed 4.6 9.4 6.9 Total 100.0 100.0 100.0 MEMO: Extended to nonoccupant owners 5.8 4.3 MEMO: Extended to nonoccupant owners. 4.4 4.9 7.7 Borrowers and loan characteristics Median borrower income relative to Borrowers and loan MSA median family income characteristics for all loans (percent) 137.9 137.6 Median borrower income Median loan amount relative to MSA median family income relative to MSA for all loans3 (percent) 212.0 222.5 median family Median borrower income for all loans i ( n p c e o rc m e e n t f ) o r all loans 135.8 134.2 112.2 (thousands of dollars)3 55.4 59.4 Median loan amount for all loans Median loan amount (thousands of dollars)3 86.7 97.6 relative to MSA median family Race or ethnic group of borrower income for all loans3 (percent) 196.2 223.0 190.0 (percentage of the number of all loans) Black 5.4 2.4 Median borrower income for all loans 5.1 3.2 4.1 3.8 (thousands of dollars)3 57.1 60.8 49.7 Median loan amount 1. Includes only census tracts in MSAs. If any portion of a census tract is for all loans located within a central city boundary, the census tract is classified in the (thousands of central city category. dollars)3 83.9 107.6 91.8 2. Excludes multifamily loans. 3. Averaged across census tracts in category. Race or ethnic group SOURCE. FFIEC, Home Mortgage Disclosure Act data. of borrower (percentage of the number of all loans) Black .9 3.7 20.9 tional home purchase loans to low-income bor- Hispanic .8 4.8 20.6 Asian 1.3 5.4 14.3 rowers than do independent mortgage companies (table 13). Twenty percent of the families receiving 1. Census tracts are categorized by minority population as follows: Predominantly white, less than 10 percent minority population; Moderately conventional home purchase loans through deposiminority, 10 percent to 50 percent minority population; Predominantly tories have low incomes, compared with 15 percent minority, more than 50 percent minority population. 2. Excludes multifamily loans. of families receiving them from independent mort- 3. Averaged across census tracts in category. gage companies. The higher proportion may reflect SOURCE. FFIEC, Home Mortgage Disclosure Act data. the use by depositories of more flexible underwrit- Borrowers in central cities have relative incomes ing standards. Generally, independent mortgage that are similar to those of borrowers in noncentral companies follow the underwriting guidelines set city areas. In contrast, residents in central cities by secondary market institutions because they sell have relative incomes that are lower than those of most of their loans. Mortgage company affiliates of residents in noncentral city areas. depositories focus on selling loans in the secondary k- market, but they sell to their affiliated depository - ' :' • • ' • >' . . ' . institutions as well. Depository institutions also sell ORIGINATORS OF HOME LOANS FOR loans, but they often choose to hold them in port- LOW-INCOME AND MINORITY BORROWERS folio, which gives depositories and their mortgage Depository institutions and their mortgage com- company affiliates greater flexibility in underwritpany affiliates extend proportionally more conven- ing standards. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Residential Lending to Low-Income and Minority Families: Evidence from the 1992 HMD A Data 95 On the other hand, depositories provide a smaller 13. Distribution of home loans, by type of loan, proportion of home purchase and refinancing loans characteristic of borrower, and type of lender, 1992 to minorities than do independent mortgage com- Percent panies. The higher origination by independent Depositories mortgage companies reflects in part a greater pro- IInnddeeppeennddeenntt portion of loans to "joint" borrowers—that is, BBoorrrroowweerr Excluding Including mmoorrttggaaggee cchhaarraacctteerriissttiicc affiliated affiliated ccoommppaanniieess households with one minority applicant and one mortgage mortgage companies companies white applicant—and to Asian borrowers— possibly a reflection of the fact that the indepen- Government-backed home purchase loans1 dent mortgage companies reporting 1992 HMDA Race or ethnic group data were more likely than depositories to have American Indian/ originated loans in California, a state with a large Alaskan native .4 .4 .5 Asian/Pacific Islander 1.3 1.2 2.0 Asian population. Black 8.2 9.2 8.7 Hispanic 6.0 5.2 8.1 Somewhat surprisingly, government-backed White 80.9 80.8 76.8 Other .2 .3 .3 loans extended by depositories and those extended Joint 3.1 2.8 3.5 by independent mortgage companies have distribu- Total 100 100 100 tions across income groups that are similar to the Income 2 (percentage of distributions for conventional loans. About 38 per- MSA median) Less than 80 35.3 35.7 32.2 cent of the government-backed loans originated by 80-99 21.5 21.8 21.7 depositories and their affiliates are to low-income 100-120 16.2 16.5 17.3 More than 120 27.1 26.0 28.8 borrowers, compared with 32 percent of the loans Total 100 100 100 originated by independent mortgage companies. Conventional home purchase loans One would have expected the distribution of FHA Race or ethnic group and VA loans across income groups to be similar American Indian/ for all lenders because the underwriting standards Alaskan native .4 .4 .5 Asian/Pacific Islander 3.6 3.4 5.0 are determined by the FHA or VA, not by the Black 2.8 3.1 3.1 4.0 3.6 3.9 originator. The greater proportion of low-income White 87.0 87.4 84.6 borrowers among the government-backed home Other .3 .3 .4 Joint 1.8 1.8 2.3 purchase loans extended by depositories may Total 100 100 100 reflect other factors, such as the location of bank Income2 branches in low-income communities or the effect (percentage of MSA median) of depositories' being subject to the Community Less than 80 20.1 20.0 15.2 80-99 12.9 13.1 11.9 Reinvestment Act (CRA). 100-120 12.9 13.1 13.4 More than 120 54.0 53.8 59.5 Total 100 100 100 HMDA DATA AND THE SUPERVISION OF Refinancings DEPOSITORY INSTITUTIONS Race or ethnic group American Indian/ Although the HMDA data alone are not sufficient Alaskan native .3 .3 .6 Asian/Pacific Islander 3.6 3.6 6.8 for assessing the fairness of the mortgage lending Black 2.1 2.2 2.4 process or determining whether institutions have Hispanic 3.1 2.8 4.3 White 90.6 90.8 85.4 violated the fair lending laws, they are a valuable Other .3 .4 .5 Joint 1.9 1.8 2.5 tool used extensively by the Federal Reserve and Total 100 100 100 other federal agencies in the enforcement of fair Income2 lending laws. Because these agencies have access (percentage of MSA median) to lenders' files on loan applications and to infor- Less than 80 14.7 13.9 10.1 80-99 12.0 11.9 10.1 mation about applicable credit standards, they can 100-120 13.2 13.2 12.3 overcome many of the limitations of the HMDA More than 120 60.0 61.0 67.5 Total 100 100 100 data regarding the assessment of applicant credit- 1. Loans backed by the Federal Housing Administration, the Department worthiness and of property characteristics. of Veterans Affairs, and Farmers Home Administration. The Federal Reserve's program for enforcing 2. MSA median is median family income of the metropolitan statistical area (MSA) in which the property related to the loan is located. fair lending, like that of the other agencies, focuses SOURCE. FFIEC; Home Mortgage Disclosure Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

96 Federal Reserve Bulletin • February 1994 Educational Material on Fair Lending As part of its consumer education program, the Board technical assistance to help financial institutions and the distributes a brochure published by the FFIEC entitled public understand and address community development "Home Mortgage Lending and Equal Treatment." This and reinvestment issues. Community Affairs officials at brochure identifies lending standards and practices that the Reserve Banks respond to requests for information may produce unintended discriminatory effects, and it and assistance on the CRA, fair lending, and community cautions lenders about their use. It focuses on race and development. Efforts extend to working with banking includes examples of subtle forms of discrimination, such institutions and associations, governmental entities, busias unduly conservative appraisal practices in changing nesses, and community groups to develop programs that neighborhoods; property standards like size and age that promote community development. Overall, efforts of may exclude homes in older neighborhoods; and unrealis- the Reserve Banks in Community Affairs involve about tically high minimum-loan amounts. The Board has pub- a hundred programs a year with thousands of particilished a pamphlet entitled "Home Mortgages: Under- pants as a way of encouraging economic development standing the Process and Your Right to Fair Lending." and ensuring fair lending. This pamphlet informs consumers about the mortgage To request copies of these publications, please contact application process and their rights under fair lending and the following: for "Home Mortgage Lending and Equal consumer protection laws. Treatment," the Division of Consumer and Community The Federal Reserve Bank of Boston has published a Affairs, Mail Stop 198, Board of Governors of the Fedbooklet entitled Closing the Gap: A Guide to Equal eral Reserve System, Washington, DC 20551; for "Home Opportunity Lending. It addresses lending discrimination Mortgages: Understanding the Process and Your Right to and challenges lenders to reconsider every aspect of their Fair Lending," Publications Services, Mail Stop 127, lending operations—from the hiring of loan officers to Board of Governors; for Closing the Gap: A Guide to the treatment and evaluation of applicants—to ensure Equal Opportunity Lending, Publications, Federal that loan decisions are not made on the basis of race or Reserve Bank of Boston, P.O. Box 2076, Boston, MA ethnicity. 02106-2076. Through its Community Affairs program, the Federal Reserve provides outreach services and educational and on examining for compliance with fair lending Procedures for fair lending enforcement focus laws and more broadly on ensuring that credit is primarily on comparing the treatment of members made available to low- and moderate-income areas, of a minority or protected class with other loan including areas with substantial minority popula- applicants. Starting with a review of loan policies tions. It involves an aggressive approach to investi- and procedures and interviews with lending persongating consumer complaints. It also extends to nel, an examiner seeks to determine, among other providing consumer and creditor education and things, the bank's credit standards. Then, using a gaining insight into the mortgage markets through sample of actual loan applicants, the examiner research (see the box "Educational Material on judges whether bank personnel apply those stan- Fair Lending"). dards uniformly in evaluating loan applications from minorities, women, and others whom the fair Fair Lending Enforcement lending laws were designed to protect. The examiner attempts to look at the same infor- The Federal Reserve System's program of con- mation the bank used to make its credit decision, sumer compliance examinations began in 1977. including credit history, income stability, and total These examinations, carried out by specially debt burden. If it appears that credit standards were trained examiners, emphasize identifying potential not followed or were not applied consistently, these discrimination of the kind prohibited by the Equal findings are discussed with bank management and Credit Opportunity and Fair Housing acts. On aver- a more intensive investigation is undertaken. Violaage, the Reserve Banks examine about two-thirds tions discovered through any of these techniques of all state member banks each year. will result in correction by the institution, noti- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Residential Lending to Low-Income and Minority Families: Evidence from the 1992 HMD A Data 97 fication of the applicant, and referral of the mat- between males and females that are not explained ter to the Department of Justice or HUD when by differences in income or the amount of the loan appropriate. requested, the system automatically selects a sam- Examiners also meet with members of the bank's ple of applications to be reviewed more extencommunity, including private citizens and local sively. Examiners gather additional information government officials who may have knowledge from loan application files, including data on the about the credit concerns of their community. value of the property being purchased and on the Examiners thus can learn about public perceptions applicant's credit history, debts, and employment of credit availability for minorities and low- and history. These data are analyzed in a more compremoderate-income persons. These meetings may hensive multivariate statistical model to determine suggest additional scrutiny of particular areas and whether they appear to explain the differences in may provide insight into the way a bank is serving denial rates by race, ethnicity, or gender observed its local community. in the initial analysis. The new system then pairs a The Federal Reserve's consumer complaint pro- given applicant with one or several other applicants gram is another component of the enforcement of (of different races or ethnic groups, for instance) the fair lending laws. Consumer complaints that who have similar financial characteristics but who allege loan discrimination are investigated and may experienced different outcomes on their loan prompt onsite review. Mortgage complaints may requests. After reviewing the loan files of the also be referred to the Department of Housing and selected pairings to determine what, if any, impor- Urban Development. As with the examinations pro- tant factors were omitted in the statistical analysis, gram, considerable attention is given to ensuring examiners can discuss with bank management the personal contact with complainants and making the applications for which the credit decisions are suspublic aware of agency procedures. pect. If the bank appears to have discriminated, various enforcement actions are possible, including asking the Department of Justice to investigate further. A New Fair Lending Examination Tool Besides this "micro" use of the HMDA data, the Because determining whether lenders are comply- Federal Reserve analyzes the data with a coming with fair lending laws is difficult for examiners, puterized system that is also accessible to the even with these procedures, the Federal Reserve Federal Deposit Insurance Corporation and has searched for better tools. In recent months, it the Office of the Comptroller of the Currency. The has been testing a computerized statistical model system allows the data to be segmented by applifor use in bank examinations and has shared it with cant and borrower characteristics, such as race, the other financial regulators. gender, and income, or by geographic boundaries. The new tool identifies potential problems Examiners can thus quickly sort through vast through statistical techniques but relies on exam- quantities of data, focus on data for specific lendiner judgment for determinations of whether dis- ing markets, and draw comparisons, for example, crimination has actually taken place. It automates of an individual HMDA reporter's performance the approach of onsite fair lending exams. First, the against that of all lenders in the area. Through these examiners use HMDA data to identify institutions analyses, examiners can more readily determine that may require a more intensive review of their whether a bank is serving all segments of its mortgage lending decisions. This initial analysis is community. done with a multivariate model of the institution's The Federal Reserve has also developed the decisions to accept or reject loan applicants based ability to map by computer the geographic location on the limited information available from HMDA, of a bank's loans and to integrate demoincluding the applicant's income, the amount of the graphic information for the bank's local commuloan requested, the applicant's race and gender, and nity. This type of analysis and presentation the disposition of the application. increases an examiner's ability to assess a bank's When the results of this evaluation show measur- performance in helping to meet the credit needs of able differences among racial or ethnic groups or its community. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

98 Federal Reserve Bulletin • February 1994 14. Mortgage loans sold, by type of purchaser, characteristics of borrower, and characteristics of census tract in which property is located, 1992 Number and percentage distribution Federal National Government National Federal Home Loan Farmers Home Borrower or census tract Mortgage Assn. Mortgage Assn. Mortgage Assn. Admin. cchhaarraacctteerriissttiicc Number Percent Number Percent Number Percent Number Percent Number Percent Total loans sold 1,790411 836,396 1,305,900 3,325 72,454 Race or ethnic group of borrower American Indian/ Alaskan native 4,420 .3 2,114 .5 3,508 .3 6 .2 518 .8 Asian/Pacific Islander 60,797 4.4 6,948 1.6 58,776 5.4 51 1.8 1,283 2.0 Black 28,582 2.0 33,253 7.7 17,479 1.6 99 3.5 2,551 3.9 Hispanic 43,237 3.1 25,782 5.9 33,587 3.1 58 2.0 2,239 3.4 White 1,222,548 87.7 351,179 81.0 943,425 87.2 2,582 90.8 57,029 87.6 Other 6,611 .5 1,469 .3 3,308 .3 7 .2 150 .2 Joint (white/minority) 28,413 2.0 12,797 3.0 21,235 2.0 41 1.4 1,297 2.0 Total 1,394,608 100 433,542 100 1,081,318 100 2,844 100 65,067 100 Income of borrower (percentage of MSA median)1 Less than 80 150,860 12.2 98,778 30.7 123,059 13.3 588 26.6 11,717 20.8 80-99 154,425 12.5 65,806 20.5 112,393 12.2 306 13.8 7,152 12.7 100-120 177,436 14.4 54,112 16.8 129,676 14.0 290 13.1 7,376 13.1 More than 120 751,077 60.8 102,681 40.0 559,735 60.5 1,028 46.5 29,959 53.3 Total 1,233,798 100 321,377 100 924,893 100 2,212 100 56,204 100 Racial composition of census tract (minorities as percentage of population) Less than 10 812,812 54.6 283,005 42.7 579,355 54.2 1,669 6633..33 35,298 5577..99 10-19 320,308 21.5 162,303 24.5 224,545 21.0 483 18.3 13,134 21.5 20-49 248,664 16.7 153,246 23.1 186,830 17.5 362 13.7 8,997 14.8 50-79 73,047 4.9 40,525 6.1 55,433 5.2 85 3.2 2,174 3.6 80-100 33,161 2.2 24,070 3.6 23,638 2.2 36 1.4 1,393 2.3 Total 1,487,992 100 663,149 100 1,069,801 100 2,635 100 60,996 100 Income of census tract2 Low or moderate 105,761 7.1 96,697 14.6 80,359 7.5 255 9.7 5,681 9.3 Middle 710,455 47.7 391,156 59.0 521,862 48.8 1,376 52.2 30,085 49.3 Upper 671,773 45.1 175,296 26.4 467,580 43.7 1,004 38.1 25,230 41.4 Total 1,487,989 100 663,149 100 1,069,801 100 2,635 100 60,996 100 MSA location3 Central city 518,572 34.8 298,074 44.9 376,686 35.2 715 26.9 22,404 36.7 Noncentral city 969,494 65.2 365,108 55.1 693,165 64.8 1,944 73.1 38,599 63.3 Total 1,488,066 100 663,182 100 1,069,851 100 2,659 100 61.003 inn 1. MSA median is the median family income of the metropolitan statisti- MSA; Middle income, median family income 80 percent to 120 percent of cal area (MSA) in which the property related to the loan is located. MSA median; Upper income, median family income more than 120 percent 2. Census tracts are categorized by the median family income for the tract of MSA median. relative to the median family income for the MSA in which the tract is 3. Included only census tracts located in MSAs. located. Categories are defined as follows: Low or moderate, median family SOURCE. FFIEC, Home Mortgage Disclosure Act. income for census tract less than 80 percent of median family income for PURCHASES OF HOME LOANS: THE ROLE Secondary market participants generally do not OF THE SECONDARY MORTGAGE MARKETS originate loans, but they do specify the underwriting guidelines that loans must meet to be eligible Institutions in the secondary mortgage market buy for purchase or securitization. These guidelines and and sell billions of dollars of mortgage loans or related limitations on loan-size purchases vary securities backed by mortgage loans each year. among secondary market participants; thus, for the Some participants also guarantee payments on loans that these institutions purchase or securitize, pass-through securities issued against pools of resi- the characteristics of the borrowers and neighbordential mortgage loans. The secondary mortgage hoods in which their properties are located can be market enables mortgage originators to raise new expected to differ. funds. The originators sell assets that are otherwise The 1989 amendments to HMDA require lenders relatively illiquid and can then extend new loans or in the primary market to report home loans that use the funds for other purposes. they sell to secondary market purchasers if they Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Residential Lending to Low-Income and Minority Families: Evidence from the 1992 HMD A Data 99 14.—Continued Savings bank or Life insurance Affiliate of Borrower or census tract savings and loan association company institution characteristic Number Percent Number Percent Number Percent Number Percent Total loans sold 53,292 25,218 393,763 879,293 Race or ethnic group of borrower American Indian/ Alaskan native 163 .4 50 .3 886 .3 4,211 .6 Asian/Pacific Islander 1,097 2.6 1,071 5.5 7,796 2.3 28,809 4.3 Black 1,294 3.0 478 2.4 9,441 2.8 33,106 4.9 Hispanic 895 2.1 640 3.3 5,887 1.7 29,598 4.4 White 38,786 90.5 16,748 85.4 306,377 90.9 558,451 83.1 Other 85 .2 151 .8 941 .3 2,160 .3 Joint (white/minority) 652 1.5 462 2.4 5,728 1.7 15,636 2.3 Total 42,972 100 19,600 100 337,056 100 671,971 100 Income of borrower (percentage of MSA median)1 Less than 80 5,962 16.3 2,199 12.9 37,303 13.9 107,679 19.0 80-99 4,963 13.6 1,618 9.5 30,044 11.2 71,325 12.6 100-120 4,945 13.5 1,793 10.5 32,196 12.0 67,792 12.0 More than 120 20,754 56.7 11,501 67.2 168,862 62.9 319,359 56.4 Total 36,624 100 17,111 100 268,405 100 566,155 100 Racial composition of census tract (minorities as percentage of population) Less than 10 26,565 63.3 9,286 46.5 208,694 65.1 300,856 42.8 10-19 8,127 19.4 5,573 27.9 62,160 19.4 186,936 26.6 20-49 5,371 12.8 3,687 18.5 37,089 11.6 150,559 21.4 50-79 1,230 2.9 995 5.0 8,469 2.6 42,180 6.0 80-100 696 1.7 439 2.2 4,142 1.3 22,909 3.3 Total 41,989 100 19,980 100 320,554 100 703,440 100 Income of census tract2 Low or moderate 3,727 8.9 1,502 7.5 22,017 6.9 73,022 10.4 Middle 20,515 48.9 7,510 37.6 134,222 41.9 312,990 44.5 Upper 17,747 42.3 10,968 54.9 164,315 51.2 317,428 45.1 Total 41,989 100 19,980 100 320,554 100 703,440 100 MSA location3 Central city 16,247 38.7 8,801 44.0 111,444 34.8 277,623 39.5 Noncentral city 25,742 61.3 11,179 56.0 209,114 65.2 425,861 60.5 Total 41,989 100 19,980 100 320,558 100 703,484 100 originated or purchased the loans during the same market by lenders covered under HMDA (calyear. The HMDA data are the only publicly avail- culated from table 14). Other types of institutions— able source of information on the characteristics of such as pension funds, insurance companies, mortborrowers whose loans are purchased by secondary gage companies, and depository institutions—are market institutions and of the neighborhoods in active secondary market participants. They buy the which these borrowers reside. same types of loans purchased by the GSEs and provide an outlet for so-called jumbo loans— conventional loans that exceed in size the maxi- Government-sponsored Enterprises mum single-family mortgage that may be pur- Three government-sponsored enterprises (GSEs) chased by Fannie Mae or Freddie Mac (in 1992, dominate the secondary mortgage market—Fannie $202,300).17 These non-GSE institutions some- Mae, Freddie Mac, and the Government National Mortgage Association (Ginnie Mae). Fannie Mae and Freddie Mac are publicly chartered private 17. The loan limit varies by the number of units in the property entities; Ginnie Mae is a government agency. In and by geographic location. In 1992 the maximum loan limits for single-family mortgages on properties with one to four units ranged 1992, the GSEs accounted for 74 percent of the from $202,300 to $388,800 except in Alaska, Guam, and Hawaii, roughly 5.4 million loans sold in the secondary where these limits were 50 percent higher. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

100 Federal Reserve Bulletin • February 1994 times purchase other loans such as mobile home The underwriting standards used by purchasers loans, adjustable-rate mortgages, and loans that do of mortgages other than the GSEs vary considernot conform to GSE standards or that the GSEs are ably.20 In general, these institutions purchase a prohibited from purchasing. larger proportion of mortgages extended to borrow- Fannie Mae and Freddie Mac buy mainly con- ers with incomes below the median for their MSAs ventional mortgage loans, convert them into securi- than do Fannie Mae and Freddie Mac. The excepties, and sell the securities to investors such as tions are life insurance companies, whose purpension and mutual funds. But they also hold some chases include only 22 percent of mortgages from loans in portfolio.18 Ginnie Mae does not purchase families with incomes below the median family loans but guarantees the timely payment of princi- income for their MSAs, and affiliates of institutions pal and interest for privately issued securities whose purchases include about the same share of backed by FHA, FmHA, and VA loans. mortgages to families with below-median incomes Basic underwriting guidelines (for instance, as do Fannie Mae and Freddie Mac. those applying to monthly debt-to-income and maximum loan-to-value ratios) differ among the secondary market participants. Fannie Mae and Using HMDA Data To Measure GSE Freddie Mac follow essentially the same guide- Achievements in Affordable Housing lines, which they themselves set for the conventional loans they purchase. For Ginnie Mae, the One objective in the charters of Fannie Mae and underwriting standards are established by HUD for Freddie Mac is to promote the availability of mort- FHA-insured loans and by the VA for VA- gage credit to low- and moderate-income families. guaranteed loans.19 HUD also sets annual goals for Fannie Mae and FHA and VA borrowers differ from conventional Freddie Mac, as required by the Federal Housing loan borrowers because HUD and the VA generally Enterprises Financial Safety and Soundness Act of allow borrowers to have more debt relative to 1992.21 The goals specify that a certain proportion income and to make smaller downpayments than of their purchases be mortgages extended to lowdo conventional lenders. Also, HUD and the VA and moderate-income families and to families have restrictions on the maximum size of loans residing in central cities. Furthermore, the two they will back and, on average, insure or guarantee GSEs must purchase a set dollar amount of morta higher proportion of smaller loans relative to gages extended to families who reside in lowloans made by conventional lenders. In general, income areas or who have very low incomes.22 borrowers whose loans are securitized by Ginnie As provided by the GSE legislation, HUD set Mae have lower incomes, are more likely to be interim goals for 1993 and 1994; final goals will go from a minority group, and are more likely to into effect after 1994. In 1993, 30 percent of the reside in a low- or moderate-income or minority neighborhood than are borrowers whose loans are sold to, or securitized by, Fannie Mae or Freddie Mac. For example, in 1992 about half the loans 20. The underwriting standards of these institutions are heavily backed by Ginnie Mae were made to borrowers influenced by the credit-rating agencies that rate their securities. with incomes less than the median family income The credit-rating agencies determine how much credit enhancement is required to earn an investment-grade rating; the level of the for their MSA, compared with about a quarter of required credit enhancement directly influences the cost to the the loans backed by Fannie Mae and Freddie Mac originator. (table 14). 21. The goals are described in detail in Department of Housing and Urban Development, Office of the Secretary, "Interim Housing Goals for the Federal Home Loan Mortgage Corporation" and 18. Their annual reports for calendar year 1992 indicate that "Interim Housing Goals for the Federal National Mortgage Associ- Fannie Mae's mortgage portfolio equaled 26 percent of its outstand- ation" (September 16,1993). ing mortgage securities and mortgage holdings whereas Freddie 22. The last goal is referred to as the special affordable housing Mac's portfolio equaled 8 percent. However, Freddie Mac is cur- goal. The performance of the GSEs in meeting the special affordrently expanding its portfolio at a faster rate than Fannie Mae. able housing goal cannot be evaluated because the HMDA data do 19. Ginnie Mae also securitizes loans backed by the FmHA. not include many of the mortgages purchased by Fannie Mae and Because it is relatively small and few lenders covered by HMDA Freddie Mac and because the special affordable housing goals are report such loans, the FmHA program is not discussed here. stated in dollar amounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Residential Lending to Low-Income and Minority Families: Evidence from the 1992 HMD A Data 101 15. Distribution of conventional home purchase and refinancing loans, by type of secondary market purchaser, income of borrower, type and size of loan, and MSA location, 19921 Percent Loans of less than $202,300 (income of borrower as MSA location4 TTyyppee ooff sseeccoonnddaarryy mmaarrkkeett percentage of MSA median)3 ppuurrcchhaasseerr aanndd llooaann22 Less More Central Noncentral 80-99 100-120 Total Total than 80 than 120 city city Fannie Mae Home purchase 14.0 13.5 15.0 57.5 100 36.4 63.6 100 Refinancing 10.5 12.1 14.3 63.1 100 33.2 66.8 100 Total 11.4 12.4 14.4 61.7 100 34.2 65.8 100 Freddie Mac Home purchase 14.5 13.2 14.6 57.7 100 37.1 62.9 100 Refinancing 10.5 12.1 14.3 63.1 100 34.5 65.5 100 Total 11.3 12.3 14.3 62.0 100 35.2 64.8 100 Commercial bank Home purchase 17.4 13.0 14.0 55.6 100 42.4 57.6 100 Refinancing 11.2 11.4 14.2 63.2 100 34.5 65.5 100 Total 12.6 11.8 14.2 61.5 100 38.0 62.0 100 Savings bank or S&L Home purchase 15.0 15.0 16.3 53.7 100 42.8 57.2 100 Refinancing 10.9 12.8 15.1 61.2 100 33.8 66.2 100 Total 11.9 13.3 15.4 59.5 100 37.6 62.4 100 Life insurance company Home purchase 13.4 13.5 19.3 53.8 100 46.8 53.2 100 Refinancing 6.6 10.6 12.6 70.2 100 40.9 59.1 100 Total 8.1 11.3 14.1 66.5 100 43.5 56.5 100 Affiliate of institution Home purchase 23.9 13.8 13.1 49.3 100 42.6 57.4 100 Refinancing 10.9 12.1 13.9 63.1 100 32.7 67.3 100 Total 14.2 12.5 13.7 59.6 100 36.4 63.6 100 Other purchaser Home purchase 26.5 15.3 13.5 44.7 100 42.8 57.2 100 Refinancing 10.0 11.6 14.1 64.3 100 38.7 61.3 100 Total 15.7 12.9 13.9 57.5 100 40.9 59.1 100 MEMO: Primary market Home purchase 19.5 13.9 14.2 52.4 100 37.3 62.7 100 Refinancing 12.3 12.5 14.2 61.0 100 33.6 66.4 100 Total 14.2 12.8 14.2 58.8 100 34.7 65.3 100 1. Excludes loans of less than $5,000, those with loan-to-income ratios (MSA) in which the tract is located. Categories are defined as follows: Low that exceed four, and loans to nonowner-occupants. or moderate, median family income for census tract less than 80 percent of 2. GNMA and FmHA are not included because they do not back conven- median family income for MSA; Middle income, median family income tional mortgage loans. 80 percent to 120 percent of MSA median; Upper income, median family 3. Census tracts are categorized by the median family income for the tract income more than 120 percent of MSA median. relative to the median family income for the metropolitan statistical area 4. Includes only census tracts located in MSAs. dwelling units financed by mortgages purchased HMDA data for the loans purchased; however, the by Fannie Mae had to be occupied by low- or HMDA data provide information on both the moderate-income families, and 28 percent of the primary and the secondary mortgage markets in units financed had to be secured by properties in metropolitan areas and thus will allow comparisons central cities. For Freddie Mac, the respective that can be used to evaluate the difficulties and goals were 28 percent and 26 percent. In 1994, opportunities that the GSEs encounter in attaining both of these goals are set at 30 percent for the two these goals. companies. The HMDA data can be used to derive only In assessing Fannie Mae's and Freddie Mac's rough estimates of how close the GSEs are to performance in meeting affordable housing goals, meeting the low-income and central city goals HUD will use information collected by these com- because of substantial deficiencies in the data when panies on the mortgages they purchase. This infor- used for this purpose. Specifically, HMDA does not mation will provide much greater detail than the require lenders to record the specific number of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

102 Federal Reserve Bulletin • February 1994 dwelling units financed by a loan, and for some existing mortgage. Excluding refinancings, roughly mortgages it does not provide reliable data on the 28 percent of Fannie Mae's and Freddie Mac's income of the occupants of the property. For exam- purchases were mortgages extended to ownerple, the HMDA data on mortgages extended for occupant homebuyers with below-median incomes. rental properties do not include information about Borrowers with below-median incomes accounted the income of tenants. HUD will use estimates of for about 33 percent of the conventional home the income of tenants or the rents they pay to purchase loans made in the primary market.24 calculate Fannie Mae's and Freddie Mac's perfor- In 1992, because of the large volume of refinancmance. HMDA also excludes thousands of deposi- ings, Fannie Mae and Freddie Mac would have had tory institutions that make mortgages but that have difficulty in meeting a low-income goal of 30 perno offices within an MSA; in 1992, it still excluded cent solely by purchasing single-family mortgages. independent mortgage companies that had less than But even in "normal" years for refinancings, they $10 million in assets. Finally, with regard to mort- may have difficulty meeting the goal by purchasing gages originated in central cities, HMDA classifies mostly single-family mortgages. The GSEs can all mortgages from a particular census tract as limit the influence of refinancings either by restrictbeing within the central city, even if only a portion ing their purchases of such loans or by expanding of the census tract is part of the central city. For the purchase of other loans. purposes of the GSEs' central city goal, HUD In the future, to increase their share of loans counts only loans on properties that are in the extended to borrowers with below-median incentral city portions of census tracts. comes, Fannie Mae and Freddie Mac could follow According to calculations using only HMDA several strategies. Among these are acquiring a data on owner-occupied properties, roughly 24 per- larger share of new conventional loans extended to cent of the conventional home purchase and these borrowers, purchasing seasoned loans to lowrefinancing loans purchased by Fannie Mae and income borrowers from portfolio lenders, and Freddie Mac were extended to borrowers with expanding new mortgage programs with liberalincomes smaller than the median family income for ized underwriting guidelines to compete with their MSA (table 15).23 In the primary market, government-backed and with depositories' port- 27 percent of the conventional home purchase folio loan programs. They could also focus more loans and refinancings for amounts less than on loans that finance rental properties. Relatively $202,300 were extended to borrowers with such more loans for rental properties are in lowerincomes. income neighborhoods, where there are more rent- Refinancings significantly influence the calcula- ers (see table A.l and table 10). For 1992, roughly tion of these 1992 market shares. Compared with 4 percentage points would have been added to borrowers in the home purchase loan market, many Fannie Mae's and Freddie Mac's low-income ratios of whom are first-time homebuyers, a larger pro- had loans for rental properties been included in the portion of borrowers who refinance have high calculation.25 If, however, the GSEs pursue more incomes. First-time homebuyers generally have lower incomes than homeowners who refinance an 24. The home purchase loan market also includes mobile home 23. These calculations excluded loans purchased by lenders in loans. Lower-income families are more likely to seek such loans, the primary market, government-backed loans (which do not count suggesting one explanation for the share of low-income loans toward the goals), loans above the conforming, single-family loan purchased by the GSEs being less than the share of such loans in limits, loans to nonoccupant owners, home improvement loans the primary home purchase loan market. However, the importance (which may not count toward the goals), conventional loans below of the mobile home loan market is difficult to determine. Fannie $5,000 (such loans are likely to be home improvement loans, Mae and Freddie Mac can purchase only mobile home loans that second mortgages, or home equity loans), and loans for which the are secured by real property as determined under state law. ratio of the loan amount to the borrower's income exceeded four. In 25. We estimated the number of rental units by taking the addition, HMDA data does not distinguish between first and second number of loans secured by a rental property and multiplying it by homes; HUD considers only first homes in calculating the afford- the number of units financed per loan. We used both two and three able housing goals. Including the second home mortgages in these units financed per loan secured by nonowner-occupied one- to calculations may slightly understate the proportions of low-income four-family properties; and for multifamily properties, we calcuhousing financed. lated the number of units by assuming that each unit required Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Residential Lending to Low-Income and Minority Families: Evidence from the 1992 HMD A Data 103 extensive involvement in rental properties to meet of central city loans 4—6 percentage points.26 Also, their goals, they may be undertaking greater risks small mortgage companies that are not required to because this area of real estate lending is prone to report under HMDA may be more heavily concenhigher, and more difficult to predict, levels of credit trated in suburban or semirural areas.27 The effect losses compared with mortgages secured by single- of omitting these companies' data from HMDA is family, owner-occupied properties. difficult to estimate, but including these purchases Unlike the low-income goals, the central city would probably lower the estimates of the proporgoals appear to be met by Fannie Mae and Freddie tion of central city loans purchased by Fannie Mae Mac, according to the HMDA data. In 1992, Fannie and Freddie Mac. Mae's proportion of central city purchases of con- For the reasons cited earlier, the HMDA data are ventional home purchase loans and refinancings not adequate when used for measuring Fannie was about 34 percent and Freddie Mac's proportion Mae's and Freddie Mac's performance in meeting was about 35 percent—both approximating the their goals. However, the comparison of their perprimary market's proportion of about 35 percent formance relative to that of other secondary market (table 15). institutions, as measured by the HMDA data, may Refinancings influence the overall proportion of be informative because the limitations highlighted central city purchases somewhat because refinanc- above influence the calculations for all institutions. ings are disproportionately from borrowers in non- The HMDA data suggest that secondary market central city locations. Excluding refinancings, Fan- institutions other than Fannie Mae and Freddie nie Mae's share would have been about 36 percent Mac generally have a somewhat higher proportion and Freddie Mac's about 37 percent, shares similar of loans extended to lower-income families and to to those in the primary market. families living in the central cities (table 15). This Although Fannie Mae and Freddie Mac appear to relationship is most evident in the home purchase easily meet their central city goals, other factors loan market. Only life insurance companies seem suggest that these estimates may be too high. As to finance a lower proportion of loans extended to mentioned earlier, the HMDA data overstate the lower-income families, although they purchase a share of all mortgages originated in central cities. higher proportion of loans from the central cities. HMDA classifies all loans originated in a census tract that is partially in a central city as a central APPENDIX: CHARACTERISTICS OF city loan. If all of these loans were instead classi- DIFFERENT GROUPS OF NEIGHBORHOODS fied as noncentral city loans, the ratios would drop 6-7 percentage points. Of course, the actual decline In 1992, lenders were required for the first time, would not be this extreme because some of the when identifying the location of the properties loans from these "split" census tracts are in the central cities and some are not. 26. The estimated range of the proportion of rural mortgage HMDA's coverage of loans made in nonmetro- originations is calculated from data in U.S. Department of Compolitan areas is limited, even though some institu- merce, Economics and Statistics Administration, Bureau of the Census and U.S. Department of Housing and Urban Development, tions located in metropolitan areas make and report Office of Policy Development and Research, American Housing nonmetropolitan loans, because it excludes most Survey in the United States (Government Printing Office, biennually). The lower bound reflects the distribution of occupied housing institutions located in rural areas. Roughly 14units across metropolitan and rural areas, whereas the upper bound 20 percent of all mortgage originations are from reflects the distribution of mortgage originations of all types in rural areas, suggesting that including these loans in 1990 and part of 1991. An additional source of information suggests that the share of conventional home purchase loan originathe central city calculations would lower the share tions in rural areas is roughly 14 percent. See Federal Housing Finance Board, "Effect of Federal Home Loan Bank System District Banks on the Housing Finance System in Rural Areas" (FHFB, April 23, 1993). $50,000 of financing and that HMDA covers only one-half of 27. As mentioned earlier, institutions with less than $10 million Fannie Mae's and Freddie Mac's multifamily units. We then esti- in assets were not required to report in 1992 or in earlier years. mated the number of low-income borrowers by assuming that the Beginning in 1993, any nondepository institution that originated number equaled the proportion of loans secured by rental properties more than 100 home purchase loans was required to report, and this in low- or moderate-income census tracts plus the proportion requirement may substantially increase the number of mortgage secured in middle-income census tracts. companies reporting HMDA data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

104 Federal Reserve Bulletin • February 1994 A. 1. Characteristics of MSA census tracts, by income status1 Low or moderate Middle Upper All MSA CChhaarraacctteerriissttiicc income income income census tracts Number of census tracts 12,971 20,136 10,292 43,399 Percent 29.9 46.4 23.7 100.0 INCOME AND EMPLOYMENT2 Relative neighborhood income3 58.2 99.1 153.3 99.7 Distribution of families by annual dollar income (percent) Less than 15,000 34.5 12.2 5.4 17.3 15,000-24,999 21.8 15.4 7.8 15.5 25,000-29,999 8.8 8.6 4.9 7.8 30,000-34,999 7.5 9.2 5.7 7.9 35,000-39,999 6.1 8.6 5.9 7.2 40,000-49,999 8.8 15.1 12.7 12.6 50,000-74,999 9.2 20.7 26.8 18.7 75,000 or more 3.4 10.3 30.9 13.1 Total 100.0 100.0 100.0 100.0 Percentage of residents below poverty level 28.0 8.9 4.6 13.6 Unemployment rate (percent) 12.5 5.6 3.7 7.2 HOUSING All units Number (millions) 19.8 37.8 19.2 76.8 Percent 25.8 49.2 24.9 100.0 Renter-occupied (percent)2 52.8 31.0 22.6 35.5 In one- to four-family structures (percent)2 35.5 60.9 69.1 55.3 Vacancy rate, year-round residences (percent)2 10.9 6.7 5.9 7.8 Median age (years)2 36.4 28.1 23.9 29.6 Boarded-up (percent)2 1.3 .2 .1 .5 Owner-occupied units2 Distribution by dollar value of property (percent) Less than 20,000 10.6 2.0 .4 4.1 20,000-39,999 24.1 8.8 1.7 11.5 40,000-49,999 11.9 8.2 2.1 7.8 50,000-74,999 20.6 24.9 11.6 20.5 75,000-99,999 10.2 17.6 15.4 14.9 100,000-149,999 10.4 16.5 20.3 15.6 150,000-199,999 6.3 10.5 14.4 10.2 200,000 or more 6.0 11.4 34.1 15.3 Total 100.0 100.0 100.0 100.0 Median value (dollars) 68,839 102,728 178,626 110,598 Median value as a percentage of median value for MSA .. 68.4 103.8 170.0 108.9 Renter-occupied units2 Median monthly rent (dollars) 396.7 505.0 643.2 504.9 Median monthly rent as a percentage of median value for MSA 82.0 103.5 129.0 103.1 POPULATION Total (millions) 49.1 92.9 48.3 190.3 Percent 25.8 48.8 25.4 100.0 Race or ethnic origin (percent)2 Black 30.2 8.0 4.0 12.7 Hispanic 20.6 7.7 5.2 10.4 Asian 3.7 3.1 3.9 3.4 Median age (years)2 30.4 33.8 36.3 33.4 Age 65 years or older (percent)2 12.4 13.2 12.2 12.7 Moved into census tract during 1989 or 1990 (percent)2 .. 25.2 19.5 17.9 20.9 1. Census tracts are categorized by the median family income for the tract 2. Figures are simple averages of the values for the census tracts in a relative to the median family income for the metropolitan statistical area category; they are calculated by summing the values for all census tracts in (MSA) in which the tract is located. Categories are defined as follows: Low the category and dividing by the number of tracts in the category. or moderate, median family income for census tract less than 80 percent of 3. Median family income for census tracts as a percentage of MSA median family income for MSA; Middle income, median family income median family income. 80 percent to 120 percent of MSA median; Upper income, median family SOURCE. Derived from 1990 U.S. census data. income more than 120 percent of MSA median. involved in the loan or loan application, to use the characteristics.28 The switch to the 1990 census 1990 census tract boundaries in place of the 1980 boundaries makes it difficult, however, to compare tract boundaries. As a consequence, the loan and application data may be matched with relatively 28. The 1990 U.S. Census of Population and Housing reflects up-to-date census information on neighborhood circumstances at the time the survey was conducted in the spring of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Residential Lending to Low-Income and Minority Families: Evidence from the 1992 HMD A Data 105 the 1992 HMDA data with the lending information The differences in the income and employment reported for preceding years. circumstances of households across groups of neighborhoods partly account for the variation in owner-occupancy rates. In low- or moderate- Neighborhoods with Different Incomes income neighborhoods, 53 percent of the housing units in 1990 were rentals, a share nearly two and A comparison of neighborhoods grouped by their one-half times that in upper-income neighbormedian family incomes reveals differences in pop- hoods. This difference is reflected in the composiulation, housing, and employment characteristics. tion of the housing stock: Whereas 69 percent of To demonstrate these relationships, census tracts in the housing units in upper-income neighborhoods MSAs have been divided into three broad income were in structures housing one to four families, categories—low or moderate, middle, and upper only 36 percent of the units in low- or moderateincome based on the relationship between the income neighborhoods were in such structures. median family income of a census tract and the Low- or moderate-income neighborhoods, on avermedian family income of the MSA in which it is age, had not only low owner-occupancy rates but located.29 also high concentrations of residential properties Nationwide, the low- or moderate-income neigh- with relatively low market values. For example, borhoods have median family incomes that are, on nearly 35 percent of the owner-occupied homes in average, only 58.2 percent of the median family low- or moderate-income neighborhoods in 1990 income for their respective MSA (table A.l). were valued at less than $40,000, compared with Although these neighborhoods exhibit some diver- only 2 percent of the owner-occupied homes in sity in the incomes of their residents, on average upper-income neighborhoods.30 they have a high concentration of relatively poor Vacancy rates, the median age of housing units, families and have relatively few families at the and the proportion of boarded-up units provide highest income levels. Overall, 56 percent of the insight into the condition of residential properties. families residing in low- or moderate-income Vacancy rates in low- or moderate-income neighneighborhoods had 1989 incomes below $25,000, borhoods were, on average, nearly double those in and nearly 35 percent had 1989 incomes below upper-income neighborhoods. The median age of $15,000. These low levels of income are reflected housing units also was substantially higher than in both in elevated poverty rates and in higher upper-income neighborhoods. Finally, the proporunemployment—28 percent of the residents of tion of housing units that were boarded up (a sign these neighborhoods had incomes that placed of deterioration) was greater than that in either them below the poverty level, and nationwide their moderate- or upper-income neighborhoods. average unemployment rate was more than three Besides the income, employment, housing, and times the rate for residents of upper-income property condition characteristics identified thus neighborhoods. far, population characteristics differ across neighborhoods grouped by median family income. The residents of low- or moderate-income neighborhoods in 1990 were, on average, more than 50 per- 1990, except for income information, which is based on 1989 cent black or Hispanic. These minority groups year-end data. This section draws on material in the "Report to the together accounted for only 9 percent of the popu- Congress on Community Development Lending." 29. Census tracts were classified in the following manner: Low- lation in upper-income neighborhoods. Asians, in or moderate-income census tracts are those in which median family contrast, were relatively equally distributed across income is less than 80 percent of the median family income for the neighborhoods, accounting for approximately MSA in which the tract is located; middle-income census tracts are those in which median family income is 80 to 120 percent of the 3-4 percent of the residents of both low- or MSA median family income; and upper-income census tracts are moderate- and upper-income neighborhoods. those in which median family income exceeds 120 percent of the MSA median. Census tracts in each small county (total population of 30,000 or less) are aggregated to create a small county total to be 30. Median monthly rents also reflect differences in the value of consistent with the way HMDA data are reported. In all, eighty-six residential properties across neighborhoods. The median rent in small counties are included in the analysis shown in tables 10, 11, low- or moderate-income neighborhoods in 1990 was $397, and 12. whereas the median rent in high-income neighborhoods was $643. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

106 Federal Reserve Bulletin • February 1994 A.2. Characteristics of MSA census tracts, by minority population1 Predominantly Moderately Predominantly Characteristic white minority minority Number of census tracts 17,939 15,964 9,496 Percent 41.3 36.8 21.9 INCOME AND EMPLOYMENT 2 Relative neighborhood income3 115.3 102.3 65.8 Distribution of families by annual dollar income (percent) Less than 15,000 10.2 15.5 33.4 15,000-24,999 13.7 15.4 19.1 25,000-29,999 7.7 7.8 7.9 30,000-34,999 8.2 7.9 7.1 35,000-39,999 7.9 7.3 5.9 40,000-49,999 14.3 12.7 9.3 50,000-74,999 21.9 19.1 11.7 75,000 or more 16.1 14.2 5.6 Total 100.0 100.0 100.0 Percentage of residents below poverty level 7.0 12.3 28.4 Unemployment rate (percent) 4.7 6.2 13.5 HOUSING All units Number (millions) 32.4 30.4 14.1 Percent 42.2 39.5 18.3 Renter-occupied (percent)2 23.6 39.8 50.7 In one- to four-family structures (percent)2 68.6 50.4 38.3 Vacancy rate, year-round residences (percent)2 6.5 7.9 10.0 Median age (years)2 28.0 28.0 35.2 Boarded-up (percent)2 .1 .3 1.5 Owner-occupied units 2 Distribution by dollar value of property (percent) Less than 20,000 2.2 3.1 99..66 20,000-39,999 8.9 9.9 19.7 40,000-49,999 7.5 7.1 9.8 50,000-74,999 22.6 19.5 17.7 75,000-99,999 17.8 14.2 10.5 100,000-149,999 17.8 15.0 12.2 150,000-199,999 10.3 10.5 9.7 200,000 or more 12.9 20.7 10.7 Total 100.0 100.0 100.0 Median value (dollars) 108,908 126,932 86,335 Median value as a percentage of median value for MSA 127.1 110.9 71.3 Renter-occupied units 2 Median monthly rent (dollars) 514.3 534.9 436.9 Median monthly rent as a percentage of median value for MSA 111.4 104.5 85.1 POPULATION Total (millions) 79.1 72.5 38.7 Percent 41.6 38.1 20.3 Race or ethnic origin (percent)2 Black 1.4 99..22 4422..55 Hispanic 1.6 9.3 30.4 Asian 1.1 4.3 6.5 Median age (years)2 35.6 32.9 29.8 Age 65 years or older (percent)2 14.3 12.1 10.6 Moved into census tract during 1989 or 19902 16.7 25.0 21.6 1. Census tracts are categorized by minority population as follows: Pre- 3. Median family income for census tracts as a percentage of MSA dominantly white, less than 10 percent minority population; Moderately median family income. minority, 10 percent to 50 percent minority population; Predominantly SOURCE. Derived from 1990 U.S. census data. minority, more than 50 percent minority population. 2. Figures are simple averages of the values for the census tracts in a category; they are calculated by summing the values for all census tracts in the category and dividing by the number of tracts in the category. Neighborhoods with Different Racial or reveal differences in socioeconomic and demo- Ethnic Compositions graphic status (table A.2). The residents of predominantly minority neighborhoods (defined here as As with neighborhood income, comparisons among census tracts in which the minority population neighborhoods grouped by minority population exceeds half of the total population) typically have Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Residential Lending to Low-Income and Minority Families: Evidence from the 1992 HMD A Data 107 lower relative incomes than the residents of other A.3. Characteristics of MSA census tracts, by central city neighborhoods. On average, roughly one-third of |j or noncentral city tracts 1 - p . the families in predominantly minority neighbor- Noncentral hoods had 1989 incomes below $15,000, and Characteristic Central city city 28 percent of the residents had incomes below the Number of census tracts 22,771 20,628 poverty level. In contrast, about one-tenth of the Percent 52.5 47.5 families in predominantly white neighborhoods had INCOME AND EMPLOYMENT2 incomes below $15,000, and only 7 percent of the Relative neighborhood income3 .. 90.8 109.5 residents had incomes below the poverty level. Distribution of families by annual dollar income (percent) This pattern is reversed at the opposite end of the Less than 15,000 22.8 11.1 15,000-24,999 17.2 13.6 income scale: About 17 percent of the families in 25,000-29,999 8.1 7.4 predominantly minority neighborhoods had in- 30,000-34,999 7.8 7.9 35,000-39,999 6.9 7.6 comes above $50,000, compared with 38 percent of 40,000-49,999 11.5 13.9 50,000-74,999 15.5 22.2 the families in predominantly white neighborhoods. 75,000 or more 10.3 16.3 Total 100.0 100.0 Neighborhoods with large proportions of minor- Percentage of residents below ity residents are also characterized by high unem- poverty level 18.7 8.1 Unemployment rate (percent) 8.9 5.3 ployment rates. At the time of the 1990 census, the HOUSING average unemployment rate of residents of predom- All units inantly minority neighborhoods was 14 percent Number (millions) 38.1 38.7 Percent 49.6 50.4 compared with 5 percent for residents of predomi- Renter-occupied (percent)2 43.9 26.2 In one- to four-family nantly white neighborhoods. Predominantly minor- structures (percent)2 45.8 65.7 ity neighborhoods typically have lower owner- Vacan re c s y i d r e a n te c , e s y e ( a p r e - r r c o e u n n t d ) 2 8.7 6.8 occupancy rates, higher vacancy rates, more Median age (years)2 33.3 25.5 Boarded-up (percent)2 .8 .2 boarded-up properties, older homes, and a higher Owner-occupied units 2 proportion of lower-valued, owner-occupied Distribution by dollar value homes. These characteristics are most evident in of property (percent) Less than 20,000 5.9 2.2 minority neighborhoods with large proportions of 20,000-39,999 15.6 7.2 40,000-49,999 9.5 6.0 black residents. 50,000-74,999 21.7 19.1 75,000-99,999 13.5 16.5 100,000-149,999 12.7 18.8 150,000-199,999 8.1 12.5 200,000 or more 12.9 17.9 Central City Neighborhoods Compared with Total 100.0 100.0 Median value (dollars) 97,565 124,985 Other Neighborhoods Median value as a percentage of median value for MSA 99.9 118.9 The 1990 Census provides information that can be Renter-occupied units2 Median monthly rent (dollars) 459.2 555.4 used to describe the population, housing, and Median monthly rent as a employment characteristics of residents of MSAs percentage of median value for MSA 98.3 108.4 categorized by whether they reside in neighborhoods in the central city or in the noncentral city POPULATION Total (millions) 91.4 98.9 portions. In turn, the 1992 HMDA data provide Percent 48.0 52.0 Race or ethnic origin (percent)2 information on the characteristics of the borrowers Black 19.3 6.6 and types of loans extended to households in cen- Hispanic 13.6 7.4 Asian 3.9 3.0 tral and in noncentral city locations. Median age (years)2 32.6 34.2 Age 65 years or older (percent)2 .. 13.0 12.3 The reader is cautioned that population and eco- Moved into census tract during 1989 or 19902 23.3 18.2 nomic characteristics often vary greatly within the neighborhoods of any particular central city or 1. Includes only census tracts in MSAs. If any portion of a census tract is located within a central city boundary, the census tract is classified in the noncentral city location. Moreover, central cities central city category. differ in characteristics from each other, depending, 2. Figures are simple averages of the values for the census tracts in a category; calculated by summing the values for all census tracts in the for instance, on the region of the country. category and dividing by the number of tracts in the category. Central and noncentral city areas are nearly iden- 3. Median family income for census tracts as a percentage of MSA median family income. tical in total numbers of housing units. As of 1990, SOURCE, Derived from 1990 U.S. census data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

108 Federal Reserve Bulletin • February 1994 central cities had 38.1 million housing units, and areas, these rates were 8.1 percent and 5.3 percent. noncentral city neighborhoods had 38.7 million The housing characteristics of central city and units (table A.3). Nonetheless, census information noncentral city areas also reflect the income and reveals significant differences, on average, in the employment circumstances of households. In cencharacteristics of central city and noncentral city tral city areas, on average, 43.9 percent of the units populations. The residents of central city areas had in 1990 were rentals, a rate nearly 70 percent median family incomes that averaged 91 percent of higher than that in noncentral city areas. Central the median family incomes of the MSAs in which city neighborhoods also typically had higher they are located. The residents of neighborhoods in vacancy rates, older homes, and greater proportions noncentral city areas, in contrast, had significantly of boarded-up units. higher incomes on average. Both poverty and Finally, central city and noncentral city areas are unemployment rates reflect these differences: On substantially different in their racial or ethnic comaverage, the poverty rate in central city areas was position. In 1992, blacks and Hispanics accounted 18.7 percent in 1990, and the unemployment rate for 32.9 percent of central city residents but only was 8.9 percent; in contrast, for noncentral city 14 percent of noncentral city residents. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

109 Industrial Production and Capacity Utilization for November and December 1993 Released for publication December 15 where the level of production rose 20 percent between August and November. Excluding motor Industrial production rose 0.9 percent in Novem- vehicles and parts, industrial production grew ber; the revised gain for October was 0.7 percent. 0.5 percent in November, with solid gains in the The growth in recent months has been led by sharp output of construction supplies and information increases in the motor vehicles and parts industry, processing equipment. At 113.2 percent of its 1987 Industrial production indexes Twelve-month percent change Twelve-month percent change J L J L Materials Products 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 —— TToottaall iinndduussttrryy 140 — Manufacturing 140 CCaappaacciittyy CCaappaacciittyy - 120 — — 120 100 100 Production Production 80 8800 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Percent of capacity Percent of capacity Total industry 1981 1983 1985 1987 1989 1991 1993 1981 1983 1985 1987 1989 1991 1993 All series are seasonally adjusted. Latest series, December. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

110 Federal Reserve Bulletin • February 1994 Industrial production and capacity utilization, November 19931 Industrial production, index, 1987 = 100 Percentage change Category 1993 19932 Nov. 1992 to Aug.r Sept.r Oct.' Nov. P Aug.1 Sept.r Oct.r NOV.P Nov. 1993 Total 110.0 111.4 112.2 113.2 .2 .4 .7 .9 4.4 Previous estimate 110.9 111.4 112.2 .1 .4 .8 Major market groups Products, total3 110.3 110.7 111.4 112.4 .2 .3 .7 .9 4.2 Consumer goods 107.8 107.9 109.1 110.0 .1 .1 1.1 .8 2.7 Business equipment 137.6 139.3 140.4 142.3 .3 1.2 .8 1.3 10.3 Construction supplies 98.7 99.3 99.6 100.8 .3 .6 .3 1.1 5.9 Materials 112.2 112.6 113.4 114.3 .1 .4 .7 .8 4.6 Major industry groups Manufacturing 111.9 112.4 113.2 114.4 .3 .4 .7 1.0 5.0 Durable 115.7 116.9 118.2 119.8 .3 1.0 1.1 1.3 8.0 Nondurable 107.3 106.9 107.1 107.7 .3 -.4 .2 .6 1.3 Mining 95.5 97.5 98.0 97.7 -.9 2.1 .5 -.3 -.1 Utilities 117.7 115.3 115.6 116.0 .7 -2.1 .2 .3 1.1 Capacity utilization, percent 1992 1993 Average, Low, High, 1967-92 1982 1988-89 Nov. Aug.r Sept.1 Oct. NOV.P Total 81.9 71.8 84.8 80.8 81.7 81.9 82.4 83.0 1.6 Manufacturing 81.2 70.0 85.1 79.7 80.8 81.1 81.5 82.2 1.8 Advanced processing 80.7 71.4 83.3 78.4 79.2 79.6 80.2 80.8 2.2 Primary processing . 82.2 66.8 89.1 83.0 84.8 84.4 84.7 85.5 .9 Mining 87.4 80.6 87.0 87.4 85.8 87.7 88.1 88.0 -.8 Utilities 86.7 76.2 92.6 87.1 88.6 86.7 86.8 87.0 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. average, industrial production was 4.4 percent only 0.5 percent higher than it was a year earlier. above its level a year ago. The recent strength in Over the past year, the production of clothing has output boosted the utilization of total industrial been particularly weak. capacity 0.6 percentage point in November and The rapid expansion in the output of business 0.5 percentage point in October. Capacity utiliza- equipment over the past three months has been led tion now stands at 83.0 percent, the highest rate by gains in motor vehicles and computers. On since August 1989 and more than 1.0 percentage balance, output of the other components in this point above its 1967-92 average. market group has changed little since July; declines When analyzed by market group, the data show in commercial aircraft and related equipment have that gains in motor vehicles have generated sharp largely offset gains in other categories. increases in the production of durable consumer Among materials, the sharp rise in the output of goods in each of the past three months. Excluding durables in the past three months has been spurred autos and trucks, the level of production of con- by sizable increases in the production of semisumer durables in November was about 2 percent conductors and motor vehicle parts. The prohigher than in September, a margin reflecting net duction of nondurable goods materials increased gains in appliances, carpeting, and furniture. Pro- 1.1 percent, largely because of a pickup in the duction of consumer nondurables remained slug- production of paper, paperboard, textiles, and gish, however, advancing just 0.2 percent, and was chemicals. Nevertheless, output of nondurable Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization 111 goods was only slightly higher than in August. The growth in the output of construction supplies, duraoutput of energy materials was about unchanged ble goods materials, and business equipment. At last month. 114.0 percent of its 1987 average, industrial pro- When analyzed by industry group, the data show duction in December was 4.6 percent above its that manufacturing output expanded 1.0 percent in level a year ago. Reflecting the sustained strong November and had a revised gain of 0.7 percent in growth in output, the utilization of total industrial October. The output of durable goods manufac- capacity rose 0.5 percentage point in December turers was up 1.3 percent, and the output of non- after having increased 0.7 percentage point in durable goods manufacturers rose 0.6 percent. The November. Capacity utilization at the end of 1993 utilization of manufacturing capacity increased stood at 83.5 percent, 2.5 percentage points above 0.7 percentage point, to 82.2 percent, a level 1 per- its year-ago level but still below its most recent centage point above the 1967-92 average. The peak, which was in 1988-89. utilization rate in advanced processing increased When analyzed by market group, the data show 0.6 percentage point, to 80.8 percent, a level about that the output of consumer goods was pushed up equal to the 1967-92 average. The recent increase by another sizable gain in automotive products. for the advanced-processing group was concen- However, the output of other consumer durable trated in the motor vehicles and parts industry, goods, such as appliances, eased in December after where utilization increased more than 5 percentage two months of strong growth. Despite last month's points in each of the past two months; at 83.2 per- decline, the production of consumer durables cent, the utilization rate in motor vehicles and parts excluding automotive products grew at an annual now stands nearly 8 percentage points above its rate of more than 6 percent during the fourth quar- 1967-92 average. The utilization rate in primary ter. The output of nondurables remained sluggish: processing increased 0.8 percentage point in The output of clothing and consumer paper prod- November, to 85.5 percent, a level more than ucts continued to be weak, and the production of 3.0 percentage points above the 1967-92 average. consumer fuels, mainly gasoline, declined sharply Last month's increase was concentrated in lumber last month. products, paper and products, petroleum products, The rapid expansion in the output of business and stone, clay, and glass products. At 91.7 percent equipment since August continued in December, and 94.1 percent respectively, the November utili- led by strong gains in motor vehicles and computzation rates in lumber and petroleum were each ers. The production of most other categories of nearly 9.0 percentage points above their 1967-92 business equipment, except commercial aircraft, averages. also increased. The output at utilities rose 0.3 percent, and the Among materials, another sharp rise in the outoutput of mines declined 0.3 percent. put of durables in December was driven largely by sizable increases in the production of semiconductors and parts for motor vehicles. However, the production of nondurable goods materials declined Released for publication January 14 slightly, as the output of chemical materials rose but the output of paper materials declined. The Industrial production rose 0.7 percent in December. output of energy materials expanded 0.8 percent, For the fourth quarter as a whole, total output with coal, crude oil, and utilities production all up advanced at an annual rate of 7.5 percent. Continu- noticeably. Nevertheless, production for this maring the pattern begun in September, December's ket group was down about 1 percent from its growth was boosted by developments in the motor December 1992 level. vehicles and parts industry, where production grew When analyzed by industry group, the data show 4.9 percent for the month, and has increased that manufacturing output expanded 0.7 percent in approximately 25 percent since August. Excluding December after a gain of 1.1 percent in November. motor vehicles and parts, industrial production Production by manufacturers of durable goods grew 0.5 percent in December, about the same as grew 1.3 percent, with particularly strong increases November's increase; this gain reflected continued recorded by the iron and steel, nonelectrical Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

112 Federal Reserve Bulletin • February 1994 Industrial production and capacity utilization, December 1993 Industrial production, index, 1987=100 Percentage change Category 1993 19932 Dec. 1992 to Sept.r Oct.' Nov.' Dec.p Sept.' Oct.' Nov.' Dec.p Dec. 1993 Total 111.4 112.1 113.2 114.0 .3 .7 .9 .7 4.6 Previous estimate 111.4 112.2 113.2 .4 .7 .9 Major market groups Products, total3 110.5 111.4 112.4 113.0 .2 .8 .9 .5 4.4 Consumer goods ... 107.4 108.6 109.6 109.8 -.4 1.1 .8 .2 2.1 Business equipment 139.4 140.8 142.9 144.9 1.4 1.0 1.5 1.4 11.8 Construction supplies 99.3 99.9 100.7 101.3 .6 .6 .8 .6 7.2 Materials 112.7 113.2 114.3 115.5 .5 .5 .9 1.1 5.0 Major industry groups Manufacturing 112.3 113.2 114.5 115.3 .4 .8 1.1 .7 5.6 Durable 117.0 118.3 120.1 121.7 1.1 1.1 1.5 1.3 8.8 Nondurable 106.5 107.0 107.6 107.4 -.7 .4 .6 -.2 1.3 Mining 97.7 98.2 97.4 97.9 2.3 .6 -.8 .5 -.4 Utilities 115.3 114.6 115.4 116.6 -2.1 -.6 .8 1.0 -.1 Capacity utilization, percent MMMEEEMMMOOO CCCaaapppaaaccciiitttyyy,,, pppeeerrr--ccceeennntttaaagggeee 1992 1993 AAvveerraaggee,, LLooww,, HHiigghh,, ccchhhaaannngggeee,,, DDDeeeccc... 111999999222 11996677--9922 11998822 11998888--8899 tttooo Dec. Sept.' Oct.' Nov.' Dec.P DDDeeeccc... 111999999333 Total 81.9 71.8 84.8 81.0 81.9 82.3 83.0 83.5 1.6 Manufacturing 81.2 70.0 85.1 79.8 81.0 81.5 82.3 82.7 1.9 Advanced processing 80.7 71.4 83.3 78.6 79.6 80.1 80.9 81.4 2.3 Primary processing . 82.3 66.8 89.1 82.9 84.4 84.8 85.7 86.0 .9 Mining 87.4 80.6 87.0 87.8 87.8 88.4 87.7 88.2 -.8 Utilities 86.7 76.2 92.6 88.5 86.7 86.1 86.6 87.5 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. machinery, and motor vehicles and parts industries. Notice of Revised Indexes By contrast, output of nondurable goods manufacturers declined 0.2 percent on a broad front; food, Revised indexes of industrial production and rates apparel, paper, printing and publishing, and petro- of capacity utilization will be published in the G. 17 leum all posted lower output for the month. The (419) statistical release in February 1994. Revised output at utilities rose 1.0 percent, and the output of production statistics will begin in 1991 and revised mines increased 0.5 percent. capacity utilization statistics will begin in 1990. Manufacturing capacity utilization increased 0.4 percentage point in December to 82.7 percent. • The revisions to production primarily reflect Rising utilization in durable goods manufacturing the incorporation of more comprehensive monthly has accounted for all of the increase in the factory source data, review of the production factor coeffiutilization rate over the past two months. Increases cients, and updated seasonal factors. in utilization have been particularly sharp in pri- • The revisions to capacity utilization will reflect mary metals and in motor vehicles and parts. By improved estimates of capital stocks and prelimicontrast, the utilization rate in nondurables manu- nary results from the Census Survey of Plant facturing declined 0.2 percentage point. Capacity for 1991 and 1992. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization 113 • Diskettes containing the revised data will be NOTE. This issue contains two releases on industrial available on the day of release from the Board of production and capacity utilization, the one for De- Governors of the Federal Reserve System, Publica- cember 15, 1993 (November data) and the one for tions Services, at (202) 452-3245. January 14, 1994 (December data). The release for February 1994 (containing January data) will appear in the March issue. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

114 Statement to the Congress Statement by J. Virgil Mattingly, General Coun- manipulation of fictitious accounts to conceal sel, Board of Governors of the Federal Reserve bank losses, and concealment from regulatory System, before the Committee on Banking, Fi- authorities of the BCCI's true financial position. nance and Urban Affairs, U.S. House of Repre- The BCCI never received regulatory approval to sentatives, December 9, 1993 accept deposits from the general public in the United States, although it did operate several I am pleased to appear today to testify in con- agencies here. However, evidence uncovered as nection with the committee's hearing into recent a result of formal investigations by the Federal requests that Sheikh Zayed al-Nahyan and two of Reserve and other authorities shows that the his adult sons be granted head of state immunity BCCI did engage in the United States in a in connection with pending civil litigation. The scheme to acquire controlling interests in U.S. litigation relates to the acquisition of the First banking organizations without the required pre- American banking organization by the Bank of vious regulatory approval. The BCCI carried out Credit and Commerce International, S.A., and this scheme by causing persons financed by the its affiliates (collectively BCCI). Sheikh Zayed is BCCI to acquire voting shares of banking orgathe President of the United Arab Emirates nizations as the nominees of the BCCI. As a (UAE) and the ruler of Abu Dhabi, one of the result of this scheme, the BCCI acquired controlemirates that make up the UAE. ling interests in the Credit and Commerce American Holdings, N.V. (CCAH), the holding company established to acquire the First American FEDERAL RESERVE ENFORCEMENT banks, which operated in Virginia, Maryland, Washington, D.C., New York, and Tennessee, ACTIONS RELATED TO THE BCCI as well as the Independence Bank in California At the outset, you have asked me to summarize and the National Bank of Georgia. briefly the BCCI matter and the Board's enforce- A series of administrative enforcement actions ment actions relating to the BCCI. The irregular by the Federal Reserve Board have grown out of and unlawful operations of the BCCI have been the BCCI's unlawful acquisition of banking orgadescribed in detail at previous hearings before nizations in the United States. First, the Board this and other congressional committees. In instituted actions against the BCCI itself and brief, before the BCCI closed in July 1991, it related persons arising out of the First American operated banking offices in numerous countries and National Bank of Georgia transactions. The throughout the world but was not subject to Board's charges were resolved as part of a comsupervision as a consolidated organization in its prehensive plea agreement that also resolved home country. This lack of consolidated super- parallel criminal prosecutions against the BCCI vision facilitated the BCCI's ability to carry out brought by the Justice Department and the New fraudulent transactions by, for example, allowing York County District Attorney. The BCCI pled the manipulation of accounts through transfers of guilty to the criminal charges, and the BCCI's funds among its affiliates. U.S. assets, estimated at several hundred million Much evidence has now come to light disclos- dollars, were forfeited to the United States. ing a complex and massive fraud at the BCCI, Under the agreement, half of the forfeited assets including mismanagement, substantial loan and would then be paid to a worldwide victims' fund treasury account losses, misappropriation of to compensate innocent depositors. The BCCI funds, unrecorded deposits, the creation and also consented to the Board's $200 million civil Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

115 money penalty, with the Board agreeing to stay senior management of the First American orgacollection of the penalty in light of the asset nization. The Board's case has been stayed pendforfeiture. The plea agreement also incorporated ing a final decision on whether federal criminal a requirement that the BCCI's interest in the charges against these persons will be reinstated. First American banks would be fully divested, The fourth major BCCI-related action is which has now been accomplished, and that the against Khalid bin Mahfouz, a Saudi banker, and proceeds from the sale of that interest would be the bank his family owns in Saudi Arabia, who forfeited as an asset of the BCCI under the are charged with unlawfully acquiring and holdagreement. ing a 28 percent block of shares of First Ameri- Federal Reserve enforcement actions were can's holding company from 1986 through at also aimed at various persons who served as the least 1990 without regulatory approval. The BCCI's senior management or as nominees of the Board's action seeks a $170 million civil money BCCI in acquiring and retaining control of U.S. penalty from Mahfouz. As a result of a federal banking organizations. These persons include court asset freeze lawsuit, letters of credit, total- Kamal Adham, a Saudi Arabian businessman ing $122 million, have been provided to the who was charged with acquiring and holding Board in connection with the civil penalty proshares of First American's holding company as a ceeding. Mahfouz has also been indicted in the nominee for the BCCI. Adham has paid a $10 County of New York. million civil money penalty as well as $3 million in reimbursement to cover investigative costs. He has also been permanently barred from bank- INVOLVEMENT OF THE RULING FAMILY OF ing in the United States. ABU DHABI WITH THE BCCI The second major BCCI-related enforcement action by the Federal Reserve involves Ghaith The Abu Dhabi ruling family had substantial own- Pharaon, another Saudi businessman. This ac- ership interests in both the BCCI and the First tion seeks a civil money penalty of $37 million American organization. After the Board's August and an order prohibiting Pharaon from the bank- 1981 approval of the acquisition of the First Amering industry, primarily for his alleged participa- ican banks by CCAH, Sheikh Zayed and his tion in the BCCI's unlawful acquisition of the oldest son, Khalifa, became substantial investors Independence Bank. The Board's proceedings in the CCAH, each one holding about 10 percent against Pharaon are pending. To assure that any of its voting shares. Since the formation of the possible civil money penalty assessed by the CCAH, the Abu Dhabi Investment Authority Board can be collected, the Board has obtained a (ADIA) has separately owned between 6 percent federal district court order freezing Pharaon's and 8 percent of voting shares of that company. U.S. assets until administrative proceedings be- At this time, none of the Federal Reserve's fore the Board have been completed. Pharaon is pending enforcement actions names the Abu also facing three federal indictments and an in- Dhabi ruling family or the ADIA; nor in any of dictment in New York County. the actions brought by the Federal Reserve Of the other persons charged in this proceeding against others has the Abu Dhabi ruling family or and those of First American, five are now subject ADIA been alleged to have served as BCCI to Board orders assessing penalties or banning nominees in controlling the shares of First Amerthem from banking, including Agha Hasan Abedi, ican's holding company. the founder and president of the BCCI, and The Federal Reserve has not, however, had Swaleh Naqvi, a principal officer of the organiza- access to all of the evidence relating to the tion. Actions seeking to impose similar sanctions ownership of CCAH shares by members of the against three other persons are pending. Abu Dhabi ruling family and related interests and A third major enforcement action brought by has requests outstanding for access to witnesses the Federal Reserve involves Clark Clifford and and documents in Abu Dhabi. We are continuing Robert Altman, who, among other things, served to pursue all relevant information relating to the as counsel for the BCCI and the CCAH and as ownership of shares of the CCAH. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

116 Federal Reserve Bulletin • February 1994 REQUESTS FOR HEAD OF STATE IMMUNITY cover his adult sons. We are not aware of any BY SHEIKH ZAYED AND HIS SONS situation in the past in which a bank regulatory agency sought to take formal enforcement action Sheikh Zayed and his sons have moved to be against a foreign head of state. dismissed as defendants in a civil lawsuit brought against them and several other BCCI-related persons by the First American organization. The IMPACT OF IMMUNITY GRANT ON lawsuit, filed in federal district court in Washing- REGULATION OF FOREIGN GOVERNMENTton, D.C., seeks, among other things, damages OWNED BANKS for injuries to the organization resulting from its unlawful acquisition by the BCCI. As we under- With regard to the more general question, a grant stand, Sheikh Zayed asserts that, under the doc- of immunity to a head of state who owns or trine of head of state immunity, he, as the head of controls a banking organization operating in the state of the UAE, and his immediate family are United States could restrict the Board's ability to not subject to lawsuits in the United States. We ensure compliance with the banking laws. As understand that the State Department has been explained earlier, in such a case the grant of head requested to express a view on whether head of of state immunity could be interpreted as barring state immunity applies to Sheikh Zayed and his the Board from taking any enforcement action sons. against a head of state who was a principal Thus, the specific question as to whether head shareholder of the organization. In addition, beof state immunity requires the dismissal of Sheikh cause of this potential limitation on the exercise Zayed and his sons as defendants in the pending of an important regulatory tool, the issue of head civil suit is now before the federal district court of state immunity would be a significant factor in and the Department of State, which traditionally any application by a head of state to acquire a speaks for the executive branch on questions of U.S. bank unless there was an effective waiver of immunity for foreign rulers. The Board is not a immunity by the head of state. party to the civil litigation and has not taken a Based on a review of available data, we are position on the head of state immunity issue. Staff unaware of any instance in which a person who members of the State Department have solicited can be identified as a head of state, or as a the views of the Board's staff on the possible member of the household of a head of state, at effects on the Board's bank regulatory powers if the present time owns 5 percent or more of the this immunity request was granted. shares of a bank with operations in the United States. However, in shareholder lists required to be filed with the Federal Reserve we do not EFFECT OF GRANTING IMMUNITY TO THE request that a head of state be identified as such, AB U DHABI R ULING FAMIL Y so that we cannot say for certain that no head of state currently owns shares of a bank doing If, as a result of the Board's ongoing investiga- business here. tion into BCCI matters, a formal enforcement As this committee is aware, foreign governaction were to be taken against the ruler of Abu ment entities own several banking organizations Dhabi, it is very possible that the Board's ability operating in the United States. The scope of the to prosecute such an action could be impaired if immunity granted to a foreign government entity immunity were granted. As we understand it, the in a civil action is governed by the Foreign scope of head of state immunity has not been Sovereign Immunities Act (FSIA). That act does precisely defined, but it is possible that such not extend immunity to commercial activity by a immunity could be interpreted as affording com- foreign state entity in the United States, which plete protection against any type of civil action in we believe should include the acquisition and this country, including a regulatory enforcement control of U.S. banks or the conduct by a foreign proceeding. Moreover, it is not clear whether the bank of activities in this country. Accordingly, grant of head of state immunity to the ruler would under this view of the FSIA, we believe that a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statement to the Congress 117 defense of sovereign immunity should not inter- foreign government entities are determined by fere with the effective regulation of the opera- authorities other than the Federal Reserve, a tions of foreign government owned banks in the grant of head of state immunity to an person United States in the future. In this regard, the controlling a banking organization with operadefense of sovereign immunity has not been tions in the United States could possibly block raised in any of the enforcement actions taken to regulatory actions against the head of state to date by the Board against foreign government- enforce the banking laws. However, we are not owned banks. aware of any situation in the past when immunity has restricted the exercise of regulatory powers over foreign government-owned banking organi- CONCLUSION zations, and possible problems related to immunity for foreign heads of state might be dealt with Although questions as to the existence and scope in the future by requiring a waiver of such of immunity for the heads of foreign states or immunity as a condition for approval. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

118 Announcements APPOINTMENT OF NEW MEMBERS TO THE Nicholas W. Mitchell, Jr., President and CEO, Pied- THRIFT INSTITUTIONS ADVISORY COUNCIL mont Federal Savings and Loan Association, Winston- Salem, North Carolina Stephen W. Prough, President and CEO, Western The Federal Reserve Board announced on Decem- Financial Savings Bank, Irvine, California. ber 8, 1993, the names of three new members of its Thrift Institutions Advisory Council (TIAC) and designated a new president and vice president of REGULATION A: AMENDMENTS the council for 1994. The council is an advisory group composed of The Federal Reserve Board issued on December twelve representatives from thrift institutions. The 16, 1993, amendments to Regulation A (Exten- Board established the panel in 1980, and it includes sions of Credit by Federal Reserve Banks) to representatives from savings and loans, savings implement section 142 of the Federal Deposit banks, and credit unions. The council meets at least Insurance Corporation Improvement Act of 1991 four times each year with the Board of Governors (FDICIA) regarding limits on Federal Reserve to discuss developments relating to thrift institu- Bank credit. The amendments were effective Janutions, the housing industry, mortgage finance, and ary 30, 1993. certain regulatory issues. Under section 142, after December 19, 1993, the Beatrice D'Agostino, Chairman, President, and Board may be financially liable to the Federal CEO of the New Jersey Savings Bank, Somerville, Deposit Insurance Corporation (FDIC) for certain New Jersey, will serve as president of the council losses incurred by the insurance funds administered for 1994, and Charles John Koch, President and by the FDIC. Section 142 amended section 10B of CEO of Charter One Bank, F.S.B., Cleveland, the Federal Reserve Act to discourage advances Ohio, will serve as vice president. under that section to undercapitalized and critically undercapitalized insured depository institutions. The three new members, named for two-year The Congress was concerned that such advances terms beginning January 1,1994, are the following: could lead to increased losses to the insurance Malcolm E. Collier, Chairman and CEO, First Federal funds. Savings Bank, Lakewood, Colorado Besides making several technical and stylistic Stephen D. Taylor, President and CEO, American changes to update and clarify the regulation, the Savings of Florida, F.S.B., Miami, Florida amendments accomplish the following: John M. Tippets, President and CEO, American Airlines Employees Federal Credit Union, Dallas- Fort Worth Airport, Texas. • Place limitations on Federal Reserve Bank credit to undercapitalized and critically undercapi- Other members of the council are the following: talized insured depository institutions William A. Cooper, Chairman and CEO, TCF Bank • Describe the calculation of amounts that may Savings fsb, Minneapolis, Minnesota be payable to the FDIC Paul L. Eckert, Chairman and President, Citizens Fed- • Define undercapitalized and critically undereral Savings Bank, Davenport, Iowa capitalized insured depository institutions George R. Gligorea, Chairman, President, and CEO, • Clarify the term "viable," as it applies to an First Federal Savings Bank, Sheridan, Wyoming undercapitalized insured depository institution Kerry Killinger, Chairman, President, and CEO, • Provide for assessments of the Federal Reserve Washington Mutual Savings Bank, Seattle, Washington Robert McCarter, Chairman and CEO, New Bedford Banks for amounts that the Board may be required Institution for Savings, New Bedford, Massachusetts to pay the FDIC under section 142. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

119 The revised regulation will guide the Federal from 100 percent to 50 percent for multifamily Reserve Banks in their dealings with undercapital- housing loans that meet criteria specified in the ized and critically undercapitalized institutions and proposal. This change was directed by a provision will advise these institutions and their banking of section 618(b) of the Resolution Trust Corporasupervisors of potential limitations on the availabil- tion Refinancing, Restructuring, and Improvement ity of Federal Reserve Bank credit. Act of 1991 (RTCRRIA). In a separate action on December 16, 1993, the Board approved a recommendation from the Fed- REGULATION B: AMENDMENTS eral Financial Institutions Examination Council to seek public comment on a Notice of Proposed The Federal Reserve Board issued on Decem- Rulemaking and an advance Notice of Proposed ber 10, 1993, amendments to its Regulation B Rulemaking concerning the regulatory treatment of (Equal Credit Opportunity) regarding the right recourse arrangements and direct credit substitutes, of credit applicants to receive copies of appraisal which, to the extent that they apply to multifamily reports. housing loans, would if adopted also satisfy the The amendments define the coverage of the requirements of certain provisions of section 628(b) appraisal requirements to be loans secured by a lien of RTCCRIA. This notice will be issued at a later on a residential structure containing one to four date. units. The regulation provides alternative methods of compliance with the law. Creditors may choose to automatically provide a copy of appraisal reports PROPOSED ACTIONS to all applicants for covered loans. Or they may choose to provide a copy upon the applicant's The Federal Reserve Board requested on Decemrequest and be subject to other provisions in the ber 10, 1993, public comment on a proposal to regulation. For creditors that do not automatically assess charges for examinations of U.S. branches, provide copies of appraisal reports, the regulation agencies, and representative offices of foreign includes a requirement that applicants be notified banks. Comments should be received by April 20, of the right to receive a copy and limits when 1994. an applicant must request (and the creditor must The Federal Reserve Board also requested on provide) it. December 20, 1993, public comment on a proposal The Regulation B amendments implement and to amend its risk-based capital guidelines for state clarify the amendments to the Equal Credit Oppor- member banks and bank holding companies to tunity Act contained in the Federal Deposit Insur- include in tier 1 capital net unrealized holding ance Corporation Improvement Act of 1991, which gains and losses on securities available for sale. took effect in December 1991. The amendments to This component of common stockholders' equity the regulation were effective December 14, 1993, was created by the Financial Accounting Standards but compliance with the regulatory requirements is Board (FASB) Statement No. 115 "Accounting for optional until June 14, 1994. Certain Investments in Debt Equity Securities." Comments were requested by January 21, 1994. RISK-BASED CAPITAL GUIDELINES: AMENDMENTS CHANGE IN BOARD STAFF The Federal Reserve Board announced on Decem- Effective January 1, 1994, the Division of Banking ber 20, 1993, adoption of amendments to its risk- Supervision and Regulation assumed the responsibased capital guidelines affecting the treatment of bility for the National Information Center (NIC). certain multifamily housing loans. This rule was Concurrently, the NIC Function Office was estabeffective December 31, 1993. lished in the division. Also effective January 1, The revised guidelines for state member banks 1994, William Schneider transferred to the division and bank holding companies lower the risk weight to continue as NIC Project Director. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

120 Minutes of the Federal Open Market Committee Meeting of November 16,1993 A meeting of the Federal Open Market Committee Mr. Winn, Assistant to the Board, Office of Board was held in the offices of the Board of Gov- Members, Board of Governors1 Mr. Ettin, Deputy Director, Division of Research ernors of the Federal Reserve System in Washingand Statistics, Board of Governors ton, D.C., on Tuesday, November 16, 1993, at Mr. Madigan, Associate Director, Division of 9:00 a.m. Monetary Affairs, Board of Governors Mr. Stockton, Associate Director, Division of Present: Research and Statistics, Board of Governors Mr. Greenspan, Chairman Ms. Low, Open Market Secretariat Assistant, Mr. McDonough, Vice Chairman Division of Monetary Affairs, Board of Mr. Angell Governors Mr. Boehne Mr. Keehn Mr. Beebe, Ms. Browne, Messrs. J. Davis, T. Davis, Mr. Kelley Dewald, Goodfriend, and Ms. Tschinkel, Mr. LaWare Senior Vice Presidents, Federal Reserve Mr. Lindsey Banks of San Francisco, Boston, Cleveland, Mr. McTeer Kansas City, St. Louis, Richmond, Mr. Mullins and Atlanta respectively Ms. Phillips Mr. Stern Mr. Guentner, Assistant Vice President, Federal Reserve Bank of New York Messrs. Broaddus, Jordan, Forrestal, and Parry, Alternate Members of the Federal Open By unanimous vote, the minutes for the meeting Market Committee of the Federal Open Market Committee held on September 21, 1993, were approved. Messrs. Hoenig, Melzer, and Syron, Presidents of the Federal Reserve Banks of Kansas City, The Report of Examination of the System Open St. Louis, and Boston respectively Market Account, conducted by the Board's Division of Reserve Bank Operations and Payment Mr. Kohn, Secretary and Economist Systems as of the close of business on April 30, Mr. Bernard, Deputy Secretary 1993, was accepted. Mr. Coyne, Assistant Secretary The Manager for Foreign Operations reported on Mr. Gillum, Assistant Secretary Mr. Mattingly, General Counsel developments in foreign exchange markets during Mr. Patrikis, Deputy General Counsel the period since the September meeting. There Mr. Prell, Economist were no open market transactions in foreign curren- Mr. Truman, Economist cies for the System account during this period, and thus no vote was required of the Committee. Messrs. R. Davis, Lang, Lindsey, Promisel, Rolnick, Rosenblum, Scheld, Siegman, By unanimous vote, the Committee authorized Simpson, and Slifman, Associate Economists the renewal for further periods of one year of the Ms. Lovett, Manager for Domestic Operations, System Open Market Account 1. Attended portion of meeting on the review of FOMC prac- Mr. Fisher, Manager for Foreign Operations, tices with regard to recording and transcribing FOMC meeting System Open Market Account discussions and the release of information about such discussions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

121 System's reciprocal currency ("swap") arrange- ately on balance in recent months and producer ments with foreign central banks and the Bank for prices falling. International Settlements. The amounts and matu- Total nonfarm payroll employment rose apprerity dates of these arrangements are indicated in the ciably in September and October after declining table that follows: slightly in August. Although job gains were widespread in October, a large part of the increase was in various business services, notably temporary Amounts employment agencies. In other categories, con- (millions of Term Maturity Foreign bank dollars (months) dates struction employment registered its largest monthly equivalent) rise since last spring, and jobs in manufacturing Austrian National Bank 250 12 12/04/93 increased after seven months of declines. The civil- Bank of England 3,000 12/04/93 Bank of Japan 5,000 12/04/93 ian unemployment rate edged up to 6.8 percent in Bank of Mexico 700 12/04/93 October. Bank of Norway 250 12/04/93 Bank of Sweden 300 12/04/93 Industrial production rose sharply in October, Swiss National Bank 4,000 12/04/93 with manufacturing more than accounting for Bank for International Settlements the increase. Part of the gain in manufacturing Swiss francs 600 12/04/93 Other authorized European reflected a further rebound in the output of motor currencies 1,250 12/04/93 vehicles and parts. Aside from motor vehicles, National Bank of Belgium ... 1,000 12/18/93 however, the production of business equipment Bank of Canada 2,000 12/28/93 National Bank of Denmark .. 250 12/28/93 was lifted by another surge in office and computing Bank of France 2,000 12/28/93 equipment, and the output of consumer goods was German Federal Bank 6,000 12/28/93 Bank of Italy 3,000 12/28/93 boosted by strength in furniture and appliances. Netherlands Bank 500 12/28/93 Utilization of total industrial capacity rose in October, reaching a level last seen in the fourth The Manager for Domestic Operations reported quarter of 1992. on developments in domestic financial markets and Nominal retail sales were up substantially in on System open market transactions in U.S. gov- October after changing little in September. Sales in ernment securities and federal agency obligations October were boosted by a turnaround in spending during the period September 21, 1993, through at automobile dealerships and by a surge at build- November 15, 1993. By unanimous vote, the Com- ing materials and supply stores. Sales at other types mittee ratified these transactions. of retail outlets were mixed. Purchases at general The Committee then turned to a discussion of the merchandise stores were brisk. However, sales at economic and financial outlook and the formula- apparel outlets and at furniture and appliance stores tion of monetary policy for the intermeeting period edged down after rising strongly for several ahead. A summary of the economic and financial months, and the increase in spending at gasoline information available at the time of the meeting stations entirely reflected the effects of the new and of the Committee's discussion is provided be- federal gasoline tax on pump prices. Housing activlow, followed by the domestic policy directive that ity strengthened further in the third quarter. Starts was approved by the Committee and issued to the of single-family homes in August and September Federal Reserve Bank of New York. were at their highest levels in almost five years; The information reviewed at this meeting sug- starts of multifamily units also picked up in Sepgested some strengthening in the expansion of tember, although construction activity in this sector economic activity in recent months. Consumer remained at a very low level. Sales of new and spending had picked up; housing activity was existing homes moved up further in the third quarquickening; and business spending for durable ter and were especially strong in September. equipment had continued to trend higher, though at Real business capital spending increased in the a reduced pace. Industrial production, particularly third quarter at a considerably slower pace than manufacturing, and employment had posted solid earlier in the year. The slowdown largely reflected gains. At the same time, inflation had remained a smaller rise in spending for producers' durable muted, with consumer prices increasing moder- equipment, as reduced outlays for aircraft and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

122 Federal Reserve Bulletin • February 1994 motor vehicles more than offset continued strong foods and energy goods, producer prices were gains in spending for computing equipment and down over the September-October period. Over other capital goods. Nonresidential construction the twelve-month period ended in October, prowas down slightly in the third quarter after a siz- ducer prices for nonfood, non-energy finished able advance over the first half of the year. Office goods were fractionally higher on balance, the lowand industrial building activity appeared to est yearly increase on record for this index, which have bottomed out, but high vacancy rates and was introduced in 1973. Consumer prices rose in declining property values continued to limit new October after being unchanged in September, with construction. the increase partly reflecting the effect of the imple- Business inventories climbed significantly fur- mentation of the new federal gasoline tax. For ther in September; for the third quarter as a whole, nonfood, non-energy consumer items, the rise in however, stocks were accumulated at a somewhat consumer prices over the twelve months ended in slower pace than in the first half of the year. At the October was considerably smaller than the rise retail level, inventories rebounded in September over the comparable period ended in October 1992. after declining on balance over July and August. Labor compensation costs did not show a compara- The ratio of inventories to sales for retailing edged ble downtrend. The increase in hourly compensaup in September but remained near the low end of tion for private industry workers in the third its range over the past year. Inventory accumula- quarter was about the same as in the second quartion in the wholesale sector slowed in September ter. For the twelve months ended in September, after rising substantially in August; the inventory- hourly compensation advanced slightly faster than to-sales ratio for this sector was unchanged at the over the comparable year-earlier period. midpoint of its range over the past several years. In At its meeting on September 21, 1993, the Commanufacturing, stocks dropped in September after mittee adopted a directive that called for maintainchanging little over the two previous months; with ing the existing degree of pressure on reserve posifactory shipments up, the stocks-to-shipments ratio tions and that did not include a presumption about for manufacturing as a whole fell in September to the likely direction of any adjustment to policy its lowest level in recent years. during the intermeeting period. Accordingly, the The nominal U.S. merchandise trade deficit directive indicated that in the context of the Comdeclined further in August, but for July and August mittee's long-run objectives for price stability and combined the deficit was about the same as its sustainable economic growth, and giving careful average rate for the second quarter. The value of consideration to economic, financial, and monetary both exports and imports was slightly lower in developments, slightly greater or slightly lesser July-August than in the second quarter. The reserve restraint might be acceptable during the decline in the value of exports primarily reflected intermeeting period. The reserve conditions associshortfalls in shipments of aircraft and automotive ated with this directive were expected to be consisproducts, and the drop in imports was associated tent with modest growth of M2 and M3 over the with reduced imports of oil and automotive prod- balance of the year. ucts. Available data indicated that the performance Open market operations during the intermeeting of the major foreign industrial economies contin- period were directed toward maintaining the existued to be mixed. Economic activity appeared to ing degree of pressure on reserve positions. Adjusthave remained weak in Japan in the third quarter ment plus seasonal borrowing averaged somewhat and to have stagnated in western Germany after above anticipated levels as a result of increased increasing moderately in the second quarter. On the demands for adjustment credit associated with other hand, the recessions in France and Italy quarter-end pressures in financial markets and an seemed to have bottomed out, and the economies unexpected swing in the Treasury balance. The of Canada and the United Kingdom to have recov- federal funds rate remained close to 3 percent over ered somewhat further. the period. Producer prices for finished goods fell in Octo- Most other interest rates were up somewhat over ber, retracing the small increase in September; the period since the Committee's September meetexcluding the effects of higher prices for finished ing. Treasury bill rates rose in part because of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee Meeting 123 Treasury's need to rely more heavily on bill issu- same pace as incomes over the year ahead. In ance in a quarter containing a reduced schedule for addition, fiscal restraint and uncertainty about other auctioning long-term debt. Intermediate- and long- government policies would continue to inhibit the term yields fell in the weeks following the Septem- expansion, and a sluggish acceleration in foreign ber meeting and reached twenty-year lows. These industrial economies pointed to only modest declines were more than reversed subsequently, improvement in export demand. However, improvhowever, when investors interpreted incoming data ing balance sheet positions and credit supply condias suggesting stronger economic growth and credit tions were lifting an unusual constraint on spenddemands over the intermediate term and a some- ing, and the lower interest rates would encourage what greater likelihood of some tightening of further increases in business fixed investment and monetary policy. Most indexes of stock market housing construction. The continued slack in labor prices posted robust gains early in the intermeeting and product markets, coupled with some tempering period, but these gains subsequently were pared of inflation expectations, was expected to foster back as interest rates moved higher. further reductions in wage and price inflation. In foreign exchange markets, the trade-weighted In the Committee's discussion of the economic value of the dollar in terms of the other G-10 outlook, members commented that the economic currencies appreciated over the intermeeting data and anecdotal reports received since the Sepperiod. The strengthening of the dollar, and the tember meeting had tended to reinforce their earlier associated rise in U.S. long-term interest rates rela- forecasts that moderate economic expansion would tive to foreign rates, reflected both more optimistic be sustained. After a sluggish performance in the expectations for growth in the United States and first half of the year, overall economic activity had more pessimistic assessments for the course of picked up somewhat more in the third quarter than economic activity in continental Europe and Japan. most members had anticipated, and available indi- M2 registered a relatively strong advance in Sep- cators of spending and production pointed to relatember, but growth slowed again in October. The tively robust economic growth in the current quar- September pickup partly reflected an unexpected ter. Looking ahead to 1994, the members expected surge in the volatile overnight repurchase agree- the expansion to slow somewhat from its apparent ment (RP) component of M2. Ml also was strong, pace over the closing months of this year. Fluctuabut the total of time and savings deposits continued tions in the rate of quarterly GDP growth undoubtto decline, apparently in large part because of the edly would occur, but the economy over the year persisting allure of capital market instruments. ahead was thought likely to continue on a trend of Growth of M3 strengthened somewhat more than moderate expansion averaging close to the econo- M2 over the two months, reflecting a run-up in my's long-run potential or somewhat higher. Most institution-only money market funds. For the year members saw the probability of a sharp deviation through October, M2 and M3 were estimated to in either direction from their current forecasts as have grown at rates a little above the lower ends of relatively remote, though a number also believed the Committee's ranges for the year. Total domes- that any deviation was more likely to be in the tic nonfinancial debt expanded at a moderate rate in direction of somewhat stronger rather than weaker recent months, and for the year through September growth. In general, members expected core inflait was estimated to have increased at a rate in the tion to change little or to edge lower next year, lower half of the Committee's monitoring range. but a few saw some danger of marginally higher The staff projection prepared for this meeting inflation. suggested that economic activity, after advancing In their assessment of developments underlying relatively strongly in the fourth quarter, would the economic outlook, members referred to indicaexpand moderately next year, about in line with the tions in many areas of some strengthening in busipotential rate of economic growth over time, and ness conditions and in related business sentiment, thus would be associated with limited, if any, fur- though economic activity clearly remained slugther reductions in margins of unemployed labor gish or even depressed in some parts of the counand capital. Consumer spending, which had buoyed try and overall business attitudes could still be growth recently, was expected to expand at the described as cautious. Current financial conditions, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

124 Federal Reserve Bulletin • February 1994 including the strength in equity markets, reduced While net gains in employment, including growth intermediate- and long-term interest rates, and an associated with increases in self-employment and apparently improving availability of business credit new business formations, were continuing, expanfrom financial institutions, provided a favorable sion in jobs and consumer incomes probably would backdrop for further economic expansion. More- be at a moderate pace over the year ahead. Against over, businesses and households had made substan- this background, members generally expected modtial progress in improving their financial positions. erate growth in consumer spending to be main- These factors were seen as reducing downside risks tained, but they did not see such spending as likely to the expansion. At the same time, while there to give extra impetus to growth in economic activwere signs of significant firming in the economic ity in 1994. expansion, a number of members observed that at The members anticipated appreciable further this point they did not see the usual indications of expansion in business investment spending, espeany near-term intensification of inflationary prescially in the context of reduced interest rates, sures such as general increases in commodity improved business balance sheets, and ongoing prices, lengthening delivery lead times along with efforts to improve productivity. Growth in spendefforts to increase inventories, and strong growth of ing for business equipment probably would concredit. Indeed, the risks of an overheated and inflatinue at a relatively vigorous pace, though perhaps tionary expansion in the near term seemed quite somewhat below the growth rates experienced in limited in light of various constraints on the econrecent quarters, and other investment activity omy such as those associated with a restrictive seemed poised to pick up. In this connection, sevfiscal policy and the continuing weakness in key eral members reported that vacancy rates in comexport markets. mercial office buildings were declining in some With regard to the outlook for specific sectors of areas and while this development was not yet the economy, a step-up in consumer spending, being translated into appreciable new construction, notably for motor vehicles and housing-related investment funds appeared to be flowing more durable goods, had contributed substantially to the freely into commercial real estate. Clear indicastrengthening of the economic expansion. Indica- tions of strengthening were observed in housing tions of improving consumer confidence, reflected construction in many parts of the country and the in turn in the growing optimism expressed by busi- outlook for such building activity seemed promisness contacts regarding the outlook for holiday ing in the context of reduced mortgage rates and sales, should help to sustain relatively ebullient improving consumer sentiment. consumer spending through the year-end. Contacts Fiscal policy developments, including the effects in the motor vehicles industry also appeared to be on business attitudes of the uncertainties surroundrelatively optimistic about the prospects for sales of ing health care reform legislation, were likely to the new models. The outlook for the consumer continue to inhibit the expansion over the year sector also was subject to some constraining influ- ahead. Some members again emphasized the negaences. Growth in consumer spending had tended to tive effects that the ongoing retrenchment in exceed the expansion in consumer incomes, and a defense spending was having on local economies number of members questioned the extent to which as well as on the economy more generally. On the the acceleration in such spending was likely to taxation side, the rise in tax liabilities on higher extend into the new year. The saving rate already incomes could have an especially pronounced was near the low end of its historic range, at least effect during the early months of next year, given on the basis of current estimates, and was unlikely the retroactive inclusion of 1993 incomes subject to to decline significantly, if at all. Much would the new tax, but some members noted that the depend on consumers' outlook for employment and increased tax payments probably had been widely incomes. Growing demands should eventually be anticipated and the negative implications for the translated into faster employment gains, but at this economy might well be less than many observers point business firms continued to resist adding to expected. Nonetheless, the overall posture of fiscal their workforces despite increasing sales and many policy and associated business concerns about the firms were still announcing workforce reductions. cost implications of possible future legislation were Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee Meeting 125 likely to be an important factor tending to limit the slack in overall capacity and labor utilization. strength of the expansion. At this point, however, there were no significant Net exports were seen as another constraining indications of accelerating inflation, and busifactor in the performance of the economy next ness contacts around the nation did not currently year. On the import side, even moderate expansion see or seem to anticipate increasing inflationary in domestic economic activity was likely to stimu- pressures. late appreciable further growth in U.S. demands In the Committee's discussion of policy for the for foreign goods. At the same time, the prospects intermeeting period ahead, the members generally for exports to a number of major industrial coun- agreed that despite various indications of a pickup tries were not promising, at least for the nearer in economic growth, the underlying economic term, given lagging economies in Europe and situation and the outlook for inflation had not Japan. In this connection, a number of members changed sufficiently to warrant an adjustment in referred to reports of weak export demand for monetary policy. Looking beyond the intermeeting specific U.S. products and also noted that an period, however, several members commented that extended coal mining strike had cut supplies of the Committee might well have to consider the coal available for export and had induced some need to move from the currently stimulative stance domestic firms to turn to imports to help fill their of monetary policy toward a more neutral policy requirements. On the other hand, some markets for posture, should concerns about rising inflationary U.S. exports, notably those in a number of East pressures begin to be realized. The members recog- Asian nations and some Latin American countries, nized the desirability of taking early action to arrest were likely to continue to experience considerable incipient inflationary pressures before they gathgrowth, thereby mitigating an otherwise fairly ered strength, especially given the Committee's gloomy outlook for exports. commitment not just to resist greater inflation but With regard to the outlook for inflation over the to foster sustained progress toward price stability. year ahead, views did not vary greatly among the In appropriate circumstances, a prompt policy members. They ranged from expectations of some move also might allay market concerns about inflalimited progress toward price stability to forecasts tion with favorable implications for longer-term of a marginal increase in the core rate of inflation. interest rates and the performance of interest- Members who anticipated a relatively favorable sensitive sectors of the economy. The members inflation performance tended to underscore the acknowledged that current measures of inflation likely persistence of appreciable slack in labor and and anecdotal reports from around the nation did other production resources on the assumption that not on the whole suggest an intensification of inflagrowth in overall economic activity would remain tion at this point. Moreover, the Committee had to on a moderate trend in line with their forecasts. be wary of misleading signals that were inherent in Some also pointed to the absence of inflationary the saw-tooth pattern of typical economic expanpressures in most commodity markets, the persis- sions, and it needed to avoid a policy move that tence of intense competition in local markets across would incur an unnecessary risk to the expansion, the nation, and the outlook for relatively subdued given uncertainties about the degree to which increases in labor costs in part because of ongoing recent strength in spending would persist. improvements in productivity. Other members gave Most of the members concluded that on balance more emphasis to the possibility that the economic current economic conditions warranted a steady expansion next year, especially if it turned out on policy course and, in light of prevailing uncertainthe high side of the range encompassing the mem- ties, that it would be premature to anticipate any bers' current projections, was more likely to be particular policy change or its timing. As a conseassociated with some upward pressures on costs quence, the members also concluded that the curand prices. In this connection, relatively rapid rently unbiased instruction in the directive relating growth in economic activity, should it persist into to the direction of possible intermeeting policy the early part of next year, probably would trigger changes should be retained; in any case, significant attempts to raise prices and wages somewhat more changes in the outlook requiring policy action were rapidly even in the context of some continuing viewed as unlikely in the relatively short period Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

126 Federal Reserve Bulletin • February 1994 until the next scheduled meeting on December 21. in accordance with the following domestic policy One member expressed the differing view that a directive: less accommodative policy would be more consistent over time with the Committee's desire to foster The information reviewed at this meeting suggests sustained economic expansion and progress toward some strengthening in the expansion of economic activity in recent months. Total nonfarm payroll employment price stability. However, this member also felt that rose appreciably in September and October, while the a policy tightening move at this time might be seen civilian unemployment rate edged up to 6.8 percent in as a response to a stronger economy, rather than an October. Industrial production increased sharply in Octoaction that clearly was intended to underscore the ber, partly reflecting a continuing rebound in the output Committee's commitment to price stability and of motor vehicles. Retail sales were up substantially in October after changing little in September. Housing therefore would elicit a favorable response in activity picked up further in the third quarter. The expanintermediate- and long-term debt markets. sion of business capital spending has slowed from a With regard to financial developments bearing robust pace earlier in the year. The nominal U.S. merchandise trade deficit in July-August was about on the economic outlook and the potential need unchanged from its average rate in the second quarter. to adjust monetary policy, members observed that Consumer prices have increased moderately on balance the broader money and credit aggregates had in recent months and producer prices have fallen. strengthened somewhat since earlier in the year, Most interest rates have increased somewhat since though to still relatively moderate growth rates. the Committee meeting on September 21. In foreign Moreover, much of the acceleration in M2 and exchange markets, the trade-weighted value of the dollar M3 could be attributed to special or temporary in terms of the other G-10 currencies appreciated over the intermeeting period. factors, and according to a staff analysis growth Growth of M2 picked up slightly on balance in Sepin these aggregates was likely to revert to relatember and October, while M3 strengthened to a sometively slow rates in coming months, assuming what greater extent over the two months. For the year unchanged reserve conditions. At the same time, through October, M2 and M3 are estimated to have growth in Ml and reserves had remained compara- grown at rates a little above the lower end of the Committee's ranges for the year. Total domestic nonfinancial tively rapid and in one view such growth might debt has expanded at a moderate rate in recent months, well be indicative of an overly stimulative moneand for the year through August it is estimated to have tary policy that would promote more inflation over increased at a rate in the lower half of the Committee's time or at least prove inconsistent with further monitoring range. disinflation. The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability At the conclusion of the Committee's discussion, and promote sustainable growth in output. In furtherance all the members indicated their support of a direcof these objectives, the Committee at its meeting in July tive that called for maintaining the existing degree lowered the ranges it had established in February for of pressure on reserve positions and that did not growth of M2 and M3 to ranges of 1 to 5 percent and include a presumption about the likely direction of 0 to 4 percent respectively, measured from the fourth quarter of 1992 to the fourth quarter of 1993. The any adjustment to policy during the intermeeting Committee anticipated that developments contributing to period. Accordingly, in the context of the Commitunusual velocity increases would persist over the baltee's long-run objectives for price stability and ance of the year and that money growth within these sustainable economic growth, and giving careful lower ranges would be consistent with its broad policy consideration to economic, financial, and monetary objectives. The monitoring range for growth of total domestic nonfinancial debt also was lowered to 4 to developments, the Committee decided that slightly 8 percent for the year. For 1994, the Committee agreed greater or slightly lesser reserve restraint might be on tentative ranges for monetary growth, measured from acceptable during the intermeeting period. The the fourth quarter of 1993 to the fourth quarter of 1994, reserve conditions contemplated at this meeting of 1 to 5 percent for M2 and 0 to 4 percent for M3. The were expected to be consistent with modest growth Committee provisionally set the monitoring range for growth of total domestic nonfinancial debt at 4 to 8 perin M2 and M3 over coming months. cent for 1994. The behavior of the monetary aggregates At the conclusion of the meeting, the Federal will continue to be evaluated in the light of progress Reserve Bank of New York was authorized and toward price level stability, movements in their velocidirected, until instructed otherwise by the Commit- ties, and developments in the economy and financial markets. tee, to execute transactions in the System Account Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee Meeting 127 In the implementation of policy for the immediate The information for all past meetings and many future, the Committee seeks to maintain the existing of the intermeeting telephone consultations was degree of pressure on reserve positions. In the context of contained in unedited transcripts that had been the Committee's long-run objectives for price stability preserved by the FOMC Secretariat since March and sustainable economic growth, and giving careful 1976. Virtually all the tapes from which these consideration to economic, financial, and monetary developments, slightly greater reserve restraint or transcripts were typed had been reused to record slightly lesser reserve restraint might be acceptable in subsequent meetings, and very few tapes currently the intermeeting period. The contemplated reserve con- existed for meetings before September 1993. ditions are expected to be consistent with modest growth In the course of the Committee's discussion, in M2 and M3 over coming months. members observed that the purpose of the tran- Votes for this action: Messrs. Greenspan, McDon- scripts had been to assist the FOMC Secretariat in ough, Angell, Boehne, Keehn, Kelley, La Ware, Lind- the preparation of minutes that reported the ecosey, McTeer, Mullins, Ms. Phillips, and Mr. Stern. nomic and monetary policy discussions and were Votes against this action: None. released after the next meeting. As a result, the transcripts for past meetings had never been edited The Committee approved a temporary increase nor had they been checked by meeting participants of $3 billion, to a level of $11 billion, in the limit for accuracy. It was clear from even a casual on changes between Committee meetings in perusal that at times the transcripts failed for vari- System Account holdings of U.S. government and ous reasons to convey an intelligible account of federal agency securities. The increase amended members' comments, and on occasion they even paragraph 1(a) of the Authorization for Domestic misstated the views that had been expressed. More- Open Market Operations and was effective for the over, most participants at these meetings had not intermeeting period ending with the close of busibeen aware until recently that the transcripts had ness on December 21, 1993. been preserved and that they could at some point be made public. Their release at this time would Votes for this action: Messrs. Greenspan, McDonrepresent a sharp break with past practice and ough, Angell, Boehne, Keehn, Kelley, LaWare, Lindsey, McTeer, Mullins, Ms. Phillips, and Mr. Stern. would raise an issue of fairness to participants at Votes against this action: None. earlier meetings of the Committee. The members generally agreed that their reservations about releasing the transcripts could be miti- RELEASE OF INFORMATION gated through appropriate safeguards such as with- ABOUT FOMC MEETINGS holding particularly sensitive materials and providing for a considerable lapse of time after At this meeting the Committee considered a num- Committee meetings. They noted in this connecber of alternatives for releasing detailed informa- tion that, while there was no legal requirement to tion on its deliberations at past and future meetings. prepare transcripts, the substance of existing tran- Members emphasized that the most important con- scripts needed to be preserved in accordance with sideration was the preservation of a deliberative the Federal Records Act. With regard to the manprocess that would enable the Committee to arrive ner in which the information might be made public, at the best possible monetary policy decisions. the Committee considered several alternatives in- Premature release of detailed information, such as cluding making available the unedited transcripts transcripts, would sharply curtail the Committee's themselves, or lightly edited versions of the tranability to freely discuss evolving economic and scripts, or Memoranda of Discussion comparable financial trends and alternative policy responses. to those prepared for meetings before late March Moreover, if full transcripts were subject to release 1976. The members expressed varying preferences before many years had passed, much vital informa- among these alternatives. Some proposed that martion obtained in confidence could not be discussed ginal notations be included with raw or edited in meetings and in any event probably would not transcripts to provide staff explanations or interprebe made available by foreign central banks, busi- tations of unclear or evidently mistranscribed comness firms, and other sources. ments. It was understood that preparation of edited Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

128 Federal Reserve Bulletin • February 1994 transcripts and especially Memoranda of Discus- ongoing deliberations. The other members indision would require a considerable amount of time cated that a five-year lag was acceptable because it and effort before they would be ready for public represented a reasonable balance among the various release. A majority favored the release of lightly considerations. edited transcripts that would retain all substantive At the conclusion of this discussion, the memcomments but would allow for grammatical correc- bers agreed unanimously to authorize the preparations, the smoothing of some sentences to facilitate tion of lightly edited transcripts of past meetings the understanding, and the correction of obvious and available telephone conferences since late transcription errors. The editing would be patterned March 1976 and to release such transcripts to the after that done for congressional hearings; impor- public five years after the meetings, subject to the tantly, no changes would be made in the substance redaction of especially sensitive materials as authoor the intent of the speakers. Before release to the rized by the Freedom of Information Act. It was public, particularly sensitive materials would be understood that the transcripts for the meetings redacted in accordance with the provisions of the held during 1988 would be edited on a priority Freedom of Information Act. The Committee basis and released as soon as possible. Providing agreed that the FOMC Secretariat should be given copies of unedited transcripts for all past meetings responsibility for the editing process and that the and available conference calls to the Chairman or Committee itself would not undertake to review staff of the House Banking Committee in response these transcripts. It was noted in this respect that to a request was not approved by the Committee. many former members of the Committee were no The members reviewed various options for the longer available to review their comments and that release of information about the Committee's delibin any event the passage of time would make it erations at future meetings. These options included impossible for members to recall precisely what continuing the preparation of the minutes in their they had said or to verify many of their comments. current form, which members regarded as provid- Accordingly, the edited transcripts could not be ing a complete account of the substance of the regarded as official records of the Committee. Committee's deliberations. Some urged that con- With respect to the interval between a meeting sideration be given to supplementing the minutes and release of a lightly edited transcript, all of the with the prompt release after each meeting of infor- Committee members were concerned that the mation about Committee decisions. Among other absence of a substantial lag would seriously harm options considered were an expanded version of the Committee's ongoing deliberative process. the current minutes and the release, after an appro- Many also commented that the absence of a sub- priate lag, of a lightly edited transcript or a Memostantial lag would be unfair to meeting partici- randum of Discussion for each meeting. The mempants who had been unaware that their remarks bers concluded that the complexity of the issues would be released and were unable to review the reflected in these alternatives warranted further transcripts for accuracy. Various members argued review by the Committee and accordingly a decifor lags that ranged from three years to ten years or sion was deferred. It was agreed that the Commitmore, but a majority felt that a five-year lag was tee would continue its discussion of these issues at necessary to prevent harm to the Committee's a special meeting during December. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

129 Legal Developments FINAL RULE—AMENDMENT TO REGULATION A gard to the basic objectives of monetary policy and the maintenance of a sound and orderly financial system. The Board of Governors is amending 12 C.F.R. Part 201, its Regulation A (Extensions of Credit by Federal Section 201.2—Definitions. Reserve Banks) to implement section 142 of the Federal Deposit Insurance Corporation Improvement Act For purposes of this part, the following definitions of 1991 ("FDICIA"), which amends section 10B of the shall apply: Federal Reserve Act ("FRA") in order to discourage (a) Appropriate Federal banking agency has the same advances, under that section, to undercapitalized and meaning as in section 3 of the FDI Act (12 U.S.C. critically undercapitalized depository institutions. 1813(q)). Effective January 30, 1994, 12 C.F.R. Part 201 is (b) Critically undercapitalized insured depository inamended as follows: stitution means any insured depository institution as defined in section 3 of the FDI Act (12 U.S.C. Part 201—Extensions of Credit by Federal 1813(c)(2)) that is deemed to be critically undercapi- Reserve Banks (Regulation A) talized under section 38 of the FDI Act (12 U.S.C. 18310(b)(1)(E)) and the implementing regulations. 1. The authority citation for part 201 is revised to read (c) (1) Depository institution means an institution that as follows: maintains reservable transaction accounts or nonpersonal time deposits and is: Authority: 12 U.S.C. 343 et seq. 347a, 347b, 347c, (i) An insured bank as defined in section 3 of the 347d, 348 et seq. 374, 374a and 461. FDI Act (12 U.S.C. 1813(h)) or a bank which is eligible to make application to become an insured 2. Sections 201.1 through 201.6 are revised and sec- bank under section 5 of such Act (12 U.S.C. tions 201.7 through 201.9 are added to read as follows: 1815); (ii) A mutual savings bank as defined in section 3 Section 201.1—Authority, scope and purpose. of the FDI Act (12 U.S.C. 1813(f)) or a bank which is eligible to make application to become an (a) Authority and scope. This part is issued under the insured bank under section 5 of such Act authority of sections 10A, 10B, 13, 13A, and 19 of the (12 U.S.C. 1815); FRA (12 U.S.C. 347a, 347b, 343 et seq. 347c, 348 (iii) A savings bank as defined in section 3 of the et seq. 374, 374a, and 461), other provisions of the FDI Act (12 U.S.C. 1813(g)) or a bank which is FRA, and section 7(b) of the International Banking eligible to make application to become an insured Act of 1978 (12 U.S.C. 347d) and relates to extensions bank under section 5 of such Act (12 U.S.C. of credit by Federal Reserve Banks to depository 1815); institutions and others. (iv) An insured credit union as defined in section (b) Purpose. This part establishes rules under which 101 of the Federal Credit Union Act (12 U.S.C. Federal Reserve Banks may extend credit to deposi- 1752(7)) or a credit union which is eligible to make tory institutions and others. Extending credit to de- application to become an insured credit union pository institutions to accommodate commerce, in- pursuant to section 201 of such Act (12 U.S.C. dustry, and agriculture is a principal function of 1781); Federal Reserve Banks. While open market operations (v) A member as defined in section 2 of the are the primary means of affecting the overall supply Federal Home Loan Bank Act (12 U.S.C. of reserves, the lending function of the Federal Re- 1422(4)); or serve Banks is an effective method of supplying re- (vi) A savings association as defined in section 3 serves to meet the particular credit needs of individual of the FDI Act (12 U.S.C. 1813(b)) which is an depository institutions. The lending functions of the insured depository institution as defined in section Federal Reserve System are conducted with due re- 3 of the Act (12 U.S.C. 1813(c)(2)) or is eligible to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

130 Federal Reserve Bulletin • February 1994 apply to become an insured depository institution of the periods specified in paragraphs (d)(1) and (2) under section 5 of the Act (12 U.S.C. 1815(a)). of this section. (2) The term depository institution does not include (g) Transaction account and nonpersonal time deposit a financial institution that is not required to maintain have the meanings specified in Regulation D (12 reserves under Regulation D (12 CFR Part 204) C.F.R. Part 204). because it is organized solely to do business with (h) Undercapitalized insured depository institution other financial institutions, is owned primarily by means any insured depository institution as defined in the financial institutions with which it does business, section 3 of the FDI Act (12 U.S.C. 1813(c)(2)) that: and does not do business with the general public. (1) Is not a critically undercapitalized insured depos- (d) Liquidation loss means the loss that any deposit itory institution; and insurance fund in the FDIC would have incurred if the (2) (i) Is deemed to be undercapitalized under FDIC had liquidated the institution: section 38 of the FDI Act (12 U.S.C. (1) In the case of an undercapitalized insured depos- 18310(b)(1)(C)) and the implementing regulations; itory institution, as of the end of the later of: or (i) Sixty days: (ii) Has received from its appropriate Federal (A) In any 120-day period; banking agency a composite CAMEL rating of 5 (B) During which the institution was an under- under the Uniform Financial Institutions Rating capitalized insured depository institution; and System (or an equivalent rating by its appropriate (C) During which advances or discounts were Federal banking agency under a comparable ratoutstanding to the depository institution from ing system) as of the most recent examination of any Federal Reserve Bank; or such institution. (ii) The 60 calendar day period following the (i) Viable, with respect to a depository institution, receipt by a Federal Reserve Bank of a written means that the Board of Governors or the approcertification from the Chairman of the Board of priate Federal banking agency has determined, Governors or the head of the appropriate Federal giving due regard to the economic conditions and banking agency that the institution is viable. circumstances in the market in which the institu- (2) In the case of a critically undercapitalized in- tion operates, that the institution is not critically sured depository institution, as of the end of the undercapitalized, is not expected to become crit- 5-day period beginning on the date the institution ically undercapitalized, and is not expected to be became a critically undercapitalized insured depos- placed in conservatorship or receivership. Alitory institution. though there are a number of criteria that may be (e) Increased loss means the amount of loss to any used to determine viability, the Board of Goverdeposit insurance fund in the FDIC that exceeds the nors believes that ordinarily an undercapitalized liquidation loss due to: insured depository institution is viable if the ap- (1) An advance under section 10B(l)(a) of the FRA propriate Federal banking agency has accepted a that is outstanding to an undercapitalized or criti- capital restoration plan for the depository institucally undercapitalized insured depository institution tion under 12 U.S.C. 1831o(e)(2) and the deposiwithout payment having been demanded as of the tory institution is complying with that plan. end of the periods specified in paragraphs (d)(1) and (2) of this section; or Section 201.3—Availability and terms. (2) An advance under section 10B(l)(a) of the Federal Reserve Act that is made after the end of such (a) Adjustment credit. Federal Reserve Banks extend periods. adjustment credit on a short-term basis to depository (f) Excess loss means the lesser of the increased loss or institutions to assist in meeting temporary requirethat portion of the increased loss equal to the lesser of: ments for funds or to cushion more persistent short- (1) The loss the Board of Governors or any Federal falls of funds pending an orderly adjustment of a Reserve Bank would have incurred on the amount borrowing institution's assets and liabilities. Such by which advances under section 10B(l)(a) exceed credit generally is available only for appropriate purthe amount of advances outstanding at the end of the poses and after reasonable alternative sources of funds periods specified in paragraphs (d)(1) and (2) of this have been fully used, including credit from special section if those increased advances had been unse- industry lenders such as Federal Home Loan Banks, cured; or the National Credit Union Administration's Central Liquidity Facility, and corporate central credit unions. (2) The interest received on the amount by which the Adjustment credit is usually granted at the basic advances under section 10B(l)(a) exceed the discount rate, but under certain circumstances a speamount of advances outstanding, if any, at the end Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 131 cial rate or rates above the basic discount rate may be guaranteed as to principal and interest by, the United applied. States or an agency thereof, an affirmative vote of five (b) Seasonal credit. Federal Reserve Banks extend or more members of the Board of Governors is reseasonal credit for periods longer than those permitted quired before credit may be extended. under adjustment credit to assist smaller depository institutions in meeting regular needs for funds arising Section 201.4—Limitations on availability and from expected patterns of movement in their deposits assessments. and loans. A special rate or rates at or above the basic discount rate may be applied to seasonal credit. (a) Advances to or discounts for undercapitalized (1) Seasonal credit is only available if: insured depository institutions. A Federal Reserve (i) The depository institution's seasonal needs Bank may make or have outstanding advances to or exceed a threshold that the institution is expected discounts for a depository institution that it knows to to meet from other sources of liquidity (this be an undercapitalized insured depository institution, threshold is calculated as certain percentages, only: established by the Board of Governors, of the (1) If, in any 120-day period, advances or discounts institution's average total deposits in the preced- from any Federal Reserve Bank to that depository ing calendar year); institution are not outstanding for more than 60 days (ii) The Federal Reserve Bank is satisfied that the during which the institution is an undercapitalized institution's qualifying need for funds is seasonal insured depository institution; or and will persist for at least four weeks; and (2) During the 60 calendar days after the receipt of a (iii) Similar assistance is not available from special written certification from the Chairman of the Board industry lenders. of Governors or the head of the appropriate Federal (2) The Board may establish special terms for sea- banking agency that the borrowing depository instisonal credit when depository institutions are expe- tution is viable; or riencing unusual seasonal demands for credit in a (3) After consultation with the Board of Governors.1 period of liquidity strain. (b) Advances to or discounts for critically undercapi- (c) Extended credit. Federal Reserve Banks extend talized insured depository institutions. A Federal Recredit to depository institutions under extended credit serve Bank may make or have outstanding advances to arrangements where similar assistance is not reason- or discounts for a depository institution that it knows ably available from other sources, including special to be a critically undercapitalized insured depository industry lenders. Such credit may be provided where institution only: there are exceptional circumstances or practices af- (1) During the 5-day period beginning on the date the fecting a particular depository institution including institution became a critically undercapitalized insustained deposit drains, impaired access to money sured depository institution; or market funds, or sudden deterioration in loan repay- (2) After consultation with the Board of Governors.2 ment performance. Extended credit may also be pro- (c) Assessments. The Board of Governors will assess vided to accommodate the needs of depository insti- the Federal Reserve Banks for any amount that it pays tutions, including those with longer term asset to the FDIC due to any excess loss. Each Federal portfolios, that may be experiencing difficulties adjust- Reserve Bank shall be assessed that portion of the ing to changing money market conditions over a longer amount that the Board of Governors pays to the FDIC period, particularly at times of deposit disintermedia- that is attributable to an extension of credit by that tion. A special rate or rates above the basic discount Federal Reserve Bank, up to one percent of its capital rate may be applied to extended credit. as reported at the beginning of the calendar year in (d) Emergency credit for others. In unusual and exi- which the assessment is made. The Board of Govergent circumstances, a Federal Reserve Bank may, nors will assess all of the Federal Reserve Banks for after consultation with the Board of Governors, ad- the remainder of the amount it pays to the FDIC in the vance credit to individuals, partnerships, and corpora- ratio that the capital of each Federal Reserve Bank tions that are not depository institutions if, in the bears to the total capital of all Federal Reserve Banks judgment of the Federal Reserve Bank, credit is not at the beginning of the calendar year in which the available from other sources and failure to obtain such credit would adversely affect the economy. The rate applicable to such credit will be above the highest rate 1. In unusual circumstances, when prior consultation with the in effect for advances to depository institutions. Board is not possible, a Federal Reserve Bank should consult with the Where the collateral used to secure such credit con- Board as soon as possible after extending credit that requires consultation under this paragraph. sists of assets other than obligations of, or fully 2. See footnote 1 in section 201.4(a)(3). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

132 Federal Reserve Bulletin • February 1994 assessment is made, provided, however, that if any (d) Indirect credit for others. No depository institution assessment exceeds 50 percent of the total capital and shall act as the medium or agent of another depository surplus of all Federal Reserve Banks, whether to institution in receiving Federal Reserve credit except distribute the excess over such 50 percent shall be with the permission of the Federal Reserve Bank made at the discretion of the Board of Governors, extending credit. (d) Information. Before extending credit a Federal Reserve Bank should ascertain if an institution is an Section 201.7—Branches and agencies. undercapitalized insured depository institution or a critically undercapitalized insured depository institu- (a) Except as may be otherwise provided, this part tion. shall be applicable to United States branches and agencies of foreign banks subject to reserve require- Section 201.5—Advances and discounts. ments under Regulation D (12 C.F.R. Part 204) in the same manner and to the same extent as depository (a) Federal Reserve Banks may lend to depository institutions. institutions either through advances secured by acceptable collateral or through the discount of certain Section 201.8—Federal Intermediate Credit types of paper. Credit extended by the Federal Re- Banks. serve Banks generally takes the form of an advance. (b) Federal Reserve Banks may make advances to any (a) A Federal Reserve Bank may discount for any depository institution if secured to the satisfaction of Federal Intermediate Credit Bank agricultural paper or the Federal Reserve Bank. Satisfactory collateral gen- notes payable to and bearing the endorsement of the erally includes United States government and Federal Federal Intermediate Credit Bank that cover loans or agency securities, and, if of acceptable quality, mort- advances made under subsections (a) and (b) of secgage notes covering 1-4 family residences, State and tion 2.3 of the Farm Credit Act of 1971 (12 U.S.C. local government securities, and business, consumer 2074) and that are secured by paper eligible for disand other customer notes. count by Federal Reserve Banks. Any paper so dis- (c) If a Federal Reserve Bank concludes that a depos- counted shall have a period remaining to maturity at itory institution will be better accommodated by the the time of discount of not more than nine months. discount of paper than by an advance, it may discount any paper endorsed by the depository institution that Section 201.9—No obligation to make advances meets the requirements specified in the FRA. or discounts. Section 201.6—General requirements. (a) A Federal Reserve Bank shall have no obligation to make, increase, renew, or extend any advance or (a) Credit for capital purposes. Federal Reserve credit discount to any depository institution. is not a substitute for capital. (b) Compliance with law and regulation. All credit extended under this part shall comply with applicable 3. In sections 201.108 and 201.109, footnotes 1, la, 2, requirements of law and of this part. Each Federal and 3 are redesignated as footnotes 3, 4, 5, and 6, Reserve Bank: respectively. (1) Shall keep itself informed of the general character and amount of the loans and investments of depository institutions with a view to ascertaining FINAL RULE—AMENDMENTS TO REGULATIONS whether undue use is being made of depository HAND Y institution credit for the speculative carrying of or trading in securities, real estate, or commodities, or The Board of Governors is amending 12 C.F.R. Parts for any other purpose inconsistent with the mainte- 208 and 225, its Regulations H and Y (Capital; Capital nance of sound credit conditions; and Adequacy Guidelines). The Board is amending its (2) Shall consider such information in determining risk-based capital guidelines for state member banks whether to extend credit. and bank holding companies. This final rule imple- (c) Information. A Federal Reserve Bank shall require ments section 618(b) of the Resolution Trust Corporaany information it believes appropriate or desirable to tion Refinancing, Restructuring, and Improvement Act insure that paper tendered as collateral for advances or of 1991 and section 305(b)(1)(B) of the Federal Deposit for discount is acceptable and that the credit provided Insurance Corporation Improvement Act of 1991. The is used in a manner consistent with this part. effect of the final rule will be to permit state member Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 133 banks and bank holding companies to lower from 100 criteria.36 Loans included in this category must have percent to 50 percent the risk weight assigned to been made in accordance with prudent underwriting certain multifamily housing loans. standards;37 be performing in accordance with their Effective December 31, 1993, 12 C.F.R. Parts 208 original terms; and not be 90 days or more past due or and 225 are amended as follows: carried in nonaccrual status. The following additional criteria must also be applied to a loan secured by a Part 208—Membership of State Banking multifamily residential property that is included in this Institutions in the Federal Reserve System category: all principal and interest payments on the (Regulation H) loan must have been made on time for at least the year preceding placement in this category, or in the case 1. The authority citation for part 208 continues to read where the existing property owner is refinancing a loan as follows: on that property, all principal and interest payments on the loan being refinanced must have been made on Authority: 12 U.S.C. 36, 248(a) and (c), 321-338, 461, time for at least the year preceding placement in this 481-486, 601, 611, 1814, 18230), 1831o, 1831p-l, 3906- category; amortization of the principal and interest 3909, 3310, 3331-3351; 15 U.S.C. 78b, 78o-4(c)(5), 78q, must occur over a period of not more than 30 years and 78q-l, 78w, 781(b), 781(i), and 1781(g). the minimum original maturity for repayment of principal must not be less than 7 years; and the annual net 2. Appendix A to part 208 is amended by revising the operating income (before debt service) generated by first paragraph of section III.C.3., and Category 3 the property during its most recent fiscal year must not Item 1. of Attachment III to read as follows: be less than 120 percent of the loan's current annual debt service (115 percent if the loan is based on a Appendix A to Part 208—[Amended] floating interest rate) or, in the case of a cooperative or other not-for-profit housing project, the property must generate sufficient cash flow to provide comparable protection to the institution. Also included in this III. Procedures for Computing Weighted Risk category are privately-issued mortgage-backed securi- Assets and Off-Balance Sheet Items ties provided that: (1) The structure of the security meets the criteria described in section 111(B)(3) above; C. Risk Weights (2) If the security is backed by a pool of conventional mortgages, on 1- to 4-family residential or multifamily residential properties, each underlying 3. Category 3:50 percent. This category includes loans mortgage meets the criteria described above in this fully secured by first liens34 on 1- to 4-family residential properties, either owner-occupied or rented, or on multifamily residential properties,35 that meet certain with sales of multifamily housing loans in which the purchaser of a loan shares in any loss incurred on the loan with the selling institution on other than a pro rata basis, these other loss sharing arrangements are taken into account for purposes of determining the extent to which 34. If a bank holds the first and junior liens(s) on a residential such loans are treated by the selling bank as sold (and excluded from property and no other party holds an intervening lien, the transaction balance sheet assets) under the risk-based capital framework in the is treated as a single loan secured by a first lien for the purpose of same manner as prescribed for reporting purposes in the instructions determining the loan-to-value ratio. to the Call Report. 35. Loans that qualify as loans secured by 1- to 4-family residential 36. Residential property loans that do not meet all the specified properties or multifamily residential properties are listed in the criteria or that are made for the purpose of speculative property instructions to the commercial bank Call Report. In addition, for development are placed in the 100 percent risk category. risk-based capital purposes, loans secured by 1- to 4-family residential 37. Prudent underwriting standards include a conservative ratio of properties include loans to builders with substantial project equity for the current loan balance to the value of the property. In the case of a the construction of 1- to 4-family residences that have been presold loan secured by multifamily residential property, the loan-to-value under firm contracts to purchasers who have obtained firm commit- ratio is not conservative if it exceeds 80 percent (75 percent if the loan ments for permanent qualifying mortgage loans and have made is based on a floating interest rate). Prudent underwriting standards substantial earnest money deposits. also dictate that a loan-to-value ratio used in the case of originating a The instructions to the Call Report also discuss the treatment of loan to acquire a property would not be deemed conservative unless loans, including multifamily housing loans, that are sold subject to a the value is based on the lower of the acquisition cost of the property pro rata loss sharing arrangement. Such an arrangement should be or appraised (or if appropriate, evaluated) value. Otherwise, the treated by the selling bank as sold (and excluded from balance sheet loan-to-value ratio generally would be based upon the value of the assets) to the extent that the sales agreement provides for the property as determined by the most current appraisal, or if appropripurchaser of the loan to share in any loss incurred on the loan on a pro ate, the most current evaluation. All appraisals must be made in a rata basis with the selling bank. In such a transaction, from the manner consistent with the Federal banking agencies' real estate standpoint of the selling bank, the portion of the loan that is treated as appraisal regulations and guidelines and with the bank's own appraisal sold is not subject to the risk-based capital standards. In connection guidelines. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

134 Federal Reserve Bulletin • February 1994 section for eligibility for the 50 percent risk category III. Procedures for Computing Weighted Risk at the time the pool is originated; Assets and Off-Balance Sheet Items (3) If the security is backed by privately-issued mortgage-backed securities, each underlying security qualifies for the 50 percent risk category; and C. Risk Weights (4) If the security is backed by a pool of multifamily residential mortgages, principal and interest payments on the security are not 30 days or more past 3. Category 3:50 percent. This category includes loans due. fully secured by first liens37 on 1- to 4-family residential properties, either owner-occupied or rented, or on Privately-issued mortgage-backed securities that do multifamily residential properties,38 that meet certain not meet these criteria or that do not qualify for a criteria.39 Loans included in this category must have lower risk weight are generally assigned to the been made in accordance with prudent underwriting 100 percent risk category. standards;40 be performing in accordance with their original terms; and not be 90 days or more past due or carried in nonaccrual status. The following additional criteria must also be applied to a loan secured by a multifamily residential property that is included in this Attachment III—Summary of Risk Weights and category: all principal and interest payments on the Risk Categories for State Member Banks loan must have been made on time for at least the year preceding placement in this category, or in the case where the existing property owner is refinancing a loan Category 3: 50 Percent on that property, all principal and interest payments 1. Loans fully secured by first liens on 1- to 4-family on the loan being refinanced must have been made on residential properties or on multifamily residential time for at least the year preceding placement in this properties that have been made in accordance with category; amortization of the principal and interest prudent underwriting standards, that are performing in must occur over a period of not more than 30 years and accordance with their original terms, that are not past the minimum original maturity for repayment of prindue or in nonaccrual status, and that meet other cipal must not be less than 7 years; and the annual net qualifying criteria, and certain privately-issued mortoperating income (before debt service) generated by gage-backed securities representing indirect ownership of such loans. (Loans made for speculative purposes are excluded.) 37. If a banking organization holds the first and junior lien(s) on a residential property and no other party holds an intervening lien, the transaction is treated as a single loan secured by a first lien for the purpose of determining the loan-to-value ratio. 38. Loans that qualify as loans secured by 1- to 4-family residential Part 225—Bank Holding Companies and properties or multifamily residential properties are listed in the Change in Bank Control (Regulation Y) instructions to the FR Y-9C Report. In addition, for risk-based capital purposes, loans secured by 1- to 4-family residential properties include loans to builders with substantial project equity for the 1. The authority citation for part 225 continues to read construction of 1- to 4-family residences that have been presold under firm contracts to purchasers who have obtained firm commitments for as follows: permanent qualifying mortgage loans and have made substantial earnest money deposits. Authority: 12 U.S.C. 1817(j)(13), 1818, 1831i, 1831p-l, 39. Residential property loans that do not meet all the specified criteria or that are made for the purpose of speculative property 1843(c)(8), 1844(b), 1972(1), 3106, 3108, 3907, 3909, development are placed in the 100 percent risk category. 3310, and 3331-3351. 40. Prudent underwriting standards include a conservative ratio of the current loan balance to the value of the property. In the case of a loan secured by multifamily residential property, the loan-to-value 2. Appendix A to part 225 is amended by revising the ratio is not conservative if it exceeds 80 percent (75 percent if the loan first paragraph of section III.C.3., footnote 48 in is based on a floating interest rate). Prudent underwriting standards also dictate that a loan-to-value ratio used in the case of originating a section III.D.l., and Category 3 Item 1. of Attachment loan to acquire a property would not be deemed conservative unless III to read as follows: the value is based on the lower of the acquisition cost of the property or appraised (or if appropriate, evaluated) value. Otherwise, the loan-to-value ratio generally would be based upon the value of the property as determined by the most current appraisal, or if appropri- Appendix A to Part 225—[Amended] ate, the most current evaluation. All appraisals must be made in a manner consistent with the Federal banking agencies' real estate appraisal regulations and guidelines and with the banking organization's own appraisal guidelines. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 135 the property during its most recent fiscal year must not Attachment III—Summary of Risk Weights and be less than 120 percent of the loan's current annual Risk Categories for Bank Holding Companies debt service (115 percent if the loan is based on a floating interest rate) or, in the case of a cooperative or other not-for-profit housing project, the property must Category 3: 50 Percent generate sufficient cash flow to provide comparable 1. Loans fully secured by first liens on 1-to 4-family protection to the institution. Also included in this residential properties or on multifamily residential category are privately-issued mortgage-backed securiproperties that have been made in accordance with ties provided that: prudent underwriting standards, that are performing in (1) The structure of the security meets the criteria accordance with their original terms, that are not past described in section 111(B)(3) above; due or in nonaccrual status, and that meet other (2) If the security is backed by a pool of convenqualifying criteria, and certain privately-issued morttional mortgages, on 1-to 4-family residential or gage-backed securities representing indirect ownermultifamily residential properties, each underlying ship of such loans. (Loans made for speculative purmortgage meets the criteria described above in this poses are excluded.) section for eligibility for the 50 percent risk category at the time the pool is originated; (3) If the security is backed by privately-issued mortgage-backed securities, each underlying secu- FINAL RULE—AMENDMENT TO RULES rity qualifies for the 50 percent risk category ; and REGARDING DELEGATION OF AUTHORITY (4) If the security is backed by a pool of multifamily residential mortgages, principal and interest pay- The Board of Governors is amending 12 C.F.R. Part ments on the security are not 30 days or more past 265, its Rules Regarding Delegation of Authority, for due. determining inconsistencies between state and federal laws to authorize the Director of the Division of Privately-issued mortgage-backed securities that do Consumer and Community Affairs to make such denot meet these criteria or that do not qualify for terminations for the Truth in Savings Act and Regulaa lower risk weight are generally assigned to the tion DD. 100 percent risk category. Effective December 3, 1993, 12 C.F.R. Part 265 is amended as follows: D. Off-Balance Sheet Items Part 265—Rules Regarding Delegation of Authority J * * *48 1. The authority citation for Part 265 continues to read as follows: Authority: 12 U.S.C. 248(i) and (k). 48. In regulatory reports and under GAAP, bank holding companies are permitted to treat some asset sales with recourse as "true" sales. For risk-based capital purposes, however, such assets sold with 2. Section 265.9 is amended by adding a new pararecourse and reported as "true" sales by bank holding companies are graph (c)(5) to read as follows: converted at 100 percent and assigned to the risk category appropriate to the underlying obligor or, if relevant the guarantor or nature of the collateral, provided that the transactions meet the definition of assets sold with recourse (including assets sold subject to pro rata and other loss sharing arrangements), that is contained in the instructions to the commercial bank Consolidated Reports of Condition and Income (Call Section 265.9—Functions delegated to the Report). This treatment applies to any assets, including the sale of Director of the Division of Consumer and 1-to 4-family and multifamily residential mortgages, sold with re- Community Affairs. course. Accordingly, the entire amount of any assets transferred with recourse that are not already included on the balance sheet, including pools of 1- to 4-family residential mortgages, are to be converted at 100 percent and assigned to the risk category appropriate to the obligor, or if relevant, the nature of any collateral or guarantees. The only exception involves transfers of pools of residential mortgages that (5) Section 273 of the Truth in Savings Act have been made with insignificant recourse for which a liability or (12 U.S.C. 4312) and Regulation DD (12 C.F.R. specific non-capital reserve has been established and is maintained for the maximum amount of possible loss under the recourse provision. Part 230). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

136 Federal Reserve Bulletin • February 1994 ORDERS ISSUED UNDER BANK HOLDING tions in the District of Columbia.3 Sequoia Savings, COMPANY ACT with assets of $95.3 million, is the 35th largest thrift organization in Maryland, controlling approximately Orders Issued Under Section 3 of the Bank $89 million in deposits, representing less than 1 per- Holding Company Act cent of total deposits in thrift organizations in Maryland. Upon consummation of the proposal, CIB would Credit International Bancshares, LTD. become the 43d largest commercial banking organiza- Washington, D.C. tion in Maryland, controlling approximately $89 million in deposits, representing less than 1 percent of the Order Approving the Acquisition of a Bank total deposits in commercial banks in Maryland. Credit International Bancshares, LTD., Washington, Douglas Amendment Analysis D.C. ("CIB"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Section 3(d) of the BHC Act ("Douglas Amendment") Act"), has applied under section 3 of the BHC Act prohibits a bank holding company from acquiring a (12 U.S.C. § 1842) to acquire all the voting shares of bank outside of its home state4 "unless the acquisition Sequoia National Bank, Bethesda, Maryland ("Se- of ... a State bank by an out-of-State bank holding quoia Bank").1 Sequoia Bank will be formed as suc- company is specifically authorized by the statute laws cessor to Sequoia Federal Savings Bank, Bethesda, of the State in which such bank is located, by language Maryland ("Sequoia Savings") by merger with Se- to that effect and not merely by implication."5 For quoia Bank pursuant to section 5(d)(2)(G) of the purposes of the Douglas Amendment, the home state Federal Deposit Insurance Act (12 U.S.C. of CIB is the District of Columbia, and the home state § 1815(d)(2)(G)).2 of Sequoia Savings is Maryland. The Board has pre- Notice of the proposal, affording interested persons viously determined that the interstate statutes of an opportunity to submit comments, has been pub- Maryland and the District of Columbia permit acquilished (58 Federal Register 49,514 and 49,515 (1993)). sitions of institutions located in the respective states.6 The time for filing comments has expired, and the Based on the foregoing and the other facts of record, Board has considered the proposal and all comments the Board has determined that approval of this proreceived in light of the factors set forth in section 3(c) posal is not prohibited by the Douglas Amendment.7 of the BHC Act. CIB, with total consolidated assets of $51.1 million, Competitive Considerations is the 15th largest commercial banking organization in the District of Columbia, controlling approximately CIB and Sequoia Savings compete directly in the $44.2 million in deposits, representing less than 1 per- Washington, D.C., banking market.8 Upon consumcent of total deposits in commercial banking organiza- mation of this proposal, CIB would become the 61st largest depository institution in the market, controlling deposits of $64.4 million, representing less than 1 percent of total deposits in depository institutions in the 1. In connection with the acquisition, SBI Voting Trust ("Trust"), a voting trust formed for the purpose of preserving certain tax benefits, has also filed notice pursuant to the Change in Bank Control Act ("CIBC Act") (12 U.S.C. § 1817(j)) to acquire up to 52 percent of the voting shares of CIB and thereby indirectly acquire Federal 3. Asset and deposit data are as of September 30, 1993. Capital Bank, N.A., Washington, D.C. ("Federal Capital"), a wholly 4. A bank holding company's home state is that state in which the owned subsidiary bank of CIB, and Sequoia Bank. Trust relates to the operations of the bank holding company's banking subsidiaries were shares of a single bank holding company, terminates within 25 years, principally conducted on July 1, 1966, or the date on which the engages in no other activity except to hold and vote the shares of CIB company became a bank holding company, whichever is later. The held in trust, and involves parties who are not participants in any operations of a bank holding company are considered principally similar voting trust or related agreement with respect to any other conducted in that state in which the total deposits of such banking bank or nonbank business. See 1 F.R.R.S. 4-185.5. Accordingly, subsidiaries are largest. Trust would not be considered a "company" within the meaning of 5. 12 U.S.C. § 1842(d). section 2(b) of the BHC Act. Based on all the facts of record, the 6. See James Madison, Ltd., 73 Federal Reserve Bulletin 129(1987); Board does not intend to disapprove the notice under the CIBC Act. Maryland National Corporation, 73 Federal Reserve Bulletin 310 2. This provision of the Financial Institutions Reform, Recovery, (1987). and Enforcement Act of 1989 permits a savings association to convert 7. See Md. Code Ann. Fin. Inst. § 5-1001 et seq.; D.C. Code Ann. to a bank charter provided the resulting bank remains a Savings § 26-801 et seq. The Maryland Bank Commissioner has indicated that Association Insurance Fund member. The Office of Thrift Supervision CIB's proposed acquisition is permitted by the relevant state banking has approved this conversion subject to other regulatory approval. statute. The Office of the Comptroller of the Currency has not yet acted on the 8. The Washington, D.C., banking market is defined as the Washapplication. The Board's action in this case is conditioned on the ington, D.C., Ranally Metropolitan Area, which is composed of the relevant companies' obtaining all necessary regulatory approvals for District of Columbia and the surrounding suburban areas of Maryland this transaction. and Virginia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 137 market.9 After considering the number of competitors The acquisition shall not be consummated before that would remain in the market and the relatively the thirtieth calendar day following the effective date small increase in concentration as measured by the of this order, or later than three months after the Herfindahl-Hirschman Index ("HHI"),10 the Board effective date of this order, unless such period is concludes that consummation of this proposal would extended for good cause by the Board or by the not result in a significantly adverse effect on competi- Federal Reserve Bank of Richmond, acting pursuant tion in the Washington, D.C., banking market or any to delegated authority. other relevant banking market. By order of the Board of Governors, effective Based on all the facts of record, including all the December 20, 1993. representations and commitments made in connection with this proposal, the Board concludes that financial Voting for this action: Chairman Greenspan, Vice Chairand managerial resources and future prospects of CIB, man Mullins, and Governors Angell, Kelley, LaWare, Lindits subsidiaries and Sequoia Savings and the other sey, and Phillips. supervisory factors that the Board must consider JENNIFER J. JOHNSON under section 3 of the BHC Act are consistent with Associate Secretary of the Board approval of this proposal. Considerations relating to the convenience and needs of the communities to be One Valley Bancorp of West Virginia, Inc. served are also consistent with approval. Charleston, West Virginia Conclusion Order Approving the Merger of Bank Holding Companies Based upon the foregoing and all the facts of record, including the commitments made in connection with One Valley Bancorp of West Virginia, Inc., Charlesthis proposal, the Board has determined that the ton, West Virginia ("One Valley"), a bank holding application should be, and hereby is, approved. The company within the meaning of the Bank Holding Board's approval is specifically conditioned upon Company Act ("BHC Act"), has applied for the compliance with all of the commitments made in Board's approval under section 3 of the BHC Act connection with this proposal, and upon receipt of all (12 U.S.C. § 1842) to merge with Mountaineer Bankrequired state and federal approvals. For the purpose shares of W. Va., Inc., Martinsburg ("Mountaineer"), of this action, the commitments and conditions relied and thereby indirectly acquire Old National Bank, upon by the Board in reaching its decision are deemed Martinsburg; The Empire National Bank of Clarksto be conditions imposed in writing by the Board in burg, Clarksburg; City National Bank of Fairmont, connection with its findings and decision, and, as such, Fairmont; The Bank of Wadestown, Fairview; Mermay be enforced in proceedings under applicable law. cantile Banking & Trust Company, Moundsville; and The Bank of Cameron, Inc., Cameron, all in West Virginia. One Valley also proposes to acquire Moun- 9. When used in this context, depository institutions include commercial banks and savings associations. Market data are as of June 30, taineer's subsidiary bank holding company, Sunrise 1992. Market share data are based on calculations in which the Bancorp, Inc., Wheeling, and thereby indirectly acdeposits of thrift institutions are included at 50 percent. The Board quire The Sunshine Bank of Wheeling, Wheeling, both previously has indicated that thrift institutions have become, or have the potential to become, major competitors of commercial banks. See in West Virginia.1 Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); Notice of the application, affording interested per- National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Because the deposits of Sequoia Savings will be transferred to a sons an opportunity to submit comments, has been commercial bank under the proposal, those deposits are included at published (57 Federal Register 59,267 (1993)). The 100 percent in the calculation of pro forma market share. See First time for filing comments has expired, and the Board Banks, Inc., 76 Federal Reserve Bulletin 669, 670 n.9 (1990); Norwest Corporation, 78 Federal Reserve Bulletin 452 (1992). has considered the application and all comments re- 10. The HHI for the market is currently 933 and consummation of ceived in light of the factors set forth in section 3(c) of the proposed transaction would not increase the HHI for this market. the BHC Act. Under the revised Department of Justice Merger Guidelines (49 Federal Register 26,823 (June 29, 1984)), a market in which the One Valley is the second largest commercial bankpost-merger HHI is less than 1000 is considered unconcentrated. The ing organization in West Virginia, controlling deposits Justice Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anti-competitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by 200 points. The Justice Department has stated that the higher than normal HHI 1. In connection with this application, One Valley has obtained an thresholds for screening bank mergers for anti-competitive effects option to acquire 19.9 percent of the outstanding common stock of implicitly recognize the competitive effect of limited-purpose lenders Mountaineer and will file an application with the Board before and other non-depository financial entities. exercising this option. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

138 Federal Reserve Bulletin • February 1994 of $2.3 billion, representing .14.2 percent of total com- Martinsburg banking market is also attractive to entry. mercial bank deposits in the state.2 Mountaineer is the Although West Virginia, as a whole, experienced an seventh largest commercial banking organization in 8 percent decline in population between 1980 and 1990, West Virginia, controlling deposits of $607 million, the population in the Martinsburg banking market representing 3.7 percent of total commercial bank increased by 24 percent.6 Deposits in the Martinsburg deposits in the state. Upon consummation of the banking market also have increased at a rate higher proposed transaction, One Valley would become the than the statewide rate for deposit growth.7 The atlargest commercial banking organization in West Vir- tractiveness of the Martinsburg banking market for ginia, controlling deposits of $2.9 billion, representing new entrants has been demonstrated by recent entry 17.9 percent of total commercial bank deposits in the into the market and the expansion activity of the state. institutions that already operate in the market. For example, since 1989, two large bank holding compa- Competitive Considerations nies, including the largest in the state, have entered the Martinsburg banking market through acquisition, and One Valley and Mountaineer compete directly in the in 1992, West Virginia's ninth largest bank holding Martinsburg, Clarksburg, and Wheeling, West Vir- company entered the Martinsburg banking market ginia banking markets. In the Martinsburg banking de novo. Between 1989 and 1993, the number of market,3 One Valley is the third largest of eight branch locations increased by 48 percent, from 23 to commercial banking organizations, with deposits of 34. Finally, because West Virginia permits statewide $129.9 million, representing 15.8 percent of total de- branching and acquisitions by out-of-state bank holdposits in commercial banks in the market ("market ing companies on a nationwide reciprocal basis, there deposits").4 Mountaineer is the second largest com- are numerous potential entrants to the Martinsburg mercial banking organization in the market, with de- banking market.8 posits of $138.8 million, representing 16.9 percent of In addition, the unique geographic location of the market deposits. Upon consummation of the proposal, Martinsburg banking market provides readily available One Valley would become the largest commercial and easily accessible banking services from out-ofbanking organization in the Martinsburg banking mar- market institutions. The Martinsburg banking market ket, controlling deposits of $268.7 million, represent- is located in the eastern panhandle of West Virginia ing 32.7 percent of market deposits. The Herfindahl- bordered by Maryland and Virginia, and is in close Hirschman Index ("HHI") for the market would proximity to larger population clusters in both neighincrease by 534 points to 1950.5 boring states.9 A significant portion of the daily work A number of factors indicate that the increased level force (approximately 19 percent) commutes to the of concentration in the Martinsburg banking market, surrounding markets in which these population clusas measured by the HHI, tends to overstate the ters are located.10 Moreover, a review of advertising competitive effect of this proposal. For example, upon media in the market indicates that commercial and consummation of this proposal, seven commercial consumer customers in the market are exposed to and banking organizations would continue to operate in the solicited by financial service providers from surround- Martinsburg banking market, including four of the ten ing markets.11 Consequently, many businesses and largest banking organizations in West Virginia. The 6. The population of Berkeley County increased 27 percent and the 2. Unless otherwise indicated, deposit and market data are as of population of Jefferson County increased 19 percent between 1980 and June 30, 1993. 1990. 3. The Martinsburg banking market is approximated by Berkeley 7. The compound growth rate for total bank deposits in the market and Jefferson Counties, except for the northern part of Berkeley in the past three years was 6.3 percent, compared to 4.8 percent for County. MSAs in the state and 4.2 percent for non-MSA counties in West 4. No thrifts operate in the Martinsburg banking market. Virginia. 5. Under the revised Department of Justice Merger Guidelines, 49 8. W. Va. Code §§ 3IA-8-12, 31A-8A-7. Federal Register 26,823 (June 29, 1984), a market in which the 9. Martinsburg (population 14,000) is 19 miles south of Hagerstown post-merger HHI is above 1800 is considered to be highly concen- (population 35,900) and 33 miles west of Frederick (population trated. In such markets, the Justice Department is likely to challenge 42,000), both in Maryland, and 22 miles north of Winchester, Virginia a merger that increases the HHI by more than 50 points. The Justice (population 22,900). Department has informed the Board that a bank merger or acquisition 10. Although there is substantial out-of-market commuting, the generally will not be challenged (in the absence of other factors level of commuting in any one direction is not sufficient to tie the indicating anticompetitive effects) unless the post-merger HHI is at Martinsburg area to another market. See, e.g., Hartford National least 1800 and the merger increases the HHI by more than 200 points. Corporation, 73 Federal Reserve Bulletin 720 (1987). An additional The Justice Department has stated that the higher than normal HHI 15 percent of the workforce commutes to the Washington, D.C. thresholds for screening bank mergers for anticompetitive effects banking market. implicitly recognize the competitive effect of limited-purpose lenders 11. For example, five out-of-market depository institutions adverand other non-depository financial entities. tise in the local Martinsburg newspaper, and numerous out-of-market Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 139 residents have convenient banking alternatives outside This transaction shall not be consummated before the market, and these alternatives should substantially the thirtieth calendar day following the effective date mitigate any anticompetitive effects of the proposal. of this Order, or later than three months after the In the Clarksburg and Wheeling markets,12 consum- effective date of this Order, unless such period is mation of this proposal would not exceed the threshold extended for good cause by the Board or by the standards applied by the Board and set forth in the Federal Reserve Bank of Richmond, acting pursuant Department of Justice Merger Guidelines. In addition, to delegated authority. numerous competitors would remain in these markets By order of the Board of Governors, effective after consummation of this proposal.13 December 20, 1993. In light of all facts of record, including the number of competitors that would remain in these markets, the Voting for this action: Chairman Greenspan, Vice Chairnumber of potential entrants into these markets, and man Mullins, and Governors Angell, Kelley, LaWare, Lindthe attractiveness to entry and unique geographic sey, and Phillips. characteristics of the Martinsburg banking market, the JENNIFER J. JOHNSON Board concludes that consummation of this proposal is Associate Secretary of the Board not likely to have a significantly adverse effect on competition or the concentration of banking resources Orders Issued Under Section 4 of the Bank in the Martinsburg, Clarksburg or Wheeling banking Holding Company Act markets, or in any other relevant banking market. Other Considerations Banc One Corporation Columbus, Ohio The Board concludes that the financial and managerial resources and future prospects of One Valley, Moun- Order Approving Application to Conduct Certain taineer and their subsidiary banks are consistent with Data Processing Activities approval. The Board also concludes that considerations relating to the convenience and needs of the Banc One Corporation, Columbus, Ohio ("Applicommunities to be served, and the other supervisory cant"), a bank holding company within the meaning of factors that the Board must consider under section 3 of the Bank Holding Company Act ("BHC Act"), has the BHC Act are consistent with approval of this applied for the Board's approval under section 4(c)(8) proposal. of the BHC Act (12 U.S.C. § 1843(c)(8)) and section Based on the facts of record, the Board has deter- 225.23(a) of Regulation Y (12 C.F.R. 225.23(a)) to mined that the application should be, and hereby is, acquire all the voting shares of Croghan & Associates, approved. The Board's approval of this proposal is Inc., Boulder, Colorado ("Company"), and thereby to expressly conditioned on compliance with the commit- engage de novo in certain data processing and data ments made in connection with this application. The transmission activities pursuant to section 225.25(b)(7) commitments and conditions relied on by the Board in of Regulation Y. reaching its decision are both deemed to be conditions In particular, Applicant intends to operate, through imposed in writing in connection with its findings and Company, a network for the processing and transmisdecisions, and, as such, may be enforced in proceed- sion of medical payment data between health care ings under applicable law. providers (such as physicians, hospitals, and pharmacies) ("Providers") and entities responsible for providing medical benefits (such as health insurers, health maintenance organizations, and preferred provider depository institutions pay for a listing in the local telephone directory. organizations) ("Payers"). The network would oper- 12. The Wheeling banking market is approximated by Marshall and ate in a manner similar to existing automated-teller- Ohio Counties in West Virginia, and the eastern third of Belmont County in Ohio; the Clarksburg banking market is approximated by machine ("ATM") and point-of-sale ("POS") net- Doddridge, Harrison and Taylor Counties in West Virginia. works. In general, Providers would enter claims 13. In the Wheeling banking market, One Valley would become the information into the network with a request for paythird largest depository institution, and the HHI would increase by 27 points to 974. In the Clarksburg banking market, One Valley would ment, and Payers would authorize electronic fund become the second largest depository institution, and the HHI would transfers in full or partial payment of the claims. increase by 210 points to 1746. Market share data for the Wheeling banking market are as of June 30, 1992 and are based on calculations In addition, Company proposes to furnish Providers in which the deposits of thrift institutions are included at 50 percent. and Payers with software for use in the medical The Board has regularly included thrift deposits in the calculation of payments network, including claims adjudication softmarket share on a 50 percent weighted basis. See, e.g., First Hawaiian Inc., 77 Federal Reserve Bulletin 52 (1991). ware that would automate the determination of what Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

140 Federal Reserve Bulletin • February 1994 claims should be paid and the amount of each claim The Board has determined generally that certain data that should be paid. Company also intends to provide processing activities are closely related to banking and by-products of its data processing activities, including therefore permissible for bank holding companies unstatistical information derived from the data transmit- der section 4(c)(8) of the BHC Act. Section ted through the payment network, and to furnish 225.25(b)(7) of Regulation Y permits bank holding additional related services that may result from its companies to provide data processing and data transresearch and development efforts.1 mission services, facilities (including software), data Notice of the application, affording interested per- bases, or access to such services, facilities, or data sons an opportunity to submit comments, has been bases by any technological means, so long as the data published (58 Federal Register 33,443 (1993)). The to be processed or furnished are "financial, banking, time for filing comments has expired, and the Board or economic" in nature.4 In addition, Regulation Y has considered the application and all comments re- provides that bank holding companies may engage in ceived in light of the factors set forth in section 4(c)(8) incidental activities that are necessary to carry on an of the BHC Act. activity that is closely related to banking. See Applicant, with $75.4 billion in total consolidated 12 C.F.R. 225.21(a)(2). In the data processing context, assets, is the eighth largest commercial banking orga- such incidental activities include the provision of nization in the United States, controlling $59.4 billion by-products of permissible data processing and data in deposits.2 Applicant operates subsidiary banks in transmission services, so long as such by-products are Ohio, Kentucky, Indiana, Michigan, Illinois, Wiscon- not designed, or appreciably enhanced, for the pursin, Texas, Colorado, Arizona, California, Utah, and pose of marketability. See 12 C.F.R. 225.123(e)(2). West Virginia, and engages directly and through its For analytical purposes, Applicant's proposal can subsidiaries in a broad range of banking and permissi- be viewed in three parts: ble nonbanking activities. (1) The basic operation of a medical payments network; Closely Related to Banking Analysis (2) The provision of claims adjudication software; and Section 4(c)(8) of the BHC Act provides that a bank (3) The provision of statistical and other information holding company may, with Board approval, engage in derived from the data flowing over the network. any activity that the Board determines to be "so closely related to banking or managing or controlling (1) Basic Network Services. Under the medical banks as to be a proper incident thereto." An activity payments system proposed by Company, Payer orgamay be deemed to be closely related to banking if it is nizations would issue to their members a medical demonstrated that: benefits card similar to a credit or debit card.5 Before (1) Banks generally provide the proposed services; receiving health care services, a patient would present or this medical benefits card to the relevant Provider. The (2) Banks generally provide services that are oper- Provider could then use the card to obtain access ationally or functionally so similar to the proposed through Company to a central database containing services as to equip them particularly well to pro- information on patient eligibility, co-payment requirevide the proposed services; or ments, year-to-date deductible values, and other cov- (3) Banks generally provide services that are so integrally related to the proposed services as to require their provision in a specialized form.3 (1984); Securities Industry Association v. Board of Governors of the Federal Reserve System, 468 U.S. 207, 210-211 n. 5 (1984). 4. Regulation Y also requires that the services be provided pursuant to a written agreement, and places certain limitations on the facilities and hardware provided with the data processing services. In particu- 1. The Board has relied on Applicant's commitment to consult with lar, the facilities must be designed, marketed, and operated for the the Federal Reserve System before Company offers new data pro- processing and transmission of financial, banking, or economic data; cessing services or products not specifically discussed in the applica- hardware must be provided only in conjunction with permissible tion to ensure that the activity will satisfy the criteria set forth in the software; and general purpose hardware must not constitute more BHC Act and Regulation Y, and to allow the Federal Reserve System than 30 percent of the cost of any packaged offering. See 12 C.F.R. an opportunity to consider whether a separate application should be 225.25(b)(7). Applicant has committed that Company will provide the reviewed in any particular case. proposed services pursuant to a written agreement, and will provide 2. Asset and deposit data are as of June 30, 1993. facilities and hardware within the limitations established by Regula- 3. See National Courier Association v. Board of Governors of the tion Y. Federal Reserve System, 516 F.2d 1229, 1237 (D.C. Cir. 1975). In 5. Company would perform embossing and encoding functions with addition, the Board may consider any other basis that may demon- respect to these medical benefits cards. Applicant expects that medstrate that the proposed activity has a reasonable or close connection ical benefits cards may be developed with debit or credit card features, or relationship to banking or managing or controlling banks. See so that the cards could be used by consumers to obtain access to, and Board Statement Regarding Regulation Y, 49 Federal Register 806 authorize medical payments from, their banking or other accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 141 erage data. After medical services are furnished, the relating to the terms of a particular Payer's medical Provider would transmit claim information to the coverage contract and the extent to which specific relevant Payer through Company's medical payments medical treatments would be covered by the patient's network. This claim information would include the insurance policy. amount charged and a description of the services While such medical and coverage data are not rendered that is sufficient to allow the Payer to deter- financial data, processing and transmitting this data mine the eligibility of the claim and the amount that are essential components in the transmission and should be paid. The Payer would then authorize elec- processing of the medical payments and financial tronic payment of the appropriate amount through information in the network. For example, the medical Company and participating financial institutions. data submitted by Providers as part of a claim (such as Throughout this process, Providers would be able to descriptions of a patient's symptoms and of medical ascertain the status of the claim and any related procedures performed by the Provider) are necessary payment.6 to the Payer's decision to authorize an electronic funds Company's primary activities would include the transfer payment.8 Similarly, a Payer must furnish routing and processing of medical payment transac- insurance policy coverage information to a Provider in tions through direct connections between Company's order to permit the Provider to calculate the payment computer switch and Payer and Provider terminals. reasonably to be expected from the Payer and the Company also would perform the accounting functions charges that should be allocated to the patient. necessary to settle the payments processed through Moreover, the purpose of the data processing serthe network, and would provide electronic transaction vices rendered by Company in its operation of the and settlement reports to participating financial insti- network would be to permit the electronic transfer of tutions, Providers, and Payers. In addition, Company funds from patient and Payer accounts to Provider would provide other services analogous to functions accounts. The Board also notes that banking organiperformed by the operator of an ATM or POS net- zations transmit and process similar incidental data work, including switching, gateway, and terminal driv- (though in less significant quantities) in connection ing services. These functions represent the processing with bill-paying services provided to consumers and of banking, financial, and economic data of the type accounts payable services rendered to corporate cuspreviously approved for bank holding companies.7 tomers. In addition, the Office of the Comptroller of In addition to banking, financial, and economic the Currency ("OCC") has permitted national banks information, however, Company would process and to operate a medical payments network that processed transmit medical treatment data sufficient to allow a somewhat more limited amount of non-financial Payers to make decisions regarding the legitimacy of a medical treatment and claims eligibility data.9 For the claim and the appropriate degree of coverage. Simi- foregoing reasons, the Board believes that Company's larly, when Providers obtain access to the coverage processing and transmission of medical and coverage information database, Company would transmit data data in connection with its operation of a payments network are permissible as incidental activities.10 Accordingly, and on the basis of all the facts of record, the Board has concluded that, although the 6. Alternative financial arrangements among Providers and Payers — for example, pricing based on the number of patients treated by a operation of a medical payments network would in- Provider, with payments to be made at regular intervals upon presen- volve the processing and transmission of medical and tation of satisfactory documentation - also could be accommodated by the proposed network. 7. Company also proposes to provide and maintain software and hardware used in the medical payments network. The hardware 8. Applicant has represented that this medical data submitted by provided by Company would consist primarily of general purpose Providers would include only information required to assess the hardware which, together with operating system, database and net- appropriateness, validity, and amount of a claim for payment, or work access, and network processing software, would comprise the otherwise necessary to authorize payment for a claim, and that basic operating environment for the medical payments network. The Providers would not be transmitting data for general medical use. software provided by Company for use in the network would be an 9. For example, the proposal approved by the OCC did not appear essential component in the operation of the medical payments system. to include an adjudication mechanism (such as that discussed below) Applicant has stated that Company would provide hardware and that permits an immediate analysis and payment of claims that fall software only in accordance with the limitations established by within specifications set by the Payer. In many other respects, Regulation Y. System software would constitute general purpose however, the network considered by the OCC involved the transmissoftware and be considered part of the general purpose hardware of sion of non-financial data, including medical treatment data, such as the system, subject to the 30 percent limitation in Regulation Y. Other that at issue in this proposal. The OCC concluded that operation of the software would include database and network access products, as well network was a permissible activity because it constituted the provias network processing software similar to that used in the operation of sion of a data processing system in connection with electronic fund ATM and POS networks. This software, together with the adjudica- transfers. See OCC Interpretive Letter No. 419 (February 16, 1988), tion software discussed below, would be special purpose software reprinted in Federal Banking Law Reporter (CCH) 1 85,643 (May 27, designed to carry out the billing, accounts payable, and electronic 1988). fund transfer functions of the network. 10. See 12 C.F.R. 225.21(a)(2). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

142 Federal Reserve Bulletin • February 1994 coverage data, as well as data of a financial, banking, information, and Company's processing of the underor economic nature, Company's proposed operation of lying payment transactions. Hence, on the basis of all a medical payments network would constitute permis- the facts of record, the Board has concluded that sible data processing and data transmission activities Company's provision of claims adjudication software under the BHC Act. that processes such medical and coverage data is (2) Adjudication Software. In addition to the soft- permissible as an activity incidental to its provision of ware used in the basic operation of the medical pay- software for the processing of banking and financial ments network, Company proposes to provide claims data, and its operation of a medical payments netadjudication software to Payers. This software would work.12 represent an electronic version of the basic rules of a (3) Electronic Data Interchange. Company also Payer's coverage contract, and would be designed for proposes to furnish participants in the medical paythe processing of routine claims. In general, the claims ments system with statistical and other data derived adjudication software would automate a large portion from the information contained in Company's dataof the process by which a Payer determines the extent base.13 Each customer would have on-line access to all to which a submitted claim should be paid. the data it places in the system, and third parties Company would not make decisions or render ad- designated by a Payer or Provider also could receive vice as to what portions, if any, of the claims adjudi- access to data owned by such customer.14 Applicant cation process should be automated for any particular has indicated that the information comprising the Payer, and each adjudication program developed by database for these services would consist solely of Company would contain only the information neces- medical claims data necessary for the authorization of sary to process submitted claims. In addition, Com- payments, other data transmitted through Company's pany would not play any role in determining the extent network, and similar claims and payment information to which a claim would be covered: all parameters for provided to Company by actual and potential propayment of insurance claims would be set by the cessing and adjudication customers. Payer, and questions, payment decisions, or disputes The Board has stated that bank holding companies about the extent of coverage would be handled by the may provide by-products of permissible data pro- Payer (and not by Company).11 cessing and data transmission activities, so long as The claims adjudication process essentially involves such by-products are not designed, or appreciably the interaction of financial and banking data (the enhanced, for the purpose of marketability. 12 C.F.R. amount of a submitted claim and a request for an 225.123(e)(2). The Board has indicated that by-prodelectronic funds transfer) and medical and coverage ucts include data, software, or data processing techdata (treatment information and the basic rules of a niques that may be applicable to the data processing Payer's coverage contract). Claims adjudication is a requirements of other industries. See Citicorp, 68 central aspect of the authorization function in the Federal Reserve Bulletin 505, 510-511 (1982). proposed network, and is necessary to the consumma- Company expects that, in most instances, raw data tion of an electronic funds transfer. For these reasons, will be transmitted to a customer from the network's claims adjudication is functionally similar to the pay- central computer upon the customer's electronic rement authorization services rendered by operators of quest, without any intervention by Company person- ATM and POS networks to their financial institution nel. The customer would then analyze the data to suit and other customers. In addition, the provision of its own particular needs. In some cases, however, claims adjudication software is an integral part of the pursuant to a customer's instructions, Company may accounts payable function Company proposes to pro- perform limited selection, combination, and similar vide to Payers. functions upon raw data so that it can be transmitted to Accordingly, the Board believes that the processing of medical and coverage data involved in claims adjudication is an integral part of, and therefore necessary 12. See 12 C.F.R. 225.21(a)(2). to, the processing of related financial and banking 13. Applicant has stated that these electronic data interchange services would be offered as part of a package of services purchased by a Payer or Provider. Company also would make these services available on an independent basis to potential customers of Com- 11. These limitations should ensure that Company does not become pany's network processing and claims adjudication services. Comengaged in the provision of insurance-related services or advice. pany would not, in any event, market these services to the general Company would only provide the electronic media and software for public. adjudication and payment of benefits, and would not be engaged in 14. All data furnished by Company in rendering these services insurance agency activities or in the sale of medical insurance. In this would be formatted so that individual Providers and patients could not regard, Applicant has committed that Company would not conduct be identified by persons not authorized to receive access to such any activity that would require it to be licensed as an insurance agent information. In addition, such data would be furnished only to the or broker under state law. extent permitted by relevant patient and other consent forms. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 143 the customer in a reorganized and more usable form. tors that it is required to consider under section 4(c)(8) Company also may design software that would enable of the BHC Act is favorable. customers to perform similar reorganization functions Based on all the facts of record, the Board has upon raw data. Company would not, however, render determined that the application should be, and hereby advisory or consulting services in connection with the is, approved. The Board's approval is specifically provision or use of these electronic data interchange conditioned on compliance with the commitments capabilities, and would not engage in any scientific, made in connection with this application and with the actuarial, or clinical research or analysis of the infor- conditions referred to in this order. The Board's mation contained in the database. Moreover, Com- determination also is subject to all the conditions set pany would not, under any circumstances, make data forth in Regulation Y, including those in sections available to the general public. 225.4(d) and 225.23(b) of Regulation Y, and to the On the basis of all the facts of record, including the Board's authority to require such modification or limitations discussed in the application and the limita- termination of the activities of a bank holding comtions discussed above, the Board has concluded that pany or any of its subsidiaries as the Board finds the proposed electronic data interchange services necessary to ensure compliance with, and to prevent would constitute permissible by-products of Com- evasion of, the provisions of the BHC Act and the pany's primary data processing activities, and that Board's regulations and orders issued thereunder. For such services are, therefore, permissible as an inciden- purposes of this action, these commitments and contal activity. ditions are deemed to be conditions imposed in writing by the Board in connection with its findings and Other Considerations decision, and, as such, may be enforced in proceedings under applicable law. In every case involving a nonbanking acquisition by a This transaction shall not be consummated later bank holding company under section 4 of the BHC than three months after the effective date of this order, Act, the Board considers the financial condition and unless such period is extended for good cause by the resources of the applicant and its subsidiaries and the Board or by the Federal Reserve Bank of Cleveland, effect of the transaction on those resources.15 Based acting pursuant to delegated authority. on all the facts of record, the Board has concluded that By order of the Board of Governors, effective financial and managerial considerations are consistent December 22, 1993. with approval of this proposal. In order to approve this application, the Board also Voting for this action: Chairman Greenspan, Vice Chairmust determine that the performance of the proposed man Mullins, and Governors Kelley, Lindsey, and Phillips. activities by Applicant through Company "can reason- Absent and not voting: Governors Angell and LaWare. ably be expected to produce benefits to the public . . . JENNIFER J. JOHNSON that outweigh possible adverse effects, such as undue Associate Secretary of the Board concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking Creditanstalt-Bankverein practices." 12 U.S.C. § 1843(c)(8). The Board expects Vienna, Austria that the participation of Company in the market for the proposed data processing services would increase the Order Approving an Application to Engage in level of competition among providers of those ser- Investment Advisory Services vices. The Board also anticipates that Company's proposed activities would result in new products and Creditanstalt-Bankverein, Vienna, Austria ("Appliservices, greater efficiencies, and increased convecant"), a foreign bank subject to the provisions of the nience for consumers. In addition, there is no evidence Bank Holding Company Act ("BHC Act"), has apin the record that consummation of the proposed plied pursuant to section 4(c)(8) of the BHC Act activities would result in any significantly adverse (12 U.S.C. § 1843(c)(8)) and section 225.23(a)(3) of the effects, such as undue concentration of resources, Board's Regulation Y (12 C.F.R. 225.23(a)(3)) to endecreased or unfair competition, conflicts of interests, gage de novo, through a joint venture, in investment or unsound banking practices. Accordingly, the Board advisory activities pursuant to section 225.25(b)(4) of concludes that the balance of the public interest fac- Regulation Y (12 C.F.R. 225.25(b)(4)).1 Applicant pro- 15. 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). 1. Specifically, Company will: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

144 Federal Reserve Bulletin • February 1994 poses to establish a limited partnership, Steinberg adverse effects on competition and on the financial Asset Management Company, L.P., New York, New condition of the banking organization involved in the York ("Company"), between its wholly owned sub- proposal. sidiary Creditanstalt International Advisers Group, Currently, Coventurer engages only in investment Inc., New York, New York, and Steinberg Asset advisory activities that are permissible for a bank Management Inc., New York, New York ("Coven- holding company.6 Applicant has committed to notify turer"). Company will conduct the proposed activities the Board in the event Company, Coventurer, or any throughout the United States and abroad. of its affiliates, determines to engage in any securities Notice of the application, affording interested per- activity that is impermissible for a state member bank sons an opportunity to submit comments, has been under the Glass-Steagall Act or any other activity that published (58 Federal Register 57,611 (1993)). The is impermissible under the BHC Act, and to seek time for filing comments has expired, and the Board Board approval of Applicant's retention of its interest has considered the application and all comments re- in Company should such activities of Coventurer or its ceived in light of the factors set forth in section 4(c)(8) affiliates be inconsistent with the Board's order apof the BHC Act. proving this application. Based on these and other Applicant, with total consolidated assets of commitments made by Applicant, the Board believes $48.4 billion, is the 97th largest banking organization in that the structure of the joint venture in this case is the world.2 In the United States, Applicant operates a consistent with the provisions of section 4 of the BHC branch in New York, New York, and representative Act and prior Board cases. offices in Atlanta, Georgia, and San Francisco, Cali- In order to approve this application, the Board also fornia.3 Applicant also engages in permissible non- is required to determine that the performance of the banking activities in the United States and abroad. proposed activities by Applicant can reasonably be The Board previously has determined by regulation expected to produce benefits to the public that would that providing investment advisory services is an outweigh possible adverse effects under the proper activity that is closely related to banking and permis- incident to banking standard of section 4(c)(8) of the sible for bank holding companies under section 4(c)(8) BHC Act.7 of the BHC Act.4 Applicant has stated that Company Under the framework established in this and prior will engage in these activities in accordance with the Board decisions, consummation of this proposal is not Board's regulations. likely to result in any significantly adverse effects, In prior decisions, the Board has expressed concern such as an undue concentration of resources, dethat joint ventures could potentially lead to a matrix of creased or unfair competition, conflicts of interests, or relationships between co-venturers and their affiliates unsound banking practices. Moreover, the Board has that could break down the legally mandated separation determined that performance of the proposed activiof banking and commerce, create the possibility of ties by Applicant can reasonably be expected to proconflicts of interests and other adverse effects that the duce public benefits that would outweigh any adverse BHC Act was designed to prevent, or impair or give effects under the proper incident to banking standard the appearance of impairing the ability of the banking of section 4(c)(8) of the BHC Act. organization to function effectively as an independent In weighing these factors under section 4 of the and impartial provider of credit.5 Further, joint ven- BHC Act, the Board considers the financial condition tures must be carefully analyzed for any possible and resources of Applicant and its subsidiaries and the effect of the proposal on these resources. In this case, the Board notes that Applicant meets the relevant risk-based capital standards consistent with the Basle (1) Serve as investment adviser (as defined in section 2(a)(20) of the Investment Company Act of 1940, 15 U.S.C. § 80a-2(a)(20)) to an Accord, and has capital equivalent to that which investment company registered under that act, including sponsor- would be required for United States banking organiing, organizing, and managing a closed-end investment company; zations. In view of these and other facts of record, the (2) Provide portfolio investment advice to any other person; and (3) Furnish general economic information and advice, general Board has determined that the financial factors are economic statistical forecasting services and industry studies. See consistent with approval of this application. The man- 12 C.F.R. 225.25(b)(4)(ii),(iii), and (iv). 2. Asset data are as of June 30, 1993. 3. Under section 8(a) of the International Banking Act of 1978 (12 U.S.C. § 3106(a)), a foreign bank that operates a branch, agency, or commercial lending company subsidiary in the United States is 6. See 12 C.F.R. 225.25(b)(4). In addition, Coventurer's affiliate, subject to the BHC Act as if it were a bank holding company. Michael A. Steinberg & Company, Inc., New York, New York, 4. See 12 C.F.R. 225.25(b)(4). provides securities brokerage services which also are permissible for 5. See, e.g., The Fuji Bank, Limited, 75 Federal Reserve Bulletin bank holding companies under the BHC Act. See 12 C.F.R. 577 (1989); Amsterdam-Rotterdam Bank, N.V., 70 Federal Reserve 225.25(b)(15). Bulletin 835 (1984). 7. 12 U.S.C. § 1843(c)(8). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 145 agerial resources of Applicant and its subsidiaries also enna, Virginia ("Providence"). Crestar's subsidiary are consistent with approval. bank, Crestar Bank, Richmond, Virginia ("Bank"), a Based on the foregoing and all the facts of record, state member bank, has applied under section 18(c) of the Board has determined to, and hereby does, ap- the Federal Deposit Insurance Act ("FDI Act") prove the application subject to the terms and condi- (12 U.S.C. § 1828(c)) ("Bank Merger Act") to acquire tions set forth in this order, and in the Board regula- Providence and Virginia Federal Savings Bank, Richtions and orders noted above. The Board's mond, Virginia ("VFSB"). determination also is subject to all the terms and Crestar and Bank have also applied under section conditions set forth in its Regulation Y, including 5(d)(3) of the FDI Act (12 U.S.C. § 1815(d)(3)), as those in sections 225.4(d) and 225.23(b), and to the amended by the Federal Deposit Insurance Corpora- Board's authority to require modification or termina- tion Improvement Act of 1991, Pub. L. No. 102-242, tion of the activities of a bank holding company or any § 501, 105 Stat. 2236, 2388 (1991), to acquire Proviof its subsidiaries as the Board finds necessary to dence and VFSB,1 and Bank has applied to establish assure compliance with, and to prevent evasion of, the branches at the present locations of Providence and provisions of the BHC Act, and the Board's regula- VFSB pursuant to section 9 of the Federal Reserve tions and orders issued thereunder. The Board's deci- Act (12 U.S.C. § 321 et seq.).2 sion is specifically conditioned on compliance with all Notice of the applications, affording interested perthe commitments made in this application, including sons an opportunity to submit comments, has been the commitments discussed in this order and the published in accordance with the Bank Merger Act conditions set forth in the Board orders noted above. and the Board's Rules of Procedure (12 C.F.R. These commitments and conditions shall be deemed to 262.3(b)). Reports on the competitive effects of the be conditions imposed in writing by the Board in merger were requested from the United States Attorconnection with its findings and decisions, and may be ney General, the Office of the Comptroller of the enforced in proceedings under applicable law. Currency, the Federal Deposit Insurance Corporation, This transaction shall not be consummated later and the Office of Thrift Supervision. The time for filing than three months after the effective date of this order, comments has expired, and the Board has considered unless such period is extended for good cause by the the applications and all comments received in light of Board or by the Federal Reserve Bank of New York, the factors set forth in the Bank Holding Company pursuant to delegated authority. Act, the Bank Merger Act, and the Federal Reserve By order of the Board of Governors, effective Act. December 16, 1993. Crestar, with total consolidated assets of $13 billion, operates subsidiary banks in Virginia, Maryland, and Voting for this action: Vice Chairman Mullins and Gover- the District of Columbia.3 Bank is the second largest nors Angell, Kelley, LaWare, Lindsey, and Phillips. Absent commercial banking organization in Virginia, controland not voting: Chairman Greenspan. ling approximately $7.8 billion in deposits, representing 13.8 percent of total deposits in commercial bank- JENNIFER J. JOHNSON ing organizations in the state. Providence is the 14th Associate Secretary of the Board largest thrift institution in Virginia, controlling deposits of $329.4 million, representing 3.3 percent of total Crestar Financial Corporation deposits in thrift institutions in the state. VFSB is the Richmond, Virginia fifth largest thrift institution in Virginia, controlling approximately $552.8 million in deposits, representing Crestar Bank 4.8 percent of total deposits in thrift institutions in the Richmond, Virginia state. Upon consummation of the proposed transaction, Crestar would remain the second largest com- Order Approving Mergers of Savings Associations mercial bank in Virginia, controlling approximately with a Commercial Bank Crestar Financial Corporation, Richmond, Virginia 1. Section 5(d)(3) of the FDI Act requires the Board to review any ("Crestar"), a bank holding company within the proposed merger between a bank owned by a bank holding company meaning of the Bank Holding Company Act ("BHC and a savings association, or branch of a savings association, in which the resulting institution is insured by the Bank Insurance Fund, and in Act"), has applied under section 4(c)(8) of the BHC reviewing these proposals, to follow the procedures and consider the Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of the factors set forth in section 18(c) of the Bank Merger Act. Board's Regulation Y (12 C.F.R. 225.23) to acquire 2. These branches are set forth in the Appendix. Providence will close its branch in Maryland prior to consummation of the proposal. Providence Savings and Loan Association, F.A., Vi- 3. Banking data are as of December 31, 1992. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

146 Federal Reserve Bulletin • February 1994 $8.7 billion in deposits, representing 13.3 percent of ("Protestant"). Protestant alleges generally that Bank total deposits in commercial banks in the state. discriminates against blacks in its lending activities,7 and in particular, practices illegal discrimination Competitive Considerations against minorities and low-income individuals in a lending program that includes participating financial Crestar competes directly with VFSB in the Virginia institutions and the City of Lynchburg and is sponbanking markets of Charlottesville, Newport News- sored by the United States Department of Housing and Hampton, Richmond-Petersburg, and Staunton; and Urban Development ("HUD").8 In assessing the imwith Providence in the Washington, D.C., Ranally pact of this proposal on the convenience and needs of Metro Area ("Washington RMA"). Consummation of the communities to be served, the Board has considthis proposal would not exceed the Department of ered Protestant's comments in light of Crestar's record Justice Merger Guidelines4 as applied to depository of performance under the Community Reinvestment institutions5 in any of these banking markets. Based on Act (12 U.S.C. § 2901 et seq.) ("CRA"). all the facts of record, including the relatively small Initially, the Board notes that all of Crestar's subincrease in the market concentration and market sidiary banks received "outstanding" or "satisfactoshare,6 the Board concludes that consummation of this ry" ratings from their primary regulators in their most proposal would not have a significantly adverse effect recent examinations for CRA performance. In particon competition or the concentration of banking re- ular, Bank received an "outstanding" rating for CRA sources in the Virginia and Washington RMA banking performance from the Federal Reserve Bank of Richmarkets or any other relevant banking market. mond in May 1993.9 As part of this 1993 examination, examiners reviewed denied and approved loan files Convenience and Needs Considerations and conducted interviews with 27 loan officers to ascertain compliance with regulatory requirements In analyzing the convenience and needs factor, the when collecting information from loan applicants. Ex- Board has carefully considered comments submitted aminers found no evidence of illegal discrimination or by Hamler Development Co., Inc., Concord, Virginia illegal credit practices at Bank.10 The Board also has previously reviewed Protestant's allegations of illegal discriminatory practices 4. Under the revised Department of Justice Merger Guidelines, relating to the administration of the HUD-sponsored 49 Federal Register 26,823 (June 29, 1984), a market in which the Community Development Block Grant program in post-merger HHI is above 1800 is considered to be highly concentrated. In such markets, the Justice Department is likely to challenge connection with applications filed by Crestar and a merger that increases the HHI by more than 50 points. The Justice Central Fidelity Bank and, for the reasons more fully Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors stated in those orders, concluded that these allegations indicating anticompetitive effects) unless the post-merger HHI is at did not warrant denial under the convenience and least 1800 and the merger increases the HHI by more than 200 points. needs factor.11 Subsequent to the Board's action on The Justice Department has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects those applications, HUD completed its investigation implicitly recognize the competitive effect of limited-purpose lenders and other non-depository financial entities. 5. In this context, depository institutions include commercial banks, savings banks, and savings associations. Market share data before 7. Protestant believes that Bank's denial of a recent loan request by consummation are based on calculations in which the deposits of thrift Protestant's principal on financial considerations evidences Bank's institutions are included at 50 percent. The Board previously has illegal discriminatory lending policies. The Board has considered this indicated that thrift institutions have become, or have the potential to allegation in its review of these applications. become significant competitors of commercial banks. See WM Ban- 8. Protestant also alleges that Crestar and other financial institutions corp, 76 Federal Reserve Bulletin 788 (1990); National City Corpora- have illegally excluded the principal of Protestant from participation in tion, 70 Federal Reserve Bulletin lAh (1984). Because the deposits of the loan program in retaliation for complaints about the administration Providence and VFSB would be transferred to a commercial bank of the program. under this proposal, those deposits are included at 100 percent in the 9. The Statement of the Federal Financial Supervisory Agencies calculation of pro forma market share. See Norwest Corporation, 78 Regarding the Community Reinvestment Act provides that a CRA Federal Reserve Bulletin 452 (1992); First Banks, Inc., 76 Federal examination is an important and often controlling factor in the Reserve Bulletin 669 (1990). consideration of an institution's CRA record, and that these reports 6. Market data are as of June 30, 1992. Consummation of this will be given great weight in the applications process. 54 Federal proposal would result in the following structural changes as measured Register 13,742, 13,745 (1989). by the HHI and increases in Crestar's share of total deposits in 10. Examiners noted two isolated incidences of noncompliance with depository institutions in these banking markets ("market share"): consumer credit laws. In one case, Bank failed to notify a consumer of Charlottesville (HHI unchanged at 1989 points and 14.2 percent adverse action on a loan and this error was corrected during the market share); Newport News-Hampton (HHI increase by 48 points examination. The other case involved failure to retain a record as to 1250 and 24.5 percent market share); Richmond-Petersburg (HHI required under the Board's Regulation B. Examiners determined that increase by 75 points to 1666 and 22.5 percent market share); Staunton Bank's compliance policies were sufficient to prevent similar viola- (HHI increase by 55 points to 1796 and 17.1 percent market share); tions in the future. and Washington RMA (HHI increase by 6 points to 949 and 9.4 11. Crestar Bank, 76 Federal Reserve Bulletin 879 (1990); Central percent market share). Fidelity Bank, 77 Federal Reserve Bulletin 675 (1991). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 147 of Protestant's allegations in November 1991. In a (2) Crestar and Bank currently meet, and upon formal written determination of compliance, HUD consummation of the proposed transaction will conconcluded that the denial of a funding request by the tinue to meet, all applicable capital standards; and principal of Protestant as well as the administration of (3) The proposed transaction would comply with the the loan program was in compliance with the Housing interstate provisions of the BHC Act if Providence and Community Development Act of 1974. and VFSB were state banks that Crestar was apply- In light of the foregoing and other facts of record, ing to acquire directly. See 12 U.S.C. § 1815(d)(3). the Board does not believe that Protestant's comments warrant denial of these applications.12 In this regard, The Board has also reviewed the factors it is required the Board concludes on the basis of all the facts of to consider in applications for the establishment and record that considerations relating to the convenience operation of branches under the Federal Reserve Act and needs of the communities to be served, including and finds these factors to be consistent with approval. Crestar's record of performance under the CRA, are Based on the foregoing and all the facts of record, consistent with approval. the Board has determined that these applications should be, and hereby are, approved. The Board's Other Considerations approval of these applications is conditioned upon compliance by Crestar and Bank with the commit- The Board has determined that the operation of a ments made in connection with these applications. For savings association by a bank holding company is purposes of this action, the commitments and condiclosely related to banking for purposes of section tions relied on in reaching this decision are both 4(c)(8) of the BHC Act. 12 C.F.R. 225.25(b)(9). Cre- conditions imposed in writing by the Board and, as star has committed to operate Providence in accor- such, may be enforced in proceedings under applicable dance with the Board's regulations and the record law. does not indicate that consummation of this proposal The acquisitions by Bank may not be consummated is likely to result in any significantly adverse effects, before the thirtieth calendar day following the effective such as undue concentration of resources, decreased date of this Order, and this proposal may not be or unfair competition, conflicts of interest, or unsound consummated later than three months after the effecbanking practices that are not likely to be outweighed tive date of this order, unless such period is extended by the public benefits of this proposal. Accordingly, by the Board or by the Federal Reserve Bank of the Board has determined that the balance of public Richmond, acting pursuant to delegated authority. interest factors it must consider under section 4(c)(8) By order of the Board of Governors, effective of the BHC Act is favorable and consistent with December 22, 1993. approval of the application. The Board also concludes that the financial and Voting for this action: Chairman Greenspan, Vice Chairmanagerial resources and future prospects of Crestar, man Mullins and Governors Kelley, Lindsey, and Phillips. Providence, and VFSB are consistent with approval of Absent and not voting: Governors Angell and La Ware. this application. In addition, the Board also has con- JENNIFER J. JOHNSON sidered the specific factors it must review under sec- Associate Secretary of the Board tion 5(d)(3) of the FDI Act, and the record in this case shows that: Appendix (1) The transaction will not result in the transfer of any federally insured depository institution's federal deposit insurance from one federal deposit insur- Virginia Federal Savings Branch locations ance fund to the other; 10710 Midlothian Turnpike, Richmond, Virginia 1201 Emmet Street, Charlottesville, Virginia 1643 Seminole Trail, Charlottesville, Virginia 1011 East Main Street, Orange, Virginia 230 South Wayne Avenue, Waynesboro, Virginia 12. Protestant has characterized Bank's participation in one community development program as a pretense. The Board notes that 11601 Midlothian Turnpike, Midlothian, Virginia Bank's 1993 CRA examination concluded that the bank supports the 14th and Lee Street, West Point, Virginia development or implementation of specific projects promoting com- 1222 Richmond Road, Williamsburg, Virginia munity revitalization consistent with its size, financial condition and local conditions. This examination also identifies a number of pro- 550 East Marshall Street, Richmond, Virginia grams and activities as demonstrating Bank's involvement and com- 14 North Laburnum Avenue, Richmond, Virginia mitment to local community organizations aside from the program mentioned by Protestant. 1624 Hull Street, Richmond, Virginia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

148 Federal Reserve Bulletin • February 1994 5601 Patterson Avenue, Richmond, Virginia tion in the world.2 In the United States, Applicant 5419 Lakeside Avenue, Richmond, Virginia owns a state nonmember bank based in Los Angeles, 2613 Parham Avenue, Richmond, Virginia California; operates branches in New York, New York and Chicago, Illinois; and maintains agencies in Los Providence Savings and Loan Association, F.A. Angeles, California, San Francisco, California, and Branch locations Atlanta, Georgia, as well as a loan production office in Houston, Texas. In addition to these banking opera- 6050A Burke Commons Road, Burke, Virginia tions, Applicant owns several nonbanking subsidiaries 4377 Kevin Walker Drive, Dumfries, Virginia in the United States, including Company.3 10695 Braddock Road, Fairfax, Virginia Company is, and will continue to be, a broker-dealer 9845 Georgetown Pike, Great Falls, Virginia registered with the Securities and Exchange Commis- 1443 Chain Bridge Road, McLean, Virginia sion ("SEC") and a member of the National Associa- 527 Maple Avenue, East, Vienna, Virginia tion of Securities Dealers, Inc. ("NASD"). Accord- 231 S. Van Dorn Street, Alexandria, Virginia ingly, Company is subject to the record-keeping, 3500 Mt. Vernon Avenue, Alexandria, Virginia reporting, fiduciary standards, and other requirements 8702 Richmond Highway, Alexandria, Virginia of the Securities Exchange Act of 1934 (15 U.S.C. 6116a Rose Hill Drive, Alexandria, Virginia § 78a et seq.), the SEC, and the NASD. Company 3101 Duke Street, Alexandria, Virginia currently engages in a variety of securities-related activities.4 The Dai-Ichi Kangyo Bank, Limited Tokyo,Japan Order Approving Application to Engage in Certain Nonbanking Activities 2. Asset and ranking data are as of March 31, 1993, and employ The Dai-Ichi Kangyo Bank, Limited, Tokyo, Japan exchange rates then in effect. ("Applicant"), a bank holding company within the 3. These nonbanking subsidiaries include, in addition to Company: (1) DKB Financial Products, Inc., New York, New York, which is meaning of the Bank Holding Company Act ("BHC engaged primarily in lending, leasing, financial advisory, loan mar- Act"), has applied for the Board's approval under keting, and swap and swap derivative products activities, pursuant to section 4(c)(8) of the BHC Act and sections 225.25(b)(1), (b)(4), section 4(c)(8) of the BHC Act (12 U.S.C. and (b)(5) of Regulation Y; § 1843(c)(8)) and section 225.23(a) of the Board's (2) DKB Financial Futures Corp., Chicago, Illinois ("DKB Fu- Regulation Y (12 C.F.R. 225.23(a)) to engage de novo, tures"), which is engaged primarily in futures commission merchant activities, pursuant to section 4(c)(8) of the BHC Act and section through its wholly owned subsidiary, DKB Securities 225.25(b)(18) of Regulation Y; and Corporation, New York, New York ("Company"), in (3) The CIT Group Holdings, Inc., New York, New York, which is the purchase and sale for its own account of certain engaged primarily in financing and leasing activities, pursuant to section 4(c)(8) of the BHC Act and sections 225.25(b)(1) and (b)(5) options and options on futures contracts with respect of Regulation Y. See The Dai-Ichi Kangyo Bank, Limited, 77 to certain bank-eligible securities and money market Federal Reserve Bulletin 670 (1991); The Dai-Ichi Kangyo Bank, instruments, for purposes other than hedging.1 Com- Limited, 76 Federal Reserve Bulletin 975 (1990); The Dai-Ichi Kangyo Bank, Limited, 76 Federal Reserve Bulletin 75 (1990). pany proposes to conduct these activities on a world- 4. The activities that Company currently has authority to conduct wide basis. include: (1) Underwriting and dealing in, to a limited extent, certain munic- Notice of the application, affording interested peripal revenue bonds, 1-4 family mortgage-backed securities, comsons an opportunity to submit comments, has been mercial paper, and consumer receivable-related securities; published (58 Federal Register 52,760 (1993)). The (2) Underwriting and dealing in securities that state member banks are authorized to underwrite and deal in under sections 5(c) and 16 time for filing comments has expired, and the Board of the Glass-Steagall Act (12 U.S.C. §§ 335 and 24(7)), pursuant to has considered the application and all comments re- section 225.25(b)(16) of Regulation Y (12 C.F.R. 225.25(b)(16)); (3) Providing securities brokerage and investment advisory serceived in light of the factors set forth in section 4(c)(8) vices, on both a separate and combined basis, pursuant to sections of the BHC Act. 225.25(b)(4) and (b)(15) of Regulation Y (12 C.F.R. 225.25(b)(4) and Applicant, with total consolidated assets of approx- (b)(15)); (4) Acting as agent in the private placement of all types of securities, imately $484.1 billion, is the largest banking organizaand providing related advisory services; (5) Buying and selling all types of securities on customer order as a "riskless principal"; and (6) Providing various types of financial and transaction advice to financial and nonfinancial institutions. 1. In particular, Company proposes to trade the derivative instru- See The Dai-Ichi Kangyo Bank, Limited, 77 Federal Reserve ments listed in Appendix A to this order. Company would hedge its Bulletin 184 (1991). In connection with its securities dealing business, positions in these instruments by trading in the contracts listed in Company also trades in futures, options, and options on futures on Appendix B. securities for hedging purposes. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 149 Closely Related to Banking Analysis securities dealing business and related derivatives activities, and should assist in minimizing the likeli- The Board previously has determined by order that hood of significant losses that could result from the purchasing and selling exchange-traded and over-the- activities that are the subject of this application. counter derivative instruments based on bank-eligible For example, Company has instituted internal consecurities and certain money market instruments, for trols to restrict the credit risk, market risk, and operpurposes other than hedging, is closely related to ations risk associated with futures and options trading. banking. See Swiss Bank Corporation, 11 Federal Company's board of directors has established a credit Reserve Bulletin 759 (1991) {"Swiss Bank").5 In this committee that determines counterparty credit expocase, as in Swiss Bank, the securities on which the sure limits. These credit risk limits are reviewed proposed instruments would be based are eligible to be periodically by the credit committee and board of underwritten and dealt in by national banks and state- directors, and by Applicant's Credit Supervision Divichartered banks that are members of the Federal sion in Tokyo. Broker selection procedures also are Reserve System.6 established by the board of directors. Business cannot begin with a new broker without the prior approval of Proper Incident to Banking Analysis the credit committee, which reviews a potential broker's capital adequacy, general financial condition, In order to approve the proposal, the Board must management, and other matters, and sets and perioddetermine that the proposed activities to be conducted ically reviews dealing limits for each broker to miniby Company "can reasonably be expected to produce mize settlement risk. Applicant's Credit Supervision benefits to the public, such as greater convenience, Division reviews all brokers selected by Company. increased competition, or gains in efficiency, that Market risk is controlled by imposing limits on outweigh possible adverse effects, such as undue Company's gross long and short positions for each concentration of resources, decreased or unfair com- contract, and on gross and net positions (on a riskpetition, conflicts of interests, or unsound banking adjusted basis) for the portfolio as a whole. In addipractices." 12 U.S.C. § 1843(c)(8). tion, trading limits restrict each trader's authority to Applicant and Company have substantial experi- open or close a position. These position and trading ence in trading bank-eligible securities and related limits are approved by Company's board of directors derivative products. Company currently engages in a and set forth in Company's Internal Rules for Trading. significant volume of dealing in U.S. government Company's board of directors has established "loss securities for its own account, and has broad experi- cut" rules, which apply to Company's trading activience in trading and monitoring bank-eligible securities ties as a whole. These rules, which are substantially positions. Company has gained substantial experience equivalent to stop loss limitations, are triggered whenin trading derivative products based on bank-eligible ever position losses reach specified limits, and require securities through its use of such instruments to re- that positions be liquidated or reduced to prevent the duce risks arising from its cash positions in U.S. accumulation of substantial losses in the portfolio. government securities and money market instruments. Company has established both daily and monthly loss Moreover, Applicant has extensive, worldwide expe- cut rules. The Board also notes that Company would rience in trading futures, options, and options on use the instruments listed in Appendix B to hedge the futures contracts with respect to U.S. and Japanese market risk resulting from the proposed activities. government securities and money market instruments. Operations risk, similarly, is mitigated by compre- The Board has carefully reviewed the operational, hensive review and monitoring procedures, including accounting, and risk management policies and systems independent verification of trade data and compliance proposed to be implemented by Company in conduct- with trading limits, as well as the hiring of experienced ing and monitoring the proposed activities. These operations staff and the implementation of detailed policies and systems are currently in place and have recordkeeping procedures and systems. Monitoring been used in connection with Company's existing and enforcement of Company's risk management policies and procedures is facilitated by sophisticated computer systems that report all positions and approx- 5. The Board also has indicated that trading in such derivative imate profit and loss figures, as well as information instruments for risk-reduction purposes is a permissible activity for regarding compliance with credit, position, trading, bank holding companies and their subsidiaries. See 12 C.F.R. and loss cut limits, on a real-time basis. 225.142. 6. See 12 U.S.C. § 24(7) and 335. The instruments proposed to be Senior management and internal auditing personnel traded by Company for purposes other than hedging, and the exwill be closely involved with the conduct of the changes and markets on which these activities would be conducted, are identical to those approved in Swiss Bank. proposed derivatives trading activities. As noted pre- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

150 Federal Reserve Bulletin • February 1994 viously, the credit committee and board of directors, summation of the proposal would increase market as well as other members of senior management, play liquidity and enable Company to operate more effia central role in establishing the parameters of the ciently in its government securities business. trading operation, including with respect to setting On the basis of the foregoing and all the other facts credit, position, and trading limits and loss cut rules, of record, the Board has concluded that the balance of and the selection and approval of brokers and coun- public interest factors it is required to consider under terparties. In addition, Company's chief trader will section 4(c)(8) of the BHC Act is favorable, and oversee directly all of the proposed trading activities, therefore that the proposed derivatives trading activiand will review all positions on a daily basis with ties constitute a proper incident to banking within the senior management. Company's computer systems meaning of the BHC Act. In making this determinawill generate daily reports of futures and options tion, the Board has considered the financial and manpositions for approval by senior management and agerial resources of Applicant and its subsidiaries, Company's chief compliance officer. The operations including Company, and the effect of this proposal staff will independently monitor all futures and options upon such resources, and has concluded that these transactions and counterparty exposure. factors are consistent with approval of this applica- The Board also notes that Company intends to tion.10 In this regard, the Board has noted that Appliengage in the proposed activities for a limited range of cant's capital ratios satisfy applicable risk-based stanpurposes, and does not propose to trade in derivative dards established under the Basle Accord, and are products trading for speculative purposes.7 The size of considered equivalent to the capital levels that would the proposed derivatives trading operation appears be required of a U.S. banking organization. The Board reasonable in relation to Company's government se- specifically has considered the size of the investment curities business. As a registered broker-dealer, Com- expected to be required by this proposal, and the pany will be required to comply with the SEC's net projected volume of Company's proposed derivatives capital rule.8 The Board has relied upon the fact that trading activities, in relation to Applicant's consoli- Company's proposed loss cut limits and procedures dated capital. should help to ensure that any losses that might result Based on all the facts of record, including all the from the proposed activities are small in relation to the representations and commitments made by Applicant total capital of Company and of Applicant.9 in this case, the Board has determined that the appli- The Board also expects that Company's engaging in cation should be, and hereby is, approved. The the proposed activities de novo would enhance market Board's approval is specifically conditioned on comcompetition and provide greater convenience to Com- pliance with all of the commitments made in connecpany's customers. Applicant also maintains that con- tion with this application and with the conditions referred to in this order. The Board's determination also is subject to all of the conditions set forth in 7. Applicant has indicated that the proposed trading activities will Regulation Y, including those in sections 225.4(d) and be integrated with Company's government securities trading operation, and will not function as an independent unit seeking separate 225.23(b) of Regulation Y, and to the Board's authorprofits solely from the options and futures markets. Applicant also has ity to require such modification or termination of the committed that Company will not act as a specialist or market-maker activities of a bank holding company or any of its with respect to these instruments. 8. See 15 C.F.R. 240.15c3-l. subsidiaries as the Board finds necessary to ensure 9. Applicant engages in the United States in futures commission compliance with, and to prevent evasion of, the promerchant activities and related advisory services with respect to visions of the BHC Act and the Board's regulations certain of the instruments proposed to be traded by Company. In order to minimize any potential conflicts of interests that could result and orders issued thereunder. For purposes of this from the related activities of Company and DKB Futures, Applicant action, these commitments and conditions are deemed has committed that DKB Futures will disclose to its customers its alfiliate relationship with Company, and the fact that Company trades to be conditions imposed in writing by the Board in futures, options, and options on futures contracts for its own account. connection with its findings and decision, and, as such, This disclosure will occur both at the beginning of the customer may be enforced in proceedings under applicable law. relationship and upon confirmation of any order. In addition, Applicant has committed that DKB Futures will not share non-public This transaction shall not be consummated later customer information with Company without the express written than three months after the effective date of this order, consent of the customer, and that in any case in which DKB Futures knowingly executes a transaction to which Company is a party, it will unless such period is extended for good cause by the make prior disclosure of that fact to its customer and obtain the Board or by the Federal Reserve Bank of San Francustomer's prior consent to the arrangement. These commitments are cisco, acting pursuant to delegated authority. similar to commitments relied upon by the Board in similar previous cases. See, e.g., The Long-Term Credit Bank of Japan, Limited, 79 Federal Reserve Bulletin 347, 348 n.13, n.14 (1993); The Sanwa Bank, Limited, 77 Federal Reserve Bulletin 64, 67 n.12 (1991); The Hon- 10. See 12 C.F.R. 225.24. See also The Fuji Bank, Limited, 75 gkong and Shanghai Banking Corporation, et al., 76 Federal Reserve Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Bulletin 770, 771 n.9, 772 n.10 (1990). Federal Reserve Bulletin 155 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 151 By order of the Board of Governors, effective Chicago Board of Trade December 13, 1993. U.S. Treasury Bond Futures Voting for this action: Vice Chairman Mullins and Gover- U.S. Treasury Two-Year, Five-Year, and Ten-Year nors Angell, Kelley, La Ware, Lindsey, and Phillips. Absent Note Futures and not voting: Chairman Greenspan. 30-Day Interest Rate Futures The Bond Buyer Municipal Bond Index Futures, and JENNIFER J. JOHNSON Associate Secretary of the Board Options thereon Chicago Mercantile Exchange Appendix A Eurodollar Futures Company proposes to trade for its own account in the U.S. Treasury Bill Futures following derivative instruments traded on the follow- 30-Day LIBOR Futures ing exchanges and markets: New York Commodities Exchange Chicago Board of Trade Five Year Treasury Note Futures Options on U.S. Treasury Bond Futures U.S. Two Year Treasury Note Futures Options on Two-Year, Five-Year, and Ten-Year U.S. Treasury Note Futures London International Financial Futures Exchange Chicago Mercantile Exchange Eurodollar Futures Options on Eurodollar Futures U.S. Treasury Bond Futures Options on U.S. Treasury Bill Futures Options on 30-day LIBOR Futures Singapore International Monetary Exchange Chicago Board Options Exchange Eurodollar Futures J.P. Morgan & Co. Incorporated Options on 30-Year U.S. Treasury Bonds Specific New York, New York Issues Options on 5-Year U.S. Treasury Notes Specific Order Approving an Application to Engage in Issues Futures Commission Merchant Activities Options on Short Term Treasury Index Options on Long Term Treasury Index J.P. Morgan & Co. Incorporated ("Applicant"), a bank holding company within the meaning of the Bank New York Commodities Exchange Holding Company Act ("BHC Act"), has applied under section 4(c)(8) of the BHC Act (12 U.S.C. Options on Five Year Treasury Note Futures § 1843(c)(8)), and section 225.23 of the Board's Regulation Y (12 C.F.R. 225.23), to provide futures com- London International Financial Futures Exchange mission merchant ("FCM") execution, clearance, and advisory services to unaffiliated customers with re- Options on Eurodollar Futures spect to futures and options on futures on non-finan- Options on U.S. Treasury Bond Futures cial commodities.1 Neither JPMFI nor JPMSI would Over-the-Counter Market 1. Applicant proposes to conduct these FCM activities through two wholly owned subsidiaries, J.P. Morgan Futures, Inc. ("JPMFI"), Options on U.S. Treasury Bills, Notes, and Bonds and J.P. Morgan Securities, Inc. ("JPMSI"), both located in New York, New York, and would conduct the proposed activities on the Appendix B New York Mercantile Exchange ("NYMEX"), and the Singapore International Monetary Exchange Limited ("SIMEX"). Applicant proposes initially to broker futures and options on futures on fuel oil, Company would hedge its positions in the contracts gas oil, crude oil, heating oil, gasoline, propane, and natural gas. A complete list of the proposed contracts is set forth in the Appendix. listed in Appendix A through the purchase of the Applicant must provide at least 20 days prior written notice to the following exchange-traded contracts: Federal Reserve System before: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

152 Federal Reserve Bulletin • February 1994 trade in the proposed derivative instruments for their with spouse) exceeds $1 million.3 Neither JPMFI nor own accounts for any purpose, or would trade in the JPMSI would provide such services to retail brokerage physical commodities themselves, except when neces- customers or locals. However, JPMFI and JPMSI sary to assist in the orderly resolution of an account.2 proposes to provide FCM execution, clearance, and JPMFI and JPMSI would provide the proposed FCM advisory services for non-financial commodity derivaservices only to institutional customers and natural tives to market makers.4 persons whose individual net worth (or joint net worth Notice of the application, affording interested persons an opportunity to submit comments on the proposal, has been published (58 Federal Register 34,054, 51,349 (1993)). The time for filing comments has ex- (i) Engaging in FCM activities with respect to additional ex- pired, and the Board has considered the application change-traded derivative contracts on agricultural, energy, or and all comments received in light of the public non-precious metal commodities (unless the Board has approved the contracts for any other bank holding company under the BHC interest factors set forth in section 4(c)(8) of the BHC Act) to assure that such contracts are comparable to previously Act. approved contracts; or (ii) Becoming a clearing or non-clearing member of any commod- Applicant, with total consolidated assets of ities exchange that previously has been reviewed and approved $129.3 billion, is the fifth largest commercial banking by the Board under the BHC Act. organization in the United States, and engages directly Applicant must obtain Board approval before becoming a clearing or non-clearing member of any commodities exchange that has not and through subsidiaries in a broad range of permissibeen reviewed and approved by the Board under the BHC Act. JPMFI ble nonbanking activities.5 JPMFI6 and JPMSI7 are and JPMSI may each conduct FCM activities through omnibus trading accounts established in their own names with clearing members of both FCMs registered with the CFTC, are both memexchanges on which JPMFI or JPMSI would not themselves be bers of the NFA, and are, therefore, both subject to clearing members. 79 Federal Reserve Bulletin 723, 724 (1993) the recordkeeping, reporting, fiduciary standards, and ("Northern Trust"). Applicant has committed that, with respect to their omnibus account customers, JPMFI and JPMSI will employ the other requirements of the Commodity Exchange Act same credit approval and risk management procedures developed for (7 U.S.C. § 1 et seq.), the CFTC, and the NFA.8 In their respective executing and clearing activities. Applicant also proposes to provide execution-only and clearingonly services to customers pursuant to customer agreements and "give-up agreements" that would afford the clearing FCM the right to 3. Applicant anticipates that, following consummation of the prorefuse to clear customer trades that the clearing FCM reasonably posal, a relatively small percentage of JPMFI's and JPMSI's respecdeems unsuitable in light of market conditions or a customer's tive businesses would be conducted on behalf of managed commodity financial situation or objectives. These activities have been approved funds (or commodity pools), which are regulated and supervised by by the Board. See Northern Trust; The Sakura Bank, Limited, 79 the Commodity Futures Trading Commission ("CFTC") and the Federal Reserve Bulletin 728 (1993) {"Sakura"). JPMFI and JPMSI National Futures Association ("NFA"). None of JPMFI's or JPMSI's would each conduct its proposed execution-only and clearing-only managed commodity fund customers would be owned or sponsored activities in a manner largely consistent with Northern Trust and by, or otherwise affiliated with, Applicant. Applicant, JPMFI, and Sakura. In this regard, Applicant has committed that neither JPMFI JPMSI will not act as a commodity pool operator without prior Board nor JPMSI will serve as the primary or qualifying clearing firm for any approval. However, JPMFI and JPMSI may provide FCM investment unaffiliated parties. advisory services to commodity pools. Both JPMFI and JPMSI will Applicant's proposal, however, differs from the proposals approved apply their credit approval procedures to their respective managed in Northern Trust and Sakura in some respects. JPMFI and JPMSI commodity fund customers. Applicant has committed to provide the will not subject their execution-only customers to the same formal Federal Reserve System with prior notice of any material change in credit review procedures to which their execution-and-clearing and the characteristics of JPMFI's or JPMSI's customer base. clearing-only customers are subject, in view of the reduced credit 4. Applicant states that certain of its customers may become market exposures and levels of risk that Applicant believes are involved in makers in new financial contracts in order to facilitate the introduction execution-only activities compared to execution-and-clearing activi- of the contracts, or to assist in the ongoing trading of the contracts. ties and clearing-only activities. Neither JPMFI nor JPMSI would 5. Data are as of September 30, 1993. accept a client as an execution-only customer unless the company's 6. JPMFI, formerly Morgan Futures Corporation, is a clearing senior management is satisfied that the acceptance of the client as an member of the NYMEX, the SIMEX, the Commodity Exchange, execution-only customer would not subject the company to unaccept- Inc., the Chicago Board of Trade, and the Chicago Mercantile able levels of credit risk based on: Exchange ("CME"), and is currently engaged in executing and (i) The market reputation of the client (or its advisor), or the clearing on major commodities exchanges futures and options on senior management's general knowledge of the creditworthiness futures on financial commodities and certain broad-based and widely of the client; and traded stock and bond indices. See J.P. Morgan & Co. Incorporated, (ii) The market reputation of the client's give-up clearing firm. 71 Federal Reserve Bulletin 251 (1985); J.P. Morgan & Co. Incorpo- The FCMs that would execute customer trades that JPMFI or rated, 70 Federal Reserve Bulletin 780 (1984); J.P. Morgan & Co. JPMSI would clear pursuant to give-up agreements would not Incorporated, 69 Federal Reserve Bulletin 733 (1983); J.P. Morgan & necessarily be independent from the customer. Co. Incorporated, 68 Federal Reserve Bulletin 514 (1982). 2. In those circumstances when a customer defaults on a contract 7. JPMSI is currently engaged in limited bank-ineligible securities after the contract expires and JPMFI or JPMSI is required to make or underwriting and dealing activities permissible under section 20 of the take delivery of the underlying commodity, or where JPMFI or JPMSI Glass-Steagall Act (12 U.S.C. § 377). See J.P. Morgan & Co. Incorexercises its rights to liquidate a customer's account, the company is porated, et al., 75 Federal Reserve Bulletin 192 (1989), ajfd sub nom. permitted to take those actions necessary to mitigate its damages, Securities Industries Ass'n v. Board of Governors of the Federal including acting for its own account in retendering or redelivering the Reserve System, 900 F.2d 360 (D.C. Cir. 1990). commodity, entering into an exchange-for-physical transaction, or 8. JPMSI is a member of the New York Stock Exchange Inc., the entering into an offsetting transaction in the cash market, provided American Stock Exchange Inc., and the Chicago Stock Exchange. In these or other appropriate actions are taken as soon as commercially connection with this proposal, Applicant intends to transfer to JPMSI practicable. all of JPMFI's FCM activities except for JPMFI's clearing activities Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 153 addition, JPMSI is, and will continue to be, a broker- Financial Factors, Managerial Resources, and Other dealer registered with the Securities and Exchange Considerations Commission ("SEC"), and a member of the National Association of Securities Dealers, Inc. ("NASD"). In order to approve this application, the Board must Accordingly, JPMSI is subject to the recordkeeping, determine that the performance of the proposed activreporting, fiduciary standards, and other requirements ities by Applicant can reasonably be expected to of the Securities Exchange Act of 1934 (15 U.S.C. produce public benefits that would outweigh possible § 78a et seq.), the SEC, and the NASD. 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, FCM Activities the Board must consider the financial condition and resources of the applicant and its subsidiaries and the The Board has determined that executing and clearing effect of the proposal on these resources.12 Based on futures and options on futures on non-financial com- the facts of this case, the Board concludes that the modities are activities closely related to banking for financial considerations are consistent with approval purposes of the BHC Act, and thus activities permis- of this application. The managerial resources of Apsible for bank holding companies.9 The Board also has plicant also are consistent with approval. permitted bank holding companies to provide, on a The Board expects that the de novo entry of Applistand-alone basis, investment advice with respect to cant into the market for the proposed services in the trading futures and options on futures on non-financial United States would provide added convenience to commodities.10 Moreover, the Board has allowed bank Applicant's customers, and would increase the level of holding companies to provide a combination of execu- competition among existing providers of these sertion and clearing services and investment advisory vices. To address the potential adverse effects of the services in connection with executing and clearing proposed activities, Applicant has committed to conexchange-traded derivatives of financial commodities duct the proposed activities subject to the same rules (e.g., futures and options on futures on foreign ex- and procedures imposed by the Board on FCM activchange, bullion, government securities, and money ities in derivatives of financial commodities.13 In addimarket instruments).11 Based on all the facts of record, tion, in order to minimize risks associated with the the Board has determined that the proposed activities, delivery of non-financial commodities, Applicant has including providing a combination of advisory services committed to take a number of steps in the event one regarding nonfinancial commodity derivatives and act- of Company's customers has an open position in a ing as an FCM in the execution and clearance of these contract after the contract has expired, and the cusderivatives, are closely related to banking within the tomer is unable or unwilling to make or take delivmeaning of section 4 of the BHC Act. ery.14 Based on the commitments made by Applicant regarding its conduct of the proposed activities, the limitations on the activities noted in this order, and all the facts of record, the Board has determined that the performance of the proposed activities by Applicant could reasonably be expected to produce public benefits that would outweigh the possible adverse effects on the SIMEX and the CME. After the transfer, JPMSI would ofifer its U.S. clients direct access to the overseas trading desks of Edge Act subsidiaries of Morgan Guaranty Trust Company of New York ("Morgan Guaranty"). Employees of these Edge Act subsidiaries would act as agent for JPMSI in selling derivative instruments, and would become employees of JPMSI for the limited purpose of 12. 12 C.F.R. 225.24; The Fuji Bank, Limited, 75 Federal Reserve permitting these employees to become registered with the Commodity Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve Futures Trading Commission in connection with this activity. These Bulletin 155 (1987). employees would not sell securities in the U.S., and JPMSI would not 13. See 12 C.F.R. 225.25(b)(18). Applicant also has committed that sponsor the employees to be licensed to sell securities in the U.S. Company will not enter into any impermissible tying arrangements JPMSI also will utilize the GLOBEX trading system, an after-hours with any lending affiliates, and that all customer trading positions of international multi-exchange derivatives trading system. Because JPMFI and JPMSI will be marked to market at least daily. JPMSI will not operate a 24-hour sales desk in the U.S., JPMSI will 14. Among the steps Applicant will take are: pass its book of client GLOBEX orders to a London Edge Act (1) retendering the commodity; subsidiary of Morgan Guaranty, which will execute the GLOBEX (2) offsetting the customer's open position through an exchange-fororders of JPMSI's U.S. customers. physical transaction; 9. See Bank of Montreal, 79 Federal Reserve Bulletin 1049 (1993). (3) offsetting the commodity in the cash market; and 10. See Swiss Bank Corporation, 77 Federal Reserve Bulletin 126 (4) seeking to avoid delivery through some other mechanism. See (1991). Bank of Montreal, 79 Federal Reserve Bulletin 1049, 1052 n.21 11. See, e.g., Citicorp, 68 Federal Reserve Bulletin 776 (1982). (1993). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

154 Federal Reserve Bulletin • February 1994 under the proper incident to banking standard of Options on New York Harbor Unleaded Gasoline section 4(c)(8) of the BHC Act. futures Based on the foregoing and all the facts of record, Heating Oil futures the Board has determined to, and hereby does, ap- Options on Heating Oil futures prove the application subject to all the terms and Propane futures conditions set forth in this order, and in the above Natural Gas futures noted Board regulations and orders that relate to these Options on Natural Gas futures activities.15 The Board's determination is also subject to all of the terms and conditions set forth in the Singapore International Monetary Exchange Board's Regulation Y, including those in sections Limited: 225.4(d) and 225.23(b), and to the Board's authority to require modification or termination of the activities of High Sulphur Fuel Oil futures a bank holding company or any of its subsidiaries as Gas Oil futures the Board finds necessary to assure compliance with, and to prevent evasion of, the provisions of the BHC NationsBank Corporation Act, and the Board's regulations and orders issued Charlotte, North Carolina thereunder. The Board's decision is specifically conditioned on compliance with all of the commitments Order Approving Application to Engage in Certain made in this application, including the commitments Nonbanking Activities discussed in this order and the conditions set forth in this order and in the above-noted Board regulations NationsBank Corporation, Charlotte, North Carolina and orders. These commitments and conditions shall ("NationsBank"), a bank holding company within the be deemed to be conditions imposed in writing by the meaning of the Bank Holding Company Act ("BHC Board in connection with its findings and decisions, Act"), has applied under section 4(c)(8) of the BHC and may be enforced in proceedings under applicable Act (12 U.S.C. § 1843(c)(8)) and section 225.23(a) of law. the Board's Regulation Y (12 C.F.R. 225.23(a)), This transaction shall not be consummated later through its wholly owned subsidiary, Nations Finanthan three months after the effective date of this order, cial Capital Corporation, Stamford, Connecticut unless such period is extended for good cause by the ("Company"), to acquire substantially all the assets Board or by the Federal Reserve Bank of New York, and assume certain of the liabilities of US WEST pursuant to delegated authority. Financial Services, Inc., Stamford, Connecticut ("Fi- By order of the Board of Governors, effective nancial Services"), and to engage in the following December 23, 1993. nonbanking activities: (1) Making, acquiring, and servicing loans and other Voting for this action: Chairman Greenspan, Vice Chair- extensions of credit, pursuant to section 225.25(b)(1) man Mullins, and Governors Kelley, Lindsey, and Phillips. of Regulation Y;1 Absent and not voting: Governors Angell and La Ware. (2) Leasing personal and real property, pursuant to sections 225.25(b)(5)(i) and (ii) of Regulation Y; and JENNIFER J. JOHNSON (3) Credit-related insurance activities, pursuant to Associate Secretary of the Board sections 225.25(b)(8)(i) and (ii) of Regulation Y. Appendix NationsBank proposes to conduct these activities throughout the United States. New York Mercantile Exchange: Notice of the application, affording interested persons an opportunity to submit comments on the pro- Light Sweet Crude Oil futures Options on Light Sweet Crude Oil futures Sour Crude Oil futures 1. In particular, NationsBank proposes that Company continue to Gulf Coast Unleaded Gasoline futures engage in the following lines of business currently conducted by Financial Services: corporate finance; commercial real estate finance; New York Harbor Unleaded Gasoline futures special industries finance; mortgage investments; consumer finance; project finance; and portfolio management. In connection with these activities, Financial Services also purchases and holds for investment purposes various corporate debt and mortgage-backed securities. 15. The Board also considered Applicant's request for prior ap- NationsBank has stated that Company will not engage in any underproval for certain foreign subsidiaries of Morgan Guaranty to market writing, dealing, brokerage, private placement, "riskless principal", the securities and underwriting services of JPMSI overseas. The or similar activities with respect to such corporate and mortgage- Board has approved this request by a separate letter. backed securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 155 posal, has been published (58 Federal Register 47,457 resources of the applicant and its subsidiaries and the (1993)). The time for filing comments has expired, and effect of the transaction on those resources.7 Based on the Board has considered the application and all all the facts of record, the Board has concluded that comments received in light of the factors set forth in financial and managerial considerations are consistent section 4(c)(8) of the BHC Act. with approval of this proposal. NationsBank, with total consolidated assets of In order to approve this application, the Board also $158 billion, is the third largest commercial banking must determine that the performance of the proposed organization in the United States, and operates bank activities by Company can reasonably be expected to subsidiaries in North Carolina, Texas, Georgia, Vir- produce public benefits that would outweigh possible ginia, Maryland, the District of Columbia, Tennessee, adverse effects under the proper incident to banking Kentucky, Florida, South Carolina, and Delaware.2 standard of section 4(c)(8) of the BHC Act. In this NationsBank engages through its subsidiaries in a regard, the Board expects that Company's conduct of broad range of banking and permissible nonbanking the proposed activities would provide added conveactivities. Company is a newly established corporation nience and services to NationsBank's customers. Naformed for the purpose of this transaction.3 tionsBank also maintains that consummation of the The Board has previously determined by regulation proposal would preserve the level of competition that, subject to the limitations established by Regula- among existing providers of these services, and would tion Y, Company's proposed credit, leasing, and in- increase the availability of credit, in markets currently surance activities are closely related to banking within served by Financial Services. Moreover, consummathe meaning of the BHC Act, and therefore permissi- tion of this proposal is not likely to result in any ble for bank holding companies.4 NationsBank has significant adverse effects, such as undue concentracommitted that these proposed activities will be con- tion of resources, decreased or unfair competition, ducted in conformity with the limitations established conflicts of interests, or unsound banking practices. by Regulation Y.5 Accordingly, the Board has con- Accordingly, the Board has concluded that the perforcluded that these proposed activities are closely re- mance of the proposed activities by Company can lated to banking.6 reasonably be expected to produce public benefits that In every case involving a nonbanking acquisition by would outweigh possible adverse effects under the a bank holding company under section 4 of the BHC proper incident to banking standard of section 4(c)(8) Act, the Board considers the financial condition and of the BHC Act. On the basis of the foregoing and all the facts of record, including the commitments furnished by Na- 2. Asset data are as of October 1, 1993. tionsBank, the Board has determined that the applica- 3. Company currently has no assets or operations, and is owned by tion should be, and hereby is, approved. The Board's NationsBank indirectly through Nations Financial Holding Corporation. approval is specifically conditioned upon compliance 4. NationsBank has proposed that Company provide substantial with the commitments made in connection with this senior and subordinated debt financing to certain companies together with warrants exercisable for up to 24.9 percent of the borrower's application and with the conditions referred to in this voting shares. NationsBank has made a number of commitments order. The Board's determination also is subject to all governing these investments, including that Company would own no the terms and conditions set forth in Regulation Y, equity in any of these borrowers, and that the proposed subordinated debt would not be convertible into equity. Company would have no including those in sections 225.4(d) and 225.23(b) of agreement to acquire the borrower, and would have no director or Regulation Y, and to the Board's authority to require employee interlocks with the borrower. In general, the warrants would not be exercisable by Company without prior Board approval, such modification or termination of the activities of a and could be transferred only in a manner approved by the Board. See bank holding company or any of its subsidiaries as the Policy Statement on Nonvoting Equity Investments by Bank Holding Board finds necessary to ensure compliance with, and Companies (12 C.F.R. 225.143). On the basis of these and other limitations proposed by NationsBank, and all the facts of record, the to prevent evasion of, the provisions of the BHC Act Board has determined that the structure and terms of the proposed and the Board's regulations and orders issued theretransactions appear consistent with the BHC Act. under. For purposes of this action, these commitments 5. See 12 C.F.R. 225.25(b)(1) (making, acquiring, and servicing loans and other extensions of credit); 12 C.F.R 225.25(b)(5) (leasing of and conditions are deemed to be conditions imposed in real and personal property); and 12 C.F.R. 225.25(b)(8)(i) and (ii) writing by the Board in connection with its findings (certain credit-related insurance activities). and decision, and, as such, may be enforced in pro- 6. Certain of the assets proposed to be acquired from Financial Services are not permissible for bank holding companies under section ceedings under applicable law. 4 of the BHC Act. In general, these impermissible assets consist of stock, or unrestricted warrants exercisable for stock, representing more than 5 percent of the voting shares of companies whose activities are not closely related to banking. NationsBank has committed that within two years following the date of this order, it will either dispose 7. See 12 C.F.R. 225.24. See also The Fuji Bank, Limited, 75 of these assets or conform their terms and amounts to those permis- Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 sible for bank holding companies. Federal Reserve Bulletin 155 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

156 Federal Reserve Bulletin • February 1994 This transaction shall not be consummated later (c) Over-the-counter securities, such as stock than three months after the effective date of this order, index options and money market instrument unless such period is extended for good cause by the options, that are subject to regulation by the Board or by the Federal Reserve Bank of Richmond, SEC; and acting pursuant to delegated authority. (3) Buying and selling on the order of investors as a By order of the Board of Governors, effective "riskless principal" obligations of the United States December 6, 1993. government, general obligations of the various states and their political subdivisions, and other Voting for this action: Chairman Greenspan, Vice Chair- obligations that state member banks of the Federal man Mullins, and Governors Kelley, La Ware, Lindsey, and Reserve System may be authorized to underwrite Phillips. Absent and not voting: Governor Angell. and deal in under 12 U.S.C. § 24 and 335 ("bankeligible securities").2 JENNIFER J. JOHNSON Associate Secretary of the Board Notice of the application, affording interested persons an opportunity to submit comments, has been Societe Generale published (58 Federal Register 32,135 (1993)). The Paris, France time for filing comments has expired, and the Board has considered the application and all comments re- Order Approving an Application to Engage in ceived in light of the public interest factors set forth in Full-Service Brokerage Activities and Dealing in section 4(c)(8) of the BHC Act. Government Obligations and Money Market Applicant, with total consolidated assets equivalent Instruments to approximately $257.3 billion, is the 19th largest bank in the world, and the fourth largest commercial Societe Generale, Paris, France ("Applicant"), a forbanking organization in France.3 In the United States, eign bank subject to the provisions of the Bank Hold- Applicant operates branches in New York, New York, ing Company Act ("BHC Act"), has applied for the Chicago, Illinois, and Los Angeles, California; an Board's approval under section 4(c)(8) of the BHC Act agency in Dallas, Texas; and representative offices in (12 U.S.C. § 1843(c)(8)) and section 225.23 of the Houston, Texas, and San Francisco, California. Ap- Board's Regulation Y (12 C.F.R. 225.23), to engage plicant engages, both directly and through subsidiarde novo, domestically and internationally, through its ies, in a variety of permissible nonbanking activities in wholly owned indirect subsidiary, FIMAT Futures the United States. USA, Inc., Chicago, Illinois ("Company"),1 in the Company is a futures commission merchant regisfollowing securities-related activities: tered with the Commodity Futures Trading Commis- (1) Executing without clearing, executing and clearsion ("CFTC") and a member of the National Futures ing, and providing investment advisory services Association ("NFA"), and is, therefore, subject to the with regard to exchange-traded derivative securirecordkeeping, reporting, fiduciary standards, and ties, such as foreign currency options and stock other requirements of the Commodity Exchange Act index options, that are subject to regulation by the (7 U.S.C. § 1 et seq.), the CFTC, and the NFA. Securities and Exchange Commission ("SEC"); Company also intends to register as a broker-dealer (2) Providing securities brokerage and investment with the Securities and Exchange Commission advisory services, both separately and on a com- ("SEC"), and to seek admission to the National bined basis, with respect to: Association of Securities Dealers Inc. ("NASD"). (a) Obligations of the United States government Upon such registration with the SEC and admission to and its agencies, general obligations of the the NASD, Company would be subject to the recordvarious states and their political subdivisions, keeping, reporting, fiduciary standards, and other reother exempted securities, and options thereon; quirements of the Securities Exchange Act of 1934 (b) Registered and unregistered securities is- (15 U.S.C. § 78a et seq.), the SEC, and the NASD. sued by foreign governments that are full members of the Organization for Economic Cooperation and Development, and options thereon; and 2. Company's investment advisory services will be furnished primarily to financially sophisticated customers, including pension fund managers, corporate treasurers, banks, insurance companies, offshore 1. Company is wholly owned by FIMAT International, Paris, and onshore investment companies, hedge funds, and other types of France, a wholly owned subsidiary of Applicant. Company also institutional money managers. maintains an office in New York, New York. 3. Data are as of December 31, 1992. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 157 The Board previously has determined, by regula- under. The Board's decision is specifically conditioned tion, that the proposed activities are closely related to on compliance with all the commitments made in banking under section 4(c)(8) of the BHC Act. The connection with this application, including the comexecution, clearance, and brokerage of securities, mitments discussed in this order and the conditions set either on a stand-alone basis or in combination with forth in this order and in the above noted Board the provision of investment advisory services, is au- regulations and orders. These commitments and conthorized by sections 225.25(b)(4) and (15) of Regula- ditions shall be deemed to be conditions imposed in tion Y (12 C.F.R. 225.25(b)(4) and (15)). Buying and writing by the Board in connection with its findings selling bank-eligible securities on the order of inves- and decisions, and may be enforced in proceedings tors as a "riskless principal" is a permissible activity under applicable law. pursuant to the dealing authority of section This transaction shall not be consummated later 225.25(b)(16) of Regulation Y (12 C.F.R. than three months after the effective date of this order 225.25(b)(16)). Applicant has committed that Comunless such period is extended for good cause by the pany will engage in the proposed activities in accor- Board, or by the Federal Reserve Bank of New York dance with all the conditions and limitations placed on acting pursuant to delegated authority. those activities as set forth in Regulation Y.4 By order of the Board of Governors, effective In order to approve this application, the Board also December 16, 1993. must determine that the performance of the proposed activities by Applicant can reasonably be expected to Voting for this action: Vice Chairman Mullins and Goverproduce public benefits that would outweigh possible nors Angell, Kelley, LaWare, Lindsey, and Phillips. Absent adverse effects under the proper incident to banking and not voting: Chairman Greenspan. standard of section 4(c)(8) of the BHC Act. Under the JENNIFER J. JOHNSON framework established in Regulation Y and prior Associate Secretary of the Board Board decisions, consummation of this proposal is not likely to result in any significant adverse effects, such The Sumitomo Bank, Limited as undue concentration of resources, decreased or Osaka, Japan unfair competition, conflicts of interests, or unsound banking practices. The Board expects that the de novo Order Approving an Application to Engage in entry of Applicant into the market for the proposed Foreign Exchange Advisory and Transactional services in the United States would provide added Activities convenience to Applicant's customers, and would increase the level of competition among existing pro- The Sumitomo Bank, Limited, Osaka, Japan ("Applividers of these services. Accordingly, the Board has cant"), a bank holding company within the meaning of determined that the performance of the proposed the Bank Holding Company Act ("BHC Act"), has activities by Applicant could reasonably be expected applied under section 4(c)(8) of the BHC Act to produce public benefits that would outweigh possi- (12 U.S.C. § 1843(c)(8)), and section 225.23 of the ble adverse effects under the proper incident to bank- Board's Regulation Y (12 C.F.R. 225.23), to engage ing standard of section 4(c)(8) of the BHC Act. through its wholly owned subsidiary, Sumitomo Bank On the basis of the foregoing and all the facts of Capital Markets, Inc., New York, New York ("Comrecord, the Board has determined to, and hereby does, pany"), in providing foreign exchange advisory and approve the application subject to all the terms and transactional services ("FX services") pursuant to conditions set forth in this order. The Board's detersection 225.25(b)(17) of the Board's Regulation Y mination is also subject to all the terms and conditions (12 C.F.R. 225.25(b)(17)).i Company currently enset forth in Regulation Y, including those in sections gages in commercial lending and personal and real 225.4(d), 225.23(b), 225.25(b)(4), 225.25(b)(15) and property leasing activities, brokers and deals in inter- 225.25(b)(16), and to the Board's authority to require est rate and currency swaps and swap-derivative prodmodification or termination of the activities of a bank ucts, and acts as a market maker in foreign currencies. holding company or any of its subsidiaries as the Board finds necessary to assure compliance with, and to prevent evasion of, the provisions of the BHC Act, and the Board's regulations and orders issued there- 1. These services are providing, by any means, general information and statistical forecasting with respect to foreign markets; advisory services designed to assist customers in monitoring, evaluating, and managing their foreign exchange exposures; and transactional services with respect to foreign exchange by arranging for "swaps" 4. Company does not propose to underwrite or act as a principal among customers with complementary foreign exchange exposures with respect to bank-eligible securities. and for the execution of foreign exchange transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

158 Federal Reserve Bulletin • February 1994 Notice of the application, affording interested per- position in foreign exchange by virtue of these swap sons an opportunity to submit comments on the pro- activities.4 posal, has been published (58 Federal Register 33,444 The Board has, in very limited circumstances, per- (1993)). The time for filing comments has expired, and mitted the same nonbanking subsidiary simultaneously the Board has considered the application and all to conduct foreign exchange advisory services and to comments received in light of the public interest take positions for the company's own account. The factors set forth in section 4(c)(8) of the BHC Act. Board has been concerned in these cases about the Applicant, with total consolidated assets of potential conflicts of interests that may arise when $481.6 billion, is the third largest banking organization these activities are combined.5 in Japan and in the world.2 Applicant controls banks in Sumitomo has made a number of commitments to California and Hawaii, and operates branches in San address the potential conflicts of interests in this Francisco and Los Angeles, California; Chicago, Illi- proposal. In particular, Sumitomo has committed that nois; and New York, New York. Applicant also oper- Company will disclose to each of its FX services ates agencies in Atlanta, Georgia; and Houston, customers the fact that Company may take positions in Texas. Applicant engages directly and through subsid- foreign exchange and thus have an interest in the iaries in a broad range of permissible nonbanking course of action ultimately chosen by the customer. activities. Moreover, in any case in which Company has an The Board has previously determined that FX ser- interest in a specific transaction as an intermediary or vices are closely related to banking. See 12 C.F.R. principal, Company will advise its customer of that 225.25(b)(17). The Board also is required to determine fact before recommending participation in that transthat the performance of the proposed activities by action. Further, Company will offer its FX services Applicant "can reasonably be expected to produce only to sophisticated customers who would be unlikely benefits to the public, such as greater convenience, to place undue reliance on investment advice received, increased competition, or gains in efficiency, that and who would be better able to detect investment outweigh possible adverse effects, such as undue advice motivated by self-interest. These commitments concentration of resources, decreased or unfair com- and limitations on the customer base are similar to petition, conflicts of interests, or unsound banking those relied on by the Board in previous cases. practices." 12 U.S.C. § 1843(c)(8). The Board also notes that Company's position- Section 225.25(b)(17) of the Board's Regulation Y taking activities in foreign exchange are limited to the permits a bank holding company to provide FX circumstances required by its swap activities, and that services as long as the bank holding company con- Company does not engage in taking positions for its ducts these activities in a separate subsidiary that own account for speculative purposes. Company also does not take positions in foreign exchange. Com- will not engage in direct execution of foreign exchange pany has already been permitted to take positions in transactions as part of its FX services. foreign exchange, to a limited extent, in connection Based on the foregoing and all the facts of record, with its currency swap activities. In 1989, the Board the Board believes that these commitments address permitted Company to act as a principal and broker the potential conflicts of interests that may result from in interest rate and currency swaps and swap-deriv- Sumitomo's proposal. ative products, and to provide advice to institutional In every case under section 4 of the BHC Act, the customers on interest rate and currency swaps and Board also must consider the financial condition and swap derivative products.3 As part of its approved resources of the applicant and its subsidiaries and the currency swap activities, Company takes positions in effect of the proposal on these resources.6 Based on foreign currency, either as part of a matched swap the facts of this case, the Board concludes that the transaction or for the purpose of hedging any un- financial considerations are consistent with approval matched positions pending a suitable match, but does of this application. The managerial resources of Apnot enter into unmatched or unhedged swaps or plicant also are consistent with approval. currency positions for speculative purposes. Thus, under the proposal, Company would be providing 4. Company will itself execute foreign exchange transactions only foreign exchange advisory services while having a for the positions it takes in connection with its swap activities. 5. See Final Rule, 49 Federal Register 794, 816 (1984); Hongkong and Shanghai Banking Corporation, 69 Federal Reserve Bulletin 221, 223 (1983). See also The Bank of Tokyo, Ltd., 76 Federal Reserve Bulletin 654 (1990); NationsBank Corporation, 79 Federal Reserve Bulletin 892 (1993). 2. Asset and ranking data are as of March 31, 1993. 6. 12 C.F.R. 225.24; The Fuji Bank, Limited, 75 Federal Reserve 3. The Sumitomo Bank, Limited, 75 Federal Reserve Bulletin 582 Bulletin 94 (1989); Bayerische Vereinsbank AG, 11 Federal Reserve (1989). Bulletin 155 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 159 Consummation of the proposal as a whole would Orders Issued Under Sections 3 and 4 of the provide added convenience to Applicant's and Com- Bank Holding Company Act pany's customers. In addition, the Board expects that the de novo entry of Company into the market First National Bank Shares, Ltd. for the proposed services would increase the level of Great Bend, Kansas competition among providers of these services. Consummation of this proposal subject to the terms and Order Approving Acquisition of Bank Holding conditions discussed in this order is not likely to Company and General Insurance Agencies result in any significantly adverse effects. Accordingly, the Board has determined that the performance First National Bank Shares, Ltd., Great Bend, Kansas of the proposed activities by Applicant can reason- ("First National"), a bank holding company within the ably be expected to produce public benefits that meaning of the Bank Holding Company Act ("BHC would outweigh potential adverse effects under the Act"), has applied under section 3(a)(3) of the BHC proper incident to banking standard of section 4(c)(8) Act (12 U.S.C. § 1842(a)(3)) to acquire all the voting of the BHC Act. shares of The Home State Building, Inc., Lewis, Based on the foregoing and other facts of record, Kansas ("Home State"), and thereby indirectly acand subject to the commitments made by Applicant, quire all the voting shares of Home State Bank, the Board has determined that the balance of public Kinsley, Kansas ("Home State Bank"). As part of this interest factors it is required to consider under sec- proposal, First National also has applied under section tion 4(c)(8) is favorable. Accordingly, the Board has 4(c)(8) of the BHC Act (12 U.S.C. § 1843(cX8)) to determined that the application should be, and acquire Lewis Insurance Service, Inc., Lewis, Kansas hereby is, approved. This determination is subject to ("Lewis Insurance"), and thereby to engage in general all of the terms and conditions set forth in the insurance agency activities in a small town that has a Board's Regulation Y, including those in sections population not exceeding 5,000, pursuant to section 225.4(d) and 225.23(b), and to the Board's authority 225.25(b)(8)(iii) of the Board's Regulation Y to require modification or termination of the activi- (12 C.F.R. 225.25(b)(8)(iii)). ties of a bank holding company or any of its subsid- Notice of the applications, affording interested periaries as the Board finds necessary to assure compli- sons an opportunity to submit comments, has been ance with, and to prevent evasion of, the provisions published (58 Federal Register 48,067 (1993)). The of the BHC Act, and the Board's regulations and time for filing comments has expired, and the Board orders issued thereunder. The Board's decision is has considered the applications and all comments also specifically conditioned on compliance with all received in light of the factors set forth in the BHC of the commitments made in connection with this Act. application, including the commitments discussed in First National operates one subsidiary bank in Kanthis order and the conditions set forth in this order sas. The principal shareholder of First National conand in the above-noted Board regulations. These trols another bank holding company, which operates a commitments and conditions shall be deemed to be subsidiary bank in Missouri (collectively, the "Burconditions imposed in writing by the Board in con- cham Chain"). The Burcham Chain is the 52d largest nection with its findings and decisions, and, as such, commercial banking organization in Kansas, controlmay be enforced in proceedings under applicable ling deposits of $84.1 million, representing less than law. 1 percent of total deposits in commercial banks in the This transaction shall not be consummated later state.1 Home State is the 287th largest commercial than three months after the effective date of this order, banking organization in Kansas, controlling deposits unless such period is extended for good cause by the of $15.8 million, representing less than 1 percent of Board or by the Federal Reserve Bank of San Fran- total deposits in commercial banks in the state. Upon cisco, pursuant to delegated authority. consummation of the proposed transaction, the Bur- By order of the Board of Governors, effective cham Chain would become the 41st largest commercial December 22, 1993. banking organization in Kansas, controlling deposits of $99.9 million, representing less than 1 percent of total deposits in commercial banks in the state. Voting for this action: Chairman Greenspan, Vice Chairman Mullins, and Governors Kelley, Lindsey, and Phillips. Absent and not voting: Governors Angell and La Ware. JENNIFER J. JOHNSON Associate Secretary of the Board 1. State deposit data are as of June 30, 1993. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

160 Federal Reserve Bulletin • February 1994 The Burcham Chain and Home State do not com- under section 4(c)(8) of the BHC Act is favorable and pete in any banking market.2 Based upon this and consistent with approval of these applications. other facts of record, the Board has concluded that Based on the foregoing and other facts of record, consummation of the proposal would not result in a including the representations and commitments made significantly adverse effect on competition in any in this case, the Board has determined that the applirelevant banking market. cations should be, and hereby are, approved. Ap- On the basis of all the facts of record, including the proval is specifically conditioned upon compliance applicant's representations and commitments, the with all of the commitments made in connection with Board also has concluded that the financial and man- these applications and with the conditions noted in this agerial resources and future prospects of First Na- order. The determinations with respect to First National, Home State, their respective subsidiary banks, tional's nonbanking activities also are subject to the and affiliated organizations in the Burcham Chain, as conditions set forth in Regulation Y, including those in well as convenience and needs considerations and all sections 225.4(d) and 225.23(b) of Regulation Y, and to other supervisory factors the Board is required to the Board's authority to require such modification or consider under section 3 of the BHC Act, also are termination of the activities of a bank holding comconsistent with approval of this application. pany or any of its subsidiaries as the Board finds As part of this proposal, First National also has necessary to ensure compliance with, and to prevent applied, under section 4(c)(8) of the BHC Act, to evasion of, the provisions of the BHC Act and the acquire Lewis Insurance, and thereby to engage in Board's regulations and orders issued thereunder. The general insurance agency activities in a town with a commitments and conditions relied on by the Board in population not exceeding 5,000. The Board previously reaching this decision are deemed to be conditions has determined by regulation that the proposed insur- imposed in writing by the Board in connection with its ance agency activities are closely related to banking findings and decision, and, as such, may be enforced in and permissible for bank holding companies under proceedings under applicable law. section 4(c)(8) of the BHC Act.3 First National has The acquisition of Home State shall not be consumcommitted that it will conduct these activities subject mated before the thirtieth calendar day after the effecto the limitations in Regulation Y. tive date of this order, and the proposal shall not be In order to approve the acquisition of Lewis Insur- consummated later than three months after the effecance under section 4(c)(8) of the BHC Act, the Board tive date of this order, unless such period is extended also must find that the performance of the proposed for good cause by the Board or by the Federal Reserve activities by First National "can reasonably be ex- Bank of Kansas City, acting pursuant to delegated pected to produce benefits to the public . . . that authority. outweigh possible adverse effects, such as undue By order of the Board of Governors, effective concentration of resources, decreased or unfair com- December 1, 1993. petition, conflicts of interests, or unsound banking practices." 12 U.S.C. § 1843(c)(8). The Board expects Voting for this action: Chairman Greenspan, Vice Chairthat continuation of the services provided by Lewis man Mullins, and Governors Angell, Kelley, and LaWare. Absent and not voting: Governors Lindsey and Phillips. Insurance would maintain the level of competition among insurance agencies in its market and provide a JENNIFER J. JOHNSON convenient source of insurance agency services to the Associate Secretary of the Board public. In addition, there is no evidence in the record that consummation of this proposal would result in any significantly adverse effects, such as undue concentra- Norwest Corporation tion of resources, decreased or unfair competition, Minneapolis, Minnesota conflicts of interests, or unsound banking practices. Accordingly, the Board has concluded that the balance of the public interest factors it is required to consider Order Approving Acquisition of a Bank Holding Company 2. Home State Bank operates in Lewis, Kansas and Kinsley, Kansas, in the Edwards County, Kansas banking market, which is Norwest Corporation, Minneapolis, Minnesota ("Norapproximated by Edwards County, Kansas. The Burcham Chain's west"), a bank holding company within the meaning of bank subsidiaries operate in three banking markets, the Kansas City, Missouri-Kansas market, the Barton County, Kansas market, and the the Bank Holding Company Act ("BHC Act"), has Pawnee County, Kansas market. applied under section 3 of the BHC Act (12 U.S.C. 3. See 12 C.F.R. 225.25(b)(8)(iii)(A). See also 12 U.S.C. § 1842) to acquire First United Bank Group, Inc., § 1843(c)(8)(C)(i). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 161 Albuquerque, New Mexico ("First United"), and Notice of the applications, affording interested perthereby acquire First United's subsidiary bank holding sons an opportunity to submit comments, has been companies, United New Mexico Financial Corpora- published (58 Federal Register 52,110 (1993)). The tion, Albuquerque, New Mexico ("UNMFC"), and time for filing comments has expired, and the Board Ford Bank Group, Inc. ("FBG") and FBG's subsid- has considered all comments received in light of the iary, Ford Bank Group Holdings, Inc., both of Lub- factors set forth in sections 3(c) and 4(c)(8) of the BHC bock, Texas. Norwest also proposes to indirectly Act.3 acquire the subsidiary banks of both UNMFC and Norwest, with total deposits of approximately FBG listed in the Appendix to this order.1 $28.0 billion, controls 86 banking subsidiaries in 13 In addition, Norwest has applied under section states, but currently does not control any banks in 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) to New Mexico or Texas.4 First United is the second acquire United New Mexico Trust Company, Albu- largest commercial banking organization in New Mexquerque, New Mexico, and thereby engage in trust ico, controlling deposits of $1.6 billion, representing company activities pursuant to section 225.25(b)(3) of 14.7 percent of the total deposits in commercial banks the Board's Regulation Y; and United New Mexico in the state. First United is the 11th largest commercial Credit Life Insurance Company, Phoenix, Arizona, banking organization in Texas, controlling deposits of and thereby engage as principal and agent in credit life $1.4 billion, representing less than 1 percent of the and credit accident and health insurance activities total deposits in commercial banks in the state. Upon directly related to extensions of credit by Norwest and consummation of this proposal, Norwest would beits subsidiaries pursuant to section 225.25(b)(8)(i) of come the second largest commercial banking organithe Board's Regulation Y. Two Norwest subsidiaries zation in New Mexico, controlling 14.7 percent of the also propose to acquire assets from First United's total deposits in commercial banks in New Mexico and subsidiary banks and engage in the following nonbank- the 11th largest commercial banking organization in ing activities: Texas, controlling less than 1 percent of the total (1) Norwest Investment Services, Inc., to engage in deposits in commercial banks in Texas. providing discount brokerage in combination with Norwest and First United do not compete directly in investment advisory services ("full-service broker- any relevant banking markets. Based on all the facts of age") together with incidental safekeeping services record, the Board concludes that the acquisition of pursuant to section 225.25(b)(15) of the Board's First United and its subsidiary holding companies and Regulation Y; banks by Norwest would not result in any significantly (2) Norwest Investment Services, Inc., to act as adverse effects on competition in any relevant banking agent in the sale of variable-rate annuities pursuant market. to section 225.25(b)(8)(vii) of the Board's Regulation Y;2 and Douglas Amendment Analysis (3) Norwest Mortgage, Inc., to engage in mortgage lending activities pursuant to section 225.25(b)(1) of Section 3(d) of the BHC Act, the Douglas Amendthe Board's Regulation Y. ment, prohibits the Board from approving an application by a bank holding company to acquire control of any bank located outside of the bank holding company's home state, unless such acquisition is "specifically authorized by the statute laws of the State in 1. Norwest proposes to acquire First United and its subsidiaries which such bank is located, by language to that effect indirectly through a merger with its wholly owned subsidiary, GST and not merely by implication."5 For purposes of the Company ("GST"), and GST also has applied pursuant to section 3 of Douglas Amendment, the home state of Norwest is the BHC Act to become a bank holding company. In connection with this proposal, Norwest also has requested Board approval to acquire Minnesota.6 an option to purchase approximately 19.4 percent of the outstanding common stock of First United, which will become moot upon consummation of this proposal. 2. The Board previously has determined that Norwest may engage in general insurance agency activities, including the sale as agent of 3. The Board has considered comments filed after the close of the annuities, pursuant to section 4(c)(8)(G) of the BHC Act ("Exemption public comment period. Under the Board's rules, the Board may in its G"). Norwest Corporation, 76 Federal Reserve Bulletin 873 (1990). discretion, take into account the substance of such comments. This exemption, one of seven specific exemptions (A through G) 12 C.F.R. 262.3(e). enacted by Title VI of the Garn-St Germain Depository Institutions 4. State deposit data are as of June 30, 1993. Act of 1982 to the Gam Act's general prohibition on insurance 5. 12 U.S.C. § 1842(d). activities by bank holding companies, authorizes those bank holding 6. A bank holding company's home state is that state in which the companies that engaged in insurance agency activities prior to 1971 operations of the bank holding company's banking subsidiaries were with prior Board approval, to engage, or control a company engaged principally conducted on July 1, 1966, or the date on which the in insurance agency activities. company became a bank holding company, whichever is later. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

162 Federal Reserve Bulletin • February 1994 This proposal would represent the initial entry of a income residents, small business, and federally in- Minnesota bank holding company into New Mexico sured student loans. This initiative also provides for and Texas. The interstate banking laws of both New the funding of more ATMs in low- and moderate- Mexico7 and Texas8 specifically authorize the acquisi- income areas, two internal reviews of all denied loan tion of banking organizations in these respective states applications from low-income and minority customers, by out-of-state bank holding companies. In addition, and seminars on personal money management. state banking officials in New Mexico and Texas have The Board has reviewed carefully the Home Mortconfirmed that the proposed acquisitions are autho- gage Disclosure Act (12 U.S.C. et seq.) ("HMDA") rized by their respective state banking statutes. Based data reported by Texas Bank in the Lubbock MSA, in on all facts of record, the Board concludes that ap- light of the comments received. These data indicate proval of this proposal is not prohibited by the Douglas some weaknesses in the level of lending to low- and Amendment. This conclusion is conditioned upon moderate-income communities. In this regard, the Norwest's satisfying all state requirements. Board notes that Texas Bank received a "satisfactory" rating in its last examination for CRA performance Convenience and Needs Considerations from its primary regulator, the Office of the Comptroller of the Currency ("OCC"), as of July 1991. The In connection with these applications, the Board re- OCC examiners found no evidence of prohibited disceived comments from the Community Reinvestment criminatory or other illegal credit practices during the and Development Taskforce, Albuquerque, New Mex- examination. The Board also notes that in order to ico, expressing general concern about the acquisition strengthen Texas Bank's lending performance, Norof the largest remaining independent banking chain in west has committed to a 5-year/$20 million program New Mexico and Texas and the effect of the acquisi- for mortgages to low- and moderate-income residents tion upon the access of local consumers to banking served by Texas Bank. In addition, Norwest will offer services. The Board also received comments from the its Community Home Ownership Program to provide Consumer Protection Division of the Office of the mortgages to low- and moderate-income residents who Attorney General of Texas ("Texas CPD"), which do not qualify for mortgage products that can be sold were adopted by reference by the Lubbock Hispanic in the secondary market. Norwest will also implement Chamber of Commerce ("COMA") and the League of its Community Marketing Initiative, which provides United Latin American Citizens ("LULAC") regard- contact with community members and groups to asing the lending performance of FBG's subsidiary, First certain community needs and address the credit needs National Bank of West Texas, Lubbock, Texas ("Tex- identified. In light of all the information provided by as Bank"), under the Community Reinvestment Act Norwest, the Texas CPD withdrew its comments. ("CRA"), 12 U.S.C. § 2901 et seq. Based on all the facts of record, including all com- With regard to its activities in New Mexico, Nor- ments received and Norwest's responses, the Board west has committed to implement United New Mexi- concludes that the convenience and needs considerco's recently announced five-year, 12 point Commu- ations are consistent with approval.9 nity Lending Initiative designed to assist in meeting the financial service needs of all communities served in New Mexico. This program, totaling $250 million, sets statewide lending goals for home mortgages to low- 9. The Board has carefully considered two requests for a public hearing or meeting to permit communities in New Mexico to furnish Norwest with information concerning the credit needs of those communities. Section 3(b) of the BHC Act does not require the Board to hold a public hearing or meeting on an application unless the 7. See N.M. Stat. Ann. § 58-26-1 et seq. (Michie 1992). New appropriate supervisory authority for the bank to be acquired makes a Mexico's interstate banking laws permit out-of-state banks and bank timely written recommendation of denial of the application. In this holding companies to acquire New Mexico banks or bank holding case, neither the New Mexico Director of the Financial Institutions companies, provided that the interstate acquisition does not result in Division, nor the Texas Banking Commissioner, has recommended undue concentration of deposits totalling 40 percent or more of the denial of the proposal. total deposits in all financial institutions in the state. As of June 30, Generally, under the Board's rules, the Board may, in its discretion, 1992, the New Mexico banks to be acquired by Norwest had approx- hold a public hearing or meeting on an application to clarify factual imately 12.8 percent of the total deposits in all financial institutions in issues related to the application and to provide an opportunity for the state. testimony, if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). In the 8. See Tex. Code Ann. § 342-912. The Texas Interstate Banking Board's view, all interested parties have had ample opportunity to Act permits an out-of-state bank holding company to acquire control submit their views, and substantive written submissions have been of a Texas banking organization if certain conditions are met, includ- received. Moreover, commenters have indicated general disagreeing the limitation that the aggregate deposits of Texas banks controlled ment regarding the appropriate conclusions to be drawn from the facts by the out-of-state bank holding company may not exceed 25 percent of record, but have not identified facts that are in dispute and material of the total deposits of all banks domiciled in Texas. As of June 30, to the Board's decision. Based on all the facts of record, the Board has 1993, the Texas banks subject to this proposal controlled less than one determined that a public meeting or hearing is not necessary to clarify percent of the total deposits of all banks domiciled in Texas. the factual record in this application, or otherwise warranted in this Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 163 Other Considerations such modification or termination of the activities of a holding company or any of its subsidiaries as the The Board also finds that the financial and managerial Board finds necessary to assure compliance with, or to resources and future prospects of Norwest, GST, First prevent evasions of, the provisions and purposes of United, and their respective subsidiaries, and other the BHC Act and the Board's regulations and orders supervisory factors the Board must consider under issued thereunder. For purposes of this action, the section 3 of the BHC Act, are consistent with ap- commitments and conditions relied on in reaching this proval. decision shall be deemed to be conditions imposed in Norwest also has applied for approval to engage in writing by the Board and, as such, may be enforced in certain nonbanking activities pursuant to section 4 of proceedings under applicable law. the BHC Act. As noted above, the Board previously The acquisition of First United's subsidiary banks has determined that these activities are permissible for shall not be consummated before the thirtieth calendar bank holding companies under section 4(c)(8) of the day following the effective date of this order, and the BHC Act and the Board's Regulation Y, and Norwest acquisition of First United's subsidiary banks and proposes to conduct these activities in accordance nonbanking subsidiaries shall not be consummated with the Board's regulations. The record in this case later than three months after the effective date of this indicates that there are numerous providers of these order, unless such period is extended for good cause nonbanking services, and there is no evidence in the by the Federal Reserve Bank of Minneapolis, acting record to indicate that consummation of this proposal pursuant to delegated authority. is likely to result in any significantly adverse effects, By order of the Board of Governors, effective such as undue concentration of resources, decreased December 13, 1993. or unfair competition, conflicts of interests, or unsound banking practices that would outweigh the Voting for this action: Vice Chairman Mullins and Goverpublic benefits of this proposal. Accordingly, the nors Angell, Kelley, La Ware, Lindsey, and Phillips. Absent Board has determined that the balance of public inter- and not voting: Chairman Greenspan. est factors it must consider under section 4(c)(8) of the JENNIFER J. JOHNSON BHC Act is favorable and consistent with approval of Associate Secretary of the Board the acquisition of the nonbanking subsidiaries of First United. Appendix Conclusion United New Mexico Financial Corporation Subsidiary Banks Based on the foregoing and other facts of record, the Board has determined that the applications should be, United New Mexico Bank (Alamogordo), Alamogand hereby are, approved.10 The Board's approval is ordo, New Mexico specifically conditioned upon compliance with all the United New Mexico Bank (Albuquerque), Albuquercommitments made by Norwest in connection with que, New Mexico these applications and with the conditions referred to United New Mexico Bank (Carlsbad), Carlsbad, New in this order, including satisfying all state require- Mexico ments. The determinations as to the nonbanking activities are subject to all the conditions set forth in the United New Mexico Bank (Gallup), Gallup, New Board's Regulation Y, including those in sections Mexico 225.4(d) and 225.23(b)(3) (12 C.F.R. 225.4(d) and United New Mexico Bank, N.A. (Las Cruces), Las 225.23(b)(3)), and to the Board's authority to require Cruces, New Mexico United New Mexico Bank (Lea County), Hobbs, New Mexico case, and the requests for a public hearing or meeting on these United New Mexico Bank (Mimbres Valley), Deming, applications are denied. io. LULAC and COMA believe that Bank has an insufficient New Mexico number of Hispanics in upper level management positions at Bank. United New Mexico Bank, N.A. (Portales), Portales, Because Bank employs more than SO people and acts as an agent to sell or redeem U.S. savings bonds and notes, it is required by New Mexico Treasury Department regulations to: United New Mexico Bank (Roswell), Roswell, New (1) File annual reports with the Equal Employment Opportunity Commission; and Mexico (2) Have in place a written affirmative action compliance program United New Mexico Bank, N.A. (Socorro), Socorro, which states its efforts and plans to achieve equal opportunity in the employment, hiring, promotion, and separation of personnel. New Mexico, and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

164 Federal Reserve Bulletin • February 1994 United New Mexico Bank (Vaughn), Vaughn, New organization in the state, controlling $51.7 million in Mexico deposits, representing less than 1 percent of the deposits in commercial banks in the state. Upon consum- Ford Bank Group, Inc. Subsidiary Banks mation of the proposal, Norwest would remain the second largest commercial banking organization in First National Bank of Borger, Borger, Texas Minnesota, controlling approximately $10 billion in First National Bank in Canyon, Canyon, Texas deposits, representing 22.5 percent of the total depos- First National Bank of West Texas, Lubbock, Texas its in commercial banks in the state. First National Bank of Plain view, Plain view, Texas First National Bank of Central Texas, Waco, Texas Competitive Considerations First State Bank, Crane, Texas, Yoakum County State Bank, Denver City, Texas, and Norwest and Lindeberg compete directly in the First National Bank, Post, Post, Texas Minneapolis-St. Paul banking market.3 Norwest is the second largest commercial bank or thrift institution Norwest Corporation ("depository institution") in the market, controlling Minneapolis, Minnesota deposits of $7.5 billion, representing 27.9 percent of total deposits in depository institutions in the market Order Approving the Acquisition of a Bank Holding ("market deposits").4 Lindeberg is the 44th largest Company depository institution in Minnesota, controlling approximately $49.1 million in deposits, representing Norwest Corporation, Minneapolis, Minnesota ("Nor- less than 1 percent of total state commercial bank west"), a bank holding company within the meaning of deposits. Upon consummation of this proposal, Northe Bank Holding Company Act ("BHC Act"), has west would remain the second largest depository inapplied under section 3(a)(3) of the BHC Act stitution in the market, controlling deposits of (12 U.S.C. § 1842(a)(3)) to acquire all the voting $7.5 billion, representing 28.1 percent of total market shares of Lindeberg Financial Corporation ("Linde- deposits. The Herfindahl-Hirschman Index ("HHI") berg"), and thereby indirectly acquire Forest Lake would increase by approximately 10 points to 2037.5 State Bank ("Bank"), both of Forest Lake, Minne- The Board previously has indicated that merger sota. Norwest also has applied, pursuant to section transactions in the Minneapolis-St. Paul banking mar- 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)), and ket involving one of the two largest depository instisection 225.23 of the Board's Regulation Y (12 C.F.R. tutions in the market warrant close review because of 225.23) to acquire the mortgage origination operations the size of these institutions relative to other market of Bank, and thereby engage in the making and servicing of loans pursuant to section 225.25(b)(1) of the Board's Regulation Y (12 C.F.R. 225.25(b)(1)). Notice of the applications, affording interested per- 3. The Minneapolis-St. Paul banking market is comprised of Anoka, sons an opportunity to submit comments, has been Hennepin, Ramsey, Washington, Carver, Scott, and Dakota Counties, and portions of Chisago, Le Sueur, Sherburne, and Wright published (58 Federal Register 49,050 (1993)). The Counties in Minnesota, and the town of Hudson in St. Croix County, time for filing comments has expired, and the Board Wisconsin. has considered the applications and all comments 4. Market share data are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously received in light of the factors set forth in sections 3 has indicated that thrift institutions have become, or have the potenand 4 of the BHC Act. tial to become, significant competitors of commercial banks. See Norwest, with total consolidated assets of Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). $47.8 billion, operates 86 banking subsidiaries located Thus, the Board has regularly included thrift deposits in the calculain 13 states.1 Norwest is the second largest commer- tion of market share on a 50 percent weighted basis. See, e.g.. First Hawaiian Inc., 77 Federal Reserve Bulletin 52 (1991). cial banking organization in Minnesota, controlling 5. Under the revised Department of Justice Merger Guidelines, 49 approximately $9.9 billion in deposits, representing Federal Register 26,823 (June 29, 1984), a market in which the 22.4 percent of the deposits in commercial banks in the post-merger HHI is above 1800 is considered highly concentrated. In state.2 Lindeberg, with total consolidated assets of such markets, the Justice Department is likely to challenge a merger that increases the HHI by more than 50 points. The Justice Depart- $58.2 million, is the 111th largest commercial banking ment has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anti-competitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by 200 points. The Justice 1. Asset data are as of June 30, 1993. Department has stated that the higher than normal HHI thresholds for 2. State data are as of June 30, 1993. Market data are as of June 30, screening bank mergers for anti-competitive effects implicitly recog- 1992, but have been adjusted to reflect all subsequent mergers and nize the competitive effects of limited-purpose lenders and other acquisitions through December 1, 1993. non-depository financial entities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 165 competitors.6 Even considering the effect on market the convenience and needs of the communities to be concentration in light of previous acquisitions by the served and the other supervisory factors that the two largest depository organizations, this proposal is Board must consider under section 3 of the BHC Act, not likely to have a significantly adverse competitive are consistent with approval. effect in the market. Norwest also has applied, pursuant to section 4(c)(8) In this case, Lindeberg is one of the smaller depos- of the BHC Act, to acquire the mortgage origination itory organizations in the Minneapolis-St. Paul bank- activities of Bank. As noted above, the Board has ing market, controlling less than 1 percent of market previously determined that these activities are closely deposits. In addition, the Board notes that 102 com- related to banking and generally permissible for bank petitors would remain in the market, including 92 holding companies under section 4(c)(8) of the BHC commercial banks and 10 thrifts, upon consummation Act and the Board's Regulation Y (12 C.F.R. of this proposal. 225.25(b)(1)). Norwest proposes to conduct these ac- The Minneapolis-St. Paul banking market is a major tivities in accordance with the Board's regulations. urban area and is attractive for entry. Moreover, this In order to approve the acquisition of Bank's mortacquisition is not likely to affect the availability of gage origination operations under section 4(c)(8) of the attractive entry points for potential entrants.7 In this BHC Act, the Board also must find that the perforregard, the market has experienced both de novo entry mance of the proposed activities by Norwest "can and entry by acquisition in recent years. For example, reasonably be expected to produce benefits to the seven commercial banking institutions, including two public . . . that outweigh possible adverse effects, such banks chartered de novo in 1990, have entered the as undue concentration of resources, decreased or market in the past ten years. One of the commercial unfair competition, conflicts of interests, or unsound banking institutions that entered the market during this banking practices." 12 U.S.C. § 1843(c)(8). There are period has become the fourth largest depository insti- numerous providers of mortgage lending services, and tution in the market. this proposal would not have a significantly adverse As in other cases, the Board sought comments on effect on the market for the nonbanking services. In the application from the United States Attorney Gen- addition, there is no evidence in the record to indicate eral, the General Deposit Insurance Corporation that consummation of this proposal is likely to result in ("FDIC") and the Attorney General of the State of any significantly adverse effects, such as undue con- Minnesota. The Attorney General, the FDIC and the centration of resources, decreased or unfair competi- Minnesota Attorney General have not objected to tion, conflicts of interests, or unsound banking pracconsummation of this proposal or indicated that the tices. Accordingly, the Board concludes that the proposal would have any significantly adverse compet- balance of the public interest factors that it is required itive effects. to consider under section 4(c)(8) of the BHC Act is On the basis of all the facts of record, including the favorable, and consistent with approval of Norwest's number of competitors remaining in the market and application to acquire Bank's mortgage origination the size of Lindeberg, the Board concludes that con- operations. summation of this proposal would not have a significantly adverse effect on competition or the concentra- Conclusion tion of banking resources in the Minneapolis-St. Paul banking market or any other relevant banking market Based upon the foregoing and all the other facts of in which Norwest and Lindeberg compete. record, including the commitments made by Norwest in connection with these applications, the Board has Other Considerations determined that the applications should be, and hereby are, approved. The Board's approval is expressly The Board also concludes that the financial and man- conditioned upon compliance with the commitments agerial resources and future prospects of Norwest and made in connection with these applications. The Lindeberg, and their respective subsidiaries, as well as Board's determination with respect to Norwest's nonbanking activities is also subject to all of the conditions contained in the Board's Regulation Y, including those 6. See First Bank System, Inc., 79 Federal Reserve Bulletin 50 in sections 225.4(d) and 225.23(b) (12 C.F.R. 225.4(d) (1993). In this regard, acquisitions by either of these two banking and 225.23(b)), and to the Board's authority to require organizations of a series of depository organizations with relatively such modification or termination of the activities of a small market shares could, on a cumulative basis, lead to significant anti-competitive effects. bank holding company or any of its subsidiaries as the 7. The Minneapolis-St. Paul metropolitan area, with a population of Board finds necessary to assure compliance with, and 2.46 million, is the 16th largest in the United States according to 1990 to prevent evasion of, the provisions of the BHC Act Census data, and has increased 15.3 percent in population since 1980. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

166 Federal Reserve Bulletin • February 1994 and the Board's regulations and orders thereunder. filing comments has expired, and the Board has con- For purposes of this action, the commitments and sidered the request and all comments received in light conditions relied upon by the Board in reaching its of the Board's authority to grant exemptions to Secdecision are both conditions imposed in writing by the tion 106(b)'s tie-in prohibitions.1 Board and, as such, may be enforced in proceedings First Union is the sixth largest banking organization under applicable law. in the nation, controlling deposits of $52 billion.2 First The banking acquisition shall not be consummated Union operates subsidiary banks in the District of before the thirtieth calendar day following the effective Columbia, Florida, Georgia, Maryland, North Carodate of this order, and all acquisitions shall not be lina, South Carolina, Tennessee, and Virginia, and consummated later than three months after the effec- engages directly and through subsidiaries in a broad tive date of this order, unless such period is extended range of permissible nonbanking activities. for good cause by the Board or by the Federal Reserve Section 106(b) generally prohibits a bank from vary- Bank of Minneapolis, acting pursuant to delegated ing the consideration for credit or other services on the authority. condition that the customer obtain some additional By order of the Board of Governors, effective service from the bank, its bank holding company, or December 21, 1993. any other subsidiary of its bank holding company. Section 106(b) provides that the Board may, by regu- Voting for this action: Chairman Greenspan, Vice Chair- lation or order, permit an exception to the tie-in man Mullins, and Governors Lindsey and Phillips. Voting prohibitions where the Board determines that an exagainst this action: Governors Angell, Kelley, and La Ware. ception will not be contrary to the purposes of the section. The legislative history provides that the pur- JENNIFER J. JOHNSON pose of Section 106(b) is to prohibit anti-competitive Associate Secretary of the Board practices which require bank customers to accept or provide some other service or product or refrain from Dissenting Statement of Governors Angell, Kelley, dealing with other parties in order to obtain the bank and LaWare product or service they desire.3 The legislative history also indicates that the Board should exercise its ex- We reaffirm the position we took in July 1993 when the emptive authority selectively and that the Board Board voted 4-3, to permit Norwest to acquire M&D should continue to allow appropriate traditional bank- Holding Company. ing practices based on sound economic analysis.4 In considering previous requests for an exemption, the Board has reviewed a number of factors, including ORDERS ISSUED UNDER BANK HOLDING whether the tied products are offered separately to COMPANY ACT AMENDMENTS OF 1970 customers at market prices, and whether the bank could impair the availability of the products or other- First Union Corporation wise engage in unfair competition by tying the pro- Charlotte, North Carolina posed products.5 Order Approving an Exemption from the Anti-Tying Provisions 1. The Board received ten comments on this proposal, all in favor of First Union Corporation, Charlotte, North Carolina granting First Union's request. ("First Union"), a bank holding company within the 2. Deposit data are as of June 30, 1993. 3. S. Rep. No. 1084, 91st Cong., 2d Sess. 17 (1970) ("Senate meaning of the Bank Holding Company Act, has Report"). requested that the Board grant an exemption from the 4. Senate Report at 17 and 46. 5. In 1990, the Board granted an exemption to the tie-in prohibitions, anti-tying provisions of the Bank Holding Company to permit subsidiary banks of Norwest Corporation, Minneapolis, Act Amendments of 1970 (12 U.S.C. § 1971) ("Sec- Minnesota ("Norwest"), and NCNB Corporation, Charlotte, North tion 106(b)") to permit First Union Brokerage Ser- Carolina ("NCNB"), to offer a price reduction on credit cards issued to customers of their affiliated banks. See Norwest Corporation and vices, Inc., Charlotte, North Carolina ("Brokerage NCNB Corporation, 76 Federal Reserve Bulletin 702 (1990). In Company"), to offer discounts on commissions for granting this exception, the Board determined that neither Norwest brokerage services to customers who maintain a min- nor NCNB could exercise sufficient market power to impair competition in the tied product market for the traditional banking services, imum balance in accounts at any First Union bank. and emphasized that the credit card and traditional banking products Notice of this request, affording interested persons offered as part of the arrangement were made available by the bank holding companies separately at competitive prices. By subsequent an opportunity to submit comments, has been pubrulemaking, the Board made this exemption available to bank holding lished (58 Federal Register 59,073 (1993)). The time for companies generally. See 12 C.F.R. 225.4(d)(2). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 167 First Union proposes that Brokerage Company be Under antitrust precedent, concerns over tying allowed to vary the consideration charged for bro- arrangements are substantially reduced where the kerage services if a customer maintains a minimum buyer is free to take either product by itself even balance in accounts at any First Union bank.6 Bro- though the seller may also offer the two items as a kerage Company is an operating subsidiary of First unit at a single price.9 As noted above, First Union Union National Bank of North Carolina, Charlotte, will continue to offer brokerage services and deposit North Carolina. services separately. Given the competitive nature of First Union contends that its proposal is not anti- the retail brokerage market, it is expected that First competitive because the market for retail brokerage Union will be required to offer these brokerage services is national in scope and very competitive. In services at competitive prices. There are no other this regard, First Union maintains that Brokerage facts to suggest in this case that First Union has Company does not have enough market power in this sufficient market power to affect adversely the marmarket to cause a lessening of competition by provid- ket or availability for the brokerage services through ing discounts on brokerage services to customers with its proposal to provide discounts. deposit relationships at a First Union bank. In addi- For these reasons, the Board believes that the tion, First Union argues that the proposal will not limit requested exemption is not contrary to the purpose the availability of products to consumers because the of Section 106(b), and that granting the exemption brokerage services offered by Brokerage Company would be consistent with the legislative authorization and the deposit services offered by First Union's to permit exemptions for traditional banking services subsidiary banks will be separately available to cus- on the basis of economic analysis. The Board, howtomers at competitive prices. ever, reserves the right to terminate the exemption in In determining whether the proposed exemption the event that facts develop in the future that indicate would be consistent with Section 106(b), it is appro- that the tying arrangement is resulting in anticompetpriate to consider the competitiveness of the relevant itive practices and thus would be inconsistent with retail brokerage market. In analyzing the potential the purpose of Section 106(b). competitive effects of a proposal, the Board has Based on the above, and all facts of record, the considered the availability of the tying product in its Board has determined to grant an exemption to permit relevant geographic market. The geographic market Brokerage Company to offer discounts on commisfor retail brokerage services — the tying product in sions for brokerage services to customers who mainthis case — is national in scope and highly competi- tain a minimum balance in accounts at any First Union tive.7 In each of the states in which First Union bank on the conditions discussed above. This approval competes, there are at least 50 competing brokerage is subject to the Board's authority to modify or termifirms, including major nationwide brokerage firms, nate the exemption as set forth above and to all of the and other banks offering retail brokerage services. conditions that may be imposed by the Board in Overall, First Union possesses a small market share Regulation Y. in the retail brokerage market.8 By order of the Board of Governors, effective Therefore, it is unlikely that First Union will be able December 22, 1993. to substantially lessen competition for brokerage services in a particular market. Similarly, First Union's Voting for this action: Chairman Greenspan, Vice Chairsmall market share in brokerage services and the man Mullins, and Governors Kelley, La Ware, Lindsey, and presence of many other competitors providing retail Phillips. Absent and not voting: Governor Angell. brokerage services indicate that it is unlikely that, by tying discounts on brokerage services to deposit ser- WILLIAM W. WILES vices, First Union could exercise sufficient market Secretary of the Board power to impair competition in the market for the traditional banking services. 6. The proposed exemption would provide relief from section 106(b)(1), which prohibits banks from tying their own products, and section 106(b)(2), which prohibits banks from tying their products with those offered by affiliates. See 12 U.S.C. §§ 1972(1)(A) and (B). 7. See, e.g., BankAmerica Corporation, 69 Federal Reserve Bulletin 105, 110 (1983). 8. First Union states that its 1991 brokerage revenues represented 9. Northern Pacific R. Co. v. United States, 356 U.S. 1, 6, n.4 less than one-half of 1 percent of total nationwide brokerage revenues. (1958). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

168 Federal Reserve Bulletin • February 1994 ORDERS ISSUED UNDER BANK MERGER ACT remain moderately concentrated as measured by the Herfindahl-Hirschman Index ("HHI").4 After consid- First Interstate Bank of California ering the competition offered by other depository Los Angeles, California institutions in the markets,5 the number of competitors remaining in the respective markets, the relatively Order Approving the Merger of Banks small increase in market share and market concentration in the respective markets, and all other factors of First Interstate Bank of California, Los Angeles, Cal- record, the Board concludes that consummation of the ifornia ("First Interstate-California"), a state member proposal would not have a significantly adverse effect bank, has applied for the Board's approval under on competition in any relevant banking market. section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. § 1828(c)) ("Bank Merger Act") to merge Convenience and Needs Considerations with First State Bank of the Oaks, Thousand Oaks, California ("Bank of the Oaks"), and establish In acting on an application to acquire a depository branches under section 9 of the Federal Reserve Act institution under the Bank Merger Act, the Board must (12 U.S.C. § 321). consider the convenience and needs of the communi- Notice of this application, affording interested per- ties to be served, and take into account the records of sons an opportunity to submit comments, has been the relevant depository institutions under the Commugiven in accordance with the Bank Merger Act and the nity Reinvestment Act (12 U.S.C. § 2901 et seq.) Board's Rules of Procedure (12 C.F.R. 262.3(b)). As ("CRA"). The CRA requires the federal financial required by the Bank Merger Act, reports on the supervisory agencies to encourage financial institucompetitive effects of the merger were requested from tions to help meet the credit needs of the local comthe United States Attorney General, the Office of the munities in which they operate, consistent with the Comptroller of the Currency, and the Federal Deposit safe and sound operation of such institutions. To Insurance Corporation ("FDIC"). The time for filing accomplish this end, the CRA requires the appropriate comments has expired, and the Board has considered federal supervisory authority to "assess the instituthe application and all comments received in light of tion's record of meeting the credit needs of its entire the factors set forth in the Bank Merger Act and community, including low- and moderate-income section 9 of the Federal Reserve Act. neighborhoods, consistent with the safe and sound First Interstate-California, with consolidated assets operation of such institution," and to take that record of $20.1 billion,1 is the third largest commercial bank- into account in its evaluation of these applications.6 ing organization in California, controlling deposits of In this regard, the Board has received comments $17.1 billion, representing approximately 7.2 percent from the California Reinvestment Committee of total deposits in commercial banking organizations ("CRC") and an individual (collectively, "Protesin the state.2 Bank of the Oaks is the 131st largest tants") critical of the efforts of First Interstatecommercial banking organization in California, con- California and Bank of the Oaks to meet the credit and trolling deposits of $129 million, representing less than banking needs of their communities. Protestants allege 1 percent of total deposits in commercial banking organizations in the state. Upon consummation of this proposal, First Interstate-California would remain the 4. Under the revised Department of Justice Merger Guidelines, 49 third largest commercial banking organization in Cal- Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI is below 1000 is considered unconcentrated, and a ifornia, controlling deposits of $17.3 billion, represent- market in which the post-merger HHI is between 1000 and 1800 is ing approximately 7.3 percent of the total deposits in considered moderately concentrated. The Justice Department has commercial banking organizations in the state. informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticom- First Interstate-California and Bank of the Oaks petitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Justice compete directly in the Los Angeles and Oxnard Department has stated that the higher than normal HHI thresholds for banking markets.3 Upon consummation of this pro- screening bank mergers for anticompetitive effects implicitly recogposal, the Los Angeles banking market would remain nize the competitive effect of limited-purpose lenders and other non-depository financial institutions. unconcentrated and the Oxnard banking market would 5. In this context, depository institutions include commercial banks, savings banks, and savings associations. Market deposit data are as of June 30, 1992, and are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously has 1. Asset data are as of September 30, 1993. indicated that thrift institutions have become, or have the potential to 2. State deposit data are as of June 30, 1993. become, significant competitors of commercial banks. See WM Ban- 3. The Los Angeles banking market is defined as the Los Angeles corp, 76 Federal Reserve Bulletin 788 (1990); National City Corpora- Ranally Metropolitan Area, and the Oxnard banking market is defined tion, 70 Federal Reserve Bulletin 743 (1984). as the Oxnard Ranally Metropolitan Area. 6. 12 U.S.C. § 2903. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 169 generally that First Interstate-California and Bank of its applications to acquire California Republic Bank.11 the Oaks have not met the credit needs of minorities This review included consideration of First and low- and moderate-income individuals, particu- Interstate-California's record of lending in low- and larly in the Oxnard-Ventura metropolitan statistical moderate-income and minority areas, community dearea ("MSA").7 velopment activities, and other CRA programs and In its consideration of the convenience and needs policies in light of comments received from several factor, the Board has carefully reviewed the entire commenters, including CRC. For the reasons more record of CRA performance of First Interstate- fully set forth in the First Interstate Order, the Board California and Bank of the Oaks; all comments re- concluded that the overall CRA performance record of ceived regarding this application, including the re- First Interstate-California was generally consistent sponse of First Interstate-California to those com- with approval. ments; and all the other relevant facts of record, in light of the CRA, the Board's regulations, and the C. Record of Lending in the Oxnard-Ventura Statement of the Federal Financial Supervisory Agen- MSA cies Regarding the Community Reinvestment Act ("Agency CRA Statement").® Protestants have alleged in this application that 1992 data required to be filed under the Home Mortgage Record of CRA Performance Disclosure Act (12 U.S.C. § 2801 et seq.) ("HMDA") show that First Interstate-California and Bank of the A. CRA Performance Examinations Oaks discriminate against borrowers located in lowand moderate-income and minority communities in the The Agency CRA Statement provides that a CRA Oxnard-Ventura MSA. These 1992 HMDA data reveal examination is an important and often controlling mixed results. In some categories, First Interstatefactor in the consideration of an institution's CRA California's performance met or exceeded the perforrecord, and that these reports will be given great mance of its peers. For example, the number of weight in the applications process.9 The Board notes mortgage applications received from minorities by that First Interstate-California received a "satisfacto- First Interstate-California in the Oxnard-Ventura ry" rating from its primary federal regulator, the MSA, and the number of originations, increased sub- Federal Reserve Bank of San Francisco, at its most stantially from 1991 to 1992.12 Furthermore, mortgage recent examination for CRA performance as of loan approval and denial rates for African-Americans August 10, 1992. In addition, Bank of the Oaks re- and Asian-Americans in the Oxnard-Ventura MSA ceived a "satisfactory" rating from its primary regu- were the same or better than the rates for whites in lator, the FDIC, at its most recent examination for 1992.13 CRA performance as of April 23, 1992.10 However, the 1992 HMDA data for both First Interstate-California and Bank of the Oaks also indi- B. Previous Review of First cate disparities in approvals and denials of loan appli- Interstate-California's CRA Record cations for Hispanics and individuals residing in lowto moderate-income neighborhoods in the Oxnard- The Board recently reviewed the CRA performance Ventura MSA. Because all banks are obligated to record of First Interstate-California in connection with adopt and implement lending practices that ensure not only safe and sound lending, but also equal access to credit by creditworthy applicants regardless of race, the Board is concerned when the record of an institu- 7. CRC alleges that First Interstate-California neglects home morttion indicates disparities in lending to applicants in gage lending statewide, and that plans to expand its mortgage loan portfolio have not increased the number of mortgage originations. low- and moderate-income and minority communities. CRC also believes that Bank of the Oaks's efforts to extend credit and The Board recognizes, however, that HMDA data services to minorities and low-income individuals are inadequate. CRC has requested that First Interstate-California specify CRA products and outreach efforts, and commit to CRA goals in California, for affordable housing development, community economic development, 11. See First Interstate Bancorp, 80 Federal Reserve Bulletin 40 and consumer needs. (1994) ("First Interstate Order"). 8. 54 Federal Register 13,742 (1989). 12. In 1992, First Interstate-California's mortgage lending to 9. 54 Federal Register 13,745 (1989). African-Americans was proportional to their presence in the Oxnard- 10. Although Bank of the Oaks is an approved Small Business Ventura MSA. During that year, the bank made 2 percent of its Administration ("SBA") lender, it no longer actively markets SBA- mortgage loans to African-Americans (2 percent of the population of sponsored products. However, Bank of the Oaks continues to extend the MSA). credit to small businesses. As of June 30, 1993, the bank had 13. In 19^2, the denial rate for African- and Asian-Americans in the outstanding 191 small business loans totalling approximately Oxnard-Ventura MSA was 17 percent, and the denial rate for whites $13 million. was 29 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

170 Federal Reserve Bulletin • February 1994 alone provide only a limited measure of any given must consider under the Bank Merger Act and the institution's lending in its community. The Board also Federal Reserve Act, are consistent with approval of recognizes that HMDA data have limitations that this proposal. make the data an inadequate basis, absent other information, for conclusively determining whether an insti- Conclusion tution has engaged in illegal discrimination in making lending decisions. Based on the foregoing and other facts of record, the As noted in the First Interstate Order, First Board has determined that the application should be, Interstate-California's 1992 CRA performance exami- and hereby is, approved. The Board's approval is nation found no evidence of any pattern or practice of specifically conditioned upon compliance with all the illegal discriminatory credit practices, or other prac- commitments made by First Interstate-California in tices designed to discourage credit applications. In this connection with this application. This approval is regard, examiners noted that the bank continually further subject to First Interstate obtaining the apassesses its lending activity for HMDA-reportable proval of the California Superintendent of Banks for loans. In addition, in conducting its 1992 CRA exam- the proposed transaction under applicable state law. ination of Bank of the Oaks, the FDIC reviewed For purposes of this action, the commitments and mortgage loans denied by the bank and found no conditions relied on in reaching this decision shall be evidence of any pattern or practice of illegal discrim- deemed to be conditions imposed in writing by the inatory credit practices, or other practices designed to Board and, as such, may be enforced in proceedings discourage credit applications. under applicable law. First Interstate-California also has committed to The acquisition of Bank of the Oaks shall not be steps to improve its mortgage lending in the Oxnard- consummated before the thirtieth calendar day follow- Ventura MSA. For example, First Interstate- ing the effective date of this order, or later than three California will market all of its CRA-related programs months after the effective date of this order, unless and products described in the First Interstate Order, such period is extended for good cause by the Federal including three special mortgage programs and the Reserve Bank of San Francisco acting pursuant to F.I.R.S.T. consumer loan program, to all segments of delegated authority. its banking community in the Oxnard-Ventura MSA. By order of the Board of Governors, effective In addition, the bank has committed to make its December 13, 1993. "second look" program for denied loans available to customers in the Oxnard-Ventura MSA, and operate Voting for this action: Vice Chairman Mullins and Goverits "mystery shopper" program in the Bank of the nors Angell, Kelley, LaWare, Lindsey, and Phillips. Absent Oaks branches being acquired to test for compliance and not voting: Chairman Greenspan. with fair lending laws. JENNIFER J. JOHNSON On the basis of all the facts of record, including the Associate Secretary of the Board comments provided by Protestants, First Interstate- California's response to those comments, and relevant Fleet Bank of New York reports of examination, as well as the information and Albany, New York commitments referenced in the First Interstate Order, the Board concludes that convenience and needs con- Order Approving Acquisition of Branches siderations, including the records of performance under the CRA of First Interstate-California and Bank of Fleet Bank of New York, Albany, New York ("Fleet the Oaks, are consistent with approval of this applica- Bank"), a state member bank, has applied for the tion. The Board expects First Interstate-California to Board's approval under the Bank Merger Act implement fully all commitments made in connection (12 U.S.C. § 1828(c)) to acquire certain assets and with this proposal, including its proposed CRA initiaassume certain liabilities of 29 branches of Chemical tives for the Oxnard-Ventura MSA, and to comply Bank, New York, New York ("Chemical Bank"), also with all the conditions and commitments discussed in a state member bank. These branches are located the First Interstate Order. throughout upstate New York.1 Fleet Bank also has applied for the Board's approval, pursuant to section 9 Other Considerations of the Federal Reserve Act (12 U.S.C. § 321), to The financial and managerial resources and future prospects of First Interstate-California and 'Bank of 1. The branch locations proposed to be acquired are listed in the the Oaks, and other supervisory factors the Board Appendix. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 171 establish and operate branch offices at each of these tion,6 the attractiveness of these markets for entry by locations. new competitors, and the other facts of record, the Notice of the applications, affording interested per- Board has concluded that consummation of the prosons an opportunity to submit comments, has been posal would not result in a significantly adverse effect published in accordance with the Bank Merger Act on competition in any of these banking markets. and the Board's Rules of Procedure (12 C.F.R. Based on all the facts of record in this case, the 262.3(b)). As required by the Bank Merger Act, re- Board concludes that consummation of the proposal ports on the competitive effects of the proposal have would not have a significantly adverse effect on combeen requested from the United States Attorney Gen- petition or the concentration of banking resources in eral, the Office of the Comptroller of the Currency any relevant banking market. ("OCC"), and the Federal Deposit Insurance Corporation. The time for filing comments has expired, and Convenience and Needs Considerations the Board has considered the applications and all the comments received in light of the factors set forth in In considering an application by a state member bank the Bank Merger Act and the Federal Reserve Act. to acquire another insured depository institution by On the basis of commercial bank deposits, Fleet merger or to establish an additional branch, the Board Bank, with total deposits of approximately $10.2 bil- is required to consider the convenience and needs of lion, is the seventh largest commercial bank in New the communities to be served and to take into account York.2 Chemical Bank, with total deposits of approx- the record of performance of the state member bank imately $50.9 billion, is the largest commercial bank in under the Community Reinvestment Act (12 U.S.C. the state. § 2901 et seq.) ("CRA").7 The CRA requires the federal financial supervisory agencies to encourage Competitive Considerations financial institutions to help meet the credit needs of the local communities in which they operate, consis- Fleet Bank and Chemical Bank compete directly in six tent with the safe and sound operation of such institubanking markets in New York.3 In each of these tions. To accomplish this end, the CRA requires the markets, the increase in the Herfindahl-Hirschman appropriate federal supervisory authority to "assess Index ("HHI") would not exceed the thresholds set an institution's record of meeting the credit needs of forth in the Department of Justice's Revised Merger its entire community, including low- and moderate- Guidelines4 after considering the competition offered income neighborhoods, consistent with the safe and by thrift institutions.5 In light of these facts, and after sound operation of the institution," and to take that considering the number of competitors remaining in record into account in its evaluation of applications the markets, the small increases in market concentra- under the Bank Merger Act and to establish domestic branches.8 In this regard, the Board has considered comments filed by an organization ("Protestant") that alleges 2. State deposit data are as of June 30, 1993. 3. These markets are the Albany, Buffalo, Elmira-Corning, Olean, that Fleet Bank and Chemical Bank have failed to Rochester, and Syracuse banking markets. meet the credit needs of the communities they serve, 4. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the based on 1991 HMDA data indicating disparities in the post-merger HHI is above 1800 is considered to be highly concen- rates of housing-related loan denials between minority trated. In such markets, the Justice Department is likely to challenge and non-minority applicants. Protestant also maintains a merger that increases the HHI by more than 50 points. The Justice Department has informed the Board that a bank merger or acquisition that allegations made in several pending lawsuits regenerally will not be challenged (in the absence of other factors garding improper mortgage lending practices by a indicating anti-competitive effects) unless the post-merger HHI is at nonbanking mortgage affiliate of Fleet Bank raise least 1800 and the merger or acquisition increases the HHI by at least 200 points. The Justice Department has stated that the higher than issues regarding the convenience and needs considernormal threshold for an increase in HHI when screening bank mergers and acquisitions for anti-competitive effects implicitly recognizes the competitive effect of limited-purpose lenders and other non-depository financial entities. See Appendix B for the increases in concentration in these markets on a pro forma basis as measured by HHI. 5. The Board previously has indicated that thrift institutions have become, or have the potential to become, major competitors of 6. Upon consummation of this proposal, the HHI in these markets commercial banks. See Midwest Financial Group, 75 Federal Reserve would increase as follows: (1) Albany, 67 points to 1039; (2) Buffalo, Bulletin 386 (1989); National City Corporation, 70 Federal Reserve 56 points to 2130; (3) Elmira-Corning, 26 points to 906; (4) Olean, 171 Bulletin 743 (1984). Thus, the Board has regularly included thrift points to 1903; (5) Rochester, 56 points to 1179; and (6) Syracuse, 109 deposits in the calculation of market share on a 50 percent weighted points to 1547. basis. See, e.g., First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 7. See 12 U.S.C. §§ 321, 1828(c), 2902(3)(C), and 2903(2); see also (1991). In considering the competition offered by thrifts in all banking 12 C.F.R. 208.5 and 208.9. markets in this case, thrift deposits are weighted at 50 percent. 8. 12 U.S.C. § 2903. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

172 Federal Reserve Bulletin • February 1994 ations in this proposal.9 The Board has carefully extended a significant number and percentage of reviewed the CRA performance records of Fleet Bank home mortgage loans in low- and moderate-income and Chemical Bank, as well as Protestant's comments, neighborhoods. In certain areas, however, the data Fleet Bank's response, and all of the other relevant for Fleet Bank reflect disparities in loan originations facts, in light of the CRA, the Board's regulations, and and loan rejection rates for minority applicants when the Statement of the Federal Financial Supervisory compared to non-minority applicants. The Board is Agencies Regarding the Community Reinvestment Act concerned when the record of an institution indicates ("Agency CRA Statement").10 disparities in lending to minority applicants, and believes that all banks are obligated to ensure that Record of Performance Under the CRA their lending practices are based on criteria that assure not only safe and sound lending, but also A. CRA Performance Examination equal access to credit by creditworthy applicants regardless of race. The Board recognizes, however, The Agency CRA Statement provides that a CRA that HMDA data alone provide only an incomplete examination is an important and often controlling measure of an institution's lending in its community. factor in the consideration of an institution's CRA The Board also recognizes that HMDA data have record and that these reports will be given great weight limitations that make the data an inadequate basis, in the applications process.11 In this case, the Board absent other information, for conclusively determinnotes that Fleet Bank received an "outstanding" ing that an institution has engaged in illegal discrimrating from its primary federal regulator, the Federal ination in making lending decisions. Reserve Bank of New York, at its most recent exam- The Board notes that the most recent examination ination for CRA performance as of December 16, of Fleet Bank found no evidence of illegal discrimi- 1991.12 Chemical Bank also received an "outstanding" nation or of credit practices that were inconsistent rating for CRA performance from the Federal Reserve with the substantive provisions of antidiscrimination Bank of New York at its most recent examination for laws and regulations. In this regard, examiners noted CRA performance as of July 22, 1991. that Fleet Bank solicited credit applications from all segments of its community, including low- and mod- B. Analysis of HMDA Data erate-income neighborhoods, and that the board of directors and senior management of Fleet Bank had The Board has carefully reviewed the 1991 and 1992 developed comprehensive written policies, proce- HMDA data reported by Fleet Bank and Chemical dures, training programs, and internal reviews to Bank in light of Protestant's comments.13 These data ensure that the bank did not illegally discourage or indicate that Fleet Bank and Chemical Bank have pre-screen applicants. The examination also found that HMDA data indicated a reasonable penetration of lending activity in low- and moderate-income 9. Protestant requests that Fleet Bank and Chemical Bank be census tracts, that the bank's delineation of its required to conduct an audit of their minority lending practices and to community was reasonable and did not arbitrarily make certain commitments to improve their overall minority lending exclude any low- and moderate-income neighborrecords. 10. 54 Federal Register 13,742 (1989). hoods, and that its branches were reasonably acces- 11. 54 Federal Register at 13,745. sible by, and all its products and services were 12. On October 1, 1992, in an internal reorganization, Fleet Bank, available to, all segments of its community. N.A., Buffalo, New York ("Buffalo Bank"), was merged into Fleet Bank, with Fleet Bank the surviving entity. Buffalo Bank received a Fleet Bank also has taken steps since its last CRA "satisfactory" rating from its primary federal regulator, the OCC, as examination to increase lending to minority and lowof May 20, 1991, the date of its last examination for CRA performance prior to the merger with Fleet Bank. and moderate-income borrowers. For example, Fleet 13. The actual data cited by Protestant in its comments relate to Bank implemented a program in February 1992 re- Fleet Bank's affiliate bank, Fleet National Bank, Providence, Rhode quiring a senior consumer lending officer to review Island ("Fleet-RI"), which is a bank that is not involved in this merger transaction. Although the 1991 Rhode Island data indicate some all rejected minority HMDA loan applications, using disparities between rejection rates for minority applicants when more flexible loan underwriting criteria. Since March compared to non-minority applicants, the data also show that Fleet-RI 1992, Fleet Bank has convened focus groups among extended 16 percent of its loans in low- and moderate-income areas and received and granted a higher percentage of housing-related loan minority customers and among minority branch ofapplications from minorities than did other lenders in its community. ficers, in order to identify unfilled minority credit and Data in 1992 show some decrease in Fleet-RI's minority and lowincome lending, but the percentage of loans made to minority borrow- service needs and improved methods of delivering ers remained equal to the average of other lenders in its community. services to minority customers. HMDA data for 1992 In addition, Fleet-RI received an "outstanding" CRA performance reflect improvement in both the number of applicarating from its primary federal regulator, the OCC, at its most recent examination as of October 29, 1990. tions received from and the number of loans made to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 173 minorities by Fleet Bank.14 Fleet Bank also intro- the event that a court determines, or a subsequent duced a Community Revitalization Mortgage prod- examination finds, that a subsidiary of Fleet has enuct, which provides mortgages with no closing fees gaged in illegal activities or that Fleet's initiatives in and reduced minimum down payments for low- and any of its subsidiaries prove to be inadequate. Fleet moderate-income homebuyers in distressed areas. Bank and Fleet are hereby directed to inform the The Board also has carefully reviewed Protestant's Board promptly of each material development in the comments regarding allegedly improper mortgage pending litigation, and of any future claims or lawsuits lending practices, principally in Georgia by Fleet Fi- involving similar allegations. nance, Inc. ("Fleet Finance"), a nonbanking financing subsidiary of Fleet Financial Group, Inc., Providence, Other Considerations Rhode Island ("Fleet") which is the parent holding company of Fleet Bank.15 The Board notes that Fleet The Board has considered the managerial factor in this has taken a number of steps to address the issues case in light of the recently completed examination of raised by these allegations. For example, Fleet has Fleet Bank conducted by the Federal Reserve Bank of discontinued its practice of purchasing individual New York and a full-scope inspection of Fleet conthird-party loans, except for packages in bulk from ducted by the Federal Reserve Bank of Boston at the regulated financial institutions or the Resolution Trust request of the Board. In this regard, Fleet has taken Corporation, and has stopped financing home im- substantive steps to improve the operations of all of its provements. In addition, Fleet has made significant banking and nonbanking subsidiaries, including the changes in senior executive management at the hold- management reorganization and initiatives described ing company level and the subsidiary level, has reor- above as well as other modifications to its internal ganized reporting responsibilities under functional controls, policies, training, and management informalines, and has centralized decision making authority, tion systems. While many of these changes are relawhich appear to have improved the operations of its tively recent and are still being implemented, the mortgage subsidiaries. Fleet has also recently entered Board also notes that this proposal represents a relainto a substantial settlement agreement with the Geor- tively small acquisition for Fleet. Based on all the facts gia attorney general that has concluded a year-long of record in this case, including the reforms initiated investigation by the attorney general into Fleet's mort- by Fleet, the relative size of the acquisition, and the gage lending practices in Georgia.16 results of examinations and inspections, the Board On the basis of these and all the other facts of concludes that managerial considerations are consisrecord, including comments received and relevant tent with approval. Financial resources of Fleet and Fleet Bank are satisfactory, and future prospects of examination reports, the Board concludes that conve- Fleet Bank and of Chemical Bank, and the other nience and needs considerations, including the CRA supervisory factors the Board must consider under the performance records of Fleet Bank and Chemical Bank Merger Act are also consistent with approval. In Bank, are consistent with approval of these applicaaddition, the Board has considered the factors it is tions. The Board specifically retains jurisdiction and required to consider when approving applications for full supervisory authority to take appropriate action in the establishment of branches pursuant to section 9 of the Federal Reserve Act, and finds those factors to be consistent with approval.17 14. For example, minority applications increased by 110 percent between 1991 and 1992, while non-minority applications increased by 47 percent. Loans by Fleet Bank to minority borrowers increased from 2.8 percent to 4.0 percent of all loans, while the average for all lenders in its community declined from 5.2 percent to 4.5 percent. 15. Fleet has been sued in a number of cases in Georgia and other states. Some of these cases, including a racial discrimination case in 17. Protestant has requested that the Board hold a public meeting or Georgia and a mortgage escrow account overcharge case involving a hearing on these applications. The Board is not required to hold a number of states, have been settled. In other cases, Fleet's practices public hearing in these applications under the Bank Merger Act or the have been found to be consistent with applicable law. Cases that are Federal Reserve Act. Under its rules, the Board may, in its discretion, still pending against Fleet have not gone to trial. hold a public meeting or hearing on an application to clarify factual 16. Under the terms of this settlement, qualified borrowers are issues related to the application and to provide an opportunity for entitled to compensatory damages, interest rate reductions, and testimony, if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). The rebate of origination "points" in excess of 10 percent, and Fleet has Board has carefully considered Protestant's request, and the written committed to fund $70 million in loans to low-income borrowers over comments submitted by Protestant. In the Board's view, interested the next three to five years. Fleet has also agreed to certain limitations parties have had ample opportunity to submit and have submitted on fees and interest charges for three years following the agreement. substantial written comments that have been considered by the Board. In addition, Fleet has reached an agreement with the Massachusetts In light of the foregoing and all the facts of record, the Board has Attorney General by establishing a $12 million mortgage program to determined that a public meeting or hearing is not necessary to clarify the factual record in this application, or otherwise warranted in this compensate Fleet borrowers in that state, and has established a case. Accordingly, the request for a public meeting or hearing on these nationwide, 10-point program to permit refinancings by qualifying applications is hereby denied. borrowers from Fleet Finance. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

174 Federal Reserve Bulletin • February 1994 Based on the foregoing and other facts of record, the (23) 100 Main Street, South Glen Falls, New York Board has determined that the application should be, (24) 361 South Salina Street, Syracuse, New York and hereby is, approved. The Board's approval is (25) 1802 Teall Avenue, Syracuse, New York specifically conditioned upon compliance by Fleet (26) 1188 Niagara Falls Boulevard, Tonawanda, Bank with all the commitments made in its applica- New York tions. For purposes of this action, the commitments (27) 120 Hoosick Street, Troy, New York discussed in this order shall be deemed to be condi- (28) 964 Ridge Road, Webster, New York tions imposed in writing by the Board in connection (29) 5712 Main Street, Williamsville, New York with its findings and decisions, and, as such, may be enforced in proceedings under applicable law. Appendix B This transaction shall not be consummated before the thirtieth calendar day following the effective date Banking markets in which the pro forma increase in of this order, or later than three months after the the HHI would not exceed the Department of effective date of this order, unless such period is Justice's Revised Merger Guidelines: extended for good cause by the Board or by the Federal Reserve Bank of New York, acting pursuant (1) The Albany banking market is approximated by to delegated authority. Albany, Columbia, Fulton, Greene, Hamilton, By order of the Board of Governors, effective Montgomery, Rensselaer, Saratoga, Schenectady, December 23, 1993. Schoharie, Warren, and Washington Counties in New York. The HHI would increase by 67 points to Voting for this action: Chairman Greenspan, Vice Chair- 1039, and the market would become moderately man Mullins, and Governors Angell, Kelley, La Ware, and concentrated. Phillips. Voting against this action: Governor Lindsey. (2) The Buffalo banking market is approximated by Erie and Niagara Counties in New York. The HHI JENNIFER J. JOHNSON would increase by 56 points to 2130, and the market Associate Secretary of the Board would remain highly concentrated. (3) The Elmira-Corning banking market is approxi- Appendix A mated by Chemung and Steuben Counties in New York. The HHI would increase by 26 points to 906, Locations of Chemical Bank branches to be and the market would remain unconcentrated. acquired by Fleet Bank: (4) The Olean banking market is approximated by Allegany County (less the eastern and two northern (1) 1972 Albany-Schenectady Road, Albany, tiers of townships) and Cattaraugus County (less the New York two western and northern tiers of townships) in New (2) 63 State Street, Albany, New York York. The HHI would increase by 171 points to (3) 999 Broadway, Buffalo, New York 1903, and the market would become highly concen- (4) 420 East Main Street, Buffalo, New York trated. (5) 2690 Walden Avenue, Cheektowaga, New York (5) The Rochester banking market is approximated (6) Clifton Country Mall, Clifton Park, New York by Genessee, Livingston, Monroe, Ontario, Or- (7) 360 Delaware Avenue, Delmar, New York leans, Seneca, Wayne, Wyoming, and Yates Coun- (8) 807 Fairport Road, East Rochester, New York ties in New York. The HHI would increase by 56 (9) 6600 Pittsford-Palmyra Road, Fairport, New York points to 1179, and the market would remain mod- (10) One Old Loudoun Road, Latham, New York erately concentrated. (11) 100 Main Street, Lockport, New York (6) The Syracuse banking market is approximated (12) 500 Delaware Avenue, Olean, New York by Cayuga, Cortland, Madison, Onondaga, and Os- (13) 1999 Ridge Road, Ontario, New York wego Counties in New York. The HHI would in- (14) 7 Main Street, Portville, New York crease by 109 points to 1547, and the market would (15) 3333 West Henrietta Road, Rochester, New York remain moderately concentrated. (16) 2317 Lyell Avenue, Rochester, New York (17) 183 East Main Street, Rochester, New York Dissenting Statement of Governor Lindsey (18) 1855 Monroe Avenue, Rochester, New York (19) 3380 Monroe Avenue, Rochester, New York I dissent from the Board's action in this case because, (20) 1842 East Ridge Road, Rochester, New York in my view, the record is not sufficient to demonstrate (21) 2450 Ridge Road, Rochester, New York that managerial factors support approval of this acqui- (22) 306 State Street, Schenectady, New York sition. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 175 The record in this case contains a number of allega- required by the Bank Merger Act, reports on the tions of improper practices by Fleet's nonbanking competitive effects of the merger were requested from subsidiaries and criticisms of other practices by Fleet. the United States Attorney General, the Office of the These practices appear to have been possible because Comptroller of the Currency ("OCC"), and the Fedof weak internal controls by management in a number eral Deposit Insurance Corporation ("FDIC"). The of areas. Fleet's management has recently taken steps time for filing comments has expired, and the Board to change its policies and improve its internal controls has considered the applications and all comments and supervision, including instituting training, compli- received in light of the factors set forth in the Bank ance and reporting policies. However, in a number of Merger Act and in section 9 of the Federal Reserve areas, including compliance procedures and practices, Act. the evidence indicates that Fleet has not fully imple- Bank is the largest commercial banking organization mented its corrective measures or that these measures in Idaho, controlling deposits of $2.7 billion, reprehave not been in place for a sufficient period of time to senting approximately 35 percent of total deposits in evaluate their effectiveness. commercial banks in the state.1 Idaho Bank is the 14th In reaching this conclusion I have carefully consid- largest commercial banking organization in Idaho, ered Fleet's announced remedial programs, its re- controlling deposits of $43.6 million, representing less cently announced settlement of a year-long investiga- than 1 percent of total deposits in commercial banks in tion by the Georgia Office of the Attorney General and the state. Upon consummation of this proposal, Bank its efforts to resolve some of its outstanding litigation. would remain the largest commercial banking organi- I believe that the applications process places more zation in Idaho, controlling deposits of $2.8 billion, importance on the corrective measures that have a representing approximately 35.6 percent of total dedemonstrated record of preventing problems from posits in commercial banks in the state. occurring rather than providing remedies for past problems. I have also considered these steps in light of Competitive Considerations a recent full-scope inspection of Fleet by the Federal Reserve Bank of Boston. Under the Bank Merger Act, the Board is required to In my view, the acquisition of 29 branches is a consider the effects that a proposed merger would significant expansion that should not be undertaken have on competition.2 Bank and Idaho Bank compete without a clear record of effective steps to address directly in five banking markets in Idaho: Mountain identified weaknesses of performance. Because this Home, Boise, Payette-Ontario-Weiser, Blaine record is not sufficient to date, in my weighing of the County, and Twin Falls. In the Mountain Home evidence, I would deny this proposal. banking market,3 Bank is the second largest commercial bank or thrift institution ("depository institu- December 23, 1993 tion"), controlling deposits of $25.4 million, representing 34.9 percent of total deposits in depository institutions in the market ("market deposits").4 West One Bank, Idaho Idaho Bank is the fourth largest depository institu- Boise, Idaho tion in the market, controlling deposits of $3.9 million, representing 5.4 percent of market deposits. Order Approving the Merger of Banks and the Upon consummation of this proposal, Bank would Establishment of Branches remain the second largest depository institution and the third largest financial institution in the Mountain West One Bank, Idaho, Boise, Idaho ("Bank"), a Home banking market, controlling deposits of state member bank, has applied under section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. § 1828(c)) (the "Bank Merger Act") to acquire Idaho 1. State deposit data are as of June 30, 1993. 2. See 12 U.S.C. § 1828(c)(5). State Bank, Glenns Ferry, Idaho ("Idaho Bank"). 3. The Mountain Home banking market includes the towns of Bank also has applied under section 9 of the Federal Mountain Home and Grand View, Idaho. Reserve Act (12 U.S.C. § 321) to establish branches at 4. Market data for the Mountain Home banking market are as of June 30, 1993. Market share data are based on calculations in which the locations where Idaho Bank currently operates the deposits of thrift institutions are included at 50 percent. The Board branches. previously has indicated that thrift institutions have become, or have the potential to become, major competitors of commercial banks. See Notice of the applications, affording interested per- Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); sons an opportunity to submit comments, has been National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly included thrift deposits in the calculagiven in accordance with the Bank Merger Act and the tion of market share on a 50 percent weighted basis. See, e.g., First Board's Rules of Procedure (12 C.F.R. 262.3(b)). As Hawaiian Inc., 77 Federal Reserve Bulletin 52 (1991). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

176 Federal Reserve Bulletin • February 1994 $29.3 million, representing 40.3 percent of market cantly adverse effect on competition in the Mountain deposits. The Herfindahl-Hirschman Index ("HHI") Home banking market. would increase 376 points to 3833.5 In the Boise, Payette-Ontario-Weiser, Blaine The Board believes that several factors indicate that County, and Twin Falls banking markets, consummathis increased level of concentration in the Mountain tion would result in slight increases in the concentra- Home banking market, as measured by the HHI, tion of market deposits that do not exceed the Departoverstates the competitive effects of this proposal. In ment of Justice Merger Guidelines.6 In addition, particular, Idaho Bank is a very weak competitor and numerous competitors would remain in all these marconsummation of this proposal would have little effect kets. Based on all the facts of record, the Board on actual competition in the Mountain Home banking concludes that consummation of this proposal would market. Idaho Bank has been the subject of state and not result in significantly adverse effects on competifederal supervisory actions, and the bank currently tion in these or any other relevant banking market. makes no loans in the market and does not employ a loan officer to serve the market. Idaho Bank's pres- Other Considerations ence in the market is limited to a single bank branch with two tellers. The competitive effects of this pro- Based on all the facts of record, the Board concludes posal also are mitigated by the presence of a large that considerations relating to the financial and manacredit union in the Mountain Home banking market. gerial resources and future prospects of Bank and This credit union, the largest financial institution in the Idaho Bank, and the convenience and needs of the Mountain Home banking market, is open for member- community to be served,7 also are consistent with ship to almost all residents in the market. approval of the applications filed by Bank under the The Board also has considered the public benefits of Bank Merger Act. the proposal on the convenience and needs of the The Board also has reviewed the factors it is recommunity to be served. Idaho Bank is the only quired to consider in applications for the establishment depository institution in Grand View, Idaho, and Bank and operation of branches under the Federal Reserve has committed to maintain the Grand View branch of Act.8 Based on all the facts of record, the Board Idaho Bank as a full-service branch, employ a full-time believes that these factors, including the financial loan officer, and offer loans and a full range of other condition of Bank, the general character of its manbanking services. agement, and the proposed exercise of corporate pow- The Attorney General indicated that consummation of this proposal would not have a significantly adverse effect on competition in the Mountain Home banking market or any other relevant banking market. Neither 6. Market share data for the four remaining banking markets are as the OCC nor the FDIC objected to consummation of of June 30, 1992. Upon consummation of this proposal, Bank would the proposal or indicated that the proposal would have become the largest of nine depository institutions in the Boise banking market, controlling deposits of $902 million, representing 45 percent any significantly adverse competitive effects. Accord- of market deposits. The HHI would increase 37 points to 2764. Bank ingly, based on all the facts of record, including the would become the second largest of ten depository institutions in the Payette-Ontario-Weiser banking market, controlling deposits of number of mitigating competitive considerations and $101 million, representing 24 percent of market deposits. The HHI benefit to the convenience and needs of the communi- would increase 91 points to 1741. In the Blaine County banking ties served, the Board concludes that consummation market, Bank would become the smallest of four depository institutions, controlling deposits of $11.5 million, representing 7 percent of of this proposal is not likely to result in any signifimarket deposits. The HHI would increase 18 points to 3115. Finally, in the Twin Falls banking market, Bank would become the second largest of nine depository institutions, controlling deposits of $214 million, representing 28.1 percent of market deposits. The HHI would increase 116 points to 2344. 5. Under the revised Department of Justice Merger Guidelines, 49 7. The Board has received comments from an individual ("Protes- Federal Register 26,823 (June 29, 1984), a market in which the tant' ') who claims generally that Bank's acquisition of Idaho Bank will post-merger HHI is between 1000 and 1800 is considered moderately result in the loss of a small bank that has been responsive to the credit concentrated. A market in which the post-merger HHI is above 1800 needs of the community, and replace it with a large institution whose is considered to be highly concentrated. In such markets, the Justice centralized decision making will not be responsive to community Department is likely to challenge a merger that increases the HHI by credit needs. The Board notes that Bank received a satisfactory rating more than 50 points. The Justice Department has informed the Board for performance under the Community Reinvestment Act from the that a bank merger or acquisition generally will not be challenged (in Federal Reserve Bank of San Francisco in September 1993. In the absence of other factors indicating anti-competitive effects) unless addition, Bank has committed to expand the products and services the post-merger HHI is at least 1800 and the merger or acquisition offered to customers of Idaho Bank, increase lending to customers of increases the HHI by at least 200 points. The Justice Department has Idaho Bank, and enhance the resulting institution's ability to service stated that the higher than normal threshold for an increase in the HHI the needs of its delineated community. Based on all facts of record, when screening bank mergers and acquisitions for anti-competitive the Board does not believe that Protestant's comments warrant denial effects implicitly recognizes the competitive effect of limited-purpose of this proposal. lenders and other non-depository financial entities. 8. See 12 U.S.C. § 322. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 177 ers, are consistent with approval and the purposes of in trading and dealing in gold, silver, platinum and section 9 of the Federal Reserve Act. palladium, and in related activities. Republic Bank is a subsidiary of Republic New Conclusion York Corporation, a bank holding company. Republic New York Corporation is the 20th largest banking Based on the foregoing and other facts of record, the organization in the United States, with consolidated Board has determined that the applications should be, assets of $38 billion as of September 30, 1993.1 WUKL and hereby are, approved. The Board's approval is had consolidated assets of approximately $1.5 billion specifically conditioned upon compliance by Bank as of September 30, 1993. Republic Bank engages in, with all the commitments made in connection with among other lines of business, gold and silver dealing these applications. For purposes of this action, these and the provision of related depository services. Recommitments and conditions are both considered con- public Bank proposes to acquire 100 percent of the ditions imposed in writing by the Board in connection shares of WUKL through Republic Overseas Banks with its findings and decisions, and, as such, may be Holding Corporation, a wholly owned operating subenforced in proceedings under applicable law. sidiary of RNB. WUKL's sole holding is its 100 per- This transaction shall not be consummated before cent interest in Mase Westpac, an authorized bank the thirtieth calendar day following the effective date licensed and supervised by the Bank of England. of this order, or later than three months after the Mase Westpac is one of the leading dealers in gold, effective date of this order, unless such period is silver, platinum and palladium in world markets. Mase extended for good cause by the Board or by the Westpac deals and makes markets in these metals in Federal Reserve Bank of San Francisco, acting pursu- the spot and forward market, buys and sells options on ant to delegated authority. precious metals, and is one of the five members of the By order of the Board of Governors, effective London Gold Fixing, which twice daily sets the price December 20, 1993. that is a leading reference point in gold transactions in world markets.2 As part of its precious metals business, Mase Westpac also clears bullion transactions, Voting for this action: Chairman Greenspan, Vice Chairman Mullins, and Governors Angell, Kelley, La Ware, Lind- holds gold and silver for customers and counterparsey, and Phillips. ties, maintains deposits for customers and provides loans, leases and consignment agreements relating to JENNIFER J. JOHNSON gold and silver to gold and silver producers, fabrica- Associate Secretary of the Board tors and industrial users. Mase Westpac and subsidiaries of Mase Westpac are members of the New York Commodity Exchange and the Sydney Futures Exchange, where they buy ORDERS ISSUED UNDER FEDERAL RESERVE and sell options on gold and platinum for their own ACT account and for the account of affiliates, in each case solely for hedging purposes. In addition, Republic Republic National Bank of New York Bank proposes to engage, through Mase Westpac and New York, New York its subsidiaries, in other activities permissible to U.S. banking organizations under Regulation K, such as Order Granting Consent to Acquire Westpac (U.K.) foreign exchange trading, project financing, gold and Limited, London, England, and Granting Approval silver loans and leases, and extension of gold and to Engage in Platinum and Palladium Dealing silver consignment arrangements. Activities Abroad Mase Westpac conducts its business from its London headquarters and through subsidiaries and repre- Republic National Bank of New York ("Republic sentative offices in Australia and Hong Kong.3 In Bank"), New York, New York, a national bank, has applied under section 25 of the Federal Reserve Act and section 211.5(c)(3) of the Board's Regulation K 1. Republic Bank had consolidated assets of $28.8 billion as of (12 C.F.R. 211.5(c)(3)) for consent to acquire 100 per- September 30, 1993. cent of the shares of Westpac (U.K.) Limited 2. Mase Westpac also is a market-making member of The London Bullion Market Association and a member of the London Platinum ("WUKL"), London, England, thereby acquiring inand Palladium Market. Mase Westpac's activities in precious metals directly Mase Westpac Limited ("Mase Westpac"), a are supervised and regulated by the Bank of England and the United U.K. bank wholly owned by WUKL, and for approval Kingdom's Securities and Futures Authority. 3. Mase Westpac Hong Kong Limited, Mase Westpac's direct to engage through Mase Westpac and its subsidiaries wholly owned Hong Kong subsidiary, makes a market in gold and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

178 Federal Reserve Bulletin • February 1994 addition, Mase Westpac maintains a state licensed United States for bank holding companies and subsidbranch in New York, New York, and does business iaries of national banks. 12 U.S.C. § 601. through a wholly owned subsidiary, Mase Westpac, In the exercise of that authority, the Board has Inc. ("MWI"), a Delaware corporation based in New adhered to the policy that the foreign activities it York, New York. The New York branch of Mase authorizes should be of a banking or financial, as Westpac presently engages in precious metals trading opposed to commercial, nature, or that such activities and precious-metals-related financing activities. MWI should be usual in connection with banking or other currently holds a limited number of gold loans and financial operations abroad. The Board also may condoes not propose to solicit or make any other loans or sider whether the conduct of the activity would enable engage in any other activities. Republic Bank has U.S. banking organizations to compete more effeccommitted to the Board that it will terminate all of the tively with foreign organizations in the provision of activities of MWI and Mase Westpac's New York banking and other financial services. In addition, the branch within six months of the proposed acquisition, Board takes into account whether the performance of and that it will not reactivate MWI without the written the activity by a U.S. banking organization overseas is consent of the Board.4 Mase Westpac also operates a consistent with the prudent conduct and management representative office in Denver, which would be con- of the company's banking and nonbanking organizaverted into a loan production office of Republic Bank tions. In this regard the Board takes into consideration within three months of consummation of the acquisi- the risks inherent in the activity, especially whether tion. those risks are of a type and nature normally associ- The activities of trading or dealing in platinum and ated with banking or activities conducted by banks. palladium are not on the list of activities that the Board The Board also examines the effect of the activity on has found to be usual in connection with the transac- the capital and managerial resources of the U.S. tion of banking or financial operations abroad. banking organization. 12 C.F.R. 211.5(d).5 In reviewing proposals by U.S. The Board previously has approved trading and banking organizations to engage in activities overseas, dealing in platinum in the spot, forward, futures and the Board has recognized that local institutions in options markets in the U.K. by a subsidiary of a U.S. other banking and financial systems are often permit- bank.6 The Board's determination in that instance that ted to engage in activities that have not been autho- platinum dealing is financially-related and usual in rized for U.S. banking organizations under applicable connection with the transaction of banking or other U.S. laws and regulations. In the Federal Reserve Act, financial operations in the United Kingdom applies the Board has been granted authority to permit activ- equally to this case.7 ities abroad that are generally not authorized in the The Board has not previously approved palladium trading outside the United States by either regulation or order. Several factors indicate that trading in palladium is not functionally different from trading in platinum. The markets for the two metals have much silver on a spot and forward basis. Mase Westpac also owns 91.3 percent of the shares of Mase Westpac Australia Limited ("Mase in common. Platinum and palladium are members of Westpac Australia"), a limited liability company based in Sydney, the same family of metals and generally trade in Australia, which trades precious metals for its own account, provides quotes in gold and silver and buys and sells precious metals options. tandem; precious metals counterparties view trading Westpac Banking Corporation, WUKL's current owner, owns the in both metals as closely related. The London Platiadditional shares of Mase Westpac Australia, which will be transnum and Palladium Market ("LPPM"), a professional ferred to Republic Bank or Republic Overseas Banks Holding Corporation in connection with the sale of WUKL. Mase Westpac Australia association of which Mase Westpac is a marketholds a portfolio of gold loans to gold producers, markets precious making member, sets standards, prices and settlement metals hedging facilities, and wholly owns Mase Westpac Australia (NZ) Limited, which facilitates lending transactions between its parent and New Zealand customers. 4. Section 211.5(b)(4) of Regulation K requires that United States 6. J.P. Morgan & Co. Incorporated, 76 Federal Reserve Bulletin banking organizations divest themselves of their stakes in any foreign 552 (1990) ("Morgan"). subsidiary that engages directly or indirectly in any U.S. activity not 7. In making this determination in its Morgan order, the Board permissible to an Edge corporation, unless the Board authorizes noted functional similarities between platinum dealing and the permisretention. sible activities of dealing in gold and silver bullion, the fact that the 5. National banks are authorized to trade gold and silver in the spot, same types of participants are active in the gold, silver and platinum forward and options markets for their own accounts, and such markets, and the substantial involvement of banking organizations in activities are permissible abroad under Regulation K. 12 U.S.C. 24 the U.K. platinum market. These factors remain unchanged in this (Seventh) expressly authorizes national banks to buy and sell 'coin case. Moreover, since the issuance by the Board of the Morgan order, and bullion', which consistently has been read to include gold and the OCC has determined that national banks have the power to buy silver coin and bullion. The Office of the Comptroller of the Currency and sell platinum coins and bullion for their own account and the ("OCC") has determined that national banks may buy and sell options account of customers, thereby further establishing that platinum on gold and silver for hedging purposes and for purposes of arbitrage. trading is of a banking or financial nature. OCC Interpretive Letter See, e.g., OCC Interpretive Letter No. 494 (December 20, 1989). No. 553 (May 2, 1991). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 179 procedures for platinum and palladium alike, and has further determined on the basis of the record that requires that any LPPM member that makes a market the conduct of the proposed activities is consistent in platinum also make a market in palladium. Accord- with the supervisory purposes of the Federal Reserve ing to Republic Bank, just as in the gold, silver and Act. Accordingly, the application is approved. Applatinum markets, the predominant participants in the proval of this application is specifically conditioned on palladium market are central banks, institutional in- compliance by Republic Bank with the commitments vestors and industrial users. U.K. banks also play a made in connection with this application. The commitmajor role in the palladium market, since six of the ments referred to above are conditions imposed in nine market-making members of the LPPM are banks. writing by the Board in connection with its decision, Finally, Republic Bank contends that its competitive and may be enforced under applicable law against position in foreign precious metals markets would be Republic Bank and its affiliates. injured if Mase Westpac's palladium market-making By order of the Board of Governors, effective activities were required to be discontinued, because December 22, 1993. the rules of the LPPM would then require Mase Westpac to cease making a market in platinum as well. Voting for this action: Chairman Greenspan, Vice Chair- Based on the foregoing and other facts of record, the man Mullins, and Governors Kelley, Lindsey, and Phillips. Board has determined that the palladium dealing and Absent and not voting: Governors Angell and Laware. related activities proposed by Republic Bank are JENNIFER J. JOHNSON financially-related and usual in connection with the Associate Secretary of the Board transaction of banking or other financial operations in the United Kingdom. In assessing whether the risks of platinum dealing were consistent with approval in the Morgan order, ORDERS ISSUED UNDER INTERNATIONAL the Board noted the applicant's experience in manag- BANKING ACT ing the related risks posed by bullion dealing, as well as the applicant's proposed policies and procedures Banco de Chile for assessing and controlling the risks of platinum Santiago, Republic of Chile dealing. As a major established dealer in bullion, platinum and palladium, Mase Westpac has substantial Order Approving Establishment of an Agency expertise and a record of success in managing the risks associated with the trading of platinum and palladium. Banco de Chile ("Bank"), Santiago, Republic of Republic Bank, which also has expertise in trading Chile, a foreign bank within the meaning of the Interbullion under existing risk limitation and control poli- national Banking Act ("IBA"), has applied under cies of its own, has stated that it plans to integrate section 7(d) of the IBA (12 U.S.C. § 3105(d)) to estab- Mase Westpac's operations into Republic Bank's ex- lish a state-licensed agency in Miami, Florida. A isting risk management systems. foreign bank must obtain the approval of the Board to Republic Bank's investment in WUKL will be rela- establish a branch, agency, commercial lending comtively minor in relation to Republic Bank's total capi- pany, or representative office in the United States tal. In view of the size of the investment, Republic under the Foreign Bank Supervision Enhancement Bank's and Mase Westpac's experience in precious Act of 1991 ("FBSEA"), which amended the IBA. metals trading and management of the associated Notice of the application, affording interested perrisks, and Republic Bank's plans to integrate Mase sons an opportunity to submit comments, has been Westpac into Republic Bank's existing risk manage- published in a newspaper of general circulation in ment and monitoring systems, it does not appear that Miami, Florida (The Miami Herald, November 2, the conduct of platinum and palladium trading and the 1992). The time for filing comments has expired and no other activities proposed to be conducted would result public comments were received. in undue risk to Republic Bank. Bank is the largest private bank in Chile with Based on the foregoing and other facts of record, consolidated assets of $5.2 billion as of June 30, 1993. and the fact that the proposed acquisition would The shares of Bank are widely held and are listed and enhance Republic Bank's ability to compete in the traded on the Santiago Stock Exchange. Bank is precious metals markets outside the United States authorized to provide a full range of banking services through expanded global precious metals trading ca- and concentrates in corporate lending and trade fipability and Mase Westpac's membership in the Lon- nance. don Gold Fixing, the Board has determined that the Bank has six subsidiaries in Chile engaged in finanproposed acquisition should be approved. The Board cial services, and has investments in four Chilean Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

180 Federal Reserve Bulletin • February 1994 servicing companies engaged in ATM network and The Superintendency of Banks and Financial Insticredit card administration and securities activities. tutions (the "Superintendency") is the primary super- Bank maintains a federal branch in New York and a visory authority for all banks in Chile and, as such, is representative office in Frankfurt, Germany. the home country supervisor of Bank. The Superin- Bank does not engage in nonbanking activities in the tendency authorizes the creation of new banks through United States and will remain a qualifying foreign issuance of licenses, and monitors the compliance of banking organization under Regulation K after estab- existing banks with applicable laws and regulations. In lishing the proposed agency. 12 C.F.R. 211.23(b). addition, approval of the Superintendency is required In order to approve an application by a foreign bank for Chilean banks to complete mergers and acquisito establish an agency in the United States, the IB A tions, to engage in new activities and to establish and Regulation K require the Board to determine that operations outside of Chile. The Central Bank of Chile the foreign bank engages directly in the business of exercises a supplementary role in supervising Chilean banking outside of the United States and has furnished banks through its control of reserve requirements, to the Board the information it needs to assess ade- interest rates, and foreign exchange. The Central Bank quately the application. The Board also must deter- consults with the Superintendency regarding the conmine that each of the foreign bank applicant and any dition of Chilean banks and receives regulatory reports foreign bank parent is subject to comprehensive super- submitted by banks to the Superintendency. vision or regulation on a consolidated basis by its The Superintendency obtains information on Bank's home country supervisor. 12 U.S.C. § 3105(d)(2), operations through on-site examinations and its review 12 C.F.R. 211.24(c)(1). The IBA and Regulation K of audit and financial reports submitted by Bank. The also permit the Board to take into account additional Superintendency conducts targeted on-site examinastandards. 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. tions approximately once a year. These targeted ex- 211.24(c)(2). aminations focus on specific areas of Bank's opera- Bank engages directly in the business of banking tions including accounting procedures, credit outside of the United States through its banking oper- processes, compliance with lending limits, conformity ations in Chile. Bank also has provided the Board with with restrictions on insider transactions, internal conthe information necessary to assess the application trols, or policies and procedures for compliance with through submissions that address the relevant issues. applicable laws and regulations. Bank's asset quality Regulation K provides that a foreign bank will be also is reviewed annually. In addition, the Superintenconsidered to be subject to comprehensive supervision dency conducts surprise on-site examinations as necor regulation on a consolidated basis if the Board essary. The Superintendency receives frequent and determines that the foreign bank is supervised and comprehensive reports on Bank's condition and operregulated in such a manner that its home country ations on both an unconsolidated and consolidated supervisor receives sufficient information on the basis. Bank is required annually to file financial statebank's worldwide operations, including its relation- ments audited by its external auditors. ship to any affiliate, to assess the bank's overall In addition to the on-site reviews conducted by the financial condition and its compliance with law and Superintendency, Bank's external auditors conduct regulation.1 12 C.F.R. 211.24(c)(1). In making its de- on-site reviews of Bank four times a year. Bank's termination on this application, the Board considered external auditors review Bank's electronic data prothe following information. cessing and computer systems, internal controls, financial statements, tax accounting, and policies and procedures. 1. In assessing this standard, the Board considers, among other With respect to Bank's internal methods of monitorfactors, the extent to which the home country supervisor: (i) Ensures that the bank has adequate procedures for monitoring ing its worldwide operations, Bank relies on internal and controlling its activities worldwide; audits and reporting requirements. As noted above, (ii) Obtains information on the condition of the bank and its the Superintendency reviews Bank's internal controls subsidiaries and offices through regular examination reports, audit reports, or otherwise; during its examinations and Bank provides reports to (iii) Obtains information on the dealings with and relationships the Superintendency on the scope of its internal aubetween the bank and its affiliates, both foreign and domestic; dits. (iv) Receives from the bank financial reports that are consolidated on a worldwide basis, or comparable information that permits The Superintendency receives information and analysis of the bank's financial condition on a worldwide consol- monitors the condition of Bank's affiliates through idated basis; (v) Evaluates prudential standards, such as capital adequacy and financial reporting requirements, coordination with risk asset exposure, on a worldwide basis. These are indicia of other regulatory authorities, and the imposition of comprehensive, consolidated supervision. No single factor is lending limits. Bank's financial leasing and financial essential, and other elements may inform the Board's determination. consulting subsidiaries, as well as the servicing com- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 181 panies in which it holds shares, are supervised by the addition, Bank has established controls and proce- Superintendency. These companies provide periodic dures for its U.S. offices to ensure compliance with financial reports to the Superintendency. The Super- U.S. law. Under the IBA, the proposed state-licensed intendency of Securities and Insurance (the "Superin- agency may not engage in any type of activity that is tendency of Securities") supervises Bank's subsidiar- not permissible for a federally licensed branch without ies in mutual fund administration and the securities the Board's approval. brokerage business through annual examinations and Finally, Bank has committed that it will make availthe review of regular financial reports. These subsid- able to the Board such information on the operations iaries are also subject to general regulations imposed of Bank and any affiliate of Bank that the Board deems by the Superintendency. The Superintendencies of necessary to determine and enforce compliance with Banks and of Securities are sister agencies under the the IBA, the Bank Holding Company Act of 1956, as Chilean Ministry of Finance (the "Ministry"), and amended, and other applicable federal law, to the engage in both formal and informal arrangements to extent not prohibited by law or regulation. The Board share supervisory information through the Ministry. has reviewed relevant provisions of Chilean law and Chilean banking laws prohibit the extension of has communicated with the appropriate government credit to affiliates on terms more favorable than those authorities concerning access to information. The offered to third parties. Aggregate loans by Bank to Board notes that Bank may not provide certain inforaffiliates may not exceed five percent of Bank's total mation without the consent of third parties. In this paid-in capital and reserves. The Superintendency regard, Bank has committed to cooperate with the receives a number of reports concerning transactions Board to obtain approvals or consents that may be and relationships between Bank and its affiliates. required for the Board to gain access to information Based on all of the facts of record, which include the that the Board may request. In light of these commitinformation described above, the Board concludes ments and other facts of record, and subject to the that Bank is subject to comprehensive supervision and condition described below, the Board concludes that regulation on a consolidated basis by its home country Bank has provided adequate assurances of access to supervisor. any necessary information the Board may request. In considering this application, the Board also has On the basis of all of the facts of record, and subject taken into account the additional standards set forth in to the commitments made by Bank, as well as the section 7 of the IB A. 12 U.S.C. § 3105(d)(3)-(4). Bank terms and conditions set forth in this order, the Board has received the consent of its home country supervi- has determined that Bank's application to establish an sor to establish the proposed agency. In addition, agency should be, and hereby is, approved. Should subject to certain conditions, the Superintendency has any restrictions on access to information regarding the agreed to cooperate in providing the Board with infor- operations or activities of Bank and any of its affiliates mation on Bank's operations. subsequently interfere with the Board's ability to Chile has not adopted the risk-based capital stan- determine the safety and soundness of Bank's U.S. dards of the Basle Accord. Under Chilean law, Bank's operations or the compliance by Bank or its affiliates total liabilities may not exceed a specified multiple of with applicable federal statutes, the Board may require capital and reserves. Bank is in compliance with this termination of any of Bank's direct or indirect activirequirement. Bank has also provided capital informa- ties in the United States. Approval of this application tion in a risk-based format and Bank's capital is in is also specifically conditioned on compliance by Bank excess of the minimum levels that would be required with the commitments made in connection with this by the Basle Accord and is considered equivalent to application, and with the conditions contained in this capital that would be required of a U.S. banking order.3 The commitments and conditions referred to organization. above are conditions imposed in writing by the Board Managerial and other financial resources of Bank in connection with its decision, and may be enforced in are also considered consistent with approval.2 Bank, proceedings under 12 U.S.C. § 1818 or 12 U.S.C. which has a branch and representative office outside § 1847 against Bank, its offices and its affiliates. Chile, appears to have the experience and capacity to support the additional office in the United States. In 3. The Board's authority to approve the establishment of the proposed agency parallels the continuing authority of the State of Florida Department of Banking and Finance to license offices of a 2. As a result of government intervention to deal with a financial foreign bank. The Board's approval of this application does not crisis in Chile in the 1980s, Bank is required to make payments to the supplant the authority of the State of Florida, and its agent, the Central Bank under a subordinated commitment. Despite this require- Department of Banking and Finance, to license the proposed agency ment, Bank has maintained risk-based capital ratios consistent with of Bank in accordance with any terms or conditions that the Departthe Basle capital standards. ment of Banking and Finance may impose. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

182 Federal Reserve Bulletin • February 1994 By order of the Board of Governors, effective meaning of Regulation K after establishing the pro- December 16, 1993. posed branch (12 C.F.R. 211.23(b)).3 Bank has received approvals to establish the pro- Voting for this action: Vice Chairman Mullins and Gover- posed branch from the Hong Kong Monetary Authornors Angell, Kelley, LaWare, Lindsey, and Phillips. Absent ity ("Monetary Authority") and the Office of the and not voting: Chairman Greenspan. Comptroller of the Currency ("OCC"). In order to approve an application by a foreign bank JENNIFER J. JOHNSON to establish a branch in the United States, the IBA and Associate Secretary of the Board Regulation K require the Board to determine that the foreign bank applicant engages directly in the business Dah Sing Bank, Ltd. of banking outside the United States, and has fur- Hong Kong nished to the Board the information it needs to assess adequately the application. The Board must also de- Order Approving Establishment of a Branch termine that the foreign bank applicant is subject to comprehensive supervision or regulation on a consol- Dah Sing Bank, Ltd. ("Bank"), Hong Kong, a foreign idated basis by its home country supervisors bank within the meaning of the International Banking (12 U.S.C. § 3105(d)(2); 12 C.F.R. 211.24(c)(1)). The Act ("IBA"), has applied under section 7(d) of the Board may also take into account additional standards IBA (12 U.S.C. § 3105(d)) to establish a federally as set forth in the IBA (12 U.S.C. § 3105(d)(3)-(4)) and licensed branch in Alhambra, California. A foreign Regulation K (12 C.F.R. 211.24(c)). bank must obtain the approval of the Board to estab- Bank engages directly in the business of banking lish a branch, agency, commercial lending company, outside of the United States through its banking operor representative office in the United States under the ations in Hong Kong. Bank also has provided the Foreign Bank Supervision Enhancement Act of 1991 Board with the information necessary to assess the ("FBSEA"), which amended the IBA. application through submissions that address the rele- Notice of the application, affording interested pervant issues. sons an opportunity to submit comments, has been Regulation K provides that a foreign bank will be published in a newspaper of general circulation (Starconsidered to be subject to comprehensive supervision News, Pasadena, California, September 20, 1991). The or regulation on a consolidated basis if the Board time for filing comments has expired and the Board has determines that the bank is supervised and regulated in considered the application and all comments received. such a manner that its home country supervisor re- Bank, with assets of $2.3 billion as of June 30, 1993, is the 18th largest bank in Hong Kong.1 Bank operates ceives sufficient information on the foreign bank's worldwide operations, including the relationship of the 34 branch offices in Hong Kong and controls eight foreign bank to any affiliate, to assess the overall direct domestic subsidiaries engaged in banking, infinancial condition of the foreign bank and its complivestment, real estate and insurance activities. Bank ance with law and regulation (12 C.F.R. 211.24(c)(1)).4 also has one branch in the United States. The proposed branch would engage in trade finance, commercial mortgages, and provide letters of credit, including advising and remittance, services for Bank's 3. Bank is a wholly owned subsidiary of Dah Sing Financial Holdings Limited, Hong Kong ("DSFH"), a company that is traded Hong Kong operations. The proposed branch intends on the Hong Kong stock exchange. Dah Sing Investment Limited, to take wholesale deposits from both Hong Kong and Bermuda ("DSI-Bermuda"), directly owns a 7.4 percent interest in local customers, but would not take retail deposits.2 DSFH and indirectly controls an additional 24.4 percent through a subsidiary, Dah Sing Investments Limited, Hong Kong. DSI-Ber- Bank, which currently operates a branch in San Fran- muda and DSFH have no U.S. operations other than through Bank. cisco, California, does not engage in nonbanking ac- DSI-Bermuda is owned by David S. Y. Wong, who is chairman of both DSFH and Bank. Other large shareholders of DSFH include Mitsui tivities in the United States and would continue to be Trust & Banking Company, Ltd., Japan, and Sumitomo Life Insura qualifying foreign banking organization within the ance Company, Japan, which own 17 percent and 8.5 percent, respectively, of DSFH's shares. 4. In assessing this standard, the Board considers, among other factors, the extent to which the home country supervisors: (i) Ensure that the bank has adequate procedures for monitoring and controlling its activities worldwide; 1. Data are as of December 31, 1992, unless otherwise noted. (ii) Obtain information on the condition of the bank and its 2. In accepting deposits the proposed branch would not acquire or subsidiaries and offices through regular examination reports, accept domestic retail deposits that require deposit insurance audit reports, or otherwise; (12 U.S.C. § 3104(c)). Bank also proposes to enter into an agreement (iii) Obtain information on the dealings with and relationship with the Federal Reserve to limit its deposit-taking to that permissible between the bank and its affiliates, both foreign and domestic; for a corporation organized under section 25A of the Federal Reserve (iv) Receive from the bank financial reports that are consolidated Act (an Edge corporation). 12 U.S.C. § 611 et seq. on a worldwide basis, or comparable information that permits Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 183 In making its determination under this standard, the bank. Hong Kong law also provides for the imposition Board has considered the following information. of criminal penalties on bank directors and managers The Monetary Authority is Bank's primary supervi- resulting from a conviction of failure to comply accusor. The Monetary Authority is authorized by law to rately with reporting requirements. regulate the domestic and foreign activities of Hong The establishment of a foreign branch or represen- Kong licensed banks. The duties of the Monetary tative office requires the prior approval of the Mone- Authority include licensing banks, enforcing the pro- tary Authority. The Monetary Authority evaluates the visions of Hong Kong's banking laws, and conducting adequacy and effectiveness of branch management, examinations of banks and their overseas branches the internal control systems of the branch, and proceand representative offices. In executing its responsi- dures at the head office for monitoring and controlling bilities, the Monetary Authority normally conducts the branch. Every approved foreign branch is required annual examinations of Bank, which alternate between to make periodic reports to the Monetary Authority on off-site and on-site examinations. the functions and activities of the branch and to allow The on-site examination includes evaluation of op- examiners access to the branch's books and records. erations, performance, and financial condition. In as- With respect to monitoring of dealings and relationsessing Bank's condition, examiners evaluate such ships with affiliates, the Monetary Authority is emfactors as credit quality, concentrations of credit, powered to obtain any information on an associated or adequacy of lending policies and credit administration affiliated company of a Hong Kong banking institution. procedures, capital adequacy, earnings performance, Hong Kong banking law limits Bank's transactions liquidity, adequacy of loan loss provisions, internal with subsidiaries and affiliates. Bank is required to controls, management, and compliance with laws and report affiliate-related transactions to the Monetary regulations. Authority quarterly. Periodic discussions are held with Bank's senior The Monetary Authority generally evaluates the management to discuss current performance, immedi- financial position and performance of a a bank and its ate prospects, and issues related to the overall finan- financial subsidiaries on a consolidated basis. This cial market. Further, following the completion of evaluation includes a review of capital adequacy, large Bank's annual audit, the Monetary Authority holds exposures, and concentration risks. In addition, where detailed discussions with the bank's external auditor a bank or banking group is part of a larger group which and bank management on prudential matters, includ- may include non-bank parent or affiliated companies, ing the results of the audit, adequacy of loan provi- the Monetary Authority may seek wider voluntary sions, and compliance with the provisions of Hong consolidated reporting, or seek sufficient information Kong banking law. to ensure that it understands the relationship between In addition to direct oversight through the examina- the bank and the rest of the group. tion process, the Monetary Authority receives fre- Based on all the facts of record, which include the quent and comprehensive financial reports from Bank information described above, the Board concludes on a worldwide consolidated basis. The Monetary that Bank is subject to comprehensive supervision and Authority is empowered to request an external auditor regulation on a consolidated basis by its home country to report on the accuracy of reports submitted and the supervisor. adequacy of the internal control systems for producing The Board has also taken into account the additional the reports. standards set forth in section 7 of the IBA and Regu- A number of enforcement powers are available to lation K. (See 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. the Monetary Authority to use in its supervision of 211.24(c)(2)). As noted above, Bank has received the Hong Kong banks. The Monetary Authority may consent of the Monetary Authority to establish the require a bank to take corrective action to correct any proposed branch. In addition, subject to certain confinancial, operational or managerial deficiencies, ap- ditions, the Monetary Authority may share informapoint an outside advisor to the bank to effect necessary tion on Bank's operations with other supervisors, changes, or in the extreme, assume control of the including the Board. Bank must comply with Hong Kong capital standards. Hong Kong has voluntarily subscribed to the analysis of the bank's financial condition on a worldwide consol- Basle Capital Accord ("Accord"). Bank's capital exidated basis; ceeds the minimum standards of the Accord and is (v) Evaluate prudential standards, such as capital adequacy and equivalent to capital that would be required of a U.S. risk asset exposure, on a worldwide basis. banking organization conducting similar banking activ- These are indicia of comprehensive, consolidated supervision. No ities. Managerial and other financial resources of Bank single factor is essential and other elements may inform the Board's determination. are also considered consistent with approval, and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

184 Federal Reserve Bulletin • February 1994 Bank appears to have the experience and capacity to 12 U.S.C. § 1847 against Bank, including its offices support the proposed branch. Bank has established and its affiliates. controls and procedures for its U.S. offices to ensure By order of the Board of Governors, effective compliance with U.S. law. December 16, 1993. Bank and its parents have committed to make available to the Board such information on the operations Voting for this action: Vice Chairman Mullins and Goverof Bank and any affiliate of Bank that the Board deems nors Angell, Kelley, LaWare, Lindsey, and Phillips. Absent necessary to determine and enforce compliance with and not voting: Chairman Greenspan. the IBA, the Bank Holding Company Act of 1956, as JENNIFER J. JOHNSON amended, and other applicable Federal law, to the Associate Secretary of the Board extent not prohibited by law or regulation. The Board has reviewed the restrictions on disclosure in relevant KorAm Bank jurisdictions in which Bank operates and has commu- Seoul, Korea nicated with the Monetary Authority concerning access to information. The Board notes that Bank, and Order Approving Establishment of a Branch certain of its affiliates, may not provide information without the consent of third parties. Bank has commit- KorAm Bank ("Bank"), Seoul, Korea, a foreign bank ted to cooperate with the Board to obtain any approvwithin the meaning of the International Banking Act als or consents that may be needed to gain access to ("IBA"), has applied under section 7(d) of the IBA information that may be requested by the Board. In (12 U.S.C. § 3105(d)) to establish a federally licensed light of these commitments and other facts of record, branch in Los Angeles, California. A foreign bank and subject to the condition described below, the must obtain the approval of the Board to establish a Board concludes that Bank has provided adequate branch, agency, commercial lending company, or repassurances of access to any necessary information the resentative office in the United States under the For- Board may request. eign Bank Supervision Enhancement Act of 1991 On the basis of all the facts of record, and subject to ("FBSEA"), which amended the IBA. the commitments made by Bank, as well as the terms Notice of the application, affording interested perand conditions set forth in this order, the Board has sons an opportunity to submit comments, has been determined that Bank's application to establish a published in a newspaper of general circulation branch should be, and hereby is, approved. If any (Los Angeles Times, October 13, 1992). The time for restrictions on access to information on the operations filing comments has expired and the Board has conor activities of Bank and any of its affiliates subsesidered the application and all comments received. quently interfere with the Board's ability to determine Bank, with assets of $7.5 billion,1 is the eighth the safety and soundness of Bank's U.S. operations or largest bank in Korea. Bank operates 53 branch offices compliance by Bank or its affiliates with applicable and has two affiliates in Korea.2 Federal statutes, the Board may require termination of The proposed branch would limit its activities to any of Bank's direct or indirect activities in the United those that are incidental to international or foreign States or, in the case of any such operation licensed by business, including: deposit-taking from foreign govthe OCC, recommend termination of such operation. ernments and foreign persons, and internationally re- Approval of this application is also specifically condilated credit activities, payments and collections, fortioned on compliance by Bank and its parent compaeign exchange, and investment advisory activities. nies with the commitments made in connection with Bank does not engage in nonbanking activities in the this application, and with the conditions contained in United States and would be a qualifying foreign bankthis order.5 The commitments and conditions referred ing organization within the meaning of Regulation K to above are conditions imposed in writing by the Board in connection with its decision, and may be enforced in proceedings under 12 U.S.C. § 1818 or 1. Financial data are as of June 30, 1993, unless otherwise noted. 2. As of December 31, 1992, Bank of America NT & SA ("BofA") directly owned approximately 31 percent of Bank's shares. As of the same date, a group of 11 Korean corporate shareholders held an 5. The Board's authority to approve the establishment of the aggregate of 25 percent of Bank's stock, with the remaining 44 percent proposed branch office parallels the continuing authority of the OCC held by the public and the employee shareholder association. In light to license offices of a foreign bank. The Board's approval of this of BofA's ownership interest in Bank, Bank will limit the activities application does not supplant the authority of the OCC to license the conducted at the branch to those that are permissible for a corporation proposed branch office of Bank in accordance with any terms or organized under section 25A of the Federal Reserve Act (an Edge conditions that the OCC may impose. corporation). 12 U.S.C. § 611 et seq. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 185 after establishing the proposed branch (12 C.F.R. In making its determination under this standard, the 211.23(b)). Board has considered the following information. Bank has received approvals to establish the pro- Bank's primary supervisor is the OBSE, which posed branch from the Korean Ministry of Finance monitors Bank's compliance with all banking laws and ("Ministry") and the Office of Bank Supervision and regulations and conducts examinations of Bank. In Examination ("OBSE") of the Bank of Korea and has addition, the Ministry has legal authority over Bank's applied for approval to the Office of the Comptroller of international operations, including the approval of the the Currency ("OCC"). establishment of foreign banking offices, promulgation In order to approve an application by a foreign bank of regulations on those operations, reporting requireto establish a branch in the United States, the IBA and ments, and examination of the international banking Regulation K require the Board to determine that the operations. The OBSE and Ministry coordinate their foreign bank applicant engages directly in the business supervision of Bank; the Ministry has delegated its of banking outside the United States, and has fur- examination authority for the international activities of nished the Board with the information it needs to Bank to the OBSE. assess adequately the application. The Board also The OBSE conducts special and regular on-site must determine that the foreign bank applicant is examinations of Bank's operations. Special examinasubject to comprehensive supervision or regulation on tions dealing with specific matters and/or specific a consolidated basis by its home country supervisors branch offices, including foreign offices, are carried (12 U.S.C. § 3105(d)(2); 12 C.F.R. 211.24(c)(1)). The out when determined necessary by the OBSE. Regu- Board may also take into account additional standards lar, unannounced examinations of Bank's head office as set forth in the IBA (12 U.S.C. 3105(d)(3)-(4)) and are conducted annually. These examinations normally Regulation K (12 C.F.R. 211.24(c)). focus on asset quality, internal controls, the accuracy Bank engages directly in the business of banking of financial reports, and compliance with applicable outside of the United States through its banking oper- banking laws. In addition, each year approximately 10 ations in Korea. Bank also has provided the Board percent of Bank's branches are randomly selected to with the information necessary to assess the applica- undergo an on-site examination. In connection with its tion through submissions that address the relevant examination, the OBSE has the power to require issues. banking institutions to adjust the book value of their Regulation K provides that a foreign bank will be assets, establish reserves against unsound assets, or considered to be subject to comprehensive supervision remove from the books any asset which, in its judgement, has no true value. or regulation on a consolidated basis if the Board determines that the bank is supervised and regulated in As previously indicated, examinations of Bank's such a manner that its home country supervisor re- international operations are conducted by the OBSE ceives sufficient information on the foreign bank's under the delegated authority of the Ministry. Foreign worldwide operations, including the relationship of the offices of Korean banking institutions undergo regular foreign bank to any affiliate, to assess the overall on-site examinations by the OBSE generally every two financial condition of the foreign bank and its compli- years. The focus of these examinations generally parance with law and regulation (12 C.F.R. 211.24(c)(1)).3 allels that of domestic branch examinations, with an additional review of compliance with the banking laws and regulations of the foreign jurisdiction in which such offices are located. In the year when the OBSE examination is not conducted, Bank's audit depart- 3. In assessing this standard, the Board considers, among other factors, the extent to which the home country supervisors: ment conducts an audit of Bank's foreign offices. The (i) Ensure that the bank has adequate procedures for monitoring focus of the audit is determined in conjunction with and controlling its activities worldwide; Bank's field audit program, which is submitted to the (ii) Obtain information on the condition of the bank and its subsidiaries and offices through regular examination reports, Ministry annually. audit reports, or otherwise; The OBSE also reviews Bank's operations through (iii) Obtain information on the dealings with and relationship between the bank and its affiliates, both foreign and domestic; the periodic receipt of consolidated financial reports. (iv) Receive from the bank financial reports that are consolidated Bank is required to submit a balance sheet and a report on a worldwide basis, or comparable information that permits analysis of the bank's financial condition on a worldwide consol- outlining its operations on a monthly basis; These idated basis; reports allow the OBSE to monitor Bank's capital, (v) Evaluate prudential standards, such as capital adequacy and liquidity and long- and short-term lending operations. risk asset exposure, on a worldwide basis. The OBSE may also require any other reports that it These are indicia of comprehensive, consolidated supervision. No deems necessary. single factor is essential and other elements may inform the Board's determination. With respect to the monitoring of relationships with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

186 Federal Reserve Bulletin • February 1994 affiliates, Bank must consolidate the financial state- Bank must comply with risk-based capital standards ments of any subsidiaries in which it is the largest adopted by Korea. In addition, Bank's capital is in shareholder. Further, Bank must obtain approval from excess of the minimum levels that would be required the OBSE to acquire 10 percent or more of a com- by the Basle Capital Accord and is considered equivpany's shares. The OBSE recognizes as an affiliate any alent to capital that would be required of a U.S. company that is 10 percent or more owned. Addition- banking organization.4 Managerial and other financial ally, the OBSE reviews all extensions of credit to resources of Bank are also considered consistent with affiliates. approval, and Bank appears to have the experience A number of enforcement powers are available to and capacity to support the proposed branch. Bank the OBSE in its supervision of Korean commercial has established controls and procedures for its U.S. banks. The Bank of Korea may, upon recommenda- offices to ensure compliance with U.S. law. tion of the OBSE, suspend bank officers who are Bank has committed to make available to the Board involved in willful violations of banking laws and such information on the operations of Bank and any regulations, who decline to follow its orders and affiliate of Bank that the Board deems necessary to instructions, or who otherwise hinder sound banking determine and enforce compliance with the IBA, the operations, and may recommend their dismissal to the Bank Holding Company Act of 1956, as amended, and bank's shareholders. Similarly, the Bank of Korea other applicable Federal law, to the extent not prohibmay suspend a bank's operations or cancel its license ited by law or regulation. The Board has reviewed the if the bank is in violation of relevant banking laws and restrictions on disclosure in Korea and has communiregulations, declines to follow its orders and instruc- cated with certain government authorities concerning tions, or conducts unsound business. access to information. The Board notes that Bank, and The OBSE also may review information provided certain of its affiliates may not provide information through Bank's internal systems. Bank monitors its without the consent of third parties. In this regard, own operations through internal audits that review Bank has committed to cooperate with the Board to financial performance as well as compliance with obtain any approvals or consents that may be needed applicable banking laws and regulations. The proposed to gain access to information that may be requested by Los Angeles branch will be under the direct supervi- the Board. In light of these commitments and other sion and control of Bank's international department. facts of record, and subject to the condition described The branch will file monthly, quarterly, semi-annual below, the Board concludes that Bank has provided and annual reports with the international department adequate assurances of access to any necessary inforand various other departments of the head office. As mation the Board may request. previously indicated, Bank's audit department intends On the basis of all the facts of record, and subject to to conduct regular on-site examinations of the pro- the commitments made by Bank, as well as the terms posed branch every other year, alternating with the and conditions set forth in this order, the Board has examination of the OBSE. The proposed branch also determined that Bank's application to establish a fedwill be audited once a year by an outside accounting eral branch should be, and hereby is, approved. If any firm. Further, the branch will retain local counsel to restrictions on access to information on the operations advise it on a continuing basis regarding regulatory or activities of Bank and any of its affiliates subserequirements. A senior member of the official staff of quently interfere with the Board's ability to determine the proposed branch will be designated as the compli- the safety and soundness of Bank's U.S. operations or ance officer. compliance by Bank or its affiliates with applicable Based on all the facts of record, which include the Federal statutes, the Board may require termination of information described above, the Board concludes any of Bank's direct or indirect activities in the United that Bank is subject to comprehensive supervision and States or, in the case of any such operation licensed by regulation on a consolidated basis by its home country the OCC, recommend termination of such operation. supervisors. Approval of this application is also specifically condi- The Board has also taken into account the additional tioned on compliance by Bank with the commitments standards set forth in section 7 of the IBA and Regu- made in connection with this application, and with the lation K. (See 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). As noted above, Bank has received the consent of the Ministry and the OBSE to establish the 4. The Bank of Korea has required Korean banks to meet transitional risk-based capital standards until January 1, 19%, when Korean proposed federal branch. In addition, subject to cerbanks must be in conformance with the Basle minimum standards. For tain conditions, the Ministry and the OBSE may share the period of January 1, 1994 to December 31, 1995, Korean banks must maintain a total risk-based capital ratio of at least 7.25 percent. information on Bank's operations with other supervi- As noted above, Bank's capital exceeds levels required by the Basle sors, including the Board. Capital Accord. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 187 conditions contained in this order.5 The commitments these proposals, to follow the procedures and consider and conditions referred to above are conditions im- the factors set forth in section 18(c) of the FDI Act posed in writing by the Board in connection with its (12 U.S.C. § 1828(c) ("the Bank Merger Act")).1 The decision, and may be enforced in proceedings under proposed transaction also is subject to review under 12 U.S.C. § 1818 or 12 U.S.C. § 1847 against Bank, the Bank Merger Act by the Federal Deposit Insurincluding its offices and its affiliates. ance Corporation ("FDIC"), the primary banking By order of the Board of Governors, effective regulator for Union Bank. December 22, 1993. Notice of the application, affording interested persons an opportunity to submit comments, has been Voting for this action: Chairman Greenspan, Vice Chair- published in accordance with the Bank Merger Act man Mullins and Governors Kelley, Lindsey, and Phillips. and the Board's Rules of Procedure (12 C.F.R. Absent and not voting: Governors Angell and La Ware. 262.3(b)). Reports on the competitive effects of the merger were requested from the United States Attor- JENNIFER J. JOHNSON ney General, the Office of the Comptroller of the Associate Secretary of the Board Currency and the FDIC. The time for filing comments has expired, and the Board has considered the application and all comments received in light of the factors ACTIONS TAKEN UNDER THE FEDERAL DEPOSIT set forth in the Bank Merger Act and section 5(d) of INSURANCE CORPORATION IMPROVEMENT ACT the FDI Act. Montgomery is the 29th largest commercial banking By the Board organization in Arkansas, controlling deposits of $142.1 million, representing less than 1 percent of the Montgomery County Bancshares, Inc. total deposits in commercial banking organizations in Little Rock, Arkansas the state.2 The Camden office of First Financial controls deposits of $9.2 million, representing less than Order Approving Application to Acquire a Branch of 1 percent of the total deposits in thrift institutions in a Savings Bank the state. Upon consummation of the proposed transaction, Montgomery would remain the 29th largest Montgomery County Bancshares, Inc., Little Rock, commercial banking organization in Arkansas, con- Arkansas ("Montgomery"), a bank holding company trolling deposits of $151.3 million, representing less within the meaning of the Bank Holding Company Act than 1 percent of the total deposits in commercial ("BHC Act"), proposes to purchase certain assets and banking organizations in the state.3 Montgomery and assume certain liabilities of the Camden, Arkansas, First Financial do not compete directly in any relevant branch office of First Financial Bank, F.S.B., El banking market. Based on all the facts of record, the Dorado, Arkansas ("First Financial"), by merging the Board concludes that consummation of this proposal office with Montgomery's wholly owned, nonmember, would not result in any significantly adverse effects on state-chartered bank subsidiary, Union State Bank, competition or the concentration of banking resources Junction City, Arkansas ("Union Bank"). Montgomin any relevant banking market. ery has requested Board approval of this transaction The Board also concludes that the financial and pursuant to section 5(d)(3) of the Federal Deposit managerial resources and future prospects of Mont- Insurance Act (12 U.S.C. § 1815(d)(3) ("FDI Act")), gomery and its subsidiary banks, the convenience and as amended by the Federal Deposit Insurance Corponeeds of the communities to be served, and the other ration Improvement Act of 1991 (12 U.S.C. factors that the Board must consider under the Bank § 1815(d)(3) ("FDI Act")). Section 5(d)(3) of the FDI Act requires the Board to review any proposed merger between a bank owned by a bank holding company 1. 12 U.S.C. § 1815(d)(3)(E). These factors include considerations and a savings association, or branch of a savings relating to competition, financial and managerial resources, and future association, in which the resulting institution is in- prospects of the existing and proposed institutions, and the convenience and needs of the communities to be served. 12 U.S.C. sured by the Bank Insurance Fund, and in reviewing § 1828(c). 2. State deposit data are as of June 30, 1992, and reflect the bank holding company approvals and bank mergers through September 1993. 5. The Board's authority to approve the establishment of the 3. The deposits of the Camden office of First Financial would be proposed branch office parallels the continuing authority of the OCC transferred to a commercial bank under this proposal, and these to license offices of a foreign bank. The Board's approval of this deposits are included at 100 percent in the calculation of pro forma application does not supplant the authority of the OCC to license the state deposit share. See Norwest Corporation, 78 Federal Reserve proposed branch office of Bank in accordance with any terms or Bulletin 452 (1992); First Banks, Inc., 76 Federal Reserve Bulletin 669, conditions that the OCC may impose. 670 n.9 (1990). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

188 Federal Reserve Bulletin • February 1994 Merger Act are consistent with approval.4 Moreover, Based on the foregoing and all the facts of record, the record in this case reflects that: the Board has determined that this application should (1) The transaction will not result in the transfer of be, and hereby is, approved. This approval is subject any federally insured depository institution's federal to Union Bank's obtaining the required approval of the deposit insurance from one federal deposit insur- FDIC for the proposed transaction under the Bank ance fund to the other; Merger Act. The Board's approval also is specifically (2) Montgomery and Union Bank currently meet and conditioned upon compliance by Montgomery with all upon consummation of the proposed transaction will the commitments made in connection with this applicontinue to meet, all applicable capital standards; cation. The commitments and conditions relied on by and the Board in reaching this decision are both conditions (3) The proposed transaction would comply with the imposed in writing by the Board in connection with its interstate banking provisions of the Bank Holding findings and decision, and as such may be enforced in Company Act (the "BHC Act") (12 U.S.C. proceedings under applicable law. § 1842(d)) if Union Bank were a state bank that This transaction shall not be consummated before Montgomery was applying to acquire directly. See the thirtieth calendar day following the effective date 12 U.S.C. § 1815(d)(3). of this order, or later than 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 St. Louis, acting pursuant to 4. The Board has received a comment from an individual ("Protestant") alleging improper banking practices in connection with two delegated authority. loans made by Montgomery's subsidiary banks to Protestant's former By order of the Board of Governors, effective husband. Protestant believes that a principal of Montgomery, who also serves as a director of Union Bank, and another director of Union December 1, 1993. Bank facilitated a loan by Union Bank based on an improper appraisal and a loan by another Montgomery subsidiary bank based on Protestant's forged signature. The Board has carefully considered these Voting for this action: Chairman Greenspan, Vice Chaircomments in light of all the facts of record, including Union Bank's man Mullins, and Governors Angell, Kelley, and La Ware. response to these allegations describing its appraisal and loan docu- Absent and not voting: Governors Lindsey and Phillips. mentation procedures, and the assessment of management in relevant reports of examination by the banks' primary regulator, the FDIC. Based on this review, the Board does not believe that the Protestant's JENNIFER J. JOHNSON comments warrant denial of this application. The Board also has forwarded these comments to the FDIC for consideration. 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 First Interstate Bancorp, HomeFed Bank, F.A., First Interstate Bank December 2, 1993 Los Angeles, California San Diego, California of California, Los Angeles, California SunTrust Banks, Inc., Andrew Jackson Savings Sun Bank/ December 21, 1993 Atlanta, Georgia Bank, Tallahassee, N.A., Tallahassee, Florida Tallahassee, Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 189 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 Banco Santander, S.A., Greenwich Federal Union Trust December 10, 1993 Santander, Spain Savings and Loan Company, Association, Stamford, Greenwich, Connecticut Connecticut First Claiborne Holding Jefferson Savings and First Claiborne Bank, December 13, 1993 Company, Inc., Loan Association of Tazewell, Tazewell, Tennessee Morristown, Tennessee Morristown, Tennessee 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 Commercial Corporation, Clinton Bancshares, Inc., December 13, 1993 Little Rock, Arkansas Clinton, Arkansas Regional Investment Corporation, Sun Bank/Tallahassee, N.A., December 21, 1993 Tallahassee, Florida Tallahassee, Florida Section 4 Effective Applicant(s) Bank(s) Date Barnett Banks, Inc., Main America Capital, L.C., December 2, 1993 Jacksonville, Florida Atlanta, Georgia Keystone Financial, Inc., Elmwood Bancorp, Inc., December 2, 1993 Harrisburg, Pennsylvania Media, Pennsylvania National City Corporation, CTI Logistics, Inc., December 23, 1993 Cleveland, Ohio Rah way, New Jersey Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

190 Federal Reserve Bulletin • February 1994 Section 4—Continued Effective Applicant(s) Bank(s) Date SunTrust Banks, Inc., to engage in providing investment and December 15, 1993 Atlanta, Georgia financial advice, arranging commercial real estate equity financing, and providing full-service brokerage services SunTrust Banks, Inc., Regional Investment Corporation, December 21, 1993 Atlanta, Georgia Tallahassee, Florida Sections 3 and 4 Effective Applicant(s) Bank(s) Date First Bank System, Inc., American Bancshares of Mankato, December 21, 1993 Minneapolis, Minnesota Inc., Mankato, Minnesota Eagle Insurance Agency, Inc., Amboy, Minnesota APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant(s) Bank(s) Bank Date American National Bancshares of Harper Bancshares, Inc., Kansas City December 7, 1993 Wichita, Inc., Harper, Kansas Wichita, Kansas ANB Corporation, Winchester Chicago December 21, 1993 Muncie, Indiana Bancorporation, Winchester, Indiana Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 191 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date Associated Banc-Corp, Inc., Bay Lake Banc-Corp, Chicago December 6, 1993 Green Bay, Wisconsin Kewaunee, Wisconsin Community State Bank of Algoma, Algoma, Wisconsin First Manitowoc Bancorp, Inc., Manitowoc, Wisconsin First Oak Brook Bancshares, Inc., Oak Brook, Illinois Atlantic Community Bancorp, Unity Bank & Trust Richmond December 10, 1993 Inc., Company, Rocky Mount, North Carolina Rocky Mount, North Carolina BB&T Financial Corporation, Home Savings Bank of Richmond December 1, 1993 Wilson, North Carolina Albemarle, SSB, Albemarle, North Carolina B & P Bancorp, Incorporated, Pioneer Bancshares, Inc., St. Louis December 6, 1993 Shepherdsville, Kentucky Canmer, Kentucky Century South Banks, Inc., The Martin Bank, Atlanta December 15, 1993 Dahlonega, Georgia Martin, Tennessee Citizens Holding Company, DIGISOURCE, INC., Kansas City December 8, 1993 Muskogee, Oklahoma Fayette ville, Arkansas City National Bancshares, Inc., The City National Bank, Kansas City December 23, 1993 Guymon, Oklahoma Buymon, Oklahoma Coastal Bancshares, Inc., Gulf Coast Bancshares, Dallas December 29, 1993 Pearland, Texas Inc., Alvin, Texas The First National Bank, Alvin, Texas Coastal Bancshares, Inc., Pearland State Bank, Dallas December 29, 1993 Pearland, Texas Pearland, Texas Dakota Bancshares, Inc., Dakota County Minneapolis December 28, 1993 Mendota Heights, Minnesota Bancshares, Inc., Mendota Heights, Minnesota DFC Acquisition Corporation, Preferred Shares of Kansas City December 23, 1993 Two, Dickinson Financial Kansas City, Missouri Corporation, Kansas City, Missouri First Financial Corporation, First Marshall Chicago December 6, 1993 Terre Haute, Indiana Bancshares, Inc., Marshall, Illinois First Lucedale Bancorp, Inc., First National Bank of Atlanta December 22, 1993 Lucedale, Mississippi Lucedale, Lucedale, Mississippi Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

192 Federal Reserve Bulletin • February 1994 Section 3—Continued Reserve Effective AApppplliiccaanntt((ss)) BBaannkk((ss)) Bank Date First National Security First National Bancshares St. Louis November 26, 1993 Company, of Hempstead County, DeQueen, Arkansas Inc., Hope, Arkansas Island Financial Corporation, State Bank of Bird Island, Minneapolis November 30, 1993 Bird Island, Minnesota Bird Island, Minnesota Latah Bancorporation, Inc., Bank of Latah, San Francisco November 22, 1993 Latah, Washington Latah, Washington Lea County Bancshares, Inc., Lea County State Bank, Dallas December 10, 1993 Hobbs, New Mexico Hobbs, New Mexico Lee County Bancshares, Inc., The First National Bank St. Louis December 3, 1993 Marianna, Arkansas at Marianna, Marianna, Arkansas Myers Bancshares, Inc., The Central National Kansas City November 29, 1993 Alva, Oklahoma Bank, Alva, Oklahoma Neosho Bancshares ESOP, DIGISOURCE, INC., Kansas City December 23, 1993 Neosho, Missouri Fayetteville, Arkansas Neosho Bancshares, Inc., Neosho, Missouri Northwest Wisconsin Bancorp, BCB Bancorp, Inc., Minneapolis December 7, 1993 Inc., Chippewa Falls, Chippewa Falls, Wisconsin Wisconsin Norwest Corporation, D.L. Bancshares, Inc., Minneapolis December 21, 1993 Minneapolis, Minnesota Detroit Lakes, Minnesota Peoples Financial Corp. of Bradford Bancorp, Inc., Chicago November 24, 1993 Illinois, Inc., Bradford, Illinois Kewanee, Illinois Peotone Bancorp, Inc., Southwest Bancorp, Chicago December 10, 1993 Peotone, Illinois Inc., Worth, Illinois Powhatan Point Community The First National Bank Cleveland December 20, 1993 Bancshares, Inc., of Powhatan Point, Powhatan Point, Ohio Powhatan Point, Ohio Security Corporation, Firstbank Holding Kansas City November 29, 1993 Duncan, Oklahoma Company, Marietta, Oklahoma Southern Utah BanCorporation, State Bank of Southern San Francisco December 16, 1993 Cedar City, Utah Utah, Cedar City, Utah Southland Bank Corporation, United Bank of Crawford, Atlanta December 1, 1993 Butler, Georgia Roberta, Georgia Southwestern Bancorp, Inc., Cross Plains Bankshares, Dallas December 10, 1993 Sanderson, Texas Inc., Cross Plains, Texas Citizens State Bank, Cross Plains, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 193 Section 3—Continued Reserve Effective Applieant(s) Bank(s) Bank Date Sterling Bancorporation, Inc., Guardian Bank of Dallas December 1, 1993 Wilmington, Delaware Houston, Houston, Texas Sterling Bancshares, Inc., Guardian Bancshares, Dallas December 1, 1993 Houston, Texas Inc., Houston, Texas Guardian Bank of Houston, Houston, Texas Sterling Bancshares, Inc., Enterprise Bank-Houston, Dallas December 1, 1993 Houston, Texas Houston, Texas Sterling Bancorporation, Inc. Wilmington, Delaware Stockton Bancshares, Inc., Western Bancshares, Kansas City November 29, 1993 Stockton, Kansas Inc., Stockton, Kansas Berkley Agency, Inc., Stockton, Kansas St. Paul Bancshares, Inc., Dakota Bancshares, Inc., Minneapolis December 28, 1993 Phalen Park, Minnesota Mendota Heights, Minnesota Sun Financial Corporation, Farmers State Bank of St. Louis December 21, 1993 Earth City, Missouri Risco, Risco, Missouri Union Planters Corporation, First National Bancorp of St. Louis December 20, 1993 Memphis, Tennessee Shelbyville, Inc., Shelbyville, Tennessee Wesbanco, Inc., First Fidelity Bancorp, Cleveland December 7, 1993 Wheeling, West Virginia Inc., Fairmont, West Virginia Section 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date Banco Santander, S.A., Greenwich Financial New York December 10, 1993 Santander, Spain Corporation, Greenwich, Connecticut The Bank of New York New York Equity Fund New York December 15, 1993 Company, Inc., 1993 Limited New York, New York Partnership, New York, New York City Holding Company, City Mortgage Richmond December 29, 1993 Charleston, West Virginia Corporation, McKee's Rock, Pennsylvania Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

194 Federal Reserve Bulletin • February 1994 Section 4—Continued Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date Compass Bancshares, Inc., First Performance Atlanta December 2, 1993 Birmingham, Alabama Interim, F.S.B., Jacksonville, Florida First Fidelity Bancorporation, Greenwich Financial Philadelphia December 10, 1993 Lawrenceville, New Jersey Corporation, Greenwich, Connecticut First Financial Bancorp, Highland Federal Savings Cleveland December 22, 1993 Hamilton, Ohio Bank, Mariemont, Ohio First Midwest Bancorp, Inc., First Midwest Mortgage, Chicago December 17, 1993 Naperville, Illinois Inc., Joliet, Illinois Hawkeye Bancorporation, Centre Pointe Leasing Chicago December 21, 1993 Des Moines, Iowa Co., Inc., West Des Moines, Iowa Keeco, Inc., American National Bank Chicago November 23, 1993 Chicago, Illinois and Trust Company of Northland Insurance Agency, Waukegan, Inc., Waukegan, Illinois Chicago, Illinois American Suburban Northern Illinois Financial Mortgage Corporation, Corporation, Waukegan, Illinois Wauconda, Illinois Norwest Corporation, Prosperity Mortgage Minneapolis November 18, 1993 Minneapolis, Minnesota Company, Fairfax, Virginia Prairieland Bancorp, Inc., Alfred E. Hempen Chicago December 1, 1993 Bushnell, Illinois Accounting, Hamilton, Illinois Security Richland to engage de novo in Minneapolis December 29, 1993 Bancorporation, providing investment or Miles City, Montana financial advice Sections 3 and 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date Omega Financial Corporation, Penn Central Bancorp, Philadelphia December 24, 1993 State College, Pennsylvania Huntingdon, Pennsylvania Penn Central Bancorp Life Insurance Company, Phoenix, Arizona Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 195 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 Compass Bank, Compass Bank of Atlanta November 29, 1993 Birmingham, Alabama Calhoun County, N.A., Anniston, Alabama First United Bank, New River Bank, Atlanta November 30, 1993 Boca Raton, Florida Oakland Park, Florida Meridian Bank, The Grange National Philadelphia December 24, 1993 Reading, Pennsylvania Bank of Susquehanna County, New Milford, Pennsylvania PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits Kubany v. Board of Governors, et al., No. 93-1428 (D. against the Federal Reserve Banks in which the Board D.C., filed July 9, 1993). Action challenging Board of Governors is not named a party. determination under the Freedom of Information Act. The Board's motion to dismiss was filed on October 15, 1993. Board of Governors v. Oppegard, No. 93-3706 (8th Bennett v. Greenspan, No. 93-1813 (D. D.C., filed Cir., filed November 1, 1993). Appeal of district April 20, 1993). Employment discrimination action. court order ordering appellant Oppegard to comply with prior order requiring compliance with Board Amann v. Prudential Home Mortgage Co., et al., No. removal, prohibition, and civil money penalty order. 93-10320 WD (D. Massachusetts, filed February 12, 1993). Action for fraud and breach of contract Scott v. Board of Governors, No. 930905843CV (Dist. arising out of a home mortgage. On April 17, 1993, Ct., Salt Lake County, Utah, filed October 8, 1993). the Board filed a motion to dismiss. Action against Board and others for damages and injunctive relief for alleged constitutional and statu- Adams v. Greenspan, No. 93-0167 (D. D.C., filed tory violations caused by issuance of Federal Re- January 27,1993). Action by former employee under serve notes. the Civil Rights Act of 1964 and the Rehabilitation Act of 1973 concerning termination of employment. Richardson v. Board of Governors, et al., No. 93-C 836A (D. Utah, filed August 30, 1993). Action Sisti v. Board of Governors, No. 93-0033 (D. D.C., against Board and others for damages and injunctive filed January 6, 1993). Challenge to Board staff relief for alleged constitutional and statutory viola- interpretation with respect to margin accounts. The tions caused by issuance of Federal Reserve notes. Board's motion to dismiss was granted on May 13, On September 20, 1993, the Board filed a motion to 1993. On June 3,1993, the petitioner filed a notice of dismiss. appeal. On October 14, 1993, the Court of Appeals granted the Board's motion for summary affirmance. First National Bank ofBellaire v. Board of Governors, No. H-93-1708 (S.D. Texas, filed June 8, 1993). U.S. Check v. Board of Governors, No. 92-2892 (D. Action to enjoin possible enforcement actions by D.C., filed December 30, 1992). Challenge to partial Board of Governors and other bank regulatory agen- denial of request for information under the Freedom cies. On September 23, 1993, the agencies filed a of Information Act. Dismissed by stipulation on motion to dismiss. November 9, 1993. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

196 Federal Reserve Bulletin • February 1994 CBC, Inc. v. Board of Governors, No. 92-9572 (10th by the Board of Governors of the Federal Reserve Cir., filed December 2, 1992). Petition for review of System (the "Board") against individuals allegedly civil money penalty assessment against a bank hold- affiliated with the Bank of Credit and Commerce ing company and three of its officers and directors International ("BCCI") and its affiliates. All of the for failure to comply with reporting requirements. parties — Ghaith R. Pharaon, Khalid bin Mahfouz, Petition for review denied November 30, 1993. and Board Enforcement Counsel — agree that the two DLG Financial Corporation v. Board of Governors, proceedings raise common legal issues relating to the No. 392 Civ. 2086-G (N.D. Texas, filed October 9, doctrine of disentitlement.1 The parties disagree, how- 1992). Action to enjoin the Board and the Federal ever, as to the most efficient means of addressing those Reserve Bank of Dallas from taking certain enforce- issues. ment actions, and seeking money damages on a The cases are pending in different procedural stages variety of tort and contract theories. On October 9, of the administrative adjudication process. The 1992, the court denied plaintiffs' motion for a tem- Board's case against Ghaith R. Pharaon, in which the porary restraining order. On March 30, 1993, the Board seeks an order of prohibition and a civil money court granted the Board's motion to dismiss as to it, penalty of $37 million, has already been the subject of and also dismissed certain claims against the Re- a decision by the presiding Administrative Law Judge serve Bank. On April 29, the plaintiffs filed an in this proceeding, Walter J. Alprin (the "ALJ"), in amended complaint. The Board's motion to dismiss which he granted Board Enforcement Counsel's mothe amended complaint was filed on May 17. tion for summary disposition against Pharaon based on Zemel v. Board of Governors, No. 92-1056 (D. D.C., the doctrine of disentitlement. Following the ALJ's filed May 4, 1992). Age Discrimination in Employ- referral of the record in that case to the Board for final ment Act case. The parties' cross-motions for sum- decision, Pharaon and Board Enforcement Counsel mary judgment are pending. filed exceptions to the ALJ's recommended decision Board of Governors v. Ghaith R. Pharaon, No. 91- and Pharaon filed a motion to remand the record to the CIV-6250 (S.D. New York, filed September 17, ALJ for consideration of supplemental authority, 1991). Action to freeze assets of individual pending which the Board denied. Meanwhile, the Mahfouz administrative adjudication of civil money penalty case, in which the Board seeks a civil money penalty assessment by the Board. On September 17, 1991, of $170 million, is not yet before the Board and is the court issued an order temporarily restraining the currently the subject of Board Enforcement Counsel's transfer or disposition of the individual's assets. motion for summary disposition, which is pending before the ALJ. The motions now before the Board address the manner and sequence in which the Board FINAL ENFORCEMENT DECISION ISSUED BY THE should consider the disentitlement issue common to BOARD OF GOVERNORS the two cases. In the Matters of Procedural Posture Ghaith R. Pharaon, Pharaon and Kahlid Bin Mahfouz On July 12, 1991 and July 29, 1991, the Board issued Institution-Affiliated Parties of Notices of Intent to Prohibit against Pharaon, relating to Pharaon's alleged violations of law and regulation in BCCI Holdings (Luxembourg) S.A., connection with a number of financial institutions. On Luxembourg, and the Bank of Credit September 13, 1991, the Board issued an amended and Commerce International S.A., Notice of Intent to Prohibit and issued a Notice of (Luxembourg) Assessment of Civil Money Penalty against Pharaon, imposing a $37 million civil money penalty. Pharaon Docket Nos. 91-037-E-I1, 91-037-CMP-I1, filed answers to the charges and requested a hearing as 91-043-E-I8, 92-074-CMP-I1 to the civil money penalty assessment. On July 20, 1993, the ALJ granted Board Enforce- Order Denying Motions for Consolidation and Stay ment Counsel's motion for summary disposition and Setting Briefing Schedule This is a procedural order addressing a number of 1. Briefly stated, the doctrine of disentitlement states that a fugitive from justice may not simultaneously flout legal procedures and seek motions filed in two enforcement proceedings brought the benefit of such procedures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 197 against Pharaon based on the doctrine of disentitle- distinct context presented by Mahfouz. In particular, ment and recommended that the Board's Final Deci- Mahfouz argues that he presents arguments not made sion impose civil money penalties in the amount orig- by Pharaon that should not be lost to Board considinally assessed and issue an order of prohibition eration. Mahfouz suggests that, in order to make against Pharaon. The record was thereupon referred to consolidation possible, the Board should stay the the Board for the filing of any exceptions to the Pharaon proceeding, which would provide time for recommended decision by the parties and for the the ALJ to resolve the Mahfouz motion for summary Board's final decision. Upon a joint motion by the disposition, and thus for Mahfouz to catch up with parties, the deadline for the filing of exceptions was Pharaon in the procedural process. Notwithstanding extended until September 20, 1993. his request for consolidation, Mahfouz seeks to file a On August 20, 1993, Respondent Pharaon filed a separate brief and to participate independently in motion to remand the case to the ALJ to supplement oral argument, if oral argument is granted, before the the record on the issue of disentitlement. The Board Board. denied that motion, ruling that the significance of the On October 5, 1993, Board Enforcement Counsel cases raised by Pharaon could be addressed in the filed an opposition to the motion to stay the Pharaon context of briefing the exceptions to the recommended proceeding and the motions to consolidate, and indecision. On September 24, 1993, Pharaon and Board stead moved that Mahfouz be stayed pending the Enforcement Counsel filed exceptions to the Recom- Board's disposition of Pharaon. Board Enforcement mended Decision, and Pharaon filed the motion for Counsel agrees that the Board's authority to apply the consolidation discussed below. disentitlement doctrine is an issue common to both cases, but argues that the efficiencies of consolidated Mahfouz Board consideration of disentitlement would be outweighed by the factual and legal distinctions between On July 2, 1992, the Board issued a Notice of Assess- the two cases, and by the potential delay in the ment of Civil Money Penalties against Mahfouz, im- resolution of Pharaon entailed by the time necessary posing civil money penalties in the amount of for the ALJ to resolve the motion for summary dispo- $170 million against Mahfouz on the basis of alleged sition in Mahfouz. Board Enforcement Counsel thereviolations of law and regulation in connection with fore argues that a Board stay of the ALJ's consider- BCCI-affiliated institutions. Mahfouz answered the ation of Mahfouz would enable the Board, through the charges and requested a hearing. resolution of Pharaon, to provide the ALJ with guid- In the proceedings before the ALJ, Board Enforce- ance for his resolution of the summary disposition ment Counsel has filed a motion for summary disposi- motion in Mahfouz. Board Enforcement Counsel sugtion against Mahfouz on the basis of the doctrine of gests that, even without consolidation, the Board disentitlement. On September 23, 1993, Mahfouz filed would have access to Mahfouz's arguments on disenwith the ALJ an opposition to the motion for summary titlement by consulting Mahfouz's opposition to the disposition, and filed with the Board the motion for motion for summary disposition before the ALJ; consolidation discussed below. Board Enforcement Counsel does not indicate, however, what status Mahfouz's arguments should have in Pending Motions the Board's consideration when the case is not yet before the Board. Pharaon's motion to consolidate the two cases for Also on October 5, 1993, Board Enforcement Counpurposes of resolving the disentitlement issue argues sel filed a motion for leave to respond to Pharaon's simply that the common issue of disentitlement war- exceptions, arguing that Pharaon's exceptions had rants consolidation;2 Pharaon does not suggest a raised a number of legal issues not specifically adprocedure for bringing about the requested consoli- dressed in previous briefing. In light of the additional dation. Mahfouz's corresponding motion supporting period permitted Pharaon to file exceptions, Board consolidation of the two cases, argues that the Board Enforcement Counsel requested that it be permitted should not resolve the disentitlement issue without until November 30, 1993 to file its response. considering its application in the factually and legally On October 19, 1993, Pharaon filed a response, stating that he had no objection to Board Enforcement Counsel's request for an extension of time, so long as 2. The Uniform Rules of Practice and Procedure that control these such extension was limited to 60 days from the filingo f proceedings provide that the ALJ or the Board "may consolidate, for Pharaon's exceptions, and so long as Pharaon was also some or all purposes, any two or more proceedings, if each such allowed 60 days to reply to Board Enforcement Counproceeding involves ... at least one common question of law or fact, injustice." 12 C.F.R. 263.22(a)(1); 263.4. sel's response. Pharaon suggests that this extended Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

198 Federal Reserve Bulletin • February 1994 timetable supports his argument that consolidation of mary disposition in Mahfouz. The Board may then the two proceedings would be practicable and efficient. take appropriate action to consider the cases concur- On October 29, 1993, Board Enforcement Counsel rently, which may include the exercise of the Board's filed a reply to Pharaon's response arguing that Phar- discretion to defer consideration of the Pharaon aon is not inherently entitled under the procedural recommended decision, upon the completion of rules to file a response to Board Enforcement Coun- briefing, pending the resolution of the Mahfouz mosel's response, for which Board Enforcement Counsel tion for summary disposition. sought leave from the Board. Additionally, Board Accordingly, the Board denies the motions for con- Enforcement Counsel argues that Pharaon should not solidation and also denies the motion for a stay of be allowed 60 days to respond even if such leave were either case at this time. Rather, briefing should be granted. completed as to both cases, and the ALJ should complete his consideration of the motion for summary Discussion disposition in Mahfouz. The Board grants Board Enforcement Counsel's The Board believes that the administrative process motion for leave to file a response to Pharaon's excepwould best be served by the Board's consideration of tions, and, in view of the procedural uncertainty the issue of disentitlement after full briefing in both created by the various cross-motions, extends the time proceedings.3 Board Enforcement Counsel's counter- for filing such response to January 31,1994. The Board vailing concern about potential delay in resolving will treat Pharaon's October 19th filing as a motion for Pharaon is unsupported by any statement that such leave to file a reply and will permit Pharaon to file such delay would have any extraordinary consequences a reply within 30 days of the filing of Board Enforcethat would outweigh the advantages of full briefing. ment Counsel's response. Nor is it clear in the present circumstances that So ordered, this sixth day of December, 1993. administrative economies strongly support a stay of either Pharaon or Mahfouz. Board of Governors of the Accordingly, the Board believes that the advan- Federal Reserve System tage of full briefing as to both Pharaon and Mahfouz before the Board addresses the issue of disentitle- WILLIAM W. WILES ment outweighs any other administrative consider- Secretary of the Board ation that is apparent at this time. While this goal would best be served by a concurrent consideration of the two cases by the Board, the cases need not be FINAL ENFORCEMENT ORDERS ISSUED BY THE formally consolidated, especially in light of their BOARD OF GOVERNORS factual, legal and procedural disparities. Instead, the administrative process should continue in each pro- Berrien E. Moore ceeding, through the completion of briefing in Phar- Beverly Hills, California aon and resolution of the pending motion for sum- The Federal Reserve Board announced on December 20,1993, the issuance of a Consent Order Dismiss- 3. The Board believes that procedural confusion would be avoided by consideration of Mahfouz's arguments when the Mahfouz proceed- ing a Notice of Assessment of a Civil Money Penalty ing is properly before the Board, rather than by consulting a copy of against Berrien E. Moore, a former director of First Mahfouz's arguments to the ALJ, as suggested by Board Enforcement Counsel. Pacific Bancorp, Inc., Beverly Hills, California. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Al 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 A3 5 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

A2 Federal Reserve Bulletin • February 1994 Domestic Financial Statistics—Continued A57 Selected U.S. liabilities to foreign official institutions REAL ESTATE REPORTED BY BANKS A37 Mortgage markets IN THE UNITED STATES A38 Mortgage debt outstanding A57 Liabilities to and claims on foreigners CONSUMER INSTALLMENT CREDIT A58 Liabilities to foreigners A60 Banks' own claims on foreigners A39 Total outstanding A61 Banks' own and domestic customers' claims on A39 Terms foreigners A61 Banks' own claims on unaffiliated foreigners A62 Claims on foreign countries—Combined FLOW OF FUNDS domestic offices and foreign branches A40 Funds raised in U.S. credit markets A42 Summary of financial transactions REPORTED BY NONBANKING BUSINESS A43 Summary of credit market debt outstanding ENTERPRISES IN THE UNITED STATES A44 Summary of financial assets and liabilities A63 Liabilities to unaffiliated foreigners A64 Claims on unaffiliated foreigners Domestic Nonfinancial Statistics SELECTED MEASURES SECURITIES HOLDINGS AND TRANSACTIONS A45 Nonfinancial business activity—Selected A65 Foreign transactions in securities measures A66 Marketable U.S. Treasury bonds and A45 Labor force, employment, and unemployment notes—Foreign transactions A46 Output, capacity, and capacity utilization A47 Industrial production—Indexes and gross value INTEREST AND EXCHANGE RATES A49 Housing and construction A50 Consumer and producer prices A67 Discount rates of foreign central banks A51 Gross domestic product and income A67 Foreign short-term interest rates A52 Personal income and saving A68 Foreign exchange rates A69 Guide to Statistical Releases and International Statistics Special Tables SUMMARY STATISTICS SPECIAL TABLES A53 U.S. international transactions—Summary A54 U.S. foreign trade A70 Assets and liabilities of commercial banks, A54 U.S. reserve assets September 30, 1993 A54 Foreign official assets held at Federal Reserve A76 Terms of lending at commercial banks, Banks November 1993 A55 Foreign branches of U.S. banks—Balance A80 Assets and liabilities of U.S. branches and agencies sheet data of foreign banks, September 30,1993 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A3 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 Nonfinancial Statistics • February 1994 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 Ql Q2 Q3r July Aug. Sept/ Oct/ Nov. Reserves of depository institutions2 1 Total 25.8 9.3 10.8 12.4 9.4 9.7 16.6 20.0 12.8 2 Required 25.3 8.7 12.4 12.3 5.7 12.8 14.0 20.4 12.9 3 Nonborrowed 27.1 9.5 10.6 10.9 8.1 7.5 15.2 23.1 16.8 4 Monetary base3 12.6 9.1 9.8 11.4 9.5 11.5 15.1 7.9 8.8 Concepts of money, liquid assets, and debt4 5 Ml 16.8 6.5 10.5 12.9 13.3 10.1 13.6 10.4 10.4 6 M2 2.6 -1.9 2.2 3.2 1.9* 1.6 4.1 .7 4.2 7 M3 -.4 -3.9 2.3 1.3 -,7r .9 3.8 2.1 4.2 8 L 1.4 -2.4 3.3 1.3 -,8r -2.5 2.9 n.a. "iff 9 4.2r 4.0r 4.5r 5.7 5.7r 5.5r 5.3 3.7 n.a. Nontrqnsaction components 10 InM25 -3.0 -5.4 — 1.4r -1.1 -3.2 -2.2 -.1 -3.7 1.4 11 In M3 only6 -15.0 -14.0 3.3 -8.8 -14.9 2.4 9.8 3.7 Time and savings deposits Commercial banks 12 Savings, including MMDAs 12.9 1.6 4.6 5.3 .8 6.9 5.1 1.2 8.2 13 Small time -17.2 -7.9 -7.9 -10.7 -12.0 -11.2 -8.5 -9.8 -10.9 14 Large time8,9 -20.0 -20.0 .2 -8.8 -19.1 2.7 -7.1 3.1 -6.2 Thrift institutions 15 Savings, including MMDAs 8.7 -.2 ,7r 2.9 2.5r 1.7 1.1 .0 -.8 16 Small time -23.1 -18.6 -10.5 -12.2 -14.9 — 10.4r -11.6 -13.9 -12.2 17 Large time8,9 -10.8 -15.5 -10.1 -7.0 —3.8r -1.5' -1.9 .0 -5.7 Money market mutual funds 18 General purpose and broker-dealer -4.2 -10.2 -.7 -.6 -1.1 -6.r -6.5 1.8 12.6 19 Institution-only -19.4 -14.1 .5 -12.6 -18.8 -10.5 5.0 15.5 .6 Debt components* 20 Federal 6.7 7.6 10.4 9.1 7.3r 8.7r 7.1 -1.5 n.a. 21 Nonfederal 3.4r 2.7r 2.4r 4.4 5.2r 4.3r 4.6 5.6 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 retail 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 Average of Average of daily figures for week ending on date indicated daily figures Factor 1993 1993 Sept. Oct. Nov. Oct. 13 Oct. 20 Oct. 27 Nov. 3 Nov. 10 Nov. 17 Nov. 24 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 363,813 362,732r 367,052 362,813 363,884' 363,334r 361,713 364,760 366,428 370,370 U.S. government securities 2 Bought outright—System account 320,040 320,632 326,769 320,883 320,567 321,263 320,334 327,065 327,122 327,755 3 Held under repurchase agreements ... 4,891 2,759 2,535 2,291 3,695 2,621 2,658 0 1,366 5,177 Federal agency obligations 4 Bought outright 4,835 4,782 4,732 4,803 4,795 4,754 4,734 4,734 4,734 4,734 5 Held under repurchase agreements ... 539 390 206 316 535 323 341 0 121 450 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 273 11 19 10 19 12 15 39 2 10 8 Seasonal credit 236 196 72 218 202 176 127 82 71 65 9 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float 366 608r 723 756 518r 582' 611 87 788 889 11 Other Federal Reserve assets 32,633 33,355r 31,996 33,537 33,553 33,602 32,893 32,752 32,223 31,290 12 Gold stock 11,056 11,056 11,054 11,056 11,056 11,056 11,055 11,054 11,054 11,054 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 21,839 21,898 21,958 21,885 21,899 21,913 21,927 21,941 21,955 21,969 ABSORBING RESERVE FUNDS 15 Currency in circulation 351,130 353,183 356,688 353,925 354,077 352,887 353,224 355,236 356,845 357,247 16 Treasury cash holdings 378 385 371 387 387 383 378 373 370 368 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 9,633 5,512 5,607 5,179 5,755 5,130 5,989 5,059 5,605 5,971 18 Foreign 230 288 434 209 272 406 378 611 520 220 19 Service-related balances and adjustments 6,117 6,260' 6,341 6,217 6,293r 6,356r 6,339 6,284 6,419 6,215 20 Other 329 298 296 292 303 268 316 295 301 286 21 Other Federal Reserve liabilities and capital 9,640 9,537 9,340 9,682 9,480 9,552 8,952 9,017 9,308 9,672 22 Reserve balances with Federal Reserve Banks3 27,269 28,242r 29,005 27,881 28,290r 29,337' 27,137 28,898 28,088 31,433 End-of-month figures Wednesday figures Sept. Oct. Nov. Oct. 13 Oct. 20 Oct. 27 Nov. 3 Nov. 10 Nov. 17 Nov. 24 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 369,447 360,143r 372,571 363,156 364,359' 361,787' 360,069 368,052 367,131 371,640 U.S. government securities2 Bought outright—System account . 319,357 317,961 326,804 322,978 320,527 321,903 321,945 329,543 328,812 327,247 Held under repurchase agreements 6,296 3,592 8,013 325 3,595 691 0 0 812 6,428 Federal agency obligations Bought outright 4,804 4,734 4,719 4,799 4,769 4,734 4,734 4,734 4,734 4,734 Held under repurchase agreements 2,146 449 429 31 338 317 0 0 280 605 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions Adjustment credit 2,680 7 16 4 86 10 14 6 1 22 Seasonal credit 239 138 40 210 187 170 98 73 67 62 Extended credit 0 0 0 0 0 0 0 0 0 0 Float 901 383r 1,291 1,591 1,369* 252' 641 912 1,571 1,115 Other Federal Reserve assets 33,024 32,878r 31,260 33,218 33,487r 33,709 32,637 32,785 30,854 31,427 12 Gold stock 11,057 11,056 11,054 11,056 11,056 11,055 11,055 11,054 11,054 11,054 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 21,871 21,927 21,983 21,885 21,899 21,913 21,927 21,941 21,955 21,969 ABSORBING RESERVE FUNDS 15 Currency in circulation 351,530 352,815 359,697 354,609 353,651 352,939 354,099 356,681 356,910 358,708 16 Treasury cash holdings 384 379 370 388 384 379 374 370 368 370 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 17,289 6,032 6,334 5,234 4,879 5,030 5,273 5,732 6,705 5,328 18 Foreign 501 390 5% 309 272 484 442 542 239 231 19 Service-related balances and adjustments 6,105 6,339r 6,464 6,217 6,293r 6,356' 6,339 6,284 6,419 6,215 20 Other 306 325 297 283 285 279 241 304 300 281 21 Other Federal Reserve liabilities and capital 9,687 8,879 9,561 9,358 9,291 9,380 8,797 9,143 9,331 9,514 22 Reserve balances with Federal Reserve Banks3 24,591 25 ^ 30,309 27,717 30,277r 27,927r 25,505 30,009 27,887 32,035 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 Nonfinancial Statistics • February 1994 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages RRReeessseeerrrvvveee ccclllaaassssssiiifffiiicccaaatttiiiooonnn 1990 1991 1992 1993 Dec. Dec. Dec. May June July Aug. Sept. Oct. Nov. 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss22222 30,237 26,659 25,368 25,968 26,462 26,562 26,564 27,274 28,297" 29,017 22222 TTTTToooootttttaaaaalllll vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh33333 31,789 32,510 34,535 33,462 34,106 34,535 34,516 35,217 35,202 35,705 33333 AAAAAppppppppppllllliiiiieeeeeddddd vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh44444 28,884 28,872 31,172 30,133 30,776 31,189 31,203 31,863 31,739 32,278 44444 SSSSSuuuuurrrrrpppppllllluuuuusssss vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh55555 2,905 3,638 3,364 3,329 3,330 3,347 3,313 3,355 3,463 3,426 55555 TTTTToooootttttaaaaalllll rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss66666 59,120 55,532 56,540 56,101 57,238 57,750 57,767 59,136 60,036r 61,295 77777 66666 EEEEE RRRRR xxxxx eeeeeqqqqq ccccceeeee uuuuu sssss iiiiirrrrr sssss eeeee ddddd rrrrreeeee sssss rrrrreeeee eeeee sssss rrrrrvvvvv eeeee eeeee rrrrrvvvvv bbbbb eeeee aaaaa sssss lllllaaaaannnnnccccceeeeesssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss iiiii..... ..... ..... ..... ..... ..... 57 1 , , 4 6 5 6 6 4 54,5 9 5 7 3 9 55 1 , , 3 1 8 5 5 5 55,1 9 0 9 4 6 56,3 9 2 1 8 1 56 1 , , 6 0 6 8 1 9 56,8 9 1 5 5 2 58 1 , , 0 0 4 9 6 0 58 \J ,9 O 4 & 7* 60 1 , , 1 1 9 0 5 0 88888 TTTTToooootttttaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss88888 326 192 124 121 181 244 352 428 285 89 99999 SSSSSeeeeeaaaaasssssooooonnnnnaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss 76 38 18 84 142 210 234 236 192 75 1111100000 EEEEExxxxxttttteeeeennnnndddddeeeeeddddd cccccrrrrreeeeedddddiiiiittttt99999 23 1 1 0 0 0 0 0 0 0 Biweekly averages of daily figures for weeks ending on date indicated 1993 Aug. 4 Aug. 18 Sept. 1 Sept. 15 Sept. 29 Oct. 13 Oct. 27 Nov. Kf Nov. 24 Dec. 8 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss22222 25,251 26,939 26,564 27,719 26,837 27,843 28,798r 28,017 29,742 28,995 22222 TTTTToooootttttaaaaalllll vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh33333 35,354 34,869 33,879 35,332 35,157 35,805 34,338 36,266 34,944 36,544 33333 AAAAAppppppppppllllliiiiieeeeeddddd vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh44444 31,883 31,483 30,693 31,999 31,781 32,278 30,946 32,767 31,566 33,125 44444 SSSSSuuuuurrrrrpppppllllluuuuusssss vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh 3,471 3,386 3,187 3,333 3,377 3,527 3,393 3,499 3,378 3,419 55555 TTTTToooootttttaaaaalllll rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss66666 57,133 58,422 57,257 59,718 58,618 60,121 59,744r 60,784 61,308 62,120 6 7 6 7 6 7 6 7 6 7 RRRRR EEEEExxxxx eeeeeqqqqq ccccc uuuuu eeeeesssss iiiiirrrrr sssss eeeee ddddd rrrrr eeeee rrrrr sssss eeeee eeeeerrrrr sssss vvvvv eeeee eeeee rrrrr vvvvv bbbbb eeeeesssss aaaaa lllllaaaaannnnnccccceeeeesssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss iiiii ..... ..... ..... ..... ..... ..... 56 1 , , 0 1 2 1 1 2 57,6 7 7 5 3 0 56 1 , , 1 1 3 2 6 1 58,8 8 4 7 5 4 57 1 , , 3 3 1 0 8 0 58 1 , , 9 1 8 3 5 7 58 l, , 0 6 5 9 2 2 r r 59 1 , , 7 0 2 6 2 2 60 1 , , 2 1 0 0 5 2 60 1 , , 9 1 6 5 3 7 88888 TTTTToooootttttaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 232 431 305 544 321 420 205 132 74 56 99999 SSSSSeeeeeaaaaasssssooooonnnnnaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss 222 227 246 226 247 222 189 105 68 43 1111100000 EEEEExxxxxttttteeeeennnnndddddeeeeeddddd cccccrrrrreeeeedddddiiiiittttt99999 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 Oct. 4 Oct. 11 Oct. 18 Oct. 25 Nov. 1 Nov. 8 Nov. 15 Nov. 22 Nov. 29 Federal funds purchased, repurchase agreements, and other selected borrowings From commercial banks in the United States 1 For one day or under continuing contract 72,908 77,541 76,497 70,801 71,840 72,374 74,470 71,363 72,462 2 For all other maturities 13,588 1144,,550022 14,362 1144,,225599 13,186 13,106 13,725 14,109 15,288 From other depository institutions, foreign banks and official institutions, and U.S. government agencies 3 For one day or under continuing contract 21,441r 17,756 21,280 20,664 18,901 17,810 18,334 19,661 20,951 4 For all other maturities 22,441r 25,149 22,806 22,706 21,742 23,608 24,776 24,741 25,832 Repurchase agreements on U.S. government and federal agency securities Brokers and nonbank dealers in securities 5 For one day or under continuing contract 17,805 15,768 18,981 16,601 17,133 16,848 19,009 16,257 13,216 6 For all other maturities 40,212 4400,,663377 42,465 4433,,995500 40,504 42,218 41,454 40,533 39,820 All other customers 7 For one day or under continuing contract 31,597 30,438 30,392 31,787 30,311 31,530 32,028 32,465 29,848 8 For all other maturities 14,326 14,497 14,436 14,084 14,262 13,512 13,492 13,767 17,064 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 45,766 40,813 41,543 38,232 42,365 39,656 42,090 37,366 43,412 10 To all other specified customers2 27,347 25,316 27,214 27,450 26,175 29,119 29,407 27,794 29,747 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.S (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 DomesticN onfinancial Statistics • February 1994 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit2 Extended credit3 Federal Reserve Bank 1/ O 6/ n 9 4 Effective date Previous rate 1/ O 6/ n 9 4 Effective date Previous rate 1/ O 6/ n 9 4 Effective date Previous rate Boston 7/2/92 3.5 3.10 1/6/94 3.10 3.60 1/6/94 3.60 New York ... 7/2/92 1/6/94 1/6/94 Philadelphia.. 7/2/92 1/6/94 1/6/94 Cleveland 7/6/92 1/6/94 1/6/94 Richmond 7/2/92 1/6/94 1/6/94 Atlanta 7/2/92 1/6/94 1/6/94 Chicago 7/2/92 1/6/94 1/6/94 St. Louis 7/7/92 1/6/94 1/6/94 Minneapolis.. 7/2/92 1/6/94 1/6/94 Kansas City.. 7/2/92 1/6/94 1/6/94 Dallas 7/2/92 1/6/94 1/6/94 San Francisco 7/2/92 3.5 3.10 1/6/94 3.10 3.60 1/6/94 3.60 Range of rates for adjustment credit in recent years4 Range (or F.R. Range (or F.R. Range (or F.R. Effective date A le l v l e F l) . — R. B o a f n k Effective A le l v l e F l) . — R. B o a f n k Effective date A le l v l e F l) . — R. B o a f n k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1977 6 6 1981—May 5 13-14 14 1986—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 MMaayy 11 6.5-7 7 Dec. 4 12 12 11 6 6 12 7 7 JJuullyy 3 7-7.25 7.25 11998822——JJuullyy 70 11.5-12 11.5 1988—Aug. 9 6-6.5 6.5 10 7.25 7.25 7,3 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 77 10-10.5 10 27 Nov. 1 8.5-9.5 9.5 30 10 10 6.5 6.5 3 9.5 9.5 Oct. 17, 9.5-10 9.5 1990—Dec. 19 ..... n 9.5 9.5 6-6.5 6 1979—July 20 10 10 Nov. 77 9-9.5 9 1991—Feb. 1 6 6 AAuugg.. 17 10-10.5 10.5 7.6 9 9 4 5.5-6 5.5 20 10.5 10.5 Dec. 14 8.5-9 9 Apr. 30 5.5 5.5 SSeepptt.. 19 10.5-11 11 15 8.5-9 8.5 May 2 5-5.5 5 21 11 11 17 8.5 8.5 Sept. 13 5 5 Oct. 8 11-12 12 17 4.5-5 4.5 10 12 12 1984—Apr. 9 8.5-9 9 Nov. 6 4.5 4.5 n 9 9 7 3.5-4.5 3.5 1980—Feb. 15 12-13 13 Nov. 71 8.5-9 8.5 Dec. 20 3.5 3.5 19 13 13 76 8.5 8.5 24 MMaayy 29 12-13 13 Dec. 74 1992—July 2 3-3.5 3 30 12 12 7 3 3 June 13 11-12 11 11998855——MMaayy 70 7.5-8 7.5 16 11 11 74 7.5 7.5 29 10 10 In effect Jan. 6, 1994 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 aoove 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 Requirement TTyyppee ooff ddeeppoossiitt22 Percentage of Effective date deposits Net transaction accounts3 1 $0 million-$51.9 million 33333 1111122222/////2222211111/////9999933333 2 More than $51.9 million4 1111100000 1111122222/////2222211111/////9999933333 00000 1111122222/////2222277777/////9999900000 00000 1111122222/////2222277777/////9999900000 1. Required reserves must be held in the form of deposits with Federal Reserve permit no more than six preauthorized, automatic, or other transfers per month, Banks or vault cash. Nonmember institutions may maintain reserve balances with of which no more than three may be checks, are not transaction accounts (such a Federal Reserve Bank indirectly on a pass-through basis with certain approved accounts are savings deposits). institutions. For previous reserve requirements, see earlier editions of the Annual The Monetary Control Act of 1980 requires that the amount of transaction Report or the Federal Reserve Bulletin. Under provisions of the Monetary accounts against which the 3 percent reserve requirement applies be modified Control Act, depository institutions include commercial banks, mutual savings annually by 80 percent of the percentage change in transaction accounts held by banks, savings and loan associations, credit unions, agencies and branches of all depository institutions, determined as of June 30 each year. Effective Dec. 21, foreign banks, and Edge Act corporations. 1993, for institutions reporting quarterly and weekly, the amount was increased 2. The Garn-St Germain Depository Institutions Act of 1982 (Public Law from $46.8 million to $51.9 million. 97-320) requires that $2 million of reservable liabilities of each depository 4. The reserve requirement was reduced from 12 percent to 10 percent on Apr. institution be subject to a zero percent reserve requirement. The Board is to adjust 2, 1992, for institutions that report weekly, and on Apr. 16, 1992, for institutions the amount of reservable liabilities subject to this zero percent reserve require- that report quarterly. ment each year for the succeeding calendar year by 80 percent of the percentage 5. For institutions that report weekly, the reserve requirement on nonpersonal increase in the total reservable liabilities of all depository institutions, measured time deposits with an original maturity of less than 1 Vl 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. 21, 1993, the exemption was raised from $3.8 to zero for the maintenance period that began Dec. 27, 1990. The reserve million to $4.0 million. The exemption applies in the following order: (1) net requirement on nonpersonal time deposits with an original maturity of IVi 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 • February 1994 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 rr aa iitt cc yy tt iioonn 11999900 11999911 11999922 Apr. May June July Aug. Sept. Oct. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 24,739 20,158 14,714 121 349 7,280 0 902 366 1,396 2 Gross sales 7,291 120 1,628 0 0 0 0 0 0 0 3 Exchanges 241,086 277,314 308,699 30,124 26,610 24,821 35,943 27,775 31,128 25,783 4 Redemptions 4,400 1,000 1,600 0 0 0 0 0 0 468 Others within one year 5 Gross purchases 425 3,043 1,096 244 0 0 0 100 411 0 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shifts 25,638 24,454 36,662 1,950 4,108 4,002 0 1,497 3,074 913 8 Exchanges -27,424 -28,090 -30,543 -1,100 -4,013 -2,152 0 -5,491 -1,861 -1,566 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 2,490 0 0 200 1,100 2,400 0 11 Gross sales 200 0 0 0 0 0 0 0 0 0 12 Maturity shifts -21,770 -21,211 -34,478 -1,630 -3,652 -4,002 666 -834 -3,074 -31 13 Exchanges 25,410 24,594 25,811 800 33,,224455 22,,115522 0 33,,886666 1,861 1,566 Five to ten years 14 Gross purchases 0 1,280 2,818 1,147 0 0 0 500 797 0 15 Gross sales 100 0 0 0 0 0 0 0 0 0 16 Maturity shifts -2,186 -2,037 -1,915 -320 -333 0 -666 -432 0 -882 17 Exchanges 789 22,,889944 33,,553322 300 468 0 0 11,,110000 0 0 More than ten years 18 Gross purchases 0 375 2,333 1,110 0 0 0 100 717 0 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shifts -1,681 -1,209 -269 0 -123 0 0 -231 0 0 21 Exchanges 1,226 600 1,200 0 300 0 0 525 0 0 All maturities 22 Gross purchases 25,414 31,439 34,079 5,111 349 7,280 200 2,702 4,691 1,396 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 0 468 Matched transactions 25 Gross sales 1,369,052 1,570,456 1,482,467 127,115 124,462 111,726 115,504 136,037 124,898 115,160 26 Gross purchases 1,363,434 1,571,534 1,480,140 128,924 123,227 113,095 117,074 135,705 122,578 112,837 Repurchase agreements 27 Gross purchases 219,632 310,084 378,374 30,197 33,987 53,051 41,190 53,053 62,905 27,693 28 Gross sales 202,551 311,752 386,257 36,953 28,640 43,342 56,246 48,263 61,399 30,397 29 Net change in U.S. Treasury securities 24,886 29,729 20,642 163 4,461 18,357 -13,286 7,160 3,878 -4,099 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 28 41 22 366 125 35 70 Repurchase agreements 33 Gross purchases 41,836 22,807 14,565 197 2,105 2,968 3,479 2,485 9,810 3,812 34 Gross sales 40,461 23,595 14,486 764 2,105 2,019 4,428 2,415 7,734 5,509 35 Net change in federal agency obligations 1,192 -1,085 -554 -595 -41 927 -1,315 -55 2,041 -1,767 36 Total net change in System Open Market Account 26,078 28,644 20,089 -431 4,420 19,284 -14,601 7,105 5,919 -5,866 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 Oct. 27 Nov. 3 Nov. 10 Nov. 17 Nov. 24 Sept. 30 Oct. 31 Nov. 30 Consolidated condition statement Assets 1 Gold certificate account 11,055 11,055 11,054 11,054 11,054 11,057 11,056 11,054 2 Special drawing rights certificate account 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 3 401 403 402 401 389 378 406 372 Loans 4 To depository institutions 180 111 78 67 83 2,918 145 55 5 Other 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Federal agency obligations 7 Bought outright 4,734 4,734 4,734 4,734 4,734 4,804 44,,773344 44,,771199 8 Held under repurchase agreements 317 0 0 280 605 2,146 449 429 9 Total U.S. Treasury securities 322,594 321,945 329,543 329,624 333,675 325,653 321,553 334,817 10 Bought outright2 321,903 321,945 329,543 328,812 327,247 319,357 317,961 326,804 11 Bills 154,997 154,939 162,537 161,806 160,241 151,982 151,055 159,798 1? Notes 128,128 128,228 128,228 128,453 128,453 128,597 128,128 128,453 13 Bonds 38,778 38,778 38,778 38,553 38,553 38,778 38,778 38,553 14 Held under repurchase agreements 691 0 0 812 6,428 6,296 3,592 8,013 15 Total loans and securities 327,825 326,791 334,355 334,706 339,098 335,521 326,882 340,020 16 Items in process of collection 5,517 6,754 5,793 6,882 7,359 4,349 5,052 7,808 17 Bank premises 1,048 1,048 1,049 1,050 1,050 1,047 1,048 1,050 Other assets 18 Denominated in foreign currencies 23,324 22,590 22,605 22,622 22,664 23,272 22,580 22,443 19 All other4 9,393 9,046 9,258 7,189 7,697 8,771 9,229 7,692 20 Total assets 386,581 385,704 392,535 391,921 397,329 392,412 384,270 398,458 LIABILITIES 21 Federal Reserve notes 331,806 332,948 335,513 335,723 337,498 330,421 331,672 338,456 22 Total deposits 40,367 37,985 42,786 41,102 44,918 48,030 39,169 43,277 23 Depository institutions 34,574 32,030 36,208 33,859 39,061 29,934 32,422 36,050 24 U.S. Treasury—General account 5,030 5,273 5,732 6,705 5,328 17,289 6,032 6,334 25 Foreign—Official accounts 484 442 542 239 231 501 390 596 26 279 241 304 300 281 306 325 297 27 Deferred credit items ^ 5,029 5,974 5,094 5,764 5,400 4,275 4,550 7,165 28 Other liabilities and accrued dividends 2,397 2,376 2,393 2,363 2,510 2,460 2,482 2,514 29 Total liabiUties 379,598 379,283 385,786 384,952 390,325 385,186 377,872 391,411 CAPITAL ACCOUNTS 30 Capital paid in 3,335 3,343 3,352 3,352 3,364 3,331 3,338 3,367 31 Surplus 3,054 3,022 3,042 3,054 3,054 3,054 2,984 3,054 32 Other capital accounts 594 56 355 563 585 842 75 626 33 Total liabilities and capital accounts 386,581 385,704 392,535 391,921 397,329 392,412 384,270 398,458 MEMO 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts 334,033 334,929 337,191 346,024 344,746 330,479 333,735 346,718 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) 397,288 398,769 401,179 403,185 404,902 395,420 397,576 405,827 36 LESS: Held by Federal Reserve Banks 65,482 65,821 65,667 67,461 67,404 64,999 65,904 67,371 37 Federal Reserve notes, net 331,806 332,948 335,513 335,723 337,498 330,421 331,672 338,456 Collateral held against notes, net: 38 Gold certificate account 11,055 11,055 11,054 11,054 11,054 11,057 11,056 11,054 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 312,732 313,876 316,440 316,651 318,426 311,346 312,599 319,384 42 Total collateral 331,806 332,948 335,513 335,723 337,498 330,421 331,672 338,456 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 • February 1994 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 Oct. 27 Nov. 3 Nov. 10 Nov. 17 Nov. 24 Sept. 30 Oct. 29 Nov. 30 1 Total loans 180 111 78 68 83 2,918 145 56 2 Within fifteen days1 170 40 17 66 81 2,793 71 31 3 Sixteen days to ninety days 10 71 61 2 2 125 75 25 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 322,594 321,945 329,543 329,624 333,675 319,357 317,961 326,804 10 Within fifteen days1 8,532 21,283 19,812 20,360 20,102 4,423 3,625 6,211 11 Sixteen days to ninety days 85,486 71,110 78,865 77,974 78,341 76,689 85,863 84,677 12 Ninety-one days to one year 100,930 101,076 102,389 100,643 104,584 109,686 100,828 104,601 13 One year to five years 74,911 75,743 75,743 76,083 76,083 74,942 74,911 76,750 14 Five years to ten years 21,623 21,623 21,623 23,651 23,651 22,505 21,623 23,651 15 More than ten years 31,111 31,111 31,111 30,913 30,913 31,111 31,111 30,913 16 Total federal agency obligations 5,051 4,734 4,734 5,014 5,339 4,804 4,734 4,719 17 Within fifteen days1 421 0 0 560 885 220 104 290 18 Sixteen days to ninety days 651 756 756 476 476 550 651 498 19 Ninety-one days to one year 1,105 1,104 1,104 1,104 1,104 1,102 1,105 1,127 20 One year to five years 2,139 2,139 2,139 2,139 2,139 2,187 2,139 2,074 21 Five years to ten years 594 594 594 594 594 599 594 589 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 IItteemm 11998899 11999900 11999911 11999922 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Apr. May June July' Aug. Sept. Oct/ Nov. Seasonally adjusted AADDJJUUSSTTEEDD FFOORR CCHHAANNGGEESS IINN RREESSEERRVVEE RREEQQUUIIRREEMMEENNTTSS22 11 TToottaall rreesseerrvveess33 40.49 41.77 45.53 54.35 55.20 56.88 57.12 57.57 58.03 58.84 59.82 60.46 22 NNoonnbboorrrroowweedd rreesseerrvveess44 40.23 41.44 45.34 54.23 55.12 56.76 56.94 57.32 57.68 58.41 59.53 60.37 33 NNoonnbboorrrroowweedd rreesseerrvveess pplluuss eexxtteennddeedd ccrreeddiitt55 40.25 41.46 45.34 54.23 55.12 56.76 56.94 57.32 57.68 58.41 59.53 60.37 44 RReeqquuiirreedd rreesseerrvveess 39.57 40.10 44.56 53.20 54.10 55.88 56.21 56.48 57.08 57.75 58.73 59.36 55 MMoonneettaarryy bbaassee66 267.73 293.19 317.17 350.80 360.63 364.77 368.07 370.98 374.53 379.26 381.77 384.57 Not seasonally adjusted 6 Total reserves 41.77 43.07 46.98 56.06 56.37 55.88 56.96 57.42 57.38 58.69 59.53 60.72 7 Nonborrowed reserves 41.51 42.74 46.78 55.93 56.29 55.76 56.78 57.17 57.03 58.26 59.24 60.63 8 Nonborrowed reserves plus extended credit .. 41.53 42.77 46.78 55.93 56.29 55.76 56.78 57.17 57.03 58.26 59.24 60.63 9 Required reserves8 40.85 41.40 46.00 54.90 55.27 54.88 56.05 56.33 56.43 57.60 58.44 59.62 10 Monetary base9 271.18 296.68 321.07 354.55 361.64 364.08 368.73 372.02 374.10 377.75 380.82 384.28 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves11 62.81 59.12 55.53 56.54 56.54 56.10 57.24 57.75 57.77 59.14 60.04 61.30 12 Nonborrowed reserves 62.54 58.80 55.34 56.42 56.47 55.98 57.06 57.51 57.42 58.71 59.75 61.21 13 Nonborrowed reserves plus extended credit .. 62.56 58.82 55.34 56.42 56.47 55.98 57.06 57.51 57.42 58.71 59.75 61.21 14 Required reserves 61.89 57.46 54.55 55.39 55.45 55.10 56.33 56.66 56.82 58.05 58.95 60.20 15 Monetary base12 292.55 313.70 333.61 360.90 368.18 370.46 375.19 378.48 380.53 384.25 387.51 391.11 16 Excess reserves .92 1.66 .98 1.16 1.10 1.00 .91 1.09 .95 1.09 1.09 1.10 17 Borrowings from the Federal Reserve .27 .33 .19 .12 .07 .12 .18 .24 .35 .43 .29 .09 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 • February 1994 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1993 IItteemm 1989 1990 1991 1992 Dec. Dec. Dec. Dec. Aug. Sept/ Oct/ Nov. Seasonally adjusted Measures2 1 Ml 794.6 827.2 899.3 1,026.6 1,094.1 1,106.5 1,116.1 1.125.8 2 M2 3,233.3 3.345.5 3,445.8 3,494.8 3,521. lr 3,533.1 3.535.2 3,547.7 3 M3 4,056.1 4,116.8 4,168.1 4,162.5 4,165.6r 4,178.9 4.186.3 4.200.9 4 L 4,886.1 4.966.6 4,982.3 5,039.5 5,077.0? 5,066.5 5,078.7 n.a. 5 Debt 10,030.7 10,670.1 11,145.5r 11,721.lr 12,088.3r 12,141.6 12,178.9 n.a. MI components 6 Currency3 . 222.7 246.7 267.2 292.3 312.6 316.4 318.2 319.9 7 Travelers checks4 6.9 7.8 7.8 8.1 7.8 7.8 7.9 8.0 8 Demand deposits5 279.8 278.2 290.5 340.8 370.7 376.4 379.9 385.3 9 Other checkable deposits6 285.3 294.5 333.8 385.2 403.1 406.0 410.2 412.7 Nontransaction components 10 In M2 2,438.7 2,518.3 2,546.6 2,468.3 2,426.9r 2,426.6 2,419.1 2,421.9 11 In M3 822.8 771.3 722.3 667.7 644.5r 645.8 651.1 653.1 Commercial banks 12 Savings deposits, ircluding MMDAs 541.4 582.2 666.2 756.1 773.9 777.2 778.0 783.3 13 Small time deposits' .. 534.9 610.3 601.5 506.9 479.3 475.9 472.0 467.7 14 Large time deposits10, 11 387.7 368.8 341.3 288.1 272.2 270.6 271.3 269.9 Thrift institutions 15 Savings deposits, iiuluding MMDAs 349.6 338.6 376.3 429.9 431.2 431.6 431.6 431.3 16 Small time deposits9. 617.8 562.0 463.2 360.4 330.8r 327.6 323.8 320.5 17 Large time deposits 161.1 120.9 83.4 67.5 63.2 63.1 63.1 62.8 Money market mutual funds 18 General purpose and broker-dealer . 317.4 350.5 363.9 342.3 334.2r 332.4 332.9 336.4 19 Institution-only 108.8 135.9 182.1 202.3 193.3 194.1 196.6 196.7 Debt components 20 Federal debt 2,247.6 2,490.7 2,763.8 3,068.4 3,251.lr 3,270.4 3,266.3 n.a. 21 Nonfederal debt :... 7,783.1 8,179.4 8,381.7r 8,652.7r 8,837.3r 8,871.2 8,912.7 n.a. Not seasonally adjusted Measures 22 Ml 811.5 843.7 916.4 1,045.7 1,087.7 1,098.2 1,110.9 1,128.6 23 M2 3,245.1 3,357.0 3,457.9 3,509.1 3,513.9r 3,519.5 3,529.2 3,551.1 24 M3 4,066.4 4,126.3 4.178.1 4,174.6 4,163.5r 4,166.2 4,176.4 4,206.8 25 L 4,906.0 4,988.0 5.004.2 5,064.0 5,064. r 5,055.2 5,067.9 n.a. 26 Debt 10,026.5 10,667.7 ll,144.6r ll,722.0r 12,051.7r 12,109.9 12,151.9 n.a. Ml components 27 Currency3 225.3 249.5 269.9 295.0 312.8 314.8' 317.3 319.8 28 Travelers checks4 6.5 7.4 7.4 7.8 8.4 8.2 8.0 7.7 29 Demand deposits5 291.5 289.9 302.9 355.2 367.3 372.9 380.8 390.5 30 Other checkable deposits6 288.1 296.9 336.3 387.7 399.2 402.4 404.8 410.5 Nontransaction components 31 In M2 2,433.6 2,513.2 2,541.5 2,463.4 2,426. lr 2,421.2 2,418.3 2,422.5 32 In M38 821.3 769.3 720.1 665.5 649.6r 646.7 647.2 655.7 Commercial banks 33 Savings deposits, including MMDAs 543.0 580.1 663.3 752.3 774.5 775.0 776.1 782.4 34 Small time deposits9 533.8 610.5 602.0 507.7 479.4 476.6 473.2 468.4 35 Large time deposits10' 11 386.9 367.7 340.1 287.1 273.3 271.0 270.5 269.7 Thrift institutions 36 Savings deposits, including MMDAs 347.4 337.3 374.7 427.8 431.5 430.4 430.5 430.8 37 Small time deposits 616.2 562.1 463.6 360.9 SSO^ 328.0 324.6 321.0 38 Large time deposits10 162.0 120.6 83.1 67.3 63.4 63.2 62.9 62.7 Money market mutual funds 39 General purpose and broker-dealer 315.7 348.4 361.5 340.0 331.5 329.7 329.9 334.6 40 Institution-only 109.1 136.2 182.4 202.4 193.3 190.7 192.4 197.1 Repurchase agreements and Eurodollars 41 Overnight 77.5 74.7 76.3 74.7 78.3 81.5 84.0 85.3 42 Term 178.4 158.3 130.1 126.2 140.4r 141.5 141.0 145.5 Debt components 43 Federal debt 2,247.5 2,491.3 2,765.0 3,069.8 3,229.4 3,251.9 3.249.4 n.a. 44 Nonfederal debt 7,779.0 8,176.3 8,379.7r 8,652.2r 8,822.3r 8,857.9 8.902.5 ' 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-dealer), 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 ftind 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 • February 1994 1.22 DEPOSIT INTEREST RATES AND AMOUNTS OUTSTANDING Commercial and BIF-insured saving banks1 1993 IItteemm Mar. Apr. May June July Aug. Sept. Oct/ Nov. Interest rates (annual effective yields) INSURED COMMERCIAL BANKS 1 Negotiable order of withdrawal accounts ... 3.76 2.33 2.21 2.15 2.12 2.09 2.06 2.01 1.96 1.92 1.89 2 Savings deposits 4.30 2.88 2.73 2.68 2.65 2.61 2.59 2.55 2.51 2.49 2.48 Interest-bearing time deposits with balances of less than $100,000, by maturity 3 7 to 91 days 4.18 2.90 2.75 2.72 2.70 2.68 2.67 2.66 2.63 2.63 2.64 4 92 to 182 days 4.41 3.16 3.03 2.99 2.97 2.97 2.97 2.96 2.92 2.91 2.92 5 183 days to 1 year 4.59 3.37 3.22 3.19 3.18 3.19 3.18 3.17 3.13 3.11 3.13 6 More than 1 year to 2Vi years 4.95 3.88 3.74 3.66 3.64 3.65 3.64 3.63 3.55 3.54 3.54 7 More than 2 Vi years 5.52 4.77 4.52 4.47 4.47 4.44 4.43 4.40 4.28 4.27 4.28 BIF-INSURED SAVINGS BANKS3 8 Negotiable order of withdrawal accounts ... 4.44 2.45 2.32 2.25 2.20 2.13 2.09 2.07 2.01 1.98 1.95 9 Savings deposits2 4.97 3.20 3.05 2.98 2.93 2.88 2.83 2.80 2.73 2.68 2.65 Interest-bearing time deposits with balances of less than $100,000, by maturity 10 7 to 91 days 4.68 3.13 2.95 2.91 2.87 2.86 2.80 2.79 2.76 2.75 2.73 11 92 to 182 days 4.92 3.44 3.28 3.23 3.19 3.17 3.15 3.12 3.05 3.05 3.03 12 183 days to 1 year 4.99 3.61 3.52 3.48 3.45 3.44 3.40 3.37 3.33 3.34 3.32 13 More than 1 year to 2V2 years 5.23 4.02 3.83 3.86 3.76 3.79 3.72 3.73 3.69 3.68 3.69 14 More than 2 Yi years 5.98 5.00 4.89 4.84 4.79 4.75 4.73 4.73 4.62 4.57 4.60 Amounts outstanding (millions of dollars) INSURED COMMERCIAL BANKS 15 Negotiable order of withdrawal accounts ... 244,637 286,541 287,811 280,073 283,860 287,555 284,496 287,675 286,056 289,813 297,329 16 Savings deposits2 652,058 738,253 747,809 745,038 753,452 754,790 757,716 761,919 758,835 765,372 770,609 17 Personal 508,191 578,757 591,388 586,863 591,231 592,545 593,448 593,318 592,028 595,715 598,200 18 Nonpersonal 143,867 159,496 156,422 158,175 162,221 162,245 164,268 168,601 166,807 169,657 172,408 Interest-bearing time deposits with balances of less than $100,000, by maturity 19 7 to 91 days 47,094 38,474 35,459 34,675 33,213 31,743 30,803 30,017 30,384 30,022 29,730 20 92 to 182 days 158,605 127,831 125,630 122,136 119,096 114,846 112,497 109,603 108,574 108,504 109,228 21 183 days to 1 year 209,672 163,098 158,173 156,957 157,559 156,549 156,431 155,074 152,501 149,758 147,334 22 More than 1 year to 2 V4 years 171,721 152,977 147,798 146,830 144,330 144,804 143,605 141,377 139,406 139,042 139,315 23 More than 2 n years 158,078 169,708 177,558 178,657 179,761 179,297 180,983 181,762 184,414 183,790 180,972 24 IRA/Keogh Flan deposits 147,266 147,350 148,515 147,463 146,450 146,523 146,1% 145,955 145,636 144,776 144,345 BIF-INSURED SAVINGS BANKS3 25 Negotiable order of withdrawal accounts 9,624 10,871 10,199 9,876 10,000 10,313 10,457 10,468 10,471 10,548 10,852 26 Savings deposits2 71,215 81,786 77,390 76,970 77,352 77,495 78,390 78,387 78,182 77,995 77,948 27 Personal 68,638 78,695 74,430 74,077 74,376 74,569 75,049 75,153 74,978 74,737 74,664 28 Nonpersonal 2,577 3,091 2,961 2,893 2,976 2,926 3,341 3,234 3,204 3,258 3,284 Interest-bearing time deposits with balances of less than $100,000, by maturity 29 7 to 91 days 4,146 3,867 3,201 3,167 3,103 3,022 2,871 2,928 2,886 2,839 2,778 30 92 to 182 days 21,686 17,345 14,468 14,328 14,129 13,808 13,773 13,525 13,261 13,131 12,926 31 183 days to 1 year 29,715 21,780 19,074 18,778 18,520 18,427 18,454 18,143 17,798 17,441 17,178 32 More than 1 year to 2Vi years 25,379 18,442 16,842 16,433 16,155 15,972 16,250 16,200 16,161 16,124 15,995 33 More than 2w years 18,665 18,845 18,564 18,646 18,725 18,989 19,229 19,331 19,610 19,657 19,645 34 IRA/Keogh Plan accounts 23,007 21,713 20,089 19,969 19,861 19,855 19,920 19,802 19,766 19,601 19,382 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 All 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 Apr. May June Julyr Aug.r Sept. DEBITS Seasonally adjusted Demand deposits3 1 All insured banks 277,157.5 277,758.0 315,806.1 324,638.7 306,642.9 335,248.5 331,362.1 333,320.0 360,217.0 2 Major New York City banks 131,699.1 137,352.3 165,572.7 163,540.1 155,495.0 170,062.9 166,869.2 168,433.5 185,625.9 3 Other banks 145,458.4 140,405.7 150,233.5 161,098.6 151,147.9 165,185.6 164,492.9 164,886.5 174,591.1 4 Other checkable deposits4 3,349.0 3,645.5 3,788.1 3,524.7 3,284.7 3,620.9 3,377.0 3,440.1 3,499.3 5 Savings deposits (including MMDAs) 3,483.3 3,266.1 3,331.3 3,523.3 3,436.1 3,637.4 3,637.8 3,494.7 3,733.8 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 797.8 803.5 832.4 792.3 722.8 791.3 779.4 768.2 824.6 7 Major New York City banks 3,819.8 4,270.8 4,797.9 4,120.9 3,852.9 4,197.5 4,306.7 4,027.5 4,263.0 8 Other banks 464.9 447.9 435.9 435.4 393.7 431.1 425.7 420.5 443.9 9 Other checkable deposits4 16.5 16.2 14.4 12.5 11.2 12.3 11.4 11.6 11.7 10 Savings deposits (including MMDAs) 6.2 5.3 4.7 4.7 4.5 4.7 4.7 4.5 4.8 DEBITS Not seasonally adjusted Demand deposits3 11 All insured banks 277,290.5 277,715.4 315,808.2 324,530.2 306,746.1 345,368.7 333,304.1 342,912.1 334477,,888877..11 12 Major New York City banks 131,784.7 137,307.2 165,595.0 161,923.2 154,606.6 176,874.8 168,018.4 174,674.7 179,869.7 13 Other banks 145,505.8 140,408.3 150,213.3 162,607.0 152,139.5 168,493.9 165,285.7 168,237.4 168,017.4 14 Other checkable deposits4 3,346.7 3,645.6 3,788.1 3,741.6 3,201.0 3,645.9 3,301.6 3,379.2 3,502.1 15 Savings deposits (including MMDAs)5 3,483.0 3,267.7 3,329.0 3,741.3 3,445.0 3,758.1 3,648.1 3,532.3 3,539.6 DEPOSIT TURNOVER Demand deposits3 16 All insured banks 798.2 803.4 832.5 787.0 738.2 818.3 779.0 803.4 798.6 17 Major New York City banks 3,825.9 4,274.3 4,803.5 4,108.4 3,948.9 4,412.6 4,280.6 4,307.8 4,196.6 18 Other banks 465.0 447.9 436.0 436.0 404.2 441.1 425.3 435.5 427.8 19 Other checkable deposits4 16.4 16.2 14.4 12.8 11.1 12.5 11.3 11.5 11.8 20 Savings deposits (including MMDAs)5 6.2 5.3 4.7 5.0 4.5 4.9 4.8 4.6 4.6 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 Financial Statistics • February 1994 1.24 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars, averages of Wednesday figures 1992 1993 IItteemm Dec. Jan. Feb. Mar. Apr. May Juner Julyr Aug.r Sept.r Oct/ Nov. Seasonally adjusted 1 Total loans, leases, and securities2 . 2,937.6 2,935.3 2,943.9 2,960.2 2,970.9 2,991.2 3,014.3 3,037.7 3,046.2 3,056.9 3,056.3 3,072.3 2 U.S. government securities 657.1 656.5 666.2 680.2 691.0 693.5 704.4 708.2 714.4 719.8 717.6 719.2 3 Other securities 176.0 174.5 176.4 179.0 181.0 181.2 179.5 181.3 182.1 182.5 180.5 180.7 4 Total loans and leases2 2,104.6 2,104.4 2,101.3 2,101.0 2,098.9 2,116.5 2,130.4 2,148.2 2,149.6 2,154.6 2,158.2 2,172.4 5 Commercial and industrial ..... 597.6 598.0 596.7 593.1 587.5 589.9 591.0 590.8 590.1 586.8 586.5 586.3 6 Bankers acceptances held3... 7.7 7.3 8.4 8.5 8.5 9.0 8.9 9.5 9.9 9.1 99..88 9.2 7 Other commercial and industrial 589.9 590.7 588.3 584.6 579.0 580.9 582.2 581.3 580.2 577.7 576.7 577.0 8 U.S. addressees4 580.2 581.2 578.8 574.9 569.7 571.2 572.8 571.6 570.5 567.5 566.9 566.7 9 Non-U.S. addressees4 9.7 9.6 9.5 9.7 9.3 9.7 9.4 9.8 9.7 10.1 9.8 10.3 10 Real estate 892.4 890.8 890.1 891.9 892.2 898.0 904.0 907.8 910.8 914.5 917.9 921.5 11 Individual 355.5 358.4 361.9 362.3 364.4 367.5 368.8 372.5 374.7 375.9 380.3 383.2 12 Security 64.8 63.5 62.8 64.2 62.3 68.6 71.4 81.5 7799..66 8822..55 7799..55 8866..99 13 Nonbank financial institutions 43.6 45.1 44.6 44.2 45.0 45.9 46.0 46.4 46.7 46.0 45.0 44.1 1144 Agricultural 35.0 34.5 34.3 34.0 34.1 34.3 34.3 34.7 34.8 3344..88 3355..00 3355..55 15 State and political subdivisions 24.8 24.2 23.8 23.6 23.1 23.0 22.8 22.8 22.7 22.4 22.3 21.8 lb Foreign banks 7.7 7.7 8.8 8.5 8.4 8.4 8.6 9.1 9.5 8.7 8.9 8.2 17 Foreign official institutions 2.8 2.9 3.2 3.2 3.2 3.1 3.2 3.2 3.1 3.4 3.5 3.3 18 Lease-financing receivables 30.9 30.4 30.6 30.6 30.7 30.9 31.3 31.6 31.7 31.8 32.2 32.5 19 All other loans 49.5 48.8 44.5 45.3 48.0 46.8 49.0 47.9 46.0 47.7 47.3 49.0 Not seasonally adjusted 20 Total loans, leases, and securities2. 2,947.4 2,937.4 2,946.7 2,963.9 2,972.5 2,986.2 3,014.0 3,025.9 3,037.8 3,053.8 3,055.6 3,079.6 21 U.S. government securities 655.8 656.9 669.8 685.9 692.8 692.5 702.2 703.5 712.7 717.4 715.3 722.5 22 Other securities 176.2 175.0 176.6 178.7 180.4 180.7 179.0 180.1 182.0 182.1 180.8 181.7 23 Total loans and leases2 2,115.4 2,105.5 2,100.3 2,099.3 2,099.3 2,113.0 2,132.9 2,142.3 2,143.1 2,154.2 2,159.5 2,175.5 24 Commercial and industrial..... 600.6 596.4 595.9 596.3 590.4 591.6 592.8 589.8 586.4 583.2 584.2 586.6 25 Bankers acceptances held3... 8.0 7.4 8.8 8.6 8.3 8.9 8.7 9.2 99..66 8.9 99..55 99..66 26 Other commercial and industrial 592.5 589.0 587.1 587.7 582.1 582.7 584.1 580.6 576.9 574.4 574.7 577.0 2277 U.S. addressees 583.0 579.5 577.5 578.2 572.7 573.0 573.9 570.5 566.9 564.3 565.1 567.3 28 Non-U.S. addressees 9.5 9.5 9.5 9.5 9.4 9.7 10.2 10.1 10.0 10.0 9.6 9.7 29 Real estate 893.7 890.5 888.3 889.3 891.1 898.0 904.3 908.1 911.6 915.4 918.9 923.0 30 Individual 360.0 362.5 361.9 359.8 361.7 365.7 367.0 370.2 374.1 377.6 380.7 384.1 31 Security 65.6 65.0 65.8 66.4 65.7 65.5 70.8 77.5 76.7 8800..66 7799..11 8866..11 32 Nonbank financial institutions 45.6 45.3 44.5 43.9 44.4 45.3 46.6 46.1 46.5 45.4 44.5 44.5 3333 Agricultural 34.8 33.6 32.9 32.7 33.3 34.0 34.8 35.6 3355..99 3366..22 3366..00 3355..66 34 State and political subdivisions 24.8 24.0 23.7 23.7 23.2 23.0 22.8 22.7 22.7 22.5 22.4 21.8 35 Foreign banks 8.2 7.8 8.6 8.2 8.1 8.2 8.4 9.1 9.3 8.9 9.2 8.6 36 Foreign official institutions 2.8 2.9 3.2 3.2 3.2 3.1 3.2 3.2 3.1 3.4 3.5 3.3 37 Lease-financing receivables .... 30.9 30.8 30.8 30.8 30.8 30.9 31.3 31.4 31.5 31.6 32.1 32.4 38 All other loans 48.6 46.6 44.6 45.0 47.5 47.6 51.0 48.7 45.4 49.5 48.8 49.5 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 Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Seasonally adjusted 11111 TTTTToooootttttaaaaalllll nnnnnooooonnnnndddddeeeeepppppooooosssssiiiiittttt fffffuuuuunnnnndddddsssss22222 311.4 311.2 309.6 319.9 329.4 325.1 335.7 356. lr 366.8* 377.9* 382.0 372.4 22222 NNNNNeeeeettttt bbbbbaaaaalllllaaaaannnnnccccceeeeesssss ooooowwwwweeeeeddddd tttttooooo rrrrreeeeelllllaaaaattttteeeeeddddd fffffooooorrrrreeeeeiiiiigggggnnnnn oooooffffffffffiiiiiccccceeeeesssss33333.......... 71.1 73.8 72.5 77.8 87.5 81.9 85.0 100.0* 114.1* 118.8* 123.6 120.7 33333 BBBBBooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss fffffrrrrrooooommmmm ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn cccccooooommmmmmmmmmeeeeerrrrrccccciiiiiaaaaalllll bbbbbaaaaannnnnkkkkksssss iiiiinnnnn UUUUUnnnnniiiiittttteeeeeddddd SSSSStttttaaaaattttteeeeesssss44444 240.4 237.3 237.1 242.1 241.9 243.3 250.7 256.1 252.7 259.1 258.4 251.7 44444 DDDDDooooommmmmeeeeessssstttttiiiiicccccaaaaallllllllllyyyyy ccccchhhhhaaaaarrrrrttttteeeeerrrrreeeeeddddd bbbbbaaaaannnnnkkkkksssss 155.9 156.6 156.9 161.5 166.9 166.2 173.7 179.7* 177.3* 181.7* 183.5* 178.3 55555 FFFFFooooorrrrreeeeeiiiiigggggnnnnn-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaannnnnkkkkksssss 84.4 80.7 80.2 80.5 75.0 77.1 77.0 76.4 75.4* 77.4 75.0 73.4 Not seasonally adjusted 66666 TTTTToooootttttaaaaalllll nnnnnooooonnnnndddddeeeeepppppooooosssssiiiiittttt fffffuuuuunnnnndddddsssss22222 311.4 310.0 313.9 324.7 325.6 329.8 334.7 349.8* 361.7* 372.5* 384.6 378.6 77777 NNNNNeeeeettttt bbbbbaaaaalllllaaaaannnnnccccceeeeesssss ooooowwwwweeeeeddddd tttttooooo rrrrreeeeelllllaaaaattttteeeeeddddd fffffooooorrrrreeeeeiiiiigggggnnnnn oooooffffffffffiiiiiccccceeeeesssss33333.......... 75.2 76.4 74.4 78.5 84.6 84.0 83.1 96.7* 110.4* 116.4* 124.7 122.4 88888 DDDDDooooommmmmeeeeessssstttttiiiiicccccaaaaallllllllllyyyyy ccccchhhhhaaaaarrrrrttttteeeeerrrrreeeeeddddd bbbbbaaaaannnnnkkkkksssss -15.8 -10.6 -7.0 -9.4 -9.7 -15.3 -15.2 -13.6 -11.2 -5.1 -4.9 99999 FFFFFooooorrrrreeeeeiiiiigggggnnnnn-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaannnnnkkkkksssss 90.2 92.3 84.9 85.5 94.0 93.7 98.4 112.0* 124.0* 127.7* 129.9 127.3 1111100000 BBBBBooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss fffffrrrrrooooommmmm ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn cccccooooommmmmmmmmmeeeeerrrrrccccciiiiiaaaaalllll bbbbbaaaaannnnnkkkkksssss iiiiinnnnn UUUUUnnnnniiiiittttteeeeeddddd SSSSStttttaaaaattttteeeeesssss 236.2 233.6 239.6 246.2 241.0 245.8 251.6 253.1 251.3 256.1 259.9 256.2 1111111111 DDDDDooooommmmmeeeeessssstttttiiiiicccccaaaaallllllllllyyyyy ccccchhhhhaaaaarrrrrttttteeeeerrrrreeeeeddddd bbbbbaaaaannnnnkkkkksssss 155.0 153.6 158.6 164.4 164.9 167.8 173.5 176.0 176.0* 180.3* 184.8 183.4 1111122222 FFFFFeeeeedddddeeeeerrrrraaaaalllll fffffuuuuunnnnndddddsssss aaaaannnnnddddd ssssseeeeecccccuuuuurrrrriiiiitttttyyyyy RRRRRPPPPP bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss 151.0 150.0 155.4 161.1 161.4 164.0 169.6 171.7 172.0 176.0 180.4* 178.7 1111133333 OOOOOttttthhhhheeeeerrrrr55555 4.0 3.6 3.2 3.3 3.5 3.8 3.8 4.3 4.0 4.4 4.5 4.7 1111144444 FFFFFooooorrrrreeeeeiiiiigggggnnnnn-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaannnnnkkkkksssss66666 81.2 80.0 80.9 81.8 76.2 78.0 78.2 77.1 75.3 75.7 75.0 72.8 MMMMMEEEEEMMMMMOOOOO GGGGGrrrrrooooossssssssss lllllaaaaarrrrrgggggeeeee tttttiiiiimmmmmeeeee dddddeeeeepppppooooosssssiiiiitttttsssss 1111155555 SSSSSeeeeeaaaaasssssooooonnnnnaaaaallllllllllyyyyy aaaaadddddjjjjjuuuuusssssttttteeeeeddddd 366.5 359.9 358.4 355.7 355.0 356.3 352.6 344.6 339.7 335.5 335.5 336.4 1111166666 NNNNNooooottttt ssssseeeeeaaaaasssssooooonnnnnaaaaallllllllllyyyyy aaaaadddddjjjjjuuuuusssssttttteeeeeddddd 365.5 358.0 358.0 356.5 354.2 357.9 354.1 344.3 340.8 335.8 334.6 336.2 UUUUU.....SSSSS..... TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy dddddeeeeemmmmmaaaaannnnnddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaattttt cccccooooommmmmmmmmmeeeeerrrrrccccciiiiiaaaaalllll bbbbbaaaaannnnnkkkkksssss88888 1111177777 SSSSSeeeeeaaaaasssssooooonnnnnaaaaallllllllllyyyyy aaaaadddddjjjjjuuuuusssssttttteeeeeddddd 20.4 25.6 23.6 18.8 24.2 19.1 26.1 30.1 29.4 24.2 16.7 16.0 1111188888 NNNNNooooottttt ssssseeeeeaaaaasssssooooonnnnnaaaaallllllllllyyyyy aaaaadddddjjjjjuuuuusssssttttteeeeeddddd 19.5 33.1 29.5 17.4 20.3 20.3 26.5 25.6 23.8 28.6 17.2 12.8 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 Nonfinancial Statistics • February 1994 1.26 ASSETS AND LIABILITIES OF COMMERCIAL BANKS1 Wednesday figures Millions of dollars 1993 AAccccoouunntt Sept. 29* Oct. 6r Oct. 13r Oct. 20r Oct. 27r Nov. 3 Nov. 10 Nov. 17 Nov. 24 ALL COMMERCIAL BANKING INSTITUTIONS2 Assets 1 Loans and securities 3,205,072 3,203,673 3,214,958 3,199,579 3,201,741 3,228,137 3,237,770 3,230,883 3,235,245 2 Investment securities 849,498 854,827 854,479 851,227 849,524 859,678 862,382 856,948 859,371 3 U.S. government securities 683,746 688,753 688,357 685,579 683,685 693,982 695,997 690,174 692,715 4 Other 165,752 166,074 166,123 165,648 165,838 165,696 166,385 166,774 166,657 5 Trading account assets 47,421 42,653 43,659 43,054 41,444 43,057 45,854 44,632 42,418 6 U.S. government securities 31,096 27,439 28,088 28,910 26,805 27,587 30,885 29,654 26,923 7 Other securities 2,948 2,885 2,948 2,995 2,730 2,818 2,724 2,308 2,204 8 Other trading account assets 13,378 12,328 12,622 11,149 11,909 12,652 12,245 12,670 13,291 9 Total loans 2,308,153 2,306,194 2,316,820 2,305,299 2,310,773 2,325,403 2,329,534 2,329,303 2,333,455 10 Interbank loans 150,768 149,995 158,597 148,147 151,518 154,326 157,909 158,838 155,186 11 Loans excluding interbank 2,157,386 2,156,199 2,158,222 2,157,152 2,159,255 2,171,076 2,171,625 2,170,465 2,178,269 12 Commercial and industrial 584,334 583,457 582,816 584,024 584,531 587,808 586,734 586,422 586,270 n Real estate 916,874 918,278 920,4% 918,512 917,640 920,196 923,429 921,417 921,571 14 Revolving home equity 74,801 74,681 74,627 74,470 74,377 74,212 74,090 73,986 73,783 15 Other 842,073 843,597 845,869 844,042 843,263 845,984 849,339 847,431 847,788 16 Individual 379,889 379,061 380,075 380,707 382,079 381,810 382,402 383,455 384,554 17 All other 276,289 275,403 274,835 273,910 275,005 281,263 279,061 279,171 285,875 18 Total cash assets 220,118 209,555 232,214 216,538 214,845 213,805 211,349 217,155 225,242 19 Balances with Federal Reserve Banks 31,652 29,304 29,777 32,489 30,629 27,965 31,294 29,535 35,038 20 Cash in vault 33,969 31,655 34,572 33,998 34,177 31,623 33,171 34,504 32,842 21 Demand balances at U.S. depository institutions.. 31,403 29,464 34,435 30,608 31,511 31,684 29,735 31,080 32,750 22 Cash items 83,898 80,257 93,537 80,839 78,012 84,322 79,377 83,779 85,352 23 Other cash assets 39,195 38,875 39,894 38,604 40,517 38,212 37,772 38,257 39,260 24 Other assets 273,410 282,595 280,239 265,107 268,745 280,816 282,411 273,463 272,456 25 Total assets 3,698,600 3,695,822 3,727,411 3,681,224 3,685,330 3,722,759 3,731,530 3,721,501 3,732,942 Liabilities 26 Total deposits 2,492,245 2,516,545 2,533,747 2,492,925 2,488,091 2,535,472 2,527,714 2,528,280 2,528,312 27 Transaction accounts 792,163 804,398 822,074 793,005 788,025 821,467 813,052 819,499 821,125 28 Demand, U.S. government 3,290 2,981 2,915 3,218 3,034 3,319 3,173 2,915 5,123 29 Demand, depository institutions 38,927 37,859 44,460 38,993 39,637 40,510 38,626 40,652 41,651 30 Other demand and all checkable deposits 749,946 763,559 774,700 750,795 745,354 777,638 771,253 775,933 774,352 31 Savings deposits (excluding checkable) 765,288 777,195 778,583 770,516 771,004 781,784 784,719 780,420 776,081 32 Small time deposits 606,826 606,434 605,601 603,724 601,919 602,232 600,820 599,335 599,273 33 Time deposits over $100,000 327,968 328,517 327,489 325,680 327,143 329,989 329,124 329,026 331,833 34 Borrowings 533,538 510,731 529,184 517,562 510,814 507,175 520,280 506,987 523,230 35 Treasury tax and loan notes 35,278 12,636 11,849 9,730 12,942 6,381 9,368 5,871 7,026 36 Other 498,260 498,095 517,335 507,832 497,872 500,794 510,912 501,116 516,204 37 Other liabilities 377,311 371,995 366,920 372,816 388,688 381,652 383,246 386,766 384,588 38 Total liabilities 3,403,095 3,399,271 3,429,851 3,383,303 3,387,593 3,424,299 3,431,240 3,422,033 3,436,130 39 Residual (assets less liabilities)3 295,506 296,552 297,560 297,921 297,738 298,460 300,290 299,468 296,812 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 1993 AAccccoouunntt Sept. 19 Oct. 6r Oct. 13r Oct. 20r Oct. 27r Nov. 3 Nov. 10 Nov. 17 Nov. 24 DOMESTICALLY CHARTERED COMMERCIAL BANKS4 Assets 40 Loans and securities 2,844,183 2,852,289 2,861,000 2,840,835 2,839,025 2,867,919 2,878,186 2,866,958 2,870,429 41 Investment securities 775,607 780,644 779,197 776,054 773,285 780,678 784,117 776,522 781,703 42 U.S. government securities 633,427 638,115 636,523 633,389 630,908 638,571 641,562 633,935 638,072 43 Other 142,180 142,529 142,674 142,665 142,377 142,107 142,555 142,587 143,630 44 Trading account assets 47,421 42,653 43,659 43,054 41,444 43,057 45,854 44,632 42,418 45 U.S. government securities 31,096 27,439 28,088 28,910 26,805 27,587 30,885 29,654 26,923 46 Other securities 2,948 2,885 2,948 2,995 2,730 2,818 2,724 2,308 2,204 47 Other trading account assets 13,378 12,328 12,622 11,149 11,909 12,652 12,245 12,670 13,291 48 Total loans 2,021,154 2,028,993 2,038,145 2,021,727 2,024,2% 2,044,184 2,048,216 2,045,804 2,046,308 49 Interbank loans 124,373 129,480 134,363 122,343 125,834 132,582 135,636 134,813 131,846 50 Loans excluding interbank 1,8%,782 1,899,513 1,903,782 1,899,384 1,898,462 1,911,602 1,912,580 1,910,991 1,914,462 51 Commercial and industrial 432,024 431,531 431,367 432,406 432,308 435,415 434,315 434,177 433,448 5? Real estate 869,363 870,653 873,076 871,058 870,148 872,865 876,150 874,2% 874,313 53 Revolving home equity 74,801 74,681 74,627 74,470 74,377 74,212 74,090 73,986 73,783 54 Other 794,562 795,972 798,449 7%,588 795,770 798,653 802,060 800,310 800,530 55 379,889 379,061 380,075 380,707 382,079 381,810 382,402 383,455 384,554 S6 All other 215,505 218,268 219,265 215,214 213,928 221,512 219,713 219,063 222,147 57 Total cash assets 192,534 182,918 205,317 190,171 187,093 188,137 186,486 192,407 200,032 58 Balances with Federal Reserve Banks 30,983 28,844 28,944 32,050 29,803 27,510 30,544 29,059 34,335 59 Cash in vault 33,933 31,621 34,534 33,%2 34,141 31,590 33,131 34,468 32,805 60 Demand balances at U.S. depository institutions . 29,892 28,018 32,836 29,118 30,027 29,883 28,400 29,739 31,505 61 Cash items 80,604 77,337 90,830 77,826 75,030 81,741 76,831 81,613 82,973 6? 17,122 17,098 18,173 17,215 18,092 17,414 17,581 17,529 18,415 63 Other assets 184,074 191,476 192,609 180,989 185,722 191,386 189,716 181,914 179,264 64 Total assets 3,220,790 3,226,683 3,258,926 3,211,994 3,211,840 3,247,442 3,254,389 3,241,279 3,249,725 Liabilities 65 2,347,804 2,376,146 2,394,358 2,353,714 2,349,106 2,392,583 2,385,678 2,385,621 22,,338833,,442255 66 778,523 792,1% 810,278 780,980 777,020 808,785 801,612 808,108 810,518 67 Demand, U.S. government 3,289 2,980 2,914 3,218 3,033 3,318 3,173 2,915 5,122 68 Demand, depository institutions 36,257 35,234 41,914 36,631 37,210 37,953 36,138 37,997 39,142 69 Other demand and all checkable deposits 738,977 753,982 765,450 741,132 736,777 767,514 762,301 767,1% 766,254 70 Savings deposits (excluding checkable) 761,020 772,870 774,105 766,131 766,531 777,318 780,263 776,064 771,713 71 Small time deposits 604,562 604,177 603,331 601,479 599,636 599,983 598,579 597,105 597,037 77 Time deposits over $100,000 203,699 206,904 206,645 205,124 205,919 206,497 205,224 204,344 204,157 73 Borrowings 433,921 408,340 425,640 416,959 414,916 404,635 419,135 407,010 423,753 74 Treasury tax and loan notes 35,278 12,636 11,849 9,730 12,942 6,381 9,368 5,871 7,026 75 Other 398,643 395,704 413,791 407,229 401,974 398,254 409,767 401,139 416,727 76 Other liabilities 146,562 148,647 144,369 146,401 153,081 154,766 152,288 152,181 148,736 77 Total liabilities 2,928,286 2,933,133 2,964,367 2,917,074 2,917,103 2,951,984 2,957,101 2,944,813 2,955,914 78 Residual (assets less liabilities)3 292,504 293,551 294,559 294,920 294,736 295,459 297,288 2%,466 293,811 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 Domestic Nonfinancial Statistics • February 1994 1.27 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS Millions of dollars, Wednesday figures 1993 AAccccoouunntt Sept. If Oct. 6r Oct. 13r Oct. 201 Oct. 27r Nov. 3 Nov. 10 Nov. 17 Nov. 24 ASSETS 1 Cash and balances due from depository institutions 115,803 107,174 119,498 113,622 109,344 107,851 107,550 112,738 118,322 2 U.S. Treasury and government securities 301,832 302,842 302,852 301,583 297,684 301,586 305,802 299,371 298,788 3 Trading account 26,905 24,545 25,236 26,114 24,095 24,577 27,724 26,038 24,175 4 Investment account 274,926 278,2% 277,617 275,469 273,589 277,009 278,079 273,332 274,612 5 Mortgage-backed securities1 87,215 87,234 86,762 85,774 85,422 86,336 86,070 84,588 87,603 All others, by maturity 6 One year or less 48,300 48,389 48,721 49,126 48,330 48,567 50,294 50,175 48,310 7 One year through five years 71,234 71,522 71,552 71,780 72,639 72,986 72,970 71,273 71,725 8 More than five years 68,177 71,152 70,583 68,790 67,198 69,121 68,745 67,296 66,975 9 Other securities 56,276 56,982 57,083 57,350 56,595 56,520 56,506 56,141 56,599 10 Trading account 2,629 2,621 2,684 2,731 2,467 2,558 2,463 2,098 1,994 11 Investment account 53,647 54,361 54,399 54,619 54,129 53,962 54,042 54,043 54,604 12 State and political subdivisions, by maturity 19,997 19,916 19,945 20,065 20,123 20,038 20,122 20,151 20,222 13 One year or less 3,761 3,818 3,794 3,825 3,845 3,842 3,885 3,808 3,857 14 More than one year 16,235 16,097 16,151 16,240 16,279 16,196 16,236 16,343 16,366 15 Other bonds, corporate stocks, and securities 33,650 34,445 34,454 34,553 34,005 33,924 33,921 33,892 34,382 16 Other trading account assets 13,265 12,216 12,509 11,038 11,798 12,541 12,134 12,560 13,179 17 Federal funds sold2 87,630 85,571 92,519 78,896 82,894 89,954 92,479 89,316 93,384 18 To commercial banks in the United States 52,340 49,047 54,425 42,952 48,218 50,596 53,317 51,766 52,419 19 To nonbank brokers and dealers 29,664 30,738 32,962 30,365 29,723 34,748 34,962 33,094 37,038 20 To others3 5,626 5,786 5,132 5,579 4,953 4,609 4,200 4,456 3,927 21 Other loans and leases, gross 995,485 996,022 999,886 998,241 9%,460 1,002,306 1,002,349 1,003,389 1,003,906 22 Commercial and industrial 272,386 271,700 271,482 271,962 271,904 274,566 273,264 273,204 272,408 23 Bankers acceptances and commercial paper 2,826 2,913 3,378 3,388 3,422 3,411 3,459 3,395 3,387 24 Mother 269,560 268,787 268,103 268,574 268,482 271,154 269,804 269,809 269,021 25 U.S. addressees 268,000 267,360 266,678 267,061 267,015 269,731 268,391 268,361 267,576 26 Non-U.S. addressees 1,560 1,426 1,425 1,513 1,466 1,423 1,413 1,448 1,445 27 Real estate loans 403,3(5 405,090 407,176 404,639 402,896 405,344 407,772 406,123 405,772 28 Revolving, home equity 43,653 43,633 43,602 43,476 43,405 43,359 43,275 43,211 43,039 29 All other 359,662 361,457 363,575 361,163 359,491 361,985 364,497 362,912 362,733 30 To individuals for personal expenditures 193,187 192,885 193,523 194,856 195,537 195,242 195,482 196,316 197,203 31 To financial institutions 36,826 38,568 40,802 39,449 38,519 38,959 38,659 39,147 38,946 32 Commercial banks in the United States 13,413 13,459 14,731 15,108 14,417 13,533 13,621 14,563 14,683 33 Banks in foreign countries 2,416 2,878 4,159 2,827 2,312 2,253 2,255 2,588 2,679 34 Nonbank financial institutions 20,997 22,232 21,912 21,514 21,790 23,173 22,782 21,996 21,584 35 For purchasing and carrying securities 19,251 17,863 17,644 17,882 18,665 18,847 18,136 17,692 19,951 36 To finance agricultural production 5,791 5,836 5,843 5,657 5,670 5,709 5,702 5,683 5,728 37 To states and political subdivisions 13,457 13,270 13,380 13,319 13,009 12,910 12,775 12,685 12,629 38 To foreign governments and official institutions 1,481 1,452 1,436 1,553 1,374 1,112 1,254 1,114 1,118 39 All other loans 24,621 24,063 23,304 23,476 23,365 24,043 23,743 25,771 24,457 40 Lease-financing receivables 25,169 25,294 25,296 25,450 25,521 25,575 25,563 25,653 25,693 41 LESS: Unearned income ^ 2,032 2,000 1,999 1,980 1,996 1,962 1,961 1,962 1,965 42 Loan and lease reserve 35,619 35,200 35,208 35,175 35,142 35,482 35,517 35,487 35,415 43 Other loans and leases, net 957,833 958,822 962,679 961,086 959,322 964,862 964,872 965,939 966,527 44 Other assets 169,453 175,111 175,240 167,797 172,765 175,117 175,678 169,110 165,942 45 Total assets 1,702,091 1,698,718 1,722,381 1,691,372 1,690,401 1,708,431 1,715,021 1,705,174 1,712,740 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 1993 AAccccoouunntt Sept. 29* Oct. 6r Oct. 13r Oct. 20* Oct. ir Nov. 3 Nov. 10 Nov. 17 Nov. 24 LIABILITIES 46 Deposits 1,103,316 1,116,852 1,128,746 1,101,981 1,098,232 1,122,826 1,119,609 1,122,005 1,117,039 47 Demand deposits 290,238 288,451 302,515 285,469 283,529 293,765 292,648 300,315 300,090 48 Individuals, partnerships, and corporations 236,870 240,318 250,511 233,961 232,408 243,289 242,2% 248,019 247,566 49 Other holders 53,368 48,134 52,004 51,508 51,121 50,476 50,352 52,295 52,524 50 States and political subdivisions 8,664 8,136 8,432 9,063 8,840 9,442 8,915 8,863 9,714 51 U.S. government 2,163 1,691 1,663 1,957 1,904 1,944 1,932 1,664 3,284 52 Depository institutions in the United States 22,333 21,757 26,721 22,454 22,770 23,152 21,922 23,244 23,602 53 Banks in foreign countries 5,567 4,860 5,312 5,292 5,328 5,130 5,379 4,974 5,264 54 Foreign governments and official institutions 556 566 661 618 669 637 1,088 648 713 55 Certified and officers' checks 14,085 11,124 9,215 12,124 11,610 10,171 11,116 12,903 9,947 56 Transaction balances other than demand deposits 117,086 121,929 120,211 119,0% 117,947 123,845 122,161 121,625 121,064 57 Nontransaction balances 695,992 706,472 706,019 697,416 6%,756 705,216 704,800 700,066 695,885 58 Individuals, partnerships, and corporations 673,937 684,663 684,140 675,711 675,038 683,876 683,275 678,561 674,314 59 Other holders 22,055 21,809 21,879 21,705 21,718 21,340 21,525 21,505 21,571 60 States and political subdivisions 18,184 17,840 17,831 17,648 17,611 17,319 17,476 17,386 17,434 61 U.S. government 1,991 2,212 2,235 2,230 2,245 2,224 2,267 2,321 2,334 62 Depository institutions in the United States 1,547 1,444 1,482 1,511 1,544 1,491 1,482 1,498 1,506 63 Foreign governments, official institutions, and banks .... 333 312 331 316 317 306 300 300 298 64 Liabilities for borrowed money5 329,608 309,601 325,820 317,277 314,527 305,940 318,334 306,721 323,032 65 Borrowings from Federal Reserve Banks 0 0 0 75 0 0 0 0 0 66 Treasury tax and loan notes , 30,308 10,946 10,018 8,792 11,161 5,929 8,384 5,059 6,339 67 Other liabilities for borrowed money6 299,300 298,656 315,801 308,410 303,365 300,011 309,950 301,662 316,694 68 Other liabilities (including subordinated notes and debentures) 115,611 117,807 113,296 115,586 122,191 123,686 120,731 120,657 117,677 69 Total liabilities 1,548,535 1,544,260 1,567,861 1,534,844 1,534,950 1,552,452 1,558,674 1,549,384 1,557,748 70 Residual (total assets less total liabilities)7 153,556 154,458 154,519 156,529 155,451 155,979 156,348 155,790 154,992 MEMO 71 Total loans and leases, gross, adjusted, plus securities8 .. 1,388,734 1,391,128 1,395,694 1,389,049 1,382,795 1,398,777 1,402,332 1,394,446 1,398,754 72 Time deposits in amounts of $100,000 or more 96,651 99,409 99,096 97,659 98,358 99,002 97,882 97,164 97,006 73 Loans sold outright to affiliates9 828 822 821 823 812 812 805 804 849 74 Commercial and industrial 401 401 401 401 393 394 388 387 3% 75 Other 427 422 420 422 418 418 417 417 453 76 Foreign branch credit extended to U.S. residents10 20,692 21,167 21,600 21,252 21,908 21,851 21,981 21,892 21,941 77 Net owed to related institutions abroad -9,645 -11,121 -9,307 -5,158 -4,422 -10,835 -12,507 -7,521 -5,263 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 • February 1994 1.28 LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS Assets and Liabilities1 Millions of dollars, Wednesday figures 1993 AAccccoouunntt Sept. 29 Oct. 6 Oct. 13 Oct. 20 Oct. 27 Nov. 3 Nov. 10 Nov. 17 Nov. 24 ASSETS 1 Cash and balances due from depository institutions 18,797 18,117 18,363 17,946 18,876 17,415 16,879 16,811 17,065 2 U.S. Treasury and government agency securities 32,542 32,760 33,598 33,780"^ 34,081r 35,776 35,175 3366,,442277 3355,,333399 3 Other securities 8,497 8,488 8,470 8,284r 8,444r 8,494 8,591 8,738 8,266 4 Federal funds sold1 26,975 23,013 24,297 26,878 29,237 24,640 25,281 25,523 27,847 5 To commercial banks in the United States ... 7,791 4,965 6,811 7,439 7,550 5,728 5,%1 6,808 6,389 6 To others2 19,184 18,048 17,486 19,439 21,687 18,913 19,321 18,715 21,459 7 Other loans and leases, gross 159,255 157,252 156,4% 157,138 156,706 158,164 157,667 158,820 158,959 8 Commercial and industrial 95,335 95,171 95,135 95,114 95,229 95,363 95,355 95,407 95,393 9 Bankers acceptances and commercial paper 2,466 2,695 2,951 2,952 2,771 2,761 2,618 2,528 2,826 10 All other 92,869 92,476 92,184 92,162 92,458 92,602 92,737 92,879 92,567 11 U.S. addressees 89,553 89,229 88,973 88,992 89,251 89,3% 89,413 89,5% 89,317 12 Non-U.S. addressees 3,316 3,246 3,210 3,170 3,206 3,206 3,325 3,283 3,250 13 Loans secured by real estate 31,226 31,300 31,240 31,223 31,176 31,083 31,065 31,013 30,%2 14 To financial institutions 23,545 23,443 23,368 23,345 23,228 22,571 22,660 22,722 22,499 15 Commercial banks in the United States.. 5,628 5,522 5,548 5,710 5,473 5,383 5,493 5,415 5,450 16 Banks in foreign countries 1,946 2,023 2,078 2,119 2,176 2,025 1,958 1,955 2,021 17 Nonbank financial institutions 15,971 15,898 15,741 15,517 15,579 15,163 15,208 15,353 15,028 18 For purchasing and carrying securities .... 5,233 3,923 3,395 3,716 3,323 5,154 4,711 5,709 6,132 19 To foreign governments and official institutions 497 476 464 454 423 471 469 495 474 20 All other 3,419 2,940 2,895 3,285 3,327 3,521 3,407 3,474 3,499 21 Other assets (claims on nonrelated parties) .. 32,466 30,942 31,089 30,322 31,416 32,187 32,612 31,647 32,334 22 Total assets3 302,511 296,875 296,322 296,755 299,419 300,675 301,910 303,905 305,879 LIABILITIES 23 Deposits or credit balances owed to other than directly-related institutions 93,056 90,006 89,691 89,748 90,607 92,187 92,173 92,749 94,370 24 Demand deposits 55,,770066 44,,994477 4,776 4,929 4,406 5,163 4,611 4,546 4,207 25 Individuals, partnerships, and corporations 4,260 3,809 3,758 3,875 3,497 3,745 3,564 3,437 3,352 26 Other 1,445 1,138 1,018 1,055 909 1,418 1,047 1,110 855 27 Nontransaction accounts 8877,,335500 85,059 84,915 84,819 86,201 87,025 87,562 88,203 90,163 28 Individuals, partnerships, and corporations 60,570 58,581 58,053 57,943 57,939 58,633 58,858 59,755 62,383 29 Other 2266,,778800 2266,,447788 26,862 26,876 28,262 28,391 28,703 28,448 27,780 30 Borrowings from other than directlyrelated institutions 76,345 78,929 79,180 77,095 72,845 78,087 76,509 75,561 75,276 31 Federal funds purchased 38,009 43,348 41,478 42,936 37,863 40,031 37,427 39,571 37,579 32 From commercial banks in the United States 12,027 11,931 12,427 9,033 9,993 11,776 9,739 14,427 8,946 33 From others 25,982 31,416 29,051 33,903 27,870 28,255 27,688 25,144 28,633 34 Other liabilities for borrowed money 3388,,333366 3355,,558811 3377,,770011 3344,,115599 3344,,998833 3388,,005566 3399,,008822 35,990 37,6% 35 To commercial banks in the United States 4,519 3,914 4,516 4,942 5,5% 5,022 5,804 5,517 6,052 36 To others 33,817 31,668 33,185 29,216 29,386 33,035 33,278 30,473 31,645 37 Other liabilities to nonrelated parties 30,258 28,888 27,860 27,844 28,039 28,464 29,039 29,305 28,769 38 Total liabilities6 302,511 296,875 296,322 296,755 299,419 300,675 301,910 303,905 305,879 MEMO 39 Total loans (gross) and securities, adjusted .. 213,850 211,025 210,502 212,931 215,445 215,%3 215,261 217,285 218,573 40 Net owed to related institutions abroad 78,872 72,749 75,582 79,661 87,269 77,937 78,485 80,353 81,395 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 May June July Aug. Sept. Oct. Commercial paper (seasonally adjusted unless noted otherwise) 1 AO issuers. 458,464 525,831 562,656 531,724 549,433 541,761 544,107 539,149 545,527 541,285 550,463 Financial companies' Dealer-placed paper2 Total 159,777 183,622 214,706 213,823 228,260 214,558 221,834 210,224 216,245 215,077 222,981 Bank-related (not seasonally adjusted)3 1,248 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Directly placed paper4 Total 194,931 210,930 200,036 183,379 172,813 174,558 171,479 170,192 172,093 169,431 170,965 Bank-related (not seasonally adjusted)3 43,155 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 6 Nonfinancial companies3 103,756 131,279 147,914 134,522 148,360 152,645 150,794 158,733 157,189 156,777 156,517 Bankers dollar acceptances (not seasonally adjusted)6 7 Total 66,631 62,972 54,771 43,770 38,200 34,927 34,149 33,120 32,572 33,041 33,069 By holder 8 Accepting banks 9,086 9,433 9,017 11,017 10,561 11,0% 11,568 11,422 12,416 12,522 12,332 9 Own bills 8,022 8,510 7,930 9,347 9,103 9,786 10,236 10,140 10,709 10,679 10,886 10 Bills bought from other banks 1,064 924 1,087 1,670 11,,445588 11,,331100 1,333 1,282 1,707 1,843 1,446 Federal Reserve Banks 11 Foreign correspondents 1,493 1,066 918 1,739 1,276 690 613 582 635 637 582 12 Others 56,052 52,473 44,836 31,014 26,364 23,141 21,%7 21,116 19,521 19,882 20,155 By basis 13 Imports into United States 14,984 15,651 13,095 12,843 12,212 10,274 10,066 10,149 10,422 10,773 10,810 14 Exports from United States 14,410 13,683 12,703 10,351 8,0% 7,809 7,650 7,673 7,534 7,460 7,101 15 All other 37,237 33,638 28,973 20,577 17,893 16,844 16,433 15,299 14,616 14,808 15,158 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 Rate Period Av r e a r te a ge Period Av r e a r te a ge Period 10.00 1991 8.46 1992—Jan. ... 6.50 1993—Jan. .. 9.50 1992 6.25 Feb. .. 6.50 Feb. . 9.00 1993 6.00 Mar. .. 6.50 Mar. .. 8.50 Apr. .. 6.50 Apr. .. 8.00 1991- 9.52 May ... 6.50 7.50 Feb. 9.05 June .. 6.50 June .. 6.50 Mar. 9.00 July ... 6.02 July ... Apr. 9.00 Aug. .. 6.00 Aug. .. 6.00 May . 8.50 Sept. .. 6.00 Sept. .. June 8.50 Oct. ... 6.00 Oct. ... July . 8.50 Nov. .. 6.00 Nov. .. Aug. 8.50 Dec. .. 6.00 Dec. Sept. 8.20 Oct. . 8.00 Nov. 7.58 Dec. 7.21 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 • February 1994 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 Aug. Sept. Oct. Nov. Oct. 29 Nov. 5 Nov. 12 Nov. 19 Nov. 26 MONEY MARKET INSTRUMENTS 1 Federal funds1,2,3 8.10 5.69 3.52 3.03 3.09 2.99 3.02 2.97 3.04 2.96 3.03 2.98 2 Discount window borrowing2'4 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 1-month 8.15 5.89 3.71 3.14 3.14 3.14 3.15 3.14 3.15 3.15 3.14 3.15 4 3-month 8.06 5.87 3.75 3.18 3.16 3.26 3.40 3.28 3.38 3.40 3.40 3.42 5 6-month 7.95 5.85 3.80 3.33 3.25 3.27 3.43 3.30 3.40 3.42 3.43 3.45 Finance paper, directly placed3,5,7 6 1-month 8.00 5.73 3.62 3.08 3.07 3.08 3.08 3.07 3.09 3.09 3.08 3.06 7 3-month 7.87 5.71 3.65 3.13 3.09 3.16 3.25 3.18 3.23 3.26 3.26 3.27 8 6-month 7.53 5.60 3.63 3.16 3.11 3.13 3.19 3.14 3.19 3.19 3.19 3.20 Bankers acceptances3,5,8 9 3-month 7.93 5.70 3.62 3.10 3.07 3.19 3.29 3.24 3.31 3.30 3.28 3.29 10 6-month 7.80 5.67 3.67 3.23 3.17 3.19 3.32 3.24 3.32 3.33 3.31 3.31 Certificates qf deposit, secondary market3,9 11 1-month 8.15 5.82 3.64 3.09 3.09 3.09 3.11 3.10 3.11 3.10 3.09 3.09 12 3-month 8.15 5.83 3.68 3.14 3.12 3.24 3.35 3.29 3.36 3.36 3.33 3.36 13 6-month 8.17 5.91 3.76 3.32 3.24 3.25 3.39 3.30 3.39 3.39 3.36 3.40 14 Eurodollar deposits, 3-month3,10 8.16 5.86 3.70 3.14 3.08 3.26 3.36 3.29 3.35 3.38 3.34 3.38 U.S. Treasury bills Secondary market ,5 15 3-month 7.50 5.38 3.43 3.02 2.95 3.02 3.10 3.06 3.08 3.10 3.11 3.12 16 6-month 7.46 5.44 3.54 3.14 3.06 3.12 3.26 3.18 3.25 3.25 3.25 3.27 17 1-year 7.35 5.52 3.71 3.30 3.22 3.25 3.42 3.32 3.40 3.39 3.42 3.46 Auction average ' ' 18 3-month 7.51 5.42 3.45 3.05 2.96 3.04 3.12 3.08 3.11 3.11 3.11 3.14 19 6-month 7.47 5.49 3.57 3.17 3.06 3.13 3.27 3.19 3.25 3.28 3.26 3.30 20 1-year 7.36 5.54 3.75 3.30 3.27 3.25 3.43 n.a. n.a. n.a. 3.43 n.a. U.S. TREASURY NOTES AND BONDS Constant maturities12 21 1-year 7.89 5.86 3.89 3.44 3.36 3.39 3.58 3.46 3.56 3.55 3.58 3.61 22 2-year 8.16 6.49 4.77 4.00 3.85 3.87 4.16 3.97 4.15 4.13 4.13 4.20 23 3-year 8.26 6.82 5.30 4.36 4.17 4.18 4.50 4.28 4.47 4.48 4.49 4.56 24 5-year 8.37 7.37 6.19 5.03 4.73 4.71 5.06 4.82 5.03 5.04 5.04 5.13 25 7-year 8.52 7.68 6.63 5.35 5.08 5.05 5.45 5.19 5.41 5.42 5.41 5.54 26 10-year 8.55 7.86 7.01 5.68 5.36 5.33 5.72 5.44 5.66 5.68 5.71 5.83 27 20-year n.a. n.a. n.a. n.a. n.a. 6.07 6.38 6.14 6.31 6.35 6.39 6.47 28 30-year 8.61 8.14 7.67 6.32 6.00 5.94 6.21 5.99 6.12 6.19 6.22 6.31 Composite 29 More than 10 years (long-term) 8.74 8.16 7.52 6.18 5.94 5.90 6.25 5.99 6.17 6.21 6.25 6.34 STATE AND LOCAL NOTES AND BONDS Moody's series13 30 6.96 6.56 6.09 5.37 5.25 5.13 5.10 5.05 5.08 5.10 5.12 5.12 31 Baa 7.29 6.99 6.48 5.84 5.76 5.63 5.61 5.55 5.58 5.60 5.02 5.62 32 Bond Buyer series14 7.27 6.92 6.44 5.45 5.29 5.25 5.47 5.31 5.45 5.46 5.46 5.49 CORPORATE BONDS 33 Seasoned issues, all industries15 9.77 9.23 8.55 7.19 6.98 6.97 7.25 7.03 7.18 7.24 7.26 7.32 Rating group 34 9.32 8.77 8.14 6.85 6.66 6.67 6.93 6.73 6.87 6.92 6.94 6.99 35 Aa 9.56 9.05 8.46 7.06 6.85 6.87 7.12 6.93 7.07 7.11 7.13 7.18 36 A 9.82 9.30 8.62 7.25 7.05 7.04 7.29 7.08 7.22 7.28 7.30 7.36 37 10.36 9.80 8.98 7.60 7.34 7.31 7.66 7.38 7.57 7.65 7.69 7.74 38 A-rated, recently offered utility bonds16 10.01 9.32 8.52 7.16 6.94 6.91 7.25 6.97 7.25 7.23 7.37 7.27 MEMO Dividend-price ratio17 39 Preferred stocks 8.96 8.17 7.46 6.83 6.70 6.71 6.87 6.81 6.81 6.82 6.85 6.99 40 Common stocks 3.61 3.24 2.99 2.76 2.73 2.72 2.72 2.71 2.72 2.72 2.71 2.73 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. Some of the data in this table also appear in the Board's H.15 (519) indication purposes only. weekly and G.13 (415) monthly statistical releases. For ordering address, see 11. Auction date for daily data; weekly and monthly averages computed on an inside front cover. issue-date basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets ATI 1.36 STOCK MARKET Selected Statistics 1993 IInnddiiccaattoorr 11999900 11999911 11999922 Mar. Apr. May June July Aug. Sept. Oct. Nov. Prices and trading volume (averages of daily figures) Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 183.66 206.35 229.00 248.12 244.72 246.02 247.16 247.85 251.93 254.86 257.53 255.93 2 Industrial 226.06 258.16 284.26 298.75 292.19 297.83 298.78 295.34 298.83 300.92 306.61 310.84 3 Transportation 158.80 173.97 201.02 229.42 237.97 237.80 234.30 238.30 250.82 247.74 254.04 262.% 4 Utility 90.72 92.64 99.48 112.53 113.78 111.21 113.27 116.27 118.72 122.32 120.49 115.08 5 Finance 133.21 150.84 179.29 217.01 216.02 209.40 209.75 218.89 224.% 229.35 228.18 214.08 6 Standard & Poor's Corporation (1941-43 = 10) 335.01 376.20 415.75 450.15 443.08 445.25 448.06 447.29 454.13 459.24 463.90 462.89 7 American Stock Exchange (Aug. 31, 1973 = 50? 338.32 360.32 391.28 418.56 418.54 429.72 436.13 434.99 444.75 454.91 472.73 472.41 Volume of trading (thousands of shares) 8 New York Stock Exchange 156,359 179,411 202,558 251,170 279,778 255,843 250,230 247,574 247,324 261,770 280,503 277,886 9 American Stock Exchange 13,155 12,486 14,171 16,150 15,521 20,433 17,753 17,744 19,352 18,889 21,279 18,436 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker—dealers3 28,210 36,660 43,990 45,160 47,420 48,630 49,550 49,080 52,760 53,700 56,690 59,760 Free credit balances at brokers4 11 Margin accounts5 8,050 8,290 8,970 9,650 9,805 9,560 9,820 9,585 9,480 10,030 10,270 10,940 12 Cash accounts 19,285 19,255 22,510 21,395 21,450 21,610 22,625 21,475 21,915 23,170 22,450 23,560 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 • February 1994 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn 1993 11999911 11999922 11999933 June July Aug. Sept. Oct. Nov. U.S. budget1 1 Receipts, total 1,054,264 1,090,453 l,153,147r 128,566r 80,626r 86,734r 127,469 78,668r 83,107 2 On-budget 760,380 788,027 841,213r 98,660r 57,139r 62,053r 98,609 55,864r 58,700 3 Off-budget 293,885 302,426 311,934 29,906 23,487 24,681 28,860 22,804 24,407 4 Outlays, total 1,323,785 1,380,794 l,407,831r 117,467r 120,204r 109,812r 118,904r 124,0901 121,488 5 On-budget 1,082,098 1,128,455 1,141,819* 103,473r 96,238r 84,946r 90,774r 100,568r 96,724 6 Off-budget 241,687 252,339 266,012 13,994 23,965 24,867 28,130 23,523 24,764 7 Surplus or deficit (-), total -269,521 -290,340 -254,684r 11,099 -39,577 -23,078 8,565r —45,422r -38,381 8 On-budget -321,719 -340,428 -300,6051 -4,813 -39,099 -22,893 7,835r -44,704r -38,024 9 Off-budget 52,198 50,087 45,922 15,912 -478 -186 730 -719 -357 Source of financing (total) 10 Borrowing from the public 276,802 310,918 248,619 24,757 1,055 54,301 -9,346 4,255 71,028 11 Operating cash (decrease, or increase (-)) ... -1,329 -17,305 6,283 -40,288 32,447 -12,652 -11,713 33,646 -13,450 12 Other -5,952 -3,273 -218r 4,432 6,075 -18,571 12,494r 7,521r -19,197 MEMO 13 Treasury operating balance (level, end of period) 41,484 58,789 52,506 60,588 28,141 40,793 52,506 18,860 32,310 14 Federal Reserve Banks 7,928 24,586 17,289 28,386 5,818 7,975 17,289 6,032 6,334 15 Tax and loan accounts 33,556 34,203 35,217 32,202 22,324 32,818 35,217 12,828 25,977 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 SSSooouuurrrccceee ooorrr tttyyypppeee 1991 1992 1993 1993 11999922 11999933 H2 HI H2 HI Sept. Oct. Nov. RECEIPTS 1 All sources 1,090,453 l,153,147r 519,165 560,318 540,472 593,187r 127,469 78,668r 83,107 2 Individual income taxes, net 475,964 509,680 234,939 236,576 246,938 255,556 55,653 37,680 37,634 3 Withheld 408,352 430,427 221100,,555522 198,868 215,586r 210,066 31,991 34,284 37,823 4 Presidential Election Campaign Fund 30 28 11 20 10 25 0 27 -27 5 Nonwithheld 149,342 154,772 33,296 110,995 39,288r 113,482 25,579 4,053 1,945 6 Refunds 81,760 75,546 8,910 73,308 7,942r 67,468 1,918 684 2,107 Corporation income taxes 1 Gross receipts 117,951 131,548 54,016 61,682 58,022 69,044 25,909 44,,226699 22,,885555 8 Refunds 17,680 14,027 88,,664499 9,403 7,219 7,198 1,398 2,111 647 9 Social insurance taxes and contributions, net 413,689 428,300 118866,,883399 224,569 192,599 227,177 37,768 30,828 3344,,668833 10 Employment taxes and contributions 385,491 396,939 117755,,880022 208,110 180,758 208,776 36,908 29,440 3311,,552255 11 Self-employment taxes and contributions 24,421 20,604 3,306 20,434 3,988 16,270 4,231 00 00 12 Unemployment insurance 23,410 26,556 8,721 14,070 9,397 16,074 413 1,046 2,773 13 Other net receipts 4,788 4,805 2,317 2,389 2,445 2,326 447 343 385 14 Excise taxes 45,569 48,057 24,429 22,389 23,456 23,398 4,385 3,597 4,808 IS Customs deposits 17,359 18,802 8,694 8,146 9,497 8,860 1,646 1,708 1,688 16 Estate and gift taxes 11,143 12,577 5,507 5,701 5,733 6,494 1,049 990 1,305 17 Miscellaneous receipts5 26,459 18,21 lr 13,390 10,658 11,446 9,854r 2,456 l,706r 781 OUTLAYS 18 All types 1,380,794 1,408,122 694,345 704,266 723,515 673,328 119,168 124,013 121,488 19 National defense 298,350 290,590 147,669 147,065 155,23lr 140,535 24,903 24,281 22,990 20 International affairs 16,107 17,175 7,691 8,540 9,916 6,565 1,556 4,732 1,964 21 General science, space, and technology .... 16,409 17,055 8,472 7,951 8,521 7,996 1,388 1,421 1,522 22 Energy 4,499 4,445 1,698 1,442 3,109 2,462 -276 424r 510 7,3 Natural resources and environment 20,025 20,088 11,130 8,594 11,467 8,588 1,907 1,911 2,784 24 Agriculture 15,205 20,257 7,418 7,526 8,866 11,824 205 1,442 2,237 25 Commerce and housing credit 10,118 -23,532 36,534 15,615 -7,697r -15,112 3,003 377 -1,361 26 Transportation 33,333 35,238 17,074 15,651 18,425 16,077 3,760 3,133 3,248 27 Community and regional development 6,838 10,395 3,783 3,903 4,464 4,935 1,168 898 930 28 Education, training, employment, and social services 45,250 48,872 21,114 23,767 2211,,111100"" 23,983 4,326 33,,558866 55,,009988 79 Health 89,497 99,249 41,459 44,164 47,232 49,882 9,080 9,315 8,675 30 Social security and Medicare 406,569 435,137 193,098 205,500 232,109 195,933 36,697 36,267 37,047 31 Income security 196,891 207,933 87,693 104,537 98,502r 108,559 15,6% 17,342 16,764 32 Veterans benefits and services 34,133 35,715 17,425 15,597 18,561 16,385 3,010 2,819 3,198 33 Administration of justice 14,426 14,983 6,574 7,435 7,238 7,463 1,415 1,011 1,306 34 General government 12,945 13,039 6,794 5,050 8,223 5,205 1,712 640 1,317 35 Net interest6 199,439 198,870 99,149 100,161 98,692r 99,635 15,440 17,082 16,171 36 Undistributed offsetting receipts -39,280 -37,386 -20,436 -18,229 -20,628 -17,035 -5,886r -2,593 -2,910 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 fund. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Financial Statistics • February 1994 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. 2 Public debt securities 3,665 3,802 3,881 3,985 4,065 4,177 4,231 4,352 4,412 3 Held by public 2,746 2,833 2,918 2,977 3,048 3,129 3,188 3,252 n.a. 4 Held by agencies 920 969 964 1,008 1,016 1,048 1,043 1,100 n.a. 5 Agency securities 18 19 16 16 18 19 20 21 n.a. 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. 8 Debt subject to statutory limit 3,569 3,707 3,784 3,891 3,973 4,086 4,140 4,256 4,316 9 Public debt securities 3,569 3,706 3,783 3,890 3,972 4,085 4,139 4,256 4,315 10 Other debt1 0 0 0 0 0 0 0 0 0 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 Type and holder 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 international5 392.9 458.4 491.8 549.2 549.2 564.4 567.5 26 Other miscellaneous investors6 520.7 637.7 651.3 710.5 710.5 710.8 720.0 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 Aug. Sept. Oct. Sept. 29 Oct. 6 Oct. 13 Oct. 20 Oct. 27 Nov. 3 Nov. 10 Nov. 17 Nov. 24 IMMEDIATE TRANSACTIONS2 By type of security U.S. Treasury securities 1 Bills 39,177 43,380 39,668 44,651 35,833 39,342 42,655 38,764 42,744 51,270 53,746 44,817 Coupon securities, by maturity 2 Less than 3.5 years 50,523 49,496 44,600 47,456 35,606 35,563 41,957 57,840 54,168 65,570 47,477 50,258 3 3.5 to 7.5 years 39,718 48,286 43,354 51,469 35,824 35,115 39,036 57,604 50,175 44,918 41,248 52,676 4 7.5 to 15 years 26,974 26,328 25,444 25,102 20,179 24,573 28,250 26,402 28,310 33,080 25,872 24,315 5 15 years or more 27,557 22,996 19,347 19,735 1155,,004499 1188,,007733 21,467 20,347 22,687 20,215 17,198 15,981 Federal agency securities Debt, by maturity 6 Less than 3.5 years 8,361 8,633 9,959 10,687 10,199 9,803 10,069 9,740 10,066 8,236 10,661 1111,,337755 7 3.5 to 7.5 years 512 661 734 864 684 860 724 719 641 729 919 783 8 7.5 years or more 650 653 567 689 759 441 623 470 541 381 379 410 Mortgage-backed 9 Pass-throughs 18,926 20,594 20,760 16,316 16,412 28,624 22,128 18,318 16,417 29,575 26,082 18,801 10 All others 3,079 3,259 2,863 3,273 3,107 2,648 2,706 2,879 3,161 3,192 2,675 3,220 By type of counterparty Primary dealers and brokers 11 U.S. Treasury securities 114,310 119,952 106,845 117,580 88,243 92,246 106,704 125,465 127,051 139,173 115,343 119,989 Federal agency securities 12 Debt 1,554 1,466 1,487 1,751 1,548 1,588 1,414 1,442 1,461 1,409 1,752 1,855 13 Mortgage-backed 9,462 9,745 10,260 8,015 8,865 12,217 11,401 9,779 7,484 14,319 11,686 10,269 Customers 14 U.S. Treasury securities 69,638 70,534 65,574 70,834 54,247 60,419 66,660 75,491 71,032 75,879 70,197 68,058 Federal agency securities 15 Debt 7,968 8,481 9,773 10,488 10,095 9,517 10,002 9,487 9,787 7,937 10,206 10,713 16 Mortgage-backed 12,544 14,108 13,364 11,575 10,654 19,056 13,433 11,418 12,093 18,449 17,071 11,752 FUTURES AND FORWARD TRANSACTIONS By type of deliverable security U.S. Treasury securities 17 Bills 1,906 2,504 2,445 1,980 22,,881177 22,,330011 22,,444466 22,,224477 2,484 4,965 1,792 1,568 Coupon securities, by maturity 18 Less than 3.5 years 2,264 2,254 1,603 1,406 1,140 1,613 1,469 2,049 1,728 2,166 2,244 22,,992200 19 3.5 to 7.5 years 2,062 2,220 1,530 1,359 1,279 1,276 1,384 1,906 1,967 2,048 1,759 2,640 20 7.5 to 15 years 3,398 3,040 3,153 2,626 1,976 2,513 2,963 4,374 4,211 4,309 4,022 4,388 21 15 years or more 14,008 13,177 11,266 11,387 8,669 8,064 10,784 14,608 15,775 12,137 11,879 13,554 Federal agency securities Debt, by maturity 22 Less than 3.5 years 80 150 47 271 25 45 26 60 111 147 6 6699 23 3.5 to 7.5 years 124 90 112 47 65 117 176 77 122 132 111 48 24 7.5 years or more 35 30 33 6 56 7 47 5 71 18 30 9 Mortgage-backed 25 Pass-throughs 24,157 26,532 26,410 22,621 25,431 33,701 23,164 23,489 29,155 38,228 24,226 19,934 26 Others3 2,093 1,955 2,283 1,917 1,963 2,044 2,346 2,668 2,333 1,996 1,333 2,664 OPTIONS TRANSACTIONS5 By type of underlying security U.S. Treasury, coupon securities, by maturity 27 Less than 3.5 years 1,205 1,768 1,956 1,484 1,395 1,685 2,158 2,324 2,199 2,178 2,024 2,4% 28 3.5 to 7.5 years 739 852 699 903 467 1,017 542 769 744 572 434 983 29 7.5 to 15 years 982 863 610 724 337 659 600 776 666 526 793 1,182 30 15 years or more 2,758 3,645 1,782 3,564 1,556 1,519 1,956 1,935 1,943 2,104 1,560 3,142 Federal agency, mortgagebacked securities 31 Pass-throughs 598 805 888 786 662 1,344 771 798 943 907 594 1,254 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 m 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 • February 1994 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1993 1993, week ending item Aug. Sept. Oct. Sept. 29 Oct. 6 Oct. 13 Oct. 20 Oct. 27 Nov. 3 Nov. 10 Nov. 17 Positions2 NET IMMEDIATE POSITIONS3 By type of security U.S. Treasury securities 1 Bills 8,508 6,161 22,,556611 11,,660088 44,,005522 22,,993344 77,,882255 -135 -4,788 18,547 21,360 Coupon securities, by maturity 2 Less than 3.5 years 7,631 1,901 -2,850 192 -4,939 -5,874 -4,445 2,257 -689 2 -6,995 3 3.5 to 7.5 years -21,963 -21,050 -22,479 -18,010 -19,593 -20,281 -24,027 -25,207 -23,275 -26,574 -26,279 4 7.5 to 15 years -1,200 -3,312 -6,635 -5,241 -7,181 -5,864 -6,536 -7,454 -5,902 488 379 5 15 years or more 6,931 10,167 66,,331133 77,,991111 88,,338866 77,,443388 5,749 4,552 5,302 4,827 2,802 Federal agency securities Debt, by maturity 6 Less than 3.5 years 9,611 9,784 11,014 10,882 10,855 10,062 9,762 12,899 11,900 10,798 7,513 7 3.5 to 7.5 years 2,899 3,289 3,363 3,619 3,523 3,576 3,164 3,243 3,257 3,124 3,187 8 7.5 years or more 3,783 4,083 44,,449977 44,,008855 44,,442200 44,,772288 4,711 4,220 4,321 4,025 4,107 Mortgage-backed 9 Pass-throughs 44,748 53,317 52,587 52,459 43,411 56,529 55,381 58,632 43,983 50,417 50,861 10 All others 24,588 31,825 3377,,447766 3344,,552299 38,881 37,808 36,261 35,656 40,005 37,504 33,304 Other money market instruments 11 Certificates of deposit 3,251 2,705 3,363 2,545 3,903 3,558 2,937 3,178 3,280 3,424 3,125 12 Commercial paper 7,093 7,530 6,459 5,800 7,186 6,399 5,908 6,089 7,082 7,327 6,036 13 Bankers acceptances 1,135 1,103 1,287 1,242 1,307 1,515 1,441 1,021 1,056 1,505 1,463 FUTURES AND FORWARD POSITIONS5 By type of deliverable security U.S. Treasury securities 14 Bills -7,235 --44,,334477 44,,557711 -494 22,,008855 22,,333366 33,,556688 77,,770033 88,,445500 5,986 3,718 Coupon securities, by maturity 15 Less than 3.5 years -1,741 -1,829 -617 -1,177 -769 -364 -886 -526 -407 -472 -532 16 3.5 to 7.5 years 3,649 933 2,585 -2 1,462 1,882 3,129 3,662 2,943 2,638 1,465 17 7.5 to 15 years 6,921 8,185 10,436 7,921 9,232 8,559 9,648 12,622 13,402 11,828 10,312 18 15 years or more -8,172 -6,532 -3,013 -3,979 -4,511 -4,069 -3,325 -8% -1,869 -985 -290 Federal agency securities Debt, by maturity 19 Less than 3.5 years -18 107 26 32 209 -68 -120 -14 242 37 17 20 3.5 to 7.5 years 11 -7 -111 -23 -123 -150 -153 -40 -77 -50 157 21 7.5 years or more 36 0 26 30 -27 12 114 27 -28 -28 -15 Mortgage-backed 22 Pass-throughs -26,253 -40,809 -37,665 -40,809 -31,831 -41,628 -41,404 -42,171 -25,050 -33,068 -26,614 23 All others4^ 5,513 7,468 6,104 9,149 4,950 5,392 7,915 7,465 3,533 2,816 3,154 24 Certificates of deposit -198,937 -214,188 -225,160 -205,128 -221,167 -220,504 -221,134 -241,630 -217,517 -237,362 -228,654 Financing6 Reverse repurchase agreements 25 Overnight and continuing 246,671 241,660 239,427 236,949 237,334 244,572 239,145 232,632 245,950 232,831 239,9% 26 Term 400,077 402,712 424,391 413,529 417,459 429,074 430,858 419,030 424,660 445,037 401,001 Repurchase agreements 27 Overnight and continuing 468,541 471,885 454,395 454,531 452,427 463,766 466,059 433,873 456,450 428,833 463,030 28 Term 371,613 367,019 383,016 384,472 367,000 381,464 385,927 400,554 373,973 412,254 363,182 Securities borrowed 29 Overnight and continuing 134,639 134,602 137,205 126,246 132,134 137,014 139,900 137,071 140,664 135,791 137,065 30 Term 45,868 41,872 43,8% 41,533 42,157 43,025 44,555 46,045 43,118 45,346 45,019 Securities loaned 31 Overnight and continuing 5,760 6,593 6,001 6,511 5,773 6,592 5,119 6,318 6,2% 5,204 6,175 32 Term 981 1,477 1,988 1,377 1,790 1,722 1,766 2,432 2,360 3,074 2,390 Collateralized loans 33 Overnight and continuing 16,061 16,964 17,715 19,040 17,252 18,076 19,341 16,897 16,364 19,761 19,421 MEMO: Matched book7 Reverse repurchase agreements 34 Overnight and continuing 166,820 162,477 160,149 159,473 155,254 158,602 162,876 157,083 170,789 158,101 164,401 35 Term 342,286 344,989 369,897 349,730 365,500 375,552 373,577 364,424 369,733 393,579 352,808 Repurchase agreements 36 Overnight and continuing 224,196 216,545 233,628 207,614 218,940 233,250 239,395 232,512 248,183 223,626 237,721 37 Term 274,942 269,078 285,759 282,135 275,941 289,399 286,175 290,968 284,275 318,972 266,354 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 tile 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 sFpeRciAfyS dEelRay ed 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 May June July Aug. Sept. 1 Federal and federally sponsored agencies 411,805 434,668 442,772 483,970 509,632 512,072 522,494 544,642 0 2 Federal agencies 35,664 42,159 41,035 41,829 42,738 42,218 44,656 44,816 43,753 3 Defense Department1 7 7 7 7 7 7 7 7 7 4 Export-Import Bank2'3 10,985 11,376 9,809 7,208 6,749 6,258 6,258 6,258 5,801 5 Federal Housing Administration 328 393 397 374 271 283 97 154 213 6 Government National Mortgage Association certificates of participation5 0 0 0 0 0 0 0 00 00 7 Postal Service6 6,445 6,948 8,421 10,660 10,440 10,182 10,182 10,182 9,732 8 Tennessee Valley Authority 17,899 23,435 22,401 23,580 25,271 25,488 28,112 28,215 28,000 9 United States Railway Association 0 0 0 0 0 0 0 0 0 10 Federally sponsored agencies7 375,428 392,509 401,737 442,141 466,894 469,854 477,838 499,826 0 11 Federal Home Loan Banks 136,108 117,895 107,543 114,733 120,172 127,289 125,448 129,808 132,651 12 Federal Home Loan Mortgage Corporation 26,148 30,941 30,262 29,631 46,555 35,572 42,291 55,421 52,702 13 Federal National Mortgage Association 116,064 123,403 133,937 166,300 170,768 176,527 180,730 184,924 195,786 14 Farm Credit Banks8 54,864 53,590 52,199 51,910 51,538 51,686 51,698 51,406 51,636 15 Student Loan Marketing Association9 28,705 34,194 38,319 39,650 37,%7 38,884 37,801 38,397 38,795 16 Financing Corporation10 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 134,873 179,083 185,576 154,994 137,215 132,953 132,307 128,616 129,329 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 10,979 11,370 9,803 7,202 6,743 6,252 66,,225522 66,,225522 55,,779955 21 Postal Service6 6,195 6,698 8,201 10,440 10,440 10,182 10,182 10,182 9,732 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 6,575 6,575 6,575 6,325 6,325 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 40,379 39,729 39,129 38,619 3388,,661199 26 Rural Electrification Administration 19,265 18,890 18,562 18,172 17,970 17,895 17,883 17,897 17,653 27 Other 23,724 70,8% 84,931 64,436 50,318 47,530 47,4% 44,551 46,415 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 Farmers Home Admin- borrowing in October 1989. istration, the Department of Health, Education, and Welfare, the Department of 13. The FFB, which began operations in 1974, is authorized to purchase or sell Housing and Urban Development, the Small Business Administration, and the obligations issued, sold, or guaranteed by other federal agencies. Because FFB Veterans' Administration. incurs debt solely for the purpose of lending to other agencies, its debt is not 6. Off-budget. included in the main portion of the table in order to avoid double counting. 7. Includes outstanding noncontingent liabilities: notes, bonds, and deben- 14. Includes FFB purchases of agency assets and guaranteed loans; the latter tures. Some data are estimated. are loans guaranteed by numerous agencies, with the amounts guaranteed by any 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, one agency generally being small. The Farmers Home Administration entry shown 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 Nonfinancial Statistics • February 1994 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 Apr. May June July Aug. Sept. Oct. Nov. 1 All issues, new and refunding1 120,339 154,402 215,191 21,421 27,380 29,218 23,958 24,395 23,347 21,509 16,405 By type of issue 2 General obligation 39,610 55,100 78,611 8,272 9,452 8,415 7,713 6,065 5,455 7,398 6,077 i Revenue 81,295 99,302 136,580 13,149 17,928 20,803 16,245 18,330 17,892 14,111 10,328 By type of issuer 4 15,149 24,939 25,295 1,463 2,910 3,562 2,944 2,319 2,758 3,216 885 5 Special district or statutory authority2 72,661 80,614 129,686 10,388 15,643 18,821 12,398 13,769 13,113 9,875 10,992 6 Municipality, county, or township 32,510 48,849 60,210 9,570 8,827 6,835 8,616 8,307 7,476 8,418 4,528 7 Issues for new capital 103,235 116,953 120,272 4,815 8,114 9,358 8,735 8,028 8,820 7,463 6,179 By use of proceeds 8 Education 17,042 21,121 22,071 833 1,5% 2,208 1,723 1,883 1,886 547 1,416 9 Transportation 11,650 13,395 17,334 699 813 772 653 1,062 789 304 979 10 Utilities and conservation 11,739 21,039 20,058 806 955 1,629 922 1,646 1,255 593 687 11 Social welfare 23,099 25,648 21,796 942 1,756 2,073 1,555 681 2,199 1,764 604 12 Industrial aid 6,117 8,376 5,424 134 601 1,042 429 212 329 518 673 13 Other purposes 34,607 30,275 33,589 1,401 2,393 1,634 3,453 2,544 2,362 3,737 1,820 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 oo ii rr ss ss iiss uu ss ee uu ,, ee oo rr ffffeerriinngg,, 11999900 11999911 11999922 Mar. Apr. May June July Aug/ Sept/ Oct. 1 All issues1 340,049 465,243 559,449 56,265 40,654 43,121r 65,599r 49,68r 53,227 64,024 52,481 2 Bonds2 299,884 389,822 471,125 47,427 34,403 34,423r 55,805r 39,891r 43,960 53,374 41,946 By type of offering 3 Public, domestic 188,848 286,930 377,681 42,223 31,199 31,094r 51,208r 37,218r 40,161 48,568 39,537 4 Private placement, domestic 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 5,203 3,204 3,329 4,597 2,673r 3,799 4,806 2,408 By industry group 6 Manufacturing 51,779 86,628 81,998 8,137 6,515 3,690 8,397 2,448 6,132r 4,006 2,794 7 Commercial and miscellaneous 40,733 36,666 42,869 2,695 2,194 3,015 2,505 5,442r 2,331 1,916 6,294 8 Transportation 12,776 13,598 9,979 1,067 123 685 948 605 723 288 1,416 9 Public utility 17,621 23,945 48,055 7,058 5,767 3,017r 5,874r 5,662 3,264r 5,113 2,230 10 Communication 6,687 9,431 15,394 3,270 2,015 1,820 2,473 2,331 2,979 2,237 2,826 11 Real estate and financial 170,288 219,750 272,830 25,201 17,788 22,1% 35,608 23,403r 28,531 39,814 26,387 12 Stocks2 40,175 75,424 88,325 8,838 6,251 8,698 9,794 9,796r 9,267 10,650 10,535 By type of offering 13 Public preferred 3,998 17,085 21,339 1,647 702 3,124 876 2,113 3,319 1,323 2,549 14 Common 19,442 48,230 57,118 7,191 5,549 5,574 8,918 7,683r 5,948r 9,327 7,986 15 Private placement3 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 1,741 1,387 1,413 1,982 l,818r 1,961 2,274 2,121 17 Commercial and miscellaneous 10,171 19,418 20,231 2,488 1,564 2,836 2,025 2,525r l,457r 2,242 1,842 18 Transportation 369 2,439 2,595 336 250 111 168 114 466r 153 128 19 Public utility 416 3,474 6,532 743 412 753 893 495 582 873 1,103 20 Communication 3,822 475 2,366 7 30 279 65 n.a. 115 248 18 21 Real estate and financial 19,738 25,507 33,879 3,522 2,579 3,307 4,660 4,844 4,675 4,658 5,286 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 Mar. Apr. May June July Aug. Sept.1 Oct. 1 Sales of own shares2 463,645 647,055 69,080 66,766 60,504 68,373 72,503 73,032 69,938 74,490 2 Redemptions of own shares 342,547 447,140 47,414 46,518 38,752 46,923 44,922 46,382 49,270 47,203 3 Net sales 121,098 199,915 21,666 20,248 21,759 21,650 27,581 26,650 20,667 27,287 4 Assets4 808,582 1,056,310 1,154,445 1,178,663 1,219,863 1,255,377 1,284,842 1,343,920 1,370,654 1,411,298 5 Cash5 60,292 73,999 81,536 87,140 85,677 84,177 93,345 92,771 96,848 103,642 6 Other 748,290 982,311 1,072,910 1,091,523 1,134,186 1,171,200 1,191,497 1,251,149 1,273,807 1,307,656 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 1991 1992 1993 AAccccoouunntt 11999900 11999911 11999922 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3r 1 Profits with inventory valuation and capital consumption adjustment 380.6 369.5 407.2 378.8 409.9 411.7 367.5 439.5 432.1 458.1 468.5 2 Profits before taxes 365.7 362.3 395.4 373.5 404.3 409.5 357.9 409.9 419.8 445.6 443.8 3 Profits tax liability 138.7 129.8 146.3 133.4 147.0 153.0 130.1 155.0 160.9 173.3 169.5 4 Profits after taxes 227.1 232.5 249.1 240.1 257.3 256.5 227.8 254.9 258.9 272.3 274.3 5 Dividends 153.5 137.4 150.5 133.9 138.0 146.1 155.2 162.9 167.5 168.5 169.7 6 Undistributed profits 73.6 95.2 98.6 106.1 119.3 110.4 72.7 92.0 91.4 103.9 104.6 7 Inventory valuation -11.0 4.9 -5.3 1.9 -4.6 -13.7 -7.8 4.9 -12.7 -12.2 1.0 8 Capital consumption adjustment 25.9 2.2 17.1 3.5 10.2 16.0 17.4 24.7 25.1 24.7 23.8 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 1994 IInndduussttrryy 11999922 11999933 1199994411 Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql1 1 Total nonfarm business 546.60 584.64 616.50 541.41 547.40 559.24 564.13 579.79 594.11 600.53 616.38 Manufacturing 2 Durable goods industries 73.32 81.49 84.93 74.07 72.09 73.30 79.11 80.88 81.99 83.99 87.50 3 Nondurable goods industries 100.69 97.97 101.34 97.91 100.77 103.56 95.94 96.21 100.18 99.53 98.72 Nonmanitfacturing 4 Mining 8.88 10.13 10.84 9.20 8.98 8.47 8.89 9.10 11.14 11.37 10.83 Transportation 5 Railroad 6.67 6.20 6.21 6.32 6.70 7.04 6.00 6.00 5.91 6.90 6.32 6 Air 8.93 6.83 4.45 9.65 9.69 7.60 7.30 6.54 6.92 6.57 4.64 7 Other 7.04 9.34 10.25 7.19 7.52 6.97 9.17 9.04 8.88 10.26 10.53 Public utilities 8 Electric 48.22 51.82 57.00 48.35 48.17 49.57 49.92 50.51 52.74 54.11 54.16 9 Gas and other 23.99 23.17 24.42 24.29 24.01 24.50 23.59 24.04 22.88 22.19 23.62 10 Commercial and other2 268.84 297.69 317.05 264.46 269.46 278.24 284.21 297.46 303.47 305.61 320.06 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 DomesticN onfinancial Statistics • February 1994 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 Q1 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 3 Business 293.6 292.9 296.5 292.9 290.8 293.2 288.5 2%. 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 47.5 6 Reserves for losses 9.6 12.9 15.8 12.9 13.0 12.3 12.0 15.8 15.5 13.8 7 Accounts receivable, net 425.1 412.6 415.5 412.6 409.0 413.2 411.1 415.5 406.6 408.0 8 All other 113.9 149.0 150.6 149.0 145.5 139.4 146.5 150.6 155.0 156.6 9 Total assets 539.0 561.6 566.1 561.6 554.5 552.6 557.6 566.1 561.6 564.6 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 46.4 15 Not elsewhere classified 178.2 191.3 195.3 191.3 189.8 191.9 191.4 195.3 195.1 195.8 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 539.6 561.2 566.1 561.2 554.6 552.7 559.4 566.1 561.7 564.6 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 May June July Aug. Sept. Oct. Seasonally adjusted 11 TToottaall 522,474 519,910 534,845 523,111 522,981 523,539 525,744 527,207 529,641 22 CCoonnssuummeerr 160,468 154,822 157,707 153,275 152,979 153,228 153,420 154,707 156,314 33 RReeaall eessttaattee22 65,147 65,383 68,011 66,3% 67,223 67,426 67,216 66,871 67,317 44 BBuussiinneessss 2%,858 299,705 309,127 303,440 302,778 302,885 305,109 305,629 306,010 Not seasonally adjusted 5 Total 525,888 523,192 538,158 524,180 526,818 523,389 521,094 524,333 529,198 6 Consumer 161,360 155,713 158,631 152,708 152,995 153,733 154,218 155,4% 157,330 7 Motor vehicles , 75,045 63,415 57,605 53,878 55,592 56,817 55,247 55,057 55,107 8 Other consumer 58,213 58,522 59,522 55,433 55,737 56,259 56,616 57,588 58,113 9 Securitized motor vehicles4 . 19,837 23,166 29,775 33,174 31,642 30,787 32,856 33,549 3355,,221122 10 Securitized other consumer4 8,265 10,610 11,729 10,223 10,023 9,870 9,498 9,302 88,,889988 11 Real estate2 65,509 65,760 68,410 66,150 67,230 67,649 67,565 67,212 67,755 12 Business 299,019 301,719 311,118 305,322 306,593 302,007 299,311 301,625 304,112 13 Motor vehicles 92,125 90,613 87,456 89,317 90,263 87,745 84,921 85,415 85,512 14 Retail5.... 26,454 22,957 19,303 16,513 16,995 17,561 17,264 17,761 15,968 15 Wholesale6 33,573 31,216 29,962 32,242 31,787 27,442 25,136 25,458 27,144 16 Leasing 32,098 36,440 38,191 40,562 41,481 42,743 42,520 42,1% 42,400 17 Equipment 137,654 141,399 151,607 145,237 146,487 146,408 146,404 147,905 149,207 18 Retail 31,968 30, %2 32,212 32,384 32,775 33,209 33,676 33,789 33,357 19 Wholesale6 11,101 9,671 8,669 8,556 8,482 8,224 8,059 8,113 8,091 20 Leasing 94,585 100,766 110,726 104,297 105,230 104,975 104,669 106,004 107,759 21 Other business 63,773 60,900 57,464 54,487 53,987 53,243 53,536 53,861 54,117 22 Securitized business assets4. 5,467 8,807 14,590 16,281 15,856 14,611 14,451 14,444 15,277 23 Retail 667 576 1,118 1,375 1,324 1,268 1,220 1,168 1,690 24 Wholesale 3,281 5,285 8,756 9,590 9,539 8,318 8,329 8,529 8,785 25 Leasing 1,519 2,946 4,716 5,316 4,993 5,025 4,902 4,747 4,802 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 FRA4.S OEuRtst anding 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 May June July Aug. Sept. Oct. Nov. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms1 1 Purchase price (thousands of dollars) 153.2 155.0 158.1 153.1 185.6 168.7 158.1 155.3 169.2 174.4 2 Amount of loan (thousands of dollars) 112.4 114.0 118.1 118.8 125.3 127.4 122.2 120.8 128.4 134.0 3 Loan-to-price ratio (percent) 74.8 75.0 76.6 79.5 75.3 77.8 78.4 78.5 78.0 79.1 4 Maturity (years) 27.3 26.8 25.6 26.9 25.4 26.2 26.4 26.5 26.7 26.9 5 Fees and charges (percent of loan amount)2 1.93 1.71 1.60 1.43 1.32 1.28 1.21 1.13 1.23 1.23 Yield (percent per year) 6 Contract rate1 , 9.68 9.02 7.98 7.14 7.02 6.99 6.86 6.76 6.61 6.61 7 Effective rate1, 10.01 9.30 8.25 7.37 7.23 7.20 7.05 6.95 6.80 6.80 8 Contract rate (HUD series)4 10.08 9.20 8.43 7.59 7.33 7.31 6.89 6.94 7.05 7.37 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203)5 10.17 9.25 8.46 7.59 7.52 7.51 7.02 7.03 7.08 7.51 10 GNMA securities6 9.51 8.59 7.71 6.82 6.74 6.53 6.42 6.15 6.11 6.48 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 113,329 122,837 142,833 166,849 171,232 174,674 177,992 180,057 182,524 185,463 12 FHA/VA insured 21,028 21,702 22,168 22,691 22,656 22,761 22,834 22,810 22,978 23,334 13 Conventional 92,302 101,135 120,664 144,158 148,576 151,913 155,158 157,247 159,546 162,129 Mortgage transactions (during period) 14 Purchases 23,959 37,202 75,905 7,526 9,131 7,854 8,176 8,866 8,780 8,979 Mortgage commitments (during period) 15 Issued' 23,689 40,010 74,970 7,791 8,697 7,760 8,581 9,814 7,515 11,144 16 To sell8 5,270 7,608 10,493 30 323 458 2,585 0 0 0 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of periodf 17 Total 20,419 24,131 29,959 39,960 42,477 43,119 44,396 46,858 50,108 52,933 18 FHA/VA insured 547 484 408 325 319 314 324 323 321 324 19 Conventional 19,871 23,283 29,552 39,635 42,158 42,805 44,072 46,536 49,787 52,610 Mortgage transactions (during period) 20 Purchases 75,517 99,965 191,125 18,842 21,529 19,700 19,636 18,372 18,658 27,062 21 Sales 73,817 92,478 179,208 17,532 18,968 18,631 18,008 16,230 15,985r 24,028 Mortgage commitments (during periodf 22 Contracted 102,401 114,031 261,637 18,908 28,831 21,722 17,085 16,495 24,614 39,977 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 Domestic Financial Statistics • February 1994 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1992 1993 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11998899 11999900 11999911 Q3 Q4 Q1 Q2 Q3" 1 All holders 3,549,564r 3,761,52^ 3,923,371' 4,020,556* 4,042,926* 4,059,200* 4,099,621* 4,160,167 By type of property 2 One- to four-family residences 2,408,402r 2,615,435r 2,778,803* 2,911,442* 2,953,527* 2,976,784* 3,026,924* 3,088,521 3 Multifamily residences 306,517r 309,369* 306,410* 301,975* 294,976* 293,578* 290,609* 290,857 4 Commercial 754,169* 758,313* 759,023* 726,562* 713,701* 708,086* 701,280* 699,926 5 80,476 78,408* 79,136* 80,577* 80,722* 80,752* 80,808* 80,863 By type of holder 6 Major financial institutions 1,931,537 1,914,315 1,846,726 1,793,492 1,769,187* 1,753,045* 1,765,052* 1,770,274 7 Commercial banks 767,069 844,826 876,100 891,445 894,513* 891,755* 910,944* 922,366 8 One- to four-family 389,632 455,931 483,623 502,075 507,780* 507,497* 526,800* 536,321 9 Multifamily 38,876 37,015 36,935 38,757 38,024* 37,425* 38,064* 38,370 10 Commercial 321,906 334,648 337,095 330,705 328,826* 326,853* 325,485* 326,859 11 Farm 16,656 17,231 18,447 19,908 19,882 19,980* 20,595* 20,815 12 Savings institutions 910,254 801,628 705,367 648,178 627,972 617,163* 612,379* 610,081 13 One- to four-family 669,220 600,154 538,358 501,604 489,622 480,415* 480,636* 478,832 14 Multifamily 106,014 91,806 79,881 73,723 69,791 70,608* 68,325* 68,068 15 Commercial 134,370 109,168 86,741 72,517 68,235 65,808* 63,0%* 62,860 16 Farm 650 500 388 334 324 332 322* 321 17 Life insurance companies 254,214 267,861 265,258 253,869 246,702 244,128 241,729* 237,826 18 One- to four-family 12,231 13,005 11,547 11,779 11,441 11,316 11,195* 11,008 19 Multifamily 26,907 28,979 29,562 28,591 27,770 27,466 27,174* 26,718 20 Commercial 205,472 215,121 214,105 204,132 198,269 196,100 194,012* 190,758 21 Farm 9,604 10,756 10,044 9,366 9,222 9,246 9,348* 9,343 22 Federal and related agencies 197,778 239,003 266,146 277,485 286,263* 287,182 299,214 310,825 23 Government National Mortgage Association 23 20 19 27 30 45 45 44 24 One- to four-family 23 20 19 27 30 37 38 37 25 Multifamily 0 0 0 0 0 8 7 7 26 Farmers Home Administration 41,176 41,439 41,713 41,671 41,695 41,630 41,669 41,669 27 One- to four-family 18,422 18,527 18,4% 17,292 16,912 18,149 18,313 18,313 28 Multifamily 9,054 9,640 10,141 10,468 10,575 10,235 10,197 10,197 29 Commercial 4,443 4,690 4,905 5,072 5,158 4,934 4,915 4,915 30 Farm 9,257 8,582 8,171 8,839 9,050 8,313 8,245 8,245 31 Federal Housing and Veterans' Administrations 6,087 8,801 10,733 11,768 12,581 13,027 12,945 12,797 32 One- to four-family 2,875 3,593 4,036 4,531 5,153 5,631 5,635 5,460 33 Multifamily 3,212 5,208 6,697 7,236 7,428 7,3% 7,311 7,336 34 Resolution Trust Corporation 0 32,600 45,822 37,099 32,045 27,331 21,973 19,925 35 One- to four-family 0 15,800 14,535 12,614 12,960 11,375 8,955 8,381 36 Multifamily 0 8,064 15,018 11,130 9,621 8,070 6,743 6,002 37 Commercial 0 8,736 16,269 13,356 9,464 7,886 6,275 5,543 38 Farm 0 0 0 0 0 0 0 0 39 Federal National Mortgage Association 99,001 104,870 112,283 126,476 137,584 141,192 151,513 160,721 40 One- to four-family 90,575 94,323 100,387 113,407 124,016 127,252 137,340 146,009 41 Multifamily 8,426 10,547 11,8% 13,069 13,568 13,940 14,173 14,712 42 Federal Land Banks 29,640 29,416 28,767 28,815 28,664* 28,536 28,592 28,810 43 One- to four-family 1,210 1,838 1,693 1,695 1,687* 1,679 1,682 1,695 44 Farm 28,430 27,577 27,074 27,119 26,977* 26,857 26,909 27,115 45 Federal Home Loan Mortgage Corporation 21,851 21,857 26,809 31,629 33,665 35,421 42,477 46,859 46 One- to four-family 18,248 19,185 24,125 29,039 31,032 32,831 39,905 44,315 47 Multifamily 3,603 2,672 2,684 2,591 2,633 2,589 2,572 2,544 48 Mortgage pools or trusts5 917,848 1,079,103 1,250,666 1,385,460 1,425,546 1,461,612 1,472,844 1,513,024 49 Government National Mortgage Association 368,367 403,613 425,295 422,255 419,516 421,514 413,166 415,076 50 One- to four-family 358,142 391,505 415,767 413,063 410,675 412,798 404,425 405,%3 51 Multifamily 10,225 12,108 9,528 9,192 8,841 8,716 8,741 9,113 52 Federal Home Loan Mortgage Corporation 272,870 316,359 359,163 391,762 407,514 420,932 422,882 430,089 53 One- to four-family 266,060 308,369 351,906 385,400 401,525 415,279 417,646 425,154 54 Multifamily 6,810 7,990 7,257 6,362 5,989 5,654 5,236 4,935 55 Federal National Mortgage Association 228,232 299,833 371,984 429,935 444,979 457,316 465,220 481,880 56 One- to four-family 219,577 291,194 362,667 420,835 435,979 448,483 456,645 473,599 57 Multifamily 8,655 8,639 9,317 9,100 9,000 8,833 8,575 8,281 58 Farmers Home Administration 80 66 47 41 38 44 45 45 59 One- to four-family 21 17 11 9 8 10 10 10 60 Multifamily 0 0 0 0 0 0 0 0 61 Commercial 26 24 19 18 17 18 19 19 62 Farm 33 26 17 14 13 16 16 16 63 Private mortgage conduits 48,299 59,232 94,177 141,468 153,499 161,805 171,532 185,933 64 One- to four-family 43,325 53,335 84,000 123,000 132,000 137,000 145,000 158,000 65 Multifamily 462 731 3,698 5,7% 6,305 6,662 7,410 8,074 66 Commercial 4,512 5,166 6,479 12,673 15,194 18,143 19,121 19,859 67 Farm 0 0 0 0 0 0 0 0 68 Individuals and others6 502,401r 529,104* 559,833* 564,118* 561,930* 557,360* 562,511* 566,045 69 One- to four-family 318,842r 348,638* 367,633* 375,072* 372,708* 367,031* 372,699* 375,423 70 Multifamily 84,272r 85,969* 83,7%* 85,960* 85,430* 85,977* 86,083* 86,500 71 Commercial 83,440* 80,761* 93,410* 88,090* 88,538* 88,344* 88,357* 89,113 72 Farm 15,846 13,737* 14,994* 14,9%* 15,254* 16,008* 15,372* 15,008 1. Based on data from various institutional and governmental sources; figures 5. Outstanding principaj 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 May June July Aug. Sept.r Oct. Seasonally adjusted 1 Total 738,765 733,510 741,093 750,293 752,428 757,465 762,503 768,599 776,707 2 Automobile 284,739 260,898 259,627 264,007 265,388 267,468 268,784 270,676 274,616 3 Revolving 222,552 243,564 254,299 262,690 263,338 266,938 270,753 273,703 276,854 4 Other 231,474 229,048 227,167 223,596 223,701 223,058 222,967 224,220 225,238 Not seasonally adjusted 5 Total 752,883 749,052 756,944 744,778 748,830 753,645 763,268 770,410 777,196 By major holder 6 Commercial banks 347,087 340,713 331,869 333,415 335,592 339,948 345,449 349,699 353,296 7 Finance companies 133,258 121,937 117,127 109,311 111,330 83,820* 82,249* 112,645 113,220 8 Credit unions 93,057 92,681 97,641 103,019 104,781 106,027 108,095 109,687 110,830 9 Retailers 43,464 39,832 42,079 38,681 38,813 39,043 39,688 39,842 40,310 10 Savings institutions 52,164 45,965 43,461 39,210 37,250 36,485 35,919 34,985 34,251 11 Gasoline companies 4,822 4,362 4,365 4,486 4,567 4,668 4,728 4,574 4,599 12 Pools of securitized assets2 .. 79,030 103,562 120,402 116,656 116,497 114,398 117,525 118,978 120,690 By major type of credit* 13 Automobile 284,903 261,219 259,964 262,860 265,345 267,646 270,495 273,317 276,681 14 Commercial banks 124,913 112,666 109,743 112,700 114,901 116,729 118,535 120,574 122,178 15 Finance companies 75,045 63,415 57,605 53,878 55,592 56,817 55,247 55,057 55,107 16 Pools of securitized assets2 24,620 28,915 33,878 36,431 34,701 33,673 35,569 36,149 37,630 17 Revolving 234,801 256,876 267,949 259,566 260,993 264,100 269,663 272,579 274,840 18 Commercial banks 133,385 138,005 132,582 130,871 129,921 132,984 135,466 136,738 137,835 19 Retailers 38,448 34,712 36,629 33,254 33,328 33,505 34,099 34,214 34,668 20 Gasoline companies 4,822 4,362 4,365 4,486 4,567 4,668 4,728 4,574 4,599 21 Pools of securitized assets2 45,637 63,595 74,243 69,054 70,842 69,935 71,562 72,646 73,296 22 Other 233,178 230,957 229,031 222,352 222,491 221,899 223,109 224,514 225,675 23 Commercial banks 88,789 90,042 89,544 89,844 90,770 90,235 91,448 92,387 93,283 24 Finance companies 58,213 58,522 59,522 55,433 55,737 56,259 56,616 57,588 58,113 25 Retailers 5,016 5,120 5,450 5,427 5,485 5,538 5,589 5,628 5,642 26 Pools of securitized assets2 8,773 11,052 12,281 11,171 10,954 10,790 10,394 10,183 9,764 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 Apr. May June July Aug. Sept. Oct. INTEREST RATES Commercial banks2 1 48-month new car 11.78 11.14 9.29 n.a. 8.17 n.a. n.a. 7.98 n.a. 2 24-month personal 15.46 15.18 14.04 n.a. 13.63 n.a. n.a. 13.45 n.a. 3 120-month mobile home 14.02 13.70 12.67 n.a. 12.00 n.a. n.a. 11.53 n.a. 4 Credit card 18.17 18.23 17.78 n.a. 17.15 n.a. n.a. 16.59 n.a. Auto finance companies 5 New car 12.54 12.41 9.93 9.61 9.51 9.45 9.37 9.21 9.21 6 Used car 15.99 15.60 13.80 12.74 12.61 12.55 12.46 12.48 12.52 OTHER TERMS3 Maturity (months) 7 New car 54.6 55.1 54.0 54.5 54.4 54.6 54.7 54.9 54.7 n.a. 8 Used car 46.0 47.2 47.9 48.9 48.9 49.0 49.0 49.0 48.8 Loan-to-value ratio 9 New car 87 88 89 90 91 91 91 91 91 10 Used car 95 96 97 98 98 98 98 99 98 Amount financed (dollars) 11 New car 12,071 12,494 13,584 14,021 14,146 14,2% 14,430 14,324 14,348 12 Used car 8,289 8,884 9,119 9,731 9,829 9,912 9,9% 10,104 9,808 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 Financial Statistics • February 1994 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1 Billions of dollars; quarterly data at seasonally adjusted annual rates 1991 1992 1993 11998888 11998899 11999900 11999911 11999922 Q4 Q1 Q2 Q3 ' 04 Qlr Q2' Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors .. 752.6 723.0 631.0 475.5 582.4r 411.4 603.3' 586.2r 610.8r 529.1' 399.3 667.5 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 597.5 576.6 384.1 197.3 278.4r 138.9 279.5r 233.4r 311.7r 289.0' 169.7 319.2 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 62.4 67.2 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 64.9 8 Mortgages 279.6 269.1 188.7 165.1 121.lr 145.2 185.4r 69.8r 135.lr 93^ 100.2 134.5 9 Home mortgages 219.6 212.5 177.2 166.0 176.0 176.5 216.5 111.6 203.3 172.8' 128.4 176.2 10 Multifamily residential 16.1 12.0 3.4 -2.5 -11.1 .2 11.6 -11.2r -27.9' -6.6 -12.8 11 Commercial 48.5 47.3 8.9 .9 -45.5 -28.6 -46.9 —25.7r —57.7r -51.6' -21.7 -29.1 12 Farm -4.6 -2.7 -.8 .7 1.6r -2.9 4.2r ,8r .8r .6' .1 .2 13 Consumer credit 50.1 49.5 13.4 -13.1 9.3 -10.7 -9.8 -14.7 13.5 48.2 19.2 22.9 14 Bank loans n.e.c 44.7 36.4 4.2 -46.8 -5.6r -53.7 —47.3r 27.T -24. lr 21.4' -39.7 31.8 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 12.0r -74.9 4.5r -i.r 40.8r -23.0 -37.0 By borrowing sector 17 Household 300.1 276.7 207.7 168.4 215.0r 193.8 199.2r 176.5r 217.7r 266.6' 137.4 215.8 18 Nonfinancial business 248.4 236.3 121.9 -33.4 4.0r -129.0 18.2r -io.r 20.5r -n.r -38.9 34.5 19 Farm -10.0 .5 1.8 2.4 1.5r -4.6 4.3r 3.6r -,lr -1.6' -2.5 3.4 20 Nonfarm noncorporate 57.2 49.4 19.4 -24.5 —39.4r -57.9 —21.8r —47.4r —37.3r -51.C -36.7 -31.4 21 Corporate 201.3 186.5 100.7 -11.3 41.8r -66.5 35 .r 33 .T S1.9 39.9r .3 62.5 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 71.2 68.9 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 26.8 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 25 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 6.5 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 -9.5 28 Total domestic plus foreign 759.0 733.1 654.9 489.4 606.6r 445.6 605.3r 644.0' 648.7r 528.5' 449.5 694.2 Financial sectors 29 Total net borrowing by financial sectors 239.9 213.7 193.5 150.4 209.5r 190.5 167.6 206.3' 294.4r 169.6' 148.5 130.3 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 62.7 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 68.8 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 53.7r 40.1 40.8 ii.<y i25.r 37.8' -17.3 67.6 35 Corporate bonds 49.0 37.3 40.8 56.8 58.4r 73.7 28.6 59.1 71.5r 74.2 59.9 55.5 36 Mortgages .3 .5 .4 .8 .0 1.2 -.4 ,lr .3r .1' .9 2.7 37 Bank loans n.e.c -3.8 6.0 1.1 17.1 -4.8 3.8 22.0 -39.1 i7.r - l^ -21.2 -5.9 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 -18.4 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 68.8 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 53 .r 40.1 40.8 11.<r 125.lr 37.8' -17.3 67.6 43 Commercial banks -3.0 -1.4 -.7 -11.7 8.8 -9.5 3.2 5.5 12.1 14.5 5.4 10.1 44 Bank affiliates 5.2 6.2 -27.7 -2.5 2.3 7.0 10.9 -9.2 6.6 .8 21.1 1.3 45 Funding corporations 39.1 13.8 12.5 -13.6 1.6r -14.0 16.1 29.2r -i.r -31.1' -54.2 7.2 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 17.7 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 -38.6 50 Mortgage companies -6.2 3.0 -4.0 5.7 .1 1.9 27.5 -35.3 14.4 -6.4 -10.4 15.9 51 Real estate investment trusts (REITs) 1.8 1.3 1.0 1.6 .1 3.3 1.7 1.3r 2.0r -4.r -1.4 2.5 52 Securitized credit obligation (SCO) issuers 37.6 28.9 51.1 51.0 51.lr 46.5 35.3 45.0 65.0r 59.2 47.2 50.5 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 Q1 Q2 Q3 Q4 Qlr Q2r All sectors 53 Total net borrowing, all sectors 998.8 946.8 848.4 639.8 816.0* 636.2 772.8r 850.2* 943.0* 698.1r 598.1 824.5 54 U.S. government securities 274.9 295.8 414.4 424.0 459.8 423.0 450.6 548.1 468.5 372.0 395.3 410.9 55 Tax-exempt securities 53.7 65.3 57.3 69.6 65.7 77.6 68.0 76.6 75.8 42.4 62.4 67.2 56 Corporate and foreign bonds 159.0 116.0 109.2 149.6 143.0* 152.4 109.7* 158.8 153.2* 150.1 210.5 150.9 57 Mortgages 280.0 269.6 189.1 165.8 121.1* 146.5 185.0* 69.8* 135.4* 94.0* 101.0 137.3 58 Consumer credit 50.1 49.5 13.4 -13.1 9.3 -10.7 -9.8 -14.7 13.5 48.2 19.2 22.9 59 Bank loans n.e.c 39.2 42.3 2.4 -26.6 -8.1* -43.4 -23.9* 2.8* -2.5* -8.8* -59.3 32.4 60 Open market paper 75.4 65.9 30.7 -44.0 13.1 .0 -4.5 10.3 39.9 6.8 -121.4 15.8 61 Other loans 66.6 42.4 31.8 -85.6 12.2* -109.3 -2.4* -1.4* 59.3* -6.7* -9.7 -13.0 External corporate equity funds raised in United States 62 Total net share issues -98.6 -59.6 22.2 210.6 282.5* 290.6 274.2* 264.1* 293.3' 298.4* 292.2 461.9 63 Mutual funds 6.1 38.5 67.9 150.5 206.7* 208.9 174.4 199.5* 235.2* 217.7* 240.9 357.5 64 All other -104.7 -98.1 -45.7 60.1 75.8* 81.7 99.9* 64.6* 58.1* 80.7* 51.2 104.4 65 Nonfinancial corporations -129.5 -124.2 -63.0 18.3 26.8 48.0 46.0 36.0 11.0 14.0 9.0 26.0 66 Financial corporations 23.9 8.8 9.9 11.2 18.4* 10.0 24.8* 17.4* 12.3* 19.2* 10.3 28.1 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 Financial Statistics • February 1994 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 04 Ql Q2 Q3 Q4 Ql* Q2* NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 998.8 946.8 848.4 639.8 816.0* 636.2 772.8* 850.2* 943.0* 698.1* 598.1 824.5 2 Private domestic nonfinancial sectors 196.1 122.6 162.8 -16.1 79.0* -70.7 135.5* 150.9* -62.3* 92.1* -140.8 -118.1 3 Households 170.3 78.6 140.1 -49.7 50.2r -123.3 118.2* 109.6* -99.7* 72.5* -124.7 -134.6 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 -1.8 14.3 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 -10.5 5.1 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 25.6 100.7* 41.3 96.5* 140.7* 78.1* 87.5* 73.2 89.5 9 Financial sectors 704.8 742.9 569.9 619.8 648.2* 685.6 525.6* 581.7* 953.9* 531.5* 689.8 880.9 10 Government sponsored enterprises 33.2 -4.1 16.4 14.2 69.0* 24.9 92.7 38.6 73.0 71.7* 14.6 144.1 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 86.4 153.4 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 -.7 16 Bank holding companies -.1 2.8 -2.8 -1.5 5.6 .0 7.1 -.4 16.4 -.6 -4.3 9.5 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 429.7 452.9 270.0 353.7 341.0* 405.5 204.1* 304.5* 615.5* 239.9* 410.7 556.8 19 Thrift institutions 114.8 -86.6 -153.3 -123.0 -59.9 -56.7 -105.0* -75.8* -42.6* -16.1* -28.2 -17.1 20 Insurance 199.0 257.4 181.6 234.3 164.5* 199.3 97.2* 185.4* 217.8* 157.8 291.4 175.5 21 Life insurance companies 104.0 101.8 94.4 83.2 82.4 24.6 73.7 66.9 85.1 103.7 122.1 108.0 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 37.3* 135.0 -33.2* 74.1* 99.9* 8.4 118.0 11.1 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 115.9 282.2 241.7 242.3 236.3* 263.0 211.9* 194.9* 440.4* 98.2* 147.5 398.3 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 -20.8 31.7 28 Mutual funds 11.9 23.8 41.4 90.3 123.7* 137.9 95.1 123.7* 156.9* 119.2* 130.2 193.4 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 3.8* 8.5* -26.1* -65.0 51.8 31 Real estate investment trusts (REITs) .9 .5 -.7 -1.0 .4* -1.9 -.7* 2.6 -.3 -.1 2.9 .8 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 66.7 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 46.7 49.4 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 998.8 946.8 848.4 639.8 816.0* 636.2 772.8* 850.2* 943.0* 698.1* 598.1 824.5 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 140.1 309.7 158.1 358.8 214.8* 419.6 129.0* 194.4* 278.5* 257.4* 340.7 199.8 40 Interbank claims 2.9 -16.5 34.2 -3.7 49.0* 10.3 25.7* 36.9* 82.3* 51.1* 17.7 54.9 41 Deposits at financial institutions 278.6 284.8 98.1 48.2 9.3 48.5 -.7 6.3* 174.1* -142.7* -8.2 247.2 42 Checkable deposits and currency 43.2 6.1 44.2 75.8 122.8* 102.8 86.4 110.8* 200.4* 93.5* 25.0 232.2 43 Small time and savings deposits 121.6 100.4 59.0 16.7 -60.8 8.7 -40.1 -81.8 -83.6 -37.8* -158.9 -54.2 44 Large time deposits 53.1 13.9 -65.7 -60.8 -80.0 -108.8 -72.9 -109.9 -52.9 -84.2 1.9 -17.5 45 Money market fund shares 21.9 90.1 70.3 41.2 3.9 30.5 44.4 26.7* -22.4* -32.9* -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 17.6 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 67.9 150.5 206.7* 208.9 174.4 199.5* 235.2* 217.7* 240.9 357.5 49 Corporate equities -104.7 -98.1 -45.7 60.1 75.8* 81.7 99.9* 64.6* 58.1* 80.7* 51.2 104.4 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 38.3 51 Trade debt 89.6 59.4 32.1 -2.2 57.9 -16.3 79.8 56.5 57.8 37.5 27.3 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 9.6 11.3 53 Noncorporate proprietors' equity -24.0 -31.1 -35.5 -12.5 -10.7* 12.9 -25.8* 12.3* -33.2* 4.0* 3.6 -7.2 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 98.2 169.9 196.4* 256.4 93.1* 272.6* 209.0* 210.9* 233.2 355.1 56 Total financial sources 1,632.0 1,883.8 1,306.5 1,501.3 1,644.7* 1,798.4 1,367.6* 1,731.2* 2,057.7* 1,422.3* 1,598.7 2,302.0 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 6.2 58 Other checkable deposits .8 -3.2 2.5 2.0 1.6 -5.5 13.8 2.0 -11.7 2.3 -1.8 -1.4 59 Trade credit -6.2 -1.9 2.5 8.1 21.5* -14.1 25.0 11.3 44.0* 5.7 -21.8 8.7 Liabilities not identified as assets (-) 60 Treasury currency -.1 -.2 .2 -.6 -.2 -.1 -.3* -.2* -.2* -.1 -.2 -.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 -.3 62 Security repurchase agreements -29.6 32.4 -31.5 5.2 31.1 66.7 -26.7 84.1 43.5* 23.4* 155.2 25.4 63 Taxes payable 6.3 2.3 .5 .4 6.7 .5 -7.6 7.0 23.8 3.7 -11.2 23.2 64 Miscellaneous 47.3 -77.8 -23.6 -32.1 -15.4* -7.6 -60.5* -62.9* 11.9* 49.9* 29.5 -31.0 65 Total identified to sectors as assets 1,614.8 1,928.2 1,351.0 1,505.2 1,602.7* 1,830.2 1,404.4* 1,717.6* 1,947.4* 1,341.6* 1,439.5 2,271.5 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 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 11,746.9* 11,160.6 11,289.2* 11,427.0* 11,580.3* 1111,,774466..99** 11,823.0 1111,,997799..22 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 33,,220011..22 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 8,666.5r 8,384.3 8,429.4* 8,503.7* 8,581.5* 8,666.5* 8,682.9 8,777.9 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 1,210.0 11,,222255..77 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 1,172.9 1,189.2 8 Mortgages 3,512.8 3,715.4 3,880.4 4,001.9* 3,880.4 3,918.1* 3,941.5* 3,979.7* 4,001.9* 4,017.9 4,057.6 9 Home mortgages 2,380.5 2,580.6 2,746.6 2,922.7* 2,746.6 2,791.8* 2,825.6* 2,880.8* 2,922.7* 2,945.8 2,996.0 10 Multifamily residential 304.3 305.5 303.0 291.9 303.0 305.9 301.7* 298.9* 291.9 290.3 287.1 11 Commercial 747.6 750.8 751.7 706.5* 751.7 740.3* 733.8 719.4 706.5* 701.1 693.8 12 Farm 80.5 78.4 79.1 80.7* 79.1 80.2* 80.4* 80.6* 80.7* 80.8 80.8 n Consumer credit 799.5 813.0 799.9 809.2 799.9 777.6 776.9 784.5 809.2 793.7 802.3 14 Bank loans n.e.c 750.8 747.8 701.0 695.6* 701.0 685.5* 694.0* 686.2* 695.6* 683.0 691.9 n 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 667.0 730.6 685.9 701.2* 685.9 686.2* 690.1* 695.8* 701.2* 690.8 686.2 By borrowing sector 17 Household 3,371.4 3,594.8 3,762.7 3,978.0* 3,762.7 3,782.6 3,837.3* 3,900.0* 3,978.0* 3,982.2 4,046.8 18 Nonfinancial business 3,615.7 3,728.5 3,688.7 3,6%. 3* 3,688.7 3,701.5* 3,705.4* 3,698.3* 3,696.3* 3,693.6 3,708.0 19 Farm 134.4 134.9 134.8 136.3* 134.8 133.6* 137.0* 137.9* 136.3* 133.5 136.8 20 Nonfarm noncorporate 1,199.6 1,219.0 1,192.3 1,154.5* 1,192.3 1,187.6* 1,177.3* 1,165.1* 1,154.5* 1,144.2 1,138.3 21 Corporate 2,281.7 2,374.6 2,361.6 2,405.5* 2,361.6 2,380.3* 2,391.1* 2,395.3* 2,405.5* 2,415.9 2,432.9 22 State and local government 816.1 870.5 932.8 992.2 932.8 945.3 961.0 983.1 992.2 1,007.1 1,023.2 23 Foreign credit market debt held in United States 261.2 285.1 298.9 313.8 298.9 288.7 304.7 312.9 313.8 324.8 333.1 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 61.7 28 Total credit market debt owed by nonfinandal sectors, domestic and foreign 10,315.5 10,977.1 11,459.5 12,060.7* 11,459.5 11,577.9* 11,731.8* 11,893.2* 12,060.7* 12,147.9 12,312.3 Financial sectors 29 Total credit market debt owed by financial sectors 2,362.7 2,559.4 2,709.7 2,928.5* 2,709.7 2,751.2 2,805.7* 2,877.4* 2,928.5* 2,961.7 2,997.3 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 1,774.5 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 446688..44 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 1,208.5* 1,145.6 1,160.9 1,164.1* 1,193.9* 1,208.5* 1,205.9 1,222.9 35 Corporate bonds 509.1 549.9 606.6 665.0* 606.6 613.8 628.6 646.4* 665.0* 680.0 693.9 36 Mortgages 4.0 4.3 5.1 5.1 5.1 5.0 5.0* 5.1* 5.1 5.4 6.0 37 Bank loans n.e.c 50.9 52.0 69.1 64.2 69.1 72.7 63.1 67.5* 64.2 56.9 55.8 38 Open market paper 409.1 417.7 385.7 394.3 385.7 393.2 390.5 394.6 394.3 378.7 375.1 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 447733..22 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 1,208.5* 1,145.6 1,160.9 1,164.1* 1,193.9* 1,208.5* 1,205.9 1,222.9 43 Commercial banks 77.4 76.7 65.0 73.8 65.0 63.8 66.2 69.0 73.8 73.1 76.6 44 Bank affiliates 142.5 114.8 112.3 114.6 112.3 115.0 112.7 114.4 114.6 119.9 120.2 45 Funding corporations 125.4 137.9 124.3 135.2* 124.3 137.6 144.9* 143.0* 135.2* 127.1 128.9 46 Savings institutions 169.2 139.1 94.6 87.8 94.6 89.8 87.6 89.2 87.8 90.3 93.4 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 49 Finance companies 350.4 374.4 393.0 389.4 393.0 382.2 377.4 382.7 389.4 379.1 369.8 50 Mortgage companies 11.3 7.3 13.0 13.0 13.0 19.8 11.0 14.6 13.0 10.4 14.4 51 Real estate investment trusts (REITs) 11.4 12.4 14.0 14.1 14.0 14.4 14.8* 15.3* 14.1 13.7 14.4 52 Securitized credit obligation (SCO) issuers... 227.3 278.3 329.4 380.5* 329.4 338.2 349.5 365.7* 380.5* 392.3 404.9 All sectors 53 Total credit market debt, domestic and foreign.. 12,678.2 13,536.5 14,169.3 14,989.2* 14,169.3 14,329.1* 14,537.5* 14,770.6* 14,989.2* 15,109.5 15,309.6 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 1,210.0 1,225.7 56 Corporate and foreign bonds 1,564.3 1,673.5 1,823.1 1,966.1* 1,823.1 1,850.5 1,890.2 1,928.5* 1,966.1* 2,018.7 2,056.4 57 Mortgages 3,516.8 3,719.7 3,885.5 4,007.0* 3,885.5 3,923.2* 3,946.6* 3,984.8* 4,007.0* 4,023.3 4,063.7 58 Consumer credit 799.5 813.0 799.9 809.2 799.9 777.6 776.9 784.5 809.2 793.7 802.3 59 Bank loans n.e.c 823.0 818.3 791.7 783.7* 791.7 780.2* 782.7* 780.2* 783.7* 764.3 773.6 60 Open market paper 579.2 609.9 565.9 579.0 565.9 574.1 579.9 583.6 579.0 565.5 572.2 61 Other loans 896.5 928.4 835.8 851.3* 835.8 832.8* 837.4* 845.1* 851.3* 843.0 844.8 Digitized for FR1A. SDEataR i n this table also appear in the Board's Z.l (780) quarterly statistical http://fraser.strleoleuaissef, etadb.loesr gL/. 2 through L.4. For ordering address, see inside front cover. Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • February 1994 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 Q1 Q2 Q3 Q4 Q1 Q2 CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 12,678.2 13,536.5 14,169.3 14,989.2r 14,169.3 14,329.1* 14,537.5* 14,770.6* 14,989.2* 15,109.5 15,309.6 2 Private domestic nonfinancial sectors 2,096.4 2,246.8 2,205.8 2,290.7r 2,205.8 2,211.4* 2,233.1* 2,221.6* 2,290.7* 2,247.6 2,200.2 3 Households 1,326.8 1,454.6 1,380.0 1,436.0* 1,380.0 1,388.9* 1,395.2* 1,381.1* 1,436.0* 1,405.4 1,348.0 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 181.2 175.8 180.1 216.4 180.1 180.0 192.6 199.5 216.4 208.6 216.3 6 State and local governments 531.9 561.5 595.1 590.0 595.1 593.3 5%.6 592.9 590.0 586.5 589.6 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 l,031.1r 936.2 960.4* 995.6* 1,015.1* 1,031.1* 1,040.9 1,063.3 9 Financial sectors 9,597.7 10,153.1 10,780.3 11,432.2* 10,780.3 10,906.0* 11,062.5* 11,294.7* 11,432.2* 11,591.6 11,822.8 10 Government-sponsored enterprises 355.4 371.8 397.7 466.7* 397.7 419.9 429.0 446.3 466.7* 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 3,003.2 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 242.3 270.8 319.2 335.8 319.2 313.3 328.2 328.9 335.8 326.7 327.1 16 Bank holding companies 16.2 13.4 11.9 17.5 11.9 13.6 13.1 17.5 17.5 16.4 18.4 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 6,0%.7 6,441.5* 6,0%.7 6,170.1* 6,244.3* 6,391.0* 6,441.5* 6,563.2 6,700.9 19 Thrift institutions 1,475.4 1,324.6 1,197.3 1,140.9* 1,197.3 1,172.0* 1,154.1* 1,145.1* 1,140.9* 1,131.2 1,128.0 20 Insurance 2,320.7 2,473.7 2,708.0 2,872.5* 2,708.0 2,736.6* 2,787.4* 2,841.7* 2,872.5* 2,950.2 2,999.2 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 1,349.5 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 590.2 607.4 692.7 730.0* 692.7 684.4* 702.9* 727.9* 730.0* 759.5 762.2 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 2,428.0* 2,191.5 2,261.5 2,302.8* 2,404.1* 2,428.0* 2,481.8 2,573.6 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 20.9 28.8 28 Mutual funds 307.2 360.2 450.5 574.2* 450.5 478.8 510.2* 550.2* 574.2* 611.4 659.9 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 291.8 372.7 402.7 404.1 402.7 424.0 412.0* 408.2* 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 142.9 177.9 226.9 267.1 226.9 226.3 244.6 289.6 267.1 287.0 303.6 33 Asset-backed securities (ABSs) 219.3 269.1 318.1 366.7 318.1 326.3 337.6 353.3 366.7 378.4 390.7 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 14,989.2* 14,169.3 14,329.1* 14,537.5* 14,770.6* 14,989.2* 15,109.5 15,309.6 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 4,369.8* 4,056.5 4,048.2* 4,105.0* 4,228.5* 4,369.8* 4,509.1 4,570.4 40 Interbank claims 32.4 64.0 65.2 114.0* 65.2 63.0* 68.5* 101.3* 114.0* 109.9 118.5 41 Deposits at financial institutions 4,736.7 4,836.8 4,885.2 4,892.1 4,885.2 4,878.6 4,870.6* 4,909.3* 4,892.1 4,885.9 4,934.2 42 Checkable deposits and currency 888.6 932.8 1,008.5 1,131.0 1,008.5 984.3 1,032.9* 1,072.0* 1,131.0 1,092.2 1,169.1 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 2,261.2 2,242.3 44 Large time deposits 603.4 537.7 476.9 397.2 476.9 459.2 427.5 418.4 397.2 398.3 389.9 45 Money market fund shares 428.1 498.4 539.6 543.6 539.6 572.0 556.9* 552.9* 543.6 556.6 549.9 46 Security repurchase agreements 396.5 372.3 355.8 389.4 355.8 367.0 393.5 417.6 389.4 443.5 448.3 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 1,042.1* 813.9 860.4 924.4* %5.6* 1,042.1* 1,134.6 1,225.8 49 Security credit 133.9 137.4 188.9 217.3 188.9 194.6 193.3 214.5 217.3 225.1 234.7 50 Trade debt 904.2 936.4 926.7 984.7 926.7 938.0 950.0 970.5 984.7 982.3 991.2 51 Taxes payable 81.8 77.4 68.9 76.6 68.9 73.1 70.7 74.5 76.6 81.3 79.8 52 Investment in bank personal trusts 503.2 509.9 5%.7 619.1 5%.7 612.9 612.7 610.9 619.1 625.0 635.6 53 Miscellaneous 2,591.1 2,732.4 2,884.3 3,056.2* 2,884.3 2,899.7* 2,957.3* 3,027.6* 3,056.2* 3,082.3 3,149.3 54 Total liabilities 26,015.5 27,300.7 29,143.0 30,871.4* 29,143.0 29,390.8* 29,790.7* 30,381.7* 30,871.4* 31,271.1 31,784.9 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 5,721.3 5,741.9 57 Household equity in noncorporate business 2,508.1 2,440.6 2,344.6 2,266.6* 2,344.6 2,351.4* 2,335.3* 2,313.9* 2,266.6* 2,237.6 2,237.4 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 27.2 29.6 60 Trade credit -148.6 -146.0 -144.1 -121.9* -144.1 -142.7 -151.1 -144.2* -121.9* -132.1 -141.8 Liabilities not identified as assets (-) 61 Treasury currency -4.3 -4.1 -4.8 -4.9* -4.8 -4.8* -4.9 -4.9* -4.9* -5.0 -5.0 62 Interbank claims -31.0 -32.0 -4.2 -8.4 -4.2 -1.8 -4.0 -4.3 -8.4 -5.2 -3.9 63 Security repurchase agreements 13.7 -17.7 -12.5 18.6 -12.5 -4.8 19.6 33.1* 18.6 71.8 82.4 64 Taxes payable 20.6 17.8 15.5 22.2* 15.5 7.3* 13.1* 18.1* 22.2* 12.4 21.9 65 Miscellaneous -210.7 -213.4 -254.6 -251.3* -254.6 -280.6* -282.1* -267.7* -251.3* -279.4 -274.6 66 Total identified to sectors as assets 32,685.1 33,658.6 36,749.2 39,004.7* 36,749.2 37,086.8* 37,361.0* 38,056.8* 39,004.7* 39,556.7 40,072.2 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical 2. Excludes corporate equities and mutual fund shares, release, tables L.6 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 Mar. Apr. May June July Aug.r Sept. Oct. Nov. 1 Industrial production1 106.0 104.1 106.5 110.1 110.4 110.2 110.5 110.8 111.0 111.4 112.2 113.2 Market groupings 2 Products, total 105.5 103.1 105.6 109.5 109.6 109.3 109.4 110.0 110.3 110.7 111111..44rr 111122..44 3 Final, total 107.0 105.3 108.2 112.7 112.8 112.5 112.7 113.2 113.5 lM.O1 115.0r 116.0 4 Consumer goods 103.4 102.8 105.2 108.6 108.1 107.3 107.3 107.7 107.8 107.9 109. lr 110.0 5 Equipment 112.1 108.9 112.7 118.7 119.7 119.9 120.4 121.2 121.6 122.8r 123.5r 124.8 6 Intermediate 101.2 96.5 97.6 99.6 100.0 99.7 99.4 100.4 100.6 100.4r 100.4r 101.2 7 Materials 106.8 105.5 107.9 110.9 111.5 111.6 112.1 112.0 112.2 112.6r 113.4r 114.3 Industry groupings 8 Manufacturing 106.1 103.7 106.9 110.8 111.4 111.3 111.3 111.6 111.9 112.4r 111133..22rr 111144..44 9 Capacity utilization, manufacturing (percent)2 81.1 77.8 78.8 80.6 80.9 80.7 80.6 80.7 80.8 81.1 8811..55rr 8822..22 10 Construction contracts3 95.3 89.7 96.8r 94.0 94.0 91.0 104.0 98.0 99.0 101.0 103.0 105.0 11 Nonagricultural employment, total4 107.3 106.2 106.4 107.5 107.7 107.9 108.0 108.2 108.2 108.4 108.5 108.7 12 Goods-producing, total 101.2 96.6 94.9 93.3 93.1 93.2 93.0 93.0 92.8 92.8 92.9 93.2 13 Manufacturing, total 100.6 97.1 95.8 94.4 94.0 93.8 93.5 93.5 93.3 93.2 93.2 93.4 14 Manufacturing, production workers ... 100.2 96.3 95.3 94.4 94.0 93.8 93.5 93.5 93.2 93.2 93.4r 93.7 15 Service-producing 109.8 109.3 110.0 112.0 112.4 112.6 112.8 113.1 113.1 113.4r 113.5 113.7 16 Personal income, total 122.9 127.6 135.3 139.1 141.1 141.5 141.3 141.lr 142.9 143.1 144.1 145.0 17 Wages and salary disbursements 121.4 124.5 131.5 131.6 135.7 136.8 136.5 137.2r 138.2 138.0 138.7 139.2 18 Manufacturing ^ 113.4 113.7 117.8 114.2 118.8 118.4 118.0 118.2 118.6 119.1 119.1 119.9 19 Disposable personal income 123.1 128.6 136.8 140.8 142.5 142.8 142.6 142.3r 144.1 144.4r 145.4 146.4 20 Retail sales6 120.2 121.3 127.1 130.5 133.0 133.9 134.6 135.2 136.2 136.5r 139.<F 139.5 Prices7 21 Consumer (1982-84= 100) 130.7 136.2 140.3 143.6 144.0 144.2 144.4 144.4 144.8 145.1 114455..77 114455..88 22 Producer finished goods (1982=100) 119.2 121.7 123.2 124.7 125.5 125.8 125.5 125.3 124.3 123.9 124.7 124.4 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 Apr. May June July Aug. Sept. Oct. Nov. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 189,686 191,329 193,142 194,618 194,767 194,933 195,104 195,275 195,453 195,626 195,791 7 Labor force1 126,424 126,867 128,548 128,833 129,615 129,604 129,541 129,852 129,457 130,189 130,103 3 Civilian labor force 124,787 125,303 126,982 127,341 128,131 128,127 128,070 128,370 127,975 128,714 128,633 4 Nonagricultural industries 114,728 114,644 114,391 115,356 116,203 116,195 116,262 116,729 116,362 116,936 117,243 5 Agriculture 3,186 3,233 3,207 3,060 3,070 3,024 3,039 2,980 3,095 2,991 3,138 Unemployment 6 Number 6,874 8,426 9,384 8,925 8,858 8,908 8,769 8,661 8,517 88,,778866 88,,225522 7 Rate (percent of civilian labor force) 5.5 6.7 7.4 7.0 6.9 7.0 6.8 6.7 6.7 6.8 6.4 8 Not in labor force 63,262 64,462 64,594 65,785 65,152 65,329 65,563 65,423 65,996 65,437 65,688 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 109,419 108,256 108,519 109,820 110,058 110,101 110,338 110,305 110,502r 110,649r 110,857 10 Manufacturing 19,117 18,455 18,192 17,863 17,827 17,771 17,760 17,718 17,698r 17,710"' 17,740 11 Mining 709 689 631 600 602 5% 595 592 596 595r 594 17. Contract construction 5,120 4,650 4,471 4,517 4,577 4,574 4,593 4,593 4,592r 4,625 4,652 13 Transportation and public utilities 5,793 5,762 5,709 5,720 5,719 5,711 5,709 5,690 5,692r 5,693r 5,705 14 Trade 25,774 25,365 25,391 25,758 25,827 25,861 25,916 25,902 25,953r 25,959r 25,953 15 Finance 6,709 6,646 6,571 6,585 6,588 6,590 6,604 6,602 6,616r 6,634 6,661 16 Service 27,934 28,336 29,053 29,977 30,099 30,175 30,320 30,381 30,433r 30,529" 30,634 17 Government 18,304 18,402 18,653 18,800 18,819 18,823 18,841 18,827 18,922r 18,904r 18,918 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 • February 1994 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1992 1993 1992 1993 1992 1993 SSeerriieess Q4 Ql Q2 Q3r Q4 Ql Q2 Q3 04 Ql Q2 Q3r Output (1987=100) Capacity (percent of 1987 output) Capacity utilization rate (percent)2 1 Total industry 108.3 109.7 110.4 111.1 134.2 134.8 135.3 135.9 80.7 81.4 81.6 81.8 2 Manufacturing 108.7 110.4 111.3 112.0 136.6 137.2 137.8 138.5 79.6 80.5 80.8 80.9 3 Primary processing3 104.7 106.4 107.2 107.8 126.6 126.8 127.1 127.4 82.7 83.9 84.3 84.6 4 Advanced processing 110.6 112.3 113.2 114.0 141.3 142.1 142.9 143.7 78.3 79.0 79.2 79.3 5 Durable goods 110.8 113.6 114.8 116.0 142.6 143.4 144.1 144.9 77.7 79.2 79.7 80.1 6 Lumber and products 98.5 99.7 97.3 100.0 112.5 112.6 112.7 112.9 87.6 88.5 86.3 88.6 7 Primary metals 101.5 105.0 104.8 105.8 125.0 124.9 124.9 124.9 81.2 84.1 83.9 84.7 8 Iron and steel 105.0 109.1 109.1 111.7 129.9 129.8 130.0 130.1 80.8 84.1 84.0 85.8 9 Nonferrous 96.7 99.3 98.8 97.7 118.2 118.1 117.9 117.7 81.8 84.1 83.8 83.0 10 Nonelectrical machinery 132.4 137.1 144.2 150.1 162.1 163.7 165.5 167.3 81.7 83.8 87.1 89.7 11 Electrical machinery 124.0 127.1 129.6 133.7 152.6 154.1 155.7 157.3 81.2 82.5 83.2 85.0 12 Motor vehicles and parts 111.4 120.6 117.6 111.5 154.5 155.8 156.8 157.7 72.1 77.4 75.0 70.7 13 Aerospace and miscellaneous transportation equipment . 97.7 95.7 93.2 91.3 135.8 135.7 135.5 135.4 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 82.0 15 Textile mill products 105.2 106.2 106.1 106.8 116.7 116.9 117.1 117.3 90.1 90.8 90.6 91.0 16 Paper and products 107.9 110.0 113.1 112.1 122.1 122.5 122.9 123.3 88.4 89.8 92.0 90.9 17 Chemicals and products 116.9 116.9 118.3 118.8 143.5 144.4 145.4 146.3 81.4 80.9 81.4 81.2 18 Plastics materials 106.6 111.7 113.1 111.9 128.8 129.5 130.5 131.5 82.8 86.2 86.7 85.1 19 Petroleum products 104.2 104.2 103.9 103.1 116.2 115.9 115.7 115.4 89.7 89.9 89.8 89.3 20 Mining 97.9 96.5 97.2 96.4 112.0 111.7 111.5 111.3 87.4 86.3 87.2 86.7 21 Utilities 114.7 116.0 113.8 116.7 131.8 132.2 132.5 132.9 87.1 87.8 85.9 87.8 22 Electric 114.3 115.2 114.7 117.4 128.5 129.0 129.4 129.9 89.0 89.3 88.6 90.4 1973 1975 Previous cycle2 Latest cycle3 1992 1993 High Low High Low High Low Nov. June July Aug/ Sept/ Oct/ Nov.P Capacity utilization rate (percent)2 1 Total industry 99.0 82.7 87.3 71.8 84.8 78.3 80.8 81.5 81.7 81.7 81.9 82.4 83.0 2 Manufacturing 99.0 82.7 87.3 70.0 85.1 76.6 79.7 80.6 80.7 80.8 81.1 81.5 82.2 3 Primary processing3 99.0 82.7 89.7 66.8 89.1 77.9 83.0 84.5 84.5 84.8 84.4 84.7 85.5 4 Advanced processing4 99.0 82.7 86.3 71.4 83.3 76.1 78.4 78.9 79.2 79.2 79.6 80.2 80.8 5 Durable goods 99.0 82.7 86.9 65.0 83.9 73.8 77.8 79.4 79.8 79.9 80.6 81.3 82.3 6 Lumber and products 99.0 82.7 87.6 60.9 93.3 76.8 88.7 85.5 87.8 88.6 89.3 90.7 91.7 7 Primary metals 99.0 82.7 102.4 46.8 92.9 74.3 81.2 84.6 84.3 85.0 84.7 84.9 85.1 8 Iron and steel 99.0 82.7 110.4 38.3 95.7 72.3 79.7 85.3 86.0 86.1 85.3 86.2 86.2 9 Nonferrous 99.0 82.7 90.5 62.2 88.9 75.9 83.5 83.6 81.8 83.3 83.8 83.0 83.5 10 Nonelectrical machinery 99.0 82.7 92.1 64.9 83.7 73.0 82.0 87.5 89.1 89.6 90.4 90.9 91.8 11 Electrical machinery 99.0 82.7 89.4 71.1 84.9 76.8 81.5 83.3 84.4 84.8 85.7 86.4 87.3 12 Motor vehicles and parts 99.0 82.7 93.0 44.5 84.5 57.9 71.1 72.7 70.0 69.7 72.3 78.1 83.2 13 Aerospace and miscellaneous transportation equipment. 99.0 82.7 81.1 66.9 88.3 78.1 72.0 67.7 67.9 67.5 67.0 66.2 65.4 14 Nondurable goods 99.0 82.7 87.0 76.9 86.8 80.4 82.4 82.3 82.0 82.1 81.7 81.8 82.2 15 Textile mill products 99.0 82.7 91.7 73.8 92.1 78.7 90.8 91.4 91.8 91.5 89.8 90.6 91.4 16 Paper and products 99.0 82.7 94.2 82.0 94.9 86.0 88.6 92.8 90.9 91.7 90.2 90.3 92.2 17 Chemicals and products 99.0 82.7 85.1 70.1 85.9 78.5 82.1 81.7 81.3 81.4 80.8 80.5 80.5 18 Plastics materials 99.0 82.7 90.9 63.4 97.0 75.5 83.6 86.7 85.0 85.6 84.7 19 Petroleum products 99.0 82.7 89.5 68.2 88.5 84.2 89.4 89.9 88.7 88.7 90.4 92.7 94.1 20 Mining 99.0 82.7 96.6 80.6 87.0 86.8 87.4 87.9 86.5 85.8 87.7 88.1 88.0 21 Utilities 99.0 82.7 88.3 76.2 92.6 83.4 87.1 86.6 88.1 88.6 86.7 86.8 87.0 22 Electric 99.0 82.7 88.3 78.7 94.8 87.4 88.8 89.2 91.1 91.5 88.5 88.6 88.9 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 pro- 1992 por- avg. tion Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug/ Sept/ OOcctt// NNOOVV..pp Index (1987 = 100) MAJOR MARKETS 1 Total index 100.0 106.5 108.4 108.9 109.3 109.9 110.1 110.4 110.2 110.5 110.8 111.0 111.4 112.2 113.2 2 Products 60.8 105.6 107.8 108.2 108.5 109.2 109.5 109.6 109.3 109.4 110.0 110.3 110.7 111.4 112.4 3 Final products 46.0 108.2 111.0 111.5 111.9 112.4 112.7 112.8 112.5 112.7 113.2 113.5 114.0 115.0 116.0 4 Consumer goods, total 26.0 105.2 107.1 107.5 107.6 108.5 108.6 108.1 107.3 107.3 107.7 107.8 107.9 109.1 110.0 5 Durable consumer goods 5.6 102.5 105.7 107.9 110.9 111.3 111.5 112.2 110.8 107.9 108.6 107.9 109.3 113.6 116.9 6 Automotive products 2.5 99.4 104.1 108.7 112.7 111.9 111.2 112.1 109.7 105.3 103.3 103.0 105.6 112.9 119.2 7 Autos and trucks 1.5 96.9 102.9 111.7 116.8 114.6 113.4 114.3 110.1 105.0 100.3 99.2 104.1 114.9 124.9 8 Autos, consumer .9 79.0 79.6 86.9 86.6 90.2 90.5 90.2 86.5 83.5 78.2 71.8 75.4 85.2 95.4 9 Trucks, consumer .6 127.9 143.3 154.6 169.1 156.9 153.1 155.9 150.9 142.3 138.6 146.7 153.9 166.4 176.0 10 Auto parts and allied goods... 1.0 103.7 106.0 103.8 105.8 107.4 107.5 108.5 109.1 105.8 108.4 109.3 108.1 109.7 109.6 11 Other 3.1 105.2 107.1 107.2 109.3 110.7 111.7 112.3 111.8 110.2 113.2 112.2 112.6 114.2 114.9 12 Appliances, A/C, and TV .8 110.4 110.8 110.5 116.0 117.6 125.0 124.3 121.1 116.1 127.3 123.8 126.3 131.1 131.0 13 Carpeting and furniture .9 99.9 103.7 105.4 105.5 106.7 104.5 106.2 108.9 109.1 109.9 108.3 107.3 108.9 109.7 14 Miscellaneous home goods ... 1.4 105.6 107.1 106.6 108.0 109.5 108.9 109.6 108.4 107.6 107.4 108.1 108.2 107.9 109.1 15 Nondurable consumer goods 20.4 105.9 107.5 107.4 106.7 107.7 107.7 106.9 106.3 107.2 107.4 107.8 107.5 107.8 108.0 16 Foods and tobacco 9.1 104.7 105.2 104.8 104.6 105.5 104.3 103.9 104.3 104.7 104.9 105.5 105.6 106.2 106.6 17 Clothing 2.6 95.0 95.9 96.0 95.7 95.0 94.6 94.9 94.2 94.6 93.6 93.3 92.5 92.3 92.1 18 Chemical products 3.5 118.7 123.3 121.7 122.4 121.1 123.7 123.1 122.6 123.0 124.0 123.8 124.0 123.0 122.7 19 Paper products 2.5 100.8 100.9 100.9 100.2 101.8 102.1 101.7 101.8 102.6 101.3 100.8 100.8 100.5 100.8 20 Energy 2.7 108.3 112.0 114.4 109.5 115.5 116.0 111.5 107.4 110.4 112.9 114.7 112.9 114.8 115.5 21 Fuels .7 104.7 107.7 106.1 106.5 108.9 107.1 106.6 106.5 105.8 105.0 104.0 108.2 114.0 115.1 22 Residential utilities 2.0 109.6 113.6 117.5 110.7 118.0 119.5 113.4 107.7 112.2 116.0 118.9 114.7 115.2 115.6 23 Equipment 20.0 112.7 116.7 117.2 118.1 118.0 118.7 119.7 119.9 120.4 121.2 121.6 122.8 123.5 124.8 24 Business equipment 13.9 123.2 129.0 129.6 131.2 131.7 133.4 134.8 135.4 136.1 137.1 137.6 139.3 140.4 142.3 25 Information processing and related .. 5.6 134.7 142.9 143.2 144.4 146.1 149.1 150.6 153.5 155.7 158.2 158.8 161.2 161.6 163.8 26 Office and computing 1.9 168.3 184.5 186.4 192.0 198.0 203.3 209.5 216.5 221.0 226.5 232.0 236.4 241.0 247.0 27 Industrial 4.0 108.5 112.0 112.3 113.1 112.2 113.7 115.0 115.0 115.6 117.2 117.3 117.8 117.7 118.3 28 Transit 2.5 137.1 140.4 144.1 146.7 146.5 145.0 145.0 142.5 138.0 133.2 132.5 135.3 141.2 145.9 29 Autos and trucks 1.2 117.9 123.9 131.4 136.7 136.8 135.8 136.2 133.1 127.2 118.9 119.6 126.5 139.6 150.5 30 Other 1.9 104.7 110.7 109.2 112.6 113.4 114.9 117.5 116.2 117.6 119.6 121.9 122.9 123.8 124.3 31 Defense and space equipment 5.4 85.9 83.2 82.5 82.0 81.5 80.7 80.5 79.5 78.6 78.6 78.0 77.5 76.9 76.7 32 Oil and gas well drilling .6 78.3 86.4 91.2 89.0 77.9 71.1 72.4 75.1 82.4 81.0 87.8 90.5 88.6 85.7 33 Manufactured homes .2 99.7 118.5 128.6 129.4 127.1 116.2 114.9 112.1 113.6 118.5 116.2 120.6 127.7 34 Intermediate products, total 14.7 97.6 98.1 98.3 98.2 99.3 99.6 100.0 99.7 99.4 100.4 100.6 100.4 100.4 101.2 35 Construction supplies 6.0 93.8 95.1 94.5 94.8 97.5 96.4 96.4 97.7 96.8 98.4 98.7 99.3 99.6 100.8 36 Business supplies 8.7 100.1 100.0 100.8 100.5 100.5 101.8 102.5 101.0 101.1 101.7 101.8 101.2 101.0 101.5 37 Materials 39.2 107.9 109.3 110.0 110.4 110.9 110.9 111.5 111.6 112.1 112.0 112.2 112.6 113.4 114.3 38 Durable goods materials 19.4 108.9 111.1 111.9 113.3 114.2 114.1 114.9 114.8 114.9 115.4 115.8 117.0 118.0 119.4 39 Durable consumer parts 4.2 101.5 104.3 107.5 110.8 111.8 112.2 112.6 111.6 110.2 109.8 110.3 111.4 114.9 118.6 40 Equipment parts 7.3 116.5 119.3 119.7 120.4 121.0 121.3 122.7 123.5 124.1 124.9 126.2 128.0 129.5 130.6 41 Other 7.9 106.0 107.4 107.5 108.6 109.7 108.9 109.5 109.2 109.4 110.2 109.7 110.3 110.0 110.6 42 Basic metal materials 2.8 108.3 109.8 108.8 110.4 113.2 109.9 110.3 111.1 111.3 111.3 109.7 110.2 110.8 110.7 43 Nondurable goods materials 9.0 110.9 112.0 111.5 112.4 112.1 112.8 113.8 114.1 114.8 114.2 115.2 113.8 114.2 115.5 44 Textile materials 1.2 102.8 103.4 102.9 104.2 103.2 104.2 102.7 104.3 104.9 105.9 105.6 102.9 103.7 105.7 45 Pulp and paper materials 1.9 109.9 110.2 110.7 110.7 111.9 112.8 115.3 114.1 115.9 113.4 113.5 112.7 112.0 115.0 46 Chemical materials 3.8 114.2 115.6 114.6 114.9 114.6 115.6 116.1 117.2 118.6 117.3 119.5 118.0 118.4 119.1 47 Other 2.1 110.4 112.0 111.3 114.1 112.5 112.6 114.2 113.6 112.3 114.0 114.2 113.3 114.3 114.7 48 Energy materials 10.9 103.4 103.9 105.1 103.4 103.8 103.5 103.4 103.4 104.6 103.7 102.8 103.3 104.0 103.8 49 Primary energy 7.2 99.7 100.2 101.3 100.4 98.3 97.4 99.9 101.6 100.9 98.2 96.7 98.7 99.0 98.8 50 Converted fuel materials 3.7 110.6 111.1 112.4 109.1 114.6 115.4 110.3 106.8 111.7 114.5 114.9 112.4 113.6 113.7 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.3 106.6 108.4 108.6 108.9 109.5 109.7 110.1 110.0 110.4 110.9 111.1 111.4 111.9 112.6 52 Total excluding motor vehicles and parts... 95.3 106.6 108.4 108.6 108.7 109.3 109.6 109.9 109.8 110.3 110.9 111.1 111.3 111.6 112.2 53 Total excluding office and computing machines 97.5 105.0 106.6 107.1 107.3 107.8 107.8 108.0 107.7 107.8 108.1 108.1 108.4 109.1 111100..00 54 Consumer goods excluding autos and trucks 24.5 105.7 107.4 107.3 107.0 108.1 108.2 107.6 107.1 107.5 108.2 108.4 108.2 108.7 109.0 55 Consumer goods excluding energy 23.3 104.8 106.6 106.8 107.4 107.7 107.7 107.6 107.3 107.0 107.1 107.0 107.3 108.4 109.4 56 Business equipment excluding autos and trucks 12.7 123.7 129.5 129.5 130.7 131.3 133.2 134.6 135.6 136.8 138.7 139.1 140.4 114400..55 114411..66 57 Business equipment excluding office and computing equipment 12.0 115.7 119.7 120.1 121.0 120.6 121.6 122.2 121.8 121.8 122.1 121.7 122.9 112233..55 112244..77 58 Materials excluding energy 28.4 109.5 111.4 111.8 113.0 113.6 113.7 114.6 114.6 114.9 115.1 115.6 116.0 116.9 118.2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • February 1994 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1987 1992 1993 Group c S o I d C e 2 p p r o o r - - a 1 v 99 g 2 . tion Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug/ Sept/ Oct/ Nov." Index (1987 = 100) MAJOR INDUSTRIES 59 Total index 100.0 106.5 108.4 108.9 109.3 109.9 110.1 110.4 110.2 110.5 110.8 111.0 111.4 112.2 113.2 60 Manufacturing 84.3 106.9 108.9 109.2 109.9 110.5 110.8 111.4 111.3 111.3 111.6 111.9 112.4 113.2 114.4 61 Primary processing.. 27.1 103.8 105.1 105.0 105.8 106.9 106.4 107.1 107.1 107.5 107.6 108.0 107.6 108.1 109.2 62 Advanced processing 57.1 108.3 110.7 111.3 111.9 112.2 112.9 113.4 113.3 113.0 113.5 113.7 114.7 115.6 116.8 63 Durable goods 46.5 108.1 110.9 111.8 112.9 113.8 114.1 115.0 114.9 114.6 115.4 115.7 116.9 118.2 119.8 64 Lumber and products... "'24 2.1 96.4 99.8 98.0 99.3 101.8 98.0 98.1 97.4 96.5 99.1 99.9 100.9 102.4 103.7 65 Furniture and fixtures... 25 1.5 99.0 102.3 103.9 105.2 106.0 107.3 108.8 108.4 109.5 111.1 111.1 111.3 111.4 112.4 66 Clay, glass, and stone products 32 2.4 96.0 97.6 98.0 97.0 98.9 98.6 99.8 99.6 100.5 100.8 100.9 102.4 101.3 102.6 67 Primary metals 33 3.3 101.1 101.6 102.4 102.8 108.0 104.2 104.4 104.2 105.7 105.3 106.2 105.8 106.1 106.3 68 Iron and steel 331,2 1.9 104.7 103.6 107.4 107.0 112.9 107.6 108.4 108.1 110.9 111.9 112.1 111.1 112.3 112.3 69 Raw steel .1 101.2 102.8 104.6 103.4 105.9 102.0 102.6 105.1 106.8 108.2 106.2 105.3 106.7 70 Nonferrous 333-6,9 1.4 96.1 98.7 95.7 97.1 101.4 99.4 98.9 98.9 98.5 96.3 98.0 98.6 97.6 98! 1 71 Fabricated metal products 34 5.4 96.7 97.6 97.8 99.8 99.7 100.3 101.4 100.6 100.1 101.2 101.0 101.1 101.6 102.2 72 Industrial and commercial machinery and computer equipment . 35 8.5 124.8 132.8 133.8 135.0 136.7 139.6 142.8 144.2 145.4 148.5 149.9 151.8 153.1 155.2 73 Office and computing machines 357 2.3 168.3 184.5 186.4 192.0 198.0 203.3 209.5 216.5 221.0 226.5 232.0 236.4 241.0 247.0 74 Electrical machinery 36 6.9 119.8 124.4 124.8 125.8 127.1 128.5 129.0 129.7 130.1 132.3 133.5 135.4 136.9 138.7 75 Transportation equipment 37 9.9 102.6 103.6 106.3 108.4 107.8 106.9 106.9 105.5 102.6 100.8 100.4 102.1 106.1 109.5 76 Motor vehicles and parts 371 4.8 104.8 109.9 116.2 120.9 120.7 120.1 120.4 118.1 114.3 110.1 110.0 114.3 123.7 132.0 77 Autos and light trucks 2.2 101.4 105.4 114.4 118.2 117.8 116.9 117.5 113.1 108.2 102.8 104.0 109.2 120.8 131.7 78 Aerospace and miscellaneous transportation equipment... 372-6,9 5.1 100.6 97.7 97.1 96.7 95.8 94.6 94.2 93.7 91.8 92.0 91.3 90.6 89.5 88.4 79 Instruments 38 5.1 104.2 103.6 103.3 103.0 102.2 103.3 102.6 102.5 102.5 102.8 101.3 101.8 101.2 100.5 80 Miscellaneous 39 1.3 109.7 111.4 111.8 110.9 111.9 112.6 114.3 113.1 112.1 112.3 112.5 114.3 113.6 114.3 81 Nondurable goods 37.8 105.4 106.4 106.0 106.4 106.4 106.6 106.9 106.9 107.2 107.0 107.3 106.9 107.1 107.7 82 Foods '20 8.8 106.0 106.4 106.2 105.9 106.9 106.7 106.7 106.7 107.1 107.2 107.8 107.7 108.3 108.6 83 Tobacco products 21 1.0 99.2 101.9 96.1 100.5 99.3 92.4 90.2 92.1 89.1 91.5 92.7 94.6 95.9 95.9 84 Textile mill products 22 1.8 104.7 106.0 106.0 106.9 106.2 105.4 104.2 106.9 107.1 107.7 107.4 105.4 106.4 107.4 85 Apparel products 23 2.3 92.3 92.9 92.7 93.1 92.5 92.1 92.0 91.2 91.1 90.7 90.6 89.5 89.1 88.9 86 Paper and products 26 3.6 108.2 108.2 108.3 108.6 110.4 111.1 113.1 112.1 114.2 112.0 113.1 111.3 111.6 114.0 87 Printing and publishing.. 27 6.5 95.0 94.2 94.7 94.7 94.0 94.7 95.6 94.7 94.5 93.8 93.4 93.7 93.6 93.9 88 Chemicals and products. 28 8.8 115.0 117.7 116.7 116.8 116.2 117.6 117.8 118.1 119.1 118.7 119.1 118.5 118.4 118.6 89 Petroleum products 29 1.3 102.0 103.9 103.4 103.2 104.7 104.7 104.3 103.6 103.9 102.5 102.4 104.3 106.9 108.4 90 Rubber and plastic products 30 3.2 109.7 111.3 111.3 113.6 112.7 112.9 113.6 113.8 112.8 114.7 114.8 113.9 113.5 114.9 91 Leather and products ... 31 .3 92.6 96.6 96.7 97.1 99.0 99.1 100.1 98.2 97.0 96.8 97.0 98.2 98.8 98.8 92 Mining 8.0 97.6 97.8 98.2 98.3 95.9 95.3 96.4 97.3 98.0 96.4 95.5 97.5 98.0 97.7 93 Metal "lO .3 161.7 171.6 158.1 167.7 163.0 158.2 162.5 169.3 164.4 167.7 148.2 157.0 161.7 161.9 94 Coal 11,12 1.2 105.5 103.5 107.9 108.2 101.7 102.3 108.2 106.4 106.7 101.0 95.9 103.9 105.5 102.1 95 Oil and gas extraction 13 5.8 92.6 92.8 93.4 92.7 90.9 90.4 90.5 91.6 93.1 91.6 92.4 93.0 93.1 93.2 96 Stone and earth minerals .. 14 .7 93.8 94.4 92.6 93.8 95.2 93.4 92.3 94.0 91.7 93.2 94.7 95.0 94.4 96.2 97 Utilities 7.7 112.0 114.7 116.8 112.8 117.5 117.8 114.4 112.1 114.9 116.9 117.7 115.3 115.6 116.0 98 Electric 49i,3PT 6.1 111.6 114.1 116.4 112.9 116.5 116.3 114.5 114.0 115.6 118.1 118.9 115.1 115.4 115.8 99 Gas 492,3PT 1.6 113.2 117.3 118.2 112.4 121.4 123.3 113.9 104.9 112.2 112.4 113.3 116.0 116.4 116.4 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 79.5 107.0 108.8 108.8 109.3 109.8 110.2 110.8 110.9 111.1 111.7 112.0 112.3 112.6 113.3 101 Manufacturing excluding office and computing machines 81.9 105.1 106.7 107.0 107.6 108.0 108.1 108.6 108.3 108.1 108.3 108.5 108.9 109.6 110.6 Gross value (billions of 1987 dollars, annual rates) MAJOR MARKETS 102 Products, total 1,707.0 1,806.4 1,846.7 1,857.5 1,864.9 1,880.2 1,880.3 1,882.8 1,872.6 1,873.2 1,877.4 1,879.3 1,890.0 1,913.4 1,938.1 103 Final 1,314.6 1,420.1 1,457.1 1,466.8 1,476.4 1,485.7 1,484.3 1,485.6 1,477.9 1,477.5 1,479.0 1,480.5 1,492.0 1,515.6 1,536.9 104 Consumer goods 866.6 913.0 931.6 936.3 940.0 949.4 946.1 943.6 936.1 935.5 935.5 935.6 940.1 957.1 970.0 105 Equipment 448.0 507.1 525.5 530.5 536.5 536.3 538.2 541.9 541.8 541.9 543.4 544.9 551.9 558.5 566.9 106 Intermediate 392.5 386.4 389.6 390.7 388.4 394.5 396.0 397.3 394.7 395.7 398.4 398.8 398.1 397.8 401.2 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 figuresa t seasonally adjusted annual rates except as noted 1993 IItteemm 11999900 11999911 11999922 Jan. Feb. Mar. Apr. May June July Aug.* Sept.* Oct. Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 1,111 949 1,095 1,157 1,141 1,034 1,101 1,121 1,115 1,162 1,242 1,271 1,304 2 One-family 794 754 911 972 957 871 925 919 925 977 1,015 1,047 1,097 3 Two-or-more-family 317 195 184 185 184 163 176 202 190 185 227 224 207 4 Started 1,193 1,014 1,200 1,171 1,180 1,124 1,206 1,248 1,248 1,232 1,328 1,371 1,378 5 One-family 895 840 1,030 1,051 1,036 987 1,059 1,107 1,079 1,064 1,183 1,166 1,214 6 Two-or-more-family 298 174 169 120 144 137 147 141 169 168 145 205 164 7 Under construction at end of period1.. 711 606 612 641 641 635 637 645 649 658 662 679 687 8 One-family 449 434 473 506 508 502 506 515 517 527 534 544 554 9 Two-or-more-family 262 173 140 135 133 133 131 130 132 131 128 135 133 10 Completed 1,308 1,091 1,158 1,136 1,241 1,108 1,222 1,129 1,158 1,088 1,256 1,167 1,239 11 One-family 966 838 964 980 1,049 995 1,075 987 987 947 1,078 1,037 1,070 12 Two-or-more-family 342 253 194 156 192 113 147 142 171 141 178 130 169 13 Mobile homes shipped 188 171 210 267 262 247 241 230 237 241 245 251 261 Merchant builder activity in one-family units 14 Number sold 535 507 610 603 597 602 689 629 641 647r 632 726 679 15 Number for sale at end of period ... 321 284 265 266 268 270 271 274 274 276 288 290 297 Price of units sold (thousands of dollars) 16 Median 122.3 120.0 121.3 118.0 129.4 125.0 127.0 129.9 124.5 112233..99** 126.6 128.0 112211..00 17 Average 149.0 147.0 144.9 138.9 149.4 146.6 148.4 152.3 145.7 143.4* 148.6 148.1 145.5 EXISTING UNITS (one-family) 18 Number sold 3,211 3,219 3,520 3,780 3,460 3,370 3,450 3,620 3,680 3,860 3,810 3,940 4,090 Price of units sold (thousands of dollars) 19 Median 95.2 99.7 103.6 103.1 103.6 105.1 105.8 106.5 109.3 108.5 109.0 107.2 106.6 20 Average 118.3 127.4 130.8 129.4 129.6 131.5 133.0 132.8 137.4 136.0 135.8 133.7 133.0 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 442,142 403,439 436,043 451,271 453,820 454,465 449,054 453,256 460,680 465,294 467,140 474,071 485,847 2.2 Private 334,681 293,536 317,256 335,484 334,801 336,972 328,150 332,231 335,028 336,714 339,839 343,382 350,346 23 Residential 182,856 157,837 187,820 207,214 205,730 205,519 197,317 198,380 200,496 203,869 205,654 208,137 214,568 24 Nonresidential 151,825 135,699 129,436 128,270 129,071 131,453 130,833 133,851 134,532 132,845 134,185 135,245 135,778 25 Industrial buildings 23,849 22,281 20,720 19,600 20,484 22,152 19,458 20,091 19,316 19,780 20,047 21,186 20,282 26 Commercial buildings 62,866 48,482 41,523 41,414 42,317 41,323 42,426 42,428 42,723 41,660 42,394 42,179 43,039 27 Other buildings 21,591 20,797 21,494 21,123 21,564 21,484 22,568 23,293 23,849 23,808 25,070 24,503 24,826 28 Public utilities and other 43,519 44,139 45,699 46,133 44,706 46,494 46,381 48,039 48,644 47,597 46,674 47,377 47,631 29 Public 107,461 109,900 118,784 115,786 119,019 117,493 120,904 121,025 125,652 128,581 127,302 130,689 135,501 30 Military 2,664 1,837 2,502 2,621 2,703 2,586 2,533 2,393 2,234 2,386 2,363 2,151 2,291 31 Highway 32,108 32,026 34,929 30,648 33,009 33,413 34,534 34,320 37,649 37,056 35,292 39,147 40,913 32 Conservation and development... 4,557 4,861 5,918 5,732 6,688 7,112 5,875 6,019 6,103 6,017 5,865 5,894 6,716 33 Other 68,132 71,176 75,435 76,785 76,619 74,382 77,962 78,293 79,666 83,122 83,782 83,497 85,581 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 • February 1994 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 1992 1993 19931 lll NNN eeevvv ooo eee vvv lll ... ,,, 11999922 11999933 111999999333111 NNoovv.. NNoovv.. Dec. Mar. June Sept. July Aug. Sept. Oct. Nov. CONSUMER PRICES2 (1982-84=100) 1 All items 3.0 2.7 3.2 4.0 2.2 1.4 .1 .3 .0 .4 .2 145.8 2 Food 1.5 2.6 1.4 2.6 1.4 1.7 .0 .3 .1 .6 .4 141.9 3 Energy items 2.7 -.8 1.9 3.1 -3.8 -3.4 .0 -.5 -.4 1.9 -1.3 103.7 4 All items less food and energy 3.4 3.1 3.8 4.3 2.9 1.9 .1 .3 .1 .3 .3 153.9 5 Commodities 2.5 1.6 1.5 4.6 .6 -.3 .0 .3 -.4 .3 .2 136.4 6 Services 3.9 3.7 4.7 4.4 4.1 2.7 .2 .3 .2 .3 .3 163.9 PRODUCER PRICES (1982=100) 7 Finished goods 1.4 .3 -.3 4.3 .0 -1.9 .0 -.6 .2 -.2 .0 124.4 8 Consumer foods .3 2.7 3.3 -1.6 1.6 4.2 -.2 .5 .7 -.5 .8 126.7 9 Consumer energy .4 -2.8 -10.2 16.6 -3.0 -7.4 -1.0* .0 1.3 -2.7 76.2 10 Other consumer goods 2.2 -.6 1.2 3.2 .6 -5.9 .r — 1.6r .0 -.5 .3 137.5 11 Capital equipment 1.8 1.8 .6 4.4 .3 2.2 ,4r .2 .0 -.4 .2 132.5 Intermediate materials 12 Excluding foods and feeds 1.0 1.0 -2.1 5.7 .3 -.3 -.2 .0 .1 -.1 -.3 116.3 13 Excluding energy 1.1 1.5 -.3 4.7 .0 .6 .0 .2 .0 .0 .1 124.1 Crude materials 14 Foods 1.3 6.5 5.1 1.9 -1.9 12.6 i.r 1.8* .1 -1.5 3.8 109.5 15 Energy 3.2 -9.8 -17.8 -10.1 17.5 -26.5 —7.3r 1.1* -1.2 4.9 -3.8 75.6 16 Other 3.0 11.3 1.9 24.3 11.5 -8.5 •7r -2.9* .0 .9 1.7 141.4 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 1992 1993 AAccccoouunntt 11999900 11999911 11999922 Q3 Q4 Ql Q2 Q3r GROSS DOMESTIC PRODUCT 1 Total 5,546.1 5,722.9 6,038.5 6,059.5 6,194.4 6,261.6 6,327.6 6,395.9 By source 2 Personal consumption expenditures 3,761.2 3,906.4 4,139.9 4,157.1 4,256.2 4,296.2 4,359.9 4,419.1 3 Durable goods 468.2 457.8 497.3 500.9 516.6 515.3 531.6 541.9 4 Nondurable goods 1,229.2 1,257.9 1,300.9 1,305.7 1,331.7 1,335.3 1,344.8 1,352.4 5 Services 2,063.8 2,190.7 2,341.6 2,350.5 2,407.9 2,445.5 2,483.4 2,524.8 6 Gross private domestic investment 808.9 736.9 796.5 802.2 833.3 874.1 874.1 884.0 7 Fixed investment 802.0 745.5 789.1 792.5 821.3 839.5 861.0 876.3 8 Nonresidential 586.7 555.9 565.5 569.2 579.5 594.7 619.1 624.9 9 Structures 201.6 182.6 172.6 170.8 171.1 172.4 177.6 179.1 10 Producers' durable equipment 385.1 373.3 392.9 398.4 408.3 422.2 441.6 445.8 11 Residential structures 215.3 189.6 223.6 223.3 241.8 244.9 241.9 251.3 12 Change in business inventories 6.9 -8.6 7.3 9.7 12.0 34.6 13.1 7.7 13 Nonfarm 3.8 -8.6 2.3 4.4 9.5 33.0 16.8 22.6 14 Net exports of goods and services -71.4 -19.6 -29.6 -38.8 -38.8 -48.3 -65.1 -71.9 15 Exports 557.1 601.5 640.5 641.1 654.7 651.3 660.0 653.2 16 Imports 628.5 621.1 670.1 679.9 693.5 699.6 725.0 725.1 17 Government purchases of goods and services 1,047.4 1,099.3 1,131.8 1,139.1 1,143.8 1,139.7 1,158.6 1,164.8 18 Federal 426.5 445.9 448.8 452.8 452.4 442.7 447.5 443.6 19 State and local 620.9 653.4 683.0 686.2 691.4 697.0 711.1 721.2 By major type of product 20 Final sales, total 5,539.3 5,731.6 6,031.2 6,049.9 6,182.5 6,227.1 66,,331144..55 66,,338888..22 21 Goods 2,178.4 2,227.0 2,305.5 2,308.6 2,365.6 2,362.9 2,395.0 2,401.7 22 Durable 933.6 934.3 975.8 978.4 1,008.3 1,003.5 1,037.8 1,032.9 23 Nondurable 1,244.8 1,292.8 1,329.6 1,330.2 1,357.3 1,359.3 1,357.1 1,368.8 24 Services 2,849.5 3,032.7 3,221.1 3,239.3 3,296.1 3,341.8 3,388.1 3,437.8 25 Structures 511.5 471.9 504.7 501.9 520.8 522.4 531.5 548.7 26 Change in business inventories 6.9 -8.6 7.3 9.7 12.0 34.6 13.1 7.7 27 Durable goods -2.1 -12.9 2.1 5.7 -1.2 15.0 2.7 14.8 28 Nondurable goods 9.0 4.3 5.3 4.0 13.2 19.5 10.4 -7.2 MEMO 29 Total GDP in 1987 dollars 4,897.3 4,861.4 4,986.3 4,998.2 5,068.3 5,078.2 5,102.1 5,138.3 NATIONAL INCOME 30 Total 4,491.0 4,598.3 4,836.6 4,800.8 4,975.8 5,038.9 5,104.0 5,143.2 31 Compensation of employees 3,297.6 3,402.4 3,582.0 3,603.6 3,658.6 3,705.1 3,750.6 3,793.9 32 Wages and salaries 2,745.0 2,814.9 2,953.1 2,970.7 3,015.8 3,054.3 3,082.7 3,115.4 33 Government and government enterprises 516.0 545.3 567.5 569.7 574.2 584.1 586.3 592.8 34 Other 2,229.0 2,269.6 2,385.6 2,401.0 2,441.6 2,470.2 2,496.3 2,522.6 35 Supplement to wages and salaries 552.5 587.5 629.0 632.9 642.8 650.7 668.0 678.5 36 Employer contributions for social insurance 278.3 290.6 306.3 306.9 311.3 312.2 321.4 323.8 37 Other labor income 274.3 296.9 322.7 326.0 331.5 338.5 346.6 354.7 38 Proprietors' income1 363.3 376.4 414.3 408.1 431.2 444.1 439.4 422.5 39 Business and professional 321.4 339.5 370.6 371.3 383.6 388.4 392.4 397.6 40 Farm1 41.9 36.8 43.7 36.8 47.6 55.7 47.0 24.8 41 Rental income of persons2 -14.2 -12.8 -8.9 -18.5 -1.2 7.5 12.7 13.7 42 Corporate profits1 380.6 369.5 407.2 367.5 439.5 432.1 458.1 468.5 43 Profits before tax3 365.7 362.3 395.4 357.9 409.9 419.8 445.6 443.8 44 Inventory valuation adjustment -11.0 4.9 -5.3 -7.8 4.9 -12.7 -12.2 1.0 45 Capital consumption adjustment 25.9 2.2 17.1 17.4 24.7 25.1 24.7 23.8 46 Net interest 463.7 462.8 442.0 440.1 447.7 450.1 443.2 444.6 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 • February 1994 2.17 PERSONAL INCOME AND SAVING Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1992 1993 AAccccoouunntt 11999900 11999911 11999922 Q3 Q4 Q1 Q2 Q3R PERSONAL INCOME AND SAVING 1 Total personal income 4,673.8 4,850.9 5,144.9 5,139.8 5,328.3 5,254.7 5,373.2 5,412.7 2 Wage and salary disbursements 2,745.0 2,815.0 2,973.1 2,970.7 3,095.8 2,974.3 3,082.7 3,115.4 3 Commodity-producing industries 745.7 738.1 756.5 751.6 783.3 740.7 765.1 769.4 4 Manufacturing 555.6 557.2 577.6 573.3 602.0 559.7 580.3 581.5 5 Distributive industries 635.1 648.0 682.0 682.5 709.9 682.9 709.1 714.4 6 Service industries 848.3 883.5 967.0 966.8 1,028.4 966.6 1,022.2 1,038.8 7 Government and government enterprises 515.9 545.4 567.5 569.7 574.2 584.1 586.3 592.8 8 Other labor income 274.3 296.9 322.7 326.0 331.5 338.5 346.6 354.7 9 Proprietors' income1 363.3 376.4 414.3 408.1 431.2 444.1 439.4 422.5 10 Business and professional1 321.4 339.5 370.6 371.3 383.6 388.4 392.4 397.6 11 Farm1 41.9 36.8 43.7 36.8 47.6 55.7 47.0 24.8 12 Rental income of persons2 -14.2 -12.8 -8.9 -18.5 -1.2 7.5 12.7 13.7 13 Dividends 144.4 127.9 140.4 144.9 152.3 157.0 157.8 159.0 14 Personal interest income 698.2 715.6 694.3 692.2 694.5 695.4 693.1 695.7 15 Transfer payments 687.6 769.9 858.4 866.1 877.4 894.4 905.5 918.5 16 Old-age survivors, disability, and health insurance benefits ... 352.0 382.3 413.9 416.6 420.8 433.1 435.0 439.4 17 LESS: Personal contributions for social insurance 224.9 237.8 249.3 249.8 253.3 256.6 264.5 266.8 18 EQUALS: Personal income 4,673.8 4,850.9 5,144.9 5,139.8 5,328.3 5,254.7 5,373.2 5,412.7 19 LESS: Personal tax and nontax payments 623.3 620.4 644.8 642.8 670.7 657.1 681.0 689.0 20 EQUALS: Disposable personal income 4,050.5 4,230.5 4,500.2 4,497.0 4,657.6 4,597.5 4,692.2 4,723.7 21 LESS: Personal outlays 3,880.6 4,029.0 4,261.5 4,277.3 4,377.9 4,419.7 4,483.6 4,544.0 22 EQUALS: Personal saving 170.0 201.5 238.7 219.6 279.7 177.9 208.7 179.7 MEMO Per capita (1987 dollars) 23 Gross domestic product 19,593.0 19,237.9 19,518.0 19,536.7 1199,,775544..11 1199,,774444..44 1199,,778855..44 1199,,886688..88 24 Personal consumption expenditures 13,093.0 12,895.2 13,080.9 13,097.8 13,240.9 13,234.2 13,311.6 13,416.2 25 Disposable personal income 14,101.0 13,965.0 14,219.0 14,169.0 14,490.0 14,163.0 14,326.0 14,341.0 26 Saving rate (percent) 4.2 4.8 5.3 4.9 6.0 3.9 4.4 3.8 GROSS SAVING 27 Gross saving 722.7 733.7 717.8 727.0 718.8 762.0 766.7 774.3 28 Gross private saving 861.1 929.9 986.9 1,016.5 969.4 1,024.8 988.3 988.7 29 Personal saving 170.0 201.5 238.7 219.6 279.7 177.9 208.7 179.7 30 Undistributed corporate profits1 88.5 102.3 110.4 82.3 121.7 103.7 116.3 129.3 31 Corporate inventory valuation adjustment -11.0 4.9 -5.3 -7.8 4.9 -12.7 -12.2 1.0 Capital consumption allowances 32 Corporate 368.2 383.2 396.6 441100..33 339966..55 440022..22 440055..22 441144..00 33 Noncorporate 234.5 242.8 261.3 304.3 251.5 261.0 258.1 265.7 34 Government surplus, or deficit (-), national income and -138.4 -196.2 -269.1 -289.5 -250.6 -262.8 --222211..55 --221144..44 35 Federal -163.5 -203.4 -276.3 -290.7 -264.2 -263.5 -222.6 -212.7 36 State and local 25.1 7.3 7.2 1.2 13.5 .8 1.1 -1.7 37 Gross investment 730.4 743.3 741.4 742.7 750.9 796.5 778.7 787.6 38 Gross private domestic 808.9 736.9 796.5 802.2 833.3 874.1 874.1 884.0 39 Net foreign -78.5 6.4 -55.1 -59.4 -82.4 -77.6 -95.4 -96.4 40 Statistical discrepancy 7.8 9.6 23.6 15.7 32.1 34.4 12.0 13.3 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 1993 IItteemm ccrreeddiittss oorr ddeebbiittss 11999900 11999911 11999922 Q3 Q4 Ql Q2r Q3P 1 Balance on current account -91,861 -8,324 -66,400 -17,775 -23,687 -22,308 -27,172 -27,986 2 Merchandise trade balance2 -109,033 -73,802 —96,138 -27,612 -25,962 -29,309 -34,384 -36,279 3 Merchandise exports 389,303 416,937 440,138 109,493 113,992 111,530 113,118 111,912 4 Merchandise imports -498,336 -490,739 -536,276 -137,105 -139,954 -140,839 -147,502 -148,191 5 Military transactions, net -7,834 -5,851 -2,751 -617 -836 -145 -226 -341 6 Other service transactions, net 38,485 51,733 59,163 15,898 14,265 14,769 14,685 14,448 7 Investment income, net 20,348 13,021 6,222 1,703 -806 -37 47 1,748 8 U.S. government grants -17,434 24,073 -14,688 -2,783 -5,883 -3,242 -2,730 -2,970 9 U.S. government pensions and other transfers -2,934 -3,461 -3,735 -940 -846 -978 -979 -976 10 Private remittances and other transfers -13,459 -14,037 -14,473 -3,424 -3,619 -3,366 -3,585 -3,616 11 Change in U.S. government assets other than official reserve assets, net (increase, -) 2,307 2,905 -1,609 -305 -737 535 -275 -86 12 Change in U.S. official reserve assets (increase, -) -2,158 5,763 3,901 1,952 1,542 -983 822 -545 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -192 -177 2,316 -173 2,829 -140 -166 -118 15 Reserve position in International Monetary Fund 731 -367 -2,692 -118 -2,685 -228 313 -48 16 Foreign currencies -2,697 6,307 4,277 2,243 1,398 -615 675 -378 17 Change in U.S. private assets abroad (increase, -) -44,280 -68,643 -53,253 -12,445 -31,243 -11,910 -29,888 -43,331 18 Bank-reported claims 16,027 3,278 24,948 6,584 -3,481 28,055 5,317 7,547 19 Nonbank-reported claims -4,433 1,932 4,551 -3,214 1,132 -4,774 443 20 U.S. purchases of foreign securities, net -28,765 -44,740 -47,961 -13,787 -17,405 -26,889 -24,098 -45,290 21 U.S. direct investments abroad, net -27,109 -29,113 -34,791 -2,028 -11,489 -8,302 -11,550 -5,588 22 Change in foreign official assets in United States (increase, +) ... 34,198 17,564 40,684 -7,378 5,931 10,929 17,699 19,646 23 U.S. Treasury securities 29,576 14,846 18,454 -323 -7,379 1,039 5,668 18,808 24 Other U.S. government obligations 667 1,301 3,949 912 874 710 1,082 1,545 25 Other U.S. government liabilities 2,156 1,542 2,542 864 943 -395 396 1,322 26 Other U.S. liabilities reported by U.S. banks3 3,385 -1,484 16,427 -7,831 11,219 8,171 9,454 -2,213 27 Other foreign official assets5 -1,586 1,359 -688 -1,000 274 1,404 1,099 184 28 Change in foreign private assets in United States (increase, +)... 70,976 65,875 88,895 33,828 32,914 14,789 24,681 46,806 29 U.S. bank-reported liabilities3 16,370 -11,371 18,609 23,647 -1,171 -18,862 -1,381 23,525 30 U.S. nonbank-reported liabilities 7,533 -699 741 1,553 -2,717 2,057 1,361 31 Foreign private purchases of U.S. Treasury securities, net . -2,534 18,826 36,893 4,870 21,232 13,599 -623 3,995 32 Foreign purchases of other U.S. securities, net 1,592 35,144 30,274 2,730 12,478 9,394 15,025 17,411 33 Foreign direct investments in United States, net 48,015 23,975 2,378 1,028 3,092 8,601 10,299 1,875 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 35 Discrepancy 30,820 -15,140 -12,218 2,123 15,280 8,948 14,133 5,495 36 Due to seasonal adjustment -6,754 1,222 5,814 681 -7,605 37 Before seasonal adjustment 30,820 -15,140 -12,218 8,877 14,058 3,134 13,452 13,100 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) --22,,115588 55,,776633 3,901 1,952 11,,554422 -983 822 --554444 39 Foreign official assets in United States, excluding line 25 (increase, +) 32,042 16,022 38,142 -8,242 4,988 11,324 17,303 18,324 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) 1,707 -4,882 5,857 3,051 2,336 463 -916 --33,,004433 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 • February 1994 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data seasonally adjusted 1993 IItteemm 11999900 11999911 11999922 • Apr. May June July Aug. Sept/ Oct." 1 Exports of domestic and foreign merchandise, excluding grant-aid shipments 393,592 421,730 444488,,116644 3388,,447799 3388,,993300 3377,,663399 37,109 38,050 38,885 40,110 2 General imports including merchandise for immediate consumption plus entries into bonded warehouses 495,311 488,453 532,665 48,660 47,306 49,698 47,534 48,097 49,506 50,566 3 Trade balance -101,718 -66,723 -84,501 -10,182 -8,376 -12,058 -10,425 -10,047 -10,621 -10,455 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 1990 1991 1992 May July Aug. Sept. Oct. Nov.p 1 Total 83,316 77,719 71,323 76,711 73,968 74,139 75,231 75,835 74,550 74,042 2 Gold stock, including Exchange Stabilization Fund' 11,058 11,057 11,056 11,053 11,057 11,057 11,057 11,057 11,056 11,054 3 Special drawing rights2,3 10,989 11,240 8,503 9,147 8,987 8,905 9,133 9,203 9,038 9,091 4 Reserve position in International Monetary Fund 9,076 9,488 11,759 12,195 11,926 12,083 12,118 12,101 11,908 11,827 5 Foreign currencies 52,193 45,934 40,005 44,316 41,998 42,094 42,923 43,474 42,548 42,070 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 May June July Aug. Sept. Oct. Nov.' 1 Deposits 369 968 205 193 286 284 357 501 390 596 Held in custody 2 U.S. Treasury securities2 278,499 281,107 314,481 345,060 343,672 343,378 356,671 358,860 358,975 373,864 3 Earmarked gold3 13,387 13,303 13,686 12,854 12,829 12,756 12,686 12,562 12,464 12,381 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 Apr. May June July Aug. Sept. Oct. ASSETS All foreign countries 1 Total payable in any currency 556,925 548,999 542,545 544,497 548,893 562,590 551,342 560,539 556,176 569,149 2 Claims on United States 188,496 176,487 166,798 164,652 162,355 176,025 163,793 166,817 168,086 162,243 Parent bank 148,837 137,695 132,275 129,121 127,126 141,024 127,474 130,865 136,938 127,239 4 Other banks in United States 13,2% 12,884 9,703 10,830 9,169 9,498 8,993 9,457 6,862 7,739 5 Nonbanks 26,363 25,908 24,820 24,701 26,060 25,503 27,326 26,495 24,286 27,265 6 Claims on foreigners 312,449 303,934 318,071 316,001 321,065 316,533 316,989 325,948 318,736 325,545 7 Other branches of parent bank 135,003 111,729 123,256 109,966 111,314 111,708 105,095 108,071 108,521 106,859 8 Banks 72,602 81,970 82,190 86,940 88,188 85,972 88,648 90,008 84,937 91,646 9 Public borrowers 17,555 18,652 20,756 18,577 18,251 18,183 17,687 18,364 17,797 17,875 10 Nonbank foreigners 87,289 91,583 91,869 100,518 103,312 100,670 105,559 109,505 107,481 109,165 11 Other assets 55,980 68,578 57,676 63,844 65,473 70,032 70,560 67,774 69,354 81,361 12 Total payable in U.S. dollars 379,479 364,078 365,824 345,053 344,926 355,298 340,948 338,896 348,290 342,904 N Claims on United States 180,174 169,848 162,125 160,120 156,418 169,502 155,387 157,538 160,820 154,079 14 Parent bank 142, %2 133,662 129,329 126,760 123,957 137,711 124,072 127,028 133,223 124,060 15 Other banks in United States 12,513 12,025 9,266 10,168 8,209 8,638 8,270 8,475 6,322 7,046 16 Nonbanks 24,699 24,161 23,530 23,192 24,252 23,153 23,045 22,035 21,275 22,973 17 Claims on foreigners 174,451 167,010 183,527 169,360 170,475 168,824 167,183 164,318 168,815 166,514 18 Other branches of parent bank 95,298 78,114 83,117 73,049 73,068 73,014 70,293 68,567 70,511 67,420 19 Banks 36,440 41,635 47,250 43,783 44,920 43,674 44,262 42,378 43,920 44,708 20 Public borrowers 12,298 13,685 14,313 12,537 12,244 12,049 11,951 11,999 11,580 11,506 21 Nonbank foreigners 30,415 33,576 38,847 39,991 40,243 40,087 40,677 41,374 42,804 42,880 22 Other assets 24,854 27,220 20,172 15,573 18,033 16,972 18,378 17,040 18,655 22,311 United Kingdom 23 Total payable in any currency 184,818 175,599 165,850 163,193 165,044 173,158 167,046 172,710 173,057 178,748 74 Claims on United States 45,560 35,257 36,403 33,353 31,239 37,038 34,032 35,491 34,053 30,865 25 Parent bank 42,413 31,931 33,460 29,605 27,523 33,059 29,184 30,612 30,776 26,458 26 Other banks in United States 792 1,267 1,298 757 747 1,006 808 877 631 1,010 27 Nonbanks 2,355 2,059 1,645 2,991 2,%9 2,973 4,040 4,002 2,646 3,397 28 Claims on foreigners 115,536 109,692 111,623 108,963 111,830 109,528 107,799 114,150 115,203 116,809 29 Other branches of parent bank 46,367 35,735 46,165 39,450 41,458 40,130 37,164 39,778 40,613 40,545 30 Banks 31,604 36,394 33,399 37,823 37,282 36,848 38,543 40,332 40,277 44,103 31 Public borrowers 3,860 3,306 3,329 2,513 2,420 2,342 2,341 2,606 2,171 2,147 32 Nonbank foreigners 33,705 34,257 28,730 29,177 30,670 30,208 29,751 31,434 32,142 30,014 33 Other assets 23,722 30,650 17,824 20,877 21,975 26,592 25,215 23,069 23,801 31,074 34 Total payable in U.S. dollars 116,762 105,974 109,493 95,612 97,431 100,422 96,200 93,739 97,841 95,196 35 Claims on United States 41,259 32,418 34,508 31,233 28,634 34,110 30,573 31,753 31,160 27,731 36 Parent bank 39,609 30,370 32,186 28,420 25,9% 31,265 27,580 28,938 29,130 24,756 37 Other banks in United States 334 822 1,022 393 326 533 300 308 328 430 38 Nonbanks 1,316 1,226 1,300 2,420 2,312 2,312 2,693 2,507 1,702 2,545 39 Claims on foreigners 63,701 58,791 66,335 60,180 61,742 60,479 58,944 56,603 59,725 59,385 40 Other branches of parent bank 37,142 28,667 34,124 29,388 30,753 30,287 27,814 27,713 28,306 27,478 41 Banks 13,135 15,219 17,089 16,903 17,073 16,658 17,590 15,466 17,%7 18,910 47 Public borrowers 3,143 2,853 2,349 1,888 1,808 1,804 1,744 1,832 1,614 1,613 43 Nonbank foreigners 10,281 12,052 12,773 12,001 12,108 11,730 11,7% 11,592 11,838 11,384 44 Other assets 11,802 14,765 8,650 4,637 7,055 5,833 6,683 5,383 6,956 8,080 Bahamas and Cayman Islands 45 Total payable in any currency 162,316 168,512 147,422 144,654 142,872 148,982 140,580 140,172 147,385 146,834 46 Claims on United States 112,989 115,430 %,280 97,469 94,894 102,109 93,736 93,661 98,873 98,100 47 Parent bank 77,873 81,706 66,608 67,830 66,170 74,023 66,363 67,055 74,040 72,185 48 Other banks in United States 11,869 10,907 7,828 9,279 7,184 7,651 7,477 7,360 5,489 5,710 49 Nonbanks 23,247 22,817 21,844 20,360 21,540 20,435 19,8% 19,246 19,344 20,205 50 Claims on foreigners 41,356 45,229 44,509 40,5% 41,378 40,437 39,609 39,588 41,814 40,028 51 Other branches of parent bank 13,416 11,098 7,293 6,873 6,999 7,009 6,772 7,226 8,958 8,024 5? Banks 16,310 20,174 21,212 17,816 18,527 18,117 17,688 16,863 17,090 16,228 53 Public borrowers 5,807 7,161 7,786 6,690 6,527 6,334 6,185 6,102 5,955 5,767 54 Nonbank foreigners 5,823 6,7% 8,218 9,217 9,325 8,977 8,964 9,397 9,811 10,009 55 Other assets 7,971 7,853 6,633 6,589 6,600 6,436 7,235 6,923 6,698 8,706 56 Total payable in U.S. dollars 158,390 163,957 142,861 140,146 138,202 143,900 136,025 135,698 142,831 142,273 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 • February 1994 3.14 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data1—Continued Account 1990 1992 Apr. May June July Aug. Sept. LIABILITIES All foreign countries 57 Total payable in any currency 556,925 548,999 542,545 544,497 548,893 562,590 551,342 560,539 556,176 569,149 58 Negotiable certificates of deposit (CDs) 18,060 16,284 10,032 13,748 14,348 14,154 14,568 14,604 12,666 12,166 59 To United States 189,412 198,307 189,444 176,747 175,442 186,374 174,089 172,074 180,247 173,444 60 Parent bank 138,748 136,431 134,339 119,752 117,207 129,486 120,953 118,724 121,821 114,944 61 Other banks in United States 7,463 13,260 12,182 11,952 14,062 13,514 10,440 9,561 11,662 10,699 62 Nonbanks 43,201 48,616 42,923 45,043 44,173 43,374 42,6% 43,789 46,764 47,801 63 To foreigners 311,668 288,254 309,704 316,661 322,140 318,956 319,464 333,015 322,146 333,457 64 Other branches of parent bank ... 139,113 112,033 125,160 113,845 115,189 115,725 108,925 113,550 111,731 109,123 65 Banks 58,986 63,097 62,189 68,381 69,323 67,243 71,491 73,663 68,100 76,374 66 Official institutions 14,791 15,5% 19,731 21,326 22,271 22,466 23,147 23,049 22,698 24,712 67 Nonbank foreigners 98,778 97,528 102,624 113,109 115,357 113,522 115,901 122,753 119,617 123,248 68 Other liabilities 37,785 46,154 33,365 37,341 36,%3 43,106 43,221 40,846 41,117 50,082 69 Total payable in U.S. dollars 383,522 370,710 368,773 344,532 344,319 357,116 342,287 339,344 347,387 343,930 70 Negotiable CDs 14,094 11,909 6,238 7,062 7,248 8,138 7,958 7,370 6,131 5,886 71 To United States 175,654 185,472 178,674 164,380 162,328 172,708 160,499 157,841 167,272 160,048 72 Parent bank 130,510 129,669 127,948 112,736 110,161 121,922 113,313 110,881 114,170 107,630 73 Other banks in United States 6,052 11,707 11,512 11,282 13,126 12,862 9,789 8,842 11,092 9,927 74 Nonbanks 39,092 44,0% 39,214 40,362 39,041 37,924 37,397 38,118 42,010 42,491 75 To foreigners 179,002 158,993 172,189 163,149 165,162 166,130 163,567 165,055 163,701 162,150 76 Other branches of parent bank ... 98,128 76,601 83,700 75,682 75,313 75,783 72,900 72,467 72,358 68,776 77 Banks 20,251 24,156 26,118 22,150 22,%9 23,440 23,631 24,522 23,799 24,252 78 Official institutions 7,921 10,304 12,430 12,627 12,653 12,951 12,868 12,031 10,720 11,416 79 Nonbank foreigners 52,702 47,932 49,941 52,690 54,227 53,956 54,168 56,035 56,824 57,706 80 Other liabilities 14,772 14,336 11,672 9,941 9,581 10,140 10,263 9,078 10,283 15,846 United Kingdom 81 Total payable in any currency ... 184,818 175,599 165,850 163,193 165,044 173,158 167,046 172,710 173,057 178,748 82 Negotiable CDs 14,256 11,333 4,517 5,414 5,644 6,566 6,364 6,674 5,318 4,489 83 To United States 39,928 37,720 39,174 34,661 37,272 39,514 35,521 36,600 37,180 33,411 84 Parent bank 31,806 29,834 31,100 26,781 28,095 30,410 27,183 28,076 29,217 25,147 85 Other banks in United States . 1,505 1,438 1,065 1,110 1,652 1,097 850 741 682 782 86 Nonbanks 6,617 6,448 7,009 6,770 7,525 8,007 7,488 7,783 7,281 7,482 87 To foreigners 108,531 98,167 107,176 108,670 106,834 106,725 105,949 112,121 112,534 117,614 88 Other branches of parent bank 36,709 30,054 35,983 33,545 31,437 32,275 28,408 30,534 31,578 31,921 89 Banks 25,126 25,541 25,231 26,082 27,184 25,848 28,504 29,039 28,064 31,183 90 Official institutions 8,361 9,670 12,090 12,342 11,752 12,139 11,885 11,575 12,425 13,269 91 Nonbank foreigners 38,335 32,902 33,872 36,701 36,461 36,463 37,152 40,973 40,467 41,241 92 Other liabilities 22,103 28,379 14,983 14,448 15,294 20,353 19,212 17,315 18,025 23,234 93 Total payable in U.S. dollars 116,094 108,755 108,214 94,159 96,152 98,465 93,360 92,066 94,697 94,614 94 Negotiable CDs 12,710 10,076 3,894 4,214 4,392 5,462 5,197 4,890 3,728 3,388 95 To United States 34,697 33,003 35,417 30,170 32,457 34,523 30,669 31,579 32,838 28,725 96 Parent bank 29,955 28,260 29,957 25,315 26,631 28,747 25,753 26,600 28,039 24,093 97 Other banks in United States . 1,156 1,177 709 676 1,311 847 637 476 397 350 98 Nonbanks 3,586 3,566 4,751 4,179 4,515 4,929 4,279 4,503 4,402 4,282 99 To foreigners 60,014 56,626 62,048 54,407 54,576 53,282 52,336 51,256 52,608 54,211 100 Other branches of parent bank 25,957 20,800 22,026 18,958 17,449 17,691 16,198 16,063 16,859 16,108 101 Banks 9,488 11,069 12,540 8,327 9,065 8,305 8,347 7,666 8,877 9,%7 102 Official institutions 4,692 7,156 8,847 8,803 8,210 8,812 8,720 8,042 7,195 7,399 103 Nonbank foreigners 19,877 17,601 18,635 18,319 19,852 18,474 19,071 19,485 19,677 20,737 104 Other liabilities 8,673 9,050 6,855 5,368 4,727 5,198 5,158 4,341 5,523 8,290 Bahamas and Cayman Islands 105 Total payable in any currency ... 162,316 168,512 147,422 144,654 142,872 148,982 140,580 140,172 147,385 146,834 106 Negotiable CDs 646 1,173 1,350 1,692 1,812 1,535 1,562 1,307 1,315 1,260 107 To United States 114,738 130,058 111,861 106,575 102,825 109,238 101,036 99,418 108,107 106,453 108 Parent bank 74,941 79,394 67,347 60,033 57,132 64,608 59,352 58,031 60,407 59,323 109 Other banks in United States . 4,526 10,231 10,445 10,291 11,220 11,567 8,603 7,791 10,146 9,117 110 Nonbanks 35,271 40,433 34,069 36,251 34,473 33,063 33,081 33,5% 37,554 38,013 111 To foreigners 44,444 35,200 32,556 34,888 36,220 36,621 35,973 37,808 36,449 35,291 112 Other branches of parent bank 24,715 17,388 15,169 17,500 18,652 18,944 18,164 19,103 18,609 17,451 113 Banks 5,588 5,662 6,422 6,288 6,159 6,417 6,9% 7,766 6,347 6,272 114 Official institutions 622 572 805 913 1,064 1,031 902 836 881 770 115 Nonbank foreigners 13,519 11,578 10,160 10,187 10,345 10,229 9,911 10,103 10,612 10,798 116 Other liabilities 2,488 2,081 1,655 1,499 2,015 1,588 2,009 1,639 1,514 3,830 117 Total payable in U.S. dollars 157,132 163,789 143,150 139,536 137,847 144,014 135,893 135,483 142,449 142,246 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 Item 1991 1992 Apr. May July Aug. Sept.r 1 Total1 360,530 398,672 413,661 424,298 427,380 426,726 436,909' 445,746 By type 2 Liabilities reported by banks in the United States . 38,3% 54,823 62,814 69,199 72,533 67,154 68,767r 70,276 3 U.S. Treasury bills and certificates 92,692 104,5% 113,293 120,194 119,860 128,837 136,488 139,638 U.S. Treasury bonds and notes 4 Marketable 203,677 210,553 205,302 201,878 201,118 1%,238 196,962 200,143 5 Nonmarketable 4,858 4,532 5,432 5,417 5,451 5,488 5,508 5,542 6 U.S. securities other than U.S. Treasury securities5 20,907 24,168 26,820 27,610 28,418 29,009 29,184 30,147 By area 7 Europe1 171,317 191,708 187,899 193,673 193,378 188,930 191,890* 198,336 8 Canada 7,460 7,920 8,302 8,899 8,297 8,808 8,075 8,260 9 Latin America and Caribbean 33,554 40,015 49,146 48,130 48,524 53,764 55,283r 54,678 10 Asia 139,465 152,142 159,860 164,947 169,370 168,859 174,898r 177,161 11 Africa 2,092 3,565 3,782 3,782 3,621 2,844 3,109 3,888 12 Other countries6 6,640 3,320 4,670 4,865 4,188 3,519 3,652 3,421 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 Dec. Mar. June Sept. 1 Banks' liabilities 67,835 70,477 75,129 72,7% 80,999 74,697 80,479 2 Banks' claims 65,127 66,7% 73,195 62,789 64,057 55,161 58,884 3 Deposits 20,491 29,672 26,192 24,240 24,928 23,449 22,852 4 Other claims 44,636 37,124 47,003 38,549 39,129 31,712 36,032 5 Claims of banks' domestic customers 3,507 6,309 3,398 4,432 2,625 3,234 2,640 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 • February 1994 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 1993 IItteemm 11999900 11999911 11999922 Apr. May June July Aug.r Sept.r Oct.P HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 759,634 756,066 811,371 792,760 793,584 821,035 817,600 843,154 858,661 859,706 2 Banks' own liabilities 577,229 575,374 607,556 582,931 574,822 597,715 588,994 606,529 614,511 609,852 3 Demand deposits 21,723 20,321 21,824 22,243 22,144 21,467 21,815 21,503 25,394 22,020 4 Time deposits 168,017 159,649 160,476 148,064 147,923 152,169 151,393 152,976 153,672 158,928 5 Other. 65,822 66,305 93,824 101,148 104,513 107,394 106,590 116,406 113,063 129,498 6 Own foreign offices 321,667 329,099 331,432 311,476 300,242 316,685 309,1% 315,644 322,382 299,406 7 Banks' custodial liabilities5 182,405 180,692 203,815 209,829 218,762 223,320 228,606 236,625 244,150 249,854 8 U.S. Treasury bills and certificates 9966,,779966 111100,,773344 112277,,664444 113388,,001144 114444,,112299 114444,,005599 115533,,335599 161,827 165,146 164,365 9 Other negotiable and readily transferable instruments 17,578 18,664 21,974 21,539 24,515 30,056 26,477 27,643 30,878 37,858 10 Other 68,031 51,294 54,197 50,276 50,118 49,205 48,770 47,155 48,126 47,631 11 Nonmonetary international and regional organizations 5,918 8,981 9,350 10,731 8,934 9,330 9,387 12,365 11,358 10,984 12 Banks' own liabilities 4,540 6,827 6,951 5,834 6,481 6,270 6,197 8,671 7,944 6,780 13 Demand deposits 36 43 46 33 35 19 29 37 21 71 14 Time deposits 1,050 2,714 3,214 1,687 2,989 3,607 2,920 2,882 4,062 2,968 15 Other. 3,455 4,070 3,691 4,114 3,457 2,644 3,248 5,752 3,861 3,741 16 Banks' custodial liabilities5 1,378 2,154 2,399 4,897 2,453 3,060 3,190 3,694 3,414 4,204 17 U.S. Treasury bills and certificates6 364 1,730 1,908 4,461 1,883 2,320 2,635 3,418 3,199 3,566 18 Other negotiable and readily transferable instruments 1,014 424 486 433 564 740 549 276 215 638 19 Other 0 0 5 3 6 0 6 0 0 0 20 Official institutions9 119,303 131,088 159,419 176,107 189,393 192,393 195,991 205,255 209,914 206,164 21 Banks' own liabilities 34,910 34,411 51,058 59,393 63,575 62,791 61,752 62,195 63,675 60,966 22 Demand deposits 1,924 2,626 1,274 1,361 1,386 2,204 1,557 1,321 1,951 2,121 23 Time deposits 14,359 16,504 17,823 19,166 21,682 19,408 18,626 18,050 20,537 14,885 24 Other. 18,628 15,281 31,961 38,866 40,507 41,179 41,569 42,824 41,187 43,960 25 Banks' custodial liabilities5 84,393 96,677 108,361 116,714 125,818 129,602 134,239 143,060 146,239 145,198 26 U.S. Treasury bills and certificates6 7799,,442244 9922,,669922 110044,,55%% 111133,,229933 112200,,119944 111199,,886600 112288,,883377 113366,,448888 113399,,663388 114400,,552255 27 Other negotiable and readily transferable instruments7 4,766 3,879 3,726 3,284 5,480 9,602 5,297 6,514 6,149 4,491 28 Other 203 106 39 137 144 140 105 58 452 182 29 Banks10 540,805 522,265 547,988 512,921 503,421 525,237 517,363 528,549 540,690 536,095 30 Banks' own liabilities 458,470 459,335 476,785 446,694 436,547 459,341 450,359 462,7% 470,030 461,035 31 Unaffiliated foreign banks 136,802 130,236 145,353 135,218 136,305 142,656 141,163 147,152 147,648 161,629 32 Demand deposits 10,053 8,648 10,168 10,883 11,386 9,918 10,675 10,478 12,808 9,951 33 Time deposits 88,541 82,857 90,368 79,592 76,439 83,143 84,751 86,034 83,150 95,430 34 Other3 38,208 38,731 44,817 44,743 48,480 49,595 45,737 50,640 51,690 56,248 35 Own foreign offices4 321,667 329,099 331,432 311,476 300,242 316,685 309,1% 315,644 322,382 299,406 36 Banks' custodial liabilities5 82,335 62,930 71,203 66,227 66,874 65,8% 67,004 65,753 70,660 75,060 37 U.S. Treasury bills and certificates6 1100,,666699 77,,447711 11,087 99,,990088 1100,,883377 1100,,554466 1100,,662277 1111,,332277 11,794 10,046 38 Other negotiable and readily transferable instruments7 5,341 5,694 7,555 7,349 7,397 7,741 9,049 8,760 12,688 19,402 39 Other 66,325 49,765 52,561 48,970 48,640 47,609 47,328 45,666 46,178 45,612 40 Other foreigners 93,608 93,732 94,614 93,001 91,836 94,075 94,859 %,985 %,699 106,463 41 Banks' own liabilities 79,309 74,801 72,762 71,010 68,219 69,313 70,686 72,867 72,862 81,071 42 Demand deposits 9,711 9,004 10,336 9,966 9,337 9,326 9,554 9,667 10,614 9,877 43 Time deposits 64,067 57,574 49,071 47,619 46,813 46,011 45,0% 46,010 45,923 45,645 44 Other3 5,530 8,223 13,355 13,425 12,069 13,976 16,036 17,190 16,325 25,549 45 Banks' custodial liabilities5 14,299 18,931 21,852 21,991 23,617 24,762 24,173 24,118 23,837 25,392 46 U.S. Treasury bills and certificates6 6,339 8,841 10,053 1100,,335522 11,215 11,333 11,260 10,594 10,515 10,228 47 Other negotiable and readily transferable instruments 6,457 8,667 10,207 10,473 11,074 11,973 11,582 12,093 11,826 13,327 48 Other 1,503 1,423 1,592 1,166 1,328 1,456 1,331 1,431 1,496 1,837 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 7,073 7,456 9,111 9,409 9,582 10,388 9,389 9,481 11,264 17,533 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

Bank-Reported Data A59 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1—Continued 1993 IItteemm 11999900 11999911 11999922 Apr. May June July Aug/ Sept. Oct." Area 1 Total, all foreigners 759,634 756,066 811,371 792,760 793,584 821,035 817,600 843,154r 858,661* 859,706 2 Foreign countries 753,716 747,085 802,021 782,029 784,650 811,705 808,213 830,789* 847,303* 848,722 3 Europe 254,452 249,097 308,423 298,984 313,834 324,229 320,954 335,460* 340,427* 357,905 4 Austria 1,229 1,193 1,611 1,497 1,525 1,496 1,415 1,614 1,672* 1,808 5 Belgium and Luxembourg 12,382 13,337 20,572 19,775 21,099 21,817 20,805 23,345 23,635* 24,641 6 Denmark 1,399 937 3,060 1,229 2,464 3,088 3,983 3,023 3,135 5,084 7 Finland 602 1,341 1,299 2,265 2,185 2,580 2,873 2,667* 2,347 2,712 8 France 30,946 31,808 41,459 31,087 33,825 33,744 33,963 36,517* 40,622 43,033 9 Germany 7,485 8,619 18,631 19,912 23,959 22,752 24,498 22,199 22,530 22,818 10 Greece 934 765 913 742 859 819 1,078 1,122 1,378 1,366 11 Italy 17,735 13,541 10,041 8,094 9,089 10,402 10,721 11,426 11,285* 10,623 12 Netherlands 5,350 7,161 7,372 11,502 13,903 11,271 10,465 10,854 11,429 13,370 13 Norway 2,357 1,866 3,319 2,355 2,690 2,840 2,757 2,833 2,901 2,7% 14 Portugal 2,958 2,184 2,465 2,476 2,674 2,764 2,894 3,015 3,180 3,215 15 Russia 119 241 577 726 847 1,129 1,406 2,254 2,229 2,623 16 Spain 7,544 11,391 9,796 14,055 13,588 15,484 16,593 17,207* 20,495 20,179 17 Sweden 1,837 2,222 2,986 3,149 2,140 2,336 2,210 1,460 3,475* 2,355 18 Switzerland 36,690 37,238 39,440 39,703 41,775 41,270 40,494 40,987 41,908* 43,195 19 Turkey 1,169 1,598 2,666 2,664 2,761 2,497 2,882 2,618 2,553 2,897 20 United Kingdom 109,555 100,292 112,456 109,553 106,638 115,251 113,171 118,793 116,258* 130,946 21 Yugoslavia11 928 622 504 507 510 512 501 511 524 541 22 Other Europe and former U.S.S.R.12 13,234 12,741 29,256 27,693 31,303 32,177 28,245 33,015* 28,871* 23,703 23 Canada 20,349 21,605 22,746 22,303 21,331 20,051 22,264 23,917 25,142* 27,589 7.4 Latin America and Caribbean 332,997 345,529 317,236 317,876 303,630 312,692 311,963 313,275* 322,863* 310,128 25 Argentina 7,365 7,753 9,477 11,066 11,339 11,289 14,120 14,579 14,047 14,307 26 Bahamas 107,386 100,622 82,288 81,763 80,333 80,715 73,414 73,790 79,228* 75,754 77 Bermuda 2,822 3,178 7,079 6,135 5,297 6,074 6,969 6,931 7,169 8,016 78 Brazil 5,834 5,704 5,584 5,466 5,339 4,936 5,425 5,299 5,268* 5,044 79 British West Indies 147,321 163,620 153,035 148,628 138,996 147,753 147,618 146,425* 152,237* 142,746 30 Chile 3,145 3,283 3,035 3,480 3,520 3,552 3,934 3,5% 3,867 3,949 31 Colombia 4,492 4,661 4,580 4,360 4,338 4,405 4,464 4,383 3,988 3,020 32 Cuba 11 2 3 2 2 3 5 5 6 7 33 Ecuador 1,379 1,232 993 923 956 924 889 860 819 861 34 Guatemala 1,541 1,594 1,377 1,352 1,323 1,397 1,304 1,315 1,253 1,301 35 Jamaica 257 231 371 293 289 341 341 364 375 376 36 Mexico 16,650 19,957 19,456 24,896 23,351 22,296 24,117 24,833* 24,414* 24,243 37 Netherlands Antilles 7,357 5,592 5,205 4,537 3,813 4,059 4,159 5,413 4,695* 5,281 38 Panama 4,574 4,695 4,177 4,135 4,054 3,749 3,747 3,657 3,743 3,547 39 Peru 1,294 1,249 1,080 1,070 977 979 891 898 903 869 40 Uruguay 2,520 2,096 1,955 1,775 1,742 1,775 1,775 1,822 1,734 1,714 41 Venezuela 12,271 13,181 11,387 11,517 11,644 12,242 12,373 12,782 12,868 12,851 42 Other 6,779 6,879 6,154 6,478 6,317 6,203 6,418 6,323 6,249 6,242 43 136,844 120,462 114433,,556611 113311,,111177 113344,,003322 143,229 143,117 147,517* 147,648* 141,361 China 44 People's Republic of China 2,421 2,626 3,202 3,527 3,008 2,885 2,728 3,292 3,261 3,280 45 Republic of China (Taiwan) 11,246 11,491 8,379 8,884 8,790 9,618 9,991 9,483* 9,%9 9,799 46 Hong Kong 12,754 14,269 18,509 16,353 15,832 15,890 16,193 15,621 16,388* 16,387 47 India 1,233 2,418 1,396 989 1,341 1,315 1,053 1,211 1,288 1,254 48 Indonesia 1,238 1,463 1,480 1,464 1,861 2,132 1,688 1,582 1,715 1,507 49 Israel 2,767 2,015 3,775 3,765 3,163 2,764 2,790 2,729 3,241 5,424 50 Japan 67,076 47,069 58,466 51,204 54,462 62,784 62,226 67,999* 65,626* 60,194 51 Korea (South) 2,287 2,587 3,337 3,584 3,922 3,842 4,298 3,873 4,356* 3,892 52 Philippines 1,585 2,449 2,275 2,785 2,458 2,933 3,1% 2,648 2,735 2,192 53 Thailand 1,443 2,252 5,582 4,967 5,377 5,233 5,830 6,058 5,846* 6,446 54 Middle Eastern oil-exporting countries 15,829 15,752 21,446 19,687 19,272 20,327 18,409 19,141 17,255* 14,681 55 Other 16,965 16,071 15,714 13,908 14,546 13,506 14,715 13,880 15,968* 16,305 56 4,630 4,825 5,884 6,441 6,477 6,475 5,680 5,649 6,127 6,179 57 Egypt 1,425 1,621 2,472 2,938 2,922 2,784 1,880 2,018 2,457 2,220 58 Morocco 104 79 76 151 144 119 138 78 86 87 59 South Africa 228 228 190 246 198 265 172 233 275 367 60 Zaire 53 31 19 14 16 15 25 20 16 15 61 Oil-exporting countries14 1,110 1,082 1,346 1,294 1,368 1,332 1,417 1,279 1,281 1,271 62 Other 1,710 1,784 1,781 1,798 1,829 1,960 2,048 2,021 2,012 2,219 63 Other 4,444 5,567 4,171 5,308 5,346 5,029 4,235 4,971 5,0% 5,560 64 Australia 3,807 4,464 3,047 4,056 4,449 4,078 3,253 3,890 4,045 4,434 65 Other 637 1,103 1,124 1,252 897 951 982 1,081 1,051 1,126 66 Nonmonetary international and regional organizations 5,918 8,981 9,350 10,731 8,934 9,330 9,387 12,365* 1111,,335588** 1100,,998844 67 International15 4,390 6,485 7,434 7,590 5,388 5,812 5,828 8,367* 7,628* 7,340 68 Latin American regional16 1,048 1,181 1,415 2,223 2,412 2,318 2,077 2,737 2,448 2,539 69 Other regional17 479 1,315 501 918 1,134 1,200 1,482 1,261 1,282 1,105 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 • February 1994 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United Statesi Payable in U.S. Dollars Millions of dollars, end of period 1993 AArreeaa aanndd ccoouunnttrryy 11999900 11999911 11999922 Apr. May June July Aug. Sept.r Oct.P 1 Total, all foreigners 511,543 514,339 500,511 471,288 461,179 482,944 471,863 461,191r 477,526 465,126 2 Foreign countries 506,750 508,056 495,429 468,871 459,497 480,864 470,556 459,239" 475,147 463,8% 3 Europe 113,093 114,310 123,999 120,313 118,213 122,297 124,429 116,836 124,529 124,605 4 Austria 362 327 331 1,013 941 1,080 587 691 457 573 5 Belgium and Luxembourg 5,473 6,158 6,404 6,177 5,513 5,955 6,127 6,515 6,539 5,494 6 Denmark 497 686 707 645 628 721 835 693 631 1,056 7 Finland 1,047 1,907 1,419 998 885 1,225 1,007 705 594 730 8 France 14,468 15,112 14,803 13,141 11,614 11,833 11,847 11,500 10,%3 11,516 9 Germany 3,343 3,371 4,229 5,322 6,089 6,236 7,746 6,766 7,994 7,319 10 Greece 727 553 718 618 596 564 509 508 629 842 11 Italy 6,052 8,242 9,048 8,724 8,218 9,250 8,053 8,839 8,985 8,085 12 Netherlands 1,761 2,546 2,472 2,607 3,278 2,764 3,260 3,081 3,433 3,157 13 Norway 782 669 356 714 676 789 823 941 841 779 14 Portugal 292 344 325 513 593 670 710 803 787 826 15 Russia 530 1,970 3,147 2,889 3,080 3,045 2,799 2,591 2,547 2,585 16 Spain 2,668 1,881 2,772 3,642 3,441 3,607 5,117 4,184 3,652 4,746 17 Sweden 2,094 2,335 4,929 4,509 4,229 4,062 5,131 4,278 4,619 4,111 18 Switzerland 4,202 4,540 4,722 4,361 4,735 4,123 5,193 5,634 5,216 4,647 19 Turkey 1,405 1,063 962 1,285 1,508 1,584 1,492 1,549 1,418 1,650 20 United Kingdom 65,151 60,395 63,928 60,725 59,703 62,565 60,767 55,118 62,786 64,009 21 Yugoslavia^ 1,142 825 569 551 550 548 547 547 542 535 22 Other Europe and former U.S.S.R.3 1,095 1,386 2,158 1,879 1,936 1,676 1,879 1,893 1,8% 1,945 23 Canada 16,091 15,113 14,155 16,977 16,393 16,693 17,776 17,373 19,009 15,756 24 Latin America and Caribbean 231,506 246,137 218,133 202,149 197,039 212,620 208,231 207,554r 215,634 211,204 25 Argentina 6,967 5,869 4,958 3,931 3,942 4,066 4,841 4,740 4,715 4,3% 26 Bahamas 76,525 87,138 60,868 59,418 56,188 59,979 56,833 56,276r 60,906 60,839 27 Bermuda 4,056 2,270 5,934 5,609 3,089 4,319 8,578 7,122 5,550 8,929 28 Brazil 17,995 11,894 10,774 10,815 10,710 12,319 10,842 10,927 11,294 11,671 29 British West Indies 88,565 107,846 101,523 88,975 89,853 97,306 91,566 93,116r 97,409 88,772 30 Chile 3,271 2,805 3,397 3,552 3,718 3,675 3,898 3,7% 3,832 3,856 31 Colombia 2,587 2,425 2,750 2,786 2,876 2,847 2,886 2,916 2,921 2,953 32 Cuba 0 0 0 0 0 1 0 0 0 0 33 Ecuador 1,387 1,053 884 807 770 771 732 739 701 707 34 Guatemala 191 228 262 269 256 266 240 256 244 259 35 Jamaica 238 158 162 161 165 184 182 181 183 175 36 Mexico 14,851 16,567 14,997 15,534 14,967 15,279 15,685 15,652r 15,724 16,121 37 Netherlands Antilles 7,998 1,207 1,379 1,971 2,354 3,011 3,172 3,153 3,155 3,339 38 Panama 1,471 1,560 4,654 2,491 2,440 2,549 2,532 2,361 2,370 2,491 39 Peru 663 739 730 691 675 657 651 667 617 635 40 Uruguay 786 599 936 787 778 904 807 816 926 926 41 Venezuela 2,571 2,516 2,525 2,495 2,542 2,803 3,001 2,876 2,835 2,815 42 Other 1,384 1,263 1,400 1,857 1,716 1,684 1,785 l,960r 2,252 2,320 43 138,722 112255,,226622 113311,,885577 112222,,441144 112200,,998833 112222,,113344 111122,,88%% llllll,,119966rr 110099,,009988 110055,,449999 China 44 People's Republic of China 620 747 906 1,388 881 1,898 860 638 700 772 45 Republic of China (Taiwan) 1,952 2,087 2,046 1,670 1,561 1,840 1,549 1,585 1,593 1,674 46 Hong Kong 10,648 9,617 9,673 9,215 10,420 9,747 10,637 9,390 11,153 9,638 47 India 655 441 529 549 489 438 470 442r 573 621 48 Indonesia 933 952 1,189 1,432 1,386 1,503 1,282 1,289 1,329 1,268 49 Israel 774 860 820 1,057 814 777 733 775 747 752 50 Japan 90,699 84,807 79,189 71,681 71,908 71,327 62,501 64,890" 60,263 60,307 51 Korea (South) 5,766 6,048 6,180 7,048 7,152 7,428 7,587 7,245 7,098 7,123 52 Philippines 1,247 1,910 2,145 1,645 1,521 1,402 1,357 1,250 1,143 1,168 53 Thailand 1,573 1,713 1,867 1,794 1,763 1,865 2,006 2,018 2,146 2,151 54 Middle Eastern oil-exporting countries4 10,749 8,284 18,559 17,909 17,937 17,437 16,946 15,912 14,251 13,580 55 Other 13,106 7,796 8,754 7,026 5,151 6,472 6,968 5,762 8,102 6,445 56 Africa 5,445 4,928 4,279 3,767 3,661 3,812 3,856 3,902 4,023 3,911 57 Egypt 380 294 186 151 151 177 148 168 176 160 58 Morocco 513 575 441 3% 420 416 437 443 454 433 59 South Africa 1,525 1,235 1,041 924 803 748 742 705 713 663 60 Zaire 16 4 4 3 3 3 4 4 3 3 61 Oil-exporting countries5 1,486 1,298 1,002 1,128 1,144 1,156 1,232 1,224 1,206 1,179 62 Other 1,525 1,522 1,605 1,165 1,140 1,312 1,293 1,358 1,471 1,473 63 Other 1,892 2,306 3,006 3,251 3,208 3,308 3,368 2,378 2,854 2,921 64 Australia 1,413 1,665 2,262 2,635 2,534 2,574 2,443 1,847 2,419 2,401 65 Other 479 641 744 616 674 734 925 531 435 520 66 Nonmonetary international and regional organizations6 4,793 6,283 5,082 2,417 1,682 2,080 1,307 1,952 2,379 1,230 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

Bank-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 1993 CCllaaiimm 11999900 11999911 11999922 Apr. May June July Aug.r Sept.r Oct." 1 Total 579,044 579,683 560,549 532,827 518,807 2 Banks' claims 511,543 514,339 500,511 471,288 461,179 482,944 471,863 461,191 477,526 465,126 3 Foreign public borrowers 41,900 37,126 31,376 30,390 29,601 29,409 32,579 30,287 31,926 31,329 4 Own foreign offices2 304,315 318,800 304,623 287,119 282,587 298,972 280,120 275,299 286,883 268,660 5 Unaffiliated foreign banks 117,272 116,602 109,643 97,747 94,727 93,965 92,865 94,018 96,167 92,373 6 Deposits 65,253 69,018 61,277 47,816 47,327 46,273 44,823 45,490 44,671 43,816 7 Other 52,019 47,584 48,366 49,931 47,400 47,692 48,042 48,528 51,496 48,557 8 All other foreigners 48,056 41,811 54,869 56,032 54,264 60,598 66,299 61,587 62,550 72,764 9 Claims of banks' domestic customers3... 67,501 65,344 60,038 49,883 41,281 10 Deposits 14,375 15,280 15,452 12,960 9,343 11 Negotiable and readily transferable instruments4 41,333 37,125 31,454 23,488 18,475 12 Outstanding collections and other claims 11,792 12,939 13,132 13,435 13,463 MEMO 13 Customer liability on acceptances 13,628 8,974 8,670 8,121 8,189 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States .... 44,638 42,936 36,073 33,016 33,840 29,687 2299,,330022rr 28,345 24,443 n.a. 1. For banks' claims, data are monthly; for claims of banks' domestic custom- foreign bank, and foreign branches, agencies, or wholly owned subsidiaries of ers, data are quarterly. head office or parent foreign bank. Reporting banks include all types of depository institution, as well as some 3. Assets held by reporting banks 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 Dec. Mar. June Sept." 1 Total 238,123 206,903 195,302 195,560 182,873 183,236 189,870 By borrower ?. Maturity of one year or less 178,346 165,985 162,573 163,775 152,673 154,617 162,071 3 Foreign public borrowers 23,916 19,305 21,050 17,809 21,210 17,943 21,221 4 All other foreigners 154,430 146,680 141,523 145,966 131,463 136,674 140,850 5 Maturity of more than one year 59,776 40,918 32,729 31,785 30,200 28,619 27,799 6 Foreign public borrowers 36,014 22,269 15,859 13,279 12,220 11,252 10,498 7 All other foreigners 23,762 18,649 16,870 18,506 17,980 17,367 17,301 By area Maturity of one year or less 8 Europe 53,913 49,184 51,835 53,707 55,292 54,357 5577,,222299 9 Canada 5,910 5,450 6,444 6,0% 7,890 8,013 9,809 10 Latin America and Caribbean 53,003 49,782 43,597 50,398 45,141 48,584 51,662 11 Asia 57,755 53,258 51,059 45,726 37,895 38,818 37,677 17 Africa 3,225 3,040 2,549 1,784 1,680 1,715 1,919 13 All other3 4,541 5,272 7,089 6,064 4,775 3,130 3,775 Maturity of more than one year 14 Europe 4,121 3,859 3,878 5,367 4,8% 4,561 44,,443333 15 Canada 2,353 3,290 3,595 3,282 3,117 2,875 2,573 16 Latin America and Caribbean 45,816 25,774 18,277 15,312 14,567 13,850 13,544 17 Asia 4,172 5,165 4,459 5,034 5,054 4,794 4,760 18 Africa 2,630 2,374 2,335 2,380 2,130 2,050 2,046 19 All other3 684 456 185 410 436 489 443 1. Reporting banks include sill kinds of depository institutions besides commer- 2. Maturity is time remaining to maturity, rial 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 • February 1994 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 Sept. Dec. Mar. June Sept. Dec. Mar. June Sept.* 1 Total 340.9 320.1 338.4 343.6 351.7 359.4 346.0 347.6 363.0 377.6 389.0 2 G-10 countries and Switzerland 152.9 132.2 135.0 137.6 130.9 136.2 137.4 133.9 143.6 149.8 153.0 3 Belgium and Luxembourg 6.3 5.9 5.8 6.0 5.3 6.2 6.2 5.6 6.1 7.0 7.1 4 France 11.7 10.4 11.1 11.0 10.0 11.9 15.3 15.3 13.6 14.0 12.3 5 Germany 10.5 10.6 9.7 8.3 8.4 8.8 10.9 9.3 9.9 10.8 12.4 6 Italy 7.4 5.0 4.5 5.6 5.4 8.0 6.4 6.5 6.7 7.6 8.0 7 Netherlands 3.1 3.0 3.0 4.7 4.3 3.3 3.7 2.8 3.7 3.7 3.7 8 Sweden 2.0 2.2 2.1 1.9 2.0 1.9 2.2 2.3 3.0 2.5 2.5 9 Switzerland 7.1 4.4 3.9 3.4 3.2 4.6 5.2 4.8 5.3 4.7 5.6 10 United Kingdom 67.2 60.9 65.6 68.5 64.8 65.9 61.8 61.3 66.3 73.5 74.9 11 Canada 5.4 5.9 5.8 5.8 6.5 6.7 6.7 6.6 8.6 8.1 9.7 12 Japan 32.3 24.0 23.5 22.6 21.1 18.7 18.9 19.3 20.4 17.9 16.9 13 Other industrialized countries 21.0 22.9 22.1 22.8 21.4 25.5 25.1 24.0 25.5 27.2 26.0 14 Austria 1.5 1.4 1.0 .6 .8 .8 .7 1.2 1.2 1.3 .6 15 Denmark 1.1 1.1 .9 .9 .8 1.3 1.5 .9 .8 1.0 1.1 16 Finland 1.0 .7 .6 .7 .8 .8 1.0 .7 .7 .9 .6 17 Greece 2.5 2.7 2.3 2.6 2.3 2.8 3.0 3.0 2.8 3.1 3.2 18 Norway 1.4 1.6 1.4 1.4 1.5 1.7 1.6 1.2 1.8 1.8 2.1 19 Portugal .4 .6 .5 .6 .5 .5 .5 .4 .7 .9 1.0 20 Spain 7.1 8.3 8.3 8.3 7.7 10.1 9.8 9.0 9.5 10.5 9.3 21 Turkey 1.2 1.7 1.6 1.4 1.2 1.5 1.5 1.3 1.4 2.1 2.1 22 Other Western Europe 1.0 1.2 1.3 1.8 1.5 2.0 1.5 1.7 2.0 1.7 2.2 23 South Africa 2.0 1.8 1.6 1.9 1.8 1.7 1.7 1.7 1.6 1.3 1.2 24 Australia 1.6 1.8 2.4 2.7 2.3 2.3 2.3 2.9 2.9 2.5 2.8 25 OPEC2 17.1 12.8 15.6 14.5 15.8 16.2 15.9 16.1 16.8 15.9 14.9 26 Ecuador 1.3 1.0 .8 .7 .7 .7 .7 .6 .6 .6 .5 27 Venezuela 7.0 5.0 5.6 5.4 5.4 5.3 5.4 5.2 5.3 5.6 5.6 28 Indonesia 2.0 2.7 2.8 2.7 3.0 3.0 3.0 3.0 3.1 3.1 2.8 29 Middle East countries 5.0 2.5 5.0 4.2 5.3 5.9 5.4 6.2 6.6 5.4 4.9 30 African countries 1.7 1.7 1.5 1.5 1.4 1.4 1.4 1.1 1.1 1.1 1.1 31 Non-OPEC developing countries 77.5 65.4 64.7 63.9 69.7 68.1 72.8 72.1 74.3 76.5 76.9 Latin America 32 Argentina 6.3 5.0 4.5 4.8 5.0 5.1 6.2 6.6 7.0 6.6 7.2 33 Brazil 19.0 14.4 10.5 9.6 10.8 10.6 10.8 10.8 11.6 12.3 11.6 34 Chile 4.6 3.5 3.7 3.6 3.9 4.0 4.2 4.4 4.6 4.6 4.7 35 Colombia 1.8 1.8 1.6 1.7 1.6 1.6 1.7 1.8 1.9 1.9 2.0 36 Mexico 17.7 13.0 16.2 15.5 17.7 16.3 17.1 16.0 16.8 16.7 17.5 37 Peru .6 .5 .4 .4 .4 .4 .5 .5 .4 .4 .3 38 Other 2.8 2.3 1.9 2.1 2.2 2.2 2.5 2.6 2.6 2.7 2.6 Asia China 39 Peoples Republic of China .3 .2 .4 .3 .3 .3 .3 .7 .6 1.6 .5 40 Republic of China (Taiwan) 4.5 3.5 4.1 4.1 4.8 4.6 5.0 5.2 5.3 5.9 6.4 41 India 3.1 3.3 2.8 3.0 3.6 3.8 3.6 3.2 3.1 3.1 2.9 42 Israel .7 .5 .5 .5 .4 .4 .4 .4 .5 .4 .4 43 Korea (South) 5.9 6.2 6.5 6.8 6.9 6.9 7.4 6.6 6.5 6.9 6.5 44 Malaysia 1.7 1.9 2.3 2.3 2.5 2.7 3.0 3.1 3.3 3.7 4.1 45 Philippines 4.1 3.8 3.6 3.7 3.6 3.1 3.6 3.6 3.4 2.9 2.6 46 Thailand 1.3 1.5 1.9 1.7 1.7 1.9 2.2 2.2 2.2 2.4 2.8 47 Other Asia3 1.0 1.7 2.0 2.0 2.3 2.5 2.7 2.7 2.7 2.6 3.0 Africa 48 Egypt .4 .4 .4 .4 .3 .5 .3 .2 .2 .2 .2 49 Morocco .9 .8 .7 .7 .7 .7 .6 .6 .5 .6 .6 50 Zaire .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 1.0 1.0 .8 .7 .7 .6 .9 1.0 .8 .9 .8 52 Eastern Europe 3.5 2.3 1.8 2.4 2.9 3.0 3.1 3.1 2.9 3.2 3.0 53 Russia .7 .2 .4 .9 1.4 1.7 1.8 1.9 1.7 1.9 1.7 54 Yugoslavia 1.6 1.2 .8 .9 .8 .7 .7 .6 .6 .6 .6 55 Other 1.3 .9 .7 .7 .6 .6 .7 .6 .7 .7 .7 56 Offshore banking centers 38.4 44.7 54.6 54.2 63.0 61.5 54.6 58.4 60.1 57.7 67.4 57 Bahamas 5.5 2.9 6.7 11.9 15.3 13.0 9.0 6.9 9.6 6.9 12.4 58 Bermuda 1.7 4.4 7.1 2.3 3.9 5.1 3.8 6.2 4.1 4.5 5.5 59 Cayman Islands and other British West Indies 9.0 11.7 13.8 15.8 18.6 19.3 16.9 21.8 17.6 15.6 15.1 60 Netherlands Antilles 2.3 7.9 3.9 1.2 1.0 .8 .7 1.1 1.6 2.5 2.8 61 Panama 1.4 1.4 1.3 1.4 1.6 1.9 2.0 1.9 2.0 2.1 2.1 62 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 63 Hong Kong 11.3 9.7 14.0 14.4 14.0 15.0 15.2 13.8 16.7 16.8 19.0 64 Singapore 7.0 6.6 7.7 7.1 8.5 6.4 6.8 6.5 8.4 9.3 10.4 65 Other5 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated6 30.5 39.9 44.4 48.0 47.8 48.6 36.8 39.7 39.5 47.3 47.6 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 Type of liability and area or country 1989 1990 1991 June Sept. Dec. Mar. 1 Total 38,764 46,043 43,692 44,879 45,251 46,125 44,322 45,177 2 Payable in dollars 33,973 40,786 38,117 39,243 38,480 37,499 36,623 37,064 3 Payable in foreign currencies 4,791 5,257 5,575 5,636 6,771 8,626 7,699 8,113 By type 4 Financial liabilities 17,879 21,066 22,055 22,813 22,823 24,061 22,804 23,071 5 Payable in dollars 14,035 16,979 17,760 18,407 17,503 17,092 16,178 16,348 6 Payable in foreign currencies 3,844 4,087 4,295 4,406 5,320 6,969 6,626 6,723 7 Commercial liabilities 20,885 24,977 21,637 22,066 22,428 22,064 21,518 22,106 8 Trade payables 8,070 10,683 8,699 9,164 9,769 9,727 9,437 9,945 9 Advance receipts and other liabilities ... 12,815 14,294 12,938 12,902 12,659 12,337 12,081 12,161 10 Payable in dollars 19,938 23,807 20,357 20,836 20,977 20,407 20,445 20,716 11 Payable in foreign currencies 947 1,170 1,280 1,230 1,451 1,657 1,073 1,390 By area or country Financial liabilities 12 Europe 11,660 10,978 11,878 12,729 13,460 14,252 13,024 13,343 13 Belgium and Luxembourg 340 394 236 192 213 276 434 306 14 France 258 975 2,106 1,997 2,324 2,785 1,608 1,610 15 Germany 464 621 682 666 634 738 810 820 16 Netherlands 941 1,081 1,056 1,025 979 980 606 639 17 Switzerland 541 545 408 355 490 627 569 503 18 United Kingdom 8,818 6,357 6,383 7,588 7,933 8,044 8,327 8,911 19 Canada 610 229 292 308 362 345 516 576 20 Latin America and Caribbean 1,357 4,153 4,404 4,230 3,503 3,592 3,565 3,624 21 Bahamas 157 371 537 406 353 230 359 509 22 Bermuda 17 0 114 114 114 115 114 114 23 Brazil 0 0 6 8 10 18 19 18 24 British West Indies 724 3,160 3,144 3,088 2,352 2,528 2,382 2,307 25 Mexico 6 5 7 7 12 12 13 26 Venezuela 0 4 4 4 5 6 5 27 Asia 4,151 5,295 5,423 5,451 5,409 5,782 5,665 5,467 28 Japan 3,299 4,065 4,187 4,192 4,316 4,749 4,639 4,495 29 Middle East oil-exporting countries .. 2 5 13 13 10 17 19 24 30 Africa 2 2 6 7 0 5 6 6 0 0 4 6 0 0 0 0 31 Oil-exporting countries 32 All other4 Commercial liabilities 9,071 10,310 8,147 7,693 7,332 6,992 7,028 6,768 33 Europe 175 275 248 256 240 173 298 269 34 Belgium and Luxembourg 877 1,218 963 683 662 694 673 677 35 France 1,392 1,270 950 885 707 759 632 563 36 Germany 710 844 710 574 605 601 557 667 37 Netherlands 693 775 575 543 461 482 416 532 38 Switzerland 2,620 2,792 2,311 2,446 2,405 2,282 2,478 2,157 39 United Kingdom 40 Canada 1,124 1,261 1,014 1,115 1,109 1,114 923 998 41 Latin America and Caribbean 1,224 1,672 1,355 1,704 1,493 1,619 1,912 42 Bahamas 41 12 3 13 3 6 18 43 Bermuda 308 538 310 493 409 325 312 437 44 Brazil 100 145 219 230 218 121 211 238 45 British West Indies 27 30 107 108 73 85 57 87 46 Mexico 323 475 307 378 480 326 446 544 47 Venezuela 164 130 94 168 279 125 130 167 48 Asia 7,550 9,483 9,335 9,895 10,445 11,026 10,815 11,109 49 Japan 2,914 3,651 3,722 3,550 3,538 3,918 4,005 4,096 50 Middle Eastern oil-exporting countries' 1,632 2,016 1,498 1,592 1,778 1,813 1,793 1,775 51 Africa 844 715 646 777 675 559 590 52 Oil-exporting countries 339 422 327 253 389 335 295 236 53 Other4 1,030 1,071 1,013 951 764 574 729 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 • February 1994 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1992 1993 Type, and area or country 11998899 11999900 11999911 Mar. June Sept. Dec. Mar. Junep 1 Total 33,173 35,348 44,799 44,689 46,068 45,755 40,755 45,134 40,849 2 Payable in dollars 30,773 32,760 42,238 42,057 43,069 42,795 38,247 42,405 37,797 3 Payable in foreign currencies 2,400 2,589 2,561 2,632 2,999 2,960 2,508 2,729 3,052 By type 4 Financial claims 19,297 19,874 27,635 27,821 28,783 28,395 23,257 25,916 21,480 5 Deposits 12,353 13,577 19,856 19,969 19,679 19,405 14,991 16,520 11,598 6 Payable in dollars 11,364 12,552 18,981 18,770 18,324 18,268 14,202 15,464 10,682 7 Payable in foreign currencies 989 1,025 875 1,199 1,355 1,137 789 1,056 916 8 Other financial claims 6,944 6,297 7,779 7,852 9,104 8,990 8,266 9,396 9,882 9 Payable in dollars 6,190 5,280 6,899 7,130 8,397 7,983 7,520 8,670 8,985 10 Payable in foreign currencies 754 1,017 880 722 707 1,007 746 726 897 11 Commercial claims 13,876 15,475 17,164 16,868 17,285 17,360 17,498 19,218 19,369 12 Trade receivables 12,253 13,657 14,438 14,301 14,822 14,655 15,210 17,096 16,939 13 Advance payments and other claims 1,624 1,817 2,726 2,567 2,463 2,705 2,288 2,122 2,430 14 Payable in dollars 13,219 14,927 16,358 16,157 16,348 16,544 16,525 18,271 18,130 15 Payable in foreign currencies 657 548 806 711 937 816 973 947 1,239 By area or country Financial claims 16 Europe 8,463 9,645 13,277 13,834 12,871 11,229 9,131 10,180 9,407 17 Belgium and Luxembourg 28 76 13 12 25 16 8 6 13 18 France 153 371 269 252 777 768 762 905 774 19 Germany 152 367 287 266 358 296 330 382 377 20 Netherlands 238 265 334 707 715 750 515 544 499 21 Switzerland 153 357 581 647 765 587 487 478 460 22 United Kingdom 7,496 7,971 11,366 11,580 8,692 8,002 6,054 6,833 6,350 23 Canada 1,904 2,934 2,642 2,694 2,545 2,281 1,704 2,107 1,758 24 Latin America and Caribbean 8,020 6,201 10,634 10,244 12,001 13,731 11,032 9,611 6,612 25 Bahamas 1,890 1,090 784 493 538 1,212 638 320 697 26 Bermuda 7 3 8 12 12 65 40 79 258 27 Brazil 224 68 351 346 331 589 686 592 590 28 British West Indies 5,486 4,635 9,016 8,965 10,699 11,422 9,196 8,159 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 590 860 640 617 952 717 806 3,263 2,961 32 Japan 213 523 350 355 705 471 643 3,066 2,444 33 Middle East oil-exporting countries .. 8 8 5 3 4 4 3 3 10 34 Africa 140 37 57 60 57 71 79 128 125 35 Oil-exporting countries3 12 0 1 0 0 1 9 1 1 36 All other4 180 195 385 372 357 366 505 627 617 Commercial claims 6,209 7,044 7,992 7,971 8,239 7,909 7,776 8,415 8,770 37 Europe 242 212 192 182 255 173 186 169 170 38 Belgium and Luxembourg 964 1,240 1,583 1,663 1,685 1,824 1,493 1,465 1,452 39 France 696 807 952 946 919 895 898 960 964 40 Germany 479 555 643 646 666 588 541 724 555 41 Netherlands 313 301 295 323 394 305 307 426 441 42 Switzerland 1,575 1,775 2,084 2,085 2,172 2,004 1,941 2,312 2,506 43 United Kingdom 44 Canada 1,091 1,074 1,111 1,121 1,063 1,138 1,213 1,259 1,285 45 Latin America and Caribbean 2,184 2,375 2,649 2,630 2,727 3,213 2,962 3,388 3,376 46 Bahamas 58 14 13 12 12 12 27 18 16 47 Bermuda 323 246 264 273 291 256 246 195 239 48 Brazil 297 326 425 372 447 406 348 821 780 49 British West Indies 36 40 41 45 32 43 38 17 42 50 Mexico 508 661 839 907 859 973 903 967 876 51 Venezuela 147 192 203 207 253 307 338 336 310 52 Asia 3,570 4,127 4,592 4,368 4,499 4,314 4,649 5,295 5,029 53 Japan 1,199 1,460 1,900 1,796 1,798 1,774 1,812 2,122 1,824 54 Middle Eastern oil-exporting countries' 518 460 621 635 609 513 679 756 659 55 Africa 429 488 427 424 428 439 549 454 507 56 Oil-exporting countries3 108 67 95 75 73 60 78 75 97 57 Other4 393 367 393 354 329 347 349 407 402 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 Jan.- Apr. May June July Aug. Sept.r Oct.P Oct. U.S. corporate securities STOCKS 1 Foreign purchases 211,207 221,426 254,328 25,123 23,094 24,310 24,441 26,133r 23,891 32,326 2 Foreign sales 200,116 226,548 240,801 25,454 22,308 23,467 25,046 23,693 23,023 27,840 3 Net purchases or sales (-) 11,091 -5,122 13,527 -331 786 843 -605 2,440r 868 4,486 4 Foreign countries 10,522 -5,155 13,349 -339 790 815 -652 2,413r 950 4,574 5 Europe 53 -4,913 6,458 -650 -619 415 -185 670 433 3,095 6 France 9 -1,350 -209 -154 -86 -66 45 -9 -152 198 7 Germany -63 -66 1,251 137 6 99 76 202 112 328 8 Netherlands -227 -262 -19 32 35 -91 -452 133 69 134 9 Switzerland -131 168 2,442 280 50 178 369 354 -260 409 10 United Kingdom -352 -3,301 1,628 -1,140 -689 195 -73 -204 570 1,709 11 Canada 3,845 1,407 -3,138 91 -132 -532 -1,400 -128 -596 -324 12 Latin America and Caribbean 2,177 2,203 3,710 246 509 72 413 613r 139 1,245 13 Middle East1 -134 -88 -375 7 56 -22 -135 -44 10 -77 14 Other Asia 4,255 -3,943 6,633 2 910 1,073 632 1,204 977 602 15 Japan 1,179 -3,598 2,657 -530 452 230 626 860 1,016 349 16 Africa 153 10 37 -48 10 20 -49 63 3 5 17 Other countries 174 169 24 13 56 -211 72 35 -16 28 18 Nonmonetary international and regional organizations 568 33 178 8 -4 28 47 27 --8822 -88 BONDS2 19 Foreign purchases 153,096 214,922 227,175 20,817 19,325 24,091 22,738 22,288 24,844 28,465 20 Foreign sales 125,637 175,737 177,924 15,765 15,514 16,825 20,730 16,481r 16,294 19,032 21 Net purchases or sales (-) 27,459 39,185 49,251 5,052 3,811 7,266 2,008 5,807r 8,550 9,433 22 Foreign countries 27,590 38,069 48,804 5,073 3,843 7,229 2,018 5,801r 7,864 9,294 23 Europe 13,112 17,540 18,355 1,616 360 2,710 -1,001 2,102r 3,912 4,779 24 France 847 1,203 2,091 508 595 -12 -76 64 13 512 25 Germany 1,577 2,480 1,144 815 228 -241 2 -207 -419 881 26 Netherlands 482 540 -434 108 -7 -134 11 317 219 -518 27 Switzerland 656 -579 -576 -239 -219 -56 172 -327 -205 203 28 United Kingdom 8,931 12,526 15,052 975 -303 3,033 -1,214 l,84r 4,059 3,566 29 Canada 1,623 237 1,280 291 20 397 218 164 249 95 30 Latin America and Caribbean 2,672 9,300 10,162 632 1,262 1,770 901 1,678 846 1,727 31 Middle East1 1,787 3,166 2,442 463 115 202 147 158 171 375 32 Other Asia 8,459 7,545 15,346 2,082 2,062 2,089 1,382 1,432 2,373 2,256 33 Japan 5,767 -450 8,016 991 940 863 890 919 993 1,574 34 Africa 52 354 1,032 0 21 2 224 317 236 47 35 Other countries -116 -73 187 -11 3 59 147 -50 77 15 36 Nonmonetary international and regional organizations -131 1,116 447 -21 -32 37 -10 6 668866 113399 Foreign securities 37 Stocks, net purchases or sales (-)3 -31,967 -32,295 -54,443 -4,029 -3,793 -6,317 -7,964 -12,212r -5,119 -6,517 38 Foreign purchases 120,598 150,037 186,143 19,297 16,465 18,523 19,620 20,745r 21,501 24,758 39 Foreign sales 152,565 182,332 240,586 23,326 20,258 24,840 27,584 32,95T 26,620 31,275 40 Bonds, net purchases or sales (-) -14,828 -19,585 -54,419 -2,913 -545 -7,528 -10,633 — l,046r -9,908 -2,580 41 Foreign purchases 330,311 486,238 650,422 55,766 58,771 70,377 68,769 75,84/ 80,177 75,992 42 Foreign sales 345,139 505,823 704,841 58,679 59,316 77,905 79,402 76,893r 90,085 78,572 43 Net purchases or sales (-), of stocks and bonds -46,795 -51,880 -108,862 -6,942 -4,338 -13,845 -18,597 -13,258r -15,027 -9,097 44 Foreign countries -46,711 -55,216 -108,987 -7,221 -4,671 -13,907 -18,707 —13,312r -15,103 -9,446 45 Europe -34,452 -37,284 -80,656 -3,252 -5,382 -11,719 -15,488 - 10,543r -13,173 -4,853 46 Canada -7,004 -6,635 -13,541 -818 11 -1,277 -2,557 1,635 -1,309 -1,003 47 Latin America and Caribbean 759 -3,881 -1,124 -2,551 1,092 421 -635 —l,127r 1,945 -557 48 Asia -7,350 -6,654 -10,694 -531 -185 -780 121 -2,644r -2,344 -2,006 49 Africa -9 -2 -178 -18 -186 9 4 7 14 14 50 Other countries 1,345 -760 -2,794 -51 -21 -561 -152 -640 -236 -1,041 51 Nonmonetary international and regional organizations -84 3,336 125 279 333 62 NO 54 76 334499 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 • February 1994 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1993 1993 Country or area 1991 1992 J O an ct . . - Apr. May June July Aug. Sept. Oct.? Transactions, net purchases or sales (-) during period1 1 Estimated total 19,865 39,288 8,615 4,232 -1,159 -5,710 -1,531 13,980 -10,890* 3,946 2 Foreign countries 19,687 37,935 8,837 4,393 -877 -5,955 -1,144 14,368 - 10,748r 5,081 3 Europe 8,663 19,625 -1,973 1,518 -190 1,473 -1,539 3,547 -5,917 3,4% 4 Belgium and Luxembourg 523 1,985 1,261 -387 647 86 505 -218 207 -205 5 Germany -4,725 2,076 -9,798 -1,382 -3,3% -1,100 -2,918 305 1,209 1,176 6 Netherlands -3,735 -2,959 -532 731 108 -393 524 -167 137 -506 7 Sweden -663 -804 1,311 -100 649 673 32 293 53 47 8 Switzerland 1,007 488 -2,004 -719 108 888 -223 -74 -209 448 9 United Kingdom 6,218 24,184 8,574 2,659 2,948 2,147 1,455 3,787 -8,201 829 10 Other Europe and former U.S.S.R 10,037 -5,345 -785 716 -1,254 -828 -914 -379 887 1,707 11 Canada -3,019 562 9,048 1,386 522 133 2,270 324 -1,119 -342 12 Latin America and Caribbean 10,285 -3,222 -1,932 -2,020 -3,880 -1,419 -333 6,917 -3,311 3,701 13 Venezuela 10 539 314 74 152 5 2 -7 32 -102 14 Other Latin America and Caribbean 4,179 -1,956 -4,828 1,0% -1,863 711 510 1,178 -1,700 676 15 Netherlands Antilles 6,097 -1,805 2,582 -3,190 -2,169 -2,135 -845 5,746 -1,643 3,127 16 3,367 23,517 4,757 3,813 2,994 -5,687 -2,587 3,755 —574r -2,009 17 Japan -4,081 9,817 10,760 3,324 3,291 -301 -980 3,561 -1,809 156 18 Africa 689 1,103 1,006 67 -2 81 116 292 616 74 19 Other -298 -3,650 -2,069 -371 -321 -536 929 -467 -443 161 20 Nonmonetary international and regional organizations 178 1,353 -222 -161 -282 245 -387 -388 — 142r -1,135 21 International -358 1,018 -1,276 -228 -318 402 -321 -698 —99r -879 22 Latin American regional -72 533 615 16 -17 106 -21 30 18 -23 MEMO 23 Foreign countries 19,687 37,935 8,837 4,393 -877 -5,955 -1,144 14,368 -10,748r 5,081 24 Official institutions 1,190 6,876 -8,787 2,709 -3,424 -760 -4,880 724 3,181r 1,623 25 Other foreign2 18,4% 31,059 17,624 1,684 2,547 -5,195 3,736 13,644 -13,929* 3,458 Oil-exporting countries 26 Middle East2 -6,822 4,317 -8,914 114 -1,070 -2,443 -1,261 -1,172 -980 -820 27 239 11 4 -4 0 0 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 (Trucial 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 Dec. 31, 1993 Rate on Dec. 31, 1993 Rate on Dec. 31, 1993 Country Country Country Percent e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e Austria.. 5.25 Nov. 1993 Germany... 5.75 Oct. 1993 Norway 7.0 Oct. 1993 Belgium . 5.25 Dec. 1993 Italy 8.0 Oct. 1993 Switzerland 4.0 Dec. 1993 Canada.. 4.11 Dec. 1993 Japan 1.75 Sept. 1993 United Kingdom 12.0 Sept. 1992 Denmark 6.50 Nov. 1993 Netherlands 5.0 Dec. 1993 France .. 6.20 Dec. 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 TTyyppee oorr ccoouunnttrryy 11999911 11999922 11999933 June July Aug. Sept. Oct. Nov. Dec. 5.86 3.70 3.18 3.21 3.17 3.14 3.08 3.26 3.36 3.26 11.47 9.56 5.88 5.83 5.88 5.79 5.88 5.74 5.52 5.28 9.07 6.76 5.14 4.91 4.48 4.58 4.90 4.76 4.34 4.09 9.15 9.42 7.17 7.51 7.12 6.49 6.52 6.53 6.20 5.99 8.01 7.67 4.79 4.99 4.62 4.56 4.61 4.44 4.44 4.10 9.19 9.25 6.74 6.64 6.45 6.27 6.26 6.20 5.85 5.51 9.49 10.14 8.31 7.19 7.72 7.45 7.07 6.85 6.56 6.39 g Italy 12.04 13.91 10.10 10.18 9.42 9.20 9.05 8.69 8.94 8.57 9.30 9.31 8.11 6.87 7.12 9.02 9.82 9.05 7.93 7.05 7.33 4.39 2.96 3.23 3.22 3.02 2.59 2.44 2.31 2.06 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 • February 1994 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar except as noted 1993 CCoouunnttrryy//ccuurrrreennccyy uunniitt 11999911 11999922 11999933 July Aug. Sept. Oct. Nov. Dec. 1 Australia/dollar2 77.872 73.521 67.993 67.788 67.736 65.167 66.100 66.465 67.364 2 Austria/schilling 11.686 10.992 11.639 12.071 11.920 11.402 11.540 11.958 12.025 3 Belgium/franc 34.195 32.148 34.581 35.483 35.985 34.847 35.674 36.227 35.694 4 Canada/dollar 1.1460 1.2085 1.2902 1.2820 1.3080 1.3215 1.3263 1.3174 1.3308 5 China, P.R./yuan 5.3337 5.5206 5.7795 5.7756 5.7906 5.8015 5.8013 5.8086 5.8210 6 Denmark/krone 6.4038 6.0372 6.4863 6.6531 6.8976 6.6336 6.6379 6.7667 6.7042 7 Finland/markka 4.0521 4.4865 5.7251 5.7852 5.8315 5.7868 5.7554 5.8143 5.7602 8 France/franc 5.6468 5.2935 5.6669 5.8464 5.9298 5.6724 5.7541 5.9069 5.8477 9 Germany/deutsche mark 1.6610 1.5618 1.6545 1.7157 1.6944 1.6219 1.6405 1.7005 1.7105 10 Greece/drachma 182.63 190.81 229.64 234.77 237.64 232.56 237.93 243.43 245.51 11 Hong Kong/dollar 7.7712 7.7402 7.7357 7.7556 7.7515 7.7384 7.7307 7.7272 7.7245 12 India/rupee 22.712 28.156 31.291 31.600 31.612 31.578 31.505 31.434 31.440 13 Ireland/pound2 161.39 170.42 146.47 140.83 139.05 143.40 143.19 140.31 141.82 14 Italy/lira 1,241.28 1,232.17 1,573.41 1,586.02 1,603.75 1,569.10 1,600.93 1,666.31 1,687.17 15 Japan/yen 134.59 126.78 111.08 107.69 103.77 105.57 107.02 107.88 109.91 16 Malaysia/ringgit 2.7503 2.5463 2.5738 2.5672 2.5514 2.5475 2.5478 2.5548 2.5737 17 Netherlands/guilder 1.8720 1.7587 1.8585 1.9299 1.9062 1.8214 1.8438 1.9084 1.9162 18 New Zealand/dollar2 57.832 53.792 54.127 54.900 55.261 55.157 55.260 54.787 55.631 19 Norway/krone 6.4912 6.2142 7.0979 7.3179 7.3579 7.0829 7.1755 7.3882 7.4211 20 Portugal/escudo 144.77 135.07 161.08 167.87 173.27 166.28 169.60 173.93 174.58 21 Singapore/dollar 1.7283 1.6294 1.6158 1.6206 1.6100 1.5972 1.5735 1.5950 1.5975 22 South Africa/rand 2.7633 2.8524 3.2729 3.3518 3.3660 3.4135 3.3924 3.3680 3.3788 23 South Korea/won 736.73 784.58 805.75 809.58 811.94 811.84 813.45 809.79 812.57 24 Spain/peseta 104.01 102.38 127.48 134.93 138.51 130.54 132.18 137.27 140.42 25 Sri Lanka/rupee 41.200 44.013 48.205 48.643 48.750 48.854 48.954 49.187 49.322 26 Sweden/krona 6.0521 5.8258 7.7956 7.9802 8.0466 8.0170 8.0195 8.2660 8.3501 27 Switzerland/franc 1.4356 1.4064 1.4781 1.5147 1.4966 1.4182 1.4432 1.4969 1.4634 28 Taiwan/dollar 26.759 25.160 26.416 26.682 26.950 26.931 26.865 26.884 26.768 29 Thailand/baht 25.528 25.411 25.333 25.331 25.191 25.196 25.269 25.382 25.460 30 United Kingdom/pound2 176.74 176.63 150.16 149.55 149.14 152.48 150.23 148.08 149.13 MEMO 31 United States/dollar3 89.84 86.61 93.18 94.59 94.32 92.07 93.29 95.47 95.73 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.S (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 December 31, 1992 May 1993 A70 March 31, 1993 August 1993 A70 June 30, 1993 November 1993 A70 September 30, 1993 February 1994 A70 Terms of lending at commercial banks February 1993 May 1993 A76 May 1993 August 1993 A76 August 1993 November 1993 A76 November 1993 February 1994 A76 Assets and liabilities of US. branches and agencies of foreign banks December 31, 1992 May 1993 A80 March 31, 1993 August 1993 A80 June 30, 1993 November 1993 A80 September 30, 1993 February 1994 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 Special Tables • February 1994 4.20 DOMESTIC AND FOREIGN OFFICES Insured Commercial Bank Assets and Liabilities1 Consolidated Report of Condition, September 30, 1993 Millions of dollars except as noted Banks with foreign offices2 Bank o s f f w ic i e th s o d n o l m y3 e stic IItteemm Total Total Foreign Domestic Over 100 Under 100 1 Total assets4 3,605,757 2,015,148 476,587 1,629,957 1,244,739 345,870 2 Cash and balances due from depository institutions 266,386 181,030 76,044 104,986 66,123 19.233 3 Cash items in process of collection, unposted debits, and currency and coin 4 79,322 2,155 77,168 36,200 4 5 C C a u s r h r e i n te cy m s a n in d p c r o o in c ess of collection and unposted debits T 1 n n . . a a . . n n . . a a . . 6 1 0 7 , , 0 1 3 3 1 7 2 1 3 2 , , 9 2 0 9 1 9 I 1 6 Balances due from depository institutions in the United States n.a. 26,224 18,063 8,161 15,772 n.a. 7 Balances due from banks in foreign countries and foreign central banks 1 58,278 54,806 3,472 2,871 1 8 Balances due from Federal Reserve Banks • 17,206 1,020 16,185 11,280 t MEMO 9 Non-interest-bearing balances due from commercial banks in the United States (included in balances due from depository institutions in the United States) n.a. n.a. n.a. 6,012 1122,,884411 77,,552200 10 Total securities, loans- and lease-financing receivables, net 2,987,563 1,555,350 n.a. n.a. 1,119,162 313,051 11 Total securities, book value 812,242 346,454 31,234 315,220 349,454 116,333 12 U.S. Treasury securities and U.S. government agency and corporation obligations 644,594 268,135 7,914 226600,,222211 228833,,666699 9922,,779900 13 U.S. Treasury securities n.a. 98,898 4,247 94,651 118,076 n.a. 14 U.S. government agency and corporation obligations n.a. 169,237 3,667 165,570 165,593 n.a. 15 All holdings of U.S. government-issued or guaranteed certificates of participation in pools of residential mortgages 173,119 87,948 33,,447700 8844,,447788 6677,,443388 1177,,773333 16 All other n.a. 81,289 197 81,092 98,155 n.a. 17 Securities issued by states and political subdivisions in the United States 75,108 20,138 558 19,580 37,656 17,314 18 Other domestic debt securities n.a. 28,794 123 28,671 22,060 n.a. 19 All holdings of private certificates of participation in pools of residential mortgages 44,,558811 22,,440077 00 22,,440077 22,,003388 113366 20 All other domestic debt securities 50,972 26,387 123 26,264 20,022 4,564 21 Foreign debt securities n.a. 23,086 21,578 1,508 328 n.a. 22 Equity securities 13,572 6,302 1,062 5,240 5,741 1,528 23 Marketable 5,786 1,683 294 1,389 3,104 999 24 Investments in mutual funds 3,713 851 10 841 1,972 890 25 Other 2,109 832 284 548 1,148 129 26 LESS: Net unrealized loss 36 1 0 0 16 19 27 Other equity securities 7,786 4,619 769 3,851 2,637 529 28 Federal funds sold and securities purchased under agreements to resell 146,177 85,119 752 84,368 45,643 15,415 29 Federal funds sold 122,045 64,083 n.a. n.a. 42,685 15,277 30 Securities purchased under agreements to resell 24,132 21,036 n.a. n.a. 2,958 138 31 Total loans- and lease-financing receivables, gross 2,089,676 1,160,797 211,956 948,842 743,257 185,622 32 LESS: Unearned income on loans 6,871 2,592 899 1,693 3,132 1,147 33 Total loans and leases (net of unearned income) 2,082,805 1,158,205 211,057 947,148 740,125 184,475 34 LESS: Allowance for loan and lease losses 53,231 34,002 n.a. n.a. 16,058 3,171 35 LESS: Allocated transfer risk reserves 430 427 n.a. n.a. 3 0 36 EQUALS: Total loans and leases, net 2,029,144 1,123,777 n.a. n.a. 724,064 181,303 Total loans, gross, by category 37 Loans secured by real estate 893,766 404,771 2211,,995599 338822,,881133 338866,,553344 110022,,446611 38 Construction and land development I 4 34,560 27,170 6,276 4 3 0 9 O Fa n r e m - l t a o n f d o ur-family residential properties T 1 T 1 T 1 222 2 , , 6 0 7 9 2 7 21 7 2 , , 8 8 3 0 2 6 5 1 5 0 , , 7 8 0 8 1 7 41 Revolving, open-end loans, extended under lines of credit n.a. n.a. n.a. 40,392 30,776 2,837 1 1 1 182,279 182,031 52,864 43 Multifamily (five or more) residential properties 1 1 1 12,697 13,607 2,277 44 Nonfarm nonresidential properties T • T 110,788 125,119 27,320 45 Loans to depository institutions 37,676 31,982 16,276 15,706 5,407 287 46 Commercial banks in the United States n.a. 13,221 857 12,364 4,959 n.a. 47 Other depository institutions in the United States n.a. 397 46 352 235 n.a. 48 Banks in foreign countries n.a. 18,364 15,373 2,991 212 n.a. 49 Loans to finance agricultural production and other loans to farmers 37,279 5,165 182 4,983 12,252 19,862 50 Commercial and industrial loans 526,806 371,928 95,103 276,826 124,779 30,099 51 U.S. addressees (domicile) n.a. 293,620 19,407 274,213 124,311 n.a. 52 Non-U.S. addressees (domicile) n.a. 78,308 75,6% 2,612 468 n.a. 53 Acceptances of other banks 1,851 1,390 867 524 358 102 54 U.S. banks n.a. 388 8 380 n.a. n.a. 55 Foreign banks n.a. 1,003 859 144 n.a. n.a. 56 Loans to individuals for household, family, and other personal expenditures (includes 400,556 181,678 21,732 159,946 118888,,885555 3300,,002222 57 Credit cards and related plans 142,041 73,066 n.a. n.a. 67,308 1,668 58 Other (includes single payment and installment) 258,514 108,613 n.a. n.a. 121,547 28,355 59 Obligations (other than securities) of states and political subdivisions in the United States (includes nonrated industrial development obligations) 22,657 12,293 332 11,961 99,,119999 11,,116655 60 Taxable 1,800 1,190 213 977 565 45 61 Tax-exempt 20,857 11,103 119 10,984 8,634 1,120 62 All other loans 133,375 122,891 52,144 70,747 9,360 1,124 63 Loans to foreign governments and official institutions n.a. 24,345 22,520 1,825 49 n.a. 64 Other loans n.a. 98,546 29,624 68,922 9,311 n.a. 65 Loans for purchasing and carrying securities n.a. n.a. n.a. 20,653 2,186 n.a. 66 All other loans n.a. n.a. n.a. 48,269 7,125 n.a. 67 Lease-financing receivables 35,709 28,697 3,361 25,336 6,513 499 68 Assets held in trading accounts 112,912 110,926 70,181 40,519 1,814 172 69 Premises and fixed assets (including capitalized leases) 54,691 29,657 4 n.a. 19,273 5,761 7 7 0 1 O In t v h e e s r tm re e al n t e s s t in a te u n o c w o n n e s d o lidated subsidiaries and associated companies 20 3 , , 2 2 3 4 6 6 1 2 3 , , 8 0 3 5 9 0 T i n n . . a a . . 5,8 3 6 7 1 8 1,3 2 2 9 5 72 Customers' liability on acceptances outstanding 14,401 14,037 n.a. n.a. 348 15 73 Net due from own foreign offices, Edge Act and agreement subsidiaries, and IBFs ... n.a. n.a. 1 53,108 n.a. n.a. 74 Intangible assets 16,630 9,903 1 n.a. 6,269 458 75 Other assets 129,692 98,356 T n.a. 25,512 5,825 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks All 4.20 DOMESTIC AND FOREIGN OFFICES Insured Commercial Bank Assets and Liabilities1—Continued Consolidated Report of Condition, September 30, 1993 Millions of dollars except as noted Banks with foreign offices2 Bank o s f f w ic i e th s o d n o l i y n estic Item Total Total Foreign Domestic Over 100 Under 100 76 Total liabilities, limited-life preferred stock, and equity capital 3,605,757 2,015,148 1,244,739 77 Total liabilities5 3,319,152 1,868,431 476,581 1,483,246 1,138,960 78 Limited-life preferred stock 4 0 n.a. n.a. 1 79 Total deposits 2,675,745 1,363,716 322,561 1,041,156 1,008,724 80 Individuals, partnerships, and corporations 199,966 967,319 940,960 81 U.S. government 2,579 1,660 82 States and political subdivisions in the United States 30,799 46,086 83 Commercial banks in the United States n.a. 18,921 8,126 8 8 4 5 O Ba th n e k r s d in e p f o o s r i e t i o g r n y c i o n u st n i t t r u i t e i s o ns in the United States I 3 5 , , 2 8 5 8 2 6 4,5 2 6 1 1 9 86 Foreign governments and official institutions 25,576 24,645 931 72 87 Certified and official checks 21,376 12,370 902 11,468 7,039 88 All other® n.a. n.a. 97,048 n.a. n.a. 89 Total transaction accounts 392,069 311,803 90 Individuals, partnerships, and corporations 337,878 278,695 91 U.S. government 2,248 1,282 92 States and political subdivisions in the United States 14,113 17,548 93 Commercial banks in the United States 17,748 5,836 94 Other depository institutions in the United States 2,303 1,179 95 Banks in foreign countries 5,584 186 96 Foreign governments and official institutions 727 38 97 Certified and official checks 11,468 7,039 98 All other n.a. n.a. 99 Demand deposits (included in total transaction accounts) 283,646 175,190 100 Individuals, partnerships, and corporations 235,047 153,188 101 U.S. government 2,007 1,240 102 States and political subdivisions in the United States 8,768 6,517 103 Commercial banks in the United States 17,748 5,814 104 Other depository institutions in the United States 2,302 1,169 105 Banks in foreign countries 5,581 186 106 Foreign governments and official institutions 725 38 107 Certified and official checks 11,468 7,039 108 All other n.a. n.a. 109 Total nontransaction accounts 649,087 696,920 110 Individuals, partnerships, and corporations 629,441 662,265 111 U.S. government 331 378 112 States and political subdivisions in the United States 16,686 28,538 113 Commercial banks in the United States 1,173 2,290 114 U.S. branches and agencies of foreign banks 90 436 115 Other commercial banks in the United States 1,083 1,853 116 Other depository institutions in the United States 949 3,382 1 1 1 1 7 8 Ba F n o k r s e i in g n f o b r r e a i n g c n h c e o s u o n f t r o i t e h s er U.S. banks 30 1 2 4 33 1 119 Other banks in foreign countries 288 32 120 Foreign governments and official institutions 204 35 121 All other n.a. n.a. n.a. n.a. 122 Federal funds purchased and securities sold under agreements to repurchase 277,928 202,041 824 201,217 72,357 123 Federal fiinds purchased 174,472 131,874 n.a. n.a. 40,913 124 Securities sold under agreements to repurchase 103,456 70,167 n.a. n.a. 31,444 125 Demand notes issued to the U.S. Treasury n.a. n.a. n.a. 28,314 5,980 126 Other borrowed money 167,358 133,282 47,864 85,418 32,200 127 Banks' liability on acceptances executed and outstanding 14,461 14,097 3,839 10,258 348 128 Notes and debentures subordinated to deposits 36,756 34,306 n.a. n.a. 2,413 129 Net owed to own foreign offices, Edge Act and agreement subsidiaries, and IBFs n.a. n.a. n.a. 38,289 n.a. 130 All other liabilities 112,292 92,675 n.a. n.a. 16,938 131 Total equity capital7 286,601 146,717 n.a. n.a. 105,778 MEMO 132 Holdings of commercial paper included in total loans, gross 614 170 444 588 133 Total individual retirement (IRA) and Keogh plan accounts 62,648 66,445 134 Total brokered deposits 23,338 16,089 135 Total brokered retail deposits 16,420 13,482 136 Issued in denominations of $100,000 or less 982 3,211 137 Issued in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less 15,438 10,271 138 Money market deposit accounts (savings deposits; MMDAs) 239,046 176,460 139 Other savings deposits (excluding MMDAs) 129,616 136,921 140 Total time deposits of less than $100,000 190,831 296 141 Time certificates of deposit of $100,000 or more 76,356 84,505 142 Open-account time deposits of $100,000 or more 13,238 2,708 143 All negotiable order of withdrawal (NOW) accounts (including Super NOWs) — 107,361 134,091 144 Total time and savings deposits 757,509 833,533 Quarterly averages 145 Total loans 907,595 723,203 146 Obligations (other than securities) of states and political subdivisions in the United States 12,455 9,046 147 Transaction accounts in domestic offices (NOW accounts, automated transfer service (ATS) accounts, and telephone and preauthorized transfer accounts) 110,249 136,090 Nontransaction accounts in domestic offices 148 Money market deposit accounts 243,775 176,892 149 Other savings deposits 129,639 135,770 150 Time certificates of deposit of $100,000 or more 81,452 83,323 151 All other time deposits 213,876 302,101 152 Number of banks 11,042 209 2,845 Digitized for FRASER Footnotes appear at the end of table 4.22 http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Special Tables • February 1994 4.21 DOMESTIC OFFICES Insured Commercial Banks with Assets of $100 Million or More or With Foreign Offices1 Consolidated Report of Condition, September 30, 1993 Millions of dollars except as noted Members Item Total Total National State 1 Total assets4 2,874,696 2,252,286 1,733,493 518,793 2 Cash and balances due from depository institutions 171,109 140,685 110,396 30,289 3 Cash items in process of collection and unposted debits 83.932 74,260 57,391 16,870 4 Currency and coin 29,436 24,080 19,550 4,530 5 Balances due from depository institutions in the United States 23.933 15,963 13,155 2,808 6 Balances due from banks in foreign countries and foreign central banks 6,343 4,735 4,163 571 7 Balances due from Federal Reserve Banks 27,466 21,646 16,137 5,510 8 Total securities, loans- and lease-financing receivables (net of unearned income) 2,481,958 1,920,270 1,506,868 413,402 9 Total securities, book value 664,674 505,227 377,459 127,768 10 U.S. Treasury securities 212,726 156,539 121,101 35,438 11 U.S. government agency and corporation obligations 331,163 259,732 192,449 67,283 12 All noldings of U.S. government-issued or guaranteed certificates of participation in pools of residential mortgages 151,916 124,722 90,781 33,941 13 All other 179,248 135,010 101,668 33,342 14 Securities issued by states and political subdivisions in the United States 57,236 39,762 28,054 11,707 15 Other domestic debt securities 50,731 39,972 28,366 11,606 1 1 1 1 6 7 8 9 F E o q A A r u e l l i l l i t y g h o n o t s h l d e d e c e r i u b n r t d g i o s t s i m e e o c s f e u s p r t i r i t c i i v e d a s e te b t c e s r e t c i u fi r c i a ti t e e s s of participation in pools of residential mortgages .. 4 1 6 4 4 0 1 , , , , , 2 4 4 9 8 8 4 9 8 3 6 5 3 1 6 36 7 3 2 1 , , , , , 2 6 8 1 3 9 7 7 1 5 9 3 2 7 1 25 2 6 1 1 , , , , , 5 8 3 7 1 1 5 4 8 4 2 4 5 8 4 10 1 , , 7 8 2 3 5 8 1 0 3 2 7 8 7 0 6 20 Marketable 2,813 1,331 1,176 156 21 Investments in mutual funds 1,696 792 617 175 22 Other 16 6 5 1 2 2 3 4 Othe L r E e S q S u : i t N y e s t e u cu n r r i e t a ie li s z ed loss 6,488 5,754 4,558 1,197 25 Federal funds sold and securities purchased under agreements to resell8 130,011 109,364 84,695 24,669 26 Federal funds sold 42,685 28,998 24,774 4,224 27 Securities purchased under agreements to resell 2,958 1,630 1,332 298 28 Total loans and lease-financing receivables, gross 1,692,098 1,308,816 1,047,035 261,782 29 LESS: Unearned income on loans 4,825 3,137 2,321 816 30 Total loans and leases (net of unearned income) 1,687,273 1,305,679 1,044,713 260,966 Total loans, gross, by category 31 Loans secured by real estate 769,347 573,069 464,470 108,599 32 Construction and land development 61,730 46,053 37,237 8,816 33 Farmland 9,928 5,871 4,903 968 34 One- to four-family residential properties 435,478 333,449 271,071 62,378 35 Revolving, open-end and extended under lines of credit 71,168 55,269 44,785 10,483 36 All other loans 364,310 278,180 226,285 51,895 37 Multifamily (five or more) residential properties 26,304 18,555 14,961 3,593 38 Nonfarm nonresidential properties 235,907 169,142 136,298 32,844 39 Commercial banks in the United States 17,323 14,368 11,451 2,917 40 Other depository institutions in the United States 587 330 244 85 41 Banks in foreign countries 3,203 3,035 1,684 1,351 42 Loans to finance agricultural production and other loans to farmers 17,235 11,664 10,088 1,576 43 Commercial and industrial loans 401,605 328,598 263,297 65,301 44 U.S. addressees (domicile) 398,524 325,813 261,003 64,810 45 Non-U.S. addressees (domicile) 3,081 2,785 2,294 491 46 Acceptances of other banks9 881 632 476 156 47 U.S. banks 525 361 216 145 48 Foreign banks 271 237 233 4 49 Loans to individuals for household, family, and other personal expenditures (includes purchased paper) 348,802 258,605 211,916 46,688 50 Credit cards and related plans 67,308 46,502 42,568 3,934 51 Other (includes single-payment and installment loans) 121,547 75,103 59,304 15,800 52 Loans to foreign governments and official institutions 1,874 1,846 871 975 53 Obligations (outer than securities) of states and political subdivisions in the United States (includes nonrated industrial development obligations) 21,160 17,219 12,649 4,570 54 Taxable 1,542 1,273 892 382 55 Tax-exempt 19,618 15,946 11,757 4,189 56 Other loans 78,233 72,800 48,490 24,309 5 5 7 8 A Lo ll a o n t s h f e o r r l p o u an rc s hasing and carrying securities 5 2 5 2 , , 3 8 9 3 4 9 2 5 1 1 , , 4 3 2 8 0 0 3 1 7 1 , , 3 1 0 8 8 3 1 14 0 , , 0 2 7 3 2 7 59 Lease-financing receivables 31,849 26,650 21,398 5,252 60 Customers' liability on acceptances outstanding 10,479 9,857 7,169 2,688 61 Net due from own foreign offices, Edge Act and agreement subsidiaries, and IBFs 53,108 45,952 17,319 28,633 62 Remaining assets 211,150 181,474 109,061 72,414 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks All 4.21 DOMESTIC OFFICES Insured Commercial Banks with Assets of $100 Million or More or With Foreign Offices1—Continued Consolidated Report of Condition, September 30, 1993 Millions of dollars except as noted Members NNoonn-- IItteemm TToottaall mmeemmbbeerrss Total National State 63 Total liabilities and equity capital 2,874,696 2,252,286 1,733,493 518,793 622,410 64 Total liabilities5 2,622,207 2,055,667 1,582,521 473,146 566,540 65 Total deposits 2,049,879 1,577,842 1,247,391 330,451 472,038 66 Individuals, partnerships, and corporations 1,908,279 1,467,447 1,163,042 304,406 440,832 67 U.S. government 4,239 3,569 3,072 497 670 68 States and political subdivisions in the United States 76,885 56,309 43,876 12,433 20,576 69 Commercial banks in the United States 27,047 23,940 18,755 5,184 3,107 70 Other depository institutions in the United States 7,814 4,949 3,983 966 2,865 71 Banks in foreign countries 6,105 5,650 3,622 2,028 455 72 Foreign governments and official institutions 1,004 922 647 275 82 73 Certified and official checks 18,508 15,056 10,394 4,662 3,451 74 Total transaction accounts 703,872 561,120 439,472 121,648 142,752 75 Individuals, partnerships, and corporations 616,574 487,561 383,755 103,806 129,013 76 U.S. government 3,529 2,949 2,551 398 580 77 States and political subdivisions in the United States 31,661 24,423 18,965 5,458 7,238 78 Commercial banks in the United States 23,584 22,165 17,626 4,539 1,419 79 Other depository institutions in the United States 3,482 2,809 2,166 643 673 80 Banks in foreign countries 5,770 5,439 3,503 1,937 331 81 Foreign governments and official institutions 765 718 514 205 46 82 Certified and official checks 18,508 15,056 10,394 4,662 3,451 83 Demand deposits (included in total transaction accounts) 458,837 373,937 286,484 87,454 84,899 84 Individuals, partnerships, and corporations 388,234 312,418 240,561 71,857 75,816 85 U.S. government 3,247 2,684 2,304 380 563 86 States and political subdivisions in the United States 15,285 12,655 9,424 3,231 2,631 87 Commercial banks in the United States 23,562 22,164 17,625 4,539 1,397 88 Other depository institutions in the United States 3,471 2,804 2,161 643 667 89 Banks in foreign countries 5,767 5,439 3,503 1,936 328 90 Foreign governments and official institutions 763 717 513 205 46 91 Certified and official checks 18,508 15,056 10,394 4,662 3,451 97 Total nontransaction accounts 1,346,007 1,016,721 807,918 208,803 329,286 93 Individuals, partnerships, and corporations 1,291,706 979,886 779,286 200,600 311,819 94 U.S. government 709 620 521 99 90 95 States and political subdivisions in the United States 45,224 31,886 24,911 6,975 13,338 % Commercial banks in the United States 3,463 1,775 1,130 645 1,688 97 U.S. branches and agencies of foreign banks 526 89 60 29 438 98 Other commercial banks in the United States 2,936 1,686 1,070 616 1,250 99 Other depository institutions in the United States 4,331 2,140 1,817 323 2,191 100 Banks in foreign countries 335 211 119 91 124 101 Foreign branches of other U.S. banks 15 15 15 0 0 102 Other banks in foreign countries 320 1% 105 91 124 103 Foreign governments and official institutions 239 203 133 70 36 104 Federal funds purchased and securities sold under agreements to repurchase10 273,574 231,542 160,775 70,767 42,032 105 Federal funds purchased 40,913 30,535 25,738 4,797 10,378 106 Securities sold under agreements to repurchase 31,444 20,060 15,669 4,390 11,385 107 Demand notes issued to the U.S. Treasury 34,294 31,662 20,609 11,053 2,632 108 Other borrowed money 117,618 89,710 61,949 27,761 27,908 109 Banks liability on acceptances executed and outstanding 10,606 9,985 7,259 2,726 621 110 Notes and debentures subordinated to deposits 2,413 1,723 1,415 308 690 111 Net owed to own foreign offices, Edge Act and agreement subsidiaries, and IBFs 38,289 28,371 26,062 2,309 9,918 112 Remaining liabilities 133,822 113,203 83,122 30,081 20,618 113 Total equity capital7 252,489 196,620 150,972 45,647 55,870 MEMO 114 Holdings of commercial paper included in total loans, gross 1,032 405 385 20 662277 115 Total individual retirement (IRA) and Keogh plan accounts 129,093 100,172 80,846 19,327 28,921 116 Total brokered deposits 39,427 27,282 22,025 5,257 12,145 117 Total brokered retail deposits 29,902 20,534 16,985 3,549 9,368 118 Issued in denominations of $100,000 or less 4,193 2,883 2,649 234 1,310 119 Issued in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less 25,709 17,651 14,336 3,315 88,,005588 120 Money market deposit accounts (savings deposits; MMDAs) 415,506 329,983 262,287 67,6% 85,523 17,1 Other savings accounts 266,537 200,894 150,050 50,844 65,643 122 Total time deposits of less than $100,000 487,158 360,142 295,078 65,064 127,016 123 Time certificates of deposit of $100,000 or more 160,861 112,697 93,357 19,340 48,164 124 Open-account time deposits of $100,000 or more 15,946 13,006 7,146 5,859 2,940 125 All negotiable order of withdrawal (NOW) accounts (including Super NOWs) 241,452 185,110 151,238 33,871 56,343 126 Total time and savings deposits 1,591,043 1,203,904 960,907 242,997 387,138 Quarterly averages VI 1,630,798 1,257,292 1,005,927 251,365 373,506 128 Obligations (other than securities) of states and political subdivisions in the United States 21,501 17,612 12,814 4,798 3,889 179 Transaction accounts (NOW accounts, automated transfer service (ATS) accounts, and telephone preauthorized transfer accounts) 246,339 188,677 153,676 35,001 57,661 Nontransaction accounts NO Money market deposit accounts 420,667 334,365 263,531 70,834 8866,,330022 131 Other savings deposits 265,410 200,281 148,896 51,386 65,128 137 Time certificates of deposits of $100,000 or more 164,775 117,447 97,453 19,994 47,328 133 All other time deposits 515,977 384,582 309,371 75,211 131,395 134 Number of banks 3,054 1,622 1,320 302 1,432 Footnotes appear at the end of table 4.22 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • February 1994 4.22 DOMESTIC OFFICES Insured Commercial Bank Assets and Liabilities1 Consolidated Report of Condition, September 30, 1993 Millions of dollars except as noted Members Item Total National State 1 Total assets4 3,220,566 2,383,483 1,833,028 550,454 2 Cash and balances due from depository institutions 190,342 148,311 116,316 31,995 3 Currency and coin 32,859 25,377 20,551 4,827 4 Non-interest-bearing balances due from commercial banks 26,373 15,220 12,240 2,980 5 Other 131,110 107,713 83,525 24,188 6 Total securities, loans, and lease-financing receivables (net of unearned income) 2,798,181 2,039,811 1,597,356 442,455 7 Total securities, book value 781,007 550,367 412,782 137,585 8 U.S. Treasury securities and U.S. government agency and corporation obligations .. 636,680 452,949 342,438 110,511 9 Securities issued by states and political subdivisions in the United States 74,551 45,849 32,701 13,148 10 Other debt securities 57,267 42,988 30,733 12,255 11 All holdings of private certificates of participation in pools of residential mortgages 4,582 3,740 2,903 837 12 All other 52,686 39,248 27,830 11,418 13 Equity securities 12,509 8,581 6,910 1,671 14 Marketable 5,492 2,512 2,119 393 15 Investments in mutual funds 3,703 1,697 1,486 211 16 Other 1,825 828 645 184 17 LESS: Net unrealized loss 35 13 11 2 18 Other equity securities 7,017 6,069 4,791 1,278 19 Federal funds sold and securities purchased under agreements to resell8 145,425 115,699 89,335 26,364 20 Federal ftinds sold 57,962 35,298 29,391 5,907 21 Securities purchased under agreements to resell 3,096 1,666 1,355 310 22 Total loans and lease financing receivables, gross 1,877,720 1,377,329 1,097,894 279,435 23 LESS: Unearned income on loans 5,972 3,584 2,655 929 24 Total loans and leases (net of unearned income) 1,871,748 1,373,745 1,095,239 278,506 Total loans, gross, by category 25 Loans secured by real estate 871,808 610,735 492,250 118,485 26 Construction and land development 68,006 48,437 38,936 9,501 27 Farmland 20,816 9,271 7,537 1,734 28 One- to four-family residential properties 491,179 354,243 286,296 67,947 29 Revolving, open-end loans, and extended under lines of credit. 74,005 56,424 45,553 10,871 30 All other loans 417,174 297,818 240,743 57,076 31 Multifamily (five or more) residential properties 28,580 19,415 15,612 3,803 32 Nonfarm nonresidential properties 263,227 179,369 143,869 35,500 33 Loans to depository institutions 21,400 17,940 13,544 4,3% 34 Loans to finance agricultural production and other loans to farmers 37,097 18,179 15,126 3,053 35 Commercial and industrial loans 443311,,770044 340,391 271,882 68,509 36 Acceptances of other banks 998844 664 503 161 37 Loans to individuals for household, family, and other personal expenditures (includes purchased paper) 378,824 269,892 220,431 49,461 38 Credit cards and related plans 68,976 47,152 43,090 4,061 39 Other (includes single payment installment) 149,902 85,740 67,2% 18,444 40 Obligations (other than securities) of states and political subdivisions in the United States 22,325 17,608 12,954 4,654 41 Taxable 1,587 1,290 902 387 42 Tax-exempt 20,738 16,318 12,051 4,267 43 All other loans 81,232 75,108 49,674 25,434 44 Lease-financing receivables 32,347 26,813 21,530 5,283 45 Customers' liability on acceptances outstanding 10,494 9,869 7,177 2,692 46 Net due from own foreign offices, Edge Act and agreement subsidiaries, and IBFs 53,108 45,952 17,319 28,633 47 Remaining assets 221,549 185,492 112,180 73,312 48 Total liabilities and equity capital. 3,220,566 2,383,483 1,833,028 550,454 49 Total liabiUties5 2,933,968 2,174,145 1,672,381 501,764 50 Total deposits 2,353,185 1,693,028 1,334,900 358,128 51 Individuals, partnerships, and corporations 2,186,923 1,573,702 1,243,908 329,794 52 U.S. government 4,632 3,736 3,205 531 53 States and political subdivisions in the United States 96,626 63,197 49,311 13,885 54 Commercial banks in the United States 28,213 24,592 18,948 5,644 55 Other depository institutions in the United States ... 9,167 5,331 4,240 1,091 56 Certified and official checks 20,474 15,881 11,015 4,866 57 All other 7,151 6,589 4,273 2,316 58 Total transaction accounts 793,717 596,516 466,571 129,946 59 Individuals, partnerships, and corporations 695,943 518,881 407,893 110,988 60 U.S. government 3,811 3,063 2,643 420 61 States and political subdivisions in the United States 39,157 27,012 21,0% 5,917 62 Commercial banks in the United States 24,127 22,625 17,680 4,944 63 Other depository institutions in the United States ... 3,643 2,879 2,223 656 64 Certified and official checks 20,474 15,881 11,015 4,866 65 All other. 6,563 6,174 4,021 2,154 66 Demand deposits (included in total transaction accounts). 501,916 391,470 299,530 91,940 67 Individuals, partnerships, and corporations 426,498 327,818 252,242 75,576 68 U.S. government 3,515 2,795 2,393 402 69 States and political subdivisions in the United States .. 17,148 13,308 9,%7 3,341 70 Commercial banks in the United States 24,100 22,620 17,676 4,944 71 Other depository institutions in the United States 3,624 2,873 2,217 656 72 Certified and official checks 20,474 15,881 11,015 4,866 73 AH other 6,558 6,173 4,020 2,153 74 Total nontransaction accounts 1,559,468 1,096,512 868,329 228,183 75 Individuals, partnerships, and corporations 1,490,980 1,054,821 836,015 218,806 76 U.S. government 821 673 562 111 77 States and political subdivisions in the United States 57,469 36,185 28,216 7,%9 78 Commercial banks in the United States 4,086 1,967 1,267 700 79 Other depository institutions in the United States ... 5,524 2,451 2,017 435 80 All other 588 415 253 162 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A75 4.22 DOMESTIC OFFICES Insured Commercial Bank Assets and Liabilities1—Continued Consolidated Report of Condition, September 30, 1993 Millions of dollars except as noted Members NNoonn-- IItteemm TToottaall mmeemmbbeerrss Total National State 81 Federal funds purchased and securities sold under agreements to repurchase10 277,104 233,047 161,734 71,313 44,057 82 Federal funds purchased 42,598 31,273 26,131 5,141 11,325 83 Securities sold under agreements to repurchase 33,289 20,827 16,235 4,592 12,461 84 Demand notes issued to the U.S. Treasury 34,612 31,772 20,691 11,081 2,840 85 Other borrowed money 119,494 90,324 62,429 27,895 29,170 86 Banks liability on acceptances executed and outstanding 10,622 9,997 7,267 2,730 625 87 Notes and debentures subordinated to deposits 2,450 1,735 1,421 313 716 88 Net owed to own foreign offices, Edge Act and agreement subsidiaries, and IBFs 38,289 28,371 26,062 2,309 9,918 89 Remaining liabilities 136,501 114,242 83,939 30,303 22,259 90 Total equity capital7 286,598 209,338 160,647 48,691 77,260 MEMO 91 Assets held in trading accounts 42,505 40,889 22,950 17,939 1,616 92 U.S. Treasury securities 20,786 20,363 10,166 10,197 423 93 U.S. government agency corporation obligations 5,753 5,554 4,489 1,065 198 94 Securities issued by states and political subdivisions in the United States 1,841 1,760 1,043 717 81 95 Other bonds, notes, and debentures 1,420 1,392 912 480 28 96 Certificates of deposit 1,633 1,483 1,033 450 150 97 Commercial paper 37 37 37 0 0 98 Bankers acceptances 2,880 2,713 1,643 1,070 167 99 Other 7,324 7,319 3,392 3,928 5 100 Total individual retirement (IRA) and Keogh plan accounts 146,342 106,465 85,663 20,802 39,877 101 Total brokered deposits 40,086 27,509 22,202 5,307 12,577 102 Total brokered retail deposits 30,534 20,749 17,155 3,595 9,785 103 Issued in denominations of $100,000 or less 4,759 3,076 2,800 276 1,682 104 Issued in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less 25,775 17,673 14,354 3,319 8,102 Savings deposits 105 Money market deposit accounts (savings deposits; MMDAs) 453,481 345,319 273,875 71,444 110088,,116622 106 Other savings deposits 306,613 216,754 161,860 54,894 89,859 107 Total time deposits of less than $100,000 5%,089 398,828 324,506 74,322 197,261 108 Time certificates of deposit of $100,000 or more 186,425 122,319 100,715 21,604 64,106 109 Open-account time deposits of $100,000 or more 16,860 13,292 7,374 5,918 3,568 110 All negotiable order of withdrawal (NOW) accounts (including Super NOWs) 286,978 202,523 164,983 37,540 84,455 Ill Total time and savings deposits 1,851,268 1,301,558 1,035,370 266,188 549,710 Quarterly averages 11,,881111,,668811 11,,332244,,002266 11,,005555,,444444 226688,,558822 448877,,665555 113 Transaction accounts (NOW accounts, automated transfer service (ATS) accounts, and telephone and preauthorized transfer accounts) 293,021 206,472 167,687 38,786 86,549 Nontransaction accounts 114 Money market deposit accounts 458,424 349,539 275,003 74,536 110088,,888855 115 Other savings deposits 304,990 215,944 160,576 55,369 89,046 116 Time certificates of deposit of $100,000 or more 189,822 126,908 104,686 22,223 62,914 117 All other time deposits 626,044 423,445 338,907 84,537 202,600 118 Number of banks 11,042 4,351 3,384 967 6,691 1. Effective March 31, 1984, the report of condition for commercial banks was FFIEC 033 Call Report.) "Under 100" refers to banks whose assets, on June 30 substantially revised. Some of the changes are as follows: (1) Previously, banks of the preceding calendar year, were less than $100 million. (These banks file the with international banking facilities (IBFs) that had no other foreign offices were FFIEC 034 Call Report.) considered domestic reporters. Beginning with the March 31, 1984, Call Report 4. Because the domestic portion of allowances for loan and lease losses and these banks are considered foreign and domestic reporters and must file the allocated transfer risk reserves are not reported for banks with foreign offices, the foreign and domestic report of condition. (2) Banks with assets of more than $1 components of total assets (domestic) do not sum to the actual total (domestic). billion report additional items. (3) The domestic offices of banks with foreign 5. Because the foreign portion of demand notes issued to the U.S. Treasury is offices report far less detail. (4) Banks with assets of less than $25 million are not reported for banks with foreign offices, the components of total liabilities excused from reporting certain detail items. (foreign) do not sum to the actual total (foreign). The notation "n.a." indicates the lesser detail available from banks that don't 6. The definition of "all other" varies by report form and therefore by column have foreign offices, the inapplicability of certain items to banks that have only in this table. domestic offices or the absence of detail on a fully consolidated basis for banks 7. Equity capital is not allocated between the domestic and foreign offices of that have foreign offices. banks with foreign offices. All transactions between domestic and foreign offices of a bank are reported in 8. Only the domestic portion of federal funds sold and securities purchased "net due from" and "net due to" lines. All other lines represent transactions with under agreements to resell are reported here; therefore, the components do not parties other than the domestic and foreign offices of each bank. Because these sum to totals. intraoffice transactions are nullified by consolidation, total assets and total 9. Acceptances of other banks is not reported by domestic banks having less liabilities for the entire bank may not equal the sum of assets and liabilities than $300 million in total assets; therefore the components do not sum to totals. respectively of the domestic and foreign offices. 10. Only the domestic portion of federal funds purchased and securities sold 2. Foreign offices include branches in foreign countries, Puerto Rico, and U.S. under agreements to repurchase are reported here; therefore the components do territories and possessions; subsidiaries in foreign countries; all offices of Edge not sum to totals. Act and agreement corporations wherever located; and IBFs. 11. Components are reported only for banks with total assets of $1 billion or 3. "Over 100" refers to banks whose assets, on June 30 of the preceding more; therefore, components do not sum to totals. calendar year, were $100 million or more. (These banks file the FFIEC 032 or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Special Tables • February 1994 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 1-5, 19931 Commercial and Industrial Loans Characteristic A ( o t f h m o l d o o u o a u s l n n a l s a t n r d o s s ) f ( o t A f h o v d s u e o iz s r l a e l a a g n r e d s s ) W m a a v e D t e i u a g r r y a h i s g t t e y e d 2 W e a f v f L e e e i o c g r a t a h n i g t v e e e r d a 3 te (p S er t e a c r n e r n o d t a r ) 4 r d c ( s p o L e e ll c o r b a u c a y t e r e n e n r s d a t) l ( c p o L u m m e m n o r a e c d a m d n e n e e t n i r s t t - ) (p P p l e a o a r r t a c t i i n e o c s n n i - t) ALL BANKS 1 Overnight6 11,933,295 7,287 .23 8.2 56.1 3.7 2 One month or less (excluding overnight) 7,059,083 1,047 4.29 27.9 74.1 9.3 3 Fixed rate 4,500,684 1,242 4.05 23.8 78.2 12.7 4 Floating rate 2,558,400 820 4.72 35.0 66.9 3.3 5 More than one month and less than one year 9,045,033 176 155 5.15 51.0 79.3 5.1 6 Fixed rate 3,845,564 183 132 4.49 46.7 81.2 6.6 7 Floating rate 5,199,469 171 172 5.64 54.2 77.9 4.0 8 Demand7 16,267,448 322 5.22 59.5 65.7 6.3 9 Fixed rate 4,714,349 880 4.01 26.5 69.6 7.9 10 Floating rate 11,553,099 256 5.71 72.9 64.1 5.6 11 Total short-term 44,304,860 402 4.65 38.9 67.2 5.8 12 Fixed rate (thousands of dollars) ... 24,993,440 792 30 3.95 20.4 66.5 6.6 13 1-99 358,081 14 144 8.08 81.7 53.8 1.0 14 100-499 455,367 206 92 6.38 69.8 50.9 2.2 15 500-999 378,164 680 45 5.09 50.5 82.9 2.8 16 1,000-4,999 3,644,673 2,390 38 4.46 28.5 70.5 8.2 17 5,000-9,999 3,844,537 6,631 27 4.07 19.1 73.1 10.1 18 10,000 or more 16,312,618 20,543 25 3.62 15.4 64.4 5.7 19 Floating rate (thousands of dollars). 19,311,420 245 123 5.56 62.9 68.2 4.8 20 1-99 1,470,021 25 176 7.41 84.5 86.0 1.5 21 100-499 3,061,160 198 178 6.94 78.4 87.1 3.2 22 500-999 1,645,694 678 162 6.68 70.3 81.4 12.1 23 1,000-4,999 4,180,317 2,041 154 5.88 61.3 84.5 8.4 24 5,000-9,999 2,003,498 6,652 129 5.25 48.5 69.6 5.4 25 10,000 or more 6,950,730 21,493 62 4.20 54.7 42.8 2.3 Months 26 Total long-term 6,034,383 246 5.60 60.5 77.4 7.0 27 Fixed rate (thousands of dollars) .. 2,025,966 160 5.38 47.1 60.4 8.6 28 1-99 233,108 20 8.33 87.6 21.4 4.0 29 100-499 162,734 216 7.50 87.4 39.2 1.8 30 500-999 107,373 585 6.99 72.2 27.9 1.3 31 1,000 or more 1,522,751 6,072 4.59 34.8 70.9 10.6 32 Floating rate (thousands of dollars) 4,008,417 337 5.70 67.2 86.0 6.2 33 1-99 236,546 29 7.60 82.9 57.7 2.1 34 100-499 533,703 209 7.13 82.7 73.6 5.7 35 500-999 368,387 675 6.53 68.2 89.2 13.1 36 1,000 or more 2,869,782 4,379 5.18 62.9 90.2 5.8 Loan rate (percent) Days Effective3 Nominal8 LOANS MADE BELOW PRIME10 37 Overnight6 11,584,924 9,055 3.64 3.63 6.8 54.8 3.8 38 One month or less (excluding overnight) 6,324,463 4,037 21 3.93 3.92 26.0 73.5 9.9 39 More than one month and less than one vear 5,658,182 895 141 4.00 3.98 35.8 83.9 4.8 40 Demand7 8,781,550 3,299 3.82 3.79 47.2 47.3 5.8 41 Total short-term 32,349,119 2,734 3.79 26.6 5.7 42 Fixed rate 23,384,896 3,587 3.74 3.73 17.6 66.1 6.9 43 Floating rate 8,964,223 1,687 3.99 3.96 50.0 49.5 2.5 Months 44 Total long-term 3,050,093 4.21 43.8 83.0 45 Fixed rate 1,410,961 505 4.30 4.27 29.7 71.8 11.5 46 Floating rate .. 1,639,132 1,668 4.13 4.09 56.0 92.6 1.5 Footnotes appear at the end of the table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets All 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 1-5, 1993—Continued Commercial and industrial loans—Continued Amount of Average W av e e ig ra h g te e d Loan rate (percent) s L ec o u a r n e s d L m o a a d n e s Partici- Characteristic ( o t f h l o d o u o a s l n l a s a n r d s) s ( o t f h o d s u o iz s ll e a a n r d s) s ma D tu ay ri s t y2 W e a f v f e e e i c g r t a h i g t v e e e d 3 Standard c (p o e ll r b a c y t e e n ra t) l ( c p o u m e m n r e c d m n e e t n i r t t - ) (p p l e a o r t a c i n e o s n n t) LARGE BANKS 1 Overnight6 9,196,233 6,870 3.80 9.1 56.7 4.0 2 One month or less (excluding overnight) 4,960,769 3,747 4.24 21.7 83.0 11.4 3 Fixed rate 3,785,442 5,879 4.01 22.7 82.2 13.0 4 Floating rate 1,175,327 1,728 4.99 18.4 85.4 6.5 5 More than one month and less than one year 5,273,805 983 148 4.35 38.6 86.4 4.0 6 Fixed rate 2,683,479 3,452 129 3.88 39.0 91.7 5.6 7 Floating rate 2,590,326 564 168 4.84 38.2 80.9 2.3 8 Demand7 11,378,666 649 4.88 58.3 56.3 6.2 9 Fixed rate 3,812,506 3,061 3.93 24.9 68.2 9.7 10 Floating rate 7,566,161 464 5.36 75.2 50.4 4.4 11 Total short-term 30,809,474 1,205 4.36 34.4 65.9 6.0 12 Fixed rate (thousands of dollars) 19,477,660 4,863 27 3.88 19.0 68.7 7.1 13 1-99 25,479 31 69 6.75 73.7 62.9 1.1 14 100-499 148,864 249 42 5.49 62.2 76.2 1.5 15 500-999 275,407 692 34 5.10 51.3 85.1 3.8 16 1,000-4,999 2,573,110 2,401 25 4.38 25.3 75.9 6.0 17 5,000-9,999 3,121,355 6,745 21 4.12 17.5 72.6 10.6 18 10,000 or more 13,333,445 20,255 29 3.68 16.8 66.0 6.7 19 Floating rate (thousands of dollars)... 11,331,814 526 121 5.20 60.8 61.0 4.1 20 1-99 427,264 33 164 7.22 82.7 92.1 1.4 21 100-499 1,236,084 206 170 6.80 74.7 92.2 4.3 22 500-999 677,470 675 164 6.40 65.9 92.9 6.8 23 1,000-4,999 2,100,889 2,061 152 5.77 54.9 81.8 4.7 24 5,000-9,999 1,521,589 6,898 148 5.38 54.3 71.3 7.1 25 10,000 or more 5,368,518 22,813 77 4.25 59.5 36.2 3.0 Months 26 Total long-term 3,402,384 1,043 5.20 50.4 89.0 9.4 27 Fixed rate (thousands of dollars) 1,112,132 2,308 4.39 39.3 83.4 14.2 28 1-99 7,184 33 7.46 90.8 46.9 1.3 29 100-499 23,980 250 6.35 77.5 65.3 6.2 30 500-999 30,018 709 5.57 32.7 64.2 .0 31 1,000 or more 1,050,950 8,543 4.30 38.3 84.7 14.8 32 Floating rate (thousands of dollars) ... 2,290,251 824 5.59 55.7 91.7 7.2 33 1-99 36,650 40 6.89 80.4 89.3 5.1 34 100-499 263,352 237 6.85 76.2 90.1 6.3 35 500-999 250,483 664 6.58 65.9 86.3 12.8 36 1,000 or more 1,739,767 4,611 5.23 50.6 92.8 6.5 Loan rate (percent) Days Effective3 Nominal8 LOANS MADE BELOW PRIME10 37 Overnight6 8,849,116 8,559 3.71 3.69 7.4 55.0 4.2 38 One month or less (excluding overnight) 4,535,379 5,998 19 3.91 3.90 20.1 83.1 12.2 39 More than one month and less than one vear 4,210,816 4,545 142 3.78 3.77 31.4 87.0 3.9 40 Demand7 7,227,232 5,381 3.77 3.74 52.7 39.2 6.8 41 Total short-term 24,822,544 6,114 3.78 27.0 61.0 6.4 42 Fixed rate 18,558,580 6,696 27 3.75 3.74 17.5 67.6 7.4 43 Floating rate 6,263,964 4,863 113 3.86 3.83 54.9 41.2 3.2 Months 44 Total long-term 1,908,765 4,766 39 3.99 37.2 91.8 45 Fixed rate 971,909 6,586 4.02 4.01 33.2 86.8 16.0 46 Floating rate .. 936,856 3,704 4.00 3.97 41.4 97.1 2.4 Footnotes appear at the end of the table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 Special Tables • February 1994 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 1-5, 1993l—Continued Commercial and industrial loans—Continued Characteristic ( A o t f h m o l d o o u o a u s l n n a l s a t n r d o s s ) f ( o t A f h o v d s u e o iz s r l e a a la g n r e d s s ) W m a a v e t i e u g r r h a i g t t e y e d 2 W av L e e i o g r a a h n g t e e r d a te (p S er t c a e n n d t a ) r d c s o L e l c l o b a u a y t r n e e s r d a l c L o u m m m n o a e d a m d n n e e t i r s t - (p P p l e a o a r r t a c t i i n e o c s n n i - t) Days effective3 (percent) (percent) OTHER BANKS 1 Overnight6 2,737,062 9,157 3.43 4.9 54.0 2.4 2 One month or less (excluding overnight) 2,098,314 387 4.42 42.4 53.1 4.2 3 Fixed rate 715,242 240 4.28 29.6 56.9 11.3 4 Floating rate 1,383,072 567 4.49 49.0 51.2 .5 5 More than one month and less than one year 3,771,228 82 164 6.27 68.5 69.4 6.7 6 Fixed rate 1,162,085 58 138 5.89 64.6 57.0 8.8 7 Floating rate 2,609,144 101 176 6.43 70.2 74.9 5.7 8 Demand7 4,888,782 148 6.01 62.1 87.6 6.4 9 Fixed rate 901,843 219 4.35 33.4 75.6 .4 10 Floating rate 3,986,939 138 6.38 68.6 90.3 7.8 11 Total short-term 13,495,386 159 5.31 49.2 70.3 5.3 12 Fixed rate (thousands of dollars) 5,515,780 200 39 4.21 25.3 58.6 4.6 13 1-99 332,602 13 147 8.18 82.3 53.1 1.0 14 100-499 306,503 190 109 6.81 73.5 38.6 2.5 15 500-999 102,757 651 78 5.07 48.4 77.0 .0 16 1,000-4,999 1,071,563 2,361 66 4.65 36.3 57.6 13.7 17 5,000-9,999 723,182 6,182 52 3.86 25.6 75.2 8.3 18 10,000 or more 2,979,173 21,944 7 3.40 9.2 56.9 1.2 19 Floating rate (thousands of dollars) ... 7,979,606 140 124 6.07 65.7 78.5 5.8 20 1-99 1,042,757 23 178 7.49 85.2 83.5 1.6 21 100-499 1,825,076 194 180 7.03 80.9 83.7 2.4 22 500-999 968,224 680 161 6.88 73.5 73.3 15.8 23 1,000-4,999 2,079,428 2,020 155 5.99 67.8 87.1 12.1 24 5,000-9,999 481,909 5,981 85 4.85 30.2 64.1 .0 25 10,000 or more 1,582,212 17,966 43 4.02 38.7 65.2 .0 Months 26 Total long-term 2,631,999 124 6.11 73.5 62.4 3.9 27 Fixed rate (thousands of dollars) ... 913,833 75 6.58 56.6 32.3 1.9 28 1-99 225,925 20 8.36 87.5 20.6 4.1 29 100-499 138,753 211 7.69 89.2 34.7 1.0 30 500-999 77,355 548 7.54 87.5 13.8 1.7 31 1,000 or more 471,800 3,692 5.25 27.2 40.2 1.2 32 Floating rate (thousands of dollars). 1,718,166 189 5.86 82.5 78.3 5.0 33 1-99 199,896 28 7.73 83.4 51.9 1.6 34 100-499 270,350 188 7.40 89.1 57.6 5.1 35 500-999 117,904 699 6.41 73.1 95.5 13.6 36 1,000 or more 1,130,015 4,065 5.10 81.8 86.2 4.7 Loan rate (percent) Days Effective3 Nominal8 LOANS MADE BELOW PRIME10 37 Overnight6 2,735,808 11,144 3.43 3.41 4.9 54.0 2.4 38 One month or less (excluding overnight) 1,789,084 2,208 25 3.99 3.96 41.0 49.4 3.9 39 More than one month and less than one vear 1,447,366 268 137 4.65 4.61 48.5 74.9 7.5 40 Demand7 1,554,317 1,179 4.04 4.03 21.5 85.2 1.3 41 Total short-term 7,526,575 968 3.92 3.90 25.3 63.4 3.5 42 Fixed rate 4,826,316 1,288 3.72 3.69 17.9 60.3 4.9 43 Floating rate 2,700,259 671 4.30 4.27 38.5 68.9 1.1 Months 44 Total long-term 1,141,328 54.8 68.2 .18 45 Fixed rate 439,052 166 4.93 4.86 21.8 38.6 1.7 46 Floating rate .. 702,276 963 4.31 4.26 75.5 86.7 .2 Footnotes appear at the end of the table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A79 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 1-5, 1993—Continued NOTES 1. The survey of terms of bank lending to business collects data on gross loan 4. The chances are about two out of three that the average rate shown would extensions made during the first full business week in the mid-montn of each differ by less than the amount of the standard error from the average rate that quarter by a sample of 340 commercial banks of all sizes. A sample of 250 banks would be found by a complete survey of lending at all banks. reports loans to farmers. The sample data are blown up to estimate the lending 5. The rate used to price the largest dollar volume of loans. Base pricing rates terms at all insured commercial banks during that week. The estimated terms of include the prime rate (sometimes referred to as a bank's "basic" or "reference" bank lending are not intended for use in collecting the terms of loans extended rate); the federal funds rate; domestic money market rates other than the federal over the entire quarter or residing in the portfolios of those banks. Construction funds rate, foreign money market rates; and other base rates not included in the and land development loans include both unsecure loans and loans secured by real foregoing classifications. estate. Thus, some of the construction and land development loans would be 6. Overnight loans mature on the following business day. reported on the statement of condition as real estate loans and the remainder as 7. Demand loans have no stated date of maturity. business loans. Mortgage loans, purchased loans, foreign loans, and loans of less 8. Nominal (not compounded) annual interest rate calculated from the stated that $1,000 are excluded from the survey. As of September 30, assets of most of rate and other terms of the loans and weighted by loan size. the large banks were at least $7.0 billion. For all insured banks, total assets 9. Calculated by weighting the prime rate reported by each bank by the volume averaged $275 million. of loans reported by that bank, summing the results, and then averaging over all 2. Average maturities are weighted by loan size; excludes demand loans. reporting banks. 3. Effective (compounded) annual interest rate calculated from the stated rate 10. The proportion of loans made at rates below the prime may vary substanand other terms of the loans and weighted by loan size. tially from the proportion of such loans outstanding in banks' portfolios. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A80 Special Tables • February 1994 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 19931 Millions of dollars, except as noted All states2 New York California Illinois Item in I c T B l o u F t d a s i l 3 n g o IB nl F y s 3 inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u F t d a s i l n g I o B n F ly s 1 Total assets4 682,830 299,987 520,854 238,155 73,124 33,838 53,768 20,349 2 Claims on nonrelated parties 604,516 179,113 453,929 145,630 67,759 14,803 53,431 13,954 3 Cash and balances due from depository institutions 138,882 112,666 118,047 93,228 7,495 6,981 11,930 11,675 4 Cash items in process of collection and unposted debits 3,128 0 2,986 0 1100 0 9933 00 5 Currency and coin (U.S. and foreign) 24 n.a. 16 n.a. 2 n.a. 11 n.a. 6 Balances with depository institutions in United States .. 91,480 69,805 78,094 57,409 5,276 4,803 77,,446622 7,314 7 U.S. branches and agencies of other foreign banks (including IBFs) 85,973 67,415 73,179 55,123 44,,999955 44,,772222 77,,333344 77,,330044 8 Other depository institutions in United States (including IBFs) 5,508 2,390 4,915 2,286 281 81 112288 1100 9 Balances with banks in foreign countries and with foreign central banks 43,821 42,861 36,599 35,819 2,183 22,,117788 44,,336666 44,,336611 10 Foreign branches of U.S. banks 748 665 574 491 97 97 74 74 11 Other banks in foreign countries and foreign central banks 43,072 42,197 36,025 35,328 2,086 2,081 44,,229922 44,,228866 12 Balances with Federal Reserve Banks 429 n.a. 353 n.a. 25 n.a. 8 n.a. 13 Total securities and loans 373,190 55,279 256,062 42,589 54,219 6,854 36,315 2,000 14 Total securities, book value 87,859 13,885 80,594 12,762 3,894 662 2,868 441 15 U.S. Treasury 31,476 n.a. 30,761 n.a. 334 n.a. 318 n.a. 16 Obligations of U.S. government agencies and corporations 19,021 n.a. 1188,,226600 n.a. 553399 n.a. 112222 n.a. 17 Other bonds, notes, debentures, and corporate stock (including state and local securities) 37,361 13,885 31,573 12,762 3,021 662 22,,442288 444411 18 Federal funds sold and securities purchased under agreements to resell 41,814 5,153 39,721 4,636 1,058 482 664499 00 19 U.S. branches and agencies of other foreign banks 13,985 3,381 12,534 3,064 718 282 517 0 70 Commercial banks in United States 4,564 45 4,326 45 44 0 31 0 21 Other 23,265 1,727 22,862 1,527 296 200 101 0 77 Total loans, gross 285,455 41,402 175,550 29,832 50,345 6,193 33,456 1,559 73 LESS: Unearned income on loans 123 7 81 5 20 1 10 0 24 EQUALS: Loans, net 285,332 41,395 175,469 29,827 50,325 6,192 33,446 1,559 Total loans, gross, by category 75 Real estate loans 47,576 416 24,880 117722 1144,,885588 220022 44,,552222 4400 26 Loans to depository institutions 40,634 26,366 29,718 18,734 5,774 4,407 2,006 1,031 77 Commercial banks in United States (including IBFs) 17,385 8,617 11,918 5,552 3,663 2,427 1,495 609 78 U.S. branches and agencies of other foreign banks ... 14,622 8,393 9,943 5,380 3,528 2,389 978 609 29 Other commercial banks in United States 2,763 224 1,975 171 135 38 516 0 30 Other depository institutions in United States (including IBFs) 2 0 2 0 00 0 00 00 31 Banks in foreign countries 23,246 17,749 17,798 13,182 2,111 1,980 512 422 37 Foreign branches of U.S. banks 257 179 242 173 11 6 0 0 33 Other banks in foreign countries 22,989 17,570 17,556 13,009 2,101 1,974 512 422 34 Loans to other financial institutions 21,083 777 18,107 637 943 12 1,415 17 35 Commercial and industrial loans 158,744 10,510 88,504 7,481 28,189 1,468 24,197 428 36 U.S. addressees (domicile) 140,244 259 75,650 * 232 25,780 12 23,439 0 37 Non-U.S. addressees (domicile) 18,500 10,251 12,854 7,249 2,409 1,456 757 428 38 Acceptances of other banks 880 12 594 2 120 0 4 0 39 U.S. banks 368 0 328 0 8 0 0 0 40 Foreign banks 512 12 266 2 112 0 4 0 41 Loans to foreign governments and official institutions (including foreign central banks) 4,562 3,078 3,431 2,600 136 103 222200 4444 42 Loans for purchasing or carrying securities (secured and unsecured) 6,533 119 6,232 119 114499 0 8800 00 43 All other loans 5,444 124 4,083 86 176 0 1,013 0 44 All other assets 50,630 6,015 40,099 5,177 4,987 485 4,537 280 45 Customers' liabilities on acceptances outstanding 15,219 n.a. 10,622 n.a. 3,336 n.a. 788 n.a. 46 U.S. addressees (domicile) 11,207 n.a. 7,277 n.a. 2,974 n.a. 714 n.a. 47 Non-U.S. addressees (domicile) 4,012 n.a. 3,345 n.a. 362 n.a. 75 n.a. 48 Other assets including other claims on nonrelated parties 35,411 6,015 29,477 5,177 1,651 485 33,,774499 228800 49 Net due from related depository institutions 78,314 120,874 66,925 92,524 5,364 19,036 337 6,395 50 Net due from head office and other related depository institutions 78,314 n.a. 66,925 n.a. 55,,336644 n.a. 333377 n.a. 51 Net due from establishing entity, head offices, and other related depository institutions5 n.a. 120,874 n.a. 92,524 n.a. 1199,,003366 n.a. 66,,339955 52 Total liabilities4 682,830 299,987 520,854 238,155 73,124 33,838 53,768 20,349 53 Liabilities to nonrelated parties 569,075 275,891 464,814 221,620 58,198 33,346 30,431 15,090 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A81 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 19931—Continued Millions of dollars, except as noted All states2 New York California Illinois Item ex I T c B l o u F t d a s i l 3 n g o IB nl F y s 3 ex T c IB l o u t F d a s i l n g I o B n F ly s ex T c IB l o u t F d a s i l n g I o B n F ly s ex T c IB l o u t F d a s i l ng 54 Total deposits and credit balances 141,063 204,074 124,683 187,114 4,522 5,354 4,684 55 Individuals, partnerships, and corporations 101,051 11,896 86,730 7,583 4,185 433 3,919 56 U.S. addressees (domicile) 87,448 174 79,130 173 2,472 0 2,847 57 Non-U.S. addressees (domicile) 13,603 11,722 7,600 7,409 1,713 433 1,072 58 Commercial banks in United States (including IBFs). 23,574 62,357 22,468 57,742 80 2,039 674 59 U.S. branches and agencies of other foreign banks 12,795 56,125 12,246 51,956 43 1,874 471 60 Other commercial banks in United States 10,778 6,232 10,222 5,786 37 164 203 6 6 1 2 Ba F n o k r s e i i g n n f o b r r e a i n g c n h c e o s u o n f t r U ie . s S . banks 7 2 , , 2 5 8 8 3 2 10 3 9 , , 9 3 4 0 5 5 6 2 , , 9 5 1 8 6 1 10 3 3 , , 7 0 2 8 3 1 4 0 6 2,0 1 3 3 2 0 81 0 63 Other banks in foreign countries 4,700 105,361 4,335 99,357 46 1,901 81 64 Foreign governments and official institutions (including foreign central banks) 2,879 20,340 2,559 18,583 185 851 2 65 All other deposits and credit balances 5,563 175 5,347 125 6 0 1 66 Certified and official checks 713 663 20 7 67 Transaction accounts and credit balances (excluding IBFs) 9,124 7,576 289 339 68 Individuals, partnerships, and corporations 6,772 5,526 218 328 69 U.S. addressees (domicile) 5,043 4,443 165 321 7 7 7 7 7 7 7 5 6 0 4 3 1 2 B C a o N O F O U n m o o k t t . m h h r S s n e e e . - e i i r r U g n r b c n b c r . f i a o a S a o b n n m l . r r c k e a a b m h s i d n a g e e d i c n n s n r r h k c e c e s a i f s o a s o n s i l u r d n e o e n b e f i a t U a s g r g U n n i n e ( e k . i d n s c S t s o e c o . m d i i u n e b n i s S a c t U n i r t o l a i n k f e e t s i ) s e o t s e t d h ( e i S n r c t f a l o u te r d e s i i n g g n I b B a F nk s) s . 1,7 9 9 1 1 2 8 9 2 5 3 9 7 3 0 2 9 7 1,0 8 8 1 1 8 2 1 1 5 3 3 4 3 6 4 3 0 5 3 3 0 0 2 2 7 7 2 0 7 0 0 0 1 1 77 Foreign governments and official institutions (including foreign central banks) 382 321 7 78 All other deposits and credit balances 107 97 6 79 Certified and official checks 713 663 20 80 Demand deposits (included in transaction accounts and credit balances) 8,532 7,283 236 325 81 Individuals, partnerships, and corporations 6,271 5,302 171 314 82 U.S. addressees (domicile) 4,872 4,359 136 307 83 Non-U.S. addressees (domicile) 1,399 944 35 7 84 Commercial banks in United States (including IBFs). 154 150 1 0 85 U.S. branches and agencies of other foreign banks 18 16 0 0 86 Other commercial banks in United States 136 133 1 0 8 8 8 9 7 8 Ba O F n o t k h r s e e i r i g n b n f a o b n r r k e a s i n g i c n n h c e f o o s u r o e n f i t g r U n ie . s c S o . u b n a t n ri k e s s 9 9 5 5 0 3 3 7 7 8 7 1 3 9 3 3 0 7 7 0 1 1 90 Foreign governments and official institutions (including foreign central banks) 356 306 7 2 91 All other deposits and credit balances 85 81 0 1 92 Certified and official checks 713 663 20 7 93 Nontransaction accounts (including MMDAs, excluding IBFs) 131,939 117,107 4,233 4,345 94 Individuals, partnerships, and corporations 94,279 81,204 3,967 3,591 95 U.S. addressees (domicile) 82,406 74,687 2,306 2,526 % Non-U.S. addressees (domicile) 11,874 6,517 1,661 1,065 97 Commercial banks in United States (including IBFs). 23,414 22,315 78 673 98 U.S. branches and agencies of other foreign banks 12,773 12,226 43 471 99 Other commercial banks in United States 10,641 10,089 35 203 1 1 0 0 0 1 Ba F n o k r s e i in g n f o b r r e a i n g c n h c e o s u o n f t r U ie . s S . banks 6 2 , , 2 5 9 8 3 0 6 2 , , 1 5 0 7 0 9 9 0 8 0 0 102 Other banks in foreign countries 3,713 3,521 9 80 103 Foreign governments and official institutions (including foreign central banks) 2,496 2,238 179 0 104 All other deposits and credit balances 5,456 5,250 0 1 105 IBF deposit liabilities 204,074 187,114 5,354 1 10 0 7 6 Ind U iv .S id . u a a d l d s, r e p s a s r e t e n s e r ( s d h o i m ps i , c i a le n ) d corporations 11,8 1 9 7 6 4 7,5 1 8 7 3 3 43 0 3 108 Non-U.S. addressees (domicile) 11,722 7,409 433 109 Commercial banks in United States (including IBFs). 62,357 57,742 2,039 110 U.S. branches and agencies of other foreign banks 56,125 51,956 1,874 111 Other commercial banks in United States 6,232 5,786 164 112 Banks in foreign countries 109,305 103,081 2,032 113 Foreign branches of U.S. banks 3,945 3,723 130 114 Other banks in foreign countries 105,361 99,357 1,901 115 Foreign governments and official institutions (including foreign central banks) 20,340 18,583 851 116 All other deposits and credit balances 175 125 0 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A82 Special Tables • February 1994 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 1993 Continued Millions of dollars, except as noted All states2 New York California Illinois IItteemm in I T c B l o u F t d a s i l 3 n g o IB nl F y s 3 in T c I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u F t d a s i l n g I o B n F ly s in T c I l B o u t F d a s i l n g I o B n F ly s 117 Federal funds purchased and securities sold under agreements to repurchase 66,116 11,716 53,833 7,480 7,933 2,468 3,948 1,629 118 U.S. branches and agencies of other foreign banks 14,915 3,526 9,768 1,234 3,630 1,718 1,442 543 119 Other commercial banks in United States 12,600 168 8,405 57 2,723 68 1,375 27 120 Other 38,600 8,023 35,661 6,189 1,581 681 1,132 1,060 121 Other borrowed money 111122,,112266 55,006 6633,,112255 22,616 3355,,998866 25.053 1100,,778844 6,732 122 Owed to nonrelated commercial banks in United States (including IBFs) 39,146 22,266 15,133 4,629 18,173 14,538 4,143 2,724 123 Owed to U.S. offices of nonrelated U.S. banks 99,,333333 2.237 55,,669977 1,051 11,,991144 901 11,,227788 265 124 Owed to U.S. branches and agencies of nonrelated foreign banks 29,813 20,028 9,436 3,578 16,260 13,637 2,865 2,459 125 Owed to nonrelated banks in foreign countries 32,185 30,274 17,600 15,844 10,376 10,270 3,929 3,929 126 Owed to foreign branches of nonrelated U.S. banks ... 1,422 1,371 706 685 603 598 83 83 127 Owed to foreign offices of nonrelated foreign banks 30,764 28,902 16,895 15,159 9,773 9,672 3,846 3,846 128 Owed to others 40,794 2,466 30,392 2,143 7,436 245 2,712 79 129 All other liabilities 45,697 5,094 36,059 4,410 44,,440022 472 4,466 181 130 Branch or agency liability on acceptances executed and outstanding 15,916 n.a. 11,258 n.a. 3,337 n.a. 804 n.a. 131 Other liabilities to nonrelated parties 29,781 5,094 24,801 4,410 1,066 472 3,662 181 132 Net due to related depository institutions5 113,754 24,096 56,040 16,535 1144,,992266 492 2233,,333377 5,260 133 Net owed to head office and other related depository institutions 111133,,775544 n.a. 5566,,004400 n.a. 1144,,992266 n.a. 2233,,333377 n.a. 134 Net owed to establishing entity, head office, and other related depository institutions n.a. 24,096 n.a. 16,535 n.a. 492 n.a. 5,260 MEMO 135 Non-interest-bearing balances with commercial banks in United States 1,452 13 1,202 13 106 0 46 0 136 Holding of commercial paper included in total loans 669 629 4 26 137 Holding of own acceptances included in commercial and industrial loans 22,,447788 11,,777766 476 53 138 Commercial and industrial loans with remaining maturity of one year or less 94,939 50,918 17,209 15,345 139 Predetermined interest rates 59,987 n.a. 31,288 n.a. 10,656 n.a. 11,567 n. a. 140 Floating interest rates 34,952 19,630 66,,555522 33,,777788 141 Commercial and industrial loans with remaining maturity of more than one year 63,804 37,586 10,981 8,852 142 Predetermined interest rates 21,643 12,738 4,107 3,626 143 Floating interest rates 42,161 24,848 6,874 5,226 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A83 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 19931—Continued Millions of dollars, except as noted All states2 New York California Illinois IItteemm ex I T c B l o u F t d a s i l 3 n g o IB nl F y s 3 ex T c IB l o u F t d a s i l n g I o B n F ly s ex T I c B l o u F t d a s i l n g I o B n F ly s ex T c IB l o u t F d a s i l ng I o B n F ly s 111144444444 CCCCoooommmmppppoooonnnneeeennnnttttssss ooooffff ttttoooottttaaaallll nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ttttoooottttaaaallll ddddeeeeppppoooossssiiiittttssss aaaannnndddd ccccrrrreeeeddddiiiitttt bbbbaaaallllaaaannnncccceeeessss ooooffff 111144445555 TTTTiiiimmmm nnnnoooo eeee nnnn CCCC ttttrrrr DDDD aaaannnn ssss ssss aaaa iiiinnnn cccc tttt dddd iiiioooo eeee nnnn nnnn oooo aaaa mmmm cccccccc iiiinnnn oooo aaaa uuuu tttt nnnn iiiioooo ttttssss nnnn ,,,, ssss iiiinnnn ooooffff cccc llll $$$$ uuuu 1111 dddd 0000 iiiinnnn 0000 gggg ,,,,0000 0000 IIIIBBBB 0000 FFFF oooo ssss rrrr mmmmoooorrrreeee 1 9 3 9 7 , , 4 1 2 4 5 1 t 1 8 2 9 3 , , 6 0 6 2 8 5 t 4 2 , , 8 9 7 6 1 0 • 4 2 , , 5 7 2 4 1 0 1 111144446666 OOOOtttthhhheeeerrrr ttttiiiimmmmeeee ddddeeeeppppoooossssiiiittttssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 27,219 n.a. 24,363 n.a. 876 n.a. 1,395 n.a. 111144447777 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee \ * » * wwwwiiiitttthhhh rrrreeeemmmmaaaaiiiinnnniiiinnnngggg mmmmaaaattttuuuurrrriiiittttyyyy ooooffff mmmmoooorrrreeee tttthhhhaaaannnn 11112222 mmmmoooonnnntttthhhhssss ........ 10,497 8,994 1,036 386 All states2 New York California Illinois inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u F t d a s i l n g I o B n F ly s inc T IB l o u F t d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s 111144448888 MMMMaaaarrrrkkkkeeeetttt vvvvaaaalllluuuueeee ooooffff sssseeeeccccuuuurrrriiiittttiiiieeeessss hhhheeeelllldddd 89,086 13,973 81,525 12,822 3,991 679 2,8% 447 111144449999 IIIImmmmmmmmeeeeddddiiiiaaaatttteeeellllyyyy aaaavvvvaaaaiiiillllaaaabbbblllleeee ffffuuuunnnnddddssss wwwwiiiitttthhhh aaaa mmmmaaaattttuuuurrrriiiittttyyyy ggggrrrreeeeaaaatttteeeerrrr tttthhhhaaaannnn oooonnnneeee ddddaaaayyyy iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ooootttthhhheeeerrrr bbbboooorrrrrrrroooowwwweeeedddd mmmmoooonnnneeeeyyyy 68,424 n.a. 33,068 n.a. 27,538 n.a. 6,057 n.a. 111155550000 NNNNuuuummmmbbbbeeeerrrr ooooffff rrrreeeeppppoooorrrrttttssss ffffiiiilllleeeedddd5555 562 0 264 0 129 0 51 0 1. Data are aggregates of categories reported on the quarterly form FFIEC 002, item is not an eligible IBF asset or liability or because that level of detail is not "Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign reported for IBFs. From December 1981 through September 1985, IBF data were Banks." The form was first used for reporting data as of June 30, 1980, and was included in all applicable items reported. revised as of December 31, 1985. From November 1972 through May 1980, U.S. 4. Total assets and total liabilities include net balances, if any, due from or branches and agencies of foreign banks had filed a monthly FR 886a report. owed to related banking institutions in the United States and in foreign countries Aggregate data from that report were available through the Federal Reserve (see note 5). On the former monthly branch and agency report, available through statistical release G.ll, last issued on July 10, 1980. Data in this table and in the the G.ll statistical release, gross balances were included in total assets and total G. 11 tables are not strictly comparable because of differences in reporting panels liabilities. Therefore, total asset and total liability figures in this table are not and in definitions of balance sheet items. IBF, international banking facility. comparable to those in the G.ll tables. 2. Includes the District of Columbia. 5. Related depository institutions includes the foreign head office and other 3. Effective December 1981, the Federal Reserve Board amended Regulations U.S. and foreign branches and agencies of a bank, a bank's parent holding D and Q to permit banking offices located in the United States to operate company, and majority-owned banking subsidiaries of the bank and of its parent international banking facilities (IBFs). Since December 31, 1985, data for IBFs holding company (including subsidiaries owned both directly and indirectly). have been reported in a separate column. These data are either included in or 6. In some cases two or more offices of a foreign bank within the same excluded from the total columns as indicated in the headings. The notation "n.a." metropolitan area file a consolidated report. indicates that no IBF data have been reported for that item, either because the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A84 Index to Statistical Tables References are to pages A3-A83 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Debt (See specific types of debt or securities) Agricultural loans, commercial banks, 22, 23 Demand deposits Assets and liabilities (See also Foreigners) Banks, by classes, 20-24 Banks, by classes, 20-23 Ownership by individuals, partnerships, and Domestic finance companies, 36 corporations, 24 Federal Reserve Banks, 11 Turnover, 17 Financial institutions, 28 Depository institutions Foreign banks, U.S. branches and agencies, 24, 80-83 Reserve requirements, 9 Automobiles Reserves and related items, 4, 5, 6, 13, 71, 73, 75 Consumer installment credit, 39 Deposits (See also specific types) Production, 47,48 Banks, by classes, 4, 20-23, 24 Federal Reserve Banks, 5,11 BANKERS acceptances, 10, 23, 26 Interest rates, 16 Bankers balances, 20-23, 80-83. (See also Foreigners) Turnover, 17 Bonds (See also U.S. government securities) Discount rates at Reserve Banks and at foreign central banks and New issues, 35 foreign countries (See Interest rates) Rates, 26 Discounts and advances by Reserve Banks (See Loans) Branch banks, 24, 55 Dividends, corporate, 35 Business activity, nonfinancial, 45 Business expenditures on new plant and equipment, 35 EMPLOYMENT, 45 Business loans (See Commercial and industrial loans) Eurodollars, 26 CAPACITY utilization, 46 FARM mortgage loans, 38 Capital accounts Federal agency obligations, 5, 10, 11, 12, 31, 32 Banks, by classes, 20, 71, 73, 75 Federal credit agencies, 33 Federal Reserve Banks, 11 Federal finance Central banks, discount rates, 67 Debt subject to statutory limitation, and types and ownership Certificates of deposit, 26 of gross debt, 30 Commercial and industrial loans Receipts and outlays, 28, 29 Commercial banks, 18, 22, 70, 72, 74 Treasury financing of surplus, or deficit, 28 Weekly reporting banks, 22-24 Treasury operating balance, 28 Commercial banks Federal Financing Bank, 28, 33 Assets and liabilities, 20-23, 76-79 Federal funds, 7, 19, 22, 23, 24, 26, 28 Commercial and industrial loans, 18, 20, 21, 22, 23, 24 Federal Home Loan Banks, 33 Consumer loans held, by type and terms, 39, 70, 72, 74 Federal Home Loan Mortgage Corporation, 33, 37, 38 Deposit interest rates of insured, 16 Federal Housing Administration, 33, 37, 38 Loans sold outright, 22 Federal Land Banks, 38 Nondeposit funds, 19, 80-83 Federal National Mortgage Association, 33, 37, 38 Number by classes, 71, 73,75 Federal Reserve Banks Real estate mortgages held, by holder and property, 38 Condition statement, 11 Terms of lending, 76-79 Discount rates (See Interest rates) Time and savings deposits, 4 U.S. government securities held, 5, 11, 12, 30 Commercial paper, 25, 26, 36 Federal Reserve credit, 5,6, 11, 12 Condition statements (See Assets and liabilities) Federal Reserve notes, 11 Construction, 45,49 Federally sponsored credit agencies, 33 Consumer installment credit, 39 Finance companies Consumer prices, 45, 46 Assets and liabilities, 36 Consumption expenditures, 52, 53 Business credit, 36 Corporations Loans, 39 Nonfinancial, assets and liabilities, 35 Paper, 25, 26 Profits and their distribution, 35 Financial institutions, loans to, 22, 23, 24 Security issues, 34, 65 Float, 51 Cost of living (See Consumer prices) Credit unions, 39 Flow of funds, 40, 42, 43,44 Currency and coin, 70, 72, 74 Foreign banks, assets and liabilities of U.S. branches and Currency in circulation, 5, 14 agencies, 23, 24, 80-83 Customer credit, stock market, 27 Foreign currency operations, 11 Foreign deposits in U.S. banks, 5,11, 22, 23 Foreign exchange rates, 68 DEBITS to deposit accounts, 17 Foreign trade, 54 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A85 Foreigners Profits, corporate, 35 Claims on, 55, 57, 60, 61, 62, 64 Liabilities to, 23, 54, 55, 57, 58, 63, 65, 66 REAL estate loans Banks, by classes, 18, 22, 23, 38, 72 GOLD Terms, yields, and activity, 37 Certificate account, 11 Type of holder and property mortgaged, 38 Stock, 5, 54 Repurchase agreements, 7, 19, 22, 23, 24 Government National Mortgage Association, 33, 37, 38 Reserve requirements, 9 Gross domestic product, 51 Reserves Commercial banks, 20 HOUSING, new and existing units, 49 Depository institutions, 4, 5, 6,13 Federal Reserve Banks, 11 INCOME, personal and national, 45, 51, 52 U.S. reserve assets, 54 Industrial production, 45, 47 Residential mortgage loans, 37 Installment loans, 39 Retail credit and retail sales, 39,40,45 Insurance companies, 30, 38 Interest rates SAVING Bonds, 26 Flow of funds, 40, 42, 43, 44 Commercial banks, 76-79 National income accounts, 51 Consumer installment credit, 39 Savings and loan associations, 38, 39,40. (See also SAIF-insured Deposits, 16 institutions) Federal Reserve Banks, 8 Savings banks, 38, 39 Foreign central banks and foreign countries, 67 Savings deposits (See Time and savings deposits) Money and capital markets, 26 Securities (See also specific types) Mortgages, 37 Federal and federally sponsored credit agencies, 33 Prime rate, 25 Foreign transactions, 65 International capital transactions of United States, 53-67 New issues, 34 International organizations, 57, 58, 60, 63, 64 Prices, 27 Inventories, 51 Special drawing rights, 5, 11, 53, 54 Investment companies, issues and assets, 35 State and local governments Investments (See also specific types) Deposits, 22, 23 Banks, by classes, 20, 21, 22, 23, 24 Holdings of U.S. government securities, 30 Commercial banks, 4, 18, 20-23, 72 New security issues, 34 Federal Reserve Banks, 11, 12 Ownership of securities issued by, 22, 23 Financial institutions, 38 Rates on securities, 26 Stock market, selected statistics, 27 LABOR force, 45 Stocks (See also Securities) Life insurance companies (See Insurance companies) New issues, 34 Loans (See also specific types) Prices, 27 Banks, by classes, 20-23 Commercial banks, 4, 18, 20-23, 70, 72, 74 Student Loan Marketing Association, 33 Federal Reserve Banks, 5, 6, 8, 11, 12 Financial institutions, 38 TAX receipts, federal, 29 Insured or guaranteed by United States, 37, 38 Thrift institutions, 4. (See also Credit unions and Savings and loan associations) MANUFACTURING Time and savings deposits, 4, 14, 16, 19, 20, 21, 22, 23, 24, Capacity utilization, 46 71,73, 75 Production, 46,48 Trade, foreign, 54 Margin requirements, 27 Treasury cash, Treasury currency, 5 Member banks (See also Depository institutions) Treasury deposits, 5, 11, 28 Federal funds and repurchase agreements, 7 Treasury operating balance, 28 Reserve requirements, 9 UNEMPLOYMENT, 45 Mining production, 48 U.S. government balances Mobile homes shipped, 49 Commercial bank holdings, 20, 21, 22, 23 Monetary and credit aggregates, 4, 13 Treasury deposits at Reserve Banks, 5, 11, 28 Money and capital market rates, 26 U.S. government securities Money stock measures and components, 4, 14 Bank holdings, 20-23, 24, 30 Mortgages (See Real estate loans) Dealer transactions, positions, and financing, 32 Mutual funds, 35 Federal Reserve Bank holdings, 5, 11,12, 30 Mutual savings banks (See Thrift institutions) Foreign and international holdings and transactions, 11, 30, 66 NATIONAL defense outlays, 29 Open market transactions, 10 National income, 51 Outstanding, by type and holder, 28, 30 Rates, 25 OPEN market transactions, 10 U.S. international transactions, 53-67 Utilities, production, 48 PERSONAL income, 52 Prices VETERANS Administration, 37, 38 Consumer and producer, 45, 50 Stock market, 27 WEEKLY reporting banks, 22-24 Prime rate, 25 Wholesale (producer) prices, 45, 50 Producer prices, 45, 50 Production, 45, 47 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A86 Federal Reserve Board of Governors and Official Staff ALAN GREENSPAN, Chairman WAYNE D. ANGELL DAVID W. MULLINS, JR., Vice Chairman EDWARD W. KELLEY, JR. OFFICE OF BOARD MEMBERS DIVISION OF INTERNATIONAL FINANCE JOSEPH R. COYNE, Assistant to the Board EDWIN M. TRUMAN, Staff Director DONALD J. WINN, Assistant to the Board LARRY J. PROMISEL, Senior Associate Director THEODORE E. ALLISON, Assistant to the Board for Federal CHARLES J. SIEGMAN, Senior Associate Director Reserve System Affairs DALE W. HENDERSON, Associate Director LYNN S. Fox, Special Assistant to the Board DAVID H. HOWARD, Senior Adviser WINTHROP P. HAMBLEY, Special Assistant to the Board DONALD B. ADAMS, Assistant Director BOB STAHLY MOORE, Special Assistant to the Board PETER HOOPER III, Assistant Director DIANE E. WERNEKE, Special Assistant to the Board KAREN H. JOHNSON, Assistant Director RALPH W. SMITH, JR., Assistant Director LEGAL DIVISION DIVISION OF RESEARCH AND STATISTICS J. VIRGIL MATTINGLY, JR., General Counsel SCOTT G. ALVAREZ, Associate General Counsel MICHAEL J. PRELL, Director RICHARD M. ASHTON, Associate General Counsel EDWARD C. ETTIN, Deputy Director OLIVER IRELAND, Associate General Counsel WILLIAM R. JONES, Associate Director KATHLEEN M. O'DAY, Associate General Counsel THOMAS D. SIMPSON, Associate Director LAWRENCE SLIFMAN, Associate Director OFFICE OF THE SECRETARY DAVID J. STOCKTON, Associate Director WILLIAM W. WILES, Secretary MARTHA BETHEA, Deputy Associate Director JENNIFER J. JOHNSON, Associate Secretary PETER A. TINSLEY, Deputy Associate Director BARBARA R. LOWREY, Associate Secretary MYRON L. KWAST, Assistant Director PATRICK M. PARKINSON, Assistant Director DIVISION OF BANKING MARTHA S. SCANLON, Assistant Director JOYCE K. ZICKLER, Assistant Director SUPERVISION AND REGULATION JOHN J. MINGO, Senior 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 ROGER T. COLE, Deputy Associate Director DAVID E. LINDSEY, Deputy Director JAMES I. GARNER, Deputy Associate Director BRIAN F. MADIGAN, Associate Director HOWARD A. AMER, Assistant Director RICHARD D. PORTER, Deputy Associate Director GERALD A. EDWARDS, JR., Assistant Director NORMAND R. V. BERNARD, Special Assistant to the Board JAMES D. GOETZINGER, Assistant Director STEPHEN M. HOFFMAN, JR., Assistant Director DIVISION OF CONSUMER LAURA M. HOMER, Assistant Director AND COMMUNITY AFFAIRS 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 WILLIAM SCHNEIDER, Project Director, National Information Center 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 PORTIA W. THOMPSON, Equal Employment Opportunity DAVID L. ROBINSON, Deputy Director (Finance and Programs Officer Control) CHARLES W. BENNETT, Assistant Director DIVISION OF HUMAN RESOURCES JACK DENNIS, JR., Assistant Director MANAGEMENT EARL G. HAMILTON, Assistant Director DAVID L. SHANNON, Director JEFFREY C. MARQUARDT, Assistant Director JOHN R. WEIS, Associate Director JOHN H. PARRISH, Assistant Director ANTHONY V. DIGIOIA, Assistant Director LOUISE L. ROSEMAN, Assistant Director JOSEPH H. HAYES, JR., Assistant Director FLORENCE M. YOUNG, Assistant Director FRED HOROWITZ, Assistant Director OFFICE OF THE INSPECTOR GENERAL OFFICE OF THE CONTROLLER BRENT L. BOWEN, Inspector General GEORGE E. LIVINGSTON, Controller DONALD L. ROBINSON, Assistant Inspector General STEPHEN J. CLARK, Assistant Controller (Programs and BARRY R. SNYDER, Assistant Inspector General 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

A88 Federal Reserve Bulletin • February 1994 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman WILLIAM J. MCDONOUGH, Vice Chairman WAYNE D. ANGELL JERRY L. JORDAN DAVID W. MULLINS, JR. J. ALFRED BROADDUS, JR. EDWARD W. KELLEY, JR. SUSAN M. PHILLIPS ROBERT P. FORRESTAL JOHN P. LAWARE ROBERT T. PARRY LAWRENCE B. LINDSEY ALTERNATE MEMBERS THOMAS M. HOENIG THOMAS C. MELZER RICHARD F. SYRON SILAS KEEHN 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 MARSHALL N. CARTER, First District EUGENE A. MILLER, Seventh District J. CARTER BACOT, Second District ANDREW B. CRAIG, III, Eighth District ANTHONY P. TERRACCIANO, Third District JOHN F. GRUNDHOFER, Ninth District FRANK V. CAHOUET, Fourth District DAVID A. RISMILLER, Tenth District RICHARD G. TILGHMAN, Fifth District CHARLES R. HRDLICKA, Eleventh District CHARLES E. RICE, 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

A89 CONSUMER ADVISORY COUNCIL JEAN POGGE, Chicago, Illinois, Chairman JAMES L. WEST, Tijeras, New Mexico, Vice Chairman BARRY A. ABBOTT, San Francisco, California GARY S. HATTEM, New York, New York JOHN R. ADAMS, Philadelphia, Pennsylvania RONALD HOMER, Boston, Massachusetts JOHN A. BAKER, Atlanta, Georgia THOMAS L. HOUSTON, Dallas, Texas MULUGETTA BIRRU, Pittsburgh, Pennsylvania KATHARINE W. MCKEE, Durham, North Carolina DOUGLAS D. BLANKE, St. Paul, Minnesota EDMUND MIERZWINSKI, Washington, D.C. GENEVIEVE BROOKS, Bronx, New York ANNE B. SHLAY, Philadelphia, Pennsylvania CATHY CLOUD, Washington, D.C. JOHN V. SKINNER, Irving, Texas ALVIN J. COWANS, Orlando, Florida REGINALD J. SMITH, Kansas City, Missouri MICHAEL D. EDWARDS, Yelm, Washington LOWELL N. SWANSON, Portland, Oregon MICHAEL FERRY, St. Louis, Missouri MICHAEL W. TIERNEY, Washington, D.C. ELIZABETH G. FLORES, Laredo, Texas LORRAINE VAN ETTEN, Troy, Michigan NORMA L. FREIBERG, New Orleans, Louisiana GRACE W. WEINSTEIN, Englewood, New Jersey LORI GAY, LOS Angeles, California LILY K. YAO, Honolulu, Hawaii BONNIE GUITON, Charlottesville, Virginia ROBERT O. ZDENEK, Greenwich, Connecticut THRIFT INSTITUTIONS ADVISORY COUNCIL BEATRICE D'AGOSTINO, Somerville, New Jersey, President CHARLES JOHN KOCH, Cleveland, Ohio, Vice President MALCOLM E. COLLIER, Lakewood, Colorado ROBERT MCCARTER, New Bedford, Massachusetts WILLIAM A. COOPER, Minneapolis, Minnesota NICHOLAS W. MITCHELL, JR., Winston-Salem, North Carolina PAUL L. ECKERT, Davenport, Iowa STEPHEN W. PROUGH, Irvine, California GEORGE R. GLIGOREA, Sheridan, Wyoming STEPHEN D. TAYLOR, Miami, Florida KERRY KILLINGER, Seattle, Washington JOHN M. TIPPETS, DFW Airport, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A90 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, FEDERAL RESERVE REGULATORY SERVICE. Looseleaf; updated MS-127, 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, and Mexico. Elsewhere, $35.00 per year or $3.00 each. THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MULTI- ANNUAL STATISTICAL DIGEST: period covered, release date, COUNTRY MODEL, May 1984. 590 pp. $14.50 each. number of pages, and price. WELCOME TO THE FEDERAL RESERVE. March 1989. 14 pp. 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- 1986 November 1987 288 pp. $15.00 SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. 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 1992 December 1993 215 pp. $25.00 Consumer Handbook on Adjustable Rate Mortgages Consumer Handbook to Credit Protection Laws A Guide to Business Credit for Women, Minorities, and Small SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF CHARTS. Weekly. $30.00 per year or $.70 each in the Businesses United States, its possessions, Canada, and Mexico. Else- How to File A Consumer Credit Complaint where, $35.00 per year or $.80 each. Series on the Structure of the Federal Reserve System The Board of Governors of the Federal Reserve System THE FEDERAL RESERVE ACT and other statutory provisions The Federal Open Market Committee affecting the Federal Reserve System, as amended through Federal Reserve Bank Board of Directors August 1990. 646 pp. $10.00. Federal Reserve Banks REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL Organization and Advisory Committees RESERVE SYSTEM. A Consumer's Guide to Mortgage Lock-Ins A Consumer's Guide to Mortgage Settlement Costs ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— A Consumer's Guide to Mortgage Refinancings Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. Home Mortgages: Understanding the Process and Your Right Vol. II (Irregular Transactions). 1969. 116 pp. Each volto Fair Lending ume $2.25; 10 or more of same volume to one address, Making Deposits: When Will Your Money Be Available? $2.00 each. Making Sense of Savings GUIDE TO THE FLOW OF FUNDS ACCOUNTS. 672 pp. $8.50 When Your Home is on the Line: What You Should Know each. About Home Equity Lines of Credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A91 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 166. THE ECONOMICS OF THE PRIVATE PLACEMENT MARKET, RESULTS, by Flint Bray ton and Peter B. Clark. December by Mark Carey, Stephen Prowse, John Rea, and Gregory 1985. 17 pp. Udell. January 1994. Ill pp. 149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS IN BANKING BEFORE AND AFTER ACQUISITION, by Stephen A. Rhoades. April 1986. 32 pp. REPRINTS OF SELECTED BULLETIN ARTICLES Some Bulletin articles are reprinted. The articles listed below 150. STATISTICAL COST ACCOUNTING MODELS IN BANKING: A REEXAMINATION AND AN APPLICATION, by John T. are those for which reprints are available. Most of the articles Rose and John D. Wolken. May 1986. 13 pp. reprinted do not exceed twelve pages. Limit often copies. 151. RESPONSES TO DEREGULATION: RETAIL DEPOSIT PRICING FROM 1983 THROUGH 1985, by Patrick I. Mahoney, Alice Recent Developments in the Bankers Acceptance Market. 1/86. P. White, Paul F. O'Brien, and Mary M. McLaughlin. The Use of Cash and Transaction Accounts by American January 1987. 30 pp. Families. 2/86. 152. DETERMINANTS OF CORPORATE MERGER ACTIVITY: A Financial Characteristics of High-Income Families. 3/86. REVIEW OF THE LITERATURE, by Mark J. Warshawsky. Prices, Profit Margins, and Exchange Rates. 6/86. April 1987. 18 pp. Agricultural Banks under Stress. 7/86. 153. STOCK MARKET VOLATILITY, by Carolyn D. Davis and Foreign Lending by Banks: A Guide to International and U.S. Alice P. White. September 1987. 14 pp. Statistics. 10/86. 154. THE EFFECTS ON CONSUMERS AND CREDITORS OF Recent Developments in Corporate Finance. 11/86. PROPOSED CEILINGS ON CREDIT CARD INTEREST RATES, Measuring the Foreign-Exchange Value of the Dollar. 6/87. by Glenn B. Canner and James T. Fergus. October 1987. Changes in Consumer Installment Debt: Evidence from the 26 pp. 1983 and 1986 Surveys of Consumer Finances. 10/87. 155. THE FUNDING OF PRIVATE PENSION PLANS, by Mark J. Home Equity Lines of Credit. 6/88. Warshawsky. November 1987. 25 pp. Mutual Recognition: Integration of the Financial Sector in the 156. INTERNATIONAL TRENDS FOR U.S. BANKS AND BANKING European Community. 9/89. MARKETS, by James V. Houpt. May 1988. 47 pp. The Activities of Japanese Banks in the United Kingdom and in 157. M2 PER UNIT OF POTENTIAL GNP AS AN ANCHOR FOR the United States, 1980-88. 2/90. THE PRICE LEVEL, by Jeffrey J. Hallman, Richard D. Industrial Production: 1989 Developments and Historical Porter, and David H. Small. April 1989. 28 pp. Revision. 4/90. 158. THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIRE- Recent Developments in Industrial Capacity and Utilization. MENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE 6/90. PRODUCTS, by Mark J. Warshawsky with the assistance of Developments Affecting the Profitability of Commercial Banks. Dietrich Earnhart. September 1989. 23 pp. 7/90. 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSID- Recent Developments in Corporate Finance. 8/90. IARIES OF BANK HOLDING COMPANIES, by Nellie Liang U.S. Exchange Rate Policy: Bretton Woods to Present. 11/90. and Donald Savage. February 1990. 12 pp. The Transmission Channels of Monetary Policy: How Have 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- They Changed? 12/90. VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by Changes in Family Finances from 1983 to 1989: Evidence from Gregory E. Elliehausen and John D. Wolken. September the Survey of Consumer Finances. 1/92. 1990. 35 pp. U.S. International Transactions in 1991. 5/92. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A92 Maps of the Federal Reserve System BOSTON 7 - • NEW YORK CHICAGO • CLEVILAND • PHILADELPHIA I SAN FRANCISCO 10 A • KANSAS CITYB 5 • ATLANTA • DALLAS 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

A93 1-A 2-B 3-C 4-D 5-E Baltimore^ Pittsburgh wv. d" / •Cincii nnati Buffalo CT ^RI nj ny BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 6-F 7-G 8-H • Nashville TN o Birmingham MO W1 ML • J '* MS ) OA IA Detroit • Louisville L/TN LA • ^ Jacksonville IN .. J- • Memphis New Orleans ^ LM?S MS Rock I Miami ATLANTA CHICAGO ST. LOUIS 9-1 MT • Hel«j na I 1 m MN Ml WI 1 SD • MINNEAPOLIS 10-J WY 12-L mKmat - L • Omaha • > iin Denver OklahomajCity OK KANSAS CITY 11-K El Paso Houston • Los Angeles • J # San Antonio r DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A94 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK Chairman President Vice President branch, or facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* 02106 Jerome H. Grossman Richard F. Syron Warren B. Rudman Cathy E. Minehan NEW YORK* 10045 Maurice R. Greenberg William J. McDonough David A. Hamburg James H. Oltman Buffalo 14240 Joseph J. Castiglia James O. Aston PHILADELPHIA 19105 James M. Mead Edward G. Boehne Donald J. Kennedy William H. Stone, Jr. CLEVELAND* 44101 A. William Reynolds Jerry L. Jordan G. Watts Humphrey, Jr. Sandra Pianalto Cincinnati 45201 John N. Taylor, Jr. Charles A. Cerino1 Pittsburgh 15230 Robert P. Bozzone Harold J. Swart1 RICHMOND* 23219 Henry J. Faison J. Alfred Broaddus, Jr. Claudine B. Malone Jimmie R. Monhollon Baltimore 21203 Rebecca Hahn Windsor Ronald B. Duncan1 Charlotte 28230 Harold D. Kingsmore Walter A. Varvel1 Culpeper Communications John G. Stoides1 and Records Center 22701 ATLANTA 30303 Leo Benatar Robert P. Forrestal Hugh M. Brown Jack Guynn Donald E. Nelson1 Birmingham 35283 Shelton E. Allred FredR. Herr1 Jacksonville 32231 Samuel H. Vickers James D. Hawkins1 Miami 33152 Dorothy C. Weaver James T. Curry III Nashville 37203 Paula Lovell Melvyn K. Purcell New Orleans 70161 Jo Ann Slaydon 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 John F. McDonnell James R. Bowen Little Rock 72203 To be announced Karl W. Ashman Louisville 40232 To be announced Howard Wells Memphis 38101 Sidney Wilson, Jr. John P. Baumgartner MINNEAPOLIS 55480 Gerald A. Rauenhorst Gary H. Stern Jean D. Kinsey Colleen K. Strand Helena 59601 Lane Basso 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 Cece Smith Robert D. McTeer, Jr. Roger R. Hemminghaus Tony J. Salvaggio El Paso 79999 To be announced Sammie C. Clay Houston 77252 To be announced Robert Smith, HI1 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 Anita E. Landecker John F. Moore1 Portland 97208 William A. Hilliard E. Ronald Liggett1 Salt Lake City 84125 Gerald R. Sherratt 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

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 127, 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 guide io Business A Consumer's Credit Guide to for Women, Mortgage Minorities, and Lock-Ins Small Businesses 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, AA, and BB, and statutes, interpretations, policy statements, rulings, associated materials. and staff opinions. For those with a more specialized The Payment System Handbook deals with expeinterest in the Board's regulations, parts of this ser- dited funds availability, check collection, wire transvice are published separately as handbooks pertaining fers, and risk-reduction policy. It includes Regulation to monetary policy, securities credit, consumer affairs, CC, Regulation J, the Expedited Funds Availability and the payment system. Act and related statutes, the official Board commen- These publications are designed to help those who tary on Regulation CC, and policy statements on risk must frequently refer to the Board's regulatory mate- reduction in the payment system. rials. They are updated monthly, and each contains For domestic subscribers, the annual rate is $200 citation indexes and a subject index. for the Federal Reserve Regulatory Service and $75 The Monetary Policy and Reserve Requirements for each Handbook. For subscribers outside the Handbook contains Regulations A, D, and Q, plus United States, the price including additional air mail related materials. costs is $250 for the Service and $90 for each Hand- The Securities Credit Transactions Handbook con- book. All subscription requests must be accompanied tains Regulations G, T, U, and X, dealing with exten- by a check or money order payable to the Board of sions of credit for the purchase of securities, together Governors of the Federal Reserve System. Orders with related statutes, Board interpretations, rulings, should be addressed to Publications Services, mail and staff opinions. Also included are the Board's list stop 127, Board of Governors of the Federal Reserve System, Washington, DC 20551. U.S. MONETARY POLICY AND FINANCIAL MARKETS U.S. Monetary Policy and Financial Markets by Ann- context, examining first the evolution of Federal Marie Meulendyke offers an in-depth description of Reserve monetary policy procedures from their beginthe way monetary policy is developed by the Federal nings in 1914 to the end of the 1980s. It indicates how Open Market Committee and the techniques em- policy operates most directly through the banking ployed to implement policy at the Open Market Trad- system and the financial markets and describes key ing Desk. Written from her perspective as a senior features of both. Finally, the book turns its attention to economist in the Open Market Function at the Federal the transmittal of monetary policy actions to the U.S. Reserve Bank of New York, Ann-Marie Meulendyke economy and throughout the world. describes the tools and the setting of policy, including The book is $5.00 a copy for U.S. purchasers and many of the complexities that differentiate the process $10.00 for purchasers outside the United States. Copfrom simpler textbook models. Included is an account ies are available from the Public Information Departof a day at the Trading Desk, from morning ment, Federal Reserve Bank of New York, 33 Liberty information-gathering through daily decisionmaking Street, New York, NY 10045. Checks must accomand the execution of an open market operation. pany orders and should be payable to the Federal The book also places monetary policy in a broader Reserve Bank of New York in U.S. dollars. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis