Federal Reserve Bulletin, 1994-11

VOLUME 80 • NUMBER 11 • NOVEMBER 1994 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn • J. Virgil Mattingly, Jr. • Michael J. Prell • Richard Spillenkothen • Edwin M. Truman The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Graphics Center under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 965 RECENT DEVELOPMENTS IN DISCOUNT Committee on Banking, Housing, and Urban WINDOW POLICY Affairs, September 22, 1994. Underlying trends in the depository sector 990 ANNOUNCEMENTS along with changes in federal legislation have had important ramifications in recent years for Meeting of the Consumer Advisory Council. the discount window, the Federal Reserve's Revision of proposal to amend Regulation lending facility. The severe financial distress BB (Community Reinvestment) and conformof the 1980s and 1990s led to the active ing amendments to Regulation C (Home involvement of the discount window in many Mortgage Disclosure). failing-bank situations. In addition, healthy institutions apparently became more reluctant Changes in Board staff. to borrow from the discount window during Erratum regarding a footnote in a Bulletin this period. article. The Monetary Control Act of 1980 dramatically expanded the universe of depository institutions eligible to borrow at the discount 991 MINUTES OF THE FEDERAL OPEN window. The bank failures of the 1980s led to MARKET COMMITTEE MEETING other legislation that discourages lending to At its meeting on August 16, 1994, the Cominstitutions that do not meet minimum capital mittee adopted a directive that called for requirements. increasing somewhat the degree of pressure on reserve positions, taking account of a pos- 978 INDUSTRIAL PRODUCTION AND sible increase in the discount rate. The direc- CAPACITY UTILIZATION FOR tive did not include a presumption about SEPTEMBER 1994 possible adjustments to policy during the intermeeting period. The directive stated that, Industrial production was unchanged in Sepin the context of the Committee's long-run tember, at 118.7 percent of its 1987 average, objectives for price stability and sustainable after an increase of 0.7 percent in August. economic growth, and giving careful consid- Industrial capacity utilization dropped back eration to economic, financial, and monetary 0.2 percentage point to 84.6 percent. developments, slightly greater or slightly lesser reserve restraint would be acceptable 981 STATEMENT TO THE CONGRESS during the intermeeting period. Alan Greenspan, Chairman, Board of Governors, offers the Federal Reserve's views of 999 LEGAL DEVELOPMENTS the progress the banking industry has made Various bank holding company, bank service in recent years to rebuild its strength and corporation, and bank merger orders; and what needs to be done to ensure that the pending cases. industry remains strong and accommodates the nation's economic growth and says that A1 FINANCIAL AND BUSINESS STATISTICS although current conditions are good, the industry, the regulators, and the Congress need These tables reflect data available as of to look to the long term, before the Senate September 28, 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A3 GUIDE TO TABULAR PRESENTATION A80 FEDERAL OPEN MARKET COMMITTEE AND STAFF; ADVISORY COUNCILS A4 Domestic Financial Statistics A45 Domestic Nonfinancial Statistics A53 International Statistics A82 FEDERAL RESERVE BOARD PUBLICATIONS A67 GUIDE TO STATISTICAL RELEASES AND SPECIAL TABLES A84 MAPS OF THE FEDERAL RESERVE SYSTEM A76 INDEX TO STATISTICAL TABLES A86 FEDERAL RESERVE BANKS, BRANCHES, A78 BOARD OF GOVERNORS AND STAFF AND OFFICES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments in Discount Window Policy James A. Clouse, of the Board's Division of depository institutions eligible to borrow at the Monetary Affairs, prepared this article. Pearl discount window. As a result, the Federal Reserve Buenvenida and Matthew Luecke provided research assumed greater direct responsibility for respondassistance. ing to the liquidity needs of all depositories. Another important legislative change arose in Underlying trends in the depository sector along response to the large number of bank failures in the with changes in federal legislation have had impor- 1980s and the associated depletion of the insurance tant ramifications in recent years for the discount funds of the Federal Deposit Insurance Corporation window, the Federal Reserve's lending facility. (FDIC). The legislation, the Federal Deposit Insur- The periods of stress and consolidation in the ance Corporation Improvement Act of 1991, condepository sector during the 1980s and 1990s led to tained provisions intended to discourage Federal the active involvement of the discount window in Reserve lending to depositories that do not meet many failing-bank situations. Indeed, the scope of minimum capital standards. Although these proviproblems in the banking industry and the extent of sions do not prohibit the Federal Reserve from discount window lending to troubled institutions lending to such institutions, they specify that the were greater than in any period since the Great Federal Reserve will incur a limited liability to the Depression. FDIC for lending that extends beyond certain time In addition, changes became evident during the periods and that results in increased losses to the 1980s in the willingness of healthy institutions to FDIC's insurance funds. turn to the discount window. Many banks apparently became more reluctant to turn to the window for fear of provoking market concerns about their DISCOUNT WINDOW LENDING: THE BASICS financial condition. The greater reluctance to borrow weakened the historical relationship Sections 10B and 13 of the Federal Reserve Act between discount window borrowing and the authorize the Federal Reserve Banks to extend spread of the federal funds rate over the discount discount window credit to depository institutions in rate. This weakening, in turn, impaired the effec- the form of discounts and advances. In the early tiveness of the discount window in tempering years of the Federal Reserve System, discounts unexpected pressure in the reserve market and were the primary form of discount window credit. reduced the Federal Reserve's emphasis on bor- A bank wishing to obtain a discount from its Fedrowed reserves in the day-to-day management of eral Reserve Bank would present a short-term busithe reserve market. ness loan or other asset meeting the type and matu- Perhaps the most notable legislation affecting the rity specifications set forth in the Federal Reserve discount window has been the Depository Institu- Act. The Federal Reserve Bank would extend credit tions Deregulation and Monetary Control Act of in an amount that reflected the value of the asset at 1980, which dramatically expanded the universe of maturity minus a "discount" based on the Federal Reserve's discount rate and the time until maturity of the asset. When the asset matured, the Federal Reserve returned it to the bank and received from NOTE. This article has benefitted substantially from extensive the bank a cash payment equal to the maturity comments received from the members of the Discount Policy Group at the Federal Reserve Board—Donald L. Kohn, Oliver value of the asset. Ireland, Gary P. Gillum, and Manley Williams. Helpful suggestions An advance is operationally simpler than a diswere also received from other staff members at the Board and from count, and all discount window credit has been discount officers at the Reserve Banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

966 Federal Reserve Bulletin • November 1994 provided in the form of advances for many years. distinct purpose: (1) adjustment credit, to help For an advance, a bank requests a loan from its depository institutions meet unexpected short-term Federal Reserve Bank. The rate charged on the liquidity needs; (2) seasonal credit, to assist smaller loan is the discount rate, and the duration of the institutions in managing liquidity needs that arise loan is determined by the Reserve Bank.1 To secure from regular swings in loans and deposits; and the advance, the borrower must pledge collateral in (3) extended credit, to help depositories that have amounts and of types that are satisfactory to the somewhat longer-term liquidity needs resulting lending Reserve Bank. from exceptional circumstances. None of these pro- In addition to authorizing loans to "eligible" grams is intended to be a substitute for market depository institutions, the Federal Reserve funding sources; Regulation A stipulates that banks Act—in sections 13(3) and 13(13)—authorizes the must first exhaust market sources of funds before System to act in emergency circumstances as turning to the discount window.3 To ensure that "lender of last resort" to individuals, partnerships, this principle is met in practice, Reserve Banks and corporations. Enacted in 1932, section 13(3) regularly monitor the sources and uses of funds for was intended to enable the Federal Reserve to institutions while they are borrowing. provide credit in the form of discounts for borrow- Before the Monetary Control Act of 1980, only ers unable to obtain adequate credit accommoda- banks that were members of the Federal Reserve tions from other banking institutions; its use was System had regular access to discount window limited to periods of unusual and exigent circum- credit.4 The act imposed reserve requirements on stances, as determined by the affirmative vote of at a much larger set of depository institutions and least five members of the Board of Governors.2 simultaneously extended discount window access The Congress enacted section 13(13) in 1933 to them.5 As a result, nonmember commercial to authorize the Federal Reserve to make advances banks and savings banks as well as savings and to individuals, partnerships, and corporations on loan associations (S&Ls) and credit unions became the security of U.S. Treasury and federal agency eligible to borrow at the discount window.6 obligations. Although this provision, unlike sec- An institution that anticipates borrowing from tion 13(3), carries no statutory restrictions on its the Federal Reserve must execute a borrowing use, the Federal Reserve has always regarded its agreement and other documents with its Federal applicability as being limited to unusual or excep- Reserve Bank that define the terms and conditions tional circumstances. Indeed, since 1973, the under which discount window loans will be pro- Board's Regulation A, which governs discount vided. For both historical and administrative reawindow lending activities, has restricted use of this sons, most institutions that are eligible to borrow authority to emergency circumstances in which do not choose to file borrowing agreements or borrowers cannot obtain credit from other sources borrow at the discount window. For example, of and their failure to obtain credit would adversely the approximately 27,000 depository institutions affect the economy. eligible to borrow at the beginning of this year, Purpose and Borrowing Eligibility 3. As described below, this requirement does not strictly apply for the seasonal credit program. Regulation A does state, however, The Federal Reserve Board's Regulation A defines that seasonal credit is available only if similar assistance is not available from special industry lenders. three discount window programs, each serving a 4. U.S. branches and agencies of foreign banks with reservable liabilities gained access to the discount window under the International Banking Act of 1978. 1. Regardless of the expected duration of a discount window 5. Under the act, nonmember depository institutions also gained loan, Reserve Bank operating circulars and borrowing agreements access to various Federal Reserve priced services such as check specify that all discount window advances are demand loans—they clearing, collateral safekeeping, and electronic funds transfers. may be called at the discretion of the Reserve Bank. There is no linkage, however, between an institution's use of 2. No loans have been made under this section since the 1930s, Federal Reserve priced services and the availability of discount although the Board of Governors did activate this authority during window credit. two periods in the late 1960s and early 1970s in contemplation 6. The Board has determined that nonbank banks such as corpoof possible liquidity difficulties among nonmember depository rate central credit unions and bankers banks may have access to the institutions. discount window if they voluntarily maintain reserves. 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Recent Developments in Discount Window Policy 967 only about 7,000 had filed borrowing agreements. institutions in meeting temporary funding require- Many smaller banks turn to their correspondent ments in appropriate circumstances. The program banks when funding needs arise. In addition, spe- also operates at a "macro" level by moderating cial industry lenders such as the Federal Home unexpected pressures in the reserve market. Loan Banks and corporate central credit unions serve as sources of liquidity assistance for their member institutions; credit unions, in particular, Lending Policies elect to rely almost entirely on their corporate central credit unions for any liquidity assistance Regulation A establishes two key criteria for deterrather than turn to the Federal Reserve. mining whether to approve a request for adjustment credit: The loan must be for an appropriate reason and borrowers must have exhausted all reasonably The Mechanics of Borrowing available alternative sources of funds, including Institutions almost always initiate loan requests by credit from special industry lenders. Discount offia telephone call to their respective Reserve Banks. cers at each Reserve Bank necessarily use their During the call, the borrower describes the nature own judgment in applying these principles to indiof the funding shortfall and indicates the amount vidual circumstances. Appropriate reasons for borand duration of the loan required. Staff members at rowing include temporary, unanticipated funding the Reserve Bank ensure that the institution has shortfalls. Inappropriate reasons for borrowing filed the necessary borrowing documents and has include funding a planned increase in loans or collateral to secure the loan fully. Satisfactory col- securities, meeting an anticipated runoff of higherlateral may include U.S. government and agency cost funds, and exploiting the spread of the federal securities, mortgages covering one- to four-family funds rate over the discount rate. residences, state and local government securities, In judging whether borrowers have pursued all commercial and consumer loans, and other cus- reasonably available alternative sources of funds V " - ••• • V before turning to the discount window, the Federal tomer notes of acceptable quality. Reserve distinguishes between banks with ready Many institutions that anticipate a periodic need access to national money markets, usually large to borrow maintain a pool of collateral earmarked banks, and those that do not have such access, to secure discount window loans. Collateral is which generally are smaller banks. The distinction usually held at the Federal Reserve Banks or by between large and small banks is not, however, acceptable third-party custodians, but borrowers in based solely on asset or deposit size. Most U.S. good financial condition may be permitted to hold branches of foreign banks, for example, are treated their own collateral under terms and conditions as large institutions even when the quantity of their established by the Reserve Banks. The face value assets booked in the United States is small; these of collateral pledged to secure a discount window branches are typically part of large multinational loan generally exceeds the amount of the loan; banking organizations that have ready access to the difference is intended to provide a cushion market sources of funds, and the parent entities are against loss in the event that a borrower defaults expected to meet the bulk of the funding needs of and the Federal Reserve is forced to liquidate the their US. branches. collateral.7 Under these distinctions, Reserve Banks typically grant the requests of large banks for discount THE ADJUSTMENT CREDIT PROGRAM window assistance only very late in the day, when The adjustment credit program operates at a the money markets are closing, and usually only "micro" level by assisting individual depository when money markets have tightened considerably near the end of a reserve maintenance period (see box, "Borrowing Behavior of Large Banks"). In 7. In most cases, standard "haircuts" are applied to the value of the collateral. The haircuts are intended to account for various addition, the largest banks are assumed to be in a factors including the credit, liquidity, and market risks associated position to repay their discount window loans with the collateral. Additional haircuts are taken at the discretion of quickly through prompt adjustments in their balthe Federal Reserve Bank when lending to troubled institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

968 Federal Reserve Bulletin • November 1994 Borrowing Behavior of Large Banks The borrowing function is a convenient way of summa- large and small banks. For this illustration, an unexpected rizing the general relationship between borrowing and movement is defined as the difference between the fedthe spread of the federal funds rate over the discount rate. eral funds rate at 11:00 a.m. and at the close.3 Again for However, the general relationship obscures some impor- the 1987-93 period, large banks borrowed on days when tant differences in behavior between institutions in differ- the unexpected movement in the federal funds rate was ent size categories. Large banks, for example, must make relatively large. In particular, the average unexpected greater efforts than others to obtain funding in national jump in the federal funds rate exceeded 10 percentage money markets before turning to the discount window; points on the final days of maintenance periods (second thus, these banks usually turn to the window only late in Wednesdays) on which large banks borrowed. By cona reserve maintenance period, which is when reserve trast, for smaller banks, the average unexpected movepressures tend to appear. Discount window requests by ment was closer to zero for each day. smaller banks are more likely to be approved early in a In part, the correlation between unexpected movemaintenance period because they are not presumed to ments in the federal funds rate and the number of large have the same degree of access to market funding.1 banks turning to the window likely reflects the nature of Indeed, from 1987 to 1993, more than 80 percent of all the largest banks' business. These banks often act as discount window borrowing by large banks (defined here providers of short-term funding to smaller banks, securias those with total deposits greater than $10 billion) ties dealers, and corporations. On days when the aggeoccurred in the second week of the maintenance period, gate level of reserves falls short of what depositories and more than 60 percent occurred on the last day of the anticipated, the federal funds market tightens, and the maintenance period (chart, left panel). By contrast, dis- largest banks can be subject to sudden demands for count window borrowing by smaller banks was nearly short-term liquidity. As these banks scramble for funds uniformly distributed over the maintenance period.2 late in the day, the federal funds rate can be bid up well Unexpected movements in the federal funds rate on above the trading range that had been expected earlier in those days when large banks choose to borrow offer the day until some banks turn to the window. another difference between the borrowing behavior of 1. Since February 1984, reserve maintenance periods have been 3. The concept of unexpected movements in the funds rate is based on defined as fourteen-day intervals beginning on a Thursday and ending on the idea that if the funds market is arbitraged effectively, the federal funds Wednesday two weeks later. rate prevailing early in the day must be the rate that the market expects to 2. In this analysis, "smaller" banks are those whose deposits are prevail at the close of business. If, for example, the expected level of the between the level required for weekly reporting of deposit data to the federal funds rate at the close exceeded the level of the funds rate earlier Federal Reserve and $10 billion. The threshold for reporting is changed in the day, banks would bid up the earlier rate by borrowing heavily in the each year, but it was close to $40 million throughout the sample period. funds market in order to lend funds at a higher rate later in the day. Distribution of discount window borrowings during the Average unexpected change in the federal funds rate on reserve maintenance period, by day of the period and days of the reserve maintenance period when banks bank size, 1987-93 borrowed, 1987-93 Percent Percentage points Week 1 Week 2 Week 1 Week 2 • • Large banks — — — l 1 • 1 - ll 1 — Other banks — Other banks 1 1 1 1 1 1 1 1 1 I 1 1 Thu. Fri. Mon. Tue. Wed. Thu. Fri. Mon. Tue. Wed. Thu. Fri. Mon. Tue. Wed. Thu. Fri. Mon. Tue. Wed. Note. Distribution of borrowings by a class of banks on a given day of Note. Unexpected change in the federal funds rate is the rate at the close the reserve maintenance period is the number of borrowings on that day by less the rate at 11:00 a.m. Large banks are those with total deposits banks in that class during 1987-93 divided by the total number of borrow- exceeding $10 billion. ings by banks in that class during those years. Large banks are those with total deposits exceeding $10 billion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments in Discount Window Policy 969 ance sheets. As a result, discount window loans to to depository institutions. A shortage of reserves large banks are usually extended for only one busi- tends to push up the federal funds rate. But a rise in ness day. Banks with less ready access to money the federal funds rate induces more banks to turn to market funding may request discount window loans the discount window, which alleviates some of the on any day of the reserve maintenance period and pressure in the reserve market and damps the rise at an earlier hour of the day;8 the Reserve Banks in the federal funds rate. may approve such loans with a term of several Although relatively stable for many years, the days. borrowing function has been less reliable recently, The interest rate charged for adjustment credit having gradually shifted down since the mid-1980s ordinarily is the basic discount rate. In certain (chart 1). The result has been a smaller volume of circumstances, however, a higher rate may be adjustment credit for any given spread of the fedapplied. For an unusually large loan that results eral funds rate over the discount rate. The increased from a major operating problem at the borrower's reluctance to borrow at the discount window facility, the highest rate established for loans to appears to be related in large part to the difficulties depository institutions may be charged; in the experienced in the banking sector during the 1980s. current discount rate structure, that rate would With large numbers of banks and thrifts failing be the market-related rate on extended credit (see during these years, many banks apparently became below).9 more reluctant to turn to the discount window for fear of being labeled a financially weakened institution. This reluctance became acute during the The Borrowing Function economic downturn in 1990-1991, and the effectiveness of the discount window as a pressure Apart from assisting individual banks in meeting release valve in the reserve market was impaired short-term liquidity pressures, adjustment credit (see box, "Shifts in the Borrowing Function"). serves an important "pressure release" function in The instability of the borrowing function in the reserve market. The level of adjustment bor- recent years also has complicated the Federal rowing has historically exhibited a fairly stable Reserve's day-to-day operating procedures. For relationship to the spread of the federal fufitis idle part of the 1980s, the Federal Reserve relied over the discount rate (chart 1); wider spreads heavily on the quantity of borrowed reserves as an create a greater incentive to borrow, thus leading "operating target" for daily reserve management. to higher aggregate levels of borrowing. This As the borrowing function became less stable, howso-called "borrowing function" works to dilute the ever, the "borrowing target" came to be treated influence that shifts in the supply and demand for much more flexibly; other variables such as the reserves can have on the federal funds rate. For federal funds rate and various measures of reserve example, on a given day, changes in factors affect- conditions have become more important operating ing the supply of nonborrowed reserves, such as guides for reserve management. increases in currency in circulation or flows of reserves from depository institutions to the U.S. 1. Adjustment borrowing and the spread of the federal Treasury's account at the Federal Reserve, could funds rate over the discount rate, 1960-93 result in an aggregate shortage of reserves available Percentage points Billions of dollars 3 Rate spread » — 1.5 8. However, the proceeds of discount window loans are usually 0 K (i not made available to borrowers until the end of the day. l\ 1 I 9. In 1980 and 1981, at times when the spread between money / \ 1 - A / 10 market rates and the discount rate was exceptionally wide, the + A Jl \\ | Federal Reserve imposed a surcharge in addition to the basic 0 — / \\J A discount rate. The surcharge, varying between 2 and 4 percentage 1 / Adjustment \ — .5 points, was applied to institutions with deposits of $500 million or i -w y \i ^ 1 / borrowing \ more that borrowed too frequently. The surcharges were intended to encourage these institutions to make quicker portfolio i 11 M V ii ii MS> 1 I960 1970 1980 1990 adjustments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

970 Federal Reserve Bulletin • November 1994 Shifts in the Borrowing Function During the second half of the 1980s, the level of adjust- was operating less effectively as a buffer in the reserve ment credit associated with a given spread between the market. In December 1990, the Federal Reserve cut federal funds rate and the discount rate (the so-called reserve requirements on nonpersonal time deposits and borrowing function) declined. One frequently cited factor Eurocurrency liabilities. As a result, reserve balances for the downward shift in the borrowing function is that in the System fell substantially.1 For a time in early well-publicized troubles in the banking industry have had 1991, sharp fluctuations in the demand for excess a chilling effect on the willingness of banks to turn to the reserves and an unusual degree of day-to-day volatility discount window. in the federal funds rate suggested that the mar- The chilling effect could arise because, although the ginal demand of banks for reserves was being impor- Federal Reserve holds information about discount win- tantly affected by the volume of daily clearing activity dow borrowing by individual banks in the strictest confi- in the banking system. If banks had been more willing dence, market participants at times have tried to infer to turn to the discount window, the influence of the which banks might be borrowing through knowledge of daily variability of reserve demand on the federal which banks were bidding for funds in the market late in funds rate most likely would have been significantly the day. Usually such inferences have been little more muted. In February 1991, in his semiannual testimony than educated speculation, but market rumors about bank to the Congress under the Full Employment and borrowing at the discount window have occasionally Balanced Growth Act of 1978 (the Humphreyprompted withdrawals by account holders or curtailed a Hawkins act), Federal Reserve Board Chairman bank's access to other market funds. As a result, in the Greenspan noted that the discount window was availlatter half of the 1980s and the early 1990s, troubled or able, as always, to meet the short-term liquidity needs financially weak institutions turned to the window only of depository institutions in appropriate circumstances. as a last resort. Moreover, healthy depositories with legiti- For a time, this statement appeared to stimulate a bit mate reasons for borrowing appeared to avoid the win- more borrowing. Even with the marked improvement dow for fear of raising questions in the marketplace about in the health of depository institutions since 1991, their financial condition. however, the level of discount window borrowing remains subdued in comparison with levels once asso- The greater reluctance of banks to borrow has had little ciated with a given spread of the federal funds rate effect on the ability of the Federal Reserve to achieve its over the discount rate. objectives for money growth or for general conditions in reserve and money markets. The reluctance has, however, complicated somewhat the construction of short-term conditional forecasts of borrowed reserves, and it has 1. Depository institutions may hold a combination of vault cash and also reduced the effectiveness of the discount window as reserve balances to satisfy reserve requirements. The volume of vault cash held by most banks is dictated by customer demands for currency. a pressure release valve in the reserve market. As a consequence, the reduction in required reserves in Decem- The behavior of the federal funds rate early in 1991 ber 1990 showed through largely as a reduction in reserve balances provided a strong indication that the discount window held by depository institutions. SEASONAL CREDIT sonal credit program allows them to carry fewer liquid securities during the off-peak periods of the The seasonal credit program was established in year and to extend more loans in their local com- 1973 to assist small institutions that lack effec- munities. The program is structured so that larger tive access to national money markets and that institutions must meet a greater portion of their experience a seasonal pattern of swings in deposits seasonal need through market funding sources. and loans. Previously, these banks had been forced Typically, institutions with more than $250 million to hold a relatively large share of their asset port- in total deposits are not able to demonstrate a folio in liquid securities through much of the year seasonal need under the current structure of the to be in a position to accommodate their funding seasonal program. In addition, Regulation A specineeds during the peak period of loan demand and fies that seasonal credit is available only if similar deposit runoffs. By granting these banks longer- assistance is not available from special industry term funds to meet their seasonal needs, the sea- lenders. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments in Discount Window Policy 971 Most lending under the seasonal credit program of the program in 1985 contributed to greater use is to small agricultural banks in the Midwest.10 of seasonal credit. In that year, the 4 percent Agricultural banks face strong loan demand and deductible for the first $100 million of deposits was deposit runoffs as farmers cultivate their crops dur- lowered to 2 percent, and the 7 percent deductible ing the spring and summer months. In the fall, on additional deposits up to $200 million was farmers sell their crops, rebuild their deposit bal- lowered to 6 percent; the 10 percent deductible on ances, and pay down their bank loans. Simul- deposits in excess of $200 million remained the taneously, banks pay down their seasonal loans same. These reductions were intended to help allewith the Federal Reserve. viate the severe financial difficulties experienced in Banks that wish to establish a seasonal line gen- the farm sector during the mid-1980s.11 erally are required to submit three years of histori- Until recently, the rate charged on seasonal credit cal data on loans and deposits to their Reserve loans was the basic discount rate, the same rate Bank. From these data, the Reserve Bank calcu- charged for adjustment credit. The discount rate lates the maximum amount of credit that each generally lies below market interest rates, and institution is eligible to borrow in each month of hence the seasonal program created a small subsidy the year; the approved seasonal line also may for borrowers.12 Given the rapid growth of seareflect adjustments based on discussions with the sonal credit over the 1980s and a judgment that borrower regarding expected funding needs in the financial markets had become better able to meet coming year. Reserve Banks require that borrowers the seasonal funding needs of smaller banks, the meet a certain portion of their seasonal need— Board elected to move to a market-related discount known as the "deductible"—from their own rate on seasonal credit beginning in January 1992. resources. The deductible is based on the size of The market-related rate is established at the the borrower and reflects the presumption that larger depositories have greater access to market sources of funds and therefore should have less 11. In 1985 the Board also created a temporary simplified seasonal program. This program was designed to make it easier for need for seasonal credit. small agricultural banks that might be experiencing unusual liquid- Institutions with approved seasonal credit lines ity pressures to gain access seasonal credit. Banks could borrow up to one-half of the increase in their total loans in excess of 2 percent are not required to exhaust all other "reasonably from a base level. The discount rate for the temporary seasonal available" sources of liquidity before borrowing. program was set at Vi percentage point above the basic discount Indeed, borrowers of seasonal credit are permitted rate. The amount of borrowing under the temporary program was quite small and the Board discontinued the program in 1988. to maintain a net "sold" federal funds position that 12. Using the federal funds rate as a benchmark, the extent of is consistent with historical operating patterns. The the subsidy for seasonal borrowers was relatively small. An aver- Reserve Banks monitor borrowers, however, to age seasonal borrower during the peak months of the year might borrow about $1 million. Assuming that the spread between the ensure that they are using seasonal credit to fund federal funds rate and discount rate was a rather wide 100 basis increases in loans or deposit runoffs and that they points and that the institution maintained its peak level of borroware meeting the "deductible" portion of their sea- ing continuously for a full 9 months (very unlikely), the implied subsidy would amount to only about $7,500 per year, a minuscule sonal need through their own resources. As with all savings on the bank's overall funding costs. forms of discount window credit, seasonal credit loans must be fully collateralized. 2. Number of banks using seasonal credit, 1980-93 Usage of the seasonal credit program has grown and changed significantly over time. Since passage of the the Monetary Control Act of 1980, nonmember banks have become increasingly important users of the program (chart 2); indeed, in recent years, they have outnumbered member banks as borrowers of seasonal credit. Changes in the terms 10. Seasonal borrowers also include some depositories in resort areas that experience large changes in their loans and deposits over the course of a year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

972 Federal Reserve Bulletin • November 1994 beginning of each reserve maintenance period and activity to the minimum required to remain viable is based upon the average federal funds rate and the in serving their markets. More generally, a boraverage secondary market rate on negotiable rower must shrink its balance sheet in an orderly ninety-day bank certificates of deposit prevailing manner, and its efforts to do so are closely moniduring the previous maintenance period. tored by its Reserve Bank. As described in detail The move to a market-related rate has not dra- below, the Federal Deposit Insurance Corporation matically reduced the volume of borrowing under Improvement Act of 1991 places restraints on disthe seasonal credit program (chart 3); indeed, the count window lending to institutions that do not peak levels of borrowing in 1994 were close to the meet minimum capital standards. record levels posted in 1989. In part, this continued Certain borrowers drew heavily on extended use may indicate that borrowers still find the credit in the 1980s (chart 4), especially during the market-related discount rate charged on seasonal 1985-91 period, when the number of failures of credit to be attractive relative to rates offered by banks and thrift institutions exceeded that of any their correspondents. Also important may be the period since the Great Depression.13 Some of the nonpecuniary costs of borrowing from correspon- Federal Reserve's extended credit lending in this dents, who may impose relatively restrictive terms period bridged a temporary period of illiquidity for on the types of acceptable collateral, the size of institutions that proved to be viable, but in many credit limits, and the length of periods of continu- other cases Federal Reserve loans were provided to ous borrowing. institutions that were closed or required federal assistance to restore viability. Federal Reserve lending in these latter cases provided time for the FDIC and the chartering authorities to arrange for EXTENDED CREDIT orderly closings of failing institutions. Extended credit lending was conducted in consultation with The extended credit program is designed to address the FDIC and the relevant state and federal banking the needs of institutions facing longer-term authorities to ensure that such lending would serve ("extended") liquidity pressures in exceptional cira clear public purpose. The Federal Reserve's lendcumstances. For the past several years, the discount ing to troubled institutions during the 1980s has rate charged on extended credit has been somewhat been the subject of some controversy, however, and above market interest rates. In addition, this proa brief review of extended credit lending since gram affords credit only under stringent conditions. 1980 provides some perspective on the Federal Institutions seeking extended credit must submit a Reserve's actions. business plan describing how they intend to address their liquidity difficulties, and they must have exhausted all other sources of funding before turn- 13. During these years, 1,192 federally insured banks failed and ing to the window. Borrowers in the extended 1,034 federally insured S&Ls failed or were subject to supervisory credit program are expected to restrain lending mergers. 3. Seasonal borrowing, 1973-September 1994 4. Extended credit borrowing, 1960-93 Millions of dollars Billions of dollars Marketrelated Continental Illinois Bank discount rate -r450 — Crisis in southwestern — 300 — U.S. Bank of — New England \ - Franklin National Bank —150 H vj 1 I I I I II 1 I I I 1 I I I I I I I 1 I I I I I I I I I I I I I I I 1 1975 1980 1985 1990 1960 1970 1980 1990 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments in Discount Window Policy 973 EXTENDED CREDIT LENDING: 1980-85 The liquidity and solvency problems among commercial banks in the early 1980s were not as In the late 1970s and early 1980s, the depository severe as those in the thrift industry, but some sector came under considerable strain as a result of banks were in serious trouble. In 1980, the FDIC a steep climb in interest rates and inflation and the provided extensive "open-bank assistance" to First ensuing deep economic recession. In the savings Pennsylvania Bank, which had suffered large losses and loan industry, many institutions faced weak on its securities portfolio.14 The Federal Reserve earnings on their asset portfolios at a time when provided extended credit to First Pennsylvania for their funding costs had risen sharply. Moreover, a time to address its liquidity needs. In July 1982, federal limits on interest rates on deposits, in com- Penn Square National Bank failed owing to subbination with the sharp rise in market interest rates, stantial losses on energy loans. Liquidity pressures sparked a severe decline in deposits as account emerged during the days immediately preceding holders, in a process called disintermediation, the bank's failure, and the Federal Reserve proshifted their funds into money market instruments vided limited discount window assistance. offering higher yields. As a result, many S&Ls (as Penn Square was a relatively small institution, well as banks) suffered intense liquidity pressures. but it was an aggressive originator of loan particithe FederalHome Loan Bank (FHLB) System pations. The largest single purchaser of these loan historically had served as a key funding source for participations was Continental Illinois National savings and loan associations by issuing debt in the Bank. Losses on loans purchased from Penn national money markets and lending the proceeds Square, coupled with other asset quality problems, to its member associations. However, by mid-1981 led to severe liquidity pressures at Continental in the magnitude of the disintermediation at thrift early May 1984. institutions raised the possibility that it would To address the bank's problems, staunch the exceed the funding capacity of the FHLB System. outflow of funds, and prevent similar runs at Conti- As a precautionary measure, the Federal Home nental's respondent banks, the FDIC implemented Loan Banks and the Federal Reserve announced an open-bank assistance package. The FDIC also that they would lend jointly to financially sound took the extraordinary step of announcing on S&Ls that needed longer-term liquidity assistance. May 17, 1984, that all general creditors of the bank The amount of lending under this program was would be fully protected against loss. In support of relatively small; the program did, however, estab- the FDIC's efforts, the Federal Reserve provided lish a precedent for cooperation between the FHLB extensive discount window assistance to Continen- System and the Federal Reserve that would become tal from May 1984 through September 1985. important again during the S&L crisis of the late Continental drew heavily on extended credit at a 1980s. time when the highest interest rate charged for In another action associated with the early-1980s extended credit loans—2 percentage points over prospect of possibly large-scale lending to S&Ls, the basic discount rate—was lower than market the Federal Reserve altered the structure of rates rates. Concerns that Continental was obtaining subcharged on extended credit. Since 1974, extended stantial funding at a below-market rate prompted credit borrowers had been charged a rate of up to the Federal Reserve Bank of Chicago to obtain the 2 percentage points over the basic discount rate. In Federal Reserve Board's permission to apply a August 1981, the rate structure was revised to market-related rate to Continental's borrowing. charge the basic discount rate for the first 60 days Later, on November 8, 1984, the Board changed of extended credit borrowing, the basic discount rate plus 1 percentage point for the next 90 days of 14. In the case of First Pennsylvania, assistance was provided borrowing, and the basic rate plus 2 percentage under the "essentiality" clause of section 13(c) of the Federal Deposit Insurance Act. Under this provision, the FDIC could points for borrowing beyond 150 days. The purprovide assistance to a depository institution without regard to cost pose of the graduated rate schedule was to increase considerations if the institution was deemed "essential" to provide the incentive for institutions to address their liquid- adequate banking service in its community. A finding of essentiality required a majority vote of the FDIC Board; the case of First ity problems as their reliance on the discount win- Pennsylvania marked only the third time that the FDIC had invoked dow became more prolonged. the essentiality clause. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

974 Federal Reserve Bulletin • November 1994 the rate structure for extended credit to give all days. The flexible rate also could be applied sooner Reserve Banks the option of applying a market- than thirty days at the discretion of the lending related rate for extended credit borrowing beyond Federal Reserve Bank. 150 days instead of the basic rate plus 2 percentage By the late 1980s, the difficulties of many S&Ls points. The previously established schedule of the far exceeded the capability of the Federal Savings basic rate for the first 60 days and the basic rate and Loan Insurance Corporation to resolve them. plus 1 percentage point for the next 90 days was As a result, President Bush in the early days of his left unchanged. The market-related rate was administration acted to place insolvent S&Ls in intended to apply principally to larger institutions federal conservatorships while the Congress develwith access to national money markets, especially oped legislation to address the fundamental strucduring times when market rates generally exceeded tural, regulatory, and deposit insurance problems in the basic rate plus 2 percentage points. the thrift industry. To meet potential liquidity needs that might arise before legislation could be enacted, the Federal EXTENDED CREDIT LENDING: 1985-90 Reserve in concert with the FHLB System and the Treasury entered into a Joint Lending Program to As the problems at Continental Illinois subsided, a provide liquidity to S&Ls experiencing severe series of new problems began to emerge. In March withdrawals of deposits, particularly those institu- 1985, a privately insured S&L in Ohio failed, rais- tions in federal conservatorship. Under this proing widespread concern over the safety of deposits gram, established on February 23, 1989, credit was in the numerous thrift institutions without federal extended only when alternative funds were not deposit insurance. Soon thereafter, a liquidity crisis available. The Federal Reserve and the FHLB Sysfor privately insured institutions arose in Maryland. tem each advanced 45 percent of the loans, and the The Federal Reserve supplied discount window Treasury advanced 10 percent. Credit extensions assistance in both states to help calm the situation were secured by the assets of the borrower and and to permit solvent institutions to remain open. guaranteed by the Federal Savings and Loan At about the same time, a severe downturn in the Insurance Corporation. Lending under the program farm economy resulted in heavy losses for Mid- was slight—only two S&Ls in conservatorship western banks in agricultural communities. And a borrowed—but the program offers another example little later, a sharp decline in oil prices led to the of the cooperative action of federal banking deterioration of portfolios of energy loans at banks authorities to avert potential systemic crises. in the Southwest—a situation that was soon com- In August 1989, the Congress passed the Finanpounded by a collapse in commercial real estate cial Institutions Reform, Recovery, and Enforcemarkets and a broad regional economic downturn. ment Act (FIRREA), which established the Reso- During this period, many of the largest banks in lution Trust Corporation (RTC) as a temporary Texas failed. With hundreds of institutions failing agency charged with resolving the hundreds of during the latter half of the 1980s, Federal Reserve S&Ls that failed. The RTC also assumed responsicredit was often provided to allow time for orderly bility for any liquidity support that thrift instituresolutions, which gave depositors uninterrupted tions in conservatorship might require, so the Joint access to their funds and, more broadly, ensured Lending Program was discontinued. that an adequate level of banking services would continue to be available. As the frequency of extended credit lending situ- BENEFITS AND COSTS OF EXTENDED ations increased, the Federal Reserve moved to CREDIT LENDING simplify its rate structure for extended credit and to broaden the use of a market-related rate. On Concerned over the mounting frequency and cost July 27, 1987, the Board approved a policy of of bank failures, the Congress in 1991 began to charging the basic discount rate for the first thirty develop legislation to strengthen the ability of days of borrowing and a flexible rate somewhat federal banking agencies to deal promptly with above market rates for borrowing beyond thirty financially weak depositories. The Congress also Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments in Discount Window Policy 975 FDICIA and the Discount Window The Federal Deposit Insurance Corporation Improvement viable. Alternatively, the liability provision may be Act of 1991 is aimed at enhancing market and regulatory suspended for a 60-day period if the Federal Reserve discipline in the banking sector and protecting the federal conducts its own examination of the institution and the deposit insurance funds. The core elements of FDICIA Chairman of the Board of Governors certifies in writestablish five capital categories for depository institu- ing to the lending Federal Reserve Bank that the institions: (1) well capitalized, (2) adequately capitalized, tution is viable. Each subsequent 60-day suspension of (3) undercapitalized, (4) significantly undercapitalized, the liability provision requires new viability certificaand (5) critically undercapitalized. These categories are tions. For critically undercapitalized institutions, the defined by specific capital ratios.1 FDICIA prescribes Board incurs a potential liability to the FDIC for increasingly severe supervisory actions to be applied increases in discount window advances beyond a 5-day to an institution as it moves into lower capital categories. period beginning on the date the institution becomes In addition, FDICIA also places restraints on Federal critically undercapitalized. Reserve lending to institutions that fall below minimum The potential liability to the FDIC incurred by the capital standards.2 Board for advances exceeding the section 142 limitations is capped at the lesser of the interest earned on Section 142 the increases in advances beyond the specified period or the losses the Federal Reserve would have incurred Section 142 of FDICIA amended section 10B of the if the increased advances had been unsecured. Sec- Federal Reserve Act to set time periods beyond which the tion 142 further requires that the Board report to the Federal Reserve may not lend to undercapitalized and Congress within six months after incurring any such critically undercapitalized institutions without incurring a liability to the FDIC. potential limited liability to the FDIC. The Board generally incurs a potential liability to the Section 473 FDIC if an undercapitalized institution borrows for more than 60 days in any 120-day period.3 This liability provi- The bulk of the provisions in FDICIA pertaining to the sion may be suspended for a 60-day period if the head discount window are contained in section 142, but of the institution's primary federal regulator certifies in section 473 effects a technical change in the emerwriting to the Federal Reserve that the institution is gency lending powers of the Federal Reserve under section 13(3) of the Federal Reserve Act. Section 473 removes a restriction on the "kinds and maturities" of 1. For details, see the Federal Reserve's Regulation H, 12 C.F.R. 208; notes, drafts, and bills of exchange that can be disand Federal Reserve Regulatory Service, 3-1506-1506.2. counted for individuals, partnerships, and corporations 2. For purposes of section 142, an institution that receives the lowest supervisory rating from its primary federal regulator is also classified as under the authority of section 13(3). In those extremely undercapitalized, regardless of its actual capital ratios. unlikely circumstances in which section 13(3) lending 3. Changes in capital categories for depository institutions are tied to authority might be invoked, this change provides dates associated with official actions such as the required filing date for a greater flexibility to the Federal Reserve in managing a Call Report, receipt of written notice from a primary regulator, or the financial crisis. delivery of a final report of examination. undertook an assessment of Federal Reserve lend- bank can be time consuming and labor intensive— ing to institutions whose capital had slipped below bid documents must be prepared and potential adequate levels. acquirers must have time to conduct a careful The Federal Reserve had long been mindful of review of the failed bank's assets and liabilities. both the benefits and potential costs associated with This process helps the FDIC obtain the best price prolonged lending to institutions whose solvency is for the failed bank through competitive bidding by unclear. An important benefit of Federal Reserve interested acquirers. lending in these situations has been the time pro- In the absence of liquidity assistance, many vided to the FDIC and the other banking agencies failed institutions would have been closed abruptly, to carry out the orderly closure and resolution of with possible interruptions in depositors' access to failed institutions. Arranging for the sale of a failed their funds—including balances covered by federal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

976 Federal Reserve Bulletin • November 1994 deposit insurance—and in the availability of other which thereby reduced the need for prolonged banking services. At times of widespread financial liquidity assistance from the discount window.15 distress, when depositors and other creditors cannot be certain of the solvency of individual banks, such disruptions may generate fears among custom- POTENTIAL IMPLICATIONS OF RECENT ers of other banks and thereby trigger a spread of REGULATORY DEVELOPMENTS liquidity pressures. Abrupt and disorderly closures also may adversely affect the market value of failed The panoply of regulatory changes stemming from institutions and reduce the price obtained by the FDICIA included many initiatives that directly link FDIC. a bank's funding capability with its capital status. The Federal Reserve recognized that costs For example, FDICIA prohibits institutions that are may be associated with prolonged lending to undercapitalized from accepting brokered deposits. troubled institutions. Such lending, for example, In addition, institutions that are not allowed to can allow uninsured depositors and other general accept brokered deposits may also lose "passcreditors to exit a failing bank before its closure. through" deposit insurance on new deposits or When Federal Reserve loans, which are fully col- rollovers of existing deposits obtained from fidulateralized, replace funds that are not federally in- ciaries such as pension funds and insurance compasured, the FDIC may face higher resolution costs. nies.16 Institutions that fall below minimum capital In addition, a perception that discount window standards may face limits on the deposit interest assistance will be readily available to troubled insti- rates they can offer to attract new deposit accounts. tutions can weaken market discipline in the bank- In addition, an undercapitalized depository may ing system and remove some of the pressure on find its usual federal funds lines and respondent bank regulators to close troubled institutions balances diminished as a result of a restriction, promptly. mandated by FDICIA and put in place this year, In assessing the experience of the previous years, that requires banks to limit their exposure to an the Congress and the Federal Reserve agreed that it undercapitalized depository institution. Also, under would be appropriate to establish restraints on the the Federal Reserve's policies to contain payments provision of discount window credit to institutions system risk, institutions generally face tighter conthat do not meet minimum capital standards. To straints on their intraday reserve positions as their this end, section 142 of the Federal Deposit Insur- capital condition deteriorates. ance Corporation Improvement Act of 1991 Other regulatory developments may indirectly (FDICIA) sets time periods beyond which the Fed- exert a powerful influence on bank liquidity in the eral Reserve may not lend to institutions below future. For example, the incentive for unsecured minimum capital standards without incurring a general creditors—Eurodollar creditors and sellers potential limited liability to the FDIC (see box, of federal funds for example—to withdraw their "FDICIA and the Discount Window"). funds at an early stage of a bank's decline is now Section 142 of FDICIA did not become effective greater because of the national depositor preference until December 19,1993. The delayed implementa- provision adopted as title III of the Omnibus Budtion was intended, in part, to provide time for the get Reconciliation Act of 1993. This provision federal banking agencies to exercise the new regulatory authorities granted in FDICIA to strengthen the banking system. Nevertheless, the Federal 15. The last period of heavy extended credit lending occurred in the first half of 1990 when the Bank of New England borrowed Reserve sought to move as promptly as was prufrom the discount window continuously from January 15 to June 13 dent to bring its administration of the discount of that year. The bank did not borrow again before its closure on window into line with the provisions of sec- January 6, 1991. tion 142. The level of extended credit fell sharply 16. As an example of pass-through deposit insurance, a financial institution acting as a custodian for many individuals—a pension (chart 4), partly reflecting a smaller number of fund or insurance company, for example—deposits in a bank, say, bank failures; but the drop also reflected the more $10 million, in which case deposit insurance may be "passedaggressive posture of the Federal Reserve and bank through" to each individual up to the limit of $100,000 per individual, which in turn may allow the entire $10 million deposit to be regulators in resolving troubled banks swiftly, insured. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments in Discount Window Policy 977 places the claims of insured and uninsured domes- liquidity effects of these regulatory developments. tic depositors of a failed bank ahead of the claims These factors likely would become important, howof other general creditors. As a result, unsecured ever, in some future period of financial distress. In general creditors are at greater risk of loss in a bank that event, the Federal Reserve will likely face failure and may flee the bank earlier to avoid such critical decisions about curtailing the acQes^ of losses. troubled banks to the discount window at a much To date, strong capital and earnings for most earlier stage of their difficulties than was typical in depository institutions have mitigated the potential the past. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

978 Industrial Production and Capacity Utilization for September 1994 Released for publication October 14 decrease in the output of motor vehicles and parts. However, output excluding motor vehicles edged Industrial production was unchanged in September up 0.1 percent, an increase led by another sizable after an increase of 0.7 percent in August. In Sep- increase in the output of business equipment. tember, disruptions associated with a strike and At 118.7 percent of its 1987 average, industrial with temporary parts shortages contributed to a production in September was 6.7 percent higher Industrial production indexes Twelve-month percent change Twelve-month percent change 5 + 0 5 10 5 + 0 5 1988 1989 1990 1991 1992 1993 1994 Capacity and industrial production Ratio scale, 1987 production = 100 Ratio scale, 1987 production =100 140 — Manufacturing 140 Capacity _ • 1 120 - 120 100 100 Production 80 80 1 1 1 1 Percent of capacity Percent of capacity All series are seasonally adjusted. Latest series, September. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

979 Industrial production and capacity utilization, September 1994 Industrial production, index, 1987=100 Percentage change Category 1994 19941 Sept. 1993 to Juner Julyr Aug/ Sept. t Juner July' Aug/ Sept. ( Sept. 1994 Total 117.5 117.9 118.7 118.7 .7 .3 .7 .0 6.7 Previous estimate 117.3 117.7 118.5 .6 .3 .7 Major market groups Products, total2 116.1 116.7 117.4 117.4 .8 .5 .6 .0 6.1 Consumer goods 112.7 113.2 113.7 113.3 .9 .5 .4 -.3 4.4 Business equipment , 148.5 149.9 152.5 153.4 .8 .9 1.7 .6 12.5 Construction supplies 102.7 103.5 104.1 103.8 -.2 .8 .6 -.3 6.1 Materials 119.4 119.5 120.6 120.6 .7 .1 .9 .0 7.4 Major industry groups Manufacturing 118.9 119.5 120.7 120.8 .3 .5 1.0 .1 7.8 Durable 123.4 124.3 126.2 126.4 .4 .8 1.5 .2 9.9 Nondurable 113.3 113.6 114.0 114.0 .2 .2 .4 .0 5.0 Mining 99.8 98.7 98.3 97.8 .7 -1.0 -.5 -.5 .4 Utilities 120.8 119.6 117.6 116.9 5.3 -1.0 -1.6 -.6 .6 Capacity utilization, percent MMMEEEMMMOOO CCCaaapppaaaccciiitttyyy,,, pppeeerrr--ccceeennntttaaagggeee 1993 1994 ccchhhaaannngggeee,,, AAvveerraaggee,, LLooww,, HHiigghh,, SSSeeepppttt... 111999999333 11996677--9933 11998822 11998888--8899 Sept. Juner Julyr Aug/ Sept. P tttooo SSSeeepppttt... 111999999444 Total 81.9 71.8 84.8 81.4 84.3 84.4 84.8 84.6 2.6 Manufacturing 81.2 70.0 85.1 80.4 83.5 83.7 84.3 84.2 2.9 Advanced processing 80.6 71.4 83.3 78.9 81.8 82.2 82.7 82.6 3.6 Primary processing . 82.2 66.8 89.1 83.9 87.5 87.4 88.2 88.1 1.3 Mining 87.4 80.6 87.0 87.7 90.2 89.3 88.9 88.5 -.5 Utilities 86.7 76.2 92.6 86.7 89.3 88.3 86.7 86.1 1.3 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. than a year earlier. Output rose at a 6.0 percent The output of construction supplies is estimated annual rate in the third quarter, up from a 5.4 per- to have declined a bit after posting stronger gains cent annual rate in the second quarter. In Septem- in July and August than previously reported; for ber, industrial capacity utilization dropped back the quarter as a whole, production in this sector 0.2 percentage point, to 84.6 percent. rose about 5V2 percent at an annual rate, compared When analyzed by market group, the data show with an IIV2 percent gain in the second quarter. that the output of durable consumer goods fell Materials output, which surged nearly 1 percent in 1.3 percent, largely as a result of the decline in August, was unchanged in September. The producassemblies of cars and trucks. Also, the production tion of durables continued to increase; however the of appliances, which had risen sharply earlier in the September gain of 0.3 percent was smaller than in summer, moved down for a second month. The the preceding two months, largely because of the output of nondurable consumer goods has changed drop in output of motor vehicle parts. Production of little in recent months. Business equipment other nondurables eased a bit after a sizable jump in than cars and trucks rose 0.9 percent in September, August, and output of energy materials declined as about the same as the average monthly gain evident well. so far this year; much of the ongoing strength in When analyzed by industry group, the data show this sector has occurred in information-processing that manufacturing output edged up 0.1 percent equipment, particularly computers, and in indus- after rising sharply in August. Excluding motor trial equipment. vehicles and parts, factory production advanced Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

980 Federal Reserve Bulletin • November 1994 0.2 percent. Sizable increases in the production of The operating rate for advanced processors has electrical and nonelectrical machinery as well as increased 3.7 percentage points during the past primary metals were partly offset by decreases in year, with strong gains for the motor vehicle and the output of motor vehicles and parts, aerospace machinery industries leading the advance. Operatand miscellaneous transportation equipment, lum- ing rates in most other industries have increased at ber, and textiles. least 2 percentage points; only foods, instruments, Factory utilization edged down 0.1 percentage and miscellaneous manufactures have shown little point, to 84.2 percent, still 3 percentage points gain. higher than its long-run average. Over the past The output in mining and utilities fell for a third year, utilization in manufacturing has risen 3.8 per- month in a row. The decreases in utilities during centage points, with gains broadly based. Utiliza- the summer have partially reversed the surge in tion in primary-processing industries has increased output in June, which resulted from especially hot 4.2 percentage points, with the largest gains in weather. • primary metals and fabricated metals products. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

981 Statement to the Congress Statement by Alan Greenspan, Chairman, Board to adapt but also that it build on the progress it of Governors of the Federal Reserve System, has made in managing its risks. before the Committee on Banking, Housing, and Despite recent stress, the many changes and Urban Affairs, U.S. Senate, September 22, 1994 innovations in financial markets worldwide, and the increased role of nonbank competitors, the U.S. commercial banking system remains the I am pleased to be here to discuss the condition centerpiece of the nation's financial system. In of the U.S. banking system, especially at a time that role, banks should continue to be held to when the industry's performance appears to be high standards of risk management because of so robust. But first, Mr. Chairman, I want to take their central role and because of their access to this opportunity to personally thank you for the the government safety net. Such standards working relationship we have enjoyed over the should be set, however, with an understanding of years. You have probed the basis of economic how financial markets work and a mindfulness of policy with impressive insight and while at times the lesser constraints and requirements imposed we have disagreed, as President Ford used to on banks' nonbank competitors. Moreover, we say, never to the point of being disagreeable. should not lose sight of the necessity for banks to You will be leaving the U.S. Senate shortly with take risks if they are to perform their essential an impressive list of legislative accomplishments. economic function. Under your leadership during a period of unusual In my remarks this morning, I will offer the turmoil and challenge, the Banking Committee Federal Reserve's views of the progress the has focused importantly on the safety and sound- industry has made in recent years to rebuild its ness of U.S. depository institutions and the pro- strength and what needs to be done to ensure that tection of the federal deposit insurance funds. It the industry remains strong and accommodates has also begun the process of modernizing the the nation's economic growth. Current condibanking system. tions are very good, but the industry, the regu- Given the industry's experience as recently as lators, and the Congress need to look to the long three years ago, its current condition is a positive term as well. testament to its resilience and strength. This condition and the progress it reflects bode well for the industry's future, a future enhanced by THE PAST the recent enactment of the Riegle-Neal Interstate Banking and Branching Efficiency Act. As recently as 1991, much of the industry was The U.S. banking system, like the U.S. econ- under severe stress. During the last half of the omy more generally, has undergone an important 1980s, nearly 900 commercial and savings banks transition in recent years in response to techno- failed, and even in 1991 and 1992 more than 100 logical and financial innovations and in the face banks failed each year. At more than 1,000, the of intense competitive pressures, both domesti- number of "problem" banks in 1991 also recally and abroad. We can only expect such mained unacceptably high, although well below trends in the banking framework to continue. the peak of nearly 1,600 institutions in 1987. That Managing this process and adapting to new mar- 1991 figure was especially disturbing because, by ket practices will be a significant challenge to the then, it included some major institutions, which banking system and to the regulatory agencies. It boosted the assets of problem banks to more than is important not only that the industry be allowed $600 billion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

982 Federal Reserve Bulletin • November 1994 These difficulties had many of their roots in adjustment of overly aggressive loan policies that events that occurred more than a decade before. led to some of the problems of the late 1980s and Throughout the 1980s and into the 1990s, much early 1990s illustrates the eventual costs of purof the U.S. banking system was faced with suing unsustainable growth. serious asset quality problems. Problem loans to These efforts to improve operations and credit developing countries plagued many of the na- standards have had highly salutary effects. Since tion's largest banks, beginning in the early 1980s. 1991, U.S. banking organizations have recorded Later, declining energy prices hurt many banks, two consecutive years of record profits and have especially those in the Southwest, and then came substantially improved their capital ratios, all agricultural problems in the Midwest. Finally, while absorbing net charge-offs of nearly $50 excessive lending to commercial real estate mar- billion in bad debts. As a result, the industry has kets—combined with the 1990-91 recession— largely overcome its recent problems and repoproduced the banking industry's last round of sitioned itself for further growth. problems. The regulatory agencies facilitated this process This series of events caused the volume of by encouraging and, at times, urging many of the nonperforming assets and the number of com- industry's actions and by helping banks identify mercial bank failures to rise sharply. Nonaccru- weaknesses in their investment and loan portfoing loans and foreclosed real estate more than lios and in their operating controls and procedoubled, from $43 billion in 1984 to the peak of dures. The Federal Reserve placed particular $95 billion in 1991, and banks failed at intolerable emphasis on discouraging expansion by institurates. By year-end 1991, the cost of resolving tions that did not have strong financial and manthese failures and reserving for expected losses agerial profiles. Throughout this process, the had nearly drained the industry's Bank Insurance risk-based capital standard, reinforced by the Fund (BIF) and had prompted the Congress to prompt corrective action provisions required enact major banking legislation. by the Congress in the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), served to guide managerial and super- THE PRESENT visory actions and highlighted the benefits of being well capitalized. Today, the condition of the banking system is sound and much improved from only a few years Current Condition ago. This progress was brought about by a host of factors that included changes to bank policies, The industry's improved condition is demonwrite-offs of large amounts of bad debts, substan- strated in nearly every measure of financial pertial increases in capital, changes in standards formance. Besides the past two years of record adopted by the Congress and the regulatory earnings, U.S. commercial banks were on pace agencies, a stronger economy, and the decline in at midyear to report still higher profits in 1994. the level of market interest rates. The industry's return on assets (ROA) reached Responding to their asset quality problems and 1.23 percent in 1993, the highest level in decades. to changing market conditions, many banks Since then, the industry's ROA has declined made strategic decisions to restructure their ac- slightly to 1.17 percent but in large part only tivities, cut dividends and operating costs, ex- because of changed accounting rules that inpand revenues, and, in general, develop more creased the reported assets of major trading efficient operations. The industry also devoted banks. increased attention to establishing and maintain- These strong earnings, moreover, extend ing sound credit standards. To some extent, a throughout the industry. Last year and during the widespread strengthening of these standards first six months of 1994, more than 60 percent of worsened the so-called credit crunch that the all U.S. commercial banks had ROAs larger than economy experienced a few years ago, but it was 1.0 percent, a historical benchmark of strong a necessary process by bank management. This profits, although less than 5 percent of them Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statement to the Congress 983 reported losses—the lowest level since 1980. The number and assets of problem banks— However, in an important shift from conditions those rated CAMEL 4 or 5—also continue to during the 1980s, the earnings of large banks— decline. With $42 billion in assets at midyear, the those with assets exceeding $10 billion—are now remaining 338 problem commercial banks, out of also historically high, with almost 70 percent of a total of 10,700 banks, are much smaller, on these institutions reporting ROAs of more than average, and far fewer than was the case only 1.0 percent. several years earlier. Building on the substantial Shareholders' capital offers the greatest pro- progress achieved in 1992 and 1993, the number tection from unanticipated or sustained losses of problem banks fell 21 percent during the first and is the principal shield for the Bank Insurance six months of 1994, while problem bank assets Fund. At 7.8 percent of assets in June 1994, the dropped more than 80 percent. industry's equity capital ratio was the strongest This recent improvement in problem instituin nearly thirty years, and the average Basle tions, bank failures, and related resolution costs risk-based capital ratio was 13.2 percent. These marks a highly welcome and long-awaited turn of measures are well above regulatory minimums events. At its current rate of progress, the BIF is and, once again, represent substantial progress likely to reach the required 1.25 percent of inby banks of all sizes. Large banks have histori- sured deposits within the next year. That time cally had lower capital ratios than smaller insti- frame is much earlier than many analysts had tutions, at least partly because of their greater projected only a few years ago and is well within diversification, and they still do. Nevertheless, the time period authorized by law. This improvelarge banks have also strengthened their capital ment in the BIF represents, however, a situation positions substantially in recent years and now that may require congressional attention in the have an average risk-based ratio approaching 12 near future because of the respective insurance percent. Among commercial banks operating in premiums paid by banks and thrift institutions. September, only thirty-six institutions, with ag- As the BIF reaches its target level, one would gregate assets of about $3 billion, failed to meet expect its currently high premiums to decline to the minimum capital standards at midyear. their more traditional levels. That would cer- Asset quality is also much improved, as a tainly be a welcome event to commercial banks. result of the stronger credit standards and sub- Any such decision to lower BIF premiums, stantial charge-offs of nonaccruing loans and though, while maintaining the higher premiums foreclosed real estate. Since 1991, problem as- required to rebuild the Savings Association Insets have declined more than one-half, to $42 surance Fund (SAIF), could seriously undermine billion. Moreover, by maintaining their loan-loss the competitiveness of thrift institutions. reserves through adequate provisions, commer- Although the industry's performance is highly cial banks have increased the reserve coverage of encouraging, experience has shown that future their nonperforming loans from 84 percent in problems—even when they are impending—are 1991 to 181 percent at midyear 1994. sometimes overlooked and that banks need ade- All of this improvement is reflected in the quate general reserves for such occasions. At smaller numbers of failed and problem banks, present, we see no major problems looming, but which may provide the best indicators of the we should recognize that the risks are always industry's improved condition. In contrast to the there. The industry's average reserve balance, large number of commercial banks that failed equal to 2.4 percent of outstanding loans and each year from 1985 through 1992, forty banks leases, however, remains high by historical stanfailed in 1993, and only eleven commercial banks dards and, when combined with the improved comprising total assets of only $1 billion have asset quality and capital ratios, seems adequate been closed through mid-September of this year. for the industry as a whole. The estimated cost of their failures to the BIF is I would note, though, that some banks have small. Even during the 1960s and 1970s, the sharply curtailed or eliminated their provisions industry often experienced eight to ten failures for possible losses in response to the improved each year. outlook for future charge-offs and the relatively Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

984 Federal Reserve Bulletin • November 1994 high level of reserves. Indeed, many commer- viding them with new and important sources of cial banks made no loan-loss provisions during noninterest revenues. the first half of 1994.1 am not questioning those This trend is reflected in the increased volume decisions at this time, because these institu- of trading and derivatives activities of banks. tions, in particular, tend to have higher-than- Trading account assets of U.S. banks, for examaverage reserve ratios. Nonetheless, I would ple, nearly doubled in size from $67 billion at the urge the industry to guard against letting re- end of 1991 to $122 billion at the end of 1993. serves decline too far. Although asset quality During the first six months of 1994, these assets has improved sharply, banks should ensure that climbed much further—to $228 billion but printheir loss provisions and reserves remain ade- cipally because of an accounting change rather quate to support unidentified losses and the than real growth. Although their effects are less pace of loan growth. transparent, oflf-balance-sheet positions also con- In recent months, I have begun to receive tinue to grow, whether measured by notional or reports from examiners and from surveys that replacement values, or by the credit equivalence banks are competing more aggressively for loans measure specified by the Basle Accord. and that they are relaxing their credit standards. Revenues from trading and derivatives activi- Lending margins, in particular—and especially ties grew commensurately through last year and for medium and large corporate customers— were highly useful in helping some large instituhave declined, and loan covenants and collateral tions rebuild their capital and earnings and rerequirements have eased. These developments cover from credit-related difficulties of the past. have benefits to the economy and, in part, reflect These revenues last year were exceptional, the easing of standards that had been sharply though, and were widely recognized as such at raised as banks rebuilt their capital positions. It the time. In the first half of this year, with rising is too early to know if banks are easing exces- interest rates, most large trading institutions exsively, but our examiners are sensitive to such perienced sharply lower trading revenues. Nevconcerns. ertheless, only three of the fifty largest banking organizations suffered net losses from their trading activities during the first half—and those Increased Trading and Derivatives losses were quite small. Although the experience Activities was unpleasant to many of these institutions, it may have provided a useful reminder to the During recent years, many of the country's larg- industry that position-taking has its risks. est banks have sought to increase their revenues by expanding their trading operations and by Stock Market Response developing greater expertise in derivative products. This approach is, in large part, a natural The securities market has responded favorably to response by these institutions to financial and the industry's improved condition. Common technological innovations and changing market share prices of the fifty largest bank holding demands. As I have suggested in previous testi- companies currently trade at an average of about mony, this is not a strategy that should be 150 percent of book value, compared with an discouraged, although we need to be vigilant that average of 90 percent at the end of 1990. This new and complicated instruments are issued only higher valuation rate has increased the market within the framework of strong risk management value of these fifty companies by more than $100 controls. Large corporations that once looked to billion. banks for financing now have other funding Almost all of the gain in stock prices took place sources and turn to banks principally for other during 1991 and 1992, as the industry's net interfinancial services, including assistance in manag- est margins and earnings improved. This year, ing market risks. Banks that have sufficient ex- stock prices for the group as a whole have been pertise to advise, innovate, and make markets in relatively stable, despite the declines in trading complex financial products see this shift as pro- revenue reported by some large institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statement to the Congress 985 Many analysts had expected trading revenues, to supervise. The development of new products, typically concentrated among the largest institu- such as complex derivative instruments, and the tions, to decline from their exceptionally high general trend toward asset securitization offer levels in 1993 and had built that prediction into banks useful ways to reduce risks and generate their earnings forecasts. Although the declines in revenues, but they also carry risks of their own. some cases were greater than projected, shares That is why the supervisory effort is increasingly of the money center companies have, on aver- focusing on the evaluation of risk-management age, continued to outperform the broader market systems. so far this year, as measured by major equity Competition in financial markets only continindexes. ues to grow, as the number and types of mutual funds multiply and more nonbank institutions compete aggressively to make commercial and THOUGHTS ABOUT THE FUTURE consumer loans. Technological changes will continue to modify the environment in which banks As we consider these favorable conditions, we compete. These and other events will require need to remind ourselves that there are, and will continued efforts by banks of all sizes to operate continue to be, difficult challenges ahead. Some efficiently, to innovate, and to find new opportuof these challenges will be familiar ones that tend nities for growth. Indeed, many large banks are to reappear at different stages of the economic responding to these forces by emphasizing their cycle. One can easily predict, for example, that market risk-management skills and by continuing loan losses will again rise the next time the to expand interstate. However, the competitive economy slows materially or enters a recession- abilities of small banks in offering plain vanilla ary period. Banks are in the business of taking banking services look secure for well into the risks, and such risks inevitably translate into twenty-first century, although they, too, will some losses; if that did not occur, banks would increasingly use new technology to deliver banknot be performing their economic function. ing services. Nonetheless, credit risk, the risk that a cus- In recent years, both small and large banks tomer will default on an obligation, has been, and have been able to maintain their competitive remains, the most critical risk to commercial position. Indeed, research conducted within the banks and one that must be managed carefully. It Federal Reserve System, as well as by the Amermay also be the risk in banking that still demands ican Bankers Association, has suggested that, the most subjective judgment, despite constant when properly measured, banking's share of efforts to improve and quantify the credit deci- financial intermediation has not declined as much sionmaking process. Unfortunately, bankers and as conventional indicators suggested. Moreover, sometimes their supervisors tend to forget that by some measures banks appear to have more point and other lessons of the past, as memories than held their own. This new research attempts fade and conditions change. Bankers pursue to incorporate not only traditional statistics, such faster loan growth, and supervisors hesitate to as bank loans, but also the estimated "credit criticize aggressive practices as long as economic equivalent" amounts of the many new off-balconditions remain favorable. We need to achieve ance-sheet activities, estimates of certain offa proper balance to prevent excessive risk-tak- shore banking operations, and other adjustments ing, while not discouraging banks from taking to the data that attempt to account for the effects risks in responding to legitimate needs of their of technological change and globalization. These customers. results are interesting and provocative and give Other challenges will be less traditional, as quantitative meaning to something we all knew— banking takes new directions in the years ahead. that banks are adapting to, and participating in, Although the underlying risks may not be new, the changes sweeping the financial services inthey may be packaged in new products, activi- dustry, as well as being severely challenged by ties, and organizational structures that bankers them. must learn to manage and regulators must learn In the last analysis, however, whether banks Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

986 Federal Reserve Bulletin • November 1994 are expanding, holding their own, or losing mar- to a variety of different market conditions, which ket share is largely irrelevant—unless the chang- becomes more feasible as technology improves. ing share is being driven by outdated legal barri- Rigorous stress testing is one of the most imporers or subsidies. It has always seemed to me that tant aspects of managing market risks and one to there should only be two tests for evaluating which banks should devote more attention. potential permissible activities at banking orga- Fortunately, the basic nature of most major nizations: banking organizations makes them relatively strong and well diversified to withstand a great 1. Will the activity facilitate the efficient de- deal of stress. Their ability to absorb large credit ployment of assets, capital, and human resources losses in recent years and to recover as they have to meet the public's need for financial services? attest to that point. Moreover, the consistent 2. Is the risk acceptable on safety and sound- profitability of trading activities of almost all ness grounds? large banks suggests that these institutions are able to manage the associated risks. Our experience with section 20 affiliates and However, developing more sophisticated risktrading activities of banks suggests that securities management and examination techniques and and trading activities meet these tests. This expe- attracting and retaining qualified staff become rience also clearly demonstrates that supervision more important as financial products grow more by the Securities and Exchange Commission of complex. Doing that will be a challenge to banks section 20 affiliates, and the banking agencies of and bank supervisors, alike. Indeed, as I contemboth section 20 affiliates and bank trading activ- plate the future of banking, I am concerned about ities, has more than met the challenges during the continued ability of the government to reperiods of market stress. Moreover, it seems cruit, reward, and maintain a supervisory staff obvious to me that the public is well served by with the technical skills to evaluate the trading additional competitors offering underwriting ser- positions of banks—particularly as the private vices. These benefits would be particularly sector competes for people with the same skills. strengthened as banks use their expertise for Once again, the growth of derivative instruregional and smaller customers. ments provides a prime example. Some forms of Keeping pace with industry practices requires derivatives have long histories because they that the regulatory agencies constantly review meet a fundamental economic need to transfer their supervisory policies and techniques. In risks among willing individuals. Although some large part, as I noted above, emphasizing the of the more recent variations of derivatives are importance of sound credit practices is still par- highly complex in their design and behavior, they amount, and such time-tested procedures as con- meet a market demand and should continue to ducting frequent, full-scope, on-site examina- grow. We must deal with their complexity and tions that are centered around a review of asset learn how to manage and use these instruments quality should remain solidly intact. For many wisely, understanding their role and implications banks, though, these reviews should be supple- for the entire financial system. mented by an in-depth assessment of their risk- For its part, the Federal Reserve is taking management techniques and controls. These ef- steps to ensure that its examiners have the forts should cover trading and nontrading proper training and guidance to evaluate these operations and the role of these institutions as complex activities and is also participating acderivatives dealers and end users. tively through international efforts to advance When examiners are evaluating market risks, sound supervisory policies and procedures they will need to focus on the overall nature of a worldwide. In recent months, the Federal Rebank's trading activities and exposures and on its serve has issued policy statements dealing with policies, risk-management systems, and con- sound management and examination practices trols, rather than on specific positions that can regarding trading and derivatives activities, dechange quickly. Examiners should also empha- veloped a Trading Activities Manual, and estabsize the importance of testing a bank's exposures lished capital markets coordinators at each Re- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statement to the Congress 987 serve Bank to enhance communications, provide mum international capital standard for market training, and transfer supervisory resources as risk. Stress tests, though, must be structured needed throughout the Federal Reserve System. carefully to reflect the nature of risks faced by We also continue to support efforts of the Basle individual banks. Additional disclosure, which Committee on Banking Supervision to develop permits increased market discipline, can also capital standards for trading and derivatives ac- perform an important role and may help deter tivities and are working through that body and excessive risk-taking. through the Group of Ten central bank governors The supervisory process must also adapt to to develop related reporting and disclosure stan- new concerns of the public as banks develop new dards. products and services. The sale of mutual funds, As the regulatory agencies and the Congress for example, must be accompanied by assurconsider the industry's evolving role, I should ances that issues of full disclosure of investor repeat that banks must be allowed to take risks; risk are addressed by institutions. Unfortunately, they will thus make mistakes and some will fail. surveys suggest that some banks have not yet Permitting them management flexibility to per- implemented the necessary procedures to ensure form their function, however, is necessary to that the uninsured nature of these investment foster innovation and promote economic growth. products is disclosed to their customers. In its Our target should not be to avoid all bank fail- supervisory role, the Federal Reserve has atures. Rather, our responsibility, as regulators, tempted to ensure good industry practice through should be to ensure that mistakes, and in extreme the issuance of guidelines, rather than through cases failures, do not disrupt the marketplace or complex and burdensome regulations. It will be impose undue costs on the federal safety net. up to the industry to demonstrate that this flexi- It is a balancing process, with real economic ble approach is adequate. costs on each side. Regulatory burden is an important concern and should be kept at a minimum, but the cost of regulatory laxity can also be COMMUNITY REINVESTMENT AND high. FDICIA's requirements of frequent and FAIR LENDING comprehensive examinations and prompt corrective action have been useful provisions and Let me now turn to some issues that I know have should help us to maintain a proper balance. been of serious concern to you and to this As we proceed through the 1990s, we should committee—the problem of racial discrimination focus on enhancing supervisory practices, rather in our credit markets and related concerns about than on developing new laws and regulations. the effectiveness of the Community Reinvest- Risks need to be evaluated in the context of ment Act (CRA). individual institutions and at a level of detail that The Board and the other supervisory agencies typically requires an on-site presence. We must have been troubled by indications that some of assure ourselves that a bank's established poli- our citizens have experienced unwarranted difficies and procedures adequately control for risk culties in obtaining credit due to discriminatory and are consistent with the principles of sound practices. Although we may never truly know the banking and that its practices follow these prin- magnitude of the problem, its existence seems ciples. A specific financial instrument, for exam- undeniable and requires prompt and decisive ple, may adequately hedge or reduce the market action. risk of one bank but be an unacceptable invest- Whether discrimination is a product of habit ment for another, depending on the specific mix and culture, or the deliberate acts of individuals, of assets and liabilities each institution holds and the consequences are the same. Unfair practices on the institution's ability to evaluate and man- resulting in credit decisions that are not based on age its risks. legitimate economic factors harm our society and Once again, stress testing may play an impor- impair our economy, not to mention reduce the tant role in managing and measuring risks and is profit opportunities of our banks. Discrimination likely to be a key factor in constructing a mini- in lending directly limits the ability of its victims Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

988 Federal Reserve Bulletin • November 1994 to own homes, build businesses, create job op- posed regulation helped to clarify some issues portunities, or accumulate wealth. It stifles eco- but highlighted deep divisions on others and did nomic development and opportunity in our com- not simplify our task. munities and neighborhoods. On a broader scale, Ultimately, actual performance—not paperdiscrimination in credit markets restricts the free work and procedures—should be the primary flow of capital, reduces the demand for goods focus of CRA evaluations. But it would be a and services, and robs our economy of financial serious mistake if the desire to make CRA asand human resources that can contribute to eco- sessments more objective produced instead govnomic growth. ernment credit allocation. That would not only Let me assure you that we are doing our best destroy one of the major strengths of the CRA— to deal decisively with the problem. The agencies the flexibility that enables banks and their comhave been quite aggressive in communicating our munities to design programs that respond to the expectations on equal credit opportunity to sen- unique needs of their local markets—but would ior management of financial institutions. We also reduce the efficiency, and ultimately the have augmented our examination procedures, growth, of our economy. strengthened examiner training, and sponsored In short, further quantifying what is meant by numerous educational programs for bankers on good CRA performance, while avoiding addifair lending issues and "best practices." We tional regulatory burdens and damaging credit continue to coordinate our activities with other allocation, requires a delicate balance. The regfederal agencies having responsibilities under our ulatory agencies will shortly consider a new fair lending laws. proposal, and we hope that an acceptable and None of this, of course, is a substitute for workable balance can be reached. action by financial institutions. We believe that these issues must be addressed aggressively by the financial services industry itself. We will CONGRESSIONAL ACTION continue to encourage institutions to reexamine their marketing, employee training, and loan Just as banks and the regulatory agencies must underwriting practices to ensure that all aspects constantly review their operations and rules, so of the credit-granting process are fair and free too should the Congress periodically revisit and from unintended discriminatory consequences. update the banking statutes. Some recent actions The agencies also have been engaged in a are quite encouraging, and I congratulate you comprehensive process to reform implementa- and the committee for your success in enacting tion of the CRA. Proposed changes to CRA the Riegle-Neal Interstate Banking and Branchregulations were published by the agencies ear- ing Efficiency Act as well as the Riegle Commulier this year, and well over 6,000 comments from nity Development and Regulatory Improvement the public have been received and reviewed, a Act of 1994. In the context of the condition of the record number. The agencies are now in the final banking system, the interstate banking legislastages of preparing revised regulations for further tion, in particular, should have positive and public comment. important implications for the long-term health As you know, we were asked by the President, and competitiveness of U.S. banks. as well as by members of the Congress, bankers, Although these recent developments are favorcommunity groups, and others to make the CRA able, we at the Federal Reserve Board have long evaluation process more objective by clarifying encouraged the Congress to take still further steps what is meant by good CRA performance. We to expand bank activities. As the committee were also asked to reduce the regulatory burden knows, nonbank organizations are competing agof the legislation on financial institutions. The gressively for the traditional customers of comneed to consider a number of competing, if not mercial banks. Much has been done to address incompatible, objectives championed by many this situation and to ease the competitive probparties has made this a difficult process. The lems banks face, particularly in the area of secuunprecedented volume of comments on the pro- rities sales and underwriting. Most of that relief, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statement to the Congress 989 however, has come from the agencies' limited the country's welfare. Accordingly, we must flexibility to revise or interpret their regulations. remain vigilant against new threats and costly More sweeping statutory changes are needed, problems that can arise quickly with little foreregarding both securities and insurance products. warning. The test should be what is good for the economy One risk that is always present is that preand for consumers of financial services—within sented by uncertainty and change. To confront the constraints of acceptable risk-taking for insti- that risk the industry must be willing and able to tutions with access to the safety net. adapt. The U.S. banking system has consistently demonstrated its strength in this regard and is acknowledged as the world's leader in financial CONCLUSION innovation. Some current laws, however, constrain the industry in ways that no longer serve In conclusion, the banking system is stronger their purpose. The banking industry, the regulanow than it has been in many years, and it seems tory agencies, and the Congress can all take well prepared to meet the nation's credit needs. credit for the positive events we have seen in Indeed, the pace of progress in the 1990s has recent years, but we must share responsibility for been most remarkable and much faster than one the industry's future as well. We should be could have reasonably expected a few years ago. willing to acknowledge change and adapt to new Maintaining a healthy banking system is vital to challenges. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

990 Announcements MEETING OF CONSUMER ADVISORY COUNCIL continue in her current position as the Board's EEO Programs Director until a replacement can be The Federal Reserve Board on October 3, 1994, selected, not later than January 1, 1995. The new announced a meeting of the Consumer Advisory EEO Programs Adviser position has been estab- Council scheduled for November 3. The Council's lished in recognition of a sizable increase in workfunction is to advise the Board on the exercise of load and a heightened emphasis on Systemwide the Board's responsibilities under the Consumer affirmative action and diversity. The EEO Pro- Credit Protection Act and on other matters on grams Adviser will report to Mr. Theodore Allison, which the Board seeks its advice. Assistant to the Board for Federal Reserve System Affairs. The Board of Governors announced on September 29, 1994, that Day Radebaugh would join the PROPOSED ACTION Office of the Secretary as Visiting Assistant Secretary on October 1, 1994. He is currently Assistant The Federal Reserve Board in conjunction with Director in the Division of Information Resources the other financial institutions regulatory agencies Management. The Board's Visiting Assistant Secrequested public comment on a revised proposal to retary program is intended to further the profesamend Regulation BB (Community Reinvestment) sional development of Board officers by providing and related conforming amendments to Regulabroad exposure to programs and operations of the tion C (Home Mortgage Disclosure). The previous Board and the System. amendments were proposed for public comment on December 21, 1993. Comments on the revised proposal are requested by November 21, 1994. ERRATUM: Federal Reserve Bulletin In "Changes in Family Finances from 1989 to CHANGES IN BOARD STAFF 1992: Evidence from the Survey of Consumer Finances" in the October 1994 Bulletin, note 22 on The Board of Governors announced on Septem- page 880 contains an error: The number of families ber 15, 1994, the promotion of Portia W. Thomp- represented by the 1992 Survey of Consumer son to the position of Equal Employment Oppor- Finances is 95.9 million instead of 92.9 million as tunity Programs Adviser. Ms. Thompson will stated. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

991 Minutes of the Federal Open Market Committee Meeting Held on August 16,1994 A meeting of the Federal Open Market Committee Mr. Ettin, Deputy Director, Division of Research was held in the offices of the Board of Governors and Statistics, Board of Governors Mr. Slifman, Associate Director, Division of of the Federal Reserve System in Washington, Research and Statistics, Board of Governors D.C., on Tuesday, August 16, 1994, at 9:00 a.m. Mr. Madigan, Associate Director, Division of Monetary Affairs, Board of Governors Present: Ms. Low, Open Market Secretariat Assistant, Mr. Greenspan, Chairman Division of Monetary Affairs, Board of Mr. McDonough, Vice Chairman Governors Mr. Blinder Mr. Broaddus Messrs. Bennett, Davis, Dewald, Rosenblum, and Mr. Forrestal Vander Wilt, Senior Vice Presidents, Federal Mr. Jordan Reserve Banks of New York, Kansas City, Mr. Kelley St. Louis, Dallas, and Chicago respectively Mr. LaWare Messrs. McNees, Meyer, and Sniderman, Mr. Lindsey Vice Presidents, Federal Reserve Banks of Mr. Parry Boston, Philadelphia, and Cleveland Ms. Phillips respectively Ms. Yellen Ms. Meulendyke, Assistant Vice President, Messrs. Conrad, Hoenig, Melzer, and Ms. Minehan, Federal Reserve Bank of New York Alternate Members of the Federal Open Mr. Weber, Senior Research Officer, Market Committee Federal Reserve Bank of Minneapolis Messrs. Boehne, McTeer, and Stern, Presidents of Secretary's Note: the Federal Reserve Banks of Philadelphia, Advice had been received that Janet L. Yellen had Dallas, and Minneapolis respectively executed her oath of office as member of the Federal Open Market Committee. Advice also had been received of the election of Mr. Kohn, Secretary and Economist Cathy E. Minehan by the boards of directors of the Mr. Bernard, Deputy Secretary Federal Reserve Banks of Boston, Philadelphia, and Mr. Coyne, Assistant Secretary Richmond as alternate member of the Federal Open Mr. Gillum, Assistant Secretary Market Committee for the period ending December 31, Mr. Mattingly, General Counsel 1994, and that she had executed her oath of office; and of Mr. Patrikis, Deputy General Counsel the election of William C. Conrad by the boards of Mr. Prell, Economist directors of the Federal Reserve Banks of Cleveland and Mr. Truman, Economist Chicago as alternate member of the Federal Open Market Committee for the period ending with the appoint- Messrs. Beebe, Goodfriend, Lindsey, Promisel, ment of a president for the Federal Reserve Bank of Siegman, Simpson, Stockton, and Chicago or December 31, 1994, whichever comes first, Ms. Tschinkel, Associate Economists and that he had executed his oath of office. Ms. Lovett, Manager for Domestic Operations, By unanimous vote, the minutes of the meeting System Open Market Account of the Federal Open Market Committee held on Mr. Fisher, Manager for Foreign Operations, System Open Market Account July 5-6, 1994, were approved. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

992 Federal Reserve Bulletin • November 1994 The Manager for Foreign Operations reported on generation from its unusually high weather-related developments in foreign exchange markets during level in June damped the July advance. Manufacthe period since the July meeting. There were no turing output was up considerably in July, despite a System open market transactions in foreign cur- drop in the production of motor vehicles and parts; rencies during this period, and thus no vote was outside of motor vehicles, increases were widerequired of the Committee. spread, with a very large rise recorded in the output The Manager for Domestic Operations reported of durable consumer goods. The overall rate of on developments in domestic financial markets and capacity utilization in manufacturing remained at a on System open market transactions in government high level, with most major industry groups operatsecurities and federal agency obligations during ing at or near capacity. the period July 6, 1994, through August 15, 1994. Growth in consumer spending had slowed in By unanimous vote, the Committee ratified these recent months, owing in part to constraints on the transactions. supply of motor vehicles. Nominal retail sales The Committee then turned to a discussion of the edged lower in July after expanding at a slightly economic and financial outlook and the imple- reduced pace in the second quarter. Sales at general mentation of monetary policy over the intermeeting merchandise and furniture and appliance stores period ahead. A summary of the economic and increased further in July, while purchases at apfinancial information available at the time of the parel outlets were down after large June increases. meeting and of the Committee's discussion is Sales at automotive dealerships fell appreciably in provided below, followed by the domestic policy July after edging lower in the second quarter; these directive that was approved by the Committee and sales declines apparently resulted in part from the issued to the Federal Reserve Bank of New York. inability of manufacturers to produce enough of The information reviewed at this meeting sug- the most popular models. Housing starts in July gested that the pace of economic expansion, though retraced part of a large June decline but remained still substantial, might have slowed somewhat below their elevated rate in the fourth quarter of recently. Consumer spending continued to post 1993. moderate gains, supported by rising labor income Business fixed investment expanded in the secand favorable sentiment. Business outlays for plant ond quarter at about the same brisk pace as in the and equipment remained on a steep uptrend, but first quarter but well below the rate recorded in higher interest rates seemed to be having some 1993. In the second quarter, a strong recovery in restraining effect on homebuilding activity. Re- nonresidential construction activity from the source utilization was at elevated levels, with facto- weather-related decline of the first quarter offset a ries operating at relatively high rates and labor marked slowing in business purchases of durable markets evidencing very low levels of slack. equipment. Much of the slowdown in the growth of Increases in broad indexes of consumer and pro- outlays for equipment reflected a reduction in the ducer prices had remained moderate in recent pace of acquisition of office and computing equipmonths, apart from the effects of short-run swings ment. Other categories of durable equipment, with in the volatile food and energy components. the exception of aircraft and motor vehicles, contin- Nonfarm payroll employment continued to ued to show solid increases. Most indicators of advance at a robust pace in July. Hiring in the business investment activity suggested further large services industries remained strong, with personnel gains in coming months: Orders for nondefense supply agencies posting another sizable increase. capital goods pointed to a continued strong expan- Jobs also were up substantially in retail trade and sion in spending on business equipment, and perconstruction. By contrast, employment in manufac- mits for nonresidential construction had been rising turing was held down by strike activity. The civil- as well. ian unemployment rate edged up to 6.1 percent in Business inventory investment slowed in June July, little changed from the average for the second after a sharp acceleration in April and May; for the quarter. second quarter as a whole, inventories were up Industrial production rose moderately in July substantially, but they appeared to have remained after a sizable gain in June; a decline in electricity broadly in line with sales. In manufacturing, recent Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 993 inventory buildups had been concentrated in a few of processing, producer prices of intermediate industries in which orders had been particularly materials posted another sizable gain in July. These strong. For manufacturing as a whole, the ratio of prices had increased at a faster rate thus far this stocks to shipments declined from an already low year than in 1993, mirroring a similar pattern in level. At the wholesale level, the accumulation of prices of nonfood, non-energy crude materials. The inventories in the second quarter was largely in employment cost index for private industry workdurable goods, which were in strong demand; the ers rose more rapidly in the second quarter after a inventory-to-sales ratio for this sector remained sharp slowing in the first quarter, with the accelerabelow the range that has prevailed in recent years. tion in compensation largely reflecting a pickup in A large part of the buildup of retail inventories in wage and salary growth. The increase in total comthe second quarter was in nondurable goods, espe- pensation over the last four quarters was little cially in stocks of general merchandise. For the changed from the advance over the previous fourretail sector as a whole, the inventory-to-sales ratio quarter period. at the end of June was near the high end of the At its meeting on July 5-6, 1994, the Committee range observed in recent years. adopted a directive that called for maintaining the The nominal deficit on U.S. trade in goods and existing degree of pressure on reserve positions but services widened slightly in May; for April and that included a bias toward the possible firming of May combined, the deficit was significantly larger reserve conditions during the intermeeting period. than in the first quarter. Exports of goods and The directive stated that in the context of the Comservices were about the same in May as in April, mittee's long-run objectives for price stability and with increased shipments of machinery and indus- sustainable economic growth, and giving careful trial supplies offset by reduced exports of aircraft consideration to economic, financial, and monetary and gold. Imports of goods and services were developments, slightly greater reserve restraint slightly higher in May than in April. Most of the would be acceptable or slightly lesser reserve increase was in imports of oil, as a consequence of restraint might be acceptable during the intermeethigher prices, and consumer goods. The economies ing period. The reserve conditions associated with of all the major foreign industrial countries contin- this directive were expected to be consistent with ued to expand in the second quarter. Growth modest growth in M2 and M3 over coming months. remained at a healthy pace in the United Kingdom Open market operations during the intermeeting and Canada and appeared to have firmed in conti- period were directed toward maintaining the existnental Europe. In Japan, growth apparently slowed ing degree of pressure on reserve positions. Adjustsomewhat in the second quarter. ment plus seasonal borrowing rose over the period Trends in broad measures of prices and labor in accommodation of the usual summer pickup in costs had shown no change thus far in 1994. In demands for seasonal credit and averaged near July, the overall index of consumer prices rose at anticipated levels. The federal funds rate remained the same pace as in June, despite larger monthly close to AVA percent. increases in the food and energy components of the Other market interest rates were unchanged to up index. The jump in energy prices reflected the slightly on balance over the intermeeting period. effects of the earlier run-up in crude oil prices. For Rates generally edged lower during the early part the twelve months ended in July, both the overall of the period as incoming data were viewed by index and the index excluding food and energy market participants as being consistent with continrose by about the same amounts as during the ued moderation in final demands and a reduced preceding twelve-month period. At the producer need for any further monetary tightening actions. level, prices of finished goods were up significantly In early August, however, interest rates began to in July after no change in June; large price erase their previous declines, partly in response to increases were recorded for coffee and finished the strong employment report, which generated energy goods. Prices of finished goods other than expectations that monetary policy might need to food and energy were unchanged on balance over be tightened substantially in the near term. Most June and July and registered only a small rise over major indexes of equity prices were up on balance the twelve months ended in July. At an earlier stage over the intermeeting period, with second-quarter Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

994 Federal Reserve Bulletin • November 1994 corporate profits generally better than had been the rate of recent years, reflecting still unsatisfied expected. demand for home ownership and the relatively The trade-weighted value of the dollar in terms favorable cash-flow affordability of housing, as of the other G-10 currencies declined early in the judged by the standards of the past two decades. intermeeting period but later recouped its losses The restraint on economic activity exerted by weak and ended the period unchanged on balance. The export demand was projected to diminish as ecofluctuations in the dollar partly reflected evolving nomic conditions improved abroad, given the perceptions of the degree to which U.S. authorities competitiveness of U.S. produced goods. were concerned about further weakness in the In the Committee's discussion of current and currency. Over the intermeeting period, the dollar prospective economic developments, members depreciated slightly against the mark but edged commented that final aggregate demand appeared higher against the yen. to have slowed somewhat in recent months but that Both M2 and M3 expanded in July after declin- the expansion still seemed to have considerable ing on average over May and June. The growth of underlying momentum. Indeed, available data on M2 in July owed in part to a sizable increase in the various components of spending taken together liquid deposits, but in light of a resumption of might in fact be understating the growth in ecorun-offs at bond mutual funds it also may have nomic activity; the strength of labor markets and reflected a renewed preference by households for measures of gross domestic income suggested a the protection of principal provided by money mar- somewhat stronger economic performance. Susket mutual funds. The strength in M2 showed tained expansion, perhaps at a pace broadly in line through to M3, which also was boosted by funds with or a bit above the economy's long-run growth garnered from wholesale sources to finance a surge potential, remained a reasonable expectation, but in bank credit. For the year through July, M2 and many members observed that they saw the risks as M3 grew at rates slightly above the bottom of their being on the upside of such a projection in the ranges for 1994. Total domestic nonfinancial debt absence of some further policy tightening. Views continued to expand at a moderate pace. varied to some degree with regard to available The staff forecast prepared for this meeting sug- margins of unemployed resources, but the memgested that the economy was operating close to its bers agreed that the economy probably was operatlong-run capacity and that growth would trend ing very close to, and in the view of some might lower over the next several quarters to a rate gener- have reached, its long-run potential. In these cirally in line with the increase in its potential. Under cumstances, the members saw appreciable risks of these circumstances, trends in the core rate of infla- intensifying pressures on resources and higher tion would not deviate significantly from recent inflation. Broad measures of wages and prices sugexperience, but there was a risk that such an out- gested little change in inflation trends in recent come might require further monetary policy tight- quarters, but worrisome signs of greater inflation ening. Growth in consumer spending was projected were evident in the prices of materials purchased to slow in response to smaller gains in employment by business firms and in anecdotal reports of sucand income, some reductions in pent-up demands, cessful efforts by an increasing number of busiand the adverse effects on household financial nesses to pass on rising costs by raising prices. wealth of earlier increases in interest rates and In their comments on business conditions in difdeclines in stock market prices. Business fixed ferent parts of the nation, members reported coninvestment, while remaining relatively brisk, was tinuing expansion ranging from modest to solid expected to decelerate somewhat over the forecast growth in most regions, however, the rise in busihorizon, primarily owing to smaller projected gains ness activity appeared to have slowed in some in sales, a growing shortfall of corporate cash flow areas and business conditions had remained essenrelative to capital outlays, and higher financing tially unchanged in a number of others, notably in costs. Single-family housing construction would California. In the course of their review, members continue to be damped by the higher mortgage pointed to the general strength in labor markets as rates; however, the pace of homebuilding was evidenced, for example, by statistical indications expected to remain relatively robust compared with of large and persisting gains in employment and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 995 relatively low initial claims for unemployment pointed to rapid further growth in expenditures for compensation. These data for the national economy business equipment over coming months. Some were reinforced by reports of sizable employment moderation in the growth of such spending increases in numerous industries and parts of the appeared likely later in the context of projected country and associated indications of growing slower expansion in sales and the rise in financing labor shortages in a number of areas and some costs. The outlook for nonresidential construction, occupations. while not ebullient, nonetheless seemed likely to The financial climate remained supportive of become a more positive factor in fostering further sustained economic growth. It was clear that the economic growth. Demand for commercial real rise in interest rates since the start of the year had estate space, including office space, had begun to had some restraining effects on interest-sensitive improve in many areas. Against this background expenditures, notably housing and perhaps to a and given the apparent availability of financing for lesser extent some consumer durables, but to date soundly based projects, nonresidential construction these effects had not been large. Moreover, surveys activity, while displaying considerable local variaand anecdotal reports suggested that banking insti- tion, appeared to be on a moderate uptrend for the tutions were becoming increasingly aggressive in nation as a whole. their efforts to foster loan growth by easing many Prospective developments in foreign trade also terms and standards for lending. In financial mar- were expected to have a positive effect on the kets more generally, risk spreads had remained expansion of the domestic economy and indeed to relatively narrow and both debt and equity markets offset some of the anticipated slowing in the overappeared to be well positioned to provide ample all growth of domestic demand. Economic condifinancing for further economic expansion. tions abroad were improving faster than had been In their review of developments in key sectors of anticipated, and this development along with the the economy, members saw widespread evidence decline in the foreign exchange value of the dollar of a well established expansion. Some signs of was projected to stimulate faster growth in exports moderation from the rapid advance in recent quar- while curbing that of imports over the next several ters had emerged, including statistical and anec- quarters. dotal indications of somewhat slower growth of Members focused on recent inventory developconsumer spending. Members noted, however, that ments, which in the context of some moderation in an apparently significant portion of the recent the growth of final demand had accounted for a weakness in sales of motor vehicles appeared to be considerable portion of the overall expansion in related to supply shortages that were in the process GDP reported for the second quarter. While the rate of being corrected. Consumer confidence remained of inventory accumulation could be expected to at a high level and likely reflected, among other slow in the current quarter, the extent of that slowfactors, the strength in job markets in many parts of ing and its retarding effects on near-term economic the country. Nonetheless, more moderate consumer growth were uncertain. Partly on the basis of anecspending was a reasonable expectation in the con- dotal reports, the members concluded that much of text of a low saving rate, increased consumer debt the inventory buildup in the second quarter was levels, and higher interest rates. One member com- voluntary, thereby reducing the probability of a mented that some pause in the expansion of overall sharp reversal. Indeed, to the degree that delivery consumer spending would not be unusual after lead times might edge up in various industries as several quarters of robust growth, and another capacity constraints were encountered, stronger remarked that the rise in household expenditures efforts to build inventories could emerge, espehad been larger than the increase in household cash cially against the background of currently low incomes by an appreciable margin over the past inventory-to-sales ratios. Some business contacts year. reported that they were planning to add to their Further marked expansion in business fixed inventories over the months ahead. At the same investment was likely to make a sizable contribu- time, ongoing business efforts to maintain relation to continuing economic growth. Ongoing tively lean inventories undoubtedly would tend to strength in orders, including foreign demand, limit any broad buildup in inventories. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

996 Federal Reserve Bulletin • November 1994 With regard to the outlook for residential con- productivity. From a differing perspective, one struction, members reported some slowing in member noted that decelerating growth in money single-family housing demand in many parts of the measures such as Ml, the monetary base, and country as homebuyers reacted to the rise in mort- reserves—which had been expanding rapidly for gage interest rates. However, single-family home- several years—implied that monetary policy had building activity was being maintained at relatively been moved substantially to curtail any increase in robust levels in some areas and multifamily hous- inflation pressures, though more action might still ing construction was improving in numerous local be required. markets. On balance, the housing sector probably In the Committee's discussion of policy for the would contribute little, if any, impetus to the expan- intermeeting period ahead, the members agreed sion but homebuilding was likely to remain well that a prompt further tightening move was needed above its earlier depressed levels. to provide greater assurance that inflationary pres- In their assessment of the outlook for inflation, sures in the economy would remain subdued. The many members focused on the prospects for further members recognized that the Committee's earlier growth in output in the context of diminishing policy actions were exerting some restraining margins of unemployed production resources. It effects and that further lagged effects from those was difficult to assess the extent of remaining actions could be expected. Even so, the underlying margins of available resources, in part because of strength in demand and narrow margins of slack in uncertainty about the effects on capacity of ongo- the economy pointed to a considerable risk of furing efforts to improve productivity through busi- ther inflation pressures in the absence of additional ness restructurings and sharp increases in business policy tightening. investment expenditures. Despite somewhat differ- With regard to the size of the policy adjustment, ing views, the members generally concluded that the members were apprised of a disposition on the the economy probably was operating at a level that part of the Board of Governors to approve the was quite close to, if not already at, its long-run ^-percentage-point increase in the discount rate potential. In the circumstances, many of the mem- that was pending at several Federal Reserve Banks. bers commented that the risks of intensifying infla- The Committee members endorsed a proposal to tion clearly were on the upside if the economic allow the effects of such a rise in the discount rate, expansion did not moderate from its pace in recent should it be approved, to be reflected fully in quarters. Indications of accelerating cost and price reserve markets. Consideration was given to a pressures were not yet visible in broad measures of lesser adjustment in reserve conditions, but the inflation and wages. Those measures, while subject members concluded that a smaller step was to fluctuations largely associated with swings in unlikely to be adequate, and on perceiving this, food and energy prices, had not displayed any financial markets would quickly build in further discernible trend over the past several quarters. At monetary tightening, the unknown size and timing the same time, signs of increasing prices and costs of which would add to market uncertainty and at earlier stages of production appeared to be multi- volatility. A more decisive policy move might plying, including sizable price increases for a wide reduce the need for further tightening later, or range of industrial commodities. More generally, possibly even avert that need entirely, by moderatmembers cited a growing number of reports by ing or arresting the inflationary momentum in the business firms of rising input costs and of more economy more promptly and by helping to curb successful efforts by some firms to raise prices. It inflationary expectations more effectively. also was noted that the decline in the value of the In considering possible adjustments to policy dollar would contribute, directly and indirectly, to during the period before the next meeting, all the some upward pressures on prices. However, busimembers favored moving to a symmetric interness contacts, notably at the retail level, indicated meeting instruction. Such a directive would be that competition remained intense and made it very consistent with the members' expectations that a difficult to pass on cost increases through higher further policy action was not likely to be needed prices, thereby placing a premium on continued for some time, given the substantial nature of efforts to contain costs through improvements in today's policy move. However, a symmetrical Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 997 directive would not rule out the possibility of a currencies was unchanged on balance over the interpolicy move in the event that intermeeting develop- meeting period. M2 and M3 turned up in July following declines on ments differed substantially from expectations. average in both aggregates over May and June; for the At the conclusion of the Committee's policy year through July, M2 and M3 grew at rates slightly discussion, all the members indicated they could above the bottom of their ranges for 1994. Total domessupport a directive that called for increasing some- tic nonfinancial debt has continued to expand at a moderwhat the degree of pressure on reserve positions, ate rate in recent months. The Federal Open Market Committee seeks monetary taking account of a possible increase in the disand financial conditions that will foster price stability count, rate, and that did not include a presumption and promote sustainable growth in output. In furtherance about possible adjustments to policy during the of these objectives, the Committee at its meeting in intermeeting period. Accordingly, in the context July reaffirmed the ranges it had established in February of the Committee's long-run objectives for price for growth of M2 and M3 of 1 to 5 percent and 0 to 4 percent respectively, measured from the fourth quarter stability and sustainable economic growth, and givof 1993 to the fourth quarter of 1994. The Committee ing careful consideration to economic, financial, anticipated that developments contributing to unusual and monetary developments, the Committee de- velocity increases could persist during the year and that cided that slightly greater or slightly lesser reserve money growth within these ranges would be consistent restraint would be acceptable during the inter- with its broad policy objectives. The monitoring range for growth of total domestic nonfinancial debt was meeting period. According to a staff analysis, the maintained at 4 to 8 percent for the year. For 1995, the reserve conditions contemplated at this meeting Committee agreed on tentative ranges for monetary would be consistent with modest growth in M2 and growth, measured from the fourth quarter of 1994 to the M3 over coming months. fourth quarter of 1995, of 1 to 5 percent for M2 and 0 to 4 percent for M3. The Committee provisionally set the At the conclusion of the meeting, the Federal associated monitoring range for growth of domestic non- Reserve Bank of New York was authorized and financial debt at 3 to 7 percent for 1995. The behavior of directed, until instructed otherwise by the Commit- the monetary aggregates will continue to be evaluated in tee, to execute transactions in the System Account the light of progress toward price level stability, movein accordance with the following domestic policy ments in their velocities, and developments in the economy and financial markets. directive: In the implementation of policy for the immediate The information reviewed at this meeting suggests future, the Committee seeks to increase somewhat the that the pace of economic expansion, though still sub- existing degree of pressure on reserve positions, taking stantial, may have moderated somewhat recently, while account of a possible increase in the discount rate. In the resource utilization has remained at high levels. Non- context of the Committee's long-run objectives for price farm payroll employment continued to advance at a stability and sustainable economic growth, and giving robust pace in July, but the civilian unemployment rate careful consideration to economic, financial, and monedged up to 6.1 percent—about the same as the average etary developments, slightly greater reserve restraint or for the second quarter. Industrial production rose appre- slightly lesser reserve restraint would be acceptable in ciably over June and July. Growth in consumer spending the intermeeting period. The contemplated reserve conhas slowed in recent months, owing in part to constraints ditions are expected to be consistent with modest growth on the supply of motor vehicles. Housing starts rose in in M2 and M3 over coming months. July. Orders for nondefense capital goods point to a continued strong expansion in spending on business Votes for this action: Messrs. Greenspan, McDonequipment; permits for nonresidential construction have ough, Blinder, Broaddus, Forrestal, Jordan, Kelley, been rising as well. Business inventories registered a LaWare, Lindsey, and Parry and Mses. Phillips and large increase in the second quarter, but inventories Yellen. Votes against this action: None. appeared to have remained broadly in line with sales. The average nominal deficit on U.S. trade in goods and It was agreed that the next meeting of the Comservices was larger in April and May than the average mittee would be held on Tuesday, September 27, for the first quarter. Increases in broad indexes of consumer and producer prices have remained moderate in 1994. recent months, apart from the effect of short-run swings The meeting adjourned at 12:30 p.m. in volatile food and energy components. Most market interest rates are unchanged to up slightly on balance since the July meeting. The trade- Donald L. Kohn weighted value of the dollar in terms of the other G-10 Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

999 Legal Developments ORDERS ISSUED UNDER BANK HOLDING The Board previously has determined that the inter- COMPANY ACT state banking statutes of Texas permit out-of-state bank holding companies to acquire established bank- Orders Issued Under Section 3 of the Bank ing organizations in Texas.3 Based on all the facts of Holding Company Act record, the Board has determined that its approval of this proposal is not prohibited by the Douglas Amend- Boatmen's Bancshares, Inc. ment. Approval of this proposal is conditioned upon St. Louis, Missouri Boatmen's receiving all required state regulatory approvals. Order Approving Acquisition of a Bank Holding Company Competitive Consideration Boatmen's Bancshares, Inc., St. Louis, Missouri Boatmen's with total deposits of $18.6 billion, controls ("Boatmen's"), a bank holding company within the depository institutions in nine states. In Texas, Boatmeaning of the Bank Holding Company Act ("BHC men's is the 13th largest commercial banking organi- Act"), has applied for the Board's approval under zation, controlling deposits of $1.1 billion, representsection 3 of the BHC Act (12 U.S.C. § 1842) to acquire ing less than 1 percent of total deposits in commercial Dalhart Bancshares, Inc., Dalhart, Texas ("Dalhart"), banking organizations in the state.4 Dalhart is the 152d and thereby indirectly acquire Citizens State Bank of largest commercial banking organization in Texas, Dalhart, Dalhart, Texas ("Bank").1 controlling deposits of $119.9 million, representing Notice of the application, affording interested perless than 1 percent of total deposits in commercial sons an opportunity to submit comments, has been banking organizations in the state. Upon consummapublished (59 Federal Register 36,765 (1994)). The tion of this proposal, Boatmen's would continue to time for filing comments has expired, and the Board rank as the 13th largest commercial banking organizahas considered the application and all comments retion in Texas, controlling $1.2 billion in deposits, ceived in light of the factors set forth in section 3(c) of representing less than 1 percent of total deposits in the BHC Act. commercial banking organizations in the state. Boatmen's and Dalhart compete directly in the Douglas Amendment Analysis Amarillo, Texas, banking market.5 Boatmen's is the largest of ten depository institutions in the market, with Section 3(d) of the BHC Act, the Douglas Amenddeposits of $624.1 million, representing 35.5 percent of ment, prohibits the Board from approving an applicatotal deposits in depository institutions in the market tion by a bank holding company to acquire control of ("market deposits").6 Dalhart is the ninth largest any bank outside the bank holding company's home state unless the acquisition is "specifically authorized by the statute laws of the State in which such bank is 3. Boatmen's Bancshares, Inc., 79 Federal Reserve Bulletin 1179 located, by language to that effect and not merely by (1993). Under Texas law, each bank to be acquired must have been in implication."2 For purposes of the Douglas Amend- existence for at least five years, and the proposed transaction must not ment, Boatmen's home state is Missouri. result in the acquiring organization controlling more than 25 percent of total deposits held by depository institutions in Texas. Tex. Rev. Civ. Stat. Ann. Art. 342-916 (West 1992). Bank has been in existence for more than five years, and upon consummation of this proposal, 1. Boatmen's proposes to acquire both Dalhart and Dalhart's wholly Boatmen's would control less than 1 percent of total deposits in owned subsidiary, Dalhart Bancshares of Delaware, Inc., Wilming- depository institutions in Texas. ton, Delaware ("Dalhart Delaware"), which owns approximately 4. State deposit data are as of March 31, 1994. 93 percent of the voting shares of Bank. Boatmen's will merge both 5. The Amarillo, Texas, banking market is approximated by the Dalhart and Dalhart Delaware into Boatmen's wholly owned subsid- Amarillo Metropolitan Statistical Area, which consists of Potter and iary, Boatmen's Texas, Inc., St. Louis, Missouri. Randall Counties, Texas. 2. 12 U.S.C. § 1842(d). A bank holding company's home state is that 6. In this context, depository institutions include banks, savings state in which the operations of the bank holding company's banking banks, and savings associations. Market deposit data are as of June subsidiaries were principally conducted on July 1, 1966, or the date on 30, 1993, and are based on calculations in which deposits of thrift which the company became a bank holding company, whichever is later. institutions are included at 50 percent. The Board previously has Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1000 Federal Reserve Bulletin • November 1994 depository institution in the market, controlling depos- Board and, as such, may be enforced in proceedings its of $20.1 million, representing 1.1 percent of total under applicable law. deposits in depository institutions in the market. Upon The proposal shall not be consummated before the consummation of this proposal, Boatmen's would con- thirtieth calendar day following the effective date of trol $644.3 million in deposits, representing 36.7 per- this order, or later than three months after the effective cent of total deposits in depository institutions in the date of this order, unless such period is extended for market. The Herfindahl-Hirschman Index ("HHI") good cause by the Board or by the Federal Reserve would increase by 81 points to 2637.7 Bank of St. Louis, acting pursuant to delegated au- A number of factors in this case indicate that the thority. increase in the concentration level of the Amarillo By order of the Board of Governors, effective market tends to overstate the competitive effects of September 28, 1994. this proposal. For example, nine competitors, including two large multistate bank holding companies would Voting for this action: Chairman Greenspan, Vice Chairremain in the market after consummation of this man Blinder, and Governors Kelley, La Ware, Lindsey, Phillips, and Yellen. proposal. In addition, the Amarillo market also has attracted two de novo entrants in the past five years, indicating that the market is attractive for entry. After JENNIFER J. JOHNSON Deputy Secretary of the Board considering the number of competitors remaining in the market, the relatively small increase in concentra- FCFT, Inc., tion as measured by the HHI, and all other facts of Princeton, West Virginia record, the Board concludes that consummation of the proposal would not result in a significantly adverse Order Approving Acquisition of Shares of a Bank effect on competition or concentration of banking Holding Company resources in the Amarillo banking market or any other relevant banking market. FCFT, Inc., Princeton, West Virginia ("FCFT"), has The Board also concludes that the financial and applied under section 3(a)(3) of the Bank Holding managerial resources and future prospects of Boat- Company Act ("BHC Act") (12 U.S.C. § 1842(a)(3)) men's, Dalhart, and their respective subsidiaries, and to acquire up to 19 percent of the voting shares of other supervisory factors the Board must consider Hinton Financial Corporation ("Hinton"), and under section 3(c) of the BHC Act, are consistent with thereby indirectly acquire up to 19 percent of the approval of this application. Considerations relating to voting shares of Hinton's bank subsidiary, The First convenience and needs of the community to be served National Bank of Hinton ("First National"), both of also are consistent with approval. Hinton, West Virginia.1 Based on the foregoing and other facts of record, the Notice of the application, affording interested per- Board has determined that the application should be, sons an opportunity to submit comments, has been and hereby is, approved. The Board's approval is published (59 Federal Register 32,962 (1994)). The specifically conditioned upon compliance by Boattime for filing comments has expired, and the Board men's with all the commitments made in connection has considered the application and all comments rewith this application and with the conditions in this ceived in light of the factors set forth in section 3 of the order. For purposes of this action, the commitments BHC Act. and conditions relied on in reaching this decision shall FCFT, with total consolidated assets of $690.2 milbe deemed to be conditions imposed in writing by the lion, is the seventh largest banking or thrift organization ("depository institution") in West Virginia,2 controlling approximately $572.3 million in deposits, indicated that thrift institutions have become, or have the potential to representing 3.2 percent of the total deposits in deposbecome, significant competitors of commercial banks. See Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National itory institutions in the state.3 FCFT controls three City Corporation, 70 Federal Reserve Bulletin 743 (1984). bank subsidiaries and one savings association subsid- 7. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI is above 1800 is considered concentrated. The Justice Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other 1. FCFT currently owns approximately 4.78 percent of the voting factors indicating anti-competitive effects) unless the post-merger shares of Hinton, and intends to purchase up to 19 percent of Hinton's HHI is at least 1800 and the merger increases the HHI by 200 points. voting shares. The Justice Department has stated that the higher than normal HHI 2. In this context, depository institutions include commercial banks, thresholds for screening bank mergers for anti-competitive effects savings banks, and savings associations. implicitly recognized the competitive effect of limited purpose lenders 3. Asset data are as of March 31, 1994, and state deposit data are as and other non-depository financial entities. of December 31, 1993. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1001 iary located in West Virginia. Hinton, with total con- bank holding company."6 The Board also has noted solidated assets of $65.8 million, is the 54th largest that the requirement in section 3(a)(3) of the BHC Act depository institution in West Virginia, controlling that the Board's prior approval be obtained before a $56.6 million in deposits, representing less than bank holding company acquires more than 5 percent of 1 percent of the total deposits in depository institu- the voting shares of a bank suggests that Congress tions in the state. contemplated the acquisition by bank holding compa- FCFT and Hinton do not compete directly in any nies of between 5 percent and 25 percent of the voting banking market. Accordingly, consummation of this shares of banks. For these reasons, the Board conproposal would not have a significantly adverse effect cludes that the purchase by FCFT of less than a on competition or the concentration of banking re- controlling interest in Hinton is not a factor that, by sources in any relevant banking market. itself, justifies denial of this application. The Board has carefully reviewed comments from As part of this proposal, FCFT has made a number special counsel to Hinton ("Protestant"), objecting to of commitments to address concerns relating to the FCFT's acquisition of a minority interest in Hinton. effect that its acquisition of shares of Hinton would Protestant alleges that FCFT's acquisition of 19 per- have on the management and operation of Hinton. In cent of Hinton's voting stock would adversely affect particular, FCFT has committed that it will not, with- Hinton's ability to affiliate with another financial insti- out the Board's prior approval: tution and, thus, impair Hinton's ability to raise capital 1. Exercise or attempt to exercise a controlling and improve services to its community.4 Protestant influence over the management or policies of Hinton alleges that FCFT eventually intends to acquire con- or its bank subsidiary; trol of Hinton and would discourage potential compet- 2. Have or seek to have any employees or represening acquirors.5 FCFT maintains that its investment in tatives serve as an officer, agent, or employee of Hinton is completely passive, and that it will not Hinton or its bank subsidiary; exercise or attempt to exercise a controlling influence 3. Seek or accept representation on the board of over the management or policies of Hinton or First directors of Hinton or its bank subsidiary; National. 4. Take any action causing Hinton or its bank The Board previously has approved the acquisition subsidiary to become a subsidiary of FCFT; by a bank holding company of less than a controlling 5. Acquire or retain shares of Hinton that would interest in a bank, noting that "nothing in section 3(c) cause the combined interests of FCFT and its afof the [BHC] Act requires denial of an application filiates, officers, and directors to equal or exceed solely because a bank holding company proposes to 25 percent of the outstanding voting shares of Hinacquire less than a controlling interest in a bank or ton; 6. Propose a director or a slate of directors in opposition to a nominee or slate of nominees proposed by the management or board of directors of 4. Protestant also alleges that FCFT improperly filed its application Hinton or its bank subsidiary ; before Hinton became a bank holding company. Hinton, however, 7. Attempt to influence the dividend policies or became a bank holding company before the date that FCFT's appli- practices of Hinton or its bank subsidiary; cation was accepted for processing by the Federal Reserve System. Accordingly, this comment does not warrant a denial of the applica- 8. Solicit or participate in soliciting proxies with tion. respect to any matter presented to the shareholders 5. Protestant alleges that FCFT's rights as a dissenting shareholder of Hinton ; under Delaware law could prevent a common and beneficial type of purchase by a potential acquiror. Protestant asserts that the most 9. Attempt to influence the loan and credit decisions attractive type of acquisition for Hinton would be a stock-for-stock or policies of Hinton or its subsidiary bank, the exchange, under which Hinton shareholders would receive stock of the acquiror in exchange for their shares, and that such transactions pricing of services, any personnel decision, the generally are structured for accounting purposes as a "pooling of location of any offices, branching, the hours of interests." Under Delaware law, FCFT could elect to receive fair operation, or similar activities of Hinton or its bank market value for its Hinton shares in lieu of a stock-for-stock exchange proposal by a potential acquiror ("shareholder dissenter's subsidiary; rights"). See Del. Code Ann. tit. 8, § 262 (1974 & Supp. 1992). 10. Dispose or threaten to dispose of shares of Protestant alleges that any such election by FCFT, with shareholdings in excess of 10 percent, would preclude "pooling of interests" Hinton in any manner as a condition of specific accounting treatment for a stock exchange proposal because this action or nonaction by Hinton or its bank subsidaccounting treatment is not available if more than 10 percent of the iary; and acquiree's shares are purchased for cash. See Accounting Principles Board Opinion No. 16, 1147(b). The Board notes that the "pooling of interests" accounting treatment of an acquisition of Hinton also would not be available if one or more other Hinton shareholders with 6. See United Counties Bancorporation, 75 Federal Reserve Bulleshareholdings aggregating more than 10 percent exercised their share- tin 714 (1989); Midlantic Banks, Inc., 70 Federal Reserve Bulletin 776, holder dissenter's rights. 776-77 (1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1002 Federal Reserve Bulletin • November 1994 11. Enter into any banking or nonbanking transac- the appropriate supervisory authority to "assess the tions with Hinton or its bank subsidiary, except that institution's record of meeting the credit needs of its FCFT and/or its subsidiaries may establish and entire community, including low- and moderatemaintain deposit accounts with Hinton's bank sub- income neighborhoods, consistent with the safe and sidiary; provided that the aggregate balance of all sound operations of such institution," and to take this such deposit accounts does not exceed $100,000, record into account in its evaluation of bank holding and provided that the accounts are maintained on company applications.8 substantially the same terms as those prevailing for In connection with this application, Protestant has comparable accounts of persons unaffiliated with asserted that FCFT's record of performance under the Hinton. CRA is unsatisfactory, as demonstrated by the "needs to improve" rating that FCFT's savings association Based on the facts of record and FCFT's commit- subsidiary, First Federal Savings Bank, Bluefield, ments, the Board concludes that FCFT would not West Virginia ("First Federal"), received in its evalacquire control or the ability to exercise a controlling uation under the CRA as of April 1993 by its primary influence over the management or policies of Hinton regulator, the Office of Thrift Supervision ("OTS"). or impair its ability to raise capital upon consumma- The Board has carefully reviewed the CRA perfortion of this proposal.7 On this basis, the Board does mance of FCFT and Hinton, and their subsidiary not believe that the proposed ownership of up to depository institutions, in light of the CRA, the 19 percent of the shares of Hinton by FCFT would Board's regulations, the jointly issued Statement of impede Hinton's ability to improve services to its the Federal Financial Supervisory Agencies Regarding community. The Board notes that numerous other the Community Reinvestment Act ("Agency CRA bank holding companies with minority investors have Statement"), and Protestant's comments. The Agency succesfully raised capital to meet business needs, and CRA Statement provides that a CRA examination is an there is no evidence in the record, other than the important and often controlling factor in determining assertion of Protestant, that would support a finding in whether convenience and needs factors are consistent this case that Hinton would be unable as a result of the with approval of an expansionary proposal. proposed investment to raise capital as needed. Based Initially, the Board notes that First Federal imon these and other facts of record, including Protes- proved its CRA performance since the 1993 examinatant's comments, the Board concludes that the finan- tion. First Federal took steps to address the deficiencial and managerial resources and future prospects of cies noted in the 1993 examination, and to improve its FCFT and Hinton, and all other supervisory factors CRA performance generally. These steps included the the Board must consider under section 3 of the BHC appointment of a compliance officer and the develop- Act, are consistent with approval of this proposal. ment of new CRA programs in response to the credit needs of its community, including a significantly in- Convenience and Needs Considerations creased involvement in West Virginia and Virginia housing development funds and participation in other Section 3 of the BHC Act also requires the Board, in state-sponsored home ownership programs targeted to every case involving the acquisition by a bank holding persons of low- or moderate-income. As a result of company of a bank or bank holding company, to these and other actions, the OTS upgraded First consider the effects of the proposal on the convenience Federal's rating to "satisfactory" at its most recent and needs of the communities to be served. The Board examination for CRA performance as of April 11, 1994 has long held that this analysis includes a review of the (the "April 1994 examination"). In the April 1994 performance under the Community Reinvestment Act examination, the OTS found that the geographic dis- (12 U.S.C. § 2109 et seq.) ("CRA"). The CRA re- tribution of First Federal's credit extensions demonquires federal financial supervisory agencies to en- strated a reasonable penetration of all segments of its courage financial institutions to help meet the credit delineated community. The Board notes that the April needs of the local communities in which they operate 1994 examination did not find any evidence of illegal consistent with the safe and sound operation of such discrimination or illegal credit practices. Examiners institutions. To accomplish this end, the CRA requires also found no evidence of any practices or procedures that would discourage applications for credit from any segment of First Federal's delineated community. 7. FCFT would not be able to acquire control of Hinton in the future or sell its interest in Hinton to another bank holding company without prior Board approval, and the Board would at that time re-examine the effects of the proposal under the factors set forth in section 3(c) of the BHC Act after providing an opportunity for public comment. 8. 12 U.S.C. § 2903. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1003 The record does not show that the issues raised by of this order, or later than three months after the examiners in the 1993 examination of First Federal effective date of this order, unless such period is indicate chronic institutional deficiencies or a pattern extended for good cause by the Board or the Federal of CRA deficiencies at other FCFT depository institu- Reserve Bank of Richmond, acting pursuant to deletions. FCFT's other three depository institutions each gated authority. received at least a "satisfactory" rating from their By order of the Board of Governors, effective primary federal supervisors in their most recent CRA September 13, 1994. performance examinations, including FCFT's lead bank, First Community Bank, Inc., Princeton, West Voting for this action: Vice Chairman Blinder and Gover- Virginia ("First Community").9 nors Kelley, Lindsey, Phillips, and Yellen. Absent and not voting: Chairman Greenspan and Governor La Ware. For the foregoing reasons, and based on all facts of record in this case, the Board concludes that the JENNIFER J. JOHNSON convenience and needs considerations, including the Deputy Secretary of the Board CRA performance records of FCFT and its subsidiary depository institutions and those of Hinton and its Firstar Corporation bank subsidiary, are consistent with approval of this Milwaukee, Wisconsin application. Firstar Corporation of Wisconsin Conclusion Milwaukee, Wisconsin Based on the foregoing and other facts of record, the Order Approving the Acquisition of a Bank Holding Board has determined that the application should be, Company and hereby is, approved.10 The Board's approval is expressly conditioned on compliance with all the com- Firstar Corporation and Firstar Corporation of Wismitments made by FCFT in connection with this consin, both of Milwaukee, Wisconsin (collectively, application, including the commitments discussed in "Firstar"), bank holding companies within the meanthis order. The commitments and conditions relied on ing of the Bank Holding Company Act ("BHC Act"), by the Board in reaching this decision are deemed to have applied under section 3 of the BHC Act be conditions imposed in writing by the Board in (12 U.S.C. § 1842) to acquire by merger First Southconnection with its findings and decision, and, as such, east Banking Corp., Lake Geneva, Wisconsin ("First may be enforced in proceedings under applicable law. Southeast"), and thereby indirectly acquire First This transaction shall not be consummated before Southeast's banking subsidiaries, First Bank Souththe thirtieth calendar day following the effective date east, N.A., Milwaukee, Wisconsin ("First Bank Southeast"), and First Bank Southeast of Lake Geneva, N.A., Lake Geneva, Wisconsin ("First Bank 9. The following bank subsidiaries of FCFT all received a "satis- Lake Geneva"). factory" rating at their most recent examinations for CRA performance: First Community (Board—January 24, 1994); The Flat Top Notice of the application, affording interested per- National Bank of Bluefield, Bluefield, West Virginia (Office of the sons an opportunity to submit comments, has been Comptroller of the Currency ("OCC")—July 11, 1994); and Peoples published (59 Federal Register 23,717 (1994)). The Bank of Bluewell, Blue well, West Virginia (Federal Deposit Insurance Corporation—January 19, 1994). The Board also notes that First time for filing comments has expired, and the Board National received a "satisfactory" rating by the OCC at its most has considered the application and all comments rerecent examination for CRA performance as of April 19, 1993. 10. Protestant has requested that the Board hold a public hearing on ceived in light of the factors set forth in section 3(c) of this application. The Board is not required under section 3(b) of the the BHC Act. BHC Act to hold a hearing on an application unless the appropriate Firstar, with total consolidated assets of $13.9 bilbanking authority for the bank to be acquired makes a timely recommendation of denial of the application. In this case, the OCC has lion, controls 34 subsidiary banks in Wisconsin, Iowa, not recommended denial of the proposal. Illinois, Minnesota, and Arizona. Upon consummation Generally, under the Board's rules, the Board may, in its discretion, of the proposal, Firstar would remain the second hold a public hearing or meeting on an application to clarify factual issues related to the application and to provide an opportunity for largest commercial banking organization in Wiscontestimony, if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). The sin, controlling $7 billion in deposits, representing Board has carefully considered this request. In the Board's view, Protestant has had sufficient opportunity to present written submis- 16.7 percent of the total deposits in commercial banksions, and has, in fact, submitted written comments that have been ing organizations in the state.1 considered by the Board. On the basis of all the facts of record, the Board has determined that a public hearing is not necessary to clarify the factual record in this application, or otherwise warranted in this case. Accordingly, the request for a public hearing on this application 1. Asset data are as of March 31, 1994. All deposit data are as of is hereby denied. June 30, 1993. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1004 Federal Reserve Bulletin • November 1994 Competitive Considerations Convenience and Needs Considerations Firstar and First Southeast compete directly in the In acting upon an application to acquire a depository Milwaukee, Kenosha-Racine, and Walworth banking institution under the BHC Act, the Board must conmarkets, all in Wisconsin.2 Upon consummation of sider the convenience and needs of the communities to this proposal, all these markets would remain moder- be served, and take into account the records of the ately concentrated as measured by the Herfindahl- relevant depository institutions under the Community Hirschman Index ("HHI")3 based on market deposit Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). calculations in which the deposits of thrift institutions The CRA requires the federal financial supervisory are included at 50 percent.4 In light of all the facts of agencies to encourage financial institutions to help meet record, including the number of depository institutions the credit needs of the local communities in which they (commercial banks, savings banks and savings associ- operate, consistent with the safe and sound operation of ations) that would remain in these markets, and the such institutions. To accomplish this end, the CRA relatively small increases in market share and market requires the appropriate federal supervisory authority concentration as measured by the HHI,5 the Board to "assess the institution's record of meeting the credit believes that consummation of this proposal would not needs of its entire community, including low- and have a significantly adverse effect on competition or moderate-income neighborhoods, consistent with the the concentration of banking resources in any relevant safe and sound operation of such institution," and to banking market.6 take that record into account in its evaluation of bank holding company applications.7 The Board has received comments opposing the 2. The Milwaukee banking market consists of Milwaukee, Ozaukee, proposal from the United Paperworkers International and Waukesha Counties; Polk, Jackson, Richfield, and Germantown townships in Washington County; Waterford, Norway, and Raymond Union ("Protestant"). Protestant alleges that data townships in Racine County; East Troy township in Walworth submitted by Firstar under the Home Mortgage Dis- County; and Ixonia township in Jefferson County. The Kenoshaclosure Act ("HMDA") (12 U.S.C. § 2801 et seq.) Racine banking market consists of Kenosha County, except Wheatland and Randall townships; and Caledonia, Mount Pleasant, show that Firstar discriminates in its housing-related Yorkville, Dover, and Rochester townships in Racine County. The lending against minority applicants in the City of Walworth banking market consists of Walworth County, except East Milwaukee, particularly African-American and Troy township; Wheatland and Randall townships in Kenosha County; and Burl township in Racine County. Hispanic borrowers residing in low-income and dete- 3. Under the revised Department of Justice Merger Guidelines, riorating areas in the central city that have been 49 Federal Register 26,824 (June 29, 1984), a market in which the designated as "target areas" by the Milwaukee Comppost-merger HHI is between 1000 and 1800 is considered moderately concentrated. The Justice Department has informed the Board that a troller's office.8 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 Record of Performance Under the CRA 200 points. The Justice Department has stated that the higher than normal HHI thresholds for screening bank mergers for anti-competi- In its consideration of the convenience and needs tive effects implicitly recognize the competitive effect of limitedpurpose lenders and other non-depository financial entities. factor under the BHC Act, the Board has carefully 4. The Board previously has indicated that thrift institutions have become, or have the potential to become, major competitors of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin 788 (1990); National City Corporation, 70 Federal Reserve Bulletin (1984). would remain in the Kenosha-Racine banking market, including one 5. In the Milwaukee banking market, Firstar would remain the independent community bank with 21.2 percent of market deposits. largest depository institution, controlling 23 percent of the total Based on the presence of these competitors and for the reasons deposits in depository institutions in the market ("market deposits"), discussed above, the Board believes that the competitive considerand the HHI would increase by five points to 1212. In the Kenosha- ations in this proposal are consistent with approval and that these Racine banking market, Firstar would become the third largest comments do not warrant denial of the application. depository institution, controlling 17 percent of market deposits, and 7. 12 U.S.C. § 2903. the HHI would increase by 112 points to 1637. In the Walworth 8. Specifically, Protestant maintains that Firstar affiliates: have banking market, Firstar would become the largest depository institu- higher residential loan denial rates for neighborhoods in the central tion, controlling 23 percent of market deposits, and the HHI would city of Milwaukee than for all other neighborhoods in metropolitan increase by 252 points to 1101. Milwaukee; reject applications from minority loan applicants more 6. The Board has carefully reviewed several comments maintaining frequently than they reject applications from white applicants; and that this proposal would have an anticompetitive effect by eliminating reject mortgage applications for properties in predominantly minority the last major independent bank in the Walworth and Kenosha-Racine neighborhoods at significantly higher rates than for properties in banking markets. The Board notes that a significant number of predominantly white neighborhoods. Protestant also alleges that competitors, including several independent institutions, would remain Firstar affiliates discriminate against residents of low- and moderatein the two relevant banking markets following consummation of this income neighborhoods in Racine, and that First Southeast has a proposal. In the Walworth banking market, seventeen depository superior record of housing-related lending in Racine. institutions would remain, including two independent community The Board also has received comments from several individuals banks with 11.3 percent and 9.9 percent, respectively, of market opposing this proposal on the basis of Firstar's record of making deposits and six other independent depository institutions with housing-related loans to minorities in Milwaukee and in the central 5 percent or more of market deposits. Sixteen depository institutions city of Milwaukee. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1005 reviewed the CRA performance record of Firstar and and Firstar's mortgage lending subsidiary, Firstar its respective subsidiary banks, as well as all com- Home Mortgage Corporation, Milwaukee, Wisconsin ments received regarding these applications, Firstar's ("Firstar Mortgage"), in lending to minorities, particresponses to these comments, and all other relevant ularly African Americans and Hispanics in the central facts of record in light of the CRA, the Board's city of Milwaukee, in light of 1992 and 1993 HMDA regulations, and the Statement of the Federal Finan- data. These data show some disparities in denial rates cial Supervisory Agencies Regarding the Community for African American and Hispanic applicants com- Reinvestment Act ("Agency CRA Statement").9 pared to white applicants, and in the denial rates for The Board also has carefully considered the com- applicants from the target area compared to applicants ments and information provided by the Office of the from the rest of the Milwaukee MSA. However, the Comptroller of the Currency ("OCC"), the primary HMDA data also indicate that Firstar's housingregulator of Firstar Bank Milwaukee, N.A., Milwau- related lending to African American and Hispanic kee, Wisconsin ("Firstar Milwaukee"), Firstar's lead borrowers and in low- and moderate-income neighborsubsidiary bank and the primary focus of Protestant's hoods is comparable to or exceeds the performance of comments. The OCC has reviewed this proposal in lenders in the aggregate in the Milwaukee area. For light of Protestant's comments and all its examination example, Firstar approved a higher percentage of loan and other supervisory information relating to the CRA applications from African Americans and Hispanics performance of Firstar Milwaukee and the other na- than did lenders in the aggregate both in the target area tional bank subsidiaries of Firstar. Based on this and in the Milwaukee MSA as a whole, and its denial review, the OCC has concluded that there is no reason rates for these groups were generally lower than the to oppose this transaction. denial rates of lenders in the aggregate.11 The Board is concerned when an institution's record A. Evaluations of CRA Performance indicates disparities in lending to minority applicants and in low- and moderate-income neighborhoods and The Agency CRA Statement provides that a CRA believes that all banks are obligated to ensure that examination is an important and often controlling their lending practices are based on criteria that assure factor in the consideration of an institution's CRA not only safe and sound lending, but also assure equal record and that these reports will be given great weight access to credit by creditworthy applicants regardless in the applications process.10 In this case, the Board of race or residential area. The Board recognizes, notes that Firstar Milwaukee received a "satisfacto- however, that HMDA data alone provide an incomry" rating from the OCC at its most recent examina- plete measure of an institution's lending in its comtion for CRA performance as of July 5, 1993, and that munity and have limitations that make the data an Firstar Bank Racine, Racine, Wisconsin ("Firstar Ra- inadequate basis, absent other information, for concine"), received an "outstanding" rating from its pri- clusively determining whether an institution has mary regulator, the Federal Deposit Insurance Corpo- engaged in illegal discrimination in making lending ration ("FDIC"), at its most recent examination for decisions. CRA performance as of May 27, 1992. In addition, all The most recent OCC examination of Firstar Milremaining 32 subsidiary banks of Firstar have received waukee found no evidence of illegal discrimination either "outstanding" or "satisfactory" ratings from against minorities or low- and moderate-income bortheir primary regulators in their most recent examina- rowers. Examiners also found no evidence of any tions for CRA performance. First Bank Southeast re- practices or procedures that would discourage appliceived a "satisfactory" rating from the OCC at its most cations for available credit from any geographical recent examination for CRA performance as of Novem- segment of its delineated community. Moreover, these ber 15, 1993, and First Bank Lake Geneva received a "satisfactory" rating from the OCC at its most recent examination for CRA performance as of May 21, 1991. 11. Protestant also criticizes Firstar's performance in the target area by comparing the percentage of housing-related loans originated in B. HMD A Data 1992 by Firstar Milwaukee (14 percent) with the percentage of such loans originated by First Bank Southeast (21 percent). The record indicates, however, that Firstar Milwaukee and Firstar Mortgage The Board has carefully reviewed Protestant's alle- originated 128 housing-related loans in the target area during 1992, while First Southeast originated 16 such loans. The relative percentgations regarding the record of Firstar Milwaukee ages of loans made by Firstar and First Southeast in the target area are not directly comparable because of a significant difference in the size of the institutions and the communities they serve. First Bank Southeast has a single branch in the Milwaukee banking market, with 9. 54 Federal Register 13,742 (1989). $11 million in deposits, located in the target area, while Firstar 10. Id. at 13,745 (1989). Milwaukee serves nearly the entire Milwaukee MSA. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1006 Federal Reserve Bulletin • November 1994 examinations indicate generally that the geographic which was more than 50 percent higher than the distribution of Firstar Milwaukee's credit extensions, percentage during each period for any other large applications, and denials reflect reasonable penetra- lender as determined by the Milwaukee Comptroller. tion in all segments of its delineated community, In 1992, Firstar made 452 conventional home mortgage including low- and moderate-income neighborhoods.12 loans in the Milwaukee MSA, including 76 loans The OCC also conducted a fair lending examination totalling $3.1 million in low- and moderate-income of Firstar Mortgage as of June 30, 1993, and found no census tracts and 19 loans totalling $523,000 in preevidence of racial discrimination. In the examination, dominantly minority census tracts. In 1993, Firstar the OCC reviewed the loan files for all minority made 580 conventional home mortgage loans in the applicants denied loans and compared them to the files Milwaukee MSA, including 84 loans totalling $3.8 of white applicants provided loans. The OCC con- million in low- and moderate-income census tracts and cluded that all these loans denials were appropriate 16 loans totalling $456,000 in predominantly minority and that minority and non-minority applicants re- census tracts. Firstar also made 145 home improveceived equivalent levels of assistance during the loan ment loans totalling $1.3 million in low- and moderateapplication process.13 income census tracts in 1992 and 170 such loans totalling $1.6 million in 1993, and made 67 home C. Other Aspects of CRA Performance improvement loans totalling $450,000 in predominantly minority census tracts in 1992 and 69 such loans The record in this case indicates that Firstar provides totalling $656 thousand in 1993. In addition, Firstar a substantial amount of housing-related loans through- Milwaukee participates in several governmentally guarout the Milwaukee MSA, including the target area. anteed housing loan programs, including programs of The Board notes that the Milwaukee Comptroller's the Wisconsin Housing and Economic Development 1993 review of lending practices ranked Firstar Mil- Authority ("WHEDA"), the Wisconsin Department of waukee first among large lenders in the percentage of Veterans Affairs, and the Farmers Home Loan Adminresidential lending in the target area.14 The Milwaukee istration. In 1991, Firstar Milwaukee made 80 loans Comptroller found that Firstar Milwaukee made through these programs, totalling $4.2 million. 13.2 percent of its housing-related loans (excluding Firstar also has participated in every program ofhome refinancing loans) in the target area in 1991, and fered by the City of Milwaukee to encourage home 14.3 percent of such loans in the target area in 1992, ownership in the target area. During 1990 and 1991, Firstar Milwaukee originated $5.3 million in loans under the city's Making Ownership a Reality program, 12. The OCC has identified several loan transactions in which including $700,000 in loans in lower-income neighbor- Firstar Milwaukee and two other Firstar subsidiary banks, Firstar hoods, to finance the purchase and rehabilitation of Bank Des Moines, N.A., Des Moines, Iowa, and Firstar Bank Cedar Rapids, N.A., Cedar Rapids, Iowa ("Firstar Cedar Rapids"), have housing by lower-income families. The bank also has failed to comply with the Equal Credit Opportunity Act (15 U.S.C. participated in the city's Buy in Your Neighborhood § 1601 et seq.) and the Board's Regulation B (12 C.F.R. 202.1 et seq.). These transactions involved the treatment of the income of certain program to help homeowners buy second homes as unmarried joint applicants for consumer loans. In addition, the OCC rental properties in their immediate neighborhoods determined that Firstar Cedar Rapids improperly discounted the and the Duplex as a Starter Home program to provide income of certain other applicants for consumer loans. No real estate related loans were affected. Firstar has implemented a number of steps loans for the purchase of duplexes. In addition, Firstar to ensure that these violations do not occur in the future, including a Milwaukee served as joint managing underwriter in revised consumer lending policy developed in consultation with the OCC, and extensive training sessions for all its lenders. 1991 for $169 million of bonds issued by WHEDA to 13. Protestant also alleges that Firstar Mortgage discriminates finance low-income housing in Milwaukee and elseagainst residents of low- and moderate-income neighborhoods in where in Wisconsin, and has underwritten bond issues Racine. The OCC included all denials of applications from minorities in Racine in its fair lending examination of Firstar Mortgage, and by the Milwaukee Housing Authority. Firstar Milwaufound no evidence of racial discrimination. In addition, the most kee also has developed supplemental products and recent CRA performance examination of Firstar Racine by its primary programs. The bank offers a Your Way to a Home regulator, the FDIC, found no evidence of practices intended to discourage credit applications or violations of the substantive provi- Loan, which features reduced down payment and sions of fair lending and fair housing laws. In this regard, the debt-to-income requirements, reduced closing costs, examination noted that all credit denials are reviewed by a senior officer to verify the appropriateness of the denial. In addition, exam- alternative credit documentation, no private mortgage iners found that the bank's delineated community did not exclude any insurance requirement, and no application fee, a Rapid low- and moderate-income neighborhoods, and that its loans and Equity Loan, which provides a standard first mortgage financial services were distributed throughout the community. loan together with a short-term second mortgage loan, 14. The Milwaukee Comptroller separates lenders that originate more than $25 million in residential loans (excluding home refinancing and a home purchase and rehabilitation loan that loans) in one year from lenders that make a smaller dollar volume of requires no repayment of principal during the first six such loans for purposes of comparing the concentration of their lending in the target area. months. Firstar Milwaukee also has committed to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1007 purchase $200,000 of home improvement and second hospital in a low- to moderate-income area to provide mortgage loans from Neighborhood Housing Services, business and medical office space to accommodate a non-profit agency promoting neighborhood revital- over 300 new jobs. ization.15 Firstar Milwaukee also has taken steps to improve Conclusions Regarding Convenience and Needs the marketing of its special lending programs and to Factors encourage more home ownership among low-income residents. In July 1993, Firstar Milwaukee integrated In considering the overall CRA performance records these programs into the Community Home Works of Firstar, its subsidiary banks, Firstar Mortgage, and Program, which it promotes through its network of First Southeast, the Board has carefully considered 45 branches (including eight branches in low- and the entire record, including the public comments. The moderate-income census tracts, two branches contig- Board is concerned by the disparities in the HMDA uous to such census tracts, and five branches located data concerning the percentage of minority and target in adjacent census tracts), a weekly radio call-in pro- area applicants that Firstar denies as compared to gram on home ownership issues, bilingual loan coun- non-minority and higher-income applicants. The seling, and sponsorship of inner-city "Parade of Board notes, however, that the record, including CRA Homes" events. From July 1993 through May 1994, performance examinations, indicates that Firstar's Firstar Milwaukee received 91 applications under the housing-related lending to minority and low- and program, closed 61 loans, and denied only four appli- moderate-income borrowers is generally satisfactory. cations. These examinations and the fair lending examination Firstar Milwaukee's community development cor- of Firstar Mortgage by the OCC found no evidence of poration subsidiary, Firstar Community Investment illegal discrimination by Firstar in housing-related Corporation, Milwaukee, Wisconsin ("FCIC"), also lending. The Board further notes the relatively large assists in meeting the housing needs of low- and volume of lending by Firstar, as compared to its peers, moderate-income members of the community, partic- in the target area and the programs Firstar Milwaukee ularly in the central city of Milwaukee. FCIC arranged has adopted to address the specific housing-related financing, invested as a limited partner, planned and credit needs of low- and moderate-income borrowers coordinated, and served as guarantor for the and of residents of the central city of Milwaukee. The $9.2 million Johnson Square housing rehabilitation Board expects Firstar to continue to implement its project, the largest such project in Wisconsin. Com- CRA initiatives and to address the issues raised by the pleted in 1992, this project renovated six dilapidated OCC in its most recent CRA performance examination apartment buildings in order to create 179 low- and of Firstar Milwaukee and other national banks. The moderate-income apartments and to provide on-site Board will continue to monitor implementation by day-care and Head Start facilities.16 FCIC also served Firstar of the steps taken to address the matters as developer for the $4.2 million renovation of a discussed in this order, and will take this review into deteriorating former bank building to create 100 apart- account in future applications by Firstar. Based on a ments for low-income residents, and is serving as review of the entire record of performance in this case, developer and an equity investor in a $8.7 million including Protestant's comments, Firstar's response to project nearing completion to rehabilitate five apart- these comments, the relevant reports of examination, ment buildings in order to provide 50 units of low- and the steps taken by Firstar to address the issues income housing and social services on Milwaukee's raised by the OCC, the Board has concluded that the Near West Side. In addition, FCIC has invested efforts of Firstar to help meet the credit needs of all $400,000 in the Housing Equity Fund to develop new segments of the communities served by its subsidiary housing initiatives in Milwaukee and planned and banks are consistent with approval of this applicacoordinated the $16 million renovation of a vacant tion.17 15. Firstar Racine addresses the credit needs of low- and moderate- 17. Protestant and the individual commenters have requested that income borrowers in the Racine MSA by participating in the GE the Board hold a public meeting or hearing on these applications. The Capital Home Buyer's Program, which provides credit counseling and Board is not required under section 3(b) of the BHC Act to hold a employs modified employment, debt-to-income, and credit history hearing on an application unless the appropriate banking authority for requirements, and in FHA, VA, and Wisconsin Housing and Eco- the bank to be acquired makes a timely written recommendation of nomic Development Authority loan programs. denial of the application. As previously noted, the OCC has not 16. Firstar Milwaukee provided construction financing for the recommended denial of this proposal. project. More than 50 percent of the construction contracts for the Under the Board's rules, the Board may, at its discretion, hold a project were awarded to minority-owned firms, and nearly 10 percent public hearing or meeting on an application to clarify factual issues of the construction contracts for the project were awarded to firms related to the application, and to provide an opportunity for testiowned by women. mony, if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). The Board has Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1008 Federal Reserve Bulletin • November 1994 Other Considerations Notice of the application, affording interested persons an opportunity to submit comments, has been The financial and managerial resources and future published (59 Federal Register 31,996 (1994)). The prospects of Firstar, First Southeast, and their respec- time for filing comments has expired, and the Board tive banking subsidiaries, and other supervisory fac- has considered the application and all comments retors the Board must consider under section 3 of the ceived in light of the factors set forth in section 3 of the BHC Act, also are consistent with approval. BHC Act. Keweenaw, with total consolidated assets of ap- Conclusion proximately $112 million, controls one bank, Superior National Bank and Trust Company, Hancock, Michi- Based on the foregoing and other facts of record, the gan ("Superior National").1 Keweenaw is the 54th Board has determined that this application should be, largest commercial banking organization in Michigan, and hereby is, approved. The Board's approval is controlling $101.8 million in deposits, representing less expressly conditioned upon compliance with all the than 1 percent of total deposits in commercial banks in commitments made by Firstar in connection with this the state.2 Bank controls $41.1 million in deposits, application and with the conditions referred to in this representing less than 1 percent of total deposits in order. The commitments and conditions relied on by commercial banks in the state. Upon consummation of the Board in reaching this decision are both deemed to this proposal, Keweenaw would become the 36th be conditions imposed in writing by the Board in largest commercial banking organization in Michigan, connection with its findings and decision, and, as such, controlling $142.9 million in deposits, representing less may be enforced in proceedings under applicable law. than 1 percent of total deposits in commercial banks in This transaction shall not be consummated before the state. the thirtieth calendar day following the effective date Keweenaw and Bank compete directly in the Caluof this order, or later than three months after the met, Michigan banking market ("Calumet banking effective date of this order, unless such period is market").3 Keweenaw's subsidiary bank, Superior extended by the Board or by the Federal Reserve Bank National, is the largest of seven depository instituof Chicago, acting pursuant to delegated authority. tions4 that operate in the market, controlling deposits By order of the Board of Governors, effective of $101.8 million, representing 25.8 percent of total September 6, 1994. deposits in depository institutions in the market ("market deposits").5 Bank is the fifth largest depository institution in the Calumet banking market, Voting for this action: Chairman Greenspan, Vice Chairman Blinder, and Governors Kelley, Lindsey, Phillips, and controlling deposits of $40.4 million, representing Yellen. Absent and not voting: Governor LaWare. 10.2 percent of market deposits. Upon consummation of this proposal, Superior National would remain the WILLIAM W. WILES largest depository institution in the Calumet banking Secretary of the Board market, controlling deposits of $142.2 million, representing 36.1 percent of market deposits. The Herfind- Keweenaw Financial Corporation ahl-Hirschman Index ("HHI") would increase by 371 Hancock, Michigan points to 2220.6 Order Approving the Acquisition of a Bank 1. Asset data are as of June 30, 1994. Keweenaw Financial Corporation, Hancock, Michi- 2. State deposit data are as of March 31, 1994. gan ("Keweenaw"), a bank holding company within 3. The Calumet banking market is approximated by Keweenaw, the meaning of the Bank Holding Company Act Houghton, and Baraga counties, all in Michigan. 4. When used in this context, the term "depository institution" ("BHC Act"), has applied under section 3 of the BHC includes commercial banks, savings banks, and savings associations. Act (12 U.S.C. § 1842) to acquire Commercial Na- Market share data are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously has tional Bank of L'Anse, L'Anse, Michigan ("Bank"). indicated that thrift institutions have become, or have the potential to become, major competitors of commercial banks. See Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City carefully considered this request. In the Board's view, interested Corporation, 70 Federal Reserve Bulletin 743 (1984). parties have had a sufficient opportunity to present written submis- 5. Market deposit data are as of June 30, 1994. sions, and Protestant has submitted substantial written comments that 6. Under the revised Department of Justice Merger Guidelines (49 have been considered by the Board. On the basis of all the facts of Federal Register 26,823 (June 29, 1984)), a market in which the record, the Board has determined that a public meeting or hearing is post-merger HHI exceeds 1800 is considered to be highly concennot necessary to clarify the factual record in these applications, or trated. In such markets, the Justice Department is likely to challenge otherwise warranted in this case. Accordingly, the request for a public a merger that increases the HHI by more than 50 points. The Justice meeting or hearing on these applications is hereby denied. Department has informed the Board that a bank merger or acquisition Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1009 A number of factors in this case indicate that the Based on the foregoing and all the other facts of increase in the concentration level of the Calumet record, the Board has determined that this application banking market, as measured by the HHI, tends to should be, and hereby is, approved. The Board's overstate the competitive effects of this proposal. For approval of this proposal is expressly conditioned example, upon consummation of this proposal, six upon compliance with all the commitments made by competitors would remain in the market, including a Keweenaw in connection with this application, and large multistate bank holding company and the largest with the conditions in this order. For purposes of this banking organization headquartered in Michigan's Up- action, these commitments and conditions are deemed per Peninsula. Four of these competitors would have to be conditions imposed in writing by the Board in market shares of at least 14 percent, and all the connection with its findings and decision, and, as such, institutions that compete in the market would have may be enforced in proceedings under applicable law. market shares of at least 7 percent. One of these This transaction shall not be consummated before organizations entered the Calumet banking market in the thirtieth calendar day following the effective date 1994 through an acquisition, indicating that the market of this order, or later than three months after the may be attractive to entry. In addition, the Calumet effective date of this order, unless such period is banking market has become less concentrated in re- extended for good cause by the Board or by the cent years; the HHI has decreased more than 300 Federal Reserve Bank of Minneapolis, acting pursuant points since 1989. Moreover, there are numerous to delegated authority. potential entrants to the Calumet banking market, By order of the Board of Governors, effective since Michigan permits statewide branching and acqui- September 12, 1994. sitions by out-of-state bank holding companies on a nationwide reciprocal basis.7 Finally, consummation Voting for this action: Vice Chairman Blinder and Goverof this proposal would not result in the loss of an nors Kelley, Lindsey, Phillips, and Yellen. Absent and not independent competitor in the Calumet banking mar- voting: Chairman Greenspan and Governor La Ware. ket since Bank is part of a two-bank chain banking organization that includes First National Bank of JENNIFER J. JOHNSON Calumet-Lake Linden, Calumet, Michigan, another Deputy Secretary of the Board depository institution that competes in the Calumet banking market. The Board also notes that the Depart- Midwest Bancshares, Inc. ment of Justice and Office of the Comptroller of the Poplar Bluff, Missouri Currency have considered the potential anticompetitive impact of the proposal, and have not objected to the proposal. Based on the foregoing considerations, Order Approving Acquisition of a Bank Holding and all the other facts of record, the Board has con- Company cluded that consummation of this proposal would not result in a significantly adverse effect on competition or Midwest Bancshares, Inc., Poplar Bluff, Missouri the concentration of banking resources in the Calumet ("Midwest"), a bank holding company within the banking market or any other relevant banking market. meaning of the Bank Holding Company Act ("BHC The Board also has concluded that the financial Act"), has applied under section 3 of the BHC Act and managerial resources and future prospects of (12 U.S.C. § 1842) to acquire all the voting shares of Keweenaw and its subsidiaries and Bank, and all other First Southern Missouri Bancshares, Inc., Poplar supervisory factors the Board must consider under Bluff, Missouri ("First Southern"), and thereby indisection 3 of the BHC Act, are consistent with approval rectly acquire Carter County State Bank, Van Buren, of this application. Considerations relating to the con- Missouri ("Bank"). venience and needs of the communities to be served Notice of the application, affording interested peralso are consistent with approval. sons an opportunity to submit comments, has been published (59 Federal Register 30,003 (1994)). The time for filing comments has expired, and the Board has considered the application and all comments regenerally will not be challenged (in the absence of other factors indicating anti-competitive effects) unless the post-merger HHI is at ceived in light of the factors set forth in section 3(c) of least 1800 and the merger increases the HHI by more than 200 points. the BHC Act. The Justice Department has stated that the higher than normal Midwest is the 51st largest commercial banking threshold for an increase in the HHI when screening bank mergers and acquisitions for anti-competitive effects implicitly recognizes the organization in Missouri, controlling three subsidiary competitive effects of limited-purpose lenders and other non-deposi- banks with total deposits of $97.2 million, representing tory financial entities. 7. MICH. STAT. ANN. §§ 23.710(130b) and 23.710(171). less than 1 percent of total deposits in commercial Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1010 Federal Reserve Bulletin • November 1994 banking organizations in the state.1 First Southern, a by the Federal Reserve Bank of St. Louis, acting one-bank holding company, is the 277th largest com- pursuant to delegated authority. mercial banking organization in the state, controlling By order of the Board of Governors, effective total deposits of $16.9 million, representing less than September 6, 1994. 1 percent of total deposits in commercial banking organizations in the state. Upon consummation of this Voting for this action: Chairman Greenspan, Vice Chairproposal, Midwest would become the 45th largest man Blinder, and Governors Kelley, Lindsey, Phillips, and commercial banking organization in the state, control- Yellen. Absent and not voting: Governor La Ware. ling total deposits of $114.1 million, representing less than 1 percent of total deposits in commercial banking WILLIAM W. WILES Secretary of the Board organizations in the state. Midwest and First Southern do not compete directly in any banking market. Ac- Omnibanc Corporation cordingly, consummation of this proposal would not River Rouge, Michigan have a significantly adverse effect on competition or the concentration of banking resources in any relevant Order Approving Acquisition of a Bank Holding banking market. Company The Board also concludes that financial and managerial resources and future prospects of Midwest, First Omnibanc Corporation, River Rouge, Michigan Southern, and their respective subsidiary banks, and ("Omnibanc"), a bank holding company within the the other supervisory factors that the Board must meaning of the Bank Holding Company Act ("BHC consider under section 3 of the BHC Act, are consis- Act"), has applied under section 3 of the BHC Act tent with approval of this proposal.2 Considerations (12 U.S.C. § 1842) to acquire Indecorp, Inc., Chicago, relating to.the convenience and needs of the commu- Illinois ("Indecorp"), and thereby indirectly acquire nities to be served also are consistent with approval. Indecorp's subsidiary banks, Independence Bank of Based on the foregoing and other facts of record, the Chicago ("Independence Bank"), and Drexel Na- Board has determined that the application should be, tional Bank, both of Chicago, Illinois.1 and hereby is, approved. The Board's approval is Notice of the application, affording interested perexpressly conditioned on compliance with all the comsons an opportunity to submit comments has been mitments made by Midwest in connection with this published (58 Federal Register 67,411 (1993)). The application. The commitments and conditions relied on time for filing comments has expired, and the Board by the Board in reaching this decision are both deemed has considered the application and all comments reto be conditions imposed in writing by the Board in ceived in light of the factors set forth in section 3 of the connection with its findings and decision, and, as such, BHC Act. may be enforced in proceedings under applicable law. Omnibanc is the 144th largest commercial banking The acquisition of First Southern shall not be conorganization in Michigan, controlling one banking summated before the thirtieth calendar day following subsidiary with $15.9 million in deposits, representing the effective date of this order, or later than three less than 1 percent of the total deposits in commercial months after the effective date of this order, unless banking organizations in the state.2 Indecorp is the such period is extended for good cause by the Board or 79th largest commercial banking organization in Illinois, controlling two subsidiary banks with $227.4 million in deposits, representing less than 1 1. All banking data are as of June 30, 1993. percent of the total deposits in commercial banking 2. The Board has carefully considered comments received from a minority shareholder of Bank ("Protestant") who maintains that the organizations in Illinois. Upon consummation of this principal shareholder is paid excessive compensation as president and proposal, Omnibanc would become the 79th largest chairman of the bank holding companies and Bank. Protestant also believes that the provision of data processing and consulting services commercial banking organization in Illinois. to Bank and Midwest by two companies owned by the principal Section 3(d) of the BHC Act, the Douglas Amendshareholder, and the acquisition of all the shares of a bank holding ment, prohibits the Board from approving an applicacompany by a bank holding company controlled by the target's owner, raise supervisory concerns. The Board notes that the principal shareholder's compensation was reduced in 1993 as a result of a consultant's study. In addition, federal law requires that the purchase of 1. Omnibanc proposes to merge its wholly owned subsidiary, services from an affiliate must be on a fair market basis. These Omnibanc Illinois, Inc., into Indecorp. Upon consummation of this comments have been reviewed in light of information contained in proposal, the surviving entity would operate as a second tier bank reports of examinations conducted by the primary federal regulators of holding company under the name, Indecorp, Inc. Drexel National Bank and the bank holding companies. As part of the examination Bank is owned by Drexel Holding Company, Chicago, Illinois, a process, the examiners consider the fees paid to affiliated providers of wholly owned subsidiary of Indecorp. Drexel Holding Company services and compensation. Based on all the facts of record, the Board would be liquidated upon consummation of this proposal. concludes that these comments do not warrant denial of the application. 2. Banking data are as of June 30, 1992. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1011 tion by a bank holding company to acquire control of Omnibanc are inadequate to acquire a substantially any bank located outside its home state, unless such larger banking organization like Indecorp. Protestants acquisition is "specifically authorized by the statute also assert that managerial considerations relating to laws of the State in which such bank is located, by the chief executive officer and principal shareholder of language to that effect and not merely by implica- Omnibanc ("Principal") are inconsistent with aption."3 For purposes of the Douglas Amendment, the proval. The Board has carefully reviewed these comhome state of Omnibanc is Michigan and the home ments in light of all the facts of record in assessing the state of Indecorp is Illinois. statutory factors in this case. The interstate banking statutes of Illinois permit Omnibanc has provided detailed financial projecout-of-state bank holding companies to acquire Illinois tions and strategic plans for addressing potential issues banking organizations if the laws of the state where the associated with acquiring a larger organization. The acquiring company is located permit acquisitions by an Board notes that the acquisition is substantially fi- Illinois bank holding company under conditions sub- nanced with equity and that, upon consummation of the stantially similar to those imposed by Illinois.4 Mich- proposal, Omnibanc's consolidated capital ratios would igan's interstate banking statute authorizes the acqui- exceed the thresholds for well-capitalized institutions. sition of Michigan banking organizations by out-of- In addition, Omnibanc's strategic plan contains detailed state bank holding companies located within a defined operational and managerial steps that would be taken to region, which includes Illinois, on a reciprocal basis if integrate and manage the combined entity. the laws of the state where the acquiring bank holding The Board also has carefully considered comments company is located would not impose unduly restric- on the competence, experience and integrity of Printive conditions on an acquisition by a Michigan bank cipal that allege improper actions by Principal, primarholding company.5 The Illinois and Michigan banking ily during the early 1980's, when he was involved in supervisors have indicated that their reciprocity re- two cable television ventures. The Board notes that quirements have been met.6 In light of the foregoing, proceedings by the Disciplinary Commission of the the Board has determined that its approval of this Ohio state bar ("Disciplinary Commission") against proposal is not prohibited by the Douglas Amendment. Principal, who is licensed to practice law in Ohio, are Approval of this proposal is conditioned on Omnibanc pending.7 obtaining all required state approvals. The Board has considered the information provided Omnibanc and Indecorp do not compete directly in by Protestants regarding these matters, and the explaany relevant banking market. Therefore, based on all nations and information provided by Principal, as well the facts of record, the Board concludes that Omni- as the record of financial and managerial performance banc's acquisition of Indecorp and its subsidiary banks of Omnibanc's management as disclosed in reports of would not result in any significantly adverse effects on examination by federal and state regulators. The the concentration of banking resources or on compe- Board has reviewed this information in light of a tition in any relevant banking market. number of additional factors, including Principal's The Board received a number of comments support- record of involvement with Omnibanc's bank subsiding this proposal from individuals, community-based iary, OmniBank, since 1989 and the fact that the groups and public officials, who believe that Omni- allegations raised by Protestants are currently the banc 's plan to strengthen investment and economic subject of review by the Disciplinary Commission. development would benefit the community, particu- The Board notes that Principal has had a satisfactory larly in view of Omnibanc's record of performance in record of managerial performance in banking since the banking industry. The Board also has received 1989 when he acquired OmniBank, and has provided comments from individuals ("Protestants") contend- substantial equity capital to improve the financial ing that the financial and managerial resources of condition of Omnibanc's subsidiary bank. Principal maintains that none of the actions under review by the Disciplinary Commission or raised by Protestants involve wrongdoing on his part. Nevertheless, Principal 3. 12 U.S.C. § 1842(d). A bank holding company's home state is that state in which the operations of the bank holding company's has committed that he will not serve as an officer or banking subsidiaries were principally conducted on July 1, 1966, or director of Indecorp's subsidiary banks while the the date on which the company became a bank holding company, Disciplinary Commission proceedings are pending, whichever is later. 4. S.H.A. 205 ILCS 10/3.071 (West 1994). 5. MSA § 23.710 (1606) (1994 Supp.). 6. The Board also has considered this transaction as if Indecorp, with a home state of Illinois, were acquiring Omnibanc. As noted 7. The Disciplinary Commission publicly reprimanded Principal in above, the relevant banking statutes of Illinois would permit the 1982 for altering the date on an auditor's opinion letter filed in acquisition of an Illinois bank holding company by a Michigan banking connection with the payment of a franchise tax by his cable company organization. to the city of Columbus, Ohio. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1012 Federal Reserve Bulletin • November 1994 and that he will resign his positions with Omnibanc be, and hereby is, approved. The Board's approval of upon the request of the Board if the proceedings result this proposal is expressly conditioned on compliance in a significantly adverse finding against him. with the commitments made by Omnibanc and Princi- Based on all the facts of record, including informa- pal in connection with this application and the condition provided by the commenters, Omnibanc, and the tions discussed in this order. The commitments and Disciplinary Commission, relevant reports of exami- conditions relied on by the Board in reaching this nation, and Principal's commitments in this case, the decision are deemed to be conditions imposed in Board believes that considerations relating to the writing by the Board in connection with its findings managerial resources are consistent with approval.8 In and decision and, as such, may be enforced in proaddition, based on the facts of record, including the ceedings under applicable law. matters discussed above, and commitments made by This transaction shall not be consummated before Omnibanc and Principal, the Board believes that con- the thirtieth calendar day following the effective date siderations relating to the financial resources, future of this order, or later than three months after the prospects of the institutions involved, the convenience effective date of this order, unless such period is and needs of the community9 and other supervisory extended for good cause by the Board or by the considerations are also consistent with approval.10 Federal Reserve Bank of Chicago, acting pursuant to Thus, the Board does not believe that Protestants' delegated authority. comments warrant a denial of this application. By order of the Board of Governors, effective Based on the foregoing and all the facts of record, September 14, 1994. the Board has determined that the application should Voting for this action: Chairman Greenspan, Vice Chairman Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen. Absent and not voting: Governor La Ware. 8. Another commenter contends that Omnibanc is required to file a tender offer with the U.S. Securities and Exchange Commission ("SEC") under section 14(d) of the Securities Exchange Act of 1934 JENNIFER J. JOHNSON (the "1934 Act"). Section 14(d) regulates tender offers, which are Deputy Secretary of the Board offers made directly to the shareholders of the target company, for any class of security registered under section 12 of the 1934 Act. No filing is required in this case because Omnibanc is not making an offer to the Orders Issued Under Section 4 of the Bank shareholders of Indecorp and neither company has securities regis- Holding Company Act tered under the 1934 Act. SEC staff has informally concurred in this conclusion. 9. Indecorp's subsidiary bank, Independence Bank, received a Barnett Banks, Inc. "needs to improve" rating for performance under the Community Jacksonville, Florida Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA") at its most recent examination by the Federal Deposit Insurance Corporation, its primary federal regulator. The Board notes that Omnibanc's subsidiary Order Approving an Application to Acquire a bank received "satisfactory" CRA performance ratings at its most Mortgage Company recent examination and that Omnibanc has committed to implement a number of programs designed to increase the lending and marketing activities at Independence Bank after consummation of the proposal. Barnett Banks, Inc. ("Barnett"), and its subsidiary Protestants maintain that Omnibanc would not fulfill CRA-related commitments because they believe that Principal failed to fulfill Barnett Mortgage Company, both of Jacksonville, commitments made to community groups about the operation of his Florida, have applied for the Board's approval under Seattle cable company. As discussed later in this order, fulfillment of section 4(c)(8) of the Bank Holding Company Act Omnibanc's commitments is a condition imposed by this order, and as such may be enforced under applicable law. ("BHC Act") (12 U.S.C. § 1843(c)(8)) and section 10. The Board also has considered a request by Protestants chal- 225.23 of the Board's Regulation Y (12 C.F.R. 225.23) lenging the integrity of Omnibanc's Principal, for a public hearing or to acquire Loan America Financial Corporation, meeting in connection with this application. Section 3(b) of the BHC Act does not require the Board to hold a public hearing or meeting on Miami Lakes, Florida ("Loan America"), and its an application unless the appropriate supervisory authority for the wholly owned subsidiaries.1 Loan America engages in bank to be acquired makes a timely written recommendation of denial of the application. In this case, neither the Michigan Financial making, acquiring, and servicing loans.2 Institutions Bureau, nor the Illinois Commissioner of Banks and Trust Companies, has recommended denial of the proposal. Generally, under its rules, the Board may, in its discretion hold a public hearing or meeting on an application to clarify factual issues 1. Loan America operates four wholly owned subsidiaries. Citizens related to the application and to provide an opportunity for testimony, Management Corporation, CMC Mortgage Corporation (USA), and if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). In the Board's view, CMC Mortgage Corporation (USA), Inc. (collectively, "Compaall interested parties have had ample opportunity to submit their nies"), are California, Georgia, and Texas corporations, respectively, views, and substantive written submissions have been received. formed for the exclusive purpose of serving as nominal holders of Based on all the facts of record, including the commitments made by deeds of trust, as required by the laws of their incorporating states. Omnibanc and Principal in this case, the Board has determined that a CMC Mortgage Corporation (USA) is the California parent company public meeting or hearing is not necessary to clarify the factual record of Citizens Management Corporation. in this application, or otherwise warranted in this case, and the request 2. Loan America is a mortgage banking firm that originates residenfor a public hearing or meeting on this application is denied. tial mortgage loans through independent mortgage brokers and other Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1013 Notice of this proposal, affording interested persons advantage of economies of scale, provide Barnett an opportunity to submit comments, has been pub- with access to Loan America's enhanced loan prolished (59 Federal Register 25,659 (1994)). The time for duction and servicing technology, and provide added filing comments has expired, and the Board has con- convenience to Barnett's mortgage customers. The sidered the application and all the facts of record in Board also notes that the acquisition of Loan Amerlight of the factors set forth in section 4(c)(8) of the ica by Barnett is not likely to have a significantly BHC Act. No public comments were received on this adverse effect on the provision or availability of proposal. mortgage lending or other services in any relevant Barnett, with consolidated assets of $38.3 billion, is market because there are numerous providers of the 21st largest banking organization in the United these services and Loan America and Barnett focus States.3 Barnett operates 31 banking subsidiaries in their activities on different parts of the country. Florida and Georgia, and engages through other sub- There is no evidence in the record to indicate that sidiaries in various permissible nonbanking activities. consummation of this proposal is likely to result in Barnett is the largest retail mortgage originator in any significantly adverse effects, such as undue con- Florida, originating $3.5 billion in residential mortgage centration of resources, decreased or unfair compeloans in 1993, representing approximately 7.5 percent tition, conflicts of interests, or unfair banking pracof total residential mortgages originated in Florida. tices that are not outweighed by the public benefits of Barnett also services a mortgage loan portfolio of the proposal. $13.1 billion. Loan America, with total assets of In reviewing this proposal, the Board notes that the $299 million, originated $3.4 billion in residential mort- Department of Justice ("DOJ") has initiated an ingage loans in 1993, and services a mortgage loan quiry into the mortgage lending practices of several portfolio of $4.1 billion.4 Loan America is the 61st subsidiary banks of Barnett under the federal fair largest residential mortgage banking firm in the counlending statutes. There has been no finding or adjuditry, with mortgages originated in Florida representing cation of any violation of law by Barnett or any of its less than 3 percent of total mortgages it purchased in subsidiaries. Barnett has indicated that it believes that 1993.5 Upon consummation of this proposal, Barnett the lending activities of all of its subsidiary banks fully would become the 29th largest mortgage servicer in comply with all federal fair lending laws, and has the United States, servicing a residential mortgage submitted to the Board extensive information about portfolio of approximately $17.2 billion. the lending efforts and programs at its banks and a The Board previously has determined that making, statistical analysis of the lending efforts of two of its acquiring, and servicing loans, including mortgage banks. The DO J has indicated that it is not able at this loans, are activities that are closely related to banking time to provide the Board with the information it has within the meaning of section 4 of the BHC Act.6 compiled in its inquiry. Barnett has committed to conduct these activities in The Board has an obligation under the BHC Act to accordance with the Board's regulations. act on applications submitted under that Act in light of In order to approve Barnett's acquisition of Loan specified statutory factors. The Board must consider America under section 4(c)(8) of the BHC Act, the each application on the basis of the record before it Board also must find that the performance of the and its findings must be supported by substantial proposed activities by Barnett "can reasonably be evidence. In addition, the BHC Act and the Board's expected to produce benefits to the public . . . that regulations require the Board to act on applications outweigh possible adverse effects, such as undue submitted under section 4(c)(8) of the BHC Act within concentration of resources, decreased or unfair com- specified time periods. petition, conflicts of interests, or unsound banking The Board has considered the information available practices." 12 U.S.C. § 1843(c)(8). The proposed ac- to it about this application, including submissions by quisition of Loan America will allow Barnett to take Barnett, examination reports and findings, and other information. On the basis of that record, the Board concludes that this proposal satisfies the criteria specoriginators in major housing markets across the country. Upon ified by statute to be applied by the Board in reviewing consummation of this proposal, Loan America would operate as a separate subsidiary of Barnett Mortgage Company. proposed acquisitions of this type and that the record 3. Asset data for Barnett and mortgage data for both Barnett and does not provide a basis to deny this application under Loan America are as of December 31, 1993. the statutory factors. The Board notes that this pro- 4. Asset data for Loan America are as of March 31, 1994. 5. Loan America conducts its home mortgage business in 36 states, posal represents the acquisition of a nonbanking comwith 70 percent of its 1993 business located in California, New Jersey, pany and that Board action on this proposal will not Illinois, and New York. In contrast, Barnett originates mortgage loans hinder the DO J in its inquiry. The Board will monitor only in Florida and Georgia. 6. See 12 C.F.R. 225.25(b)(1). the DOJ inquiry and retains broad authority to take Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1014 Federal Reserve Bulletin • November 1994 appropriate supervisory action, including action on Board's Regulation Y (12 C.F.R. 225.23) to engage future applications, if warranted. through its indirect subsidiary, Cosmo Securities Based on the record available to the Board at this (America) Inc., New York, New York ("Company"), time, including commitments made by Barnett in con- in securities brokerage activities pursuant to secnection with this application, and for the reasons tion 225.25(b)(15) of Regulation Y (12 C.F.R. discussed in this order, the Board has determined that 225.25(b)(15)), and in buying and selling securities on the balance of public interest factors that it is required the order of investors as "riskless principal." to consider under section 4(c)(8) of the BHC Act is Notice of the application, affording interested perfavorable and consistent with approval of this applica- sons an opportunity to submit comments, has been tion. Accordingly, the application is hereby approved. published (59 Federal Register 15,730 (1994)). The The Board's approval is specifically conditioned on time for filing comments has expired, and the Board compliance by Barnett with all the commitments made has considered the application and all comments rein connection with this application. The Board's de- ceived in light of the factors set forth in section 4(c)(8) termination also is subject to all the conditions set of the BHC Act. forth in Regulation Y, including those in sections 225.7 Applicant, with total consolidated assets equivalent and 225.23(b)(3) of Regulation Y (12 C.F.R. 225.7 and to approximately $178.2 billion, is the 20th largest 225.23(b)), and to the Board's authority to require banking organization in the world.1 Applicant operates modification or termination of the activities of a bank branches, agencies, representative offices and loan holding company or any of its subsidiaries as the production offices in several cities in the United Board finds necessary to assure compliance with, and States, and owns Daiwa Bank Trust Company, a to prevent evasion of, the provisions and purposes of state-chartered trust company in New York. The the BHC Act and the Board's regulations and orders Company is registered as a broker-dealer with the issued thereunder. For the purpose of this action, the Securities and Exchange Commission ("SEC") and is commitments and conditions relied on by the Board in a member of the National Association of Securities reaching this decision are deemed to be conditions Dealers, Inc. ("NASD").2 Accordingly, Company is imposed in writing by the Board in connection with its subject to the record-keeping, reporting, fiduciary findings and decision, and, as such, may be enforced in standards, and other requirements of the Securities proceedings under applicable law. Exchange Act of 1934 (15 U.S.C. § 78a et seq.), the This transaction shall not be consummated later SEC, and the NASD. than three months after the effective date of this order, The Board previously has determined by regulation unless such period is extended for good cause by the that engaging in securities brokerage services is Board or by the Federal Reserve Bank of Atlanta, closely related to banking and permissible for bank acting pursuant to delegated authority. holding companies under section 4(c)(8) of the BHC By order of the Board of Governors, effective Act.3 Applicant has committed that Company will September 21, 1994. conduct these activities in accordance with the limitations imposed by section 225.25(b)(15) of Regula- Voting for this action: Chairman Greenspan, Vice Chair- tion Y. man Blinder, and Governors Kelley, Lindsey, Phillips, and "Riskless principal" is the term used in the securi- Yellen. Absent and not voting: Governor LaWare. ties business to refer to a transaction in which a broker-dealer, after receiving an order to buy (or sell) JENNIFER J. JOHNSON a security from a customer, purchases (or sells) the Deputy Secretary of the Board security for its own account to offset a contemporaneous sale to (or purchase from) the customer.4 "Risk- The Daiwa Bank, Limited less principal" transactions are understood in the Osaka, Japan industry to include only transactions in the secondary market. Thus, Applicant proposes that Company Order Approving an Application to Engage in would not act as a "riskless principal" in selling Securities Brokerage Activities and to Act as securities at the order of a customer that is the issuer "Riskless Principal" The Daiwa Bank, Limited, Osaka, Japan ("Appli- 1. Asset data are as of March 31, 1994. 2. Company currently engages in securities brokerage activities. cant"), a bank holding company within the meaning of Applicant received temporary authority to acquire a controlling interthe Bank Holding Company Act ("BHC Act"), has est in Company under section 4(c)(9) of the BHC Act. applied pursuant to section 4(c)(8) of the BHC Act 3. See 12 C.F.R. 225.25(b)(15). 4. See Securities and Exchange Commission Rule 10b-10. 17 C.F.R. (12 U.S.C. § 1843(c)(8)) and section 225.23 of the 240.10b-10(a)(8)(i). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1015 of the securities to be sold, or in any transaction where outweigh possible adverse effects under the proper Company has a contractual agreement to place the incident to banking standard of section 4(c)(8) of the securities as agent of the issuer. Company also would BHC Act.® not act as a "riskless principal" in any transaction Under the framework established in this and prior involving a security for which it makes a market. Board decisions, consummation of this proposal is not The Board previously has determined by order that, likely to result in any significantly adverse effects, subject to prudential limitations that address the po- such as an undue concentration of resources, detential for conflicts of interests, unsound banking creased or unfair competition, conflicts of interests, or practices, and other adverse effects, the proposed unsound banking practices. Moreover, the Board has riskless principal activities are so closely related to determined that performance of the proposed activibanking as to be a proper incident thereto within the ties by Applicant can reasonably be expected to promeaning of section 4(c)(8) of the BHC Act.5 The Board duce public benefits, such as added convenience to also previously has determined that purchasing and Applicant's customers, that would outweigh any adselling securities on the order of investors as a "risk- verse effects under the proper incident to banking less principal" does not constitute underwriting and standard of section 4(c)(8) of the BHC Act. dealing in securities for purposes of section 20 of the In every case involving a nonbanking acquisition by Glass-Steagall Act (12 U.S.C. § 377), and that reve- a bank holding company under section 4 of the BHC nue derived from this activity is not subject to the Act, the Board considers the financial condition and 10 percent revenue limitation on underwriting and resources of Applicant and its subsidiaries and the dealing in bank-ineligible securities.6 In order to ad- effect of the transaction on these resources.9 In this dress the potential for conflicts of interests, unsound case, the Board notes that Applicant meets the relebanking practices, or other adverse effects, Applicant vant risk-based capital standards consistent with the has committed that Company will conduct its "riskless Basle Accord, and has capital equivalent to that which principal" activities using the same methods and pro- would be required of a United States banking organicedures, and subject to the same prudential limita- zation. In view of these and other facts of record, the tions, as those established by the Board in the Bankers Board has determined that the financial factors are Trust Order and the J.P. Morgan Order, as modified to consistent with approval of this application. The manreflect Applicant's status as a foreign bank.7 agerial resources of Applicant and its subsidiaries also In order to approve this application, the Board also are consistent with approval. is required to determine that the performance of the Based on the foregoing and all the facts of record, proposed activities by Applicant can reasonably be the Board has determined to, and hereby does, apexpected to produce benefits to the public that would prove this application subject to all the terms and conditions set forth in this order, and in the Board regulations and orders noted above. The Board's 5. See J.P. Morgan & Company Incorporated, 76 Federal Reserve determination also is subject to all the terms and Bulletin 26 (1990) ("J.P. Morgan Order"); Bankers Trust New York conditions set forth in its Regulation Y, including Corporation, 75 Federal Reserve Bulletin 829 (1989) ("Bankers Trust Order'). those in sections 225.7 and 225.23(b), and to the 6. Id. Board's authority to require modification or termina- 7. See The Sumitomo Bank, Limited, 11 Federal Reserve Bulletin 339 (1991); Creditanstalt-Bankverein, 11 Federal Reserve Bulletin 183 tion of the activities of a bank holding company or any (1991); The Royal Bank of Scotland Group PLC, 76 Federal Reserve of its subsidiaries as the Board finds necessary to Bulletin 866 (1990). As detailed more fully in these orders, in addition assure compliance with, and to prevent evasion of, the to the commitments imposed by the Board in connection with underwriting and dealing in securities, Applicant has made a number of provisions of the BHC Act, and the Board's regulacommitments regarding the conduct of the "riskless principal" activ- tions and orders issued thereunder. The Board's deciities. In particular, Applicant has committed that Company will sion is specifically conditioned on compliance with all maintain specific records that will clearly identify all "riskless principal" transactions, and that Company will not engage in "riskless the commitments made in this application, including principal" transactions for any securities carried in its inventory. the commitments discussed in this order and the When acting as a "riskless principal," Company will engage only in conditions set forth in the Board orders noted above. transactions in the secondary market, and will not act at the order of a customer that is the issuer of the securities to be sold; will not act as These commitments and conditions shall be deemed to "riskless principal" in any transaction involving a security for which be conditions imposed in writing by the Board in it makes a market; nor hold itself out as making a market in the securities that it buys and sells as a "riskless principal." Moreover, connection with its findings and decisions and, as Company will not engage in "riskless principal" transactions on behalf of any foreign affiliates that engage in securities dealing activities outside the United States, and will not act as "riskless principal" for registered investment company securities. In addition, 8. 12 U.S.C. § 1843(c)(8). Company will not act as a "riskless principal" with respect to any 9. See 12 C.F.R. 225.24; Fuji Bank, Limited, 15 Federal Reserve securities of investment companies that are advised by Applicant or Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve any of its affiliates. Bulletin 155 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1016 Federal Reserve Bulletin • November 1994 such, may be enforced in proceedings under applicable section 9 of the Federal Reserve Act (12 U.S.C. § 321 law. et seq.)2 This transaction shall not be consummated later Section 5(d)(3) of the FDI Act requires the Board to than three months after the effective date of this order, review any proposed merger between a Savings Assounless such period is extended for good cause by the ciation Insurance Fund member and any Bank Insur- Board or by the Federal Reserve Bank of New York, ance Fund ("BIF") member, if the acquiring or resultpursuant to delegated authority. ing institution is a BIF-insured subsidiary of a bank By order of the Board of Governors, effective holding company. In reviewing these proposals, the September 27, 1994. Board is required to follow the procedures and consider the factors set forth in section 18(c) of the FDI Act, the Bank Merger Act (12 U.S.C. § 1828(c)).3 Voting for this action: Chairman Greenspan, Vice Chairman Blinder, and Governors Kelley, Lindsey, Phillips, and Notice of the applications, affording interested per- Yellen. Absent and not voting: Governor La Ware. sons an opportunity to submit comments, has been published (59 Federal Register 32,432 (1994)). As JENNIFER J. JOHNSON required by the Bank Merger Act and the Board's Deputy Secretary of the Board Rules of Procedure (12 C.F.R. 262.3(b)), reports on the competitive effects of the mergers were requested First Interstate Bancorp from the United States Attorney General, the Office of Los Angeles, California the Comptroller of the Currency ("OCC"), and the Federal Deposit Insurance Corporation. The time for First Interstate Bank of California filing comments has expired, and the Board has con- Los Angeles, California sidered the applications and all comments received in light of the factors set forth in section 4(c)(8) of the Order Approving Applications to Acquire and Merge BHC Act, the Bank Merger Act, section 5(d)(3) of the a Savings Association Into a Subsidiary Bank FDI Act, and section 9 of the Federal Reserve Act. The Board has determined by regulation that the First Interstate Bancorp, Los Angeles, California operation of a savings association by a bank holding ("First Interstate"), a bank holding company within company is closely related to banking for purposes of the meaning of the Bank Holding Company Act section 4(c)(8) of the BHC Act, if the savings associ- ("BHC Act"), has applied under section 4(c)(8) of the ations acquired by bank holding companies conform BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23 their direct and indirect activities to those permissible of the Board's Regulation Y (12 C.F.R. 225.23) to for bank holding companies under section 4(c)(8) of acquire Sacramento Savings Bank, Sacramento, Calithe BHC Act.4 First Interstate has committed to fornia ("Savings Bank"), and Central Valley Security conform all activities of Savings Bank to the require- Company, both wholly owned subsidiaries of Alleghments of section 4(c)(8) of the BHC Act and Regulaeny Financial, Inc., New York, New York. First tion Y. Interstate's subsidiary bank, First Interstate Bank of First Interstate, with total consolidated assets of California, Los Angeles, California ("FICAL"), a $53.5 billion, controls 14 banks in Alaska, Arizona, state member bank, has applied under section 18(c) of California, Colorado, Idaho, Montana, Nevada, New the Federal Deposit Insurance Act (the "FDI Act") Mexico, Oregon, Texas, Washington, Wyoming, and (12 U.S.C. § 1828(c) ("Bank Merger Act") to acquire Utah.5 First Interstate is the fifth largest depository Savings Bank. institution in California, with FICAL controlling First Interstate also has applied under section $19.9 billion in deposits, representing approximately 5(d)(3) of the FDI Act (12 U.S.C. § 1815(d)(3)), as 5.1 percent of the total deposits in depository instiamended by the Federal Deposit Insurance Corpora- tutions in the state.6 Savings Bank is the 22d largest tion Improvement Act of 1991, Pub. L. No. 102-242, § 501, 105 Stat. 2236, 2388 (1991), to acquire Savings Bank,1 and FICAL has applied to establish branches 2. A list of these branches is set forth in the Appendix. at the present locations of Savings Bank pursuant to 3. 12 U.S.C. § 1815(d)(3)(E). These factors include considerations relating to competition, the financial and managerial resources and future prospects of the existing and proposed institutions, and the convenience and needs of the communities to be served. 12 U.S.C. 1. Section 5(d)(3) of the FDI Act requires the Board to review any § 1828(c). proposed merger between a bank owned by a bank holding company 4. See 12 C.F.R. 225.25(b)(9). and a savings association, or branch of a savings association, in which 5. Asset data are as of March 31, 1994. the resulting institution is insured by the Bank Insurance Fund, and in 6. State and market deposit data are as of June 30, 1993. In this reviewing these proposals, to follow the procedures and consider the context, depository institutions include commercial banks, savings factors set forth in section 18(c) of the Bank Merger Act. banks, and savings associations. Market share data before consum- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1017 depository institution in California, controlling needs of the local communities in which they operate, $2.8 billion in deposits, representing less than 1 per- consistent with the safe and sound operation of such cent of the total deposits in depository institutions in institutions. To accomplish this end, the CRA requires the state. Upon consummation of this proposal, First the appropriate federal supervisory authority to "as- Interstate would remain the fifth largest depository sess the institution's record of meeting the credit organization in the state, controlling deposits of $22.7 needs of its entire community, including low- and billion, representing approximately 5.8 percent of the moderate-income neighborhoods, consistent with the total deposits in depository institutions in California. safe and sound operation of such institutions," and to First Interstate and Savings Bank compete directly take that record into account in its evaluation of these in ten banking markets in California.7 After consum- applications.9 mation of this proposal, numerous competitors would The Board has reviewed comments submitted by remain in each market and the increase in market several organizations and individuals ("Protestants") concentration, as measured by the Herfindahl- alleging that First Interstate's lead bank, FICAL, has Hirschman Index ("HHI"), would not exceed the failed to meet the credit needs of minority and low- to Department of Justice merger guidelines.8 Based on all moderate-income persons in the Sacramento metrothe facts of record, the Board concludes that consum- politan statistical area ("Sacramento MSA").10 In mation of this proposal would not result in significantly particular, Protestants contend that data filed by the adverse effects on competition or the concentration of bank under the Home Mortgage Disclosure Act banking resources in these or any other relevant (12 U.S.C. § 2801 et seq.) ("HMDA") indicate disparbanking markets. ities in the rates of housing-related loan approvals and denials between minority and nonminority applicants Convenience and Needs Considerations and in the geographic distribution of credit-related products. In addition, Protestants indicate that the In acting on applications to acquire a depository Sacramento community has not benefitted from institution, the Board must consider the convenience FICAL's lending initiative to provide $2 billion in and needs of the communities to be served, and take special funding over a ten-year period to low- to into account the records of the relevant depository moderate-income communities. Protestants assert that institutions under the Community Reinvestment Act FICAL has an inadequate branch location/closure pol- (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA re- icy and insufficient community and economic developquires the federal financial supervisory agencies to ment and outreach and marketing programs to serve the encourage financial institutions to help meet the credit minority community in the Sacramento MSA. Moreover, Protestants express concern that the proposed transaction may result in the elimination of branches and lending programs established by Savings Bank and mation are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously has loss of employment opportunities in Sacramento.11 indicated that thrift institutions have become, or have the potential to In its consideration of the convenience and needs become, significant competitors of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin 788 (1990); National City Corpora- factor, the Board has carefully reviewed the entire tion, 70 Federal Reserve Bulletin 743 (1984). Because the deposits of CRA performance record of FICAL and Savings Savings Bank would be transferred to a commercial bank under this proposal, those deposits are included at 100 percent in the calculation Bank, all comments received on these applications, of First Union's pro forma market share. See Norwest Corporation, including First Interstate's and Savings Bank's re- 78 Federal Reserve Bulletin 452 (1992); First Bank, Inc., 76 Federal Reserve Bulletin 669, 670 n. 9 (1990). 7. These markets are the Auburn, Chico, Grass Valley, Lodi, Placerville, Redding, Santa Rosa, Sacramento, Stockton, and Yuba City banking markets. 9. 12 U.S.C. § 2903. 8. Under the revised Department of Justice Merger Guidelines, 49 10. The Protestants include the Mayor of Sacramento, Project Federal Register 26,823 (June 29, 1984), a market in which the FAITHE, Sacramento Black Chamber of Commerce, Sacramento post-merger HHI is above 1800 is considered to be highly concen- Housing Alliance, and Sacramento Housing and Redevelopment trated. In such markets, the Justice Department is likely to challenge Agency. An individual commenter has joined in these comments, and a merger that increases the HHI by more than 50 points. The Justice also alleges that FICAL does not make sufficient ascertainment and Department has informed the Board that a bank merger or acquisition outreach efforts to the gay and lesbian community, and has engaged in generally will not be challenged (in the absence of other factors deliberate, discriminatory actions against the gay and lesbian commuindicating anticompetitive effects) unless the post-merger HHI is at nity in its credit practices and against downtown Sacramento residents least 1800 and the merger increases the HHI by more than 200 points. through its administration of an automated teller machine ("ATM") The Justice Department has stated that the higher than normal HHI site. The Board notes that FICAL closed the ATM at night and locked thresholds for screening bank mergers for anticompetitive effects the parking lot in response to security concerns raised by the implicitly recognize the competitive effect of limited-purpose lenders Sacramento Police Department. FICAL subsequently installed a new and other non-depository financial entities. Consummation of this 24-hour ATM in a more secure location on the branch's premises. proposal would not cause the HHI to increase more than 200 points or 11. FICAL expects that any staff reductions would be accomplished result in a post-merger HHI above 1800 points in any of the relevant largely through attrition, and has in place programs to assist employbanking markets. ees who are displaced as a result of this proposal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1018 Federal Reserve Bulletin • November 1994 sponse to these comments, and all other relevant facts moderate-income and minority communities. The of record, in light of the CRA, the Board's regulations Board also recognizes that HMDA data have limitaand the Statement of the Federal Financial Supervi- tions that make the data an inadequate basis, absent sory Agencies Regarding the Community Reinvest- other information, for conclusively determining ment Act ("Agency CRA Statement").12 whether an institution has engaged in illegal discrimination in making lending decisions. A. Record of CRA Performance The Board has carefully considered the results of FICAL's 1994 examination, which found that credit The Agency CRA Statement provides that a CRA applications are generally solicited from all segments examination is an important and often controlling of the bank's delineated community, are in compliance factor in the consideration of an institution's CRA with regulatory requirements, and do not contain record, and that these reports will be given great language that would discourage applicants. The bank weight in the applications process.13 The Board notes has developed a number of policies, procedures and that FICAL received a "satisfactory" rating from the training programs to prevent discrimination in its Federal Reserve Bank of San Francisco at the most lending and credit activities. Examiners also noted recent examination of FICAL's CRA performance as that FICAL's record of generating applications and of April 11, 1994 ("1994 examination") and that all of extending credit in low-income and minority commu- First Interstate's other subsidiary banks received nities continues to improve. The 1994 examination "satisfactory" or "outstanding" CRA ratings at the indicates that FICAL has taken extensive steps to most recent examinations of their CRA performance.14 identify discriminatory practices at the branch, resi- In addition, Savings Bank received a "satisfactory" dential, and consumer lending levels. These efforts rating from its primary regulator, the Office of Thrift include the use of consultants who were hired to Supervision, at its most recent examination as of conduct two separate "matched pair" tests at the March 10, 1993. branch level to evaluate mortgage-lending and other officers involved in home improvement financing; and B. FICAL's HMDA Data a comprehensive fair lending review conducted by the bank's internal audit department to evaluate underwriting procedures and ensure that credit standards The Board has carefully reviewed the 1992 and 1993 are applied consistently to all applicants. Moreover, data filed under the HMDA in light of Protestants' FICAL has implemented a "second review" program allegations of disparities in lending to low- to moderatefor consumer, mortgage, and small business lending. income and minority residents in the Sacramento Under the program, senior bank underwriters review MSA, which show some disparities in denial and all declined loan applications to ensure that the appliorigination rates in the Sacramento MSA. cants were treated fairly and in accordance with law, Because all banks are obligated to adopt and impleand to determine if an alternative credit structure to ment lending practices that ensure not only safe and the one requested can be offered to the applicant.15 sound lending, but also equal access to credit by creditworthy applicants regardless of race, the Board is concerned when the record of an institution indi- C. FICAL's Lending Practices cates disparities in lending to applicants in low- to 1. Statewide 12. 54 Federal Register 13,742 (1989). FICAL offers numerous loan products to assist in 13. Id. at 13,745. meeting the ascertained credit needs of the bank's 14. FICAL's subsidiary bank, First Interstate Bank of Englewood, Englewood, Colorado, received an "outstanding" rating for its CRA community, including low- and moderate-income performance from the OCC as of January 1991, and twelve subsidiary banks of FICAL each received "satisfactory" ratings for CRA performance from the OCC: First Interstate Bank of Alaska, Anchorage, Alaska (October 1992); First Interstate Bank of Arizona, Phoe- 15. Examiners also found violations of the Equal Credit Opportunix, Arizona (May 1992); First Interstate Bank of Denver, Denver, nity Act at the bank, mostly related to the bank's failure to provide Colorado (January 1991); First Interstate Bank of Idaho, Boise, Idaho notification of adverse actions to telephone loan applicants, or involv- (August 1993); First Interstate Bank of Montana, Kalispell, Montana ing non-applicant signature requirements for otherwise creditworthy (October 1992); First Interstate Bank of Nevada, Las Vegas, Nevada applicants at various bank departments. Management commenced (November 1992); First Interstate Bank of New Mexico, Santa Fe, corrective action during the examination and immediately thereafter New Mexico (November 1993); First Interstate Bank of Oregon, to remedy these violations. Examiners also found a few apparent Portland, Oregon (April 1992); First Interstate Bank of Texas, Hous- violations of law in other areas of the bank. FICAL and the Federal ton, Texas (June 1993); First Interstate Bank of Utah, Salt Lake City, Reserve Bank of San Francisco are evaluating these apparent viola- Utah (October 1993); First Interstate Bank of Washington, Seattle, tions to determine what, if any, corrective action is appropriate. The Washington (August 1992); and First Interstate Bank of Wyoming, bank's progress in addressing these matters will be closely monitored Casper, Wyoming (October 1993). by the Reserve Bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1019 neighborhoods. In 1992, the bank introduced the Com- and that its lending activities in low- to moderatemunity Investment Home Loan Program, which con- income areas in Sacramento represent a somewhat sists of three new mortgage products to make home greater proportion of its lending activities in the city. ownership more affordable for low- and moderate- FICAL's assets in the Sacramento MSA represent income borrowers who may not otherwise meet the approximately 3 percent of the bank's total assets. In bank's credit standards. The Community Investment 1993, however, the bank's lending activity in the Home Loan Program includes the Down Payment Sacramento MSA represented approximately 7 per- Assistance program which reduces the homebuyer's cent of total assets in mortgage loans to low-income out-of-pocket down payment cost to 3 percent of the applicants or in low- and moderate-income areas, and purchase price. FICAL lends the remaining 2 percent 12 percent of total assets in construction loans for in the form of a second mortgage with below-market affordable housing to low-income individuals. rates and interest-only payments for the life of the In 1993, FICAL originated approximately $7.1 milloan. In addition, the Home Buyers Assistance Pro- lion in mortgage loans to low-income applicants or gram has a down payment requirement of 5 percent, low-to-moderate-income census tracts in the Sacrawith an option permitting the down payment to come mento MSA. Moreover, the bank originated 776 confrom a gift or grant to the borrower. FICAL also has sumer loans to individuals in low- to moderate-income established a Community Advancement Program tarcensus tracts totalling $7.6 million in 1993. During the geted at low-income or minority census tracts that has first half of 1994, 332 consumer loans were made in reduced down payment requirements of 5 percent for these census tracts totalling $7 million. any qualified borrower purchasing a home in a low- In 1993, FICAL extended five loans totalling income or predominantly minority area. In 1993, 84 $485,000 under the bank's three-pronged Community loans, totalling $10.3 million, were made under these Investment Home Loan Program. This year, the bank programs. In 1994, the bank has made 212 such loans, has made four loans totalling $397,750 under this totalling $23.7 million. program. The Affordable Housing Unit made a loan of The 1994 examination also indicates that FICAL's $10.5 million to construct a 241-unit low-income houscommunity development activities are outstanding. ing project for senior citizens in Sacramento. During The bank's community development activities are the first half of 1994, FICAL also originated $697,500 conducted primarily through its Community Lending in government-guaranteed business loans and Department ("CLD"), which contains two separate $3.7 million in non-government guaranteed small busunits, Affordable Housing and Economic Develop- iness loans in the Sacramento MSA. ment. FICAL's Affordable Housing Unit provides In connection with this proposal, FICAL has comaffordable housing construction loans primarily for the mitted to take a variety of steps to increase the number construction of residences targeted for low- and of loans made to minority and low- to moderatemoderate-income households. The unit extended income areas in the Sacramento MSA. For example, $56 million in 1992 and $82 million in 1993 in affordable First Interstate will hire a CRA loan officer for the housing loans. The Economic Development Unit ad- Sacramento area. In addition, First Interstate will ministers FICAL's commercial loan pools and proestablish a Sacramento loan production office at a site grams, and extends loans under the bank's Community accessible to low- and moderate-income applicants for Assistance Program ("CAP"), a loan program develhome loans. The loan production office will have a oped in 1993 to provide financial assistance for commubilingual loan officer solely responsible for originating nity social services, increased job opportunities, and CRA loans and will co-sponsor homebuyer workshop housing in low-income and economically deprived sessions with local community groups. neighborhoods. As of April 1994, loans totalling $2.3 In response to Protestants' concerns, First Intermillion have been extended under the CAP program. state will allocate a portion of its $2-billion/10-year FICAL also participates in government-insured and statewide loan commitment to low- and moderatepublicly sponsored programs, including Federal Hous- income communities to the Sacramento MSA. To ing Administration mortgage loans, California guaran- ensure that the Sacramento MSA is adequately repreteed business loans, Small Business Administration sented in future allocations, FICAL plans to add a ("SBA") loans, and federally insured and state guar- person from the Sacramento area to the Community anteed student loans. Advisory Board, which was established to make community development loans from the $2-billion fund. In 2. Sacramento addition, FICAL will continue Savings Bank's role in the Northern California Reinvestment Consortium In evaluating this proposal, the Board notes that ("NCRC") and has committed to joining NCRC as a FICAL's presence in Sacramento is relatively small, loan pool participant. First Interstate will pursue mem- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1020 Federal Reserve Bulletin • November 1994 bership in the Federal Home Loan Bank's Affordable credit history barriers. In addition, after FICAL deter- Housing Program, a program in which Savings Bank mined that many low-income applicants were being previously served as a lender. denied credit because FICAL was unable to acquire mortgage insurance for the loans, FICAL approved a D. FICAL's Ascertainment of Community $50 million portfolio allocation for loans that met Credit Needs underwriting standards but for which mortgage insurance was not available. Moreover, a Community Ad- I. Statewide visory Board consisting of a six-member group of minority leaders was formed in 1993, as part of The 1994 examination indicates that FICAL's ascer- FICAL's $2-billion/10-year statewide CRA committainment efforts are outstanding. The bank's employ- ment. ees have direct contacts with local government and community groups, as well as a "telephone call" 2. Sacramento program to identify the credit needs of the entire community, including low- and moderate-income FICAL has implemented these statewide outreach neighborhoods. Information gathered through these efforts in the Sacramento MSA. For instance, contacts is documented in a "Community Reinvest- FICAL's branch managers and staff are required to ment Act Questionnaire" completed periodically for ascertain the credit needs of their communities each branch and used in devising techniques to target through customer and prospective customer contacts; outreach efforts. These questionnaires are forwarded calling efforts; involvement in community-based orgato the Community Development Department for com- nizations; contacts with government officials, agencies pilation and distribution to the bank's CRA Task or departments; and discussions with community lead- Force, which develops a comprehensive annual CRA ers. In 1993, the Sacramento area averaged over 200 Plan.16 Branches also receive information from such calls per month. In addition, a representative FICAL's California Marketing Department on the from the Sacramento area will be added to the Comdemographics of the branch's targeted market, recom- munity Advisory Board. mended product usage, potential credit needs and market share information. E. FICAL's Marketing Efforts As a result of the most recent CRA Questionnaire, conducted in April 1993, FICAL now offers unsecured 1. Statewide small business lines of credit, small business accounts receivable lines of credit, and a commercial real estate The 1994 examination indicates that FICAL's overall product with lower minimum loan sizes and newly marketing efforts are satisfactory. FICAL markets its acceptable forms of collateral; has hired additional products and services through the California Market- Small Business Administration loan officers; has imple- ing Department ("CMD"), which is the primary marmented a flexible Mobile Home Loan Policy to allow keting and advertising vehicle for statewide promofor older, wider homes to serve as collateral to pur- tions; the Central Marketing Department; individual chase single-wide homes; offers secured consumer departments of the bank (First Interstate Residential credit cards with credit lines as low as $500; and has Mortgage, Government Guaranteed Lending Unit, and created a flexible basic checking account with a low the Community Development Department), which are opening balance and no minimum balance requirement. responsible for product specific marketing relative to FICAL's Residential Mortgage Division identified the credit products offered; and the branch network the following characteristics of credit as obstacles to which acts as a support mechanism to the CMD for all meeting the mortgage credit needs of the community: product promotions. down payment requirements, underwriting criteria, Marketing efforts at the CMD consist primarily of lack of credit history, and rigid mortgage insurance direct mail campaigns. The CMD also uses various guidelines. The bank's three-pronged Community In- media sources, including radio stations such as Spanish vestment Home Loan Program was established to language stations, that reach a diverse section of the alleviate the down payment, underwriting and lack of community in all counties served by the bank. Examiners noted that FICAL's use of outdoor and transit media had increased since the previous examination period, and advertisements are generally included in 16. The 1994 examination indicates that FICAL's board of directors and senior management have supported efforts to improve the bank's African-American, Chinese, and Hispanic publications. CRA program and routinely attend CRA Task Force meetings. Exam- The CMD also compiles the branch Sales Resource iners also noted that the board of directors are generally active in their respective communities in ways that enhance the bank's CRA program. Manual, which contains advertisements and solicita- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1021 tions for most products and services offered by the ability of FICAL's special affordable mortgage probank. Approximately 25 to 35 new flyers are produced grams and products. each year in both English and Spanish. Branches use these flyers in conjunction with mailing lists provided F. Branches by the CMD. All marketing activities for FICAL's mortgage loan The 1994 examination indicates that branch offices are products are conducted through the Residential Mort- reasonably accessible to all segments of the bank's gage Division ("FIRM"). The major marketing device local community and provide a full range of deposit at FIRM is the Home Buyer Workshop. These work- and credit services. Each branch has ATM facilities, shops are held in conjunction with branches, commu- and additional stand-alone ATMs are available at nity based organizations, and local churches to pro- various locations throughout the state. The 1994 vide prospective applicants with information on the examination also indicates that FICAL has a combank's mortgage loan products, especially those de- prehensive, written branch-closure policy. The polsigned for low- and moderate-income consumers. Ra- icy states that the decision to close a branch office dio and community based newspapers as well as local shall be made only after the bank has thoroughly realtors promote the workshops. evaluated the potential impact of such an action and The bank's Community Development Department consulted with the local community, including cusalso is engaged in marketing activities, and has re- tomers and employees. tained an advertising agency to promote FICAL's In Sacramento, FICAL and Savings Bank have F.I.R.S.T. Program, a program designed to provide seven branch offices located in census tracts either access to consumer credit for low- and moderate- designated as low- to moderate-income or having a income individuals who are unable to obtain credit minority population greater than 50 percent. Two of because of down payment and closing-cost require- these offices would be consolidated into nearby ments. FICAL offices in accordance with FICAL's branch- Marketing for the bank's Small Business Adminis- closure policy. tration ("SBA") loan programs is conducted through the Government Guaranteed Lending Unit. Activities G. Conclusion Regarding Convenience and of the unit include developing product specific adver- Needs Factor tisements for local business journals throughout the state, participation in SB A seminars, hosting seminars On the basis of all the facts of record, including the targeted at small business owners, and producing information provided by the commenters and First marketing materials for use at these seminars. Interstate, and relevant reports of examination, the Board concludes that the convenience and needs con- 2. Sacramento siderations, including the CRA records of performance of FICAL and Savings Bank, are consistent with Currently, FICAL uses the Home Buyer Education approval of these applications.17 The Board expects Workshops to reach low-income and minority commu- First Interstate to implement fully all commitments nities in the Sacramento MSA. FICAL conducted 14 made in connection with this proposal, including its homebuyer workshops in 1993, and 17 such work- proposed CRA initiatives for the Sacramento area. The shops through the first half of 1994. After the merger, Board also expects FICAL to continue to strengthen its FICAL will maintain the same number of workshops performance in the areas discussed in this order, and to as the combined number of workshops that Savings Bank and FICAL currently conduct. FICAL also plans to implement a four-part Sacra- 17. Protestants have requested that the Board hold a public hearing mento Affordable Mortgage Loan Marketing Plan. or meeting on this proposal. The Board's rules provide that a hearing is required under section 4 of the BHC Act only if there are disputed First, FICAL will develop a direct mail campaign, issues of material fact that cannot be resolved in some other manner. consisting of a series of letters or postcards announc- In addition, the Board may, in its discretion, hold a public hearing or ing the availability of FHA, FmHA, VA, and Commu- meeting on an application to clarify factual issues related to the application and to provide an opportunity for testimony, if approprinity Investment Home loans to all segments of the ate. 12 C.F.R. 262.3(e) and 262.25(d). The Board has carefully Sacramento MSA. Second, advertisements will be considered this request. In the Board's view, Protestants have had placed in community-oriented publications. Third, ad- sufficient opportunity to present written submissions, and has submitted substantial written comments that have been considered by the vertisements will be placed with radio stations tar- Board. On the basis of all the facts of record, the Board has geted to minority audiences. Fourth, a community determined that a public meeting or hearing is not necessary to clarify reinvestment officer has been hired to work with the factual record in these applications, or otherwise warranted in this case. Accordingly, the request for a public meeting or hearing on these community organizations to communicate the avail- applications is hereby denied. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1022 Federal Reserve Bulletin • November 1994 submit semiannual reports on its programs to the Fed- this proposal is specifically conditioned on compliance eral Reserve Bank of San Francisco for the next two by First Interstate with the commitments made in years. The Board will assess the success of FICAL's connection with these applications and upon First Incontinued efforts in connection with future applications terstate and FICAL receiving all necessary federal and for expansion by First Interstate. state approvals. The commitments and conditions relied on by the Board in reaching this decision are Other Considerations deemed to be conditions imposed in writing by the Board in connection with its findings and decision and, The financial and managerial resources and future as such, may be enforced in proceedings under appliprospects of First Interstate, Savings Bank, and their cable law. respective subsidiaries, and the other supervisory fac- The Board's determination is subject to all of the tors the Board must consider under the Bank Merger conditions set forth in Regulation Y, including those in Act and the Federal Reserve Act, are consistent with sections 225.4(d) and 225.23(b)(3), and to the Board's approval of this proposal. authority to require modification or termination of the In addition, the record does not indicate that consum- activities of a bank holding company or any of its mation of this proposal is likely to result in any signif- subsidiaries as the Board finds necessary to assure icantly adverse effects, such as undue concentration of compliance with, and to prevent evasion of, the proresources, decreased or unfair competition, conflicts of visions and purposes of the BHC Act and the Board's interests, or unsound banking practices that are not regulations and orders issued thereunder. likely to be outweighed by the public benefits of this The merger of FICAL and Savings Bank shall not be proposal. The Board expects that FICAL's acquisition consummated before the thirtieth calendar day followof Savings Bank would provide added convenience and ing the effective date of this order, and neither transservices to Savings Bank customers because they action shall be consummated later than three months would have access to an array of services and programs after the effective date of this order, unless such period not currently provided by Savings Bank in the Sacra- is extended for good cause by the Board or by the mento community. Accordingly, the Board has deter- Federal Reserve Bank of San Francisco, acting pursumined that the balance of public interest factors it must ant to delegated authority. consider under section 4(c)(8) of the BHC Act is By order of the Board of Governors, effective favorable and consistent with approval of First Inter- September 22, 1994. state's applications to acquire Savings Bank. The Board also has considered the additional factors Voting for this action: Chairman Greenspan, Vice Chairit must review under section 5(d)(3) of the FDI Act, man Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen. Absent and not voting: Governor La Ware. and the record in this case reflects that: (1) The transaction will not result in the transfer of JENNIFER J. JOHNSON any federally insured depository institution's federal Deputy Secretary of the Board deposit insurance from one federal deposit insurance fund to the other; Appendix (2) First Interstate and FICAL currently meet, and upon consummation of the proposed transaction will Branches of Sacramento Savings Bank to be continue to meet, all applicable capital standards; Acquired by First Interstate Bancorp and (3) Because FICAL is located in California and is 330 E Street, Davis, California merging with a California savings association, the 5499 Sunrise Blvd., Davis, California proposed transaction would comply with the Dou- 5000 Laguna Blvd., Elk Grove, California glas Amendment if Savings Bank were a state bank that First Interstate was applying to acquire directly. See 12 U.S.C. § 1815(d)(3). staffs. The Board notes that because FICAL employs more than 50 people, serves as a depository of government funds, and acts as agent in selling or redeeming U.S. savings bonds and notes, it is required by Based on the foregoing and all the facts of record, the Department of Labor regulations to: Board has determined that the applications should be, (1) File annual reports with the Equal Employment Opportunity and hereby are, approved.18 The Board's approval of Commission; and (2) Have in place a written affirmative action compliance program that states its efforts and plans to achieve equal opportunity in the employment, hiring, promotion, and separation of personnel. 18. In addition, one Protestant criticized FICAL's record on the See 41 C.F.R. 60-1.7(a), 60-1.40. First Interstate and its other representation of African Americans among its vendor contractors ; on subsidiaries also are subject to these equal opportunity and affirmative its board of directors; and on its executive, officer, and management action requirements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1023 954 East Avenue, Chico, California of the Bank Holding Company Act ("BHC Act"), has 6585 Oakmont Drive, Santa Rosa, California applied under section 4(c)(8) of the BHC Act 190 E. Monte Vista Avenue, Vacaville, California (12 U.S.C. § 1843(c)(8)), and section 225.23 of the 5697 Hillsdale Blvd., Sacramento, California Board's Regulation Y (12 C.F.R. 225.23), to acquire 6363 Riverside Blvd., Sacramento, California through its wholly owned subsidiary, Pinnacle Invest- 90 Belle Mille Road, Red Bluff, California ment Company, Windsor, Colorado, a partial interest 1224 E. Gibson Road, Woodland, California in a de novo joint venture partnership ("Joint Ven- 1380 Hilltop Drive, Redding, California ture") that would provide full-service securities bro- 9165 Kiefer Blvd., Sacramento, California kerage services pursuant to section 225.25(b)(15) of 8859 Madison Avenue, Fair Oaks, California Regulation Y (12 C.F.R. 225.25(b)(15)). The remaining 6653 Clark Road, Paradise, California interest in Joint Venture would be acquired by Gilbert 5107 Fair Oaks Blvd., Carmichael, California Marshall & Company, Greeley, Colorado ("Gilbert 3103 Travis Blvd., Fairfield, California Marshall"). 3205 West Hammer Lane, Stockton, California Notice of the application, affording interested per- 2485 Notre Dame Blvd., Suite 750, Chico, California sons an opportunity to submit comments, has been 1326 Broadway, Sacramento, California published (58 Federal Register 61,913 (1993)). The 1300 W. Kettleman Lane, Lodi, California time for filing comments has expired, and the Board 3450 Palmer Drive, Cameron Park, California has considered the application and all comments re- 2440 N. Texas Street, Fairfield, California ceived in light of the factors set forth in section 4(c)(8) 3101 Travis Blvd., Fairfield, California of the BHC Act. 8395 Folsom Blvd., Sacramento, California Applicant, with $1.1 billion in total consolidated 9165 Kiefer Blvd., Sacramento, California assets, operates subsidiary banks in Colorado, Kan- 850 Colusa Avenue, Yuba, California sas, Nebraska and Wyoming,1 and engages in permis- 995 Tharp Road, Yuba City, California sible nonbanking activities. Gilbert Marshall is a reg- 7895 Lichen Drive, Citrus Heights, California istered broker-dealer and derives a significant portion 6031 Greenback Lane, Citrus Heights, California of its revenues from underwriting and dealing in bank- 2805 Childress Drive, Anderson, California ineligible securities. 13422 East Lincoln Way, Auburn, California The Board previously has determined by regulation 1801 Douglas Blvd., Roseville, California that providing full-service securities brokerage ser- 9 South El Dorado Street, Stockton, California vices is an activity that is closely related to banking 1100 Pitt School Road, Dixon, California and permissible for bank holding companies under 736 Taylorville Road, Grass Valley, California section 4(c)(8) of the BHC Act.2 Applicant has com- 7201 Southland Park Drive, Sacramento, California mitted that Joint Venture will conduct these activities 424 L Street, Sacramento, California in accordance with the limitations imposed by section 1651 Response Road, Sacramento, California 225.25(b)(15) of Regulation Y. 6945 Stockton Blvd., Sacramento, California Applicant proposes that two officers of Gilbert Mar- 2150 Watt Avenue, Sacramento, California shall who are involved in marketing and selling bank- 8799 Elk Grove Blvd., Elk Grove, California ineligible securities underwritten and dealt in by Gil- 11875 Sutton Way, Grass Valley, California bert Marshall serve as officers of Joint Venture. In 701 East Bidwell Street, Folsom, California addition, Applicant proposes that at least half of the 35 11200 Gold Express Drive, California registered broker-dealers employed by Gilbert Mar- 4875 Granite Drive, Rocklin, California shall serve simultaneously as employees of Joint Ven- 3980 Missouri Flat Road, Placerville, California ture and provide full-service brokerage services to 700 E Street, Marysville, California customers of Applicant's bank affiliates.3 Applicant 1320 Yuba Street, Redding, California maintains that reliance on officers and broker-dealers who are dual employees is necessary to the success of Pinnacle Bancorp, Inc. Joint Venture. Central City, Nebraska In prior decisions, the Board has expressed concern that joint ventures potentially could lead to a matrix of Order Approving Application to Engage in Full-Service Securities Brokerage Activities Through a Joint Venture 1. Asset data are as of December 31, 1993. 2. See 12 C.F.R. 225.25(b)(15). 3. Initially, Joint Venture's offices would be established at six Pinnacle Bancorp, Inc., Central City, Nebraska ("Ap- Pinnacle bank locations. Gilbert Marshall would provide one or more plicant"), a bank holding company within the meaning brokers to each location during regular business hours or as needed. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1024 Federal Reserve Bulletin • November 1994 relationships between co-venturers that could breach In order to approve this application, the Board also the legally mandated separation of banking and com- must determine that the performance of the proposed merce, create the possibility of conflicts of interests activities by Applicant "can reasonably be expected to and other adverse effects that the BHC Act was produce benefits to the public, such as greater convedesigned to prevent, or impair, or give the appearance nience, increased competition, or gains in efficiency, of impairing, the ability of the banking organization to that outweigh possible adverse effects, such as undue function effectively as an independent and impartial concentration of resources, decreased or unfair comprovider of credit.4 The Board has restricted dual petition, conflicts of interests, or unsound banking employees between a joint venture and a securities practices."7 Applicant and Joint Venture have comfirm co-venturer in previous cases, to separate the mitted that the securities advisory and brokerage permissible activities of the joint venture from the services offered by Joint Venture will be provided in impermissible activities of the co-venturer securities accordance with the guidelines established by the firm.5 Board and the other agencies for the sale of uninsured In this case, Applicant has made several commit- products on bank premises.8 ments to address concerns that the proposed common Under these guidelines, the securities and advisory officers and employees may cause Joint Venture to be services provided by Joint Venture on bank premises engaged in impermissible securities activities or may will be provided by trained personnel at a clearly cause conflicts of interests or other adverse effects. identified location separate from the bank's deposit- Applicant has committed that Joint Venture will not taking area. Customers also will receive written disrecommend, market, or act as broker for any securi- closures that specific products recommended by Joint ties underwritten or dealt in by Gilbert Marshall, and Venture are uninsured and will be required to sign a will not solicit customers on Gilbert Marshall's behalf. written acknowledgement of the disclosures. Appli- None of the broker-dealers employed by Joint Venture cant has established procedures for supervising Joint will have any involvement in Gilbert Marshall's under- Venture's compliance with these and the other policies writing, market making or dealing activities, either at set forth in the guidelines and Applicant may terminate Gilbert Marshall or at Joint Venture, even while the joint venture if the policies are not followed. The serving as employees of Gilbert Marshall.6 In addition, Board believes that this framework for conducting the Joint Venture's activities will be conducted at a loca- proposed activities reduces the potential for conflicts tion separate from the Gilbert Marshall offices, and of interests and customer confusion that otherwise Joint Venture will not include any reference to Gilbert might be associated with conducting the proposed Marshall in its name. While two of the officers of activities on bank premises. Gilbert Marshall who are engaged in underwriting and In every case involving a nonbanking acquisition by dealing activities would be officers of the joint venture, a bank holding company under section 4 of the BHC neither these officers nor any other officers of Gilbert Act, the Board considers the financial condition and Marshall will have access to the Pinnacle customer resources of the applicant and its subsidiaries and the lists or be permitted to provide services directly to effect of the transaction on these resources.9 Based on Joint Venture's customers. Moreover, the dual em- the facts of this case, the Board concludes that finanployees will not distribute prospectuses or sales liter- cial considerations are consistent with approval of this ature regarding securities underwritten or dealt in by application. The managerial resources of Applicant Gilbert Marshall, and will not refer customers to also are consistent with approval. Gilbert Marshall. The Board expects that the de novo entry of Appli- Based on these and all of Applicant's other commit- cant into the market for the proposed services would ments, it appears that the proposed dual officers and provide added convenience to Applicant's customers, employees would not cause Applicant or Joint Venture and would increase the level of competition among to become involved in impermissible securities activ- existing providers of these services. Accordingly, the ities. Board has determined that performance of the proposed activities by Joint Venture can reasonably be expected to produce benefits to the public. In addition, the record does not indicate that con- 4. See The Chuo Trust and Banking Company, Limited, 78 Federal summation of the proposal is likely to result in any Reserve Bulletin 446 (1992) (Chuo Trust); Amsterdam-Rotterdam Bank, N.V., 70 Federal Reserve Bulletin 835 (1984) (Amro). 5. See Amro; Chuo Trust; Banque Nationale de Paris, 80 Federal Reserve Bulletin 638 (1994). 7. 12 U.S.C. § 1843(c)(8). 6. The underwriting and dealing activities of Gilbert Marshall will be 8. See Interagency Statement on Retail Sales of Nondeposit Investhandled exclusively by the officers of Gilbert Marshall, none of whom ment Products, February 15, 1994. will have contact with customers of Joint Venture. 9. 12 C.F.R. 225.24. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1025 significantly adverse effects, such as concentration of the Bank Holding Company Act ("BHC Act"),1 has resources, decreased or unfair competition, conflicts applied under section 4(c)(8) of the BHC Act of interests, or unsound banking practices that are not (12 U.S.C. § 1843(c)(8)) and section 225.23(a) of the likely to be outweighed by the public benefits of the Board's Regulation Y (12 C.F.R. 225.23(a)) to engage proposal. Accordingly, the Board has determined that de novo through its wholly owned subsidiary, Toronto the public interest factors it must consider under Dominion Securities (USA) Inc., New York, New section 4 of the BHC Act are favorable and consistent York ("Company"), in the following nonbanking acwith approval of the application. tivities: Based on the foregoing and all the facts of record, (1) Underwriting and dealing in, to a limited extent, the Board has determined to, and hereby does, apall types of debt and equity securities (other than prove the application, subject to the terms and condisecurities issued by open-end investment compations set forth in this order, and in the Board regulanies), including sovereign debt securities, corporate tions and orders noted above. The Board's debt securities, convertible debt securities, debt determination also is subject to all the terms and securities issued by a trust or other vehicle secured conditions set forth in Regulation Y, including those in by or representing interests in debt obligations, sections 225.7 and 225.23(b), and to the Board's aupreferred stock, common stock, American Deposithority to require modification or termination of the tary Receipts, and other direct and indirect owneractivities of a bank holding company or any of its ship interests in corporations and other entities subsidiaries as the Board finds necessary to assure ("bank-ineligible securities"); compliance with, and prevent evasion of, the provi- (2) Purchasing and selling all types of securities as a sions of the BHC Act, and the Board's regulations and "riskless principal" on the order of customers; and orders issued thereunder. The Board's decision is (3) Making, acquiring, and servicing loans or other specifically conditioned on compliance with all the extensions of credit (including issuing letters of commitments made in this application, including the credit and accepting drafts) for Company's account commitments discussed in this order and the condiand for the account of others, pursuant to section tions set forth in the Board orders noted above. These 225.25(b)(1) of Regulation Y. commitments and conditions shall be deemed to be conditions imposed in writing by the Board in connec- Applicant seeks approval for Company to conduct the tion with its findings and decisions, and, as such, may proposed activities throughout the United States. be enforced in proceedings under applicable law. Notice of the application, affording interested per- This transaction shall not be consummated later sons an opportunity to submit comments on the prothan three months after the effective date of this order, posal, has been published (59 Federal Register 11,607 unless such period is extended for good cause by the (1994)). The time for filing comments has expired, and Board or by the Federal Reserve Bank of Kansas City, the Board has considered the application and all pursuant to delegated authority. comments received in light of the factors set forth in By order of the Board of Governors, effective section 4(c)(8) of the BHC Act. September 19, 1994. Applicant, with total consolidated assets of $56.6 billion, is the fifth largest commercial banking Voting for this action: Chairman Greenspan, Vice Chair- organization in Canada and the 98th largest bank in the man Blinder, and Governors Kelley, Phillips, and Yellen. world.2 In the United States, Applicant operates a Absent and not voting: Governors LaWare and Lindsey. branch and a limited purpose trust company in New York, New York, an agency in Houston, Texas, and a JENNIFER J. JOHNSON representative office in Chicago, Illinois. In addition, Deputy Secretary of the Board Applicant engages through Company and other subsidiaries in a broad range of permissible nonbanking The Toronto-Dominion Bank activities in the United States. Company currently is Toronto, Canada engaged in limited bank-ineligible securities underwriting and dealing activities that are permissible under Order Approving Application to Engage De Novo in section 20 of the Glass-Steagall Act (12 U.S.C. Various Securities-Related Activities, Including Underwriting and Dealing in All Types of Debt and Equity Securities on a Limited Basis 1. Applicant, a foreign bank with a branch in New York, New York, is subject to the BHC Act by operation of section 8(a) of the International Banking Act of 1978 (12 U.S.C. § 3106(a)). The Toronto-Dominion Bank, Toronto, Canada ("Ap- 2. Asset data are as of December 31, 1992, and employ exchange plicant"), a foreign bank subject to the provisions of rates then in effect. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1026 Federal Reserve Bulletin • November 1994 § 377).3 Company is, and will continue to be, a broker- that Company will conduct its underwriting and dealdealer registered with the Securities and Exchange ing activities with respect to bank-ineligible securities Commission ("SEC") and a member of the National subject to this 10 percent revenue test.5 Association of Securities Dealers, Inc. ("NASD"). The Board has determined that, subject to the Accordingly, Company is subject to the record-keep- prudential framework of limitations established in preing and reporting obligations, fiduciary standards, and vious decisions to address the potential for conflicts of other requirements of the Securities Exchange Act of interests, unsound banking practices, or other adverse 1934 (15 U.S.C. § 78a et seq.), the SEC, and the effects, the proposed underwriting and dealing activi- NASD. ties involving bank-ineligible securities are so closely As indicated above, the Board has previously deter- related to banking as to be proper incidents thereto mined by regulation that the proposed activities re- within the meaning of section 4(c)(8) of the BHC Act.6 lated to the making, acquiring, and servicing of loans Applicant has committed that Company will conduct and other extensions of credit are closely related to the proposed underwriting and dealing activities using banking within the meaning of the BHC Act. See the same methods and procedures, and subject to the 12 C.F.R. 225.25(b)(1). In order to approve this appli- same prudential limitations as were established by the cation, the Board also must determine that the perfor- Board in the Section 20 Orders and other previous mance of the proposed activities by Company "can cases. reasonably be expected to produce benefits to the The Board notes that, in connection with this propublic . . . that outweigh possible adverse effects, such posal, an issue has been raised as to whether the as undue concentration of resources, decreased or Section 20 Orders would prevent affiliates of Company unfair competition, conflicts of interests, or unsound from participating in letter of credit or similar facilities banking practices." 12 U.S.C. § 1843(c)(8). that would enhance the marketability or creditworthiness of bank-ineligible securities underwritten by Underwriting and Dealing Activities Company. The Board's Section 20 Orders contain a limitation on credit enhancements which prohibits an The Board has previously determined that the conduct affiliate of a section 20 subsidiary from extending of the proposed underwriting and dealing activities is credit that might be viewed as enhancing the creditconsistent with section 20 of the Glass-Steagall Act worthiness or marketability of securities underwritten (12 U.S.C. § 377), provided that the company engaged by the section 20 subsidiary. Unlike other limitations in the underwriting and dealing activities derives no contained in the Section 20 Orders, this limitation on more than 10 percent of its total gross revenue from credit enhancements contains no exception for credit underwriting and dealing in bank-ineligible securities facilities in which there is substantial participation by over any two-year period.4 Applicant has committed other lenders. Accordingly, this limitation would pro- 3. In particular, Company has authority to underwrite and deal in, Cir. 1988), cert, den., 486 U.S. 1059 (1988) (collectively, "Section 20 to a limited extent, certain municipal revenue bonds, 1-4 family Orders"). Compliance with the 10 percent revenue limitation shall be mortgage-related securities, commercial paper, and consumer receiv- calculated in accordance with the method stated in the Section 20 able-related securities. In addition, Company is authorized to: Orders, as modified by the Order Approving Modifications to the (1) Underwrite and deal in securities that state member banks are Section 20 Orders, 75 Federal Reserve Bulletin 751 (1989), the Order permitted to underwrite and deal in under sections 5(c) and 16 of the Approving Modifications to the Section 20 Orders, 79 Federal Reserve Glass-Steagall Act (12 U.S.C. §§ 335 and 24(7)); Bulletin 226 (1993), and the Supplement to Order Approving Modifi- (2) Act as agent in the private placement of all types of securities; cations to Section 20 Orders, 79 Federal Reserve Bulletin 360 (1993) (3) Provide investment advisory and securities brokerage services (collectively, "Modification Orders"). In this regard, the Board notes on a combined basis; that Applicant has not adopted the Board's alternative indexed (4) Provide certain financial and transaction advice to institutions; revenue test to measure compliance with the 10 percent limitation on (5) Broker various interest rate and currency swaps, and similar bank-ineligible securities activities, and, absent such election, will transactions; continue to employ the Board's original 10 percent revenue standard. (6) Arrange for the sale of loans and other extensions of credit 5. Applicant also has proposed that Company engage in certain originated by affiliated and unaffiliated lenders; and activities, including repurchase and reverse repurchase transactions, (7) Provide financial advice to Canadian governmental authorities in connection with and as an incident to the proposed underwriting and their agents with respect to the issuance of their securities in the and dealing activities. In this regard, the Board notes that Company United States. may engage in activities that are necessary incidents to the proposed See The Toronto-Dominion Bank, 76 Federal Reserve Bulletin 573 underwriting and dealing activities, provided that any such activities (1990). are treated as part of the bank-ineligible securities activities unless 4. See Canadian Imperial Bank of Commerce, et al., 76 Federal Company has received specific approval under section 4(c)(8) of the Reserve Bulletin 158 (1990); J.P. Morgan & Co. Incorporated, et al., BHC Act to conduct the activities independently. Until such approval 75 Federal Reserve Bulletin 192 (1989), aff'd sub nom. Securities is obtained, any revenues from the incidental activities must be Industries Ass'n v. Board of Governors of the Federal Reserve counted as ineligible revenues subject to the 10 percent revenue System, 900 F.2d 360 (D.C. Cir. 1990); Citicorp, et al., 73 Federal limitation set forth in the Section 20 Orders, as modified by the Reserve Bulletin 473 (1987), aff d sub nom. Securities Industry Ass'n Modification Orders. v. Board of Governors of the Federal Reserve System, 839 F.2d 47 (2d 6. See Section 20 Orders. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1027 hibit affiliates of Company from participating in a tus as a foreign bank.11 These methods, procedures, credit facility that would support bank-ineligible secu- and prudential limitations include the comprehensive rities underwritten by Company, even when other framework of restrictions designed to avoid potential lenders participate in the facility to a substantial ex- conflicts of interests, unsound banking practices, and tent. other adverse effects imposed by the Board in connection with underwriting and dealing in securities. Riskless Principal Activities Other Considerations "Riskless principal" is the term used in the securities business to refer to a transaction in which a broker- In every case under section 4(c)(8) of the BHC Act, dealer, after receiving an order to buy (or sell) a the Board considers the financial and managerial resecurity from a customer, purchases (or sells) the sources of the applicant and its subsidiaries and the security for its own account to offset a contemporane- effect of the transaction upon such resources.12 In ous sale to (or purchase from) the customer.7 Riskless considering these factors, the Board has noted that principal transactions are understood in the industry to Applicant's capital ratios satisfy applicable risk-based include only transactions in the secondary market. standards established under the Basle Accord, and are Thus, Company would not act as a riskless principal in considered equivalent to the capital levels that would selling securities at the order of a customer that is the be required of a U.S. banking organization. The Board issuer of the securities to be sold or in any transaction has also reviewed the capitalization of Applicant and in which Company has a contractual agreement to Company in accordance with the standards set forth in place the securities as agent of the issuer. Company the Section 20 Orders, and finds the capitalization of also would not act as a riskless principal in any each to be consistent with approval of this proposal. transaction involving a security for which it makes a With respect to the capitalization of Company, this market. determination is based upon all the facts of record, The Board has previously determined that, subject including Applicant's projections with respect to the to prudential limitations that address the potential for volume of Company's underwriting and dealing activconflicts of interests, unsound banking practices, or ities in bank-ineligible securities. On the basis of all the other adverse effects, the proposed riskless principal facts of record, including the foregoing, and subject to activities are so closely related to banking as to be the completion of a satisfactory infrastructure review, proper incidents thereto within the meaning of section the Board has concluded that financial and managerial 4(c)(8) of the BHC Act.* The Board has also previ- considerations are consistent with approval of this ously determined that purchasing and selling securities application. on the order of investors as a riskless principal does Under the framework and conditions established in not constitute underwriting or dealing in securities for this and prior decisions, consummation of this propurposes of section 20 of the Glass-Steagall Act, and, accordingly, that revenue derived from these activities is not subject to the 10 percent revenue limitation on tory. When acting as a riskless principal, Company will engage only in bank-ineligible securities underwriting and dealing.9 transactions in the secondary market, and not at the order of a customer that is the issuer of the securities to be sold, will not act as Applicant has committed that Company will conduct riskless principal in any transaction involving a security for which it its riskless principal activities using the same methods makes a market, and will not hold itself out as making a market in the and procedures, and subject to the same prudential securities that it buys and sells as a riskless principal. Moreover, Company will not engage in riskless principal transactions on behalf of limitations, as were established by the Board in the any foreign affiliates that engage in securities dealing activities outside Bankers Trust Order, the J.P. Morgan Order, and the United States, and will not act as riskless principal for registered investment company securities. In addition, Company will not act as other orders approving the conduct of riskless princia riskless principal with respect to any securities of investment pal activities,10 as modified to reflect Applicant's sta- companies that are advised by Applicant or any of its affiliates. With respect to these riskless principal activities, Applicant has proposed that Company be permitted to enter bid or ask quotations, or publish "offering wanted" or "bid wanted" notices, on trading 7. See 17 C.F.R. 249.10b-10(a)(8)(i). systems other than an exchange or the NASDAQ, provided that 8. See J.P. Morgan & Company Incorporated, 76 Federal Reserve Company not enter price quotations on different sides of the market Bulletin 26 (1990) ("7.P. Morgan Order"); Bankers Trust New York for a particular security without a separation of at least two business Corporation, 75 Federal Reserve Bulletin 829 (1989) ("Bankers Trust days between such quotations. The Board has previously permitted Order"). this practice in connection with riskless principal activities. See 9. See Bankers Trust Order. Dauphin Deposit Corporation, 77 Federal Reserve Bulletin 672 (1991). 10. See J.P. Morgan Order; Bankers Trust Order. Included among 11. See, e.g., The Bank of Nova Scotia, 76 Federal Reserve Bulletin the limitations applicable to the proposed activities are that Company 545 (1990). will maintain specific records that will clearly identify all riskless 12. See 12 C.F.R. 225.24. See also The Fuji Bank, Limited, 75 principal transactions, and that Company will not engage in any Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 riskless principal transactions for any securities carried in its inven- Federal Reserve Bulletin 155 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1028 Federal Reserve Bulletin • November 1994 posal is not likely to result in any significant adverse subject to the other conditions of this order and the effects, such as undue concentration of resources, Section 20 Orders. decreased or unfair competition, conflicts of interests, The Board's determination also is subject to all the or unsound banking practices. Moreover, the Board terms and conditions set forth in Regulation Y, includexpects that the de novo entry of Company into the ing those in sections 225.7 and 225.23(b) of Regulation market for the proposed services in the United States Y, and to the Board's authority to require such modwould provide added convenience to Applicant's cus- ification or termination of the activities of a bank tomers, and would increase the level of competition holding company or any of its subsidiaries as the among existing providers of these services. For these Board finds necessary to ensure compliance with, and reasons, the Board has determined that the perfor- to prevent evasion of, the provisions of the BHC Act mance of the proposed activities by Applicant can and the Board's regulations and orders issued therereasonably be expected to produce public benefits that under. The Board's decision is specifically conditioned outweigh possible adverse effects under the proper on compliance with all the commitments made in incident to banking standard of section 4(c)(8) of the connection with this application, including the com- BHC Act. mitments discussed in this order, and the conditions Accordingly, and for the reasons set forth in this set forth in this order and the above-noted Board order and in the Section 20 Orders, the Board has regulations and orders. These commitments and conconcluded that Applicant's proposal to engage through ditions are deemed to be conditions imposed in writing Company in the proposed activities is consistent with by the Board in connection with its findings and the Glass-Steagall Act, and that the proposed activi- decision, and, as such, may be enforced in proceedties are so closely related to banking as to be proper ings under applicable law. incidents thereto within the meaning of section 4(c)(8) This transaction shall not be consummated later of the BHC Act, provided that Applicant limits Com- than three months after the effective date of this order, pany's activities as specified in this order and the unless such period is extended for good cause by the Section 20 Orders, as modified by the Modification Board or by the Federal Reserve Bank of New York, Orders. acting pursuant to delegated authority. On the basis of the foregoing and all the facts of By order of the Board of Governors, effective record, including the commitments furnished by Ap- September 14, 1994. plicant, the Board has determined that the application should be, and hereby is, approved, subject to all the Voting for this action: Chairman Greenspan, Vice Chairterms and conditions of this order and the Section 20 man Blinder, and Governors Kelley, Lindsey, Phillips, and Orders, as modified by the Modification Orders. The Yellen. Absent and not voting: Governor La Ware. Board's approval of this proposal extends only to JENNIFER J. JOHNSON activities conducted within the limitations of those Deputy Secretary of the Board orders and this order, including the Board's reservation of authority to establish additional limitations to ensure that Company's activities are consistent with safety and soundness, conflicts of interests, and other ORDERS ISSUED UNDER BANK MERGER ACT relevant considerations under the BHC Act. Underwriting and dealing in any manner other than as Bank of Lancaster approved in this order and the Section 20 Orders is not Kilmarnock, Virginia within the scope of the Board's approval and is not authorized for Company. Order Approving Merger of Savings Association The Board's approval of this proposal is conditioned with a Commercial Bank upon a future determination by the Board that Applicant and Company have established policies and pro- Bank of Lancaster, Kilmarnock, Virginia ("Bank"), a cedures to ensure compliance with the Section 20 state member bank, has applied under section 18(c) of Firewalls and the other requirements of this order and the Federal Deposit Insurance Act ("FDI Act") the Section 20 Orders, including computer, audit, and (12 U.S.C. § 1828(c)) (the "Bank Merger Act") to accounting systems, internal risk management con- acquire the Kilmarnock, Virginia, branch of TideMark trols, and the necessary operational and managerial Bank ("TideMark Branch"), a federally chartered infrastructure. Upon notification by the Board that this stock savings bank headquartered in Newport News, condition has been satisfied, Company may immedi- Virginia. Bank also has applied under section 5(d)(3) of ately commence the proposed underwriting and deal- the FDI Act (12 U.S.C. § 1815(d)(3)), as amended by ing activities with respect to bank-ineligible securities, the Federal Deposit Insurance Corporation Improve- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1029 ment Act of 1991 (Pub. L. No. 102-242, § 501, 105 Branch is the fifth largest depository institution in the Stat. 2236, 2388 (1991)), to acquire Tidemark Branch1 market, controlling $5.2 million in deposits, representand to establish a branch at this location, pursuant to ing 1.1 percent of market deposits. Upon consumsection 9 of the Federal Reserve Act (12 U.S.C. § 321 mation of this proposal, Lancaster would control et seq.). $140.3 million in deposits, representing 59.8 percent of Notice of the applications, affording interested per- total market deposits. The Herfindahl-Hirschman Insons an opportunity to submit comments, has been dex ("HHI") would increase by 167 points to 4331.5 given in accordance with the Bank Merger Act and the The Board notes that a number of factors indicate Board's Rules of Procedure (12 C.F.R. 262.3(b)). As that the competitive effects of the proposal may be required by the Bank Merger Act, reports on the overstated by the increase in concentration as meacompetitive effects of the merger were requested from sured by the HHI. Because of its financial condition, the United States Attorney General, the Office of the TideMark Bank has operated under formal supervi- Comptroller of the Currency ("OCC"), the Federal sory action by the OTS since 1990, and it has not been Deposit Insurance Corporation ("FDIC"), and the a viable competitor in the market. In addition, three Office of Thrift Supervision ("OTS"). The time for other commercial banks, including two branches of the filing comments has expired, and the Board has con- state's largest commercial banks, would remain in the sidered the applications and all comments received in market after consummation of this proposal. Morelight of the factors set forth in the Bank Merger Act over, TideMark Bank undertook substantial efforts to and in section 9 of the Federal Reserve Act. find a buyer both in and out of the market, and Bank Bank is the 35th largest commercial banking organi- emerged as the only purchaser for TideMark Branch's zation in Virginia, controlling $135.1 million in depos- relatively small amount of deposits. its, representing less than 1 percent of total deposits in As noted above, the Board sought comments from commercial banking organizations in the state.2 Tide- the United States Attorney General, the OCC, the Mark Branch controls deposits of $5.2 million, repre- FDIC, and the OTS on the competitive effects of this senting less than 1 percent of total deposits in thrift proposal. The Attorney General indicated that the institutions in the state. Upon consummation of the proposal is not likely to have a significantly adverse proposed transaction, Bank would remain the 35th effect on competition in any relevant banking market, largest commercial bank in Virginia, controlling and the OCC, the FDIC, and the OTS did not object to $140.3 million, representing less than 1 percent of total the acquisition. Based on all the facts of record, deposits in commercial banks in the state. including the financial condition of TideMark Branch, the Board concludes that consummation of this pro- Competitive Considerations posal would not have significantly adverse effects on competition or on the concentration of resources in Bank and TideMark Branch compete directly in the any relevant banking market. Lancaster County banking market.3 Bank is the largest The Board also concludes that the financial and of the five depository institutions in the market, managerial resources and future prospects of Bank controlling deposits of $135.1 million, representing and TideMark Branch are consistent with approval of 58.2 percent of the total deposits in depository institu- this application. Considerations relating to the convetions in the market ("market deposits").4 TideMark nience and needs of the communities to be served and the other supervisory factors the Board is required to consider under the Bank Merger Act are all consistent 1. Section 5(d)(3) of the FDI Act requires the Board to follow the with approval. procedures and consider the factors set forth in section 18(c) of the Bank Merger Act. 2. Market deposit data are as of June 30, 1994. 3. The Lancaster County banking market is approximated by Lancaster County, Virginia. 4. In this context, depository institutions include commercial banks, 5. Under the revised Department of Justice Merger Guidelines, 49 savings banks, and savings associations. Market share data before Federal Register 26,823 (June 29, 1984), a market in which the consummation are based on calculations in which the deposits of thrift post-merger HHI is above 1800 is considered to be highly conceninstitutions are included at 50 percent. The Board previously has trated. In such markets, the Justice Department is likely to challenge indicated that thrift institutions have become, or have the potential to a merger that increases the HHI by more than 50 points. The Justice become significant competitors of commercial banks. See WM Ban- Department has informed the Board that a bank merger or acquisition corp, 76 Federal Reserve Bulletin 788 (1990); National City Corpora- generally will not be challenged (in the absence of other factors tion, 70 Federal Reserve Bulletin 743 (1984). Because the deposits of indicating anticompetitive effects) unless the post-merger HHI is at TideMark Branch would be transferred to a commercial bank under least 1800 and the merger increases the HHI by more than 200 points. this proposal, those deposits are included at 100 percent in the The Justice Department has stated that the higher than normal HHI calculation of pro forma market share. See Norwest Corporation, 78 thresholds for screening bank mergers for anticompetitive effects Federal Reserve Bulletin 452 (1992); First Banks, Inc., 76 Federal implicitly recognize the competitive effect of limited-purpose lenders Reserve Bulletin 669 (1990). and other non-depository financial entities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1030 Federal Reserve Bulletin • November 1994 In addition, the Board has also considered the Bank"); Rocky Mountain Bank of Plains, Plains; First specific factors it must review under section 5(d)(3) of State Bank of Stevensville, Stevensville; and The the FDI Act, and the record in this case shows that: Whitehall State Bank, Whitehall; all in Montana (col- (1) The transaction will not result in the transfer of lectively, "merging banks"), with Billings Bank to be any federally insured depository institution's federal the surviving institution. Billings Bank and the mergdeposit insurance from one federal deposit insur- ing banks are subsidiaries of Rocky Mountain Bancorance fund to the other; and poration, Inc., Billings, Montana ("Rocky Moun- (2) Bank currently meets, and upon consummation tain"), a bank holding company within the meaning of of the proposed transaction will continue to meet, all the Bank Holding Company Act (12 U.S.C. § 1841 applicable capital standards. et seq.). In connection with this proposal, Billings Bank also has applied for the Board's approval under The Board also has reviewed the factors it is required section 9 of the Federal Reserve Act (12 U.S.C. § 321 to consider in applications for the establishment and et seq.) to establish branches at the sites of the operation of branches under the Federal Reserve Act merging banks' existing offices. and finds them to be consistent 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 these applications given in accordance with the Bank Merger Act and the should be, and hereby are, approved. The Board's Board's Rules of Procedure (12 C.F.R. 262.3). As approval of these applications is conditioned on com- required by the Bank Merger Act, reports on the pliance by Bank with the commitments made in con- competitive effects of the proposal were requested nection with these applications. For purposes of this from the United States Attorney General ("Attorney action, the commitments and conditions relied on in General"), the Office of the Comptroller of the Curreaching this decision are both conditions imposed in rency ("OCC"), and the Federal Deposit Insurance writing by the Board and, as such, may be enforced in Corporation ("FDIC"). The time for filing comments proceedings under applicable law. has expired, and the Board has considered the appli- The acquisition by Bank may not be consummated cations and all comments received in light of the before the thirtieth calendar day following the effective factors set forth in the Bank Merger Act and the date of this order, and this proposal may not be Federal Reserve Act. consummated later than three months after the effec- Billings Bank controls deposits of $22.1 million, tive date of this order, unless such period is extended representing less than 1 percent of the total deposits in by the Board or by the Federal Reserve Bank of commercial banks in Montana.2 The merging banks Richmond, acting pursuant to delegated authority. collectively control deposits of $99.3 million, repre- By order of the Board of Governors, effective senting approximately 1.5 percent of total deposits in September 12, 1994. commercial banks in the state. Upon consummation of this proposal, Rocky Mountain would remain the ninth Voting for this action: Vice Chairman Blinder and Gover- largest commercial banking organization in Montana, nors Kelley, Lindsey, Phillips, and Yellen. Absent and not controlling deposits of $121.4 million, representing voting: Chairman Greenspan and Governor La Ware. approximately 1.8 percent of total deposits in commer- JENNIFER J. JOHNSON cial banks in the state. Deputy Secretary of Board As previously noted, Rocky Mountain currently controls Billings Bank and the merging banks. Hence, Rocky Mountain Bank of Billings this transaction represents a merger of banks that are Billings, Montana already affiliated. The Attorney General has indicated that this proposal is not likely to result in a signifi- Order Approving the Merger of Banks cantly adverse effect on competition in any relevant banking market, and neither the OCC nor the FDIC Rocky Mountain Bank of Billings, Billings, Montana has objected to consummation of this transaction. ("Billings Bank"), a state member bank,1 has applied Based on all the facts of record, including the foregounder section 18(c) of the Federal Deposit Insurance ing, the Board has concluded that consummation of Act (12 U.S.C. § 1828(c)) ("Bank Merger Act") to this proposal would not have a significantly adverse merge with Powder River Bank of Broadus, Broadus; effect on competition or the concentration of banking Security State Bank of Harlem, Harlem ("Harlem resources in any relevant banking market. 1. Billings Bank, formerly Western Bank of Billings, became a member of the Federal Reserve System on June 24, 1994. 2. Deposit data are as of March 31, 1994. 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Legal Developments 1031 Convenience and Needs Considerations Record of CRA Performance In acting on an application under the Bank Merger A. Evaluation of CRA Performance Act, the Board is required to consider the convenience and needs of the communities to be served, and to take The Agency CRA Statement provides that a CRA into account the records of the relevant depository examination is an important and often controlling institutions under the Community Reinvestment Act factor in the consideration of an institution's CRA (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA re- record, and that these reports will be given great quires the federal financial supervisory agencies to weight in the applications process.6 The Board notes encourage financial institutions to help meet the credit that all of Rocky Mountain's subsidiary banks that needs of the local communities in which they operate, have been examined for CRA performance received consistent with the safe and sound operation of such "satisfactory" ratings from their primary regulators institutions. To accomplish this end, the CRA requires during their most recent examinations for CRA perforthe appropriate federal supervisory authority to "as- mance. In particular, Billings Bank, the surviving sess the institution's record of meeting the credit needs institution under this proposal, received a "satisfactoof its entire community, including low- and moderate- ry" rating from the FDIC, at its most recent examinaincome neighborhoods, consistent with the safe and tion for CRA performance as of January 18, 1994.7 In sound operation of such institution," and to take that addition, Harlem Bank received a "satisfactory" ratrecord into account in its evaluation of applications ing from the FDIC at its most recent CRA examination under the Bank Merger Act or section 9 the Federal as of September 27, 1993 ("1993 Exam"). Reserve Act to establish domestic branches.3 The Board has received comments from the Fort B. Lending Record Belknap Community Council4 ("Protestant") that criticize the efforts of Harlem Bank to meet the credit and The Board has carefully reviewed Harlem Bank's banking needs of the communities it serves. Protestant lending data in light of Protestant's allegations. The alleges generally that Harlem Bank historically has Board notes that the FDIC concluded in the 1993 denied credit to Native American borrowers, even Exam that Harlem Bank's geographic distribution of when those loans would be guaranteed by the Bureau credit applications and denials demonstrated reasonof Indian Affairs ("BIA"), and that, in some cases, the able penetration of all segments of the bank's local bank denied credit to applicants who had maintained community. The examination results also indicated deposit accounts at Harlem Bank for several years. that the bank had advanced credit throughout its local Protestant also alleges that Harlem Bank has discour- community, and that a majority of these credit extenaged Native Americans from applying for credit by sions were to borrowers within Harlem Bank's delinturning down potential borrowers before a credit ap- eated community.8 In addition, the FDIC determined plication was filed. In addition, Protestant alleges that that the bank's loan records did not show a disproporalthough there is a substantial shortage of housing on tionate impact of credit denials or credit extensions on the Fort Belknap Indian Reservation, Harlem Bank any protected group. Moreover, the FDIC did not find has not extended an adequate amount of residential any evidence of practices intended to discourage aploans to Native Americans. plications for the bank's credit products, or any pro- In its consideration of the convenience and needs hibited discriminatory or other illegal credit practices. factor under the Bank Merger Act, the Board has Harlem Bank's loan policy states that the bank will not carefully reviewed the entire record of CRA perfor- discriminate in its credit practices.9 mance of Billings Bank, Harlem Bank, and the other The record also indicates that Harlem Bank has merging banks, all comments received and Harlem made significant efforts to help meet the credit needs Bank's responses to those comments, and all other of Native Americans. According to the lending data relevant facts of record in light of the CRA, the provided by Harlem Bank, a substantial portion of the Board's regulations, and the Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act ("Agency CRA Statement").5 6. Id. at 13,745. 7. The Board notes that Rocky Mountain has committed to implement the CRA policies and programs of Billings Bank in the communities currently served by Harlem Bank. 8. Harlem Bank's delineated community is approximated by Blaine 3. 12 U.S.C. § 2903. County and a small portion of the west side of Phillips County, both in 4. The Fort Belknap Community Council is the federally-recognized Montana, and includes the entire Fort Belknap Indian Reservation. governing body of the Fort Belknap Indian Reservation, home to the 9. Rocky Mountain has recently added a corporate compliance Gros Ventre and Assiniboine Tribes. officer to provide support, audit, and training for its subsidiary banks 5. 54 Federal Register 13,742 (1989). on CRA performance and related compliance matters. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1032 Federal Reserve Bulletin • November 1994 bank's overall lending has been extended to Native needs considerations, are consistent with approval of Americans.10 The bank extended 54.8 percent of the this proposal. 872 loans in its loan portfolio to Native Americans, which represents over 20 percent of the dollar value Other Considerations of outstanding loans in the bank's portfolio. Harlem Bank's loan portfolio also indicates that the bank The Board also has concluded that the financial and has extended 70.2 percent of its consumer loans, managerial resources and future prospects of Rocky 29.4 percent of its agriculture loans, 30 percent of its Mountain, Billings Bank and the merging banks, and commercial loans, and 19.3 percent of its real estate all other supervisory factors the Board must consider loans to Native Americans. Moreover, from July 1, under the Bank Merger Act, are consistent with ap- 1993 to June 30, 1994, Harlem Bank made 62.3 proval. percent of its total loans to Native Americans, rep- The Board also has considered the factors it is resenting 31.5 percent of the dollar amount of loans required to consider when reviewing applications to extended. establish branches pursuant to section 9 of the Federal Harlem Bank also participates in government- Reserve Act (12 U.S.C. § 321 et seq.), and has deterinsured loan programs targeted to the Native Ameri- mined that those factors are consistent with approval can community. In particular, Harlem Bank has of the establishment of Billings Bank branches at the $623,800 in BIA-guaranteed loans in its portfolio.11 present sites of the merging banks' offices. Harlem Bank has not denied credit to individuals Based on the foregoing and all other facts of record, proposing a BIA-guaranteed loan during the period including the commitments made by Rocky Mountain, from January 1, 1992 to July 28, 1994. The bank has Billings Bank and the merging banks, the Board has stated that it regularly solicits BIA-guaranteed loans determined that the applications should be, and hereby on the Fort Belknap Indian Reservation, and main- are, approved.12 The Board's approval is specifically tains contact with BIA credit administrators in Fort conditioned on compliance by Rocky Mountain and its Belknap. Harlem Bank also has outstanding Small subsidiaries with all the commitments made in connec- Business Administration loans and Farmers Home tion with the applications. The commitments and Administration loans in an aggregate amount of over conditions relied upon by the Board in reaching its $1 million. decision are deemed to be conditions imposed in The 1993 Exam notes that the management and writing by the Board in connection with its findings directorate of Harlem Bank are actively involved in and decision, and, as such, may be enforced in provarious civic and community groups to help ascertain ceedings under applicable law. community credit needs, and the bank has made a This transaction shall not be consummated before survey of bank customers to ascertain whether ser- the thirtieth calendar day following the effective date vices offered were consistent with the needs of the of this order, or later than three months after the delineated local community. The bank also advertises effective date of this order, unless such period is on local radio stations and in newspapers and other extended for good cause by the Board or by the publications circulated in and around Harlem. In ad- Federal Reserve Bank of Minneapolis, acting pursuant dition, Harlem Bank has met with the Fort Belknap to delegated authority. Indian Housing Authority to discuss credit needs on the reservation. In reviewing the convenience and needs factor under the Bank Merger Act, the Board has carefully 12. The Board notes that Protestant also criticized the employment considered the entire record, including Protestant's practices of Harlem Bank. Specifically, Protestant alleges that although more than half of the population in Harlem, Montana, is Native comments and the CRA record of performance. American, Harlem Bank does not have any Native American employ- Based on this review, the Board believes that the ees. Harlem Bank has indicated that it employs eight people, and efforts of Billings Bank and all the merging banks to contends that it offers equal employment opportunity to qualified individuals without regard to race, color, creed, religion, national help meet the credit needs of all segments of their origin, sex, age, physical or mental handicap, or marital status. The communities, including low- and moderate-income Board notes that as a result of the proposed transaction, Billings Bank neighborhoods, as well as all other convenience and will employ more than 50 people, serve as a depository of government funds, and act as an agent in selling or redeeming U.S. savings bonds and notes; thus, it will be required by Department of Labor regulations to: (1) File annual reports with the Equal Employment Opportunity 10. According to U.S. census data, the population in Harlem Bank's Commission; and delineated community is composed of approximately 40.8 percent (2) Have in place a written affirmative action compliance program Native Americans. which states its efforts and plans to achieve equal opportunity in the 11. Harlem Bank has approved two additional BIA-guaranteed employment, hiring, promotion, and separation of personnel. loans totalling $446,000, which are awaiting BIA action. See 41 C.F.R. 60-1.7(a) and 60-1.40. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1033 By order of the Board of Governors, effective Beach County, West Palm Beach, Florida ("Barnett- September 6, 1994. West Palm Beach"); Barnett Bank of Pasco County, Port Richey, Florida ("Barnett-Pasco County"); Bar- Voting for this action: Chairman Greenspan, Vice Chair- nett Bank of Pinellas County, St. Petersburg, Florida man Blinder, and Governors Kelley, Lindsey, Phillips, and ("Barnett-Pinellas County"); Barnett Bank of South- Yellen. Absent and not voting: Governor LaWare. west Florida, Sarasota, Florida ("Barnett-Southwest Florida"); and Barnett Bank of Tampa, Tampa, Flor- WILLIAM W. WILES ida ("Barnett-Tampa") (collectively, the "State Mem- Secretary of the Board ber Banks").2 The State Member Banks also have applied, pursuant to section 9 of the Federal Reserve Act (12 U.S.C. § 321), to establish and operate branch ACTIONS TAKEN UNDER THE FEDERAL DEPOSIT offices at each of these locations.3 INSURANCE CORPORATION IMPROVEMENT ACT Notice of the applications, affording interested persons an opportunity to submit comments, has been By the Board given in accordance with the Bank Merger Act and the Board's Rules of Procedure (12 C.F.R. 262.3(b)). Barnett Bank of Palm Beach County Reports on the competitive effects of the merger were West Palm Beach, Florida requested from the United States Attorney General, the OCC, and the Federal Deposit Insurance Corpo- Barnett Bank of Pasco County ration. The time for filing comments has expired, and Port Richey, Florida the Board has considered the applications and all of the facts of record in light of the factors set forth in the Barnett Bank of Pinellas County Bank Merger Act and the Federal Reserve Act. St. Petersburg, Florida Barnett, with consolidated assets of $38.1 billion, controls 31 banks in Florida and Georgia.4 Barnett is Barnett Bank of Southwest Florida the largest depository institution in Florida, control- Sarasota, Florida ling total deposits of $31.5 billion, representing approximately 19.1 percent of total deposits in deposi- Barnett Bank of Tampa tory institutions in the state.5 The Florida branch Tampa, Florida offices of Glendale control deposits of $4.1 billion, representing approximately 2.5 percent of total depos- Order Approving the Merger of a Savings its in depository institutions in Florida. Under this Association with Commercial Banks and the proposal, the State Member Banks would acquire 26 of Establishment of Branches the Florida branches offices of Glendale, which control deposits of $1.4 billion, representing less than one Barnett Banks, Inc., Jacksonville, Florida ("Barpercent of deposits in depository institutions in the nett"), proposes, through nine of its subsidiary banks, state. Upon acquisition by the State Member Banks of to acquire certain assets and assume certain liabilities these 26 Florida branch offices of Glendale, Barnett of the 60 Florida branch offices of Glendale Federal would remain the largest depository institution in Bank, F.S.B., Glendale, California ("Glendale"). Florida, controlling deposits of $32.9 billion, repre- Five state member banks controlled by Barnett have applied under section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. § 1828(c)) ("Bank Merger Act") and section 5(d)(3) of the Federal Deposit In- the Board to follow the procedures and consider the factors set forth in the Bank Merger Act. surance Act (12 U.S.C. § 1815(d)(3)), as amended by 2. Four national banks controlled by Barnett propose to acquire the the Federal Deposit Insurance Corporation Improve- remaining 34 branches of Glendale. The national banks must obtain ment Act of 1991 (Pub. L. No. 102-242, § 501, 105 the approval of the Office of the Comptroller of the Currency (the "OCC") under the Bank Merger Act before acquiring the assets and Stat. 2236, 2388-2392 (1991)), to acquire certain assets assuming the liabilities of these branches. These national banks are and assume certain liabilities of 26 of the 60 branches Barnett Bank of Broward County, N.A., Fort Lauderdale, Florida; of Glendale.1 These banks are Barnett Bank of Palm Barnett Bank of Central Florida, N.A., Winter Park, Florida; Barnett Bank of Manatee County, N.A., Bradenton, Florida; and Barnett Bank of South Florida, N.A., Miami, Florida. 3. The locations of the branches that the State Member Banks 1. Because the state member banks involved in this proposal are all propose to establish are listed in the Appendix. members of the Bank Insurance Fund and are acquiring deposits of 4. Asset data are as of June 30, 1994. Glendale, which is a member of the Savings Association Insurance 5. Deposit and market data are as of June 30, 1993. In this context, Fund, prior Board approval is required for this proposal under section depository institutions include commercial banks, savings banks, and 5(d)(3) of the Federal Deposit Insurance Act. Section 5(d)(3) requires savings associations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1034 Federal Reserve Bulletin • November 1994 senting 19.9 percent of total deposits in depository nett and several of its subsidiaries, including one of the institutions in the state. State Member Banks. The DOJ has provided the Barnett and Glendale compete directly in the Sara- Board with the Department's conclusion regarding its sota, Tampa Bay, and West Palm Beach banking investigation, but has indicated that it is not able at this markets, all in Florida. Upon consummation of this time to provide the Board with the information the proposal, all of these banking markets would remain DOJ has compiled in its investigation. Barnett has unconcentrated or moderately concentrated6 as mea- indicated that it believes that the lending activities of sured by the Herfindahl-Hirschman Index ("HHI").7 all of its subsidiaries, including the State Member After considering the competition offered by other Banks, fully comply with all federal fair lending laws, depository institutions in the market, the number of and has submitted to the Board extensive information competitors remaining in the market, the relatively about the lending efforts and programs at its banks, small increase in concentration as measured by the including a statistical analysis of the lending efforts of HHI,8 and all other facts of record, the Board con- two of its banks. cludes that consummation of the proposal would not The Board has an obligation under the Bank Merger result in a significantly adverse effect on competition Act and the Federal Reserve Act to act on applications in any relevant banking market. submitted under these Acts in light of specified statutory factors. The Board must apply the criteria speci- Managerial Resources and Convenience and Needs fied by statute on the basis of the evidence of record Considerations before the Board and its findings must be supported by substantial evidence. In considering an application by a state member bank The Board notes that it has received no comment to acquire another insured depository institution by from the public in opposition to this proposal or merger or to establish an additional branch, the Board contending that Barnett is not serving the credit needs must consider the managerial resources of the compa- of its many local communities, including the low- and nies and banks involved in the proposal and the moderate-income neighborhoods in these communiconvenience and needs of the communities to be ties, and that there has been no adjudication of any served, and take into account the records of the violation of the federal fair lending laws by Barnett or relevant depository institutions under the Community any of its subsidiaries. The Board also notes that, of Reinvestment Act ("CRA") (12 U.S.C. § 2901 the five State Member Banks involved in this proposal, et seq.). In reviewing this proposal, the Board has four received "outstanding" ratings and one received considered the fact that the Department of Justice a "satisfactory" rating from the Federal Reserve Bank ("DOJ") has conducted an investigation regarding the of Atlanta in their most recent CRA examinations.9 compliance with federal fair lending statutes by Bar- The Board also notes that, of the remaining 26 Barnett subsidiary banks, nine received "outstanding" ratings and 13 received "satisfactory" ratings from their primary regulators in their most recent examina- 6. Market share data before consummation are based on calculations in which the deposits of thrift institutions are included at tions.10 Glendale received a "satisfactory" rating from 50 percent. The Board previously has indicated that thrift institutions the Office of Thrift Supervision, its primary regulator, have become, or have the potential to become, significant competitors in its most recent examination as of January 31, 1994. of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin 788 (1990); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Because the deposits of the Glendale branches will be transferred to a commercial bank under this proposal, those deposits are included at 100 percent in the calculation of pro forma market share. See Norwest Corporation, 78 Federal Reserve Bulletin 452 (1992); First Banks, Inc., 76 Federal Reserve Bulletin 669 (1990). 9. Barnett-Pinellas County, Barnett-Pasco County and Barnett- 7. Under the revised Department of Justice Merger Guidelines, 49 Southwest Florida received preliminary ratings of "outstanding" in Federal Register 26,823 (June 29, 1984), a market in which the recent CRA examinations performed by the Federal Reserve Bank of post-merger HHI is less than 1000 is considered unconcentrated, and Atlanta, as of April 18, 1994. These ratings represent an upgrade from a market in which the post-merger HHI is between 1000 and 1800 is "satisfactory" ratings received by these three banks as of October 19, considered moderately concentrated. The Justice Department has 1992. Barnett-West Palm Beach received a rating of "outstanding" in informed the Board that a bank merger or acquisition generally will its CRA examination performed by the Federal Reserve Bank of not be challenged (in the absence of other factors indicating anticom- Atlanta, as of August 9, 1993. Barnett-Tampa received a preliminary petitive effects) unless the post-merger HHI is at least 1800 and the rating of "satisfactory" in a recent CRA examination performed by merger increases the HHI by more than 200 points. The Justice the Federal Reserve Bank of Atlanta, as of April 18, 1994, the same Department has stated that the higher than normal HHI thresholds for rating received by this bank in its examination as of November 12, screening bank mergers for anticompetitive effects implicitly recog- 1991. nize the competitive effect of limited-purpose lenders and other 10. One of the subsidiary banks has not been evaluated for CRA non-depository financial institutions. performance, and three of the subsidiary banks have not been 8. The HHI would increase in these banking markets as follows: evaluated for CRA performance since the CRA was amended to Sarasota—by 51 points to 1579; Tampa Bay—by 157 points to 1445; require public written evaluations and disclosure of performance and West Palm Beach—by 122 points to 987. ratings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1035 A. Barnett's Record of Lending in its by FannieMae.13 Barnett also participates in multi- Community family real estate projects for low- and moderateincome persons.14 The Board also has reviewed and considered the In January 1992, Barnett implemented a small buspolicies and programs in place at Barnett. Barnett has iness banking strategy that includes the active particin place a number of credit and other bank products ipation in federal, state and local programs that proand marketing and outreach programs designed to help vide loans and other assistance to small business meet the banking needs of its entire community, owners. In that regard, Barnett's subsidiary banks are including minority and low- and moderate-income active participants in various loan programs sponsored borrowers, and to help increase home ownership op- by the Small Business Administration. As of March portunities for these borrowers. All these products and 1994, Barnett's outstanding loan commitments to programs would become available in the Glendale small businesses exceeded $1 billion, and Barnett branches proposed to be acquired by Barnett. originated approximately $500 million in new loan Special Programs and Initiatives. In 1992, Barnett commitments to small businesses in 1993 alone.15 pledged to lend more than $2 billion over a five-year As part of its $2 billion lending commitment, Barnett period to low- and moderate-income borrowers and established a goal of making $36 million in commercial businesses owned by minorities and women. Barnett loans to businesses owned by women and minorities designated $1 billion of that commitment to residential during each year of the five-year initiative. During mortgage loans, including loans made through its 1993, Barnett's subsidiary banks, including the State special loan program known as "Home Ownership Member Banks, originated $85 million of such loans, Made Easy" (the "HOME Program"), which was exceeding Barnett's annual production goal by introduced in the latter part of 1991.11 The HOME 137 percent. In addition, Barnett is one of the largest Program offers more favorable financing terms and investors in the six Black Business Investment Corpoflexible underwriting criteria, such as lower down rations located in Florida. Barnett's subsidiary banks, payment requirements and less restrictive underwrit- including the State Member Banks, have contributed a ing ratios. Loans under this program are priced at one total of $1 million of equity to these non-profit organihalf percent below Barnett's published rate for con- zations, which were established to provide loans and ventional fixed-rate mortgages, and there are no orig- guarantees, and offer equity capital, to businesses ination fees, ancillary bank fees or discount points. In owned by African Americans. addition to the HOME Program, many of Barnett's Barnett has marketing and outreach programs in banks have developed their own products or have place to help ensure that its customers and potential modified existing systemwide products to serve the customers are aware of the various products available individual needs of their markets.12 Barnett's goal from its subsidiary banks. Several of Barnett's subsidunder its $2 billion initiative was to provide iary banks have hired community residential lending $200 million in CRA-related residential mortgages in professionals who maintain regular contact with real 1993. It exceeded this goal by 108 percent, providing estate professionals and churches and community over $400 million in such mortgages during that year. groups in the minority communities within the banks' Barnett also has recently entered into a new loan service areas, and who also originate loans in these purchase arrangement with the Federal National Mort- communities. Many of the banks have established gage Association ("FannieMae"), under which loans working relationships with minority real estate agents, made to low- and moderate-income borrowers using more lenient underwriting standards will be acquired 13. Under the terms of the arrangement, residential loans will be made to low- and moderate-income borrowers by the Barnett subsidiary banks under a revised HOME Program that will use even more 11. Since the HOME Program was introduced in 1991, Barnett has liberal income qualifying and credit history guidelines. made 4,400 mortgage loans under this program totalling approximately 14. For example, Barnett has provided a $26.7 million commitment $220 million. to the First Housing Development Corporation over the next several 12. For example, Barnett-Pinellas County offers FHA/VA loans. years for that organization's Low Income Housing Tax Credit During 1993, the bank originated 331 FHA/VA mortgage loans total- Program. Several of Barnett's subsidiary banks participate in this ling $20.1 million. The bank also participates in the Pinellas County initiative. For example, Barnett-Pinellas County has provided over Housing Finance Authority Bond Program, and has originated 120 $1 million to this program, and its Community Affairs Officer serves on loans totalling $141 million under this program as of June 1993. The the First Housing Development Corporation's Board of Directors. bank has extended 86 loans for $3.9 million to low-income borrowers 15. Barnett also offers several special banking products and services participating in programs sponsored by the Tampa Bay Community to small businesses, including small business checking, small business Development Corporation. In addition, the bank originated 178 merchant services, and other money management services. These HOME Program loans totalling more than $8 million in 1993, and services provide assistance in managing the small business by, for originated 52 such loans totalling $2.2 million during the first quarter of example, providing easy access to account information and quick 1994. available credit for ATM and credit card payments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1036 Federal Reserve Bulletin • November 1994 builders and other real estate professionals in their minority and low- and moderate-income communiservice areas. The Barnett subsidiary banks partici- ties.20 In addition, annual bonuses paid to residential pate in first-time homebuyer seminars, housing fairs real estate managers depend, in part, on CRA producand other mortgage counseling sessions in minority tion volume.21 and low- and moderate-income areas.16 Barnett's subsidiary banks have a network of In 1993, Barnett spent approximately $1 million for branch offices that serve the minority and low- and advertising in the African-American and Hispanic moderate-income neighborhoods within their local sermarkets, and anticipates that it will spend $1.5 million vice areas. Barnett's office closing procedures require in 1994. Advertisements appear in both English and a community impact analysis before closing any Spanish, and in minority-oriented newspapers and on branch office, including an evaluation of the office's minority-oriented radio stations. In 1993, Barnett past CRA performance, a discussion of the planned hired an African-American advertising consultant to closing with community representatives, and a deterprovide additional guidance on effective methods of mination of whether the action will cause a negative reaching the African-American market, which resulted impact on the community. in a specific plan for 1994 using print and radio HMDA Data. Data submitted by the State Member advertising to generate additional awareness of Bar- Banks for 1992 and 1993 under the Home Mortgage nett's products. Barnett also retained a Hispanic ad- Disclosure Act ("HMDA") (12 U.S.C. § 2801 et seq.) vertising agency to help it develop advertising for the indicate an increase in the number of loan applications Hispanic market.17 from African Americans and Hispanics to these banks, Direct mail campaigns aimed at households in CRA- as well as an increase in the number of originations to designated census tracts are used frequently by the minority loan applicants. For example, from 1992 to Barnett organization.18 For example, in early 1993, 1993, loan applications from African Americans in- Barnett sent literature to 195,000 households in these creased from 371 to 597, and the applications from tracts. The solicitation was supplemented at certain Hispanics increased from 388 to 581. The number of subsidiary banks with a targeted advertising campaign originations made during that period to African Amerand follow-up calls. This direct mailing campaign, as icans increased from 222 to 376, and the number of measured by new deposit accounts and loans gener- originations to Hispanics increased from 265 to 344. ated during 1993 within the targeted census tracts, led The HMDA data for 1992 and 1993 indicate disparto 1,650 new deposit accounts and 938 new installment ities in approvals and denials of loan applications and mortgage loans totalling approximately $11 mil- according to racial and ethnic group. Because all lion. '9 banks are obligated to adopt and implement lending Additional steps to increase lending to minorities practices that ensure not only safe and sound lending, and low- and moderate-income individuals have in- but also equal access to credit by creditworthy applicluded an incentive compensation package for em- cants regardless of race, the Board is concerned when ployees to encourage loan originations under Barnett's the record of an institution indicates disparities in special mortgage programs. For example, Barnett's lending to minority applicants. The Board recognizes, systemwide incentive plan pays higher commissions however, that HMDA data alone provide only a limfor the origination of loan products designed to serve ited measure of any given institution's lending in its community. The Board also recognizes that HMDA data have limitations that make the data an inadequate 16. For example, Barnett-Pinellas County holds monthly HOME Program educational classes, and mortgage counseling sessions are basis, absent other information, for conclusively deheld weekly at the bank. A first-time homebuyers seminar was held in termining whether an institution has engaged in illegal February 1994 at a local realtor's office, and small business seminars discrimination in making lending decisions. In addihave been held. Barnett-Pasco County offers a Community Homebuyer's Program that provides a self-study course covering the steps tion, successful efforts to increase outreach and the necessary to becoming a homeowner. This bank also participates in a number of applications from low- and moderateprogram providing money-management and homeownership counselincome and minority borrowers may affect denial ing services. 17. Several of the subsidiary banks supplement this corporate-wide rates. marketing program with their own efforts. For example, Barnett- The Board notes that the most recent CRA exami- Southwest Florida advertises its products in several local publications nations for the State Member Banks found no evithat reach minorities and residents of low- and moderate-income census tracts. 18. A CRA-designated tract has been defined by Barnett for these purposes as a census tract with median family income equal to less than 80 percent of the median family income for a particular metro- 20. An additional 10 to 20 basis points in commissions are paid on politan statistical area. these loans. 19. A similar program in 1992 resulted in 1,486 new deposit accounts 21. Under the current incentive plan, 15 to 25 percent of a and 576 new installment and mortgage loans totalling approximately residential manager's bonus is based on CRA loan production as a $10 million. percent of total loan production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1037 dence of a pattern or practice of discriminatory credit gage application process,24 and the active recruitpractices, or other practices having the intent or effect ment of African Americans for employment as of discouraging credit applications. originators, processors, underwriters and customer contact personnel in the residential lending depart- B. Compliance with Fair Lending Laws ments of the subsidiary banks. During the past two years, Barnett has implemented Conclusions Regarding Managerial and Convenience a comprehensive fair lending compliance program at and Needs Factors its subsidiary banks to address its responsibilities for assuring fair lending under the Equal Credit Oppor- The Board has carefully considered the entire record tunity Act (15 U.S.C. § 1691 et seq.) and other fair available to it in reviewing these applications under the lending laws.22 This program includes comprehen- factors specified in the Bank Merger Act and the sive training for residential real estate employees, Federal Reserve Act. While the Board has considered including customer contact staff, to ensure a corpo- the views of the DOJ regarding the compliance by rate-wide understanding of Barnett's fair lending Barnett and certain of its subsidiaries with the federal responsibilities and the flexible mortgage products. fair lending laws, the Board does not have available to In 1992, all residential real estate employees were it the information or analysis developed by the DOJ in required to complete this training, and all new resi- its investigation. Accordingly, on the basis of the dential real estate employees at the banks receive fair available facts of record, and for the reasons discussed lending and CRA training very soon after employ- in this order, the Board concludes that the convement. In 1993, a fair lending self study module was nience and needs factor, including the CRA perfordistributed to all employees and directors of the mance of the State Member Banks, and the managerial subsidiary banks, and in 1994, all mortgage under- factor, are consistent with approval of these applicawriters were required to attend FannieMae-spon- tions, and that the record does not provide a basis to sored training sessions on underwriting loans for deny these applications under the statutory factors the low- and moderate-income borrowers. Barnett also is Board must consider in applications of this type. In in the process of developing a diversity training acting on these cases, the Board has considered that program that will be offered to employees at all its action will not hinder the DOJ in its investigation or subsidiary banks. in any action that may result from that investigation. In 1993, Barnett implemented a second review The Board will monitor the DOJ investigation and process that requires a second review of mortgage retains broad authority to take appropriate superviloan applications recommended for denial.23 In addi- sory action, including action on future applications, if tion, Barnett has established and implemented poli- warranted. cies to ensure that residential appraisals upon which its subsidiary banks rely are performed in accor- Other Considerations dance with Barnett's fair lending policy. In that regard, Barnett's Residential Appraisal Policy pro- The Board also concludes that the financial resources vides specific instruction for detecting subtle forms and future prospects of the State Member Banks and of discrimination in the performance of appraisals. Glendale, and the other supervisory factors the Board Lenders have been instructed to reject any appraisal must consider under the Bank Merger Act, are consisthat suggests that neighborhood racial and/or ethnic tent with approval. In addition, the Board has considcomposition is a predictor of risk. Appraisals are ered the factors it is required to consider when approvreviewed during the second review process when- ing applications for the establishment of branches ever a recommendation for denial is based on inad- pursuant to section 9 of the Federal Reserve Act, and equate collateral. Additional aspects of Barnett's fair finds those factors also are consistent with approval. lending program include a "mystery shopper" pro- Moreover, the Board also has considered the specific gram to test how customers are treated in the mort- factors it must review under section 5(d)(3) of the Federal Deposit Insurance Act, and the record in this case shows that: 22. This program, formally adopted in 1992, evolved from programs that were in place at many of the subsidiary banks by 1991. Barnett adopted a systemwide program to ensure uniform adherence to its fair 24. The purpose of the program was to detect any improper lending standards. discrimination occurring during the application process. According to 23. Several subsidiary banks, including all of the State Member the outside consultant who conducted the program in February 1993, Banks, have expanded their second review process to include certain the experiences of the minority and non-minority testers were comconsumer and small business loans recommended for denial. parable. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1038 Federal Reserve Bulletin • November 1994 (1) The transaction will not result in the transfer of Appendix any federally insured depository institution's federal deposit insurance from one federal deposit insur- Branch offices of Glendale Federal Bank, F.S.B., to ance fund to the other; be acquired by: (2) The State Member Banks currently meet, and upon consummation of the proposed transaction will Barnett Bank of Tampa continue to meet, all applicable capital standards; 507 Oakfield Drive, Brandon, FL and 425 N. Florida Avenue, Tampa, FL (3) The proposed transaction would comply with the 203 W. Fletcher Avenue, Tampa, FL interstate banking provision of the Bank Holding 5005 S. Dale Mabry Highway, Tampa, FL Company Act (12 U.S.C. § 1842(d)) if the Florida 8001 N. Dale Mabry Highway, Tampa, FL branches of Glendale were state banks that Barnett 305 S. Wheeler Street, Plant City, FL was applying to acquire directly. See 12 U.S.C. 303 N. Tamiami Trail, Ruskin, FL § 1815(d)(3). 1609 Sun City Center Plaza, Sun City, FL 9400 56th Street, Temple Terrace, FL Based on the foregoing and all the facts of record, the Board has determined that these applications Barnett Bank of Pinellas County should be, and hereby are, approved. The Board's approval of these applications is conditioned upon 26627 U.S. Highway 19 North, Clearwater, FL Barnett's compliance with the commitments made in 3412 E. Lake Road, Palm Harbor, FL connection with these applications. This approval is 250 37th Avenue North, St. Petersburg, FL further subject to Barnett obtaining any required ap- 7600 66th Street North, Pinellas Park, FL provals under applicable state laws. For purposes of 11290 78th Avenue, Seminole, FL this action, the commitments and conditions relied on 719 S. Missouri Avenue, Clearwater, FL in reaching this decision are both conditions imposed in writing by the Board and, as such, may be enforced Barnett Bank of Pasco County in proceedings under applicable law. This transaction may not be consummated before 9501 U.S. Highway 19, Port Richey, FL the thirtieth calendar day after the effective date of this 5205 U.S. Highway 19, New Port Richey, FL order, unless such period is shortened with the consent of the Attorney General, or later than three Barnett Bank of Palm Beach County months after the effective date of this order, unless such period is extended by the Board or by the Federal 2301 W. Glades Road, Boca Raton, FL Reserve Bank of Atlanta, acting pursuant to delegated 9136 Glades Road, Boca Raton, FL authority. 4000 N. Federal Highway, Boca Raton, FL 1609 S. Congress Avenue, Boynton Beach, FL By order of the Board of Governors, effective 7499 W. Atlantic Avenue, Delray Beach, FL September 29, 1994. 800 U.S. Highway 1, North Palm Beach, FL 3300 PGA Boulevard, Palm Beach Gardens, FL Voting for this action: Chairman Greenspan, Vice Chairman Blinder, and Governors Kelley, LaWare, Lindsey, Phil- 6404 Lake Worth Road, Lake Worth, FL lips and Yellen. Barnett Bank of Southwest Florida JENNIFER J. JOHNSON Deputy Secretary of the Board 1670 S. Venice Bypass, Venice, FL Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1039 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 Keystone Financial, Inc., Pennsylvania National American Savings September 15, 1994 Harrisburg, Pennsylvania Bank, Bank, Pottsville, Pennsylvania Tamaqua, Pennsylvania Union Planters Corporation, Cherokee Valley Federal Union Planters Bank September 23, 1994 Memphis, Tennessee Savings Association, of Chattanooga, Cleveland, Tennessee National Association, Knox ville, Tennessee 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 Irish Banks Limited pic, Second National Federal First National Bank September 16, 1994 Dublin, Ireland Savings Association, of Maryland, First Maryland Bancorp, Salisbury, Maryland Baltimore, Baltimore, Maryland Maryland American Bancshares, Inc., Oak Tree Federal Savings First American Bank August 29, 1994 Monroe, Louisiana Bank, & Trust of New Orleans, Louisiana, Louisiana Monroe, Louisiana Central of Kansas, Inc., Central National Central National August 29, 1994 Junction City, Kansas Bank-Newton, Bank, Newton, Kansas Junction City, Central Bank-Herington, Kansas Herington, Kansas Century Bancshares, Inc., Second National Federal Century National September 16, 1994 Washington, D.C. Savings Association, Bank, Salisbury, Maryland Washington, D.C. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1040 Federal Reserve Bulletin • November 1994 FDICIA—Continued Acquired Acquiring Approval Bank Holding Company Thrift Bank(s) Date The Citizens Bancorp of Security Trust Federal The Citizens Bank of September 16, 1994 Hickman, Inc., Savings & Loan Hickman, Hickman, Kentucky Association, Hickman, Knoxville, Tennessee Kentucky Citizens Bancorporation, Inc., Oak Tree Federal Savings Citizens Bank & August 26, 1994 Plaquemine, Louisiana Bank, Trust Company, New Orleans, Plaquemine, Louisiana Louisiana Crestar Financial Corporation, Second National Federal Crestar Bank, September 16, 1994 Richmond, Virginia Savings Association, Richmond, Virginia Salisbury, Maryland First Union Corporation, Home Federal Savings First Union National September 2, 1994 Charlotte, North Carolina Bank, Bank of Washington, D.C. Washington, D.C. Washington, D.C. Harbor Bankshares Corporation, Second National Federal The Harbor Bank of September 16, 1994 Baltimore, Maryland Savings Association, Maryland, Salisbury, Maryland Baltimore, Maryland Mellon Bank Corporation, Second National Federal Mellon Bank (DE) September 16, 1994 Pittsburgh, Pennsylvania Savings Association, National Salisbury, Maryland Association, Wilmington, Delaware Mercantile Bankshares Second National Federal The Chestertown September 16, 1994 Corporation, Savings Association, Bank of Maryland, Baltimore, Maryland Salisbury, Maryland Chestertown, Maryland Mercantile Bankshares Second National Federal Peninsula Bank, September 16, 1994 Corporation, Savings Association, Princess Anne, Baltimore, Maryland Salisbury, Maryland Maryland Minden Bancshares, Inc., Oak Tree Federal Savings Minden Bank & Trtist August 29, 1994 Minden, Louisiana Bank, Company, New Orleans, Minden, Louisiana Louisiana One American Corporation, Oak Tree Federal Savings First American Bank August 26, 1994 Vacherie, Louisiana Bank, & Trust Company, New Orleans, Vacherie, Louisiana Louisiana Premier Bancorp, Inc., Oak Tree Federal Savings Premier Bank, N.A., August 26, 1994 Baton Rouge, Louisiana Bank, Baton Rouge, New Orleans, Louisiana Louisiana Regions Financial Corporation, Oak Tree Federal Savings Guaranty Bank & August 26, 1994 Birmingham, Alabama Bank, Trust Company, New Orleans, Baton Rouge, Louisiana Louisiana Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1041 FDICIA—Continued Acquired Acquiring Approval Bank Holding Company Thrift Bank(s) Date Second Bancorp, Inc., TransOhio Federal Second National September 16, 1994 Warren, Ohio Savings Bank, Bank of Warren, Cleveland, Ohio Warren, Ohio Shoreline Financial Corporation, Great Lakes Bancorp, A Shoreline Bank, August 30, 1994 Benton Harbor, Michigan Federal Savings Bank, Benton Harbor, Ann Arbor, Michigan Michigan St. Martin Bancshares, Oak Tree Federal Savings St. Martin Bank & August 26, 1994 St. Martinville, Louisiana Bank, Trust Company, New Orleans, St. Martinville, Louisiana Louisiana Star Banc Corporation, TransOhio Federal Star Bank, National September 16, 1994 Cincinnati, Ohio Savings Bank, Association, Cleveland, Ohio Cincinnati, Ohio UNB Corporation, TransOhio Federal United National Bank September 16, 1994 Canton, Ohio Savings Bank, & Trust Company, Cleveland, Ohio Canton, Ohio 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) ^ a t e^ AmSouth Bancorporation, The Tampa Banking Company, September 19, 1994 Birmingham, Alabama Tampa, Florida Montana Community Banks, Inc., Community Bank-Missoula Inc., September 27, 1994 Ronan, Montana Missoula, Montana Union Planters Corporation, Commercial Bancorp, Inc., September 13, 1994 Memphis, Tennessee Obion, Tennessee Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1042 Federal Reserve Bulletin • November 1994 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 AApppplliiccaanntt((ss)) BBaannkk((ss)) Bank Date AMH Holding Company, The Citizens Bancorp of Cleveland September 2, 1994 Morehead, Kentucky Morehead, Inc., Morehead, Kentucky BancOne Corporation, American Holding Co., Cleveland August 31, 1994 Columbus, Ohio Glencoe, Illinois BancOne Illinois Corporation, Springfield, Illinois Bancorp Connecticut, Inc., Southington Savings Bank, Boston August 29, 1994 Southington, Connecticut Southington, Connecticut Banknorth Group, Inc., North American Bank Boston September 13, 1994 Burlington, Vermont Corporation, Farmington, New Hampshire CB&T Holding Corporation, City Bank & Trust, Atlanta September 8, 1994 New Orleans, Louisiana New Orleans, Louisiana The Citizens Bancorp of AMH Holding Company, Cleveland September 2, 1994 Morehead, Inc., Morehead, Kentucky Morehead, Kentucky CMB SOLO, Cheyenne Mountain Bank, Kansas City September 6, 1994 Colorado Springs, Colorado Colorado Springs, Colorado Community Bancshares, Inc., The Bank of Troup County, Atlanta September 16, 1994 Cornelia, Georgia LaGrange, Georgia Country Bancshares, Inc., Paloma Bancshares, Inc., St. Louis September 9, 1994 Hull, Illinois Paloma, Illinois F & M Bancorporation, Inc., Union State Bank, Chicago September 8, 1994 Kaukauna, Wisconsin Wautoma, Wisconsin Fairport Bancshares, Inc., The Bank of Fairport, Kansas City September 7, 1994 Fairport, Missouri Fairport, Missouri First Citizens of Paris, Inc., Oakland National Bank, Chicago September 8, 1994 Paris, Illinois Oakland, Illinois First Community Bancorp, Inc., First Community Bank, Minneapolis September 12, 1994 Glasgow, Montana Glasgow, Montana First Pry or Bancorp, Inc., The First National Bank of Kansas City September 7, 1994 Pryor, Oklahoma Pryor Creek, Pryor, Oklahoma FNB Bancshares, Inc., First National Bank of Atlanta September 9, 1994 Springfield, Georgia Effingham, Springfield, Georgia GHB, Inc., Greenhorn Valley Bank, Kansas City August 31, 1994 Colorado City, Colorado Colorado City, Colorado Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1043 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date Grant Park Bancshares, Inc., First National Bank of Chicago September 16, 1994 Grant Park, Illinois Grant Park, Grant Park, Illinois Greensburg Bancorp, Inc., Peoples Bancorp of Green St. Louis September 6, 1994 Shepherdsville, Kentucky County, Inc., Greensburg, Kentucky Heritage Bancshares, Inc., First Exchange Bank, Richmond August 30, 1994 Mannington, West Virginia Mannington, West Virginia Hometown Bancorp, Inc., The Bank of Milan, St. Louis August 31, 1994 Milan, Tennessee Milan, Tennessee Lakeland Bancorp, Inc., High Point Financial Corp., New York August 26, 1994 Oak Ridge, New Jersey Branchville, New Jersey New Independent Bancshares, The New Washington State St. Louis September 1, 1994 Inc., Bank, New Washington, Indiana New Washington, Indiana Norwest Corporation, First National Bank of Minneapolis September 6, 1994 Minneapolis, Minnesota Kerrville, Kerrville, Texas Peoples Bancorp of Mt. Pleasant, The Peoples National Bank Cleveland August 31, 1994 Inc., of Mt. Pleasant, Mount Pleasant, Ohio Mount Pleasant, Ohio Peoples First Corporation, Libsab Bancorp, Inc., St. Louis September 6, 1994 Paducah, Kentucky Mayfield, Kentucky Peotone Bancorp, Inc., Westbanco, Inc., Chicago September 15, 1994 Peotone, Illinois Westville, Illinois Southwest Bancorp, Inc., Minooka Bancorp, Inc., Worth, Illinois Minooka, Illinois Founders Bancorp, Inc., Scottsdale, Arizona PFC Acquisition Corporation II, Libsad Bancorp, Inc., St. Louis September 6, 1994 Paducah, Kentucky Mayfield, Kentucky Pioneer Bankshares, Inc., Pioneer II Bankshares, Inc., Dallas September 14, 1994 Fredericksburg, Texas Dover, Delaware Pioneer National Bank, Fredericksburg, Texas Pioneer II Bankshares, Inc., Pioneer National Bank, Dallas September 14, 1994 Dover, Delaware Fredericksburg, Texas Regions Financial Corporation, American Bancshares, Inc., Atlanta September 19, 1994 Birmingham, Alabama Monroe, Louisiana Salt Creek Valley Bancshares, The Salt Creek Valley Bank, Cleveland August 25, 1994 Inc., Laurelville, Ohio Laurelville, Ohio Southeastern Banking United Citizens Bank of Atlanta September 9, 1994 Corporation, Alachua County, Darien, Georgia Alachua, Florida Southern Bancshares, Ltd., DeSoto Bancshares, Inc., St. Louis August 30, 1994 Carbondale, Illinois De Soto, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1044 Federal Reserve Bulletin • November 1994 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date Superior Bancorporation, Ltd. Community Bank and Trust Minneapolis September 19, 1994 Superior, Wisconsin Company, Superior, Wisconsin United Bancorp of Kentucky, American Fidelity Bank & Cleveland August 29, 1994 Lexington, Kentucky Trust Company, Corbin, Kentucky United Bancorporation of Drake-Lyman Bancshares, Kansas City September 9, 1994 Wyoming, Inc., Inc., Jackson, Wyoming Sheridan, Wyoming ValliCorp Holdings, Inc., Mineral King National San Francisco September 6, 1994 Fresno, California Bank, Visalia, California Victory Bancshares, Inc., The Mt. Victory State Bank, Cleveland August 31, 1994 Mount Victory, Ohio Mount Victory, Ohio Village Investment Company, Libertyville Savings Bank, Chicago September 16, 1994 Libertyville, Iowa Liberty ville, Iowa Section 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date Banco Santander, S.A., to engage de novo in: New York September 9, 1994 Santander, Spain (1) providing investment and financial advisory services, and (2) alone or in combination with such services, engaging in securities brokerage activities First Bank Shares of the South Resource Financial Atlanta September 22, 1994 East, Inc., Services, Inc., Alma, Georgia Alma, Georgia Norwest Corporation, Michigan National Bank, Minneapolis September 20, 1994 Minneapolis, Minnesota Southfield, Michigan Regions Financial Corporation, Oak Tree Federal Savings Atlanta August 26, 1994 Birmingham, Alabama Bank, New Orleans, Louisiana UJB Financial Corp., Palisade Savings Bank, New York August 26, 1994 Princeton, New Jersey FSB, Ridgefield Park, New Jersey United Bancorp of Kentucky, Harlan Federal Bank, a Cleveland August 29, 1994 Lexington, Kentucky Federal Savings Bank, Harlan, Kentucky Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1045 Sections 3 and 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date King Bancshares, Inc., Turon Banc Shares, Inc., Kansas City August 31, 1994 Kingman, Kansas Turon, Kansas Norwest Corporation, Alexandria Securities and Minneapolis September 8, 1994 Minneapolis, Minnesota Investment Company, Alexandria, Minnesota Community State Bank of Alexandria, Alexandria, Minnesota 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 Bank of Fresno, Mineral King National San Francisco September 6, 1994 Fresno, California Bank, Visalia, California Crestar Bank, Second National Federal Richmond September 16, 1994 Richmond, Virginia Savings Association, Salisbury, Maryland Old Kent Bank, Merchandise National Bank, Chicago September 14, 1994 Elmhurst, Illinois Chicago, Illinois EdgeMark Bank-Lombard, Lombard, Illinois EdgeMark Bank-Rosemont, Rosemont, Illinois PENDING CASES INVOLVING THE BOARD OF continued by stipulation pending a hearing sched- GOVERNORS uled for October 4, 1994. National Title Resource Agency v. Board of Gover- This list of pending cases does not include suits nors, No. 94-2050 (8th Cir., filed April 28, 1994). against the Federal Reserve Banks in which the Board Petition for review of Board's order, issued under of Governors is not named a party. section 4 of the Bank Holding Company Act, approving the application of Norwest Corp., Minneap- Board of Governors of the Federal Reserve System v. olis, Minnesota, to acquire Double Eagle Financial MacCallum, No. 94 Civ. 5652 (WK) (S.D. New Corp., Phoenix, Arizona, and its subsidiary, United York, filed August 3, 1994). Action to freeze assets Title Agency, Inc., and thereby engage in title of individual pending administrative adjudication of insurance agency activities and real estate settlecivil money penalty assessment by the Board. On ment services (80 Federal Reserve Bulletin 453). August 3, 1994, the court issued an order tempo- The Board's brief was filed July 7, 1994. rarily restraining the transfer or disposition of the Scott v. Board of Governors, No. 94-4117 (10th Cir.), individual's assets. The order was amended and filed April 28, 1994. Appeal of dismissal of action Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1046 Federal Reserve Bulletin • November 1994 against Board and others for damages and injunctive Adams v. Greenspan, No. 93-0167 (D. D.C., filed relief for alleged constitutional and statutory viola- January 27, 1993). Action by former employee under tions caused by issuance of Federal Reserve notes. the Civil Rights Act of 1964 and the Rehabilitation Beckman v. Greenspan, No. CV 94-41-BCG-RWA Act of 1973 concerning termination of employment. (D. Mont., filed April 13, 1994). Action against The Board's motion for summary judgment was Board and others seeking damages for alleged vio- granted in part and denied in part on September 8, lations of constitutional and common law rights. The 1994. Trial is scheduled to commence on Novem- Board's motion to dismiss was filed May 19, 1994. ber 15, 1994. DLG Financial Corp. v. Board of Governors, No. Zemel v. Board of Governors, No. 92-1056 (D. D.C., 94-10078 (5th Cir., filed January 20, 1994). Appeal filed May 4, 1992). Age Discrimination in Employof district court dismissal of appellants' action to ment Act case. The parties' cross-motions for sumenjoin the Board and the Federal Reserve Bank of mary judgment are pending. Dallas from taking certain enforcement actions, and Board of Governors v. Ghaith R. Pharaon, No. 91for money damages on a variety of tort and contract CIV-6250 (S.D. New York, filed September 17, theories. The case was consolidated on appeal with 1991). Action to freeze assets of individual pending Board of Governors v. DLG Financial Corp., Nos. administrative adjudication of civil money penalty 93-2944 and 94-20013 (5th Cir., filed December 14, assessment by the Board. On September 17, 1991, 1993 and December 31, 1993), an appeal of a tem- the court issued an order temporarily restraining the porary restraining order and a preliminary injunc- transfer or disposition of the individual's assets. tion obtained by the Board freezing assets of a corporation and an individual pending administrative adjudication of civil money penalty assessments FINAL ENFORCEMENT DECISIONS ISSUED BY by the Board. On August 15, 1994, the court of THE BOARD OF GOVERNORS appeals affirmed both the asset freeze order obtained by the Board and the district court's dismissal In the Matter of of plaintiffs' claims. Augustus I. Cavallari Richardson v. Board of Governors, et al., No. 94- 4020 (10th Cir.), filed January 14, 1994. Appeal of Participant in the Affairs of dismissal of action against Board and others for damages and injunctive relief for alleged constitu- Summit National Bank, N.A., tional and statutory violations caused by issuance of Torrington, Connecticut Federal Reserve notes. The Board's brief was filed June 3, 1994. OCC No. AA-EC-92-115 Scott v. Board of Governors, No. 94-0104 (D. D.C., filed January 21, 1994). Petition for review of a Final Decision Board order approving the application of Society Corporation, Cleveland, Ohio, to merge with Key- This is an administrative proceeding pursuant to sec- Corp, Albany, New York (80 Federal Reserve Bul- tion 8(e) of the Federal Deposit Insurance Act ("FDI letin 253 (1994)). On July 29, 1994, the Board filed a Act"), 12 U.S.C. § 1818(e), in which the Office of the motion to dismiss. Comptroller of the Currency of the United States of Board of Governors v. Oppegard, No. 93-3706 (8th America ("OCC") seeks to prohibit Augustus I. Cav- Cir., filed November 1,1993). Appeal of district court allari from further participation in the affairs of any order ordering appellant Oppegard to comply with federally-supervised financial institution as a result of prior order requiring compliance with Board prohibi- his participation in misconduct during his legal repretion and civil money penalty orders. Oral argument sentation of Summit National Bank N.A. (insolvent), was held June 16, 1994. On July 6, 1994, the Court of Torrington, Connecticut ("Summit" or "the Bank"). Appeals affirmed the district court order. As required by the FDI Act, the proceeding has been Jackson v. Board of Governors, No. CV-N-93-401- referred to the Board of Governors of the Federal ECR (D. Nev., filed June 14, 1993). Pro se action for Reserve System ("Board") for final decision. violation of a prisoner's civil rights. On August 23, The proceeding comes before the Board in the form 1994, the court granted the Board's motion to dis- of a Recommended Decision by Administrative Law miss. Judge ("ALJ") Walter J. Alprin, issued following an Bennett v. Greenspan, No. 93-1813 (D. D.C., filed administrative hearing held on August 2-4, 1993, in April 20, 1993). Employment discrimination action. Hartford, Connecticut, and the filing of post-hearing Trial is scheduled to commence on October 4, 1994. briefs by the parties. In the Recommended Decision, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1047 the ALJ found that the OCC had proved its allegations B. The ALJ's Recommended Decision against Cavallari and recommended that the Board order his prohibition from participation in banking.1 The ALJ concluded that Cavallari acted as an IAP Cavallari has filed exceptions to the Recommended with respect to Summit, in that he knowingly and Decision, arguing that the OCC failed to establish that recklessly breached his fiduciary duty as counsel to he was an "institution-affiliated party" subject to Summit, participated in a violation of a cease and administrative sanction under the FDI Act and that it desist order against Summit, and participated in an failed to establish that he acted with "willful or con- unsafe and unsound banking transaction that caused tinuing disregard" of the institution's safety or sound- loss to Summit. Recommended Decision ("RD") ness, a necessary finding for imposition of a prohibi- 25-37. tion order. The OCC's charges in this case stem from legal work performed by Cavallari from January through Statement of the Case May 1991 in connection with the restructuring and renewal of two non-performing loans Summit made in A. Statutory and Regulatory Background 1988 to Winthrop Broadcasting Corporation ("Winthrop"). In the restructuring, Summit agreed to re- 1. Institution-Affiliated Party lease five Winthrop officers and shareholders (the "Winthrop Guarantors") from their personal guaran- The FDI Act defines the term "institution-affiliated tees of the Winthrop loans in return for the corporate party" to include "any independent contractor (in- guarantee of another corporation, Comko, Ltd. cluding any attorney, appraiser, or accountant) who ("Comko"), owned by individuals who had a business knowingly or recklessly participates in: or family relationship with the Winthrop guarantors, (A) Any violation of any law or regulation; and a security interest in radio equipment owned by (B) Any breach of fiduciary duty; or Comko. Following the restructuring and renewal, the (C) Any unsafe or unsound practice, which Winthrop loans again went into default. Comko's caused or is likely to cause more than a minimal guarantee was essentially worthless; Comko was financial loss to, or a significant adverse effect on, nearly insolvent at the time the guarantee was given, the insured depository institution." 12 U.S.C. and has since gone out of business. In the course of his § 1813(u)(4). representation of Summit, Cavallari had advised the Bank that the exchange of guarantees was in the 2. Standards for Prohibition Order Bank's best interests, but had done nothing to ascertain the relative value of the guarantees that were the An IAP may be prohibited from the banking industry if subject of the exchange. the appropriate Federal banking agency—here, the The ALJ found that Cavallari drafted the releases of Board—makes three separate findings: the original Winthrop Guarantors and participated in (1) There must be a specified type of misconduct— the preparation of the security agreement and loan violation of law, unsafe or unsound practice, or renewal, was involved in several meetings and telebreach of fiduciary duty; phone calls in which negotiations had taken place and (2) The misconduct must have a prescribed effect— had billed Summit for "negotiations," and had recomfinancial gain or other benefit to the respondent or mended, both orally and in writing, that Summit financial harm or other damage to the institution or engage in the release and the renewal as being in prejudice to the institution's depositors; and Summit's best interests. RD 27-28. The ALJ rejected (3) The misconduct must involve culpability of a Cavallari's arguments that he had been merely a certain degree—personal dishonesty or willful or "transactional attorney," as opposed to a regulatory continuing disregard for the safety or soundness of or in-house counsel, and that his role in the transacthe institution. tions had been so limited that Cavallari did not meet the statutory standard for an IAP. Id. The ALJ found that Cavallari had not acted merely imprudently or based upon a good-faith mistake, but had participated 1. The OCC also issued against Cavallari a Notice of Charges seeking restitution and a Notice of Assessment of Civil Money both knowingly and recklessly in the transactions, Penalties that, pursuant to the statutory scheme, were referred by the thereby satisfying the test for institution-affiliated ALJ to the Comptroller of the Currency for final decision. As discussed below, the Comptroller issued his decision on those charges party. RD 37. on July 28, 1994, ordering Cavallari to pay restitution in the amount of The ALJ found that the misconduct required for a $554,903 plus interest and to pay a civil money penalty in the amount prohibition order had been established in that Cavalof $83,000. OCC Decision and Orders ("OCC Dec."), No. OCC-AA- EC-92-115 (July 28, 1994). lari's written and oral advice favoring the release of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1048 Federal Reserve Bulletin • November 1994 the guarantors in exchange for the Comko guarantee C. Cavallari's Exceptions to the Prohibition without assessing the strength of either Comko or the Recommendation Winthrop Guarantors,2 and his participation in the loan modifications, constituted unsafe or unsound As his exceptions relate to the case for prohibition, practices, a breach of fiduciary duty as counsel and a Cavallari attacks both the legal and factual findings by violation of a final order to cease and desist.3 RD 44. the ALJ. First, he argues that as a transactional The exchange of loan guarantors from the Winthrop attorney who gave advice in good faith, he does not Guarantors to Comko had the effect of denying Sum- meet the statutory definition of an IAP. He excepts to mit recovery from the personal assets of the Winthrop the ALJ's finding that Summit relied on his advice in Guarantors, who had had at the time the loans were releasing the guarantees, arguing that the negotiations made a collective net worth of $16 million. RD 34. In as to the release were conducted prior to his involvereturn for giving up any recovery against the Winthrop ment in the transaction. He argues that he was not Guarantors, Summit received a guarantee from responsible for valuing the existing and proposed Comko, which at that time had a negative net worth. security for the loans, and that his advice that the RD 34. The ALJ found that Cavallari's failure to transaction was in the best interests of the Bank was review the relevant financial information on either side based on information provided to him by the Bank's of the transaction before advising Summit's president president, Raymond Cordani, and its senior vice presthat the exchange was in the Bank's best interest ident, Paul Kolok. Thus, he claims he did not "particconstituted participation in an unsafe and unsound ipate" in any unsafe or unsound practice. practice. RD 35. Cavallari also contests the "loss" associated with The ALJ found that the second requirement for the exchange of guarantees. He argues that it was prohibition, the effect of the misconduct, had been improper for the ALJ to assume that the net worths of satisfied by the losses Summit sustained as a result of the Winthrop Guarantors had remained in 1991 at the the substitution of the worthless Comko guarantee for high levels documented at the time the loans were the individual guarantees of the Winthrop Guarantors. made in 1988, and that the FDIC is responsible for part RD 36, 45. Accepting the appraisals of the collateral of the loss because of its failure to take appropriate offered by the OCC, the ALJ found that, after deduct- collection action. ing the value of that collateral, Summit lost $554,903 Finally, Cavallari argues without elaboration that on the Winthrop loans. RD 45. his involvement in the transaction did not meet the The ALJ also found that Cavallari's conduct exhib- standard of "willful or continuing disregard" required ited willful and continuing disregard for safety or for a prohibition order. soundness, meeting the culpability test for prohibition. Cavallari also excepts to the numerous rulings by RD 45-46. The ALJ found that conclusion supported the ALJ allowing evidence into the record over Cavby Cavallari's failure to review Comko's or Win- allari's objections that it was irrelevant, hearsay, unthrop's financial statements, failure to determine with authenticated, beyond the scope of direct examinacertainty whether the Winthrop Guarantors were sub- tion, or beyond the witness's knowledge or expertise. ject to litigation or risked having their assets attached, Similarly, Cavallari excepts to the ALJ's exclusion of failure to review the cease and desist orders against testimony sought by Cavallari on grounds of rele- Summit that Cavallari knew existed, and general fail- vance. ure to act as responsible counsel to Summit. Id. D. The Comptroller's Decision In his Decisions and Order, the Comptroller of the 2. The ALJ noted that Cavallari based his advice, in part, on the Currency4 first determined that Cavallari was an instiimpression that the Winthrop Guarantors were subject to "a great deal of litigation" casting doubt on their ability to perform on their tution-affiliated party. He found that the failure to guarantees, when in fact Cavallari had no independent knowledge that assess the financial condition of the Winthrop Guaranthe individuals were involved in litigation, and did not personally review the Guarantors' financial statements. RD 30. tors and Comko prior to the exchange of guarantees 3. The ALJ found that Cavallari's participation in the exchange of was "contrary to accepted standards of banking operthe guarantees for the Winthrop loans constituted participation in the ation and resulted in abnormal risk of loss to the violation of a July 16, 1990 OCC temporary cease and desist order that prohibited Summit from making extensions of credit to certain identified individuals and their "related interests." RD 33, 36. The ALJ found that the exchange of guarantees constituted a new extension of credit to Winthrop and Comko, related interests of the individuals 4. The term "Comptroller" is used to denote the agency head who who were the subjects of the cease and desist order. RD 33. The ALJ is charged with making the final decision in enforcement cases, as rejected Cavallari's argument that he did not know the terms of the opposed to the "OCC" generally, which comprises, inter alia, the order, noting that Cavallari conceded knowledge of the existence of agency's Enforcement and Compliance Division, which prosecuted the order and made no attempt to learn its terms. RD 33. this case. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1049 Bank," making it an unsafe and unsound practice. vested with the power "to consider and rule upon all Defining "reckless" to mean "something more than procedural and other motions [other than granting a simple carelessness and something less than premedi- motion to dismiss] appropriate in an adjudicatory tated malice," the Comptroller found that Cavallari's proceeding." 12 C.F.R. 19.5(b)(7). An ALJ's evidenparticipation in this unsafe or unsound practice was tiary rulings therefore are generally accorded defer- "reckless" for purposes of the definition of institution- ence in the absence of an abuse of discretion or affiliated party. Because Winthrop itself had no capac- manifest unfairness. Upon review of the ALJ's evidenity to pay its loans, and Comko had large operating tiary rulings, the Board finds no such abuse of discrelosses and minimal net worth at the time of the tion or manifest unfairness and denies each of Cavalexchange of guarantees, while the individual Winthrop lari's exceptions to the hearing procedure.6 Guarantors had previously had a combined net worth in excess of $16 million, the Comptroller found that it B. Findings of Fact was likely that the exchange of guarantees would result in "more than a minimal financial loss" to 1. Relevant Individuals and Business Entities Summit. Accordingly, the Comptroller found Cavallari to be an IAP. OCC Dec. 11-13, 15. a. Summit National Bank. At all times relevant to this On the basis of these findings, the Comptroller proceeding, Summit was a national banking associafound that the statutory preconditions to the imposi- tion, chartered and examined by the OCC. During the tion of a civil money penalty and a restitution order period from December 11, 1990 to March 12, 1991, were met.5 After reviewing the statutory factors, the Summit's condition was poor and its capital base was Comptroller imposed a civil money penalty of $83,000 approximately $6,000,000. On February 3, 1992, Sumand required Cavallari to pay restitution in the amount mit was declared insolvent by the OCC due to heavy of $554,903. losses sustained on problem loans. During the relevant time period, Raymond Cordani Findings and Conclusions was Summit's president and chief executive officer and Paul Kolok was senior vice president. Richard D. Upon review of the administrative record and the Barbieri, Sr. ("Barbieri") served as a consultant to Decision and Orders of the Comptroller of the Cur- Summit during and after its organization, and had rency in the parallel restitution and civil money pen- recommended Cordani for his position at the Bank. alty cases, of which the Board takes official notice, the Barbieri and Summit shared a lawyer, Anthony F. Board hereby makes its Final Decision, and adopts the DiFabio, who was also a shareholder of Winthrop ALJ's Recommended Decision, Recommended Find- Broadcasting Corporation ("Winthrop"). ings of Preliminary Fact and Recommended Conclu- Cavallari, a Waterbury lawyer and longtime friend sions of Law, except as specifically supplemented or of Kolok, was retained by Summit in the fall of 1990 to modified herein. The Board therefore determines that perform legal work including collections, workouts the attached Order of Prohibition shall issue against and foreclosures. Among the loans he worked on were Cavallari, prohibiting him from future participation in two loans to Winthrop. the affairs of any federally-supervised financial institu- b. Security Savings and Loan. Barbieri was also tion without the approval of the appropriate supervi- president and chief executive officer of a thrift institusory agency. tion, Security Savings and Loan of Waterbury, Connecticut. John A. Corpaci was the executive vice- A. Procedural Issues president of Security, and Vinal Duncan was Security's vice chair. Paul Kolok was an officer at The Board denies Cavallari's exceptions to the ALJ's Security before leaving for Summit in 1988. Barbieri's procedural rulings. The ALJ is generally vested with son, Richard D. Barbieri, Jr. ("Barbieri Jr."), was an "all powers necessary to conduct a proceeding in a fair officer at Security. Cavallari was a shareholder of and impartial manner and to avoid unnecessary de- Security since its incorporation in 1974 and a borrower lay." 12 C.F.R. 19.5(a). More specifically, the ALJ is 5. The Comptroller also found that Cavallari had violated the 6. Cavallari also requests oral argument on his exceptions, although temporary cease-and-desist order to which Summit was subject, it is unclear whether his request is directed to the Board or only to the providing another basis for imposition of civil money penalties under Comptroller. Because the legal and factual issues have been thor- 12 U.S.C. § 1818(i). Because such a violation does not appear to give oughly explained in the written submissions, the Board denies Cavalrise to a prohibition order under 12 U.S.C. § 1818(e), the Board does lari's request for oral argument to the extent that it was directed to the not reach this issue. Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1050 Federal Reserve Bulletin • November 1994 from Security on numerous loans. Cavallari also per- prohibited Summit from making any extension of formed closings and title work for Security. credit to Barbieri, Corpaci, Barbieri Jr., or Duncan, or On July 12, 1990, the Office of Thrift Supervision their related interests, or to any person referred to the ("OTS") suspended Barbieri and Barbieri Jr. from Bank by them. their offices at Security and Corpaci was subsequently After the suspension actions by the OTS in July fired. 1990, Winthrop stopped making any payment on its c. Comko, Ltd. In September 1987, Barbieri, Cor- two loans, then carrying principal balances totalling paci and Duncan acquired an AM radio station in $614,358. In November 1990, Winthrop provided Sum- Waterbury, Connecticut, that was later held by them mit with a balance sheet showing a net worth of through Comko, Ltd., a corporation they owned. negative $1,026,394 and an income statement showing Comko ceased operations in April 1992. a nine-month net loss of $375,093. At that point, the d. Winthrop Broadcasting Corporation. Barbieri, Winthrop loans were 122 days past due. On Decem- Corpaci and Duncan were interested in purchasing ber 5, 1990, Summit sent a letter to each of the another radio station but were precluded from doing so Winthrop Guarantors requesting updated and signed by multiple ownership restrictions imposed by the personal financial statements, personal tax returns for Federal Communications Commission. On Septem- 1989, and payment of past-due interest. The Winthrop ber 13, 1987, Winthrop Broadcasting Corporation was Guarantors did not comply with the requests. formed to enable six individuals who were family b. The Restructuring Transactions. Shortly after the members and friends of Barbieri, Corpaci, and Duncan Winthrop Guarantors received the letters from Summit to purchase the radio station through a corporate requesting financial information, Barbieri and Corpaci entity.7 requested that Summit release their family members and friends from their guarantees and that the Winthrop 2. The Winthrop Restructuring loans be renewed into a single note with a 25-year amortization. In exchange for the release of guarantees, a. The Winthrop Loans. On September 22, 1988, Barbieri and Corpaci offered to give Summit: Barbieri and Corpaci arranged for Summit to make (1) A guarantee from Comko, which was owned by Winthrop a loan of $600,000 that was used to acquire a Barbieri, Corpaci and Duncan; and radio station and a parcel of real estate. The loan was (2) A security interest in the radio station equipment secured by a first mortgage on the radio station prop- owned by Comko. In exchange for renewing the erty and was guaranteed personally by five of the six Winthrop loans, Barbieri and Corpaci also offered family members and friends of Barbieri, Duncan, and Summit a first mortgage on a parcel of real estate Corpaci who were shareholders of Winthrop (the owned by the Barbieris, Corpaci and Duncan. "Winthrop Guarantors"). Winthrop never was profitable and had difficulty On January 25, 1991, Summit retained Cavallari to servicing its Summit debt. On December 14, 1988, provide legal services relating to the Winthrop loans. Summit granted Winthrop an additional loan of Corpaci and Barbieri, on behalf of Winthrop and the $100,000, arranged by the Barbieris and Corpaci, Winthrop Guarantors as well as Comko, negotiated without security other than the personal guarantees of the restructuring deal with Kolok and Cavallari on the Winthrop Guarantors. This loan was renewed on behalf of Summit. As part of the restructuring, Caval- April 13, 1989 and again on July 12, 1989. lari agreed to act as trustee for Winthrop, Summit's On July 12, 1990, OTS issued enforcement orders debtor, to hold the real property to be mortgaged to against Security and its principals that, among other Summit. Accordingly, on February 25, 1991, the real things, immediately suspended Barbieri and Barbieri estate was conveyed from a trustee for the Barbieris, Jr. from all offices and positions at Security. Corpaci Corpaci, and Duncan to Cavallari, as trustee for Winwas fired by Security. Almost immediately thereafter, throp. The use of trustees was designed to prevent on July 16, 1990, the OCC issued a temporary order to interference in the deal from creditors of Winthrop and cease and desist against a number of Barbieri-related of the individuals involved. banks including Summit that, among other things, On February 26, 1991, Kolok and Cavallari met with Barbieri and Corpaci. Kolok and Cavallari discussed the terms of the deal with Cordani over a speaker 7. Barbieri Jr. was a 20 percent shareholder and president; Vinal telephone and both indicated to Cordani that the deal Duncan's son was a 20 percent shareholder and vice president; Corpaci's sister was a 20 percent shareholder, treasurer and corporate should go forward. Cavallari orally advised Cordani secretary; a business partner of Barbieri's and Corpaci's was a that the release of the Winthrop Guarantors in ex- 20 percent shareholder and vice-president; another Barbieri friend change for the corporate guarantee and Comko secuwas a 10 percent shareholder; and DiFabio was a 10 percent shareholder. rity interest was in the best interests of the Bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1051 At the time that he advised Summit that the subject. Cavallari later testified that he based his transaction should go forward, Cavallari had not opinion in part on the belief that the Winthrop Guardetermined either the value of the guarantees Summit antors were judgment-proof because their personal was releasing, or the value of the guarantees and assets had been attached as a result of litigation over collateral it would get in return. Specifically, al- guarantees they had provided to the Bank of Boston. though he knew that Barbieri and Corpaci sought the In fact, the Winthrop Guarantors had not had property release of their family members' and friends' guar- attached by the Bank of Boston.10 antees, Cavallari did not determine the net worths of On or about April 30, 1991, Cavallari conveyed the the Winthrop Guarantors. In addition, although the real estate he was holding as trustee to Winthrop, Bank's records reflected the negative net worth of which subsequently granted Summit a first mortgage Winthrop, Cavallari did not obtain financial informa- on the property in consideration of Summit's renewal tion relating to Barbieri and Corpaci's other Water- of Winthrop's loans. At the same time, the Winthrop bury radio enterprise, Comko, whose guarantee was loans were combined into a single note with a five-year being substituted for that of the Winthrop Guaran- maturity that was drafted by Cavallari. The amortizators. Nor did he obtain any valuation of the radio tion schedules of the two original notes were extendequipment in which Summit was to receive a security ed11 and the interest rates reduced.12 The renewal had interest. The record does not even reflect that the effect of dramatically reducing the monthly amount Cavallari ever specifically inquired of Summit's man- due on the loans (from almost $11,000 to approxiagement as to any of these issues. In short, Cavallari mately $5,500) and of changing the status of the loans had absolutely no reasonable basis on which to from seriously past due to "current." Summit's readvise that the restructuring was in the Bank's best newal of the Winthrop loans was not supported by any interests. new financial information regarding Winthrop, and was not approved by Summit's loan committee or by In other ways, as well, Cavallari's actions show that the board of directors. The renewal of the loans he was heedless of the Bank's interests. During the contributed to the postponement of the liquidation of February 26, 1991 meeting, Cavallari obtained a corthe collateral securing the loans during a time when the porate guarantee from Comko that was part of the market for the collateral was declining, and made consideration for the release of the Winthrop Guaran- Winthrop's unencumbered assets available to other tors that was seriously defective in a number of respects.8 In addition, Cavallari failed to obtain a creditors. security interest in the radio equipment that was to be Winthrop defaulted on the renewed note after makpledged to support the Winthrop loans.9 ing three payments, the last on February 3, 1992, each Had he inquired about Comko's financials, Cavallari of which was late and consisted only of interest due, could have learned that Comko was nearly insolvent and not principal. At that time the principal balance and was incurring large losses. Comko suffered a net was $614,358, with an accrued interest of $12,663. loss of $292,129 in 1990, and had a net worth of $49,068 Winthrop thereafter continued to sustain losses and by year-end. Accordingly, Comko was incapable of remained insolvent, while Comko continued to sustain servicing or retiring the Winthrop loans. losses and went out of business. At Cordani's request, Cavallari provided him a After February 3, 1992, the OCC declared Summit written opinion on May 14, 1991 that the restructuring insolvent and appointed the FDIC as receiver. As of was in the best interests of the bank. The letter, which July 19, 1992, the principal balance due on the Winrestated oral advice provided earlier by Cavallari, throp loans was $596,775 and the accrued interest was contained unqualified statements of fact concerning $172,464.13 The ALJ found that the FDIC had not the litigation faced by the Winthrop Guarantors and received any additional recoveries on the loans from the relative lack of litigation to which Comko was 10. In his Exceptions, Cavallari argues that this advice related 8. The guarantee was not dated, did not state whose loans were primarily to the legal issue of whether the guarantee was enforceable being guaranteed, did not state which institutions held the loans being against Comko and whether Summit's security interest in Comko's guaranteed, did not state the original or outstanding balances of the property was properly filed. The text of the opinion letter, which in his loans being guaranteed, did not refer accurately to the second loan, testimony Cavallari characterized as a "business opinion," does not was not supported by a corporate resolution from Comko authorizing support this argument; rather, the subject of the letter is whether the the guarantee, was not notarized, and did not contain the signature of exchange of guarantees "was in the best interest of the bank." any witness. 11. The amortization schedule on the $600,000 note was extended 9. The technical defects in the Comko guarantee were remedied from 8 to 25 years, and on the $100,000 note from past due to 25 years. when Corpaci's attorneys provided Cavallari with a new corporate 12. The interest rates were reduced from 13 and 13.5 percent guarantee dated March 15, 1991 and a security interest in the Comko respectively to escalating rates of 10, 11 and 11.5 percent over 5 years. radio equipment dated March 16, 1991. The record does not reflect 13. The FDIC applied the three payments made following the whether these corrections were due to any efforts on Cavallari's part. renewal to principal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1052 Federal Reserve Bulletin • November 1994 any additional source, and did not expect to receive never approved the arrangement and that Cavallari was any such recoveries in the future. still responsible on the $1.8 million loan.14 In December 1990, Cavallari was deposed by the 3. Cavallari's Prior Involvements with Barbieri and OTS as part of its investigation of the Security princi- Kolok pals. The deposition focused on the Arlington Partnership and Gaston Farms transactions and Cavallari's Cavallari came to the Winthrop restructuring transac- actions as Kolok and Barbieri's nominee in those tion with a significant amount of information about the transactions. At the deposition, the OTS lawyer spevarious parties involved in the transaction. He himself cifically suggested that Cavallari's actions on behalf of had been involved in a previous nominee arrangement Barbieri and Kolok constituted a fraud on Security. with Barbieri and Kolok, and was aware of certain b. Victoria Court. Victoria Court was a real estate allegations concerning Comko's principals from his project in Waterbury owned by a number of individurepresentation of Summit in another matter. These als financed with loans from the Bank of Boston in involvements, detailed below, provided Cavallari with which Summit participated. The loans were supported a background that should have made him aware of the by personal guarantees of the principals, including need for caution by the Bank in going forward with the Barbieri, Corpaci and Duncan. In September 1990, restructuring. Cavallari was retained by Summit to represent its a. Gaston Farms and Arlington Partnership. In 1987 interests with respect to the Victoria Court loans, and early 1988 Barbieri, on behalf of Security, arranged which had become troubled. On September 19, 1990, for a Security subsidiary to act as a joint venture Cavallari attended a meeting with Kolok at the Bank of partner with a real estate developer in connection with Boston offices to discuss Victoria Court. Four debtors, two real estate transactions known as Gaston Farms including Barbieri and Corpaci, were present. In his and Arlington Partnership. When the Security board of subsequent memorandum describing the meeting, directors denied permission for the subsidiary to par- Cavallari noted that many of the debtors faced reguticipate due to prior regulatory criticism, Barbieri, latory and criminal problems and that the Bank of concerned about the thrift's liability for backing out of Boston attorney had stated that several fraudulent its commitment, instructed Kolok to seek a nominee to transfers had been made to family members of the act as the joint venture partner with the developer. guarantors. Cavallari, a longtime friend of Kolok, agreed to be that nominee. Cavallari and Kolok entered into nominee C. Conclusions of Law agreements, dated November 3, 1987 and January 14, 1988, respectively, whereby Cavallari agreed to exe- I. Institution-Affiliated Party cute all necessary public and bank documents for the project, and Kolok agreed to hold Cavallari harmless The Board's determination whether Cavallari is an for any resulting liability. In accordance with the nom- IAP is not made on a clean slate; the IAP issue is inee agreements, Cavallari obtained loans from Secu- common to this case and to the parallel OCC proceedrity to finance the joint ventures without disclosing the ing seeking the remedies of restitution and civil money existence of the nominee agreements to Security's penalties against Cavallari. The Board takes official board of directors, even though at Security's request he notice that the Comptroller of the Currency has provided an opinion letter from another lawyer regard- adopted the ALJ's finding that Cavallari is an IAP. ing the enforceability of the loan agreements against OCC Dec. at 9-14. Rather than readdress those issues, him. Cavallari testified that his own financial picture the Board defers to and incorporates the conclusion of was insufficient to justify the loans made to him, and the Comptroller, Summit's primary regulator, as to the that he agreed to engage in the nominee arrangements IAP determination.15 in the hope of receiving additional legal work from Security. After the Arlington Partnership project experienced difficulties, Cavallari met with Barbieri in May 1990 and 14. At the time Security was declared insolvent and closed, much of the $1.8 million loan was still outstanding. Cavallari was ultimately asked to be released from his obligation on Security's sued by the Resolution Trust Corporation in October 1991 as receiver $1.8 million loan to the joint venture. Barbieri, then for Security for a $950,000 deficiency on the loan. It is unclear what president and CEO of Security, suggested ways for actions, if any, Cavallari took to enforce Kolok's obligations under the nominee agreement. Cavallari to negotiate with Security for a release from 15. In his Brief in support of his Exceptions, Cavallari argues that he his obligation. After Barbieri was suspended from Se- is not an IAP on the basis of the legislative history of the definition of curity on July 12, 1990, an attorney for Security wrote that term. It is true that the legislative history provides that Congress did not "intend to subject attorneys to agency enforcement actions for Cavallari in September 1990 stating that Security had those good faith activities falling within the traditional attorney-client Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1053 The Board therefore adopts the ALJ's recom- transaction—that the exchange of guarantors was in mended findings and conclusions as to the IAP deter- the best interests of the Bank. As the ALJ found, this mination to the same extent, and for the same reasons, constituted participation in an unsafe or unsound as the Comptroller. The Board accordingly concludes practice. that Cavallari acted as an IAP of Summit in his b. Effects. The Board adopts the ALJ's conclusion participation in the exchange of the Comko guarantee that Summit sustained financial loss as a result of the and security for those of the Winthrop Guarantors, in exchange of guarantors that satisfies the requirements that he at least recklessly participated in an unsafe or of 12 U.S.C. § 1818(e)(l)(B)(i). The ALJ found that unsound practice which caused loss to Summit. His Summit sustained a loss of $554,904 as a result of the conduct therefore satisfied the definitional standards transactions, after applying the appraised value of the under which an independent contractor such as an collateral. The Board adopts these findings as to the outside counsel may be found to have acted as an IAP. existence of financial loss, and rejects Cavallari's 12 U.S.C. § 1813(u)(4).16 arguments that the loss is partly due to inaction by the FDIC.19 2. Substantive Basis for Prohibition c. Culpability. The Board adopts the ALJ's finding that Cavallari's participation in the exchange of a. Misconduct. The Board adopts the ALJ's finding guarantors reflects willful disregard for safety or that Cavallari's participation in the transaction by soundness satisfying the criteria of 12 U.S.C. which the Winthrop Guarantors were released from § 1818(e)( l)(C)(ii).20 their obligations constituted participation in an unsafe "Willful disregard for safety or soundness" is not or unsound banking practice.17 For the reasons iden- defined in the FDI Act. Previously, the Board has tified above, Summit's release of the individual guar- found that " 'willful disregard for safety or soundness' antors in exchange for the Comko guaranty and secu- is established by intentional conduct that constitutes rity interest, with no assessment of the relative an unsafe or unsound banking practice . . . ." In the prospects of recovery, constituted a banking practice Matter of Magee, 78 Federal Reserve Bulletin 968, 974 so imprudent, under the circumstances, as to consti- (1992) (emphasis added). This is consistent with the tute an unsafe and unsound banking practice.18 Cav- definition adopted by the OTS in a series of cases allari was Summit's sole counsel in the consummation interpreting the phrase. of that transaction, and rendered a written opinion to Bank management—that he admitted simply memori- Willful disregard for the safety or soundness of an insured alized advice previously given at the time of the institution is established when an individual (a) purposely, as opposed to accidentally, commits an act and that act evidences neglect or lack of thoughtful attention to the institution's safety or soundness, or (b) acts with plain indifference relationship," and that "providing advice in good faith to a client to the institution's safety and soundness. See In re Kim, OTS financial institution, by itself, should not lead to an enforcement Order No. AP 93-30, 22-23 (Apr. 15, 1993) [appeal pending, action." H.R. Rep. No. 54, 101st Cong., 1st Sess. 467 (1989). No. 93-70425 (9th Cir., filed May 6, 1993)]. Nevertheless, the unique facts of this case — specifically, Cavallari's personal knowledge of facts that should have given rise to greater caution on behalf of the Bank — are sufficient to support a finding that In re Lopez, OTS Order No. AP 92-74 (May 17, 1994), Cavallari's services regarding the exchange of guarantors on the at 37 n. 68. Winthrop loan were not provided in good faith. Thus, Cavallari is not the kind of attorney the legislative history states should be protected In the Board's view, this definition correctly sets out from agency enforcement actions. the meaning of the statutory phrase. Willful disregard 16. Even if the Board were required to make a wholly separate for safety and soundness is different than willful pardetermination as to the IAP issue, the conclusion would be the same. The Board's conclusions as to the substantive requirements for prohibition, infra, establish that Cavallari participated recklessly in an unsafe or unsound practice that caused loss to Summit. 17. The Board agrees with the Comptroller that there is no evidence 19. Cavallari argues that the FDIC might have sued Winthrop as the in the record regarding the appropriate standard of care, and thus does primary obligor on the loans, or Comko as guarantor. The evidence of not adopt the ALJ's findings that Cavallari's actions also constituted those companies' financial condition (Comko is no longer in business, a breach of his fiduciary duty to the Bank. With regard to the ALJ's and Winthrop was insolvent in 1991) suggests that such action would finding that Cavallari violated the final cease-and-desist order imposed not have substantially reduced Summit's losses. by consent against Summit on April 25, 1991, the Board notes that by Moreover, even if one does not accept the ALJ's assumption that the time that order was issued, the exchange of guarantees in which the Winthrop Guarantors' net worths were unchanged from their Cavallari had participated was completed. Accordingly, the Board earlier levels of roughly $16 million, it is reasonable to assume that the does not adopt the ALJ's finding that Cavallari violated the final net worths of the five guarantors exceeded the financial strength of cease-and-desist order issued against Summit. Comko, which the ALJ found had a negative net worth, and thus that 18. See First Nat'l Bank of Eden v. Comptroller of the Currency, the exchange of guarantees resulted in a "more than minimal" amount 568 F.2d 610, 611 n.2 (8th Cir. 1978) (per curiam) (unsafe or unsound of loss to Summit. This is all that is needed to support a finding of IAP banking practice is a practice "deemed contrary to accepted standards status and of "effects" for purposes of a prohibition order. of banking operations which might result in abnormal risk or loss to a 20. The Board does not reach the issue of whether Cavallari's banking institution or shareholder"). actions constituted "continuing" disregard. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1054 Federal Reserve Bulletin • November 1994 ticipation in an unsafe or unsound transaction. One been attached by Bank of Boston as a result of the certainly disregards an institution's safety and sound- Victoria Court problems were not the Winthrop ness when one is simply oblivious to it. To deliberately Guarantors, as he testified in an attempt to rationaland consciously take part in an action that evidences ize their release from the guarantees, but instead utter lack of attention to an institution's safety and included Barbieri, Corpaci and Duncan, the individsoundness is to willfully disregard that institution's uals behind Comko.21 Cavallari admitted to acting as safety and soundness. a trustee for Winthrop in the conveyance of real That standard is certainly met by the facts of this estate as a means of avoiding attachment by credicase. Here, the record shows that Cavallari provided tors. an opinion that the substitution of guarantors on the For all of these reasons, Cavallari unavoidably was Winthrop loans was in the best interests of the Bank on notice that the exchange of guarantees was a without undertaking any independent inquiry into the hazardous undertaking for Summit, since Summit gave basic facts of the transaction: the current financial up rights to pursue immediate recovery against indicondition of the current and new guarantors and the viduals whose net worth Cavallari did not ascertain in value of the new collateral. return for a guarantee from a corporation owned by Moreover, even if no independent inquiry had individuals who Cavallari knew were in financial, been conducted, Cavallari had actual knowledge regulatory and criminal trouble. It is not enough, given based on past dealings with individuals involved that all of Cavallari's knowledge, including knowledge of should have put him on notice that the transaction Kolok's previous dealings with Barbieri, for Cavallari was not in fact fair to the Bank or that, at a minimum, to claim that he was simply acting on the information the representations of Bank management and those and decisions conveyed to him by Kolok. Cavallari's negotiating on behalf of the borrower regarding the failure to obtain any information about the relative loan restructuring should have been viewed with value of security interests being exchanged, and to suspicion. Cavallari had reason to know that Bar- require a security interest in Comko's radio equipment bieri, who negotiated the Winthrop/Comko transac- at the time of the release of the Winthrop Guarantors, demonstrates more than mere negligence. It evidences tions on behalf of the borrowers, had been termia willingness to turn a blind eye to Summit's interests nated from his position at Security and was the in the face of known risks. Substantial evidence supsubject of regulatory scrutiny. He knew that Barbieri ported the ALJ's conclusion that Cavallari's actions and the other owners of Comko faced financial, were not in the realm of good faith negligence, but regulatory and criminal problems. He knew from his reflected a willful disregard of the Bank's safety and dealings in the Arlington Partnership transaction that soundness. Barbieri and Kolok were willing to put the financial institution for which they worked at risk without its knowledge, and he was aware that Kolok was pur- Conclusion porting to represent Summit in negotiations with his former boss, Barbieri, in the Winthrop/Comko trans- For the foregoing reasons, the Board orders that the action. He was aware of the accusation of the Bank attached Order of Prohibition issue against Cavallari. of Boston attorneys regarding fraudulent transfers to By Order of the Board of Governors, this 26th day family members by the Victoria Court guarantors, a of September, 1994. group that included Barbieri, Corpaci and Duncan, and he knew that in the Winthrop/Comko transaction Board of Governors of the Barbieri and Corpaci were seeking the release of Federal Reserve System their own family members and friends. He was aware that Summit, which had business dealings with Bar- WILLIAM W. WILES bieri and whose management was connected with Secretary of the Board him, was subject to a cease and desist order by the OCC, an order whose contents he never inquired into. He was aware that other transactions in which he had engaged with Barbieri and Kolok were being 21. Cavallari was retained to represent Summit's interests in Vicinvestigated by the OTS, and that OTS attorneys had toria Court and therefore was on notice that the Bank of Boston suggested that they might be fraudulent. He had litigation over Victoria Court resulted in the attachment of the personal property of the individuals who owned Comko, not the reason to know that the persons whose property had Winthrop Guarantors, as he professed to believe. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1055 Order of Prohibition In the Matter of WHEREAS, pursuant to section 8(e) of the Federal MCORP Deposit Insurance Act, as amended (the "Act") Dallas, Texas (12 U.S.C. § 1818(e)), the Board of Governors of the Federal Reserve System ("the Board") is of the opin- and ion, for the reasons set forth in the accompanying Final Decision, that a final Order of Prohibition should MCORP MANAGEMENT, INC. issue against AUGUSTUS I. CAVALLARI; Dallas, Texas NOW, THEREFORE, IT IS HEREBY ORDERED, pursuant to sections 8(e) and 8(j) of the Federal Deposit Docket No. 88-062-B2-HC Insurance Act, as amended (12 U.S.C. §§ 1818(e) and 18180)), that: Order Dismissing Notice of Charges and of Hearing 1. In the absence of prior written approval by the Board, and by any other Federal financial insti- On March 30, 1989, the Board of Governors of the tution regulatory agency where necessary pursu- Federal Reserve System (the "Board of Governors") ant to section 8(e)(7)(B) of the Act (12 U.S.C. issued a Notice of Charges and of Hearing (the "No- § 1818(e)(7)(B)), AUGUSTUS I. CAVALLARI is tice") pursuant to sections 8(b)(1) and 8(b)(3) of the hereby prohibited: Federal Deposit Insurance Act, as amended (12 U.S.C. (a) From participating in the conduct of the affairs §§ 1818(b)(1) and (3)), and section 5(b) of the Bank of any bank holding company, any insured depos- Holding Company Act of 1956, as amended (12 U.S.C. itory institution or any other institution specified § 1844(b)), against MCorp, a registered bank holding in subsection 8(e)(7)(A) of the Act (12 U.S.C. company, and MCorp Management, a nonbank subsid- § 1818(e)(7)(A)); iary of MCorp. The Notice alleged that the respondents (b) From soliciting, procuring, transferring, at- engaged in certain violations of law and unsafe and tempting to transfer, voting or attempting to vote unsound practices in connection with their activities any proxy, consent, or authorization with respect within the jurisdiction of the Board of Governors. to any voting rights in any institution described On June 28, 1994, the United States Bankruptcy in subsection 8(e)(7)(A) of the Act (12 U.S.C. Court for the Southern District of Texas, Houston § 1818(e)(7)(A)); Division, entered an order confirming a bankruptcy (c) From violating any voting agreement previ- plan in In re MCorp Financial, Inc., MCorp Manageously approved by the appropriate Federal bank- ment, and MCorp, Civil Action No. 93-395, jointly ing agency; or administered cases under Chapter 11 of the United (d) From voting for a director, or from serving or States Bankruptcy Code. The plan confirmed by the acting as an institution-affiliated party as defined bankruptcy court incorporated a settlement agreed to in section 3(u) of the Act (12 U.S.C. § 1813(u)), by the Federal Deposit Insurance Corporation such as an officer, director, or employee. ("FDIC") as a creditor in the bankruptcy proceeding. Pursuant to the settlement and bankruptcy plan, the FDIC received, inter alia, a cash payment from the 2. This Order, and each provision hereof, is and bankruptcy estate as recovery for its claims in the shall remain fully effective and enforceable until bankruptcy action, including claims that were based expressly stayed, modified, terminated or suson the same transactions that are at issue in the pended in writing by the Board. Notice. In addition, neither MCorp, MCorp Management, nor any successor entities will survive the This Order shall become effective upon the expira- bankruptcy proceeding as a bank holding company, tion of thirty days after service is made. and there appears to be no further supervisory purpose By Order of the Board of Governors, this 26th day in continuing with this enforcement action. of September, 1994. NOW, THEREFORE, IT IS HEREBY ORDERED, pursuant to section 8(b) of the Federal Deposit Insurance Act, as amended (12 U.S.C. § 1818(b)) that: Board of Governors of the 1. The Notice issued in this matter on March 30, Federal Reserve System 1989 is dismissed, with prejudice; and 2. The provisions of this Order shall not bar, estop WILLIAM W. WILES or otherwise prevent the Board of Governors, or Secretary of the Board any federal or state agency or department, from Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1056 Federal Reserve Bulletin • November 1994 taking any other action affecting MCorp or MCorp State Bank of India Management, or any of their current or former Bombay, India institution-affiliated parties. The Federal Reserve Board announced on Septem- By Order of the Board of Governors of the Federal ber 22, 1994, the issuance of a Cease and Desist Order Reserve System effective this 21st day of September, against the State Bank of India, Bombay, India. 1994. Board of Governors of the Federal Reserve System WRITTEN AGREEMENTS APPROVED BY FEDERAL WILLIAM W. WILES RESERVE BANKS Secretary of the Board National Bank of Greece Athens, Greece FINAL ENFORCEMENT ORDERS ISSUED BY THE BOARD OF GOVERNORS The Federal Reserve Board announced on Septem- First Bank of Philadelphia ber 14, 1994, the execution of a Written Agreement Philadelphia, Pennsylvania among the National Bank of Greece, Athens, Greece, and its branches in Boston and Chicago, the Federal The Federal Reserve Board announced on Septem- Reserve Banks of New York, Boston, and Chicago, ber 2, 1994, the issuance of a Prompt Corrective the Commissioner of Banks for the Commonwealth of Action Directive by Consent against First Bank of Massachusetts, and the Federal Deposit Insurance Philadelphia, Philadelphia, Pennsylvania. Corporation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Al Financial and Business Statistics CONTENTS WEEKLY REPORTING COMMERCIAL BANKS Assets and liabilities A3 Guide to Tabular Presentation 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 A6 Reserves and borrowings—Depository A26 Interest rates—money and capital markets institutions A27 Stock market—Selected statistics A7 Selected borrowings in immediately available funds—Large member banks FEDERAL FINANCE POLICY INSTRUMENTS A28 Federal fiscal and financing operations 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 A33 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 A35 Corporate profits and their distribution A35 Nonfarm business expenditures on new plant and equipment COMMERCIAL BANKING INSTITUTIONS A36 Domestic finance companies—Assets and 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 • November 1994 Domestic Financial Statistics—Continued REPORTED BY BANKS IN THE UNITED STATES REAL ESTATE A55 Liabilities to and claims on foreigners A37 Mortgage markets A56 Liabilities to foreigners A38 Mortgage debt outstanding A58 Banks' own claims on foreigners A59 Banks' own and domestic customers' claims on foreigners CONSUMER INSTALLMENT CREDIT A59 Banks' own claims on unaffiliated foreigners A39 Total outstanding A60 Claims on foreign countries—Combined A39 Terms domestic offices and foreign branches FLOW OF FUNDS REPORTED BY NONBANKING BUSINESS A40 Funds raised in U.S. credit markets ENTERPRISES IN THE UNITED STATES A42 Summary of financial transactions A43 Summary of credit market debt outstanding A61 Liabilities to unaffiliated foreigners A44 Summary of financial assets and liabilities A62 Claims on unaffiliated foreigners Domestic Nonfinancial Statistics SECURITIES HOLDINGS AND TRANSACTIONS SELECTED MEASURES A63 Foreign transactions in securities A64 Marketable U.S. Treasury bonds and A45 Nonfinancial business activity—Selected notes—Foreign transactions measures A45 Labor force, employment, and unemployment A46 Output, capacity, and capacity utilization INTEREST AND EXCHANGE RATES A47 Industrial production—Indexes and gross value A49 Housing and construction A65 Discount rates of foreign central banks A50 Consumer and producer prices A65 Foreign short-term interest rates A51 Gross domestic product and income A66 Foreign exchange rates A52 Personal income and saving A67 Guide to Statistical Releases and Special Tables International Statistics SUMMARY STATISTICS SPECIAL TABLES A53 U.S. international transactions—Summary A68 Terms of lending at commercial banks, A54 U.S. foreign trade August 1994 A54 U.S. reserve assets A72 Assets and liabilities of U.S. branches and agencies A54 Foreign official assets held at Federal Reserve of foreign banks, June 30, 1994 Banks A55 Selected U.S. liabilities to foreign official institutions Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A3 Guide to Tabular Presentation SYMBOLS AND ABBREVIATIONS c Corrected G-10 Group of Ten e Estimated GNMA Government National Mortgage Association n.a. Not available GDP Gross domestic product n.e.c. Not elsewhere classified HUD Department of Housing and Urban P Preliminary Development r Revised (Notation appears on column heading IMF International Monetary Fund when about half of the figures in that column IO Interest only are changed.) IPCs Individuals, partnerships, and corporations * Amounts insignificant in terms of the last decimal IRA Individual retirement account place shown in the table (for example, less than MMDA Money market deposit account 500,000 when the smallest unit given is millions) 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 NonfinancialS tatistics • November 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 Apr. May June July Aug. Reserves of depository institutions2 1 Total 12.5 14.2 3.1 -4.4 -5.1 -8.4 -4.0 2.2 -6.0 2 Required 12.4 14.1 2.5 -3.6 -8.9 -3.8 -8.0 2.2 -4.0 3 Nonborrowed 11.0 15.6 3.7 -5.4 -6.4 -9.9 -6.7 -.3 -6.3 4 Monetary base3 10.6 9.8 10.2 8.4 6.6 7.6 7.7 8.1 6.3 Concepts of money, liquid assets, and debt4 5 Ml 12.0 9.4 6.0 1.9 -1.4 1.9 3.7 7.6 -1.6 6 M2 2.5 2.3 1.9 1.9r 2.9r 1.3r -2.2' 4.6r -2.0 7 M3 1.1 2.6 .3r .5 2.1' — A' .0r 6.1r -1.9 8 L 1.0 2.0 2.4 1.0 4.6r .0' -1.9r 7.2 n.a. 9 Debt 5.6r 4.9r 5.3r 5.4r 5.5r 4.9' 3.4r 2.5 n.a. Nontransaction components 10 In M25 -1.6 -.8 .0 2.0r 4.9r l.lr -5.0r 3.1r -2.2 11 In M3 only6 -6.5 4.0 -8.4r -1.2' 1.9r -10.6r 13.lr 14.5r -1.3 Time and savings deposits Commercial banks 12 Savings, including MMDAs 4.9 3.6 4.3 -3.3 -3.0 -6.1 -7.7 -2.3 -2.5 13 Smalltime7. -10.6 -7.4 -5.2 .1 -2.6 6.2 6.7 5.7 15.4 14 Large time ' -7.7 -.4 -3.6 -3.3 -3.1 19.6 .4 9.2r 15.2 Thrift institutions 15 Savings, including MMDAs 2.3 -.4 .5 .2 2.2 -2.2 -10.3 -9.5 -17.0 16 Small time7 -14.0 -9.5 -11.5 -7.4 -6.2 -7.4 -5.1 -.4 -3.2 17 Large time8 -4.5 -6.7 -9.3 -7.6 5.9 -27.5 6.0 14.0 -5.9 Money market mutual funds 18 General purpose and broker-dealer -1.8 1.2 -.1 17.7 45.1 12.0 -19.1 14.0 -2.0 19 Institution-only -10.5 8.8 -26.7 -22.8 -2.7 -52.2 1.4 9.9 -11.2 Debt components4 20 Federal 8.2r 6.1r 7.3r 5.5r 3.9r 4.2 4.9r 1.2 n.a. 21 Nonfederal 4.7r 4.5r 4.6r 5.3r 6.1r 5.2r 2.9r 3.0 n.a. 1. Unless otherwise noted, rates of change are calculated from average depository institutions, the U.S. government, money market funds, and foreign amounts outstanding during preceding month or quarter. banks and official institutions. Also excluded is the estimated amount of overnight 2. Figures incorporate adjustments for discontinuities, or "breaks," associ- RPs and Eurodollars held by institution-only money market funds. Seasonally ated with regulatory changes in reserve requirements. (See also table 1.20.) adjusted M3 is computed by adjusting its non-M2 component as a whole and then 3. The seasonally adjusted, break-adjusted monetary base consists of (1) adding this result to seasonally adjusted M2. seasonally adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term adjusted currency component of the money stock, plus (3) (for all quarterly Treasury securities, commercial paper, and bankers acceptances, net of money reporters on the "Report of Transaction Accounts, Other Deposits and Vault market fund holdings of these assets. Seasonally adjusted L is computed by Cash" and for all weekly reporters whose vault cash exceeds their required summing U.S. savings bonds, short-term Treasury securities, commercial paper, reserves) the seasonally adjusted, break-adjusted difference between current vault and bankers acceptances, each seasonally adjusted separately, and then adding cash and the amount applied to satisfy current reserve requirements. this result to M3. 4. Composition of the money stock measures and debt is as follows: Debt: The debt aggregate is the outstanding credit market debt of the domestic Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the nonfinancial sectors—the federal sector (U.S. government, not including governvaults of depository institutions, (2) travelers checks of nonbank issuers, (3) ment-sponsored enterprises or federally related mortgage pools) and the nonfeddemand deposits at all commercial banks other than those owed to depository eral sectors (state and local governments, households and nonprofit organizations, institutions, the U.S. government, and foreign banks and official institutions, less nonfinancial corporate and nonfarm noncorporate businesses, and farms). Noncash items in the process of collection and Federal Reserve float, and (4) other federal debt consists of mortgages, tax-exempt and corporate bonds, consumer checkable deposits (OCDs), consisting of negotiable order of withdrawal (NOW) credit, bank loans, commercial paper, and other loans. The data, which are and automatic transfer service (ATS) accounts at depository institutions, credit derived from the Federal Reserve Board's flow of funds accounts, are breakunion share draft accounts, and demand deposits at thrift institutions. Seasonally adjusted (that is, discontinuities in the data have been smoothed into the series) adjusted Ml is computed by summing currency, travelers checks, demand and month-averaged (that is, the data have been derived by averaging adjacent deposits, and OCDs, each seasonally adjusted separately. month-end levels). M2: Ml plus (1) overnight (and continuing contract) repurchase agreements 5. Sum of (1) overnight RPs and overnight Eurodollars, (2) money market fund (RPs) issued by all depository institutions and overnight Eurodollars issued to balances (general purpose and broker-dealer), (3) savings deposits (including U.S. residents by foreign branches of U.S. banks worldwide, (2) savings (includ- MMDAs), and (4) small time deposits. ing MMDAs) and small time deposits (time deposits—including retail RPs—in 6. Sum of (1) large time deposits, (2) term RPs, (3) term Eurodollars of U.S. amounts of less than $100,000), and (3) balances in both taxable and tax-exempt residents, and (4) money market fund balances (institution-only), less (5) a general-purpose and broker-dealer money market funds. Excludes individual consolidation adjustment that represents the estimated amount of overnight RPs retirement accounts (IRAs) and Keogh balances at depository institutions and and Eurodollars held by institution-only money market funds. This sum is money market funds. Also excludes all balances held by U.S. commercial banks, seasonally adjusted as a whole. money market funds (general purpose and broker-dealer), foreign governments 7. Small time deposits—including retail RPs—are those issued in amounts of and commercial banks, and the U.S. government. Seasonally adjusted M2 is less than $100,000. All IRA and Keogh account balances at commercial banks and computed by adjusting its non-Mi component as a whole and then adding this thrift institutions are subtracted from small time deposits. result to seasonally adjusted Ml. 8. Large time deposits are those issued in amounts of $100,000 or more, M3: M2 plus (1) large time deposits and term RP liabilities (in amounts of excluding those booked at international banking facilities. $100,000 or more) issued by all depository institutions, (2) term Eurodollars held 9. Large time deposits at commercial banks less those held by money market by U.S. residents at foreign branches of U.S. banks worldwide and at all banking funds, depository institutions, the U.S. government, and foreign banks and official offices in the United Kingdom and Canada, and (3) balances in both taxable and institutions. tax-exempt, institution-only money market funds. Excludes amounts held by Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A5 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT1 Millions of dollars Average of Average of daily figures for week ending on date indicated daily figures Factor 1994 1994 June July Aug. July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 387,308 391,275 390,700 390,874 386,916 390,388 392,767 389,719 390,204 390,406 U.S. government securities 2 Bought outright—System account 349,265 349,268 348,753 348,287 349,376 348,816 349,076 348,343 348,528 348,953 3 Held under repurchase agreements ... 880 3,163 3,299 3,031 0 2,688 4,114 2,861 3,739 2,793 Federal agency obligations 4 Bought outright 3,955 3,915 3,883 3,920 3,911 3,900 3,900 3,895 3,895 3,837 5 Held under repurchase agreements ... 93 1,047 880 2,002 0 800 996 651 807 1,413 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 69 125 26 84 38 52 13 13 25 35 8 Seasonal credit 224 367 446 378 405 420 419 440 460 476 9 Extended credit 0 0 0 1 0 0 0 0 0 0 10 Float 605 473r 526 406 302r 181 533 529 537 547 11 Other Federal Reserve assets 32,218 32,918r 32,888 32,765 32,884r 33,531 33,715 32,988 32,213 32,352 12 Gold stock 11,052 11,052 11,054 11,052 11,052 11,052 11,053 11,054 11,054 11,054 13 Special drawing rights certificate account . 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 14 Treasury currency outstanding 22,497 22,560 22,621 22,562 22,576 22,590 22,604 22,618 22,632 22,646 ABSORBING RESERVE FUNDS 15 Currency in circulation 378,797 383,384 384,389 383,436 382,458 383,067 384,553 384,780 384,256 384,157 16 Treasury cash holdings 357 354 354 353 354 352 353 352 353 361 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 6,120 5,179 5,220 4,581 5,373 5,046 5,422 4,780 5,208 5,029 18 Foreign 192 200 188 173 182 186 191 178 182 208 19 Service-related balances and adjustments 5,889 5,912 5,551 5,791 5,815 5,707 5,578 5,491 5,556 5,514 20 Other 296 269 311 300 236 268 292 314 323 321 21 Other Federal Reserve liabilities and capital 10,781 11,232 11,187 10,872 10,780 11,315 11,292 11,063 11,095 11,229 22 Reserve balances with Federal Reserve Banks 26,443 26,375r 25,194 27,000 23,365r 26,108 26,761 24,451 24,936 25,306 End-of-month figures Wednesday figures June July Aug. July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 396,529 390,930r 393,979 391,304 388,080r 391,591 391,952 385,299 390,464 393,979 U.S. government securities 2 Bought outright—System account 347,644 348,838 349,110 347,568 350,895 348,291 348,594 348,639 348,564 349,110 3 Held under repurchase agreements ... 10,059 2,770 6,519 4,337 0 4,925 4,299 0 3,990 6,519 Federal agency obligations 4 Bought outright 3,920 3,900 3,837 3,920 3,900 3,900 3,900 3,895 3,895 3,837 5 Held under repurchase agreements ... 580 1,350 1,732 2,048 0 0 650 0 550 1,732 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 415 39 35 396 43 76 7 14 41 35 8 Seasonal credit 286 420 459 399 414 419 431 451 483 459 9 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float 866 -9r 325 -156 -177r 446 200 490 525 325 11 Other Federal Reserve assets 32,760 33,623r 31,961 32,793 33,006r 33,534 33,872 31,810 32,417 31,961 12 Gold stock 11,052 11,052 11,054 11,052 11,052 11,052 11,054 11,054 11,055 11,054 13 Special drawing rights certificate account . 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 14 Treasury currency outstanding 22,534 22,590 22,646 22,562 22,576 22,590 22,604 22,618 22,632 22,646 ABSORBING RESERVE FUNDS 15 Currency in circulation 382,159 382,229 385,995 383,576 383,285 384,611 385,719 385,281 384,749 385,995 16 Treasury cash holdings 353 352 368 347 352 353 352 352 360 368 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 9,356 3,683 5,994 5,823 5,602 6,744 6,289 6,522 5,494 5,994 18 Foreign 604 182 188 167 163 181 164 163 164 188 19 Service-related balances and adjustments 6,138 5,707 5,514 5,791 5,815 5,707 5,578 5,491 5,556 5,514 20 Other 286 244 289 267 217 281 305 329 317 289 21 Other Federal Reserve liabilities and capital 11,825 11,394 10,864 10,708 10,569 11,235 10,877 10,772 10,934 10,864 22 Reserve balances with Federal Reserve Banks 27,412 28,799r 26,485 26,258 23,722r 24,139 24,344 18,079 24,594 26,485 1. Amounts of cash held as reserves are shown in table 1.12, line 2. 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 NonfinancialS tatistics • November 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. Feb. Mar. Apr. May June July Aug. 1 Reserve balances with Reserve Banks 26,659 25,368 29,374 26,922 27,396 29,614 26,790 26,502 25,996 25,286 2 Total vault cash 32,509 34,542 36,812 36,295 35,585 35,215 35,892 36,898 37,635 37,614 3 Applied vault cash 28,872 31,172 33,484 32,671 32,208 32,027 32,483 33,422 34,096 34,053 4 Surplus vault cash 3,637 3,370 3,328 3,624 3,377 3,188 3,409 3,476 3,539 3,561 5 Total reserves6 55,532 56,540 62,858 59,593 59,605 61,641 59,273 59,924 60,092 59,338 6 Required reserves 54,553 55,385 61,795 58,454 58,638 60,489 58,358 58,819 58,985 58,333 7 Excess reserve balances at Reserve Banks ... 979 1,155 1,063 1,140 967 1,151 915 1,105 1,107 1,005 8 Total borrowings at Reserve Banks8 192 124 82 70 55 124 200 333 458 469 9 Seasonal borrowings 38 18 31 15 24 57 134 226 364 445 10 Extended credit 1 1 0 0 0 0 0 0 0 0 Biweekly averages of daily figures for two week periods ending on dates indicated 1994 Apr. 27 May 11 May 25 July 6 July 20 Aug. 3r Aug. 17 Aug. 31 1 Reserve balances with Reserve Banks2 30,212 26,702 26,848 26,816 26,473 26,239 26,908 24,703 25,594 25,102 2 Total vault cash3 34,748 36,447 35,320 36,209 37,227 37,012 37,179 38,557 38,114 36,913 3 Applied vault cash 31,599 32,983 31,952 32,806 33,689 33,571 33,754 34,818 34,486 33,456 4 Surplus vault cash 3,150 3,464 3,368 3,403 3,538 3,441 3,425 3,739 3,628 3,457 5 Total reserves6 61,810 59,684 58,800 59,622 60,162 59,810 60,662 59,521 60,080 58.558 6 Required reserves 60,350 58,871 57,881 58,531 59,264 58,330 59,902 58,176 59,141 57.559 7 Excess reserve balances at Reserve Banks ... 1,460 814 919 1,092 898 1,480 760 1,346 939 999 8 Total borrowings at Reserve Banks 114 170 216 218 266 568 412 458 442 498 1 9 0 E Se x a te so n n d a e l d b c o r r e r d o i w t9 i ngs 640 1002 1401 1706 2170 2920 3571 4103 4300 468 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). may 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 July 4 July 11 July 18 July 25 Aug. 1 Aug. 8 Aug. 15 Aug. 22 Aug. 29 Federal funds purchased, repurchase agreements, and other selected borrowings From commercial banks in the United States 1 For one day or under continuing contract 75,243 71,526 66,841 63,557 67,017 68,289 69,154 67,697 64,922 2 For all other maturities 12,512 12,351 1133,,224411 1122,,668844 1133,,224477 1133,,444455 1111,,669999 1111,,449977 11,983 From other depository institutions, foreign banks and official institutions, and U.S. government agencies 3 For one day or under continuing contract 21,605 24,687 22,767 25,010 19,810 21,082 19,655 19,617 15,573 4 For all other maturities 23,863 21,640" 22,878r 22,832" 23,779 23,850 22,788 22,732 23,857 Repurchase agreements on U.S. government and federal agency securities Brokers and nonbank dealers in securities 5 For one day or under continuing contract 23,161 22,868r 21,857 23,534" 24,456 21,927 26,287 24,329 20,870 6 For all other maturities 31,800" 32,706r 35,960" 33,806" 33,083 32,239 29,666 31,231 33,163 All other customers 7 For one day or under continuing contract 34,878 30,024 30,260 30,074 30,628 29,336 32,202 32,960 33,945 8 For all other maturities 16,063 15,889 15,814 16,628 17,427 16,255 15,719 15,886 16,815 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 58,317 54,569 53,340 52,643 57,099 52,838 54,594 55,294 53,210 10 To all other specified customers2 23,581 21,466 23,025 23,194 24,025 21,588 23,313 22,226 21,366 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 Nonfinancial Statistics • November 1994 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit2 Extended credit3 FFeeddeerraall RReesseerrvvee BBaannkk 9/3 O 0 n /9 4 Effective date Previous rate 9/3 O 0 n /9 4 Effective date Previous rate 9/3 O 0 n / 94 Effective date Previous rate Boston 4.0 8/16/94 3.50 4.90 9/29/94 4.80 5.40 9/29/94 5.30 New York 8/16/94 9/29/94 9/29/94 Philadelphia 8/18/94 9/29/94 9/29/94 Cleveland 8/17/94 9/29/94 9/29/94 Richmond 8/16/94 9/29/94 9/29/94 Atlanta 8/18/94 9/29/94 9/29/94 Chicago 8/16/94 9/29/94 9/29/94 St. Louis 8/16/94 9/29/94 9/29/94 Minneapolis 8/18/94 9/29/94 9/29/94 Kansas City 8/16/94 9/29/94 9/29/94 Dallas 8/16/94 9/29/94 9/29/94 San Francisco ... 4.0 8/17/94 3.50 4.90 9/29/94 4.80 5.40 9/29/94 5.30 Range of rates for adjustment credit in recent years4 Range (or F.R. Range (or F.R. Range (or F.R. Effective date A le l v l e F l) . — R. Ba o n f k Effective A le l v l e F l) . — R. Ba of n k Effective date A le l v l e F l) . — R. B o a f n k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1977 6 6 1981-——MMaayy 5 . 13-14 14 1986—Aug. 21 5.5-6 5.5 K . 14 14 22 5.5 5.5 1978—Jan. 9 6-6.5 6.5 Nov. 7 13-14 13 20 6.5 6.5 6 . 13 13 1987—Sept. 4 5.5-6 6 May 11 6.5-7 7 Dec. 4 12 12 11 6 6 12 7 7 July 3 7-7.25 7.25 1982---JJuullyy 70 11.5-12 11.5 1988—Aug. 9 6-6.5 6.5 10 7.25 7.25 73 . 11.5 11.5 11 6.5 6.5 Aug. 21 7.75 7.75 AAuugg.. 7 . 11-11.5 11 Sept. 22 8 8 3 11 11 1989—Feb. 24 6.5-7 7 Oct. 16 8-8.5 8.5 16 . 10.5 10.5 27 7 7 20 8.5 8.5 77 10-10.5 10 Nov. 1 8.5-9.5 9.5 30 . 10 10 1990—Dec. 19 6.5 6.5 3 9.5 9.5 Oct. 17 9.5-10 9.5 13 . 9.5 9.5 1991—Feb. 1 6-6.5 6 1979—July 20 10 10 Nov. 77 9-9.5 9 4 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. 71 8.5-9 8.5 24 3.5 3.5 19 13 13 76 8.5 8.5 May 29 12-13 13 Dec. 74 8 8 1992—July 2 3-3.5 3 30 12 12 7 3 3 June 13 11-12 11 1985-——MMaayy ?n 7.5-8 7.5 16 11 11 74 7.5 7.5 29 10 10 IInn eeffffeecctt SSeepptt.. 3300,, 11999944 3.5 3.5 July 28 10-11 10 1986-—Mar. 7 7-7.5 7 Sept. 26 11 11 10 7 7 Nov. 17 12 12 Apr. 71 6.5-7 6.5 Dec. 5 12-13 13 July 11 6 6 1. Available on a short-term basis to help depository institutions meet tempo- ordinarily is charged on extended-credit loans outstanding less than thirty days; rary needs for funds that cannot be met through reasonable alternative sources. however, at the discretion of the Federal Reserve Bank, this time period may be The highest rate established for loans to depository institutions may be charged on shortened. Beyond this initial period, a flexible rate somewhat above rates adjustment credit loans of unusual size that result from a major operating problem charged on market sources of funds is charged. The rate ordinarily is reestablished at the borrower's facility. on the first business day of each two-week reserve maintenance period, but it is 2. Available to help relatively small depository institutions meet regular never less than the discount rate applicable to adjustment credit plus 50 basis seasonal needs for funds that arise from a clear pattern of intrayearly movements points. in their deposits and loans and that cannot be met through special industry 4. For earlier data, see the following publications of the Board of Governors: lenders. The discount rate on seasonal credit takes into account rates charged by Banking and Monetary Statistics, 1914-1941, and 1941-1970; and the Annual market sources of funds and ordinarily is reestablished on the first business day of Statistical Digest, 1970-1979. each two-week reserve maintenance period; however, it is never less than the In 1980 and 1981, the Federal Reserve applied a surcharge to short-term discount rate applicable to adjustment credit. adjustment-credit borrowings by institutions with deposits of $500 million or more 3. May be made available to depository institutions when similar assistance is that had borrowed in successive weeks or in more than four weeks in a calendar not reasonably available from other sources, including special industry lenders. quarter. A 3 percent surcharge was in effect from Mar. 17,1980, through May 7, Such credit may be provided when exceptional circumstances (including sus- 1980. A surcharge of 2 percent was reimposed on Nov. 17, 1980; the surcharge tained deposit drains, impaired access to money market funds, or sudden was subsequently raised to 3 percent on Dec. 5, 1980, and to 4 percent on May 5, deterioration in loan repayment performance) or practices involve only a partic- 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, and to 2 ular institution, or to meet the needs of institutions experiencing difficulties percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the adjusting to changing market conditions over a longer period (particularly at times surcharge was changed from a calendar quarter to a moving thirteen-week period. of deposit disintermediation). The discount rate applicable to adjustment credit The surcharge was eliminated on Nov. 17, 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A9 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Type of deposit2 Net transaction accounts 1 $0 million-$51.9 million... 12/21/93 2 More than $51.9 million4.. 12/21/93 3 Nonpersonal time deposits' 12/27/90 4 Eurocurrency liabilities6. . 12/27/90 1. Required reserves must be held in the form of deposits with Federal Reserve 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 1 Vi years was reduced from 3 increase in the total reservable liabilities of all depository institutions, measured percent to \Vi 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 1 Vi 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 1 Vi 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 \Vi 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 Financial Statistics • November 1994 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 1994 TTyyppee ooff ttrraannssaaccttiioonn 11999911 11999922 11999933 aanndd mmaattuurriittyy Jan. Feb. Mar. Apr. May June July U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 20,158 14,714 17,717 0 1,264 900 1,101 1,395 4,143 0 2 Gross sales 120 1,628 0 0 0 0 0 0 0 0 3 Exchanges 277,314 308,699 332,229 28,986 28,709 33,163 28,881 29,807 39,484 29,559 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 0 0 147 209 155 0 0 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shifts 24,454 36,662 31,368 0 4,063 0 2,316 0 1,197 0 8 Exchanges -28,090 -30,543 -36,582 -639 -1,985 -3,605 -907 0 -3,192 0 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 0 0 1,413 2,817 0 0 0 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shifts -21,211 -34,478 -27,140 776 3,447 0 1,607 0 -1,197 0 13 Exchanges 24,594 25,811 0 639 1,145 3,605 907 0 3,192 0 Five to ten years 14 Gross purchases 1,280 2,818 4,168 0 0 1,103 1,117 0 0 0 15 Gross sales 0 0 0 0 0 0 0 0 0 0 16 Maturity shifts -2,037 -1,915 0 -776 -616 0 709 0 0 0 17 Exchanges 2,894 3,532 0 0 550 0 0 0 0 0 More than ten years 18 Gross purchases 375 2,333 3,457 0 0 618 896 0 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 1,200 0 0 325 0 0 0 0 0 All maturities 22 Gross purchases 31,439 34,079 36,915 0 1,264 4,181 6,140 1,550 4,143 0 23 Gross sales 120 1,628 0 0 0 0 0 0 0 0 24 Redemptions 1,000 1,600 468 616 0 0 440 0 0 0 Matched transactions 25 Gross sales 1,570,456 1,482,467 1,475,085 132,872 124,125 155,950 120,393 137,458 133,939 125,181 26 Gross purchases 1,571,534 1,480,140 1,475,941 133,468 124,270 155,625 120,512r 137,195 133,075 126,677 Repurchase agreements 27 Gross purchases 310,084 378,374 475,447 25,818 33,693 38,490 19,741 21,517 10,059 28,085 28 Gross sales 311,752 386,257 470,723 29,348 37,425 38,115 25,041 17,112 4,405 35,374 29 Net change in U.S. Treasury securities 29,729 20,642 42,027 -3,550 -2,323 4,232 14,058 5,691 8,933 -5,793 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 1,072 202 102 108 180 70 58 322 Repurchase agreements 33 Gross purchases 22,807 14,565 35,063 2,600 3,277 3,160 728 4,195 580 9,472 34 Gross sales 23,595 14,486 34,669 3,106 3,636 3,170 878 2,895 1,300 8,702 35 Net change in federal agency obligations -1,085 -554 -678 -708 -461 -118 -330 1,230 -778 448 36 Total net change in System Open Market Account 28,644 20,089 41,348 -4,258 -2,784 4,114 118899rr 6,921 8,155 -5,345 1. Sales, redemptions, and negative figures reduce holdings of the System Open Market Account; all other figures increase such holdings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Banks All 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month Account 1994 1994 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 June 30 July 31 Aug. 31 Consolidated condition statement ASSETS 1 Gold certificate account 11,052 11,054 11,054 11,055 11,054 11,052 11,052 11,054 2 Special drawing rights certificate account 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 3 Coin 304 317 324 322 315 301 318 315 Loans 4 To depository institutions 495 438 465 524 494 701 458 494 5 Other 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Federal agency obligations 1 Bought outright 3,900 3,900 3,895 3,895 33,,883377 33,,992200 33,,990000 33,,883377 8 Held under repurchase agreements 0 650 0 550 1,732 580 1,350 1,732 9 Total U.S. Treasury securities 353,216 352,893 348,639 352,554 355,629 357,703 351,608 355,629 10 Bought outright2 348,291 348,594 348,639 348,564 349,110 347,644 348,838 349,110 11 Bills 169,525 169,829 169,873 169,798 170,345 168,576 170,072 170,345 12 Notes 138,384 138,384 138,006 138,006 138,006 138,686 138,384 138,006 13 Bonds 40,381 40,381 40,760 40,760 40,760 40,381 40,381 40,760 14 Held under repurchase agreements 4,925 4,299 0 3,990 6,519 10,059 2,770 6,519 15 Total loans and securities 357,610 357,880 352,999 357,522 361,692 362,903 357,316 361,692 16 Items in process of collection 5,857 5,094 5,703 5,026 5,125 4,537 3,809 5,125 17 Bank premises 1,063 1,064 1,063 1,065 1,065 1,061 1,063 1,065 Other assets 18 Denominated in foreign currencies 22,876 22,892 22,908 22,925 22,624 22,408 22,868 22,624 19 All other4 9,653 9,990 7,913 8,364 8,341 9,330 9,728 8,341 20 Total assets 416,434 416,309 409,982 414,296 418,233 419,610 414,173 418,233 LIABILITIES 21 Federal Reserve notes 362,678 363,784 363,339 362,799 364,032 360,280 360,309 364,032 22 Total deposits 37,228 36,980 30,929 36,047 38,753 43,604 38,682 38,753 23 Depository institutions 30,021 30,222 23,914 30,072 32,282 33,358 34,573 32,282 24 U.S. Treasury General account 6,744 6,289 6,522 5,494 5,994 9,356 3,683 5,994 25 Foreign Official accounts 181 164 163 164 188 604 182 188 26 Other 281 305 329 317 289 286 244 289 27 Deferred credit items 5,293 4,669 4,942 4,516 4,584 3,901 3,787 4,584 28 Other liabilities and accrued dividends5 3,504 3,392 3,272 3,418 3,632 3,626 3,425 3,632 29 Total liabilities 408,702 408,825 402,482 406,780 411,001 411,411 406,203 411,001 CAPITAL ACCOUNTS 30 Capital paid in 3,551 3,560 3,564 3,576 3,588 3,523 3,550 3,588 31 Surplus 3,401 3,401 3,401 3,401 3,383 3,401 3,401 3,383 32 Other capital accounts 779 523 535 539 262 1,275 1,018 262 33 Total liabilities and capital accounts 416,434 416,309 409,982 414,296 418,233 419,610 414,173 418,233 MEMO 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts 390,207 392,088 392,187 397,924 398,851 382,449 395,105 398,851 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) 436,306 437,920 439,726 441,472 442,669 427,534 435,668 442,669 36 LESS: Held by Federal Reserve Banks 73,628 74,136 76,387 78,672 78,637 67,254 75,359 78,637 37 Federal Reserve notes, net 362,678 363,784 363,339 362,799 364,032 360,280 360,309 364,032 Collateral held against notes, net 38 Gold certificate account 11,052 11,054 11,054 11,055 11,054 11,052 11,052 11,054 4 3 0 9 O Sp th ec er i a e l l d ig r i a b w le i n a g s s r e ig ts h ts certificate account 8,0180 8,018 0 8,018 0 8,018 0 8,018 0 8,018 0 8,018 0 8,018 0 41 U.S. Treasury and agency securities 344,711 344,266 343,727 344,960 341,210 341,239 344,960 343,608 42 Total collateral 363,784 363,339 362,799 364,032 360,280 360,309 364,032 362,678 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 • November 1994 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding Millions of dollars Wednesday End of month TTTyyypppeee ooofff hhhooollldddiiinnnggg aaannnddd mmmaaatttuuurrriiitttyyy 1994 1994 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 June 30 July 31 Aug. 31 1 Total loans 495 438 465 524 512 701 458 512 2 Within fifteen days1 185 117 388 443 417 549 228 417 3 Sixteen days to ninety days 310 321 77 8800 95 152 230 95 4 Ninety-one days to one year 0 0 0 00 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 353,216 352,893 348,639 352,554 355,629 347,644 348,838 355,629 10 Within fifteen days1 20,167 23,773 16,744 20,342 18,290 4,966 7,706 18,290 11 Sixteen days to ninety days 80,193 75,986 79,539 83,885 83,811 81,476 89,041 83,811 12 Ninety-one days to one year 108,178 108,456 109,309 105,279 110,330 117,289 108,478 110,330 13 One year to five years 86,576 86,576 84,370 84,370 84,522 85,524 85,511 84,522 14 Five years to ten years 24,977 24,977 25,178 25,178 25,178 25,264 24,977 25,178 15 More than ten years 33,125 33,125 33,499 33,499 33,499 33,125 33,125 33,499 16 Total federal agency obligations 3,900 4,550 3,895 4,445 5,569 3,920 3,900 5,569 17 Within fifteen days1 15 708 348 898 2,022 165 111 2,022 18 Sixteen days to ninety days 726 668 378 378 448 490 607 448 19 Ninety-one days to one year 746 746 746 746 763 839 769 763 20 One year to five years 1,818 1,818 1,828 1,828 1,752 1,826 1,818 1,752 21 Five years to ten years 570 585 570 570 559 575 570 559 22 More than ten years 25 25 25 25 25 25 25 25 1. Holdings under repurchase agreements are classified as maturing within fifteen days in accordance with maximum maturity of the agreements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A13 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1994 IItteemm DD 1199 ee 99 cc 00 .. DD 1199 ee 99 cc 11 .. DD 1199 ee 99 cc 22 .. DD 1199 ee 99 cc 33 .. Jan. Feb. Mar. Apr. May June July Aug. Seasonally adjusted AAAADDDDJJJJUUUUSSSSTTTTEEEEDDDD FFFFOOOORRRR CCCCHHHHAAAANNNNGGGGEEEESSSS IIIINNNN RRRREEEESSSSEEEERRRRVVVVEEEE RRRREEEEQQQQUUUUIIIIRRRREEEEMMMMEEEENNNNTTTTSSSS2222 1111 TTTToooottttaaaallll rrrreeeesssseeeerrrrvvvveeeessss3333 41.77 45.53 54.34 60.48 60.60 60.76 60.59 60.33 59.91 59.71 59.82 59.52 2222 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss 41.44 45.34 54.22 60.39 60.53 60.69 60.53 60.21 59.71 59.37 59.36 59.05 3333 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss pppplllluuuussss eeeexxxxtttteeeennnnddddeeeedddd ccccrrrreeeeddddiiiitttt 41.47 45.34 54.22 60.39 60.53 60.69 60.53 60.21 59.71 59.37 59.36 59.05 4444 RRRReeeeqqqquuuuiiiirrrreeeedddd rrrreeeesssseeeerrrrvvvveeeessss 40.11 44.55 53.19 59.41 59.16 59.62 59.62 59.18 59.00 58.60 58.71 58.51 5555 MMMMoooonnnneeeettttaaaarrrryyyy bbbbaaaasssseeee6666 293.16 317.12 350.61 385.86 389.61 393.96 397.01 399.20 401.73 404.32 407.04 409.18 Not seasonally adjusted 6666 TTTToooottttaaaallll rrrreeeesssseeeerrrrvvvveeeessss7777 43.07 46.98 56.06 62.37 62.04 59.53 59.50 61.40 58.97 59.56 59.66 58.84 7777 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss ^^^^ 42.74 46.78 55.93 62.29 61.96 59.46 59.44 61.27 58.77 59.22 59.20 58.38 8888 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss pppplllluuuussss eeeexxxxtttteeeennnnddddeeeedddd ccccrrrreeeeddddiiiitttt 42.77 46.78 55.93 62.29 61.96 59.46 59.44 61.27 58.77 59.22 59.20 58.38 9999 RRRReeeeqqqquuuuiiiirrrreeeedddd rrrreeeesssseeeerrrrvvvveeeessss8888 41.40 46.00 54.90 61.31 60.59 58.39 58.53 60.25 58.06 58.45 58.55 57.84 11110000 MMMMoooonnnneeeettttaaaarrrryyyy bbbbaaaasssseeee9999 296.68 321.07 354.55 390.59 391.00 390.86 394.15 399.76 400.26 404.72 408.16 408.95 NNNNOOOOTTTT AAAADDDDJJJJUUUUSSSSTTTTEEEEDDDD FFFFOOOORRRR CCCCHHHHAAAANNNNGGGGEEEESSSS IIIINNNN RRRREEEESSSSEEEERRRRVVVVEEEE RRRREEEEQQQQUUUUIIIIRRRREEEEMMMMEEEENNNNTTTTSSSS11110000 11111111 TTTToooottttaaaallll rrrreeeesssseeeerrrrvvvveeeessss11111111 59.12 55.53 56.54 62.86 62.07 59.59 59.61 61.64 59.27 59.92 60.09 59.34 11112222 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss 58.80 55.34 56.42 62.78 62.00 59.52 59.55 61.52 59.07 59.59 59.63 58.87 11113333 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss pppplllluuuussss eeeexxxxtttteeeennnnddddeeeedddd ccccrrrreeeeddddiiiitttt 58.82 55.34 56.42 62.78 62.00 59.52 59.55 61.52 59.07 59.59 59.64 58.87 11114444 RRRReeeeqqqquuuuiiiirrrreeeedddd rrrreeeesssseeeerrrrvvvveeeessss 57.46 54.55 55.39 61.80 60.62 58.45 58.64 60.49 58.36 58.82 58.99 58.33 11115555 MMMMoooonnnneeeettttaaaarrrryyyy bbbbaaaasssseeee11112222.... 313.70 333.61 360.90 397.62 397.89 397.93 400.78 406.32 406.59 410.94 414.39r 414.90 11116666 EEEExxxxcccceeeessssssss rrrreeeesssseeeerrrrvvvveeeessss 1.66 .98 1.16 1.06 1.45 1.14 .97 1.15 .92 1.11 1.11 1.01 11117777 BBBBoooorrrrrrrroooowwwwiiiinnnnggggssss ffffrrrroooommmm tttthhhheeee FFFFeeeeddddeeeerrrraaaallll RRRReeeesssseeeerrrrvvvveeee .33 .19 .12 .08 .07 .07 .06 .12 .20 .33 .46 .47 1. Latest monthly and biweekly figures are available from the Board's H.3 (502) what required reserves would have been in past periods had current reserve weekly statistical release. Historical data starting in 1959 and estimates of the requirements been in effect. Break-adjusted required reserves include required impact on required reserves of changes in reserve requirements are available from reserves against transactions deposits and nonpersonal time and savings deposits the Money and Reserves Projections Section, Division of Monetary Affairs, (but not reservable nondeposit liabilities). Board of Governors of the Federal Reserve System, Washington, DC 20551. 9. The break-adjusted monetary base equals (1) break-adjusted total reserves 2. Figures reflect adjustments for discontinuities, or "breaks," associated with (line 6), plus (2) the (unadjusted) currency component of the money stock, plus (3) regulatory changes in reserve requirements. (See also table 1.10) (for all quarterly reporters on the "Report of Transaction Accounts, Other 3. Seasonally adjusted, break-adjusted total reserves equal seasonally Deposits and Vault Cash" and for all those weekly reporters whose vault cash adjusted, break-adjusted required reserves (line 4) plus excess reserves (line 16). exceeds their required reserves) the break-adjusted difference between current 4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally vault cash and the amount applied to satisfy current reserve requirements. adjusted, break-adjusted total reserves (line 1) less total borrowings of depository 10. Reflects actual reserve requirements, including those on nondeposit liabilinstitutions from the Federal' Reserve (line 17). ities, with no adjustments to eliminate the effects of discontinuities associated 5. Extended credit consists of borrowing at the discount window under with regulatory changes in reserve requirements. the terms and conditions established for the extended credit program to help 11. Reserve balances with Federal Reserve Banks plus vault cash used to depository institutions deal with sustained liquidity pressures. Because there is satisfy reserve requirements. not the same need to repay such borrowing promptly as with traditional short- 12. The monetary base, not break-adjusted and not seasonally adjusted, term adjustment credit, the money market impact of extended credit is similar to consists of (1) total reserves (line 11), plus (2) required clearing balances and that of nonborrowed reserves. adjustments to compensate for float at Federal Reserve Banks, plus (3) the 6. The seasonally adjusted, break-adjusted monetary base consists of (1) currency component of the money stock, plus (4) (for all quarterly reporters on seasonally adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally the "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all adjusted currency component of the money stock, plus (3) (for all quarterly those weekly reporters whose vault cash exceeds their required reserves) the reporters on the "Report of Transaction Accounts, Other Deposits and Vault difference between current vault cash and the amount applied to satisfy current Cash" and for all those weekly reporters whose vault cash exceeds their required reserve requirements. Since the introduction of contemporaneous reserve rereserves) the seasonally adjusted, break-adjusted difference between current vault quirements in February 1984, currency and vault cash figures have been measured cash and the amount applied to satisfy current reserve requirements. over the computation 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 • November 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. May June July Aug. Seasonally adjusted Measures2 1 Ml 826.4 897.7 1,024.8 1,128.4 1,142.9 1,146.4 1,153.7 1,152.2 2 M2 3,353.0 3,455.3 3,509.0 3,567.9 3,596. lr 3,589.4r 3,603.2r 3,597.2 3 M3 4,125.7 4,180.4 4,183.1 4,232.0 4,226.4r 4,226.4r 4,248.0r 4,241.3 4 L 4,974.8 4,992.9 5,057.2 5,134.4 5,163.2r 5,155.0* 5,186.1 n.a. 5 Debt 10,690.6r ll,165.9r ll,697.8r 12,320.3r 12,591.5r 12,627.7r 12,654.3 n.a. Ml components 6 Currency5 246.7 267.1 292.2 321.4 337.6 340.3 343.2 345.4 7 Travelers checks 7.8 7.7 8.1 7.9 8.1 8.1 8.2 8.3 8 Demand deposits 277.9 290.0 339.6 384.8 385.8 386.6 389.6 388.3 9 Other checkable deposits6 294.0 332.8 384.9 414.3 411.2 411.4 412.7 410.2 Nontrqnsaction components 10 In M27 2,526.6 2,557.6 2,484.3 2,439.5 2,453.3r 2,443.0r 2,449.4r 2,445.0 11 In M38 only 772.7 725.2 674.1 664.1 630.2r 637. lr 644.8r 644.1 Commercial banks 12 Savings deposits, including MMDAs 582.1 665.5 754.6 785.3 784.2 779.2 777.7 776.1 13 Small time deposits9 611.3 602.9 508.7 468.5 464.0 466.6 468.8 474.8 14 Large time deposits10' 11 368.6 342.4 292.8 277.1 273.7 273.8 275.9r 279.4 Thrift institutions 15 Savings deposits, including MMDAs 338.3 375.6 429.0 430.2 431.7 428.0 424.6 418.6 16 Small time deposits 563.2 464.5 361.8 317.1 305.1 303.8 303.7 302.9 17 Large time deposits10 120.9 83.4 67.5 61.8 59.8 60.1 60.8 60.5 Money market mutual funds 18 General purpose and broker-dealer 355.5 370.4 352.0 348.8 365.1 359.3 363.5 362.9 19 Institution-only 135.0 181.0 201.5 197.0 169.3 169.5 170.9 169.3 Debt components 20 Federal debt 2,490.3r 2,763.3r 3,067.9r 3,327.4r 3,402.5r 3,416.3r 3,419.8 n.a. 21 Nonfederal debt 8,200.3r 8,402.6r 8,629.8r 8,992.8r 9,189.1r 9,211.4r 9,234.5 n.a. Not seasonally adjusted Measures 22 Ml 843.8 916.7 1,046.7 1,153.8 1,132.8 1,142.6 1,151.6 1.145.2 23 M2 3,366.0 3,470.4 3.527.6 3,590.5 3,581.5r 3,585.3r 3,599.4r 3,589.5 24 M3 4,135.5 4,191.9 4,198.3 4,251.3 4,217.4r 4,223.0r 4,241.0r 4.237.3 25 L 4,997.2 5,018.0 5.087.7 5,169.3 5,140.0r 5,144.5r 5,171.5 n.a. 26 Debt 10,687.6r ll,163.3r ll,700.6r 12,316.0r 12,522.0' 12,581. lr 12,613.5 n.a. Ml components 27 Currency3 249.5 269.9 295.0 324.9 337.4 340.6 344.8 345.7 28 Travelers checks': 7.4 7.4 7.8 7.6 7.9 8.3 8.8 8.9 29 Demand deposits 289.9 303.1 355.1 402.6 378.8 383.5 388.9 384.9 30 Other checkable deposits6 297.0 336.3 388.9 418.6 408.7 410.1 409.1 405.6 Nontransaction components 31 In M27 2,522.3 2,553.7 2,480.9 2,436.7 2,448.6r 2,442.7r 2,447.8r 2,444.3 32 In M38 769.5 721.6 670.6 660.9 635.9r 637.7r 641.5r 647.8 Commercial banks 33 Savings deposits, including MMDAs 580.8 664.0 752.9 783.9 784.8 781.9 779.6 776.7 34 Small time deposits 610.5 601.9 507.8 467.6 463.0 466.2 469.8 475.8 35 Large time deposits10' 11 367.7 341.3 291.7 276.0 276.0 275.6 275.6r 281.3 Thrift institutions 36 Savings deposits, including MMDAs 337.6 374.8 428.1 429.4 432.0 429.5 425.6 418.9 37 Small time deposits9 562.4 463.8 361.2 316.4 304.4 303.5 304.4 303.5 38 Large time deposits10 120.6 83.1 67.2 61.6 60.3 60.5 60.7 60.9 Money market mutual funds 39 General purpose and broker-dealer 353.8 368.5 350.2 347.2 364.5 357.1 360.0 360.2 40 Institution-only 134.7 180.4 200.4 195.8 171.0 166.3 167.4 169.5 Repurchase agreements and Eurodollars 41 Overnight and continuing 77.3 80.6 80.7 92.3 99.9r 104.4r 108.5r 109.3 42 Term 158.3 130.1 126.8 143.8 144.3r 150.3r 152.9r 150.3 Debt components 43 Federal debt 2,491.3 2,765.0 3,069.8 3,329.5 3,379.7 3,394.5 3,393.8 n.a. 44 Nonfederal debt 8,196.2r 8,398.3r 8,630.8r 8,986.5r 9,142.3r 9,186.6r 9,219.7 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) and bankers acceptances, each seasonally adjusted separately, and then adding weekly statistical release. Historical data starting in 1959 are available from the this result to M3. Money and Reserves Projections Section, Division of Monetary Affairs, Board of Debt: The debt aggregate is the outstanding credit market debt of the domestic Governors of the Federal Reserve System, Washington, DC 20551. nonfinancial sectors—the federal sector (U.S. government, not including govern- 2. Composition of the money stock measures and debt is as follows: ment-sponsored enterprises or federally related mortgage pools) and the nonfed- Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the eral sectors (state and local governments, households ana nonprofit organizations, vaults of depository institutions, (2) travelers checks of nonbank issuers, (3) nonfinancial corporate and nonfarm noncorporate businesses, and farms). Nondemand deposits at all commercial banks other than those owed to depository federal debt consists of mortgages, tax-exempt and corporate bonds, consumer institutions, the U.S. government, and foreign banks and official institutions, less credit, bank loans, commercial paper, and other loans. The data, which are cash items in the process of collection and Federal Reserve float, and (4), other derived from the Federal Reserve Board's flow of funds accounts, are breakcheckable deposits (OCDs), consisting of negotiable order of withdrawal (NOW) adjusted (that is, discontinuities in the data have been smoothed into the series) and automatic transfer service (ATS) accounts at depository institutions, credit and month-averaged (that is, the data have been derived by averaging adjacent union share draft accounts, and demand deposits at thrift institutions. Seasonally month-end levels). adjusted Ml is computed by summing currency, travelers checks, demand 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of deposits, and OCDs, each seasonally adjusted separately. depository institutions. M2: Ml plus (1) overnight (and continuing contract) repurchase agreements 4. Outstanding amount of U.S. dollar-denominated travelers checks of non- (RPs) issued by all depository institutions and overnight Eurodollars issued to bank issuers. Travelers checks issued by depository institutions are included in U.S. residents by foreign branches of U.S. banks worldwide, (2) savings (includ- demand deposits. ing MMDAs) and small time deposits (time deposits—including retail RPs—in 5. Demand deposits at commercial banks and foreign-related institutions other amounts of less than $100,000), and (3) balances in both taxable and tax-exempt than those owed to depository institutions, the U.S. government, and foreign general-purpose and broker-dealer money market funds. Excludes individual banks and official institutions, less cash items in the process of collection and retirement accounts (IRAs) and Keogh balances at depository institutions and Federal Reserve float. money market funds. Also excludes all balances held by U.S. commercial banks, 6. Consists of NOW and ATS account balances at all depository institutions, money market funds (general purpose and broker-dealer), foreign governments credit union share draft account balances, and demand deposits at thrift instituand commercial banks, and the U.S. government. Seasonally adjusted M2 is tions. computed by adjusting its non-Mi component as a whole and then adding this 7. Sum of (1) overnight RPs and overnight Eurodollars, (2) money market fund result to seasonally adjusted Ml. balances (general purpose and broker-dealer), (3) savings deposits (including M3: M2 plus (1) large time deposits and term RP liabilities (in amounts of MMDAs), and (4) small time deposits. $100,000 or more) issued by all depository institutions, (2) term Eurodollars held 8. Sum of (1) large time deposits, (2) term RPs, (3) term Eurodollars of U.S. by U.S. residents at foreign branches of U.S. banks worldwide and at all banking residents, and (4) money market fund balances (institution-only), less (5) a offices in the United Kingdom and Canada, and (3) balances in both taxable and consolidation adjustment that represents the estimated amount of overnight RPs tax-exempt, institution-only money market funds. Excludes amounts held by and Eurodollars held by institution-only money market funds. depository institutions, the U.S. government, money market funds, and foreign 9. Small time deposits—including retail RPs—are those issued in amounts of banks and official institutions. Also excluded is the estimated amount of overnignt less than $100,000. All IRAs and Keogh accounts at commercial banks and thrift RPs and Eurodollars held by institution-only money market funds. Seasonally institutions are subtracted from small time deposits. adjusted M3 is computed by adjusting its non-M2 component as a whole and then 10. Large time deposits are those issued in amounts of $100,000 or more, adding this result to seasonally adjusted M2. excluding those booked at international banking facilities. L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term 11. Large time deposits at commercial banks less those held by money market Treasury securities, commercial paper, and bankers acceptances, net of money funds, depository institutions, the U.S. government, and foreign banks and official market fund holdings of these assets. Seasonally adjusted L is computed by institutions. summing U.S. savings bonds, short-term Treasury securities, commercial paper, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic NonfinancialS tatistics • November 1994 1.22 DEPOSIT INTEREST RATES AND AMOUNTS OUTSTANDING Commercial and BIF-insured saving banks1 1993 1994 1991 1992 Dec. Dec. Dec. Jan. Feb. Mar. Apr. May June Jul/ Aug. Interest rates (effective annual yields) INSURED COMMERCIAL BANKS 1 Negotiable order of withdrawal accounts ... 3.76 2.33 1.86 1.84 1.82 1.82 1.81 1.83 1.82 1.83 1.85 2 Savings deposits2 4.30 2.88 2.46 2.46 2.43 2.43 2.45 2.50 2.54 2.57 2.63 Interest-bearing time deposits with balances of less than $100,000, by maturity 3 7 to 91 days 4.18 2.90 2.65 2.65 2.68 2.76 2.87 2.99 3.08 3.17 3.29 4 92 to 182 days 4.41 3.16 2.91 2.90 2.94 3.02 3.13 3.28 3.36 3.44 3.61 5 183 days to 1 year 4.59 3.37 3.13 3.14 3.18 3.27 3.42 3.64 3.76 3.88 4.11 6 More than 1 year to 2V5 years 4.95 3.88 3.55 3.56 3.61 3.69 3.87 4.12 4.26 4.39 4.61 7 More than 2Vi years 5.52 4.77 4.29 4.31 4.35 4.46 4.67 4.89 5.02 5.14 5.33 BIF-INSURED SAVINGS BANKS3 8 Negotiable order of withdrawal accounts ... 4.44 2.45 1.87 1.89 1.88 1.83 1.86 1.86 1.88 1.89 1.89 9 Savings deposits 4.97 3.20 2.63 2.62 2.64 2.63 2.65 2.67 2.69 2.67 2.74 Interest-bearing time deposits with balances of less than $100,000, by maturity 10 7 to 91 days 4.68 3.13 2.70 2.69 2.69 2.71 2.72 2.77 2.84 2.98 3.03 11 92 to 182 days 4.92 3.44 3.02 3.03 3.04 3.08 3.13 3.21 3.41 3.53 3.69 12 183 days to 1 year 4.99 3.61 3.31 3.33 3.34 3.37 3.47 3.67 3.92 4.02 4.19 13 More than 1 year to 2Vi years 5.23 4.02 3.66 3.72 3.76 3.85 3.96 4.12 4.38 4.56 4.81 14 More than 2 Vi years 5.98 5.00 4.62 4.61 4.66 4.75 4.85 5.08 5.24 5.35 5.47 Amounts outstanding (millions of dollars) INSURED COMMERCIAL BANKS 15 Negotiable order of withdrawal accounts ... 244,637 286,541 305,223 293,806 295,573 297,496 293,888 292,797 290,220 290,631 295,323 16 Savings deposits2 652,058 738,253 766,413 771,559 776,204 779,340 771,869 773,170 767,539 765,751 764,022 17 Personal 508,191 578,757 597,838 606,615 611,725 615,875 611,720 612,648 608,132 605,881 600,920 18 Nonpersonal 143,867 159,496 168,575 164,944 164,479 163,465 160,149 160,522 159,407 159,870 163,102 Interest-bearing time deposits with balances of less than $100,000, by maturity 19 7 to 91 days 47,094 38,474 29,455 29,312 29,578 29,539 29,467 29,950 28,763 28,659 27,953 20 92 to 182 days 158,605 127,831 110,069 109,110 109,444 107,407 105,615 104,400 102,439 100,424 98,064 21 183 days to 1 year 209,672 163,098 146,565 144,037 143,624 144,022 146,733 148,102 151,165 152,216 156,222 22 More than 1 year to 2xh years 171,721 152,977 141,223 141,204 141,006 139,946 139,313 140,764 144,686 146,875 150,718 23 More than 2 n years 158,078 169,708 181,528 182,193 181,240 180,973 181,977 180,381 181,843 182,944 186,397 24 IRA and Keogh plan deposits 147,266 147,350 143,985 143,875 143,409 142,002 142,448 142,047 142,513 142,649 142,648 BIF-INSURED SAVINGS BANKS3 25 Negotiable order of withdrawal accounts 9,624 10,871 11,151 10,796 10,870 11,078 11,051 11,052 10,792 10,925 10,998 26 Savings deposits 71,215 81,786 80,115 78,660 78,016 78,701 78,982 78,817 77,289 77,337 75,044 27 Personal 68,638 78,695 77,035 75,445 74,756 75,444 75,717 75,474 74,121 74,064 71,981 28 Nonpersonal 2,577 3,091 3,079 3,215 3,260 3,257 3,265 3,344 3,168 3,273 3,064 Interest-bearing time deposits with balances of less than $100,000, by maturity 29 7 to 91 days 4,146 3,867 2,793 2,737 2,735 2,671 2,697 2,702 2,614 2,531 2,521 30 92 to 182 days 21,686 17,345 12,946 13,094 13,165 13,177 13,058 12,822 12,515 12,511 12,282 31 183 days to 1 year 29,715 21,780 17,426 17,418 17,436 17,511 17,504 17,444 17,310 17,591 17,578 32 More than 1 year to 2V5 years 25,379 18,442 16,546 16,281 16,338 16,180 16,453 16,477 16,493 16,901 16,810 33 More than 2Vi years 18,665 18,845 20,464 20,630 20,939 21,110 21,454 21,546 21,079 21,573 21,516 34 IRA and Keogh plan accounts 23,007 21,713 19,356 19,395 19,474 19,447 19,860 19,772 19,511 19,757 19,440 1. BIF, Bank Insurance Fund. Data in this table also appear in the Board's H.6 seasonally adjusted and include IRA and Keogh deposits and foreign currency- (508) Special Supplementary Table monthly statistical release. For ordering denominated deposits. Data exclude retail repurchase agreements and deposits address, see inside front cover. Estimates are based on data collected by the held in 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. Includes both mutual and federal savings banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A17 1.23 BANK DEBITS AND DEPOSIT TURNOVER1 Debits are in billions of dollars; turnover is ratio of debits to deposits; monthly data are at annual rates 1994 Jan. Feb. Mar. Apr. May June DEBITS Seasonally adjusted Demand deposits3 1 All insured banks 277,741.7 313,251.6 334,793.7 349,574.2 371,865.9 393,877.0 352,710.1' 376,234.8' 371,524.8 2 Major New York City banks 137,337.2 165,484.5 171,312.0 183,245.0 200,050.9 210,684.5 184,409.0 200,277.7 195,079.4 3 Other banks 140,404.5 147,767.2 163,481.7 166,329.2 171,815.0 183,192.5 168,301.1' 175,957.1' 176,445.4 4 Other checkable deposits4 3,643.1 3,781.5 3,486.8 3,426.9 3,785.2 3,882.2 3,574.0r 3,868.2 3,843.7 5 Savings deposits (including MMDAs) 3,206.4 3,310.6 3,507.3 3,595.3 4,056.9 3,918.6 3,458.4 3,530.6 3,825.7 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 803.7 826.0 786.5 771.4 823.3 873.6 778.6 833.9 828.5 7 Major New York City banks 4,267.1 4,794.5 4,200.6 4,268.2 4,674.4 4,798.4 4,233.3 4,714.9 4,480.9 8 Other banks 448.1 428.9 424.8 405.5 420.2 450.1 411.1 430.6 435.8 9 Other checkable deposits4 16.2 14.4 11.9 11.3 12.6 12.9 11.9 12.8 12.7 10 Savings deposits (including MMDAs) 5.2 4.7 4.6 4.6 5.2 5.0 4.4 4.5 4.9 DEBITS Not seasonally adjusted Demand deposits3 11 All insured banks 277,752.4 313,416.8 334,775.6 349,669.7 345,587.2 406,826.5 350,131.9' 364,468.1' 387,228.2 12 Major New York City banks 137,307.2 165,595.0 171,283.5 181,971.7 187,904.4 218,783.5 181,272.6 188,885.2 204,251.8 13 Other banks 140,445.2 147,821.9 163,492.1 167,698.0 157,682.8 188,043.0 168,859.4' 175,583.0 182,976.3 14 Other checkable deposits4 3,645.2 3,784.4 3,485.2 3,745.4 3,480.4 3,889.2 3,782.0 3,685.4 3,900.9 15 Savings deposits (including MMDAs) 3,209.2 3,310.0 3,505.8 3,780.8 3,616.8 3,882.8 3,633.8 3,567.4 3,949.0 DEPOSIT TURNOVER Demand deposits3 16 All insured banks 803.6 826.3 786.5 759.5 783.2 923.4 771.4 823.3 868.3 17 Major New York City banks 4,269.0 4,803.5 4,197.9 4,047.8 4,319.0 5,140.2 4,228.8 4,449.3 4,878.2 18 Other banks 448.1 429.0 424.9 403.7 396.4 472.4 410.8 438.7 452.8 19 Other checkable deposits4 16.2 14.4 11.9 12.1 11.6 12.9 12.3 12.3 13.0 20 Savings deposits (including MMDAs)5 5.2 4.7 4.6 4.8 4.6 5.0 4.6 4.6 5.1 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 • November 1994 1.26 ASSETS AND LIABILITIES OF COMMERCIAL BANKS1 Billions of dollars Monthly averages Wednesday figures Account 1993 1994 1994 Aug. Feb. Mar. Apr." May" June" July" Aug. Aug. 10 Aug. 17 Aug. 24 Aug. 31" ALL COMMERCIAL BANKING INSTITUTIONS Seasonally adjusted Assets 1 Bank credit 3,065.lr 3,139.2" 3,167.7" 3,194.6 3,198.9 3,207.5 3,241.6 3,255.0 3,246.2 3,247.3 3,262.7 3,269.1 2 Securities in bank credit 902.5 929.4" 949.4" 966.6 964.4 966.7 970.5 964.6 962.2 962.6 967.9 966.7 3 U.S. government securities ... 718.3r 730.8" 745.2" 755.9 749.0 749.9 749.5 745.3 744.8 744.0 746.5 745.6 4 Other securities 184.2 198.6" 204.2" 210.7 215.4 216.8 221.1 219.3 217.4 218.6 221.4 221.1 5 Loans and leases in bank credit2. 2,162.6 2,209.8 2,218.3 2,228.0 2,234.5 2,240.8 2,271.1 2,290.4 2,284.0 2,284.7 2,294.8 2,302.4 6 Commercial and industrial 588.7r 590.6" 595.3" 601.7 605.8 608.2 616.8 621.8 620.0 621.7 623.4 622.9 7 Real estate 919.7r 942.3" 943.0" 945.5 946.8 952.6 958.9 968.1 964.3 967.3 969.7 972.8 8 Revolving home equity 74.7 73.2 73.3 73.3 73.7 74.0 74.1 74.3 74.3 74.3 74.2 74.4 9 Other 845.0" 869.1" 869.8" 872.1 873.1 878.6 884.8 893.8 890.0 893.0 895.5 898.5 10 Consumer 378.1 397.9 402.4 408.7 411.8 415.1 422.7 429.0 427.2 428.9 429.2 431.8 11 Security3 80.3 82.2 83.3 76.9 77.4 76.1 77.8 75.2 76.8 71.8 74.9 76.8 12 Other 195.9" 196.9" 194.2 195.2 192.7 188.8 194.9 196.5 195.7 195.0 197.5 198.0 13 Interbank loans4 155.4 155.4 148.7 150.0 161.9 163.2 166.3 163.2 155.5 163.7 159.9 174.0 14 Cash assets5 219.9 225.0 216.2 209.7 217.4 216.5 213.1 205.8 206.1 195.8 211.6 210.1 15 Other assets6 219.5 210.8" 204.6" 205.8 208.8 205.4 208.9 208.5 208.8 209.7 207.5 206.8 16 Total assets7 3,599.7 3,673.1" 3,680.1" 3,702.8 3,729.5 3,734.9 3,771.9 3,774.5 3,758.5 3,758.4 3,783.6 3,801.9 Liabilities 17 Deposits 2,520.0 2,531.6 2,517.3 2,506.0 2,519.2 2,505.9 2,512.2 2,516.2 2,510.6 2,505.8 2,529.3 2,523.1 18 Transaction 799.1 817.5 813.5 800.5 812.4 809.2 810.3 808.2 806.5 798.6 819.0 810.4 19 Nontransaction 1,720.9 1,714.0 1,703.8 1,705.5 1,706.7 1,696.6 1,701.9 1,708.0 1,704.1 1,707.2 1,710.3 1,712.7 20 Large time 346.8 340.4 332.5 335.3 338.0 334.3 339.0 342.4 340.1 342.7 343.8 343.9 21 Other 1,374.1 1,373.6 1,371.3 1,370.2 1,368.7 1,362.4 1,362.9 1,365.6 1,364.0 1,364.5 1,366.5 1,368.8 22 Borrowings 518.3 549.1" 561.3" 587.4 581.6 578.1 583.8 578.6 559.4 575.2 584.0 598.2 23 From banks in the U.S 156.4 154.4 147.9 150.2 163.3 161.3 167.9 162.7 153.3 163.9 159.5 173.2 24 From nonbanks in the U.S 361.9 394.8" 413.4" 437.2 418.3 416.8 415.8 415.9 406.1 411.3 424.5 425.0 25 Net due to related foreign offices 118.2 135.6 157.6 173.6 171.9 185.0 201.6 212.6 213.0 221.3 211.1 204.5 26 Other liabilities8 149.0 151.7 143.1 143.5 146.5 141.8 146.5 141.6 143.9 141.3 138.2 141.7 27 Total liabilities 3,305.5 3,368.0" 3,379Jr 3,410.5 3,419.1 3,410.9 3,444.0 3,449.0 3,426.9 3,443.6 3,462.6 3,467.6 28 Residual (assets less liabilities)9 294.2 305.1" 300.8" 292.3 310.4 324.1 327.8 325.5 331.6 314.9 321.0 334.3 Not seasonally adjusted Assets 29 Bank credit 3,057.3" 3,137.8" 3,166.3" 3,192.8 3,187.8 3,202.5 3,225.0 3,246.7 3,238.1 3,244.5 3,245.6 3,263.6 30 Securities in bank credit 901.0" 929.3" 952.5" 967.4 960.2 963.0 964.0 963.8 960.6 964.1 963.7 967.8 31 U.S. government securities ... 717.4 729.6 748.7" 758.1 746.0 747.4 743.8 744.6 743.6 745.4 743.7 745.4 32 Other securities 183.7 199.8" 203.8" 209.4 214.1 215.6 220.2 219.3 216.9 218.6 220.0 222.5 33 Loans and leases in bank credit2. 2,156.2 2,208.5 2,213.7 2,225.4 2,227.7 2,239.5 2,261.1 2,282.8 2,277.5 2,280.4 2,281.9 2,295.8 34 Commercial and industrial 585.4" 589.8" 598.2" 604.6 607.4 609.2 614.6 618.0 617.9 619.0 617.6 617.9 35 Real estate 919.9" 938.9" 939.3" 943.5 947.2 953.1 959.7 967.1 965.5 966.6 966.9 971.0 36 Revolving home equity 74.7 73.0 72.6 72.8 73.4 73.8 73.9 74.3 74.1 74.3 74.2 74.5 37 Other 845.2" 865.9" 866.6" 870.7 873.7 879.2 885.7 892.8 891.4 892.3 892.7 896.5 38 Consumer 377.5 399.1 399.6 405.5 410.5 413.2 420.0 428.2 424.9 428.3 428.9 432.6 39 Security3 77.7 86.8 85.5 79.6 73.4 74.3 72.6 72.6 74.0 69.7 71.7 74.6 40 Other 195.8" 193.9" 191.1 192.2 189.2 189.8 194.1 196.9 195.2 196.7 196.7 199.6 41 Interbank loans4 152.4 156.0 148.4 151.4 157.1 160.7 161.8 159.4 152.6 160.5 152.9 171.2 42 Cash assets5 214.2 219.6 210.9 207.0 214.9 214.2 209.7 200.1 196.1 192.3 196.0 213.9 43 Other assets6 217.8 210.3" 203.2" 202.7 206.1 202.9 207.2 206.9 207.8 206.6 203.3 207.7 44 Total assets7 3,581.9 3,666.0" 3,671.3" 3,696.9 3,708.4 3,722.6 3,746.3 3,755-3 3,736.9 3,746.1 3,740.0 3,798.5 Liabilities 45 Deposits 2,509.0 2,521.3 2,508.9 2,512.6 2,507.9 2,507.5 2,506.0 2,504.6 2,501.9 2,502.0 2,487.7 2,522.6 46 Transaction 784.2 808.4 802.0 808.8 801.1 807.6 802.3 793.0 790.8 790.5 775.6 809.0 47 Nontransaction 1,724.8' 1,712.9 1,706.9 1,703.8 1,706.8 1,699.9 1,703.6 1,711.6 1,711.1 1,711.4 1,712.0 1,713.6 48 Large time 348.5 340.7 335.1 336.4 342.0 337.1 339.4 344.0 342.1 343.8 346.3 344.9 49 Other 1,376.3 1,372.1 1,371.8 1,367.3 1,364.8 1,362.7 1,364.3 1,367.6 1,369.0 1,367.7 11,,336655..77 1,368.7 50 Borrowings 519.8 547.6" 548.7" 563.8 569.2 584.1 589.0 592.0 579.1 591.5 558888..88 611.4 51 From banks in the U.S 152.6 155.9 148.4 151.4 157.1 160.7 161.8 159.4 152.6 160.5 152.9 171.2 52 From nonbanks in the U.S 367.2 391.6" 400.3" 412.4 412.1 423.5 427.3 432.5 426.5 430.9 436.0 440.2 53 Net due to related foreign offices 110.5 139.3 163.1 172.6 180.3 180.2 193.4 201.0 198.2 196.7 208.4 202.9 54 Other liabilities8 148.6 151.9 142.8 138.8 142.7 138.9 143.5 141.2 142.9 140.7 137.5 142.5 55 Total liabilities 3,287.9 3,360.0" 3,363.4" 3,387.8 3,400.1 3,410.7 3,431.8 3,438.7 3,422.1 3,430.8 3,422.4 3,479.3 56 Residual (assets less liabilities)9 294.0 306.0" 307.9" 309.1 308.3 311.9 314.5 316.6 314.9 315.3 317.5 319.2 Footnotes appear on last page. 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 Aug. Feb. Mar. Apr.* May* June* July* Aug. Aug. 10 Aug. 17 Aug. 24 Aug. 31* DOMESTICALLY CHARTERED COMMERCIAL BANKS Seasonally adjusted Assets 57 Bank credit 2,721.0 2,803.1* 2,829.5* 2,845.2 2,851.5 2,861.1 2,884.3 2,897.8 2,888.0 2,896.1 2,901.7 2,911.1 58 Securities in bank credit 824.3 850.7* 870.6* 878.9 875.7 874.6 879.3 872.0 872.2 871.5 872.8 871.2 59 U.S. government securities .. 665.0* 676.3* 690.3* 694.5 690.5 689.1 689.3 684.6 685.4 684.7 684.5 682.6 60 Other securities 159.3r 174.4* 180.3* 184.3 185.1 185.5 190.0 187.4 186.7 186.8 188.3 188.6 61 Loans and leases in bank credit2 . l,896.8r 1,952.4 1,959.0 1,966.4 1,975.8 1,986.4 2,004.9 2,025.8 2,015.8 2,024.6 2,028.9 2,039.9 67 Commercial and industrial ... 434.2 442.6* 444.7* 448.6 451.6 455.0 460.3 463.7 462.2 464.3 464.4 465.0 63 Real estate 871.5r 897.2* 898.2* 902.0 903.8 909.7 916.9 926.2 922.2 925.5 927.8 931.4 64 Revolving home equity 74.7 73.1 73.2 73.3 73.6 73.9 74.0 74.2 74.3 74.3 74.2 74.4 65 Other 796.9* 824.1* 825.0* 828.7 830.2 835.8 842.9 852.0 848.0 851.3 853.7 857.2 66 Consumer 378.1 397.9 402.4 408.7 411.8 415.1 422.7 429.0 427.2 428.9 429.2 431.8 67 Security3 54.7 54.5 55.5 49.5 51.3 49.7 46.7 47.2 45.8 46.4 47.4 50.1 68 Other 158.4* 160.2* 158.2* 157.6 157.3 156.9 158.3 159.7 158.4 159.5 160.1 161.6 69 Interbank loans4 134.0 130.1 125.3 124.2 133.3 133.8 135.9 135.0 127.3 134.1 136.6 141.5 70 Cash assets5 193.1 200.5 190.7 183.5 190.1 190.2 187.4 181.6 182.3 171.0 188.4 185.9 71 Other assets6 173.4 164.1* 158.3* 159.6 158.7 155.5 156.5 156.5 155.9 158.1 156.6 155.2 72 Total assets7 3,161.4 3r240.6r 3,246.8* 3,255.2 3,276.1 3,283.0 3,306.0 3,312.9 3,295.5 3,301.3 3,325.2 3,335.8 Liabilities 73 Deposits 2,368.7 2,382.5 2,376.7 2,363.8 2,376.2 2,368.6 2,370.8 2,371.6 2,368.7 2,362.3 2,383.2 2,374.3 74 Transaction 787.4 806.4 802.5 790.2 802.1 798.7 800.2 798.2 796.4 789.1 808.8 800.0 75 Nontransaction 1,581.2 1,576.1 1,574.2 1,573.6 1,574.1 1,569.9 1,570.6 1,573.4 1,572.3 1,573.2 1,574.3 1,574.3 76 Large time 214.5 209.1 208.0 208.4 209.8 210.0 211.1 212.2 212.7 212.6 212.1 211.2 77 Other 1,366.7 1,367.0 1,366.2 1,365.2 1,364.2 1,359.9 1,359.4 1,361.2 1,359.6 1,360.5 1,362.2 1,363.1 78 Borrowings 405.8 445.2 462.0 483.1 476.8 468.3 469.9 468.1 448.6 468.1 477.8 481.1 79 From banks in the U.S 119.3 132.7 128.6 129.9 142.4 138.0 146.6 143.7 134.6 145.7 142.8 150.2 80 From nonbanks in the U.S 286.5 312.5 333.3 353.2 334.4 330.3 323.3 324.5 314.0 322.4 335.0 330.9 81 Net due to related foreign offices -12.4 2.5 13.2 21.1 22.4 32.7 45.0 54.2 54.1 54.7 54.8 57.4 82 Other liabilities8 107.9 108.6 101.3 102.4 103.4 99.8 101.0 96.0 97.4 97.3 92.7 94.7 83 Total liabilities 2,869.9 2,938.8 2,953.3 2,970.5 2,978.8 2,969.4 2,986.7 2,989.9 2,968.8 2,982.4 3,008.5 3,007.5 84 Residual (assets less liabilities)9... 291.5 301.7* 293.5* 284.8 297.4 313.6 319.3 323.1 326.7 319.0 316.7 328.2 Not seasonally adjusted Assets 85 Bank credit 2,717.2 2,799.2* 2,824.3* 2,845.7 2,846.5 2,859.8 2,876.1 2,893.4 2,884.0 2,893.7 2,890.2 2,910.0 86 Securities in bank credit 824.4 849.9* 871.1* 881.0 873.1 873.9 874.8 872.6 871.5 873.2 870.9 874.8 87 U.S. government securities .. 665.2 675.1* 691.8* 698.1 689.3 688.7 685.4 685.1 685.4 686.2 683.4 684.7 88 Other securities 159.2 174.7* 179.3* 182.9 183.8 185.1 189.4 187.6 186.2 187.0 187.6 190.1 89 Loans and leases in bank credit2 . 1,892.8 1,949.3 1,953.2 1,964.8 1,973.4 1,986.0 2,001.4 2,020.7 2,012.4 2,020.5 2,019.3 2,035.2 90 Commercial and industrial ... 431.6* 441.9* 446.6* 451.3 454.3 456.0 458.9 460.9 460.5 461.6 460.1 461.4 91 Real estate 871.6* 893.6* 894.4* 900.1 904.2 910.4 917.7 925.1 923.4 924.6 924.9 929.3 9?, Revolving home equity 74.7 72.9 72.6 72.8 73.4 73.8 73.8 74.2 74.0 74.2 74.1 74.4 93 Other 797.0* 820.7* 821.8* 827.4 830.9 836.7 843.9 850.9 849.4 850.4 850.8 854.9 94 Consumer 377.5 399.1 399.6 405.5 410.5 413.2 420.0 428.2 424.9 428.3 428.9 432.6 95 Security3 53.5 56.7 56.7 52.0 49.2 49.0 46.0 46.2 45.2 45.2 45.9 49.1 96 Other 158.6 158.0 155.9 155.9 155.2 157.3 158.7 160.2 158.5 160.8 159.4 162.8 97 Interbank loans4 132.2 132.3 126.0 126.1 129.2 133.0 131.7 132.8 127.5 134.8 129.7 138.6 98 Cash assets5 186.7 195.5 185.9 181.7 188.6 187.7 184.2 175.3 171.5 167.0 171.8 189.3 99 Other assets6 171.9 163.4* 157.5* 157.4 157.1 154.4 156.1 155.2 155.0 155.3 152.9 156.3 100 Total assets7 3,148.3 3,232.8r 3,236.1r 3,253.9 3,264.0 3,277.5 3,290.9 3,299.0 3,280_5 3,293.1 3,286.9 3,336.4 Liabilities 101 Deposits 2,357.5 2,371.4 2,365.3 2,369.3 2,361.7 2,366.2 2,363.5 2,359.9 2,360.2 2,358.0 2,341.3 2,374.4 10? Transaction 772.8 797.3 791.4 798.7 791.1 797.2 792.2 783.2 781.1 781.0 765.9 798.6 103 Nontransaction 1,584.7 1,574.1 1,573.9 1,570.6 1,570.6 1,569.0 1,571.3 1,576.7 1,579.1 1,577.0 1,575.3 1,575.8 104 Large time 215.9 209.1 207.4 207.7 210.4 209.4 210.8 213.6 214.2 213.7 213.8 212.7 105 Other 1,368.7 1,364.9 1,366.5 1,362.9 1,360.2 1,359.6 1,360.5 1,363.1 1,364.9 1,363.3 1,361.5 1,363.2 106 Borrowings 406.1 445.8 449.7 460.6 467.5 474.0 475.1 480.4 466.3 481.9 482.6 495.0 107 From banks in the U.S 115.5 135.4 129.0 131.6 138.0 138.2 140.3 140.3 133.2 142.1 136.6 148.3 108 From nonbanks in the U.S 290.7 310.4 320.7 329.0 329.4 335.8 334.8 340.2 333.1 339.8 345.9 346.7 109 Net due to related foreign offices -12.8 5.4 16.0 20.6 31.1 32.9 43.5 51.0 46.7 46.1 57.3 57.1 110 Other liabilities8 107.6 108.1 101.3 98.8 100.3 97.2 99.1 95.7 96.7 96.5 92.8 95.4 111 Total liabilities 2,858.4 2,930.8 2,932.4 2,949.4 2,960.5 2,970.4 2,981.1 2,987.1 2,969.9 2,982.5 2,974.0 3,021.9 112 Residual (assets less liabilities)9... 289.9 302.0* 303.7* 304.5 303.5 307.1 309.7 312.0 310.4 310.6 313.0 314.5 Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Nonfinancial Statistics • November 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 July 6 July 13 July 20 July 27r Aug. 3 Aug. 10 Aug. 17 Aug. 24 ASSETS 1 Cash and balances due from depository institutions 124,808 110,265 103,754 107,275 105,539 101,119 96,646 103,156 2 U.S. Treasury and government securities 313,583r 312,285r 307,162r 311,057 313,899 313,324 316,004 311,394 3 Trading account 24,211 23,141 21,513 22,734 24,974 24,678 27,754 24,642 4 Investment account 289,372r 289,144r 285,649r 288,323 288,925 288,647 288,250 286,752 5 Mortgage-backed securities 87,938r 88,133r 86,713r 88,621 95,278 94,981 94,611 93,024 All others, by maturity 6 One year or less 50,267r 49,954r 48,778r 47,642 46,894 46,969 47,450 47,339 7 One year through five years 78,107r 77,786r 77,580r 77,407 77,956 78,197 78,398 78,644 8 More than five years 73,061r 73,271r 72,578r 74,654 68,798 68,499 67,791 67,746 9 Other securities 100,716r 104,210r 101,832r 101,358 98,995 98,892 100,296 100,938 10 Trading account 1,811 1,768 1,697 2,123 2,098 1,779 1,788 1,774 11 Investment account 57,848r 58,030r 58,748r 58,652 58,712 59,194 59,086 59,384 12 State and local government, by maturity 20,899 21,012 21,145r 21,243 21,131 21,186 21,213 21,324 13 One year or less 4,457r 4,518r 4,586r 4,582 4,704 4,730 4,744 4,790 14 More than one year 16,442r 16,494r 16,559r 16,661 16,427 16,455 16,469 16,535 15 Other bonds, corporate stocks, and securities 36,949r 37,018r 37,603r 37,409 37,581 38,009 37,873 38,059 16 Other trading account assets 41,057r 44,412r 41,386r 40,583 38,185 37,919 39,422 39,780 17 Federal funds sold2 96,662 90,280 97,349 94,029 95,914 89,963 97,480 93,475 18 To commercial banks in the United States 67,320 60,744 65,739 61,593 65,340 59,702 66,452 63,067 19 To nonbank brokers and dealers in securities 22,991 23,370 25,330 26,211 24,546 23,764 23,669 22,991 20 To others 6,351 6,166 6,280 6,225 6,027 6,497 7,359 7,417 21 Other loans and leases, gross l,077,439r l,073,600r l,078,871r 1,078,401 1,084,980 1,086,607 1,092,264 1,092,133 22 Commercial and industrial 297,530r 296,702r 298,276r 298,241 299,632 299,932 301,000 299,470 23 Bankers acceptances and commercial paper 2,916 2,936 2,920 2,942 3,070 3,098 3,116 3,068 24 All other 294,615r 293,765r 295,356r 295,300 296,563 296,834 297,884 296,402 25 U.S. addressees 292,898 292,041 293,648 293,610 294,821 295,160 296,137 294,747 26 Non-U.S. addressees l,717r 1,124' 1,708' 1,690 1,741 1,674 1,747 1,654 27 Real estate loans 430,715 432,396 432,859 432,336 434,756 435,869 436,545 436,043 28 Revolving, home equity 44,407r 44,468r 44,728r 44,741 44,848 44,790 44,952 45,031 29 All other 386,308r 387,928r 388,131r 387,595 389,907 391,079 391,593 391,011 30 To individuals for personal expenditures 218,239 218,592 219,965 221,082 222,527 223,361 225,462 227,091 31 To depository and financial institutions 40,986 40,402 40,289 40,355 42,296 40,832 41,898 41,122 32 Commercial banks in the United States 20,936 21,094 21,259 21,788 22,603 21,900 22,600 22,566 33 Banks in foreign countries 3,187 2,766 2,656 2,405 3,054 2,686 2,857 2,398 34 Nonbank depository and other financial institutions .. 16,863 16,542 16,375 16,162 16,639 16,246 16,442 16,158 35 For purchasing and carrying securities 16,173 15,574 16,201 16,312 15,213 15,897 15,984 17,484 36 To finance agricultural production 6,508 6,539 6,514 6,573 6,593 6,655 6,639 6,615 3 3 3 7 8 9 A T T o o ll s f o o t t a r h t e e e i r s g n l a o n g a d o n v s p 4 e o r l n it m ic e a n l ts s u a b n d d i v o is ff io ic n i s a l institutions 2 1 6 1 l, , , 1 1 8 8 7 6 0 5 8 r r 2 1 2 l 1 , , , 0 3 8 7 3 2 1 7 1 r r 2 1 3 1 l, , , 1 6 7 0 1 5 4 0 2 r r 2 1 2 1 1 , , , 3 8 0 1 0 1 5 1 3 2 1 2 1 , , 6 7 9 8 7 6 1 1 1 2 1 2 1 , , 9 9 6 0 7 3 0 2 2 2 1 3 1 , , 5 6 9 5 1 6 4 3 9 2 1 2 1 1 , , , 7 8 0 4 6 0 9 1 3 4 4 0 1 LE L S e S a : s U e- n f e in a a rn n e c d in g in r c e o c m ei e v ables 28 l, , 6 0 5 65 6 r 28 l, , 6 1 7 6 5 7 r 28 l, , 6 3 9 0 9 3 r 28 1 , , 3 6 7 9 2 0 28 1 , , 5 6 4 8 9 7 28 1 , , 5 6 5 9 7 3 28 1 , , 6 6 0 8 1 4 28 1 , , 6 6 9 7 5 8 4 4 4 2 3 4 A O l t l h o er t h l L e o r o a a n a n s s s a a e n n ts d d l l e ea a s s e e s r , e n s e e t r ve l,0 1 4 3 5 1 4 8 , , , 3 4 3 8 0 8 2 1 3 r r l,0 1 3 3 5 7 4 8 , , , 2 7 3 0 1 0 7 9 7 r r 1,0 1 3 4 5 4 2 3 , , , 7 4 5 2 4 5 6 7 3 ' ' 1,0 1 3 4 5 4 2 1 , , , 7 0 0 0 0 0 5 7 8 1,0 1 3 4 5 4 8 7 , , , 9 3 9 6 3 1 2 1 1 1,0 1 3 4 5 4 9 2 , , , 9 9 8 9 1 4 8 6 2 1,0 1 3 5 5 5 5 5 , , , 0 5 2 2 5 9 2 7 1 1,0 1 3 5 4 4 5 7 , , , 9 4 6 8 6 0 6 8 9 45 Total assets6 l,835,535r l,812,554r 1,806,096' 1,806,731 1,820,589 1,806,056 1,821,274 1,812,040 Footnotes appear on the following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • November 1994 1.27 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued Millions of dollars, Wednesday figures 1994 AAccccoouunntt July 6 July 13 July 20 July 27R Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 LIABILITIES 46 Deposits L,163,080R L,134,948R L,124,335R 1,121,266 1,142,661 1,135,036 1,136,718 1,125,278 1,144,736 47 Demand deposits7 321,555R 293,281R 283,784R 284,445 294,053 285,563 287,976 280,781 299,926 48 Individuals, partnerships, and corporations 268,967R 248,943R 240,924R 239,104 245,790 243,166 243,692 236,936 253,128 49 Other holders 52,588R 44,338 42,861 45,341 48,263 42,398 44,284 43,845 46,798 50 States and political subdivisions 9,077 8,000 8,313 8,425 9,099 8,196 8,370 8,496 8,585 51 U.S. government 1,981 1,755 1,980 1,947 2,882 1,883 1,887 2,216 2,394 52 Depository institutions in the United States 25,612R 18,638 18,823 18,269 21,160 18,459 18,551 18,401 19,739 53 Banks in foreign countries 6,347 5,732 5,373 5,058 6,059 4,220 5,414 4,452 5,792 54 Foreign governments and official institutions 607 576 790 612 632 640 732 752 647 55 Certified and officers' checks 8,963 9,638 7,582 11,031 8,431 9,000 9,330 9,527 9,641 56 Transaction balances other than demand deposits4 127,385 123,757 123,563 122,285 127,894 125,517 125,299 123,470 125,112 57 Nontransaction balances 714,140 717,910 716,987 714,535 720,715 723,956 723,443 721,028 719,699 58 Individuals, partnerships, and corporations 692,935 696,012R 694,894R 692,011 698,378 701,072 700,716 698,244 697,285 59 Other holders 21,205 21,899R 22,094R 22,524 22,336 22,884 22,727 22,784 22,413 60 States and political subdivisions 17,130 17,437 17,548 17,697 17,727 17,964 17,740 17,801 17,509 61 U.S. government 1,986 2,305 2,309 2,391 2,263 2,493 2,489 2,448 2,440 62 Depository institutions in the United States 1,688 L,754R L,840R 2,047 1,932 1,987 2,066 2,103 2,039 63 Foreign governments, official institutions, and banks .... 401 403 396 389 414 440 431 432 425 64 Liabilities for borrowed money5 353,078 349,655 353,091 351,144 347,730 343,463 355,888 352,903 364,637 65 Borrowings from Federal Reserve Banks 2,241 0 250 0 0 0 0 0 0 66 Treasury tax and loan notes 6,502 6,826 7,475R 9,805 8,464 7,350 7,749 8,663 17,265 67 Other liabilities for borrowed money6 344,335 342,829 345,366' 341,339 333399,,226666 333366,,111133 334488,,113399 334444,,224400 334477,,337722 68 Other liabilities (including subordinated notes and debentures) 152,047 158,871 158,785R 164,391 160,140 157,912 158,285 161,594 164,534 69 Totol liabiUties l,668,204r l,643,475r l,636,211r 1,636,801 1,650,531 1,636,411 1,650,890 1,639,775 1,673,907 70 Residual (total assets less total liabilities)7 167,331R 169,079R 169,886R 169,930 170,057 169,644 170,384 172,265 172,035 MEMO 71 Total loans and leases, gross, adjusted, plus securities8 .. L,500,145R L,498,537R L,498,216R 1,501,464 1,505,844 1,507,184 1,516,992 1,512,307 1,526,768 72 Time deposits in amounts of $100,000 or more 93,607 96,619 96,493 97,285 97,790 98,238 98,401 98,033 96,421 73 Loans sold outright to affiliates 676 675 671 670 680 680 679 672 672 74 Commercial and industrial 327 326 326 327 327 326 326 326 326 75 Other 349 349 345 343 353 354 353 346 345 76 Foreign branch credit extended to U.S. residents1 22,539 22,065 21,972 22,409 22,482 22,516 22,518 22,263 22,961 77 Net owed to related institutions abroad 27,950R 34,874R 41,372R 45,753 38,483 40,892 40,581 51,594 51,276 1. Includes certificates of participation, issued or guaranteed by agencies of the 8. Excludes loans to and federal funds transactions with commercial banks in U.S. government, in pools of residential mortgages. the United States. 2. Includes securities purchased under agreements to resell. 9. Affiliates include a bank's own foreign branches, nonconsolidated nonbank 3. Includes allocated transfer risk reserve. affiliates of the bank, the bank's holding company (if not a bank), and noncon- 4. Includes negotiable order of withdrawal (NOWs) and automatic transfer solidated nonbank subsidiaries of the holding company. service (ATS) accounts, and telephone and preauthorized transfers of savings 10. Credit extended by foreign branches of domestically chartered weekly deposits. reporting banks to nonbank U.S. residents. Consists mainly of commercial and 5. Includes borrowings only from other than directly related institutions. industrial loans, but includes an unknown amount of credit extended to other than 6. Includes federal funds purchased and securities sold under agreements to nonfinancial businesses. repurchase. 7. This balancing item is not intended as a measure of equity capital for use in capital-adequacy analysis. 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 Liabilities Millions of dollars, Wednesday figures 1994 Account July 6 July 13 July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 ASSETS 1 Cash and balances due from depository institutions 16,898 16,117 16,339 16,548 16,121 15,777 16,276 15,472 15,891 2 U.S. Treasury and government agency securities 39,969 39,513 39,870 39,578 39,152 39,306 40,122 40,823 41,299 3 Other securities... 10,916 10,907 10,906 10,877 10,876 10,832 11,160 11,429 11,519 5 4 Fe T d o e r c a o l m fu m n e d r s c i s a o l ld b anks in the United States .. 2 10 9 , , 0 0 7 2 4 6 2 7 8 , , 1 9 5 7 1 2 3 8 0 , , 7 2 0 2 2 0 3 9 1 , , 9 6 3 6 9 0 2 6 8 , , 8 9 8 3 4 4 3 6 0 , ,5 7 6 2 4 0 27 7, , 0 0 2 7 8 1 2 5 7 , , 5 4 5 1 1 3 3 1 0 0 , ,0 4 8 26 0 6 To others2 18,952 21,821 21,518 21,721 22,049 23,844 20,043 21,862 20,345 7 Other loans and leases, gross 155,823 156,384 159,323 158,731 158,768 157,668 158,100 158,504 159,480 8 Commercial and industrial 99,211 100,189 101,658 100,936 100,325 101,015 101,308 101,214 101,339 9 Bankers acceptances and commercial paper 3,286 3,480 3,530 3,457 3,529 3,616 3,614 3,488 3,365 10 Mother 95,925 96,709 98,128 97,480 96,795 97,399 97,694 97,726 97,974 11 U.S. addressees 91,900 92,647 93,936 93,359 92,651 93,299 93,554 93,582 93,811 12 Non-U.S. addressees 4,025 4,061 4,192 4,121 4,144 4,100 4,140 4,144 4,163 13 Loans secured by real estate 27,006 27,049 27,090 27,063 26,984 26,966 26,980 26,940 26,948 14 Loans to depository and financial institutions 21,938 21,825 23,228 23,600 23,925 22,719 22,584 23,486 23,356 15 Commercial banks in the United States. 4,903 4,748 5,109 5,199 5,102 4,653 4,610 5,134 4,602 16 Banks in foreign countries 1,826 1,819 1,772 1,784 1,778 1,768 1,760 1,826 1,919 17 Nonbank financial institutions 15,209 15,258 16,346 16,617 17,045 16,298 16,214 16,527 16,835 18 For purchasing and carrying securities ... 3,705 3,166 3,391 3,235 3,592 3,082 3,345 2,985 3,793 19 To foreign governments ana official institutions 366 548 338 328 350 327 328 346 349 20 Allother 3,598 3,608 3,619 3,568 3,592 3,559 3,554 3,533 3,696 21 Other assets (claims on nonrelated parties) . 34,211 35,894 34,885 34,063 36,559 35,857 34,900 34,314 35,463 22 Total assets3 308,491 309,643 313,117 313,540 313,088 314,049 311,238 313,289 320,245 LIABILITIES 23 Deposits or credit balances owed to other than directly related institutions 86,763 88,666 90,917 92,082 88,828 89,610 91,278 93,017 93,292 24 Demand deposits4 4,930 4,546 4,601 4,251 3,889 4,228 4,186 4,276 4,639 25 Individuals, partnerships, and corporations 3,987 3,580 3,351 3,387 3,161 3,352 3,286 3,127 3,794 26 Other 943 966 1,250 864 728 877 900 1,150 845 27 Nontransaction accounts 81,833 84,120 86,316 87,831 84,940 85,382 87,091 88,740 88,653 28 Individuals, partnerships, and corporations 53,282 54,845 56,888 57,652 56,689 56,402 57,695 59,123 59,894 29 Other 28,551 29,275 29,428 30,180 28,251 28,980 29,396 29,618 28,759 30 Borrowings from other than directly related institutions 78,925 79,747 79,840 76,387 79,432 79,084 77,084 74,778 81,837 31 Federal funds purchased 39,029 38,941 41,090 37,562 40,700 41,454 38,027 37,002 41,954 32 From commercial banks in the United States 9,990 8,799 9,136 7,553 7,775 7,895 7,637 6,129 10,281 33 From others 29,039 30,143 31,954 30,009 32,926 33,559 30,390 30,873 31,673 34 Other liabilities for borrowed money 39,896 40,806 38,750 38,826 38,732 37,630 39,057 37,777 39,882 35 To commercial banks in the United States 7,388 7,512 7,432 7,024 7,277 6,845 6,553 6,446 6,478 36 To others 32,508 33,294 31,318 31,802 31,455 30,785 32,504 31,331 33,404 30,101 32,216 31,182 31,375 32,155 32,882 31,383 31,836 33,317 37 Other liabilities to nonrelated parties 308,491 309,643 313,117 313',540 313,088 314,049 311,238 313,289 320,245 38 Total liabilities6 3 4 9 0 T N Mo e Et t M a o l O w l o e a d n s t o ( g r r e o la ss te ) d a n in d s t s i e tu cu ti r o i n ti s e s a , b a ro d a j d u sted' 2 9 2 1 0 , , 0 7 5 5 3 7 2 8 2 7 3 , , 1 87 6 8 0 2 8 2 9 6 , , 6 5 0 0 3 8 2 9 2 1 5 , , 6 7 1 0 4 9 2 8 2 9 5 , , 9 7 9 4 5 4 2 8 2 8 6 , , 4 9 2 9 8 7 2 8 2 7 4 , , 8 8 8 1 5 5 2 8 2 8 7 , , 3 4 2 8 5 4 22 8 8 5 , , 0 6 4 3 2 2 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. For U.S. branches and agencies of foreign banks having a net "due to" 3. For U.S. branches and agencies of foreign banks having a net "due from" position, includes net owed to related institutions abroad. position, includes net due from related institutions abroad. 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 • November 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 Feb. Mar. Apr. May June July Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 525,831 562,656 528,832 545,619 555,075 560,345 557,768 553,497 559,569 563,067r 572,539 Financial companies' Dealer-placed paper2 2 Total 183,622 214,706 212,999 226,456 218,947 223,549 216,982 207,180 213,623 214,313 222,780 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 210,930 200,036 182,463 171,605 180,389 186,318 194,527 119999,,880033 197,812 199,168r 199,175 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 131,279 147,914 133,370 147,558 155,739 150,478 146,259 146,514 148,134 149,586 150,584 Bankers dollar acceptances (not seasonally adjusted)6 7 Total 62,972 54,771 43,770 38,194 32,348 30,994 31,061 31,775 29,867 30,659 30,390 By holder 8 Accepting banks 9,433 9,017 11,017 10,555 12,421 11,258 11,727 11,643 11,533 12,334 11,608 9 Own bills 8,510 7,930 9,347 9,097 10,707 10,248 10,758 10,888 10,601 11,273 10,838 10 Bills bought from other banks 924 1,087 1,670 1,458 1,714 1,010 969 755 932 1,061 770 Federal Reserve Banks7 11 Foreign correspondents 1,066 918 1,739 1,276 725 753 693 625 465 453 386 12 Others 52,473 44,836 31,014 26,364 19,202 18,983 18,641 19,507 17,869 17,872 18,3% By basis 13 Imports into United States 15,651 13,095 12,843 12,209 10,217 10,707 10,554 10,834 10,396 10,625 10,956 14 Exports from United States 13,683 12,703 10,351 8,0% 7,293 6,872 6,708 6,723 6,367 6,576 6,399 15 All other 33,638 28,973 20,577 17,890 14,838 13,414 13,800 14,217 13,104 13,458 13,035 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 te a ge Period Av r e a r te a ge Av r e a r te a ge 1991— Jan. 1 10.00 1991 8.46 1992— Jan. 6.50 1993— June .. 6.00 2 9.50 1992 6.25 Feb. 6.50 July ... 6.00 Feb. 4 9.00 1993 6.00 Mar. 6.50 Aug. .. 6.00 May 1 8.50 Apr. 6.50 Sept. .. 6.00 Sept. 13 8.00 1991- -Jan. . 9.52 May 6.50 Oct. ... 6.00 Nov. 6 7.50 Feb. 9.05 June 6.50 6.00 Dec. 23 6.50 Mar. 9.00 July 6.02 Dec. .. 6.00 Apr. 9.00 Aug. 6.00 1992— July 2 6.00 May . 8.50 Sept. 6.00 1994— Jan. ... 6.00 June 8.50 Oct 6.00 Feb. .. 6.00 1994— Mar. 24 6.25 July . 8.50 Nov. 6.00 6.06 Apr. 19 6.75 Aug. 8.50 Dec. 6.00 6.45 May 17 7.25 Sept. 8.20 May ... 6.99 Aug. 16 7.75 Oct. . 8.00 1993— Jan. 6.00 7.25 Nov. 7.58 Feb. 6.00 July ... 7.25 Dec. 7.21 Mar. 6.00 Aug. .. 7.51 Apr. 6.00 Sept. .. 7.75 May 6.00 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 DomesticN onfinancialS tatistics • November 1994 1.35 INTEREST RATES Money and Capital Markets Percent per year; figures are averages of business day data unless otherwise noted 1994 1994, week ending IItteemm 11999911 11999922 11999933 May June July Aug. July 29 Aug. 5 Aug. 12 Aug. 19 Aug. 26 MONEY MARKET INSTRUMENTS 1 Federal funds1'2'3 5.69 3.52 3.02 4.01 4.25 4.26 4.47 4.28 4.28 4.26 4.35 4.66 2 Discount window borrowing ' 5.45 3.25 3.00 3.24 3.50 3.50 3.76 3.50 3.50 3.50 3.64 4.00 Commercial paper3,5,6 3 1-month 5.89 3.71 3.17 4.28 4.36 4.49 4.65 4.46 4.45 4.54 4.74 4.79 4 3-month 5.87 3.75 3.22 4.57 4.57 4.75 4.84 4.73 4.71 4.82 4.90 4.90 5 6-month 5.85 3.80 3.30 4.92 4.86 5.13 5.19 5.16 5.13 5.21 5.24 5.18 Finance paper, directly placed!3'5'7 6 1-month 5.73 3.62 3.12 4.19 4.27 4.40 4.56 4.37 4.36 4.45 4.64 4.70 7 3-month 5.71 3.65 3.16 4.44 4.44 4.64 4.73 4.63 4.60 4.69 4.78 4.81 8 6-month 5.60 3.63 3.15 4.45 4.50 4.67 4.79 4.72 4.67 4.78 4.82 4.84 Bankers acceptances3,5,8 9 3-month 5.70 3.62 3.13 4.45 4.45 4.65 4.74 4.61 4.61 4.71 4.80 4.79 10 6-month 5.67 3.67 3.21 4.77 4.73 5.01 5.03 5.01 4.94 5.05 5.07 5.04 Certificates of deposit, secondary market1'9 11 1-month 5.82 3.64 3.11 4.23 4.30 4.45 4.60 4.40 4.40 4.50 4.69 4.74 12 3-month 5.83 3.68 3.17 4.51 4.52 4.73 4.81 4.70 4.68 4.79 4.86 4.87 13 6-month 5.91 3.76 3.28 4.90 4.85 5.15 5.17 5.16 5.07 5.20 5.21 5.19 14 Eurodollar deposits, 3-month3'10 5.86 3.70 3.18 4.51 4.51 4.74 4.80 4.73 4.68 4.76 4.85 4.86 U.S. Treasury bills Secondary market' 15 3-month 5.38 3.43 3.00 4.14 4.14 4.33 4.48 4.39 4.34 4.40 4.56 4.55 16 6-month 5.44 3.54 3.12 4.60 4.55 4.75 4.88 4.80 4.75 4.91 4.94 4.90 17 1-year 5.52 3.71 3.29 5.03 4.98 5.17 5.25 5.22 5.12 5.29 5.30 5.31 Auction average ' ' 18 3-month 5.42 3.45 3.02 4.19 4.18 4.39 4.50 4.43 4.35 4.43 4.59 4.62 19 6-month 5.49 3.57 3.14 4.64 4.58 4.81 4.91 4.83 4.75 4.93 4.99 4.98 20 1-year 5.54 3.75 3.33 4.77 5.03 5.20 5.36 5.20 n.a. n.a. n.a. 5.36 U.S. TREASURY NOTES AND BONDS Constant maturities12 21 1-year 5.86 3.89 3.43 5.31 5.27 5.48 5.56 5.51 5.41 5.60 5.63 5.61 22 2-year 6.49 4.77 4.05 5.97 5.93 6.13 6.18 6.14 6.03 6.23 6.21 6.23 23 3-year 6.82 5.30 4.44 6.34 6.27 6.48 6.50 6.48 6.36 6.58 6.53 6.52 24 5-year 7.37 6.19 5.14 6.78 6.70 6.91 6.88 6.89 6.77 6.96 6.90 6.92 25 7-year 7.68 6.63 5.54 7.01 6.91 7.12 7.06 7.08 6.96 7.14 7.07 7.10 26 10-year 7.86 7.01 5.87 7.18 7.10 7.30 7.24 7.26 7.15 7.31 7.24 7.27 27 20-year n.a. n.a. 6.29 7.54 7.51 7.67 7.62 7.60 7.49 7.66 7.63 7.69 28 30-year 8.14 7.67 6.59 7.41 7.40 7.58 7.49 7.52 7.43 7.54 7.46 7.52 Composite 29 More than 10 years (long-term) 8.16 7.52 6.45 7.47 7.43 7.61 7.55 7.54 7.43 7.60 7.56 7.61 STATE AND LOCAL NOTES AND BONDS Moody's series13 30 Aaa 6.56 6.09 5.38 5.62 5.76 5.88 5.88 5.91 5.90 5.90 5.90 5.85 31 Baa 6.99 6.48 5.82 6.02 6.15 6.26 6.22 6.30 6.24 6.24 6.24 6.20 32 Bond Buyer series 6.92 6.44 5.60 6.19 6.11 6.23 6.21 6.22 6.16 6.25 6.22 6.21 CORPORATE BONDS 33 Seasoned issues, all industries15 9.23 8.55 7.54 8.28 8.27 8.42 8.36 8.36 8.26 8.42 8.35 8.41 Rating group 34 Aaa 8.77 8.14 7.22 7.99 7.97 8.11 8.07 8.05 7.96 8.12 8.07 8.13 35 Aa 9.05 8.46 7.40 8.19 8.17 8.31 8.25 8.25 8.15 8.30 8.24 8.29 36 A 9.30 8.62 7.58 8.32 8.30 8.44 8.38 8.38 8.28 8.44 8.37 8.43 37 Baa 9.80 8.98 7.93 8.62 8.65 8.80 8.74 8.74 8.64 8.79 8.73 8.79 38 A-rated, recently offered utility bonds 9.32 8.52 7.46 8.37 8.30 8.45 8.36 8.27 8.37 8.35 8.39 8.36 MEMO Dividend-price ratio 39 Preferred stocks18 8.17 7.46 6.89 7.44 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 40 Common stocks 3.24 2.99 2.78 2.89 2.84 2.87 2.78 2.85 2.81 2.81 2.78 2.76 1. The daily effective federal funds rate is a weighted average of rates on 12. Yields on actively traded issues adjusted to constant maturities. Source: trades through New York brokers. U.S. Department of the 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 for 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 A21 1.36 STOCK MARKET Selected Statistics 1993 1994 IInnddiiccaattoorr 11999911 11999922 11999933 Dec. Jan. Feb. Mar. Apr. May June July Aug. Prices and trading volume (averages of daily figures) Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 206.35 229.00 249.71 257.73 262.11 261.97 257.32 247.97 249.56 251.21 249.29 256.08 2 Industrial 258.16 284.26 300.10 313.22 320.92 322.41 318.08 304.48 307.58 308.66 307.34 316.56 3 Transportation 173.97 201.02 242.68 268.11 278.29 276.67 265.68 250.43 244.75 246.64 244.21 244.67 4 Utility 92.64 99.48 114.55 114.97 112.67 116.22 107.72 105.04 102.89 103.27 102.73 105.61 5 Finance 150.84 179.29 216.55 216.00 218.71 217.12 211.02 208.12 211.30 215.89 210.91 214.77 6 Standard & Poor's Corporation (1941-43 = 10)1 376.20 415.75 451.63 465.95 472.99 471.58 463.81 447.23 450.90 454.83 451.40 464.24 7 American Stock Exchange (Aug. 31, 1973 = 50f 360.32 391.28 438.77 465.95 481.14 476.25 465.72 437.01 437.54 436.08 430.10 444.89 Volume of trading (thousands of shares) 8 New York Stock Exchange 179,411 202,558 263,374 259,457 313,223 307,269 311,096 301,242 269,812 265,341 250,382 277,877 9 American Stock Exchange 12,486 14,171 18,188 17,461 19,211 19,630 19,481 15,805 15,727 18,400 14,378 15,874 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers3 36,660 43,990 60,310 60,310 61,250 62,020 61,960 60,700 59,870 60,800r 61,930 63,070 Free credit balances at brokers4 11 Margin accounts5 8,290 8,970 12,360 12,360 12,125 12,890 13,185 13,175 12,715 12,560* 12,620 12,090 12 Cash accounts 19,255 22,510 27,715 27,715 26,020 25,665 26,190 24,800 23,265 28,585r 25,790 24,400 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. In July 1976 a financial group, composed of banks and insurance companies, on securities other than options are the difference between the market value (100 was added to the group of stocks on which the index is based. The index is now percent) and the maximum loan value of collateral as prescribed by the Board. based on 400 industrial stocks (formerly 425), 20 transportation (formerly 15 rail), Regulation T was adopted effective Oct. 15, 1934; Regulation U, effective May 1, 40 public utility (formerly 60), and 40 financial. 1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective Nov. 1, 2. On July 5, 1983, the American Stock Exchange rebased its index, effectively 1971. cutting previous readings in half. On Jan. 1, 1977, the Board of Governors for the first time established in 3. Since July 1983, under the revised Regulation T, margin credit at broker- Regulation T the initial margin required for writing options on securities, setting dealers has included credit extended against stocks, convertible bonds, stocks it at 30 percent of the current market value of the stock underlying the option. On acquired through the exercise of subscription rights, corporate bonds, and Sept. 30, 1985, the Board changed the required initial margin, allowing it to be the government securities. Separate reporting of data for margin stocks, convertible same as the option maintenance margin required by the appropriate exchange or bonds, and subscription issues was discontinued in April 1984. self-regulatory organization; such maintenance margin rules must be approved by 4. Free credit balances are amounts in accounts with no unfulfilled commit- the Securities and Exchange Commission. Effective Jan. 31, 1986, the SEC ments to brokers and are subject to withdrawal by customers on demand. approved new maintenance margin rules, permitting margins to be the price of the 5. Series initiated in June 1984. option plus 15 percent of the market value of the stock underlying the option. 6. Margin 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 • November 1994 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn 1994 11999911 11999922 11999933 Mar. Apr. May June July Aug. U.S. budget1 1 Receipts, total 1,054,272 1,090,453 1,153,226 93,108 141,326 83,546 138,124 84,827 97,338 2 On-budget 760,388 788,027 841,292 64,612 104,311 55,367 106,014 60,145 66,207 3 Off-budget 293,885 302,426 311,934 28,496 37,015 28,179 32,110 24,682 31,131 4 Outlays, total 1,323,793 1,380,856 1,408,484 125,423 123,872 115,602r 122,923 118,025 121,513 5 On-budget 1,082,106 1,128,518 1,141,897 100,260 100,625 89,729 108,166 93,163 90,537 6 Off-budget 241,687 252,339 266,587 25,163 23,247 25,871 32,290 24,862 30,975 7 Surplus or deficit (-), total -269,521 -290,403 -255,258 -32,315 17,454 -32,054 14,850 -33,198 -24,174 8 On-budget -321,719 -340,490 -300,605 -35,648 3,686 -34,362 -2,152 -33,018 -24,330 9 Off-budget 52,198 50,087 45,347 3,333 13,768 2,308 -180 -180 156 Source of financing (total) 10 Borrowing from the public 276,802 310,918 248,619 26,511 -21,801 27,649 1,898 -3 245 11 Operating cash (decrease, or increase (-)) ... -1,329 -17,305 6,283 -6,461 -4,124 21,537 -23,797 30,706 -9,815 12 Other -5,952 -3,210 356 12,265 8,471 -17,132 7,049 2,495 33,744 MEMO 13 TTrreeaassuurryy ooppeerraattiinngg bbaallaannccee ((lleevveell,, eenndd ooff ppeerriioodd)) 41,484 58,789 52,506 44,607 48,731 27,194 50,991 20,285 30,100 14 Federal Reserve Banks 7,928 24,586 17,289 6,181 7,965 5,675 9,356 3,683 5,994 15 Tax and loan accounts 33,556 34,203 35,217 38,426 40,766 21,519 41,635 16,603 24,100 1. Since 1990, off-budget items have been the social security trust funds accounts; seigniorage; increment on gold; net gain or loss for U.S. currency (federal old-age survivors insurance and federal disability insurance) and the U.S. valuation adjustment; net gain or loss for IMF loan-valuation adjustment; and Postal Service. profit on sale of gold. 2. Includes special drawing rights (SDRs); reserve position on the U.S. quota SOURCES. U.S. Department of the Treasury, Monthly Treasury Statement of in the International Monetary Fund (IMF); loans to the IMF; other cash and Receipts and Outlays of the U.S. Government-, and U.S. Office of Management monetary assets; accrued interest payable to the public; allocations of SDRs; and Budget, Budget of the U.S. Government. deposit funds; miscellaneous liability (including checks outstanding) and asset 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 1992 H2 July RECEIPTS 1 All sources 1,090,453 1,153,226 540,484 593,212 582,054 651,944 138,124 84,827 2 Individual income taxes, net 475,964 509,680 246,938 255,556 262,073 274,736 58,123 37,372 3 Withheld 408,352 430,211 215,584 209,517 228,423 225,387 37,724 35,360 4 Presidential Election Campaign Fund . 30 28 10 25 2 63 9 6 5 Nonwithheld 149,342 154,989 39,288 113,510 41,768 117,928 21,985 3,793 6 Refunds 81,760 75,546 7,942 67,468 8,114 68,642 1,596 1,786 Corporation income taxes 7 Gross receipts 117,951 131,548 58,022 69,044 68,266 80,536 29,812 4,581 8 Refunds 17,680 14,027 7,219 7,198 6,514 6,933 697 776 9 Social insurance taxes and contributions. net 413,689 428,300 192,599 227,177 206,176 248,301 41,509 34,046 10 Employment taxes and contributions 385,491 396,939 180,758 208,776 192,749 228,714 40,853 32,222 11 Self-employment taxes and contributions 24,421 20,604 3,988 16,270 4,335 20,762 3,813 93 12 Unemployment insurance 23,410 26,556 9,397 16,074 11,010 17,301 290 1,399 13 Other net receipts 4,788 4,805 2,445 2,326 2,417 2,284 366 424 14 Excise taxes 45,569 48,057 23,456 23,398 25,994 26,444 4,596 4,175 15 Customs deposits 17,359 18,802 9,497 8,860 10,215 9,500 1,711 1,782 16 Estate and gift taxes 11,143 12,577 5,733 6,494 6,617 8,197 1,068 1,060 17 Miscellaneous receipts 26,459 18,273 11,458 9,879 9,227 11,164 2,003 2,587 OUTLAYS 18 All types 1,380,856 1,408,484 723,527 673,915 727,654r 709,978r 122,923 118,025 19 National defense 298,350 291,086 155,231 140,535 146,177 133,739 24,197 22,147 20 International affairs 16,107 16,826 9,916 6,565 10,534 5,800 582 893 21 General science, space, and technology. 16,409 17,030 8,521 7,996 8,904 8,502 1,596 1,236 2 2 2 3 N En a e tu rg ra y l resources and environment 2 4 0 , ,0 5 2 0 5 0 2 4 0 , , 3 2 1 3 9 9 1 3 1 , , 1 4 0 6 9 7 2 8, , 5 4 9 6 2 2 ll 1 , , 0 6 9 4 6 1 r 9 2 , , 1 0 7 3 9 6 1,6 2 7 6 0 1 1,6 4 3 6 5 4 24 Agriculture 15,205 20,443 8,852 11,872 7,335 7,451 320 309 25 Commerce and housing credit 10,083 -22,725 -7,697 -14,537 -1,724 -5,114 1,016 277 26 Transportation 33,333 35,004 18,425 16,076 19,828r 16,772 3,151 3,226 27 Community and regional development .. 6,838 9,051 4,464 4,929 5,606 5,592 1,184 1,081 28 Education, training, employment, and social services 45,248 50,012 21,241 24,080 25,494r 18,976 3,797 2,948 29 Health 89,497 99,415 47,232 49,882 52,631 53,121 9,729 8,189 30 Social security and Medicare 406,569 435,137 232,109 195,933 223,735 232,777 43,367 39,297 31 Income security 196,958 207,257 98,382 107,870 103,156r 109,103 13,139 17,037 32 Veterans benefits and services 34,138 35,720 18,561 16,385 19,848 16,686 3,011 3,079 33 Administration of justice 14,426 14,955 7,238 7,482 7,448 7,718 1,136 1,440 34 General government 12,990 13,009 8,223 5,205 6,565 5,076 1,715 -13 35 Net interest6 199,421 198,811 98,692 99,635 99,963 99,844 15,880 17,956 36 Undistributed offsetting receipts -39,280 -37,386 -20,628 -17,035 -20,407 -17,308 -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. Rents and royalties for the outer continental shelf, U.S. government the Budget have not been fully distributed across months. 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 U.S. Office of Management 4. Federal employee retirement contributions and civil service retirement and 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 Nonfinancial Statistics • November 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 4,602 4,673 ?,P ublic debt securities 3,985 4,065 4,177 4,231 4,352 4,412 4,536 4,576 i 3 Held by public 2,977 3,048 3,129 3,188 3,252 3,295 3,382 3,434 T 1 4 Held by agencies 1,008 1,016 1,048 1,043 1,100 1,117 1,154 1,142 5 Agency securities 16 18 19 20 21 25 27 26 1 6 Held by public 16 18 19 20 21 25 27 26 •1 7 Held by agencies 0 0 0 0 0 0 0 0 8 Debt subject to statutory limit 3,891 3,973 4,086 4,140 4,256 4,316 4,446 4,491 4,559 9 Public debt securities 3,890 3,972 4,085 4,139 4,256 4,315 4,445 4,491 4,559 10 Other debt1 0 0 0 0 0 0 0 0 0 MEMO 11 Statutory debt limit 4,145 4,145 4,145 4,145 4,370 4,900 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 TTyyppee aanndd hhoollddeerr 11999900 11999911 11999922 11999933 03 04 01 02 1 Total gross public debt 3,364.8 3,801.7 4,177.0 4,535.7 4,411.5 4,535.7 4,575.9 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 4,642.5 3 Marketable 2,195.8 2,471.6 2,754.1 2,989.5 2,904.9 2,989.5 3,042.9 3,051.0 4 Bills 527.4 590.4 657.7 714.6 658.4 714.6 721.1 6' «.4 5 Notes 1,265.2 1,430.8 1,608.9 1,764.0 1,734.2 1,764.0 1,802.5 1,835.7 6 Bonds 388.2 435.5 472.5 495.9 497.4 495.9 504.2 501.8 7 Nonmarketable1 1,166.2 1,327.2 1,419.8 1,542.9 1,503.7 1,542.9 1,529.7 1,591.5 8 State and local government series 160.8 159.7 153.5 149.5 149.5 149.5 145.5 143.4 y Foreign issues 43.5 41.9 37.4 43.5 42.5 43.5 42.7 42.2 10 Government 43.5 41.9 37.4 43.5 42.5 43.5 42.7 42.2 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes 124.1 135.9 155.0 169.4 167.0 169.4 172.6 174.9 13 Government account series 813.8 959.2 1,043.5 1,150.0 1,114.3 1,150.0 1,138.4 1,200.6 14 Non-interest-bearing 2.8 2.8 3.1 3.4 2.9 3.4 3.3 By holder 4 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 1,141.7 16 Federal Reserve Banks 259.8 281.8 302.5 334.2 325.7 334.2 342.6 17 Private investors 2,288.3 2,563.2 2,839.9 3,047.7 2,983.0 3,047.7 3,094.6 18 Commercial banks 171.5 233.4 294.0 316.0 313.3 316.0 344.3 19 Money market funds 45.4 80.0 79.4 80.5 75.2 80.5 70.5 20 Insurance companies 142.0 168.7 197.5 216.0 215.5 216.0 218.1 n.a. 21 Other companies 108.9 150.8 192.5 213.0 215.6 213.0 216.3 22 State and local treasuries 490.4 520.3 534.8 564.0 558.0 564.0 582.8 Individuals 23 Savings bonds 126.2 138.1 157.3 171.9 169.1 171.9 175.0 24 Other securities 107.6 125.8 131.9 137.9 136.7 137.9 140.1 25 Foreign and international 458.4 491.8 549.7 623.3 592.3 623.3 633.5 26 Other miscellaneous investors6 637.7 651.3 702.4 725.0 707.2 725.0 714.0 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, week ending Item May June July July 6 July 13 July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 OUTRIGHT TRANSACTIONS2 By type of security 1 U.S. Treasury bills 48,137 44,292 47,024 53,391 46,778 46,949 53,927 57,258 55,638 46,251 Coupon securities, by maturity 2 Five years or less 78,977 59,771 71,909 87,157 88,035 82,359 92,868 95,597 89,903 58,879 3 More than five years 38,985 36,722 37,990 37,820 39,015 47,704 59,820 60,786 46,399 38,257 4 Federal agency 15,536 16,162 14,887 15,426 15,383 16,875 13,037 15,214 16,962 18,255 5 Mortgage-backed 37,606 33,328 51,956 40,004 25,843 31,561 49,059 34,827 24,249 22,165 By type of counterparty Interdealer broker securities 6 U.S. Treasury 94,926 76,060 90,041 104,711 99,507 99,520 118,645 121,583 105,674 79,274 7 Federal agency 731 651 913 836 502 703 635 662 552 881 8 Mortgage-backed 13,306 9,161 18,519 14,149 10,448 11,524 17,355 12,864 8,957 9,351 Other securities 9 U.S. Treasury 71,173 64,725 66,882 73,657 74,321 77,492 87,970 92,058 86,266 64,113 10 Federal agency 14,805 15,511 13,974 14,590 14,881 16,172 12,402 14,552 16,410 17,374 11 Mortgage-backed 24,301 24,167 33,437 25,855 15,395 20,037 31,704 21,963 15,292 12,814 FUTURES TRANSACTIONS3 By type of deliverable security 12 U.S. Treasury bills 914 663 1,109 1,049 1,069 802 Coupon securities, by maturity 12 Five years or less 2,692 3,005 2,230 3,104 2,671 2,397 2,860 2,630 3,202 2,652 13 More than five years 12,198 10,718 12,090 13,676 11,009 13,964 12,613 15,667 12,776 13,196 OPTIONS TRANSACTIONS4 By type of underlying security Coupon securities, by maturity 15 Five years or less 3,493' 2,487r 3,558' 3,687 3,377 4,642 4,616 4,518 3,623 3,308 16 More than five years 4,068r 3,925r 3,238r 4,665 3,863 5,377 4,538 6,153 5,333 4,493 17 Mortgage-backed securities 791r l,303r 925r 605 564 725 1,246 563 577 286 1. Transactions are market purchases and sales of securities as reported to the 3. 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. Monthly averages are based on the number specify delayed delivery. All futures transactions are included regardless of time of trading days in the month. Transactions are assumed evenly distributed among to delivery. Forward contracts for U.S. Treasury securities and federal agency the trading days of the report week. Immediate, forward, and futures transactions debt securities are included when the time to delivery is more than five business are reported at principal value, which does not include accrued interest; options days. Forward contracts for mortgage-backed agency securities are included transactions are reported at the face value of the underlying securities. when the time to delivery is more than thirty business days. Dealers report cumulative transactions for each week ending Wednesday. 4. Options transactions are purchases or sales of put and call options, whether 2. Transactions for immediate delivery include purchases or sales of securities arranged on an organized exchange or in the over-the-counter market, and include (other than mortgage-backed agency securities) for which delivery is scheduled in options on futures contracts on U.S. Treasury and federal agency securities. five business days or less and "when-issued" securities that settle on the issue NOTE. In tables 1.42 and 1.43, "n.a." indicates that data are not published date of offering. Transactions for immediate delivery of mortgage-backed agency because of insufficient activity. securities include purchases and sales for which deliveiy is scheduled in thirty business Major changes in the report form filed by primary dealers induced a break in the days or less. Stripped securities are reported at market value by maturity of coupon or dealer data series as of the week ending July 6, 1994. corpus. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • November 1994 1.43 U.S.'GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1994 1994, week ending IItteemm May June July July 6r July 13 July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Positions2 NET IMMEDIATE POSITIONS3 By type of security 1 U.S. Treasury bills 0 0 4,837 -4,577 1,340 9,697 8,808 9,623 4,752 2,727 22,,446655 Coupon securities, by maturity 2 Five years or less 0 0 -19,174 -20,021 -19,987 -23,672 -15,263 -15,433 -11,910 -11,630 -8,669 3 More than five years 0 0 -28,673 -28,995 -29,622 -28,765 -28,308 -27,005 -24,096 -21,098 -23,282 4 Federal agency 0 0 19,979 18,585 18,465 19,706 22,040 21,588 18,599 18,568 17,358 5 Mortgage-backed 0 0 45,633 42,794 46,128 46,317 47,093 45,272 44,401 42,927 41,492 FUTURES AND FORWARD POSITIONS, NET4 By type of deliverable security 6 U.S. Treasury bills 0 0 -3,552 -2,092 -1,816 -5,542 -3,510 -5,370 -5,976 -5,129 --55,,447722 Coupon securities, by maturity 7 Five years or less 0 0 5,623 2,844 4,976 7,058 6,840 6,283 6,285 6,138 44,,225566 8 More than five years 0 0 -616 -1,994 2,413 -14 -1,103 -4,050 -4,697 -6,644 -5,839 Financing5 Reverse repurchase agreements 9 Overnight and continuing 282,976 258,155 254,524r 244,900 254,867 259,537 252,847 262,518 273,709 302,287 225599,,558855 10 Term 377,460 400,429 397,577r 360,647 397,103 407,094 423,622 391,571 419,773 354,941 392,886 Securities borrowed 11 Overnight and continuing 160,263r 155,361r 167,116r 163,581 169,574 168,130 164,374 171,144 171,501 181,630 177,263 12 Term 30,886r 37,849r 51,906r 50,217 51,597 54,536 52,873 48,689 48,122 40,103 42,709 13 Securities received as pledge, overnight and continuing 0r 0r 2,313r 2,095 2,241 2,505 2,320 2,416 1,960 2,199 1,998 Repurchase agreements 14 Overnight and continuing 469,689r 450,891r 465,675r 454,994 460,135 478,967 445599,,004433 479,736 484,671 538,439 447700,,999977 15 Term 351,134 375,461 363,779r 316,538 361,112 368,517 402,650 362,989 397,281 324,519 372,580 Securities loaned 16 Overnight and continuing 3,533 3,680 4,323r 4,530 4,277 4,632 3,936 4,229 3,488 4,190 4,149 17 Term 573r l,692r l,372r 934 1,111 1,677 1,717 1,351 572 1,296 1,272 Securities pledged 18 Overnight and continuing 0r 0' 34,700r 38,900 36,091 33,467 32,525 31,932 24,720 28,704 28,036 19 Term 0R 0r l,085r 1,186 1,151 1,170 940 924 7,369 2,944 3,293 20 Collateralized loans, overnight and continuing 21,179r 25,349r 20,164r 14,756 21,900 20,223 21,190 23,340 22,509 23,038 22,564 MEMO: Matched book6 Securities in 21 Overnight and continuing 211,581 195,019 207,656r 193,545 199,027 209,765 215,230 226,981 236,598 256,444 231,074 22 Term 327,691 349,644 369,889r 330,820 369,888 378,989 394,368 369,733 390,674 328,070 358,442 Securities out 23 Overnight and continuing 244,382r 239,337r 268,075r 248,101 260,070 273,605 276,288 287,993 292,688 318,338 281,314 24 Term 275,999 290,450 294,642r 255,248 295,386 292,233 326,707 300,536 334,643 266,804 302,740 1. Data for positions and financing are obtained from reports submitted to the delivery. Forward contracts for U.S. Treasury securities and federal agency debt Federal Reserve Bank of New York by the U.S. government securities dealers on securities are included when the time to delivery is more than five business days. its published list of primary dealers. Weekly figures are close-of-business Wednes- Forward contracts for mortgage-backed agency securities are included when the day data. Positions for calendar days of the report week are assumed to be time to delivery is more than thirty business days. constant. Monthly averages are based on the number of calendar days in the 5. Overnight financing refers to agreements made on one business day that month. mature on the next business day; continuing contracts are agreements that remain 2. Securities positions are reported at market value. in effect for more than one business day but have no specific maturity and can be 3. Net immediate positions include securities purchased or sold (other than terminated without advance notice by either party; term agreements have a fixed mortgage-backed agency securities) that have been delivered or are scheduled to maturity of more than one business day. be delivered in five business days or less and "when-issued" securities that settle 6. Matched-book data reflect financial intermediation activity in which the on the issue date of offering. Net immediate positions of mortgage-backed agency borrowing and lending transactions are matched. Matched-book data are included securities include securities purchased or sold that have been delivered or are in the financing breakdowns given above. The reverse repurchase and repurchase scheduled to be delivered in thirty business days or less. numbers are not always equal because of the "matching of securities of different 4. Futures positions reflect standardized agreements arranged on an exchange. values or different types of collateralization. Forward positions reflect agreements made in the over-the-counter market that NOTE. Major changes in the report form filed by primary dealers induced a break in specify delayed delivery. All futures positions are included regardless of time to the dealer data series as of the week ending July 6, 1994. 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 Agency 11999900 11999911 11999922 11999933 Feb. Mar. Apr. May June 1 Federal and federally sponsored agencies 0 411,805 434,668 442,772 592,751 604,421 619,302 633,366 646,661 2 Federal agencies . 0 35,664 42,159 41,035 44,753 44,291 44,390 43,681r 43,040 3 Defense Department'. 0 7 7 7 6 6 6 6 6 4 Export-Import Bank ' 0 10,985 11,376 9,809 5,315 4,853 4,853 4,853 4,386 5 Federal Housing Administration4 0 328 393 397 99 114 123 131r 138 6 Government National Mortgage Association certificates of participation 0 0 0 0 0 0 0 0 0 7 Postal Service6 0 6,445 6,948 8,421 9,732 9,732 9,732 9,473 9,473 8 Tennessee Valley Authority .. 0 17,899 23,435 22,401 29,601 29,586 29,676 29,218 29,037 9 United States Railway Association 0 0 0 0 0 0 0 0 0 10 Federally sponsored agencies7 0 375,428 392,509 401,737 547,998 560,130 574,912 589,685 603,621 11 Federal Home Loan Banks 0 136,108 117,895 107,543 137,862 147,309 153,539 156,955 160,822 12 Federal Home Loan Mortgage Corporation 0 26,148 30,941 30,262 70,482 62,908 65,621 71,274 73,340 13 Federal National Mortgage Association 0 116,064 123,403 133,937 206,493 216,430 218,845 223,173 227,897 14 Farm Credit Banks8 0 54,864 53,590 52,199 52,839 52,433 52,672 52,534 53,692 15 Student Loan Marketing Association 0 28,705 34,194 38,319 40,407 41,120 44,306 45,820 47,940 16 Financing Corporation . 0 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 17 Farm Credit Financial Assistance Corporation 0 847 1,261 1,261 1,261 1,261 1,261 1,261 1,261 18 Resolution Funding Corporation 0 4,522 23,055 29,996 29,996 29,996 29,996 29,996 29,996 MEMO 19 Federal Financing Bank debt13 0 134,873 179,083 185,576 123,304 120,103 118,386 116,092 115,603 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 0 10,979 11,370 9,803 5,309 4,847 4,847 4,847 4,383 21 Postal Service6 0 6,195 6,698 8,201 9,732 9,732 9,732 9,473 9,473 22 Student Loan Marketing Association 0 4,880 4,850 4,820 1,760 0 0 0 0 23 Tennessee Valley Authority . 0 16,519 14,055 10,725 6,075 6,075 6,075 4,675 4,375 24 United States Railway Association 0 0 0 0 0 0 0 0 0 Other lending14 25 Farmers Home Administration 0 53,311 52,324 48,534 38,619 38,209 37,839 37,124 35,999 26 Rural Electrification Administration 0 19,265 18,890 18,562 17,512 17,360 17,360 17,419 17,357 27 Other 0 23,724 70,896 84,931 43,667 43,880 42,533 42,554 44,016 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 Fanners Home Administration entry which is 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 DomesticN onfinancialS tatistics • November 1994 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1994 TTyyppee ooff ii oo ss rr ss uu uu ee ss ee oo rr iissssuueerr,, 11999911 11999922rr 11999933 Jan. Feb. Mar. Apr. May June July Aug. 1 All issues, new and refunding1 154,402 226,818 279,945 16,560 14,698 15,461 10,129 12,388 14,779 12,450 11,294 By type of issue 2 General obligation 55,100 78,611 90,599 5,105 4,365 7,371 3,469 4,029 5,556 7,110 3,996 3 Revenue 99,302 136,580 189,346 11,455 8,553 8,090 6,660 8,359 9,223 5,340 7,298 By type of issuer 4 State 24,939 24,874 27,999 1,235 921 3,302 1,013 1,158 1,733 4,686 1,665 5 Special district or statutory authority2 80,614 138,327 178,714 10,672 10,263 6,145 5,235 8,085 9,335 4,931 7,103 6 Municipality, county, or township 48,849 63,617 73,232 4,653 3,514 6,014 3,881 3,145 3,711 2,833 2,526 7 Issues for new capital 116,953 101,865 91,434 5,558 8,774 10,114 8,147 9,125 9,726 10,348 n.a. By use of proceeds 8 Education 21,121 18,852 16,831 1,573 2,292 1,859 2,102 1,933 1,945 1,147 2,035 9 Transportation 13,395 14,357 9,167 293 1,223 401 1,453 1,037 2,033 290 1,080 10 Utilities and conservation 21,039 12,164 12,014 480 243 540 707 423 856 694 885 11 Social welfare 25,648 16,744 13,837 813r l,648r l,227r l,475r 2,136r l,312r l,698r 2,117 12 Industrial aid 8,376 6,188 6,862 392 1,316 470 601 657 935 959 838 13 Other purposes 30,275 33,560 32,723 2,007' 2,052r 5,617r l,809r 2,939r 2,645r 5,560" 2,925 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 Dec. Jan. Feb.r Mar. Apr. May June July 1 All issues1 465,246 559,827 764,509 44,344 58,445" 47,175 52,188r 34,828r 43,809" 43,157" 23,751 2 Bonds2 389,822 471,502 641,498 33,813 52,652r 39,369 42,984r 29,363r 40,203" 36,810" 20,100 By type of offering 3 Public, domestic 286,930 378,058 486,879 32,232 47,208r 32,052 40,410" 26,154r 33,028r 31,941r 17,500 4 Private placement, domestic 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 1,582 5,444 7,317 2,574 3,209 7,175 4,869 2,600 By industry group 6 Manufacturing 86,628 82,058 88,002 3,068 4,785 3,586 2,421 2,229 2,302r 2,217 2,271 7 Commercial and miscellaneous 36,666 43,111 60,443 2,525 2,869 2,153 3,020 940 2,446r 3,059r 1,500 8 Transportation 13,598 9,979 10,756 895 693 100 920 97 150 1,082 223 9 Public utility 23,944 48,055 56,272 2,336 2,466 1,768 1,632 546 1,021 631 1,000 10 Communication 9,431 15,394 31,950 2,001 2,592 2,115 2,090 1,298 934 573r 800 11 Real estate and financial 219,555 272,904 394,076 22,989 39,247r 29,647 32,901r 24,253r 33,351r 29,249r 14,306 12 Stocks2 75,424 88,325 n.a. 10,531 5,793 7,806 9,210" 5,465r 3,673" 6,347" 3,651 By type of offering 13 Public preferred 17,085 21,339 20,533 650 1,592 1,318 1,969 2,248 695 1,366 599 14 Common 48,230 57,118 90,559 9,881 4,200r 6,488 7,241r 3,218r 2,978r 4,981r 3,053 15 Private placement 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 2,267 l,486r 1,558 2,499* 2,696r 956 1,056 489 17 Commercial and miscellaneous 19,418 20,231 25,761 1,970 l,472r 1,630 l,491r 773r 905 1,853 702 18 Transportation 2,439 2,595 2,237 162 78 589 358r 106 104 449 75 19 Public utility 3,474 6,532 7,050 129 293 43 480 75 239 297 n.a. 20 Communication 475 2,366 3,439 1,603 n.a. 120 0 0 32 28 n.a. 21 Real estate and financial 25,507 33,879 49,889 4,381 2,463r 3,867 4,381 l,815r l,437r 2,663r 2,386 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 IItteemm 11999922 11999933 Dec. Jan. Feb. Mar. Apr. May June July 1 Sales of own shares2 647,055 89,775 98,679 78,032 87,381 71,164 65,179 65,333 59,672 f 2 Redemptions of own shares 447,140 62,764 61,829 56,235 73,395 61,925 55,036 56,068 50,563 3 Net sales 199,915 1 27,011 36,849 21,797 13,986 9,239 10,144 9,265 9,109 4 Assets4 1,056,310 1,510,047 1,572,907 1,561,705 1,500,745 1,510,827 1,529,478 1,509,998 1,552,410 1 5 Cash5 73,999 1 100,209 110,022 113,975 112,399 118,221 119,982 114,885 120,580 6 Other 982,311 • 1,409,838 1,462,879 1,447,730 1,388,347 1,392,606 1,409,496 1,395,113 1,431,830 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 newly in the same group. formed companies after their initial offering of securities. 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 1992 1993 1994 AAccccoouunntt 11999911 11999922 11999933 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2r 1 Profits with inventory valuation and capital consumption adjustment 390.3 405.1 485.8 363.2 432.5 442.5 473.1 493.5 533.9 508.2 546.4 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 131.1 139.7 173.2 124.6 148.6 159.8 171.8 169.9 191.5 184.1 201.7 4 Profits after taxes 234.1 256.2 289.2 234.9 264.8 273.0 284.8 288.9 310.2 299.4 321.4 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 95.6 115.6 103.0 118.9 7 Inventory valuation 5.8 -6.4 -6.2 -7.3 2.1 -11.2 -10.0 3.0 -6.5 -12.3 -14.1 8 Capital consumption adjustment 19.4 15.7 29.5 10.9 16.9 21.0 26.5 31.7 38.8 37.0 37.4 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 1993 1994 IInndduussttrryy 11999922 11999933 1199994411 Q1 Q2 Q3 Q4 Q1 Q2 Q31 Q41 1 Total nonfarm business 546.60 586.73 638.37 563.48 578.95 594.56 604.51 619.34 637.08 651.92 645.13 Manufacturing 2 Durable goods industries 73.32 81.45 92.78 78.19 8800..3333 82.74 83.64 86.03 91.71 98.97 94.44 3 Nondurable goods industries 100.69 98.02 99.77 95.80 97.22 99.74 98.51 99.02 102.28 98.39 99.39 Nonmanufacturing 4 Mining 8.88 10.08 11.24 88..9988 99..1100 1111..0099 1100..9922 11.43 1100..7700 11.57 11.27 Transportation 5 Railroad 6.67 6.14 6.72 6.16 5.94 5.89 6.55 7.46 5.36 6.65 7.40 6 Air 8.93 6.42 3.95 7.26 6.63 6.70 5.06 4.23 4.53 3.86 3.16 7 Other 7.04 9.22 10.53 8.96 8.92 8.74 10.23 10.77 9.70 10.22 11.42 Public utilities 8 Electric 48.22 52.55 52.25 49.98 50.61 52.96 55.60 48.68 53.55 54.15 52.60 9 Gas and other 23.99 23.43 24.20 23.79 23.83 22.98 23.27 24.51 22.96 24.35 24.97 10 Commercial and other 268.84 299.44 336.93 284.35 296.35 303.74 310.73 327.20 336.28 343.76 340.48 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 • November 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 Ql 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 i 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 6 5 LESS: R R e e s s e e r r v v e e s s f f o o r r u lo n s e s a e r s n ed income 5 1 5 2 . . 1 9 5 1 0 5 . . 8 8 4 1 9 1 . . 0 0 5 1 0 2 . . 8 0 5 1 0 5 . . 8 8 4 1 7 5 . . 4 5 4 1 7 3 . . 5 8 4 1 7 1 . . 9 1 4 1 9 1 . . 0 0 4 1 9 1 . . 3 5 7 Accounts receivable, net 412.6 415.5 416.1 411.1 415.5 406.6 408.0 408.6 416.1 427.3 8 All other 149.0 150.6 177.3 146.5 150.6 155.0 156.6 169.7 177.3 177.0 9 Total assets 561.6 566.1 593.4 557.6 566.1 561.6 564.6 578.3 593.4 604.3 LIABILITIES AND CAPITAL 1 1 0 1 C Ba o n m k m l e o r a c n i s a l paper 1 4 5 2 9 . . 3 5 1 3 5 7 6 . . 6 4 1 2 5 5 9 . . 3 2 1 3 5 8 3 . . 1 2 1 3 5 7 6 . . 6 4 1 3 4 4 9 . . 1 8 1 2 4 9 4 . . 5 5 1 2 4 5 9 . . 8 9 1 2 5 5 9 . . 3 2 1 2 6 4 5 . . 2 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 44.9 15 Not elsewhere classified 191.3 195.3 199.9 191.4 195.3 195.1 195.8 198.1 199.9 205.3 1 1 6 / A C l a l p o it t a h l e , r s l u i r a p b l i u li s t , i e a s nd undivided profits 6 6 9 4 . . 0 8 6 71 7 . . 2 8 9 7 1 1 . . 1 7 7 6 3 8 . . 7 1 7 6 1 7 . . 2 8 7 6 4 6 . . 2 6 8 67 1 . . 1 3 8 6 7 8 . . 6 9 9 7 1 1 . . 1 7 9 69 4 . . 7 3 18 Total liabilities and capital 561.2 566.1 593.4 559.4 566.1 561.7 564.6 578.3 593.4 604.3 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 Feb. Mar. Apr. May June July Seasonally adjusted 11 TToottaall 519,716 530,603 537,947 544,335 554,342 557,121 564,902 567,488 563,576 22 CCoonnssuummeerr 154,951 157,075 162,057 161,446 163,493 163,763 165,126 167,313 165,047 33 RReeaall eessttaattee 65,925 68,556r 68,731 69,438 69,669 69,815 71,402 70,966 72,121 44 BBuussiinneessss 298,840 304,972 307,159 313,451 321,180 323,543 328,374 329,209 326,408 Not seasonally adjusted 5 Total 523,354 534,934 542,700 542,894 553,810 558,208 562,600 567,798 6 Consumer 155,908 158,398 163,629 161,367 163,484 164,257 163,873 166,267 7 Motor vehicles 63,415 57,605 55,274 56,963 57,797 59,458 56,614 56,932 8 Other consumer3 58,522 59,522 62,189 61,132 62,264 63,387 64,161 66,064 9 Securitized motor vehicles4 23,361 29,734 36,024 33,451 33,173 31,328 32,623 32,705 10 Securitized other consumer4 10,610 11,537 10,141 9,821 10,250 10,084 10,475 10,566 11 Real estate2 65,760 68,410 68,577 69,446 69,005 70,114 70,920 70,475 12 Business 301,686 308,126r 310,495 312,081 321,321 323,837 327,807 331,056 13 Motor vehicles 90,613 87,456 90,172 90,668 95,719 97,727 99,311 101,711 14 Retail5 22,957 19,303 16,024 17,514 19,162 19,632 19,790 20,587 15 Wholesale6 31,216 29,962 31,067 29,435 31,070 31,059 31,019 31,084 16 Leasing 36,440 38,191 43,081 43,720 45,487 47,036 48,501 50,040 17 Equipment 141,399 151,607 148,858 147,425 149,721 151,150 154,568 155,179 18 Retail 30,962 32,212 33,266 33,033 33,861 34,602 35,429 36,037 19 Wholesale6 9,671 8,669 8,007 7,972 8,281 8,295 8,403 8,441 20 Leasing 100,766 110,726 107,585 106,420 107,579 108,253 110,736 110,701 21 Other business" 60,900 57,464 51,054 51,489 53,596 53,352 51,818 52,709 22 Securitized business assets 8,774 11,599 20,411 22,499 22,285 21,607 22,111 21,456 23 Retail 576 1,120 2,483 2,245 2,119 2,058 2,406 2,619 24 Wholesale 5,285 5,756 9,727 13,084 13,090 13,098 13,348 13,033 25 Leasing 2,913 4,723 8,201 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. Digitized for FRA4. SOEutsRta nding balances of pools upon which securities have been issued; these balances are no longer carried on the balance sheets of the loan originator. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate A37 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 1994 IItteemm 11999911 11999922 11999933 Feb. Mar. Apr. May June July Aug. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms1 1 Purchase price (thousands of dollars) 155.0 158.1 163.1 157.9 167.8 166.1 171.6 172.6 166.0 167.6 2 Amount of loan (thousands of dollars) 114.0 118.1 123.0 124.1 131.0 127.6 132.2 130.0 129.0 129.3 3 Loan-to-price ratio (percent) 75.0 76.6 78.0 80.2 80.2 79.3 78.5 78.0 79.4 79.0 4 Maturity (years) 26.8 25.6 26.1 27.0 27.6 26.7 27.6 26.5 27.5 28.0 5 Fees and charges (percent of loan amount)2 1.71 1.60 1.30 1.16 1.20 1.16 1.45 1.30 1.35 1.38 Yield (percent per year) 6 Contract rate1 9.02 7.98 7.02 6.67 6.81 7.13 7.20 7.41 7.50 7.45 7 Effective rate1, 9.30 8.25 7.24 6.85 6.99 7.31 7.43 7.62 7.71 7.67 8 Contract rate (HUD series)4 9.20 8.43 7.37 7.54 8.31 8.56 8.61 8.72 8.64 8.68 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203)5 9.25 8.46 7.46 7.59 8.57 8.63 8.63 9.03 8.65 8.66 10 GNMA securities6 8.59 7.71 6.65 6.72 7.40 7.93 8.05 8.01 8.23 8.15 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 128,983 158,119 190,861 196,078 197,770 201,542 206,147 208,180 210,666 212,680 12 FHA/VA insured 21,796 22,593 23,857 23,789 24,226 25,088 25,303 25,390 25,477 25,604 13 Conventional 107,187 135,526 167,004 172,289 173,544 176,454 180,844 182,790 185,189 187,076 Mortgage transactions (during period) 14 Purchases 37,202 75,905 92,037 5,427 5,820 6,677 7,238 4,386 4,628 4,077 Mortgage commitments (during period) 15 Issued 40,010 74,970 92,537 4,858 8,683 4,788 3,801 44,,226688 3,798 3,776 16 To sell8 7,608 10,493 5,097 525 136 90 281 11 0 0 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of periodf 17 Total 26,809 33,665 55,012 57,245 58,498 59,352 60,799 62,232 62,993 64,118 18 FHA/VA insured 460 352 321 318 315 309 304 299 296 291 19 Conventional 26,349 33,313 54,691 56,928 59,184 59,043 60,495 61,933 62,697 63,827 Mortgage transactions (during period) 20 Purchases 99,965 191,125 229,242 17,840 15,970 14,589 10,629 8,341 6,535 6,407 21 Sales 92,478 179,208 208,723 16,719 14,486 14,175 10,228 8,097 6,338 5,828 Mortgage commitments (during period)9 22 Contracted 114,031 261,637 274,599 12,880 22,533 22,765 9,586 7,252 5,820 5,649 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 • November 1994 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1993 1994 Type of holder and property 11999900 11999911 11999922 Q2 Q3 Q4 Q1 Q2P 1 All holders 3,762,872 3,924,782 4,049,256 4,109,649r 4,167,465r 4,209,912r 4,236,258' 4,279,533 By type of property 2 One- to four-family residences 2,616,288 2,780,044 2,959,558 3,034,990r 3,095,463' 3,144,895' 3,178,154' 3,217,521 3 Multifamily residences 309,369 306,410 295,417 291,258r 290,544' 290,346' 288,994' 291,587 4 Commercial 758,313 759,023 713,862 702,720r 700,642' 693,824' 688,144' 688,226 5 Farm 78,903 79,306 80,419 80,681' 80,816' 80,847' 80,966' 82,199 By type of holder 6 Major financial institutions 1,914,315 1,846,726 1,769,187 l,765,667r 1,769,890' 1,767,685' 1,746,317' 1,760,541 7 Commercial banks 844,826 876,100 894,513 910,989 922,610' 940,293' 937,973' 956,767 8 One- to four-family 455,931 483,623 507,780 526,817 537,602' 556,443' 554,125' 568,757 9 Multifamily 37,015 36,935 38,024 38,058 37,652' 38,630r 38,456' 39,074 10 Commercial 334,648 337,095 328,826 325,519 326,508' 324,359' 324,147' 327,021 11 Farm . 17,231 18,447 19,882 20,595 20,848' 20,861' 21,246' 21,916 12 Savings institutions 801,628 705,367 627,972 612,435' 609,654' 598,330' 584,345' 585,525 13 One- to four-family 600,154 538,358 489,622 480,696' 478,456' 469,959' 457,982' 462,122 14 Multifamily 91,806 79,881 69,791 68,306' 68,440' 67,362' 66,903' 66,336 15 Commercial 109,168 86,741 68,235 63,111 62,439' 60,704' 59,163' 56,767 16 Farm 500 388 324 322 320 305 297 301 17 Life insurance companies 267,861 265,258 246,702 242,243' 237,626' 229,061' 223,999' 218,249 18 One- to four-family 13,005 11,547 11,441 11,218' 11,001' 10,578' 10,340' 10,064 19 Multifamily 28,979 29,562 27,770 27,227' 26,701' 25,676' 25,098' 24,426 20 Commercial 215,121 214,105 198,269 194,396' 190,638' 183,322' 179,191' 174,398 21 Farm 10,756 10,044 9,222 9,402' 9,287' 9,484' 9,370' 9,361 22 Federal and related agencies 239,003 266,146 286,263 298,991 309,579 321,486 325,835 332,543 23 Government National Mortgage Association 20 19 30 45 43 22 20 12 24 One- to four-family 20 19 30 38 37 15 13 12 25 Multifamily 0 0 0 7 7 7 7 0 26 Farmers Home Administration 41,439 41,713 41,695 41,446 41,424 41,386 41,209 41,370 27 One- to four-family 18,527 18,496 16,912 16,133 15,714 15,303 14,870 14,459 28 Multifamily 9,640 10,141 10,575 10,739 10,830 10,940 11,037 11,147 29 Commercial 4,690 4,905 5,158 5,250 5,347 5,406 5,399 5,526 30 Farm 8,582 8,171 9,050 9,324 9,533 9,739 9,903 10,239 31 Federal Housing and Veterans' Administrations 8,801 10,733 12,581 12,945 11,797 12,215 11,344 11,169 32 One- to four-family 3,593 4,036 5,153 5,635 4,850 5,364 4,738 4,826 33 Multifamily 5,208 6,697 7,428 7,311 6,947 6,851 6,606 6,343 34 Resolution Trust Corporation 32,600 45,822 32,045 21,973 19,925 17,284 14,241 13,908 35 One- to four-family 15,800 14,535 12,960 8,955 8,381 7,203 6,312 6,030 36 Multifamily 8,064 15,018 9,621 6,743 6,002 5,327 4,190 4,181 37 Commercial 8,736 16,269 9,464 6,275 5,543 4,754 3,739 3,697 38 Farm 0 0 0 0 0 0 0 0 39 Federal National Mortgage Association 104,870 112,283 137,584 151,513 160,721 166,642 172,343 175,377 40 One- to four-family 94,323 100,387 124,016 137,340 146,009 151,310 156,576 159,437 41 Multifamily 10,547 11,896 13,568 14,173 14,712 15,332 15,767 15,940 42 Federal Land Banks 29,416 28,767 28,664 28,592 28,810 28,460 28,181 28,475 43 One- to four-family 1,838 1,693 1,687 1,682 1,695 1,675 1,658 1,675 44 Farm 27,577 27,074 26,977 26,909 27,115 26,785 26,523 26,800 45 Federal Home Loan Mortgage Corporation 21,857 26,809 33,665 42,477 46,859 55,476 58,498 62,232 46 One- to four-family 19,185 24,125 31,032 39,905 44,315 52,929 55,942 59,652 47 Multifamily 2,672 2,684 2,633 2,572 2,544 2,547 2,556 2,580 48 Mortgage pools or trusts5 1,079,103 1,250,666 1,425,546 1,473,323 1,514,002 1,546,818 1,602,595 1,639,946 49 Government National Mortgage Association 403,613 425,295 419,516 413,166 415,076 414,066 423,446 435,709 50 One- to four-family 391,505 415,767 410,675 404,425 405,963 404,864 414,194 426,363 51 Multifamily 12,108 9,528 8,841 8,741 9,113 9,202 9,251 9,346 52 Federal Home Loan Mortgage Corporation 316,359 359,163 407,514 422,882 430,089 439,029 457,577 465,330 53 One- to four-family 308,369 351,906 401,525 417,646 425,154 434,494 453,407 461,508 54 Multifamily 7,990 7,257 5,989 5,236 4,935 4,535 4,170 3,822 55 Federal National Mortgage Association 299,833 371,984 444,979 465,220 481,880 495,525 507,376 514,855 56 One- to four-family 291,194 362,667 435,979 456,645 473,599 486,804 498,489 505,730 57 Multifamily . 8,639 9,317 9,000 8,575 8,281 8,721 8,887 9,125 58 Farmers Home Administration 66 47 38 32 30 28 26 22 59 One- to four-family 17 11 8 6 6 5 5 4 60 Multifamily 0 0 0 0 0 0 0 0 61 Commercial 24 19 17 15 14 13 12 10 62 Farm 26 17 13 11 10 10 9 8 63 Private mortgage conduits 59,232 94,177 153,499 172,023 186,927 198,171 214,171 224,030 64 One- to four-family 53,335 84,000 132,000 145,000 158,000 164,000 177,000 179,500 65 Multifamily 731 3,698 6,305 7,407 7,991 8,701 9,481 12,241 66 Commercial 5,166 6,479 15,194 19,616 20,936 25,469 27,689 32,289 67 Farm 0 0 0 0 0 0 0 0 68 Individuals and others6 530,452 561,244 568,260 571,668' 573,994' 573,923' 561,511' 546,503 69 One- to four-family 349,491 368,874 378,739 382,849' 384,681' 383,948' 372,503' 357,381 70 Multifamily 85,969 83,796 85,871 86,164' 86,391' 86,516' 86,586' 87,027 71 Commercial 80,761 93,410 88,699 88,538' 89,219' 89,797' 88,803' 88,518 72 Farm 14,232 15,164 14,951 14,117 13,703 13,662 13,618 13,576 1. Multifamily debt refers to loans on structures of five or more units. 6. Other holders include mortgage companies, real estate investment trusts, 2. Includes loans held by nondeposit trust companies but not loans held by state and local credit agencies, state and local retirement funds, noninsured bank trust departments. pension funds, credit unions, and finance companies. 3. Includes savings banks and savings and loan associations. SOURCES. Based on data from various institutional and government sources. 4. FmHA-guaranteed securities sold to the Federal Financing Bank were Separation of nonfarm mortgage debt by type of property, if not reported directly, reallocated from FmHA mortgage pools to FmHA mortgage holdings in 1986:Q4 and interpolations and extrapolations, when required for some quarters, are because of accounting changes by the Farmers Home Administration. estimated in part by the Federal Reserve. Line 64, from Inside Mortgage 5. Outstanding principal balances of mortgage-backed securities insured or Securities. guaranteed by the agency indicated. 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 11999911 11999922 11999933 Feb. Mar. Apr. May Juner July Seasonally adjusted 11 TToottaall 728,398 729,932 795,573 805,787 817,173 827,288 838,748 849,904 855,472 22 AAuuttoommoobbiillee 260,574 257,890 281,504 284,388 287,912 292,738 296,566 301,534 305,671 33 RReevvoollvviinngg 245,631 257,453 287,970 294,461 299,218 304,381 308,590 312,591 316,249 44 OOtthheerr 222,193 214,590 226,099 226,938 230,043 230,168 233,593 235,778 233,552 Not seasonally adjusted 5 Total 744,243 746,452 813,864 805,015 812,477 821,754 831,515 843,915 849,454 By major holder 6 Commercial banks 340,713 330,088 368,549 366,712 369,710 376,379 380,063 386,235 393,705 7 Finance companies 121,904 117,050 117,463 118,095 120,061 122,845 120,775 122,996 122,840 8 Credit unions 90,302 91,693 101,634 100,984 102,683 104,153 107,423 110,349 111,571 9 Savings institutions 41,373 37,049 38,078 38,578 38,828 39,078 39,255 39,400 39,749 10 Nonfinancial business 46,658 49,184 57,637 53,453 53,410 53,756 54,505 55,374 55,775 11 Pools of securitized assets 103,293 121,388 130,503 127,193 127,785 125,543 129,494 129,561 125,814 By major type of credit3 12 Automobile 261,046 258,572 282,291 283,429 287,476 291,352 295,066 300,745 304,762 13 Commercial banks 112,666 109,623 123,358 124,449 126,949 130,104 132,979 136,038 138,778 14 Finance companies 63,415 57,605 55,274 56,963 57,797 59,458 56,614 56,932 58,191 15 Pools of securitized assets 28,588 33,888 39,490 36,599 36,613 34,531 35,836 35,817 34,436 16 Revolving 259,001 271,369 303,430 294,112 296,023 300,457 304,586 309,012 312,416 17 Commercial banks 138,005 132,966 149,527 144,274 145,701 149,265 149,972 153,032 156,856 18 Nonfinancial business 41,658 43,974 52,113 48,017 47,937 48,279 49,005 49,845 50,218 19 Pools of securitized assets 63,333 74,931 79,887 79,597 79,768 79,927 82,064 82,075 80,904 20 Other 224,196 216,511 228,143 227,474 228,978 229,945 231,863 234,158 232,276 21 Commercial banks 90,042 87,499 95,664 97,989 97,060 97,010 97,112 97,165 98,071 22 Finance companies 58,489 59,445 62,189 61,132 62,264 63,387 64,161 66,064 64,649 23 Nonfinancial business 5,000 5,210 5,524 5,436 5,473 5,477 5,500 5,529 5,557 24 Pools of securitized assets 11,372 12,569 11,126 10,997 11,404 11,085 11,594 11,669 10,474 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 1994 IItteemm 11999911 11999922 11999933 Jan. Feb. Mar. Apr. May June July INTEREST RATES Commercial banks2 1 48-month new car 11.14 9.29 8.09 n.a. 7.54 n.a. n.a. 7.76 n.a. n.a. 2 24-month personal 15.18 14.04 13.47 n.a. 12.89 n.a. n.a. 12.96 n.a. n.a. 3 120-month mobile home 13.70 12.67 11.87 n.a. 11.56 n.a. n.a. 11.60 n.a. n.a. 4 Credit card 18.23 17.78 16.83 n.a. 16.06 n.a. n.a. 16.15 n.a. n.a. Auto finance companies 5 New car 12.41 9.93 9.48 7.55 8.93 99..1133 9.71 99..9922 9.96 10.17 6 Used car 15.60 13.80 12.79 12.02 12.23 12.68 13.25 13.51 13.78 13.86 OTHER TERMS3 Maturity (months) 7 New car 55.1 54.0 54.5 52.9 54.4 5544..00 53.8 5533..55 53.3 53.9 8 Used car 47.2 47.9 48.8 50.0 50.3 50.1 50.0 50.6 50.0 50.2 Loan-to-value ratio 9 New car 88 89 91 91 91 92 92 93 94 93 10 Used car 96 97 98 98 99 99 99 99 100 100 Amount financed (dollars) 11 New car 1122,,449944 13,584 14,332 15,330 14,904 1144,,882211 15,067 15,194 15,180 15,319 12 Used car 88,,888844 9,119 9,875 10,434 10,449 10,427 10,477 10,606 10,656 10,735 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 • November 1994 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1 Billions of dollars; quarterly data at seasonally adjusted annual rates 1992 1993r 1994 Q4r Q1 Q2 Q3 Q4 Qlr Q2 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors .. 729.0 635.6 475.8 536.1 630.5 456.0 487.3 757.7 603.2 673.7 660.0 491.3 By sector and instrument 2 U.S. government 146.4 246.9 278.2 304.0 256.1 242.7 240.5 336.4 173.4 274.2 210.5 122.9 3 Treasury securities 144.7 238.7 292.0 303.8 248.3 240.0 237.4 332.3 157.2 266.5 211.8 118.2 4 Budget agency issues and mortgages 1.6 8.2 -13.8 .2 7.8 2.7 3.2 4.1 16.2 7.7 -1.3 4.7 5 Private 582.7 388.7 197.5 232.1 374.4 213.3 246.8 421.3 429.8 399.5 449.5 368.4 By instrument 6 Tax-exempt obligations 69.8 48.7 68.7 31.1 77.3 -15.8 88.6 127.5 65.8 27.3 4.0 -32.2 7 Corporate bonds 73.8 47.1 78.8 67.5 75.3 54.0 85.7 75.7 72.6 67.4 48.0 52.0 8 Mortgages 281.2 199.5 161.4 123.9 157.1 86.6 97.6 157.1 220.5 153.2 160.9 129.1 9 Home mortgages 224.5 185.6 163.8 179.5 185.3 164.9 123.0 194.5 237.3 186.6 188.7 115.6 10 Multifamily residential 11.5 4.8 -3.1 -11.2 -6.3 -26.5 -6.1 -11.4 -4.9 -2.6 -5.5 9.7 11 Commercial 47.8 9.3 .4 -45.5 -22.4 -51.4 -19.5 -26.8 -12.4 -30.9 -22.9 -1.1 12 Farm -2.5 -.3 .4 1.1 .4 -.5 .2 .8 .5 .1 .5 4.9 13 Consumer credit 45.8 16.0 -15.0 5.5 64.4 29.6 22.1 48.3 76.1 111.0 74.4 118.7 14 Bank loans n.e.c 27.3 .4 -40.9 -13.8 5.5 19.1 -15.8 -.3 11.5 26.7 77.9 69.1 15 Commercial paper 21.4 9.7 -18.4 8.6 10.0 22.3 -14.1 33.2 17.2 3.8 8.0 16.4 16 Other loans 63.3 67.4 -37.1 9.2 -15.2 17.5 -17.2 -20.2 -33.8 10.2 76.3 15.3 By borrowing sector 17 Household 281.6 218.9 170.9 217.7 293.8 249.6 176.3 275.3 375.3 348.4 315.7 269.7 18 Nonfinancial business 233.1 123.7 -35.9 -2.0 21.1 1.9 -9.9 38.9 10.4 44.9 145.1 152.5 19 Farm .6 2.3 2.1 1.0 2.0 -2.4 -2.3 2.5 4.2 3.5 2.9 10.7 20 Nonfarm noncorporate 40.3 10.1 -28.5 -43.9 -26.1 -53.9 -27.4 -31.7 -28.7 -16.7 15.1 23.7 21 Corporate 192.1 111.3 -9.6 40.9 45.2 58.2 19.7 68.1 34.9 58.0 127.1 118.1 22 State and local government 68.0 46.0 62.6 16.4 59.5 -38.2 80.4 107.1 44.1 6.3 -11.3 -53.8 23 Foreign net borrowing in United States 10.2 23.9 13.9 21.3 46.9 3.6 38.9 42.8 83.1 22.9 -64.0 -4.6 24 Bonds 4.9 21.4 14.1 14.4 59.4 26.0 66.5 45.3 84.5 41.4 29.0 11.1 25 Bank loans n.e.c -.1 -2.9 3.1 2.3 .7 -10.3 1.5 6.6 1.0 -6.3 6.0 -1.2 26 Commercial paper 13.1 12.3 6.4 5.2 -9.0 -12.1 -21.7 -.6 -1.6 -12.0 -101.8 -5.2 27 U.S. government and other loans -7.6 -7.0 -9.8 -.6 -4.2 .0 -7.5 -8.4 -.8 -.1 2.9 -9.3 28 Total domestic plus foreign 739.2 659.4 489.6 557.4 677.4 459.6 526.2 800.5 686.3 696.7 596.0 486.7 Financial sectors 29 Total net borrowing by financial sectors 225.1 202.9 152.6 237.1 276.0 198.8 175.6 168.4 417.7 342.4 479.4 329.8 By instrument 30 U.S. government-related 149.5 167.4 145.7 155.8 157.2 132.6 169.4 56.6 275.3 127.3 327.3 235.3 31 Government-sponsored enterprises securities 25.2 17.1 9.2 40.3 80.6 33.6 32.2 68.8 167.8 53.4 160.0 146.6 32 Mortgage pool securities 124.3 150.3 136.6 115.6 76.6 99.2 137.2 -12.2 107.5 73.9 186.5 88.6 33 Loans from U.S. government .0 -.1 .0 .0 .0 -.1 .0 .0 .0 .0 -19.2 .0 34 Private 75.7 35.5 6.8 81.3 118.9 66.1 6.2 111.8 142.4 215.1 152.1 94.5 35 Corporate bonds 41.5 46.3 67.6 78.5 112.2 97.0 94.1 84.9 134.7 134.9 142.0 96.9 36 Mortgages .3 .6 .5 .6 3.6 .9 1.4 1.4 6.2 5.5 .2 2.2 37 Bank loans n.e.c 13.5 4.7 8.8 2.2 -14.0 -24.1 -34.6 13.2 -16.5 -18.0 -18.3 -32.6 38 Open market paper 31.3 8.6 -32.0 -.7 -6.2 -6.5 -75.1 -16.2 -9.4 76.0 39.0 -4.3 39 Loans from Federal Home Loan Banks -11.0 -24.7 -38.0 .8 23.3 -1.1 20.4 28.4 27.4 16.8 -10.8 32.3 By borrowing sector 40 Government-sponsored enterprises 25.2 17.0 9.1 40.2 80.6 33.5 32.2 68.8 167.8 53.4 140.8 146.6 41 Federally related mortgage pools 124.3 150.3 136.6 115.6 76.6 99.2 137.2 -12.2 107.5 73.9 186.5 88.6 42 Private 75.7 35.5 6.8 81.3 118.9 66.1 6.2 111.8 142.4 215.1 152.1 94.5 43 Commercial banks -1.4 -.7 -11.7 8.8 5.6 14.5 3.5 11.3 6.5 1.2 4.4 -6.1 44 Bank holding companies 6.2 -27.7 -2.5 2.3 8.8 .8 21.1 1.3 .5 12.2 3.5 8.2 45 Funding corporations 12.5 15.4 -6.5 13.2 2.9 3.6 -31.4 -1.6 7.9 36.7 47.4 -21.1 46 Savings institutions -15.1 -30.2 -44.5 -6.7 11.1 -5.4 9.7 12.6 13.5 8.8 -5.6 30.6 47 Credit unions .0 .0 .0 .0 .2 .1 .0 .3 .3 .1 .1 -.1 48 Life insurance companies .0 .0 .0 .0 .2 -.2 .1 .6 -.1 .4 .0 .2 49 Finance companies 27.4 24.0 18.6 -3.6 -5.0 1.0 -24.4 -20.7 9.0 16.3 62.0 66.4 50 Mortgage companies 10.1 .0 -2.4 8.0 -1.0 -6.4 -25.2 32.4 -.8 -10.4 -27.6 -29.2 51 Real estate investment trusts (REITs) 1.4 .8 1.2 .3 3.5 -5.6 .4 1.3 6.0 6.2 1.2 3.8 52 Issuers of asset-backed securities (ABSs) 28.3 52.3 51.0 56.3 80.5 67.7 61.9 60.5 85.2 114.2 76.6 41.4 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 1993r 1994 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998899rr 11999900rr 11999911rr 11999922rr 11999933rr Q4r Ql Q2 Q3 Q4 Qlr Q2 All sectors 53 Total net borrowing, all sectors 964.4 862.3 642.2 794.5 953.4 658.4 701.8 968.8 1,104.0 1,039.1 1,075.5 816.5 54 U.S. government securities 295.8 414.4 424.0 459.8 413.3 375.5 409.9 393.0 448.7 401.5 557.0 358.2 55 Tax-exempt securities 69.8 48.7 68.7 31.1 77.3 -15.8 88.6 127.5 65.8 27.3 4.0 -32.2 56 Corporate and foreign bonds 120.2 114.7 160.5 160.4 246.9 177.0 246.3 205.9 291.8 243.7 219.0 160.0 57 Mortgages 281.6 200.1 161.9 124.5 160.7 87.4 98.9 158.4 226.6 158.7 161.1 131.3 58 Consumer credit 45.8 16.0 -15.0 5.5 64.4 29.6 22.1 48.3 76.1 111.0 74.4 118.7 59 Bank loans n.e.c 40.7 2.2 -29.1 -9.4 -7.8 -15.3 -48.9 19.5 -4.0 2.4 65.6 35.3 60 Open market paper 65.9 30.7 -44.0 13.1 -5.1 3.7 -110.9 16.4 6.3 67.7 -54.8 6.9 61 Other loans 44.7 35.6 -84.9 9.5 3.8 16.3 -4.3 -.2 -7.2 26.9 49.2 38.3 Funds raised through mutual funds and corporate equities 62 Total net share issues -60.8 19.7 215.4 296.0 436.5 294.8 344.3 473.5 494.4 434.0 219.0 219.5 63 Mutual funds 37.2 65.3 151.5 211.9 316.8 205.4 268.9 358.0 348.9 291.5 114.0 152.7 64 Corporate equities -98.0 -45.6 64.0 84.1 119.7 89.4 75.4 115.5 145.5 142.4 105.0 66.8 65 Nonfinancial corporations -124.2 -63.0 18.3 27.0 20.9 14.0 8.6 24.8 28.7 21.5 -2.8 10.4 66 Financial corporations 9.0 10.0 15.1 26.4 38.2 27.7 35.2 38.6 38.2 40.9 38.3 17.5 67 Foreign shares purchased in United States 17.2 7.4 30.7 30.7 60.6 47.8 31.6 52.1 78.6 80.0 69.4 38.9 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables F.2 through F.5. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Financial Statistics • November 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 Q4 Q1 02 Q3 Q4 Q1 Q2 NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 964.4 862.3 642.2 794.5 953.4 658.4 701.8 968.8 1,104.0 1,039.1 1,075.5 816.5 2 Private domestic nonfinancial sectors 137.0 190.1 -7.5 72.0 -2.3 104.3 -40.2 -3.3 -43.9 78.1 465.9 235.0 3 Households 94.7 157.2 -39.6 70.7 -30.9 112.0 -91.0 -70.5 -76.7 114.4 447.1 270.2 4 Nonfarm noncorporate business -.8 -1.7 -3.7 -1.1 -3.2 -1.3 -3.0 -3.2 -3.3 -3.5 -3.6 -3.8 Nonfinancial corporate business 13.7 -3.7 6.7 29.2 17.5 31.8 -2.8 16.6 40.8 15.2 33.7 39.1 6 State and local governments 29.3 38.3 29.2 -26.8 14.4 -38.3 56.5 53.7 -4.7 -48.0 -11.2 -70.5 7 U.S. government -3.1 33.7 10.5 -11.9 -18.4 -16.0 -23.2 -27.1 -15.4 -7.9 -40.8 -8.2 8 Foreign 86.6 85.5 26.6 100.5 125.8 98.3 65.6 93.2 123.7 220.5 123.9 54.2 9 Financial sectors 743.8 553.0 612.5 633.9 848.4 471.9 699.6 905.9 1,039.7 748.3 526.5 535.6 10 Government sponsored enterprises -4.1 13.9 15.2 69.0 90.2 80.7 16.7 128.0 140.8 75.2 92.4 104.3 11 Federally related mortgage pools 124.3 150.3 136.6 115.6 76.6 99.2 137.2 -12.2 107.5 73.9 186.5 88.6 12 Monetary authority -7.3 8.1 31.1 27.9 36.2 48.2 42.5 35.7 28.2 38.5 48.8 17.9 13 Commercial banking 177.2 125.1 80.8 95.3 142.2 63.8 100.5 133.4 146.7 188.1 187.3 117.8 14 U.S. commercial banks 146.1 94.9 35.7 69.5 149.6 53.4 103.4 137.4 160.3 197.3 120.8 136.4 15 Foreign banking offices 26.7 28.4 48.5 16.5 -9.8 6.5 -1.4 -14.3 -16.9 -6.5 61.4 -20.7 16 Bank holding companies 2.8 -2.8 -1.5 5.6 .0 .2 -4.5 7.9 1.2 -4.8 3.0 .2 17 Banks in U.S. affiliated areas 1.6 4.5 -1.9 3.7 2.4 3.6 3.0 2.4 2.2 2.1 2.1 1.9 18 Funding corporations 8.0 16.1 15.8 23.5 18.1 11.4 -3.8 1.1 32.4 42.6 19.5 23.5 19 Thrift institutions -90.0 -154.0 -123.5 -61.3 -1.7 -22.6 -30.7 16.0 21.1 -13.3 16.1 37.2 20 Life insurance companies 101.8 94.4 83.2 79.1 105.1 100.8 124.6 97.8 111.8 86.3 50.5 77.6 21 Other insurance companies 29.7 26.5 32.6 12.8 33.3 11.9 27.3 36.0 37.6 32.1 27.9 32.8 22 Private pension funds 81.1 17.2 85.7 37.3 40.2 8.4 118.0 11.1 91.9 -60.1 -97.7 -42.0 23 State and local government retirement funds 46.1 34.9 46.0 34.4 28.1 16.7 -9.3 51.5 24.4 45.9 45.5 49.4 24 Finance companies 32.0 29.0 -12.7 1.7 -5.3 22.3 -26.9 -18.3 2.0 22.0 72.9 24.3 25 Mortgage companies 20.1 .0 11.2 .1 .0 -12.8 -50.4 65.1 -1.6 -13.3 -55.4 -66.2 26 Mutual funds 23.8 41.4 90.3 123.7 164.0 96.1 148.6 194.4 174.6 138.4 -72.6 11.3 27 Closed-end funds 6.6 .2 14.7 17.4 10.2 17.3 16.7 10.5 5.9 7.7 8.7 3.6 28 Money market funds 67.1 80.9 30.1 1.3 12.9 -29.4 -57.3 33.3 25.3 50.3 -37.4 33.7 29 Real estate investment trusts (REITs) .5 -.7 -.7 1.1 .6 2.6 .2 .8 1.0 .2 .7 .7 30 Brokers and dealers 80.2 2.8 17.5 -6.9 9.2 -113.1 75.2 52.5 -7.8 -82.8 -55.7 -34.4 31 Asset-backed securities issuers (ABSs) 27.1 51.1 48.9 53.8 79.1 62.1 61.4 59.4 88.0 107.7 75.8 43.6 32 Bank personal trusts 19.7 15.9 10.0 8.0 9.5 8.3 9.1 10.0 9.9 8.9 12.9 11.7 RELATION OF LIABILITIES TO FINANCIAL ASSETS 33 Net flows through credit markets 964.4 862.3 642.2 794.5 953.4 658.4 701.8 968.8 1,104.0 1,039.1 1,075.5 816.5 Other financial sources 34 Official foreign exchange 24.8 2.0 -5.9 -1.6 .8 5.1 3.4 -4.0 1.7 2.2 -.2 -11.2 35 Special drawing rights certificates 3.5 1.5 .0 -2.0 .0 -8.0 .0 .0 .0 .0 .0 .0 36 Treasury currency .6 1.0 .0 .2 .4 .3 .3 .4 .4 .7 .7 .6 37 Life insurance reserves 28.8 25.7 25.7 27.3 35.2 26.3 43.6 35.3 36.6 25.5 20.0 20.1 38 Pension fund reserves 321.2 165.1 360.3 249.7 295.8 267.9 353.4 316.8 356.0 156.9 -27.7 61.0 39 Interbank claims -16.2 35.4 -3.9 61.7 42.8 -14.4 70.2 126.5 -4.5 -20.9 155.5 197.0 40 Checkable deposits and currency 6.4 43.3 86.4 113.8 117.3 51.8 99.7 214.4 73.1 81.9 173.1 -60.4 41 Small time and savings deposits 98.7 63.7 1.5 -57.2 -70.3 -29.9 -108.5 -67.8 -68.1 -36.6 5.2 -66.5 42 Large time deposits 16.9 -66.1 -58.5 -73.2 -23.5 -91.1 -21.6 -26.8 -59.5 13.7 -39.6 -4.8 43 Money market fund shares 90.1 70.3 41.2 3.9 15.8 -33.4 -46.8 61.8 .6 47.7 -10.9 67.8 44 Security repurchase agreements 77.8 -24.2 -16.5 35.5 65.5 -68.7 170.7 37.9 67.8 -14.4 15.3 183.7 45 Foreign deposits 35.7 38.2 -16.7 -7.2 -22.1 -23.2 -11.9 -17.1 -50.7 -8.6 24.9 13.9 46 Mutual fund shares 37.2 65.3 151.5 211.9 316.8 205.4 268.9 358.0 348.9 291.5 114.0 152.7 47 Corporate equities -98.0 -45.6 64.0 84.1 119.7 89.4 75.4 115.5 145.5 142.4 105.0 66.8 48 Security credit 15.6 3.5 51.4 4.2 61.9 -.4 44.8 40.0 76.6 86.5 30.0 -34.1 49 Trade debt 68.2 37.0 3.6 41.5 49.0 46.1 43.2 51.1 49.8 51.9 24.7 23.0 50 Taxes payable 2.4 -4.8 -6.2 8.5 4.6 9.7 7.9 7.3 -1.8 4.9 13.5 3.9 51 Noncorporate proprietors' equity -25.8 -28.3 -3.3 18.4 -11.4 32.8 -9.0 -17.8 7.1 -25.9 -66.4 -75.1 52 Investment in bank personal trusts 19.6 29.7 16.1 -7.1 1.6 -6.0 -4.2 -7.2 .1 17.6 19.0 -8.9 53 Miscellaneous 313.8 135.7 197.2 257.6 309.2 194.5 194.3 431.1 226.1 385.2 287.1 117.1 54 Total financial sources 1,985.7 1,410.6 1,530.2 1,764.5 2,262.7 1,312.8 1,875.5 2,624.2 2,309.9 2,241.3 1,918.6 1,463.1 Floats not included in assets (-) 55 U.S. government checkable deposits 8.4 3.3 -13.1 .7 -1.5 -11.8 4.7 2.9 2.1 -15.5 -2.4 .3 56 Other checkable deposits -2.2 8.5 4.5 1.6 -1.3 2.2 -2.0 8.3 -5.2 -6.2 .6 -1.1 57 Trade credit 7.0 9.1 9.7 4.1 16.0 5.0 5.2 25.1 21.9 11.7 23.1 16.3 Liabilities not identified as assets (-) 58 Treasury currency -.2 .2 -.6 -.2 -.2 -.1 -.2 -.2 -.2 -.2 -.2 -.2 59 Interbank claims -4.4 1.6 26.2 -4.9 4.2 -5.5 2.7 .5 -10.4 24.0 -27.9 4.9 60 Security repurchase agreements 32.4 -24.0 6.2 27.9 84.6 8.9 179.6 60.8 66.6 31.3 8.3 130.0 61 Taxes payable 2.7 .1 1.3 14.0 1.0 9.5 -6.9 18.2 1.2 -8.6 -1.0 19.9 62 Miscellaneous -55.6 -35.4 -45.3 -46.0 -36.1 8.4 -83.4 -65.8 -23.9 28.6 -108.8 -155.8 63 Total identified to sectors as assets 1,997.6 1,447.2 1,541.2 1,767.2 2,196.1 1,296.1 1,775.9 2,574.4 2,257.9 2,176.2 2,026.9 1,448.8 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 1993r 1994 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999900rr 11999911rr 11999933rr Q4r Q1 Q2 Q3 Q4 Qlr Q2 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 10,712.6 11,181.5 11,720.7 12,351.9 11,720.7 11,804.0 12,001.1 12,145.0 12,351.9 1122,,447766..55 1122,,660077..77 By lending sector and instrument ? 2,498.1 2,776.4 3,080.3 3,336.5 3,080.3 3,140.2 3,201.2 3,247.3 3,336.5 33,,338877..77 33,,339955..44 3 Treasury securities 2,465.8 2,757.8 3,061.6 3,309.9 3,061.6 3,120.6 3,180.6 3,222.6 3,309.9 3,361.4 3,368.0 4 Budget agency issues and mortgages 32.4 18.6 18.8 26.6 18.8 19.6 20.6 24.7 26.6 26.3 27.4 5 Private 8,214.5 8,405.1 8,640.4 9,015.4 8,640.4 8,663.9 8,799.9 8,897.8 9,015.4 9,088.8 9,212.3 By instrument 6 Tax-exempt obligations 1,039.9 1,108.6 1,139.7 1,217.0 1,139.7 1,160.7 1,201.5 1,209.2 1,217.0 1,216.8 1,218.4 7 Corporate bonds 1,008.2 1,086.9 1,154.4 1,229.8 1,154.4 1,175.9 1,194.8 1,212.9 1,229.8 1,241.8 1,254.8 8 Mortgages 3,758.5 3,920.0 4,043.9 4,201.0 4,043.9 4,053.9 4,103.6 4,159.9 4,201.0 4,227.3 4,270.0 9 Home mortgages 2,616.3 2,780.0 2,959.6 3,144.9 2,959.6 2,976.0 3,035.0 3,095.5 3,144.9 3,178.2 3,217.5 10 Multifamily residential 307.9 304.8 293.6 287.4 293.6 292.1 289.3 288.0 287.4 286.0 288.4 11 755.4 755.8 710.3 687.8 710.3 705.4 698.7 695.6 687.8 682.1 681.8 1? 78.9 79.3 80.4 80.8 80.4 80.5 80.7 80.8 80.8 81.0 82.2 13 812.4 797.4 803.0 867.3 803.0 787.4 801.1 825.1 867.3 864.9 895.8 14 726.9 686.0 672.1 677.6 672.1 660.9 666.2 666.5 677.6 690.2 713.0 15 116.9 98.5 107.1 117.8 107.1 113.9 124.0 123.2 117.8 129.9 135.7 16 Other loans 751.8 707.8 720.2 704.9 720.2 711.2 708.6 700.9 704.9 718.1 724.6 By borrowing sector 17 3,614.3 3,784.7 4,002.3 4,296.2 4,002.3 4,009.6 4,092.8 4,192.5 4,296.2 44,,333388..77 44,,442200..55 18 Nonfinancial business 3,751.7 3,709.3 3,710.5 3,732.3 3,710.5 3,707.8 3,724.9 3,720.8 3,732.3 3,767.1 3,812.5 19 135.4 135.0 136.0 138.0 136.0 133.1 136.3 138.4 138.0 136.3 141.7 70 Nonfarm noncorporate 1,147.0 1,116.4 1,074.1 1,048.0 1,074.1 1,066.6 1,059.2 1,051.3 1,048.0 1,051.0 1,057.5 71 Corporate 2,469.2 2,458.0 2,500.4 2,546.3 2,500.4 2,508.1 2,529.3 2,531.1 2,546.3 2,579.8 2,613.4 22 State and local government 848.6 911.1 927.5 987.0 927.5 946.5 982.2 984.5 987.0 983.0 979.2 7* Foreign credit market debt held in United States 285.0 298.8 310.9 357.8 310.9 319.8 332.0 351.3 357.8 334400..99 334411..22 74 115.4 129.5 143.9 203.4 143.9 160.6 171.9 193.0 203.4 210.6 213.4 75 18.5 21.6 23.9 24.6 23.9 24.3 25.9 26.2 24.6 26.2 25.9 76 Commercial paper 75.3 81.8 77.7 68.7 77.7 72.3 72.1 71.7 68.7 43.3 42.0 27 U.S. government and other loans 75.7 65.9 65.3 61.1 65.3 62.7 62.0 60.3 61.1 60.8 59.9 78 Total credit market debt owed by nonfinancial sectors, domestic and foreign 10,997.6 11,480.3 12,031.6 12,709.7 12,031.6 12,123.9 12,333.1 12,496.3 12,709.7 1122,,881177..44 1122,,994488..99 Financial sectors 29 Total credit market debt owed by financial sectors 2,599.5 2,752.1 3,004.7 3,286.1 3,004.7 3,044.8 3,092.6 3,195.4 3,286.1 3,401.8 3,490.7 By instrument 30 U.S. government-related 1,418.4 1,564.2 1,720.0 1,877.1 1,720.0 1,755.8 1,774.5 1,842.2 1,877.1 1,952.1 2,016.2 31 Government-sponsored enterprises securities 393.7 402.9 443.1 523.7 443.1 451.2 468.4 510.3 523.7 563.7 600.3 32 Mortgage pool securities 1,019.9 1,156.5 1,272.0 1,348.6 1,272.0 1,299.8 1,301.3 1,327.1 1,348.6 1,388.4 1,415.9 33 Loans from U.S. government 4.9 4.8 4.8 4.8 4.8 4.8 4.8 4.8 4.8 .0 .0 34 Private 1,181.1 1,187.9 1,284.8 1,409.0 1,284.8 1,289.0 1,318.2 1,353.2 1,409.0 1,449.7 1,474.5 35 Corporate bonds 572.4 640.0 724.8 836.9 724.8 748.8 770.8 804.3 836.9 870.5 895.5 36 Mortgages 4.3 4.8 5.4 8.9 5.4 5.7 6.0 7.6 8.9 9.0 9.5 37 Bank loans n.e.c 69.6 78.4 80.5 66.5 80.5 70.3 73.4 69.2 66.5 60.3 52.0 38 Open market paper 417.7 385.7 394.3 393.5 394.3 379.3 375.9 373.2 393.5 409.4 408.9 39 Loans from Federal Home Loan Banks 117.1 79.1 79.9 103.1 79.9 85.0 92.1 98.9 103.1 100.4 108.5 By borrowing sector 40 Government-sponsored enterprises 398.5 407.7 447.9 528.5 447.9 456.0 473.2 515.1 528.5 563.7 600.3 41 Federally related mortgage pools 1,019.9 1,156.5 1,272.0 1,348.6 1,272.0 1,299.8 1,301.3 1,327.1 1,348.6 1,388.4 1,415.9 42 Private financial sectors 1,181.1 1,187.9 1,284.8 1,409.0 1,284.8 1,289.0 1,318.2 1,353.2 1,409.0 1,449.7 1,474.5 43 Commercial banks 76.7 65.0 73.8 79.5 73.8 73.1 76.6 77.9 79.5 79.0 78.0 44 Bank holding companies 114.8 112.3 114.6 123.4 114.6 119.9 120.2 120.3 123.4 124.2 126.3 45 Funding corporations 145.7 139.1 161.6 169.9 161.6 162.2 166.5 166.3 169.9 190.4 190.1 46 Savings institutions 139.1 94.6 87.8 99.0 87.8 90.3 93.4 96.8 99.0 97.6 105.2 47 Credit unions .0 .0 .0 .2 .0 .0 .1 .2 .2 .3 .2 48 Life insurance companies .0 .0 .0 .2 .0 .0 .2 .1 .2 .3 .3 49 Finance companies 374.4 393.0 389.4 384.4 389.4 379.1 369.8 373.9 384.4 395.4 407.6 50 Mortgage companies 24.6 22.2 30.2 29.2 30.2 23.9 32.0 31.8 29.2 22.3 15.0 51 Real estate investment trusts (REITs) 12.4 13.6 13.9 17.4 13.9 14.0 14.4 15.8 17.4 17.7 18.7 52 Issuers of asset-backed securities (ABSs) 278.1 329.1 391.7 472.2 391.7 407.2 422.3 443.6 472.2 491.3 501.7 All sectors 53 Total credit market debt, domestic and foreign.. 13,597.1 14,232.3 15,036.3 15,995.8 15,036.3 15,168.7 15,425.7 15,691.7 15,995.8 16,219.2 16,439.6 54 U.S. government securities 3,911.7 4,335.7 4,795.5 5,208.8 4,795.5 4,891.2 4,970.9 5,084.7 5,208.8 5,339.8 5,411.7 55 Tax-exempt securities 1,039.9 1,108.6 1,139.7 1,217.0 1,139.7 1,160.7 1,201.5 1,209.2 1,217.0 1,216.8 1,218.4 56 Corporate and foreign bonds 1,696.0 1,856.5 2,023.1 2,270.1 2,023.1 2,085.2 2,137.4 2,210.2 2,270.1 2,322.9 2,363.7 57 Mortgages 3,762.9 3,924.8 4,049.3 4,209.9 4,049.3 4,059.7 4,109.6 4,167.5 4,209.9 4,236.3 4,279.5 58 Consumer credit 812.4 797.4 803.0 867.3 803.0 787.4 801.1 825.1 867.3 864.9 895.8 59 Bank loans n.e.c 815.0 785.9 776.6 768.8 776.6 755.4 765.6 761.9 768.8 776.8 790.9 60 Open market paper 609.9 565.9 579.0 580.0 579.0 565.5 572.0 568.2 580.0 582.6 586.5 61 Other loans 949.4 857.5 870.2 873.9 870.2 863.7 867.5 864.9 873.9 879.4 893.1 Digitized for FRASER 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical http://fraser.stlroelueaissef,e tdab.olers gL/. 2 through L.4. For ordering address, see inside front cover. Federal Reserve Bank of St. Louis

A44 Domestic Financial Statistics • November 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 Q4 Q1 Q2 Q3 Q4 Q1 Q2 CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 13,597.1 14,232.3 15,036.3 15,995.8 15,036.3 15,168.7 15,425.7 15,691.7 15,995.8 16,219.2 16,439.6 2 Private domestic nonfinancial sectors 2,260.8 2,240.2 2,318.0 2,325.8 2,318.0 2,291.7 2,286.9 2,274.4 2,325.8 2,416.3 2,471.0 3 Households 1,499.3 1,446.5 1,523.1 1,502.3 1,523.1 1,493.5 1,466.5 1,451.1 1,502.3 1,598.0 1,655.8 4 Nonfarm noncorporate business 47.8 44.1 42.9 39.7 42.9 42.2 41.4 40.6 39.7 38.8 37.9 b Nonfinancial corporate business 189.6 196.2 225.4 242.9 225.4 216.0 223.1 230.3 242.9 241.9 254.7 6 State and local governments 524.1 553.3 526.5 540.9 526.5 540.0 555.9 552.4 540.9 537.5 522.6 7 U.S. government 239.0 246.9 235.0 216.6 235.0 229.4 223.1 218.8 216.6 206.3 204.7 8 Foreign 918.3 958.1 1,052.7 1,174.4 1,052.7 1,061.2 1,083.4 1,117.5 1,174.4 1,205.2 1,218.1 Y Financial sectors 10,179.0 10,787.2 11,430.6 12,279.0 11,430.6 11,586.3 11,832.3 12,080.9 12,279.0 12,391.4 12,545.8 10 Government-sponsored enterprises 375.6 390.7 459.7 549.8 459.7 463.0 495.5 530.8 549.8 572.0 598.8 II Federally related mortgage pools 1,019.9 1,156.5 1,272.0 1,348.6 1,272.0 1,299.8 1,301.3 1,327.1 1,348.6 1,388.4 1,415.9 12 Monetary authority 241.4 272.5 300.4 336.7 300.4 303.6 318.2 324.2 336.7 341.5 351.6 13 Commercial banking 2,772.5 2,853.3 2,948.6 3,090.8 2,948.6 2,956.6 2,998.8 3,036.4 3,090.8 3,120.8 3,159.1 14 U.S. commercial banks 2,466.7 2,502.5 2,571.9 2,721.5 2,571.9 2,589.4 2,628.5 2,670.2 2,721.5 2,743.9 2,782.3 15 Foreign banking offices 270.8 319.2 335.8 326.0 335.8 326.7 327.1 322.3 326.0 332.4 331.6 16 Bank holding companies 13.4 11.9 17.5 17.5 17.5 16.4 18.4 18.7 17.5 18.2 18.3 17 Banks in U.S. affiliated areas 21.6 19.7 23.4 25.8 23.4 24.2 24.8 25.3 25.8 26.4 26.8 18 Funding corporations 35.7 51.5 75.0 93.1 75.0 74.0 74.3 82.4 93.1 97.9 103.8 19 Thrift institutions 1,320.5 1,192.6 1,134.5 1,132.7 1,134.5 1,124.8 1,130.0 1,136.5 1,132.7 1,134.8 1,145.4 20 Life insurance companies 1,116.5 1,199.6 1,278.8 1,383.9 1,278.8 1,316.2 1,343.9 1,372.1 1,383.9 1,403.4 1,426.1 21 Other insurance companies 344.0 376.6 389.4 422.7 389.4 396.3 405.3 414.6 422.7 429.6 437.8 22 Private pension funds 607.4 693.0 730.4 770.6 730.4 759.8 762.6 785.6 770.6 746.2 735.6 23 State and local government retirement funds 433.9 479.9 514.3 542.4 514.3 511.9 524.8 530.9 542.4 553.7 566.1 24 Finance companies 497.6 484.9 486.6 481.3 486.6 473.7 473.5 472.0 481.3 492.8 503.1 25 Mortgage companies 49.2 60.3 60.5 60.4 60.5 47.9 64.1 63.8 60.4 46.6 30.0 26 Mutual funds 360.2 450.5 574.2 738.2 574.2 611.4 659.9 703.6 738.2 720.0 722.9 27 Closed-end funds 35.6 50.3 67.7 77.9 67.7 71.9 74.5 76.0 77.9 80.1 81.0 28 Money market funds 372.7 402.7 404.1 417.0 404.1 404.5 403.9 400.6 417.0 422.2 422.0 29 Real estate investment trusts (REITs) 7.7 7.0 8.1 8.6 8.1 8.1 8.3 8.6 8.6 8.8 9.0 30 Brokers and dealers 106.5 124.0 117.1 126.3 117.1 135.9 149.0 147.1 126.3 112.4 103.8 31 Asset-backed securities issuers (ABSs) 268.9 317.8 377.9 457.0 377.9 393.2 408.1 430.1 457.0 476.0 486.9 32 Bank personal trusts 213.4 223.5 231.5 240.9 231.5 233.7 236.2 238.7 240.9 244.2 247.1 RELATION OF LIABILITIES TO FINANCIAL ASSETS 33 Total credit market debt 13,597.1 14,232.3 15,036.3 15,995.8 15,036.3 15,168.7 15,425.7 15,691.7 15,995.8 16,219.2 16,439.6 Other liabilities 34 Official foreign exchange 61.3 55.4 51.8 53.4 51.8 54.5 53.9 55.6 53.4 56.4 54.9 3B Special drawing rights certificates 10.0 10.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 36 Treasury currency 16.3 16.3 16.5 17.0 16.5 16.6 16.7 16.8 17.0 17.1 17.3 37 Life insurance reserves 380.0 405.7 433.0 468.2 433.0 443.9 452.7 461.9 468.2 473.2 478.2 38 Pension fund reserves 3,484.2 4,138.3 4,516.5 4,981.5 4,516.5 4,658.1 4,739.5 4,898.0 4,981.5 4,908.4 4,926.4 39 Interbank claims 95.3 96.4 132.8 175.9 132.8 137.3 145.0 166.9 175.9 203.5 226.2 40 Deposits at financial institutions 5,005.3 5,044.8 5,059.1 5,141.8 5,059.1 5,055.3 5,097.1 5,088.5 5,141.8 5,157.1 5,180.7 41 Checkable deposits and currency 934.2 1,020.6 1,134.4 1,251.7 1,134.4 1,089.1 1,168.0 1,181.9 1,251.7 1,220.5 1,231.2 42 Small time and savings deposits 2,349.2 2,350.7 2,293.5 2,223.2 2,293.5 2,275.7 2,255.0 2,236.6 2,223.2 2,234.4 2,213.7 43 Large time deposits 546.9 488.4 415.2 391.7 415.2 410.6 401.1 389.4 391.7 382.6 378.9 44 Money market fund shares 498.4 539.6 543.6 559.4 543.6 556.6 549.8 547.9 559.4 582.4 576.4 4b Security repurchase agreements 372.3 355.8 392.3 457.8 392.3 446.2 450.4 472.5 457.8 473.0 512.8 46 Foreign deposits 304.3 289.6 280.1 258.0 280.1 277.1 272.8 260.2 258.0 264.3 267.7 47 Mutual fund shares 602.1 813.9 1,042.1 1,429.3 1,042.1 1,134.6 1,225.8 1,342.4 1,429.3 1,439.0 1,443.1 48 Security credit 137.4 188.9 217.3 279.3 217.3 225.0 234.7 254.5 279.3 282.8 273.9 49 Trade debt 942.2 935.9 977.4 1,026.4 977.4 976.9 989.6 1,009.7 1,026.4 11,,002200..99 1,026.9 50 Taxes payable 77.4 71.2 79.6 84.2 79.6 82.9 81.2 82.8 84.2 8888..88 86.1 bl Investment in bank personal trusts 522.1 608.3 629.6 660.9 629.6 639.0 637.6 651.2 660.9 665.7 674.1 b2 Miscellaneous 2,820.4 2,992.2 3,160.2 3,424.8 3,160.2 3,176.6 3,258.3 3,325.8 3,424.8 3,516.2 3,525.8 53 Total liabilities 27,751.1 29,609.6 31,360.1 33,746.4 31,360.1 31,777.4 32,365.7 33,053.7 33,746.4 34,056.3 34,361.3 Financial assets not included in liabilities (+) 54 Gold and special drawing rights 22.0 22.3 19.6 20.1 19.6 19.8 20.0 20.3 20.1 20.4 20.8 bb Corporate equities 3,530.2 4,863.6 5,462.9 6,186.5 5,462.9 5,647.3 5,683.7 5,941.7 6,186.5 6,052.2 5,877.7 56 Household equity in noncorporate business 2,529.1 2,444.4 2,411.5 2,427.9 2,411.5 2,420.2 2,434.1 2,445.5 2,427.9 2,459.2 2,477.2 Floats not included in assets (-) 57 U.S. government checkable deposits 15.0 3.8 6.8 5.6 6.8 3.4 3.5 2.2 5.6 .3 .9 58 Other checkable deposits 35.9 40.4 42.0 40.7 42.0 36.7 41.6 33.7 40.7 36.3 38.7 b9 Trade credit -130.3 -129.3 -124.6 -106.9 -124.6 -135.0 -139.2 -134.8 -106.9 -113.1 -120.1 Liabilities not identified as assets (-) 60 Treasury currency -4.1 -4.8 -4.9 -5.1 -4.9 -5.0 -5.0 -5.1 -5.1 -5.2 -5.2 61 Interbank claims -32.0 -4.2 -9.3 -4.7 -9.3 -5.8 -5.7 -7.8 -4.7 -7.4 -7.2 62 Security repurchase agreements 3.0 9.2 38.1 122.7 38.1 94.9 108.0 132.6 122.7 136.7 166.7 b3 Taxes payable 17.8 17.8 25.2 33.3 25.2 14.1 23.3 22.5 33.3 26.6 22.1 64 Miscellaneous -261.2 -330.7 -398.4 -479.8 -398.4 -437.1 -433.7 -478.9 -479.8 -505.1 -482.9 65 Total identified to sectors as assets 34,188.3 37,337.6 39,679.1 42,775.1 39,679.1 40,298.4 40,910.8 41,896.7 42,775.1 43,019.1 43,123.8 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 Dec. Jan. Feb. Mar. Apr. Mayr Juner Julyr Aug. 1 Industrial production1 104.1 106.5 110.9 114.0 114.6 115.0 115.9 116.0 116.6 117.3 117.7 118.5 Market groupings ?. Products, total 103.2 105.7 110.2 113.0 113.6 114.2 114.7 114.7 111155..33 111166..11 111166..66 111177..55 3 Final, total 105.3 108.0 112.7 115.4 116.2 117.2 117.5 117.3 117.8 118.8 119.5 120.7 4 Consumer goods 102.8 105.7 108.7 110.1 110.9 111.6 111.9 111.2 111.7 112.9 113.3 114.1 5 Equipment 108.9 111.2 118.5 123.1 123.9 125.3 125.7 126.2 126.6 127.2 128.4 130.1 6 96.8 99.0 102.6 105.4 105.7 105.1 105.9 106.7 107.5 107.9 107.9 107.9 7 Materials 105.4 107.7 111.9 115.5 116.0 116.2 117.7 117.9 118.6 119.1 119.2 119.9 Industry groupings 8 Manufacturing 103.7 106.8 111.7 115.4 115.6 116.1 117.2 117.7 111188..55 111188..88 111199..44 112200..66 9 Capacity utilization, manufacturing (percent) 77.8 78.6 80.6 8822..33 82.2 82.4 8833..00 8833..11 8833..44 8833..44 8833..77 8844..33 10 Construction contracts3 89.7 97.7 101.6 102.0 103.0 107.0 110.0 103.0 108.0 105.0 109.0 n.a. 11 Nonagricultural employment, total4 106.2 106.4 108.1 109.5 109.6 109.8 110.1 110.5 110.8 111.2 111.4 111.6 12 Goods-producing, total 96.6 94.9 93.1 94.4 94.5 94.5 94.8 95.3 95.3 95.6 95.6 95.7 13 Manufacturing, total 97.1 95.8 93.7 94.4 94.6 94.6 94.6 94.8 94.8 95.0 95.0 95.2 14 Manufacturing, production workers ... 96.0 94.5 93.7 94.9 95.1 95.3 95.4 95.7 95.7 96.0 95.9 96.2 15 Service-producing 109.4 110.5 112.8 114.3 114.4 114.6 115.0 115.4 115.7 116.1 116.4 116.6 16 Personal income, total 127.8 135.6 141.4 145.1 144.2 146.7 147.5 148.2 148.8 148.9 149.7 n.a. 17 Wages and salary disbursements 124.5 131.6 136.2 139.8 141.4 141.8 142.4 143.3r 144.3 144.5 145.2 n.a. 18 Manufacturing 113.7 118.0 120.0 123.5 123.6 124.6 124.8 124.8 124.9 125.2 125.3 n.a. 19 Disposable personal income 128.8 137.0 142.5 146.1 144.8 147.5 148.4 148.1 149.5 149.7 150.5 n.a. 20 Retail sales 121.1 126.9 135.2 141.1 139.3 141.9 144.5 143.1 143.0 144.3 144.4 145.5 Prices7 71 Consumer (1982-84=100) 136.2 140.3 144.5 145.8 146.2 146.7 147.2 147.4 147.5 148.0 114488..44 114499..00 22 Producer finished goods (1982-100) 121.7 123.2 124.7 124.1 124.5 124.8 124.9 125.0 125.3 125.5 126.0 126.6 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 1994 CCaatteeggoorryy 11999911 11999922 11999933 Jan. Feb. Mar. Apr. May Juner July1 Aug. HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 125,303 126,982 128,040 130,667 130,776 130,580 130,747 130,774 130,248 130,457 131,189 2 Nonagricultural industries3 114,644 114,391 116,232 118,639 118,867 118,611 118,880 119,437 119,195 119,173 119,722 3 Agriculture 3,233 3,207 3,074 3,331 3,391 3,426 3,459 3,435 3,235 3,278 3,444 Unemployment 4 Number 8,426 9,384 8,734 8,696 8,518 8,543 8,408 77,,990022 7,817 88,,000055 88,,002233 5 Rate (percent of civilian labor force) 6.7 7.4 6.8 6.7 6.5 6.5 6.4 6.0 6.0 6.1 6.1 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 108,256 108,519 110,171 111,711 111,919 112,298 112,699 112,951 113,334 113,585 113,764 7 Manufacturing 18,455 18,192 17,804 17,968 17,970 17,980 18,007 18,009 18,044 18,045 18,077 689 631 599 616 612 609 606 603 605 601 600 9 Contract construction 4,650 4,471 4,571 4,744 4,745 4,806 4,893 4,907 4,927 4,949 4,943 10 Transportation and public utilities 5,762 5,709 5,710 5,793 5,803 5,816 5,759 5,843 5,849 5,854 5,858 11 Trade 25,365 25,391 25,849 25,914 25,968 26,039 26,165 26,190 26,328 26,432 26,450 6,646 6,571 6,605 6,771 6,776 6,781 6,791 6,787 6,798 6,798 6,803 28,336 29,053 30,193 31,004 31,129 31,326 31,497 31,598 31,765 31,897 32,020 14 Government 18,402 18,653 18,841 18,901 18,916 18,941 18,981 19,014 19,018 19,009 19,013 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 • November 1994 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1993 1994 1993 1994 1993 1994 Q3 Q4 Q1 Q2r Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2r Output (1987=100) Capacity (percent of 1987 output) Capacity utilization rate (percent)2 1 Total industry 111.1 112.9 115.2 116.6 136.5 137.2 138.0 139.0 81.4 82.3 83.4 83.9 2 Manufacturing 111.8 114.1 116.3 118.3 139.2 140.0 140.9 142.0 80.3 81.5 82.5 83.3 3 Primary processing3 107.7 109.9 110.7 113.2 128.3 128.6 129.0 129.5 83.9 85.5 85.8 87.4 4 Advanced processing4 113.8 116.1 118.9 120.8 144.4 145.4 146.6 148.0 78.8 79.9 81.2 81.6 5 Durable goods 114.2 118.1 121.0 122.9 145.4 146.3 147.6 149.1 78.5 80.7 82.0 82.4 6 Lumber and products 100.8 104.9 103.6 105.1 115.0 115.2 115.4 115.7 87.6 91.1 89.8 90.9 7 Primary metals 106.7 109.6 109.7 114.1 123.0 122.6 122.4 122.4 86.8 89.4 89.6 93.2 8 Iron and steel 112.3 115.6 114.8 121.3 126.9 126.3 126.0 126.0 88.6 91.5 91.1 96.3 9 Nonferrous 98.9 101.4 102.7 104.1 117.6 117.6 117.5 117.5 84.1 86.2 87.4 88.6 10 Industrial machinery and equipment ... 147.2 152.7 158.8 164.5 175.7 178.2 181.7 186.2 83.8 85.7 87.4 88.3 11 Electrical machinery 129.7 132.6 136.4 142.0 155.7 157.7 160.3 163.3 83.2 84.1 85.1 87.0 12 Motor vehicles and parts 112.0 131.7 142.7 134.3 154.8 156.1 157.8 159.7 72.3 84.4 90.5 84.1 13 Aerospace and miscellaneous transportation equipment , 87.4 85.2 82.5 82.0 133.2 132.8 132.2 131.4 65.6 64.2 62.4 62.4 14 Nondurable goods 108.9 109.2 110.5 112.7 131.6 132.1 132.7 133.4 82.8 82.6 83.2 84.5 15 Textile mill products 108.0 107.7 108.9 111.7 119.4 119.9 120.5 121.2 90.5 89.8 90.3 92.2 16 Paper and products 111.7 114.2 114.4 115.4 124.8 125.3 125.8 126.3 89.6 91.2 90.9 91.4 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 82.5 18 Plastics materials 111.5 114.4 117.6 121.3 131.1 132.0 133.0 133.9 85.1 86.6 88.4 90.6 19 Petroleum products 104.0 107.7 104.5 108.0 115.7 115.6 115.4 115.3 89.9 93.2 90.5 93.7 20 Mining 96.8 97.3 98.4 99.6 111.1 110.8 110.6 110.6 87.1 87.8 89.0 90.1 21 Utilities 117.5 115.6 119.9 116.2 134.0 134.3 134.7 135.2 87.8 86.1 89.0 86.0 22 Electric 118.0 114.8 118.2 117.6 131.2 131.7 132.2 132.8 89.9 87.2 89.4 88.6 1973 1975 Previous cycle5 Latest cycle6 1993 1994 High Low High Low High Low Aug. Mar. Apr. Ma/ Juner Julyr Aug.P Capacity utilization rate (percent)2 1 Total industry 89.2 72.6 87.3 71.8 84.8 78.1 81.4 83.8 83.7 83.9 84.2 84.3 84.7 2 Manufacturing 88.9 70.8 87.3 70.0 85.1 76.7 80.3 83.0 83.1 83.4 83.4 83.7 84.3 3 Primary processing3 92.2 68.9 89.7 66.8 89.1 78.0 84.1 86.3 86.9 87.9 87.5 87.4 87.7 4 Advanced processing 87.5 72.0 86.3 71.4 83.3 76.0 78.7 81.6 81.5 81.5 81.7 82.1 82.8 5 Durable goods 88.8 68.5 86.9 65.0 83.9 73.8 78.3 82.2 82.4 82.4 82.4 82.8 83.8 6 Lumber and products 90.1 62.2 87.6 60.9 93.3 76.2 87.7 89.0 89.8 91.5 91.4 89.8 90.3 7 Primary metals 100.6 66.2 102.4 46.8 92.9 74.4 87.1 90.7 93.5 94.3 91.8 92.7 93.2 8 Iron and steel 105.8 66.6 110.4 38.3 95.7 72.2 88.9 93.0 97.0 97.7 94.1 94.8 95.3 9 Nonferrous 92.9 61.3 90.5 62.2 88.9 75.8 84.5 87.3 88.4 89.1 88.4 89.7 90.0 10 Nonelectrical machinery 96.4 74.5 92.1 64.9 83.7 71.4 83.7 88.1 88.1 88.6 88.3 89.3 89.8 11 Electrical machinery 87.8 63.8 89.4 71.1 84.9 77.3 83.1 85.8 86.4 86.9 87.6 89.5 89.5 12 Motor vehicles and parts 93.4 51.1 93.0 44.5 84.5 57.3 71.5 88.3 86.5 82.9 82.9 80.5 87.2 13 Aerospace and miscellaneous transportation equipment. 77.0 66.6 81.1 66.9 88.3 78.5 65.4 62.2 62.2 62.5 62.6 61.9 61.9 14 Nondurable goods 87.9 71.8 87.0 76.9 86.8 80.4 83.0 84.0 84.0 84.8 84.8 84.8 84.9 15 Textile mill products 92.0 60.4 91.7 73.8 92.1 78.5 91.1 91.2 92.2 92.5 91.9 92.4 92.0 16 Paper and products 96.9 69.0 94.2 82.0 94.9 86.3 89.9 91.1 89.4 91.9 92.8 91.5 92.4 17 Chemicals and products 87.9 69.9 85.1 70.1 85.9 79.4 81.4 82.2 81.7 83.0 83.0 82.8 82.7 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 75.3 85.7 89.8 88.7 91.7 91.4 19 Petroleum products 96.7 81.1 89.5 68.2 88.5 84.5 89.5 90.2 94.4 94.5 92.1 91.7 93.5 20 Mining 94.4 88.4 96.6 80.6 87.0 86.8 87.0 89.9 90.3 89.6 90.2 89.0 88.3 21 Utilities 95.6 82.5 88.3 76.2 92.6 83.1 88.4 87.5 84.8 84.9 88.3 87.1 85.9 22 Electric 99.0 82.7 88.3 78.7 94.8 86.3 91.0 88.7 87.3 87.0 91.4 90.0 88.1 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, 1978-80; 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 Group p p r o o r - - 1 aa 9 vv 9 gg 3 .. tion Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. MMaayy11 Juner JJuullyyrr Aug.P Index (1987 = 100) MAJOR MARKETS 1 Total index 100.0 110.9 111.1 111.3 111.9 112.8 114.0 114.6 115.0 115.9 116.0 116.6 117.3 117.7 118.5 2 Products 59.5 110.2 110.4 110.6 111.2 112.1 113.0 113.6 114.2 114.7 114.7 115.3 116.1 116.6 117.5 3 Final products 44.8 112.7 112.7 113.1 113.8 114.6 115.4 116.2 117.2 117.5 117.3 117.8 118.8 119.5 120.7 4 Consumer goods, total 26.5 108.7 108.6 108.5 109.2 109.7 110.1 110.9 111.6 111.9 111.2 111.7 112.9 113.3 114.1 5 Durable consumer goods 5.8 110.5 107.3 108.7 112.7 115.8 118.2 119.0 120.9 118.3 117.4 115.5 116.4 117.7 121.1 6 Automotive products 2.7 111.6 103.9 106.7 113.8 120.2 124.9 127.7 131.7 125.3 123.3 119.2 120.2 116.9 125.0 7 Autos and trucks 1.7 112.2 99.2 104.1 114.9 124.9 131.5 134.6 141.0 131.1 128.6 121.4 121.9 116.3 130.8 8 Autos, consumer 1.1 86.1 71.8 75.4 85.2 95.4 98.8 102.0 106.7 101.0 98.3 92.4 91.5 88.4 93.7 9 Trucks, consumer .6 157.3 146.7 153.9 166.4 176.0 188.0 191.0 200.4 183.3 181.2 171.6 174.4 164.7 195.0 10 Auto parts and allied goods... 1.0 110.6 111.8 111.1 111.9 112.3 113.9 116.3 116.2 115.4 114.3 115.6 117.5 117.9 115.3 11 Other 3.1 109.5 110.2 110.4 111.8 112.0 112.2 111.3 111.5 112.1 112.2 112.3 113.1 118.4 117.6 12 Appliances televisions and air conditioners .8 122.9 124.9 126.4 130.4 130.7 130.5 123.7 123.4 125.6 122.8 125.5 127.9 141.3 139.4 13 Carpeting and furniture .9 102.2 103.2 102.4 104.1 102.5 102.8 104.0 105.5 104.5 106.9 105.6 104.8 109.1 109.3 14 Miscellaneous home goods ... 1.4 106.7 106.4 106.4 106.3 107.5 108.0 109.1 108.6 109.4 109.5 109.2 110.2 111.3 110.6 15 Nondurable consumer goods 20.7 108.2 109.0 108.4 108.2 107.9 107.9 108.6 109.0 110.1 109.4 110.6 111.9 112.1 112.2 16 Foods and tobacco 9.1 106.1 107.0 105.9 105.9 105.2 105.8 106.1 106.9 109.0 109.3 110.0 110.5 111.6 111.4 17 Clothing 2.6 94.9 94.3 93.3 93.3 94.3 95.1 93.8 94.4 95.8 96.5 97.6 97.1 97.6 97.8 18 Chemical products 3.6 122.5 123.7 124.1 122.6 122.3 122.0 121.6 123.3 125.4 123.7 125.8 128.0 127.4 127.9 19 Paper products 2.6 103.2 103.1 103.2 104.0 103.3 102.6 102.6 102.3 102.5 103.6 104.5 104.9 103.6 104.6 20 Energy 2.7 113.7 115.8 115.3 114.6 115.2 113.1 119.7 117.1 114.4 108.4 110.8 116.1 114.9 114.8 21 Fuels .8 106.6 103.8 108.0 111.3 110.6 108.6 105.1 104.3 105.3 107.7 108.2 106.4 105.0 107.5 22 Residential utilities 2.0 116.5 120.4 118.2 115.9 117.0 114.9 125.4 122.1 117.9 108.7 111.8 119.9 118.6 117.6 23 Equipment 18.3 118.5 118.6 119.8 120.4 121.8 123.1 123.9 125.3 125.7 126.2 126.6 127.2 128.4 130.1 24 Business equipment 13.2 134.6 134.8 136.3 137.7 139.7 141.8 142.9 145.0 145.5 146.3 147.3 148.2 150.1 152.6 25 Information processing and related .. 5.5 155.8 158.2 160.6 162.0 164.5 167.2 170.1 173.5 175.2 175.6 177.1 178.8 182.0 184.9 26 Computer and office equipment., 1.9 223.1 230.6 234.8 241.8 248.6 256.1 261.5 269.5 272.1 273.4 274.2 278.6 284.4 290.4 27 Industrial 3.9 112.2 113.3 113.2 112.5 113.0 114.8 114.0 114.6 116.8 118.1 119.8 119.6 122.3 123.1 28 Transit 2.0 136.7 126.2 129.8 136.1 141.5 142.8 145.2 147.5 141.2 139.8 136.1 137.5 135.5 142.5 . 29 Autos and trucks 1.0 134.5 119.6 126.5 139.6 150.5 154.9 161.0 166.7 156.1 153.7 146.0 147.3 143.4 157.7 30 Other 1.8 115.6 119.1 119.1 119.4 119.3 120.8 119.4 120.7 121.4 124.5 127.3 128.0 128.6 128.1 31 Defense and space equipment 4.4 74.8 74.0 73.7 72.7 72.5 71.5 71.0 69.9 69.9 69.8 68.9 68.5 67.9 68.2 32 Oil and gas well drilling .6 82.5 87.0 89.7 86.5 82.9 82.3 82.4 87.4 88.6 89.6 89.1 88.9 87.4 83.4 33 Manufactured homes .2 118.9 115.5 120.7 123.4 130.4 141.1 145.3 139.7 143.6 136.2 135.9 138.1 135.7 133.8 34 Intermediate products, total 14.7 102.6 103.3 103.0 103.5 104.3 105.4 105.7 105.1 105.9 106.7 107.5 107.9 107.9 107.9 35 Construction supplies 5.9 96.8 97.3 97.8 98.6 99.5 101.3 100.5 98.9 99.7 101.8 102.9 102.8 102.9 102.9 36 Business supplies 8.8 106.5 107.2 106.4 106.7 107.5 108.1 109.2 109.3 110.0 109.9 110.6 111.3 111.3 111.2 37 Materials 40.5 111.9 112.1 112.2 112.8 113.9 115.5 116.0 116.2 117.7 117.9 118.6 119.1 119.2 119.9 38 Durable goods materials 20.5 115.5 115.6 116.5 117.5 119.1 121.5 122.2 121.9 124.1 125.2 125.9 126.1 127.2 129.0 39 Durable consumer parts 4.1 113.9 111.4 112.6 116.0 120.4 125.7 126.7 126.0 127.3 125.9 125.8 125.0 125.6 129.4 40 Equipment parts 7.4 123.4 124.7 126.0 127.0 127.5 128.6 130.7 131.6 133.9 135.9 136.9 138.8 140.2 142.2 41 Other 9.0 109.7 109.9 110.4 110.3 111.6 113.6 113.2 112.0 114.6 116.1 116.9 116.2 117.1 117.9 42 Basic metal materials 3.1 112.5 111.2 111.7 112.9 114.7 117.6 116.2 113.1 115.3 119.4 119.0 117.6 118.8 119.4 43 Nondurable goods materials 9.0 113.8 114.6 113.6 114.1 115.3 116.6 115.4 116.2 117.7 117.0 119.1 118.9 118.9 119.1 44 Textile materials 1.2 104.2 106.1 103.1 104.0 103.7 102.1 103.2 104.4 106.2 106.4 106.3 106.3 106.6 105.6 45 Paper materials 2.0 113.7 111.5 112.7 113.2 115.2 115.2 114.0 116.1 117.6 113.8 117.8 119.3 116.7 117.4 46 Chemical materials 3.8 116.9 118.6 117.1 117.2 119.1 119.9 119.7 120.4 121.6 122.2 125.3 123.1 123.4 123.5 47 Other 2.0 113.8 114.9 114.1 115.1 114.9 120.2 115.6 115.1 116.8 116.2 116.3 117.7 119.6 120.1 48 Energy materials 11.0 103.7 103.7 103.1 103.0 103.1 103.2 104.8 105.6 105.6 105.2 104.6 106.0 104.6 103.8 49 Primary energy 7.3 99.1 98.0 98.4 98.2 97.6 97.5 97.3 100.2 101.1 101.4 100.4 100.4 98.6 97.9 50 Converted fuel materials 3.7 112.7 114.9 112.3 112.6 113.8 114.5 119.6 116.1 114.4 112.5 112.6 117.0 116.4 115.2 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.2 110.6 111.2 111.2 111.5 112.2 113.2 113.7 114.0 115.2 115.4 116.2 116.9 117.4 117.9 52 Total excluding motor vehicles and parts.., 95.2 110.4 111.1 111.1 111.3 111.8 112.7 113.2 113.4 114.7 114.9 115.8 116.5 117.1 117.4 53 Total excluding computer and office equipment 97.7 108.2 108.2 108.3 108.8 109.6 110.6 111.1 111.3 112.1 112.2 112.9 113.4 113.7 114.4 54 Consumer goods excluding autos and trucks 24.8 108.5 109.3 108.8 108.8 108.6 108.7 109.3 109.6 110.6 109.9 111.1 112.3 113.1 113.0 55 Consumer goods excluding energy 23.8 108.2 107.8 107.7 108.6 109.0 109.8 109.9 111.0 111.6 111.5 111.8 112.5 113.1 114.1 56 Business equipment excluding autos and trucks 12.2 134.6 136.1 137.2 137.5 138.7 140.6 141.3 143.2 144.6 145.7 147.4 148.3 150.7 152.1 57 Business equipment excluding computer and office equipment 11.3 119.7 118.7 119.8 120.2 121.3 122.5 123.0 124.1 124.3 124.9 125.9 126.3 127.5 129.4 58 Materials excluding energy 29.5 115.0 115.3 115.6 116.5 118.0 120.0 120.1 120.1 122.1 122.7 123.8 123.9 124.6 125.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • November 1994 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1987 1994 Group c S o I d C e 2 p p r o o r - - 1 av 99 g 3 . tion Aug. Sept. Oct. Nov. Dec Feb. Mar. Apr. Mayr Juner Julyr Aug. Index (1987 = 100) MAJOR INDUSTRIES 59 Total index 100.0 110.9 111.1 111.3 111.9 112.8 114.0 114.6 115.0 115.9 116.0 116.6 117.3 117.7 118.5 60 Manufacturing 84.3 111.7 111.8 112.1 112.9 114.0 115.4 115.6 116.1 117.2 117.7 118.5 118.8 119.4 120.6 61 Primary processing 27.1 107.6 107.9 107.7 108.5 109.9 111.3 110.7 110.0 111.4 112.3 113.8 113.4 113.4 114.0 62 Advanced processing 57.1 113.7 113.6 114.2 115.0 116.0 117.4 117.9 119.0 119.9 120.2 120.7 121.3 122.3 123.8 63 Durable goods 46.5 114.3 113.9 115.0 116.2 118.0 120.1 120.4 120.9 121.7 122.5 122.9 123.2 124.3 126.2 64 Lumber and products... "24 2.1 100.6 100.9 101.8 104.6 104.9 105.2 105.2 102.8 102.9 103.8 105.8 105.8 104.0 104.6 65 Furniture and fixtures... 25 1.5 103.3 105.2 105.2 104.8 104.2 106.3 105.4 107.4 107.6 109.5 109.9 110.7 111.8 111.2 66 Stone, clay, and glass products 32 2.4 98.7 98.4 99.9 99.7 100.5 104.6 101.1 100.0 101.7 102.7 104.1 103.3 103.0 102.9 67 Primary metals 33 3.3 106.5 107.2 107.3 106.1 109.8 113.0 110.5 107.6 111.1 114.4 115.4 112.4 113.5 114.1 68 Iron and steel 331,2 1.9 111.6 112.8 112.4 113.3 114.4 119.1 115.8 111.5 117.2 122.2 123.2 118.6 119.4 120.1 69 Raw steel .1 105.7 106.3 105.9 107.2 106.2 110.9 102.0 105.8 106.0 105.3 105.7 106.3 104.7 70 Nonferrous 333-6,9 1.4 99.5 99.4 100.3 96.2 103.5 104.5 103.3 102.1 102.6 103.8 104.7 103.8 105.4 105!8 71 Fabricated metal products 34 5.4 99.5 99.6 99.6 100.7 102.1 102.6 103.9 103.0 104.1 105.0 105.1 105.9 106.5 107.3 72 Industrial and commercial machinery and computer equipment 35 8.5 144.1 147.1 148.4 150.3 152.0 155.7 156.3 158.8 161.4 162.8 165.0 165.8 169.0 171.2 73 Computer and office equipment 357 2.3 223.1 230.6 234.8 241.8 248.6 256.1 261.5 269.5 272.1 273.4 274.2 278.6 284.4 290.4 74 Electrical machinery 36 6.9 127.5 129.5 130.9 131.4 132.1 134.3 134.8 136.1 138.3 140.2 141.9 143.9 148.0 148.9 75 Transportation equipment 37 9.9 104.2 98.5 100.4 104.2 108.3 110.7 111.9 113.0 110.1 108.8 106.5 106.7 104.5 110.0 76 Motor vehicles and parts 371 4.8 120.7 110.6 115.1 124.1 132.4 138.5 142.1 146.1 139.9 137.5 132.5 132.9 129.6 141.1 77 Autos and light trucks 2.5 118.4 104.0 109.2 120.8 131.7 138.4 141.8 148.5 138.4 135.7 127.9 128.3 122.6 137.0 78 Aerospace and miscellaneous transportation equipment. 372-6,9 5.1 88.7 87.2 86.7 85.5 85.7 84.5 83.4 82.0 82.1 81.9 82.2 82.0 81.0 80.9 79 Instruments 38 5.1 104.0 103.2 104.0 102.7 102.4 102.3 103.7 104.1 104.4 104.5 104.5 104.6 105.8 106.2 80 Miscellaneous 39 1.3 109.3 108.8 110.3 109.6 110.1 110.3 110.7 109.9 111.1 112.1 111.8 111.7 114.7 113.9 81 Nondurable goods 37.8 108.7 109.2 108.5 108.8 109.1 109.7 109.6 110.1 111.7 111.8 113.1 113.3 113.5 113.8 82 Foods "20 8.8 108.6 109.6 109.0 109.0 108.4 109.0 109.2 110.1 112.2 111.8 112.3 112.7 114.0 113.8 83 Tobacco products 21 1.0 91.0 90.3 85.4 86.4 83.3 84.3 88.2 86.7 89.4 94.1 97.4 96.8 97.7 98.6 84 Textile mill products 22 1.8 107.8 108.8 106.6 107.7 108.0 107.4 107.8 108.7 110.1 111.5 112.1 111.5 112.4 112.0 85 Apparel products 23 2.3 93.1 93.2 92.1 92.1 92.6 93.1 92.4 92.9 94.2 94.6 95.3 95.3 96.0 96.0 86 Paper and products 26 3.6 112.3 112.1 111.4 112.7 114.5 115.5 113.5 114.9 114.8 112.8 116.0 117.4 115.9 117.1 87 Printing and publishing.. 27 6.5 101.3 100.9 101.1 101.6 101.7 101.9 101.7 102.3 103.6 103.9 104.4 105.0 104.3 105.0 88 Chemicals and products. 28 8.8 117.8 118.8 118.3 117.8 118.8 119.3 119.3 119.9 121.7 121.2 123.3 123.6 123.6 123.8 89 Petroleum products 29 1.3 104.9 103.5 105.3 108.2 107.8 107.1 104.8 104.5 104.1 108.9 109.0 106.1 105.6 107.8 90 Rubber ana plastic products 30 3.2 115.9 117.5 116.7 116.5 117.8 119.3 120.3 119.7 122.5 123.0 124.6 124.9 125.3 125.3 91 Leather and products ... 31 .3 85.0 83.6 83.5 83.9 83.5 85.1 84.8 83.1 85.1 86.0 84.3 83.2 83.0 82.0 92 Mining 8.0 97.3 96.6 97.4 98.0 96.9 96.9 97.0 98.8 99.5 99.9 99.1 99.7 98.4 97.6 93 Metal "lO .3 167.6 152.9 159.4 175.8 168.5 177.3 177.8 167.4 167.3 171.3 160.3 168.8 168.5 167.8 94 Coal 12 1.2 103.8 98.5 104.4 104.4 101.1 104.7 104.0 114.4 120.4 119.8 113.2 115.0 108.6 107.0 95 Oil and gas extraction 13 5.8 92.2 93.3 92.6 92.6 91.8 90.9 91.0 91.8 91.5 91.9 92.6 92.8 92.2 91.5 96 Stone and earth minerals .. 14 .7 93.8 94.1 94.5 94.1 98.2 93.9 94.9 97.1 96.3 96.9 99.3 97.6 98.8 98.1 97 Utilities 7.7 116.2 118.4 116.2 114.9 116.1 115.8 121.9 119.8 118.0 114.4 114.7 119.5 118.0 116.5 98 Electric 49i,3PT 6.1 115.9 119.5 115.8 113.7 115.2 115.5 119.1 118.1 117.4 115.8 115.5 121.5 119.8 117.5 99 Gas 492,3PT 1.6 117.2 114.4 118.0 119.1 119.4 117.0 132.6 126.4 120.1 109.4 111.9 111.7 111.5 112.6 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 79,5 111.2 111.8 111.9 112.2 112.9 114.0 114.0 114.3 115.8 116.5 117.6 118.0 118.8 119.4 101 Manufacturing excluding office and computing machines 81.9 108.6 108.4 108.6 109.2 110.2 111.4 111.4 111.7 112.8 113.2 114.0 114.2 114.7 115.8 Gross value (billions of 1987 dollars, annual rates) MAJOR MARKETS 102 Products, total 1,707.0 1,886.9 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 1,969.4 1,979.9 1,982.5 2,007.8 103 Final 1,314.6 1,480.7 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 1,542.9 1,552.5 1,555.7 1,580.1 104 Consumer goods 866.6 944.1 937.3 940.2 953.1 960.2 963.7 968.7 974.0 972.4 967.4 969.5 976.6 976.9 989.8 105 Equipment 448.0 536.7 532.7 539.2 545.7 554.7 561.9 566.3 573.9 572.0 573.7 573.4 575.9 578.8 590.3 106 Intermediate 392.5 406.1 408.2 406.9 410.0 413.3 418.2 420.4 416.2 418.2 424.5 426.5 427.4 426.8 427.7 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 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 949 1,095 1,199 1,298 1,363 1,474 1,312 1,252 1,313 1,380 1,357 1,316 1,337 2 One-family 754 911 986 1,078 1,132 1,181 1,071 1,054 1,068 1,069 1,083 1,046 1,034 3 Two-family or more 195 184 213 220 231 293 241 198 245 311 274 270 303 4 Started 1,014 1,200 1,288 1,409 1,406 1,612 1,271 1,328 1,519 1,471 1,491 1,358 1,413 5 One-family 840 1,030 1,126 1,231 1,248 1,383 1,125 1,121 1,271 1,211 1,200 1,163 1,199 6 Two-family or more 174 169 162 178 158 229 146 207 248 260 291 195 214 7 Under construction at end of period1.. 606 612 680 686 699 713 716 720 732 740 748 750 758 8 One-family 434 473 543 551 564 574 577 578 585 585 582 583 588 9 Two-or-more-family 173 140 137 135 135 139 139 142 147 155 166 167 170 10 Completed 1,091 1,158 1,193 1,248 1,248 1,289 1,216 1,334 1,273 1,354 1,446 1,333 1,274 11 One-family 838 964 1,040 1,081 1,107 1,139 1,075 1,185 1,115 1,192 1,257 1,158 1,143 12 Two-or-more-family 253 194 153 167 141 150 141 149 158 162 189 175 131 13 Mobile homes shipped 171 210 254 260 283 308 316 301 308 290 292 292 286 Merchant builder activity in one-family units 14 Number sold 507 610 666 723 766 817 642 697 722 673 692 613 664 15 Number for sale at end of period1 ... 284 266 294 291 294 294 296 298 298 298r 299 313 314 Price of units sold (thousands of dollars)2 16 Median 120.0 121.3 126.1 125.0 130.0 125.0 126.0 129.9 132.3 129.0 129.9 113311..00 123.0 17 Average 147.0 144.9 147.6 146.9 152.5 146.4 153.4 150.7 152.8 152.9r 153.0 156.9 144.7 EXISTING UNITS (one-family) 18 Number sold 3,219 3,520 3,800 4,030 4,120 4,350 4,250 3,840 4,070 4,120 4,110 3,960 3,970 Price of units sold (thousands of dollars) 19 Median 99.7 103.6 106.5 106.6 107.1 107.4 107.9 107.2 107.6 108.9 110099..88 111122..88 111111..77 20 Average 127.4 130.8 133.1 133.0 133.1 133.7 134.6 133.3 134.4 135.5 136.6 140.9 139.3 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 403,644 435,355 466,365 477,807 490,176 499,931 488,469 485,894 496,042 500,453 506,208 507,452 510,530 77 Private 293,536 316,115 341,101 350,164 360,386 367,271 363,852 361,895 371,681 377,629 379,908 381,437 380,747 73 Residential 157,837 187,870 210,455 216,559 222,351 228,549 229,775 233,322 236,767 238,800 239,858 239,509 237,205 74 Nonresidential 135,699 128,245 130,646 133,605 138,035 138,722 134,077 128,573 134,914 138,829 140,050 141,928 143,542 75 Industrial buildings 22,281 20,720 19,533 19,239 19,319 20,391 19,682 19,972 19,905 21,287 21,442 21,083 21,481 76 Commercial buildings 48,482 41,523 42,627 43,422 46,696 47,342 43,261 42,065 46,602 47,514 47,975 48,807 49,673 77 Other buildings 20,797 21,494 23,626 24,486 24,071 24,225 22,998 22,258 23,918 23,826 24,031 24,345 24,696 28 Public utilities and other 44,139 44,508 44,860 46,458 47,949 46,764 48,136 44,278 44,489 46,202 46,602 47,693 47,692 79 Public 110,107 119,238 125,262 127,642 129,790 132,659 124,617 123,999 124,361 122,824 126,300 126,015 129,783 30 Military 1,837 2,502 2,454 2,289 2,245 2,298 2,911 2,404 2,231 2,179 2,165 2,209 2,123 31 Highway 32,041 34,899 37,355 39,654 40,742 40,657 38,410 36,329 38,830 39,404 40,579 40,268 40,560 32 Conservation and development... 5,010 6,021 5,976 6,301 5,218 5,230 5,707 6,731 5,206 5,685 5,673 4,466 5,800 33 Other 71,219 75,816 79,477 79,398 81,585 84,474 77,589 78,535 78,094 75,556 77,883 79,072 81,300 1. Not at annual rates. Institute and seasonally adjusted by the Census Bureau, and (2) sales and prices 2. Not seasonally adjusted. of existing units, which are published by the National Association of Realtors. All 3. Recent data on value of new construction may not be strictly comparable back and current figures are available from the originating agency. Permit with data for previous periods because of changes by the Bureau of the Census in authorizations are those reported to the Census Bureau from 17,000 jurisdictions its estimating techniques. For a description of these changes, see Construction beginning in 1984. Reports (C-30-76-5), issued by the Census Bureau in July 1976. SOURCES. 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 • November 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 llleeevvveeelll,,, IIIttteeemmm 1993 1994 1994 AAAuuuggg... 11999933 11999944 111999999444111 AAuugg.. AAuugg.. Sept. Dec. Mar. June Apr. May June July Aug. CONSUMER PRICES2 (1982-84=100) 1 AH items 2.8 2.9 2.0 3.3 2.5 2.5 .1 .2 .3 .3 .3 149.0 2 Food 2.0 2.8 2.6 4.9 -1.1 2.8 .1 .3 .3 .5 .4 144.8 i Energy items -.2 3.1 -4.2 1.2 4.7 -4.9 -.4 -1.0 .1 1.8 1.4 108.5 4 All items less food and energy 3.3 2.9 2.1 3.4 2.9 3.1 .2 .3 .3 .2 .3 157.0 3 Commodities 2.0 1.5 .0 2.4 .6 4.2 .1 .4 .4 .1 -.1 136.8 6 Services 4.0 3.5 3.5 3.7 4.2 2.4 .2 .2 .2 .2 .4 168.5 PRODUCER PRICES (1982=100) 7 Finished goods .5 1.9 -2.5 -.3 3.6 -.3 .0 -.1 .0 .5 .6 126.6 8 Consumer foods 1.6 1.4 3.2 5.2 -.6 -5.8 -.5 -L.TR .0 .5 .7 127.1 Y Consumer energy -1.4 2.8 -7.4 -15.6 15.4 -2.6 .3R -1.2R .3 2.5 1.7 81.3 10 Other consumer goods -.1 1.7 -6.4 1.5 2.0 1.5 -.R .5R -.1 .0 .4 139.0 N Capital equipment 1.8 2.4 2.2 .3 4.3 3.6 .4 .4 .1 .1 .1 134.4 Intermediate materials 12 Excluding foods and feeds .8 2.6 -1.0 -.3 2.8 2.8 .0 .2 .5 .6 .7 119.7 13 Excluding energy 1.3 2.8 1.0 1.6 1.9 3.9 .1 .3 .6 .4 .5 127.3 Crude materials 14 Foods 4.1 -5.8 13.1 18.4 -4.5 -20.9 -l.R -3.5R -1.2 -2.1 -1.4 101.7 15 Energy -7.7 1.9 -28.1 -22.1 10.1 26.9 L.R 1.7R 3.3 -1.3 -.1 75.0 lb Other 6.9 12.4 -4.5 15.4 22.7 -2.1 -.3R -1.0r .7 2.0 1.4 157.2 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 1993 1994 AAccccoouunntt 11999911 11999922 11999933 Q2 Q3 Q4 Q1 Q2R GROSS DOMESTIC PRODUCT 1 5,724.8 6,020.2 6,343.3 6,299.9 6,359.2 6,478.1 6,574.7 6,685.5 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 4,587.3 3 Durable goods 456.6 492.7 538.0 531.2 541.9 562.8 576.2 581.8 4 Nondurable goods 1,257.8 1,295.5 1,339.2 1,334.2 1,340.2 1,355.2 1,368.9 1,381.0 5 Services 2,188.1 2,348.7 2,501.0 2,481.9 2,519.1 2,551.6 2,589.9 2,624.5 6 Gross private domestic investment 744.8 788.3 882.0 869.7 882.2 922.5 966.6 1,031.7 7 Fixed investment 746.6 785.2 866.7 851.1 868.3 913.5 942.5 967.5 8 Nonresidential 557.0 561.4 616.1 609.3 619.0 646.3 665.4 683.4 9 Structures 182.9 171.1 173.4 172.3 173.9 176.7 172.7 181.4 10 Producers' durable equipment 374.1 390.3 442.7 437.0 445.1 469.6 492.7 502.0 11 Residential structures 189.6 223.8 250.6 241.8 249.3 267.2 277.1 284.1 12 Change in business inventories -1.8 3.0 15.4 18.6 13.9 9.0 24.1 64.2 13 Nonfarm -1.2 -2.7 20.1 23.9 24.2 10.7 22.3 60.5 14 Net exports of goods and services -19.9 -30.3 -65.3 -63.3 -77.0 -71.2 -86.7 -99.8 15 Exports 601.1 638.1 659.1 660.1 649.0 680.3 674.2 703.2 16 Imports 620.9 668.4 724.3 723.5 726.0 751.4 760.9 803.0 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 1,166.3 18 Federal 445.8 449.0 443.6 445.2 442.7 439.8 437.8 434.9 19 State and local 651.6 676.3 704.7 701.2 710.2 717.4 722.0 731.4 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 6,621.4 21 Goods 2,225.7 2,292.0 2,390.4 2,377.6 2,381.9 2,452.6 2,489.1 2,496.2 22 Durable 934.2 968.6 1,032.4 1,030.6 1,026.8 1,072.9 1,098.2 1,102.3 23 Nondurable 1,291.5 1,323.4 1,358.1 1,347.0 1,355.1 1,379.7 1,390.9 1,393.9 24 Services 3,028.9 3,227.2 3,405.5 3,383.1 3,429.3 3,459.3 3,503.8 3,551.6 25 Structures 472.0 498.1 532.0 520.6 534.1 557.2 557.7 573.5 2.6 Change in business inventories -1.8 3.0 15.4 18.6 13.9 9.0 24.1 64.2 27 Durable goods -16.9 -13.0 8.6 3.7 14.9 9.0 20.6 37.6 28 Nondurable goods 15.1 16.0 6.7 14.8 -1.1 .0 3.5 26.5 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 5,310.2 NATIONAL INCOME 30 4,608.2 4,829.5 5,131.4 5,094.0 5,138.5 5,262.0 5,308.7 5,422.0 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 3,979.6 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 3,257.6 33 Government and government enterprises 545.4 567.3 583.8 580.9 586.1 587.8 595.7 602.5 34 Other 2,270.6 2,387.5 2,517.0 2,504.2 2,529.8 2,560.7 2,612.6 2,655.1 35 Supplement to wages and salaries 588.8 636.4 679.6 676.0 685.9 697.4 711.7 722.0 36 Employer contributions for social insurance 289.8 307.7 324.3 324.6 327.0 330.6 338.5 343.6 37 Other labor income 299.0 328.7 355.3 351.4 358.8 366.8 373.2 378.4 38 Proprietors' income1 376.2 418.7 441.6 438.8 420.3 462.9 471.0 467.6 39 Business and professional 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 35.8 41 Rental income of persons2 -10.5 -5.5 24.1 23.4 26.3 30.3 15.3 33.0 42 Corporate profits1 390.3 405.1 485.8 473.1 493.5 533.9 508.2 547.3 43 Profits before tax3 365.2 395.9 462.4 456.6 458.7 501.7 483.5 523.1 44 Inventory valuation adjustment 5.8 -6.4 -6.2 -10.0 3.0 -6.5 -12.3 -12.5 45 Capital consumption adjustment 19.4 15.7 29.5 26.5 31.7 38.8 37.0 36.8 46 447.4 420.0 399.5 397.6 396.7 389.1 394.2 394.4 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 • November 1994 2.17 PERSONAL INCOME AND SAVING Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1994 Account 1992 Q2 Q3 Q4 Q1 PERSONAL INCOME AND SAVING 1 Total personal income 4,860.3 5,154.3 5,375.1 5,364.5 5,395.9 5,555.8 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 Commodity-producing industries 738.4 757.6 773.8 776.4 781.4 791.0 801.9 4 Manufacturing 557.4 578.3 588.4 591.4 594.9 601.7 609.4 5 Distributive industries 648.0 682.3 701.9 704.0 709.6 712.6 728.6 6 Service industries 884.2 967.6 1,021.4 1,023.7 1.038.8 1,057.0 1,082.0 7 Government and government enterprises 545.5 567.3 583.8 580.9 586.1 587.8 595.7 8 Other labor income 299.0 328.7 355.3 351.4 358.8 366.8 373.2 9 Proprietors' income . 376.2 418.7 441.6 438.8 420.3 462.9 471.0 10 Business and professional 339.5 374.4 404.3 399.4 404.5 418.5 423.8 11 Farm1 . 36.7 44.4 37.3 39.4 15.8 44.4 47.2 12 Rental income of persons -10.5 -5.5 24.1 23.4 26.3 30.3 15.3 13 Dividends 150.5 161.0 181.3 180.4 182.8 184.1 185.7 14 Personal interest income 695.1 665.2 637.9 636.6 634.1 627.7 631.1 15 Transfer payments 770.1 860.2 915.4 910.4 921.6 931.0 947.4 16 Old-age survivors, disability, and health insurance benefits ... 414.0 444.4 441.9 446.8 382.3 452.1 463.8 17 LESS: Personal contributions for social insurance 248.7 261.3 261.5 263.8 236.2 266.6 276.3 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 19 LESS: Personal tax and nontax payments 623.7 648.6 686.4 685.9 695.4 707.0 723.0 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 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 22 EQUALS: Personal saving 211.6 247.9 192.6 214.0 182.3 189.4 175.5 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 20,235.2 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 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 26 Saving rate (percent) GROSS SAVING 27 Gross saving 751.4 722.9 787.5 775.0 788.9 825.8 886.2 28 Gross private saving 937.3 980.8 1,002.5 986.6 989.9 1,011.4 1,037.3 29 Personal saving 211.6 247.9 192.6 214.0 182.3 189.4 175.5 30 Undistributed corporate profits1 99.2 94.3 120.9 110.7 130.3 147.9 127.7 31 Corporate inventory valuation adjustment 5.8 -6.4 -6.2 -10.0 3.0 -6.5 -12.3 Capital consumption allowances 32 Corporate 383.3 396.8 407.8 404.8 413.3 411.1 432.2 33 Noncorporate 243.1 261.8 261.2 257.2 264.1 263.0 301.8 34 Government surplus, or deficit (-), national income and product accounts -185.9 -257.8 -215.0 -211.6 -201.0 -185.6 -151.1 35 Federal -202.9 -282.7 -241.4 -237.0 -224.9 -220.1 -176.2 36 State and local 17.0 24.8 26.3 25.3 23.9 34.5 25.2 37 Gross investment 731.7 38 Gross private domestic investment 744.8 788.3 882.0 869.7 882.2 922.5 966.6 39 Net foreign investment 8.1 -56.6 -92.3 -88.9 -98.8 -113.2 -116.4 40 Statistical discrepancy 8.8 5.7 -5.5 -36.1 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 Item credits or debits Q2 Q3 Q4 Qlr Q2p 1 Balance on current account.. -6,952 -67,886 -103,896 -25,602 -27,856 -30,587 -32,317 -36,970 2 Merchandise trade balance2 -74,068 -96,097 -132,575 -33,727 -36,488 -33,169 -36,962 -41,771 3 Merchandise exports 416,913 440,361 456,866 113,787 111,736 119,679 118,018 122,670 4 Merchandise imports -490,981 -536,458 -589,441 -147,514 -148,224 -152,848 -154,980 -164,441 5 Military transactions, net -5,485 -3,034 -763 -129 -87 —444 -338 17 6 Other service transactions, net 51,082 58,747 57,613 14,786 14,317 13,637 12,972 14,743 7 Investment income, net 14,833 4,540 3,946 668 2,015 -590 -811 -2,495 8 U.S. government grants 23,959 -15,010 -14,620 -2,730 -3,114 -5,591 -2,371 -2,588 9 U.S. government pensions and other transfers -3,461 -3,735 -3,785 -985 -986 -987 -968 -975 10 Private remittances and other transfers -13,811 -13,297 -13,712 -3,486 -3,513 -3,443 -3,839 -3,901 11 Change in U.S. government assets other than official reserve assets, net (increase, -) 2,900 -1,652 -306 -281 -192 -321 490 -217 12 Change in U.S. official reserve assets (increase, -) 5,763 3,901 -1,379 822 -545 -673 -59 3,537 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -177 2,316 -537 -166 -118 -113 -101 -108 15 Reserve position in International Monetary Fund -367 -2,692 -44 313 -48 -80 -3 251 16 Foreign currencies 6,307 4,277 -797 675 -378 -480 45 3,394 17 Change in U.S. private assets abroad (increase, -) -60,175 -63,759 -146,213 -36,507 -34,915 -62,628 -48,667 -5,147 18 Bank-reported claims 4,763 22,314 32,238 5,595 7,335 -9,293 -1,236 15,141 19 Nonbank-reported claims 11,097 45 -598 -87 4,838 -303 1,941 20 U.S. purchases of foreign securities, net -44,740 -45,114 -119,983 -24,340 -40,777 -30,349 -24,605 -12,486 21 U.S. direct investments abroad, net -31,295 -41,004 -57,870 -17,675 -6,311 -22,683 -24,767 -7,802 22 Change in foreign official assets in United States (increase, +) .. 17,199 40,858 71,681 17,492 19,259 23,962 11,530 7,869 23 U.S. Treasury securities 14,846 18,454 48,702 5,668 19,098 22,856 1,193 6,168 24 Other U.S. government obligations 1,301 3,949 4,062 1,082 1,345 970 50 2,483 25 Other U.S. government liabilities 1,177 2,572 1,666 158 1,121 825 938 121 26 Other U.S. liabilities reported by U.S. banks3 -1,484 16,571 14,666 9,485 -2,489 -587 10,139 53 27 Other foreign official assets 1,359 2,585 1,099 184 -102 -790 -956 28 Change in foreign private assets in United States (increase, +).. 80,935 105,646 159,017 34,337 52,675 66,200 83,548 34,460 29 U.S. bank-reported liabilities 3,994 15,461 18,452 3,459 27,618 7,370 35,200 24,770 30 U.S. nonbank-reported liabilities -3,115 13,573 14,282 7,606 1,169 4,733 5,867 31 Foreign private purchases of U.S. Treasury securities, net 18,826 36,857 24,849 -622 3,474 7,996 9,260 -7,662 32 Foreign purchases of other U.S. securities, net 35,144 29,867 80,068 15,025 17,445 38,008 21,258 13,447 33 Foreign direct investments in United States, net 26,086 9,888 21,366 8,869 2,969 8,093 11,963 3,905 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 3 3 5 6 Di D sc u r e e p to a n s c e y a sonal adjustment -39,670 -17,108 21,096 9,7 4 3 3 9 5 - - 6 8 , , 6 4 4 2 3 7 4,0 1 4 0 7 3 -14 5 , , 5 8 2 1 5 0 -3,5 4 3 8 2 0 37 Before seasonal adjustment -39,670 -17,108 21,096 9,304 -1,785 3,944 -20,335 -4,012 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) 5,763 3,901 -1,379 822 -545 -673 -59 3,537 39 Foreign official assets in United States, excluding line 25 (increase, +) 16,022 38,286 70,015 17,334 18,138 23,137 10,592 7,748 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) -4,882 -3,847 -1,674 -3,965 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 • November 1994 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data seasonally adjusted 1994 IItteemm 11999911 11999922 11999933 Jan.r Feb/ Mar.r Apr.r Mayr Juner July" 1 Goods and services, balance -28,472 -40,384 -75,725 -7,829 -9,595 -6,898 -8,447 -9,381 -9,041 -10,991 2 Merchandise -74,068 -96,097 -132,575 -11,968 -13,543 -11,446 -13,337 -14,271 -14,019 -15,696 3 Services 45,596 55,713 56,850 4,139 3,948 4,548 4,890 4,890 4,978 4,705 4 Goods and services, exports 580,127 616,924 641,677 53,625 52,865 58,387 56,402 56,397 58,362 56,472 5 Merchandise 416,913 440,361 456,866 38,533 37,425 42,065 40,378 40,276 42,028 40,335 6 Services 163,214 176,563 184,811 15,092 15,440 16,322 16,024 16,121 16,334 16,137 7 Goods and services, imports -608,599 -657,308 -717,402 -61,454 -62,460 -65,285 -64,849 -65,778 -67,403 -67,463 8 Merchandise -490,981 -536,458 -589,441 -50,501 -50,968 -53,511 -53,715 -54,547 -56,047 -56,031 9 Services -117,618 -120,850 -127,961 -10,953 -11,492 -11,774 -11,134 -11,231 -11,356 -11,432 MEMO 10 Balance on merchandise trade, Census basis -66,723 -84,501 -115,568 -10,850 -12,072 -9,583 -12,045 -12,885 -13,028 -14,593 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 Feb. Mar. Apr. May June July Aug.p 1 Total 77,719 71,323 73,442 75,766 76,809 76,565 74,420 75,732 75,443 75,740 2 Gold stock, including Exchange Stabilization Fund1 11,057 11,056 11,053 11,053 11,052 11,053 11,052 11,052 11,052 11,054 3 Special drawing rights23 11,240 8,503 9,039 9,295 9,383 9,440 9,522 9,731 9,696 9,837 4 Reserve position in International Monetary Fund2 9,488 11,759 11,818 11,974 12,135 11,899 11,841 12,184 12,183 12,161 5 Foreign currencies 45,934 40,005 41,532 43,444 44,239 44,173 42,005 42,765 42,512 42,688 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 Feb. Mar. Apr. May June July Aug." 1 Deposits 968 205 386 190 454 171 174 604 181 188 Held in custody 2 U.S. Treasury securities 281,107 314,481 379,394 393,238 399,817 396,495 402,170 411,580 423,715 427,574 3 Earmarked gold 13,303 13,118 12,327 12,238 12,145 12,104 12,065 12,065 12,056 12,044 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 1994 IItteemm 11999922rr 11999933 Jan.r Feb.r Mar.r Apr/ May7 June' July? 1 Total1 412,624 482,594 492,362 491,747 493,189 479,147 488,093 501,095 514,696 By type 2 Liabilities reported by banks in the United States 54,967 69,648 78,546 77,998 79,787 74,681 76,897 80,264 83,264 3 U.S. Treasury bills and certificates 104,596 150,900 146,940 143,222 148,707 140,653 134,568 141,338 146,247 U.S. Treasury bonds and notes 4 Marketable 210,931 212,169 216,453 220,498 215,447 214,807 226,060 228,734 233,592 5 Nonmarketable4 4,532 5,652 5,689 5,725 5,763 5,799 5,837 5,875 5,913 6 U.S. securities other than U.S. Treasury securities 37,598 44,225 44,734 44,304 43,485 43,207 44,731 44,884 45,680 By area 7 Europe1 189,230 206,665 214,220 208,177 214,970 210,321 213,453 221,233 225,760 8 Canada 13,700 15,285 15,864 15,624 14,108 13,901 14,505 15,971 18,656 9 Latin America and Caribbean 37,973 55,908 55,619 59,261 53,399 44,435 43,727 42,688 42,677 10 164,690 197,733 199,776 201,464 203,836 203,459 209,054 211,216 217,997 11 3,723 4,052 3,839 4,201 3,718 3,691 3,969 4,112 3,797 12 Other countries6 3,306 2,949 3,042 3,018 3,156 3,338 3,383 5,873 5,807 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 U.S. Department of the Treasury data and on data reported 3. Includes nonmarketable certificates of indebtedness (including those payable to the 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 1989 benchmark survey of foreign of foreign countries. portfolio 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 Sept. Dec. Mar. June 1 Banks' liabilities 70,477 75,129 72,796 81,225 77,627 85,545 71,682 2 Banks' claims 66,796 73,195 62,799 59,136 59,151 72,623 55,694 3 Deposits 29,672 26,192 24,240 20,930 19,379 18,118 20,430 4 Other claims 37,124 47,003 38,559 38,206 39,772 54,505 35,264 5 Claims of banks' domestic customers 6,309 3,398 4,432 2,494 3,058 3,655 4,182 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 • November 1994 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 1994 IItteemm 11999911 11999922 11999933 Jan. Feb. Mar. Apr. May Juner JulyP BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 756,066 810,259 911,762 895,879 920,638 951,606 958,806 960,796r 988,357 995,481 2 Banks' own liabilities 575,374 606,444 620,865 609,542 631,501 649,703 667,187 665,667r 684,680 697,961 3 Demand deposits 20,321 21,828 21,575 23,644 24,417 23,034 23,646 27,878 24,558 23,594 4 Time deposits 159,649 160,385 175,117 159,421 159,743 176,892 178,034 183,097r 184,307 185,945 5 Other 66,305 93,237 109,957 129,411 136,096 112,463 124,531 123,652r 116,959 126,244 6 Own foreign offices 329,099 330,994 314,216 297,066 311,245 337,314 340,976 331,040r 358,856 362,178 7 Banks' custodial liabilities5 180,692 203,815 290,897 286,337 289,137 301,903 291,619 295,129 303,677 297,520 8 U.S. Treasury bills and certificates6 110,734 127,644 176,430 170,694 166,980 173,425 167,920 161,043 171,315 170,061 9 Other negotiable and readily transferable instruments7 18,664 21,974 36,078 37,329 41,892 41,748 38,151 48,705 49,913 46,313 10 Other 51,294 54,197 78,389 78,314 80,265 86,730 85,548 85,381 82,449 81,146 11 Nonmonetary international and regional organizations 8,981 9,350 10,935 11,318 7,299 8,086 5,912 8,363 8,630 7,318 17 Banks' own liabilities 6,827 6,951 5,639 7,304 5,924 5,641 4,328 6,437 5,256 5,511 13 Demand deposits 43 46 15 172 320 209 26 35 31 29 14 Time deposits 2,714 3,214 2,780 3,665 2,533 2,482 2,411 2,785 3,073 3,469 15 Other3 4,070 3,691 2,844 3,467 3,071 2,950 1,891 3,617 2,152 2,013 16 Banks' custodial liabilities5 2,154 2,399 5,296 4,014 1,375 2,445 1,584 1,926 3,374 1,807 17 U.S. Treasury bills and certificates6 1,730 1,908 4,275 3,497 1,321 2,097 1,358 857 2,825 1,082 18 Other negotiable and readily transferable instruments7 424 486 1,021 517 54 338 226 1,069 547 725 19 Other 0 5 0 0 0 10 0 0 2 0 20 Official institutions9 131,088 159,563 220,548 225,486 221,220 228,494 215,334 211,465r 221,602 229,511 21 Banks' own liabilities 34,411 51,202 64,071 71,531 67,369 67,086 64,668 64,803r 67,022 72,346 22 Demand deposits 2,626 1,302 1,601 1,631 1,406 1,758 1,504 1,435 2,031 1,472 23 Time deposits 16,504 17,939 21,654 20,237 20,028 23,944 22,050 24,384 25,965 27,331 24 Other3 15,281 31,961 40,816 49,663 45,935 41,384 41,114 38,984r 39,026 43,543 7,5 Banks' custodial liabilities5 96,677 108,361 156,477 153,955 153,851 161,408 150,666 146,662 154,580 157,165 26 U.S. Treasury bills and certificates6 92,692 104,596 150,900 146,940 143,222 148,707 140,653 134,568 141,338 146,247 27 Other negotiable and readily transferable instruments7 3,879 3,726 5,482 6,855 10,527 12,414 9,969 12,050 13,108 10,859 28 Other 106 39 95 160 102 287 44 44 134 59 29 Banks10 522,265 547,320 579,467 554,851 585,118 609,824 622,810 626,322r 643,509 649,359 30 Banks' own liabilities 459,335 476,117 474,602 451,239 479,177 497,732 514,759 510,730r 530,965 538,732 31 Unaffiliated foreign banks 130,236 145,123 160,386 154,173 167,932 160,418 173,783 179,690 172,109 176,554 32. Demand deposits 8,648 10,170 9,719 11,031 11,986 10,707 11,785 15,551 12,320 11,792 33 Time deposits 82,857 90,296 105,192 87,788 92,401 104,776 107,550 109,024 108,220 107,186 34 Other3 38,731 44,657 45,475 55,354 63,545 44,935 54,448 55,115 51,569 57,576 35 Own foreign offices4 329,099 330,994 314,216 297,066 311,245 337,314 340,976 331,040' 358,856 362,178 36 Banks' custodial liabilities5 62,930 71,203 104,865 103,612 105,941 112,092 108,051 115,592 112,544 110,627 37 U.S. Treasury bills and certificates 7,471 11,087 10,707 9,832 11,051 11,007 10,079 11,405 10,834 10,135 38 Other negotiable and readily transferable instruments7 5,694 7,555 16,810 17,136 17,010 17,404 15,684 22,021 22,347 21,512 39 Other 49,765 52,561 77,348 76,644 77,880 83,681 82,288 82,166 79,363 78,980 40 Other foreigners 93,732 94,026 100,812 104,224 107,001 105,202 114,750 114,646r 114,616 109,293 41 Banks' own liabilities 74,801 72,174 76,553 79,468 79,031 79,244 83,432 83,697r 81,437 81,372 47 Demand deposits 9,004 10,310 10,240 10,810 10,705 10,360 10,331 10,857 10,176 10,301 43 Time deposits 57,574 48,936 45,491 47,731 44,781 45,690 46,023 46,904r 47,049 47,959 44 Other3 8,223 12,928 20,822 20,927 23,545 23,194 27,078 25,936r 24,212 23,112 45 Banks' custodial liabilities5 18,931 21,852 24,259 24,756 27,970 25,958 31,318 30,949 33,179 27,921 46 U.S. Treasury bills and certificates 8,841 10,053 10,548 10,425 11,386 11,614 15,830 14,213 16,318 12,597 47 Other negotiable and readily transferable instruments7 8,667 10,207 12,765 12,821 14,301 11,592 12,272 13,565 13,911 13,217 48 Other 1,423 1,592 946 1,510 2,283 2,752 3,216 3,171 2,950 2,107 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 7,456 9,111 17,567 17,509 1177,,992299 19,209 17,961 26,385 27,075 25,589 1. Reporting banks include all types of depository institutions, 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 quarterly Consolidated Reports of Condition filed "holdings of dollars" of the International Monetary Fund. with bank regulatory agencies. For agencies, branches, and majority-owned 9. Foreign central banks, foreign central governments, and the Bank for subsidiaries of foreign banks, consists principally of amounts owed to the head International Settlements. office or parent foreign bank, and to foreign branches, agencies, or wholly owned 10. Excludes central banks, which are included in "Official institutions." subsidiaries of the 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 1994 IItteemm 11999911 11999922 11999933 Jan. Feb. Mar. Apr. May June Julyp AREA 1 Total, all foreigners 756,066 810,259 911,762 895,879 920,638 951,606 958,806 960,796r 988,357r 995,481 2 Foreign countries 747,085 800,909 900,827 884,561 913,339 943,520 952,894 952,433r 979,727r 988,163 3 Europe 249,097 307,670 376,532 368,666 393,566 399,542 406,298 405,308r 411,697' 421,461 4 Austria 1,193 1,611 1,917 2,567 2,159 2,515 2,719 3,309 3,578 3,364 5 Belgium and Luxembourg 13,337 20,567 28,627 29,395 30,617 31,827 32,043 32,612 25,293' 25,135 6 Denmark 937 3,060 4,517 5,089 4,829 3,093 3,342 3,207 3,473 2,877 7 Finland 1,341 1,299 1,872 1,843 1,737 1,495 1,932 1,849 2,649' 2,504 8 France 31,808 41,411 39,704 32,243 38,426 42,010 43,137 41,962 43,138' 41,410 9 Germany 8,619 18,630 26,613 27,567 30,241 31,771 32,704 27,583 33,013 30,175 in Greece 765 913 1,519 1,338 1,463 1,425 1,160 1,453 1,377 1,153 II Italy 13,541 10,041 11,559 10,700 12,741 12,786 11,915 13,015 12,771' 11,537 17 Netherlands 7,161 7,365 16,031 17,532 17,083 17,686 16,330 18,496 18,708' 18,457 13 Norway 1,866 3,314 2,966 2,533 2,340 2,429 2,537 3,278 4,018 3,731 14 Portugal 2,184 2,465 3,366 3,131 3,170 3,131 4,061 2,853 2,920 2,865 15 Russia 241 577 2,511 2,208 2,017 1,971 3,041 4,016 4,497 4,593 16 11,391 9,793 20,493 19,650 18,119 19,621 18,319 17,482r 15,754 16,763 17 Sweden 2,222 2,953 2,572 2,301 2,528 1,451 2,532 3,443 4,043' 5,710 18 Switzerland 37,238 39,440 41,533 40,796 41,000 39,246 40,988 40,164 37,957 41,698 19 Turkey 1,598 2,666 3,227 3,119 3,241 2,922 2,972 2,759 3,250' 3,515 70 United Kingdom 100,292 111,805 133,763 130,801 148,139 150,652 154,563 159,841 163,283' 171,158 71 Yugoslavia 622 504 570 549 428 414 407 424 434 230 22 Other Europe and other former U.S.S.R.12 12,741 29,256 33,172 35,304 33,294 33,097 31,596 27,562r 31,541' 34,586 23 Canada 21,605 22,420 20,227 20,588 23,200 21,430 22,552 25,948 25,455 26,625 74 Latin America and Caribbean 345,529 317,228 348,586 344,462 346,783 359,652 362,639 356,987r 378,743' 374,950 75 Argentina 7,753 9,477 14,477 14,485 14,435 14,017 13,267 13,474r 13,750' 14,592 76 100,622 82,284 72,964 71,547 72,430 77,457 80,843 79,265 85,809 87,264 77 Bermuda 3,178 7,079 7,824 7,741 6,697 6,183 7,621 8,110 8,975 10,055 78 Brazil 5,704 5,584 5,301 5,121 5,386 5,256 4,878 5,572r 5,708 6,259 79 British West Indies 163,620 153,033 181,844 178,184 176,774 189,293 193,645 187,187r 203,927' 197,817 30 Chile 3,283 3,035 3,183 3,551 3,726 3,573 3,830 3,286r 3,523 3,353 31 Colombia 4,661 4,580 3,171 3,714 3,363 3,427 4,002 3,865r 3,931 3,773 37 Cuba 2 3 33 34 30 38 9 11 11 12 33 Ecuador 1,232 993 880 888 858 822 844 842r 812 819 34 Guatemala 1,594 1,377 1,207 1,257 1,230 1,169 1,155 l,137r 1,143 1,206 35 231 371 410 387 421 419 495 526 475 518 36 19,957 19,454 28,018 27,645 30,616 27,804 22,358 21,900r 21,286' 20,179 37 Netherlands Antilles 5,592 5,205 4,195 5,129 6,230 5,312 5,035 7,021 4,885 4,301 38 4,695 4,177 3,582 3,543 3,429 3,397 3,514 3,811r 3,861' 4,087 39 1,249 1,080 926 885 913 873 893 912' 930 916 40 Uruguay 2,096 1,955 1,611 1,723 1,534 1,578 1,522 1,547 1,583 1,406 41 Venezuela 13,181 11,387 12,786 12,445 12,598 12,968 12,307 12,013r 11,655' 11,984 42 Other 6,879 6,154 6,174 6,183 6,113 6,066 6,421 6,508' 6,479' 6,409 43 120,462 143,540 144,656 140,062 139,562 152,458 149,156 152,115' 148,728 151,387 China 44 People's Republic of China 2,626 3,202 4,011 4,075 4,565 5,294 6,058 5,358 6,152 5,017 45 Republic of China (Taiwan) 11,491 8,408 10,633 9,959 9,475 9,306 8,696 9,820' 8,375 8,811 46 Hong Kong 14,269 18,499 17,233 18,651 17,730 18,684 19,090 21,665' 19,108 18,767 47 2,418 1,399 1,114 1,435 1,127 1,658 1,450 1,521 2,136 1,695 48 Indonesia 1,463 1,480 1,986 1,807 1,659 2,345 1,802 1,537 2,002 1,766 49 Israel 2,015 3,773 4,435 4,137 4,628 4,580 4,134 3,460 3,762 3,822 SO 47,069 58,435 61,483 58,606 60,112 66,403 62,274 63,031 64,114 65,680 51 Korea (South) 2,587 3,337 4,913 4,721 4,856 4,808 4,646 4,523 4,571 5,311 57 2,449 2,275 2,035 1,907 1,820 2,542 2,616 2,590' 3,150 3,396 53 Thailand 2,252 5,582 6,137 6,156 5,838 5,985 5,550 5,788 4,851 5,222 54 Middle Eastern oil-exporting countries13 15,752 21,437 15,824 13,129 11,919 13,305 13,655 14,895 14,374' 14,932 55 Other 16,071 15,713 14,852 15,479 15,833 17,548 19,185 17,927' 16,133' 16,968 56 4,825 5,884 6,634 5,818 6,327 5,749 5,813 6,166 6,417 6,153 57 1,621 2,472 2,208 1,959 2,058 1,659 1,688 1,984 1,999 1,706 58 79 76 99 94 73 89 76 93 78 80 59 South Africa 228 190 451 214 294 285 331 230 290 289 60 31 19 12 13 8 11 11 8 7 8 61 Oil-exporting countries 1,082 1,346 1,303 1,186 1,433 1,139 983 1,057 1,204 1,291 62 Other 1,784 1,781 2,561 2,352 2,461 2,566 2,724 2,794 2,839 2,779 63 5,567 4,167 4,192 4,965 3,901 4,689 6,436 5,909' 8,687' 7,587 64 4,464 3,043 3,308 3,807 2,511 3,006 2,991 2,796 5,804 6,288 65 Other 1,103 1,124 884 1,158 1,390 1,683 3,445 3,113' 2,883' 1,299 66 Nonmonetary international and regional 8,981 9,350 10,935 11,318 7,299 8,086 55,,991122 88,,336633 88,,663300 77,,331188 6677 International15 6,485 7,434 6,850 6,806 6,060 6,375 4,249 5,634 6,646 5,446 6688 1,181 1,415 3,218 3,402 357 330 393 909 847 612 69 Other regional 1,315 501 867 1,110 882 1,381 1,270 1,820 1,137 1,260 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, has included all parts of the former U.S.S.R. (except Russia), and Bosnia, 16. Principally the Inter-American Development Bank. Croatia, 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). Europe." 14. Comprises Algeria, Gabon, Libya, and Nigeria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • November 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 1994 AArreeaa oorr ccoouunnttrryy 11999911 11999922 11999933 Jan. Feb. Mar. Apr. May Juner Julyp 1 Total, all foreigners 514,339 499,437 483,135 470,964 477,605 475,077 476,334 472,627' 476,035 470,541 2 Foreign countries 508,056 494,355 480,730 467,810 476,011 473,157 475,150 470,901r 473,614 469,216 3 Europe 114,310 123,377 121,033 114,312 124,643 129,838 124,818 123,622 119,624 122,828 4 Austria 327 331 413 720 598 489 420 486 416 470 5 Belgium and Luxembourg 6,158 6,404 6,535 5,169 6,327 6,775 6,774 6,391 7,115 6,905 6 Denmark 686 707 382 507 600 612 896 1,332 539 622 7 Finland 1,907 1,418 598 699 725 570 647 669 699 739 8 France 15,112 14,723 11,490 11,705 11,033 11,481 11,398 13,092 13,703 13,063 9 Germany 3,371 4,222 7,683 7,364 7,966 8,164 9,374 8,303 7,208 7,871 10 Greece 553 717 679 653 669 736 720 682 661 583 11 Italy 8,242 9,047 8,876 8,950 8,477 7,658 6,370 6,749 6,128 6,074 17 Netherlands 2,546 2,468 3,063 3,877 2,821 2,945 2,575 3,272 3,003 3,006 13 Norway 669 355 396 738 777 531 598 605 620 751 14 Portugal 344 325 720 805 918 936 846 835 876 1,035 IS Russia 1,970 3,147 2,295 2,142 2,005 1,961 1,862 1,642 1,605 1,541 16 Spain 1,881 2,755 2,763 3,299 2,688 2,666 1,859 2,828 2,502 1,905 17 Sweden 2,335 4,923 4,100 3,704 3,608 3,443 3,313 3,420 3,411 3,632 18 Switzerland 4,540 4,717 6,567 7,177 4,535 8,606 5,578 6,487 6,674 9,028 19 Turkey 1,063 962 1,287 1,118 1,565 1,559 1,546 1,324 1,210 1,207 70 United Kingdom 60,395 63,430 60,928 53,142 66,977 68,275 67,442 63,227 61,157 62,428 21 Yugoslavia2 825 569 536 470 414 376 364 361 340 274 22 Other Europe and other former U.S.S.R.3 1,386 2,157 1,722 2,073 1,940 2,055 2,236 1,917 1,757 1,694 23 Canada 15,113 13,845 18,408 19,103 16,864 16,989 17,920 17,109 20,346 19,799 24 Latin America and Caribbean 246,137 218,078 223,977 226,236 226,467 220,298 219,983 219,593 221,873 217,762 25 Argentina 5,869 4,958 4,425 4,569 4,459 4,662 5,161 5,173 5,501 5,806 7.6 Bahamas 87,138 60,835 65,045 66,411 65,439 66,022 66,239 64,974 64,078 67,947 27 Bermuda 2,270 5,935 8,032 10,234 9,969 8,342 8,837 6,591 6,276 5,689 28 Brazil 11,894 10,773 11,803 12,719 13,005 12,924 11,457 11,985 11,346 10,642 29 British West Indies 107,846 101,507 97,930 94,355 95,230 92,252 91,700 94,150 98,005 91,435 30 Chile 2,805 3,397 3,614 3,546 3,763 3,640 3,455 3,353 3,419 3,293 31 Colombia 2,425 2,750 3,179 3,241 3,053 3,057 3,263 3,229 3,366 33,,332266 37. Cuba 0 0 0 0 2 0 0 0 0 88 33 Ecuador 1,053 884 673 679 722 703 679 677 707 679 34 Guatemala 228 262 286 316 294 289 273 291 312 308 35 Jamaica 158 162 195 180 176 163 191 198 194 186 36 Mexico 16,567 14,991 15,843 16,516 16,902 16,210 16,300 16,456 16,768 16,649 37 Netherlands Antilles 1,207 1,379 2,367 3,115 3,093 2,411 2,769 2,871 2,366 2,132 38 Panama 1,560 4,654 2,913 2,843 2,983 2,491 2,539 2,341 2,219 2,346 39 Peru 739 730 651 693 726 751 807 901 908 924 40 Uruguay 599 936 951 793 742 532 500 540 608 750 41 Venezuela 2,516 2,525 2,904 2,763 2,709 2,662 2,532 2,462 2,461 2,267 42 Other 1,263 1,400 3,166 3,263 3,200 3,187 3,281 3,401 3,339 3,375 43 Asia 125,262 131,789 110,684 101,551 101,661 99,013 105,412 103,874r 110044,,771199 110022,,225588 China 44 People's Republic of China 747 906 2,299 881 842 796 843 802 784 941 45 Republic of China (Taiwan) 2,087 2,046 2,628 2,611 1,487 2,162 1,817 2,024 1,948 1,786 46 Hong Kong 9,617 9,642 10,864 10,224 9,990 11,666 9,903 8,996 9,783 10,031 47 India 441 529 589 638 664 737 684 738 784 791 48 Indonesia 952 1,189 1,522 1,595 1,571 1,647 1,545 1,378 1,319 1,369 49 Israel 860 820 826 947 798 664 676 711 668 635 SO Japan 84,807 79,172 59,576 54,164 54,583 49,771 54,931 53,120 55,371 53,218 SI Korea (South) 6,048 6,179 7,556 7,373 7,518 7,502 7,457 7,410 7,984 8,112 57 Philippines 1,910 2,145 1,408 1,132 1,183 1,307 925 914 654 514 S3 Thailand 1,713 1,867 2,154 2,481 2,649 2,764 2,744 2,944r 2,979 2,839 54 Middle Eastern oil-exporting countries4 8,284 18,540 14,398 12,903 13,190 14,153 16,387 18,323 16,598 16,342 55 Other 7,796 8,754 6,864 6,602 7,186 5,844 7,500 6,514 5,847 5,680 56 Africa 4,928 4,279 3,819 3,751 3,775 3,698 3,680 3,692 3,795 3,464 57 Egypt 294 186 196 203 227 205 206 219 281 234 58 Morocco 575 441 444 489 521 518 472 470 518 479 59 South Africa 1,235 1,041 633 581 558 565 557 575 556 492 60 Zaire 4 4 4 4 6 4 5 5 4 3 61 Oil-exporting countries5 1,298 1,002 1,128 1,169 1,197 1,210 1,207 1,211 1,239 1,194 62 Other 1,522 1,605 1,414 1,305 1,266 1,196 1,233 1,212 1,197 1,062 63 Other 2,306 2,987 2,809 2,857 2,601 3,321 3,337 3,011 3,257 3,105 64 Australia 1,665 2,243 2,072 2,030 1,692 1,685 1,859 1,369 1,489 1,587 65 Other 641 744 737 827 909 1,636 1,478 1,642 1,768 1,518 66 Nonmonetary international and regional organizations6 6,283 55,,008822 22,,440055 33,,115544 11,,559944 1,920 1,184 1,726 2,421 1,325 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, has 6. Excludes the Bank for International Settlements, which is included in included all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, "Other 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 1994 TTyyppee ooff ccllaaiimm 11999911 11999922 11999933 Jan. Feb. Mar. Apr. May1 June1 July? 11 TToottaall 579,683 559,495 523,545 522,879 525,244 22 BBaannkkss'' ccllaaiimmss 514,339 499,437 483,135 470,964 477,605 475,077 476,334 472,627 476,035 470,541 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 37,126 31,367 28,814 30,718 26,554 25,772 25,116 22,560 21,691 21,630 44 OOwwnn ffoorreeiiggnn ooffffiicceess 318,800 303,991 286,819 275,549 273,763 280,898 280,435 284,532 289,442 285,815 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 116,602 109,342 98,012 91,129 97,871 94,809 96,903 98,186 101,370 100,533 66 DDeeppoossiittss 69,018 61,550 46,885 40,664 45,813 44,177 47,971 50,323 50,550 50,574 77 OOtthheerr 47,584 47,792 51,127 50,465 52,058 50,632 48,932 47,863 50,820 49,959 88 AAllll ootthheerr ffoorreeiiggnneerrss 41,811 54,737 69,490 73,568 79,417 73,598 73,880 67,349 63,532 62,563 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss33...... 65,344 60,058 40,410 47,802 49,209 1100 DDeeppoossiittss 15,280 15,452 9,619 14,022 12,579 1111 NNeeggoottiiaabbllee aanndd rreeaaddiillyy ttrraannssffeerraabbllee iinnssttrruummeennttss44 37,125 31,474 17,155 20,340 23,031 1122 OOuuttssttaannddiinngg ccoolllleeccttiioonnss aanndd ootthheerr ccllaaiimmss 12,939 13,132 13,636 13,440 13,599 MMEEMMOO 1133 CCuussttoommeerr lliiaabbiilliittyy oonn aacccceeppttaanncceess 8,974 8,655 7,871 7,570 8,031 1144 DDoollllaarr ddeeppoossiittss iinn bbaannkkss aabbrrooaadd,, rreeppoorrtteedd bbyy nnoonnbbaannkkiinngg bbuussiinneessss eenntteerrpprriisseess iinn tthhee UUnniitteedd SSttaatteess 43,024 36,213 22,724 21,622 21,294 21,931 21,873r 20,600 20,342 n.a. 1. For banks' claims, data are monthly; for claims of banks' domestic custom- office or parent foreign bank, and to foreign branches, agencies, or wholly owned ers, data are for quarter ending with month indicated. subsidiaries of the 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 ana 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 quarterly Consolidated Reports of Condition certificates of deposit denominated in U.S. dollars issued by banks abroad. For filed with bank regulatory agencies. For agencies, branches, and majority-owned description of changes in data reported by nonbanks, see Federal Reserve subsidiaries of foreign banks, consists principally of amounts due from the head 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 Sept. Dec. Mar. Junep 1 Total 206,903 195,302 195,119 189,470 194,776 193,309 185,619 By borrower 2 Maturity of one year or less 165,985 162,573 163,325 161,925 166,226 166,443 160,050 3 Foreign public borrowers 19,305 21,050 17,813 21,211 17,447 15,904 12,644 4 All other foreigners 146,680 141,523 145,512 140,714 148,779 150,539 147,406 5 Maturity of more than one year 40,918 32,729 31,794 27,545 28,550 26,866 25,569 6 Foreign public borrowers 22,269 15,859 13,266 10,341 10,828 9,576 8,638 7 All other foreigners 18,649 16,870 18,528 17,204 17,722 17,290 16,931 By area Maturity of one year or less 8 Europe 49,184 51,835 53,300 57,240 56,299 58,856 50,828 9 Canada 5,450 6,444 6,091 9,816 7,540 7,291 8,065 10 Latin America and Caribbean 49,782 43,597 50,376 51,559 56,622 58,717 56,531 11 Asia 53,258 51,059 45,709 37,619 40,274 35,987 38,189 1? Africa 3,040 2,549 1,784 1,916 1,783 1,611 1,805 13 All other3 5,272 7,089 6,065 3,775 3,708 3,981 4,632 Maturity of more than one year 14 Europe 3,859 3,878 5,367 4,433 4,327 3,822 3,316 15 Canada 3,290 3,595 3,287 2,549 2,553 2,548 2,491 16 Latin America and Caribbean 25,774 18,277 15,312 13,353 13,877 13,341 12,683 17 Asia 5,165 4,459 5,038 4,732 5,412 4,705 4,795 18 Africa 2,374 2,335 2,380 2,049 1,934 2,001 1,849 19 All other3 456 185 410 429 447 449 435 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 • November 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 June Sept. Dec. Mar. June Sept. Dec. Mar. June? 1 Total 320.1 343.6 3S8.7 344.5 346.5 361.0 377.0 388.3 403.7 492.7 496.9 2 G-10 countries and Switzerland 132.2 137.6 135.6 136.0 132.9 142.4 150.0 153.3 161.0 178.1 182.7 3 Belgium and Luxembourg .0 6.0 6.2 6.2 5.6 6.1 7.0 7.1 7.4 7.9 8.6 4 France 10.4 11.0 11.9 15.3 15.3 13.5 14.0 12.3 11.7 16.4 18.5 5 Germany 10.6 8.3 8.8 10.9 9.3 9.9 10.8 12.4 12.6 28.7 24.3 6 Italy 5.0 5.6 8.0 6.4 6.5 6.7 7.9 8.7 7.6 15.5 14.0 7 Netherlands .0 4.7 3.3 3.7 2.8 3.6 3.7 3.7 4.7 4.1 3.6 8 Sweden 2.2 1.9 1.9 2.2 2.3 3.0 2.5 2.5 2.5 2.8 2.9 9 Switzerland 4.4 3.4 4.6 5.2 4.8 5.3 4.7 5.6 5.9 6.3 6.5 10 United Kingdom 60.9 68.5 65.6 61.0 60.8 65.7 73.5 74.7 84.5 69.9 76.1 11 Canada 5.9 5.8 6.5 6.3 6.3 8.2 8.0 9.7 6.6 7.6 9.4 12 Japan 24.0 22.6 18.7 18.9 19.3 20.4 17.9 16.8 17.4 18.8 18.8 13 Other industrialized countries 22.9 22.8 25.5 25.0 24.0 25.4 27.2 26.0 24.6 41.2 43.3 14 Austria 1.4 .6 .8 .7 1.2 1.2 1.3 .6 .4 1.0 1.0 15 Denmark 1.1 .9 1.3 1.5 .9 .8 1.0 1.1 1.0 1.1 1.1 16 Finland .7 .7 .8 1.0 .7 .7 .9 .6 .4 1.0 .9 17 Greece 2.7 2.6 2.8 3.0 3.0 2.7 3.1 3.2 3.2 3.8 4.6 18 Norway 1.6 1.4 1.7 1.6 1.2 1.8 1.8 2.1 1.7 1.6 1.6 19 Portugal .6 .6 .5 .5 .4 .7 .9 1.0 .8 1.2 1.1 20 Spain 8.3 8.3 10.1 9.7 8.9 9.5 10.5 9.3 8.9 12.3 13.2 21 Turkey 1.7 1.4 1.5 1.5 1.3 1.4 2.1 2.1 2.1 2.4 2.1 22 Other Western Europe 1.2 1.8 2.0 1.5 1.7 2.0 1.7 2.2 2.6 3.0 2.8 23 South Africa 1.8 1.9 1.7 1.7 1.7 1.6 1.3 1.2 1.1 1.2 1.2 24 Australia 1.8 2.7 2.2 2.3 2.9 2.9 2.5 2.8 2.3 12.7 13.7 25 OPEC2 12.8 14.5 16.2 15.9 16.1 16.6 15.7 14.8 16.7 22.1 21.6 26 Ecuador 1.0 .7 .7 .7 .6 .6 .6 .5 .5 .5 .5 27 Venezuela 5.0 5.4 5.3 5.4 5.2 5.1 5.5 5.4 5.1 4.7 4.5 28 Indonesia 2.7 2.7 3.0 3.0 3.0 3.1 3.1 2.8 3.2 3.0 3.2 29 Middle East countries 2.5 4.2 5.9 5.4 6.2 6.6 5.4 4.9 6.7 12.8 12.4 30 African countries 1.7 1.5 1.4 1.4 1.1 1.1 1.1 1.1 1.2 1.0 1.1 31 Non-OPEC developing countries 65.4 63.9 68.1 72.8 72.1 74.4 76.6 77.0 82.5 93.9 94.5 Latin America 32 Argentina 5.0 4.8 5.1 6.2 6.6 7.0 6.6 7.2 7.7 8.7 9.8 33 Brazil 14.4 9.6 10.6 10.8 10.8 11.6 12.3 11.7 12.0 12.5 11.8 34 Chile 3.5 3.6 4.0 4.2 4.4 4.6 4.6 4.7 4.7 5.1 5.1 35 Colombia 1.8 1.7 1.6 1.7 1.8 1.9 1.9 2.0 2.1 2.2 2.4 36 Mexico 13.0 15.5 16.3 17.1 16.0 16.8 16.8 17.5 17.7 18.7 18.3 37 Peru .5 .4 .4 .5 .5 .4 .4 .3 .4 .5 .6 38 Other 2.3 2.1 2.2 2.5 2.6 2.6 2.7 2.6 3.0 2.6 2.7 Asia China 39 Peoples Republic of China .2 .3 .3 .3 .7 .6 1.6 .5 2.0 .8 .7 40 Republic of China (Taiwan) 3.5 4.1 4.6 5.0 5.2 5.3 5.9 6.4 7.3 7.5 7.1 41 India 3.3 3.0 3.8 3.6 3.2 3.1 3.1 2.9 3.2 4.1 3.7 42 Israel .5 .5 .4 .4 .4 .5 .4 .4 .5 .4 .4 43 Korea (South) 6.2 6.8 6.9 7.4 6.6 6.5 6.9 6.5 6.7 13.9 14.7 44 Malaysia 1.9 2.3 2.7 3.0 3.1 3.4 3.7 4.1 4.4 5.2 5.2 45 Philippines 3.8 3.7 3.1 3.6 3.6 3.4 2.9 2.6 3.1 3.4 3.2 46 Thailand 1.5 1.7 1.9 2.2 2.2 2.2 2.4 2.8 3.1 2.9 3.3 47 Other Asia 1.7 2.0 2.5 2.7 2.7 2.7 2.6 3.0 2.9 3.1 3.5 Africa 48 Egypt .4 .4 .5 .3 .2 .2 .2 .2 .4 .4 .5 49 Morocco .8 .7 .7 .6 .6 .5 .6 .6 .6 .7 .7 50 Zaire .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 1.0 .7 .6 .9 1.0 .8 .9 .8 .8 1.0 .9 52 Eastern Europe 2.3 2.4 3.0 3.1 3.1 2.9 3.2 3.0 3.0 3.3 3.1 53 Russia4 .2 .9 1.7 1.8 1.9 1.7 1.9 1.7 1.6 1.5 1.2 54 Yugoslavia5 1.2 .9 .7 .7 .6 .6 .6 .6 .6 .5 .5 55 Other .9 .7 .6 .7 .6 .7 .7 .7 .9 1.4 1.5 56 Offshore banking centers 44.7 54.2 61.4 54.5 58.3 60.2 58.0 67.9 72.5 80.3 76.8 57 Bahamas 2.9 11.9 12.9 8.9 6.9 9.7 7.1 12.7 12.6 15.4 13.5 58 Bermuda 4.4 2.3 5.1 3.8 6.2 4.1 4.5 5.5 8.1 8.4 6.1 59 Cayman Islands and other British West Indies 11.7 15.8 19.3 16.9 21.8 17.6 15.6 15.1 16.9 17.2 20.3 60 Netherlands Antilles 7.9 1.2 .8 .7 1.1 1.6 2.5 2.8 2.3 2.7 2.4 61 Panama6 1.4 1.4 1.9 2.0 1.9 2.0 2.1 2.1 2.4 2.0 1.9 62 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 63 Hong Kong 9.7 14.4 14.9 15.2 13.8 16.7 16.9 19.1 18.7 21.7 21.8 64 Singapore 6.6 7.1 6.4 6.8 6.5 8.4 9.3 10.4 11.2 12.7 10.6 65 Other' .0 .0 .0 .0 .0 .0 .0 .0 .1 .0 .0 66 Miscellaneous and unallocated8 39.9 48.0 48.6 36.8 39.7 38.8 46.2 46.3 43.3 73.6 74.5 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 Type of liability and area or country 1991 Mar. June Sept. Dec. 1 Total 46,043 44,708 44,979 44,979 45,832 46,155 48,184 48,596 2 Payable in dollars 40,786 39,029 37,250 37,250 37,870 37,002 39,286 37,857 3 Payable in foreign currencies 5,257 5,679 7,729 7,729 7,962 9,153 8,898 10,739 By type 4 Financial liabilities 21,066 22,518 23,098 23,098 23,670 24,497 26,161 27,507 5 Payable in dollars 16,979 18,104 16,754 16,754 17,152 16,910 18,680 18,152 6 Payable in foreign currencies 4,087 4,414 6,344 6,344 6,518 7,587 7,481 9,355 7 Commercial liabilities 24,977 22,190 21,881 21,881 22,162 21,658 22,023 21,089 8 Trade payables 10,683 9,252 9,777 9,777 9,915 9,614 9,456 9,007 9 Advance receipts and other liabilities 14,294 12,938 12,104 12,104 12,247 12,044 12,567 12,082 10 Payable in dollars 23,807 20,925 20,496 20,496 20,718 20,092 20,606 19,705 11 Payable in foreign currencies 1,170 1,265 1,385 1,385 1,444 1,566 1,417 1,384 By area or country Financial liabilities 12 Europe 10,978 12,003 13,128 13,128 13,488 14,120 16,366 17,884 13 Belgium and Luxembourg 394 216 414 414 306 268 278 175 14 France 975 2,106 1,623 1,623 1,625 2,216 2,074 2,323 15 Germany 621 682 810 810 820 787 779 902 16 Netherlands 1,081 1,056 606 606 639 585 573 534 17 Switzerland 545 408 569 569 503 491 378 634 18 United Kingdom 6,357 6,528 8,430 8,430 9,035 9,118 11,694 12,712 19 Canada 229 292 544 544 604 492 663 859 20 Latin America and Caribbean 4,153 4,784 4,053 4,053 4,299 4,199 3,719 3,359 21 Bahamas 371 537 369 369 521 426 1,301 1,148 22 Bermuda 0 114 114 114 114 124 114 0 23 Brazil 0 6 19 19 18 18 18 18 24 British West Indies 3,160 3,524 2,860 2,860 2,970 2,951 1,600 1,533 25 Mexico 5 7 12 12 13 11 15 17 26 Venezuela 4 4 6 6 5 5 5 5 27 Asia 5,295 5,381 5,334 5,334 5,213 5,516 5,263 5,243 28 Japan 4,065 4,116 4,266 4,266 4,202 4,334 4,234 4,174 29 Middle East oil-exporting countries 5 13 19 19 24 19 23 23 30 Africa 2 6 6 6 6 130 132 133 0 4 0 0 0 123 124 123 31 Oil-exporting countries 32 All other4 Commercial liabilities 10,310 8,701 7,398 7,398 6,992 6,807 7,051 6,825 33 Europe 275 248 298 298 264 269 257 240 34 Belgium and Luxembourg 1,218 1,039 700 700 707 775 643 648 35 France 1,270 1,052 729 729 650 603 571 684 36 Germany 844 710 535 535 537 577 601 687 37 Netherlands 775 575 350 350 472 441 536 375 38 Switzerland 2,792 2,297 2,505 2,505 2,119 2,186 2,319 2,051 39 United Kingdom 40 Canada 1,261 1,014 1,002 1,002 1,005 942 847 883 41 Latin America and Caribbean 1,672 1,355 1,533 1,533 1,776 1,828 1,759 1,661 42 Bahamas 12 3 3 3 11 6 4 21 43 Bermuda 538 310 307 307 429 356 340 348 44 Brazil 145 219 209 209 236 226 214 216 45 British West Indies 30 107 33 33 34 16 36 26 46 Mexico 475 307 457 457 553 659 577 485 47 Venezuela 130 94 142 142 171 172 173 126 48 Asia 9,483 9,334 10,805 10,805 10,988 10,764 11,146 10,665 49 Japan • • 3,651 3,721 3,823 3,823 3,940 3,634 3,956 4,158 50 Middle Eastern oil-exporting countries^'3 2,016 1,498 1,889 1,889 1,796 1,815 1,968 1,525 51 Africa 844 715 568 568 675 665 641 463 52 Oil-exporting countries 422 327 309 309 322 378 320 171 53 Other4 1,406 1,071 575 575 726 652 579 592 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 • November 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 11999922 Dec. Mar. June Sept. Dec. Mar. 1 Total 35,348 45,262 42,312 42,312 46,442 42,203 42,781 43,115 43,020r 2 Payable in dollars 32,760 42,564 39,526 39,526 43,337 38,850 39,333 39,805 39,614r 3 Payable in foreign currencies 2,589 2,698 2,786 2,786 3,105 3,353 3,448 3,310 3,406r By type 4 Financial claims 19,874 27,882 23,779 23,779 26,436 22,243 23,753 23,191 23,264r 5 Deposits 13,577 20,080 15,136 15,136 16,576 11,758 13,361 13,049 13,767r 6 Payable in dollars 12,552 19,080 14,313 14,313 15,461 10,799 12,366 12,215 12,868r 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 9,497r 9 Payable in dollars 5,280 6,910 7,724 7,724 8,939 9,373 9,472 9,150 8,433r 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 19,756r 12 Trade receivables 13,657 14,468 15,976 15,976 17,652 17,477 16,050 16,980 16,918r 13 Advance payments and other claims 1,817 2,912 2,557 2,557 2,354 2,483 2,978 2,944 2,838 14 Payable in dollars 14,927 16,574 17,489 17,489 18,937 18,678 17,495 18,440 18,313r 15 Payable in foreign currencies 548 806 1,044 1,044 1,069 1,282 1,533 1,484 l,443r By area or country Financial claims 16 Europe 9,645 13,441 9,315 9,315 10,382 9,715 8,371 8,042 7,347 17 Belgium and Luxembourg 76 13 8 8 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 10,295r 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 8,071r 29 Mexico 177 212 435 435 399 455 543 634 782r 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 2,633r 32 Japan 523 350 668 668 3,123 2,485 2,215 1,063 1,769 33 Middle East oil-exporting countries 8 5 3 3 3 10 5 3 5 34 Africa 37 57 79 79 128 125 88 99 76 35 Oil-exporting countries 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 8,305r 38 Belgium and Luxembourg 212 194 189 189 170 173 163 183 172r 39 France 1,240 1,585 1,537 1,537 1,492 1,504 1,429 1,932 1,820 40 Germany 807 955 933 933 1,025 1,042 934 997 930r 41 Netherlands 555 645 552 552 734 565 408 415 351 42 Switzerland 301 295 362 362 437 442 376 424 403r 43 United Kingdom 1,775 2,086 2,094 2,094 2,360 2,554 2,287 2,239 2,148r 44 Canada 1,074 1,121 1,281 1,281 1,329 1,356 1,357 1,350 l,449r 45 Latin America and Caribbean 2,375 2,655 3,043 3,043 3,473 3,454 3,063 3,196 3,489r 46 Bahamas 14 13 28 28 18 17 20 11 11 47 Bermuda 246 264 255 255 195 239 225 173 222r 48 Brazil 326 427 357 357 836 788 407 460 408r 49 British West Indies 40 41 40 40 17 43 39 70 58 50 Mexico 661 842 924 924 997 911 858 936 971r 51 Venezuela 192 203 345 345 349 317 286 295 310r 52 Asia 4,127 4,591 4,847 4,847 5.419 5,178 5,505 5,587 5,585r 53 Japan 1,460 1,899 1,900 1,900 2,158 1,858 2,502 2,126 2,298r 54 Middle Eastern oil-exporting countries 460 620 693 693 773 673 456 656 620r 55 Africa 488 430 554 554 463 515 493 492 497r 56 Oil-exporting countries 67 95 78 78 75 98 107 71 90 57 Other4 367 390 364 364 417 413 433 490 43 lr 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 1994 Transaction and area or country 1992 1993 J J a u n ly .- Jan. Feb. Mar. Apr. May Juner JulyP U.S. corporate securities STOCKS 1 Foreign purchases 221,367 319,449 212,195 32,238 34,428 36,340 29,851 26,687 28,336 24,315 2 Foreign sales 226,503 297,913 209,073 28,965 30,709 37,079 31,653 25,111 30,249 25,307 3 Net purchases or sales (-) -5,136 21,536 3,122 3,273 3,719 -739 -1,802 1,576 -1,913 -992 4 Foreign countries -5,169 21,264 3,181 3,273 3,786 -737 -1,800 1,559 -1,904 -996 5 Europe -4,927 10,615 8,062 2,951 3,447 379 802 1,209 -389 -337 6 France -1,350 -103 -460 119 190 -587 -83 210 -241 -68 7 Germany -80 1,647 2,769 1,170 440 332 252 398 119 58 8 Netherlands -262 -603 918 169 210 -155 82 176 83 353 9 Switzerland 168 2,986 1,199 254 505 79 173 30 73 85 10 United Kingdom -3,301 4,510 1,419 614 1,215 389 230 172 -324 -877 11 Canada 1,407 -3,213 -539 314 -284 -59 290 156 -531 -425 12 Latin America and Caribbean 2,203 5,709 -1,553 948 910 -31 -1,862 -207 -839 -472 13 Middle East1 -88 -311 -204 -100 -17 64 4 49 -111 -93 14 Other Asia -3,943 8,199 -3,161 -911 -379 -1,295 -1,191 476 -143 282 15 Japan -3,598 3,826 -960 -800 -447 -117 -658 335 171 556 16 Africa 10 63 37 10 -17 13 33 -1 6 -7 17 Other countries 169 202 539 61 126 192 124 -123 103 56 18 Nonmonetary international and regional organizations 33 272 -59 0 -67 -2 -2 17 -9 4 BONDS2 19 Foreign purchases 214,922 283,725 189,212 24,607 22,271 30,607 29,756 24,951r 31,789 25,231 20 Foreign sales 175,842 217,481 150,689 19,418 18,263 25,147 27,407 20,848 21,123 18,483 21 Net purchases or sales (-) 39,080 66,244 38,523 5,189 4,008 5,460 2,349 4,103r 10,666 6,748 22 Foreign countries 37,964 65,706 37,861 5,205 3,977 5,373 2,364 4,041r 10,538 6,363 23 Europe 17,435 22,055 20,359 2,742 2,764 2,870 412 528r 6,031 5,012 24 France 1,203 2,346 274 53 -57 32 181 -3 47 21 25 Germany 2,480 883 -132 -101 90 -64 83 -244 52 52 26 Netherlands 540 -290 1,975 75 99 330 216 358 868 29 27 Switzerland -579 -627 329 176 57 131 -123 136 144 -192 28 United Kingdom 12,421 19,158 19,699 1,676 2,799 3,259 556 894r 5,624 4,891 29 Canada 237 1,653 1,300 23 -141 101 -16 286 422 625 30 Latin America and Caribbean 9,300 16,493 7,057 1,638 909 1,850 873 762 1,553 -528 31 Middle East1 3,166 3,257 891 161 -83 59 7 33 339 375 32 Other Asia 7,545 20,826 7,700 670 480 417 903 2,287 2,177 766 33 Japan -450 11,569 3,785 -95 37 -363 523 1,575 1,396 712 34 Africa 354 1,149 0 -51 10 -10 55 10 9 -23 35 Other countries -73 273 554 22 38 86 130 135 7 136 36 Nonmonetary international and regional organizations 1,116 538 662 -16 31 87 -15 62 128 338855 Foreign securities 37 Stocks, net purchases or sales (-)3 -32,259 -63,320 -33,668 -5,860 -6,248 -6,457 -1,237 —4,025r -6,707 -3,134 38 Foreign purchases 150,051 246,011 232,214 32,432 38,374 37,032 33,079 30,934* 31,086 29,277 39 Foreign sales 182,310 309,331 265,882 38,292 44,622 43,489 34,316 34,959* 37,793 32,411 40 Bonds, net purchases or sales (-) -15,605 -61,023 -15,565 -9,483 -4,532 6,139 -5,454 — 168r -684 -1,383 41 Foreign purchases 513,589 839,118 549,028 84,223 85,903 118,931 68,164 63,036r 69,370 59,401 42 Foreign sales 529,194 900,141 564,593 93,706 90,435 112,792 73,618 63,204r 70,054 60,784 43 Net purchases or sales (-), of stocks and bonds -47,864 -124,343 -49,233 -15,343 -10,780 -318 -6,691 —4,193r -7,391 -4,517 44 Foreign countries -51,274 -124,504 -49,539 -15,386 -10,648 -295 -6,647 —4,480r -7,384 -4,699 45 Europe -31,350 -81,175 -1,599 -5,512 -3,568 8,122 -7 -1,569* 3,341 -2,406 46 Canada -6,893 -14,649 -7,025 -2,741 -2,192 619 -316 436* -789 -2,042 47 Latin America and Caribbean -4,340 -9,549 -21,252 -3,124 -327 -2,852 -6,602 -2,161 -5,089 -1,097 48 Asia -7,923 -15,044 -17,777 -3,171 -4,449 -6,598 565 -527 -4,371 774 49 Africa -13 -185 -209 -60 18 -118 -28 -4 -46 29 50 Other countries -755 -3,902 -1,677 -778 -130 532 -259 -655 -430 43 51 Nonmonetary international and regional organizations 3,410 161 306 43 -132 -23 -44 287 -7 182 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 • November 1994 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1994 1994 Country or area 1992 1993 Jan.- Jan. Feb. Mar. Apr. May June July" July Transactions, net purchases or sales (-) during period1 1 Estimated total 39,288 24,355 16,457 1,853 12,995 -1,318 -13,607 19,727 —5,358r 2,165 2 Foreign countries 37,935 24,159 17,419 1,592 12,884 -1,446 -12,879 19,676 -4,906r 2,498 3 Europe 19,625 -2,712 11,858 114 3,552 2,281 -5,356 8,629 —2,707r 5,345 4 Belgium and Luxembourg 1,985 1,218 58 -63 128 269 -175 147 -170 -78 5 Germany 2,076 -10,033 3,214 2,327 -1,055 -729 -465 2,279 143 714 6 Netherlands -2,959 -515 387 52 418 -971 187 21 560 120 7 Sweden -804 1,421 612 -4 229 34 -154 150 257 100 8 Switzerland 488 -1,511 1,787 313 555 1,385 3 -211 158 -416 9 United Kingdom 24,184 6,055 1,908 -1,888 2,455 688 -3,910 4,812 -5,562 5,313 10 Other Europe and former U.S.S.R -5,345 653 3,892 -623 822 1,605 -842 1,431 l,907r -408 11 Canada 562 11,252 1,919 32 168 357 -1,662 98 -11 2,937 12 Latin America and Caribbean -3,222 -4,651 -15,245 3,677 7,512 -3,428 -6,002 -2,652 -7,080* -7,272 13 Venezuela 539 389 -297 -358 235 93 -146 -130 -9 18 14 Other Latin America and Caribbean -1,956 -5,884 -22,252 3,118 2,860 -4,204 -6,911 -2,708 -6,744r -7,663 15 Netherlands Antilles -1,805 844 7,304 917 4,417 683 1,055 186 -327 373 16 Asia 23,517 20,939 20,621 -2,152 1,191 151 403 13,378 5,128 2,522 17 Japan 9,817 17,073 13,885 -3,074 -1,403 2,914 2,976 8,185 5,099 -812 18 Africa 1,103 1,156 -222 -135 -120 -18 59 -29 16 5 19 Other -3,650 -1,825 -1,512 56 581 -789 -321 252 -252 -1,039 20 Nonmonetary international and regional organizations 1,353 1% -962 261 111 128 -728 51 -452 -333 21 International 1,018 -310 -845 455 1 173 -724 70 -395 -425 22 Latin American regional 533 654 73 7 116 -37 21 -111 54 23 MEMO 23 Foreign countries 37,935 24,159 17,419 1,592 12,884 -1,446 -12,879 19,676 -4,906r 2,498 24 Official institutions 6,876 1,238 21,423 4,284 4,045 -5,051 -640 11,253 2,674r 4,858 25 Other foreign 31,059 22,921 -4,004 -2,692 8,839 3,605 -12,239 8,423 -7,580 -2,360 Oil-exporting countries 26 Middle East2 4,317 -8,543 -1,174 -1,518 900 33 144 -250 -495 12 27 11 -5 0 0 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, averages of daily figures Rate on Sept. 30, 1994 Rate on Sept. 30, 1994 Rate on Sept. 30, 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.. 5.54 Sept. 1994 Japan 1.75 Sept. 1993 United Kingdom 12.0 Sept. 1992 Denmark 5.0 May 1994 Netherlands 4.5 May 1994 France .. 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 Type or country 11999911 11999922 11999933 Mar. Apr. May June July Aug. Sept. 2 3 2 3 2 3 2 3 2 3 2 3 2 3 2 3 11111111 CCCCCCCC UUUUUUUU EEEEEEEE aaaaaaaa uuuuuuuu nnnnnnnn nnnnnnnn rrrrrrrr iiiiiiiitttttttt oooooooo aaaaaaaa eeeeeeee dddddddd dddddddd dddddddd aaaaaaaa oooooooo llllllll KKKKKKKK llllllllaaaaaaaa iiiiiiiinnnnnnnn rrrrrrrrssssssss gggggggg ddddddddoooooooommmmmmmm 1 9 9 5 1 . . . . 0 1 8 4 7 5 6 7 9 6 9 3 . . . . 7 4 7 5 6 2 0 6 5 5 7 3 . . . . 1 1 8 1 4 7 8 8 4 5 5 3 . . . . 4 7 7 1 5 3 5 2 5 5 6 4 . . . . 4 1 0 0 8 4 7 0 5 5 6 4 . . . . 3 0 1 5 8 7 3 1 4 5 6 4 . . . . 9 5 1 5 5 0 3 1 4 6 5 4 . . . . 2 8 1 7 8 6 5 4 4 5 5 4 . . . . 8 7 8 4 9 1 0 7 5 4 5 5 . . . . 6 9 6 0 1 5 5 1 11111111 99999999 5 8 5 8 5 8 5 8 5 8 5 8 5 8 5 8 00000000 6 7 6 7 6 7 6 7 6 7 6 7 6 7 6 7 JJJJJJJJ BBBBBBBB FFFFFFFF NNNNNNNN SSSSSSSS IIIIIIII aaaaaaaa tttttttt wwwwwwww rrrrrrrr eeeeeeee aaaaaaaa eeeeeeee pppppppp aaaaaaaa llllllll llllllll tttttttt iiiiiiii aaaaaaaa gggggggg yyyyyyyy nnnnnnnn hhhhhhhh tttttttt nnnnnnnn iiiiiiii zzzzzzzz cccccccc eeeeeeee uuuuuuuu eeeeeeee eeeeeeee rrrrrrrr mmmmmmmm rrrrrrrr llllllll llllllll aaaaaaaa aaaaaaaa nnnnnnnn nnnnnnnn dddddddd dddddddd ssssssss 1 9 9 9 7 8 2 . . . . . . 3 1 4 0 3 0 0 9 9 4 3 1 1 1 9 9 4 7 3 0 . . . . . . 2 3 3 6 9 1 5 1 9 7 1 4 1 8 6 8 4 2 0 . . . . . . 1 7 3 7 9 0 0 3 0 9 6 9 6 5 2 8 6 3 . . . . . . 1 2 2 3 9 1 0 3 6 6 9 1 5 8 5 5 2 3 . . . . . . 8 2 8 0 2 9 4 2 9 7 6 6 5 7 5 5 2 3 . . . . . . 2 0 7 5 1 9 7 4 6 2 7 4 5 2 8 4 5 4 . . . . . . 4 3 9 0 1 2 4 3 5 4 2 1 5 4 2 8 5 4 . . . . . . 8 5 5 1 3 1 4 3 1 4 9 7 2 5 8 4 5 4 . . . . . . 2 8 8 4 4 2 8 8 8 6 7 1 4 5 2 5 8 4 . . . . . . 5 9 3 6 0 3 0 8 4 8 0 1 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 • November 1994 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar except as noted Country/currency unit 1992 1993 Apr. May July Aug. Sept. 1 Australia/dollar^ 77.872 73.521 67.993 71.565 72.433 73.291 73.409 74.010 74.200 2 Austria/schilling 11.686 10.992 11.639 11.948 11.651 11.446 11.027 11.010" 10.904 3 Belgium/franc 34.195 32.148 34.581 34.979 34.108 33.514 32.315 32.248r 31.871 4 Canada/dollar 1.1460 1.2085 1.2902 1.3830 1.3808 1.3836 1.3826 1.3783r 1.3540 5 China, P.R./yuan 5.3337 5.5206 5.7795 8.7251 8.6859 8.6836 8.6605 8.6072 8.5581 6 Denmark/krone 6.4038 6.0372 6.4863 6.6642 6.4857 6.3786 6.1581 6.1845r 6.1038 7 Finland/markka 4.0521 4.4865 5.7251 5.4997 5.4194 5.4241 5.1996 5.1493" 4.9689 8 France/franc 5.6468 5.2935 5.6669 5.8170 5.6728 5.5597 5.3702 5.3602 5.2975 9 Germany/deutsche mark. 1.6610 1.5618 1.6545 1.6984 1.6565 1.6271 1.5674 1.5646 1.5491 10 Greece/drachma 182.63 190.81 229.64 249.08 245.41 244.77 236.92 237. llr 235.98 11 Hong Kong/dollar 7.7712 7.7402 7.7357 7.7269 7.7262 7.7309 7.7265 7.7272 7.7275 12 India/rupee 22.712 28.156 31.291 31.391 31.375 31.385 31.376 31.373 31.372 13 Ireland/pound2 161.39 170.42 146.47 143.42 147.12 149.54 152.79 152.22 154.61 14 Italy/lira 1,241.28 1,232.17 1,573.41 1,626.07 1,594.56 1,592.22 1,562.31 l,582.15r 1,565.79 15 Japan/yen 134.59 126.78 111.08 103.48 103.75 102.53 98.44 99.94 98.77 16 Malaysia/ringgit 2.7503 2.5463 2.5738 2.6887 2.6169 2.5942 2.5948 2.5633 2.5617 17 Netherlands/guilder 1.8720 1.7587 1.8585 1.9074 1.8597 1.8242 1.7585 1.7570r 1.7372 18 New Zealand/dollar2 57.832 53.792 54.127 56.908 58.347 59.121 60.063 60.119 60.297 19 Norway/krone 6.4912 6.2142 7.0979 7.3680 7.1789 7.0686 6.8560 6.833lr 6.7961 20 Portugal/escudo 144.77 135.07 161.08 173.54 171.15 168.76 160.98 159.80" 157.91 21 Singapore/dollar 1.7283 1.6294 1.6158 1.5628 1.5464 1.5310 1.5137 1.5045 1.4885 22 South Africa/rand 2.7633 2.8524 3.2729 3.5789 3.6346 3.6318 3.6705 3.5968 3.5570 23 South Korea/won 736.73 784.58 805.75 811.71 809.79 809.86 808.39 806.83 803.69 24 Spain/peseta 104.01 102.38 127.48 138.14 136.62 134.23 129.31 129.90" 128.41 25 Sri Lanka/rupee 41.200 44.013 48.205 48.925 49.067 49.232 49.010 49.241 49.260 26 Sweden/krona 6.0521 5.8258 7.7956 7.8850 7.7181 7.7968 7.7471 7.7420" 7.5227 27 Switzerland/franc 1.4356 1.4064 1.4781 1.4383 1.4125 1.3727 1.3239 1.3184 1.2892 28 Taiwan/dollar 26.759 25.160 26.416 26.389 26.792 27.018 26.658 26.419 26.210 29 Thailand/baht 25.528 25.411 25.333 25.268 25.212 25.137 24.977 25.021 24.968 30 United Kingdom/pound 176.74 176.63 150.16 148.23 150.42 152.62 154.67 154.22 156.61 MEMO 31 United States/dollar3... 89.84 86.61 93.18 94.39 92.79 89.26" 88.08 1. Averages of certified noon buying rates in New York for cable transfers. the 1972-76 average world trade of that country divided by the average world Data in this table also appear in the Board's G.5 (405) monthly statistical release. trade of all ten countries combined. Series revised as of August 1978 (see Federal For ordering address, see inside front cover. Reserve Bulletin, vol. 64 (August 1978), p. 700). 2. Value in U.S. cents. 3. Index of weighted-average exchange value of U.S. dollar against the currencies of ten industrial countries. The weight for each of the ten countries is Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A67 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 November 1993 February 1994 A76 February 1994 May 1994 A74 May 1994 August 1994 A68 August 1994 November 1994 A68 Assets and liabilities of U.S. branches and agencies of foreign banks September 30, 1993 February 1994 A80 December 31, 1993 May 1994 A78 March 31, 1994 August 1994 A72 June 30, 1994 November 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 A71 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 Special Tables • November 1994 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, August 1-5, 19941 Commercial and Industrial Loans Weighted Loan rate (percent) Loans Loans MMoosstt AAmmoouunntt ooff Average aavveerraaggee secured made PPaarrttiiccii-- common Characteristic ( o t f h o l d o u o a s l n a l s a n r d s s ) ( o t f h o d s u o iz s l e a la n r d s s ) mmaa D ttuu a rr y ii s tt yy22 WW e a f v f ee e e iigg c r t a hh i g tt v ee e e dd 3 St e a r n ro d r a 4 r d c (p o e ll r hu a c vy t e e n ra t) l ( c p o u e m m n r e c d m n e e t n r i t t - ) (p p l e a o r t a c i n e o s n n t) p r r a ic te in 5 g ALL BANKS 1 Overnight6 11,642,664 6,404 • 5.00 .21 14.1 57.7 10.6 Other 2 One month or less (excluding overnight) 7,423,447 1,199 14 5.23 .19 14.3 77.7 4.5 Other 3 Fixed rate 5,697,915 1,981 12 5.06 .26 10.4 75.7 4.9 Other 4 Floating rate 1,725,532 521 20 5.78 .26 27.4 84.2 2.9 Other 5 More than one month and less than one year 12,832,976 214 150 6.48 .15 45.5 80.8 6.8 Prime 6 Fixed rate 6,247,291 248 102 5.93 .19 36.0 81.6 8.4 Foreign 7 Floating rate 6,585,685 189 195 7.01 .20 54.5 80.1 5.4 Prime 8 Demand7 13,508,412 280 » 6.69 .17 75.6 59.8 4.4 Prime 9 Fixed rate 1,887,209 472 * 5.54 .28 36.7 86.2 7.0 Other 10 Floating rate 11,621,203 263 * 6.88 .18 81.9 55.6 4.0 Prime 11 Total short-term 45,407,499 391 64 5.% .15 41.3 68.1 6.7 Other 12 Fixed rate (thousands of dollars) ... 25,474,430 753 31 5.28 .21 20.3 69.7 8.5 Other 13 1-99 431,342 16 152 8.74 .13 84.0 32.3 .5 Other 14 100-499 430,482 200 92 7.01 .19 62.2 59.1 5.9 Other 15 500-999 464,578 691 56 5.88 .03 40.3 74.4 5.3 Fed funds 16 1,000-4,999 4,170,929 2,352 38 5.54 .06 31.9 76.7 8.1 Other 17 5,000-9,999 3,937,787 6,519 32 5.31 .09 28.3 72.4 9.5 Other 18 10,000 or more 16,039,311 18,522 24 5.05 .09 11.9 68.4 8.8 Other 19 Floating rate (thousands of dollars). 19,933,069 242 159 6.83 .17 68.1 66.1 4.4 Prime 20 1-99 1,578,234 26 191 8.54 .05 84.6 84.6 1.8 Prime 21 100-499 3,405,858 204 192 8.11 .02 80.9 86.7 3.6 Prime 22 500-999 1,775,208 661 203 7.71 .10 76.6 86.2 5.2 Prime 23 1,000-4,999 4,278,755 1,947 162 7.21 .10 69.1 82.4 5.8 Prime 24 5,000-9,999 1,656,578 6,589 151 6.27 .29 58.8 67.0 7.9 Prime 25 10,000 or more 7,238,436 23,384 124 5.53 .26 58.0 37.7 3.4 Fed funds Months 26 Total long-term 6,586,107 260 43 6.91 .15 59.2 82.9 5.4 Prime 27 Fixed rate (thousands of dollars) 1,631,902 130 42 6.66 .26 53.5 74.7 4.2 Other 28 1-99 187,979 16 55 8.92 .26 93.8 28.9 .0 Other 29 100-499 151,272 214 41 8.06 .29 86.2 52.0 3.9 Other 30 500-999 53,158 636 44 7.21 .31 61.6 89.6 13.1 Other 31 1,000 or more 1,239,493 4,190 40 6.12 .24 43.0 83.8 4.5 Other 32 Floating rate (thousands of dollars).. 4,954,205 388 43 6.99 .14 61.1 85.6 5.8 Prime 33 1-99 262,930 34 44 8.46 .12 91.9 64.2 2.4 Prime 34 100-499 752,046 207 47 8.06 .07 81.7 74.3 5.0 Prime 35 500-999 458,048 675 36 7.73 .08 71.2 83.7 14.4 Prime 36 1,000 or more 3,481,182 4,304 43 6.55 .20 53.0 90.0 5.1 Prime Loan rate (percent) DDaayyss Prime rate Effective3 Nominal8 LOANS MADE BELOW PRIME 37 Overnight6 11,465,486 7,585 4.96 4.93 13.4 57.1 10.8 7.25 38 One month or less (excluding overnight) 6,939,745 4,480 13 5.00 4.97 9.7 77.4 4.5 7.24 39 More than one month and less than one vear 8,002,671 1,033 121 5.42 5.39 30.0 81.8 8.7 7.27 40 Demand7 6,767,385 2,284 * 5.21 5.14 66.0 37.4 3.6 7.28 41 Total short-term 33,175,287 2,410 41 5.13 5.09 213 63.3 7.5 7.26 42 Fixed rate 23,963,940 2,896 26 5.10 5.07 17.4 69.7 8.6 7.26 43 Floating rate 9,211,347 1,676 123 5.21 5.15 53.2 46.7 4.5 7.27 Months 44 Total long-term 3,106,160 881 39 5.47 5.38 34.9 89.0 5.5 7.31 45 Fixed rate 979,152 454 36 5.41 5.35 29.9 81.4 5.4 7.30 46 Floating rate .. 2,127,007 1,556 41 5.49 5.40 37.3 92.6 5.5 7.31 Footnotes appear at the end of the table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A69 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, August 1-5, 1994—Continued Commercial and industrial loans—Continued Weighted Loan rate (percent) Loans Loans Amount of Average average secured made Partici- Characteristic (th l o o u a s n a s n ds (tho s u iz s e a nds maturity2 Weighted coll b a y t eral co u m nd m e i r t- p l a o t a i n o s n of dollars) of dollars) Days e a f v fe e c r t a i g v e e 3 (percent) (p m er e c n e t n t) (percent) LARGE BANKS 1 Overnight6 10,216,970 6,864 5.02 13.8 55.8 2 One month or less (excluding overnight) 6,046,005 3,876 5.08 11.4 75.1 5.0 3 Fixed rate 4,639,574 6,028 5.01 9.8 72.6 5.6 4 Floating rate 1,406,431 1,780 5.33 16.7 83.1 2.9 5 More than one month and less than one year 8,251,717 1,081 131 6.03 38.0 85.4 8.4 6 Fixed rate 4,408,903 3,100 91 5.69 36.3 90.6 9.9 7 Floating rate 3,842,814 618 176 6.42 40.0 79.5 6.6 8 Demand7 9,178,379 493 6.17 73.6 51.5 4.2 9 Fixed rate 1,394,907 1,756 5.36 32.0 83.8 .0 10 Floating rate 7,783,472 437 6.32 81.1 45.7 4.9 11 Total short-term 33,693,072 1,150 5.59 35.6 65.3 12 Fixed rate (thousands of dollars) 20,659,706 4,620 24 5.19 18.9 68.9 13 1-99 21,864 29 148 7.53 75.1 70.0 1.5 14 100-499 185,972 261 58 6.29 49.0 75.1 4.4 15 500-999 315,172 697 48 5.86 41.6 74.4 4.6 16 1,000-4,999 3,089,694 2,353 35 5.53 31.9 75.8 6.8 17 5,000-9,999 3,345,952 6,597 30 5.31 28.8 70.0 8.4 18 10,000 or more 13,701,053 18,773 20 5.04 12.6 66.9 9.5 19 Floating rate (thousands of dollars)... 13,033,366 525 134 6.24 62.0 59.7 5.2 20 1-99 503,484 34 197 8.33 87.2 88.8 1.5 21 100-499 1,501,946 209 184 7.98 80.0 90.4 3.9 22 500-999 810,968 673 182 7.61 71.6 89.2 7.4 23 1,000-4,999 2,206,566 2,012 141 6.82 57.4 83.1 8.0 24 5,000-9,999 1,322,078 6,591 136 6.06 57.0 67.7 10.0 25 10,000 or more 6,688,324 24,998 116 5.38 57.5 37.7 3.7 26 Total long-term 4,378,174 937 6.53 51.8 88.5 5.8 27 Fixed rate (thousands of dollars) 721,700 1,066 5.97 47.1 72.7 7.6 28 1-99 9,255 28 8.59 90.4 41.0 .0 29 100-499 32,099 226 6.98 79.8 74.2 .0 30 500-999 28,221 663 7.04 53.8 89.9 18.5 31 1,000 or more 652,124 3,961 5.84 44.6 72.3 7.6 32 Floating rate (thousands of dollars)... 3,656,474 915 6.64 52.7 91.7 5.4 33 1-99 61,597 41 8.12 88.4 85.9 2.9 34 100-499 339,296 228 7.94 75.0 87.7 4.8 35 500-999 306,313 682 7.71 67.1 88.4 14.9 36 1,000 or more 2,949,268 5,267 6.35 47.9 92.6 4.5 Loan rate (percent) Days Effective3 Nominal8 LOANS MADE BELOW PRIME 37 Overnight6 10,041,329 8,158 4.98 4.95 13.0 55.1 11.2 38 One month or less (excluding overnight) 5,852,881 6,291 13 4.97 4.95 9.3 74.7 4.9 39 More than one month and less than one vear 6,367,022 3,787 117 5.39 5.36 30.2 84.1 9.3 40 Demand7 5,952,386 3,913 5.15 5.07 68.9 30.6 2.4 41 Total short-term 28,213,618 5,260 38 27.9 60.5 7.6 42 Fixed rate 20,030,596 5,744 24 5.11 5.08 17.3 68.1 8.8 43 Floating rate 8,183,022 4,361 111 5.10 5.04 53.8 42.0 4.7 Months 44 Total long-term 2,477,855 3,410 40 35.8 5.9 45 Fixed rate 568,765 2,263 5.40 5.33 39.8 73.9 8.4 46 Floating rate .. 1,909,090 4,016 5.38 5.28 34.6 93.7 5.1 Footnotes appear at the end of the table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 Special Tables • November 1994 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, August 1-5, 19941—Continued Commercial and industrial loans—Continued Weighted Loan rate (percent) Loans Loans Amount of Average average secured made Partici- Characteristic ( o t f h l o d o u o a s l n a l s a n r d s s ) ( o t f h o d s u o iz s l e l a a n r d s) s maturity2 W av e e ig ra h g te e d Standard coll b a y te ral co u m m n e d m n e t r i t- (p p l e a o r t a c i n o e s n n t) Days effective3 (percent) (percent) OTHER BANKS 1 Overnight6 1,425,694 4,325 4.83 15.9 71.6 7.8 2 One month or less (excluding overnight) 1,377,441 298 5.84 27.3 89.3 2.2 3 Fixed rate 1,058,340 502 5.26 13.1 89.3 1.9 4 Floating rate 319,101 126 7.78 74.5 89.0 2.9 5 More than one month and less than one year 4,581,259 87 184 7.30 59.0 72.5 4.1 6 Fixed rate 1,838,388 77 130 6.50 35.3 59.8 4.8 7 Floating rate 2,742,871 96 220 7.83 74.9 81.0 3.6 8 Demand7 4,330,033 146 7.79 79.6 77.5 4.9 9 Fixed rate 492,302 154 6.02 50.0 92.8 26.7 10 Floating rate 3,837,731 145 8.02 83.4 75.6 2.1 11 Total short-term 11,714,427 135 7.01 76.2 4.6 12 Fixed rate (thousands of dollars) ... 4,814,724 164 59 5.68 26.2 73.2 7.3 13 1-99 409,479 15 152 8.81 84.4 30.3 .4 14 100-499 244,510 170 115 7.55 72.3 46.9 7.0 15 500-999 149,406 679 73 5.91 37.4 74.3 6.8 16 1,000-4,999 1,081,235 2,350 46 5.57 32.0 79.5 11.6 17 5,000-9,999 591,835 6,110 45 5.31 25.5 86.0 15.9 18 10,000 or more 2,338,259 17,178 46 5.07 7.9 77.2 4.4 19 Floating rate (thousands of dollars). 6,899,703 120 200 7.93 79.6 78.3 2.7 20 1-99 1,074,750 24 189 8.64 83.3 82.7 1.9 21 100-499 1,903,912 200 195 8.22 81.7 83.8 3.4 22 500-999 964,240 652 216 7.78 80.8 83.7 3.3 23 1,000-4,999 2,072,189 1,882 186 7.63 81.5 81.7 3.4 24 5,000-9,999 334,500 6,578 224 7.13 65.8 64.4 .0 25 10,000 or more 550,112 13,098 317 7.45 64.5 37.5 .0 Months 26 Total long-term 2,207,934 107 7.66 73.9 71.8 4.8 27 Fixed rate (thousands of dollars) 910,202 77 7.20 58.5 76.3 1.6 28 1-99 178,724 16 8.94 94.0 28.3 .0 29 100-499 119,172 211 8.35 87.9 46.0 4.9 30 500-999 24,937 608 7.39 70.5 89.2 7.0 31 1,000 or more 587,369 4,477 6.43 41.3 96.5 1.1 32 Floating rate (thousands of dollars)... 1,297,731 148 7.97 84.7 68.7 7.0 33 1-99 201,333 33 8.56 93.0 57.6 2.3 34 100-499 412,750 192 8.15 87.2 63.2 5.1 35 500-999 151,735 661 7.76 79.6 74.3 13.4 36 1,000 or more 531,913 2,137 7.68 81.0 75.6 8.5 Loan rate (percent) Days Effective Nominal LOANS MADE BELOW PRIME 37 Overnight 1,424,157 5,073 4.83 4.82 15.8 71.5 7.8 38 One month or less (excluding overnight) 1,086,865 1,756 13 5.13 5.12 12.2 92.3 2.3 39 More than one month and less than one year. 1,635,649 270 139 5.56 5.50 29.2 73.0 6.1 40 Demand7 814,999 565 5.64 5.62 44.3 87.1 12.0 41 Total short-term . 4,961,669 590 59 5.27 5.24 24.1 42 Fixed rate .. 3,933,344 822 36 5.06 5.03 17.8 78.0 7.8 43 Floating rate , 1,028,325 284 197 6.08 6.03 48.3 83.6 2.7 Months 44 Total long-term. 628,305 225 36 5.78 5.75 31.5 3.9 45 Fixed rate .., 410,387 215 5.41 5.37 16.1 91.7 1.2 46 Floating rate . 217,918 244 6.49 6.46 60.4 82.5 8.9 Footnotes appear at the end of the table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A71 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, August 2-5, 1994—Continued NOTES 1. The survey of terms of bank lending to business collects data on gross loan 4. The chances are about two out of three that the average rate shown would extensions made during the first full business week in the mid-month of each differ by less than the amount of the standard error from the average rate that quarter by a sample of 340 commercial banks of all sizes. A sample of 250 banks would be found by a complete survey of lending at all banks. reports loans to farmers. The sample data are blown up to estimate the lending 5. The rate used to price the largest dollar volume of loans. Base pricing rates terms at all insured commercial banks during that week. The estimated terms of include the prime rate (sometimes referred to as a bank's "basic" or "reference" bank lending are not intended for use in collecting the terms of loans extended rate); the federal funds rate; domestic money market rates other than the federal over the entire quarter or residing in the portfolios of those banks. Construction funds rate; foreign money market rates; and other base rates not included in the and land development loans include both unsecure loans and loans secured by real foregoing classifications. estate. Thus, some of the construction and land development loans would be 6. Overnight loans mature on the following business day. reported on the statement of condition as real estate loans and the remainder as 7. Demand loans have no stated date of maturity. business loans. Mortgage loans, purchased loans, foreign loans, and loans of less 8. Nominal (not compounded) annual interest rate calculated from the stated that $1,000 are excluded from the survey. As of September 30, assets of most of rate and other terms of the loans and weighted by loan size. the large banks were at least $7.0 billion. For all insured banks, total assets 9. Calculated by weighting the prime rate reported by each bank by the volume averaged $275 million. of loans reported by that bank, summing the results, and then averaging over all 2. Average maturities are weighted by loan size; excludes demand loans. reporting banks. 3. Effective (compounded) annual interest rate calculated from the stated rate 10. The proportion of loans made at rates below the prime may vary substanand other terms of the loans and weighted by loan size. tially from the proportion of such loans outstanding in banks' portfolios. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • November 1994 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, June 30, 19941—Continued Millions of dollars, except as noted All states2 New York California Illinois IItteemm in I T c B l o u F t d a s i l 3 n g o IB nl F y s 3 in T c I l B o u t F d a s i l n g I o B n F ly s in T c I l B o u t F d a s i l n g I o B n F ly s in T c I l B o u t F d a s i l n g I o B n F ly s 1 Total assets4 710,018 319,027 542,574 259,197 74,223 33,189 59,123 19,468 2 Claims on nonrelated parties 634,634 183,861 480,732 152,336 67,385 15,925 57,351 11,072 3 Cash and balances due from depository institutions 143,487 118,324 125,814 102,676 6,737 6,131 9,683 8,828 4 Cash items in process of collection and unposted debits 3,455 0 3,308 0 11 0 90 0 5 Currency and coin (U.S. and foreign) 24 n.a. 17 n.a. 1 n.a. 1 n.a. 6 Balances with depository institutions in United States .. 86,826 66,794 75,456 57,003 44,,446688 3,903 6,360 55,,669955 7 U.S. branches and agencies of other foreign banks (including IBFs) 81,637 64,258 70,977 54,716 4,121 3,778 6,169 5,575 8 Other depository institutions in United States (including IBFs) 5,188 2,535 4,479 2,287 346 126 190 120 9 Balances with banks in foreign countries and with foreign central banks 52,569 51,531 46,482 45,674 2,235 2,228 3,223 3,133 10 Foreign branches of U.S. banks 841 701 750 621 47 46 43 33 11 Other banks in foreign countries and foreign central banks 51,728 50,829 45,732 45,052 2,188 2,181 3,181 3,101 12 Balances with Federal Reserve Banks 613 n.a. 550 n.a. 22 n.a. 9 n.a. 13 Total securities and loans 369,133 55,083 251,645 40,431 55,378 9,105 35,702 1,756 14 Total securities, book value 87,453 12,850 80,303 11,676 4,207 692 2,315 464 15 U.S. Treasury 28,148 n.a. 27,142 n.a. 626 n.a. 287 n.a. 16 Obligations of U.S. government agencies and corporations 2211,,114422 n.a. 2200,,660088 n.a. 332200 n.a. 39 n.a. 17 Other bonds, notes, debentures, and corporate stock (including state and local securities) 38,163 12,850 32,554 11,676 3,261 692 1,989 464 18 Federal funds sold and securities purchased under agreements to resell 50,847 5,379 46,200 4,930 674 147 3,475 297 19 U.S. branches and agencies of other foreign banks 13,786 4,250 11,531 3,801 488 147 1,522 297 20 Commercial banks in United States 10,562 232 10,096 232 94 0 220 0 21 Other 26,498 896 24,573 896 92 0 1,733 0 22 Total loans, gross 281,812 42,241 171,420 28,759 51,194 8,416 33,397 1,292 23 LESS: Unearned income on loans 132 8 78 4 23 2 9 0 24 EQUALS: Loans, net 281,680 42,233 171,341 28,754 51,170 8,414 33,388 1,292 Total loans, gross, by category 25 Real estate loans 42,099 411 23,467 211 12,875 185 3,696 13 26 Loans to depository institutions 41,281 27,702 27,180 17,972 8,705 6,596 2,030 878 27 Commercial banks in United States (including IBFs) 19,178 10,471 11,275 5,837 5,925 3,952 1,693 566 28 U.S. branches and agencies of other foreign banks ... 17,222 10,120 10,124 5,593 5,737 3,866 1,131 546 29 Other commercial banks in United States 1,956 351 1,150 244 188 87 562 20 30 Other depository institutions in United States (including IBFs) 17 9 17 9 0 0 0 0 31 Banks in foreign countries 22,086 17,222 15,888 12,125 2,781 2,644 337 312 32 Foreign branches of U.S. banks 735 695 370 338 355 355 0 0 33 Other banks in foreign countries 21,351 16,528 15,518 11,788 2,426 2,289 337 312 34 Loans to other financial institutions 20,388 1,081 16,751 925 1,238 24 1,845 50 35 Commercial and industrial loans 160,877 10,159 90,683 7,067 27,680 1,550 23,697 332 36 U.S. addressees (domicile) 141,856 65 77,284 37 25,127 14 23,026 0 37 Non-U.S. addressees (domicile) 19,021 10,095 13,399 7,030 2,553 1,537 672 332 38 Acceptances of other banks 966 61 658 53 68 0 43 0 39 U.S. banks 343 0 299 0 18 0 3 0 40 Foreign banks 623 60 359 53 49 0 40 0 41 Loans to foreign governments and official institutions (including foreign central banks) 3,771 2,659 2,844 2,392 175 61 171 18 42 Loans for purchasing or carrying securities (secured and unsecured) 6,551 10 6,148 10 205 0 130 0 43 All other loans 4,573 116 2,383 88 247 0 1,785 0 44 All other assets 56,690 4,942 44,994 4,166 4,533 541 6,160 191 45 Customers' liabilities on acceptances outstanding 13,069 n.a. 8,965 n.a. 2,821 n.a. 670 n.a. 46 U.S. addressees (domicile) 9,810 n.a. 6,347 n.a. 2,610 n.a. 578 n.a. 47 Non-U.S. addressees (domicile) 3,259 n.a. 2,618 n.a. 211 n.a. 92 n.a. 48 Other assets including other claims on nonrelated parties 43,621 4,942 36,030 4,166 1,712 541 5,490 191 49 Net due from related depository institutions 75,384 135,166 61,843 106,861 6,838 17,264 11,,777722 8,396 50 Net due from head office ana other related depository institutions 75,384 n.a. 61,843 n.a. 6,838 n.a. 11,,777722 n.a. 51 Net due from establishing entity, head offices, and other related depository institutions n.a. 135,166 n.a. 106,861 n.a. 17,264 n.a. 8,396 52 Total liabilities4 710,018 319,027 542,574 259,197 74,223 33,189 59,123 19,468 53 Liabilities to nonrelated parties 597,871 295,758 488,638 241,728 56,665 32,461 37,464 16,057 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A73 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, June 30, 1994'—Continued Millions of dollars, except as noted All states2 New York California Illinois IItteemm ex I T c B l o u F t d a s l i 3 n g o IB nl F y s 3 ex T c IB l o u t F d a s i l ng I o B n F ly s ex T c IB l o u t F d a s i l ng I o B n F ly s ex T c IB l o u t F d a s l i ng I o B n F ly s 54 Total deposits and credit balances 137,577 225,071 118,725 205,661 4,948 6,254 7,079 8,683 55 Individuals, partnerships, and corporations 91,122 12,640 75,570 8,770 4,303 385 5,632 81 56 U.S. addressees (domicile) 77,531 167 67,723 165 2,604 0 4,773 2 57 Non-U.S. addressees (domicile) 13,591 12,473 7,847 8,605 1,699 385 859 79 58 Commercial banks in United States (including IBFs)... 25,459 65,236 23,195 60,968 386 2,164 1,303 1,942 59 U.S. branches and agencies of other foreign banks .. 15,049 59,048 14,030 55,568 86 1,981 496 1,350 60 Other commercial banks in United States 10,410 6,188 9,165 5,400 299 183 807 593 61 Banks in foreign countries 8,269 127,185 8,011 118,504 47 3,019 62 5,062 6? Foreign branches of U.S. banks 2,982 3,824 2,982 3,470 0 147 0 198 63 Other banks in foreign countries 5,287 123,361 5,029 115,034 47 2,872 62 4,864 64 Foreign governments and official institutions (including foreign central banks) 4,732 19,943 4,420 17,388 186 686 2 1,562 65 All other deposits and credit balances 7,099 67 6,685 32 6 0 74 35 66 Certified and official checks 895 844 20 7 67 Transaction accounts and credit balances (excluding IBFs) 9,393 7,810 328 322 68 Individuals, partnerships, and corporations 6,872 5,570 259 308 69 U.S. addressees (domicile) 5,104 4,469 204 304 70 Non-U.S. addressees (domicile) 1,768 1,101 54 4 71 Commercial banks in United States (including IBFs)... 90 84 2 0 77. U.S. branches and agencies of other foreign banks .. 33 31 1 0 73 Other commercial banks in United States 57 53 1 0 74 Banks in foreign countries 967 808 38 2 75 Foreign branches of U.S. banks 1 1 0 0 76 Other banks in foreign countries 966 807 38 2 77 Foreign governments and official institutions (including foreign central banks) 409 362 4 2 78 All other deposits and credit balances 160 144 6 3 79 Certified and official checks 895 844 20 7 80 Demand deposits (included in transaction accounts and credit balances) 8,801 7,535 261 308 81 Individuals, partnerships, and corporations 6,423 5,411 198 294 82 U.S. addressees (domicile) 4,929 4,392 159 290 83 Non-U.S. addressees (domicile) 1,494 1,019 39 4 84 Commercial banks in United States (including IBFs)... 78 73 0 0 85 U.S. branches and agencies of other foreign banks .. 22 n.a. 21 n.a. 0 n a. 0 n.a. 86 Other commercial banks in United States 56 52 0 0 87 Banks in foreign countries 906 750 38 2 88 Foreign branches of U.S. banks 1 1 0 0 89 Other banks in foreign countries 905 749 38 2 90 Foreign governments and official institutions (including foreign central banks) 382 348 4 2 91 All other deposits and credit balances 117 109 1 3 92 Certified and official checks 895 844 20 7 93 Nontransaction accounts (including MMDAs, excluding IBFs) 128,185 110,914 4,619 6,757 94 Individuals, partnerships, and corporations 84,251 70,000 4,045 5,324 95 U.S. addressees (domicile) 72,427 63,254 2,400 4,469 % Non-U.S. addressees (domicile) 11,824 6,746 1,645 855 97 Commercial banks in United States (including IBFs)... 25,369 23,111 384 1,302 98 U.S. branches and agencies of other foreign banks .. 15,017 13,999 86 496 99 Other commercial banks in United States 10,353 9,113 298 807 100 Banks in foreign countries 7,302 7,203 9 60 101 Foreign branches of U.S. banks 2,981 2,981 0 0 107 Other banks in foreign countries 4,321 4,222 9 60 103 Foreign governments and official institutions (including foreign central banks) 4,323 4,058 182 0 104 All other deposits and credit balances 6,940 6,541 0 71 105 IBF deposit liabilities 225,071 205,661 6,254 8,683 106 Individuals, partnerships, and corporations 12.640 8.770 385 81 107 U.S. addressees (domicile) 167 165 0 2 108 Non-U.S. addressees (domicile) 12,473 8,605 385 79 109 Commercial banks in United States (including IBFs)... 65,236 60,968 2,164 1,942 110 U.S. branches and agencies of other foreign banks .. 59,048 55,568 1,981 1,350 111 Other commercial banks in United States n.a. 6,188 n.a. 5,400 n.a. 183 n.a. 593 112 Banks in foreign countries 127,185 118,504 3,019 5,062 113 Foreign branches of U.S. banks 3,824 3,470 147 198 114 Other banks in foreign countries 123.361 115.034 2.872 4,864 115 Foreign governments and official institutions (including foreign central banks) 19.943 17.388 686 1,562 116 All other deposits and credit balances 67 32 0 35 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • November 1994 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, June 30, 19941—Continued Millions of dollars, except as noted All states2 New York California Illinois IItteemm in I T c B l o u F t d a s i l 3 n g o IB nl F y s 3 in T c I l B o u t F d a s i l ng I o B n F ly s in T c I l B o u t F d a s i l ng I o B n F ly s in T c I l B o u t F d a s i l ng I o B n F ly s 117 Federal funds purchased and securities sold under agreements to repurchase 68,203 12,622 56,508 8,649 5,6% 1,631 5,500 2,240 118 U.S. branches and agencies of other foreign banks .... 13,002 2,448 8,695 865 3,262 1,223 843 274 119 Other commercial banks in United States 8,225 257 5,631 72 1,956 125 562 60 120 Other 46,975 9,917 42,182 7,712 478 283 4,095 1,907 121 Other borrowed money 116,552 53,570 67,833 23,585 3355,,880022 24,073 10,525 5,003 122 Owed to nonrelated commercial banks in United States (including IBFs) 38,485 20,139 15,611 5,183 18,468 13,045 2,814 1,468 123 Owed to U.S. offices of nonrelated U.S. banks 9,198 1,849 5,208 550 2,743 976 731 252 124 Owed to U.S. branches and agencies of nonrelated foreign banks 29,287 18,290 10,403 4,632 15,725 12,069 2,084 1,216 125 Owed to nonrelated banks in foreign countries 32,883 30,844 18,162 16,323 10,792 10,666 3,391 3,390 126 Owed to foreign branches of nonrelated U.S. banks ... 1,527 1,491 619 586 660 660 227 227 127 Owed to foreign offices of nonrelated foreign banks 31,356 29,353 17,542 15,737 10,132 10,006 3,164 3,163 128 Owed to others 45,184 2,587 34,061 2,079 6,542 363 4,320 145 129 All other liabilities 50,468 4,495 39,911 3,833 33,,996666 502 55,,667766 131 130 Branch or agency liability on acceptances executed and outstanding 13,707 n.a. 9,523 n.a. 2,825 n.a. 670 n.a. 131 Other liabilities to nonrelated parties 36,761 4,495 30,388 3,833 1,141 502 5,005 131 132 Net due to related depository institutions5 112,147 23,269 53,936 17,469 1177,,555577 728 21,660 3,411 133 Net owed to head office and other related depository institutions 112,147 n. a. 53,936 n.a. 1177,,555577 n.a. 2211,,666600 n.a. 134 Net owed to establishing entity, head office, and other related depository institutions n.a. 23,269 n.a. 17,469 n.a. 728 n.a. 3,411 MEMO 135 Non-interest-bearing balances with commercial banks in United States 1,105 0 867 0 103 0 53 0 136 Holding of commercial paper included in total loans 973 924 11 10 137 Holding of own acceptances included in commercial and industrial loans 33,,557700 22,,440000 930 78 138 Commercial and industrial loans with remaining maturity of one year or less 97,001 53,731 16,449 15,577 139 Predetermined interest rates 53,498 n.a. 29,274 n.a. 9,393 n.a. 10,757 n a. 140 Floating interest rates 4433,,550022 2244,,445577 77,,005566 44,,882200 141 Commercial and industrial loans with remaining maturity of more than one year 63,876 36,952 11,232 8,120 142 Predetermined interest rates 19,724 10,960 4,186 3,224 143 Floating interest rates 44,152 25,992 7,046 4,896 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U. S. Branches and Agencies A75 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, June 30, 19941—Continued Millions of dollars, except as noted All states2 New York California Illinois IItteemm ex I T c B l o u F t d a s i l 3 n g o IB nl F y s 3 ex T c IB l o u F t d a s i l ng I o B n F ly s ex T c IB l o u F t d a s i l ng I o B n F ly s ex T c IB l o u F t d a s i l ng I o B n F ly s 111144444444 CCCCoooommmmppppoooonnnneeeennnnttttssss ooooffff ttttoooottttaaaallll nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ttttoooottttaaaallll ddddeeeeppppoooossssiiiittttssss aaaannnndddd ccccrrrreeeeddddiiiitttt bbbbaaaallllaaaannnncccceeeessss ooooffff t 1 1 t nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddiiiinnnngggg IIIIBBBBFFFFssss 131,695 114,894 5,282 6,985 111144445555 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 97,237 85,046 3,091 5,280 111144446666 OOOOtttthhhheeeerrrr ttttiiiimmmmeeee ddddeeeeppppoooossssiiiittttssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 n.a. n.a. n.a. oooorrrr mmmmoooorrrreeee 24,639 I 21,587 1,173 I 1,254 1 111144447777 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee n.a. wwwwiiiitttthhhh rrrreeeemmmmaaaaiiiinnnniiiinnnngggg mmmmaaaattttuuuurrrriiiittttyyyy ooooffff mmmmoooorrrreeee tttthhhhaaaannnn 11112222 mmmmoooonnnntttthhhhssss ........ 9,819 8,261 1 1,018 451 All states2 New York California Illinois in T c IB l o u F t d a s i l n g I o B n F ly s in T c IB l o u t F d a s i l n g I o B n F ly s in T c IB l o u F t d a s i l n g I o B n F ly s inc T IB l o u F t d a s i l n g I o B n F ly s 111144448888 MMMMaaaarrrrkkkkeeeetttt vvvvaaaalllluuuueeee ooooffff sssseeeeccccuuuurrrriiiittttiiiieeeessss hhhheeeelllldddd 0 0 0 0 0 0 0 0 111144449999 IIIImmmmmmmmeeeeddddiiiiaaaatttteeeellllyyyy aaaavvvvaaaaiiiillllaaaabbbblllleeee ffffuuuunnnnddddssss wwwwiiiitttthhhh aaaa mmmmaaaattttuuuurrrriiiittttyyyy ggggrrrreeeeaaaatttteeeerrrr tttthhhhaaaannnn oooonnnneeee ddddaaaayyyy iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ooootttthhhheeeerrrr bbbboooorrrrrrrroooowwwweeeedddd mmmmoooonnnneeeeyyyy 73,167 n.a. 36,582 n.a. 28,905 n.a. 6,010 n.a. 111155550000 NNNNuuuummmmbbbbeeeerrrr ooooffff rrrreeeeppppoooorrrrttttssss ffffiiiilllleeeedddd5555 550 0 256 0 127 0 49 0 1. Data are aggregates of categories reported on the quarterly form FFIEC 002, item is not an eligible IBF asset or liability or because that level of detail is not "Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign reported for IBFs. From December 1981 through September 1985, IBF data were Banks." The form was first used for reporting data as of June 30, 1980, and was included in all applicable items reported. revised as of December 31, 1985. From November 1972 through May 1980, U.S. 4. Total assets and total liabilities include net balances, if any, due from or branches and agencies of foreign banks had filed a monthly FR 886a report. owed to related banking institutions in the United States and in foreign countries Aggregate data from that report were available through the Federal Reserve (see note 5). On the former monthly branch and agency report, available through statistical release G.ll, last issued on July 10, 1980. Data in this table and in the the G.ll statistical release, gross balances were included in total assets and total G.ll tables are not strictly comparable because of differences in reporting panels liabilities. Therefore, total asset and total liability figures in this table are not and in definitions of balance sheet items. IBF, international banking facility. comparable to those in the G.ll tables. 2. Includes the District of Columbia. 5. Related depository institutions includes the foreign head office and other 3. Effective December 1981, the Federal Reserve Board amended Regulations U.S. and foreign branches and agencies of a bank, a bank's parent holding D and Q to permit banking offices located in the United States to operate company, and majority-owned banking subsidiaries of the bank and of its parent international banking facilities (IBFs). Since December 31, 1985, data for IBFs holding company (including subsidiaries owned both directly and indirectly). have been reported in a separate column. These data are either included in or 6. In some cases two or more offices of a foreign bank within the same excluded from the total columns as indicated in the headings. The notation "n.a." metropolitan area file a consolidated report. indicates that no IBF data have been reported for that item, either because the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Index to Statistical Tables References are to pages A3-A75 although the prefix 'A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Demand deposits Agricultural loans, commercial banks, 21, 22 Banks, by classes, 18-23 Assets and liabilities (See also Foreigners) Ownership by individuals, partnerships, and Banks, by classes, 18—22 corporations, 23 Domestic finance companies, 36 Turnover, 17 Federal Reserve Banks, 11 Depository institutions Financial institutions, 28 Reserve requirements, 9 Foreign banks, U.S. branches and agencies, 23, 72-75 Reserves and related items, 4, 5, 6, 13 Automobiles Deposits (See also specific types) Consumer installment credit, 39 Banks, by classes, 4, 18-22, 24 Production, 47, 48 Federal Reserve Banks, 5,11 Interest rates, 16 Turnover, 17 BANKERS acceptances, 10, 22, 26 Discount rates at Reserve Banks and at foreign central banks and Bankers balances, 18-22, 72-75. (See also Foreigners) foreign countries (See Interest rates) Bonds (See also U.S. government securities) Discounts and advances by Reserve Banks (See Loans) New issues, 35 Dividends, corporate, 35 Rates, 26 Branch banks, 23 Business activity, nonfinancial, 45 EMPLOYMENT, 45 Business expenditures on new plant and equipment, 35 Eurodollars, 26 Business loans (See Commercial and industrial loans) CAPACITY utilization, 46 FARM mortgage loans, 38 Capital accounts Federal agency obligations, 5,10,11,12, 31, 32 Banks, by classes, 18, 69, 71, 73 Federal credit agencies, 33 Federal Reserve Banks, 11 Federal finance Central banks, discount rates, 65 Debt subject to statutory limitation, and types and ownership Certificates of deposit, 26 of gross debt, 30 Commercial and industrial loans Receipts and outlays, 28, 29 Commercial banks, 21 Treasury financing of surplus, or deficit, 28 Weekly reporting banks, 21-23 Treasury operating balance, 28 Commercial banks Federal Financing Bank, 28, 33 Assets and liabilities, 18-22, 68-71 Federal funds, 7, 19, 21, 22, 23, 26, 28 Commercial and industrial loans, 18-23 Federal Home Loan Banks, 33 Consumer loans held, by type and terms, 39 Federal Home Loan Mortgage Corporation, 33, 37, 38 Deposit interest rates of insured, 16 Federal Housing Administration, 33, 37, 38 Loans sold outright, 21 Federal Land Banks, 38 Nondeposit funds, 72-75 Federal National Mortgage Association, 33, 37, 38 Federal Reserve Banks Real estate mortgages held, by holder and property, 38 Condition statement, 11 Terms of lending, 68-71 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) Credit unions, 39 Row of funds, 40,42,43,44 Currency in circulation, 5, 14 Foreign banks, assets and liabilities of U.S. branches and Customer credit, stock market, 27 agencies, 22, 23, 72-75 Foreign currency operations, 11 Foreign deposits in U.S. banks, 5, 11, 21, 22 DEBITS to deposit accounts, 17 Foreign exchange rates, 66 Debt (See specific types of debt or securities) Foreign trade, 54 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A77 Foreigners Production, 45, 47 Claims on, 55, 58, 59, 60, 62 Profits, corporate, 35 Liabilities to, 22, 54, 55, 56, 61, 63, 64 REAL estate loans GOLD Banks, by classes, 21, 22, 38 Certificate account, 11 Terms, yields, and activity, 37 Stock, 5, 54 Type of holder and property mortgaged, 38 Government National Mortgage Association, 33, 37, 38 Repurchase agreements, 7, 21-23 Gross domestic product, 51 Reserve requirements, 9 Reserves HOUSING, new and existing units, 49 Commercial banks, 18 Depository institutions, 4, 5, 6, 13 INCOME, personal and national, 45, 51, 52 Federal Reserve Banks, 11 Industrial production, 45,47 U.S. reserve assets, 54 Installment loans, 39 Residential mortgage loans, 37 Insurance companies, 30, 38 Retail credit and retail sales, 39, 40, 45 Interest rates Bonds, 26 SAVING Commercial banks, 68-71 Flow of funds, 40, 42, 43, 44 Consumer installment credit, 39 National income accounts, 51 Deposits, 16 Savings and loan associations, 38, 39, 40 Federal Reserve Banks, 8 Savings banks, 38, 39 Foreign central banks and foreign countries, 66 Savings deposits (See Time and savings deposits) Money and capital markets, 26 Securities (See also specific types) Mortgages, 37 Federal and federally sponsored credit agencies, 33 Prime rate, 25 Foreign transactions, 63 International capital transactions of United States, 53-65 New issues, 34 International organizations, 55, 56, 58, 61, 62 Prices, 27 Inventories, 51 Special drawing rights, 5, 11, 53, 54 Investment companies, issues and assets, 35 State and local governments Investments (See also specific types) Deposits, 21, 22 Banks, by classes, 18—23 Holdings of U.S. government securities, 30 Commercial banks, 4, 18-23 New security issues, 34 Federal Reserve Banks, 11,12 Ownership of securities issued by, 21, 22 Financial institutions, 38 Rates on securities, 26 Stock market, selected statistics, 27 LABOR force, 45 Stocks (See also Securities) Life insurance companies (See Insurance companies) New issues, 34 Loans (See also specific types) Prices, 27 Banks, by classes, 18-23 Commercial banks, 4, 18-23 Student Loan Marketing Association, 33 Federal Reserve Banks, 5, 6, 8, 11, 12 Financial institutions, 38 TAX receipts, federal, 29 Insured or guaranteed by United States, 37, 38 Thrift institutions, 4. (See also Credit unions and Savings and loan associations) MANUFACTURING Time and savings deposits, 4, 14, 16, 18-23 Capacity utilization, 46 Trade, foreign, 54 Production, 46, 48 Treasury cash, Treasury currency, 5 Margin requirements, 27 Treasury deposits, 5, 11, 28 Member banks (See also Depository institutions) Treasury operating balance, 28 Federal funds and repurchase agreements, 7 UNEMPLOYMENT, 45 Reserve requirements, 9 US. government balances Mining production, 48 Commercial bank holdings, 18-23 Mobile homes shipped, 49 Treasury deposits at Reserve Banks, 5, 11, 28 Monetary and credit aggregates, 4, 13 U.S. government securities Money and capital market rates, 26 Bank holdings, 18-23, 30 Money stock measures and components, 4, 14 Dealer transactions, positions, and financing, 32 Mortgages (See Real estate loans) Federal Reserve Bank holdings, 5, 11, 12, 30 Mutual funds, 35 Foreign and international holdings and Mutual savings banks (See Thrift institutions) transactions, 11, 30, 64 Open market transactions, 10 NATIONAL defense outlays, 29 Outstanding, by type and holder, 28, 30 National income, 51 Rates, 25 U.S. international transactions, 53-66 OPEN market transactions, 10 Utilities, production, 48 PERSONAL income, 52 VETERANS Administration, 37, 38 Prices Consumer and producer, 45, 50 WEEKLY reporting banks, 22-24 Stock market, 27 Wholesale (producer) prices, 45, 50 Prime rate, 25 Producer prices, 45, 50 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 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 J. VIRGIL MATTINGLY, JR., General Counsel RALPH W. SMITH, JR., Assistant Director 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 PATRICK M. PARKINSON, Associate Director WILLIAM W. WILES, Secretary THOMAS D. SIMPSON, Associate Director JENNIFER J. JOHNSON, Deputy Secretary LAWRENCE SLIFMAN, Associate Director BARBARA R. LOWREY, Associate Secretary MARTHA S. SCANLON, Deputy Associate Director PETER A. TINSLEY, Deputy Associate Director DIVISION OF BANKING 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 JACK P. JENNINGS, Assistant Director NORMAND R.V. BERNARD, Special Assistant to the Board MICHAEL G. MARTINSON, Assistant Director RHOGER H PUGH, Assistant Director DIVISION OF CONSUMER 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

A79 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 J J A D O O A N S H V T E N I H P D H O R L . N H . Y W . S E H H V I A . A S Y D , N E A I N G S s O , I s O N J o R , I c A D . i , , a A i A t r e s e s s c s D i i t s s o i t r t a r a e n n c t t t o D D r i i r r e e c c t t o o r r J F J E E O L A F O H R F N R L R E E H G N Y . . C P H C E A . A M R M M R . I A I L Y S R T H O Q O , U U N A N A , s G A R s , i D s A s s T t s i a , s s n A t i a t s s t n D s a t i n s i D r t t a e i D c n r t e t i o r c D r e t o c ir t r e o c r t or 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

80 Federal Reserve Bulletin • November 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 P. 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 MARVIN S. GOODFRIEND, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary DAVID E. LINDSEY, Associate Economist JOSEPH R. COYNE, Assistant Secretary FREDERIC S. MISHKIN, 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 JACK H. BEEBE, 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

A81 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

A82 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, FEDERAL RESERVE REGULATORY SERVICE. Loose-leaf; updated MS-127, Board of Governors of the Federal Reserve System, monthly. (Requests must be prepaid.) Washington, DC 20551 or telephone (202) 452-3244 or FAX Consumer and Community Affairs Handbook. $75.00 per (202) 728-5886. When a charge is indicated, payment should year. accompany request and be made payable to the Board of Monetary Policy and Reserve Requirements Handbook. Governors of the Federal Reserve System or may be ordered $75.00 per year. via Mastercard or Visa. Payment from foreign residents should Securities Credit Transactions Handbook. $75.00 per year. be drawn on a U.S. bank. The Payment System Handbook. $75.00 per year. Federal Reserve Regulatory Service. Four vols. (Contains all four Handbooks plus substantial additional material.) THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS. $200.00 per year. 1984. 120 pp. Rates for subscribers outside the United States are as follows ANNUAL REPORT. and include additional air mail costs: ANNUAL REPORT: BUDGET REVIEW, 1993-94. Federal Reserve Regulatory Service, $250.00 per year. FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or Each Handbook, $90.00 per year. $2.50 each in the United States, its possessions, Canada, THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MULTIand Mexico. Elsewhere, $35.00 per year or $3.00 each. COUNTRY MODEL, May 1984. 590 pp. $14.50 each. ANNUAL STATISTICAL DIGEST: period covered, release date, WELCOME TO THE FEDERAL RESERVE. March 1989. 14 pp. number of pages, and price. INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. 1981 October 1982 239 pp. $ 6.50 440 pp. $9.00 each. 1982 December 1983 266 pp. $ 7.50 FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. 1983 October 1984 264 pp. $11.50 December 1986. 264 pp. $10.00 each. 1984 October 1985 254 pp. $12.50 FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY- 1985 October 1986 231 pp. $15.00 SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. 1986 November 1987 288 pp. $15.00 1987 October 1988 272 pp. $15.00 1988 November 1989 256 pp. $25.00 CONSUMER EDUCATION PAMPHLETS 1980-89 March 1991 712 pp. $25.00 Short pamphlets suitable for classroom use. Multiple copies are 1990 November 1991 185 pp. $25.00 available without charge. 1991 November 1992 215 pp. $25.00 1992 December 1993 215 pp. $25.00 Consumer Handbook on Adjustable Rate Mortgages Consumer Handbook to Credit Protection Laws SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF CHARTS. Weekly. $30.00 per year or $.70 each in the A Guide to Business Credit for Women, Minorities, and Small Businesses United States, its possessions, Canada, and Mexico. Elsewhere, $35.00 per year or $.80 each. Series on the Structure of the Federal Reserve System The Board of Governors of the Federal Reserve System THE FEDERAL RESERVE ACT and other statutory provisions The Federal Open Market Committee affecting the Federal Reserve System, as amended through Federal Reserve Bank Board of Directors August 1990. 646 pp. $10.00. Federal Reserve Banks REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL Organization and Advisory Committees RESERVE SYSTEM. A Consumer's Guide to Mortgage Lock-Ins A Consumer's Guide to Mortgage Settlement Costs ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— A Consumer's Guide to Mortgage Refinancings Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. Home Mortgages: Understanding the Process and Your Right Vol. 11 (Irregular Transactions). 1969. 116 pp. Each volto Fair Lending ume $2.25; 10 or more of same volume to one address, Making Deposits: When Will Your Money Be Available? $2.00 each. Making Sense of Savings GUIDE TO THE FLOW OF FUNDS ACCOUNTS. 672 pp. $8.50 When Your Home is on the Line: What You Should Know each. About Home Equity Lines of Credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A83 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 Gregory 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

A84 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

A85 1-A 2-B 3-C 4-D 5-E Baltimore Pittsburgh <3 w NY ^_ J / C T r * • Cincinnati Buffalo KY NJ NY BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 7-G 8-H IN Louisville TO 9 Memphis f Orleans little Rock ATLANTA CHICAGO ST. LOUIS 9-1 MINNEAPOLIS 10-J 12-L } MO OklahomajCity KANSAS CITY 11-K f-i* -1 fx?,' - - 3ib San DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A86 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 Paul M. Connolly 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 Fred R. 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