Federal Reserve Bulletin, 1994-10

VOLUME 80 • NUMBER 10 • OCTOBER 1994 FEDERAL RESERVE BULLETIN BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn • J. Virgil Mattingly, Jr. • Michael J. Prell • Richard Spillenkothen • Edwin M. Truman The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Graphics Center under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 861 CHANGES IN FAMILY FINANCES FROM cations on which action was taken in the 1989 TO 1992: EVIDENCE FROM THE fourth quarter of 1993. SURVEY OF CONSUMER FINANCES 900 THE BANK FOR INTERNATIONAL Using newly available data from the 1992 SETTLEMENTS AND THE FEDERAL Survey of Consumer Finances along with pre- RESERVE viously available data from the 1989 survey, this article provides detailed evidence of the In September 1994, the Chairman of the Board way family income and net worth changed of Governors of the Federal Reserve System over the three-year period. Of the develop- assumed the seat on the Board of Directors of ments that the article reports, a few are par- the Bank for International Settlements desigticularly noteworthy. First, families tended to nated for the central bank of the United States. shift their asset portfolios away from tradi- This article discusses the role of the BIS as an tional deposits and toward mutual funds. Sec- international monetary institution, summarizes ond, an important increase occurred in owner- the Federal Reserve's relationship with the ship of tax-deferred retirement accounts as BIS since dial w^amraiinn's founding, and well as in the median size of such accounts. gives background information (MI the organi- Third, despite a decline in real family income zational structure of the BIS and its financial over die period, die median ratio of debt pay- operations. ments to family income remained steady, largely because of the effects of declining 907 INDUSTRIAL PRODUCTION AND interest rates on payments. Finally, income CAPACITY UTILIZATION and net worth for nonwhite and Hispanic fam- FOR AUGUST 1994 ilies grew substantially relative to the comparatively low levels at which they started the Industrial production rose 0.7 percent in period. August to 118_5 percent of its 1987 average, after an upwardly revised increase of 0.3 percent in July. Utilization of total industrial capacity rose to 84.7 percent, up from 883 PRIVATE MORTGAGE INSURANCE 81.4 percent a year earlier. Mortgage lenders will accept a relatively small down payment on a home purchase or on a 910 STATEMENT TO THE CONGRESS refinancing of an existing loan if repayment of the mort gage is backed by mortgage guarantee Alan Greenspan, Chairman, Board of Goverinsurance, which is offered by both private nors, examines the role of forecasting and the and governmental insurers. This article use of economic statistics in making monetary reviews some of the history of the mortgage policy and says that he is not aware that insurance industry, outlines the conduct of the forecasting the U.S. economy is currendy any business, details some of the financial implica- more difficult, or few that matter, any easier tions for a borrower choosing between private than it was several decades ago, before the and federal insurance, and reports on data Commerce, Consumer, and Monetary Affairs released this year by the private mortgage Subcommittee of the House Committee cm insurance industry on the disposition of appli- Government Operations, August 10, 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

913 ANNOUNCEMENTS run objectives for price stability and sustainable economic growth, and giving careful Monetary policy actions taken by the Board of consideration to economic, financial, and Governors. monetary developments, the Committee Issuance of official staff commentary on Reg- decided that slightly greater reserve restraint ulation DD. would be acceptable or slightly lesser reserve restraint might be acceptable during the inter- Proposal to modify the methodology for meeting period. imputing clearing balance income to more closely parallel the practices of a private sec- 925 LEGAL DEVELOPMENTS tor provider; proposed amendment to the Board's risk-based capital guidelines far state Various bank holding company, bank service member banks and bank holding companies corporation, and bank merger orders; and regarding the treatment of derivative con- pending cases. tracts; extension of comment period on a proposal to provide an alternative to the current A1 FINANCIAL AND BUSINESS STATISTICS test used to measure whether a section 20 subsidiary is in compliance with the "engaged These tables reflect data available as of principally" criterion of section 20 of the August 29, 1994. Glass-Steagall Act- A3 GUIDE TO TABULAR PRESENTATION Change in Board staff. A4 Domestic Financial Statistics 914 MINUTES OF THE FEDERAL OPEN A45 Domestic Nonfinancial Statistics MARKET COMMITTEE MEETING A53 International Statistics At its meeting on July 5-6,1994, the Commit- A67 GUIDE TO STATISTICAL RELEASES AND tee reaffirmed the ranges for growth of M2 SPECIAL TABLES and M3 and the monitoring range for growth of total domestic nonfinancial debt that it had A69 INDEX TO STATISTICAL TABLES established in February far 1994. For the year 1995, the Committee approved provisional A70 BOARD OF GOVERNORS AND STAFF ranges for M2 and M3 that were unchanged from the 1994 ranges, but it reduced the monitoring range for growth in total domestic non- A72 FEDERAL OPEN MARKET COMMITTEE financial debt by 1 percentage point from 1994 AND STAFF; ADVISORY COUNCILS to a range of 3 to 7 percent. With regard to possible changes in policy A74 FEDERAL RESERVE BOARD during the intermeeting period ahead, the PUBLICATIONS Committee adopted a directive that called far maintaining the existing degree of pressure on A76 MAPS OF THE FEDERAL RESERVE reserve positions and that included a bias SYSTEM toward the possible firming of reserve conditions during the intermeeting period. Accord- A78 FEDERAL RESERVE BANKS, BRANCHES, ingly, in the context of the Committee's long- AND OFFICES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Family Finances from 1989 to 1992: Evidence from the Survey of Consumer Finances Arthur B. Kennickell and Martha Starr-McCluer of of recession, the proportion of families headed by the Board's Division of Research and Statistics persons in blue-collar jobs declined as the proporprepared this article. Todd W. King provided tion headed by persons who were not working rose. research assistance. Concurrently, interest rates on three-month certificates of deposit fell from 7.7 percent to 3.1 percent Using newly available data from the 1992 Survey while rates on long-term, fixed-rate mortgages deof Consumer Finances along with previously avail- clined less sharply, from 9.8 percent to 8.0 percent. able data from the 1989 survey, this article pro- At the same time, the Standard and Poor's 500 vides detailed evidence of the way family income index of stock prices rose at an annualized rate of and net worth changed over the three-year period. 7.1 percent, and real home prices leveled off or, in Although the processing of the 1992 data is not yet some areas, even declined. On average, consumer complete, the preliminary findings indicate some prices rose 4.2 percent per year over this period. noteworthy changes in the income and net worth of Several longer-term trends also affected family families. finances. The number and types of mutual funds First, in a development that paralleled declines in available to consumers continued to grow as the interest rates over the period, families tended to cost of information processing declined. Continued shift their asset portfolios away from traditional easing of restrictions on interstate banking, the deposits and toward mutual funds. Second, an decline of the savings and loan industry, and the important increase occurred in ownership of tax- increase in the local presence of national mortgage deferred retirement accounts as well as in the lenders changed the types of institutions that median size of such accounts. Third, despite a families faced when obtaining loans. As the tax decline in real family income over the period, the advantages of individual retirement accounts median ratio of debt payments to family income weakened, employers—responding to a variety of remained steady, largely because declining interest changes in legislation governing pensions— rates tended to lower payments. Finally, income increasingly offered tax-deferred savings plans as and net worth for nonwhite and Hispanic families a way for workers to accumulate savings for grew substantially relative to the comparatively retirement. low levels at which they started the period. A long-running demographic trend is the aging To a large extent, the findings from the survey of the large post-World War II cohort. In the reflect recent macroeconomic events and other, three-year period covered by this article, the prolonger-term trends. In terms of macroeconomic portion of families headed by persons between changes, the period from 1989 to 1992 spanned a 45 and 54 years of age, a group largely composed recession and an evolving expansion. In 1989, the of this "baby boom" generation, rose from U.S. economy was at the end of a long expansion, 14.4 percent to 16.2 percent. A smaller increase with a civilian unemployment rate of 5.4 percent; also occurred in the fraction of families headed by by 1992, the economy had started its recovery from persons aged 65 and more. the 1990-91 recession, but the unemployment rate stood at 7.5 percent.1 Partially reflecting the effects THE SURVEY OF CONSUMER FINANCES 1. The quarters selected for the aggregate figures were the fourth The Survey of Consumer Finances (SCF) is inquarter of 1989 and the third quarter of 1992 because these quarters contained the midpoints of the survey field periods. tended to provide detailed information on the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

862 Federal Reserve Bulletin • September 1994 assets, liabilities, and demographic characteristics FAMILY INCOME of U.S. families.2 In its current form, the SCF has been conducted every three years since 1983. The From an examination of patterns across demoinformation reported in this article derives from the graphic groups, two trends are apparent. Both the 1989 and 1992 survey data. Analyses and descrip- 1989 and the 1992 data show a tendency for tions of die earlier surveys have been published in income to rise with education (table 1). The surprevious issues of the Federal Reserve Bulletin.3 veys also show that family income initially rises The sample design for the SCF is complex. Some with age and then declines after middle age. assets, such as business assets and corporate stocks, Respondents reported their before-tax family are held in large part by a disproportionately small income for the year preceding the survey. In real number of families. To provide a sufficient number terms, the mean of this measure of family income of cases for die analysis of such variables, the declined about $1300 between 1989 and 1992, survey oversamples wealthy families and uses while the median fell about $1,500* Data from the weights to maintain the correct proportion of such Current Population Survey of the Bureau of the families in die overall population. Because of the Census also show a decline in real median income complexity of the sample, computing standard er- over this period. Much of this change is likely due rors for tie figures reported hoe is not possible at to cyclical factors. However, the trend growth rate the current stage of data processing. However, the in real median income was also low: an average of data have been carefully inspected for outliers and less than 1 percent per year over the ten years overly influential cases. Based on this information before 1992. and on sampling error calculations from earlier surveys, the presentation in this article concentrates on results that are likely to be sustained by more Changes in Income formal significance tests. (See the appendix for a by Demographic Categories technical description of the survey.) The Survey Research Center at the University of When disaggregated by various demographic Michigan collected the data for the 1989 SCF, categories, the income data reveal large changes which was sponsored by the Federal Reserve in for some groups. Median income fell sharply for cooperation with the Department of the Treasury, the group with heads between the ages of 35 and the Department of Health and Human Services, the 44 and those 75 and older, but rose for all other National Institute on Aging, the Small Business age groups. The decline for the 35-to-44 group Administration, the General Accounting Office, the appears to reflect a disproportionate rise in Comptroller of the Currency, and the Congresunemployment among such families. The fall in sional Joint Committee cm Taxation. The National median income for the 75-and-over group is Opinion Research Center at the University of Chilikely a result of declining interest income from cago collected the data for the 1992 survey, which investments. The classification by the family head's was sponsored by the Federal Reserve in cooperalevel of formal education shows either a decline tion with the Department of the Treasury. or no change in mean income for all groups and a rise in median income only for those with a college degree. Nonwhites and Hispanics 2. The term "family " as it is used in this article is dose to the experienced growth in both mean and median US. Bureau of the Census definition of '"household" Both defini- income, reflecting an increase in both the protkms include both married coupks and single individuals. The portion of these families with an employed head appendix to this article discusses the technical definition of family used hoe. 3. For a discussion of the results from the last SCF, see Arthur Kennickell and Janice Shack-Maiquez, "Changes in Family Finances from 1983 to 1989: Evidence from the Survey of Consumer Finances." Federal Reserve Bulletin, vol. 78 (January 1992), 4. All dollar figures have been adjusted to 1992 dollars using the pp. 1-18. consumer price index (CPf) for all urban consumers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Family Finances from 1989 to 1992: Evidence from the Survey of Consumer Finances 863 and the proportion with heads in professional and refer to the year prior to the survey date. This managerial occupations.5 convention helps explain the otherwise puzzling tin By work status, median income rose substan- rise in the mean and median of prior-year income tially for families headed by persons who were for other families with heads who were not workemployed in a service occupation or self-employed. ing, because this group includes some highly paid Median income fell for families headed by skilled workers who lost their jobs because of the recesblue-collar workers, a development due largely to sion or restructuring. the recession, and for families headed by retired persons. As mentioned earlier, the income data Family Saving 5. As described in the amrmfci, Ihe race-ethnicity variable used An important determinant of changes in family hoe differs from that used in KmnirkfJI and Shacfc-Marquez, -n l ' r -Ij r jililijia fflt tf fljjfr*;- wealth is saving out of current income. If families' 1. Before-tax family income for previous year, by selected characteristics of families, 1989 and 1992, and percentage of families who saved in 1992 T k mk of 1992 doOan except as Kited 1989 1992 FsMdy Percentage Percentage Mean Median of MM llriita of families wfao saved 462 294 449 273 573 3X8 24.0 273 33.8 253 593 259 573 429 23.4 523 363 56.9 22.7 71.7 42.4 14.4 621 43.1 58.7 16L2 483 29.8 135 553 321 603 13.1 35.7 17.9 120 34.6 183 55.4 12.7 264 15-5 9J0 273 133 473 9.4 Education of head 0-8 grade 19.7 13.1 129 17.1 109 333 9.4 9-12 gnde 24J6 17.9 11.4 209 15.4 43.7 10.7 High school diploma . 33.6 253 321 329 243 56l7 29-6 Some college 46u6 33.4 15.1 39j6 283 593 17.7 CnllrgrJl^iu. ...... 80.6 47.7 283 74.4 483 67.9 32j6 527 34J6 75.1 493 31.1 61.1 77.9 »r-s oow•t n-.t e or •r aspamc . 26.4 16l7 249 293 18.6 44.0 22.1 ; of head Professional, i 7lJ0 513 169 713 513 TOO 172 Technical, sales, clerical 40.4 32.6 13.4 408 326 64.7 143 Precision production .. 47.1 44.1 9J6 39.7 326 64.6 7j0 Operators and laborers 32.8 28.6 10.6 320 269 56L6 98 Service occupations ... 23.9 17.9 6.6 28L7 19.6 513 62 R Sc et h i e re ir d ip ioycd 1 2 0 6 2 3 9 4 1 4 6 j . 6 1 2 1 5 1 0 2 2 8 6 8 3 3 5 1 0 4 7 3 4 5 7 8 . 3 9 2 1 5 1 . . 7 6 16L2 83 63 23.1 121 427 73 523 41.1 203 53J0 403 625 18.4 713 463 124 643 403 633 11.4 53.4 333 35.4 522 33J6 623 36L7 243 14J0 31.7 25.7 133 46l7 335 583 38.1 633 543 363 633 63 JS 2SJ0 163 362 273 17.6 46.6 362 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

864 Federal Reserve Bulletin • September 1994 consumption is less than their income, they add to tion of net worth, which is defined as total assets their assets or pay down their debts; and if their less total debts (table 3).8 Mean and median net consumption exceeds income, they decrease their worth increase strongly with income and formal net worth, either by drawing down existing assets education. And like income, net worth rises with or by borrowing. In the 1992 SCF, respondents the age group of the head, peaking in late middle were asked whether over the previous year they age and then declining. Between 1989 and 1992, had spent more than their current income, about as real mean family net worth rose 11.7 percent, much, or less. From this self-description, one can whereas the median remained about the same roughly distinguish families who were saving from (around $52,000).9 those who were dissaving or borrowing.6 Only When disaggregated over demographic categoabout 57 percent of families reported that they had ries, the distribution of net worth can be surprissaved, according to this definition (table 1). The ingly variable, even over a three-year period. The proportion who had saved rises steadily with most notable of such variations in this period is the income and education and tends to decline after rise in the mean and median net worth of nonage 65. The proportion of families who had saved whites and Hispanics. The median for this group was also relatively high among non-Hispanic rose from $6,200 in 1989 to $11,900 in 1992. Over whites and families with heads employed in profes- the same period, the net worth of other families sional, technical, or skilled blue-collar occupations. declined from $77,100 to $72,200.10 These changes Families reported many reasons for saving. The parallel the income changes observed for these most frequently reported reason was to increase groups, but the changes in net worth were larger. In their liquidity, a general category that included both 1989 and 1992, the distribution of net worth many responses, the most specific of which were for nonwhites and Hispanics appears to be approxi- "saving for reserves against unemployment" and mately bimodal, that is, the distribution shows con- "saving in case of illness" (table 2).7 In both 1989 centrations of families around two different levels and 1992, more than 41 percent reported that liquidity-related concerns were an important motivation for saving. At the same time, the proportion 8. The measure of assets used here excludes families' future of families reporting retirement as a reason for benefits under defined-benefit pension plans, defined-contribution saving rose nearly 3 percentage points to 26.6 per- plans from which neither withdrawals nor loans can be made, and cent in 1992. Much of this increase resulted from future social security benefits. 9. Data from the 1988 and 1991 Survey of Income and Program growth in the share of families with middle-aged Participation (SIPP) of the U.S. Bureau of the Census show a heads. The proportion of families citing educa- 12 percent decrease in real median net worth over that period. tional expenses as an important reason for saving 10. Published figures from the SIPP do not allow us to construct the same race-ethnicity categories as those in the SCF. However, also rose, again reflecting the larger share of famidata from the 1988 and 1991 SIPP show no significant change in lies with middle-aged heads. median net worth for blacks and a significant decline for whites. NET WORTH 2. Proportion of families citing selected reasons as most important for saving, 1989 and 1992 As with family income, some clear patterns across Percent demographic groups are apparent in the distribu- Reason 1989 1992 Education 11.4 14.3 6. This information is available only in the 1992 SCF. The For the family 4.3 4.4 Buying own home 6.3 5.6 underlying questions allow us to take into account the purchase of Purchases 13.0 10.2 durables, which we treat as a type of saving. For a more detailed Retirement 23.8 26.6 analysis of the saving data, see Arthur B. Kennickell, "Saving and 41.4 42.0 Permanent Income," Working Paper (Board of Governors of the Investments 9.6 10.0 Other reasons 8.8 8.4 Federal Reserve System, Division of Research and Statistics, 1994). 7. Families were asked to report their reasons for saving even if NOTE. Figures sum to more than 100 percent because some families cited they were not currently saving. more than one reason as most important. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Family Finances from 1989 to 1992: Evidence from the Survey of Consumer Finances 865 of net worth. One group of these families had net declined from $90,400 in 1989 to $87,000 in 1992. worth near zero, while another had net worth con- At the same time, the proportion of nonwhite and centrated around a higher level. For non-Hispanic Hispanic families with less than $500 of net worth whites, the distribution appears to have only one fell from 32.4 percent in 1989 to 25.3 percent in concentration around a positive level of net worth. 1992, and the proportion of non-Hispanic whites Indeed, if confined to families with $500 or more with net worth of less than $500 held steady at of net worth, the analysis shows that the median net about 8 percent. Thus, the rise in the overall net worth of nonwhites and Hispanics remained fairly worth of nonwhites and Hispanics may be attribsteady, at $30,400 in 1989 and $31,800 in 1992, uted largely to a movement of families out of the while the median net worth of other families low-wealth group. 3. Family net worth, by selected characteristics of families, 1989 and 1992 Thousands of 1992 dollars except as noted 1989 1992 Family characteristic Percentage Percentage Mean Median of Mean Median of families families All families 197.2 51.5 100 2203 52.2 100 Income (1992 dollars) Less than 10,000 24.4 1.7 16.9 44.3 3.9 17.6 10,000-24,999 77.5 26.0 26.1 73.0 23.4 28.0 25,000-49,999 118.9 58.7 30.5 144.3 58.3 27.8 50,000-99,999 225.3 127.4 19.6 283.8 139.6 19.3 100,000 and more 1,344.7 450.3 6.9 1,324.2 569.0 7.3 Age of head (years) Less than 35 60.4 8.4 27.2 60.2 10.4 25.9 35-44 156.0 63.1 23.4 157.0 46.3 22.7 45-54 308.1 103.9 14.4 304.5 97.1 16.2 55-64 304.5 100.6 13.9 371.0 133.3 13.1 65-74 306.4 80.5 12.0 369.8 103.6 12.7 75 and more 228.4 75.8 9.0 257.6 87.0 9.4 Education of head 0-8 grade 75.2 25.2 12.9 75.2 21.1 9.4 9-12 grade 93.6 27.4 11.4 96.7 21.2 10.7 High school diploma 122.4 39.6 32.1 126.8 40.8 29.6 Some college 194.3 51.3 15.1 210.6 55.6 17.7 College degree 379.5 119.2 28.5 392.9 113.0 32.6 Race or ethnicity of head White non-Hispanic 237.9 77.1 75.1 256.0 72.2 77.9 Nonwhite or Hispanic 74.8 6.2 24.9 95.1 11.9 22.1 Current work status of head Professional, managerial 238.8 97.1 16.9 262.7 86.2 17.2 Technical, sales, clerical 90.0 37.3 13.4 125.3 45.4 14.8 Precision production 85.8 53.2 9.6 91.6 34.9 7.0 Operators and laborers 61.2 21.0 10.6 58.0 20.3 9.8 Service occupations 48.5 8.5 6.6 55.9 14.7 6.2 Self-employed 696.9 182.7 11.2 666.1 196.9 11.6 Retired 181.3 70.6 25.0 229.4 71.1 25.7 Other not working 56.8 0.7 6.7 64.2 4.0 7.8 Current industry of head Manufacturing, mining, construction 177.6 56.9 20.5 220.9 57.9 18.4 Infrastructure, wholesale trade, FIRE1 326.3 85.9 12.4 326.6 60.9 11.4 Retail trade, services, agriculture 201.4 41.8 35.4 213.8 49.0 36.7 Not working 155.0 47.5 31.7 191.2 47.9 33.5 Housing status Owner 283.7 109.0 63.8 317.1 108.5 63.8 Renter or other 45.0 2.2 36.2 49.9 3.7 36.2 1. Infrastructure covers the transportation, communications, and utilities industries. FIRE covers the finance, insurance, and real estate industries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

866 Federal Reserve Bulletin • September 1994 Results for other groups wane mixed and in 4. Distribution of amount of financial assets of all many instances reflected die macroeconomic events families, by type of asset, 1989 and 1992 during the period. Across age groups, there were IVrcent broad increases in net worth for families headed by 1989 1992 persons aged 55 and above. Median net worth for asset families with more than $100,000 of income rose Taction accourts 19.7 16.4 Caiifkatts of deposit I0L4 79 more than 26 percent, while mean net worth fell Mutual funds (excluding slightly for this group, suggesting that a relatively money market fouls) 5.0 12. Slocks 14.6 21 JO small number of very wealthy families experienced Roads HJO 7.7 Retirement accounts 18.8 22.7 declines. Savings bnmh 1j6 1.1 Mean and median net worth increased for fami- Cash value of lifc insurance 62 5.7 6.6 6.4 lies in the lowest income group. This rise appears Other 6.0 39 Total 100 100 to reflect, in part, a compositional shift in this group, with the recession temporarily pushing some M Fi E n M an O c ial assets as a families with a relatively high level of assets down percentage of total iwis Z7-9 323 into the lowest income group. Nearly 39 percent of families in this group reported having income below their usual level, a higher proportion than in holdings of transaction accounts, certificates of the 22.6 percent rate for families overall. The inclu- deposit, and bonds. sion of this group with other low-income families partially accounts for the counterintuitive rise in median net worth for families headed by persons Transaction Accounts who were not working. By definition, net worth may vary because of an The proportion of families with some type of transincrease or decrease in assets or in the level of debt action account—including checking, savings, and The decisions families make to hold particular money market accounts—rose finom 85.1 percent in assets and liabilities reflect their individual needs 1989 to 87.5 percent in 1992, while the median and risk assessments. Most of the remainder of this value of such accounts increased about $100 article discusses families' portfolio choices. (table 5). Account ownership increased most notably for families in the lowest income group, in part reflecting the effects of recession on the composition of this group. Account ownership also rose ASSETS among families headed by persons between 55 and 64 years of age, nonwhites and Hispanics, and Continuing a trend observed since the 1983 SCF, renters. Over this period, the proportion of families an overall rise occurred in the share of financial with deposits of more than $100,000 in institutions assets in families' asset portfolios between 1989 covered by deposit insurance—and thus potentially and 1992. There were corresponding declines in having some deposits not covered by federal the shares of primary residences and other nondeposit insurance—rose from 3.1 percent to financial assets. 4.7 percent in 1992.11 Although the overwhelming majority of families has some type of transaction account, and the share Financial Assets V- >F< S, ' • • • The composition of financial assets held by fami- 11. A detailed description of the changes in the arrangement of lies changed substantially between 1989 and families' accounts may be found in Arthur B. Kenntckell. Myron L 1992 (table 4). The proportion of financial assets Kwast r and Martha Stanr-MoCha; "Reducing Households' Deposit Insurance. Evidence mi AM^pfcaf'IMmM JtjttuBt" accounted for by mutual funds, retirement Working Paper (Boad of Governors of the Federal Reserve Sysaccounts, and stocks rose, with offsetting declines tran, Dmskm of Research tad SMOks, 1994). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Family Finances from 1989 to 1992: Evidence from the Survey of Consumer Finances 867 appears to be increasing, the proportion of families median holdings of owners rose substantially. The without such accounts—12.5 percent in 1992—is changes for this higher-income group suggest that still substantial. For the most part, these families families with relatively small holdings may have have low incomes and are nonwhite or Hispanic. moved into other assets, such as mutual funds. The discussion in the box provides some informa- Median holdings of stocks and bonds also rose for tion on the reasons some families have no such the remaining groups of families with incomes of accounts. more than $25,000. For families with heads in Certificates of Deposit and Mutual Funds Why Families Do Not Have Checking Accounts Against the backdrop of a sharp decline in interest rates on deposits, the SCF data show a large The proportion of families without any type of transacdecrease in the ownership of certificates of tion account fell from 14.9 percent in 1989 to 12_5 perdeposit—from 19.4 percent of families in 1989 to cent in 1992, possibly because of banks' efforts to 16.6 percent in 1992—along with a strong offset- improve access to basic banking services. The survey ting rise in ownership of mutual funds—from asked families who had no transaction account 7.1 percent of families in 1989 to 11.2 percent in why they did not have a checking account. In 1992, 1992.12 For both assets, these changes woe broadly 20.1 percent of these families, up from 15.1 percent distributed across demographic groups. For fami- in 1989, reported that either bank service charges or lies with certificates of deposit, median holdings minimum balance requirements deterred them from having a checking account (see table below). For famrose slightly, though sizable increases occurred in ilies with less than $10,000 of income, these reasons holdings for families in the groups with heads were cited by 92 percent erf the group in 1989 and between 55 and 74 years of age, groups that also 18.2 percent in 1992. Higher-income families were experienced large increases in net worth. In conmore likely to cite these reasons in both years. trast, the value of mutual fund holdings rose for More than 60 percent of families in 1989 and 1992 most groups and fell substantially only for families with incomes of less than $10,000 reported that they headed by persons aged 75 and over and for non- either did not write enough checks for an account to be white and Hispanic families. worthwhile or that they did not have enough money. An underlying explanation for these responses may be that these families were too poor for a transaction account to be useful. Inconvenient hours or location Stocks and Bonds were cited by a negligible fraction of families in both years. Overall, ownership of directly held stocks and bonds moved in opposite directions, with increases in ownership and median holdings of stocks and Reasons reported by families without any type of corresponding declines for bonds.13 Families with transaction account for not having a checking account, 1989 and 1992 incomes of $100,000 or more experienced large IYiiut declines in ownership of both assets, though Response category 1989 1992 Do not write enough checks lo noke it wwtbwtnk 333 283 7.7 8.1 12. The mntnal fund figures do not mrindr money market Do not Eke dearing with banks... J 4.6 148 mutual foods or individml irliinnrat accounts, Keogfa accounts, or Service changes arc too high 7.4 120 any type of pension plan invested in mutual funds. Further infuma- car location 13 3 tion on mntnal foods is reported in Phillip R_ Mack, "Recent Do U have enough money 24.6 22-0 Trends in the lAtfnri Find Industry," Federal Reserve Bulletin, voL 79 (November 1993), pp. 1001-12. a checking j 4.5 4.4 Otter 6L6 iai 13. This dhcusskm uwm only stocks and bonds that are Total 100 100 dircctly held by families outside mutual foods or individual retirement, Keogfa, or pension accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

868 Federal Reserve Bulletin • October 1994 5. Family holdings of financial assets, by selected characteristics of families and type of asset, 1989 and 1992 A. 1989 Survey of Consumer Finances Family Trans- Mutual Retire- Savings Life Other Other All action CDs Stocks Bonds ment financial characteristic funds bonds managed financial accounts accounts assets Percentage of families holding assets AH families 85.1 19.4 7.1 16.2 S3 35.4 23.8 34.7 33 13.4 88.4 Income (1992 dollars) Less than 10,000 52.4 6.5 * • * 2.6 3.8 12.4 * 8.3 57.6 10,000-24,999 81.0 20.7 2.9 8.9 1.8 14.9 14.5 24.8 2.7 12.1 86.0 25,000-49,999 95.0 20.6 6.9 14.0 5.3 43.7 27.6 39.0 2.5 14.8 97.7 50,000-99,999 98.6 23.2 12.3 27.7 6.9 62.5 43.8 51.7 6.2 12.9 99.6 100,000 and more 98.9 30.2 25.6 57.4 27.2 79.4 34.0 59.5 10.4 26.2 99.6 Age of head (years) Less than 35 79.9 8.5 2.2 10.9 1.6 26.6 25.4 24.5 2.6 14.3 84.3 35-44 86.2 15.8 7.9 16.9 4.1 47.8 32.8 41.3 2.9 14.2 90.3 45-54 87.4 21.7 9.2 20.7 5.3 49.8 22.2 39.2 3.2 14.9 90.7 55-64 84.8 20.7 9.7 18.6 8.4 42.4 18.9 40.8 3.3 14.3 86.9 65-74 89.2 31.2 9.3 17.1 10.8 27.6 18.1 36.9 5.6 11.1 90.9 75 and more 89.8 40.8 9.8 18.5 7.7 6.0 12.8 28.5 5.4 7.8 90.8 Race or ethnicity of head White non-Hispanic 92.3 24.3 9.2 20.2 6.7 42.0 27.9 39.0 4.3 14.3 94.7 Nonwhite or Hispanic 63.7 4.9 1.0 4.4 1.0 15.3 11.5 21.7 1.1 10.7 69.2 Current work status of head Professional, managerial 99.1 21.4 11.5 28.4 8.8 63.0 39.2 45.6 4.5 17.4 99.2 Technical, sales, clerical 93.6 14.1 5.6 16.0 3.0 45.9 30.7 32.5 4.4 13.2 97.0 Precision production 90.6 13.1 6.5 14.9 2.4 48.5 35.7 43.4 2.4 14.2 94.1 Operators and laborers 77.3 9.7 3.0 7.1 • 28.0 20.1 30.4 3.0 10.6 83.5 Service occupations 69.5 11.2 2.1 4.1 • 21.3 12.1 23.3 * 12.7 78.1 Self-employed 96.0 23.3 11.3 22.9 9.2 43.7 23.9 46.4 3.5 21.5 98.7 Retired 83.2 32.0 8.0 15.7 8.0 17.2 14.9 31.0 4.3 9.2 84.8 Other not working 42.1 4.4 1.2 5.1 * 5.3 4.1 11.2 .9 10.1 49.5 Housing status Owner 94.4 24.6 9.8 21.8 7.0 46.6 28.9 44.2 4.7 12.9 95.9 Renter or other 68.9 10.3 2.3 6.4 2.3 15.6 14.7 17.9 1.3 14.2 75.2 Median value of holdings for families holding such assets (thousands of 1992 dollars) AM families 23 12.6 11.2 73 27.9 11.2 .6 3.4 22.3 2.8 12.0 Income (1992 dollars) Less than 10,000 .6 14.5 * * * 1.7 .7 .9 * 1.0 1.2 10,000-24,999 1.1 14.5 11.2 5.6 27.9 4.2 .6 1.7 22.3 1.3 3.8 25,000-49,999 2.3 11.2 7.8 4.0 17.9 8.8 .6 2.7 27.9 2.2 11.3 50,000-99,999 4.5 11.2 8.9 5.6 11.2 14.5 .7 5.0 22.3 3.9 25.6 100,000 and more 19.3 27.9 30.2 22.1 44.7 50.3 1.1 8.9 44.7 22.3 160.9 Age of head (years) Less than 35 1.3 4.5 1.3 3.4 7.8 4.5 .5 2.2 17.9 .8 3.0 35-44 2.5 7.8 4.5 3.9 13.0 10.1 .6 3.6 13.4 2.8 15.5 45-54 2.9 11.2 11.2 5.6 11.2 14.5 .6 4.5 8.9 4.1 18.2 55-64 3.4 15.1 22.3 20.4 39.1 26.8 1.8 5.6 35.7 5.6 23.6 65-74 3.6 19.5 19.0 31.3 38.0 13.4 1.7 2.2 53.6 11.2 19.1 75 Mid more 4.9 30.2 33.5 19.0 31.3 27.9 3.4 2.2 35.7 11.2 28.7 Race or ethnicity of head White non-Hispanic 3.0 12.6 11.2 7.8 30.2 11.5 .7 3.4 27.9 3.4 16.8 Nonwhite or Hispanic 1.2 12.3 29.7 2.2 27.9 6.7 .4 2.0 8.9 .8 2.2 Current work status of head Professional, managerial 4.5 11.2 11.2 5.6 21.7 16.3 .6 4.5 34.6 2.2 23.5 Technical, sales, clerical 1.7 5.6 2.7 2.7 5.6 7.3 .4 2.2 39.1 1.3 7.4 Precision production 2.1 6.0 4.6 4.5 3.4 8.7 .6 3.4 3.9 2.2 12.2 Operators and laborers 1.1 11.2 3.4 2.9 * 8.9 .6 2.7 6.7 2.2 4.4 Service occupations 1.2 6.7 1.0 3.4 » 3.4 .5 .8 * .3 2.2 Self-employed 5.0 16.8 29.7 10.9 39.1 23.5 .6 5.6 33.5 6.7 18.5 Retired 3.4 22.3 22.3 22.7 33.5 15.6 2.0 2.2 50.3 8.9 18.3 Other not working .9 2.2 6.6 33.5 * 2.2 .7 1.1 11.2 .7 1.3 Housing status Owner 3.4 16.8 14.5 7.8 31.3 13.4 .7 3.4 22.3 5.0 20.1 Renter or other 1.2 7.8 2.2 5.6 13.0 4.5 .6 2.1 24.6 1.1 2.6 NOTE. * Fewer than five observations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Family Finances from 1989 to 1992: Evidence from the Survey of Consumer Finances 869 5.—Continued B. 1992 Survey of Consumer Finances RReettiirree-- A11 Family Stocks BBoonnddss mmeenntt Savings Life Other Other financial characteristic aaccccoouunnttss bonds insurance managed financial assets Percentage of families holding assets m.i All families 87.5 16.6 11.2 17.8 4.7 39 3 22.7 353 43 11.4 Income (1992 dollars) Less than 10,000 63.7 11.1 3.3 4.2 1.0 7.0 6.6 16.3 .9 9.7 70.2 10,000-24,999 83.7 15.1 5.7 8.8 1.9 21.6 13.3 26.4 2.4 10.7 88.1 25,000-49,999 95.4 17.1 11.8 18.2 3.7 45.2 27.9 40.9 4.7 11.5 98.2 50,000-99,999 98.7 22.2 18.5 31.0 6.9 70.7 39.5 48.1 6.8 12.1 99.3 100,000 and more 98.7 19.5 29.9 48.7 22.4 78.6 32.1 60.2 11.6 16.0 98.7 Age of head (years) Less than 35 82.5 7.4 5.8 11.1 1.4 29.7 22.8 26.2 1.9 13.1 86.8 35-44 86.9 9.0 10.8 20.7 3.1 47.3 29.4 35.6 3.3 12.0 90.9 45-54 89.2 15.1 10.5 19.2 6.5 52.9 25.4 40.4 6.0 11.6 93.1 55-64 90.7 21.2 16.6 23.0 5.0 53.4 21.4 44.1 6.0 10.8 92.9 65-74 89.8 31.7 16.5 19.0 9.2 36.7 14.1 38.6 6.3 11.8 91.7 75 and more 91.7 36.6 13.4 18.2 8.3 6.3 14.5 34.4 5.6 5.3 92.6 Race or ethnicity of head White non-Hispanic 93.1 19.3 13.5 21.3 5.7 44.0 26.1 38.8 5.2 12.3 95.6 Nonwhite or Hispanic 67.5 7.3 3.1 5.6 1.2 22.5 10.4 23.0 1.1 8.4 73.7 Current work status of head Professional, managerial 97.9 16.8 18.8 28.8 8.2 65.8 34.7 45.0 8.3 10.6 99.4 Technical, sales, clerical 93.6 12.9 10.0 18.4 2.6 50.7 30.9 38.1 2.9 12.8 96.8 Precision production 88.0 5.6 7.9 15.8 * 50.2 23.9 35.0 2.5 11.2 90.5 Operators and laborers 79.5 6.6 5.4 12.0 * 31.0 16.3 31.6 * 8.0 84.8 Service occupations 78.1 8.7 4.9 7.4 • 26.3 23.1 23.3 3.2 11.1 85.1 Self-employed 96.2 18.3 16.4 27.7 8.1 48.9 24.0 42.9 3.7 19.5 97.8 Retired 86.3 30.1 11.8 15.1 6.4 22.0 15.3 33.6 5.8 7.6 88.6 Other not working 60.5 5.2 2.2 4.2 1.0 12.7 9.3 17.6 .8 15.6 68.3 Housing status Owner 94.2 21.6 14.9 23.7 6.6 49.1 28.0 43.6 5.8 10.3 96.0 Renter or other 75.7 7.9 4.6 7.5 1.4 21.8 13.3 20.7 1.7 13.4 81.5 Median value of holdings for families holding such assets (thousands of 1992 dollars) All families 2.4 133 18.0 10.0 25.0 15.0 .7 4.0 25.0 2.8 13.1 Income (1992 dollars) Less than 10,000 .7 7.0 15.0 10.0 15.7 9.0 .5 1.2 12.0 1.2 1.5 10,000-24,999 1.1 16.0 7.0 4.0 11.0 5.1 .5 2.8 20.0 2.0 3.9 25,000-49,999 2.3 13.0 15.0 5.0 25.0 10.0 .5 4.3 20.0 2.0 14.1 50,000-99,999 5.6 12.0 22.0 8.0 20.0 25.0 1.0 5.0 32.0 7.0 47.0 100,000 and more 25.5 28.0 30.0 40.0 51.0 66.0 1.2 10.5 95.0 40.0 184.0 Age of head (years) Less than 35 1.4 5.0 3.8 2.0 10.0 4.7 .4 2.8 20.0 1.0 44..22 35-44 2.2 5.0 18.0 5.0 19.3 9.8 .6 4.0 20.0 3.0 10.8 45-54 3.4 10.0 20.0 12.0 25.2 30.0 1.0 4.8 25.0 2.8 24.7 55-64 4.0 20.0 20.4 20.0 40.0 35.7 1.0 6.5 30.0 5.0 40.1 65-74 4.0 25.0 30.0 24.0 25.3 23.0 .9 4.0 40.0 9.8 30.2 75 and more 4.0 24.0 22.3 28.0 52.0 28.0 1.1 3.0 55.0 5.0 20.2 Race or ethnicity of head White non-Hispanic 3.0 13.5 18.0 10.0 25.0 17.0 .7 4.0 27.0 3.0 16.7 Nonwhite or Hispanic 1.0 12.0 18.0 4.1 35.0 7.0 .6 3.8 25.0 1.2 3.5 Current work status of head Professional, managerial 3.8 7.5 12.0 10.0 24.3 25.7 1.0 4.5 20.0 3.0 30.3 Technical, sales, clerical 2.0 10.0 10.0 8.0 10.0 9.6 .5 3.0 25.0 1.8 10.5 Precision production 2.0 2.3 6.3 4.8 • 8.9 .3 5.6 18.0 2.0 9.0 Operators and laborers 1.3 6.5 15.0 4.0 * 6.0 .5 3.8 * 1.3 4.6 Service occupations .8 12.0 4.0 4.0 * 5.1 .7 5.0 2.2 .6 2.4 Self-employed 5.6 12.0 30.0 10.0 45.0 30.0 .6 6.5 95.0 7.0 23.0 Retired 3.0 22.0 28.0 15.0 30.0 20.0 1.0 3.5 40.0 6.0 17.1 Other not working 1.2 10.0 10.6 22.0 44.6 13.0 .5 3.5 6.0 2.0 3.0 Housing status Owner 3.6 15.0 20.0 10.0 25.0 20.0 .8 4.4 27.0 5.0 24.0 Renter or other 1.0 10.0 10.0 4.0 20.0 5.5 .5 3.0 20.0 1.6 3.0 NOTE. * Fewer than five observations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

870 Federal Reserve Bulletin • September 1994 professional or managerial occupations and for tion of families holding savings bonds fell slightly those with heads between 35 and 54 years of age or between 1989 and 1992, while the median value of 75 and older, median holdings of stocks and bonds holdings rose slightly. For fife insurance that has a rose markedly. cash value, ownership and the median value of holdings rose somewhat. Other managed assets— including tnists, annuities, managed investment Retirement Accounts accounts, and other such assets—were not widely held in either year, though the proportion of fami- The rise in die share of financial assets in house- lies with these assets rose slightly over the threehold portfolios was driven in part by the increase year period. The percentage of families owning in holdings of retirement accounts—including indi- other financial assets—a diverse category covering vidual retirement accounts, Keogh accounts, and such items as futures contracts, oil and gas leases, employer-provided pension plans from which with- royalties, future proceeds from an estate, and loans drawals can be made, such as 401(k) accounts. to friends or relatives—fell between 1989 and • ' * « • mm m 1992, although the median value of holdings was Continuing trends evident in earlier surveys, retirement accounts rose from 18.8 percent of total family financial assets in 1989 to 22.7 percent in 1992. Ownership of retirement accounts went up mark- Nonfinancial Assets edly for all groups, increasing overall from 35.4 percent of families to 393 percent. Median Overall, the composition of nonfinancial assets held holdings of these assets rose 33.9 percent, and by families was largely unchanged between 1989 the gains wane spread among most of the groups and 1992 (table 6). A slight decline in the share of considered. The increase in the median value of nonfinancial assets accounted for by primary resiholdings was particularly notable for the families dences and vehicles was roughly offset by a gain in with heads between 45 and 64 years of age, a group the share of investment real estate. that traditionally has retirement as an important Ownership and the median value of nonfinancial motive for saving. assets tend to increase with income (table 7). These Among families with at least one worker, the iBGiili^^ to increase as the percentage having any type of pension was nearly family bead increases until late middle age, fflppt unchanged at 55.9 percent in 1989 and 56.5 percent they begin to flatten out or decline, as the portfolio in 1992, while the percentage having 401(k)-like share of financial assets rises. plans rose from 26.5 percent to 30.7 percent.14 In contrast, coverage of worker families by conventional defined-benefit pension plans, that is, plans Primary Residence that offer a guaranteed income at retirement, declined over the three-year period from 48.8 percent The primary residence was the largest part of to 45.1 percent Much of the growth in ownership nonfinancial assets for families, accounting for of 401(k)-like accounts took place among families who did not have other types of employer-provided pension plans, although die median value of the 6. Distribution of amount of nonfinancial assets of all families, by type of asset, 1989 and 1992 holdings in such accounts rose only for those who Percent also had another type of plan. NoaBaaacM asset 1989 1992 Remaining Financial Assets Primary residence 44444444....1111 44443333....5555 Investment real estate 222211113333 22222222....0000 Business assets 22227777....0000 222277772222 There were few notable changes in the holdings of 5555....4444 4444JJJJ9999 Othrr imnfmanrxal assrts 22221111 22224444 the remaining financial assets. The overall propor- Told 111100000000 111100000000 MEMO jNonfinanrial assets 14. These figures include pensions from both current and previ- as a percentage of total asseb 777722221111 66667777....7777 ous jobs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Family Finances from 1989 to 1992: Evidence from the Survey of Consumer Finances 871 435 percent of these assets in 1992. Indeed, this rose from 6.7 percent of families in 1989 to 8.3 pershare was about as large as that for all financial cent in 1992, compared with the movement from assets held directly by families. Between 1989 and 15.3 percent to 16.8 percent for non-Hispanic 1992, the proportion of families who owned homes whites. The median value of business assets of remained steady at 63.8 percent, while real median nonwhite and Hispanic families rose dramatically house values increased about 4.6 percent. In a from $3,400 in 1989 to $55,000 in 1992, while the continuation of earlier trends evident since at least median for the other business owners moved down 1983, increases in ownership and median house from $55,900 in 1989 to $5jj)y0OO in 1992. Because value were particularly pronounced for families nonwhite and Hispanic business owners are a headed by persons aged 75 and older, with smaller smaller proportion of the population than nonincreases for the 65-to-74 age group. The recent Hispanic white owners, however, the estimate of increase may mirror both the effects of rising the median value of business holdings for nonwealth and improving health among older people, whites and Hispanics is less precise than that for who are thus better able to maintain a home, and the rest of the population. The survey data also slack in real estate markets in many areas, which indicate substantial increases in median business may have led people to hold homes longer than values for families with $100,000 or more of they would otherwise have done- income and for those headed by persons between the ages of 45 and 74. Investment Real Estate Vehicles Overall, ownership and median holdings of Vehicles—including automobiles, motorcycles, investment real estate—which includes vacation vans, trucks, jeeps, spoit utility vehicles, motorhomes, rental units, commercial property, vacant homes, recreational vehicles, airplanes, and land, and all other real estate except a primary boats—are the most widely held nexifinanenal asset, with 86.4 percent of families having had some type were unchanged. However, thane were a few imporof vehicle in 1992.15 This figure represents an tant shifts for some demographic groups. Families increase of 2.8 percentage points over the level in headed by persons aged 55 to 74 were more likely 1989. Ownership jumped for hexiseholels headed by to have such property, and the median value erf persons aged 65 and over and for nemwhites and their holdings rose. Although the ownership rate of Hispanics, although overall the meeiian value erf investment real estate for nonwhites and Hispanics holdings declined. The eiecline was most marked declined somewhat, the median value of their holdfor families headed by persons younger than 55 ings rose 18.4 percent and families with more than $50,000 of inexMne. Underlying the overall vehicle trends, the types of vehicles selected by families changeel, with the Business Assets percentage of families owning a van, sport utility vehicle, eirjeep rising from 11.0 percent in 1989 to Likely reflecting the increase in business formation 16.9 percent in 1992. that typically occurs at the beginning of an eco- In recent years, vehicle leasing has beexime nomic recovery, direct holdings by families erf an somewhat more ce>mroon as a substitute for exitequity interest in a business—incluehng serfe propri- right ownership. The SCF indicates that in 1989, etorships, limited partnerships, other partnerships, 2.4 percent of families leased vehicles for personal subchapter S corporations, other corporations use and that by 1992 that figure had risen to that are not publicly traded, and other private businesses—moved up 1.7 percentage points between 1989 and 1992. This increase was particu- J*;-.' IS. This figure cowers only personally owned vehicles. in 1992, larly notable for families headed by persons aged 4.8 |»nn< of famihrs had ai least one vehicle provided by their 55 to 64. Ownership for nemwhites and Hispanics employer for their pasonal use. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

872 Federal Reserve Bulletin • October 1994 7. Family holdings of nonfinancial assets, by selected characteristics of families and type of nonfinancial asset, 1989 and 1992 A. 1989 Survey of Consumer Finances Investment Other All Family Primary real Business Vehicles non- nonfinancial characteristic residence estate financial assets Percentage of families holding assets All families 63.8 20.0 13.2 83.6 11.9 89.1 Income (1992 dollars) Less than 10,000 32.4 4.2 2.5 48.4 5.1 62.9 10,000-24,999 53.9 13.7 9.2 80.6 7.5 86.6 25,000-49,999 68.9 20.1 11.2 94.8 13.2 97.0 50,000-99,999 85.3 29.6 20.6 96.7 17.0 99.2 100,000 and more 94.1 54.0 42.1 94.4 24.2 99.5 Age of head (years) Less than 35 37.6 7.9 10.3 80.6 9.4 83.0 35-44 67.1 21.1 19.5 89.2 13.7 92.0 45-54 77.3 29.3 18.7 91.0 14.8 93.4 55-64 80.2 30.0 12.6 86.1 12.5 90.9 65-74 77.1 25.0 8.1 81.1 12.8 92.6 75 and more 69.6 16.3 4.4 66.1 7.8 85.8 Race or ethnicity of head White non-Hispanic 70.5 22.5 15.3 89.3 14.0 94.2 Nonwhite or Hispanic 43.5 12.3 6.7 66.7 5.4 73.8 Current work status of head Professional, managerial ... 73.0 26.2 9.3 94.8 16.6 97.2 Technical, sales, clerical ... 55.7 12.2 7.4 87.2 10.9 88.9 Precision production 71.2 19.2 8.6 96.8 11.9 98.2 Operators and laborers 56.0 14.4 6.4 87.1 7.6 89.5 Service occupations 42.9 12.8 4.6 75.4 7.3 79.4 Self-employed 74.1 38.1 69.7 94.7 21.0 98.6 Retired 72.5 20.1 3.7 74.5 9.3 87.3 Other not working 29.3 6.4 1.6 47.8 7.5 56.2 Housing status Owner 100.0 25.9 16.5 92.9 14.1 100.0 Renter or other .0 9.6 7.3 67.3 8.0 70.0 Median value of holdings for families holding such assets (thousands of 1992 dollars) All families 78.2 48.0 503 7.7 7.8 74.5 Income (1992 dollars) Less than 10,000 27.9 15.1 22.3 1.8 1.1 9.2 10,000-24,999 55.9 20.1 12.3 4.7 5.6 42.1 25,000-49,999 72.6 42.5 33.5 7.7 5.6 74.8 50,000-99,999 111.7 55.9 50.3 12.9 11.2 138.2 100,000 and more 223.4 148.8 156.4 17.9 23.5 369.8 Age of head (years) Less than 35 72.6 31.3 22.3 6.4 5.6 17.5 35-44 89.4 51.4 50.3 9.1 7.5 96.3 45-54 93.8 62.6 58.6 10.6 8.9 117.7 55-64 83.8 44.8 89.4 7.5 11.2 102.2 65-74 59.0 33.5 59.2 5.5 7.7 68.9 75 and more 55.9 43.6 78.2 4.4 9.3 56.8 Race or ethnicity of head White non-Hispanic 80.4 51.4 55.9 8.4 8.4 82.9 Nonwhite or Hispanic 55.9 38.0 3.4 4.8 5.6 31.0 Current work status of head Professional, managerial ... 117.3 58.1 61.4 9.5 8.9 118.2 Technical, sales, clerical ... 93.8 33.5 9.4 7.7 5.6 71.5 Precision production 71.5 22.3 5.6 9.5 5.6 72.0 Operators and laborers 55.9 24.6 86.0 6.8 5.6 41.6 Service occupations 78.2 22.3 33.5 6.1 4.5 34.9 Self-employed 111.7 80.4 62.6 11.3 15.6 199.9 Retired 61.4 39.4 76.0 5.1 7.3 65.6 Other not working 38.0 33.5 84.8 2.4 1.9 12.6 Housing status Owner 78.2 50.3 58.6 9.4 8.9 107.6 Renter or other * 33.5 11.2 4.3 5.6 5.6 NOTE. * Fewer than five observations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Family Finances from 1989 to 1992: Evidence from the Survey of Consumer Finances 873 7.—Continued B. 1992 Survey of Consumer Finances Investment Other All FFaammiillyy PPrriimmaarryy BBuussiinneessss VVeehhiicclleess non- nonfinancial characteristic residence estate financial assets Percentage of families holding assets All families 63.8 20.0 14.9 86.4 8.5 91.3 Income (1992 dollars) Less than 10,000 38.8 5.9 3.6 5555..88 55..00 6677..88 10,000-24,999 54.2 12.3 8.4 88.2 5.7 92.2 25,000-49,999 68.8 20.3 14.1 93.9 8.2 97.5 50,000-99,999 84.2 30.6 23.6 96.9 11.3 99.1 100,000 and more 87.6 54.2 46.4 96.8 21.6 100.0 Age of head (years) Less than 35 37.0 88..44 1111..33 8844..88 88..11 8866..77 35-44 64.1 17.1 20.1 89.3 9.3 93.0 45-54 75.5 26.6 18.9 92.5 10.1 94.5 55-64 77.9 35.8 19.2 87.2 6.7 93.1 65-74 78.9 26.7 11.3 86.3 7.9 92.0 75 and more 76.7 16.6 4.1 72.4 8.4 90.7 Race or ethnicity of head White non-Hispanic 69.5 22.5 16.8 9900..66 99..99 9944..99 Nonwhite or Hispanic 43.8 11.0 8.3 71.9 3.9 78.6 Current work status of head Professional, managerial 67.2 24.8 11.9 94.6 1122..00 9977..11 Technical, sales, clerical 62.0 16.2 10.2 91.9 7.3 94.3 Precision production 61.3 19.1 6.9 92.6 10.0 95.3 Operators and laborers 56.7 14.7 4.1 90.2 8.3 92.5 Service occupations 47.3 5.2 6.4 81.5 6.6 85.0 Self-employed 76.6 37.3 74.6 95.0 13.8 98.4 Retired 73.3 21.1 4.8 78.7 5.7 89.3 Other not working 33.5 6.5 2.5 64.4 5.4 68.4 Housing status Owner 100.0 26.0 19.1 93.3 99..77 110000..00 Renter or other .0 9.5 7.5 74.4 6.5 75.9 Median value of holdings for families holding such assets (thousands of 1992 dollars) All families 81.8 50.0 50.0 6.9 7.2 69.5 Income (1992 dollars) Less than 10,000 40.0 33.0 29.0 2.4 11..55 2200..66 10,000-24,999 50.0 21.0 20.0 4.3 5.0 34.3 25,000-49,999 75.0 45.0 55.5 8.1 5.0 71.5 50,000-99,999 115.0 65.0 25.0 11.0 12.0 140.3 100,000 and more 225.0 160.0 260.0 14.9 20.0 442.3 Age of head (years) Less than 35 69.0 40.0 1199..33 55..99 33..55 1166..66 35-44 90.0 38.5 45.0 7.6 8.5 82.3 45-54 95.0 70.0 100.3 8.6 11.3 101.5 55-64 85.0 55.0 92.0 8.3 10.4 114.2 65-74 70.0 60.0 80.0 5.6 11.0 79.0 75 and more 70.0 52.0 80.0 4.5 5.0 70.3 Race or ethnicity of head White non-Hispanic 85.0 52.0 50.0 77..44 77..55 7799..77 Nonwhite or Hispanic 51.0 45.0 55.0 4.9 7.0 34.6 Current work status of head Professional, managerial 120.0 75.0 20.0 9.0 8.0 110033..66 Technical, sales, clerical 83.0 45.0 10.0 7.5 7.0 67.5 Precision production 77.0 35.0 10.0 8.0 4.5 66.5 Operators and laborers 55.0 25.0 17.0 5.8 2.8 36.3 Service occupations 65.0 40.0 35.0 4.5 4.5 21.8 Self-employed 145.0 95.0 80.0 10.4 15.0 206.4 Retired 65.0 50.0 75.0 4.8 7.0 65.5 Other not working 54.0 30.0 31.8 4.2 9.0 20.3 Housing status Owner 81.8 53.0 70.0 8.5 1100..00 110088..99 Renter or other * 50.0 19.3 4.2 4.0 5.1 NOTE. * Fewer than five observations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

874 Federal Reserve Bulletin • September 1994 3.0 percent.16 Over this time, the prevalence of information on the distribution of unrealized capileasing rose particularly among families with high tal gains on primary residences, investment real incomes. In 1992, 10.1 percent of families with estate, businesses, and stocks and mutual funds incomes of $100,000 or more leased a vehicle for held outside retirement accounts. The median net personal use, up from 4.8 percent in 1989. The unrealized capital gain over all families, including increase in leasing by this group may partially those who did not have assets, declined from offset the decline in the median value of vehicles $10,600 in 1989 to $7,500 in 1992 (table 8). Shifts owned by such families. in the real value of homes accounted for most of this change. However, mean net gains rose slightly over the period. This rise reflected increases in Other Nonfinancial Assets unrealized gains on assets other than primary residences for a relatively small fraction of the The proportion of families owning other nonfinan- population. By age groups, increases in mean net cial assets—a broad category including artwork, gains were concentrated among families headed by jewelry, precious metals, antiques, and other tangi- persons between 55 and 74 years of age, though the ble assets—declined from 11.9 percent in 1989 median rose only for those headed by persons aged to 8.5 percent in 1992. This decline was spread 65 and over. over most of the demographic groups considered. At the same time, among families owning such assets, the median value of holdings also fell, LIABILITIES though changes by demographic groups were more mixed. In terms of portfolio share, mortgages and other home-equity-based loans account for the largest part of families' borrowing—56.7 percent in 1989 and 63.3 percent in 1992 (table 9). Considering the Unrealized Capital Gains prominence of housing in families' asset portfolios, Unrealized capital gains are an important factor in the importance of mortgage debt is not surprising. changes in total assets. The survey offers some Families' Holdings of Debt 16. The SCF does not collect information on families' leasing of While total family debt as measured in the SCF fell vehicles for business purposes. from 15.9 percent of total assets in 1989 to 14.5 percent in 1992, the proportion of families 8. Family unrealized capital gains, by selected actually borrowing and the median amount of characteristics of families, 1989 and 1992 total debt outstanding changed only slightly Thousands of 1992 dollars 1989 1992 FFaammiillyy cchhaarraacctteerriissttiicc 9. Distribution of amount of debt of all families, by type Mean Median Mean Median of debt, 1989 and 1992 All families 79.0 10.6 82.4 7.5 Percent Income (1992 dollars) Type of debt 1989 1992 Less than 10,000 9.3 .0 14.9 .0 10,000-24,999 33.5 1.2 29.8 .5 25,000-49,999 48.3 12.8 47.3 8.0 Home mortgage and home equity 50,000-99,999 84.9 38.5 98.0 30.7 lines of credit 555666...777 666333...333 100,000 and more 546.8 131.8 537.0 145.0 Installment loans 111333...999 999...222 Credit card balances 222...333 222...888 Age of head (years) Other lines of credit 111...000 ...888 Less than 35 24.0 .0 19.2 .0 Investment real estate mortgages 222444...555 222222...000 35-44 60.2 11.9 59.8 5.0 Other debt 111...777 111...999 45-54 131.5 37.4 112.3 18.0 Total 111000000 111000000 55-64 121.3 33.0 144.2 32.0 65-74 120.5 28.6 153.1 30.2 MEMO 75 and more 89.3 17.5 77.9 26.1 Debt as a percentage of total assets .. 111555...999 111444...555 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Family Finances from 1989 to 1992: Evidence from the Survey of Consumer Finances 875 (table 10). The pattern of debt across demographic second mortgage that they reported was not used groups resembles that of nonfinancial assets, with for the purchase of their home, and such borrowing borrowing and the median amount owed rising accounted for about 7 percent of the value of with income and initially with age, before declin- borrowing secured by home equity.17 For at least ing after middle age. This correspondence is two reasons, these figures likely understate the to be expected because much of borrowing is extent of secured borrowing to finance purchases associated with the acquisition of nonfinancial other than homes. First, because money is fungible, assets, particularly homes. The largest change in it is difficult to determine how the money from a overall indebtedness occurred in the group of loan is ultimately used. Second, the survey did not families with incomes of $50,000 or more, for ask respondents about how the funds from a first whom the percentage having any debt fell even mortgage were used: They are assumed to have though the median balance rose. Borrowing been used to purchase a home. However, when rose for families headed by persons aged 65 and mortgages are refinanced, people may extract funds over, a group that also experienced gains in net from their accumulated equity beyond what is worth. needed to finance the balance on their existing mortgage. The rise in refinancing noted earlier underscores the potential importance of such Mortgages borrowing. Although the proportion of families who were homeowners in 1992 was virtually the same as that Nonmortgage Installment Borrowing in 1989, the overall percentage with mortgages— including traditional mortgages, home equity loans, The use of nonmortgage installment borrowing fell and home equity lines of credit—fell about 1.3 per- off sharply—from 50.1 percent of families in 1989 centage points. However, the median mortgage to 45.8 percent in 1992—and this decline was amount outstanding rose more than the median spread among most of the groups considered here. house value, by 15.8 percent as compared with Modest increases occurred only among families 4.6 percent for house values. Substantial declines with incomes between $10,000 and $25,000, those occurred in the prevalence of mortgages among with heads under the age of 35, those with heads families with more than $50,000 of income and employed in service occupations, and renters. For among those in professional occupations, though those with installment loans outstanding, the the median amount owed by these groups moved amounts owed also tended to decline as the median up. This finding suggests that people with rela- amount outstanding on such loans fell almost tively small mortgage balances tended to pay them 24 percent. Only those families headed by persons off over this period. Paralleling the decline in inter- 65 to 74 years of age, a group that experienced a est rates over the three-year period, the proportion sizable increase in net worth, had an appreciable of families who had ever refinanced their current increase in the median amount owed. Notably, the mortgages rose from 10.8 percent in 1989 to decline in the percentage of families who borrowed 15.0 percent in 1992. to purchase vehicles and in the amount of such Before the Tax Reform Act of 1986, which borrowing accounted for the majority of the decline phased out the tax deductibility of interest pay- in nonmortgage installment borrowing. ments other than those for home mortgages, fami- The share of families having credit cards— lies primarily used mortgages to purchase homes, including bank-type cards (such as Visa, Masterwhereas they used other forms of consumer credit card, and Discover), store and gasoline company to support other types of consumption. Since 1986, consumers have had a strong incentive to shift toward borrowing secured by home equity. The survey offers some evidence of the prevalence of 17. For a more detailed discussion of home-equity-based borthis type of borrowing. In both years, 6.7 percent of rowing, see Glenn B. Canner and Charles A. Luckett, "Home Equity Lending: Evidence from Recent Surveys," Federal Reserve families had either a home equity line of credit or a Bulletin, vol. 80 (July 1994), pp. 571-83. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

876 Federal Reserve Bulletin • October 1994 10. Family holdings of debts, by selected characteristics of families and type of debt, 1989 and 1992 A. 1989 Survey of Consumer Finances Other Family Mortgage and Credit Investment Other All characteristic home equity card credit real estate debt debt Percentage of families holding debts All families 40.0 50.1 40.4 3.2 73 6.7 73.0 Income (1992 dollars) Less than 10,000 6.4 30.6 13.4 * * 5.3 45.2 10,000-24,999 23.4 39.7 29.1 2.3 1.4 5.5 60.0 25,000-49,999 44.4 59.8 53.1 2.1 6.8 5.4 82.9 50,000-99,999 71.4 65.5 59.0 7.5 11.8 8.5 92.9 100,000 and more 76.3 50.9 40.1 6.7 33.9 15.9 89.6 Age of head (years) Less than 35 33.5 60.2 44.6 4.4 2.5 6.6 79.7 35-44 59.1 68.5 52.5 4.8 11.0 9.1 89.5 45-54 59.2 59.8 50.5 4.2 13.4 8.6 85.8 55-64 38.7 39.2 32.9 1.3 10.3 7.4 72.3 65-74 21.1 22.8 26.9 .7 4.4 3.1 49.5 75 and more 6.7 10.2 10.0 • 1.2 1.9 21.9 Race or ethnicity of head White non-Hispanic 43.8 50.5 42.5 3.2 8.1 7.2 74.5 Nonwhite or Hispanic 28.5 48.9 34.1 3.2 4.7 5.2 68.5 Current work status of head Professional, managerial 63.5 64.8 59.1 4.8 14.3 10.2 93.8 Technical, sales, clerical 48.5 65.1 58.5 6.7 4.6 6.2 89.1 Precision production 56.1 66.9 61.2 2.6 6.7 7.9 90.5 Operators and laborers 36.9 59.4 42.2 3.8 4.3 9.0 81.9 Service occupations 29.4 45.9 38.6 * 3.2 » 66.7 Self-employed 53.4 56.3 34.6 5.2 16.9 9.9 82.7 Retired 17.1 22.9 17.8 .3 3.4 3.3 40.9 Other not working 19.3 40.4 20.7 * 2.5 5.4 59.1 Housing status Owner 62.7 52.1 44.9 2.9 9.5 7.0 79.1 Renter or other .0 46.8 32.6 3.9 3.3 6.3 62.2 Median value of holdings for families holding such debts (thousands of 1992 dollars) All families 38.0 5.9 1.1 2.2 35.7 2.2 17.6 Income (1992 dollars) Less than 10,000 7.3 1.4 .3 * * .6 1.5 10,000-24,999 14.6 3.5 .7 1.0 14.9 1.1 5.6 25,000-49,999 32.4 7.3 1.0 2.2 16.8 1.3 18.3 50,000-99,999 49.2 8.7 1.7 2.8 34.6 3.6 49.3 100,000 and more 83.8 11.6 2.2 11.2 76.0 5.6 118.4 Age of head (years) Less than 35 51.4 5.5 1.1 1.6 22.3 1.8 12.7 35-44 46.4 7.7 1.3 3.7 42.5 1.3 37.4 45-54 29.0 7.8 1.1 1.5 22.3 3.4 26.5 55-64 23.5 4.2 1.1 2.2 36.3 3.4 12.1 65-74 10.1 3.8 .6 2.2 16.8 2.2 5.6 75 and more 4.5 3.4 .2 * 20.1 5.6 2.4 Race or ethnicity of head White non-Hispanic 39.4 6.7 1.1 3.1 35.4 2.2 22.1 Nonwhite or Hispanic 31.0 3.4 1.0 1.6 38.0 1.1 8.0 Current work status of head Professional, managerial 53.6 8.4 1.7 2.8 39.1 2.6 46.7 Technical, sales, clerical 34.6 4.9 1.0 1.3 51.9 2.2 13.0 Precision production 39.1 6.3 1.1 4.5 16.5 1.8 27.3 Operators and laborers 27.5 5.4 .8 1.1 14.9 1.1 12.3 Service occupations 46.9 4.9 1.2 * 6.1 • 8.9 Self-employed 46.9 8.9 1.2 10.9 70.4 5.6 39.1 Retired 11.2 3.9 .6 .4 15.6 1.3 5.4 Other not working 14.5 2.2 .7 * 22.3 .3 3.4 Housing status Owner 38.0 7.7 1.1 3.4 35.7 3.0 37.5 Renter or other * 3.6 .9 1.6 30.7 .9 3.5 NOTE. * Fewer than five observations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Family Finances from 1989 to 1992: Evidence from the Survey of Consumer Finances 877 10.—Continued B. 1992 Survey of Consumer Finances cha F ra a c m te il r y is tic M ho o m rtg e a e g q e u a it n y d IInnssttaallllmmeenntt C c r a e r d d i t c O r t e h d e i r t I r n e v a e l s e tm sta e t n e t O d t e h b e t r d A eb ll t s Percentage of families holding debts All families 38.7 45.8 43.4 2.5 8.3 8.7 73 3 Income (1992 dollars) Less than 10,000 9.6 29.8 23.7 * ..66 55..22 4477..55 10,000-24,999 21.8 46.8 43.2 1.5 3.5 6.4 69.5 25,000-49,999 47.4 54.6 54.8 2.9 7.3 10.7 82.5 50,000-99,999 66.1 50.2 49.0 4.3 13.5 10.1 84.6 100,000 and more 67.6 35.3 32.9 4.2 34.6 14.9 85.0 Age of head (years) Less than 35 30.6 62.1 5522..66 22..99 44..88 66..55 8822..11 35-44 55.5 58.2 50.3 3.3 9.3 12.6 86.5 45-54 61.8 48.6 48.4 2.8 14.5 10.3 85.8 55-64 40.0 38.0 36.7 2.3 13.8 10.8 69.2 65-74 18.3 22.9 30.2 1.1 5.4 5.4 51.9 75 and more 6.7 8.0 19.5 • .7 4.5 30.2 Race or ethnicity of head White non-Hispanic 41.8 45.9 43.8 22..88 99..44 88..44 7744..22 Nonwhite or Hispanic 27.9 45.4 41.9 1.4 4.3 9.9 70.2 Current work status of head Professional, managerial 55.3 56.7 50.0 4.6 1122..77 1122..77 8877..66 Technical, sales, clerical 50.1 57.6 58.3 2.8 7.1 7.6 88.9 Precision production 49.0 62.4 53.2 2.3 9.0 9.5 86.1 Operators and laborers 42.8 58.3 54.6 2.6 6.8 11.2 79.6 Service occupations 29.0 56.6 46.3 3.0 6.3 78.4 Self-employed 57.7 45.9 47.2 3.6 20.5 12.1 84.8 Retired 16.3 21.1 24.9 .6 4.1 5.2 45.0 Other not working 19.7 42.1 30.4 * 2.9 6.5 65.0 Housing status Owner 60.7 44.0 45.7 2.1 1100..55 99..55 7788..11 Renter or other .0 49.0 39.2 3.1 4.3 7.4 64.9 Median value of holdings for families holding such debts (thousands of 1992 dollars) All families 44.0 4.5 1.0 2.2 28.0 2.5 17.6 Income (1992 dollars) Less than 10,000 16.0 1.6 ..66 * 66..55 ..77 22..00 10,000-24,999 17.4 2.7 .8 3.0 6.1 1.0 5.6 25,000-49,999 40.0 5.6 1.3 1.5 18.0 2.0 21.1 50,000-99,999 58.0 7.8 1.5 2.0 41.0 3.0 57.2 100,000 and more 103.0 10.8 3.9 18.0 75.0 6.0 131.0 Age of head (years) Less than 35 52.0 4.6 ..99 11..66 1188..00 11..22 1100..22 35-44 54.0 5.0 1.3 1.8 28.0 3.0 33.3 45-54 42.0 5.0 1.7 5.0 49.5 3.0 30.9 55-64 28.0 3.9 1.0 4.0 34.7 3.0 20.8 65-74 17.0 4.2 .7 4.0 17.0 2.0 5.6 75 and more 15.0 3.1 .6 * 104.0 1.1 2.3 Race or ethnicity of head White non-Hispanic 45.0 5.0 11..00 22..00 2299..00 22..99 2211..11 Nonwhite or Hispanic 30.3 3.2 1.0 2.5 27.0 1.6 7.6 Current work status of head Professional, managerial 60.0 5.9 1.4 3.0 3366..00 33..00 3388..00 Technical, sales, clerical 46.0 5.1 1.0 1.2 15.0 2.0 20.8 Precision production 45.0 4.2 1.0 1.3 17.0 2.2 20.6 Operators and laborers 29.0 4.5 1.0 1.0 9.0 2.5 14.9 Service occupations 31.0 3.0 .8 2.0 * 1.5 7.0 Self-employed 72.0 6.7 1.6 4.0 82.0 5.0 57.3 Retired 17.0 3.1 .8 4.0 18.0 2.0 5.2 Other not working 27.0 2.6 .8 * 27.0 1.5 4.0 Housing status Owner 44.0 5.6 1.1 44..00 3333..44 33..00 3388..00 Renter or other * 3.5 .9 1.2 18.0 1.0 3.7 NOTE. * Fewer than five observations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

878 Federal Reserve Bulletin • September 1994 cards, travel and entertainment cards (such as small. The median amount owed on these loans fell American Express and Diners Club), and other 21.6 percent, but the change was unevenly spread credit cards—rose from 69.9 percent in 1989 to over demographic groups. A substantial decline in 72.7 percent in 1992, with increases occurring in median loan balances for families with heads most demographic groups. This growth is almost between 35 and 44 years of age was partially offset entirely due to a surge in the share of families with by gains in the 45-to-54 group. bank-type credit cards. The proportion of card The prevalence of other borrowing—including holders who reported that they normally pay off loans on insurance policies, loans against pension their bills in full each month increased somewhat accounts, and other unclassified loans—rose over from 50.4 percent to 52.3 percent.18 Nonetheless, the period. Loans against pension accounts grew as use of credit cards for borrowing increased substan- a share of other borrowing over the three-year tially over this period, largely because of the rise in period, from 8.2 percent in 1989 to 13.1 percent in the number of card holders. In 1989, 40.4 percent 1992. At the beginning of this period, 0.8 percent of families had outstanding balances on credit of families had loans outstanding against pension cards, compared with 43.4 percent in 1992, though accounts and the median balance was $3,350; three the median balance declined very slightly. One years later, the proportion with such loans had risen notable change was the increase in the use of cards to 1.8 percent of families, but the median balance by families with heads aged 55 and older. The rise had dropped to $1,000. in the use of credit cards was particularly large for the 75-and-over group, which had a simultaneous rise in the median balance. This change is surpris- Reasons for Borrowing ing in light of earlier data showing consistently low levels of debt for this group. Credit card borrowing The SCF provides detailed information on the by higher-income families fell off, but median bal- reasons families report for having taken out most ances rose strongly for borrowers with incomes of loans.19 Not unexpectedly, borrowing for home $100,000 or more. purchase—which includes first mortgages and all other loans reportedly used for home purchase— accounted for the largest share of families' debt Other Borrowing outstanding, rising from 53.1 percent of all loan balances in 1989 to 58.6 percent in 1992 (table 11). Overall, families decreased their use of lines of credit other than credit cards or home equity lines between 1989 and 1992. Over this time, the per- 19. In addition to first mortgages, the survey does not ask about centage of families with balances on credit lines purposes for loans against pension accounts, credit cards, loans fell from 3.2 percent to 2.5 percent. Declines in use against insurance policies, and miscellaneous loans. Credit cards were particularly large for higher-income families, are assumed to have been used for the purchase of goods and services. though median balances rose sharply for households with $100,000 or more of income. Increases in use were notable only for families headed by 11. Distribution of amount of debt of all families, persons aged 55 and older, a group with a particu- by purpose of debt, 1989 and 1992 larly large increase in median balances as well. Percent Consistent with the moderate increase in fami- Purpose of debt 1989 1992 lies' holdings of investment real estate, the proportion of families having loans for such properties Home purchase 55553333....1111 55558888....6666 Home improvement 2222....0000 1111....9999 rose 1 percentage point. Changes in use over vari- Investment, excluding real estate 2222....6666 1111....4444 Vehicles 8888....6666 5555....7777 ous demographic groups were mixed and generally Goods and services 4444....8888 4444....9999 Investment real estate 22225555....8888 22222222....4444 1111....9999 2222....1111 Unclassifiable loans against 18. The share of card holders paying off their monthly balance pension accounts ....1111 ....2222 Other unclassifiable loans 1111....1111 2222....7777 refers only to store credit cards and to bank cards. The figures Total 111100000000 111100000000 reported in the table refer to all types of credit cards. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Family Finances from 1989 to 1992: Evidence from the Survey of Consumer Finances 879 The shares of loans taken out for vehicle purchases loans declined, tending to lower payments on loans. and for investment declined markedly. Borrowing However, real family income also fell over the for real estate investment other than for primary period. Thus, it is not clear a priori what the net residences also fell sharply. Despite the growth in effect of the interest rate and income changes was employer-sponsored pension accounts noted ear- on families' ability to meet loan payments. lier, the share of borrowing attributable to loans The survey data provide mixed evidence on the against such accounts rose only a bit. The share change in debt burden (table 13). On the one hand, of borrowing for other goods and services was the ratio of aggregate payments to total family unchanged. income—the conventional measure of debt burden—moved down from 16.5 percent in 1989 to 15.1 percent in 1992, and the ratio computed Choice of Lenders using only the payments and incomes of families with debts also declined.20 On the other hand, the Important changes occurred between 1989 and median ratio for families with debts increased mar- 1992 in the institutions from which consumers ginally.21 Thus, the improvement in the aggregate borrowed. Reflecting large numbers of failures of ratio does not appear to reflect a decline in the debt savings and loans, these institutions' share of total burden of the typical family with debt. Rather, the lending declined markedly, from 23.5 percent in decline in the aggregate ratio is attributable largely 1989 to 18.9 percent in 1992 (table 12). Although to families with incomes of $50,000 or more. Nevother insured depositories—namely commercial ertheless, even for borrowers with incomes at such banks, savings banks, and credit unions—absorbed levels, the median ratio moved up slightly. some of this share, on balance the market share of Another potential indicator of financial stress is all insured depositories fell slightly from 56.4 per- the proportion of families with negative net worth, cent of lending to families in 1989 to 54.7 percent a figure that declined from 7.4 percent in 1989 to in 1992. Offsetting this decline was a notable increase in the share of loans made by finance companies. The shares of real estate lenders— 20. Unlike analyses in previous Bulletin articles, we include mainly mortgage companies—brokerages, and payments for all types of debt, not just installment debt. This credit card companies rose marginally. change is intended to allow for the shift toward home-equity-based borrowing. 21. For families with mortgage debt, the median ratio moved up from 21.4 percent to 22.9 percent between 1989 and 1992. Debt Burden While total family borrowing was little changed 13. Ratio of family debt payments to family income, over the 1989-92 period, typical interest rates on by selected characteristics of families, 1989 and 1992 Percent 12. Distribution of amount of debt of all families, by 1989 1992 FFaammiillyy type of lending institution, 1989 and 1992 cchhaarraacctteerriissttiicc Percent Aggregate Median Aggregate Median All families 16.5 15.1 15.1 15.4 Type of institution 1989 1992 Income (1992 dollars) Commercial bank 29.7 31.8 Less than 10,000 15.2 13.4 16.0 11.6 Savings and loan 23.5 18.9 10,000-24,999 13.0 15.1 14.7 14.8 Credit union 3.2 4.0 25,000-49,999 16.8 15.6 19.7 16.7 Finance or loan company 9.4 12.9 50,000-99,999 17.7 15.8 15.9 16.2 Brokerage 3.0 3.9 100,000 and more 16.5 12.6 11.8 13.7 Real estate lender 13.2 13.4 Individual lender 6.8 4.0 Age of head (years) Other nonfinancial 1.9 2.5 Less than 35 18.9 15.0 17.4 15.2 Government 2.1 1.2 35-44 18.9 17.4 17.1 18.1 Credit and store cards 2.3 2.9 45-54 18.1 16.4 17.6 16.5 Loans against pension accounts .1 .2 55-64 17.2 12.4 13.7 14.2 Other unclassifiable loans 4.8 4.3 65-74 7.1 11.6 8.7 9.7 Total 100 100 75 and more 2.6 8.5 3.6 2.6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

880 Federal Reserve Bulletin • September 1994 7.1 percent in 1992. For the great majority of these the population, such as home ownership, as well as families, the absolute level of negative net worth variables that are more narrow in their incidence, was fairly small, with median values of $2,400 such as the holding of corporate bonds. To this end, in 1989 and $3,100 in 1992. In 1992, less than the SCF employs a dual-frame sample. One part is 0.5 percent of families had negative net worth of a standard multistage area-probability sample, more than $25,000. For most families with nega- which provides good coverage of the widely held tive net worth, their borrowing primarily consisted assets and liabilities. Because ownership of the of education loans, credit card balances, and install- more narrowly distributed variables is highly correment loans. Only a few families with negative net lated with wealth, the second part of the SCF worth had large loans associated with businesses or sample is a list design intended to oversample properties. households that are more likely to be wealthy. The data used to design this second part of the sample derive from tax records, which are made available under strict rules governing confidentiality, the SUMMARY rights of the potential respondents to refuse participation in the survey, and the type of information The most recent SCF provides detailed information that can be made generally available. Of the 3,143 on the finances of U.S. families over the period completed cases in the cross-sectional part of the from 1989 to 1992. Real family income declined, 1989 survey, 2,277 families were a part of the largely reflecting the effects of recession as well area-probability sample, and the remaining 866 as slow longer-term growth. Overall, families were part of the list sample; the comparable figures increased the share of financial assets in their portfor the 3,906 completed cases in the 1992 survey folios, and among their financial assets, mutual are 2,456 families from the area-probability sample funds appear to have displaced to some degree the and 1,450 from the list sample.22 importance of both deposits and directly held The Survey Research Center of the University of stocks and bonds. Retirement assets also became Michigan collected the data for the 1989 survey more commonly held and grew as a share of finanbetween the months of August 1989 and March cial assets. Although debt fell slightly as a share of 1990. The National Opinion Research Center at the assets, the number of borrowers held steady. Some University of Chicago conducted the 1992 SCF distributional shifts in holdings of debt occurred, between the months of June and November 1992. but the median of the ratio of loan payments to In both years, field interviewers performed most of income, a traditional measure of debt burden, was the interviews in person, though about 10 percent nearly unchanged among families with debts. were completed by telephone. In 1989, the response rate for the area-probability sample was slightly less than 70 percent, and the rate for the list TECHNICAL APPENDIX sample was about 34 percent. For one stratum within the list sample that was likely to be very The questionnaires for the 1989 and 1992 SCF wealthy, the rate was about 10 percent. Response differ in only minor ways. In both years the survey rates were slightly higher in 1992. Analysis of the gathered detailed information on the assets and data suggests that nonresponse is highly correlated liabilities of families as well as information on with wealth. By the standards of other surveys, the pension rights, employment history, marital his- response rates for the list sample are low, and were tory, other demographic characteristics, and attitudinal data. The survey is intended to provide an adequate 22. The 1989 SCF also includes a longitudinal component. For a detailed description of the design of the sample for that survey, see descriptive basis for the analysis of responses to Steven G. Heeringa, Judith H. Connor, and R. Louise Woodburn, core questions bearing on family assets and liabili- "The 1989 Surveys of Consumer Finances Sample Design and ties. To provide adequate coverage of the popula- Weighting Documentation," Working Paper (Institute for Social Research, Ann Arbor, Michigan, April 1994). The 1989 SCF repretion for this purpose, the survey sample must represents 93.1 million families, and the 1992 survey represents sent both variables that are broadly distributed in 92.9 million families. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Family Finances from 1989 to 1992: Evidence from the Survey of Consumer Finances 881 it not possible to make adjustments, the resulting SCF uses weighting adjustments to compensate for data might be questionable. However, it is worth complete nonresponse. To deal with missing infornoting that differential nonresponse by wealthy mation on individual items, the SCF uses statistical families is very likely latent in all household methods to impute missing data.24 surveys, though most surveys do not have a means Generally, the survey data correspond well to of identifying this bias. In the construction of external estimates, when such information is availweights for the SCF, extensive analysis is con- able. Because of the special design of the SCF ducted to devise systematic nonresponse correc- sample, in general only medians from the SCF can tions, and some external information is used to be compared with those of other surveys. Recent align the distribution of key characteristics in the comparisons of SCF data with aggregate figures on survey to population totals, such as the geographic household balance sheets from the Federal Reserve distribution of families.23 flow of funds accounts suggest that when proper The processing of the data for this article in- adjustments are made to achieve conceptual comcluded extensive graphical analysis to inspect the patibility, these aggregate estimates and the SCF data for observations that would tend to have an estimates for 1989 and 1992 are very close.25 overly influential effect on the estimates reported. The definition of "family" that is used through- As a result of this inspection, further adjustments out this article differs from that typically used in were made to the weights of a small number of other government studies. In the SCF, a household observations. Thus, even though it is not yet feasi- unit is divided into a "primary economic unit" ble to compute statistical confidence intervals for (PEU)—the family—and everyone else in the the results reported in this article, the key findings household. The PEU is intended to be the economare likely to be robust. ically dominant single individual or pair of individ- Errors may be introduced into survey results at uals (who may be married or living as partners) and many stages. Sampling error, that is, expected all other individuals who are financially dependent variability in estimates, is present in any survey on that person or those persons. In other governthat is not a census. The standard error of estimates ment studies, for example, those of the Bureau due to sampling may be reduced by increasing the of the Census, a single individual is not considered size of the sample or by designing the sample to a family. As noted earlier, the Census definition of reduce variability, as is done in the SCF. Interview- household is closer to the SCF definition of family. ers may also introduce errors, though SCF inter- The term "head" used in this article is an artifact viewers are given extensive project-specific train- of the organization of the data and implies no ing to minimize this problem. Respondents may judgment about the structure of families. In this introduce error by understanding a question in a report, the head is taken to be either the central different sense than that intended by the survey person in a PEU, or the male in the core couple of designers. For the SCF, extensive pretesting of the PEU, or the older person in a same-sex couple. questions tends to reduce the seriousness of this In the report on the 1989 SCF in the January source of error. Also, editing routines have been 1992 Federal Reserve Bulletin, an error was made developed to identify possible reporting and record- in the definition of the race or ethnicity classificaing errors for further analysis. Nonresponse—either tion used in several tables. The groups were labeled complete nonresponse to a survey or nonresponse "non-Hispanic whites" and "nonwhites and to selected items within a survey—may be another important source of error. As noted previously, the 24. For a description of the imputation procedures used in the 23. For a description of the weighting design for the SCF, see SCF, see Arthur B. Kennickell, "Imputation of the 1989 Survey of Arthur B. Kennickell and R. Louise Woodburn, "Estimation of Consumer Finances: Stochastic Relaxation and Multiple Imputa- Household Net Worth Using Model-Based and Design-Based tion," Working Paper (Board of Governors of the Federal Reserve Weights: Evidence from the 1989 Survey of Consumer Finances" System, Division of Research and Statistics, 1991). (1993); and Arthur B. Kennickell, Douglas A. McManus, and 25. For the details of this comparison, see Rochelle R. Louise Woodburn, "Weight Design for the 1992 Survey of Antoniewicz, "A Comparison of the Household Sector from the Consumer Finances" (1994), Working Papers (Board of Gov- Flow of Funds Accounts and the Survey of Consumer Finances," ernors of the Federal Reserve System, Division of Research and Working Paper (Board of Governors of the Federal Reserve Sys- Statistics). tem, Division of Research and Statistics, 1994). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

882 Federal Reserve Bulletin • September 1994 Hispanics." In fact, owing to a coding error for the data represent the best estimates available at the 1989 data, the latter group comprised only black current advanced stage of data processing. These families, and the former group comprised all other preliminary data, in a form designed to protect the families. The 1983 data were correct as reported. privacy of the respondents, should be available to The data used here from the 1989 SCF derive the public after October 1994 from the National from the final version of the dataset and for this Technical Information Service, Federal Computer reason may differ in some details from preliminary Products Center, 5285 Port Royal Road, Springversions of the data reported earlier. The 1992 field, VA 22161 or (703) 487-4763. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

883 Private Mortgage Insurance Glenn B. Canner and Wayne Passmore, of the Early forms of mortgage insurance arose in the Board's Division of Research and Statistics, and private sector around the turn of the century and Monisha Mittal, of the Division of Consumer and developed until the onset of the Depression. The Community Affairs, prepared this article. Wayne C. private mortgage insurance industry then collapsed, Cook and Lisa Kirch, of the Division of Research and its function was assumed by the federal govand Statistics, and Gary G. Myers, of the Division ernment, which was the only source of mortgage of Information Resources Management, provided insurance from the mid-1930s through the late research assistance, 1950s. Today, mortgages backed by government t- .* 7% * ! • insurance continue to play a significant role in the Before extending a mortgage, lenders typically home finance market, but mortgage insurance require borrowers to make a sizable down pay- offered by the private mortgage insurance industry ment to reduce both the risk of default on the is also widely used by homebuyers and those loan and the amount they stand to lose if a foreclo- refinancing their existing mortgages. Private mortsure is necessary. Moreover, borrowers often pay gage insurance backed nearly 1.2 million singlesignificant closing costs. Together, the down family home loans extended in 1993, representing payment and closing costs can be substantial about 45 percent of all the insured mortgages relative to the borrower's savings, particularly for granted that year (table 1). first-time homebuyers and households with lower This article reviews some of the history of the incomes. mortgage insurance industry, outlines the way the Mortgage lenders usually require a down pay- mortgage insurance business is conducted, examment of at least 20 percent of the appraised value of ines the financial implications for a borrower a home. But they will accept smaller down pay- choosing between governmental and private mortments if repayment of the mortgage is backed by a gage insurance, and discusses the disposition of type of insurance, paid for by the borrower, known recent applications submitted to private mortgage as mortgage guarantee insurance. Mortgage insur- insurers. Little information has been available hereance for low-down-payment loans is available from tofore about the disposition of applications. This the federal government, primarily through pro- year, however, the private mortgage insurance grams administered by the Federal Housing industry released data on the disposition of the Administration and the Department of Veterans cases that private insurers acted on during the Affairs, and from the private sector. fourth quarter of 1993 and on the characteristics Insurance on a mortgage comes into play when of the households in those cases (see box, "Data the homeowner defaults on the loan and the pro- Disclosed by the Private Mortgage Insurance ceeds from the subsequent sale of the mortgaged Industry"). The article summarizes the new inforproperty fail to cover the remaining debt plus the mation and draws some comparisons with data on costs associated with the sale. In such a case, the applications for government insurance and with mortgage insurer reimburses the lender for the mortgage applications generally. shortfall, generally in full if the insurance is governmental but only up to certain limits if the insurance is private. Because insurers bear at least part PRIVATE MORTGAGE INSURANCE: of the risk of loss on home loans, they must care- A HISTORICAL PERSPECTIVE fully review the qualifications of prospective borrowers and the value of the collateral provided by The private mortgage insurance (PMI) industry can the property being purchased. trace its origin to the early years of this century Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

884 Federal Reserve Bulletin • September 1994 and the activities of title insurance companies in capitalization, questionable business practices, and New York State.1 The state legislature authorized weak regulation of the PMI industry—resulted in the issuance of mortgage guarantee insurance in the collapse of the industry. 1904, but the law permitted insurers to guarantee Government efforts to revive the housing industhe payments only on mortgages owned by the try during the Depression led to the establishment institution that originated the loan. In 1911, by the Federal Housing Administration (FHA) New York amended the law to permit mortgage of the Mutual Mortgage Insurance Fund to proinsurers to purchase and resell mortgages. To vide mortgage insurance on FHA loans.3 After enhance their ability to sell mortgages to investors, World War II, the federal government's role in insurers guaranteed the property title as well as the providing insurance on mortgages expanded with loan.2 the creation in the Veterans Administration (VA) of Until the Depression, rising real estate values a mortgage insurance program for veterans.4 made it possible for most mortgaged properties that FHA and VA home loan insurance programs were in default to be sold without a loss. This apply to a wide range of prospective homebuyers, experience reinforced a widely held perception that but both programs have significant limitations. The insuring mortgages was a low-risk business. But FHA, for example, limits the size of the mortgages the sharp decline in real estate values in the early it will insure. The VA programs guarantee only a years of the Depression—together with the low portion of the loan amount up to a congressionally established ceiling and are available only to veterans. In addition, the property and credit underwrit- 1. For a comprehensive history of the PMI industry, see Charles ing standards of both the FHA and VA exclude Rapkin and others, The Private Insurance of Home Mortgages: A Study of Mortgage Guaranty Insurance Corporation, Institute for some prospective borrowers. Environmental Studies (University of Pennsylvania, 1967). 2. During the period preceding the Depression, the industry developed a business similar to the current one for mortgagebacked securities. The companies offered "participations," which 3. Establishment of the Mutual Mortgage Insurance Fund was involved the issuance of certificates to a group of investors who authorized by section 202 of tide II of the 1934 National Housing were entitled to receive periodic payments based on the interest Act. As the purposes of the act have expanded over the years, the income and principal repayments generated by the underlying FHA has added new insurance programs to its portfolio. mortgages. However, one significant difference between current 4. The Veterans Administration became the cabinet-level and former market practices was that issuers of participations Department of Veterans Affairs (VA) on March 15, 1989. Techniretained the right to substitute mortgages underlying a specific cally, the VA offers loan guarantees rather than mortgage insurance, certificate so long as the substitute had the same face value as that but the two forms of assurance are similar in function and both are of the original loan. The abuse of this right contributed to investor referred to here as mortgage insurance. Other government agencies losses during the Depression. also provide home loan insurance but on a much smaller scale. 1. Distribution of insured mortgages on single-family homes, by type of insurance, 1982-93 FHA VA Private Total YYeeaarr Number Percent Number Percent Number Percent Number Percent 1982 106,468 18.0 92,957 15.7 391,060 66.2 590,485 100 1983 395,048 27.9 285,696 20.2 736,777 52.0 1,417,521 100 1984 213,814 15.2 198,431 14.1 990,529 70.6 1,402,774 100 1985 380,012 28.9 193,178 14.7 741,208 56.4 1,314,398 100 1986 855,923 47.2 345,935 19.1 612,434 33.8 1,814,292 100 1987 1,218,614 55.5 451,125 20.6 524,334 23.9 2,194,073 100 1988 591,912 47.4 210,999 16.9 445,139 35.7 1,248,050 100 1989 595,237 51.2 182,559 15.7 385,429 33.1 1,163,225 100 1990 644,749 52.8 192,601 15.8 383,635 31.4 1,220,985 100 1991 567,386 44.1 186,205 14.5 532,525 41.4 1,286,116 100 1992 600,456 33.4 289,901 16.1 907,561 50.5 1,797,918 100 1993 994,881 37.5 457,693 17.3 1,198,307 45.2 2,650,881 100 NOTE. Excludes manufactured homes. 2. Includes loans for alteration and repair, which constitute a small propor- FHA Federal Housing Administration tion of the yearly totals. VA Department of Veterans Affairs SOURCES. Federal Housing Administration, Mortgage Insurance Compa- 1. Includes loans insured by FHA under sections 203(b) and 234 of the nies of America, and Department of Veterans Affairs. National Housing Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Private Mortgage Insurance 885 ance Corporation (MGIC). Throughout the 1960s Data Disclosed by the Private Mortgage and 1970s, the industry generally flourished Insurance Industry because rising home values limited the incidence of, and losses from, mortgage defaults. In this During 1994 the Federal Financial Institutions Exami- environment, companies tended to focus more on nation Council (FFIEC) received and processed data growth and less on credit quality. In the 1980s, as from eight PMI companies regarding applications for house price inflation slowed—and prices fell in insurance that they acted on in the fourth quarter of some areas—homeowners who could not make 1993. The FFIEC prepared disclosure reports for the their mortgage payments often were unable to PMI companies in formats similar to those created for resolve their problems by selling their homes; financial institutions covered by the Home Mortgage Disclosure Act (HMDA).1 The compilation was car- instead, they defaulted on their mortgages. In addiried out under the auspices of the Mortgage Insurance tion, some PMI companies suffered substantial Companies of America (MICA).2 In asking the FFIEC losses from fraud and inadequate risk diversificato undertake the report preparation, MICA was tion. Weak companies could not survive as inderesponding to growing public and congressional inter- pendent entities, and industry consolidation folest in learning more about the activities of PMI compa- lowed. By the end of the 1980s, only half of the nies as they relate to issues of fair lending, affordable firms from the early 1980s remained. housing, and community development. In the past few years, tighter underwriting stan- To supply the data, each PMI company records data dards and an end to an excessive reliance on conin a loan application register for each application for tinuing increases in house prices to mitigate credit private mortgage insurance acted on in a given period. risk has brought the industry back to financial The information covers the action taken on the applicahealth.5 Today, eight PMI companies are active tion (approved, denied, withdrawn, or file closed); the purpose of the mortgage for which insurance was (table 2).6 The two largest, MGIC and GE Capital sought; the race or national origin, the sex, and the Mortgage Corporation, accounted for roughly annual income of the mortgage applicants; the amount 52 percent of the private mortgage insurance writof the mortgage; and the geographic location of the ten and 62 percent of the outstanding dollar amount property securing the mortgage. The FFIEC compiled of private mortgage insurance in force in 1993. the data into disclosure statements summarizing the Comparing the revenues and profitability of the information for the public. PMI companies is complicated by differences in Disclosure statements for each PMI company are the products they offer and in the strategies they publicly available at its corporate headquarters and at a pursue. However, the ratio of premiums earned to central depository in each MSA. In addition to a disclototal insurance in force is a measure of the average sure statement for each PMI company, the central payment made by a borrower with PMI across depository has aggregate data for all of the companies |ctive in that MSA. The PMI data can also be obtained different products and through time. Generally, by calling the Federal Reserve Board's HMDA Assis- companies that specialize in insuring mortgages tance Line at (202) 452-2016. with lower credit risks tend to have lower premi- The initial report of PMI activity covered applica- ums than companies that insure products with a tions acted on during the fourth quarter of 1993. For wider range of credit characteristics. Regardless of 1994 and beyond, the PMI companies plan to submit data covering the full year. 5. The tighter underwriting practices of recent years have helped 1. For a comprehensive discussion of the requirements of HMDA reduce the proportion of insured loans with loan-to-value ratios of and an assessment of the data, see Glenn B. Canner, Wayne Passmore, greater than 90 percent, from 47.6 percent in 1985 to 32.4 percent and Dolores S. Smith, "Residential Lending to Low-Income and in 1993. The share of other higher-risk loans, such as mortgages Minority Families: Evidence from the 1992 HMDA Data," Federal secured by condominiums and non-owner-occupied properties and Reserve Bulletin, vol. 80 (February 1994), pp. 79-108. mortgages that allow negative amortization, has also declined. See 2. The costs to the FFIEC for receiving and processing the data, David M. Graifman, "Mortgage Insurance: The Party Continues," preparing disclosure statements and other reports, and dissemination Standard and Poor's Structured Finance (May 1994), pp. 13-17. of the data are being covered by the PMI companies through MICA. 6. A few other PMI firms exist, but they do not currently write new mortgage insurance. For additional information about the PMI industry, see Mortgage Insurance Companies of America Factbook The PMI industry re-emerged in 1957 with the & Directory of Membership (Washington: Mortgage Insurance establishment of the Mortgage Guarantee Insur- Companies of America, 1994). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

886 Federal Reserve Bulletin • September 1994 2. Characteristics of the private mortgage insurance (PMI) companies, year-end 1993 Claims under Private Mortgage Insurance Ratio of Percentage Total premiums Ratio of The claim amount on a defaulted loan generally ininsurance net income Company of all PMI in force to total to total cludes the outstanding balance on the loan, delinquent written in insurance (millions of insurance 1993 dollars) (p in e r f c o e r n c t e ) 1 (percent)2 interest payments, expenses incurred during foreclosure, costs to maintain the property, and advances the Mortgage Guaranty lender made to pay taxes and hazard insurance on the Insurance property. After foreclosing and taking title to a prop- Company 27.0 86,196 .35 .15 GE Capital Mortgage erty, a lender may submit a claim to the mortgage Insurance insurer.1 At this point, the PMI company has two Corporation — 24.9 148,845 .36 .10 PMI Mortgage options: (1) pay the full claim amount and take title to Company 18.6 51,600 .46 .17 United Guaranty the property or (2) pay the lender the designated per- Corporation 12.8 42,479 .35 .16 centage of the coverage of the total claim amount as Republic Mortgage Insurance indicated in the policy and let the lender retain title to Company 8.9 25,372 .35 .20 the property. The option selected by the PMI company Commonwealth Mortgage will depend on its estimate of the potential value of the Assurance property net of sales expenses. Company 6.4 23,220 .35 .15 Triad Guaranty Insurance Corporation 1.2 3,000 .26 .11 1. In some cases a formal foreclosure may be avoided, such as Amerin Guaranty when a borrower voluntarily conveys title to the lender. Corporation .2 272 .12 -.91 Total 100 380,984 .36 .14 1. Premiums earned equals net premiums written plus change in premiest rates rise relative to the rate on an outstanding ums earned. 2. Net income equals net premiums earned plus net investment income, mortgage, the value of the mortgage falls. Lenders less expenses, less income tax, where expenses include losses, acquisition may protect themselves from interest rate risk in costs, underwriting, and operating expenses. SOURCES. 1993 annual reports and annual statements of the companies various ways, but such measures increase costs. and Standard and Poor's Structured Finance (May 1994). Credit risk is the possibility that borrowers may fail to repay their loan obligations as scheduled. In the premiums charged, the rates of return in 1993, the case of default, the lender is able to take action as measured by the ratio of net income to insurance against the borrower, for example by foreclosing in force, seem similar among the well-established on the property securing the loan. But foreclosure firms.7 entails a variety of costs—unpaid interest from Overall, the re-emergence of the PMI industry the time of delinquency through foreclosure, legal has greatly expanded the opportunities for home- expenses, costs to maintain the property, and buyers to take out conventional mortgage loans expenses associated with the sale of the property— with low down payments. PMI is now available on and therefore even if the asset has not lost value, a wide variety of loan programs and may be used the lender may incur a loss. for the purchase of homes with values far exceed- Among the steps lenders can take to mitigate ing the FHA loan limits. credit risk is the requirement that borrowers whose mortgages have high loan-to-value ratios obtain private mortgage insurance.8 PMI reduces credit THE BUSINESS OF MORTGAGE INSURANCE risk by insuring against losses associated with default up to a contractually established percentage Lenders that originate and hold mortgage loans or of the claim amount (see box, "Claims under Prifinancial instruments derived from such loans face vate Mortgage Insurance"). Defaults on these loans two distinct types of risk, interest rate risk and credit risk. Interest rate risk exists because market interest rates change over time. When market inter- 8. Some lenders will grant low-down-payment mortgages without insurance. Most often such mortgages are extended as part of an affordable housing program, although lenders may choose to 7. Amerin Guaranty Corporation is new to the PMI industry. self-insure other low-down-payment mortgages as well. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Private Mortgage Insurance 887 may result in a loss to the insurer; therefore PMI In addition, insurers consider the use of the propcompanies address credit risk in many ways in erty securing the mortgage. Dwellings to be used as pursuing their business strategies: vacation homes, second homes, or investment properties are generally underwritten to standards that • First, a PMI company may simply not insure a are more strict than those for owner-occupied, priparticular type of mortgage contract or a mortgage mary residences. For example, the maximum loansecured by a specific type of property, ceding that to-value ratio allowed for second homes is often business to competitors. lower than that for primary residences. In the • Second, in determining whether to insure a extreme, some PMI companies have chosen not to particular loan in a chosen line of business, PMI offer insurance for particular uses of property, such companies act as a review underwriter, evaluating as investment. both the creditworthiness of the prospective bor- Furthermore, insurers examine the characterisrower and the adequacy of the collateral offered as tics of the mortgage itself and adjust the price of security on the loan. They will deny insurance to insurance coverage accordingly. The loan-to-value prospective borrowers judged to impose undue ratio on the mortgage is a primary indicator of credit risk on the insurer and lender; lenders, of default risk; hence, the higher the ratio, the higher course, are free to extend credit to such borrowers, the premium.9 Insurers also generally assess higher but they must do so without the protection of PMI. premiums on adjustable rate mortgages because • Third, insurers may underwrite some mort- these mortgages can potentially impose larger paygages more strictly than others and thus limit their ment burdens on borrowers and because they have exposure to losses. historically exhibited an inferior payment record.10 y'i • Fourth, they may charge a higher premium to Finally, insurers assess lower premiums on shorterinsure riskier mortgages, although state regulation term mortgages because such mortgages result in a can limit or set the premiums charged for different more rapid accumulation of equity by the borrower types of mortgage insurance. and therefore impose less risk of loss. • Fifth, the PMI companies can limit the extent The PMI companies often use the credit underof their coverage of losses, either directly (by limit- writing guidelines of the two large governmenting the proportion of the mortgage insured) or by sponsored mortgage agencies, the Federal National using reinsurance or pooling arrangements. Mortgage Association (Fannie Mae) and the • Sixth, PMI companies can mitigate credit risk Federal Home Loan Mortgage Corporation (Fredthrough credit counseling and early intervention die Mac), when deciding whether to approve an once a borrower falls behind on payments. application. Many lenders desire to sell their mortgages to these agencies, and both Fannie Mae In assessing the risk of the borrower, PMI com- and Freddie Mac require PMI before they will panies evaluate both the ability and the willingness consider purchasing a low-down-payment mortof the borrower to repay the mortgage loan. In gage. Thus, PMI companies have a strong motivadetermining the borrower's ability to repay, insur- tion to assure lenders that mortgages insured by ers examine sources of income, debt-to-income PMI companies conform to the standards set by ratios, asset holdings, employment history, and these organizations. prospects for income growth. Insurers gauge willingness to repay primarily by reviewing the borrower's credit history, including rent and utility 9. Research has consistently found that mortgages with higher payment records in some cases. loan-to-value ratios default more frequently than those with lower PMI companies also evaluate the characteristics ratios. See Roberto G. Quercia and Michael A. Stegman, "Residenof the property securing the mortgage. For exam- tial Mortgage Default: A Review of the Literature," Journal of Housing Research, vol. 3 (1992), pp. 341-79. ple, because insurers generally perceive condomin- 10. In recent years, the ninety-day delinquency rate for adjustiums, manufactured homes, and properties with able rate mortgages purchased by Fannie Mae has been roughly two, three, or four units as riskier sources of collat- 50 percent to 100 percent higher than the delinquency rate on fixed rate mortgages. See John M. Dickie, "Residential Delinquencies eral than single-family detached dwellings, they and Foreclosures: First Quarter 1994" (memorandum, U.S. Departusually treat them more stringently. ment of Housing and Urban Development, July 14, 1994). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

888 Federal Reserve Bulletin • September 1994 When examining the risks described above, age within a range of 20 percent to 25 percent of many PMI companies rely heavily on automated the claim when a mortgage defaults, whereas the underwriting systems to identify and quickly FHA, for instance, covers 100 percent of the unpaid approve applications that are acceptable for insur- balance of the mortgage to the lender as well as ance. PMI employees further evaluate applications some, but not necessarily all, of the costs associthat fail the automated review. Computer automa- ated with foreclosure and the sale of the property. tion of underwriting thus allows PMI companies to For marginally qualified borrowers, some lenders focus their efforts on applicants with marginal or might prefer the added protection afforded by FHA unusual credit histories and other special circum- insurance and they may encourage borrowers to stances and is generally perceived to have widened apply for these mortgages. Lenders may have the availability of PMI. other incentives to encourage applicants to apply A fundamental strategy of insurance underwrit- for one loan program over another. For example, ing is to diversify risk.11 In the case of PMI compa- FHA-insured mortgages provide lenders with nies, risk diversification means limiting geographic greater income from loan servicing than do the concentrations of insurance, dealing with numer- mortgages covered by PMI. On the other hand, the ous lenders, and restricting the insurance written origination of mortgages insured by PMI often for any one particular project. The importance of requires less paperwork. these tactics is illustrated by the large losses in the From the perspective of homebuyers, the costs 1980s of PMI companies that had significant con- and availability of the insurance offered by FHA, centrations of insurance in "oil patch" states. VA, and private companies can differ markedly. An integral part of the PMI business is the The homebuyers' knowledge of these alternatives management of problem mortgages. Foreclosing varies with their experience, their willingness to on properties is both time-consuming and costly, shop among lenders, and the extent of information and insurers attempt to avoid it. Insurers try to provided by real estate agents and others. Real work with delinquent borrowers, mostly through estate agents, as well as others, sometimes encourlenders, but sometimes directly with borrowers. age homeowners to select one type of insured mort- Insurers often stress counseling as a way of helping gage product over another. borrowers overcome payment difficulties. Insurers will try to determine the prospects for bringing the mortgage back to scheduled payments and may work out a plan with the borrower to do so. Incentives for Using Government Insurance In some cases, however, encouraging borrowers to sell their properties may be the least costly Most households are able to purchase homes or method, for both insurer and borrower, of resolving refinance an existing mortgage without mortgage problems. insurance and thus avoid the added cost of the insurance. Many households, however, lacking the assets necessary for a sizable down payment and SOURCES OF MORTGAGE INSURANCE closing costs, can qualify only for a mortgage with a high loan-to-value ratio and thus must purchase From the lender's perspective, the mortgage insur- mortgage insurance. In addition, some households ance provided both by private mortgage insurers prefer making a small down payment toward a and by government agencies such as the FHA and mortgage even if they have the funds for a larger the VA reduces credit risk, but the level of protec- down payment; they, too, are normally required by tion varies. PMI companies typically limit cover- the lender to purchase mortgage insurance. Households often choose mortgages backed by the FHA or the VA instead of mortgages backed by 11. For further information about the risk diversification and private insurers because the agencies will insure monitoring practices of PMI companies, see Roger Blood, "Manag- mortgages that require a considerably smaller ing Insured Mortgage Risk," in Jess Lederman, ed., The Secondary amount of cash at closing and will use more liberal Mortgage Market: Strategies for Surviving and Thriving in Today's Challenging Markets, rev. ed (Probus, 1992). underwriting guidelines when evaluating the credit- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Private Mortgage Insurance 889 worthiness of the applicant.12 For example, the A calculation of the expenses incurred by a 1993 FHA insures mortgages that require smaller down borrower purchasing a $100,000 home with the payments and, unlike PMI companies, the FHA minimum required down payment (table 3) shows allows the borrower to finance both closing costs that the cash required at closing would be substanand the mortgage insurance premium.13 In addi- tially greater for a mortgage with PMI ($8,250) tion, the FHA allows households to use gifts from than for one with FHA insurance ($4,615).15 others for the entire down payment. Generally, The lower cash outlays associated with the insurers backing conventional low-down-payment mortgages limit the proportion of the down payment that may be paid from gifts. Moreover, the 15. In 1994 the FHA lowered its initial premium from 3 percent FHA allows households to carry relatively more of the mortgage to 2.25 percent. debt and still qualify for a mortgage, an underwriting practice that is often important to lower-income 3. Generalized comparison of mortgage financing under and first-time homebuyers. FHA insurance and private mortgage insurance for a typical mortgage on a $100,000 house Dollars except as noted Comparison of Costs Item FHA PMI Comparing the costs to a homebuyer of purchasing Sales price of home 100,000 100,000 a home with an FHA-insured mortgage relative to PLUS: Closing costs financed' 2,300 0 the costs of a mortgage backed by PMI is difficult. EQUALS: Acquisition cost 102,300 100,000 The initial fee for government insurance is higher LESS: Minimum down payment2 , , 4,615 5,000 than for PMI, but government agencies allow the EQUALS: Maximum mortgage amount borrower to finance this fee as part of the mortgage. (before initial mortgage insurance premium) 97,685 95,000 Furthermore, the FHA refunds part of the initial premium when the borrower prepays the mortgage PLUS: Initial mortgage insurance premium financed3 2,931 0 within a specified period. On the other hand, PMI EQUALS: Total financed 100,616 95,000 in some circumstances can be dropped once the Loan-to-value ratio (percent)4 household has accumulated at least a 20 percent FHA calculation 95.5 equity position in the property, whereas the house- 100.6 95 hold must prepay the mortgage to drop FHA insur- Cash required at closing ance. The price of FHA insurance also does not C D l o o w si n n g p a c y o m st e s nt 4,615 0 2 5 , , 3 0 0 0 0 0 vary by the size of the borrower's down payment, PMI5 950 Total 4,615 8,250 whereas the premium rate for PMI is lower for Total monthly payment6 households making larger down payments.14 Over- Years 1-10 778.97 735.87 all, households that have low debt payments rela- Years 11-30 778.97 716.87 tive to income and that are taking out mortgages NOTE. . . . Not applicable. 1. Assumed to be 2.3 percent of selling price, determined by calculating with loan-to-value ratios between 80 percent and the ratio of the average closing costs to the average sales price of homes 95 percent are more likely to choose a mortgage purchased in 1993 under the FHA section 203(b) home loan program. 2. Minimum FHA down payment equals 3 percent of the first $25,000 backed by PMI. plus 5 percent of the remaining amount financed, excluding the initial mortgage insurance premium. Minimum down payment for PMI is 5 percent of the sales price. 3. Initial mortgage insurance premium is 3 percent of the maximum mortgage amount. 12. The VA mortgage guarantee program is open only to veter- 4. FHA loan-to-value is the maximum mortgage amount divided by the ans. It is usually the first choice of eligible households that can acquisition cost. Actual loan-to-value is the total amount financed divided by afford only a small down payment. the sales price. 13. Recendy, PMI companies have allowed part or all of the 5. Initial premium of 1 percent of the maximum mortgage amount. initial fees for insurance to be paid monthly. 6. The mortgage in both the FHA and PMI cases is assumed to be for thirty years at 8 percent. The monthly payment is the sum of the loan 14. However, the FHA discontinues the annual premium after a payment (principal and interest) plus the monthly insurance premium, which specified number of years for mortgages with loan-to-value ratios under FHA is 0.5 percent (annual rate) of the maximum mortgage amount. of less than 95 percent. For example, for FHA mortgages originated The premium charged for PMI typically declines after a specified period; in 1993 that had a loan-to-value ratio of less than 90 percent, the here it is assumed to be 0.49 percent (annual rate) of the maximum mortgage FHA will discontinue the annual premium after seven years. amount for the first ten years, and 0.25 percent (annual rate) thereafter. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

890 Federal Reserve Bulletin • September 1994 FHA-insured mortgage mainly reflect the FHA's ever, with the smaller loan size associated with willingness to allow the borrower to finance the PMI and the consequently lower monthly payclosing costs and the FHA insurance premium. As ments, the PMI borrower is able to invest the described in the example below, an FHA-insured monthly payment difference each month, also in a mortgage will be more attractive to households savings account. Summing up the net worth of each with fewer assets. borrower at any particular time, the FHA borrower The difference in the minimum down payments generally will carry greater mortgage debt (colmade under the two programs is relatively small, umn 1 in table 4) but will also have the combut financing the closing costs and the mortgage pounded earnings from the $3,635 savings account insurance premium means that the FHA borrower (column 3). The PMI borrower has a savings has less equity relative to the value of the home. In account that is accumulating faster, however, addition, the borrower's monthly housing expenses because of the lower monthly payments (colare higher for the FHA mortgage. The higher loan- umn 2). Even counting the potential refunds from to-value ratio and monthly housing expenses sug- FHA as a source of wealth for the FHA borrower gest that FHA borrowers may be more prone to who chooses to sell the home (column 4), the PMI default if they encounter financial difficulties. borrower still begins to accumulate greater wealth Under the FHA insurance program, the borrow- after only one year (column 5).16 er's initial cash outlays are lower, but the monthly Another major determinant of who uses PMI is payments are higher. If the borrower is constrained the congressionally imposed limit on the size of a by the amount of available cash at closing, the mortgage that can receive FHA insurance. The FHA may be the only alternative. On the other hand, if the borrower has sufficient cash on hand and is concerned about the amount of debt to be 16. The wealth advantage of the FHA borrower during the first year (shown in row 1 of table 4) reflects the lower cost of FHA carried and the higher monthly payment, then PMI insurance if the borrower holds the FHA-insured mortgage for only may be preferable. one year. This lower cost is a consequence of the FHA insurance A comparison of two borrowers with equal refund policy. However, if to acquire the refund the FHA borrower incurs closing costs when taking out a conventional mortgage, the incomes who both have sufficient cash to choose refund advantage may be lost. either an FHA-insured or PMI-backed mortgage In addition, the conditions placed on the PMI borrower's ability ($8,250, shown in table 3) suggests that the house- to drop the PMI insurance affect this cost advantage. Some lenders allow borrowers to drop PMI with minimal charges once sufficient hold with PMI could accumulate greater wealth equity has accumulated in the property; other lenders do not allow over the life of the mortgage (table 4). With the PMI to be dropped, forcing the PMI borrower to refinance in order requirements for a smaller initial outlay of cash, the to drop the insurance. If the PMI borrower must refinance, then the relative advantage of the FHA refund is maintained. Furthermore, FHA program allows the borrower to place $3,635 PMI companies may refund part of the initial premiums if a of his or her savings in a savings account. How- mortgage is terminated within the first year. 4. Wealth accumulation under a PMI-backed mortgage compared with that under an FHA-backed mortgage Dollars Mortgage debt Accumulated savings Accumulated savings Wealth of PMI Year mortgage of FHA of PMI borrower from of FHA borrower from Refund of FHA borrower less is liquidated borrower less investing monthly investing $3,635 insurance premium wealth of FHA (end of period) that of PMI borrower payment difference1 at closing1 borrower2 (1) (2) (3) (4) (5) 1 5,574 527 3,780 2,759 -438 2 5,530 1,077 3,932 2,306 369 3 5,481 1,674 4,089 1,724 1,342 4 5,429 2,241 4,252 1,226 2,192 5 5,370 2,859 4,422 832 2,975 10 4,992 6,336 5,381 0 5,947 15 4,409 11,827 6,546 0 9,690 20 3,511 18,508 7,965 0 14,054 30 0 36,525 11,790 0 24,735 NOTE. These calculations are based on the mortgages shown in table 3. 2. Sum of columns 1 and 2 less columns 3 and 4. 1. Investment in a savings account yielding 4 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Private Mortgage Insurance 891 limit varies by area, depending on whether the For applications pertaining to properties in metregion is considered high-cost or low-cost. For ropolitan statistical areas (MSAs), the PMI compahigh-cost areas, the limit in 1993 was 95 percent of nies identified properties by census tract number. the local median sales price up to a maximum of Lenders covered by HMDA, in contrast, currently $151,725, whereas for low-cost areas the maxi- identify property location by census tract only for mum was $67,500.17 Unlike the FHA, PMI compa- loans in metropolitan areas where they have, or are nies may insure mortgages of any size. deemed to have, a home or branch office.19 A person whose desired mortgage is within the For the eight PMI companies, the Federal Finansize limits established for FHA loan programs may cial Institutions Examination Council prepared disstill have to choose PMI because of other restric- closure statements detailing a company's activities tions associated with FHA loans. For example, the for each MSA in which it had business. In total, the FHA limits the availability of insurance in projects FFIEC prepared disclosure statements relating to with high proportions of rental units and does not 1,894 MSAs, an average of 237 MSAs for each provide insurance for most of the adjustable rate PMI company. In contrast, the typical lender covmortgage products offered in the conventional ered by HMDA in 1993 received a disclosure statemortgage market. In addition, some housing devel- ment that included information on an average of opments are not approved for FHA insurance, and only 3.7 MSAs. some loan programs for first-time homebuyers rely exclusively on conventional mortgages with PMI. Volume of Applications for PMI In the fourth quarter of 1993, PMI companies acted REVIEW OF 1993 PMI ACTIVITY on roughly 456,400 applications for insurance: 265,400 for insurance to back home-purchase mort- The eight private mortgage insurance companies gages on single-family properties and 191,000 to recently made data publicly available that, for the insure refinancings of existing mortgages (table 5). first time, describes the disposition of applications for insurance by the characteristics of the mortgage borrower. These data are comparable to those sup- 19. That is, in the case of depository institutions, the HMDA rule for reporting property location is based on office location, plied by mortgage lenders under the Home Mortwhereas mortgage companies are deemed to have an office in an gage Disclosure Act (HMDA). The PMI data cover MSA if they receive applications for, or purchase, five or more applications for mortgage insurance acted on only loans in a given year on property in that MSA. during the fourth quarter of 1993. The companies 5. Distribution of applications for private mortgage limited their 1993 data to this quarter to allow insurance, by purpose and size of loan, 1993:Q4 themselves adequate time to develop procedures for receiving, tracking, and reporting activity in a Home purchase Home refinancing SSiizzee ooff llooaann manner consistent with the requirements of ((ddoollllaarrss)) Number Percent Number Percent HMDA. Information about the PMI industry indicates that fourth-quarter activity accounted for Less than 50,000 21,920 8.3 8,671 4.5 50,000-74,999 46,159 17.4 34,257 17.9 nearly 30 percent of all 1993 PMI commitments 75,000-99,999 51,454 19.4 37,390 19.6 written on home mortgage loans.18 The nature of 1 15 0 0 0 , , 0 0 0 0 0 0 - - 1 1 9 4 9 9 , , 0 9 0 9 0 9 8 39 3 , , 3 7 2 9 8 4 3 1 1 4 . . 6 8 6 29 3 , , 7 8 6 8 8 0 3 1 3 5 . . 4 6 the fourth-quarter mortgages and their disposition 200,000 or more 22,750 8.6 17,033 8.9 Total 265,405 100 190,999 100 may or may not be representative of the rest of the MEMO year. Size conformance1 Conforming 247,818 93.4 176,742 92.5 Nonconforming 17,587 6.6 14,257 7.5 17. The maximum mortgage limit of $151,725 became effective Size statistic (dollars)2 March 15, 1993. The FHA also establishes higher limits for proper- 116 202 120 894 ties with two, three, or four units and for properties in Alaska and Median 106 000 110 000 Hawaii. For instance, in 1993 the single-family limit in Honolulu 1. Loans of less than $203,150 conform with size limits imposed on was $227,550. See 58 Fed. Reg. 13950, March 15, 1993. (f Fannie Mae and Freddie Mac. 18. When this article was written, the data described were still 2. For applications on which loan size was reported. subject to revision. Final data, which are available to the public, SOURCE. Federal Financial Institutions Examination Council, preliminary may differ somewhat from the data used here. data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

892 Federal Reserve Bulletin • September 1994 Most applications dealt with mortgages of less than 6. Applications for private mortgage insurance, by $150,000. The average size of the home-purchase purpose of loan, characteristics of applicant, and mortgages was $116,200. characteristics of census tract in which property is located, 1993:Q4 The mortgage size distribution and the average mortgage size for home-purchase mortgages are Home purchase Home refinancing only slightly different from those for refinancings. CChhaarraacctteerriissttiicc Percentage Percentage Number Number This relationship is somewhat surprising because distribution distribution of the large proportion of first-time homebuyers in Race or ethnic group the home-purchase category; such homebuyers typ- of applicant American Indian/ ically have lower incomes than other homeowners Alaskan native . 1,284 .6 974 .7 Asian/ and consequently take out smaller loans than home- Pacific Islander . 6,800 3.3 6,402 4.5 owners who are refinancing. Black 9,828 4.8 4,946 3.5 Hispanic 12,516 6.1 6,362 4.5 White 169,626 82.8 120,489 84.4 Other 700 .3 524 .4 Joint (white/ minority) 4,153 2.0 3,009 2.1 Characteristics of Applicants for PMI Total 204,907 100 142,706 100 Income of applicant (percentage of MSA In 1993, more than two-thirds of the PMI appli- median)1 cants seeking home purchase mortgages had Less than 80 38,353 17.4 14,779 8.7 80-99 33,391 15.2 20,465 12.0 incomes that exceeded the median for the MSA in 100-120 35,027 15.9 26,086 15.3 More than 120 113,504 51.5 108,750 63.9 which the property securing the loan was located Total 220,275 100 170,080 100 (table 6). The distributions of PMI applicants by Racial composition income differ between those seeking loans to pur- of census tract (minorities as chase homes and those applying for insurance to percentage of population) refinance an existing loan. In particular, the propor- Less than 10 115,101 52.1 78,113 45.8 tion of insurance applicants in the highest income 10-19 47,784 21.6 40,362 23.7 20-49 38,316 17.4 36,848 21.6 group (income greater than 120 percent of the 50-79 12,492 5.7 10,324 6.1 80-100 7,081 3.2 4,765 2.8 median family income in their MSA) was signifi- Total 220,774 100 170,412 100 cantly larger for refinancings than for home- Income of census purchase mortgages. Once again, this difference tract2 Low or moderate .... 25,780 11.7 16,281 9.6 probably reflects the high proportion of first-time, Middle 110,653 50.1 85,751 50.3 and perhaps younger, homebuyers in the home- 84,425 38.2 68,384 40.1 Total 220,858 100 170,416 100 purchase category. Location of census The racial and ethnic characteristics of PMI tract3 Central city 85,198 38.6 62,497 36.7 applicants were similar to those of mortgage appli- Non-central-city 135,660 61.4 107,919 63.3 cants covered by the HMDA data. Most applicants Total 220,858 100 170,416 100 for loans backed by PMI were white, and about 1. MSA median is median family income of the metropolitan statistical area (MSA) in which the property related to the loan is located. half were seeking insurance for mortgages to be 2. Low or moderate: median family income for census tract less than secured by properties located in neighborhoods in 80 percent of median family income for MSA of tract. Middle income: 80 percent to 120 percent. Upper income: more than 120 percent. which the nonwhite and Hispanic population was 3. For census tracts located in MSAs. less than 10 percent of the total.20 Overall, about SOURCE. Federal Financial Institutions Examination Council, preliminary three-fifths of the applicants were seeking insur- data. ance to help buy a home or refinance mortgages on properties located in the non-central-city portion of MSAs. A Comparison of Applicants for PMI and for Government Insured Mortgages 20. About 23 percent of the PMI application records submitted The vast majority of mortgages insured by the to the FFIEC lacked data on race or ethnic origin. This proportion FHA and VA have high loan-to-value ratios at is much larger than that for HMDA records and reflects, according the time of origination. For example, among all to industry representatives, the initial complications of starting a hew data collection process. FHA single-family mortgages originated in 1993, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Private Mortgage Insurance 893 94 percent had a loan-to-value ratio exceeding The distribution of applicants by racial or ethnic 80 percent, and 78 percent had a ratio exceeding characteristics indicates that the FHA and VA 90 percent.21 The vast majority of mortgages received a higher proportion of requests for insurbacked by PMI also have high loan-to-value ratios, ance from black applicants than did PMI compabut the pool of FHA-insured mortgages includes nies, whereas the latter had a higher proportion of many with loan-to-value ratios that exceed PMI Asian applicants. Relative to the VA, the FHA and limits. Because PMI companies, the FHA, and the the PMI companies both had a larger proportion of VA all serve households applying for mortgages Hispanic applications, a result that perhaps reflects with low down payments, comparisons of the char- a lower proportion of Hispanic veterans. The govacteristics of the applicants applying for insurance ernment insurance programs were also more likely under each program are appropriate. to receive applications secured by properties in We conducted such a comparison, using data census tracts where minority residents exceeded on FHA and VA lending activity drawn from 10 percent of the population and in census tracts in information filed for 1993 by lenders covered by central cities. HMDA. The comparisons are limited to applications for mortgages secured by properties in MSAs. Disposition of Applications In addition, the samples of applications used for the for Mortgage Insurance comparison was restricted to mortgages that fell within the size lqgiits established by the FHA for PMI companies approved most of the applications single-family mortgages. for insurance that they acted on during the fourth Our comparison indicates that the majority of quarter of 1993—roughly 85 percent of applicaapplicants for both government-backed and pri- tions for insurance to back home-purchase loans vately insured home-purchase loans had incomes and 87 percent to back refinancings (table 8). The that were below the median family income for their insurers denied about 12 percent of home-purchase MSA (table 7). Applicants for the government- applications and about 10 percent of refinancing backed programs, however, were relatively more applications; in a relatively small percentage of likely to have modest incomes: for example, for cases, applications were withdrawn by the lender home-purchase loans, 68 percent of FHA appli- or files were closed after additional information cants and 65 percent of VA applicants had incomes needed by the insurer to make a decision was not that were below the median family income for their provided. MSA, compared with 54 percent of the applicants Most applications for PMI were approved in for PMI. 1993, but the approval rate varied substantially A comparison between applicants of the different across metropolitan areas. In particular, applicainsurance programs based on neighborhood income tions for insurance for home-purchase mortgages finds a smaller difference. For example, 16 percent secured by properties located in all California of the PMI applicants sought insurance for home- MSAs and in most Florida MSAs had relatively purchase mortgages for properties in low- or high rates of denial. Denial rates in California were moderate-income census tracts, compared with as high as 33 percent in some areas, including Los 18 percent of the FHA applicants and 16 percent of Angeles. In California, the aggressive pursuit of the VA applicants. Thus, the insurance programs customers by mortgage originators and a weak seem to have a similar distribution of applicants housing market may have led to higher proportions across neighborhoods grouped by income, but the of marginally qualified applicants for mortgage FHA and the VA generally serve a lower-income insurance. The explanations for high denial rates clientele. in Florida are less certain, but suggestions range from a high proportion of condominiums and second homes to a local economy that is prone to greater volatility in housing prices. In contrast, 21. FHA Trends of Home Mortgage Characteristics: Section many MSAs in the Midwest—including Chicago, 203(b) Mortgages Insured, USA., Calendar Year 1993, FHA Detroit, and St. Louis—had denial rates well below Comptroller, Information Systems Division (Department of Housthe national average. ing and Urban Development, n.d.). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

894 Federal Reserve Bulletin • September 1994 7. Distribution of applications for insured mortgages, by purpose of loan, type of insurance, characteristics of applicant, and characteristics of census tract in which property is located, 1993:Q4 Percent Home purchase Home refinancing Private FHA VA Private FHA VA Race or ethnic group of applicant American Indian/ Alaskan native .7 .5 .4 .8 .5 .7 Asian/Pacific Islander 3.3 1.9 1.2 3.5 2.0 1.2 Black 6.4 12.0 14.0 4.2 7.2 9.5 Hispanic 8.6 10.8 4.9 5.5 6.1 4.1 White 79.1 71.9 74.2 83.6 80.8 79.3 Other .4 .5 .4 .4 .6 .4 Joint (white/minority) 1.6 2.5 4.9 2.0 2.8 4.9 Total 100 100 100 100 100 100 Income of applicant (percentage of MSA median Less than 80 31.2 46.3 41.9 13.9 30.6 24.5 80-99 22.9 21.5 23.5 17.8 17.7 16.9 100-120 18.5 14.3 16.1 20.2 16.0 17.2 More than 120 27.4 17.9 18.6 48.1 35.7 41.4 Total 100 100 100 100 100 100 Racial composition of census tract (minorities as percentage of population) Less than 10 52.0 40.3 36.6 47.7 39.4 35.9 10-19 20.0 23.1 24.4 22.1 26.7 26.8 20-49 17.0 24.0 29.8 20.4 24.0 28.1 50-79 6.7 7.8 6.5 6.3 6.5 6.7 80-100 4.4 4.7 2.8 3.4 3.4 2.6 Total 100 100 100 100 100 100 Income of census tract2 Low or moderate 16.0 18.2 15.8 12.0 14.6 12.8 Middle 58.0 59.2 62.2 58.3 58.7 60.7 Upper 26.0 22.6 22.0 29.7 26.6 26.5 Total 100 100 100 100 100 100 Location of census tract3 Central city 40.6 47.5 47.3 37.4 45.2 42.2 Non-central-city 59.4 52.5 52.7 62.6 54.8 57.8 Total 100 100 100 100 100 100 Note. Applications for government insurance are those submitted in the 2. Low or moderate: median family income for census tract less than Aug.-Dec. period. In all cases, only applications that met the FHA single- 80 percent of median family income for MSA of tract. Middle income: family loan size limits and that pertained to properties in metropolitan 80 percent to 120 percent. Upper income: more than 120 percent. statistical areas (MSAs) are counted. 3. For census tracts located in MSAs. 1. MSA median is median family income of the metropolitan statistical SOURCE. Federal Financial Institutions Examination Council, preliminary area (MSA) in which the property related to the loan is located. data. Multiple Applications submission of applications; consequently multiple PMI applications are potentially more common In general, the relatively high approval rates for than multiple mortgage applications and may skew PMI are to be expected; lenders submitting applica- the statistics. tions for insurance know the prospective borrow- For example, if lenders submit the applications er's credit circumstances and the credit underwrit- of only the marginally qualified applicants to more ing guidelines used by the PMI companies.22 than one PMI firm, then denial rates may be However, unlike mortage lenders, who charge a fee inflated. If, on the other hand, lenders need quick to applicants, PMI companies do not charge for the approvals and low premiums to attract wellqualified applicants, then denial rates may be deflated because multiple applications for insurance would be more common for these borrowers. 22. The approval rate for one PMI company, Amerin Guaranty Corporation, is 100 percent because the firm delegates the decision Overall, only 4.1 percent of the applications in to approve an application for insurance to the lending institution. the 1993 data appear to have involved multiple Thus, Amerin is notified about applications for insurance only when a lender has selected them as the insurance provider. applications (see box, "Multiple Applications"), Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Private Mortgage Insurance 895 and they appear to be, for the most part, from what among applicants grouped by their income applicants who are only marginally qualified. For (table 8). For example, about 87 percent of the example, among the multiple applications, the applicants for insurance for home-purchase loans denial rate for insurance for home-purchase mort- whose incomes placed them in the highest income gages was about 49 percent, compared with 10 per- group were approved for insurance, compared cent for all home-purchase applications excluding with 79 percent in the lowest income group the multiple applications (the rate for all home- (income less than 80 percent of the median of their purchase applications, 11.9 percent, is shown in MSA). Approval and denial rates for applicants table 8). from middle-income groups were similar to those for the highest income group. The same patterns were found for applications for insurance on Disposition by Applicant Income and Race refinancings. As examination of the racial or ethnic character- In general, income and its stability can be expected istics of applicants indicates that, compared with to affect an applicant's ability to qualify for mortwhite applicants, greater proportions of Asian, gage insurance, although they are usually considblack, and Hispanic applicants had their applicaered in relationship to the existing and proposed tions for private mortgage insurance turned down. debt burden rather than as an absolute measure of For insurance for home-purchase loans, for examcreditworthiness. Other factors consider when evalple, 20.8 percent of Asian applicants, 23.3 percent uating creditworthiness include the size of the loan, of black applicants, 26.4 percent of Hispanic appliassets available for down payment and closing cants, and 12.1 percent of white applicants were costs, employment experience, and credit history. denied.23 The rate of denial also generally increased Nevertheless, on average, low-income households as the proportion of minority residents in a neighhave fewer assets and lower net worth and experiborhood increased (table 9). ence more frequent employment disruptions than high-income households; this combination of factors often results in a denial of an application. 23. If multiple applications are removed from the sample, denial rates for all racial groups are lower: 17.9 percent for Asian appli- The 1993 fourth-quarter data indicate that the cants, 19.4 percent for black applicants, 22.2 percent for Hispanic rates of approval and denial for PMI vary some- applicants, and 10.3 percent for white applicants. 8. Distribution of applications for private mortgage insurance by purpose of loan, disposition, and characteristics of applicant, 1993:Q4 Percent Home purchase Home refinance CChhaarraacctteerriissttiicc With- With- Approved Denied File closed Total Approved Denied File closed Total drawn drawn Race or ethnic group of applicant American Indian/ Alaskan native 88.9 9.2 1.6 .3 100 88.5 8.8 2.0 .7 100 Asian/Pacific Islander 74.2 20.8 3.6 1.4 100 73.1 21.0 3.9 2.0 100 Black 72.2 23.3 3.1 1.4 100 79.8 16.8 2.5 .8 100 Hispanic 68.8 26.4 3.0 1.8 100 71.2 23.7 3.4 1.6 100 White 84.6 12.1 2.5 .8 100 87.0 9.7 2.5 .8 100 Other 73.4 23.3 1.9 1.4 100 75.6 20.0 2.7 1.7 100 Joint (white/minority) 77.7 18.7 2.7 .9 100 82.1 13.9 3.0 1.0 100 Income of applicant (percentage of MSA median)1 Less than 80 79.2 17.8 2.2 .7 100 79.7 17.0 2.6 .7 100 80-99 85.0 12.1 2.3 .6 100 85.8 11.4 2.2 .6 100 100-120 86.1 10.9 2.3 .7 100 87.4 9.6 2.3 .7 100 More than 120 86.7 10.1 2.5 .8 100 87.8 8.7 2.7 .8 100 Total 84.8 11.9 2.4 .8 100 86.9 9.8 2.6 .8 100 I. MSA median is median family income of the metropolitan statistical SOURCE. Federal Financial Institutions Examination Council, preliminary area (MSA) in which the property related to the loan is located. data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

896 Federal Reserve Bulletin • September 1994 Multiple Applications Among the 456,404 applications for PMI acted on in the ing that lenders typically did not submit a given applicafourth quarter of 1993, 18,844, or 4.1 percent, appear to tion to more than two PMI companies. be multiple or "duplicate" applications. Multiple applica- Applications from Hispanics, blacks, and Asians—and tions were identified by searching the mortgage insurance from applicants not in the highest income category— application data for records with identical census tracts, were more likely to be sent to multiple PMI companies purpose of loan, race or ethnic status, applicant income, (compare table 6 with the table below). In addition, and loan size. For matches on applicant income and loan denial rates are substantially higher for all categories of size, differences of $1,000 were allowed when identify- applicants with multiple application records (compare ing matches. In the overwhelming number of cases, a table 8 with the table below). multiple match consisted of only two records, indicat- Distribution and denial rate of PMI applications sent to more than one PMI company, by purpose of loan, characteristics of applicant, and characteristics of census tract in which property is located, 1993:Q4 Percent Home purchase Home refinancing Home purchase Home refinancing CChhaarraacctteerriissttiicc CChhaarraacctteerriissttiicc Percentage Denial Percentage Denial Percentage Denial Percentage Denial distribution rate distribution rate distribution rate distribution rate All applications Racial composition sent to more of census tract than one (minorities as company 100 48.9 100 45.5 percentage of population) Race or ethnic Less than 10 39.9 40.9 33.2 31.0 group of applicant 10-19 23.9 48.3 23.8 44.5 American Indian/ 20-49 22.5 54.9 29.1 54.3 Alaskan 50-79 8.9 63.2 8.9 61.7 native .1 77.8 .2 70.0 80-100 4.7 64.8 5.1 67.6 Asian/Pacific Total 100 100 Islander 4.2 58.9 7.1 59.4 Black 7.2 65.5 3.8 65.6 Income of census Hispanic 11.4 62.2 7.2 68.8 tract2 White 74.8 45.9 79.5 42.2 Low or moderate 14.2 59.0 11.6 59.8 Other .2 60.0 .1 71.4 Middle 48.4 48.8 48.8 46.3 Joint (white/ Upper 37.4 45.3 39.6 40.4 minority) 2.0 61.4 2.1 54.9 Total 100 100 Total 100 100 Location of census Income of applicant tract3 (percentage of MSA Central city 38.6 50.6 35.3 47.5 median)1 Non-central-city 61.4 47.9 64.7 44.5 Less than 80 22.4 56.9 11.7 62.2 Total 100 100 80-99 16.8 47.9 14.5 48.7 100-120 17.7 44.6 17.6 43.1 MEMO More than 120 43.1 46.9 56.3 42.1 Number of Total 100 100 applications sent to more than one company 12,387 6,457 1. MSA median is median family income of the metropolitan statistical 3. For census tracts located in MSAs. area (MSA) in which the property related to the loan is located. SOURCE. Federal Financial Institutions Examination Council, prelimi- 2. Low or moderate: median family income for census tract less than nary data. 80 percent of median family income for MSA of tract; Middle income: 80 percent to 120 percent; Upper income: more than 120 percent. Differences in denial rates for PMI applicants 80 percent of the median family income for their grouped by race or ethnicity reflect a variety of MSA (data not shown in tables). The comparable factors, including the proportion of each group ratios were about 29 percent for blacks, 26 percent with relatively low incomes. The data show that for Hispanics, and 17 percent for Asians. These 17 percent of the white applicants for insurance on differences in the distribution of applicants for home-purchase loans had incomes of less than insurance by income account for some of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Private Mortgage Insurance 897 differences in denial rates. However, within each determined, however, from the data submitted by income group, white applicants had lower rates of the PMI companies—they provide little informadenial than Asians, blacks, or Hispanics (table 10). tion about the characteristics of the properties that The pattern of denial rates for PMI for home- applicants seek to purchase or refinance and about purchase loans by race or ethnic characteristic dif- the financial circumstances of the applicants that fers from the pattern in HMDA data in one notable affect their expected mortgage payment perforway. In the HMDA data, the denial rate for Asian mance. For example, the level of debt carried by applicants is usually close to that for whites; in the applicants, their credit histories, and their employ- PMI data, it is much higher—about 21 percent for ment experiences are not disclosed. Without this Asians versus 12 percent for whites (18 percent information and information about the specific versus 10 percent excluding multiple applications). underwriting standards used by PMI companies, Part of the explanation of the disparity between the fairness of the decision process cannot be PMI denials for Asians and for whites lies in the assessed. fact that proportionally more Asians than whites ; : i. " ." i • sought insurance in California. Considering only AFFORDABLE HOUSING INITIATIVES properties whose MSA location was reported, white and Asian applicants in California were both As noted earlier, the essential feature of mortgage denied at about the same rate—30 percent for insurance is that it allows homebuyers to acquire a whites and about 31 percent for Asians; but 40 per- house with a small down payment. Usually, homecent of all applications by Asians were for Califor- buyers who can afford only a small down payment nia properties, compared with only about 9 percent also have low or moderate incomes; in this sense, of applications by whites. Excluding the applica- mortgage insurance promotes home ownership for tions from California, the rejection rate was 14 per- such households. cent for Asians and 10 percent for whites. Over the past several years, PMI companies The difference in denial rates for PMI for white have introduced new programs targeted at lowapplicants as compared with Asian, black, and and moderate-income households.24 Often these Hispanic applicants raises questions about the influence of race on the disposition of applications. 24. PMI companies, like many government programs, do not The existence of racial discrimination cannot be use uniform definitions for low- or moderate-income households. 9. Distribution of applications for private mortgage insurance by purpose of loan, disposition, and characteristics of census tract in which property is located, 1993:Q4 Percent Home purchase Home refinance Characteristic With- With- Approved Denied File closed Total Approved Denied File closed Total drawn drawn Racial composition of census tract (minorities as percentage of population) Less than 10 89.3 8.1 2.1 .5 100 91.9 5.4 2.2 .5 100 10-19 84.1 12.6 2.5 .8 100 86.3 10.3 2.6 .9 100 20-49 79.5 16.9 2.6 1.0 100 81.3 14.7 2.9 1.0 100 50-79 74.0 21.8 2.9 1.2 100 76.0 19.3 3.3 1.4 100 80-100 70.9 24.3 3.5 1.3 100 71.5 23.6 3.3 1.6 100 Income of census tract1 Low or moderate 78.9 17.5 2.7 .9 100 81.3 14.9 2.9 .9 100 Middle 85.4 11.7 2.3 .7 100 87.0 9.8 2.4 .7 100 Upper 86.4 10.5 2.4 .7 100 87.7 8.9 2.6 .8 100 Location of census tract2 Central city 84.1 12.7 2.5 .7 100 86.3 10.4 2.5 .8 100 Non-central-city 85.6 11.4 2.3 .8 100 87.0 9.7 2.6 .8 100 1. Low or moderate: median family income for census tract less than 2. For census tracts located in MSAs. 80 percent of median family income for MSA of tract. Middle income: SOURCE. Federal Financial Institutions Examination Council, preliminary 80 percent to 120 percent. Upper income: more than 120 percent. data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

898 Federal Reserve Bulletin • September 1994 programs involve other parties, including Fannie State housing authorities generally issue tax- Mae and Freddie Mac and state housing finance exempt bonds to fund mortgages with high loan-toauthorities. Working with secondary market agen- value ratios granted to first-time homebuyers. PMI cies through programs such as Fannie Mae's companies issue a special form of mortgage insur- Community Home Buyers and Freddie Mac's ance ("pool insurance") to enhance the credit qual- Affordable Gold, the PMI companies expand ity of these bonds. their regular 95 percent loan-to-value ratio pro- Another recent PMI industry initiative provides grams by allowing the borrower to use gifts and insurance for mortgages with 97 percent loan-toother nonborrower sources of funds as part of the value ratios. As with the programs described above, down payment. These programs also use more financial counseling is typically a mandatory comflexible underwriting criteria. To offset the addi- ponent of these products. In addition, PMI compational potential risk anticipated from such nies use early intervention techniques in these proloans, borrowers are required to complete a grams for households that fall behind in their homebuyer education course. Often the pre- mortgage payments. Mortgages generated through purchase counseling for homebuyers is undertaken these programs may be held in portfolio by the with community groups and other nonprofit lender, whereas others may be sold into the secondorganizations. ary market. 10. Disposition of applications for private mortgage insurance, by purpose of loan and race of applicant by income, 1993:Q4 Percent Home purchase Home refinance AApppplliiccaanntt''ss MMSSAA--rreellaattiivvee iinnccoommee aanndd rraaccee oorr eetthhnniicc ggrroouupp11 Approved Denied With- File closed Total Approved Denied With- File closed Total drawn drawn American Indian/ Alaskan native 90.0 8.8 1.2 0 100 86.0 12.1 1.9 0 100 Asian/Pacific Islander 70.0 25.5 3.9 .6 100 59.8 34.3 3.9 1.9 100 Black 67.3 28.1 3.1 1.4 100 69.0 27.1 3.2 .7 100 Hispanic 64.6 31.6 2.8 1.1 100 58.3 36.8 3.6 1.2 100 White 79.2 17.9 2.1 .7 100 79.4 17.3 2.5 .7 100 Other 72.2 27.8 0 0 100 73.6 20.8 3.8 1.9 100 Joint (white/minority) 68.9 28.3 2.1 .7 100 65.0 27.7 5.1 2.2 100 80-99 percent American Indian/ Alaskan native 92.7 5.5 1.8 0 100 92.7 6.6 0 .7 100 Asian/Pacific Islander 77.5 18.5 2.9 1.0 100 71.3 24.9 3.1 .8 100 Black 72.8 23.0 3.2 1.0 100 78.4 17.1 2.6 1.8 100 Hispanic 68.4 27.4 3.0 1.2 100 68.3 28.0 2.4 1.3 100 White 85.2 11.8 2.3 .6 100 86.1 11.2 2.2 .6 100 Other 76.6 22.3 0 1.1 100 61.5 30.8 7.7 .0 100 Joint (white/minority) 75.0 20.8 3.5 .7 100 75.2 22.8 1.0 1.0 100 100-120 percent American Indian/ Alaskan native 87.8 10.1 1.6 .5 100 90.1 9.9 0 .0 100 Asian/Pacific Islander 76.9 19.0 2.9 1.2 100 72.9 21.7 3.6 1.8 100 Black 72.9 22.7 3.5 .9 100 78.2 17.6 3.5 .7 100 Hispanic 67.9 26.7 3.5 1.9 100 69.9 24.1 3.7 2.3 100 White 86.7 10.5 2.1 .6 100 87.8 9.3 2.2 .7 100 Other 76.5 21.6 2.0 0 100 83.9 14.5 1.6 0 100 Joint (white/minority) 78.3 17.3 3.4 1.0 100 83.2 15.4 1.0 .3 100 More than 120 percent American Indian/ Alaskan native 89.7 8.2 1.7 .4 100 87.5 8.5 2.8 1.2 100 Asian/Pacific Islander 74.3 20.2 3.9 1.6 100 75.0 18.7 4.2 2.1 100 Black 76.7 19.5 2.6 1.2 100 82.5 14.6 2.2 .7 100 Hispanic 72.6 22.5 2.9 2.0 100 76.0 19.1 3.5 1.4 100 White 86.5 10.2 2.6 .7 100 88.0 8.6 2.6 .8 100 Other 72.3 22.3 2.9 2.6 100 76.9 19.3 1.9 1.9 100 Joint (white/minority) 79.2 17.4 2.5 1.0 100 83.7 11.9 3.4 1.0 100 1. Income percentages are the percentage of the median family income of SOURCE. Federal Financial Institutions Examination Council, preliminary the metropolitan statistical area (MSA) in which the property related to the data. loan is located. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Private Mortgage Insurance 899 Finally, the industry is examining and modify- offer to promote homeownership.25 However, ing its traditional products to make them more insurance products associated with affordable attractive to all households, including low- and housing initiatives are expected to contribute to the moderate-income households. For example, PMI financial performance of the PMI companies by companies have recently introduced monthly pay- opening new markets as well as by supporting their ment programs that allow the borrower to pay traditional core businesses. An example of the latthe initial premium over time rather than as a ter effect is that some special programs encourage lump-sum advance payment. This type of initiative applications from borrowers who were unaware lowers the amount of funds the borrower needs that they could qualify for mainstream insurance at closing to acquire a house and thereby allows programs. But like the traditional PMI programs, households with fewer assets to become the affordable housing initiatives also face competihomeowners. tion from the FHA and from lenders who extend Generally, affordable housing programs initiated mortgages to low- and moderate-income homebuyor supported by PMI companies have not been ers without requiring mortgage insurance. • available long enough to determine their risks and profitability or their impact on first-time homebuy- 25. The Community Affairs staffs of the Federal Reserve Banks ers. In addition, many lenders are not yet familiar indicate that lenders generally are aware of the affordable housing with the full range of products that PMI companies initiatives of only the largest two or three PMI companies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

900 The Bank for International Settlements and the Federal Reserve Charles J. Siegman, Senior Associate Director of the organization's name). However, its primary the Board's Division of International Finance, objectives, which have guided the Bank's activities prepared this article. since its inception and are reflected in its current role, were to promote cooperation among central On September 13, 1994, the Chairman of the Board banks and to provide additional facilities for interof Governors of the Federal Reserve System national financial operations. assumed the seat on the Board of Directors of the Over time, the BIS has evolved into a major Bank for International Settlements (BIS) desig- international institution, providing an important nated for the central bank of the United States. The forum for frequent consultation among central central bank of the United States has had the right bankers on a wide range of issues. In recent years to be represented on the BIS's Board of Directors the BIS has broadened its role by, for example, since the BIS was established more than sixty years mobilizing supplementary resources for the Interago. For a variety of reasons, however, the Federal national Monetary Fund (IMF) and arranging Reserve had, until this year, never exercised its bridge financing for some heavily indebted middleright. The Federal Reserve Board's decision to income developing countries and, more recently, assume representation on the BIS's Board was for some Eastern European countries.1 The BIS has made in recognition of the increasingly important also broadened its contacts with central banks outrole of the BIS as the principal forum for consulta- side Europe. tion, cooperation, and information exchange among Since the early 1960s, the BIS has hosted, nine central bankers and in anticipation of a broadening or ten times each year, meetings of central bank of that role. Federal Reserve membership on the governors of the Group of Ten (G-10) countries, BIS Board marks a new chapter in the relationship which provide a forum for ongoing discussion of of the Federal Reserve System with the BIS. issues of common interest.2 The BIS is also the site This article discusses the role of the BIS as an of periodic and ad hoc meetings of central bank international monetary institution, summarizes the officials in the subsidiary committees of the G-10 Federal Reserve's relationship with the BIS since central bank governors—the Basle Committee on that organization's founding, and provides back- Banking Supervision, the Committee on Payment ground information on the organizational structure and Settlement Systems (currently chaired by of the BIS and its financial operations. William J. McDonough, President of the Federal Reserve Bank of New York), the Euro-Currency Standing Committee, and the Gold and Foreign Exchange Committee. THE BIS'S ROLE AS AN INTERNATIONAL The Basle Committee on Banking Supervision MONETARY INSTITUTION developed the international agreement on mini- The Bank for International Settlements is an orga- mum capital standards for internationally active nization of central banks based in Basle, Switzerland. It was established in 1930, and thus is the 1. The bridge financing consisted of short-term credits extended oldest functioning international financial organiza- until credits became available from the IMF, the International Bank tion. The BIS was formed for the practical purpose for Reconstruction and Development, and other sources. 2. The G-10 countries are Belgium, Canada, France, Germany, of coordinating Germany's World War I repara- Italy, Japan, the Netherlands, Sweden, Switzerland, the United tions payments (hence the term "settlements" in Kingdom, and the United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

901 banks and continues to be the forum for designing officials to draw on each other's experiences with a cooperative framework for supervision of interna- policy, operational, statistical, and technical issues. tional bank activities. Meetings of the Basle Com- The various meetings held under the auspices of mittee are also attended by bank supervisors from the BIS have become increasingly important to G-10 countries who represent institutions other central banks in carrying out their missions in an than the central banks. (Representing the United interdependent world. The information, under- States, for example, are officials from the Comp- standing, and analyses acquired at these meetings troller of the Currency and the Federal Deposit and through the statistical activities carried out Ml^pccr Corporation as well as the Federal under BIS auspices contribute to more effective Reserve.) and more efficient policies. The BIS has become The Committee on Payment and Settlement increasingly useful to central banks throughout the Systems has formulated principles and minimum world as a forum for collecting information, sharstandards for the operation and oversight of cross- ing insights, developing analyses, and cooperating border payment systems. Its ongoing efforts to find on a wide range of policy-related matters. ways to reduce risk in payment systems are fundamental to international efforts to minimize the potential for systemic risk and to promote interna- THE FEDERAL RESERVE'S RELATIONSHIP tional financial stability. WITH THE BIS The numerous studies on a wide range of international financial, banking, and payment system The Federal Reserve over the years has played an issues prepared by the subsidiary committees of the active role in the meetings of the G-10 central bank G-10 central banks provide comprehensive infor- governors and of that group's subsidiary commitmation for analyzing new developments and for tees and in the other specialized meetings of central addressing common financial, monetary, and super- bankers held at the BIS. Participation in the activivisory issues facing central banks. For example, the ties held under the auspices of the BIS has helped Euro-Currency Standing Committee, which moni- the Federal Reserve in the implementation of U.S. tors and analyzes international financial markets in monetary policy and in carrying out its responsibilthe context of concerns about systemic risk, has ities for the supervision and stability of the U.S. initiated a coordinated reporting system for interna- banking and financial system in today's global tional banking data and has conducted a series of financial markets. studies of international interbank markets. Its most Although the Federal Reserve has been an active recent study of interbank relations, prepared by a and continuing participant in meetings on a wide working group chaired by a Federal Reserve staff range of central bank-related matters that are dismember, is widely cited for having laid out for the cussed and analyzed under the auspices of the BIS, first time some of the major international impli- until this September its relationship with the BIS cations for central banks and market participants had been unique. The United States was the only of the increased use of derivative instruments, and country whose central bank had the continuous for having laid the foundation for subsequent dis- right, under the statutes of the BIS, to be reprecussions and studies of derivatives at national and sented on the BIS's Board of Directors that had international levels. chosen not to do so. The BIS also organizes other specialized meet- The question of whether or not the Federal ings of central bankers, such as periodic meetings Reserve should join the BIS's Board of Directors of the Group of Computer Experts and the Group dates back to 1929, when the BIS was being of Experts on Monetary and Economic Data Bank formed. At that time, and in the 1930s, it was Questions, semiannual meetings of central bank concluded that because one of the principal funceconomists and of coordinators of central bank tions of the BIS was to handle Germany's war technical assistance to Eastern Europe and the reparations, and because the United States was not former Soviet Union, and periodic meetings of a party to the reparations settlement with Germany, experts on monetary policy, money markets, and it was not appropriate for the Federal Reserve to legal matters. These meetings enable central bank join the BIS Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

902 Federal Reserve Bulletin • September 1994 The issue of Federal Reserve representation on gress on the matter. That report, submitted in 1984, the BIS's Board of Directors was left in abeyance concluded: during the World War II period. During the war there were moves, supported by the U.S govern- [We] see no urgent need to change the current relationship of the Federal Reserve with the BIS and the ment, to liquidate the BIS, particularly because assumption by the Federal Reserve of the seat on the the new Bretton Woods institutions (the IMF and Board of Directors of the BIS that is reserved for the the International Bank for Reconstruction and Governor of the central bank of the United States. In the Development) were viewed as the primary organi- absence of a strong case to change the current status of zations for dealing with postwar international mon- the United States relationship with the BIS, there are certain technical and policy reservations that militate etary affairs. After the war, the U.S. government against the Federal Reserve's becoming a member of the reconsidered its position with regard to the BIS, Board of Directors of the BIS. This matter obviously acknowledging that the BIS was able to perform deserves to be reviewed periodically in light of evolving some functions that would be beneficial for the developments in the international monetary and financial international monetary system that the new Bretton system. Woods institutions were not in a position to handle, for example, certain activities in connection with Previous technical and policy reservations about Marshall Plan aid to Western Europe. the Federal Reserve being represented on the BIS During the 1950s and 1960s, the Federal Reserve Board have substantially diminished in recent Board considered the question of Federal Reserve years. representation on the BIS Board on several occa- For a number of years the BIS has been working sions. Although it was becoming more favorably cooperatively with, rather than as a competitor of, inclined toward representation, it did not act, for the IMF. For example, it has mobilized supplemenseveral reasons. First, the Federal Reserve Board tary resources for the IMF and is working closely had lingering concerns that joining the BIS might with the IMF in coordinating the technical assisbe construed as an expression of preference for the tance that is being provided by central banks to BIS over the IMF. Second, it had reservations Eastern European countries and to the countries of about the European character of the BIS. Third, the former Soviet Union. there were concerns about the Federal Reserve With regard to the BIS's European orientation, becoming involved in the BIS's operations, espe- in recent years the BIS has broadened its reach cially in the gold market, a market that had impor- beyond Europe and has included representatives of tant international economic policy implications at central banks from Latin America and East Asia in that time. The BIS's role in assisting South Africa some of its meetings. Also, to reflect its more in certain gold transactions was also a concern. global character, the BIS in July 1994 elected to its By the 1970s, the Federal Reserve Board had Board of Directors (effective September 13, 1994) reached an informal consensus that the BIS had the governors of the central banks of Canada and become a sufficiently important international mon- Japan; from 1945 until then, the Board had etary institution for the Federal Reserve to seek to included only representatives of Western European be a full participant in its deliberations, and that central banks. representation on the BIS Board of Directors would Ideological disagreements about the role of gold enable the Federal Reserve to contribute to the in the international monetary system have become evolution and policies of that organization. How- muted since the early 1970s. Similarly, political ever, in the end, the consensus was not acted concerns about South Africa's membership in the upon. BIS and the BIS's assistance to South Africa in The question of Federal Reserve representation certain gold transactions have waned as the situaon the BIS Board was again considered in 1983-84 tion in that country has changed. when, because of the BIS's increased role in inter- The end of the Cold War removed another resernational monetary affairs, the Congress requested vation that the Federal Reserve had once had about the Secretaries of State and the Treasury and the being represented on the BIS Board and becoming Chairman of the Board of Governors of the Federal involved in BIS's operations for central banks— Reserve System to prepare a report for the Con- namely, that the BIS was performing banking func- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Bank for International Settlements and the Federal Reserve 903 tions for some countries that at that time were part of the Eastern bloc. In the Cold War environment, Member Central Banks of the Bank the United States at times expressed disapproval for International Settlements of such financial relationships with these countries. With the end of the Cold War, this factor is no Country Central bank longer relevant in considering whether the Federal Reserve should exercise its right to be represented Australia Reserve Bank of Australia on the BIS Board. In fact, Federal Reserve repre- Austria Austrian National Bank sentation on the BIS Board is fully consistent Belgium National Bank of Belgium with the integration of Eastern European countries Bulgaria Bulgarian National Bank (and, over time, the countries of the former Soviet Canada Bank of Canada Union) into the global economy. For example, the BIS organizes semiannual meetings of coordinators Czech Republic Czech National Bank of central bank technical assistance to Eastern Denmark National Bank of Denmark Estonia Bank of Estonia Europe and the former Soviet Union and serves as Finland Bank of Finland a clearinghouse for information on technical assis- France Bank of France tance related to central banking that is being provided to these countries. Germany German Bundesbank Given these developments, the Federal Reserve Greece Bank of Greece Board concluded that its previous reservations Hungary National Bank of Hungary about joining the BIS's Board of Directors were no Iceland Central Bank of Iceland longer as powerful, and that the positive benefits of Ireland Central Bank of Ireland being represented on the BIS Board in helping to achieve the Federal Reserve's objectives have been Italy Bank of Italy enhanced. The United States is an active member Japan Bank of Japan of other international and regional financial organi- Latvia Bank of Latvia zations, and its non-membership status on the BIS Lithuania Bank of Lithuania Board of Directors was becoming an increasingly Netherlands The Netherlands Bank questionable anomaly.3 By being represented on the BIS Board, the Federal Reserve will be able Norway Central Bank of Norway to play a more active role in shaping the future Poland National Bank of Poland of the BIS and to further international monetary Portugal Bank of Portugal cooperation. Romania National Bank of Romania Slovakia National Bank of Slovakia ORGANIZATIONAL STRUCTURE OF THE BIS South Africa South African Reserve Bank Spain Bank of Spain Membership and Shares Sweden Bank of Sweden Switzerland Swiss National Bank The BIS currently has thirty-three central banks as Turkey Central Bank of the members (see box). The Reserve Bank of Aus- Republic of Turkey United Kingdom Bank of England 3. The United States is a founding member of the International United States Federal Reserve System Monetary Fund (IMF), the International Bank for Reconstruction Yugoslavia1 National Bank of Yugoslavia and Development, the Organization for Economic Cooperation and Development (OECD), the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, and the 1. The membership of the central bank of Yugoslavia European Bank for Reconstruction and Development. The Federal is currently suspended pending a final determination Reserve is a collaborating (associate) member of the Center for of the legal status of the Yugoslav issue of the BIS's Latin American Studies (CEMLA), the Chairman of the Federal capital. Reserve Board is the Alternate Governor of the IMF, and Federal Reserve officials participate actively in meetings of the OECD. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

904 Federal Reserve Bulletin • September 1994 tralia, the Bank of Canada, the Federal Reserve 1930. In practice, Citibank exercised these voting System, the Bank of Japan, and the South African rights by appointing the president or the general Reserve Bank are the only non-European central manager of the BIS to act as its proxy. banks that are members. The membership includes When the Federal Reserve assumed its ex officio most of the Eastern European countries (except seat on the BIS Board of Directors in September Albania and the countries that have emerged from 1994, it was not required to make a financial outlay the former Yugoslavia4). The three Baltic states by purchasing shares of the BIS. However, starting resumed their membership in June 1992. Russia with the annual general meeting in June 1995, the and the other former Soviet republics have never Federal Reserve will be entitled to vote the shares been members. issued as part of the U.S. issue. Some 84 percent of the 473,125 shares of the BIS currently outstanding are owned by central Board of Directors banks; the remainder are held by private shareholders, mainly in Europe. The shares owned by According to current BIS statutes, the governors of private shareholders consist of the shares originally the central banks of Belgium, France, Germany, issued as part of the U.S. issue in 1930 that were Italy, the United Kingdom, and the United States not subscribed by the U.S. central bank and a are ex officio members of the BIS Board of Direcportion of the original issue for Belgium and tors. Ex officio directors serve as long as they France to which the National Bank of Belgium and remain governors of their central banks. Following the Bank of France did not subscribe. Because the the Federal Reserve Board's decision to be reprecentral bank of the United States decided not to sented on the BIS's Board, Alan Greenspan, Chairsubscribe to its share of the original capital sub- man of the Board of Governors of the Federal scription of the BIS, a United States banking group Reserve System, assumed the ex officio seat for the (composed of J.R Morgan and Company, the First United States on September 13,1994. National Bank of New York, and the First National BIS statutes also empower each ex officio direc- Bank of Chicago) subscribed or arranged for the tor to appoint to the BIS Board of Directors another subscription of these shares. Since that time, these person of the same nationality, representing "American" shares have been sold to other parties, finance, industry, or commerce. Most of the current mostly European. appointed members of the BIS Board are former The BIS declares an annual dividend, and all officials of their respective country's central bank shares carry equal rights with regard to such divi- now serving as private citizens (four are former dends. However, the ownership of shares carries no heads of their central banks). Appointed directors right of voting or representation at annual general hold office for three years and are eligible for meetings and extraordinary general meetings of the reappointment. Federal Reserve Board Chairman BIS. The right of representation and voting, in Alan Greenspan named William J. McDonough, proportion to the number of shares subscribed in President of the Federal Reserve Bank of New each country, can be exercised only by the central York, as the appointed director for the United bank of that country or its nominee; if the central States. bank does not nominate an institution, the BIS may In addition to the six ex officio directors and the designate a financial institution not objected to by six directors appointed by the ex officio directors, the central bank of the country in question. Thus, in BIS statutes provide for the election, by a twothe past, whenever a general or extraordinary gen- thirds majority of the BIS Board members, of as eral meeting of the BIS was held, the BIS Board of many as nine directors from among the governors Directors appointed Citibank N.A. of New York to of the central banks of the countries that have exercise the right of voting all the "American" subscribed to shares of the BIS, excluding the shares resulting from the original U.S. issue in six central banks that are entitled to designate ex officio directors. Elected directors serve for three 4. The State Bank of Albania was a member for many years but years and are eligible for reelection. The current withdrew its membership in 1977. The membership of the central members of the BIS Board of Directors are listed in bank of Yugoslavia is currently suspended pending a final determithe box. nation of the legal status of the Yugoslav issue of the BIS's capital. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Bank for International Settlements and the Federal Reserve 905 Financial Operations Board of Directors of the Bank for International Settlements, As an international financial organization, the BIS September 1994 performs a variety of banking, trustee, and agent Basis of functions, mainly for central banks and interna- Member membership tional organizations. The BIS accepts deposits of currencies and gold, primarily from central banks; Willem F. Duisenberg Elected in June 1994, about one hundred central banks held President, The Netherlands Bank deposits at the BIS. In turn, the BIS places its Chairman, Board of Directors of the assets in the money markets and on occasion makes BIS, and President of the BIS loans to central banks. The BIS has performed the Carlo Azeglio Ciampi Appointed functions of trustee with regard to the outstanding Former governor, Bank of Italy indebtedness associated with the German post- Vice Chairman, Board of Directors World War I reparations agreements. It has also of the BIS served as the depository for the secured loans of Urban Backstrom Elected the European Coal and Steel Community and has Governor, Bank of Sweden exercised the functions of agent for the European Bernard Clappier Appointed Monetary Cooperation Fund. More recently, the Former governor, Bank of France BIS has become the agent for the collateral Antonio Fazio Ex officio arrangements in connection with the Brazilian Governor, Bank of Italy commercial bank debt restructuring and is acting Edward A. J. George Ex officio as a sub-agent for the Federal Reserve Bank of Governor, Bank of England New York in connection with the collateralized Alan Greenspan Ex officio Venezuelan Brady bonds. Chairman, Board of Governors of the Before any financial operation in a given market Federal Reserve System or given currency is carried out by or on behalf of Lord Kingsdown Appointed the BIS, the BIS Board must give the central bank [formerly Robin Leigh-Pemberton] or central banks directly concerned an opportunity Former governor, Bank of England to disapprove, in order to avoid disrupting national Markus Lusser Elected financial markets. If a central bank objects, the President, Swiss National Bank proposed operation does not take place. William J. McDonough Appointed Information about the banking functions per- President, Federal Reserve Bank of formed by the BIS is included in the BIS's annual New York report, in the chapter that reviews the operations of Yasushi Mieno Elected the BIS's Banking Department. The following data Governor, Bank of Japan provide some salient points concerning the finan- Helmut Schlesinger Appointed cial operations of the BIS: Former president, German Bundesbank Jean-Claude Trichet Ex officio • As of March 31, 1994, the BIS's balance-sheet Governor, Bank of France total stood at 65 billion gold francs, with the BIS's Hans Tietmeyer Ex officio own funds (capital and reserves) at 1.8 billion gold President, German Bundesbank francs.5 The equivalents in U.S. dollars, with gold Gordon Thiessen Elected at the then-current market price, were $134 billion Governor, Bank of Canada and $4.5 billion respectively. Alfons Verplaetse Ex officio Governor, National Bank of Belgium 5. The BIS uses the gold franc (equivalent to 0.29 gram of fine Philippe Wilmes Appointed gold) as a unit of account for balance-sheet purposes. Assets and liabilities in U.S. dollars are converted at $208 per ounce of fine Member of the board of regents, gold (equivalent to 1 gold franc = $1.94); all other items in National Bank of Belgium currencies are converted into gold francs on the basis of market rates against the U.S. dollar. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

906 Federal Reserve Bulletin • September 1994 • The preponderant share of deposits of curren- cies) has declined steadily over time and amounted cies placed at the disposal of the BIS is derived to nearly 7 percent at the end of March 1994, from deposits of central banks. The proportion of compared with 22 percent at the end of central bank deposits of currencies to total deposits March 1984. of currencies, always high, has increased over • For the financial year 1993-94, the BIS recent years and stood at 96 percent on March 31, reported a profit of $268 million equivalent; of that 1994. The other 4 percent were mainly currency amount, nearly $80 million equivalent was disdeposits by international institutions, with a minus- tributed as dividends, and the remainder was placed cule amount from commercial banks. in various reserve funds. On March 31, 1994, total • The proportion of central bank deposits of reserves of the BIS amounted to $3.4 billion gold in relation to total deposits (gold and curren- equivalent. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

907 Industrial Production and Capacity Utilization for August 1994 Released for publication September 16 assemblies of motor vehicles accounted for the acceleration of industrial production in August; Industrial production rose 0.7 percent in August gains in the output of machinery (including comafter an upwardly revised increase of 0.3 percent in puters) and components used to make equipment July; increases for May and June also are now and motor vehicles contributed most of the remainlarger than previously reported. A resurgence in ing growth. The demand for electricity, which had Industrial production indexes Twelve-month percent change Twelve-month percent change 10 10 5 + 0 Nondurable manufacturing 5 1988 1989 1990 1991 1992 1993 1994 1988 1989 1990 1991 1992 1993 1994 Capacity and industrial production Ratio scale, 1987 production =100 Ratio scale, 1987 production =100 — Total industry Capacity Percent of capacity Percent of capacity Total industry Manufacturing 90 90 Utilization Utilization 80 80 70 70 J I L 1980 1982 1984 1986 1988 1990 1992 1994 1980 1982 1984 1986 1988 1990 1992 1994 All series are seasonally adjusted. Latest series, August. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

908 Federal Reserve Bulletin • September 1994 Industrial production and capacity utilization, August 1994 Industrial production, index, 1987=100 Percentage change Category 1994 19941 Aug. 1993 to Mayr Juner July' Aug.f Mayr Juner July' Aug. Aug. 1994 Total 116.6 117.3 117.7 118.5 6.7 Previous estimate 116.3 116.9 117.2 Major market groups Products, total2 115.3 116.1 116.6 117.5 .5 .7 .5 6.5 Consumer goods ... 111.7 112.9 113.3 114.1 .5 1.1 .3 .7 5.1 Business equipment 147.3 148.2 150.1 152.6 .7 .7 1.3 1.6 13.2 Construction supplies 102.9 102.8 102.9 102.9 1.1 -.1 .1 .1 5.7 Materials 118.6 119.1 119.2 119.9 .6 .4 .1 .6 7.0 Major industry groups Manufacturing 118.5 118.8 119.4 120.6 .7 .3 1.0 7.9 Durable 122.9 123.2 124.3 126.2 .3 .3 1.5 10.8 Nondurable 113.1 113.3 113.5 113.8 1.1 .2 .1 .3 4.3 Mining 99.1 99.7 98.4 97.6 .6 -1.3 -.8 1.0 Utilities 114.7 119.5 118.0 116.5 4.1 -1.2 -1.3 -1.6 Capacity utilization, percent MMMEEEMMMOOO CCCaaapppaaaccciiitttyyy,,, pppeeerrr--ccceeennntttaaagggeee 1993 1994 ccchhhaaannngggeee,,, AAvveerraaggee,, LLooww,, HHiigghh,, AAAuuuggg... 111999999333 11996677--9933 11998822 11998888--8899 Aug. Mayr Juner July' Aug.P tttooo AAAuuuggg... 111999999444 Total 81.9 71.8 84.8 81.4 83.9 84.2 84.3 84.7 2.5 Manufacturing 81.2 70.0 85.1 80.3 83.4 83.4 83.7 84.3 2.8 Advanced processing 80.6 71.4 83.3 78.7 81.5 81.7 82.1 82.8 3.5 Primary processing .. 82.2 66.8 89.1 84.1 87.9 87.5 87.4 87.7 1.3 Mining 87.4 80.6 87.0 87.0 89.6 90.2 89.0 88.3 -.5 Utilities 86.7 76.2 92.6 88.4 84.9 88.3 87.1 85.9 1.2 NOTE. Data seasonally adjusted or calculated from seasonally adjusted 2. Contains components in addition to those shown, monthly data. r Revised, 1. Change from preceding month. p Preliminary. risen sharply in June, was down again. At addition to the rebound in motor vehicles, the pro- 118.5 percent of its 1987 average, industrial pro- duction of information processing equipment duction was 6.7 percent higher in August than it posted another strong gain; the output of industrial was a year earlier. The substantial growth in output equipment, which had surged in July, advanced boosted the utilization of total industrial capacity to further. The recent strength in the index of indus- 84.7 percent, up from 81.4 percent a year earlier. trial equipment has been fairly widespread among When analyzed by market group, the data show its components. The production of defense and that the output of consumer goods increased space equipment rose 0.5 percent because of a 0.7 percent; the production of automotive products, rebound in tank production after the settlement of a which had eased through July, rose 6.9 percent. In strike. Apart from this gain, output in this sector contrast, the output of other consumer durables, continued its downtrend. which had jumped in July, declined 0.6 percent The output of construction supplies has been as appliance output retreated a bit from a high essentially flat since May after strong gains earlier level. The further decrease in the use of residen- in the year. The August increase of 0.6 percent in tial electricity and a small decline in the output the output of materials was nearly all in durable of food held down the overall rise in consumer materials; the latter increased 1.4 percent because nondurables. of the ongoing strong growth in semiconductors The output of business equipment rose 1.6 per- and computer parts and a pickup in the production cent after an increase of 1.3 percent in July. In of parts for motor vehicles. The index for nondura- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization 909 ble materials was about unchanged for a second Factory utilization rose 0.6 percentage point, to month, and the index for energy materials declined 84.3 percent; this operating rate is 4.0 percentage because cooler weather in August reduced the out- points higher than last August and 3.1 percentage put of electricity and because coal production points higher than its long-term average. Utilizaeased. tion in advanced-processing industries, which has When analyzed by industry group, the data show risen noticably over the past several months, was that manufacturing production rose 1.0 percent; up 0.7 percentage point in August, bringing it to a the increase follows monthly gains that are now level 2.2 percentage points above its long-term estimated to have averaged 0.5 percent per month average. The utilization rate for primary processors from April to July. The output of motor vehicles turned up 0.3 percentage point last month after and parts, which had dropped noticeably in July, having edged lower in the preceding two months; rose nearly 9 percent; the increase accounted for nonetheless, it stands 5.5 percent higher than the slightly more than half of the increase in factory 1967-93 average. output. Gains in the production of lumber, metals, The output in mining and utilities fell for a machinery, paper, printing, and petroleum contrib- second month in August because of declines in oil uted significantly to the increase in manufacturing and gas well drilling, coal mining, and the generaoutput. tion of electricity. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

910 Statement to the Congress Statement by Alan Greenspan, Chairman, Board lysts, even in the case of these multiple objecof Governors of the Federal Reserve System, tives, have advocated that the use of a single before the Commerce, Consumer, and Monetary variable as an intermediate target would elimi- Affairs Subcommittee of the Committee on Gov- nate the need to forecast and enable monetary ernment Operations, U.S. House of Representa- policymakers to automatically follow only one tives, August 10, 1994 policy guide in their effort to stabilize the economy. But implicit in the use of any such potential I thank the committee for this opportunity to target is the presumption that the past relationreflect on some broader aspects of monetary ship of the variable to the economy would conpolicymaking. As requested, I intend to examine tinue to hold, and that, itself, is a forecast. the role of forecasting and the use of economic The forecasting records of some of those prostatistics in making monetary policy. posed variables—including the financial aggre- There has never been a time when economic gates Ml, M2, and domestic nonfinancial debt— understanding was all-encompassing, activity strongly suggest that following a rule involving was measured with unerring precision, and fore- just one target would be inadequate to steer the casting was flawless. The critical question facing U.S. economy. Even more complex rules, involvthe current generation of policymakers—and that ing multiple policy guides or automatic feedback appears to have motivated this hearing—is as from economic outcomes, would be insufficiently follows: Has the pace of technology, which has responsive to changing economic structures. For substantially integrated world economies and monetary policy purposes, there appears to be no brought many new products to market, signifi- recourse but to form a conceptual framework that cantly impaired our understanding of how the identifies the various important forces influencing economic system works, how available data re- the future course of the economy and, hence, can late to the true economy, and how policy should be used in forecasting. In that process, money and be implemented? credit aggregates play a substantial role and have proved over the years to be useful in framing the relevant conceptual understanding of the way that FORECASTING AND POLICYMAKING the U.S. economy functions. In their efforts to understand the economy, Economists have always struggled to understand analysts have tried to take advantage of new the effects of innovations in behavior, instru- technology, including the manifold increase in ments, and institutions. Many analysts, despair- computing power. Econometricians have deing of reaching a usable understanding, have vised complicated mathematical models that purendeavored to substitute a "rule" for monetary port to describe relationships within the U.S. policy to eliminate a need to analyze or to economy. Although these models serve many forecast economic developments. What has be- useful purposes, no matter how elaborate they come increasingly clear is that no simple guide may be, they are generally too simple to capture would enable us to put monetary policy on the evolving complexities of our economy. Hisautomatic pilot. In principle, such a rule might be tory teaches us that the underlying structure of relied upon more readily if there were only one the economy is in a continuing state of flux; ultimate policy objective, as would be the case if current estimates of key parameters describing price stability were mandated. However, in this the basic relationships are based on past experination, the Federal Reserve Act specifies multi- ence and need to be viewed skeptically when ple objectives for monetary policy. Some ana- making policy for the future. As a consequence, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statement to the Congress 911 alternative approaches to inferring the evolving the units of output have become ever more structure of the economy are required. difficult to identify. One ton of 99.7 percent pure The appropriateness of monetary policy will aluminum is fairly well defined with respect to depend on how successful we are in understand- quantity and quality. A computer program is not. ing the complex forces that are currently driving Clearly, unless output is unambiguously defined, the economy. In the process of reaching such an the concept of price is vague. Moreover, the understanding, we do not rely on a single, point conceptualization of output is one of the factors forecast of economic activity. Instead, recogniz- that has been associated with substantial ining the uncertainty around any given forecast, we creases in the quality of goods and services. endeavor to look at a range of forecasts and to Measurement of the extent of that improvement, form judgments of their relative probabilities. quite obviously, is problematic, and, in turn, has Based on those judgments, we implement policy critical implications for aggregate price indexes. to meet national economic objectives. But we Any imprecision in those calculations of prices also recognize the inevitability of errors in fore- translates directly into uncertainty in the real casts. Policymaking requires an assessment of values of output and productivity. the consequences of various policy alternatives There are many hopeful signs that improveshould they prove to be wrong. We must ask ments in technology and advances in the practice ourselves: How difficult would it be to reverse of measurement are being reflected in improved policy mistakes and at what cost? economic statistics. For example, the development of the Employment Cost Index by the Bureau of Labor Statistics (BLS) has added MEASUREMENT AND POLICYMAKING importantly to our understanding of trends in labor costs. The BLS has also been able to raise When forming an assessment of the economy's significantly the response rate for the first estistructure, we have to recognize that the eco- mate of monthly employment in its establishment nomic outcomes of human decisionmaking— survey, thereby improving noticeably the quality spending, production, asset holdings, and of that timely indicator of economic activity. prices—are measured imperfectly, adding noise Similarly, the development of hedonic estimates and, in some instances, systematic biases to of price change for computing equipment by the reported statistics. From the viewpoint of an Bureau of Economic Analysis has paid off in a analyst, such as myself, who has spent much of better understanding of trends in real investment his career closely tracking the regular cycle of spending and inflation. Nonetheless, as I shall economic releases, the list of shortcomings in discuss later, more work needs to be done. U.S. economic data is depressingly long. There are biases in aggregate price indexes, incomplete reporting of international transactions, a signifi- THE CONDUCT OF POLICY cant amount of mere interpolation in the service portion of our national income accounts, uneven Recognizing that economic understanding is imcoverage of the financial accounts of households perfect and measurement is imprecise is not a and firms, and unreported economic activity. reason to despair about conducting monetary Breakthroughs in computing hardware, soft- policy. Imprecision in published data on the ware, and communication technologies may al- macroeconomy does not pose a crippling hardlow data collection to be more precise, but these ship. When there is systematic bias in reported and other innovations make the economy more statistics, we can take that into account as well. difficult to measure. This results, in large part, For example, most price indexes tend to overbecause output of goods and services is increas- state inflation. They generally lag behind in recingly becoming more conceptual than physical ognizing shifts toward lower-cost retailers; they overtime. The part of the real value of output that are also slow to incorporate new goods and, thus, reflects ideas rather than bulk has increased miss the typical price declines that are posted in immeasurably this century. As a consequence, the earliest phase of the product cycle. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

912 Federal Reserve Bulletin • September 1994 We are careful to recognize that information tics, we must recognize that there are budget on the state of the economy comes from a variety constraints. The staff members at the various of sources of varying degrees of accuracy. Some agencies responsible for gathering and interdata, such as motor vehicle assemblies and sales, preting economic statistics are working hard provide full coverage and are quite accurate. and are making progress within those con- Other data, such as estimates of U.S. currency straints. I can think of no better area for addiheld abroad, are subject to considerable error. tional research than in the construction of price Often before statistics from systematic samples indexes, in part, because of the widespread on sales, employment, and prices are available, extent of indexation in the federal government's less accurate, so-called anecdotal information accounts. Given the considerable body of recan be quite useful as a preliminary indicator of search indicating that systematic biases may emerging trends. One important source of such exist in measurement of price change in the information is the reports that are received from Consumer Price Index, it will be an important our Reserve Banks through their extensive con- task of staff members at the BLS to address this tacts in their communities. In addition, we fre- problem in coming years. quently tap trade groups and advisory councils Another step to enhance data interpretation is for timely indications of what is going on out in to process information from futures, forward, the field. Such detailed readings of firm behavior and options markets intensively. Derivatives are important, for example, in indicating when markets potentially provide central banks with inflation pressures are beginning to mount. new opportunities to gauge market sentiment as The historical record shows that higher price to the future movements of a variety of interest inflation tends to surface only as the business rates, equity prices, foreign exchange rates, and cycle matures. Thus, by the time that aggregate commodity prices and to measure the strength of price indexes reveal that inflation is on the up- those market convictions. Moreover, financial swing, many imbalances that are costly to rectify innovation holds the promise of opening new have developed already. Hence, information on windows on economic behavior, particularly firm behavior and signals from financial and should markets develop in price-indexed debt or commodity markets may warn about the devel- in futures on such items as home prices, gross opment or easing of bottlenecks sooner than domestic product, and the components of spendhighly aggregative readings on unemployment, ing. As to futures markets, we must await the national income, prices, or the traditional mone- ingenuity of private parties in the financial sectary aggregates. tor. As to indexed debt, the Treasury could issue On balance, imprecision in the measurement of obligations that have interest and principal paykey economic magnitudes does complicate the ments related to consumer prices. job of policymaking. Making inferences about the future is always harder when readings on the economy are contaminated by measurement er- CONCLUSION ror. However, because of our ability to consult a variety of sources, the adverse effects of such Having reflected on forecasting and economic mismeasurement are kept to a minimum. I am statistics in the conduct of monetary policy, I not aware that forecasting the U.S. economy is remain confident in just one prediction: Future currently any more difficult or, for that matter, Federal Reserve chairmen will tell your succesany easier than it was, say, several decades ago. sors on this panel that economic forecasting is still uncertain and that the consequences of monetary policy vary over time. The U.S. economy COURSE OF ACTION is complex and evolving. Keeping pace with that change will require our continuing efforts to When considering steps to improve the mea- understand how the economy works and to adapt surement and interpretation of economic statis- our data-gathering procedures accordingly. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

913 Announcements MONETARY POLICY ACTIONS DD (Truth in Savings). The commentary applies and interprets the requirements of the regulation The Federal Reserve announced on August 16, and is a substitute for individual staff interpreta- 1994, the following monetary policy actions: tions. It incorporates much of the guidance provided when the regulation was adopted and • The Board of Governors approved an increase addresses additional questions raised since that in the discount rate from 3V2 percent to 4 percent, time. The commentary was effective on August 3, effective immediately. 1994, but compliance is optional until February 6, • The Federal Open Market Committee agreed 1995. that this increase would be allowed to show through completely into interest rates in reserve markets. PROPOSED ACTIONS These measures were taken against the background of evidence of continuing strength in the The Federal Reserve Board on August 16, 1994, economic expansion and high levels of resource requested public comment on a proposal to modify utilization. The actions are intended to keep infla- the methodology for imputing clearing balance tionary pressures contained and thereby foster sus- income to more closely parallel the practices of a tainable economic growth. private sector provider. Comments were requested The Federal Reserve will continue to monitor by September 21, 1994. economic and financial developments to gauge the On August 22, 1994, the Federal Reserve appropriate stance of policy. But these actions are Board requested public comment on a proposed expected to be sufficient, at least for a time, to meet amendment to the Board's risk-based capital the objective of sustained, noninflationary growth. guidelines for state member banks and bank hold- In taking the discount rate action, the Board ing companies regarding the treatment of derivaapproved requests submitted by the boards of direc- tive contracts. Comments were requested by Octotors of the Federal Reserve Banks of Boston, ber 21, 1994. New York, Richmond, Kansas City, and Dallas. The Federal Reserve Board on August 9, 1994, The Board subsequently approved similar actions extended for thirty days, to September 9, 1994, its by the boards of directors of the Federal Reserve comment period on a proposal to provide an alter- Banks of Chicago and St. Louis, also effective native to the current test used to measure whether a August 16; by the boards of directors of the Federal section 20 subsidiary is in compliance with the Reserve Banks of Cleveland and San Francisco, "engaged principally" criterion of section 20 of effective August 17; and by the boards of directors the Glass-Steagall Act. Comments were referred of the Federal Reserve Banks of Philadelphia, to Docket Number R-0841. (59 Federal Register Atlanta, and Minneapolis, effective August 18. The 35,516 July 12, 1994.) discount rate is the interest rate that is charged depository institutions when they borrow from their District Federal Reserve Banks. CHANGE IN BOARD STAFF REGULATION DD: STAFF COMMENTARY The Board of Governors announced the retirement of Levon H. Garabedian, Assistant Director, Divi- The Federal Reserve Board issued on August 3, sion of Research and Statistics, effective Septem- 1994, an official staff commentary to Regulation ber 2, 1994. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

914 Minutes of the Federal Open Market Committee Meeting Held on July 5-6,1994 A meeting of the Federal Open Market Committee Ms. Lovett, Manager for Domestic Operations, was held in the offices of the Board of Governors System Open Market Account Mr. Fisher, Manager for Foreign Operations, of the Federal Reserve System in Washing- System Open Market Account ton, D.C., beginning on Tuesday, July 5, 1994, at 2:30 p.m. and continuing on Wednesday, July 6, Mr. Winn, Assistant to the Board, Office of Board 1994, at 9:00 a.m. Members, Board of Governors Mr. Ettin, Deputy Director, Division of Research and Statistics, Board of Governors Present: Mr. Madigan, Associate Director, Division of Mr. Greenspan, Chairman Monetary Affairs, Board of Governors Mr. McDonough, Vice Chairman Mr. Struckmeyer and Ms. Zickler, Assistant Mr. Blinder Directors, Division of Research and Statistics, Mr. Broaddus Board of Governors Mr. Forrestal Ms. Edwards1 and Mr. Oliner,1 Economists, Mr. Jordan Divisions of Monetary Affairs and Research Mr. Kelley and Statistics respectively, Board of Mr. LaWare Governors Mr. Lindsey Ms. Low, Open Market Secretariat Assistant, Mr. Parry Division of Monetary Affairs, Board of Ms. Phillips Governors Messrs. Hoenig, Keehn, and Melzer, Alternate Mr. Bennett, Ms. Browne, Messrs. Davis, Dewald, Members of the Federal Open Market Lang, Rolnick, Rosenblum, and Scheld, Senior Committee Vice Presidents, Federal Reserve Banks of New York, Boston, Kansas City, St. Louis, Messrs. Boehne, McTeer, and Stern, Presidents of Philadelphia, Minneapolis, Dallas, and the Federal Reserve Banks of Philadelphia, Chicago respectively Dallas, and Minneapolis respectively Messrs. Guentner and Sniderman, Vice Presidents, Federal Reserve Banks of New York and Mr. Conrad and Ms. Minehan, First Vice Cleveland respectively Presidents, Federal Reserve Banks of Chicago Secretary's Note: Advice had been received that and Boston respectively Alan S. Blinder had executed his oath of office as a member of the Federal Open Market Committee. Mr. Kohn, Secretary and Economist Mr. Bernard, Deputy Secretary By unanimous vote, the minutes of the meeting Mr. Coyne, Assistant Secretary of the Federal Open Market Committee held on Mr. Gillum, Assistant Secretary Mr. Mattingly, General Counsel May 17, 1994, were approved. Mr. Patrikis, Deputy General Counsel The Manager for Foreign Operations reported on Mr. Prell, Economist developments in foreign exchange markets and on Mr. Truman, Economist Messrs. Beebe, Goodfriend, Lindsey, Promisel, 1. Attended portion of the meeting relating to the Committee's Siegman, Simpson, and Ms. Tschinkel, discussion of die economic outlook and its longer-run growth Associate Economists objectives for monetary and debt aggregates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

915 System open market transactions in foreign cur- appeared to be very low levels. Increases in conrencies during the period May 17, 1994, to July 5, sumer and producer prices had remained moderate 1994. The Committee ratified these transactions. in recent months, but prices of many basic industrial materials had risen. Votes for this action: Messrs. Greenspan, McDon- Nonfarm payroll employment advanced someough, Blinder, Broaddus, Forrestal, Kelley, LaWare, what less rapidly in May after the brisk increases of Parry, and Ms. Phillips. Votes against this action: Messrs. Jordan and Lindsey. recent months; however, the average workweek of production and nonsupervisory workers reached its Messrs. Jordan and Lindsey dissented from this highest level since 1987. The reduction in job gains action, although they agreed that the foreign was widespread by sector—including business serexchange transactions conducted during the inter- vices; finance, insurance, and real estate; manufacmeeting period were authorized under the Com- turing; and construction. Employment in transpormittee's rules. Their dissents were based on their tation rebounded, reflecting the end of a Teamsters strong reservations about the efficacy of sterilized strike. The civilian unemployment rate, measured intervention in most circumstances, including those on the new basis introduced in January, declined prevailing during the intermeeting period. In their sharply in May, to 6.0 percent; the decline might view, to the extent that repeated intervention failed have been overstated as a result of seasonal adjustto achieve stated or perceived objectives, questions ment problems, but even after correcting for these would tend to arise about the credibility of mone- factors, the unemployment rate had fallen sharply tary policy more generally. since late 1993. The Manager for Domestic Operations reported The rise in industrial production slackened in on developments in domestic financial markets and April and May after strong first-quarter gains. on System open market transactions in govern- Much of the slowing was the result of capacity ment securities and federal agency obligations constraints that prevented normal seasonal during the period May 17, 1994, to July 5, 1994. increases in the production of motor vehicles. By unanimous vote, the Committee ratified these Growth of output of manufactured goods other than transactions. motor vehicles and parts was at a slightly less The Committee then turned to a discussion of the robust pace than in the first quarter but close to the economic and financial outlook and the implemen- rapid rate seen in 1993; business equipment and tation of monetary policy over the intermeeting construction supplies continued to be areas of period ahead. A summary of the economic and strength. The overall rate of utilization in manufinancial information available at the time of the facturing stayed at a high level in May, with most meeting and of the Committee's discussion is pro- major industry groups operating at or near capacity. vided below, followed by the domestic policy In addition to motor vehicles, capacity constraints directive that was approved by the Committee and were evident in the petroleum products and nonissued to the Federal Reserve Bank of New York. electrical machinery industry groups and in some The information reviewed at this meeting sug- individual product lines in other industries. gested that economic activity recorded another sub- Real personal consumption expenditures fell on stantial gain in the second quarter. Although con- balance in April and May after a strong advance sumer spending and homebuying apparently had earlier in the year, but the level of expenditures for increased at a slower pace, business spending on the two months combined was a little above the durable equipment remained quite strong and first-quarter average. The recent slowdown in coninvestment in nonresidential structures rebounded sumer spending in large part reflected reduced outfrom a weather-depressed level in the first quarter. lays for motor vehicles. Spending for durable goods In addition, the rate of nonfarm inventory invest- other than motor vehicles increased over April and ment evidently had picked up in the second quarter. May at about the first-quarter pace. Outlays for Levels of resource utilization had risen further: nondurable goods were down on balance in April Factory operating rates were at relatively high lev- and May, while spending for services in May more els, and the slack in labor markets had narrowed than reversed a small April decline. Housing activconsiderably over the first half of the year to what ity had rebounded from weather disruptions early Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

916 Federal Reserve Bulletin • September 1994 in the year to a pace close to the elevated fourth- the same in April as in March; increases in conquarter rate. Single-family starts edged down in sumer goods, machinery, and oil were offset by May after declining substantially in April but were declines in other categories. The economies of all still at a relatively high level. While the cash-flow the major foreign industrial countries expanded in affordability of home ownership had fallen since the first quarter of 1994. Growth resumed in Japan, late last year, it remained at favorable levels in western Germany, and France, while economic comparison with recent years. Multifamily starts in expansion continued at a healthy pace in the May were at their highest level in more than three United Kingdom and Canada. years; most of the pickup occurred in the South, Broad indexes of consumer and producer prices where vacancy rates had declined recently. had risen moderately through the first five months Shipments of nondefense capital goods other of the year. In May, the rise in the overall index of than aircraft and parts posted a further solid gain in consumer prices continued to be held down by May, although the upward trend appeared to have declines in energy prices. Excluding the food and moderated in recent months. Sales of heavy trucks energy components, the increase in consumer also were strong in April and May. Shipments of prices in the twelve months ending in May was aircraft declined sharply in April (latest available smaller than that for the previous twelve months. data), retracing much of a March surge. Available Producer prices of finished goods continued to data on orders for nondefense capital goods pointed edge lower in May, reflecting further declines in to a continued strong uptrend in business spending prices of finished foods and energy goods. Proon durable equipment. Nonresidential construction ducer prices for items other than food and energy picked up in April and May from a weather- increased at a faster rate in May, but the change depressed slump in the first quarter. over the twelve-month period ending in May was Business inventories increased in April, more very small. At an earlier stage of processing, prothan reversing a March runoff; the overall pace of ducer prices of crude materials other than food and accumulation remained moderate, and buildups energy registered another small decline in May, were largely concentrated in segments of the econ- although the index was substantially higher in May omy where market demand was robust. In manu- than a year ago. Furthermore, prices of many basic facturing, inventories increased in April and May industrial materials remained under upward presafter a small drawdown in March. The rise in sure. Average hourly earnings of production or stocks was in line with shipments, and the ratio of nonsupervisory workers increased by a larger stocks to shipments stayed at a very low level. In amount in May than in April, but the rise over the April (latest available data), wholesale inventories twelve months ended in May was about the same retraced most of the sizable March drawdown. The as in the previous twelve months. ratio of inventories to sales in this sector remained At its meeting on May 17, 1994, the Committee below the range that has prevailed in recent years. adopted a directive that called for increasing some- At the retail level, inventory stocks again edged what the degree of pressure on reserve positions, higher; the inventory-to-sales ratio for this sector taking account of a possible increase in the diswas well within the range observed over the past count rate. The directive did not include a presumpyear. tion about the likely direction of any further adjust- The nominal deficit on U.S. trade in goods and ment to policy during the intermeeting period. The services widened in April but was little changed directive stated that in the context of the Commitfrom the average for the first quarter; over the first tee's long-run objectives for price stability and four months of 1994, the deficit was significantly sustainable economic growth, and giving careful larger than that recorded in the fourth quarter of consideration to economic, financial, and monetary last year. The value of exports of goods and ser- developments, slightly greater or slightly lesser vices was down somewhat in April, retracing part reserve restraint might be acceptable during the of a sharp runup in March. The uptrend in exports intermeeting period. The reserve conditions associsince last fall has been led by shipments of machin- ated with this directive were expected to be consisery, especially to expanding markets in Asia. The tent with modest growth of M2 and M3 over comvalue of imports of goods and services was about ing months. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 917 Immediately after the conclusion of the May previous meeting, with both M2 and M3 declining meeting, the Board of Governors approved a on average over May and June. The declines V2 percentage point increase in the discount rate, to appeared to be related in part to the continuing 31/2 percent, and the Committee permitted the full appeal of capital market instruments. More generamount of the increase to pass through to interest ally, however, the rise in short- and long-term rates in reserve markets. Thereafter, open market interest rates since the beginning of 1994, coupled operations were conducted with a view to maintain- with the reluctance of banks and other depository ing the less acommodative degree of reserve pres- institutions to adjust their offering rates promptly, sure sought by the Committee. After the policy had produced a widening of the opportunity costs change, the federal funds rate rose V2 percentage of holding deposits and had led households to point, to 4lA percent, and remained at about that move deposit monies into direct and indirect holdlevel over the intermeeting period. Adjustment plus ings of market instruments. For the year through seasonal borrowing trended higher over the inter- June, both M2 and M3 were at the bottom of the meeting period, reflecting the usual seasonal pickup Committee's ranges for 1994, and total domestic in lending activity, and averaged close to antici- nonfinancial debt had expanded at a moderate rate pated levels. in the lower half of its monitoring range. Market interest rates on instruments with more The staff forecast prepared for this meeting sugthan three-month maturities moved lower immedi- gested that the economy was operating at a level ately following the announcement of the Commit- close to capacity and that the expansion would tee's action, although some very short-term interest slow over the next several quarters to a rate generrates moved up. The commercial bank prime rate ally in line with the growth of the economy's also was raised by V2 percentage point, to 714 per- potential. To the extent that aggregate demand cent. Market participants apparently interpreted the tended to expand at a pace that could foster policy actions and the accompanying announce- higher inflation, it would not be accommodated by ment as signaling that the System would not take monetary policy, and pressures would be generated further tightening actions as soon as they had antic- in financial markets that would restrain domestic ipated earlier. Incoming data suggesting sluggish spending. Consumer spending, which had been spending and subdued inflation tended to confirm increasing faster than household income for some these market assessments. Late in the intermeeting time, was expected to moderate as smaller gains period, however, bond yields retraced their earlier in employment and income, coupled with higher declines, partly in association with a weakening interest rates and reductions in the value of housedollar in foreign exchange markets and rising com- hold financial assets, exerted a restraining influmodity prices. Most major indexes of equity prices ence on consumption patterns. Business fixed rose early in the intermeeting period, but they then investment was projected to continue at a brisk moved lower in sympathy with the declines in pace, although growth would be damped somebond prices and the dollar and ended the period what by the expected deceleration in economic with small losses. activity, a growing shortfall of corporate cash flow The trade-weighted value of the dollar in terms relative to capital outlays, and higher financing of the other G-10 currencies fell significantly fur- costs. The effects of higher mortgage interest rates ther on balance over the intermeeting period. The were expected to cause some slowing in the relarenewed decline, which began toward the middle tively robust pace of single-family homebuilding. of June, occurred in response to indications of an The restraint on output growth exerted by weak improved economic outlook abroad, associated export demand was expected to diminish because increases in foreign bond yields, and heightened of the lower value of the dollar and the someconcerns about possible increases in U.S. inflation. what faster recovery now projected in economic Developments suggesting less favorable prospects activity abroad. The staff analysis suggested for progress in U.S.-Japanese trade negotiations that, with the economy already operating close to also tended to strengthen the yen against the dollar. its long-run potential, no further reduction in the core rate of inflation was likely over the forecast The broad monetary aggregates were weaker horizon. than the Committee anticipated at the time of its Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

918 Federal Reserve Bulletin • September 1994 In the Committee's discussion of current and 6V4 percent in the fourth quarters of both 1994 and prospective economic developments, members 1995, about the same as the average unemployment commented that the expansion continued to display rate in recent months. For the rate of inflation, as considerable momentum, with business activity measured by the CPI, the projections had a central apparently still increasing at a pace above the econ- tendency of 23A to 3 percent for 1994 and 23A to omy's long-run growth potential. At the same time, 31/2 percent for 1995; both ranges represented a indications of some slowing in aggregate demand slight increase from the average rate over the past had tended to increase over the past few months. year. Favorable developments in the food and The extent of that slowing remained subject to energy sectors, which had held down overall inflaconsiderable uncertainty, especially in light of tion measures over the past several quarters, were somewhat disparate data on employment and not expected to continue and the drop in the dollar spending. Nonetheless, it was generally agreed that, would be exerting upward pressures on prices in in the context of appropriate fiscal and monetary coming quarters. policies, some moderation in economic growth to a Pursuant to a request from the Chairman of the pace closer to that of the economy's long-run Senate Banking Committee, the members considpotential was a reasonable expectation. Such a ered extending their specific forecasts by an addislowing seemed necessary to forestall a buildup of tional year. Many expressed reservations about the inflation pressures in the view of many members. A reliability and thus the usefulness of numerical number of members emphasized that remaining forecasts extending relatively far into the future. margins of unemployed labor and other production Moreover, they were concerned about misunderresources, while difficult to assess, now appeared standings of specific long-range forecasts in relato be quite limited. Although views differed to tion to the Committee's goals and the ongoing some degree, the members generally concluded formulation of monetary policy. The members conthat the various factors affecting the course of cluded that, on balance, the Committee's policy inflation were likely to result, on balance, in little intentions and expectations would be conveyed change, or perhaps a small rise, in inflation over more effectively by the Chairman in his upcoming the 1994-95 forecast horizon. Some members congressional testimony through a discussion of regarded the risks of a significant divergence from the important factors bearing on trends in economic their forecasts of economic growth and inflation as growth, prices, and unemployment; the uncertainfairly evenly balanced in either direction, but most ties involved in projecting such variables; and the believed that those risks were tilted to the upside. role of monetary policy in achieving desired eco- In keeping with the usual practice at meetings nomic goals. Committee members noted that the when the Committee considers its long-run objec- Administration's medium-term outlook contained tives for growth of the money and debt aggregates, reasonable estimates of the trend growth in output. the members of the Committee and the Federal In their review of developments in different parts Reserve Bank presidents not currently serving as of the country and sectors of the economy, memmembers provided specific individual projections bers referred to indications of continuing growth of growth in real and nominal GDP, the rate of in regional business activity ranging from relaunemployment, and the rate of inflation for the tively modest to quite robust across much of the years 1994 and 1995. The central tendency of the nation; at the same time, some areas such as Califorecasts of the rate of expansion in real GDP for fornia continued to experience generally stagnant 1994 as a whole was 3 to 3 LA percent, a little below economic conditions. While solid growth seemed the rate of growth estimated for the first half of the to characterize the overall economy, the members year; for 1995, the projections had a central ten- saw increasing signs of some slowing in many dency of 2VZ to 23/ percent. With regard to the areas. Business and consumer sentiment generally 4 expansion of nominal GDP, the forecasts centered remained quite positive, although a number of on growth rates of 5V2 to 6 percent for 1994 and members commented on a new note of caution 5 to 5Vi percent for 1995. The projections of more among some of their business contacts and some moderate growth in economic activity were associ- shaving of industry forecasts for the balance of the ated with rates of unemployment in a range of 6 to year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 919 Turning to the key consumer sector, members on net, probably would make a small contribution commented on various indications of some moder- to economic growth over the next several quarters. ation in the growth of expenditures. Higher interest Some noted that business contacts were reporting costs were cited by some business contacts as con- strong foreign demand for various U.S. products. straining purchases of consumer durables, but As members had noted at previous meetings, the members also referred to the negative impact of North American Free Trade Agreement appeared persisting, highly visible cutbacks in workforces by to have stimulated increased trade between Mexico some major business firms and of growing con- and the United States, although it was still too early sumer debt. Some members also noted that supply to gauge the extent of this development. More constraints, such as limitations on the availability generally, the decline in the foreign exchange value of some popular automobile models, had tended to of the dollar and a somewhat greater strengthening curb the expansion in sales. Looking ahead, more in the economies of major trading partners than moderate growth in consumer spending seemed was expected earlier had enhanced the prospects likely; apart from the direct effects of higher inter- for appreciable growth in U.S. exports, and in the est rates on such spending, the prospectively less view of at least some members that growth might ebullient housing sector was likely to retard prove to be considerably greater than was currently demands for household furnishings. projected. Business fixed investment was thought likely to Members remarked that uncertainties about continue to provide appreciable stimulus to the remaining margins of slack in the economy, accenexpansion, though to a diminishing extent in the tuated by the change in the household employment context of slower overall growth in economic activ- survey, and about potential levels of economic ity and higher financing costs. While spending for activity over the quarters ahead made it particularly equipment was likely to moderate considerably difficult to assess the outlook for inflation. Howfrom the extraordinarily rapid increases recorded ever, based on what seemed to be reasonable estiover an extended period, ongoing business efforts mates of resource utilization levels and their own to improve operating efficiencies would probably projections that the rate of economic growth would sustain substantial further growth in equipment out- slow to a pace nearer the economy's growth potenlays. Nonresidential construction expenditures were tial, the members generally concluded that the rate expected to post moderate increases after stagnat- of inflation, as measured by the CPI, might remain ing earlier; in this connection, a number of mem- about unchanged or tilt slightly higher over the bers observed that commercial vacancy rates were forecast horizon. This conclusion took into account declining in various metropolitan areas and the effects of the decline in the foreign exchange improved demand for space was likely to generate value of the dollar, the increase in oil prices on increased construction activity. Although higher world markets, and the at-least-temporary rise in interest costs could have some restraining effect, food prices. Some members observed that the overfinancing for such projects was more readily avail- all behavior of prices had been somewhat more able than earlier. The outlook for inventory invest- favorable than they would have predicted, given ment remained uncertain. Some buildup in inven- the strength of the expansion and the level of tories was occurring, but business firms were resource utilization. One explanation could be that continuing to resist sizable increases and inventory- increases in overall capacity and productivity stemto-sales ratios remained at unusually low levels. ming from business restructuring activities and Developments that might be expected to foster a investments in new equipment and facilities had faster buildup, such as some lengthening of order been greater than expected. Comments from lead times and rising pressures on capacity in numerous business contacts around the country some industries, had not led to the strengthening in continued to indicate that despite the rising costs of inventory investment that had characterized many materials used in the production process, comparable stages of previous business cycle highly competitive markets rendered it very diffiexpansions. cult or impossible to pass these higher costs through to prices of finished goods. At the same Members observed that the outlook for exports time, labor compensation increases had remained appeared to have improved and that foreign trade, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

920 Federal Reserve Bulletin • September 1994 subdued despite indications of shortages of some 1995, the Committee decided to carry forward the types of labor in many parts of the country. Excep- 1994 ranges, subject to a review early next year. tions involving sizable wage increases continued to The Committee noted that the current ranges, be cited for some industries, such as construction which had been reduced greatly over the years, and trucking, that were operating at full capacity. could be viewed as long-run benchmarks for mone- Nonetheless, in the absence of an uptrend thus far tary growth consistent with maximum sustainable in consumer price inflation and given continuing economic expansion in a noninflationary environuncertainties about job prospects despite large job ment, if there were a return to more normal velocgains, wage pressures had remained restrained. ity behavior. The Committee recognized that con- In keeping with the requirements of the Full siderable uncertainty about the behavior of velocity Employment and Balanced Growth Act of 1978 was likely to persist and that a broad range of (the Humphrey-Hawkins Act), the Committee at financial and economic indicators, in addition to this meeting reviewed the ranges for growth in the the monetary aggregates, would need to be monimonetary and debt aggregates that it had estab- tored in determining the appropriate course for lished in February for 1994 and it decided on monetary policy. tentative ranges for growth in those aggregates in In their review of the Committee's monitoring 1995. The current ranges set in February for the range for the growth of total domestic nonfinancial period from the fourth quarter of 1993 to the fourth debt, the members agreed that the current range for quarter of 1994 included expansion of 1 to 5 per- 1994 should be retained. This view took into cent for M2 and 0 to 4 percent for M3. A monitor- account staff projections indicating that the debt ing range for growth of total domestic nonfinancial aggregate was likely to grow within its present debt had been set at 4 to 8 percent for 1994. range this year, albeit the lower half of that range. In the Committee's discussion, which as in the Considerable sentiment was expressed, however, past tended to focus on M2, all the members indi- for reducing the debt monitoring range for 1995. cated that they were in favor of retaining the cur- Debt growth was expected to remain relatively rent ranges for M2 and M3 for 1994 and extending subdued in association with projections of a slower those ranges on a provisional basis to 1995. In their rate of expansion in nominal GDP. Lowering the evaluation of appropriate growth ranges for 1994, range would underscore the Committee's view that the members anticipated that the projected modera- rapid debt growth, should it materialize and be tion in the expansion of nominal GDP and the sustained, could have adverse implications for likelihood that funds would continue to be diverted inflation and financial stability. Members emphafrom deposits to higher yielding market instru- sized, however, that action to adjust the debt range ments would be reflected in relatively sluggish did not imply increased Committee emphasis on growth in M2 and M3 and further increases in their the debt aggregate, and most believed that the risks velocity—the ratio of nominal GDP to these mone- of any misinterpretation could be minimized by tary measures. In the circumstances, expected including an appropriate explanation in the report growth in M2 and M3 at rates around the lower end to the Congress. of their ranges would be consistent with the Com- At the conclusion of this discussion, the Commitmittee's overall objective of fostering financial con- tee voted to reaffirm the ranges for growth of M2 ditions that would promote sustainable economic and M3 and the monitoring range for growth of growth and contain pressures on prices. Indeed, total domestic nonfinancial debt that it had estabthat objective might even imply a shortfall from lished in February for 1994. The following statecurrent ranges, but a shortfall could be tolerated ment was approved for inclusion in the Commitand explained if it reflected a greater-than-expected tee's domestic policy directive: rise in velocities associated with an acceptable economic performance. While growth of the broad The Federal Open Market Committee seeks monetary monetary aggregates might pick up somewhat next and financial conditions that will foster price stability year, it probably would remain damped relative to and promote sustainable growth in output. In furtherance of these objectives, the Committee reaffirmed at this income. In light of this prospect, and of the uncermeeting the ranges it had established in February for tainties about appropriate monetary growth in growth of M2 and M3 of 1 to 5 percent and 0 to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 921 4 percent respectively, measured from the fourth quarter tightening was needed to avert the development of of 1993 to the fourth quarter of 1994. The Committee greater inflation. anticipated that developments contributing to unusual In the discussion of the near-term course of velocity increases could persist during the year and that policy, the members took account of the substantial money growth within these ranges would be consistent weakness of the dollar in foreign exchange markets with its broad policy objectives. The monitoring range for growth of total domestic nonfinancial debt was main- over the course of recent weeks. By itself, the drop tained at 4 to 8 percent for the year. in the dollar could put some pressure on resources and prices. However, the members agreed that Votes for this action: Messrs. Greenspan, McDonthese effects needed to be considered in the context ough, Blinder, Broaddus, Forrestal, Jordan, Kelley, of overall prospects for the economy and financial LaWare, Lindsey, Parry, and Ms. Phillips. Votes against this action: None. markets, and policy should not be focused narrowly on the dollar alone. In any case, given the For the year 1995, the Committee approved negative sentiment in the foreign exchange marprovisional ranges for M2 and M3 that were kets, the effects on the dollar that would flow from unchanged from the 1994 ranges. The Committee a small change in policy were uncertain. Ultireduced the monitoring range for growth in total mately, the most effective support that monetary domestic nonfinancial debt by 1 percentage point policy could provide for the dollar was to foster the from 1994 to a range of 3 to 7 percent. Accord- objectives of sustainable economic growth and ingly, the Committee voted to incorporate the fol- progress toward price stability. lowing statement regarding the 1995 ranges in its With regard to possible changes in policy during domestic policy directive: the intermeeting period, a majority favored a change in the intermeeting instruction in the direc- For 1995, the Committee agreed on tentative ranges tive from symmetry to asymmetry toward restraint. for monetary growth, measured from the fourth quarter of 1994 to the fourth quarter of 1995, of 1 to 5 percent Some of the members indicated that near-term for M2 and 0 to 4 percent for M3. The Committee developments were not likely to call for an adjustprovisionally set the associated monitoring range for ment to policy. Nonetheless, the risk of inflationary growth of domestic nonfinancial debt at 3 to 7 percent momentum in the expansion remained high, given for 1995. The behavior of the monetary aggregates will an economy that appeared to be operating at or continue to be evaluated in the light of progress toward price level stability, movements in their velocities, and very close to full capacity, and they believed that developments in the economy and financial markets. the probable direction of the next policy move was likely to be in the direction of restraint. Some Votes for this action: Messrs. Greenspan, McDon- emphasized that such a move should be made ough, Blinder, Broaddus, Forrestal, Jordan, Kelley, promptly in response to information suggesting a LaWare, Lindsey, Parry, and Ms. Phillips. Votes greater potential for inflation. In the view of many against this action: None. though not all members, the costs of policy errors In the Committee's discussion of policy for the were asymmetrical at this point. The costs of intermeeting period ahead, most members endorsed reversing a policy stance that turned out to be a proposal to maintain an unchanged degree of slightly too tight would be limited to somewhat pressure in reserve markets. The economy seemed slower economic growth for a time; the expansion to be slowing, although to an uncertain extent. appeared to be so well established at this juncture Earlier policy tightening actions were being re- that the risks of a greater economic adjustment flected in the sluggish behavior of money and were remote. On the other hand, a policy that reserves, although the extent of their effects on turned out to be unduly stimulative would foster spending were still in question. Inflation was a greater inflation and inflationary expectations that concern, but direct evidence of additional pressures probably could be reversed only at the cost of on costs and prices was quite fragmentary. In these considerable disruption in financial markets and the economy. It also was noted that an asymmetric circumstances, all but one of the members condirective would underscore the Committee's detercluded that it would be prudent for the Committee mination to resist greater inflation; the asymmetry to assess further developments before taking any could be viewed as a logical extension of the action. One member believed that prompt further Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

922 Federal Reserve Bulletin • September 1994 strategy adopted in February to move to a policy very large increases in February and March. Housing stance consistent with averting inflationary pres- starts have rebounded from winter disruptions to a pace close to the elevated fourth-quarter level. Orders for sures in a firmly established expansion. nondefense capital goods point to a continued strong Some members indicated a preference for retainuptrend in spending on business equipment, while noning a symmetric directive. These members did not residential construction has recovered from a weatherrule out the possible need for further policy tighten- depressed level in the first quarter. The nominal deficit ing, but they believed that the risks surrounding on U.S. trade in goods and services was larger in April current forecasts were about evenly weighted in than in March but about unchanged from the average for the first quarter. Increases in broad indexes of consumer both directions. One member expressed strong resand producer prices have remained moderate in recent ervations about the use of an asymmetric directive months, though prices of many basic industrial materials on the grounds that such language made intermeet- have risen. ing changes more likely and in the view of that On May 17, 1994, the Board of Governors approved member markets reacted more favorably when an increase in the discount rate from 3 to 3V2 percent. actions were taken and announced at regular meet- Most market interest rates were up slightly on balance since the May meeting; declines in bond yields early in ings. However, all those favoring a symmetric the intermeeting period were offset later by market reacdirective with an unchanged policy stance could tions to a weakening dollar in foreign exchange markets accept an asymmetric intermeeting instruction. and rising commodity prices. The trade-weighted value At the conclusion of the Committee's discussion, of the dollar in terms of the other G-10 currencies was all but one of the members indicated that they down significantly further on balance over the intermeeting period, reflecting a sizable drop since early June. could support a directive that called for maintain- M2 and M3 declined on average over May and June; ing the existing degree of pressure on reserve posifor the year through June, both M2 and M3 are at the tions and that included a bias toward the possible bottom of their ranges for 1994. Total domestic nonfifirming of reserve conditions during the intermeet- nancial debt has continued to expand at a moderate rate ing period. Accordingly, in the context of the Com- in recent months. The Federal Open Market Committee seeks monetary mittee's long-run objectives for price stability and and financial conditions that will foster price stability sustainable economic growth, and giving careful and promote sustainable growth in output. In furtherance consideration to economic, financial, and monetary of these objectives, the Committee reaffirmed at this developments, the Committee decided that slightly meeting the ranges it had established in February for greater reserve restraint would be acceptable or growth of M2 and M3 of 1 to 5 percent and 0 to slightly lesser reserve restraint might be acceptable 4 percent respectively, measured from the fourth quarter of 1993 to the fourth quarter of 1994. The Committee during the intermeeting period. The reserve condianticipated that developments contributing to unusual tions contemplated at this meeting were expected velocity increases could persist during the year and that to be consistent with modest growth in the broader money growth within these ranges would be consistent monetary aggregates over coming months. with its broad policy objectives. The monitoring range At the conclusion of the meeting, the Federal for growth of total domestic nonfinancial debt was maintained at 4 to 8 percent for the year. For 1995, the Reserve Bank of New York was authorized and Committee agreed on tentative ranges for monetary directed, until instructed otherwise by the Commitgrowth, measured from the fourth quarter of 1994 to the tee, to execute transactions in the System Account fourth quarter of 1995, of 1 to 5 percent for M2 and 0 to in accordance with the following domestic policy 4 percent for M3. The Committee provisionally set the directive: associated monitoring range for growth of domestic nonfinancial debt at 3 to 7 percent for 1995. The behavior of The information reviewed at this meeting suggests the monetary aggregates will continue to be evaluated in that economic activity recorded another substantial gain the light of progress toward price level stability, movein the second quarter, causing levels of resource utiliza- ments in their velocities, and developments in the econtion to rise further. Increases in nonfarm payroll employ- omy and financial markets. ment have been relatively large on average in recent In the implementation of policy for the immediate months; the civilian unemployment rate is reported to future, the Committee seeks to maintain the existing have declined to 6.0 percent in May. The rise in indus- degree of pressure on reserve positions. In the context of trial production slackened in April and May, primarily the Committee's long-run objectives for price stability because capacity constraints prevented normal seasonal and sustainable economic growth, and giving careful increases in the production of motor vehicles. Growth in consideration to economic, financial, and monetary consumer spending has slowed in recent months after developments, slightly greater reserve restraint would or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 923 slightly lesser reserve restraint might be acceptable in policy was taken. Views differed on this issue, but the intermeeting period. The contemplated reserve con- most of the members supported a proposal to proditions are expected to be consistent with modest growth vide a brief and informal indication that the meetin M2 and M3 over coming months. ing had ended and that there would be no further Votes for this action: Messrs. Greenspan, McDon- announcements. Since early February, a statement ough, Blinder, Forrestal, Jordan, Kelley, LaWare, had been released after each meeting, all of which Lindsey, Parry, and Ms. Phillips. Votes against this had involved policy changes; failure to take some action: Mr. Broaddus. step after this meeting to make clear that there was no change to announce would lead for a time to a Mr. Broaddus dissented because he believed that heightened degree of uncertainty. With regard to additional near-term tightening was necessary to future announcements, it was understood that this contain inflation. The tightening actions impleissue along with other public disclosure questions mented thus far this year were moderate by historiwould be considered at a later meeting. The Comcal standards, and he doubted that they would mittee's decision regarding announcements would prove sufficient to prevent higher inflation given then be made public. the strength of the economic expansion, the mini- It was agreed that the next meeting of the Commal remaining margins of unemployed labor and mittee would be held on Tuesday, August 16, 1994. other producer resources, and inflationary expecta- The meeting adjourned at 12:35 p.m. tions that he feared might already be rising. Before the conclusion of this meeting, the members discussed the desirability of announcing the Donald L. Kohn outcome of a meeting when no action to change Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

925 Legal Developments FINAL RULE—AMENDMENT TO REGULATION A ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT The Board of Governors is amending 12 C.F.R. Part 201, its Regulation A (Extensions of Credit by Federal Orders Issued Under Section 3 of the Bank Reserve Banks), to reflect its approval of an increase Holding Company Act in the basic discount rate at each Federal Reserve Bank. The Board acted on requests submitted by the Bank of Montreal Boards of Directors of the twelve Federal Reserve Toronto, Canada Banks. Effective August 18, 1994, 12 C.F.R. Part 201 is Bankmont Financial Corp. amended as follows and the rate changes for adjust- Chicago, Illinois ment credit were effective on the dates specified in section 201.51. Harris Bankmont, Inc. Chicago, Illinois Part 201—Extensions of Credit by Federal Order Approving Acquisition of Banks and Reserve Banks (Regulation A) Formation of a Bank Holding Company 1. The authority citation for 12 C.F.R. Part 201 con- Bank of Montreal, Toronto, Canada ("Applicant"), tinues to read as follows: and its subsidiary, Bankmont Financial Corp., Chicago, Illinois ("Bankmont Financial"), each a bank Authority: 12 U.S.C. 343 et seq., 347a, 347b, 347c, holding company within the meaning of the Bank 347d, 348 et seq., 357, 374, 374a and 461. Holding Company Act ("BHC Act"), have applied under section 3 of the BHC Act (12 U.S.C. § 1842) to 2. Section 201.51 is revised to read as follows: acquire indirectly all the voting shares of the 13 subsidiary banks ("Suburban Banks") of Suburban Bancorp, Inc., Palatine, Illinois ("Suburban").1 In Section 201.51—Adjustment credit for connection with this proposal, Harris Bankmont, Inc., depository institutions. Chicago, Illinois ("Bankmont"), has applied under section 3 of the BHC Act to become a bank holding The rates for adjustment credit provided to depository company by acquiring all the voting shares of the institutions under section 201.3(a) are: Suburban Banks.2 Notice of the applications, affording interested persons an opportunity to submit comments, has been published (59 Federal Register 27,020 (1994)). The time for filing comments has expired, and the Board Federal Reserve Bank Rate Effective Date has considered the applications and all comments received in light of the factors set forth in section 3 of Boston 4.0 August 16, 1994 New York 4.0 August 16, 1994 the BHC Act. Philadelphia 4.0 August 18, 1994 Cleveland 4.0 August 17, 1994 Richmond 4.0 August 16, 1994 Atlanta 4.0 August 18, 1994 Chicago 4.0 August 16, 1994 1. The Suburban Banks are listed in the Appendix. St. Louis 4.0 August 16, 1994 2. Under this proposal, Suburban would merge with and into Minneapolis 4.0 August 18, 1994 Bankmont, a direct, wholly owned subsidiary of Applicant formed for Kansas City 4.0 August 16, 1994 Dallas 4.0 August 16, 1994 this transaction. Applicant would then contribute the shares of Bank- San Francisco 4.0 August 17, 1994 mont to Bankmont Financial, another direct, wholly owned subsidiary. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

926 Federal Reserve Bulletin • September 1994 Applicant, with consolidated assets equivalent to by the HHI,7 and all other facts of record, the Board approximately $90.3 billion, is the third largest bank- has concluded that consummation of this proposal ing organization in Canada.3 In the United States, would not have a significantly adverse effect on com- Applicant indirectly controls 13 banks in Illinois petition or the concentration of banking resources in through Bankmont Financial and a third bank holding any relevant banking market. company that is a direct, wholly owned subsidiary of Bankmont Financial, Harris Bankcorp, Incorpo- Convenience and Needs Considerations rated, Chicago, Illinois.4 Applicant is the third largest commercial banking organization in Illinois, In acting on an application to acquire a depository controlling deposits of $7.3 billion, representing institution under the BHC Act, the Board must con- 5.2 percent of all deposits in commercial banking sider the convenience and needs of the communities to organizations in the state. Suburban is the 16th be served, and take into account the records of the largest commercial banking organization in Illinois, relevant depository institutions under the Community controlling deposits of $1.2 billion, representing less Reinvestment Act (12 U.S.C § 2901 et seq. ("CRA"). than 1 percent of all deposits in commercial banking The CRA requires the federal financial supervisory organizations in the state. Upon consummation of agencies to encourage financial institutions to help this proposal, Applicant would remain the third meet the credit needs of the local communities in largest commercial banking organization in Illinois, which they operate, consistent with the safe and sound controlling deposits of $8.5 billion, representing ap- operation of such institutions. To accomplish this end, proximately 6.1 percent of all deposits in commercial the CRA requires the appropriate federal supervisory banking organizations in the state. authority to "assess the institution's record of meeting the credit needs of its entire community, including Competitive Considerations low- and moderate-income neighborhoods, consistent with the safe and sound operation of such institution," and to take that record into account in its evaluation of Applicant and Suburban compete directly in the Chicago, Aurora, and Elgin, Illinois, banking markets.5 applications.8 Upon consummation of this proposal, all these mar- The Board has received comments from two indikets would remain unconcentrated or moderately con- viduals ("Protestants") alleging that Applicant's lead centrated as measured by the Herfindahl-Hirschman bank subsidiary in the United States, Harris Trust and Index ("HHI").6 After considering the number of Savings Bank, Chicago, Illinois ("Bank"), discrimicompetitors that would remain in these markets, the nates against loan applicants and loan customers on relatively small increase in concentration as measured the basis of race and gender.9 Each Protestant claims 7. The HHI, based on market deposit data as of June 30, 1992, would increase in these banking markets as follows: Chicago (by 3. Asset, state deposit, and ranking data are as of March 31, 1994. 8 points to 584); Aurora (by 30 points to 1183); and Elgin (by 25 points National ranking data are as of December 31, 1992. to 1514). 4. In addition, Applicant controls one bank in Arizona. 8. 12 U.S.C. § 2903. 5. The Chicago banking market is approximated by Cook, Du Page, 9. One commenter ("First Protestant") alleges that Bank imposed and Lake Counties, all in Illinois. The Aurora banking market is burdensome delays, conditions, and procedures in the loan applicaapproximated by the southern three tiers of townships in Kane tion process that discouraged his attempts to refinance loans on two County; Piano, Bristol, Oswego, Fox, and Kendall townships in properties, and that Bank relied on inaccurate appraisal reports to Kendall County; and Sandwich township in De Kalb County, all in deny or discourage loan applications. Bank has stated that it accepted Illinois. The Elgin banking market is approximated by Marengo, applications for and approved both of First Protestant's loans even Seneca, Nunda, Riley, Coral, Grafton, and Algonquin townships in though each was below the minimum amount normally funded by McHenry County; and the northern two tiers of townships in Kane Bank at the time. Bank noted that it processed the loan at a time when County, all in Illinois. it was processing a large number of requests to refinance loans and 6. Under the revised Department of Justice Merger Guidelines, 49 stated that it imposes the same conditions and procedures on all Federal Register 26,823 (June 29, 1984), a market in which the mortgage customers with similar property. post-merger HHI is less than 1000 is considered unconcentrated, and The other commenter ("Second Protestant") alleges that Bank took a market in which the post-merger HHI is between 1000 and 1800 is unreasonable steps in foreclosing on a residential mortgage loan. Bank considered moderately concentrated. The Justice Department has denied this allegation, and stated that it based its decision to proceed informed the Board that a bank merger or acquisition generally will with a sheriff s sale based on Second Protestant's payment history and not be challenged (in the absence of other factors indicating anti- credit status, as well as its estimate of whether Second Protestant competitive effects) unless the post-merger HHI is at least 1800 and could obtain financing to repay her loan. Bank also states that the the merger or acquisition increases the HHI by at least 200 points. The bankruptcy court in which Second Protestant filed for bankruptcy Justice Department has stated that the higher than normal threshold confirmed the fairness and reasonableness of the sale of the property for an increase in the HHI when screening bank mergers and acqui- arranged by Bank as mortgagee. sitions for anti-competitive effects implicitly recognizes the competi- Based on all the facts of record, including relevant examination tive effect of limited-purpose lenders and other non-depository finan- information, the Board concludes that the Protestants' comments do cial entities. not warrant denial of these applications. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 927 that data submitted by Bank under the Home Mort- County, all lenders made 7 percent of their HMDAgage Disclosure Act ("HMDA") (12 U.S.C. § 2801 related loans to African Americans. In addition, Bank et seq. ) show that Bank has a higher denial rate for denied loan applications submitted by African Ameri- African-American than for white mortgage loan appli- cans at the average rate for all lenders in Cook County. cants and that this disparity indicates discrimination However, these data also indicate disparities in the on the part of Bank. rates of denials that vary by racial group. The Board is concerned when an institution's record Record of Performance Under the CRA indicates disparities in lending to minority applicants and believes that all banks are obligated to ensure that In its consideration of the convenience and needs their lending practices are based on criteria that assure factor under the BHC Act, the Board has carefully not only safe and sound lending, but also access to reviewed the CRA performance records of Applicant, credit by creditworthy applicants regardless of race. Suburban, and their respective subsidiary banks, as The Board recognizes, however, that HMDA data well as all comments received on these applications, alone provide an incomplete measure of an institu- Applicant's responses to those comments, and all tion's lending in its community and have limitations other relevant facts of record in light of the CRA, the that make the data an inadequate basis, absent other Board's regulations, and the Statement of the Federal information, for concluding that an institution has Financial Supervisory Agencies Regarding the Com- engaged in illegal discrimination in lending. munity Reinvestment Act ("Agency CRA State- The Board notes that the 1993 Exam found no ment").10 evidence of prohibited discrimination or other illegal credit practices. That examination also found no evi- A. CRA Performance Examinations dence of practices intended to discourage applications for the types of credit listed in Bank's CRA state- The Agency CRA Statement provides that a CRA ment.12 examination is an important and often controlling The record of these applications also indicates that factor in the consideration of an institution's CRA Bank has undertaken a number of efforts to improve its record and that these reports will be given great weight record of lending to minority and low- and moderatein the applications process.11 In this case, the Board income credit applicants. For example, Bank (as well as notes that all of Applicant's subsidiary banks in the other subsidiaries of Applicant) has established a "sec- United States received either "outstanding" or "sat- ond look" procedure to ensure that mortgage applicaisfactory" ratings at their most recent examinations tions from low- and moderate-income applicants obtain for CRA performance. In particular, Bank received a a fair review. Under this program, Bank may make a "satisfactory" rating from the Federal Reserve Bank loan to a borrower who does not meet the standard of Chicago at its most recent examination for CRA underwriting criteria for a loan. Because these loans are performance as of September 1993 ("1993 Exam"). not eligible for sale in the secondary market, Bank The Board also notes that all of Suburban's subsidiary retains these loans in its own portfolio. banks received either "outstanding" or "satisfactory" Bank also uses a variety of methods to market credit ratings at their most recent examinations for CRA products to all segments of its community, including performance. minority residents. Bank advertises in media with primarily minority audiences.13 Bank also advertises B. HMDA Data and Marketing Efforts specific credit products targeted to low- and moderateincome communities, including its Community Home- The Board has carefully reviewed the 1992 and 1993 buyers Program, SBA-guaranteed loans, and home HMDA data reported by Bank in light of Protestants' equity loans. Bank also engaged in an extensive direct comments that Bank's denial rates indicate that Bank discriminates against African Americans. These data indicate that in 1992, Bank made 86 HMDA-related 12. Applicant states that the credit staff of its bank subsidiaries loans to African-American residents in its delineated receive annual anti-discrimination training focused on fair lending laws. Compliance officers in individual divisions and the compliance community, Cook County, representing 10.1 percent office for the entire Bank regularly conduct fair lending reviews of loan of the total HMDA-related loans Bank made in Cook files. County that year. On an aggregate basis in Cook 13. Newspapers in which Bank advertises include The Chicago Defender, La Raza, and The Extra, and radio stations include WGCI and WVAZ. The record also indicates that Bank has increased its advertising, including advertising in minority media, by tripling the number of credit-related advertisements placed in print media from 10. 54 Federal Register 13,742 (1989). 1992 to 1993 and doubling the number of radio spots over the same 11. Id. at 13,745. period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

928 Federal Reserve Bulletin • September 1994 mail campaign to promote a new secured credit card C. Lending Programs product to expand consumer credit. More than onequarter of customers enrolled as a result of the cam- The record of these applications also indicates that paign were from minority census tracts. Bank has developed several credit products specifi- The 1993 Exam also concluded that Bank's calling cally designed to meet the needs of low- to moderateefforts target low- and moderate-income areas income customers in the areas of affordable housing, throughout its delineated community. Bank uses mar- consumer credit, and small business loans. In the ket research surveys, discussion groups, and formal summer of 1992, Bank developed its Community calling programs with specific numerical goals to as- Homebuyers Program. This product uses the Freddie certain the credit needs of all segments of its commu- Mac "Affordable Gold" program, which is actively nity, including the African-American community. Un- marketed by Bank through newspapers and to realtors der its calling program, Bank divides its market area and mortgage originators. Bank made nine loans under into several sections and sets goals for and monitors this program in 1992, and increased this figure to 46 the number of calls made in minority and low- and loans totalling $3.7 million during the first eight months moderate-income census tracts within each section. In of 1993. Bank also closed 27 loans totalling more than 1992, Bank created the position of Needs Ascertain- $18 million for the rehabilitation of multi-family housment Manager ("NAM"). The NAM complements the ing in 1993. Bank also participates in numerous loan efforts of other Bank staff by monitoring their calling pools sponsored by not-for-profit organizations that efforts and initiating calling efforts where necessary.14 provide community development funds and assis- Approximately one-half of the NAM's calls in the first tance. As of the end of 1993, Bank had committed half of 1993 were made in minority communities. In more than $27 million to these pools. addition, Bank has a calling program directed at small Bank also participates in various government-guarbusinesses. During the first half of 1993, approxi- anteed, government-insured, or government-subsimately one-third of the calls made under this program dized loan programs for housing and small business. were to small businesses located in minority census These include City of Chicago Department of Housing tracts. Based on needs identified through these ascer- programs, Illinois Housing Development Authority tainment efforts, Bank sponsored or participated in programs, the State of Illinois Treasurer Linked Deseveral home purchase or basic banking seminars and posit program, New Homes for Chicago-Laverne and modified its low down payment mortgage product to Pilsen, SBA programs,16 and FHA/VA programs. make it more responsive to meeting identified housing Loans outstanding under these programs amounted to needs.15 approximately $18.4 million as of September 1993, The record also indicates that Bank has improved its with an additional $12.4 million in loans approved but record of lending to African-American mortgage cus- not yet closed. tomers. HMDA data show that Bank increased the Applicant also announced in April 1994 that its U.S. number of loan applications received from African- banking operations would open approximately one- American loan applicants from 126 in 1992 to 235 in third of 24 planned branches in the Chicago area in 1993. In addition, the denial rate for African-American low- and moderate-income neighborhoods. In addiloan applicants decreased over that time period. As a tion, Bank has announced a $305 million lending result, 17.3 percent of Bank's HMDA-related loans in program for affordable housing, small business, and Cook County were made to African-American borrow- community revitalization over the next five years. ers in 1993. The record also indicates that Bank's Bank has targeted $100 million for residential mortmarket share among African-American borrowers for gages and $50 million for multi-family and mixed-use HMDA-related loans is nearly twice its overall market mortgages. In connection with this new lending initiashare. tive, Bank announced plans to extend $2 million in Harris Foundation grants to community redevelopment organizations. 14. Bank also employs a CRA officer. The NAM's responsibilities are more specific than those of the CRA officer, who coordinates the overall CRA effort of Bank and ensures that products are developed to meet identified credit needs. 16. In 1993, Bank received the SBA's Illinois Minority Enterprise 15. In particular, Bank expanded its Community Homebuyers Development Week Private Sector Firm of the Year Award. Bank Program, which offers 95 percent financing, to include 2-unit proper- provided over $8 million in financing to small businesses through SBA ties. programs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 929 Conclusion Regarding Convenience and Needs termination on this application, the Board considered Factor the following information. The Office of the Superintendent of Financial Insti- The Board has carefully considered all the facts of tutions ("OSFI") is the supervisory authority for record in this case in reviewing the convenience and Canadian banks that are licensed by the Canadian needs factor under the BHC Act. For the foregoing federal government and, as such, is the home country reasons, and based on all the facts of record in this supervisor of Applicant. OSFI monitors the capital, case, including Protestants' comments, Applicant's earnings, assets, liquidity, operations/systems, and responses to those comments, and the relevant reports internal controls of Canadian banks. OSFI receives of examination, the Board has concluded that conve- information on the worldwide operations of the banks nience and needs considerations, including relevant it supervises, including their domestic and foreign CRA performance records, are consistent with ap- branches and affiliates, through on-site examinations, proval of these applications. review of external and internal audit reports, and monitoring periodic financial reports. The focus of Supervisory Considerations OSFI's supervisory process is directed toward ensuring that the banks it supervises have sound internal In order to approve an application by a foreign bank to controls. When OSFI assesses a bank's internal conacquire a U.S. bank or bank holding company, the trols, it does so on a worldwide basis. OSFI considers BHC Act and Regulation Y require the Board to that the most critical component of a bank's internal determine that the foreign bank is subject to compre- control process is the bank's internal audit division, hensive supervision or regulation on a consolidated and OSFI devotes a considerable amount of time to basis by its home country supervisor. See 12 U.S.C. assessing the work of that division. § 1842(c)(3)(B); 12 C.F.R. 225.13(b)(5). The Board OSFI conducts annual on-site examinations of Apalso must determine that the foreign bank has provided plicant, and specific information on Applicant's doadequate assurances that it will make available to the mestic and foreign subsidiaries that has a material Board such information on its operations and activities impact on Applicant's operations is analyzed. The and those of its affiliates that the Board deems appro- scope of the on-site examination includes a review of priate to determine and enforce compliance with ap- the work of Applicant's external and internal auditors plicable law. See 12 U.S.C. § 1842(c)(3)(A); 12 C.F.R. and a review of Applicant's compliance with applica- 225.13(b)(4). ble law. Asset quality is examined through a review of The Board considers a foreign bank to be subject to the level of "watch list" and non-performing loans, comprehensive supervision or regulation on a consol- the adequacy of the loan loss reserve, and concentraidated basis if the Board determines that the bank is tions in the loan portfolio. Sample credit files are also supervised and regulated in such a manner that its reviewed as part of the examination process. OSFI home country supervisor receives sufficient informa- also meets at least annually with Applicant's managetion on the bank's worldwide operations, including its ment responsible for compliance, whose mandate inrelationship to any affiliate, to assess the bank's over- cludes establishing compliance manuals and advising all financial condition and its compliance with law and on compliance with law and regulations in all jurisdicregulation.17 12 C.F.R. 211.24(c)(1). In making its de- tions in which Applicant operates. Each year, Applicant's shareholders appoint two qualified accounting firms as auditors to be used in alternate years. The qualification standards for audi- 17. In assessing this standard, the Board considers, among other tors of Canadian banks are set by statute. OSFI relies factors, the extent to which the home country supervisor: (i) Ensures that the bank has adequate procedures for monitoring on the reports of these auditors based on a detailed and controlling its activities worldwide; annual review of the external auditors' working paper (ii) Obtains information on the condition of the bank and its files. OSFI communicates with Applicant's external subsidiaries and offices outside the home country through regular examination reports, audit reports, or otherwise; auditors regularly, and OSFI examiners meet with (iii) Obtains information on the dealings with and relationships Applicant's external auditors following the on-site between the bank and its affiliates, both foreign and domestic; portion of the OSFI examination. (iv) Receives from the bank financial reports that are consolidated on a worldwide basis, or comparable information that permits Applicant's external auditors are required by statute analysis of the bank's financial condition on a worldwide consol- to report annually to Applicant's senior management idated basis; (v) Evaluates prudential standards, such as capital adequacy and any transactions or conditions that the auditors believe risk asset exposure, on a worldwide basis. are unsatisfactory and require corrective action. In- These are indicia of comprehensive, consolidated supervision. No cluded in the report is a list of loans that exceed one single factor is essential, and other elements may inform the Board's determination. half of one percent of Applicant's capital that the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

930 Federal Reserve Bulletin • September 1994 auditors regard as likely to result in a loss. All of access to any necessary information the Board may Applicant's worldwide operations, both foreign and request. domestic, are subject to internal audits by Applicant. The results of these internal audits are made available Other Considerations to OSFI. OSFI monitors Applicant through a quarterly anal- On the basis of all the facts of record, the Board has ysis of Applicant's financial results, focusing on the also concluded that the financial and managerial reoperating results of Applicant's various divisions and sources and future prospects of Applicant and Suburon Applicant's capital, assets, liquidity, and earnings. ban and their respective subsidiaries, and all other Financial reports submitted by Applicant to OSFI are supervisory factors the Board must consider under prepared on a consolidated basis and include the section 3 of the BHC Act, are consistent with approval results of all domestic and foreign subsidiaries. Appli- of this proposal. cant's balance sheet and a report on its foreign ex- Based on the foregoing and all the other facts of change position are sent to OSFI monthly. record, the Board has determined that the applications Transactions between Applicant and its affiliates should be, and hereby are, approved. Should any must be reported to and approved by a statutorily restrictions on access to information on the operations mandated committee of Applicant, which, in turn, has or activities of Applicant and any of its affiliates reporting responsibilities to OSFI. Moreover, OSFI subsequently interfere with the Board's ability to regulates and monitors transactions between Appli- determine the safety and soundness of Applicant's cant and its directors, officers, and their affiliates to U.S. operations or the compliance by Applicant or its ensure that the transactions are on arm's-length terms affiliates with applicable federal statutes, the Board and that the transactions do not exceed statutory may require termination of any of Applicant's direct or limits. indirect activities in the United States. The Board's Applicant's investment banking subsidiary, The approval is specifically conditioned on compliance Nesbitt Thomson Corporation, Ltd. ("Nesbitt"), is with all the commitments made by Applicant in condirectly monitored by the Investment Dealers Associ- nection with these applications. For purposes of this ation of Canada ("IDA"), a self-regulatory organiza- action, the commitments and conditions relied on in tion. Nesbitt is required to submit monthly and annual reaching this decision shall be deemed to be conditions consolidated reports to IDA. IDA also conducts unan- imposed in writing by the Board in connection with its nounced examinations. While there is no formal ex- findings and decision, and, as such, may be enforced in change of information between OSFI and IDA, OSFI proceedings under applicable law against Applicant, has access to financial and other information concern- its offices, and its affiliates. ing Nesbitt through the parent company. This transaction shall not be consummated before Based on all the facts of record, the Board con- the thirtieth calendar day following the effective date cludes that Applicant is subject to comprehensive of this order, or later than three months after the supervision on a consolidated basis by its home coun- effective date of this order, unless such period is try supervisor. extended for good cause by the Board or by the The Board has reviewed relevant provisions of Federal Reserve Bank of Chicago, acting pursuant to Canadian law and has communicated with the appro- delegated authority. priate government authorities about access to informa- By order of the Board of Governors, effective tion regarding Applicant's operations. Applicant has August 22, 1994. committed that it will make available to the Board information on the operations of Applicant and any Voting for this action: Chairman Greenspan, Vice Chairaffiliate of Applicant that the Board deems necessary man Blinder, and Governors Kelley, LaWare, and Phillips. to determine and enforce compliance with the Inter- Absent and not voting: Governors Lindsey and Yellen. national Banking Act, the BHC Act, as amended, and other applicable federal law. To the extent that the JENNIFER J. JOHNSON Deputy Secretary of the Board provision of such information to the Board may be prohibited or impeded by law, Applicant has committed to cooperate with the Board in obtaining any Appendix necessary consents or waivers that might be required from third parties for disclosure. In light of these Subsidiary Banks to be Acquired commitments and other facts of record, and subject to the condition described below, the Board concludes (1) Suburban National Bank of Palatine that Applicant has provided adequate assurances of (2) Suburban Bank of Barrington Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 931 (3) The State Bank of Woodstock resenting approximately 24 percent of the total depos- (4) Suburban Bank of Rolling Meadows its in commercial banks in the state. (5) Suburban Bank of Bartlett (6) Suburban Bank of Cary-Grove Competitive Considerations (7) Suburban National Bank of Elk Grove Village (8) Marengo State Bank FBS and Green Mountain compete directly in the (9) Suburban Bank of West Brook Denver-Boulder banking market.3 FBS is the largest (10) Suburban Bank of Hoffman-Schaumburg depository institution in the market,4 controlling de- (11) Suburban Bank of Oakbrook Terrace posits of $5 billion, representing 26.7 percent of total (12) The State Bank of Huntley deposits in depository institutions in the market (13) Suburban National Bank/Aurora ("market deposits"). Green Mountain is the 54th largest depository institution in the Denver-Boulder First Bank System, Inc. banking market, with deposits of $24.8 million, repre- Minneapolis, Minnesota senting less than 1 percent of market deposits. Upon consummation of this proposal, FBS would remain the Order Approving the Acquisition of a Bank Holding largest depository institution in the Denver-Boulder Company banking market, controlling deposits of approximately $5 billion, representing 26.8 percent of market depos- First Bank System, Inc., Minneapolis, Minnesota, and its. Based on all the facts of record, including the its wholly owned subsidiary, Colorado National Bank- relatively small increases in market share and market shares, Inc., Denver, Colorado (together, "FBS"), concentration as measured by the Herfindahlboth bank holding companies within the meaning of Hirschman Index ("HHI"),5 the number of competithe Bank Holding Company Act ("BHC Act"), have tors remaining in the market, and other facts of record, applied under sections 3(a)(3) and 3(a)(5) of the BHC the Board has concluded that consummation of the Act (12 U.S.C. § 1842(a)) to acquire Green Mountain proposal would not result in a significantly adverse Bancorporation, Inc., Lakewood, Colorado ("Green effect on competition or the concentration of banking Mountain"), and thereby indirectly acquire Green resources in the Denver-Boulder banking market or Mountain's subsidiary bank, Green Mountain Bank, any other relevant banking market. Lakewood, Colorado. Notice of the applications, affording interested per- Convenience and Needs Considerations sons an opportunity to submit comments, has been published (59 Federal Register 23,206 (1994)). The In acting on an application to acquire a depository time for filing comments has expired, and the Board institution under the BHC Act, the Board must conhas considered the applications and all comments sider the convenience and needs of the communities to received in light of the factors set forth in section 3 of be served, and take into account the records of the the BHC Act. FBS, with total consolidated assets of approxi- 3. The Denver-Boulder banking market is defined as the Denver mately $26.7 billion, operates ten banks in seven RMA, plus all of Boulder County; the towns of Erie, Fort Lupton, states.1 FBS is the largest commercial banking orga- Frederick and Keenesburg in Weld County; and the town of Parker in nization in Colorado, controlling approximately Douglas County. 4. When used in this context, depository institution includes com- $6.5 billion in deposits, representing approximately mercial banks and savings associations. Market share data are based 24 percent of the deposits in commercial banks in the on calculations in which the deposits of thrift institutions are included state.2 Green Mountain, with total consolidated assets at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, major competiof $30.8 million, is the 127th largest commercial bank- tors of commercial banks. See Midwest Financial Group, 75 Federal ing organization in the state, controlling $24.8 million Reserve Bulletin 386 (1989); National City Corporation, 70 Federal in deposits, representing less than 1 percent of the Reserve Bulletin 743 (1984). 5. The HHI for the Denver-Boulder banking market would increase total deposits in commercial banks in the state. Upon by seven points to 1353. Under the revised Department of Justice consummation of the proposal, FBS would remain the Merger Guidelines (49 Federal Register 26,823 (June 29, 1984)), a largest commercial banking organization in Colorado, market in which the post-merger HHI is between 1000 and 1800 is considered to be moderately concentrated. The Justice Department controlling approximately $6.5 billion in deposits, rep- 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 thresholds for screening bank mergers for anti-competitive effects implicitly recog- 1. Asset data are as of March 31, 1994. nize the competitive effects of limited-purpose lenders and other 2. State deposit data are as of June 30, 1993. non-depository financial entities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

932 Federal Reserve Bulletin • September 1994 relevant depository institutions under the Community factor in the consideration of an institution's CRA Reinvestment Act (12 U.S.C. § 2901 et seq.) record, and that these reports will be given great ("CRA"). The CRA requires the federal financial weight in the applications process.10 In this case, the supervisory agencies to encourage financial institu- Board notes that all of FBS's subsidiary banks retions to help meet the credit needs of the local com- ceived "outstanding" or "satisfactory" ratings at the munities in which they operate, consistent with the most recent examinations of their CRA performance. safe and sound operation of such institutions. To In particular, both FBS's lead bank, First Bank, N.A., accomplish this end, the CRA requires the appropriate Minneapolis, Minnesota, and CNB received "satisfacfederal supervisory authority to "assess the institu- tory" ratings from their primary regulator, the Office tion's record of meeting the credit needs of its entire of the Comptroller of the Currency ("OCC"), at their community, including low- and moderate-income most recent CRA examinations.11 Green Mountain's neighborhoods, consistent with the safe and sound subsidiary bank, Green Mountain Bank, also received operation of such institution," and to take that record a "satisfactory" rating at its most recent CRA examinto account in its evaluation of applications.6 ination, which was completed in April 1992. The Board has received comments from the Denver Community Reinvestment Alliance ("Protestant") al- B. Lending Practices leging that FBS's subsidiary bank, Colorado National Bank, Denver, Colorado ("CNB"), has failed to meet The Board has carefully reviewed the 1992 and 1993 the credit needs of minorities and low- and moderate- HMDA data reported by FBS and CNB, in light of income communities.7 In particular, Protestant alleges Protestant's comments. These data show some disparthat data filed under the Home Mortgage Disclosure ities in denial and origination rates in the Denver Act ("HMDA") and the results of two reports pre- Metropolitan Statistical Area that vary according to pared by a member organization of Protestant,8 one of the race of the homeowner. The data also show that which was prepared with the help of a local television CNB's 1993 origination and denial rates for minorities station, indicate that FBS and CNB have discrimi- have improved over CNB's 1992 origination and denial nated against minorities in extending credit. Protestant rates, and are comparable to other financial institualso alleges that CNB has inadequately marketed its tions in the Denver market.12 Because all banks are services to minorities and low- and moderate-income obligated to adopt and implement lending practices communities. that ensure not only safe and sound lending, but also In its consideration of the convenience and needs equal access to credit by creditworthy applicants factor, the Board has carefully reviewed the entire regardless of race, the Board is concerned when the CRA performance record of FBS, Green Mountain record of an institution indicates disparities in lending and their subsidiaries, all comments received regard- to applicants in low- and moderate-income and minoring this application, including FBS's response to these ity communities. The Board also recognizes that comments, and all other relevant facts of record, in HMDA data have limitations that make the data an light of the CRA, the Board's regulations, and the inadequate basis, absent other information, for con- Statement of the Federal Financial Supervisory Agen- clusively determining whether an institution has encies Regarding the Community Reinvestment Act gaged in illegal discrimination in making lending deci- ("Agency CRA Statement").9 sions. The OCC's 1992 CRA performance examination of Record of CRA Performance CNB found no evidence of any pattern or practice of discriminatory credit practices, or other practices de- A. Evaluation of CRA Performance signed to discourage credit applications.13 The Board The Agency CRA Statement provides that a CRA examination is an important and often controlling 10. 54 Federal Register 13,745 (1989). 11. CNB's most recent CRA examination was completed by the OCC in January 1992. FBS acquired CNB in 1993. First Bank, N.A.'s 6. 12 U.S.C. § 2903. most recent CRA examination was completed in January 1993. 7. During the processing of this application, Protestant requested, 12. The 1992 and 1993 data used in this comparison are a combinaand the Board granted, an extension of the comment period to allow tion of the following organizations' HMDA data: CNB, FBS Mortit to analyze 1993 data filed by FBS and CNB under the Home gage, Colorado National Mortgage, Central Bank National Associa- Mortgage Disclosure Act. tion ("Central Bank"), and Bank Western National Association 8. These reports involved visits by several individuals to a few ("Bank Western"), all of Denver, Colorado. In 1993, FBS merged offices of FBS and CNB to inquire about applying for home mortgage Central Bank and Bank Western into CNB. and home equity loans. The minority testers reported that they 13. The examination noted technical and procedural violations of received less favorable treatment than the non-minority testers. the Fair Credit Reporting Act and the Board's Regulation B. The OCC 9. 54 Federal Register 13,742 (1989). evaluated the steps proposed by management to prevent recurrence of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 933 also has carefully considered the preliminary results of CNB also provides credit services tailored to meet a fair lending review of CNB conducted by the OCC, the needs of small businesses located in low- and which takes into account Protestant's allegations.14 moderate-income communities. In 1993, CNB made In addition, the Board has also considered affirma- 281 loans, totalling $15.3 million, to small businesses tive steps taken by FBS and CNB to ensure that all in low- and moderate-income neighborhoods. In 1992 customers and potential customers are treated equally and 1993, CNB was one of the largest SB A lenders in in the lending process. For example, CNB has estab- Colorado. In 1993, CNB originated at least 50 loans, lished a Fair Lending Office to give loan applicants and totalling over $12 million, and in 1992, CNB originated borrowers a forum to discuss their concerns about fair 45 loans, totalling over $9 million. CNB also offers a and equal treatment. CNB employees who are in- nontraditional lending product to small businesses, volved in the lending process are given formal training First Opportunity, which has expanded underwriting to increase their sensitivity to diversity and are given guidelines designed to serve small business clients that copies of CNB's Non-Discrimination Policy State- are too new or too undercapitalized to qualify under ment. In addition, CNB and FBS Mortgage have in standard underwriting guidelines.17 In 1993, nine First place a Second Look Program that assists in ensuring Opportunity loans were approved, totalling over equal treatment of borrowers in the lending process by $425,000.18 targeting declined applications for a second review. This program is designed to ensure that all decisions to C. Other Aspects of CRA Performance deny loan applications were handled properly and to offer alternative credit products and resources to cus- CNB ascertains community credit needs in various tomers where appropriate. ways, and at CNB's 1992 CRA examination, examin- FBS, through CNB and FBS Mortgage, has initiated ers noted that CNB targeted low- and moderateseveral lending programs specifically designed to assist income neighborhoods in its marketing programs and in meeting the housing-related credit needs of low- and offered special credit products designed for low- and moderate-income borrowers, and CNB, through its moderate-income households. The bank maintains CRA Bonus Point Program, offers incentives to its loan regular contact with the community through its Comoriginators to originate loans in low- and moderate- munity Advisory Board, which was established in income areas. For example, FBS Mortgage offers an 1993, and which is comprised of representatives from affordable housing product, Home Advantage, a spe- low- and moderate-income communities. CNB uses a cialized product for low- and moderate-income borrow- variety of media to advertise its products and services, ers that features more flexible underwriting criteria. In including outdoor advertising, newspapers and direct 1993, FBS Mortgage originated 83 Home Advantage mail. CNB directs significant marketing efforts to loans, totalling $4.9 million, through its Community minority and low- and moderate-income communities. Lending Office. The Community Lending Office opened In 1993, 27 percent of CNB's advertising budget was in 1992 and is located in a low- and moderate-income spent on media that specifically serves Denver's mineighborhood in northwest Denver. CNB also offers nority communities. Accessibility Financing, a consumer and mortgage loan CNB also has increased by two the number of product with flexible underwriting criteria designed for branches located in minority and low- and moderatepeople with physical disabilities. In addition, CNB income communities in northwest Denver. In 1993, offers down payment and closing cost assistance,15 and CNB opened a branch in Five Points, a low- and sponsors an ongoing education program for individuals moderate-income area in northwest Denver, and it that includes such topics as budgeting and credit. In recently opened a full service branch in Montbello, a 1993, CNB made $17.3 million in loans related to predominately minority, middle-income community, affordable housing and economic development in low- also in northwest Denver. and moderate-income neighborhoods.16 these violations by enhancing internal controls, and determined that these steps were sufficient to address these violations. 14. The OCC has indicated that it did not find evidence of any prohibited discriminatory lending practices or other illegal practices during its fair lending review of CNB. 15. In 1993 , 91 borrowers received a total of $350,000 in down 17. In addition, CNB sponsors educational programs for small payment and closing cost assistance. businesses through the Colorado Black Chamber of Commerce and 16. For example, CNB made a loan to a nonprofit community the Hispanic Chamber of Commerce. development corporation to acquire and renovate a 94-unit apartment 18. CNB also is the largest investor in the Downtown Capital complex for low-income housing and a loan to a housing authority to Corporation ("DCC"). DCC provides loans to small businesses that construct 32 housing units for migrant workers. are unable to qualify for credit at financial institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

934 Federal Reserve Bulletin • September 1994 Conclusion On Convenience and Needs Factors of this order, or later than three months after the effective date of this order, unless such period is In considering the overall CRA performance records extended for good cause by the Board or by the of FBS and Green Mountain, the Board carefully has Federal Reserve Bank of Minneapolis, acting pursuant evaluated the entire record, including the public com- to delegated authority. ments in this case. Based on a review of the entire By order of the Board of Governors, effective record, including the programs and record of perfor- August 8, 1994. mance discussed above, Protestant's comments, information provided by FBS, and relevant reports and Voting for this action: Chairman Greenspan, Vice Chairexaminations, the Board concludes that convenience man Blinder, and Governors Kelley, LaWare, Lindsey, and Phillips. and needs considerations, including the CRA performance records of FBS, Green Mountain, and then- JENNIFER J. JOHNSON subsidiary depository institutions, are consistent with Deputy Secretary of the Board approval of this application. The Board expects CNB to continue progress in strengthening its performance Rurban Financial Corporation in the areas discussed in this order, and to submit Defiance, Ohio semiannual reports on its programs to the Federal Reserve Bank of Minneapolis during the next year. Order Approving Applications to Acquire a Bank, The Board will assess the success of CNB's continued and for Membership in the Federal Reserve System efforts in connection with future applications by FBS to expand its deposit-taking facilities. Rurban Financial Corporation, Defiance, Ohio ("Rurban"), a bank holding company within the meaning of Other Considerations the Bank Holding Company Act ("BHC Act"), has applied for the Board's approval under section 3(a)(3) The Board also concludes that the financial and manof the BHC Act (12 U.S.C. § 1842(a)(3)) to acquire all agerial resources and future prospects of FBS and the voting shares of The Citizens Savings Bank Com- Green Mountain, and their respective subsidiaries, are pany, Pemberville, Ohio ("Citizens"), and Pemberconsistent with approval. Factors relating to the conville Interim Bank, Pemberville, Ohio ("Bank"). As venience and needs of the communities to be served part of this proposal, Bank also has applied under and other supervisory factors the Board must consider section 9 of the Federal Reserve Act (12 U.S.C. § 321) under section 3 of the BHC Act also are consistent for membership in the Federal Reserve System.1 with approval. Notice of the applications, affording interested per- Based on the foregoing and all the facts of record, sons an opportunity to submit comments, has been the Board has determined that the application should published (59 Federal Register 28,106 (1994)). The be, and hereby is, approved.19 The Board's approval time for filing comments has expired, and the Board of this proposal is expressly conditioned upon complihas considered the applications and all comments ance with all the commitments made by FBS in received in light of the factors set forth in section 3(c) connection with this application. For purposes of this of the BHC Act and in the Federal Reserve Act. action, the commitments and conditions relied on by Rurban is the 29th largest commercial banking the Board in reaching its decision are deemed to be organization in Ohio, controlling approximately conditions imposed in writing by the Board and, as $285 million in deposits, representing less than such, may be enforced in proceedings under applicable 1 percent of the total deposits in commercial banking law. organizations in the state.2 Citizens is the 106th largest This transaction shall not be consummated before commercial bank in Ohio, controlling approximately the thirtieth calendar day following the effective date $56 million in deposits, representing less than 1 percent of the total deposits in commercial banking organizations in the state. Upon consummation of this 19. Protestant also has alleged that CNB's hiring and promotion practices are discriminatory. The Board notes that, because CNB employs more than 50 people, serves as a depository of government funds, and acts as an agent in selling or redeeming U.S. savings bonds 1. Rurban proposes to establish Bank as a de novo subsidiary that and notes, it is required by Department of Labor regulations to: will merge with Citizens immediately following Rurban's acquisition (1) File annual reports with the Equal Employment Opportunity of Citizens. Bank will survive this merger and will operate under the Commission; and name, "The Citizens Savings Bank Company." On June 30, 1994, the (2) Have in place a written affirmative action compliance program Federal Deposit Insurance Corporation approved this merger under which states its efforts and plans to achieve equal opportunity in the section 18(c)(1) of the Federal Deposit Insurance Act. (12 U.S.C. employment, hiring, promotion, and separation of personnel. § 1828(c)(1)). See 41 C.F.R. 60-1.7(a) and 60-1.40. 2. Deposit data are as of March 31, 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 935 transaction, Rurban would become the 23d largest Reserve Bank of Cleveland, acting pursuant to delecommercial banking organization in Ohio, controlling gated authority. approximately $341 million in deposits, representing By order of the Board of Governors, effective less than 1 percent of the total deposits in commercial August 8, 1994. banking organizations in the state. Rurban and Citizens do not compete directly in any relevant banking Voting for this action: Chairman Greenspan, Vice Chairmarket. Based on all the facts of record, the Board man Blinder, and Governors Kelley, La Ware, Lindsey, and concludes that this proposal would not result in any Phillips. significantly adverse efiFects on competition or concen- JENNIFER J. JOHNSON tration of banking resources in any relevant banking Deputy Secretary of the Board market. The Board also concludes that the financial and Trans Financial Bancorp, Inc. managerial resources and future prospects of Rurban Bowling Green, Kentucky and its subsidiaries and Citizens,3 the convenience and needs of the communities to be served, and other Order Approving Merger of Bank Holding supervisory factors the Board must consider under Companies section 3 of the BHC Act, are consistent with approval of Rurban's applications to acquire Citizens and Bank. Trans Financial Bancorp, Inc., Bowling Green, Ken- The Board also has considered the factors it is tucky ("TFB"), a bank holding company within the required to consider when reviewing applications for meaning of the Bank Holding Company Act ("BHC membership under section 9 of the Federal Reserve Act"), has applied under section 3(a)(5) of the BHC Act and section 208.5 of the Board's Regulation H,4 Act (12 U.S.C. § 1842(a)(5)) to merge with FGC Holdand finds those factors to be consistent with approval. ing Company, Martin, Kentucky ("FGC"), and Bank appears to meet all the criteria for admission to thereby indirectly acquire First Guaranty National membership, including capital requirements and con- Bank, Martin, Kentucky ("FGNB"). siderations related to management character and quality.5 Notice of the application, affording interested persons an opportunity to submit comments, has been Based on the foregoing and all the facts of record, published (59 Federal Register 24,432 (1994)). The the Board has determined that these applications time for filing comments has expired, and the Board should be, and hereby are, approved. The Board's has considered the application and all comments reapproval is specifically conditioned on compliance ceived in light of the factors set forth in section 3(c) of with all the commitments made by Rurban and Bank in the BHC Act. connection with these applications. For purposes of TFB, with total consolidated assets of $1.5 billion, this action, the commitments and conditions relied on operates subsidiary banks in Kentucky and Tennesby the Board in reaching this decision are both deemed see.1 TFB is the sixth largest commercial banking to be conditions imposed in writing by the Board in organization in Kentucky, controlling deposits of connection with its findings and decision and, as such, $808.8 million, representing 2.4 percent of total commay be enforced in proceedings under applicable law.' mercial bank deposits in the state. FGC is the 48th These transactions shall not be consummated before largest commercial banking organization in Kentucky, the thirtieth calendar day following the effective date controlling deposits of $114.7 million, representing of this order, or later than three months after the less than 1 percent of total deposits in commercial effective date of this order, unless such period is banking organizations in the state. Upon consummaextended for good cause by the Board or the Federal tion of this proposal, TFB would control $923.6 million in deposits, representing 2.7 percent of deposits in commercial banks in Kentucky, and would remain the sixth largest commercial banking organization in the 3. The Board has carefully considered comments from a share- state. holder of Citizens who alleges that conflicts of interest on the board of directors of Citizens resulted in the bank's sustaining a significant loss on an overdraft loan to a customer in violation of the bank's legal lending limit. Rurban was not involved in this matter. After a review of the information provided by the commenter, the policies put in place by Citizens to assure compliance with its lending limit, changes in the management of Citizens and other facts of record, the Board concludes that Protestant's comments do not warrant denial of this proposal. 1. State deposit and market data are as of March 31, 1994, adjusted 4. See 12 U.S.C. §§ 322 and 1816; 12 C.F.R. 208.5. for the acquisition of Peoples Financial Services, Inc., Cookeville, 5. Id. Tennessee, which was consummated on April 22, 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

936 Federal Reserve Bulletin • September 1994 Competitive Considerations counties in Kentucky.5 A commercial banking organization entered the market de novo this year by char- TFB and FGC directly compete in the Pikeville, tering a thrift institution that accumulated over $7 mil- Kentucky, banking market.2 TFB is the third largest lion in deposits in fewer than three months of banking or thrift organization ("depository institu- operation. tion") in the market, controlling deposits of $167.1 mil- As in other cases, the Board also sought comments lion, representing 14.5 percent of total deposits in on the competitive effects of this proposal from the depository institutions in the market ("market depos- United States Attorney General, the Office of the its").3 FGC is the fifth largest depository institution in Comptroller of the Currency, and the Federal Deposit the market, controlling deposits of $114.7 million, Insurance Corporation, none of whom objected to representing 9.9 percent of market deposits. Upon consummation of the proposal or indicated that the consummation of the proposal, TFB would become proposal would have any significantly adverse competthe second largest depository institution in the itive effects in the Pikeville banking market. On the Pikeville market, controlling deposits of $281.8 mil- basis of all the facts of record, and for the reasons lion, representing 24.5 percent of market deposits. The discussed above, the Board concludes that consum- Herfindahl-Hirschman Index ("HHI") would increase mation of this proposal would not have a significantly by 289 points to a level of 2526 as a result of the adverse effect on competition or the concentration of proposed acquisition.4 banking resources in the Pikeville, Kentucky banking The Board believes that a number of factors indicate market or any other relevant banking market. that the measurements reflected in the HHI overstate the competitive effects of this proposal. For example, Financial, Managerial, and Other Considerations upon consummation, seven depository institutions would remain in the market, including the largest The Board also concludes that the financial and mancompetitor in the market, which controls 38 percent of agerial resources and future prospects of TFB, FGC, market deposits, and a commercial bank subsidiary of and their subsidiary banks are consistent with apa large multistate bank holding company (total assets proval of this proposal. Considerations relating to the of $84.5 billion), which controls approximately 17 per- convenience and needs of the communities to be cent of market deposits. The Pikeville, Kentucky served and other supervisory factors the Board is banking market also has a number of features that required to consider under section 3 of the BHC Act make it attractive for entry. For example, Pike and also are consistent with approval. Floyd Counties, which comprise the relevant banking Based on the foregoing and other facts of record, the market, are larger than any other rural market in the Board has determined that the application should be, state, with a total population of 115,800 (1992 esti- and hereby is, approved. The Board's approval of this mate), and Pike County is the third most populous of transaction is specifically conditioned on compliance the 98 rural counties in Kentucky. In addition, the with all the commitments made in connection with this ratio of total deposits per banking office is significantly application. These commitments are considered to be higher than the averages for both urban and rural conditions imposed in writing in connection with the 'approval of this application, and, as such, may be enforced in proceedings under applicable law. The transaction shall not be consummated before the thir- 2. The Pikeville, Kentucky banking market is approximated by Pike and Floyd Counties in Kentucky. tieth calendar day following the effective date of this 3. Market share data are based on calculations in which the deposits order, or later than three months after the effective of thrift institutions are included at 50 percent. The Board previously date of this order, unless such period is extended for has indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See good cause by the Board or by the Federal Reserve Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); Bank of St. Louis, acting pursuant to delegated au- National City Corporation, 70 Federal Reserve Bulletin 743 (1984). thority. 4. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the By order of the Board of Governors, effective post-merger HHI is above 1800 is considered highly concentrated. In August 1, 1994. such markets, the Justice Department is likely to challenge a merger that increases the HHI by more than 50 points. The Justice Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating 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 thresholds for 5. Total deposits per banking office for Pike and Floyd Counties are screening bank mergers for anti-competitive effects implicitly recog- $30,400 compared to $26,800 for Kentucky MSA counties and $24,700 nize the competitive effects of limited-purpose lenders and other for Kentucky non-MSA counties. Deposits are as of June 30, 1992 for non-depository financial entities. commercial banks only. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 937 Voting for this action: Chairman Greenspan, Vice Chair- proximately 44 percent of total deposits in depository man Blinder, and Governors Kelley, LaWare, Lindsey, and organizations in the market ("market deposits").3 Phillips. First National is the 14th largest depository organization in the market, controlling deposits of $7.6 million, JENNIFER J. JOHNSON representing less than 1 percent of market deposits. Deputy Secretary of the Board Upon consummation of this proposal, Trustmark would remain the largest depository organization in Trustmark Corporation the Jackson banking market, controlling deposits of Jackson, Mississippi $1.8 billion, representing approximately 44.2 percent of market deposits. The Herfindahl-Hirschman Index Order Approving Merger of Bank Holding ("HHI") would increase 16 points to a level of 3209.4 Companies Based on all the facts of record, including the relatively small increase in the HHI, the number of Trustmark Corporation, Jackson, Mississippi ("Trustcompetitors that would remain in the Jackson banking mark"), a bank holding company within the meaning market, and the attractiveness of that market, the of the Bank Holding Company Act ("BHC Act"), has Board has concluded that consummation of this proapplied under section 3 of the BHC Act (12 U.S.C. posal would not have a significantly adverse effect on § 1842) to merge with First National Financial Corpocompetition or the concentration of banking resources ration ("First National"), and thereby acquire First in the Jackson banking market or any other relevant National Bank of Vicksburg ("FNB"), both of Vicksbanking market. burg, Mississippi. Based on all the facts of record, the Board also has Notice of the application, affording interested perconcluded that the financial and managerial resources sons an opportunity to submit comments, has been and future prospects of Trustmark, First National, and published (59 Federal Register 36,765 (1994)). The their respective subsidiaries, and all other supervisory time for filing comments has expired, and the Board factors that the Board must consider under section 3 of has considered the application and all comments rethe BHC Act, are consistent with approval of this ceived in light of the factors set forth in section 3 of the proposal. BHC Act. The Board also has considered the convenience and Trustmark, with total consolidated assets of needs of the communities to be served. In its consid- $4.4 billion, is the largest commercial banking organieration of convenience and needs, the Board takes into zation in Mississippi, controlling deposits of $3.2 bilaccount the records of the relevant depository institulion, representing approximately 15.6 percent of total tions under the Community Reinvestment Act deposits in commercial banking organizations in the (12 U.S.C. § 2901 etseq.) ("CRA"). Trustmark's substate.1 First National, with total consolidated assets of sidiary bank, Trustmark National Bank, Jackson, Mis- $304 million, is the 12th largest commercial banking sissippi ("Trustmark Bank"), received a CRA rating organization in Mississippi, controlling deposits of $243.1 million, representing approximately 1.2 percent of total deposits in commercial banking organizations in the state. Upon consummation of this proposal, 3. Market deposit data are as of June 30,1993. Market share data are Trustmark would remain the largest commercial bank- based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously has indicated that thrift ing organization in Mississippi, controlling deposits of institutions have become, or have the potential to become, significant $3.4 billion, representing approximately 16.8 percent competitors of commercial banks. See Midwest Financial Group, 75 of total deposits in commercial banking organizations Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly in the state. included thrift deposits in the calculation of market share on a 50 Trustmark and First National compete directly in percent weighted basis. See, e.g., First Hawaiian Inc., 77 Federal Reserve Bulletin 52 (1991). the Jackson, Mississippi, banking market ("Jackson 4. Under the revised Department of Justice Merger Guidelines, 49 banking market").2 Trustmark is the largest of 15 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI is above 1800 is considered to be highly concencommercial banking or thrift organizations ("depositrated. In such markets, the Justice Department is likely to challenge tory organizations") in the Jackson banking market, a merger that increases the HHI by more than 50 points. The Justice controlling deposits of $1.8 billion, representing ap- Department has informed the Board that a bank merger or acquisition generally will not be challenged, in the absence of other factors indicating anticompetitive effects, unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Justice Department has stated that the higher than normal 1. Asset data are as of June 30, 1994. State deposit data are as of threshold for an increase in the HHI when screening bank mergers and December 31, 1993. acquisitions for anticompetitive effects implicitly recognizes the com- 2. The Jackson banking market is approximated by Hinds, Madison, petitive effect of limited-purpose lenders and other non-depository financial entities. and Rankin Counties, all in Mississippi. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

938 Federal Reserve Bulletin • September 1994 of "satisfactory" from the Office of the Comptroller of the commitments made in connection with this applithe Currency ("OCC"), its primary regulator, on April cation and with the conditions referenced in this order. 22, 1994.5 Trustmark has CRA policies and programs For purposes of this action, these commitments and to ensure that it is meeting the credit needs of its conditions are deemed to be conditions imposed in communities, and its board of directors and senior writing by the Board in connection with its findings management take an active role in formulating policies and decision, and, as such, may be enforced in proand reviewing CRA performance. ceedings under applicable law. The Board notes that FNB, the organization pro- This transaction shall not be consummated before posed to be acquired, received a CRA rating of "needs the thirtieth calendar day following the effective date to improve" from the OCC, as of January 18, 1994, of this order, or later than three months after the and is subject to a Consent Order with the OCC effective date of this order, unless such period is ("Order"), and a related Consent Decree with the extended for good cause by the Board or by the Department of Justice ("Decree"), regarding compli- Federal Reserve Bank of Atlanta, acting pursuant to ance with the Fair Housing Act (42 U.S.C. § 3601 delegated authority. et seq.), the Equal Credit Opportunity Act (15 U.S.C. By order of the Board of Governors, effective § 1691 et seq.), and the Board's Regulation B August 29, 1994. (12C.F.R. Part 202). FNB has implemented new programs and policies in the areas of lending proce- Voting for this action: Vice Chairman Blinder and Goverdures, loan review, employee, officer, and director nors Kelley, La Ware, Lindsey, and Phillips. Absent and not voting: Chairman Greenspan and Governor Yellen. training, testing, and customer assistance to address compliance with these statutory and regulatory re- WILLIAM W. WILES quirements. The OCC and the Justice Department Secretary of the Board have informed the Board that FNB is in full compliance with the Order and the Decree. Trustmark has Orders Issued Under Section 4 of the Bank committed to assume the ongoing requirements of the Holding Company Act Order and the Decree and to assure FNB's continued compliance with the Order and the Decree and related SunTrust Banks, Inc. regulations and statutes after the acquisition. In addi- Atlanta, Georgia tion, Trustmark has committed to institute its corporate CRA programs and policies at FNB following the Order Approving an Application to Engage De Novo proposed acquisition. The Board has determined, on in Underwriting and Dealing in Certain the basis of all the facts of record, including the Bank-Ineligible Securities on a Limited Basis, and information provided by the OCC and the Justice Other Securities-Related Activities Department, that considerations relating to the convenience and needs of the communities to be served also SunTrust Banks, Inc., Atlanta, Georgia ("Appliare consistent with approval. The Board expects cant"), a bank holding company within the meaning of Trustmark to strengthen FNB's CRA performance, the Bank Holding Company Act ("BHC Act"), has and to assure FNB's full compliance with all applicaapplied under section 4(c)(8) of the BHC Act ble laws. In order for the Board to monitor progress in (12 U.S.C. § 1843(c)(8)) and section 225.23 of the this area, Trustmark must submit copies of the quar- Board's Regulation Y (12 C.F.R. 225.23) to engage terly reports mandated by the Order to the Federal de novo through its subsidiary, SunTrust Capital Mar- Reserve Bank of Atlanta. The Board also will monitor kets, Inc., Atlanta, Georgia ("Company"), in the progress and compliance in this area when considering following nonbanking activities: future applications by Trustmark. (1) Underwriting and dealing in, to a limited extent, Based on all the facts of record, the Board has certain investment quality municipal revenue bonds, determined that this application should be, and hereby 1-4 family mortgage-related securities, consumer is, approved. The Board's approval is specifically receivable- related securities, and commercial paper conditioned upon compliance by Trustmark with all (' 'bank-ineligible securities ");1 5. The Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act provides that a CRA 1. In connection with the proposal for Company to underwrite and examination is an important and often controlling factor in the deal in municipal revenue bonds, Applicant also has proposed that consideration of an institution's CRA record, and that these reports Company be permitted to underwrite and deal in certain municipal will be given great weight in the applications process. 54 Federal leases that are considered municipal securities for purposes of the Register 13,742 (1989). Securities Exchange Act of 1934. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 939 (2) Acting as agent in the private placement of all activities, have been determined by regulation to be types of securities, and providing related advisory closely related to banking for purposes of section services; 4(c)(8) of the BHC Act.3 Applicant has committed that (3) Purchasing and selling all types of securities as a Company will conduct these activities in accordance "riskless principal" on the order of customers; with the limitations set forth in Regulation Y and the (4) Making, acquiring, and servicing loans and other Board's orders relating to these activities.4 extensions of credit for Company's account and for the account of others, pursuant to section Underwriting and Dealing in Bank-Ineligible 225.25(b)(1) of Regulation Y (12 C.F.R. Securities 225.25(b)(1)); (5) Engaging in investment and financial advisory The Board previously has determined that, subject to activities, pursuant to section 225.25(b)(4) of Regu- the prudential framework of limitations established in lation Y (12 C.F.R. 225.25(b)(4)); previous decisions to address potential conflicts of (6) Arranging commercial real estate equity financ- interests, unsound banking practices, or other adverse ing, pursuant to section 225.25(b)(14) of Regula- effects, the proposed underwriting and dealing activition Y (12 C.F.R. 225.25(b)(14)); ties involving bank-ineligible securities are so closely (7) Providing discount and full-service brokerage related to banking as to be proper incidents thereto services, pursuant to section 225.25(b)(15) of Regu- within the meaning of section 4(c)(8) of the BHC Act.5 lation Y (12 C.F.R. 225.25(b)(15)); and Applicant has committed that, with one exception, (8) Underwriting and dealing in obligations of the Company will conduct the proposed underwriting and United States and other obligations that state mem- dealing activities using the same methods and proceber banks may underwrite and deal in under dures, and subject to the same prudential limitations, 12 U.S.C. §§ 335 and 24(7) ("bank-eligible securi- as were established by the Board in the Section 20 ties"), pursuant to section 225.25(b)(16) of Regula- Orders. tion Y (12 C.F.R. 225.25(b)(16)). Applicant has requested that the Board permit limited director interlocks between Company and its Notice of this application, affording interested per- affiliated banks. Applicant proposes to establish up to sons an opportunity to submit comments, has been two director interlocks between Company and its bank published (58 Federal Register 26,501 (1994)). The affiliates.6 These directors would not be officers of the time for filing comments has expired, and the Board affiliated banks, and would not conduct the day-to-day has considered the application and all comments re- business of the banks or handle individual bank transceived in light of the factors set forth in section 4(c)(8) actions. Applicant has not proposed that any officer of of the BHC Act. Company be employed by any bank affiliate. Applicant Applicant, with total consolidated assets of approx- also has committed to abide by the results of the imately $40.9 billion, is the second largest banking Board's pending review of interlocks between section organization in Georgia.2 Applicant operates banking 20 subsidiaries and affiliated banks. subsidiaries in Alabama, Florida, Georgia, and Tennessee, and engages through other subsidiaries in various permissible nonbanking activities. Company has applied to register as a broker-dealer with the 3. See 12 C.F.R. 225.25(b)(1), (b)(4), (b)(14), (b)(15), and (b)(16). 4. The Board notes that in order to address potential conflicts of Securities and Exchange Commission ("SEC"), and interests arising from Company's conduct of full-service brokerage has sought admission to the National Association of activities together with underwriting and dealing in bank-ineligible securities, Applicant has committed that whenever Company provides Securities Dealers, Inc. ("NASD"). Upon such regisfull-service brokerage services with respect to ineligible securities that tration with the SEC and admission to the NASD, it holds as principal, Company will inform its customers at the Company would be subject to the recordkeeping, commencement of the relationship that, as a general matter, Company may be a principal or may be engaged in underwriting with respect to, reporting, fiduciary standards, and other requirements or may purchase from an affiliate, those securities for which brokerage of the Securities Exchange Act of 1934 (15 U.S.C. and advisory services are provided. In addition, at the time any § 78a et seq.), the SEC, and the NASD. brokerage order is taken, the customer will be informed (usually orally) whether Company is acting as agent or principal with respect to As noted, all the proposed activities except under- a security. Confirmations sent to customers also will state whether writing and dealing in bank-ineligible securities, and Company is acting as agent or principal. See PNC Financial Corp., 75 Federal Reserve Bulletin 396 (1989). conducting private placement and "riskless principal" 5. See Citicorp, et al., 73 Federal Reserve Bulletin 473 (1987), ajfd sub nom. Securities Industry Ass'n v. Board of Governors of the Federal Reserve System, 839 F.2d 47 (2d Cir. 1988), cert, den., 486 U.S. 1059 (1988) ("Section 20 Orders"). 6. These interlocks would represent less than a majority of the 2. Asset and ranking data are as of June 30, 1994. boards of Company and each affiliated bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

940 Federal Reserve Bulletin • September 1994 The Board previously has permitted interlocks be- Private Placement and "Riskless Principal" tween a bank and an affiliated section 20 company.7 In Activities view of the limitations and commitments proposed by Applicant, the Board believes that Company would Private placement involves the placement of new remain operationally distinct from its affiliated banks, securities with a limited number of sophisticated purand does not believe that the proposed interlocks are chasers in a nonpublic offering. A financial intermedilikely to result in conflicts of interests, unsound bank- ary in a private placement transaction acts solely as an ing practices, or other adverse effects. Accordingly, agent for the issuer in soliciting purchasers, and does the Board has concluded that Applicant's proposed not purchase the securities and attempt to resell them. modification to the prudential limitations should be Securities that are privately placed are not subject to permitted. The Board expects that Applicant will the registration requirements of the Securities Act of ensure that the framework established pursuant to the 1933, and are offered only to financially sophisticated Section 20 Orders will be maintained in all other institutions and individuals and not to the public. respects. Company would not privately place registered securi- The Board also has determined that the conduct of ties, and would only place securities with customers these securities underwriting and dealing activities is who qualify as accredited investors. consistent with section 20 of the Glass-Steagall Act "Riskless principal" is the term used in the securi- (12 U.S.C. § 377), provided that the company engaged ties business to refer to a transaction in which a in the underwriting and dealing activities derives no broker-dealer, after receiving an order to buy (or sell) more than 10 percent of its total gross revenues over a security from a customer, purchases (or sells) the any two-year period from underwriting and dealing in security for its own account to offset a contemporanesecurities that a bank may not underwrite or deal in ous sale to (or purchase from) the customer.10 "Riskdirectly.8 Applicant has committed that Company will less principal" transactions are understood in the conduct its underwriting and dealing activities with industry to include only transactions in the secondary respect to bank-ineligible securities subject to the market. Thus, Company would not act as a "riskless 10 percent revenue test established by the Board in principal" in selling securities at the order of a cusprevious orders.9 tomer that is the issuer of the securities to be sold, or in any transaction where Company has a contractual agreement to place the securities as agent of the issuer. Company also would not act as a "riskless principal" in any transaction involving a security for which it makes a market. The Board previously has determined that, subject 7. See, e.g., Bank South Corporation, 79 Federal Reserve Bulletin to a number of prudential limitations that address the 716 (1993); Banc One Corporation, 76 Federal Reserve Bulletin 756 potential for conflicts of interests, unsound banking (1990). 8. See Section 20 Orders. Compliance with the 10 percent revenue practices, and other adverse effects, the proposed limitation shall be calculated in accordance with the method stated in private placement and riskless principal activities are J.P. Morgan & Co. Incorporated, et al., 75 Federal Reserve Bulletin closely related to banking within the meaning of sec- 192, 196—197 (1989), as modified by the Order Approving Modifications to the Section 20 Orders, 75 Federal Reserve Bulletin 751 (1989), tion 4(c)(8) of the BHC Act.11 The Board also has the Order Approving Modifications to the Section 20 Orders, 79 previously determined that acting as agent in the Federal Reserve Bulletin 226 (1993), and the Supplement to Order private placement of securities, and purchasing and Approving Modifications to Section 20 Orders, 79 Federal Reserve Bulletin 360 (1993) (collectively, "Modification Orders"). The Board selling securities on the order of investors as a "risknotes that Applicant has not adopted the Board's alternative indexed- less principal," do not constitute underwriting or revenue test to measure compliance with the 10 percent revenue limitation on bank-ineligible securities activities, and, absent such dealing in securities for purposes of section 20 of the election, Applicant will continue to employ the Board's original Glass-Steagall Act, and, accordingly, that revenue 10 percent revenue standard. derived from these activities is not subject to the 9. Applicant has indicated that, in connection with Company's proposed underwriting and dealing activities, Company intends to 10 percent revenue limitation on bank-ineligible secuengage in related hedging transactions. The Board notes that Com- rities underwriting and dealing activities.12 Applicant pany may conduct activities that are necessary incidents to the proposed underwriting and dealing activities, provided that any activities conducted as a necessary incident to the bank-ineligible securities activities are treated as part of the bank-ineligible securities activities unless Company has received specific approval under section 4(c)(8) 10. See 17 C.F.R. 249.10b-10(a)(8)(i). of the BHC Act to conduct such activities independently. Until such 11. See J.P. Morgan & Company Incorporated, 76 Federal Reserve approval is obtained, any revenues from the incidental activities must Bulletin 26 (1990) ("J.P. Morgan Order"); Bankers Trust New York be counted as ineligible revenues subject to the 10 percent revenue Corporation, 75 Federal Reserve Bulletin 829 (1989) ("Bankers Trust limitation set forth in the Section 20 Orders, as modified by the Order"). Modification Orders. 12. See Bankers Trust Order. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 941 has committed that Company will conduct its private decisions, consummation of this proposal is not likely placement and riskless principal activities using the to result in any significant adverse effects, such as same methods and procedures, and subject to the same undue concentration of resources, decreased or unfair prudential limitations, as were established by the Board competition, conflicts of interests, or unsound banking in the Bankers Trust Order, the J.P. Morgan Order.13 practices. Moreover, the Board expects that the These methods, procedures, and prudential limitations de novo entry of Company into the market for the include the comprehensive framework of restrictions proposed services would provide added convenience designed to avoid potential conflicts of interests, un- to Applicant's customers, and would increase the level sound banking practices, and other adverse effects of competition among existing providers of these serimposed by the Board in connection with underwriting vices. Accordingly, the Board has determined that the and dealing in bank-ineligible securities.14 performance of the proposed activities by Company can reasonably be expected to produce public benefits Other Considerations that outweigh possible adverse effects under the proper incident to banking standard of section 4(c)(8) In every application under section 4(c)(8) of the BHC of the BHC Act. Act, the Board considers the financial and managerial Based on all the facts of record, and subject to the resources of the applicant and its subsidiaries and the commitments made by Applicant, as well as the terms effect of the proposal upon such resources.15 Based on and conditions set forth in this order and in the all the facts of this case, the Board concludes that above-noted Board orders, the Board has determined financial and managerial considerations are consistent that the application should be, and hereby is, apwith approval of this application. proved. Approval of this proposal is specifically con- In order to approve this application, the Board also ditioned on compliance by Applicant and Company must determine that the performance of the proposed with the commitments made in connection with this activities by Company can reasonably be expected to application and the conditions referenced in this order produce public benefits that would outweigh possible and the above-referenced orders. The Board's deteradverse effects under the proper incident to banking mination also is subject to all the terms and conditions standard of section 4(c)(8) of the BHC Act. Under the set forth in Regulation Y, including those in sections framework and conditions established in this and prior 225.4(d) and 225.23(b) of Regulation Y, and to the Board's authority to require such modification or termination of the activities of a bank holding company or any of its subsidiaries as the Board finds 13. See J.P. Morgan Order; Bankers Trust Order. Among the prudential limitations detailed more fully in those Orders are that necessary to ensure compliance with, and to prevent Company will maintain specific records that will clearly identify all evasion of, the provisions of the BHC Act and the "riskless principal" transactions, and that Company will not engage in Board's regulations and orders issued thereunder. In any "riskless principal" transactions for any securities carried in its inventory. When acting as a "riskless principal," Company will approving this proposal, the Board has relied upon all engage only in transactions in the secondary market, and not at the the facts of record, and all the representations and order of a customer that is the issuer of the securities to be sold, will commitments made by Applicant. For purposes of this not act as "riskless principal" in any transaction involving a security for which it makes a market, nor hold itself out as making a market in transaction, these commitments and the conditions the securities that it buys and sells as a "riskless principal." More- referenced herein shall be deemed to be conditions over, Company will not engage in "riskless principal" transactions on behalf of any foreign affiliates that engage in securities dealing imposed in writing by the Board in connection with its activities outside the United States, and will not act as "riskless findings and decision, and, as such, may be enforced in principal" for registered investment company securities. In addition, proceedings under applicable law. Company will not act as a "riskless principal" with respect to any securities of investment companies that are advised by Applicant or This transaction shall not be consummated later any of its affiliates. With respect to private placement activities, than three months after the effective date of this order, Applicant has committed that Company will not privately place registered investment company securities or securities of investment unless such period is extended for good cause by the companies that are advised by Applicant or any of its affiliates. Board or by the Federal Reserve Bank of Atlanta, 14. With respect to Company's riskless principal activities, Applicant has proposed that Company be permitted to enter bid or ask acting pursuant to delegated authority. quotations, or publish "offering wanted" or "bid wanted" notices, on By order of the Board of Governors, effective trading systems other than an exchange or the NASDAQ, provided August 15, 1994. that Company not enter price quotations on different sides of the market for a particular security without a separation of at least two business days between such quotations. The Board has previously Voting for this action: Chairman Greenspan, Vice Chairpermitted this practice in connection with riskless principal activities. man Blinder, and Governors Kelley, LaWare, Phillips, and See Dauphin Deposit Corporation, 77 Federal Reserve Bulletin 672 Yellen. Absent and not voting: Governor Lindsey. (1991). 15. See 12 C.F.R. 225.24. See also The Fuji Bank, Limited, 75 JENNIFER J. JOHNSON Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve Bulletin 155 (1987). Deputy Secretary of the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

942 Federal Reserve Bulletin • September 1994 Orders Issued Under Sections 3 and 4 of the notify the Federal Deposit Insurance Corporation Bank Holding Company Act ("FDIC"), and obtain the approval of the bank's state regulator, prior to converting to the stock form of Harvest Home Financial Corporation ownership.2 The FDIC has informed Bank that it will Cheviot, Ohio issue a non-objection letter with regard to the conversion, provided that Bank meets several conditions.3 Order Approving Formation of a Bank Holding The Ohio Department of Commerce, Division of Sav- Company and Application to Engage in Lending ings & Loans/Savings Banks also has conditionally Activities approved the proposed conversion. The Board has reviewed the facts of record, including Bank's revised Harvest Home Financial Corporation, Cheviot, Ohio business plan, and believes that Applicant's proposal ("Applicant"), has applied under section 3(a)(1) of the is consistent with the factors the Board must consider Bank Holding Company Act ("BHC Act") (12 U.S.C. under the BHC Act. Accordingly, based on all the § 1842(a)(1)) to become a bank holding company by facts of record and subject to fulfillment by Bank and acquiring all the voting shares of Harvest Home Sav- Applicant of the conditions imposed by the FDIC and ings Bank, Cheviot, Ohio ("Bank"). Applicant also the Ohio Department of Commerce, Division of Savhas applied pursuant to section 4(c)(8) of the BHC Act ings & Loans/Savings Banks, the Board concludes (12 U.S.C. § 1843(c)(8)) to engage directly in making, that the financial and managerial resources and future acquiring or servicing loans or other extensions of prospects of Applicant and Bank, and the convenience credit pursuant to section 225.25(b)(1) of the Board's and needs and other supervisory factors that the Board Regulation Y (12 C.F.R. 225.25(b)(1)). is required to consider under section 3 of the BHC Notice of the applications, affording interested per- Act, are consistent with approval of this proposal. sons an opportunity to submit comments, has been Applicant also has applied for approval to engage in published (59 Federal Register 13,966 (1994)). The lending activities. The Board previously has detertime for filing comments has expired, and the Board mined that these activities are closely related to bankhas considered the applications and all comments ing and permissible for bank holding companies under received in light of the factors set forth in sections 3 section 4(c)(8) of the BHC Act and the Board's Reguand 4 of the BHC Act. lation Y. Applicant proposes to conduct these activi- Applicant is a nonoperating corporation formed for ties pursuant to the requirements of the Board's reguthe purpose of becoming a bank holding company lations. The record in this case indicates that there are through the acquisition of Bank. Bank currently oper- numerous providers of these services, and there is no ates as an Ohio-chartered mutual savings bank and has evidence in the record to indicate that consummation applied to the Ohio Department of Commerce, Divi- of this proposal is likely to result in any significantly sion of Savings & Loans/Savings Banks, to convert to adverse effects, such as undue concentration of rean Ohio stock savings bank. Bank is the 187th largest sources, decreased or unfair competition, conflicts of depository institution in Ohio, controlling deposits of interests, or unsound banking practices, that would approximately $59.8 million, representing less than not be outweighed by the likely public benefits of this 1 percent of total deposits in depository institutions in proposal. Accordingly, the Board has determined that the state.1 Applicant and Bank do not compete directly the balance of public interest factors it must consider in any banking market. Accordingly, consummation of under section 4(c)(8) of the BHC Act is favorable and this proposal would not have a significantly adverse consistent with approval of this application. effect on competition or the concentration of banking Based on the foregoing and other facts of record, the resources in any relevant banking market. Board has determined that the applications should be, In every application under section 3 of the BHC and hereby are, approved. The Board's approval is Act, the Board is required to consider the financial and expressly conditioned upon compliance with all the managerial resources and future prospects of the com- commitments made by Applicant in connection with panies and banks concerned, and the convenience and these applications, and is conditioned upon Applicant needs of the community to be served. As noted above, Bank is a mutual savings bank, and before consummation of this proposal, Bank would become an Ohio- 2. The FDIC has published an interim rule governing these converchartered stock savings bank. A nonmember state- sions and has requested public comment on a proposed rule that addresses concerns that arise in the context of mutual-to-stock chartered mutual savings bank, such as Bank, must conversions of state nonmember savings banks. 59 Federal Register 7194 (1994); 59 Federal Register 30,316 (1994). 3. The conditions include a satisfactory business plan and an updated appraisal that takes the subscription offering into consider- 1. State deposit data are as of December 31, 1993. ation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 943 and Bank receiving all necessary approvals from all Notice of the applications, affording an opportunity the relevant regulatory agencies, and compliance with for interested persons to submit comments, has been the requirements imposed by the FDIC and the Ohio duly published (58 Federal Register 65,597 (1993)). Department of Commerce, Division of Savings & The time for filing comments has expired, and the Loans/Savings Banks. The determination on the non- Board has considered the applications and all combanking activities is subject to all the conditions in ments received in light of the factors set forth in Regulation Y, including those in sections 225.4(d) and sections 3 and 4 of the BHC Act. 225.23(b)(3) (12 C.F.R. 225.4(d) and 225.23(b)(3)), and Northwest is a non-operating corporation formed to the Board's authority to require such modification for the purpose of becoming a bank holding company or termination of the activities of a holding company or through the acquisition of Bank. Bank is the 173d any of its subsidiaries as the Board finds necessary to largest depository institution in Wisconsin, with deassure compliance with, or to prevent evasion of, the posits of $49.1 million, representing less than 1 percent provisions and purposes of the BHC Act and the of the total deposits in depository institutions in the Board's regulations and orders issued thereunder. The state.1 Northwest and Bank do not compete directly in commitments and conditions relied on by the Board in any banking market. Accordingly, consummation of reaching this decision are deemed to be conditions this proposal would not have a significantly adverse imposed in writing by the Board in connection with its effect on competition in any relevant banking market. findings and decision, and, as such, may be enforced in In every application under section 3 of the BHC proceedings under applicable law. Act, the Board is required to consider the financial and The acquisition of the subsidiary bank shall not be managerial resources and future prospects of the comconsummated before the thirtieth calendar day follow- panies and banks concerned, and the convenience and ing the effective date of this order, and the banking and needs of the communities to be served. Bank currently nonbanking transactions shall not be consummated is chartered in Wisconsin as a mutual savings bank, later than three months after the effective date of this and before consummation of this proposal, it would order, unless such period is extended for good cause become a Wisconsin-chartered stock savings bank. A by the Federal Reserve Bank of Cleveland, acting nonmember state-chartered mutual savings bank, such pursuant to delegated authority. as Bank, must notify the Federal Deposit Insurance By order of the Board of Governors, effective Corporation ("FDIC") and obtain the approval of the August 10, 1994. bank's state regulator prior to converting to the stock form of ownership.2 The FDIC has informed Bank that it will issue a non-objection letter with regard to the Voting for this action: Vice Chairman Blinder and Governors Kelley, La Ware, Lindsey, and Phillips. Absent and not conversion, provided that Bank meets several condivoting: Chairman Greenspan. tions.3 The Wisconsin State Commissioner of Savings and Loan also has approved the proposed conversion. JENNIFER J. JOHNSON The Board has reviewed the facts of record, including Deputy Secretary of the Board Bank's business plan, and believes that Northwest's proposal is consistent with the factors the Board must Northwest Equity Corp. consider under the BHC Act. Accordingly, based on Amery, Wisconsin all the facts of record and subject to fulfillment of the conditions imposed by the FDIC and the Wisconsin Order Approving Formation of a Holding Company State Commissioner of Savings and Loan, the Board and Engaging in Lending Activities concludes that the financial and managerial resources and future prospects of Northwest and Bank and the convenience and needs and other supervisory factors Northwest Equity Corp., Amery, Wisconsin ("Norththat the Board must consider under section 3 of the west"), has applied under section 3(a)(1) of the Bank BHC Act are consistent with approval of this pro- Holding Company Act ("BHC Act") (12 U.S.C. posal. § 1842(a)(1)) to become a bank holding company by acquiring all the voting shares of Northwest Savings Bank, Amery, Wisconsin ("Bank"). Northwest also has applied, pursuant to section 4(c)(8) of the BHC Act 1. All banking data are as of December 31, 1993. (12 U.S.C. § 1843(c)(8)) and section 225.25(b)(1) of the 2. The FDIC has published an interim rule governing these conversions and has requested public comment on a proposed rule that Board's Regulation Y (12 C.F.R. 225.25(b)(1)), to en- addresses concerns that arise in the context of mutual-to-stock gage directly in making, acquiring, or servicing loans conversions of state nonmember savings banks. 59 Federal Register 7194 (1994); 59 Federal Register 30,316 (1994). or other extensions of credit pursuant to section 3. The conditions include an updated appraisal that takes the 225.25(b)(1) of Regulation Y. subscription offering into consideration. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

944 Federal Reserve Bulletin • September 1994 Northwest also has applied to engage in lending By order of the Board of Governors, effective activities. The Board previously has determined that August 10, 1994. these activities are closely related to banking and generally permissible for bank holding companies Voting for this action: Vice Chairman Blinder and Goverunder section 4(c)(8) of the BHC Act and Regulation nors Kelley, LaWare, Lindsey, and Phillips. Absent and not voting: Chairman Greenspan. Y (12 C.F.R. 225.25(b)(1)). Northwest proposes to conduct these activities in accordance with the JENNIFER J. JOHNSON Board's regulations. The record in this case indicates Deputy Secretary of the Board that there are numerous providers of these services and there is no evidence in the record to indicate that Northwest Illinois Bancorp, Inc. consummation of this proposal is likely to result in Freeport, Illinois any significantly adverse effects, such as undue concentration of resources, decreased or unfair compe- Order Approving the Acquisition of a Bank and an tition, conflicts of interests, or unsound banking Application to Engage in Insurance Activities practices, that would not be outweighed by the likely public benefits of this proposal. Accordingly, the Northwest Illinois Bancorp, Inc., Freeport, Illinois Board concludes that the balance of public interest ("Northwest"), a bank holding company within the factors that it is required to consider under section meaning of the Bank Holding Company Act ("BHC 4(c)(8) of the BHC Act is favorable, and consistent Act"), has applied under section 3(a)(3) of the BHC with approval of Northwest's application. Act (12 U.S.C. § 1842(a)(3)) to acquire all the voting Based on the foregoing and other facts of the shares of Tri-State Bank & Trust Company, East record, the Board has determined that the applica- Dubuque, Illinois ("TSBT"). Northwest also has aptions should be, and hereby are, approved. The plied under section 4(c)(8) of the BHC Act (12 U.S.C. Board's approval of this transaction is expressly § 1843(c)(8)) to acquire Tri-State Insurance Agency, conditioned on compliance with all the commitments Inc. ("TSI"), and thereby engage in general insurance made by Northwest in connection with these appliactivities in towns of less than 5,000 in population cations, and on Northwest and Bank receiving all pursuant to section 225.25(b)(8)(iii) of the Board's necessary approvals from all the relevant regulators, Regulation Y. and compliance with the requirements imposed by Notice of the applications, affording interested perthe FDIC and the Wisconsin State Commissioner of sons an opportunity to submit comments, has been Savings and Loan. The determination on the nonpublished (59 Federal Register 30,587 (1993)). The banking activities is subject to all the conditions time for filing comments has expired, and the Board in Regulation Y, including those in sections has considered the applications and all comments 225.4(d) and 225.23(b)(3) (12 C.F.R. 225.4(d) and received in light of the factors set forth in sections 3 225.23(b)(3)), and to the Board's authority to require and 4 of the BHC Act. such modification or termination of the activities of a Northwest is the 56th largest commercial banking holding company or any of its subsidiaries as the organization in Illinois, controlling approximately Board finds necessary to assure compliance with, or $327.7 million in deposits, representing less than 1 perto prevent evasion of, the provisions and purposes of cent of total deposits in commercial banks in the the BHC Act and the Board's regulations and orders state.1 TSBT is the 393d largest commercial banking issued thereunder. For purposes of this action, these organization in Illinois, controlling approximately commitments and conditions will both be considered $39.8 million in deposits, representing less than 1 perconditions imposed in writing by the Board in concent of total deposits in commercial banks in the state. nection with its findings and decision, and, as such, Upon consummation of the proposal, Northwest may be enforced in proceedings under applicable would become the 49th largest commercial banking law. organization in Illinois, controlling approximately The acquisition of the subsidiary bank shall not be $367.5 million in deposits, representing less than 1 perconsummated before the thirtieth calendar day folcent of total deposits in commercial banks in the state. lowing the effective date of this order, and the Northwest and TSBT compete directly in the Jo banking and nonbanking transactions shall not be Daviess County, Illinois banking market.2 Northwest consummated 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 Minneapolis, acting pursuant to 1. Deposit data are as of June 30, 1993. 2. The Jo Daviess County banking market is approximated by delegated authority. Jo Daviess County, except Dunlieth Township. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 945 is the second largest of the seven commercial banking significantly adverse effect in competition or the conorganizations in the market, controlling deposits of centration of resources in the Jo Daviess County $71.4 million, representing 24.4 percent of the total banking market or any other relevant market. deposits in commercial banks in the market ("market The Board also concludes that the financial and deposits").3 TSBT is the seventh largest depository managerial resources and future prospects of TSBT, institution in the market, controlling deposits of Northwest, and its subsidiary banks are consistent $12.5 million, representing 4.3 percent of market de- with approval of this proposal. Considerations relating posits. Upon consummation of the proposal, North- to the convenience and needs of the communities to be west would become the largest commercial banking served and other supervisory factors the Board is organization in the market, controlling total deposits required to consider under section 3 of the BHC Act of $83.9 million, representing 28.7 percent of market also are consistent with approval. deposits. The Herfindahl-Hirschman Index ("HHI") Northwest also has applied, pursuant to section would increase 210 points to 2109.4 4(c)(8) of the BHC Act, to acquire TSI, and thereby Although this proposal would result in some in- engage in general insurance agency activities in towns crease in market concentration, several factors miti- with a population not exceeding 5,000. The Board gate the competitive effects of this transaction. Six previously has determined that this activity is closely commercial banks would remain as competitors after related to banking and generally permissible for bank consummation of this proposal. In addition, several holding companies under section 4(c)(8) of the BHC aspects of the Jo Daviess County banking market Act7 and Regulation Y (12 C.F.R. 225.25(b)(8)(iii). make it an attractive market for potential competitors Northwest proposes to conduct this activity in accorto enter. In terms of total bank deposits, Jo Daviess dance with the Board's regulations. The record in this County is among the top third of rural Illinois counties. case indicates that there are numerous providers of In addition, the market has experienced growth in total this service, and there is no evidence in the record to bank deposits and per capita income that exceed the indicate that consummation of this proposal is likely to average growth rates for other rural markets in the result in any significantly adverse effects, such as state. From 1988 to 1991, total bank deposits for the undue concentration of resources, decreased or unfair market have increased 13.5 percent and per capita competition, conflicts of interests, or unsound banking income for the market has increased 15 percent.5 In practices, that would outweigh the public benefits of addition, the legal barriers to entry into the market this proposal. Accordingly, the Board has determined remain low. Illinois permits statewide branching and that the balance of public interest factors it must allows bank holding companies from other states to consider under section 4(c)(8) of the BHC Act is enter on a reciprocal basis.6 favorable and consistent with approval of Northwest's Based on all the facts of record, including the application to acquire TSI. number of remaining competitors and the attractive- Based on the foregoing and other facts of record, the ness of the market, the Board concludes that consum- Board has determined that the applications should be, mation of the proposal is not likely to result in any and hereby are, approved. The Board's approval is expressly conditioned upon compliance with all the commitments made by Northwest in connection with 3. No thrift institutions operate in the Jo Daviess County banking these applications. The determination as to the nonmarket. banking activities are subject to all the conditions in 4. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the the Board's Regulation Y, including those in sections post-merger HHI is above 1800 is considered to be highly concen- 225.4(d) and 225.23(b)(3), and to the Board's authority trated. In such markets, the Justice Department is likely to challenge to require such modification or termination of the a merger that increases the HHI by more than 50 points. The Justice Department has informed the Board that a bank merger or acquisition activities of a holding company or any of its subsidiargenerally will not be challenged (in the absence of other factors ies as the Board finds necessary to assure compliance indicating anti-competitive effects) unless the post-merger HHI is at with, or to prevent evasion of, the provision and least 1800 and the merger or acquisition increases the HHI by at least 200 points. The Justice Department has stated that the higher than purposes of the BHC Act and the Board's regulation normal threshold for an increase in the HHI when screening bank and orders issued thereunder. The commitments and mergers and acquisitions for anticompetitive effects implicitly recognizes the competitive effect of limited-purpose lenders and other conditions relied on by the Board in reaching this non-depository financial entities. decision are deemed to be conditions imposed in 5. The average increases in total bank deposits and per capita income for rural Illinois counties, during the 1988-1991 period, is 13.3 percent and 13.9 percent, respectively. Income data is from, Survey of Current Business, May 1993, "Local Area Personal Income", Table 2—Total Personal Income & Per Capita Personal Income by County. 6. 205 ILCS 5/5(15) and 10/3.071 (West Supp. 1994). 7. See 12 U.S.C. § 1843(c)(8)(C) and 12 C.F.R. 225.25(b)(8)(iii). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

946 Federal Reserve Bulletin • September 1994 writing by the Board in connection with its findings sota.1 Security Agency is the 126th largest commercial and decision, and, as such, may be enforced in pro- banking organization in Minnesota, controlling deposceedings under applicable law. its of $48.1 million, representing less than 1 percent of The acquisition of the subsidiary bank shall not be total deposits in commercial banking organizations in consummated before the thirtieth calendar day follow- the state.2 Cook County Bank, a de novo institution, ing the effective date of this order, and the banking and would provide commercial banking services in the nonbanking acquisitions shall not be consummated Cook County, Minnesota, banking market.3 In view of later than three months after the effective date of this the de novo status of Cook County Bank, and based on order, unless such period is extended for good cause all the facts of record, the Board concludes that by the Board or by the Federal Reserve Bank of consummation of this proposal would not result in any Chicago, acting pursuant to delegated authority. significantly adverse effects on competition or the By order of the Board of Governors, effective concentration of banking resources in any relevant August 22, 1994. banking market. The Board received comments from a bank in Grand Voting for this action: Chairman Greenspan, Vice Chair- Marais ("Protestant"), alleging that Security Agency man Blinder, and Governors Kelley, LaWare, and Phillips. cannot adequately service the acquisition debt that Absent and not voting: Governors Lindsey and Yellen. will be incurred to capitalize Cook County Bank and build a facility for the bank. In addition, Protestant JENNIFER J. JOHNSON alleges that the proposed management for Cook Deputy Secretary of the Board County Bank is inadequate, and that Security Agency would not be able to provide sufficient management support.4 The Board has carefully reviewed Protestant's com- Security State Agency of Aitkin, Inc. ments in light of all the facts of record, including Aitkin, Minnesota confidential financial information and relevant reports of examination. The Board notes that Security Agency is in satisfactory financial condition and has sufficient Order Approving the Acquisition of a Bank and an financial resources to establish Cook County Bank as Application to Engage in General Insurance Agency a de novo bank, and that its debt service projections Activities in a Small Town and pro forma debt-to-equity ratio are reasonable and consistent with the Board's guidelines. Security State Agency of Aitkin, Inc., Aitkin, Minnesota ("Security Agency"), a bank holding company within the meaning of the Bank Holding Com- 1. Asset data are as of March 31, 1994. Security Agency is the pany Act ("BHC Act"), has applied under section 3 parent of Security State Bank of Aitkin, Aitkin, Minnesota ("Security of the BHC Act (12 U.S.C. § 1842) to acquire all the Bank"). 2. State deposit data are as of March 31, 1994. voting shares of Cook County State Bank, Grand 3. The Cook County, Minnesota, banking market is approximated Marais, Minnesota ("Cook County Bank"), a by Cook County, Minnesota. de novo bank. Security Agency also has applied 4. Protestant also alleges that Security Agency's sole shareholder ("Principal") may have violated Board regulations by exercising under section 4(c)(8) of the BHC Act (12 U.S.C. significant influence over and participating in major policy decisions of § 1843(c)(8)) to engage in general insurance agency Security Agency. Principal acquired his interest in, and ability to influence, Security Agency in accordance with the prior notice proactivities on the premises of Cook County Bank in cedures under the Change in Bank Control Act (12 U.S.C. § 1817(j)), Grand Marais, a town with a population not exceed- and has not changed his position at Security Agency in any way that ing 5,000, pursuant to section 225.25(b)(8)(iii) of would have required additional Board approval. Additionally, Protestant alleges that, in 1990, Principal engaged in a transaction that Regulation Y (12 C.F.R. 225.25(b)(8)(iii)). circumvented the loan policies of another bank, Whatcom State Bank, Notice of these applications, affording interested Ferndale, Washington ("Whatcom Bank"), of which he is the primary shareholder, and may have violated insider lending or other regulapersons an opportunity to submit comments, has been tions. The Board has reviewed all the facts of record regarding this published (59 Federal Register 26,232 (1994)). The allegation, including relevant reports of examination and information time for filing comments has expired, and the Board received from the Federal Deposit Insurance Corporation ("FDIC"), Whatcom Bank's primary federal regulator, and the history of Princihas considered the applications and all comments pal's involvement in Whatcom Bank and Security Agency. The FDIC received in light of the factors set forth in sections 3 has indicated that Whatcom Bank's loan policies and compliance are satisfactory, and that the transaction identified by Protestant did not and 4 of the BHC Act. warrant supervisory action. Based on all the facts of record, the Board Security Agency, with total consolidated assets of concludes that Protestant's allegations do not warrant denial of these $52.8 million, controls one subsidiary bank in Minne- applications. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 947 The Board also "has carefully reviewed the manage- hereby are, approved. The Board's approval is specifrial resources of Security Agency and Cook County ically conditioned upon compliance by Security Bank in light of Protestant's allegations. The Board Agency with all the commitments made in connection has reviewed relevant examination and inspection with these applications. reports, and has considered the findings of the Minne- The determinations as to the nonbanking activities sota Commissioner of Commerce ("Commissioner"), are subject to all the conditions in Regulation Y, Cook County Bank's primary regulator, that Cook including those in sections 225.4(d) and 225.23(b)(3) County Bank would be properly capitalized and man- (12 C.F.R. 225.4(d) and 225.23(b)(3)), and to the aged.5 The FDIC also has concluded that the manage- Board's authority to require such modification or rial resources of Cook County Bank are consistent termination of the activities of a bank holding comwith approval of the bank's application for deposit pany or any of its subsidiaries as the Board finds insurance. Based on all the facts of record, including necessary to assure compliance with, or to prevent relevant examination reports, the managerial re- evasions of, the provisions and purposes of the BHC sources available to Security Agency, and Security Act and the Board's regulations and orders issued Agency's business plans, the Board concludes that thereunder. The commitments and conditions relied Protestant's comments do not warrant denial of these on by the Board in reaching its decision on these applications, and concludes that the financial and applications are both deemed to be conditions imposed managerial resources and future prospects of Security in writing by the Board in connection with its findings Agency, Security Bank, and Cook County Bank are and decision, and as such may be enforced in proceedconsistent with approval. The Board also concludes ings under applicable law. that considerations relating to the convenience and The banking acquisitions may not be consummated needs of the communities to be served and the other before the thirtieth calendar day following the effective supervisory factors that the Board must consider date of this order, the banking and nonbanking acquiunder section 3 of the BHC Act are consistent with sitions shall not be consummated later than three approval of this proposal. months after the effective date of this order, and Cook Security Agency also has applied, under section County Bank shall be open for business not later than 4(c)(8) of the BHC Act, to engage in general insurance six months after the effective date of this order. The agency activities in Grand Marais, a town with a later two periods may be extended for good cause by population not exceeding 5,000. The Board previously the Board or the Federal Reserve Bank of Minneapolis has determined by regulation that the proposed insur- acting pursuant to delegated authority. ance agency activities are closely related to banking By order of the Board of Governors, effective and permissible under section 4(c)(8) of the BHC Act.6 August 8, 1994. Security Agency has committed that it will conduct these activities subject to the limitations in Regula- Voting for this action: Chairman Greenspan, Vice Chairtion Y. The Board believes that Security Agency's man Blinder, and Governors Kelley, La Ware, Lindsey, and proposal to engage in these activities on a de novo Phillips. basis would enhance competition among existing pro- JENNIFER J. JOHNSON viders of these services, and there is no evidence in the Deputy Secretary of the Board record to indicate that consummation of this proposal is likely to result in any significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or un- ORDERS ISSUED UNDER INTERNATIONAL sound banking practices. Accordingly, the Board has BANKING ACT determined that the balance of public interest factors it must consider under section 4(c)(8) of the BHC Act is Cooperatieve Centrale Raiffeisenfavorable and consistent with approval. Boerenleenbank B.A., Rabobank Nederland Based on all the facts of record, the Board has Utrecht, The Netherlands determined that these applications should be, and Order Approving Establishment of a Representative Office 5. Protestant's allegations were considered by a Minnesota Administrative Law Judge ("ALJ") in connection with Cook County Bank's Cooperatieve Centrale Raiffeisen-Boerenleenbank charter application. After considering Protestant's comments, the Commissioner adopted the findings of the ALJ and approved Cook B.A., Rabobank Nederland ("Bank"), Utrecht, The County Bank's charter. Netherlands, a foreign bank within the meaning of the 6. See 12 C.F.R. 225.25(b)(8)(iii). See also 12 U.S.C. § 1843(c)(8)(C)(i). International Banking Act ("IBA"), has applied under Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

948 Federal Reserve Bulletin • September 1994 section 10(a) of the IBA (12 U.S.C. § 3107(a)) to the Board shall take into account whether the foreign establish a representative office in Chicago, Illinois. bank engages directly in the business of banking The Foreign Bank Supervision Enhancement Act of outside the United States, has furnished to the Board 1991 ("FBSEA"), which amended the IBA, provides the information it needs to assess adequately the that a foreign bank must obtain the approval of the application, and is subject to comprehensive supervi- Board to establish a representative office in the United sion or regulation on a consolidated basis by its home States. country supervisor. 12 U.S.C. § 3105(d)(2); 12 C.F.R. Notice of the application, affording interested per- 211.24. The Board also may take into account addisons an opportunity to comment, has been published tional standards as set forth in the IBA and Regulain a newspaper of general circulation in Chicago, tion K. 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. Illinois (Chicago Tribune, March 24, 1994). The time 211.24(c). for filing comments has expired, and the Board has The Board has previously stated that the standards considered the application and all comments received. that apply to the establishment of a branch or agency Bank is a cooperative entity that has been granted a need not in every case apply to the establishment of a license in the Netherlands to engage in a universal representative office, because representative offices do banking business. Bank, with total consolidated assets not engage in a banking business and cannot take of approximately $131 billion,1 is the second largest deposits or make loans.3 In evaluating an application bank in the Netherlands. The Rabobank Group (the to establish a representative office under the IBA and "Group") consists of Bank, which is the central Regulation K, the Board will take into account the institution;2 Bank's subsidiaries; and approximately standards that apply to establishment of branches and 650 local banks in the Netherlands ("Local Banks"). agencies, subject to certain considerations relating to The Group provides a wide range of domestic and supervision by home country authorities and financial international financial services, with offices in 20 counfactors.4 tries in Europe, Asia and elsewhere. The Local Banks Bank is subject to supervision and regulation by are engaged primarily in local retail and business DNB. The Board has previously determined, in conlending and deposit taking. In the Netherlands, Bank nection with an application involving another bank in provides primarily wholesale banking services such as the Netherlands, that the Dutch bank was subject to corporate banking and finance and private banking home country supervision on a consolidated basis.5 In services. Bank's international banking activities are this case, the Board has determined that Bank is concentrated in the international agribusiness sector. supervised in its banking operations by DNB on the Bank provides administrative and advisory services same terms and conditions as set forth in the earlier for the Local Banks, and supervises them under au- order.6 In light of all the facts of record, the Board has thority delegated by De Nederlandsche Bank, N.V. determined that Bank is subject to comprehensive ("DNB"), the Dutch central bank. Bank's subsidiaries supervision or regulation by its home country superengage in a variety of domestic and international visor on a consolidated basis. activities, including leasing, consumer finance, ship The Board also notes that Bank engages directly in finance, factoring, and insurance. the business of banking outside the United States Bank's operations in the United States include a through its extensive banking operations in Europe, branch in New York, an agency in Dallas, and repre- Asia and elsewhere. Bank has provided the Board with sentative offices in San Francisco and Des Moines. the information necessary to assess the application Bank also engages indirectly in permissible nonbank- through submissions that address the relevant issues. ing activities in the United States. The Board has also taken into account the additional The proposed representative office would engage standards set forth in section 7 of the IBA and Regusolely in representational and administrative activities, lation K. 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. including soliciting new business and acting as liaison 211.24(c)(2). The Board notes that DNB has no objecbetween Bank and its U.S. customers. The proposed office would have no authority to make credit decisions or any other decisions relating to Bank's banking 3. See 58 Federal Register 6348, 6351 (1993). business. 4. See Citizens National Bank, 79 Federal Reserve Bulletin 805 In acting on an application to establish a represen- (1993). tative office, the IBA and Regulation K provide that 5. See MeesPierson N.V., 80 Federal Reserve Bulletin 662 (1994). 6. Although, as noted above, Bank performs a supervisory function for the Local Banks under authority delegated by DNB, DNB supervises Bank on a consolidated basis, which includes the opera- 1. Data are as of December 31, 1993, unless otherwise noted. tions and activities of the Local Banks, and retains a direct supervi- 2. The Local Banks are members of Bank, which is a cooperative sory role over the Local Banks through periodic examinations and institution, and its sole shareholders. other means. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 949 tion to the establishment of the proposed representa- By order of the Board of Governors, effective tive office by Bank. August 18, 1994. The Board has determined that financial and managerial factors are consistent with approval of the Voting for this action: Chairman Greenspan, Vice Chairproposed representative office. Bank appears to have man Blinder, and Governors LaWare and Phillips. Absent and not voting: Governors Kelley, Lindsey, and Yellen. the experience and capacity to support the proposed representative office and has also established controls JENNIFER J. JOHNSON and procedures for the proposed representative office Deputy Secretary of the Board to ensure compliance with U.S. law. Bank has committed that it will make available to the Board such information on the operations of Bank ACTIONS TAKEN UNDER THE FEDERAL and any of its affiliates that the Board deems necessary DEPOSIT INSURANCE CORPORATION to determine and enforce compliance with the IB A, IMPROVEMENT ACT the Bank Holding Company Act of 1956, as amended, By the Board and other applicable Federal law. To the extent that the provision of such information to the Board is Valley State Investments, Inc. prohibited or impeded by law, Bank has committed to Lamar, Colorado cooperate with the Board to obtain any necessary consents or waivers that might be required from third Order Approving an Application to Acquire a parties in connection with the disclosure of certain Branch of a Savings Bank information. In addition, DNB may share information on Bank's operations with other supervisors, including Valley State Investments, Inc. ("Valley State"), and the Board. In light of these commitments and other its bank subsidiary, Valley State Bank ("Valley facts of record, and subject to the conditions described Bank"), both of Lamar, Colorado, propose to acquire below, the Board concludes that Bank has provided the Lamar branch of First Federal Savings Bank of adequate assurances of access to any necessary infor- Colorado, Lakewood, Colorado ("First Federal"), mation the Board may request. pursuant to section 5(d)(3) of the Federal Deposit On the basis of all the facts of record, and subject to Insurance Act (12 U.S.C. § 1815(d)(3) ("FDI Act")), the commitments made by Bank, as well as the terms as amended by the Federal Deposit Insurance Corpoand conditions set forth in this order, the Board has ration Improvement Act of 1991 (Pub. L. No. 102-242, determined that Bank's application to establish a rep- § 501, 105 Stat. 2236, 2388-2392 (1991)). resentative office should be, and hereby is, approved. Section 5(d)(3) of the FDI Act requires the Board to If any restrictions on access to information on the review any proposed merger between a Savings Assooperations or activities of Bank and any of its affiliates ciation Insurance Fund member and any Bank Insursubsequently interfere with the Board's ability to ance Fund ("BIF") member, if the acquiring or resultdetermine the compliance by Bank or its affiliates with ing institution is a BIF-insured subsidiary of a bank applicable federal statutes, the Board may require holding company, and, in reviewing these proposals, to termination of any of Bank's direct or indirect activi- follow the procedures and consider the factors set forth ties in the United States. Approval of this application in section 18(c) of the FDI Act (12 U.S.C. § 1828(c) is also specifically conditioned on compliance by Bank ("the Bank Merger Act")).1 The proposed transaction with the commitments made in connection with this also is subject to review under the Bank Merger Act by application, and with the conditions contained in this the Federal Deposit Insurance Corporation ("FDIC"), order.7 The commitments and conditions referred to the primary federal regulator of Valley Bank. above are conditions imposed in writing by the Board Notice of the application, affording interested perin connection with its decision, and may be enforced in sons an opportunity to submit comments, has been proceedings under 12 U.S.C. § 1818 or 12 U.S.C. given in accordance with the Bank Merger Act and the § 1847 against Bank, its officers, and its affiliates. Board's Rules of Procedure (12 C.F.R. 262.3(b)). The time for filing comments has expired, and the Board has considered the application and all comments re- 7. The Board's authority to approve the establishment of the proposed representative office parallels the continuing authority of the ' State of Illinois to license representative offices of a foreign bank through its Commissioner of Banks and Trust Companies ("Commis- 1. 12 U.S.C. § 1815(d)(3)(E). These factors include considerations sioner"). The Board's approval of this application does not supplant relating to competition, financial and managerial resources, and future the authority of the Commissioner to license the proposed represen- prospects of the existing and proposed institutions, and the convetative office of Bank in accordance with any terms or conditions that nience and needs of the communities to be served. 12 U.S.C. the Commissioner may impose. § 1828(c). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

950 Federal Reserve Bulletin • September 1994 ceived in light of the factors set forth in the Bank residents ("Protestants"), who oppose this proposal Merger Act and section 5(d)(3) of the FDI Act. because they believe that it is anticompetitive. A Valley State is the 66th largest depository institution number of factors in this case, however, indicate that in Colorado, controlling total deposits of $55.2 million, the increase in concentration levels in the Lamar representing less than 1 percent of total deposits in banking market as measured by the HHI tend to depository institutions in the state.2 The Lamar branch overstate the competitive effects of this proposal. For of First Federal controls deposits of $24.8 million, example, eight depository institutions, five of which representing less than 1 percent of total deposits in have market shares exceeding 9 percent, would condepository institutions in the state. Upon consumma- tinue to operate in the market following consummation tion of the proposed transaction, Valley State would of this proposal. The increase in concentration levels become the 46th largest banking organization in Col- also does not take into account the substantial runoff orado, controlling deposits of $80 million, representing of deposits from the Lamar branch of First Federal less than 1 percent of total deposits in depository since June 30, 1993.6 Finally, because Colorado perinstitutions in the state. mits interstate branching and interstate bank acquisitions by bank holding companies located in states that Competitive Considerations allow entry on a reciprocal basis, legal barriers to entry into this market are low.7 Valley State and First Federal compete directly in the In accordance with the Bank Merger Act, the Board Lamar, Colorado banking market.3 Valley Bank is the has sought comments from the United States Attorney second largest depository institution in the market, General, the Office of the Comptroller of the Currency controlling deposits of $55.2 million, representing ap- ("OCC"), and the FDIC on the competitive effects of proximately 21.2 percent of total deposits in deposi- this proposal. The Attorney General has indicated that tory institutions in the market ("market deposits").4 the proposal is not likely to have a significantly ad- The Lamar branch of First Federal controls deposits verse effect on competition in any relevant banking of $24.8 million, representing 4.8 percent of market market. Neither the OCC nor the FDIC has objected deposits. Upon consummation of this proposal, Valley to the acquisition. Based on these and all the other Bank would control $80 million in deposits, represent- facts of record, including Protestants' comments, the ing approximately 29.3 percent of market deposits. Board concludes that consummation of this proposal The Herfindahl-Hirschman Index ("HHI") for this would not result in significantly adverse effects on market would increase 262 points to 2139.5 competition or on the concentration of banking re- In considering the competitive factors in this case, sources in any relevant banking market. the Board has considered comments by two Lamar Other Considerations The Board also concludes that the financial and man- 2. Deposit and market data are as of June 30, 1993. In this context, depository institutions include commercial banks, savings banks, and agerial resources and future prospects of Valley State savings associations. and its subsidiaries and First Federal are consistent 3. The Lamar banking market is approximated by Prowers, Baca, with approval of this application. Considerations reand Kiowa Counties, plus the town of McClave in Bent County, all in Colorado. lating to the convenience and needs of the communi- 4. Market share data before consummation are based on calcula- ties to be served also are consistent with approval. tions in which the deposits of thrift institutions are included at Moreover, the record in this case indicates that: 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant competitors (1) The transaction will not result in the transfer of of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin any federally insured depository institution's federal 788 (1990); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Because the deposits of the Lamar branch of First Federal deposit insurance from one federal deposit insurwould be transferred to a commercial bank under this proposal, those ance fund to the other; deposits are included at 100 percent in the calculation of pro forma (2) Valley State and Valley Bank currently meet, market share. See Norwest Corporation, 78 Federal Reserve Bulletin 452 (1992); First Banks, Inc., 76 Federal Reserve Bulletin 669 (1990). and upon consummation of the proposed transaction 5. Under the revised Department of Justice Merger Guidelines, 49 will continue to meet, all applicable capital stan- Federal Register 26,823 (June 29, 1984), a market in which the dards; and post-merger HHI is above 1800 is considered highly concentrated. The Justice Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Justice Department has stated that the higher than 6. The Lamar branch experienced a 20 percent drop in deposits from normal HHI thresholds for screening bank mergers for anticompeti- June 30, 1993 to March 31, 1994, compared with an increase in tive effects implicitly recognize the competitive effect of limited- deposits at most other banks in the market during this period. purpose lenders and other non-depository financial institutions. 7. See Colo. Rev. Stat. §§ 11-6.4-103; 11-25-103 (1993). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 951 (3) The proposed transaction would comply with the under applicable law. This approval is limited to the interstate banking provision of the Bank Holding proposal presented to the Board by Valley State, and Company Act (12 U.S.C. § 1842(d)) if First Federal may not be construed as applying to any other was a state bank that Valley State was applying to transaction. acquire directly. See 12 U.S.C. § 1815(d)(3). This transaction may not be consummated before the thirtieth calendar day after the effective date of this Based on the foregoing and all the facts of record, order, or later than three months after the effective the Board has determined that this application should date of this order, unless such period is extended by be, and hereby is, approved. Approval of this appli- the Board or the Federal Reserve Bank of Kansas cation is conditioned on Valley State's compliance City, acting pursuant to delegated authority. with the commitments made in connection with this By order of the Board of Governors, effective application. This approval is further subject to Valley August 22, 1994. Bank obtaining the approval of the FDIC for the proposed transaction under the Bank Merger Act. Voting for this action: Chairman Greenspan, Vice Chair- For purposes of this action, the commitments and man Blinder, and Governors Kelley, LaWare, and Phillips. conditions relied on in reaching this decision are both Absent and not voting: Governors Lindsey and Yellen. deemed to be conditions imposed in writing by the Board in connection with the approval of this appli- JENNIFER J. JOHNSON cation, and, as such, may be enforced in proceedings Deputy 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 Compass Bancshares, Inc., First Heights Bank, Compass Bank, July 29, 1994 Birmingham, Alabama F.S.B., Houston, Texas Houston, Texas Trans Financial Bancorp, Inc., Trans Financial Bank of Trans Financial Bank August 24, 1994 Bowling Green, Kentucky Tennessee, F.S.B., Tennessee, N.A., Tullahoma, Tennessee Cookeville, Tennessee Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

952 Federal Reserve Bulletin • September 1994 ACTIONS TAKEN UNDER THE FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991 By the Director of the Division of Banking Supervision and Regulation and the General Counsel of the Board Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Acquired Acquiring Approval Bank Holding Company Thrift Bank(s) Date Allied Bankshares, Inc., First Savings Bank, Allied Bank of August 5, 1994 Thomson, Georgia F.S.B., Georgia, Thomson, Georgia Thomson, Georgia City National Bancorp, Inc., Security Trust Federal The City National August 8, 1994 Fulton, Kentucky Savings & Loan Bank of Fulton, Association, Fulton, Kentucky Knoxville, Tennessee CNB Bancshares, Inc., First Federal Savings Citizens Bank of August 17, 1994 Evansville, Indiana Bank of Kentucky, Kentucky, Madisonville, Kentucky Madisonville, Citizens Bank of Kentucky Kentucky, N.A., Henderson, Kentucky First Union Corporation, Cobb Federal Savings First Union National August 12, 1994 Charlotte, North Carolina Association, Bank of Georgia, Marietta, Georgia Atlanta, Georgia First Union Corporation, Hollywood Federal First Union National August 19, 1994 Charlotte, North Carolina Savings Bank, Bank of Florida, Hollywood, Florida Jacksonville, Florida Mission-Heights Management First Heights Bank, Channelview Bank, August 5, 1994 Company, Ltd., F.S.B., Channel view, Houston, Texas Houston, Texas Texas Independent Bancorp, Inc., Channel view, Texas IBID, Inc., Wilmington, Delaware Sequoia Bancshares, Inc., Sequoia National Sequoia National August 15, 1994 Bethesda, Maryland Bank, MD, Bank, DC, Bethesda, Maryland Washington, D.C. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 953 APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Applicant(s) Bank(s) ^Date^ Old National Bancorp, Indiana State Bank of Terre Haute, August 18, 1994 Evansville, Indiana Terre Haute, Indiana Old National Bancorp, O.C.B. Bancorp, August 8, 1994 Evansville, Indiana Paoli, Indiana Section 4 Effective Applicant(s) Bank(s) Date Signet Banking Corporation, Signet Credit Card Bank, August 4, 1994 Richmond, Virginia Richmond, Virginia Trans Financial Bancorp, Inc., to engage in providing full service August 19, 1994 Bowling Green, Kentucky securities brokerage services 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 AJJ Bancorp, Inc., Central State Bank, Chicago July 22, 1994 Elkader, Iowa Elkader, Iowa Allied Bankshares, Inc., Citizens Bank & Trust, Atlanta August 5, 1994 Thomson, Georgia Evans, Georgia Allied Bancshares, Inc., Jefferson Bancshares, Atlanta August 5, 1994 Thomson, Georgia Inc., Louisville, Georgia Ambank Company, Inc., Remsen Financial Chicago July 22, 1994 Sioux Center, Iowa Services, Inc., Council Bluffs, Iowa Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

954 Federal Reserve Bulletin • September 1994 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date Atlantic Bancorp, Inc., Citibank (Maine), N.A., Boston August 12, 1994 Portland, Maine South Portland, Maine Bank Investors Limited Royal Bankgroup of Atlanta August 5, 1994 Partnership, Acadiana, Inc., Lafayette, Louisiana Lafayette, Louisiana Baylake Corp., Kewaunee County Chicago July 29, 1994 Sturgeon Bay, Wisconsin Banc-Shares, Inc., Kewaunee, Wisconsin Big Sky Holding Company, Basin State Bank, Minneapolis August 5, 1994 Stanford, Montana Stanford, Montana Bronte Bancshares - Delaware, First National Bank in Dallas July 26, 1994 Inc., Bronte, Wilmington, Delaware Bronte, Texas Bronte Bancshares, Inc., Bronte Bancshares - Dallas July 26, 1994 Bronte, Texas Delaware, Inc., Wilmington, Delaware First National Bank in Bronte, Bronte, Texas Cardinal Bancshares, Inc., CNB Bank of Kentucky, Cleveland August 11, 1994 Lexington, Kentucky Louisville, Kentucky Central Texas Bankshare Hill Bancshares Holdings, Dallas August 5, 1995 Holdings, Inc., Inc., Columbus, Texas Weimar, Texas Hill Bank & Trust Co., Weimar, Texas Chance Investments, Inc., Bank Investors Limited Atlanta August 5, 1994 Lafayette, Louisiana Partnership, Lafayette. Louisiana Charter Bancorporation, First Buffalo Holding San Francisco August 5, 1994 Newport, Minnesota Company, Scottsdale, Arizona Citizens State Bancshares, Inc., Citizens State Bank of Minneapolis August 12, 1994 Lankin, North Dakota Lankin, Lankin, North Dakota Citizens State Bank Employee Citizens State Bank, Dallas August 5, 1994 Stock Ownership Plan, Buffalo, Texas Buffalo, Texas CM Bank Holding Company, Calcasieu Marine Atlanta August 19, 1994 Lake Charles, Louisiana National Bank of Lake Charles, Lake Charles, Louisiana Commerce Bancshares, Inc., Liberty Bancshares, Inc., Kansas City July 27, 1994 Kansas City, Missouri Liberty, Missouri CBI Security Corp., Kansas City, Missouri Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 955 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date Community Bancorporation of El Pueblo State Bank, Kansas City August 12, 1994 New Mexico, Inc., Espanola, New Mexico Santa Fe, New Mexico Community Bancshares, Inc., Bank of Wallowa County, San Francisco August 17, 1994 Joseph, Oregon Joseph, Oregon Community First Bancorp, Inc., Glendive Bancorporation, Minneapolis August 10, 1994 Glendive, Montana Inc., Glendive, Montana Community First Financial, Inc., Community Independent Cleveland July 29, 1994 Maysville, Kentucky Bancorp, Inc., Maysville, Kentucky Community Financial Bancorp, Inc., Maysville, Kentucky Consolidated Equity Corporation, First American Bank and Kansas City August 10, 1994 Purcell, Oklahoma Trust Company, Purcell, Oklahoma American Interstate Bancshares, Inc., Woodward, Oklahoma Denver Bankshares, Inc., Bank of Denver, Kansas City August 10, 1994 Denver, Colorado Denver, Colorado DFC Acquisition Corporation First American Kansas City August 17, 1994 Two, Bancshares, Inc., Kansas City, Missouri Kansas City, Kansas Dickinson Financial Corporation, First American Kansas City August 17, 1994 Kansas City, Missouri Bancshares, Inc., Kansas City, Missouri D.L. Evans Bancorp, D.L. Evans Bank, San Francisco August 5, 1994 Burley, Idaho Burley, Idaho First Banks, Inc., BancTEXAS Group, Inc., St. Louis July 26, 1994 Clayton, Missouri Dallas, Texas First Bankshares, Inc., First Bank of Georgia, Atlanta August 12, 1994 East Point, Georgia East Point, Georgia First of America Bank First Park Ridge Chicago August 3, 1994 Corporation, Corporation, Kalamazoo, Michigan Chicago, Illinois First of America Acquisition First State Bank and Company, Trust Company of Park Ridge, Illinois Park Ridge, Park Ridge, Illinois First State Bank of Gurnee, Gurnee, Illinois First Capital Corporation, Kincaid Banc Agency, Kansas City August 12, 1994 Fort Scott, Kansas Inc., Kincaid, Kansas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

956 Federal Reserve Bulletin • September 1994 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date First National Bancorp, Inc., The First National Bank Chicago August 5, 1994 Farragut, Iowa of Farragut, Farragut, Iowa First State Bancshares of Bostwick Banking Atlanta July 25, 1994 Blakely, Company, Blakely, Georgia Arlington, Georgia Froid Bankshares, Inc., First State Bank of Froid, Minneapolis August 16, 1994 Froid, Montana Froid, Montana FSB Financial Corporation, The Francisco State St. Louis August 8, 1994 Francisco, Indiana Bank, Francisco, Indiana Hensley Investment Limited Peoples Bank of St. Louis August 8, 1994 Partnership, Fordland, Springfield, Missouri Fordland, Missouri Citizens Bank of the Ozarks, Camdenton, Missouri Peoples Bank of the Ozarks, Nixa, Missouri Heritage Eagle Corp., Heritage Bank, Dallas August 10, 1994 Red Oak, Texas Red Oak, Texas Heritage Oaks Bancorp, Heritage Oaks Bank, San Francisco August 5, 1994 Paso Robles, California Paso Robles, California Jones Partners, Ltd., Lower Rio Grande Valley Dallas August 5, 1994 La Feria, Texas Bancshares, Inc., La Feria, Texas First National Bank of La Feria, La Feria, Texas Lindale Delaware Corporation, Lindale State Bank, Dallas August 11, 1994 Dover, Delaware Lindale, Texas Magna Group, Inc., Goreville Bancorporation, St. Louis August 17, 1994 St. Louis, Missouri Inc., Goreville, Illinois Mercantile Bancorp, Inc., Perry Bancshares, Inc., St. Louis August 10, 1994 Quincy, Illinois Monroe City, Missouri Merchants Capital Corporation, Merchants Bank, Atlanta August 24, 1994 Vicksburg, Mississippi Vicksburg, Mississippi Norwest Corporation, Bank of Scottsdale, Minneapolis July 26, 1994 Minneapolis, Minnesota Scottsdale, Arizona Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 957 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date Overton Financial Corporation, First State Bank, Dallas August 11, 1994 Overton, Texas Van, Texas Overton Delaware Corporation, Dover, Delaware Longview Financial Corporation, Long view, Texas Longview Delaware Corporation, Dover, Delaware Overton Financial Corporation, Longview Financial Dallas August 11, 1994 Overton, Texas Corporation, Overton Delaware Corporation, Longview, Texas Dover, Delaware Panhandle Aviation, Inc., Bank Altoona, Chicago August 8, 1994 Clarinda, Iowa Altoona, Iowa PBT Bancshares, Inc., Nickerson Bankshares, Kansas City August 10, 1994 McPherson, Kansas Inc., Nickerson, Kansas Peoples Bancorporation of Peoples Bank of Northern Cleveland July 15, 1994 Northern Kentucky, Inc., Kentucky, Inc., Crestview Hills, Kentucky Crestview Hills, Kentucky Plains Bancshares, Inc., Plains State Bank, Dallas August 9, 1994 Dover, Delaware Plains, Texas Plains State Financial Plains Bancshares, Inc., Dallas August 9, 1994 Corporation, Dover, Delaware Plains, Texas Plains State Bank, Plains, Texas Regions Financial Corporation, BNR Bancshares, Inc., Atlanta July 27, 1994 Birmingham, Alabama New Roads, Louisiana Richey Bancorporation, Inc., Community First Minneapolis August 10, 1994 Glendive, Montana Bancorp, Inc., Glendive, Montana Royal Bankgroup of Acadiana, Bank of Lafayette, Atlanta August 5, 1994 Inc., Lafayette, Louisiana Lafayette, Louisiana San Mateo County Bancorp, Mid-Peninsula Bank, San Francisco July 25, 1994 San Mateo, California Palo Alto, California Security Capital Corporation, Bank of Sardis, St. Louis August 22, 1994 Batesville, Mississippi Sardis, Mississippi SNB Bancshares, Inc., Security National Bank, Atlanta July 29, 1994 Macon, Georgia Macon, Georgia Southeast Bancshares, Inc., Fall River State Bank, Kansas City July 25, 1994 Chanute, Kansas Fall River, Kansas SouthTrust Corporation, First Jefferson Atlanta August 10, 1994 Birmingham, Alabama Corporation, Biloxi, Mississippi Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

958 Federal Reserve Bulletin • September 1994 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date SouthTrust Corporation, Island Bank of Collier Atlanta August 10, 1994 Birmingham, Alabama County, Marco Island, Florida SouthTrust Corporation, SouthTrust Interim Atlanta August 10, 1994 Birmingham, Alabama National Bank, Crystal River, Florida Citrus National Bank, Crystal River, Florida SouthTrust Corporation, University State Bank Atlanta August 10, 1994 Birmingham, Alabama Corporation, SouthTrust of Florida, Inc., Tampa, Florida Jacksonville, Florida SouthTrust Corporation, University State Bank Atlanta August 10, 1994 Birmingham, Alabama Corporation, SouthTrust USB, Inc., Tampa, Florida Birmington, Alabama SouthTrust of Mississippi, Inc., First Jefferson Atlanta August 10, 1994 Biloxi, Mississippi Corporation, Biloxi, Mississippi Synovus Financial Corp., Synovus Financial Corp. Atlanta July 25, 1994 Columbus, Georgia of Alabama, TB&C Bancshares, Inc., Jasper, Alabama Columbus, Georgia State Bancshares, Inc., Enterprise, Alabama The Templar Fund, Inc., United States National St. Louis July 27, 1994 Brentwood, Missouri Bank of Clayton, Truman Bancorporation, Inc., St. Louis, Missouri Brentwood, Missouri Texas State Bancshares, Inc., Heights Delaware Dallas August 16, 1994 Harker Heights, Texas Financial Corporation, Dover, Delaware Heights State Bank, Harker Heights, Texas Town Financial Corporation, Pacesetter Bank of Chicago July 28, 1994 Hartford City, Indiana Hartford City, Hartford City, Indiana Pacesetter Bank of Montpelier, Montpelier, Indiana TSB Financial, Inc., Tremont Savings Bank, Chicago August 11, 1994 Tremont, Illinois Tremont, Illinois Village Bancorp, Inc., Liberty National Bank, New York July 29, 1994 Ridgefield, Connecticut Danbury, Connecticut Washington/Wilkes Holding The Peoples Bank, Atlanta August 8, 1994 Company, Crawfordville, Georgia Washington, Georgia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 959 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date Wintrust Investments, North Shore Community Chicago August 12, 1994 Lake Forest, Illinois Bank & Trust Company, Wilmette, Illinois Section 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date Amcore Financial Inc., A/R Management, Ltd. Chicago August 12, 1994 Rockford, Illinois Oconomowoc, Wisconsin Amcore Financial Inc., Professional American Chicago August 12, 1994 Rockford, Illinois Collections, Inc., North Aurora, Illinois The Bank of Nova Scotia, Government Pricing New York July 20, 1994 Toronto, Canada Information System, Barclays PLC, Inc., London, United Kingdom New York, New York Barclays Bank PLC, London, United Kingdom CS Holding, Zurich, Switzerland Deutsche Bank AG, Frankfurt, Germany The Fuji Bank, Limited, Tokyo,Japan The Long-Term Credit Bank of Japan, Limited, Tokyo, Japan The Nippon Credit Bank, Ltd., Tokyo,Japan Castle BancGroup, Inc., Northern Illinois Finance Chicago August 19, 1994 DeKalb, Illinois Company, Sandwich, Illinois Commonwealth Bancshares, Inc., First Security Trust St. Louis August 17, 1994 Shelbyville, Kentucky Company, Miami, Florida Community Bancs of Oklahoma, to engage de novo in Kansas City August 11, 1994 Tulsa, Oklahoma commercial credit, consumer finance and mortgage lending J.P. Morgan & Co. Incorporated, Times Square Investment New York August 22, 1994 New York, New York Limited Partnership, New York, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

960 Federal Reserve Bulletin • September 1994 Section 4—Continued Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date KeyCorp, State Home Savings Cleveland July 20, 1994 Cleveland, Ohio Bank, F.S.B., Bowling Green, Ohio Society Interim Bank, F.S.B., Toledo, Ohio Norwest Corporation, Norwest Financial Guam, Minneapolis August 4, 1994 Minneapolis, Minnesota Inc., Norwest Financial Services, Inc., Des Moines, Iowa Des Moines, Iowa Norwest Financial, Inc., Des Moines, Iowa Old Kent Financial Corporation, Michigan Capital Fund Chicago August 2, 1994 Grand Rapids, Michigan For Housing Limited Partnership I, Lansing, Michigan Osakis Bancshares, Inc., to engage de novo in Minneapolis July 22, 1994 Osakis, Minnesota making loans for its own account Republic Bancorp Inc., Home Funding, Inc., Chicago August 19, 1994 Owosso, Michigan Hopewell Junction, New York The Sanwa Bank, Limited, Government Pricing San Francisco July 20, 1994 Osaka, Japan Information System, Inc., New York, New York Sections 3 and 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date Clarence Talen Charitable Trust, Menomonie Shares, Inc., Minneapolis August 16, 1994 Menomonie, Wisconsin Menomonie, Wisconsin Dunn County Bankshares, Inc., Menomonie Acquisition Minneapolis July 26, 1994 Menomonie, Wisconsin Corporation, Amery, Wisconsin Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 961 Sections 3 and 4—Continued Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date First American Bank Group, Ltd., Agri Bancorporation, Chicago August 12, 1994 Fort Dodge, Iowa Webster City, Iowa Farmers Bank & Trust, Webster City, Iowa Hill Investment Company, Jewell, Iowa Farmers State Bank, Jewell, Iowa Story County Bancorporation, Jewell, Iowa American State Bank, Ames, Iowa First American Credit Corporation Company, Fort Dodge, Iowa Hill Land Company, Fort Dodge, Iowa First Commonwealth Financial United National Cleveland July 27, 1994 Corporation, Bancorporation, Indiana, Pennsylvania Chambersburg, Pennsylvania Unitas Mortgage Corporation, Carlisle, Pennsylvania First Ozaukee Capital Corp. First Ozaukee Savings Chicago August 19, 1994 Cedarburg, Wisconsin Bank, Cedarburg, Wisconsin IBS Financial Corp., Inter-Boro Savings and Philadelphia August 23, 1994 Cherry Hill, New Jersey Loan Association, Cherry Hill, New Jersey Menomonie Acquisition First American Bank Minneapolis July 26, 1994 Corporation, Wisconsin, Amery, Wisconsin Amery, Wisconsin Menomonie Shares, Inc., Menomonie Financial Minneapolis August 16, 1994 Menomonie, Wisconsin Services, Inc., Menomonie, Wisconsin First Bank & Trust, Menomonie, Wisconsin Electronic Strategies, Inc., Menomonie, Wisconsin Otto Bremer Foundation, to engage in insurance Minneapolis July 26, 1994 St. Paul, Minnesota premium financing Bremer Financial Corporation, activities St. Paul, Minnesota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

962 Federal Reserve Bulletin • September 1994 Sections 3 and 4—Continued Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date Otto Bremer Foundation, Dunn County Bankshares, Minneapolis July 26, 1994 St. Paul, Minnesota Inc., Menomonie, Wisconsin Bank of Menomonie, Menomonie, Wisconsin Premium Finance Corporation, Menomonie, Wisconsin The Summit Bancorporation, Crestmont Financial New York July 21, 1994 Chatham, New Jersey Corp., Edison, New Jersey Crestmont Federal Savings and Loan Association, Chatham, New Jersey Talco, Inc., Electric Strategies, Inc., Minneapolis August 16, 1994 Menomonie, Wisconsin Menomonie, Wisconsin Clarence Talen Charitable Trust, Menomonie, Wisconsin Menomonie Shares, Inc., Menomonie, Wisconsin Talco, Inc., Menomonie Shares, Inc., Minneapolis August 16, 1994 Menomonie, Wisconsin Menomonie, Wisconsin Western State Agency, Inc., Towner Bancorporation, Minneapolis August 18, 1994 Devils Lake, North Dakota Ltd., Towner, North Dakota McHenry Insurance Agency, Towner, North Dakota 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 Merchants Bank, Merchants Bank, N.A., Atlanta August 24, 1994 Vicksburg, Mississippi Vicksburg, Mississippi OMNIBANK Southeast, OMNIBANK Arapahoe, Kansas City August 4, 1994 Denver, Colorado Englewood, Colorado SouthTrust Bank of West University State Bank, Atlanta August 10, 1994 Florida, Tampa, Florida St. Petersburg, Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 963 PENDING CASES INVOLVING THE BOARD OF Scott v. Board of Governors, No. 94-0104 (D. D.C., GOVERNORS filed January 21, 1994). Petition for review of a Board order approving the application of Society Corporation, Cleveland, Ohio, to merge with Key- This list of pending cases does not include suits Corp, Albany, New York (80 Federal Reserve Bulagainst the Federal Reserve Banks in which the Board letin 253 (1994)). On July 29, 1994, the Board filed a of Governors is not named a party. motion to dismiss. National Title Resource Agency v. Board of Gover- Board of Governors v. Oppegard, No. 93-3706 (8th nors, No. 94-2050 (8th Cir., filed April 28, 1994). Cir., filed November 1, 1993). Appeal of district Petition for review of Board's order, issued under court order ordering appellant Oppegard to comply section 4 of the Bank Holding Company Act, ap- with prior order requiring compliance with Board proving the application of Norwest Corp., Minneap- prohibition and civil money penalty orders. Oral olis, Minnesota, to acquire Double Eagle Financial argument was held June 16, 1994. On July 6, 1994, Corp., Phoenix, Arizona, and its subsidiary, United the Court of Appeals affirmed the district court Title Agency, Inc., and thereby engage in title order. insurance agency activities and real estate settle- Jackson v. Board of Governors, No. CV-N-93-401ment services (80 Federal Reserve Bulletin 453). ECR (D. Nev., filed June 14,1993). Pro se action for The Board's brief was filed July 7, 1994. violation of a prisoner's civil rights. On Novem- Scott v. Board of Governors, No. 94-4117 (10th Cir.), ber 26, 1993, the Board filed a motion to dismiss. filed April 28, 1994. Appeal of dismissal of action against Board and others for damages and injunctive Kubany v. Board of Governors, et al., No. 93-1428 relief for alleged constitutional and statutory viola- (D. D.C., filed July 9, 1993). Action challenging tions caused by issuance of Federal Reserve notes. Board determination under the Freedom of Informa- Beckman v. Greenspan, No. CV 94-41-BCG-RWA tion Act. The Board's motion to dismiss was granted (D. Mont., filed April 13, 1994). Action against on July 19, 1994. Board and others seeking damages for alleged violations of constitutional and common law rights. The Bennett v. Greenspan, No. 93-1813 (D. D.C., filed Board's motion to dismiss was filed May 19, 1994. April 20, 1993). Employment discrimination action. DLG Financial Corp. v. Board of Governors, No. Trial is scheduled to commence on October 4, 1994. 94-10078 (5th Cir., filed January 20, 1994). Appeal Amann v. Prudential Home Mortgage Co., et al., No. of district court dismissal of appellants' action to 93-10320 WD (D. Massachusetts, filed February 12, enjoin the Board and the Federal Reserve Bank of 1993). Action for fraud and breach of contract Dallas from taking certain enforcement actions, and arising out of a home mortgage. The action was for money damages on a variety of tort and contract dismissed voluntarily on June 21, 1994. theories. The case was consolidated on appeal with Board of Governors v. DLG Financial Corp., Nos. Adams v. Greenspan, No. 93-0167 (D. D.C., filed 93-2944 and 94-20013 (5th Cir., filed December 14, January 27,1993). Action by former employee under 1993 and December 31, 1993), an appeal of a tem- the Civil Rights Act of 1964 and the Rehabilitation porary restraining order and a preliminary injunc- Act of 1973 concerning termination of employment. tion obtained by the Board freezing assets of a The Board's motion for partial summary judgment corporation and an individual pending administra- was filed on January 4, 1994. tive adjudication of civil money penalty assessments Zemel v. Board of Governors, No. 92-1056 (D. D.C., by the Board. On August 15, 1994, the court of filed May 4, 1992). Age Discrimination in Employappeals affirmed both the asset freeze order obment Act case. The parties' cross-motions for sumtained by the Board and the district court's dismissal mary judgment are pending. of plaintiffs' claims. Richardson v. Board of Governors, et al., No. 94- Board of Governors v. Ghaith R. Pharaon, No. 91- 4020 (10th Cir.), filed January 14, 1994. Appeal of CIV-6250 (S.D. New York, filed September 17, dismissal of action against Board and others for 1991). Action to freeze assets of individual pending damages and injunctive relief for alleged constituadministrative adjudication of civil money penalty tional and statutory violations caused by issuance of assessment by the Board. On September 17, 1991, Federal Reserve notes. The Board's brief was filed the court issued an order temporarily restraining the June 3, 1994. transfer or disposition of the individual's assets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

964 Federal Reserve Bulletin • September 1994 FINAL ENFORCEMENT ORDERS ISSUED BY THE FNB Rochester Corporation Rochester, New York BOARD OF GOVERNORS Cease and Desist Order dated June 18, 1992, termi- Lombard Bank, Ltd. nated June 27, 1994. Republic of Vanuatu Wahoo State Bank The Federal Reserve Board announced on August 15, Wahoo, Nebraska 1994, the issuance of a Cease and Desist Order against Lombard Bank, Ltd., Republic of Vanuatu; Lombard Written Agreement dated October 23, 1992, termi- Credit Corporation, Miami, Florida; and Ruy Delgado; nated August 5, 1994. Alvaro Machado; and Alex Laycayo. FWB Bancorporation Rockville, Maryland His Excellency Ali Mohammed A1 Shorafa Abu Dhabi Written Agreement dated October 10, 1994, terminated August 16, 1994. The Federal Reserve Board announced on August 15, 1994, the execution of an Agreement with His Excel- Georgetown Bancorp, Inc. lency Ali Mohammed A1 Shorafa of Abu Dhabi, Georgetown, Kentucky United Arab Emirates, and the issuance of an Order of Prohibition against Mr. Shorafa to settle potential Written Agreement dated January 15,1992, terminated claims arising from the "BCCI affair." August 19, 1994. WRITTEN AGREEMENTS APPROVED BY FEDERAL TERMINATION OF ENFORCEMENT ACTIONS RESERVE BANKS The Federal Reserve Board announced on August 29, Bangkok Metropolitan Bank, PCL 1994, the termination of the following enforcement Bangkok, Thailand actions: The Federal Reserve Board announced on August 29, Colonial Bancshares, Inc. 1994, the execution of a Written Agreement among the Des Peres, Missouri Federal Reserve Bank of San Francisco, the California State Banking Department, the Bangkok Metropolitan Michael Davis Bank, PCL., Bangkok, Thailand, and Bangkok Metropolitan's San Francisco Agency. Kenneth Tiemeyer Bank of St. Petersburg St. Petersburg, Florida David Fairchild The Federal Reserve Board announced on August 8, John Weber 1994, the execution of a Written Agreement among the Federal Reserve Bank of Atlanta, the State Comptroller Cease and Desist Order dated July 13, 1993, termi- and Banking Commissioner of the State of Florida, and nated June 30, 1994. the Bank of St. Petersburg, St. Petersburg, Florida. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1 Financial and Business Statistics CONTENTS WEEKLY REPORTING COMMERCIAL BANKS Assets and liabilities A3 Guide to Tabular Presentation A21 Large reporting banks A23 Branches and agencies of foreign banks Domestic Financial Statistics MONEY STOCK AND BANK CREDIT FINANCIAL MARKETS A4 Reserves, money stock, liquid assets, and debt A24 Commercial paper and bankers dollar measures acceptances outstanding A5 Reserves of depository institutions, Reserve Bank A25 Prime rate charged by banks on short-term credit business loans A26 Interest rates—money and capital markets A6 Reserves and borrowings—Depository A27 Stock market—Selected statistics institutions A7 Selected borrowings in immediately available funds—Large member banks FEDERAL FINANCE POLICY INSTRUMENTS A28 Federal fiscal and financing operations A29 U.S. budget receipts and outlays A8 Federal Reserve Bank interest rates A30 Federal debt subject to statutory limitation A9 Reserve requirements of depository institutions A30 Gross public debt of U.S. Treasury—Types A10 Federal Reserve open market transactions and ownership A31 U.S. government securities dealers—Transactions FEDERAL RESERVE BANKS A32 U.S. government securities dealers—Positions and financing All Condition and Federal Reserve note statements A3 3 Federal and federally sponsored credit A12 Maturity distribution of loan and security agencies—Debt outstanding holdings MONETARY AND CREDIT AGGREGATES SECURITIES MARKETS AND CORPORATE FINANCE A13 Aggregate reserves of depository institutions and monetary base A34 New security issues—Tax-exempt state and local A14 Money stock, liquid assets, and debt measures governments and corporations A16 Deposit interest rates and amounts outstanding— A35 Open-end investment companies—Net sales commercial and BIF-insured banks and assets A17 Bank debits and deposit turnover A3 5 Corporate profits and their distribution A35 Nonfarm business expenditures on new plant and equipment A36 Domestic finance companies—Assets and COMMERCIAL BANKING INSTITUTIONS liabilities, and consumer, real estate, and business A18 Assets and liabilities, Wednesday figures credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • September 1994 Domestic Financial Statistics—Continued A54 Foreign official assets held at Federal Reserve Banks A55 Selected U.S. liabilities to foreign official REAL ESTATE institutions A37 Mortgage markets A38 Mortgage debt outstanding REPORTED BY BANKS CONSUMER INSTALLMENT CREDIT IN THE UNITED STATES A39 Total outstanding A55 Liabilities to and claims on foreigners A39 Terms A56 Liabilities to foreigners A58 Banks' own claims on foreigners FLOW OF FUNDS A59 Banks' own and domestic customers' claims on foreigners A40 Funds raised in U.S. credit markets A59 Banks' own claims on unaffiliated foreigners A42 Summary of financial transactions A60 Claims on foreign countries—Combined A43 Summary of credit market debt outstanding domestic offices and foreign branches A44 Summary of financial assets and liabilities Domestic Nonfinancial Statistics REPORTED BY NONBANKING BUSINESS ENTERPRISES IN THE UNITED STATES SELECTED MEASURES A61 Liabilities to unaffiliated foreigners A45 Nonfinancial business activity—Selected A62 Claims on unaffiliated foreigners measures A45 Labor force, employment, and unemployment A46 Output, capacity, and capacity utilization SECURITIES HOLDINGS AND TRANSACTIONS A47 Industrial production—Indexes and gross value A49 Housing and construction A63 Foreign transactions in securities A50 Consumer and producer prices A64 Marketable U.S. Treasury bonds and notes—Foreign transactions A51 Gross domestic product and income A52 Personal income and saving INTEREST AND EXCHANGE RATES International Statistics A65 Discount rates of foreign central banks SUMMARY STATISTICS A65 Foreign short-term interest rates A66 Foreign exchange rates A53 U.S. international transactions—Summary A54 U.S. foreign trade A67 Guide to Statistical Releases and A54 U.S. reserve assets Special Tables Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

3 Guide to Tabular Presentation SYMBOLS AND ABBREVIATIONS c Corrected G-10 Group of Ten e Estimated GNMA Government National Mortgage Association n.a. Not available GDP Gross domestic product n.e.c. Not elsewhere classified HUD Department of Housing and Urban p Preliminary Development r Revised (Notation appears on column heading IMF International Monetary Fund when about half of the figures in that column IO Interest only are changed.) IPCs Individuals, partnerships, and corporations * Amounts insignificant in terms of the last decimal IRA Individual retirement account place shown in the table (for example, less than MMDA Money market deposit account 500,000 when the smallest unit given is millions) MSA Metropolitan statistical area 0 Calculated to be zero NOW Negotiable order of withdrawal Cell not applicable OCD Other checkable deposit ATS Automatic transfer service OPEC Organization of Petroleum Exporting Countries BIF Bank insurance fund OTS Office of Thrift Supervision CD Certificate of deposit PO Principal only CMO Collateralized mortgage obligation REIT Real estate investment trust FFB Federal Financing Bank REMIC Real estate mortgage investment conduit FHA Federal Housing Administration RP Repurchase agreement FHLBB Federal Home Loan Bank Board RTC Resolution Trust Corporation FHLMC Federal Home Loan Mortgage Corporation SAIF Savings Association Insurance Fund FmHA Farmers Home Administration SCO Securitized credit obligation FNMA Federal National Mortgage Association SDR Special drawing right FSLIC Federal Savings and Loan Insurance Corporation SIC Standard Industrial Classification G-7 Group of Seven VA Department of Veterans Affairs 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 • October 1994 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 1993 1994 1994 MMoonneettaarryy oorr ccrreeddiitt aaggggrreeggaattee Q3 Q4 Q1 Q2 Mar. Apr.1 May1 June1 July Reserves of depository institutions2 1 Total 12.5 14.2 3.1 —4.4r -3.5r -5.1 -8.4 -4.0 2.2 2 Required 12.4 14.1 2.5 -3.6 .0 -8.9 -3.8 -8.0 2.2 3 Nonborrowed 11.0 15.6 3.7 -5.41 -3.21 -6.4 -9.9 -6.7 -.3 4 Monetary base3 10.6 9.8 10.2 8.4 9.3 6.6 7.6 7.7 8.1 Concepts of money, liquid assets, and debt4 5 Ml 12.0 9.4 6.0 11..99** 4.0r -1.4 1.9 3.7 77..66 6 M2 2.5 2.3 1.9r 1.8r 4.7 2.8 1.1 -2.4 4.7 7 M3 l.l1 2.6 .2 ,5r 2.3r 2.9 -.7 -.3 5.8 8 L 1.0 2.(f 2.4r 1.0 .O1 4.7 -.2 -2.1 n.a. 9 Debt 6.0 5.8 5.0 5.4r 4.9 4.8 5.2 n.a. Nontrgnsaction components 10 In M2 -1.6r -.8 .0r 1.8r 5.0 4.7 .8 -5.3 3.3 11 In M3 only6 -6.51 4.0 -8.6r -7.1r —11.2r 4.0 -11.3 12.2 11.7 Time and savings deposits Commercial banks 12 Savings, including MMDAs 4.9 3.6 4.3 -3.3 -1.4 -3.0 -6.1 -7.7 -2.3 13 Smalltime7. -10.6 -7.4 -5.2 .1 -3.4 -2.6 6.2 6.7 5.7 14 Large time8'9 -7.7 -.4 -3.6 -3.3 -17.5 -3.1 19.6 .4 11.8 Thrift institutions 15 Savings, including MMDAs 2.3 -.4 .5 .2 5.3 2.2 -2.2 -10.3 -9.5 16 Smalltime -14.0 -9.5 -11.5 -7.4r -7.3 -6.2 -7.4 -5.1 -.4 17 Large time8,9 -4.5 -6.7 -9.3 -7.6 -15.6 5.9 -27.5 6.0 14.0 Money market mutual funds 18 General purpose and broker-dealer -1.8 1.2 -.1 17.7 16.4 45.1 12.0 -19.1 14.0 19 Institution-only -10.5 8.8 -26.7 -22.8 3.4 -2.7 -52.2 1.4 9.9 Debt components4 20 Federal 9.2 5.5 7.1 5.2 9.0 2.9 4.2 6.8 n.a. 21 Nonfederal 4.8 4.9 5.3r 4.9 4.0r 5.7 5.1 4.7 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 retad RPs—in residents, and (4) money market ftind 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 tune 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 1994 1994 May June July June 15 June 22 June 29 July 6 July 13 July 20 July 27 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit out: 382,772 387,308r 391,275 385,440 388,362 387,362' 394,190 394,215 390,874 386,916 U.S. government securities' 2 Bought outright—System account 343,765 349,265 349,268 348,867 350,769 348,221 350,110 349,405 348,287 349,376 3 Held under repurchase agreements ... 1,376 880 3,163 0 0 1,705 5,652 5,179 3,031 0 Federal agency obligations 4 Bought outright 4,019 3,955 3,915 3,955 3,952 3,938 3,920 3,920 3,920 3,911 5 Held under repurchase agreements ... 414 93 1,047 0 0 129 309 1,636 2,002 0 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 65 69 125 13 84 107 444 25 84 38 8 Seasonal credit 134 224 367 192 242 278 306 335 378 405 9 Extended credit 0 0 0 0 0 0 0 0 1 0 10 Float 398 605r 471 300 962 523' 701 807 406 299 11 Other Federal Reserve assets 32,600 32,218r 32,919 32,112 32,353 32,461' 32,748 32,907 32,765 32,887 12 Gold stock 11,052 11,052 11,052 11,052 11,052 11,052 11,052 11,052 11,052 11,052 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 22,424 22,497r 22,560 22,490' 22,505r 22,519' 22,534 22,548 22,562 22,576 ABSORBING RESERVE FUNDS 15 Currency in circulation 374,200 378,797r 383,384 378,641r 378,547' 379,139' 383,370 384,655 383,436 382,458 16 Treasury cash holdings 373 357 354 358 357 355 354 358 353 354 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 6,174 6,120 5,179 4,826 7,064 7,561 5,917 6,031 4,581 5,373 18 Foreign 185 192 200 176 172 182 320 185 173 182 19 Service-related balances and adjustments 6,089 5,889r 5,912 5,839 5,926 5,867r 6,138 6,055 5,791 5,815 20 Other 304 296 269 300 314 274 276 279 300 236 21 Other Federal Reserve liabilities and capital 10,426 10,781 11,232 10,756 10,712 10,758 11,746 11,581 10,872 10,780 22 Reserve balances with Federal Reserve Banks 26,516 26,443 26,374 26,106 26,844 24,816' 27,673 26,689 27,000 23,364 End-of-month figures Wednesday figures May June July June 15 June 22 June 29 July 6 July 13 July 20 July 27 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 386,797 396,529r 390,929 387,637 388,715 388,922' 395,026 393,342 391,304 388,079 U.S. government securities 2 Bought outright—System account 344,365 347,644 348,838 351,146 351,581 347,643 348,465 349,254 347,568 350,895 3 Held under repurchase agreements ... 4,405 10,059 2,770 0 0 3,979 5,182 4,198 4,337 0 Federal agency obligations 4 Bought outright 3,977 3,920 3,900 3,952 3,952 3,920 3,920 3,920 3,920 3,900 5 Held under repurchase agreements ... 1,300 580 1,350 0 0 300 463 1,667 2,048 0 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 76 415 39 19 319 96 2,375 24 396 43 8 Seasonal credit 164 286 420 205 263 284 321 356 399 414 9 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float 473 866r -12 95 123 480r 1,523 951 -156 -180 11 Other Federal Reserve assets 32,038 32,760r 33,626 32,220 32,477 32,221' 32,778 32,972 32,793 33,008 12 Gold stock 11,052 11,052 11,052 11,053 11,052 11,052 11,052 11,052 11,052 11,052 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 22,461 22,534r 22,590 22,490r 22,505' 22,519' 22,534 22,548 22,562 22,576 ABSORBING RESERVE FUNDS 15 Currency in circulation 377,939 382,159r 382,229 379,355r 379,096' 381,563' 385,161 384,823 383,576 383,285 16 Treasury cash holdings 361 353 352 357 356 353 359 354 347 352 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5,675 9,356 3,683 5,530 6,682 6,435 6,958 5,275 5,823 5,602 18 Foreign 174 604 182 178 166 163 175 283 167 163 19 Service-related balances and adjustments 5,975 6,138r 5,707 5,839 5,926 5,867' 6,138 6,055 5,791 5,815 20 Other 278 286 244 307 393 270 295 233 267 217 21 Other Federal Reserve liabilities and capital 10,836 11,825 11,394 10,553 10,530 10,634 11,460 10,697 10,708 10,569 22 Reserve balances with Federal Reserve Banks3 27,091 27,412r 28,798 27,078 27,140 25,226 26,085 27,240 26,258 23,721 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 • October 1994 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages RReesseerrvvee ccllaassssiiffiiccaattiioonn 1991 1992 1993 1994 Dec. Dec. Dec. Jan. Feb. Mar. Apr. May June July 1 Reserve balances with Reserve Banks2 26,659 25,368 29,374 27,817 26,922 27,396 29,614 26,790 26,502r 25,996 2 Total vault cash3 32,509 34,542 36,812 37,907 36,295 35,585 35,215 35,892 36,898 37,635 3 Applied vault cash , 28,872 31,172 33,484 34,254 32,671 32,208 32,027 32,483 33,422 34,096 4 Surplus vault cash 3,637 3,370 3,328 3,653 3,624 3,377 3,188 3,409 3,476 3,539 5 Total reserves 55,532 56,540 62,858 62,072 59,593 59,605 61,641 59,273 59,924r 60,092 6 7 R Ex eq ce u s ir s e d re s re e s rv er e v b e a s lances at Reserve Banks i . . . . . . 54,5 9 5 7 3 9 55 1 , , 3 1 8 5 5 5 61 1 , , 7 0 9 6 5 3 60 1 , , 6 4 2 4 4 8 58 1 , , 4 1 5 4 4 0 58,6 9 3 6 8 7 60 1 , , 4 1 8 5 9 1 58,3 9 5 1 8 5 58 l, , 1 81 0 9 5 * r 58 1 , , 9 1 8 0 5 7 8 Total borrowings at Reserve Banks8 192 124 82 73 70 55 124 200 333 458 9 Seasonal bonowings 38 18 31 15 15 24 57 134 226 364 10 Extended credit9 1 1 0 0 0 0 0 0 0 0 Biweekly averages of daily figures for weeks ending on date indicated 1994 Mar. 30 Apr. 13 Apr. 27 May 11 May 25 June 8 June 22 July 6r July 20 Aug. 3 1 Reserve balances with Reserve Banks2 27,434 29,641 30,212 26,702 26,848 26,816 26,473 26,239 26,908 24,703 2 Total vault cash..2 34,667 35,434 34,748 36,447 35,320 36,209 37,227 37,012 37,179 38,557 3 Applied vault cash 31,440 32,268 31,599 32,983 31,952 32,806 33,689 33,571 33,754 34,819 4 Surplus vault cash 3,227 3,167 3,150 3,464 3,368 3,403 3,538 3,441 3,425 3,738 5 Total reserves6 58,874 61,909 61,810 59,684 58,800 59,622 60,162 59,810 60,662 59,522 6 Required reserves ^ ... 58,013 61,012 60,350 58,871 57,881 58,531 59,264 58,330 59,902 58,177 7 Excess reserve balances at Reserve Banks ... 861 897 1,460 814 919 1,092 898 1,480 760 1,345 8 Total borrowings at Reserve Banks8 68 125 114 170 216 218 266 568 412 458 9 Seasonal bonowings 32 40 64 102 141 176 217 292 357 413 10 Extended credit9 0 0 0 0 0 0 0 0 1 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 1994, week ending Monday SSoouurrccee aanndd mmaattuurriittyy May 30 June 6 June 13 June 20 June 27 July 4 July 11 July 18 July 25 Federal funds purchased, repurchase agreements, and other selected borrowings From commercial banks in the United States 1 For one day or under continuing contract 66,615r 67,500 67,573 65,141 65,682 75,243 71,526 66,841 63,557 2 For all other maturities 1122,,555544rr 1122,,118877 1122,,115500 1122,,116666 1122,,444466 1122,,551122 1122,,335511 1133,,224411 12,684 From other depository institutions, foreign banks and official institutions, and U.S. government agencies 3 For one day or under continuing contract 20,452 20,999 22,330 24,392 23,238 21,605 24,687 22,767 25,010 4 For all other maturities 21,704 21,848 22,032 22,501 23,410 23,863 22,591 24,391 23,259 Repurchase agreements on U.S. government and federal agency securities Brokers and nonbank dealers in securities 5 For one day or under continuing contract 22,351 22,637 21,846 22,452 21,499 23,161 22,833 21,857 23,363 6 For all other maturities 34,067 33,957 35,588 33,263 31,207 31,677 31,790 34,445 33,408 All other customers 7 For one day or under continuing contract 31,843 30,919 31,013 30,298 30,184 34,878 30,024 30,260 30,074 8 For all other maturities 16,442 16,620 16,842 17,076 16,695 16,063 15,889 15,814 16,628 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 50,351r 52,253 49,992 49,898 54,868 58,317 54,569 53,340 52,643 10 To all other specified customers 23,592 23,430 20,999 21,942 19,863 23,581 21,466 23,025 23,194 1. Banks with assets of $4 billion or more as of Dec. 31, 1988. 2. Brokers and nonbank dealers in securities, other depository institutions, Data in this table also appear in the Board's H.5 (507) weekly statistical release. foreign banks and official institutions, and U.S. government agencies. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic NonfinancialS tatistics • October 1994 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit2 Extended credit3 FFeeddeerraall RReesseerrvvee BBaannkk 9/ O 2/ n 9 4 Effective date Previous rate 9/ O 2/ n 9 4 Effective date Previous rate 9/ O 2/ n 9 4 Effective date Previous rate Boston 4.0 8/16/94 3.50 4.80 9/1/94 4.55 5.30 9/1/94 5.05 New York 8/16/94 9/1/94 9/1/94 Philadelphia 8/18/94 9/1/94 9/1/94 Cleveland 8/17/94 9/1/94 9/1/94 Richmond 8/16/94 9/1/94 9/1/94 Atlanta 8/18/94 9/1/94 9/1/94 Chicago 8/16/94 9/1/94 9/1/94 St. Louis 8/16/94 9/1/94 9/1/94 Minneapolis 8/18/94 9/1/94 9/1/94 Kansas City 8/16/94 9/1/94 9/1/94 Dallas 8/16/94 9/1/94 9/1/94 San Francisco ... 4.0 8/17/94 3.50 4.80 9/1/94 4.55 5.30 9/1/94 5.05 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 an f k Effective A le l v l e F l) . — R. B o an f k Effective date A le l v l e F l) . — R. B o an f k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1977 6 6 1981-—May 5 13-14 14 1986—Aug. 21 5.5-6 5.5 14 14 22 5.5 5.5 1978—Jan. 9 6-6.5 6.5 Nov. ? 13-14 13 20 6.5 6.5 6 13 13 1987—Sept. 4 5.5-6 6 May 11 6.5-7 7 Dec. 4 12 12 11 6 6 12 7 7 July 3 7-7.25 7.25 1982---JJuullyy 70 11.5-12 11.5 1988—Aug. 9 6-6.5 6.5 Aug. 2 1 1 0 7 7 . . 2 7 5 5 7 7 . . 2 7 5 5 AAuugg.. •>7:\ 11 1 - 1 1 . 1 5 . 5 1 1 1 1 . 5 11 6.5 6.5 Sept. 22 8 8 3 11 11 1989—Feb. 24 6.5-7 7 Oct. 2 1 0 6 8 8 -8 .5 .5 8 8 . . 5 5 7161 10 1 - 0 1 . 0 5 . 5 1 1 0 0 . 5 27 7 7 - Nov. 1 8.5-9.5 9.5 30 10 10 1990—Dec. 19 6.5 6.5 3 9.5 9.5 Oct. 1? 9.5-10 9.5 1979—July 20 10 10 Nov. 7 13 ? 9 9 -9 .5 .5 9 9. 5 1991—Feb. 4 1 6-6 6 .5 6 6 Aug. 17 10-10.5 10.5 76 9 9 Apr. 30 5.5-6 5.5 20 10.5 10.5 Dec. 14 8.5-9 9 May 2 5.5 5.5 Sept. 19 10.5-11 11 15 8.5-9 8.5 Sept. 13 5-5.5 5 21 11 11 17 8.5 8.5 17 5 5 Oct. 8 11-12 12 Nov. 6 4.5-5 4.5 10 12 12 1984-——AApprr.. 9 8.5-9 9 7 4.5 4.5 13 9 9 Dec. 20 3.5-4.5 3.5 1980—Feb. 15 12-13 13 Nov. 21 8.5-9 8.5 24 3.5 3.5 19 13 13 26 8.5 8.5 May 29 12-13 13 Dec. 74 8 8 1992—July 2 3-3.5 3 June 3 1 0 3 11 1 - 2 1 2 1 1 1 2 1985-——MMaayy 7 7 1 4 ) 7.5-8 7.5 7 3 3 16 11 11 7.5 7.5 July 2 2 9 8 10 1 - 0 1 1 1 1 0 0 1986-—Mar. 1 7-7.5 7 IInn eeffffeecctt SSeepptt.. 22,, 11999944 3.5 3.5 Sept. 26 11 11 111 7 7 Nov. 17 12 12 Apr. 71 6.5-7 6.5 Dec. 5 12-13 13 July 11 6 6 1. Available on a short-term basis to help depository institutions meet tempo- ordinarily is charged on extended-credit loans outstanding less than thirty days; rary needs for funds that cannot be met through reasonable alternative sources. however, at the discretion of the Federal Reserve Bank, this time period may be The highest rate established for loans to depository institutions may be charged on shortened. Beyond this initial period, a flexible rate somewhat above rates on adjustment-credit loans of unusual size that result from a major operating problem market sources of funds is charged. The rate ordinarily is reestablished on the first at the borrower's facility. business day of each two-week reserve maintenance period, but it is never less 2. Available to help relatively small depository institutions meet regular than the discount rate applicable to adjustment credit plus SO 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 tnan four weeks in a calendar 3. May be made available to depository institutions when similar assistance is quarter. A 3 percent surcharge was in effect from Mar. 17,1980, through May 7, not reasonably available from other sources, including special industry lenders. 1980. A surcharge of 2 percent was reimposed on Nov. 17, 1980; the surcharge Such credit may be provided when exceptional circumstances (including sus- was subsequently raised to 3 percent on Dec. 5,1980, and to 4 percent on May 5, tained deposit drains, impaired access to money market funds, or sudden 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, and to 2 deterioration in loan repayment performance) or practices involve only a partic- percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the ular institution, or to meet the needs of institutions experiencing difficulties surcharge was changed from a calendar quarter to a moving thirteen-week period. adjusting to changing market conditions over a longer period (particularly at times The surcharge was eliminated on Nov. 17, 1981. of deposit disintermediation). The discount rate applicable to adjustment credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A9 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Type of deposit Net transaction accounts3 1 $0 million-$51.9 million... 12/21/93 2 More than $51.9 million4.. 12/21/93 3 Nonpersonal time deposits5 12/27/90 4 Eurocurrency liabilities6. . 12/27/90 1. Required reserves must be held in the form of deposits with Federal Reserve automatic, or other transfers per month, of which no more than three may be Banks or vault cash. Nonmember institutions may maintain reserve balances with checks. Accounts subject to such limits are savings deposits. a Federal Reserve Bank indirectly on a pass-through basis with certain approved The Monetary Control Act of 1980 requires that the amount of transaction institutions. For previous reserve requirements, see earlier editions of the Annual accounts against which the 3 percent reserve requirement applies be modified Report or the Federal Reserve Bulletin. Under provisions of the Monetary annually by 80 percent of the percentage change in transaction accounts held by Control Act, depository institutions include commercial banks, mutual savings all depository institutions, determined as of June 30 each year. Effective Dec. 21, banks, savings and loan associations, credit unions, agencies and branches of 1993, for institutions reporting quarterly and weekly, the amount was increased foreign banks, and Edge Act corporations. from $46.8 million to $51.9 million. 2. The Garn-St Germain Depository Institutions Act of 1982 (Public Law 4. The reserve requirement was reduced from 12 percent to 10 percent on 97-320) requires that $2 million of reservable liabilities of each depository Apr. 2, 1992, for institutions that report weekly, and on Apr. 16, 1992, for institution be subject to a zero percent reserve requirement. The Board is to adjust institutions that report quarterly. the amount of reservable liabilities subject to this zero percent reserve require- 5. For institutions that report weekly, the reserve requirement on nonpersonal ment each year for the succeeding calendar year by 80 percent of the percentage time deposits with an original maturity of less than 1VS years was reduced from 3 increase in the total reservable liabilities of all depository institutions, measured percent to lVi percent for the maintenance period that began Dec. 13, 1990, and on an annual basis as of June 30. No corresponding adjustment is to be made in to zero for the maintenance period that began Dec. 27, 1990. The reserve the event of a decrease. On Dec. 21, 1993, the exemption was raised from $3.8 requirement on nonpersonal time deposits with an original maturity of lVi years million to $4.0 million. The exemption applies in the following order: (1) net or more has been zero since Oct. 6, 1983. negotiable order of withdrawal (NOW) accounts (NOW accounts less allowable For institutions that report quarterly, the reserve requirement on nonpersonal deductions); and (2) net other transaction accounts. The exemption applies only to time deposits with an original maturity of less than 1V5 years was reduced from 3 accounts that would be subject to a 3 percent reserve requirement. percent to zero on Jan. 17, 1991. 3. Includes all deposits against which the account holder is permitted to make 6. The reserve requirement on Eurocurrency liabilities was reduced from 3 withdrawals by negotiable or transferable instruments, payment orders of with- percent to zero in the same manner and on the same dates as was the reserve drawal, and telephone and preauthorized transfers for the purpose of making requirement on nonpersonal time deposits with an original maturity of less than payments to third persons or others, other than money market deposit accounts l'/i years (see note 5). (MMDAs) and similar accounts that permit no more than six preauthorized, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Nonfinancial Statistics • October 1994 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 1993 1994 TTyyppee ooff ttrraannssaaccttiioonn aanndd mmaattuurriittyy 11999911 11999922 11999933 Dec. Jan. Feb. Mar. Apr. May June U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 20,158 14,714 17,717 1,394 0 1,264 900 1,101 1,395 4,143 2 Gross sales 120 1,628 0 0 0 0 0 0 0 0 A Exchanges 277,314 308,699 332,229 33,536 28,986 28,709 33,163 28,881 29,807 39,484 4 Redemptions 1,000 1,600 468 0 0 0 0 0 0 0 Others within one year 5 Gross purchases 3,043 1,096 1,223 189 0 0 147 209 155 0 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shifts 24,454 36,662 31,368 2,910 0 4,063 0 2,316 0 1,197 8 Exchanges -28,090 -30,543 -36,582 -2,910 -639 -1,985 -3,605 -907 0 -3,192 9 Redemptions 1,000 0 0 0 0 0 0 0 0 0 One to five years 10 Gross purchases 6,583 13,118 10,350 2,619 0 0 1,413 2,817 0 0 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shifts -21,211 -34,478 -27,140 -2,910 776 3,447 0 1,607 0 -1,197 13 Exchanges 24,594 25,811 0 2,910 639 11,,114455 33,,660055 907 0 33,,119922 Five to ten years 14 Gross purchases 1,280 2,818 4,168 1,008 0 0 1,103 1,117 0 0 15 Gross sales 0 0 0 0 0 0 0 0 0 0 16 Maturity shifts -2,037 -1,915 0 0 -776 -616 0 709 0 0 17 Exchanges 22,,889944 33,,553322 0 0 0 550 0 0 0 0 More than ten years 18 Gross purchases 375 2,333 3,457 826 0 0 618 896 0 0 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shifts -1,209 -269 0 0 0 0 0 0 0 0 21 Exchanges 600 11,,220000 0 0 0 325 0 0 0 0 All maturities 22 Gross purchases 31,439 34,079 36,915 6,035 0 1,264 4,181 6,140 1,550 4,143 23 Gross sales 120 1,628 0 0 0 0 0 0 0 0 24 Redemptions 1,000 1,600 468 0 616 0 0 440 0 0 Matched transactions 25 Gross sales 1,570,456 1,482,467 1,475,085 137,645 132,872 124,125 155,950 120,393 137,458 133,939 26 Gross purchases 1,571,534 1,480,140 1,475,941 136,821 133,468 124,270 155,625 134,051 137,195 133,075 Repurchase agreements 2277 Gross purchases 310,084 378,374 475,447 33,751 25,818 33,693 38,490 19,741 21,517 10,059 28 Gross sales 311,752 386,257 470,723 29,577 29,348 37,425 38,115 25,041 17,112 4,405 29 Net change in U.S. Treasury securities 29,729 20,642 42,027 9,386 -3,550 -2,323 4,232 14,058 5,691 8,933 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 0 0 0 0 0 0 0 0 0 0 31 Gross sales 5 0 0 0 0 0 0 0 0 0 32 Redemptions 292 632 1,072 81 202 102 108 180 70 58 Repurchase agreements 3333 Gross purchases 22,807 14,565 35,063 2,211 2,600 3,277 3,160 728 4,195 580 34 Gross sales 23,595 14,486 34,669 1,615 3,106 3,636 3,170 878 2,895 1,300 35 Net change in federal agency obligations -1,085 -554 -678 515 -708 -461 -118 -330 1,230 -778 36 Total net change in System Open Market Account 28,644 20,089 41,348 9,901 -4,258 -2,784 4,114 13,728 6,921 8,155 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 AAAccccccooouuunnnttt 1994 1994 June 29 July 6 July 13 July 20 July 27 May 31 June 30 July 31 Consolidated condition statement ASSETS 1 Gold certificate account 11,052 11,052 11,052 11,052 11,052 11,052 11,052 11,052 2 Special drawing rights certificate account 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 3 302 284 280 290 297 357 301 318 Loans 4 To depository institutions 381 2,695 380 796 456 240 701 445588 5 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Federal agency obligations 7 Bought outright 3,920 3,920 3,920 3,920 3,900 3,977 3,920 33,,990000 8 Heldunder repurchase agreements 300 463 1,667 2,048 0 1,300 580 1,350 9 Total U.S. Treasury securities 351,622 353,647 353,452 351,905 350,895 348,770 357,703 351,608 10 Bought outright2 347,643 348,465 349,254 347,568 350,895 344,365 347,644 348,838 11 Bills 168,575 169,398 170,186 168,802 172,130 165,297 168,576 170,072 1? Notes 138,686 138,686 138,686 138,384 138,384 138,686 138,686 138,384 13 Bonds 40,381 40,381 40,381 40,381 40,381 40,381 40,381 40,381 14 Held under repurchase agreements 3,979 5,182 4,198 4,337 0 4,405 10,059 2,770 15 Total loans and securities 356,222 360,725 359,418 358,668 355,251 354,287 362,903 357,316 16 Items in process of collection 4,998 9,272 6,044 5,339 4,621 2,412 4,537 3,809 17 Bank premises 1,061 1,062 1,062 1,063 1,063 1,058 1,061 1,063 Other assets 18 Denominated in foreign currencies 21,659 22,475 22,492 22,513 22,525 22,349 22,408 2222,,886688 19 All other4 9,295 9,236 9,501 9,306 9,483 8,673 9,330 9,728 20 Total assets 412,606 422,124 417,867 416,249 412,310 408,207 419,610 414,173 LIABILITIES 21 Federal Reserve notes 359,698 363,270 362,910 361,651 361,358 356,197 360,280 360,309 22 Total deposits 37,732 39,963 39,194 39,065 35,940 39,306 43,604 38,682 7.3 Depository institutions 30,864 32,535 33,404 32,809 29,957 33,186 33,358 34,573 24 U.S. Treasury—General account 6,435 6,958 5,275 5,823 5,602 5,675 9,356 3,683 25 Foreign—Official accounts 163 175 283 167 163 174 604 182 26 270 295 233 267 217 278 286 244 7.7 Deferred credit items 4,541 7,431 5,066 4,824 4,444 1,868 3,901 3,787 28 Other liabilities and accrued dividends 3,230 3,278 3,285 3,269 3,133 3,106 3,626 3,425 29 Total liabilities 405,202 413,942 410,455 408,809 404,874 400,477 411,411 406,203 CAPITAL ACCOUNTS 30 Capital paid in 3,523 3,523 3,535 3,535 3,538 3,517 3,523 3,550 31 Surplus 3,401 3,401 3,401 3,401 3,401 3,401 3,401 3,401 32 Other capital accounts 481 1,258 476 504 497 811 1,275 1,018 33 Total liabilities and capital accounts 412,606 422,124 417,867 416,249 412,310 408,207 419,610 414,173 MEMO 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts 381,850 382,609 386,280 391,234 392,681 372,886 382,449 395,105 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) 426,742 428,339 430,652 432,691 434,581 420,983 427,534 435,668 36 LESS: Held by Federal Reserve Banks 67,044 65,069 67,742 71,040 73,223 64,787 67,254 75,359 37 Federal Reserve notes, net 359,698 363,270 362,910 361,651 361,358 356,197 360,280 360,309 Collateral held against notes, net: 38 Gold certificate account 11,052 11,052 11,052 11,052 11,052 11,052 11,052 11,052 3 4 9 0 S O p th ec e i r a e l l d ig r i a b w le in a g s s r e ig ts h ts certificate account 8,01 0 8 8,01 0 8 8,01 0 8 8,01 0 8 8,01 0 8 8,01 0 8 8,01 0 8 8,01 0 8 41 U.S. Treasury and agency securities 344,200 343,840 342,581 342,288 337,126 341,210 341,239 340,628 42 Total collateral 363,270 362,910 361,651 361,358 356,197 360,280 360,309 359,698 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 • October 1994 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding Millions of dollars Wednesday End of month Type of holding and maturity 1994 1994 June 29 July 6 July 13 July 20 July 27 May 31 June 30 July 31 1 Total loans 381 2,695 380 796 456 240 701 458 2 Within fifteen days1 340 2,438 96 731 400 155 549 228 3 Sixteen days to ninety days ... 40 258 284 65 57 85 152 230 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.. 351,622 353,647 353,452 351,905 350,895 344,365 347,644 348,838 10 Within fifteen days1 22,360 17,342 21,087 20,919 20,124 10,423 4,966 7,706 11 Sixteen days to ninety days ... 81,653 83,653 79,795 79,294 83,030 88,120 81,476 89,041 12 Ninety-one days to one year .. 105,494 108,739 108,657 108,078 104,128 103,708 117,289 108,478 13 One year to five years 83,725 85,524 85,524 85,511 85,511 83,725 85,524 85,511 14 Five years to ten years 25,264 25,264 25,264 24,977 24,977 25,264 25,264 24,977 15 More than ten years 33,125 33,125 33,125 33,125 33,125 33,125 33,125 33,125 16 Total federal agency obligations 4,220 4,383 5,587 5,968 3,900 3,977 3,920 3,900 17 Within fifteen days1 465 468 1,687 2,164 111 266 165 111 18 Sixteen days to ninety days ... 490 690 700 604 607 386 490 607 19 Ninety-one days to one year .. 839 799 769 769 769 891 839 769 20 One year to five years 1,826 1,826 1,831 1,831 1,818 1,833 1,826 1,818 21 Five years to ten years 575 575 570 575 570 577 575 570 22 More than ten years 25 25 30 25 25 25 25 25 1. Holdings under repurchase agreements are classified as maturing within fifteen days m 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 1994 IItteemm 11999900 11999911 11999922 11999933 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Dec. Jan. Feb. Mar. Apr. May June July Seasonally adjusted AADDJJUUSSTTEEDD FFOORR CCHHAANNGGEESS IINN RREESSEERRVVEE RREEQQUUIIRREEMMEENNTTSS22 11 TToottaall rreesseerrvveess33 41.77 45.53 54.34 60.48 60.48 60.60 60.76 60.59 60.33r 59.91r 59.71r 59.82 22 NNoonnbboorrrroowweedd rreesseerrvveess 41.44 45.34 54.22 60.39 60.39 60.53 60.69 60.53 60.21r 59.71r 59.37r 59.36 33 NNoonnbboorrrroowweedd rreesseerrvveess pplluuss eexxtteennddeedd ccrreeddiirr 41.47 45.34 54.22 60.39 60.39 60.53 60.69 60.53 60.21r 59.71r 59.37r 59.36 44 RReeqquuiirreedd rreesseerrvveess 40.11 44.55 53.19 59.41 59.41 59.16 59.62 59.62 59.18r 59.00r 58.601 58.71 55 MMoonneettaarryy bbaassee 293.16 317.12 350.61 385.86 385.86 389.61 393.96 397.01 399.20r 401.73r 404.32' 407.04 Not seasonally adjusted 6 Total reserves7 43.07 46.98 56.06 62.37 62.37 62.04 59.53 59.50 61.40 58.97 59.56 59.66 7 Nonborrowed reserves .. 42.74 46.78 55.93 62.29 62.29 61.96 59.46 59.44 61.27 58.77 59.22 59.20 8 Nonborrowed reserves plus extended credit . 42.77 46.78 55.93 62.29 62.29 61.96 59.46 59.44 61.27 58.77 59.22 59.20 9 Required reserves8 41.40 46.00 54.90 61.31 61.31 60.59 58.39 58.53 60.25 58.06 58.45 58.55 10 Monetary base 296.68 321.07 354.55 390.59 390.59 391.00 390.86 394.15 399.76 400.26 404.72r 408.16 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS1 11 Total reserves11 59.12 55.53 56.54 62.86 62.86 62.07 59.59 59.61 61.64 59.27 59.92r 60.09 12 Nonborrowed reserves .. 58.80 55.34 56.42 62.78 62.78 62.00 59.52 59.55 61.52 59.07 59.59 59.63 13 Nonborrowed reserves plus extended credir. 58.82 55.34 56.42 62.78 62.78 62.00 59.52 59.55 61.52 59.07 59.59 59.64 14 Required reserves 57.46 54.55 55.39 61.80 61.80 60.62 58.45 58.64 60.49 58.36 58.82 58.99 15 Monetary base . 313.70 333.61 360.90 397.62 397.62 397.89 397.93 400.78 406.32 406.59 410.94r 414.38 16 Excess reserves13 1.66 .98 1.16 1.06 1.06 1.45 1.14 .97 1.15 .92 1.11 1.11 17 Borrowings from the Federal Reserve .33 .19 .12 .08 .08 .07 .07 .06 .12 .20 .33 .46 1. Latest monthly and biweekly figuresa re 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 Monetaiy and reserves against transactions deposits and nonpersonal time and savings deposits Reserves Projections Section, Division of Monetaiy 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-adiusted 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 monetaiy 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 Financial Statistics • October 1994 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1994 IItteemm 1990 1991 1992 1993 Dec. Dec. Dec. Dec. Apr. Mayr Juner July Seasonally adjusted Measures2 1 Ml 826.4 897.7 1,024.8 1,128.4 1,141.1' 1,142.9 1.146.4 1.153.7 2 M2 3,353.0 3.455.3 3.509.0 3,567.9' 3,591.8' 3,595.2 3,587.9 3,601.9 3 M3 4.125.7 4.180.4 4.183.1 4,232.0' 4,228.0' 4,225.5 4.224.5 4.244.8 4 L 4.974.8 4,992.9 5.057.2 5,134.4' 5,163.1' 5,162.4 5,153.2 n.a. 5 Debt 10,670.0r 11,144.1' 11,723.9' 12,318.5' 12,534.2' 12,584.6 12,639.6 n.a. Ml components 6 Currency^ 246.7 267.1 292.2 321.4 334.8 337.6 340.3 343.2 7 Travelers checks 7.8 7.7 8.1 7.9 8.1 8.1 8.1 8.2 8 Demand deposits5 277.9 290.0 339.6 384.8 388.9 385.8 386.6 389.6 9 Other checkable deposits6 294.0 332.8 384.9 414.3 409.3' 411.2 411.4 412.7 Nontransaction components 10 In M27 2,526.6 2,557.6 2,484.3 2,439.5' 2,450.6' 2,452.3 2,441.5 2,448.2 11 In M38 772.7 725.2 674.1 664.1' 636.3' 630.3 636.7 642.9 Commercial banks 12 Savings deposits, including MMDAs 582.1 665.5 754.6 785.3 788.2 784.2 779.2 777.7 13 Small time deposits9 611.3 602.9 508.7 468.5 461.6 464.0 466.6 468.8 14 Large time deposits10' 11 368.6 342.4 292.8 277.1 269.3 273.7 273.8 276.5 Thrift institutions 15 Savings deposits, including MMDAs 338.3 375.6 429.0 430.2 432.5 431.7 428.0 424.6 16 Small time deposits 563.2 464.5 361.8 317.1 307.0 305.1 303.8 303.7 17 Large time deposits 120.9 83.4 67.5 61.8 61.2 59.8 60.1 60.8 Money market mutual funds 18 General purpose and broker-dealer . 355.5 370.4 352.0 348.8 361.5 365.1 359.3 363.5 19 Institution-only 135.0 181.0 201.5 197.0 177.0 169.3 169.5 170.9 Debt components 20 Federal debt 2,490.7 2,763.8 3,068.4 3,327.6 3,383.6 3,395.4 3,414.5 n.a. 21 Nonfederal debt 8,179.3r 8,380.3' 8,655.5' 8,990.9' 9,150.6' 9,189.3 9,225.1 n.a. Not seasonally adjusted Measures2 22 Ml 843.8 916.7 1,046.7 1,153.8 1,153.1' 1,132.8 1.142.6 1,151.6 23 M2 3,366.0 3,470.4 3.527.6 3,590.5' 3,609.1' 3,580.5 3.583.7 3,598.2 24 M3 4,135.5 4,191.9 4,198.3 4,251.3' 4,243.7' 4,216.5 4,221.1 4,237.8 25 L 4,997.2 5,018.0 5.087.7 5,169.3' 5,172.3' 5,139.2 5,142.7 n.a. 26 Debt 10,667.6r 11,141.4' 11,725.7' 12,320.9' 12,508.4' 12,555.3 12,606.9 n.a. Ml components 27 Currency3 249.5 269.9 295.0 324.9 334.4 337.4 340.6 344.8 28 Travelers checks 7.4 7.4 7.8 7.6 7.8 7.9 8.3 8.8 29 Demand deposits5 289.9 303.1 355.1 402.6 390.3 378.8 383.5 388.9 30 Other checkable deposits6 297.0 336.3 388.9 418.6 420.6' 408.7 410.1 409.1 Nontransaction components 31 In M2 2,522.3 2,553.7 2,480.9 2,436.7' 2,456.0' 2,447.6 2,441.2 2,446.6 32 In M38 769.5 721.6 670.6 660.9' 634.6' 636.0 637.4 639.6 Commercial banks 33 Savings deposits, including MMDAs 580.8 664.0 752.9 783.9 790.6 784.8 781.9 779.6 34 Small time deposits 610.5 601.9 507.8 467.6 461.2 463.0 466.2 469.8 35 Large time deposits10,11 367.7 341.3 291.7 276.0 268.7' 276.0 275.6 276.2 Thrift institutions 36 Savings deposits, including MMDAs 337.6 374.8 428.1 429.4 433.8 432.0 429.5 425.6 37 Small time deposits . 562.4 463.8 361.2 316.4 306.7 304.4 303.5 304.4 38 Large time deposits'" 120.6 83.1 67.2 61.6 61.0 60.3 60.5 60.7 Money market mutual funds 39 General purpose and broker-dealer 353.8 368.5 350.2 347.2 367.2 364.5 357.1 360.0 40 Institution-only 134.7 180.4 200.4 195.8 176.2 171.0 166.3 167.4 Repurchase agreements and Eurodollars 41 Overnight 77.3 80.6 80.7 92.3' 96.5' 98.9 102.9 107.2 42 Term 158.3 130.1 126.8 143.8' 145.3' 144.4 149.7 151.2 Debt components 43 Federal debt 2,491.3 2,765.0 3,069.8 3,329.5 3,376.8 3,379.7 3,394.5 n.a. 44 Nonfederal debt 8,176.3r 8,376.5 8,655.9' 8,991.5' 9,131.6' 9,175.6 9,212.4 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 hind 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 NonfinancialS tatistics • October 1994 1.22 DEPOSIT INTEREST RATES AND AMOUNTS OUTSTANDING Commercial and BIF-insured saving banks1 1993 1994 IItteemm 1991 1992 Dec. Dec. Nov/ Dec. Jan. Feb. Mar. Apr. May Juner July Interest rates (annual effective yields) INSURED COMMERCIAL BANKS 1 Negotiable order of withdrawal accounts ... 3.76 2.33 1.89 1.86 1.84 1.82 1.82 1.81 1.83 1.82 1.83 2 Savings deposits 4.30 2.88 2.48 2.46 2.46 2.43 2.43 2.45 2.50 2.54 2.57 Interest-bearing time deposits with balances of less than $100,000, by maturity 3 7 to 91 days 4.18 2.90 2.64 2.65 2.65 2.68 2.76 2.87 2.99 3.08 3.17 4 92 to 182 days 4.41 3.16 2.92 2.91 2.90 2.94 3.02 3.13 3.28 3.36 3.44 5 183 days to 1 year 4.59 3.37 3.13 3.13 3.14 3.18 3.27 3.42 3.64 3.76 3.89 6 More than 1 year to 2lA years 4.95 3.88 3.54 3.55 3.56 3.61 3.69 3.87 4.12 4.26 4.39 7 More than 2 Vi years 5.52 4.77 4.28 4.29 4.31 4.35 4.46 4.67 4.89 5.02 5.15 BIF-INSURED SAVINGS BANKS3 8 Negotiable order of withdrawal accounts ... 4.44 2.45 1.95 1.87 1.89 1.88 1.83 1.86 1.86 1.88 1.89 9 Savings deposits 4.97 3.20 2.65 2.63 2.62 2.64 2.63 2.65 2.67 2.69 2.67 Interest-bearing time deposits with balances of less than $100,000, by maturity 1100 1 to 91 days 4.68 3.13 2.73 2.70 2.69 2.69 2.71 2.72 2.77 2.84 2.98 11 92 to 182 days 4.92 3.44 3.03 3.02 3.03 3.04 3.08 3.13 3.21 3.41 3.53 12 183 days to 1 year 4.99 3.61 3.32 3.31 3.33 3.34 3.37 3.47 3.67 3.92 4.02 13 More than 1 year to 2 VI years 5.23 4.02 3.69 3.66 3.72 3.76 3.85 3.96 4.12 4.38 4.56 14 More than 2 Pi years 5.98 5.00 4.60 4.62 4.61 4.66 4.75 4.85 5.08 5.24 5.35 Amounts outstanding (millions of dollars) INSURED COMMERCIAL BANKS 15 Negotiable order of withdrawal accounts ... 244,637 286,541 297,406 305,223 293,806 295,573 297,496 293,888 292,797 290,220 290,658 16 Savings deposits2 652,058 738,253 770,652 766,413 771,559 776,204 779,340 771,869 773,170 767,539 765,767 17 Personal 508,191 578,757 598,216 597,838 606,615 611,725 615,875 611,720 612,648 608,132 605,893 18 Nonpersonal 143,867 159,496 172,435 168,575 164,944 164,479 163,465 160,149 160,522 159,407 159,874 Interest-bearing time deposits with balances of less than $100,000, by maturity 19 7 to 91 days 47,094 38,474 30,023 29,455 29,312 29,578 29,539 29,467 29,950 28,763 28,645 20 92 to 182 days 158,605 127,831 110,095 110,069 109,110 109,444 107,407 105,615 104,400 102,439 100,390 21 183 days to 1 year 209,672 163,098 148,239 146,565 144,037 143,624 144,022 146,733 148,102 151,165 152,061 22 More than 1 year to 2V5 years 171,721 152,977 140,305 141,223 141,204 141,006 139,946 139,313 140,764 144,686 147,204 23 More than 2Vi years 158,078 169,708 182,152 181,528 182,193 181,240 180,973 181,977 180,381 181,843 182,911 24 IRA/Keogh Plan deposits 147,266 147,350 144,467 143,985 143,875 143,409 142,002 142,448 142,047 142,513 142,615 BIF-INSURED SAVINGS BANKS3 25 Negotiable order of withdrawal accounts 9,624 10,871 10,880 11,151 10,796 10,870 11,078 11,051 11,052 10,792 10,925 26 Savings deposits 71,215 81,786 77,939 80,115 78,660 78,016 78,701 78,982 78,817 77,289 77,342 27 Personal 68,638 78,695 74,653 77,035 75,445 74,756 75,444 75,717 75,474 74,121 74,069 28 Nonpersonal 2,577 3,091 3,286 3,079 3,215 3,260 3,257 3,265 3,344 3,168 3,273 Interest-bearing time deposits with balances of less than $100,000, by maturity 29 7 to 91 days 4,146 3,867 2,780 2,793 2,737 2,735 2,671 2,697 2,702 2,614 2,531 30 92 to 182 days 21,686 17,345 12,936 12,946 13,094 13,165 13,177 13,058 12,822 12,515 12,511 31 183 days to 1 year 29,715 21,780 17,193 17,426 17,418 17,436 17,511 17,504 17,444 17,310 17,592 32 More than 1 year to 2Vi years 25,379 18,442 16,008 16,546 16,281 16,338 16,180 16.453 16,477 16,493 16,888 33 More than 2Vl years 18,665 18,845 19,659 20,464 20,630 20,939 21,110 21.454 21,546 21,079 21,565 34 IRA/Keogh Plan accounts 23,007 21,713 19,393 19,356 19,395 19,474 19,447 19,860 19,772 19,511 19,757 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 1994 BBaannkk ggrroouupp,, oorr ttyyppee ooff ccuussttoommeerr 1199991122 1199992222 1199993322 Dec. Jan. Feb. Mar. Apr/ May DEBITS Seasonally adjusted Demand deposits3 1 All insured banks 277,741.7 313,251.6 334,793.7 367,734.8 349,574.2 371,865.9 393,877.0 352,710.2 376,234.9 2 Major New York City banks 137,337.2 165,484.5 171,312.0 189,024.1 183,245.0 200,050.9 210,684.5 184,409.0 200,277.7 3 Other banks 140,404.5 147,767.2 163,481.7 178,710.7 166,329.2 171,815.0 183,192.5 168,301.2 175,957.2 4 Other checkable deposits4 3,643.1 3,781.5 3,486.8 3,809.5 3,426.9 3,785.2 3,882.2 3,573.9 3,868.2 5 Savings deposits (including MMDAs) 3,206.4 3,310.6 3,507.3 3,933.6 3,595.3 4,056.9 3,918.6 3,458.4 3,530.6 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 803.7 826.0 786.5 826.9 771.4 823.3 873.6 778.6 833.9 7 Major New York City banks 4,267.1 4,794.5 4,200.6 4,550.0 4,268.2 4,674.4 4,798.4 4,233.3 4,714.9 8 Other banks 448.1 428.9 424.8 443.3 405.5 420.2 450.1 411.1 430.6 9 Other checkable deposits4 16.2 14.4 11.9 12.6 11.3 12.6 12.9 11.9 12.8 10 Savings deposits (including MMDAs) 5.2 4.7 4.6 5.1 4.6 5.2 5.0 4.4 4.5 DEBITS Not seasonally adjusted Demand deposits3 11 All insured banks 277,752.4 313,416.8 334,775.6 380,187.5 349,669.7 345,587.2 406,826.5 350,132.0 364,468.2 12 Major New York City banks 137,307.2 165,595.0 171,283.5 194,541.0 181,971.7 187,904.4 218,783.5 181,272.6 188,885.2 13 Other banks 140,445.2 147,821.9 163,492.1 185,646.4 167,698.0 157,682.8 188,043.0 168,859.5 175,583.0 14 Other checkable deposits4 3,645.2 3,784.4 3,485.2 3,888.9 3,745.4 3,480.4 3,889.2 3,782.0 3,685.4 15 Savings deposits (including MMDAs) 3,209.2 3,310.0 3,505.8 4,066.4 3,780.8 3,616.8 3,882.8 3,633.8 3,567.4 DEPOSIT TURNOVER Demand deposits3 16 All insured banks 803.6 826.3 786.5 820.6 759.5 783.2 923.4 771.4 823.3 17 Major New York City banks 4,269.0 4,803.5 4,197.9 4,387.8 4,047.8 4,319.0 5,140.2 4,228.8 4,449.3 18 Other banks 448.1 429.0 424.9 443.1 403.7 396.4 472.4 410.8 438.7 19 Other checkable deposits4 16.2 14.4 11.9 12.7 12.1 11.6 12.9 12.3 12.3 20 Savings deposits (including MMDAs) 5.2 4.7 4.6 5.2 4.8 4.6 5.0 4.6 4.6 1. Historical tables containing revised data for earlier periods can be obtained 4. As of January 1994, other checkable deposits (OCDs) previously defined as from the Publications Section, Division of Support Services, Board of Governors automatic transfer to demand deposits (ATSs) and negotiable order of withdrawal of the Federal Reserve System, Washington, DC 20551. (NOW) accounts, were expanded to include telephone and preauthorized transfer Data in this table also appear in the Board's G.6 (406) monthly statistical accounts. This change redefined OCDs for debits data to be consistent with OCDs release. For ordering address, see inside front cover. for deposits data. 2. Annual averages of monthly figures. 5. Money market deposit accounts. 3. Represents accounts of individuals, partnerships, and corporations and of states and political subdivisions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics • October 1994 1.26 ASSETS AND LIABILITIES OF COMMERCIAL BANKS1 Billions of dollars Monthly averages Wednesday figures Account 1993 1994r 1994r July Jan. Feb. Mar. Apr. May June July July 6 July 13 July 20 July 27 ALL COMMERCIAL BANKING INSTITUTIONS Seasonally adjusted Assets 1 Bank credit 3,060.7 3,124.3 3,138.2 3,165.7 3,191.8 3,196.2 3,204.7 3,238.1 3,227.5 3,238.7 3,239.2 3,244.3 2 Securities in bank credit 896.4 924.3 928.4 947.4 963.9 961.7 963.8 966.9 972.8 974.4 962.4 963.3 3 U.S. government securities ... 714.21 731.9 730.9 745.3 756.0 749.1 749.9 749.4 755.3 752.8 744.1 748.3 4 Other securities 182.2r 192.4 197.5 202.2 207.9 212.6 213.9 217.4 217.5 221.5 218.3 215.1 5 Loans and leases in bank credit2. 2,164.3 2,200.0 2,209.8 2,218.3 2,228.0 2,234.5 2,240.8 2,271.2 2,254.7 2,264.3 2,276.8 2,281.0 6 Commercial and industrial 590.6r 588.3 590.7 595.5 601.9 606.0 608.4 617.1 611.1 616.8 618.8 619.1 7 Real estate 916.8r 942.6 942.1 942.9 945.3 946.6 952.4 958.7 955.6 956.4 958.6 961.1 8 Revolving home equity 75.0 73.0 73.2 73.3 73.3 73.7 74.1 74.4 74.3 74.3 74.4 74.4 9 Other 841.8r 869.6 869.0 869.6 871.9 873.0 878.3 884.3 881.2 882.1 884.3 886.7 10 Consumer 375.3 394.2 397.9 402.4 408.7 411.9 415.1 422.7 420.8 421.4 422.5 423.9 11 Security3 83.0 81.0 82.2 83.3 76.9 77.4 76.1 77.8 73.4 76.2 80.7 81.3 12 Other 198.7r 193.9 196.8 194.2 195.2 192.6 188.7 194.9 193.8 193.6 196.1 195.6 13 Interbank loans4 161.0 154.4 155.4 148.7 150.0 161.9 163.2 166.4 170.7 158.4 173.0 165.7 14 Cash assets5 217.7 219.4 225.0 216.2 209.7 217.4 216.5 213.1 222.8 212.3 209.4 214.4 15 Other assets6 219.6r 215.9 212.3 206.9 207.8 210.7 207.6 211.9 209.1 216.2 211.5 209.6 16 Total assets7 3,598.6R 3,656.3 3,673.6 3,680.5 3,702.0 3,728.8 3,734.4 3,771.4 3,772.1 3,767.5 3,774.9 3,775.9 Liabilities 17 Deposits 2,517.4 2,537.7 2,531.6 2,517.3 2,506.0 2,519.2 2,505.9 2,512.3 2,508.9 2,514.6 2,510.2 2,518.3 18 Transaction 788.1 815.7 817.5 813.5 800.5 812.4 809.2 810.5 814.9 813.0 805.7 812.6 19 Nontransaction 1,729.3 1,722.0 1,714.0 1,703.8 1,705.5 1,706.8 1,696.6 1,701.9 1,694.0 1,701.6 1,704.5 1,705.7 20 Large time 352.5 348.3 340.4 332.5 335.3 338.1 334.3 339.0 333.2 338.2 340.6 342.4 21 Other 1,376.8 1,373.6 1,373.6 1,371.3 1,370.3 1,368.7 1,362.4 1,362.9 1,360.8 1,363.5 1,363.9 1,363.2 22 Borrowings 529.8r 547.8 549.3 561.5 587.6 582.0 578.6 584.1 583.7 573.2 594.3 591.5 23 From banks in the U.S MO1 153.3 154.4 147.9 150.2 163.3 161.3 167.9 173.2 160.0 174.5 166.4 24 From nonbanks in the U.S 366.8 394.5 394.9 413.5 437.4 418.7 417.2 416.2 410.5 413.2 419.8 425.1 25 Net due to related foreign offices IOS^ 115.6 135.6 157.6 173.5 171.7 185.1 201.8 202.1 194.4 208.1 195.8 26 Other liabilities8 ISI.O1 151.2 151.7 143.1 142.8 145.9 141.1 145.5 145.8 149.5 143.7 144.0 27 Total liabilities 3,304.1R 3,352.2 3,368.2 3,379.4 3,410.0 3,418.7 3,410.7 3,443.8 3,440.4 3,431.7 3,456.3 3,449.7 28 Residual (assets less liabilities)9 294.5r 304.1 305.4 301.0 292.1 310.1 323.7 327.6 331.8 335.8 318.6 326.2 Not seasonally adjusted Assets 29 Bank credit 3,043.8' 3,125.2 3,136.7 3,164.4 3,190.2 3,185.3 3,199.6 3,221.3 3,217.7 3,221.4 3,218.5 3,221.4 30 Securities in bank credit 889.5r 920.1 928.2 950.6 964.8 957.6 960.1 960.2 964.8 965.3 954.9 957.7 31 U.S. government securities ... 708./ 727.9 729.6 748.8 758.2 746.1 747.5 743.8 749.0 745.7 738.6 742.0 32 Other securities ISOY 192.2 198.6 201.8 206.7 211.5 212.6 216.5 215.8 219.6 216.3 215.7 33 Loans and leases in bank credit2. 2,154.3 2,205.1 2,208.5 2,213.7 2,225.4 2,227.7 2,239.5 2,261.1 2,252.9 2,256.1 2,263.6 2,263.7 34 Commercial and industrial 588.6 587.5 589.9 598.4 604.9 607.6 609.4 614.8 613.0 613.7 616.3 614.9 35 Real estate 916.9" 941.1 938.7 939.1 943.3 947.0 952.9 959.5 957.3 959.7 959.0 959.6 36 Revolving home equity 74.8 73.2 73.0 72.6 72.8 73.4 73.9 74.2 74.1 74.1 74.1 74.2 37 Other 842. lr 867.9 865.7 866.5 870.5 873.6 878.9 885.3 883.3 885.6 884.9 885.4 38 Consumer 372.9 398.6 399.1 399.6 405.5 410.6 413.2 420.1 417.2 418.3 419.9 422.0 39 Security3 78.1 83.3 86.8 85.5 79.6 73.4 74.3 72.6 69.0 71.4 74.0 75.1 40 Other 197.8r 194.5 193.8 191.1 192.1 189.1 189.7 194.1 196.4 193.1 194.3 192.1 41 Interbank loans4 156.4 158.6 156.0 148.4 151.4 157.1 160.7 161.8 171.9 155.5 162.1 159.5 42 Cash assets5 214.5 224.4 219.6 210.9 207.1 214.9 214.2 209.7 234.9 208.0 199.9 202.7 43 Other assets6 218.1r 218.3 211.8 205.5 204.6 208.0 205.1 210.2 211.6 212.5 207.7 206.6 44 Total assets7 3,573.2r 3,669.0 3,666.4 3,671.7 3,696.2 3,707.7 3,722.0 3,745.7 3,779.2 3,740.0 3,730.8 3,732.9 Liabilities 45 Deposits 2,512.1 2,541.0 2,521.3 2,508.9 2,512.6 2,507.9 2,507.5 2,506.1 2,547.4 2,505.3 2,488.9 2,484.0 46 Transaction 780.6 825.3 808.4 802.0 808.8 801.0 807.6 802.5 849.2 801.1 783.6 779.9 47 Nontransaction 1,731.5 1,715.7 1,712.9 1,706.9 1,703.8 1,706.8 1,699.9 1,703.6 1,698.2 1,704.2 1,705.3 1,704.1 48 Large time 353.1 344.8 340.7 335.1 336.4 342.1 337.1 339.4 332.6 338.5 341.0 343.4 49 Other 1,378.4 1,370.9 1,372.1 1,371.8 1,367.3 1,364.8 1,362.7 1,364.3 1,365.6 1,365.7 1,364.3 1,360.7 50 Borrowings 524.01 547.1 547.7 548.8 564.1 569.6 584.5 589.4 592.5 587.3 593.6 587.1 51 From banks in the U.S 156.6r 158.6 155.9 148.4 151.4 157.1 160.7 161.8 171.9 155.5 162.1 159.5 52 From nonbanks in the U.S 367.4 388.5 391.8 400.5 412.6 412.6 423.9 427.6 420.6 431.8 431.5 427.6 53 Net due to related foreign offices 99.5r 123.8 139.3 163.1 172.5 180.3 180.3 193.5 184.3 188.1 . 194.1 205.1 54 Other liabilities8 148.0 153.4 151.9 142.8 138.1 142.1 138.2 142.5 141.8 145.1 140.2 142.2 55 Total liabilities 3,2&3.6R 3,365.3 3,360.2 3,363.6 3,387.3 3,399.9 3,410.5 3,431.6 3,466.0 3,425.8 3,416.7 3,418.4 56 Residual (assets less liabilities)9 289./ 303.7 306.2 308.1 308.9 307.8 311.5 314.1 313.3 314.2 314.0 314.5 Footnotes appear on followingp age. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions A19 1.26 ASSETS AND LIABILITIES OF COMMERCIAL BANKS1—Continued Billions of dollars Monthly averages Wednesday figures Account 1993 1994* 1994* July Jan. Feb. Mar. Apr. May June July July 6 July 13 July 20 July 27 DOMESTICALLY CHARTERED COMMERCIAL BANKS Seasonally adjusted Assets 57 Bank credit 2,713.1 2,793.4 2,802.0 2,827.6 2,842.5 2,848.8 2,858.2 2,880.7 2,879.1 2,878.9 2,879.7 22,,888844..33 58 Securities in bank credit 820.0* 846.3 849.6 868.6 876.2 873.0 871.8 875.7 880.4 881.6 871.4 873.8 59 U.S. government securities .. 662.61 678.4 676.4 690.4 694.6 690.6 689.2 689.3 693.9 691.4 684.4 689.4 60 Other securities 157.4r 167.9 173.2 178.2 181.5 182.4 182.6 186.4 186.5 190.2 187.0 184.4 61 Loans and leases in bank credit2 . 1,893.0 1,947.1 1,952.4 1,959.0 1,966.4 1,975.8 1,986.5 2,005.0 1,998.7 1,997.3 2,008.3 2,010.5 6? Commercial and industrial ... 436.2 440.3 442.8 444.9 448.8 451.8 455.2 460.5 459.0 459.7 460.9 461.5 63 Real estate 867.9* 897.6 897.1 898.1 901.7 903.6 909.6 916.7 914.0 914.2 916.9 918.9 64 Revolving home equity 75.0 73.0 73.1 73.2 73.2 73.6 74.0 74.3 74.3 74.3 74.4 74.4 65 Other 793.0* 824.6 824.0 824.9 828.5 830.0 835.5 842.4 839.7 839.9 842.6 844.6 66 Consumer 375.3 394.2 397.9 402.4 408.7 411.9 415.1 422.7 420.8 421.4 422.5 423.9 67 Security3 54.0 54.5 54.5 55.5 49.5 51.3 49.7 46.7 45.6 44.8 48.8 48.4 68 Other 159.6* 160.5 160.1 158.1 157.6 157.2 156.8 158.3 159.3 157.2 159.2 157.9 69 Interbank loans4 139.3 135.2 130.1 125.3 124.2 133.3 133.8 135.9 136.5 132.5 140.0 134.5 70 Cash assets5 190.4 194.3 200.5 190.7 183.5 190.1 190.2 187.4 196.3 187.2 183.2 188.8 71 Other assets6 173.2* 171.3 165.6 160.6 161.6 160.6 157.6 159.4 157.6 161.9 159.0 158.7 72 Total assets7 3,155.7 3,236.5 3,241.0 3,247.1 3,254.6 3,275.5 3,282.4 3,305.3 3,311.7 3,302.5 3,303.9 3,308.2 Liabilities 73 2,363.4 2,382.1 2,382.5 2,376.7 2,363.8 2,376.2 2,368.6 2,370.9 2,371.8 2,374.6 2,366.1 2,373.5 74 Transaction 776.5 804.9 806.4 802.5 790.2 802.1 798.7 800.3 804.3 802.6 795.4 802.6 75 Nontransaction 1,586.9 1,577.2 1,576.1 1,574.2 1,573.6 1,574.1 1,569.9 1,570.6 1,567.5 1,572.0 1,570.6 1,570.8 76 Large time 216.9 210.5 209.1 208.0 208.4 209.8 210.0 211.2 208.5 211.3 211.2 212.4 77 Other 1,370.0 1,366.6 1,367.0 1,366.2 1,365.2 1,364.2 1,359.9 1,359.4 1,359.0 1,360.7 1,359.4 1,358.4 78 Borrowings 410.2 438.7 445.2 462.0 483.1 476.8 468.3 469.9 472.0 459.3 477.0 476.9 7799 From banks in the U.S 122.2 131.1 132.7 128.6 129.9 142.4 138.1 146.7 152.6 139.6 150.4 144.9 8800 From nonbanks in the U.S 288.1 307.6 312.5 333.3 353.1 334.3 330.2 323.2 319.4 319.7 326.6 332.0 81 Net due to related foreign offices -14.1 3.3 2.5 13.2 21.1 22.3 32.7 45.0 40.6 4433..00 50.1 46.1 82 Other liabilities8 109.2 109.0 108.6 101.3 101.8 102.8 99.1 100.0 101.6 102.4 97.9 99.1 83 Total liabilities 2,868.7 2,933.2 2,938.8 2,953.3 2,969.8 2,978.0 2,968.7 2,985.9 2,986.0 2,979.2 2,991.0 2,995.6 84 Residual (assets less liabilities)9... 287.0 303.3 302.2 293.9 284.8 297.4 313.7 319.5 325.7 323.2 312.9 312.7 Not seasonally adjusted Assets 85 Bank credit 2,703.9* 2,786.4 2,798.1 2,822.4 2,843.2 2,844.0 2,857.0 2,872.4 2,875.6 2,872.1 2,867.0 2,871.6 86 Securities in bank credit 814.9* 839.8 848.8 869.2 878.4 870.5 871.0 871.0 875.5 876.0 865.4 868.8 87 U.S. government securities .. 658.5* 672.3 675.2 691.9 698.2 689.4 688.8 685.4 690.4 687.3 679.9 683.8 88 Other securities 156.4* 167.5 173.6 177.3 180.2 181.2 182.2 185.7 185.1 188.7 185.5 185.0 89 Loans and leases in bank credit2 . 1,889.0 1,946.6 1,949.3 1,953.2 1,964.8 1,973.4 1,986.0 2,001.4 2,000.1 1,996.0 2,001.6 2,002.8 90 Commercial and industrial ... 435.0* 437.8 442.0 446.8 451.5 454.5 456.2 459.1 460.0 458.1 458.8 458.8 91 Real estate 868.1* 896.2 893.5 894.3 899.9 904.0 910.3 917.5 915.7 917.6 917.0 917.7 9? Revolving home equity 74.7 73.1 72.9 72.6 72.7 73.3 73.9 74.1 74.0 74.0 74.0 74.1 93 Other 793.3* 823.0 820.6 821.7 827.2 830.7 836.4 843.4 841.6 843.6 843.0 843.5 94 Consumer 372.9 398.6 399.1 399.6 405.5 410.6 413.2 420.1 417.2 418.3 419.9 422.0 9S Security3 53.1 54.0 56.7 56.7 52.0 49.2 49.0 46.0 44.9 44.5 47.0 47.8 96 Other 159.9* 159.9 158.0 155.9 155.8 155.2 157.3 158.7 162.4 157.6 158.8 156.5 97 Interbank loans4 135.1 138.3 132.3 126.0 126.1 129.2 133.0 131.7 138.9 129.3 131.7 126.2 98 Cash assets5 187.5 199.5 195.5 185.9 181.7 188.6 187.7 184.2 208.9 182.9 174.5 177.1 99 Other assets6 172.8 172.4 164.9 159.8 159.3 159.0 156.6 159.0 161.7 160.1 156.5 156.7 100 Total assets7 3,139.8 3,239.1 3,233.2 3,236.5 3,253.3 3,263.4 3,276.8 3,290.1 3,328.1 3,287.0 3,272.4 3,274.4 Liabilities 101 Deposits 2,356.8 2,387.0 2,371.4 2,365.3 2,369.3 2,361.7 2,366.2 2,363.6 2,409.2 22,,336655..00 2,343.1 2,338.1 10? Transaction 769.1 814.3 797.3 791.4 798.8 791.1 797.2 792.3 838.3 790.9 773.2 770.2 103 Nontransaction 1,587.7 1,572.8 1,574.1 1,573.9 1,570.6 1,570.6 1,569.0 1,571.3 1,570.8 1,574.1 1,569.9 1,567.9 104 Large time 216.6 209.0 209.1 207.4 207.7 210.4 209.4 210.8 207.2 210.7 210.9 212.4 105 Other 1,371.1 1,363.8 1,364.9 1,366.5 1,362.8 1,360.2 1,359.6 1,360.5 1,363.6 1,363.3 1,359.0 1,355.5 106 Borrowings 404.4 438.9 445.8 449.7 460.6 467.4 474.0 475.1 477.7 471.9 476.8 476.7 107 From banks in the U.S 115.8 136.0 135.4 129.0 131.6 138.1 138.2 140.3 148.7 134.1 139.3 139.2 108 From nonbanks in the U.S 288.6 303.0 310.4 320.7 329.0 329.4 335.8 334.8 329.0 337.8 337.5 337.4 109 Net due to related foreign offices -14.3 3.0 5.4 16.0 20.6 31.1 32.9 43.5 33.2 4400..55 47.2 51.6 110 Other liabilities8 107.1 110.3 108.1 101.3 98.1 99.6 96.5 98.1 592.5 587.3 593.6 587.1 111 Total liabilities 2,853.9 2,939.2 2,930.8 2,932.4 2,948.7 2,959.9 2,969.7 2,980-3 3,019.2 2,977.2 2,962.8 2,964.2 112 Residual (assets less liabilities)9... 285.8* 299.9 302.4 304.1 304.5 303.5 307.1 309.8 308.9 309.8 309.7 310.2 Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic NonfinancialS tatistics • October 1994 NOTES TO TABLE 1.26 1. Covers the following types of institutions in the fifty states and the District 4. Consists of federal funds sold to, reverse repurchase agreements with, and of Columbia: domestically chartered commercial banks that submit a weekly loans to commercial banks in the United States. report of condition (large domestic); other domestically chartered commercial 5. Includes vault cash, cash items in process of collection, demand balances banks (small domestic); branches and agencies of foreign banks; New York State due from depository institutions in the United States, balances due from Federal investment companies, and Edge Act and agreement corporations (foreign-related Reserve Banks, and other cash assets. institutions). Excludes international banking facilities. Data are Wednesday 6. Excludes the due-from position with related foreign offices, which is values, or pro rata averages of Wednesday values. Large domestic banks included in lines 25, 53, 81, and 109. constitute a universe; data for small domestic banks and foreign-related institu- 7. Excludes unearned income, reserves for losses on loans and leases, and tions are estimates based on weekly samples and on quarter-end condition reserves for transfer risk. Loans are reported gross of these items. reports. Data are adjusted for breaks caused by reclassifications of assets and 8. Excludes the due-to position with related foreign offices, which is included in liabilities. lines 25, 53, 81, and 109. 2. Excludes federal funds sold to, reverse repurchase agreements with, and 9. This balancing item is not intended as a measure of equity capital for use in loans to commercial banks in the United States. capital adequacy analysis. 3. Consists of reserve repurchase agreements with broker-dealers and loans to purchase and carry securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A21 1.27 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS Millions of dollars, Wednesday figures 1994 AAccccoouunntt June 1 June 8 June 15 June 22 June 29 July 6 July 13 July 20 July 27 ASSETS 1 Cash and balances due from depository institutions 146,103 103,790 130,236 106,464 107,736' 124,808 110,265 103,754 107,278 2 U.S. Treasury and government securities 312,363r 310,531r 312,414r 310,002r 308,644' 313,488 312,190 307,067 311,001 Trading account 25,362 24,030 24,660 21,900 20,971 24,211 23,141 21,513 22,735 4 Investment account 287,001r 286,502r 287,754r 288,102r 287,673' 289,277 289,048 285,554 288,266 5 Mortgage-backed securities1 89,546r 89,314r 89,108' 91,273r 91,130' 88,388 88,601 87,177 89,127 All others, by maturity 6 One year or less 49,651r 50,322r 50,55 lr 50,084r 50,154' 50,277 49,947 48,775 4477,,665500 7 One year through five years 76,806r 76,294r 77,980r 77,602r 77,881' 78,433 78,112 77,907 77,707 8 More than five years 70,998r 70,571r 70,115r 69,143r 68,508' 72,178 72,389 71,695 73,783 9 Other securities 92,465r 91,252r 91,875r 94,058r 95,977' 96,897 100,385 98,160 97,993 10 Trading account 1,980 1,947 1,878 1,902 2,009 1,811 1,768 1,697 2,123 11 Investment account 58,222r 58,176r 58,225r 57,933r 58,114' 57,943 58,125 58,881 58,754 12 State and political subdivisions, by maturity 21,659 21,640 21,654r 21,710r 21,505 20,899 21,012 21,183 21,280 13 One year or less 4,508 4,534 4,605r 4,643r 4,470 4,458 4,520 4,587 4,583 14 More than one year 17,152 17,106 17,049 17,067 17,035 16,441 16,492 16,596 16,697 15 Other bonds, corporate stocks, and securities 36,563r 36,535r 36,571r 36,224r 36,609' 37,045 37,113 37,698 37,474 16 Other trading account assets 32,263r 31,129r 31,772r 34,223r 35,854' 37,142 40,493 37,581 37,116 17 Federal funds sold2 96,279 97,544 101,158 93,807 96,773 96,662 90,280 97,349 94,029 18 To commercial banks in the United States 62,848 64,080 64,358 65,394 68,947 67,320 60,744 65,739 61,594 19 To nonbank brokers and dealers 27,376 27,610 31,307 23,411 22,609 22,991 23,370 25,330 26,211 7 7, 0 1 Ot T h o er o l t o h a e n r s s 3 a nd leases, gross 1,06 6 1 , , 0 3 5 1 5 0 1,05 5 5 , , 8 7 5 4 4 2 l,063 5 , , 5 4 5 9 4 3 r l,062 5 , , 8 0 5 0 8 2 r 1,06 5 8 , , 2 0 1 1 8 3 1,07 6 7 , , 3 4 5 2 1 5 1,07 6 3 , , 1 5 6 9 6 6 1,07 6 8 , , 2 8 8 6 0 8 1,07 6 8 , , 2 3 2 8 5 3 72 Commercial and industrial 293,487' 291,126r 293,608r 295,152' 294,502' 297,519 296,690 298,264 298,227 23 Bankers acceptances and commercial paper 3,131 3,182 3,264 3,067 3,150 2,916 2,936 2,920 2,942 74 All other 290,356r 287,944r 290,344' 292,085' 291,352' 294,603 293,753 295,344 295,285 75 U.S. addressees 288,497r 286,147r 288,580r 290,350' 289,618' 292,898 292,041 293,648 293,607 76 Non-U.S. addressees 1,860 1,797 1,764 1,735 1,735 1,705 1,712 1,696 1,678 77 Real estate loans 426,275 427,266 426,862 425,938' 428,798' 430,715 432,396 432,859 432,331 ?J? Revolving, home equity 44,259 44,233 44,380 44,496 44,625 44,676 44,740 44,998 45,010 79 All other 382,017 383,033 382,482 381,442' 384,173' 386,039 387,657 387,861 387,321 30 To individuals for personal expenditures 215,007r 213,345r 214,549r 216,376' 217,597' 218,239 218,592 219,965 221,080 31 To financial institutions 38,348 37,490 38,584 37,924 38,743 40,986 40,402 40,289 40,355 37 Commercial banks in the United States 18,072 17,395 18,601 18,781 19,505 20,936 21,094 21,259 21,788 33 Banks in foreign countries 3,168 3,001 3,131 2,969 2,799 3,187 2,766 2,656 2,405 34 Nonbank financial institutions 17,108 17,094 16,852 16,174 16,439 16,863 16,542 16,375 16,162 35 For purchasing and carrying securities 15,943 16,121 18,874 17,604 16,874 16,173 15,574 16,201 16,312 36 To finance agricultural production 6,279 6,292 6,328 6,355 6,440 6,508 6,539 6,514 6,574 37 To states ana political subdivisions 11,807 11,748 ll,738r 11,706' 12,042 11,865 11,827 11,750 11,801 38 To foreign governments and official institutions 1,014 977 952 1,075 1,009 1,192 1,082 1,116 1,025 39 All other loans 25,593 23,741 24,391 22,892 24,069 26,164 22,326 23,609 22,306 40 Lease-financing receivables 27,556 27,637 27,669 27,836' 27,938' 28,065 28,167 28,303 28,372 41 LESS: Unearned income 1,623 1,622 1,635 1,645 1,636 1,626 1,645 1,669 1,660 47, Loan and lease reserve 34,979 34,991 35,090 34,996 34,690 34,401 34,719 34,726 34,707 43 Other loans and leases, net 1,024,708 1,019,129 l,026,829r 1,026,217' 1,031,686 1,041,398 1,037,232 1,042,474 1,042,016 44 Other assets 161,088r 157,819r 161,536r 156,217' 158,232' 162,298 162,227 157,484 154,606 45 Total assets l,833,006r l,780,066r 1,824,048 l,786,765r l,799,048r 1,835,551 1,812,579 1,806,287 1,806,924 Footnotes appear on the following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • October 1994 1.27 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued Millions of dollars, Wednesday figures Account June 1 June 8 June 15 June 22 June 29 July 6 July 13 July 20 July 27 LIABILITIES 46 Deposits 1,170,057 1,132,674 1,172,735 1,109,738 l,118,472r 1,163,066 1,134,943 1,124,583 1,121,529 47 Demand deposits 328,192 288,481 330,438 277,171 289,974r 321,541 293,276 284,033 284,698 48 Individuals, partnerships, and corporations 268,526r 243,091r 258,133r 232,334r 243,615r 268,943 248,938 241,172 239,334 49 Other holders 59,667r 45,390* 72,305r 44,837r 46,359r 52,598 44,338 42,861 45,365 50 States and political subdivisions 9,682 7,547 9,388 8,876 8,632 9,077 8,000 8,313 8,424 51 U.S. government 4,120 1,908 23,161 2,259 2,366 1,981 1,755 1,980 1,948 52 Depository institutions in the United States ... 30,579r 20,371r 24,892r 18,788r 19,258r 25,622 18,638 18,823 18,292 53 Banks in foreign countries 5,432 5,920 5,280 5,017 5,498 6,347 5,732 5,373 5,058 54 Foreign governments and official institutions .. 645 583 623 906 724 607 576 790 612 55 Certified and officers' checks 9,210 9,060 8,962 8,990 9,881 8,963 9,638 7,582 11,031 56 Transaction balances other than demand deposits4 . 125,954 125,768 126,148 121,593 121,265 127,385 123,757 123,563 122,303 57 Nontransaction balances 715,911 718,425 716,148 710,975 707,233 714,140 717,910 716,987 714,528 58 Individuals, partnerships, and corporations 692,580 694,911 693,063 688,144 685.756 692,935 695,887 694,769 691,885 59 Other holders 23,331 23,514 23,084 22,830 21,477 21,205 22,024 22,219 22,644 60 States and political subdivisions 18,298 18,702 18,193 17,958 17,378 17,130 17,437 17,548 17,692 61 U.S. government 2,571 2,551 2,522 2,500 2,151 1,986 2,305 2,309 2,391 62 Depository institutions in the United States ... 2,080 1,877 1,942 1,944 1,548 1,688 1,879 1,965 2,172 63 Foreign governments, official institutions, and banks . 382 383 428 428 400 401 403 396 389 6 6 4 5 Lia B b o i r li r t o ie w s i n fo g r s b fr o o rr m o w F e e d d e m ra o l n R ey es 5 erve Banks 346,32 0 7 335,784 0 337,125 0 362,774 0 362,801 0 r 353 2 , , 0 2 7 4 8 1 349,655 0 353,0 2 9 5 1 0 351,134 0 66 Treasury tax and loan notes ll,442r 2,666 6,500 29,AIT 33,360 6,502 6,826 7,472 9,804 67 Other liabilities for borrowed money6 334,885r 333,117r 330,624r 333,297r 329,441r 344,335 342,829 345,369 341,330 68 Other liabilities (including subordinated notes and debentures) 150,208r 145,638r 148,059 147,300r 151,017r 152,047 158,871 158,659 164,264 69 Total liabilities l,666,593r l,614,096r 1,657,918 l,619,813r 1,632,290' 1,668,191 1,643,470 1,636,334 1,636,927 70 Residual (total assets less total liabilities)7 166,413 165,970 166,130 166,953 166.757 167,361 169,109 169,954 169,997 MEMO 71 Total loans and leases, gross, adjusted, plus securities' l,481,496r l,473,595r l,486,042r l,476,550r l,480,954r 1,496,216 1,494,613 1,494,446 1,498,025 72 Time deposits in amounts of $100,000 or more 95,997 97,953 96,819 95,234 91,349 93,607 96,619 96,493 97,283 73 Loans sold outright to affiliates 698 693 691 690 681 676 675 671 670 74 Commercial and industrial 328 328 328 328 328 327 326 326 327 75 Other 370 365 363 363 354 349 349 345 343 76 Foreign branch credit extended to U.S. residents1"... 22,395 22,341 22,218 22,104 22,044 22,539 22,065 21,972 22,409 77 Net owed to related institutions abroad 27,052r 23,608r 26,696 28,948 31,617 27,945 34,866 41,363 45,753 1. Includes certificates of participation, issued or guaranteed by agencies of the 9. Affiliates include a bank's own foreign branches, nonconsolidated nonbank U.S. government, in pools of residential mortgages. affiliates of the bank, the bank's holding company (if not a bank), and noncon- 2. Includes securities purchased under agreements to resell. solidated nonbank subsidiaries of the holding company. 3. Includes allocated transfer risk reserve. 10. Credit extended by foreign branches of domestically chartered weekly 4. Includes negotiable order of withdrawal accounts (NOWs), automatic trans- reporting banks to nonbank U.S. residents. Consists mainly of commercial and fer service (ATS), and telephone and preauthorized transfers of savings deposits. industrial loans, but includes an unknown amount of credit extended to other than 5. Includes borrowings only from other than directly related institutions. nonfinancial businesses. 6. Includes federal funds purchased and securities sold under agreements to NOTE. Data that formerly appeared in table 1.28, Assets and Liabilities of Large repurchase. Weekly Reporting Commercial Banks in New York City, can be obtained from the 7. This balancing item is not intended as a measure of equity capital for use in Board s H.4.2 (504) weekly statistical release. For ordering address, see inside capital-adequacy analysis. front cover. 8. Excludes loans to and federal funds transactions with commercial banks in the United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A23 1.28 LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS Assets and Liabilities1 Millions of dollars, Wednesday figures 1994 AAccccoouunntt June 1 June 8 June 15 June 22 June 29 July 6 July 13 July 20 July 27 ASSETS 1 Cash and balances due from depository institutions 17,075 17,032 16,423 16,787 18,082 16,898 16,117 16,339 16,548 2 U.S. Treasury and government agency securities 38,693 39,618 40,042 39,806 40,295 39,969 39,513 3399,,887700 3399,,557788 3 Other securities 10,994 10,608 10,750 10,895 10,830 10,916 10,907 10,906 10,877 4 Federal funds sold1 27,294 27,435 23,898 26,416 29,026 29,026 28,972 30,220 31,660 5 To commercial banks in the United States ... 5,872 8,299 4,312 7,039 9,419 10,074 7,151 8,702 9,939 6 To others2 21,422 19,136 19,586 19,377 19,607 18,952 21,821 21,518 21,721 7 Other loans and leases, gross 156,391 155,440 155,902 155,067 155,925r 155,823 156,384 159,323 158,731 8 Commercial and industrial 99,225r 98,828r 99,027r 98,983r 99,088r 99,211 100,189 101,658 100,936 9 Bankers acceptances and commercial paper 3,315 3,246 3,255 3,279 3,250 3,286 3,480 3,530 3,457 10 All other 95,910r 95,582r 95,772r 95,704r 95,839r 95,925 96,709 98,128 97,480 11 U.S. addressees 92,153r 91,855r 91,919r 91,735r 91,884r 91,900 92,647 93,936 93,359 12 Non-U.S. addressees 3,757 3,727 3,853 3,969 3,955 4,025 4,061 4,192 4,121 13 Loans secured by real estate 27,689 27,674 27,579 27,646 27,206r 27,006 27,049 27,090 27,063 14 To financial institutions 22,182r 22,118r 21,979r 21,810r 22,178r 21,938 21,825 23,228 23,600 15 Commercial banks in the United States.. 5,206 5,532 5,392 5,444 5,509 4,903 4,748 5,109 5,199 16 Banks in foreign countries 1,873 1,840 1,647 1,639 1,684 1,826 1,819 1,772 1,784 17 Nonbank financial institutions 15,103r 14,747r 14,940r 14,727r 14,984r 15,209 15,258 16,346 16,617 18 For purchasing and carrying securities .... 3,260 2,878 3,350 2,798 3,524 3,705 3,166 3,391 3,235 19 To foreign governments and official institutions 469 404 396 358 351 366 554488 333388 332288 20 All other 3,565 3,538 3,571 3,471 3,579 3,598 3,608 3,619 3,568 21 Other assets (claims on nonrelated parties) .. 34,181r 33,582r 32,245r 32,745r 33,725r 34,211 35,894 34,885 34,063 22 Total assets3 306,578R 306,373R 302,195R 302,938R 308,870R 308,491 309,643 313,117 313,540 LIABILITIES 23 Deposits or credit balances owed to other than directly-related institutions 91,960 89,084 88,451 86,928 88,801 86,763 88,666 90,917 92,082 24 Demand deposits4 4,670 4,352 4,559 4,350 5,194 4,930 4,546 4,601 4,251 25 Individuals, partnerships, and corporations 3,697 3,501 3,579 3,524 4,103 3,987 3,580 3,351 3,387 26 Other 972 852 980 826 1,091 943 966 1,250 864 27 Nontransaction accounts 87,290 84,732 83,892 82,578 83,607 81,833 84,120 86,316 87,831 28 Individuals, partnerships, and corporations 57,149 55,477 55,092 54,285 54,823r 53,282 54,845 56,888 57,652 29 Other 30,141 29,254 28,799 28,293 28,784r 28,551 29,275 29,428 30,180 30 Borrowings from other than directlyrelated institutions 73,338r 76,35lr 75,712r 73,960r 75,845r 78,925 79,747 7799,,884400 7766,,338877 31 Federal funds purchased 36,255 39,093 38,465 36,331 36,586 39,029 38,941 41,090 37,562 32 From commercial banks in the United States 7,676 10,754 9,495 8,007 9,077 9,990 8,799 9,136 7,553 33 From others 28,579 28,339 28,970 28,324 27,508 29,039 30,143 31,954 30,009 34 Other liabilities for borrowed money 73,338r 76,351r 75,712r 73,960r 75,845r 78,925 79,747 79,840 76,387 35 To commercial banks in the United States 7,214r 7,125r 6,980r 7,005r 7,742r 7,388 7,512 7,432 7,024 36 To others 29,869 30,133 30,266 30,623 31,518 32,508 33,294 31,318 31,802 37 Other liabilities to nonrelated parties 29,856r 29,690r 28,746r 28,348r 29,989r 30,101 32,216 31,182 31,375 38 Total liabilities6 306,578R 306,373R 302,195R 302,938R 308,870R 308,491 309,643 313,117 313,540 MEMO 39 Total loans (gross) and securities, adjusted .. 222,294 219,271 220,887 219,702 221,148r 220,757 223,878 226,508 225,709 40 Net owed to related institutions abroad 89,474r 88,592r 86,35lr 92,481r 93,248r 91,053 87,160 89,603 91,614 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

A24 Domestic NonfinancialS tatistics • October 1994 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period Year ending December 1994 IItteemm 1989 1990 1991 1992 1993 Jan. Feb. Mar. Apr. May June Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 525,831 562,656 528,832 545,619 555,075 559,413r 560,345r 557,768r 553,497r 559,569? 562,046 Financial companies1 Dealer-placed paper2 2 Total 183,622 221144,,770066 221122,,999999 226,456 218,947 222,156r 223,549r 216,982r 207,180r 213,623r 214,313 3 Bank-related (not seasonally adjusted) n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Directly placed paper 4 Total 210,930 220000,,003366 118822,,446633 171,605 118800,,338899 182,075 118866,,331188 119944,,552277 119999,,880033 119977,,881122 198,147 5 Bank-related (not seasonally adjusted) n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 6 Nonfinancial companies5 131,279 147,914 133,370 147,558 155,739 155,182r 150,478r 146,259r 146,514r 148,134r 149,586 Bankers dollar acceptances (not seasonally adjusted)6 7 Total 62,972 54,771 43,770 38,194 32,348 31,792 30,994 31,061 31,775 29,867 30,659 By holder 8 Accepting banks 9,433 9,017 11,017 10,555 12,421 11,410 11,258 11,727 11,643 11,533 12,334 9 Own bills 8,510 7,930 9,347 9,097 10,707 9,953 10,248 10,758 10,888 10,601 11,273 10 Bills bought from other banks 924 11,,008877 11,,667700 1,458 11,,771144 1,457 11,,001100 969 755 932 1,061 Federal Reserve Banks 11 Foreign correspondents 1,066 918 1,739 1,276 725 869 753 693 625 465 453 12 Others 52,473 44,836 31,014 26,364 19,202 19,513 18,983 18,641 19,507 17,869 17,872 By basis 13 Imports into United States 15,651 13,095 12,843 12,209 10,217 10,649 10,707 10,554 10,834 10,396 10,625 14 Exports from United States 13,683 12,703 10,351 8,096 7,293 7,123 6,872 6,708 6,723 6,367 6,576 15 All other 33,638 28,973 20,577 17,890 14,838 14,020 13,414 13,800 14,217 13,104 13,458 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A25 1.33 PRIME RATE CHARGED BY BANKS Short-Term Business Loans1 Percent per year Date of change Rate Period Av r e a r t a e g e Av r e a r t a e g e Period Av r e a r t a e g e 1991— Jan. 1 10.00 1991 8.46 1992— Jan. ... 6.50 1993— 6.00 2 9.50 1992 6.25 Feb. .. 6.50 6.00 Feb. 4 9.00 1993 6.00 6.50 July ... 6.00 May 1 8.50 6.50 Aug. .. 6.00 Sept. 13 8.00 1991-- Jan. . 9.52 May ... 6.50 Sept. .. 6.00 Nov. 6 7.50 Feb. 9.05 June .. 6.50 Oct. ... 6.00 Dec. 23 6.50 Mar. 9.00 July 6.02 Nov. .. 6.00 Apr. 9.00 Aug. .. 6.00 Dec. .. 6.00 1992— July 2 6.00 May . 8.50 Sept. 6.00 June 8.50 Oct. ... 6.00 1994— 6.00 1994— Mar. 24 6.25 July . 8.50 Nov. .. 6.00 Feb. .. 6.00 Apr. 19 6.75 Aug. 8.50 Dec. .. 6.00 Mar. 6.06 May 17 7.25 Sept. 8.20 Apr. .. 6.45 Aug. 16 7.75 Oct. . 8.00 1993— 6.00 May ... 6.99 Nov. 7.58 Feb. .. 6.00 June .. 7.25 Dec. 7.21 Mar. . 6.00 July ... 7.25 Apr. . 6.00 Aug. .. 7.51 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 • October 1994 1.35 INTEREST RATES Money and Capital Markets Averages, percent per year; figures are averages of business day data unless otherwise noted 1994 1994, week ending IItteemm 11999911 11999922 11999933 Apr. May June July July 1 July 8 July 15 July 22 July 29 MONEY MARKET INSTRUMENTS 1 Federal funds1,2,3 5.69 3.52 3.02 3.56 4.01 4.25 4.26 4.19 4.38 4.30 4.30 4.28 2 Discount window borrowing^ 5.45 3.25 3.00 3.00 3.24 3.50 3.50 3.50 3.50 3.50 3.50 3.50 Commercial paper3,5,6 3 1-month 5.89 3.71 3.17 3.81 4.28 4.36 4.49 4.47 4.53 4.55 4.44 4.46 4 3-month 5.87 3.75 3.22 4.05 4.57 4.57 4.75 4.70 4.78 4.80 4.69 4.73 5 6-month 5.85 3.80 3.30 4.40 4.92 4.86 5.13 4.99 5.12 5.18 5.07 5.16 Finance paper, directly placed^'5'1 6 1-month 5.73 3.62 3.12 3.71 4.19 4.27 4.40 4.37 4.45 4.47 4.33 4.37 7 3-month 5.71 3.65 3.16 3.94 4.44 4.44 4.64 4.54 4.67 4.68 4.58 4.63 8 6-month 5.60 3.63 3.15 4.03 4.45 4.50 4.67 4.55 4.63 4.70 4.65 4.72 Bankers acceptances3,5,8 9 3-month 5.70 3.62 3.13 3.96 4.45 4.45 4.65 4.64 4.72 4.69 4.59 4.61 10 6-month 5.67 3.67 3.21 4.27 4.77 4.73 5.01 4.92 5.04 5.05 4.96 5.01 Certificates of deposit, secondary marker,9 11 1-month 5.82 3.64 3.11 3.75 4.23 4.30 4.45 4.43 4.49 4.50 4.40 4.40 12 3-month 5.83 3.68 3.17 4.01 4.51 4.52 4.73 4.71 4.78 4.78 4.65 4.70 13 6-month 5.91 3.76 3.28 4.38 4.90 4.85 5.15 5.08 5.19 5.20 5.07 5.16 14 Eurodollar deposits, 3-month3,10 5.86 3.70 3.18 4.00 4.51 4.51 4.74 4.71 4.76 4.80 4.64 4.73 U.S. Treasury bills Secondary market3,5 15 3-month 5.38 3.43 3.00 3.68 4.14 4.14 4.33 4.16 4.28 4.37 4.30 4.39 16 6-month 5.44 3.54 3.12 4.09 4.60 4.55 4.75 4.61 4.74 4.79 4.70 4.80 17 1-year 5.52 3.71 3.29 4.57 5.03 4.98 5.17 5.18 5.19 5.18 5.10 5.22 Auction average3, • 18 3-month 5.42 3.45 3.02 3.74 4.19 4.18 4.39 4.20 4.31 4.50 4.31 4.43 19 6-month 5.49 3.57 3.14 4.13 4.64 4.58 4.81 4.60 4.74 4.94 4.71 4.83 20 1-year 5.54 3.75 3.33 4.30 4.77 5.03 5.20 5.04 n.a. n.a. n.a. 5.20 U.S. TREASURY NOTES AND BONDS Constant maturities12 21 1-year 5.86 3.89 3.43 4.82 5.31 5.27 5.48 5.47 5.49 5.49 5.41 5.51 72 2-year 6.49 4.77 4.05 5.55 5.97 5.93 6.13 6.14 6.15 6.17 6.05 6.14 23 3-year 6.82 5.30 4.44 5.99 6.34 6.27 6.48 6.46 6.50 6.53 6.39 6.48 24 5-year 7.37 6.19 5.14 6.52 6.78 6.70 6.91 6.89 6.95 6.97 6.83 6.89 25 7-year 7.68 6.63 5.54 6.80 7.01 6.91 7.12 7.11 7.18 7.19 7.04 7.08 76 10-year 7.86 7.01 5.87 6.97 7.18 7.10 7.30 7.27 7.34 7.36 7.23 7.26 77 20-year n.a. n.a. 6.29 7.40 7.54 7.51 7.67 7.67 7.74 7.74 7.62 7.60 28 30-year 8.14 7.67 6.59 7.27 7.41 7.40 7.58 7.55 7.63 7.64 7.53 7.52 Composite 29 More than 10 years (long-term) 8.16 7.52 6.45 7.32 7.47 77..4433 7.61 77..5599 7.66 77..6677 7.54 77..5544 STATE AND LOCAL NOTES AND BONDS Moody's series13 30 6.56 6.09 5.38 5.44 5.62 5.76 5.88 5.77 5.88 55..9966 5.91 5.91 31 Baa 6.99 6.48 5.82 5.87 6.02 6.15 6.26 6.16 6.24 6.34 6.30 6.30 32 Bond Buyer series14 6.92 6.44 5.60 6.23 6.19 6.11 6.23 6.28 6.27 6.22 6.22 6.22 CORPORATE BONDS 33 Seasoned issues, all industries15 9.23 8.55 7.54 8.17 8.28 8.27 8.42 8.41 8.48 8.48 8.36 8.36 Rating group 34 Aaa 8.77 8.14 7.22 7.88 7.99 77..9977 8.11 8.11 8.18 88..1177 8.06 8.05 35 Aa 9.05 8.46 7.40 8.08 8.19 8.17 8.31 8.31 8.37 8.37 8.26 8.25 36 A 9.30 8.62 7.58 8.22 8.32 8.30 8.44 8.43 8.50 8.50 8.38 8.38 37 Baa 9.80 8.98 7.93 8.52 8.62 8.65 8.80 8.80 8.87 8.86 8.75 8.74 38 A-rated, recently offered utility bonds16 9.32 8.52 7.46 8.20 8.37 8.30 8.45 8.49 8.57 8.42 8.45 8.27 MEMO Dividend-price ratio17 39 Preferred stocks 8.17 7.46 66..8899 77..3333 7.44 n.a. n.a. 77..5511 n.a. n.a. n.a. n.a. 40 Common stocks 3.24 2.99 2.78 2.90 2.89 2.84 2.87 2.88 2.89 2.87 2.85 2.85 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 18. Data for the preferred stock yield was discontinued as of June 29, 1994. indication purposes only. NOTE. Some of the data in this table also appear in the Board's H.15 (519) 11. Auction date for daily data; weekly and monthly averages computed on an weekly and G.13 (415) monthly statistical releases. For ordering address, see issue-date basis. inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets All 1.36 STOCK MARKET Selected Statistics 1993 1994 IInnddiiccaattoorr 11999911 11999922 11999933 Nov. Dec. Jan. Feb. Mar. Apr. May June July Prices and trading volume (averages of daily figures) Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 206.35 229.00 249.71 255.93 257.73 262.11 261.97 257.32 247.97 249.56 251.21 249.29 2 Industrial 258.16 284.26 300.10 310.84 313.22 320.92 322.41 318.08 304.48 307.58 308.66 307.34 3 Transportation 173.97 201.02 242.68 262.96 268.11 278.29 276.67 265.68 250.43 244.75 246.64 244.21 4 Utility 92.64 99.48 114.55 115.08 114.97 112.67 116.22 107.72 105.04 102.89 103.27 102.73 5 Finance 150.84 179.29 216.55 214.08 216.00 218.71 217.12 211.02 208.12 211.30 215.89 210.91 6 Standard & Poor's Corporation (1941-43 = 10)1 376.20 415.75 451.63 462.89 465.95 472.99 471.58 463.81 447.23 450.90 454.83 451.40 7 American Stock Exchange (Aug. 31, 1973 = 50r 360.32 391.28 438.77 472.41 465.95 481.14 476.25 465.72 437.01 437.54 436.08 430.10 Volume of trading (thousands of shares) 8 New York Stock Exchange 179,411 202,558 263,374 277,886 259,457 313,223 307,269 311,096 301,242 269,812 265,341 250,382 9 American Stock Exchange 12,486 14,171 18,188 18,436 17,461 19,211 19,630 19,481 15,805 15,727 18,400 14,378 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers3 36,660 43,990 60,310 59,760 60,310 61,250 62,020 61,960 60,700 59,870 59,550 61,930 Free credit balances at brokers4 11 Margin accounts 8,290 8,970 12,360 10,940 12,360 12,125 12,890 13,185 13,175 12,715 12,340 12,620 12 Cash accounts 19,255 22,510 27,715 23,560 27,715 26,020 25,665 26,190 24,800 23,265 27,995 25,790 Margin requirements (percent of market value and effective date)6 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 13 Margin stocks 70 80 65 55 65 50 14 Convertible bonds 50 60 50 50 50 50 15 Short sales 70 80 65 55 65 50 1. Effective July 1976, includes a new financial group, banks and insurance on securities other than options are the difference between the market value (100 companies. With this change the index includes 400 industrial stocks (formerly percent) and the maximum loan value of collateral as prescribed by the Board. 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 Regulation T was adopted effective Oct. 15, 1934; Regulation U, effective May 1, financial. 1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective Nov. 1, 2. On July 5, 1983, the American Stock Exchange rebased its index, effectively 1971. cutting previous readings in half. On Jan. 1, 1977, the Board of Governors for the first time established in 3. Since July 1983, under the revised Regulation T, margin credit at broker- Regulation T the initial margin required for writing options on securities, setting dealers has included credit extended against stocks, convertible bonds, stocks it at 30 percent of the current market value of the stock underlying the option. On acquired through the exercise of subscription rights, corporate bonds, and Sept. 30, 1985, the Board changed the required initial margin, allowing it to be the government securities. Separate reporting of data for margin stocks, convertible same as the option maintenance margin required by the appropriate exchange or bonds, and subscription issues was discontinued in April 1984. self-regulatory organization; such mamtenance 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 • October 1994 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn 1994 11999911 11999922 11999933 Feb. Mar. Apr. May June July U.S. budget* 1 Receipts, total 1,054,272 1,090,453 1,153,226 72,874 93,108 141,326 83,546 138,124 84,827 2 On-budget 760,388 788,027 841,292 46,879 64,612 104,311 55,367 106,014 60,145 3 Off-budget 293,885 302,426 311,934 25,995 28,496 37,015 28,179 32,110 24,682 4 Outlays, total 1,323,793 1,380,856 1,408,484 114,440 125,423 123,872 115,600 122,923 118,025 5 On-budget 1,082,106 1,128,518 1,141,897 88,523 100,260 100,625 89,729 108,166r 93,163 6 Off-budget 241,687 252,339 266,587 25,918 25,163 23,247 25,871 32,290* 24,862 7 Surplus or deficit (-), total -269,521 -290,403 -255,258 -41,566 -32,315 17,454 -32,054 14,850r -33,198 8 On-budget -321,719 -340,490 -300,605 -41,644 -35,648 3,686 -34,362 —2,152r -33,018 9 Off-budget 52,198 50,087 45,347 77 3,333 13,768 2,308 — 180r -180 Source of financing (total) 10 Borrowing from the public 276,802 310,918 248,619 31,633 26,511 -21,801 27,649 1,898 -3 11 Operating cash (decrease, or increase (-)) ... -1,329 -17,305 6,283 19,666 -6,461 -4,124 21,537 -23,797 30,706 12 Other -5,952 -3,210 356 -9,733 12,265 8,471 -17,132 7,049r 2,495 MEMO 13 Treasury operating balance (level, end of period} 41,484 58,789 52,506 38,146 44,607 48,731 27,194 50,991 20,285 14 Federal Reserve Banks 7,928 24,586 17,289 4,886 6,181 7,965 5,675 9,356 3,683 15 Tax and loan accounts 33,556 34,203 35,217 33,259 38,426 40,766 21,519 41,635 16,603 1. In accordance with the Balanced Budget and Emergency Deficit Control Act monetary assets; accrued interest payable to the public; allocations of SDRs; of 1985, all former off-budget entries are now presented on-budget. Federal deposit funds; miscellaneous liability (including checks outstanding) and asset Financing Bank (FFB) activities are now shown as separate accounts under the accounts; seigniorage; increment on gold; net gain or loss for U.S. currency agencies that use the FFB to finance their programs. The act has also moved two valuation adjustment; net gain or loss for IMF loan-valuation adjustment; and social security trust funds, (federal old-age survivors insurance and federal profit on sale of gold. disability insurance) off-budget. The Postal Service is included as an off-budget SOURCES. U.S. Department of the Treasury, Monthly Treasury Statement of item in the Monthly Treasury Statement beginning in 1990. Receipts and Outlays of the U.S. Government and Office of Management and 2. Includes special drawing rights (SDRs); reserve position on the U.S. quota Budget, Budget of the U.S. Government. in the International Monetary Fund (IMF); loans to the IMF; other cash and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A29 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Fiscal year Calendar year Source or type 1992 1993 1994 1993 H2 H2 HI May July RECEIPTS 1 All sources 1,090,453 1,153,226 540,484 593,212 582,054 651,944 83,546 138,124 84,827 2 Individual income taxes, net 475,964 509,680 246,938 255,556 262,073 274,736 24,384 58,123 37,372 3 Withheld 408,352 430,211r 215,584 209,517 228,423r 225,387 35,706 37,724 35,360 4 Presidential Election Campaign Fund . 30 28 10 25 2 63 12 9 6 5 Nonwithheld 149,342 154,989' 39,288 113,510 41,768r 117,928 5,359 21,985 3,793 6 Refunds 81,760 75,546 7,942 67,468 8,114 68,642 16,692 1,596 1,786 Corporation income taxes 7 Gross receipts 117,951 131,548 58,022 69,044 68,266 80,536 3,847 29,812 4,581 8 Refunds 17,680 14,027 7,219 7,198 6,514 6,933 1,030 697 776 9 Social insurance taxes and contributions, net 413,689 428,300 192,599 227,177 206,176r 248,301 46,540 41,509 34,046 10 Employment taxes and contributions2 385,491 396,939 180,758 208,776 192,749 228,714 35,749 40,853 32,222 11 Self-employment taxes and contributions 24,421 20,604 3,988 16,270 4,335 20,762 1,577 3,813 93 12 Unemployment insurance 23,410 26,556 9,397 16,074 11,010 17,301 10,426 290 1,399 13 Other net receipts4 4,788 4,805 2,445 2,326 2,417 2,284 364 366 424 14 Excise taxes 45,569 48,057 23,456 23,398 25,994 26,444 5,253 4,596 4,175 15 Customs deposits 17,359 18,802 9,497 8,860 10,215 9,500 1,620 1,711 1,782 16 Estate and gift taxes .. 11,143 12,577 5,733 6,494 6,617 8,197 1,342 1,068 1,060 17 Miscellaneous receipts 26,459 18,273 11,458 9,879 9,227 11,164 1,589 2,003 2,587 OUTLAYS 18 All types 1,380,856 1,408,484 723,527 673,915 728,200 709,976 115,600 122,923 118,025 19 National defense 298,350 291,086 155,231 140,535 146,177 133,739 19,509 24,197 22,147 20 International affairs 16,107 16,826 9,916 6,565 10,534 5,800 917 582 893 21 General science, space, and technology . 16,409 17,030 8,521 7,996 8,904 8,502 1,415 1,596 1,236 22 Energy 4,500 4,319 3,109 2,462 1,641 2,036 325 261 464 23 Natural resources and environment 20,025 20,239 11,467 8,592 ll,083r 9,179 1,519 1,670 1,635 24 Agriculture 15,205 20,443 8,852 11,872 7,335 7,451 1,112 320 309 25 Commerce and housing credit 10,083 -22,725 -7,697 -14,537 -1,724 -5,114 1,564 1,016 277 26 Transportation 33,333 35,004 18,425 16,076 20,375 16,772 2,869 3,151 3,226 27 Community and regional development .. 6,838 9,051 4,464 4,929 5,606 5,592 843 1,184 1,081 28 Education, training, employment, and social services 45,248 50,012 21,241 24,080 25,458r 18,976 3,841 3,797 2,948 29 Health 89,497 99,415 47,232 49,882 52,631 53,121 9,074 9,729 8,189 30 Social security and Medicare 406,569 435,137 232,109 195,933 223,735 232,777 37,955 43,367 39,297 31 Income security 196,958 207,257 98,382 107,870 103,209r 109,103 15,796 13,139 17,037 32 Veterans benefits and services 34,138 35,720 18,561 16,385 19,848 16,686 1,666 3,011 3,079 33 Administration of justice 14,426 14,955 7,238 7,482 7,448 7,718 1,277 1,136 1,440 34 General government 12,990 13,009 8,223 5,205 6,565 5,076 1,279 1,715 -13 35 Net interest6 199,421 198,811 98,692 99,635 99,963 99,844 17,671 15,880 17,956 36 Undistributed offsetting receipts' -39,280 -37,386 -20,628 -17,035 -20,407 -17,308 -3,032 -2,827 -3,176 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, U.S. governthe Budget have not been fully distributed across months. ment contributions for employee retirement, and certain asset sales. 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 1995. disability fund. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic NonfinancialS tatistics • October 1994 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1992 1993 1994 IItteemm June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 1 Federal debt outstanding 4,001 4,083 4,196 4,250 4,373 4,436 4,562 4,576 2 Public debt securities 3,985 4,065 4,177 4,231 4,352 4,412 4,536 3 Held by public 2,977 3,048 3,129 3,188 3,252 3,295 3,382 T 4 Held by agencies 1,008 1,016 1,048 1,043 1,100 1,117 1,154 I 5 Agency securities 16 18 19 20 21 25 27 n.a. n.a. 7 6 H He e l l d d b b y y p ag u e b n li c c i es 1 0 6 1 0 8 1 0 9 2 0 0 2 0 1 2 0 5 2 0 7 • 1 8 Debt subject to statutory limit 3,891 3,973 4,086 4,140 4,256 4,316 4,446 4,491 9 Public debt securities 3,890 3,972 4,085 4,139 4,256 4,315 4,445 4,491 10 Other debt1 0 0 0 0 0 0 0 0 MEMO 11 Statutory debt limit 4,145 4,145 4,145 4,145 4,370 4,900 4,900 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 1993 1994 Type and holder 11999900 11999911 11999922 11999933 Q3 Q4 Q1 Q2 1 Total gross public debt 3,364.8 3,801.7 4,177.0 4,535.7 4,411.5 4,535.7 n. a. By type 2 Interest-bearing 3,362.0 3,798.9 4,173.9 4,532.3 4,408.6 4,532.3 4,572.6 3 Marketable 2,195.8 2,471.6 2,754.1 2,989.5 2,904.9 2,989.5 3,042.9 4 Bills 527.4 590.4 657.7 714.6 658.4 714.6 721.2 5 Notes 1,265.2 1,430.8 1,608.9 1,764.0 1,734.2 1,764.0 1,802.5 6 Bonds 388.2 435.5 472.5 495.9 497.4 495.9 504.2 7 Nonmarke table1 1,166.2 1,327.2 1,419.8 1,542.9 1,503.7 1,542.9 1,529.7 8 State and local government series 160.8 159.7 153.5 149.5 149.5 149.5 145.5 9 Foreign issues 43.5 41.9 37.4 43.5 42.5 43.5 42.7 10 Government 43.5 41.9 37.4 43.5 42.5 43.5 42.7 11 Public .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes. 124.1 135.9 155.0 169.4 167.0 169.4 172.6 13 Government account series 813.8 959.2 1,043.5 1,150.0 1,114.3 1,150.0 1,138.4 14 Non-interest-bearing 2.8 2.8 3.1 3.4 2.9 3.4 3.3 By holder* 15 U.S. Treasury and other federal agencies and trust funds. 828.3 968.7 1,047.8 1,153.5 1,116.7 1,153.5 16 Federal Reserve Banks 259.8 281.8 302.5 334.2 325.7 334.2 17 Private investors 2,288.3 2,563.2 2,839.9 3,047.7 2,983.0 3,047.7 18 Commercial banks 171.5 233.4 294.0 316.0 313.3 316.0 19 Money market funds 45.4 80.0 79.4 80.5 75.2 80.5 20 Insurance companies 142.0 168.7 197.5 216.0 215.5 216.0 21 Other companies 108.9 150.8 192.5 213.0 215.6 213.0 n.a. 22 State and local treasuries 490.4 520.3 534.8 564.0 558.0 564.0 Individuals 23 Savings bonds 126.2 138.1 157.3 171.9 169.1 171.9 24 Other securities 107.6 125.8 131.9 137.9 136.7 137.9 25 Foreign and international 458.4 491.8 549.7 623.3 592.3 623.3 26 Other miscellaneous investors 637.7 651.3 702.4 725.0 707.2 725.0 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 1994 1994, week ending IItteemm Apr. May June June 1 June 8 June 15 June 22 June 29 July 6 July 13 July 20 July 27 IMMEDIATE TRANSACTIONS2 By type of security U.S. Treasury securities 1 Bills 50,420 53,959 50,054 53,818 50,452 50,648 41,667 56,695 Coupon securities, by maturity 2 Less than 3.5 years 56,202 64,646 47,905 52,536 49,432 42,344 52,200 46,717 3 3.5 to 7.5 years 40,471 41,824 38,517 38,913 41,164 33,232 43,648 35,945 4 7.5 to 15 years 29,625 33,634 24,119 24,255 28,622 23,099 22,888 21,841 5 15 years or more 15,977 15,926 13,989 12,428 14,911 13,381 14,493 13,484 Federal agency securities Debt, by maturity 6 Less than 3.5 years 12,901 14,460 13,455 15,430 12,365 12,841 13,240 14,978 7 3.5 to 7.5 years 504 526 503 572 630 320 474 573 8 7.5 years or more 623 519 794 315 808 468 1,277 718 Mortgage-backed 9 Pass-throughs 25,873 23,722 22,278 19,778 26,652 25,042 19,329 18,590 10 All others 3,053 2,400 2,084 1,867 2,308 2,223 2,140 1,709 By type of counterparty Primary dealers and brokers 11 U.S. Treasury securities 123,507 134,896 111,174 111,996 115,711 103,466 112,026 113,328 Federal agency securities 12 Debt 2,143 1,916 2,048 1,786 1,710 1,926 2,431 2,178 13 Mortgage-backed 13,076 11,232 10,879 9,970 11,094 12,688 10,421 9,496 Customers 14 U.S. Treasury securities 69,188 75,091 63,410 69,952 68,870 59,237 62,870 61,354 Federal agency securities 15 Debt 11,884 13,588 12,703 14,531 12,093 11,703 12,560 14,091 16 Mortgage-backed 15,849 14,889 13,483 11,674 17,867 14,577 11,047 10,803 FUTURES AND FORWARD TRANSACTIONS n a. n.a. n.a. n a. By type of deliverable security U.S. Treasury securities 17 Bills 3,904 3,715 3,746 1,942 3,866 4,513 4,555 2,409 Coupon securities, by maturity 18 Less than 3.5 years 2,535 3,389 2,730 3,194 2,586 2,326 3,849 2,067 19 3.5 to 7.5 years 1,941 2,373 2,373 2,166 2,265 2,085 3,298 1,886 20 7.5 to 15 years 4,367 5,301 3,986 4,316 5,164 3,199 4,392 3,125 21 15 years or more 12,689 12,982 11,634 10,848 11,618 10,138 13,059 11,880 Federal agency securities Debt, by maturity 22 Less than 3.5 years 105 59 205 80 64 320 317 146 23 3.5 to 7.5 years 126 33 42 12 42 61 38 34 24 7.5 years or more 35 39 191 22 68 183 283 263 Mortgage-backed 25 Pass-throughs 22,207 19,060 17,318 13,645 19,545 25,616 13,788 11,057 26 Others3 1,022 789 490 510 490 460 535 469 OPTIONS TRANSACTIONS5 By type of underlying security U.S. Treasury, coupon securities, by maturity 27 Less than 3.5 years 3,767 4,118 2,561 2,544 3,183 2,165 2,818 2,083 28 3.5 to 7.5 years 877 762 729 574 1,243 418 679 606 29 7.5 to 15 years 1,091 1,243 1,273 1,133 1,551 789 1,151 1,629 30 15 years or more 1,654 2,343 2,005 1,917 2,240 2,138 2,139 1,522 Federal agency, mortgagebacked securities 31 Pass-throughs 747 528 480 589 751 455 253 440 1. Transactions are market purchases and sales of securities as reported to the 4. Futures transactions are standardized agreements arranged on an exchange. Federal Reserve Bank of New York by the U.S. government securities dealers on Forward transactions are agreements made in the over-the-counter market that its published list of primary dealers. Averages are based on the number of trading specify delayed delivery. All futures transactions are included regardless of time days in the period. Immediate, forward, and futures transactions are reported at to delivery. Forward contracts for U.S. Treasury securities and federal agency principal value, which does not include accrued interest; options transactions are debt securities are included when the time to delivery is more than five business reported at the face value of the underlying securities. days. Forward contracts for mortgage-backed agency securities are included Dealers report cumulative transactions for each week ending Wednesday. when the time to delivery is more than thirty business days. 2. Transactions for immediate delivery include purchases or sales of securities 5. Options transactions are purchases or sales of put-and-call options, whether (other than mortgage-backed agency securities) for which delivery is scheduled in arranged on an organized exchange or in the over-the-counter market, and include five business days or less and "when-issued" securities that settle on the issue options on futures contracts on U.S. Treasury and federal agency securities. date of offering. Transactions for immediate delivery of mortgage-backed agency NOTE. In tables 1.42 and 1.43, "n.a." indicates that data are not published securities include purchases and sales for which delivery is scheduled in thirty business because of insufficient activity. days or less. Stripped securities are reported at market value by maturity of coupon or Data for several types of options transactions—U.S. Treasury securities, bills; corpus. Federal agency securities, debt; and federal agency securities, mortgage-backed, 3. Includes such securities as collateralized mortgage obligations (CMOs), real other than pass-throughs—are no longer available because activity is insufficient. estate mortgage investment conduits (REMICs), interest-only securities (IOs), and principal-only securities (POs). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic NonfinancialS tatistics • October 1994 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1994 1994, week ending nem Apr. May June June 1 June 8 June 15 June 22 June 29 July 6 July 13 July 20 Positions2 NET IMMEDIATE POSITIONS3 By type of security U.S. Treasury securities 1 Bills 12,752 8,513 5,727 12,767 99,,770077 99,,992222 33,,666633 --11,,339911 Coupon securities, by maturity 2 Less than 3.5 years -21,399 -12,383 -9,022 -8,228 -9,538 -10,448 -6,625 -9,589 3 3.5 to 7.5 years -26,208 -20,053 -15,369 -15,068 -15,933 -18,156 -12,145 -15,284 4 7.5 to 15 years -7,653 -9,990 -13,850 -11,072 -12,107 -13,105 -14,203 -16,381 5 15 years or more -3,026 -6,375 -6,041 -6,816 -5,884 --55,,880033 -6,124 --66,,224422 Federal agency securities Debt, by maturity 6 Less than 3.5 years 8,667 8,982 11,205 10,318 8,754 14,472 10,919 10,800 7 3.5 to 7.5 years 5,728 5,204 4,468 4,665 4,879 4,650 4,163 4,153 8 7.5 years or more 55,,227766 4,630 44,,332233 44,,112200 44,,445522 44,,339900 44,,223399 44,,224400 Mortgage-backed 9 Pass-throughs 44,711 36,379 42,034 32,217 47,880 44,700 37,029 39,928 10 All others 33,965 34,307 3344,,117766 3355,,334477 3366,,001177 3344,,110088 3333,,335588 3333,,005522 Other money market instruments 11 Certificates of deposit 2,728 2,756 2,861 2,564 2,493 3,511 3,113 2,369 12 Commercial paper 5,398 5,759 6,024 7,063 4,596 8,740 5,462 5,149 13 Bankers acceptances 589 548 517 706 540 589 562 350 FUTURES AND FORWARD POSITIONS5 By type of deliverable security n.a. n.a. n.a. U.S. Treasury securities 14 Bills 2,133 -1,286 --55,,224444 --11,,221100 --44,,338844 --55,,449944 --88,,553311 --33,,114422 Coupon securities, by maturity 15 Less than 3.5 years 1,579 5 289 -10 -679 -658 1,768 766 16 3.5 to 7.5 years 2,536 2,118 2,614 1,228 1,879 4,389 1,682 2,702 17 7.5 to 15 years 7,992 5,277 1,228 4,469 1,955 580 179 1,735 18 15 years or more -7,551 -5,625 -2,976 -4,699 --33,,557766 --33,,223366 --22,,995500 --11,,889944 Federal agency securities Debt, by maturity 1199 Less than 3.5 years 79 9 105 55 -85 -168 286 393 20 3.5 to 7.5 years 91 -27 7 -32 -11 4 -8 49 21 7.5 years or more -62 23 281 -12 82 159 495 430 Mortgage-backed 22 Pass-throughs -32,719 -22,553 -29,914 -20,782 -35,875 -32,343 -25,556 -27,187 23 All others 7,039 1,052 -35 -991 -956 -182 809 324 24 Certificates of deposit -154,901 -148,150 -116,126 -128,274 -108,564 -122,652 -108,843 -122,708 Financing6 Reverse repurchase agreements 2255 Overnight and continuing 275,469 282,976 258,155 272,112 269,352 263,715 252,777 244,783 26 Term 396,537 377,460 400,429 372,344 403,069 403,414 399,332 399,913 Repurchase agreements 27 Overnight ana continuing 447,713 469,689 450,891 465,177 463,032 470,896 448,108 419,488 28 Term 376,304 351,134 375,461 339,352 374,865 374,335 376,367 381,437 Securities borrowed 29 Overnight and continuing 152,707 160,263 155,361 158,772 158,301 155,653 154,502 152,500 30 Term 35,824 30,886 37,849 31,647 32,292 36,351 40,310 43,330 Securities loaned 31 Overnight and continuing 3,591 3,533 3,680 3,632 2,923 3,019 5,437 3,346 32 Tenn 306 573 1,692 1,208 1,226 1,281 3,489 843 n. a. n.a. n. a. Collateralized loans 33 Overnight and continuing 24,153 21,179 25,349 21,886 24,869 28,071 25,600 23,350 MEMO: Matched book7 Reverse repurchase agreements 34 Overnight and continuing 197,715 211,581 195,019 206,451 203,050 200,702 188,304 186,386 35 Term 340,574 327,691 349,644 322,752 346,464 349,876 350,673 355,404 Repurchase agreements 36 Overnight and continuing 232,199 244,382 239,337 247,790 250,586 241,146 240,388 224,020 37 Term 286,839 275,999 290,450 263,488 286,493 287,330 294,181 297,647 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 deliveiy is more than five business days. its published list of primary dealers. Weekly figures are close-of-business Wednes- Forward contracts for mortgage-backed agency securities are included when the day data; monthly figures are averages of weekly data. time to delivery is more than thirty business days. 2. Securities positions are reported at market value. 6. Overnight financing refers to agreements made on one business day that 3. Net immediate positions include securities purchased or sold (other than mature on the next business day; continuing contracts are agreements that remain mortgage-backed agency securities) that have been delivered or are scheduled to in effect for more than one business day but have no specific maturity and can be be delivered in five business days or less and "when-issued" securities that settle terminated without advance notice by either party; term agreements have a fixed on the issue date of offering. Net immediate positions of mortgage-backed agency maturity of more than one business day. securities include securities purchased or sold that have been delivered or are 7. Matched-book data reflect financial intermediation activity in which the scheduled to be delivered in thirty business days or less. borrowing and lending transactions are matched. Matched-book data are included 4. Includes such securities as collateralized mortgage obligations (CMOs), real in the financing breakdowns given above. The reverse repurchase and repurchase estate mortgage investment conduits (REMICs), interest-only securities (IOs), numbers are not always equal because of the "matching of securities of different and principal-only securities (POs). values or different types of collateralization. 5. Futures positions reflect standardized agreements arranged on an exchange. NOTE. Data for futures and forward commercial paper and bankers acceptances and Forward positions reflect agreements made m the over-the-counter market that for term financing of collateralized loans are no longer available because of insufficient specify delayed delivery. All futures positions are included regardless of time to activity. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A33 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1994 AAggeennccyy 11999900 11999911 11999922 11999933 Jan. Feb. Mar. Apr. May 1 Federal and federally sponsored agencies 434,668 442,772 483,970 570,711 581,886 592,751 604,421 619,302 633,356 2 Federal agencies 42,159 41,035 41,829 45,193 44,988 44,753 44,291 44,390 43,680 3 Defense Department 7 7 7 6 6 6 6 6 6 4 Export-Import Bank '3 11,376 9,809 7,208 5,315 5,315 5,315 4,853 4,853 4,853 5 Federal Housing Administration4 393 397 374 255 80 99 114 123 130 6 Government National Mortgage Association certificates of participation 0 0 0 0 0 0 0 0 0 7 Postal Service6 6,948 8,421 10,660 9,732 9,732 9,732 9,732 9,732 9,473 8 Tennessee Valley Authority 23,435 22,401 23,580 29,885 29,855 29,601 29,586 29,676 29,218 9 United States Railway Association6 0 0 0 0 0 0 0 0 0 10 Federally sponsored agencies7 392,509 401,737 442,141 525,518 536,898 547,998 560,130 574,912 589,685 11 Federal Home Loan Banks 117,895 107,543 114,733 141,577 139,241 137,862 147,309 153,539 156,955 12 Federal Home Loan Mortgage Corporation 30,941 30,262 29,631 49,993 61,245 70,482 62,908 65,621 71,274 13 Federal National Mortgage Association 123,403 133,937 166,300 201,112 203,013 206,493 216,430 218,845 223,173 14 Farm Credit Banks 53,590 52,199 51,910 53,123 52,621 52,839 52,433 52,672 52,534 15 Student Loan Marketing Association 34,194 38,319 39,650 39,784 40,861 40,407 41,120 44,306 45,820 16 Financing Corporation 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 17 Farm Credit Financial Assistance Corporation11 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 18 Resolution Funding Corporation12 23,055 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 MEMO 19 Federal Financing Bank debt13 179,083 185,576 154,994 128,187 125,182 123,304 120,103 118,386 116,092 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 11,370 9,803 7,202 5,309 5,309 5,309 4,847 4,847 4,847 21 Postal Service 6,698 8,201 10,440 9,732 9,732 9,732 9,732 9,732 9,473 22 Student Loan Marketing Association 4,850 4,820 4,790 4,760 2,760 1,760 0 0 0 23 Tennessee Valley Authority 14,055 10,725 6,975 6,325 6,075 6,075 6,075 6,075 4,675 24 United States Railway Association6 0 0 0 0 0 0 0 0 0 Other lending14 25 Farmers Home Administration 52,324 48,534 42,979 38,619 38,619 38,619 38,209 37,839 37,124 26 Rural Electrification Administration 18,890 18,562 18,172 17,578 17,511 17,512 17,360 17,360 17,419 27 Other 70,896 84,931 64,436 45,864 45,176 43,667 43,880 42,533 42,554 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 • October 1994 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1993 1994 TTyyppee ooff ii oo ss rr ss uu uu ee ss ee oo rr iissssuueerr,, 11999911 11999922 11999933rr Dec/ Jan. Feb. Mar. Apr. May June July 1 All issues, new and refunding1 154,402 215,191 279,945 24,520 16,560 14,698 15,461 10,129 12,388 14,779* 12,450 By type of issue 2 General obligation 55,100 78,611 90,599 6,542 5,105r 4,365 7,371 3,469 4,029 5,556 7,110 3 Revenue 99,302 136,580 189,346 17,978 11,455' 8,553 8,090 6,660 8,359 9,223 5,340 By type of issuer 4 State 24,939 25,295 27,999 1,265 1,235 921 3,302 1,013 1,158 1,733 4,686 5 Special district or statutory authority2 80,614 129,686 178,714 16,398 10,672 10,263 6,145 5,235 8,085 9,335 4,931 6 Municipality, county, or township 48,849 60,210 73,232 6,857 4,653 3,514 6,014 3,881 3,145 3,711 2,833 7 Issues for new capital 116,953 120,272 91,434 9,543 5,558 8,774 10,114 8,147 9,125 9,726r 10,348 By use of proceeds 8 Education 21,121 22,071 16,831 1,254 1,573 2,292 1,859 2,102 1,933 1,945 1,147 9 Transportation 13,395 17,334 9,167 255 293 1,223 401 1,453 1,037 2,033 290 10 Utilities and conservation 21,039 20,058 12,014 1,430 480 243 540 707 423 856 694 11 Social welfare 25,648 21,796 13,837 1,570 825 1,660 1,670 1,502 2,099 1,275 1,458 12 Industrial aid 8,376 5,424 6,862 1,473 392 1,316 470 601 657 935 959 13 Other purposes 30,275 33,589 32,723 3,561 l,995r 8,774 5,174 1,782 2,976 2,682 5,800 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 1994 TTyyppee ooff iissssuuee,, ooffffeerriinngg,, 11999911 11999922 11999933 oorr iissssuueerr Nov. Dec. Jan. Feb. Mar. Apr. May June 1 All issues1 465,246 559,827 764,509* 54,736 44,344 57,919* 47,105* 51,908* 34,750* 43,568* 42,983 2 Bonds2 389,822 471,502 641,498* 43,137 33,813 52,126* 39,343* 42,704* 29,319* 39,962* 36,629 By type of offering 3 Public, domestic 286,930 378,058 486,879* 39,448 32,232 46,682r 32,026* 40,130r 26,110* 32,787* 31,760 4 Private placement, domestic3 74,930 65,853 116,240 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Sold abroad 27,962 27,591 38,379 3,689 1,582 5,444 7,317 2,574 3,209r 7,175* 4,869 By industry group 6 Manufacturing 86,628 82,058 88,002 3,334 3,068 4,785 3,586 2,421r 2,229r 2,352r 2,217 7 Commercial and miscellaneous 36,666 43,111 60,443 3,078 2,525 2,869 2,153 3,020 940* 2,396 3,054 8 Transportation 13,598 9,979 10,756 648 895 693 100 920 97 150 1,082 9 Public utility 23,944 48,055 56,272 1,763 2,336 2,466 1,768 1,632 546 1,021* 631 10 Communication 9,431 15,394 31,950 1,015 2,001 2,592 2,115 2,090 1,298 934 548 11 Real estate and financial 219,555 272,904 394,076* 33,299 22,989 38,721* 29,622* 32,621r 24,208r 33,110* 29,097 12 Stocks2 75,424 88,325 124,153 11,599 10,531 5,793* 7,806 9,210 5,465 3,673 6,347 By type of offering 13 Public preferred 17,085 21,339 20,533 1,385 650 1,592 1,318 1,969 2,248 695 1,366 14 Common 48,230 57,118 90,559 10,209 9,881 4,135 6,488 7,241 3,218 2,978 4,981 15 Private placement3 10,109 9,867 11,917 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. By industry group 16 Manufacturing 24,111 22,723 22,271 2,169 2,267 1,564 1,807 2,891 2,669 i i 17 Commercial and miscellaneous 19,418 20,231 25,761 3,061 1,970 1,516 1,682 1,547 785 T T 18 Transportation 2,439 2,595 2,237 221 162 78 703 980 106 n.a. n.a. 2 1 0 9 C Pu o b m li m c u u n ti i l c i a ty ti on 3,4 4 7 7 4 5 6 2, , 3 5 6 3 6 2 3 7 , , 4 0 3 5 9 0 1,0 3 7 7 4 1 1,6 1 0 2 3 9 n. 2 a 9 . 3 2 1 0 2 3 0 480 0 7 0 5 1 fI 21 Real estate and financial 25,507 33,879 49,889 4,486 4,381 2,397 3,844 4,381 1,815 1,437 2,663 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. Beginning July 1993, Securities Data Company and the Board of investment companies other than closed-end, intracoiporate transactions, equi- 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 1994 1992 1993 Nov. Dec Jan. Feb. Mar. Apr. Mayr June 1 Sales of own shares 647,055 72,865 89,775 98,679 78,032 87,381 71,164 65,179 65,333 2 Redemptions of own shares. 447,140 51,306 62,764 61,829 56,235 73,395 61,925 55,036 56,068 199,915 21,559 27,011 36,849 21,797 13,986 9,239 10,144 9,265 3 Net sales3 1,056,310 1,416,841 1,510,047 1,572,907 1,561,705 1,500,745 1,510,827 1,529,478 1,509,505 4 Assets4 56 OCathsehr 5 9 7 8 3 2 , , 9 3 9 1 9 1 1,3 1 0 0 3 3 , , 4 3 8 5 9 2 1,4 1 0 0 9 0 , , 8 2 3 0 8 9 1,4 1 6 1 2 0 , , 8 0 7 2 9 2 1,4 1 4 1 7 3 , , 7 9 3 7 0 5 1,3 1 8 1 8 2 , , 3 3 4 9 7 9 1,3 1 9 1 2 8 , , 6 2 0 21 6 1,4 1 0 1 9 9 , , 4 9 9 8 6 2 1,3 1 9 1 5 4 , , 1 88 1 5 3 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 1992r 1993r 1994 AAccccoouunntt 11999911rr 11999922rr 11999933rr Q3 Q4 Q1 Q2 Q3 Q4 Qlr Q2 1 Profits with inventory valuation and capital consumption adjustment 390.3 405.1 485.8 363.2 432.5 442.5 473.1 493.5 533.9 508.2 547.3 2 Profits before taxes 365.2 395.9 462.4 359.5 413.5 432.7 456.6 458.7 501.7 483.5 523.1 3 Profits tax liability 131.1 139.7 173.2 124.6 148.6 159.8 171.8 169.9 191.5 184.1 201.5 4 Profits after taxes 234.1 256.2 289.2 234.9 264.8 273.0 284.8 288.9 310.2 299.4 321.6 5 Dividends 160.0 171.1 191.7 174.4 182.1 188.2 190.7 193.2 194.6 196.3 202.5 6 Undistributed profits 74.1 85.1 97.5 60.5 82.7 84.7 94.1 95.6 115.6 103.0 119.1 7 Inventory valuation 5.8 -6.4 -6.2 -7.3 2.1 -11.2 -10.0 3.0 -6.5 -12.3 -12.5 8 Capital consumption adjustment 19.4 15.7 29.5 10.9 16.9 21.0 26.5 31.7 38.8 37.0 36.8 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 Q4 Q1 Q2 Q3 Q4 Q1 Q21 Q31 1 Total nonfarm business 546.60 585.64 634.02 559.24 564.13 579.79 594.11 604.51 619.11 637.14 639.71 Manufacturing 2 Durable goods industries 73.32 81.33 90.12 73.30 79.11 80.88 81.99 83.35 86.98 92.42 90.86 3 Nondurable goods industries 100.69 97.84 101.49 103.56 95.94 96.21 100.18 99.04 99.06 102.54 101.21 Nonmanufacturing 4 Mining 8.88 10.03 10.75 8.47 8.89 9.10 11.14 10.98 11.30 10.34 10.79 Transportation 5 Railroad 6.67 6.23 6.79 7.04 6.00 6.00 5.91 7.01 6.69 6.07 7.10 6 Air : 8.93 6.43 4.07 7.60 7.30 6.54 6.92 4.95 4.27 4.53 4.02 7 Other 7.04 9.22 10.50 6.97 9.17 9.04 8.88 9.78 10.94 9.50 11.04 Public utilities 8 Electric 48.22 52.26 52.62 49.57 49.92 50.51 52.74 55.88 48.63 53.30 54.85 9 Gas and other 23.99 23.46 25.03 24.50 23.59 24.04 22.88 23.33 24.26 24.01 25.19 10 Commercial and other2 268.84 298.83 332.65 278.24 284.21 297.46 303.47 310.20 326.98 334.44 334.65 1. Figures are amounts anticipated by business. SOURCE. U.S. Department of Commerce, Survey of Current Business. 2. "Other" consists of construction, wholesale and retail trade, finance and insurance, personal and business services, and communication. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Nonfinancial Statistics • October 1994 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1 Billions of dollars, end of period; not seasonally adjusted 1992 1993 1994 AAccccoouunntt 11999911 11999922 11999933 Q3 Q4 Q1 Q2 Q3 Q4 Q1 ASSETS 1 Accounts receivable, gross2 480.6 482.1 476.1 473.9 482.1 469.6 469.3 467.6 476.1 488.1 2 Consumer 121.9 117.1 117.5 116.7 117.1 111.9 111.3 112.6 117.5 120.1 3 Business 292.9 296.5 290.1 288.5 296.5 289.6 290.7 287.8 290.1 299.0 4 Real estate 65.8 68.4 68.6 68.8 68.4 68.1 67.2 67.2 68.6 69.0 5 LESS: Reserves for unearned income 55.1 50.8 49.0 50.8 50.8 47.4 47.5 47.9 49.0 49.3r 6 Reserves for losses 12.9 15.8 11.0 12.0 15.8 15.5 13.8 11.1 11.0 11.5r 7 Accounts receivable, net 412.6 415.5 416.1 411.1 415.5 406.6 408.0 408.6 416.1 427.3r 8 All other 149.0 150.6 177.3 146.5 150.6 155.0 156.6 169.7 177.3 177.0r 9 Total assets 561.6 566.1 593.4 557.6 566.1 561.6 564.6 578.3 593.4 604.3r LIABILITIES AND CAPITAL 10 Bank loans 42.3 37.6 25.3 38.1 37.6 34.1 29.5 25.8 25.3 24.2r 11 Commercial paper 159.5 156.4 159.2 153.2 156.4 149.8 144.5 149.9 159.2 165.9 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 34.5 37.8 46.1 34.9 37.8 41.9 46.4 47.9 46.1 44.9r 15 Not elsewhere classified 191.3 195.3 199.9 191.4 195.3 195.1 195.8 198.1 199.9 205.3 16 All other liabilities 69.0 71.2 91.1 73.7 71.2 74.2 81.3 87.6 91.1 94.3 17 Capital, surplus, and undivided profits 64.8 67.8 71.7 68.1 67.8 66.6 67.1 68.9 71.7 69.7 18 Total liabilities and capital 561.2 566.1 593.4 559.4 566.1 561.7 564.6 578.3 593.4 604.31" 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 1994 TTyyppee ooff ccrreeddiitt 11999911 11999922 11999933 Jan. Feb. Mar. Apr. May June Seasonally adjusted 1111 TTTToooottttaaaallll 519,716 530,603 537,947 541,123 544,335 554,342 557,121 564,902r 566,850 3333 2222 CCCC RRRR oooo eeeeaaaa nnnn llll ssss uuuu eeee mmmm ssssttttaaaa eeee tttt rrrr eeee 2222 1 6 5 5 4 , , 9 9 2 5 5 1 1 6 5 8 7 , , 5 0 5 7 5 5 1 6 6 8 2 , , 7 05 3 7 1 1 6 6 8 1 , , 9 84 6 6 6 1 6 6 9 1 , , 4 4 3 4 8 6 1 6 6 9 3 , , 6 4 6 9 9 3 1 6 6 9 3 , , 8 7 1 6 5 3 1 7 6 1 5 , , 4 1 0 2 2 6 r 1 7 6 1 7 , , 1 4 2 3 0 1 4444 BBBBuuuussssiiiinnnneeeessssssss 298,840 304,972 307,159 310,312 313,451 321,180 323,543 328,374r 328,299 Not seasonally adjusted 5555 TTTToooottttaaaallll 523,354 534,934 542,700 541,316 542,894 553,810 558,208 562,600r 567,153 6666 CCCCoooonnnnssssuuuummmmeeeerrrr 155,908 158,398 163,629 162,140 161,367 163,484 164,257 163,873r 166,384 7777 MMMMoooottttoooorrrr vvvveeeehhhhiiiicccclllleeeessss 63,415 57,605 55,274 56,509 56,963 57,797 59,458 56,614 56,932 8888 OOOOtttthhhheeeerrrr ccccoooonnnnssssuuuummmmeeeerrrr 58,522 59,522 62,189 61,427 61,132 62,264 63,387 64,161 66,182 9999 SSSSeeeeccccuuuurrrriiiittttiiiizzzzeeeedddd mmmmoooottttoooorrrr vvvveeeehhhhiiiicccclllleeeessss4444 23,361 29,734 36,024 34,190 33,451 33,173 31,328 32,623 32,705 11110000 SSSSeeeeccccuuuurrrriiiittttiiiizzzzeeeedddd ooootttthhhheeeerrrr ccccoooonnnnssssuuuummmmeeeerrrr4444 10,610 11,537 10,141 10,013 9,821 10,250 10,084 10,475r 10,566 11111111 RRRReeeeaaaallll eeeessssttttaaaatttteeee2222 65,760 68,410 68,577 69,385 69,446 69,005 70,114 70,920 70,628 11112222 BBBBuuuussssiiiinnnneeeessssssss 301,686 308,127 310,495 309,791 312,081 321,321 323,837 327,807r 330,140 11113333 MMMMoooottttoooorrrr vvvveeeehhhhiiiicccclllleeeessss 90,613 87,456 90,172 88,377 90,668 95,719 97,727 99,31 lr 101,079 11114444 RRRReeeettttaaaaiiiillll5555................ 22,957 19,303 16,024 16,965 17,514 19,162 19,632 19,790 19,955 11115555 WWWWhhhhoooolllleeeessssaaaalllleeee6666 31,216 29,962 31,067 27,975 29,435 31,070 31,059 31,019 31,084 11116666 LLLLeeeeaaaassssiiiinnnngggg 36,440 38,191 43,081 43,437 43,720 45,487 47,036 48,501r 50,040 11117777 EEEEqqqquuuuiiiippppmmmmeeeennnntttt 141,399 151,607 148,858 147,915 147,425 149,721 151,150 154,568r 155,183 11118888 RRRReeeettttaaaaiiiillll 30,962 32,212 33,266 33,109 33,033 33,861 34,602 35,429 36,037 11119999 WWWWhhhhoooolllleeeessssaaaalllleeee6666 9,671 8,669 8,007 7,996 7,972 8,281 8,295 8,403 8,404 22220000 LLLLeeeeaaaassssiiiinnnngggg »»»» 100,766 110,726 107,585 106,810 106,420 107,579 108,253 110,736r 110,742 22221111 OOOOtttthhhheeeerrrr bbbbuuuussssiiiinnnneeeessssssss 60,900 57,464 51,054 50,821 51,489 53,596 53,352 51,818r 52,422 22222222 SSSSeeeeccccuuuurrrriiiittttiiiizzzzeeeedddd bbbbuuuussssiiiinnnneeeessssssss aaaasssssssseeeettttssss 8,774 11,599 20,411 22,679 22,499 22,285 21,607 22,111 21,456 22223333 RRRReeeettttaaaaiiiillll 576 1,120 2,483 2,343 2,245 2,119 2,058 2,406 2,619 22224444 WWWWhhhhoooolllleeeessssaaaalllleeee 5,285 5,756 9,727 12,437 13,084 13,090 13,098 13,348 13,033 22225555 LLLLeeeeaaaassssiiiinnnngggg 2,913 4,723 8,201 7,899 7,170 7,076 6,451 6,357 5,804 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. 4. Outstanding balances of pools upon which securities have been issued; these Digitized for FbRalaAnSceEs Rare 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 1994 IItteemm 11999911 11999922 11999933 Jan. Feb. Mar. Apr. May June July Terms and yields in primary and secondary markets PRIMARY MARKETS Terms1 1 Purchase price (thousands of dollars) 155.0 158.1 163.1 168.1 157.9 167.8 166.1 171.6 172.6 166.0 2 Amount of loan (thousands of dollars) 114.0 118.1 123.0 127.9 124.1 131.0 127.6 132.2 130.0 129.0 3 Loan-to-price ratio (percent) 75.0 76.6 78.0 78.0 80.2 80.2 79.3 78.5 78.0 79.4 4 Maturity (years) v 26.8 25.6 26.1 27.2 27.0 27.6 26.7 27.6 26.5 27.5 5 Fees and charges (percent of loan amount) 1.71 1.60 1.30 1.18 1.16 1.20 1.16 1.45 1.30 1.35 Yield {percent per year) 6 Contract rate1 , 9.02 7.98 7.02 6.77 6.67 6.81 7.13 7.20 7.41 7.50 7 Effective rate1,3 9.30 8.25 7.24 6.95 6.85 6.99 7.31 7.43 7.62 7.71 8 Contract rate (HUD series)4 9.20 8.43 7.37 7.13 7.54 8.31 8.56 8.61 8.72 8.64 SECONDARY MARKETS Yield {percent per year) 9 FHA mortgages (Section 203)5 9.25 8.46 7.46 7.05 7.59 8.57 8.63 8.63 9.03 8.65 10 GNMA securities6 8.59 7.71 6.65 6.45 6.72 7.40 7.93 8.05 8.01 8.23 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 128,983r 158,119* 190,861* 194,441 196,078 197,770 201,542 206,147 208,180 210,666 12 FHA/VA insured 21,796r 22,593* 23,857* 23,796 23,789 24,226 25,088 25,303 25,390 25,477 13 Conventional 107,187r 135,526* 167,004* 170,645 172,289 173,544 176,454 180,844 182,790 185,189 Mortgage transactions (during period) 14 Purchases 37,202 75,905 92,037 7,919 5,427 5,820 6,677 7,238 4,386 4,628 Mortgage commitments (during period) 15 Issued 40,010 74,970 92,537 6,159 4,858 8,683 4,788 3,801 44,,226688 3,798 16 To sell8 7,608 10,493 5,097 664 525 136 90 281 11 0 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period f 17 Total 26,809r 33,665* 55,012* 56,067 57,245 58,498 59,352 60,799 62,232 62,993 18 FHA/VA insured 460r 352* 321* 319 318 315 309 304 299r 296 19 Conventional 26,349* 33,313* 54,691* 55,747 56,928 59,184 59,043 60,495 61,933* 62,697 Mortgage transactions (during period) 20 Purchases 99,965 191,125 229,242 22,611 17,840 15,970 14,589 10,629 8,341 6,535 21 Sales 92,478 179,208 208,723 21,253 16,719 14,486 14,175 10,228 8,097 6,338 Mortgage commitments (during period f 22 Contracted 114,031 261,637 274,599 31,393 12,880 22,533 22,765 9,586 7,252 5,820 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 Nonfinancial Statistics • October 1994 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1993 1994 Type of holder and property 11999900 11999911 11999922 Q1 Q2 Q3 Q4 Qlp 1 All holders 3,762,872 3,924,782 4,049,256 4,059,221 4,108,890 4,166,286 4,208,512 4,247,007 By type of property 2 One- to four-family residences 2,616,288 2,780,044 2,959,558 2,975,768 3,034,781 3,096,443 3,146,832 3,189,641 3 Multifamily residences 309,369 306,410 295,417 294,045 291,272 290,679 290,553 289,273 4 Commercial 758,313 759,023 713,862 708,966 702,210 698,435 690,388 687,126 5 Farm 78,903 79,306 80,419 80,442 80,627 80,730 80,739 80,967 By type of holder 6 Major financial institutions 1,914,315 1,846,726 1,769,187 1,753,045 1,765,176 1,769,014 1,766,633 1,747,288 7 Commercial banks 844,826 876,100 894,513 891,755 910,989 922,596 940,253 937,966 8 One- to four-family 455,931 483,623 507,780 507,497 526,817 538,919 558,583 555,434 9 Multifamily 37,015 36,935 38,024 37,425 38,058 37,633 38,436 38,166 10 Commercial 334,648 337,095 328,826 326,853 325,519 325,201 322,373 323,120 11 Farm , 17,231 18,447 19,882 19,980 20,595 20,843 20,862 21,245 12 Savings institutions 801,628 705,367 627,972 617,163 612,458 609,563 598,348 584,352 13 One- to four-family 600,154 538,358 489,622 480,415 480,722 478,324 469,689 457,679 14 Multifamily 91,806 79,881 69,791 70,608 68,303 68,552 67,823 67,348 15 Commercial 109,168 86,741 68,235 65,808 63,111 62,367 60,531 59,029 16 Farm 500 388 324 332 322 320 305 297 17 Life insurance companies 267,861 265,258 246,702 244,128 241,729 236,855 228,032 224,970 18 One- to four-family 13,005 11,547 11,441 11,316 11,195 10,967 10,534 10,387 19 Multifamily 28,979 29,562 27,770 27,466 27,174 26,620 25,568 25,211 20 Commercial 215,121 214,105 198,269 196,100 194,012 190,061 182,553 180,001 21 Farm 10,756 10,044 9,222 9,246 9,348 9,206 9,376 9,371 22 Federal and related agencies 239,003 266,146 286,263 287,081 298,991 309,579 321,486 325,835 23 Government National Mortgage Association. 20 19 30 45 45 43 22 20 24 One- to four-family 20 19 30 37 38 37 15 13 25 Multifamily 0 0 0 8 7 7 7 7 26 Farmers Home Administration 41,439 41,713 41,695 41,529 41,446 41,424 41,386 41,209 27 One- to four-family 18,527 18,496 16,912 16,536 16,133 15,714 15,303 14,870 28 Multifamily 9,640 10,141 10,575 10,650 10,739 10,830 10,940 11,037 29 Commercial 4,690 4,905 5,158 5,187 5,250 5,347 5,406 5,399 30 Farm 8,582 8,171 9,050 9,156 9,324 9,533 9,739 9,903 31 Federal Housing and Veterans' Administr; 8,801 10,733 12,581 13,027 12,945 11,797 12,215 11,344 32 One- to four-family 3,593 4,036 5,153 5,631 5,635 4,850 5,364 4,738 33 Multifamily 5,208 6,697 7,428 7,396 7,311 6,947 6,851 6,606 34 Resolution Trust Corporation 32,600 45,822 32,045 27,331 21,973 19,925 17,284 14,241 35 One- to four-family 15,800 14,535 12,960 11,375 8,955 8,381 7,203 6,312 36 Multifamily 8,064 15,018 9,621 8,070 6,743 6,002 5,327 4,190 37 Commercial 8,736 16,269 9,464 7,886 6,275 5,543 4,754 3,739 38 Farm 0 0 0 0 0 0 0 0 39 Federal National Mortgage Association 104,870 112,283 137,584 141,192 151,513 160,721 166,642 172,343 40 One- to four-family 94,323 100,387 124,016 127,252 137,340 146,009 151,310 156,576 41 Multifamily 10,547 11,896 13,568 13,940 14,173 14,712 15,332 15,767 42 Federal Land Banks 29,416 28,767 28,664 28,536 28,592 28,810 28,460 28,181 43 One- to four-family 1,838 1,693 1,687 1,679 1,682 1,695 1,675 1,658 44 Farm 27,577 27,074 26,977 26,857 26,909 27,115 26,785 26,523 45 Federal Home Loan Mortgage Corporation 21,857 26,809 33,665 35,421 42,477 46,859 55,476 58,498 46 One- to four-family 19,185 24,125 31,032 32,831 39,905 44,315 52,929 55,942 47 Multifamily 2,672 2,684 2,633 2,589 2,572 2,544 2,547 2,556 48 Mortgage pools or trusts5 1,079,103 1,250,666 1,425,546 1,462,181 1,473,323 1,514,002 1,546,818 1,602,595 49 Government National Mortgage Associatioi 403,613 425,295 419,516 421,514 413,166 415,076 414,066 423,446 50 One- to four-family 391,505 415,767 410,675 412,798 404,425 405,963 404,864 414,194 51 Multifamily 12,108 9,528 8,841 8,716 8,741 9,113 9,202 9,251 52 Federal Home Loan Mortgage Corporation 316,359 359,163 407,514 420,932 422,882 430,089 439,029 457,577 53 One- to four-family 308,369 351,906 401,525 415,279 417,646 425,154 434,494 453,407 54 Multifamily 7,990 7,257 5,989 5,654 5,236 4,935 4,535 4,170 55 Federal National Mortgage Association 299,833 371,984 444,979 457,316 465,220 481,880 495,525 507,376 56 One- to four-family 291,194 362,667 435,979 448,483 456,645 473,599 486,804 498,489 57 Multifamily 8,639 9,317 9,000 8,833 8,575 8,281 8,721 8,887 58 Fanners Home Administration 66 47 38 34 32 30 28 26 59 One- to four-family 17 11 8 7 6 6 5 5 60 Multifamily 0 0 0 0 0 0 0 0 61 Commercial 24 19 17 16 15 14 13 12 62 Farm 26 17 13 11 11 10 10 9 63 Private mortgage conduits 59,232 94,177 153,499 162,385 172,023 186,927 198,171 214,171 64 One- to four-family 53,335 84,000 132,000 137,000 145,000 158,000 164,000 177,000 65 Multifamily 731 3,698 6,305 6,665 7,407 7,991 8,701 9,481 66 Commercial 5,166 6,479 15,194 18,720 19,616 20,936 25,469 27,689 67 Farm 0 0 0 0 0 0 0 0 68 Individuals and others6 530,452 561,244 568,260 556,913 571,400 573,691 573,576 571,289 69 One- to four-family 349,491 368,874 378,739 367,632 382,637 384,510 384,060 382,938 70 Multifamily 85,969 83,796 85,871 86,026 86,235 86,512 86,565 86,597 71 Commercial 80,761 93,410 88,699 88,396 88,412 88,966 89,289 88,137 72 Farm 14,232 15,164 14,951 14,859 14,117 13,703 13,662 13,618 1. Based on data from various institutional and governmental sources; figures 5. Outstanding principal balances of mortgage-backed securities insured or for some quarters estimated in part by the Federal Reserve. Multifamily debt guaranteed by the agency indicated. refers to loans on structures of five or more units. 6. Other holders include mortgage companies, real estate investment trusts, 2. Includes loans held by nondeposit trust companies but not loans held by state and local credit agencies, state and local retirement funds, noninsured bank trust departments. pension funds, credit unions, and finance companies. 3. Includes savings banks and savings and loan associations. SOURCES. Based on data from various institutional and government sources. 4. FmHA-guaranteed securities sold to the Federal Financing Bank were Separation of nonfarm mortgage debt by type of property, if not reported directly, reallocated from FmHA mortgage pools to FmHA mortgage holdings in 1986:Q4 and inteipolations and extrapolations, when required, are estimated mainly by the because of accounting changes by the Fanners 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 1994 HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt 11999911rr 11999922rr 11999933rr J j Jan. Feb. Mar. Apr. May June Seasonally adjusted 11 TToottaall 728,398 729,932 795,573 800,912 805,787 817,173 827,288 838,748 849,634 22 AAuuttoommoobbiillee 260,574 257,890 281,504 283,453 284,388 287,912 292,738 296,566 301,199 33 RReevvoollvviinngg 245,631 257,453 287,970 290,807 294,461 299,218 304,381 308,590 312,581 44 OOtthheerr 222,193 214,590 226,099 226,651 226,938 230,043 230,168 233,593 235,854 Not seasonally adjusted 5 Total 744,243 746,452 813,864 808,010 805,015 812,477 821,754 831,515 843,646 By major holder 6 Commercial banks 340,713 330,088 368,549 367,883 366,712 369,710 376,379 380,063 385,895 7 Finance companies 121,904 117,050 117,463 117,936 118,095 120,061 122,845 120,775 123,114 8 Credit unions 90,302 91,693 101,634 100,554 100,984 102,683 104,153 107,423 110,301 9 Savings institutions 41,373 37,049 38,078 38,328 38,578 38,828 39,078 39,255 39,400 10 Nonfinancial business 46,658 49,184 57,637 55,228 53,453 53,410 53,756 54,505 55,374 11 Pools of securitized assets2 103,293 121,388 130,503 128,081 127,193 127,785 125,543 129,494 129,562 By major type of credit* 12 Automobile 261,046 258,572 282,291 282,418 283,429 287,476 291,352 295,066 300,411 13 Commercial banks 112,666 109,623 123,358 124,238 124,449 126,949 130,104 132,979 135,800 14 Finance companies 63,415 57,605 55,274 56,509 56,963 57,797 59,458 56,614 56,932 15 Pools of securitized assets 28,588 33,888 39,490 37,426 36,599 36,613 34,531 35,836 35,817 16 Revolving 259,001 271,369 303,430 296,852 294,112 296,023 300,457 304,586 309,002 17 Commercial banks 138,005 132,966 149,527 145,673 144,274 145,701 149,265 149,972 153,027 18 Nonfinancial business 41,658 43,974 52,113 49,757 48,017 47,937 48,279 49,005 49,845 19 Pools of securitized assets2 63,333 74,931 79,887 79,444 79,597 79,768 79,927 82,064 82,076 20 Other 224,196 216,511 228,143 228,740 227,474 228,978 229,945 231,863 234,233 21 Commercial banks 90,042 87,499 95,664 97,972 97,989 97,060 97,010 97,112 97,068 22 Finance companies 58,489 59,445 62,189 61,427 61,132 62,264 63,387 64,161 66,182 23 Nonfinancial business 5,000 5,210 5,524 5,471 5,436 5,473 5,477 5,500 5,529 24 Pools of securitized assets2 11,372 12,569 11,126 11,211 10,997 11,404 11,085 11,594 11,669 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 1994 IItteemm 11999911 11999922 11999933 Dec. Jan. Feb. Mar. Apr. May June INTEREST RATES Commercial banks2 1 48-month new car 11.14 9.29 8.09 n.a. n.a. 7.54 n.a. n.a. 7.76 n.a. 2 24-month personal 15.18 14.04 13.47 n.a. n.a. 12.89 n.a. n.a. 12.96 n.a. 3 120-month mobile home 13.70 12.67 11.87 n.a. n.a. 11.56 n.a. n.a. 11.60 n.a. 4 Credit card 18.23 17.78 16.83 n.a. n.a. 16.06 n.a. n.a. 16.15 n.a. Auto finance companies 5 New car 12.41 9.93 9.48 8.80 7.55 8.93 9.13 9.71 9.92 9.96 6 Used car 15.60 13.80 12.79 12.33 12.02 12.23 12.68 13.25 13.51 13.78 OTHER TERMS3 Maturity (months) 7 New car 55.1 54.0 54.5 54.0 52.9 54.4 54.0 53.8 53.5 53.3 8 Used car 47.2 47.9 48.8 48.3 50.0 50.3 50.1 50.0 50.6 50.0 Loan-to-value ratio 9 New car 88 89 91 90 91 91 92 92 93 94 10 Used car 96 97 98 98 98 99 99 99 99 100 Amount financed (dollars) 11 New car 1122,,449944 13,584 14,332 15,097 15,330 14,904 14,821 15,067 15,194 15,180 12 Used car 88,,888844 9,119 9,875 10,349 10,434 10,449 10,427 10,477 10,606 10,656 1. The Board's series on amounts of credit covers most short- and 2. Data are available for only the second month of each quarter, intermediate-term credit extended to individuals that is scheduled to be repaid (or 3. At auto finance companies, has the option of repayment) in two or more installments. Data in this table also appear in the Board s G.19 (421) monthly statistical release. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic NonfinancialS tatistics • October 1994 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1 Billions of dollars; quarterly data at seasonally adjusted annual rates 1992 1993 1994 11998899 11999900 11999911 11999922 11999933 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Nonfinancial sector s 1 Total net borrowing by domestic nonfinancial sectors .. 723.0 631.0 475.5 582.4 592.3 611.1 529.5 382.6 719.2 584.2 683.2 620.0 By sector and instrument 2 U.S. government 146.4 246.9 278.2 304.0 256.1 299.1 240.1 229.6 348.2 177.2 269.6 195.9 3 Treasury securities 144.7 238.7 292.0 303.8 248.3 290.1 237.4 226.4 344.1 160.9 261.9 197.2 4 Budget agency issues and mortgages 1.6 8.2 -13.8 .2 7.8 9.0 2.7 3.2 4.1 16.2 7.7 -1.3 5 Private 576.6 384.1 197.3 278.4 336.2 312.0 289.4 153.1 370.9 407.0 413.6 424.1 By instrument 6 Tax-exempt obligations 65.3 57.3 69.6 65.7 60.4 75.8 42.4 62.4 67.2 48.3 63.9 60.5 7 Corporate bonds 73.8 47.1 78.8 67.5 75.3 61.7 54.0 85.7 75.7 72.6 67.4 51.0 8 MMoorrttggaaggeess 269.1 188.7 165.1 120.8 155.4 134.8 94.0 74.9 171.5 206.7 168.6 184.0 9 HHoommee mmoorrttggaaggeess 212.5 177.2 166.0 176.0 187.1 203.3 172.8 100.1 211.6 229.9 206.7 206.7 1U Multifamily residential 12.0 3.4 -2.5 -11.1 -6.3 -11.2 -27.8 -6.5 -12.0 -4.4 -2.3 -6.9 11 Commercial 47.3 8.9 .9 -45.5 -25.7 -57.8 -51.5 -18.9 -28.9 -19.2 -35.8 -16.7 12 Farm -2.7 -.8 .7 1.3 .3 .6 .5 .1 .7 .4 .0 .9 13 Consumer credit 49.5 13.4 -13.1 9.3 49.0 13.5 48.3 19.2 22.9 60.7 93.3 49.5 14 Bank loans n.e.c 36.4 4.2 -46.8 -5.6 4.7 -24.0 21.3 -39.7 31.7 6.9 20.0 36.7 15 Commercial paper 21.4 9.7 -18.4 8.6 10.0 9.3 25.4 -27.1 33.7 23.8 9.7 -27.4 16 Other loans 61.0 63.6 -37.8 12.1 -18.8 40.8 4.1 -22.3 -31.6 -11.9 -9.2 69.7 By borrowing sector 17 Household 276.7 207.7 168.4 215.0 247.8 217.9 266.5 109.2 251.1 324.3 306.5 255.2 18 Nonfinancial business 236.3 121.9 -33.4 4.0 23.0 20.6 -12.2 -27.8 50.8 30.6 38.3 96.7 19 Farm .5 1.8 2.4 1.2 1.9 -.2 -1.9 -2.7 3.1 4.4 2.7 3.8 20 Nonfarm noncorporate 49.4 19.4 -24.5 -39.4 -25.6 -37.3 -51.0 -32.7 -31.4 -24.1 -14.3 29.7 21 Corporate 186.5 100.7 -11.3 42.1 46.7 58.2 40.7 7.5 79.1 50.3 49.8 63.2 22 State and local government 63.5 54.5 62.3 59.4 65.4 73.5 35.1 71.7 69.1 52.1 68.8 72.2 23 Foreign net borrowing in United States 10.2 23.9 13.9 24.2 47.7 37.8 -.6 50.3 39.3 82.4 19.0 7.6 24 Bonds 4.9 21.4 14.1 17.3 60.5 20.3 22.2 75.6 42.4 84.5 39.3 43.8 25 Bank loans n.e.c -.1 -2.9 3.1 2.3 .7 3.9 -10.3 1.6 6.5 1.0 -6.3 6.1 26 Commercial paper 13.1 12.3 6.4 5.2 -9.0 13.1 -12.1 -21.7 -.6 -1.6 -12.0 -49.0 27 U.S. government and other loans -7.6 -7.0 -9.8 -.6 -4.5 .5 -.4 -5.3 -9.0 -1.5 -2.0 6.7 28 Total domestic plus foreign 733.1 654.9 489.4 606.6 640.0 649.0 528.8 432.9 758.5 666.6 702.2 627.6 Financial sectors 29 Total net borrowing by financial sectors 213.7 193.5 150.4 216.4 239.0 304.1 174.8 145.4 131.5 385.7 293.2 408.7 By instrument 30 U.S. government-related 149.5 167.4 145.7 155.8 157.2 169.3 131.8 165.8 62.7 273.7 126.4 322.7 31 Government-sponsored enterprises securities 25.2 17.1 9.2 40.3 80.6 67.7 33.6 32.2 68.8 167.8 53.4 160.0 32 Mortgage pool securities 124.3 150.3 136.6 115.6 76.6 101.6 98.4 133.5 -6.1 105.9 73.0 181.9 33 Loans from U.S. government .0 -.1 .0 .0 .0 .0 -.1 .0 .0 .0 .0 -19.2 34 Private 64.2 26.1 4.6 60.6 81.8 134.8 42.9 -20.3 68.8 112.0 166.8 86.0 35 Corporate bonds 37.3 40.8 56.8 65.3 70.8 81.2 79.4 54.6 55.7 97.3 75.7 81.8 36 Mortgages .5 .4 .8 .0 3.8 .4 .0 .9 2.7 6.2 5.5 5.4 37 Bank loans n.e.c 6.0 1.1 17.1 -4.8 -9.9 17.5 -19.8 -21.2 -5.9 -14.0 1.5 8.6 38 Open market paper 31.3 8.6 -32.0 -.7 -6.2 17.5 -6.5 -73.1 -17.3 -9.7 75.5 4.5 39 Loans from Federal Home Loan Banks -11.0 -24.7 -38.0 .8 23.3 18.1 -10.1 18.6 33.5 32.3 8.6 -14.3 By borrowing sector 40 Government sponsored enterprises 25.2 17.0 9.1 40.2 80.6 67.7 33.5 32.2 68.8 167.8 53.4 140.8 41 Federally related mortgage pools 124.3 150.3 136.6 115.6 76.6 101.6 98.4 133.5 -6.1 105.9 73.0 181.9 42 Private 64.2 26.1 4.6 60.6 81.8 134.8 42.9 -20.3 68.8 112.0 116666..88 86.0 43 Commercial banks -1.4 -.7 -11.7 8.8 5.6 12.1 14.5 5.4 10.1 6.2 ..88 7.0 44 Bank holding companies 6.2 -27.7 -2.5 2.3 8.1 6.6 .8 21.1 1.3 -2.2 12.2 4.1 45 Funding corporations 13.8 12.5 -13.6 1.6 -10.7 -7.7 -31.1 -51.9 8.2 -13.2 14.0 -22.2 46 Savings institutions -15.1 -30.2 -44.5 -6.7 11.1 11.2 -14.4 7.9 17.7 18.4 .6 -9.0 47 Credit unions .0 .0 .0 .0 .2 .0 .1 .0 .3 .3 .1 .1 48 Life insurance companies .0 .0 .0 .0 .2 .2 -.2 .1 .6 -.1 .4 .0 49 Finance companies 27.4 24.0 18.6 -3.6 -5.0 21.2 19.9 -33.1 -38.6 16.0 35.8 56.2 50 Mortgage companies 3.0 -4.0 5.7 .1 4.0 14.4 -6.4 -10.4 15.9 2.4 8.0 -5.9 51 Real estate investment trusts (REITs) 1.3 1.0 1.6 .1 3.3 2.3 -5.1 -1.4 2.5 6.1 5.9 6.0 52 Issuers of asset-backed securities (ABSs) 28.9 51.1 51.0 58.0 64.9 74.3 64.8 41.9 50.7 78.1 89.0 49.7 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 1992 1993 1994 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998899 11999900 11999911 11999922 11999933 Q3 Q4 Q1 Q2 Q3 Q4 Q1 All sectors 53 Total net borrowing, all sectors 946.8 848.4 639.8 822.9 879.0 953.1 703.6 578.3 889.9 1,052.3 995.4 1,036.3 54 U.S. government securities 295.8 414.4 424.0 459.8 413.3 468.5 372.0 395.3 410.9 450.9 396.0 537.8 55 Tax-exempt securities 65.3 57.3 69.6 65.7 60.4 75.8 42.4 62.4 67.2 48.3 63.9 60.5 56 Corporate and foreign bonds 116.0 109.2 149.6 150.1 206.6 163.3 155.6 215.9 173.8 254.4 182.4 176.7 57 Mortgages 269.6 189.1 165.8 120.8 159.2 135.3 93.9 75.7 174.2 212.9 174.1 189.4 58 Consumer credit 49.5 13.4 -13.1 9.3 49.0 13.5 48.3 19.2 22.9 60.7 93.3 49.5 59 Bank loans n.e.c 42.3 2.4 -26.6 -8.1 -4.5 -2.5 -8.8 -59.3 32.3 -6.2 15.2 51.3 60 Open market paper 65.9 30.7 -44.0 13.1 -5.1 39.9 6.8 -121.9 15.7 12.5 73.2 -71.9 61 Other loans 42.4 31.8 -85.6 12.2 .0 59.3 -6.6 -9.1 -7.1 18.8 -2.6 43.0 Funds raised through mutual funds and corporate equities 62 Total net share issues -59.6 22.2 210.6 284.0 423.7 297.7 300.3 296.0 462.2 491.7 445.1 320.8 63 Mutual funds 38.5 67.9 150.5 206.7 310.8 235.2 217.7 240.9 357.5 337.6 307.2 217.5 64 Corporate equities -98.1 -45.7 60.1 77.3 112.9 62.5 82.6 55.1 104.7 154.1 137.8 103.3 65 Nonfinancial corporations -124.2 -63.0 18.3 27.0 22.9 12.0 14.0 8.6 24.8 28.7 29.5 2.0 66 Financial corporations 8.8 9.9 11.2 19.6 25.1 15.7 21.1 14.5 25.9 26.7 33.2 30.0 67 Foreign shares purchased in United States 17.2 7.4 30.7 30.6 64.9 34.8 47.5 31.9 54.0 98.6 75.1 71.3 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 Nonfinancial Statistics • October 1994 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 1992 1993 1994 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998899 11999900 11999911 11999922 11999933 Q3 Q4 Q1 Q2 Q3 Q4 Q1 NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 946.8 848.4 639.8 822.9 879.0 953.1 703.6 578.3 889.9 1,052.3 995.4 1,036.3 2 Private domestic nonfinancial sectors 122.6 162.8 -16.1 65.3 -62.8 -105.4 87.0 -79.8 -82.4 -94.8 5.8 306.5 3 Households 78.6 140.1 -49.7 37.0 -67.9 -135.7 66.6 -83.9 -82.5 -110.7 5.4 260.4 4 Nonfarm noncorporate business -.7 -1.7 -4.2 -2.4 -2.5 -2.0 -1.0 -3.7 -3.0 -2.2 -1.0 -4.4 5 Nonfinancial corporate business 13.6 -5.3 4.3 36.3 12.3 46.5 36.9 -4.0 10.6 42.7 .0 24.1 6 State and local governments 31.1 29.6 33.5 -5.7 -4.8 -14.1 -15.5 11.8 -7.5 -24.6 1.3 26.4 7 U.S. government -3.1 33.7 10.5 -12.0 -18.6 -26.7 -13.3 -24.7 -28.5 -15.4 -5.9 -41.7 8 Foreign 84.4 82.1 25.6 100.8 128.2 78.1 87.8 74.0 93.4 138.3 207.2 112.8 9 Financial sectors 742.9 569.9 619.8 668.8 832.2 1,006.9 542.1 608.9 907.4 1,024.2 788.3 658.7 10 Government sponsored enterprises -4.1 16.4 14.2 69.0 90.2 73.0 71.7 14.6 134.1 145.1 66.7 77.9 11 Federally related mortgage pools 124.3 150.3 136.6 115.6 76.6 101.6 98.4 133.5 -6.1 105.9 73.0 181.9 12 Monetary authority -7.3 8.1 31.1 27.9 36.2 15.7 48.3 44.5 32.6 28.2 39.5 51.5 13 Commercial banking 177.2 125.1 84.3 94.8 143.2 148.0 73.3 86.4 153.4 131.9 201.1 169.6 14 U.S. commercial banks 146.1 94.9 39.2 69.8 150.5 123.5 66.0 100.4 142.0 147.0 212.7 108.7 15 Foreign banking offices 26.7 28.4 48.5 16.5 -9.8 5.2 4.8 -12.5 -.7 -17.2 -8.7 50.2 16 Bank holding companies 2.8 -2.8 -1.5 5.6 -.1 16.4 -.6 -4.3 9.5 -.4 -5.1 8.6 17 Banks in U.S. affiliated areas 1.6 4.5 -1.9 2.9 2.6 3.0 3.0 2.9 2.6 2.5 2.3 2.1 18 Private nonbank finance 452.9 270.0 353.7 361.6 486.0 668.6 250.4 329.9 593.3 613.0 407.9 177.8 19 Thrift institutions -86.6 -153.3 -123.0 -59.5 -13.3 -42.6 -15.0 -33.3 -5.2 10.3 -24.9 10.1 20 Insurance 257.4 181.6 234.3 177.9 192.4 261.4 161.6 257.0 172.9 261.6 78.1 65.9 21 Life insurance companies 101.8 94.4 83.2 82.4 109.5 85.1 103.7 122.1 108.0 117.1 90.6 119.6 22 Other insurance companies 29.7 26.5 32.3 12.7 9.4 -2.8 8.3 8.9 10.6 8.6 9.7 19.7 23 Private pension funds 81.1 17.2 85.3 37.3 40.2 99.9 8.4 118.0 11.1 91.9 -60.1 -104.9 24 State and local government retirement funds 44.7 43.5 33.5 45.5 33.3 79.2 41.2 8.0 43.2 44.0 37.9 31.5 25 Finance n.e.c 282.2 241.7 242.3 243.2 306.9 449.7 103.8 106.2 425.7 341.1 354.7 101.9 26 Finance companies 32.0 28.4 -12.1 1.7 -5.4 4.0 24.0 -34.0 -22.8 8.1 27.2 64.9 27 Mortgage companies 6.1 -8.0 11.4 .1 -.4 28.9 -12.8 -50.3 64.9 -1.9 -14.2 -12.0 28 Mutual funds 23.8 41.4 90.3 123.7 164.0 156.9 119.2 130.2 193.4 168.4 163.9 45.5 29 Closed-end funds 6.3 .0 15.2 12.3 11.4 8.7 13.1 8.9 13.0 11.0 12.7 12.5 30 Money market funds 67.1 80.9 30.1 1.3 12.9 8.5 -26.1 -65.0 51.5 11.5 53.6 -46.3 31 Real estate investment trusts (REITs) .5 -.7 -1.0 .4 .6 -.3 -.1 .2 .8 1.0 .2 .7 32 Brokers and dealers 96.3 34.9 49.0 40.2 57.1 180.3 -90.2 79.5 66.7 69.0 13.4 -37.9 33 Asset-backed securities issuers (ABSs) 27.7 49.9 49.0 55.5 63.6 72.0 59.2 41.4 49.6 80.9 82.5 50.3 34 Bank personal trusts 22.4 14.8 10.4 8.0 3.1 -9.3 17.3 -4.7 8.6 -7.0 15.5 24.1 RELATION OF LIABILITIES TO FINANCIAL ASSETS 35 Net flows through credit markets 946.8 848.4 639.8 822.9 879.0 953.1 703.6 578.3 889.9 1,052.3 995.4 1,036.3 Other financial sources 36 Official foreign exchange 24.8 2.0 -5.9 -1.6 .8 -8.5 5.1 3.4 -4.0 1.7 2.2 6.0 37 Treasury currency and special drawing rights certificates 4.1 2.5 .0 -1.8 .4 .2 -7.7 .3 .4 .4 .7 .7 38 Life insurance reserves 28.8 25.7 25.7 27.3 50.6 41.5 26.3 53.6 39.5 59.5 49.6 49.6 39 Pension fund reserves 309.7 158.1 358.8 227.8 235.4 291.7 267.0 332.9 224.2 304.1 80.3 -65.8 40 Interbank claims -16.5 34.2 -3.7 48.1 32.9 79.8 50.0 26.2 48.3 14.8 42.4 156.3 41 Deposits at financial institutions 284.8 98.1 48.2 9.3 85.7 174.1 -142.7 -.4 219.6 -14.6 138.3 33.7 42 Checkable deposits and currency 6.1 44.2 75.8 122.8 119.5 200.4 93.5 25.0 232.2 96.3 124.4 78.0 43 Small time and savings deposits 100.4 59.0 16.7 -60.8 -79.8 -83.6 -37.8 -155.9 -57.3 -73.0 -33.0 -24.5 44 Large time deposits 13.9 -65.7 -60.8 -80.0 -16.1 -52.9 -84.2 1.9 -17.5 -57.3 8.7 -31.8 45 Money market fund shares 90.1 70.3 41.2 3.9 15.8 -22.4 -32.9 -37.7 66.5 -15.8 50.3 -1.7 46 Security repurchase agreements 77.8 -24.2 -16.5 33.6 67.2 89.6 -67.1 180.3 17.6 78.7 -7.9 21.7 47 Foreign deposits -3.6 14.6 -8.2 -10.2 -20.9 43.0 -14.2 -13.9 -21.9 -43.5 -4.2 -8.0 48 Mutual nind shares 38.5 67.9 150.5 206.7 310.8 235.2 217.7 240.9 357.5 337.6 307.2 217.5 49 Corporate equities -98.1 -45.7 60.1 77.3 112.9 62.5 82.6 55.1 104.7 154.1 137.8 103.3 50 Security credit 15.6 3.5 51.4 4.2 61.9 82.8 5.5 39.7 38.3 77.2 92.6 13.4 51 Trade debt 59.4 32.1 -2.2 54.9 53.4 54.0 33.0 29.2 43.0 57.6 83.8 30.3 52 Taxes payable 2.0 -4.5 -8.5 7.9 3.7 6.7 10.3 3.4 9.3 -4.2 6.2 3.0 53 Noncorporate proprietors' equity -31.1 -35.5 -12.5 -5.7 -18.5 -27.5 10.5 -10.1 -20.3 -8.4 -35.2 -103.4 54 Investment in bank personal trusts 23.1 21.5 29.8 -7.5 13.8 -55.4 -35.2 -27.7 24.8 32.4 25.7 17.1 55 Miscellaneous 292.1 98.2 169.9 195.7 281.7 202.6 211.8 190.4 423.7 177.8 335.0 188.3 56 Total financial sources 1,883.8 1,306.5 1,501.3 1,665.5 2,104.7 2,092.8 1,437.9 1,515.2 2,398.9 2,242.4 2,262.3 1,686.2 Floats not included in assets (-) 57 U.S. government checkable deposits 8.4 3.3 -13.1 .7 -1.5 4.4 -3.6 .1 6.2 -6.4 -5.8 -5.9 58 Other checkable deposits -3.2 2.5 2.0 1.6 -3.8 -11.7 2.3 -1.8 -1.4 -5.6 -6.3 -9.1 59 Trade credit -1.9 2.5 8.1 18.5 17.7 40.2 1.2 -8.6 28.6 10.7 39.9 1.6 Liabilities not identified as assets (-) 60 Treasury currency -.2 .2 -.6 -.2 -.2 -.2 -.1 -.2 -.2 -.2 -.2 -.1 61 Interbank claims -4.4 1.6 26.2 -4.9 4.2 -7.8 -1.7 11.4 -5.7 -16.5 27.7 -17.5 62 Security repurchase agreements 32.4 -31.5 5.2 31.1 69.3 43.5 23.4 154.9 14.1 66.7 41.4 -24.9 63 Taxes payable 2.3 .5 .4 6.9 -1.3 24.1 4.0 -17.4 21.2 -.1 -9.1 -18.7 64 Miscellaneous -77.8 -23.6 -32.1 -21.1 -46.6 1.2 49.3 -77.2 -31.0 -61.3 -16.8 110.3 65 Total identified to sectors as assets 1,928.2 1,351.0 1,505.2 1,632.8 2,067.0 1,999.2 1,363.1 1,454.1 2,367.2 2,255.0 2,191.5 1,650.7 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical 2. Excludes corporate equities and mutual fund shares, release, tables F.6 and F.7. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A43 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 1992 1993 1994 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999900 11999911 11999922 11999933 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 10,692.0 11,160.6 11,747.2 12,347.0 11,580.6 11,747.2 11,826.0 11,995.0 12,142.4 12,347.0 12,478.8 By lending sector and instrument 2 U.S. government 2,498.1 2,776.4 3,080.3 3,336.5 2,998.9 3,080.3 3,140.2 3,201.2 3,247.3 3,336.5 3,387.7 3 Treasury securities 2,465.8 2,757.8 3,061.6 3,309.9 2,980.7 3,061.6 3,120.6 3,180.6 3,222.6 3,309.9 3,361.4 4 Budget agency issues and mortgages 32.4 18.6 18.8 26.6 18.1 18.8 19.6 20.6 24.7 26.6 26.3 5 Private 8,193.9 8,384.3 8,666.9 9,010.5 8,581.7 8,666.9 8,685.8 8,793.8 8,895.1 9,010.5 9,091.1 By instrument 6 Tax-exempt obligations 1,062.1 1,131.6 1,197.3 1,257.8 1,186.4 1,197.3 1,210.0 1,225.7 1,241.8 1,257.8 1,270.0 7 Corporate bonds 1,008.2 1,086.9 1,154.4 1,229.8 1,140.9 1,154.4 1,175.9 1,194.8 1,212.9 1,229.8 1,242.5 8 Mortgages 3,715.4 3,880.4 4,001.6 4,163.6 3,979.4 4,001.6 4,017.9 4,066.9 4,122.7 4,163.6 4,200.7 9 Home mortgages 2,580.6 2,746.6 2,922.7 3,115.8 2,880.8 2,922.7 2,944.8 3,003.8 3,065.4 3,115.8 3,158.6 10 Multifamily residential 305.5 303.0 291.9 286.0 298.9 291.9 290.7 287.7 286.6 286.0 284.3 11 Commercial 750.8 751.7 706.5 681.0 719.4 706.5 702.0 694.8 689.9 681.0 676.8 12 Farm 78.4 79.1 80.4 80.7 80.3 80.4 80.4 80.6 80.7 80.7 81.0 13 Consumer credit 813.0 799.9 809.2 858.3 784.5 809.2 793.7 802.3 821.7 858.3 849.9 14 Bank loans n.e.c 747.8 701.0 695.6 700.3 686.2 695.6 683.0 691.8 691.5 700.3 707.5 15 Commercial papier 116.9 98.5 107.1 117.8 108.2 107.1 113.9 124.0 123.2 117.8 125.1 16 Other loans 730.6 685.9 701.6 683.0 696.1 701.6 691.5 688.3 681.2 683.0 695.3 By borrowing sector 17 Household 3,594.8 3,762.7 3,978.0 4,231.8 3,900.1 3,978.0 3,981.2 4,054.5 4,143.4 4,231.8 44,,226644..99 18 Nonfinancial business 3,728.5 3,688.7 3,696.7 3,721.0 3,698.6 3,696.7 3,697.4 3,715.9 3,711.3 3,721.0 3,753.4 19 Farm 134.9 134.8 136.0 137.9 137.6 136.0 133.1 136.3 138.3 137.9 136.6 20 Nonfarm noncorporate 1,219.0 1,192.3 1,154.5 1,128.9 1,165.1 1,154.5 1,145.3 1,139.3 1,130.6 1,128.9 1,135.0 21 Corporate 2,374.6 2,361.6 2,406.1 2,454.3 2,395.8 2,406.1 2,419.1 2,440.3 2,442.4 2,454.3 2,481.8 22 State and local government 870.5 932.8 992.2 1,057.7 983.1 992.2 1,007.2 1,023.4 1,040.5 1,057.7 1,072.9 23 Foreign credit market debt held in United States 285.1 298.9 313.8 361.6 312.9 313.8 324.8 336.3 355.6 361.6 361.8 24 Bonds 115.4 129.5 146.9 207.3 141.3 146.9 165.8 176.4 197.5 207.3 218.3 25 Bank loans n.e.c 18.5 21.6 23.9 24.6 26.5 23.9 24.3 25.9 26.2 24.6 26.2 26 Commercial paper 75.3 81.8 77.7 68.7 80.7 77.7 72.3 72.1 71.7 68.7 56.5 27 U.S. government and other loans 75.8 66.0 65.4 60.9 64.4 65.4 62.5 61.9 60.2 60.9 60.9 28 Total credit market debt owed by nonfinancial sectors, domestic and foreign 10,977.1 11,459.5 12,061.0 12,708.5 11,893.5 12,061.0 12,150.8 12,331.3 12,498.0 12,708.5 12,840.6 Financial sectors 29 Total credit market debt owed by financial sectors 2,559.4 2,709.7 2,941.7 3,186.0 2,889.3 2,941.7 2,974.1 3,010.1 3,104.4 3,186.0 3,284.4 By instrument 30 U.S. government-related 1,418.4 1,564.2 1,720.0 1,877.1 1,683.5 1,720.0 1,755.8 1,774.5 1,842.2 1,877.1 1,952.1 31 Government-sponsored enterprises securities 393.7 402.9 443.1 523.7 434.7 443.1 451.2 468.4 510.3 523.7 563.7 32 Mortgage pool securities 1,019.9 1,156.5 1,272.0 1,348.6 1,244.0 1,272.0 1,299.8 1,301.3 1,327.1 1,348.6 1,388.4 33 Loans &om U.S. government 4.9 4.8 4.8 4.8 4.8 4.8 4.8 4.8 4.8 4.8 .0 34 Private 1,140.9 1,145.6 1,221.7 1,308.9 1,205.8 1,221.7 1,218.3 1,235.6 1,262.2 1,308.9 1,332.3 35 Corporate bonds 549.9 606.6 678.2 749.0 658.3 678.2 691.8 705.8 730.1 749.0 767.0 36 Mortgages 4.3 5.1 5.1 8.9 5.1 5.1 5.4 6.0 7.6 8.9 10.3 37 Bank loans n.e.c 52.0 69.1 64.2 54.3 67.5 64.2 56.9 55.8 52.4 54.3 54.5 38 Open markey?aper 417.7 385.7 394.3 393.5 394.6 394.3 379.2 375.9 373.2 393.5 400.1 39 Loans from Federal Home Loan Banks 117.1 79.1 79.9 103.1 80.2 79.9 85.0 92.1 98.9 103.1 100.4 By borrowing sector 40 Government-sponsored enterprises 398.5 407.7 447.9 528.5 439.5 447.9 456.0 473.2 515.1 528.5 563.7 41 Federally related mortgage pools 1,019.9 1,156.5 1,272.0 1,348.6 1,244.0 1,272.0 1,299.8 1,301.3 1,327.1 1,348.6 1,388.4 42 Private financial sectors 1,140.9 1,145.6 1,221.7 1,308.9 1,205.8 1,221.7 1,218.3 1,235.6 1,262.2 1,308.9 1,332.3 43 Commercial banks 76.7 65.0 73.8 79.5 69.0 73.8 73.1 76.6 77.9 79.5 79.0 44 Bank holding companies 114.8 112.3 114.6 122.7 114.4 114.6 119.9 120.2 119.7 122.7 123.7 45 Funding corporations 137.9 124.3 135.2 129.9 143.0 135.2 127.6 129.7 126.4 129.9 129.6 46 Savings institutions 139.1 94.6 87.8 99.0 89.2 87.8 90.3 93.4 96.8 99.0 97.6 47 Credit unions .0 .0 .0 .2 .0 .0 .0 .1 .2 .2. .3 48 Life insurance companies .0 .0 .0 .2 .0 .0 .0 .2 .1 .2 .3 49 Finance companies 374.4 393.0 389.4 384.4 382.7 389.4 379.1 369.8 373.9 384.4 396.4 50 Mortgage companies 7.3 13.0 13.0 17.0 14.6 13.0 10.4 14.4 15.0 17.0 15.5 51 Real estate investment trusts (REITs) 12.4 14.0 14.1 17.4 15.3 14.1 13.7 14.4 15.9 17.4 18.9 52 Issuers of asset-backed securities (ABSs) 278.3 329.4 393.7 458.6 377.5 393.7 404.2 416.9 436.4 458.6 471.0 All sectors 53 Total credit market debt, domestic and foreign.. 13,536.5 14,169.3 15,002.7 15,894.5 14,782.8 15,002.7 15,124.9 15,341.4 15,602.4 15,894.5 16,125.0 54 U.S. government securities 3,911.7 4,335.7 4,795.5 5,208.8 4,677.6 4,795.5 4,891.2 4,970.9 5,084.7 5,208.8 5,339.8 55 Tax-exempt securities 1,062.1 1,131.6 1,197.3 1,257.8 1,186.4 1,197.3 1,210.0 1,225.7 1,241.8 1,257.8 1,270.0 56 Corporate and foreign bonds 1,673.5 1,823.1 1,979.5 2,186.1 1,940.6 1,979.5 2,033.5 2,076.9 2,140.5 2,186.1 2,227.8 57 Mortgages 3,719.7 3,885.5 4,006.7 4,172.6 3,984.5 4,006.7 4,023.3 4,072.9 4,130.3 4,172.6 4,211.1 58 Consumer credit 813.0 799.9 809.2 858.3 784.5 809.2 793.7 802.3 821.7 858.3 849.9 59 Bank loans n.e.c 818.3 791.7 783.7 779.2 780.2 783.7 764.3 773.5 770.1 779.2 788.1 60 Open market paper 609.9 565.9 579.0 580.0 583.6 579.0 565.4 572.0 568.2 580.0 581.7 61 Other loans 928.4 835.8 851.7 851.8 845.5 851.7 843.7 847.0 845.1 851.8 856.6 Digitized for FRASER 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical http://fraser.sretlleoauseis, fteabdle.os rLg.2/ through L.4. For ordering address, see inside front cover. Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • October 1994 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1 Billions of dollars except as noted, end of period 1992 1993 1994 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999900 11999911 11999922 11999933 Q3 Q4 Q1 Q2 Q3 Q4 Q1 CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 13,536.5 14,169.3 15,002.7 15,894.5 14,782.8 15,002.7 15,124.9 15,341.4 15,602.4 15,894.5 16,125.0 2 Private domestic nonfinancial sectors 2,246.8 2,205.8 2,288.3 2,251.9 2,209.1 2,288.3 2,266.3 2,227.9 2,208.2 2,251.9 2,312.1 3 Households 1,454.6 1,380.0 1,434.2 1,392.7 1,369.4 1,434.2 1,419.8 1,375.4 1,358.4 1,392.7 1,450.7 4 Nonfarm noncorporate business 54.9 50.7 48.3 45.8 48.1 48.3 47.0 46.3 45.6 45.8 44.4 5 Nonfinancial corporate business 175.8 180.1 216.4 228.8 199.5 216.4 208.1 214.9 220.9 228.8 226.6 6 State and local governments 561.5 595.1 589.4 584.6 592.1 589.4 591.5 591.4 583.4 584.6 590.4 7 U.S. government 239.1 247.0 235.0 216.4 239.2 235.0 229.2 223.0 218.6 216.4 206.3 8 Foreign 897.5 936.2 1,031.6 1,151.4 1,015.5 1,031.6 1,041.7 1,065.0 1,099.6 1,151.4 1,179.5 y Financial sectors 10,153.1 10,780.3 11,447.8 12,274.8 11,319.0 11,447.8 11,587.7 11,825.4 12,075.9 12,274.8 12,427.1 10 Government-sponsored enterprises 371.8 397.7 466.7 551.0 446.3 466.7 464.1 496.7 532.0 551.0 570.5 11 Federally related mortgage pools 1,019.9 1,156.5 1,272.0 1,348.6 1,244.0 1,272.0 1,299.8 1,301.3 1,327.1 1,348.6 1,388.4 12 Monetary authority 241.4 272.5 300.4 336.7 285.2 300.4 303.6 318.2 324.2 336.7 341.5 13 Commercial banking 2,772.5 2,856.8 2,951.6 3,094.8 2,928.2 2,951.6 2,960.9 3,003.2 3,040.2 3,094.8 3,125.8 14 U.S. commercial banks 2,466.7 2,506.0 2,575.7 2,726.2 2,560.0 2,575.7 2,594.6 2,633.8 2,674.7 2,726.2 2,748.3 13 Foreign banking offices 270.8 319.2 335.8 326.0 328.9 335.8 326.7 327.1 322.3 326.0 332.3 16 Bank holding companies 13.4 11.9 17.5 17.4 17.5 17.5 16.4 18.4 18.6 17.4 19.6 17 Banks in U.S. affiliated areas 21.6 19.7 22.5 25.1 21.8 22.5 23.3 23.9 24.5 25.1 25.6 18 Private nonbank finance 5,747.4 6,096.7 6,457.1 6,943.7 6,415.3 6,457.1 6,559.2 6,706.0 6,852.5 6,943.7 7,000.9 19 Thrift institutions 1,324.6 1,197.3 1,140.9 1,127.7 1,144.9 1,140.9 1,130.0 1,129.8 1,134.0 1,127.7 1,127.5 20 Insurance 2,473.7 2,708.0 2,874.9 3,067.3 2,854.5 2,874.9 2,943.9 2,992.3 3,057.5 3,067.3 3,086.9 21 Life insurance companies 1,116.5 1,199.6 1,282.0 1,391.5 1,264.7 1,282.0 1,317.3 1,349.5 1,378.6 1,391.5 1,426.5 22 Other insurance companies 344.0 376.3 389.0 398.4 386.9 389.0 391.2 393.8 396.0 398.4 403.4 23 Private pension funds 607.4 692.7 719.0 759.2 728.2 719.0 748.5 751.3 774.3 759.2 733.0 24 State and local government retirement funds... 405.9 439.4 484.9 518.2 474.6 484.9 486.9 497.7 508.7 518.2 524.0 25 Finance n.e.c 1,949.1 2,191.5 2,441.2 2,748.7 2,415.9 2,441.2 2,485.3 2,584.0 2,661.0 2,748.7 2,786.5 26 Finance companies 497.0 484.9 486.6 481.3 477.8 486.6 473.7 473.5 472.0 481.3 492.8 27 Mortgage companies 14,6 25.9 26.1 25.7 29.3 26.1 13.5 29.7 29.2 25.7 22.7 28 Mutual funds 360.2 450.5 574.2 738.2 550.2 574.2 611.4 659.9 703.6 738.2 754.3 29 Closed-end funds 37.1 52.4 64.6 76.0 61.3 64.6 66.9 70.1 72.8 76.0 79.1 30 Money market funds 372.7 402.7 404.1 417.0 408.2 404.1 404.5 403.9 400.6 417.0 422.2 31 Real estate investment trusts (REITs) 7.7 6.8 7.4 8.6 7.4 7.4 8.1 8.3 8.6 8.6 8.8 32 Brokers and dealers 177.9 226.9 267.1 324.2 289.6 267.1 287.0 303.6 320.9 324.2 314.7 33 Asset-backed securities issuers (ABSs) 269.1 318.1 379.9 443.5 365.1 379.9 390.2 402.6 422.9 443.5 456.0 34 Bank personal trusts 212.9 223.3 231.2 234.3 226.9 231.2 230.0 232.2 230.4 234.3 235.8 RELATION OF LIABILITIES TO FINANCIAL ASSETS 35 Total credit market debt 13,536.5 14,169.3 15,002.7 15,894.5 14,782.8 15,002.7 15,124.9 15,341.4 15,602.4 15,894.5 16,125.0 Other liabilities 36 Official foreign exchange 61.3 55.4 51.8 53.4 55.4 51.8 54.5 53.9 55.6 53.4 56.4 37 Treasury currency and special drawing rights certificates 26.3 26.3 24.5 25.0 26.5 24.5 24.6 24.7 24.8 25.0 25.1 38 f .ife insurance reserves 380.0 405.7 433.0 483.5 426.4 433.0 446.4 456.2 471.1 483.5 495.9 39 Pension fund reserves 3,400.3 4,056.5 4,357.8 4,774.7 4,250.0 4,357.8 4,494.2 4,557.5 4,706.0 4,774.7 4,685.2 40 Interbank claims 64.0 65.2 113.1 146.3 100.7 113.1 111.1 118.1 137.6 146.3 177.9 41 Deposits at financial institutions 4,836.8 4,885.2 4,892.1 4,977.9 4,909.3 4,892.1 4,887.8 4,929.3 4,924.2 4,977.9 4,983.1 42 Checkable deposits and currency 932.8 1,008.5 1,131.0 1,250.5 1,072.0 1,131.0 1,092.2 1,169.1 1,182.6 1,250.5 1,225.0 43 Small time and savings deposits 2,336.3 2,353.0 2,292.2 2,212.4 2,303.7 2,292.2 2,262.0 2,242.2 2,223.0 2,212.4 2,215.2 44 Large time deposits 537.7 476.9 397.2 381.1 418.4 397.2 398.3 389.9 379.7 381.1 374.2 4b Money market fund shares 498.4 539.6 543.6 559.4 552.9 543.6 556.6 549.8 547.9 559.4 582.2 46 Security repurchase agreements 372.3 355.8 389.4 456.6 417.6 389.4 443.5 448.4 470.9 456.6 470.6 47 Foreign deposits 159.4 151.3 138.8 117.9 144.6 138.8 135.3 129.8 120.2 117.9 115.9 48 Mutual fund shares 602.1 813.9 1,042.1 1,429.3 965.6 1,042.1 1,134.6 1,225.8 1,342.4 1,429.3 1,503.1 49 Security credit 137.4 188.9 217.3 279.3 214.5 217.3 225.1 234.7 254.5 279.3 280.2 50 Trade debt 936.4 926.7 978.1 1,032.1 965.1 978.1 976.4 985.4 1,007.5 1,032.1 1,030.4 51 Taxes payable 77.4 68.9 76.8 80.5 74.6 76.8 79.9 77.9 79.3 80.5 83.6 52 Investment in bank personal trusts 509.9 596.7 619.1 643.9 610.9 619.1 622.5 629.1 632.8 643.9 634.4 53 Miscellaneous 2,732.4 2,884.3 3,053.7 3,273.7 3,026.7 3,053.7 3,069.9 3,160.3 3,216.1 3,273.7 3,365.8 54 Total liabilities 27,300.7 29,143.0 30,862.1 33,093.9 30,408.2 30,862.1 31,251.8 31,794.3 32,454.4 33,093.9 33,446.2 Financial assets not included in liabilities (+) 55 Gold and special drawing rights 22.0 22.3 19.6 20.1 23.2 19.6 19.8 20.0 20.3 20.1 20.4 56 Corporate equities 3,543.7 4,869.4 5,540.6 6,120.7 4,995.4 5,540.6 5,721.3 5,741.9 6,006.6 6,120.7 5,961.9 57 Household equity in noncorporate business 2,440.6 2,344.6 2,274.5 2,228.3 2,320.3 2,274.5 2,259.8 2,261.0 2,252.6 2,228.3 2,179.3 Floats not included in assets (-) 58 U.S. government checkable deposits 15.0 3.8 6.8 5.6 4.0 6.8 3.4 3.5 2.2 5.6 .3 59 Other checkable deposits 28.9 30.9 32.5 28.7 23.3 32.5 27.2 29.6 21.7 28.7 21.8 60 Trade credit -146.0 -144.1 -128.5 -109.2 -149.6 -128.5 -135.7 -140.4 -139.1 -109.2 -114.1 Liabilities not identified as assets (-) 61 Treasury currency -4.1 -4.8 -4.9 -5.1 -4.9 -4.9 -5.0 -5.0 -5.1 -5.1 -5.2 62 Interbank claims -32.0 -4.2 -9.3 -4.7 -5.0 -9.3 -5.6 -5.7 -7.8 -4.7 -7.4 63 Security repurchase agreements -17.7 -12.5 18.6 88.0 33.1 18.6 72.1 79.3 100.5 88.0 96.7 64 Taxes payable 17.8 15.5 22.4 29.6 18.2 22.4 11.1 20.1 19.0 29.6 21.4 65 Miscellaneous -213.4 -254.6 -254.9 -377.7 -273.2 -254.9 -309.5 -301.5 -342.3 -377.7 -317.8 66 Total identified to sectors as assets 33,658.6 36,749.2 39,014.1 41,807.8 38,101.2 39,014.1 39,594.7 40,137.4 41,084.7 41,807.8 41,912.2 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 1994 MMeeaassuurree 11999911 11999922 11999933 Nov. Dec. Jan. Feb. Mar. Apr.' May1 June' July 1 Industrial production1 104.1 106.5 110.9 112.8 114.0 114.6 115.0 115.9 116.0 116.3 116.9 117.2 Market groupings 2 Products, total 103.2 105.7 110.2 112.1 113.0 113.6 114.2 114.7 114.7 111144..99 111155..44 111155..77 3 Final, total 105.3 108.0 112.7 114.6 115.4 116.2 117.2 117.5 117.3 117.4 118.1 118.4 4 Consumer goods 102.8 105.7 108.7 109.7 110.1 110.9 111.6 111.9 111.2 111.3 112.3 112.7 5 Equipment 108.9 111.2 118.5 121.8 123.1 123.9 125.3 125.7 126.2 126.1 126.4 126.7 6 Intermediate 96.8 99.0 102.6 104.3 105.4 105.7 105.1 105.9 106.7 107.3 107.5 107.5 7 Materials 105.4 107.7 111.9 113.9 115.5 116.0 116.2 117.7 117.9 118.4 119.1 119.3 Industry groupings 8 Manufacturing 103.7 106.8 111.7 114.0 115.4 115.6 116.1 117.2 117.7 111188..11 111188..33 111188..77 9 Capacity utilization, manufacturing (percent) 77.8 78.6 80.6 81.5 82.3 8822..22 82.4 8833..00 8833..11 8833..11 8833..00 8833..11 10 Construction contracts3 89.7 97.7 101.6r 105.0 102.0 103.0 107.0 110.0 103.0 108.0 105.0 109.0 11 Nonagricultural employment, total4 106.2 106.4 108.1 109.2 109.5 109.6 109.8 110.1 110.5 110.8 111.1 111.4 12 Goods-producing, total 96.6 94.9 93.1 94.4 94.4 94.5 94.5 94.8 95.3 95.3 95.5 95.6 13 Manufacturing, total 97.1 95.8 93.7 94.5 94.4 94.6 94.6 94.6 94.8 94.8 94.9 95.0 14 Manufacturing, production workers ... 96.0 94.5 93.7 94.8 94.9 95.1 95.3 95.4 95.7 95.7 95.9 96.0 15 Service-producing 109.4 110.5 112.8 114.0 114.3 114.4 114.6 115.0 115.4 115.7 116.1 116.4 16 Personal income, total 127.8r 135.6r 141.4' 144.2' 145.1' 144.2' 146.7' 147.5' 148.2 148.8 149.0 n.a. 17 Wages and salary disbursements 124.5 131.6' 136.2 139.1' 139.8' 141.4' 141.8' 142.4' 143.4 144.4 144.5 n.a. 18 Manufacturing 113.7 IIS.O* 120.0' 122.7' 123.5' 123.6' 124.6' 124.8' 124.8 124.8 125.2 n.a. 19 Disposable personal income5 128.8r 137.0r 142.5' 145.2' 146.1' 144.8' 147.5' 148.4' 148.1 149.6 149.7 n.a. 20 Retail sales 121.1 126.9 135.2 139.6 141.1 139.3 141.9 144.5 143.1 143.0 144.2 144.1 Prices7 21 Consumer (1982-84=100) 136.2 140.3 144.5 145.8 145.8 146.2 146.7 147.2 147.4 114477..55 114488..00 114488..44 22 Producer finished goods (1982=100) 121.7 123.2 124.7 124.5 124.1 124.5 124.8 124.9' 125.0 125.3 125.5 126.0 1. Data in this table also appear in the Board's G.17 (419) monthly statistical 5. Based on data from U.S. Department of Commerce, Survey of Current release. For the ordering address, see the inside front cover. The latest historical Business. revision of the industrial production index and the capacity utilization rates was 6. Based on data from U.S. Department of Commerce, Survey of Current released in February 1994. See "Industrial Production and Capacity Utilization Business. since 1990: A Revision," Federal Reserve Bulletin, vol. 80 (March 1994), pp. 7. Based on data not seasonally adjusted. Seasonally adjusted data for changes 220-26. For a detailed description of the industrial production index, see in the price indexes can be obtained from the U.S. Department of Labor, Bureau "Industrial Production: 1989 Developments and Historical Revision," Federal of Labor Statistics, Monthly Labor Review. Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. NOTE. Basic data (not indexes) for series mentioned in notes 4, 5,and 6, and 2. Ratio of index of production to index of capacity. Based on data from the indexes for series mentioned in notes 3 and 7 can also be found in the Survey of Federal Reserve, DRI McGraw-Hill, U.S. Department of Commerce, and other Current Business. sources. Figures for industrial production for the latest month are preliminary, and many 3. Index of dollar value of total construction contracts, including residential, figures for the three months preceding the latest month have been revised. See nonresidential, and heavy engineering, from McGraw-Hill Information Systems "Recent Developments in Industrial Capacity and Utilization," Federal Reserve Company, F.W. Dodge Division. Bulletin, vol. 76 (June 1990), pp. 411-35. See also "Industrial Production Capacity 4. Based on data from U.S. Department of Labor, Employment and Earnings. and Capacity Utilization since 1987," Federal Reserve Bulletin, vol. 79, (June Series covers employees only, excluding personnel in the armed forces. 1993), pp. 590-605. 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data seasonally adjusted except as noted 1993 1994 CCaatteeggoorryy 11999911 11999922 11999933 Dec. Jan. Feb. Mar. Apr. May1 June' Juty HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 125,303 126,982 128,040 128,898 130,667 130,776 130,580 130,747 130,774 130,248 130,457 2 Nonagricultural industries3 114,644 114,391 116,232 117,565 118,639 118,867 118,611 118,880 119,437 119,195 119,173 3 Agriculture 3,233 3,207 3,074 3,096 3,331 3,391 3,426 3,459 3,435 3,235 3,278 4 Number 8,426 9,384 8,734 8,237 8,696 8,518 8,543 8,408 7,902 7,817 8,005 5 Rate (percent of civilian labor force) 6.7 7.4 6.8 6.4 6.7 6.5 6.5 6.4 6.0 6.0 6.1 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 108,256 108,519 110,171 111,610 111,711 111,919 112,298 112,699 112,951 113,307 113,566 7 Manufacturing 18,455 18,192 17,804 17,942 17,968 17,970 17,980 18,007 18,009 18,036 18,042 8 Mining 689 631 599 618 616 612 609 606 603 605 602 9 Contract construction 4,650 4,471 4,571 4,738 4,744 4,745 4,806 4,893 4,907 4,923 4,948 10 Transportation and public utilities 5,762 5,709 5,710 5,792 5,793 5,803 5,816 5,759 5,843 5,846 5,860 11 Trade 25,365 25,391 25,849 25,907 25,914 25,968 26,039 26,165 26,190 26,317 26,397 17 6,646 6,571 6,605 6,769 6,771 6,776 6,781 6,791 6,787 6,800 6,801 13 Service 28,336 29,053 30,193 30,926 31,004 31,129 31,326 31,497 31,598 31,763 31,901 14 Government 18,402 18,653 18,841 18,918 18,901 18,916 18,941 18,981 19,014 19,017 19,015 1. Beginning January 1994, reflects redesign of current population survey and 4. Includes all full- and part-time employees who worked during, or received population controls from the 1990 census. pay for, the pay period that includes the twelfth day of the month; excludes 2. Persons sixteen years of age and older, including Resident Armed Forces. proprietors, self-employed persons, household and unpaid family workers, and Monthly figures are based on sample data collected during the calendar week that members of the armed forces. Data are adjusted to the March 1992 benchmark, contains the twelfth day; annual data are averages of monthly figures. By and only seasonally adjusted data are available at this time. definition, seasonality does not exist in population figures. SOURCE. Based on data from U.S. Department of Labor, Employment and 3. Includes self-employed, unpaid family, and domestic service workers. Earnings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • October 1994 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1993 1994 1993 1994 1993 1994 SSeerriieess Q3 Q4 Q1 Q2r Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2r Output (1987=100) Capacity (percent of 1987 output) Capacity utilization rate (p srcent)2 1 Total industry 111.1 112.9 115.2 116.4 136.5 137.2 138.0 139.0 81.4 82.3 83.4 83.8 2 Manufacturing 111.8 114.1 116.3 118.0 139.2 140.0 140.9 142.0 80.3 81.5 82.5 83.1 3 Primary processing3.. 107.7 109.9 110.7 112.9 128.3 128.6 129.0 129.5 83.9 85.5 85.8 87.2 4 Advanced processing 113.8 116.1 118.9 120.4 144.4 145.4 146.6 148.0 78.8 79.9 81.2 81.4 5 Durable goods 114.2 118.1 121.0 122.5 145.4 146.3 147.6 149.1 78.5 80.7 82.0 82.2 6 Lumber and products 100.8 104.9 103.6 104.6 115.0 115.2 115.4 115.7 87.6 91.1 89.8 90.4 7 Primaiy metals 106.7 109.6 109.7 113.7 123.0 122.6 122.4 122.4 86.8 89.4 89.6 92.9 8 Iron and steel 112.3 115.6 114.8 120.9 126.9 126.3 126.0 126.0 88.6 91.5 91.1 95.9 9 Nonferrous 98.9 101.4 102.7 103.9 117.6 117.6 117.5 117.5 84.1 86.2 87.4 88.4 10 Nonelectrical machinery 147.2 152.7 158.8 164.0 175.7 178.2 181.7 186.2 83.8 85.7 87.4 88.1 11 Electrical machinery 129.7 132.6 136.4 141.9 155.7 157.7 160.3 163.3 83.2 84.1 85.1 86.9 12 Motor vehicles and parts 112.0 131.7 142.7 133.8 154.8 156.1 157.8 159.7 72.3 8844..44 9900..55 8833..88 13 Aerospace and miscellaneous transportation equipment 87.4 85.2 82.5 81.8 133.2 132.8 132.2 131.4 65.6 64.2 62.4 62.2 14 Nondurable goods 108.9 109.2 110.5 112.5 131.6 132.1 132.7 133.4 82.8 82.6 83.2 84.3 15 Textile mill products 108.0 107.7 108.9 111.0 119.4 119.9 120.5 121.2 90.5 89.8 90.3 91.6 16 Paper and products 111.7 114.2 114.4 115.1 124.8 125.3 125.8 126.3 89.6 91.2 90.9 91.1 17 Chemicals and products 118.6 118.6 120.3 122.7 145.9 146.8 147.7 148.7 81.2 80.8 81.5 8822..55 18 Plastics materials 111.5 114.4 117.6 131.1 132.0 133.0 85.1 86.6 88.4 19 Petroleum products 104.0 107.7 104.5 109.0 115.7 115.6 115.4 115.3 89.9 93.2 90.5 94.6 20 96.8 97.3 98.4 99.5 111.1 110.8 110.6 110.6 87.1 87.8 89.0 90.0 21 Utilities 117.5 115.6 119.9 116.6 134.0 134.3 134.7 135.2 87.8 86.1 89.0 86.3 22 Electric 118.0 114.8 118.2 118.3 131.2 131.7 132.2 132.8 89.9 87.2 89.4 89.1 1973 1975 Previous cycle5 Latest cycle6 1993 1994 High Low High Low High Low July Feb. Mar. Apr/ Ma/ Juner JulyP Capacity utilization rate (percent)2 1 Total industry 89.2 72.6 87.3 71.8 84.8 78.1 81.3 83.3 83.8 83.7 83.7 83.9 83.9 2 Manufacturing 88.9 70.8 87.3 70.0 85.1 76.7 80.3 82.4 83.0 83.1 83.1 83.0 83.1 3 Primary processing3 92.2 68.9 89.7 66.8 89.1 78.0 83.8 85.3 86.3 86.9 87.5 87.2 87.1 4 Advanced processing 87.5 72.0 86.3 71.4 83.3 76.0 78.9 81.2 81.6 81.5 81.3 81.3 81.5 5 Durable goods 88.8 68.5 86.9 65.0 83.9 73.8 78.3 82.0 82.2 82.4 82.2 82.0 82.1 6 Lumber and products 90.1 62.2 87.6 60.9 93.3 76.2 86.7 89.1 89.0 89.8 91.0 90.4 89.9 / Primary metals 100.6 66.2 102.4 46.8 92.9 74.4 85.8 87.9 90.7 93.5 93.4 91.8 92.2 8 Iron and steel 105.8 66.6 110.4 38.3 95.7 72.2 88.1 88.5 93.0 97.0 96.4 94.5 94.6 9 Nonferrous 92.9 61.3 90.5 62.2 88.9 75.2 82.5 86.9 87.3 88.4 89.1 87.8 88.6 10 Nonelectrical machinery 96.4 74.5 92.1 64.9 83.7 71.4 83.6 87.4 88.1 88.1 88.3 87.7 87.6 11 Electrical machinery 87.8 63.8 89.4 71.1 84.9 77.3 82.9 84.9 85.8 86.4 86.9 87.5 88.9 12 Motor vehicles and parts 93.4 51.1 93.0 44.5 84.5 57.3 71.4 92.6 88.3 86.5 8822..66 8822..33 8800..77 13 Aerospace and miscellaneous transportation equipment. 77.0 66.6 81.1 66.9 88.3 78.5 66.2 62.0 62.2 62.2 62.3 62.2 61.2 14 Nondurable goods 87.9 71.8 87.0 76.9 86.8 80.4 83.0 83.0 84.0 84.0 84.5 84.5 84.5 15 Textile mill products 92.0 60.4 91.7 73.8 92.1 78.5 91.1 90.2 91.2 92.2 91.7 90.9 90.5 16 Paper and products 96.9 69.0 94.2 82.0 94.9 86.3 89.6 91.3 91.1 89.4 91.9 92.1 92.7 17 Chemicals and products 87.9 69.9 85.1 70.1 85.9 79.4 81.4 81.2 82.2 81.7 82.8 83.0 83.0 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 75.3 85.0 88.2 89.8 88.7 19 Petroleum products 96.7 81.1 89.5 68.2 88.5 84.5 89.2 90.6 90.2 94.4 94.2 95.1 93.4 20 Mining 94.4 88.4 96.6 80.6 87.0 86.8 86.6 89.3 89.9 90.3 89.6 90.0 89.2 21 Utilities 95.6 82.5 88.3 76.2 92.6 83.1 88.2 89.0 87.5 84.8 84.8 89.2 88.0 22 Electric 99.0 82.7 88.3 78.7 94.8 86.3 90.6 89.3 88.7 87.3 87.0 92.9 91.5 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 the ordering address, see the inside front cover. The latest historical petroleum refining; rubber and plastics; stone, clay, and glass; and primary and revision of the industrial production index and the capacity utilization rates was fabricated metals. released in February 1994. See "Industrial Production and Capacity Utilization 4. Advanced processing includes food, tobacco, apparel, furniture, printing, since 1990: A Revision," Federal Reserve Bulletin, vol. 80 (March 1994), pp. chemical products such as drugs and toiletries, leather and products, machinery, 220-26. For a detailed description of the industrial production index, see transportation equipment, instruments, miscellaneous manufacturing, and ord- "Industrial Production: 1989 Developments and Historical Revision," Federal nance. Reserve Bulletin, vol. 76, (April 1990), pp. 187-204. 5. Monthly highs, 1978 through 1980; monthly lows, 1982. 2. Capacity utilization is calculated as the ratio of the Federal Reserve's 6. Monthly highs, 1988-89; monthly lows, 1990-91. seasonally adjusted index of industrial production to the corresponding index of capacity. 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 1993 1994 pro- 1993 GGrroouupp por- avg. tion July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr.r Mayr Juner JJuullyyPP Index (1987 = 100) MAJOR MARKETS 1 Total index 100.0 110.9 110.9 111.1 111.3 111.9 112.8 114.0 114.6 115.0 115.9 116.0 116.3 116.9 117.2 7 Products 59.5 110.2 110.4 110.4 110.6 111.2 112.1 113.0 113.6 114.2 114.7 114.7 114.9 115.4 115.7 Final products 44.8 112.7 112.8 112.7 113.1 113.8 114.6 115.4 116.2 117.2 117.5 117.3 117.4 118.1 118.4 4 Consumer goods, total 26.5 108.7 108.9 108.6 108.5 109.2 109.7 110.1 110.9 111.6 111.9 111.2 111.3 112.3 112.7 5 Durable consumer goods 5.8 110.5 108.2 107.3 108.7 112.7 115.8 118.2 119.0 120.9 118.3 117.4 115.3 116.1 117.2 6 Automotive products 2.7 111.6 104.3 103.9 106.7 113.8 120.2 124.9 127.7 131.7 125.3 123.3 119.1 120.0 118.4 7 Autos and trucks 1.7 112.2 100.3 99.2 104.1 114.9 124.9 131.5 134.6 141.0 131.1 128.6 121.2 121.5 118.6 8 Autos, consumer 1.1 86.1 78.2 71.8 75.4 85.2 95.4 98.8 102.0 106.7 101.0 98.3 92.3 91.5 88.7 9 Trucks, consumer .6 157.3 138.6 146.7 153.9 166.4 176.0 188.0 191.0 200.4 183.3 181.2 171.3 173.3 170.5 10 Auto parts and allied goods... 1.0 110.6 111.0 111.8 111.1 111.9 112.3 113.9 116.3 116.2 115.4 114.3 115.6 117.4 118.1 11 Other 3.1 109.5 111.6 110.2 110.4 111.8 112.0 112.2 111.3 111.5 112.1 112.2 112.0 112.7 116.0 12 Appliances, A/C, and TV .8 122.9 130.6 124.9 126.4 130.4 130.7 130.5 123.7 123.4 125.6 122.8 125.2 127.9 139.1 13 Carpeting and furniture .9 102.2 103.8 103.2 102.4 104.1 102.5 102.8 104.0 105.5 104.5 106.9 104.7 103.4 103.6 14 Miscellaneous home goods ... 1.4 106.7 105.8 106.4 106.4 106.3 107.5 108.0 109.1 108.6 109.4 109.5 109.2 110.1 111.1 15 Nondurable consumer goods 20.7 108.2 109.1 109.0 108.4 108.2 107.9 107.9 108.6 109.0 110.1 109.4 110.1 111.2 111.5 16 Foods and tobacco 9.1 106.1 107.0 107.0 105.9 105.9 105.2 105.8 106.1 106.9 109.0 109.3 109.4 109.2 110.2 17 Clothing 2.6 94.9 95.2 94.3 93.3 93.3 94.3 95.1 93.8 94.4 95.8 96.5 96.6 95.7 95.5 18 Chemical products 3.6 122.5 123.9 123.7 124.1 122.6 122.3 122.0 121.6 123.3 125.4 123.7 125.6 127.4 129.1 19 Paper products 2.6 103.2 103.7 103.1 103.2 104.0 103.3 102.6 102.6 102.3 102.5 103.6 104.5 105.0 103.8 70 Energy 2.7 113.7 114.8 115.8 115.3 114.6 115.2 113.1 119.7 117.1 114.4 108.4 110.4 116.7 114.6 71 Fuels .8 106.6 104.0 103.8 108.0 111.3 110.6 108.6 105.1 104.3 105.3 107.7 108.2 110.7 106.7 22 Residential utilities 2.0 116.5 119.0 120.4 118.2 115.9 117.0 114.9 125.4 122.1 117.9 108.7 111.3 119.0 117.7 23 Equipment 18.3 118.5 118.5 118.6 119.8 120.4 121.8 123.1 123.9 125.3 125.7 126.2 126.1 126.4 126.7 24 Business equipment 13.2 134.6 134.6 134.8 136.3 137.7 139.7 141.8 142.9 145.0 145.5 146.3 146.7 147.3 147.9 25 Information processing and related .. 5.5 155.8 158.1 158.2 160.6 162.0 164.5 167.2 170.1 173.5 175.2 175.6 177.3 178.6 180.5 26 Office and computing 1.9 223.1 226.5 230.6 234.8 241.8 248.6 256.1 261.5 269.5 272.1 273.4 275.0 277.6 279.3 77 Industrial 3.9 112.2 113.6 113.3 113.2 112.5 113.0 114.8 114.0 114.6 116.8 118.1 118.6 118.4 119.1 78 Transit 2.0 136.7 127.5 126.2 129.8 136.1 141.5 142.8 145.2 147.5 141.2 139.8 135.5 136.4 133.3 79 Autos and trucks 1.0 134.5 118.9 119.6 126.5 139.6 150.5 154.9 161.0 166.7 156.1 153.7 145.9 146.9 143.8 30 Other 1.8 115.6 116.2 119.1 119.1 119.4 119.3 120.8 119.4 120.7 121.4 124.5 125.8 125.4 126.7 31 Defense and space equipment 4.4 74.8 74.6 74.0 73.7 72.7 72.5 71.5 71.0 69.9 69.9 69.8 68.5 68.0 67.1 32 Oil and gas well drilling .6 82.5 83.5 87.0 89.7 86.5 82.9 82.3 82.4 87.4 88.6 89.6 89.1 88.9 87.4 33 Manufactured homes .2 118.9 115.8 115.5 120.7 123.4 130.4 141.1 145.3 139.7 143.6 136.2 135.9 138.1 140.2 34 Intermediate products, total 14.7 102.6 102.9 103.3 103.0 103.5 104.3 105.4 105.7 105.1 105.9 106.7 107.3 107.5 107.5 35 Construction supplies 5.9 96.8 96.4 97.3 97.8 98.6 99.5 101.3 100.5 98.9 99.7 101.8 102.5 102.4 102.3 36 Business supplies 8.8 106.5 107.3 107.2 106.4 106.7 107.5 108.1 109.2 109.3 110.0 109.9 110.6 110.9 111.0 37 Materials 40.5 111.9 111.7 112.1 112.2 112.8 113.9 115.5 116.0 116.2 117.7 117.9 118.4 119.1 119.3 38 Durable goods materials 20.5 115.5 115.1 115.6 116.5 117.5 119.1 121.5 122.2 121.9 124.1 125.2 125.4 125.7 126.5 39 Durable consumer parts 4.1 113.9 110.3 111.4 112.6 116.0 120.4 125.7 126.7 126.0 127.3 125.9 124.5 123.4 123.4 40 Equipment parts 7.4 123.4 123.8 124.7 126.0 127.0 127.5 128.6 130.7 131.6 133.9 135.9 137.1 138.8 140.6 41 Other 9.0 109.7 110.1 109.9 110.4 110.3 111.6 113.6 113.2 112.0 114.6 116.1 116.1 115.9 116.3 47 Basic metal materials 3.1 112.5 112.0 111.2 111.7 112.9 114.7 117.6 116.2 113.1 115.3 119.4 118.2 117.3 117.7 43 Nondurable goods materials 9.0 113.8 113.7 114.6 113.6 114.1 115.3 116.6 115.4 116.2 117.7 117.0 119.1 118.7 119.1 44 Textile materials 1.2 104.2 105.5 106.1 103.1 104.0 103.7 102.1 103.2 104.4 106.2 106.4 106.4 106.5 106.5 45 Pulp and paper materials 2.0 113.7 112.4 111.5 112.7 113.2 115.2 115.2 114.0 116.1 117.6 113.8 117.9 118.2 119.4 46 Chemical materials 3.8 116.9 116.9 118.6 117.1 117.2 119.1 119.9 119.7 120.4 121.6 122.2 124.7 123.4 123.4 47 Other 2.0 113.8 113.8 114.9 114.1 115.1 114.9 120.2 115.6 115.1 116.8 116.2 116.9 117.5 118.1 48 Energy materials 11.0 103.7 103.6 103.7 103.1 103.0 103.1 103.2 104.8 105.6 105.6 105.2 104.7 107.0 105.8 49 Primary energy 7.3 99.1 98.0 98.0 98.4 98.2 97.6 97.5 97.3 100.2 101.1 101.4 100.4 102.2 100.7 50 Converted fuel materials 3.7 112.7 114.4 114.9 112.3 112.6 113.8 114.5 119.6 116.1 114.4 112.5 113.1 116.5 115.7 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.3 110.6 111.0 111.2 111.2 111.5 112.2 113.2 113.7 114.0 115.2 115.4 115.9 116.5 116.9 52 Total excluding motor vehicles and parts... 95.2 110.4 110.9 111.1 111.1 111.3 111.8 112.7 113.2 113.4 114.7 114.9 115.5 116.2 116.5 53 Total excluding office and computing machines 97.7 108.2 108.1 108.2 108.3 108.8 109.6 110.6 111.1 111.3 112.1 112.2 112.5 113.1 113.3 54 Consumer goods excluding autos and trucks 24.8 108.5 109.5 109.3 108.8 108.8 108.6 108.7 109.3 109.6 110.6 109.9 110.6 111.6 112.3 55 Consumer goods excluding energy 23.8 108.2 108.2 107.8 107.7 108.6 109.0 109.8 109.9 111.0 111.6 111.5 111.4 111.8 112.5 56 Business equipment excluding autos and trucks 12.8 134.6 136.0 136.1 137.2 137.5 138.7 140.6 141.3 143.2 144.6 145.7 146.8 147.3 148.3 57 Business equipment excluding office and computing equipment 11.3 119.7 119.2 118.7 119.8 120.2 121.3 122.5 123.0 124.1 124.3 124.9 125.1 125.3 125.9 58 Materials excluding energy 29.5 115.0 114.7 115.3 115.6 116.5 118.0 120.0 120.1 120.1 122.1 122.7 123.5 123.6 124.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • October 1994 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1987 1993 1994 „ roup c S o I d C e 2 p p r o o r - - 1 a 9 v 9 g 3 . tion July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr.r May1 Juner Julyp Index (1987 = 100) MAJOR INDUSTRIES 59 Total index 100.0 110.9 110.9 111.1 111.3 111.9 112.8 114.0 114.6 115.0 115.9 116.0 116.3 116.9 117.2 60 Manufacturing 84.3 111.7 111.6 111.8 112.1 112.9 114.0 115.4 115.6 116.1 117.2 117.7 118.1 118.3 118.7 61 Primary processing 27.1 107.6 107.4 107.9 107.7 108.5 109.9 111.3 110.7 110.0 111.4 112.3 113.3 113.0 113.0 62 Advanced processing 57.1 113.7 113.6 113.6 114.2 115.0 116.0 117.4 117.9 119.0 119.9 120.2 120.4 120.7 121.4 63 Durable goods 46.5 114.3 113.7 113.9 115.0 116.2 118.0 120.1 120.4 120.9 121.7 122.5 122.5 122.6 123.3 64 Lumber and products... "24 2.1 100.6 99.6 100.9 101.8 104.6 104.9 105.2 105.2 102.8 102.9 103.8 105.2 104.6 104.1 65 Furniture and fixtures... 25 1.5 103.3 103.5 105.2 105.2 104.8 104.2 106.3 105.4 107.4 107.6 109.5 108.8 108.9 110.2 66 Clay, glass, and stone prcxiucts 32 2.4 98.7 98.8 98.4 99.9 99.7 100.5 104.6 101.1 100.0 101.7 102.7 102.7 101.7 101.7 67 Primary metals 33 3.3 106.5 105.6 107.2 107.3 106.1 109.8 113.0 110.5 107.6 111.1 114.4 114.4 112.4 112.8 68 Iron and steel 331,2 1.9 111.6 111.9 112.8 112.4 113.3 114.4 119.1 115.8 111.5 117.2 122.2 121.5 119.0 119.1 69 Raw steel .1 105.7 106.9 106.3 105.9 107.2 106.2 110.9 102.0 105.8 106.0 105.3 105.7 106.3 103.0 70 Nonferrous 333-6,9 1.4 99.5 97.0 99.4 100.3 96.2 103.5 104.5 103.3 102.1 102.6 103.8 104.7 110033..22 104.1 71 Fabricated metal products 34 5.4 99.5 99.6 99.6 99.6 100.7 102.1 102.6 103.9 103.0 104.1 105.0 104.9 110055..44 110055..55 72 Industrial and commercial machinery and computer equipment . 35 8.5 144.1 146.1 147.1 148.4 150.3 152.0 155.7 156.3 158.8 161.4 162.8 164.5 164.7 165.7 7733 Office and computing machines 357 2.3 223.1 226.5 230.6 234.8 241.8 248.6 256.1 261.5 269.5 272.1 273.4 275.0 277.6 279.3 7744 Electrical machinery 36 6.9 127.5 128.6 129.5 130.9 131.4 132.1 134.3 134.8 136.1 138.3 140.2 141.9 114433..88 114477..00 75 Transportation equipment 37 9.9 104.2 98.9 98.5 100.4 104.2 108.3 110.7 111.9 113.0 110.1 110088..88 106.1 110055..99 110044..33 76 Motor vehicles and parts 371 4.8 120.7 110.2 110.6 115.1 124.1 132.4 138.5 142.1 146.1 139.9 137.5 131.9 113322..00 113300..00 77 Autos and light trucks 2.2 118.4 106.0 104.0 109.2 120.8 131.7 138.4 141.8 148.5 138.4 135.7 127.8 127.9 124.8 78 Aerospace and miscellaneous transportation equipment... 372-6,9 5.1 88.7 88.3 87.2 86.7 85.5 85.7 84.5 83.4 82.0 82.1 81.9 81.9 81.5 80.1 7799 Instruments 38 5.1 104.0 104.8 103.2 104.0 102.7 102.4 102.3 103.7 104.1 104.4 104.5 104.3 105.1 106.8 80 Miscellaneous 39 1.3 109.3 108.8 108.8 110.3 109.6 110.1 110.3 110.7 109.9 111.1 112.1 111.8 111.5 113.5 81 Nondurable goods 37.8 108.7 109.1 109.2 108.5 108.8 109.1 109.7 109.6 110.1 111.7 111.8 112.7 112.9 113.1 82 Foods "'20 8.8 108.6 108.8 109.6 109.0 109.0 108.4 109.0 109.2 110.1 112.2 111.8 111.8 111.8 112.9 83 Tobacco products 21 1.0 91.0 97.3 90.3 85.4 86.4 83.3 84.3 88.2 86.7 89.4 94.1 94.7 93.4 92.7 8844 Textile mill products 22 1.8 107.8 108.5 108.8 106.6 107.7 108.0 107.4 107.8 108.7 110.1 111.5 111.1 110.3 110.0 8855 Apparel products 23 2.3 93.1 93.6 93.2 92.1 92.1 92.6 93.1 92.4 92.9 94.2 94.6 95.1 94.9 94.9 8866 Paper and products 26 3.6 112.3 111.7 112.1 111.4 112.7 114.5 115.5 113.5 114.9 114.8 112.8 116.1 116.4 117.4 8877 Printing and publishing.. 27 6.5 101.3 101.6 100.9 101.1 101.6 101.7 101.9 101.7 102.3 103.6 103.9 104.1 104.2 103.8 88 Chemicals and products. 28 8.8 117.8 118.6 118.8 118.3 117.8 118.8 119.3 119.3 119.9 121.7 121.2 123.1 123.6 123.9 89 Petroleum products 29 1.3 104.9 103.2 103.5 105.3 108.2 107.8 107.1 104.8 104.5 104.1 108.9 108.6 110099..77 110077..66 90 Rubber and plastic products 30 3.2 115.9 116.9 117.5 116.7 116.5 117.8 119.3 120.3 119.7 122.5 123.0 124.4 125.2 125.2 91 Leather and products ... 31 .3 85.0 83.8 83.6 83.5 83.9 83.5 85.1 84.8 83.1 85.1 86.0 84.4 82.5 81.9 92 Mining 8.0 97.3 96.4 96.6 97.4 98.0 96.9 96.9 97.0 98.8 99.5 99.9 99.1 99.5 98.6 93 Metal "lO .3 167.6 170.4 152.9 159.4 175.8 168.5 177.3 177.8 167.4 167.3 171.3 159.8 166.8 168.4 94 Coal 11,12 1.2 103.8 100.9 98.5 104.4 104.4 101.1 104.7 104.0 114.4 120.4 119.8 113.2 115.0 108.6 95 Oil and gas extraction 13 5.8 92.2 91.6 93.3 92.6 92.6 91.8 90.9 91.0 91.8 91.5 91.9 92.6 92.5 92.3 96 Stone and earth minerals .. 14 .7 93.8 92.7 94.1 94.5 94.1 98.2 93.9 94.9 97.1 96.3 96.9 99.5 97.5 99.6 97 Utilities 7.7 116.2 118.0 118.4 116.2 114.9 116.1 115.8 121.9 119.8 118.0 114.4 114.7 120.6 119.2 98 Electric 491,3PT 6.1 115.9 118.8 119.5 115.8 113.7 115.2 115.5 119.1 118.1 117.4 115.8 115.5 123.6 121.8 99 Gas 492,3PT 1.6 117.2 115.0 114.4 118.0 119.1 119.4 117.0 132.6 126.4 120.1 109.4 111.7 109.8 109.8 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 79.5 111.2 111.7 111.8 111.9 112.2 112.9 114.0 114.0 114.3 115.8 116.5 117.3 111177..44 111188..00 101 Manufacturing excluding office and computing machines 81.9 108.6 108.3 108.4 108.6 109.2 110.2 111.4 111.4 111.7 112.8 113.2 113.6 113.7 114.1 Gross value (billions of 1987 dollars, annual rates) MAJOR MARKETS 102 Products, total 1,707.0 1,886.9 1,878.8 1,878.2 1,886.3 1,908.8 1,928.2 1,943.9 1,955.4 1,964.1 1,962.6 1,965.5 1,962.8 1,973.9 1,972.6 103 Final ^ 1,314.6 1,480.7 1,471.4 1,470.0 1,479.5 1,498.9 1,514.9 1,525.7 1,535.0 1,547.9 1,544.5 1,541.1 1,537.6 1,547.8 1,546.8 104 Consumer goods y 866.6 944.1 939.2 937.3 940.2 953.1 960.2 963.7 968.7 974.0 972.4 967.4 966.4 975.6 974.9 105 Equipment 448.0 536.7 532.2 532.7 539.2 545.7 554.7 561.9 566.3 573.9 572.0 573.7 571.2 572.2 571.9 106 Intermediate 392.5 406.1 407.4 408.2 406.9 410.0 413.3 418.2 420.4 416.2 418.2 424.5 425.3 426.1 425.8 1. Data in this table also appear in the Board's G.17 (419) monthly statistical 220-26. For a detailed description of the industrial production index, see release. For the ordering address, see the inside front cover. The latest historical "Industrial Production: 1989 Developments and Historical Revision," Federal revision of the industrial production index and the capacity utilization rates was Reserve Bulletin, vol. 76, (April 1990), pp. 187-204. released in February 1994. See "Industrial Production and Capacity Utilization 2. Standard industrial classification. since 1990: A Revision," Federal Reserve Bulletin, vol. 80 (March 1994), pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A49 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted 1993 1994 IItteemm 11999911 11999922 11999933 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr.r May June Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 949 1,095 1,199 1,265 1,298 1,363 1,474 1,312 1,252 1,313 1,380 1,357 1,316 2 One-family 754 911 986 1,036 1,078 1,132 1,181 1,071 1,054 1,068 1,069 1,083 1,046 3 Two-or-more-family 195 184 213 229 220 231 293 241 198 245 311 274 270 4 Started 1,014 1,200 1,288 1,359 1,409 1,406 1,612 1,271 1,328 1,519 1,471 1,491 1,351 5 One-family 840 1,030 1,126 1,160 1,231 1,248 1,383 1,125 1,121 1,271 1,211 1,200 1,164 6 Two-or-more-family 174 169 162 199 178 158 229 146 207 248 260 291 187 7 Under construction at end of period1.. 606 612 680 678 686 699 713 716 720 732 740 748 750 8 One-family 434 473 543 544 551 564 574 577 578 585 585 582 584 9 Two-or-more-family 173 140 137 134 135 135 139 139 142 147 155 166 166 10 Completed 1,091 1,158 1,193 1,172 1,248 1,248 1,289 1,216 1,334 1,273 1,354 1,445 1,327 11 One-family 838 964 1,040 1,041 1,081 1,107 1,139 1,075 1,185 1,115 1,192 1,254 1,155 12 Two-or-more-family 253 194 153 131 167 141 150 141 149 158 162 191 172 13 Mobile homes shipped 171 210 254 254 260 283 308 316 301 308 290 292 292 Merchant builder activity in one-family units 14 Number sold 507 610 666 738 723 766 817 642 697 722r 673 688 591 15 Number for sale at end of period1 ... 284 266 294 288 291 294 294 296 298 298r 300 301 317 Price of units sold (thousands of dollars) 16 Median 120.0 121.3 126.1 129.4 125.0 130.0 125.0 126.0 129.9 132.3r 129.0 128.0 134.9 17 Average 147.0 144.9 147.6 150.1 146.9 152.5 146.4 153.4 150.7 152.8r 152.5 150.7 157.2 EXISTING UNITS (one-family) 18 Number sold 3,219 3,520 3,800 3,990 4,030 4,120 4,350 4,250 3,840 4,070 4,120 4,110 3,960 Price of units sold (thousands of dollars) 19 Median 99.7 103.6 106.5 107.2 106.6 107.1 107.4 107.9 107.2 107.6 108.9 109.8 112.8 20 Average 127.4 130.8 133.1 133.6 133.0 133.1 133.7 134.6 133.3 134.4 135.5 136.6 140.9 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 403,644 435,355 466,365 470,756 477,807 490,176 499,931 488,469 485,894 496,042 500,453 507,178 507,993 22 Private 293,536 316,115 341,101 342,491 350,164 360,386 367,271 363,852 361,895 371,681 377,629 381,187 381,800 23 Residential 157,837 187,870 210,455 211,452 216,559 222,351 228,549 229,775 233,322 236,767 238,800 241,053 240,742 24 Nonresidential 135,699 128,245 130,646 131,039 133,605 138,035 138,722 134,077 128,573 134,914 138,829 140,134 141,058 25 Industrial buildings 22,281 20,720 19,533 19,565 19,239 19,319 20,391 19,682 19,972 19,905 21,287 21,442 21,093 26 Commercial buildings 48,482 41,523 42,627 41,794 43,422 46,696 47,342 43,261 42,065 46,602 47,514 47,959 48,350 27 Other buildings 20,797 21,494 23,626 24,813 24,486 24,071 24,225 22,998 22,258 23,918 23,826 23,983 24,025 28 Public utilities and other 44,139 44,508 44,860 44,867 46,458 47,949 46,764 48,136 44,278 44,489 46,202 46,750 47,590 29 Public 110,107 119,238 125,262 128,264 127,642 129,790 132,659 124,617 123,999 124,361 122,824 125,991 126,193 30 Military 1,837 2,502 2,454 2,471 2,289 2,245 2,298 2,911 2,404 2,231 2,179 2,172 2,237 31 Highway 32,041 34,899 37,355 39,033 39,654 40,742 40,657 38,410 36,329 38,830 39,404 40,617 40,203 32 Conservation and development... 5,010 6,021 5,976 6,294 6,301 5,218 5,230 5,707 6,731 5,206 5,685 5,494 4,527 33 Other 71,219 75,816 79,477 80,466 79,398 81,585 84,474 77,589 78,535 78,094 75,556 77,708 79,226 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 ana 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 • October 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 1993r 1994r 19941 lll JJJ eee uuu vvv lll eee yyy lll ,,, 11999933 11999944 111999999444111 JJuullyy JJuullyy Sept. Dec. Mar. June Mar. Apr. May June July CONSUMER PRICES2 (1982-84=100) 1 All items 2.8 2.8 2.0 3.3 2.5 2.5 .3 .1 .2 .3 .3 148.4 2 Food 2.3 2.8 2.6 4.9 -1.1 2.8 .1 .1 .3 .3 .5 144.2 3 Energy items -.2 .9 -4.2 1.2 4.7 -4.9 .4 -.4 -1.0 .1 1.8 106.8 4 All items less food and energy 3.2 2.9 2.1 3.4 2.9 3.1 .3 .2 .3 .3 .2 156.4 5 Commodities 1.8 1.8 .0 2.4 .6 4.2 .3 .1 .4 .4 .1 136.8 6 Services 3.9 3.4 3.5 3.7 4.2 2.4 .4 .2 .2 .2 .2 167.7 PRODUCER PRICES (1982=100) 7 Finished goods 1.3 .6 -2.5 -.3 3.6 -.3 .2 .0r -.1 .0 .5 126.0 8 Consumer foods 1.8 1.0 3.2 5.2 -.6 -5.8 .6r -.5 -.9 .0 .5 126.2 9 Consumer energy -1.0 .0 -7.4 -15.6 15.4 -2.6 -,3r .lr -1.0 .3 2.5 79.6 10 Other consumer goods 1.5 -.5 -6.4 1.5 2.0 1.5 .1 .0r .4 -.1 .0 138.8 11 Capital equipment 1.9 2.4 2.2 .3 4.3 3.6 ,2r .4 .4 .1 .1 134.4 Intermediate materials 12 Excluding foods and feeds .9 1.8 -1.0 -.3 2.8 2.8 .2 .0 .2 .5 .6 118.8 13 Excluding energy 1.2 2.4 1.0 1.6 1.9 3.9 .2 ,lr .3 .6 .4 126.6 Crude materials 14 Foods 2.4 -3.3 13.1 18.4 -4.5 -20.9 -l.lr -1.2r -3.4 -1.2 -2.1 104.0 13 Energy -7.4 .1 -28.1 -22.1 10.1 26.9 5.0r 1.8r 1.0 3.3 -1.3 75.1 16 Other 9.7 8.8 -4.5 15.4 22.7 -2.1 ,3r -,lr -1.1 .7 2.0 155.1 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 1993R 1994 AAccccoouunntt 11999911RR 11999922RR 11999933RR Q2 Q3 Q4 Qlr Q2 GROSS DOMESTIC PRODUCT 1 Total 5,724.8 6,020.2 6,343.3 6,299.9 6,359.2 6,478.1 6,574.7 6,683.6 By source 2 Personal consumption expenditures 3,902.4 4,136.9 4,378.2 4,347.3 4,401.2 4,469.6 4,535.0 4,584.8 3 Durable goods 456.6 492.7 538.0 531.2 541.9 562.8 576.2 581.5 4 Nondurable goods 1,257.8 1,295.5 1,339.2 1,334.2 1,340.2 1,355.2 1,368.9 1,376.3 5 Services 2,188.1 2,348.7 2,501.0 2,481.9 2,519.1 2,551.6 2,589.9 2,626.9 6 Gross private domestic investment 744.8 788.3 882.0 869.7 882.2 922.5 966.6 1,028.9 7 Fixed investment 746.6 785.2 866.7 851.1 868.3 913.5 942.5 967.3 8 Nonresidential 557.0 561.4 616.1 609.3 619.0 646.3 665.4 683.6 9 Structures 182.9 171.1 173.4 172.3 173.9 176.7 172.7 181.1 10 Producers' durable equipment 374.1 390.3 442.7 437.0 445.1 469.6 492.7 502.5 11 Residential structures 189.6 223.8 250.6 241.8 249.3 267.2 277.1 283.7 12 Change in business inventories -1.8 3.0 15.4 18.6 13.9 9.0 24.1 61.6 13 Nonfarm -1.2 -2.7 20.1 23.9 24.2 10.7 22.3 58.5 14 Net exports of goods and services -19.9 -30.3 -65.3 -63.3 -77.0 -71.2 -86.7 -99.1 15 Exports 601.1 638.1 659.1 660.1 649.0 680.3 674.2 696.2 16 Imports 620.9 668.4 724.3 723.5 726.0 751.4 760.9 795.3 17 Government purchases of goods and services 1,097.4 1,125.3 1,148.4 1,146.3 1,152.9 1,157.2 1,159.8 1,169.0 18 Federal 445.8 449.0 443.6 445.2 442.7 439.8 437.8 438.8 19 State and local 651.6 676.3 704.7 701.2 710.2 717.4 722.0 730.2 By major type of product 20 Final sales, total 5,726.6 6,017.2 6,327.9 6,281.4 6,345.4 6,469.2 6,550.6 6,621.9 21 Goods 2,225.7 2,292.0 2,390.4 2,377.6 2,381.9 2,452.6 2,489.1 2,493.9 22 Durable 934.2 968.6 1,032.4 1,030.6 1,026.8 1,072.9 1,098.2 1,102.2 23 Nondurable 1,291.5 1,323.4 1,358.1 1,347.0 1,355.1 1,379.7 1,390.9 1,391.6 24 Services 3,028.9 3,227.2 3,405.5 3,383.1 3,429.3 3,459.3 3,503.8 3,556.0 25 Structures 472.0 498.1 532.0 520.6 534.1 557.2 557.7 572.1 26 Change in business inventories -1.8 3.0 15.4 18.6 13.9 9.0 24.1 61.6 27 Durable goods -16.9 -13.0 8.6 3.7 14.9 9.0 20.6 40.5 28 Nondurable goods 15.1 16.0 6.7 14.8 -1.1 .0 3.5 21.2 MEMO 29 Total GDP in 1987 dollars 4,867.6 4,979.3 5,134.5 5,105.4 5,139.4 5,218.0 5,261.1 5,309.2 NATIONAL INCOME 30 Total 4,608.2 4,829.5 5,131.4 5,094.0 5,138.5 5,262.0 5,308.7 n.a. 31 Compensation of employees 3,404.8 3,591.2 3,780.4 3,761.1 3,801.7 3,845.8 3,920.0 3,979.3 32 Wages and salaries 2,816.0 2,954.8 3,100.8 3,085.1 3,115.9 3,148.4 3,208.3 3,258.5 33 Government and government enterprises 545.4 567.3 583.8 580.9 586.1 587.8 595.7 602.7 34 Other 2,270.6 2,387.5 2,517.0 2,504.2 2,529.8 2,560.7 2,612.6 2,655.8 35 Supplement to wages and salaries 588.8 636.4 679.6 676.0 685.9 697.4 711.7 720.8 36 Employer contributions for social insurance 289.8 307.7 324.3 324.6 327.0 330.6 338.5 342.4 37 Other labor income 299.0 328.7 355.3 351.4 358.8 366.8 373.2 378.4 38 Proprietors' income1 376.2 418.7 441.6 438.8 420.3 462.9 471.0 469.4 39 Business and professional1 339.5 374.4 404.3 399.4 404.5 418.5 423.8 431.8 40 Farm1 36.7 44.4 37.3 39.4 15.8 44.4 47.2 37.6 41 Rental income of persons2 -10.5 -5.5 24.1 23.4 26.3 30.3 15.3 33.1 42 Corporate profits1 390.3 405.1 485.8 473.1 493.5 533.9 508.2 n.a. 43 Profits before tax^ 365.2 395.9 462.4 456.6 458.7 501.7 483.5 n.a. 44 Inventory valuation adjustment 5.8 -6.4 -6.2 -10.0 3.0 -6.5 -12.3 -10.3 45 Capital consumption adjustment 19.4 15.7 29.5 26.5 31.7 38.8 37.0 37.3 46 Net interest 447.4 420.0 399.5 397.6 396.7 389.1 394.2 n.a. 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 • October 1994 2.17 PERSONAL INCOME AND SAVING Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1993r 1994 AAccccoouunntt 11999911rr 11999922rr 11999933rr Q2 Q3 Q4 Qlr Q2 PERSONAL INCOME AND SAVING 1 Total personal income 4,860.3 5,154.3 5,375.1 5,364.5 5,395.9 5,484.6 5,555.8 5,652.8 2 Wage and salary disbursements 2,816.1 2,974.8 3,080.8 3,085.1 3,115.9 3,148.4 3,208.3 3,258.5 3 Commodity-producing industries 738.4 757.6 773.8 776.4 781.4 791.0 801.9 811.5 4 Manufacturing 557.4 578.3 588.4 591.4 594.9 601.7 609.4 612.5 648.0 682.3 701.9 704.0 709.6 712.6 728.6 742.7 6 Service industries 884.2 967.6 1,021.4 1,023.7 1,038.8 1,057.0 1,082.0 1,101.6 7 Government and government enterprises 545.5 567.3 . 583.8 580.9 586.1 587.8 595.7 602.7 8 Other labor income 299.0 328.7 355.3 351.4 358.8 366.8 373.2 378.4 1 9 0 Pro B p u r s i i e n t e o s r s s ' a i n n d c o p m ro e f 1 e ssional f 3 33 7 9 6 . . 5 2 4 37 1 4 8 . . 4 7 4 4 4 0 1 4 . . 6 3 4 39 3 9 8 . . 4 8 4 40 2 4 0 . . 5 3 4 41 6 8 2 . . 5 9 4 4 7 2 1 3 . . 0 8 4 4 6 3 9 1 . . 4 8 11 Farm1 36.7 44.4 37.3 39.4 15.8 44.4 47.2 37.6 12 Rental income of persons2 -10.5 -5.5 24.1 23.4 26.3 30.3 15.3 33.1 150.5 161.0 181.3 180.4 182.8 184.1 185.7 191.7 14 Personal interest income 695.1 665.2 637.9 636.6 634.1 627.7 631.1 644.0 15 Transfer payments 770.1 860.2 915.4 910.4 921.6 931.0 947.4 957.0 16 Old-age survivors, disability, and health insurance benefits ... 382.3 414.0 444.4 441.9 446.8 452.1 463.8 470.4 17 LESS: Personal contributions for social insurance 236.2 248.7 261.3 261.5 263.8 266.6 276.3 279.3 18 EQUALS: Personal income 4,860.3 5,154.3 5,375.1 5,364.5 5,395.9 5,484.6 5,555.8 5,652.8 19 LESS: Personal tax and nontax payments 623.7 648.6 686.4 685.9 695.4 707.0 723.0 746.2 20 EQUALS: Disposable personal income 4,236.6 4,505.8 4,688.7 4,678.6 4,700.5 4,777.6 4,832.8 4,906.7 21 LESS: Personal outlays 4,025.0 4,257.8 4,496.2 4,464.6 4,518.2 4,588.2 4,657.3 4,710.6 22 EQUALS: Personal saving 211.6 247.9 192.6 214.0 182.3 189.4 175.5 196.1 MEMO Per capita (1987 dollars) 23 Gross domestic product 19,263.3 19,489.7 19,878.8 19,795.4 19,871.2 20,119.1 2200,,223355..22 2200,,337700..22 24 Personal consumption expenditures 12,898.9 13,110.4 13,390.8 13,335.0 13,425.1 13,518.9 13,639.8 13,647.8 25 Disposable personal income 14,003.0 14,279.0 14,341.0 14,351.0 14,338.0 14,451.0 14,535.0 14,606.0 26 Saving rate (percent) 5.0 5.5 4.1 4.6 3.9 4.0 3.6 4.0 GROSS SAVING 27 Gross saving 751.4 722.9 787.5 775.0 788.9 825.8 886.2 n.a. 28 Gross private saving 937.3 980.8 1,002.5 986.6 989.9 1,011.4 1,037.3 n.a. 29 Personal saving 211.6 247.9 192.6 214.0 182.3 189.4 175.5 196.1 30 Undistributed corporate profits1 99.2 94.3 120.9 110.7 130.3 147.9 127.7 nn..aa.. 31 Corporate inventory valuation adjustment 5.8 -6.4 -6.2 -10.0 3.0 -6.5 -12.3 --1100..33 Capital consumption allowances 383.3 396.8 407.8 404.8 441133..33 441111..11 443322..22 442266..11 33 Noncorporate 243.1 261.8 261.2 257.2 264.1 263.0 301.8 272.1 34 Government surplus, or deficit (—), national income and -185.9 -257.8 -215.0 -211.6 -201.0 -185.6 -151.1 n.a. -202.9 -282.7 -241.4 -237.0 -224.9 -220.1 -176.2 n.a. 36 State and local 17.0 24.8 26.3 25.3 23.9 34.5 25.2 n.a. 37 Gross investment 752.9 731.7 789.8 780.8 783.4 809.3 850.2 n.a. 744.8 788.3 882.0 869.7 882.2 922.5 966.6 1,028.9 39 Net foreign 8.1 -56.6 -92.3 -88.9 -98.8 -113.2 -116.4 n.a. 40 Statistical discrepancy 1.5 8.8 2.3 5.7 -5.5 -16.5 -36.1 n.a. 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 1994 Item credits or debits Q1 Q2 Q3 Q4 QL" 1 Balance on current account -6,952 -67,886 -103,896 -19,850 -25,602 -27,856 -30,587 -31,901 2 Merchandise trade balance2 -74,068 -96,097 -132,575 -29,191 -33,727 -36,488 -33,169 -36,965 3 Merchandise exports 416,913 440,361 456,866 111,664 113,787 111,736 119,679 118,012 4 Merchandise imports -490,981 -536,458 -589,441 -140,855 -147,514 -148,224 -152,848 -154,977 5 Military transactions, net -5,485 -3,034 -763 -105 -129 -87 —444 -391 6 Other service transactions, net 51,082 58,747 57,613 14,874 14,786 14,317 13,637 13,091 7 Investment income, net 14,833 4,540 3,946 1,855 668 2,015 -590 -367 8 U.S. government grants 23,959 -15,010 -14,620 -3,186 -2,730 -3,114 -5,591 -2,427 9 U.S. government pensions and other transfers -3,461 -3,735 -3,785 -827 -985 -986 -987 -966 10 Private remittances and other transfers -13,811 -13,297 -13,712 -3,270 -3,486 -3,513 -3,443 -3,876 11 Change in U.S. government assets other than official reserve assets, net (increase, -) 2,900 -1,652 -306 -281 -192 -321 446 12 Change in U.S. official reserve assets (increase, -) 5,763 3,901 -1,379 -983 822 -545 -673 -59 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -177 2,316 -537 -140 -166 -118 -113 -101 15 Reserve position in International Monetary Fund -367 -2,692 -44 -228 313 -48 -80 -3 16 Foreign currencies 6,307 4,277 -797 -615 675 -378 -480 45 17 Change in U.S. private assets abroad (increase, -) -60,175 -63,759 -146,213 -12,164 -36,507 -34,915 -62,628 -56,325 18 Bank-reported claims3 4,763 22,314 32,238 28,601 5,595 7,335 -9,293 -9,062 19 Nonbank-reported claims 11,097 45 -598 -5,046 -87 4,838 -303 20 U.S. purchases of foreign securities, net -44,740 -45,114 -119,983 -24,517 -24,340 -40,777 -30,349 -26,904 21 U.S. direct investments abroad, net -31,295 -41,004 -57,870 -11,202 -17,675 -6,311 -22,683 -20,359 22 Change in foreign official assets in United States (increase, +) .. 17,199 40,858 71,681 10,968 17,492 19,259 23,962 11,353 23 U.S. Treasury securities 14,846 18,454 48,702 1,080 5,668 19,098 22,856 1,361 24 Other U.S. government obligations 1,301 3,949 4,062 665 1,082 1,345 970 50 25 Other U.S. government liabilities 1,177 2,572 1,666 -438 158 1,121 825 1,0% 26 Other U.S. liabilities reported by U.S. banks3 -1,484 16,571 14,666 8,257 9,485 -2,489 -587 9,636 27 Other foreign official assets5 1,359 -688 2,585 1,404 1,099 184 -102 -790 28 Change in foreign private assets in United States (increase, +).. 80,935 105,646 159,017 5,804 34,337 52,675 66,200 71,774 29 U.S. bank-reported liabilities3 3,994 15,461 18,452 -19,995 3,459 27,618 7,370 34,118 30 U.S. nonbank-reported liabilities -3,115 13,573 14,282 774 7,606 1,169 4,733 31 Foreign private purchases of U.S. Treasury securities, net 18,826 36,857 24,849 14,001 -622 3,474 7,996 ' 9,243 32 Foreign purchases of other U.S. securities, net 35,144 29,867 80,068 9,590 15,025 17,445 38,008 20,340 33 Foreign direct investments in United States, net 26,086 9,888 21,366 1,434 8,869 2,969 8,093 8,073 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 35 Discrepancy 15,737 9,739 -8,427 4,047 4,712 36 Due to seasonal adjustment -39,670 -17,108 21,096 6,105 435 -6,643 103 5,719 37 Before seasonal adjustment 9,632 9,304 -1,785 3,944 -1,007 -39,670 -17,108 2i,0% MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) 5,763 3,901 -1,379 -983 822 -545 -673 -59 39 Foreign official assets in United States, excluding line 25 (increase, +) 16,022 38,286 70,015 11,406 17,334 18,138 23,137 10,257 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) -4,882 5,942 -3,847 445 -3,194 -229 -1,937 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 • October 1994 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data seasonally adjusted 1993 1994 IItteemm 11999911 11999922 11999933 Dec. Jan. Feb. Mar. Apr. May* JuneP 1 Goods and services, balance -28,472 -40,384 -75,725 -4,526 -7,780 -9,609 -6,875 -8,528 -9,517 -9,367 2 Merchandise -74,068 -96,097 -132,575 -9,115 -11,971 -13,541 -11,450 -13,337 -14,271 -14,163 3 Services 45,596 55,713 56,850 4,589 4,191 3,932 4,575 4,809 4,754 4,796 4 Goods and services, exports 580,127 616,924 641,677 56,727 53,479 52,645 58,072 56,152 56,166 58,172 5 Merchandise 416,913 440,361 456,866 40,953 38,530 37,426 42,060 40,378 40,276 42,015 6 Services 163,214 176,563 184,811 15,774 14,949 15,219 16,012 15,774 15,890 16,157 7 Goods and services, imports -608,599 -657,308 -717,402 -61,253 -61,259 -62,254 -64,947 -64,680 -65,683 -67,539 8 Merchandise -490,981 -536,458 -589,441 -50,068 -50,501 -50,967 -53,510 -53,715 -54,547 -56,178 9 Services -117,618 -120,850 —127,961 -11,185 -10,758 -11,287 -11,437 -10,965 -11,136 -11,361 MEMO 10 Balance on merchandise trade, Census basis -66,723 -84,501 -115,568 -7,782 -10,850 -12,072 -9,583 -12,045 -12,885 -13,171 1. Data show monthly values consistent with quarterly figures in the U.S. SOURCE. FT900, U.S. Department of Commerce, Bureau of the Census and balance of payments accounts. Bureau of Economic Analysis. 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1994 AAsssseett 11999911 11999922 11999933 Jan. Feb. Mar. Apr. May June Julyp 1 Total 77,719 71,323 73,442 74,243 75,766 76,809 76,565 74,420 75,732 75,443 2 Gold stock, including Exchange Stabilization Fund1 11,057 11,056 11,053 11,053 11,053 11,052 11,053 11,052 11,052 11,052 3 Special drawing rights '3 11,240 8,503 9,039 9,070 9,295 9,383 9,440 9,522 9,731 9,696 4 Reserve position in International Monetary Fund 9,488 11,759 11,818 11,906 11,974 12,135 11,899 11,841 12,184 12,183 5 Foreign currencies 45,934 40,005 41,532 42,214 43,444 44,239 44,173 42,005 42,765 42,512 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 1994 AAsssseett 11999911 11999922 11999933 Jan. Feb. Mar. Apr. May June July 1 Deposits 968 205 386 257 190 454 171 174 604 181 Held in custody 2 U.S. Treasury securities 281,107 314,481 379,394 388,065 393,238 399,817 396,495 402,170 411,580 423,715 3 Earmarked gold3 13,303 13,118 12,327 12,302 12,238 12,145 12,104 12,065 12,065 12,056 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, in each case measured at face (not market) value. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A55 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1993 1994 IItteemm 11999911 11999922 Dec/ Jan/ Feb/ Mar/ Apr/ Mayr June p 1 Total1 360,530 398,816 468,786 478,554 477,939 479,381 465,339 473,880 486,906 By type 2 Liabuities reported by banks in the United States 38,396 54,967 69,648 78,546 77,998 79,787 74,681 76,492 79,840 3 U.S. Treasury bills and certificates 92,692 104,596 150,900 146,940 143,222 148,707 140,653 134,568 141,338 U.S. Treasury bonds and notes 4 Marketable 203,677 210,553 211,791 216,075 220,120 215,069 214,429 225,682 228,271 5 Nonmarketable 4,858 4,532 5,652 5,689 5,725 5,763 5,799 5,837 5,875 6 U.S. securities other than U.S. Treasury securities 20,907 24,168 30,795 31,304 30,874 30,055 29,777 31,301 31,582 By area 7 Europe1 171,317 191,708 209,143 216,698 210,655 217,448 212,799 215,826 223,417 8 Canada 7,460 7,920 9,505 10,084 9,844 8,328 8,121 8,725 10,191 9 Latin America and Caribbean 33,554 40,025 57,960 57,671 61,313 55,451 46,487 45,779 44,758 10 139,465 152,276 185,319 187,362 189,050 191,422 191,045 196,340 198,697 11 2,092 3,565 3,894 3,681 4,043 3,560 3,533 3,811 3,954 12 Other countries 6,640 3,320 2,963 3,056 3,032 3,170 3,352 3,397 5,887 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 1993 1994 IItteemm 11999900 11999911 11999922 June Sept. Dec. Mar/ 1 Banks' liabilities 70,477 75,129 72,796 75,221 81,225 77,627 85,545 2 Banks' claims 66,796 73,195 62,799 55,549 59,136 59,151 72,623 3 Deposits 29,672 26,192 24,240 20,464 20,930 19,379 18,118 4 Other claims 37,124 47,003 38,559 35,085 38,206 39,772 54,505 5 Claims of banks' domestic customers 6,309 3,398 4,432 2,775 2,494 3,058 3,655 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

A56 International Statistics • October 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 1994 IItteemm 11999911 11999922 Dec. Jan. Feb. Mar.r Apr. Ma/ June" HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 756,066 810,259 911,762 911,762 895,879 920,638 951,606 958,806' 960,582 988,180 2 Banks' own liabilities 575,374 606,444 620,865 620,865 609,542 631,501 649,703 667,187r 665,453 684,505 3 Demand deposits 20,321 21,828 21,575 21,575 23,644 24,417 23,034 23,646r 27,878 24,557 4 Time deposits 159,649 160,385 175,117 175,117 159,421 159,743 176,892 178,034r 183,023 184,647 5 Other3 66,305 93,237 109,957 109,957 129,411 136,096 112,463 124,531 123,542 116,646 6 Own foreign offices4 329,099 330,994 314,216 314,216 297,066 311,245 337,314 340,976' 331,010 358,655 7 Banks' custodial liabilities5 180,692 203,815 290,897 290,897 286,337 289,137 301,903 291,619' 295,129 303,675 8 U.S. Treasury bills and certificates 110,734 127,644 176,430 176,430 170,694 166,980 173,425 167,920' 161,043 171,313 9 Other negotiable and readily transferable instruments 18,664 21,974 36,078 36,078 37,329 41,892 41,748 38,151 48,705 4499,,991133 10 Other 51,294 54,197 78,389 78,389 78,314 80,265 86,730 85,548 85,381 82,449 11 Nonmonetary international and regional organizations 8,981 9,350 10,935 10,935 11,318 7,299 88,,008866 55,,991122 88,,336633 88,,663300 12 Banks' own liabilities 6,827 6,951 5,639 5,639 7,304 5,924 5,641 4,328 6,437 5,256 13 Demand deposits 43 46 15 15 172 320 209 26 35 31 14 Time deposits 2,714 3,214 2,780 2,780 3,665 2,533 2,482 2,411 2,785 3,073 15 Other3 4,070 3,691 2,844 2,844 3,467 3,071 2,950 1,891 3,617 2,152 16 Banks' custodial liabilities5 2,154 2,399 5,296 5,296 4,014 1,375 2,445 1,584 1,926 3,374 17 U.S. Treasuiy bills and certificates 1,730 1,908 4,275 4,275 3,497 1,321 2,097 1,358 857 2,825 18 Other negotiable and readily transferable instruments 424 486 1,021 1,021 517 54 338 226 1,069 547 19 Other 0 5 0 0 0 0 10 0 0 2 20 Official institutions9 131,088 159,563 220,548 220,548 225,486 221,220 228,494 215,334 211,060 221,178 7.1 Banks' own liabilities 34,411 51,202 64,071 64,071 71,531 67,369 67,086 64,668 64,398 66,598 7.2 Demand deposits 2,626 1,302 1,601 1,601 1,631 1,406 1,758 1,504 1,435 2,030 7,3 Time deposits 16,504 17,939 21,654 21,654 20,237 20,028 23,944 22,050 24,384 25,800 24 Other3 15,281 31,961 40,816 40,816 49,663 45,935 41,384 41,114 38,579 38,768 75 Banks' custodial liabilities5 96,677 108,361 156,477 156,477 153,955 153,851 161,408 150,666 146,662 154,580 26 U.S. Treasury bills and certificates 92,692 104,596 150,900 150,900 146,940 143,222 148,707 140,653 134,568 141,338 27 Other negotiable and readily transferable instruments7 3,879 3,726 5,482 5,482 6,855 10,527 12,414 9,969 12,050 13,108 28 Other 106 39 95 95 160 102 287 44 44 134 29 Banks10 522,265 547,320 579,467 579,467 554,851 585,118 609,824 622,810' 626,292 643,736 30 Banks' own liabilities 459,335 476,117 474,602 474,602 451,239 479,177 497,732 514,759' 510,700 531,194 31 Unaffiliated foreign banks 130,236 145,123 160,386 160,386 154,173 167,932 160,418 173,783' 179,690 172,539 32 Demand deposits 8,648 10,170 9,719 9,719 11,031 11,986 10,707 11,785' 15,551 12,319 33 Time deposits 82,857 90,296 105,192 105,192 87,788 92,401 104,776 107,550' 109,024 108,710 34 Other. 38,731 44,657 45,475 45,475 55,354 63,545 44,935 54,448 55,115 51,510 35 Own foreign offices4 329,099 330,994 314,216 314,216 297,066 311,245 337,314 340,976' 331,010 358,655 36 Banks' custodial liabilities5 62,930 71,203 104,865 104,865 103,612 105,941 112,092 108,051 115,592 112,542 37 U.S. Treasury bills and certificates6 7,471 11,087 10,707 10,707 9,832 11,051 11,007 10,079 11,405 10,834 38 Other negotiable and readily transferable instruments7 5,694 7,555 16,810 16,810 17,136 17,010 17,404 15,684 22,021 22,345 39 Other 49,765 52,561 77,348 77,348 76,644 77,880 83,681 82,288 82,166 79,363 40 Other foreigners 93,732 94,026 100,812 100,812 104,224 107,001 105,202 114,750' 114,867 114,636 41 Banks' own liabilities 74,801 72,174 76,553 76,553 79,468 79,031 79,244 83,432' 83,918 81,457 42 Demand deposits 9,004 10,310 10,240 10,240 10,810 10,705 10,360 10,331' 10,857 10,177 43 Time deposits 57,574 48,936 45,491 45,491 47,731 44,781 45,690 46,023' 46,830 47,064 44 Other3. 8,223 12,928 20,822 20,822 20,927 23,545 23,194 27,078 26,231 24,216 45 Banks' custodial liabilities5 18,931 21,852 24,259 24,259 24,756 27,970 25,958 31,318' 30,949 33,179 46 U.S. Treasury bills and certificates6 8,841 10,053 10,548 10,548 10,425 11,386 11,614 15,830' 14,213 16,316 47 Other negotiable and readily transferable instruments7 8,667 10,207 12,765 12,765 12,821 14,301 11,592 12,272 13,565 13,913 48 Other 1,423 1,592 946 946 1,510 2,283 2,752 3,216 3,171 2,950 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 7,456 9,111 17,567 17,567 17,509 17,929 19,209 17,961 26,385 27,075 1. Reporting banks include all types of depository institution, as well as some 6. Includes nonmarketable certificates of indebtedness and Treasury bills brokers and dealers. issued to official institutions of foreign countries. 2. Excludes negotiable time certificates of deposit, which are included in 7. Principally bankers acceptances, commercial paper, and negotiable time "Other negotiable and readily transferable instruments." certificates of deposit. 3. Includes borrowing under repurchase agreements. 8. Principally the International Bank for Reconstruction and Development, the 4. For U.S. banks, includes amounts owed to own foreign branches and foreign Inter-American Development Bank, and the Asian Development Bank. Excludes subsidiaries consolidated in Consolidated Report of Condition filed with bank "holdings of dollars" of the International Monetary Fund. regulatory agencies. For agencies, branches, and majority-owned subsidiaries of 9. Foreign central banks, foreign central governments, and the Bank for foreign banks, consists principally of amounts owed to head office or parent International Settlements. foreign bank, and foreign branches, agencies, or wholly owned subsidiaries of 10. Excludes central banks, which are included in "Official institutions." head office or parent foreign bank. 5. Financial claims on residents of the United States, other than long-term securities, held by or through reporting banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A57 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1—Continued 1993 1994 11999911 11999922 11999933 Dec. Jan. Feb. Mar. Apr. Ma/ June? AREA 1 Total, all foreigners 756,066 810,259 911,762 911,762 895,879 920,638 951,606R 958,806R 960,582 988,180 2 Foreign countries 747,085 800,909 900,827 900,827 884,561 913,339 943,520"" 952,894R 952,219 979,550 3 Europe 249,097 307,670 376,532 376,532 368,666 393,566 399,542r 406,298r 405,197 411,530 4 Austria 1,193 1,611 1,917 1,917 2,567 2,159 2,515 2,719 3,309 3,578 5 Belgium and Luxembourg 13,337 20,567 28,627 28,627 29,395 30,617 31,827 32,043 32,612 25,264 6 Denmark 937 3,060 4,517 4,517 5,089 4,829 3,093 3,342 3,207 3,473 7 Finland 1,341 1,299 1,872 1,872 1,843 1,737 1,495 1,932 1,849 2,484 8 France 31,808 41,411 39,704 39,704 32,243 38,426 42,010 43,137 41,962 43,128 9 Germany 8,619 18,630 26,613 26,613 27,567 30,241 31,771 32,704 27,583 33,013 10 Greece 765 913 1,519 1,519 1,338 1,463 1,425 1,160 1,453 1,377 11 Italy 13,541 10,041 11,559 11,559 10,700 12,741 12,786 ll,915r 13,015 13,017 12 Netherlands 7,161 7,365 16,031 16,031 17,532 17,083 17,686 16,330 18,496 18,449 13 Norway 1,866 3,314 2,966 2,966 2,533 2,340 2,429 2,537 3,278 4,018 14 Portugal 2,184 2,465 3,366 3,366 3,131 3,170 3,131 4,061 2,853 2,920 15 Russia 241 577 2,511 2,511 2,208 2,017 1,971 3,041 4,016 4,497 16 Spain 11,391 9,793 20,493 20,493 19,650 18,119 19,621r 18,319r 17,481 15,754 17 Sweden 2,222 2,953 2,572 2,572 2,301 2,528 1,45 lr 2,532 3,443 4,072 18 Switzerland 37,238 39,440 41,533 41,533 40,796 41,000 39,246r 40,988 40,164 37,957 19 Turkey 1,598 2,666 3,227 3,227 3,119 3,241 2,922 2,972 2,759 3,271 20 United Kingdom 100,292 111,805 133,763 133,763 130,801 148,139 150,652r 154,563r 159,841 163,460 21 Yugoslavia11 622 504 570 570 549 428 414 407 424 434 22 Other Europe and former U.S.S.R. 12,741 29,256 33,172 33,172 35,304 33,294 33,097r 31,596r 27,452 31,364 23 Canada 21,605 22,420 20,227 20,227 20,588 23,200 21,430r 22,552r 25,948 25,455 24 Latin America and Caribbean 345,529 317,228 348,586 348,586 344,462 346,783 359,652r 362,639r 356,892 378,732 25 Argentina 7,753 9,477 14,477 14,477 14,485 14,435 14,017r 13,267r 13,471 13,753 26 Bahamas 100,622 82,284 72,964 72,964 71,547 72,430 11,AST 80,843r 79,265 85,809 27 Bermuda 3,178 7,079 7,824 7,824 7,741 6,697 6,183r 7,621r 8,110 8,975 28 Brazil 5,704 5,584 5,301 5,301 5,121 5,386 5,256r 4,878r 5,569 5,708 29 British West Indies 163,620 153,033 181,844 181,844 178,184 176,774 189,293r 193,645 187,134 203,901 30 Chile 3,283 3,035 3,183 3,183 3,551 3,726 3,573r 3,830r 3,284 3,523 31 Colombia 4,661 4,580 3,171 3,171 3,714 3,363 3,427 4,002 3,863 3,931 32 Cuba 2 3 33 33 34 30 38 9 11 11 33 Ecuador 1,232 993 880 880 888 858 822 844 840 812 34 Guatemala 1,594 1,377 1,207 1,207 1,257 1,230 1,169 1,155 1,135 1,143 35 Jamaica 231 371 410 410 387 421 419 495 526 475 36 Mexico 19,957 19,454 28,018 28,018 27,645 30,616 27,804 22,358 21,895 21,292 37 Netherlands Antilles 5,592 5,205 4,195 4,195 5,129 6,230 5,312r 5,035r 7,021 4,885 38 Panama 4,695 4,177 3,582 3,582 3,543 3,429 3,397r 3,514r 3,806 3,869 39 Peru 1,249 1,080 926 926 885 913 873 893 907 930 40 Uruguay 2,096 1,955 1,611 1,611 1,723 1,534 l,578r l,522r 1,547 1,583 41 Venezuela 13,181 11,387 12,786 12,786 12,445 12,598 12,968 12,307 12,008 11,667 42 Other 6,879 6,154 6,174 6,174 6,183 6,113 6,066r 6,421r 6,500 6,465 43 Asia 120,462 143,540 144,656 144,656 140,062 139,562 152,458r 149,156r 152,105 148,728 China 44 People's Republic of China 2,626 3,202 4,011 4,011 4,075 4,565 5,294 6,058 5,358 6,152 45 Republic of China (Taiwan) 11,491 8,408 10,633 10,633 9,959 9,475 9,306 8,696 9,817 8,375 46 Hong Kong 14,269 18,499 17,233 17,233 18,651 17,730 18,684r 19,090r 21,662 19,108 47 India 2,418 1,399 1,114 1,114 1,435 1,127 1,658 1,450 1,521 2,136 48 Indonesia 1,463 1,480 1,986 1,986 1,807 1,659 2,345 1,802 1,537 2,002 49 Israel 2,015 3,773 4,435 4,435 4,137 4,628 4,580 4,134r 3,460 3,762 50 Japan 47,069 58,435 61,483 61,483 58,606 60,112 66,403 62,274 63,031 64,114 51 Korea (South) 2,587 3,337 4,913 4,913 4,721 4,856 4,808 4,646 4,523 4,571 52 Philippines 2,449 2,275 2,035 2,035 1,907 1,820 2,542 2,616 2,588 3,150 53 Thailand 2,252 5,582 6,137 6,137 6,156 5,838 5,985 5,550 5,788 4,851 54 Middle Eastern oil-exporting countries13 ... 15,752 21,437 15,824 15,824 13,129 11,919 13,305 13,655 14,895 14,373 55 Other 16,071 15,713 14,852 14,852 15,479 15,833 17,548 19,185 17,925 16,134 56 Africa 4,825 5,884 6,634 6,634 5,818 6,327 5,749r 5,813r 6,166 6,417 57 Egypt 1,621 2,472 2,208 2,208 1,959 2,058 ll,,665599rr l,688r 1,984 1,999 58 Morocco 79 76 99 99 94 73 8899 76 93 78 59 South Africa 228 190 451 451 214 294 285 331 230 290 60 Zaire 31 19 12 12 13 8 11 11 8 7 61 Oil-exporting countries 1,082 1,346 1,303 1,303 1,186 1,433 1,139 983 1,057 1,204 62 Other 1,784 1,781 2,561 2,561 2,352 2,461 2,566 2,724 2,794 2,839 63 Other 5,567 4,167 4,192 4,192 4,965 3,901 4,689 6,436 5,911 8,688 64 Australia 4,464 3,043 3,308 33,,330088 3,807 2,511 3,006 2,991 2,796 5,804 65 Other 1,103 1,124 884 888844 1,158 1,390 1,683 3,445 3,115 2,884 66 Nonmonetary international and regional organizations 8,981 9,350 10,935 10,935 11,318 7,299 8,086 5,912 8,363 8,630 67 International .. 6,485 7,434 6,850 6,850 6,806 6,060 6,375 4,249 5,634 6,646 68 Latin American regional 1,181 1,415 3,218 3,218 3,402 357 330 393 909 847 69 Other regional17 1,315 501 867 867 1,110 882 1,381 1,270 1,820 1,137 11. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 15. Principally the International Bank for Reconstruction and Development. 12. Includes the Bank for International Settlements. Since December 1992, Excludes "holdings of dollars" of the International Monetary Fund. includes all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, 16. Principally the Inter-American Development Bank. and Slovenia. 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." 14. Comprises Algeria, Gabon, Libya, and Nigeria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • October 1994 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1993 1994 AArreeaa aanndd ccoouunnttrryy 11999911 11999922 11999933 Dec. Jan. Feb. Mar. Apr/ Mayr Junep 1 Total, all foreigners 514,339 499,437 483,135 483,135 470,964 477,605 475,077r 476,334 472,608 475,486 2 Foreign countries 508,056 494,355 480,730 480,730 467,810 476,011 473,157r 475,150 470,882 473,524 3 Europe 114,310 123,377 121,033 121,033 114,312 124,643 129,838r 124,818 123,622 119,619 4 Austria 327 331 413 413 720 598 489 420 486 416 5 Belgium and Luxembourg 6,158 6,404 6,535 6,535 5,169 6,327 6,775r 6,774 6,391 7,115 6 Denmark 686 707 382 382 507 600 612 896 1,332 539 7 Finland 1,907 1,418 598 598 699 725 570 647 669 699 8 France 15,112 14,723 11,490 11,490 11,705 11,033 11,481 11,398 13,092 13,718 9 Germany 3,371 4,222 7,683 7,683 7,364 7,966 8,164 9,374 8,303 7,208 10 Greece 553 717 679 679 653 669 736 720 682 661 11 Italy 8,242 9,047 8,876 8,876 8,950 8,477 7,658 6,370 6,749 6,127 12 Netherlands 2,546 2,468 3,063 3,063 3,877 2,821 2,945 2,575 3,272 2,988 13 Norway 669 355 396 396 738 777 531 598 605 615 14 Portugal 344 325 720 720 805 918 936 846 835 881 15 Russia 1,970 3,147 2,295 2,295 2,142 2,005 1,961 1,862 1,642 1,605 16 Spain 1,881 2,755 2,763 2,763 3,299 2,688 2,666 1,859 2,828 2,502 17 Sweden 2,335 4,923 4,100 4,100 3,704 3,608 3,443 3,313 3,420 3,411 18 Switzerland 4,540 4,717 6,567 6,567 7,177 4,535 8,606r 5,578 6,487 6,674 19 Turkey 1,063 962 1,287 1,287 1,118 1,565 1,559 1,546 1,324 1,210 20 United Kingdom 60,395 63,430 60,928 60,928 53,142 66,977 68,275r 67,442 63,227 61,158 21 Yugoslavia2 825 569 536 536 470 414 376 364 361 335 22 Other Europe and former U.S.S.R.3 1,386 2,157 1,722 1,722 2,073 1,940 2,055 2,236 1,917 1,757 23 Canada 15,113 13,845 18,408 18,408 19,103 16,864 16,989r 17,920 17,109 20,340 24 Latin America and Caribbean 246,137 218,078 223,977 223,977 226,236 226,467 220,298r 219,983 219,593 221,831 25 Argentina 5,869 4,958 4,425 4,425 4,569 4,459 4,662r 5,161 5,173 5,499 26 Bahamas 87,138 60,835 65,045 65,045 66,411 65,439 66,022r 66,239 64,974 64,078 27 Bermuda 2,270 5,935 8,032 8,032 10,234 9,969 8,342 8,837 6,591 6,276 28 Brazil 11,894 10,773 11,803 11,803 12,719 13,005 12,924r 11,457 11,985 11,346 29 British West Indies 107,846 101,507 97,930 97,930 94,355 95,230 92,252r 91,700 94,150 98,000 30 Chile 2,805 3,397 3,614 3,614 3,546 3,763 3,640 3,455 3,353 3,419 31 Colombia 2,425 2,750 3,179 3,179 3,241 3,053 3,057 3,263 3,229 3,363 32 Cuba 0 0 0 0 0 2 0 0 0 0 33 Ecuador 1,053 884 673 673 679 722 703 679 677 707 34 Guatemala 228 262 286 286 316 294 289 273 291 313 35 Jamaica 158 162 195 195 180 176 163 191 198 194 36 Mexico 16,567 14,991 15,843 15,843 16,516 16,902 16,210r 16,300 16,456 16,777 37 Netherlands Antilles 1,207 1,379 2,367 2,367 3,115 3,093 2,411 2,769 2,871 2,366 38 Panama 1,560 4,654 2,913 2,913 2,843 2,983 2,491r 2,539 2,341 22,,118811 39 Peru 739 730 651 651 693 726 751 807 901 990088 40 Uruguay 599 936 951 951 793 742 532r 500 540 608 41 Venezuela 2,516 2,525 2,904 2,904 2,763 2,709 2,662 2,532 2,462 2,460 42 Other 1,263 1,400 3,166 3,166 3,263 3,200 3,187 3,281 3,401 3,336 43 Asia 125,262 131,789 110,684 110,684 110011,,555511 110011,,666611 9999,,001133rr 110055,,441122 110033,,885555 110044,,668822 China 44 People's Republic of China 747 906 2,299 2,299 881 842 796 843 802 784 45 Republic of China (Taiwan) 2,087 2,046 2,628 2,628 2,611 1,487 2,162r 1,817 2,024 1,948 46 Hong Kong 9,617 9,642 10,864 10,864 10,224 9,990 11,666 9,903 8,996 9,783 47 India 441 529 589 589 638 664 737 684 738 779 48 Indonesia 952 1,189 1,522 1,522 1,595 1,571 1,647 1,545 1,378 1,318 49 Israel 860 820 826 826 947 798 664 676 711 668 50 Japan 84,807 79,172 59,576 59,576 54,164 54,583 49,771 54,931 53,120 55,361 51 Korea (South) 6,048 6,179 7,556 7,556 7,373 7,518 7,502r 7,457 7,410 7,984 52 Philippines 1,910 2,145 1,408 1,408 1,132 1,183 1,307 925 914 654 53 Thailand 1,713 1,867 2,154 2,154 2,481 2,649 2,764 2,744 2,925 2,953 54 Middle Eastern oil-exporting countries4 8,284 18,540 14,398 14,398 12,903 13,190 14,153 16,387 18,323 16,598 55 Other 7,796 8,754 6,864 6,864 6,602 7,186 5,844 7,500 6,514 5,852 56 Africa 4,928 4,279 3,819 3,819 3,751 3,775 3,698 3,680 3,692 3,795 57 Egypt 294 186 196 196 203 227 205 206 219 281 58 Morocco 575 441 444 444 489 521 518 472 470 518 59 South Africa 1,235 1,041 633 633 581 558 565 557 575 555 60 Zaire 4 4 4 4 4 6 4 5 5 5 61 Oil-exporting countries5 1,298 1,002 1,128 1,128 1,169 1,197 1,210 1,207 1,211 1,239 62 Other 1,522 1,605 1,414 1,414 1,305 1,266 1,196 1,233 1,212 1,197 63 Other 2,306 2,987 2,809 2,809 2,857 2,601 3,321r 3,337 3,011 3,257 64 Australia 1,665 2,243 2,072 2,072 2,030 1,692 l,685r 1,859 1,369 1,489 65 Other 641 744 737 737 827 909 1,636 1,478 1,642 1,768 66 Nonmonetary international and regional organizations6 6,283 55,,008822 2,405 2,405 3,154 1,594 1,920 1,184 1,726 1,962 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. Since December 1992, 6. Excludes the Bank for International Settlements, which is included in includes all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, "Other Western Europe." and Slovenia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A59 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 1994 CCllaaiimm 11999911 11999922 11999933 Dec. Jan. Feb. Mar.r Apr/ May1 Junep 11 TToottaall 579,683 559,495 523,545 523,545 522,879 22 BBaannkkss'' ccllaaiimmss 514,339 499,437 483,135 483,135 470,964 477,605 475,077 476,334 472,608 475,486 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 37,126 31,367 28,814 28,814 30,718 26,554 25,772 25,116 22,557 21,216 44 OOwwnn ffoorreeiiggnn ooffffiicceess22 318,800 303,991 286,819 286,819 275,549 273,763 280,898 280,435 284,513 289,300 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 116,602 109,342 98,012 98,012 91,129 97,871 94,809 96,903 98,501 101,411 66 DDeeppoossiittss 69,018 61,550 46,885 46,885 40,664 45,813 44,177 47,971 50,323 50,645 77 OOtthheerr 47,584 47,792 51,127 51,127 50,465 52,058 50,632 48,932 48,178 50,766 88 AAllll ootthheerr ffoorreeiiggnneerrss 41,811 54,737 69,490 69,490 73,568 79,417 73,598 73,880 67,037 63,559 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss33...... 65,344 60,058 40,410 40,410 47,802 1100 DDeeppoossiittss 15,280 15,452 9,619 9,619 14,022 1111 NNeeggoottiiaabbllee aanndd rreeaaddiillyy ttrraannssffeerraabbllee iinnssttrruummeennttss 37,125 31,474 17,155 17,155 20,340 1122 OOuuttssttaannddiinngg ccoolllleeccttiioonnss aanndd ootthheerr ccllaaiimmss 12,939 13,132 13,636 13,636 13,440 MMEEMMOO 1133 CCuussttoommeerr lliiaabbiilliittyy oonn aacccceeppttaanncceess 8,974 8,655 7,871 7,871 7,570 1144 DDoollllaarr ddeeppoossiittss iinn bbaannkkss aabbrrooaadd,, rreeppoorrtteedd bbyy nnoonnbbaannkkiinngg bbuussiinneessss eenntteerrpprriisseess iinn tthhee UUnniitteedd SSttaatteess55 43,024 36,213 22,724 22,724 21,622 21,294 21,931 21,737 20,447 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, ana 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 1993 1994 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa22 11999900 11999911 11999922 June Sept. Dec. Mar.r 1 Total 206,903 195,302 195,119 182,785 189,470 194,776 193,309 By borrower 2 Maturity of one year or less 165,985 162,573 163,325 154,276 161,925 166,226 166,443 3 Foreign public borrowers 19,305 21,050 17,813 17,962 21,211 17,447 15,904 4 All other foreigners 146,680 141,523 145,512 136,314 140,714 148,779 150,539 5 Maturity of more than one year 40,918 32,729 31,794 28,509 27,545 28,550 26,866 6 Foreign public borrowers 22,269 15,859 13,266 11,101 10,341 10,828 9,576 7 All other foreigners 18,649 16,870 18,528 17,408 17,204 17,722 17,290 By area Maturity of one year or less 8 Europe 49,184 51,835 53,300 54,376 57,240 56,299 58,856 9 Canada 5,450 6,444 6,091 7,878 9,816 7,540 7,291 10 Latin America and Caribbean 49,782 43,597 50,376 48,532 51,559 56,622 58,717 11 53,258 51,059 45,709 38,649 37,619 40,274 35,987 12 Africa 3,040 2,549 1,784 1,712 1,916 1,783 1,611 13 All other3 5,272 7,089 6,065 3,129 3,775 33,,770088 33,,998811 Maturity of more than one year 14 Europe 3,859 3,878 5,367 4,579 4,433 4,327 3,822 15 Canada 3,290 3,595 3,287 2,909 2,549 2,553 2,548 16 Latin America and Caribbean 25,774 18,277 15,312 13,674 13,353 13,877 13,341 17 5,165 4,459 5,038 4,808 4,732 5,412 4,705 18 Africa 2,374 2,335 2,380 2,050 2,049 1,934 2,001 19 All other3 456 185 410 489 429 447 449 1. Reporting banks include all kinds of depository institutions besides commer- 2. Maturity is time remaining to maturity, cial banks, as well as some brokers and dealers. 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • October 1994 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. and Foreign Offices of U.S. Banks1 Billions of dollars, end of period 1992 1993 1994 AArreeaa oorr ccoouunnttrryy 11999900 11999911 Mar. June Sept. Dec. Mar. June Sept. Dec. Mar. 1 Total 320.1 343.6 351.7 358.7 344.5 346.5 377.0 388.3r 403.7 492.7r 2 G-10 countries and Switzerland 132.2 137.6 130.9 135.6 136.0 132.9 142.4 150.0 153.3 161.0 178.1r 3 Belgium and Luxembourg .0r 6.0 5.3 6.2 6.2 5.6 6.1 7.0 7.1 7.4 7.9r 10.4 11.0 10.0 11.9 15.3 15.3 13.5 14.0 12.3 11.7 16.4 10.6 8.3 8.4 8.8 10.9 9.3 9.9 10.8 12.4 12.6 28.7 6 Italy 5.0 5.6 5.4 8.0 6.4 6.5 6.7 7.9 8.7 7.6 15.5 7 Netherlands 4.7 4.3 3.3 3.7 2.8 3.6 3.7 3.7 4.7 4.1 8 Sweden 2.2 1.9 2.0 1.9 2.2 2.3 3.0 2.5 2.5 2.5 2.8 9 Switzerland 4.4 3.4 3.2 4.6 5.2 4.8 5.3 4.7 5.6 5.9 6.3 10 United Kingdom 60.9 68.5 64.7 65.6 61.0 60.8 65.7 73.5 74.7 84.5 69.9r 5.9 5.8 6.5 6.5 6.3 6.3 8.2 8.0 9.7 6.6r 7.6r 12 Japan 24.0 22.6 21.1 18.7 18.9 19.3 20.4 17.9 16.8 17.4 18.8r 13 Other industrialized countries 22.9 22.8 21.4 25.5 25.0 24.0 25.4 27.2 26.0 24.6 41.2 14 Austria 1.4 .6 .8 .8 .7 1.2 1.2 1.3 .6 .4 1.0 15 Denmark 1.1 .9 .8 1.3 1.5 .9 .8 1.0 1.1 1.0 1.1 16 Finland .7 .7 .8 .8 1.0 .7 .7 .9 .6 .4 1.0 2.7 2.6 2.3 2.8 3.0 3.0 2.7 3.1 3.2 3.2 3.8 18 Norway 1.6 1.4 1.5 1.7 1.6 1.2 1.8 1.8 2.1 1.7 1.6 19 Portugal .6 .6 .5 .5 .5 .4 .7 .9 1.0 .8 1.2 20 Spain 8.3 8.3 7.7 10.1 9.7 8.9 9.5 10.5 9.3 8.9 12.3 21 Turkey 1.7 1.4 1.2 1.5 1.5 1.3 1.4 2.1 2.1 2.1 2.4 22 Other Western Europe 1.2 1.8 1.5 2.0 1.5 1.7 2.0 1.7 2.2 2.6 3.0 23 South Africa 1.8 1.9 1.8 1.7 1.7 1.7 1.6 1.3 1.2 1.1 1.2 24 Australia 1.8 2.7 2.3 2.2 2.3 2.9 2.9 2.5 2.8 2.3 12.7 25 OPEC2 12.8 14.5 15.8 16.2 15.9 16.1 16.6r 15.7r 14.8r 16.7 22.1 26 Ecuador 1.0 .7 .7 .7 .7 .6 .6 .6 .5 .5 .5 27 Venezuela 5.0 5.4 5.4 5.3 5.4 5.2 5.11 5.5r 5.4r 5.1 4.7 28 Indonesia 2.7 2.7 3.0 3.0 3.0 3.0 3.1 3.1 2.8 3.2 3.0 29 Middle East countries 2.5 4.2 5.3 5.9 5.4 6.2 6.6 5.4 4.9 6.7 12.8 30 African countries 1.7 1.5 1.4 1.4 1.4 1.1 1.1 1.1 1.1 1.2 1.0 31 Non-OPEC developing countries 65.4 63.9 69.7 68.1 72.8 72.1 74.4 76.6 77.0 82.5 93.9r Latin America 32 Argentina 5.0 4.8 5.0 5.1 6.2 6.6 7.0 6.6 7.2 7.7 8.7r 33 Brazil 14.4 9.6 10.8 10.6 10.8 10.8 11.6 12.3 11.7 12.0 12.5 34 Chile 3.5 3.6 3.9 4.0 4.2 4.4 4.6 4.6 4.7 4.7 5.1 35 Colombia 1.8 1.7 1.6 1.6 1.7 1.8 1.9 1.9 2.0 2.1 2.2 13.0 15.5 17.7 16.3 17.1 16.0 16.8 16.8 17.5 17.7 18.7 37 Peru .5 .4 .4 .4 .5 .5 .4 .4 .3 .4 .5 38 Other 2.3 2.1 2.2 2.2 2.5 2.6 2.6 2.7 2.6 3.0 2.6 Asia China 39 Peoples Republic of China .2 .3 .3 .3 .3 .7 .6 1.6 .5 2.0 .8 40 Republic of China (Taiwan) 3.5 4.1 4.8 4.6 5.0 5.2 5.3 5.9 6.4 7.3 7.5 3.3 3.0 3.6 3.8 3.6 3.2 3.1 3.1 2.9 3.2 4.1r 42 Israel .5 .5 .4 .4 .4 .4 .5 .4 .4 .5 .4 43 Korea (South) 6.2 6.8 6.9 6.9 7.4 6.6 6.5 6.9 6.5 6.7 13.9 1.9 2.3 2.5 2.7 3.0 3.1 3.4 3.7 4.1 4.4 5.2 3.8 3.7 3.6 3.1 3.6 3.6 3.4 2.9 2.6 3.1 3.4 46 Thailand 1.5 1.7 1.7 1.9 2.2 2.2 2.2 2.4 2.8 3.1 2.9 47 Other Asia 1.7 2.0 2.3 2.5 2.7 2.7 2.7 2.6 3.0 2.9 3.1 Africa 48 Egypt ..44 .4 ..33 ..55 ..33 ..22 ..22 .2 ..22 ..44 .4 49 Morocco .8 .7 .7 .7 .6 .6 .5 .6 .6 .6 .7 50 Zaire .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 1.0 .7 .7 .6 .9 1.0 .8 .9 .8 .8 1.0 52 Eastern Europe 2.3 2.4 2.9 3.0 3.1 3.1 2.9 3.2 3.0 3.0 3.3 53 Russia4 .2 .9 1.4 1.7 1.8 1.9 1.7 1.9 1.7 1.6 1.5 54 Yugoslavia5 1.2 .9 ..88 .7 .7 .6 .6 .6 .6 .6 .5 55 Other .9 .7 ..66 .6 .7 .6 .7 .7 .7 .9 1.4 56 Offshore banking centers 44.7 54.2 63.0 61.4 54.5 58.3 60.2r 58.0* 67.9" 72.5 80.3r 57 Bahamas 2.9 11.9 15.3 12.9 8.9 6.9 9.7r 7.1r 12.7' 12.6 15.4 58 Bermuda 4.4 2.3 3.9 5.1 3.8 6.2 4.1 4.5 5.5 8.1 8.4 59 Cayman Islands and other British West Indies 11.7 15.8 18.6 19.3 16.9 21.8 17.6 15.6 15.1 16.9 17.2r 60 Netherlands Antilles 7.9 1.2 1.0 .8 .7 1.1 1.6 2.5 2.8 2.3 2.7 61 Panama6 1.4 1.4 1.6 1.9 2.0 1.9 2.0 2.1 2.1 2.4 2.0 62 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 63 Hong Kong 9.7 14.4 14.0 14.9 15.2 13.8 16.7 16.9 19.1 18.7 21.7 64 Singapore 6.6 7.1 8.5 6.4 6.8 6.5 8.4 9.3 10.4 11.2 12.7 65 Other7 .0 .0 .0 .0 .0 .0 .0 .0 .0 .1 .0 66 Miscellaneous and unallocated8 39.9 48.0 47.8 48.6 36.8 39.7 38.8 46.2 46.3 43.3 73.6r 1. The banking offices covered by these data include U.S. offices and foreign Saudi Arabia, and United Arab Emirates); and Bahrain and Oman (not formally branches of U.S. banks, including U.S. banks that are subsidiaries of foreign members of OPEC). banks. Offices not covered include U.S. agencies and branches of foreign banks. 3. Excludes Liberia. Beginning March 1994 includes Namibia. Beginning March 1994, the data include large foreign subsidiaries of U.S. banks. 4. As of December 1992, excludes other republics of the former Soviet Union. The data also include other types of U.S. depository institutions as well as some 5. As of December 1992, excludes Croatia, Bosnia and Hercegovinia, and types of brokers and dealers. To eliminate duplication, the data are adjusted to Slovenia. exclude the claims on foreign branches held by a U.S. office or another foreign 6. Includes Canal Zone. branch of the same banking institution. 7. Foreign branch claims only. 2. Organization of Petroleum Exporting Countries, shown individually; other 8. Includes New Zealand, Liberia, and international and regional members of OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A61 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1992 1993 TTyyppee ooff lliiaabbiilliittyy aanndd aarreeaa oorr ccoouunnttrryy 11999900 11999911 11999922 Dec. Mar. June Sept. Dec. Mar. 1 46,043 44,708 44,979 44,979 45,832 46,155 48,184 48,596 50,075 2 Payable in dollars 40,786 39,029 37,250 37,250 37,870 37,002 39,286 37,857 37,894 3 Payable in foreign currencies 5,257 5,679 7,729 7,729 7,962 9,153 8,898 10,739 12,181 By type 4 Financial liabilities 21,066 22,518 23,098 23,098 23,670 24,497 26,161 27,507 28,564 5 Payable in dollars 16,979 18,104 16,754 16,754 17,152 16,910 18,680 18,152 18,458 6 Payable in foreign currencies 4,087 4,414 6,344 6,344 6,518 7,587 7,481 9,355 10,106 7 Commercial liabilities 24,977 22,190 21,881 21,881 22,162 21,658 22,023 21,089 21,511 8 Trade payables 10,683 9,252 9,777 9,777 9,915 9,614 9,456 9,007 9,510 9 Advance receipts and other liabilities 14,294 12,938 12,104 12,104 12,247 12,044 12,567 12,082 12,001 10 Payable in dollars 23,807 20,925 20,496 20,496 20,718 20,092 20,606 19,705 19,436 11 Payable in foreign currencies 1,170 1,265 1,385 1,385 1,444 1,566 1,417 1,384 2,075 By area or country Financial liabilities 17 Europe 10,978 12,003 13,128 13,128 13,488 14,120 16,366 17,884 19,237 13 Belgium and Luxembourg 394 216 414 414 306 268 278 175 525 14 France 975 2,106 1,623 1,623 1,625 2,216 2,074 2,323 2,586 15 Germany 621 682 810 810 820 787 779 902 962 16 Netherlands 1,081 1,056 606 606 639 585 573 534 564 17 Switzerland 545 408 569 569 503 491 378 634 1,200 18 United Kingdom 6,357 6,528 8,430 8,430 9,035 9,118 11,694 12,712 12,477 19 Canada 229 292 544 544 604 492 663 859 508 70 Latin America and Caribbean 4,153 4,784 4,053 4,053 4,299 4,199 3,719 3,359 3,553 7.1 Bahamas 371 537 369 369 521 426 1,301 1,148 1,157 77 Bermuda 0 114 114 114 114 124 114 0 120 7.3 Brazil 0 6 19 19 18 18 18 18 18 74 British West Indies 3,160 3,524 2,860 2,860 2,970 2,951 1,600 1,533 1,613 25 Mexico 5 7 12 12 13 11 15 17 14 26 Venezuela 4 4 6 6 5 5 5 5 5 77 Asia 5,295 5,381 5,334 5,334 5,213 5,516 5,263 5,243 5,110 28 Japan 4,065 4,116 4,266 4,266 4,202 4,334 4,234 4,174 4,058 29 Middle East oil-exporting countries 5 13 19 19 24 19 23 23 24 30 Africa 2 6 6 6 6 130 132 133 133 31 Oil-exporting countries 0 4 0 0 0 123 124 123 124 32 All other4 409 52 33 33 60 40 18 29 23 Commercial liabilities 33 Europe 10,310 8,701 7,398 7,398 6,992 6,807 7,051 6,825 6,564 34 Belgium and Luxembourg 275 248 298 298 264 269 257 240 253 35 France 1,218 1,039 700 700 707 775 643 648 521 36 Germany 1,270 1,052 729 729 650 603 571 684 563 37 Netherlands 844 710 535 535 537 577 601 687 627 38 Switzerland 775 575 350 350 472 441 536 375 500 39 United Kingdom 2,792 2,297 2,505 2,505 2,119 2,186 2,319 2,051 2,133 40 Canada 1,261 1,014 1,002 1,002 1,005 942 847 883 1,039 41 Latin America and Caribbean 1,672 1,355 1,533 1,533 1,776 1,828 1,759 1,661 1,907 42. Bahamas 12 3 3 3 11 6 4 21 8 43 Bermuda 538 310 307 307 429 356 340 348 493 44 Brazil 145 219 209 209 236 226 214 216 211 45 British West Indies 30 107 33 33 34 16 36 26 19 46 Mexico 475 307 457 457 553 659 577 485 557 47 Venezuela 130 94 142 142 171 172 173 126 150 48 Asia 9,483 9,334 10,805 10,805 10,988 10,764 11,146 10,665 10,778 49 Japan 3,651 3,721 3,823 3,823 3,940 3,634 3,956 4,158 4,548 50 Middle Eastern oil-exporting countries ' 2,016 1,498 1,889 1,889 1,796 1,815 1,968 1,525 1,535 51 Africa 844 715 568 568 675 665 641 463 489 52 Oil-exporting countries3 422 327 309 309 322 378 320 171 199 53 Other4 1,406 1,071 575 575 726 652 579 592 734 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

A62 International Statistics • October 1994 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1992 1993 1994 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11999900 11999911 11999922rr Dec. Mar. June Sept. Dec. Mar. 1 Total 35,348 45,262 42,312 42,312 46,442 42,203 42,781 43,115 42,798r 2 Payable in dollars 32,760 42,564 39,526 39,526 43,337 38,850 39,333 39,805 39,272r 3 Payable in foreign currencies 2,589 2,698 2,786 2,786 3,105 3,353 3,448 3,310 3,526 By type 4 Financial claims 19,874 27,882 23,779 23,779 26,436 22,243 23,753 23,191 23,067 5 Deposits 13,577 20,080 15,136 15,136 16,576 11,758 13,361 13,049 13,621 6 Payable in dollars 12,552 19,080 14,313 14,313 15,461 10,799 12,366 12,215 12,722 7 Payable in foreign currencies 1,025 1,000 823 823 1,115 959 995 834 899 8 Other financial claims 6,297 7,802 8,643 8,643 9,860 10,485 10,392 10,142 9,446 9 Payable in dollars 5,280 6,910 7,724 7,724 8,939 9,373 9,472 9,150 8,382 10 Payable in foreign currencies 1,017 892 919 919 921 1,112 920 992 1,064 11 Commercial claims 15,475 17,380 18,533 18,533 20,006 19,960 19,028 19,924 19,731r 12 Trade receivables 13,657 14,468 15,976 15,976 17,652 17,477 16,050 16,980 16,893r 13 Advance payments and other claims 1,817 2,912 2,557 2,557 2,354 2,483 2,978 2,944 2,838r 14 Payable in dollars 14,927 16,574 17,489 17,489 18,937 18,678 17,495 18,440 18,168r 15 Payable in foreign currencies 548 806 1,044 1,044 1,069 1,282 1,533 1,484 1,563 By area or country Financial claims 16 Europe 9,645 13,441 9,315 99,,331155 10,382 9,715 8,371 8,042 7,347 17 Belgium and Luxembourg 76 13 8 88 67 74 70 131 122 18 France 371 269 764 764 905 781 708 749 753 19 Germany 367 283 326 326 388 383 362 472 441 20 Netherlands 265 334 515 515 544 499 485 483 503 21 Switzerland 357 581 490 490 478 494 512 506 520 22 United Kingdom 7,971 11,534 6,236 6,236 6,968 6,550 5,227 4,538 3,916 23 Canada 2,934 2,642 1,714 1,714 2,011 1,795 1,617 1,851 2,534 24 Latin America and Caribbean 6,201 10,717 11,302 11,302 9,926 6,976 10,306 10,943 10,108 25 Bahamas 1,090 827 658 658 320 742 550 496 481 26 Bermuda 3 8 40 40 79 258 197 125 34 27 Brazil 68 351 686 686 592 590 590 599 567 28 British West Indies 4,635 9,056 9,297 9,297 8,310 4,692 8,134 8,645 8,049 29 Mexico 177 212 435 435 399 455 543 634 617 30 Venezuela 25 40 29 29 23 24 25 161 26 31 Asia 860 640 864 864 3,362 3,015 2,755 1,779 2,623 32 Japan 523 350 668 668 3,123 2,485 2,215 1,063 1,769 33 Middle East oil-exporting countries2 8 5 3 3 3 10 5 3 5 34 Africa 37 57 79 79 128 125 88 99 76 35 Oil-exporting countries3 0 1 9 9 1 1 1 1 0 36 All other4 195 385 505 505 627 617 616 477 379 Commercial claims 37 Europe 7,044 8,193 8,444 8,444 8,905 9,044 8,177 8,809 8,416r 38 Belgium and Luxembourg 212 194 189 189 170 173 163 183 171 39 France 1,240 1,585 1,537 1,537 1,492 1,504 1,429 1,932 l^ 40 Germany 807 955 933 933 1,025 1,042 934 997 921r 41 Netherlands 555 645 552 552 734 565 408 415 351r 42 Switzerland 301 295 362 362 437 442 376 424 402 43 United Kingdom 1,775 2,086 2,094 2,094 2,360 2,554 2,287 2,239 2,147r 44 Canada 1,074 1,121 1,281 1,281 1,329 1,356 1,357 1,350 1,441 45 Latin America and Caribbean 2,375 2,655 3,043 3,043 3,473 3,454 3,063 3,196 3,445r 46 Bahamas 14 13 28 28 18 17 20 11 U 47 Bermuda 246 264 255 255 195 239 225 173 212 48 Brazil 326 427 357 357 836 788 407 460 406 49 British West Indies 40 41 40 40 17 43 39 70 58 50 Mexico 661 842 924 924 997 911 858 936 960r 51 Venezuela 192 203 345 345 349 317 286 295 309r 52 Asia 4,127 4,591 4,847 4,847 5,419 5,178 5,505 5,587 5,515' 53 Japan 1,460 1,899 1,900 1,900 2,158 1,858 2,502 2,126 2,285r 54 Middle Eastern oil-exporting countries2 460 620 693 693 773 673 456 656 617 55 Africa 488 430 554 554 463 515 493 492 494r 56 Oil-exporting countries3 67 95 78 78 75 98 107 71 90 57 Other4 367 390 364 364 417 413 433 490 420 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 A63 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1994 1993 1994 Transaction and area or country 1992 1993 J J a u n n . e - Dec. Jan. Feb. Mar. Apr. Mayr June? U.S. corporate securities STOCKS 1 Foreign purchases 221,367 319,449 187,849 32,843 32,238 34,428 36,340 29,851 26,687 28,305 2 Foreign sales 226,503 297,913 183,766 28,362 28,965 30,709 37,079 31,653 25,111 30,249 3 Net purchases or sales (-) -5,136 21,536 4,083 4,481 3,273 3,719 -739 -1,802 1,576 -1,944 4 Foreign countries -5,169 21,264 4,146 4,457 3,273 3,786 -737 -1,800 1,559 -1,935 5 Europe -4,927 10,615 8,367 2,415 2,951 3,447 379 802 1,209 -421 6 France -1,350 -103 -393 61 119 190 -587 -83 210 -242 7 Germany -80 1,647 2,711 266 1,170 440 332 252 398 119 8 Netherlands -262 -603 565 183 169 210 -155 82 176 83 9 Switzerland 168 2,986 1,112 338 254 505 79 173 30 71 10 United Kingdom -3,301 4,510 2,268 1,078 614 1,215 389 230 172 -352 11 Canada 1,407 -3,213 -114 -110 314 -284 -59 290 156 -531 12 Latin America and Caribbean 2,203 5,709 -1,081 1,058 948 910 -31 -1,862 -207 -839 13 Middle East1 -88 -311 -111 11 -100 -17 64 4 49 -111 14 Other Asia -3,943 8,199 -3,443 965 -911 -379 -1,295 -1,191 476 -143 15 Japan -3,598 3,826 -1,516 681 -800 -447 -117 -658 335 171 16 Africa 10 63 44 20 10 -17 13 33 -1 6 17 Other countries 169 202 484 98 61 126 192 124 -123 104 18 Nonmonetary international and regional organizations 33 272 -63 24 0 -67 -2 -2 17 -9 BONDS2 19 Foreign purchases 214,922 283,725 164,357 28,395 24,607 22,271 30,607 29,756r 24,853 32,263 20 Foreign sales 175,842 217,481 132,185 17,427 19,418 18,263 25,147 27,407r 20,848 21,102 21 Net purchases or sales (-) 39,080 66,244 32,172 10,968 5,189 4,008 5,460 2,349r 4,005 11,161 22 Foreign countries 37,964 65,706 31,895 10,901 5,205 3,977 5,373 2,364r 3,943 11,033 23 Europe 17,435 22,055 15,115 3,118 2,742 2,764 2,870 412r 430 5,897 24 France 1,203 2,346 253 145 53 -57 32 181 -3 47 25 Germany 2,480 883 -184 -62 -101 90 -64 83 -244 52 26 Netherlands 540 -290 1,946 95 75 99 330 216 358 868 27 Switzerland -579 -627 521 28 176 57 131 -123 136 144 28 United Kingdom 12,421 19,158 14,576 2,853 1,676 2,799 3,259 556r 796 5,490 29 Canada 237 1,653 675 319 23 -141 101 -16 286 422 30 Latin America and Caribbean 9,300 16,493 7,585 3,681 1,638 909 1,850 873r 762 1,553 31 Middle East1 3,166 3,257 1,124 383 161 -83 59 7 33 947 32 Other Asia 7,545 20,826 6,955 3,137 670 480 417 903 2,287 2,198 33 Japan -450 11,569 3,094 2,477 -95 37 -363 523 1,575 1,417 34 Africa 354 1,149 23 119 -51 10 -10 55 10 9 35 Other countries -73 273 418 144 22 38 86 130 135 7 36 Nonmonetary international and regional organizations 1,116 538 277 67 -16 31 87 -15 62 128 Foreign securities 37 Stocks, net purchases or sales (-)3 -32,259 -63,320 -29,297 -6,503 -5,860 -6,248 -6,457 -l,237r -4,012 -5,483 38 Foreign purchases 150,051 246,011 202,916 31,135 32,432 38,374 37,032 33,079r 30,932 31,067 39 Foreign sales 182,310 309,331 232,213 37,638 38,292 44,622 43,489 34,316r 34,944 36,550 40 Bonds, net purchases or sales (-) -15,605 -61,023 -13,677 -8,158 -9,483 -4,532 6,139 -5,454r -130 -217 41 Foreign purchases 513,589 839,118 489,608 79,334 84,223 85,903 118,931 68,164r 63,023 69,364 42 Foreign sales 529,194 900,141 503,285 87,492 93,706 90,435 112,792 73,618r 63,153 69,581 43 Net purchases or sales (—), of stocks and bonds -47,864 -124,343 -42,974 -14,661 -15,343 -10,780 -318 -6,691r -4,142 -5,700 44 Foreign countries -51,274 -124,504 -43,098 -14,691 -15,386 -10,648 -295 —6,647r -4,429 -5,693 45 Europe -31,350 -81,175 1,497 -4,351 -5,512 -3,568 8,122 -7r -1,567 4,029 46 Canada -6,893 -14,649 -4,737 -1,733 -2,741 -2,192 619 -316 485 -592 47 Latin America and Caribbean -4,340 -9,549 -19,570 -4,566 -3,124 -327 -2,852 -6,602r -2,161 -4,504 48 Asia -7,923 -15,044 -18,333 -3,555 -3,171 -4,449 -6,598 565 -527 -4,153 49 Africa -13 -185 -238 13 -60 18 -118 -28 -4 -46 50 Other countries -755 -3,902 -1,717 -499 -778 -130 532 -259 -655 -427 51 Nonmonetary international and regional organizations 3,410 161 124 30 43 -132 -23 -44 287 -7 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

A64 International Statistics • October 1994 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1994 1993 1994 Country or area 1992 1993 J J a u n n . e - Dec. Jan. Feb. Mar. Apr. May Junep Transactions, net purchases or sales (-) during period1 1 Estimated total 39,288 24,355 14,207 408 1,853 12,995 -1,318 -13,607 19,727 -5,443 2 Foreign countries 37,935 24,159 14,836 597 1,592 12,884 -1,446 -12,879 19,676 -4,991 3 Europe 19,625 -2,712 6,408 400 114 3,552 2,281 -5,356 8,629 -2,812 4 Belgium and Luxembourg 1,985 1,218 136 -65 -63 128 269 -175 147 -170 5 Germany 2,076 -10,033 2,500 571 2,327 -1,055 -729 -465 2,279 143 6 Netherlands -2,959 -515 267 -189 52 418 -971 187 21 560 7 Sweden -804 1,421 512 -31 -4 229 34 -154 150 257 8 Switzerland 488 -1,511 2,203 -70 313 555 11,,338855 3 -211 158 9 United Kingdom 24,184 6,055 -3,405 -511 -1,888 2,455 668888 -3,910 4,812 -5,562 10 Other Europe and former U.S.S.R -5,345 653 4,195 695 -623 822 1,605 -842 1,431 1,802 11 Canada 562 11,252 -1,018 846 32 168 357 -1,662 98 -11 12 Latin America and Caribbean -3,222 -4,651 -7,953 -4,830 3,677 7,512 -3,428 -6,002 -2,652 -7,060 13 Venezuela 539 389 -315 56 -358 235 93 -146 -130 -9 14 Other Latin America and Caribbean -1,956 -5,884 -14,569 -1,061 3,118 2,860 -4,204 -6,911 -2,708 -6,724 15 Netherlands Antilles -1,805 844 6,931 -3,825 917 4,417 683 1,055 186 -327 16 Asia 23,517 20,939 18,099 4,029 -2,152 1,191 151 403 13,378 5,128 17 Japan 9,817 17,073 14,697 649 -3,074 -1,403 2,914 2,976 8,185 5,099 18 Africa 1,103 1,156 -227 115 -135 -120 -18 59 -29 16 19 Other -3,650 -1,825 -473 37 56 581 -789 -321 252 -252 20 Nonmonetary international and regional organizations 1,353 196 -629 -189 261 111 128 -728 51 -452 21 International 1,018 -310 -420 124 455 1 173 -724 70 -395 22 Latin American regional 533 654 50 -1 7 116 -37 21 -111 54 MEMO 23 Foreign countries 37,935 24,159 14,836 597 1,592 12,884 -1,446 -12,879 19,676 -4,991 24 Official institutions 6,876 1,238 16,480 3,637 4,284 4,045 -5,051 -640 11,253 2,589 25 Other foreign2 31,059 22,921 -1,644 -3,040 -2,692 8,839 3,605 -12,239 8,423 -7,580 Oil-exporting countries 26 Middle East2 4,317 -8,543 -1,186 84 -1,518 900 33 144 -250 -495 27 Africa3 11 -5 0 -9 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 A65 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS1 Percent per year Rate on Aug. 31, 1994 Rate on Aug. 31, 1994 Rate on Aug. 31, 1994 Country Country Country e M ffe o c n t t i h v e e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e Austria.. 4.5 May 1994 Germany... 4.5 May 1994 Norway 4.75 Feb. 1994 Belgium . 4.5 May 1994 Italy 7.5 Aug. 1994 Switzerland 3.5 Apr. 1994 Canada.. 5.6 Aug. 1994 Japan 1.75 Sept. 1993 United Kingdom 12.0 Sept. 1992 Denmark 5.0 May 1994 Netherlands 4.5 May 1994 France2.. 5.0 July 1994 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 1994 TTyyppee oorr ccoouunnttrryy 11999911 11999922 11999933 Feb. Mar. Apr. May June July Aug. 5.86 3.70 3.18 3.43 3.75 4.00 4.51 4.51 4.74 4.80 11.47 9.56 5.88 5.15 5.12 5.14 5.13 5.13 5.15 5.47 9.07 6.76 5.14 3.89 4.45 6.07 6.38 6.50 6.28 5.71 9.15 9.42 7.17 5.78 5.73 5.48 5.07 4.95 4.86 4.89 8.01 7.67 4.79 4.04 3.99 3.96 3.94 4.21 4.17 4.21 6 Netherlands 9.19 9.25 6.73 5.19 5.23 5.22 5.04 4.95 4.84 4.88 9.49 10.14 8.30 6.18 6.11 5.89 5.52 5.44 5.51 5.46 8 Italy 12.04 13.91 10.09 8.42 8.36 8.07 7.76 8.04 8.39 8.88 9.30 9.31 8.10 6.39 6.10 5.84 5.27 5.33 5.53 5.47 10 Japan 7.33 4.39 2.96 2.21 2.26 2.26 2.17 2.12 2.14 2.28 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

A66 International Statistics • October 1994 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar except as noted 1994 CCoouunnttrryy//ccuurrrreennccyy uunniitt 11999911 11999922 11999933 Mar. Apr. May June July Aug. 1 Australia/dollar2 77.872 73.521 67.993 71.087 71.565 72.433 73.291 73.409 74.010 2 Austria/schilling 11.686 10.992 11.639 11.896 11.948 11.651 11.446 11.027 11.010 3 Belgium/franc 34.195 32.148 34.581 34.862 34.979 34.108 33.514 32.315 32.240 4 Canada/dollar 1.1460 1.2085 1.2902 1.3644 1.3830 1.3808 1.3836 1.3826 1.3783 5 China, P.R./yuan 5.3337 5.5206 5.7795 8.7241 8.7251 8.6859 8.6836 8.6605 8.6072 6 Denmark/krone 6.4038 6.0372 6.4863 6.6296 6.6642 6.4857 6.3786 6.1581 6.1845 7 Finland/markka 4.0521 4.4865 5.7251 5.5436 5.4997 5.4194 5.4241 5.1996 5.1493 8 France/franc 5.6468 5.2935 5.6669 5.7647 5.8170 5.6728 5.5597 5.3702 5.3602 9 Germany/deutsche mark 1.6610 1.5618 1.6545 1.6909 1.6984 1.6565 1.6271 1.5674 1.5646 10 Greece/drachma 182.63 190.81 229.64 246.71 249.08 245.41 244.77 236.92 237.11 11 Hong Kong/dollar 7.7712 7.7402 7.7357 7.7268 7.7269 7.7262 7.7309 7.7265 7.7272 12 India/rupee 22.712 28.156 31.291 31.415 31.391 31.375 31.385 31.376 31.373 13 Ireland/pound 161.39 170.42 146.47 143.40 143.42 147.12 149.54 152.79 152.22 14 Italy/lira 1,241.28 1,232.17 1,573.41 1,666.63 1,626.07 1,594.56 1,592.22 1,562.31 1,582.15 15 Japanfyen 134.59 126.78 111.08 105.10 103.48 103.75 102.53 98.44 99.94 16 Malaysia/ringgit 2.7503 2.5463 2.5738 2.7171 2.6887 2.6169 2.5942 2.5948 2.5633 17 Netherlands/guilder 1.8720 1.7587 1.8585 1.9006 1.9074 1.8597 1.8242 1.7585 1.7570 18 New Zealand/dollar2 57.832 53.792 54.127 57.093 56.908 58.347 59.121 60.063 60.119 19 Norway/krone 6.4912 6.2142 7.0979 7.3419 7.3680 7.1789 7.0686 6.8560 6.8331 20 Portugal/escudo 144.77 135.07 161.08 174.00 173.54 171.15 168.76 160.98 159.80 21 Singapore/dollar 1.7283 1.6294 1.6158 1.5819 1.5628 1.5464 1.5310 1.5137 1.5045 22 South Africa/rand 2.7633 2.8524 3.2729 3.4586 3.5789 3.6346 3.6318 3.6705 3.5968 23 South Korea/won 736.73 784.58 805.75 810.69 811.71 809.79 809.86 808.39 806.83 24 Spain/peseta 104.01 102.38 127.48 138.78 138.14 136.62 134.23 129.31 129.90 25 Sri Lanka/rupee 41.200 44.013 48.205 48.931 48.925 49.067 49.232 49.010 49.241 26 Sweden/krona 6.0521 5.8258 7.7956 7.9156 7.8850 7.7181 7.7968 7.7471 7.7420 27 Switzerland/franc 1.4356 1.4064 1.4781 1.4292 1.4383 1.4125 1.3727 1.3239 1.3184 28 Taiwan/dollar 26.759 25.160 26.416 26.414 26.389 26.792 27.018 26.658 26.419 29 Thailand/baht 25.528 25.411 25.333 25.325 25.268 25.212 25.137 24.977 25.021 30 United Kingdom/pound 176.74 176.63 150.16 149.19 148.23 150.42 152.62 154.67 154.22 MEMO 31 United States/dollar3 89.84 86.61 93.18 94.35 94.39 92.79 91.60 89.06 89.26 1. Averages of certified noon buying rates in New York for cable transfers. the 1972-76 average world trade of that country divided by the average world Data in this table also appear in the Board's G.5 (405) monthly statistical release. trade of all ten countries combined. Series revised as of August 1978 (see Federal For ordering address, see inside front cover. Reserve Bulletin, vol. 64 (August 1978), p. 700). 2. Value m 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

67 Guide to Statistical Releases and Special Tables STATISTICAL RELEASES—List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases June 1994 A76 SPECIAL TABLES—Quarterly Data Published Irregularly, with Latest Bulletin Reference Title and Date Issue Page Assets and liabilities of commercial banks March 31, 1993 August 1993 A70 June 30, 1993 November 1993 A70 September 30, 1993 February 1994 A70 December 31, 1993 May 1994 A68 Terms of lending at commercial banks August 1993 November 1993 A76 November 1993 February 1994 A76 February 1994 May 1994 A74 May 1994 August 1994 A68 Assets and liabilities of U.S. branches and agencies of foreign banks June 30, 1993 November 1993 A80 September 30, 1993 February 1994 A80 December 31, 1993 May 1994 A78 March 31, 1994 August 1994 A72 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 All Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

68 Index to Statistical Tables References are to pages A3-A66 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Demand deposits—Continued Agricultural loans, commercial banks, 21, 22 Ownership by individuals, partnerships, and Assets and liabilities (See also Foreigners) corporations, 23 Banks, by classes, 18—22 Turnover, 17 Domestic finance companies, 36 Depository institutions Federal Reserve Banks, 11 Reserve requirements, 9 Financial institutions, 28 Reserves and related items, 4, 5, 6, 13 Foreign banks, U.S. branches and agencies, 23 Deposits ( See also specific types) Automobiles Banks, by classes, 4, 18-22, 24 Consumer installment credit, 39 Federal Reserve Banks, 5,11 Production, 47, 48 Interest rates, 16 Turnover, 17 Discount rates at Reserve Banks and at foreign central banks and BANKERS acceptances, 10, 22, 26 foreign countries (See Interest rates) Bankers balances, 18-22. (See also Foreigners) Discounts and advances by Reserve Banks (See Loans) Bonds (See also U.S. government securities) Dividends, corporate, 35 New issues, 35 Rates, 26 EMPLOYMENT, 45 Branch banks, 23 Eurodollars, 26 Business activity, nonfinancial, 45 Business expenditures on new plant and equipment, 35 FARM mortgage loans, 38 Business loans (See Commercial and industrial loans) Federal agency obligations, 5,10,11,12, 31, 32 Federal credit agencies, 33 CAPACITY utilization, 46 Federal finance Capital accounts Debt subject to statutory limitation, and types and ownership Banks, by classes, 18, 69, 71, 73 of gross debt, 30 Federal Reserve Banks, 11 Receipts and outlays, 28, 29 Central banks, discount rates, 65 Treasury financing of surplus, or deficit, 28 Certificates of deposit, 26 Treasury operating balance, 28 Commercial and industrial loans Federal Financing Bank, 28, 33 Commercial banks, 21 Federal funds, 7, 19, 21, 22,23,26, 28 Weekly reporting banks, 21-23 Federal Home Loan Banks, 33 Commercial banks Federal Home Loan Mortgage Corporation, 33, 37, 38 Assets and liabilities, 18-22 Federal Housing Administration, 33, 37, 38 Commercial and industrial loans, 18-23 Federal Land Banks, 38 Consumer loans held, by type and terms, 39 Federal National Mortgage Association, 33, 37, 38 Deposit interest rates of insured, 16 Federal Reserve Banks Loans sold outright, 21 Condition statement, 11 Real estate mortgages held, by holder and property, 38 Discount rates (See Interest rates) Time and savings deposits, 4 U.S. government securities held, 5, 11, 12, 30 Commercial paper, 24, 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, 24,26 Profits and their distribution, 35 Financial institutions, loans to, 21, 22, 23 Security issues, 34,65 Float, 5 Cost of living (See Consumer prices) Flow of funds, 40, 42, 43,44 Credit unions, 39 Foreign banks, assets and liabilities of U.S. branches and Currency in circulation, 5, 14 agencies, 22, 23 Customer credit, stock market, 27 Foreign currency operations, 11 Foreign deposits in U.S. banks, 5, 11,21, 22 Foreign exchange rates, 66 DEBITS to deposit accounts, 17 Foreign trade, 54 Debt (See specific types of debt or securities) Foreigners Demand deposits Claims on, 55, 58, 59, 60, 62 Banks, by classes, 18-23 Liabilities to, 22, 54, 55, 56, 61, 63, 64 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

69 GOLD REAL estate loans Certificate account, 11 Banks, by classes, 21, 22, 38 Stock, 5, 54 Terms, yields, and activity, 37 Government National Mortgage Association, 33, 37, 38 Type of holder and property mortgaged, 38 Gross domestic product, 51 Repurchase agreements, 7, 21-23 Reserve requirements, 9 HOUSING, new and existing units, 49 Reserves Commercial banks, 18 INCOME, personal and national, 45, 51,52 Depository institutions, 4, 5, 6, 13 Industrial production, 45,47 Federal Reserve Banks, 11 Installment loans, 39 U.S. reserve assets, 54 Insurance companies, 30,38 Residential mortgage loans, 37 Interest rates Retail credit and retail sales, 39,40, 45 Bonds, 26 Consumer installment credit, 39 SAVING Deposits, 16 Flow of funds, 40,42, 43, 44 Federal Reserve Banks, 8 National income accounts, 51 Foreign central banks and foreign countries, 66 Savings and loan associations, 38, 39, 40 Money and capital markets, 26 Savings banks, 38, 39 Mortgages, 37 Savings deposits (See Time and savings deposits) Prime rate, 25 Securities (See also specific types) International capital transactions of United States, 53-65 Federal and federally sponsored credit agencies, 33 International organizations, 55, 56, 58,61, 62 Foreign transactions, 63 Inventories, 51 New issues, 34 Investment companies, issues and assets, 35 Prices, 27 Investments (See also specific types) Special drawing rights, 5, 11, 53, 54 Banks, by classes, 18—23 State and local governments Commercial banks, 4,18-23 Deposits, 21, 22 Federal Reserve Banks, 11,12 Holdings of U.S. government securities, 30 Financial institutions, 38 New security issues, 34 Ownership of securities issued by, 21, 22 LABOR force, 45 Rates on securities, 26 Life insurance companies (See Insurance companies) Stock market, selected statistics, 27 Loans (See also specific types) Stocks (See also Securities) Banks, by classes, 18—23 New issues, 34 Commercial banks, 4,18-23 Prices, 27 Federal Reserve Banks, 5, 6, 8,11, 12 Financial institutions, 38 Student Loan Marketing Association, 33 Insured or guaranteed by United States, 37, 38 TAX receipts, federal, 29 MANUFACTURING Thrift institutions, 4. (See also Credit unions and Savings and Capacity utilization, 46 loan associations) Production, 46, 48 Time and savings deposits, 4, 14, 16, 18-23 Margin requirements, 27 Trade, foreign, 54 Member banks (See also Depository institutions) Treasury cash, Treasury currency, 5 Federal funds and repurchase agreements, 7 Treasury deposits, 5, 11, 28 Reserve requirements, 9 Treasury operating balance, 28 Mining production, 48 UNEMPLOYMENT, 45 Mobile homes shipped, 49 U.S. government balances Monetary and credit aggregates, 4,13 Commercial bank holdings, 18-23 Money and capital market rates, 26 Treasury deposits at Reserve Banks, 5, 11, 28 Money stock measures and components, 4,14 U.S. government securities Mortgages (See Real estate loans) Bank holdings, 18-23, 30 Mutual funds, 35 Dealer transactions, positions, and financing,3 2 Mutual savings banks (See Thrift institutions) Federal Reserve Bank holdings, 5, 11, 12, 30 Foreign and international holdings and NATIONAL defense outlays, 29 transactions, 11, 30, 64 National income, 51 Open market transactions, 10 Outstanding, by type and holder, 28, 30 OPEN market transactions, 10 Rates, 25 U.S. international transactions, 53-66 Utilities, production, 48 PERSONAL income, 52 Prices Consumer and producer, 45, 50 VETERANS Administration, 37, 38 Stock market, 27 Prime rate, 25 WEEKLY reporting banks, 22-24 Producer prices, 45, 50 Wholesale (producer) prices, 45, 50 Production, 45,47 Profits, corporate, 35 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

70 Federal Reserve Board of Governors and Official Staff ALAN GREENSPAN, Chairman EDWARD W. KELLEY, JR. ALAN S. BLINDER, Vice Chairman JOHN P. LAWARE 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, Deputy Congressional Liaison 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 THOMAS A. CONNORS, Assistant Director DIANE E. WERNEKE, Special Assistant to the Board PETER HOOPER III, Assistant Director KAREN H. JOHNSON, Assistant Director LEGAL DIVISION CATHERINE L. MANN, Assistant Director RALPH W. SMITH, JR., Assistant Director J. VIRGIL MATTINGLY, JR., General Counsel SCOTT G. ALVAREZ, Associate General Counsel RICHARD M. ASHTON, Associate General Counsel DIVISION OF RESEARCH AND STATISTICS OLIVER IRELAND, Associate General Counsel MICHAEL J. PRELL, Director KATHLEEN M. O'DAY, Associate General Counsel EDWARD C. ETTIN, Deputy Director ROBERT DEV. FRIERSON, Assistant General Counsel DAVID J. STOCKTON, Deputy Director KATHERINE H. WHEATLEY, Assistant General Counsel MARTHA BETHEA, Associate Director WILLIAM R. JONES, Associate Director OFFICE OF THE SECRETARY MYRON L. KWAST, Associate Director WILLIAM W. WILES, Secretary PATRICK M. PARKINSON, Associate Director JENNIFER J. JOHNSON, Deputy Secretary THOMAS D. SIMPSON, Associate Director LAWRENCE SLIFMAN, Associate Director BARBARA R. LOWREY, Associate Secretary MARTHA S. SCANLON, Deputy Associate Director DIVISION OF BANKING PETER A. TINSLEY, Deputy Associate Director FLINT BRAYTON, Assistant Director SUPERVISION AND REGULATION DAVID S. JONES, Assistant Director RICHARD SPILLENKOTHEN, Director STEPHEN A. RHOADES, Assistant Director STEPHEN C. SCHEMERING, Deputy Director CHARLES S. STRUCKMEYER, Assistant Director DON E. KLINE, Associate Director ALICE PATRICIA WHITE, Assistant Director WILLIAM A. RYBACK, Associate Director JOYCE K. ZICKLER, Assistant Director FREDERICK M. STRUBLE, Associate Director JOHN J. MINGO, Senior Adviser HERBERT A. BIERN, Deputy Associate Director GLENN B. CANNER, Adviser ROGER T. COLE, Deputy Associate Director JAMES I. GARNER, Deputy Associate Director DIVISION OF MONETARY AFFAIRS HOWARD A. AMER, Assistant Director GERALD A. EDWARDS, JR., Assistant Director DONALD L. KOHN, Director JAMES D. GOETZINGER, Assistant Director DAVID E. LINDSEY, Deputy Director STEPHEN M. HOFFMAN, JR., Assistant Director BRIAN F. MADIGAN, Associate Director LAURA M. HOMER, Assistant Director RICHARD D. PORTER, Deputy Associate Director JAMES V. HOUPT, Assistant Director VINCENT R. REINHART, Assistant Director NORMAND R.V. BERNARD, Special Assistant to the Board JACK P. JENNINGS, Assistant Director MICHAEL G. MARTINSON, Assistant Director DIVISION OF CONSUMER RHOGER H PUGH, Assistant Director SIDNEY M. SUSSAN, Assistant Director AND COMMUNITY AFFAIRS MOLLY S. WASSOM, Assistant Director GRIFFITH L. GARWOOD, Director WILLIAM SCHNEIDER, Project Director, GLENN E. LONEY, Associate Director National Information Center DOLORES S. SMITH, Associate Director MAUREEN P. ENGLISH, Assistant Director IRENE SHAWN MCNULTY, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

71 LAWRENCE B. LINDSEY JANET L. YELLEN SUSAN M. PHILLIPS 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) LOUISE L. ROSEMAN, Associate Director DIVISION OF HUMAN RESOURCES CHARLES W. BENNETT, Assistant Director MANAGEMENT JACK DENNIS, JR., Assistant Director DAVID L. SHANNON, Director EARL G. HAMILTON, Assistant Director JOHN R. WEIS, Associate Director JEFFREY C. MARQUARDT, Assistant Director JOHN H. PARRISH, Assistant Director ANTHONY V. DIGIOIA, Assistant Director FLORENCE M. YOUNG, Assistant Director JOSEPH H. HAYES, JR., 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 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

72 Federal Reserve Bulletin • September 1994 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman WILLIAM J. MCDONOUGH, Vice Chairman ALAN S. BLINDER EDWARD W. KELLEY, JR. ROBERT T. PARRY J. ALFRED BROADDUS, JR. JOHN R LAWARE SUSAN M. PHILLIPS ROBERT P. FORRESTAL LAWRENCE B. LINDSEY JANET L. YELLEN JERRY L. JORDAN ALTERNATE MEMBERS THOMAS M. HOENIG CATHY E. MINEHAN JAMES H. OLTMAN THOMAS C. MELZER MICHAEL H. MOSKOW STAFF DONALD L. KOHN, Secretary and Economist JACK H. BEEBE, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary MARVIN S. GOODFRIEND, Associate Economist JOSEPH R. COYNE, Assistant Secretary DAVID E. LINDSEY, Associate Economist GARY P. GILLUM, Assistant Secretary LARRY J. PROMISEL, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel CHARLES J. SIEGMAN, Associate Economist ERNEST T. PATRIKIS, Deputy General Counsel THOMAS D. SIMPSON, Associate Economist MICHAEL J. PRELL, Economist DAVID J. STOCKTON, Associate Economist EDWIN M. TRUMAN, Economist SHEILA L. TSCHINKEL, 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 RICHARD M. ROSENBERG, President EUGENE A. MILLER, Vice President 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 Emeritus WILLIAM J. KORSVIK, Co-Secretary JAMES ANNABLE, Co-Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

73 CONSUMER ADVISORY COUNCIL JEAN POGGE, Chicago, Illinois, Chairman JAMES L. WEST, Tijeras, New Mexico, Vice Chairman BARRY A. ABBOTT, San Francisco, California RONALD HOMER, Boston, Massachusetts JOHN R. ADAMS, Philadelphia, Pennsylvania THOMAS L. HOUSTON, Dallas, Texas JOHN A. BAKER, Atlanta, Georgia KATHARINE W. MCKEE, Durham, North Carolina MULUGETTA BIRRU, Pittsburgh, Pennsylvania EDMUND MIERZWINSKI, Washington, D.C. DOUGLAS D. BLANKE, St. Paul, Minnesota ANNE B. SHLAY, Philadelphia, Pennsylvania GENEVIEVE BROOKS, Bronx, New York JOHN V. SKINNER, Irving, Texas CATHY CLOUD, Washington, D.C. REGINALD J. SMITH, Kansas City, Missouri ALVIN J. COWANS, Orlando, Florida LOWELL N. SWANSON, Portland, Oregon MICHAEL D. EDWARDS, Yelm, Washington JOHN E. TAYLOR, Washington, D.C. MICHAEL FERRY, St. Louis, Missouri MICHAEL W. TIERNEY, Washington, D.C. ELIZABETH G. FLORES, Laredo, Texas LORRAINE VANETTEN, Troy, Michigan NORMA L. FREIBERG, New Orleans, Louisiana GRACE W. WEINSTEIN, Englewood, New Jersey LORI GAY, Los Angeles, California LILY K. YAO, Honolulu, Hawaii GARY S. HATTEM, New York, New York 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, Newport Beach, 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

74 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, The Payment System Handbook. $75.00 per year. MS-127, Board of Governors of the Federal Reserve System, Federal Reserve Regulatory Service. Four vols. (Contains all Washington, DC 20551 or telephone (202) 452-3244 or FAX four Handbooks plus substantial additional material.) (202) 728-5886. When a charge is indicated, payment should $200.00 per year. accompany request and be made payable to the Board of Rates for subscribers outside the United States are as follows Governors of the Federal Reserve System or may be ordered and include additional air mail costs: via Mastercard or Visa. Payment from foreign residents should Federal Reserve Regulatory Service, $250.00 per year. be drawn on a U.S. bank. Each Handbook, $90.00 per year. THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MULTI- COUNTRY MODEL, May 1984. 590 pp. $14.50 each. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS. 1984. 120 pp. WELCOME TO THE FEDERAL RESERVE. March 1989. 14 pp. INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. ANNUAL REPORT. 440 pp. $9.00 each. ANNUAL REPORT: BUDGET REVIEW, 1993-94. FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. December 1986. 264 pp. $10.00 each. $2.50 each in the United States, its possessions, Canada, and Mexico. Elsewhere, $35.00 per year or $3.00 each. FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY- ANNUAL STATISTICAL DIGEST: period covered, release date, SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. number of pages, and price. 1981 October 1982 239 pp. $ 6.50 CONSUMER EDUCATION PAMPHLETS 1982 December 1983 266 pp. $ 7.50 Short pamphlets suitable for classroom use. Multiple copies are 1983 October 1984 264 pp. $11.50 available without charge. 1984 October 1985 254 pp. $12.50 1985 October 1986 231 pp. $15.00 1986 November 1987 288 pp. $15.00 Consumer Handbook on Adjustable Rate Mortgages 1987 October 1988 272 pp. $15.00 Consumer Handbook to Credit Protection Laws 1988 November 1989 256 pp. $25.00 A Guide to Business Credit for Women, Minorities, and Small 1980-89 March 1991 712 pp. $25.00 Businesses 1990 November 1991 185 pp. $25.00 Series on the Structure of the Federal Reserve System 1991 November 1992 215 pp. $25.00 The Board of Governors of the Federal Reserve System 1992 December 1993 215 pp. $25.00 The Federal Open Market Committee Federal Reserve Bank Board of Directors Federal Reserve Banks SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF CHARTS. Weekly. $30.00 per year or $.70 each in the Organization and Advisory Committees United States, its possessions, Canada, and Mexico. Else- A Consumer's Guide to Mortgage Lock-Ins where, $35.00 per year or $.80 each. A Consumer's Guide to Mortgage Settlement Costs A Consumer's Guide to Mortgage Refinancings THE FEDERAL RESERVE ACT and other statutory provisions Home Mortgages: Understanding the Process and Your Right affecting the Federal Reserve System, as amended through to Fair Lending August 1990. 646 pp. $10.00. Making Deposits: When Will Your Money Be Available? Making Sense of Savings REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL When Your Home is on the Line: What You Should Know RESERVE SYSTEM. About Home Equity Lines of Credit ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each volume $2.25; 10 or more of same volume to one address, $2.00 each. GUIDE TO THE FLOW OF FUNDS ACCOUNTS. 672 pp. $8.50 each. FEDERAL RESERVE REGULATORY SERVICE. Loose-leaf; updated monthly. (Requests must be prepaid.) Consumer and Community Affairs Handbook. $75.00 per year. Monetary Policy and Reserve Requirements Handbook. $75.00 per year. Securities Credit Transactions Handbook. $75.00 per year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

75 STAFF STUDIES: Only Summaries Printed in the 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM BULLETIN MORTGAGE LOAN RATES IN TWENTY CITIES, by Stephen A. Rhoades. February 1992. 11 pp. Studies and papers on economic and financial subjects that are of general interest. Requests to obtain single copies of the full 163. CLEARANCE AND SETTLEMENT IN U.S. SECURITIES MAR- KETS, by Patrick Parkinson, Adam Gilbert, Emily Gollob, text or to be added to the mailing list for the series may be sent Lauren Hargraves, Richard Mead, Jeff Stehm, and Mary to Publications Services. Ann Taylor. March 1992. 37 pp. 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, by Staff Studies 1-157 are out of print. James T. Fergus and John L. Goodman, Jr. July 1993. 20 pp. 158. THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIRE- 165. THE DEMAND FOR TRADE CREDIT: AN INVESTIGATION OF MENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE MOTIVES FOR TRADE CREDIT USE BY SMALL BUSINESSES, PRODUCTS, by Mark J. Warshawsky with the assistance of by Gregoiy E. Elliehausen and John D. Wolken. Septem- Dietrich Earnhart. September 1989. 23 pp. ber 1993. 18 pp. 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSID- 166. THE ECONOMICS OF THE PRIVATE PLACEMENT MARKET, IARIES OF BANK HOLDING COMPANIES, by Nellie Liang by Mark Carey, Stephen Prowse, John Rea, and Gregory and Donald Savage. February 1990. 12 pp. Udell. January 1994. Ill pp. 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- 167. A SUMMARY OF MERGER PERFORMANCE STUDIES IN VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by BANKING, 1980-93, AND AN ASSESSMENT OF THE "OPER- Gregory E. Elliehausen and John D. Wolken. September ATING PERFORMANCE" AND "EVENT STUDY" METHOD- 1990. 35 pp. OLOGIES, by Stephen A. Rhoades. July 1994. 37 pp. 161. A REVIEW OF CORPORATE RESTRUCTURING ACTIVITY, 1980-90, by Margaret Hastings Pickering. May 1991. 21pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

All 1-A 2-B 3-C 4-D 5_E Baltimore Pittsburgh"; IV•Bp' Jjifr / tA Charlotte NH • Cincinnati Buffalo sm \ KY NJ NY BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 7-G 8-H • ATLANTA CHICAGO ST. LOUIS 9-1 BHHHL HHI^R^fe MINNEAPOLIS 10-J WY 12-L CO ^ 0maha' NM I— fflHwWWIl'w«»' OKL KANSAS CITY 11-K San Monl DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

78 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 Cathy E. Minehan Warren B. Rudman Temporarily Vacant NEW YORK* 10045 Maurice R. Greenberg William J. McDonough David A. Hamburg James H. Oltman Buffalo 14240 Joseph J. Castiglia Carl W. Turnipseed1 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 Michael H. Moskow 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 Robert D. Nabholz, Jr. Karl W. Ashman Louisville 40232 Laura M. Douglas 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 Richard K. Rasdall Denver 80217 Barbara B. Grogan Kent M. Scott1 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 Alvin T. Johnson Sammie C. Clay Houston 77252 Judy Ley Allen Robert Smith, III1 San Antonio 78295 Erich Wendl Thomas H. Robertson SAN FRANCISCO 94120 James A. Vohs Robert T. Parry Judith M. Runstad Patrick K. Barron Los Angeles 90051 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

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 four-volume loose-leaf service The Consumer and Community Affairs Handbook containing all Board regulations as well as related contains Regulations B, C, E, M, Z, AA, BB, and DD, statutes, interpretations, policy statements, rulings, and 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 Regulato monetary policy, securities credit, consumer affairs, tions CC, J, and EE, related statutes and commenand the payment system. taries, and policy statements on risk reduction in the These publications are designed to help those who payment system. must frequently refer to the Board's regulatory mate- For domestic subscribers, the annual rate is $200 rials. They are updated monthly, and each contains for the Federal Reserve Regulatory Service and $75 citation indexes and a subject index. for each Handbook. For subscribers outside the The Monetary Policy and Reserve Requirements United States, the price including additional air mail Handbook contains Regulations A, D, and Q, plus costs is $250 for the Service and $90 for each Handrelated materials. book. All subscription requests must be accompanied The Securities Credit Transactions Handbook con- by a check or money order payable to the Board of tains Regulations G, T, U, and X, dealing with exten- Governors of the Federal Reserve System. Orders sions of credit for the purchase of securities, together should be addressed to Publications Services, mail with related statutes, Board interpretations, rulings, stop 127, Board of Governors of the Federal Reserve and staff opinions. Also included are the Board's list System, Washington, DC 20551. GUIDE TO THE FLOW OF FUNDS ACCOUNTS A recent Federal Reserve publication, Guide to the dures as seasonal adjustment, extrapolation, and Flow of Funds Accounts, explains in detail how the interpolation. U.S. financial flow accounts are prepared. The The balance of the Guide contains explanatory accounts, which are compiled by the Division of tables corresponding to the tables of financial flows Research and Statistics, are published in the Board's data that appeared in the September 1992 Z.l release. quarterly Z.l statistical release, "Flow of Funds These tables give, for each data series, the source of Accounts, Flows and Outstandings." The Guide the data or the methods of calculation, along with updates and replaces Introduction to Flow of Funds, annual data for 1991 that were published in the published in 1980. September 1992 release. The 670-page Guide begins with an explanation of Guide to the Flow of Funds Accounts is available the organization and uses of the flow of funds for $8.50 per copy from Publications Services, Board accounts and their relationship to the national income of Governors of the Federal Reserve System, Washand product accounts prepared by the U.S. Depart- ington, DC 20551. Orders must include a check or ment of Commerce. Also discussed are the individual money order, in U.S. dollars, made payable to the data series that make up the accounts and such proce- Board of Governors of the Federal Reserve System. 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. Business A C G o u n id su e m to e r's OwM*t« Credit Mortgage Lock-Ins Costs Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis